SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: JULY 30, 2007
(Date of earliest event reported)
PRINCIPAL FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-16725 42-1520346
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification Number)
711 HIGH STREET, DES MOINES, IOWA 50392
(Address of principal executive offices)
(515) 247-5111
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 7.01 REGULATION FD DISCLOSURE
The following information is provided in response to inquiries by investors
about exposure to subprime mortgage lending. The following is an overview of
Principal Financial Group, Inc.'s ("PFG") investment in residential mortgages,
mortgage backed securities ("MBS") (including collateralized mortgage
obligations ("CMO") and commercial mortgage backed securities ("CMBS")), and
asset backed securities ("ABS") (including collateralized debt obligations
("CDO")). All values are as of June 30, 2007.
RESIDENTIAL MORTGAGES. PFG owned approximately $1.5 billion of whole loan
residential mortgages. This $1.5 billion was comprised of $1.0 billion of first
and second lien mortgages to prime borrowers at Principal Bank. PFG's
subsidiary, Principal International de Chile S.A., owned approximately $500
million of first mortgages to prime Chilean borrowers.
MBS. PFG owned approximately $6.7 billion of MBS. This $6.7 billion was
comprised of (i) $1.3 billion of AAA rated mortgage pass-through certificates in
which the underlying mortgages were conforming loans backed by U.S. government
agencies or instrumentalities; (ii) $985 million of CMO which were backed by 91%
prime mortgages and 9% Alt A mortgages (95% rated AAA and 5% rated AA; 81%
issued in 2005 or before, 14% in 2006 and 5% in 2007); and (iii) $4.4 billion of
CMBS, 98% of which were investment grade, with 71% rated A- or better.
ABS. PFG owned approximately $2.8 billion of ABS. This included (i) $629 million
of subprime first lien mortgages, 99% of which were rated AA or better and 87%
of which were issued in 2005 or before; (ii) $177 million of CDO backed by
subprime mortgages (61% rated AA, and 36% rated A or A-; 33% issued in 2005 or
before, and 67% in 2006 and 2007); and (iii) $1.06 billion of CDO backed by cash
or synthetic corporate debt (76%) or CMBS (24%) (100% of the CDO corporate
securities were investment grade and 90% of the CMBS CDO securities were
investment grade). The remaining $900 million of ABS portfolio was backed by
credit card, auto or consumer loan receivables.
To summarize, PFG's total exposure to subprime residential mortgages at June 30,
2007 was $806 million, or 1.3% of invested assets. Almost all such exposure was
in highly rated traunches of asset backed securities, most of which were issued
in 2005 or earlier.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINCIPAL FINANCIAL GROUP, INC.
By: /S/ THOMAS J. GRAF
Name: Thomas J. Graf
Title: Senior Vice President -
Investor Relations
Date: July 30, 2007