We wanted to share additional information about an announcement Principal® made this morning regarding changes to its business mix, product offerings, and capital management strategy as part of our ongoing efforts to meet customer needs, create value for our stakeholders and position our company for the future.
Today, we announced key decisions from the review that support ongoing growth and enable us to deliver meaningful products and services to you and our customers. We’ve reinforced and strengthened our commitment to our retirement, global asset management, and U.S. specialty benefits and protection businesses – building on our deep expertise and experience helping millions of customers with integrated and differentiated solutions. As we intensify our focus in these areas, we will exit select products and segments in the future. Before we get into the details, it’s important to note:
- Changes to our future offerings do not impact policies, contracts, or agreements currently in place with Principal. We will continue to support you and meet the needs of our customers.
- Pending applications or contracts will still be processed and honored. This announcement does not halt anything that is currently in flight.
- Ensuring that our high standards for customer-centricity are met and will be a cornerstone as we pursue strategic alternatives for those blocks of business.
U.S. annuities and U.S. individual life insurance
A key element of this review centered on focusing our resources, talent, and investment on opportunities where we can deliver the greatest value and benefits to our stakeholders and customers. Greater focus and discipline will allow us to increase support and help grow areas where we have unmatched expertise and deep relationships.
In U.S. retail annuities, we will continue to sell variable annuities, Pension Risk Transfer, and Principal Pension Builder, all of which play an important role within our complete suite of retirement solutions and support our worksite strategy.
Principal will exit U.S. retail fixed annuities—discontinuing new sales of its deferred annuities, individual payout annuities, and indexed annuities by the end of the third quarter 2021—and will pursue strategic transactions, including divestiture, of the related in-force blocks.
In U.S. life insurance, our product portfolio remains largely the same as a result of this announcement. What’s different is we’ll focus exclusively on the business market—particularly small to medium-sized businesses (SMBs). Business owners and key executives have been a strategic focus for us for more than 10 years and today about 60 percent of our sales come from the business market. We’ll look to further invest and build even more differentiating capabilities to serve this customer segment. Our nonqualified deferred compensation business will continue to be a critical component of this strategy.
In U.S. individual life insurance, the company will discontinue new sales of its products to retail customers by the end of the third quarter 2021. Additionally, Principal will pursue strategic transactions for the in-force universal life with secondary guarantee (ULSG) block, as well as other related in-force blocks.
We’ll share additional information as we can, but please be assured that as of today, there will be no changes in service.