Credit Ratings

Principal Life Insurance Company, currently the largest operating company within the family of companies comprising the Principal Financial Group, has received consistently high financial strength ratings from the rating agencies^[1], including A.M. Best Company, Moody's Investors Service, Standard & Poor's, and Fitch Ratings. Recently, Principal National Life Insurance Company has been assigned ratings from the same four rating agencies.

Last update August 17, 2009.

Financial Strength Ratings

Issuer Credit Ratings

About the ratings

Financial Strength Ratings

A.M. Best ratings for insurance companies range from "A++" to "S". A.M. Best indicates that "A++" and "A+" ratings are assigned to those companies that in A.M. Best's opinion have achieved superior overall performance when compared to the norms of the life insurance industry and have demonstrated a strong ability to meet their policyholder and other contractual obligations. For the latest rating, access www.ambest.com

Fitch’s ratings for insurance companies range from “AAA” to “D”. Fitch indicates that “AA” ratings are assigned to those companies that have demonstrated financial strength and a very strong capacity to meet policyholder and contract holder obligations on a timely basis.

Moody’s ratings for insurance companies range from “Aaa” to “C”. Moody’s indicates that “A (“Excellent”)” ratings are assigned to those companies that have demonstrated excellent financial security.

Standard & Poor’s ratings for insurance companies range from “AAA” to “R”. Standard & Poor’s indicates that “AA” ratings are assigned to those companies that have demonstrated very strong financial security.

In evaluating a company’s financial and operating performance, these rating agencies review its profitability, leverage and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated market value of its assets, the adequacy of its policy reserves and the experience and competency of its management. Our ratings reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our obligations to policyholders and are not evaluations directed toward the protection of investors. Such ratings are neither a rating of securities nor a recommendation to buy, hold or sell any security, including our common stock.

Issuer Credit Ratings

"Moody's Issuer Rating: Issuer Ratings are opinions of the ability of entities to honor senior unsecured financial obligations and contracts. Moody's rating symbols for Issuer Ratings are identical to those used to indicate the credit quality of long-term obligations. Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default.

A Standard & Poor's issuer credit rating is a current opinion of an obligor's overall financial capacity (its creditworthiness) to pay its financial obligations. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation, as it does not take into account the nature of and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. In addition, it does not take into account the creditworthiness of the guarantors, insurers, or other forms of credit enhancement on the obligation. The issuer credit rating is not a recommendation to purchase, sell, or hold a financial obligation issued by an obligor, as it does not comment on market price or suitability for a particular investor.

Fitch Ratings' credit ratings provide an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested.

^[1]

The four rating agencies referenced have placed negative outlooks on the US Life Insurance Sector. A negative outlook means that the ratings of many US Life Insurance Companies may be downgraded due to impact of negative market conditions.