Iowa Commissioner Approves Principal Conversion

By Staff Writer

August 28, 2001 at 08:00 PM

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NU Online News Service, Aug. 28, 6:05 p.m. – Iowa Insurance Commissioner Therese Vaughan today gave Principal Mutual Holding Company Inc., Des Moines, Iowa, permission to convert to a stock company.

Principal Mutual, a policyholder-owned life insurer, filed a conversion plan with state regulators in March.

The plan calls for Principal Financial Services Inc., a stock company, to become the parent company.

Principal Financial would then raise cash by selling 109 million shares of its stock to the public at a price of about $19 each.

Principal Financial would compensate the Principal Mutual policyholders for their loss of policy-based ownership by giving them 261 million shares of stock and $1.3 billion in cash and policy credits.

The demutualization plan "complies with all provisions of law, is fair and equitable to the company and its eligible policyholders, and the reorganized company will have the amount of capital and surplus deemed by the Commissioner to be reasonably necessary for its future solvency," Vaughan writes in an explanation accompanying the approval order.

Principal Mutual President J. Barry Griswell welcomed the order.

"Today's order is positive news for our policyholders and for the organization," Grisswell said in a statement. "With Commissioner Vaughan's approval, we are one step closer to becoming a public company."

Iowa officials have posted a copy of the approval order and information about obtaining a transcript of the Aug. 3 demutualization hearing on the Iowa Insurance Division Web site, at http://www.iid.state.ia.us/whatsnew.asp

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