Principal Financial Group to drop medical insurance coverage

Des Moines, Iowa-based Principal Financial Group Inc. (NYSE: PFG) will no longer provide medical insurance and has entered into an agreement with UnitedHealthcare to offer renewal options to Principal's insurance clients for the next 36 months as the business transitions, according to a Sept. 30 Principal news release.

"While a difficult decision, this is the right strategic decision for Principal," chairman, president and CEO Larry Zimpleman said in the release. "The medical business continues to be one that undergoes rapid change, which would mean investing additional capital into the business to be able to offer competitive products.

"For us, that just does not make sense."

Susan Houser, Principal media contact, said in a phone interview that Principal's existing medical insurance customers will be sent a quote from UnitedHealthcare but that it is up to individual clients to decide which way to move forward with their health insurance plans.

While there are businesses that utilize Principal's medical insurance in the Springfield area, Houser declined to name any of them, citing company policy. Springfield Business Journal's current group health plan is through Principal.

She said the company doesn't break down the number of insured people regionally, but nationally, the company provides medical insurance to about 840,000 employees and/or their dependents through 14,000 group employer clients.

Principal's sale of medical insurance and insurance contracts will be renewed with UnitedHealthcare instead of Principal within 36 months. Employees in Principal's health insurance unit will be utilized throughout that period to ease the transition process, but positions will be eliminated as the business transfers, according to the release.

Zimpleman said the move would allow the company to focus its attention on asset accumulation, domestic and international asset management businesses, and its risk business.

The medical insurance drop will not affect the company's other businesses, including retirement, asset management, life insurance, wellness, disability, dental and vision, the release said.

Principal is estimating a third-quarter drop in cost per share of 3 cents to 4 cents and a full-year drop of 18 cents to 20 cents.

Shares of Principal stock were trading at $26.31 as of 8:37 a.m. Oct. 1. Principal's 52-week range is $20.89 to $31.41.[[In-content Ad]]