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The Zacks Analyst Blog Highlights: Principal Financial Group, Assured Guaranty, Cigna, CNO Financial Group and United Parcel

    The Zacks Analyst Blog Highlights: Principal Financial Group, Assured
        Guaranty, Cigna, CNO Financial Group and United Parcel Service

PR Newswire

CHICAGO, Feb. 19, 2013

CHICAGO, Feb. 19, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Principal Financial Group Inc.
(NYSE:PFG), Assured Guaranty Ltd. (NYSE:AGO), Cigna Corp. (NYSE:CI), CNO
Financial Group Inc. (NYSE:CNO) and United Parcel Service Inc. (NYSE:UPS).

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Here are highlights from Friday's Analyst Blog:

Rating Action on Principal Financial

Fitch Ratings reiterated the long-term Issuer Default Rating (IDR) of
Principal Financial Group Inc. (NYSE:PFG) at 'A'. Concurrently, the rating
agency reiterated the Insurer Financial Strength (IFS) at 'AA-' of Principal
Financial's operating subsidiaries. The ratings carry a negative outlook.

The rating affirmations came on the back of Principal Financial's sturdy
capitalization and continued solid operational performance. However, these
positives are dwarfed by higher leverage and substantial exposure to direct
mortgages and structured mortgage securities.

The outlook took into account the execution risk associated with the Cuprum
acquisition, lower-than-expected fixed charge coverage and higher financial
leverage. As of Dec 31, 2012, financial leverage was higher at 24%, an
increase of 900 basis points (bps) year over year. The increase was largely
due to the issuance of debt to fund the acquisition. Nevertheless, Chile-based
AFP Cuprum compliments Principal Financial's strategy to widen its presence in
the emerging marketplace. Also, fixed charge coverage was 7.1x in 2012, lower
from nearly 7.9x in 2011.

Fitch, nonetheless, expects that Principal Financial will be able to deliver
sustained profitability on its growing fee-based businesses. At the same time,
the rating agency believes that continued low interest rate environment and
competition will weigh on earnings improvement in the near term.

Rating affirmations or upgrades from credit rating agencies play an important
part in retaining investors' confidence on the stock as well as maintaining
creditworthiness in the market. We believe that the company's strong score
with the credit rating agencies will help it write more business going
forward.

The ratings might be subject to downgrade if investment losses escalate
considerably, return on equity falls below 10%, fixed charge coverage ratio
moves below 7x, risk-based capital ratio goes down below 375% or financial
leverage moves above 25%.

Principal Financial currently carries a Zacks Rank #3 (Hold). Multi-line
insurers Assured Guaranty Ltd. (NYSE:AGO) carries a Zacks Rank #1 (Strong
Buy), while Cigna Corp. (NYSE:CI) and CNO Financial Group Inc. (NYSE:CNO)
carry a Zacks Rank #2 (Buy) and appear impressive.

UPS Hikes Dividend

Leading package delivery company, United Parcel Service Inc. (NYSE:UPS)
announced a dividend increase for its outstanding Class A and Class B shares.
The board of directors announced an increase of 8.8% to 62 cents per share
payable on Mar 12, to shareholders of record on Feb 25, 2013.

Further, the company has announced a share repurchase program of $10 billion
that replaces the existing program that began in 2012. The new share
repurchase program is without an expiration date.

UPS continues to return cash to shareholders in the form of increased
dividends and share repurchases. It projects return on invested capital of at
least 25% by 2014 and free cash flow to exceed 100% of net income each year.
The company raised its quarterly dividend by 9.6% to 57 cents per share for
fiscal 2012 from 52 cents in 2011. With respect to buybacks, the company
raised its target for 2013 from $1.5 billion to $4.0 billion.

Despite the disappointing end to the $6.8 billion mega acquisition of Dutch
shipping company, TNT Express and an economic setback that affected the demand
trend, an increase in shareholders return underpins the company's strength
with respect to its market position and ability to safeguard shareholders'
value despite unfavorable market dynamics. As a result, the company continues
to remain optimistic over its 2013 earnings results, which are expected to
grow in the range of $4.80 to $5.06 per share, representing an increase of
6–12% from the 2012 level.

The company's financial strength drives growth through strategic investments,
technology-backed operations and an enhanced worldwide network. UPS seems to
look beyond the failure of the TNT deal and banks on smaller acquisitions that
it carried out in Europe to expand its global footprint. In Dec 2011, the
company acquired Italian pharma logistics provider Pieffe Group to enhance its
position in North and South America, Europe and Asia. Following this, it
acquired a Belgian e-commerce company, Kiala in Feb 2012.

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