Principal Cuts Staff for 5th Year in Health-Unit Retreat

Principal Financial Group Inc., the insurer that expanded in Chile this month, said it cut 154 employees in 2012 as it scaled back from health coverage, marking the fifth-straight year the workforce contracted.

Principal had 13,373 workers as of Dec. 31, compared with 13,527 a year earlier, according to the insurer’s annual report today. The figure was 16,585 at the end of 2007.

Chief Executive Officer Larry Zimpleman began exiting health insurance in 2010, and job cuts are tied to the wind-down of that unit, said Susan Houser, a company spokeswoman. The Des Moines, Iowa-based insurer is turning to fee revenue from managing assets as low interest rates on bonds pressure profits. Principal acquired Chilean pension manager AFP Cuprum SA this month for about $1.5 billion as it expands in emerging markets.

“Apart from the planned three-year exit of our health insurance business, we actually had new job growth in other businesses,” Houser wrote in an e-mail. “We also were able to reabsorb far more employees impacted by the health exit into open positions in other businesses than we had originally estimated.”

Principal shares gained about 23 percent in the past 12 months including dividends, beating the 20 percent return of the 22-company Standard & Poor’s 500 Insurance Index.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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