Principal Financial Group, Inc. Announces Long-term Extension of Joint Venture in Brazil


DES MOINES, Iowa--(BUSINESS WIRE)--Oct. 27, 2009--Principal Financial Group, Inc.(NYSE: PFG) today announced that The Principal® and Banco do Brasil (Novo Mercado: BBAS3) have signed a Memorandum of Understanding related to BrasilPrev Seguros e Previdência S.A. (BrasilPrev), their pension and long-term asset accumulation joint venture in Brazil.

Under the terms of the Memorandum, and following completion of all necessary approvals and transactions, BrasilPrev will have, for 23 years, the exclusive right to manufacture and distribute pension and other long-term asset accumulation products within the Banco do Brasil network. Other key elements of the Memorandum include:

  • Co-management of the joint venture, with The Principal owning 50.01 percent of BrasilPrev common stock and Banco do Brasil wning 49.99 percent;
  • Economic interests (sharing of profits) of 25.005 percent to The Principal and 74.995 percent to Banco do Brasil; and
  • The intent to negotiate BrasilPrev’s acquisition of the pension portfolio of Mapfre Nossa Caixa.

“We are very pleased to announce the long-term continuation of our successful strategic partnership with Banco do Brasil,” said Larry Zimpleman , chairman, president and chief executive officer of The Principal. “Over the past 10 years, combining the leading pension expertise from The Principal and the power of Banco do Brasil’s distribution network, BrasilPrev has become one of Brazil’s top retirement services companies, with three million accounts and nearly $15 billion in assets under management1. We see even greater opportunity going forward as Banco do Brasil continues to expand its distribution reach and strengthens its commitment to increasing market share.”

“Continuing our partnership with The Principal was a strategic decision for Banco do Brasil, given their deep pension expertise and broad industry leadership,” said Aldemir Bendine, president of Banco do Brasil. “We look forward to building on the strong relationships we’ve developed over the past 10 years, based on a shared commitment to quality, focus on innovation and passion for helping customers achieve financial success.”

Adds Norman Sorensen, president and chief executive officer of Principal International: “The 23-year commitment reflects the strength of The Principal and Banco do Brasil relationship and the shared desire to build on the success of BrasilPrev. In the past five years BrasilPrev has achieved compounded annual growth rates of operating earnings of 25 percent and 43 percent growth in assets under management. Expectations are for even greater future growth driven by:

  • The expansion of the Banco do Brasil network. The recent acquisition of Nossa Caixa bank alone adds over 560 branches, 2,200 points of sale and 5.7 million prospective customers;
  • The shared commitment to increase penetration of Banco do Brasil’s existing 34 million banking customers;
  • The consolidation of all Banco do Brasil’s pension operations within BrasilPrev; and
  • The significant growth of the Brazilian middle class in need of world-class pension products.

Having a meaningful stake in a larger, faster growing BrasilPrev for the next 23 years will continue to reinforce the success of Principal International.”

Details will be released upon completion of negotiations and signing of a definitive agreement.

Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to operating earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions. The company does not undertake to update or revise these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's annual report on Form 10-K for the year ended December 31, 2008, and in company’s quarterly report on Form 10-Q for the quarter ended June 30, 2009, filed by the company with the Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions that may significantly affect the company’s ability to meet liquidity needs, access to capital and cost of capital; difficult conditions in the global capital markets and the general economy, which the company does not expect to improve in the near future, that may materially adversely affect the company’s business and results of operations; the actions of the U.S. government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing the financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial institutions that could adversely affect the company; investment risks which may diminish the value of the company’s invested assets and the investment returns credited to customers, which could reduce sales, revenues, assets under management and net income; requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect company liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal Financial Group, Inc.’s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and default of the company’s re-insurers.

About the Principal Financial Group

The Principal Financial Group® (The Principal®)2 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $257.7 billion in assets under management3 and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit

About Banco do Brasil

BANCO DO BRASIL is the leading financial institution in Brazil, listed on the Novo Mercado with a free float close to 21.70%. Its main shareholder is the Federative Republic of Brazil. It is the bank with the largest network in Brazil (covers 59% of Brazilian cities with nearly 5,000 branches) and has a clear leadership position in the market as a retail bank with 34 million customers (30% share), 139 billion dollars in deposits (23% share), and 24 million credit card customers.

1As of September 30, 2009.
2"The Principal Financial Group" and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
3As of June 30, 2009

Source: Principal Financial Group, Inc.

Principal Financial Group, Inc.
Media Contact:
Paula Chizek, 515-235-6016
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Investor Relations Contact:
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