Principal to Exit Medical Insurance Business

September 30, 2010 ( – Principal Financial Group announced it will exit the medical insurance business and has selected UnitedHealthcare to renew medical coverage for its customers.

According to statements put out by both companies, UnitedHealthcare will enroll Principal’s medical insurance customers in a comparable UnitedHealthcare plan as they reach their medical plan renewal dates.  Until plan participants are enrolled in a replacement plan, their current benefits remain in effect under their existing contract.

Sales by Principal will cease and the renewal process with UnitedHealthcare will begin immediately to be completed within 36 months, subject to applicable requirements of federal and state law.

“While a difficult decision, this is the right strategic decision for The Principal,” said Larry D. Zimpleman, chairman, president and chief executive officer in a statement. “While performing well financially, our medical business has been declining in relative size for a number of years, thanks to strong growth from our retirement and asset management businesses. 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.”

The Principal covers customers in 31 markets nationwide, predominantly throughout the Central United States, where UnitedHealthcare offers a network of physicians, hospitals and other health care providers.

According to the Principal, as the business transfers, positions will be eliminated. As much as possible the company will place qualified employees in open positions that become available through attrition and growth in other businesses.

There are approximately 1,500 employees in the medical insurance area. Initially, approximately 150 (of the 1,500) positions will be impacted as some functions cease more quickly. Impacted employees will be considered for other positions and will be given severance and outplacement assistance if they are unable to find a position within the company, Principal said.

The Principal customers who have questions can contact UnitedHealthcare at 1-800-809-9831 for additional information.