NEW YORK, Nov 18 (Reuters) - Principal Financial Group Inc
said on Tuesday it had applied to take part in a federal
lending program for financial services firms.
The provider of retirement products, life and health
insurance said it expected to be able to borrow up to $2
billion, if approved for the program.
Principal joins several other U.S. life insurers, and Dutch
insurer Aegon NV -- on behalf of its U.S. unit Transamerica --
to have applied for government funding as part of the United
States' $700 billion bank bailout.
Principal said it made the application as a savings and
loan holding company, given its ownership of Principal Bank.
Life insurers are lining up to tap government sources of
funding after being hurt by investment losses.
Principal's profit tumbled 60 percent in the third quarter
hurt by losses tied to impairments on fixed income securities
and equities.
Insurers have to be bank holding companies in order to
apply to take part in the federal program. This has led to
Hartford Financial Services Group Inc and Genworth Financial
Inc, to buy small savings and loan companies in recent days.
Both have since applied for government funding.
Late on Tuesday, Protective Life Corp said it was seeking
bank holding company status, and had applied to the federal
lending program.
Protective Life plans to buy Bonifay Holding Co Inc, a
small bank with six branches in Florida, according to its
website. There were no terms disclosed for the acquisition,
which is subject to approval to take part in the federal
capital scheme, Protective Life said.
Principal said that if it participates in the government
program it would issue preferred shares and warrants to the
U.S. Treasury. Proceeds would be used to support and capitalize
its financial services and operating units, the Des Moines,
Iowa-based company said.
Principal said it believes it is prudent to consider the
government funding plan as another option to build on its
position of financial strength, by adding to its capital
cushion in a time of volatile and uncertain market conditions.
(Reporting by Lilla Zuill; editing by Carol Bishopric)
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