Principal Financial Advisors, Inc. would like to make you aware of an important change

Decision to re-direct new contributions formerly allocated to the Principal U.S. Property Separate Account

On Friday, March 20, 2020, Principal Life Insurance Company (Principal Life) communicated to you and to Principal Financial Advisors the implementation of withdrawal limitations on the Principal U.S. Property Separate Account (Separate Account) sub-advised by Principal Real Estate Investors, LLC.  The Separate Account invests primarily in private equity commercial real estate, such as warehouses, office buildings, apartments and retail properties.

The global spread of COVID-19 has resulted in volatility in the public equities market.  Many investors are now overweight to real estate given commercial real estate’s positive performance year-to-date.  Due to this and other factors, investors have submitted an unusually high number of withdrawal requests in a concentrated period of time.

The Separate Account maintains sufficient cash to satisfy withdrawal requests in the ordinary course of business, but the concentration and dollar volume of withdrawal requests resulted in Principal Life Insurance Company’s decision to implement a withdrawal limitation for the Account to proactively protect the best interests of all contract holders. This limitation will be in place at least until adequate liquidity exists to meet withdrawal requests and maintain ongoing operations.

Withdrawal restrictions are common for institutional investors investing in open-ended private real estate accounts similar to the Separate Account. However, this is only the second time Principal Life has invoked a withdrawal restriction on the Separate Account.

Principal Financial Advisors believes strongly that real estate plays an important role in our asset allocation strategies.  The performance record of Principal Real Estate Investors, LLC, has been exemplary throughout the life of the Separate Account.  Accordingly, Principal Financial Advisors supports our clients’ continued investment in the Separate Account by maintaining existing balances in the investment.  However, given the uncertainty of market behavior and its potential impact on the ongoing management of the Separate Account, Principal Financial Advisors believes it is prudent to re-direct new contributions formerly allocated to the Separate Account. As a result, effective April 9th, 2020, Principal Financial Advisors began re-directing new contributions formerly allocated to the Separate Account proportionately to the non-fixed income separate accounts used in your retirement plan’s asset allocation.

Questions?

If you have any questions about this change, your plan or what is occurring in the markets please contact your advisory associate at Principal Financial Advisors, Inc.

Sincerely,

Randy Welch
President
Principal Financial Advisors, Inc.

Before directing retirement funds to a separate account, investors should carefully consider the investment objectives, risks, charges and expenses of the separate account as well as their individual risk tolerance, time horizon and goals. For additional information contact us at 800-547-7754 or by visiting principal.com.

 

Principal Financial Advisors, Inc. is a registered investment adviser and member of Principal Global Investors.   Principal Global Investors leads global asset management and is a member of the Principal Financial Group®.

 

Asset allocation strategies are developed using Separate Accounts available through a group annuity contract of Principal Life Insurance Company.  Asset allocation and diversification do not ensure a profit or protect against a loss.

 

Investing involves risk, including possible loss of principal.

 

Real Estate investment options are subject to investment and liquidity risk and other risks inherent in real estate such as those associated with general and local economic conditions. Property values can decline due to environmental and other reasons. In addition, fluctuation in interest rates can negatively impact the performance of real estate investment options.

 

Principal Life Insurance Company is the Investment Manager as defined by ERISA, with regard to the assets of the Separate Account.

 

Separate Accounts are available through a group annuity contract with Principal Life Insurance Co. Insurance products and plan administrative services provided through Principal Life Insurance Company, a member of the Principal Financial Group, Des Moines, Iowa 50392. See the group annuity contract for the full name of the Separate Account. Certain investment options and contract riders may not be available in all states or U.S. commonwealths. Principal Life Insurance Company reserves the right to defer payments or transfers from Principal Life Separate Accounts as permitted by the group annuity contracts providing access to the Separate Accounts or as required by applicable law. Such deferment will be based on factors that may include situations such as: unstable or disorderly financial markets; investment conditions which do not allow for orderly investment transactions; or investment, liquidity, and other risks inherent in real estate (such as those associated with general and local economic conditions). If you elect to allocate funds to a Separate Account, you may not be able to immediately withdraw them.

 

Certain investment options and contract riders may not be available in all states or U.S. commonwealths.

 

April 2020 – 1142373-042022

Terms of Use   |   Disclosures   |   Privacy   |   Security   |   Report Fraud


© {{CurrentYear}}, Principal Financial Services, Inc.

Securities offered through Principal Securities, Inc., member SIPC