In spite of concerns
about a weak stock market in the aftermath of the Sept. 11 terrorist
attacks, Principal Financial Group made its debut as a
stockholder-owned company with an initial public offering (IPO) that
raised $1.8 billion.
| "While
we are deeply saddened by the terrorist attacks, we [were] compelled to
move forward because that is what we all must do as part of the
rebuilding process." |
The
Oct. 23 IPO consisted of 100 million shares of stock at $18.50 per
share — in the middle of the company's $17 to $20 predicted range.
After
the first day of trading the newly christened ticker symbol PFG closed
at $21 per share, up $2.50 per share, or 13.5 percent. Principal's IPO marks the end of the company's conversion from a mutual insurance company, owned by the insurance policyholders, to a publicly traded company, owned by shareholders.
Principal
plans to use some of the funds generated by the IPO to compensate its
policyholders in the form of cash and insurance policy credits for
their loss of ownership in the company. Principal also plans to
distribute an additional 260 million shares of stock to its
policyholders. Of the approximately 800,000 policyholders eligible for
compensation through the demutualization process, 82 percent will
receive stock, 12 percent will be paid in cash, and the remaining 6
percent chose to be compensated in the form of policy credits. The
insurer hopes to have completed the payout by Dec. 26, 2001 — 60 days
after the completion of the demutualization. "While we are deeply saddened by the terrorist attacks, we
[were] compelled to move forward because that is what we all must do as
part of the rebuilding process," says J. Barry Griswell, president and
chief executive officer of Principal. Principal still faces a lawsuit, which seeks nationwide
class action status, that challenges the constitutionality of its
demutualization and the way policyholders are compensated for their
loss of ownership in the company. The $1.8 billion Principal IPO makes it the second-largest
insurance demutualization — eclipsing the $1.73 billion raised by John
Hancock in January 2000, but falling short of the $2.9 billion of
MetLife's April 2000 IPO. In what is expected to be the largest
demutualization ever, Prudential Insurance Co. of America plans to go
public before the end of 2001.
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