The Principal proves benefits of privatised retirement solutions

Long-term savings are beneficial on individual and macroeconomic levels, whether in developed or developing economies. In Asia, where massive savings can be mobilised through employer-based retirement schemes, they spell greater resilience to more frequent turbulence in today's rapidly changing world.

"The best way to attain a higher level of economic growth is to promote long-term savings," says Larry Zimpleman, chairman, president and CEO of the Principal Financial Group. "When you look at the United States experience, our decade of highest economic growth was the 1990s and all of that was attributable to 401k plans."

An early mover in the 401k business in the US, The Principal is one of the biggest players in this space and one of the world's leading investment managers. It has grown in size - with assets under management expanding from US$2 billion in the early 1970s to US$517.9 billion as of the second quarter of this year - largely through the strength of small- to medium-sized businesses (SMBs).

Focused on SMBs

Founded in 1879 as the Bankers Life Association, The Principal has flourished despite economic turmoil and two world wars by keeping its focus on SMBs. Among the first to use direct mail and broadcast advertising in the early 1900s, it set the course for the financial services business for decades to come.

On its 75th anniversary in 1954, the company had significantly grown its group insurance business. This was attained through the rigorous training of its agents in all aspects of pension, life and health insurance in order to fully serve a diversifying client base.

With the advent of the computer age, The Principal introduced Adjustable Life, an innovative product that allowed customers to adapt their insurance policies to the realities of ageing. By 1978, the value of The Principal's assets had more than tripled as the market embraced the flexibility provided by Adjustable Life. This firmly established the company's leadership role in the insurance industry.