The Principal Financial Group has slightly lowered the expected price range for its initial public offering but will hold the stock sale within 30 days as planned, the company said in a filing last week with the U.S. Securities and Exchange Commission, reports the Des Moines Register.
Principal is converting from a mutual insurance company to a publicly traded company. Principal policyholders were given a choice of receiving stock or cash. Money raised in the IPO will pay off policyholders who chose cash, and to pay restructuring costs.
In a separate action, a Rockford, Ill., woman has filed a lawsuit challenging the allocation method used by Des Moines-based Principal to decide how many shares policyholders will receive. The lawsuit filed in federal court in Rockford on Thursday by Esther Gayman, claims that Principal’s share allocation method was unfair to many policyholders. Gayman has asked that the lawsuit be designated a class action.
The allocation method used by Principal gives each policyholder a fixed allocation of 100 shares, but customers can receive additional shares based on their policy’s past and future contributions to surplus. The lawsuit says the company should consider only past contributions to surplus. It also contends that group policyholders — businesses that provide insurance for employees — receive too many shares.
The law firm representing Gayman, Malakoff Doyle and Finberg of Pittsburgh, is involved in similar class actions against John Hancock Financial and Metropolitan Life, two insurance companies that also made recent changes from mutual to public-share ownership. Gayman has requested a jury trial and requests declaratory relief and damages.
In the SEC filing, Principal said it expects shares to sell for $17 to $20 per share. The earlier estimate was $18.50 to $20.50. Principal plans to sell 100 million shares to the public. At the new price, the sale would raise up to $2 billion. The exact issuing price will be determined when the sale occurs.
Principal has estimated it will have insurance losses of between $9 million and $12 million as the result of mostly life insurance claims stemming from the terrorist attacks Sept. 11. A Bloomberg index that tracks the stocks of leading insurance companies showed a drop of nearly 12 percent in shareholder value after the terrorist attacks, but all of that value and a little more has been gained back during the past week.