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So another one bites the dust! Carrier consolidation has been a way of life for the past several years and it appears that more is on the way. Principal Financial Group Inc. has stopped selling health insurance. When customers come up for renewal, they will have the opportunity to renew with UnitedHealthcare. The transition is expected to take up to three years. The funny thing is that we didn't get notified by Principal... I got the memo from UHC! It's not the worst news we've gotten, but it's certainly a sad day when a viable carrier exists our market... one less choice for our clients. We were surprised because they had committed to resources to be a player in our market again after losing ground for a number of years. I have to believe healthcare reform played into the decision since they were really gaining momentum prior to the news.
Principal's asset management and 401(k) businesses has grown. However, its health insurance segment has contracted and required more investment. We suspect healthcare reform will drive smaller players out of the game as the bigger players vie for market share. Principal announced they expect to cut 1500 jobs as a result of the exit from the health market.