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Principal Benefits From Low Disability Claims

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Solid results at U.S. health, specialty benefits and individual life operations helped earnings at Principal Financial Group Inc. during the second quarter.[@@]

Principal, Des Moines, Iowa, is reporting $239 million in net income for the latest quarter on $2.2 billion in revenue, up from $120 million in net income on $2 billion in revenue for the second quarter of 2004.

Profits were up at all company divisions, and net income increased to $76 million, from $57 million, at the life and health unit, which handles sales of health insurance, individual life insurance and specialty benefits.

Net income rose about 67%, to $35 million, at the individual life operation, even though revenue fell to $341 million, from $342 million.

Although traditional life revenue fell, strong sales of universal and variable universal life products increased overall production to $325 million, from $318 million.

Revenue and net income were also up at the health and specialty benefits operations.

The specialty benefits operation, which sells disability insurance, dental insurance and other ancillary product, increased sales to $54 million, from $44 million, and specialty benefits net income increased to $18 million, from $12 million.

But Principal is warning that the specialty benefits operation enjoyed unusually low loss ratios.

For individual disability, for example, the loss ratio fell to 57.8%, from 62.9%.