How 10 Companies Achieved Business Success Because of - Not in Spite Of - Employee Benefits

Jan. 29, 2007 (Des Moines, Iowa) — Ten successful companies have discovered the formula for managing many of today's biggest challenges for employers—like skyrocketing health care costs and lackluster retirement savings. The practical, real-world solutions used by these organizations, The Principal^® 10 Best Companies for Employee Financial Security—2006, are revealed in a new guide that provides a blueprint for achieving business success through employee benefits. The guide - The Formula for Success - is available at no charge at www.principal.com.

The Formula for Success is the fifth annual compilation of best practices from The Principal 10 Best Companies, a national program sponsored by the Principal Financial Group^®, which recognizes growing businesses (five to 1,000 employees) that excel at giving employees an edge on achieving long-term financial security. The guide offers a unique perspective on employee benefits with its combination of proven strategies, hard data and inspiring, real-life examples.

"The Principal 10 Best Companies—2006 face the same constraints as other employers—tough competition for the best employees, tight budgets and the ever-present need to produce more with fewer people," explains Renee Schaaf, vice president, the Principal Financial Group. "The Formula for Success showcases the inventive methods used by these companies to thrive despite their challenges."

Throughout The Formula for Success, employers and their financial professionals can find:

Easy-to-use, interactive checklists that can help them fine-tune their benefit programs
A benchmarking chart for comparing their benefits to those of The Principal 10 Best and national averages
Detailed tactics and real-life examples of their successful benefits programs
Engaging case studies that illustrate the universal challenges faced by employers today—and the innovative tactics The Principal 10 Best used to overcome them

Employers who are struggling to boost their retirement plan participation, for example, can get inspiration from West Bend Mutual Insurance Company (West Bend, Wisc.), which uses several "do it for me" tools - including automatic enrollment, automatic deferral increases and lifecycle funds - in its retirement plan to achieve an impressive 96% participation rate.

Business owners can also learn how to fight - and win - the battle against rising health care costs through a focus on employee wellness. Years of escalating health care costs were taking a heavy toll on the bottom line at Howalt-McDowell Insurance (Sioux Falls, S.D.). "We were on our way to no more benefits," says Larry Larson, controller at Howalt-McDowell. Then the company implemented a comprehensive wellness program that has resulted in a 40 percent decrease in its loss ratio (the amount of claims against premiums paid into the plan) and lower increases in annual premiums.

The ultimate example of the power of motivated employees can be found at ITAGroup (West Des Moines, Iowa). ITAGroup credits its employee stock ownership plan (ESOP) with helping the company achieve record performance in 2006—including record sales, record earnings, record growth, 95.05 percent customer satisfaction, 97.8 percent customer retention and 93.4 percent employee retention. "We know that we can't achieve any of our goals unless our people are fully engaged. That's why we have a stock ownership plan," explains Steve Chapman, chairman and CEO, ITAGroup.

The Formula for Success allows employers to see how The Principal 10 Best Companies used their investments in employee benefits to:

Attract great people. "We get the best and the brightest because of our benefits," says Joan McCormick, PHR, vice president and director of human resources, Eastern Financial Florida Credit Union.
Retain key employees. It's no coincidence that The Principal 10 Best Companies—2006 have significantly lower turnover rates than others in their industries. Simply put, the companies' outstanding benefits make it very hard for employees to leave. "There's been more than one situation in which our defined benefit program has been an incentive to senior managers to stay here as opposed to choosing a higher salary with a competitor," Wayne Wood, president of Michigan Farm Bureau, says.
Boost the bottom line. Reduced turnover costs, increased productivity and easier recruitment have paid off for these businesses. "The additional cost we put into benefits is more than evenly returned in the quality of people we're able to attract, which creates efficiencies we wouldn't otherwise get. This is an investment, not an expense," explains Vic Sellier, vice president—finance and operations and CFO, Argon ST.

The Principal 10 Best Companies—2006 are: Argon ST, Inc., Fairfax, Va.; Central Iowa Power Cooperative (CIPCO), Cedar Rapids, Iowa; Eastern Financial Florida Credit Union, Miramar, Fla.; GTE Federal Credit Union, Tampa, Fla.; Howalt-McDowell Insurance, Inc., Sioux Falls, S.D.; ITAGroup, Inc., West Des Moines, Iowa; McNaughton & Gunn, Inc., Saline, Mich.; Michigan Farm Bureau Family of Companies, Lansing, Mich.; Wells Real Estate Funds, Inc., Norcross, Ga.; and West Bend Mutual Insurance Company, West Bend, Wisc.

The Principal 10 Best Companies—2006 were selected by a distinguished judging panel of business leaders and employee benefit experts who worked with Mathew Greenwald & Associates, a premier market research company. Judges included Dallas L. Salisbury, president/CEO, Employee Benefit Research Institute; David Wray, president, Profit Sharing/401(k) Council of America; Nevin E. Adams, editor-in-chief, PLANSPONSOR Magazine; Karen Ignani, president & CEO, America's Health Insurance Plans; Corey Rosen, executive director, National Center for Employee Ownership; Nancy Ayres, general manager, Clipper Belt Lacer Company; Dan McCarthy, Consulting Actuary, Milliman USA; Jeffrey McAulay, vice president, Moran Towing.

About The Principal 10 Best Companies Program

The Principal 10 Best Companies for Employee Financial Security is a nationwide program that searches for and recognizes small and medium-size companies that excel in providing for employee financial security. Entries for the 2006 search were accepted from February 1, 2006 through April 21, 2006. The program was open to any company with between five to 1,000 employees. To qualify, all entrants must have been based in the United States and have provided a broad range of employee benefits for at least five years. Qualifying companies must have, at a minimum, offered "traditional" employee benefits, such as those relating to retirement, health, life or disability. No entry fee was required, and employees of The Principal were not eligible to enter. Entry forms for the 2007 recognition program will be available on February 1, 2007. For more information, visit www.principal.com/10best/.

About the Principal Financial Group

The Principal Financial Group^® (The Principal^®)¹ is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies and national network of financial professionals. A member of the Fortune 500, the Principal Financial Group has $215.0 billion in assets under management² and serves some 16.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

1) "The Principal Financial Group" and "The Principal" are registered trademarks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2) As of September 30, 2006.