Response to Color of Change
ColorofChange.org recently released communication incorrectly stating that The Principal supports the private prison industry by investing in the common stock of two prominent private prison organizations. Here are the facts:
- Principal Life Insurance Company does not currently invest any of its general account assets in the Corrections Corporation of America (CCA) or GEO Group.
- Principal Life Insurance Company has a very small exposure to CCA and GEO (approximately $17 million in market value). More than 99 percent of these investments are held by two separate accounts, each designed to fully replicate an index (and CCA and GEO are included in the respective index). These purchases are made simply to track an index, as is explained in the contracts supported by these separate accounts. The separate accounts are managed consistent with ERISA obligations.
- All other investments are maintained on behalf of clients, who are the owners of the investment accounts, not The Principal. The investments are made in accordance with contractual obligations to clients and consistent with all applicable law. As a fiduciary, we are required to manage funds solely in the best interests of clients and in accordance with their investment directions or guidelines. As a fiduciary, The Principal as a manager is unable to base investment decisions on its view of any single social or political issue.
Questions and Answers
What is Color of Change?
ColorOfChange.org is a civil rights organization whose purpose is stated on its website as: "...to strengthen Black America's political voice. Our goal is to empower our members - Black Americans and our allies - to make government more responsive to the concerns of Black Americans and to bring about positive political and social change for everyone."
Why is The Principal investing in the private prison industry?
Principal Life Insurance Company is not making discretionary investments in private prisons. The investments maintained in Principal Life’s separate accounts are designed to replicate an index (and CCA and GEO are included in the respective indexes). Purchases are made simply to mimic an index.
The vast majority of other investments are held not by Principal Life but by accounts governed by contracts with the respective clients and by applicable law (e.g., Principal-sponsored mutual funds, and accounts managed for unaffiliated investors). The Principal is not the owner of these stocks.