Principal Exits Healthcare Business

NEW YORK (TheStreet) -- Principal Financial Group(PFG) is exiting the medical-insurance business due to declining revenue and regulatory changes, according to a company statement.

"While performing well financially, our medical business has been declining in relative size for a number of years, thanks to strong growth from our retirement and asset management businesses," said CEO Larry Zimpleman said in a company statement. "The medical business continues to be one that undergoes rapid change, which would mean investing additional capital into the business to be able to offer competitive products. For us, that just does not make sense."

UnitedHealth Group(UNH) will be picking up Principal's coverage of its customers.

Principal said it also plans to cut 150 employees out of the 1,500 person division. The company will try to place the remaining employees in other units.

The insurer added that third-quarter earnings will sink by 3 to 4 cents a share, and full-year results to be cut by 18 to 20 cents as a result of the change.

--Written by Maria Woehr in New York.