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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets

2. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill reported in our segments were as follows:

	Retirement and Investor Services		Principal Global Investors		Principal International			U.S. Insurance Solutions		Corporate			Consolidated

	(in millions)
Balances at January 1, 2010	$	72.6	$	169.0	$	56.3		$	43.4	$	45.1		$	386.4
Impairment		—		—		—			—		(43.6	)		(43.6	)
Foreign currency translation		—		—		4.2			—		—			4.2
Other		—		—		(1.6	)		—		—			(1.6	)

Balances at December 31, 2010		72.6		169.0		58.9			43.4		1.5			345.4
Goodwill from acquisitions		—		68.0		86.2			—		—			154.2
Foreign currency translation		—		—		(17.3	)		—		—			(17.3	)
Other		—		—		—			1.5		(1.5	)		—

Balances at December 31, 2011	$	72.6	$	237.0	$	127.8		$	44.9	$	—		$	482.3

On September 30, 2010, we announced our decision to exit the group medical insurance business. This event constituted a substantive change in circumstances that would more likely than not reduce the fair value of our group medical insurance reporting unit below its carrying amount. Accordingly, we performed an interim goodwill impairment test as of September 30, 2010. As a result of the shortened period of projected cash flows, we determined that the goodwill related to this reporting unit within our Corporate operating segment was impaired and it was written down to a value of zero. We recorded a $43.6 million pre-tax impairment loss as an operating expense in the consolidated statements of operations during the year ended December 31, 2010.

Finite Lived Intangible Assets

Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 13 years were as follows:

	December 31,

	2011						2010
	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
	(in millions)
Present value of future profits	$	191.7	$	47.9	$	143.8	$	148.7	$	48.7	$	100.0
Other finite lived intangible assets		218.9		139.3		79.6		194.3		128.5		65.8

Total amortized intangible assets	$	410.6	$	187.2	$	223.4	$	343.0	$	177.2	$	165.8

During 2010, we fully amortized other finite lived intangible assets of $1.7 million. We had no fully amortized other finite lived intangible assets in 2011.

Present Value of Future Profits. Present value of future profits ("PVFP") represents the present value of estimated future profits to be generated from existing insurance contracts in-force at the date of acquisition and is amortized over the expected policy or contract duration in relation to estimated gross profits. The PVFP asset and amortization may be adjusted if revisions to estimated gross profits occur.

The changes in the carrying amount of PVFP, reported in our Principal International segment were as follows (in millions):


Balance at January 1, 2009	$	84.4
Interest accrued		7.6
Amortization		(8.9	)
Foreign currency translation		5.1
Other		10.2

Balance at December 31, 2009		98.4
Interest accrued		8.0
Amortization		(11.5	)
Foreign currency translation		5.1

Balance at December 31, 2010		100.0
Acquisitions		67.4
Interest accrued		9.4
Amortization		(14.2	)
Foreign currency translation		(18.8	)

Balance at December 31, 2011	$	143.8

At December 31, 2011, the estimated amortization expense, net of interest accrued, related to PVFP for the next five years is as follows (in millions):



Year ending December 31:
2012	$	2.2
2013		2.3
2014		3.3
2015		4.3
2016		5.2

Other Finite Lived Intangible Assets. During 2010, we recorded a $1.6 million pre-tax impairment loss as an operating expense related to finite lived intangible assets with a gross carrying amount of $6.0 million and $4.4 million of accumulated amortization at the time of impairment resulting from our decision to exit the group medical insurance business. During 2009, we recognized an impairment of $6.5 million associated with a customer-based intangible acquired as part of our acquisition of WM Advisors, Inc. This impairment had no impact on our consolidated statement of operations for the Retirement and Investor Services segment, as the cash flows associated with this intangible are credited to an outside party.

The amortization expense for intangible assets with finite useful lives was $11.3 million, $18.9 million and $35.2 million for 2011, 2010 and 2009, respectively. At December 31, 2011, the estimated amortization expense for the next five years is as follows (in millions):


Year ending December 31:
2012	$	13.3
2013		11.5
2014		10.5
2015		8.9
2016		8.8

Indefinite Lived Intangible Assets

The net carrying amount of unamortized indefinite lived intangible assets was $667.2 million and $668.8 million as of December 31, 2011 and 2010, respectively. As of both December 31, 2011 and 2010, $608.0 million relates to investment management contracts associated with our December 31, 2006, acquisition of WM Advisors, Inc.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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