Raises third quarter 2024 common stock dividend
Principal Financial Group® (Nasdaq: PFG) announced results for
second quarter 2024.
Second Quarter 2024 Highlights
- Net income attributable to Principal Financial Group (PFG) of
$353 million, or $1.49 per diluted share
- Non-GAAP net income attributable to PFG, excluding exited
business, of $356 million, or $1.50 per diluted share
- Non-GAAP operating earnings1 of $386 million, or $1.63 per
diluted share
- Returned $415 million of capital to shareholders, including
$250 million of share repurchases and $165 million of common stock
dividends
- Raised third quarter 2024 common stock dividend to $0.72 per
share, a 1 cent increase over the second quarter 2024 dividend; the
dividend will be payable on September 27, 2024, to shareholders of
record as of September 5, 2024
- Assets under management (AUM) of $699 billion, which is
included in assets under administration (AUA) of $1.6 trillion
- Strong financial position with $1.6 billion of excess and
available capital
Dan Houston, chairman, president, and
CEO of Principal®
“Our second quarter 2024 results were
supported by strong business fundamentals and continued growth,
generating nearly $390 million of non-GAAP operating earnings. We
remain well positioned to deliver full year guidance as our
strategic focus on higher growth markets, combined with our
integrated product portfolio and strong distribution relationships,
continues to create value and drive growth for customers and
shareholders.
We returned $415 million to shareholders
in the quarter, including $250 million of share repurchases,
delivering on our commitment to return excess capital to
shareholders, while maintaining our strong capital position.”
_________________________
1 Use of non-GAAP financial measures and
their reconciliations to the most directly comparable GAAP measures
are included in this release. Non-GAAP operating earnings for total
company is after tax.
Second Quarter Enterprise
Results
In millions except percentages, earnings
per share, or otherwise noted
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Net income (loss) attributable to PFG
$353.1
$388.8
(9)%
$1,260.1
$1,548.2
(19)%
Non-GAAP net income attributable to PFG,
excluding exited business
$356.2
$324.5
10%
$1,576.1
$1,578.2
0%
Non-GAAP operating earnings
$386.1
$375.8
3%
$1,640.6
$1,540.2
7%
Diluted earnings per common
share
Net income (loss) attributable to PFG
$1.49
$1.58
(6)%
Non-GAAP net income (loss) attributable to
PFG, excluding exited business
$1.50
$1.32
14%
Non-GAAP operating earnings
$1.63
$1.53
7%
Assets under administration (billions)
$1,620.3
$1,532.8
6%
Assets under management (billions)
$699.2
$674.2
4%
Second Quarter Segment Highlights
- Retirement and Income Solutions (RIS) net revenue2 increased
10% from second quarter 2023; 38% operating margin3
- Principal Global Investors (PGI) managed AUM of $513 billion
increased 6% over second quarter 2023
- Specialty Benefits premium and fees increased 8% from second
quarter 2023 driven by record year-to-date sales and strong
retention
- Life Insurance business market premium and fees increased 15%
from second quarter 2023
________________________
2 Net revenue = operating revenues less:
benefits, claims and settlement expenses, liability for future
policy benefits remeasurement (gain) loss, market risk benefit
remeasurement (gain) loss, and dividends to policyholders.
3 Operating margin for RIS = pre-tax
operating earnings divided by net revenue.
Segment Results
In millions except percentages, or
otherwise noted except percentages or otherwise noted)
Retirement and Income Solutions
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating earnings4
$267.8
$232.3
15%
$1,099.3
$892.4
23%
Net revenue
$700.9
$639.9
10%
$2,792.6
$2,522.3
11%
Operating margin
38.2%
36.3%
39.4%
35.4%
- Pre-tax operating earnings increased $35.5 million
primarily due to higher net revenue and operating margin.
- Net revenue increased $61.0 million primarily due to
growth in the business, higher net investment income, and favorable
market performance.
Principal Global Investors
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating earnings
$126.9
$125.0
2%
$519.7
$514.7
1%
Operating revenues less pass-through
expenses5
$379.2
$359.6
5%
$1,520.8
$1,473.7
3%
Operating margin6
34.5%
34.9%
34.6%
35.2%
Total PGI assets under management
(billions)
$513.2
$485.8
6%
PGI sourced assets under management
(billions)
$259.7
$249.8
4%
- Pre-tax operating earnings increased $1.9 million
primarily due to higher operating revenues less pass-through
expenses partially offset by higher operating expenses.
- Operating revenues less pass-through expenses increased
$19.6 million primarily due to higher management fees on higher
average AUM.
_______________________
4 Pre-tax operating earnings = operating
earnings before income taxes and after noncontrolling interest.
5 The company has provided reconciliations
of the non-GAAP measures to the most directly comparable U.S. GAAP
measures at the end of the release. The company has determined this
measure is more representative of underlying operating revenues
growth for PGI as it removes commissions and other expenses that
are collected through fee revenue and passed through expenses with
no impact to pre-tax operating earnings.
6 Operating margin for PGI = pre-tax
operating earnings, adjusted for noncontrolling interest divided by
operating revenues less pass-through expenses.
Principal International
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating earnings
$62.5
$63.2
(1)%
$298.5
$283.6
5%
Combined net revenue (at PFG share)7
$224.0
$229.4
(2)%
$960.7
$921.8
4%
Operating margin8
27.9%
27.6%
31.1%
30.8%
Assets under management (billions)
$171.1
$174.4
(2)%
- Pre-tax operating earnings decreased slightly primarily
due to lower combined net revenue offset by lower operating
expenses.
- Combined net revenue (at PFG share) decreased $5.4
million primarily due to impacts of macroeconomic headwinds in Asia
and foreign currency translation.
Specialty Benefits
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating earnings
$108.7
$98.1
11%
$477.8
$441.6
8%
Premium and fees
$813.5
$750.2
8%
$3,177.5
$2,927.8
9%
Operating margin9
13.4%
13.1%
15.0%
15.1%
Incurred loss ratio
61.5%
62.0%
60.0%
59.5%
- Pre-tax operating earnings increased $10.6 million due
to growth in the business and lower incurred loss ratio.
- Premium and fees increased $63.3 million driven by
record year-to-date sales and strong retention, along with
employment and wage growth.
- Incurred loss ratio improved to 61.5% driven by more
favorable underwriting experience in group disability and group
life.
______________________
7 Combined net revenue (a non-GAAP
financial measure): net revenue for all PI companies at 100% less
pass-through commissions. The company has determined combined net
revenue (at PFG share) is more representative of underlying net
revenue growth for PI as it reflects our proportionate share of
consolidated and equity method subsidiaries. In addition, using
this net revenue metric provides a more meaningful representation
of our operating margin.
8 Operating margin for PI = pre-tax
operating earnings divided by combined net revenue (at PFG
share).
9 Operating margin for Benefits and
Protection = pre-tax operating earnings divided by premium and
fees.
Life Insurance
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating earnings
$23.6
$26.8
(12)%
$79.7
$102.5
(22)%
Premium and fees
$227.0
$229.0
(1)%
$929.4
$913.2
2%
Operating margin
10.4%
11.7%
8.6%
11.2%
- Pre-tax operating earnings decreased $3.2 million
primarily due to a GAAP-only regulatory closed block dividend
adjustment.
- Premium and fees decreased $2.0 million driven by a
one-time impact of a risk-reducing YRT reinsurance transaction
executed in the quarter.
Corporate
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
% Change
2Q24
2Q23
% Change
Pre-tax operating losses
$(103.4)
$(97.4)
(6)%
$(395.6)
$(381.0)
(4)%
- Pre-tax operating losses increased $6.0 million
primarily due to higher operating expenses.
Earnings Conference Call
On Friday, July 26, 2024, at 10:00 a.m. (ET), Chairman,
President and Chief Executive Officer Dan Houston and Executive
Vice President and Chief Financial Officer Deanna Strable will lead
a discussion of results and the impacts on future prospects, asset
quality and capital adequacy during a live conference call, which
can be accessed as follows:
- Via live Internet webcast. Please go to investors.principal.com
at least 10-15 minutes prior to the start of the call to register,
and to download and install any necessary audio software.
- Via telephone by dialing in one of the following numbers 10
minutes prior to the start of the call.
- 877-407-0832 (U.S. and Canadian callers)
- +1 201-689-8433 (International callers)
- Replay of the earnings call via webcast as well as a transcript
of the call will be available after the call at
investors.principal.com.
The company’s financial supplement and slide presentation is
currently available at investors.principal.com, and may be referred
to during the call.
Forward Looking Statements
This release contains statements that constitute forward‑looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements relating to share
repurchases and planned dividends, the realization of our growth
and business strategies and results from ongoing operations.
Forward‑looking statements are made based upon our current
expectations and beliefs concerning future developments and their
potential effects on us. Such forward‑looking statements are not
guarantees of future performance and actual results may differ
materially from the results anticipated in the forward-looking
statements. We describe risks, uncertainties and factors that could
cause or contribute to such material differences in our filings
with the Securities and Exchange Commission, including in the “Risk
Factors” and “Note Concerning Forward-Looking Statements” sections
in our annual report on Form 10-K for the year ended Dec. 31, 2023,
as updated or supplemented from time to time in subsequent filings.
We assume no obligation to update any forward-looking statement for
any reason, which speaks as of its date.
Use of Non-GAAP Financial Measures
The company uses a number of non-GAAP financial measures that
management believes are useful to investors because they illustrate
the performance of normal, ongoing operations, which is important
in understanding and evaluating the company’s financial condition
and results of operations. They are not, however, a substitute for
U.S. GAAP financial measures. Therefore, the company has provided
reconciliations of the non-GAAP measures to the most directly
comparable U.S. GAAP measure at the end of the release. The company
adjusts U.S. GAAP measures for items not directly related to
ongoing operations. However, it is possible these adjusting items
have occurred in the past and could recur in future reporting
periods. Management also uses non-GAAP measures for goal setting,
as a basis for determining employee and senior management awards
and compensation and evaluating performance on a basis comparable
to that used by investors and securities analysts.
About
Principal®10
Principal Financial Group® (Nasdaq: PFG) is a global financial
company with nearly 20,000 employees11 passionate about improving
the wealth and well-being of people and businesses. In business for
145 years, we’re helping approximately 64 million customers11 plan,
insure, invest, and retire, while working to support the
communities where we do business, and build a diverse, inclusive
workforce. Principal® is proud to be recognized as one of the 2024
World’s Most Ethical Companies12, a member of the Bloomberg Gender
Equality Index, and a “Best Place to Work in Money Management13.”
Learn more about Principal and our commitment to building a better
future at principal.com.
______________________
10 Principal, Principal and symbol design
and Principal Financial Group are trademarks and service marks of
Principal Financial Services, Inc., a member of the Principal
Financial Group.
11 As of June 30, 2024
12 Ethisphere, 2024
13 Pensions & Investments, 2023
Summary of Principal Financial Group® and Segment
Results
Principal Financial Group, Inc.
Results
(in millions)
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
2Q24
2Q23
Net income (loss) attributable to
PFG
$
353.1
$
388.8
$
1,260.1
$
1,548.2
(Income) loss from exited business
3.1
(64.3
)
316.0
30.0
Non-GAAP net income (loss) attributable
to PFG excluding exited business
$
356.2
$
324.5
$
1,576.1
$
1,578.2
Net realized capital (gains) losses, as
adjusted
29.9
51.3
64.5
(38.0
)
Non-GAAP Operating Earnings*
$
386.1
$
375.8
$
1,640.6
$
1,540.2
Income taxes
100.0
72.2
438.8
313.6
Non-GAAP Pre-Tax Operating
Earnings
$
486.1
$
448.0
$
2,079.4
$
1,853.8
Segment Pre-Tax Operating Earnings
(Losses):
Retirement and Income Solutions
$
267.8
$
232.3
$
1,099.3
$
892.4
Principal Asset Management
189.4
188.2
818.2
798.3
Benefits and Protection
132.3
124.9
557.5
544.1
Corporate
(103.4
)
(97.4
)
(395.6
)
(381.0
)
Total Segment Pre-Tax Operating
Earnings
$
486.1
$
448.0
$
2,079.4
$
1,853.8
Per Diluted Share
Three Months Ended,
Six Months Ended,
2Q24
2Q23
2Q24
2Q23
Net income (loss)
$
1.49
$
1.58
$
3.72
$
1.01
(Income) loss from exited business
0.01
(0.26
)
(0.64
)
1.72
Non-GAAP net income (loss) excluding
exited business
$
1.50
$
1.32
$
3.08
$
2.73
Net realized capital (gains) losses, as
adjusted
0.13
0.21
0.20
0.28
Non-GAAP Operating Earnings
$
1.63
$
1.53
$
3.28
$
3.01
Weighted-average diluted common shares
outstanding (in millions)
236.6
245.5
238.0
246.4
*U.S. GAAP (GAAP) net income attributable to PFG versus
non-GAAP operating earnings
Management uses non-GAAP operating earnings, which is a
financial measure that excludes the effect of net realized capital
gains and losses, as adjusted, income (loss) from exited business
and other after-tax adjustments the company believes are not
indicative of overall operating trends, for goal setting, as a
basis for determining employee and senior management awards and
compensation and evaluating performance on a basis comparable to
that used by investors and securities analysts. Note: it is
possible these adjusting items have occurred in the past and could
recur in future reporting periods. While these items may be
significant components in understanding and assessing our
consolidated financial performance, management believes the
presentation of non-GAAP operating earnings enhances the
understanding of results of operations by highlighting earnings
attributable to the normal, ongoing operations of the company’s
businesses.
Selected Balance Sheet
Statistics
Period Ended,
2Q24
4Q23
Total assets (in billions)
$
308.8
$
305.0
Stockholders’ equity (in millions)
$
11,059.0
$
10,961.7
Total common equity (in millions)
$
11,013.4
$
10,916.0
Total common equity excluding cumulative
change in fair value of funds withheld embedded derivative and
accumulated other comprehensive income (AOCI) other than foreign
currency translation adjustment (in millions)
$
12,385.2
$
12,735.4
End of period common shares outstanding
(in millions)
232.3
236.4
Book value per common share
$
47.41
$
46.18
Book value per common share excluding
cumulative change in fair value of funds withheld embedded
derivative and AOCI other than foreign currency translation
adjustment
$
53.32
$
53.87
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions, except as
indicated)
Period Ended,
2Q24
4Q23
Stockholders’ Equity, Excluding
Cumulative Change in Fair Value of Funds Withheld Embedded
Derivative and AOCI Other Than Foreign Currency Translation
Adjustment, Available to Common Stockholders:
Stockholders’ equity
$
11,059.0
$
10,961.7
Noncontrolling interest
(45.6
)
(45.7
)
Stockholders’ equity available to common
stockholders
11,013.4
10,916.0
Cumulative change in fair value of funds
withheld embedded derivative
(2,367.5
)
(2,027.9
)
AOCI, other than foreign currency
translation adjustment
3,739.3
3,847.3
Stockholders’ equity, excluding cumulative
change in fair value of funds withheld embedded derivative and AOCI
other than foreign currency translation adjustment, available to
common stockholders
$
12,385.2
$
12,735.4
Book Value Per Common Share, Excluding
Cumulative Change in Fair Value of Funds Withheld Embedded
Derivative and AOCI Other Than Foreign Currency Translation
Adjustment:
Book value per common share
$
47.41
$
46.18
Cumulative change in fair value of funds
withheld embedded derivative and AOCI, other than foreign currency
translation adjustment
5.91
7.69
Book value per common share, excluding
change in fair value of funds withheld embedded derivative and AOCI
other than foreign currency translation adjustment
$
53.32
$
53.87
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
2Q24
2Q23
Income Taxes:
Total GAAP income taxes (benefit)
$
87.1
$
59.9
$
269.0
$
299.5
Net realized capital gains (losses) tax
adjustments
(6.3
)
12.7
5.9
(9.9
)
Exited business tax adjustments
0.8
(17.1
)
93.2
(38.7
)
Income taxes related to equity method
investments and noncontrolling interest
18.4
16.7
70.7
62.7
Income taxes
$
100.0
$
72.2
$
438.8
$
313.6
Net Realized Capital Gains
(Losses):
GAAP net realized capital gains
(losses)
$
(15.2
)
$
(72.8
)
$
50.5
$
5.1
Market value adjustments to fee
revenues
0.1
0.2
1.2
0.8
Net realized capital gains (losses)
related to equity method investments
(3.6
)
8.1
(13.4
)
5.9
Derivative and hedging-related revenue
adjustments
17.0
(5.0
)
61.3
(37.2
)
Certain variable annuity fees
18.0
18.4
72.7
73.6
Sponsored investment funds and other
adjustments
6.9
5.7
24.4
22.3
Capital gains distributed – operating
expenses
(11.8
)
(7.3
)
(82.2
)
17.5
Amortization of actuarial balances
(0.1
)
0.1
(0.6
)
0.1
Derivative and hedging-related expense
adjustments
1.1
0.1
1.5
0.1
Market value adjustments of embedded
derivatives
(6.0
)
5.3
(16.7
)
4.0
Market value adjustments of market risk
benefits
(8.1
)
(4.4
)
(65.2
)
(31.5
)
Capital gains distributed – cost of
interest credited
(19.9
)
(9.5
)
(89.9
)
(0.1
)
Net realized capital gains (losses) tax
adjustments
(6.3
)
12.7
5.9
(9.9
)
Net realized capital gains (losses)
attributable to noncontrolling interest, after-tax
(2.0
)
(2.9
)
(14.0
)
(12.7
)
Total net realized capital gains (losses)
after-tax adjustments
(14.7
)
21.5
(115.0
)
32.9
Net realized capital gains (losses), as
adjusted
$
(29.9
)
$
(51.3
)
$
(64.5
)
$
38.0
Income (Loss) from Exited
Business:
Pre-tax impacts of exited business:
Strategic review costs and impacts
$
-
$
-
$
-
$
(23.6
)
Amortization of reinsurance gains
(losses)
(417.5
)
(20.3
)
(453.9
)
(68.6
)
Other impacts of reinsured business
161.7
(30.0
)
55.1
(131.1
)
Net realized capital gains (losses) on
funds withheld assets
19.0
37.8
112.7
179.2
Change in fair value of funds withheld
embedded derivative
232.9
93.9
(123.1
)
52.8
Tax impacts of exited business
0.8
(17.1
)
93.2
(38.7
)
Total income (loss) from exited
business
$
(3.1
)
$
64.3
$
(316.0
)
$
(30.0
)
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve Months,
2Q24
2Q23
2Q24
2Q23
Principal Global Investors Operating Revenues Less Pass-Through
Expenses:
Operating revenues
$
410.3
$
390.1
$
1,643.5
$
1,599.4
Commissions and other expenses
(31.1
)
(30.5
)
(122.7
)
(125.7
)
Operating revenues less pass-through
expenses
$
379.2
$
359.6
$
1,520.8
$
1,473.7
Principal International Combined Net
Revenue (at PFG Share):
Pre-tax operating earnings
$
62.5
$
63.2
$
298.5
$
283.6
Combined operating expenses other than
pass-through commissions (at PFG share)
161.5
166.2
662.2
638.2
Combined net revenue (at PFG share)
$
224.0
$
229.4
$
960.7
$
921.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725383721/en/
INVESTOR CONTACT: Humphrey Lee, 877-909-1105,
lee.humphrey@principal.com MEDIA CONTACT: Jane Slusark,
515-362-0482, slusark.jane@principal.com
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