Raises second quarter 2024 common stock dividend
Principal Financial Group® (Nasdaq: PFG) announced results for
first quarter 2024.
First Quarter 2024 Highlights
- Net income attributable to Principal Financial Group (PFG) of
$533 million, or $2.22 per diluted share
- Non-GAAP net income attributable to PFG, excluding exited
business of $376 million, $1.58 per diluted share
- Non-GAAP operating earnings1 of $394 million, or $1.65 per
diluted share
- Returned $362 million of capital to shareholders, including
$200 million of share repurchases and $162 million of common stock
dividends
- Raised second quarter 2024 common stock dividend to $0.71 per
share, a 2 cent increase over the first quarter 2024 dividend; the
dividend will be payable on June 27, 2024, to shareholders of
record as of June 3, 2024
- Assets under management (AUM) of $709 billion, which is
included in assets under administration (AUA) of $1.6 trillion
- Strong financial position with $1.4 billion of excess and
available capital
Dan Houston, chairman, president, and
CEO of Principal®
“I’m proud of our first quarter 2024
results, generating nearly $400 million of non-GAAP operating
earnings, and demonstrating a focused execution of our strategy,
strong sales across our enterprise, and equity market tailwinds. We
continue to drive profitable growth across the enterprise -
balancing investing for growth and innovation in our business while
managing expenses.
We returned more than $360 million to
shareholders in the quarter, including $200 million of share
repurchases, delivering on our commitment to return excess capital
to shareholders. We are in a strong financial position and remain
on track to deliver on our 2024 outlook and meet our long-term
financial goals.”
First Quarter Enterprise Results
In millions except percentages, earnings per share, or otherwise
noted
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Net income (loss) attributable to PFG
$532.5
$(140.1)
N/M
$1,295.8
$4,278.1
(70)%
Non-GAAP net income attributable to PFG,
excluding exited business
$376.4
$346.9
9%
$1,544.4
$1,461.4
6%
Non-GAAP operating earnings
$394.3
$366.8
7%
$1,630.3
$1,588.4
3%
Diluted earnings per common
share
Net income (loss) attributable to PFG
$2.22
$(0.58)
N/M
Non-GAAP net income (loss) attributable to
PFG, excluding exited business
$1.58
$1.39
14%
Non-GAAP operating earnings
$1.65
$1.48
11%
Assets under administration (billions)
$1,624.3
$1,503.4
8%
Assets under management (billions)
$708.5
$659.9
7%
First Quarter Segment Highlights
- Retirement and Income Solutions (RIS) sales of $9.4 billion
increased 6% over first quarter 2023; net revenue2 increased 6%
from first quarter 2023; 38% operating margin3
- Principal Global Investors (PGI) managed AUM of $514 billion
increased 7% over first quarter 2023; with positive institutional
and real estate net cash flow
- Principal International (PI) AUM of $179 billion increased 7%
over first quarter 2023; $1 billion of positive net cash flow
- Specialty Benefits premium and fees increased 8% from first
quarter 2023 driven by record sales along with employment and wage
growth
- Life Insurance business market premium and fees increased 23%
from first quarter 2023
- Strong investment performance4: 71% of Principal investment
options above median on a one-year basis, 57% on a three-year
basis, 73% on a five-year basis, and 82% on a ten-year basis;
additionally, 58% of fund-level AUM had a 4- or 5-star rating from
Morningstar5
Segment Results
In millions except percentages, or otherwise noted except
percentages or otherwise noted)
Retirement and Income Solutions
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating earnings6
$262.2
$249.8
5%
$1,063.8
$914.7
16%
Net revenue
$691.4
$650.1
6%
$2,731.6
$2,534.1
8%
Operating margin
37.9%
38.4%
38.9%
36.1%
- Pre-tax operating earnings increased $12.4 million
primarily due to higher net revenue partially offset by higher
operating expenses.
- Net revenue increased $41.3 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,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating earnings6
$113.9
$109.1
4%
$517.8
$569.7
(9)%
Operating revenues less pass-through
expenses7
$373.8
$361.5
3%
$1,501.2
$1,542.8
(3)%
Operating margin8
30.7%
30.5%
34.7%
37.2%
Total PGI assets under management
(billions)
$513.5
$478.7
7%
PGI sourced assets under management
(billions)
$261.5
$245.9
6%
- Pre-tax operating earnings increased $4.8 million
primarily due to higher operating revenues less pass-through
expenses partially offset by higher operating expenses.
- Operating revenues less pass-through expenses increased
$12.3 million primarily due to higher management fees on higher
average AUM.
Principal International
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating earnings
$73.2
$78.7
(7)%
$299.2
$309.8
(3)%
Combined net revenue (at PFG share)9
$231.3
$241.5
(4)%
$966.1
$937.2
3%
Operating margin10
31.6%
32.6%
31.0%
33.1%
Assets under management (billions)
$178.7
$167.1
7%
- Pre-tax operating earnings decreased $5.5 million
primarily due to lower combined net revenue.
- Combined net revenue (at PFG share) decreased $10.2
million primarily due to impacts of macroeconomic headwinds in Asia
and foreign currency translation.
Specialty Benefits
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating earnings
$102.0
$81.8
25%
$467.2
$430.3
9%
Premium and fees
$801.3
$742.1
8%
$3,114.2
$2,872.6
8%
Operating margin11
12.7%
11.0%
15.0%
15.0%
Incurred loss ratio
61.1%
62.5%
60.1%
60.2%
- Pre-tax operating earnings increased $20.2 million due
to growth in the business and lower incurred loss ratio.
- Premium and fees increased $59.2 million driven by
record sales along with employment and wage growth.
- Incurred loss ratio improved to 61% driven by more
favorable underwriting experience.
Life Insurance
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating earnings
$9.8
$17.5
(44)%
$82.9
$146.5
(43)%
Premium and fees
$234.0
$224.8
4%
$931.4
$814.8
14%
Operating margin
4.2%
7.8%
8.9%
18.0%
- Pre-tax operating earnings decreased $7.7 million
primarily due to a GAAP-only regulatory closed block dividend
adjustment.
- Premium and fees increased $9.2 million as strong
business market growth outpaced the runoff of the legacy
business.
Corporate
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
% Change
1Q24
1Q23
% Change
Pre-tax operating losses
$(88.9)
$(96.1)
7%
$(389.6)
$(436.5)
11%
Earnings Conference Call
On Friday, Apr. 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®12
Principal Financial Group® (Nasdaq: PFG) is a global financial
company with nearly 20,000 employees13 passionate about improving
the wealth and well-being of people and businesses. In business for
more than 140 years, we’re helping approximately 62 million
customers13 plan, insure, invest, and retire, while working to
improve our planet, support the communities where we do business,
and build a diverse, inclusive workforce. Principal® is proud to be
recognized as one of the 2023 World’s Most Ethical Companies14, a
member of the Bloomberg Gender Equality Index, and named as a “Best
Places to Work in Money Management15.” Learn more about Principal
and our commitment to sustainability, inclusion, and purpose at
principal.com.
Summary of Principal Financial Group® and Segment
Results
Principal Financial Group, Inc.
Results
(in millions)
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
1Q24
1Q23
Net income (loss) attributable to
PFG
$
532.5
$
(140.1
)
$
1,295.8
$
4,278.1
(Income) loss from exited business
(156.1
)
487.0
248.6
(2,816.7
)
Non-GAAP net income (loss) attributable
to PFG excluding exited business
$
376.4
$
346.9
$
1,544.4
$
1,461.4
Net realized capital (gains) losses, as
adjusted
17.9
19.9
85.9
127.0
Non-GAAP Operating Earnings*
$
394.3
$
366.8
$
1,630.3
$
1,588.4
Income taxes
77.9
74.0
411.0
346.1
Non-GAAP Pre-Tax Operating
Earnings
$
472.2
$
440.8
$
2,041.3
$
1,934.5
Segment Pre-Tax Operating Earnings
(Losses):
Retirement and Income Solutions
$
262.2
$
249.8
$
1,063.8
$
914.7
Principal Asset Management
187.1
187.8
817.0
879.5
Benefits and Protection
111.8
99.3
550.1
576.8
Corporate
(88.9
)
(96.1
)
(389.6
)
(436.5
)
Total Segment Pre-Tax Operating
Earnings
$
472.2
$
440.8
$
2,041.3
$
1,934.5
Per Diluted Share
Three Months Ended,
1Q24
1Q23
Net income (loss)
$
2.22
$
(0.58
)
(Income) loss from exited business
(0.64
)
1.97
Non-GAAP net income (loss) excluding
exited business
$
1.58
$
1.39
Net realized capital (gains) losses, as
adjusted
0.07
0.08
Impact of dilutive shares16
0.00
0.01
Non-GAAP Operating Earnings
$
1.65
$
1.48
Weighted-average diluted common shares
outstanding (in millions)
239.4
247.3
*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,
1Q24
4Q23
Total assets (in billions)
$
308.7
$
305.0
Stockholders’ equity (in millions)
$
11,230.4
$
10,961.7
Total common equity (in millions)
$
11,185.5
$
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)
$
12,640.9
$
12,735.4
End of period common shares outstanding
(in millions)
235.0
236.4
Book value per common share
$
47.60
$
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
$
53.79
$
53.87
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions, except as
indicated)
Period Ended,
1Q24
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
$
11,230.4
$
10,961.7
Noncontrolling interest
(44.9
)
(45.7
)
Stockholders’ equity available to common
stockholders
11,185.5
10,916.0
Cumulative change in fair value of funds
withheld embedded derivative
(2,183.5
)
(2,027.9
)
AOCI, other than foreign currency
translation adjustment
3,638.9
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
$
12,640.9
$
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
$
47.60
$
46.18
Cumulative change in fair value of funds
withheld embedded derivative and AOCI, other than foreign currency
translation adjustment
6.19
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
$
53.79
$
53.87
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
1Q24
1Q23
Income Taxes:
Total GAAP income taxes (benefit)
$
95.1
$
(78.0
)
$
241.8
$
1,076.3
Net realized capital gains (losses) tax
adjustments
11.1
8.2
24.9
46.7
Exited business tax adjustments
(41.5
)
121.3
75.3
(835.1
)
Income taxes related to equity method
investments and noncontrolling interest
13.2
22.5
69.0
58.2
Income taxes
$
77.9
$
74.0
$
411.0
$
346.1
Net Realized Capital Gains
(Losses):
GAAP net realized capital gains
(losses)
$
(0.9
)
$
(66.0
)
$
(7.1
)
$
(111.5
)
Market value adjustments to fee
revenues
-
-
1.3
0.7
Net realized capital gains (losses)
related to equity method investments
(10.3
)
0.2
(1.7
)
(11.2
)
Derivative and hedging-related revenue
adjustments
18.1
2.1
39.3
(57.2
)
Certain variable annuity fees
18.2
18.4
73.1
74.3
Sponsored investment funds and other
adjustments
5.9
6.1
23.2
22.5
Capital gains distributed – operating
expenses
(35.6
)
15.8
(77.7
)
59.8
Amortization of actuarial balances
(0.2
)
-
(0.4
)
(6.7
)
Derivative and hedging-related expense
adjustments
(1.3
)
-
0.5
-
Market value adjustments of embedded
derivatives
(4.1
)
3.0
(5.4
)
(21.5
)
Market value adjustments of market risk
benefits
3.3
(6.5
)
(61.5
)
(141.0
)
Capital gains distributed – cost of
interest credited
(24.7
)
2.6
(79.5
)
4.0
Net realized capital gains (losses) tax
adjustments
11.1
8.2
24.9
46.7
Net realized capital gains (losses)
attributable to noncontrolling interest, after-tax
2.6
(3.8
)
(14.9
)
14.1
Total net realized capital gains (losses)
after-tax adjustments
(17.0
)
46.1
(78.8
)
(15.5
)
Net realized capital gains (losses), as
adjusted
$
(17.9
)
$
(19.9
)
$
(85.9
)
$
(127.0
)
Income (Loss) from Exited
Business:
Pre-tax impacts of exited business:
Strategic review costs and impacts
$
-
$
-
$
-
$
40.4
Amortization of reinsurance gains
(losses)
(10.1
)
(22.1
)
(56.7
)
(78.8
)
Other impacts of reinsured business
(36.8
)
(40.6
)
(136.6
)
(166.4
)
Net realized capital gains (losses) on
funds withheld assets
47.5
81.0
131.5
830.4
Change in fair value of funds withheld
embedded derivative
197.0
(626.6
)
(262.1
)
3,026.2
Tax impacts of exited business
(41.5
)
121.3
75.3
(835.1
)
Total income (loss) from exited
business
$
156.1
$
(487.0
)
$
(248.6
)
$
2,816.7
Principal Financial Group,
Inc.
Reconciliation of U.S. GAAP to
Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve Months,
1Q24
1Q23
1Q24
1Q23
Principal Global Investors Operating
Revenues Less Pass-Through Expenses:
Operating revenues
$
404.8
$
392.7
$
1,623.3
$
1,672.9
Commissions and other expenses
(31.0
)
(31.2
)
(122.1
)
(130.1
)
Operating revenues less pass-through
expenses
$
373.8
$
361.5
$
1,501.2
$
1,542.8
Principal International Combined Net
Revenue (at PFG Share):
Pre-tax operating earnings
$
73.2
$
78.7
$
299.2
$
309.8
Combined operating expenses other than
pass-through commissions (at PFG share)
158.1
162.8
666.9
627.4
Combined net revenue (at PFG share)
$
231.3
$
241.5
$
966.1
$
937.2
____________________________________
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.
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.
4 Percentage of Principal actively managed
mutual funds, exchange traded funds (ETFs), insurance separate
accounts, and collective investment trusts (CITs), on an equal
weighted basis, in the top two Morningstar quartiles. Excludes
Money Market, Stable Value, Liability Driven Investment (Short,
Intermediate and Extended Duration), Hedge Fund Separate Account,
& U.S. Property Separate Account.
5 Includes only funds with ratings
assigned by Morningstar; non-rated funds excluded (85 total, 80 are
ranked).
6 Pre-tax operating earnings = operating
earnings before income taxes and after noncontrolling interest.
7 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.
8 Operating margin for PGI = pre-tax
operating earnings, adjusted for noncontrolling interest divided by
operating revenues less pass-through expenses.
9 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.
10 Operating margin for PI = pre-tax
operating earnings divided by combined net revenue (at PFG
share).
11 Operating margin for Benefits and
Protection = pre-tax operating earnings divided by premium and
fees.
12 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.
13 As of March 31, 2024
14 Ethisphere, 2023
15 Pensions & Investments, 2023
16 When a net loss is reported, our basic
weighted-average shares are used to calculate diluted earnings per
share, as dilutive shares would have an antidilutive effect and
result in a lower loss per share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425760999/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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