DES MOINES, Iowa--(BUSINESS WIRE)--Dec. 3, 2009--
Principal Financial Group, Inc. (NYSE:PFG) today announced its outlook
for 2010: operating earnings per diluted share (EPS) ranging from $2.45
to $2.75; and net income available to common stockholders per diluted
share ranging from $1.75 to $2.05.1,2,3,4
Guidance for 2010 incorporates certain assumptions, including: a 13 to
15 percent increase in average assets under management in 2010 compared
to 2009 based on an average S&P 500 Index of 1,150 in 2010; operating
losses for the Corporate segment of $90 million to $110 million; and no
share repurchase activity. Company guidance contemplates additional
scaling back of the Investment Only business during 2010, from its
present level of approximately 25 percent of general account liabilities
to approximately 20 percent by year-end 2010. Guidance also contemplates
a change in operating earnings for Principal International due to a
pending change in the company’s economic interest in its BrasilPrev
joint venture.5 Guidance does not contemplate any other
activity, other than where a definitive agreement has been signed by the
company and publicly announced.
The company also announced that it remains committed to its long-term
goals: average annual improvement in return on equity (ROE)6
of roughly 50 basis points; and 11 to 13 percent average annual growth
in EPS, reflecting the company’s outlook for continued strength in the
U.S. and international asset management and accumulation businesses.7
Forward looking and cautionary statements
This press release
contains forward-looking statements, including, without limitation,
statements as to operating earnings, net income available to common
stockholders, net cash flows, realized and unrealized losses, capital
and liquidity positions, sales and earnings trends, and management's
beliefs, expectations, goals and opinions. The company does not
undertake to update or revise these statements, which are based on a
number of assumptions concerning future conditions that may ultimately
prove to be inaccurate. Future events and their effects on the company
may not be those anticipated, and actual results may differ materially
from the results anticipated in these forward-looking statements. The
risks, uncertainties and factors that could cause or contribute to such
material differences are discussed in the company's annual report on
Form 10-K for the year ended December 31, 2008, and in company’s
quarterly report on Form 10-Q for the quarter ended September 30, 2009,
filed by the company with the Securities and Exchange Commission, as
updated or supplemented from time to time in subsequent filings. These
risks and uncertainties include, without limitation: adverse capital and
credit market conditions that may significantly affect the company’s
ability to meet liquidity needs, access to capital and cost of capital;
a continuation of difficult conditions in the global capital markets and
the general economy that may materially adversely affect the company’s
business and results of operations; the actions of the U.S. government,
Federal Reserve and other governmental and regulatory bodies for
purposes of stabilizing the financial markets might not achieve the
intended effect; the risk from acquiring new businesses, which could
result in the impairment of goodwill and/or intangible assets recognized
at the time of acquisition; impairment of other financial institutions
that could adversely affect the company; investment risks which may
diminish the value of the company’s invested assets and the investment
returns credited to customers, which could reduce sales, revenues,
assets under management and net income; requirements to post collateral
or make payments related to declines in market value of specified assets
may adversely affect company liquidity and expose the company to
counterparty credit risk; changes in laws, regulations or accounting
standards that may reduce company profitability; fluctuations in foreign
currency exchange rates that could reduce company profitability;
Principal Financial Group, Inc.’s primary reliance, as a holding
company, on dividends from its subsidiaries to meet debt payment
obligations and regulatory restrictions on the ability of subsidiaries
to pay such dividends; competitive factors; volatility of financial
markets; decrease in ratings; interest rate changes; inability to
attract and retain sales representatives; international business risks;
a pandemic, terrorist attack or other catastrophic event; and default of
the company’s re-insurers.
About the Principal Financial Group
The Principal Financial
Group® (The Principal ®)8 is a leader
in offering businesses, individuals and institutional clients a wide
range of financial products and services, including retirement and
investment services, life and health insurance, and banking through its
diverse family of financial services companies. A member of the Fortune
500, the Principal Financial Group has $280.4 billion in assets under
management9 and serves some 18.6 million customers worldwide
from offices in Asia, Australia, Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock
Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
1 Guidance speaks only as of the date it is made. The company
does not undertake to update annual guidance during the year, but may do
so if significant changes occur in general business conditions or
company operations.
2 EPS, which is not measured in accordance with U.S.
generally accepted accounting principles (U.S. GAAP), should not be
viewed as a substitute for net income available to common stockholders
(net income) per diluted share determined in accordance with U.S. GAAP.
EPS is calculated by dividing operating earnings by weighted average
shares outstanding. Operating earnings are determined by adjusting net
income for the effect of net realized capital gains and losses, as
adjusted, and other after-tax adjustments. After-tax adjustments have
occurred in the past and could recur in future reporting periods. While
these items may be significant components in understanding and assessing
the company's consolidated financial performance, management believes
the presentation of operating earnings per diluted share enhances the
understanding of results of operations by highlighting earnings
attributable to the normal, ongoing operations of the company's
businesses.
3 The range of $1.75 to $2.05 reflects the company's estimate
for 2010 mortgage and credit losses only. There are a number of items
the company does not predict that could significantly affect net income
per diluted share, including, but not limited to: mark-to-market on
derivatives; changes to laws, regulations, or accounting standards; and
gains or losses from discontinued operations.
4 The company’s estimate of mortgage and credit losses for
2010 ranges from 65 cents to 75 cents per diluted share. The company’s
outlook for net income per diluted share is based on the mid-point of
that range.
5 As announced on October 27, 2009, the company has signed a
Memorandum of Understanding with Banco do Brasil. Following completion
of all necessary approvals and transactions, the pension and long-term
asset accumulation joint venture in Brazil would be extended for 23
years and The Principal’s economic interest in the joint venture would
change to 25 percent, from 46 percent.
6 Operating return on average equity excluding accumulated
other comprehensive income, calculated over the trailing twelve month
period.
7 Long-term EPS and ROE targets assume domestic equity market
performance improvement of roughly two percent per quarter.
8 “The Principal Financial Group” and “The Principal” are
registered service marks of Principal Financial Services, Inc., a member
of the Principal Financial Group.
9 As of September 30, 2009
Source: Principal Financial Group, Inc.
Principal Financial Group, Inc.
Media Contact:
Jeff
Rader, 515-247-7883
rader.jeff@principal.com
or
Investor
Relations Contact:
Tom Graf, 515-235-9500
graf.tom@principal.com
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