Record assets under management of $327.4 billion at the end of first
quarter 2011, an increase of 12 percent compared to first quarter 2010.
DES MOINES, Iowa, May 02, 2011 (BUSINESS WIRE) --
Principal Financial Group, Inc. (NYSE: PFG) today announced results for
first quarter 2011. The company reported operating earnings1
of $231.8 million for first quarter 2011, compared to $221.4 million for
first quarter 2010. Operating earnings per diluted share (EPS) were
$0.71 for first quarter 2011, compared to $0.69 for first quarter 2010.
The company reported net income available to common stockholders of
$196.3 million, or $0.60 per diluted share for first quarter 2011,
compared to $190.8 million, or $0.59 per diluted share for first quarter
2010. Operating revenues for first quarter 2011 were $2,046.7 million
compared to $1,972.5 million for the same period last year.
"The Principal(R) had a very solid start to 2011, including
record total company assets under management, record Principal Funds
sales and strong net cash flows from Principal International, Full
Service Accumulation and Principal Funds," said Larry D. Zimpleman,
chairman, president and chief executive officer of Principal Financial
Group, Inc. "With the continued successful execution of our strategy and
signs of a recovering economy, we expect growth across our businesses to
accelerate in the quarters ahead."
"Because of our strong financial position and flexibility going into the
year, we have the opportunity to further increase shareholder value
through capital deployment," said Zimpleman. "Since year end, we've
announced two acquisitions, the HSBC AFORE and Finisterre Capital. These
businesses complement our strategy, provide additional scale and fit
nicely within our existing infrastructure, which gives us potential for
substantial synergies. We're also excited about additional opportunities
in 2011 to deploy capital as we continue to execute our strategy."
"In the first quarter we delivered strong operating results on
double-digit earnings growth from Principal Global Investors, Principal
Funds, Individual Annuities and U.S. Insurance Solutions," said Terry
Lillis, senior vice president and chief financial officer. "Across our
business lines we're seeing momentum continue to build, reflecting
demand for our unique solutions and success of our multi-product,
multi-channel distribution platform."
"Our investment portfolio continues to perform better than expected,"
added Lillis. "In addition, we are encouraged by the demand for many of
the investment strategies where Principal Global Investors has a proven
track record such as real estate, emerging markets and high yield."
1 Use of non-GAAP financial measures is discussed in this
release after Segment Highlights
Key Highlights
-
Excellent sales in the company's three key U.S. Retirement and
Investor Services products in the first quarter, with $2.0 billion for
Full Service Accumulation, $2.9 billion for Principal Funds and $345
million for Individual Annuities.
-
Net cash flows of $870 million for Full Service Accumulation and $620
million for Principal Funds.
-
Continued strong operating leverage in Principal Global Investors with
38 percent growth in first quarter 2011 operating earnings over first
quarter 2010 on 6 percent growth in average assets under management.
-
Principal International reported record assets under management of
$48.5 billion, excluding China, as of March 31, 2011, and net cash
flows of $1.3 billion for the quarter.
-
Record Specialty Benefits sales of $113 million for the quarter and a
35 percent increase in Individual Life sales over the prior year
quarter.
-
Strong capital position with an estimated risk based capital ratio of
425 percent at quarter end and approximately $1.9 billion of excess
capital.2
-
Book value per share, excluding AOCI3 increased to a record
high of $28.38, up 6 percent over first quarter 2010.
-
Named by Barron's as the #3 rated Fund Family for investment
performance across all asset categories in 2010 and #7 for the last
decade.
-
Named Investment Brand of The Year in the 2011 Harris Poll EquiTrend(R)
Study.*
Net Income
Net income available to common stockholders of
$196.3 million for first quarter 2011 reflects net realized capital
losses of $52.6 million, which include:
-
$32.7 million of losses related to credit gains and losses on sales
and permanent impairments of fixed maturity securities, including
$21.3 million of losses on commercial mortgage backed securities; and
-
$5.1 million of losses on commercial mortgage whole loans.
Segment Highlights
Retirement and Investor Services
Segment operating earnings
for first quarter 2011 were $159.3 million, compared to $157.0 million
for the same period in 2010. Full Service Accumulation earnings were
$76.0 million for first quarter 2011 as compared to $76.3 million for
first quarter 2010. A 13 percent increase in average account values was
substantially offset by a lower dividends received deduction accrual
true-up than a year ago quarter and higher deferred policy acquisition
cost (DPAC) amortization expense. Principal Funds earnings increased 18
percent from a year ago to $12.0 million, primarily due to a 19 percent
increase in average account values. Individual Annuities earnings were
$37.3 million compared to $30.8 million for first quarter 2010. The
variance primarily reflects favorable investment income in the quarter
and record account values. The accumulation businesses4 had
record account values of $166.6 billion at March 31, 2011.
2 Excess capital includes cash at the holding company and
capital at the life company above that needed to maintain a 350 percent
NAIC risk based capital ratio for the life company.
3
Accumulated Other Comprehensive Income
4 Full Service
Accumulation, Principal Funds, Individual Annuities and Bank and Trust
Services
Operating revenues for first quarter 2011 were $1,017.8 million compared
to $1,012.7 million for the same period in 2010, primarily due to higher
revenues for the accumulation businesses, which improved $51.7 million,
or 7 percent, from a year ago.
Segment assets under management were $181.5 billion as of March 31,
2011, compared to $165.9 billion as of March 31, 2010.
Principal Global Investors
Segment operating earnings for
first quarter 2011 were $16.6 million, compared to $12.0 million in the
prior year quarter, primarily due to an increase in assets under
management.
Operating revenues for first quarter were $125.3 million, compared to
$113.8 million for the same period in 2010, primarily due to higher
management fees and transaction fees.
Unaffiliated assets under management were $78.1 billion as of March 31,
2011, compared to $74.9 billion as of March 31, 2010.
Principal International
Segment operating earnings were
$28.5 million in first quarter 2011, compared to $37.9 million in the
prior year quarter, reflecting a reduced economic interest in our
Brazilian joint venture.
Operating revenues were $206.2 million for first quarter 2011, compared
to $181.1 million for the same period last year, primarily due to growth
in assets under management.
Segment assets under management were a record $48.5 billion as of March
31, 2011 ($7.7 billion of assets in our joint venture in China are not
included in reported assets under management), up from $35.7 billion as
of March 31, 2010. This includes a record $5.6 billion of net cash flows
over the trailing twelve months, or 16 percent of beginning of period
assets under management.
U.S. Insurance Solutions
Segment operating earnings for
first quarter 2011 were $59.5 million, compared to $44.1 million for the
same period in 2010. Individual Life earnings were $36.5 million in the
first quarter, compared to $30.5 million in first quarter 2010,
primarily due to improved mortality experience. Specialty Benefits
earnings were $23.0 million in first quarter 2011, up from $13.6 million
in the same period a year ago, primarily due to improved claims
experience and investment performance.
Segment operating revenues for first quarter 2011 were $731.2 million
compared to $692.1 million for the same period a year ago, with stronger
non-qualified life insurance sales and positive trends in sales, lapses
and employment in Specialty Benefits.
Corporate
Operating losses for first quarter 2011 were $32.1
million compared to operating losses of $29.6 million in first quarter
2010.
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 gains and losses,
capital and liquidity positions, sales and earnings trends, and
management's beliefs, expectations, goals and opinions. The company does
not undertake to update 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 Dec. 31, 2010, 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 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.
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 toongoing operations. However, it is possible these adjusting items
have occurred in the past and could recur in the 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.
Earnings Conference Call
On Tuesday, May 3, 2011 at 10:00
a.m. (ET), Chairman, President and Chief Executive Officer Larry
Zimpleman and Senior Vice President and Chief Financial Officer Terry
Lillis will lead a discussion of results, asset quality and capital
adequacy during a live conference call, which can be accessed as follows:
-
Via live Internet webcast. Please go to www.principal.com/investor
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 800-374-1609 (U.S. and Canadian callers) or
706-643-7701 (International callers) approximately 10 minutes prior to
the start of the call. The access code is 54521548.
-
Replay of the earnings call via telephone is available by dialing
800-642-1687 (U.S. and Canadian callers) or 706-645-9291
(International callers). The access code is 54521548. This replay will
be available approximately two hours after the completion of the live
earnings call through the end of day May 10, 2011.
-
Replay of the earnings call via webcast as well as a transcript of the
call will be available after the call at: www.principal.com/investor.
The company's financial supplement and additional investment portfolio
detail for first quarter 2011 is currently available at www.principal.com/investor,
and may be referred to during the call.
About the Principal Financial Group
The Principal Financial
Group(R) (The Principal (R))5 is a leader
in offering businesses, individuals and institutional clients a wide
range of financial products and services, including retirement and
investment services, insurance, and banking through its diverse family
of financial services companies. A member of the Fortune 500, the
Principal Financial Group has $327.4 billion in assets under management6
and serves some 16.4 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.
*The Principal Financial Group received the highest numerical Equity
Score among Investment brands included in the 2011 Harris Poll EquiTrend(R)
Study, which is based on opinions of 25,099 U.S. consumers ages 15
and over surveyed online between January 11 and 27, 2011. Your opinion
may differ. "Highest Ranked" was determined by a pure ranking of a
sample of Investment brands.
5 "The Principal Financial Group" and "The
Principal" are registered service marks of Principal Financial Services,
Inc., a member of the Principal Financial Group.
6 As of
March 31, 2011
Summary of Segment and Principal Financial Group, Inc. Results
|
|
|
|
Segment
|
|
|
|
Operating Earnings (Loss)* in millions
|
|
Three Months Ended, |
|
03/31/11
|
|
03/31/10
|
| Retirement and Investor Services |
|
$159.3
|
|
$157.0
|
|
| Principal Global Investors |
|
16.6
|
|
12.0
|
|
| Principal International |
|
28.5
|
|
37.9
|
|
| U.S. Insurance Solutions |
|
59.5
|
|
44.1
|
|
| Corporate |
|
(32.1
|
)
|
(29.6
|
)
|
| Operating Earnings |
|
231.8 |
|
221.4 |
|
| Net realized capital losses, as adjusted |
|
(52.6
|
)
|
(56.7
|
)
|
| Other after-tax adjustments |
|
17.1
|
|
26.1
|
|
| Net income available to common stockholders |
|
$196.3 |
|
$190.8 |
|
|
|
|
|
Per Diluted Share |
|
Three Months Ended, |
|
03/31/11
|
|
03/31/10
|
| Operating Earnings |
|
$0.71 |
|
$0.69 |
|
| Net realized capital losses, as adjusted |
|
(0.16
|
)
|
(0.18
|
)
|
| Other after-tax adjustments |
|
0.05
|
|
0.08
|
|
| Net income available to common stockholders |
|
$0.60 |
|
$0.59 |
|
| Weighted-average diluted common shares outstanding |
|
324.7 |
|
322.1 |
|
|
|
|
|
|
|
*Operating earnings versus U.S. GAAP (GAAP) net income available to
common stockholders
Management uses operating earnings, which
excludes the effect of net realized capital gains and losses, as
adjusted, and other after-tax adjustments, for goal setting, as a basis
for determining employee compensation, and evaluating performance on a
basis comparable to that used by investors and securities analysts.
Segment operating earnings are determined by adjusting U.S. GAAP net
income available to common stockholders for net realized capital gains
and losses, as adjusted, and other after-tax adjustments the company
believes are not indicative of overall operating trends. 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 segment operating
earnings enhances the understanding of results of operations by
highlighting earnings attributable to the normal, ongoing operations of
the company's businesses.
| Principal Financial Group, Inc. |
| Results of Operations |
| (in millions) |
|
|
|
|
|
Three Months Ended, |
|
|
3/31/11 |
|
3/31/10 |
|
Premiums and other considerations
|
|
$
|
571.2
|
|
|
$
|
550.0
|
|
|
Fees and other revenues
|
|
|
593.6
|
|
|
|
540.7
|
|
|
Net investment income
|
|
|
881.9
|
|
|
|
881.8
|
|
| Total operating revenues |
|
|
2,046.7
|
|
|
|
1,972.5
|
|
|
|
|
|
|
|
Benefits, claims and settlement expenses
|
|
|
1,018.5
|
|
|
|
1,039.1
|
|
|
Dividends to policyholders
|
|
|
53.6
|
|
|
|
56.5
|
|
|
Commissions
|
|
|
149.7
|
|
|
|
139.6
|
|
|
Capitalization of DPAC
|
|
|
(127.0
|
)
|
|
|
(123.8
|
)
|
|
Amortization of DPAC
|
|
|
81.2
|
|
|
|
60.3
|
|
|
Depreciation and amortization
|
|
|
20.0
|
|
|
|
18.6
|
|
|
Interest expense on corporate debt
|
|
|
30.5
|
|
|
|
29.4
|
|
|
Compensation and other
|
|
|
501.6
|
|
|
|
464.8
|
|
| Total expenses |
|
|
1,728.1
|
|
|
|
1,684.5
|
|
|
|
|
|
|
|
Operating earnings before tax, noncontrolling interest and
preferred
stock dividends
|
|
|
318.6
|
|
|
|
288.0
|
|
|
Less:
|
|
|
|
|
|
Income tax
|
|
|
77.5
|
|
|
|
57.8
|
|
|
Operating earnings attributable to noncontrolling interest
|
|
|
1.1
|
|
|
|
0.6
|
|
|
Preferred stock dividends
|
|
|
8.2
|
|
|
|
8.2
|
|
| Operating earnings |
|
$
|
231.8
|
|
|
$
|
221.4
|
|
|
|
|
|
|
|
Net realized capital losses, as adjusted
|
|
|
(52.6
|
)
|
|
|
(56.7
|
)
|
|
Other after-tax adjustments
|
|
|
17.1
|
|
|
|
26.1
|
|
| Net income available to common stockholders |
|
$
|
196.3
|
|
|
$
|
190.8
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Statistics
|
|
|
|
|
|
Period Ended, |
|
3/31/11
|
|
|
|
12/31/10
|
|
|
|
3/31/10
|
|
Total assets (in billions)
|
|
$
|
147.5
|
|
|
|
$
|
145.6
|
|
|
|
$
|
140.8
|
|
Total common equity (in millions)
|
|
$
|
9,645.6
|
|
|
|
$
|
9,185.8
|
|
|
|
$
|
8,013.6
|
|
Total common equity excluding accumulated other comprehensive
income (in millions)
|
|
$
|
9,120.1
|
|
|
|
$
|
8,913.4
|
|
|
|
$
|
8,591.5
|
|
End of period common shares outstanding (in millions)
|
|
|
321.3
|
|
|
|
|
320.4
|
|
|
|
|
319.7
|
|
Book value per common share
|
|
$
|
30.02
|
|
|
|
$
|
28.67
|
|
|
|
$
|
25.07
|
|
Book value per common share excluding accumulated other
comprehensive income
|
|
$
|
28.38
|
|
|
|
$
|
27.82
|
|
|
|
$
|
26.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Principal Financial Group, Inc. |
| Reconciliation of Non-GAAP Financial Measures to U.S. GAAP |
| (in millions, except as indicated) |
|
|
|
|
|
Three Months Ended, |
|
|
3/31/11 |
|
3/31/10 |
| Diluted Earnings Per Common Share: |
|
|
|
|
|
Operating earnings
|
|
0.71
|
|
|
0.69
|
|
|
Net realized capital losses
|
|
(0.16
|
)
|
|
(0.18
|
)
|
|
Other after-tax adjustments
|
|
0.05
|
|
|
0.08
|
|
|
Net income available to common stockholders
|
|
0.60
|
|
|
0.59
|
|
|
|
|
|
|
| Book Value Per Common Share Excluding Accumulated Other
Comprehensive Income: |
|
|
|
|
|
Book value per common share excluding accumulatedother
comprehensive income
|
|
28.38
|
|
|
26.87
|
|
|
Net unrealized capital gains (losses)
|
|
1.91
|
|
|
(0.57
|
)
|
|
Foreign currency translation
|
|
0.16
|
|
|
(0.02
|
)
|
|
Net unrecognized postretirement benefit obligations
|
|
(0.43
|
)
|
|
(1.21
|
)
|
|
Book value per common share including accumulatedother
comprehensive income
|
|
30.02
|
|
|
25.07
|
|
|
|
|
|
|
| Operating Revenues: |
|
|
|
|
|
RIS
|
|
1,017.8
|
|
|
1,012.7
|
|
|
PGI
|
|
125.3
|
|
|
113.8
|
|
|
PI
|
|
206.2
|
|
|
181.1
|
|
|
USIS
|
|
731.2
|
|
|
692.1
|
|
|
Corporate
|
|
(33.8
|
)
|
|
(27.2
|
)
|
|
Total operating revenues
|
|
2,046.7
|
|
|
1,972.5
|
|
|
Net realized capital losses and related adjustments
|
|
(81.8
|
)
|
|
(69.8
|
)
|
|
Exited businesses
|
|
254.9
|
|
|
361.3
|
|
|
Total GAAP revenues
|
|
2,219.8
|
|
|
2,264.0
|
|
|
|
|
|
|
| Operating Earnings: |
|
|
|
|
|
RIS
|
|
159.3
|
|
|
157.0
|
|
|
PGI
|
|
16.6
|
|
|
12.0
|
|
|
PI
|
|
28.5
|
|
|
37.9
|
|
|
USIS
|
|
59.5
|
|
|
44.1
|
|
|
Corporate
|
|
(32.1
|
)
|
|
(29.6
|
)
|
|
Total operating earnings
|
|
231.8
|
|
|
221.4
|
|
|
Net realized capital losses
|
|
(52.6
|
)
|
|
(56.7
|
)
|
|
Other after-tax adjustments
|
|
17.1
|
|
|
26.1
|
|
|
Net income available to common stockholders
|
|
196.3
|
|
|
190.8
|
|
|
|
|
|
|
| Net Realized Capital Gains (losses): |
|
|
|
|
|
Net realized capital losses, as adjusted
|
|
(52.6
|
)
|
|
(56.7
|
)
|
|
Periodic settlements and accruals on non-hedge derivatives
|
|
22.3
|
|
|
24.7
|
|
|
Amortization of DPAC and sale inducement costs
|
|
(25.6
|
)
|
|
14.8
|
|
|
Certain market value adjustments of embedded derivatives
|
|
(3.8
|
)
|
|
(2.2
|
)
|
|
Capital gains distributed
|
|
8.7
|
|
|
2.0
|
|
|
Tax impacts
|
|
(26.1
|
)
|
|
(31.2
|
)
|
|
Noncontrolling interest capital gains (losses)
|
|
17.5
|
|
|
4.0
|
|
|
Recognition of front-end fee revenues
|
|
1.5
|
|
|
(0.4
|
)
|
|
Capital gains (losses) associated with exited medical business
|
|
0.1
|
|
|
(0.5
|
)
|
|
GAAP net realized capital losses
|
|
(58.0
|
)
|
|
(45.5
|
)
|
|
|
|
|
|
| Other After Tax Adjustments: |
|
|
|
|
|
Earnings associated with exited businesses
|
|
17.1
|
|
|
33.9
|
|
|
Tax impact of healthcare reform
|
|
-
|
|
|
(7.8
|
)
|
|
Total other after-tax adjustments
|
|
17.1
|
|
|
26.1
|
|
SOURCE: Principal Financial Group, Inc.
Principal Financial Group, Inc.
Media contact:
Susan Houser, 515-248-2268
houser.susan@principal.com
or
Investor contact:
John Egan, 515-235-9500
egan.john@principal.com
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