Principal 3Q Income Rises, Ameriprise Profit Sinks

Analysts expect this quarter’s earnings to be difficult for life insurers as a rough stock market, low interest rates and a strong dollar affect carriers doing business abroad. The headwinds have caused some analysts to trim their earnings estimates for life carriers by 3 percent.

Here is a rundown on how two financial services companies performed in the third quarter.

Principal Net Income Rises 25% on Earnings Miss

Principal Financial Group reported increases in both net income and revenue in the third quarter. Principal reported a third-quarter net income of $300.4 million, an increase of 25 percent over the year-ago period. The company also reported revenues of $3.2 billion, an increase of 27 percent from the year-ago period.

Third-quarter operating earnings were $317 million, or $1.06 per diluted share, compared with $353.7 million, or $1.19 per share, in the year-ago period. Eight analysts surveyed by Zacks Equity Research forecast operating earnings of $1.07 per share.

“Despite challenging operating conditions, we continue to benefit from the diversification of our businesses and our competitive position around the world,” Dan Houston, the Principal president and CEO, said in a statement.

Expenses rose to $2.8 billion, a 37 percent increase compared with the year-ago period. The company said this was due to higher benefits, claims, settlement expenses, commissions and compensation.

Third-quarter operating earnings in individual life rose 40 percent to $72.9 million compared with the year-ago period. Operating earnings from specialty benefits rose 34 percent to $41.6 million compared with the year-ago period, the company also reported.

The company’s board of directors authorized a $150 million share repurchase program and a fourth-quarter 2015 dividend of 38 cents per share of common stock.

This marks the first earnings report issued since Houston began his duties as CEO. He assumed the top spot in the company in August, taking over from long-time CEO Larry Zimpleman.

Houston said he was “excited to lead The Principal as we continue to extend our leadership positions in key global markets, delivering market-driven retirement, investment management and protection solutions to customers around the world.”

Ameriprise Profit Sinks on Earnings Beat

Ameriprise Financial Services reported third-quarter net income of $397 million, a drop of 5 percent compared with the year-ago period.

Revenues came to $2.9 billion, a 1 percent drop compared with the year-ago period. The company said this was due to the impact of foreign exchange and volatile equity markets on variable annuity guaranteed benefits, index universal life benefits and investment hedges.

The company reported a profit of $2.17 per share. Operating earnings, adjusted for nonrecurring and amortization costs, came to $2.35 per share, beating the average forecast of five Zacks Investment Research analysts by a penny.

“Ameriprise had a solid third quarter given the backdrop of declining and volatile equity markets, unfavorable foreign exchange and persistently low interest rates,” Jim Cracchiolo, chairman and CEO, said in a news release.

The company’s Advice and Wealth Management segment recruited 95 experienced advisors during the quarter. This segment saw operating net revenues grow 3 percent to 1.2 billion, due to the growth of fee-based accounts, the company said.

There are 9,814 individual advisors working at the company. Operating net revenue per advisor on a trailing 12-month basis is $514,000, the company also said.

Several life and annuity holding companies including Torchmark, CNO Financial, Aflac and Lincoln Financial report third quarter earnings next week.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].