Here’s a rundown on the changes of keenest interest to insurance advisors...
Principal Financial Group, Inc. announced results for first quarter 2014.
In a release on April 24, the company noted:
-Operating earnings increased 36 percent to $317.1 million for first quarter 2014, compared to $233.3 million for first quarter 2013. Operating earnings per diluted share (EPS) increased 34 percent to $1.06 for first quarter 2014, compared to $0.79 for first quarter 2013.
-Net income available to common stockholders for first quarter 2014 increased 65 percent to $293.7 million, or $0.95 per diluted share, compared to $178.3 million, or $0.61 per diluted share for first quarter 2013.
-Operating revenues for first quarter 2014 were $2,499.3 million, an increase of 12 percent, compared to $2,238.3 million for first quarter 2013.
-Quarterly dividend of $0.32 per share of common stock for second quarter 2014 authorized by its Board of Directors, a 14 percent increase over first quarter 2014. The dividend will be payable on June 27, to shareholders of record as of June 9.
"First quarter 2014 continued the strong business momentum from 2013, with record quarterly operating earnings, record assets under management and a 13 percent return on equity, which was a 90 basis point increase over year-end 2013," says Larry D. Zimpleman, chairman, president and chief executive officer. "We continue to benefit from the diversification of our business model as well as the successful execution of our investment management strategy, allowing us to meet the growing global need for financial security."
Added Terry Lillis, executive vice president and chief financial officer, "Our capital deployment strategy continues to be a clear differentiator and a priority as we further increase shareholder value. Today we're announcing a $0.32 common stock dividend payable in the second quarter, which is a 14 percent increase over the first quarter dividend. In addition, we bought back more than $72 million of shares in first quarter, reduced our debt leverage and continue to be in a strong financial position to consider further strategic acquisition opportunities. Our fee-based business model and financial flexibility are the key ingredients for continued success going forward."
-Retirement and Investor Services Accumulation sales were $7.8 billion in the first quarter. Highlights include $2.7 billion for Full Service Accumulation, $4.5 billion for Principal Funds and $0.6 billion for Individual Annuities. Full Service Accumulation recurring deposits were up 10 percent on a trailing twelve month basis.
-Principal Funds received a Lipper Fund Award for the Principal Global Real Estate Fund. This fund was named the best global real estate fund, out of 81 funds, over the five-year period for its consistently strong risk-adjusted performance.
-Principal Global Investors had record AUM of $297.9 billion, including net cash flows of $1.1 billion.
-Principal International reported net cash flows of $2.0 billion and record AUM of $109.1 billion (excluding $14.1 billion of AUM in our asset management joint venture in China, which is not reported in AUM), a 2 percent increase over the year ago quarter despite a strengthening U.S. dollar.
-Specialty Benefits premium and fees increased 5 percent over the year ago quarter and claims in the first quarter continue to be in line with our expectations.
-Record total company AUM of $495.5 billion, up 9 percent over the year ago quarter.
-Total company net cash flows for first quarter 2014 were $4.8 billion.
-Total company return on equity (ROE) excluding AOCI was 13.0 percent, a 320 basis point increase over 9.8 percent in first quarter 2013.
-Current quarter results benefited from strong prepayments and variable investment income.
-Strong capital position with a 2014 capital deployment target of $500 -$700 million.
-Paid a first quarter common stock dividend of $0.28 per share on March 28, an 8 percent increase over fourth quarter 2013, and announced a second quarter 2014 dividend of $0.32 per share.
-Repurchased 1.6 million shares of common stock in the first quarter at an average price of $45.48.
-Board authorized repurchase of up to $200 million of company's outstanding common stock.
-Book value per share, excluding AOCI was $30.81, up 6 percent over first quarter 2013.
-Net income available to common stockholders of $293.7 million for first quarter 2014, up 65 percent compared to first quarter 2013 reflecting:
-Total company operating earnings increased 36 percent compared to first quarter 2013;
-Net realized capital losses improved 59 percent to $22.9 million over first quarter 2013, which includes:
-$11.5 million of credit related net losses, related to sales and permanent impairments of fixed maturity securities, a 39 percent improvement compared to first quarter 2013. This includes $20.7 million of losses on commercial mortgage backed securities; and
-Losses on derivatives and related activities used for hedging financial risks.
Retirement and Investor Services - Accumulation3 (in millions except percentages or otherwise noted) Quarter Trailing Twelve Months 1Q14 1Q13 percent Change 1Q14 1Q13 percent Change Operating Earnings $184.5$141.8 30 percent Net Revenue $628.4$559.9 12 percent $2,404.6$2,110.5 14 percent Pretax Return on Net Revenue 34.0 percent 31.0 percent
32.5 percent 29.5 percent Pretax Return on Net Revenue for the trailing twelve months as of the first quarter 2013 was 30.6 percent after adjusting for the third quarter 2012 actuarial assumption review.
-Operating Earnings increased $42.7 million primarily due to an increase in net revenue and continued expense discipline, resulting in improved pretax margins. Full Service Accumulation benefited $15.0 million in first quarter 2014 and $8.4 million in first quarter 2013, predominately due to a true up on a prior-year dividend accrual. In addition, Principal Funds benefited $2.5 million from a legal settlement in first quarter 2013.
-Net Revenue increased $68.5 million, primarily due to an increase in account values driven by positive net cash flows and strong equity markets.
-Operating Earnings increased $3.8 million primarily due to a $6.0 million benefit from higher than expected variable investment income.
-Net Revenue increased $5.7 million primarily due to higher variable investment income.
-Operating Earnings increased $6.6 million primarily due to strong revenue growth and improved margins.
-Operating Revenue increased $17.4 million in first quarter 2014 as a result of higher management fees due to growth in AUM and higher borrower and transaction fees.
-Operating Earnings increased $18.7 million. Results benefited from the Cuprum acquisition but were negatively impacted by the strengthening of the U.S. dollar. Results from the prior year quarter were negatively impacted by $2.2 million due to tax on repatriated earnings from Hong Kong. On a local currency basis, normalized6 first quarter 2014 operating earnings grew 14 percent compared to the prior year quarter.
-Combined Net Revenue increased $39.4 million due to the acquisition of Cuprum and the growth in AUM from positive net cash flows.
Pretax Operating Margin for the trailing twelve months as of first quarter 2013 was 14.8 percent after adjusting for the third quarter 2012 actuarial assumption review.
-Operating Earnings increased $2.4 million. Results were negatively impacted by $4.0 million in first quarter 2014 and $6.0 million in first quarter 2013, both due to adverse mortality.
-Premium and Fees decreased $4.4 million due to lower sales in the current quarter.
Pretax Operating Margin for the trailing twelve months as of first quarter 2013 was 9.8 percent after adjusting for the third quarter 2012 actuarial assumption review.
-Operating Earnings increased $5.3 million due to lower expenses, higher investment income and growth in the business.
-Premium and Fees increased $18.4 million reflecting growth in the business and stable employment and salary trends.
-Incurred Loss Ratio continued to perform well and was in our targeted range.
The company's financial supplement for first quarter 2014 is currently available at principal.com/investor, and may be referred to during the call. Slides related to the call will be available at principal.com/investor approximately one-half hour prior to call start time.
The Principal Financial Group is a global investment management company offering retirement services, insurance solutions and asset management.
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