Principal Financial Net Income Soars In Second Quarter

By Cyril Tuohy

InsuranceNewsNet

Principal Financial Group reported that second quarter net income increased by 33 percent to $222.3 million, or 75 cents per share, from $167.6 million, or 56 cents per share, in the same period last year.

Larry D. Zimpleman, Principal chairman, president and chief executive, said strong sales, a booming stock market and tight expense control helped the company deliver a “great first half” in 2013.

A “diversified model” based on a broad business mix and a global footprint, “combined with our ability to execute on our investment management strategy, continues to position us for long-term growth,” he also said.

Total operating revenues rose to $2.31 billion from $2.13 billion in the year-ago period.

Zimpleman and Terry Lillis, Principal's chief financial officer, said the company was also benefitting from moving its business model away from one based on interest income and toward more reliance on customer fees.

Principal has selectively expanded into foreign markets over the past few years. The company’s latest performance affirms its balanced efforts at growth, the executives said in a conference call with investors and analysts.

Operating earnings rose across four of the company’s six lines of business: retirement services, global investment services, international businesses and specialty benefits, but fell in its life insurance and corporate business.

But even in the company’s individual life businesses, where operating earnings dropped 22 percent to $21.5 million compared to the year-ago quarter, premiums and fees were up 5 percent to $226.5 million, the company said.

Premium and fees in the company’s specialty business were up 3 percent to $372.43 million, the company reported.

Operating losses connected to expenses associated with Cuprum, a manager of pension funds in Chile which Principal bought last year, were $35.4 million, a 15 percent increase from the year-ago period, the company also said.

Not only have operating earnings and net income returned to levels close to before the financial crisis but the company has achieved a better sales balance across small, medium and large retirement plans, Zimpleman said.

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].

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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].