Principal Financial Group® Announces First Quarter 2022 Results
Company also announces common stock dividend
Company Highlights
-
First quarter 2022 net income attributable to
Principal Financial Group ®, Inc. (PFG) of$376 million , or$1.43 per diluted share. -
First quarter 2022 non-GAAP operating earnings1 of
$429 million , or$1.63 per diluted share. -
Returned
$891 million of capital to shareholders in first quarter, including$724 million in share repurchases and$167 million of common stock dividends. -
Company declared second quarter 2022 common stock dividend of
$0.64 per share. -
Assets under management (AUM) of
$714 billion managed by PFG, which is included in assets under administration (AUA) of$1.6 trillion .
-
Net income attributable to PFG for first quarter 2022 of
$376.2 million , compared to$517.1 million for first quarter 2021. Net income per diluted share of$1.43 for first quarter 2022 compared to$1.87 in the prior year quarter. -
Non-GAAP operating earnings for first quarter 2022 of
$428.8 million , compared to$423.5 million for first quarter 2021. Non-GAAP operating earnings per diluted share of$1.63 for first quarter 2022 compared to$1.53 in the prior year quarter. -
Quarterly common stock dividend of
$0.64 per share for second quarter 2022 was authorized by the company’s Board of Directors, bringing the trailing twelve-month dividend to$2.55 per share, an 11% increase compared to the prior year trailing twelve-month period. The dividend will be payable onJune 24, 2022 , to shareholders of record as ofJune 2, 2022 .
“Strong underlying fundamentals and a sharp focus on our growth drivers drove a solid start to the year despite significant market volatility and geopolitical uncertainty,” said
First quarter highlights
-
Returned
$891.4 million of capital to shareholders during the first quarter, including:-
$167.0 million of common stock dividends with the$0.64 per share common dividend paid in the first quarter; and -
$724.4 million to repurchase 10.8 million shares of common stock.
-
-
Retirement and Income Solutions (RIS) – Fee recurring deposits increased nearly 60% over the first quarter of 2021, including a 17% increase on our legacy block in addition to deposits from the
Institutional Retirement and Trust (IRT) retirement participants. -
Principal Global Investors (PGI) net cash flow of$3.2 billion . -
Principal International reported total AUM of$163.5 billion . Reported AUM does not include$193.1 billion of AUM inChina . - Specialty Benefits premium and fees2 increased 10% from record sales, strong retention and employment growth.
- Investment performance3 - 46% of Principal investment options above median on a one-year basis, 69% on a three-year basis, 82% on a five-year basis, and 79% on a ten-year basis. Additionally, 66% of fund-level AUM had a 4 or 5 star rating from Morningstar.
Strong financial position
-
$1.7 billion of excess and available capital in our holding companies and other subsidiaries, which is available for corporate purposes.-
Plan to grade excess capital at the holding company down to our
$800 million target during 2022 while maintaining a 20-25% leverage ratio.
-
Plan to grade excess capital at the holding company down to our
-
Statutory risk-based capital (RBC) ratio for
Principal Life Insurance Company was estimated to be in line with our 400% target.
Segment Results
Retirement and Income Solutions - Fee
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
|||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
% Change |
||||
Pre-tax operating earnings4 |
|
|
4% |
|
|
(16)% |
|||
Net revenue5 |
|
|
4% |
|
|
2% |
|||
Pre-tax return on net revenue6 |
21.1% |
21.1% |
19.6% |
23.9% |
-
Pre-tax operating earnings increased
$4.5 million due to higher net revenue and disciplined expense management partially offset by higher deferred acquisition costs (DAC) amortization expense. -
Net revenue increased
$19.3 million primarily due to favorable equity markets and revenue from the Principal Deposit Sweep program.
Retirement and Income Solutions - Spread
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
% Change |
|||||
Pre-tax operating earnings |
|
|
14% |
|
|
35% |
||||
Net revenue |
|
|
7% |
|
|
30% |
||||
Pre-tax return on net revenue |
83.9% |
79.0% |
|
81.2% |
78.4% |
-
Pre-tax operating earnings increased
$25.4 million primarily due to higher net revenue and lower operating expenses. -
Net revenue increased
$17.1 million primarily due to growth in the business and higher net investment income.
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
||||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
%Change |
|||||||
Pre-tax operating earnings |
|
|
2% |
|
|
31% |
||||||
Operating revenues less pass-through expenses7 |
|
|
6% |
|
|
20% |
||||||
Pre-tax return on operating revenues less pass-through expenses |
36.5% |
37.9% |
|
42.4% |
38.8% |
|||||||
Total PGI assets under management (billions) |
|
|
6% |
|||||||||
PGI sourced assets under management (billions) |
|
|
6% |
-
Pre-tax operating earnings increased
$2.3 million due to higher operating revenues less pass-through expenses, partially offset by higher operating expenses. -
Operating revenues less pass-through expenses increased
$20.9 million primarily due to growth in management fees resulting from an increase in AUM.
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months |
|||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
% Change |
||||||
Pre-tax operating earnings |
|
|
(23)% |
|
|
1% |
|||||
Combined net revenue (at PFG share) 8 |
|
|
(7)% |
|
|
9% |
|||||
Pre-tax return on combined net revenue (at PFG share) |
27.2% |
32.8% |
|
30.5% |
32.9% |
|
|||||
Assets under management (billions) |
|
|
2% |
|
|
|
-
Pre-tax operating earnings decreased
$17.0 million primarily due to lower combined net revenue. -
Combined net revenue (at PFG share) decreased
$15.2 million due to unfavorable impacts from encaje performance and the regulatory fee reduction inMexico , partially offset by higher variable investment income inChile and favorable impacts from inflation.
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
|||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
% Change |
||||||
Pre-tax operating earnings |
|
|
29% |
|
|
4% |
|||||
Premium and fees |
|
|
10% |
|
|
9% |
|||||
Pre-tax return on premium and fees9 |
11.3% |
9.6% |
|
10.5% |
11.1% |
|
|||||
Incurred loss ratio |
64.3% |
65.9% |
|
64.6% |
63.7% |
|
-
Pre-tax operating earnings increased
$17.0 million due to growth in the business, improved claim experience and disciplined expense management. -
Premium and fees increased
$60.5 million due to record sales, strong retention and employment growth. - Incurred loss ratio decreased due to improved claims experience driven by dental.
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
||||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
1Q21 |
%Change |
|||||||
Pre-tax operating earnings (losses) |
|
|
10% |
|
|
NM |
||||||
Premium and fees |
|
|
0% |
|
|
1% |
||||||
Pre-tax return on premium and fees |
12.0% |
10.9% |
|
17.4% |
(4.6)% |
|
-
Pre-tax operating earnings increased
$3.6 million from higher net investment income and favorable non-COVID claims, partially offset by higher COVID-19 related claims. -
Premium and fees decreased
$0.9 million .
Corporate
(in millions except percentages or otherwise noted) |
Quarter |
Trailing Twelve Months
|
||||||||||
1Q22 |
1Q21 |
% Change |
1Q22 |
|
1Q21 |
% Change |
||||||
Pre-tax operating losses |
|
|
(38)% |
|
|
(23)% |
-
Pre-tax operating losses increased
$35.2 million primarily due to unfavorable variable investment income and higher operating expenses.
Forward-looking and cautionary statements
Certain statements made by the company which are not historical facts may be considered forward-looking statements, including, without limitation, statements as to non-GAAP operating earnings, net income attributable to PFG, net cash flow, 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
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
Earnings conference call
On
- Via live Internet webcast. Please go to 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 833-875-0582 (
U.S. and Canadian callers) or 216-562-0095 (international callers) approximately 10 minutes prior to the start of the call. -
Replay of the earnings call via telephone is available by dialing 855-859-2056 (
U.S. and Canadian callers) or 404-537-3406 (international callers). The access code is 1872237. This replay will be available approximately two hours after the completion of the live earnings call through the end of dayMay 6, 2022 . - Replay of the earnings call via webcast as well as a transcript of the call will be available after the call at principal.com/investor.
The company’s financial supplement and slide presentation is currently available at principal.com/investor, and may be referred to during the call.
###
Summary of
|
(in millions) |
|||||||||||
Three Months Ended, |
Trailing Twelve Months, |
|||||||||||
|
|
|
|
|||||||||
Net income attributable to PFG |
$ |
376.2 |
|
$ |
517.1 |
|
$ |
1,569.7 |
|
$ |
1,624.0 |
|
Net realized capital (gains) losses, as adjusted |
|
52.6 |
|
|
(93.6 |
) |
|
283.2 |
|
|
(153.7 |
) |
Non-GAAP Operating Earnings* |
$ |
428.8 |
|
$ |
423.5 |
|
$ |
1,852.9 |
|
$ |
1,470.3 |
|
Income taxes |
|
77.4 |
|
|
82.1 |
|
|
409.1 |
|
|
286.2 |
|
Non-GAAP Pre-Tax Operating Earnings |
$ |
506.2 |
|
$ |
505.6 |
|
$ |
2,262.0 |
|
$ |
1,756.5 |
|
|
|
|
|
|
||||||||
Segment Pre-Tax Operating Earnings (Losses): |
|
|
|
|
||||||||
Retirement and Income Solutions |
$ |
317.9 |
|
$ |
288.0 |
|
$ |
1,171.1 |
|
$ |
1,049.8 |
|
|
|
143.4 |
|
|
141.1 |
|
|
710.7 |
|
|
542.3 |
|
|
|
58.1 |
|
|
75.1 |
|
|
292.0 |
|
|
287.9 |
|
|
|
115.8 |
|
|
95.2 |
|
|
491.4 |
|
|
205.6 |
|
Corporate |
|
(129.0 |
) |
|
(93.8 |
) |
|
(403.2 |
) |
|
(329.1 |
) |
Total Segment Pre-Tax Operating Earnings |
$ |
506.2 |
|
$ |
505.6 |
|
$ |
2,262.0 |
|
$ |
1,756.5 |
|
|
Per Diluted Share |
||||
Three Months Ended, |
|||||
|
|
||||
Net income |
$ |
1.43 |
$ |
1.87 |
|
Net realized capital (gains) losses, as adjusted |
|
0.20 |
|
(0.35 |
) |
Adjustment for redeemable noncontrolling interest |
|
0.00 |
|
0.01 |
|
Non-GAAP Operating Earnings |
$ |
1.63 |
$ |
1.53 |
|
Weighted-average diluted common shares outstanding (in millions) |
|
263.8 |
|
276.0 |
|
*
Management uses non-GAAP operating earnings, which is a financial measure that excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are not indicative of overall operating trends, 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. 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 non-GAAP operating earnings enhances the understanding of results of operations by highlighting earnings attributable to the normal, ongoing operations of the company’s businesses.
Selected Balance Sheet Statistics |
|||||
|
Period Ended, |
||||
|
|
||||
Total assets (in billions) |
$ |
291.5 |
$ |
304.7 |
|
Stockholders’ equity (in millions) |
$ |
11,952.7 |
$ |
16,1258 |
|
Total common equity (in millions) |
$ |
11,897.6 |
$ |
16,069.4 |
|
Total common equity excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustment (in millions) |
$ |
12,406.6 |
$ |
12,894.9 |
|
End of period common shares outstanding (in millions) |
|
252.2 |
261.7 |
||
Book value per common share |
$ |
47.18 |
$ |
61.40 |
|
Book value per common share excluding AOCI other than foreign currency translation adjustment |
$ |
49.19 |
$ |
49.27 |
|
||||||
Reconciliation of |
||||||
(in millions, except as indicated) |
||||||
|
Period Ended, |
|||||
|
|
|
||||
Stockholders’ Equity, Excluding AOCI Other Than Foreign Currency Translation Adjustment, Available to Common Stockholders: |
|
|
||||
Stockholders’ equity |
$ |
11,9527 |
|
$ |
16,125.8 |
|
Noncontrolling interest |
|
(55.1 |
) |
|
(56.4 |
) |
Stockholders’ equity available to common stockholders |
|
11,897.6 |
|
|
16,069.4 |
|
Net unrealized capital (gains) losses |
|
171.0 |
|
|
(3,519.2 |
) |
Net unrecognized postretirement benefit obligation |
|
338.0 |
|
|
344.7 |
|
Stockholders’ equity, excluding AOCI other than foreign currency translation adjustment, available to common stockholders |
$ |
12,406.6 |
|
$ |
12,894.9 |
|
|
|
|
||||
|
|
|
||||
|
|
|
||||
Book Value Per Common Share, Excluding AOCI Other Than Foreign Currency Translation Adjustment: |
|
|
||||
Book value per common share |
$ |
47.18 |
|
$ |
61.40 |
|
Net unrealized capital (gains) losses |
|
0.67 |
|
|
(13.45 |
) |
Net unrecognized postretirement benefit obligation |
|
1.34 |
|
|
1.32 |
|
Book value per common share, excluding AOCI other than foreign currency translation adjustment |
$ |
49.19 |
|
$ |
49.27 |
|
|
|
|
|
||||||||||||
Reconciliation of |
||||||||||||
(in millions) |
||||||||||||
|
||||||||||||
|
Three Months Ended, |
Trailing Twelve Months, |
||||||||||
|
|
|
|
|
||||||||
Income Taxes: |
|
|
|
|
||||||||
Total GAAP income taxes |
$ |
47.3 |
|
$ |
97.6 |
|
$ |
275.9 |
|
$ |
319.4 |
|
Net realized capital gains (losses) tax adjustments |
|
16.5 |
|
|
(23.5 |
) |
|
96.2 |
|
|
(66.4 |
) |
Income taxes related to equity method investments and noncontrolling interest |
|
13.6 |
|
|
8.0 |
|
|
37.0 |
|
|
33.2 |
|
Income taxes |
$ |
77.4 |
|
$ |
82.1 |
|
$ |
409.1 |
|
$ |
286.2 |
|
|
|
|
|
|
||||||||
Net Realized Capital Gains (Losses): |
|
|
|
|
||||||||
GAAP net realized capital gains (losses) |
$ |
(110.5 |
) |
$ |
151.4 |
|
$ |
(259.4 |
) |
$ |
322.6 |
|
|
|
|
|
|
||||||||
Recognition of front-end fee revenues |
|
(1.9 |
) |
|
(7.5 |
) |
|
2.7 |
|
|
(11.8 |
) |
Market value adjustments to fee revenues |
|
- |
|
|
(0.4 |
) |
|
(0.2 |
) |
|
(2.0 |
) |
Net realized capital gains (losses) related to equity method investments |
|
(3.6 |
) |
|
(7.1 |
) |
|
(20.5 |
) |
|
(1.2 |
) |
Derivative and hedging-related revenue adjustments |
|
(40.1 |
) |
|
(38.4 |
) |
|
(162.0 |
) |
|
(157.7 |
) |
Sponsored investment fund adjustments |
|
5.8 |
|
|
5.0 |
|
|
22.1 |
|
|
18.4 |
|
Amortization of deferred acquisition costs |
|
(8.0 |
) |
|
12.0 |
|
|
(20.2 |
) |
|
177.3 |
|
Capital gains distributed – operating expenses |
|
58.9 |
|
|
(13.0 |
) |
|
2.5 |
|
|
(83.3 |
) |
Amortization of other actuarial balances |
|
6.7 |
|
|
21.8 |
|
|
(3.8 |
) |
|
49.1 |
|
Market value adjustments of embedded derivatives |
|
(19.8 |
) |
|
(1.5 |
) |
|
61.5 |
|
|
(33.1 |
) |
Capital gains distributed – cost of interest credited |
|
32.1 |
|
|
(7.4 |
) |
|
2.2 |
|
|
(30.4 |
) |
Net realized capital gains (losses) tax adjustments |
|
16.5 |
|
|
(23.5 |
) |
|
96.2 |
|
|
(66.4 |
) |
Net realized capital gains (losses) attributable to noncontrolling interest, after-tax |
|
11.3 |
|
|
2.2 |
|
|
(4.3 |
) |
|
(27.8 |
) |
Total net realized capital gains (losses) after-tax adjustments |
|
57.9 |
|
|
(57.8 |
) |
|
(23.8 |
) |
|
(168.9 |
) |
|
|
|
|
|
||||||||
Net realized capital gains (losses), as adjusted |
$ |
(52.6 |
) |
$ |
93.6 |
|
$ |
(283.2 |
) |
$ |
153.7 |
|
|
||||||||||||
Reconciliation of |
||||||||||||
(in millions) |
||||||||||||
|
Three Months Ended, |
Trailing Twelve Months, |
||||||||||
|
|
|
|
|
||||||||
Principal Global Investors Operating Revenues Less Pass-Through Expenses: |
|
|
|
|
||||||||
Operating revenues |
$ |
435.3 |
|
$ |
415.2 |
|
$ |
1,848.1 |
|
$ |
1,563.5 |
|
Commissions and other expenses |
|
(38.6 |
) |
|
(39.4 |
) |
|
(159.3 |
) |
|
(151.1 |
) |
Operating revenues less pass-through expenses |
$ |
396.7 |
|
$ |
375.8 |
|
$ |
1,688.8 |
|
$ |
1,412.4 |
|
|
|
|
|
|
||||||||
|
|
|
|
|
||||||||
Principal International Combined Net Revenue (at PFG Share) |
|
|
|
|
||||||||
Pre-tax operating earnings |
$ |
58.1 |
|
$ |
75.1 |
|
$ |
292.0 |
|
$ |
287.9 |
|
Combined operating expenses other than pass-through commissions (at PFG share) |
|
155.8 |
|
|
154.0 |
|
|
664.5 |
|
|
587.8 |
|
Combined net revenue (at PFG share) |
$ |
213.9 |
|
$ |
229.1 |
|
$ |
956.5 |
|
$ |
875.7 |
|
1 Use of non-GAAP financial measures is discussed in this release after segment results. Non-GAAP operating earnings for total company is after tax.
2 Premiums and fees = premiums and other considerations plus fees and other revenues.
3 Includes only funds with ratings assigned by Morningstar; non-rated funds excluded (87 total, 79 are ranked).
4 Pre-tax operating earnings = operating earnings before income taxes and after noncontrolling interest.
5 Net revenue = operating revenues less benefits, claims and settlement expenses less dividends to policyholders.
6 Pre-tax return on net revenue = pre-tax operating earnings divided by net revenue.
7 The company has provided reconciliations of the non-GAAP measures to the most directly comparable
8 Combined net revenue (a non-GAAP financial measure): net revenue for all PI companies at 100% less pass-through commissions. The company has determined combined net revenue (at PFG share) is more representative of underlying net revenue growth for PI as it reflects our proportionate share of consolidated and equity method subsidiaries. In addition, using this net revenue metric provides a more meaningful representation of our profit margins.
9 Pre-tax return on premium and fees = pre-tax operating earnings divided by premium and fees.
10 Principal, Principal and symbol design and
11 As of
12
13 Pensions & Investments, 2020
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Source:
CINCINNATI FINANCIAL CORP – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations
KINSALE CAPITAL GROUP, INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations
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