Raises fourth quarter 2023 common stock
dividend
Company Highlights
- Net income attributable to Principal Financial Group®, Inc.
(PFG)1 of $1,246 million, or $5.10 per diluted share, includes $702
million of income from exited business
- Non-GAAP operating earnings2 of $420 million, or $1.72 per
diluted share
- Returned $356 million of capital to shareholders
- Raises fourth quarter 2023 common stock dividend by $0.02 to
$0.67 per share
- Assets under management (AUM) of $651 billion, which is
included in assets under administration (AUA) of $1.5
trillion
Principal Financial Group® (Nasdaq: PFG) announced results for
third quarter 2023.
- Non-GAAP net income attributable to PFG excluding income
from exited business1 for third quarter 2023 of $544.4 million,
compared to $395.9 million for third quarter 2022. Non-GAAP net
income excluding income from exited business per diluted share of
$2.23 for third quarter 2023, compared to $1.57 for third quarter
2022.
- As noted in Exhibit 1, third quarter 2023 net income
reflected the impacts of the significant variances2, including
the annual actuarial assumption review, which decreased net
income by $9.7 million, or $0.04 per diluted share.
- Non-GAAP operating earnings for third quarter 2023 of $419.7
million, compared to $403.3 million for third quarter 2022.
Non-GAAP operating earnings per diluted share of $1.72 for third
quarter 2023 compared to $1.60 per diluted share for third quarter
2022.
- Third quarter 2023 non-GAAP operating earnings reflected the
following significant variances2 as noted in Exhibit 1:
- Results of the annual actuarial assumption review
decreased non-GAAP operating earnings by $5.6 million, or $0.02 per
diluted share;
- And a net $21.1 million, or $0.09 per diluted share, decrease
to non-GAAP operating earnings primarily from lower than expected
variable investment income.
- After excluding the significant variances noted in Exhibit 1,
non-GAAP operating earnings increased 11 percent, or 14 percent per
diluted share, over the prior year quarter.
- Quarterly common stock dividend of $0.67 per share for
fourth quarter 2023 was authorized by the company’s Board of
Directors, bringing the trailing twelve-month dividend to $2.60 per
share. The dividend will be payable on December 20, 2023, to
shareholders of record as of December 1, 2023.
"Our diversified and increasingly integrated business model, as
well as our industry leading position in the small to mid-sized
business segment, contributed to another strong quarter. Healthy
sales growth and strong underwriting results drove third quarter
results with non-GAAP operating earnings of $420 million. We
returned $356 million to shareholders during the quarter and remain
confident in delivering our full year guidance,” said Dan Houston,
chairman, president, and CEO of Principal®.
Third quarter highlights
- Retirement and Income Solutions (RIS) sales of $7.6 billion
increased 30% from third quarter 2022, including $0.6 billion of
pension risk transfer sales
- Principal Global Investors (PGI) managed AUM of $469.0 billion;
positive real estate net cash flow of $0.8 billion; operating
margin3 of 39%
- Principal International (PI) reported positive net cash flow of
$0.8 billion; AUM of $168.4 billion, up 16% from third quarter
2022
- Specialty Benefits premium and fees increased 8% from third
quarter 2022 driven by continued strong sales, retention,
employment and wage growth
- Life Insurance business market premium and fees increased 24%
from third quarter 2022
- Returned $356.4 million of capital to shareholders during the
third quarter, including:
- $200.3 million to repurchase 2.5 million shares of common
stock; and
- $156.1 million of common stock dividends with the $0.65 per
share common dividend paid in the third quarter
Strong financial position
- $1.4 billion of excess and available capital in our holding
companies and other subsidiaries
- Estimated statutory risk-based capital (RBC) ratio for
Principal Life Insurance Company of 404%
Segment Results Retirement and Income
Solutions
(in millions except percentages
or otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating earnings4
$304.7
$206.3
48%
$990.8
$1,047.4
(5)%
Net revenue5
$709.8
$616.8
15%
$2,615.3
$2,762.1
(5)%
Operating margin6
42.9%
33.4%
37.9%*
37.9%*
*Operating margin – Excluding the
third quarter actuarial assumption reviews and other significant
variances, the trailing twelve month operating margin was 38.3% for
third quarter 2023 and 36.6% for third quarter 2022.
- Pre-tax operating earnings increased $98.4 million.
Excluding the significant variances outlined in Exhibit 1, pre-tax
operating earnings increased $29.7 million primarily due to higher
net revenue and lower operating expenses.
- Net revenue increased $93.0 million. Excluding the
significant variances outlined in Exhibit 1, net revenue increased
$24.3 million primarily due to favorable equity markets and the
benefits of rising interest rates, partially offset by fee
compression.
Principal Global Investors
(in millions except percentages
or otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating earnings
$151.6
$142.0
7%
$524.3
$658.2
(20)%
Operating revenues less pass-through
expenses7
$393.9
$373.1
6%
$1,494.5
$1,651.9
(10)%
Operating margin
38.7%
38.4%
35.3%
40.1%
Total PGI assets under management
(billions)
$469.0
$449.4
4%
PGI sourced assets under management
(billions)
$240.9
$235.7
2%
- Pre-tax operating earnings increased $9.6 million
primarily due to higher operating revenues less pass-through
expenses, partially offset by higher variable expenses.
- Operating revenues less pass-through expenses increased
$20.8 million primarily due to higher real estate performance
fees.
Principal International
(in millions except percentages or
otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating earnings
$70.8
$64.0
11%
$290.4
$334.1
(13)%
Combined net revenue
(at PFG share)8
$239.1
$218.3
10%
$942.6
$976.3
(3)%
Operating margin9
29.6%
29.3%
30.8%*
34.2%*
Assets under management (billions)
$168.4
$144.6
16%
*Operating margin – Excluding the
third quarter actuarial assumption reviews and other significant
variances, the trailing twelve month operating margin was 31.6% for
third quarter 2023 and 31.0% for third quarter 2022.
- Pre-tax operating earnings increased $6.8 million.
Excluding the significant variances outlined in Exhibit 1, pre-tax
operating earnings increased $2.5 million primarily due to higher
combined net revenue, partially offset by increased operating
expenses.
- Combined net revenue (at PFG share) increased $20.8
million. Excluding the significant variances outlined in Exhibit 1,
combined net revenue increased $13.5 million primarily as a result
of higher AUM.
Specialty Benefits
(in millions except percentages
or otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating earnings
$147.8
$149.0
(1)%
$440.4
$356.8
23%
Premium and fees
$771.3
$712.5
8%
$2,986.6
$2,734.1
9%
Operating margin10
19.2%
20.9%
14.7%*
13.0%*
Incurred loss ratio
56.1%
53.8%
60.0%
62.9%
*Operating margin – Excluding the
third quarter actuarial assumption review and other significant
variances, the trailing twelve month operating margin was 14.8% for
third quarter 2023 and 13.2% for third quarter 2022.
- Pre-tax operating earnings decreased $1.2 million.
Excluding the significant variances outlined in Exhibit 1, pre-tax
operating earnings increased $32.2 million due to growth in the
business and a decrease in the incurred loss ratio.
- Premium and fees increased $58.8 million driven by
strong sales, retention, employment and wage growth.
- Incurred loss ratio increased to 56.1%. Excluding the
significant variances outlined in Exhibit 1, the incurred loss
ratio of 58.2% decreased driven by strong long-term disability
underwriting results and lower group life mortality.
Life Insurance
(in millions except percentages
or otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating earnings (losses)
$21.2
$32.8
(35)%
$90.9
$156.4
(42)%
Premium and fees
$241.8
$243.9
(1)%
$911.1
$1,017.3
(10)%
Operating margin
8.8%
13.4%
10.0%*
15.4%*
*Operating margin – Excluding the
third quarter actuarial assumption review and other significant
variances, the trailing twelve month operating margin was 13.6% for
third quarter 2023 and 18.0% for third quarter 2022.
- Pre-tax operating earnings decreased $11.6 million.
Excluding the significant variances outlined in Exhibit 1, pre-tax
operating earnings decreased $11.0 million due to higher mortality
and lower net investment income.
- Premium and fees decreased $2.1 million. Excluding the
significant variances outlined in Exhibit 1, premium and fees
increased $6.4 million as strong business market growth outpaced
the runoff of the legacy business.
Corporate
(in millions except percentages or
otherwise noted)
Quarter
Trailing Twelve Months
3Q23
3Q22
% Change
3Q23
3Q22
% Change
Pre-tax operating losses
$(114.8)
$(100.8)
(14)%
$(395.0)
$(477.1)
17%
- Pre-tax operating losses increased $14.0 million.
Excluding the significant variances outlined in Exhibit 1, pre-tax
operating losses increased primarily due to higher operating
expenses.
Exhibit 1
Principal Financial
Group
Impact of 3Q 2023 and 3Q 2022
significant variances on quarterly net income attributable to PFG
and non-GAAP operating earnings
(in millions, except per share
data)
Impacts of 3Q 2023 significant
variances
Impacts of 3Q 2022 significant
variances
Actuarial assumption
review
Other significant
variances11
Total 3Q23 significant
variances
Actuarial assumption
review
Other significant
variances12
Total 3Q22 significant
variances
Net income attributable to PFG
$
(9.7)
$
(21.1)
$
(30.8)
$
51.2
$
(50.2)
$
1.0
Net realized capital (gains) losses, as
adjusted
4.2
-
4.2
1.4
-
1.4
(Income) loss from exited business
(0.1)
-
(0.1)
(2.8)
-
(2.8)
Non-GAAP operating earnings
(5.6)
(21.1)
(26.7)
49.8
(50.2)
(0.4)
Income taxes13
68.8
(2.6)
66.2
13.2
(12.2)
1.0
Non-GAAP pre-tax operating
earnings
$
63.2
$
(23.7)
$
39.5
$
63.0
$
(62.4)
$
0.6
Per diluted share:
Net income
$
(0.04)
$
(0.09)
$
(0.13)
$
0.20
$
(0.20)
$
0.00
Net realized capital (gains) losses, as
adjusted
0.02
0.00
0.02
0.01
0.00
0.01
(Income) loss from exited business
(0.00)
0.00
(0.00)
(0.01)
0.00
(0.01)
Non-GAAP operating earnings
$
(0.02)
$
(0.09)
$
(0.11)
$
0.20
$
(0.20)
$
0.00
Weighted average diluted common shares
outstanding
244.3
244.3
244.3
251.9
251.9
251.9
Segment pre-tax operating earnings
(losses):
Retirement and Income Solutions
$
53.4
$
(9.0)
$
44.4
$
1.8
$
(26.1)
$
(24.3)
Principal Global Investors
-
-
-
-
-
-
Principal International
-
(5.1)
(5.1)
-
(9.4)
(9.4)
Principal Asset Management
-
(5.1)
(5.1)
-
(9.4)
(9.4)
Specialty Benefits
16.2
-
16.2
55.6
(6.0)
49.6
Life Insurance
(6.4)
(2.0)
(8.4)
5.6
(13.4)
(7.8)
Benefits and Protection
9.8
(2.0)
7.8
61.2
(19.4)
41.8
Corporate
-
(7.6)
(7.6)
-
(7.5)
(7.5)
Total segment pre-tax operating
earnings
$
63.2
$
(23.7)
$
39.5
$
63.0
$
(62.4)
$
0.6
Income statement line item details of the 3Q23 and 3Q22
significant variances are available in our earnings conference call
presentation on our website.
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 Dec. 31, 2022, and in the company’s
quarterly report on Form 10-Q for the quarter ended Jun. 30, 2023,
filed by the company with the U.S. 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 may
significantly affect the company’s ability to meet liquidity needs,
access to capital and cost of capital; conditions in the global
capital markets and the economy generally; volatility or declines
in the equity, bond or real estate markets; changes in interest
rates or credit spreads or a prolonged low interest rate
environment; the elimination of the London Inter-Bank Offered Rate
(“LIBOR”); the company’s investment portfolio is subject to several
risks that may diminish the value of its invested assets and the
investment returns credited to customers; the company’s valuation
of investments and the determination of the amount of allowances
and impairments taken on such investments may include
methodologies, estimations and assumptions that are subject to
differing interpretations; any impairments of or valuation
allowances against the company’s deferred tax assets; the company’s
actual experience for insurance and annuity products could differ
significantly from its pricing and reserving assumptions; the
pattern of amortizing the company’s DAC asset and other actuarial
balances may change; changes in laws, regulations or accounting
standards; the company’s ability to pay stockholder dividends, make
share repurchases and meet its obligations may be constrained by
the limitations on dividends or other distributions Iowa insurance
laws impose on Principal Life; litigation and regulatory
investigations; from time to time the company may become subject to
tax audits, tax litigation or similar proceedings, and as a result
it may owe additional taxes, interest and penalties in amounts that
may be material; applicable laws and the company’s certificate of
incorporation and by-laws may discourage takeovers and business
combinations that some stockholders might consider in their best
interests; competition, including from companies that may have
greater financial resources, broader arrays of products, higher
ratings and stronger financial performance; a downgrade in the
company’s financial strength or credit ratings; client
terminations, withdrawals or changes in investor preferences; the
company’s hedging or risk management strategies prove ineffective
or insufficient; international business risks; risks arising from
participation in joint ventures; the company may need to fund
deficiencies in its “Closed Block” assets; the company’s reinsurers
could default on their obligations or increase their rates; risks
arising from acquisitions of businesses; risks related to
administering reinsurance transactions; a pandemic, terrorist
attack, military action or other catastrophic event; global climate
change; technological and societal changes may disrupt the
company’s business model and impair its ability to retain existing
customers, attract new customers and maintain its profitability;
damage to the company’s reputation; the company may not be able to
protect its intellectual property and may be subject to
infringement claims; inability to attract, develop and retain
qualified employees and sales representatives and develop new
distribution sources; an interruption in information technology,
infrastructure or other internal or external systems used for
business operations, or a failure to maintain the confidentiality,
integrity or availability of data residing on such systems; loss of
key vendor relationships or failure of a vendor to protect
information of our customers or employees; and the company’s
enterprise risk management framework may not be fully effective in
identifying or mitigating all of the risks to which the company is
exposed.
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 to
ongoing operations. However, it is possible these adjusting items
have occurred in the past and could recur in 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 Friday, Oct. 27, 2023, at 10:00 a.m. (ET), Chairman,
President and Chief Executive Officer Dan Houston and Executive
Vice President and Chief Financial Officer Deanna Strable will lead
a discussion of results and the impacts on future prospects, asset
quality and capital adequacy during a live conference call, which
can be accessed as follows:
- Via live Internet webcast. Please go to investors.principal.com
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 through Call Me, a zero hold-time telephone
dial-back service, or by dialing in one of the following numbers 10
minutes prior to the start of the call.
- 877-407-0832 (U.S. and Canadian callers)
- +1 201-689-8433 (International callers)
- Replay of the earnings call via webcast as well as a transcript
of the call will be available after the call at
investors.principal.com.
The company’s financial supplement and slide presentation is
currently available at investors.principal.com, and may be referred
to during the call.
About Principal®14
Principal Financial Group® (Nasdaq: PFG) is a global financial
company with approximately 19,500 employees15 passionate about
improving the wealth and well-being of people and businesses. In
business for more than 140 years, we’re helping approximately 61
million customers15 plan, insure, invest, and retire, while working
to improve our planet, support the communities where we do
business, and build a diverse, inclusive workforce. Principal® is
proud to be recognized as one of the 2023 World’s Most Ethical
Companies16, a member of the Bloomberg Gender Equality Index, and a
Top 10 “Best Places to Work in Money Management17.” Learn more
about Principal and our commitment to sustainability, inclusion,
and purpose at principal.com.
Summary of Principal Financial Group, Inc. and Segment
Results
Principal Financial Group, Inc.
Results:
(in millions)
Three Months Ended,
Trailing Twelve Months,
9/30/23
9/30/22
9/30/23
9/30/22
Net income (loss) attributable to
PFG
$
1,246.2
$
1,315.7
$
1,478.7
$
5,211.7
(Income) loss from exited business
(701.8)
(919.8)
248.0
(3,830.8)
Net income (loss) attributable to PFG
excluding exited business
$
544.4
$
395.9
$
1,726.7
$
1,380.9
Net realized capital (gains) losses, as
adjusted
(124.7)
7.4
(170.1)
303.8
Non-GAAP Operating Earnings*
$
419.7
$
403.3
$
1,556.6
$
1,684.7
Income taxes
161.6
90.0
385.2
391.1
Non-GAAP Pre-Tax Operating
Earnings
$
581.3
$
493.3
$
1,941.8
$
2,075.8
Segment Pre-Tax Operating Earnings
(Losses):
Retirement and Income Solutions
$
304.7
$
206.3
$
990.8
$
1,047.4
Principal Asset Management
222.4
206.0
814.7
992.3
Benefits and Protection
169.0
181.8
531.3
513.2
Corporate
(114.8)
(100.8)
(395.0)
(477.1)
Total Segment Pre-Tax Operating
Earnings
$
581.3
$
493.3
$
1,941.8
$
2,075.8
Per Diluted Share
Three Months Ended,
Nine Months Ended,
9/30/23
9/30/22
9/30/23
9/30/22
Net income (loss)
$
5.10
$
5.22
$
6.08
$
18.55
(Income) loss from exited business
(2.87)
(3.65)
(1.13)
(14.89)
Net income (loss) excluding exited
business
$
2.23
$
1.57
$
4.95
$
3.66
Net realized capital (gains) losses, as
adjusted
(0.51)
0.03
(0.22)
1.10
Non-GAAP Operating Earnings
$
1.72
$
1.60
$
4.73
$
4.76
Weighted-average diluted common shares
outstanding (in millions)
244.3
251.9
245.7
257.3
*U.S. GAAP (GAAP) net income attributable to PFG versus
non-GAAP operating earnings
Management uses non-GAAP operating earnings, which is a
financial measure that excludes the effect of net realized capital
gains and losses, as adjusted, income (loss) from exited business
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,
9/30/23
12/31/22
Total assets (in billions)
$
287.9
$
290.6
Stockholders’ equity (in millions)
$
10,722.9
$
10,017.8
Total common equity (in millions)
$
10,671.6
$
9,976.7
Total common equity excluding cumulative
change in fair value of funds withheld embedded derivative and
accumulated other comprehensive income (AOCI) other than foreign
currency translation adjustment (in millions)
$
12,754.2
$
12,398.5
End of period common shares outstanding
(in millions)
239.7
243.5
Book value per common share
$
44.52
$
40.97
Book value per common share excluding
cumulative change in fair value of funds withheld embedded
derivative and AOCI other than foreign currency translation
adjustment
$
53.21
$
50.92
Principal Financial Group, Inc.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
(in millions, except as indicated)
Period Ended,
9/30/23
12/31/22
Stockholders’ Equity, Excluding AOCI
Other Than Foreign Currency Translation Adjustment, Available to
Common Stockholders:
Stockholders’ equity
$
10,722.9
$
10,017.8
Noncontrolling interest
(51.3)
(41.1)
Stockholders’ equity available to common
stockholders
10,671.6
9,976.7
Cumulative change in fair value of funds
withheld embedded derivative
(3,195.9)
(2,885.6)
AOCI, other than foreign currency
translation adjustment
5,278.5
5,307.4
Stockholders’ equity, excluding AOCI other
than cumulative change in fair value of funds withheld embedded
derivative and foreign currency translation adjustment, available
to common stockholders
$
12,754.2
$
12,398.5
Book Value Per Common Share, Excluding
AOCI Other Than Foreign Currency Translation Adjustment:
Book value per common share
$
44.52
$
40.97
Cumulative change in fair value of funds
withheld embedded derivative and AOCI, other than foreign currency
translation adjustment
8.69
9.95
Book value per common share, excluding
AOCI other than foreign currency translation adjustment
$
53.21
$
50.92
Principal Financial Group, Inc.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve
Months,
9/30/23
9/30/22
9/30/23
9/30/22
Income Taxes:
Total GAAP income taxes (benefit)
$
354.8
$
328.8
$
325.5
$
1,293.9
Net realized capital gains (losses) tax
adjustments
(34.2)
3.4
(47.5)
107.3
Exited business tax adjustments
(177.4)
(259.1)
43.0
(1,072.6)
Income taxes related to equity method
investments and noncontrolling interest
18.4
16.9
64.2
62.5
Income taxes
$
161.6
$
90.0
$
385.2
$
391.1
Net Realized Capital Gains
(Losses):
GAAP net realized capital gains
(losses)
$
179.3
$
(27.4)
$
211.8
$
(318.2)
Market value adjustments to fee
revenues
0.1
-
0.9
0.1
Net realized capital gains (losses)
related to equity method investments
(4.1)
6.6
(4.8)
(11.7)
Derivative and hedging-related revenue
adjustments
26.6
(24.3)
13.7
(126.2)
Certain variable annuity fees
18.5
18.7
73.4
78.6
Sponsored investment fund adjustments
5.8
5.2
22.9
22.3
Capital gains distributed – operating
expenses
(22.5)
19.9
(24.9)
109.6
Amortization of actuarial balances
(0.3)
0.1
(0.3)
(1.8)
Derivative and hedging-related expense
adjustments
0.8
-
0.9
-
Market value adjustments of embedded
derivatives
(9.3)
(4.5)
(0.8)
(41.0)
Market value adjustments of market risk
benefits
(30.1)
(16.1)
(45.5)
(173.1)
Capital gains distributed – cost of
interest credited
(9.3)
5.6
(15.0)
16.1
Net realized capital gains (losses) tax
adjustments
(34.2)
3.4
(47.5)
107.3
Net realized capital gains (losses)
attributable to noncontrolling interest, after-tax
3.4
5.4
(14.7)
34.2
Total net realized capital gains (losses)
after-tax adjustments
(54.6)
20.0
(41.7)
14.4
Net realized capital gains (losses), as
adjusted
$
124.7
$
(7.4)
$
170.1
$
(303.8)
Income (Loss) from Exited
Business:
Pre-tax impacts of exited business:
Strategic review costs and impacts
$
-
$
(27.6)
$
4.0
$
36.4
Amortization of reinsurance gains
(losses)
(8.1)
(7.7)
(69.0)
(38.2)
Other impacts of reinsured business
(39.3)
(32.0)
(138.4)
(97.3)
Net realized capital gains (losses) on
funds withheld assets
1.0
8.5
171.7
697.5
Change in fair value of funds withheld
embedded derivative
925.6
1,237.7
(259.3)
4,305.0
Tax impacts of exited business
(177.4)
(259.1)
43.0
(1,072.6)
Total income (loss) from exited
business
$
701.8
$
919.8
$
(248.0)
$
3,830.8
Principal Financial Group, Inc.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
(in millions)
Three Months Ended,
Trailing Twelve
Months,
9/30/23
9/30/22
9/30/23
9/30/22
Principal Global Investors Operating
Revenues Less Pass-Through Expenses:
Operating revenues
$
424.6
$
406.0
$
1,618.0
$
1,798.8
Commissions and other expenses
(30.7)
(32.9)
(123.5)
(146.9)
Operating revenues less pass-through
expenses
$
393.9
$
373.1
$
1,494.5
$
1,651.9
Principal International Combined Net
Revenue (at PFG Share)
Pre-tax operating earnings
$
70.8
$
64.0
$
290.4
$
334.1
Combined operating expenses other than
pass-through commissions (at PFG share)
168.3
154.3
652.2
642.2
Combined net revenue (at PFG share)
$
239.1
$
218.3
$
942.6
$
976.3
____________________
1 All financial results and periods
reflect the adoption of long-duration targeted improvements (LDTI)
accounting guidance.
2 Use of non-GAAP financial measures is
discussed in this release after segment results. Non-GAAP operating
earnings for total company is after tax. The total company impacts
of significant variances, including the actuarial assumption
review, is also after tax.
3 Operating margin for PGI = pre-tax
operating earnings, adjusted for noncontrolling interest divided by
operating revenues less pass-through expenses.
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; liability for future
policy benefits remeasurement (gain) loss; market risk benefit
remeasurement (gain) loss; and dividends to policyholders.
6 Operating margin for RIS = pre-tax
operating earnings divided by net revenue.
7 The company has provided reconciliations
of the non-GAAP measures to the most directly comparable U.S. GAAP
measures at the end of the release. The company has determined this
measure is more representative of underlying operating revenues
growth for PGI as it removes commissions and other expenses that
are collected through fee revenue and passed through expenses with
no impact to pre-tax operating earnings.
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 operating margin.
9 Operating margin for PI = pre-tax
operating earnings divided by combined net revenue (at PFG
share).
10 Operating margin for Benefits and
Protection = pre-tax operating earnings divided by premium and
fees.
11 Other significant variances in 3Q23
include 1) lower than expected variable investment income in RIS,
Life Insurance and Corporate; 2) impact of lower than expected
encaje performance, Latin American inflation and other items in
Principal International.
12 Other significant variances in 3Q22
include 1) lower than expected variable investment income in RIS,
Specialty Benefits, Life Insurance and Corporate, partially offset
by higher variable investment income in Principal International; 2)
lower than expected encaje performance and non-economic LDTI
discount rate impacts in Principal International; 3) COVID-19
related claims in RIS and Life Insurance.
13 A change in methodology of certain tax
reserves resulted in additional tax expense in 3Q23.
14 Principal, Principal and symbol design
and Principal Financial Group are trademarks and service marks of
Principal Financial Services, Inc., a member of the Principal
Financial Group.
15 As of September 30, 2023
16 Ethisphere, 2023
17 Pensions & Investments, 2022
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026613053/en/
Media Contact: Jane Slusark, 515-362-0482,
slusark.jane@principal.com Investor Contact: Humphrey Lee,
877-909-1105, lee.humphrey@principal.com
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