Principal Financial Group Inc (PFG) Q3 2024 Earnings Call Highlights: Strong AUM Growth and ...

GuruFocus News
4 min read

In This Article:

  • Non-GAAP Operating Earnings: $412 million or $1.76 per diluted share.

  • EPS Excluding Variances: $2.05, a 12% increase over Q3 2023.

  • Net Revenue Growth: 5% increase year-over-year.

  • Capital Returned to Shareholders: $416 million, including $251 million in share repurchases.

  • Assets Under Management (AUM): $741 billion, a 6% increase from the previous quarter.

  • Recurring Deposits Growth: 10% year-over-year increase.

  • Pension Risk Transfer Sales: Nearly $500 million in Q3, $2.2 billion year-to-date.

  • Principal International AUM: $185 billion, up 8% from Q2.

  • Net Cash Flows: Positive $2.3 billion for Principal International.

  • Specialty Benefits Growth: Over 6% premium and fee growth.

  • Net Loss: $220 million, driven by non-economic impacts from exited businesses.

  • Non-GAAP Operating ROE: 12.9%, 13.5% excluding actuarial assumption review impacts.

  • RIS Pretax Operating Earnings: 12% increase over Q3 2023.

  • PGI Pretax Operating Earnings: Decreased 2% year-over-year, increased 17% sequentially.

  • Principal International Pretax Operating Earnings: 8% increase over Q3 2023.

  • Specialty Benefits Loss Ratio: 61.5%, below the midpoint of guidance range.

  • Capital and Liquidity: Approximately $1.6 billion of excess and available capital.

  • Common Stock Dividend: $0.73, a 9% increase over the previous year.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Principal Financial Group Inc (NASDAQ:PFG) reported $412 million of non-GAAP operating earnings, translating to $1.76 per diluted share, with an EPS of $2.05 after adjustments, marking a 12% increase over the previous year.

  • The company returned $416 million of capital to shareholders in the third quarter, including $251 million in share repurchases, and raised its common stock dividend for the sixth consecutive quarter.

  • Total company managed assets under management (AUM) reached $741 billion, reflecting a 6% growth from the previous quarter, driven by robust returns and positive market performance.

  • Principal International ended the quarter with a record $185 billion of AUM, up 8% from the second quarter, driven by robust net cash flows and favorable market performance.

  • The company is experiencing strong momentum in its retirement business, with recurring deposits increasing by 10% year-over-year and contract retention rates on track to achieve the best full-year retention rates over the past five years.

Negative Points

  • Principal Financial Group Inc (NASDAQ:PFG) reported a net loss of $220 million for the third quarter, driven by non-economic impacts from exited businesses.

  • The actuarial assumption review had a net negative impact on non-GAAP operating earnings, although it was immaterial to free capital flow and run rate earnings.

  • PGI experienced net outflows, driven by lower fee and yield products and rebalancing activities by institutional clients.

  • The specialty benefits segment saw a slowdown in growth, attributed to no new Paid Family and Medical Leave (PFML) sales and a competitive environment, particularly in dental.

  • Variable investment income was lower than expected, primarily due to negative private equity returns in the quarter.

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