Principal Financial Group Reports Q3 2024 Performance

Principal Financial Group (PFG) reported a solid third-quarter performance for 2024 on October 25, with non-GAAP operating earnings of $412 million, or $1.76 per diluted share, and an adjusted EPS of $2.05. This reflects a 12% increase from the same period last year. The company's total assets under management (AUM) grew by 6% to $741 billion, driven by strong market performance and a 5% rise in net revenue. Principal Financial Group also announced a dividend increase and continued to return capital to shareholders, maintaining a positive outlook for the remainder of the year.

Key Takeaways

• Adjusted EPS rose by 12% year-over-year to $2.05.
• Total AUM increased to $741 billion, a 6% growth quarter-over-quarter.
• Returned $416 million to shareholders via dividends and share repurchases.
• Retirement segment revenue and earnings exceeded guidance with recurring deposits up 10%.
• Principal International saw strong net cash flows with an 8% increase in AUM.
• Specialty Benefits experienced over 6% growth in premiums and fees.
• On track to meet guidance of 14% to 16% return on equity by 2025.

Company Outlook

• Full-year EPS growth expected to be 9% to 12%, in line with 2024 guidance.
• Maintains free cash flow target of 75% to 85% for the year.
• Announced a dividend of $0.73 per share for Q4, a 9% increase from the previous year.
• Anticipates strong cash flow in Q4, contributing to the full-year target.

Bearish Highlights

• Reported a net loss of $220 million for Q3.
• Principal Asset Management experienced outflows in PGI.
• Performance fees from real estate transactions were lower than typical at $7 million year-to-date.
• Life Insurance segment is trending below expected operating margin of 13% to 15%.

Bullish Highlights

• Strong market performance supported a 6% AUM increase.
• Recurring deposits in the Retirement segment increased 10% year-over-year.
• Principal International achieved record operating earnings of $121 million.
• Pension risk transfer sales nearly reached $500 million in Q3, targeting $3 billion for the full year.

Misses

• Negative impacts from foreign currency translation and lower variable investment income due to negative private equity returns.
• Effective tax rate at lower end of 17% to 20% guidance range.
• Pension Risk Transfer (PRT) business fee revenue rates down 2 basis points year-over-year.

Q&A Highlights

• 75% of participant withdrawals driven by strong market performance.
• Plans for retirement income solutions expected by 2025.
• Focus on strategic initiatives to boost net cash flows across segments.

In conclusion, Principal Financial Group has demonstrated resilience and growth in Q3 2024, with strong performance in its Retirement and International segments. Despite some headwinds, the company is optimistic about its capital deployment strategies and the upcoming Investor Day event, where it will discuss future growth opportunities.

Full transcript – Principal Financial Group Inc (NASDAQ:PFG) Q3 2024:

Operator: Good morning, and welcome to the Principal Financial Group Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to Humphrey Lee, Vice President of Investor Relations.

Humphrey Lee: Thank you, and good morning. Welcome to Principal Financial Group's Third Quarter 2024 Earnings Conference Call. As always, materials related to today's call are available on our website at investors.principal.com. Following a reading of the safe harbor provision, CEO, Dan Houston; and President and COO, Deanna Strable, will deliver some prepared remarks.