Principal Financial Group Inc. (PFG), Monday said its first quarter profit declined from a year ago on higher other than temporary impairment losses and lower revenues. Results also reflect losses related to net realized capital and other items. The financial products and service provider's earnings and revenues came in below Street estimates for the quarter.
For the first quarter, Principal Financial's net income available to common stockholders dropped 35.24% to $112.8 million or $0.43 per share from $174.2 million or $0.67 per share in the same quarter a year ago.
Results for the quarter reflects net realized capital losses of $50.9 million and a $0.3 million net loss from other after-tax adjustments.
Operating earnings of the Des Moines, Iowa-based company was $164.0 million or $0.63 per share, down from $258.4 million or $0.99 per share in the prior-year quarter.
On average, sixteen analysts polled by Thomson Reuters expected earnings of $0.66 per share for the quarter. Analysts' estimates typically exclude one-time items.
Based on the early adoption of new FASB requirements, on a pre-tax basis, total other than temporary impairment losses on available for sale securities were $146.6 million and the noncredit portion of loss recognized in other comprehensive income was $50.6 million.
Excluding requirements, losses on available for sale fixed maturity securities would have been $28.5 million higher, after-tax, reducing net income in the same amount.
Principal Financials' total revenues for the quarter decreased to $2.19 billion from $2.50 billion in the comparable quarter a year ago, below Street estimates of $2.51 billion.
Operating revenues from U.S. Asset Accumulation segment dropped 16% to $1.01 billion primarily due to lower net investment income in the Investment Only business. Global Asset Management operating revenue declined 25.2% to $104.4 million, while operating revenues from the International Asset Management and Accumulation plunged $64.0 million from the year-earlier quarter. Operating revenues of Life and Health Insurance declined 4.8% to $1.13 billion, while operating loses at corporate segment widened to $24.7 million from the year-ago quarter.
In the sequentially preceding fourth quarter, the company slipped to a loss of $7.5 million or $0.03 per share primarily due to higher net realized capital losses. Operating revenues were down at $2.53 billion.
Net investment income was $828.5 million, compared to $960.3 million in the prior-year quarter. Premium and other considerations also dropped to $949.9 million from $1.05 billion in the corresponding quarter last year. Fees and other revenues were $473.5 million, down from $613.4 million in the year-earlier quarter.
The declines in operating earnings reflect lower asset valuations as represented by a 41% decline in the S&P 500 daily average reducing total company assets under management by 22% to $236.6 billion at March 31, 2009. Total assets at March 31, 2009 were $123.2 billion, compared to $152.0 at March 31, 2008.
On March 31, 2009, brokerage FBR Capital Markets downgraded Principal Financials' shares from 'Mkt Perform' to 'Underperform' with a mean target range of $15.50.
PFG closed Monday's regular trading at $16.93, up $1.50 or 9.72%, on a volume of 9.29 million shares. In after-hours trading, the stock further gained $0.07 or $0.41% to trade at $17.00. In the last 52-week period, the stock traded in the range of $5.41 to $59.00, on a three-month average volume of 8.38 million shares.
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