Monday, Principal Financial Group Inc. (PFG), a retirement and investment products provider, said its third quarter profit rose from a year ago reflecting essentially a decline in expenses, notwithstanding the lower revenues registered during the quarter. Adjusted earnings dropped from last year, however, came in ahead of Street estimates.
The Des Moines, Iowa-based company's third-quarter net income available to common stockholders rose to $184.7 million or $0.57 per share from $90.1 million or $0.35 per share in the year ago quarter. Net income available to common stockholders improved 23%, reflecting higher operating earnings and a comparable level of net realized capital losses.
Net income available to common stockholders for the quarter reflects net realized capital losses of $53.5 million.
Operating earnings for the quarter slipped to $238.7 million or $0.74 per share from $251.2 million or $0.96 per share for third quarter 2008. Eighteen Analysts polled by Thomson Reuters expected the company to report earnings of $0.65 per share for the quarter. Analysts' estimates typically exclude special items.
The decline in operating earnings from a year ago reflects a number of items, including lower average assets under management, higher costs for employee pension and other post-retirement benefits, lower investment income and unfavorable foreign currency movements. These items were substantially offset by the company's expense management activities and lower deferred policy acquisition cost (DPAC) amortization expense. The decline in per share results also reflects the company's May 11, 2009 common stock offering, which increased weighted average shares outstanding from 261.0 million for the quarter ending September 30, 2008, to 321.5 million for the quarter ending September 30, 2009.
In the preceding first quarter, the company posted net income available to common stockholders of $150.3 million or $0.52 per share, compared to $168.3 million or $0.64 per share in the prior year quarter. Operating earnings were $200.5 million or $0.69 per share, compared to $254.1 million or $0.97 per share in the comparable period a year earlier.
Total revenues for the quarter under review declined to $2.27 billion from $2.498 billion in the year ago quarter. Seven analysts had consensus revenue estimate of $2.49 billion for the quarter.
Premiums and other considerations totaled $932.9 million, compared to $1.05 billion a year ago, while fees and other revenues decreased to $550.7 million from $599.0 million in the prior year quarter. Investment income declined significantly to $853.3 million from $1.08 billion last year.
Commenting on the operations, Larry Zimpleman, chairman, president and chief executive officer said, "Improved market conditions, and the positive impact of actions by management over the past several quarters, contributed to a strong sequential increase in assets under management and operating earnings."
The company's three key retirement and investment products generated $2.7 billion of sales, on a combined basis in third quarter 2009, with $0.5 billion of sales for full service accumulation, $1.9 billion for Principal Funds, and $0.3 billion for individual annuities.
For the quarter, the company recorded total expenses of $2.022 billion, down from $2.391 billion a year ago.
Segment wise, U.S. Asset Accumulation Segment recorded operating earnings of $154.6 million up from $136.5 million for the same period last year, while operating revenues declined to $1.026 billion from $1.238 billion last year reflecting lower net investment income in the investment business, which the company has been scaling back over the past several quarters, and lower premiums in the individual annuities business due to lower sales of fixed deferred annuities.
Global Asset Management Segment generated operating earnings of $10.5 million for the quarter, significantly down from $23.5 million in the prior year quarter, reflecting a 12% decline in average assets under management, lower fees and higher costs for employee pension and other post-retirement benefits. Operating revenues dipped to $111.3 million from $141.7 million last year.
International Asset Management and Accumulation Segment had operating earnings of $33.1 million, down from $44.4 million last year. Earnings were dampened by deflation in Chile, which reduced earnings by $3.5 million. Third quarter 2008 earnings included a $5.0 million unlocking benefit for price changes in Brazil and a $7.1 million experience benefit from higher yields on invested assets in Chile due to unusually high inflation. Operating revenues, meanwhile decreased to $156.1 million from $265.5 million for the same period last year, as a result of lower investment returns due to deflation in Chile in third quarter 2009.
Life and Health Insurance Segment's operating earnings slipped to $68.2 million for quarter from $73.9 million a year ago, with operating revenues declining to $1.104 billion from $1.159 billion for the same period a year ago. The decline in revenues was primarily due to a 7% fall in Health division premiums, which reflects a decrease in group medical covered members.
The company indicated that its assets under management improved 9% or $22.7 billion to $280.4 billion as of September 30, 2009.
Year-to-date, the company posted net income available to common stockholders of $447.8 million up from $432.6 million. Net income on a per share basis was $1.54, compared to $1.66 a year ago.
Operating earnings slid to $603.2 million or $2.07 per share from $763.7 million or $2.92 per share in the corresponding period last year.
Total revenues for the nine-month period were $6.617 billion, down from $7.657 billion in the previous year.
Looking ahead, Zimpleman said, "While confidence in the capital markets improved again in the third quarter, we expect the economic recovery will be more protracted, and that near-term, business activity will remain muted."
Among the peers, diversified financial services company Ameriprise Financial Inc. (AMP)on October 21, Wednesday reported a turn to profit in the third quarter helped by a 20% rise in quarterly revenues and an eight-fold increase in net investment income. Net income of Ameriprise Financial was $260 million or $1.00 per share, compared to a loss of $70 million or $0.32 per share in the same quarter a year ago.
Ameriprise's core operating earnings were $268 million, up 7% from $251 million a year ago. On a per share basis, core operating earnings decreased to $1.03 per share from $1.13 in the same quarter last year on higher share count. Excluding 36 million shares, the company issued to pre-fund its acquisition, core operating earnings per share were $1.19, up 5% from the prior year.
PFG closed Monday's regular trading at $25.01, down $0.03 or 0.12%, on a volume of about 4.29 million shares. In the after hours, the stock gained $0.59 or 2.36%, trading at $25.60. For the past 52-week period, the stock moved between $5.41 - $30.87, on a 3-month average of 3.75 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.