Principal Financial Group, Inc.’s (NASDAQ:PFG) fourth-quarter 2019 operating net income of $1.41 per share matched the Zacks Consensus Estimate and grew 27% year over year.
Results reflected improved performance at Retirement and Income Solution-Fee business, Principal Global Investors and U.S. Insurance Solutions segments. Also, Principal Financial recorded growth in assets under management (AUM). The company’s investment performance also remained solid.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Principal Financial Group, Inc. price-consensus-eps-surprise-chart | Principal Financial Group, Inc. Quote
Behind the Headlines
Operating revenues rose 6.6% year over year to nearly $4.1 billion. Higher fees and other revenues plus net investment income drove this upside. The top line beat the Zacks Consensus Estimate by 0.6%.
Total expenses increased 4.2% year over year to $3.7 billion due to higher operating expenses.
Principal Financial’s AUM as of Dec 31, 2019 was a record $735 billion, up 17.3% year over year.
Segment Update
Retirement and Income Solution: Revenues increased 5.3% year over year to about $2.3 billion.
Pre-tax operating earnings increased 12.8% to $207.5 million on account of improved performance at Retirement and Income Solution-Fee business.
Principal Global Investors: Revenues of $437.4 million plunged 23.1% from the prior-year quarter.
Operating earnings increased 40.6% to $144 million.
Principal International: Revenues increased 4.4% year over year to $326.5 million in the quarter.
Operating earnings increased 34.1% to $77.5 million.
U.S. Insurance Solution: Revenues grew 6.3% year over year to $1.1 billion.
Operating earnings of $144.5 million increased 27.9% year over year due to improved performance at Individual Life Insurance and Specialty Benefits Insurance business.
Corporate: Operating loss of $95.7 million was wider than $78.2 million loss incurred a year ago. This downside was due to higher expenses.
Financial Update
As of Dec 31, 2019, cash and cash equivalents were $2.5 billion, down 15.5% year over year.
At fourth-quarter end, debt was $3.7 billion, up 14.5%.
As of Dec 31, 2019, book value per share (excluding AOCI other than foreign currency translation adjustment) was $44.25, up 5.8% year over year.
Capital Deployment
Principal Financial paid out $152.4 million in dividends and bought back shares worth $83.5 million in the fourth quarter.
The board of directors approved fourth-quarter dividend of 55 cents per share, up 1.8% year over year.
Zacks Rank
Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Investment Managers
Of the insurance industry players that have reported fourth-quarter results so far, RLI Corp. (NYSE:RLI) , Brown & Brown, Inc. (NYSE:BRO) and The Travelers Companies, Inc. (NYSE:TRV) beat the respective Zacks Consensus Estimate for earnings.
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Brown & Brown, Inc. (BRO): Free Stock Analysis Report
Principal Financial Group, Inc. (PFG): Free Stock Analysis Report
RLI Corp. (RLI): Free Stock Analysis Report
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
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