Principal Financial (PFG) Q3 Earnings call transcript Oct 25, 2024
1min read The Principal Financial Group (Principal) recently held its third quarter earnings call, highlighting a period of steady financial performance in a challenging macroeconomic environment. Despite the ongoing volatility, the company reported a net loss of $220 million in the third quarter, driven by noneconomic impacts from exited businesses. However, excluding these impacts, net income stood at $419 million, with non-GAAP operating ROE at 12.9%.
CEO Dan Houston and President and COO Deanna Strable-Soethout led the call, outlining key financial highlights and strategic initiatives across the company's three primary business units: Retirement and Income Solutions (RIS), Principal Asset Management (PGI), and Benefits and Protection. The company's strong capital position, with a total company managed AUM of $741 billion, underscores its robust financial health.
Retirement and Income Solutions (RIS)
RIS reported strong revenue and earnings growth above the high end of guidance, driven by favorable market conditions and the breadth of its integrated retirement solutions. This includes recordkeeping, asset management, and retirement income services. The underlying fundamentals of the retirement business remain healthy, with recurring deposits increasing by 10% year-over-year and lapse rates running lower than a year ago. The company is on track to achieve its best full-year retention rates over the past five years.
Principal Asset Management (PGI)
PGI showcased positive net cash flows, particularly in Principal International, which reached a record $185 billion in AUM, up 8% from the previous quarter. This growth is attributed to robust net cash flows, favorable market performance, and FX tailwinds. The company's focus on global expansion and diversification is evident, with asset management inflows exceeding $18 billion in the quarter.
Benefits and Protection
In the Benefits and Protection segment, the company continues to generate above-market premium and fee growth, with a focus on high-growth, high-persistency industries. This focus on strategic areas is driving growth and strengthening relationships with key distribution partners and customers.
Outlook and Future Prospects
The company remains confident in its ability to deliver full-year EPS growth aligned with its 9% to 12% guidance, despite the challenges posed by the macroeconomic environment. The management team's strategic focus on capital deployment, stock buybacks, and dividend policy is a testament to their commitment to shareholder value.
The Principal Financial Group's third quarter earnings call provided a comprehensive overview of its financial health and strategic initiatives. The company's resilience in the face of market volatility underscores its strength and adaptability, positioning it well for the future. The company's focus on capital deployment, strategic growth, and customer-centric initiatives is a testament to its commitment to delivering value to its stakeholders. With its robust financial position and strategic direction, Principal Financial Group is well-positioned to navigate the evolving market landscape and capitalize on growth opportunities.
