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Principal Financial Group Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed March 2, 2006
Period End
December 31, 2005
Security
PFG
In the record · 2016–202610-K1110-Q338-K163

PFG filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 163 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · May ’19May ’19
  3. Leadership change8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed March 2, 2006. Cited figures are marked; the original filing is the authoritative source.

Principal Financial Group, Inc. (PFG) reported $195.2 billiona in assets under management and approximately fifteen million customers worldwide as of December 31, 2005.

The company organizes its businesses into three operating segments: U.S. Asset Management and Accumulation, International Asset Management and Accumulation, and Life and Health Insurance, with a Corporate and Other segment. Total operating revenues were $9,032.1 millionb in 2005, up from $8,418.6 million in 2004, and total U.S. GAAP revenues were $9,007.7 million. Net income available to common stockholders rose to $901.3 million, or $3.11 diluted net income per share, from $825.6 million in 2004, with preferred stock dividends of $17.7 million in 2005 following the June 2005 preferred issuance.

Segment operating earnings totaled $862.4 millionc in 2005 versus $764.8 million in 2004, led by U.S. Asset Management and Accumulation at $538.4 million and Life and Health Insurance at $274.4 million. Total assets reached $127.0 billion at year-end 2005, and stockholders' equity was $7.8 billion. The company repurchased shares heavily during 2005, including an accelerated stock repurchase of approximately 13.7 million shares with an initial payment of $542.3 million, and its common shares outstanding fell to 280.6 million from 300.6 million.

Key risk areas disclosed include exposure to securities market declines, credit and commercial mortgage defaults (with 18%d of commercial mortgage loans in California), ratings downgrade consequences, interest rate management, litigation including a New York Attorney General subpoena and a pending sales practices class action, and dividend limits imposed by Iowa insurance law on Principal Life. Management stated that pending litigation is not expected to have a material adverse effect on the business or financial position.

02—Key points

Key Highlights

  1. Assets under management of $195.2 billion as of December 31, 2005, with approximately fifteen million customers worldwide.
  2. Net income available to common stockholders of $901.3 million in 2005, compared with $825.6 million in 2004; diluted net income per share of $3.11.
  3. Total U.S. GAAP revenues of $9,007.7 million in 2005, compared with $8,301.2 million in 2004.
  4. Segment operating earnings of $862.4 million in 2005, with U.S. Asset Management and Accumulation contributing $538.4 million and Life and Health Insurance $274.4 million.
  5. Preferred stock issuance in June 2005 raised net proceeds of $296.0 million (Series A) and $246.0 million (Series B), with a $542.3 million initial payment under an accelerated stock repurchase.
  6. Annual common dividend increased to $0.65 per share in 2005 from $0.55 in 2004.
  7. Total assets of $127,035.4 million and stockholders' equity of $7,807.2 million at December 31, 2005.

03—Questions

Frequently Asked Questions

  1. How did Principal Financial Group's earnings change in 2005?

    Net income available to common stockholders was $901.3 million in 2005, up from $825.6 million in 2004. Income from continuing operations rose to $891.9 million from $700.9 million, while preferred stock dividends of $17.7 million were new in 2005.

  2. What are the company's main business segments?

    The company reports three operating segments: U.S. Asset Management and Accumulation ($4,099.2 million of 2005 operating revenues), International Asset Management and Accumulation ($604.5 million), and Life and Health Insurance ($4,387.5 million), plus a Corporate and Other segment.

  3. How much capital did the company return to shareholders in 2005?

    The filing shows $182.2 million in common dividends paid in 2005 and $868.4 million of treasury stock acquired, along with an accelerated stock repurchase settlement of $84.0 million. Common shares outstanding decreased to 280.6 million from 300.6 million.

  4. What legal and regulatory matters does the company face?

    The company is regularly involved in litigation, primarily as a defendant. It received a New York Attorney General subpoena in March 2005 and a Connecticut Attorney General subpoena in January 2006 related to compensation arrangements, and a 2004 class action concerning demutualization allocation remains pending. Management does not believe pending litigation will have a material adverse effect on its business or financial position.

  5. What limits the company's ability to pay dividends to stockholders?

    As a holding company, Principal Financial Group depends on dividends from Principal Life. Iowa insurance law limits those dividends to the greater of 10% of prior year-end statutory policyholder surplus or the prior year's statutory net gain from operations. Principal Life could pay approximately $630.7 million in stockholder dividends in 2006 without exceeding that limit.

04—Continue

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