01—Abstract
Summary
Summary of the 10-K filed February 17, 2010. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported $284.7 billiona in assets under management and approximately 18.9 million customers worldwide as of December 31, 2009.
The company is a provider of retirement savings, investment and insurance products, with a primary focus on small and medium-sized businesses, and organizes its operations into four reportable segments: U.S. Asset Accumulation, Global Asset Management, International Asset Management and Accumulation, and Life and Health Insurance, plus a Corporate segment. Financial results improved in 2009. Net income available to common stockholders was $589.7 millionb, compared with $425.1 million in 2008, primarily due to a $211.5 million after-tax decrease in net realized capital losses.
Total revenues declined to $8,849.1 millionc from $9,935.9 million, reflecting lower premiums, fees and net investment income. Total stockholders' equity rose to $8,016.4 million from $2,569.3 million, aided by a May 2009 common stock issuance that netted $1,109.1 million. Total assets were $137,759.4 million at year-end.
The filing highlights continued pressure from the financial crisis: $553.2 milliond, or 1.24%, of total fixed maturity securities were classified as problem, potential problem or restructured, and the four major rating agencies maintained negative outlooks on the U.S. life insurance industry. Principal Life's financial strength ratings remained in the A+ to Aa3 range, and several class-action lawsuits related to ERISA and fund fees remained pending.
02—Key points
Key Highlights
- Assets under management of $284.7 billion and approximately 18.9 million customers worldwide as of December 31, 2009.
- Net income available to common stockholders of $589.7 million in 2009, up from $425.1 million in 2008, driven mainly by a $211.5 million after-tax decrease in net realized capital losses.
- Total revenues of $8,849.1 million in 2009, down from $9,935.9 million in 2008; net investment income fell to $3,400.8 million from $3,994.3 million.
- Issued 58.2 million common shares in May 2009 at $19.75 per share, with net proceeds of $1,109.1 million; total stockholders' equity increased to $8,016.4 million.
- Problem, potential problem and restructured fixed maturity securities were $553.2 million, or 1.24% of total fixed maturity securities, up from 0.65% in 2008.
- Commercial mortgage loans totaled $10,121.8 million, with problem, potential problem and restructured commercial mortgages at 6.20% of total commercial mortgages.
- Insurer financial strength ratings for Principal Life include A+ (A.M. Best), AA- (Fitch), Aa3 (Moody's) and A+ (S&P), with negative outlooks from A.M. Best and Fitch.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 17, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $8.85B$9.94B | −10.9% |
| Net Income | $622.70M$458.10M | +35.9% |
| EPS (Basic) | $1.98$1.64 | +20.7% |
| EPS (Diluted) | $1.97$1.63 | +20.9% |
| Shares Outstanding (Basic) | 297.30M259.30M | +14.7% |
| Shares Outstanding (Diluted) | 298.90M261.10M | +14.5% |
05—Questions
Frequently Asked Questions
How did Principal Financial Group's earnings change in 2009?
Net income available to common stockholders rose to $589.7 million from $425.1 million in 2008. The filing attributes the increase primarily to a $211.5 million after-tax decrease in net realized capital losses, partially offset by lower earnings in the Global Asset Management segment.
What is the company's exposure to problem or troubled investments?
As of December 31, 2009, problem, potential problem and restructured fixed maturity securities totaled $553.2 million, or 1.24% of total fixed maturity securities, compared with 0.65% at year-end 2008. Problem, potential problem and restructured commercial mortgages were $627.8 million, or 6.20% of total commercial mortgages, up from 1.64%.
What are the main risks to the company's credit ratings?
The filing states that A.M. Best, Fitch, Moody's and Standard & Poor's all maintained negative outlooks on the U.S. life insurance industry at year-end 2009. A ratings downgrade could increase policy surrenders, reduce new sales, terminate distributor relationships and raise the cost of capital.
How much capital did the company raise and what was its debt position?
In May 2009 the company issued $750.0 million of senior notes and 58.2 million common shares netting $1,109.1 million. Long-term debt rose to $1,584.6 million from $1,290.5 million, while short-term debt fell to $101.6 million from $500.9 million.
What dividends did the company pay?
The company declared and paid an annual common cash dividend of $0.50 per share in 2009, totaling $159.5 million, compared with $0.45 per share in 2008. Preferred stock dividends were $33.0 million in both years.
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