01—Abstract
Summary
Summary of the 10-K filed February 10, 2016. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported $527.4 billiona in assets under management and approximately 19.1 million customers worldwide as of December 31, 2015.
The company operates through four reportable segments: Retirement and Income Solutions, Principal Global Investors, Principal International and U.S. Insurance Solutions, plus a Corporate segment. Net income attributable to Principal Financial Group, Inc. was $1,234.0 millionb in 2015, up from $1,144.1 million in 2014, and net income available to common stockholders was $1,209.3 million, with diluted earnings per share of $4.06 compared with $3.65 in 2014. Total revenues rose to $11,964.4 million from $10,477.6 million, though net realized capital losses of $51.1 million partly offset growth.
Segment results were mixed. Retirement and Income Solutions pre-tax operating earnings fell to $740.1 millionc from $851.2 million, driven by an unfavorable DAC unlocking and higher staff costs in the Fee business and lower variable investment income in the Spread business. Principal Global Investors pre-tax operating earnings rose to $388.5 million from $350.1 million on higher management fee revenue tied to AUM, which grew to $360.8 billion.
Principal International pre-tax operating earnings declined to $271.3 milliond from $352.7 million, reflecting currency weakness in Latin America, Chilean pension fund market changes and intangible asset impairments in Brazil. U.S. Insurance Solutions pre-tax operating earnings increased to $429.5 million from $344.1 million. Balance sheet and capital activity were significant in 2015.
Long-term debt increased to $3,290.8 million from $2,531.2 million after the issuance of $400.0 million of 3.4% senior notes due 2025 and $400.0 million of junior subordinated notes due 2055. The company redeemed its series A and series B preferred stock, which required $550.0 million, and returned $741.6 million to common stockholders through dividends of $441.0 million and repurchases of $300.6 million.
Total stockholders' equity declined to $9,377.4 million from $10,232.0 million, largely due to a $922.6 million decline in accumulated other comprehensive income. Net cash provided by operating activities was $4,377.1 million.
02—Key points
Key Highlights
- Assets under management reached $527.4 billion at December 31, 2015, up from $519.3 billion in 2014, with Principal Global Investors managing $360.8 billion.
- Total revenues increased to $11,964.4 million in 2015 from $10,477.6 million in 2014, while net income attributable to PFG rose to $1,234.0 million from $1,144.1 million.
- Diluted earnings per share were $4.06 in 2015 compared with $3.65 in 2014, and dividends declared per common share increased to $1.50 from $1.28.
- Retirement and Income Solutions pre-tax operating earnings declined to $740.1 million from $851.2 million, while Principal Global Investors pre-tax operating earnings increased to $388.5 million from $350.1 million.
- Long-term debt rose to $3,290.8 million after issuing $400.0 million of 3.4% senior notes due 2025 and $400.0 million of junior subordinated notes due 2055.
- The company redeemed its series A and series B preferred stock and repurchased $300.6 million of common stock in 2015, returning $741.6 million in total to common stockholders.
- Total stockholders' equity decreased to $9,377.4 million from $10,232.0 million, reflecting a $922.6 million other comprehensive loss in 2015.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 10, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $11.96B$10.48B | +14.2% |
| Net Income | $1.23B$1.14B | +7.9% |
| EPS (Basic) | $4.11$3.70 | +11.1% |
| EPS (Diluted) | $4.06$3.65 | +11.2% |
| Shares Outstanding (Basic) | 294.40M294.70M | −0.1% |
| Shares Outstanding (Diluted) | 298.00M298.70M | −0.2% |
05—Questions
Frequently Asked Questions
How did Principal Financial Group's earnings change in 2015?
Net income attributable to Principal Financial Group, Inc. increased to $1,234.0 million in 2015 from $1,144.1 million in 2014. Net income available to common stockholders rose to $1,209.3 million from $1,111.1 million, and diluted earnings per share were $4.06 compared with $3.65. The filing attributes the increase in part to a change in deferred tax balances from the merger of two Chilean legal entities, partially offset by net realized capital losses.
Which segments drove the results?
Principal Global Investors pre-tax operating earnings rose to $388.5 million from $350.1 million on higher management fee revenue tied to increased AUM. U.S. Insurance Solutions pre-tax operating earnings increased to $429.5 million from $344.1 million. Retirement and Income Solutions pre-tax operating earnings declined to $740.1 million from $851.2 million, and Principal International declined to $271.3 million from $352.7 million.
What did the company do with its capital in 2015?
The company issued $400.0 million of 3.4% senior notes due 2025 and $400.0 million of junior subordinated notes due 2055, using proceeds mainly to redeem its series A and series B preferred stock for a combined $550.0 million. It also paid $441.0 million in common dividends and repurchased $300.6 million of common stock, and its board authorized an additional $150.0 million repurchase program in October 2015.
What were the main factors affecting Principal International's results?
The filing states that Principal International pre-tax operating earnings decreased primarily due to the weakening of Latin American currencies against the U.S. dollar, unfavorable market changes on the required regulatory investment in Chilean pension funds, and intangible asset impairments in the Brazilian mutual fund company in the third quarter of 2015. Higher earnings from equity method investments in Brazil and China partially offset these declines.
What ratings did the company's insurance subsidiaries receive?
A.M. Best affirmed an A+ financial strength rating for Principal Life and Principal National Life Insurance Company in January 2016 with a stable outlook. Fitch affirmed AA– with a stable outlook in November 2015, S&P affirmed A+ with a stable outlook in April 2015, and Moody's rated A1 with a stable outlook.
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