01—Abstract
Summary
Summary of the 10-K filed February 14, 2020. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported $735.3 billiona in assets under management (AUM) as of December 31, 2019, up from $626.8 billion in 2018.
Total revenues were $16,222.1 millionb in 2019 versus $14,237.2 million in 2018, while net income attributable to Principal Financial Group, Inc. declined to $1,394.2 million from $1,546.5 million. Diluted earnings per share were $4.96, compared with $5.36 in 2018. The decline was driven primarily by a $73.9 million favorable 2018 real estate realignment item and $68.6 million of unfavorable actuarial assumption updates in 2019.
The company completed the acquisition of the Institutional Retirement & Trust (IRT) business from Wells Fargo Bank, N.A. on July 1, 2019, for $1.2 billion in cash plus an earn-out of up to $150.0 millionc. The IRT business had $898.2 billion in assets under administration at year-end, and the filing notes that customer migration is expected to begin in late 2020 and continue into 2021. Total stockholders' equity rose to $14,685.8 million from $11,456.0 million, and total assets were $276,087.8 million.
Cash returned to common stockholders totaled $887.0 milliond in 2019, comprising $606.0 million in dividends and $281.0 million in share repurchases. Dividends declared per share increased to $2.18 from $2.10. Net cash provided by operating activities was $5,493.2 million.
The filing reports senior debt ratings of A-/Baa2 for PFG and A+ insurer financial strength ratings for Principal Life and PNLIC from A.M. Best and S&P, with A.M. Best affirming its ratings in February 2020.
02—Key points
Key Highlights
- AUM reached $735.3 billion at December 31, 2019, up from $626.8 billion at year-end 2018.
- Total revenues rose to $16,222.1 million from $14,237.2 million, while net income attributable to PFG declined to $1,394.2 million from $1,546.5 million.
- Diluted EPS was $4.96 in 2019 versus $5.36 in 2018; dividends declared per share rose to $2.18 from $2.10.
- The $1.2 billion acquisition of Wells Fargo's IRT business closed July 1, 2019, adding $898.2 billion in assets under administration.
- Total stockholders' equity increased to $14,685.8 million from $11,456.0 million, with accumulated other comprehensive income swinging to $1,037.9 million from a loss of $1,565.1 million.
- Cash returned to common stockholders totaled $887.0 million, including $281.0 million of share repurchases.
- Net cash provided by operating activities was $5,493.2 million, compared with $5,156.5 million in 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 14, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $16.22B$14.24B | +13.9% |
| Net Income | $1.39B$1.55B | −9.8% |
| EPS (Basic) | $5.00$5.41 | −7.6% |
| EPS (Diluted) | $4.96$5.36 | −7.5% |
| Shares Outstanding (Basic) | 278.60M285.80M | −2.5% |
| Shares Outstanding (Diluted) | 281.00M288.80M | −2.7% |
05—Questions
Frequently Asked Questions
What drove the decline in net income in 2019?
The filing attributes the decrease in net income attributable to PFG primarily to a $73.9 million favorable impact in 2018 from the realignment of a real estate investment team, and to $68.6 million of actuarial assumption updates and model refinements that were unfavorable in 2019 compared with a favorable impact in 2018.
What is the Wells Fargo IRT acquisition and how is it being integrated?
PFG acquired the Institutional Retirement & Trust business of Wells Fargo Bank, N.A. on July 1, 2019, for $1.2 billion in cash plus up to $150.0 million in earn-out payments tied to retention of fee revenue through December 31, 2020. The filing says integration and customer migration are expected to begin in late 2020 and continue into 2021, with Wells Fargo continuing to service customers under a transition services agreement in the meantime.
How much did PFG return to shareholders in 2019?
The filing reports total cash returned to common stockholders of $887.0 million in 2019, consisting of $606.0 million in dividends and $281.0 million in repurchases of common stock, with 5.5 million shares repurchased.
What are PFG's credit and financial strength ratings?
Principal Life and Principal National Life Insurance Company are rated A+ by A.M. Best, AA- by Fitch, A+ by S&P and A1 by Moody's, all with stable outlooks. PFG's senior unsecured debt is rated a by A.M. Best, A- by Fitch and S&P, and Baa2 by Moody's. In February 2020, A.M. Best affirmed its insurer ratings and upgraded PFG's long-term issuer credit ratings.
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