01—Abstract
Summary
Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported total assets under administration of $1,578.7 billiona, including $694.5 billion in assets under management, as of December 31, 2023.
The company operates four reportable segments: Retirement and Income Solutions, Principal Asset Management, Benefits and Protection, and a Corporate segment. Net income attributable to Principal Financial Group, Inc. was $623.2 millionb for 2023, down from $4,756.9 million in 2022, primarily due to the change in fair value of the funds withheld embedded derivative, which produced a $1,085.7 million loss in 2023 versus a $3,652.8 million gain in 2022. Pre-tax operating earnings by segment were $1,051.4 million for Retirement and Income Solutions, $817.7 million for Principal Asset Management, and $537.6 million for Benefits and Protection, with Corporate at $(396.8) million.
Total revenues were $13,665.8 millionc in 2023 compared with $17,536.1 million in 2022. Net cash provided by operating activities was $3,792.4 million. Total stockholders' equity attributable to PFG rose to $10,916.0 million from $9,976.7 million, and the company's $1.5 billion share repurchase authorization approved in February 2024 is in addition to $287.9 million remaining under the prior program.
Treasury stock acquisitions totaled $748.8 milliond for 2023 under the company's repurchase programs. Ratings were reported as stable across A.M.
Best, Fitch, Moody's and S&P, with Principal Life Insurance Company rated A+ by A.M. Best and S&P.
02—Key points
Key Highlights
- Net income attributable to Principal Financial Group, Inc. fell to $623.2 million in 2023 from $4,756.9 million in 2022, driven mainly by the change in fair value of the funds withheld embedded derivative.
- Total revenues were $13,665.8 million in 2023 versus $17,536.1 million in 2022; the Talcott Reinsurance Transaction affected comparability.
- Assets under administration were $1,578.7 billion and assets under management were $694.5 billion as of December 31, 2023.
- Retirement and Income Solutions pre-tax operating earnings were $1,051.4 million, up from $959.1 million in 2022.
- Total stockholders' equity attributable to PFG increased to $10,916.0 million; debt to equity was 37% at year-end 2023 compared with 41% a year earlier.
- In February 2024 the Board authorized a new share repurchase program of up to $1.5 billion, in addition to $287.9 million remaining under the existing authorization.
- Insurer financial strength ratings were reaffirmed as stable, with A.M. Best rating Principal Life A+ (Superior) and S&P rating it A+ (Strong).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 20, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $13.67B$17.54B | −22.1% |
| Net Income | $670.10M$4.85B | −86.2% |
| EPS (Basic) | $2.58$18.94 | −86.4% |
| EPS (Diluted) | $2.55$18.63 | −86.3% |
| Shares Outstanding (Basic) | 241.30M251.10M | −3.9% |
| Shares Outstanding (Diluted) | 244.60M255.30M | −4.2% |
05—Questions
Frequently Asked Questions
Why did net income fall so sharply in 2023?
The filing states that net income attributable to Principal Financial Group, Inc. decreased primarily due to the change in fair value of the funds withheld embedded derivative, which was a loss of $1,085.7 million in 2023 compared with a gain of $3,652.8 million in 2022. The loss was attributed mainly to a tightening of credit spreads.
What is the Talcott Reinsurance Transaction?
During the second quarter of 2022, PFG closed a coinsurance with funds withheld reinsurance transaction with Talcott Life & Annuity Re, an affiliate of Talcott Resolution Life, Inc., a subsidiary of Sixth Street. PFG ceded its in-force U.S. retail fixed annuity and universal life insurance with secondary guarantee blocks of business, with economics effective as of January 1, 2022.
How much capital did the company return to stockholders in 2023?
The filing reports total cash returned to common stockholders of $1,374.3 million in 2023, consisting of $625.5 million in dividends and $748.8 million in repurchases of common stock. The company repurchased 9,581,329 shares during the year.
How much could Principal Life pay in dividends to the parent without regulatory approval in 2024?
Based on 2023 statutory results, the filing states that Principal Life could pay approximately $1,497.8 million in ordinary stockholder dividends in 2024 without prior regulatory approval. Dividends paid if made before a specified date during 2024 may be extraordinary and require approval.
What were the company's credit and financial strength ratings?
Senior unsecured debt of PFG was rated a (A.M. Best), A- (Fitch), Baa1 (Moody's) and A- (S&P). Principal Life's insurer financial strength was rated A+ by A.M. Best, AA- by Fitch, A1 by Moody's and A+ by S&P, all with stable outlooks as of the filing.
06—Continue