01—Abstract
Summary
Summary of the 10-Q filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported net income attributable to Principal Financial Group, Inc. of $532.5 milliona for the three months ended March 31, 2024, compared with a loss of $140.1 million in the same period of 2023.
Management attributes the increase primarily to the change in fair value of the funds withheld embedded derivative, which was a $197.0 millionb gain in 2024 versus a $626.6 million loss in 2023. Total revenues rose to $4,053.3 million from $2,819.0 million, and diluted earnings per common share were $2.22 compared with a loss of $0.58 a year earlier. Pre-tax operating earnings by segment were $262.2 million for Retirement and Income Solutions, $187.1 million for Principal Asset Management, $111.8 million for Benefits and Protection and a loss of $88.9 million for Corporate, for total segment pre-tax operating earnings of $472.2 million.
At March 31, 2024, total assets were $308,683.5 millionc and total stockholders' equity attributable to PFG was $11,185.5 million, up from $10,916.0 million at December 31, 2023. Accumulated other comprehensive loss improved to $(5,256.1) million from $(5,345.3) million, while the company repurchased $232.3 million of common stock during the quarter. The Board authorized a new share repurchase program of up to $1.5 billion in February 2024, and the company paid $162.4 million in dividends to common stockholders, or $0.69 per share declared.
The filing shows cash and cash equivalents declining to $4,168.4 milliond from $4,707.7 million, and net cash provided by operating activities of $584.2 million. Debt to capitalization was 26% at March 31, 2024, versus 27% at December 31, 2023. Management reports that no significant changes occurred in credit ratings through the filing date, and the company states it has no unique material cash requirements from known contractual obligations.
02—Key points
Key Highlights
- Net income attributable to PFG of $532.5 million for Q1 2024 versus a loss of $140.1 million in Q1 2023, driven primarily by the funds withheld embedded derivative gain of $197.0 million compared with a $626.6 million loss a year earlier.
- Diluted EPS of $2.22 for the quarter versus a loss of $0.58 per share in the prior-year quarter.
- Total revenues increased to $4,053.3 million from $2,819.0 million, with premiums and other considerations up to $1,684.6 million from $1,448.6 million.
- Total segment pre-tax operating earnings of $472.2 million, up from $440.8 million, led by Retirement and Income Solutions at $262.2 million.
- Stockholders' equity attributable to PFG rose to $11,185.5 million from $10,916.0 million, with $232.3 million of common stock repurchased in the quarter.
- A new $1.5 billion share repurchase authorization was approved by the Board in February 2024, and dividends declared were $0.69 per common share.
- Average monthly account values in Retirement and Income Solutions increased to $522.6 billion from $463.5 billion, and Principal Global Investors AUM ended at $513.5 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 1, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $4.05B$2.82B | +43.8% |
| Net Income | $532.50M-$140.10M | +480.1% |
| EPS (Basic) | $2.26$-0.58 | +489.7% |
| EPS (Diluted) | $2.22$-0.58 | +482.8% |
| Shares Outstanding (Basic) | 236.00M243.40M | −3.0% |
| Shares Outstanding (Diluted) | 239.40M243.40M | −1.6% |
05—Questions
Frequently Asked Questions
What drove the swing from a net loss to a net profit in the first quarter of 2024?
The filing states that net income attributable to Principal Financial Group, Inc. increased primarily due to the change in fair value of the funds withheld embedded derivative, which produced a $197.0 million gain in 2024 compared with a $626.6 million loss in 2023. The company explains the gain resulted mainly from an increase in interest rates, versus a decrease in rates in the prior-year period.
How did the company's segments perform in the quarter?
Retirement and Income Solutions reported pre-tax operating earnings of $262.2 million, up from $249.8 million. Principal Asset Management reported $187.1 million, compared with $187.8 million. Benefits and Protection reported $111.8 million, up from $99.3 million, and Corporate reported a pre-tax operating loss of $88.9 million, improved from a loss of $96.1 million.
What is the company's capital return activity and balance sheet position?
During the quarter, the company paid $162.4 million in dividends to common stockholders and repurchased $232.3 million of common stock. Total stockholders' equity was $11,230.4 million and total assets were $308,683.5 million at March 31, 2024. Debt to capitalization was 26%, compared with 27% at year-end 2023.
What liquidity sources does the company cite?
The filing cites a committed $800.0 million revolving credit facility maturing in October 2027 with no outstanding balance, and cash and liquid assets of $2,214.6 million held at the holding companies and other subsidiaries. It also reports that Principal Life paid $440.0 million in extraordinary stockholder dividends to its parent during the quarter, approved by the Iowa Commissioner.
What were the main changes in operating and investing cash flows?
Net cash provided by operating activities was $584.2 million, down from $695.3 million, which the company attributes mainly to fluctuations in receivables and payables from settlement timing. Net cash used in investing activities was $1,343.2 million, up from $1,104.1 million, reflecting net acquisitions and originations of mortgage loans in 2024 compared with net sales in 2023.
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