01—Abstract
Summary
Summary of the 10-Q filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. reported a net loss attributable to Principal Financial Group, Inc. of $220.0 milliona for the third quarter of 2024, compared with net income of $1,246.2 million in the third quarter of 2023.
For the nine months ended September 30, 2024, net income attributable to the company was $665.6 millionb, versus $1,494.9 million a year earlier. The filing attributes the decline primarily to the change in fair value of the funds withheld embedded derivative, which was a loss of $776.8 million in the quarter compared with a gain of $925.6 million in the prior-year quarter. Total revenues were $3,011.6 million for the quarter versus $4,598.7 million a year earlier, and total expenses rose to $3,305.4 million from $2,993.8 million, reflecting higher liability for future policy benefits remeasurement loss, market risk benefit remeasurement loss and operating expenses.
Segment pre-tax operating earnings were $499.8 millionc for the quarter versus $581.3 million a year earlier, with Retirement and Income Solutions, Principal Asset Management and Benefits and Protection all lower in the quarter, while Principal Asset Management pre-tax operating earnings rose to $268.7 million from $222.4 million. The company also cited actuarial assumption updates that decreased net income attributable to Principal Financial Group, Inc. by $85.7 million in the quarter, and a one-time impact of yearly renewable term reinsurance transactions in 2024 that affected the nine-month results. Capital activity remained significant: the company paid $492.7 million in dividends to common stockholders and repurchased $739.0 million of common stock during the nine months ended September 30, 2024, and total stockholders' equity attributable to Principal Financial Group, Inc. was $11,237.4 million at quarter end, up from $10,916.0 million at December 31, 2023.
Shares outstanding were 229,291,302 as of September 30, 2024. Management stated it is monitoring liquidity closely and reported the company's financial strength ratings as stable across A.M. Best, Fitch, Moody's and S&P.
02—Key points
Key Highlights
- Q3 2024 net loss attributable to Principal Financial Group, Inc. of $220.0 million, versus net income of $1,246.2 million in Q3 2023
- Change in fair value of funds withheld embedded derivative was a $776.8 million loss in Q3 2024 compared with a $925.6 million gain in Q3 2023, the main driver of the earnings decline
- Total revenues fell to $3,011.6 million in Q3 2024 from $4,598.7 million; total expenses rose to $3,305.4 million from $2,993.8 million
- Basic loss per common share of $(0.95) in Q3 2024 versus basic earnings of $5.17 in Q3 2023; nine-month basic EPS of $2.85 versus $6.17
- Net investment income rose to $1,167.6 million in Q3 2024 from $989.2 million, and nine-month net investment income increased to $3,325.9 million from $2,964.0 million
- Returned $1,231.7 million to common stockholders in the nine months ended September 30, 2024, including $492.7 million in dividends and $739.0 million in share repurchases
- Stockholders' equity attributable to Principal Financial Group, Inc. increased to $11,237.4 million from $10,916.0 million at year-end 2023
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 30, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $3.01B$4.60B | −34.5% |
| Net Income | -$220.00M$1.25B | −117.7% |
| EPS (Basic) | $-0.95$5.17 | −118.4% |
| EPS (Diluted) | $-0.95$5.10 | −118.6% |
| Shares Outstanding (Basic) | 230.70M241.10M | −4.3% |
| Shares Outstanding (Diluted) | 230.70M244.30M | −5.6% |
05—Questions
Frequently Asked Questions
Why did Principal Financial Group's net income swing to a loss in the third quarter of 2024?
The filing states the decline was due primarily to the change in fair value of the funds withheld embedded derivative, which produced a $776.8 million loss in Q3 2024 compared with a $925.6 million gain in Q3 2023. The filing links this to a decrease in interest rates in 2024 versus an increase in 2023. Higher liability for future policy benefits remeasurement loss and market risk benefit remeasurement loss also contributed.
How did the company's segment operating earnings perform?
Total segment pre-tax operating earnings were $499.8 million in Q3 2024 versus $581.3 million in Q3 2023. Retirement and Income Solutions fell to $246.1 million from $304.7 million, and Benefits and Protection fell to $64.4 million from $169.0 million. Principal Asset Management rose to $268.7 million from $222.4 million.
What did management say about actuarial assumption updates?
The filing states that assumption updates, model refinements and other updates made in the third quarter decreased consolidated net income attributable to Principal Financial Group, Inc. by $85.7 million for the three and nine months ended September 30, 2024. The updates were primarily unfavorable for Benefits and Protection's Individual disability and Term life businesses.
How is the company managing capital and liquidity?
The filing reports $3,337.5 million of cash and liquid assets held in the holding companies and other subsidiaries as of September 30, 2024. It also cites an $800.0 million credit facility, with no commercial paper outstanding, and a February 2024 share repurchase authorization of up to $1.5 billion with no expiration. Principal Life paid $885.0 million in stockholder dividends to its parent during the nine months, all approved as extraordinary by the Iowa Commissioner.
What are the company's financial strength ratings?
The filing lists stable outlooks from all four agencies. Principal Life Insurance Company's insurer financial strength ratings are A+ from A.M. Best, AA- from Fitch, A1 from Moody's and A+ from S&P, and the filing states there were no significant changes in ratings through the filing date.
06—Continue