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Principal Financial Group 8-K Report, Financial Results (Feb 12, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 12, 2024
Period End
February 12, 2024
Security
PFG
In the record · 2016–202610-K1110-Q338-K163

PFG filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 163 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Sep ’18Sep ’18
  2. Leadership change8-K · Sep ’20Sep ’20
  3. Material agreement8-K · Oct ’22Oct ’22
  4. Material agreement8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed February 12, 2024. Cited figures are marked; the original filing is the authoritative source.

Principal Financial Group, Inc. (Nasdaq: PFG) reported full-year and fourth-quarter 2023 results in this 8-K, furnishing its earnings release as Exhibit 99.

For full year 2023, net income attributable to PFG was $623 milliona, or $2.55 per diluted share, which includes $892 million of loss from exited business. Non-GAAP operating earnings were $1,603 million, or $6.55 per diluted share, compared with $1,618.8 million, or $6.34 per diluted share, in 2022. For the fourth quarter, the company reported a net loss attributable to PFG of $872 million, or $3.66 per diluted share, including $1,171 million of loss from exited business, while non-GAAP operating earnings were $441 million, or $1.83 per diluted share.

The company returned $1.3 billionb of capital to shareholders in 2023, including $0.4 billion in the fourth quarter. The Board raised the first-quarter 2024 common stock dividend to $0.69 per share and approved a new $1.5 billion share repurchase authorization; about $0.3 billion remained under the prior authorization as of December 31, 2023. Assets under management were $695 billion, and the company reported $1.7 billion of excess and available capital at its holding companies and other subsidiaries.

For 2024, management expects 9-12% annual non-GAAP EPS growth, 75-85% free capital flow conversion, and $1.5c-$1.8 billion of capital deployment, with long-term targets unchanged. Segment results were mixed: Retirement and Income Solutions pre-tax operating earnings rose 30% in the quarter, while Principal Global Investors and Life Insurance were flat to lower, and Specialty Benefits premium and fees grew 9% for the full year.

02—Key points

Key Highlights

  1. Full-year 2023 net income attributable to PFG was $623 million ($2.55 per diluted share), including $892 million of loss from exited business; fourth-quarter net loss was $872 million ($3.66 per diluted share), including $1,171 million of exited business loss.
  2. Full-year 2023 non-GAAP operating earnings were $1,603 million ($6.55 per diluted share), versus $6.34 per diluted share in 2022; fourth-quarter non-GAAP operating earnings were $441 million ($1.83 per diluted share).
  3. Quarterly common stock dividend raised to $0.69 per share for Q1 2024, bringing the trailing twelve-month dividend to $2.65 per share, a 4% increase.
  4. New $1.5 billion share repurchase authorization approved by the Board; approximately $0.3 billion remained under the prior authorization at December 31, 2023.
  5. Returned $1.3 billion to shareholders in 2023, including $0.7 billion of share repurchases (9.1 million shares) and $0.6 billion of common dividends.
  6. 2024 outlook: 9-12% annual non-GAAP EPS growth, 75-85% free capital flow conversion, and $1.5-$1.8 billion capital deployment; long-term targets unchanged, including 14-16% non-GAAP ROE.
  7. Retirement and Income Solutions full-year sales rose 9%, including $2.9 billion of pension risk transfer sales; Principal International reported record AUM of $180.4 billion, up 15%.

03—Questions

Frequently Asked Questions

  1. Why was the fourth-quarter GAAP net loss so large compared with non-GAAP operating earnings?

    The release attributes the gap mainly to loss from exited business, which totaled $1,171 million in the fourth quarter. The release shows this is driven largely by a $1,478.6 million change in fair value of the funds withheld embedded derivative. Non-GAAP operating earnings exclude this item, along with net realized capital gains and losses and other after-tax adjustments.

  2. How much capital did Principal return to shareholders, and what is the remaining buyback capacity?

    Principal returned $1.3 billion in 2023, including $0.4 billion in the fourth quarter. The Board approved a new $1.5 billion repurchase authorization, and about $0.3 billion remained under the prior authorization as of December 31, 2023.

  3. What is management guiding to for 2024?

    Management expects 2024 non-GAAP EPS growth of 9-12% compared with 2023, based on macroeconomic assumptions as of December 31, 2023. It also expects 75-85% free capital flow conversion and $1.5-$1.8 billion of capital deployment. The long-term targets are unchanged, including a 40% dividend payout ratio and 14-16% non-GAAP ROE.

  4. Which business segments drove performance in 2023?

    Retirement and Income Solutions was the strongest, with full-year pre-tax operating earnings of $1,051.4 million, up 10%, and fourth-quarter pre-tax operating earnings up 30%. Specialty Benefits premium and fees grew 9% for the full year. Principal Global Investors pre-tax operating earnings fell 15% for the full year, and Life Insurance pre-tax operating earnings fell 41%.

  5. Is Principal's capital position strong enough to support its capital returns?

    The release cites $1.7 billion of excess and available capital at the holding companies and other subsidiaries, aided by management actions to increase capital efficiency. It also reports a statutory risk-based capital ratio of 427% for Principal Life Insurance Company.

04—Continue

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