Principal Financial Posts 21% Drop in 2Q Net as Exchange Rates Affect International Business
July 27, 2015 by Renée Kiriluk-Hill
Principal Financial Group’s second-quarter net income dropped by 21% while total operating revenues climbed by 34%.
Principal reported net income of $241.1 million.
In its international business, Principal operating earnings dropped by 13%, to $59.3 million. It said foreign exchange rates were largely to blame.
The company said its $539.9 billion in assets under management is a record high for Principal, and the share of earnings coming from its fee-based businesses continues to climb.
Those fee-based earnings, Terry Lillis, executive vice president and chief financial officer, said in a statement, are “enabling us to generate increased free cash flow … So far in 2015, we’ve announced plans to deploy more than $800 million of capital. In addition to the common stock dividends we paid in the first and second quarters, the current low interest rate environment provided us the opportunity to issue debt and redeem our preferred stock.”
Axa SA announced in November it was selling its pension businesses, the Mandatory Provident Fund and Occupational Retirement Schemes Ordinance, in Hong Kong to Principal for $335.4 million (Best’s News Service, Nov. 7, 2014).
Lillis said that deal is expected to be finalized on Sept. 1. “And we’ll continue repurchasing shares,” he said.
The company posted a jump in operating revenues to $3.4 billion from $2.5 billion.
Principal said its individual life second-quarter premiums and fees were up 4% over the second-quarter of 2014, and that sector’s operating earnings rose 32%, to $26.3 million “due to improved mortality.”
Its specialty benefits premiums and fees increased 8%, Principal said, because of “disciplined underwriting” and “strong retention and growth.”
Principal Life Insurance Co. and Principal National Life Insurance Co. each currently has a Best’s Financial Strength Rating of A+ (Superior).
Principal Financial Group (NYSE:PFG) was trading at $54.51 a share near midday July 24, up 3.87% from the previous close.
