Principal Financial Group (PFG) Q3 2024 earnings summary

Executive summary

• Reported a GAAP net loss of $220 million ($0.95 per diluted share) due to losses from exited business and derivative impacts, while non-GAAP operating earnings were $412 million ($1.76 per share); excluding significant variances, EPS was $2.05, up 12% year-over-year.

• Net revenue grew 5% year-over-year, with AUM reaching $741 billion, up 14% year-over-year and 6% sequentially; assets under administration totaled $1.7 trillion.

• Returned $416 million to shareholders in Q3 2024 ($251 million in share repurchases, $165 million in dividends), and raised the quarterly dividend to $0.73 per share.

• Segment performance was mixed: Retirement and International segments saw strong growth, while Specialty Benefits and Life Insurance faced headwinds from actuarial updates and claims.

• Completed actuarial assumption review and significant YRT reinsurance transactions, resulting in notable one-time impacts.

Financial highlights

• Non-GAAP operating earnings were $412 million (-2% year-over-year); excluding significant variances, earnings were $480 million (+7%).

• GAAP net loss of $220 million compared to net income of $1.25 billion in 3Q23, driven by derivative and exited business losses.

• Net investment income rose to $1,167.6 million, while net realized capital gains fell to $77.4 million.

• Non-GAAP operating ROE was 12.9% (13.5% excluding actuarial impacts); debt-to-capital ratio at 22%.

• Effective tax rate for Q3 2024 was 34%, up from 22% in Q3 2023.

Outlook and guidance

• Full-year 2024 non-GAAP EPS growth expected at 9%-12%, with capital deployment guidance of $1.5-$1.8 billion.

• Management remains confident in achieving best full-year retention rates in retirement and continued strong free cash flow.

• Ongoing monitoring of global economic and capital market conditions, interest rates, and regulatory changes.