Principal Financial Group, Inc.’s PFG fourth-quarter 2024 operating net income of $1.94 per share missed the Zacks Consensus Estimate by 0.5%. However, the bottom line increased 6% year over year.
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Total revenues jumped 76.6% year over year to $4.7 billion due to increased fees and other revenues. The metric beat the Zacks Consensus Estimate by 17.9%.
Principal Financial witnessed reduced expenses, higher revenues across Specialty Benefits, Benefits and Protection, Investment Management segments, offset by soft performance in the Corporate, Life Insurance and International Pension segments.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Principal Financial Group, Inc. price-consensus-eps-surprise-chart | Principal Financial Group, Inc. Quote
Behind the Headlines
Total expenses decreased 4.2% year over year to $3.6 billion due to higher benefits, claims and settlement expenses. The figure was lower than our estimate of $4.4 billion.
As of Dec. 31, 2024, Principal Financial’s assets under management (AUM) amounted to $712 billion, which is included in assets under administration (AUA) of $1.7 trillion.
Segment Update
Retirement and Income Solution: Revenues decreased 6.3% year over year to $2.1 billion because of lower premiums and other considerations. The figure missed our estimate of $2.2 billion.
Pre-tax operating earnings increased 6% year over year to $280.1 million, primarily due to higher net revenues. The figure missed our estimate of $828.5 million.
Investment Management: Revenues of $474.6 million were up 9.6% from the prior-year quarter due to higher fees and other revenues and net investment income.
Pre-tax operating earnings increased 27% year over year to $163.9 million. The increase was primarily due to higher operating revenues less pass-through expenses and higher operating margin. Operating margin expanded 570 basis points year over year to 38.3%.
International Pension: Revenues decreased 21.6% year over year to $239.8 million because of lower premiums and other considerations, fees and other revenues and net investment income.
Pre-tax operating earnings decreased 40% year over year to $52.1 million, primarily due to lower net revenues. Operating margin contracted 1,100 basis points year over year to 38.1% primarily due to encaje performance.
Benefits and Protection: Revenues increased 2.7% year over year to $1.2 billion owing to higher premiums and other considerations fees and other revenues. The figure beat our estimate of $1 billion.
Pre-tax operating earnings of $154.7 million rose 7.1% year over year. The metric beat our estimate of $40.7 million.
Specialty Benefits: Revenues increased 4.2% year over year to $873.3 million, owing to higher premiums and other considerations as well as net investment income. The metric beat our estimate of $801.8 million.
Pre-tax operating earnings of $147.2 million increased 23% year over year. The increase was primarily due to more favorable underwriting results in the reported quarter and growth in the business. The metric beat our estimate of $111.1 million.
Life Insurance: Revenues decreased 1.4% year over year to $329.3 million, owing to lower premiums and other considerations and net investment income. The metric beat our estimate of $280 million.
Pre-tax operating earnings of $7.5 million declined 70% year over year. The decrease was due to higher mortality owing to severity and a GAAP-only regulatory closed block dividend adjustment. Our estimate was pegged at a loss of $70.5 million.
Corporate: Pre-tax operating losses of $103.9 million were wider than a loss of $88.5 million incurred a year ago. The losses increased primarily due to lower variable investment income compared to the year-ago quarter. Our estimate was pegged at a loss of $92.4 million.
Financial Update
As of Dec. 31, 2024, cash and cash equivalents were $4.2 billion, which decreased 10.5% from 2023-end.
At the fourth-quarter end, long-term debt was $3.9 billion, which inched up 0.6% from 2023-end. As of Dec. 31, 2024, book value per share (excluding cumulative change in fair value of funds withheld embedded derivative and AOCI other than foreign currency translation adjustment) was $53.69, down 0.3% from 2023-end.
Dividend and Share Repurchase Update
Principal Financial returned $1.7 billion of capital to shareholders for 2024, including $1 billion of share repurchases and $0.7 billion of dividends.
The board of directors raised the first-quarter dividend by 9% to 75 cents per share. The dividend will be payable on March 28, 2025, to shareholders of record as of March 12.
The board approved a new authorization for the repurchase of $1.5 billion of the company’s outstanding shares. As of Dec. 31, 2024, approximately $0.8 billion remained under the company’s prior authorization.
Full-Year Highlights
For 2024, Principal Financial reported an operating net income of $6.97 per share, which missed the Zacks Consensus Estimate by 0.2%. However, it increased 6% year over year.
Total operating revenues of $15.63 billion beat the consensus mark by 0.3%. Moreover, it increased 6.6% year over year.
2025 Guidance
Principal Financial expects 9-12% annual non-GAAP operating earnings per diluted share growth.
PFG estimates 75-85% free capital flow conversion. It expects 14-16% non-GAAP return on equity. The insurer projects $1.4-$1.7 billion capital deployment.
Zacks Rank
Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Multi-Line Insurers
The Hartford Financial Services Group, Inc. HIG reported fourth-quarter 2024 adjusted operating earnings of $2.94 per share, which beat the Zacks Consensus Estimate by 10.1%. However, the bottom line decreased 3.9% year over year. HIG's operating revenues amounted to $4.8 billion, which improved 11.1% year over year in the quarter under review. The top line beat the consensus mark by a whisker. Earned premiums of Hartford Financial rose 6.9% year over year to $5.8 billion in the fourth quarter but missed the Zacks Consensus Estimate by 0.7%.
Pre-tax net investment income of $714 million grew 9.3% year over year and beat the consensus mark by 5.5%. Net investment income witnessed year-over-year growth in both the Property and Casualty and Group Benefits segments. Total benefits, losses and expenses increased 6.5% year over year to $5.8 billion in the quarter under review.
Everest Group, Ltd. EG reported fourth-quarter 2024 operating loss of $18.39 per share, wider than the Zacks Consensus Estimate of a loss of $16.65. EG had reported an operating income of $25.18 per share in the year-ago quarter. Everest Group’s total operating revenues of nearly $4.64 billion increased 26.7% year over year on higher premiums earned and net investment income.
The top line beat the consensus mark by 4.4%. Gross written premiums improved 8% year over year to $4.7 billion. Our estimate was $5.1 billion. Net investment income was $473 million, which increased 15.1% year over year. Our estimate was $419.5 million. The Zacks Consensus Estimate was pegged at $496 million. Total claims and expenses surged 59% to $5.4 billion.
MGIC Investment Corporation MTG reported fourth-quarter 2024 operating net income per share of 72 cents, which beat the Zacks Consensus Estimate by 10.8%. Moreover, the bottom line increased 10.2% year over year. MGIC Investment recorded total operating revenues of $303.1 million, which increased 6.4% year over year. The top line however missed the consensus mark by 1.1%. Insurance in force increased 0.6% from the prior-year quarter to $295.4 billion. The Zacks Consensus Estimate was $294 billion. Our estimate was $293.6 billion.
The insurer witnessed a 4.4% increase in primary delinquency to 26,791 loans. Net premiums written increased 5.9% year over year to $232.1 million. The figure was higher than our estimate of $231.1 million. Net investment income increased 6.1% year over year to $61.3 million. Our estimate was $66.9 million. The Zacks Consensus Estimate was pegged at $65 million.
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