DEF: Principal Financial Group Announces CEO Transition and Reports Strong 2024 Performance

Principal Financial Group reports a CEO leadership transition effective January 2025 and highlights strong 2024 earnings driven by strategic focus and growth in key markets.

Summary

• Principal Financial Group marked its 145th anniversary in July 2024.
• A CEO leadership transition was announced, becoming official in January 2025.
• The company is focused on three growth drivers: the small and midsized business market, the retirement ecosystem, and global asset management.
• In 2024, SMB recurring deposits grew 8 percent, group benefits premium and fees grew 7 percent, and business market life insurance premium and fees grew 16 percent.
• RILA sales reached $1.3 billion, and pension risk transfers totaled $3.1 billion in 2024.
• Principal manages $140 billion of institutional assets for over 600 clients.
• The Data Center Growth & Income Fund raised over $3.6 billion across 11 countries.
• Full-year non-GAAP operating earnings per diluted share, excluding significant variances of $7.65, increased 11%, in line with long-term guidance of 9-12%.
• The company ended 2024 with $712 billion of total company assets under management and $1.7 trillion in assets under administration.
• Principal returned $1.7 billion to shareholders during the year.
• The annual common stock dividend increased by 10 percent on a trailing 12-month basis.
• The Board of Directors recommends shareholders vote FOR all nominees for election at the 2025 Annual Meeting.
• The Board of Directors recommends shareholders vote FOR the approval of compensation of our Named Executive Officers.
• The Board of Directors recommends shareholders vote FOR the ratification of the appointment of Ernst & Young LLP as the company's independent auditors for 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic growth initiatives, and a commitment to shareholder value. The CEO transition is framed as a well-planned event, and the company highlights its ethical and social responsibility efforts.

Positives

• Strong growth in the SMB market with recurring deposits up 8% and significant premium and fee increases.
• Successful expansion in the retirement ecosystem with RILA sales reaching $1.3 billion and pension risk transfers totaling $3.1 billion.
• Significant assets under management ($140 billion) and a diverse global institutional client base.
• Successful fundraising for the Data Center Growth & Income Fund, raising over $3.6 billion.
• Strong earnings in 2024, with non-GAAP operating earnings per diluted share increasing 11%.
• Commitment to returning capital to shareholders, with $1.7 billion returned during the year.
• Recognition as one of the World's Most Ethical Companies and America's Most JUST Companies.

Negatives

• One-year total shareholder return lagged asset management peers, and the company lagged insurance peers over all three periods (1, 3 and 5 years).

Risks

• The document mentions forward-looking statements are based on current assumptions and expectations, but actual results could differ significantly due to risk factors outlined in the Annual Report on Form 10-K.

Future Outlook

Principal has a compelling strategy and the right mix of businesses, capabilities, and talent to help us grow now and well into the future. Future success requires us to continue innovating and evolving each and every day while nurturing the culture that has made us successful for so many years.

Management Comments

• We share a deep respect and affinity for Principal and a firm belief that with a clear strategy and the talents of committed employees around the globe, our best days lie ahead.
• Deanna possesses deep knowledge of the opportunities available in the marketplace and the positional and capability advantages that set Principal apart.
• Deanna co-architected the enterprise strategy currently delivering strong results for Principal.

Industry Context

Principal is positioning itself as an integrated provider of financial security globally, leveraging market positions to win within and across its businesses. The company is focused on attractive growth drivers, including the small and midsized business market, the retirement ecosystem, and global asset management, which aligns with broader industry trends.

Comparison to Industry Standards

• Group benefits premium and fee growth is more than 2 percentage points above the industry.
• Asset growth within the SMB segment of retirement outperforms the industry by more than 8 percentage points.
• The document references specific competitors such as Guardian, Lincoln National, MetLife, Prudential Financial, The Standard, Sun Life, Unum, and Voya Financial in the context of industry peer margin.

Management Changes

Related Party Transactions

• As of December 31, 2024, the Vanguard Group, Inc. managed funds holding in the aggregate approximately 12.64% of the Company’s common stock.
• During 2024, Principal paid the Vanguard Group $62,038.12 in fees for banking operations.
• Principal Life Insurance Company accounts held approximately $46,840,360 in privately placed debt issued by Vanguard.
• As of December 31, 2024, BlackRock, Inc. (together with its affiliates BlackRock) and certain subsidiaries collectively owned or managed funds holding in the aggregate approximately 8.35% of the Company’s common stock.
• During 2024, Principal Global Investors, LLC paid BlackRock Financial Management $1,683,952.90 in sub-advisor management fees.
• In 2024, Principal affiliates paid BlackRock $2,914,895 for fees for consulting services and software.
• As of December 31, 2024, Nippon Life Insurance Company (Nippon Life) held approximately 8.02% of the Company’s common stock.
• In 2024, Nippon Life and NLICA paid the following amounts to Principal Life Insurance Company or its affiliates: $155,044.10 for fees and investment income related to pension services and $5,487,968.34 for investment management and other service fees.
• The Company owns common stock of NLICA and received $196,710 in dividends in 2024.
• During 2024, Post paid an aggregate of $2,560,003 in dividends.
• Dwight Soethout, Vice President-Chief Actuary, is the spouse of Deanna D. Strable-Soethout, President and Chief Executive Officer.
• Kristine Pitz, DirectorAccounting, is the spouse of Joel M. Pitz, Interim Chief Financial Officer.

Stakeholder Impact

• Shareholders: The company is committed to maximizing shareholder investment and returned $1.7 billion to shareholders during the year.
• Employees: The company aims to provide an inclusive and rewarding experience for its global employees.
• Customers: The company is focused on meeting and anticipating customer needs, delivering unique solutions with speed and impact.
• Communities: The company strives to strengthen communities through volunteerism, philanthropic grants, and community-focused sponsorships and activations.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to execute its strategic plan focused on the SMB market, retirement ecosystem, and global asset management.
• The company will continue to innovate and evolve while nurturing the culture that has made us successful for so many years.

Key Dates

Keywords

financial services, asset management, retirement, insurance, SMB market, earnings, shareholders, governance, sustainability, proxy statement