8-K: Principal Financial Group Announces Strong 2024 Results and Raises Dividend, Authorizes $1.5 Billion Share Repurchase

Principal Financial Group reports positive full year and fourth quarter 2024 results, increases its first quarter 2025 dividend, and approves a $1.5 billion share repurchase program.

Summary

• Principal Financial Group (PFG) announced its full year and fourth quarter 2024 results.
• Net income attributable to PFG for the full year was $1.571 billion, or $6.68 per diluted share.
• For the fourth quarter, net income attributable to PFG was $905 million, or $3.92 per diluted share.
• Full-year non-GAAP operating earnings per diluted share, excluding significant variances, increased 11% to $7.65, aligning with the company's long-term guidance of 9-12%.
• The company returned $1.7 billion of capital to shareholders in 2024, including $1.0 billion in share repurchases and $0.7 billion in common stock dividends.
• The first quarter 2025 common stock dividend was raised to $0.75 per share, a 2-cent increase over the previous quarter and a 9% increase year-over-year.
• The Board of Directors approved a new authorization for the repurchase of $1.5 billion of the company's outstanding common stock.
• Assets under management (AUM) reached $712 billion, contributing to assets under administration (AUA) of $1.7 trillion.
• The company maintains a strong financial position with $1.6 billion of excess and available capital.
• The statutory risk-based capital (RBC) ratio for Principal Life Insurance Company is 404%.
• The company's 2025 outlook includes 9-12% annual non-GAAP operating earnings per diluted share (EPS) growth, 75-85% free capital flow conversion, 14-16% non-GAAP ROE, and $1.4-$1.7 billion in capital deployment.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, increased dividend, and share repurchase authorization. The company's performance is in line with its long-term guidance, and management expresses confidence in future growth.

Positives

• Full-year non-GAAP operating earnings per diluted share, excluding significant variances, increased 11%, aligning with long-term guidance.
• The company returned $1.7 billion to shareholders in 2024.
• The first quarter 2025 dividend was raised by 9% year-over-year.
• A new $1.5 billion share repurchase authorization was approved.
• Assets under management (AUM) reached $712 billion.
• The company has a strong financial position with $1.6 billion of excess capital.
• Retirement and Income Solutions (RIS) recurring deposit growth of 7% and transfer deposit growth of 16% over 2023.
• Investment Management AUM increased $32 billion to $559 billion.
• Specialty Benefits premium and fees increased 7% over 2023.
• RIS 4Q24 transfer deposits up 57% to $8.8 billion, including $0.9 billion of PRT sales.
• Investment Management had a record quarter in retirement investment sales driven by a $1.0 billion off-platform mandate.
• Life Insurance business market premium and fees increased 17%.

Negatives

• International Pension pre-tax operating earnings decreased $38.0 million primarily due to lower net revenue.
• Life Insurance pre-tax operating earnings decreased $17.6 million due to higher mortality and a GAAP-only regulatory closed block dividend adjustment.
• Corporate pre-tax operating losses increased $15.4 million primarily due to lower variable investment income compared to the year ago quarter.

Risks

• The release contains forward-looking statements that are subject to risks and uncertainties.
• Actual results may differ materially from the results anticipated in the forward-looking statements.
• Lower than expected variable investment income in RIS, International Pension, Specialty Benefits, Life Insurance and Corporate.
• Impact of lower than expected encaje performance and Latin American inflation in International Pension.
• Impact of GAAP-only regulatory closed block adjustment in Life Insurance.
• Impact of model refinement in Specialty Benefits.

Future Outlook

The company's 2025 outlook includes 9-12% annual non-GAAP operating earnings per diluted share (EPS) growth, 75-85% free capital flow conversion, 14-16% non-GAAP ROE, and $1.4-$1.7 billion in capital deployment.

Management Comments

• Deanna Strable, President and CEO of Principal, stated that strong business fundamentals, continued growth, and positive markets generated strong earnings in 2024.
• Deanna Strable noted that the company's strategic focus on higher growth markets, integrated product portfolio, and strong distribution relationships continue to create value and drive growth.
• Deanna Strable mentioned the company delivered on its commitment to return excess capital to shareholders, while maintaining a strong capital position.

Industry Context

Principal Financial Group's results reflect a broader trend in the financial services industry of focusing on higher-growth markets and returning capital to shareholders. The company's emphasis on retirement and income solutions, investment management, and specialty benefits aligns with the increasing demand for these services as the population ages and individuals seek to secure their financial futures.

Comparison to Industry Standards

• Principal's RBC ratio of 404% is strong compared to the industry average, indicating a solid capital position.
• Comparable companies like Prudential Financial and MetLife also focus on returning capital to shareholders through dividends and share repurchases.
• Principal's AUM growth is in line with other major asset managers, reflecting the overall positive market performance in 2024.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and share repurchase program.
• Customers will benefit from the company's continued focus on improving wealth and well-being.
• Employees will benefit from the company's commitment to building a diverse and inclusive workforce.

Next Steps

• President and Chief Executive Officer Deanna Strable and Senior Vice President and Interim Chief Financial Officer Joel Pitz will lead a discussion of results and the impacts on future prospects, asset quality and capital adequacy during a live conference call on February 7, 2025.

Key Dates

Keywords

financial results, share repurchase, dividend, earnings, AUM, PFG, Principal Financial Group