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Principal Financial (PFG) Q2 Earnings Beat, Revenues Miss

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Principal Financial Group, Inc.’s (PFG - Free Report) second-quarter 2021 operating net income of $1.70 per share beat the Zacks Consensus Estimate by 11.1%. Moreover, the bottom line increased 16.4% year over year.

Principal Financial witnessed higher revenues across its business lines and higher assets under management (AUM) offset by higher expenses.

Principal Financial Group, Inc. Price, Consensus and EPS Surprise

Behind the Headlines

Operating revenues increased 13.6% year over year to nearly $3.6 billion, primarily due to lower premiums and other considerations, fees and other revenues and net investment income. However, the top line missed the Zacks Consensus Estimate by nearly 2.3%.

Total expenses increased 18.8% year over year to $3.1 billion due to higher benefits, claims and settlement expenses as well as increased operating expenses.

Principal Financial’s AUM as of Jun 30, 2021 was $990.4 billion, up 41.1% year over year.

Segment Update

Retirement and Income Solution: Revenues increased 12.9% year over year to about $1.7 billion driven by higher premiums and other considerations, fees and other revenues and net investment income.

Pretax operating earnings increased 30.9% year over year to $280.2 million on account of solid performance at Retirement and Income Solution —Spread business.

Principal Global Investors: Revenues of $453.7 million were up 28.6% from the prior-year quarter driven by higher fees and other revenues and net investment income.

Operating earnings increased 70.1% year over year to $184.4 million primarily due higher operating revenues less pass-through expenses.

Principal International: Revenues increased 10.8% year over year to $306.2 million in the quarter due to higher fees and other revenues and premiums and other considerations.

Operating earnings decreased 50% year over year to $47.7 million due to unfavorable impacts from encaje performance. Further, this quarte witnessed inflation, which was partially offset by favorable variable investment income and favorable foreign currency translation.

U.S. Insurance Solution: Revenues grew 8.6% year over year to $1.2 billion driven by higher premiums and other considerations, fees and other revenues and net investment income.

Operating earnings of $126.6 million decreased 18.3% year over year due to poor performance at the Specialty Benefits Insurance business.

Corporate: Operating loss of $82.7 million was narrower than $84 million loss incurred a year ago.

Financial Update

As of Jun 30, 2021, cash and cash equivalents were $2.4 billion, down 23.3% year over year.

At second-quarter end, debt was $4.3 billion, up 2.8% year over year.

As of Jun 30, 2021, book value per share (excluding AOCI other than foreign currency translation adjustment) was $48.68, up 9.5% year over year.

Capital Deployment

The company paid out $165.2 million in dividends and deployed $265.7 million to buy back 4.2 million shares in the quarter under review.

The board of directors approved third-quarter dividend of 63 cents per share, up 13% year over year.

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 Investment Managers

Among other investment managers, which have reported second-quarter earnings so far, the bottom line of BlackRock, Inc. (BLK - Free Report) , Blackstone (BX - Free Report) and SEI Investments Co. (SEIC - Free Report) beat the Zacks Consensus Estimate.

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