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Principal Financial (PFG) Q3 Earnings Beat, Revenues Miss

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Principal Financial Group, Inc.’s (PFG - Free Report) third-quarter 2021 operating net income of $1.69 per share beat the Zacks Consensus Estimate by 6.3%. Also, the bottom line increased 98.8% year over year.

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

Behind the Headlines      

Operating revenues increased 10% year over year to nearly $3.6 billion, primarily due to higher premiums and other considerations, fees and other revenues, and net investment income. The top line however missed the Zacks Consensus Estimate by nearly 9.2%.

Total expenses decreased 1.3% year over year to $2.9 billion due to lower benefits, claims and dividends to policyholders.

Principal Financial’s AUM as of Sep 30, 2021 was $981 billion, up 34.1% year over year.

Segment Update

Retirement and Income Solution: Revenues increased 6.6% year over year to about $1.6 billion.

Pretax operating earnings increased 13.5% year over year to $243.2 million on account of the solid performance at Retirement and Income Solution — Fee as well as Spread business.

Principal Global Investors: Revenues of $465.2 million were up 21.5% from the prior-year quarter.

Operating earnings increased 34.9% year over year to $190.1 million, primarily due to higher operating revenues less pass-through expenses, partially offset by higher operating expenses.

Principal International: Revenues increased 45.6% year over year to $328.1 million in the quarter.

Operating earnings increased 37.9% year over year to $81 million.

U.S. Insurance Solution: Revenues increased 6.1% year over year to $1.2 billion.

Operating earnings were $151.6 million against an operating loss of $134.1 million in the prior-year quarter, primarily due to improved performance at the Specialty Benefits Insurance business and Individual Life Insurance.

Corporate: Operating loss of $97.1 million was wider than $69.7 million loss incurred a year ago, primarily due to higher operating expenses.

Financial Update

As of Sep 30, 2021, cash and cash equivalents were $3.1 billion, down 11.6% year over year.

At third-quarter end, debt was $4.3 billion, unchanged year over year.

As of Sep 30, 2021, book value per share (excluding AOCI other than foreign currency translation adjustment) was $48.58, up 3.2% from the 2020-end level.

Capital Deployment

Principal Financial paid out $168.2 million in dividends. The board of directors approved fourth-quarter dividend of 64 cents per share, up 14% 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 the investment managers that have reported third-quarter results so far, Blackstone (BX - Free Report) , Invesco (IVZ - Free Report) and BlackRock (BLK - Free Report) beat the respective Zacks Consensus Estimate for earnings.

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