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PFG Q3 Earnings Miss Estimates on Lower Investment Income
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Key Takeaways
PFG's Q3 earnings rose 5.7% to $2.22 per share but missed estimates by 9.8%, while revenues grew 9.7%.
Lower variable investment income, rising expenses and unfavorable encaje returns weighed on PFG's results.
PFG recorded $10.7B in AUM net outflows but returned $429M to shareholders and raised its dividend.
Principal Financial Group, Inc.’s (PFG - Free Report) third-quarter 2026 operating earnings of $2.22 per share missed the Zacks Consensus Estimate of $2.46 by 9.8%. The bottom line increased 5.7% year over year.
Revenues rose 9.7% year over year to $4.3 billion, which missed the consensus mark of $4.31 billion by 0.8%.
The quarterly results were supported by higher Specialty Benefits premiums, improved Life Insurance results and growth in retirement deposits. However, lower variable investment income, rising expenses and unfavorable encaje returns weighed on PFG's results.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Total expenses increased 10% year over year to $3.78 billion. Benefits, claims and settlement expenses rose 18.1% to $2.32 billion, while operating expenses increased 1.7% to $1.40 billion.
Non-GAAP operating earnings increased 2% to $481.8 million. Excluding significant variances, operating earnings advanced 3% to $540.6 million. Net income attributable to PFG increased to $631.9 million from $213.8 million a year earlier.
Principal's Retirement Business Gains Ground
Retirement and Income Solutions' net revenues increased 1% year over year to $757.3 million. Favorable market performance and business growth supported revenues, partially offset by lower variable investment income and the impacts of the prior-year actuarial assumption review
Pre-tax operating earnings declined 4% to $297.8 million, while the reported operating margin contracted 200 basis points to 39.3%. Recurring deposits increased 8% to $13 billion, while pension risk transfer sales totaled $0.9 billion in the third quarter. Small and mid-sized business transfer deposits increased 21%, reflecting continued momentum in the retirement business.
PFG's Asset Management Results Stay Mixed
Investment Management's operating revenues less pass-through expenses decreased 2% year over year to $436.1 million, primarily due to lower management fees. Pre-tax operating earnings declined 3% to $168.1 million, while the operating margin contracted 70 basis points to 39.1%.
International Pension's net revenues declined 23% to $144.1 million, primarily due to unfavorable encaje returns. Pre-tax operating earnings fell 38% to $62.4 million, while the reported operating margin contracted to 43.3% from 53.9%. Assets under management increased 10% to $166.2 billion in the third quarter.
PFG's Benefits Unit Drives Profit Growth
Specialty Benefits' premiums and fees increased 6% year over year to $895.4 million. Pre-tax operating earnings declined 12% to $137.3 million, while the reported operating margin narrowed to 15.3% from 18.4% in the third quarter. The incurred loss ratio increased 260 basis points to 59%, remaining below the targeted range of 60-64%.
Life Insurance premiums and fees declined 4% to $238.6 million. Pre-tax operating earnings improved to $32.4 million from a loss of $69 million, aided by favorable mortality experience and prior-year actuarial assumption review impacts. The operating margin reached 13.6%.
PFG's AUM Remains Stable Amid Net Outflows
Principal Financial’s assets under management totaled $785 billion at the end of the third quarter, largely unchanged from a year earlier. Assets under administration increased 3% year over year to $1.84 trillion.
AUM net cash outflows totaled $10.7 billion compared towith inflows of $0.4 billion a year earlier. Investment Management recorded approximately $12 billion of net outflows, primarily concentrated in select active equity strategies. These were partially offset by $0.5 billion of active ETF inflows and $0.8 billion of private markets inflows.
Principal Financial's Capital Returns Remain Solid
Principal Financial returned $429 million to shareholders during the third quarter, including $250 million in share repurchases and $179 million in common stock dividends.
Principal Financial ended the quarter with $1.5 billion of excess and available capital, an estimated 380% risk-based capital ratio and a 24.7% debt-to-capital ratio. Adjusted book value per share was $57.63.
PFG's Dividend Increase Reflects Capital Priorities
Principal Financial announced a fourth-quarter common stock dividend of 85 cents per share, representing a 1-cent sequential increase and an 8% rise from the prior-year quarter. The dividend is payable on Dec. 18, 2026, to shareholders of record as of Dec. 2.
Chubb Limited (CB - Free Report) reported third-quarter 2026 core operating earnings of $7.66 per share, which beat the Zacks Consensus Estimate of $6.53 by 17.3%. The bottom line increased 0.8% year over year. Revenues of $16.81 billion surpassed the consensus mark of $16.72 billion by 0.55%. Consolidated net premiums earned rose 3.9% year over year to $14.92 billion. P&C underwriting income declined 8.8% year over year to $2.06 billion. The combined ratio deteriorated 230 basis points to 84.1%. The Zacks Consensus Estimate is pegged at 87.
W.R. Berkley Corporation (WRB - Free Report) reported third-quarter 2026 operating income of $1.17 per share, which beat the Zacks Consensus Estimate by 2.63%. The bottom line increased 6.4% year over year. Operating revenues of $3.76 billion rose 1.8% year over year but missed the consensus estimate by 1.19%. Net premiums earned jumped 1.8% year over year. W.R. Berkley’s net premiums written increased 1.3% year over year to $3.27 billion. Net investment income grew 9.2% year over year to $383.5 million, supported by higher income from the core investment portfolio. Income from fixed-maturity securities increased 10.3%, while the core portfolio contributed $369.1 million, up 12% year over year. The Zacks Consensus Estimate was pegged at $398.2 million. Our estimate was pegged at $384.3 billion.
The Travelers Companies, Inc. (TRV) reported third-quarter 2026 core earnings of $9.18 per share, which beat the Zacks Consensus Estimate of $7.07 by 29.8%. The bottom line increased 12.8% year over year. Revenues of $12.45 billion surpassed the consensus estimate of $12.40 billion by 0.4% and remained nearly flat year over year. Net written premiums totaled $11.48 billion during the quarter. Travelers generated core income of $1.95 billion, up 4.3% year over year, while net income increased 1.5% to $1.92 billion. Net favorable prior-year reserve development increased to $234 million pre-tax from $22 million in the year-ago quarter. Catastrophe losses widened to $538 million pre-tax from $402 million. The combined ratio improved 50 basis points year over year to 86.8%.
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PFG Q3 Earnings Miss Estimates on Lower Investment Income
Key Takeaways
Principal Financial Group, Inc.’s (PFG - Free Report) third-quarter 2026 operating earnings of $2.22 per share missed the Zacks Consensus Estimate of $2.46 by 9.8%. The bottom line increased 5.7% year over year.
Revenues rose 9.7% year over year to $4.3 billion, which missed the consensus mark of $4.31 billion by 0.8%.
The quarterly results were supported by higher Specialty Benefits premiums, improved Life Insurance results and growth in retirement deposits. However, lower variable investment income, rising expenses and unfavorable encaje returns weighed on PFG's results.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Principal Financial Group, Inc. price-consensus-eps-surprise-chart | Principal Financial Group, Inc. Quote
PFG's Expenses Rise With Higher Benefit Outlays
Total expenses increased 10% year over year to $3.78 billion. Benefits, claims and settlement expenses rose 18.1% to $2.32 billion, while operating expenses increased 1.7% to $1.40 billion.
Non-GAAP operating earnings increased 2% to $481.8 million. Excluding significant variances, operating earnings advanced 3% to $540.6 million. Net income attributable to PFG increased to $631.9 million from $213.8 million a year earlier.
Principal's Retirement Business Gains Ground
Retirement and Income Solutions' net revenues increased 1% year over year to $757.3 million. Favorable market performance and business growth supported revenues, partially offset by lower variable investment income and the impacts of the prior-year actuarial assumption review
Pre-tax operating earnings declined 4% to $297.8 million, while the reported operating margin contracted 200 basis points to 39.3%. Recurring deposits increased 8% to $13 billion, while pension risk transfer sales totaled $0.9 billion in the third quarter. Small and mid-sized business transfer deposits increased 21%, reflecting continued momentum in the retirement business.
PFG's Asset Management Results Stay Mixed
Investment Management's operating revenues less pass-through expenses decreased 2% year over year to $436.1 million, primarily due to lower management fees. Pre-tax operating earnings declined 3% to $168.1 million, while the operating margin contracted 70 basis points to 39.1%.
International Pension's net revenues declined 23% to $144.1 million, primarily due to unfavorable encaje returns. Pre-tax operating earnings fell 38% to $62.4 million, while the reported operating margin contracted to 43.3% from 53.9%. Assets under management increased 10% to $166.2 billion in the third quarter.
PFG's Benefits Unit Drives Profit Growth
Specialty Benefits' premiums and fees increased 6% year over year to $895.4 million. Pre-tax operating earnings declined 12% to $137.3 million, while the reported operating margin narrowed to 15.3% from 18.4% in the third quarter. The incurred loss ratio increased 260 basis points to 59%, remaining below the targeted range of 60-64%.
Life Insurance premiums and fees declined 4% to $238.6 million. Pre-tax operating earnings improved to $32.4 million from a loss of $69 million, aided by favorable mortality experience and prior-year actuarial assumption review impacts. The operating margin reached 13.6%.
PFG's AUM Remains Stable Amid Net Outflows
Principal Financial’s assets under management totaled $785 billion at the end of the third quarter, largely unchanged from a year earlier. Assets under administration increased 3% year over year to $1.84 trillion.
AUM net cash outflows totaled $10.7 billion compared towith inflows of $0.4 billion a year earlier. Investment Management recorded approximately $12 billion of net outflows, primarily concentrated in select active equity strategies. These were partially offset by $0.5 billion of active ETF inflows and $0.8 billion of private markets inflows.
Principal Financial's Capital Returns Remain Solid
Principal Financial returned $429 million to shareholders during the third quarter, including $250 million in share repurchases and $179 million in common stock dividends.
Principal Financial ended the quarter with $1.5 billion of excess and available capital, an estimated 380% risk-based capital ratio and a 24.7% debt-to-capital ratio. Adjusted book value per share was $57.63.
PFG's Dividend Increase Reflects Capital Priorities
Principal Financial announced a fourth-quarter common stock dividend of 85 cents per share, representing a 1-cent sequential increase and an 8% rise from the prior-year quarter. The dividend is payable on Dec. 18, 2026, to shareholders of record as of Dec. 2.
Zacks Rank
Principal Financial currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Chubb Limited (CB - Free Report) reported third-quarter 2026 core operating earnings of $7.66 per share, which beat the Zacks Consensus Estimate of $6.53 by 17.3%. The bottom line increased 0.8% year over year. Revenues of $16.81 billion surpassed the consensus mark of $16.72 billion by 0.55%.
Consolidated net premiums earned rose 3.9% year over year to $14.92 billion. P&C underwriting income declined 8.8% year over year to $2.06 billion. The combined ratio deteriorated 230 basis points to 84.1%. The Zacks Consensus Estimate is pegged at 87.
W.R. Berkley Corporation (WRB - Free Report) reported third-quarter 2026 operating income of $1.17 per share, which beat the Zacks Consensus Estimate by 2.63%. The bottom line increased 6.4% year over year. Operating revenues of $3.76 billion rose 1.8% year over year but missed the consensus estimate by 1.19%. Net premiums earned jumped 1.8% year over year. W.R. Berkley’s net premiums written increased 1.3% year over year to $3.27 billion.
Net investment income grew 9.2% year over year to $383.5 million, supported by higher income from the core investment portfolio. Income from fixed-maturity securities increased 10.3%, while the core portfolio contributed $369.1 million, up 12% year over year. The Zacks Consensus Estimate was pegged at $398.2 million. Our estimate was pegged at $384.3 billion.
The Travelers Companies, Inc. (TRV) reported third-quarter 2026 core earnings of $9.18 per share, which beat the Zacks Consensus Estimate of $7.07 by 29.8%. The bottom line increased 12.8% year over year. Revenues of $12.45 billion surpassed the consensus estimate of $12.40 billion by 0.4% and remained nearly flat year over year. Net written premiums totaled $11.48 billion during the quarter. Travelers generated core income of $1.95 billion, up 4.3% year over year, while net income increased 1.5% to $1.92 billion. Net favorable prior-year reserve development increased to $234 million pre-tax from $22 million in the year-ago quarter. Catastrophe losses widened to $538 million pre-tax from $402 million. The combined ratio improved 50 basis points year over year to 86.8%.