Principal Financial Group Inc. Reports Operating Results (10-Q)
Principal Financial Group Inc. has a market cap of $7.93 billion; its shares were traded at around $24.8 with a P/E ratio of 8.7 and P/S ratio of 0.9. The dividend yield of Principal Financial Group Inc. stocks is 2%. Principal Financial Group Inc. had an annual average earning growth of 3.9% over the past 10 years.PFG is in the portfolios of Ronald Muhlenkamp of Muhlenkamp Fund, Bill Frels of Mairs & Power Inc. , Chris Davis of Davis Selected Advisers, Manning & Napier Advisors, Inc, David Dreman of Dreman Value Management.
Highlight of Business Operations: Foreign currency exchange rate fluctuations create variances in our financial statement line items. Our consolidated net income was positively impacted by $19.8 million and negatively impacted by $8.9 million for the three months ended June 30, 2010 and 2009, respectively, and positively impacted by $27.2 million and negatively impacted by $22.1 million for the six months ended June 30, 2010 and 2009, respectively, as a result of fluctuations in foreign currency to U.S. dollar exchange rates. For a discussion of our approaches to managing foreign currency exchange rate risk, see Item 3. Quantitative and Qualitative Disclosures About Market Risk Foreign Currency Risk.
The 2010 annual pension benefit expense for substantially all of our employees and certain agents is expected to be $110.4 million pre-tax, which is a $47.2 million decrease from the 2009 pre-tax pension expense of $157.6 million. This decrease is primarily due to actual asset returns in 2009 that were greater than expected, resulting in an actuarial gain and higher than expected plan assets as of December 31, 2009. The higher asset value increased the expected return on plan assets in 2010 and the actuarial gain reduced the previous actuarial loss and its amortization in 2010. For additional information, see Item 1. Financial Statements, Notes to Unaudited Consolidated Financial Statements, Note 6, Employee and Agent Benefits. Approximately $27.6 million and $55.2 million of pre-tax pension expense was reflected in the determination of net income for the three and six months ended June 30, 2010, respectively. In addition, approximately $27.6 million of pre-tax pension expense will be reflected in each of the following two quarters of 2010. The expected long-term return on plan assets assumption and the discount rate used to develop the 2010 expense remained at the same 8.0% and 6.0% rates, respectively, used to develop the 2009 expense.
Fees for the U.S. Asset Accumulation segment increased $27.5 million primarily due to higher fee income stemming from an increase in average account values as a result of improved equity markets during the latter half of 2009. In addition, fees for the Global Asset Management segment increased $7.7 million due to an increase in average AUM as a result of improved market performance during the latter half of 2009.
Fees for the U.S. Asset Accumulation segment increased $92.7 million, primarily due to higher fee income stemming from an increase in average account values as a result of improved equity markets during the latter half of 2009. In addition, fees for the Global Asset Management segment increased $17.9 million due to an increase in average AUM as a result of improved market performance during the latter half of 2009.
Benefits, claims and settlement expenses decreased $68.3 million for the Life and Health Insurance segment primarily due to a decrease in membership in our health and specialty benefits insurance businesses. In addition, benefits, claims and settlement expenses decreased $63.7 million for the U.S. Asset Accumulation segment primarily due to a decrease in our investment only business resulting from lower variable crediting rates and a decline in average account values, which resulted from our decision to scale back this business. Partially offsetting these decreases was a $104.3 million increase in our International Asset Management and Accumulation segment, primarily due to higher inflation-based interest crediting rates to customers in Chile and the strengthening of the Chilean peso against the U.S. dollar.
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