Principal Financial Group Inc. (PFG, Financial) filed Quarterly Report for the period ended 2009-06-30.
The Principal Financial Group is a leading provider of retirement savings investment and insurance products and services. In addition they offer a broad range of individual life and disability insurance group life and health insurance and residential mortgage loan origination and servicing in the United States. Principal Financial Group Inc. has a market cap of $7.95 billion; its shares were traded at around $25.58 with a P/E ratio of 7.9 and P/S ratio of 0.8. The dividend yield of Principal Financial Group Inc. stocks is 1.8%. Principal Financial Group Inc. had an annual average earning growth of 12.2% over the past 5 years.
As a result of our decision to terminate our commercial mortgage securities issuance operation, amounts previously included in our Global Asset Management segment operating earnings related to our commercial mortgage securities issuance operation have been removed from operating earnings for all periods presented and are reported as other after-tax adjustments. Our commercial mortgage securities issuance operation had operating revenues of zero and $2.4 million for the three months ended June 30, 2009 and 2008, respectively, and $(0.1) million and $(18.9) million for the six months ended June 30, 2009 and 2008, respectively. Our commercial mortgage securities issuance operation had after-tax operating losses of zero and $0.4 million for the three months ended June 30, 2009 and 2008, respectively, and $0.3 million and $17.5 million for the six months ended June 30, 2009 and 2008, respectively.
Foreign currency exchange rate fluctuations create variances in our financial statement line items. Our consolidated net income was negatively impacted by $8.9 million and positively impacted by $0.4 million for the three months ended June 30, 2009 and 2008, respectively, and negatively impacted by $22.1 million and positively impacted by $6.2 million for the six months ended June 30, 2009 and 2008, 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 2009 annual pension benefit expense for substantially all of our employees and certain agents is expected to be $157.6 million pre-tax, which is a $145.3 million increase from the 2008 pre-tax pension expense of $12.3 million. This increase is primarily due to lower than estimated returns on plan assets and a decrease in discount rate. Approximately $39.4 million and $78.8 million of pre-tax pension expense were reflected in the determination of net income for the three and six months ended June 30, 2009, respectively. In addition, approximately $39.4 million of pre-tax pension expense will be reflected in each of the following two quarters for 2009. The discount rate used to develop the 2009 expense was 6.0%, down from the 6.3% discount rate used to develop the 2008 expense. The expected long-term return on plan assets assumption was 8.0%, down from the 8.25% used to develop the 2008 expense.
Benefits, claims and settlement expenses decreased $185.7 million in our U.S. Asset Accumulation segment primarily due to a decrease in our investment only business resulting from a decline in account values and lower variable crediting rates. Furthermore, a decrease in reserves related to lower sales of annuities with life contingencies in our full service payout and individual annuities businesses also contributed to the decrease. Benefits, claims and settlement expenses decreased $87.3 million for the International Asset Management and Accumulation segment, primarily due to lower interest crediting rates to customers, which are impacted by deflation in Chile, and the weakening of the Chilean peso against the U.S. dollar.
Operating expenses decreased $166.8 million for the U.S. Asset Accumulation segment primarily due to a decrease in DPAC amortization, which related to an improvement in equity markets during the second quarter of 2009 and a decrease due to expense savings initiatives. In addition, operating expenses decreased $66.5 million for the Life and Health Insurance segment primarily due to lower non-deferred sales-related expenses, expense savings initiatives and lower DPAC amortization. Despite a $87.8 million increase i
Read the The complete ReportPFG is in the portfolios of Chris Davis of Davis Selected Advisers, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management.
The Principal Financial Group is a leading provider of retirement savings investment and insurance products and services. In addition they offer a broad range of individual life and disability insurance group life and health insurance and residential mortgage loan origination and servicing in the United States. Principal Financial Group Inc. has a market cap of $7.95 billion; its shares were traded at around $25.58 with a P/E ratio of 7.9 and P/S ratio of 0.8. The dividend yield of Principal Financial Group Inc. stocks is 1.8%. Principal Financial Group Inc. had an annual average earning growth of 12.2% over the past 5 years.
Highlight of Business Operations:
Post Advisory Group, LLC. Effective January 1, 2009, we sold certain asset management contracts within our Post Advisory Group, LLC subsidiary to the management team now under the name Beach Point Capital Management LP. The assets under management associated with this sale totaled $3.8 billion. The total cash proceeds were $50.0 million, in addition to which we realized benefits from the cancellation of deferred compensation agreements. The initial $2.2 million cash down payment was received in the second quarter. We expect to receive the remaining balance over the next four years.As a result of our decision to terminate our commercial mortgage securities issuance operation, amounts previously included in our Global Asset Management segment operating earnings related to our commercial mortgage securities issuance operation have been removed from operating earnings for all periods presented and are reported as other after-tax adjustments. Our commercial mortgage securities issuance operation had operating revenues of zero and $2.4 million for the three months ended June 30, 2009 and 2008, respectively, and $(0.1) million and $(18.9) million for the six months ended June 30, 2009 and 2008, respectively. Our commercial mortgage securities issuance operation had after-tax operating losses of zero and $0.4 million for the three months ended June 30, 2009 and 2008, respectively, and $0.3 million and $17.5 million for the six months ended June 30, 2009 and 2008, respectively.
Foreign currency exchange rate fluctuations create variances in our financial statement line items. Our consolidated net income was negatively impacted by $8.9 million and positively impacted by $0.4 million for the three months ended June 30, 2009 and 2008, respectively, and negatively impacted by $22.1 million and positively impacted by $6.2 million for the six months ended June 30, 2009 and 2008, 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 2009 annual pension benefit expense for substantially all of our employees and certain agents is expected to be $157.6 million pre-tax, which is a $145.3 million increase from the 2008 pre-tax pension expense of $12.3 million. This increase is primarily due to lower than estimated returns on plan assets and a decrease in discount rate. Approximately $39.4 million and $78.8 million of pre-tax pension expense were reflected in the determination of net income for the three and six months ended June 30, 2009, respectively. In addition, approximately $39.4 million of pre-tax pension expense will be reflected in each of the following two quarters for 2009. The discount rate used to develop the 2009 expense was 6.0%, down from the 6.3% discount rate used to develop the 2008 expense. The expected long-term return on plan assets assumption was 8.0%, down from the 8.25% used to develop the 2008 expense.
Benefits, claims and settlement expenses decreased $185.7 million in our U.S. Asset Accumulation segment primarily due to a decrease in our investment only business resulting from a decline in account values and lower variable crediting rates. Furthermore, a decrease in reserves related to lower sales of annuities with life contingencies in our full service payout and individual annuities businesses also contributed to the decrease. Benefits, claims and settlement expenses decreased $87.3 million for the International Asset Management and Accumulation segment, primarily due to lower interest crediting rates to customers, which are impacted by deflation in Chile, and the weakening of the Chilean peso against the U.S. dollar.
Operating expenses decreased $166.8 million for the U.S. Asset Accumulation segment primarily due to a decrease in DPAC amortization, which related to an improvement in equity markets during the second quarter of 2009 and a decrease due to expense savings initiatives. In addition, operating expenses decreased $66.5 million for the Life and Health Insurance segment primarily due to lower non-deferred sales-related expenses, expense savings initiatives and lower DPAC amortization. Despite a $87.8 million increase i
Read the The complete ReportPFG is in the portfolios of Chris Davis of Davis Selected Advisers, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management.
