Principal Financial Group Inc. (PFG, Financial) filed Quarterly Report for the period ended 2009-03-31.
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 $6.05 billion; its shares were traded at around $23.29 with a P/E ratio of 6.6 and P/S ratio of 0.5. The dividend yield of Principal Financial Group Inc. stocks is 1.9%. Principal Financial Group Inc. had an annual average earning growth of 12.2% over the past 5 years.
Foreign currency exchange rate fluctuations create variances in our financial statement line items. Our consolidated net income was negatively impacted by $13.2 million and positively impacted by $5.8 million for the three months ended March 31, 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 $3.1 million of pre-tax pension expense were reflected in the determination of net income for the three months ended March 31, 2009 and 2008, respectively. In addition, approximately $39.4 million of pre-tax pension expense will be reflected in each of the following three 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.
Fees for the U.S. Asset Accumulation segment decreased $101.6 million, primarily due to lower fee income stemming from a decrease in account values as a result of the declining equity markets from 2008 to 2009. In addition, fees for the Global Asset Management segment decreased $35.0 million due to a decrease in AUM as a result of declining market conditions and the sale of certain asset management contracts within Post Advisory Group, LLC.
Benefits, claims and settlement expenses decreased $89.8 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. Benefits, claims and settlement expenses decreased $64.8 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, reflecting our decision to scale back this business, and lower variable crediting rates. Furthermore, lower sales of full service payout annuities with life contingencies also contributed to the decrease in benefits, claims and settlement expenses.
Operating earnings decreased $17.0 million in our full service accumulation business primarily due to lower fee income resulting from a decrease in account values stemming from declining equity markets from 2008 to 2009. In addition, operating earnings decreased $11.5 million in our individual annuities business primarily due to an increase in DPAC amortization related to declining equity markets from 2008 to 2009. Furthermore, operating earnings decreased $7.9 million in our investment only business primarily due to a decrease in net investment income resulting from a decline in average invested assets, reflecting our decision to scale back this business, our decision to pursue a more liquid investment strategy and from a decrease in short-term investment rates.
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 $6.05 billion; its shares were traded at around $23.29 with a P/E ratio of 6.6 and P/S ratio of 0.5. The dividend yield of Principal Financial Group Inc. stocks is 1.9%. Principal Financial Group Inc. had an annual average earning growth of 12.2% over the past 5 years.
Highlight of Business Operations:
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 $(0.1) million and $(21.3) million for the three months ended March 31, 2009 and 2008, respectively. Our commercial mortgage securities issuance operation had after-tax operating losses of $0.3 million and $17.1 million for the three months ended March 31, 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 $13.2 million and positively impacted by $5.8 million for the three months ended March 31, 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 $3.1 million of pre-tax pension expense were reflected in the determination of net income for the three months ended March 31, 2009 and 2008, respectively. In addition, approximately $39.4 million of pre-tax pension expense will be reflected in each of the following three 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.
Fees for the U.S. Asset Accumulation segment decreased $101.6 million, primarily due to lower fee income stemming from a decrease in account values as a result of the declining equity markets from 2008 to 2009. In addition, fees for the Global Asset Management segment decreased $35.0 million due to a decrease in AUM as a result of declining market conditions and the sale of certain asset management contracts within Post Advisory Group, LLC.
Benefits, claims and settlement expenses decreased $89.8 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. Benefits, claims and settlement expenses decreased $64.8 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, reflecting our decision to scale back this business, and lower variable crediting rates. Furthermore, lower sales of full service payout annuities with life contingencies also contributed to the decrease in benefits, claims and settlement expenses.
Operating earnings decreased $17.0 million in our full service accumulation business primarily due to lower fee income resulting from a decrease in account values stemming from declining equity markets from 2008 to 2009. In addition, operating earnings decreased $11.5 million in our individual annuities business primarily due to an increase in DPAC amortization related to declining equity markets from 2008 to 2009. Furthermore, operating earnings decreased $7.9 million in our investment only business primarily due to a decrease in net investment income resulting from a decline in average invested assets, reflecting our decision to scale back this business, our decision to pursue a more liquid investment strategy and from a decrease in short-term investment rates.
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.
