OREANDA-NEWS. Principal Financial Group, Inc. (NYSE:PFG) today announced certain business unit outlook metrics and an update on capital deployment plans for 2017. These metrics provide greater clarity of key drivers of earnings growth for each of the business units. There is a 30-minute conference call at 10:00 a.m. EST today, Dec. 6, 2016. Company senior leaders will provide additional detail and answer questions.

Below are the 2017 outlook metrics for each business:

 
Principal Financial Group 2017 Outlook Metrics
Retirement & Income Solutions – Fee    
 

Net revenue1 growth

   2-5%
 

Pre-tax return on net revenue2

   29-33%
Retirement & Income Solutions – Spread    
  Net revenue growth   5-10%
  Pre-tax return on net revenue   55-60%
Principal Global Investors    
 

Adjusted revenue3 growth

   4-8%
 

Pre-tax return on adjusted revenue4

   34-37%
Principal International (at PFG share, in reported USD)    
 

Combined5 net revenue growth

   11-14%
  Combined pre-tax return on net revenue   38-42%
Specialty Benefits    
 

Premium and fees6 growth

   7-9%
 

Pre-tax return on premium and fees7

   10-13%
  Loss ratio   62-68%
Individual Life    
  Premium and fees growth   3-6%
  Pre-tax return on premium and fees   14-18%
Corporate      
  Pre-tax operating losses   $200-$225 million
       

The outlook for 2017 incorporates certain assumptions including:

  • Average S&P 500 index in 2017 between 2,265 and 2,285, assuming a 2 percent quarterly total return on levels as of the end of November 2016;
  • 10-year treasury rate approximately 2.50-3.00 percent at year-end 2017;
  • Future foreign exchange rates follow external8 consensus as of November 2016; reflects marginal weakening of the U.S. dollar in 2017 relative to 2016;
  • US GAAP total company net income effective tax rate of 16-18 percent; total company operating earnings effective tax rate of 21-23 percent9
    • Fee effective tax rate of 19-21 percent9
    • Spread effective tax rate of 28-32 percent9
    • Risk effective tax rate of 30-34 percent9
    • Corporate effective tax rate at 40 percent;
  • $800 million to $1.1 billion of total capital deployed for common stock dividends, strategic acquisitions, share repurchases, and to provide financial flexibility; and
  • Diluted weighted average number of common shares outstanding ranging from 288 – 292 million.