OREANDA-NEWS. Principal Financial Group, Inc. (NYSE: PFG) today announced results3 for fourth quarter and full-year 2015.

  • Operating earnings of $303.2 million for fourth quarter 2015, compared to $324.0 million for fourth quarter 2014. Operating earnings per diluted share (EPS) of $1.02 for fourth quarter 2015, compared to $1.09 for fourth quarter 2014. For the 12 months ending Dec. 31, 2015, operating earnings of $1,270.5 million, compared to $1,317.9 million for the 12 months ending Dec. 31, 2014. Full-year 2015 EPS of $4.26 compared to $4.41 for full-year 2014. On a constant currency basis, normalized operating earnings increased 1 percent in fourth quarter 2015 and 4 percent for full-year 2015 compared to the prior year periods.
  • Net income available to common stockholders for fourth quarter 2015 of $253.6 million, or $0.86 per diluted share, compared to $270.4 million, or $0.91 per diluted share for fourth quarter 2014. For the 12 months ending Dec. 31, 2015, net income available to common stockholders of $1,209.3 million, or $4.06 per diluted share, compared to $1,111.1 million, or $3.65 per diluted share, for the 12 months ending Dec. 2014.
  • Operating revenues decreased 3 percent in fourth quarter 2015 to$2,891.8 million compared to$2,973.8 million for fourth quarter 2014. Operating revenues for the 12 months endingDec. 31, 2015, increased 14 percent to$12,121.1 million compared to$10,609.2 million for the same period last year.
    • Fee income4 decreased $3.2 million to $909.0 million for the fourth quarter 2015 from $912.2 million for fourth quarter 2014. For the 12 months ending Dec. 31, 2015, fee income increased 3 percent to $3,594.1 million compared to $3,481.3 million for the same period last year.
  • Quarterly common stock dividend of $0.38 per share for first quarter 2016 was authorized by the company’s Board of Directors. The dividend will be payable on March 25, 2016, to shareholders of record as of March 7, 2016.

“2015 was a good year despite the challenging macroeconomic environment. Outstanding investment performance and $23 billionin full-year net cash flows, 4 percent of beginning of the year AUM, highlight our success in attracting and retaining retail, retirement and institutional investors around the world,” said Dan Houston, president and chief executive officer. “Additionally, we continue to capitalize on growth opportunities in the U.S. group benefits business with Specialty Benefits delivering record 2015 earnings, and we continue to benefit from earnings diversification provided by our U.S. insurance businesses overall. We remain focused on advancing global retirement readiness, helping individuals around the world save, invest and protect their assets.”

Added Terry Lillis, executive vice president and chief financial officer, “In 2015, we were able to deploy nearly 90 percent of our net income. This was well above our initial guidance and shows the strength of our businesses and their ability to generate deployable capital. This enabled us to increase our full year 2015 dividend by 17 percent over 2014 and repurchase 5.5 million shares of our common stock. Additionally, we closed on the acquisition of the AXA’s Hong Kong pension retirement business, enabling us to further build upon our strategic international operations. Our balanced approach to capital deployment is centered on increasing long term shareholder value.”

Other Highlights

Fourth Quarter

  • Total company AUM as of Dec. 31, 2015, was $527.4 billion, with positive net cash flows of $1.3 billion.
  • Retirement and Income Solutions Fee sales were $3.1 billion in the fourth quarter, which contributed to end of period account values of $176.7 billion.
  • Principal Global Investors had total AUM of $360.8 billion, including positive quarterly net cash flows of $0.7 billion.
  • Principal International had its 29th consecutive quarter of positive net cash flows, with reported flows of $1.8 billion and AUM of$109.9 billion (excluding $41.8 billion of AUM in our joint venture in China, which is not part of reported AUM), a 20 percent increase over the year ago quarter on a constant currency basis.
  • Specialty Benefits premium and fees5 increased 8 percent over the year ago quarter and continued to have favorable claims experience.

Full-Year Results

  • Outstanding investment performance, with 88 percent of Principal’s investment options6 in the top two Morningstar quartiles on a one-year basis, 89 percent in the top two quartiles on a three-year basis and 93 percent in the top two quartiles on a five-year basis at year end.
  • Total company full year net cash flows were strong at $23.1 billion, 4 percent of beginning of year AUM.
  • In the Spread business of Retirement and Income Solutions, full-year pension closeout sales doubled over 2014 to a record $1.8 billion.
  • Principal Global Investors had full-year net cash flows of $15.5 billion, including $7.8 billion from institutional clients.
  • Principal International had $9.3 billion of net cash flows and continued to generate mid-teens earnings growth on a constant currency basis.
  • Specialty Benefits had record sales of $314.2 million and record retention.
  • Individual Life Insurance full-year normalized premium and fees increased 4 percent over prior year and business market sales remained strong at nearly 60 percent of 2015 sales.
  • Total company ROE, excluding AOCI other than foreign currency translation adjustment, was 14.2 percent.
  • Strong capital position with estimated risk based capital ratio of 432 percent, above our 415-425 targeted range.
  • In 2015, deployed$1.1 billion of capital, which was nearly 90 percent of net income. This included:
    • A fourth quarter common stock dividend of $0.38 per share, bringing full-year 2015 to a record $1.50 per share, a 17 percent increase over full-year 2014;
    • The $335 million acquisition of AXA’s pension business in Hong Kong; and
    • The repurchase of 5.5 million shares of common stock in 2015 for $275 million.

Net Income

  • Fourth quarter 2015 net income available to common stockholders was$253.6 million, a decrease of 6 percent compared to fourth quarter 2014 reflecting:
    • Total company operating earnings of $303.2 million; and
    • Net realized capital losses of$47.6 million, including:
      • $5.1 million loss due to credit impairments related to sales and permanent impairments of fixed maturity securities and commercial mortgages. This is a 39 percent improvement in credit impairments from fourth quarter 2014 as losses on commercial mortgage backed securities continue to mitigate; and
      • $49.7 million of losses related to hedging activities were predominantly due to interest rate and equity market changes.