| SECURITIES AND EXCHANGE COMMISSION | |||
| Washington, D.C. 20549 | |||
| _________________________ | |||
| FORM 8-K | |||
| CURRENT REPORT | |||
| Pursuant to Section 13 or 15(d) of the | |||
| Securities Exchange Act of 1934 | |||
| Date of Report: May 2, 2011 | |||
| (Date of earliest event reported) | |||
| PRINCIPAL FINANCIAL GROUP, INC. | |||
| (Exact name of registrant as specified in its charter) | |||
| Delaware | 1-16725 42-1520346 | ||
| (State or other jurisdiction | (Commission file number) (I.R.S. Employer | ||
| of incorporation) | Identification Number) | ||
| 711 High Street, Des Moines, Iowa 50392 | |||
| (Address of principal executive offices) | |||
| (515) 247-5111 | |||
| (Registrant’s telephone number, including area code) | |||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the | |||
| registrant under any of the following provisions: | |||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR | ||
| 240.14d-2(b)) | |||
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR | ||
| 240.13e-4(c)) | |||
| _________________________ | |||
| Page 2 | |
| Item 2.02. Results of Operations and Financial Condition | |
| On May 2, 2011, Principal Financial Group, Inc. publicly announced information regarding its | |
| results of operations and financial condition for the quarter ended March 31, 2011. The text of the | |
| announcement is included herewith as Exhibit 99. | |
| Item 9.01 Financial Statements and Exhibits | |
| 99 First Quarter 2011 Earnings Release | |
| SIGNATURE | |
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly | |
| caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | |
| PRINCIPAL FINANCIAL GROUP, INC. | |
| By: /s/ Terrance J. Lillis | |
| Name: Terrance J. Lillis | |
| Title: Senior Vice President and Chief Financial | |
| Officer | |
| Date: May 3, 2011 | |
| Page 3 | |
| EXHIBIT 99 | |
| Release: On receipt, May 2, 2011 | |
| Media contact: Susan Houser, 515-248-2268, houser.susan@principal.com | |
| Investor contact: John Egan, 515-235-9500, egan.john@principal.com | |
| Principal Financial Group, Inc. Announces First Quarter 2011 Results | |
| Record assets under management of $327.4 billion at the end of first quarter 2011, an increase | |
| of 12 percent compared to first quarter 2010. | |
| (Des Moines, Iowa) – Principal Financial Group, Inc. (NYSE: PFG) today announced results for first quarter | |
| 2011. The company reported operating earnings1 of $231.8 million for first quarter 2011, compared to $221.4 | |
| million for first quarter 2010. Operating earnings per diluted share (EPS) were $0.71 for first quarter 2011, | |
| compared to $0.69 for first quarter 2010. The company reported net income available to common stockholders | |
| of $196.3 million, or $0.60 per diluted share for first quarter 2011, compared to $190.8 million, or $0.59 per | |
| diluted share for first quarter 2010. Operating revenues for first quarter 2011 were $2,046.7 million compared to | |
| $1,972.5 million for the same period last year. | |
| “The Principal® had a very solid start to 2011, including record total company assets under | |
| management, record Principal Funds sales and strong net cash flows from Principal International, Full Service | |
| Accumulation and Principal Funds,” said Larry D. Zimpleman, chairman, president and chief executive | |
| officer of Principal Financial Group, Inc. “With the continued successful execution of our strategy and signs | |
| of a recovering economy, we expect growth across our businesses to accelerate in the quarters ahead.” | |
| “Because of our strong financial position and flexibility going into the year, we have the | |
| opportunity to further increase shareholder value through capital deployment,” said Zimpleman. “Since year | |
| end, we’ve announced two acquisitions, the HSBC AFORE and Finisterre Capital. These businesses | |
| complement our strategy, provide additional scale and fit nicely within our existing infrastructure, which gives us | |
| potential for substantial synergies. We’re also excited about additional opportunities in 2011 to deploy capital as we | |
| continue to execute our strategy.” | |
| “In the first quarter we delivered strong operating results on double-digit earnings growth from Principal | |
| Global Investors, Principal Funds, Individual Annuities and U.S. Insurance Solutions,” said Terry Lillis, senior vice | |
| president and chief financial officer. “Across our business lines we’re seeing momentum continue to build, | |
| reflecting demand for our unique solutions and success of our multi-product, multi-channel distribution platform.” | |
| “Our investment portfolio continues to perform better than expected,” added Lillis. “In addition, we are | |
| encouraged by the demand for many of the investment strategies where Principal Global Investors has a proven | |
| track record such as real estate, emerging markets and high yield.” | |
| _________________________ | |
| 1 Use of non-GAAP financial measures is discussed in this release after Segment Highlights | |
| Page 4 | |
| Key Highlights | |
| • | Excellent sales in the company’s three key U.S. Retirement and Investor Services products in the first |
| quarter, with $2.0 billion for Full Service Accumulation, $2.9 billion for Principal Funds and $345 | |
| million for Individual Annuities. | |
| • | Net cash flows of $870 million for Full Service Accumulation and $620 million for Principal Funds. |
| • | Continued strong operating leverage in Principal Global Investors with 38 percent growth in first quarter |
| 2011 operating earnings over first quarter 2010 on 6 percent growth in average assets under management. | |
| • | Principal International reported record assets under management of $48.5 billion, excluding China, as of |
| March 31, 2011, and net cash flows of $1.3 billion for the quarter. | |
| • | Record Specialty Benefits sales of $113 million for the quarter and a 35 percent increase in Individual |
| Life sales over the prior year quarter. | |
| • | Strong capital position with an estimated risk based capital ratio of 425 percent at quarter end and |
| approximately $1.9 billion of excess capital.2 | |
| • | Book value per share, excluding AOCI3 increased to a record high of $28.38, up 6 percent over first |
| quarter 2010. | |
| • | Named by Barron’s as the #3 rated Fund Family for investment performance across all asset categories in |
| 2010 and #7 for the last decade. | |
| • | Named Investment Brand of The Year in the 2011 Harris Poll EquiTrend® Study.* |
| Net Income | |
| Net income available to common stockholders of $196.3 million for first quarter 2011 reflects net realized | |
| capital losses of $52.6 million, which include: | |
| • | $32.7 million of losses related to credit gains and losses on sales and permanent impairments of fixed |
| maturity securities, including $21.3 million of losses on commercial mortgage backed securities; and | |
| • | $5.1 million of losses on commercial mortgage whole loans. |
| Segment Highlights | |
| Retirement and Investor Services | |
| Segment operating earnings for first quarter 2011 were $159.3 million, compared to $157.0 million for | |
| the same period in 2010. Full Service Accumulation earnings were $76.0 million for first quarter 2011 as | |
| compared to $76.3 million for first quarter 2010. A 13 percent increase in average account values was | |
| substantially offset by a lower dividends received deduction accrual true-up than a year ago quarter and higher | |
| deferred policy acquisition cost (DPAC) amortization expense. Principal Funds earnings increased 18 percent | |
| from a year ago to $12.0 million, primarily due to a 19 percent increase in average account values. Individual | |
| Annuities earnings were $37.3 million compared to $30.8 million for first quarter 2010. The variance primarily | |
| reflects favorable investment income in the quarter and record account values. The accumulation businesses4 had | |
| record account values of $166.6 billion at March 31, 2011. | |
| _________________________ | |
| 2 Excess capital includes cash at the holding company and capital at the life company above that needed to maintain a | |
| 350 percent NAIC risk based capital ratio for the life company. | |
| 3 Accumulated Other Comprehensive Income | |
| 4 Full Service Accumulation, Principal Funds, Individual Annuities and Bank and Trust Services | |
| Page 5 |
| Operating revenues for first quarter 2011 were $1,017.8 million compared to $1,012.7 million for |
| the same period in 2010, primarily due to higher revenues for the accumulation businesses, which improved |
| $51.7 million, or 7 percent, from a year ago. |
| Segment assets under management were $181.5 billion as of March 31, 2011, compared to $165.9 |
| billion as of March 31, 2010. |
| Principal Global Investors |
| Segment operating earnings for first quarter 2011 were $16.6 million, compared to $12.0 million in |
| the prior year quarter, primarily due to an increase in assets under management. |
| Operating revenues for first quarter were $125.3 million, compared to $113.8 million for the same |
| period in 2010, primarily due to higher management fees and transaction fees. |
| Unaffiliated assets under management were $78.1 billion as of March 31, 2011, compared to $74.9 |
| billion as of March 31, 2010. |
| Principal International |
| Segment operating earnings were $28.5 million in first quarter 2011, compared to $37.9 million in |
| the prior year quarter, reflecting a reduced economic interest in our Brazilian joint venture. |
| Operating revenues were $206.2 million for first quarter 2011, compared to $181.1 million for the same |
| period last year, primarily due to growth in assets under management. |
| Segment assets under management were a record $48.5 billion as of March 31, 2011 ($7.7 billion |
| of assets in our joint venture in China are not included in reported assets under management), up from $35.7 |
| billion as of March 31, 2010. This includes a record $5.6 billion of net cash flows over the trailing twelve |
| months, or 16 percent of beginning of period assets under management. |
| U.S. Insurance Solutions |
| Segment operating earnings for first quarter 2011 were $59.5 million, compared to $44.1 million |
| for the same period in 2010. Individual Life earnings were $36.5 million in the first quarter, compared to |
| $30.5 million in first quarter 2010, primarily due to improved mortality experience. Specialty Benefits earnings |
| were $23.0 million in first quarter 2011, up from $13.6 million in the same period a year ago, primarily due to |
| improved claims experience and investment performance. |
| Segment operating revenues for first quarter 2011 were $731.2 million compared to $692.1 million |
| for the same period a year ago, with stronger non-qualified life insurance sales and positive trends in sales, |
| lapses and employment in Specialty Benefits. |
| Corporate |
| Operating losses for first quarter 2011 were $32.1 million compared to operating losses of $29.6 |
| million in first quarter 2010. |
| Page 6 | |
| Forward looking and cautionary statements | |
| This press release contains forward-looking statements, including, without limitation, statements as to | |
| operating earnings, net income available to common stockholders, net cash flows, realized and unrealized | |
| gains and losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, | |
| expectations, goals and opinions. The company does not undertake to update these statements, which are | |
| based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. | |
| Future events and their effects on the company may not be those anticipated, and actual results may differ | |
| materially from the results anticipated in these forward-looking statements. The risks, uncertainties and | |
| factors that could cause or contribute to such material differences are discussed in the company's annual report | |
| on Form 10-K for the year ended Dec. 31, 2010, filed by the company with the Securities and Exchange | |
| Commission, as updated or supplemented from time to time in subsequent filings. These risks and | |
| uncertainties include, without limitation: adverse capital and credit market conditions that may significantly | |
| affect the company’s ability to meet liquidity needs, access to capital and cost of capital; a continuation of | |
| difficult conditions in the global capital markets and the general economy that may materially adversely affect | |
| the company’s business and results of operations; the risk from acquiring new businesses, which could result | |
| in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of | |
| other financial institutions that could adversely affect the company; investment risks which may diminish the | |
| value of the company’s invested assets and the investment returns credited to customers, which could reduce | |
| sales, revenues, assets under management and net income; requirements to post collateral or make payments | |
| related to declines in market value of specified assets may adversely affect company liquidity and expose the | |
| company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce | |
| company profitability; fluctuations in foreign currency exchange rates that could reduce company | |
| profitability; Principal Financial Group, Inc.’s primary reliance, as a holding company, on dividends from its | |
| subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay | |
| such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; | |
| inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or | |
| other catastrophic event; and default of the company’s re-insurers. | |
| Use of Non-GAAP Financial Measures | |
| The company uses a number of non-GAAP financial measures that management believes are useful to investors | |
| because they illustrate the performance of normal, ongoing operations, which is important in understanding and | |
| evaluating the company’s financial condition and results of operations. They are not, however, a substitute for | |
| U.S. GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP | |
| measures to the most directly comparable U.S. GAAP measure at the end of the release. The company adjusts | |
| U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these | |
| adjusting items have occurred in the past and could recur in the future reporting periods. Management also uses | |
| non-GAAP measures for goal setting, as a basis for determining employee and senior management | |
| awards and compensation, and evaluating performance on a basis comparable to that used by investors | |
| and securities analysts. | |
| Earnings Conference Call | |
| On Tuesday, May 3, 2011 at 10:00 a.m. (ET), Chairman, President and Chief Executive Officer Larry | |
| Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of | |
| results, asset quality and capital adequacy during a live conference call, which can be accessed as follows: | |
| • | Via live Internet webcast. Please go to www.principal.com/investor at least 10-15 minutes prior to the |
| start of the call to register, and to download and install any necessary audio software. | |
| • | Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International |
| callers) approximately 10 minutes prior to the start of the call. The access code is 54521548. | |
| Page 7 | |
| • | Replay of the earnings call via telephone is available by dialing 800-642-1687 (U.S. and Canadian |
| callers) or 706-645-9291 (International callers). The access code is 54521548. This replay will be | |
| available approximately two hours after the completion of the live earnings call through the end of day | |
| May 10, 2011. | |
| • | Replay of the earnings call via webcast as well as a transcript of the call will be available after the call at: |
| www.principal.com/investor. | |
| The company's financial supplement and additional investment portfolio detail for first quarter 2011 is | |
| currently available at www.principal.com/investor, and may be referred to during the call. | |
| About the Principal Financial Group | |
| The Principal Financial Group® (The Principal ® )5 is a leader in offering businesses, individuals and | |
| institutional clients a wide range of financial products and services, including retirement and investment | |
| services, insurance, and banking through its diverse family of financial services companies. A member of the | |
| Fortune 500, the Principal Financial Group has $327.4 billion in assets under management6 and serves some | |
| 16.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United | |
| States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol | |
| PFG. For more information, visit www.principal.com. | |
| *The Principal Financial Group received the highest numerical Equity Score among Investment | |
| brands included in the 2011 Harris Poll EquiTrend® Study, which is based on opinions of 25,099 U.S. | |
| consumers ages 15 and over surveyed online between January 11 and 27, 2011. Your opinion may | |
| differ. “Highest Ranked” was determined by a pure ranking of a sample of Investment brands. | |
| ### | |
| _______________________ | |
| 5 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, | |
| Inc., a member of the Principal Financial Group. | |
| 6 As of March 31, 2011 | |
