("=Principal Financial 1Q Profit Drops 34%; Rev Down," at 16:28
ET, incorrectly stated revenue was in millions instead of billions
in the sixth paragraph. The correct version follows:)
DOW JONES NEWSWIRES
Principal Financial Group Inc. (PFG) reported a 34% drop in
first-quarter profit as the life insurer and asset manager
continued to be hurt by equity-market declines, though Chief
Executive Larry Zimpleman noted expense initiatives helped offset
some of the revenue declines caused by lower asset valuations.
Zimpleman said the capital losses from the company's investment
portfolio were at "a manageable level." He added that, during the
quarter, cash was moved to the holding company from the life
company, "positioning the holding company to meet its obligations
in 2009, while continuing to maintain strong life company capital
ratios."
Still, shares fell 3.8% to $16.29 in late trading as the results
were below expectations.
The results come as the life-insurance sector has been roiled by
troubles in investment portfolios and annuities, both heavily
exposed to the downbeat financial sector. But Principal Financial
is among those expected to get some help from the Troubled Asset
Relief Program, after the Treasury Department decided to include
life insurers among the financial companies eligible for such
aid.
Principal Financial posted earnings of $121 million, or 43 cents
a share, down from $182.4 million, or 67 cents a share, a year
earlier. Excluding capital losses and other one-time items, the
company earned 63 cents a share in the latest quarter, down from 99
cents in the prior year.
Revenue fell 12% to $2.19 billion.
Analysts polled by Thomson Reuters were expecting a profit of 66
cents a share on $2.51 billion in revenue.
Net investment income fell 14% to $828.5 million. Total assets
under management fell 22% to $236.6 billion as of March 31, which
the company said reflects lower asset valuations, including the
impact of equity-market declines.
Revenue in the life- and health-insurance segment fell 4.8% amid
a drop in health-division premiums, as profits slumped 9.3%, hurt
by higher costs for employee pension and other post-retirement
benefits. Excluding items, the segment's earnings rose 14%.
Meanwhile, in the U.S. asset-accumulation unit, which includes
annuities and other retirement and investment products, revenue
dropped 16% as earnings tumbled 33%. The segment was hurt by lower
revenue due to the impact on account values of significant
equity-market declines as well as higher employee pension and
post-retirement benefits costs.
Book value per common share was $8.03 as of March 31, up from
$7.45 at the end of the fourth quarter but down sharply from $24.36
a year earlier.
-By Donna Kardos, Dow Jones Newswires; 201-938-5963;
donna.kardos@dowjones.com