PFG - Earnings call 3 2023 | Principal Financial Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Principal Financial Group Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to Humphrey Lee, Vice President of Investor Relations.

Humphrey Lee

Thank you, and good morning. Welcome to Principal Financial Group's Third Quarter 2023 Conference Call.

As always, materials related to today's call are available on our website at investors.principal.com.

the Strable, provision, remarks. will of and Dan reading Deanna CFO, deliver a safe CEO, harbor Houston; Following some prepared

will also the of up then questions. We members Other call senior available be for will for Q&A. management open

results actual the this does made statements cause differ meaning could annual update new to that U.S. not Private revise uncertainties the the and Exchange may Reform Litigation implied information, by in the call or Risks those reflect during Securities or of contain conference subsequent changes Some from discussed Act. report of filed Commission. or the company's to expressed company Securities comments XX-K strategy. materially forward-looking recent within with the and on The in are Form events company them most

Additionally, be in comparable quarter made the non-GAAP the We'll measures. this XXXX Reconciliations may measures February combined slide and call call XXXX XX. GAAP the earnings U.S. be release, on comments financial most financial hosting presentation. fourth outlook conference found to refer a non-GAAP our may financial earnings to of financial supplement directly and some of during measures

We earlier details share year. next will Dan? more

Daniel Houston

to like and of welcome update position. our the and Humphrey, additional and highlights. with key details capital notable morning, our current and I'd an Deanna on on Thanks, performance This to third call. some quarter everyone financial results aspects share financial will follow

disciplined in balance as integrated the growth a well Across the and model strong our our for to to businesses management. increasingly small-to-midsized investing we position and contributed U.S. business continue enterprise, diversified market Our in as expense differentiated business with leading quarter.

quarter. non-GAAP or across sales healthy our in drove underwriting and the diluted share $XXX $X.XX million X, third of results earnings businesses Slide on operating strong per growth Starting reported

to partnerships earnings distribution our value synergies joint share venture shareholders. offering quarter significant customers our XXXX. increasingly the Excluding value third businesses and the for of unlock over and increased between our continue of XX% per integrated variances, The and

growth common in $XXX capital stock our quarter, we and on the than and During to businesses delivered share of our strategy, for shareholders repurchases through dividends. returning investing more capital deployment million

Our and the our us increase enabled $XXX dividend. repurchases quarter third position strong million to in to share of capital complete

After markets to and the year, start a in August strong retreated equity September.

tailwinds rest currency strengthened reversed dollar on of first in the quarter outpacing the yields U.S., of Foreign as higher world. in half and in the U.S. of the the the growth much third the year

improved company company-managed dynamics strong impacted cash net which in International, Investors ended flow second institutional flow flows quarter, AUM, account general benefiting strong in from managed $XXX the These from improved our Principal Principal and billion. Global macroeconomic total the cash Total quarter over flows. net

and year-to-date funds last trillion net as funds evidenced XX and of of many $X industry. AUM. markets highly flows and nearly management in current make and money $X percentage the is industry funds of aggressive outflows across volatile a are better to billion The $X.X asset money a the attractive. This trillion rate we With AUM performed the than industry managers hikes for into approximately money over active cash have quarter, challenge by the market beginning asset market interest of months the continued the market

strategies. quarter the income as positive into generated real of million we pressure investors have stabilize and back positioned in well like select the in reallocate put to starting are assets investors continued strategies estate in real net risk-based solutions. We the cash sector, money Despite institutional estate are rates interest specialty to right and estate flow as real our work $XXX

of flows our estate class. clients demonstrates differentiated capabilities this nearly have in This the the and half in real in our asset first year the was double our confidence

our boosting opportunities quarters. estate real several have for coming We optimism the

the quarter in our funding data fourth China venture. joint our additional fund and new real expect center estate and We

last have yet $X billion estate currently strong real work unfunded that over we we'll mandates, As of quarter, opportunistically. committed pipeline a discussed put to

Looking institutional of by will cash total. that total, approximately size large of $X billion outflows management are impact net at X similar aware in asset in flow we

One client take in-house other while to is planning a is to passive the moving the option. funds

of to one in expect of We quarter occur the first in other fourth the the quarter the early outflows and XXXX.

including reflected International, share. with Brasilprev, joint in Brazil. we quarter nearly reported both with retirement AUM This in Banco ended total and Latin leader the the AUM. cash Brasil, do strong In with our market XX% $XXX in venture deposits America, of billion $X flow net remains market Principal billion

in a cash year. seasonally and net third first the in As stronger each flow be reminder, Brazil to tends quarter

the asset We global global support to in opportunity have deliver continue more client great ability our than capabilities and and and markets. management local confidence across investment XX to

of team we our new Henderson of Maris Equities; Goldman Sachs fixed CIO our leaders Goosay part capabilities Michael upon our to investment As income. investment highly Both that complements George specialized investment X our added global XXX have investment efforts nearly build CIO professionals. from as further Janus for of invest and growth, experienced leaders from as with expertise robust will and proven regarded

our We will and Mexico. be to a Latin announcing businesses of in across America Brazil, the leader coming also new drive days, Chile

XX% XX% value the deposits sales grew net retirement, third and Turning transfer a to was cash in account flow quarter. Total year positive increased compared fee-based RIS ago. to U.S.

$X to X retirement transfer in quarter, and contributed billion deposits. plan had sales large We sales which the

a XXXX, can sales in a quarter-to-quarter. large driven the segment and reoccurring over segment. X% the net Total cash in reminder, As increase quarter deposits increased significantly plan flow SMB by lapses impact third of

lapses on as segment healthy. this funding The offset as full given from defined earlier and impact as well of lower has the plan strong partially wages benefit and planned proven was these deposits be by large continues plans. resilient year employment status to remain deposits the This SMB

typically onboard plans trends. plans the providers Looking we first while generally historical flow net cash at lapses elevated change consistent quarter. We ahead, see expect quarter, in fourth new year-end, the with negative and in we

a heading remain We expect we leveraging year position and and focused to have profitable leading levels be of on sales full driving higher basis, RIS, XXXX. XXXX transfer deposits retirement into solutions. workplace our than On growth good and market in and we full suite momentum

And to in Attractive growth the to within deliver and confident our and an X% value specialty strong continuing over wage aid employment segments XXXX. growth. ability with above meaningful benefits a and and market contributed underpenetrated third remain growth in these of market proposition to sales, to fees segments premium we are retention, the quarter target SMB

and across set combined quarter is our focus excited continue the product distribution premium on legacy integrated and market working value the business enterprise distinct high-growth and Life, drive to fees over markets, of for will grew suite customers of partnerships the of our and our shareholders. I'm outpaced the confident runoff that growth strategy XXXX In opportunities our and XX% about business. as the our third with

on tools, our we're is guidance. this products individuals, core, the demand know kind and today, and At communities of businesses, access And focused for to significant. knowledge support we providing financial markets with and

Principal, example life state and comes a of worldwide. with which we Global industry global back upon To Financial regularly stay the in take step touch study customer seeing inclusion around the assessing built. the financial to the our of a of foundation state Inclusion One the has trends consider sponsored globe, we're by Index, trends in

We identifying companies, long-term continued for to to building to financial persistent participate released prepared employers second in people feel governments help this our a work security. month, financial and earlier and continue finding together need year fully more service to

I'd Deanna, to to like we over it turning Before some highlight recently received. recognition

women for Forbes one and Principal best of the recognized recently on list employers most companies. in cybersecure of America's its U.S.

management We local in innovation Cuprum most also Index from and helps consulting and Equality us benchmark companies, as most categories. stand Recognition this the progress, the and like a AFP company Deanna? score top Disability achieved XXXX in in group on recently retain out the Inn. innovative attract marketplace. Principal the Disability And both talent innovative Chile, and the awarded asset

Deanna Strable

key our morning and quarter. and current share call. to everyone on the update portfolio. position financial financial loan Dan. I performance capital This on commercial to will morning, the mortgage Thanks, of Details our Good for the an contributors

more in or capital free change from the was quarter, be the income a income in funds net $X.X and our reflecting of million of to $XXX reported withheld businesses. cash due of primarily value benefit We can impact billion fair This than exited doesn't the quarter-to-quarter. embedded flow third volatile which derivative, extremely

businesses, from minimal Excluding $X the exited with of million losses million. net income income was $XXX credit

credit in third better the impacts also total manageable Year-to-date, a and expectation quarter. which of had the is $XX We year. losses beginning drift at the million, than were credit our from drift minimal

demonstrating model. XXXX, diluted per were XX% Excluding quarter business our million increased significant of quarter third operating of strength $X.XX variances, earnings over diversified $XXX third share. EPS and resiliency the non-GAAP or the

variances, to guided significant XXXX On increased a our excluding year-to-date range. has X% basis, over X% X% EPS to compared

on impacted As variances Slide diluted detailed tax million share. net XX, net non-GAAP million quarter by negative $X.XX a operating earnings our $XX and pretax, positive per a $XX significant after third

and included as in as better-than-expected International, inflation. assumption actuarial performance of well and variable variances from including significant RIS impacts impacts encaje Life the lower-than-expected The income review, lower-than-expected investment impacts Corporate Principal in

well net including individual adjustments assumptions mortality was This group refinements a driven and positive updates impact RIS Benefits, and primarily PRT had review assumption model and to as million morbidity experience life. The earnings. Specialty pretax $XX operating as by in assumptions, on disability

as from reflect million benefit $X review. significant in operating the variances, a offset methodology Specialty was one-time in tax rate resulting RIS more the earnings, There no change. pretax assumption material third negative are by reserve rate from a impacts was impacts impact after-tax PRT a quarter run tax pretax The run than excluding the impact Benefits. Life's

year, investment lower half variable run but rate was improved the positive total, of the and from expectations. the income In quarter first our it for than was

estate fees from VII alternative sales investment benefited real remain returns, improvement While in immaterial. and prepayment

third third daily quarter, macroeconomics fee-based XXX second S&P quarter of the increased quarter from third at XX% the the the quarter benefiting in our in Looking from businesses. XXXX, and X% results average

half in While negative fee-based markets returns of revenue, XXX fixed the second well. businesses. nearly quarter, our This for earnings and S&P margins as X% second impacts daily retreated were closed the lower quarter the and the average increased, income the than

benefits exchange quarter, XXXX RIS, well compared to by management offset interest compression. from rates Foreign the tailwind basis. on second a rates to as In higher fee were trailing basis strong a as headwind quarter and market a slight favorable slight XX-month were expense on performance the relative quarterly and immaterial third a partially equity of

to variances, of to revenue XXXX XX%. compared third X% the year and revenue in XX%. estate in PGI fees the benefited quarter increase over quarter, real significant performance Excluding was X% margin ago net driving the and a margin increased a at improve from strong

business, the strong pretax quarter. operating disability mortality. and This increased Benefits life excluding fueled variances, underwriting growth earnings, experience Specialty long-term ago group significant year the was in lower over by XX%

adjusted of The third strong higher points margin third than XXX XXXX. basis over which at was quarter than XX%, was quarter more the

the our As to fourth want expenses. to quarter, compensation the and we I due other enterprise typically you remind higher that expenses to certain of are seasonality look

X% impact typical aligned on with portfolio, challenging investment We it macro we're expenses the remains of fourth expect our liability to a volatile to Shifting than less of for profile positioned XX% and economic as and quality, our this the an quarter conditions. in focused environment. variety well managing high

mortgage real current estate XX% are office ratios and and loan loan-to-value the X.Xx. in commercial coverage third The at the revalued The service portfolio healthy. portfolio remains debt strong quarter. We again

are in confident quarter. one the maturities our year-to-date to are the the exposure we office of the and loan remaining CML office Specific fourth maturing resolved, all in small in outcome portfolio,

ahead of XXXX ratio coverage debt Looking and office X.Xx. underlying metrics the XX% are with a loan-to-value maturities, service to strong

in the of confident are outcome XXXX, maturities are half slated first of in X only for We the the which the XX of year.

benefit Turning in and excess position and and in our risk-based available above $XXX the million IMR holding includes $XXX ratio. company, of in $XX liquidity, the our which of XXX% million subsidiaries, a capital reflects billion capital million are and we is million our at with $X.X approximately targeted targeted strong level, which capital, of negative to excess $XXX

ratio. quarter. shareholders to XX% stock common Last of a $XXX million This share $X.XX $XXX the increase stock is payout We million million quarter, in payable returned including repurchases common dividend with and more dividend $X.XX targeted our we announced $XXX and third in fourth than of the aligns a night, dividends.

previously Given of and our full are repurchase strong capital with for to higher common we our now increasing to current than billion shareholders $XXX we the dividends, share $XXX expectation year expect free flow, capital approximately year. position to million, Combined full capital return million expected. $X.X stock

holding the targets approach liquidity company We and capital balanced both and remain focused the disciplined capital life and we'll our and company, on a at maintaining to deployment. continue

This to to long-term asset retirement, growth protection, maximizing the drivers will growth for enterprise call our continue value. for committed and global prepared our which and management the of open and please Operator, questions. long-term concludes are benefits We deliver shareholder remarks.

Operator

Our Instructions] the first [Operator Ryan from of Krueger line questions come KBW. with

Ryan Krueger

your estate. opportunities in the in Do is estate was you And of mentioned think reasonable -- million any a $XXX I question we on. some real quarter. you you visibility flows that of you there? type is move you My expectations more have first that on did forward? real as more can estate my now question color real guess on couple I Or just pace give

Daniel Houston

Kamal invited also we've want have Kamal that Pat to thanks let respond just Yes, join minute Head to questions for know going I and participate in here, is of Bhatia Investments forward. everyone a also reports Ryan, our Asset directly for going calls us PGI, on Pat, Principal that responding to but to for question. in Global to He I'm the to we'll Q&A. earnings Management. on

that, So to like would please? question, Pat, take you that with

Patrick Halter

Yes. for the thanks Ryan, question.

real in we in as the did an in that look real opportunity we question, to flow. quarter I $X the the been very continue an flow quarter, like And a net pace terms expect of million cash continue capital institutional the a in marketplace was your the in selectively from third active and consistent third that not our cash predominantly net of quarter billion deploy $XXX That would saw pipeline have see double flow, in see invested committed fourth we of and estate. to highlighted, Ryan. forward. has you yet was to estate As we terms cash quarter to active pipeline To prior net

Ryan Krueger

type funds on then what of $X or outflows that of are in? you And billion what asset Great. classes type X totaling the mentioned, those

Daniel Houston

Pat. Please,

Patrick Halter

Ryan. Thanks, Yes.

of outflows we to quarter that fourth X have quarter large in the of early onetime XXXX. see mentioned, do the Dan late As in XXXX and we first expect

a first one strategies The merging multiple with client larger one sort of a who preferred is large into who portfolio. is is securities mandate,

client a mandate a that second to large-cap is very a opted equity strategy. The with has passive to move

Just X the forward. adjustments we $XX terms the of we any in large mandates. probably of is It's approximately earnings question what is go without the impact million of as these combined natural expense offsetting sort loss considering

forward our We've noted in overall base. not overall as portfolio just reviewed if other have a XXXX. portfolio, also we are And expect taken ones Ryan, any at the we our any outflows there look, and point at onetime into as client we other this we look time

Daniel Houston

from of securities I spectrum preferred to performance So might the in-house only Pat, Ryan strong very mandate, add on took they thing and that in spite that management. our that asset preferred

performance. a So tough the again, strong considering was us, it loss for especially

Operator

come the questions next Our with Jimmy of JPMorgan. from line Bhullar

Jamminder Bhullar

quarter. And over your in fees or some Because on what for is an next the drove what next third color performance if thought that in I strong the outlook just give were quarter this us good. first and was environment, quarterly either number year? you Pat, obviously, very So PGI fees type the the have would would performance have very that but over of could suffered

Daniel Houston

question. Thanks, the Jimmy, Pat? for

Patrick Halter

question. Yes. for the Jimmy, thanks

portfolios that generation of stages performance when fees see in sort or hopefully on heard are the can gains maturity conditions the that real you we have And we large you've relatively of terms we're imagine, managing. fees. depending are we can of of market in harvesting always estate that optimize lumpy, actual alpha and at a investments prior me pipeline As as different in comments, different performance

$XX Those have third million in quarter. did are X performance a in gross fee transactions. the different We

look first probably we we that the performance we'll in probably As forward, we fourth that the where of fees, quarter. saw think which half the muted, year see were

we've continue a still been we XXXX, future for in harvested guidance have suggest expect as us, if to we be But past XXXX which look fees strategies an be diverse that the opportunity should range, the we to a conditions as $XX-plus have that different discussions years. consistent into a you performance has I the would we've million to of indicated the we second that provide XXXX, confidence in realization of performance half that and investment in of believe first portfolio probably fees, consistent versus of half where we seen in can the but market

Jamminder Bhullar

Okay. on And secondly, then business. fee in flows net the RIS

quarter. this lapses high some saw You

bought. lapses you platform acquisition the wealth I you happened think years on several mentioned cap ago. large The

Or have that? What's the the So I weak that it competition? business? is in those really it is would part over. fee-based have But shock thought flows it is would now, lapses by -- causing been

Daniel Houston

Jimmy, handing to it of a really let over couple Chris. me And quick make just comments before

thing done and domestic a advancing our to out recruiting First I challenging want for existing an thank our industry Chris talent leadership job leveraging in retirement his strategy. is environment It's the from talent. do He's there. amazing

focus mid that Each different large characteristics volatile. can those plans. one have of remains be and on Our still small,

on abilities and here. TRS defined But these most doubling it growing Chris in part, businesses, place like some benefit, and nonqualified. volatility taken solution importantly, the integration that our is our ESOP create a defined has from think And in certainly, continued but large down we've to unique for contribution, to I'd seen

can respond? Chris, So please you

Christopher Littlefield

No, for Yes. Jimmy. thanks the question,

the gotten to across have market have and pandemic in I in as bid seen dampened some and uptick activity, an certainly think mind probably what keep as that we've has a of activity 'XX. that the the industry of into result you we volatility is the of some bid

meaningful we fact, But see yes, heading positive are had perspective don't I up of we're deposits the it's I in was continue a And you create definitely to starting very to that's that. through and flows, something we if I going of transfer quarter, losses 'XX. a think and quarter, working look digits. significant contract pickup we and in pressure. mean SMB from moderation transfer So deposits. mid-double into lot increase in in the sales at to in see mean a a

really is that see of quarter. trends continue All those to the and continue we positive, in fourth

So I really that when volatile. some more market and of hard really lag is volatility think, move to from the pandemic it's yes, the we are plans some seeing market activity

the that's think I here much So sort out over or to so. quarter going pretty next

Operator

Jefferies. Suneet Our the next line come with from questions Kamath of

Suneet Kamath

review. And is from for Just assumption similarly, on any should from review either on negative item that to then of tax for that GAAP rate? there sort statutory expect? based the the Deanna we start taxes impacts ongoing sort implications Any or the of impact that up in showed --

Deanna Strable

the life, From does rate in Thanks, no in for it a SPD. in cause slight question. slight a benefit Yes. pressure Suneet, perspective, run RIS, a impact

pretax it think basis. would we rate you on of note that earnings reflected I in is those quarter the be a third though that run operating gave

have of all those been in. So kind factored

we a move As did cause capital item capital, to hit. the tax

positive so from years. trued offset the a tax really portion credits taken we and we impact that And moving was impact reversed perspective, be a unknown, some that From and that But that -- a had the of pieces. that was that impact those would modest ultimately, offsetting positive previous AAR. had in slightly capital onetime no ongoing up

go And forward. as so no impact we

Suneet Kamath

Got it.

then, guess, I Okay. Amy. maybe for And

you guess strong -- On just other from think to sense these understand strong just the timing a this companies. looks glide or the like. trying would of from how want point, results, at occur see like but I but we I sort would be imagine will guys, factored only continue I disability what to I'm of, to quickly some really into that a perspective, business, understand path not And get you results pricing? to good

Daniel Houston

Amy, please?

Amy Friedrich

Yes. Yes.

you reratable I'll ability performance perspective -- good to bit is give of rerate, -- Suneet. kind block going mean -- an to me a in going by pass of that up. business vary nature It's annually if this, think those do that that that we which let on on block, relatively your you I of we But the made of kind how quickly. have your the So my is most to

to more committed there that, income rates. -- to future that I in in growth out our that We're into industry the in. that good that we've when and put for back We protection know the that's good got we're it's customers. And performance, rates economy products know say our making will economy. good sure we're pretty continue know good putting We our the we if for or we for

time what would catch I take it to is up. does of say So for though a that bit little

differently business some your with block new in-force You do pricing. things your versus

still in case it we of out 'XX would that into even so you growth will So slowly pricing that whole the mean will industry. pricing. benefit us and the kind back into I well-run new see in-force through I business, moving come guess into But -- would our it as can or XXXX, of it get a

it the say, other of composition matter The is you does that would point -- I though, do block. your

So knowledge is for workers. block what would about we consider example, our XX%

recovery So to are of hybrid remote or in working workers going options claims those of options. have you knowledge of in terms think terms great really when

have you've in your higher the like into industries, going consistently if if to a of business of in your knowledge retail that into or be pricing that are than into you benefits block, block of lot results ability those your and your sectors. more more your manufacturing So move to got

you've composition into multiyear your nature to block rate guarantees it's the locked whether factor ability matters, ratable everybody's of in matters, and going So the grow. to

Daniel Houston

helps, That Suneet?

Suneet Kamath

It does.

Daniel Houston

question. the appreciate I

Operator

Scott Our come with the from Goldman Sachs. of Alex next line questions

Taylor Scott

or partly hold guys and I inflation, flexibility over the to of versus about terms the few the way that Any last ongoing of you sustainability wanted more a of obviously, level that to that to just bit of some targets driven should And ability about at forth. think kind from the are you the communicated? recovery through in pressures your some some and think and AUM on so talk we by that how short-term a keep to running margins couple of pretty probably margins a see quarters. if just could the quarters the in of nice

Daniel Houston

the Yes, first ability around margins. aligning protecting handing those end. garbled our towards our Alex, before we margin ongoing investors. for to vigilance appreciate our certainly, there make around little that say our expenses maintain a I Deanna to with But I'll have is it revenues the over margins, thing to was we're it question sure And an the

again, it's again, at markets, some challenging. more extreme time this we the and on taking But our we try same while businesses appropriately degree anticipate sure do In to to make appropriate being focused are investments the that growing to making out unnecessary expenses.

maybe frame you of basis. can on Deanna, a So sort anticipate the go-forward margins

Deanna Strable

I'd quarter from Yes. up total. went the our as you it quarter benefiting did then some little we you of on Alex, pass some bring appropriate businesses we to very of and have businesses. retreat you know, that that in in to that all we say margin And I'll of can a deeper, to President. were was It in can into quarter. frame the strong want some outlook specific And through you almost year fourth the go if third the obviously bit and across early strength. relative market the as a

impact quarter on that I some in remarks The is on margins retirement all fourth do in prepared to slightly impact does typical, from we thing see that That would expenses. other but as will business. We do well. expect you be our seasonality our that have larger did impact than less say we some with mention a businesses that the

very back margins. still year, I bringing ultimately, about we feel news do the think and what to us those And expectations is, February we for laying our in levels. do focused we in and is really us to full good on need kind to but be will XXXX our margins out we to of those call, But the outlook doing targeted targeted keep the good be maintaining continue

Daniel Houston

follow-up, a Alex? have You

Taylor Scott

of follow-up resist the is of that had you're on pressures? what sort help are to able just about all ask flows? pressure And is there the nuance be strategies Yes. I facing. industry those active asset that you anything The wanted deploying broad working PGI. to some are that on to to And I management

Daniel Houston

economic rates Alex, geopolitical is of there's the and inflation. interest and in certainly thing tackle this risk one right shortage extreme one of terms person think know, Well, to there Kamal. is I challenges out we and all no volatility And

to do provide insights, So want Kamal, you some please?

Kamal Bhatia

Sure. Thanks, I'll the a see would Dan. Alex, client probably and X highlight where you give Yes. we measure see I on that's the because you of industry perspective, best engagement client Thanks, we going. Alex. for where dimensions risk sentiment and yields. talked investors One, less very goals been here. and achieving taking by I about, on particularly Dan rewarded think, to well smart, as comes been have it they've when their most coupon focusing

that including these recently some benefit great As on. performance the you yield. management more an are early know, capability that great we simply realize capability solutions, because a return we more probably is of income long and than a lot of partners coupon total at would cycle that are and looking our have we of really institutions a is are at we return are and the with of interest And probably something on specialty on total of and certainly of wealth Most dawn them, our capabilities. getting a lot reason rather seeing investors now focusing

it. one The do piece, a as is is the is have second And strategic of in and seen Asset there where extremely experienced And for engagement partners is we desire real Management continued we driving that well and a you've are to market that's through go as markets. private have conversations success through but things positioned our future to lot to tend reasons relationships. in cycle a this tenured that some discovery, we more have very continue well on estate confidence of there very, we work our Principal with couple long transition and franchise,

is markets, amazing during which One work this across and private have times. is we important to public capability these

continues between true some full these service equity, benefit to excellent a debt We to of highlight we offer that have would a large and understanding had have and culture can a we of continuing also solution relationships service that client And with us. I them.

but So management that as space from some that give do perspective. have confidence stressed, the capabilities highlighted, is high us active you we

Daniel Houston

help, that Did Alex?

Taylor Scott

for all Thank you Yes. the detail.

Operator

Our from next the Burdis of Wilma with Raymond questions come line James.

Wilma Jackson Burdis

the favorable of continue? you on And pension mortality is to business the impact transfer discuss would risk you whether something Could the this expect in quarter?

Daniel Houston

have that Deanna Yes. And take one. I'll

Deanna Strable

Yes.

as So levels. sure went few in reserve back actuarial look through see quarter, we years, the step assumptions of did our and ultimately, that every obviously, COVID, benefit our some do mortality. make past the at we third where all we over that and we But reflecting we of are we

New this fact risk under transfer applies our actuarial which Fast year also pension this the XX products, products. that annual LDTI includes is review to

And that wouldn't would reflecting been historically have something but in AAR, are reflected that. our so again, now we have

seen One the we seeing are things we mortality into had ultimately, we of is expected that that not improvement that our factored assumptions. the have

$XX up we trued PRT. mortality And then PRT so that led to on in expectations that lives. that and over benefit And million ultimately those slightly the increase the

the We aren't what but expectations happens. changing really run that our is of rate AAR, in future was mortality slight driver the a benefit assumptions. for There

Wilma Jackson Burdis

to drivers sounds in in And then the improved your targets into near and year-over-year. quarters? term, expect could XX%, we go Benefits benefit points outperform It Okay. disability ratio other than Specialty which was group what but the coming the could like continue the adjusted was you X should the in and better

Daniel Houston

Amy, Wilma. Thanks, Excellent. please.

Amy Friedrich

Yes.

giving result. quarter do continue. about, talked And one one will that Wilma, you've think some of probably again, noted, as that as disability drivers overall I bigger the is the of bit a is not repeatable. us So group third little that's that we've

not XX% In the historical you're but from that terms almost when continue, AAR, you out at those improvement will see loss That's looking levels. will some we of adjust something ratio. that

piece in an I really, group about our continuing is a point well. those have well. that other a really question on say is would impact knowledge talk think tends made to life The group I to little do as a perform in life little earlier I of bit to focus industries. bit

type patterns that you've over of built against matter. really business do So you business the that type the and time of see

group life pretty to continue would And expect I to well. so perform

COVID, the that to over utilization years we're year, COVID. last a has return kind to find more to It's little make trying I beginning Dental one those have slowly of normal that it one see that pricing we're some seeing that next of business. been to stewards to be of we kind used pattern. always willing to of good X.X severity sure bit to do modest we been of see prior line continuing patterns we're adjustments since and been those make

line, But to historical see continue performance a supplemental I trailing that. saw to to we even number probably I would see better than our to in from the XX-month those have of would in performance health I seen the performing those that bit some with but type to little would we've then we've talked And of disability benefits see and past expect expect that continue of continue also from then levels. about, could to consistent the that some see individual it

Daniel Houston

Hopefully, Wilma. helps, that

Wilma Jackson Burdis

Yes.

Operator

Our the come Wesley line from Fargo. next questions Wells of with Carmichael

Wesley Carmichael

a XXXX. be to for you when the variable that around? if you of maybe that quarter, just levels expected I So are income talked persist think about And quarter? that investment you think XXXX in fourth still to could below into or little turn expect expecting normal bit And remainder you the you last

Daniel Houston

that one. have I'll take Deanna Wes. Thanks,

Deanna Strable

Yes.

I you real then investment first in came some and the at see what sales to real that that estate relative second think we quarter. when did saw we into income. in XQ quarter variable improvement quarter The transferred look because

especially that the we volatile closer -- levels and be I probably I fourth expect predict, to we as quarter fourth think As But see XQ it today. given XQ to you to market look to forward sit here probably hard quarter, the is have.

the For obvious I it prepays. the on from at think continue as volatile do that other quarter-to-quarter. to real alts to call. rates detail see be the outlook the interest But it's this continue is I'll February estate to really pressure that understand we're more And to XXXX, ongoing level, defer and high going can

Wesley Carmichael

in Individual bit the it a maybe expectations, And business, below your maybe as little maybe last a so. or came quarters follow-up. Life that of seems couple even for In the like

there little driving or bit if an to is there? mortality So pressure what's related just of wondering impact a the

Daniel Houston

businesses, delves in have that job done from reinsurance her the Yes. what The this to want and agreements. I outstanding she there into say thing divested And retail an the team pivoting only with solutions Amy business franchise but going want is complementary been But before just to the NQ owner you the really really entire a business organization Amy, for to and platform. little has loss volatility executive and powerful be the on there, take the to here? ratios is

Amy Friedrich

that refocus would terms exceeding of been that those business business on that about getting Yes. one say nonqualified I in or given meaningful insurance any sort meeting business make the going now. I be in is business tied of the that our quarter life life XX% ourselves of would into owner Dan, focused has points the really in business expectations of to do hit you've we is relationships, owner, about

And across products, to owner look our franchise only not management the but and when asset offerings, they those at tend life retirement business as tend insurance to well. they deepen relationship we purchase

relationships really us are business nice those so for And building. small to be

there point the is in some the of seen question, We're than seen the bit It's terms little we've the seeing in a more. has claims, the been of not not bit is things been mortality not last the hit does the the we've terms really number but in quarters have You've severity that little seeing we're difference, running severity. of couple that incident hotter on a historically, attribute whole of that side. but which

Operator

of line with come Tom the ISI. Gallagher Our from next questions Evercore

Thomas Gallagher

QX. expected think on business in for Dan, you the And I the works. questions part few way just you of A seasonal, would outflows that in me. highlighted net RIS is RIS

of outflows? you set in guys some outflows, it just but to outsized, the large level all than just you more outsized $X had think or unusual better not jumbo similar Would lot we're a was $X quarter make here. to of billion QX. billion want I another Now still that, expect directionally outflows last sure year, something I down,

Daniel Houston

question. Tom, Yes. have on. I'll take one the Chris that appreciate I

Christopher Littlefield

Yes. Thanks, Tom.

to pipeline in strong double-digit quality across So throughout as Dan and sales really good the seeing growth activity. a quarter, we see and we're mentioned, third we lapse some see deposit But transfer full again, as large and elevated expect the well do year. in positioned growth SMBs for

planned the it's December difficult lineup quarter really for is to have I about move And plans January. active and quarter to going part an think Tom, from predict, fourth the planned changes. to it's you're transition hard transitions

So it's really hard for us to give a on lot of clear guidance that.

be it the but in But in to withdrawal to terms be terms negative, the we of percentages. expect year of and we do ago, both than less negative dollars expect it

directional would view. So some give again, that you

forward all As how and we into moderation to a growth look growth. rate, fourth strong solid recurring for first we the quarter, the deposits, is contract to with and consistent managing meaningful really transfer lapse see continue business, which quarter continue deposit our profitable we're in

expect despite activity, And full for margin year. for our the this range we revenue of upper of within half guidance for the all be in the year to full and

pressure, some had we we as did see year So as ago. certainly a don't much but

Daniel Houston

Did that help, Tom?

Thomas Gallagher

but at XQ, X%, -- is something That's the there a for helpful, you I should to follow-up look normal? fee or QX. somewhat need simplified, fee is if Is day RIS. fee adjust? I and calculation flat in would assets, doing say, Dan. versus calculation Or X% the fee and is are it's quarter the extra pressure. an -- at monthly suggest, fees seeing My And you would Chris I compression in QX then -- fee I'm that the overly maybe I average in more look essentially just gotten the than we increase to have there on -- If probably higher-than-normal with that pressure question

Christopher Littlefield

compression be throughout from to guidance. we're at versus newer No, our a is emerge that's retaining as price historically which coming expect No. our bps -- reduction with annually last fee business, Tom. that around we ones But the quarters. seeing competitive customers, definitely lapse compression guided emerging to rates. both at lower driven bps pushed existing market line plans, X sort We've higher in again, by fee benefited year, it's I rate XX markets dynamics, think of the fee new year, X and equity the few Thanks, in acquiring we've having the

X to X reduction. that's that ago. it X year versus in year the So was put about that compression year bps a sort bps this bps of -- we This a quarter,

the consistent So this that's future. how what lower higher keep margins, And the in bit, also and we revenue a we're down mind you're this we seeing. really fee how expenses, we're rate for have business, with is that manage delivering while managing business

Daniel Houston

add shift. thing might only investment to list also that I management the is Chris, Yes. the

revenues that to there's passive a impact extent as going the money the negative active, more goes to a option opposed to So as on you're see well. to

Operator

Our line from Barclays. with the Benguigui questions come next of Tracy

Tracy Dolin-Benguigui

do quarter? going too at XX%, pressures feel certain office than worse comfortable. healthy mid-single-digit you but low office I where deterioration if Your simplistic is a just you CML LTV LTV to will XX% there's feel see your to CML I'm materialize. every take quarter. about wondering last it like level less trending time office forward? it's Is to How think

Daniel Houston

Pat, here? any insights

Patrick Halter

the for question, Tracy. Thanks Yes.

rewriting we It's in XX% of That's loan-to-value, again, do be about billion reminder, on sort a And office actually we we office buildings mentioned, performance. XX% terms buildings, X.Xx Deanna as really Class a worth coverage. of strong, in our sort So have rating general our on basis. expectation quality A, a account. just A portfolio on occupied. of quarterly to debt high-quality the service consider our XX% of $X.X of

But cap the with every we do want analysis property, cash quarter, of a discount valuation. apply each streams of the an to we to flow office the rates come that rates, terminal up

in of our sure marketplace. staying rates on important terms in things what adjusting think make the on been a being consummated what we're terms I are very aggressive trades really we're expectations think of we've of cap we're is hearing, of basis in the abreast that quarter-to-quarter one that seeing where I investor to

conservative And that higher. to is which you suggest the in I'll office at institutional are investors And rates that relative significantly index look continue cap our be our NCREIF, to XX% space. rates market the private for cap most

last So we're very to relative just cap conservative NCREIF out as rates as came well where day. are rates of cap NCREIF the

quarterly to assessments. conditions market continue conditions about our and those And thoughtful reflecting we very so market be

help, time real and expectations to debt Tracy? you giving those we're sure see and data where make loan values. Does to want real-time to coverage as we service we so that And

Tracy Dolin-Benguigui

helps at given report if what for diligence. XX% from feels it because few wondering scale look less I that then go your is maybe just here like LTV No, realistic the But that sure and others more it quarters. probably than could next where

Deanna Strable

Tracy, sure XX% the -- 'XX our that's not on actually value where the Well, to what think I'm loan maturities. is. I

mentioned XX% of what have So Pat thing service even And LTV X.X%, the is other make debt XX%, is and the I portfolio on note total occupancy. which is is 'XX a we then the actual would the office is the XX%. coverage maturities though

good So maturing those those be are 'XX, will attractive maturing feel that that ultimately, in that loans year. we loans are for next

Tracy Dolin-Benguigui

are income. by alternative traditional it. accumulate seeing wondering I'm and Bermuda an Got management assets you playbook side We're to alongside consortium large cars creating annuity the what they're do insurers life and of of your stake equity investors managers making fee in thoughts from asset a and borrowing earn asset have as way capabilities. page a these given

Daniel Houston

help on in whether of for frame Yes. It for that capital or really not want you some that spread believe solution offshore came there's an our Deanna, in do to your relief question, Tracy, it's us? but businesses. I garbled, would

Deanna Strable

our competitors question. and what are at good for that. Tracy, opportunities opportunities to evaluate We to create doing Yes. always look value our relative customers and

We entity on go term, our will have we Bermuda new sales exploring focus be PRT specifically we forward. and whether on a up set as should been focused

given And the that. in-house a we sidecar size arrangement of and new manage of One, won't that -- sales portfolio, to to to our our we ability aren't that. relative considering the our relative size

creating capital in we more make we be being as want as that to efficient for always our be to forward, mindful as that I can on we are shareholders. go there'll sure value to come but So

Operator

question Our from Bank the of Shanker will Josh come with of last line America.

Joshua Shanker

concert by were the buyback the some what where rate through $X.XX Talcott you recover number cash that comes generating. dividends extent million for should $XXX -- bit you how a to you about go much To and are with did cash generally increase to levels forecastable when And again? the over in can dividend going much be the seems a be you're you reduced deal you're history of you your that how raising also it the timing by So time? flow that of to just flow when a expectations. It is the you surprised

Daniel Houston

Yes.

it's good question. So a

in that I of made, you have thing we've a principal do at we changes and has like. is know that the anticipated look analysis. our a the what post have some some judgment first been would The We last fair might to position. these amount use of to for capital forecasting to of say not the look review strong very years this given wanted strategic we doing having X when We of were clarity perfect challenging,

that, But share knowing these but as payout investing that for spread we XX% comments. businesses businesses, those most organic be add businesses. and buyback I'll it's in said through dividends our said But And deployments during both increased returning through where having in to capital the targeting some strategic we look additional also ratio, outcome, opportunities of committed our fee appropriate. still have we're would Deanna reviews in

Deanna Strable

been has the earnings committed and our our raise XX% you're review wanted on ratio, for to able flow And free review XX% strategic Josh, understand last came impact sure within happy that We and that. of really as we since managed on quarter were be that $X.XX that our to Thanks, the dividend to to we're as and level. quarter. Yes. cash this to $X.XX strategic aware, pause the question. out we to We make

as know, markets pretty were XXXX, the then, also negative. And in you

talked but the we get that that flow. AAR we impact. understand netted did We of the to a one the offset And about as few one-timers free about. impact how by to capital $XXX was could The X quarter tax that well. help admittance have million is we our notable did most needed positive IMR, in They negative partially through the so that

what increase common feel dividend, capital us our for put track really ability I share the and cash about billion still an ultimately return our and anomaly don't on buyback flow we're our full year is focused seeing that of the free stock to I XX% to And think increase so expectations of shareholders again, on stay XXXX. to year conversion. good for a this $X.X XX%

Joshua Shanker

way it's And compounding businesses to flow, assume X% compounded know that should think hike if think to that times straight markets you're about are not but about think you growing dividend worse. line, a hope annual wrong I X% apply that if things? things of to we going don't guess, most don't quarters, to move I people they that things I a the lot If be a I you rate. cash equity will. or unreasonable, equity in a I your way think Is in working a see to think

Deanna Strable

some have we that. And go can look a But Yes. back I our and think mean, on of the at prior you to did I the to can increases. fluctuation obviously, markets have transaction trend of even dividend consistent pattern increases.

would have in I high-growth Specialty thing operations other we Benefits The say business. is our

expectations high business. growth have We our international in

That from macro. have benefit fact cash And we we that I But lower, won't be EPS some more I come flow. level. might years to again, deliver slightly X% you XX% some will come we it's that -- back to There can growth. always free years where back think at where be the to strong

model time in company, consistent dividends versus our a pure actually committed of being volatility. to returning are managers, to to that relative diversified committed able pressured we to growth to are back And have of We because a growing ultimately, shareholders. we're our lot asset and

consistency. I we the dividend say, right, pattern you're to the and you like able term, increase that long shareholders. the should return So And over as and be our to

Daniel Houston

question, the for Josh. Thanks

Operator

Thank you.

please. the end your Q&A. Houston, have comments, reached closing We Mr. of our

Daniel Houston

may It also didn't is point time. which line February outlook will XXXX the had just sounds we here. today. clear call include in have earnings on like apologize. It come on in a questions a perfectly Humphrey XX. I something a bad But reminder in mentioned, at All combined these have will we that

with on line us about our continue our go-forward individual our There's of to ability employer very to revenues, in risk our optimistic no while remain to align expenses as and It create out also to shortage The sight, the I top you. investing remains today. and better we customers We for today. keep Thank your needs continue meet time shareholders macroeconomic innovating our customers. institutional our mind still and of of want for value to Appreciate basis. and geopolitical a of customers. line, our customers bottom there

Operator

you. today's does call. conclude Thank conference This

your your you You lines time, for may disconnect and thank at we participation. this

Principal Financial (PFG) 27 Oct 232023 Q3 Earnings call transcript