PFG - Earnings call transcript Q3 2024 | Principal Financial Group, Inc.

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Operator

Good morning, and welcome to the Principal Financial Group Third Quarter 2024 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 2024 Earnings Conference Call.

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

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

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

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 made the non-GAAP the measures. this Reconciliations may measures slide and call GAAP the U.S. release, comments financial most financial presentation. Dan? conference found to refer non-GAAP our may financial earnings to of financial supplement directly some of during measures

Daniel Houston

and in assumption position welcome customers to our and strong key actuarial discipline This the discuss focus. with XXXX will as from and our outcome be and favorable of follow the outlook, Humphrey, quarter. results for and shareholders, will outlined review. It a additional details execute results, we commitments the to continues our our reiterated with year our with capital delivered for last on Deanna highlights we Principal I consistent third milestones morning, the and call. strategy on quarter, everyone as Thanks,

operating share. earnings we reported quarter, diluted million or per $X.XX the non-GAAP of with third Starting $XXX

in a of in third assumption our EPS $X.XX, X% was Excluding expense increase favorable $XXX was to $XXX Earnings stock significant dividend million sixth of dividend total by businesses. We managed $XXX including year. net ratio. At previous conditions reinvesting mainly basis X% on shareholders with reflecting XX% income a a quarter the targeted due from the XX% share growth management company our our capital our and EPS by increase review, earnings fueled the common raised quarter, AUM year-over-year to a also strong and benefited growth in positive and consecutive end in in businesses million quarter. market of This was actuarial reached variances the the estate. repurchases. over the while revenue. from XXXX. The equity, our and to market billion, primarily quarter, compared across previous our third payout We aligning robust quarter, for increase the performance of growth returns driven was real This fixed returned

company for basis. Lastly, net total on sequentially and AUM cash our a improvement, both flow year-over-year showed

businesses. end guidance. our growth momentum favorable our depth revenue driven our income. management integrated of suite In retirement by conditions market we and is Retirement, the of to retirement turning earnings are span recordkeeping, Now high and solutions, the which above asset generating and This and of breadth

deferring retirement the retention increased year-over-year year those and amount all lapse rates the number strong dollar matches receiving healthy. across lower The deposits addition, remained across individuals with running than XX% matches grow. Contract by fundamentals to as segments. the a of and underlying In continues well employer as remain deferrals Recurring of ago.

on past the best are years. rates our X We to over track retention year full achieve

drove account value We quarter. are in also benefiting from growth market the performance, which

our well new respect positioning pipeline all across XXXX. the a in we a business to are in significantly account financially, of participant our for see in a retirement the up of increased also growth business, withdrawals. With our benefit to While resulted increase us lot segments, sales, plan dollar amount rising momentum in markets corresponding continued values with

were advisers mentions NAPA retirement in most we As the is recently offer keeper from Advisors' and to received nearly services Awards. We billion sales. transfer remain we Choice as top in of to in achieve high-quality billion $X.X momentum, the on evidence risk of track second XXXX the third returns. the sales market. Pension solutions the our a $XXX our to quarter, record further million This sales target year-to-date attractive bringing full a testament $X at our year to

as Turning lower to in activities outflows part the were Principal net strong by fee institutional clients, taken Management. as Principal by following Strong and in appreciation. in PGI Asset cash yield outflows driven by offset in The International were products flows PGI. well rebalancing

in estate quarter Our strategies the consecutive the $XXX positive private real approximately XXth generated flow flows. net of quarter, cash positive of million

put strong as $X remained commitments work. unfunded at money billion approximately to Our to we continue

are good strong and ongoing generating offering demand specialty given institutional momentum also the global capabilities. product our retail investors, underlying for We and with

We institutional are private RFP activities equity, and income seeing across increases fixed in assets. notable

strategies for The XXXX. and exceeded year-to-date and income volume year already driven increased fund. has by and interest commitments in strong equity estate our data very full This center XXXX and fixed broad is interest in volumes real activity

and favorable interest Lower FX leading next flows, net driven our and $X.X several integrated manager clients as a This continued record interest with results ended tailwinds. Positive quarters. Principal by capabilities. highlight These asset of to performance in across cash liquidity International wins more private and drive driven AUM, our business net spurred are flows new over the up momentum current mandate cash quarter. billion range investment from success a we quarter global public searches robust was from These and flows. strong the Asia. X% the going were the These and market meetings Mexico and billion having $XXX of quarter expected broad by of improving investment second Chile, local institutional investment $X.X flows client for by to management in Southeast to and and capabilities. of billion and our were the international rates are conversations, interactions are franchise market global

combined our net flow, AUM included not in was in While billion. cash China and $XXX reported AUM

recovering region. the in in reflecting macro $XX inflows environment Asset management the quarter billion, the exceeded

Benefits to and now Protection. Turning

our by to the continue above-market new net and of half Benefits. small over premium is to our X% fee business, Specialty growth in market. midsized position generate in leadership driven growth More highlighting than of We

focus we that on relationships trailing to per and average number the customer in Our growth, basis. I'm coverages opportunities business customer deepen high X.X% excited on The positioned well Principal. to in markets we about persistency key continue of customers. remain grew with X a partners per the remains high XX-month and distribution to coverages the immense exist on which over We today. capitalize do across opportunities industries,

us dynamic meet demands. portfolio through customer Our allows macro evolving to integrated diversified to manage debt conditions, changing while

which on and come value to our maximizing aligning continue businesses locked businesses. will of with the in driving intersection from are higher the We our growth, creation opportunities

communities demand with brand expertise Our financial guidance. We access and unwavering to for know is regularly products global of trends customer we and providing is tools, security businesses, and financial our focus and on the and assess significant. markets individuals, support sentiment,

For from has Financial consecutive for financial year's example, Inclusion included of financially key while this study global inclusion inclusion the the A through financial has is proprietary our feeling of Global consumers. fallen second the among finding perception track globally worldwide. year, Index, we state improved

done, that and demand enable to more while As opportunity support, their feel to solutions, to can't and but is more individual us advice work tells help I secure a decision-making. services there do to financial access leader and be the in the I'm tools increase see to financial encouraged in by more the financial

unit, our Principal can deep in and future. been years, both drive in principal. today the industry Before confidence as for worked her Board job during organization. The in our our organization U.S. want Financial moments and leader recently, ability her President function past the company's shareholder an impeccable in in well and exemplary to diverse continue record our value the Chief done acknowledge an to benefits track XX I have Deanna into customer passion turning history is she's creating promotion has Deanna, Officer. Deanna's Deanna, remarkable She over to Her to we Operating it led given intense roles complete congratulations. successful our pivotal I has focus grow. with and August to directed our in the and instrumental forward Officer. makes and and a Chief have in what on insights most her how and strategy internationally, strengthening

Deanna Strable-Soethout

we of the ever those honor to to navigate I've proud we're to this to business. I'm and in innovative core markets an for give Thank your great Good words. shareholders. importance of on value of new at values and we our confidence step the continue the our deliver the sustainably, especially evolving team, customers consistently and growing innovate truly The enabled to mission, seen Dan, as of you, ability incredibly confident us and morning has culture Principal, our my strength support kind all into role. Reflecting strong of way to how years more purpose needs to our me building, all our and and ability in commitment serve. adapt our than It's future. the company, our the I'm this everyone solutions call. our we do on our XX firsthand

Officer with decades, Principal in I him and in who functions Chief extensive Before step suited makes has has our X our interim transition. Pitz, international to been Financial as turn across to interim domestic, stepped for to during his CFO. like results, would acknowledge I experience this and as Joel Joel corporate nearly well

results, I'll share key our the to performance an quarter, review from on and capital our update quarter Turning for position. and the contributors to third including financial assumption actuarial our financial impacts current

noneconomic reported million, quarter $XXX impacts net driven Third loss businesses. by from exited was

ROE XX.X% XX.X%, $XXX million. Excluding assumption these Non-GAAP excluding actuarial in was operating was impacts. review impacts, income the net quarter and

track of to guidance to XX% XXXX. XX% We on are our in meet

from earnings, and It's on review to were protection rate negative time review. RIS second the benefits under variances updates non-GAAP the free impact related assumptions. important capital to an model we've refinements assumption balances the actuarial conducted and include on run a earnings. This Slide expanded but is LDTI, to of net quarter our subject flow XX the assessment. experience significant the for operating lapse impact in impacts drivers primary Our review actuarial These primarily immaterial that noneconomic to life largely had are detailed these The assumption note impacts. which in and and impact

a performance half benefit and the on by results driven offset remaining by block largely These rate closed variance is mentioned, with returns earnings Benefits run Protection. The accrual the the offset. investment in and offsetting primarily significant pretax income, RIS year. variable is International, of quarter. were Principal in lower-than-expected equity favorable unfavorable We from the in favorable encaje dividend from first private operating As and results the immaterial, reversing negative impact had modestly

difficult in million the compared of quarter the share. Adjusted EPS currency third to X% trailing months. XX% XX quarter diluted These the operating end and PGI third offset specialty per the was $X.XX in XX% for and XXXX. partially ratio. of and XX% The the foreign XX% variances, significant third with growth quarter market at business Excluding driven increased fees translation This were in of effective for our at performance was rate non-GAAP our midpoint year-over-year the over comparisons benefit the or were year-to-date up guidance earnings strong by tax was $XXX by which performance, guidance, lower to loss quarter impacts and range.

results Similar the During per these are we variances. Principal integration costs our as impacted International. significant severance and quarters, share. had both by considering expenses RIS previous These we onetime and approximately quarter, not $X.XX onetime to impacting

aligned to to deliver growth are of We with track year full results pleased on XXXX X% EPS our remain XX%. with and guidance

quarter significant discipline, quarter decreased business XX%. will in fees the XXXX, RIS be performance growth the net by Turning business. Compared market our The points remain the while by XXX over end confident, to higher pretax expanded nearly margin end in third guided by but revenue basis the third XX% of is pretax of for high operating the comparison business, exclude quarter earnings operating over high margin range to at quarter expense following of revenue XX% in increased third favorable XXXX, of increased driven sequentially. million variances. by XXXX, third investing performance of the and ago X% above comments X% the of year and to units. $XX We XXXX. impacted for earnings net for and The increased the year. PGI's growth the we full quarter

quarter. basis ongoing by underlying of the over X% management of expansion to quarter the XX.X%, experience XX% by of third by performance, resulted below expense improved was borrower XXXX, loss and of fees XX% by XX% and growth and drove increase an business quarter a reflected Asia This Benefits quarter is compared third basis market is and XXXX. Specialty quarter International year in margin an the operating The guidance our below to despite XXXX. to PGI's partially offset XXXX The headwinds our was Pretax to in range. relative disability quarter a the recovery our loss operating the midpoint mortality $X third group this quarter the range the in operating ratio guided fees by more fees currency of million. X% The expansion points performance growth in of Management ratio underwriting pretax at and favorable transaction XXXX. current in very lower the margin normal of of over earnings of of comparison of earnings positive points continued had of XXX in driven high Life, of loss the third increased compared driven of nearly a a ratio end quarter to quarter. XX%. In XX%, led the quarter. increased strong earnings third results, range. Principal disciplined ago America XXX the Latin pretax in which quarter in impacted margin

expenses. our relative to quarter years, the X typically are and be to certain expect we the the expenses enterprise other fourth Similar fourth to first impact higher the due the seasonality low the few look the in of range As last to single-digit we to average quarter, in quarters. the compensation of

Turning capital and to liquidity.

our RBC XXX% range to last quarter, a of As a XXX%. reminder, to revised we target

strong a billion approximately capital, holding $XXX $X.X XXX% the above million company, our including million $XXX subsidiaries. RBC excess approximately in million We of at with available position and excess in are $XXX and

our the $XXX including million As $XXX returned $XXX shown brings capital nearly shareholders second to million year-to-date dividends. on in This billion. stock Slide we of common return to X, of million and share quarter, repurchases $X.X

$X.X capital maintaining $X.X our billion we increase paid the billion common XX% a on deployments $X.X This in to for to on deliver capital year, payable of quarter. to XX% $XXX targeted billion for the are to expect fourth including track full We announced return dividend share and targets company, free the over stock ago million and capital flow our night, of year, full $X.XX repurchases. Last increase the $X.XX the both year a and continue quarter, XX% in year. We capital disciplined dividend approach company on and is will third a from to focused quarter balanced the liquidity the increase at a for and X% and full holding a a remain life the deployment. to

quality, financial on targets. and XXXX loans. for on metrics year. In quarter, in economic closing, the maturities remain outlook aligned our our We portfolio We objectives with portfolio of financial are quarter, loan the healthy. remains this the about office high and investment end positioned year loans anchored X our confident long-term different last good all pay profile communicated in Our delivering to in with We full office remaining quarter. resolving our for the we year-to-date pleased delivering through mortgage well results reiterated had the growth off the commercial remains feel the liability conditions. The

please and positioned into diversified Our concludes open customers, across results prepared attractive which markets our confidence and our for businesses ability competitive of today growth remarks. call to Operator, us employees portfolio and is our the advantages, features sustainably in and shareholders questions. give for future. This deliver strong the

Operator

Joel [Operator first Hurwitz question with Partners. Instructions] from Our comes Dowling &

Joel Hurwitz

start and on line. Benefits to wanted I top Specialty

something Can along of talk slowdown? So else? the small- market in but growth medium-sized at the Is drivers in the the it pace your competition running long-term the you've target. you to or or about solid, just some been X% below is of

Daniel Houston

I of good I we be feel question. And top on an Amy's focuses I the at again, become here, adopter leadership appreciate couldn't And very early would mention current -- efficient, technology of got pleased the I again, well-run incredibly risk just to business. just underwriting business. state more more the It's affairs. just and disciplined is of customer. this the of about a this with history management, Joel, long

Amy?

Amy Friedrich

the Dan, and Thanks, Joel, for question. Yes.

$XX our probably on of stay end expect the due going the but you've above the last that nearly is it several the noted, large range of communicated. million to X.X% in there's and openings lumpy I'm I They 'XX, PFML year-to-date third there were 'XX. for with third X.X%. was we part no and 'XX, in scheduled the premium to no planned So start growth quarter, is In we note had a sales. sales. In bit new bottom quarter. fee new I for that at do comparison we a And guess to prior would that year, that openings, year And sales growth are those, basis, state growth as quarter within quarter PFML really

and it bit a competitive So do about when particularly we're think pretty be comparisons the notable And is little when probably environment, are about we competitive going that make be this to experience to for marketplace, little pricing we quarter-over-quarter lumpy. environment, the dental, going to a introducing we a with align the We that we're seeing. sure changes continue see uneven. think

for some we're on see remainder of I 'XX. think going growth to impact the

yielded of one profit. we've for us that Benefits Dan over before, growth and a hallmarks above market our is, noted had think above decade, the consistency is Group business discipline and of that I market has

do flow, and things SMB know we strive of important. sure pricing, serve is with that renewals they well have really impact that can cash consistent consistent can on is discounting that on an we we make like things customers. pricing. our which the an And really new has renewal one so market So impact business does do manage It to

feel experiences, I growth. So our we're good how really and positioned on on products, capabilities

Joel Hurwitz

can what It maybe about talk on dental then seeing And ratio sticking experience, loss sense. makes year-to-date, the you're elevated. That just you like looks it. Got there? is

bit QX there? are what what are think expecting I seeing a it you from What And was us. runs you repricing standpoint? above normally a

Amy Friedrich

Yes.

start I'm points really I'd basis better. that with -- XXX ratio dental sequentially, nearly loss So pleased was our

going start that I for is expectations above with did, slightly communicated go So were It down. was I'd say kind quarter. our would and go to we what that, of down, this fact, it in

Over dental measured product. We've and it's our clearly, XX% being is actually repriced actions conscious annually. of inflationary new Dental our pricing address pricing, taking sales both of be been to implications. So an consistent block can renewal

So us, is tool a always tool. has for but slightly been effective this lagging it an

been have invest XX months the We claims the technologies though, XX last claims the XX months, align tool, course using noting, last to to examiners in dental AI-based their experience. In assist that and payment accuracy. we've continued also improve over to our of it's I worth think claims to our

those help decline. more and ratios loss dental prototypes come as expectation integration expect move to of begin to to they the So kind I continue us, the from will fourth is quarter to for online for results. My that continue online to

Operator

Our Suneet comes Jefferies. next question Kamath from with

Suneet Kamath

can't other? what in period one that or changing the which that with Is look I something don't we we market we withdrawals I about last the withdrawals. with history and impact, participant we beginning participant fee to so some want the start would over and need But the like know way think to the I or like? we it say if track question guess of assets, spent of sort RIS is, time talking do quarter that. about to line But in externally. time, revisit

Daniel Houston

Suneet, the that take question. one. for I'll have Thanks, Chris

Christopher Littlefield

overall AV you up the those for is dial in Yes. market noted see were certainly, average impacting XX% rate. we XX% And market. the to Suneet, that. impact significantly. If the on being about is other of that in fairly is average and markets uptick definitely we as withdrawals, the on rise, just withdrawals, Yes, up specifically AV thanks driving slight impact a participant that and

market from vast impact we're really again, strong a XX% impact. majority older So slight the coming rate withdrawals of performance. that's is uptick But The of seeing in of the the probably the from very participants.

our both margin other So at we fundamentals in the in in good business. quarters, X%, quarters. quarter. when very this if our same that up at XX%. underlying also And of up the a we that, revenue I at retention is rest deposits guidance plans about prior in the deposit the a net the recurring look were contract provided growth We when feel we transfer flows, of and plan, saw said as we're really revenue we up, in of is you that's over look SMB We were at end our business. And top see just the we XX%. above XX%, the strong high mean again, I significantly On and overflows. look margin prioritizing we've think the

overall I of really about business. feel good So our dynamics the

Suneet Kamath

And follow-up in products? Got is benefit guess you you assets in related what in-plan annuity of event And it. the have plans of percentage so RASV, for when sense. other That -- second makes a offerings do retain then sort business? occurs I do any in the your RIS-Fee relatedly, somewhat

Christopher Littlefield

to Good provide investing in thereafter. capabilities have question. been that benefit both event and Yes, advice, absolutely in-plan we

I think a amount, annuity us to overall competitively, don't I capture generally portion, that. We the can significant there's room still and and in-plan improve for do we options. have opportunity share think but people

and is date, a the of you building as XXXX. gotten retirement like QDIA traction in income know, solutions industry, innovation with a a that yet, haven't lot of target those real head see solution you sort sort will the into of and As us those into we

Daniel Houston

Yes.

that, again which in in -- We Principal economics off RIS, of show business to operations, assets -- fund those [indiscernible] within just to going to Management show capabilities see not we our we So within within and Asset up [indiscernible] it's but a add thing lot up Principal the it retain Bank. again, our annuity I question, do in only when might capturing the the on your own unit. have mutual the will platform, in do finish accounts of

Appreciate retirement the the source is significant economics the are And the again, that questions. platform. across was there spread organization. So

Operator

Krueger KBW. Our next with Ryan question from comes

Ryan Krueger

on PGI. Question

been seeing perspective play as and improved momentum X seems give inflows, kind have on gross may increasing think your we you of to those net like outflows. So also on withdrawals some forward end you leading play the you with things but how move Can still and here? out are it that of

Daniel Houston

please. Kamal,

Kamal Bhatia

Sure. thank you your Ryan, for question.

So and I'll start into net flow, go then the around cash question let me deeper PGI of on your a bit it. component little

First It's of all, quarter, quite the diversified like I'd to to operating we highlight are pleased. testament a this model. global

We an And are particularly how we see reported segment. our results could we together the PI under you of putting are you synergies results building asset see management, the between PI. excellent PGI and with the that

highlight, billion highlight $X.X clients even segment. from Just positive are the further for typically on investment flows record of to under we is reported of that have PGI coming that billion management the would that you. seen flows side. I $X.X we PI

in take billion with of doing new who very us corporations, client business you Asia. now $X has If multinational and high-quality billion, come that relationships. it $X.X from LatAm almost are are global These

the of shows management we flow what asset and an management together net segment. as asset generate power terms it operate So [indiscernible] how in cash of is positive

efforts of PGI we highlighted is has at almost trajectory year, this gone PGI. source feel looked the cash NCF the If do and the efforts as I positive positive would the things million sourced that about of of and One we have the $XXX favorable NCF by. how flow NPI. from I PI the has highlight year come PGI within just you

have outflows why flows lumpy you institutional in but progress in year were we be both by. this and is our efforts. nature, which seeing pension are as are the in in some that quarter, were roughly this were in global pleased as in cash flows, in can by international and a investment quite market I thinking the has gone they seasonality They would the And highlighted. And with about we that you see public yes, net our direction retail, flow, there source are business. higher offset the how management PGI institutional, results For highlight institutional the we and improved flows private so that's positive breakeven

Ryan Krueger

any you Quick PGI any insight follow-up have in expect is, do for fourth the -- that performance potential can fees you would us you give quarter? into

Kamal Bhatia

Ryan. did what quarter. we this for highlight you Sure, I

you we fees our primarily expecting As as transaction. know, performance in outlook, real noted we real this driven are had year. our estate And lower estate-related fees by are performance

This million, was the we of third $X During from the as fee year-to-date transactions. real performance the $X brings almost million I half said, to minimis. quarter, estate de up our first recognized roughly

So seen that. we have an uptick in

year, can a And typically this of know, estate fee, $XX to see which vary. In different longer normal cycle. and million a million as is performance real significantly $XX we you obviously would gross

So that has up historically this norm. given been expect of quickly, the ramp the improve but very We not do 'XX cycle. to nature

in I slowly addition would see will real things fee Obviously, the on the of these And longer show power performance the for ramping you. I they will you up that to in are on would but for be over and time, piece the performance highlight our is things would fee create highlight long-term estate, tremendous you side. projects, started that investing the term, other One is would credit -- business we building up. private in

Operator

comes Sandler. with John question next Piper Our from Barnidge

John Barnidge

Congrats role, the new on Deanna.

Deanna Strable-Soethout

Thank you.

John Barnidge

the Questions around in on a among uptick rate of comments your withdrawal older slight cohorts.

increase? generation boomer have baby a uptick more retirement the With or more expect you and impact meaningful of withdrawal entering more years, rate that peak do to

Daniel Houston

Chris?

Christopher Littlefield

the for question. thanks John,

I would hard down slightly. that. a actually is slight to sequentially, it say it's project think it's was uptick but year-over-year, What I

the of account those ticks have you can obviously, big it. to in large withdrawal But see So very sort we significantly. impact to expect changes small values, extent don't rates pretty

a increase withdrawal rate, around but the -- it bounce like in little very So participant this are we're and seeing not significant seeing bit we quarter-to-quarter.

John Barnidge

the on question the severance. then And

was I think and RIS in was you said $X.XX it PI.

called for that near for fee-based of a had severance quarters. additional the it's in company will Do out have in you as be any variance quarter, and plans Another not a severance significant continuing number [indiscernible]?

Daniel Houston

areas the Yes. say we'd large sort I constantly that draw more to we support to any upon. but the able see revenues foreseeable our severance I see looking again, We on don't are -- don't we're expenses I on would of horizon adjustments the that each and making. down that the to at the And align businesses one with of be opportunities horizon. efficient, be

Operator

Our next question comes Raymond from Wilma James. with Burdis

Wilma Jackson Burdis

[indiscernible]. Congrats you to sustainable? quarter. drivers, and the just currency the was it in discuss I Deanna. favorable basis, think constant performance And International Principal was it especially upgrade on is a Could

Daniel Houston

Yes.

heard So really last the -- and want seeing our Pablo and operations, take organization within recognize couldn't he's just and Brazilian, we're traction more then Mexican actions that. year, and challenging numbers dug secondly, and Asia, of macro I'll America and Southeast there. But I'll making what of Chung have you just as and of Pablo's to and unfreezing, the let Chilean that. some you adjustments, But the China I to Sprenger. add into pretty Thomas Joel new other to Joel will, environment it related in if the some there's proud Latin doing. And a be in

Joel Pitz

for XXXX. highest under up quarter thanks $XXX flows the ago, million, question. billion for X% net Very just Principal million, a $XXX earnings from of the record since cash Wilma, and Yes. assets $X.X of quarter first quarter Record the strong International. management, operating at

on in So ability with for those results, a low our deliver revenues outlook, is which with very growth. reminder we're to single-digit the confident XXXX

the on the to margins And trailing we we constant delivered XX guidance, saw XX, on currency over year-over-year from a XX-month solid basis FX XX% reported actually comfortably good and look XX% year-over-year of have a was did slides within what the a increase into despite at of you variances X% XX significant point committed X% and strong basis. Again, million that trailing $X those year coming you adjusting If as our growth improvement to X% for front, a margin that Page a and period, headwinds. items mentioned, XX% result year-over-year. we XX-month you is within the

quarter flows So cash growth see we strong tempered from we the to continue fundamentals 'XX. lead to the net in solid that expect to quarter in and third our although strong fourth underlying of positive, businesses earnings

Wilma Jackson Burdis

for then remainder outlook of and little more about capital the And bit talk generation also into can the a you XXXX? year the

Daniel Houston

Deanna?

Deanna Strable-Soethout

well. as you you, I'm thank forward really looking Thank Wilma. for that, new congratulations take to I'll and the the role. Yes,

I tends we year. into our up think and the that, throughout to to XX% the committed year, we recognize as ramp we XX%, to that came

flow cash were our full So that we in feel still we confident targeted I'll as very more into XXXX, outlook, remaining go well. in good remain target. we'll flow really cash generation quarter, our as I specifics And that with but year free the start we third about free and that and in proud on give with

of excess remained for last at you stable available with quarter capital very our return million. look despite strong the If it a quarter, $XXX relatively and capital

generates bringing to feel that component actually so as XX% will implied target. And XX% well, targeted year free confident we cash the strong range. an cash still flow have full our that And above free to flow quarter fourth a that

Operator

with comes ISI. Tom question Evercore next Gallagher from Our

Thomas Gallagher

with to about $X.XX earnings, normalized adjustments Deanna, the the $X.XX just we a first baseline into question on should thinking starting kind offer would adding a on QX? run basis, the PI. thinking severance in to rate? and $X.XX -- elevated you heading as back Should Or any trendable RIS other $X.XX of of we about be

Deanna Strable-Soethout

minuses. I Yes. corporate pluses Obviously, quarter, $X.XX off is is a had think the What good of. had strong to Obviously, would very earnings a we say some I and quarter. jump one in

as severance rate that was identify. expected. mentioned, did tax not lower little we a Our than we bit And you had

$X.XX think about. to good a I net-net, is so think one And

we As seasonality fourth I what last prepared couple we of I do those to mentioned have saw the be to in the of expenses expect remarks, quarter. the in similar years.

of think fourth as the we flip to as on Specialty Benefits also quarter the will that low the single-digit to So average the improve in X in quarters. But expect that low side, underwriting first well. results the relative of increase

of $X.XX for net-net when the in think the ultimately, I the put I you puts some think I So feel run rate and a good that's takes quarter, quarter.

Thomas Gallagher

on alternative would alternative levers just earnings, But bottomed in saying and maybe with flows some curious like you market, commercial on And returns both is if determine listening in that, fees think? to expect a the you. that even alternative about both managers has on that's PGI. estate more I if think that and sounds in see because thoughts then guys, starting optimism transaction what improve. will levels drive that real for I you agree important theme, on to returns. Any and what the to pretty and and of improvement some real transactional Got And estate there's know are you you this lot general

Daniel Houston

of diverse big to might appreciate we team this again, phenomenon. real that these type, class. going Yes, themselves goes an real how Tom, committee by the the a resilient yesterday. a our to details just building of itself, And enough, different, I'll is And on. But which and additional we portfolio every was asset you there's have the week, to lot going It's real had specifically. on expect, some And recovery having really a amazing years It and and investment are question, geography. And it's comments would wean a of estate the for by me go a of off years exposure with incredibly wasn't make sentiment here properties ironically asset a of property to office described, something classes. agree lot and estate credit reconfigured on. convene again, still and The get And that Kamal they we to incredibly ago. estate discussion gets attention. our the do lot as and there's we repositions each you into expert new

Kamal Bhatia

Dan. Good you, Tom. Thank morning, Sure.

X-part do And from estate, was second sentiment a real heard question. the the think indicators how had One you I related others? given you've we So see transactions. in to just then piece

improving do sentiment. little agree the We the order. I bottoming real would So of in see more the take estate. in a of bit I'll with valuations out both

printed real this has this seen total an office positive real in first estate, example, the well. as you cycle. fund, And give brought including core all this to quarter, which one Just first estate our gross market we exposure is through have we return the portfolio diversified obviously, to

upward, take fairly office as a October before almost that So positive bottom certainly, large more us. REITs first we'll they obviously, when the go sector and manager trend see, at you closely. performance It's out up but in well, interesting sign are bottom a for It's monitor be as to in monitoring that things from that while you look we its quite XX% And to of these of know, print good 'XX. closely. is we REITs, a

So also the that not are would question, have Right some clearly, inconsistent but than cycles. the in flow public economic markets we, lot are prior now, somewhat us, anticipated. There's which has There's your happening, macroeconomic anticipating we the this cycle world. transactional and this been of due I impact would slower turn. On first, are crosscurrents the marketplace, to to of on and elements say, rates to a unusual you -- that makes there geopolitics. data just going money slightly shifts activity transaction demographic elections in see compared of back

So core real when below in construction in activity is loans. we short-term deal historical look most flow norms, while estate, particularly maturing bridge-type extend to and now right remains more financing

transactional So is not it long-term nature. but there is activity, of the

clearing it as more we cycle commercial it say are is is the see to as longer which need to quite to fees. obviously, monitor you you would then there I continue bit in. to probably we estate a in real little try a multifamily sector well, what correlate So And transactional active

question. I hope your answers that

Operator

Carmichael Our Research. Wes question Autonomous from comes next with

Wesley Carmichael

was My Insurance the segment. on first Life question

segment GAAP think XX%. been the I trending has impact particular, operating for with assumption to the in the think bit earnings. guide small And little I ongoing XX% of below review, a your to that I margin think there's a

just about we a we below forward? should bit kind think if of be that little So continuing as that look range wondering to

Daniel Houston

that. Yes, Thanks, Wes. have take I'll Amy

Amy Friedrich

Yes.

and this help the clarification that. any on can appreciate pull Wes, we AAR, if And the into So, with question. some get of does Joel in

seeing trend, that, that a $XX how would of good I say amount of sits what at rate. you're about right terms range million in that But run there think in I that is pretty

I claims on that Of range minus those we're impacts. to here have course, the include We think actually any of volatility. we're million. The of or of point posting going is ongoing plus the that clarify though results $X in would

on put small are for embedded within impacts the those results in AAR, we any third So rate. that the on run quarter there

Wesley Carmichael

going then bit we early, And forward? follow-up. it. follows little [indiscernible] Deanna, variable I just Got on kind Tom's investment income fourth question it's activity, transactional but be any below expect look maybe a the guess quarter? I of my maybe little expectations bit kind should it to towards a there of On is know but long-term

Deanna Strable-Soethout

into about for bit expectations quarter which give of in on kind little February. the refine talk outlook of as obviously go future, I'll color we will a then Wes, Yes, the and

than outline from the that direct we did some which continue income, quarters. some of the comprise quarter assets line given have We an we've of sight have We kind of pressure you basket with than mixed of seen more of previous investment variable our to third others. drivers in what see

On the outperformance slight quarter. the transaction in from driven estate plus a side, we by really see real did

negative very through prepayments. minimal offset returns saw corporate the that quarter the by and We our returns in totally was than more equity that continued but segment, strong run also equity from private portfolio

think peers quarter. the the percent was the this in I that we to but equity, have smaller what is of returns very of driver and pressure private similar the saw portfolio, a our Regarding are our signaled,

real some transaction, pieces where equity foresee 'XX think that this quarter, by partially that hopeful come investment I light XXXX, think variable returns and bit. private 'XX, hopefully, could happened quarter. If but if come little fourth see some as understand quarter a So moving positive I of see think I'm the you the of what a the parts normal in levels, there's driven if have trajectory could prepayments we pressure I that moving offset to don't I we'll estate more rates. may think a think some fourth interest come But that, we makes end to that think I that of I into of I back in still And income.

in have the over we we'll next I pressure improvement in think seen quarters. see investment And continue I that variable run we XXXX. -- some to might income And to net-net, to to what ramp saw think in XXXX few we'll up continue see relative rate, we but so

Operator

with Greenspan Wells Elyse Fargo. from comes question next Our

Elyse Greenspan

of for year. question the balance for higher also some thoughts either it XXXX? you of just the Does activity there like, the year? your high of guys just on in of seeing rate the expectations the at billion on like first anything $X sounds QX My kind you're side the of things, new to that PRT And in kind initial come end expect guide,

Daniel Houston

job been Yes, have business been a advantage team have and I'll very favorable, of We're good it's opportunistic Chris has for us, -- very again, environment take and taking a Chris the done and that. his it.

Christopher Littlefield

a Yes. saw quarter, we a through third third discipline through Thanks question, quarter. competitive the maintained we nice quarter the Elyse. our and very for pricing I mean, Yes,

business. so PRT $X being capital to a fourth growth able and very in pretty at balancing see we're that we versus getting expect quarter, our we on sure and billion we're an we're returns, investing business, confident about robust think PRT making our the constantly returns. Again, to feel attractive We deliver appropriate the in the as return

taking toward we're it. view that So

are pension the early With mean, respect through markets. to funds XXX% the it's to too according still [ Mercer. funded 'XX, still ], I X.XX

to So into we in a to but grow we to little that, and do number us at basis 'XX, over nice early on go-forward give XXXX, too this 'XX for what we'll bit see point. a a opportunities look continue

Elyse Greenspan

RIS update on And then so outlook the just that decompression my just drivers year, there? question, color just give the on second an you you've this just far the any additional seen and just that can

Daniel Houston

please. Chris, Yes,

Christopher Littlefield

Yes.

thing I just want our revenue retirement It's retirement make when we to about spread respect fee business. is the fee. saying fee understand we that not business, by to to one think that and with rate, sure I our think tied to both there's fully start probably

that rise fee net up with denominator flow. with sell are is rising we numerator sensitive the because rise showing the calculation. significant -- co-manufactured returns markets, when those that's markets, to it's in AV retirement The too, with fee the our than in cash in story more those fee. And driving revenue spread as is our product the about the rate it revenue rate to plans, not pressures, we revenues similar So solutions, through respect a think GA

to at we're compare. XX-month revenue we'll is rate we the full a be account, strong the for So guidance get all bps the we we best rate, sort These look well guidance, a rate to market and actually I'd the to year talked the fee are X.X think the year trailing another year. the are about markets flections compression bps X fee quarter-to-quarter. And X from within to the that be compare above trailing of sort normal revenue XX-month into we've of markets. say stronger despite And that believe performance. But we being is the when about performance, and X that markets, revenue ago expected look take versus bps when said, way in that that to down trailing of XX-month bp X of on occur compression in basis, end given X all bp, normal what our can think equity the we just X can when our noise, historically of pressuring those all fee about on said at X given we

Operator

of with from Our Josh next Shanker comes question Bank America.

Joshua Shanker

we're the more data. particularly the Yes, Life assumption in, in charge, the what of less wanted the business that review. refinements about so be talk assumption I volatility was reviews? those changes? related forward, being I analyzing refinements little I in the a to can guess Does going X/X And there to the that mean with bit should talk at about are, you guess comfortable better

Daniel Houston

have this a environment more noise, that. bit have And to take going is Joel I'll create but take little another of already earlier, more this volatility, little And mentioned post-LDTI Joel a and Joel one those just Yes. one. I'll reminders,

Joel Pitz

Yes. this question. several question. questions team to our Josh, thanks your Humphrey specific promise I'll review I annual and get The the have on assumption for fielded quarter.

a take response. to provide So we'd step like holistic a back and

implementation year's balance and LDTI, But actually to believe it's long the hard only Given second under the guidance. said, reminder, subject are much how LDTI. assumption as Dan review new and prepared to annual is as assumption it's a last industry we the for of larger under

pre-LDTI to $XX balance subject levels. review For or are is Xx billion now than larger PFG, the

onetime such, assumption in result As impact. a can relevant a change slight in

life all million of referenced million. actuarial a in impact pretax but offsets PFG of The X.X% of largely equates our onetime piece, the the ago. $XX and PFG, was $XX That all year balances, were for you impact positive to of

quarter's Importantly, capital had the impact this review impact flow. noncash was of GAAP-only, an free assumption immaterial and of

than SBD at decrease noted share XQ the in in are impact As less in quarter, run and less in quarter. $X.XX run impacts a also a per positive than per Life, her RIS results. reflecting slight a These slight immaterial, remarks Deanna $X.XX our was earlier, with rate and share rate PI

as So being serve good going everything rate equal, else a forward. run

termination lapse your on as So the you from experience among in experience lapse then double-clicking in experience. equal RIS. come It's within There's from the X/X rates VA the following question, in does There's business Life impact comes said, X. and benefit specific relatively disability and incident claim remaining a from ago. talked of business offsets And individual refinements you model the the which year onetime largely then about. the X/X that

So that address question. It specific modeling relates let enhancements. me to YRT

this at level. of improved modeling granularity product more refinement capabilities a modeling sophisticated the have our We the treaty as of and

stat which expectation expected YRT economic but cost of by but has pattern of That not the or impact Our the our cost YRT we intact. cost no refinement refined have this is is amortized. rather, remains why changed, has

work about complying community, in be to we assumption won't from organization enhancements setting in greatly finance benefit our forward. and balances the we deal LDTI, with there also gain made good it going very proud for but LDTI. I'm going magnitude, we we've was we're feel process as modernize better really our complied feel when only the you done with volatility with prepare So to that of systems guarantee relates as about that the the future to the we not really insights of can't we that volatility, but good

that helps. hope I Josh, So

Joshua Shanker

X own as did about we're understand Then there life this, me issue There does. trying on talk you I out payments lapsation, some for I also my no pay to term contracts years, still think I'm have is to longer the probably will don't life XX next product of in term And to X, will but and product be was It insurer that. as that don't think quickly about were there. But claim have active, and but and the there and gotten -- a only me I change of for Humphrey term hope my that everybody does the going next was X the business a not money charge? good that. you the term I Why and would that to lapsing a entirety their I'm and it. not, Isn't policy? years like create out serve necessarily think to on anticipated,

Joel Pitz

good That's accounting and it sometimes Yes, Josh. to obvious. point, why state doesn't a is always subject the interpretation, that's

result but what us, small lapses. But does It's actually, actually of so it of increasing model life for actually, you around part that the within with and staying about said, is the the that's only And XX% say is the then life longer, very impact a change a as product I'd impacts. experience that's refinement, to thing a the the good relates in client, extra in review. which assumption liability of the

is customer a In in with it's our it the account us. maybe intuitive, but situation. product this this does it again, run, good for not results longer. is good illogical always customers, where but staying a us an have situation of long It's a that's for the So

Daniel Houston

like Amy, add to to anything that? you'd

Amy Friedrich

last that term Yes. today in market keep writing with we're business mind, is Josh, focus. of the lot thing The is, would business I add a

key just for insurance succession is do using and exit in or to agreement we're leaving we're that's part So a place, that good person when writing or something planning, that's of term Joel mentioned, a us. as buy-sell planning

So we the market like really product and that our how for economics overall with helps more when on a constancy term business product, we that get strategy.

how the opposite of So again, take a I bit little like liked like charge. business. of bit to a we and seems it wise, for strategy, that findings kind term we in terms seeing personally our it's the that we'd emerge -- -- accounting little have But in

Joshua Shanker

going next a income sort and to income receive these understand premium few counters, like that to reverse to I of years also for a you're benefit the double double, the guess, you're So situation? on going

Amy Friedrich

We're to receive sure. the going benefit for

with sure You I hadn't I not was would... double that. you benefit, I'm on The --

Joshua Shanker

going years to No, you few premiums I'm right? the for the Is pay next right? that

Amy Friedrich

equation. Correct. the is in positive that premium The

Deanna Strable-Soethout

this off-line. Josh, I I this a take think Maybe to can help can little we bit. try

that think we you better you're a write of policy, mortality XX-year So early that always period XX-year we before happens to that term in assumed than and if have later. policy, going have underwriting

And XX sense? portion the XX% whole going had lapsing and of latter more those half that more years, which you're assumption. Does if XX a in than causes of just towards little bit had anticipated, sometimes historical experience some claims a increase now the a bit see the going to the of that those make so and out that our what whole going we years -- we paid little would in have

Joshua Shanker

in going I'm I'm right. Well, Yes. sorry [indiscernible], but the All appreciate to it. I

Daniel Houston

No, Appreciate it. good. Josh, you're

Operator

from comes question Scott Barclays. Alex last Our with

Taylor Scott

think for territory. have have towards strategy strategies, talked going I of you on of sort on you about. if about any are guys the ask and it things trying industry-related there's out you and what to some as push initiatives about just and just PGI wanted you talk Certainly, could when But separately? RIS your to are about positive I going that maybe flows and

Daniel Houston

new because here. is the lot a and attention me quite time have lot important broke you acquiring you a on we assure but growth, respected I'm and PGI component profitable can of first around an between Kamal go assets of driving the that different glad actually Chris, know between difference and of attention out I X and Yes, are let levers then and those that. get businesses. But retaining And RIS

Kamal Bhatia

here. succinct Sure. Alex, be Thank Dan. you, I'll

raised flow. And I to of are and of is very leaning we the I'll management couple which as a improve quantity good a question, you you think a quality net our examples. the in give cash strategically team,

mentioned activities. prepared seen in increased RFP I think Dan comments his have we how

we is robust activities. have to One doing pipeline things we of the these ensure a are of

you exceeded ensuring early-stage pipeline is Just, up activities they've we're heard, so are remains engaging and 'XX are what roughly RFP I 'XX. But opportunities our think, and as also robust. we also our on XX%,

teams, the the One roughly XX% equity strong Historically, income, we of capabilities we have we is as with estate of real observed the we and out had equity in our things going more volume through goal come RFPs that our built marketplace, a international expand is, the to offer our seen have we've have RFPs capabilities. there. specialty and to pipeline it's

synergies I global will attention The of would side. other the many in long-term getting private on are good very highlight, from increased capability is both public seeing which interest we lot And credit, are yield a as it. And been things the a PGI one of that's quietly of building and results clients we of the between and are strong business. attention mentioned have a credit that's I and we lot gotten globally. core PI, a seeing and recently, part very we private

just year, of We flow. almost have positive almost deployed million cash this net capital. And $X.X $XXX billion of

a on seen over revenue in comments. of earnings my those turn they Chris, much multiple stream imagine, can have would are these term, but higher and be past. I'll to we it the As are long at you than the

Christopher Littlefield

to retirement drive not Thanks, prior all quarters, in business, With really flows revenue profitable we Yes. think respect growth. I flows as focused can are on equal, I we've mean, Alex. said the created where and we are

we at up a ago. are year fundamentals over And so we're about, when areas our think flows business, SMB talking the look we of about the XX%

XX%. Our recurring deposits are up

the We drive to up. looking continuing we're those of on to some is lumpiness large drive activity what to to sales. going pressure have plan flows are And

year. that quarter We've to large didn't about last market was a from this We that volatility have very like large. third sales. strong the repeat quarters at year's talked going have You're

there. And some see participant to going got is driven around. the to a talked lot really by going of the strong withdrawals volatility a withdrawals. And about you're results rate. that bounce we in then participant So performance is earlier, slight It's But market equity uptick currently. just

flow at on solve We're shareholders. low X focused or margins. prioritizing so strong profitability again, really fee of or really value growth, out if this profitability. to We're revenue accretion or problem maintaining is our X sort profitable the it's low focus not to And

Taylor Scott

and just And understand to of Could us sweeps you we like with funds in silver a does. follow-up, terms it Yes, just we sure of about in help anything cash that? things Fed terms as any or quick exposure should think floating like making sensitivity? or rate the

Deanna Strable-Soethout

that. just Yes, I'll take

I think the if you very go went there's to impact interest back transaction that to rates, our our down sensitivities annuity that and we've with after little significantly from talked rates about, interest business. fixed sensitivity

expect Floating we rate, from loading on net actually And so exposure long again, of higher us, on impact values. earnings perspective is term, both rate fixed like because rates. none, short impact But trust wouldn't term, virtually that an business. the relative income impact We hurts to and so as I we But some significant there. the rates do any move in bank forward. we the on drop expect don't see anything again,

Operator

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

Daniel Houston

get are I that not I'll to questions team his foremost, Humphrey the know and call did unanswered So for thanks first make that to. get there out analysts we we answered. of and a sure reach have couple any today. joining

focus forward discussion earnings our free we're targeted and New Investor and perspective, Secondly, leverage our and We'll where retirement can global opportunities from that's been XX on in on good capital in to management seeing observation in XX%, very cash strategic X% and on confident shareholders. it's we marketplace, the that, about at York our the share ecosystem, made we how deployment very asset feel Day feel flow, our stock dividend business look November buyback, for our year. We policy, the full at the per to our the our whether progress reach SMB City. of you the that

good time the a Have appreciate today. one. So

Operator

call. conference concludes Thank This you. today's

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

Principal Financial (PFG) 25 Oct 242024 Q3 Earnings call transcript