PFG - Earnings call transcript Q4 2024 | 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 Fourth Quarter 2024 Financial Results and 2025 Outlook 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 Fourth Quarter and Full Year 2024 Earnings and 2024 (sic) [ 2025 ] Outlook Conference Call.

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

the Joel provision, prepared Pitz, of and Deanna remarks. reading CFO, Interim will a safe CEO harbor Strable Following deliver some

senior We questions. for the open management of Q&A. will available are call also then Members for

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

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

Deanna Strable

Humphrey, on the welcome everyone Thanks, call. to and

like and and highlights fourth begin Board. an is XX our recognize discuss I been will I to in led has years. the I grateful continued continue years serve is I'd foundation with been Joel well established of forward work building key quarter milestones leadership. growth, him strong XXXX. to Chair the tireless from growth and extremely the in us we've as year last look positioned alongside details. to follow will X morning, leadership. additional Dan's leadership upon Executive thanks transformation. This honor through to CEO morning, Dan his this as the strength have his I full significant of He CFO. Dan over Houston last to under the Principal has our am setting instrumental has It as for our Before agenda for position a today and to his over

outlook. to We delivered X% range flow XX% to a XXXX. that we've towards XX% Principal ROE on targeted earnings to growing of strong to our pleased ambitious share the targeting XX%. XX% began year per I'm expanding this XX% a our range, free capital delivered with We and conversion committed an extremely guidance. the in

strong Our the across per than more fourth from growth foreign offset adjusted This in non-GAAP by earnings currency. in growth driven was XX% equity well as the a with benefits XXXX impacts which enterprise, tailwinds, XX%, was increase top share as strong market from quarter. line the

conversion our XX% Our target on track ratio by at in the free and capital flow to midpoint XX% ended ROE we target, XX% to improved year-over-year points and our basis XXXX. the our XX year XX% are achieve to of

on position flow capital and in capital of strong deliver Our to enabled XXXX. capital free to shareholders deployment us returned our guidance. We capital billion $X.X

Our stock total our capital targeted a dividend. shareholders our buybacks of in above midpoint the share increase XX% which to and annual were return range common included

is This a Board repurchase prior $XXX remaining the authorization the million Our year. end new the the under just billion. at $X.X addition in Directors share approved of of to for nearly authorization

of I'm retirement to strategic Day, our and recent ecosystem, focus our sustained these. Investor our out the to growth, and happy areas highlight management. asset of laid global related for At we achievements businesses broad midsized small some

plan needs our ecosystem now recently strategy, retirement of expanded addressing the to sponsors and suite date evolving we our of of offerings both participants. and passive options, part personalized As include target

in our nearly $X the hybrid unlock opportunity billion across highlights retirement of to the incremental capabilities target differentiated This win retirement and management quarter. off-platform at our value also date intersection asset mandate fourth investment our led Our to an into businesses. of

and expand resilient positioned valuable our look a significant to we segment decades, serve and leadership remain opportunities to We base. SMB uniquely market large, built This on disciplined for this customer Over with position growth. is have a way. in

In growth case this segment. with in have in up strong X% segment, the RIS, XXXX. Benefits, on recurring to large more deposit three outpacing we products growth XXXX In customers, compared experience our than X% with continue us, to average, Specialty

We long attractive have of and strong in leadership a record growth the deep customer segment. position relationships, a SMB track above-market

real expand estate clients we our solutions, strategies Management, with in traction Asset private continue and globally. to and In multi-asset gaining credit next-generation

real estate fund materialize Notably, clients in commitments. has the flow months. and will countries XX% growth billion time. represent through currently XX This net over largest cash institutional of fund, fund's income Our XX across over data raised total center $X.X new

advancing private we of and our infrastructure the multi-asset fund credit private of real estate, a a build-out and launch private team. the including capabilities, are Beyond debt REIT

platforms strategy growth distinct execution Our clear and strong forward. continue going these strong delivered XXXX three and across in will results

of company-managed the from XXXX. X% ago flow down sequentially both for the market compared from offset cash of total and but market impacts despite billion X% up We final performance in volatility year and period. improved flow. XXXX the net the cash year net Strong ended company year $XXX than more to AUM, fourth XXXX FX weeks quarter full with the Total

helped in U.S. our activity. seasonality sales partially institutional weakest the what flows positive retirement typically in to lapse offset and Specifically, to quarter and due retail is quarter

in remain employer segment. income. and by total in strength to management recordkeeping, strong was to business solutions continued fourth the our our integrated segments. of market turning This in in fundamentals our increased the XXXX. and deposits and favorable for Now Recurring revenue XXXX The conditions X% the X% over retirement breadth growth driven compared of quarter Retirement, depth our underlying block individuals of up XXXX. SMB by across driven matches asset and deferring due retirement XXXX, growth In spanning healthy. and business to are retirement number generated of earnings suite The receiving we

by deferrals dollar In same of amount over increased period. the during addition, and the matches these X%

participation while solutions how participants. and sponsors retirement and because plan we employer-sponsored full There us serve Employers higher plans. advisers, by led and the rate are account choosing markets an in participant the offer is in interest has sponsors stabilized partner to amounts, we in couple over and plan encouraged And increase that withdrawals equity to driven are suite quarter. with we of our of strong years growing of withdrawal of values the last

and at The Contact PRT business. quarter, we are nearly compared year returns. substantially sales positioned in market full the also retention X Pension the it. sales to fourth pipeline XXXX our $X improved robust, retention rates to generating were and improved strong Better years. sales remains million in $XXX bringing billion advantage our momentum previous are of to take transfer over attractive an risk in

defined Our for coming benefit from source Asset existing In business fourth Management, relationships. quarter. in contracts investment to defined business, a continues PRT new nearly with realigned be new pension into XXXX the our international benefits customer XX% and businesses we our valuable of management

year across the as XXXX Asset billion offset nonaffiliated by in $XXX market flows from Management for the improvement FX all compared of in billion Net improved performance Strong AUM. nearly flows investment to XXXX impacts. of year management with ended $XX benefited channels. was partially

against opportunities management business, We growth asset stronger positioning outcomes. even and our for client global continue new to evolve

leverage competitive strategic differentiators our and leadership Our focus positions. businesses attractive that remains on

pursuing services. within management. while a took expertise actions impactful Kong, industry Hong regulatory presence this retirement several evolution, asset streamline a asset to in partnership with business we us of of our recently Most evidence pension management environment on is evolving changing the core in market, As necessitates an focusing our portfolio where our leader new

Our pension transaction Trust, schemes. role the into with investment factored BCT, The outlook. been or Bank BCT our when with an assets manager to expand financial our impact combined our MPF approved, will Consortium transition schemes from and has as

Benefits benefits market Turning to over we while our life, new of in resonating growth protection, growth and X% above-market to business business XXXX. pricing reflects XXXX. premium business the generate fees maintaining In in continue net as our focus XX% owner is Specialty This and on discipline. grew in

offering of global I front confident look penetration sharpening As our opportunities value expanding management. market in and our am deeper the ecosystem in I our us, through in within SMB, to ability the at asset drive focus in retirement

Joel, over recently. like I'd and #XX industry one we reflects the XXXX on Most it XXX America's and Principal recognition Just our the of to highlight our to received was Companies two JUST shareholders. Capital, to This our serving ranking communities important recognitions customers, employees, list. named turning Before JUST in commitment leadership by

retain and inception was like competitive to XXth talent the culture and the Asset earning year, Place since to stand marketplace. this consecutive values, for this us year help award. and out Management by our in of recognition Pensions core allow Money and a named the Management Work Principal every Additionally, attract Investments, Recognitions reinforce us the Best top in

diverse We closed across momentum with portfolio XXXX businesses. our of

to our us seize hard growth. employees. Their to customers the and Joel? our ongoing opportunities excellence enabled Our and to work has for success focus future is and a the to of XX,XXX testament stage set commitment global

Joel Pitz

capital of morning financial portfolio and position on details performance fourth investment share our everyone I'll our Thanks, quarter for and our and Deanna. to through updates Good for call. the on XXXX. outlook the full walk provide year,

XXXX, strong, in and equally operating XX% $XXX non-GAAP our X% year a were represents Results share. As non-GAAP diluted earnings $X.XX increase guidance. of variances, excluding with the per billion variances over or excluding the quarter. shown within Slides X, were significant increase year XX% X $X.X operating on per This or full quarter earnings million to an XX% $X.XX significant diluted share, over EPS comfortably for EPS ago

items significant You through variance XX. the can on find XX Slide

assumption net drift, better year. credit was XXXX. at basis modest was to reported and track XXXX beginning period. ago on both an improvement ROE our operating remain points $X.X deliver review XX% income for the targeted ROE excluding the the year expectations XX% of to with actuarial than We to compared business slightly XX.X%, Full of Non-GAAP our by billion, XX exited year excluding losses our

returns with XXXX real favorable cap, XXX across in equity and XX% total indices. international S&P estate for equities. more tailwinds gained mid-cap, major the modest with growth The markets created small strong year,

on equity diversified of in importance S&P Appendix mix, underscores XX. recognizing with income in This our asset asset the along the be classes, that mix results fixed to Our our XXX. found Slide within performance can asset from the which varies allocation AUM, the market

for AUM $XX negatively exchange The $XX the the year for impacts than performance significant and the impact, FX variances. following more billion offset equity billion year. Foreign market excludes quarter. Despite for this impacted full rates commentary the full by

in of deliver growth coupled our X% of business, results full across EPS on businesses, investing integrated our the expansion basis enabled growth. of This, XXXX. to points Our non-GAAP enterprise top company the X% strength in the during guidance XXXX which line XX expense our margin resulted XX% demonstrate of us delivered year to discipline We with while in year.

margin income. with market full business increased pretax strong favorable year of our driven end our on higher XXXX. growth, earnings long-term investment growth revenue for full at over guided range. disciplined year conditions revenue highlight our of and for operating target X% X% exceeded The net Starting Net the favorable our RIS, profitable high tailwinds. was focus and macroeconomic guidance XXXX, supported by results the by growth, XX% These

Management strong results for the Asset Principal delivered year.

points, pensions expanded market in investment from earnings due noteworthy and points X% XXXX, of a year with improved revenue. targeted earnings driven strong operating from a a flat in constant operating accomplishment from million Operating management fees. International the XXXX our strong XX% margin margin impacts markets. contributions basis earnings over by currency to a execution year X%, On limited increased were pretax in operating performance increased in performance. Full year fees reflecting by year. X% relatively basis, by FX growth to management's Specifically, ago, resulting pretax higher basis net driven $XX growth XXX of compared XXX

presentation, it on basis. on year that is as delivered did PGI the noting constant guidance, revised a International Principal worth we currency Although full

favorable quarter makes comparisons Specialty large produced sale compared direct of full as earnings Notably, by Quarter-over-quarter fourth XXXX, underscore was guided as well and above low in meaningful. in Benefits of management midpoint XX% less to of of to at fees a of guided An Benefits end XXXX. our continues to year profitable deliver the quarter Loss results Specialty margin are premium growth, premium for the which year X% These effectiveness growth. range. was of impacted XXXX. our XX.X% single full the fourth ratio up drive the record actions the year range. operating and attractive comparisons the

increased block. Life business, market fees our we and Life YRT and XX% on the in as In to up X% premium This impact the year-over-year. executed and life and outpace fees legacy premium of growth the decrease earnings an We slight derisk business with overall, roll-off immaterial Full fees. market to transaction continues our year had to a premium portfolio. legacy continue another reinsurance business

and XXXX in the transactions, XXXX. fees reinsurance Excluding growth premium X% was

portfolio to is economic Turning investment and well-diversified a with a perform well variety positioned that our to profile, portfolio. aligns conditions. high-quality our We of liability across maintain

on may of While be re-underwrite quality. portfolio quarter. still continue some debt each an of commercial coverage ratio mortgage average is of we loans high With ratio minds, investors' loan-to-value loans to XX% and service X.Xx, our office our

year $XXX resolving successfully office loan XXXX million. the we entered optimism. in in our lower XXXX XXXX maturities, continued Maturities at coming After with are than

Revival off. market its activity to We in already with a will path. million market office the capital paid been are recovery good start, continue off help $XX having

we our information, supplemental provided more on available investment For detailed slides have website.

and Turning full liquidity. which ratio, delivered This basis, On conversion, strong our of very the XXX% the capital year million XX% is $X.X excess year-end. targeted to capital million We $XXX XX% range. year within level, a targeted company, $XXX million $XXX flow million capital. position, we and holding our free subsidiaries, ended of comfortably our available billion in to XXX% $XXX and targeted a XX% risk-based in at our with includes capital in at excess above

returned $XXX Slide XXXX, to common $X on in $X.X dividends. billion shareholders shown in As X, billion share we repurchases stock via and million including

the of This just guidance. included our this share previously, in in quarter, returned of million repurchases million As XXXX midpoint dividends. in Deanna capital under shareholders $XXX above $XXX the $XXX fourth was and million to noted

our payable stock represents first quarter. continued night, and the a dividend prior $X.XX a dividend XX% basis XX-month dividend, underscoring aligns Last over payout performance. on strong increase we growth dividend, This trailing XX% rate $X.XX our and common targeted growth with a quarter's announced in in ratio, the confidence a

to Our value shareholders results to approach opportunities. financial balanced maintaining long-term reinforce flexibility for deployment, creating capital our growth while support

Slide our Turning outlook, to XX. starting on

share, capital We are X% earnings again Investor long-term XX% reaffirmed These well XX% conversion XX% enterprise at in return on were and positioned per to XX% growth equity. to our targets to XXXX. deliver to Day, free financial flow on with in XX%

As a reminder, targets these are variances. excluding significant

EPS growth see a on basis. to expect stronger reported We even

$X.X excess to targeting to deployments returning to million shareholders This billion committed share to includes and dividend capital XXXX. a remain We repurchases are of $X $XXX billion capital in $X.X XX% billion of and ratio. payout

rate run income, investment assumes guidance variable Our or VII.

impact lower-than-expected to continue year. the variance will the a higher cost throughout earnings and We quantify our reported results VII to significant from in

For to we to VII expect compared XXXX. XXXX, improve

assumes XXXX. XXXX for conditions. expectations our guidance XXXX XX Turning XXXX our outlines through Business unit outlook, to modeling units. Slide enterprise business business unit for considerations and normal medium-term market

Taken enterprise sustained at together, our this confidence guidance the the reinforces financial targets in level. our delivery of

net to the X% guidance strength revenue reflects intact. revising upward, underlying and management In on global investment guidance RIS, in In our business. of margin guidance remains building XXXX, strong are medium-term we management, the of results asset our X%

expect pension, rest We the metric different ranges guidance to be Principal better past to the the International the within of enterprise. in and align these we margin in showed our international due the revenue in revenue looks net with the XXXX. from to change and resegmentation what growth In for

from the XXXX to U.S. constant to due a of range year. on the be range relative the the basis, expected midpoint and the below thereafter. XXXX currency levels, the end improving improve to the but range at be to at last in Margin revenue of basis net dollar expect of We on is strengthening low a reported

We of dynamic discipline, in during second underwriting lower XXXX. in sales In maintained our the year. Benefits, dental half resulting the was Specialty the market

contributing overall in In ratio are a throughout to our to growth ongoing premium the this us the X%, revising of reflecting discipline range, block, of As health we loss result, and strength The X% business growth targets, our near fundamentals is we with confidence and margin improve end which our to business. in to growth. low the improving remains year. underwriting medium-term fees guidance expect to leading industry above be continued in this XXXX,

In be the growth legacy our of to is block. high at fees in Life, of year, market runoff offset by the our range growth high-teens business above with block, the partially end for premium expected the or

Our revised margin over guidance XXXX. reflects improvement

Before opening to of due for of quarter questions, the In few Investment typically our for elevated and is seasonality the lowest first compensation deferred I want a to quarter remind seasonality earnings taxes. you impacts. payroll Management,

expenses higher XXXX. with to contribute dental will half half Specifically, these In quarter half factors second Benefits, typically year the the pattern claims outlook. the higher of we first million impact the meaningfully of the the $XX expect in Specialty no in being higher first seasonally to full year. Similar first approximately in than to in earnings XXXX, of are

Additionally, they drive the of and year half is which second increases flow, the typically the seasonal in half. pattern lightest of the first free in capital

as a have long-term are to and momentum strong We start well with capital positioned position, good XXXX we on financial targets. our deliver we

grounded the growth retirement shareholder continuing are to drivers and our management value. while small of global midsized ecosystem, businesses drive in asset We and long-term

for Operator, questions. our concludes the prepared remarks. open This please call

Operator

[Operator Ryan KBW. The first from question Instructions] Krueger from comes

Ryan Krueger

to reform some passed forward? was, you how Principal thoughts My think may in pension impact about the provide initial on can and that first question that was going how Chile

Deanna Strable

give and Thanks, over Kamal. a for it Ryan, comment then the Yes. pass I'll brief question. to

remain Chile committed long for we our there. in been to customers time, a we've supporting know, you and As

on update on additional but that, we We future, a to time ask navigate further there. out. With play are optimistic that this to what the I'll provide we're reform seeing will how take will give clarity Kamal

Kamal Bhatia

Deanna. Thanks, Sure.

comments. to to Deanna's Just add

reform reducing reaffirming us important encaje, will system's defined the improve improve -- system, efficiency. the positive are which some So which first, to bring they will and contribution will changes. which Particularly, is help the

step We stage, for done the optimistic have At to to in in are also we investment about this long-term believe business anticipate is over Chile. navigate smoother the a are vehicles, time data our we key we and in our as which a marketplace. ability outlook transition past target these forward changes confident the for

Deanna Strable

Yes, question? gets of as have we'll move continue firmed additional But you update do obviously, an up as forward. this to more Ryan. we And

Ryan Krueger

private managers Yes. that alternative over on thoughts how This Would has question. There for guess, is particularly more your getting interested about bit more and higher a be talk asset could industry. of, within level a in I that XXX(k) of been by the plans. time assets evolve

Deanna Strable

Yes.

we've know, and you Chris As estate specifically real been for has I'll some around see obviously a XXX(k) have lineup. on private comments have privates within the focus if decades, in but

Christopher Littlefield

and Yes. Yes, need in Thanks question, the plans. increased buffers need be for opportunity for that Ryan. see, overcome customers. and to along think other There's we retirement I paired of some the issues to use some be that think retirement for terms liquidity of hurdles the sees some and like privates significant in I industry regulatory obviously would

that of little in will bit is a there works do retirement we that before a is to work I for a I think customers. getting time little of momentum. we retirement, for sort a on think of in potential product So but And take bit there environment the that see regulatory significant privates think do still and vehicle

or account it managed target packaged you'll in think dates I offerings. initially see

the in see or some that next space the of innovation course So X. you'll over I think year

Deanna Strable

questions. Thanks, Ryan, for the

Operator

Joel line with the Dowling Partners. Hurwitz from of & comes question next Our

Joel Hurwitz

least just the you flows. then looks much guess, just enter wanted flows? comments color on the of you unpack color you on stabilization year-over-year? at how provide on any RIS guys I and participant quarter some on level some And more saw to just for lapses we pipeline withdrawals? improve then, maybe of I the with made the outlook first the contract XXXX how as And Could

Deanna Strable

and about I'll thanks the Chris And look primary for as into how for When about the have the growth specifics talked earnings. really year that quarter the of had Joel, question. translated is well mentioned in we've and you and RIS revenue as quarter great both first But Yes, focus. as that the the past, margin you a year. about 'XX. talk there, that our think we all at

Christopher Littlefield

Yes. Deanna. Thanks, for Joel. And that, thanks

quarters, Flows revenue our as our I flows, 'XX, revenue which growth, think and I generating focus we've deeply flows. top and our end into exceeding over before we are important, dive we stated previous revenue being in I prioritize of net do but margin did is profitable in at guidance mean, the on margin.

about good that. So we feel really

over I in us rate fee-based well market. fourth call We deposit we strong on know for recurring rates. you well, and positive particularly slightly pressures create they our saw the improved but a resulted sequentially which in retention markets flows quarter, as as deposits. had revenue record other flows in large all participant And do year metrics, ago from as X%. transfer largely of are fee-based and rising net businesses, equity saw we the for our a were including because withdrawal think as lapses, lower the In WSRS, healthy growth the contract over lower fee

in again, saw rate. is quarter we what withdrawal fourth So lower the

And those really of attributable equity higher-performing flows are so the all markets. to

RILA, lapses, to is pressure VAs about I seeing VA flows thing I year, if with that we from to $X respect a at many think of a registered of fee-based the of course of billion note from GMWB sort into that flow we're flow. are the look another annuity you is with are full index-linked RILA, a want over income, which percentage our capturing And significant exchanged but very those are product with converting and spread-based to XXXX. being in

are as we seeing So dynamic that well.

say about see we flows thing continue do good health other -- see to is SMB The very and flows. I'd

seeing and averages, Our flow deposit cash positive higher in we're growth the is SMB. net recurring than

about feel position in So good we SMB. really the again,

impact withdrawal flows performance forecast rate be transfer lingering expect by to XXXX. for see the of and the and currently to market recurring do turn the equity outlook markets will the that higher we As we'll from and and stabilize but to health strong XXXX, impacted deposits, the continue we participant we

see overall in net which portion to good some the block, continued but trend, outflows an those from a VA expect of industry is capturing those RILA. traditional -- are We of those

quarter, know A again, at client, terminate first we have large as about $X.X of chose fee billion that In to we business be that in retention the lower outflow but XXXX. quarter. relationship, to that saw then slightly one first And retention the more minimal that maybe compared we revenue market see record rate with expect will impact. to contract do a profitable look one outflow we we we in normalized, the

All a again, a profile flow profitable we net that margin revenue revenue it's it. XXXX. guidance really remaining -- delivering on net at said, our all being and in flows cash look and growth focus is do on measure, profit, on and disciplined different pricing, and and generating and but our have is revenue

Deanna Strable

that hope We helps.

additional You have question? an

Joel Hurwitz

in year? real Then Investment for Yes. for performance estate color investment expectations Management fees you on income activity. and transactional the sort just to just variable What of any shifting expecting are 'XX? And more

Deanna Strable

state specific core to color comments Yes. we Thank real regarding competency, to market. to general implications but And going regarding Joel that estate within general I'm question. as also our add give both for drive on I'll you clients, a account. ask Kamal the VII. Obviously, some real is unaffiliated to flows account general of kind the and the ask then our estate in of

Kamal Bhatia

Joel, where Deanna estate state left real off on up of so let pick market. me the the

estate recovery have a but real we this volatile a commercial early see stages of do than period entering in more we probably sit, seen we the sort where of past. from gradual So

that robust to for is available the is things has expand. are are Those important CRE to the activity market marketplace. transactional real continue seeing credit there to signals actually of growth in transactions. that happen One this very we estate parallel, in And to happen has started in been real

when in substantial In fact, transaction you activity, been year-over-year. increase XQ, XX% equity look has there at a

that now, are a important price marketplace and to is the starting find to because leads it transactions allowed floor. to clearly, So happen discovery, which

just CMBS has issuance billion We The XXXX. had in over of strong. new unusually market $XXX been

side. the on credit helping certainly that's So

$X at to private bought $X.X Just look in almost XQ, billion up in year. was own billion work. book our the capital we That from to earlier of

Xx increase. almost So

side. I'll confident over Joel part. feel turn the to I So the it on second transactional on

Joel Pitz

Yes.

We making classes the do XXXX portfolio. in expectations to VII relative for 'XX. question. or our of importantly, at all improved thanks we Joel, and for And with within expect estate as key So, and in you very XX% have asset And a of returns approaching that, long-term part is concentration portfolio, up hedge XXXX real much PE less portfolio, know, of funds. our prominent in our alts

estate XXXX Real from improved XXXX. expect continue trend we that have returns to XXXX, and in to

Given referenced, valued not these Therefore, fund case real capabilities if estate. Kamal we in our invest quarter, investing directly are under strong that fair assets a will every we're as be the structure.

Slide the can these you supplement on that as position. gain So provided properties in real investment we see in X, estate are sitting a unrealized meaningful

resulting emerges, latter XXXX. our we'll the gains in When at year time be the volatility within VII to some this the and on which recognized sure of half highlight weighted to unrealized that those will towards be time, quarterly and appreciation over this in of expect sale, we be So activity metric. middle

due timing relevant some in improvement of expect to the So the for way along VII do sales, upcoming we in with summary, volatility year.

Operator

James. The next Raymond from Wilma from comes question Burdis

Wilma Jackson Burdis

There's PRT some litigation larger been understand the market. end the different in PFG. a the for of I set that of

But of the have more of bit I little guess, some offshore model. any you, activity you end the focused yet? smaller could more on see -- been market? Or moving this observed that's the a Given into

Deanna Strable

decades, obviously if and great a business directly We've the for there, PRT in question. the Chris recent expertise for Wilma, litigation. Thanks, been I'll can answer see regarding have Yes. the your question

Christopher Littlefield

payment haven't as out, XX years Deanna over and pointed I I been mean in business Wilma. we've Yes. for a Thanks, missed to think customer. this ever a

haven't migrate litigation we the think seen down. I

those how I they'll of of customers transactions I notable transactions. I don't any not turn I it's of that exception suspect on are of under terms think those wait in note, received lawsuits those more more a lawsuits see not, traditional in again, fee-backed their providers carrier. certainly, believe and have validity with focused payments out PRT one the those

I hasn't our think So business. our from impacted it perspective,

of trusted, business, have a We and risk a reliable the for remain transfer we haven't lot in pensions. seen midsized to provider very that people of small activity solutions

Deanna Strable

We Wilma, great year, we move Do Thanks, additional PRT that into we question? and an confident had XXXX. for going have are to you a that. continue that's as

Wilma Jackson Burdis

years, you record. you're XXXX? on what's a discipline just track in Specialty Yes. going little XX pretty little about Yes, underwriting in good that a Can bit a exercising Benefits talk

Deanna Strable

we're again focus sure profitable growth. And Yes. -- our to Amy talk at translates and Thanks, it quarter driving year our Benefits approach look great pricing. seeing has decades had making the it I'll how been Wilma, that what Specialty to really underwriting for over and a for with an you that, discipline incredible and when is we're perspective, on about from specifically earnings which our question. and to to move an

Amy Friedrich

Thanks, Wilma. metrics the at on we Deanna. Thanks, think underwriting understand when I to probably that in. it's helpful Sure. of we've comes given looking how back for guidance look all outlook, do SPD the across discipline

reminder, the for loss ratio as a just margin and a the as our both outlook. just tightened -- ranges So we've

loss the lower XX% So ratio end XX%. down to and to we're moving the up margin to then the

the to question. reflect So really are premium adjusted heart overall growth those your competitive at we've also that factors that of

in half continue XXXX. So the get aggressive. second a of we're meant seeing We, in dental. competitive that's utilization seen think whole more competition, the especially in I and look on we've dental, have saw the high We repricing is we market some we're And along that when bit at probably experienced of is, doing XXXX, with product what the that little will that XXXX. the industry, pretty most pressures the

impact, the of at sales half XXXX, some XXXX. it half we impacted has think, new that will of this and least in back front of the So

Do bundle as we a products. keep sell in of mind that

profitable of to underwriting critical It's products really does And when and long maintaining you that term, bundle. a dental is stable profitable impacted, And though, our over block. What in dental a some maintaining other the growth product critical see products. we on predictable the building a to is too. renewals, be tend know, for to disciplined all so and of impact meaningful is that some can

It's customers those brokers our sale. renewals creating that need from stable just employer that and not predictable -- us. it's new So are end both front our

small we about customers. predictable more to flow something Cash and for When market. have in expertise small that's got that concerns we've small very bit our are think that in midsized market, a significant

is stable, that flow important. keeping really So predictable

trade-off the need got -- less that type a bit we've the a business. we'll make that bit we little margin the to little we've for less ratio loss that is looking sure sometimes and growthy And take make of sure got

technology above the service SMB is is really So going discipline the to focused to And just of we of market, then knowledge use provide. of relationships package over our that and confident that of the part that course industry our grow the and on the deep I'm be have, underwriting time. ability that broad broker we

comfortable feel how and a it's with package, all So really XXXX I looks.

Deanna Strable

the all questions. for Wilma, Thanks,

Operator

The next question comes from Barclays. Alex Scott from

Taylor Scott

-- time years, First sort it's of the one, like cash pretty capital the you free flow. think of terms conversion been is I free in for earnings. few flow guide in views outlook have excess the of And what has of last looked to on return cash in It strong. I

through is commentary mean, just How think conversion was better? I the Or do in interested I I further drawdown of flow capital? it getting cash there. excess all is that? So free

Deanna Strable

drawing is Yes, years flavor additional of the for then because model flow deployment. deployment I'll like to there's each all there. Alex, some that our add partially over few look business we Joel it, bit perspective. been ongoing again, translates at just we kind free business down, the for But last of how that and our years, think of just of ask and about higher into generated capital started that question. little we we've the both the When that you're right, our from And cash a thanks how and

Joel Pitz

Yes, question. for Alex, thanks the

A As coming outsized. that excess strong lot if share you XXXX. capital do we the share is ratio of because plan XXXX of And long-term our billion our said, excess to XX%, repurchase is starting dividend of at we're position XX% of you guidance, buyback coming position into into which strength, $X.X capital a year. have XX% is to for available and payout look

delivering $XXX billion million again, about feel results so And the we're for good front. we And year. to target of really that proud that our there the really that $X we have on

reason 'XX, comments drew come some did because looking hear at less did more it coming big in is about We we reports down into 'XX. the and it's And seems the less. we at

ratio the it's XXX%. at our today, into into XXXX. you And XXX% look coming RBC If coming year, it was we here as sit

year So at ago. excess but not had the again, just excess, still we're X we

about strong of buybacks, a billion ratio, XX% $X $XXX guidance, product generation. translates payout our to XX% and share to flow to capital outsized above that's million again, our So

Deanna Strable

question? Thanks, a Alex. follow-up Do you have

Taylor Scott

Yes.

wanted on record levels guess, your a same record And and of margins, what sort Empower, for the fees to I ask on to just look near as levels or follow-up, about thing. at I expect So RIS. I

had next margins and history think in year. I had the they've the guided more the Empower expansion ever best company of to

competitive you your how just peers, So is pricing going some of biggest are lead in business margins more Are what business. think this margins competition? are seeing a signs competitive the strong profit environment? are to your strong seeing thinking for the through you to pretty that and the I would

Deanna Strable

Alex. Chris Thanks, ask that. Yes. address I'll to

Christopher Littlefield

we've I From Yes. market, been anything competitive what to and consistently that This fee seeing unusual. competition. from seen, competitors' and we We're expect just mean, and strong, it's performance XXXX. I we margins, improve compression margin it has think is that manage a through. without we've has particularly our that's to levels through something always commenting been delivered I on very our mean work had not in generally

cost and in business. there's complexity think recognition of a this a managing lot is retirement I there's -- that also

there provide. return is the look I also we recognition provide, when the so think on reasonable be we a services services you to at needs that that a that And

of consolidation. So consolidating. irrational at this industry think part We're We've that been I there's I sort don't is we've scale. - tough. competition think it's of there. just that out The

And not organically, think consolidation inorganically. the I is I've happening a as in past, continue. of mentioned lot the will that

some saw smaller you obviously, Now, inorganic transactions.

So market environment. I would say it's tough. It's tough a

winning will we are to that able continue as we win it, be have space. scale in We and a the in confidence player to

Deanna Strable

basis to you've improvement, where At point is that high end, given we And X the the landed range, Chris, X well. think I just we that which I guided about and as same XXXX think year. equity to this think guiding market we're as to

Operator

comes from The Jimmy from next JPMorgan. Bhullar question

Jamminder Bhullar

it you Is the So on first, what there's there's think assume of I to that chance earlier. flows things because realize for had going I that yes, a a you if the the next question there's for inflows your of would Or Chris change reasonable flows at been to major well, past on call not to fee some as years And change? seasonality some the flows but the positive? be a in in in discussed the they turn negative X And have X least RIS X years? do business.

Christopher Littlefield

Jimmy. you, prior and And think Thank I've Yes. your notes I as well. analysis seen

I people large think many that for saving some retirement. reaching been in are you've that macro there's now pressures identified, XXX(k) from have decades systems

we so are seeing some of certainly rates. And pressure withdrawal in that

through also get of positive to demographic an of it's think see next here couple next greatly over the but going don't the inflection where we years, immediately you've identified years. that I trend turn the I couple So

earlier X their that in are in we of that sort -- the careers seeing saving have are the generations are and careers, in more those the What generation. earlier their working in than is been are saving Generation

flow we you've as positive do the are for think dynamics retirement, think see rightly we very pointed I long-term but some pressures, So out. short-term

Deanna Strable

those values negative few and years, flows, which obviously increasing the last account sizably then with does our over earnings. Even translate into are Jimmy, Yes. revenue

have a So do you question? follow-up

Jamminder Bhullar

Yes.

repricing done couple on years XXXX? benefits, is we until Or that you've Just And ongoing But look in an we book, for the Amy your should that's process if dental, now. I completely? dental won't normalize think, employee process? been margins, of stand-alone on a of assume beyond that

Deanna Strable

can address that? you Amy,

Amy Friedrich

Yes. Yes.

would of I block moving the say those actions So through our now. bulk are right

really and what will is coming the we means half to them through are first see, to continue of flow the some that of through the going that results of be So year. them already some

answer stand-alone question I think look are margins at that we XXXX. bit is a like that comes do dental yes. to point I better And positive entity patterns. to as look XXXX? to your for going production more loss a I the in And look the expect that really is ratio line important if the we to looked from expect see the historical in

back products of sure into make we to sell would put rarely is I any What these alone.

to be function of going So bundle. a again, a these always are

is coverages up we sale average whether up talking products. mentioned We're our three I about opening you're our some in-force, comments. in or think -- over it of bundle, for new

our relationships them. and rely price of how one of any just work on that rare we any terms it's So with in really product

Deanna Strable

there. a And of Yes. Jimmy, couple things

and One is thing disability. SMB has have of of that And rate life results because very the important, advantages guarantee. had really Amy's X-year all seen business business only on is you there's other our positive on bundles, the also is focusing think which then almost in a we've last underwriting builds point, that of I the really

And may the look that of little increase increase they across the so rates. package, bit But dental and into their all as see at from in mute a that we bundle perspective, overall products. a we can we of account, take of all can

and that results feel growth again, we're And continued approaching Specialty out profitable good Benefits. so about great see of how to expect

thank Jimmy. So you,

Operator

question next The Matten from comes from Jack Markets. BMO Capital

Francis Matten

any in changes offsets other is international net you any had were it Kong. know revenue there and markets? guidance. I of the you I pension That those guess your there you all And growth question and to on I at growth adjust things, changed if for first the was there. at the outlook? mentioned two The resegmented in definition all, change I Hong changed throughout know

Deanna Strable

Yes. Yes,

of all, well. be we some FX But we pressure to with as the have aspects of to you more international impacts as can and as forward look think pension there? guidance, ask encaje think that. address Obviously, thanks coverage. for maybe And continues we interacting in forward. give First we we go specific initiating you to as did about Joel I'll some

Joel Pitz

Yes.

So Jack, question. thanks the for

On the pension we what similar front, international had to XXXX. very it's in

revenues currency in was in X% earnings. So basis, what we and growth in had X% on a growth XXXX constant

for the expect drawn FX relatively year-over-year. we to of be all XXXX, going of the It's we're look same. -- what to it's flat down to range, to the going to due forward if fast you is being you at more it's As be why midpoint

to going and expansion margin point within in beyond. expecting be that within there's a business, expansion importantly, that continued In XXX margin XXXX basis and continued there expansion we're XXXX, But was business.

So really feel well growth positioned and that in markets the targeted about prospects good really business. those within

Deanna Strable

follow-up a Jack, do question? have you

Francis Matten

healthy, follow-up you you but a are and just It trends net seems touch going to XXXX. how there And could into continue cash withdrawals the net Yes. elevated. see your if management developing things on impacting pretty I deposits on investment like flows flows. somewhat guess be

Deanna Strable

Kamal ask color to give I'll on that. Yes. some

at and If overall net negative, quarter level cash our for have for the AUM a though improvement, an we you look saw it's enterprise, year. do the flow both significant the still on full even

XXXX. But Kamal thinking to I'll about the specifics some give how we're into there as ask also on drivers we go and that

Kamal Bhatia

net then international color actually Joel business. flow our you look you positive pension actually [indiscernible]. we had also first, at start we in thing million of cash net the and would to what growth. is you Sure. more pension maybe said 'XX, the $XXX I'll had with When One Jack, on addition international piece for cash in give highlight positive I flow

attracting actually very So new mature not in we're but only managing business. well, business the dollars a

would distribution affiliated of back very is from a of for quite came and flows positive look came talk of our about very, I I the we But also almost multiple flows. geographies, very flow valuable for cash from some net us. cash international flow. is quarter, had they Chris say And did at our just increasing. results. turning million lot flows, the which of clients, diversity Management, These channels strong a to when But Investment strong $XXX nonaffiliated

large net to earlier And U.S. highlight, particularly retirement then flows credit. solutions. $X Just in about billion win almost had Deanna win in We mandate institutional and talked were over billion international strong. a $X

really So that strong wins space. in

net cash If clients, $X.X billion year-over-year, is sequentially, we full nonaffiliated almost at of had cash I us. flow for all a XXXX, flow significant our from diversify positive we asset could in look of regional milestone those numbers. as local $X.X you, Day, remind is for see year that And this by billion. and the power I'll global what just at our you laid client management out up Investor channels, we base And

raised, second Deanna is which the that do I see part forward. To what moving

new in are mentioned date. we've think be have earlier business, public XX we added largest sizable actually clients our going milestone historically till on relationships exceeding over to respect only for that our just we we beyond a It's not I real growing target across estate with had fundraise pensions. to the the us world

and who We are and added managers us. asset now have new relationships endowment also investing regional U.S. with now. foreign premier we foundations We've have insurance in Asia companies with

just fund you, I recently in management So that's get last forward, I I market would as and XXXX, also highlight grade actually this bond for year look were highlighted U.S. And on that highlight continues private top-performing a to that side. grow flows. the the the we momentum would active category to the investment thing continue will as

So hopefully, that helped you.

Deanna Strable

the Jack, questions. Thanks, for

Operator

Sandler. from from The John next Barnidge comes question Piper

John Barnidge

here. international on So improvement How the either you do in life focus or in quarter and show the YRT further Hong derisking Kong of kind the business? change see much a perpetual insurance the markets then within

Deanna Strable

Yes.

sizable really business is, was that thing changes first as involved us but would strategic a very deliver our The led financial our in on I review to and know, I great some more in objectives. strategic you our there say position recent put importantly, portfolio, to to

out. we it assess don't growth, have see make to the pivots there. path need driving as But our changes to we or make We where what derisk deliver places sense portfolio where in portfolio, what to makes continuously obviously decisions we will needed, make we'll the laid we just on the

happening highlighted we by in did mention are driven was this And you the that somewhat market. one changes the that regulatory which in that call,

how risk look disciplined at, forward. stay feel think going about we facts specifically bottom perspective, and product so we to again, we're But good then where those portfolio both at exposure. about life we'll And continue obviously, a in from line, our as we

John Barnidge

focus Principal non-exposure? benefits and about of nonprofit my customer. to follow-up understand completely the your retirement you medium-sized much in contracting your exposure can small, And businesses? You the But government government have or business, within talk primary how question, serving or

Deanna Strable

and today, Chris, we from have if get maybe just I'll to a to don't here answers we Chris ask the retirement back sure address that. make Amy And we'll But quickly Yes. anything you. perspective?

Christopher Littlefield

are governmental in marketplace, say the a we player would I that not large John.

our composition business. of exact the have don't I So

we details the of not follow We but a have end as the more in on with some, governmental composition. up very But large with, we're business. could known the player

Amy Friedrich

Amy. are That's even one Benefits I in. agree Yes. not and in take comment, just build Specialty been some with I'll to and for marketplace. I it our This growth. say would operate business where chime is historical step don't align might And we just seen a Chris's the government with further player a process they we that technology. different variables set we've not pricing us our of of how clearly machine tend with and the and

market. player just we're so that a in And simply not

Deanna Strable

Thanks, questions. those for John,

Operator

The from comes Kamath Suneet from last question Jefferies.

Suneet Kamath

you're Deanna, M&A in I that seat. wanted to about now ask the

Just on deal a way, CEO. we we'd it to some and get be the want big deals, other But out, now focus Your you what as thing come XX% were kind is it big of kind and small along, look X% know how rather lapses? is advantage have you're maybe if Or your kind something pencils already interested? do of similar that of say, of to to sort these allocation if we've we'd the of capital IRT, we sense just to to done at the deals. where suggests and take

Deanna Strable

I'll pretty strategy start -- I as forward. Suneet, our obviously, with around M&A, Yes, involved in was integral

any we our What talked Investor changes within about across them, areas be focused think of significant they the Day. did there. all businesses. would total really XX don't the And allocation, say X we our about would expect at if M&A that allocation would is opportunities is inquisitive that I growth you we are small. So to around I Yes, capital

we have to other have thing you marry low ratio. that is a leverage very The with

that lean which our is capabilities fit, overall thresholds, into if platform we and have bar forward. financial three is all the the how about think our growth fit met I'd as across something so come we to And fit say cultural and did M&A going of it high into strategic fit, sense. made that they if But also

will I ultimately, reach to inquisitive our results. our growth come We can at need I don't started, is on to financial you kind that continue where activity look organic if And we'll engines M&A make but feel we would about of to targets, those. those disciplined, sense. back additions deliver be obviously

Suneet Kamath

thoughts Any asset then for for rolling target quick are a it. in-plan products around Got And of managers funds these out? lot real date just annuity that Chris.

Christopher Littlefield

Thanks, Suneet. Yes.

So we think promising. they're

solution, think fund the a quarters, sort prior target of opportunity mentioned account probably increase package solution probably on I've to the some them I think I penetration. best date to as or in managed

on we're So shelf. the sitting

of amount participant utilization an deposits change tremendous designs So will and lineup, as we're the over But more it that bit. and not those change understanding people more and still the option planned I next having enhance plan and yet. open it little just sponsors do start are to in a seeing as think improve and as

activity. of lot a So

the do won't this outlive. savings in us the X guaranteed of they plan think that to convert how think see you'll last lot frontier them activity about a of income have the think Americans accumulated XXX(k) course I over from I year that if retirement it's their address, into you others for that that And sort you and really next of in or do space.

it's I here, in And early but promise utilization. terms think do so days that there's real some of still

Deanna Strable

for your Suneet, questions. Thanks,

Operator

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

Deanna Strable

you. Thank Yes.

I strong all and on by our a that strong success was delivered As continue we close quarter. well to We year, reiterate objectives, this we're today's call, enterprise very capped want to off in XXXX XXXX. of positioned a

out decisions attractive at the on with your the evolving laid future. combined and of the of to our Principal. look forward many to guide that Day, this connecting you do, We a in us access executing Have our today, we for you we and approach everything We your positions every well most your day. to as Investor in questions great time landscape. Thank strategy Our ability focused for priorities those the with support remain of and day disciplined the parts for we continued market, grow near future. navigate

Operator

call. conference today's concludes This you. Thank

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

Principal Financial (PFG) 7 Feb 252024 Q4 Earnings call transcript