Principal Financial Group posted a net loss of $220 million for the third quarter, primarily due to the impact of exited businesses, according to the company’s latest earnings statement.
The loss contrasts with a net income of $1.25 billion during the same period last year. The company cited a $639.1 million loss associated with businesses it has exited.
In a supplemental report, Principal noted that it had exited its group medical and long-term care insurance segments, reporting these operations under the corporate segment. The company has been restructuring its business portfolio, which has influenced its recent financial results.
Despite the quarterly loss, Principal reported growth in its assets under administration, which increased by 13% year-over-year to reach $1.69 trillion. Assets under management also rose by 14% during the same period, totaling $740.6 billion.
Dan Houston (pictured above), Principal’s chairman and CEO, attributed the growth to strong returns and positive market performance across various asset classes, including equity, fixed-income, and real estate.
"This increase was mainly driven by robust returns and positive market performance across equity, fixed-income, and real estate," Houston said during the earnings call.
The company also reported its first positive return on real estate investments since recent market volatility, which Houston described as a sign of recovery.
"There's a recovery going on. It's an incredibly resilient asset class," Houston said, noting that many properties have been reconfigured to adapt to changing market demands.
Principal’s financial strategy includes measures to insulate the company from potential interest rate fluctuations.
President and COO Deanna Strable highlighted a $25 billion reinsurance deal with Sixth Street’s Talcott Resolution, which included $16 billion in reinsured retail fixed annuities. Strable noted that this transaction has reduced Principal's sensitivity to short-term interest rate changes.
"There's very little impact from interest rates, and that sensitivity to interest rates went down significantly after our transaction with the fixed annuities business," Strable said. "Long-term we like higher rates, but short-term that actually hurts us, both from an earnings perspective and because of the impact on fixed-income values."
Earlier this year, Principal also reported a net loss of $871.7 million for the fourth quarter of 2023, compared to a $16.2 million loss during the same period a year earlier. The company attributed this primarily to its strategic exits from certain business lines.
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