Principal Financial ((PFG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Principal Financial Group showcased a positive sentiment with a focus on strong financial performance throughout 2024. The company demonstrated impressive earnings growth and strategic successes in the retirement ecosystem, alongside significant capital returns to shareholders. While facing challenges such as foreign exchange impacts, a decline in assets under management (AUM), and competitive pressures in the dental market, Principal’s achievements and strategic positioning were highlighted as outweighing these challenges.
Strong Earnings Growth
Principal Financial Group reported robust earnings growth, with adjusted non-GAAP earnings per share increasing by 11% for the year 2024. Notably, the fourth quarter alone saw a 16% rise in earnings, underscoring the company’s financial strength and operational efficiency.
Capital Return to Shareholders
The company returned $1.7 billion of capital to its shareholders in 2024. This included $1 billion in share repurchases, along with a significant 10% increase in the annual common stock dividend, reflecting the company’s commitment to enhancing shareholder value.
Retirement Ecosystem Strategy Success
Principal successfully expanded its suite of target date offerings and secured an off-platform retirement investment mandate worth nearly $1 billion, highlighting the effectiveness of its strategies in the retirement ecosystem.
Asset Management Growth
The company’s largest real estate fund raised over $3.6 billion, with new institutional clients comprising 36% of the fund’s total commitments, indicating strong growth and interest in Principal’s asset management capabilities.
Recognition and Awards
Principal was honored as one of America’s Most Just Companies, ranking #11 on the 2025 Just 100 list, and was recognized as a Best Place to Work in Money Management for the 13th consecutive year, affirming its esteemed reputation in the industry.
Sequential Decline in AUM
Despite strong performance in various areas, Principal saw a 4% sequential decline in total company-managed AUM, ending 2024 at $712 billion. This was primarily due to foreign exchange impacts and net cash outflows.
International Pension FX Impact
The earnings call highlighted that international pensions’ pretax operating earnings remained relatively flat compared to 2023, affected by a $26 million foreign exchange impact.
Pressure on RIS and VA Flows
Challenges were noted in the form of net outflows from the VA traditional block and pressures on Retirement and Income Solutions (RIS) flows, primarily due to participant withdrawals and contract lapses.
Dental Market Competition
Competitive pressures in the dental market led to repricing actions, impacting sales in the second half of the year, emphasizing the need for strategic adjustments in this segment.
Forward-Looking Guidance
Looking ahead, Principal Financial Group has set ambitious targets for 2025, aiming for earnings per share growth between 9% and 12% and a free capital flow conversion target of 75% to 85%. The company also seeks to expand its return on equity (ROE) towards the 14% to 16% range, supported by a new $1.5 billion share repurchase authorization. With a strategic focus on retirement ecosystems, small to midsized businesses, and global asset management, Principal is well-positioned to meet its financial goals despite the ongoing foreign currency challenges.
In conclusion, Principal Financial Group’s earnings call reflected a strong performance in 2024, with notable achievements in earnings growth and strategic initiatives. Despite facing certain market challenges, the company’s forward-looking guidance and strategic priorities suggest a positive outlook for 2025, reinforcing its commitment to shareholder value and financial excellence.
