Principal Financial Misses Q1 Earnings, Unveils 7% Dividend Hike

Principal Financial Group, Inc.’s PFG first-quarter 2025 operating net income of $1.81 per share missed the Zacks Consensus Estimate by 2.1%. Also, the bottom line increased 10% year over year. 

Principal Financial witnessed higher revenues and operating earnings across most of the segments and improved assets under management (AUM), offset by higher expenses. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Behind the Headlines

Operating revenues increased 5.5% year over year to $4 billion due to increased premiums and other considerations, fees and other revenues and net investment income. The metric beat the Zacks Consensus Estimate by 0.9%. 

Total expenses increased 7% year over year to $3.7 billion due to higher benefits, claims and settlement expenses, liability for future policy benefits remeasurement loss and market risk benefit remeasurement loss. The figure was lower than our estimate of $4.1 billion.

Principal Financial Group, Inc. Price, Consensus and EPS Surprise

Principal Financial Group, Inc. price-consensus-eps-surprise-chart | Principal Financial Group, Inc. Quote

Principal Financial’s AUM as of March 31, 2025, amounted to $717.9 billion, up 1.3% year over year.

Segment Update

Retirement and Income Solution: Revenues increased 7.4% year over year to $2 million primarily due to higher premiums and other considerations, fees and other revenues and net investment income. The figure matched our estimate.

Pre-tax operating earnings increased 8% year over year to $283.7 million, primarily due to higher net revenues and margin expansion while investing in the business. The figure was lower than our estimate of $315.1 million.

Investment Management: Revenues increased 4.2% year over year to $453.7 million in the quarter due to higher fees and other revenues and net investment income. The figure was lower than our estimate of $485.9 million.

Pre-tax operating earnings decreased 5% year over year to $116.3 million, primarily due to elevated seasonal expenses, partially offset by higher operating revenues less pass-through expenses. The figure was lower than our estimate of $155.9 million.

International Pension: Revenues rose 6.2% year over year to $237.8 million, owing to higher net investment income. The figure was higher than our estimate of $227.8 million.

Pre-Tax operating earnings of $71.2 million climbed 10% year over year, primarily due to margin expansion, partially offset by foreign currency headwinds. The metric beat our estimate of $63.1 million.

Specialty Benefits: Revenues increased 4.2% year over year to $883.9 million, owing to higher premiums and other considerations and net investment income. The metric missed our estimate of $934 million.

Pre-tax operating earnings of $106 million jumped 4% year over year. The rise was due to growth in the business, higher net investment income, and more favorable underwriting experience. The metric missed our estimate of $153.6 million.

Life Insurance: Revenues decreased 2.2% year over year to $330.5 million due to lower premiums and other considerations and net investment income. The metric beat our estimate of $291 million.

Pre-tax operating earnings of $13.3 million rose 36% year over year, as a favorable change in a GAAP-only regulatory closed block dividend adjustment was partially offset by higher mortality experience. The metric missed our estimate of $27.3 million.

Corporate: Pre-tax operating losses of $105.6 million were wider than the loss of $88.9 million incurred a year ago. The figure was wider than our estimate of a loss of $71.5 million.

Financial Update

As of March 31, 2025, cash and cash equivalents were $3.9 billion, down 7% year over year.

At the end of the first quarter, long-term debt was $4.3 billion, up 10% year over year.

As of March 31, 2025, book value per share (excluding cumulative change in fair value of funds withheld, embedded derivative and AOCI, other than foreign currency translation adjustment) was $53.70, down 0.1% year over year.

Dividend and Share Repurchase Update

Principal Financial returned $369 million of capital to shareholders, which included $200 million of share repurchases and $169 million of dividends.

The board of directors raised second-quarter dividend by 7% to 76 cents. The dividend will be paid out on June 27, 2025, to shareholders of record as of June 2, 2025. The dividend increased 1 cent over the first quarter of 2025 and rose 9% on a trailing 12-month basis.

Zacks Rank

Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurance Stocks

Selective Insurance Group, Inc. SIGI reported first-quarter 2025 operating income of $1.76 per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line increased 32.3% from the year-ago quarter. Total revenues of $1.3 billion increased 10% from the year-ago quarter’s figure. The top line missed the Zacks Consensus Estimate by 0.9%.

On a year-over-year basis, net premiums written increased 7% to $1.2 billion. Average renewal pure price expanded 220 basis points year over year to 10.3%. The figure matched our estimate. Net investment income increased 12% year over year to $95.6 million. After-tax net underwriting income was $36.1 million, which more than doubled year over year. Net catastrophe losses of $43.4 million were narrower than the year-ago loss of $55.2 million. 

Marsh & McLennan Companies, Inc. MMC reported first-quarter 2025 adjusted earnings per share of $3.06, which surpassed the Zacks Consensus Estimate by 1.3%. The bottom line advanced 5% year over year.  Consolidated revenues of $7.1 billion improved 9% year over year. The figure rose 4% on an underlying basis. However, the top line missed the consensus mark by 0.1%. Total operating expenses escalated 11.2% year over year to $5.1 billion, higher than our model estimate of $4.8 billion. 

Expenses of the Risk and Insurance Services segment escalated 16.3% year over year, while the Consulting segment’s expenses increased 4.3% year over year.  Marsh & McLennan’s adjusted operating income improved 8% year over year to $2.2 billion but fell slightly short of our estimate of $2.3 billion. 

Chubb Limited CB reported first-quarter 2025 core operating income of $5.68 per share, which outpaced the Zacks Consensus Estimate by 12.8%. However, the bottom line decreased 30.1% year over year.  Net premiums written improved 3.5% year over year to $12.6 billion in the quarter. Our estimate was $13.2 billion, while the Zacks Consensus Estimate was pegged at $13 billion.

Net investment income was $1.5 billion, up 12.2% year over year. The Zacks Consensus Estimate and our estimate for the same were both pegged at $1.6 billion. Property and casualty (P&C) underwriting income was $441 million, down 68.5% year over year. Global P&C underwriting income, excluding Agriculture, was $387 million, down 71.2%. Chubb Limited incurred pre-tax net catastrophe losses of $1.64 billion, wider than the year-ago quarter’s loss of $435 million. The losses include $1.47 billion from the California wildfires. 

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