Principal Financial Report Third Quarter Loss of $220 Million | Insurance Business American Insurance News Principal Financial Report Third Quarter Loss of $220 Million |
Losses increase due to withdrawal from medical and nursing care business
insurance news
Written by Kenneth Arauro
Principal Financial Group posted a net loss of $220 million in the third quarter, primarily due to the impact of exited businesses, according to the company’s latest financial report.
This loss compares with net income of $1.25 billion in the same period last year. The company cited a loss of $639.1 million related to the exited business.
Principal said in a supplementary report that it had exited the group’s health and long-term care insurance divisions and reported these businesses as its corporate division. The company has been restructuring its business portfolio, which has had an impact on recent results.
Despite the quarterly loss, Principal reported an increase in assets under management, reaching $1.69 trillion, up 13% year over year. Assets under management also increased by 14% over the same period, totaling $740.6 billion.
Principal Chairman and CEO Dan Huston (pictured above) attributes the growth to strong returns and strong market performance across a variety of asset classes, including equities, fixed income and real estate. said.
“This increase was driven primarily by strong returns and strong market performance across equities, fixed income and real estate,” Houston said on the earnings call.
The company also reported positive real estate investment returns for the first time since the recent market volatility, which Houston described as a sign of recovery.
“The recovery is underway. It’s an incredibly resilient asset class,” Houston said, noting that many properties are being reconfigured to adapt to changing market demands.
A principal’s financial strategy includes measures to protect the company from potential interest rate fluctuations.
Deanna Struble, president and chief operating officer, highlighted Sixth Street’s $25 billion reinsurance agreement with Talcott Resolution, which includes $16 billion in personal Fixed annuity reinsurance was included. Struble noted that the transaction reduced the principal’s sensitivity to changes in short-term interest rates.
“We have very little impact from interest rates, and after the transaction with the fixed annuity business, we have become much less sensitive to interest rates,” Struble said. “In the long term, we want interest rates to rise, but in the short term it’s actually negative, both from an earnings perspective and from the impact on bond values.”
Earlier this year, Principal also reported a net loss of $871.7 million for the fourth quarter of 2023. This compares to a loss of $16.2 million in the year-ago period. The company attributes this primarily to strategic withdrawal from certain business areas.
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