“The Principal Financial Group ended a strong 2012 with very strong fourth quarter earnings. The continued strength of our underlying business fundamentals and successful execution of our strategy gives us momentum going into 2013,” said Larry D. Zimpleman, chairman, president and chief executive officer. “We significantly advanced our international strategy with two acquisitions in Latin America last year. Closing on Cuprum will further solidify our position as a global investment management leader in 2013 and beyond.”
Added Terry Lillis, senior vice president and chief financial officer, “Our very strong earnings in the fourth quarter and the ability of our fee-based business model to continuously generate deployable capital gives us continued financial flexibility, as demonstrated by our strong capital deployment in 2012 and today’s announcement of a 10 percent increase in our quarterly common stock dividend. Full-year book value per share (excluding other comprehensive income) increased 7 percent over full year 2011 and our investment portfolio is performing very well.”
Key Highlights Fourth Quarter
- Retirement and Investor Services Accumulation sales were up 17 percent in the fourth quarter compared to the year ago quarter. This includes $3.3 billion for Full Service Accumulation, $4.2 billion for Principal Funds and $448 million for Individual Annuities. Net cash flows of $1.6 billion for Full Service Accumulation and $1.5 billion for Principal Funds.
- Principal Global Investors had record unaffiliated assets under management (AUM) of $98.2 billion.
- Principal International reported net cash flows of $2.0 billion and record AUM of $69.3 billion (excluding $11.3 billion of AUM in our asset management joint venture in China, which is not included in reported assets under management).
- Individual Life sales of $84.8 million, up 56 percent over fourth quarter 2011.
- Specialty Benefits premium and fee growth of 5 percent over fourth quarter 2011 and favorable incurred loss ratio of 64.3 percent.
Full Year Results
- Record AUM of $403.0 billion, up 20 percent compared to year-end 2011.
- Total company net cash flows of $29.8 billion.
- Strong capital position with an estimated risk based capital ratio of 415-420 percent at year end and $2.5 billion of excess capital. 3
- Book value per share, excluding AOCI 4 was $29.20, up 7 percent over 2011.
- Four quarterly dividends to common stockholders in 2012 totaling $0.78 cents per share, up 11 percent over 2011.
- Repurchased 9.9 million shares of common stock in 2012 at an average price of $25.92.
Net income available to common stockholders of $218.6 million for
fourth quarter 2012, up 47 percent compared to fourth quarter 2011
Net realized capital losses of $0.5 million, which includes:
- $15.0 million of net losses, down 48 percent from a year ago quarter, related to sales and permanent impairments of fixed maturity securities. This includes $11.1 million of losses on commercial mortgage backed securities, which is down 51 percent from $22.6 million loss in fourth quarter 2011.
- Other after-tax adjustment loss of $24.8 million, which reflects expenses incurred extinguishing $400 million of long-term debt that was scheduled to mature in 2014.
- Net realized capital losses of $0.5 million, which includes:
- A net gain of $141.2 million as a result of Catalyst Health Solutions, Inc.’s merger into a subsidiary of SXC Health Solutions Corp. (SXC), and our subsequent sale of our interest in SXC (now known as Catamaran Corporation);
$76.8 million of net losses, a 36 percent improvement over 2011
related to sales and permanent impairments of fixed maturity
- $60.1 million of losses on commercial mortgage backed securities, which is down 34 percent from $90.5 million loss in 2011.
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