Principal Posts Strong Life Sales: Earnings

Principal Financial Inc. today became the first direct writer of life insurance to post its earnings for the fourth quarter of 2019.

"Fees and other revenues" helped the Des Moines, Iowa-based company increase earnings, even though premium revenue was soft.

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Principal (Nasdaq:PFG) is reporting $315 million in net income for the quarter on $4 billion in revenue, compared with $236 million in net income on $3.8 billion in revenue for the fourth quarter of 2018.

Revenue from premiums and other considerations fell to $1.93 billion, from $1.98 billion.

The retirement and income solutions spread unit, which sells annuities, is reporting $92 million in pre-tax operating earnings for the latest quarter on $142 million in revenue, compared with $95 million in pre-tax operating earnings on $146 million in revenue for the year-earlier quarter.

Sales, and spending on sales commissions were down, and experience losses were higher, Principal says.

The individual life unit is reporting $46 million in pre-tax operating earnings on $281 million in revenue, up from $38 million in pre-tax operating earnings on $269 million in revenue.

Principal says the individual life claims were high in the fourth quarter of 2018 but returned to normal in the fourth quarter of 2019.

The specialty benefits unit, which sells products such as disability insurance, is reporting $98 million in pre-tax operating earnings on $595 million in revenue, up from $75 million in pre-tax operating earnings on $559 million in revenue.

Sales, retention, and growth of case sizes were all strong, and group life and group disability claims were down, Principal says.

Reinsurance Group of America Inc. (NYSE:RGA)

In other earnings news, Reinsurance Group of America Inc. — a reinsurer — says it found U.S. individual life mortality was worse than it had expected.

The Chesterfield, Missouri-based company is reporting $235 million for the fourth quarter of 2019 on $3.8 billion in revenue, up from $110 million on $3.3 billion for the fourth quarter of 2018.

Net income was higher partly because premiums were up, and partly because the company gained $35 million on investments in instruments other than fixed maturity securities. In the year-earlier quarter, the company reported a $125 million loss for that item.

The company's U.S. and Latin America traditional reinsurance business is reporting $85 million in pre-tax income for the latest quarter on $1.8 billion in revenue, compared with $95 million in pre-tax income on $1.7 billion in revenue for the year-earlier quarter.

At the U.S. and Latin America traditional reinsurance business, "results reflected above-average variable investment income and favorable group experience, offset by adverse individual mortality experience driven by large claims," RGA says.

The company's U.S. and Latin America asset-intensive financial solutions unit is reporting $78 million in pre-tax income on $310 million in revenue, compared with a $6 million pre-tax loss on $146 million in revenue for the year-earlier quarter.

At the asset-intensive solutions unit, the value of deferred fixed annuities reinsured increased to $11 billion, from $8.5 billion.

The value of equity-indexed annuities reinsured fell to $3.6 billion, from $3.8 billion.

The value of variable annuities reinsured increased to $3 billion, from $2.4 billion, with much of the gain coming from guaranteed minimum death benefit riders.

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