PRINCIPAL FINANCIAL GROUP INC, 10-Q filed on 5/1/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2013
Apr. 24, 2013
Document and Entity Information
 
 
Entity Registrant Name
PRINCIPAL FINANCIAL GROUP INC 
 
Entity Central Index Key
0001126328 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2013 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
293,420,211 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Statements of Financial Position (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Dec. 31, 2011
Assets
 
 
 
 
Fixed maturities, available-for-sale (2013 and 2012 include $220.3 million and $194.6 million related to consolidated variable interest entities)
$ 51,084.1 
$ 50,939.3 
 
 
Fixed maturities, trading (2013 and 2012 both include $110.4 million related to consolidated variable interest entities)
628.9 
626.7 
 
 
Equity securities, available-for-sale
147.0 
136.5 
 
 
Equity securities, trading
732.2 
252.8 
 
 
Mortgage loans
11,577.9 
11,519.7 
 
 
Real estate
1,202.0 
1,180.3 
 
 
Policy loans
866.5 
864.9 
 
 
Other investments (2013 and 2012 include $77.2 million and $80.3 million related to consolidated variable interest entities and $110.9 million and $113.9 million measured at fair value under the fair value option)
3,187.2 
3,291.1 
 
 
Total investments
69,425.8 
68,811.3 
 
 
Cash and cash equivalents
1,661.2 
4,177.2 
1,651.9 
2,833.9 
Accrued investment income
584.5 
584.4 
 
 
Premiums due and other receivables
1,175.2 
1,084.4 
 
 
Deferred acquisition costs
2,715.5 
2,590.0 
 
 
Property and equipment
472.6 
464.2 
 
 
Goodwill
1,197.4 
543.4 
 
482.3 
Other intangibles
1,590.3 
914.7 
 
 
Separate account assets (2013 includes $33,892.2 million related to consolidated variable interest entities)
120,906.1 
81,653.8 
 
 
Other assets
1,034.3 
1,006.8 
 
 
Total assets
200,762.9 
161,830.2 
 
 
Liabilities
 
 
 
 
Contractholder funds
36,701.6 
37,786.5 
 
 
Future policy benefits and claims
22,689.5 
22,436.2 
 
 
Other policyholder funds
811.2 
716.4 
 
 
Short-term debt
46.5 
40.8 
 
 
Long-term debt
2,790.5 
2,671.3 
 
 
Income taxes currently payable
9.8 
15.3 
 
 
Deferred income taxes
791.4 
600.0 
 
 
Separate account liabilities (2013 includes $33,892.2 million related to consolidated variable interest entities)
120,906.1 
81,653.8 
 
 
Other liabilities (2013 and 2012 include $318.3 million and $302.9 million related to consolidated variable interest entities, of which $96.5 million and $85.0 million are measured at fair value under the fair value option)
6,130.8 
6,146.1 
 
 
Total liabilities
190,877.4 
152,066.4 
 
 
Redeemable noncontrolling interest
58.9 
60.4 
23.1 
22.2 
Stockholders' equity
 
 
 
 
Common stock, par value $.01 per share - 2,500.0 million shares authorized, 455.9 million and 453.5 million shares issued, and 293.3 million and 293.8 million shares outstanding in 2013 and 2012
4.6 
4.5 
 
 
Additional paid-in capital
9,771.5 
9,730.9 
 
 
Retained earnings (accumulated deficit)
4,971.7 
4,862.0 
 
 
Accumulated other comprehensive income (loss)
621.0 
640.3 
 
 
Treasury stock, at cost (162.6 million and 159.7 million shares in 2013 and 2012)
(5,645.3)
(5,554.4)
 
 
Total stockholders' equity attributable to Principal Financial Group, Inc.
9,723.6 
9,683.4 
 
 
Noncontrolling interest
103.0 
20.0 
 
 
Total stockholders' equity
9,826.6 
9,703.4 
9,660.0 
9,306.2 
Total liabilities and stockholders' equity
200,762.9 
161,830.2 
 
 
Series A
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock, value
   
   
 
 
Series B
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock, value
$ 0.1 
$ 0.1 
 
 
Consolidated Statements of Financial Position (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Fixed maturities, available-for-sale
$ 51,084.1 
$ 50,939.3 
Fixed maturities, trading
628.9 
626.7 
Other investments
3,187.2 
3,291.1 
Other investments measured at fair value under fair value option
110.9 
113.9 
Separate account assets
120,906.1 
81,653.8 
Separate account liabilities
120,906.1 
81,653.8 
Other liabilities
6,130.8 
6,146.1 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized (in shares)
2,500.0 
2,500.0 
Common stock, issued (in shares)
455.9 
453.5 
Common stock, outstanding (in shares)
293.3 
293.8 
Treasury stock (in shares)
162.6 
159.7 
Series A
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, liquidation preference (in dollars per share)
$ 100 
$ 100 
Preferred stock, authorized (in shares)
3.0 
3.0 
Preferred stock, issued (in shares)
3.0 
3.0 
Preferred stock, outstanding (in shares)
3.0 
3.0 
Series B
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, liquidation preference (in dollars per share)
$ 25 
$ 25 
Preferred stock, authorized (in shares)
10.0 
10.0 
Preferred stock, issued (in shares)
10.0 
10.0 
Preferred stock, outstanding (in shares)
10.0 
10.0 
Aggregate consolidated variable interest entities
 
 
Fixed maturities, available-for-sale
220.3 
194.6 
Fixed maturities, trading
110.4 
110.4 
Other investments
77.2 
80.3 
Separate account assets
33,892.2 
 
Separate account liabilities
33,892.2 
 
Other liabilities
318.3 
302.9 
Other liabilities measured at fair value under fair value option
$ 96.5 
$ 85.0 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Revenues
 
 
Premiums and other considerations
$ 694.7 
$ 679.8 
Fees and other revenues
733.6 
598.0 
Net investment income (loss)
789.3 
824.8 
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities
(26.4)
22.1 
Total other-than-temporary impairment losses on available-for-sale securities
(44.7)
(33.7)
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income
20.2 
4.9 
Net impairment losses on available-for-sale securities
(24.5)
(28.8)
Net realized capital gains (losses)
(50.9)
(6.7)
Total revenues
2,166.7 
2,095.9 
Expenses
 
 
Benefits, claims and settlement expenses
1,094.5 
1,212.5 
Dividends to policyholders
48.3 
50.3 
Operating expenses
795.7 
555.1 
Total expenses
1,938.5 
1,817.9 
Income (loss) before income taxes
228.2 
278.0 
Income taxes (benefits)
38.2 
56.7 
Net income (loss)
190.0 
221.3 
Net income (loss) attributable to noncontrolling interest
3.5 
9.2 
Net income (loss) attributable to Principal Financial Group, Inc.
186.5 
212.1 
Preferred stock dividends
8.2 
8.2 
Net income (loss) available to common stockholders
$ 178.3 
$ 203.9 
Earnings per common share
 
 
Basic earnings per common share (in dollars per share)
$ 0.61 
$ 0.68 
Diluted earnings per common share (in dollars per share)
$ 0.61 
$ 0.68 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Consolidated Statements of Comprehensive Income
 
 
Net income (loss)
$ 190.0 
$ 221.3 
Other comprehensive income (loss), net:
 
 
Net unrealized gains (losses) on available-for-sale securities
(99.3)
161.3 
Noncredit component of impairment losses on fixed maturities, available-for-sale
(11.3)
(0.9)
Net unrealized gains (losses) on derivative instruments
22.0 
(3.5)
Foreign currency translation adjustment
54.4 
59.6 
Net unrecognized postretirement benefit obligation
13.8 
8.7 
Other comprehensive income (loss)
(20.4)
225.2 
Comprehensive income (loss)
169.6 
446.5 
Comprehensive income (loss) attributable to noncontrolling interest
2.4 
10.0 
Comprehensive income (loss) attributable to Principal Financial Group, Inc.
$ 167.2 
$ 436.5 
Consolidated Statements of Stockholders' Equity (USD $)
In Millions, unless otherwise specified
Total
Common stock
Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive income (loss)
Treasury stock
Noncontrolling interest
Series A
Preferred stock
Series B
Preferred stock
Balances at Dec. 31, 2011
$ 9,306.2 
$ 4.5 
$ 9,634.7 
$ 4,323.4 
$ 271.4 
$ (5,281.7)
$ 353.8 
$ 0 
$ 0.1 
Increase (decrease) in stockholders' equity
 
 
 
 
 
 
 
 
 
Common stock issued
9.1 
 
9.1 
 
 
 
 
 
 
Stock-based compensation and additional related tax benefits
24.8 
 
25.8 
(1.0)
 
 
 
 
 
Treasury stock acquired, common
(64.2)
 
 
 
 
(64.2)
 
 
 
Dividends to common stockholders
(54.3)
 
 
(54.3)
 
 
 
 
 
Dividends to preferred stockholders
(8.2)
 
 
(8.2)
 
 
 
 
 
Distributions to noncontrolling interest
(3.2)
 
 
 
 
 
(3.2)
 
 
Contributions from noncontrolling interest
4.2 
 
 
 
 
 
4.2 
 
 
Net income (loss) (excludes $0.1 million and $0.2 million attributable to redeemable noncontrolling interest in 2013 and 2012)
221.1 
 
 
212.1 
 
 
9.0 
 
 
Other comprehensive income (loss) (excludes $(1.0) million and $0.7 million attributable to redeemable noncontrolling interest in 2013 and 2012)
224.5 
 
 
 
224.4 
 
0.1 
 
 
Balances at Mar. 31, 2012
9,660.0 
4.5 
9,669.6 
4,472.0 
495.8 
(5,345.9)
363.9 
0.1 
Balances at Dec. 31, 2012
9,703.4 
4.5 
9,730.9 
4,862.0 
640.3 
(5,554.4)
20.0 
0.1 
Increase (decrease) in stockholders' equity
 
 
 
 
 
 
 
 
 
Common stock issued
20.3 
0.1 
20.2 
 
 
 
 
 
 
Stock-based compensation and additional related tax benefits
19.4 
 
20.4 
(1.0)
 
 
 
 
 
Treasury stock acquired, common
(90.9)
 
 
 
 
(90.9)
 
 
 
Dividends to common stockholders
(67.6)
 
 
(67.6)
 
 
 
 
 
Dividends to preferred stockholders
(8.2)
 
 
(8.2)
 
 
 
 
 
Distributions to noncontrolling interest
(3.6)
 
 
 
 
 
(3.6)
 
 
Contributions from noncontrolling interest
113.9 
 
 
 
 
 
113.9 
 
 
Purchase of subsidiary shares from noncontrolling interest
(30.6)
 
 
 
 
 
(30.6)
 
 
Net income (loss) (excludes $0.1 million and $0.2 million attributable to redeemable noncontrolling interest in 2013 and 2012)
189.9 
 
 
186.5 
 
 
3.4 
 
 
Other comprehensive income (loss) (excludes $(1.0) million and $0.7 million attributable to redeemable noncontrolling interest in 2013 and 2012)
(19.4)
 
 
 
(19.3)
 
(0.1)
 
 
Balances at Mar. 31, 2013
$ 9,826.6 
$ 4.6 
$ 9,771.5 
$ 4,971.7 
$ 621.0 
$ (5,645.3)
$ 103.0 
$ 0 
$ 0.1 
Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Consolidated Statements of Stockholders' Equity
 
 
Net income (loss) attributable to redeemable noncontrolling interest
$ 0.1 
$ 0.2 
Other comprehensive income (loss) attributable to redeemable noncontrolling interest
$ (1.0)
$ 0.7 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Operating activities
 
 
Net income (loss)
$ 190.0 
$ 221.3 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Amortization of deferred acquisition costs
55.6 
(129.3)
Additions to deferred acquisition costs
(124.2)
(99.6)
Accrued investment income
(0.1)
(7.3)
Net cash flows for trading securities
(122.1)
7.0 
Premiums due and other receivables
8.7 
97.3 
Contractholder and policyholder liabilities and dividends
133.1 
521.9 
Current and deferred income taxes (benefits)
136.5 
(32.6)
Net realized capital (gains) losses
50.9 
6.7 
Depreciation and amortization expense
34.9 
32.8 
Mortgage loans held for sale, acquired or originated
 
(22.0)
Mortgage loans held for sale, sold or repaid, net of gain
 
24.0 
Real estate acquired through operating activities
(16.7)
(2.9)
Real estate sold through operating activities
10.2 
1.2 
Stock-based compensation
19.4 
25.1 
Other
219.7 
258.1 
Net adjustments
405.9 
680.4 
Net cash provided by (used in) operating activities
595.9 
901.7 
Investing activities
 
 
Available-for-sale securities: Purchases
(2,447.1)
(2,060.5)
Available-for-sale securities: Sales
503.1 
428.5 
Available-for-sale securities: Maturities
1,790.9 
1,612.1 
Mortgage loans acquired or originated
(610.9)
(919.6)
Mortgage loans sold or repaid
555.8 
361.4 
Real estate acquired
(23.4)
(21.3)
Net (purchases) sales of property and equipment
6.7 
(17.3)
Purchases of interest in subsidiaries, net of cash acquired
(1,268.3)
 
Net change in other investments
(32.2)
(73.8)
Net cash provided by (used in) investing activities
(1,525.4)
(690.5)
Financing activities
 
 
Issuance of common stock
20.3 
9.1 
Acquisition of treasury stock
(90.9)
(64.2)
Proceeds from financing element derivatives
14.3 
20.4 
Payments for financing element derivatives
(12.7)
(16.2)
Excess tax benefits from share-based payment arrangements
3.8 
9.9 
Purchase of subsidiary shares from noncontrolling interest
(30.6)
 
Dividends to common stockholders
(67.6)
(54.3)
Dividends to preferred stockholders
 
(8.2)
Issuance of long-term debt
3.5 
1.0 
Principal repayments of long-term debt
(0.4)
(0.8)
Net proceeds from (repayments of) short-term borrowings
 
(7.5)
Investment contract deposits
1,419.7 
1,618.6 
Investment contract withdrawals
(2,852.0)
(2,885.9)
Net increase (decrease) in banking operation deposits
6.9 
(13.4)
Other
(0.8)
(1.7)
Net cash provided by (used in) financing activities
(1,586.5)
(1,393.2)
Net increase (decrease) in cash and cash equivalents
(2,516.0)
(1,182.0)
Cash and cash equivalents at beginning of period
4,177.2 
2,833.9 
Cash and cash equivalents at end of period
$ 1,661.2 
$ 1,651.9 
Nature of Operations and Significant Accounting Policies
Nature of Operations and Significant Accounting Policies

1. Nature of Operations and Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements of Principal Financial Group, Inc. (“PFG”), its majority-owned subsidiaries and its consolidated variable interest entities (“VIEs”), have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2013, are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. These interim unaudited consolidated financial statements should be read in conjunction with our annual audited financial statements as of December 31, 2012, included in our Form 10-K for the year ended December 31, 2012, filed with the United States Securities and Exchange Commission (“SEC”). The accompanying consolidated statement of financial position as of December 31, 2012, has been derived from the audited consolidated statement of financial position but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

 

Reclassifications have been made to prior period financial statements to conform to the March 31, 2013, presentation.

 

Revisions of Previously Issued Financial Statements

 

In conjunction with our first quarter 2013 acquisition of AFP Cuprum S.A. (“Cuprum”) in Chile, we re-evaluated the accounting treatment for similar products offered in other foreign jurisdictions, including the AFORE retirement accumulation business in Mexico. As a result of this re-evaluation, we have concluded that the AFORE product, which was previously accounted for under Accounting Standards Codification 944, Financial Services — Insurance, should be accounted for as a long-term service contract, consistent with the accounting requirements for our recently acquired retirement accumulation business in Chile. The revision to the accounting treatment for the AFORE product in Mexico will result in the following changes:

 

(a)                                 Fewer acquisition costs are capitalized. Specifically, we expense as incurred salary and related costs associated with the successful efforts of our proprietary sales force and sales support staff. All direct and incremental costs such as commissions will continue to be deferred.

 

(b)                                 Deferred costs are amortized on a straight line basis over the expected contract life rather than based on estimated gross profits. The amortization method change also impacts purchased customer intangible assets.

 

We have revised our prior period consolidated financial statements accordinglyThese revisions, inclusive of any other potential adjustments, are not material in any prior period based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletin 108, and, as a result, amendment of previously filed periodic reports is not required. Rather, these revisions will be made the next time we file the prior period consolidated financial statements.

 

The following tables quantify the prior period impact of this revision.

 

Principal Financial Group, Inc.

Consolidated Statements of Financial Position

 

 

 

December 31, 2012

 

December 31, 2011

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions)

 

Assets

 

 

 

 

 

 

 

 

 

Fixed maturities, available-for-sale

 

$

50,939.3

 

$

50,939.3

 

$

49,006.7

 

$

49,006.7

 

Fixed maturities, trading

 

626.7

 

626.7

 

971.7

 

971.7

 

Equity securities, available-for-sale

 

136.5

 

136.5

 

77.1

 

77.1

 

Equity securities, trading

 

252.8

 

252.8

 

404.8

 

404.8

 

Mortgage loans

 

11,519.7

 

11,519.7

 

10,727.2

 

10,727.2

 

Real estate

 

1,180.3

 

1,180.3

 

1,092.9

 

1,092.9

 

Policy loans

 

864.9

 

864.9

 

885.1

 

885.1

 

Other investments

 

3,291.1

 

3,291.1

 

2,985.8

 

2,985.8

 

Total investments

 

68,811.3

 

68,811.3

 

66,151.3

 

66,151.3

 

Cash and cash equivalents

 

4,177.2

 

4,177.2

 

2,833.9

 

2,833.9

 

Accrued investment income

 

584.4

 

584.4

 

615.2

 

615.2

 

Premiums due and other receivables

 

1,084.4

 

1,084.4

 

1,196.5

 

1,196.5

 

Deferred acquisition costs

 

2,673.8

 

2,590.0

 

2,428.0

 

2,358.1

 

Property and equipment

 

464.2

 

464.2

 

457.2

 

457.2

 

Goodwill

 

543.4

 

543.4

 

482.3

 

482.3

 

Other intangibles

 

927.2

 

914.7

 

890.6

 

870.3

 

Separate account assets

 

81,653.8

 

81,653.8

 

71,364.4

 

71,364.4

 

Other assets

 

1,006.8

 

1,006.8

 

942.3

 

942.3

 

Total assets

 

$

161,926.5

 

$

161,830.2

 

$

147,361.7

 

$

147,271.5

 

Liabilities

 

 

 

 

 

 

 

 

 

Contractholder funds

 

$

37,786.5

 

$

37,786.5

 

$

37,676.4

 

$

37,676.4

 

Future policy benefits and claims

 

22,436.2

 

22,436.2

 

20,210.4

 

20,210.4

 

Other policyholder funds

 

716.4

 

716.4

 

548.6

 

548.6

 

Short-term debt

 

40.8

 

40.8

 

105.2

 

105.2

 

Long-term debt

 

2,671.3

 

2,671.3

 

1,564.8

 

1,564.8

 

Income taxes currently payable

 

15.3

 

15.3

 

3.1

 

3.1

 

Deferred income taxes

 

626.5

 

600.0

 

208.7

 

184.0

 

Separate account liabilities

 

81,653.8

 

81,653.8

 

71,364.4

 

71,364.4

 

Other liabilities

 

6,146.1

 

6,146.1

 

6,286.2

 

6,286.2

 

Total liabilities

 

152,092.9

 

152,066.4

 

137,967.8

 

137,943.1

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

60.4

 

60.4

 

22.2

 

22.2

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

Series A preferred stock, par value

 

 

 

 

 

Series B preferred stock, par value

 

0.1

 

0.1

 

0.1

 

0.1

 

Common stock, par value

 

4.5

 

4.5

 

4.5

 

4.5

 

Additional paid-in capital

 

9,730.9

 

9,730.9

 

9,634.7

 

9,634.7

 

Retained earnings

 

4,940.2

 

4,862.0

 

4,402.3

 

4,323.4

 

Accumulated other comprehensive income

 

631.9

 

640.3

 

258.0

 

271.4

 

Treasury stock, at cost

 

(5,554.4

)

(5,554.4

)

(5,281.7

)

(5,281.7

)

Total stockholders’ equity attributable to Principal Financial Group, Inc.

 

9,753.2

 

9,683.4

 

9,017.9

 

8,952.4

 

Noncontrolling interest

 

20.0

 

20.0

 

353.8

 

353.8

 

Total stockholders’ equity

 

9,773.2

 

9,703.4

 

9,371.7

 

9,306.2

 

Total liabilities and stockholders’ equity

 

$

161,926.5

 

$

161,830.2

 

$

147,361.7

 

$

147,271.5

 

 

Principal Financial Group, Inc.

Consolidated Statements of Operations

 

 

 

For the year ended

 

For the year ended

 

 

 

December 31, 2012

 

December 31, 2011

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions, except per share data)

 

Revenues

 

 

 

 

 

 

 

 

 

Premiums and other considerations

 

$

3,219.4

 

$

3,219.4

 

$

2,891.0

 

$

2,891.0

 

Fees and other revenues

 

2,626.7

 

2,626.7

 

2,526.7

 

2,526.7

 

Net investment income

 

3,254.9

 

3,254.9

 

3,375.3

 

3,375.3

 

Net realized capital gains, excluding impairment losses on available-for-sale securities

 

232.7

 

232.7

 

75.0

 

75.0

 

Total other-than-temporary impairment losses on available-for- sale securities

 

(135.9

)

(135.9

)

(147.6

)

(147.6

)

Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income

 

17.3

 

17.3

 

(49.7

)

(49.7

)

Net impairment losses on available-for-sale securities

 

(118.6

)

(118.6

)

(197.3

)

(197.3

)

Net realized capital gains (losses)

 

114.1

 

114.1

 

(122.3

)

(122.3

)

Total revenues

 

9,215.1

 

9,215.1

 

8,670.7

 

8,670.7

 

Expenses

 

 

 

 

 

 

 

 

 

Benefits, claims and settlement expenses

 

5,123.9

 

5,123.9

 

4,616.6

 

4,616.6

 

Dividends to policyholders

 

197.7

 

197.7

 

210.2

 

210.2

 

Operating expenses

 

2,934.1

 

2,933.5

 

2,950.8

 

2,971.1

 

Total expenses

 

8,255.7

 

8,255.1

 

7,777.6

 

7,797.9

 

Income before income taxes

 

959.4

 

960.0

 

893.1

 

872.8

 

Income taxes

 

134.7

 

134.6

 

204.2

 

198.3

 

Net income

 

824.7

 

825.4

 

688.9

 

674.5

 

Net income attributable to noncontrolling interest

 

18.8

 

18.8

 

36.2

 

36.2

 

Net income attributable to Principal Financial Group, Inc.

 

805.9

 

806.6

 

652.7

 

638.3

 

Preferred stock dividends

 

33.0

 

33.0

 

33.0

 

33.0

 

Net income available to common stockholders

 

$

772.9

 

$

773.6

 

$

619.7

 

$

605.3

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

2.60

 

$

2.60

 

$

1.97

 

$

1.92

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

2.57

 

$

2.58

 

$

1.95

 

$

1.91

 

 

Principal Financial Group, Inc.

Consolidated Statements of Operations

 

 

 

For the six months ended

 

For the nine months ended

 

 

 

June 30, 2012

 

September 30, 2012

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions, except per share data)

 

Revenues

 

 

 

 

 

 

 

 

 

Premiums and other considerations

 

$

1,361.1

 

$

1,361.1

 

$

2,519.3

 

$

2,519.3

 

Fees and other revenues

 

1,234.1

 

1,234.1

 

1,909.1

 

1,909.1

 

Net investment income

 

1,625.8

 

1,625.8

 

2,409.6

 

2,409.6

 

Net realized capital gains, excluding impairment losses on available-for-sale securities

 

54.3

 

54.3

 

176.4

 

176.4

 

Total other-than-temporary impairment losses on available-for- sale securities

 

(82.8

)

(82.8

)

(126.4

)

(126.4

)

Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to other comprehensive income

 

22.0

 

22.0

 

31.2

 

31.2

 

Net impairment losses on available-for-sale securities

 

(60.8

)

(60.8

)

(95.2

)

(95.2

)

Net realized capital gains (losses)

 

(6.5

)

(6.5

)

81.2

 

81.2

 

Total revenues

 

4,214.5

 

4,214.5

 

6,919.2

 

6,919.2

 

Expenses

 

 

 

 

 

 

 

 

 

Benefits, claims and settlement expenses

 

2,322.5

 

2,322.5

 

3,969.5

 

3,969.5

 

Dividends to policyholders

 

99.8

 

99.8

 

149.5

 

149.5

 

Operating expenses

 

1,280.1

 

1,284.7

 

2,106.7

 

2,101.1

 

Total expenses

 

3,702.4

 

3,707.0

 

6,225.7

 

6,220.1

 

Income before income taxes

 

512.1

 

507.5

 

693.5

 

699.1

 

Income taxes

 

109.1

 

107.6

 

99.2

 

100.4

 

Net income

 

403.0

 

399.9

 

594.3

 

598.7

 

Net income attributable to noncontrolling interest

 

11.9

 

11.9

 

15.3

 

15.3

 

Net income attributable to Principal Financial Group, Inc.

 

391.1

 

388.0

 

579.0

 

583.4

 

Preferred stock dividends

 

16.5

 

16.5

 

24.7

 

24.7

 

Net income available to common stockholders

 

$

374.6

 

$

371.5

 

$

554.3

 

$

558.7

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.25

 

$

1.24

 

$

1.86

 

$

1.87

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

1.24

 

$

1.22

 

$

1.84

 

$

1.85

 

 

Principal Financial Group, Inc.

Consolidated Statements of Operations

 

 

 

For the three months ended

 

For the three months ended

 

For the three months ended

 

For the three months ended

 

 

 

March 31, 2012

 

June 30, 2012

 

September 30, 2012

 

December 31, 2012

 

 

 

As originally

 

 

 

As originally

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions, except per share data)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums and other considerations

 

$

679.8

 

$

679.8

 

$

681.3

 

$

681.3

 

$

1,158.2

 

$

1,158.2

 

$

700.1

 

$

700.1

 

Fees and other revenues

 

598.0

 

598.0

 

636.1

 

636.1

 

675.0

 

675.0

 

717.6

 

717.6

 

Net investment income

 

824.8

 

824.8

 

801.0

 

801.0

 

783.8

 

783.8

 

845.3

 

845.3

 

Net realized capital gains, excluding impairment losses on available-for-sale securities

 

22.1

 

22.1

 

32.2

 

32.2

 

122.1

 

122.1

 

56.3

 

56.3

 

Total other-than-temporary impairment losses on available-for-sale securities

 

(33.7

)

(33.7

)

(49.1

)

(49.1

)

(43.6

)

(43.6

)

(9.5

)

(9.5

)

Other-than-temporary impairment losses on fixed maturities, available-for- sale reclassified to (from) other comprehensive income

 

4.9

 

4.9

 

17.1

 

17.1

 

9.2

 

9.2

 

(13.9

)

(13.9

)

Net impairment losses on available-for-sale securities

 

(28.8

)

(28.8

)

(32.0

)

(32.0

)

(34.4

)

(34.4

)

(23.4

)

(23.4

)

Net realized capital gains (losses)

 

(6.7

)

(6.7

)

0.2

 

0.2

 

87.7

 

87.7

 

32.9

 

32.9

 

Total revenues

 

2,095.9

 

2,095.9

 

2,118.6

 

2,118.6

 

2,704.7

 

2,704.7

 

2,295.9

 

2,295.9

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits, claims and settlement expenses

 

1,212.5

 

1,212.5

 

1,110.0

 

1,110.0

 

1,647.0

 

1,647.0

 

1,154.4

 

1,154.4

 

Dividends to policyholders

 

50.3

 

50.3

 

49.5

 

49.5

 

49.7

 

49.7

 

48.2

 

48.2

 

Operating expenses

 

556.0

 

555.1

 

724.1

 

729.6

 

826.6

 

816.4

 

827.4

 

832.4

 

Total expenses

 

1,818.8

 

1,817.9

 

1,883.6

 

1,889.1

 

2,523.3

 

2,513.1

 

2,030.0

 

2,035.0

 

Income before income taxes

 

277.1

 

278.0

 

235.0

 

229.5

 

181.4

 

191.6

 

265.9

 

260.9

 

Income taxes (benefits)

 

58.2

 

56.7

 

50.9

 

50.9

 

(9.9

)

(7.2

)

35.5

 

34.2

 

Net income

 

218.9

 

221.3

 

184.1

 

178.6

 

191.3

 

198.8

 

230.4

 

226.7

 

Net income attributable to noncontrolling interest

 

9.2

 

9.2

 

2.7

 

2.7

 

3.4

 

3.4

 

3.5

 

3.5

 

Net income attributable to Principal Financial Group, Inc.

 

209.7

 

212.1

 

181.4

 

175.9

 

187.9

 

195.4

 

226.9

 

223.2

 

Preferred stock dividends

 

8.2

 

8.2

 

8.3

 

8.3

 

8.2

 

8.2

 

8.3

 

8.3

 

Net income available to common stockholders

 

$

201.5

 

$

203.9

 

$

173.1

 

$

167.6

 

$

179.7

 

$

187.2

 

$

218.6

 

$

214.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.67

 

$

0.68

 

$

0.58

 

$

0.56

 

$

0.61

 

$

0.64

 

$

0.74

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.66

 

$

0.68

 

$

0.58

 

$

0.56

 

$

0.60

 

$

0.63

 

$

0.74

 

$

0.72

 

 

Principal Financial Group, Inc.

Consolidated Statements of Comprehensive Income

 

 

 

For the year ended

 

For the year ended

 

 

 

December 31, 2012

 

December 31, 2011

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions)

 

Net income

 

$

824.7

 

$

825.4

 

$

688.9

 

$

674.5

 

Other comprehensive income (loss), net:

 

 

 

 

 

 

 

 

 

Net unrealized gains on available-for-sale securities

 

557.6

 

557.6

 

208.6

 

208.6

 

Noncredit component of impairment losses on fixed maturities, available-for-sale

 

(6.7

)

(6.7

)

31.0

 

31.0

 

Net unrealized gains (losses) on derivative instruments

 

(43.6

)

(43.6

)

23.6

 

23.6

 

Foreign currency translation adjustment

 

(4.8

)

(9.8

)

(139.5

)

(130.9

)

Net unrecognized postretirement benefit obligation

 

(127.4

)

(127.4

)

(172.9

)

(172.9

)

Other comprehensive income (loss)

 

375.1

 

370.1

 

(49.2

)

(40.6

)

Comprehensive income

 

1,199.8

 

1,195.5

 

639.7

 

633.9

 

Comprehensive income attributable to noncontrolling interest

 

20.0

 

20.0

 

35.7

 

35.7

 

Comprehensive income attributable to Principal Financial Group, Inc.

 

$

1,179.8

 

$

1,175.5

 

$

604.0

 

$

598.2

 

 

Principal Financial Group, Inc.

Consolidated Statements of Comprehensive Income

 

 

 

For the six months ended

 

For the nine months ended

 

 

 

June 30, 2012

 

September 30, 2012

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions)

 

Net income

 

$

403.0

 

$

399.9

 

$

594.3

 

$

598.7

 

Other comprehensive income, net:

 

 

 

 

 

 

 

 

 

Net unrealized gains on available-for-sale securities

 

262.0

 

262.0

 

558.0

 

558.0

 

Noncredit component of impairment losses on fixed maturities, available-for-sale

 

(10.8

)

(10.8

)

(14.8

)

(14.8

)

Net unrealized gains on derivative instruments

 

45.4

 

45.4

 

27.2

 

27.2

 

Foreign currency translation adjustment

 

(21.4

)

(23.9

)

27.2

 

21.5

 

Net unrecognized postretirement benefit obligation

 

17.5

 

17.5

 

26.2

 

26.2

 

Other comprehensive income

 

292.7

 

290.2

 

623.8

 

618.1

 

Comprehensive income

 

695.7

 

690.1

 

1,218.1

 

1,216.8

 

Comprehensive income attributable to noncontrolling interest

 

12.1

 

12.1

 

16.3

 

16.3

 

Comprehensive income attributable to Principal Financial Group, Inc.

 

$

683.6

 

$

678.0

 

$

1,201.8

 

$

1,200.5

 

 

Principal Financial Group, Inc.

Consolidated Statements of Comprehensive Income

 

 

 

For the three months ended

 

For the three months ended

 

For the three months ended

 

For the three months ended

 

 

 

March 31, 2012

 

June 30, 2012

 

September 30, 2012

 

December 31, 2012

 

 

 

As originally

 

 

 

As originally

 

 

 

As originally

 

 

 

As originally

 

 

 

 

 

reported

 

As adjusted

 

reported

 

As adjusted

 

reported

 

As adjusted

 

reported

 

As adjusted

 

 

 

(in millions)

 

Net income

 

$

218.9

 

$

221.3

 

$

184.1

 

$

178.6

 

$

191.3

 

$

198.8

 

$

230.4

 

$

226.7

 

Other comprehensive income (loss) net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on available-for-sale securities

 

161.3

 

161.3

 

100.7

 

100.7

 

296.0

 

296.0

 

(0.4

)

(0.4

)

Noncredit component of impairment losses on fixed maturities, available-for-sale

 

(0.9

)

(0.9

)

(9.9

)

(9.9

)

(4.0

)

(4.0

)

8.1

 

8.1

 

Net unrealized gains (losses) on derivative instruments

 

(3.5

)

(3.5

)

48.9

 

48.9

 

(18.2

)

(18.2

)

(70.8

)

(70.8

)

Foreign currency translation adjustment

 

65.3

 

59.6

 

(86.7

)

(83.5

)

48.6

 

45.4

 

(32.0

)

(31.3

)

Net unrecognized postretirement benefit obligation

 

8.7

 

8.7

 

8.8

 

8.8

 

8.7

 

8.7

 

(153.6

)

(153.6

)

Other comprehensive income (loss)

 

230.9

 

225.2

 

61.8

 

65.0

 

331.1

 

327.9

 

(248.7

)

(248.0

)

Comprehensive income (loss)

 

449.8

 

446.5

 

245.9