Principal, Genworth, Hartford Post Robust Earnings

All three insurers report a big turnaround in Q1 over 2009

A trio of insurers released earnings with all reporting a strong turnaround over last year's dismal showing.

Principal Financial Group, the insurer and asset manager, posted Monday, May 3, a 69% surge in first-quarter profit, as its asset accumulation business showed substantial growth. The company earned $190.8 million, or 59 cents a share, compared with $112.8 million, or 43 cents a share a year ago.

Principal has suffered huge losses as the markets collapsed, forcing the company to raise its cash holdings that led to lower yields on investments.

A big driver of Principal's success was the operating profit at its U.S. asset accumulation segment, which rose to $157 million for the latest quarter, from $93.1 million in the year-ago period.

Assets under management (AUM) rose 24% to $293.4 billion, compared to $236.6 billion in the first quarter of 2009.

"We see clear signs the economy is starting to recover," Principal CEO Larry D. Zimpleman said. "As this has occurred, our three largest U.S. accumulation businesses have delivered meaningful sequential improvement in sales, with $4.3 billion in total for the first quarter, generating more than $900 million of positive net cash flows. While we see improving trends, small and medium businesses continue to proceed with caution, and our sales remain below 2007 levels."

There were also robust sales of the company's three key U.S. retirement and investment products in the first quarter, despite a difficult sales environment, with $1.7 billion for Full Service Accumulation, $2.1 billion for Principal Funds and $500 million for Individual Annuities.

Genworth Profits Jump

On Thursday, April 29, Genworth Financial reported a better-than-expected first quarter, as profits rose on stronger revenue and net flows continued to bulge its assets under management (AUM).

The insurer saw profit rise to $178 million or 36 cents a share, compared with last year's first-quarter loss of $469 million or $1.08 a share. Analysts had forecast earnings of 27 cents a share, according to Thomson Reuters.

Revenue increased 40% year over year to $2.42 billion. The company reported a drop in net investment losses to $42 million, down from $54 million in the prior quarter and $483 million in the year-ago quarter. Its unrealized investment losses also improved in the quarter. Net unrealized investment losses declined to $900 million from $1.4 billion in the prior quarter and $4.1 billion in the prior-year quarter.

The Retirement and Protection sector reported a net operating income of $122 million, compared with $38 million in the prior-year quarter. Though earnings in life insurance and long term care businesses were down in the quarter, earnings were up in the wealth management and retirement income businesses. Wealth management net flows were $504 million, the fourth consecutive quarter of positive net flows, bringing AUM to $20 billion.

"Genworth's improved results demonstrate clear progress in our served markets around the world," said Michael D. Fraizer, Genworth's chairman and CEO. "Our decisive actions on loss mitigation, select product re-pricing and re-investing cash all contributed to earnings growth in the quarter."

Hartford's Big Turnaround

Hartford Financial Services Group, the insurance giant, reported a big upswing in first-quarter profits, but the company lost money on a per share basis after buying back its stock from the government.

The company said earnings were $319 million for the quarter, compared with a loss of $1.2 billion a year ago. On a per share basis the company lost 42 cents, after including a $440 million charge for repurchasing the U.S. government's preferred shares, which were granted through the TARP program. Hartford recently repaid the entire $3.4 billion it received in government aid.

Hartford CEO Liam E. McGee said in a statement that his company's results "reflect building momentum, with year-over-year top-line improvements in many businesses."

Hartford said its assets under management (AUM) grew 20%, to $396.4 billion from $330.2 billion in the same quarter a year ago.

Hartford said its property and casualty unit earned $257 million during the first quarter, more than double a year-ago profit of $112 million. The company said it has seen an increase in new business premiums and policy retention.

The company's life-insurance unit recorded net income of $186 million, reversing a year-earlier loss of $1.3 billion. The unit benefited from a narrower deferred acquisition costs.

Read the full version of the earnings reports for Principal, Genworth, and Hartford.

Read a story about Hartford's recent restructuring from the archives of InvestmentAdvisor.com.

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