Principal Financial Group Inc. posted $600 million in sales of the big group annuities that help employers shed defined benefit pension obligations in the first quarter.
Now the company is hoping Congress will help boost sales of group annuities, or group annuitization features, to 401(k) plans and other defined contribution retirement plans.
Renee Schaaf, the head of the Des Moines, Iowa-based life insurer’s retirement income solutions unit, talked about the federal 401(k) plan annuitization safe harbor fight Friday, during a conference call the company held to go over the company’s first-quarter earnings.
Congress is considering legislation that could help employers reduce their potential exposure to legal liability when they pick providers of lifetime income options for their 401(k) plans.
A higher-profile proposal that would help multiple employers team up to sponsor retirement plans would help, too, but the annuitization safe harbor proposal is also very important, Schaaf said.
“We really believe that it’s in the best interest of Americans to have this kind of income guarantee available to them moving forward,” Schaaf said.
Principal as a whole is reporting $452 million in net income for the first quarter on $3.7 billion in revenue, compared with $402 million in net income on $2.9 billion in revenue for the first quarter of 2018.
The company’s U.S. insurance solutions unit, which sells products such as life insurance, disability insurance, dental insurance and vision plans, is reporting $111 million in pretax operating earnings on $1.1 billion in revenue, compared with $115 million in pretax operating earnings on $1 billion in revenue for the year-earlier quarter.
Commission expense at the unit increased to $96 million, from $84 million.
Individual life commission expense increased to $30.5 million, from $28 million.
Specialty benefits commission expense increased to $65 million, from $57 million.
Here’s what happened to sales of some of the products Principal sells, in terms of annualized premiums, between the first quarter of 2018 and the latest quarter:
- Group Dental and Vision: $73 million, up from $61 million.
- Group Life: $27 million, up from $23 million.
- Group Disability: $34.9 million, down from $35.4 million.
- Individual Disability: $13 million, up from $11 million.
- Universal and Variable Universal Life: $43 million, down from $45 million.
- Traditional Life: $20 million, up from $16 million.
At the group life unit, sales and overall revenue increased even though the lapse rate increased to 7.1%, from 4.7% in the first quarter of 2019.