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We Have Plenty of Cash: Principal

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Principal Financial Group Inc. earned hundreds of millions of dollars in the first quarter, and it has plenty of cash, the company announced Monday.

The Des Moines, Iowa-based life insurer became the latest company to try to calm investors down.

The company noted that, in response to the COVID-19 pandemic, about 95% of its 18,000 employees are now working at home or in other remote locations, with no significant service interruptions.

Dan Houston, the company’s chief executive officer, made a point of saying that the company started with 2020 with a solid balance sheet and ample liquidity.

“Coupled with our diversified operating model, Principal is not only able to meet the financial needs of our business, but along with the Principal Foundation we are also providing more than $25 million in customer relief and support to our communities,” Houston said in a comment included in the earnings announcement.

At the end of the first quarter, Principal had about $3 billion in cash and liquid assets, along with access to an $800 million line of credit.

Resources

Principal is reporting $285 million in net income for the quarter on $4.6 billion in revenue, compared with $452 million in net income on $3.7 billion in revenue for the first quarter of 2019.

The individual life business is reporting $41 million in pretax operating earnings on $484 million in revenue, compared with $51 million in pretax operating earnings on $466 million in revenue for the year-earlier quarter.

Commission spending increased to $33 million, from $30 million.

At the specialty benefits unit, which sells products such as disability insurance, operating income increased to $88 million on $639 million in revenue, from $59 million on $502 million in revenue.

Specialty benefits commission spending increased to $71 million, from $65 million.

The retirement and income solutions unit, is reporting $205 million in pretax operating profits on $2.6 billion in revenue, compared with $241 million in pretax operating profits on $1.7 billion in revenue.

Here’s what happened to U.S. sales of certain types of products, when compared with the first quarter of 2019:

  • Group dental and vision: $75 million (up from $73 million)
  • Group life: $24 million (down from $27 million)
  • Group disability: $33 million (down from $35 million)
  • Individual disability: $13 million (flat)
  • Universal and variable life: $34 million (down from $43 million)
  • Traditional life: $22 million (up from $20 million)

— Read Equitable Records $12 Billion in Hedging Gainson ThinkAdvisor.

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