What You Need to Know
- The blocks of business on the block are backed by about $25 billion in reserves.
- Principal sees strong interest in both the the annuities and the life insurance business.
- The effects of COVID-19 on dental care eased, and more dental plan enrollees went to the dentist.
Principal Financial Group executives say efforts to wind down unwanted U.S. life and annuity operations are going well.
Dan Houston, the Des Moines, Iowa-based company’s CEO, briefed securities analysts on the company’s realignment Wednesday, during a conference call the company held to go over earnings for the second quarter, which ended June 30.
Principal announced June 28 that it intends to end the sale of U.S. individual fixed annuities and of retail U.S. individual life insurance.
The company is planning to stay in the market for the kinds of individual life policies sold through executive compensation plans.
“Our resulting go-forward strategy is focused on our growth drivers of retirement in the U.S. and emerging markets, global asset management, and U.S. benefits and protection,” Houston said during the call. “These businesses offer the greatest opportunity for growth, leverage our differentiators and integrated business model, and meet our financial objectives of being more capital-efficient with higher returns.”
Houston said Principal is looking for new homes for the blocks of in-force business associated with the lines now being discontinued, to free up capital and to reduce the company’s overall level of risk.
“We are focused on executing on the transactions and expect they are actionable in the near-term,” Houston said.
Deanna Strable, Principal’s chief financial officer, said the annuity blocks that are now on the block are backed by about $18 billion in reserves, and that the universal life block now in the block is backed by $7 billion in reserves.
“While we don’t have details to share on transactions, we will continue to update you as we know more, including timing as well as the financial and capital impacts,” Strable said.