Principal Financial Slumps as Earnings Decline

Principal Financial Group Inc., the provider of life insurance and retirement products, dropped the most in eight weeks in New York trading after second-quarter profit fell.

Principal lost 3.2 percent to $24.80 at 9:58 a.m. in New York trading, the only decline on the 22-company Standard & Poor’s 500 Insurance Index. The shares have advanced less than 1 percent this year.

Profit fell in Principal’s Retirement and Investor Services segment amid pressure on fee growth and as lower interest rates cut into earnings from annuities, the Des Moines, Iowa-based insurer said in a statement yesterday. The unit posted operating earnings of $141.7 million in the second quarter, compared to $154.7 million in the same period a year earlier, as Principal’s net income available to common stockholder slid 20 percent to $173.1 million.

“While the cash flow in the businesses was solid and the asset base grew, all too often this did not translate at Principal into like revenue growth and like earnings growth,” Eric Berg, an analyst at RBC Capital Markets, wrote in a research note today. Principal “may be facing the margin squeeze that we and it said wouldn’t happen.”

Editor: Dan Kraut

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