Sept. 13 (Bloomberg) -- Principal Financial Group Inc., the seller of life insurance and retirement products, expects about 40 percent of net income to be paid to shareholders through dividends in 2018 as less capital is needed for organic growth.
The 2018 projection calls for 30 percent to be invested in organic growth with the remaining 30 percent available for acquisitions and share buybacks, the Des Moines, Iowa-based insurer said today in a presentation. Currently, the company devotes about a third to each of the categories.
Principal released the plan as part of an investor day presentation at which Chief Executive Officer Larry Zimpleman projected a return of equity of 15 percent by 2018, up from about 10.4 percent in the 12 months through June 30. Returns dropped from more than 16 percent in 2007 as global markets slumped and the company held more equity to reduce risk and shifted its mix of businesses.
“Based on the businesses we are in today, there is no question that that 15 percent ROE is not only achievable, but doesn’t represent any sort of ceiling,” Zimpleman told investors today.
The insurer slipped 7 cents to $43.37 at 9:55 a.m. in New York. The company has advanced 52 percent this year, compared with the 18 percent gain of the Standard & Poor’s 500 Index.
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