Principal Falls Most Since 2011, Leading Life Insurer Slump

  • MetLife, Prudential shares also decline more than 3%
  • Insurer has `difficult business mix' in current environment

Principal Financial Group Inc. fell the most since 2011, leading a slump of U.S. life insurers, after profit declined as currency fluctuations and investment losses weighed on results.

Principal dropped $2.88, or 7.6 percent, to $35.07 at 4:01 p.m. in New York. MetLife Inc. and Prudential Financial Inc.,. the largest U.S. life insurers, each fell at least 3 percent. All three companies have substantial operations outside the U.S., where a stronger dollar can depress earnings. And each manages massive investment portfolios -- including funds for third-party clients and holdings backing insurance obligations -- that can be pressured in times of market volatility.

Fourth-quarter net income dropped 6.2 percent to $253.6 million, Des Moines, Iowa-based Principal said in a statement Monday after markets closed. Operating income was $1.02 a share, missing by three cents the average estimate of analysts surveyed by Bloomberg. Results included net realized capital losses of $47.6 million, with some of the costs tied to sales and impairments of bonds and commercial mortgages.

Principal has a “difficult business mix amid the current environment,” John Nadel, an analyst at Piper Jaffray Cos., said in a note to investors. The company faces “pressured equity markets, ongoing U.S. dollar strength, and heightened competition” among providers of 401(k) retirement accounts, he wrote.

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