Principal Pursues Non-U.S. Takeovers as CFO Sees Buybacks Waning

Principal Financial Group Inc., the seller of life insurance and retirement products, said it is seeking acquisitions outside the U.S. while share repurchases probably will decline after the stock rallied.

Principal is “evaluating additional acquisitions, most in the international asset-management businesses,” Chief Financial Officer Terry Lillis said today on a conference call with analysts. “While share repurchase remains in our portfolio for capital deployment, we expect a relatively lower amount of share repurchase in 2014 than in the past few years.”

The insurer has spent about $2 billion since 2008 to add money managers in a push to increase fee income. Last year, the Des Moines, Iowa-based company agreed to buy Chile’s AFP Cuprum SA for about $1.5 billion. This year, it acquired a majority stake in Liongate Capital Management LLP in a bet on hedge-fund demand after adding Finisterre Capital LLP in 2011.

Principal plans to deploy $500 million to $700 million in capital during 2014, the insurer said today in a presentation to analysts. That compares with about $400 million to $600 million this year, which includes $150 million for share repurchases and $288 million for common stock dividends. The company may also use cash to pay down debt, according to today’s presentation.

Principal gained 0.8 percent to $49.85 at 11:10 a.m. in New York. The stock has rallied 75 percent this year, beating the 42 percent gain of the Standard & Poor’s 500 Insurance Index.

Lillis said Principal may also use funds to increase stakes in businesses it already owns. The company bought 55 percent Liongate and majority holdings in firms including Finisterre and Brazilian mutual fund provider Claritas.

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