Principal to fully exit US retail fixed annuities
Principal Financial Group announced strategic changes “following a comprehensive review of the company’s business mix and capital management options.”
- New initiatives will see the insurer focus on its higher-growth retirement, global asset management, and U.S. benefits and protection businesses
- It will discontinue sales of all U.S. retail fixed annuities and consumer life insurance products — and pursue strategic alternatives for related in-force blocks
“This thorough and intensive review considered strategic fit, client needs, financial impact, and the risk profile of our business lines. The outcome will result in a more focused portfolio and stronger capital management strategy that we believe positions Principal for strengthened leadership in higher growth markets and greater capital efficiency, leading to higher expected shareholder returns. We identified opportunities to reduce complexity and risk, improve our return profile, and increase our cash flow conversion to better enable us to execute on our strategy, reinvest in growth, and support our financial strength. We’ve also announced a new $1.2 billion share repurchase authorization, which underscores our commitment to return excess capital to shareholders. I am confident that as we move forward, we’ll be positioned to win and grow in meaningful ways for our shareholders, customers, and employees, both today and into the future.” – Dan Houston, chairman, president, and CEO of Principal.
Bottom Line: In the context of fintech, annuities are quickly becoming irrelevant due to their complex nature, and in the context of insurance, Principal is moving further away from Primerica and Bestow with over 287,809 and 35,000 term life insurance policies, respectively.