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Principal Financial 3Q net income down 55 pct

October 27, 2011

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DES MOINES, Iowa—Insurance, retirement, and financial services company Principal Financial Group Inc. said Thursday that its third-quarternet income fell 55 percent as investment losses, a write-off due to a court ruling in New York, and increased expenses offset a 2 percent increase in revenue.

The Des Moines, Iowa-based company posted net income of $63.7 million, or 20 cents per share, compared with $142.2 million, or 44 cents per share a year ago.

The results included net realized capital losses of $63.7 million on investments including commercial mortgage-backed securities and a $79.4 million loss resulting from a court ruling. The case involved the New York State Insurance Department's liquidation plan for Executive Life Insurance Co. of New York.

Excluding the one-time items, the company reported operating earnings of $191.9 million, or 61 cents per share, compared with $218.9 million, or 68 cents per share a year ago.

Analysts surveyed by FactSet expected 71 cents per share.

Revenue rose to $2.03 billion from $1.99 billion a year ago. Expenses climbed to $1.78 billion from $1.70 billion.

While operating earnings from the retirement and investor services business slipped nearly 13 percent, the Principal Global Investors division posted a 27 percent increase to $19.1 million.

Principal International, a global asset management division, saw operating earnings grow 11 percent to $36.6 million.

U.S. insurance division earnings were nearly flat at $47.6 million.

CEO Larry Zimpleman said he expects 2011 full-year revenue to be significantly improved from 2010.

Assets under management were $320.8 billion at the end of the quarter, an increase of 5 percent compared with the same quarter last year.

Principal Financial shares rose $2.10, or 8 percent, to close at $28.47. They've traded as high as $35 in the past year and are off about 13 percent from the beginning of the year.