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Principal Financial Group (PFG) |
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WIKI ANALYSIS
The Principal Financial Group (PFG)[1] is a financial services firm that manages 401(k) plans and pensions for businesses and their employees. The company also provides group life and health insurance. PFG generates revenue by charging asset management fees on the assets in its managed pensions and 401(k) plans, in addition to charging insurance premiums for its life and health insurance plans. The company's main focus is the small to medium business market.
Business Overview
Business & Financial Metrics[2]
In 2009, PFG generated a net income of $645.7 million on $3.75 billion in total revenues. This represents a 38.6% increase in net income with a 10.9% decrease in total revenues from 2008, when the company earned $465.8 million on revenues of $4.21 billion.
Business Segments[3]
PFG is divided into five business segments.
- U.S. Asset Accumulation (43.4% of total revenue): This segment offers pension plan products and services to domestic customers.[4]
- Global Asset Management (4.7% of total revenue): This segment includes subsidiary Principal Global Investors and its affiliates.[5]
- International Asset Management and Accumulation (6.0% of total revenue): This segment includes subsidiary Principal International and has operations in Brazil, Chile, China, Hong Kong, India, Indonesia, Malaysia, Mexico, and Singapore. PFG targets countries with large middle classes and growing long-term savings through this segment.[5]
- Life and Health Insurance (47.7% of total revenue): This segment offers life, health, and other insurances to individuals and groups. Its target customers are small- and medium-sized businesses.[6]
- Corporate (-1.8% of total revenue): This segment is a catchall for assets and activities that are not allocated to any other segment.[4]
Trends and Forces
Aging Baby Boomers Boost Demand for Retirement Services and Insurance
The baby boomers are an affluent demographic, with the highest median household income of any age range in the United States,[7] $61,000 compared to a national median household income of $44,000. As these consumers age and approach retirement, the demand for retirement services and insurance products, especially life and health insurance, rise. This benefits PFG's Retirement and Investor Services division, which provides a variety of savings and investment vehicles to individuals, as well as Principal's insurance division. This trend is evidenced by PFG's 7.5-8% revenue growth over the past several years, which has been relatively evenly distributed between the company's asset accumulation and insurance divisions.[8]
Shift Towards Defined Contribution Plans Favors PFG
In a defined contribution (DC) plan, an employer is obligated to make a predetermined payment, usually in the form of a donation to match an employee's contribution, to the plan every year. The cost of a DC plan is therefore pre-specified every year, and will not unexpectedly increase. By contrast, an employer with a defined benefit (DB) plan is obligated to provide its retired employees a specific benefit every year, which means that costs can escalate unexpectedly if benefits suddenly become more expensive or as more members retire. As a result, DC plans have become more widespread all over the world in recent years, and are now the dominant form of plan in the private sector in many countries. For example, the number of DB plans in the US has been steadily declining, as more and more employers see the large pension contributions as a large expense that they can avoid by disbanding the plan and instead offering a defined contribution plan.
Health Consciousness Drives Employer Demand for Health Consulting Services
The United States has seen a growing trend towards greater general consciousness of health and wellness. This trend can be observed through healthier food choices, more widespread fitness club membership, and a reduction in unhealthy habits such as smoking. As this wellness trend continues, Principal could see an increase in demand for its wellness products, as more and more employers implement corporate health and wellness programs to attract qualified employees.
You really need to check with your local State aturohity to find out what is needed, as it can vary state to state. You need to be approved by HUD, the State of Texas, and the lenders. If you want to work the loans directly under the name of your Corporation, since this is a HUD loan, I believe you need to be HUD approved yourself as a direct lender/broker. And then you need to get the State licensing to do loans in Texas. Then you need to register and get approved with the various lenders who are also qualified to offer mortgages in Texas. Otherwise, you work for a broker as a contractor, or a bank as an employee, who are approved in Texas and fall under their licensing and sell only their products. Or sign up with one of the internet shops who are licensed in Texas, and go under their umbrella licensing. Or sell the leads.Texas is a very special state and is a little more restrictive in what they allow in reverse mortgages (e.g. trusts, lines of credit, purchases, etc.).
Competitors
Principal's main competitors are:
- Ameriprise Financial, Inc. (AMP): Ameriprise focuses on providing advising and asset management services to individual clients, although it also serves institutional and corporate clients. AMP's Asset Accumulation and Income division offers a mix of mutual funds and annuities to individuals, as well as 401(k) plans to institutional clients. AMP also has a Protection division, which provides a variety of life and disability insurance services. Although Principal is currently larger than Ameriprise, AMP has been growing more rapidly in the past few years, and may soon overtake PFG.
- AXA (AXA): AXA sells life insurance and qualified retirement plans to its customers. The company also advises and educates its clients about financial planning and estate planning. AXA operates other segments that provide property and casualty insurance to individuals and corporations, and also international insurance.
- Manulife Financial (MFC): MFC offers a range of global insurance products, including individual life and group life and health insurance. Manulife Financial offers wealth management products, such as pension funds, mutual funds, and annuities. MFC also provides reinsurance services to its institutional clients.
- Nationwide Financial Services (NFS): NFS is a mutual life insurance company that also provides various group retirement investment plans, including 401(k), 403(b), and 457 plans. NFS also offers individual investment advisory services and a variety of annuity products.
References
- ↑ PFG's company website
- ↑ PFG 2009 10-K pg. 33
- ↑ 3.0 3.1 PFG 2009 10-K pg. 157
- ↑ 4.0 4.1 PFG 2009 10-K pg. 4
- ↑ 5.0 5.1 PFG 2009 10-K pg. 9
- ↑ PFG 2009 10-K pg. 11
- ↑ From the U.S. Census Bureau and Department of Labor Statistics.
- ↑ From PFG's 2006 10-k statement, page 5.
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