Principal Financial has decided to fully exit the retail consumer market as it will discontinue new sales of term life and universal life products to retail consumers in the US.
Iowa-based Principal Financial is considering strategic alternatives, including divestitures of the related in-force blocks of approximately $25bn reserves.
Principal Financial CEO, chairman and president Dan Houston said: “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.”
Principal Financial said it will continue selling its variable annuity offering.
Principal Financial also announced a new $1.2bn share-repurchase authorisation.
A review was initiated in February 2021, following which changes were approved by the principal board of directors, including Principal’s largest investor Elliott Investment Management.
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Elliott head of insurance in the US Mark Cicirelli said: “We believe Principal’s refined focus will result in substantial returns of capital to investors and that the implementation of today’s decisions will leave Principal better positioned to leverage its quality franchise and create significant additional value for both its shareholders and its customers.”
The firm will now focus on retirement in the US and select emerging markets, global asset management, and US speciality benefits and protection in the small-to-medium-sized business market.
Multiple US insurers have divested blocks of older life insurance policies. Some sold entire units too.
Earlier this week Dutch insurer NN Group made an offer to acquire part of MetLife’s life insurance businesses in Europe.
In 2017, Brighthouse Financial separated from MetLife and started doing business as an independent company.
In 2019, AXA offloaded nearly 12% stake in the US life insurance business for $1.5bn.