Principal Financial 3Q net profit falls 61 percent

DES MOINES, Iowa - Third-quarter profit for retirement, insurance and financial services company Principal Financial Group Inc. fell 61 percent as the company declared substantial losses on its investments.

The Des Moines-based company said net income slipped to $90.1 million, or 35 cents a share from $232.3 million, or 87 cents a share a year ago.

Operating profit, which excludes investment losses and other one-time charges was $251.2 million, or 96 cents a share compared with $316 million, or $1.18 a share a year ago.

Operating revenue was $2.75 billion, down from $2.94 billion a year ago.

Analysts polled by Thomson Reuters expected Principal to post operating profit of 92 cents per share on revenue of $2.8 billion.

Shares climbed 17.9 percent, or $3.40, to close at $22.39. They have traded between $12.50 to $70.85 in the past 52 weeks. The company released the report after the markets closed for the day.

Principal said the realized and unrealized losses include $41 million related to Lehman Brothers Holdings, which filed for bankruptcy protection in September, and $41.2 million related to Washington Mutual, which was acquired by JPMorgan. Other losses included almost $5 million for terminating its commercial mortgage securities issuance operation.

The company said its life and health insurance segment grew operating earnings by 23 percent while its international asset management business saw a 26 percent increase.

Company assets under management fell 6 percent to $287.4 billion as of September 30, reflecting declines in equity markets. The S&P 500 Index dropped 24 percent over the quarter.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.