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Principal Completes Acquisition of Wells Fargo Institutional Retirement & Trust Business

DES MOINES, Iowa--(BUSINESS WIRE)--

  • Acquisition includes Wells Fargo’s defined contribution, defined benefit, executive deferred compensation, employee stock ownership plans, institutional trust and custody and institutional asset advisory businesses
  • Doubles Principal U.S. retirement businessi and expands on its trust & custody and discretionary asset allocation capabilities
  • Integration work underway with leader appointments and location commitments

Today, Principal Financial Group® (PFG) announced the closing of its acquisition of the Wells Fargo & Company (WFC) Institutional Retirement & Trust business. Principal® will now begin the integration of Wells Fargo’s defined contribution, defined benefit, executive deferred compensation, employee stock ownership plans, institutional trust and custody and institutional asset advisory businesses.

“With this acquisition, we are broadening our offerings and deepening our ability to serve customers with unmatched capabilities across retirement, asset management and protection solutions,” said Dan Houston, chairman, president and CEO of Principal. “As a top-three leader in the U.S. retirement industry, we will be well-positioned to invest and grow our business to the benefit of our customers, employees and shareholders.i

Through this acquisition, Principal will double the size of its U.S. retirement businessi, while bringing on attractive institutional trust and custody offerings for the non-retirement market and expanding its discretionary asset management footprint.

“Principal is committed to helping people live their best lives through our holistic financial solutions,” said Renee Schaaf, president of Retirement & Income Solutions at Principal. “Together with the Wells Fargo Institutional Retirement & Trust business, our customers can expect a powerful combination of passion, talent and expertise to help empower them to reach their financial goals.”

Last month, Principal announced its progress toward a unified retirement leadership team to help guide the integration and future organization, including appointing several executives from Wells Fargo Institutional Retirement & Trust. The company has also committed to retaining locations in: Charlotte, N.C.; Minneapolis/Roseville, Minn.; Waco, Texas; Winston-Salem, N.C.; and Manila, Philippines.

As of December 31, 2018, the respective Wells Fargo retirement businesses had $827 billion in assets under administrationii served by approximately 2,500 employees in locations across the U.S., Philippines and India.

Principal announced its intention to purchase Wells Fargo Institutional Retirement & Trust in April. The terms of the transaction remain consistent with what was previously announced.

Visit www.principal.com/BetterRetirement for more information.

About Principal®

Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals – offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at principal.com.

Forward looking and cautionary statements

Certain statements made by the company which are not historical facts may be considered forward-looking statements, including, without limitation, statements as to non-GAAP operating earnings, net income available to PFG, net cash flow, realized and unrealized gains and losses, capital and liquidity positions, sales and earnings trends, and management’s beliefs, expectations, goals and opinions. The company does not undertake to update these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company’s annual report on Form 10-K for the year ended Dec. 31, 2018, and quarterly report on Form 10-Q for the quarter ended March 31, 2019, filed by the company with the U.S. Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the company’s ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; volatility or declines in the equity, bond or real estate markets; changes in interest rates or credit spreads or a sustained low interest rate environment; the company’s investment portfolio is subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company’s valuation of investments and the determination of the amount of allowances and impairments taken on such investments may include methodologies, estimations and assumptions that are subject to differing interpretations; any impairments of or valuation allowances against the company’s deferred tax assets; the company’s actual experience could differ significantly from its pricing and reserving assumptions; the pattern of amortizing the company’s DAC and other actuarial balances on its universal life-type insurance contracts, participating life insurance policies and certain investment contracts may change; changes in laws, regulations or accounting standards; the company may not be able to protect its intellectual property and may be subject to infringement claims; the company’s ability to pay stockholder dividends and meet its obligations may be constrained by the limitations on dividends Iowa insurance laws impose on Principal Life; litigation and regulatory investigations; from time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in amounts that may be material; applicable laws and the company’s certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests; competition, including from companies that may have greater financial resources, broader arrays of products, higher ratings and stronger financial performance; technological and societal changes may disrupt the company’s business model and impair its ability to maintain profitability; a downgrade in the company’s financial strength or credit ratings; client terminations, withdrawals or changes in investor preferences; inability to attract and retain qualified employees and sales representatives and develop new distribution sources; an interruption in telecommunication, information technology or other systems, or a failure to maintain the confidentiality, integrity or availability of data residing on such systems; international business risks; fluctuations in foreign currency exchange rates; risks arising from participation in joint ventures; the company may need to fund deficiencies in its “Closed Block” assets; the company’s reinsurers could default on their obligations or increase their rates; risks arising from acquisitions of businesses; and loss of key vendor relationships or failure of a vendor to protect information of our customers or employees.

Use of Non-GAAP financial measures

The company uses a number of non-GAAP financial measures that management believes are useful to investors because they illustrate the performance of normal, ongoing operations, which is important in understanding and evaluating the company’s financial condition and results of operations. They are not, however, a substitute for U.S. GAAP financial measures. The company adjusts U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP measures for goal setting, as a basis for determining employee and senior management awards and compensation and evaluating performance on a basis comparable to that used by investors and securities analysts.

iPro-Forma calculations based upon data as of December 31, 2017 provided by PLANSPONSOR 2018 Recordkeeping Survey and inclusive of shock lapse and new sales assumptions.
ii Source: Wells Fargo; Data as of 12/31/18

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.
© 2019 Principal Financial Services, Inc.

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