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Principal Financial Takes Initiatives Amid Coronavirus Crisis

Zacks Equity Research
·3 mins read

Principal Financial Group, Inc. PFG has taken several initiatives to protect the interest of its members during the COVID-19 pandemic. The United States seems to be severely hit by the coronavirus outbreak, with reported fatalities exceeding 10,000 to date.

The initiatives undertaken by the company reflect its efforts to ensure the welfare of a wide range of businesses and individuals that it supports. For clients opting for loans from their employer-sponsored retirement accounts, tax-favored withdrawals or hardship withdrawal, Principal Financial along with Wells Fargo Institutional Retirement & Trust (IRT) eliminated participant-paid distribution and loan origination fees. Notably, Principal Financial completed the buyout of the IRT business of Wells Fargo in last July.

In order to reduce administrative burdens, customers will get the benefit of making changes in their plans as retirement plan sponsors will remove any additional costs incurred in the process.

Moreover, the pandemic can lead to delays in the payment of the company’s premiums by its policyholders. To avoid such lapse in policies, Principal Financial has decided to extend the due dates of premiums. For employers who have less than 500 employees and coming under Principal Financial’s group benefits coverage, the financial services provider has stopped any rate increase on a temporary basis. The halt is applicable only for policies, whose renewal dates lie between May 1 and Aug 15 this year.

Furthermore, Principal Financial has consistently made investments for enhancing its digital services. The current dismal period creates an opportunity for the company to make use of its digital services. Instead of coming into contact with doctors and labs, Principal Financial can now rely on digital health data and records, while underwriting life and disability policies.

Being a provider of mainly retirement, insurance and asset management solutions, such actions underline the company’s efforts to reduce the financial burdens of its customers amid the economic uncertainty. Principal Financial is well-poised for operational excellence, riding on its strong retirement as well as group benefits and protection solutions across the United States.

However, shares of this Zacks Rank #4 (Sell) financial services provider have lost 47% in a year, underperforming its industry’s decline of 30.6%. Nevertheless, we believe that the company’s strong fundamentals are likely to drive its shares, going forward.

 

 

Stocks to Consider

Some better-ranked stocks in the finance space are American Equity Investment Life Holding Company AEL, Amerisafe, Inc. AMSF, and FGL Holdings FG. While American Equity Investment currently sports a Zacks Rank #1 (Strong Buy), Amerisafe and FGL Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While American Equity Investment and Amerisafe surpassed earnings estimates in each of the trailing four quarters by 53.4% and 50.1%, respectively, FGL Holdings outpaced earnings estimates in three of the trailing four quarters by 15.7%, on average.

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