DOW JONES NEWSWIRES 
 

Principal Financial Group Inc.'s (PFG) second-quarter profit dropped 10% on lower revenue and a drop in fee income.

Shares were down 2% to $24.94 in after-hours trading as revenue missed analysts' expectations. The shares are down by about 50% from their 52-week high of $54.28 in September.

Chief Financial Officer Terry Lillis said institutional investors continued to delay funding due to market volatility, while rising unemployment lowered the number of participants in existing employment benefit plans and investment income has declined. Still, Lillis expects those pressures to ease over the next several quarters.

In June, Principal became the fourth of six approved life insurance companies to reject an investment from the U.S. government, saying capital markets have improved since its initial application last year. The company improved its capital base through a $1.15 billion secondary equity offering and $750 million debt offering. Unlike many of its peers, Principal Financial has avoided slipping into the red.

The provider or retirement services, insurance and investment products reported earnings of $158.6 million, or 52 cents a share, down from $176.6 million, or 64 cents a share, a year earlier. Excluding investment losses, earnings fell to 69 cents from 97 cents.

Revenue decreased 19% to $2.16 billion.

Analysts polled by Thomson Reuters expected per-share earnings of 63 cents on revenue of $2.47 billion.

Total assets under management declined 16% to $257.7 billion as of June 30, but grew 9% from the first quarter amid the stock market's rally. U.S. asset-accumulation earnings declined 10%, while global asset management's profit decreased 19%.

The life and health insurance segment reported a 13% drop in profit.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com