BOSTON, June 28 (Reuters) - Principal Financial Group Inc said on Monday it will stop selling U.S. retail fixed annuities and consumer life-insurance products, explore sales of those businesses and buy back more stock after conducting a months-long strategic review.

The Des Moines, Iowa-based investment management and insurance company said the steps would help it focus its portfolio, create a stronger capital management strategy and help its share price climb.

"We identified opportunities to reduce complexity and risk, improve our return profile, and increase our cash flow conversion to better enable us to execute on our strategy, reinvest in growth, and support our financial strength," Principal Chief Executive Dan Houston said in a statement. The company will offer details at Tuesday's investor day.

Principal agreed four months ago to review its business portfolio and add two board members as part of a settlement with activist investment firm Elliott Management, one of its biggest shareholders.

Principal will continue to sell variable annuity offerings. The businesses earmarked for sales have policy reserves of approximately $18 billion, the company said.

The board also signed off on an additional $1.2 billion in stock re-purchases. Within the coming 18 months, Principal said it expects to buy back between $1.3 billion and $1.7 billion in stock, including the $675 million previously authorized.

The company will focus on growth areas including the retirement business in the United States and some emerging markets, global asset management and U.S. specialty benefits and protection in the small-to-medium-sized business market.

Elliott, a $42 billion hedge fund that pushed for changes at companies ranging from Twitter to eBay, has urged Principal to consider selling its more capital-intensive life insurance business. On Monday it welcomed the planned steps.

"We applaud today's announcements," Mark Cicirelli, Elliott's U.S. head of insurance, said in a statement, adding that they "represent a significant step on a path towards higher growth, higher returns, and greater capital efficiency."

Principal's share price fell 1.26% to $63.55. The stock is up 31.55% since January.

A number of insurers have been spinning off certain divisions and some private equity firms have been interested in buying them.

Principal was advised by investment bank Goldman Sachs & Co., law firm Skadden, Arps, Slate, Meagher & Flom LLP and actuarial consulting firm Milliman. (Reporting by Svea Herbst-Bayliss Editing by Paul Simao)