Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Day (September 2018)
40 slides from Principal Financial's investor day presentation, Sep 27, 2018
Slide 1: Slide 1
Slide 2: Tokyo investor day September 28, 2018
Tokyo investor day September 28, 2018
Slide 3: Welcome
Welcome Tim Dunbar President, Global Asset Management John Egan Vice President, Investor Relations
Slide 4: Use of non-GAAP financial measures
Use of non-GAAP financial measures A non-GAAP financial measure is a numerical measure of performance, financial position, or cash flows that includes adjustments from a comparable financial measure presented in accordance with U.S. GAAP. The company uses a number of non-GAAP financial measures that
Slide 5: Non-GAAP financial measure reconciliations
Non-GAAP financial measure reconciliations Trailing 12 $ in millions months 6/30/2018 Non-GAAP pre-tax operating earnings (losses) Income before income taxes $2,445.0 Net realized capital gains (679.0) Net realized capital gains pre-tax adjustments (16.4) Non-GAAP pre-tax operating earnings attribut
Slide 6: Forward looking statements
Forward looking 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 attributable to PFG, net cash flows, realized and unrealized gains a
Slide 7: Agenda
Agenda Time (JST) Topic Presenter(s) Tim Dunbar President, Global Asset Management 8:30 am Welcome John Egan VP, Investor Relations Renee Schaaf SVP & COO, Principal International 8:50 am Principal overview Kirk West Executive Director, Investments Pedro Borda President, South Asia & India, Principa
Slide 8: Our businesses
Our businesses Principal Financial Group Retirement U.S. Principal and Income Principal Insurance Global Corporate Solutions International Solutions Investors (RIS) (USIS) Specialty Benefits RIS-Fee RIS-Spread Individual Life (SBD) 8
Slide 9: Global Asset Management
Global Asset Management Principal Global Asset Management (GAM) Tim Dunbar Principal Principal Global Strategy, International General Global RobustWealth Marketing & (PI) investment Account Investors (PGI) operations* Product Institutional Retirement HNW/Retail investors investors investors 9 *As pe
Slide 10: Pre-tax operating earnings
Pre-tax operating earnings Risk (21%) 9% Specialty Benefits Individual Life 25% 12% Pre-tax operating earnings1 Fee (64%) 16% $2,151.0 million RIS-Fee Spread (15%) Principal Global Investors Principal International RIS-Spread 23% 15% 10 1 Trailing twelve months as of 6/30/2018; excludes
Slide 11: Principal in Asia
Principal in Asia Renee Schaaf Senior Vice President and Chief Operating Officer, Principal International Kirk West Executive Director – Investments, Principal Global Investors
Slide 12: Thinking global, acting local
Thinking global, acting local Leveraging our strengths provides synergies that allow us to better serve our customers Principal International Principal Global Investors Synergies: Target market: Individuals Target market: Institutional • Asset accumulation in Emerging Markets and High Net Worth* • A
Slide 13: Principal's global presence
Principal’s global presence Principal International (PI) and Principal Global Investors (PGI) locations PGI has clients in 80+ territories PI has over 16 million customers in 10 territories Principal International markets Principal International offices Principal Global Investors portfolio managemen
Slide 14: Our regional financial footprint
Our regional financial footprint China $155,737M Taiwan South Korea Total Asia AUM $951M $845M Hong Kong Japan Middle East $10,451M $15,244M Principal Global Investors: $2,718M India $21,312M $1,082M Thailand Principal International: $4,212M Malaysia Singapore $186,083M $15,340M $294M Indonesia $522
Slide 15: Global asset growth = opportunity across regions
Global asset growth = opportunity across regions Global AUM by region (USD trillions) $80.0 +5% $70.0 Overall global $60.0 AUM growth: $50.0 +6% $40.0 +11% 2016: $84.9T $30.0 +6% $20.0 +9% 2050e: $145.4T $10.0 +10% $0.0 North America Europe Asia-Pacific Middle East + Latin America Africa 2016 2050e
Slide 16: Asia opportunity: Retirement and retail savings
Asia opportunity: Retirement and retail savings Pension Increase Optimize joint Digital evolution & voluntary venture disruption expansion savings relationships 16
Slide 17: Asia opportunity: Asset management
Asia opportunity: Asset management Investors focused Willing to pay Growing demand Power of our on outcomes & attractive fees for for cross-border diversified performance value investing business model 17
Slide 18: Spotlight on Southeast Asia and India
Spotlight on Southeast Asia and India Pedro Borda President – South Asia and India, Principal International Celestine Khoo Managing Director– Asia Ex-Japan, Principal Global Investors
Slide 19: Principal's SE Asia presence
Principal’s SE Asia presence India Principal Asset Management Mutual Funds Principal Retirement Advisors Advisory Thailand CIMB-Principal Asset Management Mutual Funds, Asset Management, Provident Funds Singapore UAE PGI Regional Office PGI Sales Office Asset Management (Institutional & HNW) Asset M
Slide 20: Better together
Better together Established Joint partnership Principal increased with CIMB group ownership share (Principal: 40% ownership) to 60%. 2003 2018 CIMB’s role as a strong partner Rationale for increased ownership: • 5th largest banking group in the ASEAN region • Leverage Principal’s global retirement a
Slide 21: SE Asia: Key business line trends and opportunities
SE Asia: Key business line trends and opportunities Mutual funds Pension (Malaysia and Thailand) • Solid growth across the region − 2013-2017 industry AUM CAGR of 11.3%1 • Private retirement scheme (PRS) launched in Malaysia − 2017-2022 industry AUM CAGR of 12.9%1 in 2011 − Growth led by Thailand an
Slide 22: SE Asia: Key business line trends and opportunities
SE Asia: Key business line trends and opportunities Institutional High net worth • More than $1.4 trillion of institutional • Asia-Pacific is the global leader in high net worth addressable assets in the region1 population and wealth2 • Outsourcing opportunities are bright as • The region is on targ
Slide 23: Financial highlights: SE Asia
Financial highlights: SE Asia Pre-tax operating earnings- reported in the Assets under management- reported in the Principal International segment (USD millions) Principal International segment (USD billions) $16 $20 17% $18.6B $13.6M CAGR2 $14 35% $18 $16.9B CAGR1 $16 $15.4B $12 $10.1M $14 $10 $12
Slide 24: Principal in India
Principal in India Principal Asset Management was Principal increased ownership share of established via a joint venture Principal Asset Management to 100%. 1999 2017 What we are doing to capture the potential of India: • Exploring strategies and capabilities that enhance AUM quality • Digital trans
Slide 25: India: Key business line trends and opportunities
India: Key business line trends and opportunities Mutual funds/Asset management Pension • Strong growth • Strong growth − 2013-2017 industry AUM CAGR of 26.1%1 • March 2014-March 2018 industry AUM − 2017-2024 industry AUM CAGR of 22.9%1 CAGR of 40.8%1 − Government and industry broadening promotion •
Slide 26: Financial highlights: India
Financial highlights: India Pre-tax operating earnings- reported in the Assets under management- reported in the Principal International segment (USD millions) Principal International segment (USD billions) $0 $2 -$1 15% CAGR -$2 -$3 $-2.0M $1.1B -$4 $-3.0M $1 $0.9B $0.7B $0.7B -$5 $0.6B -$6 $-5.7M
Slide 27: Spotlight on North Asia
Spotlight on North Asia Thomas Cheong President – North Asia, Principal International Celestine Khoo Managing Director– Asia Ex-Japan, Principal Global Investors
Slide 28: Principal's diversified strategy for China
Principal’s diversified strategy for China • Multiple opportunities exist across four segments, which we are exploring in parallel • Some will be pursued with China Institutional/ Retirement Retail Mutual Construction Bank (CCB), others FundsSub-advisory outside of CCB • We will maintain a relations
Slide 29: Our focus in each segment
Our focus in each segment • Broaden and deepen our CCB partnership Retirement • Finalize Pension JV agreement with CCB and gain regulatory approval • Advance multiple initiatives with CCB Principal Asset Management to Retail Mutual grow the retail mutual fund business Funds • Build relationships and
Slide 30: China Construction Bank + Principal Asset Management (CCBPAM)
China Construction Bank + Principal Asset Management (CCBPAM) 50% of its customer base RQFII equity fund successfully Strategic cooperation facilitates are retail investors launched by Malaysia & Thailand interaction and engagement at ventures, sub-advised by China venture multiple levels between PF
Slide 31: Financial highlights: China
Financial highlights: China Pre-tax operating earnings- reported in the Assets under management- reported in the Principal International segment (USD millions) Principal International segment (USD billions) $60 $140 $124.4B $48.5M $120 $50 62% 70% $42.6M CAGR $101.3B CAGR $100 $40 $80 $30 $21.5M $60
Slide 32: Hong Kong: Mandatory Provident Fund (MPF) market update
Hong Kong: Mandatory Provident Fund (MPF) market update Key pieces of the MPF market: • Distribution • Contribution • Voluntary savings • e-MPF Key trends: • Growing awareness of the need to enhance Hong Kong’s pension system − MPF remains the centerpiece of Hong Kong retirement system − Tax-incenti
Slide 33: Opportunities for Principal in Hong Kong
Opportunities for Principal in Hong Kong Increased Continued Simplify and Strengthen customer investment in streamline brand awareness centricity digital solutions 33
Slide 34: Financial highlights: Hong Kong
Financial highlights: Hong Kong Pre-tax operating earnings- reported in the Assets under management- reported in the Principal International segment (USD millions) Principal International segment (USD billions) 30% $30 $10 CAGR $9.3B 20% $25.6M $9 $25 $7.6B CAGR $8 $7.2B $7 $20 $6 $15 $13.5M $14.0M
Slide 35: Spotlight on Japan
Spotlight on Japan Hitoshi Itagaki CEO and President – Japan, Principal Global Investors
Slide 36: Japan: Evolving with the market
Japan: Evolving with the market Market Trends Our Japan Business • Total asset management market has grown to • Target markets include Pensions, Financial US$5 trillion (JPY 550 trillion)1 Institutions, Sub-advisory, and Funds • Despite this growth, Japan remains • Our broad range of specialist capa
Slide 37: Leveraging PGI's multi-boutique model
Leveraging PGI’s multi-boutique model Breakdown of Japan-sourced AUM1 By Asset Class By Boutique Post Fixed Advisory Income Group 81.2% 40.0% Real Estate PGI Fixed 8.8% Income $15.2 33.8% $15.2 billion Hedge billion Fund PrinREI 1.6% 8.8% Equity Spectrum 8.4% 7.4% Edge Finisterre Origin 0.1% PGI Equ
Slide 38: Investment Trust Management (ITM) capability
Investment Trust Management (ITM) capability • PGI-Japan ITM business started in 2017 PGI Japan Investment Trust AUM 1 • Steady growth to US$1.5 billion AUM in one year (USD billions) • The capability opens up new opportunities with: $2.0 − Tax qualified investors through tax-qualified $1.5 funds $1
Slide 39: Opportunities for Principal in Japan
Opportunities for Principal in Japan Variety of Distribution ITM investment alliance for platform solutions mid-size institutions 39
Slide 40: Questions for the panel?
Questions for the panel? re) Principal”
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