Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Day (December 2009)
44 slides from Principal Financial's investor day presentation, Dec 3, 2009
Slide 1: Principal Financial Group Investor Conference
Exhibit 99 Principal Financial Group, Inc. Investor Conference December 3, 2009 WE'LL GIVE YOU AN EDGE
Slide 2: Tom Graf, Senior Vice President & Investor Relations Officer
Tom Graf Senior Vice President & Investor Relations Officer
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Anon-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 4: 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 sales targets, sales and earings trends, and management's beliefs, expectations, goals and opinions. The comp
Slide 5: Larry Zimpleman, Chairman, President & CEO
Larry Zimpleman Chairman, President & Chief Executive Officer
Slide 6: Overview
Overview Strategic Update Evolution of Our Businesses Growth Drivers — U.S.AA - Accumulation — Principal Global Investors — Principal International Focus on Fundamentals Delivering on Promises al
Slide 7: Strategic Update
Strategic Update re.
Slide 8: Defining characteristics of The Principal
Strategic Update Defining characteristics of The Principal® Competitive advantages and market leadership High growth/high return fee-based businesses Strong recurring deposits Proven ability to execute Business and asset diversification High financial strength ratings Prudent product design & manage
Slide 9: Fundamental forces continue to drive change
Strategic Update Fundamental forces continue to drive change The Government Core benefit programs in trouble é Costs of benefits Employees a aching making U.S Employers e companies less competitive “Era of Personal Responsibility” “a
Slide 10: Market trends create opportunity
Market trends create opportunity Core trends remain: Personal Responsibility Retiring Baby Boomers Globalization of Retirement Systems Opportunities: — > x 2 21 21 To meet the changing financial security and benefits demands of an aging workforce To manage assets appropriate or retirement and other
Slide 11: Our strategy remains compelling
Our strategy remains compelling: The Principal is positioned to capitalize Deepen SMB market penetration Deliver complete retirement solutions within comprehensive employee benefits package Extend retirement leadership to capture retail rollover opportunities Capitalize on global asset management ex
Slide 12: Evolution of Our Businesses
Evolution of Our Businesses
Slide 13: Change in AUM mix illustrates evolution to asset management and accumulation
Change in AUM mix illustrates evolution to asset management and accumulation Total Company AUM 1213112001 12/31/2005 — a $280B Wi General Account @ Separate Account MiMutual Funds Q@Non-affiliated I Principal International *12/31/2001 numbers have been restated to reflect disposition of BT and PRMI
Slide 14: Evolution of operating earnings illustrates power of growth engines
Evolution of Our Busine Evolution of operating earnings illustrates power of growth engines Total Company OE* 17% 32% 38% 12/31/2001 12/31/2005 9/30/2009 2014E IM Growth Businesses [ll Risk Businesses [ll Guaranteed Businesses (primarily fee-based) *Excludes from 2001 the mortgage banking operation,
Slide 15: Growth Drivers
Growth Drivers U.S.AA - Accumulation (U.S.AA — Accum) Principal Global Investors (PGI) Principal International (PI)
Slide 16: Growth Drivers — U.S. AA Accum
Growth Drivers — U.S. AA Accum Total Retirement Suites" remains a competitive advantage 2004 2005 2006 2007 2008 Total Retirement Suite Sales ($B) As % of Total FSA* Sales . 15 “Full service accumulation Group 25% 34% 54% 59% 58%
Slide 17: Uniquely qualified to solve client needs
16 Uniquely qualified to solve client needs Total Retirement Suite - Best in Class, Proprietary Solutions Defined Contribution (DC) * $87.5 B in DC assets, including $5.2 B in 403(b) assets? ESOP - Administrative services to more than 780 companies covering 460,000 participants, including services f
Slide 18: Alliances continue to generate strong sales
Alliances continue to generate strong sales Expanding relationships position the company for future sales growth Added approximately 50,000 new intermediaries since 2001 Alliance Sales $0.4B $4.2B Total FSA Sales $3.3B $8.3B 14% ON Ss MorganStanley SmithBarney Bankof America, “VP Northwestern Mutual
Slide 19: Diversified approach positions us for continued growth
Diversified approach positions us for continued growth $100 billion of pension client assets under management (as of 09/30/09) @ Manage assets for 12 of the top 25 U.S. pension funds' @ Clients in 53 countries (as of 09/30/09) ® Sovereign Wealth Fund Client AUM2 39% increase in number of ins USB Mil
Slide 20: Growth Drivers - PGI
Growth Drivers - PGI Proven boutique strategy Bouiiue Year Asset Class 09/30/09 AUM q Acquired Specialty AUM —_CAGRs* SPECTRUM — 9904 Preferreds $9.28 32% High yield cost 2003 ee $9.2B 27% Advisory Fixed Income 2007 Stable Value $15.7B 15% Grawih $14.6B 39% @ 2005 Equities *Compounded annual growth
Slide 21: Growth Drivers - PI
Gr wth Drivers - PI Strategic international footprint delivers exceptional growth Assets Under Management Operating Earnings Number of Customers in USD Billions Trailing Twelve Months in Millions in USD Millions 20 978 5-yr CAGR 5-yr CAGR 14% 5-yr CAGR 22% 28% 52 37 . ] 09/30/04 09/30/09 09/30/04 09
Slide 22: Growth Drivers - PI: Brasilprev
Growth Drivers - PI Brasilprev Banco do Brasil * #1 in Latin America by assets Deposit Growth of Private Pension Plans* + #1 in deposits and customers Change YTD Aug ‘08 vs. YTD Aug ‘09 (53 million) + Largest footprint (17,234 points of 62.1% service; 4,958 branches; 104,139 employees) * — Inclusion
Slide 23: CCB Principal Asset Management
CCB Principal Asset Management China Construction Bank (CCB)* . ind i ji 24 largest bank in China (by assets) AliM far datot Vents * 13,400 branches; 2,198 personal (in USD Billions) financial centers; 109 wealth management centers CCB Principal Asset Management 46 “9 * 97% CAGR (3-yr) for AUM** 3.8
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23
Slide 25: Experience and discipline lessen impact of a challenging environment
Focus on Fundamentals Experience and discipline lessen impact of a challenging environment Prior to the crisis During the downturn Ongoing discipline limits exposure *Liabilities Scaling back Investment Only = Expense actions — Variable annuities* — Puttable GICs Liquidity building °Assets Repositio
Slide 26: Asset/liability management
25 Assetiliabilit managemen Liquidity management Intent and ability to hold to maturity Disciplined Portfolio Management: No losses from forced selling $40 $20 Book Value PerStare $10 $0 | 03/31/08 Volatility of “ unrealized losses reflects market dislocation + $0 ~ ($8) 12/31/08 09/30/09 eet Unreal
Slide 27: U.S. Real Estate capital markets in recovery
26 U.S. Real Estate capital markets in recovery Material improvement in pricing and liquidity in three of four quadrants Public Equity (REITs) « Share price up > 100% from March trough* * Trading above NAV for first time in > 2 years Private Debt « Loan delinquencies continue to rise but life insura
Slide 28: Delivering on Promises
Delivering on Promises Financial Group
Slide 29: Bottom line: Our focused execution delivers
Bottom line: Our focused execution delivers... meat: $782M : | operating : ...despite the earnings : headwinds of : some of the , 2 worst conditions $440M : in decades. netincome : * 28 *For trailing twelve months ended September 30, 2009 re. Group
Slide 30: Delivering on our promises
29 Delivering on our promises penne ism) $562 $943 10-12% bein om 362 261 EPS? $1.55 $3.61 11-13% AUM ($B)! $98 «$247 ROE® 8.6% 14.2% +50 bps S&P 500 1,148 903 8%" NOTE: Data in tables throughout presentation have generally been rounded; calculations based on un-rounded financial supplement data. ‘E
Slide 31: Value built since IPO
30 Delivering on Promises Share price does not reflect Value built since IPO 12/31/01 9/30/09 Customers (M) 13.0 18.6 Operating Earnings ($M) $562 $782* AUM ($B) $98 $280 Annual dividend to common stockholders $0.25 $0.50 Share price $24.00 $27.39 *For trailing twelve months ended September 30, 2009
Slide 32: Long-term financial targets remain achievable
Delivering on Promises Long-term financial targets remain achievable 11-13% average annual growth in EPS 50 basis points average annual ROE improvement Assumes long-term equity market performance improvement of roughly 2% per quarter. E ee
Slide 33: Compelling Strategy + Effective Execution = Strong long-term growth
32 Compelling Strategy + Effective Execution = Strong long-term growth ¢ Trends continue to create meaningful growth opportunities ¢ The Principal — strongly positioned to capitalize on trends — Special expertise in serving SMB market — Retirement focus — Strong distribution focused on independent a
Slide 34: Terry Lillis, Senior Vice President & Chief Financial Officer
Terry Lillis Senior Vice President & Chief Financial Officer
Slide 35: Navigating uncertain times through earnings diversification
Financial Review Navigating Uncertain Times through earnings diversification % of Operating Earnings* 9 months ended 09/30/09 Latin America & Asia U.S. Guaranteed 13% U.S. Accumulation 43% 34 “Excludes Corporate segment.
Slide 36: Navigating uncertain times through a diversified asset mix
Financial Review Navigating Uncertain Times through a diversified asset mix One Possible Loss Scenario* $500 Size of Portfolio $400 m Bonds = $30.7B mCM =$10.4B g $300 mCMBS/CDO = $5.4B § E $200 S Pb bees 2006 2007 2008 2009 2010 2011 2012 Source: 309 earnings release materials. Portfolio sizes are
Slide 37: Navigating uncertain times through liquidity management
36 Financial Review Navigating Uncertain Times through liquidity management Company increased liquidity position by $4 billion over the six quarters ended 9/30/09 Managed holding company liquidity — Retired $441 million debt that matured August 2009 — Next significant debt maturity is in 2014 Redepl
Slide 38: Navigating uncertain times through capital management
Financial Review Navigating Uncertain Times through capital management Excess capital of $1.5 billion at 9/30/09 (after paying off long-term debt obligation) — $1.9 billion capital raise in May 2009 — $441 million debt maturity in August 2009 Solid earnings over trailing twelve months ending 9/30/09
Slide 39: S&P Index Closing Price
S&P 500 Index Closing Price fouttook | Market performance key driver of AUM growth S&P Price Performance tyo2/2008, 1447.2 12/31/2010, 1186 2008 S&P Mean = 1227 . 2010 S&P Mean = 1150E 2009 S&P Mean = 960E 03/09/2009, 676.5 2008 2009 2010 re. Group
Slide 40: Outlook
| Outiook | 2010 Outlook . Group
Slide 41: 2010 Outlook
2010 Outlook re. Group
Slide 42: Q&A Session
41 Q&A Session Please remain connected to this webcast to hear the Q&A discussion with senior management. If you would like to ask a question, call this number: 866-374-1609 (US & Canadian callers) 706-643-7701 (International callers) The operator will ask for the Conference ID: 43807038 Press *1 on
Slide 43: Dial in details and management team
Dial in: 800-374-1609 (Domestic) 706-643-7701 (International) 43807038 Conference ID f f | a Larry Zimpleman _ Terry Lillis Dan Houston Jim McCaughan Tim Minard Ellen Lamale Julia Lawler Norman Sorensen Deanna Strable ry. a 42 Group
Slide 44: Non-GAAP Financial Measures
Principal Financial Group. no. Non-GAAP Financial Meseures (ir millons, except as incieated) Forte Tres months Snea WSUS | STAT | Sewanee | sroects | so Sepoe | anos | Se Book Value Per Common Share XOCT [Book value OCT SESS TEES TEBE SERS SBS BBE SZ Net unrealized esnital oases. eer) er) (15.20) (1
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