Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Day (2013)
20 slides from Principal Financial's investor day presentation, 2013
Slide 1: U.S. Businesses Overview
DAN HOUSTON U.S. BUSINESSES • Solid underlying growth • Industry competitive margins • Continued strong sales & retention OVERVIEW STATE OF • Compelling growth opportunities: U.S. ̶ Retirement Readiness BUSINESSES ̶ Retirement Income RETIREMENT & ̶ Voluntary Benefits INVESTOR SERVICES • Highlighting
Slide 2: Success Reflects Expertise Serving SMB Market
Individual Life 2010 2011 2012* 1H13 Premium $847M $873M $890M $466M U.S. INSURANCE & fees Operating SOLUTIONS earnings $107M $110M $112M $36M Pre‐tax (USIS) margin 18.0% 17.9% 17.4% 10.8% • Earnings diversification Specialty Benefits • Enhances SMB leadership 2010 2011 2012 1H13 • Interest rate pre
Slide 3: Strong Growth Across Lines; Balanced Portfolio
$90M 1800 $82M 1600 U.S. INSURANCE Business Owner 1400 $71M New Plans 1200 $60M and Executive 1000 SOLUTIONS Solutions (BOES) 800 $33M 600 Individual Life 400 200 25% of 2009 premium 0 2009 2010 2011 2012 2013E 36% of 2012 premium New Premium ($M) New Plans STRONG 2000 300 Total Paid Premium GROWTH
Slide 4: Retirement & Investor Services (RIS)
RIS Accumulation 2010 2011 2012 1H13 Net $1,820M $1,917M $2,044M $1,138M revenue* Operating RETIREMENT earnings $449M $473M $488M $286M Pre‐tax & INVESTOR return on net revenue 30.8% 31.4% 29.5% 31.7% SERVICES (RIS) RIS Guaranteed • Solid underlying growth 2010 2011 2012 1H13 • Strong expense manage
Slide 5: Platform Differentiation Drives Success
RETIREMENT & INVESTOR SERVICES Multiple Investment PLATFORM Approaches DIFFERENTIATION Across Alternatives | Asset Allocation DRIVES SUCCESS Asset Classes Equities | Fixed Income Multiple Distribution Channels RETIREMENT RETAIL INVESTMENT INVESTMENT PLATFORM PLATFORM 60 RETIREMENT & INVESTOR SERVICE
Slide 6: Net Cash Flow Consistently Outpaces Industry
6.3% Full Service Accumulation (FSA) RETIREMENT & INVESTOR SERVICES 3.5% 2.5% 1.8% …RESULTING 1.0% 0.6% 0.5% 0.6% NET CASH 2009 2010 2011 2012 FLOW 401k Industry net flows Principal FSA net flows CONSISTENTLY Principal Funds 18.1% OUTPACES INDUSTRY 8.3% 6.0% 6.7% 4.6% 4.5% 2.4% 1.9% 2009 2010 2011 2
Slide 7: Principal Total Retirement Suite
RETIREMENT & INVESTOR SERVICES Full Service Accumulation Defined PRINCIPAL Defined Benefit Contribution #2 DC plan #1 DB provider TOTAL (by # of clients) recordkeeper (by # of plans) RETIREMENT SUITESM Employee Stock Nonqualified Ownership Plan Plans STILL A DIFFERENTIATOR #1 ESOP plan #2 Deferred C
Slide 8: Why Does SMB Focus Matter?
79% RETIREMENT & % proprietary INVESTOR SERVICES 71% More Full Service Accumulation proprietary assets SMB Total Block WHY DOES Double Digit growth Higher annualized SMB FOCUS on a lower asset base 1H13 compared to 1H12 revenue on MATTER? new sales Nearly 4,000 plans More sold in 2012 vs. plans 2,70
Slide 9: Individual Investor Strategy Captures Additional Assets
RETIREMENT & INVESTOR SERVICES • Simplify process ENROLLMENT • Improve experience INDIVIDUAL OPTIMIZATION • Maximize participation and influence behavior INVESTOR STRATEGY READY TO • Portfolio allocation RETIRE • Participant education RETIREMENT • Education and guidance INCOME • Portfolio constructi
Slide 10: Principal Funds: Key Growth Driver
NORA EVERETT PRINCIPAL FUNDS PRINCIPAL FUNDS Measure1 2009 2010 2011 2012 1H13 KEY Sales $7.7B $9.4B $11.2B $15.8B $11.0B GROWTH Net cash flow ($0.2B) $1.6B $2.2B $6.6B $4.7B DRIVER FOR Account $30.8B $36.3B $38.6B $50.4B $57.8B values2 THE Return on PRINCIPAL adjusted revenue3 16.2% 24.3% 27.2% 25.
Slide 11: Principal Funds: 3 Key Growth Drivers
PRINCIPAL FUNDS INDUSTRY SALES AND FLOWS LEADING SALES • 12x industry sales growth GROWTH OUTPACE THE INDUSTRY STRONG NET CASH FLOW • 4x industry average …with continued gains in market share 19TH LARGEST MANAGER OF • Up 5 spots from 2010 INTERMEDIARY SOLD FUNDS 72 Comparisons based on year‐end 2012
Slide 12: A Diversified Family of Mutual Funds
Net Cash Assets Under Flow Management PRINCIPAL FUNDS 27% Equity 31% A DIVERSIFIED Fixed Income FAMILY OF 11% 21% 1% MUTUAL FUNDS 3% Index Asset 55% 45% Allocation Other 2% 4% TTM 6/30/13 6/30/13 74 PRINCIPAL FUNDS LEADING ASSET #5 LifeCycle AUM ALLOCATION POSITIONS #5 Target Risk AUM #4 Target Date
Slide 13: Demonstrated Success in Retirement Income
PRINCIPAL FUNDS DEMONSTRATED $23B SUCCESS IN INCOME ORIENTED RETIREMENT MUTUAL FUND SALES* (2010 to 6/30/13) INCOME MARKET INCOME ORIENTED MUTUAL FUNDS ADDED TO >30 THIRD PARTY PLATFORMS** * Equity Income, GDI, High Yield, Income, Preferred Securities, Short‐term Income, and Small‐MidCap Dividend In
Slide 14: Investment Platform Success and Strong Performance
OVER THE LAST INVESTMENT PRINCIPAL FUNDS 5 YEARS PLATFORM SUCCESS 11 FUNDS NEW Generated 50% of our NCF $10 BILLION SALES 78 Morningstar Rankings PRINCIPAL FUNDS Percentage of Principal Funds in the top two quartiles 89% STRONG 85% 82% 84% 87% 71% INVESTMENT 64% 62% 69% PERFORMANCE Represents $100 b
Slide 15: Industry Recognition and Multiple Distribution Channels
PRINCIPAL FUNDS Best Mixed-Asset Large Fund Group DRIVING 2013 INDUSTRY RECOGNITION Hottest Fund AND ADVISOR Firms of 2012 ENGAGEMENT Top 10 DC Fund Manager 80 SALES – Then & Now 21% Affiliated PRINCIPAL FUNDS Distribution Third Party MULTIPLE 100% 52% Broker/Dealers DCIO/RIA DISTRIBUTION 27% 2006 6
Slide 16: Continuing to Drive Advisor Growth
300,000+ Total FINRA Licensed advisors PRINCIPAL FUNDS CONTINUING +17% TO DRIVE # of Advisors selling Principal ADVISOR 100,000+ Funds* GROWTH Average top fund family +77% advisor count # of Top Advisors 45,000+ selling Principal Advisors selling Funds (>$500k)* Principal Funds today 82 * 6/30/13 vs
Slide 17: Distribution Update: Alliances and Evolution
RETIREMENT & INVESTOR SERVICES Firms w/$1B sales 7 DISTRIBUTION UPDATE ALLIANCES IN 2013: 67% of FSA Sales 85% of Funds Sales 84 2006 2012 2018 Collaborative approach to RETIREMENT & FSA Focus Accumulation capture more Principal Model INVESTOR SERVICES branded funds PRINCIPAL BRANDED FUNDS FSA FSA D
Slide 18: Distribution Update; U.S. Insurance Solutions Outlook
DISTRIBUTION UPDATE 2010 2011 2012 1H13 RIS & USIS RIS $17.7B $21.2B $29.2B $16.7B Accumulation SALES REMAIN Individual Life $164M $186M $227M $119M STRONG Specialty $241M $285M $256M $158M Benefits 86 U.S. INSURANCE SOLUTIONS: 5 YEAR 2011 2012 6/30/13 TTM 5 Year Outlook OUTLOOK Individual Life Prem
Slide 19: Accumulation Outlook and Key Takeaways
RETIREMENT & INVESTOR SERVICES 6/30/13 5 Year 2011 2012 5 YEAR TTM Outlook OUTLOOK Net revenue* 5% 7% 14% 6‐8% ACCUMULATION growth rate • Market returns are Pre‐tax helping recent return on net 31.4% 29.5% 30.2% 28‐32% revenue growth revenue • Maintaining return Net revenue on revenue margin is GUAR
Slide 20: Q&A with Dan Houston & Nora Everett
Q&A WITH DAN HOUSTON & NORA EVERETT Principal Financial Group 2013 Investor Day 20