Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Q1 2023 Earnings Presentation
23 slides from Principal Financial's earnings presentation, Apr 28, 2023
Slide 1: First Quarter 2023 Earnings Call Presentation
e) Principal’ First Quarter 2023 Earnings Call Presentation PRINCIPAL FINANCIAL GROUP April 27, 2023 RETIREMENT ASSET MANAGEMENT BENEFITS & PROTECTION
Slide 2: 1Q 2023 key takeaways
1Q 2023 key takeaways * Strong first quarter results in line with our expectations, reflecting 1Q seasonality * Remain confident in 2023 outlook; benefitting from strong execution and 1Q market tailwinds Strength and resilience of our small to mid-sized customers across US businesses and recovery in
Slide 3: 1Q 2023 financial highlights
3 1Q 2023 financial highlights 1Q 2023 OPERATING EARNINGS AND EPS Reported non-GAAP Impact of significant variances to Non-GAAP operating earnings, operating earnings! non-GAAP operating earnings? excluding significant variances (xSV) $367M $29M after-tax $395M (-8% vs. 1Q 2022) ($33M pre-tax) (-10%
Slide 4: Investment performance
Investment performance % of funds outperforming Morningstar median! ? As of 3/31/2023 1-Year 3-Year 5-Year 10-Year Equity 45% 44% 62% 88% Fixed Income 50% 60% 79% 73% Asset Allocation 40% 66% 74% 74% Total 44% 57% 71% 79% % of composites outperforming benchmarks"? As of 3/31/2023 1-Year 3-Year 5-Yea
Slide 5: High quality and diversified investment portfolio
High quality and diversified investment portfolio U.S. invested assets and cash; excluding funds withheld, as of March 31, 2023 Government Cash, 3.9% Agencies, State & Political, Other", 10.1% 8.6% Residential Loans, 4.6% * Intentional improvement of credit quality in fixed maturity and commercial r
Slide 6: Retirement and Income Solutions
Retirement and Income Solutions HIGHLIGHTS + Pre-tax operating earnings excluding significant variances! decreased slightly due to lower net revenue partially offset by lower operating Net revenue ($M) Quarterly basis expenses aa oe . $732 —_{ -11% ) * Net revenue excluding significant variances? de
Slide 7: Principal Global Investors (PGI)
Principal Global Investors (PGI) HIGHLIGHTS * Pre-tax operating earnings decreased primarily due to lower management Operating revenues less fees from a decrease in average AUM pass-through expenses’ ($M) * Management fee rate remained stable at 29 basis points Quarterly basis * PGI managed AUM of $
Slide 8: Principal International
Principal International HIGHLIGHTS * Pre-tax operating earnings excluding significant variances! increased primarily due to higher combined net revenue as a result of higher AUM * Positive net cash flow of $0.8B driven by SE Asia, Brazil, Mexico, and Hong Kong OTHER CONSIDERATIONS * Lower earnings i
Slide 9: Specialty Benefits
Specialty Benefits HIGHLIGHTS * Pre-tax operating earnings excluding significant variances! increased due to growth in the business and lower claims experience partially offset by higher expenses * Premium and fees increased 10% driven by strong sales, retention, and employment growth Reported Pre-t
Slide 10: Life Insurance
10 Life Insurance HIGHLIGHTS * Pre-tax operating earnings excluding significant variances! decreased primarily due lower net investment income and higher claims experience * Premium and fees decrease driven by the 2022 reinsurance transaction Premium and fees ($M) Quarterly basis $225 $332 -3% exclu
Slide 11: Commercial real estate details
Commercial real estate details As of 3/31/2023, excluding funds withheld
Slide 12: High quality commercial mortgage loan portfolio
High quality commercial mortgage loan portfolio U.S. invested assets excluding funds withheld, as of 3/31/2023 al Property type Commercial Mortgage Loan- Total * Commercial mortgage whole loans remain high quality given the low @ 43% Apartments Debt service coverage leverage, strong debt service and
Slide 13: Office loans exposure well managed
13 Office loans exposure well managed U.S. invested assets excluding funds withheld, as of 3/31/2023 Office exposure of $3.4B, 4.6% of U.S. invested assets and cash Reduced office exposure from 37% in 2016 to 25% today Manageable near-term maturities Average LTV 52% and DSC 2.5x 90% current occupanc
Slide 14: Mortgage & asset-backed fixed maturity securities quality
Mortgage & asset-backed fixed maturity securities quality U.S. invested assets excluding funds withheld, as of 3/31/2023 ($ in millions) * Reduced size of CMBS portfolio by over 20%! since 2008 * Overall quality of the portfolio improved; 98% of CMBS portfolio rated NAIC 1, up from 87% in 2008 % wi
Slide 15: Equity real estate
Equity real estate U.S. invested assets excluding funds withheld, as of 3/31/2023 * Substantial cushion between market Equity real estate exposure by property type and carry values; risk of balance sheet vs. NCREIF property index impairment unlikely 39.3% ° Well diversified portfolio across property
Slide 16: Appendix
Appendix
Slide 17: Non-GAAP operating earnings excluding impacts from significant variances
Non-GAAP operating earnings excluding impacts from significant variances Signifi iances ignificant variances luding tuding VID-19 Enc: n Other'__y e lated Vil___Inflation __Other? Retirement and Income Solutions 249.8 24.0 (11.0) 262.8 294.2 9.4 (1.8)] (36.0) 265.8 (3.0) 1% Principal Asset Managemen
Slide 18: Significant variances
Significant variances Business unit impacts of significant variances (in millions) Retirement and Income Solutions (28.4) (25.0) 24.3 25.3 (3.8) vil (36.0) (25.0) 27.1 25.3 (8.6) IRT integration 9.4 - - - 94 Actuarial assumption review - - (1.8) - (1.8) COVID-19 claims (1.8) - (1.0) - (2.8) Principa
Slide 19: Non-GAAP operating earnings sensitivities
19 Non-GAAP operating earnings sensitivities Estimated impacts of changes in key macroeconomic conditions on annual non-GAAP pre-tax operating earnings relative to the next 12 months, prior to management expense actions Certain alternative Equity market investment If macroeconomics return? Interest
Slide 20: Non-GAAP financial measure reconciliations
20 Non-GAAP financial measure reconciliations Three months ended (in millions) Principal Global Investors operating revenues less pass-through expenses ete Senter Non-GAAP operating earnings (losses) (in millions) 3/31/23 Three months ended 3/31/22 Principal Global Investors operating revenues $392.
Slide 21: Non-GAAP financial measure reconciliations
21 Non-GAAP financial measure reconciliations Period ended (in millic Stockholders’ equity x- cumulative change in fair value of funds withheld embedded derivative and AOC! other than foreign currency translation adjustment, available to common stockholders 3/31/23 Non-GAAP operating earnings ROE (x
Slide 22: 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 flow 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 manag
Slide 23: 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 flow, realized and unrealized gains and
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