Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Day (November 2024)
66 slides from Principal Financial's investor day presentation, November 2024
Slide 1: The Principal advantage: Positioned for sustained growth
Principal’ ~The Principal’ advantage: Positioned for sustained growth
Slide 2: Welcome
Slide 3: Agenda
Agenda Welcome Our growth strategy Panel: Small and midsized business Break Panel: Retirement ecosystem Panel: Global asset management Positioned for market-leading growth Break Q&A
Slide 4: Our growth strategy
Our growth strategy Dan Houston | Chairman & Chief Executive Officer Deanna Strable | President, Chief Operating Officer & Chief Executive Officer Elect
Slide 5: Today's discussion
Today’s discussion Core values Market leading performance Established leadership positions Exceptional market opportunities Distinct competitive advantages Investments driving growth and efficiency Integrated capabilities expand our competitive advantage Confidence in delivering financial targets &
Slide 6: Core values guide every decision we make
Core values guide every decision we make. Start with the customer We solve for the customer—every day and with every decision. Do what’s right Integrity is nonnegotiable. It guides everything we do. Own what’s next We continuously learn and advance ourselves in pursuit of tomorrow. Invest for our fu
Slide 7: Decisive actions to deliver financial targets
Decisive actions to deliver financial targets Reposition business portfolio Reinsurance of ULSG and fixed annuity blocks Increased free capital flow Ongoing return of excess capital Growing dividend with 40% payout ratio? Achieving financial targets @ 9-12% EPS' growth @ 14-16% ROE? in 2025 @ 75-85%
Slide 8: Delivering strong returns to shareholders
Delivering strong returns to shareholders Total shareholder return since last Investor Day (June 2021)° 53% 9 37% 34% 24% PFG Peers* S&P 500 S&P 500 Financials 8 v Principal”
Slide 9: Strong distribution partnerships enable market leadership
Strong distribution partnerships enable market leadership Affiliated . . P — 5 4 “ enerits an rotection .>. retiremen sset Managemen P B fit: d Protect! U.S. reti t Asset t rincipal Financial Network Principal Connection #4 Group life® #4 Defined benefit? #4 Peet U.S. target rd - i i a) petisy | See
Slide 10: How we win
How we win O Principal’
Slide 11: History of evolving to capture market opportunities
" History of evolving to capture market opportunities Insurance-focused Insurance heritage with aspiration to deliver broad suite of solutions Pioneer of workplace retirement and benefits Leading portfolio of risk, fee, and spread businesses Retirement Asset management Benefits International Focused
Slide 12: Small and midsized business profit pool is attractive
Small and midsized ...and we have a long history business profit pool of outperforming the industry is attractive... Group benefits Retirement Premium and fees growth’? SMB asset growth”? $90B annual 7 Q 12.8% profit pool’ " Oy U.S. SMB market 7.0% 4.9% opportunity across : 4.5% retirement and insur
Slide 13: Redefining retirement to capture value across the retirement ecosystem
Redefining retirement to capture value across the retirement ecosystem Capabilities Recordkeeping Asset management Wealth management Income solutions 3 _ $110B annual profit pool” Uniquely positioned across entire U.S. retirement ecosystem (— Forces shaping the retirement industry Growing retirement
Slide 14: Well-positioned to drive above-market growth in global asset management
WelLpositioned to drive above-market growth in global asset management $180B annual profit pool” Focused on attractive opportunities where we have a right to win 14 > B= Differentiated capabilities with privileged access across the U.S. retirement ecosystem Large and diverse global institutional cli
Slide 15: Investing for growth and efficiency
Investing for growth and efficiency Customer experience Global delivery 15 Technology Data, analytics, and Al/GenAl Enhanced quality and operational effectiveness RFP response generation Code generation Claim management Engagement center automation Enriched customer Improved and advisor growth exper
Slide 16: What's to come
What’s to come O Principal’
Slide 17: Aligning our businesses with higher-growth opportunities
7 Aligning our businesses with higher-growth opportunities GROWTH PLATFORMS SMB Retirement ecosystem Global asset management Insurance 2 to 3% INDUSTRY SECTOR Retirement recordkeeping -1to 2% Traditional asset management 3 to 6% 4to 5% 4 to 8% 4 to 8% & Principal”
Slide 18: Delivering sustained growth through earnings power
Delivering sustained growth through earnings power... Consensus 3-year forward EPS growth?! PFG Avg. of peers 18 ...and confident in delivering financial targets Annual EPS growth Free capital flow conversion
Slide 19: Key takeaways
Key takeaways Operating from a position of strength Strong competitive advantages to capture growth in the world’s most attractive profit pools Continued confidence in delivering sustained, market-leading growth and returns to shareholders
Slide 20: Small and midsized businesses
© Principal’ PRESENTERS: Amy Friedrich President, Benefits & Protection Sm all an d Chris Littlefield President, Retirement & Income Solutions midsized H Beth Wood ) Uu ) | nN es S Executive Vice President & Chief Marketing Officer MODERATOR:
Slide 21: The SMB market is vast with significant opportunity for growth
The SMB market is vast with significant opportunity for growth 6.3M employers with <1,000 employees?> 50% 44% of all jobs in of the $27.4T America®? and 65% U.S. GDP??:4 of jobs created”? 60 M employees in SMBs25 21 © Principal”
Slide 22: Expansive view of opportunities within SMBs
Expansive view of opportunities within SMBs Saving for retirement Access to benefits and insurance Personal investing Extending protection for executives Exit and succession planning Business continuity through death or disability Personal insurance and retirement Personal wealth management Attracti
Slide 23: We've built a resilient and valuable SMB customer base
We’ve built a resilient and valuable SMB customer base Cu 23 In business an average 30+ years fe) 40% With Principal an average of 10 years PFG pre-tax 90% customer retention 95% asset retention operating earnings”° from SMBs ~80% of customers have at least 2 Principal products v Principal”
Slide 24: Our SMB track record of performance is clear
24 Our SMB track record of performance is clear Principal Retirement and Group Benefits 5-year performance vs. industry 12.8% 11.7% 9.8% 7.0% Defined contribution 401(k) participant Group Benefits premium Group Benefits asset growth?? count growth? and fees growth’? pre-tax margin v Principal”
Slide 25: Broad set of solutions across segments
Broad set of solutions across segments Common needs Principal solutions Employees * Saving for retirement Retirement plans including DC, DB, NQ, and ESOP Access to benefits and insurance Dental, vision, life, disability and worksite products Personal investing Financial education and advice, investm
Slide 26: We are uniquely positioned to serve this market
26 We are uniquely positioned to serve this mark xX Solutions & expertise Full suite of products, services, and dedicated talent addressing SMB challenges 0 Distribution Privileged access to SMBs through advisors, brokers, and third-party administrators BS Technology Relevant, easy-to- use experienc
Slide 27: Key takeaways
Key takeaways Market is vast with significant opportunity for growth Resilient and long-tenured customer base contributes to our track record of performance Uniquely built to serve needs across SMB segments
Slide 28: Retirement ecosystem
PRESENTERS: Chris Littlefield President, Retirement & Income Solutions Retirement kamal Bhatia President & Chief Executive Officer, Principal Asset Management Principal’ ecosystem monerAra Vivek Agrawal Executive Vice President & Chief Growth Officer
Slide 29: Reframing the retirement opportunity
29 Reframing the retirement opportunity Recordkeeping Asset management * Privileged access to * Institutional and retail individuals in the workplace * On-platform and off-platform ° Platform to offer and services $110B annual profit pool'® Retirement income Advice/wealth management * Imperative to
Slide 30: Two primary competitor business models
30 Two primary competitor business models Recordkeeping model @ Recordkeeping @ Advice & managed accounts x Asset management x General account X Guaranteed income Asset management model @ Asset management X Recordkeeping at scale x Advice/managed account solution X General account X Guaranteed incom
Slide 31: Combining the best of both to drive value from our retirement platform
31 Combining the best of both with multiple ways to drive value from our retirement platform Recordkeeping * Total Retirement Solutions * DC, DB, NQ, ESOP, and equity compensation * Across small, mid, and large plans Retirement income * Retail annuities * In-plan annuities * Target date with income
Slide 32: We are an at-scale retirement leader
We are an at-scale aii reti rement leader Non-qualified deferred compensation Defined benefit Employee stock ownership Pension risk transfer Employers” | Individuals” Assets” Advisor and . Multi-manager U.S. consultant target date provider relationships = Provider of U.S. hybrid target date funds Ma
Slide 33: Expanding our competitive advantage
Expanding our competitive advantage Expanded investment solutions Continued multi-asset innovation Private capabilities 9 Retail and in-plan annuities Income solutions Guaranteed income in retirement solutions Mass emerging and affluent focused Launched in-plan and benefit event advice with expanded
Slide 34: Differentiated capabilities with privileged access across the U.S. retirement ecosystem
34 Differentiated capabilities with privileged access across the U.S. Retirement ecosystem Depth and breadth of solutions— spanning client segments and needs Ability to combine fee and spread solutions Robust QDIA solutions, anchored by $100B target date franchise $26B in rollover solutions $30B in
Slide 35: We're focused on creating value across the retirement ecosystem
We’re focused on creating value across the retirement ecosystem Grow scale * Large & SMB segments * Participants * Participation and deferrals Optimize * Experience * Pricing * Cost ° Efficiency Unlock value * Asset management * General account * Total Retirement Solutions * Advice & managed account
Slide 36: Key takeaways
Key takeaways Retirement opportunity is massive and growing Workplace at the center of the opportunity where we are uniquely advantaged Our expertise and continued investment will deliver strong, future growth across our businesses
Slide 37: Global Asset Management
Ad 4 YJ 4 y 4 4 4 “4 4 SSeS Sas SS oO Principal Global Asset Management PRESENTERS: Kamal Bhatia President & Chief Executive Officer, Principal Asset Management MODERATOR: Deanna Strable President, Chief Operating Officer & Chief Executive Officer Elect
Slide 38: Driving growth across global asset management
Driving growth across global asset management... Large and Market shifts Uniquely positioned attractive market ‘ underway; widening to seize opportunities opportunity; the performance and drive sustained $1 80B annual gap among industry above-industry profit pool's players growth ... through a focus
Slide 39: Well-positioned to drive above-industry growth
WellL-positioned to drive above-industry growth Focused on the world’s most attractive market opportunities where we enjoy strong competitive advantages Differentiated capabilities with privileged access across the U.S. retirement ecosystem Large and diverse global institutional client base At-scale
Slide 40: Differentiated capabilities with privileged access across the U.S. retirement ecosystem
40 Differentiated capabilities with privileged access across the U.S. Retirement ecosystem Depth and breadth of solutions— spanning client segments and needs Ability to combine fee and spread solutions Robust QDIA solutions, anchored by $100B target date franchise $26B in rollover solutions $30B in
Slide 41: Large and diverse global institutional client base
Large and diverse global institutional client base * Four quadrant real estate * Clients in 40 countries approach ($100B AUM) * Over 1/3 of institutional AUM * Specialist and thematic equity trom lens relationships of at and fixed income capabilities eas years * Provide us with special status and ab
Slide 42: At-scale private market platform
At-scale private market platform Principal $82B in private market assets Over 60 years experience investing in private markets Over 350 dedicated private market investment professionals Evolving from real estate to real assets Leadership in data center strategies ($4B AUM) Private infrastructure lau
Slide 43: International partnerships in high-growth markets
International partnerships in high-growth markets Significant brand Principal Efficient access Presence in markets o - recognition that opens Partnerships to 800M representing more than ae . 5 doors to additional provide: retail customers 20% of global GDP oe B opportunities ; \ 0 218 Rts C % BANCO
Slide 44: Realigning to better reflect underlying businesses
Realigning to better reflect underlying businesses Principal Asset Management $711B AUM +$268B of China AUM onoctirement Institutional Brasilprev Chile Cuprum Wealth General account CCB Pension Mexico Afore 44 & Principal”
Slide 45: Key takeaways
Key takeaways Differentiated capabilities with privileged access across the U.S. retirement ecosystem Large and diverse global institutional client base At-scale and expanding private market platform International partnerships in high-growth markets
Slide 46: Positioned for market-leading growth
© Principat’ Positioned for market-leading growth Joel Pitz | Interim Chief Financial Officer
Slide 47: Positioned for sustained growth leading to strong shareholder returns
Positioned for sustained growth leading to strong shareholder returns Operating from a position of strength; delivering on financial targets now Powerful earnings generation supported by business growth and expense discipline Strong capital generation; diversified and disciplined capital allocation
Slide 48: Delivering financial targets now
© Goal met 3Q24 TTM EPS growth P . % On track to Delivering financial targets now ROE x-AAR Free capital flow conversion ¢ Principal’
Slide 49: Delivering higher EPS growth and capital returns, with lower earnings volatility
49 Delivering higher EPS growth and capital returns, with lower earnings volatility @ Principal @ Peers TTM operating EPS x AAR CAGR (3Q21 to 3Q24) Total shareholder return Since last investor day 6.8% 4.9% — 53% 2021 to 2023 capital return as a % of 5 YE2020 market cap 37% 31.6% 24% 27.2% 3-year op
Slide 50: Anchored in a strong balance sheet and diversified earnings mix
Anchored in a strong balance sheet and diversified earnings mix 402 % Target 375-400% RBC Estimated RBC ratio $900M capital at Hold Co S 1 e 6 B * Target $800M to cover 12 months of obligations wees and 3 $400M excess above 375% RBC P $250M excess capital at subsidiaries 2 2 ° 0% Target 20-25% lever
Slide 51: Sustained EPS growth driven by business growth, earnings generation and capital return
Sustained EPS growth driven by business growth, powerful earnings generation, and active return of capital + Revenue growth: , Customer growth —— Macro Fee compression Share ! hi repurchases 9-12% + Margin expansion Operating Annual earnings growth EPS growth 51 Principal” y
Slide 52: Strong expense management while investing for growth and efficiency
Strong expense ... showcasing expense management while discipline during high investing for growth inflationary backdrop and efficiency... 2021-3Q24 TTM CAGR Q) Customer experience Technology §} Global delivery model et Al/GenAl CPI-U (indexed) © Principal PFG expense Peer expense growth growth
Slide 53: Strong capital deployments and commitment to actively return excess capital
Strong capital deployments and commitment to actively return excess capital @ Dividends Share repurchases === Excess & Available Capital Shown in $millions 3,000 2,500 $2.3B 2,000 $1.5B-$1.8B $1.6B 1,500 $1.3B 4,000 $0.9B 500 53 Principal”
Slide 54: Growing dividend per share anchored to 40% payout ratio
Growing dividend per share anchored to 40% payout ratio Growth in dividends will track with net income growth Dividends per share =@= Principal dividend yield Insurance peer median dividend yield $3.00 $2.85 8.0% 2.60 rd $2.44 $2.56 $ 7.0% < $2.50 2.24 a : 6.0% 9 a = wi $2.00 4.5% 5.0% s 3 3.6% z Gi
Slide 55: Financial targets and capital allocation priorities remain intact
Financial targets and capital allocation priorities remain intact while we invest for long-term, sustained growth Financial targets Capital allocation priorities? 9-1 2 % Organic growth 1 5-2 5% Annual EPS growth Attractive dividend ° fe) payout ratio 40 % 14-16% ROE Share repurchases 35-45% ce) 7 5
Slide 56: Key takeaways
Key takeaways Operating from a position of financial strength Resilient and diversified portfolio of businesses drives strong results through economic cycles Confident in sustained delivery of financial targets
Slide 57: Principal
Principal
Slide 58: Thank you
Slide 59: Appendix
Appendix O Principal’
Slide 60: Relevant disclosures
Relevant disclosures Figures shared today are as of 09/30/2024 unless otherwise noted in Appendix Forward Looking Statements This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements re
Slide 61: Footnotes
Footnotes 10 11 Non-GAAP earnings per diluted share excluding impacts from significant variances. Non-GAAP return on equity, excluding cumulative change in fair value of funds withheld embedded derivative and AOCI, other than foreign currency translation adjustment. Based on net income attributable
Slide 62: Footnotes
Footnotes 12 Based on the number of participants, Source: 2024 PLANSPONSOR Recordkeeping Survey, July 2024. 13 Based on 2023 PRT sales based on assets, LIMRA, U.S. Group Annuity Risk Transfer Survey, Q4 2023. 14 The State of the Target-Date Market: 2023,” Sway Research, 2023 15 Pensions & Investment
Slide 63: Footnotes
Footnotes 26 Trailing twelve months as of 9/30/2023, excluding impacts from actuarial assumption reviews. 27 WSRS, PRT, PCS, and NQ employers. 28 Eligible plan participants of our worksite retirement plans, PRT individuals, variable annuities, and bank customers. 29 Retirement assets managed and adm
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Slide 65: Trailing twelve months significant variances
Trailing twelve months significant variances se Ree atk Variable investment Encaje and inflation Total significant variances Retirement and Income $(16.7) §(77.5) . §(94.2) Principal International 21.1 $(20.0) $38.0 $39.1 Specialty Benefits $(11.6) $(13.0) - $(24.6) Life Insurance $(74.8) $(20.5) -
Slide 66: Reconciliations
Reconciliations Period ended Trailing twelve months ended millions) in millions) Net income (loss) attributable to PFG $(206.1) $1,478.7 Stockholders’ equity $11,281.4 Net realized capital (gains) losses, as adjusted 182.1 (170.1) AOCI, other than foreign currency translation adjustment 2,981.4 (Inc
Principal Financial Group — Investor Day (November 2024) on 6ix