Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Presentation (December 2018)
19 slides from Principal Financial's investor presentation, Dec 3, 2018
Slide 1: Principal Financial Group 2019 Outlook Call
Principal Financial Group 2019 Outlook Call December 3, 2018
Slide 2: Forward looking statements
Posted on PFG website: 12/3/2018 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,
Slide 3: Use of non-GAAP financial measures
Posted on PFG website: 12/3/2018 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
Slide 4: Financial metrics
Posted on PFG website: 12/3/2018 Financial metrics Principal Financial Group, Inc. (in millions, except as indicated) Trailing 12 months 9/30/2018 PFG Income (loss) before income taxes $1,856.3 Net realized capital (gains) losses 3.1 Net realized capital (gains) losses pre-tax adjustments 50.1 Non-G
Slide 5: Non-GAAP financial measure reconciliations
Posted on PFG website: 12/3/2018 Non-GAAP financial measure reconciliations Trailing 12 months 9/30/2018 Estimated impact Impact of Excluding of allocation Estimated recast, Net revenue As reported 3Q18 AAR 3Q18 AAR 1 changes excluding AAR 1 RIS-Fee $1,647.0 $(3.0) $1,650.0 $(44.9) $1,605.1 RIS-Spre
Slide 6: 2019 allocation changes
Posted on PFG website: 12/3/2018 2019 allocation changes • Effective 1/1/2019, we are making allocation changes to compensation & other expenses and net investment income; prior periods will be recast • 2019 and long-term guidance ranges reflect the estimated allocation changes • Importantly, there
Slide 7: No significant change to contribution to non-GAAP pre-tax operating earnings by business
Posted on PFG website: 12/3/2018 No significant change to contribution to non-GAAP pre-tax operating earnings by business 3Q 2018 TTM non-GAAP pre-tax operating earnings (Excludes the impact of the 3Q18 actuarial assumption review and Corporate; recast figures are estimated) Before After Current met
Slide 8: Investment in digital strategies continues
Posted on PFG website: 12/3/2018 Investment in digital strategies continues • Continuing to accelerate our digital investments in 2019 • Expect the net impact (digital investment less revenue and expense benefits) to be approximately a $50 to $60 million dollar pre-tax investment in 2019, similar to
Slide 9: 2019 outlook assumptions
Posted on PFG website: 12/3/2018 2019 outlook assumptions 2019 S&P 500 daily average between 2,830 and 2,850, based on levels as Equity markets of 11/28/2018 8% total return (6% price appreciation + 2% dividend yield) Interest rates 3.25% – 3.50% 10-year treasury rate at year-end 2019 Foreign exchan
Slide 10: Retirement and Income Solutions
Posted on PFG website: 12/3/2018 Retirement and Income Solutions 3Q 2018 TTM, x-AAR1 Current Estimated 2019 Long-term Retirement and Income Solutions methodology recast outlook outlook Net revenue $1,650.0 $1,605.1 Pre-tax operating earnings $541.3 $521.9 RIS-Fee Net revenue annual growth rate 1.9%
Slide 11: Principal Global Investors
Posted on PFG website: 12/3/2018 Principal Global Investors 3Q 2018 TTM, x-performance fee1 Current Estimated 2019 Long-term Principal Global Investors methodology recast outlook outlook Operating revenues less pass-through $1,336.4 $1,336.4 commissions Pre-tax operating earnings, adjusted for $497.
Slide 12: Principal International
Posted on PFG website: 12/3/2018 Principal International 3Q 2018 TTM, x-AAR1 Current Estimated 2019 Long-term Principal International methodology recast outlook outlook Combined net revenue $968.7 $968.7 (at PFG share) Pre-tax operating earnings $333.3 $351.3 Combined net revenue annual growth rate
Slide 13: U.S. Insurance Solutions
Posted on PFG website: 12/3/2018 U.S. Insurance Solutions 3Q 2018 TTM, x-AAR1 Current Estimated 2019 Long-term U.S. Insurance Solutions methodology recast outlook outlook Premium and fees $2,132.9 $2,132.9 Pre-tax operating earnings $270.9 $268.7 Specialty Premium and fees annual 7.7% 7.7% 7-9% 7-9%
Slide 14: 2019 capital deployment strategy
Posted on PFG website: 12/3/2018 2019 capital deployment strategy • Expect to deploy $1.0B - $1.4B of capital in 2019 • Continue to have a balanced approach to capital deployment to enhance long-term shareholder value: Grow capital Return capital Optimize • Organic growth • Common capital structure
Slide 15: Appendix
Appendix
Slide 16: What if things don't go as expected?
Posted on PFG website: 12/3/2018 What if things don’t go as expected? Impacts of key macroeconomic conditions on Principal’s annual non-GAAP pre-tax operating earnings If macroeconomics Equity market Interest rates FX: U.S. dollar change by… return +/- 10% +/- 100 bps changes +/- 2% Then Principal’s
Slide 17: Estimated impacts of allocation changes
Posted on PFG website: 12/3/2018 Estimated impacts of allocation changes 3Q 2018 on a trailing twelve month basis Estimated income statement line item impacts of the net investment income and compensation and other expense allocation changes ($ in millions) Impacts of allocation changes; 9/30/2018 T
Slide 18: 9/30/2018 TTM income statement impacts of actuarial assumption review and PGI performance fee
Posted on PFG website: 12/3/2018 9/30/2018 TTM income statement impacts of the 2018 actuarial assumption review and PGI performance fee and elevated expenses Accelerated Subtotal performance Annual actuarial assumption review actuarial fee & elevated Principal Specialty Individual assumption expense
Slide 19: Measure definitions
Posted on PFG website: 12/3/2018 Measure definitions Net revenue: operating revenues less benefits, claims and settlement expenses less dividends to policyholders. Pre-tax operating earnings: operating earnings before income taxes and after noncontrolling interest. Pre-tax return on net revenue: pre
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