Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Day (September 2011)
136 slides from Principal Financial's investor day presentation, Sep 16, 2011
Slide 1: Principal International Workshop
® Exhibit 99 Principal Financial Group PRINCIPAL INTERNATIONAL WORKSHOP September 16, 2011
Slide 2: Welcome
WELCOME John Egan Vice President — Investor Relations Principal Financial Group __¢%
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 operating earnings, net income available to common stockholders, net cash flows, realized and unrealized gain
Slide 5: Agenda
AGENDA ————— 8:00am Welcome John Egan VP Investor Relations — Principal Financial Group 8:05am = Spotlight on Global Growth Terry Lillis SVP & CFO — Principal Financial Group 8:15am Our Global Strategy Norman Sorensen Chairman — Principal International Luis Valdes President — Principal international
Slide 6: Company Overview
COMPANY OVERVIEW SIMPLIFIED REPORTING STRUCTURE I. | individual Life insurance Hextineaie |— Full Service Accumulation _ Specialty Benefits Insurance Principal Internation; |— Principal Funds [-— Individual Annuities '— Bank & Trust Services |— Full Service Payout “Announced exit of business 09/30/1
Slide 7: Spotlight on Global Growth
SPOTLIGHT ON GLOBAL GROWTH Terry Lillis Senior Vice President and CFO of Principal Financial Group > aren
Slide 8: Company Strategy: Global Growth
COMPANY STRATEGY: GLOBAL GROWTH The Principal Financial Group: A LEADING FINANCIAL SERVICES COMPANY RECORD AUM* $335.8 Billion Fortune 500 company June 30, 2014 16.5 million customers Offices in 17 countries Retirement & 13,300 employees worldwide Investor Services 3 55% 132 year history Full range
Slide 9: Company Strategy: Global Growth
COMPANY STRATEGY: GLOBAL GROWTH OUR STRATEGY IS WELL SUITED FOR THE CURRENT ENVIRONMENT * Meet the retirement and employee benefit needs of growing businesses and their employees. CORE TRENDS REMAIN Vamelasdeaesl * Capitalize on the unprecedented demand COMPETITIVE s = F EMPLOYERS for financial serv
Slide 10: Capital Management Strategy
CAPITAL MANAGEMENT STRATEGY CAPITAL DEPLOYMENT Evolution of our hybrid business Organic Return to model has created Growth | Shareholders 413 413 more free cash flow resulting in greater financial flexibility
Slide 11: The Pillars of Growth
': GLOBAL GROWTH THE 4 PILLARS OF GROWTH The Principal® helps growing businesses, individuals and institutional clients in select markets worldwide achieve financial security and success. U.S. FINANCIAL U.S. EMPLOYEE SERVICES FOR GLOBAL ASSET BENE EOS EXECUTIVES, MANAGEMENT FOR GROWING BUSINESSES EM
Slide 12: Principal International: Increasing Contributor to Operating Earnings
COMPANY STRATEGY: GLOBAL GROWTH PRINCIPAL INTERNATIONAL: INCREASING CONTRIBUTOR TO OPERATING EARNINGS bk retitled totale Focus on retirement and asset accumulation has: we 25 * Taken Pl from aspirational to 16% of company earnings in 7 16% 10 years - ° Positioned PI to capitalize on [aa global growt
Slide 13: Focused Execution = Growth
FOCUSED EXECUTION = GROWTH 45.8 Principal International 34.6 (in US$ Billions) 28.7 23.1 19.1 15.4 2005 2006 2007 2008 2009 2010
Slide 14: Focused Execution = Growth
FOCUSED EXECUTION = GROWTH Principal International 126.3 1199 Operating Earnings 110.7 (in US$ Millions) 71.0 71.8 r 5 I 3 21.8 6.0 og lt 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 33.6 -12.3 . 15 Group
Slide 15: Our Global Strategy
OUR GLOBAL STRATEGY Norman Sorensen Chairman, Principal International
Slide 16: Principal International: Strategy
PRINCIPAL INTERNATIONAL: STRATEGY Our experience: Right markets + retirement expertise + marquee partners = strong growth
Slide 17: Principal International country footprint
17 xico (1993; ‘Anities, Mutual Funds, Pensions ‘AUM of USS9.5B* Wholly owned Brazil (1999) + Annuities, Pensions + AUM of US826.28 + Brasiprey— a 25% ceconomis ownership joint venture with Banco do Brasil + Annuities, Mutual Funds, Pensions , Asset ‘management + AUM of USS5.28 + Wholly owned AUM as
Slide 18: Foundation of Opportunity
FOUNDATION OF OPPORTUNITY Inevitable rise of defined contribution plans
Slide 19: Emerging Economies Likely to Surpass U.S.
PRINCIPAL INTERNATIONAL: STRATEGY EMERGING ECONOMIES LIKELY TO SURPASS U.S. TEN LARGEST ECONOMIES BY DECADE USS tm US$ tn US$ uss 2010 tm 2020 tm 2030 tn 2000 1 China 246 = China 73.5 2 Japan 3.0 China 59 J us 233 | 3. Germany 15: 5.6 India 96 4 France 12 Japan 5 italy 1 Brazil 1) Indonesia 6 UK 10
Slide 20: Rapidly Growing Middle Class
NAL: E RAPIDLY GROWING MIDDLE CLASS GLOBAL MIDDLE CLASS IN 2009 AND PREDICTION FOR 2030 id * . 20 SOURCES: OECD; Standard Chartered Research Group
Slide 21: Emerging Market Middle Class Growth
PRINCIPAL INTERNATIONAL: STRATEGY EMERGING MARKET MIDDLE CLASS GROWTH AUM EXPECTED TO GROW 4-5X FASTER THAN U.S. IN THE NEXT 20 YEARS* 21 ‘Credit Suisse emerging markets equity research, September 2010 acta
Slide 22: Inevitable Growth of Defined Contribution Pensions
INEVITABLE GROWTH OF DEFINED CONTRIBUTION PENSIONS Aging populations will pressure government-funded _...resulting in pension systems advancement of defined contribution pension systems in emerging markets Bey Ce oe Ss > 1981 1997 2000 2004 2009 2014 CHILE BRAZIL HONG KONG CHINA INDIA MALAYSIA MEXIC
Slide 23: Growing Retirement Assets
IPAL INTERNATIONAL: STRATEG GROWING RETIREMENT ASSETS 6% 4% zh t% United Chile Hong Brazil Mexico Thailand China Indonesia India States Kong Percent of retirement assets relative to GDP ee. 23 ‘SOURCE: Organisation for Economic Co-operation and Development; CIA Fact Book and 2009 EPF Annual Report;
Slide 24: Evolution of Defined Contribution Pension Market
24 PRINCIPAL INTERNATIONAL: STRATEGY EVOLUTION OF DEFINED CONTRIBUTION PENSION MARKET | | | | | | | | | | | | a | | | . Individuals | Tax-advantaged | Encouragement of | Rise of saveon | defined | private sector | supplemental theirown | — contribution i involvement | voluntary | pension plans | | p
Slide 25: Our Global Strategy
OUR GLOBAL STRATEGY Luis Valdes President, Principal International
Slide 26: Our Strategic Path to Success
PRINCIPAL INTERNATIONAL: STRATEGY OUR STRATEGIC PATH TO SUCCESS 12
Slide 27: Export Industry Leadership
27 EXPORT INDUSTRY LEADERSHIP Retirement and Investor Services Principal Global Investors® °#1 provider of bundled 401(k) plans! * Top 5 manager Stable Value °#1 provider of DB plans «Top 5 manager U.S. Real Estate °#1 provider of ESOP plans? = Top 10 manager Fixed Income °#3 Fund Family (2010 perfo
Slide 28: Our Strategic Focus
28 PRINCIPAL INTERNATIONAL: STRATEGY OUR STRATEGIC FOCUS RETIREMENT & LONG-TERM SAVINGS SOLUTIONS FOR BUSINESSES & INSTITUTIONS SOLUTIONS FOR INDIVIDUALS (~ eoucaTion INVESTMENT EDUCATION, PLANNING [rm TOOLS AND ADVICE FOR EMPLOYEES ( suipance _) AND RETAIL INVESTORS ADVICE AND SERVICES FOR EMPLOYER
Slide 29: Leveraging Strong Marquee Partners
PRINCIPAL INTERNATIONAL: STRATEGY LEVERAGING STRONG MARQUEE PARTNERS WITH OUTSTANDING DISTRIBUTION Joint Venture Partner’s Industry Distribution Reach Partner Ranking Largest bank in Latin 5,094 branches; 55.5 million Banéo do Brasil America! customers? 13,415 branches; 2.3 million business 7 | t co
Slide 30: Going Deeper & Broader into Existing Countries
PRINCIPAL INTERNATIONAL: STRATEGY GOING DEEPER & BROADER INTO EXISTING COUNTRIES Targeted Markets Pensions ae ate Annuities Our targeted Brazil Lt + + a markets Chile +n = rn] . represent a $3.5 trillion Mexico = = = = opportunity China + . . with significant Hong growth Kong = = = potential India +
Slide 31: Path Forward: Stay the Course
34 PRINCIPAL INTERNATIONAL: STRATEGY PATH FORWARD: STAY THE COURSE CONTINUE TO LEVERAGE: °Our decade-old footholds in key markets °Our recognized retirement leadership °Our leading global asset management capabilities °Our strength & breadth of multi- channel distribution *Our successful track recor
Slide 32: Our Approach to M&A
32 OUR APPROACH TO M&A Add scale Fill product gaps in existing countries Geographic expansion in emerging DC <™ pension and retirement savings markets
Slide 33: Right Strategy. Right Markets.
PRINCIPAL INTERNATIONAL: STRATEGY RIGHT STRATEGY. RIGHT MARKETS. Global Population by Country (in millions) Principal International countries represent: °46% of world’s population °54% of emerging markets capitalization* Thailand L Singapore 67 5 . ; Financ 33 SOURCE: CIA World Factbook, July 2011 e
Slide 34: Shareholder Value Creation
PRINCIPAL INTERNATIONAL: STRATEGY SHAREHOLDER VALUE CREATION CHECKBOOK ECONOMICS* $2. 7 Total invested in Pl operations: $1,005M Billion Money returned L from investment $327M VALUE OF to date: OUR Net cash $678M BUSINESSES investment: Assuming 14x earnings for our pension operations & 6% of AUM for
Slide 35: Focus on Latin America
FOCUS ON LATIN AMERICA Roberto Walker President, Principal International — Latin America
Slide 36: Principal in Latin America
PRINCIPAL INTERNATION. LATIN AMERICA STRATEGY PRINCIPAL IN LATIN AMERICA Mexico (1993) ‘AUM of US$8.58* Wholly owned companies: Principal AFORE ‘Pensions Principal Fondos de Inversion (PFI Manual Funds, LM Principal Seguros Life Insurance Principal Pensiones Brazil (1999) ‘AUM of USS28.28 Braslprey
Slide 37: Latin America Market Maturing Yet Underserved
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY LATIN AMERICA MARKET MATURING YET UNDERSERVED 72% 68% 65% 8 * Growing middle 39% class * Aging populations 8% 8% seek financial | | | | security United Brazil Chile Mexico | United ~—_Brazil Chile Mexico 11% 19% States States Percent of retirement asse
Slide 38: Projected Latin America Market Growth
PROJECTED LATIN AMERICA MARKET GROWTH Business 2010-2015E* Business 2010-2012E** Pension Institutional Asset Accumulation Mgmt + Brazil 14% *Chile 12% * Chile (voluntary) 14% + Mexico 16% Mutual Funds Payout Annuities *Chile 20% Brazil 14% *Mexico 17% *Chile 10% . aoe tee, gett 'o' FUELED BY MIDDLE
Slide 39: Principal in Brazil
PRINCIPAL IN BRAZIL Brasilprev — a pension company joint venture with Banco do Brasil (largest bank in Latin America); doing business since 1999 -We hold 50.01% of the common stock -We have 25% economic ownership *1.4 million customers -AUM of US$28.2B* 39 *AUM as of 6/30/2011
Slide 40: Brazil: Defined Contribution Pension Market
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY BRAZIL: DEFINED CONTRIBUTION PENSION MARKET ncement MARKET STAGE: Refinement/Enhancement Predominantly an IRA-based market with growing corporate DC opportunities Banks dominate distribution ® Expected offshore investments 40 IRA = Individual Retiremen
Slide 41: Principal in Brazil
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL = _BRASILPREV Banco do Brasil RETIREMENT DISTRIBUTION SUCCESSFUL JOINT EXPERTISE MIGHT VENTURE * 12 years in market +132 year history Largest bank in * Market leader in “Retirement Latin America* net pension cash expertise +200 year
Slide 42: Principal in Brazil: Our Strategic Focus
42 PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: OUR STRATEGIC FOCUS RETIREMENT & LONG-TERM SAVINGS SOLUTIONS FOR BUSINESSES & SOLUTIONS FOR INDIVIDUALS INSTITUTIONS ADVICE AND SERVICES FOR EMPLOYERS & INSTITUTIONAL INVESTORS mete BND ADVICE (On Ere GUIDANCE AND RETAIL INVESTO
Slide 43: Principal in Brazil: Execution Excellence
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: EXECUTION EXCELLENCE CORE PRODUCTS COMPETITIVE ADVANTAGE + Defined + Leveraging Principal Financial Group 65+ Contribution years pension investment and accumulation administration expertise snare * Distribution partner is Brazil's
Slide 44: Principal in Brazil: Success to Date
44 PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: SUCCESS TO DATE AUM: 5-year CAGR of 38% NCF: 5-year CAGR of 52% Market leader in asset retention* TOP PRIVATE PENSION COMPANY (Feb 2010) -- Gestao e RH magazine A SS aS SOURCE: *Based on AUM (Fenaprevi , May 2011) RD LARGEST AND
Slide 45: Principal in Brazil: Future Opportunity
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: FUTURE OPPORTUNITY +14% 66 MILLION Growth in middle class financial by 2015** assets* 45 *Syear CAGR (2010-2015) Retirement Assets from Cerulli Quantitative Update ~ Global Markets 2011 *Cerulli Assoc, World Bank,
Slide 46: Principal in Brazil: Extending Our Success
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: EXTENDING OUR SUCCESS Capitalize on the 23-year JV Enter the mutual exclusive fund business distribution agreement 46
Slide 47: Principal in Brazil: 23-Year Exclusive Agreement
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: 23-YEAR EXCLUSIVE AGREEMENT Opportunity to grow share of wallet of bank’s growing customer base Leverages ever-expanding Banco do Brasil distribution channel 47
Slide 48: Principal in Brazil: Mutual Fund Opportunities
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN BRAZIL: MUTUAL FUND OPPORTUNITIES * 5th largest mutual fund Mutual Fund Assets market in the world*: CAGR 2010 — 2015E* US$900B 48% ¢ Evolving from short-term fixed income ° Demand for off-shore ™% investments is Principal Global Investors
Slide 49: Principal in Chile
PRINCIPAL IN CHILE Principal Financial Chile — Financiat 100% Ownership and doing business in Chile since 1995 °100,000+ customers °US$5.2B AUM* 49 “AUM as of 6/30/2011 [ Group
Slide 50: Chile: Defined Contribution Pension Overview
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY CHILE: DEFINED CONTRIBUTION PENSION OVERVIEW MARKET STAGE: Enhancement Stable economic growth and aging population will trigger savings “boom” Well-developed and growing mandatory DC market (AFP) Growing voluntary DC market *APV — for individuals *APVC
Slide 51: Principal in Chile: Our Strategic Focus
PRINCIPAL INTERNATIONA! IN AMER’ STRATEGY PRINCIPAL IN CHILE: OUR STRATEGIC FOCUS RETIREMENT & LONG-TERM SAVINGS SOLUTIONS FOR BUSINESSES & SOLUTIONS FOR INDIVIDUALS INSTITUTIONS [> TOOLS AND ADVICE FOR EMPLOYEES AND RETAIL INVESTORS ‘AND GUIDANCE PRODUCT SOLUTION INSTITUTIONAL INVESTORS ADVICE AND
Slide 52: Principal in Chile: Execution Excellence
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: EXECUTION EXCELLENCE CORE PRODUCTS COMPETITIVE ADVANTAGE + Voluntary, * Only global financial group in Chile qualified individual specialized in retirement, investments and retirement (APV long-term savings plans) * Multi-channel di
Slide 53: Principal in Chile: Success to Date
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: SUCCESS TO DATE « AUM: 5-year CAGR of ANNUITY ee LEADER °¢ BEST APV FUNDS 2009 & 2010 -- FundPro RANKED IN TOP 5 (40 CONSECUTIVE YEARS)*: * Strong investment compliance: ° #5 in APV - 1st among G | P S mutual funds (Global investmen
Slide 54: Principal in Chile: Future Opportunity
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: FUTURE OPPORTUNITY a VOLUNTARY MARKET olla 14% experiencing Growth in 2 6% financial assets* GROWTH RATE Financial 54 SOURCE: *Cerulli Quantitative Update: Global Markets 2011 Group SS eE.
Slide 55: Principal in Chile: Extending Our Success
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: EXTENDING OUR SUCCESS Grow voluntary pension savings and Continue strategic opportunities in ‘mutual fund issuance of the mandatory offerings and payout annuities AFP market strengthen distribution 55 AFP = Administradora de Fondos
Slide 56: Principal in Chile: Voluntary Pension Savings & Mutual Funds
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: VOLUNTARY PENSION SAVINGS & MUTUAL FUNDS 2010 APV AUM Market Share % 1 ING 24.0 2 CUPRUM 18.2 20% Mutual 3 Habitat 179 Fund market 4 BBVA 94 growth (2010-2015E CAGR)* 6 BANCHILE 35 7 Security 3.2 8 — Consorcio 27 9 CELFIN 27 10 LARR
Slide 57: Principal in Chile: Payout Annuities & AFP Opportunities
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN CHILE: PAYOUT ANNUITIES & AFP OPPORTUNITIES PAYOUT ANNUITIES AFP OPPORTUNITIES « Disciplined execution ° AFP is basic building * Market leading risk block in retirement management, including planning asset and liability e Extend AFP custom
Slide 58: Principal in Mexico
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO Principal Financial Financial Mexico — 100% ownership and doing business in Mexico since 1993 °4.4 million customers *US$9.5B AUM* 58 *AUM as of 6/30/2011 plus HSBC assets acquired Group
Slide 59: Mexico: Defined Contribution Pension Overview
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY MEXICO: DEFINED CONTRIBUTION PENSION OVERVIEW MARKET STAGE: Refinement Established mandatory individual defined contribution plan (AFORE) Banks dominate distribution Mutual funds capture growing voluntary savings 59 AFORE = Administrada de Fondos para
Slide 60: Principal in Mexico: Our Strategic Focus
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: OUR STRATEGIC FOCUS RETIREMENT & LONG-TERM SAVINGS SOLUTIONS FOR BUSINESSES & SOLUTIONS FOR INDIVIDUALS INSTITUTIONS INVESTMENT EDUCATION, PLANNING TOOLS AND ADVICE FOR EMPLOYEES AND RETAIL INVESTORS ADVICE AND SERVICES FOR EMPLOYE
Slide 61: Principal in Mexico: Execution Excellence
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: EXECUTION EXCELLENCE CORE PRODUCTS COMPETITIVE ADVANTAGE + Mandatory * Only global financial group in Mexico individual pre- specialized in retirement, investments and retirement long-term savings pension + Leveraging Principal Fin
Slide 62: Principal in Mexico: Success to Date
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL MEXICO: SUCCESS TO DATE + 4.4 million customers (includes HSBC) LA RGEST * Successful acquisitions: alanis 2c Tepe independent” ‘ Hades in attracting high- A FORE balance new customers & M UTUAL FU ND + Strong investment compliance: ee COMPAN
Slide 63: Principal in Mexico: Future Opportunity
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: FUTURE OPPORTUNITY +16% | MILLION Growth in middle class financial by 2015** assets* GS: EASON enna mate ative nite fn am Cue Uta ional Marka DTY ee. “*Cenulli Assoc, World Bank, Economist Intellig
Slide 64: Principal in Mexico: Extending Our Success
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: EXTENDING OUR SUCCESS Grow voluntary ; : consolidation savings and Leverage opportunities mutual fund HSBC including offerings and exclusive HOHE stenaven distribution integration distribution
Slide 65: Principal in Mexico: AFORE Consolidation
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: AFORE CONSOLIDATION AUM RANK MS CUSTOMERS (in millions) RANK COMPANY BANAMEX 6,808,681 2 . BANCOMER 4,414,154 4 10.7% ING 5,148,884 3 12.5% BANORTE 7,009,901 1 17.0% PROFUTURO GNP 3,145,989 7 7.6% INBURSA 3,222,163 6 7.8% INVERCAP
Slide 66: Principal in Mexico: Voluntary Savings
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: VOLUNTARY SAVINGS Specialized mutual fund advisors High income Advisory sales Multiproduct sales Middle market Complement to AFORE savings > Pow a FD crip 66 AFORE = Administrada de Fondos para el Retiro
Slide 67: Mexico: Mutual Fund Opportunity
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY MEXICO: MUTUAL FUND OPPORTUNITY Mutual Fund Assets CAGR 2010 — 2015E* * Double digit growth ua rates expected « Mutual fund market ™ concentrated in short term, low risk United Mexico rl Group 67 SOURCE: *Cerulli Quantitative Update: Global Markets 201
Slide 68: Principal in Mexico: HSBC Distribution
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN MEXICO: HSBC DISTRIBUTION Mexico - leverages our Brazil Ls) -y e a r Will target HSBC's banking exclusive customers distribution Possibility to expand to other : agreement products, including mutual with HSBC-Mexico funds 68
Slide 69: Principal in Latin America
PRINCIPAL INTERNATIONAL: LATIN AMERICA STRATEGY PRINCIPAL IN LATIN AMERICA Maximize marquee partnership in Brazil Pursue Brazilian mutual fund opportunities Grow voluntary pension savings and mutual fund offerings in Chile and Mexico Build scale in AFORE in Mexico ° 69
Slide 70: Focus on Asia
FOCUS ON ASIA Rex Auyeung President, Principal International - Asia
Slide 71: Principal International in Asia
ral PRINCIPAL INTERNATIONAL IN ASIA Mainland China (2005) ‘RUM of USS7.36 (CCB-Principal AMC IJV with China Construction Bank ‘Mutual Funds, 1AM PI & PGI Representative Offices Government/Glient Relations and ‘Market Research Hong Kong (1996) heoeee India (2000) ‘AUM of USS1.1B, Principal PNB AMC —
Slide 72: Discretionary Income Increasing in Asian Emerging Markets
NTERNATIONAL: ASIA STRATEGY DISCRETIONARY INCOME INCREASING SIGNIFICANTLY IN ASIAN EMERGING MARKETS Shares of global middle-class consumption, 2000-50 100% 80% 60% 40% 20% China 0% * J 2000 2010 2020 2030 2040 2050 Sources: OECD, Standard Chartered Research . 72 Group
Slide 73: Anticipated Retirement Asset Growth
PRINCIPAL INTERNATIONAL: ASIA STRATEGY ANTICIPATED RETIREMENT ASSET GROWTH China Hong Kong india Singapore Thailand i m 2009 AUM Taiwan i @ Estimated AUM 1 2010 - 2020 Korea Japan $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 Assets in US$ (billion) re. 73 Source: Allianz, International Pensions
Slide 74: Principal in Mainland China
NATIONAL: ASIA PRINCIPAL IN MAINLAND CHINA Bena eran Ep Prana ass arose Ca De CCB-Principal — 25%-owned mutual fund/asset management company joint venture with China Construction Bank (CCB) 1.2 million customers °US$7.3B AUM* “AUM as of 6/30/2011
Slide 75: China: Defined Contribution Pension Overview
PRINCIPAL INTERNATIONAL: ASIA STRATEGY CHINA: DEFINED CONTRIBUTION PENSION OVERVIEW MARKET STAGE: Absence/Introduction ® Unsustainable public pension plan ® Slow take-up of Enterprise Annuity plans — a DC program designed to supplement public plan. Hurt by: eRegulated fees with small margins *No tax
Slide 76: China: Mutual Fund Industry Overview
PRINCIPAL INTERNATIONAL: ASIA STRATEGY CHINA: MUTUAL FUND INDUSTRY OVERVIEW 15% mutual fund market growth projection (2010-2015E CAGR)* Mutual funds savings is relatively new — and focused on new fund launches with limited recurring investment Investors tend to be short-term focused Distribution hea
Slide 77: Principal in Mainland China
77 PRINCIPAL IN MAINLAND CHINA Ez Financial Group RETIREMENT EXPERTISE 132 year history *Retirement expertise “Asset management expertise SOURCE: *Global Finance 2011 G China Construction Bank DISTRIBUTION MIGHT +24 largest commercial bank in world* +57 year history +292 million retail customers *13
Slide 78: Principal in China: Our Strategic Focus
78 PRINCIPAL INTERNATIONAL: ASIA STRATEGY PRINCIPAL IN CHINA: OUR STRATEGIC FOCUS RETIREMENT & LONG-TERM SAVINGS SOLUTIONS FOR BUSINESSES & INSTITUTIONS INVESTMENT EDUCATION, PLANNING TOOLS AND ADVICE FOR EMPLOYEES AND RETAIL INVESTORS ADVICE AND SERVICES FOR EMPLOYERS & 4 INSTITUTIONAL INVESTORS PR
Slide 79: Principal in China: Execution Excellence
PRINCIPAL INTERNATIONAL: ASIA STRATEGY PRINCIPAL IN CHINA: EXECUTION EXCELLENCE CORE PRODUCTS COMPETITIVE ADVANTAGE + Mutual Funds + Access to world-class asset management - QDll through Principal Global Investors * Our QDII capabilities offer more options to customers + CCB is one of few distributi
Slide 80: Principal in China: Success to Date
80 PRINCIPAL INTERNATIONAL: ASIA STRATEGY PRINCIPAL IN CHINA: SUCCESS TO DATE AUM: 5-year CAGR of = th 15 fund launches since 2005 raising US$8.5B Targeting to be Top 10 LARGEST Asset Management ASSET MANAGEMENT COMPANY* Company by 2012 1.2 million customers (out of 67 companies) SOURCE: *China Mutu
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Principal Financial Group — Investor Day (September 2011) on 6ix