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Principal Investor Workshop 2017
December 7, 2017
Investor workshop
John Egan
Vice President, Investor Relations
Welcome
2
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 gains and losses, capital and liquidity positions, sales and
earnings trends, and management’s beliefs, expectations, goals and opinions. The company does not undertake to update these statements, which are based on a number
of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated,
and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or
contribute to such material differences are discussed in the company’s annual report on Form 10-K for the year ended Dec. 31, 2016, and in the company’s quarterly
report on Form 10-Q for the quarter ended Sept. 30, 2017, filed by the company with the U.S. Securities and Exchange Commission, as updated or supplemented from
time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the
company’s ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; volatility or declines in
the equity, bond or real estate markets; changes in interest rates or credit spreads or a sustained low interest rate environment; the company’s investment portfolio is
subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company’s valuation of investments and
the determination of the amount of allowances and impairments taken on such investments may include methodologies, estimations and assumptions that are subject to
differing interpretations; any impairments of or valuation allowances against the company’s deferred tax assets; the company’s actual experience could differ
significantly from its pricing and reserving assumptions; the pattern of amortizing the company’s DAC and other actuarial balances on its universal life-type insurance
contracts, participating life insurance policies and certain investment contracts may change; the company may not be able to protect its intellectual property and may be
subject to infringement claims; the company’s ability to pay stockholder dividends and meet its obligations may be constrained by the limitations on dividends or
distributions Iowa insurance laws impose on Principal Life; changes in laws, regulations or accounting standards; results of litigation and regulatory investigations; from
time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in
amounts that may be material; applicable laws and the company’s certificate of incorporation and by-laws may discourage takeovers and business combinations that
some stockholders might consider in their best interests; competition from companies that may have greater financial resources, broader arrays of products, higher
ratings and stronger financial performance; a downgrade in the company’s financial strength or credit ratings; changes in investor preferences; inability to attract and
retain qualified employees and sales representatives and develop new distribution sources; international business risks; fluctuations in foreign currency exchange rates;
the company may need to fund deficiencies in its “Closed Block” assets that support participating ordinary life insurance policies that had a dividend scale in force at the
time of Principal Life’s 1998 conversion into a stock life insurance company; the company’s reinsurers could default on their obligations or increase their rates; risks
arising from acquisitions of businesses; and a computer system failure or security breach could disrupt the company’s business and damage its reputation.
Forward looking statements
3
Principal Financial Group, Inc.
U.S. GAAP Financial Measures
(in millions, except as indicated)
GAAP metrics
Trailing 12 months
12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017
PFG
Net income available to common stockholders $773.6 $879.7 $1,111.1 $1,209.3 $1,316.5 $1,786.6
Common stockholders' equity attributable to parent $9,141.4 $9,142.2 $9,642.0 $9,311.6 $10,227.3 $11,996.4
Preferred stock 0.1 0.1 0.1 - - -
Preferred stock paid-in capital 541.9 541.9 541.9 - - -
Noncontrolling interest 20.0 92.8 48.0 65.8 66.5 70.9
Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3
* This is a non-GAAP financial measure and is reconciled to GAAP on this page
Trailing 12 months
PFG 09/30/2017
Income (loss) before income taxes $2,318.7
Net realized capital (gains) losses (520.7)
Net realized capital (gains) losses pre-tax adjustments (45.5)
Pre-tax operating (earnings) losses attributable to noncontrolling interest (34.0)
Income taxes related to equity method investments 80.1
Early extinguishment of debt 86.4
Pre-tax operating earnings (losses)* $1,885.0
4
Principal Financial Group, Inc.
U.S. GAAP Financial Measures
(in millions, except as indicated)
GAAP metrics
Trailing 12 months (9/30/2017)
As reported
3Q17 actuarial
assumption review
Excluding 3Q17 actuarial
assumption review*
Segment pre-tax operating earnings (losses)
RIS-Fee $524.2 $41.0 $565.2
Principal Global Investors 479.3 - 479.3
Principal International 317.7 11.8 329.5
Total Fee 1,321.2 52.8 1,374.0
RIS-Spread 385.4 (19.2) 366.2
Specialty Benefits 264.8 (14.2) 250.6
Individual Life 115.9 47.0 162.9
Total Risk 380.7 32.8 413.5
Pre-tax operating earnings (losses) excluding Corporate 2,087.3 66.4 2,153.7
Corporate (202.3) - (202.3)
Pre-tax operating earnings (losses)* $1,885.0 $66.4 $1,951.4
* This is a non-GAAP financial measure and is reconciled to GAAP on this page
5
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 non-GAAP financial measures that management believes are useful to investors because they illustrate the performance of
the company’s normal, ongoing operations, which is important in understanding and evaluating the company’s financial condition and results of operations.
While such measures are also consistent with measures utilized by investors to evaluate performance, they are not, however, a substitute for U.S. GAAP
financial measures. Therefore, at the end of this presentation, the company has provided reconciliations of the non-GAAP financial measures to the most
directly comparable U.S. GAAP financial measure. The company adjusts U.S. GAAP financial measures for items not directly related to ongoing operations.
However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP
financial measures for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on
a basis comparable to that used by investors and securities analysts.
The company also uses a variety of other operational measures that do not have U.S. GAAP counterparts, and therefore do not fit the definition of non-
GAAP financial measures. Account value is an example of an operational measure that is not considered a non-GAAP financial measure.
Use of non-GAAP financial measures
6
Time Topic Presenter(s)
11:30 am Welcome John Egan & Deanna Strable
11:45 am Spread businesses Jerry Patterson
12:30 pm Risk businesses Amy Friedrich
1:15 pm Capital management Deanna Strable
1:45 pm Panel Q&A All presenters
2:15 pm Closing
Agenda
Deanna Strable
Chief Financial Officer
Welcome
Our businesses
Principal Financial Group
8
RIS-Fee RIS-Spread Individual Life
Specialty Benefits
(SBD)
U.S.
Insurance
Solutions
(USIS)
Principal
International
Principal
Global
Investors
Retirement
and Income
Solutions
(RIS)
Corporate
Spread (17%)
 RIS-Spread
26%
22%
15%
17%
12%
8%
9 1 Trailing twelve months as of 9/30/2017; excludes the impact of the 2017 actuarial assumption review; excludes Corporate
Pre-tax operating earnings
Pre-tax
operating
earnings1
$2,153.7 million
Risk (20%)
 Specialty Benefits
 Individual Life
Fee (63%)
 RIS-Fee
 Principal Global Investors
 Principal International
10
Strategic importance of
Spread and Risk business
Principal
• Financial diversification
• Common distribution
relationships to serve multiple
needs of our customers
• Relative to traditional asset
management competitors
- Broader array of customer
solutions
- Greater diversification of
distribution opportunities
Long-term
shareholder
value
Customer
• Compelling customer needs
• Significant small to
medium sized businesses
(SMB) needs
• Positive demographics
and trends
Jerry Patterson
Senior Vice President, Retirement and Income Solutions
Spread businesses
Safety, security, and sustainable income
Protect enough
Save enough
forretirement
Have enough
in retirement
12
Why we do what we do
We help
people…
Just a short “Thank You” for the regular
and both appreciated and needed checks
for me in my retirement years. After 65+
active years in the ministry, these days
alone make me yearn for action.
My wife passed away last year and my dog
tries to be a good friend. No problems.
God has been good.
Your regular help is a big boost.
May God bless you.
…. Dan
RIS businesses
14
RIS-Fee RIS-Spread
Full Service
Accumulation
Full Service Payout
(Pension Risk Transfer)
Fixed Annuities
Investment Only
Bank Services
Variable Annuities
More than 750,000 people
U.S.
Insurance
Solutions
(USIS)
Principal
International
Principal
Global
Investors
Retirement
and Income
Solutions
(RIS)
Corporate
Below
age 60
10%
Age
60-69
26%
Age
70-79
31%
Age
80-89
24%
Age 90+
9%
The diversified customers we serve
15
Pension Risk Transfer customers
266,000 lives diversified by age
As of 9/30/2017
RIS-Spread
Individual Annuity customers
191,000 lives diversified by age
Below
age 60
17%
Age
60-69
26%
Age
70-79
30%
Age
80-89
20%
Age 90+
7%
Market opportunities
16
• Fewer defined benefit plans
• Social security adequacy
• Mortgage debt
• Student loan debt
80M
boomers
with 10,000 turning
65 every day1
• Longevity needs
• Health care costs
• Millennial mindset
Shifting profile of retirees signals the growing
need for stable returns and guaranteed income:
1 LIMRA Secure Retirement Institute
RIS-Spread
17
Strong business fundamentals
Industry rankings
Pension Risk Transfer1
#3 in premium written
#2 in contract count
Individual income annuity2
#3 in premium written
1 LIMRA Secure Retirement Institute, as of 9/30/2017 YTD
2 LIMRA Secure Retirement Institute, as of 6/30/2017 YTD
3 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews
RIS-Spread
4Q
2012
3Q
2017 CAGR
Average account value $32.8B $38.5B 3%
Net revenue3 $468M $550M 3%
Pre-tax operating earnings3 $281M $366M 5%
Pre-tax return on net revenue3 60.1% 66.6%
How we compete and differentiate
18
• Broad portfolio of institutional and
retail solutions
• Focused distribution footprint
• Pricing discipline
• Shared and scalable infrastructure
RIS-Spread
Two key areas of
differentiation:
• Meeting the Pension Risk
Transfer (PRT) needs of SMB
• Broad set of guaranteed
return and income
capabilities targeting SMB
and retirees
19
The Pension Risk Transfer market
• More than 75 years of experience
• Deep expertise in defined benefit
pension plans and Risk Transfer
• Ongoing demand and needs in the
SMB market
• We see the growth trend continuing
- General trend across employee benefits
- Globalization
- Pension Benefit Guaranty Corporation (PBGC)
premiums
- Rate capitulation
$4B
$8B
$14B $14B
$17B
2013 2014 2015 2016 2017Est
1 LIMRA Secure Retirement Institute
Pension Risk Transfer
Increasing PRT industry sales1
Services
33%
Manufacturing
26%
Trade
13%
Labor
13%
Finance
8%
Tax-exempt
7%
Serving SMBs enhances diversification
20
1 As of 9/30/2017
2 2012 through 9/30/2017 sales; LIMRA Secure Retirement Institute
Pension Risk Transfer
PRT new sales market share
by premium and contracts2
Principal’s PRT plans by industry1
Over 90% of plans have under 100 lives
5,300
plans
0%
10%
20%
30%
40%
Premium Contracts
Principal Top competitors
#2
#3
Key risks and mitigation strategies
21
Longevity Credit
Interest
rates
• Pricing uses current rate
• Closely matched
assets & liabilities
• Utilize derivatives to
hedge interest rate risk
• Mortality reflects
current experience
• Apply mortality
improvement
• Strong corporate
governance
• Proven investment
philosophy
Pension Risk Transfer
Pension Risk
Transfer2
#3
A guaranteed income leader
22
A one-stop-shop focused on meeting the guaranteed income needs of SMBs
1 2017 Plan Sponsor Defined Benefit Administration Survey – based on number of clients
2 LIMRA Secure Retirement Institute – based on premiums as of 9/30/2017
3 LIMRA Secure Retirement Institute – based on premiums as of 6/30/2017
Defined
benefit plan1
#1
Individual immediate
and deferred
income annuities3
#3
Key takeaways
23
• Demographic tailwinds will continue; guaranteed income solutions will
play an increasingly vital role in the U.S. retirement system
• Our broad portfolio of products and solutions provide us with flexibility
to manage through the shifting macro environment
• Moderating interest rate environment would increase market opportunity
• We will continue to leverage our experience and expertise and will remain
focused on the SMB market
Amy Friedrich
President, U.S. Insurance Solutions
Risk businesses
Provide protection and peace of mind
for individuals and SMBs
Why we do what we do
25
Protect enough
Save enough
forretirement
Have enough
in retirement
We help
people…
Individual Life
Specialty Benefits
(SBD)
26
U.S.
Insurance
Solutions
(USIS)
Principal
International
Principal
Global
Investors
Retirement
and Income
Solutions
(RIS)
Corporate
Individual Life Retail
Business Owner /
Executive Solutions
Group Benefits
Individual Disability
Non-Qualified
USIS businesses
27
Individuals
Business owners
and individuals
Businesses
Employers and
employees
Helping customers
92K
employers
4M
people
$3.1B
premium
in-force
As of 9/30/2017
U.S. Insurance Solutions
28
4Q 2012 3Q 2017 CAGR
Premium and fees1 $2,334M $3,028M 6%
Pre-tax operating earnings1 $294M $413M 7%
Pre-tax return on premium and fees1 12.6% 13.7%
Proven results
1 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews and 1Q 2012 Individual Life amortization change
U.S. Insurance Solutions
29
Economic impact
• 68 million employees,representing
57% of working population1
• Steady growth rate
• Contributes nearly 50% of U.S. GDP2
• Provides 66% of all net new jobs3
Market attractiveness
• Paternalistic in nature
• Less competition and under penetrated
• Resilient and loyal
1 Department of Labor, Bureau of Statistics
2 Small Business Administration GDP Update, 2012
3 Small Business Administration, Frequently Asked Questions, 2012
SMB market opportunities
There are 6 million
SMBs representing
99% of all employers.1
U.S. Insurance Solutions
Business
market
61%
Individual
39%
Business
market
52%
Individual
48%
Less than 100
employees
95%
100 to 1,000
employees
4%
1,000 or more
employees
1%
30
Group Benefits in-force cases
Disability
insurance
Life
insurance
SMB focus
New sales premium and fees
Employers
we serve
U.S. Insurance Solutions
• We’ve been in the Risk Business since inception and in
the benefits business for 75 years
• We’ve built our operations around SMBs
• We have insights into employment trends
• We have insights into how business owners think
Our SMB expertise
31
U.S. Insurance Solutions
32
67,000
Number of employer
customers
Average case size
38
Case retention1
88%
Employer
paid only
31%
Voluntary
only
17%
Employer paid
plus voluntary
52%
New sales
premium
1 Average retention for the period 1/1/2015 – 9/30/2017
Disability
insurance
28%
Life
25%
Dental &
vision
47%
In-force
premium
Diversification in Group Benefits
Group Benefits
34% of all new cases sold
include “first-time” benefits
33
7.0%
2.9%
Group Benefits industry- contracts2
2016
Market size 1.7 million
Principal market share 8%
Principal market rank #3
Group Benefits leadership position
1 LIMRA, 2013-2016 CAGR
2 In-force contracts, LIMRA 2016
Group Benefits
Principal Industry
3 year in-force premium growth1
34 Excludes the impact of actuarial assumption reviews
Group Benefits profitability
Group Benefits
7.9%
9.0%
8.5%
9.0%
11.1%
10.4%
0%
2%
4%
6%
8%
10%
12%
$0
$50
$100
$150
$200
2012 2013 2014 2015 2016 3Q 2017
TTM
Pre-tax operating earnings Pre-tax return on premium and fees
Pre-tax operating earnings and pre-tax return on premium and fees
(in millions)
35
Strategies to mitigate Risk
• Case size mix
• Product mix
• Geographic diversification
• Industry diversification
• Renewable contracts
Mortality & Morbidity
Underwriting Risk
Pricing Risk
Diversification and Risk selection matters
Types of Risks
Group Benefits
72%
26%
2%
1 year 2 year 3 year
Rate guarantee
breakdown
Rate guarantee period
Multi-channel
distribution
SMB
focus
Local sales
and service
Distribution matters
Group Benefits
36
37
Modern, scalable
infrastructure
• Minimal (isolated) legacy
systems
• Cloud based platforms
• Reengineered customer
experiences
• Investing in high volume,
straight-through processing
• One bill for customer
• Secure
Technology matters
Online enrollment for SMB
Traditional Online Traditional Online
Group Benefits
45%
38%
$91,600
$83,100
Average life
insurance purchased
Participation
55%
60%
65%
70%
75%
80%
85%
90%
38
78%
70%
Principal Industry
Claim management matters
1 Excludes the impact of actuarial assumptions reviews
2 LIMRA, 2016
2016 dental claim
auto-adjudication rate
Industry leading automated
dental claim processing
Group Benefits
Stable Group Benefits loss ratio1
2
I’m a single mom and
devastated I have been
sick and can't work. I have
been in a constant state
of panic and worried that
I’d have no income to
provide for my daughter.
You’re an angel.
….a disability claimant, April 2017
Deanna Strable
Chief Financial Officer
Capital management
Proven results from disciplined capital management
41
Balanced approach to capital deployment
Disciplined capital deployment
• Capital is deployed to:
- Grow the company
- Return to shareholders
• Every capital deployment
opportunity is evaluated
against a minimum return
of our cost of capital
Common
stock
dividends
40%
M&A and share
repurchases
25-30%
Organic
growth
30-35%
Targeted long-term capital deployment strategy
Capital deployed as a percent of net income
Targeted long-term capital deployment strategy
Capital deployed as a percent of net income
Common
stock
dividends
40%
M&A and share
repurchases
25-30%
Organic
growth
30-35%
42
Historical capital deployment
Disciplined capital deployment
1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital
Historical capital deployment
Capital deployed as a percent of net income1
Common
stock
dividends
33%
Share
repurchases
20%
M&A
19%
Organic
growth
40%
43
Common stock dividends
30%
33% 34%
36% 35% 38%
27%
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
2012 2013 2014 2015 2016 3Q17
Netincome
(billions)
Dividends as % of net income
Disciplined capital deployment
YTD
• Dividend yield of 3%
• Dividend payout ratio
nearing 40% of net income2
• Since 2012, dividends per
share increased 132%3
1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital
2Excludes a one-time gain on a real estate sale in 3Q 2017
3On a trailing twelve month basis, 12/31/2012 - 9/30/2017
Common
stock
dividends
33%
Share
repurchases
20%
M&A
19%
Organic
growth
40%
Historical capital deployment
Capital deployed as a percent of net income1
Net income  One time gain on real estate sale YTD net income
2
44
Share repurchase
Disciplined capital deployment
Capital deployed to share repurchase
Shareprice
YTD
1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital
Common
stock
dividends
33%
Share
repurchases
20%
M&A
19%
Organic
growth
40%
Historical capital deployment
Capital deployed as a percent of net income1
$258M
$137M
$205M
$275M
$257M
$193M
$20
$30
$40
$50
$60
$70
$0
$50
$100
$150
$200
$250
$300
2012 2013 2014 2015 2016 3Q17
Price of shares repurchased Avg share price
• Anti-dilutive and opportunistic programs
• Execution dependent on valuation and
other deployment opportunities
HSBC Afore
45
Mergers & acquisitions
MPF
Disciplined capital deployment
Proven M&A strategy: Acquisitions have
delivered approximately a 15% IRR on a
local currency basis
1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital
Common
stock
dividends
33%
Share
repurchases
20%
M&A
19%
Organic
growth
40%
Historical capital deployment
Capital deployed as a percent of net income1
Debt Common equity excluding AOCI Leverage ratio
46
Financial leverage
28% 27%
24% 25%
23%
21%
15%
20%
25%
30%
35%
$0
$2
$4
$6
$8
$10
$12
$14
$16
2012 2013 2014 2015 2016 3Q17
Capital structure
(in billions)
Disciplined capital deployment
TTM
• Leverage ratio target: 20-25%
• Flexibility exists to increase
the leverage ratio for the right
opportunity
• Proven track record of
managing the leverage ratio
back to the targeted range
over time
47
Organic capital deployment
Disciplined capital deployment
1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital
Common
stock
dividends
33%
Share
repurchases
20%
M&A
19%
Organic
growth
40%
Historical capital deployment
Capital deployed as a percent of net income1
Organic capital drivers:
• Business mix
• Sales growth
• Capital returned from
existing business
• Investment portfolio
strategy
• Regulatory changes
PGI PI RIS-Spread
RIS-Fee SBD Life
Optimizing organic growth
Disciplined capital deployment
48
1CAGR 2012-3Q 2017 on a trailing twelve month basis; excludes the impacts of the
actuarial assumption reviews and 1Q 2012 Individual Life amortization change
Capital used
Group
Benefits
Pension Risk
Transfer
approximate new business return
Key considerations
• Growth appetite
• Pricing discipline
• Product design
• Risk management
• Asset liability management
Less
capital
intensive
More
capital
intensive
15%
6%
14%
pre-tax operating earnings CAGR for Spread and Risk combined1
pre-tax operating earnings CAGR for Pension Risk Transfer
and Group Benefits combined1
Results since 2012:
49
Proven results
Disciplined capital deployment
Balanced
capital
strategy
Focused
business
strategy
Disciplined
approach
Proven and
market
leading
results
50
We’ve delivered on our promises
1Excludes the impacts of the actuarial assumption reviews
2Return on equity, excluding AOCI other than foreign currency translation adjustment
3Includes share repurchases, common stock dividends, and M&A
Current long-term guidance
Prior long-term guidance
Disciplined capital deployment
Operating earnings
(CAGR since 2012)
14%
12%
0%
2%
4%
6%
8%
10%
12%
14%
16%
As reported Excluding AAR
100
bps 85
bps
0
20
40
60
80
100
120
As reported Excluding AAR
Return on equity2
(average annual growth
since 2012, in bps)
1 1
72%
30%
40%
50%
60%
70%
80%
Aggregate external
capital deployments3
(as a % of net income)
2012 – 3Q 2017 YTD
• Principal’s total shareholder
return has outperformed
peers
• Compared to peers,
Principal’s growth in earnings
and dividends are driving
higher total shareholder
return
• Principal’s earnings have
grown 12% per year
compared to 3% for insurance
company peers and 5% for
asset management peers
51
Proven diversification benefit
Total shareholder return vs. peers1
6%
34%
16%
96%
21%
31%
23%
63%
-10%
24%
15%
14%
149%
133%
51%
-25%
0%
25%
50%
75%
100%
125%
150%
175%
PFG Insurance Peers Asset Management
Peers
Change in Share Count Change in Earnings Change in P/E
Dividends Total Shareholder Return
Disciplined capital deployment
1 For the period 12/31/2012 – 9/30/2017; Source: SNL financial.
Insurance Peers: PRU, MET, VOYA, UNM, LNC; Asset Management Peers: AMP, TROW, BEN, AMG, WDR, IVZ
52
Proven results
Balanced
capital
strategy
Focused
business
strategy
Disciplined
approach
Proven and
market
leading
results
Disciplined capital deployment
12% operating earnings CAGR
85 bps average ROE
expansion per year
2012 - 3Q 2017 on a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews
Panel Q&A
Thank you
Appendix
57
Non-GAAP financial
measure reconciliations
Trailing 12 months
12/31/2012 09/30/2017
RIS-Spread
Pension Risk Transfer Pre-tax operating earnings $47.5 $93.9
Fixed Annuities Pre-tax operating earnings 99.6 132.5
Investment Only Pre-tax operating earnings 74.0 117.3
Bank Services Pre-tax operating earnings 43.1 41.7
Pre-tax operating earnings 264.2 385.4
Actuarial assumption review 17.0 (19.2)
Pre-tax operating earnings excluding actuarial assumption review $281.2 $366.2
Operating revenues $2,820.2 $5,699.1
Benefits, claims and settlement expenses 2,354.8 5,146.0
Net revenue 465.4 553.1
Actuarial assumption review 2.5 (3.1)
Net revenue excluding actuarial assumption review $467.9 $550.0
Pre-tax return on net revenue* 56.8% 69.7%
Pre-tax return on net revenue excluding actuarial assumption review 60.1% 66.6%
* Pre-tax operating earnings divided by net revenue
(in millions, except as indicated)
58
Trailing 12 months
12/31/2012 09/30/2017
U.S. Insurance Solutions
Pre-tax operating earnings $199.5 $380.7
Actuarial assumption review 99.7 32.8
Individual Life amortization basis change (5.1) -
Pre-tax operating earnings excluding actuarial assumption review and amortization basis change $294.1 $413.5
Premiums and other considerations $1,769.3 $2,290.2
Fees and other revenues 531.1 752.2
Premium and fees 2,300.4 3,042.4
Actuarial assumption review (13.5) (14.2)
Individual Life amortization basis change 46.6 -
Premium and fees excluding actuarial assumption review and amortization basis change $2,333.5 $3,028.2
Pre-tax return on premium and fees* 8.7% 12.5%
Pre-tax return on premium and fees excluding actuarial assumption review and amortization basis change 12.6% 13.7%
* Pre-tax operating earnings divided by premium and fees
Non-GAAP financial
measure reconciliations
(in millions, except as indicated)
59
Trailing 12 months
12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017
SBD
Group Benefits Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9
Individual Disability Pre-tax operating earnings 43.7 52.3 61.8 80.1 75.5 80.9
Pre-tax operating earnings $135.9 $161.8 $179.2 $220.4 $250.9 $264.8
Group Benefits Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0
Individual Disability Premium and fees 244.2 261.0 273.8 321.8 323.5 342.6
Premium and fees $1,443.6 $1,492.7 $1,591.4 $1,732.6 $1,862.3 $1,979.6
Non-GAAP financial
measure reconciliations
(in millions, except as indicated)
60
Trailing 12 months
12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017
Group Benefits
Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9
Actuarial assumption review 2.2 1.6 (5.3) (12.2) (4.5) (14.0)
Pre-tax operating earnings excluding actuarial assumption review $94.4 $111.1 $112.1 $128.1 $170.9 $169.9
Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0
Actuarial assumption review - - - 5.8 - -
Premium and fees excluding actuarial assumption review $1,199.4 $1,231.7 $1,317.6 $1,416.6 $1,538.8 $1,637.0
Pre-tax return on premium and fees* 7.7% 8.9% 8.9% 9.9% 11.4% 11.2%
Pre-tax return on premium and fees excluding actuarial assumption review 7.9% 9.0% 8.5% 9.0% 11.1% 10.4%
* Pre-tax operating earnings divided by premium and fees
Non-GAAP financial
measure reconciliations
(in millions, except as indicated)
61
Trailing 12 months
12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017
PFG
Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3
Net unrealized capital (gains) losses (1,235.7) (700.6) (1,148.3) (715.9) (827.0) (1,387.8)
Net unrecognized postretirement benefit obligation 488.5 155.9 411.1 450.2 408.4 395.6
Noncontrolling interest (20.0) (92.8) (48.0) (65.8) (66.5) (70.9)
Stockholders' equity x-AOCI other than foreign currency translation adjustment 8,936.2 9,139.5 9,446.8 9,045.9 9,808.7 11,004.2
Foreign currency translation adjustment 106.9 361.5 686.8 1,148.2 1,093.8 945.2
Stockholders' equity x-AOCI $9,043.1 $9,501.0 $10,133.6 $10,194.1 $10,902.5 $11,949.4
Preferred stock (0.1) (0.1) (0.1) - - -
Preferred stock paid-in capital (541.9) (541.9) (541.9) - - -
Stockholders' equity x-AOCI available to common stockholders $8,501.1 $8,959.0 $9,591.6 $10,194.1 $10,902.5 $11,949.4
Non-GAAP financial
measure reconciliations
(in millions, except as indicated)

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Principal Investor Workshop 2017

  • 3. John Egan Vice President, Investor Relations Welcome
  • 4. 2 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 gains and losses, capital and liquidity positions, sales and earnings trends, and management’s beliefs, expectations, goals and opinions. The company does not undertake to update these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company’s annual report on Form 10-K for the year ended Dec. 31, 2016, and in the company’s quarterly report on Form 10-Q for the quarter ended Sept. 30, 2017, filed by the company with the U.S. Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the company’s ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; volatility or declines in the equity, bond or real estate markets; changes in interest rates or credit spreads or a sustained low interest rate environment; the company’s investment portfolio is subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company’s valuation of investments and the determination of the amount of allowances and impairments taken on such investments may include methodologies, estimations and assumptions that are subject to differing interpretations; any impairments of or valuation allowances against the company’s deferred tax assets; the company’s actual experience could differ significantly from its pricing and reserving assumptions; the pattern of amortizing the company’s DAC and other actuarial balances on its universal life-type insurance contracts, participating life insurance policies and certain investment contracts may change; the company may not be able to protect its intellectual property and may be subject to infringement claims; the company’s ability to pay stockholder dividends and meet its obligations may be constrained by the limitations on dividends or distributions Iowa insurance laws impose on Principal Life; changes in laws, regulations or accounting standards; results of litigation and regulatory investigations; from time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in amounts that may be material; applicable laws and the company’s certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests; competition from companies that may have greater financial resources, broader arrays of products, higher ratings and stronger financial performance; a downgrade in the company’s financial strength or credit ratings; changes in investor preferences; inability to attract and retain qualified employees and sales representatives and develop new distribution sources; international business risks; fluctuations in foreign currency exchange rates; the company may need to fund deficiencies in its “Closed Block” assets that support participating ordinary life insurance policies that had a dividend scale in force at the time of Principal Life’s 1998 conversion into a stock life insurance company; the company’s reinsurers could default on their obligations or increase their rates; risks arising from acquisitions of businesses; and a computer system failure or security breach could disrupt the company’s business and damage its reputation. Forward looking statements
  • 5. 3 Principal Financial Group, Inc. U.S. GAAP Financial Measures (in millions, except as indicated) GAAP metrics Trailing 12 months 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017 PFG Net income available to common stockholders $773.6 $879.7 $1,111.1 $1,209.3 $1,316.5 $1,786.6 Common stockholders' equity attributable to parent $9,141.4 $9,142.2 $9,642.0 $9,311.6 $10,227.3 $11,996.4 Preferred stock 0.1 0.1 0.1 - - - Preferred stock paid-in capital 541.9 541.9 541.9 - - - Noncontrolling interest 20.0 92.8 48.0 65.8 66.5 70.9 Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3 * This is a non-GAAP financial measure and is reconciled to GAAP on this page Trailing 12 months PFG 09/30/2017 Income (loss) before income taxes $2,318.7 Net realized capital (gains) losses (520.7) Net realized capital (gains) losses pre-tax adjustments (45.5) Pre-tax operating (earnings) losses attributable to noncontrolling interest (34.0) Income taxes related to equity method investments 80.1 Early extinguishment of debt 86.4 Pre-tax operating earnings (losses)* $1,885.0
  • 6. 4 Principal Financial Group, Inc. U.S. GAAP Financial Measures (in millions, except as indicated) GAAP metrics Trailing 12 months (9/30/2017) As reported 3Q17 actuarial assumption review Excluding 3Q17 actuarial assumption review* Segment pre-tax operating earnings (losses) RIS-Fee $524.2 $41.0 $565.2 Principal Global Investors 479.3 - 479.3 Principal International 317.7 11.8 329.5 Total Fee 1,321.2 52.8 1,374.0 RIS-Spread 385.4 (19.2) 366.2 Specialty Benefits 264.8 (14.2) 250.6 Individual Life 115.9 47.0 162.9 Total Risk 380.7 32.8 413.5 Pre-tax operating earnings (losses) excluding Corporate 2,087.3 66.4 2,153.7 Corporate (202.3) - (202.3) Pre-tax operating earnings (losses)* $1,885.0 $66.4 $1,951.4 * This is a non-GAAP financial measure and is reconciled to GAAP on this page
  • 7. 5 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 non-GAAP financial measures that management believes are useful to investors because they illustrate the performance of the company’s normal, ongoing operations, which is important in understanding and evaluating the company’s financial condition and results of operations. While such measures are also consistent with measures utilized by investors to evaluate performance, they are not, however, a substitute for U.S. GAAP financial measures. Therefore, at the end of this presentation, the company has provided reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure. The company adjusts U.S. GAAP financial measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP financial measures for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts. The company also uses a variety of other operational measures that do not have U.S. GAAP counterparts, and therefore do not fit the definition of non- GAAP financial measures. Account value is an example of an operational measure that is not considered a non-GAAP financial measure. Use of non-GAAP financial measures
  • 8. 6 Time Topic Presenter(s) 11:30 am Welcome John Egan & Deanna Strable 11:45 am Spread businesses Jerry Patterson 12:30 pm Risk businesses Amy Friedrich 1:15 pm Capital management Deanna Strable 1:45 pm Panel Q&A All presenters 2:15 pm Closing Agenda
  • 10. Our businesses Principal Financial Group 8 RIS-Fee RIS-Spread Individual Life Specialty Benefits (SBD) U.S. Insurance Solutions (USIS) Principal International Principal Global Investors Retirement and Income Solutions (RIS) Corporate
  • 11. Spread (17%)  RIS-Spread 26% 22% 15% 17% 12% 8% 9 1 Trailing twelve months as of 9/30/2017; excludes the impact of the 2017 actuarial assumption review; excludes Corporate Pre-tax operating earnings Pre-tax operating earnings1 $2,153.7 million Risk (20%)  Specialty Benefits  Individual Life Fee (63%)  RIS-Fee  Principal Global Investors  Principal International
  • 12. 10 Strategic importance of Spread and Risk business Principal • Financial diversification • Common distribution relationships to serve multiple needs of our customers • Relative to traditional asset management competitors - Broader array of customer solutions - Greater diversification of distribution opportunities Long-term shareholder value Customer • Compelling customer needs • Significant small to medium sized businesses (SMB) needs • Positive demographics and trends
  • 13. Jerry Patterson Senior Vice President, Retirement and Income Solutions Spread businesses Safety, security, and sustainable income
  • 14. Protect enough Save enough forretirement Have enough in retirement 12 Why we do what we do We help people…
  • 15. Just a short “Thank You” for the regular and both appreciated and needed checks for me in my retirement years. After 65+ active years in the ministry, these days alone make me yearn for action. My wife passed away last year and my dog tries to be a good friend. No problems. God has been good. Your regular help is a big boost. May God bless you. …. Dan
  • 16. RIS businesses 14 RIS-Fee RIS-Spread Full Service Accumulation Full Service Payout (Pension Risk Transfer) Fixed Annuities Investment Only Bank Services Variable Annuities More than 750,000 people U.S. Insurance Solutions (USIS) Principal International Principal Global Investors Retirement and Income Solutions (RIS) Corporate
  • 17. Below age 60 10% Age 60-69 26% Age 70-79 31% Age 80-89 24% Age 90+ 9% The diversified customers we serve 15 Pension Risk Transfer customers 266,000 lives diversified by age As of 9/30/2017 RIS-Spread Individual Annuity customers 191,000 lives diversified by age Below age 60 17% Age 60-69 26% Age 70-79 30% Age 80-89 20% Age 90+ 7%
  • 18. Market opportunities 16 • Fewer defined benefit plans • Social security adequacy • Mortgage debt • Student loan debt 80M boomers with 10,000 turning 65 every day1 • Longevity needs • Health care costs • Millennial mindset Shifting profile of retirees signals the growing need for stable returns and guaranteed income: 1 LIMRA Secure Retirement Institute RIS-Spread
  • 19. 17 Strong business fundamentals Industry rankings Pension Risk Transfer1 #3 in premium written #2 in contract count Individual income annuity2 #3 in premium written 1 LIMRA Secure Retirement Institute, as of 9/30/2017 YTD 2 LIMRA Secure Retirement Institute, as of 6/30/2017 YTD 3 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews RIS-Spread 4Q 2012 3Q 2017 CAGR Average account value $32.8B $38.5B 3% Net revenue3 $468M $550M 3% Pre-tax operating earnings3 $281M $366M 5% Pre-tax return on net revenue3 60.1% 66.6%
  • 20. How we compete and differentiate 18 • Broad portfolio of institutional and retail solutions • Focused distribution footprint • Pricing discipline • Shared and scalable infrastructure RIS-Spread Two key areas of differentiation: • Meeting the Pension Risk Transfer (PRT) needs of SMB • Broad set of guaranteed return and income capabilities targeting SMB and retirees
  • 21. 19 The Pension Risk Transfer market • More than 75 years of experience • Deep expertise in defined benefit pension plans and Risk Transfer • Ongoing demand and needs in the SMB market • We see the growth trend continuing - General trend across employee benefits - Globalization - Pension Benefit Guaranty Corporation (PBGC) premiums - Rate capitulation $4B $8B $14B $14B $17B 2013 2014 2015 2016 2017Est 1 LIMRA Secure Retirement Institute Pension Risk Transfer Increasing PRT industry sales1
  • 22. Services 33% Manufacturing 26% Trade 13% Labor 13% Finance 8% Tax-exempt 7% Serving SMBs enhances diversification 20 1 As of 9/30/2017 2 2012 through 9/30/2017 sales; LIMRA Secure Retirement Institute Pension Risk Transfer PRT new sales market share by premium and contracts2 Principal’s PRT plans by industry1 Over 90% of plans have under 100 lives 5,300 plans 0% 10% 20% 30% 40% Premium Contracts Principal Top competitors #2 #3
  • 23. Key risks and mitigation strategies 21 Longevity Credit Interest rates • Pricing uses current rate • Closely matched assets & liabilities • Utilize derivatives to hedge interest rate risk • Mortality reflects current experience • Apply mortality improvement • Strong corporate governance • Proven investment philosophy Pension Risk Transfer
  • 24. Pension Risk Transfer2 #3 A guaranteed income leader 22 A one-stop-shop focused on meeting the guaranteed income needs of SMBs 1 2017 Plan Sponsor Defined Benefit Administration Survey – based on number of clients 2 LIMRA Secure Retirement Institute – based on premiums as of 9/30/2017 3 LIMRA Secure Retirement Institute – based on premiums as of 6/30/2017 Defined benefit plan1 #1 Individual immediate and deferred income annuities3 #3
  • 25. Key takeaways 23 • Demographic tailwinds will continue; guaranteed income solutions will play an increasingly vital role in the U.S. retirement system • Our broad portfolio of products and solutions provide us with flexibility to manage through the shifting macro environment • Moderating interest rate environment would increase market opportunity • We will continue to leverage our experience and expertise and will remain focused on the SMB market
  • 26. Amy Friedrich President, U.S. Insurance Solutions Risk businesses Provide protection and peace of mind for individuals and SMBs
  • 27. Why we do what we do 25 Protect enough Save enough forretirement Have enough in retirement We help people…
  • 28. Individual Life Specialty Benefits (SBD) 26 U.S. Insurance Solutions (USIS) Principal International Principal Global Investors Retirement and Income Solutions (RIS) Corporate Individual Life Retail Business Owner / Executive Solutions Group Benefits Individual Disability Non-Qualified USIS businesses
  • 29. 27 Individuals Business owners and individuals Businesses Employers and employees Helping customers 92K employers 4M people $3.1B premium in-force As of 9/30/2017 U.S. Insurance Solutions
  • 30. 28 4Q 2012 3Q 2017 CAGR Premium and fees1 $2,334M $3,028M 6% Pre-tax operating earnings1 $294M $413M 7% Pre-tax return on premium and fees1 12.6% 13.7% Proven results 1 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews and 1Q 2012 Individual Life amortization change U.S. Insurance Solutions
  • 31. 29 Economic impact • 68 million employees,representing 57% of working population1 • Steady growth rate • Contributes nearly 50% of U.S. GDP2 • Provides 66% of all net new jobs3 Market attractiveness • Paternalistic in nature • Less competition and under penetrated • Resilient and loyal 1 Department of Labor, Bureau of Statistics 2 Small Business Administration GDP Update, 2012 3 Small Business Administration, Frequently Asked Questions, 2012 SMB market opportunities There are 6 million SMBs representing 99% of all employers.1 U.S. Insurance Solutions
  • 32. Business market 61% Individual 39% Business market 52% Individual 48% Less than 100 employees 95% 100 to 1,000 employees 4% 1,000 or more employees 1% 30 Group Benefits in-force cases Disability insurance Life insurance SMB focus New sales premium and fees Employers we serve U.S. Insurance Solutions
  • 33. • We’ve been in the Risk Business since inception and in the benefits business for 75 years • We’ve built our operations around SMBs • We have insights into employment trends • We have insights into how business owners think Our SMB expertise 31 U.S. Insurance Solutions
  • 34. 32 67,000 Number of employer customers Average case size 38 Case retention1 88% Employer paid only 31% Voluntary only 17% Employer paid plus voluntary 52% New sales premium 1 Average retention for the period 1/1/2015 – 9/30/2017 Disability insurance 28% Life 25% Dental & vision 47% In-force premium Diversification in Group Benefits Group Benefits 34% of all new cases sold include “first-time” benefits
  • 35. 33 7.0% 2.9% Group Benefits industry- contracts2 2016 Market size 1.7 million Principal market share 8% Principal market rank #3 Group Benefits leadership position 1 LIMRA, 2013-2016 CAGR 2 In-force contracts, LIMRA 2016 Group Benefits Principal Industry 3 year in-force premium growth1
  • 36. 34 Excludes the impact of actuarial assumption reviews Group Benefits profitability Group Benefits 7.9% 9.0% 8.5% 9.0% 11.1% 10.4% 0% 2% 4% 6% 8% 10% 12% $0 $50 $100 $150 $200 2012 2013 2014 2015 2016 3Q 2017 TTM Pre-tax operating earnings Pre-tax return on premium and fees Pre-tax operating earnings and pre-tax return on premium and fees (in millions)
  • 37. 35 Strategies to mitigate Risk • Case size mix • Product mix • Geographic diversification • Industry diversification • Renewable contracts Mortality & Morbidity Underwriting Risk Pricing Risk Diversification and Risk selection matters Types of Risks Group Benefits 72% 26% 2% 1 year 2 year 3 year Rate guarantee breakdown Rate guarantee period
  • 39. 37 Modern, scalable infrastructure • Minimal (isolated) legacy systems • Cloud based platforms • Reengineered customer experiences • Investing in high volume, straight-through processing • One bill for customer • Secure Technology matters Online enrollment for SMB Traditional Online Traditional Online Group Benefits 45% 38% $91,600 $83,100 Average life insurance purchased Participation
  • 40. 55% 60% 65% 70% 75% 80% 85% 90% 38 78% 70% Principal Industry Claim management matters 1 Excludes the impact of actuarial assumptions reviews 2 LIMRA, 2016 2016 dental claim auto-adjudication rate Industry leading automated dental claim processing Group Benefits Stable Group Benefits loss ratio1 2
  • 41. I’m a single mom and devastated I have been sick and can't work. I have been in a constant state of panic and worried that I’d have no income to provide for my daughter. You’re an angel. ….a disability claimant, April 2017
  • 42. Deanna Strable Chief Financial Officer Capital management Proven results from disciplined capital management
  • 43. 41 Balanced approach to capital deployment Disciplined capital deployment • Capital is deployed to: - Grow the company - Return to shareholders • Every capital deployment opportunity is evaluated against a minimum return of our cost of capital Common stock dividends 40% M&A and share repurchases 25-30% Organic growth 30-35% Targeted long-term capital deployment strategy Capital deployed as a percent of net income
  • 44. Targeted long-term capital deployment strategy Capital deployed as a percent of net income Common stock dividends 40% M&A and share repurchases 25-30% Organic growth 30-35% 42 Historical capital deployment Disciplined capital deployment 1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital Historical capital deployment Capital deployed as a percent of net income1 Common stock dividends 33% Share repurchases 20% M&A 19% Organic growth 40%
  • 45. 43 Common stock dividends 30% 33% 34% 36% 35% 38% 27% $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 2012 2013 2014 2015 2016 3Q17 Netincome (billions) Dividends as % of net income Disciplined capital deployment YTD • Dividend yield of 3% • Dividend payout ratio nearing 40% of net income2 • Since 2012, dividends per share increased 132%3 1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital 2Excludes a one-time gain on a real estate sale in 3Q 2017 3On a trailing twelve month basis, 12/31/2012 - 9/30/2017 Common stock dividends 33% Share repurchases 20% M&A 19% Organic growth 40% Historical capital deployment Capital deployed as a percent of net income1 Net income  One time gain on real estate sale YTD net income 2
  • 46. 44 Share repurchase Disciplined capital deployment Capital deployed to share repurchase Shareprice YTD 1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital Common stock dividends 33% Share repurchases 20% M&A 19% Organic growth 40% Historical capital deployment Capital deployed as a percent of net income1 $258M $137M $205M $275M $257M $193M $20 $30 $40 $50 $60 $70 $0 $50 $100 $150 $200 $250 $300 2012 2013 2014 2015 2016 3Q17 Price of shares repurchased Avg share price • Anti-dilutive and opportunistic programs • Execution dependent on valuation and other deployment opportunities
  • 47. HSBC Afore 45 Mergers & acquisitions MPF Disciplined capital deployment Proven M&A strategy: Acquisitions have delivered approximately a 15% IRR on a local currency basis 1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital Common stock dividends 33% Share repurchases 20% M&A 19% Organic growth 40% Historical capital deployment Capital deployed as a percent of net income1
  • 48. Debt Common equity excluding AOCI Leverage ratio 46 Financial leverage 28% 27% 24% 25% 23% 21% 15% 20% 25% 30% 35% $0 $2 $4 $6 $8 $10 $12 $14 $16 2012 2013 2014 2015 2016 3Q17 Capital structure (in billions) Disciplined capital deployment TTM • Leverage ratio target: 20-25% • Flexibility exists to increase the leverage ratio for the right opportunity • Proven track record of managing the leverage ratio back to the targeted range over time
  • 49. 47 Organic capital deployment Disciplined capital deployment 1On a cumulative basis, 2012 – 3Q 2017; Historical capital deployment is greater than net income due to paid-in capital Common stock dividends 33% Share repurchases 20% M&A 19% Organic growth 40% Historical capital deployment Capital deployed as a percent of net income1 Organic capital drivers: • Business mix • Sales growth • Capital returned from existing business • Investment portfolio strategy • Regulatory changes
  • 50. PGI PI RIS-Spread RIS-Fee SBD Life Optimizing organic growth Disciplined capital deployment 48 1CAGR 2012-3Q 2017 on a trailing twelve month basis; excludes the impacts of the actuarial assumption reviews and 1Q 2012 Individual Life amortization change Capital used Group Benefits Pension Risk Transfer approximate new business return Key considerations • Growth appetite • Pricing discipline • Product design • Risk management • Asset liability management Less capital intensive More capital intensive 15% 6% 14% pre-tax operating earnings CAGR for Spread and Risk combined1 pre-tax operating earnings CAGR for Pension Risk Transfer and Group Benefits combined1 Results since 2012:
  • 51. 49 Proven results Disciplined capital deployment Balanced capital strategy Focused business strategy Disciplined approach Proven and market leading results
  • 52. 50 We’ve delivered on our promises 1Excludes the impacts of the actuarial assumption reviews 2Return on equity, excluding AOCI other than foreign currency translation adjustment 3Includes share repurchases, common stock dividends, and M&A Current long-term guidance Prior long-term guidance Disciplined capital deployment Operating earnings (CAGR since 2012) 14% 12% 0% 2% 4% 6% 8% 10% 12% 14% 16% As reported Excluding AAR 100 bps 85 bps 0 20 40 60 80 100 120 As reported Excluding AAR Return on equity2 (average annual growth since 2012, in bps) 1 1 72% 30% 40% 50% 60% 70% 80% Aggregate external capital deployments3 (as a % of net income) 2012 – 3Q 2017 YTD
  • 53. • Principal’s total shareholder return has outperformed peers • Compared to peers, Principal’s growth in earnings and dividends are driving higher total shareholder return • Principal’s earnings have grown 12% per year compared to 3% for insurance company peers and 5% for asset management peers 51 Proven diversification benefit Total shareholder return vs. peers1 6% 34% 16% 96% 21% 31% 23% 63% -10% 24% 15% 14% 149% 133% 51% -25% 0% 25% 50% 75% 100% 125% 150% 175% PFG Insurance Peers Asset Management Peers Change in Share Count Change in Earnings Change in P/E Dividends Total Shareholder Return Disciplined capital deployment 1 For the period 12/31/2012 – 9/30/2017; Source: SNL financial. Insurance Peers: PRU, MET, VOYA, UNM, LNC; Asset Management Peers: AMP, TROW, BEN, AMG, WDR, IVZ
  • 54. 52 Proven results Balanced capital strategy Focused business strategy Disciplined approach Proven and market leading results Disciplined capital deployment 12% operating earnings CAGR 85 bps average ROE expansion per year 2012 - 3Q 2017 on a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews
  • 58. 57 Non-GAAP financial measure reconciliations Trailing 12 months 12/31/2012 09/30/2017 RIS-Spread Pension Risk Transfer Pre-tax operating earnings $47.5 $93.9 Fixed Annuities Pre-tax operating earnings 99.6 132.5 Investment Only Pre-tax operating earnings 74.0 117.3 Bank Services Pre-tax operating earnings 43.1 41.7 Pre-tax operating earnings 264.2 385.4 Actuarial assumption review 17.0 (19.2) Pre-tax operating earnings excluding actuarial assumption review $281.2 $366.2 Operating revenues $2,820.2 $5,699.1 Benefits, claims and settlement expenses 2,354.8 5,146.0 Net revenue 465.4 553.1 Actuarial assumption review 2.5 (3.1) Net revenue excluding actuarial assumption review $467.9 $550.0 Pre-tax return on net revenue* 56.8% 69.7% Pre-tax return on net revenue excluding actuarial assumption review 60.1% 66.6% * Pre-tax operating earnings divided by net revenue (in millions, except as indicated)
  • 59. 58 Trailing 12 months 12/31/2012 09/30/2017 U.S. Insurance Solutions Pre-tax operating earnings $199.5 $380.7 Actuarial assumption review 99.7 32.8 Individual Life amortization basis change (5.1) - Pre-tax operating earnings excluding actuarial assumption review and amortization basis change $294.1 $413.5 Premiums and other considerations $1,769.3 $2,290.2 Fees and other revenues 531.1 752.2 Premium and fees 2,300.4 3,042.4 Actuarial assumption review (13.5) (14.2) Individual Life amortization basis change 46.6 - Premium and fees excluding actuarial assumption review and amortization basis change $2,333.5 $3,028.2 Pre-tax return on premium and fees* 8.7% 12.5% Pre-tax return on premium and fees excluding actuarial assumption review and amortization basis change 12.6% 13.7% * Pre-tax operating earnings divided by premium and fees Non-GAAP financial measure reconciliations (in millions, except as indicated)
  • 60. 59 Trailing 12 months 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017 SBD Group Benefits Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9 Individual Disability Pre-tax operating earnings 43.7 52.3 61.8 80.1 75.5 80.9 Pre-tax operating earnings $135.9 $161.8 $179.2 $220.4 $250.9 $264.8 Group Benefits Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0 Individual Disability Premium and fees 244.2 261.0 273.8 321.8 323.5 342.6 Premium and fees $1,443.6 $1,492.7 $1,591.4 $1,732.6 $1,862.3 $1,979.6 Non-GAAP financial measure reconciliations (in millions, except as indicated)
  • 61. 60 Trailing 12 months 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017 Group Benefits Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9 Actuarial assumption review 2.2 1.6 (5.3) (12.2) (4.5) (14.0) Pre-tax operating earnings excluding actuarial assumption review $94.4 $111.1 $112.1 $128.1 $170.9 $169.9 Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0 Actuarial assumption review - - - 5.8 - - Premium and fees excluding actuarial assumption review $1,199.4 $1,231.7 $1,317.6 $1,416.6 $1,538.8 $1,637.0 Pre-tax return on premium and fees* 7.7% 8.9% 8.9% 9.9% 11.4% 11.2% Pre-tax return on premium and fees excluding actuarial assumption review 7.9% 9.0% 8.5% 9.0% 11.1% 10.4% * Pre-tax operating earnings divided by premium and fees Non-GAAP financial measure reconciliations (in millions, except as indicated)
  • 62. 61 Trailing 12 months 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017 PFG Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3 Net unrealized capital (gains) losses (1,235.7) (700.6) (1,148.3) (715.9) (827.0) (1,387.8) Net unrecognized postretirement benefit obligation 488.5 155.9 411.1 450.2 408.4 395.6 Noncontrolling interest (20.0) (92.8) (48.0) (65.8) (66.5) (70.9) Stockholders' equity x-AOCI other than foreign currency translation adjustment 8,936.2 9,139.5 9,446.8 9,045.9 9,808.7 11,004.2 Foreign currency translation adjustment 106.9 361.5 686.8 1,148.2 1,093.8 945.2 Stockholders' equity x-AOCI $9,043.1 $9,501.0 $10,133.6 $10,194.1 $10,902.5 $11,949.4 Preferred stock (0.1) (0.1) (0.1) - - - Preferred stock paid-in capital (541.9) (541.9) (541.9) - - - Stockholders' equity x-AOCI available to common stockholders $8,501.1 $8,959.0 $9,591.6 $10,194.1 $10,902.5 $11,949.4 Non-GAAP financial measure reconciliations (in millions, except as indicated)