principal financial group 101 · ralph c. eucher 61 executive vp, human resources & corporate...

Principal Financial Group®

May 2013

Use of Non-GAAP Financial Measures

2

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, on our investor relations website, the company has provided reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAPfinancial 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. Assets under management is an example of an operational measure that is not considered a non-GAAP financial measure.

Forward Looking StatementsCertain 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, 2012, and in the company’s quarterly report on Form 10-Q for the quarter ended March 31, 2013, filed by the company with the 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; continued difficult conditions in the global capital markets and the economy generally; continued volatility or further declines in the equity markets; changes in interest rates or credit spreads; 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 securities may include methodologies, estimations and assumptions that are subject to differing interpretations; the determination of the amount of allowances and impairments taken on the company’s investments requires estimations and assumptions that are subject to differing interpretations; gross unrealized losses may be realized or result in future impairments; 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; inability to attract and retain sales representatives and develop new distribution sources; international business risks; the company’s actual experience could differ significantly from its pricing and reserving assumptions; 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; the pattern of amortizing the company’s DPAC and other actuarial balances on its universal life-type insurance contracts, participating life insurance policies and certain investment contracts may change; 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; changes in laws, regulations or accounting standards; a computer system failure or security breach could disrupt the company’s business, and damage its reputation; 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; fluctuations in foreign currency exchange rates; and 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.

3

A Leading Financial Services Company•Fortune 500 company; 134 year history; 19.1 million customers•Offices in 18 countries; 13,300 employees worldwide•Full range of retirement savings, investment and insurance solutions for small to medium-sized businesses & their employees, individuals, and institutions

Assets Under Management by Source$456 billion

as of March 31, 2013

Retirement &Investor Services

49%

Corporate1%

U.S. Insurance Solutions

4%

PrincipalInternational

23%

PrincipalGlobal

Investors 23%

Operating Earnings$965.1 million*March 31, 2013

Retirement &Investor Services

62%


13%

PrincipalInternational

16% PrincipalGlobal

Investors 9%

*Trailing twelve month total. After‐tax. Results exclude Corporate.4

COMPANY OVERVIEW

Organizational Structure

Principal Financial GroupZimpleman CEO – 42/42 yrs*

Lillis CFO – 31/31 yrs

Retirement & Investor Services

Houston - President29/29 yrs

Principal Global Investors

McCaughan – President39/11 yrs

Principal International

Valdes – President25/22 yrs


Houston – President29/29 yrs

Corporate

Full Service Accumulation

Principal Funds

Individual Annuities

Bank & Trust

Full Service Payout

Investment Only

Life

Specialty Benefits

Health**

*Years of experience: Industry/The Principal as of year end 2013.**Exited business.

COMPANY OVERVIEW

5

PRINCIPAL FINANCIAL GROUPHeadquartersDes Moines, Iowa

MexicoPrincipal AFOREPensions

Principal SegurosLife Insurance

Principal PensionesAnnuities

Principal Fondos de Inversión, S.A. de C.V (PFI)Mutual Funds, IAM

ChilePrincipal Vida Annuities / Pensions

Principal Creditos HipotecariosResidential Mortgages

Principal AGFMutual Funds, IAM

CuprumPensions - Mandatory

BrazilBrasilPrev - JV with Banco do BrasilPensions, Annuities, IAM

ClaritasMutual Funds

IndiaPrincipal/AMC -JV with PNB/VijayaMutual Funds

Principal PNB AssetManagement Co.Asset Management

MalaysiaCIMB-Principal AMC - JV with CIMB GroupMutual Funds, Asset Management

CIMB Principal Islamic Asset Management (PGI JV with CIMB Group)Islamic Institutional Asset Management

Hong KongPrincipal Insurance CompanyPensions, Mutual Funds, IAMPrincipal Global Investors (Asia) Ltd.Asset Management

ChinaCCB-Principal AMC – JV with CCB Mutual Funds, IAM

Representative OfficesPensions, Asset Management

Principal Financial Group Global Presence

GermanyPrincipal Global Investors (Europe) LTD Asset Management

IrelandPrincipal Global Investors (Ireland) LtdMutual Funds

UKPrincipal Global Investors(Europe) LTDAsset Management Japan

Principal Global Investors (Japan) LTDAsset Management

AustraliaPrincipal Global Investors (Australia) LTDAsset Management

SingaporeCIMB-Principal AMCPrincipal Global Investors (Singapore)Asset Management

ThailandCIMB-Principal AMCMutual Funds, Asset Management

IndonesiaCIMB-Principal AMCMutual Funds, Asset Management

NetherlandsPrincipal Global InvestorsRepresentative OfficeAsset Management

UAEPrincipal Global InvestorsRepresentative OfficeAsset Management

COMPANY OVERVIEW

6

134 Years of Experience

1879Life

Assoc

1911Mutual Life Co

1936Mortgage Banking/

Commercial Mortgage

1941Group Health

& Pension

1968Mutual Funds

1985Principal Financial

Group

1998Principal

Bank; Mutual Holding Co

2001IPO;

Spectrum

1990Principal

Intl

1970sDefined

Contribution

1999Principal Global

Investors; BrasilPrev JV; Principal Asset

Mgmt Co (India)

2002Benefit

Consultants Inc; Total

Retirement Suite SM

2006Washington

Mutual Funds; WM Advisors

2008CIMB-Principal

IslamicAsset Mgmt

2007Morley

2011HSBC Afore;

Finisterre;Origin

1995Principal

Chile

1996Principal

Hong Kong

1997Principal Mexico

2003Post

Advisory Group

2005CCB

Principal; Columbus

Circle

JV – Joint Venture.IPO – Initial Public Offering.

2010BrasilPrev

JV extension

2012Claritas; Cuprum

COMPANY OVERVIEW

7

2013Liongate

Experienced Management Team

*As of year end 2013

COMPANY OVERVIEW

8

Name Age* Title (Industry/PFG)*Larry D. Zimpleman 62 Chairman, President & CEO 42/42

Daniel J. Houston 52 President – Retirement, Insurance and Financial Svcs 29/29

James P. McCaughan 60 President – Global Asset Management 39/11

Luis E. Valdes 56 President – Principal International 25/22

Ralph C. Eucher 61 Executive VP, Human Resources & Corporate Svcs 29/19

Karen E. Shaff 59 Executive VP & General Counsel 31/31

Rex Auyeung 61 Senior VP, President , Principal Financial Group– Asia 36/19

Ned A. Burmeister 54 Senior VP, COO – Principal International 34/34

Gregory J. Burrows 51 Senior VP, Retirement & Investor Svcs 27/27

Timothy M. Dunbar 56 Senior VP & Chief Investment Officer 32/27

Gregory B. Elming 53 Senior VP & Chief Risk Officer 31/31

Nora M. Everett 54 Senior VP, Retirement & Investor Svcs 22/22

Joyce N. Hoffman 61 Senior VP & Corporate Secretary 33/33

Julia M. Lawler 53 Senior VP – Investment Services 31/29

Terrance J. Lillis 61 Senior VP & Chief Financial Officer 31/31

Timothy J. Minard 50 Senior VP, Distribution 27/27

Mary A. O’Keefe 57 Senior VP & Chief Marketing Officer 23/23

Jerry Patterson 47 Senior VP, Retirement & Investor Svcs 25/12

Angela R. Sanders 50 Senior VP & Controller 24/24

Gary P. Scholten 56 Senior VP & Chief Information Officer 33/33

Deanna D. Strable 45 Senior VP, U.S. Insurance Solutions 24/24

Roberto Walker 48 Senior VP, President, Principal Financial Group – LatAm 24/17

Retirement and Investor Services•A leading provider of DC plans1

•#1 provider of DB plans2

•#1 provider of ESOP plans3

•#5 Manager of Lifecycle Funds4

Industry Leadership

Sources: 1 PLANSPONSOR Recordkeeeping Survey 6/12, 2 PLANSPONSOR, April 2012; 3PLANSPONSOR 6/12; 4Lifecycle Funds Study, Financial Research Group 9/12; 5Pensions & Investments, “The Best Places to Work in Money Management for firms with 1,000 or more employees”, 12/10/2012. 6Principal Real Estate Investors named a top 10 manager of real estate. Managers ranked by total worldwide real estate assets. Real estate assets reported net of leverage and 93 managers profiled. “The Largest Real Estate Investment Managers”, Pensions & Investments, October 15, 2012, data as of 6/30/2012 7IPE, Pensions Fund Perception Programme, April 2013; 25 managers won this award (out of a field of 180). 8Assets under management, Fenaprevi (10/12); 9SVS (Dec 2012); 10Lipper (Dec 2012); 11Lipper 2011; 12Consar (Nov 2012); 13PLANSPONSOR 12/12 (based on number of plans record-kept); 14LIMRA 2011 surveys: Non-medical based on fully insured employer contracts in force & Individual Disability Insurance (IDI) rank based on in-force policies.

Principal Global Investors•Best Place to Work in Money

Management 5•Top 10 manager Real Estate 6•Managers Recommended to Other

Funds by 100% of Clients7

Principal International• #3 pensions – Brazil8• #6 payout annuities – Chile9

• #2 mutual funds – Malaysia10

• #8 pensions – Hong Kong11

•#6 pensions – Mexico12

U.S. Insurance Solutions• #2 Non-qualified deferred

compensation13

• #4 Non-medical coverages14

• #6 IDI coverages14

COMPANY OVERVIEW

9

Financial Strength:Current Ratings

(as of 4/19/2013)

• Moody's Investors Service'Aa3', Excellent - fourth highest of 21 rating levels.Outlook: Negative Rating as of October 2012

• FitchRatings'AA-‘, Very Strong - fourth highest of 21 rating levels.Outlook: NegativeRating as of February 2013

• Standard & Poor's 'A+', Strong - fifth highest of 21 rating levels.Outlook: NegativeRating as of October 2012

• A.M. Best'A+', Superior - second highest of 16 rating levels.Outlook: Stable Rating as of December 2012

Ratings related to Principal Life Insurance Company and Principal National Life Insurance Company.

COMPANY OVERVIEW

10

Meet retirement and employee benefit needs of growing businesses and their employees.

Capitalize on unprecedented demand for financial services among Baby and Echo Boomers.

Grow proven, global, multi-boutique asset management model for institutional markets and clients.

Extend retirement and long-term asset accumulation expertise in key emerging markets with fast growing middle classes and retirement assets.

GloballyCompetitiveEmployers

Aging Populations

FiscallyConstrained

Governments

Our Strategy is Well Suited for theCurrent Environment

11

COMPANY OVERVIEW

● Retirement market leader in the U.S. and select emerging markets

● Recognized global asset management leader

● Synergy adds value to diverse portfolio

● Increasing financial flexibility

Full range of retirement

solutions to savefor the long term

Insurance solutions to

protect assets for business owners, employees and

individuals

Global asset management

expertise for The Principal and institutional investors

Long‐term savings and retirementsolutions in

select emerging markets

● Enduring core values

● Experienced management team

● Strong distribution

● Operate, execute, adapt and advance

Well Positioned for Long-Term Growth

INVESTMENT MANAGEMENT +

12

COMPANY OVERVIEW

#2 Non‐qualified Deferred Compensation plans4

#4 Group Benefit coverages5#3 IDI new sales premium6

U.S. Businesses Overview

U.S. INSURANCE SOLUTIONSProtect assets, income and financial security of business owners and individuals

RETIREMENT & INVESTOR SERVICESFull range of retirement solutions and services to save for the long term and investfor growth Protect

assets

Invest

Save for long term

#3 Defined Contribution1#1 Defined Benefits2#1 ESOP1#5 Manager of

Lifecycle Funds3

1PLANSPONSOR Recordkeeping Survey 6/12 (recordkeeper by plans); 2PLANSPONSOR DB Admin Survey 4/12 (by clients); 3Lifecycle Funds Study, FRC 12/12; 4Deferred Compensation Buyer’s Guide 12/12 (by clients); 5LIMRA 2011 surveys 62011 LIMRA data of non‐cancelable annualized new sale premium. 13

U.S. BUSINESSES

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

3%Contribution

9%Contribution

Monthly Incom

e

Social Security PensionOther Savings Retirement Savings

Principal Total Retirement Suite SM (TRS)

Defined Benefit

#1 DB provider1(by # of DB clients)

DefinedContribution

#3 DC plan recordkeeper2(by # of plans)

Employee Stock Ownership Plan

#1 ESOP plan recordkeeper2

(by # of plans & assets)

NonqualifiedPlans

#2 Deferred Comp provider3

(by # of clients)

Source: PLAN SPONSOR magazine ‐‐ 1 DB Administration Survey 04/12; 2Recordkeeping Survey 06/12; 3Deferred Compensation Buyer’s Guide 12/12

Retirement Readiness

Better Retirement Programs Lead to Better Outcomes

$3,018

$4,030

Your income goal is $4,019 per month

You are

here

You could

be here

―Your Goal

14

U.S. BUSINESSES

0%

2%

4%

6%

8%

10%

12%

14%

16%

20‐49employees

50‐99employees

100‐249employees

250‐499employees

500‐999employees

1000+employees

Principal penetration of market by employer size

SOURCE: Principal customer data as of 12/31/12; Economy.com (Moody’s) Annual Firm Estimates 2012.

SMB Leadership:U.S. Businesses SMB Market Penetration

15

U.S. BUSINESSES

SMB 401(k) Market

Source: Cerulli Associates, 2009SMB – Small to Medium Sized Businesses

2002 2009 2014E

$1.6

$2.7

$3.8

LARGE CASE>1000

Employees

SMB<1000

Employees

CAGR’09-’14

+7.1%401(k) AUM(trillions)

382,046

474,018

526,6216,156

12,327

13,695

2002 2009 2014ENumber of Plans

<1000 participants 1000+ participants401(k) Plan Growth

+7.1%

16

U.S. BUSINESSES

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012

$ B

illio

ns

Recurring Deposits Transfer Deposits

15.417.8

20.6 20.417.0 18.5

20.324.3

Rising Deposits & the Power of Payroll Deduction

17

U.S. BUSINESSES

Specialty Benefits Premium & Fees% Change year over year

Signs of Recovering EconomyBut Still Lagging Pre-crisis Levels

Full Service AccumulationRecurring Deposits% Change year over year

‐10%

‐5%

0%

5%

10%

15%

20%

Eligible Participants TTM Recurring Deposits

U.S. BUSINESSES

18

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

Membership TTM Premium & Fees

Our Disciplined Execution Delivers Positive Results

* Profit 2000 Benchmark Study, Sterling Resources, Inc. (2012);** Department of Labor & Cerulli Associates 2012 (for 2012, industry 401k is an estimate)

Net Flows as % of beginning of year assets 2006-2012**

Profit Margin*Industry Avg vs. The Principal

Principal Industry Avg

0.9%

0.4%

1.8%2.2%

1.1%

0.5% 0.7%

5.5%5.1%

5.4%

2.5%

0.6%

3.5%

6.3%

2006 2007 2008 2009 2010 2011 2012

401k Industry net flows Principal FSA net flows

19

U.S. BUSINESSES

Execution of Strategy:

Customer Centric Business Model

Bundled

UnbundledSmall Case

LargeCase

TARGET MARKET

BU

SIN

ESS

MO

DEL

Nationwide

John Hancock

MetLife

Vanguard

Fidelity

Mass Mutual

ING/VOYA

PrudentialT.Rowe Price

20

U.S. BUSINESSES

Wells Fargo

Great WestTransamerica


FSA* Sales

2.23.5 2.8 1.7 2.0 3.2 2.9

1.41.4

0.70.9

1.72.3

3.4 1.3

0.50.9

1.5

2.72.4

2.1

1.0 3.2

3.3

3.3

0

2

4

6

8

10

12

14

2007 2008 2009 2010 2011 2012 2013

$ B

illio

ns

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

*Full-Service Accumulation

9.48.3

5.0

6.7

8.5

11.5

21

U.S. BUSINESSES

2.9


FSA* Deposits

5.1 7.0 6.0 6.0 5.0 6.5 6.8

4.24.5

3.6 4.1 5.05.7

5.84.4

3.6 3.84.3

5.6

5.5 4.5

3.8 5.86.0

6.5

0

5

10

15

20

25

30

2007 2008 2009 2010 2011 2012 2013

$ B

illio

ns

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter


20.6 20.4

17.018.5

20.3

24.3

22

U.S. BUSINESSES

6.8


FSA* Account Value by Manager


63.7% 60.4% 58.4% 58.3% 56.6% 56.2% 56.6%

10.9% 12.7% 12.8% 11.1% 10.0% 10.3% 10.7%

17.7% 20.1% 22.3% 23.3% 26.5% 26.5% 27.7%

7.7% 6.9% 6.6% 7.3% 6.9% 7.0% 5.0%

0%

20%

40%

60%

80%

100%20

08

2009

2010

2011

2012

2013

1Q13

Dep

osits

PGI managed Sub-advised Non-proprietary ER Securities

23

U.S. BUSINESSES

Innovative Solutions:

Solving Income Needs

ACCUMULATION

OUR APPROACH:• Education• Planning assistance

(RetireSecure®)• Full array of options• Innovative solutions

MULTI-PRODUCT SOLUTION SET

• “Through Retirement” Lifecycle Funds• Mutual Funds that:‒ Generate income‒ Preserve capital‒ Protect against inflation‒ Address market volatility

• Annuities to provide: ‒ Fixed returns ‒Guaranteed income‒ Protection against volatility

• Bank products• Full Service Payout‒ Defined Benefit plan terminations

RETIREMENT INCOME

U.S. BUSINESSES

TOP SELLING FUNDS 1Q 2013

Global Diversified Income $1.4B

Mid‐cap Blend $800M

Preferred $600M

Strategic Asset Management $400M

High Yield $300M

TOTAL FOR TOP 5 $3.5B

ASSET ALLOCATION LEADERSHIP• #5 largest lifecycle fund manager*• Target date & target risk• Multi‐manager solutions• Portfolio construction strategies:

*Based on $31.7B in assets FRC 12/31/12 Lifecycle Report

Needs-Driven Investment SolutionsBroad and unique asset allocation strategies

25

U.S. BUSINESSES

Full Service Accumulation

Net cash flows as % of beginning of year assets 2006-2011. Sources of industry data: 401(k) industry – Department of Labor & Cerulli Associates, 2011 (for 2011, industry 401k is an estimate); Funds – ICI (reflects all long-term mutual fund net flows, including variable contract mutual funds)

Principal Funds

Net Cash Flow Outpacing the Industry

4.0%3.0%

-2.0%

6.0%

3.0%

1.0%2.0%

11.0%

0.0%

-2.0%

2.0%

6.0% 7.0%

18.0%

2006 2007 2008 2009 2010 2011 2012

Industry net flows Principal Funds net flows

26

U.S. BUSINESSES

0.9%

0.4%

1.8%2.2%

1.1%

0.5% 0.7%

5.5%5.1%

5.4%

2.5%

0.6%

3.5%

6.3%

2006 2007 2008 2009 2010 2011 2012

401k Industry net flows Principal FSA net flows

ER/NQ19%

BOES36%

Individual45%

Individual Life Leadership:

Focus on the Business Market

Business owners’ financial challenges• Exiting the business• Business transition• Retaining key employees• Retirement planning

Solutions for key employees• Retirement income• Survivor income• Business protection

2012 Sales

BOES = Business Owner/Executive Solutions ER/NQ = Employer/Non-qualified

SOLUTIONS FOR BUSINESS, BUSINESS OWNERS AND KEY EXECUTIVES

27

U.S. BUSINESSES

Specialty Benefits Leadership:

Strong Market PositionSMB-focused solutions• Group Benefits

• Top tier, owned dental networks• eBenefits Edge

• Individual Disability• Wellness

$1.46B Premium & Fees Trailing Twelve Months 1Q 2013

*Non-med rank based on in-force coverages. Individual Disability Insurance (IDI) rank based on in-force premium. Source: LIMRA 2011

Group Dental

and Vision40%

Group Life23%

Group DI

20%

IDI16%

28

U.S. BUSINESSES

Wellness 1%

Business / Product Mkt.Share

IndustryRank

Total Group Inforce Contracts 7.1% 4

Life 8.3% 6

Disability 6.4% 5

Dental 6.4% 7

IDI Inforce Premium 7.2% 6

IDI New Sales Premium 15.6% 3

U.S. Distribution Overview

PRINCIPAL CONNECTION

• 70 counselors with focus on education

CAREER

• 1,000 agents • Sell all products• Career places 80‐85% of sales within The Principal family products

BANKSINSURANCE-ORIENTED

INVESTMENT-ORIENTED

• Wirehouses• Regional

Broker/Dealers• Planners

• Insurance Producers

• Banks• Broker/

Dealers• Marketers

THIRD PARTYPROPRIETARY

ALLIANCE MANAGEMENT GROUP (AMG)Select 3rd party distributors with dedicated support

STRENGTHENS RELATIONSHIPS AND FUELS SALES GROWTH

All supported by DEDICATED SERVICE TEAMS providing education, training, counseling and retention

11 WHOLESALE CHANNELSGroup Benefits

Retirement Investment Solutions

Annuities NQDC Disability Insurance

Retail Life

AMG WorksiteESOP Wellness

29

U.S. BUSINESSES

National Presence with Local Employees

OUR VALUE TO ADVISORS:

● Solutions‐based selling

● Point of sale support

● Ongoing service and education support

● Pipeline development

● Practice management

● Advisor education

121 Total Offices

NOTE: Approximate view as of March 2012. Check www.principal.com for actual locations.30

U.S. BUSINESSES

Expanding Distribution Partnerships Have Generated Strong Sales Growth

2.03.8 4.2 3.1 3.8 3.7

7.62.1 2.5

2.8

5.7 6.5

10.5

0.2

0.61.2 1.2

1.5 1.4

2.5

1.3

2.33.0

0.9

1.5 1.4

1.7

2006 2007 2008 2009 2010 2011 2012

Individual Annuities

Separately Managed Accounts

Mutual Funds

Full Service Accum

$3.5B $8.0BTotal: +36%$8.8B $10.9B

CAGR:

$12.5B $13.0B

31

U.S. BUSINESSES

$22.3B

Broad and Deep DistributionProprietary provides foundation; 3rd party provides accelerated growth

Rankings and percentages as of 12/31/201232

U.S. BUSINESSES

Product Line New Sales 1st 2nd 3rd Top 3

represent

NQ Life Career 41%

Retail Life Career 51%

Individual Disability Career Plus Group 36%

Group Benefits 13%

Fixed Annuities TD Wealth Management 39%

Variable Annuities Career Principal Connection 100%

Mutual Funds 40%

FSA – New Sales Assets Career 31%

FSA – New Sales Case Counts

Career26%

Fixed Income

$139Equity

$87

Real Estate

$47

Principal Global InvestorsAssets Under Management

$273BBy Asset Class

As of 3/31/13.1This list is derived from the Pensions & Investments “P & I 1,000” dated 02/04/13 compared to our internal records as of 03/31/13.2 This list is derived from the “P&I/Towers Watson World 300: The Largest Retirement Funds” report on the largest pension plans dated 09/03/12 compared to our internal records as of 03/31/13.

● Serve clients in nearly 60 countries, including several major central banks and sovereign wealth funds

● Manages assets for 12 of the 25 largest U.S. retirement plans1 and 10 of the 25 largest world retirement funds2

● Manages:

‒ 66% of Full Service Accumulation assets,

‒ 79% of Principal Funds assets, and

‒ 100% of Principal Life general account assets

● Office locations in major financial markets worldwide

● Long-standing commitment to corporate stewardship


33

PRINCIPAL GLOBAL INVESTORS

Strong Investment Performance ContinuesMorningstar rankings of Principal mutual funds, separate accounts and CITs

Percentage of funds in the top two quartiles

82%77%

62%

84%91%

60%

82%87%

71%

1‐Year 3‐Year 5‐Year

Mar. 31, 2012

Dec. 31, 2012

Mar. 31, 2013

Represents $123 billion assets under management of which 75% is managed by PGI boutiques

Principal “I” shares , if no “I” share class then “A” share class, separate accounts use “R6” rate level; Includes Principal mutual funds, separate accounts and collective investment trusts (CITs); Excludes money market, stable value and U.S. Property

GOAL:ABOVE

60%

34


Our Current Boutiques(AUM as of 3/31/2013)

Principal Global Equities$60.6B

PGI Fixed Income$71.6B

Private Real Estate$31.2B

CMBS$6.0B

Origin Asset Management

$2.5B

Edge Asset Management

$16.0B

Fixed IncomeEquities

REITs$5.0B

Principal Enterprise Capital$4.3B

CIMB –Principal Islamic Asset Mgmt

$768M **

* Responsible for allocation decision-making and implementation across a range of products and client portfolios, and for providing macro economic perspectives to guide allocations. ** $315M is sub-advised by Principal Global Investors Equities and included within the $60.6B Equities AUM shown above.Liongate to close during second quarter 2013.

Morley Financial Services$18.0B

Spectrum Asset Management

$18.2B

Macro Currency Group$9.5B

Post Advisory Group$11.8B

Multi‐Asset Advisors$143M*

Real Estate Alternatives/Asset Allocation

Finisterre Capital$1.6B

Columbus Circle Investors$15.9B

35


LiongateCapital Mgmt$2.1B

Awards & AUM Rankings

Winner of the Non-US Equity Value Award(1)

Top 10 Manager of Real Estate(2)

Top 10 Manager of High Yield(3)

Best Emerging Global Macro & Managed Futures Fund(4)

Last 3 years

Asset Management Expertise To Win Mandates

7.3

73.8 78.7 82.4

98.2 102.7

2001 2009 2010 2011 2012 2013

Principal Global InvestorsUnaffiliated AUM (in billions)

Rankings based on marketing assets under management.Sources: (1) Principal Global Investors announced as winner in the non-US Equity Value excluding emerging markets category by Institutional Investor in their US Investment Management Awards, March 2013. (2) Principal Real Estate Investors named a top 10 manager of real estate. Managers ranked by total worldwide real estate assets. Real estate assets reported net of leverage and 93 managers profiled. “The Largest Real Estate Investment Managers”, Pensions & Investments, October 15, 2012, data as of 6/30/2012. (3) Managers ranked by US institutional, tax-exempt assets managed internally, as of December 31, 2011. “Largest Money Managers” Pensions & Investments, May 28, 2012.; (4) Investors Choice European Hedge Fund Awards, London; March 2012. (6) America’s Top Money Manager, Institutional Investor, July 2012, data as of 12/31/2011. 36


Keys to Our Growth

● Top‐tier manager for retirement and other long‐term strategies

● Serve all business of The Principal with suitable investment capabilities

● Proven multi‐boutique operating approach

● Broad range of capabilities aligned to changing investor needs

● Global reach to facilitate investing and working with clients

37


$3.9

$6.8$8.4

$9.6$11.7

$10.8$9.3 $10.1 $9.3

$10.5$11.8

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$0.1$0.7$0.9$1.3

$2.8$4.3$3.3$3.6$4.4

$4.5

$9.2$9.5

$3.9

$8.0

$16.9

$10.5

$16.8 $16.7$15.3 $15.3

$15.9

2005 2006 2007 2008 2009 2010 2011 2012 2013

Reflects AUM growth since date of purchase.

Strong Track Record(AUM in billions as of 3/31/2013)

Columbus Circle Investors

$1.0

$6.0

$11.0$12.4$13.2

$13.3$12.5

$3.9

$9.2$11.3

$13.3

$16.9$18.2

38


Strong Track Record(AUM in billions as of 3/31/2013)

$2.6$2.3 $2.5

2011 2012 2013

$1.7 $1.6 $1.6

2011 2012 2013

$13.7$15.8 $15.5

$13.8 $14.4

$18.3 $18.0

2007 2008 2009 2010 2011 2012 2013

$18.1 $17.2

$11.2

$7.9

$11.1$12.5

$15.0 $16.0

2006 2007 2008 2009 2010 2011 2012 2013

Reflects AUM growth since date of purchase.39


Growing AcquisitionsGlobal distribution grows AUM, revenues and earnings

Spectrum Asset Management acquired in 2001 with $1.0B AUM

2002 2011 CAGR

AUM ($B) $6.1 $13.3 9%

Revenue ($M) $9.3 $35.4 14%

Pre‐tax OE ($M) $2.9 $8.0 11%

AUM sourced by Principal 9% 68%

2005 2011 CAGR

AUM ($B) $5.9 $15.3 21%

Revenue ($M) $21.5 $94.0 28%

Pre‐tax OE ($M) $(1.9)* $17.9 63%**

AUM sourced by Principal 31% 26%

Columbus Circle Investorsacquired in 2005 with $3.9B AUM

* Reflects impact of transaction expenses in 2005.** Calculated from 2006 when OE was positive.


40

Principal International Strategy

Capitalize on large and growing middle class in key emerging Latin America and Asia markets by delivering pension, mutual fund and asset management expertise and solutions.

41

PRINCIPAL INTERNATIONAL

We are in the Right Markets:Growing Middle Class

• China, India, Brazil, Mexico to be among 11 largest Middle Class populations in 2025

• Need for more public and private pension savings across our markets

SOURCE: 1 Miller McCune; 2 Global Update 2010.

(Pop. in millions)392

319174

10274

646154504543Mexico

ItalyFrance

UKRussia

GermanyBrazilJapanIndiaUSA

China

Largest middle class populations in 2025 1 Distribution of World population 2

Origin of global middle class 2

0%

20%

40%

60%

80%

100%

2000 2030

RichMiddlePoor

0%

20%

40%

60%

80%

100%

2000 2030

Rich countries

Other developing

E. Asia Pacdeveloping

42


PRINCIPAL FINANCIAL GROUP

Cuprum• Mandatory Pensions, Voluntary Pensions

• AUM of $34.3B

• Transaction closed 2/4/2013

Mexico (1993)• Annuities, Mutual Funds, Pensions, Asset Management

• AUM of $12.6B• Wholly owned

Chile (1995)• Annuities, Mutual Funds, Asset Management, Pensions


Brazil (1999)• Annuities, Pensions, Mutual Funds, Asset Management

• Brasilprev – a 25% owned joint venture with Banco do BrasilAUM of $37.8B

• Claritas – 60% indirectly owned mutual fund companyAUM of $1.9B

India (2000)• Asset Management, Mutual Funds

• AUM of $0.7B• 65% owned joint venture with Punjab National and Vijaya Banks

Malaysia (2003)• Conventional & Islamic Asset Management, Mutual Funds, Pensions

• AUM of $10.4B• CIMB‐Principal – 40% owned joint venture with CIMB Group

China (2005)• Asset Management, Mutual Funds

• AUM of $12.1B• CCB‐Principal – a 25% owned joint venture with China Construction Bank

Hong Kong (1996)• Asset Management, Mutual Funds, Pensions


Thailand (2010)• Asset Management, Mutual Funds• AUM of $0.9B• Wholly owned subsidiary of Malaysian JV

Indonesia (2007)• Asset Management, Mutual Funds

• AUM of $0.2B• Wholly owned subsidiary of Malaysian JV

Singapore (2006)•Asset Management•AUM of $0.4M• Wholly owned subsidiary of Malaysian JV

AUM as of 3/31/2013

43

Principal InternationalPRINCIPAL INTERNATIONAL

Why Emerging Markets? GROWTH!

AnnualGDP Growth ( in 2011)

Brazil 2.7%

Chile 6.0%

Mexico 3.9%

China 9.2%

Hong Kong 5.0%

India 7.8%

Malaysia 5.2%

U.S. 1.7%

Mutual Fund AUM

2011‐2016E CAGR

Brazil 12.8%

Chile 16.4%

Mexico 14.2%

China 12.5%

Hong Kong 9.2%

India 10.7%

Malaysia 14.5%

U.S. 6.1%

Sources: Cerulli Associates, World Bank, CIA World Fact Book

Population

Brazil 205.7M

Chile 17.0M

Mexico 114.9M

China 1,300M

Hong Kong 7.1M

India 1,200M

Malaysia 29.1M

U.S. 313.8M

PI LatAmmarketpopulation: 337.7M

PI Asia marketpopulation: 3,500M

44


We’re in the Right Countries

1990US$trn

1 U.S. 5.8

2 Japan 3.0

3 Germany 1.5

4 France 1.2

5 Italy 1.1

6 UK 1.0

7 Canada 0.6

8 Spain 0.5

9 Brazil 0.5

10 China 0.4

2000US$ trn

U.S. 10.0

Japan 4.7

Germany 1.9

UK 1.5

France 1.3

China 1.2

Italy 1.1

Canada 0.7

Brazil 0.6

Mexico 0.6

2010US$trn

U.S. 14.6China 5.9

Japan 5.6

Germany 3.3

France 2.6

UK 2.3

Italy 2.0

Brazil 2.0

Canada 1.6

Russia 1.5

2020EUS$ trn

China 24.6U.S. 23.3

India 9.6

Japan 6.0

Brazil 5.1

Germany 5.0

France 3.9

Russia 3.5

UK 3.4

Indonesia 3.2

2030EUS$ trn

China 73.5U.S. 38.2

India 30.3

Brazil 12.2

Indonesia 9.3

Japan 8.4

Germany 8.2

Mexico 6.6

France 6.4

UK 5.6

SOURCE: IMF, Standard Chartered Research.

TEN LARGEST ECONOMIES BY DECADECurrent Principal International locations: Asia Latin America

45


68% 65%

32%

17%

8% 6%4% 2% 1%

*Most recent data from Organisation for Economic Co-operation and Development ; CIA Fact Book and 2009 EPFAnnual Report; Melbourne Mercer Global Pension Index 2010

Growing Retirement Assets

United States

Chile Hong Kong

Brazil Mexico Thailand Indonesia

If U.S. is under-saving, what does this mean for these emerging markets?

Percent of retirement assets relative to GDP*

China India

46


Joint Venture Partner Partner’s Industry Ranking Partner’s Distribution Reach

Banco do BrasilLargest bank in Latin America1

5,340 branches7

56 million customers3

2nd largest commercial bank in world2

13,581 branches4

364 million retail customers4

5th largest financial services provider in Southeast Asia5

1,100 branches5


Largest Nationalized bank in India6

5,937 branches6


SOURCE: 1Global Finance 2012; 2Relbanks.com 2012 3Banco do Brasil Annual Report 2011, 4CCB 2011 annual report –customers based on retail debit cards; 5CIMB Group Annual report, 12/31/11, 6Pnbindia.in – ranking based on Branch Network, Total Business, Advances, Operating Profit ; 7as of 9/30/2012

Leveraging Strong Marquee Partners With Outstanding Distribution


47

Our Markets and Product Offering

Pensions Mutual Funds

Asset Mgmt Annuities

Brazil

Chile

Mexico

China

Hong Kong

India

Malaysia/SE Asia

= Where we have a product offering today

TargetedMarkets

+

+

= Targeted expansion

= 10% of market share or Top 25% of providers

= New market entry since 2010 Investor Day

48


Cuprum• $34B AUM

• Entered Chile in 1995

• Historically not a participant in mandatory pension market

• Leader in mutual fund, pension and savings products

• Leader in payout annuities

Transaction Creates EnhancedProduct Offering in the Chilean Market

Combined Companies Are More Than Sum Of The Parts

• Leader in mandatory and voluntary pension market

• Highest quality affluent customer base in Latin America

• Offering of complete full-service pension platform

• Proven and substantial proprietary distribution platform in Chile

• Leadership position in all channels—mandatory, voluntary and payout

• Part of Principal’s plan to build a “Pensions Inc.” platform and to increase footprint in Latin America

+Chile

49


Comprehensive Retirement Platform• Together Principal Financial Chile and Cuprum completes the full spectrum of products for a

comprehensive “hire through retire” approach to the market

TOGETHER

PRODUCTS:Mandatory Pension Voluntary Pensions:

AFP Fund Based Mutual Fund Based

Mutual Funds Payout Products:

Annuities Based Structured Payout

Life (Accumulation)

DISTRIBUTION:Brokers & Independent Agents Retail Alliances Proprietary Sales Force

Source: Company information.

Chile

50


CHILE MEXICO BRAZIL

CORE PRODUCTS

Mandatory pensions

Voluntary, qualified individual retirement

Voluntary, qualified group retirement

Payout annuities

Mutual funds

Mandatory individual pre-retirement pension

Retail mutual funds

Defined Contribution accumulation products for individuals & employer groups

Corporate DC plans

Mutual funds

AUM(a) $5.2bn + $32.1bn from Cuprum $9.9bn $32.3bn

CUSTOMERS (a) 150k + 621k from Cuprum 4.0m 1.4m(b)

RANKING / MARKET SHARE(a)

#4 in mandatory pensions #1 in mandatory pensions for

high income segment #1 in voluntary products Top 5 in annuities business

#6 in Afore market by AUM (6.6%) (a)

#5 in Afore market by customers (8.3%) (a)

#3 by AUM (19.4%)(b)

Principal in Latin America

Source: Company information, CONSAR (National Commission for the Retirement Savings System), FENAPREVI (National Federation of Retirement and Life Insurance).Note: TTM = trailing twelve months as of 6/30/12.(a) As at 6/30/12.(b) Figures reflect BrasilPrev only.

• Latin America is a strategically important market for Principal

• With $80bn in pro forma AUM across Latin America, Principal is one of the largest pension specialists and asset managers in the region

= Impact of Cuprum Acquisition

51


● 62% of Principal Life Insurance Company liabilities are GICs and Fixed Deferred Annuities with a weighted average duration of 3-5 years

● Principal Life Insurance Company commercial mortgages with a weighted average duration of 3-5 years fit well with these liabilities

Principal Financial Group invested assets and cash

$71.1B as of 3/31/2013

* Other includes U.S. government and agencies, State and political subdivisions, Non-US governments, Residential pass-thru securities, Residential mortgage loans, Equity securities, Equity real estate, Policy loans, and Other investments.

Liability Mix Drives Asset Need

52

INVESTMENTS

Corporate Public Bonds

30%

Commercial Mortgages

14%

CMBS/CMBS CDO6%

Other ABS4%

CMO2%

Cash2%

Other*24%

Corporate Private Bonds

18%

CMBS Loss Trends are in Line With Expectations

$0

$500

$1,000

$1,500

$2,000

$2,500

Expected CMBS Losses

Cumulative CMBS Losses

Total Net UnrealizedCMBS Losses

Unrealized Losses and Expected Losses (in millions)All numbers shown are pre-tax

53

INVESTMENTS

Investment Loss ProjectionAs of 09/30/2012

Key Messages:• 2012 losses are now expected to be lower than the $119 million projected as of

12/31/11. The losses for corporate bonds have been lower than expected while losses for other asset classes were close to expectations.

• Losses over the next three years are expected to be below pricing assumptions. This assumes no material downturn of the U.S. or Global economy.

247

182

35 25 21 38 46 36

4

57

3611 9

7 54

20 60

114

9162 39 33

26

$0

$50

$100

$150

$200

$250

$300

$350

2008 2009 2010 2011 2012E 2013E 2014E 2015E

$ in

mill

ions

afte

r-ta

x

CMBS/CMBS CDO = $4.2B

Commercial Mortgages = $9.9B

Bonds excluding CMBS/CMBS CDO = $41.6B

Size of Portfolio (Amortized Cost) as of 09/30/2012

$127 $92 $84$185$299$271 $66Total Losses (in $ millions)

$84

This is one possible loss scenario shown for Principal Life Insurance Company and consolidated subsidiaries. Portfolio sizes reflect Principal Financial Group US invested assets, excluding the Principal Global Investors segment. Years 2008-2011 reflect actual losses for Principal Financial Group, excluding Principal Global Investors segment. Actual 2012 losses through 3Q include $49.0 on CMBS/CMBS CDOs, $12.8 on Bonds excluding CMBS/CMBS CDOs, and $7.2 on Commercial Mortgages. A projection of 4Q losses is included in the 2012 estimate. Losses are after-tax. 54

2001 TTM 1Q13

TTM = Trailing Twelve Months.*After-tax. Results exclude Mortgage Banking, BT Australia, Health and Corporate.**After-tax. Results exclude Corporate.

U.S. Insurance Solutions 27%

U.S. Insurance Solutions 13%

RIS Guaranteed 33%

RIS Guaranteed 9%

RIS Accumulation 34%

RIS Accumulation

53%PGI 5%

PGI 9%

PI 1%

PI 16%

40% of OE

78% of OE

2001 Operating Earnings $448.3M*

TTM Operating Earnings $965.1M**

Evolution of Fee Based Business ModelFINANCIALS

55

Continuing Evolution Of Our Business Model

30%

40%

30%

2001

70%

15%

15%

2017E

60%20%

20%

2012OPERATING EARNINGS

Fee Spread Risk

INVESTMENT MANAGEMENT +

FINANCIALS

56

1/4

1/4

1/2

2007

Returning Capital to Shareholders

● Less capital needed to support organic growth● Diligently pursue active acquisition pipeline● Larger portion can support shareholder-friendly

activities

1/2

1/4

1/4

2017E

1/3

1/3

1/3

2012

Organic Growth Acquisitions Return to Shareholders

FINANCIALS

57

Moving to Higher Dividend Payout Ratio

20102012

2017E

Measured as percent of GAAP net income

Steady Increases Over Time

28%30%

%

FINANCIALS

58

Operating Earnings Growth

Long-term operating earnings growth:

Near-term operating earnings growth rate

Primary Factors Impacting Results:• Pressure on fees• Low interest rates

10-12% 6-8%

FINANCIALS

59

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

2011 2012E 2013E 2014E 2015E 2016E

Acquisitions Share Repurchase

Financial Impact of Acquisitions vs. Share Repurchase

Assumptions: $350M of acquisitions in 2011 (Origin $60M, Finisterre $85M, HSBC AFORE $206M) versus $350M of share repurchase at average price of $28.32/share

EPS

Acc

retio

nAcquisitions More Accretive Long Term

than Share Repurchase

FINANCIALS

60

Accelerating Our StrategyOpportunity Year Announced Achievement

Liongate Capital Management 2013 Expand alternative asset class capabilities

2012 Complete offering in Chile with marquee pension and savings franchise

Claritas 2012 Entry into Brazil mutual fund and asset management market

Origin Asset Management 2011 Enhance global equity investment

capabilities

Finisterre Capital 2011 Establish leadership in emerging markets fixed income investing

HSBC AFORE 2011 Solidify position as a leader in Mexican Afore market

BrasilPrev 2010 23 year extension of successful JV with Banco do Brasil

• Emerged from financial crisis in a position of strength and flexibility

• Executing on our strategy to increase our global footprint and fee-based earnings

FINANCIALS

61

Annual Common Stock Dividend $215M

(27% increase over 2010)

Capital Deployment Strategy

Strategic Acquisitions:$350M

OpportunisticShare Repurchases:

$550M

2011 2012Over $1.1 billion in total Allocated $2.1 billion

Quarterly Common Stock Dividends $230M

(70 to 78 cents, 11% increase)

Opportunistic Share Repurchases: $300M

Strategic Acquisitions:$1,595M

2013E

YTD Quarterly Common Stock Dividends ~$135M

(23 cents for 1Q13 & 2Q13)

$400-$600 million

• Quarterly common stock dividends

• Strategic acquisition• Opportunistic share

repurchase

62

Anti-dilution & Opportunistic Share

Repurchases: $150M(~$115M remaining)

Strategic Acquisition:$44M

5-Year 2013E Reason

AccumulationNet revenue growth 6-8% 2-4% Pressure on fees

Pre-tax RONR 28-32% 27-29% Low interest rates

GuaranteedNet revenue growth 6-8% Same Opportunistic approach

Pre-tax RONR 75-80% 77-80% Operating at scale

Net revenue = operating revenues less benefits, claims & settlement expenses less dividends to policyholdersRONR = Return on Net RevenuePre-tax operating margin = pre-tax operating earnings / premium and fees

Retirement & Investor Services

U.S. Insurance Solutions5-Year 2013E Reason

IndividualLife

Premium & fee growth 4-8% 3-5% Lower single premium sales

Pre-tax operating margin 16-21% 15-17% Low interest rates

SpecialtyBenefits

Premium & fee growth 8-10% 6-8% Slow employment growth

Pre-tax operating margin 8-12% 8-10% Low interest rates

Loss ratio 65-71% Same Stable loss ratios

63

FINANCIALS

Key Business Drivers Outlook

5-Year 2013E Reason

Revenue growth 14-17% 6-8% Lower performance fees

Pre-tax margin 30+% 23-25% Continue building scale

Key Business Drivers Outlook


Principal International (does not include Cuprum)5-Year 2013E Reason

Combined* net revenue growth 15-20% 16-19% Strong execution

Combined pre-tax RONR 55-60% 57-59% Scale offsetting fee pressure

Principal’s share of combined pre-tax earnings N/A 28%

*Combined basis includes all Principal International companies at 100%RONR = Return on Net RevenueN/A = not applicable

Estimated After-tax operating losses for Corporate of $145-$165 million in 2013

64

FINANCIALS

(1) Excludes discontinued operations. (2) Diluted. (3) Operating return on average equity excluding other comprehensive income, based on trailing 12 month period.

2001 2012 CAGR (’01-’12)

1Q 2012

1Q 2013 Change

Operating Earnings(1) ($M) $433 $808 6% $215 $233 8%

Earnings Per Share(2) $1.20 $2.69 8% $0.71 $0.79 11%

Assets Under Management ($B) $98 $403 14% $364 $456 25%

ROE (TTM)(3) 6.9% 9.7% +280 bps 9.9% 9.8% -10 bps

Book ValuePer Share (x-OCI) $17.81 $28.93 5% $27.45 $29.19 6%

S&P 500 1,148 1,426 2% 1,408 1,569 11%

Results Demonstrate Relative Strength of Our Business Model

FINANCIALS

65

The Principal is well

positioned for long-term

growth:

• Dramatically growing retirement markets

• Strong distribution

• Innovative products

• Leadership in asset management

• Deep understanding of growing need for financial security

• Purposeful diversification

• Disciplined execution

66

principal financial group 101 · ralph c. eucher 61 executive vp, human resources & corporate...

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