Principal Financial Group (PFG) 2024 KBW Insurance Conference summary

Leadership priorities and strategic focus

• New President and COO emphasizes continuity in strategy, focusing on holistic, customer-centric approaches across all business lines, leveraging broad capabilities in retirement and SMB markets.

• AI and generative AI are prioritized for enterprise-wide opportunities rather than siloed initiatives.

• No major shifts in strategy are expected, but a more integrated approach is anticipated.

Financial outlook and capital deployment

• Maintains 9% to 12% EPS growth target for 2024, with seasonality and one-time items impacting first-half results; expects normalization and higher performance fees in the second half.

• Free cash flow target remains at 75% to 85%, supporting dividends, share buybacks, and organic growth; dividend payout ratio targeted at 40%.

• Capital deployment prioritizes organic growth, balanced between dividends and buybacks, with selective M&A considered for strategic fit.

Retirement and guaranteed products

• Recurring deposit growth and participant engagement are strong, but net cash flows are pressured by higher withdrawals and less plan movement in large cases.

• Expanding guaranteed product offerings within 401(k) plans and developing new embedded solutions in target date funds.

• Capital allocation to guaranteed products is flexible within a set budget, adjusting based on opportunity.