Principal Financial Group (PFG) Investor Day 2024 summary

Strategic direction and growth priorities

• Focused on three core growth platforms: small and mid-sized business (SMB), retirement ecosystem, and global asset management, each representing significant profit pools and market opportunities.

• Emphasizing integrated solutions across retirement, asset management, and benefits, leveraging technology and distribution relationships to drive above-industry growth.

• Portfolio streamlined over the past three years, divesting non-core businesses to enhance capital efficiency and increase free cash flow, supporting both reinvestment and shareholder returns.

• Strong commitment to ethical practices, customer-centricity, and ongoing strategy review to ensure durability and adaptability in changing markets.

• Leadership transition to a new CEO, with continuity in strategic vision and execution.

Financial performance and guidance

• Achieving 9%-12% earnings per share growth in 2024, with a path to 14%-16% return on equity by 2025, reflecting a 90 basis point improvement over the prior year.

• Consistently delivering 75%-85% free capital conversion, with $7.5-$8.5 billion in free capital flow targeted.

• Outperformed peer median by 12% per year since the last Investor Day, with a 53% total shareholder return over three years.

• $7 billion returned to shareholders over three years through $4 billion in buybacks and $2.5 billion in dividends, maintaining a 40% payout ratio.

• Diversified business mix reduces earnings volatility, with all segments contributing to $2.5 billion in pre-tax earnings over the past 12 months.

Business segment highlights and investments

• SMB segment: $90 billion annual profit pool, with group benefits averaging 7% annual premium and fee growth, and retirement assets growing nearly 13% annually, both outperforming industry peers.

• Retirement ecosystem: $110 billion profit pool, leveraging privileged access to over 14 million individuals and 50,000 employers, with a focus on integrated record keeping, asset management, and income solutions.

• Asset management: $180 billion profit pool, with stable fee rates (28-29 bps), resilient net flows, and a strong foundation in real estate, private credit, and infrastructure.

• Technology and AI investments drive efficiency, customer experience, and margin expansion, with notable improvements in onboarding, claims processing, and investment operations.

• International partnerships in high-growth markets (China, Brazil, Malaysia) provide access to over 800 million retail customers and support 35%+ CAGR in China AUM over the past decade.