2. Use of Non-GAAP Financial Measures
2 Posted on PFG website: 07/26/2013
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. 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. Assets under management is an example of
an operational measure that is not considered a non-GAAP financial measure.
3. Forward Looking Statements
3
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, 2012, and in the company’s quarterly report on Form 10-Q for 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 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 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.
Posted on PFG website: 07/26/2013
4. 2Q13 Earnings Call Key Themes
• Strong results, building off the prior quarter’s positive momentum
• Globally diversified business model working; positions us for long-term growth
• Net revenue growth and expense discipline leads to earnings growth
• Onboarding of Cuprum, a leading Chilean pension provider, going extremely well
• Strategic capital deployment:
• Announced 3Q13 dividend of 26-cents, a 13% increase over the 23-cent
dividend we paid in 2Q13. This reinforces our commitment to increasing the
dividend payout ratio
• Closed on acquisition of Liongate, which provides us additional investment
capabilities
4 Posted on PFG website: 07/26/2013
5. Strong Investment Performance Continues
Morningstar rankings of Principal mutual funds, separate accounts and CITs
Percentage of funds in the top two quartiles
85%
90%
63%
82% 87%
71%
63%
87%
67%
1-Year 3-Year 5-Year
Jun. 30, 2012
Mar. 31, 2013
Jun. 30, 2013
Represents $126 billion assets under management of which 76% 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 separate account.
GOAL:
ABOVE
60%
5 Posted on PFG website: 07/26/2013
6. Per diluted share 2Q12 2Q13
Operating Earnings $0.70 $0.91
Normalizing items
Principal Global Investors
Real Estate performance fee -0.01
Principal International
Lower than expected returns on
encaje investment +0.02
Total of normalizing items $0.00 +$0.01
Normalized Operating Earnings $0.70 $0.92
Operating Earnings Normalizing Items
After normalizing, 2Q13 EPS is up 31% compared to a year ago
Up 31%*
6 Posted on PFG website: 07/26/2013
*Adjusting for Cuprum, normalized operating earnings per diluted share were up 20%.
7. Encaje
What is encaje: Our investment in the
underlying funds of our mandatory pension
operations in Chile and Mexico as required
by local regulations.
Financial obligation:
• Chile: Investment of 1.0% of each fund.
• Mexico: Investment of 0.8% of each fund.
• Change in value of these investments
reported through net investment income
How to track it: A proxy for the quarterly
returns can be found by tracking the following:
• Chile: Cuprum Investment C found on
the Pension Superintendent’s local
website:
http://www.spensiones.cl/safpstats/stats/apps/vcuofo
n/vcfAFP.php?tf=C
• Mexico: AFORE Investment APRINB3
found on http://www.bloomberg.com
2Q13 Encaje Calculations*
7 Posted on PFG website: 07/26/2013
Amounts US$M
unless otherwise stated
Chile** Chile** Mexico Mexico
Proxy Expected Proxy Expected
AUM ($B) $34.0 $34.0 $11.1 $11.1
Investment requirement 1.0% 1.0% 0.8% 0.8%
Encaje investment ($M) 340.0 340.0 88.8 88.8
Quarterly return % 1.82% 2.125% -7.90% 2.225%
Encaje return 6.2 7.2 -7.0 2.0
Ownership % 93.5% 93.5% 100% 100%
PFG impact (pre-tax) 5.8 6.8 -7.0 2.0
Tax rate 20% 20% 30% 30%
PFG impact (post-tax) 4.6 5.4 -4.9 1.4
Operating earnings differential -0.8 -6.3
*These calculations are a proxy which closely represents the actual financial impact
for the quarter.
**Cuprum is on a one month reporting lag
8. Retirement and Investor Services
Accumulation
496
578
0
100
200
300
400
500
600
700
2Q12 2Q13
Net Revenue ($m)
• Growth in the underlying business, equity
market performance, and disciplined
expense management
• Strong net cash flow & equity markets
led to growth in average account values
• Continued competitive environment
• Focus 2013 Full Service Accumulation
sales on growing net revenue
• Record sales of $5.8B in Principal Funds
On a trailing twelve month basis:
• Net revenue up 14%
• Pretax return on net revenue of 30%
Operating Earnings
After-tax ($m)
2Q13 $144.4
2Q12 $118.0
Change $26.4 (+22%)
8 Posted on PFG website: 07/26/2013
9. Retirement and Investor Services
Guaranteed
42
49
0
10
20
30
40
50
60
2Q12 2Q13
Net Revenue ($m)
On a trailing twelve month basis:
• Net revenue up 9%
• Pretax return on net revenue of 80%
Operating Earnings
After-tax ($m)
2Q13 $27.9
2Q12 $23.7
Change $4.2 (+18%)
9
• Improved spreads
• Continue to approach business
opportunistically
• Will issue when market conditions
generate attractive returns
Posted on PFG website: 07/26/2013
10. 141
160
0
20
40
60
80
100
120
140
160
180
2Q12 2Q13
Net Revenue ($m)
2Q13 performance fee
Principal Global Investors
On a trailing twelve month basis:
• Revenue is up 12%
• Pretax margin of 25%
Operating Earnings
After-tax ($m)
2Q13 $29.0
Adjusted* 2Q13 $25.0
2Q12 $18.2
Change $6.8 (+37%)
10
• Benefited from a once in 3 year
performance fee on one of our real
estate funds
• Margin improvement as we build scale
• Unaffiliated assets under management
of $101 billion
• Negative NCF reflects a couple large
withdrawals from lower revenue and
margin options
Posted on PFG website: 07/26/2013
*2Q13 is adjusted for the real estate performance fee. Change calculated with respect to adjusted number
168
8
11. 270
279
59
0
50
100
150
200
250
300
350
400
2Q12 2Q13
Combined* Net Revenue ($m)
Cuprum
• Cuprum onboarding going extremely well
• Strong 2Q13 net cash flow of $2.2 billion
• Solid growth despite macroeconomic
headwinds
• AUM of $103 billion reflects a $6.7 billion
negative FX impact this quarterOn a trailing twelve month combined basis:
• Adjusted** net revenue is up 7%
• Pretax return on net revenue of 56%
Reported OE
After-tax ($m)
Cuprum
OE excluding
Cuprum ($m)
2Q13 $58.3 $26.0 $32.3
Adjusted***
2Q13
$65.7 $26.7 $39.0
2Q12 $31.5 -- $31.5
Change $34.2 (+109%) -- $7.5 (+24%)
*Combined basis includes all Principal International companies at 100%.
**Excludes impact of additional month in Brasilprev in 4Q11 and Cuprum acquisition in 1Q13.
***Lower than expected returns on encaje investment. Change calculated with respect to adjusted number.
11
Principal International
Posted on PFG website: 07/26/2013
338
12. Individual Life
216
227
100
120
140
160
180
200
220
240
2Q12 2Q13
Premium and Fees ($m)
• Low interest rates continue to be
headwind to earnings growth
• Strong sales with continued success
in business market
On an adjusted* trailing twelve month basis:
• Premium and fees up 5%
• Pretax operating margin of 14%
Operating Earnings
After-tax ($m)
2Q13 $21.5
2Q12 $27.6
Change $(6.1) (-22%)
* Removes impact of 1Q12 change in amortization basis and the 3Q12 actuarial assumption
review.
12 Posted on PFG website: 07/26/2013
13. 361
372
200
220
240
260
280
300
320
340
360
380
400
2Q12 2Q13
Premium and Fees ($m)
Specialty Benefits
• Improved claim experience and growth
in the business
• Strong sales growth
• Overall quarterly loss ratio of 66.7% is
within targeted range of 65-71%On a trailing twelve month basis:
• Premium and fees up 4%
• Pretax operating margin of 10%
Operating Earnings
After-tax ($m)
2Q13 $25.7
2Q12 $22.6
Change $3.1 (+14%)
13 Posted on PFG website: 07/26/2013
14. Capital Deployment Strategy
Strategic Acquisitions:
$350M
Opportunistic
Share Repurchases:
$550M
2011 2012
Over $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
$400-$600 million
14
Anti-dilution &
Opportunistic Share
Repurchases: $150M
(~$115M remaining)
Strategic Acquisition:
$44M
Posted on PFG website: 07/26/2013
YTD Quarterly Common
Stock Dividends ~$211M
(23 cents for 1Q13 & 2Q13,
26 cents for 3Q13)
• Quarterly common stock
dividends
• Strategic acquisition
• Opportunistic share
repurchase
Annual Common Stock
Dividends $215M
(27% increase over 2010)
