2. 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. 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
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 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
4. 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%
Corporate
1%
U.S.
Insurance
Solutions
4%
Principal
International
23%
Principal
Global
Investors
23%
Operating Earnings
$965.1 million*
March 31, 2013
Retirement &
Investor Services
62%
U.S.
Insurance
Solutions
13%
Principal
International
16% Principal
Global
Investors 9%
*Trailing twelve month total. After‐tax. Results exclude Corporate.
4
COMPANY OVERVIEW
5. Organizational Structure
Principal Financial Group
Zimpleman CEO – 42/42 yrs*
Lillis CFO – 31/31 yrs
Retirement &
Investor Services
Houston - President
29/29 yrs
Principal Global
Investors
McCaughan – President
39/11 yrs
Principal
International
Valdes – President
25/22 yrs
U.S. Insurance
Solutions
Houston – President
29/29 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
6. PRINCIPAL FINANCIAL GROUP
Headquarters
Des Moines, Iowa
Mexico
Principal AFORE
Pensions
Principal Seguros
Life Insurance
Principal Pensiones
Annuities
Principal Fondos de
Inversión, S.A. de C.V
(PFI)
Mutual Funds, IAM
Chile
Principal Vida
Annuities / Pensions
Principal Creditos Hipotecarios
Residential Mortgages
Principal AGF
Mutual Funds, IAM
Cuprum
Pensions - Mandatory
Brazil
BrasilPrev - JV with
Banco do Brasil
Pensions, Annuities, IAM
Claritas
Mutual Funds
India
Principal/AMC -
JV with PNB/Vijaya
Mutual Funds
Principal PNB Asset
Management Co.
Asset Management
Malaysia
CIMB-Principal AMC - JV
with CIMB Group
Mutual Funds, Asset
Management
CIMB Principal Islamic
Asset Management (PGI
JV with CIMB Group)
Islamic Institutional Asset
Management
Hong Kong
Principal Insurance Company
Pensions, Mutual Funds, IAM
Principal Global Investors (Asia) Ltd.
Asset Management
China
CCB-Principal AMC – JV with CCB
Mutual Funds, IAM
Representative Offices
Pensions, Asset Management
Principal Financial Group Global Presence
Germany
Principal Global Investors
(Europe) LTD
Asset Management
Ireland
Principal Global Investors
(Ireland) Ltd
Mutual Funds
UK
Principal Global
Investors(Europe) LTD
Asset Management Japan
Principal Global Investors (Japan) LTD
Asset Management
Australia
Principal Global Investors (Australia) LTD
Asset Management
Singapore
CIMB-Principal AMC
Principal Global Investors (Singapore)
Asset Management
Thailand
CIMB-Principal AMC
Mutual Funds, Asset Management
Indonesia
CIMB-Principal AMC
Mutual Funds, Asset Management
Netherlands
Principal Global Investors
Representative Office
Asset Management
UAE
Principal Global Investors
Representative Office
Asset Management
COMPANY OVERVIEW
6
7. 134 Years of Experience
1879
Life
Assoc
1911
Mutual
Life Co
1936
Mortgage
Banking/
Commercial
Mortgage
1941
Group
Health
&
Pension
1968
Mutual
Funds
1985
Principal
Financial
Group
1998
Principal
Bank; Mutual
Holding Co
2001
IPO;
Spectrum
1990
Principal
Intl
1970s
Defined
Contribution
1999
Principal Global
Investors;
BrasilPrev JV;
Principal Asset
Mgmt Co (India)
2002
Benefit
Consultants
Inc; Total
Retirement
Suite SM
2006
Washington
Mutual Funds;
WM Advisors
2008
CIMB-Principal
Islamic
Asset Mgmt
2007
Morley
2011
HSBC Afore;
Finisterre;
Origin
1995
Principal
Chile
1996
Principal
Hong Kong
1997
Principal
Mexico
2003
Post
Advisory
Group
2005
CCB
Principal;
Columbus
Circle
JV – Joint Venture.
IPO – Initial Public Offering.
2010
BrasilPrev
JV extension
2012
Claritas;
Cuprum
COMPANY OVERVIEW
7
2013
Liongate
8. 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
9. 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
10. 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: Negative
Rating as of February 2013
• Standard & Poor's
'A+', Strong - fifth highest of 21
rating levels.
Outlook: Negative
Rating 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
11. 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.
Globally
Competitive
Employers
Aging
Populations
Fiscally
Constrained
Governments
Our Strategy is Well Suited for the
Current Environment
11
COMPANY OVERVIEW
12. ● 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 save
for 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 retirement
solutions 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
14. $0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
3%
Contribution
9%
Contribution
MonthlyIncome
Social Security Pension
Other Savings Retirement Savings
Principal Total Retirement Suite SM (TRS)
Defined Benefit
#1 DB provider1
(by # of DB clients)
Defined
Contribution
#3 DC plan
recordkeeper2
(by # of plans)
Employee Stock
Ownership Plan
#1 ESOP plan
recordkeeper2
(by # of plans & assets)
Nonqualified
Plans
#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
16. SMB 401(k) Market
Source: Cerulli Associates, 2009
SMB – 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
526,621
6,156
12,327
13,695
2002 2009 2014E
Number of Plans
<1000 participants 1000+ participants
401(k) Plan Growth
+7.1%
16
U.S. BUSINESSES
17. 0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012
$Billions
Recurring Deposits Transfer Deposits
15.4
17.8
20.6 20.4
17.0 18.5
20.3
24.3
Rising Deposits &
the Power of Payroll Deduction
17
U.S. BUSINESSES
18. Specialty Benefits
Premium & Fees
% Change year over year
Signs of Recovering Economy
But Still Lagging Pre-crisis Levels
Full Service Accumulation
Recurring 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
19. 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
20. Execution of Strategy:
Customer Centric Business Model
Bundled
Unbundled
Small
Case
Large
Case
TARGET MARKET
BUSINESSMODEL
Nationwide
John Hancock
MetLife
Vanguard
Fidelity
Mass Mutual
ING/VOYA
Prudential
T.Rowe Price
20
U.S. BUSINESSES
Wells Fargo
Great West
Transamerica
24. 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
25. 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 Solutions
Broad and unique asset allocation strategies
25
U.S. BUSINESSES
26. 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
27. ER/NQ
19%
BOES
36%
Individual
45%
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
28. Specialty Benefits Leadership:
Strong Market Position
SMB-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
Vision
40%
Group
Life
23%
Group
DI
20%
IDI
16%
28
U.S. BUSINESSES
Wellness 1%
Business / Product
Mkt.
Share
Industry
Rank
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
29. 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 CHANNELS
Group
Benefits
Retirement Investment
Solutions
Annuities NQDC Disability
Insurance
Retail
Life
AMG WorksiteESOP Wellness
29
U.S. BUSINESSES
30. 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
32. Broad and Deep Distribution
Proprietary provides foundation; 3rd party provides accelerated growth
Rankings and percentages as of 12/31/2012
32
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
Career
26%
34. Strong Investment Performance Continues
Morningstar 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
PRINCIPAL GLOBAL INVESTORS
35. 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
PRINCIPAL GLOBAL INVESTORS
LiongateCapital
Mgmt
$2.1B
36. 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 Investors
Unaffiliated 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
PRINCIPAL GLOBAL INVESTORS
37. 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
PRINCIPAL GLOBAL INVESTORS
38. $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
PRINCIPAL GLOBAL INVESTORS
39. 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
PRINCIPAL GLOBAL INVESTORS
40. Growing Acquisitions
Global 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 Investors
acquired in 2005 with $3.9B AUM
* Reflects impact of transaction expenses in 2005.
** Calculated from 2006 when OE was positive.
PRINCIPAL GLOBAL INVESTORS
40
42. 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
319
174
102
74
64
61
54
50
45
43Mexico
Italy
France
UK
Russia
Germany
Brazil
Japan
India
USA
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
Rich
Middle
Poor
0%
20%
40%
60%
80%
100%
2000 2030
Rich countries
Other developing
E. Asia Pac
developing
42
PRINCIPAL INTERNATIONAL
43. 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
• AUM of $5.7B
• Wholly owned
Brazil (1999)
• Annuities, Pensions,
Mutual Funds, Asset
Management
• Brasilprev – a 25%
owned joint venture
with Banco do Brasil
AUM of $37.8B
• Claritas – 60%
indirectly owned
mutual fund company
AUM 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
• AUM of $2.9B
• Wholly owned
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 $0.4M
• Wholly owned subsidiary
of Malaysian JV
AUM as of 3/31/2013
43
Principal International
PRINCIPAL INTERNATIONAL
44. Why Emerging Markets? GROWTH!
Annual
GDP Growth
( in 2011)
Brazil 2.7%
Chile 6.0%
Mexico 3.9%
China 9.2%
Hong Kong 5.0%
India 7.8%
Malaysia 5.2%
U.S. 1.7%
Mutual Fund
AUM
2011‐2016E CAGR
Brazil 12.8%
Chile 16.4%
Mexico 14.2%
China 12.5%
Hong Kong 9.2%
India 10.7%
Malaysia 14.5%
U.S. 6.1%
Sources: Cerulli Associates, World Bank, CIA World Fact Book
Population
Brazil 205.7M
Chile 17.0M
Mexico 114.9M
China 1,300M
Hong Kong 7.1M
India 1,200M
Malaysia 29.1M
U.S. 313.8M
PI LatAm
market
population:
337.7M
PI Asia
market
population:
3,500M
44
PRINCIPAL INTERNATIONAL
45. We’re in the Right Countries
1990
US$
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
2000
US$
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
2010
US$
trn
U.S. 14.6
China 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
2020E
US$
trn
China 24.6
U.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
2030E
US$
trn
China 73.5
U.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 DECADE
Current Principal International locations: Asia Latin America
45
PRINCIPAL INTERNATIONAL
46. 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 EPF
Annual 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
PRINCIPAL INTERNATIONAL
48. 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
Targeted
Markets
+
+
= Targeted
expansion
= 10% of market
share or Top 25% of
providers
= New market
entry since 2010
Investor Day
48
PRINCIPAL INTERNATIONAL
Cuprum
• $34B AUM
49. • 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 Enhanced
Product 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
PRINCIPAL INTERNATIONAL
50. 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
PRINCIPAL INTERNATIONAL
51. 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
PRINCIPAL INTERNATIONAL
52. ● 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
CDO
6%
Other ABS
4%
CMO
2%
Cash
2%
Other*
24%
Corporate
Private
Bonds
18%
53. 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 Unrealized
CMBS Losses
Unrealized Losses and Expected Losses (in millions)
All numbers shown are pre-tax
53
INVESTMENTS
54. Investment Loss Projection
As 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
36
11 9
7 5
4
20
60
114
91
62 39 33
26
$0
$50
$100
$150
$200
$250
$300
$350
2008 2009 2010 2011 2012E 2013E 2014E 2015E
$inmillionsafter-tax
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
55. 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 Model
FINANCIALS
55
57. 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
58. Moving to Higher
Dividend Payout Ratio
2010
2012
2017E
Measured as percent of GAAP net income
Steady Increases Over Time
28%
30%
%
FINANCIALS
58
60. $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
EPSAccretion
Acquisitions More Accretive Long Term
than Share Repurchase
FINANCIALS
60
61. Accelerating Our Strategy
Opportunity 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
62. Annual Common Stock
Dividend $215M
(27% increase over 2010)
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
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
63. 5-Year 2013E Reason
Accumulation
Net revenue growth 6-8% 2-4% Pressure on fees
Pre-tax RONR 28-32% 27-29% Low interest rates
Guaranteed
Net 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 policyholders
RONR = Return on Net Revenue
Pre-tax operating margin = pre-tax operating earnings / premium and fees
Retirement & Investor Services
U.S. Insurance Solutions
5-Year 2013E Reason
Individual
Life
Premium & fee growth 4-8% 3-5% Lower single premium sales
Pre-tax operating margin 16-21% 15-17% Low interest rates
Specialty
Benefits
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
64. 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 Global Investors
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 Revenue
N/A = not applicable
Estimated After-tax operating losses for Corporate of $145-$165 million in 2013
64
FINANCIALS
65. (1) Excludes discontinued operations. (2) Diluted. (3) Operating return on average equity excluding other
comprehensive income, based on trailing 12 month period.
2001 2012
CAGR
(’01-’12)
1Q
2012
1Q
2013
Change
Operating
Earnings
(1)
($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 Value
Per 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
66. 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
