PFG - Earnings call transcript Q2 2021 | Principal Financial Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Principal Financial Group's Second Quarter Financial Results Conference Call. There will be a question-and-answer period after the speakers have completed their prepared remarks. [Operator Instructions] I would now like to turn the conference call over to John Egan, Vice President of Investor Relations.

John Egan

Thank you and good morning. Welcome to Principal Financial Group's second quarter 2021 conference call.

to are related website on materials principal.com\investor. at always, today's available call our As

of Harbor Renee Management; prepared U.S. the Houston reading the Global call a Following Safe Asset available Others Income Deanna will up Solutions. for will Insurance Solutions; for we Halter, questions. and session provision Friedrich, Strable deliver Retirement Then and some include Amy remarks. Q&A open the Schaaf, CFO, Dan CEO, Pat

implied contain Report made Act. cause the most that events, during and to strategy. are results on within Risks this not Some in forward-looking of or could may actual recent and Private Reform statements information, or meaning filed call Litigation revise Securities the with Form company's the The company differ the of by the materially XX-K subsequent comments Annual in reflect new them the to Commission. uncertainties conference Exchange does changes or discussed Securities update U.S. from expressed those company

some call measures financial our may during the directly refer this be the comparable financial financial in release, of slide and may supplement, Dan? conference U.S. non-GAAP most found non-GAAP reconciliations of GAAP measures, made earnings to the presentation. Additionally, measures financial to comments

Dan Houston

position. enable the John for takeaways second morning, everyone strengthened to quarter, from markets our and and targets growth on management select our integrated approach. the against Thanks the financial additional we and how continue key we how our on discuss we expand Deanna Investor our highlights across progress deliver recent products focused in shared review, to capital our our us results, financial fuel to and on financial our This follow business that reach will five, as I our Day, these will we welcome exit the and slide call. results will and quarter our of performance XXXX drivers Investor priorities strategic our details Day, and momentum current and to second deliver with results and invest announced will as areas our of targets well continue on Starting including portfolio. against

retirement retail resulting on and growth, integrated related and seeking segment free individual Our of the meet objectives offer more protection. for global business portfolio. These U.S. drivers and returns. in-force fixed the capital-efficient markets, and as emerging U.S. U.S. being We're of de-risk focused U.S. is the management, transactions allowing as the for of us blocks, greatest asset with and benefits our are our differentiators in growth leverage we and go-forward retail well and strategy capital higher model, to our exiting financial businesses annuities our life opportunity up

more in aimed near-term. actionable the all and improve We And strategy growth reduce from to returning XXXX conversion our to outlined totaling XXXX; to lastly, risk capital share XXXX; on generating we capital a These will our shareholders, return annual to XX% generated of be on changes return and they transactions will free XX% the from at profile, the not value. XXXX potential capital by Bottom-line, $X more to to executing capital enable shareholders, include intensity, capital that focus, portfolio which future are any to to equity This billion achieving focused to excess reinforce our growth, long-term may shareholder our a are XXXX. earnings achieve XX%. driving commitment and management transactions. and does and plan capital sharpen per diluted in us expect between business delivering drive strategic financial XX% X% targets, moves better on include:

shareholders grow our as meaningful to in results. to customers and shareholder value position strong for and evidenced continue create second We by long-term a to quarter our are ways

on earnings operating in shown second the six, reported quarter. As non-GAAP we of million $XXX slide

quarter by the total earnings many Excluding in PGI-managed AUM $XXX a over XXXX, in of the of variances, company flow and quarter of company billion institutional We that improvement of net $XXX assets $X.X driven and XX% retirement including the more conditions PGI-managed closed continued $X.X second our execution long-term migrated increased billion Total net markets. AUM including last macroeconomic nine cash with flow. significant billion quarter, trust billion, record in second over of the strategy of and cash second than was retirement months. positive our

historical long-term Our increased our growth XX% remain shareholders. creating fueling strong retirement growth we of X.X% of IRT block line the quarter and account year generating half over growth ago business. drivers from XXXX our continue strong the Participant earnings the and deliver were the X.X% enterprise, during the deposits business, are second average than fundamentals and more In the with average than in growth the lower U.S. of from and for experienced for our withdrawals Reoccurring the coming value legacy migration. pandemic. the the in performance to second underlying in remainder with a quarter, values

and strong of in withdrawals. by quarter participant as RIS-Fee the offset in a higher equity retirement when decline. over dollars markets These and negative were to the increased $X opposite withdrawals as result participant strong migration contract the of growth second the low withdrawals as in lapses with the We is is periods quarter flow completed true second IRT strong million the cash equity This billion of led However, second of reoccurring business well during $XXX markets, prior the consistent equity net performance of the sales deposits XXXX. as quarter.

migration Day, XXXX. will be of the custody in As first the at quarter Investor the business completed the of trust we discussed and

management added account and value retirement Principal Over three TSA expense the to We're through and and last retirement nine driving opportunities IRT growth of participants plan retirement increasing positioning as migration, our a greater lower we've expanding The opportunities. including months, the $XXX billion to and total and emerge, to platform, and revenue IRA X.X scale, beginning provider. top million rollovers investment of the synergies. see benefits retirement solution strategic proprietary increased acquisition continue expenses,

in doubled nearly strongest meet of million the benefit The plan has we the in over we approximately the ensure largely market, issuance MTN in second RIS-Spread disciplined a to solutions. continues $XXX quarter and pipeline And offering of sales total $XXX million return business last risk which had to year large XXXX. core the business, retirement to remain thresholds. with growth PRT sales pricing opportunities In we in our transfer pension expect sales. of be our Our the

of second country our and during withdrawals pandemic. COVID-related well negatively and facing the a Investor IRT PGI's acquisition; U.S., approved differentiation as we AUM from four quarter from an evolving business the powerful impacted market business U.S. Retirement our the of Day; third momentum more forward, unmatched These retirement Outside engines, management macroeconomic Looking savings our at engaging the rest by long-term has In which conditions is business investment enterprise. hardship withdrawals as of quarter. emerging retirement wave solution. and engines digital from Total drive and the AFP world-class as for four $X.X key the experience of the was Chile, set will retirement future near-term enhancements; challenges with participant billion growth referenced growth Solutions;

Despite and second $XXX in quarter AUM China a from are drive needed was $XXX As was markets. on billion challenges, pressured collected these in the a the as included AUM, of to flat which Principal X% a impact our market the a our have the to AUM, long flow a reported within net second funds. and ago. competitive cash basis not flow salary, growth cash year reminder, money constant revenue International not over we reported net billion quarter, is this term by increase negative does currency not in fees chosen on in advantage institutional AUM. Chile compared

the investment right where and strong reach, are. strategy have with and venture customers that to recognition joint service us meaningful local brand access and distribution, and We digital they partners global a capabilities, locally allows management

diversify our in We offerings Principal continue International. to

year-to-date, become these cash XX% multi-mercado the AUM of Brazil of attractive With fixed We're in markets. funds. in and the accounted For with decline end more over and funds, quarter, pref. well-positioned navigate funds of to were At captured interest to of inherent we've in funds second due comes in example, BRLXX emerging doing second in long-term of XX% Brazil, equities or income XX% quarter these the rates. billion balanced investments the market for that share the sales flow volatility Emerging investments. net have markets in business our are

Principal will to asset differentiated our future and solutions growth higher our management by leveraging International. our well We offering continue on as global drive value-added in competitive as to products customers to advantages capabilities capitalize

our to in-group asset PGI-managed our integrated ability highly multichannel earnings our to is XX benefits signs business the Our strategy billion our group growth collective to nearly XX% as ETFs, XXX since scaling with cash in global with deepen and turned leverage to trailing to management block retain of management and and resiliency fee assets products global talent and normal attract and median the positive growth for our $X.X And record ability positive investment In levels including as in premium AUM continue flows, and our are the non-qualified life, and mutual businesses reflecting protection, increasing U.S. in $XXX high our billion. delivered in-group under very In accounts to drive performance performance customer preferred period, operating attract real for We're cash AUM strong of In quarter, the and net estate our strategy. for business for investment well the of see of funds, we segment. PGI and our time life solutions total to above develop medium-sized business. to total retention securities, retain products, business employees, and global strength second months' driving trust separate offering. as our to show net for emerging investment focused first market integrated corporate-owned and the returning customers billion strong and the growth distribution levels, margin, demonstrating for strong globally our This model. is the five-year XX-year. and Together, to pretax debt operating sourced market in strength continuing pandemic, going individual a top flow. interest deliver and our X.X% sales, yield, customer Principal's increased, capabilities, efficient positive performance positions insurance retirement well XX% long-term are continue to $XXX XX% and of benefits, will XX% which In our flagship the of continued growth expected Principal PGI-sourced critical operating model, yield-oriented demand strong continue us were high-growth and relationships, three-year to strongest contributing growth. growth forward sales small asset

index this seven. is a level about well-being that ESG our pandemic they businesses outlook of reiterates next before Principal a small are as months. of overall economic latest medium-sized This market. XX% to continues survey Our strength XX for priority the optimistic responded said to the for highlighted began. slide the to higher than the be on

ahead about is philanthropic ESG website to evolved drivers. annual Sustainable to focus to the the our and many in optimistic published strategies. our momentum very aligned is greater approach Goals. principal.com diversity continuous specific provide has and our our businesses portfolio Development as responsibility corporate returned and Deanna? approach our philosophies, report. lie we've ESG investment is our on Our sustainability opportunities in into bring growth that social and It of our recently inclusion, Nations' updates We're woven United and will to We've our commitments to embedded

Deanna Strable

operating This details contributors additional Dan. position, share of on the the capital on review the $X share. earnings of Principal We Thanks realized was diluted million key credit income to financial results. quarter million morning $XXX our quarter, in to Good capital losses. everyone improved losses our the outcomes million Net in $XXX with performance $X.XX per of how the including financial attributable or net financial quarter, second call. the million reported of to the current strategic for non-GAAP morning, and I'll $XXX drive will and second

of also This of $XXX the XX% per second earnings pre-pandemic Excluding increased XXXX. share variances, is quarter to quarter compared operating non-GAAP of to a second $X.XX diluted XX% or a increase XXXX. pressured million compared significant

benefit $XX second from impacts the per million from shown a of Pretax slide million and negative million pretax, million and in net had $XX life; a quarter. As impact America. during from non-GAAP eight, a of to RIS-Fee impact $X.XX of number negative lower-than-expected in share. claims; refinements million integration $XX operating higher-than-expected impact of income; variances a Brazil, included: a lower on reported earnings million negative and we from and costs; $XX encaje a in net $XX had model These COVID-related $XX negative IRT individual million a variable impact after including diluted International, impact and significant positive million amortization benefit million tax $XX performance DAC investment $XX a Latin in Principal inflation $X

impact Additional of details XX. are Brazil the on inflation available slide

second The from be prior will U.S. higher net second deaths quarters, a relatively after-tax limited individual XX,XXX to large we were impacts than claim U.S. This the in over year. results $X a quarter Insurance the to from impact remainder significant in the is million immaterial just expect our COVID-related morbidity and primarily in rule and Solutions. due COVID impact financial decline of and With life. quarter, mortality the RIS-Spread the of thumb, was to

factors macroeconomic RIS-Fee average account revenue, daily AUM, increased S&P the in Index X% XX% second PGI. and quarter, from the and average year-ago increased both and quarter, at the growth first XXX in the daily quarter to Looking benefiting the and value compared

to a continued improve XXXX; Impacts basis. a to a impact in on trailing million pretax trailing earnings on a compared immaterial second positive reported quarter $XX rates an $XX remained first included exchange XX-month the and to quarter XXXX; but quarter Foreign negative operating million XX-month a second compared headwind to basis.

variances. significant comments Turning impacts exclude of business the units, my to following the

for the full seeing work As completed are the we Dan expenses to out. we $XX fees, custody integrate benefited migration play strong from expense disciplined continue PGI expect continue we trust performance quarter, IRT $XX In the integration as to in second and the and the fees, benefits of million retirement begin IRT we to million business to mentioned, management the business. year of and year-ago quarter growth to expanding earnings were to $XX operating declined by operating Corporate pretax quarter, boosting benefited management one-time expenses in the revenue operating income. and XX%. offset driven in variable and Specialty life fees. earnings earnings as in performance pretax from group the line second with due by Pretax the from higher margin to million higher and losses ratios expectations loss were severity. dental higher investment benefits RIS-Fee,

of $XXX to $XXX more a obligations; position estimated to billion $X.X strong on with subsidiaries. and cash months nine, cover the liquidity of we XXX% available our our million company, Turning excess ratio available to the XX than at capital million remain next targeted capital of target XXX%; slide and and $XXX including: in million billion double be $X.X financial of of in our capital, holding excess in risk-based

the in $X.XX quarter. $XXX the of or X% $XXX than $XXX payable shown dividend from common $X.XX a capital second returned including of As stock million on we quarter, of third the the and second more we've dividends. XX, million increase during shareholders. slide to million year, $XXX announced Last common deployed night, the quarter, share repurchases capital million we a to half Through of stock first

is we continue the payout at ratio yield dividend X%. has million from year. been losses Through expect for immaterial improved for first year. the the half a first target dividend quarter. the $XXX year, it to the from of the Our has end estimate full approximately impact immaterial we to full And credit credit This drift and the and the remain relatively of XX%

million excess discussed of XXX% our by appropriate. company end to of the and by RBC targets the XXXX our review the of at levels ratio are targeted XXXX, validated including and We XXXX. plan Day, holding at As capital year-end $XXX the a return we capital end that to strategic Investor leverage by

XX% to our capital including when stock capital strengthened refined continue and our has to to billion Through will where returns $X.X expect deploy to to $X.X excludes billion debt plan $XXX pay $X.X strategy, billion competitive to We impacts areas will potential down XXXX. million and share leverage maintain targeted shareholders XXXX, late transactions. invest established focus in XXXX our Between increasing to Principal billion to any of we levels, of of repurchases while a matures dividends. of $X XX% ratio to and long-term shareholders. return and we approximately in it billion deployment $X.X to capital This of advantages common

We have path capital-efficient clear for higher-growth, long-term a to company more becoming a value creating shareholders.

billion annuities We and single of $XX transactions are billion pursuing actively deferred annuities income with and reserves. fixed life reserves blocks, universal secondary with in-force $X of several guarantees including premium for

share the transactions, we impacts. While on timing as as we as know to to including don't and you we more, update will capital continue have details financial well

of approximately in on As flow percentage an impact results basis. pretax and to $XXX result free a million expect our on increase in these operating XX point on portfolio capital changes, a a we equity. seven earnings lost this But of annual conversion return positive

As forward, earnings we we annual to share. XX% per X% targeting look diluted in growth a are

and on will a equity impacts free targets we generate XX% is of These from transactions, We and This segments. and earnings call open a concludes expect The have to to for discontinued return at reflect proceeds the least forward potential capital but path prepared exclude to XX% products please conversion. the capital lost XX% remarks. returns, our attractive risk from Operator, and our benefit profile. capital, questions. path and

Operator

line question Our first from Evercore. of come Gallagher Tom [Operator the with will Instructions]

Tom Gallagher

That's you one in comment question was group first my specialty in Good just your is if life? to about benefits. quarter I morning. -- a claim? large And related Deanna, so, just Did claim weakness say was follow-up large the had first to a that question. how the

Deanna Strable

she that relative rule claim after-tax impact every Amy just the That to above and Tom, it $XX COVID in turn then our of for comment were thumb slightly we $XXX,XXX slightly our add. over large to I'll debt. has of then to more And took that comment if that was one above thumb. to in of I'll see impact us U.S. million Yes, of life. individual And rule was

specialty was And so a It benefits. life the claims it on total COVID and wasn't comment a individual company. on within comment

Dan Houston

Anything Amy? further

Amy Friedrich

No.

Tom Gallagher

And I integrating just in process transaction, it scale. Do in recently the Dan, its the of bit little bar raises just guess, competitor, the viewing deal, Pru's follow-up question, the MassMutual to guess, still obviously how scale announced of the competitors. sufficient business. I that And a by it block. that my then XXX(k) like do great. curious of raises Great-West, still market, terms consider my is in you scale think this a light in surprised Great-West me their for Or Okay, because several future acquiring is, the next you your M&A post bar just feel you're IRT you years? have XXX(k)? for But you

Dan Houston

thoughtful the for Thanks Yes. Tom question.

thing I I'd the block first say business. the like The ascribed is of certainly valuation to

that emphasize volumes our think which inclusive asset speaks I management. of platform, more is about proprietary would I

We of rollovers. in and success roll-ins lot have a

We business drivers TRS other a also deferred model. of all our around and of the nonqualified success have lot compensation

all that So, hangs together really well.

marketers, out intermediaries. additional place, the The bigger first why is bought the create this Wells the comment is there IRT other access there was in to rationale gain that distribution Fargo new we behind capabilities gain and capacity, footprint apparently have in that and allow the distributors, certainly make, out Tom, is a I'd business thesis marketplace to us which with to scale,

good enjoy we today. frankly, scale So,

fight a place good capabilities. we've in at from time. on perspective. got we building digital that think constantly a it We're have those point But to supplementing from good really this We and

please? on question, like Renee, So, you'd anything add of that to top

Renee Schaaf

that as to as exactly it. IRT Dan, how market important a I clear did out acquisition terms not consultant IRT us acquired were thinking channels bring benefit access not And really had of capabilities. what well. great and to but to capabilities rounding of that job bring Yes, does before customers legacy will think, the of We're continue that our covering scale we our with to have our terms as consolidate. is It's customers may in us and did happy you only it about scale increasing the as we're to really the well set of in

very about acquisitions keep happy to watch unit we're But think close So, a that consolidation capabilities, of the as continue we closely. If terms and continue scale. we're future, about need sense make mindful watch in the to we those. costs very to with the in on scale watch we'll market our made, acquisition we and and the

Dan Houston

Thanks the question. Tom for

Tom Gallagher

Okay.

Operator

line Humphrey comes question next Our from of Dowling Lee Partners. & with the

Humphrey Lee

thank My is and my morning one you Good PGI. on first for questions. taking

this back very even were XX%. of performance performance quarter, both there's is kind So, around income component and looking the kind of and out, strong But fee you the of fees. at you for if highlighted margin a margin still that

Just for the talk the the that if especially for stable? term, should market how you relatively in think strong can about quarter? about the we And margin the pieces moving near conditions remain

Dan Houston

want Yes. across really I Pat, additional to you the for it comments strong the more some was And here? board do details of proud provide couldn't quarter and PGI. really be team. a

Pat Halter

Yes, Humphrey, question. for the thanks

think things And I the from strong to investment desire clients. because from is to the that we that of and I one seeing retail, strong institutional revenue from continue we're want in capabilities are have the marketplace. see retirement, desired we highlight growth that

our capabilities marketplace. in well are with So, that multichannel is multi-distribution playing the desired model really

been terms organization both sort So, I a think retention. of an revenue for in as of of and us terms that's generator in nice sales

Humphrey, desirable forward organization will of of and going as sort to continue that expense about to markets we're our to market question, have upper I going macro strong the control you generate, we range end our think which guidance if of we the believe place the these be in In terms guidance capabilities XX% our I is think, XX% in that as of north margin the think, bit little range, a XX% continue to, the of and probably continue continue cooperate, view margins kind the to and likely in in to marketplace.

feel margins to the about in pretty the good year. have fairly I some continue of second strong half to ability so the And

margin little fees margin second looks of may of But we have additional look the second yet the the sort of half I the year, the half of as think Humphrey. a forward I outlook strong also. year bit in on quite performance into the

Humphrey Lee

the Thank color. My second it. question Got related benefits. you is for specialty to

-- remarks, Deanna's about had or prepared can saw some dental, in about if quarter. that you talk Amy trended the just in you you like as of quarter in talked how you severity I kind and the Deanna was has think I what wondering into July.

Dan Houston

Yes. Good question. Amy, please?

Amy Friedrich

Yes, the question. sure. for Thanks

So, backwards, first year just terms greater take always to in utilized. the the we just of the quarter, bit we are little either see get these to of benefits in And first a in we half expected. utilization of that saw the ratios second to that how a of year, type expect of step loss half be than the that going

Second we that is would in ranges was And severity. down bit pretty we It terms quarter, have expected. stayed bit the what actually frequency well assumed on saw of was little higher. a drew we frequency a we that and little within severity that

dental, for from a something a two is to the be procedures So, or filling. all a being unit to severity when going think for dental done, we bridge so those of or three way unit crown severity

design have features great sort plans. And be on mechanisms features, is really what we there plan we to that really so those maximum tend I say of great think would self-regulating

down. up the it's second little see that of comes second bit going severity in year is quarter, if half a going that we're to what to So, come the even back

seeing we're sure people make more again, in-network much bunch And is we're little seeing we give those procedures. in a insight tend speculate causing good this. to pricing to speculate the lots I've our And tend some So, as have aligned bit as who into heard of that. on we great to of a of of patterns. access terms what again, dentists to us We what's don't

don't to plan saying what types that half like Those good of third tend and the think to we're normal. things of keep features we return happening we've that So, severity quarter got in it's self-regulators. and year, to going are fourth is second because design second

Dan Houston

that priced. our addition experience, of we've volatility that of so would I pandemic, for And annually coming to got claims think fact I the degree expect out business thanks Humphrey, in is advantage, in a this the some questions. global

Humphrey Lee

you. Thank

Operator

Suisse. comes next line question Kligerman from of Credit the Andrew Your with

Andrew Kligerman

Hey good morning.

Just scale asset and question paid markets, to first Tom's benefits, layer in about we're multiples multiples management. huge seeing being to maybe specialty on paid, emerging earlier

So, given $X.X maybe you've had do and in cited go acquisitions, along And businesses? repurchases the just when you more opposed -- same got operations would or least of lines, so, that you you divest I think if much, cited those scale share do raised at as that likely the as feel billion you we question? the scale to over think to

Dan Houston

Yes, so appreciate that.

won't said reiterate on one our One our our our and literally we But look-back of I course and what of was being during businesses, all Investor interrogated the benefits markets, reported strategic our having Day. of review -- we have just again, still XX every days of of the our out look-forward.

where we before were coming assets. is these understanding. as in were under feel And ones best feel competitive economics organizations We might we're scale frankly, we're like exist felt position businesses. a feel a across clear transactions these And that And so in gaps do didn't if of relative we around our there exiting are that the strong, capabilities capital go-forward deploy owners on we'll the basis. we stock to and need for back and very The us very better were But going comments our how already that frankly any interest our complete any other around arms we a make proceeds. of buybacks. conclusion that I'll Deanna with our we're here. investors ask are like got time, additional to if dividends we've feel billion in strong We $X record position, on those the the gives we a to form deploy We're a of the she has to two-year which lot optionality. position. she'd of in to period

Deanna Strable

the near-term of potential inorganic capital ratio, one use at as of reasons did to of of have as think more a one the leverage lay well the through free is capital position free low things issuance Day acquisitions flow any us we the flow out that. some allows I allow does debt that help fact fund Investor us strong in aid it Yes, also why we to the our to

obviously, to if see So, or opportunities. to organic there looking are going we're be inorganic

is stewards good of continue said strategy. Dan be our good what of But capabilities think I feel go-forward about scale capital. we'll and the we growth the to

return clear way. to to opportunity is plan a value-accretive that deploy Our is it release capital unless there in from transactions another

hopefully, that helps. So,

Dan Houston

Do you a have Andrew. Thanks follow-up?

Andrew Kligerman

Yes, a now the curious in billion brought helpful onboard, year-over-year. billion, $X.X that -- just very now up sales I'm follow-up answer. IRT from you've were $X.X RIS-Fee,

kind a you will of expanding into as now your of all that could So, onboard, kind in sales Just likely larger it's reach markets? you're big see see what we curious sales? now trends uptick

Dan Houston

integrated, at they to one Yes, be we'll our XXXX, we way think I frame help is that set we here fully sort in as premature. that get might look as of targets

sales. we observation terms remind had with from another to $X.X in numbers embedded billion. that you increase strong of within also PGI to results, regards sales good Your billion billion one is of DCIO in $X.X a $X.X I'd those

about And And I'll bit well. maybe existing have that distribution to that historically additive we so strategy. be in little not the that, will with very talk Renee? Renee these a our ask working markets to played strategies are have

Renee Schaaf

lot because for of within I seeing to said be growth you thank think that in we're a Andrew, Yes, the RIS-Fee. there's that terms organic question

as in and we was of recall with the first as there that sales So, very couple had first medium-sized plan included an of quarter, which well in about maybe in market. starting $X strong XXXX, quarter small exceptionally strength to result large sales, billion a you'll

will plan market, we large winning. indicates that that strong So, in the very quarter see are and the Then and can second is we we're a we is we turn play XX% are, a $X.X year-ago what a we -- we up from attention And which billion, successful our quarter. to quarter.

in reflects our with last we quarter's good communicated relationships sales in by or were increase strength speaks a small-, large And The plan And and making Day that Investor however, really top-tier pipeline. which The we're plans, second our cycle. large-sized pleased plan seeing a very plans. and sales market, We quarter that that. medium- longer that consultants. the to we're call nice are and really again we large institutional with fact fact at small dominated and have medium-sized inroads has the it in

So, those anticipate that in would we will sales XXXX. hit

compete that and the So, in in optimistic see continue and our we our momentum all this organic about markets small, very -- very marketplace. the ability It's we large to said, strong with across medium plan capabilities to and be growth. pleased

Dan Houston

the Thanks Andrew for question.

Andrew Kligerman

Thank you.

Operator

next come the of will with Your line question Bhullar Jimmy JPMorgan. from

Jimmy Bhullar

morning. good Hi,

and had just seems on five-year than if a first, it on the the look question So is like that one-year data worse that's funds, your investment three-year, performance you the from disclosed that's And you down worse performance. at than XX-year.

wondering attract just broad-based. the this of this a in ability of funds to because what then So, if flows? And more is implications few or are your

Dan Houston

good. Very please? Pat,

Pat Halter

question. the for thanks Yes,

feel very still of terms performance, our in positive think performance. our we long-term about I

off it a dropped has U.S. one-year And equity little bit. off dropped non-U.S. and performance. our in specifically, Our

half the that markets growth, the was one As of first a rewarded in for monetary you're you just that. U.S. of because risk the year, stimulus, strong and owning of really optimistic marketplace know, environment and in fiscal the equity

it's probably probably and higher overall the biased more lower quality of universal, lower back toward of companies. held higher fund quality a performance. -- sort more little approach quality sort of than Our our bit but is -- not And sort that's of it's

conviction a past favor. process, high out has of periods and had of been we had approach style sort again. sort risk-on we where will in our back this lot approach made investment the that quality, vol low of Our We've of have come

clients, talk in know process. in, our They to doing. of investing we we're they're They what processes. what very our know terms confident they and comfortable with As our feel

at not because either have we of any terms So, retention seen of all that. sales in drop-off or

a sort most that's drop-off if a bit of performance. important drop-off probably So, to or say, the of less part in the of, little you want

Dan Houston

do any have follow-up? you Jimmy,

Jimmy Bhullar

you your of pension far, Yes. sort then could across of seem so has given And potential feel the then gone if election about pension weak on that. the regions, And on about the how just a reform also the any do you talk business, how market, international flows there? number thus Chilean

Dan Houston

all good questions. Yes,

in flow. start to cash I'd So, relative first is net place the PI

got saw of trailing money might in But negative And I think cash It's a in it I XXXX. $X.X up the In examples fund on up last XX-month $XXX net you've and That's beginning was to basis. XX% frankly, XX attributable that's institutional could account a the for moving moving Malaysia, million year at be, quarter points billion positive out. million basis, market trailing constant quarter, currency challenging details. quarter. positive second flow. balances. three entirely the we But Southeast example, to into a of $XXX percentage XX% on an quarter Asia. this get compared months'

when is we some from of these what's is holding the U.S. of at an our are downward economic and in they long-term across really COVID again, pressure, strategies struggling of course, up in to some markets. where happening the board, that, part large well equity here there from they're look actually -- in coming frankly So, still perspective, due And recovery

of at we've really strong end still got the So, feel we day, a the position.

you still Chile XX% for could it's in the PI investment inflation a retaining encaje adjust see, income, result As margins. OE and for good you when variable

as of and to a has worked who relates we're of engaged they've it have here coming talking citizens the on well. elections, value It's it the quite withdrawals out Obviously, and what's I those the interesting. involved approach AFP how actually funding what about categorize and vehicle the that's reform. to them Chilean regulators consider authorized As A are these XX% AFP with AFP to creation couple system. frankly and challengers moderate use more as to Chilean topics would system allowed as candidates

do got past. do to we've forward. It still survive people to we a the that. a served continue lot And work to will well effort legislators, public. in has there it It's of the going the So, believe to inform concerted inform

made first that of And sure we'll Did to elections is making we'll strength round help? you of second to December. our continue November, in vigilant be the point have the know, the As round relative that in AFP. of elections in

Jimmy Bhullar

you. Thank Yes.

Dan Houston

for question. the Thanks welcome. You're

Operator

comes Ryan next Krueger the of Your line KBW. from question with

Ryan Krueger

morning. one earn X% Did at of terms in you had just know quick the stranded to PGI? you include XX% had Hi that I the reinsured growth. given account one Good be I within overhead. assets that the Day, guidance fees would on thanks. you you the lost EPS included general that Investor anything for

Dan Houston

Deanna?

Deanna Strable

Ryan. included, was that Yes,

Dan Houston

to yes. were So, X% GA in included the XX%, on loss fees the

Ryan Krueger

all That’s Thanks. had. I Okay.

Dan Houston

Ryan. Thanks it. Appreciate

Next question.

Operator

line the from Research. Erik with comes Bass question Autonomous next of Our

Erik Bass

Hi. Ryan's the some continue do just follow-up a EPS on Maybe guidance, investors. get question on questions I from growth to

you're would XX% then correctly. at I which we're So, I just to assuming in a But $X.XX roughly that want think a base starting to XXXX. believe XXXX, benefits of of range $X.XX pretax it the growth, from to growth from I clarify assumes looking that businesses imply drag redeploying and any from assuming $XXX million capital. for exiting not you're $X.XX And you're from the lost the rate X% earnings

proceeds? sale to SGUL the should assume EPS a as of then if blocks So, annuity I redeploy do your the have that first, I growth be so, we accretive baseline And correct? fixed and/or guess, would you that

Dan Houston

Deanna?

Deanna Strable

But that also Ryan, and account. those the Yes, PGI last you right. costs of just the lost included then last revenue it estimate dependent on general up following question on they specifics from estimates, you correct. are an items Obviously, be two and And stranded from around that transaction. have the are would

made there the specifics relative magnitude of again, and will so result probably relative outlook. earnings of would a the again, that be obviously depend that by relative the Obviously, It lost some discussed. But hindered be deal. I to that that on the relative to slightly dilutive. just dilutive was transaction. was from the BAU proceeds comment, confusion process Slightly that deployment the I guidance, not that to could the that And of was the upside to a

Dan Houston

on Erik, does Are that we help? that clear one?

Erik Bass

That Yes, given the in then planned a your the that from the you're exits RIS-Spread these period, you or follow-up sense even should businesses product thank And we are the what assume growth for And of flat helps. on the guidance? maybe stranded from give over you. earnings Life assuming and down Individual businesses maybe could in it, costs?

Deanna Strable

up is costs lines into standard not the impacted I the go businesses we reset a are typical would then point. what and enterprise. expect be somewhat across go actually more ones seen The of likely of would what is into those those lines of They see a And be is that that two by reason Yes, didn't business. well to as in what they entire corporate obviously, transactions. we PGI walk-forward are go on say the over going are there to from growth this we a have as just to those and

more then again, to didn't But how so would insight give a I a guidance forward. that of transact of one we as three I X% into somewhat give the But reset And think we'll it XX%. and rolled that's we specific growth up and we are as there. that's think that as that you again, go you from

Erik Bass

Perfect. That's helpful.

a $XXX is take million so And out assumption? fair just the

Deanna Strable

Yes.

Erik Bass

you. Thank it. Got

Dan Houston

Thanks for Eric question. the

Operator

the Barnidge Piper line of question Sandler. next John from with comes Your

John Barnidge

equity it the the experience, lowest the was maybe product? I we activity equity little Thank it seeing you turnaround look very you. perspective really XQ a expectations well Can PGI withdrawal Because forward? XXXX. looked helped flows bit you as talk clearly, talk since about like activity And a Can from much. in level the at Thank maybe you're withdrawal as about there. going PGI the in what your

Dan Houston

insights? some Pat,

Pat Halter

Yes.

So, John, thanks the question. for

-- investment very boutiques, our is think I I which continue think some notable to of discussion international Day, one a Investor market emerging strong institutional small-cap, flow side, they on two institutional are net has the We're also on our areas. we're sort some some I at the positive side, Origin, activity. mentioned and seeing sales actually growth cash of equity had at sales attract

activity looks the the on equity good quite side, side. institutional the So,

mutual specifically within what product in of SMA seeing sort you're are with [ph] very which net within John, fund, sort of seeing strong We're the broader commentary, you're a think cash Platforms, think large-cap some, our -- international platform, actually seeing is line, Aligned of I and our probably what seeing sort I maybe some particularly on we fund. our is Investors, positive flows we're wealth, referring mutual mid-cap, withdrawals a the platforms. manager. actually Dublin to, some

segments think But capabilities believe cover, across mutual funds. terms we be to different going still strong we mixed a it's very bag of we a I the lineup So, that equity in John. of have

Dan Houston

Follow-up, John?

John Barnidge

pricing addressing Great. for the in a Deanna, answer. half ratios lead a of offices all loss could to could pre became specialty you increased renewal that on dynamic on you the and basis? since about suddenly this thinking from aware and first dentist closed the year. on talk be vision Can Yes, benefit about long-term a Yes. frequency we and you're more the regular dental than the maybe pandemic Thank side how whether in follow-up maybe

Dan Houston

Amy, please?

Amy Friedrich

Yes. Sure. answer Happy to that. give to an

mentioned that tail So, one that terms I of we took business is at that the end the that the in dental is but highest Dan before, lines of annually think renewable. of question product our

probably include year, We every those basis that need look more We to year, going naturally a trend are do things on to to at do So, a regular when going quarterly be on dental what to prices exactly scrutiny, We in trend. look repriced basis. we a than of pricing regular once fact, in be look on they the of dental. more our marketplace. that's lot do at a a

are the the that brokers used who to is sort there So, cadence. good products have regular those of employers and news

isn't first I those would what so changes. though say at the of pricing the big full we indicative seeing course say of the would year, to half we're probably And tend of look over year. I

the at movement. going the those. facing way be it's has to pandemic responding emerges second in continue to, the a half some play, agile the that dynamics year we not be large different believe we'll Now, if to will really pricing of so But we put

their would is higher were and I and July. more that those terms we severity, even seeing and what at notably in June say utilization look what than April May of Now, when in we're

to those getting So, taper off.

So, second more a year the to going half that's certainty pattern. that, behave on increasing is our normalized that of

don't I make large have we're to so movements. foresee to And going

Dan Houston

John. Hopefully, that helps,

John Barnidge

the answers It does. Thanks luck. and for good

Dan Houston

you All right. so much. Thank

Operator

with Tracy of line the from comes question Benguigui next Barclays. Your

Tracy Benguigui

Thank you.

sooner FA sale Turning a potentially lot side, lot is to But say more saturation your buyer fair it. it strategic about ULSG update, I that know there's an from than a block the could asset managers? on since saying not you're happen alternative to

Dan Houston

think as of think the these transaction. we in about life. it shortage And the to the it's best potentially these view way or whether interest blocks, no is Yes, I one there's annuity

we shareholder expect, go are value a together in, data is is. our of and But pulling maximize lot you to As process. is whatever can initiating to intention we -- structure the and that

or of out but there. blocks You're in are there annuity a like is that something ULSG, we that? there Deanna, to again, path path better assumption sort correct relative than like more a like making well-worn-out the to good add anything buyers feel the to you'd

Deanna Strable

that for on since six we transactions. there's we'll discussions we on of if think XX path that think a over the that. we've And had the about announcement the I No, the and think have next months announcements those. We're on focused had, do execution outreach further we both think diligently to that we've both

Dan Houston

a Tracy, On full completion. follow-up?

Tracy Benguigui

XX% you to wondering your more to I'm leverage get at is wouldn't your the follow-up would would range? My the a in XX% and it be XXXX maturity, still $XXX range room to higher million return Yes. of end debt refinance why capital leave

Deanna Strable

to planning that. refinance We are

we So, question is your why would do that?

Tracy Benguigui

pay just you which that no but thought in to there Yes, clear I your was Okay. wasn't it you're-- me comments. that mentioned down, refinancing, me to felt you'll

Deanna Strable

we are we refinancing. -- not are planning No,

Our is that off the when pay it to XXXX. third of comes quarter in plan due

we, issue the extra attractive debt from very the or to credit pressure need million marketplace due that we for rates. do we not $XXX during the in the volatility uncertainty back, found very, today, that at that pandemic, you forward of any If opportunity to took remember Fast pandemic.

comes it and felt was the of XXXX. in that prudent we down And so debt take $XXX quarter retire that again third million due to

Tracy Benguigui

Okay.

of prefunding that at So, to end that and I likely would operate range? you want as think lower should the about more

Dan Houston

exactly That's That's correct. right.

Deanna Strable

Correct.

Tracy Benguigui

Okay. Thank you.

Dan Houston

Tracy. Thanks

Operator

of comes question line next from with Your Kamath Citi. Suneet the

Suneet Kamath

come back wanted ask Thanks. something. and RIS-Fee to Good just maybe for in your issue I on morning. to the thoughts scale

get to market And mix that maybe on they years that that if participants million X up call any plan guess, in the the thoughts of was had would I with commentary. different on of like said Empower guess, kind which to change as I that pace X or be business about I'm changed, week, change, your million you what participants, increase in ago. your that scale at a And just a there's five wondering plan DC inconsistent or rate scale. something business threefold was which last me from target if So, that viewed surprised like

Dan Houston

down on that of And the their Principal Everyone's entitled more would right having like better what lot cost. own with scale. and unit views opinions is your argue those Yes. drive and scale people it helps a is

you're to in So, the of customer really Suite that clearly, that your of would nonqualified. are that overall have gets service is DB that the going able agree is and, to and And the you And customer more contribution, importance the on things defined around view that then experience. matter, Retirement what to And be capabilities? deliver, with is I better. XXX(k) what course, Total which of start arching focusing the what is quality the

technology thoughts more be component. have if to I one and additional any It's enhance key efficient. an is going this there, continue So, on Renee, and important know topic? We're the deploy help component. scale to you don't we're to us

Renee Schaaf

really the this. critical really Dan pieces you've Yes, thanks. And nailed of

proposition and when I how compete our in we think the about the several thing differentiate talk on we we things. to marketplace, remember, value

our automation serve there's are competition far Total ability that capabilities and record-keeping also pull and And up doubt, contribution. take multiple our our defined Defined that of digitization is plan is highly together our a when the beyond types driven off fees ability retirement only and just by to down no Retirement First But not to marketplace. Suite business. at contribution, we look being competitive but capabilities participant the same technology, using participant it to the is a And all, is and with And fully plan work the with a again in expert proprietary across sponsor experience sponsor truly and that ability apart. global closely the in types. and of manager multiple retirement. asset sets deliver, to last plan basis true fully integrated the that plan we us integrated thing

allows successfully a primarily market. focused so on of compete differentiation might more that us the that or those against things solely defined to contribution And all other competitors create be

Dan Houston

that help, Does Suneet?

Suneet Kamath

a of then from million $XXX Yes. annuity assumption from guess No, block. of that the is pretax that block those Deanna, the much that terms between follow-up and the characterization? $X.X earnings of that. billion of divest, two help Is that that plan majority sense. a fair there's I makes our blocks you for you Thanks. Thanks businesses, vast the give that's an to what lot And from can the not any in is the that on earnings split the contribution SGUL capital for in of my And of fixed is blocks?

Deanna Strable

the that to take announce more we given the pieces, determine blocks the we I don't whether fact the the disclosure underlying this business parties. already it's prudent planning think to divested I But Yes, as transact is and single those feel split that earnings. point, is on warranted. assumption specific at incremental providing to that's fair We'll directional. we details are numbers we're a we your disclosing to market when transaction interested I on the on the into assumption think opportunity split the a think transactions earnings

Dan Houston

the can appreciate rationale you the discussion, behind Suneet. Hopefully,

Suneet Kamath

Yes, understood. Thank you.

Dan Houston

you. Okay. Thank

Operator

question America. next comes from the of with Bank Your of Josh Shanker line

Josh Shanker

And an just end you. a change about quarter-over-quarter? this if or how the I a to question were today, we a year-over-year of if Thank that that in the inflation Is quarter? that. about sorry issue Yes, calculating into the Brazil. had could is for outcome sort translate quarter that

Dan Houston

you light to shed some want on do Deanna, that?

Deanna Strable

impact. about I'll is And talk things again, of there. that couple a a quarter So,

so the have of what a basically so sold And this XXXX. is all is block have coming not go actually on calculate this it about. back to based since business right? -- we that And we actually if is, you it's And to true-up closed

Dan Houston

on in coming of a line. bit There's little the feedback

mute. want might go on to You

Josh Shanker

you're I'm mute going to talking. while

Dan Houston

Okay. Thank you.

Deanna Strable

Yes.

Due of assets and liability the links to of to an assets, index, we're the match indices. provision unavailability the backing about underlying inflation IGP-M. the the that those only able XX% contract that So, to to exactly liabilities

what of versus of that more details it a crediting can assets with we're potentially closely. you a more XXXX, has Back how IGPA. the on it's a retail The has and little last that We into take track liability. actually inflation the get the offline some bit IR period believe But this do over is we the other benefit. the months. long mismatch, a XX portion to fact the could track mismatch have of the between we a a hit that been given majority in the congruence between been long economic a bit There's market. index, will cumulative this remainder, been actually indexes. that's to is we benign. Brazilian that quarter that earning But occurring lag. a term, the there's it on into more the and financial come volatility this what of But given over in time, we're Over just But a back of two impact very little the a

Dan Houston

-- noting It's Josh also is probably that this a worth

Josh Shanker

go Yes, ahead.

Dan Houston

impacted, the There's with authorities. of regulators domestic of active partner. it. appropriate obviously joint aware They're conversation and is are This including that our players the an lot venture a

appropriate off, cut a I So, what time your lot this is on and question? of debate of you getting discussion is and solution. an ahead, go air a lot

Josh Shanker

fee-generating month-to-date very I money I what strategy going talk the shift really we good there higher I'm can into a conversation strong the is wanted figure you about what is take And strategies. the second. really out do change results to results I'll on, the there. to wondering to quarter? for you're where offline there PGI just quarter. the -- in can more push The if to in able led with guys and a were

Dan Houston

we want don't to push. I think ever

our going some customers. color? the And Pat, idea asset the that asking right we're now, to performance with is have are products customers line well attractive think the But additional up classes what very for. I and for

Pat Halter

think Yes, the capital. right really terms Josh, an incredibly flow in vibrant market terms of it very of I both is of marketplace we now, have conditions that and in

of our estate, real absolutely capabilities, generation some right in fee flagship And are vogue now. capabilities, which are higher like

very performance. Hill We're that's of the sort on upper of platform first highlight. one think to We're now. a providing specialist of with I and getting that. are where capabilities, sort side active I by second international we're the side, really West, both multichannel teams So, area side, alpha-producing just quartile And really lot strong our that U.S. right distribution the Kirk think performing and on very led and model, distribution our Tim well support

offer in the seem broad institutional be doing really reach retirement capabilities the marketplace. we to both and of can those So, and to of to we the terms that well, the retail capabilities marketplace getting the

seems coming just be now. right to quite nicely together it So,

Dan Houston

Thanks Pat.

Josh Shanker

you Thank for the answers.

Operator

the line from Mike of UBS. with final Our question Ward will come

Mike Ward

we feat, exits that largely de-risking kind lines you've of you more Thanks have for in. I'm the over is being just no still morning. fitting incremental was there identified, maybe the and to results, complete frame this get if me just step? which business if in easy de-risking or I'm recognizing Was could Good wondering through I review you strategic you of the sort Could think is should wondering be divestment But as time? the sure. first or ongoing? about it other review

Dan Houston

Clare question, incredible Yes, Richer's job Committee what Lead Scott under our I say Mike. would did leadership Finance Director. the Board I And and just our an appreciate Mills, and really first is Board our

and said expectations. our our investors' it additional incredibly I expectations up put We've and strategy was ensure monitor earlier mechanisms performance to that in my process. comments, lives to in go-forward some to internal the an As thorough

I it's complete. so think ever And don't

investors. portfolio your to growth is reward looking you're think I that drive those at markets businesses constantly can those reality the for and

we a in as And as to Did to businesses so certainly go markets look is look we X closely you speak. And follow-up? that make for our to along. I'd say continue us sure we'll meeting appropriate investors these update have would and Phase in these I thresholds play they're continue at to very

Mike Ward

Thanks much very guys. No, that was it.

Dan Houston

Appreciate the question.

Operator

the Houston, please? comments, Mr. your Q&A. end We our have closing reached of

Dan Houston

you. was when going on was and were advancing our it the think of metrics, financial were a return Thank I comments to comment measured I same strategy. And to summarize, quarter, very by if those I Yes. really My before, strong and closed growth made our strong again, both customer strategy. focused we Day, closing and long-term Investor which out our stay we're capital

XX We job are we've in committed quarter we've demonstrated And customers We're to got to world again, help around exception. no to execute ability creating long-term was and our confident shareholder financial security. it and achieve this historically us. that's for the one And value. million

you. of Thank you. forward your appreciate follow-up conversations and all look So, time to with today

Operator

call. access international today's participating number is will X day, end be replay until call at for is XXXXXXX replay. August for dial to the for replay Canadian you XXXX. Thank of P.M. The Time beginning the for XXX-XXX-XXXX or o'clock approximately Eastern U.S. in code for conference This XXX-XXX-XXXX available callers. and the Xrd, for callers

now may You disconnect.

Principal Financial (PFG) 28 Jul 212021 Q2 Earnings call transcript