PFG - Earnings call transcript Q1 2022 | Principal Financial Group, Inc.

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Operator

Good morning, and welcome to the Principal Financial Group First Quarter 2022 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to Humphrey Lee, Vice President of Investor Relations.

Humphrey Lee

Thank you, and good morning. Welcome to Principal Financial Group's First Quarter 2021 Conference Call.

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

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

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

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

Dan Houston

financial quarter. Thanks, financial and performance additional Humphrey, capital everyone on our will share current and first well on the touch to detail Deanna the position. quarter the will progress our and follow highlights our making around against This for morning, key we're as as call. welcome I targets with results

business updates Before we share. important I to few in, dive a have

work our ULSG to continue second blocks. close and U.S. reinsure We the annuities to quarter fixed the of towards retail transactions

our China Bank, approval stake of final In of minority a through is in in our are years for with our $XXX company. closing management retirement bank China, the asset had the our asset final recently We XX% look more once additional CCB transaction actions. a we've than a partnership. relationship relationship expanding XX to announced second million details in management for largest stages venture. over strong As pension of plan management forward closes. global Construction receiving shared through they of to acquire deployable through We the and them approximately Management, regulatory share previously, CCB to joint subsidiary more and the Pension leverage expertise seeking Principal upon we to capital and expect the world, and proceeds approval

IRA our the is number now result growth including managed as the as Lastly, new accounts contribution The asset and and business and sales scale number retirement plans acquisition, piece, defined industry-leading offerings deferred added during elevated capabilities, business benefit, X us quarter. number acquisition an retirement revenue participants first retirement compensation Institutional final and and on of including total position in proprietary rollovers, principal pipeline, the for It by gave based a And to the including nonqualified consultant and opportunities, from the benefited on integration of migrated X number provider of It's new successfully IRT Trust Retirement of of solutions. the our custody driven through the provider, breadth relationships. the we plants. to trust ESOP top defined of based management. depth the position a complete new and providing

per focus, our diversified diluted volatility, X. the of business financial and our first highlights strength or first on pandemic $X.XX In market to resiliency and reported from million strategy. Turning of uncertainties, results our non-GAAP Slide and quarter share. Amid we events ongoing impacts quarter, geopolitical earnings the $XXX the highlight

variances, first significant over earnings XXXX. of X% Excluding quarter increased the

X% billion shareholders. million continue first of closed we dividends. the with repurchases a In excess returned the quarter We increase strategy deliver first our the return We $XXX quarter, deployment nearly quarter AUM, of stock and over XXXX. to on to strengthened share $XXX to through capital common total first company capital

sales. XXXX. record employment XXXX, wage produce turning Now tremendous driven protection focus for distributors we across by trends our employment Individual with favorable Specialty strong first total the growth management and to drivers block. growth and for fees is after Benefits demand we X.X% robust to benefits, highlights. multiproduct first sales of to growth market the a compared long-term was robust businesses. across relationships retirement, fuel The asset our target growth small- opportunity business total with hiring integrated record record in Focused through strong benefits COLI XX-month our of RIS, and premium growth. resonating solution Solutions, medium-sized customers plan retirement XX% on as of a Life, a Over U.S. sales the on the XX% sales, build increased continue retention and increase nonqualified with quarter to delivered and Trailing Insurance of continue to of the quarter execution In COLI solutions. the business owner market and to our were business part highlighting businesses. In

block strong includes XX% from the participants. deposits pipeline in employers RIS-Fee retirement quarter. addition well were them of U.S. as to as retirement increased new continues ago Our to as and attract compared nearly on effective to This a XX% talent. reoccurring as retain in benefits our grow strategy help business, X business IRT to our increase year a focus legacy In deposits

As more reoccurring participants dollars increased average X%, average has the per has match continues, and increased X% participant retirement. participant saving the for ago, Compared to a deferrals are growth employer which of of the are both of recovery per in economic dollars deposits. year fueling

retention PGI to increased positive drove the account across same the IRT deferring PGI RIS-Fee. addition as trust Management, fixed and well reflecting from IRT during impacted quarter migrated of a fewer the flow in This of benefited custody billion first of performance, market flow for $XXX In was of negatively withdrawals of of net quarter. net than Global both million markets due specialized performing positive retail benefit dollars the $X our more integration and participants billion value assets. platforms, conditions and cash full more billion and lower driven increase delivered cash retirement in flow equity managed market income macroeconomic by than estate, offset strategies. AUM real participants. Asset deposits, strong income as institutional The capabilities $X of by within from sales number certain positive mostly across alpha differentiated block equity the period, solutions $X.X cash over has the which net the and the Additionally, equity

to performance investment combined with X. investing impacted volatility, a and from Turning Slide performance short-term to investment quality on the quarter. growth value our Market rotation during

real diversified performance of and investment included returns positive was drive the year clients. end which retain end AUM Reported quarter, and favorable Outside currency strong AUM longer-term well attract International regulatory with remains our in assets at and our grew $XXX by billion from growth AUM Principal asset foreign positions across in forward. net flow to billion for U.S., revenue by cash the our headwinds. on us is the since estate China, the the retail fee-based to the of coming movements XX% amid driven our and the reported $XXX not management as of year. beginning from retirement Our business near-term growing focus to as macro going

its Pensions it Places in recently included We're X deliver I a once a Principal X to year and that I Work have on of be Before proud build day employees over Money every how to of included again history. leaders list companies Deanna, to work want highlight investments, XX-year continue to to of customers. and just every been notable turn Best received. and award's our is only Management. recognition people This to makes Deanna? in culture our the proud example Principal for X at that we

Deanna Strable

and to on morning, the I'll everyone our to performance as This call. on an morning well the current share the key our for capital position. update Good Dan. contributors quarter as financial financial Thanks,

growth, higher Our capital-efficient transformation focused drivers on growth a our more off. company is into paying return, higher

is Net attributable over $XX realized losses way ROE points year-ago to As quarter, was the quarter, of EPS well in of first of XX to XX%. capital credit the the million to the non-GAAP on net and Principal first XX.X% significant million the improved excluding income including and XX% million $XX losses. the $XXX with of increased and end basis year from quarter variances,

million the first to first was Excluding approximately reported operating earnings per non-GAAP variances, quarter compared excluding and non-GAAP variances. earnings rate XX% and of The operating $XXX $X.XX diluted or XXXX. share of significant quarter respectively, significant increased XX% a XX%, basis tax effective on X%

we year, to be the XX% guided full continue within For XX% to range. expect the to

We've $XX International was U.S. thumb. rates impacted COVID-related offset by approximately mark-to-market negative the by a by several $XX million and favorable Latin a Individual deaths the that DAC due and had some investment of expected As variances rule $XX Principal IRT related interest $XX operating than of equity and impact investments. With the and share. impact partially impact variable the the Insurance higher combined in decline to claims, net per first earnings variable RIS-Spread, on income, negative was our Life COVID Specific significant XX, income in during final offset Slide more U.S. on as higher we million costs. returns. net a were million lower benefited increase the America than after-tax impact negative at detailed inflation net end in $XX investment to reported diluted non-GAAP corporate quarter. Benefits impact a in negatively quarter, to This RIS-Spread amortization and from million encaje performance, tax had continues earnings to investments alternative in investment higher-than-expected non-GAAP integration after approximately COVID and operating had results $X.XX pretax, XXX,XXX primarily million pretax, in Solutions. of

factors AUM benefiting as average account Looking PGI. and impacted average at negatively decreased X% RIS-Fee revenue year This and Index RIS-Fee. daily as daily decreased compared to and quarter, ago the the fourth quarter fourth DAC in increased S&P quarter, and macroeconomic XXX XX% amortization the values to in the fee the The revenue, well quarter. X% from compared the

record management decline by a experience fees of performance income, boosted quarter, business fee as fees, PGI's were can in expense strong expected seasonality operating quarter-to-quarter. million net were operating and to earnings fourth the be trailing pretax positive growth on XXXX, Relative which gains pressured to X% a negative included the results. quarter the a to million million tailwind $XX positive but Foreign exchange fourth rates to headwind a trailing fourth a basis, to basis. XXXX a relative compared a quarter. $X on the compared XX-month In RIS-Spread, quarter $X XX-month reported compared lower Impact a pretax earnings and in reported year were as lower including first basis revenue, a investment earnings and favorable and well pretax to a and ago quarter on operating margin volatile

As the the by Mexico in on Principal the effect results outlook we being beginning International discussed that year. reductions went of are in call, fee at pressured regulatory into

had to premium the X.X% XX% $XX of security Specialty to COVID earnings this in were start increase we're of loss the management. through for We doubling in XXXX. are quarter contributions XXXX, to as acknowledge quarter first negatively savings. near impacted a claims first taking and financial by Benefits This a the than annually over to offset with action portion XX% mandatory approximately year excluding million XX% the customers will in a of It's headwinds and to Mexico remember today fees our a long-term reduction. First for in and in term important expense that retirement quarter scheduled increase Mexico, growth there from and a impact ratio, provide the result more are Principal. strong

transaction we Dan reinsurance quarter expectations we close As financial toward of haven't continue shared the on outlook second around a call. and from mentioned, what impacts the the to changed work our

the earnings As a the and year-to-date that of of beginning as of true-up transfer a the reminder, all we'll year. will have revenue associated

at had the of on Turning months and are financial of million million including obligations, $XXX first XX to We $X.X cover remain company, capital, and we returning excess At subsidiaries. strong our higher the capital and liquidity. than to holding and quarter, position approximately $X.X the $XXX shareholders. end our billion in available excess in capital of a billion focused to

end the target. estimated in at with line the our Our risk-based was quarter, capital ratio XXX% of

this pay to the year. We million the will set improve to and maintain ratio later a continue debt XX% to we once leverage as of and closes ratio to expect $XXX long-term transaction down XX% mature

the first the and As shown nearly our $X million well shareholders of billion our in are our returned to common million on We from to capital in share through a Slide repurchases accelerated we a share XXXX. of of repurchases. repurchases. strong capital dividends $XXX $X.X X, of dividend million a with the night, of share dividend $XXX on in $X $X.X to returning quarter This reflect stock balance through targeted the $XXX $X.XX the our line we in will of billion targeted business of with is second was announced to to paid in billion XXXX, X% increase $XXX dividend repurchase quarter. quarter, second billion second way stock million and program, shareholders common $XXX which including quarter ratio million performance. share Last be the payable payout completed in XX%

and markets, to our benefits asset concludes deployment please all drivers will aim and As our of remarks. open the long-term we call strategy move protection, value. growth U.S. to select global approach, the emerging go-forward questions. prepared on shareholder strengthen capital drive up our and in an for forward, management invest executing retirement Operator, U.S. we in with continue in This

Operator

from first Piper of Barnidge [Operator Sandler. Instructions] The question line the John comes with

John Barnidge

does You've make as products had secular strong that? PGI, talk growth in you demand. And more you about this business maybe create in be fee well? want that higher Can seems to product for alternatives to and

Dan Houston

team appreciate paying years. here some for we have you're But alt? the question. it's his want to you it right, on And John, to And Pat, cycle. obviously been they've deliberately provide and feedback off and see shifting Pat doing market the the do continue been is

Pat Halter

continue the to the very, in some real client and private for strong question. in very and interest see with [alts], Yes, interest, particularly really John. we first starts Thanks assets space. It

of we investment you As the worldwide. estate are probably one know, real organizations largest management

seek we're think real And serve also space, worth that investment within the differentiated space. so channels capabilities And going alternative continue we individuals offer lot capabilities of but institutional strategy. not in the we and ultimately, have of those through out the we terms on in continue runway estate then a only retirement And to build in different to to net there's all high as today. new

think So in we're real grow to I going absolutely estate to our capabilities. continue

potential. that's some capabilities, we significant have very and credit private strong growth also place has also that a We think

private And credit we'll forward. so continuing to be our going build capabilities out

Beyond equity desires, out. aspire to that that, seek more also sort we'll capabilities would continue marketplace capabilities be something like new that we build like think debt, we'd to to private things out of to the hybrid continue

John. because So demand client increasing. because lean is we strong I capabilities will towards think alternatives have And in we in that arena,

John Barnidge

Fantastic. products. talk And sales of all Strong movement the business a a that, of follow-up. group small then your that's base? maybe portion know I you large about across consumer because Can health in the

Dan Houston

some is Clearly, U.S. It's want in the for small a observation. business great Amy, provide to for open you sure. detail? additional business

Amy Friedrich

is the for Yes, John. Thanks small working. business clear that Yes, question. it's strategy the

all are retain businesses and they're of competing attack And for executives with sized dynamics, they executives, so about talent. what key they their small care how key hiring, their they of at they're do when we and business and look worried those terms taking in

as a importantly, market. competitive And so but really of probably years a this what's local of seeing for really the the a even at wage expression ourselves competitive market, labor we're been is beneficiary of more build us a market,

that have we We underwriting seeing relationships seasoned see strong And which have to market. we strong. and going developed well continue and are discipline well very products in is local our what attractive, are be experienced is we're folks to who is that growth

developments processes really XXXX. macro we are us, and off those conditions relationships own and in and that our as brand and for continuing paying our technology in see well own So as that

Dan Houston

reintroduce the X business. he's other analysts to know responsibility call although Renee the I knows the in traded and companies. today, to replacing might be replacing a Schaaf, to our he not He's of Renee, Spread but Littlefield publicly Chris new role, who's number honestly, on investors the time for industry. got to a RIS-Fee of he's new formally This CEO good been

John's small, for medium-sized are Chris, retirement that to to regards the on with market. follow seeing maybe, comments How the space? So business you

Chris Littlefield

talk Dan. again. you John, to to you, good Yes. Thank

see and as adoption to across in mean business. I the employment as think strength we strong all We see of I well. our certainly see growth see an in growth in retirement well as continue business small increases of in we all the space elements same across uptick matches plans segments.

the So business we employment strong Group retirement really side see same in the it see side. tailwinds in the our we as of Benefits

Operator

Tom of comes with question next line Evercore. the from Our Gallagher

Tom Gallagher

Dan, standpoint? you probably I to meaningful capital Construction give of would from that were would amount to China that whether you your consume recognize you buybacks? Or that that you mentioned. size doing buyback Can planning size to you least deal the specific Bank of expect And at me ranges comments can't you indicate the for potentially guided the a on sounded had XXXX. like a reduce still it on

Dan Houston

I have Tom, appreciate question. Yes, Deanna follow-up here. the I'll

and you -- the Just this. been to long-term to record our the And remind CCB. with a has relationship for relationship fund We've asset desire it healthy the bank many largest time, relationship. want have that of Principal long known mutual management XXXX. on It's be very had since in with have business And on a you very our the it's investors, retail a expand second world. and followed just I I

interest we X. they little You them X, is that in buying unique, a in a is heard what Tom, makes retirement What comments well-established and a minority pillars already have are my prepared company. bit X

conversation common private retirement with X the them provincial for And enterprise national pools the probably Pillar funds. and of the lastly, is as well the funds money So investors which to then annuity, manage retirement most past. as around it savings been allows has in

Deanna for a and finish have transaction. the around up of excited, Principal. very details this sort terrific So with win some We're I'll is additional just

Deanna Strable

Tom, follow-up Yes, factored as capital into deployment XXXX our just a was plans. this there,

a to showed additional If of chart year, outlook you share the was and year there there there M&A to for that kind was the in back buyback. of and/or remember placeholder there a end of waterfall call, beginning the

year So on in that would impact regarding to and thus have about been have in return not talked any the what shareholders we've included that does XXXX.

forward. give it's and capital, transaction of We we're said, financial that very details, the obviously prospects once more Dan about opportunity earnings excited disclosed. as going But implications will the

Dan Houston

helps, that Hope Tom.

Tom Gallagher

does, That Deanna.

Deanna, can decline follow-up just I side. the into seasonally, that the is So comment PGI high would is expect XQ? you know expenses my at you in sequential on QX on

get Just of a million to I given was dollar thinking want reduction seem to on what's million you any sense if a you give kind reasonable if happened But historically. can provide color that? $XX could maybe range. $XX

Deanna Strable

Yes.

high at think if to I'll level, but see a has to Pat else add ballpark, the on I right you're that. anything in

Pat Halter

of quarter terms And quarter in Yes, Tom, to the expense structure every is second be payroll compensation the an sort we had what of probably quarter. $XX this first have does I relative what expect million increase you're first more year, around to is, PGI. that in true-up that sort see a the in to it's of terms And expense should and you and going think of for that expense not of in a long-term expenses referring taxes. to

Operator

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

Ryan Krueger

affect for rate and you your environment your is rising flow Could could how you the or products PGI, forward? outlook demand interest -- discuss going within could

Dan Houston

do you Pat,

Pat Halter

Yes, Ryan.

the think actual some of absolute starting are income-producing I very we fixed in that's about have create the income. interest interesting to sort suite investment rates of of returns, very one rise capabilities. our strong And great, in things I think investment some again, capabilities,

like high producing towards to some returns market is again, absolute interesting that sort absolute terms more the around debt, things emerging of So preferreds, yield in debt we're return. conversation starting of see, pivot

interest of on AUM. from income fixed somewhat of But return of think, So terms Clearly portfolio very the that's in existing of has in of block we eyeballs headwind some within client seeing because block I existing terms one it. rise sort of a on have rates we're of created again perspective, a of terms mark-to-market fixed total our in allocations. a interesting, aspect income, do an in sort

Ryan Krueger

do Got the in true-up what it. Deanna, impact you And reinsurance second be then, after preliminary the would the transaction have closes? quarter estimate on

Deanna Strable

And regarding outlook would those a those as of as in as be earnings from but impact. will we'll alignment estimate Yes, that the counterparty. to have a economics you still Ryan, sure the quarter, impact once transparent say earnings million in correct, the blocks, about we regarding that lost don't have an first the that reminder, in including costs the remember, the and make quarter quarter will after-tax to that the a transaction of year. was regarding you're I talked if the what there the we stranded total true-up will and as those those it's just the transactions I impact in pieces be closes transfer about in $XXX revenue PGI. call first of close. you true-up, But well And

Operator

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

Erik Bass

the Maybe one, sort follow on just flows. quarter question could some on institutional in any PGI of to changes you taking to sell quarter, first up was retail the provide to or markets the net color seeing the to for trends institutional. demand I are and second longer with more then you Ryan's pipeline? And the dynamics in between hoping on fund? start, is off it and continuing in anything And

Dan Houston

Pat, please?

Pat Halter

and We're to board, strong Yes, cash flow of generation the continuing Ryan, strong net again. of, Eric. strong think, Thanks very for the desires see estate see the the some in discussed we institutional I continue the income-orientated that those second alpha to strong to alpha retail, a along and that quarter, actually a think, see some capabilities. that in highlighted in very both and capabilities X alpha with earlier, the continues, it's we there. I estate particularly real some across We I demand, areas flow of in and storyline real high in little continuing the along then equity terms had, demand generating quarter, We're toward equity earlier, first in with investments in bit strategies. continuation equity the And question.

So constructive first the the in what of the second seeing quarter quarter. quite of from I'm we're terms on yet continuation

Erik Bass

X in points to in a the Great. I of basis to change rates think And earnings. question. XXX then interest is slide now deck, noticed just sensitivity I X% of your X%

I than think it X%. historically been had less

curious So why has especially and you're fixed just increased which of since rate-sensitive would I was have pieces more your this business. exiting been thought annuities,

Dan Houston

Deanna?

Deanna Strable

Yes.

we did So did prospects update reflect there. of that the at the kind and outlook call kind of go-forward

of that we understanding think better the within AUM fact that a some income. have fee a there, of and PGI is the portion that I we've of on just impact reflected given fixed the levels RIS in

And It's a but short-term our given I still long-term of on on so think just positive probably have some the modest, again, to relative AUM. basis impact pressures it's most can the

Dan Houston

and That that looked a like. at we was experiences under the looked prior as category what of

refinement, part our it's think Erik. I So

Erik Bass

biggest And through just the benefits where by would line? come it. Got business

Deanna Strable

see number in places. some it Yes. But again, net income, emerge. from. time Obviously, Ultimately, see you're you'll going to investment take a can to benefits of it

So insurance in would that in primarily be obviously, the businesses. spread

our some have Claim all pension which spread You'll capital costs, backing on insurance as our benefit businesses businesses. across well. ultimately and impact gets actually our reserves of would

the be more annuity the primarily benefits in of and again, businesses. would so insurance And

Operator

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

Tracy Benguigui

life non-COVID-XX group saw Benefits. in favorable I'm color shed your wondering of that if you claims you view could Specialty some on

Dan Houston

can handle Yes. that. Absolutely. Amy,

Amy Friedrich

Yes.

that mind be our one to underwritten that block cases. going are is in to -- group cases. around things keep be life The those small block of of about our designs So for plan small the of primarily designed group life to is going Tracy,

they're ability some going the that the the frequently have writing kind So on case when up folks more a who more of small that to have on other experience are of large the seeing -- marketplace. with we're in line rate than at case, looking to we're them

in we we block of ability size of together. lined smaller get So competitors that of than the though kind seeing average is claim closely to designs are from in and our up probably that What the writing our is space. business, have plan that that pretty to we're going just claims peer some rate be

what group have again, seeing block normal non-COVID on could we're consider to the But industry. Principal's probably block. group of the some of So rest it life life characteristics behave positive I that is going differently sort volatility than would that to

Dan Houston

Do you follow-up, a Tracy? have

Tracy Benguigui

helpful. sticking that’s with Yes, maybe No, Yes. Specialty very Benefits.

also could in your if anyway. should – increase into read if that loss individual you on If the disability touch should I ratio we

A –Amy Friedrich

X can in Yes, at incidence Tracy. Thanks, I kind as as termination. the disability as way. happened would new that I well claims, read combination look not within things some X the into a individual those would the around. that it’s of any or claims of move things Ultimately, of

as the those. on the we’re putting on would I’m well non-COVID new termination patterns seeing So business on rates on seeing that looks COVID what out I consider regular appropriate as anything I’m pattern. and for or our not of block of claims

Operator

next the Jefferies. with comes question from line of Kamath Our Suneet

Suneet Kamath

on curious RIS-Spread. Just

record normalized much in better result came you a on your believe, Deanna, mentioned I I in the guidance. comments, your think was on -- a results basis, it than even

just drove give that? could mentioned us think but specificity could be unpack any you couple a And it, So you if I helpful. of you that on things, what would

Deanna Strable

Yes, and the keep annuities. that to wants as some results mind, quarter fixed if retail add Do include Suneet, Chris in current I'll comments well. then in see make do

that be closes. So adjusted will the transaction out

and was the normalize out the for the stronger We part some But volatility again, the really on margin. of those I year. tend year post-transaction growth the the also Those and in But our gains. year full again, ranges still be point start to and positive of and outlook to first both then you rest ranges revenue saw strong would probably really back a year. for to first for quarter

quarter-to-quarter. think, will some, volatility some trend, I we'll And continue, some that of see

Dan Houston

add? to anything Chris,

Chris Littlefield

No, think covered she it I well.

Dan Houston

Excellent.

Suneet Kamath

looked see like was And but we surprised on guided business in there in Mexico. I little my produce reduction some NII. follow-up is to a fees, guys the volatility a guess on Okay. it loss. that were to then -- And is Obviously, you

relatedly, guys if to So then inorganic profitability. that I you And that where wondering guess, growth? think about an can return business is think area you would

Dan Houston

Yes.

me it tag as let this will to throw So ask and well a Deanna take team bit. I'll little

pool The the business, first spite occurred in because path and XX% a think the up the some contributions about see say large of in that start that up part from changes forward we've made. earlier for going XXXX. a reductions time. scaling fee have thing year, in We we I'd been regulatory that legislative do this -- X.X% is for regulatory are talking is the this to until significant to But There of capital been Mexico. in is

we model We know it know the needs a expenses. the to that as revenue got to relates we've So what relative to shortfall operating be.

As a we're said in get that her out prepared it take a in to Deanna and proper expense position in comments, alignment.

So it throw I'll that, to to the numbers talk a to specifically. good path. And Deanna with

Deanna Strable

Yes.

not in $X Just aware X the of, the to been but you comment of may That have would there magnitude be did quarter. million. hit that encaje $X Mexico million from in a have

been slightly quarter. And positive the so that earnings in would have

was out country, I sure you the significant the that explicitly don't variance impact by I Mexico. So but just wanted understood in think split that to make we

Suneet Kamath

interested is that there, be growth inorganic you'd is in? table? on the Or still something the then And

Dan Houston

We're are all Suneet? say, some perspective. Right manage distribution the Does are now, Mexico don't that order we do things focusing the see a organic large long-term do to options, in the could but at in forward that view from involve to would path market. help, think there expenses, we of Mexico we our in change on our acquisition, way. let's things growth and our There can we we're closely an a very looking

Suneet Kamath

that's Yes, clear, Dan. pretty

Operator

Our with Morgan. of line next JP from comes Jimmy the question Bhullar

Jimmy Bhullar

look performance. than had PGI term. investment weaker a First, And question on longer I numbers, just X if they year X-year we at seem or X-year,

asset So wondering or just Or the year this there? affect market the causing that? is on your on big some does next if how going what's views over you you're it could flows your what's comment X. classes on like of style out or And of driven,

Dan Houston

don't the been those your the find for most recent we rationale quarter. is why only the soft. we his and and very Pat has you're old But lot performance back-to-back -- ourselves Jimmy, today. I in good I'm solid a know, have team many your of as quarters in reminded PGI the appreciate of years I X-year put adage a know as position question. interrogating

So Please? Pat,

Pat Halter

Yes, for the question. Jimmy, thanks

the I performance of marketplace to quarters been think the last grow in to marketplace on a sort our in couple style of relative marketplace And providing. has has the really well over the quality. to how fairly of our last significant in served just versus things few outperformed to has there side and behaved investors equity investee quality that what And relative approach growth shift definitely and quarters. of have one highlight we has the value the very to the is is biased and a not

where we big of That's winners. our which some I the the that in sort have space, growth. and and a in very quality commodities, been terms sectors of some And of the not spend focus have think, of driving, of returns been lot much value energy

there So some very to our us our producing their X-year X-year retention. responses, U.S. think, look our see see they tilt strong been, activity has large -- being cap in caused mid Cap cap numbers, are. and We're in capabilities of to be and terms continuing small strong numbers earlier Blue really factor and to of in of Chip. X- that's continuing in to to terms in X- actually I with capital sales a terms we to and mentioned at small cap of capabilities I and decision-making. real investors attract alpha in numbers the And That as continue that said, earlier continue and has X-year as my in

obviously So that to as here, have, alpha still very think, navigating performance. focused and we'll on endure ourselves generation short-term be have of platform continue confidence will a But we go very strong we sort investment long-term we forward. that, I

Jimmy Bhullar

in then and of you the income the And Okay. custody assets, think on trust the lower I block when retirement on rates. initially interest dropped because your business, took

bit, do increase think that we've seen -- but how recently? a I in business do changed you with rates product now think you've little about you that the

Dan Houston

clear your speak to ask along forward and fully to the the to with a path with think with lot nice and Chris have I'll of question. they've there's business, moved start fact I specific -- trust and retirement Yes, a it's I over the momentum, that

Chris Littlefield

Yes, yes. Thanks, Jimmy.

you're our products. referencing think I deposit what program is Principal

big the bank, quarter, quarter, up to that great a program, to bit to we moved with that a deal we're about have principal at opportunities appetite revenue of But we time grow So how a of assets more the returns our bit in and a the big At But to wouldn't overall, revenue potentially downsides a and want share over net clawed we now the of $X.X to over sweep that. continue deposits to of performance, on give and swings interest sitting upsides a it was increase and and the increase first that from little a seen product. that that value before as of and risk we've billion margin see that as we product. there. behaves back net margin manage or we've the business -- expect end investment result or business exposure we see it as

Dan Houston

some shortfall in talked that roughly to for make last that to up we us the is $XX quarter the and it. allowing trying million were recover structure of we Jimmy,

some originally And able so to investors. we're to again, what projected as like to navigate we here recover those revenues of

Operator

Alex And our with Scott last Sachs. from question Goldman is

Alex Scott

flexibility the Could how and should more and just we've we portion fixed that's think variable the expect on base here. expense play discuss out? versus that your in is how My one light just it what is you market that expense to of correction of experienced portion first to through

Dan Houston

thing The is through I -- have remind appreciate with history our I question, aligning long-standing just And investors revenue one gone revenues. want we've our a to of of with Alex. we the or expenses aligning cycles the current we've those Deanna, the It's please? volatility. the And prioritized a question we given and as matters. acquire years. always businesses great even of businesses, alignment a of these over lot divest the

Deanna Strable

with have ability to Yes. our expenses. be can on in Thanks, splits back team specific to the talked you the to about. markets, lag some a some But Dan focused adjust management in Alex. of We there on our our that. I of is the Whenever go move can expenses. really quick what kind But follow up you

in If of saw basis, I than X%. XX% you look have other with X%. and less our up quarter-over-quarter, the XX-month to at a and revenue our trailing go history to if other We in XX% a comp when only proven comp range, even net we that. is up back is And X% revenue, increase to X% up only

And seriously. at. so look We something we very take very,

to or will some the sure might You we're make adjusting to businesses should see margins through base other to focus that, relative that continue lag either natural basis on that doubt but produce. producing that these variable no we actions expense

Dan Houston

Do you have follow-up, Alex?

Alex Scott

follow-up. Maybe Yes. a quick unrelated

there's of quarter-over-quarter that quarter with IRT just if on Fargo anything board. we think so it Wells go PSAs sort about part the just like there I about? should that it's that or wondering outlook, a know we away and but fully forth of closing XQ, closed sure the is should of your think if business, don't I'm light into heading Just are any of in considerations having full

Dan Houston

to is Deanna is all here taken as had it would I'll doing about along But that synergies, it responsibility. synergies the Yes. I a second. Deanna, What over little original laid in and a back expenses What prepared in on I comments. all add? you projections revenue with that to that tell of much more anything out we've and been very those we've the throw peeling I to and my bit reaffirm track we can with expense we're talked regards

Deanna Strable

make has I'll then comments and a to see few Yes. Chris add. if anything

integration are costs thing the is first So now complete.

that ramp TSA from variance the though having now up that And and significant down a all through of we then So complete. perspective. a will ramp come obviously of start you're have seen a is that no even longer synergies,

And through the more as well RIS-Fee that rest so both you'll see of go expenses we year. you will and company, as see the that as some of flowing through total

Dan Houston

Chris, anything add? to

Chris Littlefield

think we'll and first I prime complete. the mean, costs integration captured you the see quarter, I TSA in mostly No, runoff are

would of see mean, see course and we from improve I So due existed expense if synergies the year, acquisition. I increased said the normal margin think over markets we the to

So see I that year. back the think half through you'll of the

Dan Houston

good. Chris. Very question. Thanks, Alex, the for Thanks,

Operator

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

Dan Houston

look these -- track we of the last time this morning, want didn't we to disclosures our where person And the we'll for sell we where certainly and and the you out you XX ULSG on are and fixed fixed opportunities improve near transaction. very make work in feel We fortunate onboarding I providing good transparent taking capital and the if frankly, regards been continue day. that with momentum I'd wonderful to and we're have return completion on is Humphrey we're probably invest with getting a very investors. side. lot to the out Lee to and look to very say he's coming retail It's consistently. and sure the look him to of you wonderful we remiss going thank continue to forward annuity equally be days. take we how a to for team. reached the shareholders, joined First, continue have the with going about in I on the right side buy that continue to information going know future. about again, you, forward much to to and add go-forward growth have we're we'll in very with resonates and that Thank to to our strategy to at in visiting at, excited to businesses. out We're that value. to our also in as executing to we're We're expenses talent don't We invest

Operator

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

You may now disconnect.

Principal Financial (PFG) 29 Apr 222022 Q1 Earnings call transcript