Investor workshop. December 7, 2017

Transcription

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2 Investor workshop December 7, 2017

3 Welcome John Egan Vice President, Investor Relations

4 Forward looking statements Certain statements made by the company which are not historical facts may be considered forward-looking statements, including, without limitation, statements as to operating earnings, net income available to common stockholders, net cash flows, realized and unrealized gains and losses, capital and liquidity positions, sales and earnings trends, and management s beliefs, expectations, goals and opinions. The company does not undertake to update these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company s annual report on Form 10-K for the year ended Dec. 31, 2016, and in the company s quarterly report on Form 10-Q for the quarter ended Sept. 30, 2017, filed by the company with the U.S. Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the company s ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; volatility or declines in the equity, bond or real estate markets; changes in interest rates or credit spreads or a sustained low interest rate environment; the company s investment portfolio is subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company s valuation of investments and the determination of the amount of allowances and impairments taken on such investments may include methodologies, estimations and assumptions that are subject to differing interpretations; any impairments of or valuation allowances against the company s deferred tax assets; the company s actual experience could differ significantly from its pricing and reserving assumptions; the pattern of amortizing the company s DAC and other actuarial balances on its universal life-type insurance contracts, participating life insurance policies and certain investment contracts may change; the company may not be able to protect its intellectual property and may be subject to infringement claims; the company s ability to pay stockholder dividends and meet its obligations may be constrained by the limitations on dividends or distributions Iowa insurance laws impose on Principal Life; changes in laws, regulations or accounting standards; results of litigation and regulatory investigations; from time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in amounts that may be material; applicable laws and the company s certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests; competition from companies that may have greater financial resources, broader arrays of products, higher ratings and stronger financial performance; a downgrade in the company s financial strength or credit ratings; changes in investor preferences; inability to attract and retain qualified employees and sales representatives and develop new distribution sources; international business risks; fluctuations in foreign currency exchange rates; the company may need to fund deficiencies in its Closed Block assets that support participating ordinary life insurance policies that had a dividend scale in force at the time of Principal Life s 1998 conversion into a stock life insurance company; the company s reinsurers could default on their obligations or increase their rates; risks arising from acquisitions of businesses; and a computer system failure or security breach could disrupt the company s business and damage its reputation. 2

5 GAAP metrics Principal Financial Group, Inc. U.S. GAAP Financial Measures (in millions, except as indicated) Trailing 12 months 12/31/ /31/ /31/ /31/ /31/ /30/2017 PFG Net income available to common stockholders $773.6 $879.7 $1,111.1 $1,209.3 $1,316.5 $1,786.6 Common stockholders' equity attributable to parent $9,141.4 $9,142.2 $9,642.0 $9,311.6 $10,227.3 $11,996.4 Preferred stock Preferred stock paid-in capital Noncontrolling interest Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3 Trailing 12 months PFG 09/30/2017 Income (loss) before income taxes $2,318.7 Net realized capital (gains) losses (520.7) Net realized capital (gains) losses pre-tax adjustments (45.5) Pre-tax operating (earnings) losses attributable to noncontrolling interest (34.0) Income taxes related to equity method investments 80.1 Early extinguishment of debt 86.4 Pre-tax operating earnings (losses)* $1, * This is a non-gaap financial measure and is reconciled to GAAP on this page

6 GAAP metrics Principal Financial Group, Inc. U.S. GAAP Financial Measures (in millions, except as indicated) As reported Trailing 12 months (9/30/2017) 3Q17 actuarial assumption review Excluding 3Q17 actuarial assumption review* Segment pre-tax operating earnings (losses) RIS-Fee $524.2 $41.0 $565.2 Principal Global Investors Principal International Total Fee 1, ,374.0 RIS-Spread (19.2) Specialty Benefits (14.2) Individual Life Total Risk Pre-tax operating earnings (losses) excluding Corporate 2, ,153.7 Corporate (202.3) - (202.3) Pre-tax operating earnings (losses)* $1,885.0 $66.4 $1, * This is a non-gaap financial measure and is reconciled to GAAP on this page

7 Use of non-gaap financial measures A non-gaap financial measure is a numerical measure of performance, financial position, or cash flows that includes adjustments from a comparable financial measure presented in accordance with U.S. GAAP. The company uses a number of non-gaap financial measures that management believes are useful to investors because they illustrate the performance of the company s normal, ongoing operations, which is important in understanding and evaluating the company s financial condition and results of operations. While such measures are also consistent with measures utilized by investors to evaluate performance, they are not, however, a substitute for U.S. GAAP financial measures. Therefore, at the end of this presentation, the company has provided reconciliations of the non-gaap financial measures to the most directly comparable U.S. GAAP financial measure. The company adjusts U.S. GAAP financial measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-gaap financial measures for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts. The company also uses a variety of other operational measures that do not have U.S. GAAP counterparts, and therefore do not fit the definition of non- GAAP financial measures. Account value is an example of an operational measure that is not considered a non-gaap financial measure. 5

8 Agenda Time Topic Presenter(s) 11:30 am Welcome John Egan & Deanna Strable 11:45 am Spread businesses Jerry Patterson 12:30 pm Risk businesses Amy Friedrich 1:15 pm Capital management Deanna Strable 1:45 pm Panel Q&A All presenters 2:15 pm Closing 6

9 Welcome Deanna Strable Chief Financial Officer

10 Our businesses Principal Financial Group Retirement and Income Solutions (RIS) Principal Global Investors Principal International U.S. Insurance Solutions (USIS) Corporate Specialty Benefits RIS-Fee RIS-Spread Individual Life (SBD) 8

11 Pre-tax operating earnings Risk (20%) Specialty Benefits Individual Life 12% 8% 26% Spread (17%) RIS-Spread 17% Pre-tax operating earnings 1 $2,153.7 million 22% Fee (63%) RIS-Fee Principal Global Investors Principal International 15% 9 1 Trailing twelve months as of 9/30/2017; excludes the impact of the 2017 actuarial assumption review; excludes Corporate

12 Strategic importance of Spread and Risk business Customer Compelling customer needs Significant small to medium sized businesses (SMB) needs Positive demographics and trends Principal Financial diversification Common distribution relationships to serve multiple needs of our customers Relative to traditional asset management competitors - Broader array of customer solutions - Greater diversification of distribution opportunities Long-term shareholder value 10

13 Spread businesses Safety, security, and sustainable income Jerry Patterson Senior Vice President, Retirement and Income Solutions

14 Why we do what we do Save enough for retirement Have enough in retirement We help people Protect enough 12

15 Just a short Thank You for the regular and both appreciated and needed checks for me in my retirement years. After 65+ active years in the ministry, these days alone make me yearn for action. My wife passed away last year and my dog tries to be a good friend. No problems. God has been good. Your regular help is a big boost. May God bless you.. Dan

16 RIS businesses Retirement and Income Solutions (RIS) Principal Global Investors Principal International U.S. Insurance Solutions (USIS) Corporate RIS-Fee RIS-Spread More than 750,000 people Full Service Accumulation Full Service Payout (Pension Risk Transfer) Variable Annuities Fixed Annuities Investment Only Bank Services 14

17 RIS-Spread The diversified customers we serve Pension Risk Transfer customers 266,000 lives diversified by age Individual Annuity customers 191,000 lives diversified by age Age % Age 90+ 7% Below age 60 17% Age % Age 90+ 9% Below age 60 10% Age % Age % Age % Age % 15 As of 9/30/2017

18 RIS-Spread Market opportunities 80M boomers with 10,000 turning 65 every day 1 Shifting profile of retirees signals the growing need for stable returns and guaranteed income: Fewer defined benefit plans Social security adequacy Mortgage debt Student loan debt Longevity needs Health care costs Millennial mindset 16 1 LIMRA Secure Retirement Institute

19 RIS-Spread Strong business fundamentals Industry rankings 4Q Q 2017 CAGR Pension Risk Transfer 1 #3 in premium written #2 in contract count Individual income annuity 2 #3 in premium written Average account value $32.8B $38.5B 3% Net revenue 3 $468M $550M 3% Pre-tax operating earnings 3 $281M $366M 5% Pre-tax return on net revenue % 66.6% 1 LIMRA Secure Retirement Institute, as of 9/30/2017 YTD 2 LIMRA Secure Retirement Institute, as of 6/30/2017 YTD 17 3 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews

20 RIS-Spread How we compete and differentiate Broad portfolio of institutional and retail solutions Focused distribution footprint Pricing discipline Shared and scalable infrastructure Two key areas of differentiation: Meeting the Pension Risk Transfer (PRT) needs of SMB Broad set of guaranteed return and income capabilities targeting SMB and retirees 18

21 Pension Risk Transfer The Pension Risk Transfer market More than 75 years of experience Deep expertise in defined benefit pension plans and Risk Transfer Ongoing demand and needs in the SMB market We see the growth trend continuing - General trend across employee benefits - Globalization - Pension Benefit Guaranty Corporation (PBGC) premiums - Rate capitulation Increasing PRT industry sales 1 $4B $8B $14B $14B $17B Est 19 1 LIMRA Secure Retirement Institute

22 Pension Risk Transfer Serving SMBs enhances diversification Principal s PRT plans by industry 1 Over 90% of plans have under 100 lives PRT new sales market share by premium and contracts 2 Tax-exempt 7% Finance 8% Labor 13% 5,300 plans Services 33% 40% 30% 20% 10% #3 #2 Trade 13% Manufacturing 26% 0% Principal Top competitors Premium Contracts 1 As of 9/30/ through 9/30/2017 sales; LIMRA Secure Retirement Institute

23 Pension Risk Transfer Key risks and mitigation strategies Interest rates Longevity Credit Pricing uses current rate Closely matched assets & liabilities Utilize derivatives to hedge interest rate risk Mortality reflects current experience Apply mortality improvement Strong corporate governance Proven investment philosophy 21

24 A guaranteed income leader A one-stop-shop focused on meeting the guaranteed income needs of SMBs #1 #3 #3 Defined benefit plan 1 Pension Risk Transfer 2 Individual immediate and deferred income annuities Plan Sponsor Defined Benefit Administration Survey based on number of clients 2 LIMRA Secure Retirement Institute based on premiums as of 9/30/ LIMRA Secure Retirement Institute based on premiums as of 6/30/2017

25 Key takeaways Demographic tailwinds will continue; guaranteed income solutions will play an increasingly vital role in the U.S. retirement system Our broad portfolio of products and solutions provide us with flexibility to manage through the shifting macro environment Moderating interest rate environment would increase market opportunity We will continue to leverage our experience and expertise and will remain focused on the SMB market 23

26 Risk businesses Provide protection and peace of mind for individuals and SMBs Amy Friedrich President, U.S. Insurance Solutions

27 Why we do what we do Save enough for retirement Have enough in retirement We help people Protect enough 25

28 USIS businesses Retirement and Income Solutions (RIS) Principal Global Investors Principal International U.S. Insurance Solutions (USIS) Corporate Specialty Benefits (SBD) Individual Life Group Benefits Individual Life Retail Individual Disability Business Owner / Executive Solutions Non-Qualified 26

29 U.S. Insurance Solutions Helping customers Individuals Business owners and individuals Businesses Employers and employees 92K employers 4M people $3.1B premium in-force 27 As of 9/30/2017

30 U.S. Insurance Solutions Proven results 4Q Q 2017 CAGR Premium and fees 1 $2,334M $3,028M 6% Pre-tax operating earnings 1 $294M $413M 7% Pre-tax return on premium and fees % 13.7% 28 1 On a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews and 1Q 2012 Individual Life amortization change

31 U.S. Insurance Solutions SMB market opportunities There are 6 million SMBs representing 99% of all employers. 1 Economic impact 68 million employees, representing 57% of working population 1 Steady growth rate Contributes nearly 50% of U.S. GDP 2 Provides 66% of all net new jobs 3 Market attractiveness Paternalistic in nature Less competition and under penetrated Resilient and loyal 1 Department of Labor, Bureau of Statistics 2 Small Business Administration GDP Update, Small Business Administration, Frequently Asked Questions, 2012

32 U.S. Insurance Solutions SMB focus Group Benefits in-force cases New sales premium and fees 100 to 1,000 employees 4% 1,000 or more employees 1% Individual 39% Individual 48% Employers we serve Disability insurance Life insurance Less than 100 employees 95% Business market 61% Business market 52% 30

33 U.S. Insurance Solutions Our SMB expertise We ve been in the Risk Business since inception and in the benefits business for 75 years We ve built our operations around SMBs We have insights into employment trends We have insights into how business owners think 31

34 Group Benefits Diversification in Group Benefits Number of employer customers 67,000 Employer paid plus voluntary 52% Employer paid only 31% Dental & vision 47% Disability insurance 28% Average case size 38 New sales premium In-force premium Case retention 1 88% 32 1 Average retention for the period 1/1/2015 9/30/ % of all new cases sold include first-time benefits Voluntary only 17% Life 25%

35 Group Benefits Group Benefits leadership position 3 year in-force premium growth 1 Group Benefits industry - contracts 2 7.0% 2016 Market size 1.7 million 2.9% Principal market share 8% Principal market rank #3 Principal Industry 33 1 LIMRA, CAGR 2 In-force contracts, LIMRA 2016

36 Group Benefits Group Benefits profitability Pre-tax operating earnings and pre-tax return on premium and fees (in millions) $ % 10.4% 12% $ % 9.0% 8.5% 9.0% 10% 8% $100 6% 4% $50 2% $ Q 2017 TTM Pre-tax operating earnings Pre-tax return on premium and fees 0% 34 Excludes the impact of actuarial assumption reviews

37 Group Benefits Diversification and Risk selection matters Types of Risks Mortality & Morbidity Underwriting Risk Pricing Risk Strategies to mitigate Risk Case size mix Product mix Geographic diversification Industry diversification Renewable contracts Rate guarantee breakdown 2% 26% 72% 1 year 2 year 3 year Rate guarantee period 35

38 Group Benefits Distribution matters Local sales and service SMB focus Multi-channel distribution 36

39 Group Benefits Technology matters Modern, scalable infrastructure Minimal (isolated) legacy systems Cloud based platforms Reengineered customer experiences Investing in high volume, straight-through processing One bill for customer Secure Online enrollment for SMB Participation 38% 45% Average life insurance purchased $83,100 $91,600 Traditional Online Traditional Online 37

40 Group Benefits Claim management matters 90% 85% 80% 75% 70% 65% 60% Stable Group Benefits loss ratio 1 Industry leading automated dental claim processing 78% 70% 55% Principal Industry dental claim auto-adjudication rate 38 1 Excludes the impact of actuarial assumptions reviews 2 LIMRA, 2016

41 I m a single mom and devastated I have been sick and can't work. I have been in a constant state of panic and worried that I d have no income to provide for my daughter. You re an angel..a disability claimant, April 2017

42 Capital management Proven results from disciplined capital management Deanna Strable Chief Financial Officer

43 Disciplined capital deployment Balanced approach to capital deployment Targeted long-term capital deployment strategy Capital deployed as a percent of net income Organic growth 30-35% M&A and share repurchases 25-30% Common stock dividends 40% Capital is deployed to: - Grow the company - Return to shareholders Every capital deployment opportunity is evaluated against a minimum return of our cost of capital 41

44 Disciplined capital deployment Historical capital deployment Historical capital deployment Capital deployed as a percent of net income 1 Targeted long-term capital deployment strategy Capital deployed as a percent of net income Organic growth 40% Common stock dividends 33% Organic growth 30-35% Common stock dividends 40% M&A 19% Share repurchases 20% M&A and share repurchases 25-30% 42 1 On a cumulative basis, Q 2017; Historical capital deployment is greater than net income due to paid-in capital

45 Disciplined capital deployment Common stock dividends Historical capital deployment Capital deployed as a percent of net income 1 Dividend yield of 3% Dividend payout ratio nearing 40% of net income 2 Since 2012, dividends per share increased 132% 3 43 Organic growth 40% M&A 19% Common stock dividends 33% Share repurchases 20% Net income (billions) 1 On a cumulative basis, Q 2017; Historical capital deployment is greater than net income due to paid-in capital 2 Excludes a one-time gain on a real estate sale in 3Q On a trailing twelve month basis, 12/31/2012-9/30/2017 $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 Dividends as % of net income 30% 33% 34% 36% 35% 38% 27% $ Q17 YTD Net income One time gain on real estate sale YTD net income 2

46 Disciplined capital deployment Share repurchase Historical capital deployment Capital deployed as a percent of net income 1 Anti-dilutive and opportunistic programs Execution dependent on valuation and other deployment opportunities Capital deployed to share repurchase Organic growth 40% Common stock dividends 33% $300 $250 $200 $150 $100 $275M $258M $257M $205M $137M $193M $70 $60 $50 $40 Share price $50 $30 M&A 19% Share repurchases 20% $ Q17 YTD Price of shares repurchased Avg share price $ On a cumulative basis, Q 2017; Historical capital deployment is greater than net income due to paid-in capital

47 Disciplined capital deployment Mergers & acquisitions Historical capital deployment Capital deployed as a percent of net income 1 Proven M&A strategy: Acquisitions have delivered approximately a 15% IRR on a local currency basis Organic growth 40% Common stock dividends 33% HSBC Afore M&A 19% Share repurchases 20% MPF 45 1 On a cumulative basis, Q 2017; Historical capital deployment is greater than net income due to paid-in capital

48 Disciplined capital deployment Financial leverage $16 $14 $12 $10 $8 $6 $4 $2 $0 28% 27% Capital structure (in billions) 24% 25% 23% 21% Q17 TTM Debt Common equity excluding AOCI Leverage ratio 35% 30% 25% 20% 15% Leverage ratio target: 20-25% Flexibility exists to increase the leverage ratio for the right opportunity Proven track record of managing the leverage ratio back to the targeted range over time 46

49 Disciplined capital deployment Organic capital deployment Historical capital deployment Capital deployed as a percent of net income 1 Organic capital drivers: Organic growth 40% M&A 19% Common stock dividends 33% Share repurchases 20% Business mix Sales growth Capital returned from existing business Investment portfolio strategy Regulatory changes 47 1 On a cumulative basis, Q 2017; Historical capital deployment is greater than net income due to paid-in capital

50 Disciplined capital deployment Optimizing organic growth Capital used Less capital intensive PGI PI RIS-Spread RIS-Fee SBD Life More capital intensive Group Benefits Pension Risk Transfer Key considerations Growth appetite Pricing discipline Product design Risk management Asset liability management Results since 2012: 15% 6% 14% approximate new business return pre-tax operating earnings CAGR for Spread and Risk combined 1 pre-tax operating earnings CAGR for Pension Risk Transfer and Group Benefits combined CAGR Q 2017 on a trailing twelve month basis; excludes the impacts of the actuarial assumption reviews and 1Q 2012 Individual Life amortization change

51 Disciplined capital deployment Proven results Balanced capital strategy Focused business strategy Disciplined approach Proven and market leading results 49

52 Disciplined capital deployment We ve delivered on our promises Operating earnings (CAGR since 2012) Return on equity 2 (average annual growth since 2012, in bps) Aggregate external capital deployments 3 (as a % of net income) 16% 14% 12% 10% 14% 12% bps 85 bps 80% 70% 60% 72% 8% 6% 4% 2% 0% As reported Excluding AAR As reported Excluding AAR 50% 40% 30% Q 2017 YTD 50 1 Excludes the impacts of the actuarial assumption reviews 2 Return on equity, excluding AOCI other than foreign currency translation adjustment 3 Includes share repurchases, common stock dividends, and M&A Current long-term guidance Prior long-term guidance

53 Disciplined capital deployment Proven diversification benefit 175% 150% 125% 100% 75% 50% 25% 0% -25% Total shareholder return vs. peers 1 149% 24% 23% 96% 6% 133% 15% 63% 21% 34% 51% 14% 31% 16% -10% PFG Insurance Peers Asset Management Peers Change in Share Count Change in Earnings Change in P/E Dividends Total Shareholder Return Principal s total shareholder return has outperformed peers Compared to peers, Principal s growth in earnings and dividends are driving higher total shareholder return Principal s earnings have grown 12% per year compared to 3% for insurance company peers and 5% for asset management peers 51 1 For the period 12/31/2012 9/30/2017; Source: SNL financial. Insurance Peers: PRU, MET, VOYA, UNM, LNC; Asset Management Peers: AMP, TROW, BEN, AMG, WDR, IVZ

54 Disciplined capital deployment Proven results Balanced capital strategy Focused business strategy Disciplined approach Proven and market leading results 12% operating earnings CAGR 85 bps average ROE expansion per year Q 2017 on a trailing twelve month basis; excludes the impacts of the 2012 and 2017 actuarial assumption reviews

55 Panel Q&A

56 Thank you

57 Appendix

58 Non-GAAP financial measure reconciliations (in millions, except as indicated) RIS-Spread Trailing 12 months 12/31/ /30/2017 Pension Risk Transfer Pre-tax operating earnings $47.5 $93.9 Fixed Annuities Pre-tax operating earnings Investment Only Pre-tax operating earnings Bank Services Pre-tax operating earnings Pre-tax operating earnings Actuarial assumption review 17.0 (19.2) Pre-tax operating earnings excluding actuarial assumption review $281.2 $366.2 Operating revenues $2,820.2 $5,699.1 Benefits, claims and settlement expenses 2, ,146.0 Net revenue Actuarial assumption review 2.5 (3.1) Net revenue excluding actuarial assumption review $467.9 $550.0 Pre-tax return on net revenue* 56.8% 69.7% Pre-tax return on net revenue excluding actuarial assumption review 60.1% 66.6% 57 * Pre-tax operating earnings divided by net revenue

59 Non-GAAP financial measure reconciliations (in millions, except as indicated) U.S. Insurance Solutions Trailing 12 months 12/31/ /30/2017 Pre-tax operating earnings $199.5 $380.7 Actuarial assumption review Individual Life amortization basis change (5.1) - Pre-tax operating earnings excluding actuarial assumption review and amortization basis change $294.1 $413.5 Premiums and other considerations $1,769.3 $2,290.2 Fees and other revenues Premium and fees 2, ,042.4 Actuarial assumption review (13.5) (14.2) Individual Life amortization basis change Premium and fees excluding actuarial assumption review and amortization basis change $2,333.5 $3,028.2 Pre-tax return on premium and fees* 8.7% 12.5% Pre-tax return on premium and fees excluding actuarial assumption review and amortization basis change 12.6% 13.7% 58 * Pre-tax operating earnings divided by premium and fees

60 Non-GAAP financial measure reconciliations (in millions, except as indicated) Trailing 12 months 12/31/ /31/ /31/ /31/ /31/ /30/2017 SBD Group Benefits Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9 Individual Disability Pre-tax operating earnings Pre-tax operating earnings $135.9 $161.8 $179.2 $220.4 $250.9 $264.8 Group Benefits Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0 Individual Disability Premium and fees Premium and fees $1,443.6 $1,492.7 $1,591.4 $1,732.6 $1,862.3 $1,

61 Non-GAAP financial measure reconciliations (in millions, except as indicated) Trailing 12 months 12/31/ /31/ /31/ /31/ /31/ /30/2017 Group Benefits Pre-tax operating earnings $92.2 $109.5 $117.4 $140.3 $175.4 $183.9 Actuarial assumption review (5.3) (12.2) (4.5) (14.0) Pre-tax operating earnings excluding actuarial assumption review $94.4 $111.1 $112.1 $128.1 $170.9 $169.9 Premium and fees $1,199.4 $1,231.7 $1,317.6 $1,410.8 $1,538.8 $1,637.0 Actuarial assumption review Premium and fees excluding actuarial assumption review $1,199.4 $1,231.7 $1,317.6 $1,416.6 $1,538.8 $1,637.0 Pre-tax return on premium and fees* 7.7% 8.9% 8.9% 9.9% 11.4% 11.2% Pre-tax return on premium and fees excluding actuarial assumption review 7.9% 9.0% 8.5% 9.0% 11.1% 10.4% 60 * Pre-tax operating earnings divided by premium and fees

62 Non-GAAP financial measure reconciliations (in millions, except as indicated) PFG Trailing 12 months 12/31/ /31/ /31/ /31/ /31/ /30/2017 Stockholders' equity $9,703.4 $9,777.0 $10,232.0 $9,377.4 $10,293.8 $12,067.3 Net unrealized capital (gains) losses (1,235.7) (700.6) (1,148.3) (715.9) (827.0) (1,387.8) Net unrecognized postretirement benefit obligation Noncontrolling interest (20.0) (92.8) (48.0) (65.8) (66.5) (70.9) Stockholders' equity x-aoci other than foreign currency translation adjustment 8, , , , , ,004.2 Foreign currency translation adjustment , , Stockholders' equity x-aoci $9,043.1 $9,501.0 $10,133.6 $10,194.1 $10,902.5 $11,949.4 Preferred stock (0.1) (0.1) (0.1) Preferred stock paid-in capital (541.9) (541.9) (541.9) Stockholders' equity x-aoci available to common stockholders $8,501.1 $8,959.0 $9,591.6 $10,194.1 $10,902.5 $11,