Welcome. Dan Houston. Chairman, President, and CEO

Transcription

1 Welcome Dan Houston Chairman, President, and CEO

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

3 Company Overview Pre-tax operating earnings Risk (19%) Specialty Benefits Individual Life 11% 8% 26% Spread (17%) RIS-Spread 17% Pre-tax operating earnings 1 $2,150.6 million 22% Fee (64%) RIS-Fee Global Investors International 16% 1 Trailing twelve months as of 12/31/2017; excludes the impact of the 2017 actuarial assumption review; excludes Corporate

4 Company Overview The right active strategies drive strong flows and AUM growth Total Company Net Cash Flow ($ in Billions) $35 $30 $25 $20 $15 $10 $5 $122 billion in positive AUM net cash flow (2010 to 2017) AUM growth ($ in Billions) $ % CAGR $319 $

5 Company Overview U.S. retirement market still dominates Global pension market growth rates strong overall Estimated 5-year CAGR (local currency, through 2016) #1 (U.S.) #2-20 >10% China 22.4% South Korea 13.4% Ireland 11.3% India 11.0% Chile 10.2% 9 to 10% Mexico 9.9% Italy 9.8% South Africa 9.6% Australia 9.5% Canada 9.1% 8 to 9% Netherlands 8.1% U.S. 8.0% Hong Kong 8.0% Source: Global pension assets study 2017, Willis Towers Watson, Jan. 2017

6 Company Overview Emerging markets (E7) to surpass developed markets (G7) in U.S. China 2 China U.S. 3 Japan India Combined GDP in US $trillions Germany Indonesia 5 UK Japan 6 France Brazil 7 India Germany 8 Italy Mexico 9 Brazil UK 10 Canada Russia E 2050E G7: US, UK, France, Germany, Japan, Canada and Italy E7: China, India, Indonesia, Brazil, Russia, Mexico and Turkey Source: The Long View How will the global economic order change by 2050? PwC, February 2017.

7 Retirement & Income Solutions (RIS Fee) Total Retirement Suite SM Still a differentiator Defined Benefit #1 DB provider (by # of clients) Defined Contribution #4 DC plan recordkeeper (by # of plans) Employee Stock Ownership Plan #1 ESOP plan recordkeeper (by # of plans) Nonqualified Plans #1 Deferred Comp provider (by # of plans) All rankings sourced from PLANSPONSOR magazine as follows Defined Benefit: DB Administration Survey 05/17; Defined Contribution and ESOP: Recordkeeping Survey 06/17; Nonqualified Deferred Compensation: PLANSPONSOR Recordkeeping Survey 06/17

8 Retirement & Income Solutions (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 90+ 7% Below age 60 17% Age 90+ 9% Below age 60 10% Age % Age % Age % Age % Age % Age % As of 9/30/2017

9 U.S. Insurance Solutions: Specialty Benefits Insurance Balanced portfolio and above industry premium growth 4Q17 TTM Total Premium & Fees Group Group Benefits Benefits 83% 81% Group Life 25% Group Disability 28% Individual Disability 17% Dental/ Vision 47% 3 Year In-Force Premium Growth ( CAGR) 7.7% 8.1% 2.6% 1.7% Stable loss ratios Attractive margins Source: LIMRA Group Benefits The Individual DI Industry

10 U.S. Insurance Solutions: Individual Life Focus on the business market Solutions for businesses, business owners and key executives Business owners financial challenges Exiting the business Business transition Retaining key employees Retirement planning Solutions for key employees Retirement income Survivor income Business protection Individual 48% ER/NQ 25% BOES 27% 2017 Sales BOES = Business Owner/Executive Solutions ER/NQ = Employer/Non-qualified

11 Global Investors In-demand, specialist capabilities Real Estate -Private $52.9 Macro Currency Group $2.3 Aligned Investors $24.5 Global Equities $93.7 Real Estate - REITS $15.1 Columbus Circle Investors $5.6 Portfolio Strategies 1 Edge Asset Management $28.9 Global Investors $430.9 B Origin Asset Management $4.9 Global Fixed Income $96.4 Spectrum Asset Management $24.2 Post Advisory Group $16.8 Morley Financial Services $17.2 Finisterre Capital LLP $2.7 Real Estate - CMBS $8.2 Unique hybrid multi-boutique approach Distinct investment processes Leverage distribution Global institutional Global funds Integrated business processes Drive scale Share best practices Asset Allocation/Multi-Strategy Fixed Income Equity Alternatives AUM in billions, as of 12/31/ Portfolio Strategies allocates investment dollars across PGI boutiques and third-party managers.

12 Global Investors Top tier investment performance Morningstar rankings Percentage of funds in the top two quartiles 69% 76% 73% 71% 69% 86% 88% 83% 61% 42% of rated funds have 4 or 5 star rating 4 OR 5 STARS = 45 FUNDS 3 STARS 24 FUNDS 2 STARS 4 FUNDS 1 STAR 1 FUND 1-Year 3-Year 5-Year 12/31/ /30/ /31/2017 Represents the percentage of actively managed mutual funds, exchange traded funds (ETFs), insurance separate accounts, and collective investment trusts (CITs) in the top two Morningstar quartiles. Excludes Money Market, Stable Value, Liability Driven Investment (Short, Intermediate and Extended Duration), Hedge Fund Separate Account, & US Property Separate Account.

13 International Our locations We operate in emerging markets with a fast growing middle class China (2005) Asset Management, Mutual Funds AUM of $124.4B Financial CCB- a 25% owned joint venture with China Construction Bank Group Hong Kong (1996) Asset Management, Mutual Funds, Pensions Mexico (1993) AUM of $9.3B Wholly owned Annuities, Mutual Funds, Pensions, Asset Management AUM of $9.6B Wholly owned Chile (1995) Annuities, Mutual Funds, Asset Management, Mandatory Pensions, Voluntary Pensions AUM of $48.5B Wholly owned Cuprum a 98% majority owned company AUM of $41.2B Brazil (1999) Annuities, Pensions, Mutual Funds, Asset Management Brasilprev a 25% owned joint venture with Banco do Brasil AUM of $72.0B Claritas 100% owned mutual fund company AUM of $1.7B India (2000) Asset Management, Mutual Funds, Advisory Services AUM of $1.0B 79% majority owned company with Punjab National Bank Malaysia (2003) Conventional & Islamic Asset Management, Mutual Funds, Pensions AUM of $14.8B CIMB- 40% owned joint venture with CIMB Group; 50% owned Islamic company with CIMB Thailand (2010) Asset Management, Mutual Funds AUM of $3.2B Wholly owned subsidiary of Malaysian JV Indonesia (2007) Asset Management, Mutual Funds AUM of $0.6B Wholly owned subsidiary of Malaysian JV Singapore (2006) Asset Management AUM of $12.8M Wholly owned subsidiary of Malaysian JV 13 (Year) = entered country PI Sourced AUM as of 12/31/2017

14 International Notable achievements China Chile Brasilprev SE Asia Signed Strategic Cooperation Agreement with CCB for potential pension partnership in China Cuprum was recognized as the #1 AFP service provider 1 and as a top 100 most reputable company 2 Brasilprev captured 51% of industry net cash flows 3 and is #1 in total market share 4 Announced intent to increase our ownership from 40% to 60% in our asset management joint ventures in SE Asia with CIMB. 1 Ranking from Praxis consulting firm released in November 2016 received for 5 th consecutive recognition 2 Chile 100 Most Reputable Companies ranking by Merco 2016 ranking 3 Percent of P/VGBL industry net cash flows for full year Ranking is of market leadership in reserves of P/VGBL; Source: Fenaprevi, December 2016

15 Company Overview Increasing our global footprint through M&A Opportunity Year Announced Rationale INTERNOS 2017 Expand our real estate investment capabilities in Europe 2017 Strengthen position in Mexico Afore market by becoming the 5 th largest provider AXA Hong Kong Pension year exclusive distribution with 4,440 agents Gateway into China 2012 Complete offering in Chile with marquee pension and savings franchise 2012 Entry into Brazil mutual fund and asset management market 2011 Enhance global equity investment capabilities 2011 Establish leadership in emerging markets fixed income investing AFORE 2011 Solidify position as a leader in Mexican Afore market BrasilPrev year extension of successful JV with Banco do Brasil

16 Company Overview Capital deployment $ in millions $150 $50 55% of Net Income $287 $180 $100 77% of Net Income $375 $355 89% of Net Income $441 $40 $257 $94 65% of Net Income $465 $193 $180 68% of Net Income 1 $540 $200 $ Deployed $480 million Deployed $855 million Deployed $1.1 billion Deployed $856 million 2017 Deployed $913 million Common Stock Dividends Share Repurchases Strategic Acquisition Debt reduction Long term: expect to deploy percent of our net income with fluctuations in any given year 1 Excludes real estate transaction in 3Q17 and tax reform impacts in 4Q17

17 Thank you