The Principal Financial Group 101

Principal Financial Group®

March 2015

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 the 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. Assets under management is an example of an operational measure that is not considered a non-GAAP financial measure.

2

Forward Looking Statements

3

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, 2014 filed by the company with the Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the company’s ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; continued volatility or further declines in the equity, bond or real estate markets; changes in interest rates or credit spreads; the company’s investment portfolio is subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company’s valuation of securities may include methodologies, estimations and assumptions that are subject to differing interpretations; the determination of the amount of allowances and impairments taken on the company’s investments requires estimations and assumptions that are subject to differing interpretations; gross unrealized losses may be realized or result in future impairments; competition from companies that may have greater financial resources, broader arrays of products, higher ratings and stronger financial performance; a downgrade in the company’s financial strength or credit ratings; inability to attract and retain sales representatives and develop new distribution sources; international business risks; the company’s actual experience could differ significantly from its pricing and reserving assumptions; the company’s ability to pay stockholder dividends and meet its obligations may be constrained by the limitations on dividends or distributions Iowa insurance laws impose on Principal Life; the pattern of amortizing the company’s 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 need to fund deficiencies in its “Closed Block” assets that support participating ordinary life insurance policies that had a dividend scale in force at the time of Principal Life’s 1998 conversion into a stock life insurance company; the company’s reinsurers could default on their obligations or increase their rates; risks arising from acquisitions of businesses; changes in laws, regulations or accounting standards; a computer system failure or security breach could disrupt the company’s business, and damage its reputation; results of litigation and regulatory investigations; from time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in amounts that may be material; fluctuations in foreign currency exchange rates; and applicable laws and the company’s certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests.

A Leading Financial Services Company Fortune 500 company; 136 year history; 19.7 million customers

Assets Under Management by Source $519.3 billion

as of Dec. 31, 2014

Retirement & Investor Services

Accumulation 47%

Corporate 1%

U.S. Insurance Solutions

4%

Principal International

23%

Principal Global

Investors 22%

Operating Earnings $1,443.4 million*

Dec. 31, 2014


Accumulation 49%


16% Principal International

19% Principal Global

Investors 8%

*Trailing Twelve Months. After-tax. Results exclude Corporate.

4

COMPANY OVERVIEW

RIS Guaranteed

8%

RIS Guaranteed

3%

Organizational Structure Principal Financial Group

Zimpleman CEO – 44/44 yrs* Lillis CFO – 33/33 yrs

Houston COO – 31/31 yrs


Everett - President

24/24 yrs

Principal Global Investors

McCaughan – President

41/13 yrs


Valdes – President

27/24 yrs


Strable – President

26/26 yrs

Corporate

Full Service Accumulation Principal Funds** Individual Annuities Bank & Trust** Full Service Payout Investment Only

Life Specialty Benefits

*Years of experience: Industry/The Principal as of year end 2015. **Structural changes announced Feb 2015 will align Principal Funds & Principal Trust with Principal Global Investors.

5

COMPANY OVERVIEW

PRINCIPAL FINANCIAL GROUP Headquarters Des Moines, Iowa

Mexico Pensions Annuities Mutual Funds Asset Management

Chile Pensions – Mandatory Pensions – Voluntary Annuities Mutual Funds Asset Management

Brazil Pensions Annuities Asset Management Mutual Funds

India Mutual Funds Advisory Service Asset Management

Malaysia Mutual Funds Asset Management Islamic Institutional Asset Management Pensions

Hong Kong Pensions, Mutual Funds Asset Management

China Mutual Funds Asset Management

Principal Financial Group Global Presence

Germany Asset Management

Ireland Mutual Funds

UK Asset Management Japan

Asset Management

Australia Asset Management

Singapore Asset Management

Thailand Mutual Funds Asset Management

Indonesia Mutual Funds, Asset Management

Netherlands Asset Management

UAE Asset Management

6

COMPANY OVERVIEW

Malta Asset Management

136 Years of Experience

1879 Life

Assoc

1911 Mutual Life Co

1936 Mortgage Banking/

Commercial Mortgage

1941 Group

Health & Pension

1968 Mutual Funds

1985 Principal Financial

Group

1998 Principal Bank;

Mutual Holding Co

2001 IPO;

Spectrum

1990 Principal

Intl

1970s Defined

Contribution

1999 Principal Global

Investors; BrasilPrev JV;

Principal Asset Mgmt Co (India)

2002 Benefit

Consultants Inc; Total

Retirement Suite

2006 Washington

Mutual Funds; WM Advisors

2008 CIMB-Principal

Islamic Asset Mgmt

2007 Morley

2011 HSBC Afore; Finisterre;

Origin

1995 Principal

Chile

1996 Principal

Hong Kong

1997 Principal Mexico

2003 Post

Advisory Group

2005 CCB

Principal; Columbus

Circle

JV – Joint Venture IPO – Initial Public Offering

2010 BrasilPrev

JV extension

2012 Claritas; Cuprum

2013 Liongate

7

COMPANY OVERVIEW

2014 AXA Hong

Kong Pension

Name Age* Title (Industry/PFG)*

Larry D. Zimpleman 64 Chairman & Chief Executive Officer 44/44 Daniel J. Houston 54 President & Chief Operating Officer 31/31 Nora M. Everett 56 President - Retirement & Investor Services 24/24 James P. McCaughan 62 President - Global Asset Management 41/13 Deanna D. Strable 47 President - U.S. Insurance Solutions 26/26 Luis E. Valdes 58 President - Principal International 27/24 Timothy M. Dunbar 58 Executive VP & Chief Investment Officer 34/29 Terrance J. Lillis 63 Executive VP & Chief Financial Officer 33/33 Gary P. Scholten 58 Executive VP & Chief Information Officer 35/35 Karen E. Shaff 61 Executive VP, General Counsel & Secretary 33/33 Rex Auyeung 63 Senior VP & President, Principal Financial Group – Asia 38/21 David Blake 49 Senior Executive Director & Head of PGI Fixed Income 26/15 Elizabeth Brady 55 Senior VP & Chief Marketing Officer 31/2 Ned A. Burmeister 56 Senior VP & COO – Principal International 36/36 Gregory J. Burrows 53 Senior VP - Retirement & Investor Services 29/29 Gregory B. Elming 55 Senior VP & Chief Risk Officer 33/33 Amy Friedrich 45 Senior VP – Specialty Benefits 18/15 Pat Halter 56 Senior Executive Director – Principal Real Estate Investors 31/31 Julia M. Lawler 55 Senior Executive Director - Multi Asset Allocation 33/31 Greg Linde 59 Senior VP – Individual Life 36/23 Barbara McKenzie 55 Senior Executive Director & COO – Boutique Operations 31/31 Dennis Menken 52 Senior VP & Chief Investment Officer – Principal Life 21/21 Timothy J. Minard 52 Senior Executive Director – U.S. Distribution 29/29 Jerry Patterson 49 Senior VP - Retirement & Investor Services 27/14 Beth Raymond 49 Senior VP & Chief Human Resources Officer 24/15 Angela R. Sanders 52 Senior VP & Controller 26/26 Ellen Shumway 52 Senior Executive Director – Strategy & Boutique Operations 25/10 Roberto Walker 50 Senior VP & President, Principal Financial Group – LatAm 26/19

*As of 12/2015 8

Experienced Management Team COMPANY OVERVIEW

Retirement and Investor Services •A leading provider of DC plans1

•#1 provider of DB plans2

•#1 provider of ESOP plans3

•#6 manager of Target Date Funds4

Industry Leadership

Sources: 1 PLANSPONSOR Recordkeeping Survey, June 2014, 2 PLANSPONSOR, July 2014; 3 PLANSPONSOR Recordkeeping Survey, June 2014; 4 In the United States. Strategic Insight Lifecycle fund data report 12/31/14; 5Pensions & Investments, “The Best Places to Work in Money Management among companies with our size category”, PFG recognition 12/08/2014. 6 Managers ranked by total worldwide real estate assets (net of leverage), as of June 30, 2014. “Largest Real Estate Managers”, PENSIONS & INVESTMENTS, October 27, 2014.; 7Managers ranked by U.S. institutional, tax-exempt assets managed internally, as of 12/31/13, “Largest Money Managers”, Pensions & Investments, Online Research Center. 8Commercial Property Executive Published March 2014 “2014 Greenest CRE Companies” list”. 9Quantum, 11/2014; 10Asociacion de Administradóras de Fondos Mutuos De Chile, 10/2014; 11Lipper. Percentage of market share as of 12/2014; 12Towers Watson. Based on AUM as of 09/2014; 13CONSAR & PROCESAR, October 2014; 14PLANSPONSOR NQDC Buyer’s Guide, July 2014; 15LIMRA 2013 survey: Non-medical based on fully insured employer contracts in force. 16 LIMRA 2014 survey: Individual Disability Insurance (IDI) rank based on in-force policies

Principal Global Investors •Best Place to Work in Money

Management 5 •Top 10 manager Real Estate 6 •13th largest manager High Yield7 •#3 Greenest CRE Company8

Principal International •#1 net deposits – Brazil (Brasilprev)9

•#1 APV – Chile10

•#2 asset management – Malaysia11

•Top ten MPF provider – Hong Kong12

•#5 AFORE – Mexico13

U.S. Insurance Solutions •#2 Non-qualified deferred

compensation14

•#4 Non-medical coverages15

•#5 IDI coverages16

9

COMPANY OVERVIEW

Financial Strength: Current Ratings

(as of February 2015)

• Moody's Investors Service 'A1', Good – fifth highest of 21 rating levels. Outlook: Stable Rating reviewed November 2013

• FitchRatings

'AA-‘, Very Strong - fourth highest of 19 rating levels. Outlook: Stable Rating reviewed June 2014

• Standard & Poor's ‘A+’, Strong - fifth highest of 24 rating levels. Outlook: Stable Rating reviewed March 2014

• A.M. Best

'A+', Superior - second highest of 16 rating levels. Outlook: Stable Rating reviewed January 2015

Ratings related to Principal Life Insurance Company and Principal National Life Insurance Company. 10

COMPANY OVERVIEW

Platform Continuum Across markets | Across life stages

INDIVIDUAL

EMPLOYER

INVESTMENT MANAGEMENT

Full Service Accumulation

Principal Funds Investment

Only

Bank

Annuities

Full Service Payout

11

RETIREMENT AND INVESTOR SERVICES

Customer-Centric Business Model

12

Full Service Accumulation RETIREMENT AND INVESTOR SERVICES

Principal Total Retirement SuiteSM STILL A DIFFERENTIATOR

All rankings sourced from PLANSPONSOR magazine as follows – Defined Benefit: DB Administration Survey 07/14; Defined Contribution and ESOP: Recordkeeping Survey 06/14; Nonqualified Deferred Compensation: PLANSPONSOR NQDC Buyer’s Guide, July 2014

Defined Benefit

#1 DB provider

(by # of clients)

Defined Contribution

#2 DC plan recordkeeper

(by # of plans)

Employee Stock Ownership Plan

#1 ESOP plan recordkeeper

(by # of plans)

Nonqualified Plans

#2 Deferred Comp provider

(by # of plans)

13


1.7 2.0 3.2 2.9 2.7

0.9 1.7

2.3 1.8 1.4 0.9

1.5

2.7 2.6

1.8 3.2

3.3

3.3

3.0

2.8

0

2

4

6

8

10

12

14

2010 2011 2012 2013 2014

$ Bi

llion

s

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Balanced Sales Approach

14

6.7

8.5

11.5

10.3

8.7


6.0 4.8 5.0 6.0 6.8 7.4

3.6 4.1 5.0

5.7 5.8 5.9 3.6 3.8

4.3

5.6 6.3 5.7 3.8 5.8

6.0

6.5 6.3 6.0

0

5

10

15

20

25

30

2009 2010 2011 2012 2013 2014

$ B

illio

ns

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

People making a deferral +27%* Avg deferral per member +6%* People receiving a match +38%*

15

17.0 18.5

20.3

24.3 25.2

The Power of Payroll Deduction

* 4Q10 compared to 4Q14.

25.0


Account Value by Manager

16

60.4% 58.4% 58.3% 56.6% 55.8% 56.6% 58.7%

12.7% 12.8% 11.1% 10.0% 10.3% 9.9% 10.6%

20.1% 22.3% 23.3% 26.5% 26.9% 26.4% 23.4%

6.9% 6.6% 7.3% 6.9% 7.1% 7.1% 7.3%

0%

20%

40%

60%

80%

100%

2009

2010

2011

2012

2013

2014

2014

Dep

osits

PGI managed Sub-advised Non-proprietary ER Securities


Our Disciplined Execution Delivers Positive Results

17

Profit Margin* Industry Avg vs. The Principal

Principal Industry Avg

* Profit 2000 Benchmark Study, Sterling Resources, Inc. (2013)


Revenue sourced from FSA platform

FSA FSA

Other PFG businesses

Other PFG businesses

2013 2018E

Multiple Businesses Leverage FSA Success

Principal Funds, PGI, Bank & Trust, Individual Annuities, Individual Life and Full Service Payout are all beneficiaries

$500 MILLION

$350 MILLION

$0

$2B

18

RETIREMENT AND INVESTOR SERVICES Full Service Accumulation

1.9%

4.5% 4.2% 3.1%

6.7%

18.1%

12.5%

8.5%

2011 2012 2013 2014

Industry net flows Principal Funds net flows

1.0% 0.7%

0.3%

-0.9%

3.5%

6.3%

1.7%

0.4%

2011 2012 2013 2014

401k Industry net flows Principal FSA net flows

Full Service Accumulation (FSA)

Net cash flows as % of beginning of year assets 2011-2014. Sources of industry data: 401(k) industry – Department of Labor & Cerulli Associates 2014 (for 2014, industry 401(k) is an estimate); Funds – Strategic Insight Mutual Fund Industry Review (long-term funds). Principal Funds net flows represent long-term funds only.

Net Cash Flow Consistently Outpaces Industry

Principal Funds

19


TOP SELLING FUNDS TTM 4Q14

Global Diversified Income $3.6B

MidCap Fund $2.3B

Preferred Securities $1.6B

SAM Combined Funds $1.5B

High Yield Fund $1.3B

TOTAL FOR TOP 5 $10.3B

ASSET ALLOCATION LEADERSHIP • #6 largest lifecycle fund manager* • Target date & target risk • Multi-manager solutions

• Portfolio construction strategies:

*Based on $39.5B in assets Strategic Insight 12/31/14 Lifecycle Report

Needs-Driven Investment Solutions Broad and unique asset allocation strategies

20

RETIREMENT AND INVESTOR SERVICES Principal Funds

Account Values – Then & Now

32%

43% 100%

25% Affiliated Distribution

Third PartyBroker/Dealers

DCIO/RIA

16%

44% 100%

40% Affiliated Distribution

Third PartyBroker/Dealers

DCIO/RIA

Multiple Distribution Channels SALES – Then & Now

2006 $3.8B

2014 $20.0B

2006 $14.7B

2014 $74.1B

21 DCIO = Defined Contribution Investment Only. RIA = Registered Investment Advisor


A Diversified Family of Mutual Funds

12% 4%

73%

47%

2%

3%

-11%

15%

31%

TTM 4Q14 12/31/2014

Equity

Fixed Income

Index

Asset Allocation

Other

Net Cash Flow

Assets Under Management

22

24%


Driving Industry Recognition and Advisor Engagement

16th largest advisor-sold fund family(1)

Best Global Real Estate Fund Over the 5-Year Period

23 (1) Strategic Insights Mutual Fund Management Companies Rankings and Analysis, December 2014

#5 for DC Investment Manager


READY TO RETIRE

Individual Investor Strategy

• Portfolio allocation • Participant education

RETIREMENT INCOME

SOLUTIONS

• Education and guidance • Portfolio construction

strategies • Income annuities

ENROLLMENT OPTIMIZATION

• Simplify process • Improve experience • Maximize participation and

influence behavior

24


Innovative Solutions:

Solving Income Needs

ACCUMULATION

OUR APPROACH: • Education • Planning assistance

(RetireSecure®) • Full array of options • Innovative solutions

MULTI-PRODUCT SOLUTION SET

• “Through Retirement” Lifecycle Funds • Mutual Funds that: ‒Generate income ‒Preserve capital ‒Protect against inflation ‒Address market volatility

• Annuities to provide: ‒Fixed returns ‒Guaranteed income ‒Protection against volatility

• Bank products • Full Service Payout ‒Defined Benefit plan terminations

RETIREMENT INCOME

25


INDIVIDUAL LIFE •Non-Qualified Plans 12.3% #2

•Total Life New Sales Premium 1.6% #19

SPECIALTY BENEFITS •Total Group In-Force Contracts 7.3% #4

- Life 8.9% #4 - Disability 7.0% #6 - Dental 6.0% #7

• Individual Disability In-force Premium 8.5% #5

• Individual Disability New Sales Premium 15.8% #2

Success Reflects Expertise Serving SMB Market 2013

Industry Rank

2013 Market Share

26 Nonqualified Plans ranking from PLANSPONSOR Buyers Guide Survey, July 2014. All other rankings are from LIMRA 2013.

U.S. INSURANCE SOLUTIONS

ER/NQ 28%

BOES 27%

Individual 45%

Individual Life Leadership:

FOCUS ON THE BUSINESS MARKET

Business owners’ financial challenges •Exiting the business •Business transition •Retaining key employees •Retirement planning Solutions for key employees •Retirement income •Survivor income •Business protection

2014 Sales

BOES = Business Owner/Executive Solutions ER/NQ = Employer/Non-qualified

SOLUTIONS FOR BUSINESS, BUSINESS OWNERS AND KEY EXECUTIVES

27


3.9%

10.4%

2.4% 2.0%

Group Benefits Individual DI

The Principal Industry

Dental/ Vision 47% Group

Life 27%

Balanced Portfolio plus Above Industry Premium Growth

2014 Total Premium & Fees

3 Year In-Force Premium Growth (2010 – 2013 CAGR)

Group Benefits

83% Individual Disability

17%

Group Disability 26%

28


•Stable loss ratios •Attractive margins •ROE of 14% +

Industry source: LIMRA 2010-2013

U.S. Distribution Overview

PRINCIPAL CONNECTION

• 70 counselors

with focus on education

CAREER

• 1,000 agents • Sell all products • Career places

80-85% of sales within The Principal family products

BANKS INSURANCE-ORIENTED

INVESTMENT-ORIENTED

• Wirehouses • Regional

Broker/Dealers • Planners

• Insurance Producers

• Banks • Broker/

Dealers • Marketers

THIRD PARTY PROPRIETARY

ALLIANCE MANAGEMENT GROUP (AMG) Select 3rd party distributors with dedicated support

STRENGTHENS RELATIONSHIPS AND FUELS SALES GROWTH

All supported by DEDICATED SERVICE TEAMS providing education, training, counseling and retention

11 WHOLESALE CHANNELS Group

Benefits Retirement Investment

Solutions Annuities NQDC Disability

Insurance Retail

Life AMG Worksite ESOP Wellness

29

DISTRIBUTION

National Presence with Local Employees

OUR VALUE TO ADVISORS:

● Solutions-based selling

● Point of sale support

● Ongoing service and education support

● Pipeline development

● Practice management

● Advisor education

121 Total Offices

NOTE: Approximate view as of March 2012. Check www.principal.com for actual locations. 30

DISTRIBUTION

Expanding Distribution Partnerships Have Generated Strong Sales Growth

3.1 3.8 3.7 7.6 6.6 7

2.8 5.7 6.5

10.5 14.5 14.4

1.2

1.5 1.4

2.5

3.3 2.4

0.9

1.5 1.4

1.7

2.0 2.0

2009 2010 2011 2012 2013 2014

Individual Annuities

Separately Managed Accounts

Mutual Funds

Full Service Accum

$8.0B Total: +26% CAGR:

$12.5B $13.0B $22.3B

31

$26.4B

DISTRIBUTION

$25.8B

Broad and Deep Distribution Proprietary provides foundation; 3rd party provides accelerated growth

Rankings and percentages as of 12/31/2014

Product Line New Sales 1st 2nd 3rd Top 3

represent

NQ Life 33%

Retail Life 59%

Individual Disability Plus Group 39%

Group Benefits Gallagher 14%

Fixed Annuities 52%

Variable Annuities KeyCorp Ins. Agency 94%

Mutual Funds 23%

FSA – New Sales Assets 35%

FSA – New Sales Case Counts

Edward D. Jones 33%

32

DISTRIBUTION

Principal Advisor Network








• Serve clients in 75 countries, including several major central banks and sovereign wealth funds

• Network of specialized investment boutiques managing assets for a broad range of investors around the world

• Manages: – 60% of Full Service Accumulation assets

– 76% of Principal Funds assets

– 100% of Principal Life general account assets • Office locations in major financial markets

worldwide • Long-standing commitment to corporate

stewardship

As of 12/31/14

Principal Global Investors Assets Under Management

$314B By Asset Class

33

Fixed Income $132B

Equity $111B

Real Estate $57B

Alternatives $14B

PRINCIPAL GLOBAL INVESTORS

At a Glance

Our Current Boutiques (AUM as of 12/31/14)

Principal Global Equities $80.6B

Principal Global Fixed Income

$78.6B

Private Real Estate $34.9B

CMBS $7.2B

Origin Asset Management

$2.8B

Edge Asset Management1

$20.3B

Fixed Income Equities

REITs $9.6B

Principal Enterprise Capital $5.6B

CIMB – Principal Islamic Asset Mgmt.

$0.656B2

Morley Financial Services $17.1B

Spectrum Asset Management

$17.7B

Macro Currency Group $9.0B

Post Advisory Group $9.5B

Multi-Asset Advisors $0.625B3

Real Estate Asset Allocation/

Alternatives

Finisterre Capital $2.8B

Columbus Circle Investors

$16.6B

Liongate Capital Management

$0.433B

34

1 Edge Asset Management advises on an additional $8.2B across asset classes for Retirement and Investor Services. 2 Total CIMB AUM is $1.1B with $0.5B sub-advised to Principal Global Equities 3 Responsible for allocation decision-making and implementation across a range of products and client portfolios, and for providing macro economic perspectives to guide allocations. Multi-Asset Advisors advise on an additional $29B managed by multiple PGI boutiques.


Asset Management Expertise Wins Mandates

$82.4

$98.2 $109.4 $114.0

2011 2012 2013 2014

Principal Global Investors Unaffiliated AUM

(in billions) • Best Global Real Estate

Fund over the 5-year period (1)

• Top 10 Manager of Real Estate(2)

• 13th Largest manager of High Yield(3)

• PFG ranked No.1 company among the Best Places to Work in Money Management(4)

Sources: (1) The Principal Real Estate Investors portfolio management team subadvises the Principal Global Real Estate Securities Fund-Class l, which received the award from Lipper, Inc. for the second year in a row, March 2014. (2) Managers ranked by total worldwide real estate assets (net of leverage), as of June 30, 2014, “Largest Real Estate Managers”, PENSIONS & INVESTMENTS, October 27, 2014. (3) Managers ranked by U.S. institutional, tax-exempt assets managed internally, as of 12/31/13 “Largest Money Managers”, Pensions & Investments, Online Research Center. (4) Pensions & Investments, “The Best Places to Work in Money Management among companies with our size category”, PFG recognition 12/08/2014.(5) Managers ranked by total assets under management. America’s Top 300 Money Manager, Institutional Investor, July 2014, data as of 12/31/2013.

35


Strong Investment Performance

Represents $164 billion AUM of which 75% managed by PGI boutiques

Morningstar Rankings Percentage of Principal Funds in the top two quartiles

66%

78% 72%

85% 85% 88% 88% 85% 86%

1-Year 3-Year 5-Year

Dec. 31, 2013 Sept. 30, 2014 Dec. 31, 2014

36 Principal “I” shares; if no “I” share class then “A” share class; separate accounts use “R6” rate level; Includes Principal mutual funds, separate accounts and collective investment trusts (CITs); Excludes money market, stable value and U.S. Property separate account.


PRINCIPAL FINANCIAL

GROUP Mexico (1993) • Annuities, Mutual

Funds, Pensions, Asset Management

• AUM of $11.9B • Wholly owned

Chile (1995) • Annuities, Mutual Funds, Asset

Management, Mandatory Pensions, Voluntary Pensions

• AUM of $40.7B • Wholly owned • Cuprum – a 97.96% owned joint

venture AUM of $35.0B Transaction closed 2/4/2013

Brazil (1999) • Annuities, Pensions,

Mutual Funds, Asset Management

• Brasilprev – a 25% owned joint venture with Banco do Brasil

AUM of $43.3B • Claritas – 62.73%

indirectly owned mutual fund company

AUM of $1.3B

India (2000) • Asset Management,

Mutual Funds • AUM of $0.8B • 70% owned joint venture

with Punjab National

Malaysia (2003) • Conventional & Islamic Asset

Management, Mutual Funds, Pensions

• AUM of $11.3B • CIMB-Principal – 40% owned

joint venture with CIMB Group

China (2005) • Asset Management, Mutual

Funds • AUM of $19.1B • CCB-Principal – a 25%

owned joint venture with China Construction Bank

Hong Kong (1996) • Asset Management, Mutual

Funds, Pensions • AUM of $3.8B • Wholly owned

Thailand (2010) • Asset Management, Mutual Funds • AUM of $1.2B • Wholly owned subsidiary of Malaysian JV

Indonesia (2007) • Asset Management,

Mutual Funds • AUM of $0.3B • Wholly owned

subsidiary of Malaysian JV

Singapore (2006) • Asset Management • AUM of $2.7M • Wholly owned subsidiary

of Malaysian JV

AUM as of 12/31/2014

PRINCIPAL INTERNATIONAL

37

We’re in the Right Countries

SOURCE: IMF, Standard Chartered Research.

TEN LARGEST ECONOMIES BY DECADE Current Principal International locations: Asia Latin America

38

1990 US$ trn

1 U.S. 5.9

2 Japan 3.1

3 Germany 1.7

4 France 1.2

5 Italy 1.1

6 UK 1.0

7 Canada 0.6

8 Spain 0.5

9 Brazil 0.5

10 China 0.4

2000 US$ trn

U.S. 10.3

Japan 4.7

Germany 1.9

UK 1.5

France 1.3

China 1.2

Italy 1.1

Canada 0.7

Brazil 0.6

Mexico 0.6

2010 US$ trn

U.S. 15.0 China 5.9

Japan 5.5

Germany 3.3

France 2.5

UK 2.3

Italy 2.0

Brazil 2.1

Canada 1.6

Russia 1.5

2020E US$ trn

U.S. 23.5 China 21.9

Japan 6.1

Germany 5.1

India 4.5

Brazil 3.9

France 3.9

UK 3.7

Italy 2.7

Russia 2.6

2030E US$ trn

China 53.8

U.S. 38.5

India 15.0

Japan 9.3

Germany 7.4

Brazil 6.3

UK 5.8

France 5.7

Indonesia 4.7

Russia 4.6


Joint Venture Partner Partner’s Industry Ranking Partner’s Distribution Reach

Banco do Brasil Largest bank in Latin America1

5,450 branches2

61.4 million customers2

3rd largest listed bank in world1

14,650 branches3

532 million retail customers3

5th largest universal banking group in ASEAN4

1,057 branches5


3rd largest Nationalized bank in India6

6,081 branches7


SOURCE: 1Relbanks.com March 2014 in terms of AUM; 2Banco do Brasil Annual Report 2013, 3CCB 2013 annual report – customers based on retail debit cards; 4CIMB Group 2013 Annual report – ranking in term of AUM, 5CIMB Group 2013 4Q Analyst Presentation 6Indian Banks’ Association 2014 in terms of assets 7Pnbindia.in 2014

Leveraging Strong Marquee Partners with Outstanding Distribution

39


http://www.bb.com.br/portalbb/home/geral/index.bb

Pensions Mutual Funds

Asset Mgmt Annuities

Brazil

Chile

Mexico

China

Hong Kong

India

Malaysia/SE Asia

Our Markets and Product Offering

= Where we have a product offering today

Targeted Markets

= Targeted expansion

= 10% of market share or Top 25% of providers

40


41

Emerging Markets: The PI Story We are in the right markets

8% +

4%

Infla

tion

GDP

3%

“Low Inflation/Strong Growth”

“Low Inflation/Slow Growth”

“High Inflation/Slow Growth ” “High Inflation/Strong Growth” 0

0

6% +

+ Mexico

2.2% GDP Growth

Mature Economies

India

Indonesia

Hong Kong

Brazil

Chile

Malaysia

China

Thailand

(8.9% inflation)

(7.5% GDP)

Source: IMF. 2014 Estimates.

Singapore

Brasilprev – an outlier: Grew NCCF market share

in a volatile market

+


BRAZIL MEXICO CHILE

Brasilprev: #1 in net deposits

5th largest AFORE

(by AUM)

#1 APV: PI Chile and

Cuprum

PRINCIPAL IS 2ND LARGEST PENSION PROVIDER IN LATIN AMERICA

Proven Strength & Success

42 Brazil source: Quantum. 11/14. Mexico source: CONSAR & PROCESAR. 11/14. Chile source: Asociacion de Administradóras de Fondos Mutuos De Chile. 10/14. Principal is 2nd largest pension provider in Latin America by AUM among multi-country pension providers.

Latin America PRINCIPAL INTERNATIONAL

CUPRUM: A “One-Stop Shop”

43 ERM = Enterprise Risk Management

Chile PRINCIPAL INTERNATIONAL

HONG KONG

Among Top Ten MPF* Providers

Building a Strong Foundation

MALAYSIA

#2 in PRS

CHINA

Top Ten for Mutual Funds

INDIA

1st mover in advisory services business

44 *Mandatory Provident Fund. Malaysia source: Lipper. Percentage of market share as of 12/14. Hong Kong source: Towers Watson. Based on AUM as of 9/14. China source: East Fortune. Based on AUM as of 12/14. India source: Company data/media tracking at launch 11/12

PRINCIPAL INTERNATIONAL Asia

Corporate Public Bonds

28%

Corporate Private Bonds

17%

Commercial Mortgages

15% CMBS 6%

Cash 3%

MBS 6%

ABS 6%

Government, Agency, State & Political

9%

Other* 10%

Diversified Portfolio

$70.3 Billion

* Other includes Equity Securities, Residential Mortgages, Real Estate, Policy Loans, Investment in Equity Method subs, Direct Finance Leases and Other Investments

45

Invested Assets & Cash As of 12/31/14 GAAP carrying value

INVESTMENTS

• Liability-driven investment approach

• Active asset/liability management • Optimized risk adjusted yields and

returns • High quality, well-diversified

portfolio • Global collaboration and best

practices • Portfolio responsibility remains at

local country

Investment Philosophy & Strategy

REMAINS THE SAME

Assets & Liabilities Performed as Expected

-$600

-$400

-$200

$0

$200

$400

$600

$800Ja

n-12

Feb-

12M

ar-1

2Ap

r-12

May

-12

Jun-

12Ju

l-12

Aug-

12Se

p-12

Oct

-12

Nov

-12

Dec-

12Ja

n-13

Feb-

13M

ar-1

3Ap

r-13

May

-13

Jun-

13Ju

l-13

Aug-

13Se

p-13

Oct

-13

Nov

-13

Dec-

13Ja

n-14

Feb-

14M

ar-1

4Ap

r-14

May

-14

Jun-

14Ju

l-14

Aug-

14Se

p-14

In m

illio

ns

Actual net assets & liabilities Modeled net assets & liabilities

46

INVESTMENTS

Power of our Fee-Based Model

OPERATING EARNINGS

Continual shift in mix of business leading to a higher ROE and more free cash flow

65% 19%

16%

Current

70%

15%

15%

2018E

Fee Spread Risk

47 Fee includes Full Service Accumulation, Mutual Funds, Principal Global Investors, Principal International. Spread includes Individual Annuities, Bank and Trust Services, Investment Only, Full Service Payout. Risk includes U.S. Insurance Solutions.

30%

40%

30%

2001

FINANCIALS

40%

30%

30%

33%

33%

34%

Returning Capital to Shareholders

2007 Current 2018E

• Less capital needed to support organic growth • Moving to higher dividend payout ratio • Diligently pursuing active acquisition pipeline • Opportunistically buying back shares

48

(Acquisitions & share buybacks) Organic Growth Dividends Available Capital

25%

25% 50%

FINANCIALS

Driving ROE Growth

OCI = Other Comprehensive Income.

As Reported 2007 2014

Operating earnings $1.1B $1.3B

Average equity (x-OCI) $6.5B $9.3B

Return on equity (x-OCI) 16.4% 14.2%

EARNINGS

+ 4-5% for market performance

+ 4-5% for growth from sales/NCF

+ 1-2% operational efficiency

EQUITY Fee-based growth Dividend growth Opportunistic

share repurchases

ROE = 50-80 bps average annual

ROE improvement

FINANCIALS

49

We’ve Played Offense Since

Recession

Emerged from financial crisis in a position of

strength and flexibility

Executing on our strategy to increase our

global footprint and fee-based earnings

50

Opportunity Year

Announced Rationale

AXA Hong Kong Pension 2014

15 year exclusive distribution with 4,440 agents

Gateway into China

2013 Expand alternative asset class capabilities

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 2010 23 year extension of successful JV with Banco do Brasil

FINANCIALS

http://www.us.hsbc.com/1/2/home

Merger & Acquisition Criteria

• Mid-teens IRR • More accretive than buyback over

time

1 2 3

STRATEGIC

ABILITY TO ONBOARD

DISCIPLINED PRICING

• Aligns with our core competencies • Blend local talent with Principal

expertise

• Synergies with multiple lines of business preferred

• Adds scale or a new niche

Have a diligent M&A process that optimizes long-term results

51 IRR = Internal Rate of Return.

FINANCIALS

Capital Deployment

Strategic Acquisitions:

$350M

Share Repurchases:

$550M

2011 2012 Over $1.1 billion

in total Allocated $2.1 billion

Common Stock Dividends: $230M

Share Repurchases: $300M

Strategic Acquisitions:

$1,595M

2013 Allocated $480 million

Share Repurchases:

$150M

Strategic Acquisition: $44M

Common Stock

Dividends: $288M

Common Stock Dividends: $215M

52

2014 Allocated $855 million

Share Repurchases:

$200M

Strategic Acquisition:

$180M

Surplus Note Redemption: $100M

Common Stock

Dividends: $375M

Long term: expect to deploy 65–70 percent of our net income

with fluctuations in any given year

FINANCIALS

Capital Deployment • Deployed $855M in 2014, more than 75% of net income

$375M in common stock dividends

$180M for increased stake in Columbus Circle Investors

$200M in share repurchases ($50M remaining on current authorization*)

$100M surplus note redemption in 1Q14

• We expect to deploy $800M - $1.0B in 2015

$105M in common stock dividends to date 36-cent common stock dividend payable in 1Q15, a 6% increase from prior

dividend

Strategic acquisitions $335M for AXA’s Hong Kong pension business

Anti-dilutive/opportunistic share repurchase

• Long term: expect to deploy 65–70 percent of our net income with fluctuations

in any given year

*as of 12/31/2014

FINANCIALS

53

5-Year 2015E

Accumulation

Net revenue growth 6-8% 4-6%

Pre-tax RONR 28-32% 30-33%

Guaranteed

Net revenue growth 6-8% (2)-2%

Pre-tax RONR 75-80% 78-80%

Net revenue = operating revenues less benefits, claims & settlement expenses less dividends to policyholders. RONR = Return on Net Revenue. Pre-tax operating margin = pre-tax operating earnings / premium and fees. *Combined basis includes all Principal International companies at 100%.


U.S. Insurance Solutions 5-Year 2015E

Individual Life

Premium & fee growth 4-8% 3-5%

Pre-tax operating margin 16-21% 13-16%

Specialty Benefits

Premium & fee growth 8-10% 6-8%

Pre-tax operating margin 8-12% 10-12%

Loss ratio 65-71% 64-70%

54

Key Business Drivers Outlook 5-Year 2015E

Revenue growth 14-17% 7-10%

Pre-tax margin 30+% 26-28%

Principal Global Investors


5-Year 2015E

Combined* net revenue growth (normalized local basis)

15-20% 14-16%

Combined net revenue growth (in reported USD)

15-20% 8-10%

Combined pre-tax RONR 55-60% 50-52%

Principal’s share of combined pre-tax earnings N/A 35%

Estimated After-tax operating losses for Corporate of $130-$150 million in 2015

FINANCIALS

(1) Excludes discontinued operations. (2) Diluted. (3) Operating return on average equity excluding other comprehensive income, based on trailing 12 month period.

2001 2014 CAGR (’01-’14)

Operating Earnings(1) ($M) $433 $1,318 9%

Earnings Per Share(2) $1.20 $4.41 10.5%

Assets Under Management ($B) $98 $519 14%

ROE (TTM)(3) 6.9% 14.2% +730 bps

Book Value Per Share (x-OCI) $17.81 $32.64 5%

S&P 500 1,148 2,059 5%

Results Demonstrate Relative Strength of Our Business Model

55

FINANCIALS

The Principal Financial Group 101

Investor Relations

Transcript of The Principal Financial Group 101