INVESTOR WORKSHOP. The Principal Financial Group November 6, 2015

Transcription

1 INVESTOR WORKSHOP The Principal Financial Group November 6, 2015

2 INVESTOR WORKSHOP John Egan Vice President, Investor Relations Welcome

3 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, 2014 and in the company s quarterly report on Form 10 Q for quarter ended Sept. 30, 2015 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. 3

4 PRINCIPAL FINANCIAL GROUP Agenda Time Topic Presenters 12:00 pm Welcome John Egan 12:05 pm Company Strategy Dan Houston 12:20 pm Integration of Retail and Institutional Investment Platforms Q&A with McCaughan, Beer, McKenzie, Muller, Hill, Shumway Jim McCaughan Mike Beer Barb McKenzie 1:30 pm Break 1:40 pm Financial Supplement Enhancements Terry Lillis 2:10 pm Q&A Houston, McCaughan, Lillis 2:30 pm Closing Comments Dan Houston 4

5 INVESTOR WORKSHOP Dan Houston President and Chief Executive Officer Company Strategy

6 WHERE WE COMPETE HOW WE WIN 6

7 WHERE WE COMPETE More than 75 countries around the world Asset management, retirement/long-term savings, risk protection Asset management, retirement/long-term savings Asset management 7

8 WHERE WE COMPETE High growth, high potential markets GLOBAL ASSET MANAGEMENT INDUSTRY PROJECTED AUM IN TRILLIONS 4.7% CAGR $400 Country 2014 rank 2019E rank 2024E rank 2030E rank U.S. #1 #1 #1 #2 China #2 #2 #2 #1 Brazil #7 #7 #6 #5 India #9 #5 #4 #3 Mexico #15 #14 #13 #13 Indonesia #16 #15 #15 #12 6.0% CAGR TOTAL GDP FOR SIX LISTED COUNTRIES $64 $ year CAGR $34 Trillions $100 Trillions 7% See APPENDIX for sources.

9 WHERE WE COMPETE The TOP retirement market in the world 25 $ Trillions Defined Benefit Defined Contribution + IRA RETIREMENT MARKET OPPORTUNITIES RETIREMENT READINESS: New plan formation Non-participants Under-saved INCOME SOLUTIONS: Yield/Income Outcomes: o Longevity o Market volatility o Inflation 0 UNITED STATES 2nd THROUGH 10th LARGEST MARKETS COMBINED 9 See APPENDIX for sources.

10 WHERE WE COMPETE From positions of leadership GLOBAL ASSET MANAGEMENT Best Place to Work in Money Mgmt 1 #1 APV Chile Funds 2 #6 manager of Target Date Funds 3 Top 10 manager Real Estate 4 13 th largest manager High Yield 5 #3 Greenest CRE Company 6 GLOBAL RETIREMENT AND LONG-TERM SAVINGS #3 provider of DC plans 7 #2 Pension provider in Latin America 8 #5 AFORE Mexico 9 Brasilprev #1 market share Brazil 10 Top ten MPF provider Hong Kong 11 #1 provider of DB plans 12 #1 provider of ESOP plans 13 RISK PROTECTION #1 Non-qualified deferred compensation 14 #4 Non-medical coverages 15 #5 Individual Disability Insurance coverages See APPENDIX for sources.

11 HOW WE WIN Through top-tier investment performance MORNINGSTAR RANKINGS Percentage of funds in the top two quartiles 78% 66% 86% 78% 72% 91% 91% 60% 72% 1-YEAR 3-YEAR 5-YEAR 78% OF RATED FUNDS HAVE 4 OR 5 STAR RATING 4 OR 5 STARS 45 FUNDS 3 STARS 10 FUNDS 2 STARS 2 FUNDS 1 STAR 1 FUND 12/31/11 12/31/13 9/30/15 11 See APPENDIX for sources.

12 HOW WE WIN The right active strategies Estimated share of cumulative global net cash flows ( E) 14% 22% 35% 37% ALTERNATIVES HEDGE FUNDS, PRIVATE EQUITY, REAL ESTATE, INFRASTRUCTURE AND COMMODITY FUNDS* SPECIALTIES EQUITY SPECIALTIES FOREIGN, GLOBAL, EMERGING MARKET, SMALL AND MID CAP, sector** FIXED INCOME SPECIALTIES CREDIT, EMERGING MARKET, GLOBAL, HIGH YIELD, convertible** SOLUTIONS -8% ACTIVE CORE PASSIVES AND ETF's ALTS, SPECIALTIES & SOLUTIONS ABSOLUTE RETURN, TARGET DATE, GLOBAL ASSET ALLOCATION, FLEXIBLE, INCOME AND VOLATILITY FUNDS; LIABILITY DRIVEN INVESTMENTS; AND MULTI-ASSET AND TRADITIONAL BALANCED PRODUCTS 12 Global Asset Management 2015: Sparking Growth with Go-to-Market Excellence, The Boston Consulting Group, July 7, 2015 * Infrastructure and Commodity Funds are offered within Multi-Asset investment. ** Sector and Convertible are not currently offered.

13 HOW WE WIN The right active strategies drive strong flows and AUM growth Total Company Net Cash Flow ($ in Billions) PFG AUM growth ($ in Billions) $195 $ % CAGR $ /30/15 13

14 HOW WE WIN Multi-channel, multiproduct distribution 40 NUMBER OF FIRMS Number of firms with: $1+ Billion in sales $500-$599 Million in sales $250-$499 Million in sales $100-$249 Million in sales E 14

15 THIS IS HOW WE WIN Investment excellence Exceptional service Multi-channel distribution Collaborative culture 15

16 INVESTOR WORKSHOP Jim McCaughan CEO, Principal Global Investors Mike Beer - President and CEO, Principal Funds Barb McKenzie Senior Executive Director, COO & Boutique Operations Integration of Retail and Institutional Investment Platforms

17 PRINCIPAL GLOBAL INVESTORS Diversified global asset management organization Includes Principal Funds $354 Billion of AUM Managed by Principal Global Investors Broad range of investors; over 75 countries Offices in major money centers worldwide Equity $133 Other $4 Fixed Income $156 Alternative $61 Long commitment to corporate stewardship; signatory to United Nations Principles for Responsible Investment (PRI) Principal ranked top among companies with 1,000+ employees in Pensions & Investments' Best Places to Work in Money Management, for the last three years 17 Pensions & Investments, The Best Places to Work in Money Management among companies with our size category, PFG recognition 12/08/2014.

18 PRINCIPAL GLOBAL INVESTORS Global reach Principal Global Investors portfolio management, research and trading Sales and service offices Principal International 18

19 PRINCIPAL GLOBAL INVESTORS Specialized investment boutiques Unique hybrid boutique approach Distinct investment processes Leverage distribution; global institutional and funds Integrated business processes; drive scale and share best practices 19 Note: Aligned Investors uses the Principal Global Investors logo.

20 PRINCIPAL GLOBAL INVESTORS Our growth drivers Long-term strategies institutional, retirement, high net worth, and retail clients Global leader in funds Global distribution institutional and funds Range of capabilities innovative products and solutions Multi-boutique approach Driving growth of all businesses, with new opportunities from alignment! 20

21 PRINCIPAL GLOBAL INVESTORS How we will win Global leader in funds We are now a GLOBAL DESTINATION FOR FUNDS $162B in AUM across U.S. and International platforms, as well as various private funds* Strong performance across boutiques and strategies Global alignment of funds governance, operations and distribution 21 * As of 9/30/2015. Includes Principal Funds, Principal Trust, PGI Trusts and CITs, PGI Dublin Funds, PGI Australia Funds, and various boutique-level funds

22 PRINCIPAL GLOBAL INVESTORS Industry leading performance Percentage of funds in the top two quartiles, 3Q Year 3-Year 5-Year Principal* (Morningstar) 86% 91% 91% T Rowe (Lipper) 71% 78% 77% Invesco (Lipper) 53% 73% 83% Janus (Morningstar) 70% 79% 63% Franklin (Lipper) 24% 55% 57% Waddell (Lipper) 48% 64% 52% 78% of Morningstar-rated funds on our U.S. retail platform earned 4 or 5-stars (45 of 58 funds) 22 See APPENDIX for sources.

23 PRINCIPAL GLOBAL INVESTORS Important recognitions Principal Funds Principal Global Investors Dublin Funds #5 in Barron s Best Mutual Fund Families Best Global Real Estate Fund Over the 5-Year Period 16 TH LARGEST ADVISOR-SOLD FUND FAMILY * 23 * Strategic Insights Mutual Fund Management Companies Rankings and Analysis, September 2015

24 PRINCIPAL GLOBAL INVESTORS Opportunity set for global funds Translating our multi-asset, multi-manager success to offshore fund markets Translating success of other products/solutions Leveraging stronger relationships and increased power with big global distributors Driving efficiencies and sharing best practices across our platforms 24

25 PRINCIPAL GLOBAL INVESTORS Global distribution funds Top 5 Distributors Wells Fargo Merrill Lynch Morgan Stanley JP Morgan UBS Top 5 U.S. Strategies AUM* 5-Yr AUM CAGR Target Date $25.3B 9.3% Dynamic Outcome Strategies $13.8B 61.7% Strategic Asset Management $13.4B 9.4% Midcap $9.4B 59.8% Preferred $4.7B 16.6% Success through engaging distributors and advisors across channels 25 * AUM figures include both Retail and Retirement AUM and remove double counting for fund-of-fund assets.

26 PRINCIPAL GLOBAL INVESTORS Global distribution institutional Top 10 clients based on mandates won & funded in 2015, through 9/30/15 Client Funded Amount ($ Millions) Strategies Japanese Financial Institution 5,172 Investment Grade Corporate, High Yield, Post Intermediate Term HY and Limited Term High Yield Japanese Asset Management Company 2,391 Spectrum Short Duration Preferred Securities, Canadian Equity Income, US Real Estate Equity Securities Finnish Financial Institution 551 Investment Grade Corporate Japanese Insurance Company 510 CMBS Total Return, Post Intermediate Term High Yield, Spectrum Intermediate Duration Total Return, Investment Grade Corporate German Corporate Pension Fund 476 Investment Grade Corporate German Corporate Pension Fund 433 Global Real Estate Securities, Spectrum Intermediate Duration Total Return German Corporate Pension Fund 401 Investment Grade Corporate Canadian Asset Management Company 369 High Yield European Financial Institution 272 Global High Yield North Asian Pension Fund 260 Global Real Estate Securities, Hong Kong & China Equity Strong teams, representing all boutiques 26

27 PRINCIPAL GLOBAL INVESTORS How we will win Innovative products & solutions Product Development already a core strength With alignment, industry leading multi-asset, multi-manager capabilities Principal Portfolio Strategies Edge Asset Management Combined center of excellence for product research, development and management Across all legal vehicles, geographies and channels 27

28 PRINCIPAL GLOBAL INVESTORS Proven multi-asset, multi-manager expertise Principal Portfolio Strategies Investment Process # Strategies AUM 9/30/15 Strategic Asset Allocation* 17 $68.6B Dynamic Asset Allocation 5 $3.5B Dynamic Outcome 4 $14.4B Edge Asset Management Investment Process # Strategies AUM 9/30/15 Strategic Asset Management** 5 $15.2B 28 * Principal Portfolio Strategies target date and target risk strategies are combined. ** SAM Series target risk strategies. Includes assets invested through mutual fund and variable contract products.

29 PRINCIPAL GLOBAL INVESTORS Well positioned for industry trends Industry leader in delivering solutions, including Multi-Asset solutions Strong and growing suite of Alternatives Early entrant in the Active ETF space Hybrid, Passive and Indexed offerings on retirement platform of the Principal Financial Group With boutiques across asset classes, sector rotation presents opportunities 29

30 PRINCIPAL GLOBAL INVESTORS The power of alignment Principal Global Investors Financial Results ($ in Millions) TTM 9/30/15 Adjusted Revenues* 828 1,028 1,084 1,162 Operating Expenses~ Pre-tax Operating Earnings Pre-tax Operating Earnings, Adjusted for Non-controlling Interest Pre-tax Return on Adjusted Revenue 26.2% 29.8% 33.4% 33.6% Year-Over-Year Adjusted Revenue Growth 10.4% 24.2% 5.5% 5.8% 30 * Operating revenue less commission expense. ~Excludes commission expense.

31 PRINCIPAL GLOBAL INVESTORS Key takeaways Principal Global Investors is well positioned to take advantage of industry evolution and investor trends Continued collaboration with Principal International to leverage investment capabilities of the Principal Financial Group Keeping strong momentum while we pursue growth opportunities from alignment 31

32 INVESTOR WORKSHOP Q&A Panel

33 INVESTOR WORKSHOP Break

34 INVESTOR WORKSHOP Terry Lillis Executive Vice President & Chief Financial Officer Financial Supplement Enhancements

35 Evolution of the Principal Financial Group 87% 13% 53% 47% $98 Billion AUM* $516 Billion AUM 2001 U.S. General Account Other 3Q * Adjusted to reflect the disposition of discontinued operations

36 Proven results: Many growth engines ASSETS UNDER MANAGEMENT $1 TRILLION Principal International 13% CAGR $171 Principal Global Investors Institutional $106 $120 $119 Principal Global Investors Mutual Funds Retirement & Income Solutions, USIS, & Corporate $70 Outlook for Principal Financial Group $4 $16 $ Total Company $98 Billion 3Q 2015 Total Company $516 Billion 36 Assets under management by source.

37 Evolution of Financial Supplement 3 OUTCOMES Simplify disclosures Increase transparency Align business reporting 37

38 THE PRINCIPAL FINANCIAL GROUP Simplify disclosures 3Q 2015 Pre-tax TTM operating earnings OLD NEW Full Service Accumulation 12% 8% 11% 25% Individual Annuities Investment Only Full Service Payout Bank and Trust Services 19% 13% Fee Risk Spread 9% Principal Funds 68% 13% 11% 5% 3% 3% Principal International Principal Global Investors Individual Life Specialty Benefits 38 Fee includes RIS-Fee, Principal Global Investors and Principal International. Spread includes RIS-Spread. Risk includes U.S. Insurance Solutions. Results exclude Corporate and adjusted for 3Q15 actuarial assumption review.

39 THE PRINCIPAL FINANCIAL GROUP Simplify disclosures 3Q 2015 Pre-tax TTM operating earnings OLD NEW Full Service Accumulation 12% 8% 11% 25% 9% Individual Annuities Investment Only Full Service Payout Bank and Trust Services Principal Funds 19% 13% PGI 22% PI 16% Fee Risk Spread 13% 11% 5% 3% 3% Principal International Principal Global Investors Individual Life RIS - Fee 30% Specialty Benefits 39 Results exclude Corporate and adjusted for 3Q15 actuarial assumption review.

40 THE PRINCIPAL FINANCIAL GROUP Simplify disclosures MORE CONCISE AND PERTINENT DISCLOSURES More focus on trailing twelve months Pre-tax operating earnings for business segments Equity method accounting clarification After-tax operating earnings for total company and fee, spread, risk Total company return on equity Includes impact from foreign currency translation Relevant investment disclosures 40

41 RETIREMENT & INCOME SOLUTIONS FEE AND SPREAD Simplify disclosures 3Q 2015 Pre-tax TTM operating earnings To Principal Global Investors $970 Million Principal Funds $780 Million RIS Accumulation RIS Guarantee Full Service Accumulation Individual Annuities Bank & Trust Investment Only Full Service Payout OLD RIS-Fee RIS-Spread NEW 41 RIS Fee includes Full Service Accumulation & Individual Variable Annuities. RIS Spread includes Individual Fixed Annuities, Full Service Payout, Investment Only & Principal Bank. Results adjusted for 3Q15 actuarial assumption review.

42 RETIREMENT & INCOME SOLUTIONS FEE AND SPREAD Simplify disclosures Pre-tax TTM operating earnings, excluding Principal Funds ($ in Millions) $722 $418 $304 $281 $844 $780 14% CAGR $563 $543-12% CAGR $237 9/30/13 9/30/14 9/30/15 * ITEMS MODIFIED: Name change to Retirement & Income Solutions RIS-Fee includes Full Service Accumulation & Individual Variable Annuities RIS-Spread includes Individual Fixed Annuities, Full Service Payout, Investment Only & Principal Bank RIS-Fee RIS-Spread 42 * Results adjusted for 3Q15 actuarial assumption review.

43 PRINCIPAL GLOBAL INVESTORS Increase transparency Pre-tax TTM operating earnings ($ in Millions) 20% CAGR $269 $332 $387 ITEMS MODIFIED: Includes Principal Funds AUM rollforward detail Boutique reporting Additional revenue detail Margin reporting consistency 9/30/13 9/30/14 9/30/15 43

44 PRINCIPAL INTERNATIONAL Increase transparency Pre-tax TTM operating earnings ($ in Millions) $303 $260 14% CAGR* $370 $364 $397 $282 ITEMS MODIFIED: Equity method accounting clarification Business driver detail by country Local currency income statement detail More AUM transparency 9/30/13 9/30/14 9/30/15 Reported Basis Adjusted Basis* 44 *All periods adjusted for foreign exchange and encaje. 9/30/15 also adjusted for intangible asset impairment.

45 Alignment of Disclosures ALIGNMENT GOING FORWARD 3Q 2015 supplement new format available online 4Q 2015 only presented in new format 2016 OUTLOOK CALL IN NEW FORMAT December 3, 2015 REPORTING Fee, Spread, and Risk 45

46 INVESTOR WORKSHOP Q&A Panel

47 Appendix - sources Slide 8 Sources for left side chart: Asset Management 2020: A Brave New World, PwC, 2014; The age of asset management? Speech by Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the London Business School, London, 4 April 2014.) Sources for right side chart: Slide 9 - Retirement Markets 2015, Retirement Research Inc., April 2015 Slide 10 Sources: 1 Pensions & Investments, The Best Places to Work in Money Management among companies with our size category, PFG recognition 12/08/ Asociacion de Administradóras de Fondos Mutuos De Chile, 10/ In the United States. Strategic Insight Lifecycle FlowWatch report July Managers ranked by total worldwide real estate assets (net of leverage), as of June 30, Largest Real Estate Managers, PENSIONS & INVESTMENTS, October 19, Managers ranked by U.S. institutional, taxexempt assets managed internally, as of 12/31/14, Largest Money Managers, Pensions & Investments, May Commercial Property Executive Published April Greenest CRE Companies list. 7 PLANSPONSOR Recordkeeping Survey, June AUM among multi-country pension providers. 9 CONSAR & PROCESAR, October Fenaprevi, March Towers Watson. Based on AUM as of 09/ PLANSPONSOR Defined Benefit Administration Survey, May PLANSPONSOR Recordkeeping Survey, June PLANSPONSOR NQDC Buyer s Guide, July LIMRA 2014 survey: Non-medical based on fully insured employer contracts in force. 16 LIMRA 2015 survey: Individual Disability Insurance (IDI) rank based on in-force policies Slide 11 & 22 - 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. 47

48 EXECUTIVE BIOGRAPHIES MIKE BEER is president and CEO, Principal Funds and chairman and CEO of Principal Trust Company. He is president of Principal Management Corporation, which serves as investment adviser for Principal Funds. He also serves as a director for Principal Funds. Mike joined the company in 1989 as an accounting manager. He was elected an officer and named financial officer in 1990 for Princor Financial Services Corporation, a member company of the Principal Financial Group, vice president and financial officer in 1995, senior vice president and chief operating officer in 1998, and executive vice president and chief operating officer in In 2005, Mike was promoted to president of Princor Financial Services. He was then elected as a director for the Principal Funds mutual fund family in June 2012 and named president and CEO, Principal Funds in Prior to joining the Principal Financial Group, Mike was an accounting manager for Norwest Mortgage and a senior accountant for Deloitte Haskins & Sells. He received his bachelor s degree in accounting in 1983 from the University of Northern Iowa and passed the certified public accountant exam in Mike is a member of the American Institute of Certified Public Accountants and the Iowa Society of Certified Public Accountants. JOHN EGAN is vice president, Investor Relations with the Principal Financial Group. John joined The Principal in Prior to joining the company, he most recently served as vice president, Investor Relations with Assurant Inc., and vice president and financial analyst with Assurant Asset Management. John earned his bachelor s degree in accounting from Manhattan College and his M.B.A. in finance from St. John s University. He serves as a board member of the Holy Family School, and is also a member of the National Investor Relations Institute (NIRI).

49 TIM HILL is vice president of Principal Funds Distributor and is the National Sales Director for the company. Tim began his financial services career in 1993 as a Registered Representative with Edward Jones. Before joining Principal Funds in 2003, he was a senior vice president with Alliance Bernstein for five years. Tim has appeared on CNBC and contributed to articles published in both The New York Times and InvestmentNews. Tim received a B.A. in Business Administration from Jamestown College. DANIEL J. HOUSTON is president and CEO of the Principal Financial Group. He is responsible for overall management of the company. Dan joined the company in 1984 in Dallas. He has held several management positions and was named senior vice president in 2000, executive vice president in 2006 and president of Retirement and Investor Services in He was named president and chief operating officer in 2014 before assuming his current role in Houston is a member of several boards, including Greater Des Moines Partnership, The American Council of Life Insurers (ACLI), Employee Benefits Research Institute (EBRI), Iowa State University Business School Dean s Advisory Council, and Partnership for a Healthier America (PHA). Dan received his bachelor s degree from Iowa State University in He has appeared before the U.S. Senate Special Committee on Aging to discuss the importance of educating the workforce about the financial needs in retirement. Houston joined the joint forum of U.S. Senate Committees on Finance and Health, Education, Labor and Pensions to discuss Private-Sector Retirement Savings Plans: What Does the Future Hold? He also authored a chapter in The Upside of Aging, published by John Wiley & Sons in 2014, on the keys to achieving financial security in retirement.

50 EXECUTIVE BIOGRAPHIES TERRANCE (TERRY) J. LILLIS is executive vice president and CFO of the Principal Financial Group. Terry joined The Principal in 1982 as an actuarial student. He held various senior actuarial and management roles through 2000 when he was named chief financial officer Retirement & Investor Services. He was promoted to senior vice president and chief financial officer for The Principal in 2008 and to his current title in An Iowa native, Terry received a bachelor s degree from Simpson College and a master s degree from the University of Iowa. He is a member of the Iowa Actuaries Club, the American Academy of Actuaries and a member of the Society of Actuaries. He also serves on the Mercy Medical Center Board of Directors Planning & Marketing and Finance Committees, the Simpson College Board of Trustees, the Henry B. Tippie College of Business Advisory Board, and the Diocese of Des Moines and Catholic Charities Finance Council. JIM MCCAUGHAN is president of global asset management and CEO of Principal Global Investors. Jim oversees all global asset management activities, including developing global strategies and identifying and analyzing market opportunities. McCaughan has over 30 years of experience in the investment business and was most recently the CEO of the Americas division of Credit Suisse Asset Management, New York, N.Y. Prior to Credit Suisse, he was president and chief operating officer of Oppenheimer Capital in New York. Jim also speaks around the world, is frequently quoted by the financial news media, and appears regularly on CNBC and Bloomberg Television, among others. McCaughan earned a degree in mathematics from the University of Cambridge in England. He is a Fellow of the Institute of Actuaries.

51 BARBARA A. MCKENZIE is senior executive director COO & boutique operations at Principal Global Investors. She is responsible for three boutiques: Principal Global Equities, Edge Asset Management and Morley Financial Services, Inc. In addition, she is responsible for the development and efficient operation of business processes to facilitate the growth of the firm globally. This includes oversight of compliance, operations and IT. Investments in Barb joined the company in 1984 as a commercial real estate representative. She was promoted to regional administrator in 1988 and to senior regional administrator in She was elected an officer and named assistant director - Commercial Real Estate in In 1996 she was promoted to director Research and Portfolio Management, to senior managing director in 1999, and to executive director International Barb received her bachelor s degree from the University of Iowa in Iowa City, and her master s degree from Indiana University in Bloomington, Ind. She is a Fellow of the Life Office Management Institute. ANDREA MULLER is executive director, International Distribution for Principal Global Investors and a member of the global operating committee. Andrea is responsible for all sales, marketing, relationship management and client service activities in Asia Pacific, including Japan and Australia, as well as Europe, Latin America and the Middle East. Prior to that Andrea was Chief Executive, Asia and had responsibility for Asia including the Singapore, Hong Kong, China and Dubai offices. Shearman & Sterling. Andrea also leads the asset management aspects of The Principal regional joint ventures in China and Malaysia. Andrea joined the firm in 2010 after years of experience with large multinational firms including Head of Fitch Ratings Asia Pacific, Managing Director at UBS in both Singapore and France, and European Partner at Andrea received a juris doctorate from Georgetown Law Center, a Bachelor of Science degree from Georgetown University s School of Foreign Service and a Master in European Union studies from the College d Europe in Belgium. Andrea served on the Board of the Asia Securities and Financial Markets Association (ASIFMA), on the Exco of the Investment Management Association (Singapore) and the Board of Governors of the American Chamber of Commerce (Singapore). She has additional language skills in French.

52 EXECUTIVE BIOGRAPHIES ELLEN SHUMWAY is senior executive director of strategy and boutique operations at Principal Global Investors. Ellen joined The Principal in 2005 as vice president-corporate strategic development. Ellen currently leads the development of the firm s affiliate businesses and oversees their operations, marketing and governance. Ellen also advises on the sales collaboration between the firm s institutional advisory services group and the affiliates. Her background includes 15 years at McKinsey & Company, Chicago, as a partner and leader in the firm s North American insurance practice. Previously, she was an assistant treasurer at J.P. Morgan & Company, Inc. Ellen received an MBA from the University of Chicago and a bachelor s degree from Johns Hopkins University.