Principal Financial Group Inc

Good morning and welcome to the Principal Financial Group third quarter 2022 financial results conference call. There will be a question and answer period after the speakers have completed their prepared remarks. If you'd like to ask a question at that time, simply press star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. We would ask you please be respectful of others and limit your questions to one and one follow up so that we can get to everyone in the queue. I would now like to turn the conference over to Humphrey Lee, Vice President, Investor Relations. Please go ahead, sir.

Thank you and good morning. Welcome to Principal Financial Group's third quarter 2022 conference call. As always, materials related to today's call are available on our website at investors.principal.com. Following a reading of the Safe Harbor provision, CEO Dan Houston and CFO Deanna Schrabo will deliver prepared remarks. Then we'll open the call for questions. Others available for Q&A include Chris Littlefield, Retirement and Income Solutions, Pat Halter, Asset Management, and Amy Frederick, U.S. Insurance Solutions. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Security Litigation Reform Act. The company does not revise or update them to reflect new information subsequent events, or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U.S. Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures may be found in our earnings release, financial supplement, and slide presentation. Dan?

Thanks, Humphrey, and welcome to everyone on the call. This morning, I'll touch on key performance and business highlights for the third quarter. Deanna will follow with additional details on our financial results, including our annual assumption review and an update on our financial and capital position. Our third quarter results demonstrate the strength, resilience, and value of our diversified business strategy. We remain focused on aligning expenses with revenues to help offset some of the near-term pressure on our fee-based margins from unfavorable equity and fixed income market performance. At the same time, we continue investing for growth to fulfill customer needs and expand our capabilities to support our growth drivers. Starting on slide two, we reported $427 million of non-GAAP operating earnings, or $1.69 per diluted share in the third quarter, excluding significant variances, earnings per share of $1.60 decreased 2% from the third quarter of 2021. We returned more than $600 million of capital to shareholders in the quarter and $1.9 billion year-to-date through share repurchases and common stock dividends. We also paid down $300 million of debt that matured during the quarter, a commitment we made coming out of our strategic review to lower our leverage ratio and maintain a strong financial profile. We closed the third quarter with $608 billion of total company AUM, pressured by unfavorable equity and fixed income performance, as well as foreign exchange headwinds in the quarter. Our long-term relative investment performance remained strong, and our short-term relative performance improved over the second quarter, despite continued market volatility. This performance is further enhanced by the strong absolute returns and other alpha-producing funds, which are not included in the Morningstar ratings. Third quarter total company net cash flow was a positive $2.4 billion. This included $2.3 billion of PGI managed net cash flow driven by strong institutional flows across equities, real estate, and specially fixed income. Our differentiated investment solutions and our diversified distribution across institutional, wealth, and retirement channels help generate nearly $7 billion of positive total company net cash flow year-to-date. Earlier this month, we launched an extension of the Principal brand to further spotlight our investment capabilities. By launching Principal Asset Management, we can more clearly leverage the strong brand equity of Principal while also highlighting our deep local knowledge, distinct global perspectives, and investment capabilities. This launch aligns with investments in our client digital experience, global insights program, and the development of new products and alternative investment options, including model portfolios and direct lending. We're supporting small to mid-sized business customers in the U.S. as they continue to weather macro volatility and a tight labor market. In response to these market dynamics, businesses are prioritizing wages and maintaining or expanding benefits to attract and retain employees, and it's showing positively in our results. In retirement, compared to a year ago, reoccurring deposits and RIS fee increased 10%, as the number of people deferring is up 5%. The average deferral per participant increased 4%. The number of people receiving a match is up 7%, and the average match per participant also increased 7%. We've also seen a 12% increase in specialty benefits premium and fees over the year-ago quarter. Over half the growth was driven by net new business as we deepen relationships with our existing customers while attracting new customers. We're winning market share as our capabilities, expertise, and local presence sets us apart from the competition. Our strategic focus on the business market and life insurance is working. Compared to a year ago, sales of non-qualified deferred compensation and business owner solutions more than doubled for the quarter and increased 74% year-to-date. In total, third quarter life insurance sales increased 15% compared to the prior year quarter, as our decision to focus solely on the business market has more than made up for the reduction in the retail market. As we prepare for continued macroeconomic uncertainty, it's important to remember that our SMB customers are more weighted to the scientific and technical sectors, which tend to be more resilient during economic downturns, and we're less exposed to the hospitality and retail sectors, which tend to be more negatively impacted. Internationally, our business continues to grow despite macro and political uncertainty. BrazilPrev, our joint venture with Banco do Brasil, has the highest market share of pension AUM and deposits in Brazil. This, combined with the continued elevated local interest rates, are driving growth in earnings. In Chile, Cuprem has had six consecutive quarters of positive net REM, the salary base upon which we earn fees, as well as positive net transfers of new customers, meaning more Chileans are choosing to move their mandatory savings to Coopram. At our core, through our business strategy, company culture, and our foundation, we strive to make financial security accessible to more people and businesses around the globe. To do that successfully, we seek to understand the barriers to financial progress and identify opportunities to improve access and solutions. This influenced our launch of the Principal Global Financial Inclusion Index, a global research study across 42 markets that examines how well a government, financial system, and employer base provide the tools and support to enable greater levels of financial inclusion and help more people reach financial security. Through this study, we can identify the structural gaps in financial inclusion and take steps to address them through strategy, partnerships, and recommended policy, building a more productive and protected workforce and society globally. Diana?