Principal Financial Group Inc

Good morning and welcome to the Principal Financial Group First Quarter 2024 Financial Results Conference Call. There will be a question and answer session after the speakers have completed their prepared remarks. If you would 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 that you 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 call over to Humphrey Lee, Vice President of Investor Relations.

Thank you and good morning. Welcome to Principal Financial Group's first quarter 2024 earnings conference call. As always, materials related to today's call are available on our website at investor.principal.com. Following a reading of the Safe Harbor provision, CEO Dan Houston, and CFO Diana Strabo will deliver some prepared remarks. We will then open up the call for questions. Other members of senior management will also be available for Q&A. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities 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 will discuss key milestones and highlights from the first quarter as we continue to execute our strategy with discipline and focus and deliver strong results for our customers and shareholders. Deanna will follow with additional details on our results and our capital position. The first quarter of 2024 was a good start to the year for Principal. We reported $394 million of non-GAAP operating earnings, or $1.65 per diluted share, an 11% increase in EPS over first quarter of 2023. Across the enterprise, we continue to focus on growth while balancing disciplined expense management, investing for growth and innovation in our businesses, and returning excess capital to shareholders. we remain well positioned to deliver on our outlook for 2024, as well as our long-term financial targets. We returned more than $360 million of capital to shareholders in the first quarter, including $200 million of share repurchases. We raised our common stock dividend for the fourth consecutive quarter, aligned with our targeted 40% dividend payout ratio. Strong sales and favorable market performance contributed to total company managed AUM of $709 billion at the end of the quarter. We generated nearly $1.5 billion of positive total company AUM net cash flow after adjusting for the redemption in PGI that we discussed on recent calls. In principal asset management, PGI generated positive institutional net cash flow as private real estate continued to attract investors, and we saw renewed demand for specially fixed income investments. In addition, general account flows were also strong in the quarter. PGI sales were strong in the first quarter, including a rebound in U.S. mutual fund sales. It was the best quarter for mutual fund sales in two years, driven by wins across equities and preferred securities. Principal international net cash flow was positive, $1 billion, our strongest quarter since 2021, driven by robust sales in Brazil. Principal International ended the quarter with $179 billion of total reported AUM. Favorable market performance and strong net cash flow were more than offset by foreign currency headwinds, primarily in Chile. While persistently high inflation and low unemployment could keep the Fed from cutting rates in the near term, we remain optimistic that investors will continue to move money into longer duration and higher-yielding assets. based on our engagements and conversations with customers and distribution partners. Turning to U.S. retirement, RIS generated strong revenue and earnings growth in the first quarter. Margins remained stable and at the high end of our guidance as we continue to focus on revenue generation while investing for future growth. Importantly, the fundamentals of our retirement business remain healthy, with strong contract retention as well as increases in reincurring deposits, participant deferrals, and employer matches. Total retirement sales grew 6% over the year-ago quarter, and the pipeline remained strong. This included more than $750 million of pension risk transfer sales in the first quarter, building on a $2.9 billion of PRT sales in 2023 across 73 contracts. 2023 LIMRA rankings for PRT were recently released in principal rank number four in industry based on premium, and number three for number of contracts. We are the only PRT provider in the top five for both metrics, solidifying our leadership position in this attractive market and supported by our market-leading defined benefit business. We continue to leverage our favorable market position in the retirement industry with a full suite of solutions, and we are optimistic on the momentum we're seeing across our retirement platforms. This week, Department of Labor published its final rule defining fiduciary investment advice under ERISA and revised related regulatory exemptions. Principal has a history of effectively adapting and responding to regulatory change while continuing to meet customer needs. And we'll do the same with this latest rule. We are analyzing the final rule and what it means for our intermediaries we work with, along with our plan sponsors and participants. We are encouraged that the DOL confirmed and protected the importance of financial education within the workplace retirement plans with language affirming that educational support to retirement savers enforces positive savings behaviors. Having said that, we remain concerned it will have an unintended consequence of limiting consumer access to meaningful financial tools and advice on top of creating significant compliance costs for firms. In benefits and protection, record sales, along with employment and wage growth, drove an 8% increase in premium and fees and specialty benefits over the first quarter of 2023. More than half of this growth is from net new business, demonstrating our competitive advantage by focusing on the underserved, small to mid-sized business market. We continue to grow faster than the industry by deepening relationships with key distribution partners and with our customers. The life insurance premium and fees for the total block increased 4% over the first quarter of 2023, including a 23% increase in the business market. Our focus on business market and SMBs are driving growth across the enterprise. More than half of our first quarter non-qualified sales were part of a total retirement solutions plan. I'm excited about the opportunities across principal and remain confident that our focus on higher growth markets combined with our integrated product portfolio and important distribution partnerships will continue to create value and drive growth. Before turning it over to Deanna, I'd like to highlight the strong progress we've made against our sustainability goals. We've taken a measured approach to sustainability, ensuring our commitments, such as supporting the growth of diverse small businesses, accelerating the execution of our business strategy. And in recognition of strong corporate governance, Principle is once again named one of the world's most ethical companies by Ethisphere, recognizing ethical leadership and business practices. This is our 13th time on this list since it was launched in 2006. Approaching our 145th anniversary, we've always recognized the importance of keeping our promises while building a track record of progress on issues that matter to our customers, employees, businesses, and communities. Building trusted, meaningful relationships across all stakeholders continues to be a bedrock for driving growth into the future. Deanna?