To the Bank of America U.S. Financial Services Conference, day two. This is going to be the Principal Financial segment of the morning, and if you're looking for the beach, you're probably in the wrong place, but otherwise you're in the right place. We're really honored and happy to have Deanna Strable, who is President and CEO of the company. I think you're about month 13 or 14. That's correct. On the job, although, you know, I don't know if it happens as much as it used to. You are a Principal Financial lifer starting in 1990 as a junior actuary. Yeah. Having really probably had every role at the company all the way up to the big one. Probably not every role, but. Not, not every role, you know. Thanks, Josh, for having us here. Thank you for being here. Happy birthday, one day late. One day late, yeah. Yesterday was my birthday. For those listening to the podcast, they probably know that. Anyway, so let's get started. You know, we're really happy to have you here, especially on a tight schedule. 36 hours ago, you reported your results. You had your earnings conference call soon thereafter. Is there any year-end or 4Q25 sort of pointers that you want to give people to think about as they open their minds into the new year? Yeah, first of all, thank you for having us here, and it's great to be in front of everyone. We did just release our fourth quarter 2025 and 2026 outlook, and really the takeaways is 2025 was a really strong year, and that followed really a strong 2024 as well. For the year, we delivered adjusted EPS of 12%, which is at the top end of our targeted range. On a reported basis, it was even stronger at nearly 20%. Our free cash flow was at the top end or above the top end of our targeted range, and our ROE actually increased 120 basis points and was squarely in the top half of our targeted range as well. Beyond the financials, I'd say we are seeing strong traction across our businesses, margins strong and increasing in our major businesses, and really starting to really see strong results around the growth priorities that we've been focused on for the last couple of years. And so just as a reminder, those are around the retirement ecosystem, small to midsize businesses, and global asset management. We did also do our 2026 outlook, and on one hand, it's probably kind of boring because it's very consistent with what we delivered in 2024 and 2025. We are still targeting the 9%-12% EPS growth. We actually raised our ROE target, from 14%-16% to 15%-17%. That reflected where we are as we sit here today and then our confidence that that can continue on a trajectory and still feel good about 75%-85% free cash flow. I think if you look at all of those, very attractive relative to our peers, and it's one thing to do that on a one-year basis, but to be able to deliver that on a consistent basis is something that we're proud of as well. Well, terrific. I, you know, I didn't get a chance this morning to look, but jobs numbers came out this morning. Oh, you're ahead of me. And so, I mean, obviously Principal Financial's been on the vanguard of this great growth in small and medium enterprise businesses that's been going on for a long time. It's been a huge strength. There's a lot of questions about the nature of work and what it means for small and medium-sized businesses. And can we talk a little about Principal's positioning there and what that particular segment of the market looks like out into the future? Yeah, so again, I mentioned that's one of our focus areas, and SMB has been a focus here in the U.S. for Principal for decades. And we really did build a platform around that that really allows us to drive outsized growth, and we still feel really good about our abilities to continue to do that across both our retirement business and our benefits business. And just for a little bit of flavor, when we say SMB, it tends to be employers of up to 1,000 employees. I'd say on our retirement business, we play across that entire range of employers, probably a little bit more on the M side of SMB. And also, as you're aware, on the retirement side, we actually go beyond that and play in the large case market as well. If you look at our benefit business, we're solely trenched in the SMB market and tend to be probably more on the S side of the SMB, and have really seen outsized growth there. You know, I think a lot of times, like you said, people think that the SMB is a risky part of the market. And one of the stats that we shared at our last investor day is that our SMB customers have been in business for around 30 years. So again, they're not a brand new SMB customer that's still trying to figure out if they can make it. They've gotten over, kind of the startup business, and they have far beyond when they're starting to put benefits and retirement plans into that. And many of across our block of business, they have also been customers of ours for over 10 years. What we have seen through cycles is, probably different than the headlines, is that it's been a very resilient and stable part of the market. What we hear from them is they're slow to hire and they're slow to fire, and they tend to because they know how hard it is to get talent. If you look at our metrics, whether it be just natural employee growth, it's been very stable and has been around that 2% the last couple of years, which is slightly lower than what we have seen historically, but still within a 1% range of growth. If you look at recurring deposits, if you look at in-group employment growth, really seen stability there. The other thing I shared on the call, if you didn't listen, is we just fielded a research study, which we do many times during the year, on SMBs and how they think about job growth, how they think about salary growth, in general, but also in the landscape of AI. And what we found there is they don't anticipate many changes. They 95% of those employers said they plan to increase salaries or keep them stable. And from an employment level, it's about 85% say they plan to be stable or increase. And so we'll continue to monitor that, but we love that business. We do feel it allows us to grow faster than the market, which we've proven. It's an underserved market. And I think the great news is we have built our mousetrap to really excel in that market. And you do have to approach it differently. If we look across, especially the smaller end of that, most of those companies don't have HR departments. And so how you think about serving them has to be very, very different than a sophisticated, larger employer. You know, you mentioned slightly different targets on in terms of being benefits versus retirement. Can we talk a little about what that means for the cross-sell opportunity and whether leading with retirement results in also picking up a new benefits customer and how that's going? Yeah, what I would say is the cornerstone of our SMB strategy is not all grounded in cross-sell. It's really about how do we use our advantages in SMB to drive outsized growth in retirement and within benefits, and then look for ways that we can leverage those when it makes sense. I would say one of the reasons that cross-sell is more difficult is we do go to market through third-party advisors, and those tend to be very bifurcated between retirement and benefits. Not saying that you can't do it. We do have crossover, but that does make it more difficult. I'd say the places where we have seen the largest probability of success in thinking about expanding with our customers is, first of all, Total Retirement Solutions. If you think about our mousetrap in retirement, we're not just a 401(k) provider. We're a leading defined benefit provider. We're a leading non-qualified provider, which over half of the time is funded by life insurance. We're a leader in ESOP provider. And so we do see that natural bundle of retirement solutions be a real differentiator, and we see great success there, both on the traction of those cases, the expansion of those cases, and the retention of that. Within benefits, we see that they continue to add new coverages. We talked about on the call that on average we have over 3.1 coverages with those customers as they think about our supplemental, our voluntary, those types of solutions. Then I'd say two over the last couple of years that we've really leaned into and are seeing early signs of success is taking our executive, business owner solutions in life and disability, which tends to be more sold through individual distribution, and really using that as a cross-sell opportunity with our core group benefits solutions. Then one that's really interesting is actually going out to our asset management advisors and using our SMB expertise to help them go after the business owner market and the SMB market. So it's not always on the same customer, but those value adds are really helping both us and our distributors grow our businesses. If we can hone in on benefits for a little bit, can you talk about both short-term and longer-term trends in terms of incidence, severity, and what that means for the pricing of the risks longer-term, near-term? Is it getting easier? Is Is it getting harder? Yeah, so the first thing I would say is just a reminder, when you look at our employee benefits business, it's a little bit different than some of our peers in that it is our largest premium is coming from dental. And then we have also life and disability, and we tend to go to market in a bundled perspective. So I think that is important to understand. But I do think if you look back, claim trends has fundamentally changed since COVID, and a couple of things that have happened there. I think there's some normalization that will continue to happen. But what you have found is on the dental side, actually claims have went up, and that's both on the cost side as well as the incidence side. But on the life and disability side, we've actually seen loss ratios go down. Part probably the most fundamental change is more on disability and really what the actual work-from-home environment does to disability claims, both incidence, duration, termination. And I do think that's probably a fundamental shift in that it used to be if you had any type of a surgery or any type of an event, you had to go on disability and stay home for a period of time. And work-from-home allows much more flexibility relative to that. Well, if you look at our 2025 results, we had very strong Loss Ratio. Dental was a little bit elevated from where we would like it to be. Life and disability was more positive from where we wanted it to be. But when you put the whole package together, our Loss Ratio was still below the lower end of our Loss Ratio target. The great thing about SMB is that we can actually reprice that every year. And ultimately, when you can go to a customer and say, "Your whole package can have a very stable premium, but we're going to increase your dental. We're going to reduce your life and disability," that's a really attractive way to go to market to actually allow you to attract, retain, those customers, but also deliver to them a much more stable premium, base. And so I think there will be some normalization as we go forward because ultimately you want to reflect that in the pricing for your customers. But our bundled approach, I think, will continue to serve us well. Just for the audience here, if anyone wants to ask a question, you can ask it anytime. There's no point of order. So just raise your hand and we'll make that happen. I want to dig in a little bit more on these trends. So if we go to the COVID or the early COVID period, people stopped seeing their dentist. Yeah, and then after reopening, everyone had to play a catch-up. A, they had to spend unused benefit, and B, like their teeth were probably in pretty bad shape. Do you think that today we're now a number of years past that, that it became a time where people better understood the value of that benefit? As you're saying, the trends have changed. Are people thinking about their coverage differently than they did five years ago? I think one of the things that we see when we survey employees is that dental is a very valued benefit. And you know, I think some of us like to say, "Well, life is more important and disability is more important, but dental is one you're going to use," right? And so I think there is a value there relative to that. I actually also think dentists got smarter, right? They had a couple of years where they didn't have income when people weren't going. And so we have also seen, and I've experienced this personally, you get much more reminders about going to the dentist. You get much more, you know, when you go there, they're upselling. They're doing things to continue to make them a profitable business. So I think it's a little bit of a combination of that. You know, dental is a benefit that has maximums. And so it's a little bit different than medical in that, you know, if they can treat anything that's there. And so I do think over time that's going to cause it to normalize. The other thing that I think is really important is, we have our own network. It's a very sizable network. And that does allow us to also use our network, and how we contract with those dentists to also help utilization and cost trends over time. And so I think the combination of all of those will go into play. You know, we started pricing for that pretty early in the cycle. We're pretty much through that part pricing. It will continue to play out. But ultimately, you know, that will get priced in over time and we'll see how it'll play out. But feel good about where we are in managing that block of business. As a benefit ratio, is there more risk because there's more volatility that you have to demand a slightly higher margin on dentists than you do on in terms of life and disability? You actually have to target a much lower margin. The reason is that the risk and the capital charge relative to dental is at a much lower charge. So let's say you target 15%-20% ROE across all of your businesses. If you have to hold higher equity on life and disability, your targeted margin is actually much lower on dental. So again, if you compare, first of all, if you look at our margins and absolute levels, they're very competitive to all of our peers and also very stable. But if you're comparing it to a company that doesn't have dental, they could have the exact same return but need a much higher margin to be able to deliver that because the risk and capital charge on dental is much less. Makes sense. And then, you know, obviously there's a lot of change going on and just the nature of working things, but also the nature of where our GLPs are, you know, a big part of the ecosystem right now. And, there's some, you know, question about how COVID changed lives. Are you seeing anything trend-wise that's changing how you are thinking about group life and the pricing of those policies for young populations of working people? Yeah, so I think that's a really great point. First of all, when you think about group life, and we're also a little bit different than our peers, it is our group life block is entirely working population. Some group life and group disability coverage is more on the larger size, can also weave in retiree coverage. But on the smaller end, it is entirely working population. That is something we're monitoring very closely, but we've seen no no change in trends relative to those items, whether it be, you know, cancer prevalence, whether it be cancer morbidity or mortality or GLP-1. But I think it's going to be something that over the next 5-10 years we'll need to monitor closely. The great news is, again, a reminder that we annual renew most of our business every year. So if we do start to see it, whether it be positive or whether it be concerning, it's very easy for us to react to that real-time. I think we'll get to Principal Global Investors shortly. But I think that it's easy in some ways for people to see the ecosystem of providing employers with retirement services, with benefits, and also wealth management fits in with the retirement services. There's an easiness in ecosystem. Principal Financial also is a large international business. Where does that fit in with the mission for the company? And why is that a core competency? Yeah, so there's a couple of things there. The one thing I would start with is in how we've taken our capabilities outside the U.S. is really finding the places where it can take what we've built on strengths in the U.S. and export that to places where it makes sense. And that's continuing to be our strategy. What you have seen us do is transition from what used to be Principal Global Investors, which was all asset management, and Principal International, which was a combination of asset management and retirement. And we've bifurcated that now. Both of them are under the asset management umbrella, but we're really talking about investment management around the globe. We do have customers in 80 countries. We have investment teams in many jurisdictions. We have distribution teams in many jurisdictions. We have international pension, which is really just in a select few markets where we really feel the ability that we can leverage our expertise, leverage our joint venture partners, and ultimately drive diversified growth to the organization. On the international pension side, really, after a few of our divestitures is really China, Brazil, Chile, and Mexico is really the four countries that will be within that realm. On the investment management side, it really is that global asset management that we can leverage our global capabilities, our local capabilities with customers around the globe. The other thing I'll mention, which you started from, is if you look at the history of our asset management business, it really was built on the backbones of our other businesses and remains there today. If you look at our AUM within investment management, about 40%-45% of it is from affiliated sources, whether it be our retirement business or our general account. We've taken capabilities that are strong there and used that to then leverage with clients around the globe. That still is our strategy today. The other advantage I would say is it does give you diversification. It gives you access to higher growth markets. But on a macro perspective, we do see that diversification helps stabilize the impact of macro on our results. So let's talk a little about the wealth business. You know, I think you have some core competencies. Commercial real estate's always been a particular strength at Principal. And you know over the last five years, what a five years it's been between people saying that offices will be dead to data center buildouts today. Where are the mandates coming from right now? What markets are attractive? And to what extent is the demand of institutional investors matching the demand of Principal's general book in terms of where they want to put money to work? Yeah, so you know real estate has been a core competency for us, both within our balance sheet, but also how we use that to drive growth and AUM with third-party clients as well. We've seen real estate through a number of cycles, and the one that you mentioned is just one of those. We did see our diversification served us well, but we did see a dip in the actual flows that we were seeing from real estate. We're starting to see that rebound. The great news is if you look at the overall real estate market, there's been six consecutive quarters of growth in the real estate returns. We're starting to see that continue to play out in the confidence of clients. What we also hear from clients is if interest rates continue to go down, it'll actually become even a more attractive market. And so you know one of the things we talked about is our strong real estate flows in 2025. But also if you combine it with our other growing private capabilities, whether that be private credit or infrastructure, in total, that was about $3.5 billion-$4 billion of positive flows in 2025. And we're continuing to see interest as we go forward. The other thing Kamal talked about on the call is the interest that we've seen in customers in Asia and the Middle East to some of our capabilities, both here in the U.S. But we are just launching a data center fund in Europe. And we're seeing great demand from the Middle East and Asian customers relative to that as well. That's the attractiveness of our global asset management business, is that we have client relationships around the globe and we have investment capabilities in different regions of the country that we can then match relative to that. The other thing that really helped drive some of our flows in 2025 is we had a number of current customers in the U.S. that consolidated their real estate mandate, and we were a benefit of that. So again, they may have had five or six real estate investing arms within their overall book, and they were consolidating that. So we had some takeover business as well. And again, that is a testament of how they thought about our capabilities relative to their block of business. So we do still see privates as an avenue for growth. All three of those are also very attractive from a general account perspective, given our capabilities. And so that also is attractive because if our customers can see that we're putting our own money there, that actually is a sign of confidence and is attracting third-party clients as well. You know, so you talk about the data center buildout. On Monday, insurance distribution got kicked in the keister a little bit because of the argument that ChatGPT is going to be infiltrating that distribution model. Earlier in our discussion, you talked about the difficulty of the cross-sell being that you're beholden to distributors. What do you think is the real, at this point, observable change that we think that artificial intelligence can have about distribution for these insurance products? Yeah, I'll start with, I think AI is a tool that we're going to be able to leverage everywhere. Ultimately, you know I don't think sitting here today we have any crystal ball that's going to tell us where this is going to end. If I come back to distribution and distribution specifically with SMBs, I think it's going to be a combination of equipping advisors and customers with digital tools, but they're still going to value the human touch. We see that even today relative to how we distribute and service small and mid-sized customers. They want someone locally that they can call upon. So to me, it's much more about how can we supplement the process with technology versus it being a total replacement. I'd also say relative to your overall question, I think it's going to be much more easier to disintermediate if it's a very commoditized product. And one of the things that we see in both retirement and benefits is, yes, we have to be competitive, but the things that sell and retain business is not your initial price. It's how you're thinking about serving them. They don't want a problem when there is a claim. They don't want it hard to be able to add and delete employees. And we have invested so much in APIs with both the distribution partners, but also the end customers that make that really, really easy. And if it did start to go to more direct, it's very easy for us to pivot those capabilities in that way as well. So first of all, I think it's likely overblown a little bit. We'll see how it plays out. Specifically on retirement benefits, SMB, I don't see it as a huge risk. Can you talk a little about your own offering in that AI category? You have an assistant, I guess, AI experience that's proprietary to Principal, and what that is, and what the early takeaways are from its deployment? Yeah, so you know I come back to where I started, which is AI is something that no company can ignore. And it has been a real focus of ours, both in making sure that our employees have access to that from a productivity perspective, and also grounded in broad-based literacy around what those tools can offer. So we do have proprietary tools. We also use many of the leading third-party tools, but we put it in our environment. So it's using our data rather than third-party data as well. I'll just give you a few stats. And again, 2025 was a year where we really leaned into employee access and literacy. We started the year with maybe less than 1,000 people that had access to the tools. Fast forward to the end of the year, we have upwards to 17,000 of our 19,000 employees that have access to those tools. On any day, 7,000 of those are using those tools. And so you know that ranges from me using it to help prepare for a customer meeting to much embedded within how we do code development within our IT space, how we think about our engagement centers and helping our people serve the customers better, to claims, to underwriting, to RFP development, to allowing our distribution to have better data as they target customers. And so again, we have a lot of use cases that we've implemented. We'll continue to focus on those that we feel have value. But you know unlike past technology, this is probably the most broad-based application. You still have to use it smartly. You still have to have the right guardrails on it. But we're seeing traction, and I think that will continue to even escalate. There's some argument about the degree which technology is deflationary. Does this mean that as you roll this out, that actually the amount of spend you do on technology will flatten out over time, or is it going to continue to slope with your revenues? Yeah, I think those are things that you're still trying to. We'll see how it plays out. The first thing I would say is there is upfront cost. That was in our results last year. Even with that, our expenses were only up 2%. We're self-funding a lot of this as we think about it. As value comes out the other end, it's going to be a combination. Some of that will drop to the bottom line. Some of it, it'll actually allow us to have more capacity to get more done with the same amount of people. Some of it will ultimately drive growth. Some of it should help our products and services be more competitive, which in our market will accelerate growth as well. I think it's going to be a combination of all of those. Ultimately, our mission is to be a growing company. If I can do that with the same number of employees, that's a mission that's going to be attractive to our shareholders and attractive to our long-term success. So in terms of long-term success, as you started at the beginning talking about raising the ROE guidance, being at the top end of the range in terms of EPS growth and whatnot, Principal's had a commitment to a certain payout ratio, which typically results in one or usually two dividend increases throughout the year, which is unusual for most companies that make that decision on an annual basis. Can you talk a little about the philosophy behind the dividend payout and that use of capital as opposed to buybacks and how the company negotiates those two ideas? Yeah, I think we've actually grown our dividend every quarter for, I think, the last few years as we went through the strategic review, some divestitures. And ultimately, since then, we've been growing our dividend on a quarterly basis. We do target a 40% payout ratio. And we really targeted that to be a reflection of our business model. It's higher than pure insurance companies. It's lower than pure asset managers. But it allows us to have more stability in that. And ultimately, as we grow the company, we feel that'll allow for a growing dividend as well. And so we think that's attractive. But it's also married with a very significant allocation to buybacks as well. And so between those two, we really target 75%-85% payout ratio with a 40% dividend and then the remainder being on share buybacks. We still feel that we can accomplish that on an annual basis, but still have enough capital to actually drive organic growth within the organization to still allow us to have EPS growth in a near double-digit range. So it really is that combination of all of those that we feel is attractive. We're fortunate to have a business that doesn't need a lot of capital to grow. Even in those places where we do have, whether it be spread or mortality or morbidity or risk, they operate more like-fee-like in that they don't require tons of capital to be able to grow. So we do think it's a great combination to be able to organically grow the company with organic deployment of capital, but still have 75%-85% to either have a progressive dividend or a growing amount to return to shareholders. You did use the word organic. I did. And so, I mean, not that Principal's aren't fully formed, but are there, looking into the future, capabilities, without mentioning anything in particular, that you look at that the Principal family could benefit from? Obviously, you have most notably acquired some skills in wealth management through different strategies and whatnot. But the value of buying things versus the value of retiring your own stock and rewarding a high payout ratio, how do all those things balance together? Yeah, the first thing I would note is we are always inquisitive about inorganic opportunity, but it also has a very high bar. It needs to be very strategic in nature, which should go without saying. It has to meet financial targets. If you're acquiring people or businesses, there has to be a cultural fit relative to that as well. So we'll be inquisitive across the benefit arena, the retirement arena, as well as the asset management arena. What I would say is, first and foremost, we don't need that to deliver on our objectives. We feel good about the ability of our organic capabilities to meet our goal. The other thing I would say is, relative to how it potentially hinders free cash flow, we also have a very low leverage ratio relative to our peers. So we have a 22% leverage ratio, which also gives you currency that you'd be able to use if you wanted to explore inorganic capabilities as well. Having said that, I think I go back to it's a high bar and we don't need it. And so we will look at all of those, but ultimately need to make sure that it's going to be additive to our overall and ultimately allow us to continue to grow at the rates that we've talked about. Places will continue to explore in the private side. But in some situations, we've pivoted to organic builds and have found that to be more attractive than actually making an acquisition of an organization. We've looked at some capability builds, but then you marry that. Do you need to buy, or can you partner and get the same type of ability as well? Wealth management, you mentioned. And we do have a strategy to continue to leverage our 14 million retirement participants to actually establish a relationship that we can continue to grow. But if you think about that, the target is those 14 million participants. And the majority of those that we're going to target are going to be those on the lower asset level value. 1, because they need our help. 2, they tend to be in the sector that are underserved by traditional advisors. But when you actually look at that, then, to find someone that has built tools and have talent that are targeted at that market, it's difficult to do that. And so again, we have taken a portion of our primarily telephonic education base, and we're building out. We currently have about 200 of those that we've licensed to be advisors to serve that market. We'll continue to grow that organically as needed and demanded. But we'll look across the landscape. But I come back to, it's not a necessary action that we need to take to deliver on our objectives. I would like to end on the topic of culture. Obviously, Principal has grown into quite a large company. And still, I feel like I'd like to believe that the heart of the company is still in Iowa, but it's a global company now. As you've been larger, and we are in a very unique time in human history, what is Principal doing to try and keep the mission tight and unified among its teammates? Yeah, so that's a great thing that I have to focus on, which is how do I create a culture that builds on our strengths for the last 145 years, but continues to have a culture that morphs with the reality of current times, but doesn't lose what's so great about our company? You mentioned earlier, Josh. I've been at the company for 35 years. Our last few CEOs retired with over 40 years of service. That is unique, but creates a culture that has continued to be the reason I've stayed at the company for 35 years. As I've spent many days on the road this last year and over the last few years, the thing I really love is that regardless of what office I walk into, the culture feels very similar. So today we have 19,000 employees. 7,000-8,000 of those are in Des Moines. But 40% of them are outside of the United States. And so how do we, and really, that comes back to a lot of times, we'll put people in those locations that can be ambassadors of our culture. We visit them very often to make sure that we're leveraging those cultures. And actually, COVID makes that easier, right? Our town halls are much more easy to have on a virtual basis. And ultimately, we want to make sure that we're focused on those areas that make us strong, but also leaning into places around AI, technology, speed to putting things in place for our customers. And that has been a real priority of mine as I've moved into the CEO role. Thank you. you. Well, if there is a question as I asked, you can ask it now. We are running short on time, but I want to give one more opportunity. If not, we can end the session here and hope you have a wonderful day. Thanks, Josh, for all your. For everyone listening. I don't actually know what the next session is. It's not me. But stay on. And thank you for everyone for joining us today. Thank you. Bye-bye.