Principal Financial Group 2008 Annual Report Download - page 6

Sticking to our fundamentals—relying on them to guide
our actions and decisions—is paying off. Here’s how:
Perspective. While it’s the short-term pain that’s taken
center stage these past few months, we all must
maintain a long-term view. This is advice we’ve
imparted to our customers for more than a century;
it’s also how we run our business.
Our long-term view is rooted in our business model:
n Our focus on meeting the needs of growing
businesses and their employees provides us stability.
According to 2008 estimates, small to medium-
sized businesses account for 99 percent of all U.S.
companies. We’re deeply rooted in this market;
our customer base includes more than 100,000
employers and millions of workers.
n Investment in our three key growth engines continues
to reap rewards. U.S. Asset Accumulation, Global
Asset Management and Principal International
continue to provide a strong foundation for
The Principal. These businesses require very little
capital to support organic growth, so we generate
substantial free cash flows on an ongoing basis.
n We’re leveraging our U.S. experience in providing
much-needed savings and retirement solutions
for growing middle-class populations in emerging
markets. Principal International is focused on
growing its business in Brazil, China and India, for
instance, which will account for the majority of the
world’s population growth in the next 10 to 20 years.
Diversification. The past year demonstrated that our
diverse product lines not only complement each other
but also strengthen The Principal overall. In a year
when earnings were down in our retirement business
due to equity market declines, for instance, our Life
and Health Insurance segment showed strong earnings
growth, and Principal International enjoyed record
revenues and earnings.
In addition, the breadth of our product offerings for
growing businesses and their employees is unrivaled.
From retirement, annuities, mutual funds and banking
products to life, health, dental and disability
insurance, wellness programs and executive benefit
solutions, we offer more ways for growing businesses
to provide financial security for their employees.
Our customers clearly appreciate these options:
two-thirds of our employer sales result in a multiple
product relationship.
Diversification of both investment type and client
base paid off for Principal Global Investors in 2008.
While new business in 2007 was predominantly
real estate and multi-sector fixed income from U.S.
clients, new business in 2008 was predominantly
international/global equities from an increasing
number of clients outside the United States.
Discipline. Discipline is important in good times,
and it’s critical when challenges arise. In 2008, our
disciplined approach to managing our business helped
us address key concerns as pressures mounted. For
instance, with tremendous help from our employees
in fourth quarter 2008, we decreased total company
operating expenses by $63.5 million compared to
fourth quarter 2007.
AL L O F U S A T TH E PR I N C I P A L R E M A I N C O M P L E T E L Y C O M M I T T E D T O
L I V I N G O U R C O R E V A L U E S O F C U S T O M E R F O C U S , P E O P L E D E V E L O P M E N T ,
F I N A N C I A L S T R E N G T H , O P E R A T I O N A L E X C E L L E N C E A N D I N T E G R I T Y .
TH E S E V A L U E S G U I D E O U R E V E R Y M O V E , I N G O O D T I M E S A N D B A D .
The Principal Financial Group | Letter to Shareholders
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