Principal Financial Group 2014 Annual Report Download - page 21

CASE STUDY:
JOINT VENTURE IN BRAZIL
An unpredictable market, historically focused on short-term investments. An extensive, government-
backed pension system with a long legacy. A country where large, entrenched banks dominate
market share.
Brazil wasn’t the most obvious choice for global expansion when The Principal took its first, bold
steps into the market in 1992, partnering with Banco do Brasil to form the joint venture Brasilprev
Seguros e Previdência S.A. (Brasilprev).
But our keen eye toward Brazil’s emerging retirement market, fueled by an aging population and a
wave of government reforms, told us it was a risk with the potential for game-changing rewards. As
always, we made our move with discipline, focus and confidence in our long-term strategy.
By joining forces with the largest bank in Brazil, whose 111,600 employees and 5,500 branches reach
from urban São Paulo into the hearts of the country’s most rural villages, The Principal secured an
unmatched depth and breadth of distribution right away.
“From Day One, we created a product and distribution footprint that you just couldn’t build organi-
cally,” says Michael Garvin, chief financial officer, Latin America region.
That surefooted strategy paid off. Now, 20 years later—and four years into a 23-year extension of
the original joint venture—Brasilprev has become a strong proof point for our long-term vision for
global growth.
In 2014, our assets under management in Brazil reached a record $44.6 billion, and net cash flows
grew to eight times those of just six years ago on a local currency basis, making Brazil—a market
many financial institutions considered too risky to stay the course—a linchpin of our industry-leading
growth in Latin America.
The relationship between Banco do Brasil and The Principal sets a formidable stage for continued
growth, with their complementary expertise in banking and long-term savings solutions, as well as
their shared commitment to a company culture that fosters longevity and continuity.
“Our success comes from the strength of the partnership between The Principal and Banco do
Brasil,” says Nelson Katz, chief financial officer, Brasilprev. “Between The Principal’s operational
excellence and retirement expertise, and Banco do Brasil’s huge distribution network and high level
of customer confidence, one plus one equals more than two.”
And it’s not only the clear opportunity areas—a growing need for group and recurring deposit plans,
national demographic shifts and a significant untapped percentage of Banco do Brasil’s customer
base—that hold so much promise for the future of Brasilprev.
It’s also the invaluable advantage we’ve gained through our discipline and long-term vision, securing
key positioning in a promising emerging market ahead of the competition. From here, the possibilities
are endless.
“We’re the leader in the market. It’s our responsibility to continue to innovate,” says Katz. “From our
operations and technology to our products and our customer experience, it all connects. Over time,
it translates to even more value for our shareholders.”
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