Principal Financial at KBW Insurance Conference: SMB Focus Drives Growth

On Thursday, 04 September 2025, Principal Financial Group (NASDAQ:PFG) presented at the KBW Insurance Conference 2025, outlining strategic initiatives and market performance. The company highlighted its strong focus on small to mid-sized businesses (SMBs) and technology investments, while also addressing challenges such as dental claims pressure. The firm remains optimistic about long-term growth despite anticipating lower growth this year due to strategic decisions and market conditions.

Key Takeaways

• Principal Financial is heavily focused on the SMB market, particularly knowledge workers, which makes up 55% of their business.
• The company is investing in technology, including AI and predictive analytics, to improve claims management and efficiency.
• There is a strategic shift towards the business market in life insurance, focusing on key person insurance and succession planning.
• Principal anticipates a 6% to 9% premium and fee growth rate in the long term, though this year’s growth may be lower.
• Dental claims are under pressure due to rising costs, but the company is responding with strategic pricing and bundled offerings.

SMB Market and Strategy

• Focus on SMBs: Principal targets small to mid-sized businesses with 2 to 500 employees, particularly those underserved and lacking HR departments.
• Knowledge Workers: Over 55% of Principal’s business is with knowledge workers, exceeding the industry average of 40% to 45%.
• Well-being Index: SMBs show resilience, with 51% adding staff in recent months, emphasizing retention and benefits.

Disability and Dental Claims

• Disability Claims: Improvement in loss ratios due to better incident rates and recoveries. Pricing adjustments are making new sale rates more competitive.
• Dental Claims: Rising costs are pressuring margins. Bundling dental with other products helps maintain persistency at renewal.

Life Insurance Business

• Strategic Shift: Focus on business market segments like key person insurance offers less competition and better margins.
• Premium Growth: Business market growth of 10% to 12% is offsetting legacy block runoff.

Technology Investments

• AI and Predictive Analytics: Enhancing claims management and processing efficiency.
• Third-Party Partnerships: Collaborations to improve data analysis and middle office operations.

Future Outlook

• Long-Term Growth: Targeting a 6% to 9% growth rate in premiums and fees, though current year growth may be subdued.
• Market Conditions: Economic sensitivity is less relevant; focus on specific industries and plan designs is key.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - KBW Insurance Conference 2025:

Life insurance analyst, Analyst, KBW: Life insurance analyst at KBW. Great to have principal financial with us. Up on stage with me is Amy Friedrich, President of Benefits and Protection. Also Humphrey Lee from Investor Relations is in the front row. So I’ll get going.

We’re going to focus predominantly on the benefits and protection businesses given that’s what Amy is in charge of.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yep. Sounds good.

Life insurance analyst, Analyst, KBW: So I just thought maybe to start, there definitely are some key differences between the group benefits and life insurance businesses at Principal compared to the broader markets that you’re in. Could you just start by talking a little bit about what’s unique about the businesses at Principal?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Sure. Yes, thanks for the question. Glad to be here. Certainly when I look at the Group Benefits business for Principal, one of the things that stands out and should be probably immediately apparent is the SMB focus. That’s a focus we share across enterprise.

So it’s not limited to just our group or specialty benefits business. It’s also a focus that’s present across our retirement portfolio as well. So when I look at that SMB business, this is talking about we think of small to midsize businesses as anywhere from two employees to probably up to about 500 employees is where we would cut that off. Traditionally, our absolute sweet spot has been that under 100 life employer. They are often someone who’s underserved in terms of even people helping, asking to help them run their business and manage their business and they’re also not necessarily ones that have even an HR department.

So our offerings have tended to be pretty complete in nature. So the other piece that differentiates us a bit is a very complete product portfolio complemented by a technology and set of solutions that knows the intermediary, the broker advisor is often going to help do some of those HR functions. So we need to make things like our employer web. We need to make sure those interfaces that happen with that intermediary are really effective for them as well as the employer. The other key piece when we think of differentiation is we have tended to build a block of business that is knowledge workers.

We are over indexed I would say compared to the broad industry. When you look at some of the labor statistics and you look at SMBs, they would broadly say that there’s probably 40% to 45% are considered knowledge workers. Our block of business over time has accumulated more like 55% knowledge workers. So when you compare it to some of the other competitors in the marketplace, some are going to be under indexed. We tend to be over indexed in that knowledge worker base.

So that feels differentiating for us as well.

Life insurance analyst, Analyst, KBW: Actually, just curious, like it was that purposeful or that was just how it how it emerged as you built the business?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah. So I would argue ten years ago, it was something that was just aligned with what we were good at, where our history had been. We tend to with that broad set of services, we rarely do just one standalone coverage. So we’re not going to have just dental or just life or just disability. They tend to put a package together sometimes on initial sale but definitely upon renewal.

What we’ve seen is that through our renewal philosophy and I would argue this is a differentiator for us as well is that every single coverage, every single year, we know what we need to do in terms of that next best coverage that we think would help that employer, and we know where it sits in terms of profitability. How is it performing against our expectations of broad expectations, not case experience related, but our group expectations for claims, for the types of expenses we thought we would deploy to that, and then the type of profitability we assume. So when we look at that full picture together, we know that the areas that have more natural growth in them, so the ones that the employment grows with it, the wages tend to grow with it, tended to have been historically knowledge based industries. So since those have performed better for us and our algorithms really work for those things that are those pieces of the industry that are growing, we’ve collected more of them over time. So what began as an outgrowth of our how we managed our in force block has now become a fairly intentional set of work that we’ve done related to getting knowledge workers.

We like what it does for our premium and fee growth and we like the persistency we see in that block. So we’ve even built capabilities for that market.

Life insurance analyst, Analyst, KBW: Got it. Maybe before we get more into the specifics of the businesses, could you just talk a little bit about what you’re seeing from the SMB market at this point? How healthy is it? What’s the latest? I know you do a survey.

What’s that you’re hearing?

Amy Friedrich, President of Benefits and Protection, Principal Financial: We actually

Life insurance analyst, Analyst, KBW: I think you just just did it, right?

Amy Friedrich, President of Benefits and Protection, Principal Financial: We did. Yeah, that’s perfect timing. We just dropped the latest well-being index results yesterday. And so what the well-being index is, is it’s sentiment gauge for us. But we’ve added more pulse questions each quarter.

So it’s serving about a thousand business owners. And it’s actually businesses of all sizes. So even about 20% of who we survey now would be larger businesses, businesses that employ like 2,500 to 10,000 employees. So we have kind of that ability now to compare large and small businesses. That sentiment basically is telling us that they’re pretty resilient.

One of the things we asked is what would be one of the, you know, first actions you would take in the face of uncertain growth, and what would be one of the actions you would do as a last resort or never do? The one that popped near the top of that list on last resort or never do is reduce benefits or get rid of benefits. And so one of the lessons we’ve seen from that research is since COVID, their attention to the labor force in the especially in the small market has been incredibly high. They do not want to let people go. They want to continue hiring even if it’s hiring ahead and they do not want to reduce benefits.

So I would characterize them as as pretty resilient. When we asked them in the last three months, have you added staff, stayed the same, or reduced staff? 51% said they had added staff and this survey was fielded in late July. So 51% they had added staff. I think it was maybe 41% had said they had remained the same and then the rest was that they had reduced.

So the vast smallest percentage was that they had reduced staff.

Life insurance analyst, Analyst, KBW: Alright. Well that’s that’s good news.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Well it certainly was good news for us.

Life insurance analyst, Analyst, KBW: I guess so we’ll move into businesses more. Start with disability which is a big topic these days. Principal and the whole industry has seen pretty meaningful improvement in disability loss ratios as we’ve emerged from the pandemic. Can you talk about the reasons you think this has occurred and then how long lasting and sustainable do you think it is? And I guess you could talk probably there’s the claims side and the pricing side, but maybe start more with the claims side.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah. I’m going to try really hard not to make this a ten minute answer because I feel like it could be because there’s a lot of things going on underneath here. And it is and it is a very people are keenly interested in the answer to this question. So I’m gonna I’m gonna look at disability. I’m gonna parse it up a little bit into some of the key levers that I look at.

So when when emergence of our results comes together, it really is we look at incidents and we look at severity and then from the claims patterns we also make recoveries. So when we deconstruct the claims that we’re seeing what I would say is that incidents has been better, recoveries have been better, and all the things related to kind of the severity pieces have also been better. So let me deconstruct that. Incidents I think is starting to return to normal. So if we were looking at something that was 300 basis points better than a normalized rate, I would have said maybe fifty, seventy five basis points of that was coming from incidents that looked better.

I would say that is going to return to sort of those pre COVID normal levels. When I look at severity, I come down to I think the right question to ask is what what type of a block have you built? So we’ve built that small and mid sized block. What that means is the plan designs that we have to competitively put together in that block are different than the large case plan designs. So when we think of plan maximums, when we think of covered monthly earnings that are going to be maybe $30,000 a month plus to cover some of those populations, we don’t end up writing much of that content.

We don’t have to write that content because that’s who we’re pointed towards in the marketplace, and that’s not the type of plan designs that make up the bulk of our portfolio. So severity for us has over the last probably three or four years even moderated a little bit in terms of the types of plan designs we have in place. We are using so when we have an example would be an executive content right on top. So maybe it’s a a group that has 50 people or 75 people and they’re worried about having enough coverage for those four or five executives at the top. One of the things we do with more frequency than we were doing is use our individual coverages to provide a portable, probably simplified underwriting solution for for disability or even for life insurance.

So when you look at the disability block, we’re doing more layering using individual and group, and it means we don’t have to stretch as much on the group product, and we’re still getting the needs met of that group. So severity for us is better than it was, and I think there’s gonna be pieces of that that continue because they’re just a remnant of the block that we’ve built. The last piece is recoveries. I mentioned before knowledge workers. The types of things you can do on recoveries, the types of things you can do through hybrid or work from home relationships to accommodate people who need disability recoveries are just more present in the knowledge working environment.

If you don’t have to, you know, get on a forklift or go in a line or be there in person in a retail store, the options on how you can accommodate those workers just tend to be more extensive. Those accommodation options clearly were were built helpfully over COVID in that period, and they persist in our block. So if we are over indexed with those knowledge workers, there’s going to be a portion of that that continues in perpetuity for our block. So I would say of the ongoing improvement that we have seen, a portion of it will return to normal and a portion of it will sustain in our block. So I expect our block over time to continue to sustain some of the enhancements we’ve seen on the loss ratio side.

Life insurance analyst, Analyst, KBW: It sounds like like I guess from that, it I took that, like, the one thing you definitely think will return is incidents.

Amy Friedrich, President of Benefits and Protection, Principal Financial: I think so.

Life insurance analyst, Analyst, KBW: But it sounded like the other it sounded like severity and recoveries both might be pretty sustainable.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Business you’ve built matters.

Life insurance analyst, Analyst, KBW: Yeah.

Amy Friedrich, President of Benefits and Protection, Principal Financial: I’m answering for principle.

Life insurance analyst, Analyst, KBW: Yeah.

Amy Friedrich, President of Benefits and Protection, Principal Financial: I think it’s worth spending some time and energy trying to deconstruct the block of business you’ve built.

Life insurance analyst, Analyst, KBW: Got it. Well, guess so the next natural question is then on on pricing. If if if you have you’re seeing favorable results relative to what you would have expected, both you and the industry, how are you dealing with this when it comes to pricing? Also what are you seeing from competitors?

Amy Friedrich, President of Benefits and Protection, Principal Financial: We have been for a couple years returning some of those good performance that we’re seeing returning some of that through our pricing. And so when we look at our new sale rates, our new sale rates have gotten more competitive. I would assume that will continue. And our renewal rates have had less adjustments to it than would have been normalized back three or four years ago. So we’ve had to adjust less of our ongoing block to meet the targets that we want to meet and our new cell pricing has improved for both group life and disability.

Life insurance analyst, Analyst, KBW: I guess the interesting thing is despite you haven’t really seen any reversion higher in disability loss ratios though since you’ve been doing that.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Here’s how I would characterize that. I think it’s aligned with the experience we see emerging. So the loss ratio technically shouldn’t change if your pricing is aligned with what you expect from your I

Life insurance analyst, Analyst, KBW: mean you kind of already touched on this a little but I still wanted to ask it is just your view of economic sensitivity of disability claims. Probably, I assume the knowledge workers would be less sensitive, but there has historically been at least some sensitivity for disability claims within the industry, at least on some lag kind of correlation to the economy. So I’m curious what your latest thoughts are on that.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah. My latest thoughts are that it’s probably more it feels more correlated to the types of blocks you’ve built. It feels more correlated to the types of industries you’re in. It feels more correlated to the types of plan designs than it is correlated to just pure macroeconomic conditions. So I think the traditional wisdom of macro deterioration leads towards more claims just simply hasn’t been as relevant for group disability in the last few years as it was ten or fifteen years ago.

Life insurance analyst, Analyst, KBW: Has there been any other I guess one other related question is because you have to obviously have a qualified claim to file one. Of course. And I think there’s always been some thought that maybe there could be some fraud involved when related to economic sensitivity. Has advancements in technology and things like that been enabled you to better detect things like that and maybe prevent it? Or is that not, in your view, that key of a consideration?

Amy Friedrich, President of Benefits and Protection, Principal Financial: I think managing and detecting fraud in all of our products is table stakes. So you have to have you have to have great, I’m gonna call it background running. Some of it is AI enabled. Some of it’s simply predictive. Some of it’s just algorithmic pattern finding.

But you have to have great technology as table stakes. It’s typically running behind the scenes. We have great fraud technology running behind the scenes on dental for an example and we actually have really great fraud technology running against disability. Probably what’s more important though than those pieces is your ability to dig in when you see some sort of an indicator of something that looks atypical. Our ability to dig in, we’ve maintained about the same level of you know staffing and spend towards digging in towards atypical behaviors.

And I wouldn’t say we’ve seen something that’s particularly out of pattern with that.

Life insurance analyst, Analyst, KBW: Want to switch to dental. Kind of been the opposite of disability. You’ve seen, you you and the industry have seen some pressure on claims as we’ve emerged from the pandemic. Can you talk about what has caused that and then how has principal gone about addressing it through renewal actions?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Right. So know dental is a I feel like I’ve said this a whole bunch of times and I’m gonna say it a whole bunch more. It’s an inherently inflationary product. It’s a product that follows some of the things that are happening with medical trend, it’s gonna pick up on some of the things related to severity, it’s a product that definitely can be inflationary. Now I’ve been, I hate to admit how many years I’ve now been working in the group benefits industry but it’s measured in probably decades now as opposed to just five year increments.

I’ve seen probably three cycles. This is probably the third time I’ve seen a cycle where what I would call sort of aggressive, people are very interested in growing their group benefits block and one of the highest premium ways you can do that is through dental. It’s a nice lead product, people understand it, they actually ask for it at work, so it’s a it’s a product that has its own set of draw with it. If you do not have some of the levers at your disposal to manage things like dental network, and I think this probably doesn’t get talked about enough sometimes, if you don’t have some of the levers within your dental network, if you don’t have some of the, you know, fraud pieces running behind the scenes, the cost control, the the efficiencies that really come with with doing this business at scale, it can be a business that ends up getting a price on it to make any margin on it that gets very unattractive very quickly.

Life insurance analyst, Analyst, KBW: And

Amy Friedrich, President of Benefits and Protection, Principal Financial: so during these cycles, I’m not saying this will happen exactly this way, but of the last two times I’ve seen this cycle, at this point, we’d probably be about six to twelve months away from seeing some increases that drive brokers and advisers to look for other partners to do business with because the renewal rates are going to be unsustainable, especially for small to midsize businesses where their cash flow is really sensitive. And so one of the great things we have noticed about our block in terms of resilience is that we rarely have dental as a standalone. It just rarely happens that we have it as a standalone for most of our cases. Our average coverages kind of products at play for any one case is going to be above three. Actually this year is the first time that has consistently been above three in our history.

So we’re usually going to have like a life product at play, disability product, maybe a worksite product, but also a dental product. So what we’re finding is our ability to continue to deliver really attractive rates at renewal and keep persistency at the levels we need to for the full case has been a distinguisher for us. So we definitely have seen a slowdown in purely the new sales end of it. We are definitely not going to participate in some of the pricing that we’re seeing. I feel really comfortable, though, that the earnings have continued to emerge in the way that we’ve articulated they’d emerge and that taking a trade off right now on some growth is the right thing to do.

It’s really the right thing to do for our shareholders. And I think long term, I’m going to be really comfortable with the growth that we see for our whole block.

Life insurance analyst, Analyst, KBW: What’s actually what would you say has actually has driven the higher claims? I get the obviously just there’s medical inflation, but it like is utilization also been an issue? Or do you think part of it is just higher cost procedures that people put off during the pandemic or are there things like that that are going on too?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah, utilization is actually moderating a bit. Utilization is not quite as far out of pattern as severity So at least in our block, so severity has been a little bit further out of pattern. If you look back five years ago, five years ago a lot of the dental practices that we worked with were I would call them kind of unaffiliated. Certainly ten years ago they were unaffiliated, they were dental practices that were owned by the dentist or a small group of dentists and they tended to run the business and provide all the care. That has changed over the years and so we’re seeing more ownership structures of dental practices that have a little bit different level to invest, little bit different expertise.

They might optimize claims a little bit differently, they might optimize some of their fee schedules or dental network a little bit differently. And so I’d say those there’s probably a little more sophistication from the dental practices itself on how they’re both providing the care and then understanding the mechanics of the economics behind that. That’s not necessarily problematic but it means that there’s always a period where you know we’re making sure that we’re keeping up with all those underlying changes. So I actually think that carries some explanatory power in the dental industry. I think we’ll moderate on that and it will it will you know find its new level but I think that has been a change that that underlying ownership structure practices have been a bit of a change in this industry.

Life insurance analyst, Analyst, KBW: And then can you just remind us of the typical dental seasonality and is it your expectation that your results this year will follow that pattern?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah, it is absolutely our expectation. We used to say that dental seasonality was everyone kind of used up their maximums and went to the dentist in first quarter. What we’re seeing is that’s really spread over first half. So we see it as a first half second half. So first half you’re utilizing your benefits.

A lot of times you’re going to the dentist and saying I’m having some sort of preventive care visit but they’re identifying an issue or a problem or something that you need to follow-up on in those visits. So let’s say those preventive utilizations really peak in that first quarter and then some of the follow on pieces tend to peak a little bit in second quarter and even slip into the beginning of third quarter sometimes. But by the end of third quarter and into fourth quarter, that second half of the year, we tend to see seasonality that’s pretty meaningful in terms of slowdown in utilization and slowdown in some of the higher cost procedures.

Life insurance analyst, Analyst, KBW: Got it. So it makes sense why your dental premiums have slowed given the competitive conditions and some of the underwriting experience. I guess you have seen some slowdown also though in disability and supplemental health. What would you attribute that to?

Amy Friedrich, President of Benefits and Protection, Principal Financial: It’s the other side of the coin on bundling your products together. So I think when you do have the bundle and you don’t often have dental as standalone, some of those can if they’re not gonna come with it on the initial sale, you have to wait until the next renewal to help them understand how it’s sort of the next best thing for your business to put in place. So some of those aren’t bundling. I would attribute nearly all of that to the fact that it’s not bundling at the beginning. We are also seeing some lumpiness.

I don’t know if that’s the best term to use, but the some of the paid family and medical leave that comes through our disability line, those when states have opened up a mandated program and we’ve participated in that state, that’s made some of the comparisons from prior year a little bit more volatile than what we’ve seen in the past. So some of the things on the disability line are really attributable to 25 not having any of those openings coming for some of the new states for paid family medical leave as well.

Life insurance analyst, Analyst, KBW: Got it. I Well guess when you put all this together how would you think about your premium and fee growth this year in specialty benefits and then longer term?

Amy Friedrich, President of Benefits and Protection, Principal Financial: We’ve been clear long term and intermediate term we think that 6% to 9% is an appropriate rate. I still think that’s an appropriate rate for long term. For this year it will be lower than that.

Life insurance analyst, Analyst, KBW: Got it.

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yep.

Life insurance analyst, Analyst, KBW: Let’s shift to the life insurance business, talked about a little less but still a meaningful business for you. You made a strategic shift a few years ago to really focus on the business market. Can you talk about how that has gone since you’ve made that pivot?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yeah. So I’m really comfortable not being in the pure rate driven retail life marketplace. That is a marketplace that’s been characterized by pretty high commoditization. It is you know get on this platform and here’s what we’re going to need for you, here’s the technology investment. So we were really on the life insurance side using a bunch of our discretionary investments to fuel that retail life insurance block.

We’ve taken those discretionary investments and we’ve really pointed them towards things like key person insurance, business market for succession planning. So using the same, many of the same individual life products, but using in a way that either puts a layer I talked about the group benefits, the group benefits business meeting the base layer and then maybe for disability or life using those individual products to kind of meet that workplace need for those usually kind of key employees or or more highly compensated people. We like doing that. We like bundling that together, and we like having most of our capacity taken up through things like key person insurance, succession planning, exit planning. So I would characterize the premium growth which is again there’s a little noise in there from some of the transactions, transactions and other things that we’ve done have hit some of that premium level but pretty consistently we’re seeing nice premium growth moderated to how much we want to grow in this industry in that like you know 1% to 4%.

So 2% or 3% growth with that business market focus being higher growth than that. So that’s growing at you know 1012% and then we’ve got the legacy block that’s running off at the same time. So we’re seeing really nice growth from that business market solution and it’s complementary to other pieces of our strategy. I should mention too one of the key products we have in that set supports the non qualified pillar that’s part of our retirement. Our kind of four pillars of our retirement offering Non qualified is one of the most the most present for a combination for our TRS cases on the retirement side.

So a non qualified and then a four zero one ks plan are often together in the marketplace and that funding when they use life insurance to fund that is from an EVOL product from our set.

Life insurance analyst, Analyst, KBW: I guess when you think about why the business market is more attractive in your mind than the retail market is, I would assume it’s partly less competition and then partly the overlap with your other businesses. Are those the two primary drivers or are They are. Other

Amy Friedrich, President of Benefits and Protection, Principal Financial: things And I’ll put some sizing to that. The competitive set, when we used to look at our competitive set for like a term life product that was headed towards the retail market we’d find 38 competitors that we had to plot our pricing against. When we look at key person insurance, when we look at layering in kind of executive benefits, succession planning, we come down to about four or five players in the marketplace who do that. So it’s a magnitude difference in terms of the competitive environment. And it really is, in my mind, going from a spreadsheet business to going from a consultative sale.

It’s also a consultative sale that gets you really close to the business owner, and we really like working with the brokers and advisers who have very direct connectivity to those business owners.

Life insurance analyst, Analyst, KBW: From a margin standpoint you have a 12% to 16% target in this business. I think it’s been running around 10% lately. What’s been the reason for that and what do you expect going

Amy Friedrich, President of Benefits and Protection, Principal Financial: This year it’s really been claims. So claims is the explainer for that. It has been a severity issue for us not a frequency issue. When I look at frequency over the past year or two it’s been in line to maybe even just a hair better than we would have expected. From a severity issue it has been a bit elevated this year over the three and five year basis though it’s right at a hundred percent.

So I’m comfortable with what I’m seeing when you put your longer term lens on. It’s sometimes kind of difficult quarter to quarter to stop some of that volatility. What I would say is when we made the decision to transact on reinsuring a good portion of that UL with secondary guarantee block. It didn’t we knew it was making our block a bit smaller and until the business market really ramps up over the next series of years, we’re going to potentially have a bit more volatility sitting in there because we’re working off of a smaller base on our non legacy business market block.

Life insurance analyst, Analyst, KBW: Ex the claim volatility, would you expect over time some margin uplift just as you grow the business market more and some of the legacy business runs off?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Yes is the definite answer to that. To add a little bit more color to that yes though, when we look at that business market business, what we also really like is we like the connectivity from distributors that it gives us and intermediaries that it gives us to other pieces of business. So not only do we have a nice path towards getting some nice margins there, it actually is sometimes the lead sale that opens up an ESOP opportunity or that begins to help us understand what we might do with the business owner for even some of the asset management pieces that you know investment that we need to do. So it really does open a door for us so we don’t look at it as simply a margin expansion. We look at it as a relationship expansion piece that’s good for the platform.

When we integrate our platforms at Principal, it’s good for all the platforms to work together. So that business owner piece has ties into asset management, and it has ties into retirement, and I really like that piece of it.

Life insurance analyst, Analyst, KBW: Go I guess going back to disability on one other thing. Did have you seen the same trends that all the trends you talked about on group disability, have they been similar on individual disability as well or is that different some?

Amy Friedrich, President of Benefits and Protection, Principal Financial: It’s a it’s a bit of a different. Again we don’t there are some ways to do some guaranteed repricable things within IDI. We have tended historically within IDI not to have repricability as the pieces of our historical block. And so the comparisons between group and IDI are they’re just a little bit apples and oranges kind of group chassis individual chassis. What what is helpful though to think about is both of them help work together to provide disability coverages workplace.

So we like the fact that going to market with both of those in the workplace, we can use individual when we wanna have a portable coverage, when we wanna have something that we can use sort of a simplified underwriting and get those executive populations covered and then go back to our group coverages, group disability to go after the base coverages. Then we don’t have to flex so hard on plan designs on the group coverages. We don’t have to kind of get after executive or specialty content in those and that helps keep the severity down.

Life insurance analyst, Analyst, KBW: I wanted to ask about technology in in group benefits. It it just seems like it’s become more and more and more important over time. I hosted a panel I think at AFA earlier this year on group benefits and like 50% of it seemed to be about technology ultimately in terms of the answers. Can you just talk a little bit about some of the investments you’ve been making in the business, I guess both on the consumer facing side and the back end?

Amy Friedrich, President of Benefits and Protection, Principal Financial: Right. So we probably are a company that doesn’t do a press release every time we work with a third party. So I have definitely taken some questions on, I can’t find as much evidence externally that you’re working with third parties. We were we were one of the first in the industry to see there’s a you know disability claims was one of the first areas that we began to say things like and this was probably three years ago, hey we think there’s some things happening within you know predictive analytics and AI that allow us to actually go after some of those claims in a way that puts total industry claims experience at our fingertips. De identified aggregated information about what the entire universe looks like.

So rather than always just going back to our block of business and making decisions about recoveries and claim returns just on our block of business knowing the whole block and then integrating that into IDI, LTD and short term disability as well. So having all of those following a really highly efficient claims model from a third party that gave us insight and data in fact we even made a small investment in them because we believed in them so much. And so we’ve been on the front end at some of the AI players in the marketplace. We know that dental, machines can often see things in x rays that the human eye simply can’t detect. So we’ve been investing and using partners that give us the ability to complement our claims examiners, not do their job for them but complement their claims examiners by saying you know this looks like it’s to the naked eye five millimeters and so we need to do something differently with how we do group planning or scaling.

But when you take it through they might say it’s four millimeters and so we are using AI as a complement on the claim side as well. We’re also building solutions in house that are differentiating for us. One of the things that has been we like being different in the industry in terms of having that small market focus but it’s difficult being different in the industry when the third party solutions tend to focus on a larger market, large case issues, large case intake points, large case enrollment patterns and so what it’s meant for us is that for things like quoting, things like enrollment, we’ve often had to build some of our own technology and build some of our own capabilities. So our claims, some of our claims work we’ve actually brought back in house so that we can build claims for products that are across the spectrum for us, not just life or disability, but also cases that have dental, vision, and worksite coverages, and then quoting on the front end that recognizes the place that the brokers and advisers have for us in that small market space. So when you’re doing thousands of quotes every week related to customers that might have between two and nine people that work for them, you got to make that as efficient as possible.

So we’re just getting set to release some technology capabilities that are proprietary to us in the small market front end as well as the small market claims back end. Our middle office is where we’ve used a lot of third parties to help us get that middle office work done, and we’re doing that in a scalable and differentiated way.

Life insurance analyst, Analyst, KBW: I think we are basically out of time. So we’re gonna wrap it up there. Thank you very much, Amy, and and Principal Yep. For

Amy Friedrich, President of Benefits and Protection, Principal Financial: Appreciate it.

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