Q3 2021 Principal Financial Group Inc Earnings Call

October 27, 2021

Yes.

Good morning, and welcome to the principal financial group third quarter financial results Conference call. There will be a question and answer period. After the speakers have completed their prepared remarks, if he would like to ask a question at that time simply press Star and then number one on your telephone keypad.

I'd ask that you be respectful of others and limit your questions to one and a follow up so that we can get to everyone. In the queue I would now like to turn the conference over to John Egan, Vice President of Investor Relations.

Thank you and good morning, welcome to principal financial group's third quarter 2021 conference call as always materials related to today's call are available on our website at principal dotcom backslash investor.

Following a reading of the safe Harbor provision CEO, Dan Houston, and CFO Deanna <unk> will deliver some prepared remarks, then we will open up the call for questions others available for the Q&A session include Renee Schaaf retirement income solutions pad.

Pat Halter global asset management, and Amy Frederick U S insurance solutions.

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 companys. Most recent annual report on Form 10-K filed by the company with the U S Securities and Exchange Commission.

<unk> 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 on our earnings release financial supplement and slide presentation, Dan Thanks, John and welcome to everyone on the call. This.

Morning, I will discuss the progress we are making towards our strategic and financial targets and the key performance highlights for the third quarter Deanna will follow with additional details of our third quarter results as well as our current capital and financial position last week principal celebrated 20 years as a public company our evolution from a mutual insurance company.

Global financial services provider has been remarkable central our IPO in 2001, we've increased our AUM by more than eight times from 120 billion to nearly one trillion dollars and the number of customers. We serve has increased nearly four times from 13 million to 49 million today over the last two decades.

AIDS, we have whether through a global financial crisis volatile financial markets and geopolitical conditions and the complexity of a global pandemic, we've deliberately evolved our portfolio product offering and go to market approach to grow the business and meet the changing needs of our customers at the same time, we've stepped up and worked.

To act in a way that benefits society and the planet guided by a robust ESG strategy, that's focused on reducing our carbon footprint strengthening our communities and advancing access to financial security for more people and businesses.

At our Investor Day in June we shared how our long term strategy puts the customer at the center of what we do and leans into our competitive advantages, which are differentiated and integrated solutions, our leadership position in higher growth markets and our deep and established customer reach we emphasized how our focus on a higher growth more.

Capital efficient enterprise through our growth drivers retirement in the U S and select emerging markets global asset management, and U S benefits and protection positions us to win grow and create shareholder value today and long into the future.

As shown on slide four we're committed to achieving near term financial targets excluding.

Excluding significant variances, we've delivered a 12% increase in earnings per share on a trailing 12 month basis. The high end of our 9% to 12% target range and at nearly 14%, we're making great progress towards reaching our targeted 15% return on equity we're executing on our strengthened capital management.

<unk> and on our way to return $3 billion of excess capital to shareholders by the end of 2022 with our prior announcement to exit the U S retail fixed annuity business and the retail segment of our U S life insurance business, we've seen sales as of the end of the third quarter were actively engaged in conversations with Counterparties.

These are transactions for the U S retail fixed annuity and universal life with secondary guarantee blocks and are confident we will have more to share in the coming months.

And our U S individual life insurance business. Our focus is now solely on business market through business owner executive solutions, and nonqualified deferred compensation offerings in fact, ibis and associates recently ranked principal the top life insurance provider in small case business market in terms of both premium and case count.

Underscoring the strength of our go forward strategy.

With this intense focus on executing on our strategy and serving our customers.

We're already beginning to see benefits in the third quarter turning to slide five we reported $458 million of non-GAAP operating earnings in the third quarter, excluding significant variances earnings increased 7% over the third quarter of 2020, driven by growth in the business and improvement in the macroeconomic conditions, including a <unk>.

Robust U S labor market across many of our businesses.

We closed the third quarter with a total AUM of $981 billion, including $688 billion of a AUM managed by principal.

Totally AUM increased 34% compared with third quarter of 2020, reflecting $17 billion of net cash flow over the trailing 12 months strong investment performance and the migration of institutional retirement and trust retirement assets.

Total company net cash flow was a positive $4 $6 billion in the third quarter more than double the prior year quarter with positive net cash flow across all of our business units.

Third quarter results are a testament to our focus on delivering outcomes for our customers through our integrated solution and differentiated capabilities.

In global asset management third quarter Pgi managed net cash flow was a positive $2 $2 billion with positive net cash flow across institutional mutual fund platforms and general account Pgi generated record managed AUM of $535 billion and record sourced AUR.

<unk> of $265 billion in the quarter as shown on slide six we continued to deliver strong long term investment performance at 69% of the principal mutual funds Etfs separate accounts and collective investment Trust were above median for the three year period, 72% for the five year and 86.

Per cent for the tenure.

For our Morningstar rated funds, 73% of fund level, a U M B four or five star rating longer term performance continues to position us well to attract retain assets, our flagship real estate products and yield oriented products, including preferred securities high yield in private assets continues.

To be in demand, we are expanding our direct lending capabilities and looking for opportunities to deliver ESG capabilities across a variety of product categories and investment vehicles to meet evolving client demands and U S retirement and principal Supersaver study shows that despite market volatility during the pandemic.

Over half of these retirement participants said they have saved more than their retirement plans over the last 18 months and only 3% said they save less.

These trends are contributing to the 67% growth in reoccurring deposits and RIS fee compared to third quarter of 2020.

This reflects a 20% increase in reoccurring deposits on our legacy block deposits from the migrated IRT retirement participants as well as the strong increase employer matches combined with strong transfer deposits and record contract retention.

<unk> reported positive net cash flow of approximately $1 billion in the third quarter.

Additionally, we had $2 $2 billion of RIS spread sales in the third quarter, including $1 $4 billion of MTN and gig issuances and nearly $500 million of pension risk transfer sales. These strong sales generated more than $800 million of positive net cash flow.

Outside of the U S principal international reported $400 million of net cash flow and $156 million of a AUM in the third quarter, a 5% increase in AUM on a constant currency basis compared to a year ago. Despite negative cash flow in Brazil. During the quarter, we continue to see growth in our multi mercado funds now.

<unk> account for almost 30% of AUM in Brazil prep with 53 billion Brazilian rehab net cash flow year to date, we've captured 69% of the market through these value added solutions for our customers that are higher revenue diversified funds, China Num, which is not included in our reported AUM was $158 billion in.

The third quarter <unk>.

Benefiting from positive net cash flow across all asset classes, we continue to see growth in equity net cash flow and AUM as retail investors look for higher value add products and U S benefits and protection were seeing increased demand for benefits robust hiring in favorable wage trends, notably group benefits trailing 12 month in group growth.

<unk> was a record 2.7% for the total block and nearly 5% in businesses with under 200 employees turning to slide seven we continue to make progress on our ESG efforts, we issued our first sustainability bond during the quarter.

Bonds $600 million proceeds will be used to support green and social initiatives that reinforce our ESG commitments. We also launched a municipal bond impact strategy during the quarter. Our first in the U S, which is primarily offered to high net worth clients as a separately managed account we're focused on developing new ESG products.

<unk> and strategies, while enhancing existing products to meet the growing client demand for these products around the world. We're very optimistic about the opportunities that lie ahead as momentum continues to build in many of our businesses. We are evolving our portfolio to bring greater focus to our growth drivers and create greater value for our shareholders.

I'll now turn it over to Diana who will go further into how this translates into our results Dana.

Thanks, Dan Good morning to everyone on the call. This morning, I'll share the key contributors to our financial performance for the quarter as well as an update on our current financial and capital position.

Net income attributable to principal was $360 million in the third quarter, including $99 million of net realized capital losses was $6 million of credit losses.

We reported $458 million of non-GAAP operating earnings in the third quarter or $1 69 per diluted share excluding significant variances non-GAAP operating earnings of $444 million or $1 64 per diluted share increased seven 9%, respectively compared to the third quarter of 2020.

Since the end of 'twenty 'twenty, we've increased 300 basis points to nearly 14% through growth in earnings and higher levels of capital deployment. We're on track to reach our targeted 15% ROE by year end 2023, as we deploy capital in a more purposeful manner to higher return businesses return excess cash.

All of the shareholders and grow earnings.

The reported non-GAAP operating earnings effective tax rate was 19, 4% for the third quarter slightly above our guided range of 16% to 19% primarily due to higher taxes, resulting from our international businesses, we expect our full year tax rate to be within the guided range.

As shown on slide eight we had a number of significant variances during the third quarter a benefit from very favorable variable investment income was partially offset by a net unfavorable impact from the actuarial assumption review Covid related claims IRT integration cost and lower than expected and high performance in Latin America.

These had a net positive impact to reported non-GAAP operating earnings of $18 million pretax $14 million after tax and five cents per diluted share.

Investment income was $91 million pretax higher than expected in the third quarter, primarily driven by very favorable alternative investment returns and prepayment fees.

At negative $33 million pre tax impact from the annual assumption review was primarily driven by updates to experience and economic assumptions.

Unfavorable impact as a result of updating variable annuity lapse rate assumptions were partially offset by a favorable impact on individual life, primarily due to interest rates.

While we didn't change our long term interest rate assumption. The starting point is approximately 40 basis points higher than where we expected rates to be a year ago.

In the third quarter, Covid impact RIS spread and U S insurance solutions with approximately 90000 U S. Covid related deaths in the quarter. The net $20 million after tax impact was higher than our rule of thumb, primarily due to elevated group life claims in specialty benefits.

Our COVID-19 impacts have been volatile quarter to quarter, the cumulative impact since the start of the pandemic is tracking right in line with our overall rule of thumb looking.

Looking at macroeconomic factors in the third quarter. The S&P 500 index was flat and the daily average increased 6% compared to the second quarter. The daily average also increased 34% from the year ago quarter benefiting revenue AUM and account values in our S. B M. P. G I foreign exchange rates.

Were a slight headwind compared to the second quarter, but a tailwind on a trailing 12 month basis impacts to reported pre tax operating earnings included a negative $2 million compared to second quarter 2021, a positive $4 million compared to third quarter 2020, and a positive $6 million on a trailing 12 month basis.

Turning to the business units my following comments exclude the impacts of significant variances as a reminder, we took action in 2020 to reduce expenses due to uncertainties from the pandemic. Some of the expenses were naturally lower like travel sales related expenses and bonus accruals and we intentionally we do.

Other expenses, including hiring salary costs third party spend as well as marketing and advertising as revenues have increased over the past year. Some of these expenses have increased as well impacting comparability of results year over here.

RIS fee pretax operating earnings were flat with the year ago quarter growth in net revenue was offset by higher expenses, including variable compensation and DAC amortization.

We have been reporting the IRT revenue and our resolve since the transaction closed the associated account value didn't fully migrate until last quarter and that is now fully reflected in average account value.

As a result, our average annualized fee rate declined approximately 25 basis points from a year ago, and we expect annual fee compression to be between two to three basis points in 2022 or.

Our revenue mix also is now less equity market sensitive as the IRT block included more transaction based and participant base fees.

As a reminder, the IRT trust and custody business will migrate in the first quarter of 2022 later than what was assumed in our 2021 outlook.

As a result, we will continue to have some TSA and integration costs as well as delayed synergies pressuring full year 2021 earnings and margin. We now expect that the full year margin to be at the lower end of our 23% to 27% guided range expense synergies have already started emerging and we are confident that we will achieve our targeted.

$90 million in 2023.

P. J I benefited from strong management fees performance fees and continued disciplined expense management in the third quarter boosting growth in revenue and earnings and producing a 45% margin pre.

Pre tax operating earnings and margin benefited from a net $9 million from performance fees in the quarter.

Looking ahead to the fourth quarter, we anticipate another quarter of favorable impacts from variable investment income M. P. J I performance fees.

I also want to remind you that our enterprise fourth quarter compensation and other expenses are typically higher than other quarters due to seasonality of certain expenses like marketing and I T.

We expect the impact of seasonality will be lower this fourth quarter than our typical 7% to 10%.

Turning to capital and liquidity on slide nine we are focused on returning excess capital to shareholders and plan to grade down to our targeted capital levels by year end 2022 at.

At the end of the third quarter, we had $2 $5 billion of excess and available capital, including $1 $8 billion at the holding company $1 billion higher than our target of $800 million to cover the next 12 months of obligations.

$90 million in excess of our targeted 400% risk based capital ratio estimated to be 412% and nearly $500 million of available cash in our subsidiaries. We will continue to maintain a 20% to 25% leverage ratio and expect to pay down $300 million of long term debt when it matures in late 2020.

Two as shown on slide 10, we deployed $371 million of capital during the third quarter, including $203 million of share repurchases and $168 million to common stock dividend.

Since the beginning of the year, we've returned over $1 billion of capital to shareholders.

We remain committed to returning $3 billion by the end of 2022 including one four to $1 $8 billion of share repurchases and $1 three to $1 $4 billion in common stock dividends. This excludes any impacts of potential transactions.

Our dividend yield is approximately 4% and we're on track to achieve our targeted 40% dividend payout ratio for the full year.

Through our refined focus and strengthened capital deployment strategy, we will invest in areas, where principal has established competitive advantages and the ability to meet targeted returns we have a clear path to becoming a high growth more capital efficient company, creating long term value for shareholders.

We are excited about the path forward focusing on our growth areas with established differentiators, allowing for improved focus returns and risk profile.

This concludes our prepared remarks, operator, please open the call for <unk>.

At this time I would like to remind everyone that to ask a question press star and the number one on your telephone keypad again, ladies and gentlemen that star one for any questions. We'll pause for just a moment to compile the Q&A roster.

And the first question will come from Humphrey Lee with Dowling and partners. Please go ahead.

Good morning, and thank you for taking my questions. My first question is about capital deployment.

You reiterated the plan to return $3 billion to shareholders in 2021, and 2022, but given the excess capital in RPC, you intend to draw down and they expect a free cash flow generation between now and the end of next year that seems to be substantial flexibility at your disposal.

How should we think about the capital deployment as you rightsize the excess capital.

Yeah. Good morning, Humphrey and I. Appreciate your question I think the best way to look at it as we went through a very rigorous process with the finance committee of the board of directors. When we were leading up to the strategic review and what you see today is there's $3 billion of targeted capital deployment through.

Dividend and share buyback, we also want to be mindful of potential ways to grow the business organically as well through acquisition, which is why you see that debt to equity ratio, where it's at today, but the bottom line is we have a lot of financial flexibility as we move and push our way through 'twenty, two and into 'twenty three and my guess is here when we're update.

And you in January on our outlook for next year, we will be refreshing that but with that let me throw it to deanna if she wants to add additional comments yeah. A couple of things. There I think you back to the right bottom line is that we have a lot of flexibility. In addition to buyback we remain committed to a 40% payout on our dividend ratio and have continued to cry.

Is that as we think about capital deployment, and we have announced that we will use $300 million of that excess capital to pay down our debt that matures in the third quarter of 'twenty two.

And so again as we move through the next few quarters and into outlook will continue to refine those numbers, but again, we are very much committed and on the path of getting down to our targeted levels of capital at both the life co and hope by the end of 'twenty two.

All of our comfort Yeah. My second question is about the pension business in Chile.

Have been many headlines on the proposed fourth withdrawal and the potential overhaul of the system proposed by one of the presidential candidate can you just talk about the kind of overall dynamic and in a worst case scenario what would be the impact on principle.

Yeah. So it's a great question and if you'll allow me I'm going to probably be a little elongated in terms of trying to provide a comprehensive response here because I think it's.

Really important question, it's one that we've touched on here before I just as a reminder, in Chile. This is a 40 year old pension scheme that has actually worked quite well there it's a compulsory model.

July has led the world around building this out after the Paygo system was shut down.

Its biggest gap was not recognizing and having too low of a cap on wages the actual percentage of payroll and the compulsory plan was working well up to roughly $40000 or so in annual income. So the AFP model, which was a public private sector scheme.

It works it has potential it was.

Complemented with a voluntary scheme that was added in addition to that to help people achieve that goal and as I said it was voluntary not compulsory and so there's relatively low participation.

Then comes along a pandemic and the government.

In addition to other ways of trying to provide solutions for Covid relief allowed for AFP withdrawals of roughly 10% and as you know those were treated on a very favorable tax basis. There have been now three approved AFP.

Withdrawals and one annuity withdrawal and Theyre now contemplating a fourth.

AFP withdrawal and a second annuity withdrawal, it's although it's being heavily debated literally as we speak they are contemplating alternatives to these two.

<unk> and we don't know what the outcome is going to be but they also know that we're looking down the road here.

<unk> election, which will certainly have some impact on the timing and the magnitude of this change. So now the question might be directly upper tier.

Question. The answer is we have been working extremely collaboratively with the government officials to try to educate key decision makers on ways to improve and stabilize the existing AFP model you did or you may have read that principal did in both of our rights as an investor requesting consultation with the Chilean government and again, we look.

Forward to those continued conversations we have a good working relationship. We are obviously along with the rest of the industry one of the amicable solution and protecting the retirement interest of all of the Chilean that's that is a huge priority for US. There is a proposed engine modifications that would end.

Hence the basic pension or the solidarity model, we support that we're squarely behind it if you think about pairing that along with an enhanced employer based system and removing that cap you can see how that could be quite additive to financial security and then lastly, there is a working session what the congressional.

Folks that will be occurring in the first quarter of 2022, and we will be working hard try to promote the idea of a sustainable multi pillar retirement system. So.

<unk> by its very definition is an emerging market they've had a good track record of good pension policy principal has a good working relationship with the key decision makers Roberta Walker and his team have just done a magnificent job down there. So we remain quite hopeful that there is a solution that allows us to still benefit.

From being a market participant we have not tried to quantify at this point in time, what the financial ramifications are to date, you'll notice they have not been necessarily significant and that hasnt large part with the way in which fees are collected so probably more than you wanted to know, but I know that this has been top of mind for a lot of.

Our institutional investors as we've been visiting with them. So hopefully that helps Humphrey.

Got it thank you for the color.

Alright.

The next question is from Ryan Krueger with K B W. Please go ahead.

Hey, Thanks, Good morning, if I could just ask one quick follow up on Chile.

How big is I know that you don't your earnings are not affected by excess AFP withdrawals, but how big is the annuity business.

Chile for you at this point.

And if you want to quantify it for that quantify that and then also.

Yes, I know, we will find it here in the supplement for the size of the annuity business. The other the other point worth mentioning on the pension scheme, we do have a higher average balance for new items and as you know we have actually gained the number of participants in the AFP in la.

Because of the <unk>.

System that we put in place that allowed us to have payouts that occurred literally in a more.

Expedited manner in a digital.

Wade.

Again, it has allowed us in endear at us that gives us more opportunity to expand on those relationships with those participants Deanna do you have a number there on the annuity piece yeah. A couple of comments I don't have the exact answer we can get back to you Ryan, but if you look on page 20 of the supplement you will see that our total AUM in Chile is around 41.

$1 billion and the chili Cook from AFP on balances as at 30 for the remainder of that would be our voluntary mutual fund as well as our annuity so it would be.

Some portion of that difference there the other thing to expand upon Dan's comments on the fact that our customer base has been less impacted obviously having.

Having the Chilean.

People have money in there.

He is critical for the long term viability of our strong pension system.

Our customer base has been less impacted.

Partially due to the composition and partially due to some of the digital outreach that we've done card customers. So just to put that into perspective as of the end of second quarter industry right, 20% of AFP.

All participants how does the euro balance in their fund and for Cooper.

Was only 4% in the next closest competitor was at 13%.

And so again, we are focused on obviously the long term financial security of the customer and I think that's a testament and a proof point relative to that thanks, Deanna Ryan do you have a follow up.

Yes.

S B.

I guess can you give us any sense of how much cost saves have been achieved to date relative to the $90 million target and then once the trust and custody migration occurs would you expect the remaining cost saves to be achieved fairly quickly.

Yeah, I'll throw that through in a pretty quickly I just I'd be remiss if I didn't go on the record to say that.

Whenever you are going to acquire 10 years of organic growth you're going to have some challenges and it was a big milestone this past quarter to have successfully migrated over this block of business, so hats off to Renee and her team for doing that and we frankly feel very good about the revenue and expense synergies, but I'll have Renee <unk>.

Detail right.

Ryan. Thank you for that question, we are on track to achieve the $90 million net expense.

Expense synergies by the end of 2023.

And so far we have recognized about 25% of that but you have to understand that is on an annual run rate basis.

So in any one quarter, you'll see about leaving we've achieved about $5 million of the savings so far in terms of the pattern for how we think this might emerge.

Certainly once the trust and custody business has been fully integrated and is onboard.

That'll allow us to begin to spend that.

They duplicate recordkeeping system on the Wells Fargo side, it allows us to reduce some of the duplicate head count.

But then longer term the synergy gains will continue to emerge as we automate processes and we continue to streamline the customer experience. So you can expect to see that.

<unk> expense synergies will emerge relatively smoothly from now to the end of 2023.

Hopefully that helps Brian Thank you very helpful.

The next question.

<unk> will come from Josh Shanker with Bank of America. Please go ahead.

Yes, sorry to go to South America again, but I'm wondering if you can talk a little about Brazilian inflation, John help me out a little bit earlier, but.

We still need some help on the two indicators of inflation.

Whether they're converging or not whether there are I think that they're not diverging further can you go into some details on how it impacts your outlook.

Absolutely.

Two things in addition to the inflation that had been helpful. Here and that is in the current quarter. They stayed on top of one another we didn't see divergent which was quite helpful. The other thing that occurred is we actually saw the interest rates move up roughly 2% from the year ago quarter from roughly 4%.

Order to six.

Quarter. So these are modest improvements going back to a higher interest rates and of course inflation coming in line without that separation danna any additional detail on the two indices for inflation.

A few comments and if we need to go offline. After the call. We can go further Josh but yes in the fourth in the third quarter as we had anticipated they did converge and come back on top of each other.

So.

Much more of what we had seen kind of pre the current cycle when we didn't see them.

So those two indices separate and so on.

Our outlook would continue to expect that convergence, but you could have some periods, where there is a little bit of a difference, but we do expect that to be more modest than what we've experienced over the last 12 months. So.

Again, we can follow up in more detail, but that would tell you what we saw here in the third quarter and what we anticipate going forward.

And ironically enough in spite of the interest rate movement, which is favorable and inflation, we're still the market share leader when it comes to deposits for <unk> as well as <unk> for the industry roughly 30% of the flows so strong strong operating results here masked by some macro events did you have.

Follow up yes, so far just extend that chart you included in the two Q21 presentation out one quarter.

Has the gap narrowed or as it is is it just the gaps how persistent but not gotten worse.

No again, we will extend that out but they were right on top of each other for the third quarter.

Get worse or better.

Okay. Okay, and then on your long term your the rating of your fund performance is excellent.

Did that.

Deteriorate, a little bit in <unk> I'm, just wondering if we could talk about which strategies and whether or not it's a.

Bias on how principle invest or whether or not.

It will revert and what you think about the third quarter performance.

Yes, Mike My guess is that the bias on everything that we do in terms of how we invest in short term and long term performance pet yes, Josh. Thanks. Thanks for that question just in terms of the.

The performance on the.

The one year I think is really your specific question, we have a few strategies predominantly in our international suite.

It's a little bit below the second quarter to third quarter.

One is our diversified international.

Continues to beat its benchmark, but from a performance perspective relative to peers a little bit.

And that performance long term very very strong performance and don't see any concerns with the processor with the approach that the team has taken with respect to that the other two international sort of investment capabilities.

A little bit sort of in the third quarter category now a third quartile category, our international small cap that in Oregon.

And then little bit of a preference in terms of what investors are looking for.

It was international small cap, we have a very strong quality bias strong finance fundamental bias and really I think theres been no more of a risk on in a way from strong fundamentals in quality bias right now in that category and then relative to Oregon again, just harder to keep up again quality bias rated sort of lower quality than AMC.

To be winning the day there so our process our approach our philosophy continues to stay intact long term numbers are very good for those two investment capabilities also.

And then just to round out in U S. Equities U S. Equities continues to do very well at third quarter.

In terms of the first and second quartile, 67% of those funds were still in the first or second quartile. So so feel pretty good about our equity since we feel good about our international suite.

Sure.

And frankly as you highlighted long term performance is driving really our flows.

And that's what investors are really looking at when they're making decisions to to retain their activity with us or to grow their activity to us.

And the four and five star Morningstar ratings that we're receiving and really the areas that we're continuing to produce significant net cash flow growth, whether it's our go to like a line or small cap U S. R. K.

Capabilities, and our income suites like preferreds unis emerging market debt high yield rates all continue to be in that four and five star Morningstar category and are continuing to see positive net cash flow in the third quarter. So feel good about the death.

<unk> of our investment capabilities relative to what we're seeing in terms of investor interest and we're actually I think very aligned with investor interests. They are still looking for yield there are still looking for non correlated asset.

Experience and exposure I think our suite of investment capabilities offer a solution set for that I also think they are looking for inflation protection. So real estate today is offered in a nice sort of a fit to that capability and desire and they're looking for a global exposure and I think we have I think some long term investment papers that are well suited for that need so feel good about our capabilities.

Sweet.

On your numbers aren't really concerning to me at this point in time.

I think we're starting to see I think strong I think interest in.

A continuation of our billets also in things like.

Listed infrastructure, so all good on that side. Thanks.

Thanks for the question and answer I appreciate it.

Very good.

The next question is from Andrew <unk> with Credit Suisse. Please go ahead.

Hey, good morning.

Follow up questions on that.

One of the earlier questions.

With regard to capital management.

My understanding from the June Investor Day is that free cash flow.

From the subsidiaries to the parent would be about one $8 billion to $2 billion over the 'twenty one through 'twenty 2022 timeframe.

That figure represents roughly 50% to 55% of earnings.

But the company principal target, 70% to 80%.

Capital returned to the parent company, so as I think about that figure in particular and I know.

Dan and Deanna tough you both talked a little bit about flexibility earlier.

I <unk>.

Just wanted to zero in on that number because it's probably you know.

North of a half billion dollars shy of that 70% to 80% range and.

And hence is it possible then given that flexibility that theres room for at least another half a billion.

On the buyback.

Yes, I can take that yeah.

Yeah, Thanks, Andrew for the question.

There's a lot of components that go into a free cash flow and they can be volatile volatile by any one period, but over the long term, we do feel post transaction, we can be in that 70% to 80% range and we're continuing to work across our businesses to make sure that we stay and remain in that range. So again.

Relative to the particular timeframe, we're not saying every time frame will be in that range. There can be some volatility around that but I think as you've done the math there could be some upside to that number as we think through the next couple of years.

Excellent and then just following up on the question.

Could you.

Think it's I think AFP is around 4% of earnings could you clarify if I'm right on that and then with respect to the capital in that business. If you ever did decide to exit.

How much capital is sitting there and could that be extracted if if if you made that decision not that you would.

Well, yes, I mean, there's a lot of speculation in there I think the earnings of approximately four 6% in that range and we'll get back to you on on the capital Thats currently deployed and sorted out the difference between <unk> and the balance of that business. As you know we also have an annuity business there.

In Chile, but thats a good item for follow up Andrew.

Okay, and the 6% is all in meaning it includes annuity and mutual fund is what it is everything.

<unk>.

So our entire Chilean thanks, yes it.

Yeah. Thanks for the question.

The next question is from Tracy <unk> with Barclays. Please go ahead.

Q I'm curious if you have any updated views on COVID-19.

We bought another life insurer forecasting hold at that 75 to 125.

Allison in for Q, and a 150000 next year with the bulk of the first half of the year just trying to think about what your updated forecast maybe just given the elevated activity in the third quarter.

Yeah, and that's certainly the delta variance given us all something to think about as we look at our modeling and our original projection scanner further thoughts yeah. I mean, obviously, we can only go by what other governments and other agencies are forecasting and so we would be pretty close to what you see there are current forecast would have 90000 in the fourth quarter and around 100.

<unk> thousand and 22, but.

But obviously, that's going to be very impacted by the different variances as well as vaccination rates and so I think I wouldn't lock those in and we'll continue to update those as we go into the outlook.

We did see a heightened number of deaths in the third quarter in our block more heavily weighted toward the younger ages and we still think our rule of thumb is up.

Appropriate.

But we could skew a little bit higher over the next few quarters, if that continues to be more heavily dominated in and.

And the younger ages, just because of our composition of business, but.

Since the start of the pandemic our rule of thumb is right on theres volatility by quarter will still continue to see that.

But that outlines what our current thought processes on fourth quarter and 2022.

Okay.

Yeah. Thank you and you are trying to block the deal plans. It's good to hear that you'll be able to brief us in the coming months, but I'm wondering if you could discuss the croft that where.

Where are you spending most of your time.

Patients that get into that bid ask spread.

I am sorry, Tracy you broke up when you at the beginning part of your question could you ask that again.

Sure I mean, you you kind of alluded that in the next coming months youre going to be able to brief us on your block deal plan.

We see our retail F E L F G block.

In the meantime in those in that process. If you could just shed some light where are you spending most of your time in these conversations that ultimately get into the bid ask spread.

Yes, happy happy to try to respond to that in the best way that I can and first recognize that as you point out we've made the decision to divest the retail annuity business as well as USG theres better owners for those businesses. The first thing I'd say is there has been very strong interest in the assets.

Absolutely strong interest and so I think our window was actually quite good for the first round of bids the starting of the second round of bids has now begun and undoubtedly there is more refinements that will take place and as you asked the question our conversations our conversation through ourselves and advisors very healthy these are pretty straightforward.

<unk> blocks of business. So I don't think Theres a lot of confusion, we're very confident in our ability to execute on the transactions and as we've said, we'll look for opportunities to be increasingly capital efficient and creating long term shareholder value as we contemplate the proceeds but it's right on track with where we thought it would be there is strong interest in the assets.

We're expediting it were.

Certainly moving it through the process.

At an appropriate pace, while at the same time, creating long term shareholder value. So as anything changes and I'm sure that the next update with investors will be able to give you more clarity on the outcome of that hopefully that helps Tracy.

Okay. Thank you.

The next question will come from Erik bass with Autonomous Research. Please go ahead.

Hi, Thank you.

On an adjusted basis RSP earnings were roughly flat with <unk> 21 versus <unk>, 20, which I guess, if I'm somewhat surprising given the tailwind.

From positive markets positive flows and then some of the emerging synergies.

Hoping you could give a little bit.

More color on the drivers there and then talk about the <unk>.

Expected earnings power of the business heading into 2022.

Yeah. Good morning, it's a great question in the backdrop of all of this which I find really interesting is we've got a record retention lowest lapses that we can think of they're higher deferrals that has higher retention theres employer matches returning.

We've expanded into the larger case market in spite of all of those strong fundamentals of the business, including Crs still really being the mainstay of our of our value proposition to customers. It doesn't necessarily is reflected in operating earnings growth in the revenue growth and so really really is in the best position.

To provide you some additional insight on that right.

And thank you for that question, Eric and you're absolutely right.

You look at third quarter, 'twenty, one earnings compared to one quarter a year ago. The earnings are flat and let me walk through the components of that and then share some additional insight with you about how to view this business going forward first off.

As you noted we did see nice tailwind from the equity market over the past year.

But those are.

Tailwind, we're off that first by and notably by the IRT shock lapse, which was right in line with where we need it.

Shock lapses on a revenue basis came in.

Right, where we had anticipated with our acquisition model.

We also saw very normal fee compression during the same time period.

And as Dan noted in her comments, we did see increase in comp comp and other expenses as we return to a more normal working environment.

Other comment that I'll make is that we did have a one time revenue true up in third quarter 'twenty one.

And so when you compare.

Revenue.

Second quarter, 21% third quarter 21, then.

It created about a 7 million dollar reduction and again this is a one time revenue adjustment.

So now let me turn my comments.

How we think about the fee business.

So one of the comments that deanna need.

Is that if you look at our revenue as a basis point applied against the campfire, you'll see about a 25 basis point drop one year from.

Our quarter one year ago.

So in third quarter 2020, if you look at that.

He expressed his account value it was about 63 basis points.

Third quarter of this year that fell to about 38 to 39 basis points.

The primary driver behind that decrease.

Is that we are combining Iot blocks of business that is characterized by large franchises with our legacy blocks of business that is more characterized in that small and medium size.

And so large plan typically has a lower price point when you look at it on a basis point.

Method.

Logically when we blend those two together.

Fee rate declines and this was completely in line with our expectations. When we acquired the business and as we see the business began to unfold. We also saw normal fee compression in that time period again in line with our expectations.

So moving forward, we think that that 38 39 basis point revenue fee revenue run rate.

Is a good place to start with your modeling.

Then as Deanna also nowadays.

Best to see about a two to three basis points.

Headwind applied against that or normalcy impression.

So that's how to think about the revenue, let's turn our attention to the margin.

So as noted we are deferring the trust and custody integration and we're doing that in keeping with our core value of keeping the customer at the center of everything that we do and by deferring the integration.

We're able to provide a much more smooth experience for our customers as they migrate onto our platform.

So what this means is that the TSA any integration expenses will continue through the first quarter 2022.

When we look at full year 2020 margin.

We do believe that we will be in that 23% to 27% range that we communicated to you at the 2021 guidance, but at the low end of the range for the entire year.

I think in closing I think it's so important to see I think from our perspective is that the IRT acquisition did in Berkeley, what we wanted it to do it increase our scale it increased our capabilities, particularly in the large plan market.

And it created momentum for us across all plan sizes, as we strengthen our position as a top tier retirement provider and.

And I think the underlying strong fundamentals.

We enforce that strong sales strong client retention strong recurring deposits I'll speak to the strength of the underlying model and we're very very pleased with what we see in terms of the strength of the business itself. So I'm, hoping that help.

Eric.

Yes. Thank you very much its helpful. I appreciate all the detail and then provide.

Follow up just sorry to go back to Chile, one more time, but I guess just with the election looming at the end of <unk>.

Remember.

I'm wondering how much power does a new president to make changes and then the AFP system.

If there were changes put in how it is that.

Mechanically happened.

It still requires congressional approval. So there isn't I don't believe in maybe the nomenclature is wrong here and the executive order that would give them the power to just simply modify it. So it does require it goes through the Senate and the house or the approval process. So I think there is a lot of debate now all.

And every country people have their proclivities with regards to how things like this are vocalized by a precedent in terms of their advocacy, but I think there is a realization at least that's what we're hearing locally.

<unk> system isn't completely broken and that it's been undermined by these withdrawals and then at this point in time, they need to be mindful of what steps can be taken to reinforce and enhance and improve on the existing AFP system and I think that the voters out there are realizing that.

Well, so hopefully that helps one additional comment Eric to your the back and forth with Rene there I wanted to weigh in on so the so the so what on that to me would be it's why we have increased scale to drive down our cost per participant, which we've done that we're leveraging our technology.

We're pulling all of those other levers around asset retention and proprietary asset management and those roll ins and rollovers and as you very well know a lot of those economics are not necessarily captured within that RIS fee line. There are captured within pgi and other parts of our I guess I guess.

And we probably need to continue to work on refining how we demonstrate the value of that platform, but there is no question in my mind, the long term value creation of the our ISP platform is really significant hopefully those answers help.

Yes. Thank you I appreciate it.

Alright. The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Hi, just a follow up Renee to the point you made on the $7 million revenue adjustment.

In RIS fee.

Should we be adding that back to normalize the run rate I think Deanna you showed a normalized run rate for that segment of $123 million. When we think about the go forward should we add back $7 million for that one time revenue adjustment or is that already factored in to the $1 23.

Okay.

Tom that's already been factored in.

In terms of let's make it a little bit cheaper.

So that the actual revenue.

True up was $3 5 million, which created a $77 million.

Dollar swing from second quarter to third quarter. So when we think about that run rate revenue that three and a half million adjustment is already reflected in would be reflected in what we see going forward that makes sense, but we did not adjust the significant variances.

For that so the ex significant variance earnings would be pressured by that three and a half million dollars.

I think as Tom Okay. So so I.

Yes.

The punch line, the 123 million is it good.

Baseline to assume going forward and to build off of.

Tom I think I would go back to using the revenue run rate that we described the basis points that we described.

And then thinking about the margins for full year 'twenty, one being at the low end of the range and using that as a guide for determining how 2021 will unfold.

And then longer term, we communicated guidance in Investor day.

That that looked at where we anticipate earning and revenue growth at the end of 'twenty. Three those guidance has remained intact and then what we'll do in 2020 to give you further guidance on how to do in 2022.

Okay. That's.

That's fair enough and just my follow up is.

Dan just can you do.

Any more color I think the last comments you made on what you were thinking about for risk transfer as you were going to package fixed annuities and life insurance together.

Is that still the case or has that evolved at all where you might consider separating them.

Are you on the life insurance side is it still <unk> only or are you open to doing something broader.

And what we've said and what we've what is currently out there being contemplated by potential buyers is our retail fixed annuity and our USG block.

The balance of the life business as we think about it's important strategically to be the company still very much remains intact, which is something we've talked about if the strategic review.

Other potential things, we can do within the closed block of the life insurance business, which would be separate and apart from the current transactions and what we're obtaining bids on four today as it relates to structure. We said our ideal outcome would be if they were combined however, having said that we know that the second.

Round bidders there are combinations of Standalone and combined and again the objective here is to maximize shareholder value.

For for obviously, our investors, but let me throw it over to Dan and see if he wants to add to that and just a clarification, we're marketing them together the actual structure that we transact will depend on what we think is the best for our customers and our shareholders and so we're entertaining.

Different combinations of those but we're marketing them at the same time, because we do know that some of these.

Interested parties.

You may think of them differently as they contemplate them together versus separately. So we're laser focused on executing on those blocks that we have told you about but obviously well constantly evaluate if there's other options that would make us.

Providing shareholder value and positively impact our capital and returns that helped them that does thanks. Thank you.

For the question.

Final question is from John Barnidge with Piper Sandler. Please go ahead.

Thank you can you talk about the strong growth in group sales, it's now above.

Pre pandemic, <unk> 19 distribution demand driven or kind of where is that coming from thanks.

Hats off to Amy and her team Amy you want to take that one sure yes. Thanks for the question.

Glad you noticed the strong growth because its really pretty remarkable we're seeing good traction are all across the nation in terms of that there's just general attractiveness in terms of group benefits our products I think the pandemic has helped the entire industry see how these products really helped provide support.

Mechanism and so the demand is high across the industry I would say, it's particularly high in the areas, where principal does really well, which is working with smaller mid size are growing employers and putting together packages across the ancillary lines of business that can make really good sense for them, whether theyre voluntary or <unk>.

Employee paid packages. The other piece I would say is that that really strong sales growth is also being complemented in terms of the total revenue growth by strong persistency or lapsed members, but good and are in group growth to places, where we're saying, we particularly do business with the types of customers who are either increasing wage.

<unk> are adding jobs, we're seeing that is particularly notable all of those things mean, it's a really good sign for revenue growth as we head into fourth quarter in 2022.

John do you have follow up.

No we're at the hour thanks for the answer.

Really appreciate it thank you.

We have reached the end of our Q&A session, Mr. Houston any closing comments.

Yes, the first thing I would just say.

As we've talked about some of these challenges the demand for their products and services. We have remain in high demand both in the U S as well as Asia, and Latin America, and as I said earlier those emerging markets can be challenging we know that we're going to continue to be disciplined on our capital deployment and we're going to continue to emphasize and grow these <unk>.

Light businesses Thats, a priority for the organization when we can deploy capital more capital intensive.

In some of these more capital intensive businesses, we want to make sure we're getting adequately paid and compensated for that so we certainly appreciate your continued support and look forward visiting with many of you on the weeks ahead, so with that have a great day. Thank you.

Thank you for participating in today's conference call. This call will be available for replay beginning at approximately one PM Eastern time until end of day November <unk> 2021, seven to one eight points you were one seven is the access code for the replay the number to dial for the replay is 855859.

2056, U S and Canadian callers or.

Or 4045, 37, 3406 international callers, ladies and gentlemen, thank you for participating you may all disconnect.

[music].

Yes.

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Okay.

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To one and a follow up so that we can get to everyone. In the queue I would now like to turn the conference over to John Egan, Vice President of Investor Relations.

Thank you and good morning.

Come to principal financial group's third quarter 2021 conference call as always materials related to today's call are available on our website at principal dotcom Backsplash investor.

Following a reading of the safe Harbor provision CEO, Dan Houston, and CFO Deanna <unk> will deliver some prepared remarks, then we will open up the call for questions.

It was available for the Q&A session include Renee Schaaf retirement income solutions.

Halter Global asset management, and Amy Friedrich U S insurance solutions.

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.

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 on our earnings release financial supplement and slide presentation, Dan Thanks, John and welcome to everyone on the call.

Good morning, I will discuss the progress we are making towards our strategic and financial targets and the key performance highlights for the third quarter Deanna will follow with additional details of our third quarter results as well as our current capital and financial position last week principal celebrated 20 years as a public company our evolution from a mutual insurance company.

A global financial services provider has been remarkable since our IPO in 2001, we've increased our AUM by more than eight times from 120 billion to nearly one trillion dollars.

And the number of customers. We serve has increased nearly four times from 13 million to $49 million today over the last two decades, we have whether through a global financial crisis volatile financial markets and geopolitical conditions and the complexity of a global pandemic, we've deliberately evolved our portfolio product offering.

And go to market approach to grow the business and meet the changing needs of our customers at the same time, we've stepped up and worked to act in a way that benefits society and the planet guided by a robust <unk> strategy, that's focused on reducing our carbon footprint strengthening our communities and advancing access to financials.

Security for more people and businesses.

At our Investor Day in June we shared how our long term strategy puts the customer at the center of what we do and leans into our competitive advantages, which are a differentiated and integrated solutions, our leadership position in higher growth markets and our deep and established customer reach we emphasized how our focus on a higher growth more.

As shown on slide four we are committed to achieving near term financial targets excluding.

These are transactions for the U S retail fixed annuity and universal life with secondary guarantee blocks and are confident we will have more to share in the coming months.

Underscoring the strength of our go forward strategy.

With this intense focus on executing on our strategy and serving our customers.

Robust U S labor market across many of our businesses.

We closed the third quarter with a total AUM of 981 billion <unk>.

Including $688 billion of AUM managed by principal.

Total AUM increased 34% compared with third quarter of 2020, reflecting $17 billion of net cash flow over the trailing 12 months strong investment performance and the migration of institutional retirement and trust retirement assets.

Total company net cash flow was a positive $4 $6 billion in third quarter more than double the prior year quarter with positive net cash flow across all of our business units.

Third quarter results are a testament to our focus on delivering outcomes for our customers through our integrated solution and differentiated capabilities.

AUM of $265 billion in the quarter.

As shown on slide six we continue to deliver strong long term investment performance at 69% of principal mutual funds Etfs separate accounts and collective investment trusts were above median for the three year period, 72% for the five year and 86% for the tenure.

For our Morningstar rated funds, 73% of fund level AUM had a four.

Four or five star rating longer term performance continues to position us well to attract retain assets, our flagship real estate products and yield oriented products, including preferred securities high yield in private assets continues to be in demand, we are expanding our direct lending capabilities and looking for <unk>.

Opportunities to deliver ESG capabilities across a variety of product categories and investment vehicles to meet evolving client demands and U S retirement and principal Supersaver study shows that despite market volatility during the pandemic over half of these retirement participants said they have saved more than their retirement plan.

Over the last 18 months and only 3% said they save less.

These trends are contributing to the 67% growth in reoccurring deposits and RIS fee compared to third quarter of 2020.

This reflects a 20% increase in reoccurring deposits on our legacy block.

<unk> from the migrated IRT retirement participants as well as the strong increase employer matches combined with strong transfer deposits and record contract retention.

<unk> reported positive net cash flow of approximately $1 billion in the third quarter.

Additionally, we had $2 $2 billion of RIS spread sales in the third quarter, including $1 $4 billion of MTN and get issuances and nearly $500 million of pension risk transfer sales. These strong sales generated more than $800 million of positive net cash flow.

Outside of the U S principal international reported $400 million of net cash flow and $156 million of.

AUM in the third quarter, a 5% increase in AUM on a constant currency basis compared to a year ago. Despite negative cash flow in Brazil. During the quarter, we continue to see growth in our multi mercado funds now which account for almost 30% of AUM in Brazil prep with 53 billion Brazilian rehab net cash flow year to date, we've <unk>.

<unk>, 69% of the market through these value added solutions for our customers that are higher revenue diversified funds, China AUM, which is not included in the reported AUM was $158 billion in the third quarter benefiting from positive net cash flow across all asset classes, we continue to see growth in equity net cash flow.

And AUM as retail investors look for higher value add products and U S benefits and protection were seeing increased demand for benefits <unk>.

<unk> hiring and favorable wage trends, notably group benefits trailing 12 month in group growth was a record two 7% for the total block and nearly 5% in businesses with under 200 employees turning to slide seven we continue to make progress on our ESG efforts.

We issued our first sustainability bond during the quarter.

The bonds 600 million dollar proceeds will be used to support green and social initiatives that reinforce our ESG commitments. We also launched a municipal bond impact strategy during the quarter. Our first in the U S, which is primarily offered to high net worth clients as a separately managed account we're focused on developing new ESG products.

We are evolving our portfolio to bring greater focus to our growth drivers and create greater value for our shareholders.

Now I'll turn it over to Diana who will go further into how this translates into our results Dana. Thanks, Dan Good morning to everyone on the call. This morning, I'll share the key contributors to our financial performance for the quarter as well as an update on our current financial and capital position.

Net income attributable to principal was $360 million in the third quarter, including $99 million of net realized capital losses was $6 million of credit losses.

We reported $458 million of non-GAAP operating earnings in the third quarter or $1 69 per diluted share excluding significant variances non-GAAP operating earnings of $444 million or $1 64 per diluted share increased 7% and 9% respectively compared to the third quarter of 2020.

Since the end of 2020, we've increased 300 basis points to nearly 14% through growth in earnings and higher levels of capital deployment. We're on track to reach our targeted 15% ROE by year end 2023, as we deploy capital in a more purposeful manner to higher return businesses return excess capital.

The shareholders and grow earnings.

These had a net positive impact to reported non-GAAP operating earnings of $18 million pretax $14 million after tax and <unk> <unk> per diluted share.

Favorable investment income was $91 million pre tax higher than expected in the third quarter, primarily driven by very favorable alternative investment returns and prepayment fees.

The net negative $33 million pre tax impact from the annual assumption review was primarily driven by updates to experience and economic assumptions.

Favorable impact as a result of updating variable annuity lapse rate assumptions were partially offset by a favorable impact on individual life, primarily due to interest rates.

While we didn't change our long term interest rate assumption. The starting point is approximately 40 basis points higher than where we expected rates to be a year ago.

While our COVID-19 impacts have been volatile quarter to quarter, the cumulative impact since the start of the pandemic is tracking right in line with our overall rule of thumb.

And account values in our S. B M. P. G I foreign exchange rates were a slight headwind compared to the second quarter, but a tailwind on a trailing 12 month basis impacts to reported pre tax operating earnings included a negative $2 million compared to second quarter 2021, a positive $4 million compared to third quarter 2000.

'twenty and a positive $6 million on a trailing 12 month basis.

Expenses, including hiring salary cost third party spend as well as marketing and advertising as revenues have increased over the past year. Some of these expenses have increased as well impacting comparability of results year over year.

RIS fee pre tax operating earnings were flat with a year ago quarter growth in net revenue was offset by higher expenses, including variable compensation and DAC amortization.

While we have been reporting the IRT revenue in our results since the transaction closed the associated account value didn't fully migrate until last quarter and that is now fully reflected in average account value.

As a result, our average annualized fee rate declined approximately 25 basis points from a year ago, and we expect annual fee compression to be between two to three basis points in 2022.

Our revenue mix also is now less equity market sensitive as the IRT block included more transaction based and participant base fees.

As a reminder, the IRT trust and custody business will migrate in the first quarter of 2022 later than what was assumed in our 2021 outlook.

As a result, we will continue to have some TSA and integration costs as well as delayed synergies pressuring our full year 2021 earnings and margin. We now expect that the full year margin to be at the lower end of our 23% to 27% guided range expense synergies have already started emerging and we are confident that we'll achieve our targeted.

$90 million in 2023.

<unk> benefited from strong management fees performance fees and continued disciplined expense management in the third quarter boosting growth in revenue and earnings and producing a 45% margin.

Pre tax operating earnings and margin benefited from a net $9 million from performance fees in the quarter.

Looking ahead to the fourth quarter, we anticipate another quarter of favorable impacts from variable investment income and Pgi performance fees. I also want to remind you that our enterprise fourth quarter compensation and other expenses are typically higher than other quarters due to seasonality of certain expenses like marketing and I T. We expect the impact of seasonality.

We'll be lower this fourth quarter than our typical 7% to 10%.

Turning to capital and liquidity on slide nine we are focused on returning excess capital to shareholders and plan to grade down to our targeted capital levels by year end 2022 at.

$190 million in excess of our targeted 400% risk based capital ratio estimated to be 412% and nearly $500 million of available cash in our subsidiaries. We will continue to maintain a 20% to 25% leverage ratio and expect to pay down $300 million of long term debt when it matures in late 2020.

Two as shown on slide 10, we deployed $371 million of capital during the third quarter, including $203 million of share repurchases and $168 million to common stock dividends.

Since the beginning of the year, we've returned over $1 billion of capital to shareholders.

We remain committed to returning $3 billion by the end of 2022 including one four to $1 $8 billion of share repurchases and $1 three to one $4 billion in common stock dividends. This excludes any impacts of potential transactions.

Last night, we announced the 64 common stock dividend payable in the fourth quarter of one or 2% increase from the dividend paid in the third quarter.

Our dividend yield is approximately 4% and we're on track to achieve our targeted 40% dividend payout ratio for the full year.

Through our refined focus on strengthened capital deployment strategy, we will invest in areas, where principal has established competitive advantages and the ability to meet targeted returns we have a clear path to becoming a high growth more capital efficient company, creating long term value for shareholders.

We are excited about the path forward focusing on our growth areas with established differentiators, allowing for improved focus returns and risk profile.

This concludes our prepared remarks, operator, please open the call for <unk>.

Yeah.

And the first question will come from Humphrey Lee with Dowling and partners. Please go ahead.

Good morning, and thank you for taking my questions. My first question is about capital deployment.

You reiterated the plan to return $3 billion to shareholders in 2021 and 2022.

Given the excess capital in RPC, you intend to draw down and they expect a free cash flow generation between now and the end of next year. This seems to be substantial flexibility at your disposal like how should we think about the capital deployment as you right size the excess capital.

Yes, good morning, Humphrey and I. Appreciate your question I think the best way to look at it as we went through a very rigorous process with the finance committee of the board of directors. When we were leading up to the strategic review and what you see today is this $3 billion of targeted capital deployment.

Dividend and share buyback, we also want to be mindful of potential ways to grow the business organically as well through acquisition, which is why you see that debt to equity ratio, where it's at today, but the bottom line is we have a lot of financial flexibility as we move and push our way through 'twenty and into 'twenty three and my guess is here when we're update.

Getting you in January on our outlook for next year, we will be refreshing that but with that let me throw it to Dan if he wants to add additional comments yeah. A couple of things there I think you've got to the right bottom line is that we have a lot of flexibility. In addition to buyback we remain committed to a 40% payout on our dividend ratio.

<unk> to prioritize that as we think about capital deployment and we have announced that we will use $300 million of that excess capital to pay down our debt that matures in the third quarter of 'twenty two.

Follow up comfort Yeah. My second question is about the pension business in Chile.

There have been many headlines on the proposed fourth withdrawal and the potential overhaul of the system proposed side one of the presidential candidates can you just talk about the kind of overall dynamic and in a worst case scenario what would be the the impacts on principle.

Yes, so it's a great question and if you'll allow me I'm going to probably be a little elongated in terms of trying to provide a comprehensive response here because I think it's a <unk>.

The Chilean has led the world around building this out after the Paygo system was shut down.

It works it has potential it was comp.

Complemented with a voluntary scheme that was added in addition to that to help people achieve that goal and as I said it was voluntary not compulsory and so there is relatively low participation.

Then comes along a pandemic and the government.

In addition to other ways of trying to provide solutions for Covid relief allow for AFP withdrawals of roughly 10% and as you know those were treated on a very favorable tax basis. There have been now three approved AFP withdrawals and one annuity withdrawal and they are now.

Contemplating a fourth.

AFP withdrawal and a second annuity withdrawal, it's although it's being heavily debated literally as we speak there are contemplating alternatives to these two.

<unk> and we don't know what the outcome is going to be but we also know that we're looking down the road here and a presidential election, which will certainly have some impact on the timing and the magnitude of this change. So now the question might be directly upper tier.

Question. The answer is we have been working extremely collaboratively with the government officials to try to educate key decision makers on ways to improve and stabilize the existing AFP models, you did or you may have read that principal did in both our rights as an investor requests in consultation with the Chilean government and again, we look for.

Would enhance the basic pension or the solidarity model, we support that we're squarely behind it if you think about pairing that along with an enhanced employer based system and removing that cap you can see how that could be quite additive to financial security and then lastly, there is a working session what the congressional.

<unk>.

Folks that will be occurring in the first quarter of 2022, and we will be working hard to try to promote the idea of a sustainable multi pillar retirement system. So.

<unk> by its very definition is in emerging markets they've had a good track record of good pension policy principal has a good working relationship with the key decision makers Roberta Walker and his team have just done a magnificent job down there. So we remain quite hopeful that there is a solution that allows us to still benefit.

Our institutional investors as we've been visiting with them, so hopefully that helps something.

Got it thank you for the color.

Alright.

The next question is from Ryan Krueger with <unk>. Please go ahead.

Hey, Thanks, Good morning, if I could just ask one quick follow up on Chile.

How big is I know that you don't your earnings are not affected by excess AFP withdrawals, but how big is the annuity business in.

In Chile for you at this point.

And if you want to quantify it for that quantify that and then also.

Yes, no we will find it here in the supplement for the size of the annuity would be the other the other point worth mentioning on the pension scheme, we do have a higher average balance for new items and as you know we have actually seen the number of participants in the AFP.

In large part because of the CIS.

System that we put in place that allowed us to have.

Payouts that occurred literally in a more.

Expedited manner.

Digital.

Wei.

Again has allowed us and endeared us that gives us more opportunity to expand on those relationships with those participants Deanna do you have a number there on the annuity piece Yeah couple of commentary I don't have the exact answer we can get back to you Ryan, but if you look on page 20 of the supplement you will see that our total AUM in Chile is around 41.

$1 billion and the chili Cook from AFP on balances as of 30 for the remainder of that would be our voluntary mutual fund as well as our annuity. So it would be some portion of that difference there. The other thing to expand upon Dan's comments on the fact that our customer base has been.

Less impacted obviously.

Having the Chilean <unk>.

People have money in there.

He is critical for the long term viability of our strong pension system, our customer base has been less impacted.

Partially due to the composition and partially due to some of the digital outreach that we've done for our customers. So just to put that into perspective as of the end of second quarter industry right, 20% of AFP.

Participants had a zero balance in their fund and for Cooper.

It was only 4% in the next closest competitor was at 13%.

So again, we are focused on obviously the long term financial security of the customer and I think that's a testament and a proof point relative to that thanks, Deanna Ryan do you have a follow up.

Yes.

I guess can you give us any sense of how much cost savings have been achieved to date relative to the $90 million target and then once the trust and custody migration occurs would you expect the remaining cost savings to be achieved fairly quickly.

Yes, I'll throw that through in a pretty quickly I just I'd be remiss if I didn't go on the record to say that.

Appropriate detail.

Ryan. Thank you for that question, we are on track to achieve the $90 million net.

Expense synergies by the end of 2023.

And so far we have recognized about 25% of that but you have to understand that is on an annual run rate basis.

So in any one quarter Youll see about we've achieved about $5 million of the savings so far.

In terms of the pattern for how we think this might emerge.

Certainly once the trust and custody business has been fully integrated and is onboard.

That'll allow us to begin to spend that.

Recordkeeping system on the Wells Fargo side, it allows us to reduce some of the duplicate head count.

But then longer term the synergy gains will continue to emerge as we automate processes and we continue to streamline the customer experience. So you can expect to see that the.

The expense synergies will emerge relatively smoothly from now to the end of 2023.

Hopefully that helped Brian Thank you very helpful.

The next question will come from Josh Shanker with Bank of America. Please go ahead.

Yes, sorry to go to South America again, but I'm wondering if we can talk more about Brazilian inflation, John help me out a little bit earlier, but.

Still need some help on the two indicators of inflation.

Whether they're converging or not whether they're I think they're not diverging further can you go into some details on how it impacts your outlook.

Absolutely.

Two things in addition to the inflation that have been helpful. Here and that is in the current quarter. They stayed on top of one another we didn't see divergent which was quite helpful. The other thing that occurred is we actually saw.

Interest rates move up roughly 2% from the year ago quarter from roughly four and a quarter to six.

So.

Much more of what we have seen kind of pre the current cycle when we did see some.

So those two indices separate.

So our outlook would continue to expect that convergence, but you could have some periods, where there is a little bit of a difference, but we do expect that to be more modest than what we've experienced over the last 12 months. So.

Again, we can follow up in more detail, but that would tell you what we saw here in the third quarter and what we anticipate going forward.

Radically enough in spite of the interest rate movement, which is favorable and inflation.

The market share leader when it comes to deposits for <unk> as well as <unk> for the industry roughly 30% of the flow. So strong strong operating results here masked by some macro events did you have a follow up yes. So just extend that chart. You included in the two Qs 21 <unk>.

Patient out one quarter.

Has the gap narrowed or is it.

Is it just.

The gaps how persistent but not gotten worse.

No again, we will extend that out but they were right on top of each other for the third quarter.

It didn't get worse or better.

Okay. Okay, and then on your long term your rating of your fund performance is excellent.

But it did.

You're at a little bit in <unk> I'm, just wondering if we could talk about which strategies and whether or not it's a.

Bias on how principle invest or whether or not.

It will revert and what you think about the third quarter performance.

My guess is it's a bias on everything that we do in terms of how we invest in short term and long term performance.

Yes. Thanks, Thanks for that question just in terms of.

The performance on the.

The one year I think it is really your specific question. We have a few strategies predominantly in our international suites that have dipped a little bit below the second quarter into third quarter.

One is our diversified international.

Continues to beat its benchmark, but from a performance perspective relative to peers a little bit.

And that performance long term very very strong performance don't see any concerns with the processor with the approach that the team has taken with respect to that the other two international sort of investment capabilities.

A little bit sort of in the third quarter category now a third quartile category, our international small cap and in Oregon.

Little bit of a preference in terms of what investors are looking for.

International small cap, we have a very strong quality bias strong finance momentum by us and really I think theres been no more of a risk on and away from strong fundamentals in quality bias right now in that category and then relative to Oregon again, just hard to keep up again quality bias rated sort of lower quality names seem to be.

Winning the day there so our process our approach our philosophy continues to stay intact long term numbers are very good for those two investment capabilities also.

Then just to round out in U S equities U S. Equities continues to do very well in third quarter.

In terms of the first and second quartile, 67% of those funds are still in the first or second quartile. So so feel pretty good about our equity some sweets feel good about our international suite.

Josh.

And frankly as you highlighted long term performance is driving really our flows.

And Thats, what investors are really looking at when they're making decisions to to retain their activity with us or to grow their activity with us.

And the four and five star Morningstar ratings that we're receiving and really the areas that we're continuing to produce significant net cash flow growth, whether it's our goal to us like a line.

Our small cap U S.

Or.

Capabilities and our income suites like preferreds unis emerging market debt high yield rates are continuing to be in that four and five star Morningstar category and are continuing to see positive net cash flow in the third quarter. So feel good about the depth and breadth of our investment capabilities relative to what we're seeing.

And the cluster interest and we're actually I think very aligned with investor interest. They are still looking for yield there are still looking for non correlated asset.

Experience and exposure I think our suite of investment capabilities offer a solution set for that.

So things are looking for inflation protection. So real estate today is offered in a nice sort of a fit to that capability and desire and they're looking for a global exposure and I think we have I think some long term investment capabilities that are well suited for that need so feel good about our capabilities our suite.

The one year numbers aren't really concerned to me at this point in time.

I think we're starting to see I think strong I think interest in.

As a continuation of our billets also in things like.

Listed infrastructure, so all good on that side. Thanks.

Thanks for the question and answer I appreciate it.

Very good.

The next question is from Andrew <unk> with Credit Suisse. Please go ahead.

Yes.

Hey, good morning.

Two follow up questions on some of the earlier questions.

With regard to capital management.

My understanding from the June Investor days that free cash flow.

From the subsidiaries to the parent would be about one $8 billion to $2 billion over the 'twenty one through 'twenty 2022 timeframe.

That figure represents roughly 50% to 55% of earnings.

But the company principal target, 70% to 80% capital returned to the parent company. So as I think about that figure in particular and I know.

Dan and Deanna tough you both talked a little bit about flexibility earlier.

I just wanted to zero in on that number because it's probably.

North of $5 billion shy of 70% to 80% range and.

And hence is it possible then given that flexibility.

There is room for at least another half a billion.

On the buyback.

Yes, so you are going to take that.

Thanks, Andrew for the question. So obviously theres a lot of components that go into a free cash flow and they can be volatile volatile by any one period, but over the long term, we do feel post transaction, we can be in that 70% to 80% range and we're continuing to work across our businesses to make sure that we stay in.

We remain in that range so.

Again relative to the particular timeframe, we're not saying every time frame will be in that range there could be some volatility around that but I think as you've done the math there could be some upside to that number as we think through the next couple of years.

Yeah.

Excellent.

Just following up on the <unk> question.

Could you.

I think it's I think AFP is around 4% of earnings could you clarify if I'm right on that and then with respect to the capital in that business. If you ever did decide to exit.

How much capital is sitting there and could that be extracted.

If you made that decision not that you would.

Well, yes, I mean, there's a lot of speculation in there I think the earnings of approximately four 6%.

And that range and we'll get back to you on the capital Thats currently deployed and shorted out the difference between <unk> and the balance of that business. As you know we also have an annuity business, there and in Chile, but thats a good item for follow up Andrew.

Okay, and the 6% is all in meaning its recruits annuity and mutual fund is what it is everything yep pension.

Our entire team.

Yeah. Thanks for the question.

The next question is from Tracy <unk> with Barclays. Please go ahead.

I'm curious if you have any updated views on Covid fatality it's.

Paul another life insurer forecasting hold at that 75 to 125.

And for Q and a 150000 next year with the bulk of the first half of the year just trying to think about what your updated forecast maybe just given the elevated activity in the fourth quarter.

Yeah, and Thats, certainly the delta variable, giving us all something to think about as we look at our modeling and our original projection scanner further thought yes, I mean, obviously, we can only go by what other governments and other agencies are forecasting and so we would be pretty close to what you see there are current forecast would have 90000 in the fourth quarter and around 100.

2022.

We did see a heightened number of deaths in the third quarter in our block more heavily weighted towards the younger ages and we still think our rule of thumb is.

Appropriate.

But we could skew a little bit higher over the next few quarters. If that continues to be more heavily dominated in the end.

And the younger ages, just because of our composition of business, but.

Since the start of the pandemic our rule of thumb is right on there is volatility by quarter will still continue to see that.

But that outlines what our current thought processes on fourth quarter and 2022.

I'm curious.

Yes, Thank you and yeah, it's really two block deal plans, it's good to hear that you'll be able to brief us in the coming months, but I'm wondering if you could discuss the trough that we're.

Where are you spending most of your time any conversations that get into that bid ask spread.

I am sorry, Tracy you broke up when you at the beginning part of your question could you ask that again.

Sure.

You kind of alluded that in the next coming months youre going to be able to brief us on your block deal plan.

We see our retail.

You all at G block.

In the meantime in those in that process. If you could just shed some light where are you spending most of your time in these conversations that ultimately get into the bid ask spread.

Yes, happy to happy to try to respond to that in the best way that I can first recognize that as you point out we've made the decision to divest the retail annuity business as well as USG theres better owners for those businesses. The first thing I'd say is there has been very strong interest in the assets.

Absolutely strong interest and so I think our window was actually quite good for the first round of bids the starting of the second round of bids has now begun and undoubtedly there is more refinements that will take place and as you asked the question. Our conversations are conversations through ourselves advisors very healthy these are pretty straightforward.

<unk> blocks of business. So I don't think Theres a lot of confusion, we're very confident in our ability to execute on the transactions and as we've said, we will look for opportunities to be increasingly capital efficient and creating long term shareholder value as we contemplate the proceeds but it's right on track with where we thought it would be their strong interest in the assets.

We're expediting it we're certainly moving it through the process.

Okay. Thank you.

The next question will come from Erik bass with Autonomous Research. Please go ahead.

Hi, Thank you on an adjusted basis RSP earnings were roughly flat.

<unk> 21 versus <unk>, 20, which I guess, if I'm somewhat surprising given the tailwind.

From positive markets positive flows and then some of the emerging synergies with just hoping you could give a little bit.

More color on the drivers there and then talk about the expected earnings power of the business heading into 2022.

Yes, good morning, it's a great question.

Drop of all of this which I find really interesting is we've got a record retention lowest lapses that we can think of they're higher deferral is higher retention theres employer matches returning.

We've expanded into the larger case market in spite of all of those strong fundamentals of the business, including Crs still really being the main stay of our of our value proposition to customers. It doesn't necessarily it reflected in operating earnings growth in the revenue growth and so really really is in the best position for.

Abide you some additional insight on that right now.

Thank you for that question, Eric and you're absolutely right. When you look at third quarter 'twenty, one earnings compared to one quarter a year ago. The earnings are flat and let me walk through the components of that and then share some additional insight with you about how to view this business going forward first off.

As you noted we did see nice tailwind from the equity market over the past year.

But those.

Tailwind, where offset first fi and notably by the IRT shock lapse, which was right in line with where we are at.

Shock lapses on a revenue basis came in.

Right, where we had anticipated with our acquisition model.

I also saw very normal fee compression during the same time period.

And as Dan noted in her comments, we did see increase in confidence.

Comp and other expenses as we return to a more normal working environment.

The other comment that I'll make is that we did have a one time revenue true up in third quarter 'twenty one.

And so when you compare.

Revenues.

Second quarter, 21% third quarter 21.

It created about a 7 million dollar reduction and again this is a one time revenue adjustment.

So now let me turn my comments.

Toward.

How we think about the <unk> business.

So one of the comments that deanna need with that if you look at our revenue as a <unk>.

Basis points apply it against the counterparty.

See about a 25 basis point drop one year from.

Our quarter one year ago.

In third quarter 2020, if you look at that C expressed as account values. It was about 63 basis points.

Third quarter of this year that fell to about 38% to 39 basis points.

The primary driver behind that decrease.

Is that we are combining Iot blocks of business that is characterized by large franchises with our legacy blocks of business that is more characterized in that small and medium size.

So large plants typically have a lower price point when you look at it on a basis point.

Method.

So logically when you blend those two together.

Fee rate decline and this was completely in line with our expectations. When we acquired the business and as we see the business.

<unk> began to unfold.

We also saw normal fee compression in that time period again in line with our expectations.

So moving forward, we think that that 38 39 basis point revenue fee revenue run rate.

Is a is a good place to start with your modeling.

Then as Deanna also noted.

Expect to see about a two to three basis points.

Headwind applied against that or normal fee compression.

So that's how to think about the revenue, let's turn our attention to the margin.

We're able to provide a much more smooth experience for our customers as they migrate onto our platform.

So what this means is that the TSA and the integration expenses will continue through the first quarter 2022.

When we look at full year 2020 margin.

We do believe that we will be in that 23% to 27% range that we communicated to you at the 2021 guidance, but at the low end of the range for the entire year.

I think in closing I think it's so important to see I think from our perspective is that the IRT acquisition did exactly what we wanted it to do it increased our scale and increased our capabilities, particularly in the large plan market.

And it created momentum for us across all plan sizes, as we strengthen our position as a top tier retirement provider and.

And I think the underlying strong fundamentals.

We enforce that strong sales strong client retention strong recurring deposits I'll speak to the strength of the underlying model Im very very pleased with what we see in terms of the strength of the business itself. So I'm, hoping that help.

Eric.

Yes. Thank you very much its helpful. I appreciate all the detail and then.

Follow up just sorry to go back to Chile, one more time, but I guess just with the election looming at the end of <unk>.

Remember.

I'm wondering how much power does a new president to make changes and then the AFP system.

If there were changes put in how it is that.

Mechanically happened.

Well, so hopefully that helps one additional comment Eric to your the back and forth with Rene there I wanted to weigh in on so the so the <unk>.

What on that to me would be it's why we have increased scale to drive down our cost per participant, which we've done that we're leveraging our technology. We're pulling all those other levers around asset retention and proprietary asset management and those roll ins and rollovers and as you very well know a lot of those.

Economics are not necessarily captured within that RIS fee line, there are captured within pgi and other parts of our ISR.

And we probably need to continue to work on refining how we demonstrate the value of that platform, but there's no question in my mind, the long term value creation of the <unk> platform is really significant hopefully those answers help.

Yes. Thank you I appreciate it.

Alright. The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Hi, just a follow up Renee to the point you made on the $7 million revenue adjustment.

In RIS fee.

Should we be adding that back to normalize the run rate I think Deanna you showed a normalized.

Run rate for that segment of $123 million. When we think about the go forward should we add back $7 million for that one time revenue adjustment or is that already factored in to the $1 23.

Okay.

Tom that's already been factored in.

In terms of let's make it a little bit deeper.

So the actual revenue.

True up was $3 5 million, which created a $7 7 million.

Swing from second quarter to third quarter. So when we think about that run rate revenue.

That $3 5 million adjustment is already reflected in would be reflected in what we see going forward.

That makes sense, but we did not adjust the significant variances for that so.

The X significant variance earnings would be pressured by that $3 5 million.

That makes sense okay.

So I.

Yes.

The punch line to $123 million is a good.

Baseline to assume going forward and to build off of.

Tom I think I would go back to using the revenue run rate that we described the basis points that we described.

And then thinking about the margins for full year 'twenty, one being at the low end of the range and using that as a guide for determining how 2021 will unfold.

And then longer term, we communicated guidance in the Investor day.

That that looked at where we anticipate earnings and revenue growth.

At the end of 'twenty three those guidance has remained intact and then what we'll do in 2020 to give you further guidance on how to do it 2022.

Okay. That's.

That's fair enough and just my follow up is.

Dan just can you.

Any more color I think the last comments you made on what you were thinking about for risk transfer as you were going to package fixed annuities and life insurance together.

Is that still the case or has that evolved at all where you might consider separating them.

And are you on the life insurance side is it still <unk> only or are you open to doing something broader.

And what we've said and what we've what is currently out there being contemplated by potential buyers is our retail fixed annuity and our USG block again.

The balance of the life business as we think about it's important strategically to be the company still very much remains intact, which is something we've talked about if the strategic review there is other potential things. We can do within the closed block of the life insurance business, which would be separate and apart from the current transactions.

We're obtaining bids on four today as it relates to structure, we said our ideal outcome would be if they were combined however, having said that we know that the second round bidders there are combinations of Standalone and combined and again the objective here is to maximize.

<unk> shareholder value.

For <unk>, our investors, but let me throw it over to the NMC, if she wants to add to that.

Clarification, we're marketing them together the actual structure that we transact will depend on what we think is the best for our customers and our shareholders and so we're entertaining.

Different combinations of those but we're marketing them at the same time, because we do know that some of these.

Interested parties.

May think of them differently as they contemplate them together versus separately. So we're laser focused on executing on those blocks that we have told you about but obviously, we'll constantly evaluate if there's other options that would make us.

Providing shareholder value and positively impact our capital and returns that helped them that does thanks. Thank you.

For the question.

Final question is from John Barnidge with Piper Sandler. Please go ahead.

Thank you can you talk about the strong growth in group sales it's now.

Pre pandemic, <unk> 19 distribution demand driven or kind of where is that coming from thanks.

Hats off to Amy and her team Amy you want to take that one sure yes. Thanks for the question.

<unk> I think the pandemic has helped the entire industry see how these products really help provide a support mechanism and so the demand is high across the industry I would say, it's particularly high in the areas, where principal does really well, which is working with smaller mid size are growing employers and put.

Together packages across the ancillary lines of business that can make really good sense for them, whether theyre voluntary or employer paid packages. The other piece I would say is that that really strong sales growth is also being complemented in terms of the total revenue growth by strong persistency or lapsed members with good and are in group growth.

Places, where we're saying, we particularly do business with the types of customers who are either increasing wages are adding jobs. We're seeing that is particularly notable all of those things mean, it's a really good sign for revenue growth as we head into fourth quarter in 2022.

John do you have follow up.

No we're at the hour thanks for the answer.

Really appreciate it thank you.

We have reached the end of our Q&A session, Mr. Houston any closing comments.

Yes, the first thing I would just say.

As we've talked about some of these challenges the demand for the products and services. We have remained in high demand both in the U S as well as Asia, and Latin America, and as I said earlier those emerging markets can be challenging we know that we're going to continue to be disciplined on our capital deployment, we're going to continue to emphasize and grow these <unk>.

<unk> light businesses Thats, a priority for the organization when we can deploy capital more capital intensive.

Thank you for participating in today's conference call. This call will be available for replay beginning at approximately one PM Eastern time until end of day November <unk> 2021, seven to 184017 is the access code for the replay the number to dial for the replay is 855859.

2056, U S and Canadian callers.

Or 4045, 37, 3406 international callers, ladies and gentlemen, thank you for participating you may all disconnect.

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