Principal Financial Group, Inc. (PFG) Q4 2012 Earnings Report, Transcript and Summary

Good morning, and welcome to the Principal Financial Group Fourth Quarter 2012 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to John Egan, Vice President of Investor Relations.

Thank you, and good morning. Welcome to the Principal Financial Group's fourth quarter and full year earnings conference call. As always, our earnings release, financial supplement, slides related to today's call and additional investment portfolio detail are available on our website at www.principal.com/investor. Following a reading of the Safe Harbor provision, CEO, Larry Zimpleman, and CFO, Terry Lillis, will deliver some prepared remarks. Then we will open up the call for questions. Others available for the Q&A are Jim McCaughan, Principal Global Investors; Luis Valdez, Principal International; Tim Dunbar, Chief Investment Officer; and Julia Lawler, Senior Vice President of Investment Services. 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 and quarterly report on Form 10-Q filed by the company with the Securities and Exchange Commission. Now I'd like to turn the call over to Larry.

Thanks, John, and welcome to everyone on the call. As usual, I'll comment on 3 areas. First, I'll discuss fourth quarter and full year 2012 results. Second, I'll provide an update on the continued successful execution of our strategy, and I'll close with some comments on capital management. As John mentioned, we provided slides related to today's call. Slide 4 outlines the themes for today's call. The company ended 2012 with a very strong fourth quarter. The business momentum continues to be strong, and with a better macroeconomic environment, the business fundamentals were able to come through to revenue and operating earnings. While there were some modest onetime positives, which Terry will discuss, we achieved a 16% increase in total company adjusted operating earnings per share compared to fourth quarter 2011. We ended fourth quarter 2012 with a record $403 billion in assets under management and $30 billion in total company net cash flow for 2012, outstanding results reflecting ongoing momentum in the businesses. This reflects our competitive advantage and the strength of our advisor-focused distribution model, as well as the strength of our joint venture partners. Some of the growth metrics from the quarter include: strong sales of $3.3 billion for full service accumulation, contributing to strong net cash flows of $1.6 billion in the quarter; strong sales of $4.2 billion in Principal Funds, contributing to net cash flows of $1.5 billion in the quarter; record unaffiliated assets under management of $98.2 billion in Principal Global Investors; strong net cash flows of $2 billion for Principal International; $85 million in Individual Life sales in the quarter, an increase of 56% over fourth quarter 2011, reflecting strong sales in all segments and continued success in the business market; and Specialty Benefits sales of 18% in the fourth quarter of 2012…

Thanks, Larry. As Larry mentioned, the fourth quarter was a very strong finish to 2012, showing continued business momentum as we move into the new year. This morning, I'll focus my comments on operating earnings for the quarter and full year; net income, including [Audio Gap] the strength of our capital position and balance sheet. Reported fourth quarter 2012 operating earnings of $244 million were up 21% over the reported fourth quarter 2011. Looking at Slide 6, you'll see the positive onetime benefits that helped fourth quarter 2012 operating earnings per share. The extraordinary and accelerated dividends the company has paid in fourth quarter 2012 benefited fourth quarter results by $0.03, and variable investment income from alternative investments added $0.01. Combined, these items benefited current quarter operating earnings by $0.04 per share. On an adjusted basis, fourth quarter 2012 earnings per share were up 16% over the year-ago quarter, reflecting strong execution and lower share count. Looking ahead, first quarter 2013 will be negatively impacted by closing costs for Cuprum, as well as normal seasonality in Principal Global Investors and Specialty Benefits. On a reported basis, 2012 full year earnings per share were up slightly. Adjusting 2012 for the third quarter actuarial assumption review, 2012 earnings per share were up 12%. This is a very strong result despite macroeconomic pressures such as low interest rates, a strengthening U.S. dollar and pricing pressures. Now I'll discuss business unit results. Slide 7 and 8 are the same slides that we provided on our outlook call. They summarize the expected 2013 and 5-year revenue growth rates and margins for each of the businesses. These drivers of profitability provide greater clarity for earnings growth by business unit and are key to how we measure our businesses going forward. We continue to believe we'll achieve…

[Operator Instructions] The first question comes from the line of Chris Giovanni with Goldman Sachs.

I guess first question, can you comment just in terms of the large account that you lost within Origin in terms of maybe what you were collecting on fees relative to the rest of the book?

Chris, this is Larry. I'll have Jim comment on that.

Yes, Chris. The large account that exited Origin was about $800 million in asset value, and the fee was a bit lower than Origin's typical because it's a large account, but it was in the order of below 30s of basis points. So there's a bit of a loss there. However, I would point out that Origin has had growth from other sources, and we're expecting revenues in 2013 to be at or slightly above the run rate when we bought the firm just over a year ago. And just in case I can anticipate your next question, the testing of goodwill, we're well in the right side of that one. So although that was an outflow in the quarter, we are pretty confident of the general situation and the solidity of Origin's client base. Just to elaborate, if I may, this was a case where a large client wanted to move several managers into a single strategic relationship. We pitched for that. I believe we were a very credible finalist but on the day, we didn't get it. I think that's true of many of these large institutional pitches, but we're definitely in the frame and a very credible contender for that kind of case.

Okay. And then just 2 other quick ones. One, in terms of the growth in number of plans. You're getting some pretty nice growth there really in all employer sizes. Can you just comment some on the fee dynamics in terms of what you're seeing in that growth, maybe versus your core book and what you currently have in place?

Chris, yes. This is Larry. I think we said in the earlier comments to give you some kind of insight into that, as you know, the actual new sales were up about 36% in 2012. We commented that the annualized fee revenue of that business was actually up 46% over the prior year. So you can see that we're gaining traction, if you will, in terms of, if you will, revenue per dollar as it relates to new sales. And part of that is as a result of focusing a little bit more on the small and medium. Now I'm always a little cautious because when we suggest that we're focusing more in the small and medium, it sounds like we're sort of running away from a different part of the market, and that's not really the case. This really again is more about deploying additional resources and making additional investments. And so it's not like we're running away from an existing book of business or larger plans. We just think at the moment there remains a great opportunity. Part of this, as an example, Chris, is with our Edward Jones relationship. You may remember we brought that relationship on at the start of 2012. And they're an example of the type of firm that is completely and squarely focused on small, medium business. So just as we follow these opportunities, it's taking us a little bit more in that direction, which, of course, we like financially anyway.

Okay. And then just last quick one in terms of the Cuprum acquisition, the multiple you guys paid 13x. The announcement this morning from Met, they're acquiring a similar business for 10.5x. So just curious why the price that kind of you pay, is it the assets to a participant where you think there's better growth on the voluntary side? A little color would be helpful.

Yes, it's a very good question, Chris. I'll make a couple of comments. Luis may want to add some things. First of all, I think that you would have to be a little careful of evaluating the sort of initial financials that come out in a transaction like this. There's some confusion, I think, about the multiples because there's a piece of the company actually owned by BBVA directly. There's a piece that they control through ADRs. So there's going to be -- I think it's going to take a little while before we ultimately know what that multiple looks like. I will tell you, based on kind of our own calculations, we think the multiples, both on their transaction and our transaction are in that kind of 11x to 12x PE range. So I think by the time all the dust settles, we'll find those are very comparable PEs. If they are comparable PEs, I would still argue that our Cuprum acquisition represents better value. And the primary reason for that is that 2 things. First of all, the average AUM per contributor is much, much higher in Cuprum, and Luis may be able to give you some detail on that. And the other thing is that the real opportunity in Chile, the real opportunity and the growth opportunity in the future is really on the voluntary side. So one of the things that you want to look at very carefully in evaluating an acquisition there is how many of the contributors are eligible for additional voluntary. And so in the case of the industry overall, that's about 50% of the contributors. But in the case of Cuprum, our acquisition, about 70% of those contributors are eligible for voluntary contribution. So that's really the growth opportunity and the longer-term opportunity in the AFP business. So I think there's really no question that sort of pound-for-pound and strategically, Cuprum represents better value than Provida, which is a well-respected AFP, but is more of a middle income, lower middle income, whereas ours is more of a middle income and affluent sort of segment. So Luis, any comment?

As Larry mentioned, our preliminary analysis about this transaction is confirming our evaluations for this business in Latin America, in particular in Chile. As Larry mentioned, you could see some differences between Cuprum and Provida. But all in all, we are very clear that we have the right valuation for our acquisitions. And again, we are very clear that Cuprum was a very good acquisition for us and we're very happy about that.

Your next question comes from the line of Sean Dargan with Macquarie.

When I think about the strong operating results that you showed in the fourth quarter and I look at the assumptions baked into your 2013 outlook, and I think the S&P 500 has performed better than is baked in there, and at least 10-year treasury yields are higher. Should we not think of the outlook as being conservative now at this point?

Sean, this is Larry. Well, we all know that a quarter's a quarter. So it's certainly true that the macroeconomic conditions, Sean, that have been in place since our earnings driver call have been more favorable, the macroeconomic events have been more favorable than would have been implied in our earnings drivers. So I accept the premise of the question. I think we'll just have to see, however, because we obviously don't do quarterly guidance. We don't even really do annual guidance. We do guidance on earnings drivers. So I think we'll just have to see as we go forward into 2013 whether those macroeconomic events sort of stay in a favorable mode and may even ultimately become tailwinds as compared to the latter part in 2011 and most of 2012 when the macroeconomic event -- factors were really headwinds. So perhaps some reason for optimism, but it's still very early.

Got it and one follow-up. You said that you are going to close the Cuprum acquisition next week, and you got the shares tendered from Penta. But I thought I saw something in the news about the Chilean regulators having a concern with the tender process. Can you just maybe give us an update on what that concern was and if that's taken care of?

Sure, I'll have Luis comment, Sean. But again, just to be clear, the tender offer process has been completed. It's been completed successfully, and we do have in hand all the approvals from the pensions regulator. So our intent will be to complete this transaction. We're estimating right now on February 4. So Luis, anything to add?

No concerns particularly about the tender offer in particular. The regulator was asking to -- us to clarify certain aspects in the article within our prospect related with expenses mainly, but no concerns in particular. Those items were pretty clarified and the tender offer was declared a very successful one.

Your next question comes from the line of Randy Binner with FBR. Randy Binner - FBR Capital Markets & Co., Research Division: I wanted to kind of jump to the couple of laws and policy items. One, Larry, you mentioned the S&L deregistrations kind of not affecting the bank performance. But I was wondering if we get a little more color on kind of what that looks like on the ground. And then the other question I have is just around DRD. We're right ahead of the budget that comes out in a couple of weeks or 3 weeks. I mean, any thoughts on how DRD might change with the upcoming budget?

Yes, Randy, maybe a couple of comments. I'm not completely sure that I caught the gist of the first question on the S&L deregistration. I think that again, we continue to pursue that. As I said in my comments, we think it will take several months, but we don't -- we haven't seen anything so far that would cause us to think this is proceeding in any way different than we would have expected. It does appear that while there's still actually very few deregistrations that have been completed, it seems like a time frame in sort of the 6- to 9-month period sort of end to end, seems kind of reasonable. But I will also say if you've seen one deregistration process, you've seen one deregistration process because they really are all a little bit different because the entities may want to offer some banking products, maybe not others, another deregistration may not want to offer any at all. So they really are different. But again, I would just say that the discussions have been very, very constructive. I think the right questions are being asked and the right answers are being given and the process is moving forward. So we'll continue to keep you updated on that one, but again, everything is moving as we expect. On the DRD issue, I mean, there is a DRD tax benefit for an obvious reason to avoid double taxation. If we -- I think the only basis on which DRD gets changed, Randy, I think is if there's a broader corporate tax reform that happens in this country. And I would say while in the latter part of 2011 as I make my frequent trips to Washington, D.C. and listen to decision makers there, I might have had some hope in the latter part of 2011 that there actually might have been some corporate tax reform. But I will tell you that as I listen to the dialogue today post the election, I would say my view that the probability of corporate tax reform is going down and is going down fairly substantially. So I'm not expecting and we're not expecting necessarily any significant change in DRD unless a broader corporate tax reform happens. So that's about the best I can tell you on that one. Randy Binner - FBR Capital Markets & Co., Research Division: No, understood and we agree on that. I guess on the bank -- sorry, if I was vague in my question, but we assume some level of operating earnings from the bank and it's not a huge part of the business. But I mean, I guess so far, that process is not affecting how the business is operating or is it too early to tell?

Correct, yes. So the bank earns about $8 million a quarter, and it's a little bit too early to tell as to how that might change. I think if we have -- if we're able to accomplish all the things that we want to accomplish with the deregistration, which would still allow us to offer some level of banking products, maybe not the full suite we have today, it could impact that number a little bit. But again, relative to total complex, it's not going to be significant. I hope that helps. Randy Binner - FBR Capital Markets & Co., Research Division: Yes, it does.

Your next question comes from the line of Eric Berg with RBC.

There seems to be a changing dynamic, you discussed it in detail in your 401(k) business, where asset growth seems to be slowing but meaning you're getting very strong net flows. But because those strong net flows are fairly stable and against a growing asset base, the rate of growth, while still positive, is slowing. It seems, too, that you're changing the nature of -- you're trying to change the nature of your customers in favor of customers who may give you more revenue. I don't know about the profitability but more revenue. There's so much going on here. I guess the first question would be this, maybe, Terry, could you go over exactly what you were saying about the outlook for sales in 2013 for flows and for revenues because those are 3 completely different ideas? And I just want to make sure, for starters, I understand that, sales, flows and revenues in FSA.

Okay, go ahead Terry.

Sure. Eric, this is Terry. What I said was that we're expecting sales for full service accumulation in 2013 to be a comparable asset level. However, the revenue that's going to be generated off those new sales should be at a higher level and then actually seeing double-digit growth in that revenue generated by those new sales. Why is that? Because as Larry mentioned, we're going to be focusing on and adding more resources to the smaller to midsize client, not necessarily moving away from the larger client. But as we do that, it will generate more revenue because we'll see more proprietary investment offerings. So as a result of that, there should be some additional profitability for the business.

And just to make -- I'm sorry, just to finish off a comment on the flows because you asked about flows. So -- well first, on a general statement, Eric, you're correct that obviously a growing block of business, it can become more difficult to maintain growth as a block gets bigger and bigger and bigger. Witness Apple as an example as a company. So we sort of all know that's true. In the case of flows, again, what we'd expect is that sales will be relatively flat. Likely what that means, Eric, is that flows would actually be down a little bit. Net flows will be down from $7 billion. Now just so as people don't overreact to that, recognize that $7 billion of flows in 2012 was over 6% of the beginning-of-period account value. And you'll remember that our long-term guidance has been 4% to 6%. So we are outside the high end of that particular range. So the fact that flows maybe a little less shouldn't necessarily be a concern. It's really more back in line with what our longer-term guidance had been. And then finally, you have the issue of revenues, which Terry said, will be increasing our annualized new sales or annualized revenue of new sales another 10% to 15%. So what's happening here basically is that the margin, if you will, on new business and the margin on existing business are now starting to compress and get very close together, which is what's going to stabilize the overall returns on full service accumulation going forward.

If I could ask just one follow-up and then we'll go on to the next caller. Since you don't -- I don't think you report out that portion of your new money coming in the door that is going to be managed by Jim's group. I don't think you do as opposed to by sub-advised relationships or full third parties, both sort of completely outsiders. We don't get that breakdown. I'm looking for a way to keep score on how you are doing with this effort to bring in more revenue-rich business? And I'm just wondering about the following: do you think that we should be tracking as a way to keep score the rate of growth of your revenues versus the rate of growth of your assets with the idea being that if in fact you are succeeding in taking in more revenue-rich products than in the past, that rate of growth of revenues should be higher than the rate of growth in assets, if you can follow my line of thought?

Absolutely, Eric, this is Larry. I absolutely follow line of thought and agree with -- conceptually agree with what you said. If you look at -- I think it's Page 27. We don't need to talk about it now. We need to move on but on 27 of our financial supplement, you can sort of track what we're talking about in terms of PGI's investments as a proportion of the full service accumulation platform. I would just say as a general comment on that, that percentage has been holding or increasing slightly. So PGI is managing about 55%, 56% -- I'm sorry. In total, the proprietary is about 66%, and PGI manages about 55 points of the 65 points. So we're doing well on that score. And the reason we've included the revenue in the script, we'll continue to do that or think about maybe adding that to the supplement.

Thank you for that reminder about Page 27. That's helpful.

Then the page -- I mean Page 29 goes into detail that I think would answer exactly your question, Eric. This is Jim.

Your next question comes from the line of Erik Bass with Citigroup.

Do you think about PGI's current capabilities? Where do you think you're best positioned? And maybe what asset classes do you think you still need to add to or increase capacity? I guess related to that, can you talk about how you think PGI's positioned if we do start to see a shift from fixed income to equities more broadly?

Yes. This is Larry, and first of all, let me also say, welcome and we appreciate the coverage that you've picked up on us. So with that, I'll have Jim take your questions.

With your last question, which is really what happens if the emphasis goes in customer demand from fixed income to equities. As you know, we've done really well in Principal Mutual Funds and full service accumulation, as well as Principal Global Investors from the investor focus on yield-biased assets. We have had very good flows into high yield into preferred securities and then the global diversified income fund that was launched in Principal Mutual Funds. So as you rightly indicate, our strength in fixed income has stood us in very good stead in the last 2 or 3 years as that's been what investors want. We have actually got some very competitive investment products and equities as well, and some were mentioned in the script with the MidCap Blend Fund, which is the same team manages the Blue Chip Fund, which is Large Cap Quality Growth. We have the equity income fund and the capital appreciation fund at Edge. So if the start -- if the bias in investor demand towards equities continues as it seems to have started in January, then we will be extremely well placed to capture that looking forward. On the broader question of how we're managing Principal's investment platform, it's very important nowadays to have really top-performing assets in various categories. And then equities, for example, I mentioned our capabilities managed by Principal Global Equities and by Edge, we also have some very high-quality capabilities at Columbus Circle and at Origin. Their performance is probably broadly second quartile [Audio Gap] with their very strong capabilities that will show well at times. So with those 4 groups, I think we're pretty well placed in equities. In real estate, we've been a leader for a long time. Our big thrust for future development there is likely be to be towards international real estate. We've already got a global client base, a very strong global client base for U.S. real estate. The gap in our product range is really managing a private real estate on an international basis. So we're quite happy there, but we have work to do on the international side. And by the way, that can be both organic and by acquisition. And then lastly on fixed income, as you know, we added to emerging market debt with the Finisterre acquisition. We've been developing very successfully emerging market debt within Principal Global Fixed Income. So I would say our suite of yield-biased assets is probably taking our fixed income and real estate together about the strongest in the industry. I feel pretty good about where we are, but clients will continue to demand strong investment across the board. So as well as adding for gaps, I think some further diversification in our investment capability will be important so that we can continue producing for our clients and for sales channels top-tier investments whatever happens.

Perfect. And then just on that last point, it sounds like you expected that diversification to come both still organically as well as through potential additional M&A. Is that right?

Yes, absolutely. I'll give you a specific example. We took our high-yield capabilities last year and developed short-duration high-yield products, which have gone very well with certain parts of the client base. That's the kind of organic diversification that needs to be done as well to satisfy changing client demand.

Your next question comes from the line of Yaron Kinar with Deutsche Bank.

I want to look at the full service accumulation business from maybe others because -- so new sales were up $3.3 billion this quarter, which clear on an absolute basis is an impressive number. But if I look at it year-over-year, it seems like growth has slowed down a bit. I was hoping to get a little more color on why that was the case.

Yes, Yaron, this is Larry. The better metric really is to look at the sales over, I would say, I would recommend, a trailing 12-month basis. And of course, we're now at the point where we're calendar year over calendar year. So I think really the way to look at that would be to look at the whole year, which is $11.5 billion over $8.4 billion in 2011. Within the context of quarter-to-quarter, sales could be a little bit lumpy. So even though the fourth quarter sales 2012 were frankly just a bit higher, that wouldn't be the comparison because these things will kind of ebb and flow. In other words, there's not a lot of difference between having a 12/15 effective date, which is a sale in 1 year versus a 1/15 date, which is a sale on the following year. So you really need to get sort of a trailing 12 months. There's a lot of momentum behind the business. If we look at our pipelines, our pipelines continue to grow, and our close ratios actually continue to hold or get better. So we do have optimism going forward, albeit, as Terry has said I think both in his script and in some answers, what we're really focused on in 2013 is a combination of moving assets and moving net revenues. So it's going to be a balanced approach in 2013.

Got it. And then in terms of the increased focus on small mid-level accounts, can you remind us kind of what you would characterize as a small account?

Yes, good question. We normally think about smaller plans as being sort of in the below -- plan assets below the sort of $100 million to $150 million range is normally what we would think of as kind of small- and medium-size plans. So these are -- oftentimes, they're startup and quite often, they have $5 million, $10 million, and midsize would get into the $50 million, $70 million range. But those would be plan assets. Again, about 70% of the business we write is a takeover plan so there are existing assets. So those are -- that's our notion of small and medium.

And do you think about it in headcount numbers as well or is it just assets?

Well, we actually would probably think about it more in terms of assets per participant. So I mean that would really be the way we think about it. There are plans that have very large headcounts, and some competitors will go after those because they are a large headcount. But as we know in this business, Yaron, what really drives the business is the combination of revenue and profitability and revenue is, for the most part, revenue is tied to assets.

Got it. I guess what I'm getting at here is I've seen the headlines over the potential impact of the health care reform on companies keeping headcount low below 50. I was just curious if that would have any impact on either growth trajectory or plans?

Yes, I mean, frankly, I hadn't sort of extrapolated that into the whole equation, to be honest with you. I don't -- I think, really, as long as payrolls continue and salaries continue to sort of hold in at the level they are, as long as we don't get back to a 2008, '09 where you were seeing significant reduction in compensation in an attempt to save expenses. So as long as salaries continue to hold steady and merit increases continue to be given, those are all favorable trends for our business.

Yaron, this is Terry. One of the metrics that we look at is the movement in the recurring deposits to get to that point. Pre-financial crisis, we saw a significant increase year-over-year in recurring deposits due in large part due to salary increases, deferral increases, participation increases as well as employment increases. Now we're seeing some of those deferral increases, the participation, the new contracts coming on generating that. But we're not seeing a lot of additional movement inside an existing plan in terms of new employees. Now in order for us to get a quantum leap in that recurring deposits, you'll see when employment comes back, you'll see that increase occur there.

Your next question comes from the line of Jimmy Bhullar with JPMorgan. Jamminder S. Bhullar - JP Morgan Chase & Co, Research Division: Larry, overall, obviously, it seems like it's actually a pretty strong quarter. A couple of points that I thought were a little weak, FSA margins came lower especially if you adjust for the DRD whether you look at it on a return on net revenue or ROA basis. And then PGI flows were a little light. You mentioned the Origin issue, but there's also the restructuring of the emerging markets' teams so do you expect an ongoing -- any ongoing weakness because of that?

This is Larry. On the point about FSA margins, what I would say on that, and I've said this many, many, many times, is I think it's important not to take a period that's going to be as short as a calendar quarter and try to sort of annualize or divine some inflection point in that. I think the key thing here is that we are adding more revenue per dollar of new sales, we are compressing the revenue rates between the existing book and the new sales book, and that is going to stabilize those margins and move in to that range that we talked about over the long term. So I feel very, very good about where we are with our strategy around margins for that particular business. And I'll let Jim make a few comments on the emerging market restructure and how well that's gone because it's actually a positive point.

Yes, the emerging market restructure led -- some clients obviously are unsettled by any change, and it led to outflows in the order of about $1 billion during the fourth quarter. Obviously, that was offset against the PGI levels some very robust inflows elsewhere. I would characterize the emerging market restructure as firstly, we have managed by recruiting people that know our strategy and have been with us in the past and have followed us closely. We've managed to put a very solid team together that actually is as experienced as it ever was before. And we've been around all of the big clients quite intensively because you obviously communicate very closely on any changes. And I would observe as far as we can see that they're pretty rock solid and actually very encouraging of those in terms of the way we're evolving that process. So we feel we're in a very good situation. Basically, we were very proactive in terms of communication and remain very close to clients and distributors. And I think basically, the $1 billion outflow was a short 10% of the assets managed by that group, and basically it was a fourth quarter event. We're not expecting any material amount going forward.

And Jimmy, this is Larry. I would just make 2 quick additional points, data points. I said in my comments that PGI was recognized by Pensions & Investments as the top place for larger money management firms. It's interesting to note that the primary determinant of that award is based on employee input from PGI. So I think that should give you good insight and comfort about how the broad group of PGI employees feel about both PGI and Principal. And the second thing I would say and Jim's a little bit humble on this one -- the second thing I would say is in the restructured emerging market team, there were actually 2 employees who formerly worked at PGI who came back, who left and came back to PGI as part of the emerging markets' restructure. And I would venture to say you'll find very few instances in the asset management business where people would hold up their hand and ask to return to come back to the place they worked previously. So those are very strong proof points for PGI's capabilities going forward. Jamminder S. Bhullar - JP Morgan Chase & Co, Research Division: Okay. And not sort of dance on the call, but the Edward Jones partnership seems like it's gone pretty well so far. But maybe if you talk about it, if it's fully ramped up already or do you expect to further pick up in contribution from that?

Yes, this is Larry. The Edward Jones relationship has gone very well. I think that the buildup of the pipeline to, let's just say, any given level but typically, we think in terms of $1 billion, is faster in the Edward Jones relationship and ramp-up than anything we had seen previously. Although I think in fairness, it reflects the fact that Principal really is a marquee name among financial advisers for either mutual funds or retirement plans. So that relationship's going very well and it is part of the contribution toward the increase in plan count of 1,250 in 2012. So we're very excited about that going forward.

We reached the end of our Q&A. Mr. Zimpleman, your closing comments please.

I'd just again like to thank everybody for joining today's call. We're pleased with our very strong finish to 2012, and we think that the continued momentum of our businesses makes us optimistic going into 2013, although we know there will be continued macroeconomic pressure. As we prepare to complete our Cuprum acquisition on Monday, we look forward to creating a best-in-class retirement platform in Chile and in other key markets in Latin America. We continue to believe that our fee-based business model gives us greater financial flexibility and the ability to create long-term shareholder value through capital deployment, as was demonstrated with our increase in common stock dividend announced last night. So thanks again, everybody, for listening. I look forward to seeing many of you on the road in the days ahead. Have a great day.

Thank you for participating in today's conference call. This call will be available for replay beginning at approximately 8:00 p.m. Eastern Time until end of day, February 8, 2013. The access code for the replay is 83659918. The number to dial for the replay is (855) 859-2056 for U.S. and Canadian callers, or (404) 537-3406 for international callers. Thank you. You may now disconnect.