Good morning and welcome to The Principal Financial Group Third Quarter 2015 Financial Results Conference Call. There will be a question-and-answer period after the speakers have completed their prepared remarks. I would now like to turn the conference over to John Egan, Vice President of Investor Relations.

Thank you and good morning. Welcome to The Principal Financial Group's third quarter earnings conference call. As always, our earnings release, financial supplement and slides related to today's call are available on our website at www.principal.com/investor. Following the reading of the Safe Harbor provision, CEO, Dan Houston; 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 Nora Everett, Retirement and Investor Services; Jim McCaughan, Principal Global Investors; Luis Valdés, Principal International; Deanna Strable, U.S. Insurance Solutions and Tim Dunbar, our Chief Investment Officer. 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. Before we discuss the quarterly financial results, I want to remind you of the investor workshop we're holding on November 6 in New York City. Dan Houston, Jim McCaughan and other members of our leadership team will provide an update on our strategy and discuss the benefits of integrating Principal Funds and Principal Global Investors. Additionally, Terry Lillis will provide an overview of the enhancements we're making to our financial supplement. Registration details are on our website. We look forward to seeing you there. Now, I would like to turn the call over to Dan. Daniel Joseph Houston - President, Chief Executive Officer & Director: Thanks, John. And welcome to everyone on the call. As this is…

The first question comes from John Nadel from Piper Jaffray. John M. Nadel - Piper Jaffray & Co (Broker): Good morning, everybody. Dan, I guess a question to start. With the change in management, recognizing that there's likely very little, if any, change in strategy, just a question for you about capital deployment. I realize that the longer term track record here on the acquisition side remains very sound, but given the recent intangible impairments, when you look at Liongate and Claritas, I am curious whether you might have a different view about the method of deploying free cash flow and capital as we look forward? Daniel Joseph Houston - President, Chief Executive Officer & Director: Yeah, John, thank you for the question. Just a couple of comments, and I've got to appreciate your perspective, but our capital strategy will remain the same. It's going to be a very balanced approach. Increasingly, we become more driven by our fee businesses, which, gives us, frankly, more flexibility. We can demonstrate through a lot of Jim's operations, when I think about WM Funds and Morley and Spectrum and Origin and Finisterre, HSBC Mexico, these are really, really strong results. When I look at the Luis' Cuprum, AXA, Brasilprev and the exclusive distribution agreement that was added to, we've got actually a very strong track record of executing on successfully integrating companies that we've acquired, supplementing our organic growth strategies. Having said that, in the case of Liongate that you cited, Liongate, I think, is a one-off. It was an asset class that our timing wasn't good. The performance was underwhelming and caused us to lose a lot of the assets. We recognized that, we did our due diligence, we did our look back, and certainly understand perhaps how we could go about…

Your next question is from Ryan Krueger from KBW. Ryan J. Krueger - Keefe, Bruyette & Woods, Inc.: Hi. Thanks. Good morning. First, just a separate follow-up on the international business. It looked like China earnings were up pretty significantly. I was just hoping you could give a little bit of an update on what's going on there and if that's sustainable. Daniel Joseph Houston - President, Chief Executive Officer & Director: Yeah, Ryan, thank you. And, yeah, you're right. This is a quarter that we've called that out. It has increasingly become significant, both from a profitability perspective, net cash flow as well as sales. And so, Luis, you want to go ahead and provide some additional color? Luis Valdés - President-Principal International: Yes, absolutely. Ryan, I mean – and again, this is the result of our own strategy. As we have said, we're very much more patient oriented, long-term saving oriented, so our offering and value proposition in all of those markets is in that sense. So as long as we start having this kind of choppy road in China and very volatile market, essentially what is happening is customers are flying into – they fly to quality and they are looking for a safe harbor. And that is exactly what we're offering there. So we're perceived in our JV attached to the CCB, which is the second largest bank in China, we are perceived as a safe harbor. And we have had this tremendous amount of net customer cash flow. So that in essence, in one year, we doubled the size of our company. So we're running a company with $41 billion in total AUMs, and we think that we're going to continue looking and facing that kind of reality. So all these kind of things that…

Your next question comes from Tom Gallagher from Credit Suisse. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Hi. First question is on the actuarial review and the 50 basis point reduction in interest rates. Can you comment on the long end of the curve, where does that put you from an absolute standpoint? What is the absolute rate assumption that you're now using? That's question number one. And then just relatedly, can you talk about the mechanics that resulted in no net charge and the fact that it was favorable overall? What were the other offsets within the assumptions that more than offset the negative impact of interest rates? Daniel Joseph Houston - President, Chief Executive Officer & Director: Very good. Thanks, Tom, for those questions. I'll just have Terry go ahead and respond. Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah, Tom, this is Terry. On the long end of the interest rates, we look at the 30 years out plus. And as you can do with any actuarial reserve, we try to make our current best estimate of what's going to happen in the future. And none of us have a clear, crystal ball in it, but what we do is we look out and see what the trends are and then make some adjustments. Back in 2012, we looked at the long-term interest rate and lowered it as well and also changed the trajectory of it. But now we're seeing that that interest rate environment is staying longer and longer out into the future. So we looked out 30 years and we lowered our long-term rate by 50 basis points. Now, that is meaningful probably most for the life insurance business. The other businesses have a shorter duration, so when…

Our next question is from Sean Dargan from Macquarie. Sean Dargan - Macquarie Capital (USA), Inc.: Thanks and good morning. I have a question about your capital deployment strategy. Last year, we saw three different dividend raises over the course of the calendar year. It's been flat at $0.38 over the four quarters this year. You've talked about getting to a 40% payout ratio, I'm just wondering if anything's changed in your thinking? Daniel Joseph Houston - President, Chief Executive Officer & Director: No, not at all, Sean. And again, thanks for calling in this morning. Our commitment still remains the same relative to our dividend payout. If you look at it over a trailing 12-month basis, it's up 17%. The targeted payout still is right at 40%. I think if you did your math, it's somewhere around 36% today. So it's right well within the range. And that over the course of the next couple of years, we would expect to have the dividend securely at that 40%, absent something dramatic happening. So, hopefully that helps. Sean Dargan - Macquarie Capital (USA), Inc.: It does. Thanks. And coming back to Principal International, the underlying trends have been okay, I guess, considering what's been going on in the local markets, but the U.S. GAAP results are obviously being obfuscated by the FX headwinds. Have you given any thought to hedging the income statement impact of FX, or is it just too expensive now? Daniel Joseph Houston - President, Chief Executive Officer & Director: Yeah, with that, maybe I'll have Terry go ahead and tackle that question. Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah. Sean, this is Terry. As we look at this, we see this as more of a translation issue. The revenue that's generated…

Your next question is from Michael Kovac from Goldman Sachs. Mike E. Kovac - Goldman Sachs & Co.: Great. Thanks for taking my question. I'm just wondering, given the multiples that we've seen come down in asset managers across the board, how does this change any sort of opportunities that you might see for future M&A? Daniel Joseph Houston - President, Chief Executive Officer & Director: Yeah, very good and I appreciate that. Let me make a couple of comments, then flip it to Jim. We do keep a very active list of those asset classes that we think that could be complementary to our existing platform. We look for potential strategies that would be uncorrelated, that would support our global platform, whether that's for retail or retirement or institutional investors. And again, I think our track record speaks for itself as it relates to our ability to leverage that into either separate accounts or mutual funds, institutionally managed accounts, separately managed accounts, collective investment trust. And so, with that maybe, Jim, you could provide some color on valuations of these properties and where you're going. James P. McCaughan - President, Global Asset Management & Chief Executive Officer, Principal Global Investors: Yes, Michael, you are right that multiples on many of the transactions over the last few years have been very high. And if you'd asked me three years ago about the balance between organic and growth by acquisitions, I would have thought three years ago, we'd have done more acquisitions. But in fact, with the high multiples, we have been extremely focused on organic growth and hopefully that will continue to come through the numbers. As regards to one or two recent transactions that lower multiples and the talk of lower multiples, yes, that's something we'll be watching. I…

Your next question comes from Erik Bass from Citigroup.

Hi. Thank you. I just had a couple of follow-up questions on Principal International. First, on the AXA acquisition, I just want to make sure I followed on Luis' comment correctly about the earnings expectations for next year. Was that $7 million to $7.5 million after tax the expectation for the full year or on a quarterly run rate? And thinking that you're putting up about $335 million of capital, if that's the full year impact, it seems like a relatively low ROE. Daniel Joseph Houston - President, Chief Executive Officer & Director: Okay, thanks, Erik. Luis? Luis Valdés - President-Principal International: Yes, Erik. That's a good question. Next year, we're not going to be able to enjoy all the synergies that we're going to enjoy, particularly in 2017. And this is due to many contracts that are tied to the AXA block of business, particularly with best serve and other asset managers. So we're going to transition that block of business in the very first six months of 2016. So in essence, my answer for you is that we're going to enjoy just 50% of those synergies in the first year and full synergies in 2017, Erik.

Got it. Thank you. That helps. And then, Terry, just wanted to follow up on your comments around the impairments. So I think, were you speaking specifically about Claritas of no future impairments that you see on the horizon, or was that about all international acquisitions broadly? And one thing to just clarify there, I'm assuming when you do your test, it's all based on local currency results and currency is not a factor, is that correct? Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah, that's correct, Erik. This is Terry. The impairments that we did, we look at all the intangibles and goodwill across all of our entities, not just Claritas. Claritas is the one where we actually found an impairment this quarter. But we've looked at every one of them. We scrub every one of them. And we do scrub them on a local currency basis as well, as you pointed out, but across all of our goodwill, all of our intangibles, we found that we have a significant cushion that we are not looking to impair any of those other entities across them. That goes back to entities that we acquired many years ago.

Got it. Thank you. And just a final thing, just following up on the good response to Sean's question, how much of the 65% to 70% of earnings that you talk about is deployable capital? How much of that is contributed from the international business at this point? I guess thinking about it, how much of the cash flow actually gets to the holding company? Daniel Joseph Houston - President, Chief Executive Officer & Director: Terry, you want to... Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah, yeah. If I look at Principal International, it goes to different holding companies. We have a UK holding company. We also have a U.S. holding company. And most of the earnings that are generated out of Principal International come up through that UK holding company or entities there. So for example, the earnings that are generated in the $250 million or above, we'll use some of that for organic growth within those businesses. And we also have a large portion of it available for acquisitions to fund their own acquisitions within Principal International. So, I'd say that it mirrors – the international business mirrors the total company's position in terms of available capital in that two-thirds of the earnings associated with it. The rest is supporting the organic growth that's going on in the different entities, member companies. Hopefully, that helps.

Got it. It does. Thank you very much. Daniel Joseph Houston - President, Chief Executive Officer & Director: Erik, thanks for calling in.

Your next question is from Suneet Kamath from UBS. Daniel Joseph Houston - President, Chief Executive Officer & Director: Good morning, Suneet.

Thanks. Hey, good morning, guys. So, Terry, I just want to get back to your $1.04 normalized number. Just a couple of things kind of jumped out at me as I was sort of trying to think through the baseline for model projection going forward. It looked like in FSA, the tax rate was once again negative, even if I make the adjustments for the actuarial review and then the market driven expenses. And I thought on the last call, you had kind of guided to more of a 5% to 7% tax rate. So as we think about kind of trending this, I guess, how should we be thinking about getting back to that 5% to 7%, over what sort of period of time? Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah, thanks, Suneet. First off, I want to say what you need to do in terms of a tax rate, you need to look at the total company. That's where we really focus our attentions, and it's really over a longer period of time than just simply some quarter by quarter distortions that may occur. Now, that being said, the total company effective tax rate is in that 20% to 22% range as we talked about before. But if you go down to one of the biggest reasons for that drop is the dividend benefit that we receive. Now, most of that is concentrated within the Full Service Accumulation line. In this quarter there was a significant negative effective tax rate, as you pointed out. However, if you look at it over a period of time and you adjust for the unlocking, as you said before, the true-ups in the prior year, you're still at a negative rate on a year-to-date basis, albeit it's…

Got it. Daniel Joseph Houston - President, Chief Executive Officer & Director: Thanks, Terry, and thank you, Suneet, for the question.

I had one follow-up if you have a second. Daniel Joseph Houston - President, Chief Executive Officer & Director: Oh, please. Go ahead.

Yeah, thanks. Again, on the normalizing numbers, I just want to make sure we're kind of keeping score consistently here. Because if I think about that $0.06 that you're sort of adding back from weak markets, when I go back and look at prior periods where you had favorable markets, I would have thought we would have seen an adjustment going the other way. And based on the way that we track this, I didn't see it. So is there something unusual in this quarter that the reason that you're calling out those two? Or in periods of prior strong equity markets, did you have an expense adjustment kind of going the other way that maybe wasn't called out? Terrance J. Lillis - Chief Financial Officer & Executive Vice President: Yeah, exactly. Suneet, this is Terry again. You're absolutely right. One of the things that we try to do in terms of what we call out is we try to get the end number to what we believe is the appropriate run rate for that business given a more normal environment. There will be periods where we'll have higher variable investment income because of positive markets, and there will be higher expenses that offset that. So we try not to get quite granular as we did this quarter with all the different noise items. This is probably the most adjustments that I've been associated with in any one particular quarter. But we do try to keep that total run rate where we're trying to net to get to an appropriate number. Now, to the point that you made about this quarter being highly unusual, well, we saw the S&P as a proxy for the market being down nearly 7% this quarter. That had an adverse impact on the DAC amortization…

Yeah. Much appreciated. Thanks. Daniel Joseph Houston - President, Chief Executive Officer & Director: I'd just like to thank everyone for joining us today on the call and appreciate your good questions and your interest and support. We still remain very optimistic about the growth and the strategy here at Principal. We remain confident that the strategy that we have around retirement, investment management and protection will serve our long-term shareholders for many years to come. Hopefully, we'll see many of you at the Investor Day event in New York City on November 6. And with that, good day and safe travels.

Thank you for participating in today's conference call. This call will be available for replay beginning at approximately 1:00 p.m. Eastern Time until end of day, October 30, 2015. 44931486 is the access code for the replay. The number to dial for the replay is 855-859-2056, U.S. and Canadian callers, or 404-537-3406 for international callers. Thank you. This does conclude today's conference call. You may now disconnect.