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Principal Financial to bolster digital investment in '18, executives say

Principal Financial Group Inc. plans to invest more in its digital business over the next several years, beginning in 2018.

The new spending on digital, which was factored into the company's recently released 2018 outlook, is expected to focus on Principal's customer experience, direct-to-consumer sales and advice offerings and global investment research platform, Chairman, President and CEO Daniel Houston said during a conference call Dec. 12.

But the increased spend on digital may also lower the company's operating earnings growth from 2017 to 2018 by about 2 percentage points, according to CFO Deanna Strable-Soethout. Still, Principal is aiming for an annual growth rate of 9% to 12% in its total operating earnings, she said.

The digital investments will be directly introduced into the company's various businesses. While some may pay off in the next year or two, some could take up to seven years, Houston added.

"We do feel that ultimately, this digital spend helps us to continue to have that disciplined approach as well as outperformance over the long term, and we'll continue to have that same philosophy as we go forward," Strable-Soethout said.

For 2018, Principal expects to see corporate pretax operating losses between $190 million and $210 million. The company also plans to release between $900 million and $1.3 billion in common stock dividends, acquisitions and share buybacks, among other measures, to provide additional flexibility.