11. Segment Information

We provide financial products and services through the following segments: Retirement and Investor Services, Principal Global Investors, Principal International and U.S. Insurance Solutions. In addition, there is a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels.

The Retirement and Investor Services segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals.

The Principal Global Investors segment provides asset management services to our asset accumulation business, our insurance operations, the Corporate segment and third-party clients.

The Principal International segment has operations in Brazil, Chile, China, Hong Kong Special Administrative Region, India, Mexico and Southeast Asia. We focus on countries with large middle classes, favorable demographics and growing long-term savings, ideally with defined contribution markets. We entered these countries through acquisitions, start-up operations and joint ventures.

The U.S. Insurance Solutions segment provides individual life insurance and specialty benefits, which consists of group dental and vision insurance, individual and group disability insurance, group life insurance and non-medical fee-for-service claims administration, throughout the United States.

The Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including interest expense and preferred stock dividends), income on capital not allocated to other segments, inter-segment eliminations, U.S. income tax risks and certain income, expenses and other after-tax adjustments not allocated to the segments based on the nature of such items. Results of our exited group medical insurance business are reported in this segment.

Management uses segment operating earnings in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by securities analysts. We determine segment operating earnings by adjusting U.S. GAAP net income for net realized capital gains (losses), as adjusted, and other after-tax adjustments which management believes are not indicative of overall operating trends. Net realized capital gains (losses), as adjusted, are net of income taxes, related changes in the amortization pattern of DAC and other actuarial balances, recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and services, amortization of hedge accounting book value adjustments for certain discontinued hedges, net realized capital gains and losses distributed, noncontrolling interest capital gains and losses and certain market value adjustments to fee revenues. Net realized capital gains (losses), as adjusted, exclude periodic settlements and accruals on derivative instruments not designated as hedging instruments and exclude certain market value adjustments of embedded derivatives and realized capital gains (losses) associated with our exited group medical insurance business. Segment operating revenues exclude net realized capital gains (losses) (except periodic settlements and accruals on derivatives not designated as hedging instruments), including their impact on recognition of front-end fee revenues, certain market value adjustments to fee revenues and amortization of hedge accounting book value adjustments for certain discontinued hedges, and revenue from our exited group medical insurance business. Segment operating revenues include operating revenues from real estate properties that qualify for discontinued operations. While these items may be significant components in understanding and assessing the consolidated financial performance, management believes the presentation of segment operating earnings enhances the understanding of our results of operations by highlighting earnings attributable to the normal, ongoing operations of the business.

The accounting policies of the segments are consistent with the accounting policies for the consolidated financial statements, with the exception of income tax allocation. The Corporate segment functions to absorb the risk inherent in interpreting and applying tax law. The segments are allocated tax adjustments consistent with the positions we took on tax returns. The Corporate segment results reflect any differences between the U.S. tax returns and the estimated resolution of any disputes.

The following tables summarize select financial information by segment and reconcile segment totals to those reported in the consolidated financial statements:

	September 30, 2013		December 31, 2012
	(in millions)
Assets:
Retirement and Investor Services	$	124,202.2	$	117,399.5
Principal Global Investors	1,273.8		1,282.2
Principal International	53,158.2		19,170.9
U.S. Insurance Solutions	19,754.7		19,017.2
Corporate	3,298.5		4,960.4
Total consolidated assets	$	201,687.4	$	161,830.2

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
	(in millions)
Operating revenues by segment:
Retirement and Investor Services	$	1,136.5		$	1,570.7		$	3,387.6		$	3,707.0
Principal Global Investors	160.9			144.0			482.8			423.2
Principal International	303.3			203.8			825.9			676.9
U.S. Insurance Solutions	767.6			766.5			2,318.6			2,215.0
Corporate	(52.5		)	(46.4		)	(149.1		)	(139.8		)
Total segment operating revenues	2,315.8			2,638.6			6,865.8			6,882.3
Net realized capital gains (losses), net of related revenue adjustments	(76.7		)	64.9			(253.4		)	12.8
Exited group medical insurance business	0.5			1.2			4.5			24.1
Total revenues per consolidated statements of operations	$	2,239.6		$	2,704.7		$	6,616.9		$	6,919.2
Operating earnings (loss) by segment, net of related income taxes:
Retirement and Investor Services	$	172.9		$	137.5		$	515.2		$	422.8
Principal Global Investors	23.1			20.6			72.4			55.0
Principal International	50.7			37.0			153.6			112.6
U.S. Insurance Solutions	54.0			(21.6		)	136.9			78.8
Corporate	(31.5		)	(31.2		)	(104.2		)	(100.7		)
Total segment operating earnings, net of related income taxes	269.2			142.3			773.9			568.5
Net realized capital gains (losses), as adjusted (1)	(22.8		)	88.8			(126.8		)	39.6
Other after-tax adjustments (2)	(0.7		)	(43.9		)	(0.8		)	(49.4		)
Net income available to common stockholders per consolidated statements of operations	$	245.7		$	187.2		$	646.3		$	558.7

(1) Net realized capital gains (losses), as adjusted, is derived as follows:

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
	(in millions)
Net realized capital gains (losses):
Net realized capital gains (losses)	$	(50.9	)	$	87.7		$	(181.9	)	$	81.2
Certain derivative and hedging-related adjustments	(25.6		)	(22.7		)	(70.7		)	(68.4		)
Recognition of front-end fee revenue	(0.2		)	(0.1		)	(0.8		)	—
Net realized capital gains (losses), net of related revenue adjustments	(76.7		)	64.9			(253.4		)	12.8
Amortization of deferred acquisition costs and other actuarial balances	26.7			30.5			44.8			34.7
Capital gains distributed	(0.2		)	(6.8		)	(11.1		)	(8.7		)
Certain market value adjustments of embedded derivatives	18.7			—			18.4			(1.4		)
Net realized capital losses associated with exited group medical insurance business	—			—			—			0.2
Noncontrolling interest capital gains	(0.2		)	—			(0.2		)	(8.2		)
Income tax effect	8.9			0.2			74.7			10.2
Net realized capital gains (losses), as adjusted	$	(22.8	)	$	88.8		$	(126.8	)	$	39.6

(2) For the three months ended September 30, 2013, other after-tax adjustments included the negative effect of losses associated with our exited group medical insurance business that does not qualify for discontinued operations accounting treatment under U.S. GAAP.

For the three months ended September 30, 2012, other after-tax adjustments included the negative effect of (a) a contribution of appreciated stock made to The Principal Financial Group Foundation, Inc. ($39.8 million) and (b) losses associated with our exited group medical insurance business that does not yet qualify for discontinued operations accounting treatment under U.S. GAAP ($4.1 million).

For the nine months ended September 30, 2013, other after-tax adjustments included the negative effect of losses associated with our exited group medical insurance business that does not yet qualify for discontinued operations accounting treatment under U.S. GAAP.

For the nine months ended September 30, 2012, other after-tax adjustments included the negative effect of (a) a contribution of appreciated stock made to The Principal Financial Group Foundation, Inc. ($39.8 million) and (b) losses associated with our exited group medical insurance business that does not yet qualify for discontinued operations accounting treatment under U.S. GAAP ($9.6 million).

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
	(in millions)
Retirement and Investor Services:
Full service accumulation	$	369.9		$	339.0		$	1,087.7		$	1,006.1
Principal Funds	194.8			156.8			565.9			453.0
Individual annuities	334.5			302.1			881.8			864.0
Bank and trust services	24.4			26.1			74.9			75.9
Eliminations	(38.3		)	(30.4		)	(109.1		)	(88.6		)
Total Accumulation	885.3			793.6			2,501.2			2,310.4
Investment only	83.1			105.2			260.6			328.8
Full service payout	168.1			671.9			625.8			1,067.8
Total Guaranteed	251.2			777.1			886.4			1,396.6
Total Retirement and Investor Services	1,136.5			1,570.7			3,387.6			3,707.0
Principal Global Investors (1)	160.9			144.0			482.8			423.2
Principal International	303.3			203.8			825.9			676.9
U.S. Insurance Solutions:
Individual life insurance	362.7			372.6			1,110.2			1,044.8
Specialty benefits insurance	405.0			393.9			1,208.6			1,170.2
Eliminations	(0.1		)	—			(0.2		)	—
Total U.S. Insurance Solutions	767.6			766.5			2,318.6			2,215.0
Corporate	(52.5		)	(46.4		)	(149.1		)	(139.8		)
Total operating revenues	$	2,315.8		$	2,638.6		$	6,865.8		$	6,882.3
Total operating revenues	$	2,315.8		$	2,638.6		$	6,865.8		$	6,882.3
Net realized capital gains (losses), net of related revenue adjustments	(76.7		)	64.9			(253.4		)	12.8
Exited group medical insurance business	0.5			1.2			4.5			24.1
Total revenues per consolidated statements of operations	$	2,239.6		$	2,704.7		$	6,616.9		$	6,919.2

(1) Reflects inter-segment revenues of $61.1 million and $54.1 million for the three months ended September 30, 2013 and 2012, respectively, and $179.9 million and $160.0 million for the nine months ended September 30, 2013 and 2012, respectively.