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    PFG
    Earnings call· Mar 2026(Q1 FY26)

    PRINCIPAL FINANCIAL GROUP Q1 FY26 earnings call PFG

    Apr 24, 2026 Source

    Executive summary

    Principal Financial Group Q1 FY26 — Strong Earnings Growth and Capital Returns

    Principal Financial Group delivered a strong Q1 FY26, marked by double-digit adjusted EPS growth and significant capital returns, underscoring the resilience of its diversified business model. The company saw broad-based momentum across its strategic growth drivers, including record sales in Investment Management and Specialty Benefits, alongside robust retirement transfer deposits. While overall net cash flow remained negative and variable investment income was lower, management expressed confidence in achieving full-year financial targets, driven by disciplined execution and strategic investments.

    Highlights

    5

    • Adjusted non-GAAP earnings per share grew 13% in Q1 FY26.

    • Approximately $375 million of capital was returned to shareholders in the quarter, including $200 million of share repurchases.

    • Common stock dividend increased by 8% year-over-year for the 12th consecutive quarter.

    • Total retirement transfer deposits grew 35% year-over-year to $12 billion.

    • Investment Management achieved record gross sales of $37 billion, up 21% year-over-year.

    Concerns

    4

    • Total company net cash flow was negative $1.5 billion in the quarter.

    • Lower variable investment income had an after-tax impact of $23 million in Q1 FY26, primarily due to timing of real estate transactions.

    • Redemption activity in Investment Management was concentrated among a small number of U.S. active equity mutual funds.

    • First quarter losses in the Corporate segment were elevated due to timing of expenses.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year Variable Investment Income
    Improve relative to 2025
    medium materiality
    High
    Dividend Payout Ratio
    40%
    low materiality
    High
    Specialty Benefits Premium Fees Growth
    Trend higher throughout the year, most notably in the second half
    medium materiality
    Medium
    Specialty Benefits Loss Ratio
    Low end or even slightly below the low end of the range communicated at outlook
    high materiality
    High
    Individual Life Operating Margin
    Towards the lower end of 12%-16% range for full year
    medium materiality
    Medium
    RIS Net Cash Flow Pattern
    Follow historical pattern: Q1 strongest, remaining quarters impacted by strong markets and lumpiness
    medium materiality
    Medium
    International Pension Earnings Run Rate
    Mid-$70 million range
    medium materiality
    Medium
    Investment Management Performance Fees
    Similar to 2025
    low materiality
    Medium
    Corporate Segment Results
    Within target range
    low materiality
    Medium
    PRT Sales
    Fairly similar to 2025, with lighter first half and accelerated second half
    medium materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Retirement and Income Solutions (RIS)
    Pretax operating earnings increased 4% year-over-year, driven by 3% net revenue growth and margin expansion. Operating margin expanded 60 basis points, reflecting disciplined focus on profitable revenue growth and expense management, along with favorable seasonality. Strong transfer and recurring deposits, plus favorable retention, drove significant net cash flow.
    Operating margin: 41.5%Operating margin change: +60 bps YoYRIS account value net cash flow: $1.8BTotal retirement transfer deposits: $12BTotal retirement transfer deposits growth: +35% YoYRecurring deposits growth: +7% YoYParticipants deferring growth: +3%Average deferrals growth: +3%Roll-ins: $1.7BDCIO sales (Q1): $2BDCIO sales (TTM): $8BSMB recurring deposits growth (Q1): +6% YoYSMB recurring deposits growth (TTM): +7%SMB account value net cash flow: $600M
    		—4%—$318M pretax operating earnings
    Principal Asset Management
    Delivered 10% earnings growth year-over-year on 5% revenue growth and margin expansion. Investment Management pretax operating earnings increased 8% from the prior year quarter. Record gross sales highlight the attractiveness of solutions and global distribution. Demand remains strong in private markets, ETFs, and UCITS.
    Investment Management pretax operating earnings growth: +8% YoYInvestment Management adjusted revenue growth: +2% YoYInvestment Management operating margin improvement: +100 bpsGross sales: $37BGross sales growth: +21% YoYPrivate markets AUM growth: +11% YoYPrivate markets net inflows (Q1): $400MPrivate markets net inflows (TTM): $3BActive ETF net inflows (Q1): $400MActive ETF net inflows (TTM): $1.8BNet cash flow from clients outside U.S.: $1.5B
    		5% growth10%——
    International Pension
    Pretax operating earnings increased 14% year-over-year, driven by higher performance fees, favorable foreign currency impacts, and business growth. AUM reached a record $160 billion, primarily due to positive market performance and net cash flow. Net cash flow was positive $500 million, with $700 million from Brazil. Operating margin remains comfortably within target range.
    AUM: $160BAUM growth sequentially: +4%AUM growth YoY: +20%Net cash flow: $500MNet inflows in Brazil: $700MOperating margin: 48.5%Pretax operating earnings (Q1): $80MPerformance fee (China): $7M
    		—14%——
    Benefits and Protection
    Delivered a very strong quarter with pretax operating earnings of $177 million, an increase of 41% year-over-year, driven by more favorable Specialty Benefits underwriting, improved life mortality, and business growth.
    		—41%—$177M pretax operating earnings
    Specialty Benefits
    Premium fees increased 4% year-over-year, supported by record sales up 24%. Pretax operating earnings increased 26% year-over-year, reflecting strong underwriting experience and business growth. Total loss ratio improved due to improved Group Life and Group Dental results, along with continued strong results in group disability, leading to margin expansion.
    Pretax operating earnings growth: +26% YoYTotal loss ratio: 58.5%Total loss ratio improvement: 220 bps YoYOperating margin: 16.2%Operating margin improvement: +290 bps YoY
    		4% premium fees growth24% sales growth—$140M pretax operating earnings
    Life Insurance
    Pretax operating earnings increased $23 million year-over-year, driven by improved mortality experience due to lower frequency and severity. This contributed to a 15.6% operating margin in the quarter, at the high end of the target range.
    Pretax operating earnings increase: +$23M YoYOperating margin: 15.6%
    		———$37M pretax operating earnings
    Corporate
    First quarter losses were elevated due to timing of expenses. On a full year basis, the segment is expected to be within its target range.
    		———Elevated losses

    Operational metrics

    22
    Adjusted non-GAAP EPS growth
    13%YoY
    Q1 FY26

    Growth in adjusted non-GAAP earnings per share.

    Non-GAAP operating earnings
    $456M+10% YoY
    Q1 FY26

    Reported non-GAAP operating earnings.

    Non-GAAP operating earnings per share
    $2.07+14% YoY
    Q1 FY26

    Reported non-GAAP operating earnings per share.

    Non-GAAP operating earnings (excluding significant variances)
    $479M+9% YoY
    Q1 FY26

    Non-GAAP operating earnings excluding significant variances.

    Non-GAAP operating EPS (excluding significant variances)
    $2.17+13% YoY
    Q1 FY26

    Non-GAAP operating EPS excluding significant variances.

    Significant variances after-tax impact
    -$23M
    Q1 FY26

    Primarily driven by lower variable investment income.

    Company-wide margin expansion
    190 bps
    Q1 FY26

    Margin expanded to 30% in Q1 FY26.

    Company-wide net revenue growth
    6%YoY
    Q1 FY26

    Company-wide net revenue growth.

    Excess and available capital
    $1.4B
    Q1 FY26 end

    Total excess and available capital.

    Holding company capital
    $800M
    Q1 FY26 end

    Capital at the holding company, at targeted level.

    Subsidiary capital
    $300M
    Q1 FY26 end

    Capital in subsidiaries.

    Excess capital above RBC target
    $350M
    Q1 FY26 end

    Excess capital above the targeted 375% risk-based capital ratio.

    Capital returned to shareholders
    $374M
    Q1 FY26

    Total capital returned to shareholders.

    Share repurchases
    $200M
    Q1 FY26

    Amount of share repurchases executed.

    Common stock dividends
    $174M
    Q1 FY26

    Amount of common stock dividends paid.

    Total company managed AUM
    $770B+7% YoY
    Q1 FY26 end

    Total company managed AUM, modestly lower sequentially due to market performance.

    Total company net cash flow
    -$1.5Bmeaningful improvement sequentially and YoY
    Q1 FY26

    Total company net cash flow, improved due to positive net cash flow in International Pension and improved Investment Management results.

    SMB employment trends (maintaining/increasing staff)
    90%
    Late March 2026

    Percentage of small and midsized business owners indicating they are maintaining or increasing staff, based on the latest well-being index.

    Investment Management gross sales
    $37B+21% YoY
    Q1 FY26

    Record gross sales in Investment Management.

    Asset Management commitment pipeline
    $9B
    Q1 FY26

    Commitment pipeline of mandates won but not yet funded, grown from around $6 billion previously.

    Retail individual customers (IRA and advisory)
    11%YoY increase
    Q1 FY26

    Increase in retail individual customers utilizing IRA and advisory services.

    Capital preservation product flows (WS/SGA)
    $400M
    Q1 FY26

    Flows into capital preservation options within retirement plans.

    Industry KPIs

    9
    MetricValueDetails
    Combined ratio58.5%%
    Capital returns$374MUSD
    ROE operating ROE16.1%%
    Net investment income—
    Retention persistency—
    Life specific when present15.6%%
    Net premiums written earned—
    Renewal rate change pricing—
    Statutory regulatory capital~400%%

    Deals & partnerships

    1
    UndisclosedAcquisition of a small dental network and renewal rights for a block of Group Benefits business.

    Acquired a small dental network in Alabama, which also included renewal rights for a block of Group Benefits business. The transaction was not yet reflected in Q1 FY26 results.

    Risks & headwinds

    6
    Lower Variable Investment IncomeQ1 FY26

    -$23M after-tax impact in Q1 FY26

    Mitigation: Full year 2026 variable investment income is still expected to improve relative to 2025, with some pickup in activity expected in Q2-Q4.

    Redemption Activity in Investment ManagementQ1 FY26

    Concentrated among a very small number of U.S. active equity mutual funds

    Mitigation: Management expects non-affiliated net cash flow profile to improve for the balance of the year as redemption activity normalizes; future pipeline is very strong.

    Elevated Corporate Segment LossesQ1 FY26

    Elevated losses in Q1 FY26

    Mitigation: On a full year basis, the Corporate segment results are expected to be within the target range.

    Private Credit ExposureCurrent

    Vast majority of private fixed income securities are investment grade with minimal exposure to direct lending.

    Mitigation: Over 60 years of experience underwriting and managing private assets; portfolio performing better than long-term expectations; well-constructed and diversified, aligned with liability liquidity profile.

    PRT Sales PipelineQ2 FY26

    Pipeline remains a little light in Q2 FY26

    Mitigation: Expects 2026 PRT sales to be similar to 2025, with a lighter first half and more accelerated sales in the second half, similar to prior year trends. Company is disciplined on capital deployment and will not chase sales.

    Economic Uncertainty in SMB MarketCurrent

    Uncertainty in sentiment, but employment and wage growth holding steady in block.

    Mitigation: Broad-based employer base (180,000 across RIS and Group Benefits) provides diversity; regular surveys with SMB employers show optimism; no significant lag effect observed in their block.

    What to watch in Q2 FY26

    5

    Specialty Benefits Loss Ratio

    Q2 FY26 / FY26
    Current58.5% (Q1 FY26)
    TargetRise slightly in Q2, but full-year at or below low end of outlook range

    Why it matters

    This metric indicates underwriting profitability and is a key driver of Specialty Benefits earnings, impacting the overall company's financial performance.

    second quarter does tend to be the seasonally highest for Dental. So that means that the overall SBD loss ratio does rise a bit in second quarter. But when I look at full year outlook, I look at it very favorably with loss ratios expected to emerge at the low end or even slightly below the low end of the range we communicated at outlook.

    Q&A highlights

    7

    Asked for more color on favorable underwriting in Specialty Benefits across Dental, Life, and Disability, and the outlook from here.

    Management attributed strong underwriting to low frequency in Group Life and past pricing actions/network optimization in Dental. Group Disability remained strong. While Q2 is seasonally highest for Dental, the full-year loss ratio outlook is very favorable, expected at or below the low end of the communicated range.

    “But when I look at full year outlook, I look at it very favorably with loss ratios expected to emerge at the low end or even slightly below the low end of the range we communicated at outlook.”

    asked by Ryan Krueger · answered by Amy Friedrich

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Growth Drivers and Momentum

    Principal Financial Group is executing on its strategy focused on three key growth drivers: the broad retirement ecosystem, small and midsized businesses (SMB), and global asset management. The company reported broad-based momentum, including a 35% year-over-year increase in total retirement transfer deposits to $12 billion and record gross sales of $37 billion in Investment Management, up 21% year-over-year. Private markets AUM also grew 11% year-over-year, driven by demand for real estate, infrastructure, and private credit strategies.

    02

    Strong Capital Position and Shareholder Returns

    The company ended the quarter with a strong capital position, boasting over $1.4 billion of excess and available capital, including $800 million at the holding company and a Risk-Based Capital (RBC) ratio of approximately 400%. This robust capital generation enabled the return of $374 million to shareholders in Q1 FY26, comprising $200 million in share repurchases and $174 million in common stock dividends. The common stock dividend was raised for the 12th consecutive quarter, an 8% increase year-over-year, aligning with the targeted 40% payout ratio.

    03

    Specialty Benefits and Individual Life Performance

    Specialty Benefits delivered a very strong quarter with pretax operating earnings up 41% year-over-year to $177 million, driven by favorable underwriting and record sales, which increased 24% year-over-year. The total loss ratio improved by 220 basis points to 58.5%, primarily due to strong Group Life and Dental results. Individual Life also saw a significant increase in pretax operating earnings, up $23 million year-over-year to $37 million, attributed to improved mortality experience from lower frequency and severity.

    04

    SMB Market Resilience and Outlook

    The small and midsized business segment continues to perform well, with recurring deposits in Retirement growing 6% year-over-year and positive account value net cash flow of $600 million. The company's latest well-being index confirmed steady employment trends, with 90% of SMB owners maintaining or increasing staff. While acknowledging some market uncertainty🌐, management noted that SMB owners tend to be optimistic and are holding steady on their plans, with no significant lag effect observed in their block of business.

    05

    Investment Management Flows and Pipeline

    Investment Management reported record gross sales, but net cash flow was negative $1.5 billion for the total company, although improved sequentially and year-over-year. Redemptions were concentrated in U.S. active equity mutual funds due to asset allocation shifts. However, the company highlighted strong net inflows from clients outside the U.S. ($1.5 billion) and in specific areas like private markets, ETFs, and UCITS ($1.2 billion). The asset management commitment pipeline has grown to over $9 billion in unfunded mandates, diversified across public and private markets globally.

    06

    Private Credit Exposure and Investment Portfolio

    Management addressed heightened attention on the insurance industry's private credit exposure, emphasizing Principal's over 60 years of experience in underwriting and managing private assets. The vast majority of their private fixed income securities are investment grade with minimal direct lending exposure. The portfolio is performing well, exceeding long-term expectations, and is appropriately aligned with the liquidity profile of liabilities, reinforcing confidence in its well-constructed and diversified nature.

    AI-generated summary of the company’s earnings call. Not investment advice.