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    PFG
    Earnings call· Jun 2026(Q2 FY26)

    PRINCIPAL FINANCIAL GROUP Q2 FY26 earnings call PFG

    Jul 28, 2026 Source

    Executive summary

    Principal Financial Group Q2 FY26 — Strong Earnings and Strategic Portfolio Optimization

    Principal Financial Group delivered a strong Q2 FY26, driven by robust earnings growth, favorable underwriting, and strategic capital deployment. The company optimized its portfolio through the acquisition of Beam Benefits and divestiture of its Hong Kong pension business, while navigating significant net outflows in specific active equity strategies. Management remains focused on sustained growth and shareholder value.

    Highlights

    5

    • Adjusted non-GAAP EPS increased 17% year-over-year and 15% on a year-to-date basis, both above the high end of our target range.

    • Enterprise earnings grew 13% with 6% net revenue growth and 200 basis points of margin expansion.

    • Returned nearly $430 million of capital to shareholders in Q2 FY26, including $250 million in share repurchases and nearly $180 million in common stock dividends.

    • Raised common stock dividend for the 13th consecutive quarter, an 8% increase on both a quarterly and trailing 12-month basis.

    • Specialty Benefits pretax operating earnings increased 29% year-over-year, with the loss ratio improving 280 basis points to 57.4%.

    Concerns

    2

    • Total company net outflows of approximately $11 billion in the quarter, concentrated in a small number of U.S. active equity strategies.

    • Corporate segment losses were elevated due to continued investment in the business, expected to be at the high end of the targeted range for the full year.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year performance fees (Investment Management)
    in line with 2025
    medium materiality
    Medium
    Full-year capital deployment
    $1.5 billion to $1.8 billion
    high materiality
    High
    Corporate segment losses
    high end of our targeted range
    medium materiality
    Medium
    Specialty Benefits premium fees growth
    increase
    medium materiality
    Medium
    Specialty Benefits loss ratios
    below the low end of the guidance range for the full year
    high materiality
    High
    Dental underwriting results
    improve
    medium materiality
    High
    Specialty Benefits total premium and growth
    accelerate
    medium materiality
    Medium
    Investment Management net flows
    somewhat challenged
    high materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    RIS
    Pretax operating earnings increased 8% year-over-year, supported by 5% net revenue growth and continued expense discipline. Operating margin of 41% expanded 120 basis points, slightly above the high end of the target range. Fundamentals remain healthy with robust transfer deposits and steady recurring deposit growth.
    Net revenue growth: 5%Operating margin expansion: 120 bps
    		—8%—41%
    Principal Asset Management - Investment Management
    Pretax operating earnings increased 4% from the prior year quarter. Slightly higher revenue along with expense discipline more than offset elevated severance of $7 million. Operating margin improved 110 basis points. Performance fees were muted in the quarter but are expected to be in line with 2025 for the full year.
    Elevated severance: $7MOperating margin improvement: 110 bps
    		—4%——
    Principal Asset Management - International Pension
    Pretax operating earnings increased 11% year-over-year, driven by favorable foreign currency impacts and business growth. Operating margin improved 50 basis points to over 47%, well within the target range. AUM increased 6% from the prior quarter and 18% year-over-year to a record $169 billion.
    AUM growth QoQ: 6%AUM growth YoY: 18%Record AUM: $169BOperating margin improvement: 50 bps
    		—11%—over 47%
    Benefits and Protection
    Generated strong pretax operating earnings of $191 million, a 29% year-over-year increase. This was driven by favorable Specialty Benefits underwriting results and improved Life mortality.
    		—29%—$191M
    Benefits and Protection - Specialty Benefits
    Premium fees increased 4% year-over-year. Record pretax operating earnings of $162 million, up 29% year-over-year, reflecting more favorable underwriting experience and business growth. The loss ratio of 57.4% improved 280 basis points compared to the year ago quarter, with better results across all products, driving improved operating margin of 19%.
    Loss ratio: 57.4%Loss ratio improvement: 280 bpsOperating margin: 19%Operating margin improvement: 360 bps
    		increased 4% year-over-year29%—$162M
    Benefits and Protection - Life Insurance
    Pretax operating earnings of $29 million increased 29% year-over-year, driven by improved mortality experience. This contributed to a 13% operating margin, up 350 basis points year-over-year, within the target range.
    Operating margin: 13%Operating margin improvement: 350 bps
    		—29%—$29M
    Corporate
    Losses were elevated due to continued investment in the business. The segment is expected to come in at the high end of its targeted range for the full year.
    		———Losses were elevated

    Operational metrics

    32
    Adjusted non-GAAP EPS
    $2.50increased 16% YoY
    Q2 FY26

    Reported adjusted non-GAAP EPS.

    Adjusted non-GAAP EPS (ex-significant variances)
    $2.42increased 17% YoY
    Q2 FY26

    Adjusted non-GAAP EPS excluding significant variances, which had a positive after-tax impact of $18 million or $0.08 per share.

    Enterprise earnings growth
    13%
    Q2 FY26

    Overall enterprise earnings growth.

    Net revenue growth
    6%
    Q2 FY26

    Overall net revenue growth for the company.

    Total company margin
    32%expanded 200 bps
    Q2 FY26

    Total company margin expansion.

    Non-GAAP operating ROE (ex-significant variances)
    16.4%improved 120 bps YoY
    Q2 FY26

    Non-GAAP operating ROE, excluding significant variances, above the midpoint of the 15% to 17% target range.

    Net income (excluding exit business)
    $535Mincreased 24% YoY
    Q2 FY26

    Net income performance with minimal credit losses.

    Excess and available capital
    $1.6B
    Q2 FY26 end

    Total excess and available capital, including amounts at the holding company and subsidiaries.

    Share repurchases
    $250M
    Q2 FY26

    Share repurchases executed during the quarter and year-to-date.

    Common stock dividends
    $177M
    Q2 FY26

    Common stock dividends paid during the quarter and year-to-date.

    Total capital returned to shareholders
    $427M
    Q2 FY26

    Total capital returned to shareholders through buybacks and dividends.

    Dividend per share
    $0.84increased $0.02 QoQ, 8% YoY
    Q3 FY26 payable

    Quarterly dividend per share, representing the 13th consecutive increase.

    Dividend payout ratio
    40%
    target

    Ongoing commitment to the target dividend payout ratio.

    Total company managed AUM
    $808Bincreased 5% QoQ, 7% YoY
    Q2 FY26 end

    Total assets under management at quarter end.

    Transfer deposits
    increased 30%YoY
    Q2 FY26

    Growth in transfer deposits within the retirement business.

    Recurring deposits
    increased 6%
    Q2 FY26

    Growth in recurring deposits within the retirement business.

    Roll-ins
    $1.7Bup nearly 20%
    Q2 FY26

    Roll-ins onto the retirement platform for the quarter and trailing 12 months.

    DCIO sales
    $2B
    Q2 FY26

    DCIO sales for the quarter and trailing 12 months.

    PRT sales
    $500M
    Q2 FY26

    Pension Risk Transfer (PRT) sales for the quarter.

    Transfer deposits
    grew 16%
    TTM

    Growth in transfer deposits within the SMB market.

    Recurring deposits
    increased 6%YoY and TTM
    Q2 FY26

    Growth in recurring deposits within the SMB market.

    Specialty Benefits sales
    increased 11%YoY
    Q2 FY26

    Growth in Specialty Benefits sales for the SMB segment.

    Products per customer
    3.2up from 2.9 (3 years ago)
    current

    Increase in the average number of products per customer in the SMB segment.

    Total company net outflows
    $11B
    Q2 FY26

    Net outflows concentrated in U.S. active equity strategies.

    Investment Management gross sales
    increased 2%YoY
    Q2 FY26

    Gross sales performance in Investment Management.

    Private Markets AUM
    increased 10%YoY
    Q2 FY26

    Growth in Private Markets assets under management.

    Active ETF net inflows
    $500M
    Q2 FY26

    Net inflows into the active ETF business.

    Severance
    $7M
    Q2 FY26

    Elevated severance costs within Investment Management and International Pension.

    Participant count growth
    consistent participant growth
    past several quarters

    Consistent growth in the number of participants served by retirement plans.

    Highest quality US companies return
    4%
    period ending 6/30

    Return for highest quality US companies, contrasted with lowest quality companies.

    Lowest quality US companies return
    70%
    period ending 6/30

    Return for lowest quality US companies, contrasted with highest quality companies.

    Committed not funded pipeline
    $10Bup from Q1
    Q2 FY26

    Pipeline of committed but not yet funded assets, indicating future inflows.

    Industry KPIs

    5
    MetricValueDetails
    Capital returns$427MUSD
    ROE operating ROE16.4%%
    Retention persistencyvery high
    Net premiums written earnedincreased 4%%
    Statutory regulatory capital~400%%

    Product announcements

    2
    ProductTypeDetails
    Lifetime Income Builder CITsexpansion
    Fixed Income ETF suitelaunch

    Deals & partnerships

    3
    Beam BenefitsAgreement to acquire a digital-first employee benefits company focused on the SMB market.generated $175 million of premium in 2025 (for Beam Benefits)

    Beam Benefits has over 25,000 employer customers. The acquisition strengthens Principal's position in the SMB segment by expanding customer reach and adding digital-first distribution capabilities.

    BCTTransition of Hong Kong pension business.

    This move strengthens Principal's focus as a top provider of retirement investment solutions to the region.

    UndisclosedPending sale of Chile annuity business.

    The sale further optimizes Principal's portfolio.

    Risks & headwinds

    3
    Net outflows in U.S. active equity strategiesQ2 FY26

    $11 billion in Q2 FY26

    Mitigation: Investment teams maintain a disciplined approach and have a track record of navigating market dislocation. Underlying momentum in private markets, international, and institutional solutions. Committed not funded pipeline grown to $10 billion.

    Unusual market environment not rewarding high-quality companieslast year

    U.S. high-quality companies returned 4% vs. low-quality companies returned 70% (period ending 6/30)

    Mitigation: Expectation for market normalization over time, belief in the long-term track record of their investment strategies. New niche ETFs exploiting anomalies could prolong the trend.

    Elevated Corporate segment lossesQ2 FY26

    elevated

    Mitigation: Due to continued investment in the business; expected to be at the high end of the targeted range for the full year.

    What to watch in Q3 FY26

    5

    Specialty Benefits loss ratio

    Full year FY26 / H2 FY26
    Current57.4% (Q2 FY26)
    TargetBelow the low end of the guidance range for the full year (60-64%)

    Why it matters

    Indicates sustained underwriting discipline and profitability in a key growth segment.

    I now expect loss ratios to emerge below the low end of the guidance range for the full year.

    Q&A highlights

    6

    Seeking more detail on the strategic rationale for the Beam Benefits acquisition and its potential impact on 2027 capital deployment plans.

    Amy Friedrich highlighted Beam's technology, 25,000 employers, 400,000 members, and $175M premium in 2025, emphasizing its role in expanding SMB reach and bringing efficiency. Joel Pitz confirmed no change to 2026 capital deployment target or outlook guidance, citing $1.6B in excess capital and proceeds from the Chile sale.

    “Beam Benefits has really interesting technology. They've got some great things they've done with their underwriting and quoting. But what they've also got is a great relationship with 25,000 small business employers and they have 400,000 members across the U.S.”

    asked by Wesley Carmichael · answered by Amy Friedrich

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Priorities and Retirement Ecosystem Momentum

    Principal demonstrated strong momentum across its strategic priorities, particularly within the retirement ecosystem. Transfer deposits increased 30% year-over-year, and recurring deposits grew 6%. The company saw significant customer consolidation, with $1.7 billion in roll-ins during Q2 and over $7 billion over the trailing 12 months, both up nearly 20%. DCIO sales reached $2 billion in Q2 and $8 billion over the trailing 12 months, while PRT sales were $500 million for the quarter.

    02

    SMB Segment Growth and Enhanced Capabilities

    The small and midsized business (SMB) segment continues to be a key growth driver. Transfer deposits in SMB grew 16% over the trailing 12 months, and recurring deposits increased 6% on both a year-over-year and trailing 12-month basis. Specialty Benefits sales to SMBs rose 11% year-over-year. The company is deepening client relationships, with products per customer increasing steadily from 2.9 three years ago to nearly 3.2 today, reflecting successful cross-selling and bundled offerings.

    03

    Asset Management Dynamics and Outflows

    Global Asset Management experienced total company net outflows of approximately $11 billion in Q2, primarily concentrated in a few U.S. active equity strategies. These strategies faced headwinds in an 'unusual market environment' that did not reward high-quality companies. Despite this, the broader platform showed strength, with Private Markets assets under management increasing 10% year-over-year and International Pension AUM growing 18% to a record $169 billion. The active ETF business also saw healthy growth, generating $500 million of net inflows in Q2 and $2 billion over the trailing 12 months.

    04

    Beam Benefits Acquisition and Portfolio Optimization

    Principal announced an agreement to acquire Beam Benefits, a digital-first employee benefits company serving the SMB market. Beam has over 25,000 employer customers and generated $175 million in premium in 2025. This acquisition is expected to strengthen Principal's SMB position, expand customer reach, and add digital distribution capabilities without impacting 2026 capital deployment plans or EPS targets. Additionally, the company completed the transition of its Hong Kong pension business to BCT and has a pending sale of its Chile annuity business, further optimizing its portfolio.

    05

    Strong Underwriting Performance in Specialty Benefits

    The Benefits and Protection segment delivered strong results, with Specialty Benefits pretax operating earnings up 29% year-over-year. This was driven by favorable underwriting experience and improved Life mortality. The Specialty Benefits loss ratio improved 280 basis points to 57.4%, with better results across all products. Improvements in dental were attributed to network optimization and past pricing actions, while disability and group life benefited from lower incidence and frequency, respectively. Full-year loss ratios for Specialty Benefits are now expected to be below the low end of the guidance range.

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