01—Abstract
Summary
Summary of the 10-Q filed April 30, 2025. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. (PFG) reported a sharp decline in first-quarter 2025 profitability.
Net income attributable to Principal Financial Group, Inc. was $48.1 milliona, compared with $532.5 million in the first quarter of 2024, and basic and diluted earnings per common share were $0.21 versus $2.26 and $2.22. Total revenues fell to $3,695.9 million from $4,053.3 million. The filing attributes the decline mainly to a $406.7 million swing in the change in fair value of the funds withheld embedded derivative (a $209.7 million loss in 2025 versus a $197.0 million gain in 2024) and to $119.7 million of asset write-downs tied to exiting the sponsor and trustee roles for Hong Kong MPF Schemes.
Management notes the net income decrease from the funds withheld derivative was $321.4 millionb. Operating results were supported by growth in several areas. Net investment income rose to $1,165.7 million from $1,072.2 million, premiums and other considerations increased to $1,751.3 million, and segment pre-tax operating earnings were $485.1 million versus $472.2 million.
Retirement and Income Solutions segment pre-tax operating earnings were $283.7 millionc, up from $262.2 million, and Benefits and Protection rose to $119.5 million from $111.8 million. Net realized capital losses were $117.1 million, compared with $0.9 million a year earlier. Balance sheet and capital activity remained substantial.
Total assets were $313,003.3 milliond and total stockholders' equity was $11,268.3 million at March 31, 2025. During the quarter the company paid $169.0 million in common dividends ($0.75 per share declared), repurchased $241.3 million of common stock, and exercised a $400.0 million contingent funding agreement to issue 4.111% Senior Notes due 2028 to refinance 3.4% notes maturing May 15, 2025. Long-term debt was $4,321.3 million at quarter end.
02—Key points
Key Highlights
- Net income attributable to Principal Financial Group, Inc. fell to $48.1 million from $532.5 million, and diluted EPS dropped to $0.21 from $2.22.
- Total revenues declined to $3,695.9 million from $4,053.3 million, driven by a $209.7 million loss on the funds withheld embedded derivative versus a $197.0 million gain a year earlier.
- Income before income taxes was $28.9 million, and the income tax benefit was $34.0 million, producing an effective tax rate of (118)%.
- Hong Kong MPF exit recognized a $65.4 million impairment in operating expenses and a $77.0 million held-for-sale write-down in net realized capital losses.
- Segment pre-tax operating earnings rose to $485.1 million from $472.2 million, with Retirement and Income Solutions up to $283.7 million and Benefits and Protection up to $119.5 million.
- Capital return continued with $169.0 million in common dividends and $241.3 million in share repurchases; a new $1.5 billion repurchase program was authorized in February 2025.
- Long-term debt increased to $4,321.3 million from $3,955.3 million after the $400.0 million 2028 Notes issuance tied to the contingent funding agreement exercise.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 30, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $3.70B$4.05B | −8.8% |
| Net Income | $48.10M$532.50M | −91.0% |
| EPS (Basic) | $0.21$2.26 | −90.7% |
| EPS (Diluted) | $0.21$2.22 | −90.5% |
| Shares Outstanding (Basic) | 225.70M236.00M | −4.4% |
| Shares Outstanding (Diluted) | 228.80M239.40M | −4.4% |
05—Questions
Frequently Asked Questions
Why did net income fall so sharply in the first quarter of 2025?
The filing attributes the decline primarily to the change in fair value of the funds withheld embedded derivative, which produced a $209.7 million loss in 2025 compared with a $197.0 million gain in 2024. Management states this reduced net income attributable to PFG by $321.4 million. Asset write-downs of $119.7 million related to exiting the Hong Kong MPF sponsor and trustee roles also contributed.
How did core operating performance trend apart from the derivative and exit-related items?
Segment pre-tax operating earnings increased to $485.1 million from $472.2 million. Net investment income rose to $1,165.7 million from $1,072.2 million, and Retirement and Income Solutions and Benefits and Protection both reported higher pre-tax operating earnings, while Corporate reported larger pre-tax operating losses of $105.6 million.
What is the Hong Kong MPF transaction and what is its expected timing?
PFG signed an agreement with Bank Consortium Trust Company (BCT) on January 16, 2025, to expand its investment management capabilities and exit its sponsor and trustee roles for Mandatory Provident Fund Schemes in Hong Kong. The transaction is expected to close in the first quarter of 2026, subject to regulatory approval, and certain impacts were already recognized in first quarter 2025.
What capital actions did the company take during the quarter?
PFG paid $169.0 million in dividends to common stockholders, declared $0.75 per common share, and acquired treasury stock totaling $241.3 million. It also issued $400.0 million of 4.111% Senior Notes due 2028 by exercising a contingent funding agreement, with proceeds intended to repay its 3.400% senior notes maturing May 15, 2025.
How much liquidity is held at the holding company level?
The filing states that as of March 31, 2025, PFG held $1,599.4 million of cash and liquid assets in its holding companies and other subsidiaries available for corporate purposes. Principal Life paid $350.0 million in stockholder dividends to its parent during the quarter, all of which was extraordinary and approved by the Iowa Commissioner.
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