01—Abstract
Summary
Summary of the 10-Q filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Principal Financial Group, Inc. reported first-quarter 2026 net income attributable to Principal Financial Group, Inc. of $424.6 milliona, or $1.93 diluted earnings per common share, compared with $48.1 million, or $0.21 per diluted share, in the first quarter of 2025.
Management attributes the improvement primarily to the change in fair value of the funds withheld embedded derivative, which produced a gain of $177.4 millionb in 2026 versus a loss of $209.7 million in 2025. Total revenues were $3.53 billion versus $3.70 billion, and total expenses fell to $3.05 billion from $3.67 billion, with lower benefits, claims and settlement expenses largely tied to fewer single premium group annuity sales with life contingencies. Segment pre-tax operating earnings were $558.5 million in the quarter, up from $485.1 million, with Retirement and Income Solutions at $302.1 million, Principal Asset Management at $208.5 million, and Benefits and Protection at $170.0 million, offset by a Corporate segment loss of $122.1 million.
Total assets declined to $332.70 billionc from $341.38 billion at year-end 2025, largely reflecting lower separate account assets, and stockholders' equity attributable to the company was $11.82 billion. Net cash provided by operating activities fell to $187.1 million from $977.3 million. The company returned $409.4 million to common stockholders through dividends of $173.5 million and share repurchases of $235.9 million.
Accumulated other comprehensive loss widened to $4.34 billiond, reflecting $578.5 million of net unrealized losses on available-for-sale securities, as interest rates rose and credit spreads widened. Gross unrealized losses on fixed maturities available-for-sale totaled $3.59 billion as of March 31, 2026. The company reported a 14% effective tax rate for the quarter and stated that no material adverse effect from pending litigation is expected.
02—Key points
Key Highlights
- Net income attributable to Principal Financial Group, Inc. was $424.6 million ($1.93 diluted EPS), versus $48.1 million ($0.21) in the first quarter of 2025, driven mainly by a $177.4 million gain on the funds withheld embedded derivative compared with a $209.7 million loss a year earlier.
- Total revenues declined to $3,529.1 million from $3,695.9 million, while total expenses decreased to $3,047.3 million from $3,667.0 million, reflecting lower benefits and claims expense in Retirement and Income Solutions.
- Segment pre-tax operating earnings rose to $558.5 million from $485.1 million, led by Retirement and Income Solutions ($302.1 million) and Principal Asset Management ($208.5 million).
- Premiums and other considerations fell to $1,148.1 million from $1,751.3 million, mainly due to lower sales of single premium group annuities with life contingencies in Retirement and Income Solutions.
- Average monthly account values in Retirement and Income Solutions were $646.3 billion versus $572.8 billion a year earlier, and Principal Asset Management AUM ended the quarter at $737.6 billion.
- Accumulated other comprehensive loss increased to $4,343.7 million from $4,188.4 million at year-end 2025, driven by $578.5 million of net unrealized losses on available-for-sale securities amid higher interest rates and wider credit spreads.
- The company paid $173.5 million in dividends ($0.80 per share declared) and repurchased $235.9 million of common stock during the quarter; $1,234.7 million remained available under the February 2025 repurchase authorization at March 31, 2026.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 29, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $3.53B$3.70B | −4.5% |
| Net Income | $424.60M$48.10M | +782.7% |
| EPS (Basic) | $1.96$0.21 | +833.3% |
| EPS (Diluted) | $1.93$0.21 | +819.0% |
| Shares Outstanding (Basic) | 217.20M225.70M | −3.8% |
| Shares Outstanding (Diluted) | 220.30M228.80M | −3.7% |
05—Questions
Frequently Asked Questions
Why did net income improve so sharply compared with the first quarter of 2025?
The main driver was the change in fair value of the funds withheld embedded derivative, which was a gain of $177.4 million in 2026 compared with a loss of $209.7 million in 2025, reflecting changes in interest rates and credit spreads. Lower benefits, claims and settlement expenses, which fell to $1,611.1 million from $2,220.0 million, also contributed.
Is the company's core operating performance improving?
Segment pre-tax operating earnings increased to $558.5 million from $485.1 million. Retirement and Income Solutions rose to $302.1 million from $283.7 million, Benefits and Protection rose to $170.0 million from $119.5 million, and Principal Asset Management rose to $208.5 million from $187.5 million, while the Corporate segment loss widened to $122.1 million from $105.6 million.
What pressures are visible on the balance sheet and cash flow?
Net cash provided by operating activities fell to $187.1 million from $977.3 million, which the filing attributes primarily to the timing of receivable and payable settlements. Accumulated other comprehensive loss grew to $4,343.7 million, and gross unrealized losses on available-for-sale fixed maturities were $3,586.4 million at March 31, 2026, primarily due to higher interest rates and wider credit spreads.
How is the company returning capital to shareholders?
In the first quarter the company paid $173.5 million in common stock dividends, declared $0.80 per share, and repurchased $235.9 million of common stock. Total cash returned to common stockholders was $409.4 million. Principal Life paid $232.0 million in stockholder dividends to its parent during the quarter, all of which was extraordinary and approved by the Iowa Commissioner.
What is the company's exposure to credit risk in its investment portfolio?
Problem, potential problem and restructured fixed maturities totaled $145.5 million, or 0.25% of total fixed maturities, at March 31, 2026. Net realized capital losses included $32.4 million of credit losses on available-for-sale fixed maturities. Commercial mortgage loans classified as problem, potential problem or restructured totaled $176.5 million, or 1.27% of total commercial mortgage loans.
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