Why did GAAP net income fall so sharply compared with the prior year?

GAAP net income attributable to PFG was $48.1 million in 1Q25 versus $532.5 million in 1Q24. Exhibit 1 and the reconciliation tables show that the loss from exited business was $251.3 million in 1Q25 compared with income of $156.1 million in 1Q24, driven largely by a $209.7 million change in fair value of the funds withheld embedded derivative. Net realized capital losses, as adjusted, were $115.1 million in 1Q25 versus $17.9 million in 1Q24.

What did the company do with capital in the quarter and what is its dividend outlook?

Principal returned $369 million to shareholders, including $200 million of share repurchases and $169 million of common stock dividends. The second quarter 2025 common stock dividend was raised to $0.76 per share, a 1-cent increase over the first quarter, payable June 27, 2025, to shareholders of record as of June 2, 2025.

Which business segments drove results and which weakened?

Retirement and Income Solutions pre-tax operating earnings increased to $283.7 million from $262.2 million, and Specialty Benefits rose to $106.2 million from $102.0 million. Investment Management declined to $116.3 million from $122.2 million, citing elevated seasonal expenses. Corporate pre-tax operating losses widened to $105.6 million from $88.9 million, primarily due to lower net investment income and higher operating expenses.

When is the earnings call and where can investors find supporting materials?

The earnings conference call is scheduled for Friday, April 25, 2025, at 10:00 a.m. ET, led by President and CEO Deanna Strable and Interim CFO Joel Pitz. A webcast, replay and transcript are available at investors.principal.com, which also hosts the financial supplement and slide presentation.

PFG 8-K: Earnings & Results

Q: How did the company's underlying operating performance compare with the prior year?

Non-GAAP operating earnings were $414.5 million, or $1.81 per diluted share, up from $394.3 million, or $1.65, in 1Q24. Excluding significant variances, non-GAAP operating earnings per diluted share were $1.92, compared with $1.75 a year earlier, which the company reported as a 10% increase.

01—Abstract

Summary

Summary of the 8-K filed April 24, 2025. Cited figures are marked; the original filing is the authoritative source.

Principal Financial Group, Inc. (Nasdaq: PFG) reported first quarter 2025 results on April 24, 2025, per an 8-K furnishing its earnings release as Exhibit 99.

GAAP net income attributable to PFG was $48.1 million^a, or $0.21 per diluted share, compared with $532.5 million, or $2.22 per diluted share, in 1Q24. Non-GAAP operating earnings were $414.5 million, or $1.81 per diluted share, versus $1.65 in the prior-year quarter, a 10% increase. Excluding significant variances, non-GAAP operating earnings per diluted share were $1.92, up 10% from $1.75.

The company cited lower than expected variable investment income and a GAAP-only regulatory closed block adjustment in Life Insurance as significant variances in the quarter. The company returned $369 million^b to shareholders in the quarter, including $200 million of share repurchases and $169 million of common stock dividends, and raised its second quarter 2025 common stock dividend to $0.76 per share, a 1-cent increase over the first quarter dividend. Assets under management were $717.9 billion and assets under administration were $1,661.6 billion at quarter end, and the company reported $1.75 billion of excess and available capital.

AUM net cash flow was negative $4.4 billion^c in the quarter, compared with negative $0.6 billion in 1Q24. By segment, Retirement and Income Solutions pre-tax operating earnings rose to $283.7 million from $262.2 million, and Specialty Benefits pre-tax operating earnings increased to $106.2 million from $102.0 million. Investment Management pre-tax operating earnings declined to $116.3 million from $122.2 million, and Corporate pre-tax operating losses widened to $105.6 million from $88.9 million.

The company scheduled an earnings call for April 25, 2025, at 10:00 a.m. ET.

02—Key points

Key Highlights

GAAP net income attributable to PFG fell to $48.1 million ($0.21 per diluted share) from $532.5 million ($2.22 per diluted share) in 1Q24.
Non-GAAP operating earnings rose 10% to $1.81 per diluted share, or $414.5 million, from $1.65 in 1Q24; excluding significant variances, $1.92 per share, up 10%.
Returned $369 million to shareholders in the quarter, including $200 million of share repurchases and $169 million of common stock dividends.
Raised the second quarter 2025 common stock dividend to $0.76 per share, a 1-cent increase over the first quarter dividend, payable June 27, 2025, to holders of record as of June 2, 2025.
Retirement and Income Solutions recurring deposits rose 9% to $13.8 billion, with PRT sales of $0.8 billion.
AUM of $717.9 billion, within AUA of $1,661.6 billion; AUM net cash flow was negative $4.4 billion.
Reported $1.75 billion of excess and available capital at quarter end.

03—Questions

Frequently Asked Questions

Why did GAAP net income fall so sharply compared with the prior year?
GAAP net income attributable to PFG was $48.1 million in 1Q25 versus $532.5 million in 1Q24. Exhibit 1 and the reconciliation tables show that the loss from exited business was $251.3 million in 1Q25 compared with income of $156.1 million in 1Q24, driven largely by a $209.7 million change in fair value of the funds withheld embedded derivative. Net realized capital losses, as adjusted, were $115.1 million in 1Q25 versus $17.9 million in 1Q24.
How did the company's underlying operating performance compare with the prior year?
Non-GAAP operating earnings were $414.5 million, or $1.81 per diluted share, up from $394.3 million, or $1.65, in 1Q24. Excluding significant variances, non-GAAP operating earnings per diluted share were $1.92, compared with $1.75 a year earlier, which the company reported as a 10% increase.
What did the company do with capital in the quarter and what is its dividend outlook?
Principal returned $369 million to shareholders, including $200 million of share repurchases and $169 million of common stock dividends. The second quarter 2025 common stock dividend was raised to $0.76 per share, a 1-cent increase over the first quarter, payable June 27, 2025, to shareholders of record as of June 2, 2025.
Which business segments drove results and which weakened?
Retirement and Income Solutions pre-tax operating earnings increased to $283.7 million from $262.2 million, and Specialty Benefits rose to $106.2 million from $102.0 million. Investment Management declined to $116.3 million from $122.2 million, citing elevated seasonal expenses. Corporate pre-tax operating losses widened to $105.6 million from $88.9 million, primarily due to lower net investment income and higher operating expenses.
When is the earnings call and where can investors find supporting materials?
The earnings conference call is scheduled for Friday, April 25, 2025, at 10:00 a.m. ET, led by President and CEO Deanna Strable and Interim CFO Joel Pitz. A webcast, replay and transcript are available at investors.principal.com, which also hosts the financial supplement and slide presentation.

04—Continue

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