Summary of Principal Financial Group (PFG) Q4 2025 Earnings Call

1Key Financial Results and Metrics

Full-Year 2025 Performance:

Adjusted non-GAAP EPS growth of 12%, reported EPS growth nearly 20%.

Non-GAAP operating earnings: $1.9 billion or $8.55 per diluted share.

Non-GAAP operating ROE: 15.7%, up 120 basis points year-over-year.

Margins improved to 31%, an 80 basis point increase.

Returned over $1.5 billion to shareholders, including $851 million in share repurchases and $684 million in dividends.

Managed AUM at year-end: $781 billion, a 10% increase from 2024.

2Strategic Updates and Business Highlights

Retirement Ecosystem:

Total retirement transfer deposits grew 9% to $35 billion; WSRS recurring deposits increased 5%.

Pension risk transfer sales totaled $3 billion across 70 cases.

Small and Mid-Sized Businesses (SMBs):

WSRS recurring deposits grew 8%, with account value net cash flow of positive $1.5 billion.

Life business market premium and fees increased by 15%.

Global Asset Management:

Investment management gross sales reached $127 billion, up 16%.

Private markets AUM grew 12%, with strong net cash flow of $3.5 billion.

Portfolio Optimization:

Announced sale of runoff annuities business in Chile to focus on higher growth and capital-efficient businesses.

3Forward Guidance and Outlook

2026 Financial Targets:

EPS growth expected between 9% to 12%.

Free capital flow conversion targeted at 75% to 85%.

ROE target raised to 15% to 17%.

Anticipated capital deployment of $1.5 billion to $1.8 billion, including $800 million to $1.1 billion in share repurchases.

Business Unit Outlook:

Increased margin targets across several segments, including Retirement and Specialty Benefits, reflecting strong execution and growth expectations.

4Bad News, Challenges, or Points of Concern

Net Cash Flow:

Reported negative net cash flow of $2 billion for Q4, although private flows were positive.

AUM Decline:

AUM decreased by $3 billion sequentially, primarily due to disposed operations.

Performance Fees:

Performance fees expected to remain muted, similar to 2025 levels.

Market Conditions:

Potential headwinds from economic uncertainties and AI impacts on employment levels, although current metrics show stability in employment growth.

5Notable Q&A Insights

Investment Management:

Performance fees expected to remain in the $30 million to $40 million range for 2026.

Employment Growth:

Positive outlook for SMB employment growth, with 85% of surveyed employers expecting stable or increasing staffing levels.

Consolidation in the Industry:

PFG is focused on organic growth rather than acquisitions, leveraging its scale and competitive position in the market.

International Pension Business:

Optimism for growth despite recent divestitures, with expectations for improved profitability driven by favorable FX trends and strong local performance. Overall, PFG demonstrated strong financial performance in 2025, with a positive outlook for 2026, although challenges such as net cash flow and market conditions remain. The company continues to focus on strategic growth areas while optimizing its business portfolio.