Summary of Principal Financial Group Q1 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted Non-GAAP EPS: Grew 13% year-over-year to $2.07, exceeding the high end of the target range.

Non-GAAP Operating Earnings: Reported at $456 million, a 10% increase compared to Q1 2025.

Operating ROE: Improved to 16.1%, within the target range of 15% to 17%.

Revenue Growth: Achieved 6% year-over-year net revenue growth, with margin expansion of 190 basis points to 30%.

Capital Returned to Shareholders: Approximately $375 million, including $200 million in share repurchases and an 8% increase in the common stock dividend for the 12th consecutive quarter.

2Strategic Updates and Business Highlights

Retirement Ecosystem: Total retirement transfer deposits reached $12 billion, a 35% increase year-over-year, with recurring deposits up 7%.

Small and Midsized Businesses (SMB): Specialty Benefits sales rose 24% year-over-year, and business market life premium and fees grew 15%.

Global Asset Management: Achieved record gross sales of $37 billion, up 21% year-over-year, with strong net cash flow of $1.5 billion from international clients.

Recognition: Named one of the world's most ethical companies for the 15th time and received accolades for asset management performance.

3Forward Guidance and Outlook

Management expressed confidence in achieving 2026 financial targets, supported by strong fundamentals and diverse growth drivers.

Anticipated improvements in variable investment income for the full year, despite some fluctuations in the first quarter.

Continued focus on disciplined execution and sustainable growth, particularly in the retirement and asset management sectors.

4Bad News, Challenges, or Points of Concern

Negative Cash Flow: Total net cash flow was negative $1.5 billion, although this was an improvement compared to previous quarters.

Investment Management Flows: Despite record gross sales, increased redemptions were noted, particularly in U.S. equity funds, impacting net cash flow.

Market Volatility: Concerns about potential lag effects from economic uncertainty affecting SMBs and employment trends were acknowledged, although current data remained positive.

Competitive Pressures: Increased competition in the SMB market, particularly in group dental and private retirement funds, was noted, with management emphasizing a disciplined approach to capital deployment.

5Notable Q&A Insights

Specialty Benefits Underwriting: Favorable underwriting experience was attributed to low frequency in group life claims and improvements in dental performance, with expectations for continued positive trends.

Investment Management: Management indicated that while gross sales are strong, redemption activity has increased, particularly in active U.S. equity funds, due to shifts in asset allocation.

International Pension Performance: A performance fee from a significant client contributed to a strong quarter, but management cautioned that such fees can be volatile.

Private Investment Inclusion: The company supports the inclusion of private investments in retirement plans but anticipates a slow adoption rate due to complexity and fiduciary considerations. Overall, Principal Financial Group reported a strong start to 2026 with solid earnings growth and strategic momentum, while also navigating challenges related to market volatility and competitive pressures.