Financial Performance - Net income attributable to Principal Financial Group (PFG) for Q1 2025 was $48 million, a significant decrease from $532.5 million in Q1 2024[7] - Non-GAAP net income attributable to PFG, excluding exited business, was $299 million, down 20% from $376.4 million in Q1 2024[7] - Non-GAAP net income attributable to PFG, excluding exited business, was $299.4 million in 1Q25, down from $376.4 million in 1Q24[31] - Total segment pre-tax operating earnings for 1Q25 were $485.1 million, slightly up from $472.2 million in 1Q24[31] - The Corporate segment experienced a loss of $105.6 million in 1Q25, worsening from a loss of $88.9 million in 1Q24[31] - Total income (loss) from exited business in Q1 2025 was $(251.3) million, compared to a profit of $156.1 million in Q1 2024[38] Earnings and Dividends - Non-GAAP operating earnings for Q1 2025 increased by 10% to $1.81 per diluted share, compared to $1.65 in Q1 2024[6] - The company raised its common stock dividend for Q2 2025 to $0.76 per share, marking a 7% increase from Q2 2024[6] - Non-GAAP operating earnings for 1Q25 increased to $414.5 million, compared to $394.3 million in 1Q24, reflecting a growth of 2.7%[31] Assets and Capital - Assets under management (AUM) reached $718 billion, contributing to total assets under administration (AUA) of $1.7 trillion[6] - The company reported a strong financial position with $1.75 billion of excess and available capital[6] - Total assets as of 1Q25 were $313.0 billion, a slight decrease from $313.7 billion in 4Q24[34] - Stockholders' equity available to common stockholders increased to $11,216.8 million in Q1 2025 from $11,086.4 million in Q4 2024, representing a growth of 1.17%[36] - Book value per common share increased to $49.85 in 1Q25 from $49.01 in 4Q24[34] - Book value per common share, excluding cumulative change in fair value of funds withheld embedded derivative, rose to $53.70 in Q1 2025, slightly up from $53.69 in Q4 2024[36] Revenue and Expenses - Operating revenues less pass-through expenses for Investment Management reached $416.0 million in Q1 2025, up from $398.6 million in Q1 2024, indicating a growth of 4.4%[40] - Commissions and other expenses in Investment Management for Q1 2025 were $37.7 million, slightly higher than $36.9 million in Q1 2024[40] - Pre-tax operating earnings for the Investment Management segment decreased by 5% to $116.3 million in Q1 2025[10] Market and Sales Performance - Retirement and Income Solutions (RIS) recurring deposits increased by 9% to $13.8 billion, with strong Pension Risk Transfer (PRT) sales of $0.8 billion[8] - Life Insurance business market premium and fees increased by 20% in Q1 2025 compared to the previous year[8] Tax and Capital Gains - Total GAAP income taxes for Q1 2025 showed a benefit of $34.0 million, compared to an expense of $95.1 million in Q1 2024[38] - Net realized capital gains (losses) adjusted for Q1 2025 were $(115.1) million, a significant decline from $(17.9) million in Q1 2024[38] - The total net realized capital gains (losses) after-tax adjustments for Q1 2025 were $2.0 million, a recovery from $(17.0) million in Q1 2024[38] Forward-Looking Statements - Forward-looking statements indicate ongoing strategies for growth and potential share repurchases, though actual results may differ[25] Variances and Changes - Significant variances in 1Q25 included lower than expected variable investment income across multiple segments[23] - The cumulative change in fair value of funds withheld embedded derivative decreased to $(2,215.6) million in Q1 2025 from $(2,381.3) million in Q4 2024[36] - Noncontrolling interest reported a loss of $(51.5) million in Q1 2025, compared to a loss of $(44.9) million in Q4 2024[36]

Core Viewpoint - Principal Financial Group, Inc. (PFG) is expected to report first-quarter 2025 earnings on April 24, with a consensus estimate of $1.85 per share, reflecting a 12.1% increase year-over-year, despite a negative earnings surprise in the previous quarter [1][7]. Group 1: Earnings and Revenue Expectations - The first-quarter results are anticipated to show a rise in fee revenues, higher yields, favorable market performance, and increased sales of single premium group annuities [2]. - Operating revenues are projected to increase to $3.97 billion, marking a nearly 4.4% rise from the same quarter last year [3]. - Net investment income is expected to reach $1.1 billion, benefiting from higher yields and average invested assets [6]. Group 2: Expense and Performance Factors - Operating expenses are likely to increase to $1.3 billion due to higher benefits, claims, and settlement expenses [7]. - Investment Management is expected to see improved performance from higher management fee revenues, although this may be offset by lower performance fee revenues and increased variable compensation expenses [4]. Group 3: Market and International Operations - International Pension operations are expected to benefit from increased earnings from equity method investments in Brazil and favorable market performance, although foreign currency headwinds may offset some gains [5]. - Assets under management are likely to improve due to favorable market performance across equity, fixed income, and real estate [6]. Group 4: Earnings Prediction Model - The earnings prediction model indicates a potential earnings beat for Principal Financial, supported by a positive Earnings ESP of +0.31% and a Zacks Rank of 3 [8][9].

Company Overview - Principal Financial (PFG) is expected to report a year-over-year increase in earnings due to higher revenues for the quarter ended March 2025, with earnings projected at $1.86 per share, reflecting a +12.7% change, and revenues expected to be $3.97 billion, up 4.5% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for April 24, and the stock may rise if the reported numbers exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised 2.44% lower over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates a negative Earnings ESP of -0.33% for Principal Financial, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate [11]. - The company currently holds a Zacks Rank of 3 (Hold), making it challenging to predict a beat on the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Principal Financial was expected to post earnings of $1.95 per share but delivered $1.94, resulting in a surprise of -0.51% [12]. - The company has not beaten consensus EPS estimates in any of the last four quarters, indicating a trend of underperformance [13]. Industry Comparison - Goosehead Insurance (GSHD), another player in the Zacks Insurance - Multi line industry, is expected to post earnings of $0.23 per share for the same quarter, reflecting a year-over-year change of -17.9%, with revenues projected at $78.25 million, up 21.4% [17]. - Goosehead has an Earnings ESP of 4.35% and has beaten consensus EPS estimates in each of the trailing four quarters, contrasting with Principal Financial's performance [18].

Core Viewpoint - Principal Financial Group, Inc. (PFG) is experiencing a short-term bullish trend, with its share price currently at $85.67, down 6.8% from its 52-week high of $91.98, while trading above its 50-day simple moving average (SMA) [1][2][3] Financial Performance - PFG has a market capitalization of $19.32 billion and an average trading volume of 1.48 million shares over the last three months [2] - Year-to-date, PFG shares have increased by 10.6%, outperforming the Finance sector's growth of 4% and the Zacks S&P 500 composite's growth of 2.4% [4][6] - The Zacks Consensus Estimate for PFG's 2025 earnings per share indicates a year-over-year increase of 22%, with revenues projected at $16.53 billion, reflecting a 5.7% improvement [9] Growth Drivers - Revenue growth is expected to improve due to higher premiums, fees, and improved net investment income across segments [10] - The Principal International segment is likely to benefit from increased single-premium annuity sales in Chile, with operating earnings supported by foreign currency tailwinds [10] - The Specialty Benefits Insurance business is anticipated to continue benefiting from record sales, strong retention, and employment growth [11] - Strong institutional flows across various asset classes are expected to drive positive net cash flow [11] Capital Management - PFG has a strong capital position with sufficient cash generation capabilities and liquidity, revising its RBC target to a range of 375% to 400% [13] - The company plans to deploy $1.4 billion to $1.7 billion in capital in 2025, including $700 million to $1 billion for share repurchases [15] - PFG raised its dividend by 9% for the sixth consecutive quarter, aligning with a targeted 40% dividend payout ratio, resulting in a solid dividend yield of 3.6% [14] Valuation and Market Position - PFG's return on equity in the trailing 12 months was 14.68%, surpassing the industry average of 14.18% [16] - The shares are trading at a price-to-earnings multiple of 9.85, higher than the industry average of 9.26, indicating a premium valuation [17] Conclusion - PFG's financial stability and favorable growth estimates suggest positive prospects, driven by strategic buyouts, effective capital deployment, and strong retention [18]

Financial Performance and Assets - As of December 31, 2024, Principal Financial Group had $1,663.9 billion in assets under administration (AUA) and $712.1 billion in assets under management (AUM) [11]. - The Workplace Savings and Retirement Solutions (WSRS) segment managed over 43,000 defined contribution plans with $550.7 billion in assets, covering approximately 11.3 million eligible participants [22]. - Approximately 31% of WSRS account values were managed by Principal Asset Management, while 65% were managed by third-party asset managers [22]. - As of December 31, 2024, 90% of the $8.3 billion variable annuity account balances were allocated to mutual funds managed by Principal Asset Management [26]. - The company reported that $5.6 billion of the variable annuity separate account values had the Guaranteed Minimum Withdrawal Benefit (GMWB) rider [27]. - Principal Bank had approximately 772,000 customers and $8.8 billion in assets as of December 31, 2024 [36]. - Principal Trust Company managed approximately $658.6 billion in assets under administration as of December 31, 2024 [38]. - As of December 31, 2024, the Investment Management teams managed $559.1 billion in assets [45]. Insurance and Employee Benefits - The company had over 123,000 group dental and vision insurance policies in force covering over 3.0 million employees as of December 31, 2024 [68]. - The group life insurance business provided nearly $186 billion of group life insurance in force covering approximately 3.1 million employee lives as of December 31, 2024 [69]. - Long-term disability represented 59% of total group disability premium as of December 31, 2024 [70]. - The company administered approximately 716,000 individual life insurance policies with over $555.0 billion of individual life insurance in force as of December 31, 2024 [73]. - Interest sensitive products represented 18% of individual life insurance in force and generated 72% of individual life insurance annualized first year premium sales for the year ended December 31, 2024 [75]. - The company served approximately 2.2 million employee lives through over 69,000 contracts in group disability insurance as of December 31, 2024 [70]. - As of December 31, 2024, term life insurance products represented 80% of individual life insurance in force and 28% of individual life insurance annualized first year premium sales [78]. - Small and medium-sized business sales accounted for 100% of individual life sales and 71% of individual disability sales for the year ended December 31, 2024 [83]. Market Opportunities and Strategy - The company believes that small and medium-sized businesses represent an underserved market with attractive growth opportunities in retirement and employee benefit markets [13]. - The group insurance market is shifting towards voluntary/worksite products, presenting growth opportunities for the company [81]. - The company focuses on the Nonqualified Deferred Compensation and Business Solutions market to address financial challenges for business owners [83]. - The voluntary benefits platform is being enhanced to capitalize on the expanding market due to employer funding shifts [81]. Employee and Organizational Insights - As of December 31, 2024, the company employed approximately 19,700 people globally, with 12,000 in the U.S. and 7,700 outside the U.S. [112]. - The average tenure of employees was 8.8 years globally and 11.2 years in the U.S., with an annual turnover rate of 17.4% globally and 11.0% in the U.S. [119]. - The company has established eight employee resource groups (ERGs) to enhance inclusion and provide cultural insights as of December 31, 2024 [115]. - The company utilizes an enterprise people scorecard to monitor employee retention, learning, hiring, engagement, and productivity trends [117]. Risk Management and Regulatory Environment - The company’s risk management includes ongoing monitoring of various risk metrics and quarterly risk reporting to manage established risk appetites and tolerances [111]. - The company anticipates that acquisition and investment activities may increase the number and magnitude of mark-to-market adjustments on equity securities, trading securities, and derivative instruments, potentially reducing profitability and causing volatility in net income [145]. - Changes in laws or regulations could significantly increase compliance costs and reduce profitability, impacting how the company conducts business [164]. - The company is subject to various federal, state, and international regulations that may increase compliance costs and reduce profitability, particularly in the context of emerging ESG requirements [178]. - The company faces potential liabilities from assessments by state insurance guaranty associations, which could impact financial strength [167]. - Regulatory changes regarding cybersecurity and privacy may increase compliance costs and limit data insights, affecting business operations [175]. Financial Stability and Investment Risks - Financial strength ratings for Principal Life and PNLIC include A+ ("Superior") from A.M. Best and AA− ("Very Strong") from Fitch, indicating strong financial stability [88]. - The statutory surplus of each of the U.S. life insurance companies exceeded the minimum risk-based capital requirements as of December 31, 2024 [95]. - The company held $53.0 billion in fixed maturities, representing 66% of total U.S. invested assets, with approximately 5% rated below investment grade as of December 31, 2024 [141]. - The international investment operations held $2.5 billion in fixed maturities, accounting for 41% of total international invested assets as of December 31, 2024 [142]. - The commercial mortgage loan portfolio was valued at $14.7 billion, representing 17% of total invested assets, with no loans in foreclosure as of December 31, 2024 [143]. - Approximately $12.3 billion, or 85%, of the U.S. commercial mortgage loans had balloon payment maturities, which historically have a higher default rate [144]. - The company reported gross unrealized losses on fixed maturities of $4,246.2 million pre-tax as of December 31, 2024, with $4,081.7 million of these losses being in a continuous unrealized loss position for over twelve months [152]. - The company faces risks related to environmental liability exposure from its commercial mortgage loan portfolio and real estate investments, which may harm financial strength and reduce profitability [150]. Competitive Landscape and Market Challenges - The company faces pressure to lower prices due to competition from other insurance companies, which may adversely affect revenues and profitability [192]. - A downgrade in financial strength or credit ratings could lead to increased policy surrenders, reduced new sales, and higher costs of capital, negatively impacting profitability [193]. - Revenues from asset management and accumulation products are primarily fee-based, and significant client terminations or withdrawals may reduce assets under management (AUM), adversely affecting revenues [195]. - The company is exposed to risks from guarantees in certain products, which may decrease net income or increase volatility if hedging strategies prove ineffective [197]. - International operations face political, legal, and operational risks that could reduce profitability, particularly in emerging markets [198]. Technological and Operational Risks - Cybersecurity risks pose significant threats, including unauthorized access and potential reputational damage, which could adversely affect profitability [220]. - Disruptions in information technology and infrastructure could lead to operational impairments and reputational damage [219]. - The company may face costly litigation related to intellectual property infringement claims, which could result in significant liability and operational restrictions [215]. - Loss of key vendor relationships could adversely affect business operations and lead to financial losses [221]. - The company must maintain effective controls to prevent cybersecurity incidents, as failures could result in legal liabilities and competitive disadvantages [220]. Future Outlook and Strategic Considerations - The company may need to fund deficiencies in its Closed Block assets, which could impact financial stability if cash flows are insufficient [202]. - Future acquisitions may present integration challenges and unforeseen liabilities, potentially impairing expected benefits and goodwill [206]. - Technological advances and societal changes may disrupt the business model, requiring significant expenditures to adapt to evolving customer preferences [211]. - Climate change may impact mortality and morbidity rates, asset prices, and overall economic conditions, posing risks to profitability [210]. - The company's ability to attract and retain qualified employees is critical for operational success, facing intense competition in various professional fields [216]. - The performance of investments directly impacts the ability to increase and retain Assets Under Management (AUM), with potential cash outflows if qualified portfolio managers are not retained [218]. - The company relies on a variety of distribution channels, including internal digital channels and independent brokers, to sell its products and services [217].

Principal Financial Group (PFG) Conference February 10, 2025 11:20 AM ET Company Participants Amy Friedrich - President of Benefits & Protection Conference Call Participants Michael Ward - Vice President & Senior Analyst - US Insurance Michael Ward All right. Well, thank you all in the room and everyone online for joining us. Very excited to have Amy Frederick here from Principal. She is President of Benefits and Protection. Amy, I know you have some prepared remarks, but I thought it was actually helpful i ...

Financial Data and Key Metrics Changes - The company achieved an adjusted non-GAAP earnings per share (EPS) growth of 11% for 2024, with a strong 16% increase in the fourth quarter, driven by top-line growth and equity market tailwinds [10][34] - The free capital flow conversion ratio ended the year at the midpoint of the targeted range of 75% to 85%, and return on equity (ROE) improved by 90 basis points year-over-year, on track to achieve the 14% to 16% target in 2025 [11][35] - Total capital returned to shareholders was $1.7 billion in 2024, including share buybacks and a 10% increase in the annual common stock dividend [12][51] Business Line Data and Key Metrics Changes - In the Retirement segment, recurring deposits increased by 7% in 2024, with pension risk transfer (PRT) sales reaching nearly $900 million in the fourth quarter, totaling over $3 billion for the year [20][24] - Asset Management ended the year with $683 billion of assets under management (AUM), with net flows improving compared to 2023, despite a $28 billion negative impact from foreign exchange [25][26] - Specialty Benefits experienced a 7% growth in premiums and fees, with a favorable loss ratio of 60.4% for the year [28][44] Market Data and Key Metrics Changes - The S&P 500 gained 25% in 2024, contributing to favorable market conditions for the company's performance [36] - The company managed to offset foreign exchange impacts on AUM through strong equity market performance, resulting in a 3% year-over-year increase in total company-managed AUM [18][37] - The company reported positive institutional and retail flows in the fourth quarter, despite typical seasonal weaknesses in U.S. retirement sales [19] Company Strategy and Development Direction - The company focuses on three strategic areas for sustained growth: the broad retirement ecosystem, small and midsized businesses (SMB), and global asset management [13] - Recent expansions in the retirement ecosystem include new personalized and passive target date offerings, addressing evolving needs [14] - The company aims to maintain a disciplined approach to growth in the SMB segment, leveraging strong customer relationships and a track record of above-market growth [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate changes in the Chilean pension reform, viewing it as an opportunity for long-term growth [68][70] - The outlook for 2025 includes reaffirmed targets of 9% to 12% EPS growth, 75% to 85% free capital flow conversion, and 14% to 16% ROE [54][56] - Management highlighted the importance of maintaining financial flexibility while returning excess capital to shareholders, targeting $1.4 billion to $1.7 billion in capital deployments for 2025 [55][126] Other Important Information - The company received recognition as one of America's Most Just Companies and as a Best Place to Work in Money Management for the 13th consecutive year [30][31] - The company maintains a strong capital position with $1.6 billion of excess and available capital, supporting its growth initiatives [50][51] Q&A Session Summary Question: Initial thoughts on the pension reform in Chile - Management is optimistic about the reform providing clarity for future operations and believes it will improve system efficiency [68][70] Question: Thoughts on increasing private assets in 401(k) plans - Management sees significant opportunities for increased use of private assets in retirement plans but acknowledges regulatory hurdles that need to be addressed [72][75] Question: Stabilization of participant withdrawals in RIS - Management noted improved retention rates and lower withdrawal rates, contributing to a positive outlook for 2025 [80][84] Question: Expectations for real estate transactional activity and variable investment income - Management anticipates a gradual recovery in the commercial real estate market and expects improved returns in 2025 for the variable investment income portfolio [92][98] Question: Impact of litigation in the PRT market - Management has not seen litigation migrate to the smaller end of the market and remains confident in their PRT business [102][106] Question: Underwriting discipline in Specialty Benefits - Management is exercising underwriting discipline due to competitive pressures, particularly in the dental market, while maintaining a focus on profitable growth [108][115]

Core Insights - Principal Financial Group, Inc. (PFG) reported a fourth-quarter 2024 operating net income of $1.94 per share, which missed the Zacks Consensus Estimate by 0.5%, but increased by 6% year over year [1][15] - Total revenues surged 76.6% year over year to $4.7 billion, exceeding the Zacks Consensus Estimate by 17.9% [2] Financial Performance - Total expenses decreased by 4.2% year over year to $3.6 billion, lower than the estimate of $4.4 billion [3] - As of December 31, 2024, assets under management (AUM) were $712 billion, part of total assets under administration (AUA) of $1.7 trillion [3] Segment Analysis - **Retirement and Income Solution**: Revenues fell 6.3% year over year to $2.1 billion, missing the estimate of $2.2 billion; pre-tax operating earnings increased 6% to $280.1 million, but missed the estimate of $828.5 million [4] - **Investment Management**: Revenues rose 9.6% year over year to $474.6 million; pre-tax operating earnings increased 27% to $163.9 million, with an operating margin expansion of 570 basis points to 38.3% [5] - **International Pension**: Revenues decreased 21.6% year over year to $239.8 million; pre-tax operating earnings dropped 40% to $52.1 million, with an operating margin contraction of 1,100 basis points to 38.1% [6] - **Benefits and Protection**: Revenues increased 2.7% year over year to $1.2 billion, beating the estimate of $1 billion; pre-tax operating earnings rose 7.1% to $154.7 million, exceeding the estimate of $40.7 million [7] - **Specialty Benefits**: Revenues grew 4.2% year over year to $873.3 million, surpassing the estimate of $801.8 million; pre-tax operating earnings increased 23% to $147.2 million, beating the estimate of $111.1 million [8] - **Life Insurance**: Revenues decreased 1.4% year over year to $329.3 million, beating the estimate of $280 million; pre-tax operating earnings declined 70% to $7.5 million, attributed to higher mortality [9][10] - **Corporate**: Pre-tax operating losses widened to $103.9 million from a loss of $88.5 million a year ago, exceeding the estimate of $92.4 million [11] Capital Management - Principal Financial returned $1.7 billion to shareholders in 2024, including $1 billion in share repurchases and $0.7 billion in dividends; the board raised the first-quarter dividend by 9% to 75 cents per share [13] - A new authorization for the repurchase of $1.5 billion of outstanding shares was approved, with approximately $0.8 billion remaining under the prior authorization as of December 31, 2024 [14] Full-Year Highlights - For 2024, operating net income was $6.97 per share, missing the Zacks Consensus Estimate by 0.2%, but increased 6% year over year; total operating revenues reached $15.63 billion, beating the consensus mark by 0.3% and increasing 6.6% year over year [15] 2025 Guidance - Principal Financial expects 9-12% annual non-GAAP operating earnings per diluted share growth, with an estimated 75-85% free capital flow conversion and a projected 14-16% non-GAAP return on equity [16]

Principal® RETIREMENT | ASSET MANAGEMENT | BENEFITS & PROTECTION Fourth Quarter 2024 Earnings and 2025 Outlook PRINCIPAL FINANCIAL GROUP February 6, 2025 Key takeaways Delivering on long-term quidance 11% EPS growth1 (9-12% target) 13.7% ROE2 (14-16% target) Delivering on long-term guidance | 11% | 13.7% | 80% | | --- | --- | --- | | EPS growth1 | ROE2 | FCF %3 | | (9-12% target) | | (75-85% target) | FY 2024 operating results Reported non-GAAP operating earnings5 $1,641M (+2% vs. FY 2023) Non-GAAP operatin ...

Core Insights - Principal Financial (PFG) reported $4.75 billion in revenue for Q4 2024, a 12% year-over-year increase, with an EPS of $1.94 compared to $1.83 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $4.03 billion by 17.89%, while the EPS fell short of the consensus estimate of $1.95 by 0.51% [1] Financial Performance Metrics - Assets under management (AUM) reached $712.1 billion, surpassing the average estimate of $695.7 billion [4] - Revenue from premiums and other considerations was $1.83 billion, below the average estimate of $1.92 billion, reflecting an 11.9% year-over-year decline [4] - Revenue from fees and other revenues was $1.12 billion, slightly above the average estimate of $1.09 billion, marking a 7.5% year-over-year increase [4] - Net investment income was reported at $1.12 billion, below the average estimate of $1.17 billion, showing a 0.4% year-over-year decline [4] - Principal Asset Management Segment's net investment income was $163.40 million, significantly below the average estimate of $194.07 million, representing a 26% year-over-year decrease [4] - Specialty Benefits in the Benefits and Protection Segment reported total revenue of $873.30 million, exceeding the average estimate of $858.19 million, with a 4.2% year-over-year increase [4] - Life Insurance segment's premiums and other considerations were $110.90 million, below the average estimate of $124.50 million, indicating an 8% year-over-year decline [4] Stock Performance - Shares of Principal Financial have returned +2.9% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]