Principal Financial(PFG) - 2025 Q3 - Quarterly Results

Financial Performance - Diluted earnings per share for Q3 2025 were $0.95, with net income attributable to PFG at $214 million, a significant recovery from a loss of $220 million in Q3 2024[2][7] - Non-GAAP operating earnings per diluted share increased 19% year-over-year to $2.10, while non-GAAP net income attributable to PFG, excluding exited business, rose 16% to $2.06 per share[6][7] - Net income attributable to Principal Financial Group (PFG) for 3Q25 was $213.8 million, compared to a loss of $220.0 million in 3Q24, marking a significant improvement[36] - Non-GAAP net income attributable to PFG, excluding exited business, increased to $465.6 million in 3Q25 from $419.1 million in 3Q24, reflecting a growth of 11.2%[36] - Non-GAAP operating earnings for 3Q25 were $473.7 million, up from $412.0 million in 3Q24, representing a year-over-year increase of 14.9%[36] Shareholder Returns - The company returned $398 million to shareholders, including $225 million in share repurchases and $173 million in common stock dividends[6] - The fourth quarter 2025 common stock dividend was raised to $0.79 per share, reflecting an 8% increase compared to Q4 2024[6][26] Segment Performance - Retirement and Income Solutions segment reported pre-tax operating earnings of $310.3 million, a 26% increase from Q3 2024, driven by 11% net revenue growth[12][13] - Investment Management segment's pre-tax operating earnings increased 9% to $173.5 million, supported by a 5% rise in management fees[12][14] - Specialty Benefits segment achieved record pre-tax operating earnings of $155.5 million, a 53% increase year-over-year, with an incurred loss ratio of 56.4%[20][23] - International Pension segment's pre-tax operating earnings decreased 8% to $101.2 million, with net revenue declining 4%[19][22] - Corporate segment reported pre-tax operating losses of $91.6 million, an increase of 15% compared to Q3 2024, primarily due to lower interest income and higher operating expenses[25][27] - The Benefits and Protection segment saw pre-tax operating earnings rise to $86.5 million in 3Q25 from $64.4 million in 3Q24, a growth of 34.6%[36] - Principal Asset Management's pre-tax operating earnings were $274.7 million in 3Q25, slightly up from $268.7 million in 3Q24[36] Assets and Equity - Assets under management (AUM) reached $784 billion, with a net cash flow of $0.4 billion, while assets under administration (AUA) totaled $1.8 trillion[6][7] - Total assets increased to $334.5 billion in 3Q25 from $313.7 billion in 4Q24, representing a growth of approximately 6.0%[41] - Stockholders' equity available to common stockholders rose to $11,665.5 million in 3Q25, up from $11,086.4 million in 4Q24, an increase of about 5.2%[43] - Book value per common share increased to $52.90 in 3Q25 from $49.01 in 4Q24, reflecting a growth of approximately 5.9%[43] - Total common equity excluding certain adjustments was $12,333.3 million in 3Q25, compared to $12,144.0 million in 4Q24, reflecting an increase of about 1.6%[43] Revenue and Expenses - Operating revenues for investment management reached $483.9 million in 3Q25, compared to $466.4 million in 3Q24, marking an increase of about 3.2%[47] - Operating revenues less pass-through expenses amounted to $444.0 million in 3Q25, up from $427.8 million in 3Q24, indicating a growth of approximately 3.0%[47] - Total GAAP income taxes for 3Q25 were reported at $14.5 million, a significant recovery from a tax benefit of $(100.4) million in 3Q24[45] - Significant variances in 3Q25 included lower than expected variable investment income across several segments, partially offset by higher income in Corporate[29] Share Count and Capital Gains - The weighted average diluted common shares outstanding decreased to 225.2 million in 3Q25 from 233.8 million in 3Q24[37] - The number of common shares outstanding decreased to 220.5 million in 3Q25 from 226.2 million in 4Q24, a decline of approximately 2.6%[41] - Net realized capital gains (losses) as adjusted were $(8.1) million in 3Q25, compared to $7.1 million in 3Q24, indicating a significant decline[45] Fair Value Changes - The cumulative change in fair value of funds withheld embedded derivative decreased to $(2,021.6) million in 3Q25 from $(2,381.3) million in 4Q24, showing an improvement of approximately 15.1%[43]