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10-K – 2026-02-18 – pfg-20251231x10k.htm
Financing Receivables Valuation Allowance We establish a valuation allowance to provide for the risk of credit losses inherent in our financing receivables. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost excluding accrued interest receivable and includes reserves for pools of financing receivables with similar risk characteristics. We do not measure a credit loss allowance on accrued interest receivable because we write off the uncollectible accrued interest receivable balance to net investment income in a timely manner, generally within 90 days domestically or, in the Chilean market, based on the nature of the loans and collection practices in that market. 115 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) For commercial and residential mortgage loans and direct financing leases, management’s periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, composition of the portfolio, portfolio delinquency information, underwriting standards, peer group information, current and forecasted economic conditions, loss experience and other relevant factors. For reinsurance recoverables and deposit receivables, management’s periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks, adverse situations that may affect a reinsurer’s ability to repay, current and forecasted economic conditions, industry loss experience and other relevant factors. Our commercial mortgage loans and direct financing leases are pooled by risk rating level with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon historical loss experience for each risk rating level as adjusted for certain current and forecasted environmental factors management believes to be relevant. Environmental factors are forecasted for two years or less with immediate reversion to historical experience. The allowance for direct financing leases is also adjusted for the residual value of the leased assets. A commercial mortgage loan or direct financing lease is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any domestic commercial mortgage loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently is evaluated individually. We analyze the need for an individual evaluation for any Chilean commercial mortgage loan or direct financing lease that is considered past due based on collection practices in the Chilean market and the nature of the loan or lease. We estimate expected credit losses for certain commercial mortgage loan or direct financing lease commitments where we have a contractual obligation to extend credit. The expected credit losses are estimated based on the commercial mortgage loan or direct financing lease valuation allowance process described previously, adjusted for probability of funding. The estimated expected credit losses for commercial mortgage loan and direct financing lease commitments are reported in other liabilities on the consolidated statements of financial position. The change in the credit loss liability for commitments is included in net realized capital gains (losses) on the consolidated statements of operations. Once funded, expected credit losses for commercial mortgage loans or direct financing leases are included within the commercial mortgage loan or direct financing lease valuation allowance described previously. We evaluate residential mortgage loans based on aggregated risk factors and historical loss experience by pool type. We adjust these quantitative factors for qualitative factors of present and forecasted conditions. Qualitative factors include items such as economic and business conditions, changes in the portfolio, value of underlying collateral and concentrations. A residential mortgage loan is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any domestic residential mortgage loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently is evaluated individually. We analyze the need for an individual evaluation for any Chilean residential mortgage loan that is considered past due based on collection practices in the Chilean market and the nature of the loan. As discussed previously, commercial and residential mortgage loans and direct financing leases are evaluated individually if the asset does not continue to share similar risk characteristics of a pool. When we determine a commercial or residential mortgage loan is probable of foreclosure, a valuation allowance is established equal to the difference between the carrying amount of the mortgage loan and the estimated value of the collateral reduced by the cost to sell or for certain residential mortgage loans, the present value of the loan’s expected future cash flows. For certain commercial mortgage loans where repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, we elect to establish a valuation allowance equal to the difference between the carrying amount of the mortgage loan and the estimated value of the real estate collateral, which may be reduced by the cost to sell. Estimated value may also be based on either the present value of the expected future cash flows discounted at the asset’s effective interest rate or the asset’s observable market price. Subsequent changes in the estimated value are reflected in the valuation allowance. Amounts on financing receivables deemed to be uncollectible are charged off and removed from the valuation allowance. The change in the valuation allowance for loans and direct financing leases is included in net realized capital gains (losses) on the consolidated statements of operations. 116 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) Our reinsurance recoverables and deposit receivable are pooled by reinsurer risk rating with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon industry historical loss experience and expected recovery timing as adjusted for certain current and forecasted environmental factors management believes to be relevant. Environmental factors are forecasted for five years or less with immediate reversion to industry historical experience. A reinsurance recoverable or deposit receivable is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any reinsurance recoverable or deposit receivable based on past due payments and changes in reinsurer risk ratings. The change in the valuation allowance for reinsurance recoverables and deposit receivable is included in benefits, claims and settlement expenses on the consolidated statements of operations. A rollforward of our valuation allowance was as follows: For the year ended December 31, 2025 Commercial Direct Residential mortgage financing mortgage Reinsurance loans leases loans recoverables Total (in millions) Beginning balance $ 188.6 $ 3.0 $ 7.3 $ 3.3 $ 202.2 Provision 54.9 5.3 4.6 ( 0.1 ) 64.7 Charge-offs ( 56.9 ) — ( 0.2 ) — ( 57.1 ) Recoveries 0.5 — 4.8 — 5.3 Foreign currency translation adjustment 0.3 0.6 0.1 — 1.0 Ending balance $ 187.4 $ 8.9 $ 16.6 $ 3.2 $ 216.1 Accrued interest income written off to net investment income $ 3.9 $ — $ — $ — $ 3.9 For the year ended December 31, 2024 Commercial Direct Residential mortgage financing mortgage Reinsurance loans leases loans recoverables Total (in millions) Beginning balance $ 128.8 $ 0.9 $ 6.7 $ 3.2 $ 139.6 Provision 111.5 2.4 — 0.1 114.0 Charge-offs ( 51.4 ) — ( 0.2 ) — ( 51.6 ) Recoveries — — 0.9 — 0.9 Foreign currency translation adjustment ( 0.3 ) ( 0.3 ) ( 0.1 ) — ( 0.7 ) Ending balance $ 188.6 $ 3.0 $ 7.3 $ 3.3 $ 202.2 Accrued interest income written off to net investment income $ 0.3 $ — $ — $ — $ 0.3 For the year ended December 31, 2023 Commercial Direct Residential mortgage financing mortgage Reinsurance loans leases loans recoverables Total (in millions) Beginning balance $ 77.9 $ 0.6 $ 5.6 $ 2.7 $ 86.8 Provision 51.0 0.3 0.1 0.5 51.9 Charge-offs — — ( 0.4 ) — ( 0.4 ) Recoveries — — 1.4 — 1.4 Foreign currency translation adjustment ( 0.1 ) — — — ( 0.1 ) Ending balance $ 128.8 $ 0.9 $ 6.7 $ 3.2 $ 139.6 Accrued interest income written off to net investment income $ — $ — $ — $ — $ — For the years ended December 31, 2025, 2024 and 2023, no allowance was recorded for other loans. 117 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) Mortgage Loans We periodically purchase mortgage loans as well as sell mortgage loans we have originated. Mortgage loans purchased and sold were as follows: For the year ended December 31, 2025 2024 2023 (in millions) Commercial mortgage loans: Purchased $ 77.0 $ 126.7 $ 109.2 Sold 260.0 148.1 12.1 Residential mortgage loans: Purchased (1) 1,613.4 382.6 554.7 Sold 28.3 29.1 115.9 (1) 2025 includes mortgages purchased as part of a new investment focus. 2023 includes mortgage loans purchased by residential mortgage loan VIEs. Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows: December 31, 2025 December 31, 2024 Amortized Percent Amortized Percent cost of total cost of total ($ in millions) Geographic distribution New England $ 440.8 2.7 % $ 347.2 2.0 % Middle Atlantic 4,402.6 26.6 4,714.9 27.7 East North Central 463.2 2.8 591.0 3.5 West North Central 284.4 1.7 394.0 2.3 South Atlantic 3,068.4 18.6 2,987.7 17.5 East South Central 366.4 2.2 417.7 2.4 West South Central 1,422.2 8.6 1,310.5 7.7 Mountain 1,217.9 7.4 979.5 5.7 Pacific 4,327.1 26.2 4,851.9 28.4 International 525.1 3.2 478.3 2.8 Total $ 16,518.1 100.0 % $ 17,072.7 100.0 % Property type distribution Office $ 2,798.3 16.9 % $ 3,182.9 18.5 % Retail 1,580.0 9.6 1,476.9 8.7 Industrial 4,288.0 26.0 4,364.5 25.6 Apartments 6,976.9 42.2 7,220.4 42.3 Hotel 31.0 0.2 65.0 0.4 Mixed use/other 843.9 5.1 763.0 4.5 Total $ 16,518.1 100.0 % $ 17,072.7 100.0 % Mortgage Loan Modifications Our commercial and residential mortgage loan portfolios include loans that have been modified. We assess loan modifications that are related to our borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension (or a combination thereof). Generally, an assessment of whether a borrower is experiencing financial difficulty is made on the date of the modification. 118 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) The financing receivables valuation allowance utilizes an estimate of lifetime expected credit losses and it is recorded on each loan upon origination or acquisition. The starting point for the estimate of the valuation allowance is historical loss information, which includes losses from modification of receivables to borrowers experiencing financial difficulty. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the valuation allowance because of the measurement methodologies used to estimate the allowance, a change to the valuation allowance is generally not recorded upon modification. Occasionally, a modification of a loan from a borrower experiencing financial difficulty is in the form of principal forgiveness. When principal forgiveness is provided as a modification, the amount of the principal forgiven is deemed uncollectible. Therefore, that portion of the loan is written off, which results in a reduction of the amortized cost and a corresponding adjustment to the valuation allowance. In some cases, we modify a loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness may be granted. We did not have any significant mortgage loans that were modified for the years ended December 31, 2025, 2024 and 2023. Real Estate Depreciation expense on invested real estate was $ 67.0 million, $ 69.5 million and $ 69.9 million in 2025, 2024 and 2023, respectively. Accumulated depreciation was $ 975.9 million and $ 925.2 million as of December 31, 2025 and 2024, respectively. Other Investments Other investments include interests in unconsolidated entities, domestic and international joint ventures and partnerships and properties owned jointly with venture partners and operated by the partners. Such investments are generally accounted for using the equity method. In applying the equity method, we record our share of income or loss reported by the equity investees in net investment income. Summarized financial information for these unconsolidated entities was as follows: December 31, 2025 2024 (in millions) Total assets $ 245,972.1 $ 222,907.6 Total liabilities 107,265.9 87,104.7 Total equity $ 138,706.2 $ 135,802.9 Net investment in unconsolidated entities (1) $ 4,881.8 $ 3,965.7 For the year ended December 31, 2025 2024 2023 (in millions) Total revenues $ 36,794.2 $ 22,609.3 $ 12,449.3 Net income (loss) 14,473.1 9,765.6 ( 2,674.2 ) Our share of net income of unconsolidated entities (1) 437.1 305.1 314.9 (1) Our most significant equity investee is Brasilprev Seguros e Previdencia, a co-managed joint venture in Brazil. In addition, other investments include direct financing leases and other loans. See the captions “Financing Receivables” and “Financing Receivables Valuation Allowance” for further details related to our valuation of direct financing leases and other loans. Furthermore, other investments include $ 1,355.5 million and $ 1,273.5 million of cash surrender value of company owned life insurance as of December 31, 2025 and 2024, respectively. 119 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) Derivative assets are carried at fair value and reported as a component of other investments. See Note 5, Derivative Financial Instruments, for further details. Certain sponsored investment funds are also carried at fair value and reported as a component of other investments, with changes in fair value included in net realized capital gains (losses) on our consolidated statements of operations. The fair value of these funds was $ 838.4 million and $ 667.7 million as of December 31, 2025 and 2024, respectively. Securities Posted as Collateral As of December 31, 2025 and 2024, we posted $ 6,587.5 million and $ 6,748.8 million, respectively, in commercial mortgage loans and residential first lien mortgages to satisfy collateral requirements associated with our obligation under funding agreements with Federal Home Loan Bank of Des Moines (“FHLB Des Moines”). In addition, as of December 31, 2025 and 2024, we posted $ 3,610.4 million and $ 3,636.7 million, respectively, in fixed maturities, available-for-sale and trading securities to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements, a lending arrangement and our obligation under funding agreements with FHLB Des Moines. Since we did not relinquish ownership rights on these instruments, they are reported as mortgage loans, fixed maturities, available-for-sale and fixed maturities, trading, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, as of December 31, 2025 and 2024, $ 485.0 million and $ 206.0 million, respectively, could be sold or repledged by the secured party. Balance Sheet Offsetting Financial assets subject to master netting agreements or similar agreements were as follows: Gross amounts not offset in the consolidated statements of financial position Gross amount of recognized Financial Collateral assets (1) instruments (2) received Net amount (in millions) December 31, 2025 Derivative assets $ 1,224.5 $ ( 331.7 ) $ ( 881.6 ) $ 11.2 Reverse repurchase agreements 57.5 — ( 57.5 ) — Total $ 1,282.0 $ ( 331.7 ) $ ( 939.1 ) $ 11.2 December 31, 2024 Derivative assets $ 648.2 $ ( 254.8 ) $ ( 392.1 ) $ 1.3 Reverse repurchase agreements 120.4 — ( 120.4 ) — Total $ 768.6 $ ( 254.8 ) $ ( 512.5 ) $ 1.3 (1) The gross amount of recognized derivative and reverse repurchase agreement assets are reported with other investments and cash and cash equivalents, respectively, on the consolidated statements of financial position. The gross amounts of derivative and reverse repurchase agreement assets are not netted against offsetting liabilities for presentation on the consolidated statements of financial position. (2) Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position. 120 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 4. Investments – (continued) Financial liabilities subject to master netting agreements or similar agreements were as follows: Gross amounts not offset in the consolidated statements of financial position Gross amount of recognized Financial Collateral liabilities (1) instruments (2) pledged Net amount (in millions) December 31, 2025 Derivative liabilities $ 552.0 $ ( 331.7 ) $ ( 209.1 ) $ 11.2 December 31, 2024 Derivative liabilities $ 506.0 $ ( 254.8 ) $ ( 239.4 ) $ 11.8 (1) The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes derivative liabilities, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position. (2) Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position. The financial instruments that are subject to master netting agreements or similar agreements include right of setoff provisions. Derivative instruments include provisions to setoff positions covered under the agreements with the same counterparties and provisions to setoff positions outside of the agreements with the same counterparties in the event of default by one of the parties. Derivative instruments also include collateral or variation margin provisions, which are generally settled daily with each counterparty. See Note 5, Derivative Financial Instruments, for further details. Repurchase and reverse repurchase agreements include provisions to setoff other repurchase and reverse repurchase balances with the same counterparty. Repurchase and reverse repurchase agreements also include collateral provisions with the counterparties. For reverse repurchase agreements we require the counterparties to pledge collateral with a value greater than the amount of cash transferred. We have the right but do not sell or repledge collateral received in reverse repurchase agreements. Repurchase agreements are structured as secured borrowings for all counterparties. We pledge fixed maturities available-for-sale, which the counterparties have the right to sell or repledge. Interest incurred on repurchase agreements is reported as part of operating expenses on the consolidated statements of operations. Net proceeds related to repurchase agreements are reported as a component of financing activities on the consolidated statements of cash flows. We did not have any outstanding repurchase agreements as of December 31, 2025 and December 31, 2024. 121 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication and income generation strategies. Types of Derivative Instruments Interest Rate Contracts Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates. Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and/or floating rate interest amounts based upon designated market rates or rate indices and an agreed-upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash is paid or received based on the terms of the swap. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments; to hedge against cash variability related to forecasted transactions and to hedge against changes in the value of the guaranteed minimum withdrawal benefit (“GMWB”) MRB. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product. Additionally, we utilize interest rate swaps to replicate the returns of floating rate assets. Interest rate options, including interest rate caps and interest rate floors, which can be combined to form interest rate collars, are contracts that entitle the purchaser to pay or receive the amounts, if any, by which a specified market rate exceeds a cap strike interest rate, or falls below a floor strike interest rate, respectively, at specified dates. We use interest rate options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities. In exchange-traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. We enter into exchange-traded futures with regulated futures commissions merchants who are members of a trading exchange. We use exchange-traded interest rate futures to hedge against changes in value of the GMWB MRB in addition to the economic exposure to certain fund strategies. Interest rate forwards, including bond forwards and treasury forwards, are contracts to take delivery of a fixed income security at a specified price at a future date. Bond forwards and treasury forwards deliver corporate or municipal and U.S. Treasury bonds, respectively. At inception of certain treasury forward contracts we do not intend to take physical delivery. We intend to take delivery of the bond forwards referencing corporate, municipal and certain treasury bonds. Treasury forwards are used to hedge against changes in the value of the GMWB MRB and to more closely match the interest rate characteristics of assets and liabilities. Bond forwards are used to gain leverage through synthetic exposure during the forward period and fix the purchase price of a bond at a specified date in future. Foreign Exchange Contracts Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency-denominated funding agreements issued to nonqualified institutional investors in the international market, foreign currency-denominated fixed maturity and equity securities, and our international operations, including expected cash flows and potential acquisition and divestiture activity. We use various derivatives to manage our exposure to fluctuations in foreign currency exchange rates. 122 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Currency swaps are contracts in which we agree with other parties to exchange, at specified intervals, a series of principal and interest payments in one currency for that of another currency. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. The interest payments are primarily fixed-to-fixed rate; however, they may also be fixed-to-floating rate or floating-to-fixed rate. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. We use currency swaps to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell. Currency forwards are contracts in which we agree with other parties to deliver or receive a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. We use currency forwards to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell. Equity Contracts Equity risk is the risk that we will incur economic losses due to adverse fluctuations in common stock prices. We use various derivatives to manage our exposure to equity risk, which arises from products in which the return or interest we credit is tied to an external equity index as well as products subject to minimum contractual guarantees. We purchase equity call spreads (“option collars”) to hedge the equity participation rates promised to contractholders in conjunction with our fixed deferred annuity and universal life products that credit interest based on changes in an external equity index. We use equity put options to hedge against changes in the value of the GMWB MRB related to the GMWB rider on our variable annuity products. We also use equity options to hedge returns credited to policyholder accounts related to our RILA products. The premium associated with certain options is paid quarterly over the life of the option contract. We use exchange-traded equity futures to hedge against changes in the value of the GMWB MRB and returns credited to policyholder accounts related to our RILA products. We have used equity futures to hedge the economic exposure to certain fund closures in process. We use equity total return swaps to hedge for income enhancement. Total return swaps are contracts in which we agree with other parties to periodically exchange the total return on a referenced security for an agreed-upon reference rate or spread based on specified notional amounts. Credit Contracts Credit risk relates to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest. We use credit default swaps to enhance the return on our investment portfolio by providing comparable exposure to fixed income securities that might not be available in the primary market. They are also used to hedge credit exposures in our investment portfolio. Credit derivatives are used to sell or buy credit protection on an identified name or names on an unfunded or synthetic basis in return for receiving or paying a quarterly premium. The premium generally corresponds to a referenced name’s credit spread at the time the agreement is executed. We also use credit total return swaps for income enhancement. In the case of a predefined credit event, total return swaps require the total return receiver to pay for the decline in the price of the referenced security. In cases where we sell protection, we also buy a quality cash bond to match against the swap, thereby entering into a synthetic transaction replicating a cash security. When selling protection, if there is an event of default by the referenced name, as defined by the agreement, we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced security in a principal amount equal to the notional value of the swap. 123 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Other Contracts Embedded Derivatives. We purchase or issue certain financial instruments or products that contain a derivative instrument that is embedded in the financial instrument or product. When it is determined that the embedded derivative possesses economic characteristics that are not clearly or closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host instrument for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated statements of financial position, is carried at fair value. We offer group annuity contracts that have guaranteed separate accounts as an investment option. We have fixed deferred annuities, RILAs and universal life products that credit interest based on changes in an external equity index. We have a funds withheld payable associated with coinsurance with funds withheld reinsurance agreements. The funds withheld payable has an embedded total return swap as the total return of the funds withheld assets are transferred to the reinsurer, which is not based on our own creditworthiness. Exposure Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments. Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts of bilateral OTC derivatives for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparties under master netting agreements. OTC cleared derivatives have variation margin that is legally characterized as settlement of the derivative exposure, which reduces their fair value in the consolidated statements of financial position. We posted $ 491.1 million and $ 533.7 million in cash and securities under collateral arrangements as of December 31, 2025 and December 31, 2024, respectively, to satisfy collateral and initial margin requirements associated with our derivative credit support agreements and FCM agreements. Certain of our derivative instruments contain provisions that require us to maintain an investment grade rating from each of the major credit rating agencies on our debt. If the ratings on our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value, inclusive of accrued interest, of all derivative instruments with credit-risk-related contingent features that were in a liability position without regard to netting under derivative credit support annex agreements as of December 31, 2025 and December 31, 2024, was $ 546.9 million and $ 472.3 million, respectively. Cleared derivatives have contingent features that require us to post excess margin as required by the FCM. The terms surrounding excess margin vary by FCM agreement. With respect to derivatives containing collateral provisions, we posted collateral and initial margin of $ 491.1 million and $ 533.7 million as of December 31, 2025 and December 31, 2024, respectively, in the normal course of business, which reflects netting under derivative agreements. If the credit-risk-related contingent features underlying these agreements were triggered on December 31, 2025, we would be required to post up to an additional $ 121.1 million of collateral to our counterparties. 124 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) As of December 31, 2025 and December 31, 2024, we had received $ 787.6 million and $ 358.9 million, respectively, of cash collateral associated with our derivative credit support annex agreements and FCM agreements, for which we recorded a corresponding liability reflecting our obligation to return the collateral. Notional amounts are used to express the extent of our involvement in derivative transactions and represent a standard measurement of the volume of our derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received, except for contracts such as currency swaps. Credit exposure represents the gross amount owed to us under derivative contracts as of the valuation date. The notional amounts and credit exposure of our derivative financial instruments by type were as follows: December 31, 2025 December 31, 2024 (in millions) Notional amounts of derivative instruments Interest rate contracts: Interest rate swaps $ 60,267.1 $ 60,776.6 Interest rate options 3,578.0 4,735.0 Interest rate futures 1,994.7 845.0 Interest rate forwards 1,687.0 2,125.6 Foreign exchange contracts: Currency swaps 3,538.7 2,883.8 Currency forwards 914.6 981.2 Equity contracts: Equity options 7,449.3 4,380.1 Equity futures 1,699.1 852.5 Total return swaps 499.6 775.3 Credit contracts: Credit default swaps 531.0 375.0 Total return swaps 500.0 250.0 Other contracts: Embedded derivatives 24,650.7 22,592.0 Total notional amounts at end of period $ 107,309.8 $ 101,572.1 Credit exposure of derivative instruments Interest rate contracts: Interest rate swaps $ 13.2 $ 10.0 Interest rate options 4.0 28.1 Interest rate forwards 1.1 — Foreign exchange contracts: Currency swaps 190.0 191.4 Currency forwards 30.0 7.6 Equity contracts: Equity options 971.5 388.1 Total return swaps — 20.8 Credit contracts: Credit default swaps 3.4 4.0 Total return swaps 18.8 14.3 Total gross credit exposure 1,232.0 664.3 Less: collateral received 923.7 450.3 Net credit exposure $ 308.3 $ 214.0 125 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) The fair value of our derivative instruments classified as assets and liabilities was as follows: Derivative assets (1) Derivative liabilities (2) December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 (in millions) Derivatives designated as hedging instruments Interest rate contracts $ — $ — $ 69.8 $ 83.0 Foreign exchange contracts 144.6 170.4 138.8 20.7 Total derivatives designated as hedging instruments $ 144.6 $ 170.4 $ 208.6 $ 103.7 Derivatives not designated as hedging instruments Interest rate contracts $ 16.9 $ 35.4 $ 136.0 $ 246.9 Foreign exchange contracts 70.3 20.0 9.4 34.8 Equity contracts 971.5 405.0 191.6 119.8 Credit contracts 21.2 17.4 6.4 1.0 Other contracts — — ( 1,223.2 ) ( 2,436.1 ) Total derivatives not designated as hedging instruments 1,079.9 477.8 ( 879.8 ) ( 2,033.6 ) Total derivative instruments $ 1,224.5 $ 648.2 $ ( 671.2 ) $ ( 1,929.9 ) (1) The fair value of derivative assets is reported with other investments on the consolidated statements of financial position. (2) The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivatives with a net liability fair value of $ 1,410.2 million and $ 578.4 million as of December 31, 2025 and December 31, 2024, respectively, are reported with contractholder funds on the consolidated statements of financial position. Embedded derivatives with a net (asset) liability fair value of $( 2,633.4 ) million and $( 3,014.5 ) million as of December 31, 2025 and December 31, 2024, respectively, are reported with funds withheld payable on the consolidated statements of financial position. Credit Derivatives Sold When we sell credit protection, we are exposed to the underlying credit risk similar to purchasing a fixed maturity security instrument. Our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps” or “single name total return swaps”). These instruments are either referenced in an OTC credit derivative transaction or embedded within an investment structure that has been fully consolidated into our financial statements. These credit derivative transactions are subject to events of default defined within the terms of the contract, which normally consist of bankruptcy, failure to pay, or modified restructuring of the reference entity and/or issue. If a default event occurs for a reference name or security, we are obligated to pay the counterparty an amount equal to the notional amount of the credit derivative transaction. As a result, our maximum future payment is equal to the notional amount of the credit derivative. In certain cases, we also may have purchased credit protection with identical underlyings to certain of our sold protection transactions. As of December 31, 2025 and December 31, 2024, we did not purchase credit protection relating to our sold protection transactions. In certain circumstances, our potential loss could also be reduced by any amount recovered in the default proceedings of the underlying credit name. 126 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) The following tables show our derivative protection sold by types of contract, types of referenced/underlying asset class and external agency rating for the underlying reference security. The maximum future payments are undiscounted and have not been reduced by the effect of any offsetting transactions, collateral or recourse features described above. December 31, 2025 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt AA $ 96.7 $ 1.0 $ 96.7 6.4 A 219.3 ( 3.2 ) 219.3 7.2 BBB 130.0 2.3 130.0 1.5 Total single name credit default swaps 446.0 0.1 446.0 5.3 Single name total return swaps Government/municipalities AAA 40.0 1.2 40.0 29.6 AA 195.0 3.5 195.0 20.5 A 210.0 9.5 210.0 21.6 BBB 55.0 1.8 55.0 15.3 Total single name total return swaps 500.0 16.0 500.0 21.1 Total credit derivatives sold $ 946.0 $ 16.1 $ 946.0 13.7 December 31, 2024 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt A $ 40.0 $ 0.2 $ 40.0 0.5 BBB 160.0 3.6 160.0 2.1 Sovereign A 20.0 0.1 20.0 0.5 Total single name credit default swaps 220.0 3.9 220.0 1.7 Single name total return swaps Government/municipalities AAA 40.0 2.3 40.0 30.6 AA 130.0 6.4 130.0 26.5 A 80.0 4.8 80.0 30.7 Total single name total return swaps 250.0 13.5 250.0 28.5 Total credit derivatives sold $ 470.0 $ 17.4 $ 470.0 15.9 127 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Fair Value and Cash Flow Hedges Fair Value Hedges We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and also use them to align the interest rate characteristics of certain liabilities. In general, these swaps are used in asset and liability management to modify duration, which is a measure of sensitivity to interest rate changes. We enter into currency exchange swap agreements to convert certain foreign denominated assets into U.S. dollar denominated instruments to hedge the exposure to future currency volatility on those items. The net interest effect of interest rate swap and currency swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations. The currency related impacts of currency swap transactions for derivatives in fair value hedges is recorded as an adjustment to net realized capital gains or losses of the underlying hedged item in our consolidated statements of operations. The following amounts were recorded on the consolidated statements of financial position related to cumulative basis adjustments for fair value hedges. The amortized cost includes the amortized cost basis and the fair value hedging basis adjustment. Cumulative amount of fair value hedging basis adjustment Line item in the consolidated statements increase/(decrease) included in the of financial position in which the Carrying amount of hedged item carrying amount of the hedged item hedged item is included December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 (in millions) Fixed maturities, available-for-sale (1): Active hedging relationships $ 2,741.8 $ 3,208.4 $ ( 15.8 ) $ ( 33.1 ) Discontinued hedging relationships 782.9 528.6 ( 6.2 ) ( 7.0 ) Total fixed maturities, available-for-sale in active or discontinued hedging relationships $ 3,524.7 $ 3,737.0 $ ( 22.0 ) $ ( 40.1 ) Mortgage loans (2): Active hedging relationships $ 1,471.5 $ 1,707.1 $ ( 3.6 ) $ ( 8.4 ) Discontinued hedging relationships 345.0 — 1.2 — Total mortgage loans in active or discontinued hedging relationships $ 1,816.5 $ 1,707.1 $ ( 2.4 ) $ ( 8.4 ) Investment contracts: Active hedging relationships $ 3,743.8 $ 2,769.6 $ 35.4 $ ( 22.0 ) Total investment contracts in active or discontinued hedging relationships $ 3,743.8 $ 2,769.6 $ 35.4 $ ( 22.0 ) (1) These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of December 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2,303.5 million and $ 2,849.3 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 16.9 ) million and $( 55.7 ) million, respectively, and the amount of the designated hedged items were $ 970.0 million and $ 1,160.0 million, respectively. (2) These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of December 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 1,471.5 million and $ 1,707.1 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 3.7 ) million and $( 8.4 ) million, respectively, and the amount of the designated hedged items were $ 220.0 million and $ 220.0 million, respectively. For the years ended December 31, 2025, 2024 and 2023, $ 2.2 million, $( 0.9 ) million and $( 1.8 ) million, respectively, of the derivative instruments’ gains (losses) were excluded from the assessment of hedge effectiveness. 128 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Cash Flow Hedges We utilize floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and have used them to eliminate the variability in cash flows of liabilities. We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed rate instruments to eliminate the exposure to future currency volatility on those items. We use bond forwards and floating-to-fixed rate interest rate swaps to hedge forecasted transactions. The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations. The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 1.2 years. As of December 31, 2025, we had $ 15.5 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position. Amount of gain (loss) recognized in AOCI on derivatives Derivatives in cash flow for the year ended December 31, hedging relationships Related hedged item 2025 2024 2023 (in millions) Interest rate contracts Fixed maturities, available-for-sale $ 15.5 $ ( 10.8 ) $ 30.4 Interest rate contracts Investment contracts — ( 9.0 ) ( 11.0 ) Foreign exchange contracts Fixed maturities, available-for-sale ( 119.6 ) 92.2 ( 64.0 ) Total $ ( 104.1 ) $ 72.4 $ ( 44.6 ) We expect to reclassify net gains of $ 32.8 million from AOCI into net income in the next twelve months, which includes both net deferred gains on discontinued hedges and net gains on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions. 129 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations. For the year ended December 31, 2025 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges (losses) related to expenses of fixed hedges of fixed related to maturities, maturities, hedges of available-for-sale available- investment and mortgage loans for-sale contracts (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 4,730.5 $ 27.7 $ 8,564.5 Gains (losses) on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 51.2 $ — $ 57.4 Loss recognized on derivatives ( 51.6 ) — ( 59.0 ) Amortization of hedged item basis adjustments 3.5 — — Amounts related to periodic settlements on derivatives 36.3 — ( 18.4 ) Foreign exchange contracts: Gain recognized on hedged item — 25.1 — Loss recognized on derivatives — ( 25.1 ) — Amounts related to periodic settlements on derivatives 3.1 — — Total gain (loss) recognized for fair value hedging relationships $ 42.5 $ — $ ( 20.0 ) Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 2.4 $ — $ ( 0.2 ) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 2.0 — Amounts related to periodic settlements on derivatives ( 0.6 ) — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 1.4 — Amounts related to periodic settlements on derivatives 33.9 — — Total gain (loss) recognized for cash flow hedging relationships $ 35.7 $ 3.4 $ ( 0.2 ) 130 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) For the year ended December 31, 2024 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges (losses) related to expenses of fixed hedges of fixed related to maturities, maturities, hedges of available-for-sale available- investment and mortgage loans for-sale contracts (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 4,449.2 $ ( 27.3 ) $ 8,072.6 Gains (losses) on fair value hedging relationships: Interest rate contracts: Loss recognized on hedged item $ ( 4.0 ) $ — $ ( 22.3 ) Gain recognized on derivatives 6.1 — 25.8 Amortization of hedged item basis adjustments 2.6 — — Amounts related to periodic settlements on derivatives 59.0 — ( 23.4 ) Foreign exchange contracts: Loss recognized on hedged item — ( 11.7 ) — Gain recognized on derivatives — 11.7 — Amounts related to periodic settlements on derivatives 3.1 — — Total gain (loss) recognized for fair value hedging relationships $ 66.8 $ — $ ( 19.9 ) Gains on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 3.4 $ — $ ( 0.2 ) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 0.5 — Amounts related to periodic settlements on derivatives — — 9.8 Foreign exchange contracts: Loss reclassified from AOCI on derivatives — ( 0.2 ) — Amounts related to periodic settlements on derivatives 26.1 — — Total gain recognized for cash flow hedging relationships $ 29.5 $ 0.3 $ 9.6 131 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) For the year ended December 31, 2023 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges (losses) related to expenses of fixed hedges of fixed related to maturities, maturities, hedges of available-for-sale available- investment and mortgage loans for-sale contracts (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 4,091.9 $ ( 72.2 ) $ 7,788.2 Gains (losses) on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 45.3 $ — $ 0.4 Loss recognized on derivatives ( 43.9 ) — ( 2.1 ) Amounts related to periodic settlements on derivatives 60.5 — ( 2.6 ) Foreign exchange contracts: Gain recognized on hedged item — 3.7 — Loss recognized on derivatives — ( 3.7 ) — Amounts related to periodic settlements on derivatives 0.6 — — Total gain (loss) recognized for fair value hedging relationships $ 62.5 $ — $ ( 4.3 ) Gains on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 4.1 $ — $ ( 0.1 ) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 1.9 — Amounts related to periodic settlements on derivatives — — 14.2 Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 1.5 — Amounts related to periodic settlements on derivatives 21.4 — — Total gain recognized for cash flow hedging relationships $ 25.5 $ 3.4 $ 14.1 Net Investment Hedges We may take measures to hedge our net equity investments in our foreign operations from currency risk. This is accomplished with the use of currency forwards. Gains and losses associated with net investment hedges are recorded in AOCI and will be released into net income if our investment in the foreign operation is sold or substantially liquidated. The following tables show the effect of foreign exchange contracts used to hedge a portion of our net investment in certain sponsored investment funds on the consolidated financial statements. Amount of gain (loss) recognized in AOCI on derivatives for the year ended December 31, Derivatives in net investment hedging relationships 2025 2024 2023 (in millions) Foreign exchange contracts $ ( 3.3 ) $ 3.5 $ ( 0.7 ) Total $ ( 3.3 ) $ 3.5 $ ( 0.7 ) No gains or losses on net investment hedges were reclassified from AOCI into net realized capitals gains (losses) for the years ended December 31, 2025, 2024 and 2023. 132 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 5. Derivative Financial Instruments – (continued) Derivatives Not Designated as Hedging Instruments We use futures, certain swaps, option collars, options and forwards in effective economic hedges that have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations. However, the change in fair value of the funds withheld embedded derivative is separately reported on the consolidated statements of operations. Additionally, mark-to-market gains and losses as well as periodic and final settlements for derivatives used to hedge market risk benefits are reported in market risk benefit (gain) loss on the consolidated statements of operations. The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations and are net of amounts on funds withheld invested assets that are passed directly to the reinsurer. See Note 12, Reinsurance, for further details. Amount of gain (loss) recognized in net income on derivatives for the year ended December 31, Derivatives not designated as hedging instruments 2025 2024 2023 (in millions) Interest rate contracts $ ( 261.0 ) $ ( 159.6 ) $ ( 61.4 ) Foreign exchange contracts 32.0 ( 30.4 ) ( 40.0 ) Equity contracts 266.0 55.0 ( 144.1 ) Credit contracts 7.8 16.3 4.1 Other contracts (1) ( 1,212.9 ) ( 15.5 ) ( 1,154.9 ) Total $ ( 1,168.1 ) $ ( 134.2 ) $ ( 1,396.3 ) (1) Includes the change in fair value of the funds withheld embedded derivative. 133 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 6. Closed Block In connection with the 1998 MIHC formation, Principal Life formed a Closed Block to provide reasonable assurance to policyholders included therein that, after the formation of the MIHC, assets would be available to maintain dividends in aggregate in accordance with the 1997 policy dividend scales, if the experience underlying such scales continued. Assets of Principal Life were allocated to the Closed Block in an amount that produces cash flows which, together with anticipated revenue from policies and contracts included in the Closed Block, were expected to be sufficient to support the Closed Block policies. This includes, but is not limited to, provisions for payment of claims, certain expenses, charges and taxes, and to provide for continuation of policy and contract dividends in aggregate in accordance with the 1997 dividend scales, if the experience underlying such scales continues, and to allow for appropriate adjustments in such scales, if such experience changes. Due to adjustable life policies being included in the Closed Block, the Closed Block is charged with amounts necessary to properly fund for certain adjustments, such as face amount and premium increases, that are made to these policies after the Closed Block inception date. These amounts are referred to as Funding Adjustment Charges. Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block. Closed Block assets and liabilities are carried on the same basis as other similar assets and liabilities. Principal Life will continue to pay guaranteed benefits under all policies, including the policies within the Closed Block, in accordance with their terms. If the assets allocated to the Closed Block, the investment cash flows from those assets and the revenues from the policies included in the Closed Block, including investment income thereon, prove to be insufficient to pay the benefits guaranteed under the policies included in the Closed Block, Principal Life will be required to make such payments from its general funds. No additional policies were added to the Closed Block, nor was the Closed Block affected in any other way, as a result of the demutualization. A policyholder dividend obligation (“PDO”) is required to be established for higher than expected earnings in the Closed Block that will need to be paid as dividends unless future performance of the Closed Block is less favorable than originally expected. A model of the Closed Block was established to produce the pattern of expected earnings, assets and liabilities in the Closed Block. These projections are utilized to determine ratios that will allow us to compare actual cumulative earnings to expected cumulative earnings and determine the amount of the PDO. As of December 31, 2025 and 2024, the PDO was $ 0.0 million and $ 0.0 million, respectively. Closed Block liabilities and assets designated to the Closed Block were as follows: December 31, 2025 December 31, 2024 (in millions) Closed Block liabilities Future policy benefits and claims $ 2,715.3 $ 2,850.0 Other policyholder funds 4.4 4.4 Policyholder dividends payable 153.7 155.1 Income taxes currently payable 0.1 1.3 Other liabilities 29.5 27.6 Total Closed Block liabilities 2,903.0 3,038.4 Assets designated to the Closed Block Fixed maturities, available-for-sale 1,758.9 1,752.0 Fixed maturities, trading 0.6 0.7 Equity securities 0.9 0.9 Mortgage loans 359.2 413.3 Policy loans 329.4 353.6 Other investments 54.1 61.2 Total investments 2,503.1 2,581.7 Cash and cash equivalents 54.2 — Accrued investment income 30.8 32.3 Reinsurance recoverable and deposit receivable 2.8 3.5 Deferred tax asset 7.9 51.6 Other assets 0.6 2.0 Total assets designated to the Closed Block 2,599.4 2,671.1 Excess of Closed Block liabilities over assets designated to the Closed Block 303.6 367.3 Amounts included in accumulated other comprehensive income ( 25.6 ) ( 66.2 ) Maximum future earnings to be recognized from Closed Block assets and liabilities $ 278.0 $ 301.1 134 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 6. Closed Block – (continued) Closed Block revenues and expenses were as follows: For the year ended December 31, 2025 2024 2023 (in millions) Revenues Premiums and other considerations $ 153.8 $ 153.0 $ 166.1 Net investment income 127.6 130.6 127.3 Net realized capital gains (losses) 1.1 ( 11.2 ) ( 10.0 ) Total revenues 282.5 272.4 283.4 Expenses Benefits, claims and settlement expenses 163.3 151.1 161.6 Dividends to policyholders 89.3 97.4 86.8 Operating expenses 1.9 1.9 2.6 Total expenses 254.5 250.4 251.0 Closed Block revenues, net of Closed Block expenses, before income taxes 28.0 22.0 32.4 Income taxes 4.9 4.2 6.1 Closed Block revenues, net of Closed Block expenses and income taxes 23.1 17.8 26.3 Funding adjustments and other transfers — 0.7 ( 1.4 ) Closed Block revenues, net of Closed Block expenses, income taxes and funding adjustments $ 23.1 $ 18.5 $ 24.9 The change in maximum future earnings of the Closed Block was as follows: For the year ended December 31, 2025 2024 2023 (in millions) Beginning of year $ 301.1 $ 319.6 $ 344.5 End of year 278.0 301.1 319.6 Change in maximum future earnings $ ( 23.1 ) $ ( 18.5 ) $ ( 24.9 ) Principal Life charges the Closed Block with U.S. federal income taxes, payroll taxes, state and local premium taxes and other state or local taxes, licenses and fees as provided in the plan of reorganization. 135 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 7. Deferred Acquisition Costs and Other Actuarial Balances Deferred Acquisition Costs Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contracts are capitalized in the period they are incurred. Maintenance costs and acquisition costs that are not deferrable are charged to operating expenses as incurred. For our long-duration insurance products and certain investment contracts, DAC is amortized on a constant level basis over the expected life of the contracts using groupings and assumptions consistent with those used in computing policyholder liabilities. For each of our long-duration insurance products, we select an inforce measure as a basis for amortization that will result in a constant level amortization pattern for the expected life of the contract. If our actual contract terminations differ from our expectation, the amortization pattern is adjusted on a prospective basis. Some of our life and disability products within the Benefits and Protection segment have renewal commissions resulting in new DAC capitalizations in the years following the initial capitalization. We also have life products that allow for underwritten death benefit increases and cost of living adjustments, resulting in an immaterial amount of new DAC capitalizations each year. The new capitalizations are added to the existing DAC balance when incurred and amortized over the remaining life of the business. DAC on short-duration group benefits contracts is amortized over the estimated life of the underlying contracts. We review and update actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for DAC and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. We make model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively. DAC amortization expense of $ 400.0 million, $ 392.5 million and $ 389.8 million related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, respectively. The following tables summarize disaggregated DAC amounts and reconcile the totals to those reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 (in millions) Retirement and Income Solutions: Workplace savings and retirement solutions $ 528.9 $ 515.5 Individual variable annuities 385.3 323.4 Pension risk transfer 24.8 21.1 Individual fixed deferred annuities 66.9 84.2 Investment only 10.6 13.0 Total Retirement and Income Solutions 1,016.5 957.2 Benefits and Protection: Specialty Benefits: Individual disability 714.8 696.9 Life Insurance: Universal life 1,514.3 1,527.7 Term life 723.5 710.8 Participating life 71.0 77.8 Total Benefits and Protection 3,023.6 3,013.2 Short-duration contracts 30.2 30.6 Other balances (1) 1.3 5.9 Total DAC per consolidated statements of financial position $ 4,071.6 $ 4,006.9 (1) Includes insignificant balances for long-duration contracts. 136 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 7. Deferred Acquisition Costs and Other Actuarial Balances – (continued) Retirement and Income Solutions The balances and changes in DAC were as follows: Workplace Individual savings and Individual Pension fixed retirement variable risk deferred Investment solutions annuities transfer annuities only (in millions) Balances as of January 1, 2024 $ 506.4 $ 279.5 $ 15.4 $ 106.1 $ 11.5 Costs deferred 47.7 72.7 6.6 — 6.5 Amortized to expense ( 38.6 ) ( 28.8 ) ( 0.9 ) ( 21.9 ) ( 5.0 ) Balances as of December 31, 2024 515.5 323.4 21.1 84.2 13.0 Costs deferred 50.9 96.9 5.0 — 2.6 Amortized to expense ( 37.5 ) ( 35.0 ) ( 1.3 ) ( 17.3 ) ( 5.0 ) Balances as of December 31, 2025 $ 528.9 $ 385.3 $ 24.8 $ 66.9 $ 10.6 Benefits and Protection The balances and changes in DAC were as follows: Specialty Benefits Life Insurance Individual disability Universal life Term life Participating life (in millions) Balances as of January 1, 2024 $ 667.7 $ 1,545.3 $ 695.1 $ 84.7 Costs deferred 79.0 76.7 78.3 1.7 Amortized to expense ( 49.8 ) ( 94.3 ) ( 62.6 ) ( 8.6 ) Balances as of December 31, 2024 696.9 1,527.7 710.8 77.8 Costs deferred 71.9 81.2 75.6 1.2 Amortized to expense ( 54.0 ) ( 94.6 ) ( 62.9 ) ( 8.0 ) Balances as of December 31, 2025 $ 714.8 $ 1,514.3 $ 723.5 $ 71.0 137 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 7. Deferred Acquisition Costs and Other Actuarial Balances – (continued) Unearned Revenue Liability An unearned revenue liability is established when we collect fees or other policyholder assessments, inclusive of cost of insurance charges, administrative charges and other similar fees, for services to be provided in future periods. These unearned front-end fees are deferred and the amortization is recorded using an approach consistent with DAC. The unearned revenue liability is included within other policyholder funds in the consolidated statements of financial position. The following table summarizes disaggregated unearned revenue liability amounts and reconciles the totals to those reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 (in millions) Benefits and Protection – Life Insurance: Universal life $ 532.9 $ 510.1 Other balances (1) — 5.3 Total unearned revenue liability $ 532.9 $ 515.4 (1) Includes insignificant balances for long-duration contracts. Benefits and Protection The balances and changes in the unearned revenue liability for Life Insurance – Universal life contracts were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 (in millions) Balance at beginning of period $ 510.1 $ 485.5 Deferrals 56.0 56.1 Revenue recognized ( 33.2 ) ( 31.5 ) Balance at end of period 532.9 510.1 Reinsurance impact ( 215.6 ) ( 220.8 ) Balance at end of period after reinsurance $ 317.3 $ 289.3 138 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 8. Separate Account Balances The separate accounts are legally segregated and are not subject to claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. Refer to Note 18, Fair Value Measurements, for further information on the valuation methodologies. We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations. The Retirement and Income Solutions segment offers variable annuity contracts that allow the policyholder to allocate deposits into various investment options in a separate account. The variable annuity contracts can also include GMWB riders and guaranteed minimum death benefit (“GMDB”) riders that are accounted for as MRBs. Retirement and Income Solutions also offers certain group annuity contracts that have separate accounts as an investment option. The Principal Asset Management segment offers certain retirement accumulation products in Latin America where the segregated funds and associated obligation to the client are consolidated as separate account assets and liabilities within the financial statements. We have determined that summary totals are the most meaningful presentation for these funds. The Benefits and Protection segment offers variable universal life products with separate account investment options. Refer to Note 11, Market Risk Benefits, for further information on the MRBs associated with the contracts mentioned above. As of December 31, 2025 and December 31, 2024, the separate accounts included a separate account valued at $ 81.7 million and $ 79.8 million, respectively, which primarily included shares of our stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under our 2001 demutualization. These shares are included in both basic and diluted earnings per share calculations. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations. Separate Account Assets The aggregate fair value of assets, by major investment category, supporting separate accounts were as follows: December 31, 2025 December 31, 2024 (in millions) Fixed maturities: U.S. government and agencies $ 10,027.9 $ 7,537.1 Non-U.S. governments 9,122.1 8,461.5 States and political subdivisions 162.3 170.1 Corporate 13,404.2 12,590.9 Residential mortgage-backed pass-through securities 3,484.1 3,746.0 Commercial mortgage-backed securities 261.2 201.4 Other debt obligations 408.0 594.1 Total fixed maturities 36,869.8 33,301.1 Equity securities 141,251.0 126,575.0 Real estate 445.9 441.3 Other investments 8,848.3 8,160.2 Cash and cash equivalents 5,135.4 4,021.7 Other assets 1,072.2 827.8 Total separate account assets per consolidated statements of financial position $ 193,622.6 $ 173,327.1 139 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 8. Separate Account Balances – (continued) Separate Account Liabilities The following tables summarize disaggregated separate account liability amounts and reconcile the totals to separate account liabilities reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 (in millions) Retirement and Income Solutions: Group retirement contracts $ 136,674.3 $ 125,103.1 Individual variable annuities 7,364.9 8,334.9 Total Retirement and Income Solutions 144,039.2 133,438.0 Principal Asset Management – International Pension: Latin America: Pension 41,450.5 32,802.2 Benefits and Protection - Life Insurance: Universal life 7,807.9 6,806.7 Other balances (1) 325.0 280.2 Total separate account liabilities per consolidated statements of financial position $ 193,622.6 $ 173,327.1 (1) Includes insignificant balances for long-duration contracts. 140 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 8. Separate Account Balances – (continued) Retirement and Income Solutions The balances and the changes in separate account liabilities were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 Group Individual Group Individual retirement variable retirement variable contracts annuities contracts annuities (in millions) Balance at beginning of period $ 125,103.1 $ 8,334.9 $ 117,518.5 $ 9,131.9 Premiums and deposits (1) 15,458.7 157.1 16,573.1 344.5 Policy charges ( 344.1 ) ( 166.6 ) ( 365.6 ) ( 197.6 ) Surrenders, withdrawals and benefit payments (1) ( 17,649.8 ) ( 1,790.0 ) ( 19,191.4 ) ( 1,977.7 ) Investment performance 15,664.0 850.5 14,632.1 1,079.0 Net transfers (to) from general account (1) ( 1,433.1 ) ( 21.0 ) ( 4,148.3 ) ( 2.1 ) Other (2) ( 124.5 ) — 84.7 ( 43.1 ) Balance at end of period $ 136,674.3 $ 7,364.9 $ 125,103.1 $ 8,334.9 Cash surrender value (3) $ 135,606.1 $ 7,265.2 $ 123,965.4 $ 8,219.1 (1) Within the policyholder account balances rollforwards in Note 9, Contractholder Funds, amounts in these lines for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in net transfers from (to) separate account. (2) Includes amounts to be settled between the separate account and general account due to the timing of trade settlements as of the reporting date. (3) Cash surrender value represents the amount of the contractholders ’ account balances distributable at the end of the reporting period less surrender charges. Principal Asset Management – International Pension The balances and the changes in separate account liabilities for Latin America – Pension were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 (in millions) Balance at beginning of period $ 32,802.2 $ 34,580.6 Premiums and deposits 3,546.2 3,347.7 Policy charges ( 17.7 ) ( 16.6 ) Surrenders, withdrawals and benefit payments ( 3,962.7 ) ( 3,638.0 ) Investment performance 5,392.1 2,890.1 Other 2.7 22.8 Foreign currency translation adjustment 3,687.7 ( 4,384.4 ) Balance at end of period $ 41,450.5 $ 32,802.2 Cash surrender value $ 41,450.5 $ 32,802.2 141 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 8. Separate Account Balances – (continued) Benefits and Protection The balances and the changes in separate account liabilities for Life Insurance – Universal life were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 (in millions) Balance at beginning of period $ 6,806.7 $ 5,982.5 Premiums and deposits (1) 572.7 557.2 Policy charges ( 135.4 ) ( 132.7 ) Surrenders, withdrawals and benefit payments (1) ( 374.4 ) ( 492.2 ) Investment performance 938.5 880.5 Net transfers (to) from general account (1) ( 0.2 ) 11.4 Balance at end of period $ 7,807.9 $ 6,806.7 Cash surrender value (2) $ 7,873.6 $ 6,869.5 (1) Within the policyholder account balances rollforwards in Note 9, Contractholder Funds, amounts in these lines are reflected in net transfers from (to) separate account. (2) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. Certain products include surrender value enhancement riders that result in cash surrender values greater than account balances. 142 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 9. Contractholder Funds Contractholder funds include policyholder account balances related to contracts with significant insurance risk and investment contracts. The following tables summarize disaggregated policyholder account balance amounts and reconcile the totals to contractholder funds reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 (As recast) (in millions) Retirement and Income Solutions: Workplace savings and retirement solutions $ 15,808.1 $ 13,982.8 Individual variable annuities 4,273.0 1,906.7 Individual fixed deferred annuities 3,728.0 4,460.7 Total Retirement and Income Solutions 23,809.1 20,350.2 Benefits and Protection – Life Insurance: Universal life 6,867.5 6,953.7 Corporate: Inter-segment eliminations ( 358.5 ) ( 361.2 ) Total policyholder account balances for contracts with significant insurance risk or investment contracts with significant fee revenue 30,318.1 26,942.7 Reconciling items: Investment contracts without significant fee revenue (1) 14,662.7 15,807.7 Other balances (2) 399.5 349.2 Total contractholder funds per consolidated statements of financial position $ 45,380.3 $ 43,099.6 (1) Includes GICs, funding agreements, individual fixed income annuities and guaranteed pension contracts. These contracts are not included within the disaggregated rollforward or guaranteed minimum interest rate (“GMIR”) disclosures below. (2) Includes insignificant balances for long-duration contracts and amounts that are not accrued to the benefit of the contractholder and, therefore, are not included within the disaggregated rollforward or GMIR disclosures below. GICs and Funding Agreements Our GICs and funding agreements contain provisions limiting or prohibiting early surrenders, which typically include penalties for early surrenders, minimum notice requirements or, in the case of funding agreements with survivor options, minimum pre-death holding periods and specific maximum amounts. Funding agreements include those issued directly to nonqualified institutional investors and those issued to the FHLB Des Moines under their membership funding programs. As of December 31, 2025 and 2024, $ 3,972.5 million and $ 3,976.5 million, respectively, of liabilities were outstanding with respect to issuances under the program with FHLB Des Moines. In addition, we have five separate programs where the funding agreements have been issued directly or indirectly to unconsolidated special purpose entities. Claims for principal and interest under funding agreements are afforded equal priority to claims of life insurance and annuity policyholders under insolvency provisions of Iowa Insurance Laws. Principal Life was authorized to issue up to $ 4.0 billion of funding agreements under a program established in 1998 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. As of December 31, 2025 and 2024, $ 75.7 million and $ 75.8 million, respectively, of liabilities were outstanding with respect to the issuance outstanding under this program. In addition, Principal Life was authorized to issue up to $ 7.0 billion of funding agreements under a program established in 2001 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. As of December 31, 2025 and 2024, $ 202.1 million and $ 202.0 million, respectively, of liabilities were being held with respect to issuances outstanding under this program. Principal Life does not anticipate any new issuance activity under this program, given our December 2005 termination of the dealership agreement for this program and the availability of the program established in 2011 described below. 143 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 9. Contractholder Funds – (continued) Additionally, Principal Life established a funding agreements program in 2011 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. In November 2025, the program was updated such that the special purpose entity may have outstanding medium term notes at any one time up to $ 10.0 billion. As of December 31, 2025 and 2024, $ 8,057.9 million and $ 8,335.8 million, respectively, of liabilities were being held with respect to issuances outstanding under this program. Principal Life’s payment obligations on each funding agreement issued under this program are guaranteed by PFG. The program established in 2011 is not registered with the United States Securities and Exchange Commission (“SEC”). Policyholder Account Balances Retirement and Income Solutions The changes in policyholder account balances were as follows: For the year ended December 31, 2025 For the year ended December 31, 2024 Workplace Workplace savings and Individual Individual savings and Individual Individual retirement variable fixed deferred retirement variable fixed deferred solutions annuities annuities (1) solutions annuities annuities (1) (As recast) (As recast) ($ in millions) Balance at beginning of period $ 13,982.8 $ 1,906.7 $ 4,460.7 $ 12,721.5 $ 519.4 $ 5,534.1 Premiums and deposits 5,734.4 2,296.3 24.8 4,945.1 1,686.5 43.2 Policy charges ( 36.7 ) — — ( 36.7 ) — — Surrenders, withdrawals and benefit payments ( 4,206.8 ) ( 1,927.4 ) ( 878.5 ) ( 3,791.8 ) ( 2,098.2 ) ( 1,255.7 ) Net transfers from (to) separate account (2) ( 162.1 ) 1,653.9 — ( 220.5 ) 1,635.3 — Interest credited 522.5 82.7 121.9 395.9 27.3 132.4 Change in fair value of embedded derivative — 236.6 5.9 — 131.7 15.0 Other ( 26.0 ) 24.2 ( 6.8 ) ( 30.7 ) 4.7 ( 8.3 ) Balance at end of period $ 15,808.1 $ 4,273.0 $ 3,728.0 $ 13,982.8 $ 1,906.7 $ 4,460.7 Weighted-average crediting rate (3) 3.87 % 3.37 % 3.16 % 3.26 % 3.39 % 3.09 % Cash surrender value (4) $ 14,606.4 $ 4,123.4 $ 3,525.6 $ 12,524.6 $ 1,778.7 $ 4,208.5 (1) We use the deposit method of accounting for the reinsurance of this exited business. (2) Within the separate account liabilities rollforwards in Note 8, Separate Account Balances, these transfers for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account. (3) The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value. (4) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. The cash surrender value for RILA products also includes an equity and bond adjustment that may result in cash surrender value being greater than account balance. The net amount at risk for policyholder account balances for Individual variable annuities is equal to the MRB net amount at risk, as reported in Note 11, Market Risk Benefits. Workplace savings and retirement solutions and Individual fixed deferred annuities do not have guarantees that provide for benefits in excess of the current policyholder account balances. 144 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 9. Contractholder Funds – (continued) Benefits and Protection The changes in policyholder account balances for Life Insurance – Universal life were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 (As recast) ($ in millions) Balance at beginning of period $ 6,953.7 $ 6,934.3 Premiums and deposits 1,305.7 1,283.7 Policy charges ( 886.0 ) ( 877.1 ) Surrenders, withdrawals and benefit payments ( 587.7 ) ( 591.7 ) Net transfers from (to) separate account (1) ( 198.1 ) ( 76.4 ) Interest credited 304.2 306.7 Change in fair value of embedded derivative 17.3 19.6 Other ( 41.6 ) ( 45.4 ) Balance at end of period 6,867.5 6,953.7 Reinsurance impact ( 3,045.1 ) ( 3,232.8 ) Balance at end of period after reinsurance $ 3,822.4 $ 3,720.9 Weighted-average crediting rate (2) 4.11 % 4.13 % Net amount at risk (3) $ 86,094.5 $ 86,141.3 Cash surrender value (4) $ 6,045.7 $ 6,052.5 (1) Within the separate account liabilities rollforwards in Note 8, Separate Account Balances, these transfers are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account. (2) The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value, including indexed credits. (3) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the death benefit in excess of the current account balance or the fixed death benefit at the consolidated statement of financial position date. (4) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. 145 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 9. Contractholder Funds – (continued) Guaranteed Minimum Interest Rate The account values, for contracts with significant insurance risk and investment contracts with significant fee revenue by range of GMIR and the related range of difference, in basis points, between rates credited to policyholders and the respective GMIR were as follows. The amounts are before reinsurance impacts of our exited U.S. retail fixed annuity and ULSG businesses. December 31, 2025 Excess of crediting rates over GMIR Up to 0.50% 0.51% to 1.00% 1.01% to 2.00% 2.01% or more At GMIR above GMIR above GMIR above GMIR above GMIR Total (in millions) Retirement and Income Solutions Workplace savings and retirement solutions Up to 1.00 % $ — $ — $ — $ — $ — $ — 1.01 % - 2.00 % — 2,700.0 — 741.4 — 3,441.4 2.01 % - 3.00 % 195.0 189.1 673.2 3,935.8 4,471.3 9,464.4 3.01 % - 4.00 % 7.6 — — — — 7.6 4.01 % and above 11.9 — — — — 11.9 Subtotal 214.5 2,889.1 673.2 4,677.2 4,471.3 12,925.3 No GMIR 2,882.8 Total $ 15,808.1 Individual variable annuities Up to 1.00 % $ 14.8 $ — $ — $ — $ — $ 14.8 1.01 % - 2.00 % 3.9 — — — — 3.9 2.01 % - 3.00 % 197.2 — — — — 197.2 3.01 % - 4.00 % — — — — — — 4.01 % and above — — — — — — Subtotal 215.9 — — — — 215.9 No GMIR 4,057.1 Total $ 4,273.0 Individual fixed deferred annuities Up to 1.00 % $ 166.2 $ 8.9 $ 25.7 $ 78.8 $ 969.1 $ 1,248.7 1.01 % - 2.00 % 66.8 0.2 3.1 21.8 7.6 99.5 2.01 % - 3.00 % 2,101.8 — — — — 2,101.8 3.01 % - 4.00 % 133.4 — — — — 133.4 4.01 % and above — — — — — — Subtotal 2,468.2 9.1 28.8 100.6 976.7 3,583.4 No GMIR 144.6 Total $ 3,728.0 Benefits and Protection – Life Insurance Universal life Up to 1.00 % $ — $ — $ — $ 14.8 $ 31.2 $ 46.0 1.01 % - 2.00 % 239.6 — 344.3 621.7 458.0 1,663.6 2.01 % - 3.00 % 566.6 592.3 711.4 391.8 4.9 2,267.0 3.01 % - 4.00 % 1,552.7 55.6 28.6 112.7 3.3 1,752.9 4.01 % and above 17.0 9.6 16.1 7.7 — 50.4 Subtotal 2,375.9 657.5 1,100.4 1,148.7 497.4 5,779.9 No GMIR 1,087.6 Total $ 6,867.5 146 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 9. Contractholder Funds – (continued) December 31, 2024 Excess of crediting rates over GMIR Up to 0.50% 0.51% to 1.00% 1.01% to 2.00% 2.01% or more At GMIR above GMIR above GMIR above GMIR above GMIR Total (As recast) (in millions) Retirement and Income Solutions Workplace savings and retirement solutions Up to 1.00 % $ — $ — $ — $ 1,041.7 $ 445.2 $ 1,486.9 1.01 % - 2.00 % 3,727.0 — — 1,056.3 — 4,783.3 2.01 % - 3.00 % 4.6 186.9 1.8 2,900.0 2,740.1 5,833.4 3.01 % - 4.00 % 7.6 — — — — 7.6 4.01 % and above 13.9 — — — — 13.9 Subtotal 3,753.1 186.9 1.8 4,998.0 3,185.3 12,125.1 No GMIR 1,857.7 Total $ 13,982.8 Individual variable annuities Up to 1.00 % $ 19.2 $ — $ — $ — $ — $ 19.2 1.01 % - 2.00 % 3.8 — — — — 3.8 2.01 % - 3.00 % 231.5 — — — — 231.5 3.01 % - 4.00 % — — — — — — 4.01 % and above — — — — — — Subtotal 254.5 — — — — 254.5 No GMIR 1,652.2 Total $ 1,906.7 Individual fixed deferred annuities Up to 1.00 % $ 213.1 $ 27.5 $ 56.0 $ 196.9 $ 1,093.2 $ 1,586.7 1.01 % - 2.00 % 78.8 0.3 4.8 48.2 7.4 139.5 2.01 % - 3.00 % 2,416.4 — — — — 2,416.4 3.01 % - 4.00 % 142.0 — — — — 142.0 4.01 % and above — — — — — — Subtotal 2,850.3 27.8 60.8 245.1 1,100.6 4,284.6 No GMIR 176.1 Total $ 4,460.7 Benefits and Protection – Life Insurance Universal life Up to 1.00 % $ — $ — $ 1.5 $ 14.9 $ 4.9 $ 21.3 1.01 % - 2.00 % 268.6 — 424.0 518.6 452.3 1,663.5 2.01 % - 3.00 % 646.0 632.2 771.9 368.7 6.3 2,425.1 3.01 % - 4.00 % 1,559.7 56.7 34.5 105.4 7.0 1,763.3 4.01 % and above 23.5 2.5 7.0 18.9 — 51.9 Subtotal 2,497.8 691.4 1,238.9 1,026.5 470.5 5,925.1 No GMIR 1,028.6 Total $ 6,953.7 147 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims Future policy benefits and claims include reserves for short-duration contracts and long-duration contracts as well as certain reinsurance balances, when in a liability position. The following tables summarize disaggregated amounts included in future policy benefit and claims and reconcile the totals to those reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 (in millions) Liability for future policy benefits by segment (1): Retirement and Income Solutions: Pension risk transfer $ 27,349.3 $ 24,958.1 Individual fixed income annuities 4,367.4 4,504.6 Total Retirement and Income Solutions 31,716.7 29,462.7 Principal Asset Management – International Pension: Latin America: Individual fixed income annuities 4,600.5 4,126.9 Benefits and Protection: Specialty Benefits: Individual disability 1,994.2 1,829.0 Life Insurance: Term life 1,515.7 1,248.0 Total Benefits and Protection 3,509.9 3,077.0 Corporate: Long-term care insurance 166.7 164.8 Total liability for future policy benefits 39,993.8 36,831.4 Additional liability for certain benefit features by segment (2): Benefits and Protection – Life Insurance: Universal life 6,604.8 6,037.2 Total additional liability for certain benefit features 6,604.8 6,037.2 Reconciling items: Participating contracts 2,784.3 2,924.2 Short-duration contracts 1,205.2 1,267.4 Cost of reinsurance liability 971.4 958.1 Reinsurance recoverable liability 23.5 60.3 Other (3) 166.7 100.8 Future policy benefits and claims per consolidated statements of financial position $ 51,749.7 $ 48,179.4 (1) Amounts include the deferred profit liability. (2) Includes reserves on certain long-duration contracts where benefit features result in gains in early years followed by losses in later years. (3) Includes other miscellaneous reserves and the impact of unrealized gains (losses) on the additional liability for certain benefit features. 148 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Liability for Unpaid Claims The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows: For the year ended December 31, 2025 2024 2023 (in millions) Balance at beginning of period $ 1,379.9 $ 1,405.9 $ 1,395.0 Less: reinsurance recoverable 61.2 67.8 68.6 Net balance at beginning of period 1,318.7 1,338.1 1,326.4 Incurred: Current year 1,806.4 1,749.4 1,650.4 Prior years ( 129.2 ) ( 111.2 ) ( 95.4 ) Total incurred 1,677.2 1,638.2 1,555.0 Payments: Current year 1,348.8 1,288.0 1,189.2 Prior years 367.3 369.6 354.1 Total payments 1,716.1 1,657.6 1,543.3 Net balance at end of period 1,279.8 1,318.7 1,338.1 Plus: reinsurance recoverable 62.6 61.2 67.8 Balance at end of period $ 1,342.4 $ 1,379.9 $ 1,405.9 Incurred liability adjustments relating to prior years, which affected current operations during 2025, 2024 and 2023, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims. Short-Duration Contracts Future policy benefits and claims include reserves for group life and disability insurance that provide periodic income payments. These reserves are computed using assumptions of mortality, morbidity and investment performance. These assumptions are based on our experience, industry results, emerging trends and future expectations. Future policy benefits and claims also include reserves for incurred but unreported group disability, dental, vision, critical illness, accident, PFML, hospital indemnity and life insurance claims. We recognize claims costs in the period the service was provided to our policyholders. However, claims costs incurred in a particular period are not known with certainty until after we receive, process and pay the claims. We determine the amount of this liability using actuarial methods based on historical claim payment patterns as well as emerging cost trends, where applicable, to determine our estimate of claim liabilities. Premium deficiency reserves may be established for short-duration contracts to provide for expected future losses. The premium deficiency reserve calculation considers, among other factors, anticipated investment income. We have defined claim frequency as follows for each short-duration product: ● LTD: Claim frequency is based on submitted reserve claim counts. ● Group Life Waiver: Claim frequency is based on submitted reserve claim counts, consistent with LTD. ● Dental and Vision: Claim frequency is based on the claim form, which may include one or more procedures. ● STD, Critical Illness, Accident, Hospital Indemnity and PFML: Claim frequency is based on submitted claims. ● Group Life: Claim frequency is based on submitted life claims (lives, not coverages). We did not make any significant changes to our methodologies or assumptions used to calculate the liability for unpaid claims for short-duration contracts during 2025. 149 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Claims Development The following tables present undiscounted information about claims development by incurral year, including separate information about incurred claims and paid claims net of reinsurance for the periods indicated. The tables also include information on incurred but not reported claims and the cumulative number of reported claims. The tables present information for the number of years for which claims incurred typically remain outstanding, but do not exceed ten years. The data is disaggregated into groupings of claims with similar characteristics, such as duration of the claim payment period and average claim amount, and with consideration to the overall size of the groupings. Outstanding liabilities equal total net incurred claims less total net paid claims plus outstanding liabilities for net unpaid claims of prior years. LTD and Group Life Waiver Claims Incurred Cumulative but not number of reported reported Net incurred claims (1) claims claims December 31, 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2025 2025 ($ in millions) Incurral year 2016 $ 229.8 $ 228.4 $ 219.4 $ 219.5 $ 214.4 $ 218.7 $ 221.9 $ 219.0 $ 218.0 $ 218.1 $ 0.1 6,173 2017 238.4 239.7 243.1 245.8 245.2 246.5 248.9 248.7 246.4 0.1 6,093 2018 239.4 245.1 239.2 239.8 235.3 238.0 241.9 241.1 0.1 5,786 2019 255.2 248.4 240.4 240.2 238.6 243.4 240.1 0.1 5,963 2020 252.1 231.0 221.1 217.7 211.3 210.6 0.1 5,947 2021 259.7 244.5 221.6 221.2 210.0 0.5 5,594 2022 274.3 240.5 227.6 222.6 6.1 5,660 2023 267.4 245.2 227.6 19.7 5,407 2024 263.9 239.0 3.5 4,421 2025 254.4 95.4 2,747 Total net incurred claims $ 2,309.9 Net cumulative paid claims (1) December 31, 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (in millions) Incurral year 2016 $ 16.2 $ 70.6 $ 105.6 $ 124.9 $ 136.8 $ 147.2 $ 157.1 $ 165.3 $ 171.5 $ 177.2 2017 17.8 76.5 115.0 135.9 151.7 165.4 176.8 185.6 193.2 2018 20.1 79.9 115.7 135.7 150.3 163.3 173.3 182.1 2019 19.2 79.7 117.5 136.4 150.6 163.6 173.7 2020 20.6 78.8 113.1 130.0 140.8 150.4 2021 19.8 79.0 113.2 128.6 140.4 2022 19.6 76.6 111.4 127.9 2023 20.0 77.3 108.1 2024 24.5 81.3 2025 23.0 Total net paid claims 1,357.3 All outstanding liabilities for unpaid claims prior to 2016 net of reinsurance 250.0 Total outstanding liabilities for unpaid claims net of reinsurance $ 1,202.6 (1) 2016-2024 unaudited. 150 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Dental, Vision, STD, Critical Illness, Accident, Hospital Indemnity and PFML Claims Incurred Cumulative but not number of reported reported Net incurred claims (1) claims claims December 31, 2024 2025 2025 2025 ($ in millions) Incurral year 2024 $ 1,129.3 $ 1,112.6 $ — 4,989,358 2025 1,181.8 64.0 4,888,403 Total net incurred claims $ 2,294.4 Net cumulative paid claims (1) December 31, 2024 2025 (in millions) Incurral year 2024 $ 1,039.9 $ 1,111.8 2025 1,094.6 Total net paid claims 2,206.4 All outstanding liabilities for unpaid claims prior to 2024 net of reinsurance — Total outstanding liabilities for unpaid claims net of reinsurance $ 88.0 (1) 2024 unaudited. Group Life Claims Incurred Cumulative but not number of reported reported Net incurred claims (1) claims claims December 31, 2024 2025 2025 2025 ($ in millions) Incurral year 2024 $ 285.1 $ 291.8 $ 1.0 6,027 2025 294.1 31.8 5,230 Total net incurred claims $ 585.9 Net cumulative paid claims (1) December 31, 2024 2025 (in millions) Incurral year 2024 $ 223.7 $ 289.5 2025 231.2 Total net paid claims 520.7 All outstanding liabilities for unpaid claims prior to 2024 net of reinsurance 2.3 Total outstanding liabilities for unpaid claims net of reinsurance $ 67.5 (1) 2024 unaudited. 151 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Reconciliation of Unpaid Claims to Liability for Unpaid Claims Our reconciliation of net outstanding liabilities for unpaid claims of short-duration contracts to the liability for unpaid claims follows: December 31, 2025 Dental, Vision, STD, Critical Illness, LTD and Group Life Accident, Hospital Waiver Indemnity and PFML Group Life Consolidated (in millions) Net outstanding liabilities for unpaid claims $ 1,202.6 $ 88.0 $ 67.5 $ 1,358.1 Reconciling items: Reinsurance recoverable on unpaid claims 31.8 — 0.9 32.7 Impact of discounting ( 230.5 ) — — ( 230.5 ) Loss adjustment expense liability 17.1 4.3 9.3 30.7 Liability for unpaid claims - short-duration contracts $ 1,021.0 $ 92.3 $ 77.7 1,191.0 Insurance contracts other than short-duration 151.4 Liability for unpaid claims $ 1,342.4 Claim Duration and Payout Our historical average percentage of claims paid in each year from incurral was as follows: December 31, 2025 (1) Dental, Vision, STD, Critical Illness, LTD and Group Life Accident, Hospital Year Waiver Indemnity and PFML Group Life 1 8.7 % 92.5 % 77.9 % 2 25.4 7.4 20.0 3 15.5 4 8.0 5 5.8 6 5.2 7 4.4 8 3.6 9 3.0 10 2.6 (1) Unaudited. 152 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Discounting The following table provides the carrying amount of liabilities reported at present value for short-duration contract unpaid claims. We use a range of discount rates to derive the present value of the unpaid claims. The ranges of discount rates as well as the aggregate amount of discount deducted to derive the liabilities for unpaid claims and interest accretion recognized are also disclosed. Interest accretion is included in benefits, claims and settlement expenses within our consolidated statements of operations. Dental, Vision, STD, Critical Illness, LTD and Group Life Accident, Hospital Waiver Indemnity and PFML Group Life ($ in millions) Carrying amount of liabilities for unpaid claims December 31, 2025 $ 1,021.0 $ 92.3 $ 77.7 December 31, 2024 1,062.1 94.3 83.9 Range of discount rates December 31, 2025 2.8 - 7.0 % — - — % — - — % December 31, 2024 2.8 - 7.0 — - — — - — Aggregate amount of discount December 31, 2025 $ 230.5 $ — $ — December 31, 2024 226.6 — — Interest accretion For the year ended: December 31, 2025 $ 36.7 $ — $ — December 31, 2024 34.7 — — December 31, 2023 34.7 — — 153 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Long-Duration Contracts Gross Premiums or Assessments and Interest Accretion The amount of gross premiums or assessments and interest accretion recognized by segment in the consolidated statements of operations was as follows: Gross premiums or assessments (1) Interest accretion (2) For the year ended For the year ended December 31, December 31, 2025 2024 2023 2025 2024 2023 (in millions) Retirement and Income Solutions: Pension risk transfer $ 2,959.3 $ 3,103.1 $ 2,905.9 $ 1,234.2 $ 1,135.1 $ 1,008.6 Individual fixed income annuities 31.0 46.6 42.5 197.2 208.4 219.1 Total Retirement and Income Solutions 2,990.3 3,149.7 2,948.4 1,431.4 1,343.5 1,227.7 Principal Asset Management – International Pension: Latin America: Individual fixed income annuities (3) 6.4 29.0 29.7 293.1 330.2 385.8 Benefits and Protection: Specialty Benefits: Individual disability 651.5 640.0 624.6 105.0 99.8 94.5 Life Insurance: Universal life 718.6 715.3 681.8 282.4 253.3 209.2 Term life 693.6 673.3 649.1 66.6 57.0 48.2 Total Benefits and Protection 2,063.7 2,028.6 1,955.5 454.0 410.1 351.9 Corporate: Long-term care insurance 5.2 4.9 5.1 9.4 9.3 9.6 Total per consolidated statements of operations $ 5,065.6 $ 5,212.2 $ 4,938.7 $ 2,187.9 $ 2,093.1 $ 1,975.0 (1) Gross premiums are included within premiums and other considerations on the consolidated statements of operations. Assessments, which are only applicable to the Life Insurance – Universal life level of aggregation, are included within fees and other revenues on the consolidated statements of operations. (2) Interest accretion is included within benefits, claims and settlement expenses on the consolidated statements of operations. (3) Includes inflation adjustments included within the liability for future policy benefits rollforward for interest accretion. Liability for Future Policy Benefits The liability for future policy benefits (“LFPB”) for individual and group annuities is generally equal to the present value of expected future policy benefit payments. The reserves are computed using assumptions for mortality and interest. The LFPB for non-participating term life insurance, individual disability income contracts and individual and group long-term care contracts is generally equal to the present value of expected future policy benefit payments less the present value of expected net premiums. The reserves are computed using assumptions for mortality, interest, morbidity and lapse. Cohorts are used as the unit of account for liability measurement. Actual cash flows are grouped into issue-year cohorts for the liability calculation and updated quarterly. We review and update, if necessary, assumptions used to measure cash flows for the LFPB during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The change in our liability estimate as a result of updating cash flow assumptions is recognized in net income. An interest accretion rate is determined for an identified cohort and remains unchanged after the issue year. For policies issued on or prior to December 31, 2020, the interest accretion rate is based on the assumed investment yield when the business was issued. For policies issued after December 31, 2020, the interest accretion rate is based on the upper-medium grade fixed-income instrument yields, which is generally equivalent to a single-A rated bond yield matched to the duration of our insurance liabilities, when the business was issued. 154 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) The LFPB is remeasured to reflect current upper-medium grade fixed-income instrument yields as of each reporting date. The liability is calculated by discounting cash flows using rate curves reflecting the currency and duration of the insurance liabilities. For discount rate tenors, or points on the curves, where the upper-medium grade fixed-income instrument yields are not liquid or limited observable market data is available, we use various estimation techniques consistent with fair value measurement guidance. For our individual fixed income annuities in Latin America, the discount rate methodology is designed to prioritize observable inputs based on market data available in the local debt markets where the respective policies are issued in the currency in which the policies are denominated. For discount rate tenors where upper-medium grade fixed-income instrument yields based on international rating standards are not liquid or limited observable market data is available, estimation techniques are used to determine a curve in the appropriate currency. Further details regarding reference rates used are included under “Interest Accretion and Current Discount Rates.” Retirement and Income Solutions The balances and the changes in the present value for expected future policy benefits were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 Pension Individual Pension Individual risk fixed income risk fixed income transfer annuities transfer annuities ($ in millions) Present value of expected future policy benefit payments Balance at beginning of period $ 24,958.1 $ 4,504.6 $ 23,855.8 $ 4,914.1 Effect of changes in discount rate assumptions at beginning of period 1,938.8 420.4 1,036.1 296.7 Balance at beginning of period at original discount rate 26,896.9 4,925.0 24,891.9 5,210.8 Effect of changes in cash flow assumptions — — ( 3.4 ) ( 38.4 ) Effect of actual variances from expected experience ( 17.9 ) 2.3 ( 1.5 ) ( 1.7 ) Adjusted beginning of period balance at original discount rate 26,879.0 4,927.3 24,887.0 5,170.7 Interest accrual 1,234.2 197.2 1,135.1 208.4 Benefit payments ( 2,442.8 ) ( 490.0 ) ( 2,238.1 ) ( 500.2 ) Issuances 2,973.2 30.5 3,112.9 46.1 Balance at end of period at original discount rate 28,643.6 4,665.0 26,896.9 4,925.0 Effect of changes in discount rate assumptions at end of period ( 1,294.3 ) ( 297.6 ) ( 1,938.8 ) ( 420.4 ) Future policy benefits 27,349.3 4,367.4 24,958.1 4,504.6 Reinsurance impact — ( 4,310.3 ) — ( 4,469.4 ) Future policy benefits after reinsurance $ 27,349.3 $ 57.1 $ 24,958.1 $ 35.2 Weighted-average duration for future policy benefits (years) (1) 7.9 7.1 8.0 7.2 (1) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort. 155 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Principal Asset Management – International Pension The balances and the changes in the present value for expected future policy benefits for Latin America – Individual fixed income annuities were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 ($ in millions) Present value of expected future policy benefit payments Balance at beginning of period $ 4,126.9 $ 4,593.7 Effect of changes in discount rate assumptions at beginning of period ( 368.4 ) ( 351.8 ) Balance at beginning of period at original discount rate 3,758.5 4,241.9 Effect of actual variances from expected experience ( 0.4 ) 1.1 Adjusted beginning of period balance at original discount rate 3,758.1 4,243.0 Interest accrual (1) 293.1 330.2 Benefit payments ( 335.6 ) ( 326.7 ) Issuances 6.4 29.4 Foreign currency translation adjustment 385.0 ( 517.4 ) Balance at end of period at original discount rate 4,107.0 3,758.5 Effect of changes in discount rate assumptions at end of period 493.5 368.4 Future policy benefits $ 4,600.5 $ 4,126.9 Weighted-average duration for future policy benefits (years) (2) 9.6 9.8 (1) Includes inflation adjustments. (2) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort. 156 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Benefits and Protection The balances and the changes in the present value for expected net premiums and expected future policy benefits were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 Specialty Life Specialty Life Benefits Insurance Benefits Insurance Individual Individual disability Term life disability Term life ($ in millions) Present value of expected net premiums Balance at beginning of period $ 2,680.6 $ 4,107.2 $ 2,552.3 $ 3,793.7 Effect of changes in discount rate assumptions at beginning of period 436.4 290.1 313.7 100.1 Balance at beginning of period at original discount rate 3,117.0 4,397.3 2,866.0 3,893.8 Effect of changes in cash flow assumptions ( 22.5 ) 163.2 183.9 419.9 Effect of actual variances from expected experience 114.8 11.7 168.3 42.5 Adjusted beginning of period balance at original discount rate 3,209.3 4,572.2 3,218.2 4,356.2 Interest accrual 108.8 208.7 103.5 190.9 Net premiums collected ( 298.0 ) ( 418.8 ) ( 289.1 ) ( 390.8 ) Issuances 70.5 228.5 84.4 241.0 Balance at end of period at original discount rate 3,090.6 4,590.6 3,117.0 4,397.3 Effect of changes in discount rate assumptions at end of period ( 349.8 ) ( 198.4 ) ( 436.4 ) ( 290.1 ) Balance at end of period $ 2,740.8 $ 4,392.2 $ 2,680.6 $ 4,107.2 Present value of expected future policy benefit payments Balance at beginning of period $ 4,509.6 $ 5,355.2 $ 4,450.7 $ 4,879.6 Effect of changes in discount rate assumptions at beginning of period 1,302.8 366.0 903.5 124.5 Balance at beginning of period at original discount rate 5,812.4 5,721.2 5,354.2 5,004.1 Effect of changes in cash flow assumptions ( 42.6 ) 240.4 216.2 488.1 Effect of actual variances from expected experience 107.9 4.1 173.2 45.1 Adjusted beginning of period balance at original discount rate 5,877.7 5,965.7 5,743.6 5,537.3 Interest accrual 213.8 275.3 203.3 247.9 Benefit payments ( 234.1 ) ( 359.7 ) ( 219.0 ) ( 321.6 ) Issuances 68.9 242.3 84.5 257.6 Balance at end of period at original discount rate 5,926.3 6,123.6 5,812.4 5,721.2 Effect of changes in discount rate assumptions at end of period ( 1,191.3 ) ( 215.7 ) ( 1,302.8 ) ( 366.0 ) Balance at end of period $ 4,735.0 $ 5,907.9 $ 4,509.6 $ 5,355.2 Future policy benefits (1) $ 1,994.2 $ 1,515.7 $ 1,829.0 $ 1,248.0 Reinsurance impact ( 430.0 ) 9.8 ( 412.1 ) 19.5 Future policy benefits after reinsurance $ 1,564.2 $ 1,525.5 $ 1,416.9 $ 1,267.5 Weighted-average duration for future policy benefits (years) (2) 17.2 7.4 18.3 8.4 (1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums. (2) Represents the average of the cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort. 157 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) We updated our actuarial assumptions during the third quarter of 2025, resulting in a $ 20.1 million decrease in the LFPB and a $ 16.2 million increase to income before taxes, net of reinsurance, for Individual disability. This was primarily due to favorable updates to morbidity assumptions. The updates also resulted in a $ 77.2 million increase in the LFPB and a $ 63.0 million decrease to income before taxes, net of reinsurance, for Term life. This was primarily due to unfavorable updates to lapse and mortality assumptions. We updated our actuarial assumptions during the third quarter of 2024, resulting in a $ 32.3 million increase in the LFPB and an $ 18.2 million decrease to income before taxes, net of reinsurance, for Individual disability. This was primarily due to unfavorable updates to morbidity and lapse assumptions. The updates also resulted in a $ 68.2 million increase in the LFPB and a $ 52.9 million decrease to income before taxes, net of reinsurance, for Term life. This was primarily due to unfavorable updates to mortality and lapse assumptions. Additional Liability for Certain Benefit Features The LFPB also includes an additional reserve on certain universal life contracts where benefit features result in gains in early years followed by losses in later years. The liability for these future losses is accrued in relation to estimated contract assessments. A premium deficiency exists if the net liabilities together with future premiums are determined to be insufficient to provide for expected future policy benefits. Premium deficiency testing considers, among other factors, anticipated investment income and does not include a provision for adverse deviation. We did not have a premium deficiency reserve as of December 31, 2025 or December 31, 2024. The balances and the changes in the additional liability for certain benefit features for Life Insurance – Universal life contracts, excluding the impact of unrealized gains (losses), were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 ($ in millions) Balance at beginning of period $ 6,037.2 $ 5,326.5 Effect of changes in cash flow assumptions 6.8 151.9 Effect of actual variances from expected experience 18.5 28.0 Interest accrual 282.4 253.3 Net assessments collected 430.6 425.2 Benefit payments ( 170.7 ) ( 147.7 ) Balance at end of period 6,604.8 6,037.2 Reinsurance impact ( 6,593.6 ) ( 6,011.3 ) Balance at end of period after reinsurance $ 11.2 $ 25.9 Weighted-average duration for additional liability (years) (1) 21.6 23.3 (1) Represents the average of the cohort-level duration of the benefits less the net assessment cash flows weighted by the reserve balance for each cohort. We updated our actuarial assumptions during the third quarter of 2024, resulting in a $ 151.9 million increase in the additional liability for certain benefit features primarily due to mortality assumptions related to ULSG products, resulting in a $ 0.3 million decrease to income before taxes, net of reinsurance. 158 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Corporate The balances and the changes in the present value for expected net premiums and expected future policy benefits for long-term care insurance were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 ($ in millions) Present value of expected net premiums Balance at beginning of period $ 30.8 $ 42.8 Effect of changes in discount rate assumptions at beginning of period ( 1.3 ) ( 3.0 ) Balance at beginning of period at original discount rate 29.5 39.8 Effect of changes in cash flow assumptions 3.3 ( 5.3 ) Effect of actual variances from expected experience 0.3 ( 2.2 ) Adjusted beginning of period balance at original discount rate 33.1 32.3 Interest accrual 1.8 1.9 Net premiums collected ( 4.5 ) ( 4.7 ) Balance at end of period at original discount rate 30.4 29.5 Effect of changes in discount rate assumptions at end of period 2.0 1.3 Balance at end of period $ 32.4 $ 30.8 Present value of expected future policy benefit payments Balance at beginning of period $ 195.6 $ 209.5 Effect of changes in discount rate assumptions at beginning of period ( 8.8 ) ( 20.0 ) Balance at beginning of period at original discount rate 186.8 189.5 Effect of changes in cash flow assumptions 1.3 ( 1.2 ) Effect of actual variances from expected experience 3.4 2.5 Adjusted beginning of period balance at original discount rate 191.5 190.8 Interest accrual 11.2 11.2 Benefit payments ( 16.3 ) ( 15.2 ) Balance at end of period at original discount rate 186.4 186.8 Effect of changes in discount rate assumptions at end of period 12.7 8.8 Balance at end of period $ 199.1 $ 195.6 Future policy benefits (1) $ 166.7 $ 164.8 Reinsurance impact ( 166.7 ) ( 164.8 ) Future policy benefits after reinsurance $ — $ — Weighted-average duration for future policy benefits (years) (2) 9.7 9.3 (1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums. (2) Represents the average of cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort . 159 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Expected Future Gross Premiums and Benefit Payments The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums, utilizing the current upper-medium fixed-income instrument yield, were as follows: December 31, 2025 December 31, 2024 (in millions) Retirement and Income Solutions: Pension risk transfer Expected undiscounted future benefit payments $ 42,601.7 $ 39,532.3 Individual fixed income annuities Expected undiscounted future benefit payments $ 6,221.3 $ 6,622.6 Principal Asset Management – International Pension: Latin America: Individual fixed income annuities Expected undiscounted future benefit payments $ 5,945.8 $ 5,509.1 Benefits and Protection – Specialty Benefits: Individual disability Expected discounted future gross premiums $ 5,683.8 $ 5,484.0 Expected undiscounted future gross premiums $ 8,763.7 $ 8,680.0 Expected undiscounted future benefit payments $ 9,951.7 $ 9,808.8 Benefits and Protection – Life Insurance: Term life Expected discounted future gross premiums $ 6,929.2 $ 6,651.2 Expected undiscounted future gross premiums $ 11,960.4 $ 11,391.4 Expected undiscounted future benefit payments $ 9,653.9 $ 8,970.7 Corporate: Long-term care insurance Expected discounted future gross premiums $ 37.4 $ 38.4 Expected undiscounted future gross premiums $ 52.7 $ 55.7 Expected undiscounted future benefit payments $ 363.1 $ 357.3 160 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 10. Future Policy Benefits and Claims – (continued) Interest Accretion and Current Discount Rates The interest accretion rate shown for each level of aggregation is an average of the cohort-level accretion rates weighted by the reserve balance for each cohort within that level of aggregation. The current discount rate is calculated at a cohort-level based on current upper-medium fixed-income instrument yields and weighted by the reserve balance for each cohort within each level of aggregation. The weighted-average rates were as follows: Interest accretion rate Current discount rate December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 Retirement and Income Solutions: Pension risk transfer 4.70 % 4.61 % 5.28 % 5.55 % Individual fixed income annuities 4.22 % 4.22 % 5.16 % 5.50 % Principal Asset Management - International Pension (1): Latin America: Individual fixed income annuities 4.19 % 4.21 % 2.78 % 3.04 % Benefits and Protection: Specialty Benefits: Individual disability 3.84 % 3.89 % 5.43 % 5.64 % Life Insurance: Universal life 4.74 % 4.75 % See note (2) See note (2) Term life 4.81 % 4.82 % 4.91 % 5.35 % Corporate: Long-term care insurance 6.16 % 6.16 % 5.36 % 5.58 % (1) The interest accretion rate and current discount rate are Chilean real rates, excluding inflation, in the local currency. (2) The additional liability for certain benefit features for Life Insurance – Universal life is measured using the discount rate at contract inception. Therefore, the current discount rate is not applicable for this product. 161 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 11. Market Risk Benefits Contracts or contract features that provide protection to the policyholder from capital market risk, including equity, interest rate or foreign exchange risk, and expose us to other-than-nominal capital market risk are classified as MRBs. We issue certain annuity contracts that include MRBs that have been bifurcated from the host contract. The Retirement and Income Solutions segment offers variable annuity products with GMWB riders and GMDB riders, including return-of-premium GMDB and GMWB riders for its RILA products. MRBs are measured at fair value at the contract level and can be in either an asset or liability position, depending on certain inputs at the reporting date. MRB assets and liabilities are presented separately within the consolidated statements of financial position. Increases to an asset or decreases to a liability are described as favorable changes to fair value. Changes in fair value are reported in MRB remeasurement (gain) loss on the consolidated statements of operations. However, the change in fair value related to our own nonperformance risk is reported in OCI. For contracts that contain multiple MRB features, the MRBs are valued on a combined basis using an integrated model. MRBs are classified as Level 3 fair value measurements as the fair value is based on unobservable inputs. The key assumptions for calculating the fair value of the MRBs are market assumptions such as equity market returns, interest rate levels, market volatility and correlations and policyholder behavior assumptions such as lapse, mortality, utilization and withdrawal patterns. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The MRBs are valued using stochastic models that incorporate a spread reflecting our own nonperformance risk. The assumption for our own nonperformance risk for MRBs is based on the current market credit spreads for debt-like instruments we have issued and are available in the market. Increases (decreases) in our own nonperformance risk, which impacts the rates used to discount future cash flows, could lead to favorable (unfavorable) changes in the fair value of the MRBs. Long-term interest rates are used as the mean return when projecting the growth in the value of the associated account value and impact the discount rate used in the discounted future cash flows valuation. The amount of claims will increase if account value is not sufficient to cover guaranteed withdrawals. An increase (decrease) in risk-free rates could cause a favorable (unfavorable) change in the fair value of the MRBs. A decrease (increase) in market volatilities could cause a favorable (unfavorable) change in the fair value of the MRBs. An increase (decrease) in mortality rates or the overall lapse rate assumptions could cause a favorable (unfavorable) change in the fair value of the MRBs. The lapse rate assumption may vary dynamically based on the relationship between the guarantee and associated account value. A weaker (stronger) dynamic lapse rate assumption could lead to favorable (unfavorable) changes in the fair value of the MRBs. The utilization rate assumption includes how many contractholders will take withdrawals, when they will take them and how much of their benefit they will take. A decrease (increase) in the number of contractholders taking withdrawals, contractholders taking withdrawals earlier versus later, or contractholders taking more versus less of their benefit could lead to favorable (unfavorable) changes in the fair value of the MRBs. The following tables summarize disaggregated MRB amounts in an asset and liability position reported in the consolidated statements of financial position. December 31, 2025 December 31, 2024 Net asset Net asset Asset Liability (liability) Asset Liability (liability) (in millions) Retirement and Income Solutions: Individual variable annuities $ 197.1 $ 66.9 $ 130.2 $ 199.5 $ 62.1 $ 137.4 Total MRB per consolidated statements of financial position $ 197.1 $ 66.9 $ 130.2 $ 199.5 $ 62.1 $ 137.4 162 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 11. Market Risk Benefits – (continued) Retirement and Income Solutions The net asset (liability) balances and the changes in the valuation of the MRBs for Individual variable annuities were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 ($ in millions) Balance at beginning of period $ 137.4 $ 41.5 Effect of changes in nonperformance risk at beginning of period 19.0 7.7 Adjusted balance at beginning of period 156.4 49.2 Effect of: Interest accrual and expected policyholder behavior ( 62.8 ) ( 66.8 ) Benefit payments — 0.6 Changes in interest rates 13.0 100.4 Changes in equity markets 53.1 92.4 Changes in equity index volatility ( 8.3 ) 12.0 Actual policyholder behavior different from expected behavior ( 3.9 ) ( 12.7 ) Changes in future expected policyholder behavior — ( 20.2 ) Changes in other future expected assumptions ( 0.3 ) 1.5 Adjusted balance at end of period 147.2 156.4 Effect of changes in nonperformance risk at end of period ( 17.0 ) ( 19.0 ) Balance at end of period $ 130.2 $ 137.4 Weighted-average attained age of policyholders (years) (1) 67.0 67.4 Net amount at risk (2) $ 29.3 $ 46.8 (1) The weighted-average attained age is calculated at the contract level using the total contributions since inception and the age of the contractholders. (2) The net amount at risk for our GMDB riders is defined as the current GMDB amount in excess of the current account balance. The net amount at risk for our GMWB riders is defined as the greater of the present value of the GMWB payments less the current account balance or zero. For contracts with both GMDB and GMWB riders, the net amount at risk is the greater of the GMDB or GMWB net amount at risk. We had a decrease in the net amount at risk in 2025 primarily as a result of increases in the equity markets. Significant changes to inputs and assumptions that impacted the change in the MRB fair value measurement shown above were as follows: For the year ended For the year ended December 31, 2025 December 31, 2024 Change in net Change in net Change in input MRB asset (liability) Change in input MRB asset (liability) Long-term interest rate Increased Favorable Increased Favorable Equity markets Increased Favorable Increased Favorable Equity market volatilities Increased Unfavorable Decreased Favorable Own nonperformance risk Increased Favorable Decreased Unfavorable See “Unobservable Inputs for Fair Value Measurement” for additional details on the inputs. 163 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 11. Market Risk Benefits – (continued) Unobservable Inputs for Fair Value Measurement The following table provides quantitative information about the significant unobservable inputs used for fair value measurements of MRBs. The utilization rate and mortality rate inputs are omitted from the table as a range does not provide meaningful presentation. The utilization rate represents the number of contractholders taking withdrawals in addition to the amount and timing of the withdrawals. The mortality rate is an input based on an appropriate industry mortality table. December 31, 2025 December 31, 2024 Weighted- Weighted- Range of inputs Average Range of inputs Average Retirement and Income Solutions: Individual variable annuities Long-term interest rate (1) 4.80 - 4.84 % 4.82 % 4.78 - 4.85 % 4.81 % Long-term equity market volatility 17.80 - 38.80 % 21.94 % 18.10 - 35.53 % 21.76 % Nonperformance risk 0.49 - 1.12 % 0.95 % 0.40 - 1.10 % 0.89 % Lapse rate 0.90 - 55.00 % 6.51 % 0.90 - 55.00 % 5.79 % (1) Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. The rate curves are derived from an interpolation between various observable swap rates. 164 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 12. Reinsurance We reinsure a portion of the insurance risks associated with our individual disability, traditional life, universal life, medical and long-term care insurance as well as retail fixed annuity contracts with significant life insurance risk through reinsurance agreements with unaffiliated reinsurance companies, primarily on a quota share, excess loss, yearly renewable term (“YRT”) or coinsurance basis. We have coinsurance with funds withheld reinsurance agreements in which we cede our U.S. retail fixed annuity and ULSG blocks of business using both the reinsurance and deposit methods of accounting. We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. As of December 31, 2025 and 2024, we had $ 14,923.9 million and $ 14,592.6 million of reinsurance recoverable assets, respectively, included in reinsurance recoverable and deposit receivable on the consolidated statements of financial position, which does not reflect potentially offsetting impacts of collateral. As of December 31, 2025 and 2024, we had $ 23.5 million and $ 60.3 million of reinsurance recoverable liabilities, respectively, included in future policy benefits and claims on the consolidated statements of financial position. As of December 31, 2025 and 2024, $ 14,726.4 million, or 99 %, and $ 14,371.7 million, or 99 %, were with our five largest ceded reinsurers, respectively. The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows: For the year ended December 31, 2025 2024 2023 (in millions) Premiums and other considerations: Direct $ 7,330.3 $ 7,381.8 $ 6,962.2 Ceded ( 549.9 ) ( 531.6 ) ( 491.3 ) Net premiums and other considerations $ 6,780.4 $ 6,850.2 $ 6,470.9 Benefits, claims and settlement expenses: Direct $ 10,239.8 $ 10,131.5 $ 9,365.4 Ceded (1) ( 1,675.3 ) ( 2,058.9 ) ( 1,577.2 ) Net benefits, claims and settlement expenses $ 8,564.5 $ 8,072.6 $ 7,788.2 LFPB remeasurement (gain) loss: Direct $ 53.0 $ 252.7 $ 737.4 Ceded (1) 3.4 418.7 ( 789.0 ) Net LFPB remeasurement (gain) loss $ 56.4 $ 671.4 $ ( 51.6 ) (1) Includes the one-time impact of YRT reinsurance transactions in 2024. As of December 31, 2025 and December 31, 2024, we had a $ 4,076.2 million and $ 4,897.5 million reinsurance deposit receivable, respectively. Refer to Note 4, Investments, for information on our financing receivables valuation allowance related to the reinsurance recoverable and deposit receivable. 165 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 12. Reinsurance – (continued) Cost of Reinsurance A reinsurance asset or liability is established to spread the expected net reinsurance costs or profits over the expected term of the contracts. The cost of reinsurance asset and liability are reported in premiums due and other receivables and liability for future policy benefits and claims, respectively, on the consolidated statements of financial position. The cost of reinsurance asset and liability included on the consolidated statements of financial position were as follows: December 31, 2025 December 31, 2024 (in millions) Cost of reinsurance asset $ 3,103.2 $ 3,187.6 Cost of reinsurance liability $ 971.4 $ 958.1 Cost of reinsurance amortization, including the impact of remeasurement, of $ 96.9 million, $ 631.6 million and $ 17.7 million for the years ended December 31, 2025, 2024 and 2023, respectively, was reported in benefits, claims and settlement expenses and liability for future policy benefits remeasurement (gain) loss on the consolidated statements of operations. The 2024 impacts of remeasurement include the one-time impact of YRT reinsurance transactions. Funds Withheld The following assets were held in support of our reserves associated with our coinsurance with funds withheld agreements and are reported in the line items shown on the consolidated statements of financial position. December 31, 2025 December 31, 2024 (in millions) Fixed maturities, available-for-sale $ 13,300.1 $ 13,519.6 Fixed maturities, trading 279.3 299.4 Equity securities 0.3 0.3 Mortgage loans 2,002.9 2,212.4 Other investments 1,708.7 1,142.8 Cash and cash equivalents 547.8 1,080.1 Accrued interest income 159.0 166.2 Net other liabilities ( 89.2 ) ( 99.4 ) Net assets $ 17,908.9 $ 18,321.4 Certain assets are reported at amortized cost while the fair value of those assets is reflected in the funds withheld payable. As of December 31, 2025 and December 31, 2024, we had a $ 17,783.4 million and $ 18,103.7 million funds withheld payable, which was net of a $ 2,633.4 million and $ 3,014.5 million embedded derivative asset, respectively. The change in fair value of the embedded derivative was a gain (loss) of $( 381.1 ) million, $ 447.4 million and $( 1,085.7 ) million for the years ended December 31, 2025, 2024 and 2023, respectively. While the economic benefits of the funds withheld assets flow to the reinsurer, we retain legal ownership of the assets within the funds withheld account. Guidelines are in place to ensure the investment risk is appropriately managed. Net investment income and net realized capital gains (losses) related to the assets on the consolidated statements of operations is reported net of the amounts that flow to the reinsurer. The realized gains and losses that do not flow to the reinsurer are reported in net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations. 166 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 12. Reinsurance – (continued) Following are the components of net investment income on the funds withheld assets that were passed to the reinsurer. For the year ended December 31, 2025 2024 2023 (in millions) Fixed maturities, available-for-sale $ 753.8 $ 825.9 $ 856.9 Fixed maturities, trading 20.3 21.5 11.9 Equity securities — — 0.2 Mortgage loans 90.7 114.7 119.0 Cash and cash equivalents 33.4 52.8 57.9 Other 166.1 88.2 64.0 Total 1,064.3 1,103.1 1,109.9 Investment expenses ( 25.4 ) ( 35.8 ) ( 23.7 ) Net investment income $ 1,038.9 $ 1,067.3 $ 1,086.2 Following are the components of net realized capital gains (losses) on the funds withheld assets that were passed to the reinsurer. For the year ended December 31, 2025 2024 2023 (in millions) Fixed maturities, available-for-sale $ ( 53.8 ) $ ( 60.5 ) $ ( 229.7 ) Fixed maturities, trading ( 10.4 ) — ( 0.1 ) Equity securities — — ( 1.2 ) Mortgage loans ( 1.4 ) ( 1.8 ) ( 34.1 ) Derivatives ( 1.3 ) 0.2 7.2 Other ( 4.0 ) — — Net realized capital losses $ ( 70.9 ) $ ( 62.1 ) $ ( 257.9 ) 167 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 13. Debt Short-Term Debt The components of short-term debt were as follows: December 31, 2025 Financing Short-term debt Obligor/Applicant structure Maturity Capacity outstanding (in millions) Principal Life Credit facility October 2027 $ 800.0 $ — Principal Compañía de Seguros de Vida Chile S.A. Unsecured lines of credit 85.6 24.8 Principal International de Chile S.A. Unsecured lines of credit 24.1 2.9 Total $ 909.7 $ 27.7 December 31, 2024 Financing Short-term debt Obligor/Applicant structure Maturity Capacity outstanding (in millions) Principal Life Credit facility October 2027 $ 800.0 $ — Principal Compañía de Seguros de Vida Chile S.A. Unsecured lines of credit 77.0 31.1 Principal International de Chile S.A. Unsecured lines of credit 21.8 2.6 Principal Credit Real Estate Income Trust Secured subscription facility 126.0 119.0 Total $ 1,024.8 $ 152.7 Our revolving credit facility is committed and available for general corporate purposes. This credit facility also provides 100 % back-stop support for our commercial paper program, of which we had no outstanding balances as of December 31, 2025 and 2024. The weighted-average interest rate on short-term borrowings as of December 31, 2025 and 2024, was 6.3 % and 7.6 %, respectively. The unsecured lines of credit can be used for repurchase agreements or other borrowings. Each line has a maturity of less than one year. The secured subscription facility provided for revolving loans, up to a maximum aggregate availability of $ 150.0 million, which were secured by outstanding capital commitments of Principal Life and an unaffiliated insurance company. Borrowings were permitted for any purpose under the borrowers’ constituent documents and were required to be repaid within twelve months of issuance. The weighted-average interest rate on short-term borrowings as of December 31, 2024, was 6.84 %. 168 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 13. Debt – (continued) Long-Term Debt The components of long-term debt were as follows: December 31, 2025 Principal Net unamortized discount, premium and debt issuance costs Carrying amount (in millions) 3.1 % notes payable, due 2026 $ 350.0 $ ( 0.4 ) $ 349.6 4.111 % notes payable, due 2028 400.0 ( 9.8 ) 390.2 3.7 % notes payable, due 2029 500.0 ( 2.5 ) 497.5 2.125 % notes payable, due 2030 600.0 ( 2.2 ) 597.8 5.375 % notes payable, due 2033 400.0 ( 3.1 ) 396.9 6.05 % notes payable, due 2036 505.6 ( 1.9 ) 503.7 4.625 % notes payable, due 2042 300.0 ( 2.6 ) 297.4 4.35 % notes payable, due 2043 300.0 ( 2.6 ) 297.4 4.3 % notes payable, due 2046 300.0 ( 2.8 ) 297.2 5.5 % notes payable, due 2053 300.0 ( 4.2 ) 295.8 Non-recourse mortgages and notes payable 2.9 ( 0.1 ) 2.8 Total long-term debt $ 3,958.5 $ ( 32.2 ) $ 3,926.3 December 31, 2024 Principal Net unamortized discount, premium and debt issuance costs Carrying amount (in millions) 3.4 % notes payable, due 2025 $ 400.0 $ ( 0.2 ) $ 399.8 3.1 % notes payable, due 2026 350.0 ( 0.7 ) 349.3 3.7 % notes payable, due 2029 500.0 ( 3.1 ) 496.9 2.125 % notes payable, due 2030 600.0 ( 2.8 ) 597.2 5.375 % notes payable, due 2033 400.0 ( 3.5 ) 396.5 6.05 % notes payable, due 2036 505.6 ( 2.0 ) 503.6 4.625 % notes payable, due 2042 300.0 ( 2.7 ) 297.3 4.35 % notes payable, due 2043 300.0 ( 2.8 ) 297.2 4.3 % notes payable, due 2046 300.0 ( 2.9 ) 297.1 5.5 % notes payable, due 2053 300.0 ( 4.3 ) 295.7 Secured credit facilities 21.8 — 21.8 Non-recourse mortgages and notes payable 3.0 ( 0.1 ) 2.9 Total long-term debt $ 3,980.4 $ ( 25.1 ) $ 3,955.3 Net discount, premium and issuance costs associated with issuing these notes are amortized to expense over the respective terms using the interest method. On March 8, 2023, we issued $ 700.0 million of senior notes. We issued a $ 400.0 million series of notes that bear interest at 5.375 % and will mature in 2033 and a $ 300.0 million series of notes that bear interest at 5.5 % and will mature in 2053. Interest on the notes is payable semi-annually on March 15 and September 15 each year, beginning on September 15, 2023. The proceeds from these notes were used to redeem our floating rate notes payable due in 2055 and to repay at maturity our 3.125 % notes payable due in 2023. We incurred a one-time cost to extinguish this debt before the scheduled maturity date, which was recorded in operating expenses on the consolidated statements of operations. 169 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 13. Debt – (continued) On June 12, 2020, we issued $ 500.0 million of senior notes at a discount. On August 3, 2020, we issued an additional $ 100.0 million of senior notes at a premium. These notes bear interest at 2.125 % and will mature in 2030. Interest on the notes is payable semi-annually on June 15 and December 15 each year, beginning on December 15, 2020. The proceeds from these notes were used for general corporate purposes. On May 7, 2019, we issued $ 500.0 million of senior notes. The notes bear interest at 3.7 % and will mature in 2029. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on November 15, 2019. The proceeds from these notes, along with available cash, were used to fund the acquisition of an institutional retirement and trust business. On November 10, 2016, we issued $ 650.0 million of senior notes. We issued a $ 350.0 million series of notes that bear interest at 3.1 % and will mature in 2026 and a $ 300.0 million series of notes that bear interest at 4.3 % and will mature in 2046. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on May 15, 2017. The proceeds from these notes were used to redeem our notes payable due in 2017 and 2019. We incurred a one-time cost to extinguish this debt before the scheduled maturity date. On May 7, 2015, we issued $ 400.0 million of senior notes. The notes bore interest at 3.4 % and matured on May 15, 2025. Interest on the notes was payable semi-annually on May 15 and November 15 each year, beginning on November 15, 2015. The proceeds from the senior notes were used for general corporate purposes. On November 16, 2012, we issued a $ 300.0 million series of notes that bear interest at 4.35 % and will mature in 2043. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on May 15, 2013. The proceeds were used to fund our acquisition of Cuprum. On September 5, 2012, we issued a $ 300.0 million series of senior notes that bear interest at 4.625 % and will mature in 2042. Interest on the notes is payable semi-annually on March 15 and September 15 each year, beginning on March 15, 2013. The proceeds were used for the repayment of the $ 400.0 million aggregate principal amount of notes due in 2014 and to partially fund our acquisition of Cuprum. On October 16 and December 5, 2006, we issued $ 500.0 million and $ 100.0 million, respectively, of senior notes. The notes bear interest at a rate of 6.05 % per year. Interest on the notes is payable semi-annually on April 15 and October 15 each year and began on April 15, 2007. The notes will mature on October 15, 2036. A portion of the proceeds were used to fund the 2006 acquisition of WM Advisors, Inc., with the remaining proceeds being used for general corporate purposes. A tender offer in the fourth quarter of 2016 resulted in redemption of $ 94.4 million of the senior notes. We incurred a one-time cost to extinguish this debt before the scheduled maturity date. Our secured credit facilities are primarily financings for real estate loans. We did not have an outstanding principal balance as of December 31, 2025. As of December 31, 2024, the outstanding principal balance was $ 21.8 million for one loan with an interest rate of 6.47 %. Outstanding debt is secured by the underlying real estate loans, which were reported as mortgage loans on our consolidated statements of financial position with a carrying value of $ 29.0 million as of December 31, 2024. The non-recourse mortgages and notes payable are primarily financings for a real estate development. As of both December 31, 2025 and 2024, the notes had an interest rate of 4.0 %. Outstanding debt is secured by the underlying real estate properties, which were reported as real estate on our consolidated statements of financial position with a carrying value of $ 9.6 million and $ 14.3 million as of December 31, 2025 and 2024, respectively. 170 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 13. Debt – (continued) As of December 31, 2025, future annual maturities of long-term debt were as follows (in millions): Year ending December 31: 2026 $ 349.7 2027 0.1 2028 393.0 2029 497.6 2030 597.7 Thereafter 2,088.2 Total future maturities of long-term debt $ 3,926.3 Contingent Funding Agreements for Senior Debt Issuance On March 8, 2018, we entered into two contingent funding agreements: (1) a 10-year contingent funding agreement with a Delaware trust (“2028 Trust”) formed by us in connection with the sale by the trust of $ 400.0 million pre-capitalized trust securities redeemable February 15, 2028 (“2028 P-Caps”) in a Rule 144A private placement and (2) a 30-year contingent funding agreement with a Delaware trust (“2048 Trust”) formed by us in connection with the sale by the trust of $ 350.0 million pre-capitalized trust securities redeemable February 15, 2048 (“2048 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2028 P-Caps and 2048 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us a put option that gives us the right to sell at any time: (1) to the 2028 Trust up to $ 400.0 million of its 4.111 % Senior Notes due 2028 (“ 4.111 % Senior Notes”) and (2) to the 2048 Trust up to $ 350.0 million of its 4.682 % Senior Notes due 2048 (“ 4.682 % Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts (“Eligible Assets”). The 4.682 % Senior Notes will not be issued unless and until a put option is exercised, while the put option for the 4.111 % Senior Notes was exercised on March 19, 2025. We agreed to pay a semi-annual put premium of 1.275 % and 1.580 % per annum on the unexercised portion of the put option to the 2028 Trust and 2048 Trust, respectively, and to reimburse the trusts for expenses. The put option premiums are recorded in operating expenses in the consolidated statements of operations. The 4.111 % Senior Notes and 4.682 % Senior Notes will be fully, irrevocably and unconditionally guaranteed by Principal Financial Services, Inc. (“PFS”). In addition, our obligations under the put option agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS. The contingent funding agreements with the trusts provide us with a source of liquid assets, which could be used to meet future financial obligations or to provide additional capital. On March 19, 2025, we completed the exercise of our rights in full under the put option with the 2028 Trust in exchange for the Eligible Assets (the “2028 P-Caps Exercise”). In connection with the exercise of our put options right, we (1) issued $ 400.0 million of 4.111 % Senior Notes due 2028 (“2028 Notes”) to the 2028 Trust (2) waived our rights to repurchase the 2028 Notes and (3) directed The Bank of New York Mellon to dissolve the 2028 Trust in accordance with its declaration of trust and deliver the 2028 Notes to the beneficial holders of the 2028 P-Caps pro rata in respect of each 2028 P-Cap. We used the proceeds from the 2028 P-Caps Exercise to repay at maturity all $ 400.0 million aggregate principal amount outstanding of our 3.400 % senior notes that matured on May 15, 2025 (the “2025 Notes”), in accordance with the terms of the indenture governing the 2025 Notes. In addition, on March 6, 2025, we entered into a 30-year contingent funding agreement with a Delaware trust (“2055 Trust”) formed by us in connection with the sale by the trust of $ 500.0 million pre-capitalized trust securities redeemable February 15, 2055 (“2055 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2055 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us the right to sell at any time to the 2055 Trust up to $ 500.0 million of its 5.807 % Senior Notes due 2055 (“ 5.807 % Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts. The 5.807 % Senior Notes will not be issued unless and until we exercise our issuance right. We agreed to pay a semi-annual facility fee of 1.289 % per annum on the unexercised portion of the contingent fund mechanism to the 2055 Trust (the “facility agreement”), respectively, and to reimburse the trusts for expenses. The facility fee paid under the facility agreement is recorded in operating expenses in the consolidated statements of operations. The 5.807 % Senior Notes will be fully, irrevocably and unconditionally guaranteed by PFS. In addition, our obligations under the facility agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS. 171 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 14. Income Taxes Income Taxes (Benefits) Our income taxes (benefits) were as follows: For the year ended December 31, 2025 2024 2023 (in millions) Current income taxes: U.S. federal $ 171.8 $ 217.7 $ 67.6 State 30.5 31.4 20.1 Foreign 59.7 35.3 38.2 Total current income taxes 262.0 284.4 125.9 Deferred income taxes (benefits): U.S. federal ( 112.3 ) ( 12.1 ) ( 63.2 ) State 6.2 12.7 0.1 Foreign 4.6 6.7 5.9 Total deferred income taxes (benefits) ( 101.5 ) 7.3 ( 57.2 ) Total income taxes: U.S. federal 59.5 205.6 4.4 State 36.7 44.1 20.2 Foreign 64.3 42.0 44.1 Income taxes $ 160.5 $ 291.7 $ 68.7 Our income before income taxes was as follows: For the year ended December 31, 2025 2024 2023 (in millions) Domestic $ 1,041.1 $ 1,662.1 $ 412.8 Foreign 374.9 227.5 326.0 Total income before income taxes $ 1,416.0 $ 1,889.6 $ 738.8 172 Table of Contents Principal Financial Group, Inc. Notes to Consolidated Financial Statements – (continued) December 31, 2025 14. Income Taxes – (continued) Effective Income Tax Rate Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. federal statutory tax rate and the effective income tax rate was as follows: For the year ended December 31, 2025 Amount Percent (in millions) U.S. federal statutory tax rate $ 297.4 21 % State and local income taxes, net of federal income tax effect (1) 29.0 2 Foreign tax effects Ireland ( 15.3 ) ( 1 ) Other foreign jurisdictions 22.5 2 Effects of cross-border tax laws 5.2 — Tax credits: Foreign tax credits ( 31.7 ) ( 2 ) Other ( 13.0 ) ( 1 ) Nontaxable or nondeductible items: Dividends received deduction ( 79.5 ) ( 6 ) Impact of equity method presentation ( 29.0 ) ( 2 ) Interest exclusion from taxable income ( 25.0 ) ( 2 ) Other 5.6 — Changes in unrecognized tax benefits ( 5.7 ) — Effective income tax rate $ 160.5 11 % (1) State taxes in Iowa , California and Illinois made up the majority ( greater than 50 percent ) of the tax effect in this category. For the year ended December 31, 2024 2023