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10-Q – 2025-10-29 – pfg-20250930x10q.htm
Industrial — Transportation 2,328.5 48.8 117.9 — 2,259.4 Utility — Electric 3,242.9 51.3 255.0 — 3,039.2 Utility — Natural Gas 510.4 8.7 46.8 — 472.3 Utility — Other 404.7 11.0 30.7 — 385.0 Government guaranteed 167.6 10.8 12.3 — 166.1 Total corporate securities 28,643.7 581.1 1,737.3 14.9 27,472.6 Residential mortgage-backed pass-through securities 3,795.9 41.2 130.1 — 3,707.0 Commercial mortgage-backed securities 4,645.7 13.6 269.2 1.1 4,389.0 Residential collateralized mortgage obligations 4,889.8 35.4 321.5 0.3 4,603.4 Asset-backed securities — Home equity (1) 52.3 2.8 2.9 — 52.2 Asset-backed securities — All other 2,914.6 28.8 18.2 — 2,925.2 Collateralized debt obligations — Credit 16.5 — 4.4 — 12.1 Collateralized debt obligations — Loans 5,022.6 12.4 0.8 — 5,034.2 Total mortgage-backed and other asset-backed securities 21,337.4 134.2 747.1 1.4 20,723.1 U.S. government and agencies 1,253.7 9.2 58.9 — 1,204.0 States and political subdivisions 6,212.0 39.3 711.0 — 5,540.3 Non-U.S. governments 427.8 18.1 38.4 — 407.5 Total fixed maturities, available-for-sale excluding portfolio layer method basis adjustment 57,874.6 781.9 3,292.7 16.3 55,347.5 Unallocated portfolio layer method basis adjustment (18.9) 18.9 — — — Total fixed maturities, available-for-sale $ 57,855.7 $ 800.8 $ 3,292.7 $ 16.3 $ 55,347.5 (1) This exposure is all related to sub-prime mortgage loans. 153 Table of Contents December 31, 2024 Gross Gross Allowance Amortized unrealized unrealized for credit Carrying cost gains losses loss amount (in millions) Finance — Banking $ 1,814.7 $ 7.2 $ 133.8 $ — $ 1,688.1 Finance — Brokerage 875.2 8.7 85.8 — 798.1 Finance — Finance Companies 325.2 3.0 21.5 — 306.7 Finance — Financial Other 1,542.7 13.2 108.6 — 1,447.3 Finance — Insurance 1,967.1 22.9 172.7 — 1,817.3 Finance — REITs 1,809.7 10.7 158.4 — 1,662.0 Industrial — Basic Industry 1,349.6 16.9 88.7 — 1,277.8 Industrial — Capital Goods 1,430.9 18.4 113.9 — 1,335.4 Industrial — Communications 2,304.4 49.2 169.9 — 2,183.7 Industrial — Consumer Cyclical 934.7 4.6 69.3 — 870.0 Industrial — Consumer Non-Cyclical 3,081.7 17.9 228.7 11.9 2,859.0 Industrial — Energy 2,077.1 51.7 129.1 — 1,999.7 Industrial — Other 914.5 22.4 28.5 — 908.4 Industrial — Technology 1,393.0 11.8 135.9 — 1,268.9 Industrial — Transportation 2,226.8 32.7 143.0 — 2,116.5 Utility — Electric 3,173.7 20.5 325.9 — 2,868.3 Utility — Natural Gas 449.3 3.0 56.9 — 395.4 Utility — Other 247.8 2.2 37.0 4.2 208.8 Government guaranteed 167.8 7.9 17.0 — 158.7 Total corporate securities 28,085.9 324.9 2,224.6 16.1 26,170.1 Residential mortgage-backed pass-through securities 3,870.1 8.7 214.2 — 3,664.6 Commercial mortgage-backed securities 4,770.3 2.8 370.5 — 4,402.6 Residential collateralized mortgage obligations 4,432.7 16.5 430.0 0.2 4,019.0 Asset-backed securities — Home equity (1) 56.7 2.4 3.8 — 55.3 Asset-backed securities — All other 2,696.3 18.9 37.4 — 2,677.8 Collateralized debt obligations — Credit 16.5 — 4.8 — 11.7 Collateralized debt obligations — Loans 4,958.7 23.3 0.6 — 4,981.4 Total mortgage-backed and other asset-backed securities 20,801.3 72.6 1,061.3 0.2 19,812.4 U.S. government and agencies 1,197.6 0.2 95.2 — 1,102.6 States and political subdivisions 5,634.2 10.3 809.2 — 4,835.3 Non-U.S. governments 435.4 12.6 55.9 — 392.1 Total fixed maturities, available-for-sale excluding portfolio layer method basis adjustment 56,154.4 420.6 4,246.2 16.3 52,312.5 Unallocated portfolio layer method basis adjustment (55.7) 55.7 — — — Total fixed maturities, available-for-sale $ 56,098.7 $ 476.3 $ 4,246.2 $ 16.3 $ 52,312.5 (1) This exposure is all related to sub-prime mortgage loans. Of the $3,292.7 million in gross unrealized losses as of September 30, 2025, $5.9 million in losses were attributed to securities scheduled to mature in one year or less, $164.1 million attributed to securities scheduled to mature between one to five years, $333.6 million attributed to securities scheduled to mature between five to ten years, $2,042.0 million attributed to securities scheduled to mature after ten years and $747.1 million related to mortgage-backed and other ABS that are not classified by maturity year. As of September 30, 2025, we were in a $2,491.9 million net unrealized loss position as compared to a $3,769.9 million net unrealized loss position as of December 31, 2024. The $1,278.0 million decrease in net unrealized losses for the nine months ended September 30, 2025, can be attributed to a decrease in interest rates, which was partially offset by a widening of credit spreads. 154 Table of Contents Fixed Maturities Available-For-Sale Unrealized Losses. We believe our long-term fixed maturities portfolio is well diversified among industry types and between publicly traded and privately placed securities. Each year, we direct the majority of our net cash inflows into investment grade fixed maturities. Our current policy is to limit the percentage of fixed maturities invested in below investment grade assets to 15%. We invest in privately placed fixed maturities to enhance the overall value of the portfolio, increase diversification and obtain higher yields than are possible with comparable quality public market securities. Generally, private placements provide broader access to management information, strengthened negotiated protective covenants, call protection features and, where applicable, a higher level of collateral. They are, however, generally not freely tradable because of restrictions imposed by U.S. federal and state securities laws and illiquid trading markets. The following table presents our fixed maturities available-for-sale by investment grade and below investment grade as of the periods indicated. September 30, 2025 December 31, 2024 Gross Gross Allowance Gross Gross Allowance Amortized unrealized unrealized for credit Carrying Amortized unrealized unrealized for credit Carrying cost gains losses loss amount cost gains losses loss amount (in millions) Investment grade: Public $ 41,147.3 $ 415.3 $ 2,549.5 $ 1.2 $ 39,011.9 $ 40,829.3 $ 223.4 $ 3,319.7 $ 0.1 $ 37,732.9 Private 13,964.9 337.8 627.7 — 13,675.0 12,665.7 177.5 804.3 — 12,038.9 Below investment grade: Public 848.0 6.2 88.7 0.2 765.3 1,047.1 6.5 102.4 0.1 951.1 Private 1,914.4 22.6 26.8 14.9 1,895.3 1,612.3 13.2 19.8 16.1 1,589.6 Total fixed maturities, available-for-sale (1) $ 57,874.6 $ 781.9 $ 3,292.7 $ 16.3 $ 55,347.5 $ 56,154.4 $ 420.6 $ 4,246.2 $ 16.3 $ 52,312.5 (1) Excludes unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. Included in the public category carrying amount as of September 30, 2025 and December 31, 2024, were $15,719.4 million and $15,165.7 million, respectively, of securities subject to certain holding periods and resale restrictions pursuant to Rule 144A of the Securities Act of 1933. The following tables present the fair value and the gross unrealized losses on our fixed maturities available-for-sale for which an allowance for credit loss has not been recorded by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2025 and December 31, 2024, respectively. September 30, 2025 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale (1): U.S. government and agencies $ 372.2 $ 5.6 $ 381.9 $ 53.2 $ 754.1 $ 58.8 Non-U.S. governments 10.5 0.2 208.2 38.2 218.7 38.4 States and political subdivisions 546.3 15.0 3,557.0 696.1 4,103.3 711.1 Corporate 1,298.6 44.7 13,276.1 1,692.6 14,574.7 1,737.3 Residential mortgage-backed pass-through securities 199.4 1.2 1,212.0 128.8 1,411.4 130.0 Commercial mortgage-backed securities 341.8 3.1 2,955.0 264.2 3,296.8 267.3 Collateralized debt obligations (2) 237.4 0.8 17.4 4.3 254.8 5.1 Other debt obligations 535.1 5.9 2,604.7 336.6 3,139.8 342.5 Total fixed maturities, available-for-sale $ 3,541.3 $ 76.5 $ 24,212.3 $ 3,214.0 $ 27,753.6 $ 3,290.5 (1) Fair value and gross unrealized losses are excluded for available-for-sale securities for which an allowance for credit loss has been recorded. Gross unrealized losses exclude unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. 155 Table of Contents December 31, 2024 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale (1): U.S. government and agencies $ 641.2 $ 13.7 $ 543.2 $ 82.2 $ 1,184.4 $ 95.9 Non-U.S. governments 32.9 1.3 207.0 54.5 239.9 55.8 States and political subdivisions 704.7 23.8 3,552.3 785.6 4,257.0 809.4 Corporate 3,289.0 65.7 14,243.8 2,157.9 17,532.8 2,223.6 Residential mortgage-backed pass-through securities 1,938.4 33.1 1,211.6 181.1 3,150.0 214.2 Commercial mortgage-backed securities 676.9 8.1 3,157.3 362.4 3,834.2 370.5 Collateralized debt obligations (2) 259.5 0.3 29.8 5.0 289.3 5.3 Other debt obligations 1,363.1 17.1 2,799.2 453.0 4,162.3 470.1 Total fixed maturities, available-for-sale $ 8,905.7 $ 163.1 $ 25,744.2 $ 4,081.7 $ 34,649.9 $ 4,244.8 (1) Fair value and gross unrealized losses are excluded for available-for-sale securities for which an allowance for credit loss has been recorded. Gross unrealized losses exclude unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. Mortgage Loans Mortgage loans consist of commercial mortgage loans on real estate and residential mortgage loans. For further details about residential mortgage loans, see Item 1. “Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, Note 4, Investments” under the caption, “Financing Receivables.” Commercial Mortgage Loans. We generally report commercial mortgage loans on real estate at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. Commercial mortgage loans play an important role in our investment strategy by: ● providing strong risk-adjusted relative value in comparison to other investment alternatives; ● enhancing total returns and ● providing strategic portfolio diversification. As a result, we have focused on constructing a high quality portfolio of mortgages. Our portfolio is generally comprised of mortgages originated with conservative loan-to-value ratios, high debt service coverages and general purpose property types with a strong credit tenancy. Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on fully or near fully leased properties. The mortgage portfolio is comprised primarily of office properties, apartments, well-anchored retail properties and general-purpose industrial properties. Our commercial mortgage loan portfolio is diversified by geography and specific collateral property type. Commercial mortgage lending in the state of California accounted for 22% and 24% of our commercial mortgage loan portfolio before valuation allowance as of September 30, 2025 and December 31, 2024, respectively. We are, therefore, exposed to potential losses resulting from the risk of catastrophes, including but not limited to earthquakes, fires, drought, extreme heat, flooding, and tsunamis, that may affect the region. For the years ended September 30, 2025 and December 31, 2024, we did not experience any material losses due to the aforementioned catastrophe risks. 156 Table of Contents The typical borrower in our commercial mortgage loan portfolio is a single purpose entity or single asset entity. As of September 30, 2025 and December 31, 2024, the total number of commercial mortgage loans outstanding were 609 and 620, of which 33% and 35% were for loans with principal balances less than $10.0 million as of September 30, 2025 and December 31, 2024, respectively. The average loan size of our commercial mortgage portfolio was $23.1 million as of both September 30, 2025 and December 31, 2024. Commercial Mortgage Loan Credit Monitoring. For further details on monitoring and management of our commercial mortgage loan portfolio, see Item 1. “Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, Note 4, Investments” under the caption, “Financing Receivables Credit Monitoring.” We categorize loans that are 60 days or more delinquent, loans in process of foreclosure and loans with borrowers or credit tenants in bankruptcy that are delinquent as “problem” loans. We categorize loans that are delinquent less than 60 days where the default is expected to be cured and loans with borrowers or credit tenants in bankruptcy that are current as “potential problem” loans. The decision whether to classify a loan delinquent less than 60 days as a potential problem involves significant subjective judgments by management as to the likely future economic conditions and developments with respect to the borrower. We categorize loans for which the original note rate has been reduced below market and loans for which the principal has been reduced as “restructured” loans. We also consider loans that are refinanced more than one year beyond the original maturity or call date at below market rates as restructured. We had seven delinquent problem commercial mortgage loans with a carrying amount of $260.7 million for which we had a valuation allowance of $108.5 million as of September 30, 2025. We also had no potential problem commercial mortgage loans and one restructured problem commercial mortgage loan with a carrying amount of $13.2 million for which we had a valuation allowance of $11.5 million as of September 30, 2025. We had three delinquent problem commercial mortgage loans with a carrying amount of $20.6 million for which we had a valuation allowance of $18.9 million as of December 31, 2024. We also had two potential problem commercial mortgage loans with a carrying amount of $140.5 million for which we had a valuation allowance of $33.0 million and one restructured problem commercial mortgage loan with a carrying amount of $34.1 million for which we had a valuation allowance of $34.1 million as of December 31, 2024. September 30, 2025 December 31, 2024 ($ in millions) Total commercial mortgage loans $ 13,881.5 $ 14,196.0 Problem commercial mortgage loans $ 152.2 $ 1.7 Potential problem commercial mortgage loans — 107.5 Restructured problem commercial mortgage loans 1.7 — Total problem, potential problem and restructured commercial mortgage loans $ 153.9 $ 109.2 Total problem, potential problem and restructured commercial mortgage loans as a percent of total commercial mortgage loans 1.11 % 0.77 % Commercial Mortgage Loan Valuation Allowance. We establish the commercial mortgage loan valuation allowance at levels considered adequate to absorb estimated expected credit losses within the portfolio. For further details on the commercial mortgage loan valuation allowance, see Item 1. “Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, Note 4, Investments” under the caption, “Financing Receivables Valuation Allowance.” Real Estate Real estate consists primarily of commercial equity real estate. As of September 30, 2025 and December 31, 2024, the carrying amount of our equity real estate investment was $2,385.9 million and $2,463.7 million, respectively. Our commercial equity real estate is held in the form of wholly owned real estate, real estate acquired upon foreclosure of commercial mortgage loans and majority owned interests in real estate joint ventures. Equity real estate is categorized as either “real estate held for investment” or “real estate held for sale.” The carrying value of real estate held for investment is generally adjusted for impairments whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Such impairment adjustments are recorded as net realized capital losses in our consolidated results of operations. No such impairment adjustments were recorded for the nine months ended September 30, 2025 or for the year ended December 31, 2024. 157 Table of Contents Once we identify a real estate property to be sold and it is probable that it will be sold, we classify the property as held for sale. We establish a valuation allowance subject to periodic revisions, if necessary, to adjust the carrying value of the property to reflect the lower of its current carrying value or the fair value, less associated selling costs. The valuation allowance did not change for the nine months ended September 30, 2025 or for the year ended December 31, 2024. We use research, both internal and external, to recommend appropriate product and geographic allocations and changes to the equity real estate portfolio. We monitor product, geographic and industry diversification separately and together to determine the most appropriate mix. Equity real estate is distributed across geographic regions of the country. As of September 30, 2025, our largest equity real estate portfolio concentration was in the Pacific (45%) region of the United States. By property type, our largest concentrations were in Office (34%) and Industrial (29%) as of September 30, 2025. Other Investments Our other investments totaled $5,652.5 million as of September 30, 2025, compared to $4,844.7 million as of December 31, 2024. Other investments include interests in unconsolidated entities, which include real estate properties owned jointly with venture partners and operated by the partners; sponsored investment funds; the cash surrender value of company owned and trust owned life insurance; derivative assets and other investments. International Investment Operations Of our invested assets, $6,472.5 million were held by our international operations as of September 30, 2025. Due to the regulatory constraints in each location, each company maintains its own investment policies. As shown in the following table, the major category of international invested assets is fixed maturities. The following table excludes invested assets of the separate accounts. September 30, 2025 December 31, 2024 Carrying Percent Carrying Percent amount of total amount of total ($ in millions) Fixed maturities $ 2,612.8 40 % $ 2,495.0 41 % Equity securities 837.1 13 747.1 12 Mortgage loans 893.6 14 867.2 14 Real estate 1.2 — 0.8 — Policy loans 15.1 — 15.0 — Other investments: Direct financing leases 537.1 8 560.0 9 Investment in unconsolidated operating entities 1,152.5 18 1,048.6 17 Derivative assets and other investments 423.1 7 394.2 7 Total invested assets 6,472.5 100 % 6,127.9 100 % Cash and cash equivalents 297.3 248.9 Total invested assets and cash $ 6,769.8 $ 6,376.8 Regulations in certain locations require investment in the funds we manage. These required regulatory investments are classified as equity securities within our consolidated statements of financial position, with all mark-to-market changes reflected in net investment income. Our investment is primarily dictated by client activity and all investment performance is retained by us. 158 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk Market Risk Exposures and Risk Management Market risk is the risk we will incur losses due to adverse fluctuations in market rates and prices. Our primary market risk exposures are to interest rates, equity markets and foreign currency exchange rates. The active management of market risk is an integral part of our operations. We manage our overall market risk exposure within established risk tolerance ranges using several approaches, including: ● rebalancing our existing asset or liability portfolios; ● controlling the risk structure of newly acquired assets and liabilities and ● using derivative instruments to modify the market risk characteristics of existing assets or liabilities or assets expected to be purchased. Interest Rate Risk Interest rate risk is the risk of economic losses due to adverse changes in interest rates. Interest rate risk arises primarily from our holdings in interest sensitive assets and liabilities. Changes in interest rates impact numerous aspects of our operations, including but not limited to: ● yield on our invested assets; ● rate of interest we credit to contractholder account balances; ● timing of cash flows on assets and liabilities containing embedded prepayment options; ● cost of hedging our GMWB rider; ● discount rate used in valuing our liability for future policy benefits for long-duration insurance and annuity contracts; ● discount rate used in valuing our pension and OPEB obligations; ● statutory reserve and capital requirements; ● asset-based fees earned on the fixed income assets we manage; ● interest expense on our long-term borrowings; ● fair value of intangible assets in our reporting units and ● fair value of financial assets and liabilities held at fair value on our consolidated statements of financial position. Lower interest rates generally result in lower profitability in the long-term. Conversely, higher interest rates generally result in higher profitability in the long-term. However, an increase in market interest rates may cause a decline in the value of financial assets held at fair value on our consolidated statements of financial position. Impact of Changes in Long-Term Interest Rate Assumptions We use long-term interest rate assumptions to calculate MRBs, certain reserves and benefit plan obligations in accordance with U.S. GAAP. In setting these assumptions, we consider a variety of factors, including historical experience, emerging trends and future expectations. We evaluate our assumptions on at least an annual basis. Due to the long-term nature of our assumptions, we generally do not revise our assumptions in response to short-term fluctuations in market interest rates. However, we will consider revising our assumptions if a significant change occurs in the factors noted above. A reduction in our long-term interest rate assumptions may result in increases in MRB liabilities and certain reserves. 159 Table of Contents Impact of Changes in Interest Rates Changes in interest rates or a sustained low interest rate environment may result in the following impacts, which would impact our financial position and results of operations: Impact of Falling Interest Rates or Sustained Low Interest Rates Impact of Rising Interest Rates Adverse Impacts: Positive Impacts: A reduction in investment income, which may be partially offset by a reduction in the interest we credit on contractholder account balances; however, our ability to lower crediting rates may be constrained by guaranteed minimum interest rates and competitive pressures An increase in investment income, which may be partially or fully offset by an increase in the interest we credit on contractholder account balances An increase in the cost of hedging our GMWB rider A decrease in the cost of hedging our GMWB rider An increase in MRB liabilities and certain reserves A decrease in MRB liabilities and certain reserves A reduction in the discount rate used to measure reserves for long-duration insurance and annuity contracts, leading to an increase in our reserves An increase in the discount rate used to measure reserves for long-duration insurance and annuity contracts, leading to a decrease in our reserves A reduction in the discount rate used in valuing our pension and OPEB obligations, leading to an increase in our Projected Benefit Obligation, Net Periodic Pension Cost, Accumulated Postretirement Benefit Obligation and Net Periodic Benefit Cost An increase in the discount rate used in valuing our pension and OPEB obligations, leading to a decrease in our Projected Benefit Obligation, Net Periodic Pension Cost, Accumulated Postretirement Benefit Obligation and Net Periodic Benefit Cost An increase in statutory capital we are required to hold as well as the amount of assets we must maintain to support statutory reserves A decrease in statutory capital we are required to hold as well as the amount of assets we must maintain to support statutory reserves An increase in prepayments or redemptions on mortgages and bonds we own, which would force us to reinvest the proceeds at lower interest rates A decrease in prepayments or redemptions on mortgages and bonds we own, which would reduce our opportunity to reinvest the proceeds at higher interest rates Positive Impacts: Adverse Impacts: An increase in the value of the fixed income assets we manage, resulting in an increase in our fee revenue in the short-term A decrease in the value of the fixed income assets we manage, resulting in a decrease in our fee revenue in the short-term A decrease in the interest expense on our long-term borrowings, to the extent the borrowings have adjustable rates or we are able to refinance our obligations at lower interest rates An increase in the interest expense on our long-term borrowings, to the extent the borrowings have adjustable rates or we refinance our obligations at higher interest rates An increase in the fair value of certain financial assets held at fair value on our consolidated statements of financial position A decrease in the fair value of certain financial assets held at fair value on our consolidated statements of financial position, as discussed below A reduction in the fair value of intangible assets in our reporting units, potentially leading to an impairment of goodwill or other intangible assets We estimate a hypothetical 100 basis point immediate, parallel decrease in U.S. interest rates would impact segment pre-tax operating earnings between (1)% and 1% over the next twelve months. This estimate reflects the impact of routine management actions in response to changes in interest rates, such as reducing the interest rates we credit on contractholder account balances, but does not reflect the impact of other actions management may consider, such as curtailing sales of certain products. The selection of a 100 basis point immediate, parallel decrease in U.S. interest rates should not be construed as a prediction by us of future market events, but rather as an illustration of the impact of such an event. Our exposure will change as a result of ongoing portfolio transactions in response to new business, management’s assessment of changing market conditions and changes in our mix of business. 160 Table of Contents If market rates increase rapidly, policy surrenders, withdrawals and requests for policy loans may increase as customers seek to achieve higher returns. Excess lapses may result in an acceleration of amortization for our DAC and other actuarial balances. We may be required to sell assets to raise the cash necessary to respond to such surrenders, withdrawals and loans, thereby realizing capital losses on the assets sold. Guaranteed Minimum Interest Rate Exposure . The following table provides detail on the differences between the interest rates being credited to contractholders as of September 30, 2025, and the respective GMIR. Amounts for contracts without significant fee revenues such as GICs, funding agreements, retail fixed income annuities and guaranteed pension contracts are excluded. Additionally, amounts for contracts that are reinsured are also excluded. Account values are broken down by GMIR level within the Retirement and Income Solutions and Benefits and Protection segments. Account values (1) 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) Guaranteed minimum interest rate Retirement and Income Solutions Up to 1.00% $ 16.5 $ — $ — $ — $ — $ 16.5 1.01% - 2.00% 3.9 2,868.6 — 749.9 — 3,622.4 2.01% - 3.00% 552.3 102.8 681.6 3,549.8 4,035.2 8,921.7 3.01% - 4.00% 7.8 — — — — 7.8 4.01% and above 12.9 — — — — 12.9 Subtotal 593.4 2,971.4 681.6 4,299.7 4,035.2 12,581.3 Benefits and Protection Up to 1.00% — — 0.3 15.3 29.1 44.7 1.01% - 2.00% — — — 3.9 453.3 457.2 2.01% - 3.00% 3.0 10.6 108.5 389.8 5.2 517.1 3.01% - 4.00% 1,519.3 54.3 20.7 111.8 2.8 1,708.9 4.01% and above 17.6 5.5 20.0 7.8 — 50.9 Subtotal 1,539.9 70.4 149.5 528.6 490.4 2,778.8 Total $ 2,133.3 $ 3,041.8 $ 831.1 $ 4,828.3 $ 4,525.6 $ 15,360.1 Percentage of total 13.9 % 19.8 % 5.4 % 31.4 % 29.5 % 100.0 % (1) Includes only the account values, net of the account values with associated policy loans, for products with GMIRs and discretionary crediting rates, excluding amounts for contracts that are reinsured. Impact of Rising Interest Rates on the Fair Value of Financial Assets. An increase in market interest rates may cause a decline in the value of financial assets held at fair value on our consolidated statements of financial position. Although changes in the fair value of our financial assets due to changes in interest rates may impact the amount of equity reported in our consolidated statements of financial position, these changes will not cause an economic gain or loss unless we sell investments, terminate derivative positions, record an allowance for credit loss, or determine a derivative instrument is no longer an effective hedge. We estimate a hypothetical 100 basis point immediate, parallel increase in interest rates would reduce the net reported fair value of our financial assets and derivatives by $2,869.5 million as of September 30, 2025, compared to $2,670.8 million as of December 31, 2024. This estimate only reflects the change in fair value for financial assets and derivatives reported at fair value on our consolidated statements of financial position. Assets and liabilities not reported at fair value on our consolidated statements of financial position – including mortgage loans, liabilities relating to insurance contracts, investment contracts, debt and bank deposits – are excluded from this sensitivity analysis. We believe the excluded liability items would economically serve as a partial offset to the net interest rate risk of the financial instruments included in the sensitivity analysis. Separate account assets and liabilities are also excluded from this estimate, as any interest rate risk is borne by the holder of the separate account. Assets backing reserves as part of a coinsurance with funds withheld agreement are excluded from this estimate, as any interest rate risk is passed to the reinsurer. For more information on fair value measurements, see Item 8. “Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 18, Fair Value Measurements” in our Annual Report on Form 10-K for the year ended December 31, 2024. 161 Table of Contents Our selection of a 100 basis point immediate, parallel increase in interest rates is a hypothetical rate scenario we use to demonstrate potential risk. While a 100 basis point immediate, parallel increase does not represent our view of future market changes, it is a near term reasonably possible hypothetical change that illustrates the potential impact of such events. While this sensitivity analysis provides a representation of interest rate sensitivity, it is based on our portfolio exposures at a point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio transactions in response to new business, management’s assessment of changing market conditions and available investment opportunities. Our net estimated potential loss in fair value as of September 30, 2025, increased $198.7 million from December 31, 2024, primarily driven by growth in the portfolio. Interest Rate Risk Management We manage interest rate risk through the use of an integrated risk management framework. This helps us identify, assess, monitor, report and manage our risks within established limits and risk tolerances. Our internal risk committees monitor and discuss our risk profile and identify necessary actions to mitigate impacts from interest rate risk. The product designs within our business units result in a variety of different interest rate risk profiles. Therefore, our business units use a variety of different approaches for managing their asset and liability interest rate risks. ● Retirement Business Stable Cash Flows – For stable and predictable cash flow liabilities, such as pension risk transfer, WSRS, and investment only, we use investment strategy and hedges to tightly align the cash flow run off of these asset and liability cash flows. Immunization analysis is also utilized in the management of interest rate risk. ● U.S. Insurance Stable Cash Flows – Our insurance businesses in many instances contain long-term guarantees with stable and predictable liability cash flows and recurring premiums. We manage the interest rate risk through investment strategy, product crediting rates and analyzing duration and embedded value sensitivity. ● Principal Asset Management – Our international businesses operate within local regulations and financial market conditions (e.g., derivative markets, assets available) to achieve similar asset and liability cash flow management objectives. In locations with a limited availability of long-dated assets and derivative markets, the duration gap is managed to risk tolerances specific to each location. We also limit our exposure to interest rate risk through our business mix and strategy. We have intentionally limited our exposure to specific products where investment margins are critical to the product’s profitability, and we continue to emphasize the sale of products that generate revenues in the form of fees for service or premiums for insurance coverage and expose us to minimal interest rate risk. Prepayment risk is controlled by limiting our exposure to investments that are prepayable without penalty prior to maturity at the option of the issuer. We also require additional yield on these investments to compensate for the risk the issuer will exercise such option. Prepayment risk is also controlled by limiting the sales of liabilities with features such as puts or other options that can be exercised at inopportune times. We manage the interest rate risk associated with our long-term borrowings by monitoring the interest rate environment and evaluating refinancing opportunities as maturity dates approach. The plan fiduciaries use a Dynamic Asset Allocation strategy for our qualified defined benefit pension plan, which strategically allocates an increasing portion of the assets of the pension plan to fixed income securities as the funding status improves. The intended purpose of using the Dynamic Asset Allocation strategy is that the expected change in the value of the plan assets and the change in pension benefit obligation due to market movements are more likely to have more correlation versus a static allocation of assets between categories. For more information see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Benefit Plans” and Item 8. “Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 15, Employee and Agent Benefits” in our Annual Report on Form 10-K for the year ended December 31, 2024. 162 Table of Contents Use of Derivatives to Manage Interest Rate Risk. We use or have used various derivative financial instruments to manage our exposure to fluctuations in interest rates, including interest rate swaps, interest rate options, TBA forwards, bond forwards, treasury forwards, swaptions and futures. We use interest rate swaps, treasury forwards and futures contracts to hedge against changes in the value of the GMWB MRB. We use interest rate swaps, treasury forwards and have used TBA forwards primarily to more closely match the interest rate characteristics of assets and liabilities. They can be used to change the sensitivity to the interest rate of specific assets and liabilities as well as an entire portfolio. We use interest rate swaps to manage our exposure to cash flow variability on recognized assets due to fluctuations in market interest rates. We use bond forwards to fix the purchase price of a bond at a specified date in the future. We use interest rate options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities. We have purchased swaptions to hedge interest rate exposure for certain assets and liabilities. Foreign Currency Risk 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 estimate as of September 30, 2025, a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we are exposed would result in no material change to the net fair value of our foreign currency-denominated instruments identified above because we effectively hedge foreign currency-denominated instruments to minimize exchange rate impacts, which is consistent with our estimate as of December 31, 2024. However, fluctuations in foreign currency exchange rates do affect the translation of segment pre-tax operating earnings and equity of our international operations into our consolidated financial statements. For our international operations, we estimate that a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we were exposed would have resulted in a $288.8 million, or 7%, reduction in the total equity excluding noncontrolling interests of our international operations as of September 30, 2025, as compared to an estimated $277.0 million, or 7%, reduction as of December 31, 2024. We estimate a 10% unfavorable change in the average foreign currency exchange rates to which we were exposed through our international operations would have resulted in a $14.2 million, or 5%, reduction in segment pre-tax operating earnings of our international operations for the three months ended September 30, 2025, as compared to an estimated $15.6 million, or 6%, reduction for the three months ended September 30, 2024. In addition, we estimate that a 10% unfavorable change in the average foreign currency exchange rates to which we were exposed through our international operations would have resulted in a $36.3 million, or 5%, reduction in segment pre-tax operating earnings of our international operations for the nine months ended September 30, 2025, as compared to an estimated $34.1 million, or 5%, reduction for the nine months ended September 30, 2024. The selection of a 10% immediate unfavorable change in all currency exchange rates should not be construed as a prediction by us of future market events, but rather as an illustration of the potential impact of such an event. These exposures will change as a result of a change in the size and mix of our foreign operations. Use of Derivatives to Manage Foreign Currency Risk. The foreign currency risk on funding agreements and fixed maturities in our U.S. operations is mitigated by using currency swaps that swap the foreign currency interest and principal payments to our functional currency. We did not have currency swap agreements associated with foreign-denominated liabilities as of September 30, 2025 and December 31, 2024. The notional amount of our currency swap agreements associated with foreign-denominated fixed maturities was $3,036.5 million and $2,669.3 million as of September 30, 2025 and December 31, 2024, respectively. With regard to our international operations, in order to enhance the diversification of our investment portfolios we may invest in bonds denominated in a currency that is different than the currency of our liabilities. We use foreign exchange derivatives to economically hedge the currency mismatch. Our international operations had currency swaps with a notional amount of $217.7 million and $214.5 million as of September 30, 2025 and December 31, 2024, respectively. Our international operations also utilized currency forwards with a notional amount of $675.3 million and $694.8 million as of September 30, 2025 and December 31, 2024, respectively. We use currency forwards to hedge currency risk associated with expected cash flows in our foreign operations. We held currency forwards with a notional of $205.2 million and $179.7 million as of September 30, 2025 and December 31, 2024, respectively. 163 Table of Contents Additionally, we use currency forwards to hedge net equity investments in our foreign operations, including certain sponsored investment funds. We held currency forwards with a notional amount of $55.7 million and $50.8 million as of September 30, 2025 and December 31, 2024, respectively. We also use currency forwards to hedge certain foreign-denominated investments in our domestic operations. We held currency forwards with a notional amount of $59.5 million and $55.9 million as of September 30, 2025 and December 31, 2024, respectively. Equity Risk Equity risk is the risk we will incur economic losses due to adverse fluctuations in equity markets. As of September 30, 2025 and December 31, 2024, the fair value of our equity securities was $1,649.0 million and $2,295.0 million, respectively. We estimate a 10% decline in the prices of the equity securities would result in a decline in fair value of our equity securities of $164.9 million as of September 30, 2025, as compared to a decline in fair value of our equity securities of $229.5 million as of December 31, 2024. We are also exposed to the risk that asset-based fees decrease as a result of declines in assets under management due to changes in investment prices and the risk that asset management fees calculated by reference to performance could be lower. We also have equity risk associated with (1) universal life contracts that credit interest to customers based on changes in an external equity index; (2) variable annuity contracts that have a GMWB rider that allows the customer to make withdrawals of a specified annual amount, either for a fixed number of years or for the lifetime of the customer, even if the account value is reduced to zero; (3) variable annuity contracts that have a GMDB that allows the death benefit to be paid, even if the account value has fallen below the GMDB amount; (4) SEC-registered annuity contracts with returns linked to an external equity index and (5) investment contracts in which the return is subject to minimum contractual guarantees. We are also subject to equity risk based upon the assets that support our employee benefit plans. For further discussion of equity risk associated with these plans, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Benefit Plans” in our Annual Report on Form 10-K for the year ended December 31, 2024. We estimate an immediate 10% downward equity shock, followed by a 2% per quarter increase would reduce our annual segment pre-tax operating earnings by approximately 5% to 8% over the next twelve months. The selection of a 10% unfavorable equity shock should not be construed as a prediction by us of future market events, but rather as an illustration of the potential impact of such an event. Our exposure will change as a result of changes in our mix of business. Separate and distinct from our equity risk associated with a decline in the equity indices, we also have equity risk associated with certain domestic alternative investments. These investments are comprised of several asset categories (including hedge funds, private equity, infrastructure and direct lending) that provide an attractive asset match to our long-dated liabilities and create diversification benefits to our fixed income investments. The risk profile of these investments is actively monitored by our Investment Committee and our corporate risk management function. Changes in the value of these investments will impact earnings. We estimate an immediate 10% decline in the value of those assets, followed by a 2% per quarter increase would reduce our annual segment pre-tax operating earnings by less than 9%. The selection of a 10% unfavorable change in the value of those assets should not be construed as a prediction of future market events, but rather as an illustration of the potential impact of such a decline in value of those assets. Use of Derivatives to Manage Equity Risk. We economically hedge the universal life products, where the interest credited is linked to an external equity index, by purchasing options that match the product’s profile or selling options to offset existing exposures. We have economically hedged certain investments using total return swaps to swap the equity risk for income enhancement. We economically hedge RILA index credit exposure using options and futures. We economically hedge the GMWB rider MRB exposure, which includes interest rate risk and equity risk, using futures, options, treasury forwards and interest rate swaps with notional amounts of $7,289.0 million and $7,678.0 million as of September 30, 2025, and December 31, 2024, respectively. The fair value of both MRBs and associated hedging instruments are sensitive to financial market conditions and the variance related to the change in fair value of these items for a given period is largely dependent on market conditions at the end of the period. 164 Table of Contents Item 4. Controls and Procedures Disclosure Controls and Procedures In order to ensure that the information that we must disclose in our filings with the SEC is recorded, processed, summarized and reported on a timely basis, we have adopted disclosure controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file with or submit to the SEC is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer, Deanna D. Strable-Soethout, and our Chief Financial Officer, Joel M. Pitz, have reviewed and evaluated our disclosure controls and procedures as of September 30, 2025, and have concluded our disclosure controls and procedures are effective. Changes in Internal Control Over Financial Reporting We had no change in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 165 Table of Contents PART II — OTHER INFORMATION Item 1. Legal Proceedings Disclosure concerning legal proceedings can be found in Part I, Item 1. “Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, Note 15, Contingencies, Guarantees and Indemnifications” under the caption, “Litigation and Regulatory Contingencies,” which is incorporated here by this reference. Item 1A. Risk Factors In addition to the other information set forth in this report, consideration should be given to the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. If any of those factors were to occur, they could materially adversely affect our business, financial condition or future results, and could cause actual results to differ materially from those expressed in forward-looking statements in this report. We have not had material changes with respect to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities The following table presents the amount of our common share purchase activity for the periods indicated. Maximum dollar Total number of value of shares shares purchased that may yet be Total number of Average as part of publicly purchased under shares price paid announced the programs (in Period purchased (1) per share programs millions) (2) January 1, 2025 — January 31, 2025 883,214 $ 80.07 883,214 $ 715.5 February 1, 2025 — February 28, 2025 778,084 $ 83.13 664,501 $ 2,160.5 March 1, 2025 — March 31, 2025 1,227,398 $ 85.41 888,509 $ 2,085.8 April 1, 2025 — April 30, 2025 1,120,281 $ 74.20 1,117,719 $ 2,002.9 May 1, 2025 — May 31, 2025 821,183 $ 77.83 819,237 $ 1,939.1 June 1, 2025 — June 30, 2025 45,668 $ 85.90 42,558 $ 1,935.4 July 1, 2025 — July 31, 2025 856,232 $ 80.10 835,399 $ 1,868.5 August 1, 2025 — August 31, 2025 582,668 $ 77.18 572,044 $ 1,824.4 September 1, 2025 — September 30, 2025 1,403,468 $ 81.34 1,402,648 $ 1,710.3 Total 7,718,196 7,225,829 (1) Includes the number of shares of common stock utilized to execute certain stock incentive awards and shares purchased as part of publicly announced programs. (2) In February 2024, our Board authorized a share repurchase program of up to $1.5 billion of our outstanding common stock, which has no expiration date. In February 2025, our Board authorized a share repurchase program of up to $1.5 billion of our outstanding common stock, which has no expiration date. 166 Table of Contents Item 6. Exhibits Incorporated by reference herein Exhibit Number Description Form File Date 4.1 Eleventh Supplemental Indenture (including the form of 4.111% Senior Notes due 2028), dated as of March 15, 2025, among Principal Financial Group, Inc., as issuer, Principal Financial Services, Inc., as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 4.111% Senior Notes due 2028 10-Q April 30, 2025 31.1 Certification of Deanna D. Strable-Soethout 31.2 Certification of J oel M. Pitz 32.1 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code – Deanna D. Strable-Soethout 32.2 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code – Joel M. Pitz 101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 104 The cover page from Principal Financial Group, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2025 formatted in iXBRL and contained in Exhibit 101. 167 Table of Contents SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRINCIPAL FINANCIAL GROUP, INC. Dated: October 29, 2025 By /s/ Joel M. Pitz Joel M. Pitz Executive Vice President and Chief Financial Officer Duly Authorized Officer, Principal Financial Officer, and Principal Accounting Officer 168