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10-Q – 2026-04-29 – pfg-20260331x10q.htm

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes   ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer   ☒
Accelerated filer  ☐
Non-accelerated filer  ☐
Smaller reporting company  ☐
Emerging growth company  ☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒
The total number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of April 22, 2026, was 216,012,384 .





Table of Contents

PRINCIPAL FINANCIAL GROUP, INC.
TABLE OF CONTENTS


    
Page

PART I - FINANCIAL INFORMATION








Item 1.
Financial Statements

3







Condensed Consolidated Statements of Financial Position as of March 31, 2026 (Unaudited) and December 31, 2025

3







Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025

4







Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025

5







Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2026 and 2025

6







Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025

7







Notes to Unaudited Condensed Consolidated Financial Statements — March 31, 2026

8







1. Nature of Operations and Significant Accounting Policies

8


2 . Variable Interest Entities

11


3 . Investments

15


4 . Derivative Financial Instruments

33


5 . Deferred Acquisition Costs and Other Actuarial Balances

44


6 . Separate Account Balances

47


7 . Contractholder Funds

51


8 . Future Policy Benefits and Claims

56


9 . Market Risk Benefits

65


10. Reinsurance

68


11. Income Taxes

70


12. Employee and Agent Benefits

71


13. Contingencies, Guarantees and Indemnifications

72


14. Stockholders’ Equity

73


15. Fair Value Measurements

76


16. Segment Information

92


17. Revenues from Contracts with Customers

99


18. Stock-Based Compensation Plans

103


19 . Earnings Per Common Share

105






Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

106






Item 3.
Quantitative and Qualitative Disclosures About Market Risk

136






Item 4.
Controls and Procedures

142






PART II — OTHER INFORMATION








Item 1.
Legal Proceedings

143






Item 1A.
Risk Factors

143






Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

143






Item 5.
Other Information

144






Item 6.
Exhibits

144






Signature


145



2

Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Principal Financial Group, Inc.
Condensed Consolidated Statements of Financial Position

















March 31, 

December 31, 


    
2026
    
2025



(Unaudited)





(in millions, except share amounts)

Assets







Fixed maturities, available-for-sale (1)

$
72,910.0

$
73,360.7

Fixed maturities, trading (2026 and 2025 include $ 177.5 million and $ 185.0 million related to consolidated variable interest entities)

 
1,268.7

 
1,243.8

Equity securities (2026 and 2025 include $ 402.1 million and $ 428.6 million related to consolidated variable interest entities)

 
2,341.9

 
2,237.3

Mortgage loans (2026 and 2025 include $ 708.3 million and $ 726.5 million related to consolidated variable interest entities)

 
21,128.0

 
21,008.3

Real estate (2026 and 2025 include $ 820.0 million and $ 819.4 million related to consolidated variable interest entities)

 
2,406.8

 
2,409.7

Policy loans

 
873.1

 
866.7

Other investments (2026 and 2025 include $ 872.4 million and $ 838.4 million related to consolidated variable interest entities and $ 125.2 million and $ 167.1 million measured at fair value under the fair value option)

 
9,929.1

 
9,775.0

Total investments

 
110,857.6

 
110,901.5

Cash and cash equivalents (2026 and 2025 include $ 101.5 million and $ 89.1 million related to consolidated variable interest entities)

 
4,054.0

 
4,431.0

Accrued investment income (2026 and 2025 include $ 44.4 million and $ 43.8 million related to consolidated variable interest entities)

 
910.9

 
870.9

Reinsurance recoverable and deposit receivable


18,745.0


19,000.1

Premiums due and other receivables

 
3,643.2

 
3,894.5

Deferred acquisition costs


4,089.6

 
4,071.6

Market risk benefit asset


163.7


197.1

Property and equipment


714.9

 
701.4

Goodwill


1,588.0

 
1,600.5

Other intangibles


1,272.9

 
1,267.0

Separate account assets (2026 and 2025 include $ 40,102.1 million and $ 41,450.5 million related to consolidated variable interest entities)

 
185,788.4

 
193,622.6

Other assets

 
876.3

 
818.3

Total assets

$
332,704.5

$
341,376.5

Liabilities







Contractholder funds

$
45,898.8

$
45,380.3

Future policy benefits and claims

 
50,938.1

 
51,749.7

Market risk benefit liability

 
81.4

 
66.9

Other policyholder funds


950.4


940.8

Short-term debt

 
18.2

 
27.7

Long-term debt

 
3,927.7

 
3,926.3

Income taxes currently payable

 
46.0

 
29.5

Deferred income taxes

 
1,864.1

 
1,856.4

Separate account liabilities (2026 and 2025 include $ 40,102.1 million and $ 41,450.5 million related to consolidated variable interest entities)

 
185,788.4

 
193,622.6

Funds withheld payable


17,453.1


17,783.4

Other liabilities (2026 and 2025 include $ 64.3 million and $ 69.4 million related to consolidated variable interest entities)

 
13,345.5

 
13,601.6

Total liabilities

 
320,311.7


328,985.2









Redeemable noncontrolling interest (2026 and 2025 include $ 509.2 million and $ 440.9 million related to consolidated variable interest entities)

 
544.1

 
474.3









Stockholders’ equity







Common stock, par value $ 0.01 per share; 2,500,000,000 shares authorized; 498,507,505 and 496,884,232 shares issued as of 2026 and 2025; 216,449,333 and 217,380,912 shares outstanding as of 2026 and 2025

 
5.0

 
5.0

Additional paid-in capital

 
11,350.4

 
11,275.4

Retained earnings

 
18,318.9

 
18,071.3

Accumulated other comprehensive loss

 
( 4,343.7 )

 
( 4,188.4 )

Treasury stock, at cost; 282,058,172 and 279,503,320 shares as of 2026 and 2025

 
( 13,515.3 )

 
( 13,279.4 )

Total stockholders’ equity attributable to Principal Financial Group, Inc.

 
11,815.3

 
11,883.9

Noncontrolling interest

 
33.4

 
33.1

Total stockholders’ equity

 
11,848.7

 
11,917.0

Total liabilities and stockholders’ equity

$
332,704.5

$
341,376.5

(1) See Note 3, Investments, for further details relating to the amortized cost of fixed maturities, available-for-sale.

See accompanying notes.



3

Table of Contents

Principal Financial Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
















For the three months ended



March 31, 


    
2026
    
2025



(in millions, except per share data)

Revenues







Premiums and other considerations

$
1,148.1

$
1,751.3

Fees and other revenues


1,117.3


1,077.7

Net investment income


1,199.0


1,165.7

Net realized capital losses (1)


( 122.1 )


( 117.1 )

Net realized capital gains on funds withheld assets (1)


9.4


28.0

Change in fair value of funds withheld embedded derivative


177.4


( 209.7 )

Total revenues


3,529.1


3,695.9

Expenses







Benefits, claims and settlement expenses


1,611.1


2,220.0

Liability for future policy benefits remeasurement (gain) loss


( 14.7 )


2.2

Market risk benefit remeasurement loss


40.5


34.7

Dividends to policyholders


30.6


19.1

Operating expenses


1,379.8


1,391.0

Total expenses


3,047.3


3,667.0

Income before income taxes


481.8


28.9

Income taxes (benefits)


68.9


( 34.0 )

Net income


412.9


62.9

Net income (loss) attributable to noncontrolling interest


( 11.7 )


14.8

Net income attributable to Principal Financial Group, Inc.

$
424.6

$
48.1









Earnings per common share







Basic earnings per common share

$
1.96

$
0.21









Diluted earnings per common share

$
1.93

$
0.21

(1) Includes realized and unrealized gains (losses). See Note 3, Investments, for further details.

See accompanying notes.



4

Table of Contents

Principal Financial Group, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
















For the three months ended



March 31, 


    
2026
    
2025



(in millions)

Net income

$
412.9

$
62.9

Other comprehensive income (loss), net:







Net unrealized gains (losses) on available-for-sale securities

 
( 578.5 )

 
589.4

Net unrealized gains on derivative instruments

 
54.5

 
14.1

Liability for future policy benefits discount rate remeasurement gain (loss)


389.7


( 249.8 )

Market risk benefit nonperformance risk remeasurement gain


2.6


2.1

Foreign currency translation adjustment

 
( 29.0 )

 
73.4

Net unrecognized postretirement benefit obligation

 
( 0.3 )

 
2.9

Other comprehensive income (loss)

 
( 161.0 )

 
432.1

Comprehensive income

 
251.9

 
495.0

Comprehensive income (loss) attributable to noncontrolling interest

 
( 17.4 )

 
8.0

Comprehensive income attributable to Principal Financial Group, Inc.

$
269.3

$
487.0


See accompanying notes.




5

Table of Contents

Principal Financial Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
























































Accumulated















Additional




other







Total



Common

paid-in

Retained

comprehensive

Treasury

Noncontrolling

stockholders’


    
stock
    
capital
    
earnings
    
loss
    
stock
    
interest
    
equity



(in millions)

Balances as of January 1, 2025

$
4.9

$
11,100.9

$
17,583.5

$
( 5,224.8 )

$
( 12,378.1 )

$
44.9

$
11,131.3

Common stock issued


0.1


13.9

 
—

 
—

 
—

 
—

 
14.0

Stock-based compensation


—


43.0

 
( 3.3 )

 
—

 
—

 
0.1

 
39.8

Treasury stock acquired, common


—


—

 
—

 
—

 
( 241.3 )

 
—

 
( 241.3 )

Dividends to common stockholders


—


—

 
( 169.0 )

 
—

 
—

 
—

 
( 169.0 )

Distributions to noncontrolling interest


—


—


—


—


—


( 0.8 )


( 0.8 )

Contributions from noncontrolling interest


—


—

 
—

 
—

 
—

 
3.4

 
3.4

Net income (1)


—


—

 
48.1

 
—

 
—

 
3.3

 
51.4

Other comprehensive income (1)


—


—

 
—

 
438.9

 
—

 
0.6

 
439.5

Balances as of March 31, 2025

$
5.0

$
11,157.8

$
17,459.3

$
( 4,785.9 )

$
( 12,619.4 )

$
51.5

$
11,268.3
























Balances as of January 1, 2026

$
5.0

$
11,275.4

$
18,071.3

$
( 4,188.4 )

$
( 13,279.4 )

$
33.1

$
11,917.0

Common stock issued


—


28.2


—


—


—


—


28.2

Stock-based compensation


—


47.1


( 3.5 )


—


—


—


43.6

Treasury stock acquired, common


—


—


—


—


( 235.9 )


—


( 235.9 )

Dividends to common stockholders


—


—


( 173.5 )


—


—


—


( 173.5 )

Distributions to noncontrolling interest


—


—


—


—


—


( 0.2 )


( 0.2 )

Contributions from noncontrolling interest


—


—


—


—


—


0.7


0.7

Purchase of subsidiary shares from noncontrolling interest (1)


—


( 0.3 )


—


—


—


—


( 0.3 )

Net income (1)


—


—


424.6


—


—


0.4


425.0

Other comprehensive loss (1)


—


—


—


( 155.3 )


—


( 0.6 )


( 155.9 )

Balances as of March 31, 2026

$
5.0

$
11,350.4

$
18,318.9

$
( 4,343.7 )

$
( 13,515.3 )

$
33.4

$
11,848.7

(1) Excludes amounts attributable to redeemable noncontrolling interest. See Note 14, Stockholders’ Equity, for further details.

See accompanying notes.



6

Table of Contents

Principal Financial Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
















For the three months ended



March 31, 


    
2026
    
2025



(in millions)

Net cash provided by operating activities

$
187.1

$
977.3

Investing activities







Fixed maturities available-for-sale and equity securities with intent to hold:







Purchases

 
( 4,044.3 )

 
( 4,070.6 )

Sales

 
940.5

 
1,532.2

Maturities

 
2,436.7

 
1,677.4

Mortgage loans acquired or originated

 
( 738.9 )

 
( 566.9 )

Mortgage loans sold or repaid

 
604.3

 
712.8

Real estate acquired

 
( 17.5 )

 
( 32.8 )

Real estate sold


10.5


9.5

Net purchases of property and equipment


( 33.8 )


( 16.4 )

Purchase of business or interests in subsidiaries, net of cash acquired


( 16.9 )


—

Sale of interests in subsidiaries, net of cash divested


2.5


—

Net change in other investments


( 102.9 )


( 197.9 )

Net cash used in investing activities

 
( 959.8 )

 
( 952.7 )

Financing activities







Issuance of common stock


28.2


14.0

Acquisition of treasury stock


( 235.0 )


( 240.3 )

Payments for financing element derivatives


( 10.9 )


( 10.7 )

Purchase of subsidiary shares from noncontrolling interest


( 0.3 )


( 1.6 )

Dividends to common stockholders


( 173.5 )


( 169.0 )

Net repayments of short-term borrowings

 
( 9.0 )

 
( 6.3 )

Investment contract deposits

 
3,169.3

 
3,213.0

Investment contract withdrawals

 
( 2,633.1 )

 
( 3,024.0 )

Net increase (decrease) in banking operation deposits

 
260.1

 
( 134.4 )

Other


( 0.1 )


( 1.5 )

Net cash provided by (used in) financing activities

 
395.7

 
( 360.8 )

Net decrease in cash and cash equivalents

 
( 377.0 )

 
( 336.2 )

Cash and cash equivalents at beginning of period


4,431.0


4,211.9

Cash and cash equivalents at end of period

$
4,054.0

$
3,875.7









Supplemental disclosure of non-cash activities:







Pre-capitalized contingent funding agreement exercise:







Increase in fixed maturities, trading

$
—

$
388.3

Increase in long-term debt, net of discount


—


( 388.3 )

Changes resulting from deconsolidation of an investment:







Decrease in mortgage loans


—


( 140.6 )

Decrease in short-term debt


—


54.0

Decrease in long-term debt


—


86.7






7

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 2026
(Unaudited)

1. Nature of Operations and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Principal Financial Group, Inc. (“PFG”) have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-   X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ended December 31, 2026, especially when considering risks and uncertainties that may impact our business, results of operations, financial condition and liquidity. Our use of estimates and assumptions affect amounts reported and disclosed and includes, but is not limited to, the fair value of investments in the absence of quoted market values, investment impairments and valuation allowances, the fair value of derivatives, the fair value of market risk benefits (“MRBs”), measurement of goodwill and intangible assets, the liability for future policy benefits and claims, the value of pension and other postretirement benefit obligations and accounting for income taxes and the valuation of deferred tax assets. Our estimates and assumptions could change in the future. Our results of operations and financial condition may also be impacted by other uncertainties including evolving regulatory, legislative and standard-setter accounting interpretations and guidance.
These interim unaudited condensed consolidated financial statements should be read in conjunction with our annual audited financial statements as of December 31, 2025, included in our Form 10-K for the year ended December 31, 2025, filed with the United States Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated statement of financial position as of December 31, 2025, has been derived from the audited consolidated statement of financial position but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
Consolidation
We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a variable interest entity (“VIE”) or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 2, Variable Interest Entities.
If an entity is not a VIE, it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. Entities in which we have management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method.


8

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Recent Accounting Pronouncements
Description
Date of
adoption
Effect on our consolidated
financial statements or other
significant matters

Standards not yet adopted:



Accounting for internal-use software
This authoritative guidance aligns the accounting for internal-use software with the method used to develop the software, which will lead to consistency in determining when software capitalization should begin.
January 1, 2028
We are currently evaluating the impact this guidance will have on our consolidated financial statements.

Disaggregation of income statement expenses
This authoritative guidance expands the disclosures about a public entity’s expenses and addresses requests for more granular information about the types of expenses in commonly presented expense categories.
December 31, 2027
We are currently evaluating the impact this guidance will have on our notes to the consolidated financial statements.

Credit losses on purchased loans
This authoritative guidance expands application of the gross up method for credit losses from purchased financial assets with credit deterioration to certain acquired loans categorized as purchased seasoned loans.
January 1, 2027
We are currently evaluating the impact this guidance will have on our consolidated financial statements.

Hedge accounting improvements
This authoritative guidance aims to more closely align financial reporting with the economics of an entity’s risk management activities by expanding and refining the hedge accounting guidance in five key areas:
1. Similar risk assessment for cash flow hedges

2.

Hedging forecasted interest payments on choose-your-rate debt

3. Cash flow hedges of non-financial forecasted transactions
4. Net written options as hedging instruments
5. Dual hedges
January 1, 2027
We are currently evaluating the impact this guidance will have on our consolidated financial statements.

Standards adopted:



Improvements to income tax disclosures
This authoritative guidance provides improvements to income tax disclosures for annual periods primarily related to the rate reconciliation and income taxes paid information.
December 31, 2025
The enhanced disclosures can be found in Item 8. “Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 14, Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2025.


When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates.


9

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Long-Duration Insurance Contracts Disclosures

We include disaggregated rollforwards for deferred acquisition costs (“DAC”), the unearned revenue liability, separate account liabilities, policyholder account balances, the liability for future policy benefits, the additional liability for certain benefit features and MRBs. Further, for certain actuarial balances, disclosures are required for the significant inputs, judgments, assumptions and methods used in measurement, including changes in those inputs, judgments and assumptions, and the effect of those changes on measurement.

Amounts from different reportable segments cannot be aggregated for disclosures. Factors to consider in determining the level of aggregation for disclosures include the type of coverage, geography and market or type of customer. We have identified the following levels of aggregation for long-duration insurance contract disclosures.

● Retirement and Income Solutions:
o Workplace savings and retirement solutions – Group annuity contracts offered to the plan sponsors of defined contribution plans or defined benefit plans
o Individual variable annuities – Variable deferred annuities and registered index-linked annuities (“RILAs”) offered to individuals for both qualified and nonqualified retirement savings
o Pension risk transfer – Single premium group annuities offered to pension plan sponsors and other institutions
o Individual fixed deferred annuities – An exited business that offered single premium deferred annuity contracts and flexible premium deferred annuities (“FPDAs”) to individuals for both qualified and nonqualified retirement savings
o Individual fixed income annuities – An exited business that offered single premium immediate annuities (“SPIAs”) and deferred income annuities (“DIAs”) to individuals for both qualified and nonqualified retirement savings; also includes supplementary contracts generated by annuitizations from other individual product lines
o Investment only – Primarily guaranteed investment contracts (“GICs”) and funding agreements offered to retirement plan sponsors and other institutions
● Principal Asset Management – International Pension
o Latin America:
◾ Individual fixed income annuities – SPIAs offered to individuals, which are no longer being sold
◾ Pension – Certain retirement accumulation products where the segregated funds and associated obligation to the client are consolidated within our financial statements as separate account assets and liabilities and are only in the scope of long-duration insurance contracts disclosures for separate accounts
● Benefits and Protection – Specialty Benefits:
o Individual disability – Disability insurance providing protection to individuals and/or business owners
● Benefits and Protection – Life Insurance:
o Universal life – Universal life, variable universal life and indexed universal life insurance products offered to individuals and/or business owners, which will be collectively referred to hereafter as “universal life” contracts; includes our exited universal life insurance with secondary guarantee (“ULSG”) business
o Term life – Term life insurance products offered to individuals and/or business owners
o Participating life – Participating life insurance contracts offered to individuals, some of which are part of a closed block of business and are only in the scope of long-duration insurance contracts disclosures for DAC
● Corporate:
o Long-term care insurance – A closed block of long-term care insurance that is fully reinsured, which was offered on both a group and individual basis.

For the separate account liability disclosures, our Retirement and Income Solutions segment uses a Group retirement contracts level of aggregation. This consists primarily of separate account liabilities for the workplace savings and retirement solutions business as well as amounts for the investment only and pension risk transfer businesses.


10

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

2. Variable Interest Entities
We have relationships with various types of entities that may be VIEs. Certain VIEs are consolidated in our financial results. See Note 1, Nature of Operations and Significant Accounting Policies, under the caption “Consolidation” for further details of our consolidation accounting policies. We did not provide financial or other support to investees designated as VIEs for the periods ended March 31, 2026 and December 31, 2025.
Consolidated Variable Interest Entities
Mandatory Retirement Savings Funds
We hold an equity interest in Chilean mandatory privatized social security funds in which we provide asset management services. We determined the mandatory privatized social security funds, which also include contributions for voluntary pension savings, voluntary non-pension savings and compensation savings accounts, are VIEs. This is because the equity holders as a group lack the power, due to voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity’s economic performance and also because equity investors are protected from below-average market investment returns relative to the industry’s return, due to a regulatory guarantee that we provide. Further, we concluded we are the primary beneficiary through our power to make decisions and our significant variable interest in the funds. The purpose of the funds, which reside in legally segregated entities, is to provide long-term retirement savings. The obligation to the customer is directly related to the assets held in the funds and, as such, we present the assets as separate account assets and the obligation as separate account liabilities within our consolidated statements of financial position.
Real Estate
We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. Certain of these entities are VIEs based on the combination of our significant economic interest and related voting rights. We determined we are the primary beneficiary as a result of our power to control the entities through our significant ownership. Due to the nature of these real estate investments, the investment balance will fluctuate as we purchase and sell interests in the entities and as capital expenditures are made to improve the underlying real estate.
Sponsored Investment Funds
We sponsor and invest in certain investment funds for which we provide asset management services. Although our asset management fee is commensurate with the services provided and consistent with fees for similar services negotiated at arms-length, we have a variable interest for funds where our other interests are more than insignificant. The funds are VIEs as the equity holders lack power through voting rights to direct the activities of the entity that most significantly impact its economic performance. We determined we are the primary beneficiary of the VIEs where our interest in the entity is more than insignificant and we are the asset manager. We deconsolidated certain sponsored investment funds in 2025 due to the acquisition of substantial voting rights through investment in the funds by external investors.
Residential Mortgage Loans
We invest in asset – backed securities (“ABS” ) trusts. The trusts issue various collateralized mortgage obligation certificates and purchase residential mortgage loans. The trusts are considered VIEs due to insufficient equity to sustain themselves. We concluded we are the primary beneficiary as we purchase substantially all of the certificates and have the obligation to absorb losses that could potentially be significant to the VIEs.

11

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Asset-Backed Limited Partnership
We invest in an ABS limited partnership. The limited partnership issues multiple notes and purchases consumer loans, auto loans, other loans and credit facilities. The limited partnership is considered a VIE due to insufficient equity to sustain itself. We concluded we are the primary beneficiary as we have purchased all of the notes and have the obligation to absorb losses and residual returns that could potentially be significant to the VIE.
Assets and Liabilities of Consolidated Variable Interest Entities
The carrying amounts of our consolidated VIE assets, which can only be used to settle obligations of consolidated VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse were as follows:





























March 31, 2026

December 31, 2025



Total

Total

Total

Total


    
assets
    
liabilities
    
assets
    
liabilities



(in millions)

Mandatory retirement savings funds (1)

$
40,504.1

$
40,102.1

$
41,865.2

$
41,450.5

Real estate (2)

 
871.9

 
19.0

 
883.4

 
34.2

Sponsored investment funds (3)

 
967.5

 
26.4

 
851.4

 
16.3

Residential mortgage loans (4)

 
710.6

 
18.7

 
728.9

 
18.8

Asset-backed limited partnership (5)


181.5


—


256.3


—

Total

$
43,235.6

$
40,166.2

$
44,585.2

$
41,519.8

(1) The assets of the mandatory retirement savings funds primarily include separate account assets and equity securities. The liabilities primarily include separate account liabilities.
(2) The assets of the real estate VIEs primarily include real estate, other investments and cash. Liabilities primarily include other liabilities.
(3) The assets of sponsored investment funds are primarily fixed maturities and equity securities, certain of which are reported with other investments and cash. The liabilities primarily include other liabilities. The consolidated statements of financial position included a $ 509.2 million and $ 440.9 million redeemable noncontrolling interest for sponsored investment funds as of March 31, 2026 and December 31, 2025, respectively.
(4) The assets of the residential mortgage loans VIEs primarily include residential mortgage loans. The liabilities primarily include other liabilities.
(5) The assets of the asset-backed limited partnership VIE primarily include consumer loans, auto loans, other loans and credit facilities. These assets are reported with cash and cash equivalents, other investments and fixed maturities, trading on the consolidated statements of financial position.

Unconsolidated Variable Interest Entities
We hold a variable interest in a number of VIEs where we are not the primary beneficiary. Our investments in these VIEs are reported in fixed maturities, available -for-sale; fixed maturities, trading; equity securities and other investments in the consolidated statements of financial position and are described below.
Unconsolidated VIEs include certain commercial mortgage-backed securities (“CMBS”), residential mortgage-backed pass-through securities (“RMBS”) and other ABS. All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function.

12

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

We invest in cash collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities. We have determined we are not the primary beneficiary of these entities primarily because we do not control the economic performance of the entities and were not involved with the design of the entities or because we do not have a potentially significant variable interest in the entities for which we are the asset manager.
We have invested in various VIE trusts and similar entities as a debt holder. Most of these entities are classified as VIEs due to insufficient equity to sustain them. In addition, we have an entity classified as a VIE based on the combination of our significant economic interest and lack of voting rights. We have determined we are not the primary beneficiary primarily because we do not control the economic performance of the entities and were not involved with the design of the entities.
We have invested in partnerships and other funds, which are classified as VIEs. The entities are VIEs as equity holders lack the power to control the most significant activities of the entities because the equity holders do not have either the ability by a simple majority to exercise substantive kick-out rights or substantive participating rights. We have determined we are not the primary beneficiary because we do not have the power to direct the most significant activities of the entities.
As previously discussed, we sponsor and invest in certain investment funds that are VIEs. We determined we are not the primary beneficiary of the VIEs for which we are the asset manager but do not have a potentially significant variable interest in the funds.
We hold an equity interest in Mexican mandatory privatized social security funds in which we provide asset management services. Our equity interest in the funds is considered a variable interest. We concluded the funds are VIEs because the equity holders as a group lack decision-making ability through their voting rights. We are not the primary beneficiary of the VIEs because although we, as the asset manager, have the power to direct the activities of the VIEs, we do not have a potentially significant variable interest in the funds.


13

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The carrying value and maximum loss exposure for our unconsolidated VIEs were as follows:




















Maximum exposure to


    
Asset carrying value
    
loss (1)



(in millions)

March 31, 2026







Fixed maturities, available-for-sale:







Corporate

$
254.2

$
309.5

Residential mortgage-backed pass-through securities


3,751.3


3,842.0

Commercial mortgage-backed securities


5,582.9


5,895.4

Collateralized debt obligations (2)


5,991.6


6,017.3

Other debt obligations


10,777.4


12,281.4

Fixed maturities, trading:







Residential mortgage-backed pass-through securities


8.0


8.0

Commercial mortgage-backed securities


70.6


70.6

Collateralized debt obligations (2)


208.6


208.6

Other debt obligations


331.6


331.6

Equity securities


107.4


107.4

Other investments:







Other limited partnership and fund interests (3)


3,523.3


5,424.4









December 31, 2025







Fixed maturities, available-for-sale:







Corporate

$
289.4

$
361.7

Residential mortgage-backed pass-through securities


3,805.1


3,868.4

Commercial mortgage-backed securities


5,371.6


5,659.6

Collateralized debt obligations (2)


6,422.3


6,417.4

Other debt obligations


10,681.3


12,167.2

Fixed maturities, trading:







Residential mortgage-backed pass-through securities


8.4


8.4

Commercial mortgage-backed securities


70.7


70.7

Collateralized debt obligations (2)


211.0


211.0

Other debt obligations


338.8


338.8

Equity securities


109.5

 
109.5

Other investments:







Other limited partnership and fund interests (3)


3,498.4


5,500.7

(1) Our risk of loss is limited to our initial investment measured at amortized cost, excluding portfolio layer method basis adjustments for fixed maturities, available-for-sale, plus any unfunded commitments and/or guarantees and similar provisions for collateralized debt obligations and other debt obligations. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading and equity securities. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees and similar provisions for our other investments. A carrying value of zero is used if distributions have been received in excess of our investment, resulting in a negative carrying value for the investment. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager.
(2) Primarily consists of collateralized loan obligations backed by secured corporate loans.
(3) As of March 31, 2026 and December 31, 2025, the maximum exposure to loss for other limited partnership and fund interests includes $ 251.2 million and $ 256.1 million, respectively, of debt within certain of our managed international real estate funds that is fully secured by assets whose value exceeds the amount of the debt, but also includes recourse to the investment manager.

14

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Money Market Funds
We are the investment manager for certain money market mutual funds. These types of funds are exempt from assessment under any consolidation model due to a scope exception for money market funds registered under Rule 2a-7 of the Investment Company Act of 1940 or similar funds. As of March 31, 2026 and December 31, 2025, money market mutual funds we manage held $ 6.0 billion and $ 5.9 billion in total assets, respectively. We have no contractual obligation to contribute to these funds; however, we provide support through the waiver of fees and through expense reimbursements. The amount of fees waived and expenses reimbursed was insignificant.

3. Investments
Our investments include assets backing reserves as part of a coinsurance with funds withheld agreement. The funds withheld invested assets are reported within their respective line items, primarily consisting of fixed maturities available-for-sale, mortgage loans and other investments. See Note 10, Reinsurance, for more information on the funds withheld invested assets.
Fixed Maturities
Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. We classify fixed maturities as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. Equity securities are also carried at fair value. See Note 15, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to fixed maturities, available-for-sale, excluding those in fair value hedging relationships, are reflected in stockholders’ equity, net of adjustments associated with related actuarial balances, derivatives in cash flow hedge relationships and applicable income taxes. Mark-to-market adjustments on certain equity securities and mark-to-market adjustments on certain fixed maturities, trading are reflected in net realized capital gains (losses). Mark-to-market adjustments on certain fixed maturities, trading are reflected in market risk benefit remeasurement (gain) loss. Unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships are reflected in net investment income. Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income.
The amortized cost of fixed maturities includes cost adjusted for amortization of premiums and discounts, computed using the interest method. The amortized cost of fixed maturities, available-for-sale is adjusted for changes in fair value of the hedged portions of securities in fair value hedging relationships and excludes accrued interest receivable. Accrued interest receivable is reported in accrued investment income on the consolidated statements of financial position. Fixed maturities, available-for-sale are subject to an allowance for credit loss and changes in the allowance are reported in net income as a component of net realized capital gains (losses). Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows.

15

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The amortized cost, gross unrealized gains and losses, allowance for credit loss and fair value of fixed maturities, available-for-sale were as follows:





































Gross

Gross

Allowance





Amortized

unrealized

unrealized

for credit




    
cost (1)
    
gains
    
losses
    
loss
    
Fair value



(in millions)

March 31, 2026
















Fixed maturities, available-for-sale:
















U.S. government and agencies

$
2,139.6

$
5.9

$
285.2

$
0.1

$
1,860.2

Non-U.S. governments


469.2


15.1


53.8


—


430.5

States and political subdivisions


8,391.2


27.9


1,054.4


—


7,364.7

Corporate


39,944.5


650.6


3,397.4


50.1


37,147.6

Residential mortgage-backed pass-through securities


3,842.0


35.1


125.8


—


3,751.3

Commercial mortgage-backed securities


5,895.4


11.2


322.1


1.6


5,582.9

Collateralized debt obligations (2)


6,017.3


3.9


29.6


—


5,991.6

Other debt obligations


11,138.4


59.7


416.5


0.4


10,781.2

Total excluding portfolio layer method basis adjustment


77,837.6


809.4


5,684.8


52.2


72,910.0

Unallocated portfolio layer method basis adjustment (3)


( 18.8 )


18.8


—


—


—

Total fixed maturities, available-for-sale

$
77,818.8

$
828.2

$
5,684.8

$
52.2

$
72,910.0






































Gross

Gross

Allowance





Amortized

unrealized

unrealized

for credit




    
cost (1)
    
gains
    
losses
    
loss
    
Fair value



(in millions)

December 31, 2025
















Fixed maturities, available-for-sale:
















U.S. government and agencies

$
2,126.2

$
9.6

$
268.1

$
0.1

$
1,867.6

Non-U.S. governments


554.7


17.6


54.6


—


517.7

States and political subdivisions


8,107.8


42.8


1,011.9


—


7,138.7

Corporate


39,867.6


777.7


3,072.8


25.0


37,547.5

Residential mortgage-backed pass-through securities


3,868.4


54.7


118.0


—


3,805.1

Commercial mortgage-backed securities


5,659.6


19.4


306.0


1.4


5,371.6

Collateralized debt obligations (2)


6,417.4


14.6


9.7


—


6,422.3

Other debt obligations


10,981.2


99.3


389.9


0.4


10,690.2

Total excluding portfolio layer method basis adjustment


77,582.9


1,035.7


5,231.0


26.9


73,360.7

Unallocated portfolio layer method basis adjustment (3)


( 16.9 )


16.9


—


—


—

Total fixed maturities, available-for-sale

$
77,566.0

$
1,052.6

$
5,231.0

$
26.9

$
73,360.7

(1) Amortized cost excludes accrued interest receivable of $ 682.1 million and $ 473.8 million as of March 31, 2026 and December 31, 2025, respectively.
(2) Primarily consists of collateralized loan obligations backed by secured corporate loans.
(3) Represents unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. See Note 4, Derivative Financial Instruments, for further details.

16

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The amortized cost and fair value of fixed maturities, available-for-sale as of March 31, 2026, by expected maturity, were as follows:
















    
Amortized cost (1)
    
Fair value



(in millions)

Due in one year or less

$
1,521.7

$
1,503.6

Due after one year through five years


10,325.3


10,207.6

Due after five years through ten years


9,552.2


9,468.9

Due after ten years


29,545.3


25,622.9

Subtotal


50,944.5


46,803.0

Mortgage-backed and other asset-backed securities


26,893.1


26,107.0

Total

$
77,837.6

$
72,910.0

(1) Excludes unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.
Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits.
Net Realized Capital Gains and Losses
Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. In general, in addition to realized capital gains and losses on investment sales and periodic settlements on derivatives not designated as hedges, we report gains and losses related to the following in net realized capital gains (losses) on the consolidated statements of operations: mark-to-market adjustments on certain equity securities, mark-to-market adjustments on certain fixed maturities, trading, mark-to-market adjustments on sponsored investment funds, mark-to-market adjustments on derivatives not designated as hedges, cash flow hedge gains (losses) when the hedged item impacts realized capital gains (losses), changes in the valuation allowance for fixed maturities available-for-sale and certain financing receivables, impairments of real estate held for investment and impairments on equity method investments. Investment gains and losses on sales of certain real estate held for sale due to investment strategy and mark-to-market adjustments on certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reported as net investment income and are excluded from net realized capital gains (losses).

17

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The major components of net realized capital gains (losses) on investments are shown below and are net of amounts on funds withheld invested assets that are passed directly to the reinsurer. See Note 10, Reinsurance, for further details. The amounts below do not include net realized capital gains (losses) on funds withheld assets that are not passed to the reinsurer, which are separately reported on the consolidated statements of operations. Net realized capital gains (losses) on funds withheld assets includes gains (losses) realized upon sale of assets put into the funds withheld at the start of a reinsurance transaction for the unrealized gain (losses) on the date of transfer into the funds withheld, the change in the valuation allowance on funds withheld commercial mortgage loans and unrealized gains and losses related to the change in fair value of funds withheld fixed maturities, trading, equity securities and derivatives.

















For the three months ended March 31, 


    
2026
    
2025



(in millions)

Fixed maturities, available for sale:







Gross gains

$
0.1

$
0.8

Gross losses

 
( 1.2 )


( 30.3 )

Net credit losses (1)

 
( 32.4 )


( 5.0 )

Hedging, net (2)

 
( 5.3 )


7.8

Fixed maturities, trading (3)

 
0.1


( 1.8 )

Equity securities (4)

 
( 58.2 )


( 37.0 )

Mortgage loans

 
1.5


( 0.5 )

Derivatives (2)

 
( 19.8 )


15.2

Other (5)

 
( 6.9 )


( 66.3 )

Net realized capital losses

$
( 122.1 )

$
( 117.1 )

(1) Includes credit sales, adjustments to the credit loss valuation allowance, write-offs and recoveries on available-for-sale securities.
(2) The change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Gains (losses) for fixed maturities, available-for-sale related to terminated cash flow hedges continue to be reflected in net realized capital gains (losses).
(3) Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $ 0.1 million and $( 0.1 ) million for the three months ended March 31, 2026 and 2025, respectively. This excludes $( 3.0 ) million and $ 2.8 million for the three months ended March 31, 2026 and 2025, respectively, that were reported in market risk benefit remeasurement (gain) loss and $( 2.9 ) million and $( 0.2 ) million for the three months ended March 31, 2026 and 2025, respectively, that were reported in net realized capital gains (losses) on funds withheld assets.
(4) Unrealized gains (losses) on equity securities still held at the reporting date were $( 70.5 ) million and $( 36.4 ) million for the three months ended March 31, 2026 and 2025, respectively. This excludes $ 1.4 million and $ 9.2 million for the three months ended March 31, 2026 and 2025, respectively, that were reported in net investment income and $ 0.0 million and $ 0.0 million for the three months ended March 31, 2026 and 2025, respectively, that were reported in net realized capital gains (losses) on funds withheld assets.
(5) Includes a held for sale write-down of an intangible asset in 2025.
Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $ 386.3  million and $ 764.8 million for the three months ended March 31, 2026 and 2025, respectively.

18

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Allowance for Credit Loss
We have a process in place to identify fixed maturity securities that could potentially require an allowance for credit loss. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.
Each reporting period, all securities in an unrealized loss position are reviewed to determine whether a decline in value is due to credit. Relevant facts and circumstances considered include: (1) the extent the fair value is below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for structured securities, the adequacy of the expected cash flows. To the extent we determine an unrealized loss is due to credit, an allowance for credit loss is recognized through a reduction to net income.
We estimate the amount of the allowance for credit loss as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity. We do not measure a credit loss allowance on accrued interest receivable because we write off the accrued interest receivable balance to net investment income in a timely manner when we have concern regarding collectability.
Amounts on fixed maturities, available-for-sale deemed to be uncollectible are written off and removed from the allowance for credit loss. A write-off may also occur if we intend to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity.


19

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

A rollforward of the allowance for credit loss by major security type was as follows.



























































For the three months ended March 31, 2026











Residential



















mortgage-



















backed

Commercial

Collateralized







U.S.



States and



pass-

mortgage-

debt

Other





government

Non-U.S.

political



through

backed

obligations

debt




    
and agencies
    
governments
    
subdivisions
    
Corporate
    
securities
    
securities
    
(1)
    
obligations
    
Total



(in millions)

Beginning balance

$
0.1

$
—

$
—

$
25.0

$
—

$
1.4

$
—

$
0.4

$
26.9

Additions for credit losses not previously recorded


—


—


—


29.7


—


—


—


—


29.7

Reductions for securities sold during the period


—


—


—


( 0.9 )


—


—


—


—


( 0.9 )

Additional increases (decreases) for credit losses on securities with an allowance recorded in the previous period


—


—


—


0.6


—


0.2


—


—


0.8

Write-offs charged against allowance


—


—


—


( 4.2 )


—


—


—


—


( 4.2 )

Foreign currency translation adjustment


—


—


—


( 0.1 )


—


—


—


—


( 0.1 )

Ending balance

$
0.1

$
—

$
—

$
50.1

$
—

$
1.6

$
—

$
0.4

$
52.2






























Accrued interest written off to net investment income

$
—

$
—

$
—

$
1.0

$
—

$
—

$
—

$
—

$
1.0




























































For the three months ended March 31, 2025











Residential



















mortgage-



















backed

Commercial

Collateralized







U.S.



States and



pass-

mortgage-

debt

Other





government

Non-U.S.

political



through

backed

obligations

debt




    
and agencies
    
governments
    
subdivisions
    
Corporate
    
securities
    
securities
    
(1)
    
obligations
    
Total



(in millions)

Beginning balance
 
$
—
 
$
—
 
$
—
 
$
18.5

$
—
 
$
—
 
$
—
 
$
0.2
 
$
18.7

Additional increases (decreases) for credit losses on securities with an allowance recorded in the previous period
 

—
 

—
 

—
 

0.1


—
 

—


—


—


0.1

Write-offs charged against allowance


—


—


—


( 11.9 )


—


—


—


—


( 11.9 )

Foreign currency translation adjustment


—


—


—


0.1


—


—


—


—


0.1

Ending balance
 
$
—
 
$
—
 
$
—
 
$
6.8

$
—
 
$
—
 
$
—
 
$
0.2
 
$
7.0






























Accrued interest written off to net investment income

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

(1) Primarily consists of collateralized loan obligations backed by secured corporate loans.


20

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Available-For-Sale Securities in Unrealized Loss Positions Without an Allowance for Credit Loss
For available-for-sale securities with unrealized losses for which an allowance for credit loss has not been recorded, the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:









































March 31, 2026



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

$
691.3

$
17.9

$
743.5

$
267.3

$
1,434.8

$
285.2

Non-U.S. governments


29.4


1.1


230.1


52.7


259.5


53.8

States and political subdivisions


1,324.6


17.2


4,813.8


1,037.2


6,138.4


1,054.4

Corporate


4,506.6


130.5


18,300.1


3,256.0


22,806.7


3,386.5

Residential mortgage-backed pass-through securities


732.6


6.4


1,012.4


119.4


1,745.0


125.8

Commercial mortgage-backed securities


1,280.3


12.4


3,316.9


309.1


4,597.2


321.5

Collateralized debt obligations (2)


3,448.7


23.2


70.1


6.4


3,518.8


29.6

Other debt obligations


2,688.0


16.9


3,197.5


399.6


5,885.5


416.5

Total fixed maturities, available-for-sale

$
14,701.5

$
225.6

$
31,684.4

$
5,447.7

$
46,385.9

$
5,673.3

(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.

Of the total amounts, Principal Life Insurance Company’s (“Principal Life’s”) consolidated portfolio represented $ 45,569.7 million in available-for-sale fixed maturities with gross unrealized losses of $ 5,605.2 million. Of the available-for-sale fixed maturities within Principal Life’s consolidated portfolio in a gross unrealized loss position, 97 % were investment grade (rated AAA through BBB-) with an average price of 89 (carrying value/amortized cost) as of March 31, 2026. Gross unrealized losses in our fixed maturities portfolio increased during the three months ended March 31, 2026, primarily due to an increase in interest rates and a widening of credit spreads.
For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life’s consolidated portfolio held 1,993 securities with a carrying value of $ 14,478.7 million and unrealized losses of $ 216.7 million reflecting an average price of 99 as of March 31, 2026. Of this portfolio, 94 % was investment grade (rated AAA through BBB-) as of March 31, 2026, with associated unrealized losses of $ 183.7 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life’s consolidated portfolio held 5,571 securities with a carrying value of $ 31,091.0 million and unrealized losses of $ 5,388.5 million as of March 31, 2026. The average credit rating of this portfolio was A with an average price of 85 as of March 31, 2026. Of the $ 5,388.5 million in unrealized losses, the corporate sector accounts for $ 3,209.5 million in unrealized losses with an average price of 85 and an average credit rating of A-. Furthermore, unrealized losses include $ 1,030.0 million within the states and political subdivisions sector with an average price of 82 and an average credit rating of AA-; $ 366.7 million within the collateralized mortgage obligation security sector with an average price of 86 and an average credit rating of AA+; and $ 308.3 million within the CMBS sector with an average price of 91 and an average credit rating of AA. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

21

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Because we expected to recover our amortized cost, we did not record an allowance for credit loss on these securities as of March 31, 2026. Because it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not write down these investments to fair value.









































December 31, 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

$
484.1

$
11.0

$
734.1

$
257.1

$
1,218.2

$
268.1

Non-U.S. governments

 
12.8


0.3


310.9


54.3


323.7


54.6

States and political subdivisions

 
639.4

 
8.9

 
4,903.5

 
1,003.0

 
5,542.9

 
1,011.9

Corporate

 
1,889.9

 
95.7

 
19,474.6

 
2,970.8

 
21,364.5

 
3,066.5

Residential mortgage-backed pass-through securities

 
201.2

 
0.7

 
1,147.6

 
117.3

 
1,348.8

 
118.0

Commercial mortgage-backed securities

 
342.0

 
2.5

 
3,465.9

 
301.6

 
3,807.9

 
304.1

Collateralized debt obligations (2)

 
1,919.9

 
4.7

 
20.2

 
5.0

 
1,940.1

 
9.7

Other debt obligations

 
567.0

 
1.9

 
3,514.2

 
387.2

 
4,081.2

 
389.1

Total fixed maturities, available-for-sale

$
6,056.3

$
125.7

$
33,571.0

$
5,096.3

$
39,627.3

$
5,222.0

(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.

Of the total amounts, Principal Life’s consolidated portfolio represented $ 38,748.0 million in available-for-sale fixed maturities with gross unrealized losses of $ 5,149.9 million. Of the available-for-sale fixed maturities within Principal Life’s consolidated portfolio in a gross unrealized loss position, 97 % were investment grade (rated AAA through BBB-) with an average price of 88 (carrying value/amortized cost) as of December 31, 2025. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2025, primarily due to a decrease in interest rates, which was partially offset by a widening of credit spreads.
For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life’s consolidated portfolio held 870 securities with a carrying value of $ 5,888.1 million and unrealized losses of $ 117.8 million reflecting an average price of 98 as of December 31, 2025. Of this portfolio, 93 % was investment grade (rated AAA through BBB-) as of December 31, 2025, with associated unrealized losses of $ 96.7 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life’s consolidated portfolio held 5,758 securities with a carrying value of $ 32,859.9 million and unrealized losses of $ 5,032.1 million as of December 31, 2025. The average credit rating of this portfolio was A with an average price of 87 as of December 31, 2025. Of the $ 5,032.1 million in unrealized losses, the corporate sector accounts for $ 2,919.0 million in unrealized losses with an average price of 87 and an average credit rating of A-. Furthermore, unrealized losses include $ 996.0 million within the states and political subdivisions sector with an average price of 83 and an average credit rating of AA-; $ 356.7 million within the collateralized mortgage obligation security sector with an average price of 87 and an average credit rating of AA+; and $ 301.0 million within the CMBS sector with an average price of 92 and an average credit rating of AA. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

22

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Because we expected to recover our amortized cost, we did not record an allowance for credit loss on these securities as of December 31, 2025. Because it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not write down these investments to fair value.
Net Unrealized Gains and Losses on Available-For-Sale Securities and Derivative Instruments
The net unrealized gains and losses on investments in available-for-sale securities and the net unrealized gains and losses on derivative instruments in cash flow hedge relationships are reported as separate components of stockholders’ equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities and derivative instruments in cash flow hedge relationships net of adjustments related to actuarial balances, policyholder liabilities, noncontrolling interest and applicable income taxes was as follows:
















    
March 31, 2026
    
December 31, 2025



(in millions)

Net unrealized losses on fixed maturities, available-for-sale (1)

$
( 4,821.4 )

$
( 4,081.8 )

Net unrealized gains (losses) on derivative instruments

 
29.0

 
( 40.0 )

Adjustments for assumed changes in amortization patterns

 
4.8

 
4.2

Adjustments for assumed changes in policyholder liabilities

 
33.3

 
21.2

Net unrealized losses on other investments and noncontrolling interest adjustments

 
( 65.1 )

 
( 58.3 )

Provision for deferred income tax benefits

 
1,034.4

 
893.7

Net unrealized losses on available-for-sale securities and derivative instruments

$
( 3,785.0 )

$
( 3,261.0 )

(1) Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships.

Financing Receivables
Mortgage Loans
Mortgage loans consist of commercial and residential mortgage loans. Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on stabilized properties. Our residential mortgage loan portfolio is composed of first lien mortgages concentrated in Chile and the United States.
Commercial and residential mortgage loans are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. Amortized cost excludes accrued interest receivable. Mortgage loans expected to be disposed are classified as held for sale and carried at the lower of amortized cost or estimated fair value. As of March 31, 2026 and December 31, 2025, we had $ 300.7 million and $ 0.0 million of commercial mortgage loans held for sale within the funds withheld assets. The amortized cost of our residential mortgage loans also includes basis adjustments related to fair value hedges in a closed portfolio. See Note 4, Derivative Financial Instruments, for further information. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Interest income, as well as prepayment of fees and the amortization of the related premium or discount, is reported in net investment income on the consolidated statements of operations. Accrued interest receivable is reported in accrued investment income on the consolidated statements of financial position. Any changes in the loan valuation allowances are reported in net realized capital gains (losses) on the consolidated statements of operations. Further details relating to our valuation allowance are included under the caption “Financing Receivables Valuation Allowance.”
Direct Financing Leases
Our direct financing leases are concentrated in Chile. Our Chilean operations enter into private placement contracts for commercial, industrial and office space properties whereby our Chilean operations purchase the real estate and/or building from the seller-lessee but then lease the property back to the seller-lessee. Ownership of the property is transferred to the lessee by the end of the lease term. Direct financing leases are reported as a component of other investments in the consolidated statements of financial position.

23

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Reinsurance Recoverable and Deposit Receivable
Our reinsurance recoverables include amounts due from reinsurers for paid or unpaid claims, claims incurred but not reported or policy benefits. We cede life, disability, medical and long-term care insurance as well as fixed annuity contracts with significant life insurance risk to other insurance companies through reinsurance. Deposit receivables include amounts due from the reinsurer for fixed annuity contracts without significant life insurance risk recorded using the deposit method of accounting.
Other Loans
Our other loans include consumer, auto and other loans (“other loans”) of a consolidated VIE for which the fair value option was elected as well as consumer loans for which the fair value option was not elected. Other loans are generally subject to amortized cost accounting and a valuation allowance if the fair value option is not elected. Other loans are reported as a component of other investments in the consolidated statements of financial position.
Credit Quality Information for Financing Receivables
The amortized cost of our financing receivables by credit risk and vintage was as follows:















































March 31, 2026


    
2026
    
2025
    
2024
    
2023
    
2022
    
Prior
    
Total



(in millions)

Commercial mortgage loans:






















A- and above
 
$
296.2

$
1,579.4

$
1,272.2

$
901.0

$
1,075.4

$
8,428.7

$
13,552.9

BBB+ thru BBB-
 

4.3


210.9


199.1


76.6


187.3


1,232.4


1,910.6

BB+ thru BB-
 

48.0


132.2


69.7


109.5


196.0


130.3


685.7

B+ and below
 

—


—


—


32.4


—


317.1


349.5

Total
 
$
348.5

$
1,922.5

$
1,541.0

$
1,119.5

$
1,458.7

$
10,108.5

$
16,498.7
























Direct financing leases:
 





















A- and above
 
$
—

$
—

$
3.8

$
—

$
39.5

$
233.0

$
276.3

BBB+ thru BBB-
 

—


—


5.7


—


82.5


94.8


183.0

BB+ thru BB-
 

—


—


0.7


2.1


0.5


35.0


38.3

B+ and below
 

—
 

43.8
 

—
 

—
 

—
 

9.9
 

53.7

Total
 
$
—

$
43.8

$
10.2

$
2.1

$
122.5

$
372.7

$
551.3
























Residential mortgage loans:
 


 


 


 


 


 


 



Performing
 
$
177.1

$
1,357.2

$
341.6

$
352.1

$
897.7

$
1,649.2

$
4,774.9

Non-performing
 

—


0.3


0.4


2.2


11.0


9.3


23.2

Total excluding portfolio layer method basis adjustments
 
$
177.1

$
1,357.5

$
342.0

$
354.3

$
908.7

$
1,658.5


4,798.1

Unallocated portfolio layer method basis adjustment (1)
 



















( 4.5 )

Total
 


















$
4,793.6
























Other loans:






















Performing

$
—

$
91.8

$
23.2

$
22.6

$
—

$
—

$
137.6

Non-performing


—


2.1


4.6


1.8


—


—


8.5

Total

$
—

$
93.9

$
27.8

$
24.4

$
—

$
—

$
146.1
























Reinsurance recoverable and deposit receivable
 


 


 


 
$
18,748.2



24

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)














































    
December 31, 2025


    
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
Total



(in millions)

Commercial mortgage loans:
 

  


  
    

  
    

  
    

  
    

  
    

  

A- and above

$
1,568.5

$
1,315.6

$
900.9

$
1,079.7

$
1,738.8

$
6,878.7

$
13,482.2

BBB+ thru BBB-

 
200.9

 
189.7

 
151.6

 
172.1

 
116.2

 
1,187.9

 
2,018.4

BB+ thru BB-

 
111.0

 
64.2

 
109.5

 
215.8

 
11.1

 
120.7

 
632.3

B+ and below

 
—

 
—

 
32.4

 
—

 
—

 
352.8

 
385.2

Total

$
1,880.4

$
1,569.5

$
1,194.4

$
1,467.6

$
1,866.1

$
8,540.1

$
16,518.1
























Direct financing leases:

 


 


 


 


 


 


 


A- and above

$
—

$
—

$
—

$
32.7

$
11.7

$
213.1

$
257.5

BBB+ thru BBB-

 
—

 
10.6

 
—

 
94.5

 
22.0

 
97.5

 
224.6

BB+ thru BB-

 
—

 
—

 
2.1

 
0.5

 
5.6

 
32.2

 
40.4

B+ and below

 
44.6

 
—

 
—

 
—

 
9.4

 
—

 
54.0

Total

$
44.6

$
10.6

$
2.1

$
127.7

$
48.7

$
342.8

$
576.5
























Residential mortgage loans:

 


 


 


 


 


 


 


Performing

$
1,304.3

$
366.3

$
381.3

$
919.1

$
1,137.6

$
564.3

$
4,672.9

Non-performing

 
—

 
1.3

 
5.3

 
8.1

 
6.9

 
3.4

 
25.0

Total excluding portfolio layer method basis adjustments

$
1,304.3

$
367.6

$
386.6

$
927.2

$
1,144.5

$
567.7


4,697.9

Unallocated portfolio layer method basis adjustment   (1)




















( 3.7 )

Total



















$
4,694.2
























Other loans:






















Performing

$
123.1

$
28.4

$
27.9

$
—

$
—

$
—

$
179.4

Non-performing


1.4


3.6


1.5


—


—


—


6.5

Total

$
124.5

$
32.0

$
29.4

$
—

$
—

$
—

$
185.9
























Reinsurance recoverable and deposit receivable

 
  

 
  

 
  

$
19,003.3

(1)
Represents unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. See Note 4, Derivative Financial Instruments, for further details.

The amortized cost of commercial mortgage loans, direct financing leases, residential mortgage loans and other loans excluded accrued interest receivable of $ 70.2 million, $ 1.8 million, $ 22.4 million and $ 1.5 million, respectively, as of March 31, 2026, and $ 65.2 million, $ 1.5 million, $ 20.0 million and $ 1.4 million, respectively, as of December 31, 2025.

25

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Financing Receivables Credit Monitoring
Commercial Mortgage Loan Credit Risk Profile Based on Internal Rating
We actively monitor and manage our commercial mortgage loan and direct financing lease portfolios. All commercial mortgage loans and direct financing leases are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The models stress expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of an S&P Global (“S&P”) bond equivalent rating for domestic commercial mortgage loans and Feller rate equivalent for Chilean commercial mortgage loans and direct financing leases. As the credit risk for commercial mortgage loans and direct financing leases increases, we adjust our internal ratings downward with loans in the category “B+ and below” having the highest risk for credit loss. Internal ratings on commercial mortgage loans and direct financing leases are updated at least annually and potentially more often for certain investments with material changes in collateral value or occupancy and for investments on an internal “watch list”.
Commercial mortgage loans and direct financing leases that require more frequent and detailed attention are identified and placed on an internal “watch list”. Among the criteria that may indicate a potential problem are significant negative changes in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests.
Residential Mortgage Loan Credit Risk Profile Based on Performance Status
Our residential mortgage loan portfolio is monitored based on performance of the loans. Monitoring on a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of potential impairment. We define non-performing domestic residential mortgage loans as loans 90 days or greater delinquent or on non-accrual status. We define non-performing residential first lien mortgages in the Chilean market as loans that have missed a specified number of coupon payments based on the nature of the loans and collection practices in that market.
Other Loans Credit Risk Profile Based on Performance Status
Our other loans are monitored based on performance of the loans. Monitoring on other loans increases when the loan is delinquent or earlier if there is an indication of potential impairment.
Non-Accrual Financing Receivables
Financing receivables are placed on non-accrual status if we have concern regarding the collectability of future payments or if a financing receivable has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow for commercial mortgage loans and direct financing leases or number of days past due and other circumstances for residential mortgage loans. Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal, against the valuation allowance or according to the contractual terms. When a financing receivable is placed on non-accrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved. Financing receivables in the Chilean market are carried on accrual for a longer period of delinquency than domestic financing receivables, as assessment of collectability is based on the nature of the financing receivables and collection practices in that market.

26

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The amortized cost of financing receivables on non-accrual status was as follows:























March 31, 2026







Amortized cost



Beginning

Ending

of nonaccrual



amortized cost

amortized cost

assets without



on nonaccrual

on nonaccrual

a valuation


    
status
    
status
    
allowance



(in millions)

Commercial mortgage loans

$
58.4

$
62.2

$
42.0

Residential mortgage loans


19.9


12.9


11.5

Other loans


6.4


8.5


8.5

Total

$
84.7

$
83.6

$
62.0
























December 31, 2025








Amortized cost



Beginning

Ending

of nonaccrual



amortized cost

amortized cost

assets without



on nonaccrual

on nonaccrual

a valuation


    
status
    
status
    
allowance



(in millions)

Commercial mortgage loans

$
70.5

$
58.4

$
—

Residential mortgage loans
 

15.6
 

19.9
 

7.0

Other loans


—


6.4


6.4

Total
 
$
86.1
 
$
84.7
 
$
13.4


Interest income recognized on non-accrual financing receivables was as follows:

















For the three months ended March 31, 


    
2026
    
2025



(in millions)

Commercial mortgage loans

$
0.5

$
—

Residential mortgage loans


0.1


0.1

Total

$
0.6

$
0.1


The aging of our financing receivables, based on amortized cost, was as follows:















































March 31, 2026


    

    

    

    

    

    

    
Amortized















cost







90 days or







90 days or



30-59 days

60-89 days

more past

Total past





more and



past due

past due

due

due

Current

Total (1)

accruing



(in millions)

Commercial mortgage loans

$
12.7

$
6.8

$
62.2

$
81.7

$
16,417.0

$
16,498.7

$
—

Direct financing leases


4.6


—


0.9


5.5


545.8


551.3


0.9

Residential mortgage loans (2)


68.2


18.8


37.6


124.6


4,673.5


4,798.1


21.8

Other loans


2.5


2.5


10.4


15.4


130.7


146.1


1.9

Total

$
88.0

$
28.1

$
111.1

$
227.2

$
21,767.0

$
21,994.2

$
24.6



27

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)















































December 31, 2025


    

    

    

    

    

    

    
Amortized















cost







90 days or







90 days or



30-59 days

60-89 days

more past

Total past





more and



past due

past due

due

due

Current

Total (1)

accruing



(in millions)

Commercial mortgage loans

$
5.9

$
1.4

$
101.0

$
108.3

$
16,409.8

$
16,518.1

$
42.6

Direct financing leases

 
3.9

 
0.9

 
—

 
4.8

 
571.7

 
576.5

 
—

Residential mortgage loans (2)

 
64.8

 
20.3

 
26.3

 
111.4

 
4,586.5

 
4,697.9

 
12.1

Other loans


2.3


1.5


8.4


12.2


173.7


185.9


2.0

Total

$
76.9

$
24.1

$
135.7

$
236.7

$
21,741.7

$
21,978.4

$
56.7

(1) As of both March 31, 2026 and December 31, 2025, no reinsurance recoverables or deposit receivables were considered past due.
(2) Excludes unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.

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.
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.

28

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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.
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 three months ended March 31, 2026



Commercial

Direct

Residential







mortgage

financing

mortgage

Reinsurance




    
loans
    
leases
    
loans
    
recoverables
    
Total



(in millions)

Beginning balance

$
187.4

$
8.9

$
16.6

$
3.2

$
216.1

Provision
 

( 7.8 )


0.4


( 1.7 )


—
 

( 9.1 )

Charge-offs
 

( 30.2 )
 

—
 

—
 

—
 

( 30.2 )

Foreign currency translation adjustment


—


( 0.3 )


—


—


( 0.3 )

Ending balance
 
$
149.4
 
$
9.0
 
$
14.9
 
$
3.2
 
$
176.5


















Accrued interest income written off to net investment income
 
$
—
 
$
—
 
$
—
 
$
—
 
$
—



29

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)



































For the three months ended March 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
 

( 2.3 )


—


( 0.9 )


( 0.1 )
 

( 3.3 )

Charge-offs
 

( 1.3 )


—


—


—
 

( 1.3 )

Recoveries
 

—


—


3.8


—
 

3.8

Foreign currency translation adjustment


0.1


0.2


—


—


0.3

Ending balance
 
$
185.1

$
3.2

$
10.2

$
3.2
 
$
201.7


















Accrued interest income written off to net investment income
 
$
0.3

$
—

$
—

$
—
 
$
0.3


For both the three months ended March 31, 2026 and 2025, no allowance was recorded for other loans.

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 three months ended



March 31, 


    
2026
    
2025



(in millions)

Commercial mortgage loans:
 

  
 

  

Purchased

$
—

$
39.9

Sold


48.1


68.9

Residential mortgage loans:

 


 


Purchased

 
316.2

 
265.0

Sold

 
5.7

 
3.9



30

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:



























March 31, 2026

December 31, 2025
 


    
Amortized
    
Percent
    
Amortized
    
Percent
 



cost

of total

cost

of total
 



($ in millions)
 

Geographic distribution












New England

$
434.8

2.6
%  
$
440.8

2.7
%

Middle Atlantic

 
4,504.5

27.4

 
4,402.6

26.6


East North Central

 
481.8

2.9

 
463.2

2.8


West North Central

 
283.3

1.7


284.4

1.7


South Atlantic

 
2,987.5

18.1

 
3,068.4

18.6


East South Central

 
365.1

2.2

 
366.4

2.2


West South Central

 
1,431.3

8.7

 
1,422.2

8.6


Mountain

 
1,250.6

7.6

 
1,217.9

7.4


Pacific

 
4,296.7

26.0

 
4,327.1

26.2


International

 
463.1

2.8

 
525.1

3.2


Total

$
16,498.7

100.0
%  
$
16,518.1

100.0
%














Property type distribution












Office

$
2,739.4

16.6
%  
$
2,798.3

16.9
%

Retail

 
1,538.8

9.3

 
1,580.0

9.6


Industrial

 
4,376.6

26.5

 
4,288.0

26.0


Apartments

 
7,031.1

42.7

 
6,976.9

42.2


Hotel

 
30.7

0.2

 
31.0

0.2


Mixed use/other

 
782.1

4.7

 
843.9

5.1


Total

$
16,498.7

100.0
%  
$
16,518.1

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.
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 both the three months ended March 31, 2026 and 2025.

31

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Securities Posted as Collateral
As of March 31, 2026 and December 31, 2025, we posted $ 6,542.1 million and $ 6,587.5 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 March 31, 2026 and December 31, 2025, we posted $ 3,739.2 million and $ 3,610.4 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 March 31, 2026 and December 31, 2025, $ 519.8 million and $ 485.0 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)

March 31, 2026













Derivative assets

$
1,249.5

$
( 333.7 )

$
( 861.0 )

$
54.8

Reverse repurchase agreements


57.7


—


( 57.7 )


—

Total

$
1,307.2

$
( 333.7 )

$
( 918.7 )

$
54.8

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

(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.

32

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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)

March 31, 2026













Derivative liabilities

$
534.9

$
( 333.7 )

$
( 197.9 )

$
3.3















December 31, 2025













Derivative liabilities

$
552.0

$
( 331.7 )

$
( 209.1 )

$
11.2

(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 4, 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 March 31, 2026 and December 31, 2025.

4. 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.

33

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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.
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.

34

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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.
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.

35

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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 $ 440.8 million and $ 491.1 million in cash and securities under collateral arrangements as of March 31, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025, was $ 527.7 million and $ 546.9 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 $ 440.8 million and $ 491.1 million as of March 31, 2026 and December 31, 2025, 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 March 31, 2026, we would be required to post up to an additional $ 118.7 million of collateral to our counterparties.
As of March 31, 2026 and December 31, 2025, we had received $ 775.5 million and $ 787.6 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.

36

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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:
















    
March 31, 2026
    
December 31, 2025



(in millions)

Notional amounts of derivative instruments







Interest rate contracts:







Interest rate swaps

$
61,221.0

$
60,267.1

Interest rate options


3,658.0


3,578.0

Interest rate futures

 
2,246.1

 
1,994.7

Interest rate forwards

 
1,687.0

 
1,687.0

Foreign exchange contracts:







Currency swaps


3,795.3


3,538.7

Currency forwards


1,246.6


914.6

Equity contracts:







Equity options

 
8,021.6

 
7,449.3

Equity futures

 
1,759.3

 
1,699.1

Equity total return swaps


697.9


499.6

Credit contracts:







Credit default swaps

 
590.9

 
531.0

Credit total return swaps


500.0


500.0

Other contracts:







Embedded derivatives

 
24,282.0

 
24,650.7

Total notional amounts at end of period

$
109,705.7

$
107,309.8









Credit exposure of derivative instruments







Interest rate contracts:







Interest rate swaps

$
12.7

$
13.2

Interest rate options

 
6.2

 
4.0

Interest rate forwards


0.7


1.1

Foreign exchange contracts:







Currency swaps

 
230.0

 
190.0

Currency forwards

 
39.7

 
30.0

Equity contracts:







Equity options

 
921.9

 
971.5

Total return swaps


41.0


—

Credit contracts:







Credit default swaps

 
2.8

 
3.4

Total return swaps


9.2


18.8

Total gross credit exposure

 
1,264.2

 
1,232.0

Less: collateral received

 
932.5

 
923.7

Net credit exposure

$
331.7

$
308.3



37

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The fair value of our derivative instruments classified as assets and liabilities was as follows:





























Derivative assets (1)

Derivative liabilities (2)


    
March 31, 2026
    
December 31, 2025
    
March 31, 2026
    
December 31, 2025



(in millions)

Derivatives designated as hedging instruments













Interest rate contracts

$
—

$
—

$
81.6

$
69.8

Foreign exchange contracts

 
185.4

 
144.6

 
89.4

 
138.8

Total derivatives designated as hedging instruments

$
185.4

$
144.6

$
171.0

$
208.6















Derivatives not designated as hedging instruments













Interest rate contracts

$
16.3

$
16.9

$
139.4

$
136.0

Foreign exchange contracts

 
78.9

 
70.3

 
11.5

 
9.4

Equity contracts

 
958.1

 
971.5

 
199.5

 
191.6

Credit contracts

 
10.9

 
21.2

 
14.3

 
6.4

Other contracts

 
—

 
—

 
( 1,453.1 )

 
( 1,223.2 )

Total derivatives not designated as hedging instruments

 
1,064.2

 
1,079.9

 
( 1,088.4 )

 
( 879.8 )















Total derivative instruments

$
1,249.6

$
1,224.5

$
( 917.4 )

$
( 671.2 )

(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 $ 1,357.7 million and $ 1,410.2 million as of March 31, 2026 and December 31, 2025, respectively, are reported with contractholder funds on the consolidated statements of financial position. Embedded derivatives with a net (asset) liability fair value of $( 2,810.8 ) million and $( 2,633.4 ) million as of March 31, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025, 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.

38

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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.



























March 31, 2026












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

$
0.5

$
96.7

6.1

A


219.3


( 7.3 )


219.3

7.0

BBB


190.0


1.5


190.0

4.0

Total single name credit default swaps


506.0


( 5.3 )


506.0

5.7














Single name total return swaps












Government/municipalities












AAA


40.0


( 0.4 )


40.0

29.3

AA


195.0


( 1.6 )


195.0

20.2

A


210.0


4.3


210.0

21.4

BBB


55.0


0.8


55.0

15.0

Total single name total return swaps


500.0


3.1


500.0

20.9














Total credit derivatives sold

$
1,006.0

$
( 2.2 )

$
1,006.0

13.2




























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



39

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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
    
March 31, 2026
    
December 31, 2025
    
March 31, 2026
    
December 31, 2025



(in millions)

Fixed maturities, available-for-sale (1):













Active hedging relationships

$
2,720.0

$
2,741.8

$
( 18.9 )

$
( 15.8 )

Discontinued hedging relationships


762.9


782.9


—


( 6.2 )

Total fixed maturities, available-for-sale in active or discontinued hedging relationships

$
3,482.9

$
3,524.7

$
( 18.9 )

$
( 22.0 )















Mortgage loans (2):













Active hedging relationships

$
1,429.3

$
1,471.5

$
( 4.5 )

$
( 3.6 )

Discontinued hedging relationships


322.0


345.0


1.1


1.2

Total mortgage loans in active or discontinued hedging relationships

$
1,751.3

$
1,816.5

$
( 3.4 )

$
( 2.4 )















Investment contracts:













Active hedging relationships

$
4,397.1

$
3,743.8

$
7.4

$
35.4

Total investment contracts in active or discontinued hedging relationships

$
4,397.1

$
3,743.8

$
7.4

$
35.4

(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 March 31, 2026 and December 31, 2025, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2,266.2 million and $ 2,303.5 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 18.8 ) million and $( 16.9 ) million, respectively, and the amount of the designated hedged items were $ 954.0 million and $ 970.0 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 March 31, 2026 and December 31, 2025, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 1,429.3 million and $ 1,471.5 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 4.5 ) million and $( 3.7 ) million, respectively, and the amount of the designated hedged items were $ 192.5 million and $ 220.0 million, respectively.

40

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

For the three months ended March 31, 2026 and 2025, $ 0.6 million and $ 1.1 million, respectively, of the derivative instruments’ gains (losses) were excluded from the assessment of hedge effectiveness.
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 0.9 years. As of March 31, 2026, we had $ 15.2 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





For the three months ended

Derivatives in cash



March 31, 

flow hedging relationships
    
Related hedged item
    
2026
    
2025





(in millions)

Interest rate contracts
 
Fixed maturities, available-for-sale

$
( 15.2 )

$
6.5

Foreign exchange contracts
 
Fixed maturities, available-for-sale

 
83.5


10.9

Total



$
68.3

$
17.4


We expect to reclassify net gains of $ 7.8 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.

41

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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. Gains (losses) reflected in the table increase (decrease) the amount reported in the consolidated statement of operations revenue line items and decrease (increase) the amount reported in the expense line items.























For the three months ended March 31, 2026






Net realized






Net investment

capital gains

Benefits, claims



income related

(losses) related to

and settlement



to hedges of

hedges of fixed

expenses related



fixed maturities,

maturities,

to 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

$
1,199.0

$
( 122.1 )

$
1,611.1












Gains (losses) on fair value hedging relationships:










Interest rate contracts:










Gain (loss) recognized on hedged item

$
( 2.7 )

$
—

$
28.1

Gain (loss) recognized on derivatives


3.2


—


( 28.7 )

Amortization of hedged item basis adjustments


0.6


—


—

Amounts related to periodic settlements on derivatives


5.7


—


0.1












Foreign exchange contracts:










Loss recognized on hedged item


—


( 5.5 )


—

Gain recognized on derivatives


—


5.5


—

Amounts related to periodic settlements on derivatives


0.8


—


—

Total gain (loss) recognized for fair value hedging relationships

$
7.6

$
—

$
( 0.5 )












Gains (losses) on cash flow hedging relationships:










Interest rate contracts:










Amounts related to periodic settlements on derivatives

$
( 0.1 )

$
—

$
—












Foreign exchange contracts:










Loss reclassified from AOCI on derivatives


—


( 0.1 )


—

Amounts related to periodic settlements on derivatives


8.4


—


—

Total gain (loss) recognized for cash flow hedging relationships

$
8.3

$
( 0.1 )

$
—




42

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)
























For the three months ended March 31, 2025






Net realized






Net investment

capital gains

Benefits, claims



income related

(losses) related to

and settlement



to hedges of

hedges of fixed

expenses related



fixed maturities,

maturities,

to 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

$
1,165.7

$
( 117.1 )

$
2,220.0












Gains (losses) on fair value hedging relationships:










Interest rate contracts:










Gain recognized on hedged item

$
27.4

$
—

$
35.5

Loss recognized on derivatives


( 26.1 )


—


( 36.0 )

Amortization of hedged item basis adjustments


0.6


—


—

Amounts related to periodic settlements on derivatives


10.1


—


( 4.8 )












Foreign exchange contracts:










Gain recognized on hedged item


—


7.8


—

Loss recognized on derivatives


—


( 7.8 )


—

Amounts related to periodic settlements on derivatives


0.7


—


—

Total gain (loss) recognized for fair value hedging relationships

$
12.7

$
—

$
( 5.3 )












Gains (losses) on cash flow hedging relationships:










Interest rate contracts:










Gain (loss) reclassified from AOCI on derivatives

$
0.7

$
—

$
( 0.1 )

Amounts related to periodic settlements on derivatives


( 0.1 )


—


—












Foreign exchange contracts:










Amounts related to periodic settlements on derivatives


8.5


—


—

Total gain (loss) recognized for cash flow hedging relationships

$
9.1

$
—

$
( 0.1 )


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.

43

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

The following table shows 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 three months ended



March 31, 

Derivatives in net investment hedging relationships
    
2026
    
2025


 
(in millions)

Foreign exchange contracts

$
0.3

$
( 1.1 )

Total

$
0.3

$
( 1.1 )


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 10, Reinsurance, for further details.

















Amount of gain (loss) recognized in



net income on derivatives for the



three months ended March 31, 

Derivatives not designated as hedging instruments
    
2026
    
2025



(in millions)

Interest rate contracts

$
( 5.0 )

$
( 38.6 )

Foreign exchange contracts


17.3


21.0

Equity contracts


( 158.6 )


( 140.3 )

Credit contracts


( 15.9 )


( 16.0 )

Other contracts (1)


229.9


( 154.0 )

Total

$
67.7

$
( 327.9 )

(1) Includes the change in fair value of the funds withheld embedded derivative.

5. 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.

44

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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 $ 99.8 million and $ 98.5 million related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations for the three months ended March 31, 2026 and 2025, respectively.
The following tables summarize disaggregated DAC amounts and reconcile the totals to those reported in the consolidated statements of financial position.
















    
March 31, 2026
    
December 31, 2025



(in millions)

Retirement and Income Solutions:
 

  
 

  

Workplace savings and retirement solutions

$
530.7

$
528.9

Individual variable annuities

 
394.5

 
385.3

Pension risk transfer

 
24.6

 
24.8

Individual fixed deferred annuities

 
62.8

 
66.9

Investment only

 
11.6

 
10.6

Total Retirement and Income Solutions

 
1,024.2

 
1,016.5

Benefits and Protection:

 


 


Specialty Benefits:

 


 


Individual disability

 
719.0

 
714.8

Life Insurance:

 


 


Universal life

 
1,510.5

 
1,514.3

Term life

 
725.3

 
723.5

Participating life

 
69.5

 
71.0

Total Benefits and Protection

 
3,024.3

 
3,023.6

Short-duration contracts

 
39.8

 
30.2

Other balances (1)

 
1.3

 
1.3

Total DAC per consolidated statements of financial position

$
4,089.6

$
4,071.6

(1) Includes insignificant balances for long-duration contracts.


45

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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, 2025

$
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

Costs deferred


11.3


18.8


0.2


—


2.2

Amortized to expense


( 9.5 )


( 9.6 )


( 0.4 )


( 4.1 )


( 1.2 )

Balances as of March 31, 2026

$
530.7

$
394.5

$
24.6

$
62.8

$
11.6


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, 2025

$
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

Costs deferred


17.9


19.8


17.8


0.4

Amortized to expense


( 13.7 )


( 23.6 )


( 16.0 )


( 1.9 )

Balances as of March 31, 2026

$
719.0

$
1,510.5

$
725.3

$
69.5


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.
















    
March 31, 2026
    
December 31, 2025



(in millions)

Benefits and Protection - Life Insurance:
 

  
 

  

Universal life

$
538.5

$
532.9

Total unearned revenue liability

$
538.5

$
532.9



46

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Benefits and Protection

The balances and changes in the unearned revenue liability for Life Insurance – Universal life contracts were as follows:
















    
For the three months ended
    
For the year ended



March 31, 2026

December 31, 2025



(in millions)

Balance at beginning of period

$
532.9

$
510.1

Deferrals

 
14.2

 
56.0

Revenue recognized

 
( 8.6 )

 
( 33.2 )

Balance at end of period

 
538.5

 
532.9

Reinsurance impact

 
( 214.1 )

 
( 215.6 )

Balance at end of period after reinsurance

$
324.4

$
317.3



6. 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 15, 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 9, Market Risk Benefits, for further information on the MRBs associated with the contracts mentioned above.
As of March 31, 2026 and December 31, 2025, the separate accounts included a separate account valued at $ 79.8 million and $ 81.7 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.

47

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Separate Account Assets
The aggregate fair value of assets, by major investment category, supporting separate accounts were as follows:

















March 31, 2026

December 31, 2025



(in millions)

Fixed maturities:
    

  
    

  

U.S. government and agencies

$
9,970.8

$
10,027.9

Non-U.S. governments

 
9,007.4

 
9,122.1

States and political subdivisions

 
145.5

 
162.3

Corporate

 
13,025.2

 
13,404.2

Residential mortgage-backed pass-through securities

 
3,368.6

 
3,484.1

Commercial mortgage-backed securities

 
274.2

 
261.2

Other debt obligations

 
458.2

 
408.0

Total fixed maturities

 
36,249.9

 
36,869.8

Equity securities

 
137,075.9

 
141,251.0

Real estate

 
447.3

 
445.9

Other investments

 
8,279.6

 
8,848.3

Cash and cash equivalents

 
2,933.6

 
5,135.4

Other assets

 
802.1

 
1,072.2

Total separate account assets per consolidated statements of financial position

$
185,788.4

$
193,622.6


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.
















    
March 31, 2026
    
December 31, 2025



(in millions)

Retirement and Income Solutions:
 

  
 

  

Group retirement contracts

$
130,964.4

$
136,674.3

Individual variable annuities

 
6,867.8

 
7,364.9

Total Retirement and Income Solutions

 
137,832.2

 
144,039.2

Principal Asset Management – International Pension:

 


 
  

Latin America:

 


 
  

Pension

 
40,102.1

 
41,450.5

Benefits and Protection - Life Insurance:

 


 
  

Universal life

 
7,545.9

 
7,807.9

Other balances (1)

 
308.2

 
325.0

Total separate account liabilities per consolidated statements of financial position

$
185,788.4

$
193,622.6

(1) Includes insignificant balances for long-duration contracts.

48

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Retirement and Income Solutions
The balances and the changes in separate account liabilities were as follows:




























    
For the three months ended
    
For the year ended



March 31, 2026

December 31, 2025



Group

Individual

Group

Individual



retirement

variable

retirement

variable


    
contracts
    
annuities
    
contracts
    
annuities



(in millions)

Balance at beginning of period

$
136,674.3

$
7,364.9

$
125,103.1

$
8,334.9

Premiums and deposits (1)

 
4,880.4


36.0

 
15,458.7

 
157.1

Policy charges

 
( 82.3 )


( 37.9 )

 
( 344.1 )

 
( 166.6 )

Surrenders, withdrawals and benefit payments (1)

 
( 6,343.6 )


( 354.6 )

 
( 17,649.8 )

 
( 1,790.0 )

Investment performance

 
( 2,830.5 )


( 140.1 )

 
15,664.0

 
850.5

Net transfers (to) from general account (1)

 
( 865.2 )


( 0.5 )

 
( 1,433.1 )

 
( 21.0 )

Other (2)

 
( 468.7 )


—

 
( 124.5 )

 
—

Balance at end of period

$
130,964.4

$
6,867.8

$
136,674.3

$
7,364.9















Cash surrender value (3)

$
130,350.7

$
6,773.6

$
135,606.1

$
7,265.2

(1) Within the policyholder account balances rollforwards in Note 7, 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 three months ended

For the year ended


    
March 31, 2026
    
December 31, 2025


 
(in millions)

Balance at beginning of period

$
41,450.5

$
32,802.2

Premiums and deposits

 
986.2

 
3,546.2

Policy charges

 
( 5.1 )

 
( 17.7 )

Surrenders, withdrawals and benefit payments

 
( 1,095.8 )

 
( 3,962.7 )

Investment performance

 
306.8

 
5,392.1

Other

 
( 51.9 )

 
2.7

Foreign currency translation adjustment

 
( 1,488.6 )

 
3,687.7

Balance at end of period

$
40,102.1

$
41,450.5









Cash surrender value

$
40,102.1

$
41,450.5



49

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Benefits and Protection
The balances and the changes in separate account liabilities for Life Insurance – Universal life were as follows:

















For the three months ended

For the year ended


    
March 31, 2026
    
December 31, 2025



(in millions)

Balance at beginning of period

$
7,807.9
 
$
6,806.7

Premiums and deposits (1)


155.0

 
572.7

Policy charges


( 34.9 )

 
( 135.4 )

Surrenders, withdrawals and benefit payments (1)


( 162.7 )

 
( 374.4 )

Investment performance


( 225.6 )

 
938.5

Net transfers (to) from general account (1)


6.2

 
( 0.2 )

Balance at end of period

$
7,545.9

$
7,807.9









Cash surrender value (2)

$
7,638.4

$
7,873.6

(1) Within the policyholder account balances rollforwards in Note 7, 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.


50

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

7. 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.

















March 31, 2026

December 31, 2025



(in millions)

Retirement and Income Solutions:
    

  
    

  

Workplace savings and retirement solutions

$
16,394.0

$
15,808.1

Individual variable annuities

 
4,524.9

 
4,273.0

Individual fixed deferred annuities

 
3,558.0

 
3,728.0

Total Retirement and Income Solutions

 
24,476.9

 
23,809.1

Benefits and Protection – Life Insurance:

 


 
  

Universal life

 
6,852.7

 
6,867.5

Corporate:

 


 
  

Inter-segment eliminations

 
( 333.7 )

 
( 358.5 )

Total policyholder account balances for contracts with significant insurance risk or investment contracts with significant fee revenue

 
30,995.9

 
30,318.1









Reconciling items:

 


 
  

Investment contracts without significant fee revenue (1)

 
14,517.9

 
14,662.7

Other balances (2)

 
385.0

 
399.5

Total contractholder funds per consolidated statements of financial position

$
45,898.8

$
45,380.3

(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.

51

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Policyholder Account Balances
Retirement and Income Solutions
The changes in policyholder account balances were as follows:











































For the three months ended March 31, 2026

For the year ended December 31, 2025
 



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)
 



($ in millions)
 

Balance at beginning of period

$
15,808.1

$
4,273.0

$
3,728.0

$
13,982.8

$
1,906.7

$
4,460.7


Premiums and deposits

 
1,627.0

 
435.0

 
7.9

 
5,734.4

 
2,296.3

 
24.8


Policy charges

 
( 8.9 )

 
—

 
—

 
( 36.7 )

 
—

 
—


Surrenders, withdrawals and benefit payments

 
( 900.6 )

 
( 394.6 )

 
( 204.5 )

 
( 4,206.8 )

 
( 1,927.4 )

 
( 878.5 )


Net transfers (to) from separate account (2)

 
( 278.3 )

 
319.1

 
—

 
( 162.1 )

 
1,653.9

 
—


Interest credited

 
152.0

 
30.1

 
25.9

 
522.5

 
82.7

 
121.9


Change in fair value of embedded derivative


—


( 141.1 )


2.2


—


236.6


5.9


Other

 
( 5.3 )

 
3.4

 
( 1.5 )

 
( 26.0 )

 
24.2

 
( 6.8 )


Balance at end of period

$
16,394.0

$
4,524.9

$
3,558.0

$
15,808.1

$
4,273.0

$
3,728.0























Weighted-average crediting rate (3)

 
3.95
%  
 
3.21
%  
 
3.16
%  
 
3.87
%  
 
3.37
%  
 
3.16
%

Cash surrender value (4)

$
15,114.1

$
4,262.6

$
3,367.3

$
14,606.4

$
4,123.4

$
3,525.6


(1) We use the deposit method of accounting for the reinsurance of this exited business.
(2) Within the separate account liabilities rollforwards in Note 6, 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 9, 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.

52

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

Benefits and Protection
The changes in policyholder account balances for Life Insurance – Universal life were as follows:


















    
For the three months ended
    
For the year ended
 



March 31, 2026

December 31, 2025
 



($ in millions)
 

Balance at beginning of period

$
6,867.5

$
6,953.7


Premiums and deposits

 
349.1

 
1,305.7


Policy charges

 
( 223.9 )

 
( 886.0 )


Surrenders, withdrawals and benefit payments

 
( 191.7 )

 
( 587.7 )


Net transfers from (to) separate account (1)

 
1.5

 
( 198.1 )


Interest credited

 
70.7

 
304.2


Change in fair value of embedded derivative


( 6.5 )


17.3


Other

 
( 14.0 )

 
( 41.6 )


Balance at end of period

 
6,852.7

 
6,867.5


Reinsurance impact


( 3,002.8 )


( 3,045.1 )


Balance at end of period after reinsurance

$
3,849.9

$
3,822.4











Weighted-average crediting rate (2)

 
4.22
%  
 
4.11
%

Net amount at risk (3)

$
85,999.9

$
86,094.5


Cash surrender value (4)

$
6,049.5

$
6,045.7


(1) Within the separate account liabilities rollforwards in Note 6, 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.



53

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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.









































March 31, 2026



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 %


—
 

2,598.5


—


719.7


—


3,318.2

2.01 % - 3.00 %


129.5
 

19.9


65.7


5,223.8


4,589.9


10,028.8

3.01 % - 4.00 %


7.7
 

—


—


—


—


7.7

4.01 % and above
 

11.3
 

—


—


—


—


11.3

Subtotal
 

148.5
 

2,618.4


65.7


5,943.5


4,589.9


13,366.0

No GMIR
 


 













3,028.0

Total
 


 












$
16,394.0





















Individual variable annuities
 


 


 


 


 


 



Up to 1.00 %

$
14.3

$
—

$
—

$
—

$
—

$
14.3

1.01 % - 2.00 %


3.5


—


—


—


—


3.5

2.01 % - 3.00 %


189.3


—


—


—


—


189.3

3.01 % - 4.00 %


—


—


—


—


—


—

4.01 % and above
 

—


—


—


—


—


—

Subtotal
 

207.1


—


—


—


—


207.1

No GMIR
 
















4,317.8

Total
 















$
4,524.9





















Individual fixed deferred annuities
 


 


 


 


 


 



Up to 1.00 %

$
161.0

$
6.1

$
22.5

$
64.4

$
918.8

$
1,172.8

1.01 % - 2.00 %


63.5


0.2


2.9


9.8


7.4


83.8

2.01 % - 3.00 %


2,033.2


—


—


—


—


2,033.2

3.01 % - 4.00 %


131.5


—


—


—


—


131.5

4.01 % and above
 

—


—


—


—


—


—

Subtotal
 

2,389.2


6.3


25.4


74.2


926.2


3,421.3

No GMIR
 
















136.7

Total
 















$
3,558.0





















Benefits and Protection - Life Insurance
 


 


 


 


 


 



Universal life
 


 


 


 


 


 



Up to 1.00 %

$
—

$
—

$
—

$
14.7

$
38.2

$
52.9

1.01 % - 2.00 %


232.8


—


340.7


631.4


464.6


1,669.5

2.01 % - 3.00 %


548.4


582.9


689.8


397.5


0.2


2,218.8

3.01 % - 4.00 %


1,566.8


81.9


78.1


23.8


2.6


1,753.2

4.01 % and above
 

20.2


25.2


1.9


2.5


—


49.8

Subtotal
 

2,368.2


690.0


1,110.5


1,069.9


505.6


5,744.2

No GMIR
 
















1,108.5

Total
 















$
6,852.7



54

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)









































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




55

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

8 . 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.
















    
March 31, 2026
    
December 31, 2025



(in millions)

Liability for future policy benefits by segment (1):
 

  
 

  

Retirement and Income Solutions:
 

  
 

  

Pension risk transfer

$
26,778.2
 
$
27,349.3

Individual fixed income annuities

 
4,240.2
 

4,367.4

Total Retirement and Income Solutions

 
31,018.4
 

31,716.7

Principal Asset Management – International Pension:

 

 



Latin America:







Individual fixed income annuities

 
4,437.0
 

4,600.5

Benefits and Protection:

 

 



Specialty Benefits:

 

 



Individual disability

 
1,977.8
 

1,994.2

Life Insurance:

 

 



Term life

 
1,524.1
 

1,515.7

Total Benefits and Protection

 
3,501.9
 

3,509.9

Corporate:

 

 



Long-term care insurance

 
163.8
 

166.7

Total liability for future policy benefits

 
39,121.1
 

39,993.8









Additional liability for certain benefit features by segment (2):

 

 



Benefits and Protection – Life Insurance:

 

 



Universal life

 
6,739.3
 

6,604.8

Total additional liability for certain benefit features

 
6,739.3
 

6,604.8









Reconciling items:

 

 



Participating contracts

 
2,756.9
 

2,784.3

Short-duration contracts

 
1,189.9
 

1,205.2

Cost of reinsurance liability

 
958.9
 

971.4

Reinsurance recoverable liability


27.7


23.5

Other (3)

 
144.3
 

166.7

Future policy benefits and claims per consolidated statements of financial position

$
50,938.1
 
$
51,749.7

(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.

56

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
March 31, 2026
(Unaudited)

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 three months ended March 31, 


    
2026
    
2025



(in millions)

Balance at beginning of period

$
1,342.4

$
1,379.9

Less: reinsurance recoverable

 
62.6

 
61.2

Net balance at beginning of period

 
1,279.8

 
1,318.7

Incurred:

 


 


Current year

 
477.9

 
472.5

Prior years

 
( 55.5 )

 
( 42.4 )

Total incurred

 
422.4

 
430.1

Payments:

 


 


Current year

 
264.4

 
256.1