10-Q – 2026-07-29 – pfg-20260630x10q.htm

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Table of Contents

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM  10-Q

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

1-16725
(Commission file number)
PRINCIPAL FINANCIAL GROUP, INC .
(Exact name of registrant as specified in its charter)
Delaware
  ​ ​ ​
42-1520346

(State or other jurisdiction of incorporation or organization)
​
(I.R.S. Employer Identification Number)

​
711 High Street , Des Moines , Iowa 50392
(Address of principal executive offices)
( 515 ) 247-5111
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered

Common Stock
PFG
Nasdaq Global Select Market

​
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 July 22, 2026, was 214,104,641 .
​
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​

Table of Contents

PRINCIPAL FINANCIAL GROUP, INC.
TABLE OF CONTENTS
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  ​ ​ ​
Page

PART I - FINANCIAL INFORMATION
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​

​
​
​
​

Item 1.
Financial Statements
​
3

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​
​
​

​
Condensed Consolidated Statements of Financial Position as of June 30, 2026 (Unaudited) and December 31, 2025
​
3

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​

​
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025
​
4

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Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025
​
5

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​

​
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025
​
6

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​

​
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025
​
8

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​

​
Notes to Unaudited Condensed Consolidated Financial Statements — June 30, 2026
​
9

​
​
​
​

​
1. Nature of Operations and Significant Accounting Policies
​
9

​
2 . Variable Interest Entities
​
12

​
3 . Investments
​
16

​
4 . Derivative Financial Instruments
​
38

​
5 . Deferred Acquisition Costs and Other Actuarial Balances
​
52

​
6 . Separate Account Balances
​
54

​
7 . Contractholder Funds
​
58

​
8 . Future Policy Benefits and Claims
​
63

​
9 . Market Risk Benefits
​
73

​
10. Reinsurance
​
76

​
11. Long-Term Debt
​
79

​
12. Income Taxes
​
80

​
13. Employee and Agent Benefits
​
81

​
14. Contingencies, Guarantees and Indemnifications
​
81

​
15. Stockholders’ Equity
​
83

​
16. Fair Value Measurements
​
87

​
17. Segment Information
​
104

​
18. Revenues from Contracts with Customers
​
114

​
19. Stock-Based Compensation Plans
​
118

​
20 . Earnings Per Common Share
​
120

​
​
​
​

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
​
121

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​
​
​

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
​
155

​
​
​
​

Item 4.
Controls and Procedures
​
161

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​
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​

PART II — OTHER INFORMATION
​
​

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​
​
​

Item 1.
Legal Proceedings
​
162

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​
​
​

Item 1A.
Risk Factors
​
162

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​
​
​

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
​
162

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​
​
​

Item 5.
Other Information
​
163

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​
​
​

Item 6.
Exhibits
​
163

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​

Signature
​
​
164

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​

2

Table of Contents

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

​

​

​

​

​

​

​
​
June 30, 
​
December 31, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(Unaudited)
​
​

​
​
(in millions, except share amounts)

Assets
​
​
​
​
​
​

Fixed maturities, available-for-sale (1)
​
$
73,986.3
​
$
73,360.7

Fixed maturities, trading (2026 and 2025 include $ 150.6 million and $ 185.0 million related to consolidated variable interest entities)
​
 
1,087.7
​
 
1,243.8

Equity securities (2026 and 2025 include $ 432.8 million and $ 428.6 million related to consolidated variable interest entities)
​
 
2,603.4
​
 
2,237.3

Mortgage loans (2026 and 2025 include $ 680.5 million and $ 726.5 million related to consolidated variable interest entities)
​
 
21,092.7
​
 
21,008.3

Real estate (2026 and 2025 include $ 854.0 million and $ 819.4 million related to consolidated variable interest entities)
​
 
2,447.8
​
 
2,409.7

Policy loans
​
 
875.5
​
 
866.7

Other investments (2026 and 2025 include $ 981.1 million and $ 838.4 million related to consolidated variable interest entities and $ 88.2 million and $ 167.1 million measured at fair value under the fair value option)
​
 
10,908.2
​
 
9,775.0

Total investments
​
 
113,001.6
​
 
110,901.5

Cash and cash equivalents (2026 and 2025 include $ 103.2 million and $ 89.1 million related to consolidated variable interest entities)
​
 
5,259.5
​
 
4,431.0

Accrued investment income (2026 and 2025 include $ 48.9 million and $ 43.8 million related to consolidated variable interest entities)
​
 
917.3
​
 
870.9

Reinsurance recoverable and deposit receivable
​
​
18,589.1
​
​
19,000.1

Premiums due and other receivables
​
 
3,796.5
​
 
3,894.5

Deferred acquisition costs
​
 
4,102.1
​
 
4,071.6

Market risk benefit asset
​
​
202.8
​
​
197.1

Property and equipment
​
 
778.7
​
 
701.4

Goodwill
​
 
1,595.4
​
 
1,600.5

Other intangibles
​
 
1,263.1
​
 
1,267.0

Separate account assets (2026 and 2025 include $ 43,323.8 million and $ 41,450.5 million related to consolidated variable interest entities)
​
 
202,396.0
​
 
193,622.6

Other assets
​
 
850.2
​
 
818.3

Total assets
​
$
352,752.3
​
$
341,376.5

Liabilities
​
​
​
​
​
​

Contractholder funds
​
$
47,068.4
​
$
45,380.3

Future policy benefits and claims
​
 
51,248.1
​
 
51,749.7

Market risk benefit liability
​
 
65.9
​
 
66.9

Other policyholder funds
​
​
944.0
​
​
940.8

Short-term debt
​
 
16.2
​
 
27.7

Long-term debt
​
 
4,324.4
​
 
3,926.3

Income taxes currently payable
​
 
16.8
​
 
29.5

Deferred income taxes
​
 
1,932.1
​
 
1,856.4

Separate account liabilities (2026 and 2025 include $ 43,323.8 million and $ 41,450.5 million related to consolidated variable interest entities)
​
 
202,396.0
​
 
193,622.6

Funds withheld payable
​
​
17,370.2
​
​
17,783.4

Other liabilities (2026 and 2025 include $ 71.2 million and $ 69.4 million related to consolidated variable interest entities)
​
 
14,480.7
​
 
13,601.6

Total liabilities
​
​
339,862.8
​
​
328,985.2

​
​
​
​
​
​
​

Redeemable noncontrolling interest (2026 and 2025 include $ 672.1 million and $ 440.9 million related to consolidated variable interest entities)
​
 
711.7
​
 
474.3

​
​
​
​
​
​
​

Stockholders’ equity
​
​
​
​
​
​

Common stock, par value $ 0.01 per share; 2,500,000,000 shares authorized; 499,185,352 and 496,884,232 shares issued as of 2026 and 2025; 214,635,434 and 217,380,912 shares outstanding as of 2026 and 2025
​
 
5.0
​
 
5.0

Additional paid-in capital
​
 
11,429.0
​
 
11,275.4

Retained earnings
​
 
18,542.2
​
 
18,071.3

Accumulated other comprehensive loss
​
 
( 4,065.8 )
​
 
( 4,188.4 )

Treasury stock, at cost; 284,549,918 and 279,503,320 shares as of 2026 and 2025
​
 
( 13,767.6 )
​
 
( 13,279.4 )

Total stockholders’ equity attributable to Principal Financial Group, Inc.
​
 
12,142.8
​
 
11,883.9

Noncontrolling interest
​
 
35.0
​
 
33.1

Total stockholders’ equity
​
 
12,177.8
​
 
11,917.0

Total liabilities and stockholders’ equity
​
$
352,752.3
​
$
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
​
For the six months ended

​
​
June 30, 
​
June 30, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(in millions, except per share data)

Revenues
​
​
​
​
​
​
​
​
​
​
​
​

Premiums and other considerations
​
$
1,460.8
​
$
1,396.5
​
$
2,608.9
​
$
3,147.8

Fees and other revenues
​
 
1,146.0
​
 
1,082.6
​
​
2,263.3
​
​
2,160.3

Net investment income
​
 
1,301.8
​
 
1,162.8
​
​
2,500.8
​
​
2,328.5

Net realized capital gains (losses) (1)
​
 
109.7
​
 
5.4
​
​
( 12.4 )
​
​
( 111.7 )

Net realized capital gains (losses) on funds withheld assets (1)
​
 
( 8.1 )
​
​
3.7
​
​
1.3
​
​
31.7

Change in fair value of funds withheld embedded derivative
​
​
( 104.4 )
​
​
20.3
​
​
73.0
​
​
( 189.4 )

Total revenues
​
 
3,905.8
​
 
3,671.3
​
​
7,434.9
​
​
7,367.2

Expenses
​
​
​
​
​
​
​
​
​
​
​
​

Benefits, claims and settlement expenses
​
 
1,992.1
​
 
1,839.9
​
​
3,603.2
​
​
4,059.9

Liability for future policy benefits remeasurement (gain) loss
​
​
7.4
​
​
( 4.3 )
​
​
( 7.3 )
​
​
( 2.1 )

Market risk benefit remeasurement (gain) loss
​
​
( 14.5 )
​
​
14.3
​
​
26.0
​
​
49.0

Dividends to policyholders
​
 
23.9
​
 
22.9
​
​
54.5
​
​
42.0

Operating expenses
​
 
1,400.6
​
 
1,295.4
​
​
2,780.4
​
​
2,686.4

Total expenses
​
 
3,409.5
​
 
3,168.2
​
​
6,456.8
​
​
6,835.2

Income before income taxes
​
 
496.3
​
 
503.1
​
​
978.1
​
​
532.0

Income taxes
​
 
66.0
​
 
69.6
​
​
134.9
​
​
35.6

Net income
​
 
430.3
​
 
433.5
​
​
843.2
​
​
496.4

Net income attributable to noncontrolling interest
​
 
26.9
​
 
27.3
​
​
15.2
​
​
42.1

Net income attributable to Principal Financial Group, Inc.
​
$
403.4
​
$
406.2
​
$
828.0
​
$
454.3

​
​
​
​
​
​
​
​
​
​
​
​
​

Earnings per common share
​
​
​
​
​
​
​
​
​
​
​
​

Basic earnings per common share
​
$
1.87
​
$
1.81
​
$
3.82
​
$
2.02

​
​
​
​
​
​
​
​
​
​
​
​
​

Diluted earnings per common share
​
$
1.84
​
$
1.79
​
$
3.77
​
$
2.00

(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
​
For the six months ended

​
​
June 30, 
​
June 30, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(in millions)

Net income
​
$
430.3
​
$
433.5
​
$
843.2
​
$
496.4

Other comprehensive income, net:
​
​
​
​
​
​
​
​
​
​
​
​

Net unrealized gains (losses) on available-for-sale securities
​
 
196.0
​
 
248.9
​
 
( 382.5 )
​
 
838.3

Net unrealized gains (losses) on derivative instruments
​
 
( 21.8 )
​
 
( 164.7 )
​
 
32.7
​
 
( 150.6 )

Liability for future policy benefits discount rate remeasurement gain (loss)
​
​
70.8
​
​
( 82.5 )
​
​
460.5
​
​
( 332.3 )

Market risk benefit nonperformance risk remeasurement gain (loss)
​
​
( 2.0 )
​
​
( 0.4 )
​
​
0.6
​
​
1.7

Foreign currency translation adjustment
​
 
30.5
​
 
82.3
​
 
1.5
​
 
155.7

Net unrecognized postretirement benefit obligation
​
 
3.9
​
 
( 6.6 )
​
 
3.6
​
 
( 3.7 )

Other comprehensive income
​
 
277.4
​
 
77.0
​
 
116.4
​
 
509.1

Comprehensive income
​
 
707.7
​
 
510.5
​
 
959.6
​
 
1,005.5

Comprehensive income attributable to noncontrolling interest
​
 
26.4
​
 
31.7
​
 
9.0
​
 
39.7

Comprehensive income attributable to Principal Financial Group, Inc.
​
$
681.3
​
$
478.8
​
$
950.6
​
$
965.8

​
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 April 1, 2025
​
$
5.0
​
$
11,157.8
​
$
17,459.3
​
$
( 4,785.9 )
​
$
( 12,619.4 )
​
$
51.5
​
$
11,268.3

Common stock issued
​
​
—
​
​
13.3
​
 
—
​
 
—
​
 
—
​
 
—
​
 
13.3

Stock-based compensation
​
​
—
​
​
31.3
​
 
( 3.2 )
​
 
—
​
 
—
​
 
0.1
​
 
28.2

Treasury stock acquired, common
​
​
—
​
​
—
​
 
—
​
 
—
​
 
( 152.2 )
​
 
—
​
 
( 152.2 )

Dividends to common stockholders
​
​
—
​
​
—
​
 
( 169.7 )
​
 
—
​
 
—
​
 
—
​
 
( 169.7 )

Distributions to noncontrolling interest
​
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 2.0 )
​
​
( 2.0 )

Contributions from noncontrolling interest
​
​
—
​
​
—
​
 
—
​
 
—
​
 
—
​
 
0.7
​
 
0.7

Purchase of subsidiary shares from noncontrolling interest (1)
​
​
—
​
​
0.2
​
 
—
​
 
—
​
 
—
​
 
—
​
 
0.2

Net income (1)
​
​
—
​
​
—
​
 
406.2
​
 
—
​
 
—
​
 
1.4
​
 
407.6

Other comprehensive income (1)
​
​
—
​
​
—
​
 
—
​
 
72.6
​
 
—
​
 
0.3
​
 
72.9

Balances as of June 30, 2025
​
$
5.0
​
$
11,202.6
​
$
17,692.6
​
$
( 4,713.3 )
​
$
( 12,771.6 )
​
$
52.0
​
$
11,467.3

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Balances as of April 1, 2026
​
$
5.0
​
$
11,350.4
​
$
18,318.9
​
$
( 4,343.7 )
​
$
( 13,515.3 )
​
$
33.4
​
$
11,848.7

Common stock issued
​
​
—
​
​
40.8
​
​
—
​
​
—
​
​
—
​
​
—
​
​
40.8

Stock-based compensation
​
​
—
​
​
37.8
​
​
( 3.6 )
​
​
—
​
​
—
​
​
—
​
​
34.2

Treasury stock acquired, common
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 252.3 )
​
​
—
​
​
( 252.3 )

Dividends to common stockholders
​
​
—
​
​
—
​
​
( 176.5 )
​
​
—
​
​
—
​
​
—
​
​
( 176.5 )

Distributions to noncontrolling interest
​
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 1.3 )
​
​
( 1.3 )

Contributions from noncontrolling interest
​
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
2.1
​
​
2.1

Net income (1)
​
​
—
​
​
—
​
​
403.4
​
​
—
​
​
—
​
​
0.6
​
​
404.0

Other comprehensive income (1)
​
​
—
​
​
—
​
​
—
​
​
277.9
​
​
—
​
​
0.2
​
​
278.1

Balances as of June 30, 2026
​
$
5.0
​
$
11,429.0
​
$
18,542.2
​
$
( 4,065.8 )
​
$
( 13,767.6 )
​
$
35.0
​
$
12,177.8

(1) Excludes amounts attributable to redeemable noncontrolling interest. See Note 15, Stockholders’ Equity, for further details.
​
See accompanying notes.
​

6

Table of Contents

Principal Financial Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity - continued
(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
​
 
27.2
​
 
—
​
 
—
​
 
—
​
 
—
​
 
27.3

Stock-based compensation
​
 
—
​
 
74.3
​
 
( 6.5 )
​
 
—
​
 
—
​
 
0.2
​
 
68.0

Treasury stock acquired, common
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 393.5 )
​
 
—
​
 
( 393.5 )

Dividends to common stockholders
​
 
—
​
 
—
​
 
( 338.7 )
​
 
—
​
 
—
​
 
—
​
 
( 338.7 )

Distributions to noncontrolling interest
​
 
—
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 2.8 )
​
 
( 2.8 )

Contributions from noncontrolling interest
​
 
—
​
 
—
​
 
—
​
 
—
​
 
—
​
 
4.1
​
 
4.1

Purchase of subsidiary shares from noncontrolling interest (1)
​
 
—
​
 
0.2
​
 
—
​
 
—
​
 
—
​
 
—
​
 
0.2

Net income (1)
​
 
—
​
 
—
​
 
454.3
​
 
—
​
 
—
​
 
4.7
​
 
459.0

Other comprehensive income (1)
​
 
—
​
 
—
​
 
—
​
 
511.5
​
 
—
​
 
0.9
​
 
512.4

Balances as of June 30, 2025
​
$
5.0
​
$
11,202.6
​
$
17,692.6
​
$
( 4,713.3 )
​
$
( 12,771.6 )
​
$
52.0
​
$
11,467.3

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

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
​
 
—
​
 
69.0
​
 
—
​
 
—
​
 
—
​
 
—
​
 
69.0

Stock-based compensation
​
 
—
​
 
84.9
​
 
( 7.1 )
​
 
—
​
 
—
​
 
—
​
 
77.8

Treasury stock acquired, common
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 488.2 )
​
 
—
​
 
( 488.2 )

Dividends to common stockholders
​
 
—
​
 
—
​
 
( 350.0 )
​
 
—
​
 
—
​
 
—
​
 
( 350.0 )

Distributions to noncontrolling interest
​
 
—
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 1.5 )
​
 
( 1.5 )

Contributions from noncontrolling interest
​
 
—
​
 
—
​
 
—
​
 
—
​
 
—
​
 
2.8
​
 
2.8

Purchase of subsidiary shares from noncontrolling interest (1)
​
 
—
​
 
( 0.3 )
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 0.3 )

Net income (1)
​
 
—
​
 
—
​
 
828.0
​
 
—
​
 
—
​
 
1.0
​
 
829.0

Other comprehensive income (1)
​
 
—
​
 
—
​
 
—
​
 
122.6
​
 
—
​
 
( 0.4 )
​
 
122.2

Balances as of June 30, 2026
​
$
5.0
​
$
11,429.0
​
$
18,542.2
​
$
( 4,065.8 )
​
$
( 13,767.6 )
​
$
35.0
​
$
12,177.8

(1) Excludes amounts attributable to redeemable noncontrolling interest. See Note 15, Stockholders’ Equity, for further details.

See accompanying notes.
​
​
​
​
​
​

7

Table of Contents

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

​

​

​

​

​

​

​
​
For the six months ended

​
​
June 30, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(in millions)

Net cash provided by operating activities
​
$
2,264.5
​
$
1,789.2

Investing activities
​
​
​
​
​
​

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

Purchases
​
 
( 8,445.5 )
​
 
( 7,384.7 )

Sales
​
 
2,137.5
​
 
3,294.0

Maturities
​
 
4,790.7
​
 
3,547.6

Mortgage loans acquired or originated
​
 
( 1,863.5 )
​
 
( 1,704.9 )

Mortgage loans sold or repaid
​
 
1,481.1
​
 
1,470.2

Real estate acquired
​
 
( 75.8 )
​
 
( 64.7 )

Real estate sold
​
​
14.6
​
​
9.5

Net purchases of property and equipment
​
​
( 101.4 )
​
​
( 39.6 )

Purchase of business or interests in subsidiaries, net of cash acquired
​
​
( 14.1 )
​
​
—

Sale of interests in subsidiaries, net of cash divested
​
​
2.5
​
​
—

Net change in other investments
​
​
( 307.1 )
​
​
( 329.8 )

Net cash used in investing activities
​
 
( 2,381.0 )
​
 
( 1,202.4 )

Financing activities
​
​
​
​
​
​

Issuance of common stock
​
​
69.0
​
​
27.3

Acquisition of treasury stock
​
​
( 492.7 )
​
​
( 399.6 )

Payments for financing element derivatives
​
​
( 19.6 )
​
​
( 21.4 )

Purchase of subsidiary shares from noncontrolling interest
​
​
( 0.3 )
​
​
( 1.4 )

Dividends to common stockholders
​
​
( 350.0 )
​
​
( 338.7 )

Issuance of long-term debt
​
​
394.9
​
​
—

Principal repayments of long-term debt
​
 
—
​
 
( 400.0 )

Net repayments of short-term borrowings
​
 
( 11.2 )
​
 
( 11.6 )

Investment contract deposits
​
 
6,344.4
​
 
5,720.4

Investment contract withdrawals
​
 
( 5,457.0 )
​
 
( 5,745.7 )

Net increase in banking operation deposits
​
 
467.5
​
 
32.3

Other
​
​
—
​
​
( 1.3 )

Net cash provided by (used in) financing activities
​
 
945.0
​
 
( 1,139.7 )

Net increase (decrease) in cash and cash equivalents
​
 
828.5
​
 
( 552.9 )

Cash and cash equivalents at beginning of period
​
​
4,431.0
​
​
4,211.9

Cash and cash equivalents at end of period
​
$
5,259.5
​
$
3,659.0

​
​
​
​
​
​
​

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

​
​
​
​

8

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 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 and six months ended June 30, 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.
​

9

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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.

​

10

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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.
​
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.
​

11

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 June 30, 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.
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.

12

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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:
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 2026
​
December 31, 2025

​
​
Total
​
Total
​
Total
​
Total

​
  ​ ​ ​
assets
  ​ ​ ​
liabilities
  ​ ​ ​
assets
  ​ ​ ​
liabilities

​
​
(in millions)

Mandatory retirement savings funds (1)
​
$
43,756.7
​
$
43,323.8
​
$
41,865.2
​
$
41,450.5

Real estate (2)
​
 
916.2
​
 
27.3
​
 
883.4
​
 
34.2

Sponsored investment funds (3)
​
 
1,116.0
​
 
25.1
​
 
851.4
​
 
16.3

Residential mortgage loans (4)
​
 
682.6
​
 
18.6
​
 
728.9
​
 
18.8

Asset-backed limited partnership (5)
​
​
107.5
​
​
—
​
​
256.3
​
​
—

Total
​
$
46,579.0
​
$
43,394.8
​
$
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 $ 672.1 million and $ 440.9 million redeemable noncontrolling interest for sponsored investment funds as of June 30, 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.

13

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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.
​

14

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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)

June 30, 2026
​
​
​
​
​
​

Fixed maturities, available-for-sale:
​
​
​
​
​
​

Corporate
​
$
263.1
​
$
310.7

Residential mortgage-backed pass-through securities
​
​
3,662.8
​
​
3,769.7

Commercial mortgage-backed securities
​
​
5,620.6
​
​
5,938.5

Collateralized debt obligations (2)
​
​
5,871.3
​
​
5,880.3

Other debt obligations
​
​
11,121.1
​
​
12,857.1

Fixed maturities, trading:
​
​
​
​
​
​

Residential mortgage-backed pass-through securities
​
​
7.8
​
​
7.8

Commercial mortgage-backed securities
​
​
69.7
​
​
69.7

Collateralized debt obligations (2)
​
​
207.3
​
​
207.3

Other debt obligations
​
​
260.2
​
​
260.2

Equity securities
​
​
119.0
​
​
119.0

Other investments:
​
​
​
​
​
​

Other limited partnership and fund interests (3)
​
​
3,651.5
​
​
5,512.2

​
​
​
​
​
​
​

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 June 30, 2026 and December 31, 2025, the maximum exposure to loss for other limited partnership and fund interests includes $ 249.3 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.

15

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 June 30, 2026 and December 31, 2025, money market mutual funds we manage held $ 6.4 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 16, 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.

16

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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)

June 30, 2026
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Fixed maturities, available-for-sale:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

U.S. government and agencies
​
$
2,270.0
​
$
2.3
​
$
291.3
​
$
—
​
$
1,981.0

Non-U.S. governments
​
​
423.1
​
​
13.4
​
​
39.5
​
​
—
​
​
397.0

States and political subdivisions
​
​
8,298.1
​
​
44.7
​
​
1,020.8
​
​
—
​
​
7,322.0

Corporate
​
​
40,570.9
​
​
665.2
​
​
3,185.4
​
​
43.6
​
​
38,007.1

Residential mortgage-backed pass-through securities
​
​
3,769.7
​
​
27.8
​
​
134.7
​
​
—
​
​
3,662.8

Commercial mortgage-backed securities
​
​
5,938.5
​
​
8.6
​
​
324.8
​
​
1.7
​
​
5,620.6

Collateralized debt obligations (2)
​
​
5,880.3
​
​
6.5
​
​
15.5
​
​
—
​
​
5,871.3

Other debt obligations
​
​
11,485.1
​
​
56.4
​
​
416.7
​
​
0.3
​
​
11,124.5

Total excluding portfolio layer method basis adjustment
​
​
78,635.7
​
​
824.9
​
​
5,428.7
​
​
45.6
​
​
73,986.3

Unallocated portfolio layer method basis adjustment (3)
​
​
( 23.7 )
​
​
23.7
​
​
—
​
​
—
​
​
—

Total fixed maturities, available-for-sale
​
$
78,612.0
​
$
848.6
​
$
5,428.7
​
$
45.6
​
$
73,986.3

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
​
​
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 $ 656.9 million and $ 473.8 million as of June 30, 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.

17

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

The amortized cost and fair value of fixed maturities, available-for-sale as of June 30, 2026, by expected maturity, were as follows:
​
​

​

​

​

​

​

​

​
  ​ ​ ​
Amortized cost (1)
  ​ ​ ​
Fair value

​
​
(in millions)

Due in one year or less
​
$
1,578.7
​
$
1,556.4

Due after one year through five years
​
​
10,609.9
​
​
10,486.2

Due after five years through ten years
​
​
9,857.6
​
​
9,811.5

Due after ten years
​
​
29,515.9
​
​
25,853.0

Subtotal
​
​
51,562.1
​
​
47,707.1

Mortgage-backed and other asset-backed securities
​
​
27,073.6
​
​
26,279.2

Total
​
$
78,635.7
​
$
73,986.3

(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).

18

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 June 30, 
​
For the six months ended June 30, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(in millions)

Fixed maturities, available for sale:
​
​
​
​
​
​
​
​
​
​
​
​

Gross gains
​
$
2.4
​
$
4.8
​
$
2.5
​
$
5.6

Gross losses
​
​
( 44.6 )
​
​
( 23.5 )
​
​
( 45.8 )
​
​
( 53.8 )

Net credit losses (1)
​
​
( 9.8 )
​
​
( 3.8 )
​
​
( 42.2 )
​
​
( 8.8 )

Hedging, net (2)
​
​
( 2.0 )
​
​
14.5
​
​
( 7.3 )
​
​
22.3

Fixed maturities, trading (3)
​
​
( 7.1 )
​
​
( 1.2 )
​
​
( 7.0 )
​
​
( 3.0 )

Equity securities (4)
​
​
120.6
​
​
75.4
​
​
62.4
​
​
38.4

Mortgage loans
​
​
( 21.9 )
​
​
( 16.6 )
​
​
( 20.4 )
​
​
( 17.1 )

Derivatives (2)
​
​
37.5
​
​
( 86.4 )
​
​
17.7
​
​
( 71.2 )

Other (5)
​
​
34.6
​
​
42.2
​
​
27.7
​
​
( 24.1 )

Net realized capital gains (losses)
​
$
109.7
​
$
5.4
​
$
( 12.4 )
​
$
( 111.7 )

(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 $( 5.5 ) million and $( 1.3 ) million for the three months ended June 30, 2026 and 2025, respectively, and $( 4.3 ) million and $( 1.1 ) million for the six months ended June 30, 2026 and 2025, respectively. This excludes $( 0.6 ) million and $ 3.0 million for the three months ended June 30, 2026 and 2025, respectively, and $( 3.7 ) million and $ 5.8 million for the six months ended June 30, 2026 and 2025, respectively, of unrealized gains (losses) that were reported in market risk benefit remeasurement (gain) loss. In addition, this excludes $( 4.6 ) million and $( 10.2 ) million for the three months ended June 30, 2026 and 2025, respectively, and $( 7.5 ) million and $( 10.4 ) million for the six months ended June 30, 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 $ 104.3 million and $ 2.4 million for the three months ended June 30, 2026 and 2025, respectively, and $ 54.8 million and $( 26.6 ) million for the six months ended June 30, 2026 and 2025, respectively. This excludes $ 35.7 million and $ 19.0 million for the three months ended June 30, 2026 and 2025, respectively, and $ 37.1 million and $ 28.2 million for the six months ended June 30, 2026 and 2025, respectively, of unrealized gains (losses) that were reported in net investment income. In addition, this excludes $ 0.0 million and $ 0.0 million for the three months ended June 30, 2026 and 2025, respectively, and $ 0.0 million and $ 0.0 million for the six months ended June 30, 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 $ 1,012.6  million and $ 829.1 million for the three months ended June 30, 2026 and 2025, and $ 1,398.9 million and $ 1,593.9 million for the six months ended June 30, 2026 and 2025, respectively.

19

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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.
​

20

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the three months ended June 30, 2026

​
​
​
​
​
​
​
​
​
​
​
​
​
​
Residential
​
​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
mortgage-
​
Commercial
​
Collateralized
​
​
​
​
​
​

​
​
U.S.
​
​
​
​
States and
​
​
​
​
backed 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
​
$
—
​
$
—
​
$
50.1
​
$
—
​
$
1.6
​
$
—
​
$
0.4
​
$
52.2

Additions for credit losses not previously recorded
​
​
—
​
​
—
​
​
—
​
​
2.9
​
​
—
​
​
0.3
​
​
—
​
​
—
​
​
3.2

Additional increases (decreases) for credit losses on securities with an allowance recorded in the previous period
​
​
( 0.1 )
​
​
—
​
​
—
​
​
5.0
​
​
—
​
​
0.2
​
​
—
​
​
( 0.1 )
​
​
5.0

Write-offs charged against allowance
​
​
—
​
​
—
​
​
—
​
​
( 14.5 )
​
​
—
​
​
( 0.4 )
​
​
—
​
​
—
​
​
( 14.9 )

Foreign currency translation adjustment
​
​
—
​
​
—
​
​
—
​
​
0.1
​
​
—
​
​
—
​
​
—
​
​
—
​
​
0.1

Ending balance
​
$
—
​
$
—
​
$
—
​
$
43.6
​
$
—
​
$
1.7
​
$
—
​
$
0.3
​
$
45.6

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accrued interest written off to net investment income
​
$
—
​
$
—
​
$
—
​
$
0.6
​
$
—
​
$
—
​
$
—
​
$
—
​
$
0.6

​

21

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the three months ended June 30, 2025

​
​
​
​
​
​
​
​
​
​
​
​
​
​
Residential
​
​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
mortgage-
​
Commercial
​
Collateralized
​
​
​
​
​
​

​
​
U.S.
​
​
​
​
States and
​
​
​
​
backed 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
​
$
—
​
$
—
​
$
—
​
$
6.8
​
$
—
​
$
—
​
$
—
​
$
0.2
​
$
7.0

Additions for credit losses not previously recorded
​
 
—
​
 
—
​
 
—
​
 
—
​
 
—
​
 
0.3
​
 
0.1
​
 
—
​
 
0.4

Write-offs charged against allowance
​
 
—
​
 
—
​
 
—
​
 
( 4.3 )
​
 
—
​
 
—
​
 
—
​
 
—
​
 
( 4.3 )

Ending balance
​
$
—
​
$
—
​
$
—
​
$
2.5
​
$
—
​
$
0.3
​
$
0.1
​
$
0.2
​
$
3.1

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

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

​
​

22

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the six months ended June 30, 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
​
​
—
​
​
—
​
​
—
​
​
32.6
​
​
—
​
​
0.3
​
​
—
​
​
—
​
​
32.9

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
​
​
( 0.1 )
​
​
—
​
​
—
​
​
5.6
​
​
—
​
​
0.4
​
​
—
​
​
( 0.1 )
​
​
5.8

Write-offs charged against allowance
​
​
—
​
​
—
​
​
—
​
​
( 18.7 )
​
​
—
​
​
( 0.4 )
​
​
—
​
​
—
​
​
( 19.1 )

Ending balance
​
$
—
​
$
—
​
$
—
​
$
43.6
​
$
—
​
$
1.7
​
$
—
​
$
0.3
​
$
45.6

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accrued interest written off to net investment income
​
$
—
​
$
—
​
$
—
​
$
1.6
​
$
—
​
$
—
​
$
—
​
$
—
​
$
1.6

​

23

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the six months ended June 30, 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

Additions for credit losses not previously recorded
 
​
—
 
​
—
 
​
—
 
​
—
​
​
—
 
​
0.3
 
​
0.1
 
​
—
 
​
0.4

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
​
​
—
​
​
—
​
​
—
​
​
( 16.2 )
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 16.2 )

Foreign currency translation adjustment
​
​
—
​
​
—
​
​
—
​
​
0.1
​
​
—
​
​
—
​
​
—
​
​
—
​
​
0.1

Ending balance
 
$
—
 
$
—
 
$
—
 
$
2.5
​
$
—
 
$
0.3
 
$
0.1
 
$
0.2
 
$
3.1

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

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

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

24

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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:
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 2026

​
​
Less than
​
Greater than or equal to
​
​
​
​
​
​

​
​
twelve months
​
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
​
$
792.8
​
$
17.4
​
$
818.8
​
$
273.9
​
$
1,611.6
​
$
291.3

Non-U.S. governments
​
​
28.2
​
​
0.8
​
​
198.8
​
​
38.7
​
​
227.0
​
​
39.5

States and political subdivisions
​
​
392.6
​
​
6.6
​
​
4,700.0
​
​
1,014.2
​
​
5,092.6
​
​
1,020.8

Corporate
​
​
4,180.1
​
​
110.2
​
​
18,002.6
​
​
3,068.7
​
​
22,182.7
​
​
3,178.9

Residential mortgage-backed pass-through securities
​
​
1,001.7
​
​
10.9
​
​
967.1
​
​
123.8
​
​
1,968.8
​
​
134.7

Commercial mortgage-backed securities
​
​
1,433.2
​
​
16.8
​
​
3,150.8
​
​
302.7
​
​
4,584.0
​
​
319.5

Collateralized debt obligations (2)
​
​
2,112.0
​
​
10.2
​
​
73.2
​
​
5.3
​
​
2,185.2
​
​
15.5

Other debt obligations
​
​
3,355.3
​
​
23.6
​
​
3,101.4
​
​
392.8
​
​
6,456.7
​
​
416.4

Total fixed maturities, available-for-sale
​
$
13,295.9
​
$
196.5
​
$
31,012.7
​
$
5,220.1
​
$
44,308.6
​
$
5,416.6

(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 $ 43,278.6 million in available-for-sale fixed maturities with gross unrealized losses of $ 5,327.4 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 June 30, 2026. Gross unrealized losses in our fixed maturities portfolio increased during the six months ended June 30, 2026, primarily due to an increase in interest rates.
For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life’s consolidated portfolio held 1,903 securities with a carrying value of $ 12,851.2 million and unrealized losses of $ 183.4 million reflecting an average price of 99 as of June 30, 2026. Of this portfolio, 94 % was investment grade (rated AAA through BBB-) as of June 30, 2026, with associated unrealized losses of $ 154.6 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 5,460 securities with a carrying value of $ 30,427.4 million and unrealized losses of $ 5,144.0 million as of June 30, 2026. The average credit rating of this portfolio was A with an average price of 86 as of June 30, 2026. Of the $ 5,144.0 million in unrealized losses, the corporate sector accounts for $ 3,005.2 million in unrealized losses with an average price of 85 and an average credit rating of A-. Furthermore, unrealized losses include $ 1,007.1 million within the states and political subdivisions sector with an average price of 82 and an average credit rating of AA -; $ 367.7 million within the collateralized mortgage obligation security sector with an average price of 86 and an average credit rating of AA+; and $ 302.0 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.

25

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

Because we expected to recover our amortized cost, we did not record an allowance for credit loss on these securities as of June 30, 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.

26

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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:
​
​

​

​

​

​

​

​

​
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025

​
​
(in millions)

Net unrealized losses on fixed maturities, available-for-sale (1)
​
$
( 4,564.3 )
​
$
( 4,081.8 )

Net unrealized gains (losses) on derivative instruments
​
 
1.4
​
 
( 40.0 )

Adjustments for assumed changes in amortization patterns
​
 
4.7
​
 
4.2

Adjustments for assumed changes in policyholder liabilities
​
 
31.1
​
 
21.2

Net unrealized losses on other investments and noncontrolling interest adjustments
​
 
( 80.1 )
​
 
( 58.3 )

Provision for deferred income tax benefits
​
 
996.4
​
 
893.7

Net unrealized losses on available-for-sale securities and derivative instruments
​
$
( 3,610.8 )
​
$
( 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. 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. Prior to 2026, our Chilean operations entered into private placement contracts for commercial, industrial and office space properties whereby our Chilean operations purchased the real estate and/or building from the seller-lessee but then leased 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.

27

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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:
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 2026

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023
  ​ ​ ​
2022
  ​ ​ ​
Prior
  ​ ​ ​
Total

​
​
(in millions)

Commercial mortgage loans:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

A- and above
 
$
568.0
​
$
1,640.8
​
$
1,180.0
​
$
815.0
​
$
1,074.3
​
$
8,220.4
​
$
13,498.5

BBB+ thru BBB-
 
​
139.0
​
​
183.9
​
​
200.7
​
​
24.8
​
​
69.0
​
​
1,120.0
​
​
1,737.4

BB+ thru BB-
 
​
88.0
​
​
110.9
​
​
75.7
​
​
44.6
​
​
102.2
​
​
199.7
​
​
621.1

B+ and below
 
​
—
​
​
—
​
​
—
​
​
8.9
​
​
—
​
​
234.3
​
​
243.2

Total
 
$
795.0
​
$
1,935.6
​
$
1,456.4
​
$
893.3
​
$
1,245.5
​
$
9,774.4
​
$
16,100.2

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Direct financing leases:
 
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

A- and above
 
$
—
​
$
—
​
$
3.9
​
$
—
​
$
40.5
​
$
227.5
​
$
271.9

BBB+ thru BBB-
 
​
—
​
​
—
​
​
5.9
​
​
—
​
​
84.8
​
​
97.3
​
​
188.0

BB+ thru BB-
 
​
—
​
​
—
​
​
0.7
​
​
2.1
​
​
0.5
​
​
36.1
​
​
39.4

B+ and below
 
​
—
 
​
45.5
 
​
—
 
​
—
 
​
—
 
​
10.2
 
​
55.7

Total
 
$
—
​
$
45.5
​
$
10.5
​
$
2.1
​
$
125.8
​
$
371.1
​
$
555.0

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Residential mortgage loans:
 
​
​
 
​
​
 
​
​
 
​
​
 
​
​
 
​
​
 
​
​

Performing
 
$
722.2
​
$
1,305.8
​
$
321.3
​
$
321.8
​
$
878.9
​
$
1,607.5
​
$
5,157.5

Non-performing
 
​
—
​
​
0.1
​
​
0.6
​
​
4.5
​
​
7.4
​
​
13.4
​
​
26.0

Total excluding portfolio layer method basis adjustments
 
$
722.2
​
$
1,305.9
​
$
321.9
​
$
326.3
​
$
886.3
​
$
1,620.9
​
​
5,183.5

Unallocated portfolio layer method basis adjustment (1)
 
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
( 6.9 )

Total
 
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
$
5,176.6

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Other loans:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Performing
​
$
—
​
$
62.2
​
$
17.8
​
$
17.7
​
$
—
​
$
—
​
$
97.7

Non-performing
​
​
—
​
​
3.8
​
​
6.0
​
​
2.1
​
​
—
​
​
—
​
​
11.9

Total
​
$
—
​
$
66.0
​
$
23.8
​
$
19.8
​
$
—
​
$
—
​
$
109.6

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Reinsurance recoverable and deposit receivable
 
​
​
 
​
​
 
​
​
 
$
18,592.2

​

28

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 $ 69.0 million, $ 1.8 million, $ 25.0 million and $ 1.2 million, respectively, as of June 30, 2026, and $ 65.2 million, $ 1.5 million, $ 20.0 million and $ 1.4 million, respectively, as of December 31, 2025.

29

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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.

30

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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

​

​

​

​

​

​

​

​

​

​
​
June 30, 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
​
$
195.6
​
$
42.0

Residential mortgage loans
​
​
19.9
​
​
20.6
​
​
9.7

Other loans
​
​
6.4
​
​
11.9
​
​
11.9

Total
​
$
84.7
​
$
228.1
​
$
63.6

​
​

​

​

​

​

​

​

​

​

​

​
​
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 June 30, 
​
For the six months ended June 30, 
 

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2026
  ​ ​ ​
2025
​

​
​
(in millions)
​

Commercial mortgage loans
​
$
—
​
$
0.8
​
$
0.5
​
$
0.8
​

Residential mortgage loans
​
​
0.2
​
​
0.2
​
​
0.3
​
​
0.3
​

Total
​
$
0.2
​
$
1.0
​
$
0.8
​
$
1.1
​

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 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
​
$
11.6
​
$
5.9
​
$
51.7
​
$
69.2
​
$
16,031.0
​
$
16,100.2
​
$
0.1

Direct financing leases
​
​
—
​
​
0.9
​
​
—
​
​
0.9
​
​
554.1
​
​
555.0
​
​
—

Residential mortgage loans (2)
​
​
71.6
​
​
18.2
​
​
32.3
​
​
122.1
​
​
5,061.4
​
​
5,183.5
​
​
16.5

Other loans
​
​
1.8
​
​
2.0
​
​
14.3
​
​
18.1
​
​
91.5
​
​
109.6
​
​
2.4

Total
​
$
85.0
​
$
27.0
​
$
98.3
​
$
210.3
​
$
21,738.0
​
$
21,948.3
​
$
19.0

​

31

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 June 30, 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.

32

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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 June 30, 2026

​
​
Commercial
​
Direct
​
Residential
​
Reinsurance
​
​
​

​
  ​ ​ ​
mortgage loans
  ​ ​ ​
financing leases
  ​ ​ ​
mortgage loans
  ​ ​ ​
recoverables
  ​ ​ ​
Total

​
​
(in millions)

Beginning balance
​
$
149.4
​
$
9.0
​
$
14.9
​
$
3.2
​
$
176.5

Provision
​
​
20.0
​
​
( 1.1 )
​
​
( 0.2 )
​
​
( 0.1 )
​
​
18.6

Foreign currency translation adjustment
​
​
—
​
​
0.1
​
​
—
​
​
—
​
​
0.1

Ending balance
​
$
169.4
​
$
8.0
​
$
14.7
​
$
3.1
​
$
195.2

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accrued interest income written off to net investment income
​
$
0.5
​
$
—
​
$
—
​
$
—
​
$
0.5

​

33

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the three months ended June 30, 2025

​
​
Commercial
​
Direct
​
Residential
​
Reinsurance
​
​
​

​
  ​ ​ ​
mortgage loans
  ​ ​ ​
financing leases
  ​ ​ ​
mortgage loans
  ​ ​ ​
recoverables
  ​ ​ ​
Total

​
​
(in millions)

Beginning balance
​
$
185.1
​
$
3.2
​
$
10.2
​
$
3.2
​
$
201.7

Provision
​
 
10.5
​
 
( 0.1 )
​
 
3.3
​
 
—
​
 
13.7

Charge-offs
​
 
—
​
 
—
​
 
( 0.1 )
​
 
—
​
 
( 0.1 )

Recoveries
​
 
0.4
​
 
—
​
 
1.0
​
 
—
​
 
1.4

Foreign currency translation adjustment
​
 
0.1
​
 
—
​
 
0.1
​
 
—
​
 
0.2

Ending balance
​
$
196.1
​
$
3.1
​
$
14.5
​
$
3.2
​
$
216.9

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

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

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the six months ended June 30, 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
 
​
12.2
​
​
( 0.7 )
​
​
( 1.9 )
​
​
( 0.1 )
 
​
9.5

Charge-offs
 
​
( 30.2 )
 
​
—
 
​
—
 
​
—
 
​
( 30.2 )

Foreign currency translation adjustment
​
​
—
​
​
( 0.2 )
​
​
—
​
​
—
​
​
( 0.2 )

Ending balance
 
$
169.4
 
$
8.0
 
$
14.7
 
$
3.1
 
$
195.2

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accrued interest income written off to net investment income
 
$
0.5
 
$
—
 
$
—
 
$
—
 
$
0.5

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the six months ended June 30, 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
 
​
8.2
​
​
( 0.1 )
​
​
2.4
​
​
( 0.1 )
 
​
10.4

Charge-offs
 
​
( 1.3 )
​
​
—
​
​
( 0.1 )
​
​
—
 
​
( 1.4 )

Recoveries
 
​
0.4
​
​
—
​
​
4.8
​
​
—
 
​
5.2

Foreign currency translation adjustment
​
​
0.2
​
​
0.2
​
​
0.1
​
​
—
​
​
0.5

Ending balance
 
$
196.1
​
$
3.1
​
$
14.5
​
$
3.2
 
$
216.9

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accrued interest income written off to net investment income
 
$
0.3
​
$
—
​
$
—
​
$
—
 
$
0.3

​
For both the three and six months ended June 30, 2026 and 2025, no allowance was recorded for other loans.
​

34

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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
​
For the six months ended

​
​
June 30, 
​
June 30, 

​
  ​ ​ ​
2026
  ​ ​ ​
2025
  ​ ​ ​
2026
  ​ ​ ​
2025

​
​
(in millions)

Commercial mortgage loans:
 
​
  ​
 
​
  ​
​
​
  ​
 
​
  ​

Purchased (1)
​
$
124.6
​
$
30.4
​
$
124.6
​
$
70.3

Sold (2)
​
​
308.5
​
​
40.3
​
​
356.6
​
​
109.2

Residential mortgage loans:
​
 
​
​
 
​
​
 
​
​
 
​

Purchased
​
 
568.6
​
 
385.9
​
 
884.8
​
 
650.9

Sold
​
 
4.8
​
 
5.9
​
 
10.5
​
 
9.8

(1) 2026 primarily includes loans purchased within the general account to align with diversification, risk - return and long - term asset - liability management objectives.
(2) 2026 includes $ 300.7 million of mortgage loans that were previously held for sale within the funds withheld assets.

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

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 2026
​
December 31, 2025
 

​
  ​ ​ ​
Amortized
  ​ ​ ​
Percent
  ​ ​ ​
Amortized
  ​ ​ ​
Percent
 

​
​
cost
​
of total
​
cost
​
of total
 

​
​
($ in millions)
 

Geographic distribution
​
​
​
​
​
​
​
​
​
​
​

New England
​
$
409.1
​
2.5
%  
$
440.8
​
2.7
%

Middle Atlantic
​
 
4,585.0
​
28.6
​
 
4,402.6
​
26.6
​

East North Central
​
 
489.3
​
3.0
​
 
463.2
​
2.8
​

West North Central
​
​
275.3
​
1.7
​
​
284.4
​
1.7
​

South Atlantic
​
 
2,852.9
​
17.7
​
 
3,068.4
​
18.6
​

East South Central
​
 
291.7
​
1.8
​
 
366.4
​
2.2
​

West South Central
​
 
1,450.6
​
9.0
​
 
1,422.2
​
8.6
​

Mountain
​
 
1,239.0
​
7.7
​
 
1,217.9
​
7.4
​

Pacific
​
 
4,027.2
​
25.0
​
 
4,327.1
​
26.2
​

International
​
 
480.1
​
3.0
​
 
525.1
​
3.2
​

Total
​
$
16,100.2
​
100.0
%  
$
16,518.1
​
100.0
%

​
​
​
​
​
​
​
​
​
​
​
​

Property type distribution
​
​
​
​
​
​
​
​
​
​
​

Office
​
$
2,609.1
​
16.2
%  
$
2,798.3
​
16.9
%

Retail
​
 
1,479.6
​
9.2
​
 
1,580.0
​
9.6
​

Industrial
​
 
4,316.6
​
26.8
​
 
4,288.0
​
26.0
​

Apartments
​
 
6,676.5
​
41.5
​
 
6,976.9
​
42.2
​

Hotel
​
 
30.4
​
0.2
​
 
31.0
​
0.2
​

Mixed use/other
​
 
988.0
​
6.1
​
 
843.9
​
5.1
​

Total
​
$
16,100.2
​
100.0
%  
$
16,518.1
​
100.0
%

​

35

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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 and six months ended June 30, 2026 and 2025.
Securities Posted as Collateral
As of June 30, 2026 and December 31, 2025, we posted $ 6,630.7 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 June 30, 2026 and December 31, 2025, we posted $ 3,658.6 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 June 30, 2026 and December 31, 2025, $ 603.7 million and $ 485.0 million, respectively, could be sold or repledged by the secured party.

36

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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)

June 30, 2026
​
​
​
​
​
​
​
​
​
​
​
​

Derivative assets
​
$
1,751.3
​
$
( 369.8 )
​
$
( 1,360.0 )
​
$
21.5

Reverse repurchase agreements
​
​
63.5
​
​
—
​
​
( 63.5 )
​
​
—

Total
​
$
1,814.8
​
$
( 369.8 )
​
$
( 1,423.5 )
​
$
21.5

​
​
​
​
​
​
​
​
​
​
​
​
​

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.

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)

June 30, 2026
​
​
​
​
​
​
​
​
​
​
​
​

Derivative liabilities
​
$
526.2
​
$
( 369.8 )
​
$
( 143.6 )
​
$
12.8

​
​
​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​
​
​

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.

37

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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 June 30, 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.
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.

38

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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.
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.

39

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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.
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.

40

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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 $ 414.4 million and $ 491.1 million in cash and securities under collateral arrangements as of June 30, 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 June 30, 2026 and December 31, 2025, was $ 516.3 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 $ 414.4 million and $ 491.1 million as of June 30, 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 June 30, 2026, we would be required to post up to an additional $ 118.9 million of collateral to our counterparties.
As of June 30, 2026 and December 31, 2025, we had received $ 1,225.0 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.

41

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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:
​
​

​

​

​

​

​

​

​
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025

​
​
(in millions)

Notional amounts of derivative instruments
​
​
​
​
​
​

Interest rate contracts:
​
​
​
​
​
​

Interest rate swaps
​
$
63,019.9
​
$
60,267.1

Interest rate options
​
​
4,528.0
​
​
3,578.0

Interest rate futures
​
 
2,504.7
​
 
1,994.7

Interest rate forwards
​
 
1,837.0
​
 
1,687.0

Foreign exchange contracts:
​
​
​
​
​
​

Currency swaps
​
​
4,205.4
​
​
3,538.7

Currency forwards
​
​
1,177.4
​
​
914.6

Equity contracts:
​
​
​
​
​
​

Equity options
​
 
8,523.5
​
 
7,449.3

Equity futures
​
 
2,135.5
​
 
1,699.1

Equity total return swaps
​
​
829.9
​
​
499.6

Credit contracts:
​
​
​
​
​
​

Credit default swaps
​
 
611.9
​
 
531.0

Credit total return swaps
​
​
500.0
​
​
500.0

Other contracts:
​
​
​
​
​
​

Embedded derivatives
​
 
24,534.9
​
 
24,650.7

Total notional amounts at end of period
​
$
114,408.1
​
$
107,309.8

​
​
​
​
​
​
​

Credit exposure of derivative instruments
​
​
​
​
​
​

Interest rate contracts:
​
​
​
​
​
​

Interest rate options
​
$
11.2
​
$
4.0

Interest rate swaps
​
 
7.9
​
 
13.2

Interest rate forwards
​
​
2.6
​
​
1.1

Foreign exchange contracts:
​
​
​
​
​
​

Currency swaps
​
 
233.1
​
 
190.0

Currency forwards
​
 
29.2
​
 
30.0

Equity contracts:
​
​
​
​
​
​

Equity options
​
 
1,441.1
​
 
971.5

Total return swaps
​
​
6.4
​
​
—

Credit contracts:
​
​
​
​
​
​

Total return swaps
​
​
26.3
​
​
18.8

Credit default swaps
​
 
2.6
​
 
3.4

Total gross credit exposure
​
 
1,760.4
​
 
1,232.0

Less: collateral received
​
 
1,441.1
​
 
923.7

Net credit exposure
​
$
319.3
​
$
308.3

​

42

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 2026
(Unaudited)

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

​

​

​

​

​

​

​

​

​

​

​

​

​
​
Derivative assets (1)
​
Derivative liabilities (2)

​
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025

​
​
(in millions)

Derivatives designated as hedging instruments
​
​
​
​
​
​
​
​
​
​
​
​

Interest rate contracts
​
$
—
​
$
—
​
$
74.3
​
$
69.8

Foreign exchange contracts
​
 
182.9
​
 
144.6
​
 
110.3
​
 
138.8

Total derivatives designated as hedging instruments
​
$
182.9
​
$
144.6
​
$
184.6
​
$
208.6

​
​
​
​
​
​
​
​
​
​
​
​
​

Derivatives not designated as hedging instruments
​
​
​
​
​
​
​
​
​
​
​
​

Interest rate contracts
​
$
20.5
​
$
16.9
​
$
136.0
​
$
136.0

Foreign exchange contracts
​
 
73.1
​
 
70.3
​
 
10.7
​
 
9.4

Equity contracts
​
 
1,447.0
​
 
971.5
​
 
185.8
​
 
191.6

Credit contracts
​
 
27.8
​
 
21.2
​
 
9.4
​
 
6.4

Other contracts
​
 
—
​
 
—
​
 
( 563.9 )
​
 
( 1,223.2 )

Total derivatives not designated as hedging instruments
​
 
1,568.4
​
 
1,079.9
​
 
( 222.0 )
​
 
( 879.8 )

​
​
​
​
​
​
​
​
​
​
​
​
​

Total derivative instruments
​
$
1,751.3
​
$
1,224.5
​
$
( 37.4 )
​
$
( 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 $ 2,142.5 million and $ 1,410.2 million as of June 30, 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 $( 2,706.4 ) million and $( 2,633.4 ) million as of June 30, 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 June 30, 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.

43

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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.
​
​

​

​

​

​

​

​

​

​

​

​

​

​
​
June 30, 2026

​
​
​
​
​
​
​
​
​
​
​
Weighted

​
​
​
​
​
​
​
​
Maximum
​
average

​
​
Notional
​
Fair
​
future
​
expected life

​
  ​ ​ ​
amount
  ​ ​ ​
value
  ​ ​ ​
payments
  ​ ​ ​
(in years)

​
​
(in millions)
​
​

Single name credit default swaps
​
​
​
​
​
​
​
​
​
​
​

Corporate debt
​
​
​
​
​
​
​
​
​
​
​

AA
​
$
117.6
​
$
0.6
​
$
117.6
​
6.1

A
​
​
157.1
​
​
( 5.7 )
​
​
157.1
​
6.4

BBB
​
​
252.2
​
​
0.2
​
​
252.2
​
4.7

Total single name credit default swaps
​
​
526.9
​
​
( 4.9 )
​
​
526.9
​
5.5

​
​
​
​
​
​
​
​
​
​
​
​

Single name total return swaps
​
​
​
​
​
​
​
​
​
​
​

Government/municipalities
​
​
​
​
​
​
​
​
​
​
​

AAA
​
​
40.0
​
​
1.6
​
​
40.0
​
29.1

AA
​
​
195.0
​
​
6.7
​
​
195.0
​
20.0

A
​
​
210.0
​
​
13.7
​
​
210.0
​
21.1

BBB
​
​
55.0
​
​
2.8
​
​
55.0
​
14.8

Total single name total return swaps
​
​
500.0
​
​
24.8
​
​
500.0
​
20.6

​
​
​
​
​
​
​
​
​
​
​
​

Total credit derivatives sold
​
$
1,026.9
​
$
19.9
​
$
1,026.9
​
12.9

​
​

​

​

​

​

​

​

​

​

​

​

​

​
​
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

​

44

Table of Contents
Principal Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements – (continued)
June 30, 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
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025
  ​ ​ ​
June 30, 2026
  ​ ​ ​
December 31, 2025

​
​
(in millions)

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

Active hedging relationships
​
$
2,860.1
​
$
2,741.8
​
$
( 29.5 )
​
$
( 15.8 )

Discontinued hedging relationships
​
​
481.6
​
​
782.9
​
​
( 4.7 )
​
​
( 6.2 )

Total fixed maturities, available-for-sale in active or discontinued hedging relationships
​
$
3,341.7
​
$
3,524.7
​
$
( 34.2 )
​
$
( 22.0 )

​
​
​
​
​
​
​
​
​
​
​
​
​

Mortgage loans (2):
​
​
​
​
​
​
​
​
​
​
​
​