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

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Active hedging relationships

$
1,366.0

$
1,471.5

$
( 6.9 )

$
( 3.6 )

Discontinued hedging relationships


299.3


345.0


1.0


1.2

Total mortgage loans in active or discontinued hedging relationships

$
1,665.3

$
1,816.5

$
( 5.9 )

$
( 2.4 )















Investment contracts:













Active hedging relationships

$
5,145.2

$
3,743.8

$
29.4

$
35.4

Total investment contracts in active or discontinued hedging relationships

$
5,145.2

$
3,743.8

$
29.4

$
35.4

(1) These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of June 30, 2026 and December 31, 2025, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 2,438.5 million and $ 2,303.5 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 23.7 ) million and $( 16.9 ) million, respectively, and the amount of the designated hedged items were $ 924.0 million and $ 970.0 million, respectively.
(2) These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of June 30, 2026 and December 31, 2025, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 1,366.0 million and $ 1,471.5 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $( 6.9 ) million and $( 3.7 ) million, respectively, and the amount of the designated hedged items were $ 192.5 million and $ 220.0 million, respectively.

45

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

Derivative instruments’ gains (losses) excluded from the assessment of hedge effectiveness were $( 1.3 ) million and $( 2.4 ) million for the three months ended June 30, 2026 and 2025, respectively, and $( 0.7 ) million and $( 1.3 ) million for the six months ended June 30, 2026 and 2025, respectively.
Cash Flow Hedges
We utilize floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and have used them to eliminate the variability in cash flows of liabilities.
We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed rate instruments to eliminate the exposure to future currency volatility on those items.
We use bond forwards and floating-to-fixed rate interest rate swaps to hedge forecasted transactions.
The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.
The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 0.7 years. As of June 30, 2026, we had $ 14.4 million of net losses reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income.
The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position.



































Amount of gain (loss) recognized





in AOCI on derivatives





For the three months ended

For the six months ended

Derivatives in cash



June 30, 

June 30, 

flow hedging relationships
    
Related hedged item
    
2026
    
2025
    
2026
    
2025





(in millions)

Interest rate contracts
 
Fixed maturities, available-for-sale

$
0.8

$
4.0

$
( 14.4 )

$
10.5

Foreign exchange contracts
 
Fixed maturities, available-for-sale


( 27.1 )


( 209.5 )


56.4


( 198.6 )

Total



$
( 26.3 )

$
( 205.5 )

$
42.0

$
( 188.1 )


We expect to reclassify net gains of $ 16.6 million from AOCI into net income in the next twelve months, which includes both net deferred gains on discontinued hedges and net gains on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions.

46

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

Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations
The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations. Gains (losses) reflected in the table increase (decrease) the amount reported in the consolidated statement of operations revenue line items and decrease (increase) the amount reported in the expense line items.























For the three months ended June 30, 2026






Net realized






Net investment

capital gains

Benefits, claims



income related

(losses) related to

and settlement



to hedges of

hedges of fixed

expenses related



fixed maturities,

maturities,

to hedges of



available-for-sale

available-

investment


    
and mortgage loans
    
for-sale
    
contracts



(in millions)

Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported

$
1,301.8

$
109.7

$
1,992.1












Gains on fair value hedging relationships:










Interest rate contracts:










Gain (loss) recognized on hedged item

$
( 8.0 )

$
—

$
36.8

Gain (loss) recognized on derivatives


6.9


—


( 33.9 )

Amortization of hedged item basis adjustments


1.7


—


—

Amounts related to periodic settlements on derivatives


5.2


—


0.5












Foreign exchange contracts:










Loss recognized on hedged item


—


( 2.0 )


—

Gain recognized on derivatives


—


2.0


—

Amounts related to periodic settlements on derivatives


0.7


—


—

Total gain recognized for fair value hedging relationships

$
6.5

$
—

$
3.4












Gains (losses) on cash flow hedging relationships:










Interest rate contracts:










Loss reclassified from AOCI on derivatives

$
—

$
—

$
( 0.1 )

Amounts related to periodic settlements on derivatives


( 0.2 )


—


—












Foreign exchange contracts:










Amounts related to periodic settlements on derivatives


9.0


—


—

Total gain (loss) recognized for cash flow hedging relationships

$
8.8

$
—

$
( 0.1 )




47

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






Net realized






Net investment

capital gains

Benefits, claims



income related

(losses) related to

and settlement



to hedges of

hedges of fixed

expenses related



fixed maturities,

maturities,

to hedges of



available-for-sale

available-

investment


    
and mortgage loans
    
for-sale
    
contracts



(in millions)

Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported

$
1,162.8

$
5.4

$
1,839.9












Gains (losses) on fair value hedging relationships:










Interest rate contracts:










Gain recognized on hedged item

$
15.0

$
—

$
16.2

Loss recognized on derivatives


( 16.4 )


—


( 20.6 )

Amortization of hedged item basis adjustments


1.3


—


—

Amounts related to periodic settlements on derivatives


10.0


—


( 5.0 )












Foreign exchange contracts:










Gain recognized on hedged item


—


17.2


—

Loss recognized on derivatives


—


( 17.2 )


—

Amounts related to periodic settlements on derivatives


0.8


—


—

Total gain (loss) recognized for fair value hedging relationships

$
10.7

$
—

$
( 9.4 )












Gains on cash flow hedging relationships:










Interest rate contracts:










Gain reclassified from AOCI on derivatives

$
0.6

$
—

$
—

Amounts related to periodic settlements on derivatives


( 0.2 )


—


—












Foreign exchange contracts:










Gain reclassified from AOCI on derivatives


—


2.7


—

Amounts related to periodic settlements on derivatives


9.1


—


—

Total gain recognized for cash flow hedging relationships

$
9.5

$
2.7

$
—



48

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



Net investment









income related to

Net realized capital

Benefits, claims and



hedges of fixed

gains (losses)

settlement expenses



maturities,

related to hedges of

related to hedges of



available-for-sale

fixed maturities,

investment


    
and mortgage loans
    
available-for-sale
    
contracts



(in millions)

Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported

$
2,500.8

$
( 12.4 )

$
3,603.2












Gains on fair value hedging relationships:










Interest rate contracts:










Gain (loss) recognized on hedged item

$
( 10.7 )

$
—

$
64.9

Gain (loss) recognized on derivatives


10.1


—


( 62.6 )

Amortization of hedged item basis adjustments


2.3


—


—

Amounts related to periodic settlements on derivatives


10.9


—


0.6












Foreign exchange contracts:










Loss recognized on hedged item


—


( 7.5 )


—

Gain recognized on derivatives


—


7.5


—

Amounts related to periodic settlements on derivatives


1.5


—


—

Total gain recognized for fair value hedging relationships

$
14.1

$
—

$
2.9












Gains (losses) on cash flow hedging relationships:










Interest rate contracts:










Loss reclassified from AOCI on derivatives

$
—

$
—

$
( 0.1 )

Amounts related to periodic settlements on derivatives


( 0.3 )


—


—












Foreign exchange contracts:










Loss reclassified from AOCI on derivatives


—


( 0.1 )


—

Amounts related to periodic settlements on derivatives


17.4


—


—

Total gain (loss) recognized for cash flow hedging relationships

$
17.1

$
( 0.1 )

$
( 0.1 )




49

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



Net investment









income related to

Net realized capital

Benefits, claims and



hedges of fixed

gains (losses)

settlement expenses



maturities,

related to hedges of

related to hedges of



available-for-sale

fixed maturities,

investment


    
and mortgage loans
    
available-for-sale
    
contracts



(in millions)

Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported

$
2,328.5

$
( 111.7 )

$
4,059.9












Gains (losses) on fair value hedging relationships:

 
  

 
  

 
  

Interest rate contracts:

 
  

 
  

 
  

Gain recognized on hedged item

$
42.4

$
—

$
51.7

Loss recognized on derivatives

 
( 42.5 )

 
—

 
( 56.6 )

Amortization of hedged item basis adjustments

 
1.9

 
—

 
—

Amounts related to periodic settlements on derivatives

 
20.1

 
—

 
( 9.8 )












Foreign exchange contracts:

 
  

 
  

 
  

Gain recognized on hedged item

 
—

 
25.0

 
—

Loss recognized on derivatives

 
—

 
( 25.0 )

 
—

Amounts related to periodic settlements on derivatives

 
1.5

 
—

 
—

Total gain (loss) recognized for fair value hedging relationships

$
23.4

$
—

$
( 14.7 )












Gains (losses) on cash flow hedging relationships:

 
  

 
  

 
  

Interest rate contracts:

 
  

 
  

 
  

Gain (loss) reclassified from AOCI on derivatives

$
1.3

$
—

$
( 0.1 )

Amounts related to periodic settlements on derivatives

 
( 0.3 )

 
—

 
—












Foreign exchange contracts:

 
  

 
  

 
  

Gain reclassified from AOCI on derivatives

 
—

 
2.7

 
—

Amounts related to periodic settlements on derivatives

 
17.6

 
—

 
—

Total gain (loss) recognized for cash flow hedging relationships

$
18.6

$
2.7

$
( 0.1 )


Net Investment Hedges
We may take measures to hedge our net equity investments in our foreign operations from currency risk. This is accomplished with the use of currency forwards.
Gains and losses associated with net investment hedges are recorded in AOCI and will be released into net income if our investment in the foreign operation is sold or substantially liquidated.

50

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

The following tables show the effect of foreign exchange contracts used to hedge a portion of our net investment in certain sponsored investment funds on the consolidated financial statements.




























    


    


    
Amount of loss



Amount of loss recognized

reclassified from AOCI into



in AOCI on derivatives

net realized capital gains (losses)



for the three months ended

for the three months ended



June 30, 

June 30, 

Derivatives in net investment hedging relationships
    
2026
    
2025
    
2026
    
2025


 
(in millions)

Foreign exchange contracts

$
( 0.4 )

$
( 2.5 )

$
( 0.2 )

$
—

Total

$
( 0.4 )

$
( 2.5 )

$
( 0.2 )

$
—




































Amount of loss



Amount of loss recognized

reclassified from AOCI into



in AOCI on derivatives

net realized capital gains (losses)



for the six months ended

for the six months ended



June 30,

June 30,

Derivatives in net investment hedging relationships
    
2026
    
2025

2026
    
2025



(in millions)

Foreign exchange contracts
 
$
( 0.1 )

$
( 3.6 )

$
( 0.2 )

$
—

Total
 
$
( 0.1 )

$
( 3.6 )

$
( 0.2 )

$
—


Derivatives Not Designated as Hedging Instruments
We use futures, certain swaps, option collars, options and forwards in effective economic hedges that have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations. However, the change in fair value of the funds withheld embedded derivative is separately reported on the consolidated statements of operations. Additionally, mark-to-market gains and losses as well as periodic and final settlements for derivatives used to hedge market risk benefits are reported in market risk benefit (gain) loss on the consolidated statements of operations.
The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations and are net of amounts on funds withheld invested assets that are passed directly to the reinsurer. See Note 10, Reinsurance, for further details.





























Amount of gain (loss) recognized in

Amount of gain (loss) recognized in



net income on derivatives for the

net income on derivatives for the



three months ended June 30, 

six months ended June 30, 

Derivatives not designated as hedging instruments
    
2026
    
2025
    
2026
    
2025



(in millions)

Interest rate contracts

$
7.8

$
( 148.0 )

$
2.8

$
( 186.6 )

Foreign exchange contracts


( 3.8 )


( 5.0 )


13.5

 
16.0

Equity contracts


637.3


162.6


478.7

 
22.3

Credit contracts


24.2


( 12.1 )


8.3

 
( 28.1 )

Other contracts (1)


( 889.2 )


( 320.6 )


( 659.3 )

 
( 474.6 )

Total

$
( 223.7 )

$
( 323.1 )

$
( 156.0 )

$
( 651.0 )

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


51

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

5. Deferred Acquisition Costs and Other Actuarial Balances
Deferred Acquisition Costs
Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contracts are capitalized in the period they are incurred. Maintenance costs and acquisition costs that are not deferrable are charged to operating expenses as incurred.
For our long-duration insurance products and certain investment contracts, DAC is amortized on a constant level basis over the expected life of the contracts using groupings and assumptions consistent with those used in computing policyholder liabilities. For each of our long-duration insurance products, we select an inforce measure as a basis for amortization that will result in a constant level amortization pattern for the expected life of the contract. If our actual contract terminations differ from our expectation, the amortization pattern is adjusted on a prospective basis.
Some of our life and disability products within the Benefits and Protection segment have renewal commissions resulting in new DAC capitalizations in the years following the initial capitalization. We also have life products that allow for underwritten death benefit increases and cost of living adjustments, resulting in an immaterial amount of new DAC capitalizations each year. The new capitalizations are added to the existing DAC balance when incurred and amortized over the remaining life of the business.
DAC on short-duration group benefits contracts is amortized over the estimated life of the underlying contracts.
We review and update actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for DAC and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. We make model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.
DAC amortization expense of $ 100.7 million and $ 98.7 million for the three months ended June 30, 2026 and 2025, and $ 200.5 million and $ 197.2 million for the six months ended June 30, 2026 and 2025, respectively, related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations.

52

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

The following tables summarize disaggregated DAC amounts and reconcile the totals to those reported in the consolidated statements of financial position.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Retirement and Income Solutions:
 

  
 

  

Workplace savings and retirement solutions

$
532.0

$
528.9

Individual variable annuities


406.0

 
385.3

Pension risk transfer


26.1

 
24.8

Individual fixed deferred annuities


58.8

 
66.9

Investment only


12.1

 
10.6

Total Retirement and Income Solutions


1,035.0

 
1,016.5

Benefits and Protection:




 


Specialty Benefits:




 


Individual disability


724.6

 
714.8

Life Insurance:




 


Universal life


1,509.0

 
1,514.3

Term life


726.9

 
723.5

Participating life


67.9

 
71.0

Total Benefits and Protection


3,028.4

 
3,023.6

Short-duration contracts


37.4

 
30.2

Other balances (1)


1.3

 
1.3

Total DAC per consolidated statements of financial position

$
4,102.1

$
4,071.6

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

Retirement and Income Solutions

The balances and changes in DAC were as follows:



































Workplace







Individual






savings and

Individual

Pension

fixed






retirement

variable

risk

deferred

Investment


    
solutions
    
annuities
    
transfer
    
annuities
    
only



(in millions)

Balances as of January 1, 2025

$
515.5

$
323.4

$
21.1

$
84.2

$
13.0

Costs deferred

 
50.9


96.9


5.0


—


2.6

Amortized to expense

 
( 37.5 )


( 35.0 )


( 1.3 )


( 17.3 )


( 5.0 )

Balances as of December 31, 2025


528.9


385.3


24.8


66.9


10.6

Costs deferred


22.2


40.2


2.0


—


4.0

Amortized to expense


( 19.1 )


( 19.5 )


( 0.7 )


( 8.1 )


( 2.5 )

Balances as of June 30, 2026

$
532.0

$
406.0

$
26.1

$
58.8

$
12.1



53

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

Benefits and Protection

The balances and changes in DAC were as follows:





























Specialty Benefits

Life Insurance



Individual











    
disability
    
Universal life
    
Term life
    
Participating life



(in millions)

Balances as of January 1, 2025

$
696.9

$
1,527.7

$
710.8

$
77.8

Costs deferred

 
71.9


81.2


75.6


1.2

Amortized to expense

 
( 54.0 )


( 94.6 )


( 62.9 )


( 8.0 )

Balances as of December 31, 2025


714.8


1,514.3


723.5


71.0

Costs deferred


37.3


41.9


35.6


0.7

Amortized to expense


( 27.5 )


( 47.2 )


( 32.2 )


( 3.8 )

Balances as of June 30, 2026

$
724.6

$
1,509.0

$
726.9

$
67.9


Unearned Revenue Liability
An unearned revenue liability is established when we collect fees or other policyholder assessments, inclusive of cost of insurance charges, administrative charges and other similar fees, for services to be provided in future periods. These unearned front-end fees are deferred and the amortization is recorded using an approach consistent with DAC.
The unearned revenue liability is included within other policyholder funds in the consolidated statements of financial position. The following table summarizes disaggregated unearned revenue liability amounts and reconciles the totals to those reported in the consolidated statements of financial position.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Benefits and Protection - Life Insurance:
 

  
 

  

Universal life

$
544.4

$
532.9

Total unearned revenue liability

$
544.4

$
532.9


Benefits and Protection

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
















    
For the six months ended
    
For the year ended



June 30, 2026

December 31, 2025



(in millions)

Balance at beginning of period

$
532.9

$
510.1

Deferrals

 
28.7

 
56.0

Revenue recognized

 
( 17.2 )

 
( 33.2 )

Balance at end of period

 
544.4

 
532.9

Reinsurance impact

 
( 212.6 )

 
( 215.6 )

Balance at end of period after reinsurance

$
331.8

$
317.3



6. Separate Account Balances
The separate accounts are legally segregated and are not subject to claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. Refer to Note 16, Fair Value Measurements, for further information on the valuation methodologies.

54

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

We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations.
The Retirement and Income Solutions segment offers variable annuity contracts that allow the policyholder to allocate deposits into various investment options in a separate account. The variable annuity contracts can also include GMWB riders and guaranteed minimum death benefit (“GMDB”) riders that are accounted for as MRBs. Retirement and Income Solutions also offers certain group annuity contracts that have separate accounts as an investment option.
The Principal Asset Management segment offers certain retirement accumulation products in Latin America where the segregated funds and associated obligation to the client are consolidated as separate account assets and liabilities within the financial statements. We have determined that summary totals are the most meaningful presentation for these funds.
The Benefits and Protection segment offers variable universal life products with separate account investment options.
Refer to Note 9, Market Risk Benefits, for further information on the MRBs associated with the contracts mentioned above.
As of June 30, 2026 and December 31, 2025, the separate accounts included a separate account valued at $ 93.3 million and $ 81.7 million, respectively, which primarily included shares of our stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under our 2001 demutualization. These shares are included in both basic and diluted earnings per share calculations. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations.
Separate Account Assets
The aggregate fair value of assets, by major investment category, supporting separate accounts were as follows:
















    
June 30, 2026
    
December 31, 2025



(in millions)

Fixed maturities:


  


  

U.S. government and agencies

$
10,446.7

$
10,027.9

Non-U.S. governments

 
9,072.5

 
9,122.1

States and political subdivisions

 
147.4

 
162.3

Corporate

 
13,279.2

 
13,404.2

Residential mortgage-backed pass-through securities

 
3,476.1

 
3,484.1

Commercial mortgage-backed securities

 
292.7

 
261.2

Other debt obligations

 
445.3

 
408.0

Total fixed maturities

 
37,159.9

 
36,869.8

Equity securities

 
152,607.9

 
141,251.0

Real estate

 
445.0

 
445.9

Other investments

 
7,999.7

 
8,848.3

Cash and cash equivalents

 
3,272.1

 
5,135.4

Other assets

 
911.4

 
1,072.2

Total separate account assets per consolidated statements of financial position

$
202,396.0

$
193,622.6



55

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

Separate Account Liabilities
The following tables summarize disaggregated separate account liability amounts and reconcile the totals to separate account liabilities reported in the consolidated statements of financial position.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Retirement and Income Solutions:
 

  
 

  

Group retirement contracts

$
143,243.9

$
136,674.3

Individual variable annuities

 
7,086.9

 
7,364.9

Total Retirement and Income Solutions

 
150,330.8

 
144,039.2

Principal Asset Management – International Pension:

 


 
  

Latin America:

 


 
  

Pension

 
43,323.8

 
41,450.5

Benefits and Protection - Life Insurance:

 


 
  

Universal life

 
8,411.1

 
7,807.9

Other balances (1)

 
330.3

 
325.0

Total separate account liabilities per consolidated statements of financial position

$
202,396.0

$
193,622.6

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

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




























    
For the six months ended
    
For the year ended



June 30, 2026

December 31, 2025



Group

Individual

Group

Individual



retirement

variable

retirement

variable


    
contracts
    
annuities
    
contracts
    
annuities



(in millions)

Balance at beginning of period

$
136,674.3

$
7,364.9

$
125,103.1

$
8,334.9

Premiums and deposits (1)

 
9,202.0


62.1

 
15,458.7

 
157.1

Policy charges


( 165.6 )


( 75.3 )

 
( 344.1 )

 
( 166.6 )

Surrenders, withdrawals and benefit payments (1)


( 11,060.0 )


( 742.9 )

 
( 17,649.8 )

 
( 1,790.0 )

Investment performance


10,443.4


479.2

 
15,664.0

 
850.5

Net transfers (to) from general account (1)


( 1,501.4 )


( 1.1 )

 
( 1,433.1 )

 
( 21.0 )

Other (2)


( 348.8 )


—

 
( 124.5 )

 
—

Balance at end of period

$
143,243.9

$
7,086.9

$
136,674.3

$
7,364.9















Cash surrender value (3)

$
142,494.6

$
6,996.0

$
135,606.1

$
7,265.2

(1) Within the policyholder account balances rollforwards in Note 7, Contractholder Funds, amounts in these lines for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in net transfers from (to) separate account.
(2) Includes amounts to be settled between the separate account and general account due to the timing of trade settlements as of the reporting date.
(3) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges.

56

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

Principal Asset Management – International Pension
The balances and the changes in separate account liabilities for Latin America – Pension were as follows:
















 
For the six months ended

For the year ended


    
June 30, 2026
    
December 31, 2025


 
(in millions)

Balance at beginning of period

$
41,450.5

$
32,802.2

Premiums and deposits

 
2,129.2

 
3,546.2

Policy charges

 
( 10.3 )

 
( 17.7 )

Surrenders, withdrawals and benefit payments


( 2,261.1 )

 
( 3,962.7 )

Investment performance


3,081.8

 
5,392.1

Other


( 15.5 )

 
2.7

Foreign currency translation adjustment


( 1,050.8 )

 
3,687.7

Balance at end of period

$
43,323.8

$
41,450.5









Cash surrender value

$
43,323.8

$
41,450.5


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

















For the six months ended

For the year ended


    
June 30, 2026
    
December 31, 2025



(in millions)

Balance at beginning of period

$
7,807.9
 
$
6,806.7

Premiums and deposits (1)


291.5

 
572.7

Policy charges


( 69.7 )

 
( 135.4 )

Surrenders, withdrawals and benefit payments (1)


( 243.8 )

 
( 374.4 )

Investment performance


602.5

 
938.5

Net transfers (to) from general account (1)


22.7

 
( 0.2 )

Balance at end of period

$
8,411.1

$
7,807.9









Cash surrender value (2)

$
8,487.4

$
7,873.6

(1) Within the policyholder account balances rollforwards in Note 7, Contractholder Funds, amounts in these lines are reflected in net transfers from (to) separate account.
(2) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. Certain products include surrender value enhancement riders that result in cash surrender values greater than account balances.


57

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

7. Contractholder Funds
Contractholder funds include policyholder account balances related to contracts with significant insurance risk and investment contracts.
The following tables summarize disaggregated policyholder account balance amounts and reconcile the totals to contractholder funds reported in the consolidated statements of financial position.

















June 30, 2026

December 31, 2025



(in millions)

Retirement and Income Solutions:
    

  
    

  

Workplace savings and retirement solutions

$
16,828.8

$
15,808.1

Individual variable annuities

 
5,626.9

 
4,273.0

Individual fixed deferred annuities

 
3,364.8

 
3,728.0

Total Retirement and Income Solutions

 
25,820.5

 
23,809.1

Benefits and Protection – Life Insurance:

 


 
  

Universal life

 
6,597.7

 
6,867.5

Corporate:

 


 
  

Inter-segment eliminations

 
( 330.5 )

 
( 358.5 )

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

 
32,087.7

 
30,318.1









Reconciling items:

 


 
  

Investment contracts without significant fee revenue (1)

 
14,570.4

 
14,662.7

Other balances (2)

 
410.3

 
399.5

Total contractholder funds per consolidated statements of financial position

$
47,068.4

$
45,380.3

(1) Includes GICs, funding agreements, individual fixed income annuities and guaranteed pension contracts. These contracts are not included within the disaggregated rollforward or guaranteed minimum interest rate (“GMIR”) disclosures below.
(2) Includes insignificant balances for long-duration contracts and amounts that are not accrued to the benefit of the contractholder and, therefore, are not included within the disaggregated rollforward or GMIR disclosures below.

58

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

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











































For the six months ended June 30, 2026

For the year ended December 31, 2025
 



Workplace







Workplace










savings and

Individual

Individual

savings and

Individual

Individual
 



retirement

variable

fixed deferred

retirement

variable

fixed deferred
 


    
solutions
    
annuities
    
annuities (1)
    
solutions
    
annuities
    
annuities (1)
 



($ in millions)
 

Balance at beginning of period

$
15,808.1

$
4,273.0

$
3,728.0

$
13,982.8

$
1,906.7

$
4,460.7


Premiums and deposits


3,157.3


915.8


14.0

 
5,734.4

 
2,296.3

 
24.8


Policy charges


( 17.5 )


—


—

 
( 36.7 )

 
—

 
—


Surrenders, withdrawals and benefit payments


( 1,802.7 )


( 820.4 )


( 428.7 )

 
( 4,206.8 )

 
( 1,927.4 )

 
( 878.5 )


Net transfers (to) from separate account (2)


( 615.4 )


681.9


—

 
( 162.1 )

 
1,653.9

 
—


Interest credited


312.6


63.2


50.6

 
522.5

 
82.7

 
121.9


Change in fair value of embedded derivative


—


506.9


4.4


—


236.6


5.9


Other


( 13.6 )


6.5


( 3.5 )

 
( 26.0 )

 
24.2

 
( 6.8 )


Balance at end of period

$
16,828.8

$
5,626.9

$
3,364.8

$
15,808.1

$
4,273.0

$
3,728.0























Weighted-average crediting rate (3)


4.01
%

3.23
%

3.18
%
 
3.87
%  
 
3.37
%  
 
3.16
%

Cash surrender value (4)

$
15,518.4

$
5,350.2

$
3,190.6

$
14,606.4

$
4,123.4

$
3,525.6


(1) We use the deposit method of accounting for the reinsurance of this exited business.
(2) Within the separate account liabilities rollforwards in Note 6, Separate Account Balances, these transfers for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account.
(3) The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value.
(4) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. The cash surrender value for RILA products also includes an equity and bond adjustment that may result in cash surrender value being greater than account balance.

The net amount at risk for policyholder account balances for Individual variable annuities is equal to the MRB net amount at risk, as reported in Note 9, Market Risk Benefits. Workplace savings and retirement solutions and Individual fixed deferred annuities do not have guarantees that provide for benefits in excess of the current policyholder account balances.

59

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

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


















    
For the six months ended
    
For the year ended
 



June 30, 2026

December 31, 2025
 



($ in millions)
 

Balance at beginning of period

$
6,867.5

$
6,953.7


Premiums and deposits

 
672.7

 
1,305.7


Policy charges

 
( 444.0 )

 
( 886.0 )


Surrenders, withdrawals and benefit payments

 
( 556.5 )

 
( 587.7 )


Net transfers from (to) separate account (1)


( 70.4 )

 
( 198.1 )


Interest credited


143.0

 
304.2


Change in fair value of embedded derivative


11.2


17.3


Other


( 25.8 )

 
( 41.6 )


Balance at end of period


6,597.7

 
6,867.5


Reinsurance impact


( 2,950.4 )


( 3,045.1 )


Balance at end of period after reinsurance

$
3,647.3

$
3,822.4











Weighted-average crediting rate (2)


4.19
%   
 
4.11
%

Net amount at risk (3)

$
85,660.7

$
86,094.5


Cash surrender value (4)

$
5,795.5

$
6,045.7


(1) Within the separate account liabilities rollforwards in Note 6, Separate Account Balances, these transfers are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account.
(2) The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value, including indexed credits.
(3) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the death benefit in excess of the current account balance or the fixed death benefit at the consolidated statement of financial position date.
(4) Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges.



60

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

Guaranteed Minimum Interest Rate
The account values, for contracts with significant insurance risk and investment contracts with significant fee revenue by range of GMIR and the related range of difference, in basis points, between rates credited to policyholders and the respective GMIR were as follows. The amounts are before reinsurance impacts of our exited U.S. retail fixed annuity and ULSG businesses.









































June 30, 2026



Excess of crediting rates over GMIR





Up to 0.50%

0.51% to 1.00%

1.01% to 2.00%

2.01% or more




    
At GMIR
    
above GMIR
    
above GMIR
    
above GMIR
    
above GMIR
    
Total


 
(in millions)

Retirement and Income Solutions
 

  
 

  
 

  
 

  
 

  
 

  

Workplace savings and retirement solutions
 

  
 

  
 

  
 

  
 

  
 

  

Up to 1.00 %

$
—
 
$
—

$
—

$
—

$
—

$
—

1.01 % - 2.00 %


—
 

—


2,502.0


709.4


—


3,211.4

2.01 % - 3.00 %


127.0
 

20.2


75.0


1,660.9


8,560.6


10,443.7

3.01 % - 4.00 %


7.8
 

—


—


—


—


7.8

4.01 % and above
 

10.5
 

—


—


—


—


10.5

Subtotal
 

145.3
 

20.2


2,577.0


2,370.3


8,560.6


13,673.4

No GMIR
 


 













3,155.4

Total
 


 












$
16,828.8





















Individual variable annuities
 


 


 


 


 


 



Up to 1.00 %

$
13.8

$
—

$
—

$
—

$
—

$
13.8

1.01 % - 2.00 %


3.4


—


—


—


—


3.4

2.01 % - 3.00 %


183.6


—


—


—


—


183.6

3.01 % - 4.00 %


—


—


—


—


—


—

4.01 % and above
 

—


—


—


—


—


—

Subtotal
 

200.8


—


—


—


—


200.8

No GMIR
 
















5,426.1

Total
 















$
5,626.9





















Individual fixed deferred annuities
 


 


 


 


 


 



Up to 1.00 %

$
150.0

$
5.1

$
13.6

$
40.0

$
870.5

$
1,079.2

1.01 % - 2.00 %


60.6


—


1.5


3.9


8.1


74.1

2.01 % - 3.00 %


1,957.1


—


—


—


—


1,957.1

3.01 % - 4.00 %


130.0


—


—


—


—


130.0

4.01 % and above
 

—


—


—


—


—


—

Subtotal
 

2,297.7


5.1


15.1


43.9


878.6


3,240.4

No GMIR
 
















124.4

Total
 















$
3,364.8





















Benefits and Protection - Life Insurance
 


 


 


 


 


 



Universal life
 


 


 


 


 


 



Up to 1.00 %

$
—

$
—

$
—

$
14.6

$
37.2

$
51.8

1.01 % - 2.00 %


225.7


—


336.7


634.3


473.8


1,670.5

2.01 % - 3.00 %


530.6


571.1


670.0


401.1


0.2


2,173.0

3.01 % - 4.00 %


1,320.9


71.0


92.1


21.0


2.3


1,507.3

4.01 % and above
 

19.1


26.5


2.2


1.5


—


49.3

Subtotal
 

2,096.3


668.6


1,101.0


1,072.5


513.5


5,451.9

No GMIR
 
















1,145.8

Total
 















$
6,597.7



61

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









































December 31, 2025



Excess of crediting rates over GMIR






Up to 0.50%

0.51% to 1.00%

1.01% to 2.00%

2.01% or more





    
At GMIR
    
above GMIR
    
above GMIR
    
above GMIR
    
above GMIR
    
Total


 
(in millions)

Retirement and Income Solutions



















Workplace savings and retirement solutions



















Up to 1.00 %

$
—

$
—

$
—

$
—

$
—

$
—

1.01 % - 2.00 %

 
—


2,700.0


—


741.4


—


3,441.4

2.01 % - 3.00 %

 
195.0


189.1


673.2


3,935.8


4,471.3


9,464.4

3.01 % - 4.00 %

 
7.6


—


—


—


—


7.6

4.01 % and above

 
11.9


—


—


—


—


11.9

Subtotal

 
214.5


2,889.1


673.2


4,677.2


4,471.3


12,925.3

No GMIR

 















2,882.8

Total
















$
15,808.1





















Individual variable annuities

 
  

 
  

 
  

 
  

 
  

 
  

Up to 1.00 %

$
14.8

$
—

$
—

$
—

$
—

$
14.8

1.01 % - 2.00 %

 
3.9

 
—

 
—

 
—

 
—

 
3.9

2.01 % - 3.00 %

 
197.2

 
—

 
—

 
—

 
—

 
197.2

3.01 % - 4.00 %

 
—

 
—

 
—

 
—

 
—

 
—

4.01 % and above

 
—

 
—

 
—

 
—

 
—

 
—

Subtotal

 
215.9

 
—

 
—

 
—

 
—

 
215.9

No GMIR

 


 
  

 
  

 
  

 
  

 
4,057.1

Total




 
  

 
  

 
  

 
  

$
4,273.0





















Individual fixed deferred annuities

 
  

 
  

 
  

 
  

 
  

 
  

Up to 1.00 %

$
166.2

$
8.9

$
25.7

$
78.8

$
969.1

$
1,248.7

1.01 % - 2.00 %

 
66.8

 
0.2

 
3.1

 
21.8

 
7.6

 
99.5

2.01 % - 3.00 %

 
2,101.8

 
—

 
—

 
—

 
—

 
2,101.8

3.01 % - 4.00 %

 
133.4

 
—

 
—

 
—

 
—

 
133.4

4.01 % and above

 
—

 
—

 
—

 
—

 
—

 
—

Subtotal

 
2,468.2

 
9.1

 
28.8

 
100.6

 
976.7

 
3,583.4

No GMIR

 


 
  

 
  

 
  

 
  

 
144.6

Total




 
  

 
  

 
  

 
  

$
3,728.0





















Benefits and Protection - Life Insurance

 
  

 
  

 
  

 
  

 
  

 
  

Universal life

 
  

 
  

 
  

 
  

 
  

 
  

Up to 1.00 %

$
—

$
—

$
—

$
14.8

$
31.2

$
46.0

1.01 % - 2.00 %

 
239.6

 
—

 
344.3

 
621.7

 
458.0

 
1,663.6

2.01 % - 3.00 %

 
566.6

 
592.3

 
711.4

 
391.8

 
4.9

 
2,267.0

3.01 % - 4.00 %

 
1,552.7

 
55.6

 
28.6

 
112.7

 
3.3

 
1,752.9

4.01 % and above

 
17.0

 
9.6

 
16.1

 
7.7

 
—

 
50.4

Subtotal

 
2,375.9

 
657.5

 
1,100.4

 
1,148.7

 
497.4

 
5,779.9

No GMIR

 


 
  

 
  

 
  

 
  

 
1,087.6

Total




 
  

 
  

 
  

 
  

$
6,867.5




62

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

8 . Future Policy Benefits and Claims
Future policy benefits and claims include reserves for short-duration contracts and long-duration contracts as well as certain reinsurance balances, when in a liability position.
The following tables summarize disaggregated amounts included in future policy benefit and claims and reconcile the totals to those reported in the consolidated statements of financial position.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Liability for future policy benefits by segment (1):
 

  
 

  

Retirement and Income Solutions:
 

  
 

  

Pension risk transfer

$
26,999.0
 
$
27,349.3

Individual fixed income annuities


4,180.4
 

4,367.4

Total Retirement and Income Solutions


31,179.4
 

31,716.7

Principal Asset Management – International Pension:



 



Latin America:







Individual fixed income annuities


4,382.4
 

4,600.5

Benefits and Protection:



 



Specialty Benefits:



 



Individual disability


2,039.4
 

1,994.2

Life Insurance:



 



Term life


1,555.7
 

1,515.7

Total Benefits and Protection


3,595.1
 

3,509.9

Corporate:



 



Long-term care insurance


163.7
 

166.7

Total liability for future policy benefits


39,320.6
 

39,993.8









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



 



Benefits and Protection – Life Insurance:



 



Universal life


6,876.4
 

6,604.8

Total additional liability for certain benefit features


6,876.4
 

6,604.8









Reconciling items:



 



Participating contracts


2,723.9
 

2,784.3

Short-duration contracts


1,180.4
 

1,205.2

Cost of reinsurance liability


953.9
 

971.4

Reinsurance recoverable liability


27.8


23.5

Other (3)


165.1
 

166.7

Future policy benefits and claims per consolidated statements of financial position

$
51,248.1
 
$
51,749.7

(1) Amounts include the deferred profit liability.
(2) Includes reserves on certain long-duration contracts where benefit features result in gains in early years followed by losses in later years.
(3) Includes other miscellaneous reserves and the impact of unrealized gains (losses) on the additional liability for certain benefit features.

63

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

Liability for Unpaid Claims
The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows:

















For the six months ended June 30, 


    
2026
    
2025



(in millions)

Balance at beginning of period

$
1,342.4

$
1,379.9

Less: reinsurance recoverable

 
62.6

 
61.2

Net balance at beginning of period

 
1,279.8

 
1,318.7

Incurred:

 


 


Current year

 
932.0

 
926.1

Prior years

 
( 83.3 )

 
( 71.1 )

Total incurred

 
848.7

 
855.0

Payments:

 


 


Current year

 
625.4

 
615.5

Prior years

 
241.1

 
254.1

Total payments

 
866.5

 
869.6

Net balance at end of period


1,262.0

 
1,304.1

Plus: reinsurance recoverable


61.7

 
59.7

Balance at end of period

$
1,323.7

$
1,363.8


Incurred liability adjustments relating to prior years, which affected current operations during 2026 and 2025, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.

64

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

Long-Duration Contracts
Gross Premiums or Assessments and Interest Accretion
The amount of gross premiums or assessments and interest accretion recognized by segment in the consolidated statements of operations was as follows:





























Gross premiums or assessments (1)



For the three months ended
    
For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025


 
(in millions)

Retirement and Income Solutions:
 

  
 

  
 

  
 

  

Pension risk transfer (2)

$
485.0

$
444.0
 
$
653.4
 
$
1,250.1

Individual fixed income annuities


6.5

 
5.9
 

12.0
 

14.1

Total Retirement and Income Solutions


491.5

 
449.9
 

665.4
 

1,264.2

Principal Asset Management – International Pension:




 

 


 



Latin America:













Individual fixed income annuities


—

 
4.1
 

—
 

5.9

Benefits and Protection:




 

 


 



Specialty Benefits:




 

 


 



Individual disability


165.4

 
161.8
 

325.9
 

320.4

Life Insurance:




 

 


 



Universal life


179.2

 
177.2
 

360.6
 

354.2

Term life


178.1

 
173.7
 

352.4
 

344.0

Total Benefits and Protection


522.7

 
512.7
 

1,038.9
 

1,018.6

Corporate:




 

 


 



Long-term care insurance


1.1

 
1.2
 

2.8
 

2.9

Total per consolidated statements of operations

$
1,015.3

$
967.9
 
$
1,707.1
 
$
2,291.6

(1) Gross premiums are included within premiums and other considerations on the consolidated statements of operations. Assessments, which are only applicable to the Life Insurance – Universal life level of aggregation, are included within fees and other revenues on the consolidated statements of operations .
(2) Since premium received from pension risk transfer products is generally in the form of single payments, the level of premiums can fluctuate depending on the number of large-scale annuity sales in a particular quarter.


65

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





























Interest accretion (1)



For the three months ended

For the six months ended



June 30,

June 30,


    
2026
    
2025
    
2026
    
2025




(in millions)

Retirement and Income Solutions:
 












Pension risk transfer
 
$
324.6

$
308.1
 
$
650.6

$
608.6

Individual fixed income annuities
 
 
47.0

 
49.6
 
 
94.6

 
99.9

Total Retirement and Income Solutions
 
 
371.6

 
357.7
 
 
745.2

 
708.5

Principal Asset Management – International Pension:
 
 


 
  
 
 


 
  

Latin America:
 
 


 
  
 
 


 
  

Individual fixed income annuities (2)
 
 
141.9

 
78.4
 
 
196.3

 
167.2

Benefits and Protection:
 
 


 
  
 
 


 
  

Specialty Benefits:
 
 


 
  
 
 


 
  

Individual disability
 
 
27.1

 
26.2
 
 
54.0

 
52.0

Life Insurance:
 
 


 
  
 
 


 
  

Universal life
 
 
75.9

 
69.8
 
 
150.3

 
138.3

Term life
 
 
18.4

 
16.1
 
 
36.4

 
31.6

Total Benefits and Protection
 
 
121.4

 
112.1
 
 
240.7

 
221.9

Corporate:
 
 


 
  
 
 


 
  

Long-term care insurance
 
 
2.3

 
2.3
 
 
4.7

 
4.7

Total per consolidated statements of operations
 
$
637.2

$
550.5
 
$
1,186.9

$
1,102.3

(1) Interest accretion is included within benefits, claims and settlement expenses on the consolidated statements of operations.
(2) Includes inflation adjustments included within the liability for future policy benefits rollforward for interest accretion.

Liability for Future Policy Benefits
The liability for future policy benefits (“LFPB”) for individual and group annuities is generally equal to the present value of expected future policy benefit payments. The reserves are computed using assumptions for mortality and interest. The LFPB for non-participating term life insurance, individual disability income contracts and individual and group long-term care contracts is generally equal to the present value of expected future policy benefit payments less the present value of expected net premiums. The reserves are computed using assumptions for mortality, interest, morbidity and lapse. Cohorts are used as the unit of account for liability measurement. Actual cash flows are grouped into issue-year cohorts for the liability calculation and updated quarterly. We review and update, if necessary, assumptions used to measure cash flows for the LFPB during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The change in our liability estimate as a result of updating cash flow assumptions is recognized in net income.
An interest accretion rate is determined for an identified cohort and remains unchanged after the issue year. For policies issued on or prior to December 31, 2020, the interest accretion rate is based on the assumed investment yield when the business was issued. For policies issued after December 31, 2020, the interest accretion rate is based on the upper-medium grade fixed-income instrument yields, which is generally equivalent to a single-A rated bond yield matched to the duration of our insurance liabilities, when the business was issued.
The LFPB is remeasured to reflect current upper-medium grade fixed-income instrument yields as of each reporting date. The liability is calculated by discounting cash flows using rate curves reflecting the currency and duration of the insurance liabilities. For discount rate tenors, or points on the curves, where the upper-medium grade fixed-income instrument yields are not liquid or limited observable market data is available, we use various estimation techniques consistent with fair value measurement guidance.

66

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

For our individual fixed income annuities in Latin America, the discount rate methodology is designed to prioritize observable inputs based on market data available in the local debt markets where the respective policies are issued in the currency in which the policies are denominated. For discount rate tenors where upper-medium grade fixed-income instrument yields based on international rating standards are not liquid or limited observable market data is available, estimation techniques are used to determine a curve in the appropriate currency.
Further details regarding reference rates used are included under “Interest Accretion and Current Discount Rates.”
Retirement and Income Solutions
The balances and the changes in the present value for expected future policy benefits were as follows:



























    
For the six months ended
    
For the year ended



June 30, 2026

December 31, 2025



Pension

Individual

Pension

Individual



risk

fixed income

risk

fixed income


    
transfer
    
annuities
    
transfer
    
annuities


 
($   in millions)

Present value of expected future policy benefit payments
 

  
 

  
 

  
 

  

Balance at beginning of period

$
27,349.3

$
4,367.4

$
24,958.1

$
4,504.6

Effect of changes in discount rate assumptions at beginning of period

 
1,294.3

 
297.6

 
1,938.8

 
420.4

Balance at beginning of period at original discount rate

 
28,643.6

 
4,665.0

 
26,896.9

 
4,925.0

Effect of actual variances from expected experience

 
( 1.0 )

 
1.9

 
( 17.9 )

 
2.3

Adjusted beginning of period balance at original discount rate

 
28,642.6

 
4,666.9

 
26,879.0

 
4,927.3

Interest accrual

 
650.6

 
94.6

 
1,234.2

 
197.2

Benefit payments

 
( 1,282.4 )

 
( 242.2 )

 
( 2,442.8 )

 
( 490.0 )

Issuances

 
654.2

 
11.8

 
2,973.2

 
30.5

Balance at end of period at original discount rate

 
28,665.0

 
4,531.1

 
28,643.6

 
4,665.0

Effect of changes in discount rate assumptions at end of period

 
( 1,666.0 )

 
( 350.7 )

 
( 1,294.3 )

 
( 297.6 )

Future policy benefits

 
26,999.0

 
4,180.4

 
27,349.3

 
4,367.4

Reinsurance impact

 
—

 
( 4,118.1 )

 
—

 
( 4,310.3 )

Future policy benefits after reinsurance

$
26,999.0

$
62.3

$
27,349.3

$
57.1















Weighted-average duration for future policy benefits (years)   (1)

 
7.9

 
7.0

 
7.9

 
7.1

(1) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

67

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

Principal Asset Management – International Pension
The balances and the changes in the present value for expected future policy benefits for Latin America – Individual fixed income annuities were as follows:
















    
For the six months ended
    
For the year ended



June 30, 2026

December 31, 2025


 
($   in millions)

Present value of expected future policy benefit payments
 

  
 

  

Balance at beginning of period

$
4,600.5

$
4,126.9

Effect of changes in discount rate assumptions at beginning of period

 
( 493.5 )

 
( 368.4 )

Balance at beginning of period at original discount rate

 
4,107.0

 
3,758.5

Effect of actual variances from expected experience

 
0.4

 
( 0.4 )

Adjusted beginning of period balance at original discount rate

 
4,107.4

 
3,758.1

Interest accrual (1)

 
196.3

 
293.1

Benefit payments

 
( 181.9 )

 
( 335.6 )

Issuances

 
—

 
6.4

Foreign currency translation adjustment

 
( 91.3 )

 
385.0

Balance at end of period at original discount rate

 
4,030.5

 
4,107.0

Effect of changes in discount rate assumptions at end of period

 
351.9

 
493.5

Future policy benefits

$
4,382.4

$
4,600.5









Weighted-average duration for future policy benefits (years) (2)

 
9.3

 
9.6

(1) Includes inflation adjustments.
(2) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

68

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

Benefits and Protection
The balances and the changes in the present value for expected net premiums and expected future policy benefits were as follows:





























For the six months ended

For the year ended



June 30, 2026

December 31, 2025



Specialty

Life

Specialty

Life



Benefits

Insurance

Benefits

Insurance



Individual




Individual





    
disability
    
Term life
    
disability
    
Term life



($ in millions)

Present value of expected net premiums
 

  
 

  
 

  
 

  

Balance at beginning of period

$
2,740.8

$
4,392.2

$
2,680.6

$
4,107.2

Effect of changes in discount rate assumptions at beginning of period

 
349.8

 
198.4

 
436.4

 
290.1

Balance at beginning of period at original discount rate

 
3,090.6

 
4,590.6

 
3,117.0

 
4,397.3

Effect of changes in cash flow assumptions

 
—

 
—

 
( 22.5 )

 
163.2

Effect of actual variances from expected experience

 
50.8

 
( 16.4 )

 
114.8

 
11.7

Adjusted beginning of period balance at original discount rate

 
3,141.4

 
4,574.2

 
3,209.3

 
4,572.2

Interest accrual

 
54.7

 
107.3

 
108.8

 
208.7

Net premiums collected

 
( 148.7 )

 
( 213.2 )

 
( 298.0 )

 
( 418.8 )

Issuances

 
31.7

 
109.6

 
70.5

 
228.5

Balance at end of period at original discount rate

 
3,079.1

 
4,577.9

 
3,090.6

 
4,590.6

Effect of changes in discount rate assumptions at end of period

 
( 384.7 )

 
( 260.1 )

 
( 349.8 )

 
( 198.4 )

Balance at end of period

$
2,694.4

$
4,317.8

$
2,740.8

$
4,392.2















Present value of expected future policy benefit payments

 


 


 
  

 
  

Balance at beginning of period

$
4,735.0

$
5,907.9

$
4,509.6

$
5,355.2

Effect of changes in discount rate assumptions at beginning of period

 
1,191.3

 
215.7

 
1,302.8

 
366.0

Balance at beginning of period at original discount rate

 
5,926.3

 
6,123.6

 
5,812.4

 
5,721.2

Effect of changes in cash flow assumptions

 
—

 
—

 
( 42.6 )

 
240.4

Effect of actual variances from expected experience

 
48.1

 
( 26.8 )

 
107.9

 
4.1

Adjusted beginning of period balance at original discount rate

 
5,974.4

 
6,096.8

 
5,877.7

 
5,965.7

Interest accrual

 
108.7

 
143.7

 
213.8

 
275.3

Benefit payments

 
( 122.9 )

 
( 177.2 )

 
( 234.1 )

 
( 359.7 )

Issuances

 
30.6

 
116.1

 
68.9

 
242.3

Balance at end of period at original discount rate

 
5,990.8

 
6,179.4

 
5,926.3

 
6,123.6

Effect of changes in discount rate assumptions at end of period

 
( 1,257.0 )

 
( 305.9 )

 
( 1,191.3 )

 
( 215.7 )

Balance at end of period

$
4,733.8

$
5,873.5

$
4,735.0

$
5,907.9















Future policy benefits (1)

$
2,039.4

$
1,555.7

$
1,994.2

$
1,515.7

Reinsurance impact

 
( 432.1 )

 
9.6

 
( 430.0 )

 
9.8

Future policy benefits after reinsurance

$
1,607.3

$
1,565.3

$
1,564.2

$
1,525.5















Weighted-average duration for future policy benefits (years) (2)

 
16.9

 
7.1

 
17.2

 
7.4

(1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums.
(2) Represents the average of the cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.



69

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

We updated our actuarial assumptions during the third quarter of 2025, resulting in a $ 20.1 million decrease in the LFPB and a $ 16.2 million increase to income before taxes, net of reinsurance, for Individual disability. This was primarily due to favorable updates to morbidity assumptions. The updates also resulted in a $ 77.2 million increase in the LFPB and a $ 63.0 million decrease to income before taxes, net of reinsurance, for Term life. This was primarily due to unfavorable updates to lapse and mortality assumptions.
Additional Liability for Certain Benefit Features
The LFPB also includes an additional reserve on certain universal life contracts where benefit features result in gains in early years followed by losses in later years. The liability for these future losses is accrued in relation to estimated contract assessments. A premium deficiency exists if the net liabilities together with future premiums are determined to be insufficient to provide for expected future policy benefits. Premium deficiency testing considers, among other factors, anticipated investment income and does not include a provision for adverse deviation. We did not have a premium deficiency reserve as of June 30, 2026 or December 31, 2025.
The balances and the changes in the additional liability for certain benefit features for Life Insurance - Universal life contracts, excluding the impact of unrealized gains (losses), were as follows:

















For the six months ended

For the year ended


    
June 30, 2026
    
December 31, 2025



($ in millions)

Balance at beginning of period

$
6,604.8

$
6,037.2

Effect of changes in cash flow assumptions

 
—

 
6.8

Effect of actual variances from expected experience

 
35.2

 
18.5

Interest accrual

 
150.3

 
282.4

Net assessments collected

 
214.2

 
430.6

Benefit payments

 
( 128.1 )

 
( 170.7 )

Balance at end of period

 
6,876.4

 
6,604.8

Reinsurance impact

 
( 6,865.4 )

 
( 6,593.6 )

Balance at end of period after reinsurance

$
11.0

$
11.2









Weighted-average duration for additional liability (years) (1)

 
20.8

 
21.6

(1) Represents the average of the cohort-level duration of the benefits less the net assessment cash flows weighted by the reserve balance for each cohort.

70

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

Corporate
The balances and the changes in the present value for expected net premiums and expected future policy benefits for long-term care insurance were as follows:

















For the six months ended

For the year ended



June 30, 2026

December 31, 2025



($ in millions)

Present value of expected net premiums
    

  
    

  

Balance at beginning of period

$
32.4

$
30.8

Effect of changes in discount rate assumptions at beginning of period

 
( 2.0 )

 
( 1.3 )

Balance at beginning of period at original discount rate

 
30.4

 
29.5

Effect of changes in cash flow assumptions

 
—

 
3.3

Effect of actual variances from expected experience

 
( 0.5 )

 
0.3

Adjusted beginning of period balance at original discount rate

 
29.9

 
33.1

Interest accrual

 
0.8

 
1.8

Net premiums collected

 
( 2.5 )

 
( 4.5 )

Balance at end of period at original discount rate

 
28.2

 
30.4

Effect of changes in discount rate assumptions at end of period

 
1.4

 
2.0

Balance at end of period

$
29.6

$
32.4









Present value of expected future policy benefit payments

 


 
  

Balance at beginning of period

$
199.1

$
195.6

Effect of changes in discount rate assumptions at beginning of period

 
( 12.7 )

 
( 8.8 )

Balance at beginning of period at original discount rate

 
186.4

 
186.8

Effect of changes in cash flow assumptions

 
—

 
1.3

Effect of actual variances from expected experience

 
0.3

 
3.4

Adjusted beginning of period balance at original discount rate

 
186.7

 
191.5

Interest accrual

 
5.5

 
11.2

Benefit payments

 
( 8.1 )

 
( 16.3 )

Balance at end of period at original discount rate

 
184.1

 
186.4

Effect of changes in discount rate assumptions at end of period

 
9.2

 
12.7

Balance at end of period

$
193.3

$
199.1









Future policy benefits (1)

$
163.7

$
166.7

Reinsurance impact

 
( 163.7 )

 
( 166.7 )

Future policy benefits after reinsurance

$
—

$
—









Weighted-average duration for future policy benefits (years) (2)

 
9.5

 
9.7

(1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums.
(2) Represents the average of the cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.



71

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

Expected Future Gross Premiums and Benefit Payments
The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums, utilizing the current upper-medium fixed-income instrument yield, were as follows:
















    
June 30, 2026
    
December 31, 2025


 
(in millions)

Retirement and Income Solutions:
 

  
 

  

Pension risk transfer
 

  
 

  

Expected undiscounted future benefit payments

$
42,577.0
 
$
42,601.7









Individual fixed income annuities



 

  

Expected undiscounted future benefit payments

$
6,018.6
 
$
6,221.3









Principal Asset Management – International Pension:



 

  

Latin America:







Individual fixed income annuities



 

  

Expected undiscounted future benefit payments

$
5,800.8
 
$
5,945.8









Benefits and Protection – Specialty Benefits:



 

  

Individual disability



 

  

Expected discounted future gross premiums

$
5,602.3
 
$
5,683.8

Expected undiscounted future gross premiums

$
8,759.6
 
$
8,763.7

Expected undiscounted future benefit payments

$
10,032.2
 
$
9,951.7









Benefits and Protection – Life Insurance:



 

  

Term life



 

  

Expected discounted future gross premiums

$
6,873.4
 
$
6,929.2

Expected undiscounted future gross premiums

$
12,060.4
 
$
11,960.4

Expected undiscounted future benefit payments

$
9,710.9
 
$
9,653.9









Corporate:



 

  

Long-term care insurance



 

  

Expected discounted future gross premiums

$
33.8

$
37.4

Expected undiscounted future gross premiums

$
48.3
 
$
52.7

Expected undiscounted future benefit payments

$
355.9
 
$
363.1



72

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

Interest Accretion and Current Discount Rates
The interest accretion rate shown for each level of aggregation is an average of the cohort-level accretion rates weighted by the reserve balance for each cohort within that level of aggregation. The current discount rate is calculated at a cohort-level based on current upper-medium fixed-income instrument yields and weighted by the reserve balance for each cohort within each level of aggregation. The weighted-average rates were as follows:























Interest accretion rate

Current discount rate
 


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


Retirement and Income Solutions:
 
  
 
  
 
  
 
  


Pension risk transfer
 
4.72
%
4.70
%  
5.49
%
5.28
%

Individual fixed income annuities
 
4.22
%
4.22
%  
5.41
%
5.16
%

Principal Asset Management – International Pension (1):
 


  
 


  


Latin America:
 









Individual fixed income annuities

4.19
%
4.19
%  
3.10
%
2.78
%

Benefits and Protection:
 



 


  


Specialty Benefits:
 



 


  


Individual disability
 
3.82
%
3.84
%  
5.62
%
5.43
%

Life Insurance:
 


  
 


  


Universal life
 
4.74
%
4.74
%  
See note
(2)
See note
(2)

Term life
 
4.67
%
4.81
%  
5.21
%
4.91
%

Corporate:
 



 


  


Long-term care insurance
 
6.16
%
6.16
%  
5.56
%
5.36
%

(1) The interest accretion rate and current discount rate are Chilean real rates, excluding inflation, in the local currency.
(2) The additional liability for certain benefit features for Life Insurance – Universal life is measured using the discount rate at contract inception. Therefore, the current discount rate is not applicable for this product.

9. Market Risk Benefits
Contracts or contract features that provide protection to the policyholder from capital market risk, including equity, interest rate or foreign exchange risk, and expose us to other-than-nominal capital market risk are classified as MRBs. We issue certain annuity contracts that include MRBs that have been bifurcated from the host contract. The Retirement and Income Solutions segment offers variable annuity products with GMWB riders and GMDB riders, including return-of-premium GMDB and GMWB riders for its RILA products.
MRBs are measured at fair value at the contract level and can be in either an asset or liability position, depending on certain inputs at the reporting date. MRB assets and liabilities are presented separately within the consolidated statements of financial position. Increases to an asset or decreases to a liability are described as favorable changes to fair value.
Changes in fair value are reported in MRB remeasurement (gain) loss on the consolidated statements of operations. However, the change in fair value related to our own nonperformance risk is reported in OCI. For contracts that contain multiple MRB features, the MRBs are valued on a combined basis using an integrated model.
MRBs are classified as Level 3 fair value measurements as the fair value is based on unobservable inputs. The key assumptions for calculating the fair value of the MRBs are market assumptions such as equity market returns, interest rate levels, market volatility and correlations and policyholder behavior assumptions such as lapse, mortality, utilization and withdrawal patterns. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The MRBs are valued using stochastic models that incorporate a spread reflecting our own nonperformance risk.

73

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

The assumption for our own nonperformance risk for MRBs is based on the current market credit spreads for debt-like instruments we have issued and are available in the market. Increases (decreases) in our own nonperformance risk, which impacts the rates used to discount future cash flows, could lead to favorable (unfavorable) changes in the fair value of the MRBs.
Long-term interest rates are used as the mean return when projecting the growth in the value of the associated account value and impact the discount rate used in the discounted future cash flows valuation. The amount of claims will increase if account value is not sufficient to cover guaranteed withdrawals. An increase (decrease) in risk-free rates could cause a favorable (unfavorable) change in the fair value of the MRBs. A decrease (increase) in market volatilities could cause a favorable (unfavorable) change in the fair value of the MRBs.
An increase (decrease) in mortality rates or the overall lapse rate assumptions could cause a favorable (unfavorable) change in the fair value of the MRBs. The lapse rate assumption may vary dynamically based on the relationship between the guarantee and associated account value. A weaker (stronger) dynamic lapse rate assumption could lead to favorable (unfavorable) changes in the fair value of the MRBs.
The utilization rate assumption includes how many contractholders will take withdrawals, when they will take them and how much of their benefit they will take. A decrease (increase) in the number of contractholders taking withdrawals, contractholders taking withdrawals earlier versus later, or contractholders taking more versus less of their benefit could lead to favorable (unfavorable) changes in the fair value of the MRBs.
The following tables summarize disaggregated MRB amounts in an asset and liability position reported in the consolidated statements of financial position.








































    
June 30, 2026
    
December 31, 2025









Net asset







Net asset


    
Asset
    
Liability
    
(liability)
    
Asset
    
Liability
    
(liability)



(in millions)

Retirement and Income Solutions:
 

  
 

  
 

  
 

  
 

  
 

  

Individual variable annuities

$
202.8

$
65.9

$
136.9
 
$
197.1
 
$
66.9
 
$
130.2

Total MRB per consolidated statements of financial position

$
202.8

$
65.9

$
136.9

$
197.1

$
66.9

$
130.2



74

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

Retirement and Income Solutions
The net asset (liability) balances and the changes in the valuation of the MRBs for Individual variable annuities were as follows:
















    
For the six months ended
    
For the year ended



June 30, 2026

December 31, 2025


 
($ in millions)

Balance at beginning of period

$
130.2

$
137.4

Effect of changes in nonperformance risk at beginning of period

 
17.0

 
19.0

Adjusted balance at beginning of period

 
147.2

 
156.4

Effect of:

 


 
  

Interest accrual and expected policyholder behavior

 
( 38.5 )

 
( 62.8 )

Benefit payments

 
0.3

 
—

Changes in interest rates

 
15.2

 
13.0

Changes in equity markets

 
39.0

 
53.1

Changes in equity index volatility

 
( 11.6 )

 
( 8.3 )

Actual policyholder behavior different from expected behavior

 
1.5

 
( 3.9 )

Changes in other future expected assumptions

 
—

 
( 0.3 )

Adjusted balance at end of period

 
153.1

 
147.2

Effect of changes in nonperformance risk at end of period

 
( 16.2 )

 
( 17.0 )

Balance at end of period

$
136.9

$
130.2









Weighted-average attained age of policyholders (years) (1)

 
66.9

 
67.0

Net amount at risk (2)

$
21.2

$
29.3

(1) The weighted-average attained age is calculated at the contract level using the total contributions since inception and the age of the contractholders.
(2) The net amount at risk for our GMDB riders is defined as the current GMDB amount in excess of the current account balance. The net amount at risk for our GMWB riders is defined as the greater of the present value of the GMWB payments less the current account balance or zero. For contracts with both GMDB and GMWB riders, the net amount at risk is the greater of the GMDB or GMWB net amount at risk. We had a decrease in the net amount at risk in 2026 primarily as a result of increases in the equity markets.

Significant changes to inputs that impacted the change in the MRB fair value measurement shown above were as follows:



For the six months ended

For the year ended



June 30, 2026

December 31, 2025


    

    
Change in net
   

    
Change in net



Change in input

MRB asset (liability)

Change in input

MRB asset (liability)

Long-term interest rate

Increased

Favorable

Increased

Favorable

Equity markets

Increased

Favorable

Increased

Favorable

Equity market volatilities

Increased

Unfavorable

Increased

Unfavorable

Own nonperformance risk

Decreased

Favorable

Increased

Favorable


The change in input increase or decrease is based on the corresponding weighted-average values. The associated change in the MRB asset (liability) fair value measurement might be non-intuitive if the range of inputs moved differently than the weighted average. See “Unobservable Inputs for Fair Value Measurement” for additional details on the inputs.

75

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

Unobservable Inputs for Fair Value Measurement
The following table provides quantitative information about the significant unobservable inputs used for fair value measurements of MRBs. The utilization rate and mortality rate inputs are omitted from the table as a range does not provide meaningful presentation. The utilization rate represents the number of contractholders taking withdrawals in addition to the amount and timing of the withdrawals. The mortality rate is an input based on an appropriate industry mortality table.






























    
June 30, 2026

December 31, 2025
 







Weighted-





Weighted-
 



Range of inputs
    
Average
    
Range of inputs
    
Average
 

Retirement and Income Solutions:
 
  
 
  
 
  
 
  
 
  
 
  


Individual variable annuities
 
  
 
  
 
  
 
  
 
  
 
  


Long-term interest rate (1)
 
4.91
-
4.93
%  
4.92
%  
4.80
-
4.84
%  
4.82
%

Long-term equity market volatility
 
17.80
-
40.49
%  
22.73
%  
17.80
-
38.80
%  
21.94
%

Nonperformance risk
 
0.52
-
1.09
%  
0.93
%  
0.49
-
1.12
%  
0.95
%

Lapse rate
 
0.90
-
55.00
%  
6.84
%  
0.90
-
55.00
%  
6.51
%

(1) Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. The rate curves are derived from an interpolation between various observable swap rates.

10. Reinsurance
We reinsure a portion of the insurance risks associated with our individual disability, traditional life, universal life, medical and long-term care insurance as well as retail fixed annuity contracts with significant life insurance risk through reinsurance agreements with unaffiliated reinsurance companies, primarily on a quota share, excess loss, yearly renewable term (“YRT”) or coinsurance basis. We have coinsurance with funds withheld reinsurance agreements in which we cede our U.S. retail fixed annuity and ULSG blocks of business using both the reinsurance and deposit methods of accounting.
We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. As of June 30, 2026, and December 31, 2025, we had $ 14,912.5 million and $ 14,923.9 million of reinsurance recoverable assets, respectively, included in reinsurance recoverable and deposit receivable on the consolidated statements of financial position, which does not reflect potentially offsetting impacts of collateral. As of June 30, 2026, and December 31, 2025, we had $ 27.8 million and $ 23.5 million of reinsurance recoverable liabilities, respectively, included in future policy benefits and claims on the consolidated statements of financial position.

76

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

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:





























For the three months ended June 30, 

For the six months ended June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Premiums and other considerations:













Direct

$
1,612.9

$
1,538.1

$
2,889.3

$
3,421.5

Ceded

 
( 152.1 )

 
( 141.6 )

 
( 280.4 )

 
( 273.7 )

Net premiums and other considerations

$
1,460.8

$
1,396.5

$
2,608.9

$
3,147.8















Benefits, claims and settlement expenses:

 


 


 


 


Direct

$
2,406.9

$
2,322.3

$
4,442.4

$
4,920.3

Ceded

 
( 414.8 )

 
( 482.4 )

 
( 839.2 )

 
( 860.4 )

Net benefits, claims and settlement expenses

$
1,992.1

$
1,839.9

$
3,603.2

$
4,059.9















LFPB remeasurement (gain) loss:













Direct

$
22.9

$
( 11.8 )

$
24.0

$
( 5.7 )

Ceded


( 15.5 )


7.5


( 31.3 )


3.6

Net LFPB remeasurement (gain) loss

$
7.4

$
( 4.3 )

$
( 7.3 )

$
( 2.1 )


As of June 30, 2026 and December 31, 2025, we had a $ 3,676.6 million and $ 4,076.2 million reinsurance deposit receivable, respectively.
Refer to Note 3, Investments, for information on our financing receivables valuation allowance related to the reinsurance recoverable and deposit receivable.
Cost of Reinsurance
A reinsurance asset or liability is established to spread the expected net reinsurance costs or profits over the expected term of the contracts. The cost of reinsurance asset and liability are reported in premiums due and other receivables and liability for future policy benefits and claims, respectively, on the consolidated statements of financial position. The cost of reinsurance asset and liability included on the consolidated statements of financial position were as follows:
















    
June 30, 2026
    
December 31, 2025



(in millions)

Cost of reinsurance asset

$
3,061.7

$
3,103.2









Cost of reinsurance liability

$
953.9


971.4


Cost of reinsurance amortization, including the impacts of remeasurement, of $ 15.1 million and $ 24.6 million for the three months ended June 30, 2026 and 2025, and $ 24.3 million and $ 44.6 million for the six months ended June 30, 2026 and 2025, respectively, was reported in benefits, claims and settlement expenses and liability for future policy benefits remeasurement (gain) loss on the consolidated statements of operations.

77

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

Funds Withheld
The following assets were held in support of our reserves associated with our coinsurance with funds withheld agreements and are reported in the line items shown on the consolidated statements of financial position.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Fixed maturities, available-for-sale

$
12,215.3

$
13,300.1

Fixed maturities, trading


201.0


279.3

Equity securities


0.3


0.3

Mortgage loans


1,670.2


2,002.9

Other investments


1,906.8


1,708.7

Cash and cash equivalents


1,385.7


547.8

Accrued interest income


147.6


159.0

Net other liabilities


( 13.2 )


( 89.2 )

Net assets

$
17,513.7

$
17,908.9


Certain assets are reported at amortized cost while the fair value of those assets is reflected in the funds withheld payable. As of June 30, 2026 and December 31, 2025, we had a $ 17,370.2 million and $ 17,783.4 million funds withheld payable, which was net of a $ 2,706.4 million and $ 2,633.4 million embedded derivative asset, respectively. The change in fair value of the embedded derivative was a gain (loss) of $( 104.4 ) million and $ 20.3 million for the three months ended June 30, 2026 and 2025, respectively, and $ 73.0 million and $( 189.4 ) million for the six months ended June 30, 2026 and 2025, respectively.
While the economic benefits of the funds withheld assets flow to the reinsurer, we retain legal ownership of the assets within the funds withheld account. Guidelines are in place to ensure the investment risk is appropriately managed. Net investment income and net realized capital gains (losses) related to the assets on the consolidated statements of operations is reported net of the amounts that flow to the reinsurer. The realized gains and losses that do not flow to the reinsurer are reported in net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations.
Following are the components of net realized capital gains (losses) on the funds withheld assets that were passed to the reinsurer.





























For the three months ended

For the six months ended



June 30, 

June 30,


    
2026
    
2025
    
2026
    
2025



(in millions)

Fixed maturities, available-for-sale

$
( 4.1 )

$
( 19.5 )

$
( 22.0 )

$
( 47.5 )

Fixed maturities, trading


( 0.4 )


—


( 3.1 )


0.1

Mortgage loans


( 0.1 )


0.1


( 4.0 )


( 1.3 )

Derivatives


1.6


0.5


0.9


( 1.7 )

Net realized capital losses

$
( 3.0 )

$
( 18.9 )

$
( 28.2 )

$
( 50.4 )




78

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


11. Long-Term Debt
The components of long-term debt were as follows:























June 30, 2026






Net









unamortized









discount,









premium and









debt issuance

Carrying


    
Principal
    
cost
    
amount



(in millions)

3.1 % notes payable, due 2026
 
$
350.0
 
$
( 0.1 )
 
$
349.9

4.111 % notes payable, due 2028
 

400.0
 

( 7.5 )
 

392.5

3.7 % notes payable, due 2029
 

500.0
 

( 2.1 )
 

497.9

2.125 % notes payable, due 2030
 

600.0
 

( 2.0 )
 

598.0

5.375 % notes payable, due 2033
 

400.0
 

( 3.0 )
 

397.0

6.05 % notes payable, due 2036
 

505.6
 

( 1.9 )
 

503.7

5.3 % notes payable, due 2037
 

400.0
 

( 5.1 )
 

394.9

4.625 % notes payable, due 2042
 

300.0
 

( 2.6 )
 

297.4

4.35 % notes payable, due 2043
 

300.0
 

( 2.6 )
 

297.4

4.3 % notes payable, due 2046
 

300.0
 

( 2.8 )
 

297.2

5.5 % notes payable, due 2053
 

300.0
 

( 4.2 )
 

295.8

Non-recourse mortgages and notes payable
 

2.9
 

( 0.2 )
 

2.7

Total long-term debt

$
4,358.5

$
( 34.1 )

$
4,324.4
























December 31, 2025






Net









unamortized









discount,









premium and









debt issuance

Carrying


    
Principal
    
cost
    
amount



(in millions)

3.1 % notes payable, due 2026

$
350.0

$
( 0.4 )

$
349.6

4.111 % notes payable, due 2028

 
400.0

 
( 9.8 )

 
390.2

3.7 % notes payable, due 2029

 
500.0

 
( 2.5 )

 
497.5

2.125 % notes payable, due 2030

 
600.0

 
( 2.2 )

 
597.8

5.375 % notes payable, due 2033

 
400.0

 
( 3.1 )

 
396.9

6.05 % notes payable, due 2036

 
505.6

 
( 1.9 )

 
503.7

4.625 % notes payable, due 2042

 
300.0

 
( 2.6 )

 
297.4

4.35 % notes payable, due 2043

 
300.0

 
( 2.6 )

 
297.4

4.3 % notes payable, due 2046

 
300.0

 
( 2.8 )

 
297.2

5.5 % notes payable, due 2053

 
300.0

 
( 4.2 )

 
295.8

Non-recourse mortgages and notes payable

 
2.9

 
( 0.1 )

 
2.8

Total long-term debt

$
3,958.5

$
( 32.2 )

$
3,926.3


Net discount, premium and issuance costs associated with issuing these notes are amortized to expense over the respective terms using the interest method.
On May 27, 2026, we issued $ 400.0 million of senior notes that bear interest at 5.3 % and will mature in 2037. Interest on the notes is payable semi-annually on January 15 and July 15 each year, beginning on January 15, 2027. The proceeds from these notes will be used for general corporate purposes, which may include repayment, redemption or refinancing of existing indebtedness.


79

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

12. Income Taxes
Effective Income Tax Rate
The provision for income taxes for interim periods is based on an estimated annual effective tax rate. Excluded from the estimated annual effective tax rate are discrete items occurring during the period, including those which do not relate to ordinary operating income.
The effective tax rate for the three and six months ended June 30, 2026, was 13 % and 14 %, respectively. The effective tax rate for the three months ended June 30, 2026, differed from the U.S. federal statutory tax rate of 21 % due primarily to tax benefits from the dividends received deduction, interest exclusion from taxable income, tax credits, foreign currency inflation, the impact of noncontrolling interest presentation and the impact of equity method presentation, partially offset by state income tax expense. The effective tax rate for the six months ended June 30, 2026, differed from the U.S. federal statutory tax rate of 21 % due primarily to tax benefits from the dividends received deduction, interest exclusion from taxable income and the impact of equity method presentation, partially offset by state income tax expense.
The effective tax rate for the three and six months ended June 30, 2025, was 14 % and 7 %, respectively. The effective tax rate for these periods differed from the U.S. federal statutory tax rate of 21 % due primarily to tax benefits from the dividends received deduction, interest exclusion from taxable income, tax credits, changes in unrecognized tax benefits, the impact of noncontrolling interest presentation and the impact of equity method presentation, partially offset by state income tax expense and foreign statutory rate differentials.
Pillar Two Model Rules
We are currently monitoring global enactments of the Pillar Two model rules proposed by the Organisation for Economic Co-operation and Development (“OECD”), which brings forward a 15% global minimum tax. Generally, a company is required to consider the impact of new tax law on realizability of its deferred tax assets (“DTAs”), including determination of whether a change to its valuation allowance amounts is necessary. We made an accounting policy election to disregard the Pillar Two model rules when evaluating DTAs and rather recognize a current period tax expense when incurred.
Certain foreign jurisdictions have enacted, or are in the process of enacting, legislation implementing Income Inclusion Rules or Undertaxed Profits Rules, which may result in additional tax liabilities for multinational companies. On January 5, 2026, the OECD released administrative guidance for a “Side-by-Side” agreement that addresses the interaction of Pillar Two with the U.S. tax system. We recognize the effect of income tax legislation in the period of enactment; therefore, we will monitor the legislative enactment of the “Side-by-Side” agreement on a jurisdiction-by-jurisdiction basis.
Income taxes for the three and six months ended June 30, 2026, reflect the impact of enacted Pillar Two legislation in applicable jurisdictions based on management’s current interpretation of each jurisdiction’s tax law.



80

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

13. Employee and Agent Benefits
Components of Net Periodic Benefit Cost



































Other postretirement



Pension benefits

benefits



For the three months ended

For the three months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Service cost

$
15.2

$
15.0

$
—

$
—

Interest cost

 
43.0

 
43.7

 
0.7

 
0.7

Expected return on plan assets

 
( 45.9 )

 
( 43.1 )

 
( 1.3 )

 
( 1.2 )

Amortization of prior service benefit

 
( 3.8 )

 
( 3.7 )

 
( 0.2 )

 
( 0.3 )

Recognized net actuarial (gain) loss

 
6.6

 
9.1

 
( 0.5 )

 
( 0.3 )

Net periodic benefit cost (income)

$
15.1

$
21.0

$
( 1.3 )

$
( 1.1 )




































Other postretirement



Pension benefits

benefits



For the six months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Service cost

$
31.5

$
29.7

$
—

$
—

Interest cost

 
86.3

 
86.8

 
1.4

 
1.5

Expected return on plan assets

 
( 91.8 )

 
( 86.0 )

 
( 2.5 )

 
( 2.3 )

Amortization of prior service benefit

 
( 7.5 )

 
( 7.5 )

 
( 0.5 )

 
( 0.6 )

Recognized net actuarial (gain) loss

 
13.3

 
17.4

 
( 1.0 )

 
( 0.7 )

Settlement


2.6


—


—


—

Net periodic benefit cost (income)

$
34.4

$
40.4

$
( 2.6 )

$
( 2.1 )


The components of net periodic benefit cost including the service cost component are included in operating expenses on the consolidated statements of operations.
Contributions
Our funding policy for our qualified pension plan is to fund the plan annually in an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act (“ERISA”) and, generally, not greater than the maximum amount that can be deducted for U.S. federal income tax purposes. We do not anticipate contributions will be needed to satisfy the minimum funding requirements of ERISA for our qualified plan in 2026; however, it is possible that we may fund both the qualified and nonqualified pension plans in 2026 for a combined total of up to $ 70.0 million. During both the three and six months ended June 30, 2026, we contributed $ 33.0 million to these plans.

14. Contingencies, Guarantees and Indemnifications
Litigation and Regulatory Contingencies
We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages.

81

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

We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses.
In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Department of Labor (“DOL”) and other regulatory agencies in the U.S. and in international locations in which we do business, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.
While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position. To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith. The outcome of such matters is always uncertain and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate as of June 30, 2026.
Guarantees and Indemnifications
In the normal course of business, we have provided guarantees to third parties primarily related to former subsidiaries and joint ventures. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of June 30, 2026, was approximately $ 74.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees are not expected to result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period. Furthermore, in connection with our contingent funding agreements, we are required to purchase any principal and interest strips of U.S. Treasury securities that are due and not paid from the associated unconsolidated trusts. The maximum exposure under these agreements as of June 30, 2026, was $ 850.0 million.
We manage mandatory privatized social security funds in Chile. By regulation, we have a required minimum guarantee on the funds’ relative return. Because the guarantee has no limitation with respect to duration or amount, the maximum exposure of the guarantee in the future is indeterminable.
We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions, financing and reinsurance transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period.


82

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

15 . Stockholders’ Equity
Common Stock Dividends





























For the three months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025

Dividends declared per common share

$
0.82
  
$
0.76

$
1.62
  
$
1.51


Reconciliation of Outstanding Common Shares





















For the three months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025

Beginning balance
 
216,449,333
 
224,971,715
 
217,380,912
 
226,225,161

Shares issued
 
677,847

201,106

2,301,120

1,836,356

Treasury stock acquired
 
( 2,491,746 )

( 1,987,132 )

( 5,046,598 )

( 4,875,828 )

Ending balance
 
214,635,434

223,185,689

214,635,434

223,185,689


In February 2024, our Board of Directors (“Board”) authorized a share repurchase program of up to $ 1.5 billion of our outstanding common stock, which was completed in December 2025. In February 2025, our Board authorized a share repurchase program of up to $ 1.5 billion of our outstanding common stock, which has no expiration date. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity.

83

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

Other Comprehensive Income









































For the three months ended
 
For the six months ended



June 30, 2026

June 30, 2026


    
Pre-Tax
    
Tax
    
After-Tax
    
Pre-Tax
    
Tax
    
After-Tax



(in millions)

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

$
186.5

$
( 32.4 )

$
154.1

$
( 611.7 )

$
136.4

$
( 475.3 )

Reclassification adjustment for losses included in net income (1)

 
55.6


( 11.8 )


43.8


107.4


( 22.8 )


84.6

Adjustments for assumed changes in amortization patterns

 
( 0.2 )


0.1


( 0.1 )


0.4


—


0.4

Adjustments for assumed changes in policyholder liabilities

 
( 2.2 )


0.4


( 1.8 )


9.9


( 2.1 )


7.8

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

 
239.7


( 43.7 )


196.0


( 494.0 )


111.5


( 382.5 )





















Net unrealized gains (losses) on derivative instruments during the period

 
( 27.7 )


5.8


( 21.9 )


41.2


( 8.7 )


32.5

Reclassification adjustment for losses included in net income (2)

 
0.1


—


0.1


0.2


—


0.2

Adjustments for assumed changes in amortization patterns


0.1


( 0.1 )


—


0.1


( 0.1 )


—

Net unrealized gains (losses) on derivative instruments


( 27.5 )


5.7


( 21.8 )


41.5


( 8.8 )


32.7





















Liability for future policy benefits discount rate remeasurement gain (3)


102.2


( 31.4 )


70.8


595.1


( 134.6 )


460.5





















Market risk benefit nonperformance risk remeasurement gain (loss) (4)


( 2.5 )


0.5


( 2.0 )


0.8


( 0.2 )


0.6





















Foreign currency translation adjustment during the period


28.7


—


28.7


8.8


( 8.8 )


—

Reclassification adjustment for losses included in net income (5)


1.8


—


1.8


1.5


—


1.5

Foreign currency translation adjustment

 
30.5


—


30.5

 
10.3

 
( 8.8 )

 
1.5





















Unrecognized postretirement benefit obligation during the period


3.2


( 0.8 )


2.4


( 2.0 )


0.5


( 1.5 )

Amortization of amounts included in net periodic benefit cost (6)

 
2.1


( 0.6 )


1.5


6.9


( 1.8 )


5.1

Net unrecognized postretirement benefit obligation

 
5.3


( 1.4 )


3.9


4.9


( 1.3 )


3.6





















Other comprehensive income

$
347.7

$
( 70.3 )

$
277.4

$
158.6

$
( 42.2 )

$
116.4




84

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










































For the three months ended

For the six months ended



June 30, 2025

June 30, 2025


    
Pre-Tax
    
Tax
    
After-Tax
    
Pre-Tax
    
Tax
    
After-Tax



(in millions)

Net unrealized gains on available-for-sale securities during the period

$
273.5

$
( 57.6 )

$
215.9

$
940.3

$
( 198.5 )

$
741.8

Reclassification adjustment for losses included in net income (1)

 
44.5

 
( 9.5 )


35.0


107.0


( 22.6 )


84.4

Adjustments for assumed changes in amortization patterns

 
( 0.1 )

 
0.1


—


( 0.5 )


0.2


( 0.3 )

Adjustments for assumed changes in policyholder liabilities

 
( 2.6 )

 
0.6


( 2.0 )


15.7


( 3.3 )


12.4

Net unrealized gains on available-for-sale securities

 
315.3

 
( 66.4 )


248.9


1,062.5


( 224.2 )


838.3





















Net unrealized losses on derivative instruments during the period

 
( 208.0 )

 
43.6


( 164.4 )


( 189.5 )


39.7


( 149.8 )

Reclassification adjustment for gains included in net income (2)

 
( 0.6 )

 
0.2


( 0.4 )


( 1.2 )


0.3


( 0.9 )

Adjustments for assumed changes in amortization patterns


0.1


—


0.1


0.1


—


0.1

Net unrealized losses on derivative instruments

 
( 208.5 )

 
43.8


( 164.7 )


( 190.6 )


40.0


( 150.6 )





















Liability for future policy benefits discount rate remeasurement loss (3)


( 107.2 )


24.7


( 82.5 )


( 419.6 )


87.3


( 332.3 )





















Market risk benefit nonperformance risk remeasurement gain (loss) (4)


( 0.5 )


0.1


( 0.4 )


2.2


( 0.5 )


1.7





















Foreign currency translation adjustment


89.6


( 7.3 )


82.3


163.7


( 8.0 )


155.7





















Unrecognized postretirement benefit obligation during the period


( 13.6 )


3.5


( 10.1 )


( 13.6 )


3.5


( 10.1 )

Amortization of amounts included in net periodic benefit cost (6)

 
4.8


( 1.3 )


3.5


8.6


( 2.2 )


6.4

Net unrecognized postretirement benefit obligation

 
( 8.8 )


2.2


( 6.6 )


( 5.0 )


1.3


( 3.7 )





















Other comprehensive income

$
79.9

$
( 2.9 )

$
77.0

$
613.2

$
( 104.1 )

$
509.1

(1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) and net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations.
(2) See Note 4, Derivative Financial Instruments, under the caption “Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations” for further details.
(3) Includes the discount rate remeasurement gain (loss) associated with the LFPB and the associated reinsurance recoverable. See Note 8, Future Policy Benefits and Claims, under the caption “Liability for Future Policy Benefits” for further details.
(4) See Note 9, Market Risk Benefits, for further details.
(5) Relates to the release of cumulative translation adjustments from the dissolution of foreign subsidiaries.
(6) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 13, Employee and Agent Benefits, under the caption “Components of Net Periodic Benefit Cost” for further details.

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

Accumulated Other Comprehensive Loss























































MRB












Net unrealized

Net unrealized

LFPB 

nonperformance

Foreign

Unrecognized

Accumulated



losses on

gains (losses)

discount rate

risk

currency

postretirement

other



available-for-sale 

on derivative

remeasurement

remeasurement

translation

benefit

comprehensive


    
securities (1)
    
instruments
    
gain
    
loss
    
adjustment
    
obligation
    
loss



(in millions)

Balances as of April 1, 2025

$
( 4,103.5 )

$
65.9

$
1,188.4

$
( 12.9 )

$
( 1,705.7 )

$
( 218.1 )

$
( 4,785.9 )

Other comprehensive income during the period, net of adjustments

 
213.9

 
( 164.3 )

 
( 82.5 )

 
( 0.4 )

 
77.9

 
( 10.1 )

 
34.5

Amounts reclassified from AOCI

 
35.0

 
( 0.4 )

 
—

 
—

 
—

 
3.5

 
38.1

Other comprehensive income

 
248.9

 
( 164.7 )

 
( 82.5 )

 
( 0.4 )

 
77.9

 
( 6.6 )

 
72.6

Balances as of June 30, 2025

$
( 3,854.6 )

$
( 98.8 )

$
1,105.9

$
( 13.3 )

$
( 1,627.8 )

$
( 224.7 )

$
( 4,713.3 )
























Balances as of April 1, 2026

$
( 3,807.6 )

$
22.6

$
1,202.2

$
( 10.8 )

$
( 1,569.9 )

$
( 180.2 )

$
( 4,343.7 )

Other comprehensive income during the period, net of adjustments


152.2


( 21.9 )


70.8


( 2.0 )


29.3


2.4


230.8

Amounts reclassified from AOCI


43.8


0.1


—


—


1.7


1.5


47.1

Other comprehensive income


196.0


( 21.8 )


70.8


( 2.0 )


31.0


3.9


277.9

Balances as of June 30, 2026

$
( 3,611.6 )

$
0.8

$
1,273.0

$
( 12.8 )

$
( 1,538.9 )

$
( 176.3 )

$
( 4,065.8 )

























































MRB












Net unrealized

Net unrealized

LFPB

nonperformance

Foreign

Unrecognized

Accumulated



losses on

gains (losses)

discount rate

risk

currency

postretirement

other



available-for-sale

on derivative

remeasurement

remeasurement

translation

benefit

comprehensive


    
securities (1)
    
instruments
    
gain
    
loss
    
adjustment
    
obligation
    
loss



(in millions)

Balances as of January 1, 2025

$
( 4,692.9 )

$
51.8

$
1,438.2

$
( 15.0 )

$
( 1,785.9 )

$
( 221.0 )

$
( 5,224.8 )

Other comprehensive income during the period, net of adjustments

 
753.9


( 149.7 )


( 332.3 )


1.7


158.1


( 10.1 )


421.6

Amounts reclassified from AOCI

 
84.4


( 0.9 )


—


—


—


6.4


89.9

Other comprehensive income

 
838.3


( 150.6 )


( 332.3 )


1.7


158.1


( 3.7 )


511.5

Balances as of June 30, 2025

$
( 3,854.6 )

$
( 98.8 )

$
1,105.9

$
( 13.3 )

$
( 1,627.8 )

$
( 224.7 )

$
( 4,713.3 )
























Balances as of January 1, 2026

$
( 3,229.1 )

$
( 31.9 )

$
812.5

$
( 13.4 )

$
( 1,546.6 )

$
( 179.9 )

$
( 4,188.4 )

Other comprehensive income during the period, net of adjustments

 
( 467.1 )


32.5


460.5


0.6


6.3


( 1.5 )


31.3

Amounts reclassified from AOCI

 
84.6


0.2


—


—


1.4


5.1


91.3

Other comprehensive income

 
( 382.5 )


32.7


460.5


0.6


7.7


3.6


122.6

Balances as of June 30, 2026

$
( 3,611.6 )

$
0.8

$
1,273.0

$
( 12.8 )

$
( 1,538.9 )

$
( 176.3 )

$
( 4,065.8 )

(1) Net unrealized losses on available-for-sale securities for which an allowance for credit loss has been recorded were $ 12.1 million and $ 4.5 million as of June 30, 2026 and 2025, respectively.

Noncontrolling Interest
Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.
The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is excluded from stockholders’ equity and reported separately as redeemable noncontrolling interest on the consolidated statements of financial position. Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds.

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

For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.
Following is a reconciliation of the changes in the redeemable noncontrolling interest:





























For the three months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Beginning balance

$
544.1

$
326.7

$
474.3

$
337.7

Net income attributable to redeemable noncontrolling interest


26.3


25.9

 
14.2

 
37.4

Redeemable noncontrolling interest of deconsolidated entities (1)


( 0.2 )


( 10.4 )


( 7.5 )


( 22.9 )

Contributions from redeemable noncontrolling interest


157.3


58.1


283.4


88.9

Distributions to redeemable noncontrolling interest


( 15.1 )


( 13.3 )

 
( 46.0 )

 
( 45.1 )

Purchase of subsidiary shares from redeemable noncontrolling interest


—


—


( 0.9 )


( 1.6 )

Stock-based compensation attributable to redeemable noncontrolling interest


—


0.1


—


0.1

Other comprehensive income (loss) attributable to redeemable noncontrolling interest


( 0.7 )


4.1


( 5.8 )


( 3.3 )

Ending balance

$
711.7

$
391.2

$
711.7

$
391.2

(1) We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation.


16. Fair Value Measurements
We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment contracts, are excluded from these fair value disclosure requirements.
Valuation Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability.
● Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.
● Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
● Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability.

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

Determination of Fair Value
The following discussion describes the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis. The techniques utilized in estimating the fair value of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.
Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2026.
Fixed Maturities
Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. When available, the fair value of fixed maturities is based on quoted prices of identical assets in active markets. These are reflected in Level 1 and primarily include U.S. Treasury bonds and actively traded redeemable corporate preferred securities.
When quoted prices of identical assets in active markets are not available, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2. Also included in Level 2 are corporate bonds when quoted market prices are not available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data for specific security classes. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread. Although the matrix valuation approach provides a fair valuation of each pricing category, the valuation of an individual security within each pricing category may also be impacted by company specific factors.
If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of June 30, 2026, approximately 2 % of our total fixed maturities were Level 3 securities valued using internal pricing models.
The primary inputs, by asset class, for valuations of the majority of our Level 2 investments from third party pricing vendors or our internal pricing valuation approach are described below.
U.S. Government and Agencies/Non-U.S. Governments . Inputs include recently executed market transactions, interest rate yield curves, maturity dates, market price quotations and credit spreads relating to similar instruments.
States and Political Subdivisions . Inputs include Municipal Securities Rulemaking Board reported trades, U.S. Treasury and other benchmark curves, material event notices, new issue data and obligor credit ratings.

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

Corporate . Inputs include recently executed transactions, market price quotations, benchmark yields, issuer spreads and observations of equity and credit default swap curves related to the issuer. For private placement corporate securities valued through the matrix valuation approach inputs include the current Treasury curve and risk spreads based on sector, rating and average life of the issuance.
RMBS, CMBS, Collateralized Debt Obligations and Other Debt Obligations . Inputs include cash flows, priority of the tranche in the capital structure, expected time to maturity for the specific tranche, reinvestment period remaining and performance of the underlying collateral including prepayments, defaults, deferrals, loss severity of defaulted collateral and, for RMBS, prepayment speed assumptions. Other inputs include market indices and recently executed market transactions.
Equity Securities
Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. Fair values of equity securities are determined using quoted prices in active markets for identical assets when available, which are reflected in Level 1. When quoted prices are not available, we may utilize internal valuation methodologies appropriate for the specific asset that use observable inputs such as underlying share prices or the NAV, which are reflected in Level 2. Fair values might also be determined using broker quotes or through the use of internal models or analysis that incorporate significant assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities, which are reflected in Level 3.
Mortgage Loans
Mortgage loans reported at fair value included those of a consolidated VIE for which the fair value option was elected. Fair values of commercial mortgage loans were primarily determined by discounting the expected cash flows at current treasury rates plus an applicable risk spread, which reflected credit quality and maturity of the loans. The risk spread was based on market clearing levels for loans with comparable credit quality, maturities and risk. These were reflected in Level 3. The consolidated VIE was deconsolidated during 2025.
Derivatives
The fair values of exchange-traded derivatives are determined through quoted market prices, which are reflected in Level 1. Exchange-traded derivatives include futures that are settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of OTC cleared derivatives are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses utilize the secured overnight financing rate (“SOFR”) curve in their valuation. Variation margin associated with OTC cleared derivatives is settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3.
Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the SOFR curve to value our positions. Counterparty credit risk is routinely monitored to ensure our adjustment for nonperformance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral or variation margin equal to the difference in the daily market values of those contracts that eliminates the nonperformance risk on these trades.

89

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

Interest Rate Contracts. For non-cleared contracts, which include interest rate swaps and interest rate options, we use discounted cash flow valuation techniques to determine the fair value using observable swap curves as the inputs. These are reflected in Level 2. We have forward contracts for which we obtain prices from third party pricing vendors. These are reflected in Level 2. For centrally cleared contracts we use published prices from clearinghouses. These are reflected in Level 2. In addition, we had forward contracts that were valued using broker quotes. These were reflected in Level 3.
Foreign Exchange Contracts. We use discounted cash flow valuation techniques that utilize observable swap curves and exchange rates as the inputs to determine the fair value of foreign currency swaps. These are reflected in Level 2. Currency forwards are valued using observable market inputs, including forward currency exchange rates. These are reflected in Level 2.
Equity Contracts. We use an option pricing model using observable implied volatilities, dividend yields, index prices and swap curves as the inputs to determine the fair value of equity options. Certain total return swaps use an accrual method comparing both cash flows to determine fair value. These are reflected in Level 2. Certain equity option contracts are valued using broker quotes. These are reflected in Level 3.
Credit Contracts. We use either the ISDA Credit Default Swap Standard discounted cash flow model that utilizes observable default probabilities and recovery rates as inputs to determine the fair value of credit default swaps. These are reflected in Level 2. In addition, we have total return swaps and a limited number of credit default swaps that are valued using broker quotes. These are reflected within Level 3.
Other Investments
Other investments reported at fair value include invested assets of consolidated sponsored investment funds, unconsolidated sponsored investment funds, other investment funds reported at fair value, other loans of a consolidated VIE for which the fair value option was elected and certain redeemable and nonredeemable preferred stock.
Invested assets of consolidated sponsored investment funds include equity securities, fixed maturities and derivative assets, for which fair values are determined as previously described, and are reflected in Level 1 and Level 2.
The fair value of unconsolidated sponsored investment funds and other investment funds is determined using the NAV of the fund. The NAV of the fund represents the price at which we would be able to initiate a transaction. Investments for which the NAV represents a quoted price in an active market for identical assets are reflected in Level 1. Investments that do not have a quoted price in an active market are reflected in Level 2.
Other loans of a consolidated VIE for which the fair value option was elected are reflected in Level 3. The fair value of these loans is estimated using a discounted cash flow valuation model that utilizes standard assumption-setting methodology accepted by market participants in the industry. The assumptions are formed based on historical performance of the loans and utilizes market data inputs such as charge-off rates, prepayment rates, recovery rates and discount rates.
Cash Equivalents
Certain cash equivalents are reported at fair value on a recurring basis and include money market instruments and other short-term investments with maturities of three months or less. Fair values of these cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2.

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

Separate Account Assets
Separate account assets include equity securities, debt securities, cash equivalents and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3.
Market Risk Benefits
MRBs are measured at fair value at the contract level on a recurring basis and are reflected in Level 3 as either an asset or a liability, depending on certain inputs at the reporting date. The key assumptions for calculating the fair value are market assumptions and policyholder behavior. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The MRBs are valued using stochastic models that incorporate a spread reflecting our own nonperformance risk.
The assumption for our own nonperformance risk is based on current market credit spreads for debt-like instruments we have issued and are available in the market. Refer to Note 9, Market Risk Benefits, for further information on the determination of fair value measurement of MRBs.
Investment and Universal Life Contracts
Certain universal life, annuity and other investment contracts include embedded derivatives that have been bifurcated from the host contract and are measured at fair value on a recurring basis, which are reflected in Level 3. The key assumptions for calculating the fair value of the embedded derivative liabilities are market assumptions (such as equity market returns, interest rate levels, market volatility and correlations) and policyholder behavior assumptions (such as lapse and mortality). Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The embedded derivative liabilities are valued using models that incorporate a spread reflecting our own creditworthiness.
The assumption for our own nonperformance risk for investment contracts and any embedded derivatives bifurcated from certain universal life, annuity and investment contracts is based on the current market credit spreads for debt-like instruments we have issued and are available in the market.
Funds Withheld Payable Embedded Derivative
The funds withheld payable includes an embedded derivative that has been bifurcated from the host contract and is measured at fair value on a recurring basis, which is reflected in Level 3. The fair value is determined based on the change in the estimated fair value of the underlying funds withheld investments. The fair value of these assets is determined as previously described.
Other Liabilities
Derivative liabilities of consolidated sponsored investment funds are reported at fair value within other liabilities. Fair values of these derivatives are determined as previously described and are reflected in Level 1 and Level 2.

91

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis were as follows:



































June 30, 2026



Assets/

Amount












(liabilities)

measured at












measured at

net asset

Fair value hierarchy level


    
fair value
    
value (5)
    
Level 1
    
Level 2
    
Level 3



(in millions)

Assets
















Fixed maturities, available-for-sale:
















U.S. government and agencies

$
1,981.0

$
—

$
1,670.3

$
310.7

$
—

Non-U.S. governments


397.0


—


—


397.0


—

States and political subdivisions


7,322.0


—


—


7,222.2


99.8

Corporate


38,007.1


—


26.0


35,464.3


2,516.8

Residential mortgage-backed pass-through securities


3,662.8


—


—


3,662.8


—

Commercial mortgage-backed securities


5,620.6


—


—


5,618.4


2.2

Collateralized debt obligations (1)


5,871.3


—


—


5,871.3


—

Other debt obligations


11,124.5


—


—


9,692.5


1,432.0

Total fixed maturities, available-for-sale


73,986.3


—


1,696.3


68,239.2


4,050.8

Fixed maturities, trading


1,087.7


—


—


683.2


404.5

Equity securities


2,603.4


—


1,103.4


1,500.0


—

Derivative assets (2)


1,751.3


—


—


1,718.1


33.2

Other investments


1,239.3


56.5


333.7


760.9


88.2

Cash equivalents


3,519.8


—


135.4


3,384.4


—

Market risk benefit asset (3)


202.8


—


—


—


202.8

Sub-total excluding separate account assets


84,390.6


56.5


3,268.8


76,285.8


4,779.5

Separate account assets


202,396.0


7,607.0


129,883.1


64,145.5


760.4

Total assets

$
286,786.6

$
7,663.5

$
133,151.9

$
140,431.3

$
5,539.9


















Liabilities
















Investment and universal life contracts (4)

$
( 2,142.5 )

$
—

$
—

$
—

$
( 2,142.5 )

Market risk benefit liability (3)


( 65.9 )


—


—


—


( 65.9 )

Funds withheld payable embedded derivative (4)


2,706.4


—


—


—


2,706.4

Derivative liabilities (2)


( 526.6 )


—


( 0.3 )


( 516.4 )


( 9.9 )

Other liabilities


( 2.8 )


—


—


( 2.8 )


—

Total liabilities

$
( 31.4 )

$
—

$
( 0.3 )

$
( 519.2 )

$
488.1


















Net assets

$
286,755.2

$
7,663.5

$
133,151.6

$
139,912.1

$
6,028.0



92

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



































December 31, 2025



Assets/

Amount












(liabilities)

measured at












measured at

net asset

Fair value hierarchy level


    
fair value
    
value (5)
    
Level 1
    
Level 2
    
Level 3



(in millions)

Assets
















Fixed maturities, available-for-sale:
















U.S. government and agencies

$
1,867.6

$
—

$
1,515.2

$
352.4

$
—

Non-U.S. governments

 
517.7

 
—


—


517.7


—

States and political subdivisions

 
7,138.7

 
—


—


7,070.3


68.4

Corporate

 
37,547.5

 
—


27.8


35,042.0


2,477.7

Residential mortgage-backed pass-through securities

 
3,805.1

 
—


—


3,805.1


—

Commercial mortgage-backed securities

 
5,371.6

 
—


—


5,369.2


2.4

Collateralized debt obligations (1)

 
6,422.3

 
—


—


6,422.3


—

Other debt obligations

 
10,690.2

 
—


—


8,934.5


1,755.7

Total fixed maturities, available-for-sale

 
73,360.7

 
—


1,543.0


67,513.5


4,304.2

Fixed maturities, trading

 
1,243.8

 
—


0.1


786.3


457.4

Equity securities

 
2,237.3

 
—


778.6


1,458.7


—

Derivative assets (2)

 
1,224.5

 
—


—


1,199.8


24.7

Other investments

 
1,112.0

 
106.4


332.8


505.6


167.2

Cash equivalents

 
3,236.1

 
—


183.7


3,052.4


—

Market risk benefit asset (3)


197.1


—


—


—


197.1

Sub-total excluding separate account assets

 
82,611.5

 
106.4


2,838.2


74,516.3


5,150.6

Separate account assets

 
193,622.6

 
7,613.8


121,376.6


63,889.7


742.5

Total assets

$
276,234.1

$
7,720.2

$
124,214.8

$
138,406.0

$
5,893.1


















Liabilities
















Investment and universal life contracts (4)

$
( 1,410.2 )

$
—

$
—

$
—

$
( 1,410.2 )

Market risk benefit liability (3)


( 66.9 )


—


—


—


( 66.9 )

Funds withheld payable embedded derivative   (4)


2,633.4


—


—


—


2,633.4

Derivative liabilities (2)

 
( 552.1 )

 
—


—


( 545.3 )


( 6.8 )

Other liabilities

 
( 1.3 )

 
—


—


( 1.3 )


—

Total liabilities

$
602.9

$
—

$
—

$
( 546.6 )

$
1,149.5


















Net assets

$
276,837.0

$
7,720.2

$
124,214.8

$
137,859.4

$
7,042.6

(1) Primarily consists of collateralized loan obligations backed by secured corporate loans.
(2) Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 4, Derivative Financial Instruments, for further information on fair value by class of derivative instruments.
(3) Refer to Note 9, Market Risk Benefits, for further information on the change in the Level 3 fair value measurements of MRBs.
(4) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. The funds withheld payable embedded derivative could be in either an asset or (liability) position.
(5) Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $ 2.9 million and $ 2.9 million as of June 30, 2026 and December 31, 2025, respectively. Separate account assets using the NAV practical expedient consist of certain funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these funds.

93

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

Changes in Level 3 Fair Value Measurements
The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows:















































For the three months ended June 30, 2026





Total realized/unrealized

















gains (losses)














Beginning



Included in

Net purchases,







Ending



asset/(liability)




other

sales,





asset/(liability)



balance as of

Included in

comprehensive

issuances and

Transfers into

Transfers out

balance as of


    
April 1, 2026
    
net income (2)
    
income (3)
    
settlements (4)
    
Level 3
    
of Level 3
   
June 30, 2026



(in millions)

Assets






















Fixed maturities, available-for-sale:






















States and political subdivisions

$
68.2

$
—

$
( 0.5 )

$
( 0.5 )

$
32.6

$
—

$
99.8

Corporate

 
2,549.1


( 1.8 )


1.0


( 31.5 )


—


—


2,516.8

Commercial mortgage-backed securities

 
2.3


—


—


( 0.1 )


—


—


2.2

Other debt obligations

 
1,772.7


—


10.0


( 237.8 )


—


( 112.9 )


1,432.0

Total fixed maturities, available-for-sale


4,392.3


( 1.8 )


10.5


( 269.9 )


32.6


( 112.9 )


4,050.8

Fixed maturities, trading


497.0


( 6.7 )


—


( 85.8 )


—


—


404.5

Other investments

 
125.3


( 3.3 )


—


( 33.8 )


—


—


88.2

Separate account assets (1)

 
760.6


( 0.2 )


—


—


—


—


760.4
























Liabilities






















Investment and universal life contracts

 
( 1,357.7 )


( 668.0 )


—


( 116.8 )


—


—


( 2,142.5 )

Funds withheld payable embedded derivative


2,810.8


( 104.4 )


—


—


—


—


2,706.4
























Derivatives

 




















Net derivative assets (liabilities)

 
( 1.7 )


24.2


—


0.8


—


—


23.3
















































For the three months ended June 30, 2025






Total realized/unrealized gains


















(losses)















Beginning




Included in

Net purchases,







Ending



asset/(liability)




other

sales,







asset/(liability)



balance as of

Included in

comprehensive

issuances and

Transfers into

Transfers out

balance as of


    
April 1, 2025
    
net income (2)
    
income (3)
    
settlements (4)
    
Level 3
    
of Level 3
    
June 30, 2025



(in millions)

Assets






















Fixed maturities, available-for-sale:
 

  
 

  
 

  
 

  
 

  
 

  
 

  

States and political subdivisions

$
68.6

$
—

$
( 0.4 )

$
( 0.4 )

$
—

$
—

$
67.8

Corporate

 
2,419.3

 
13.0

 
( 2.7 )

 
14.4

 
—

 
—

 
2,444.0

Commercial mortgage-backed securities

 
2.6

 
—

 
—

 
—

 
—

 
—

 
2.6

Other debt obligations

 
1,459.7

 
—

 
7.4

 
224.8

 
121.5

 
—

 
1,813.4

Total fixed maturities, available-for-sale

 
3,950.2

 
13.0

 
4.3

 
238.8

 
121.5

 
—

 
4,327.8

Fixed maturities, trading

 
571.1

 
( 11.2 )

 
—

 
( 68.0 )

 
—

 
—

 
491.9

Other investments

 
118.6

 
( 2.9 )

 
—

 
3.6

 
—

 
—

 
119.3

Separate account assets (1)

 
738.2

 
3.2

 
—

 
—

 
—

 
—

 
741.4
























Liabilities

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Investment and universal life contracts

 
( 522.7 )

 
( 192.4 )

 
—

 
( 148.6 )

 
—

 
—

 
( 863.7 )

Funds withheld payable embedded derivative

 
2,804.8

 
20.4

 
—

 
—

 
—

 
—

 
2,825.2
























Derivatives

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Net derivative assets (liabilities)

 
( 1.8 )

 
( 11.1 )

 
—

 
( 0.1 )

 
—

 
( 0.1 )

 
( 13.1 )



94

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






Total realized/unrealized gains


















(losses)















Beginning




Included in

Net purchases,







Ending



asset/(liability)




other

sales,







asset/(liability)



balance as of

Included in

comprehensive

issuances and

Transfers into

Transfers out

balance as of


    
January 1, 2026
    
net income (2)
    
income (3)
    
settlements (4)
    
Level 3
    
of Level 3
    
June 30, 2026



(in millions)

Assets


















 

  

Fixed maturities, available-for-sale:
 

  
 

  
 

  
 

  
 

  
 

  
 

  

States and political subdivisions

$
68.4
 
$
—
 
$
( 0.2 )
 
$
( 1.0 )
 
$
32.6
 
$
—
 
$
99.8

Corporate

 
2,477.7
 

( 32.0 )
 

6.3
 

64.8
 

—
 

—
 

2,516.8

Commercial mortgage-backed securities

 
2.4
 

—
 

—
 

( 0.2 )
 

—
 

—
 

2.2

Other debt obligations

 
1,755.7
 

( 2.1 )
 

—
 

( 256.5 )
 

52.6
 

( 117.7 )
 

1,432.0

Total fixed maturities, available-for-sale

 
4,304.2
 

( 34.1 )
 

6.1
 

( 192.9 )
 

85.2
 

( 117.7 )
 

4,050.8

Fixed maturities, trading

 
457.4
 

( 12.0 )
 

—
 

( 40.9 )
 

—
 

—
 

404.5

Other investments

 
167.2
 

( 7.1 )
 

—
 

( 71.9 )
 

—
 

—
 

88.2

Separate account assets (1)

 
742.5
 

17.9
 

—
 

—
 

—
 

—
 

760.4
























Liabilities

 
  
 


 


 


 


 

  
 



Investment and universal life contracts

 
( 1,410.2 )
 

( 522.9 )
 

—
 

( 209.4 )
 

—
 

—
 

( 2,142.5 )

Funds withheld payable embedded derivative

 
2,633.4
 

73.0
 

—
 

—
 

—
 

—
 

2,706.4
























Derivatives

 
  
 


 


 


 


 

  
 



Net derivative assets (liabilities)

 
17.9
 

4.2
 

—
 

1.2
 

—
 

—
 

23.3

















































For the six months ended June 30, 2025






Total realized/unrealized

















gains (losses)














Beginning



Included in

Net purchases,







Ending



asset/(liability)




other

sales,





asset/(liability)



balance as of

Included in

comprehensive

issuances and

Transfers into

Transfers out

balance as of


    
January 1, 2025
    
net income (2)
    
income (3)
    
settlements (4)
    
Level 3
    
of Level 3
    
June 30, 2025



(in millions)

Assets






















Fixed maturities, available-for-sale:






















States and political subdivisions

$
66.8

$
—

$
1.9

$
( 0.9 )

$
—

$
—

$
67.8

Corporate


2,350.4


15.9


( 7.9 )


85.6


—


—


2,444.0

Commercial mortgage-backed securities

 
2.7


—


0.1


( 0.2 )


—


—


2.6

Other debt obligations

 
1,478.3


0.1


10.3


228.0


121.5


( 24.8 )


1,813.4

Total fixed maturities, available-for-sale

 
3,898.2


16.0


4.4


312.5


121.5


( 24.8 )


4,327.8

Fixed maturities, trading

 
562.6


( 11.9 )


—


( 54.0 )


—


( 4.8 )


491.9

Mortgage loans


140.6


—


—


( 140.6 )


—


—


—

Other investments

 
131.2


( 0.2 )


—


( 11.7 )


—


—


119.3

Separate account assets (1)

 
726.7


14.7


—


—


—


—


741.4
























Liabilities






















Investment and universal life contracts

 
( 578.4 )


1.0


—


( 286.3 )


—


—


( 863.7 )

Funds withheld payable embedded derivative


3,014.5


( 189.3 )


—


—


—


—


2,825.2
























Derivatives






















Net derivative assets (liabilities)

 
13.5


( 27.8 )


—


1.2


—


—


( 13.1 )

(1) Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities. Foreign currency translation adjustments related to the Principal Asset Management separate account assets are recorded in AOCI and are offset by foreign currency translation adjustments of the corresponding separate account liabilities.

95

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

(2) Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses), net realized capital gains (losses) on funds withheld assets or change in fair value of funds withheld embedded derivative within the consolidated statements of operations. Realized and unrealized gains (losses) on certain securities with an investment objective to realize economic value through mark-to-market changes are reported in net investment income within the consolidated statements of operations. Changes in unrealized gains (losses) included in net income relating to positions still held were:





























For the three months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Assets








  


  

Fixed maturities, available-for-sale:






 

  
 

  

Corporate

$
( 5.6 )

$
13.0

$
( 16.8 )

$
27.4

Other debt obligations


—


—


( 1.2 )


—

Total fixed maturities, available-for-sale


( 5.6 )


13.0


( 18.0 )


27.4

Fixed maturities, trading


( 5.5 )


( 11.0 )


( 9.8 )


( 11.2 )

Other investments


1.0


4.2


0.4


4.2

Separate account assets


( 0.9 )


( 1.2 )


17.2


( 7.8 )















Liabilities







 


 


Investment and universal life contracts


( 526.8 )


( 7.8 )


( 521.7 )


0.3

Funds withheld payable embedded derivative


( 104.4 )


20.4


73.0


( 189.4 )















Derivatives













Net derivative assets (liabilities)


10.3


( 12.6 )


1.6


( 30.6 )


(3)
Changes in unrealized gains (losses) included in OCI, including foreign currency translation adjustments related to Principal Asset Management, relating to positions still held were:






























For the three months ended

For the six months ended



June 30, 

June 30, 


    
2026
    
2025
    
2026
    
2025



(in millions)

Assets






    

    




Fixed maturities, available-for-sale:













States and political subdivisions

$
( 0.6 )

$
( 0.4 )

$
( 0.3 )

$
1.9

Corporate


4.5


( 2.4 )


2.5


( 8.7 )

Commercial mortgage-backed securities


—


—


—


0.1

Other debt obligations


9.9


7.4


0.9


10.6

Total fixed maturities, available-for-sale


13.8


4.6


3.1


3.9



96

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

(4) Gross purchases, sales, issuances and settlements were:



































For the three months ended June 30, 2026















Net purchases,















sales, issuances


    
Purchases
    
Sales
    
Issuances
    
Settlements
    
and settlements



(in millions)

Assets
















Fixed maturities, available-for-sale:
 

  
 

  
 

  
 

  
 

  

States and political subdivisions

$
—

$
—

$
—

$
( 0.5 )

$
( 0.5 )

Corporate

 
124.8

 
( 44.9 )

 
—

 
( 111.4 )

 
( 31.5 )

Commercial mortgage-backed securities


—


—


—


( 0.1 )


( 0.1 )

Other debt obligations

 
84.9

 
( 222.0 )

 
—

 
( 100.7 )

 
( 237.8 )

Total fixed maturities, available-for-sale

 
209.7

 
( 266.9 )

 
—

 
( 212.7 )

 
( 269.9 )

Fixed maturities, trading

 
56.2

 
( 133.5 )

 
—

 
( 8.5 )

 
( 85.8 )

Other investments

 
( 1.5 )

 
( 0.7 )

 
—

 
( 31.6 )

 
( 33.8 )


















Liabilities

 


 


 
  

 


 


Investment and universal life contracts

 
—

 
—

 
( 131.4 )

 
14.6

 
( 116.8 )


















Derivatives

 


 


 
  

 


 


Net derivative assets (liabilities)

 
0.1

 
0.7

 
—

 
—

 
0.8




































For the three months ended June 30, 2025















Net purchases,















sales, issuances


    
Purchases
    
Sales
    
Issuances
    
Settlements
    
and settlements



(in millions)

Assets
















Fixed maturities, available-for-sale:
















States and political subdivisions

$
—

$
—

$
—

$
( 0.4 )

$
( 0.4 )

Corporate


89.0


( 25.6 )


—


( 49.0 )


14.4

Other debt obligations


288.9


—


—


( 64.1 )


224.8

Total fixed maturities, available-for-sale


377.9


( 25.6 )


—


( 113.5 )


238.8

Fixed maturities, trading


98.3


( 76.8 )


—


( 89.5 )


( 68.0 )

Other investments


39.6


—


—


( 36.0 )


3.6


















Liabilities
















Investment and universal life contracts


—


—


( 160.1 )


11.5


( 148.6 )


















Derivatives
















Net derivative assets (liabilities)


0.2


( 0.3 )


—


—


( 0.1 )




97

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















Net purchases,















sales, issuances


    
Purchases
    
Sales
    
Issuances
    
Settlements
    
and settlements



(in millions)

Assets
















Fixed maturities, available-for-sale:
















States and political subdivisions

$
—

$
—

$
—

$
( 1.0 )

$
( 1.0 )

Corporate

 
378.3

 
( 70.8 )

 
—

 
( 242.7 )

 
64.8

Commercial mortgage-backed securities

 
—

 
—

 
—

 
( 0.2 )

 
( 0.2 )

Other debt obligations

 
194.1

 
( 222.0 )

 
—

 
( 228.6 )

 
( 256.5 )

Total fixed maturities, available-for-sale

 
572.4

 
( 292.8 )

 
—

 
( 472.5 )

 
( 192.9 )

Fixed maturities, trading

 
142.2

 
( 170.6 )

 
—

 
( 12.5 )

 
( 40.9 )

Other investments

 
8.8

 
( 0.7 )

 
—

 
( 80.0 )

 
( 71.9 )


















Liabilities

 
  

 
  

 
  

 
  

 
  

Investment and universal life contracts

 
—

 
—

 
( 241.2 )

 
31.8

 
( 209.4 )


















Derivatives

 
  

 
  

 
  

 
  

 
  

Net derivative assets (liabilities)

 
0.3

 
0.9

 
—

 
—

 
1.2




































For the six months ended June 30, 2025















Net purchases,















sales, issuances


    
Purchases
    
Sales
    
Issuances
    
Settlements
    
and settlements



(in millions)

Assets
















Fixed maturities, available-for-sale:
















States and political subdivisions

$
—

$
—

$
—

$
( 0.9 )

$
( 0.9 )

Corporate


324.2


( 155.6 )


—


( 83.0 )


85.6

Commercial mortgage-backed securities


—


—


—


( 0.2 )


( 0.2 )

Other debt obligations


513.6


( 177.7 )


—


( 107.9 )


228.0

Total fixed maturities, available-for-sale


837.8


( 333.3 )


—


( 192.0 )


312.5

Fixed maturities, trading


162.6


( 121.6 )


—


( 95.0 )


( 54.0 )

Mortgage loans


—


—


—


( 140.6 )


( 140.6 )

Other investments


60.9


( 1.5 )


—


( 71.1 )


( 11.7 )


















Liabilities
















Investment and universal life contracts


—


—


( 314.0 )


27.7


( 286.3 )


















Derivatives
















Net derivative assets (liabilities)


0.9


0.3


—


—


1.2




98

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

Transfers
Transfers of assets and liabilities measured at fair value on a recurring basis between fair value hierarchy levels were as follows:





























For the three months ended June 30, 2026


    
Transfers out 
    
Transfers out 
    
Transfers out 
    
Transfers out 



of Level 1 into

of Level 2 into 

of Level 3 into 

of Level 3 into 



 Level 3

Level 3

Level 1

Level 2



(in millions)

Assets
 

  
 

  
 

  
 

  

Fixed maturities, available-for-sale:
 












States and political subdivisions

$
—
 
$
32.6
 
$
—
 
$
—

Other debt obligations
 

—
 

—
 

—
 

112.9

Total fixed maturities, available-for-sale
 

—
 

32.6
 

—
 

112.9






























For the three months ended June 30, 2025


    
Transfers out 
    
Transfers out 
    
Transfers out 
    
Transfers out 



of Level 1 into

of Level 2 into

of Level 3 into

of Level 3 into



 Level 3

 Level 3

 Level 1

 Level 2



(in millions)

Assets
 

  
 

  
 

  
 

  

Fixed maturities, available-for-sale:
 

  
 

  
 

  
 

  

Other debt obligations

$
—

$
121.5

$
—

$
—

Total fixed maturities, available-for-sale

 
—

 
121.5

 
—

 
—















Derivatives

 
  

 
  

 
  

 
  

Net derivative assets (liabilities)

 
—

 
—

 
—

 
0.1






























For the six months ended June 30, 2026


    
Transfers out
    
Transfers out
    
Transfers out
    
Transfers out



of Level 1 into

of Level 2 into

of Level 3 into

of Level 3 into



Level 3

Level 3

Level 1

Level 2



(in millions)

Assets













Fixed maturities, available-for-sale:













States and political subdivisions

$
—

$
32.6

$
—

$
—

Other debt obligations


—


52.6


—


117.7

Total fixed maturities, available-for-sale


—


85.2


—


117.7






























For the six months ended June 30, 2025


    
Transfers out
    
Transfers out
    
Transfers out
    
Transfers out



of Level 1 into

of Level 2 into

of Level 3 into

of Level 3 into



Level 3

Level 3

Level 1

Level 2



(in millions)

Assets













Fixed maturities, available-for-sale:













Other debt obligations

$
—

$
121.5

$
—

$
24.8

Total fixed maturities, available-for-sale


—


121.5


—


24.8

Fixed maturities, trading


—


—


—


4.8


Assets transferred into Level 3 during 2026 and 2025 primarily included those assets for which we are now unable to obtain pricing from a recognized third party pricing vendor as well as assets that were previously priced using a matrix valuation approach that may no longer be relevant when applied to asset-specific situations.
Assets transferred out of Level 3 during 2026 and 2025 primarily included those assets for which we are now able to obtain pricing from a recognized third party pricing vendor or from internal models using substantially all market observable information.




99

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



Quantitative Information about Level 3 Fair Value Measurements
The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally, which primarily consists of those valued using broker quotes. The MRB asset and liability are excluded from the table. Refer to Note 9, Market Risk Benefits, for information on the unobservable inputs used for fair value measurement of MRBs. The funds withheld payable embedded derivative is excluded from the table as the determination of its fair value incorporates the fair value of the invested assets supporting the reinsurance agreement. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.



































June 30, 2026


    
Assets /
    

    

    

 

    
     





(liabilities)















measured at

Valuation

Unobservable

Input/range of

Weighted



fair value

technique(s)

input description

inputs

average



(in millions)













Assets
















Fixed maturities, available-for-sale:

Corporate

$
2,020.9
 
Discounted cash flow
 
Discount rate (1)

3.0
%   -
12.8
%

8.0
%







 
Earnings before interest, taxes, depreciation and amortization multiple

0.9
x   -
13.0
x

5.2
x








Illiquidity premium

30
basis points (“bps”) -
771
bps

144
bps








Comparability adjustment

( 96 )
bps -
4,970
bps

97
bps

Other debt obligations


1,432.0
 
Discounted cash flow
 
Discount rate (1)
 
3.9
%   -
8.9
%

4.4
%







 
Illiquidity premium
 
( 83 )
bps -
415
bps

176
bps








Comparability adjustment

( 11 )
bps -
298
bps

67
bps

Fixed maturities, trading


210.1

Discounted cash flow

Discount rate (1)

4.2
%   -
13.0
%

8.2
%







 
Earnings before interest, taxes, depreciation and amortization multiple
 
0.9
x   -
13.0
x

4.7
x








Comparability adjustment

( 96 )
bps -
689
bps

70
bps

Other investments


88.2

Discounted cash flow
 
Discount rate (1)
 
12.0
%   -
13.5
%

13.2
%








Probability of default

6.0
%   -
10.0
%

8.4
%







 
Potential loss severity
 
87.0
%   -
100.0
%

91.8
%

Separate account assets


760.4
 
Discounted cash flow - real estate
 
Discount rate (1)
 
6.8
%   -
10.0
%

7.4
%







 
Terminal capitalization rate
 
5.5
%   -
8.0
%

6.0
%







 
Average market rent growth rate
 
2.0
%   -
3.3
%

2.7
%





 
Discounted cash flow - real estate debt
 
Loan to value
 
46.5
%   -
65.5
%

52.1
%







 
Market interest rate
 
5.3
%   -
6.8
%

5.8
%


































Liabilities
    

    

    

  

    
    



Investment and universal life contracts   (4)


( 2,142.5 )
 
Discounted cash flow
 
Long duration interest rate

3.8
%   -
4.9
%
(2)
4.9
%







 
Long-term equity market volatility
 
17.2
%   -
43.5
%

22.6
%







 
Nonperformance risk
 
0.5
%   -
1.1
%

0.9
%







 
Lapse rate
 
0.0
%   -
55.0
%

8.3
%







 
Mortality rate
 
See note (3)






100

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





































December 31, 2025



    
Assets /
    



  

     





(liabilities)












measured at

Valuation

Unobservable

Input/range of

Weighted



fair value

technique(s)

input description

inputs

average



(in millions)














Assets

















Fixed maturities, available-for-sale:

Corporate

$
2,017.3
 
Discounted cash flow
 
Discount rate (1)
 

2.7
%   -
13.1
%

8.0
%








Earnings before interest, taxes, depreciation and amortization multiple




0.9
x

0.9
x








Illiquidity premium


30
bps -
771
bps

146
bps








Comparability adjustment


( 120 )
bps -
3,462
bps

122
bps

Other debt obligations

 
1,745.4
 
Discounted cash flow
 
Discount rate (1)
 

3.4
%   -
8.6
%

4.2
%







 
Illiquidity premium
 

( 83 )
bps -
415
bps

179
bps








Comparability adjustment


( 10 )
bps -
285
bps

66
bps

Fixed maturities, trading


257.6

Discounted cash flow

Discount rate (1)


8.5
%   -
13.0
%

9.0
%








Earnings before interest, taxes, depreciation and amortization multiple




0.9
x

0.9
x








Comparability adjustment


( 88 )
bps -
2,047
bps

114
bps

Other investments


167.1

Discounted cash flow

Discount rate (1)


12.0
%   -
13.5
%

12.2
%








Probability of default


6.0
%   -
10.0
%

8.0
%








Potential loss severity


87.0
%   -
100.0
%

92.9
%

Separate account assets

 
742.5
 
Discounted cash flow - real estate
 
Discount rate (1)
 

6.8
%   -
9.3
%

7.3
%







 
Terminal capitalization rate
 

5.5
%   -
8.0
%

6.0
%







 
Average market rent growth rate
 

2.0
%   -
3.3
%

2.7
%





 
Discounted cash flow - real estate debt
 
Loan to value
 

47.2
%   -
69.3
%

52.7
%







 
Market interest rate
 

5.3
%   -
6.4
%

5.8
%




































Liabilities
    


    

    

  



    
    


Investment and universal life contracts (4)

 
( 1,410.2 )
 
Discounted cash flow
 
Long duration interest rate
 

3.5
%   -
4.8
%
(2)
4.8
%







 
Long-term equity market volatility
 

16.1
%   -
33.4
%

21.8
%







 
Nonperformance risk
 

0.5
%   -
1.1
%

0.9
%







 
Lapse rate
 

0.0
%   -
55.0
%

8.0
%







 
Mortality rate
 

See note (3)



(1) Represents market comparable interest rate or an index adjusted rate used as the base rate in the discounted cash flow analysis prior to any illiquidity or other adjustments, where applicable.
(2) Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between various observable swap rates.
(3) This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation.
(4) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.

101

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

Market comparable discount rates are used as the base rate in the discounted cash flows used to determine the fair value of certain assets. The use of a higher or lower discount rate would have caused the fair value of the assets to significantly decrease or increase, respectively. Additionally, we may adjust the base discount rate or the modeled price by applying an illiquidity premium given the highly structured nature of certain assets. The use of a higher or lower illiquidity premium would have caused significant decreases or increases, respectively, in the fair value of the asset.
Embedded derivatives within our investment and universal life contracts liability can be in either an asset or liability position, depending on certain inputs at the reporting date. Increases to an asset or decreases to a liability are described as increases to fair value. The use of a higher or lower market volatility would have caused significant decreases or increases, respectively, in the fair value of embedded derivatives in investment and universal life contracts. Long duration interest rates are used as the mean return when projecting the growth in the value of associated account value and impact the discount rate used in the discounted future cash flows valuation. The use of higher or lower risk-free rates would have caused the fair value of the embedded derivative to significantly increase or decrease, respectively. The use of a higher or lower rate for our own credit risks, which impact the rates used to discount future cash flows, would have significantly increased or decreased, respectively, the fair value of the embedded derivative. The use of a lower or higher mortality rate assumption would have caused the fair value of the embedded derivative to decrease or increase, respectively. The use of a lower or higher overall lapse rate assumption would have caused the fair value of the embedded derivative to decrease or increase, respectively.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
No significant assets and liabilities were measured at fair value on a nonrecurring basis for the three and six months ended June 30, 2026 and 2025.
Fair Value Option
We elected fair value accounting for:
● Certain other loans of a consolidated VIE that were subject to amortized cost accounting and a valuation allowance so that credit losses are recognized within the changes in fair value in the consolidated statements of operations.

The following table presents information regarding the assets and liabilities for which the fair value option was elected.
















    
June 30, 2026
    
December 31, 2025



(in millions)

Other loans of consolidated VIE (1)


  


  

Fair value (1)

$
88.2

$
167.1

Aggregate contractual principal

 
98.2

 
175.8

(1) Reported with other investments on the consolidated statements of financial position. See Note 3, Investments, for additional information relating to other loans more than 90 days past due or in non-accrual status.


102

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

The following table presents information regarding the consolidated statements of operations impact of assets for which the fair value option was elected.





























For the three months ended

For the six months ended



June 30, 

June 30, 



2026

2025

2026

2025



(in millions)

Other loans of consolidated VIE
    

  
    

  
    

  
    

  

Change in fair value pre-tax loss - instrument specific credit risk

$
( 4.0 )

$
( 2.9 )

$
( 7.7 )

$
( 1.3 )

Change in fair value pre-tax loss (1)


( 4.0 )


( 2.9 )


( 7.7 )


( 1.3 )

Interest income (2)

 
3.8

 
2.9

 
9.9

 
7.1

(1) Reported in net realized capital gains (losses) on the consolidated statements of operations.
(2) Reported in net investment income on the consolidated statements of operations and recorded based on the effective interest rate of the loans.

Financial Instruments Not Reported at Fair Value
The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed at fair value were as follows:



































June 30, 2026









Fair value hierarchy level


    
Carrying amount
    
Fair value
    
Level 1
    
Level 2
    
Level 3



(in millions)

Assets (liabilities)



 


 


 


 



Mortgage loans

$
21,092.7

$
19,712.9

$
—

$
—

$
19,712.9

Policy loans

 
875.5


903.2


—


—


903.2

Other investments

 
268.9


248.0


—


83.3


164.7

Cash and cash equivalents

 
1,739.7


1,739.7


1,718.6


21.1


—

Reinsurance deposit receivable


3,676.6


3,431.9


—


—


3,431.9

Cash collateral receivable


0.8


0.8


0.8


—


—

Investment contracts

 
( 34,746.3 )


( 34,062.3 )


—


( 8,316.9 )


( 25,745.4 )

Short-term debt

 
( 16.2 )


( 16.2 )


—


( 16.2 )


—