First Quarter Enterprise Results

In millions except percentages, earnings per share, or otherwise noted

First Quarter Segment Highlights

• Retirement and Income Solutions (RIS) sales of $9.4 billion increased 6% over first quarter 2023; net revenue² increased 6% from first quarter 2023; 38% operating margin³
• Principal Global Investors (PGI) managed AUM of $514 billion increased 7% over first quarter 2023; with positive institutional and real estate net cash flow
• Principal International (PI) AUM of $179 billion increased 7% over first quarter 2023; $1 billion of positive net cash flow
• Specialty Benefits premium and fees increased 8% from first quarter 2023 driven by record sales along with employment and wage growth
• Life Insurance business market premium and fees increased 23% from first quarter 2023
• Strong investment performance⁴: 71% of Principal investment options above median on a one-year basis, 57% on a three-year basis, 73% on a five-year basis, and 82% on a ten-year basis; additionally, 58% of fund-level AUM had a 4- or 5-star rating from Morningstar⁵

   

Segment Results

In millions except percentages, or otherwise noted except percentages or otherwise noted)

Retirement and Income Solutions

• Pre-tax operating earnings increased $12.4 million primarily due to higher net revenue partially offset by higher operating expenses.
• Net revenue increased $41.3 million primarily due to growth in the business, higher net investment income, and favorable market performance.

Principal Global Investors

• Pre-tax operating earnings increased $4.8 million primarily due to higher operating revenues less pass-through expenses partially offset by higher operating expenses.
• Operating revenues less pass-through expenses increased $12.3 million primarily due to higher management fees on higher average AUM.

   

Principal International

• Pre-tax operating earnings decreased $5.5 million primarily due to lower combined net revenue.
• Combined net revenue (at PFG share) decreased $10.2 million primarily due to impacts of macroeconomic headwinds in Asia and foreign currency translation.

Specialty Benefits

• Pre-tax operating earnings increased $20.2 million due to growth in the business and lower incurred loss ratio.
• Premium and fees increased $59.2 million driven by record sales along with employment and wage growth.
• Incurred loss ratio improved to 61% driven by more favorable underwriting experience.

Life Insurance

• Pre-tax operating earnings decreased $7.7 million primarily due to a GAAP-only regulatory closed block dividend adjustment.
• Premium and fees increased $9.2 million as strong business market growth outpaced the runoff of the legacy business.

Corporate

Earnings Conference Call

On Friday, Apr. 26, 2024, at 10:00 a.m. (ET), Chairman, President and Chief Executive Officer Dan Houston and Executive Vice President and Chief Financial Officer Deanna Strable will lead a discussion of results and the impacts on future prospects, asset quality and capital adequacy during a live conference call, which can be accessed as follows:

• Via live Internet webcast. Please go to investors.principal.com at least 10-15 minutes prior to the start of the call to register, and to download and install any necessary audio software.
• Via telephone by dialing in one of the following numbers 10 minutes prior to the start of the call.
  • 877-407-0832 (U.S. and Canadian callers)
  • +1 201-689-8433 (International callers)
• Replay of the earnings call via webcast as well as a transcript of the call will be available after the call at investors.principal.com.

The company’s financial supplement and slide presentation is currently available at investors.principal.com, and may be referred to during the call.

Forward Looking Statements

This release contains statements that constitute forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to share repurchases and planned dividends, the realization of our growth and business strategies and results from ongoing operations. Forward‑looking statements are made based upon our current expectations and beliefs concerning future developments and their potential effects on us. Such forward‑looking statements are not guarantees of future performance and actual results may differ materially from the results anticipated in the forward-looking statements. We describe risks, uncertainties and factors that could cause or contribute to such material differences in our filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Note Concerning Forward-Looking Statements” sections in our annual report on Form 10-K for the year ended Dec. 31, 2023, as updated or supplemented from time to time in subsequent filings. We assume no obligation to update any forward-looking statement for any reason, which speaks as of its date.

Use of Non-GAAP Financial Measures

The company uses a number of non-GAAP financial measures that management believes are useful to investors because they illustrate the performance of normal, ongoing operations, which is important in understanding and evaluating the company’s financial condition and results of operations. They are not, however, a substitute for U.S. GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP measures to the most directly comparable U.S. GAAP measure at the end of the release. The company adjusts U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these adjusting items have occurred in the past and could recur in future reporting periods. Management also uses non-GAAP measures for goal setting, as a basis for determining employee and senior management awards and compensation and evaluating performance on a basis comparable to that used by investors and securities analysts.

About Principal^®12

Principal Financial Group^® (Nasdaq: PFG) is a global financial company with nearly 20,000 employees¹³ passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping approximately 62 million customers¹³ plan, insure, invest, and retire, while working to improve our planet, support the communities where we do business, and build a diverse, inclusive workforce. Principal^® is proud to be recognized as one of the 2023 World’s Most Ethical Companies¹⁴, a member of the Bloomberg Gender Equality Index, and named as a “Best Places to Work in Money Management¹⁵.” Learn more about Principal and our commitment to sustainability, inclusion, and purpose at principal.com.

Summary of Principal Financial Group^® and Segment Results

*U.S. GAAP (GAAP) net income attributable to PFG versus non-GAAP operating earnings

Management uses non-GAAP operating earnings, which is a financial measure that excludes the effect of net realized capital gains and losses, as adjusted, income (loss) from exited business and other after-tax adjustments the company believes are not indicative of overall operating trends, for goal setting, as a basis for determining employee and senior management awards and compensation and evaluating performance on a basis comparable to that used by investors and securities analysts. Note: it is possible these adjusting items have occurred in the past and could recur in future reporting periods. While these items may be significant components in understanding and assessing our consolidated financial performance, management believes the presentation of non-GAAP operating earnings enhances the understanding of results of operations by highlighting earnings attributable to the normal, ongoing operations of the company’s businesses.