Principal Financial Group Inc. (PFG)

Principal Financial Group sells retirement plans, asset management, and employee benefits and insurance, mostly to employers and the people who work for them. Much of it is aimed at small and medium-sized companies, a market the filing calls underserved and says remains underpenetrated. Its retirement business in the United States dates to the 1940s and its life insurance business to 1879.

Three reportable segments

Retirement and Income Solutions, Principal Asset Management, and Benefits and Protection, plus a Corporate segment holding whatever is not allocated.

Retirement and Income Solutions

The workplace savings business supplies both the administration and the investments for defined contribution plans such as 401(k) and 403(b), defined benefit plans, nonqualified executive benefit plans, employee stock ownership plans and equity compensation. At the end of 2025 it served over 42,000 defined contribution plans covering about 11.3 million eligible participants, and over 1,600 defined benefit plans covering over 371,000. Not all of that money is managed in-house: about 30 percent of those account values were managed by its own asset management segment, 66 percent by third-party managers with no sub-advisory contract, 2 percent sub-advised and 2 percent employer securities. Plans are sold nationally through a captive retirement services sales force working alongside the referring consultant or independent adviser, with a separate staff of service and education specialists across the country.

Beside that sit individual annuities, both variable annuities and registered index-linked annuities, where the index-linked options limit losses through floors or buffers. Customers can add a guaranteed minimum withdrawal benefit, and Principal carries that investment risk and hedges it. Affiliated financial representatives sold 68 percent of annuity sales in 2025, against 70 percent in 2024 and 85 percent in 2023, with the rest going through unaffiliated broker-dealers. Individual fixed annuity sales stopped in 2021 and the existing block was reinsured in 2022.

Pension risk transfer is a third line: a plan sponsor terminating a defined benefit scheme pays a single premium and Principal guarantees the income to the members. The filing notes that sponsors generally restrict their choice to insurers with superior or excellent financial strength ratings, because the Department of Labor requires annuities to be bought from the safest available insurer. Investment-only products, guaranteed investment contracts and funding agreements, pay a fixed or floating rate and restrict early surrender; the company earns the spread between what it makes on the assets and what it credits the customer. Funding agreements also back notes issued to institutional investors through special purpose entities, which makes that channel dependent on debt market conditions.

Principal Asset Management

Investment management for institutional, retirement, retail and high net worth investors in the United States and selected emerging markets, run by global and local teams covering equity, fixed income, asset allocation, real estate and other alternatives. Fees are generally driven by assets under management. The investment management teams managed $593.9 billion of client assets at the end of 2025, which is money belonging to clients rather than to Principal. The segment also runs Islamic asset management for clients across Southeast Asia and the Middle East, and Islamic mutual funds in Southeast Asia, the Middle East and Europe. A separate international pension operation sells pension accumulation, income annuities and life accumulation products in Latin America and Asia, targeting places with growing middle classes and rising long-term savings. In January 2025 the company agreed to hand its sponsor and trustee roles for MPF schemes to Bank Consortium Trust while keeping investment management, a transaction expected to close in 2026.

Benefits and Protection

Two divisions. Specialty Benefits sells group dental, group life, group disability, supplemental health and individual disability, mainly at small and medium-sized businesses: around 103,000 employer groups, 321,000 total coverages, more than 3,300,000 employees. On LIMRA's 2024 rankings the filing places the company third-largest in group dental by contracts and employer groups in force, top-ranked in group life by contracts in force, and fourth in individual disability by premium in force. The division also administers dental, disability and vision benefits on a fee-for-service basis for employers that carry the risk themselves.

The Life Insurance division works on succession planning, wealth transfer and cover for the owners, executives and key employees of small and medium-sized businesses. It stopped selling to retail consumers in 2021 and reinsured its universal life with secondary guarantee block in 2022. At the end of 2025 its US operations administered about 710,000 individual life policies. Group products reach the buyer through brokers and consultants, in all 50 states and the District of Columbia.

From Principal Financial Group's annual report on Form 10-K for the year ended 31 December 2025. The filing