PRINCIPAL FINANCIAL GROUP INC (PFG) Business

Item 1. Business

Principal Financial Group, Inc. (“PFG”) is a leader in global financial services offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and workplace benefits and protection solutions through our diverse family of financial services companies. We had $1,814.6 billion in assets under administration (“AUA”), including $781.0 billion in assets under management (“AUM”) as of December 31, 2025.

Our global asset management businesses serve a broad range of institutional, retirement, high net worth, and retail investors worldwide. Our focused investment teams provide diverse, long-term investment capabilities including equity, fixed income, real estate, and other alternative investments, as well as fund offerings. Our international asset management and accumulation businesses focus on the opportunities created as aging populations around the world drive increased demand for retirement accumulation, retirement asset management and retirement income management solutions.

In the U.S., we offer a broad array of retirement and employee benefit and insurance solutions to meet the needs of the business owner and their employees. We are a leading provider of defined contribution plans, nonqualified plans, defined benefit plans and pension risk transfer services. We are also a leading employee stock ownership plan (“ESOP”) consultant. In addition, we are one of the largest providers of specialty benefits and insurance solutions for business owners and their employees. We believe small and medium-sized businesses are an underserved market, offering attractive growth opportunities in the retirement and employee benefit markets.

Our Reportable Segments

We organize our businesses into the following reportable segments:

We also have a Corporate segment, which consists of the assets and activities that have not been allocated to any other segment.

See Item 8. “Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 20, Segment Information” for financial results of our segments.

Retirement and Income Solutions Segment

Our asset accumulation activities in the U.S. date back to the 1940s when we first began providing pension plan products and services. We offer a comprehensive portfolio of products and services for retirement savings along with select products for retirement income:

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Workplace Savings and Retirement Solutions (“WSRS”)

We offer a wide variety of investment and administrative products and services for defined contribution plans, including 401(k) and 403(b) plans; defined benefit plans; nonqualified executive benefit plans and stock services, including ESOPs and equity compensation.

Products

WSRS products respond to the needs of plan sponsors seeking both administrative and investment services for defined contribution plans or defined benefit plans. The investment component of both the defined contribution and defined benefit plans may be in the form of a guaranteed account, separate account, a mutual fund offering or a collective investment trust. In addition, defined contribution plan sponsors may also offer their own employer securities as an investment option under the plan.

We deliver both administrative and investment services to our defined contribution plan and defined benefit plan customers through annuity contracts, collective investment trusts and mutual funds. Group annuity contracts and collective investment trusts used to fund qualified plans are not required to be registered with the United States Securities and Exchange Commission (“SEC”). Our mutual fund service platform is called Principal Advantage. It is a qualified plan service package based on our series mutual fund, Principal Funds, Inc. (“PFI”). We offer investments covering the full range of stable value, equity, fixed income, real estate and international investment options managed by our Principal Asset Management segment as well as third party asset managers. In addition, WSRS offers plan sponsors trust services through an affiliated trust company.

As of December 31, 2025, we provided WSRS products to (a) over 42,000 defined contribution plans including $625.3 billion in assets and covering approximately 11.3 million eligible plan participants, and (b) to over 1,600 defined benefit plans, including $17.2 billion in assets and covering over 371,000 eligible plan participants. As of December 31, 2025, approximately 30% of our WSRS account values were managed by our Principal Asset Management segment, 66% were managed entirely by the third party asset managers that were not under contract to sub-advise a PFG product, 2% were sub-advised and 2% represented employer securities.

Markets and Distribution

We offer our WSRS products and services to plans, including qualified and nonqualified defined contribution plans and defined benefit plans. These products and services are offered to businesses of all sizes including plans sponsored by small and mid-sized businesses, which we believe remains underpenetrated, and large institutional clients. We distribute our WSRS products and services nationally, primarily through a captive retirement services sales force. Retirement services sales representatives are an integral part of the sales process alongside the referring consultant or independent advisor. We compensate retirement services sales representatives through a blend of salary and production-based incentives. We administer, on behalf of the plan, commission or fee payments to independent advisors, consultants and agents.

In addition, we have a staff of service and education specialists located across the U.S. These specialists play a key role in the ongoing servicing of plans by providing local services to our customers, such as reviewing plan performance, investment options and plan design, communicating the customers’ needs and feedback to us and helping employees understand the benefits of their plans. The following summarizes our distribution channels:

We believe our approach to WSRS plan services distribution, which gives us a targeted sales and service presence, along with our offering of PrincipalÒ Total Retirement Solutions differentiates us from many of our competitors. We have also established a number of marketing and distribution relationships to increase the sales of our products and services.

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Individual Annuities

Individual annuities includes individual variable annuities and RILAs, which are savings vehicles through which the customer makes one or more deposits of varying amounts and intervals, that are offered to individuals.

Products

Our individual variable deferred annuities provide customers with the flexibility to allocate their deposits to mutual funds managed by the Principal Asset Management segment or unaffiliated third party asset managers, with variable and guaranteed options. Generally speaking, the customers bear the investment risk for the variable options and have the right to allocate their assets among various separate mutual funds. The value of the annuity fluctuates in accordance with the experience of the mutual funds chosen by the customer. Customers have the option to allocate all or a portion of their account to our guaranteed option, in which case we credit interest at rates we determine, subject to contractual minimums. As of December 31, 2025, of our $7.4 billion variable annuity account balances invested in mutual funds, 88% was allocated to mutual funds managed by the Principal Asset Management segment and our guaranteed option. The remaining balance was allocated to mutual funds managed by unaffiliated third party asset managers.

Customers may elect a living benefit guarantee (commonly known in the industry as a guaranteed minimum withdrawal benefit, or “GMWB”). We bear the GMWB investment risk. Our goal is to hedge the GMWB investment risk through the use of sophisticated risk management techniques. As of December 31, 2025, $4.7 billion of the $7.4 billion of variable annuity separate account values had the GMWB rider. Our major source of revenue from individual variable annuities is mortality and expense fees we charge to the customer, generally determined as a percentage of the market value of the assets held in a separate investment sub-account. Account balances of variable annuity contracts with the GMWB rider were invested in separate account investment options as follows:

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In addition, we offer RILAs, which provide policyholders with index-linked investment options and a fixed interest investment option, with different available term lengths. The index-linked investment options minimize negative index performance through floors or buffers. Customers may elect a GMWB. We bear the GMWB investment risk. Our goal is to hedge the GMWB investment risk through the use of risk management techniques.

Markets and Distribution

Our target markets for individual variable annuities and RILAs include owners, executives and employees of small and medium-sized businesses and individuals seeking to accumulate and/or eventually receive distributions of assets for retirement. We market variable annuities and RILAs to individuals for both qualified and nonqualified retirement savings.

We sell our individual variable annuity products and RILAs primarily through our affiliated financial representatives, who accounted for 68%, 70% and 85% of annuity sales for the years ended December 31, 2025, 2024 and 2023, respectively. The remaining sales were made primarily through unaffiliated broker-dealer firms.

Investment Only

Products

The two primary products for which we provide investment only services are GICs and funding agreements.

GICs and funding agreements pay a specified rate of return. The rate of return can be a floating rate based on an external market index or a fixed rate. Our investment only products contain provisions disallowing or limiting early surrenders, including penalties for early surrenders and minimum notice requirements.

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Deposits to investment only products are predominantly in the form of single payments. As a result, the level of new deposits can fluctuate from one fiscal quarter to another. The amounts earned by us are derived in part from the difference between the investment income earned by us and the amount credited to the customer. The Principal Asset Management segment primarily manages the assets supporting the contractual promises.

Markets and Distribution

Funding agreements are issued directly to non-qualified institutions, the Federal Home Loan Bank of Des Moines (“FHLB Des Moines”) and unconsolidated special purpose entities. As part of our funding agreement-backed note programs, U.S. and foreign institutional investors purchase debt obligations from the special purpose entity which, in turn, purchases the funding agreement from us with terms similar to those of the debt obligations. The strength of this market is dependent on debt capital market conditions. As a result, our sales through this channel can vary widely from one quarter to another.

Pension Risk Transfer

Products

Pension risk transfer products respond primarily to the needs of pension plan sponsors in the form of single premium group annuities, which are immediate or deferred annuities that provide a current or future specific income amount, fully guaranteed by us. The majority of our business originates from defined benefit plans that are being terminated. In these situations, the plan sponsor transfers all its obligations under the plan to an insurer by paying a single premium. Generally, plan sponsors restrict their purchases to insurance companies with superior or excellent financial quality ratings because the Department of Labor (“DOL”) has mandated that annuities be purchased only from the “safest available” insurers.

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. The Principal Asset Management segment primarily manages the assets supporting pension risk transfer account values.

Markets and Distribution

Our primary distribution channel for pension risk transfer products is comprised of several specialized home office sales consultants working through consultants and brokers that specialize in this type of business. Our sales consultants also make sales directly to institutions. Our nationally dispersed retirement services sales representatives act as a secondary distribution channel for these products.

Bank and Trust Services

Principal Bank is a U.S. federal savings bank that was formed in February 1998. As of December 31, 2025, Principal Bank had nearly 816,000 customers and approximately $9.3 billion in assets. Principal Bank operates under a limited purpose charter and may only accept deposits held in a fiduciary capacity and may not hold demand deposits. It also may not own commercial loans or originate loans.

Principal Custody Solutions (“PCS”) is a division of Principal Bank that provides trust and/or custodial support services to clients in a variety of market segments including corporations, endowments, foundations, health care organizations, insurance and financial institutions, public entities and government institutions.

Principal Trust Company (the trade name for Delaware Charter Guarantee & Trust) is a non-deposit trust company chartered in 1899 in the State of Delaware. As of December 31, 2025, Principal Trust Company has over 36,000 accounts and approximately $737.9 billion in assets under administration. Principal Trust Company provides trust and custodial services to certain retirement benefit plans and personal trusts.

Products

Individual retirement accounts (“IRAs”) are provided by Principal Bank, primarily funded by retirement savings rolled over from qualified retirement plans. Principal Bank offers Federal Deposit Insurance Corporation (“FDIC”) insured cash solutions for customers in the form of savings accounts, money market accounts and certificates of deposit. The deposit products provide a relatively stable source of funding and liquidity for Principal Bank and are backed by purchases of investment securities and residential mortgage loans. In addition, Principal Bank serves as a trustee and/or custodian for institutional customers within its PCS business and facilitates cash sweep services for these customers as well as cash sweep services for customers of affiliates.

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Principal Trust Company provides a variety of comprehensive trust and administrative solutions for employee benefits plans and personal trusts. It also provides trustee services for some retirement plan customers of PCS.

Markets and Distribution

Principal Bank offers products and services primarily to participants rolling out of qualified retirement plans largely serviced by affiliates of PFG. Principal Bank services customers by telephone, mail and internet. Principal Bank also serves as trustee and/or custodian for the non-retirement plan clients within the PCS business line.

Principal Trust Company offers services through brokerage and financial institution relationships services primarily through affiliates of PFG and also leverages unaffiliated partners. Principal Trust Company also acts as trustee and/or custodian for the retirement plan clients that fall into the PCS business line.

Individual Fixed Annuities

In 2021, we ceased sales of individual fixed annuity products and in 2022, we reinsured the block of business existing as of January 1, 2022. Annuitizations from existing products occurring after this date are not reinsured.

Principal Asset Management Segment

Our Principal Asset Management segment provides global investment solutions to institutional, retirement, retail and high net worth investors in the U.S. and select emerging markets.

Investment Management

Our Investment Management operations manages assets for sophisticated investors around the world using global and local investment teams that provide diverse investment capabilities including equity, fixed income, asset allocation, real estate and other alternative investments. We focus on providing services to our other segments in addition to our retail mutual fund and third party institutional clients. Our products and services are provided for a fee as defined by client mandates. Our fees are generally driven by AUM. The Investment Management teams managed $593.9 billion in assets as of December 31, 2025.

Global Investment Teams

Equity Investments. Our equity capabilities encompass large-cap stocks, mid-cap stocks, small-cap stocks and real estate investment trusts in developed and emerging markets worldwide.

Fixed Income Investments. Our experience in fixed income management spans multiple economic and credit market cycles and encompasses all major fixed income security types and sectors. Our research and risk management capabilities in worldwide debt markets provide a strong foundation for broadly diversified “multi-sector” portfolios, tailored to specific client objectives.

Asset Allocation. Asset Allocation is a specialized asset allocation investment team offering multi-asset and/or multi-manager portfolio construction services that aim to deliver reliable, risk-adjusted investment outcomes to individual investors, institutional investors and participants in employer-sponsored plans.

Real Estate and Other Alternative Investments. We offer products and services through other alternative asset classes including managing private real estate equity, commercial mortgages, bridge/mezzanine loans, direct lending and infrastructure debt.

Global Markets and Distribution

To effectively reach and cater to a diverse range of investors, we employ a multi-channel distribution strategy. Our Global Institutional Advisory Services and Global Wealth Advisory Services teams, relationship managers and client service professionals collaborate with consultants and directly interact with investors to acquire and retain institutional, retail and other investors. These teams are organized into three geographic groups: U.S./Europe clients, Asia Pacific/Middle East clients and Latin America clients. Additionally, we leverage partnerships with independent broker-dealers to further broaden our distribution reach.

Local Investment Teams

Chile. We offer voluntary savings plans, mutual funds, and asset management solutions. Products are distributed to retail and institutional clients through digital means as well as through our proprietary sales force, financial advisors, brokerage houses and alliances with financial institutions.

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Mexico. We offer mutual funds and asset management services. We offer both domestic and international products, typically sold directly to institutional and retail clients.

China. We offer mutual funds and asset management services to individuals and institutions through a joint venture, CCB Principal Asset Management Co., Ltd. (“CCBPAM”). We owned 25.0% of CCBPAM as of December 31, 2025. China Construction Bank (“CCB”) is the majority partner with 65.0% ownership. China Huadian Capital Holdings owns 10.0%. CCBPAM distributes its mutual funds through CCB and third party distributors such as banks, securities brokers and e-channels.

Hong Kong Special Administrative Region. We offer mutual funds and investment management services to individuals and institutional investors. Products are distributed though our proprietary sales force and through third party intermediaries.

Southeast Asia. We offer mutual funds, asset management services and retirement solutions through our joint ventures in Malaysia, Principal Asset Management Berhad (“PAM”) and Principal Islamic Asset Management Sdn. Bhd. (“PIAM”). The partner is CIMB Group (“CIMB”), a leading ASEAN universal bank that has strong presence in the region.

PAM offers conventional and Islamic mutual funds, retirement solutions through the branches of CIMB and through its agency sales force selling to retail customers. PAM also distributes its mutual funds and retirement solutions through third party institutions including banks, security houses and digital platforms such as digital wallet and online marketplaces. PAM has subsidiaries in Singapore (Principal Asset Management (S) Pte. Ltd.), Indonesia (PT Principal Asset Management) and Thailand (Principal Asset Management Company Limited).

PIAM offers Islamic asset management services to clients across Southeast Asia and the Middle East. PIAM also offers Islamic mutual funds in Southeast Asia, the Middle East and Europe.

International Pension

Our International Pension operations offer pension accumulation, income annuities and life insurance accumulation products in Latin America and Asia. We focus on locations with growing middle classes and affluent segments, favorable demographics and increasing long-term savings, ideally with defined contribution retirement markets. We also focus on markets with relevant size where we have competitive advantages. We entered these locations through acquisitions, start-up operations and joint ventures.

Markets, Products and Distribution

Latin America

Brazil. We offer pension accumulation, income annuity and life insurance accumulation products through a co-managed joint venture Brasilprev Seguros e Previdencia S.A. (“Brasilprev”) with our partner with Banco do Brasil (“Banco”). We owned 25.0% of the economic interest and 50.0% of the voting shares as of December 31, 2025.

Brasilprev has the exclusive distribution rights of its pension accumulation and income annuity products through the Banco network until October 2032. Our joint venture provides products for the retirement needs of individuals and employers. Banco’s employees sell these products directly to individual clients through its bank branches and digital channels. In addition, our joint venture reaches corporate clients through two wholesale distribution channels: (1) a network of independent brokers who sell to the public and (2) Banco’s corporate account executives who sell to existing and prospective corporate clients.

Chile. We offer mandatory employee-funded pension and voluntary savings plans through Administradora de Fondos de Pensiones Cuprum S.A. (“Cuprum”). We owned 98.0% of Cuprum as of December 31, 2025, and the rest is publicly floated. Cuprum’s products are sold through digital means and via a proprietary sales network.

We offer income annuity and life insurance accumulation solutions through Principal Compañía de Seguros de Vida Chile S.A., our wholly owned life insurance company. The annuity products are distributed directly by our sales teams and through a network of brokers and independent agents. Life insurance accumulation products are offered to individuals through brokers and financial advisors and through digital means. In January 2026, an agreement was reached to sell our annuities business in Chile, subject to regulatory approvals. We expect the transaction to close in the third quarter of 2026. For additional information, see Item 8. “Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 24, Subsequent Events.”

Mexico. We offer mandatory and voluntary pension plans through Principal Afore, S.A. de C.V., Principal Grupo Financiero. We manage and administer individual retirement accounts under the mandatory privatized social security system for formal employees in Mexico. We distribute products and services through a proprietary sales force as well as independent brokers who sell directly to individuals.

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Asia

China. We offer entrust, account services and investment management for individual and group retirement security products through a joint venture, CCB Pension Management Co., Ltd. (“CCBP”). We owned 17.6% of CCBP as of December 31, 2025. CCB is the majority partner with 70.0% ownership. The Social Security Fund of China owns 12.4%.

Hong Kong Special Administrative Region. We offer two types of pension saving schemes, Mandatory Provident Fund (“MPF Schemes”) and Occupational Retirement Schemes Ordinance, which we distribute through third party intermediaries such as insurance companies, independent financial advisors, brokers and employee benefit consultants. On January 16, 2025, we announced the signing of an agreement with Bank Consortium Trust Company (“BCT”) to expand our investment management capabilities and exit our sponsor and trustee (pension) roles in Hong Kong for MPF Schemes. The transaction is expected to close in 2026.

Benefits and Protection Segment

Our Benefits and Protection segment activities date back to 1879 when we first began selling individual life insurance products. We expanded our offering to include group insurance products in the 1940s and have continued to expand our product portfolio over time. We are uniquely positioned to protect businesses through our broad set of solutions, our expertise and the experiences we offer.

We organize our operations into two divisions: Specialty Benefits and Life Insurance. However, we share key resources in our core areas such as strategic leadership, distribution, operations and marketing.

Specialty Benefits

Specialty Benefits, which includes group dental, life, disability insurance, supplemental health and individual disability insurance, is an important component of the employee benefit offering primarily at small and medium-sized businesses. We serve approximately 103,000 employer groups, providing 321,000 total coverages to more than 3,300,000 employees.

Products and Services

Group Dental Insurance. Our dental plans provide partial reimbursement for covered dental expenses. We offer indemnity and preferred provider organization dental products on both an employer-paid and voluntary basis, and we also offer a national discount dental product. According to the Life Insurance and Market Research Association (“LIMRA”), we were the third-largest group dental insurer in 2024 based on the number of contracts and employer groups in force.

Group Life Insurance. Our group life insurance provides coverage to employees and their dependents for a specified period. We offer traditional group life insurance that does not provide for the accumulation of cash values on both an employer-paid and voluntary basis, and our business remains focused on the traditional, annually renewable term product. We no longer market group universal life insurance to new employer groups. According to LIMRA, we were the top-ranked group life insurer in the United States in 2024 based on the number of group life insurance contracts in force.

Group Disability Insurance. Our group disability insurance provides benefits to insured employees who become disabled. In most instances, this benefit is in the form of a monthly or weekly income. Our group disability products include short-term and long-term disability, offered on either an employer paid or voluntary basis. We also provide paid family and medical leave (“PFML”) on a limited basis, which provides paid leave for specified family care needs or an employee’s own serious health condition. As of December 31, 2025, we have sold PFML in four states. We plan to expand to other states in the future. We also provide disability management services, called rehabilitation services, to assist individuals in returning to work as quickly as possible following disability. We work with disability claimants to improve the approval rate of Social Security benefits, thereby reducing payment of benefits by the amount of Social Security payments received. According to LIMRA, our group short-term disability business was ranked 4th and our group long-term disability business was ranked 2nd in the U.S. as of December 31, 2024, in terms of number of contracts/employer groups in force.

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Supplemental Health. Our supplemental health products include vision, critical illness, accident and hospital indemnity insurance. Our vision offerings include both indemnity and managed-care plans, available on an employer-paid or voluntary basis, and designed to reimburse a portion of eligible vision expenses. We also provide voluntary critical illness coverage that delivers a lump-sum benefit upon diagnosis of a covered condition, voluntary accident coverage that pays a lump-sum benefit for injuries resulting from an accident and hospital indemnity coverage that offers a lump-sum benefit to help manage the costs of hospitalization.

Individual Disability Insurance. Individual disability insurance has been sold since the early 1950s. Our individual disability insurance products provide income protection to the insured member and/or business in the event of disability. In most instances, this benefit is in the form of a monthly income. In addition to income replacement, we offer products to pay business-related costs such as overhead expenses for a disabled business owner, buy-out costs for business owners purchasing a disabled owner’s interest in the business, expenditures for replacement of a key person and business loan payments. We also offer a product to protect retirement savings in the event of disability. According to LIMRA, our individual disability business was ranked 4th in the U.S. in terms of premium in force in the non-cancellable segment of the market and 4th overall, as of December 31, 2024.

Fee-for-Service. We offer administration of group dental, disability and vision benefits on a fee-for-service basis.

Life Insurance

We specialize in providing solutions primarily for small to medium-sized businesses to protect against risk and loss, assist with succession planning and wealth transfer and to build and protect wealth for retirement. We also provide solutions to meet the personal needs of business owners, executives and key employees. In 2021, we narrowed our focus to the business market and ceased sales to the retail consumer market. In 2022, we reinsured our universal life with secondary guarantee (“ULSG”) block of business. Our U.S. operations administered approximately 710,000 individual life insurance policies with over $570.0 billion of individual life insurance in force as of December 31, 2025.

Products and Services

Our Business Owner Solutions platform as well as our nonqualified deferred compensation offering combines administration and consulting to service our clients’ needs. We focus on the business and personal insurance needs of owners, executives and key employees primarily of small and medium-sized businesses with an emphasis on providing insurance solutions for nonqualified executive benefits. We no longer market our products to retail customers. We offer a variety of individual life insurance products, both interest sensitive (including universal life, variable universal life and indexed universal life insurance) and traditional.

Interest Sensitive. Interest sensitive includes universal life (“UL”), variable universal life and indexed universal life insurance products; however, we no longer market universal life insurance with lifetime secondary guarantee provisions. These products offer the policyholder the option of adjusting both the premium and the death benefit amounts of the insurance contract. Universal life insurance typically includes a cash value account that accumulates at a credited interest rate based on the investment returns of the block of business. Variable universal life insurance is credited with the investment returns of the various investment options selected by the policyholder. Indexed universal life is credited with investment returns tied to an external index, subject to a contractual minimum and maximum. For the year ended December 31, 2025, interest sensitive products represented 18% of individual life insurance in force and generated 74% of individual life insurance annualized first year premium sales.

After a deduction for policy level expenses, we credit net deposits to an account maintained for the policyholder. For universal life contracts, the entire account balance is invested in the general account. Interest is credited to the policyholder’s account based on the earnings on general account investments, subject to contractual minimums. For variable universal life contracts, the policyholder may allocate the account balance among our general account and a variety of separate accounts underlying the contract. Interest is credited on amounts allocated to the general account in the same manner as for universal life. Net investment performance on separate accounts is allocated directly to the policyholder accounts; the policyholder bears the investment risk. For indexed universal life, the policyholder may allocate the account balance among our general account and two index accounts. Interest is credited on amounts allocated to the general account in the same manner as for universal life. Net investment performance on the index accounts is allocated directly to the policyholder accounts, subject to the contractual minimum and maximum. Some of our interest sensitive contracts contain what are commonly referred to as “secondary” or “no-lapse” guarantee provisions. These no-lapse guarantees keep the contract in force, even if the policyholder’s account balance is insufficient to cover all of the contract charges, provided that the policyholder has continually paid a specified minimum premium.

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Traditional Life Insurance. Traditional life insurance includes term, whole and adjustable life insurance products; however, we no longer market whole and adjustable life insurance products. Term insurance products provide a guaranteed death benefit for a specified period of time in return for the payment of a fixed premium. Term life insurance products represented 81% of individual life insurance in force as of December 31, 2025, and 26% of our individual life insurance annualized first year premium sales for the year ended December 31, 2025. Whole life policies provide a guaranteed death benefit and a cash surrender value in return for payment of fixed premiums. Adjustable life insurance products provide a guaranteed benefit in return for the payment of a fixed premium while allowing the policyholder to set the coverage period, premium and face amount combination.

Benefits and Protection Markets and Distribution

For each of our products, administration and distribution channels are customized to meet customer needs and expectations for that product.

We market our group insurance products primarily to small and medium-sized businesses, through brokers and consultants. We sell our group insurance products in all 50 states and the District of Columbia. We continually adapt our products and pricing to meet local market conditions and to comply with state and federal legislation. We market our fee-for-service capabilities to employers that self-insure their employees’ dental, disability and vision benefits. We market our fee-for-service businesses in all 50 states and the District of Columbia.

The group insurance market continues to see a shift to voluntary/worksite products due to various pressures on employers. In keeping with this market change, which shifts the funding of such products from the employer to the employee, we continue to place an enhanced focus on our voluntary benefits platform. We believe the voluntary/worksite market presents growth opportunities and we will continue to develop strategies to capitalize on this expanding market.

As of December 31, 2025, we had 139 sales representatives and 183 service representatives in 26 local markets. Our sales representatives accounted for 100% of our group insurance sales for the year ended December 31, 2025. The service representatives play a key role in servicing the case by providing local, responsive services to our customers and their brokers, such as renewing contracts, revising plans, solving administrative issues and communicating the customers’ needs and feedback to us.

We sell our individual life and individual disability insurance products in all 50 states and the District of Columbia, primarily targeting owners, executives and key employees of small and medium-sized businesses. Small and medium-sized business sales represented 100% of individual life sales and 74% of individual disability sales for the year ended December 31, 2025. Our life insurance sales efforts focus on the Nonqualified Deferred Compensation and the Business Solutions market. This strategy offers solutions to address business owner financial challenges such as exiting the business, business transition, retaining key employees and retirement planning. Key employees also have needs to supplement retirement income, survivor income and business protection. We believe the Business Owner Solutions segment offers growth opportunities and we will continue to develop strategies to capitalize on this expanding market.

We distribute our individual life and individual disability insurance products through our affiliated financial representatives and independent brokers, as well as other marketing and distribution alliances. To meet the needs of the various marketing channels, particularly the independent brokers, we employ wholesale distributors — Regional Vice Presidents for nonqualified, business solutions and individual disability.

Corporate Segment

Our Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including financing costs), income on capital not allocated to other segments, inter-segment eliminations, income tax risks and certain income, expenses and other adjustments not allocated to the segments based on the nature of such items. Results of Principal Securities, Inc., our retail broker-dealer and registered investment advisor, and our exited group medical and long-term care insurance businesses are reported in this segment.

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Competition

Competition is based on several factors including customer segments, product types and features, external peer comparisons, go-to-market strategies, compensation structure, price, performance, capital markets, capital liquidity and financial strength ratings. We compete with many financial services companies, such as banks, mutual funds, institutional trust companies, broker-dealers, insurers, recordkeepers, asset managers and wealth managers. Some of these companies may offer a broader array of products, more competitive pricing, greater diversity of distribution sources, better brand recognition or, with respect to insurers, higher financial strength ratings. Some may have greater financial resources with which to compete or have better investment performance at various times. We distinguish ourselves from our competitors through three positional advantages:

Ratings

Insurance companies are assigned financial strength ratings by rating agencies based upon factors relevant to policyholders. Financial strength ratings are generally defined as opinions as to an insurer’s financial strength and ability to meet ongoing obligations to policyholders. Information about ratings provides both industry participants and insurance consumers meaningful insights on specific insurance companies. Higher ratings generally indicate financial stability and a stronger ability to pay claims.

Principal Life and Principal National Life Insurance Company (“PNLIC”) have been assigned the following insurer financial strength ratings:

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A.M. Best Company, Inc. (“A.M. Best”) ratings for insurance companies range from “A++” to “S”. A.M. Best indicates that “A++” and “A+” ratings are assigned to those companies that in A.M. Best’s opinion have superior ability to meet ongoing insurance obligations. Fitch Ratings Ltd. (“Fitch”) ratings for insurance companies range from “AAA” to “C”. Fitch “AA” ratings indicate very strong capacity to meet policyholder and contract obligations. Moody’s Investors Service (“Moody’s”) ratings for insurance companies range from “Aaa” to “C”. Moody’s indicates that “A” ratings are assigned to those companies that offer good financial security. S&P Global Ratings (“S&P”) has ratings that range from “AAA” to “D” for insurance companies. S&P indicates that “A” ratings are assigned to those companies that have strong financial security characteristics. In evaluating a company’s financial and operating performance, these rating agencies review its profitability, leverage and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated market value of its assets, the adequacy of its policy reserves, the soundness of its risk management programs, the experience and competency of its management and other factors.

We believe our strong ratings are an important factor in marketing our products to our distributors and customers, as ratings information is broadly disseminated and generally used throughout the industry. Our ratings reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our obligations to policyholders and are not evaluations directed toward the protection of investors. Such ratings are neither a rating of securities nor a recommendation to buy, hold or sell any security, including our common stock. For more information on ratings, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Financial Strength and Credit Ratings.”

Regulation

Our businesses are subject to regulation and supervision by U.S. federal, state and broker-dealer regulatory authorities as well as non-U.S. regulatory authorities for our operations and customers outside the U.S. Our businesses are also subject to U.S. federal, state and local tax laws as well as tax laws for jurisdictions outside the U.S. As we continue to expand our global footprint, we are subject to laws and regulations of jurisdictions where we register and sell products, even if we do not have a physical operating presence.

PFG, our parent holding company, is not licensed as an insurer, investment advisor, broker-dealer, bank or other regulated entity. However, because it is the holding company for our collective operations, it is subject to regulation in connection with our regulated entities, including as an insurance holding company. We are subject to legal and regulatory requirements applicable to public companies, including public reporting and disclosure, securities trading, accounting and financial reporting and corporate governance.

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U.S. Insurance Laws and Regulations

We are subject to the insurance holding company laws in the states where our insurance companies are domiciled. Principal Life and PNLIC are domiciled in Iowa and their principal insurance regulatory authority is the Insurance Division of the Department of Commerce of the State of Iowa. Our other U.S. insurance companies are principally regulated by the insurance departments of the states in which they are domiciled. These laws require each insurance company directly or indirectly owned by the holding company to register with the insurance department in the insurance company’s state of domicile and to furnish financial and other information about the operations of the companies within the holding company system. Transactions affecting the insurers in the holding company system must be fair and at arm’s length. Most states have insurance laws that require regulatory approval of a direct or indirect change in control of an insurer or an insurer’s holding company and laws that require prior notification to state insurance departments of a change in control of a non-domiciliary insurance company doing business in that state.

Annually, our U.S. insurance companies must submit an opinion from a board-appointed qualified actuary to state insurance regulators, where licensed, on whether the statutory assets backing statutory reserves are sufficient to meet contractual obligations and related expenses of the insurer. If such an opinion cannot be rendered noting the sufficiency of assets, the insurance company must set up additional statutory reserves drawing from available statutory surplus until such an opinion can be given.

State insurance departments have broad administrative powers over the insurance business, including insurance company licensing and examination, agent licensing, establishment of reserve requirements and solvency standards, premium rate regulation, admittance of assets to statutory surplus, policy form approval, unfair trade and claims practices regulation and other matters. State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for further details.

To enhance the regulation of insurer solvency, the National Association of Insurance Commissioners (“NAIC”) has established risk-based capital (“RBC”) standards. The standards require life insurers to report annually to state regulators regarding their RBC based upon categories of risk including the following: asset risk, insurance risk, interest rate risk and business and operational risk. As of December 31, 2025, the statutory surplus of each of our U.S. life insurance companies exceeded the minimum RBC requirements.

The following authorities regularly make inquiries and conduct routine examinations or investigations regarding our compliance with applicable laws and regulations:

Each state has insurance guaranty association laws under which insurers doing business in a state can be assessed, up to prescribed limits, to cover contractual benefit obligations of insolvent insurance companies. The guaranty associations of each state levy assessments on member insurers doing business in their states based on the proportionate share of the premiums written by such insurer in the lines of business in which the insolvent insurer is engaged. Some states permit the member insurers to recover the assessments paid through full or partial premium tax offsets.

U.S. Executive Orders

The President of the United States manages the operations of the Executive branch of Government through Executive orders. As a U.S.-based business, we are subject to certain Executive orders that could affect our business, operations, regional footprint, risk management strategies and investments and increase our costs of compliance.

Securities Regulation

Insurance and investment products that require registration with the SEC, such as variable annuities, RILA, variable life insurance and some funding agreements that constitute securities and mutual fund products are subject to securities laws and regulations, including U.S. state securities regulation as well as U.S. federal regulation under the SEC, FINRA and other regulatory authorities. These regulations affect investment advice, sales and related activities for these products and the compliance oversight construct.

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We operate registered broker-dealers that are subject to SEC and FINRA oversight as well as entities that are registered as investment advisors which are subject to the requirements of the Investment Advisors Act of 1940.

Employee Retirement Income Security Act

As we provide products and services for U.S. and Puerto Rico employee benefit plans, we are subject to regulation under the Employee Retirement Income Security Act (“ERISA”). ERISA provisions include reporting and disclosure requirements and standards of conduct.

Banking Regulation

Principal Bank, a wholly owned subsidiary, is a U.S. federal savings bank regulated by the Office of the Comptroller of the Currency. Principal Bank’s depositors are insured by the FDIC up to specified limits, making Principal Bank subject to certain of the FDIC’s regulations.

Trust Regulation

Delaware Charter Guarantee & Trust Company conducting business as Principal Trust Company, a wholly owned subsidiary, is a Delaware state-chartered trust company regulated by the State of Delaware Office of the State Bank Commissioner. Principal Trust Company is subject to Delaware banking and trust law.

Principal Global Investors Trust Company, a wholly owned subsidiary, is an Oregon state registered banking corporation with trust powers regulated by the State of Oregon Division of Financial Regulations. Principal Global Investors Trust Company is subject to Oregon banking regulations.

Environmental Regulation

As we own and operate real property, we are subject to U.S. federal, state and local environmental laws, as well as international environmental laws and could be subject to environmental liabilities and costs associated with required remediation of our properties. We routinely have environmental assessments performed for real estate being acquired or used as collateral for commercial mortgages we use for investment.

Regulation of International Businesses

Our international businesses are supervised by regulatory authorities in the jurisdictions in which they operate, including regulation and supervision by insurance, securities, tax and privacy regulatory authorities. The purpose of these regulations aligns with the purpose and intent of U.S. regulations and is primarily focused on consumer protection and prudency of the overall financial system.

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Risk Management

Like all financial services companies, we are exposed to a wide variety of financial, operational and other risks, as described in Item 1A. “Risk Factors.” Our enterprise risk management approach ensures appropriate resources, processes and controls are in place to identify, measure, monitor and manage risks within established limits and tolerances helping us:

We utilize an integrated risk management framework to identify, analyze and mitigate internal and external risks. Execution of our risk management framework delivers perspective that is used in business decision making. Our approach to enterprise risk management is built upon a commitment to continual improvement and ongoing validation.

Our governance structure includes Board of Directors (“Board”) oversight, internal risk committees, an enterprise risk management function and dedicated risk professionals with expertise representing each business area. The Board and its committees, which include Audit Committee, Finance Committee, Human Resources Committee and Nominating and Governance Committee, provide oversight no less frequently than quarterly, addressing relevant aspects of our risk profile.

Our internal risk committees meet regularly to facilitate the management of issues and review the risk profile of their responsibilities. Each business area and functional area has its own committee responsible for oversight of the material risks within the area. We also have internal committees that provide oversight around certain types of risks across the organization. This matrix approach helps maintain comprehensive risk coverage and preserve an integrated view of risks. The Enterprise Risk Management Committee, comprised of members from the Executive Management Group (“EMG”), exercises enterprise-wide oversight for the most significant risk profiles.

Business areas and functional areas have primary responsibility for identifying, assessing, monitoring, reporting and managing their own risks. Our enterprise risk management staff (independent of the business areas) work closely with the dedicated risk professionals aligned to the business areas and functional areas to provide objective oversight, framework enablement and aggregated risk analysis. This results in a model where risk management can be closer to actual risks while also facilitating effective oversight and consolidation at the enterprise level.

Internal Audit provides independent, risk-based objective assurance and advice designed to add value and improve our operations. It helps us accomplish our objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal control and governance processes; and by promoting continuous improvement. The Chief Internal Auditor reports functionally to the Board Audit Committee and administratively to our Chief Risk Officer.

Risk appetites, tolerances and limits have been established from an enterprise-wide and business area perspective for specific risk categories, where appropriate. We monitor a variety of risk metrics on an ongoing basis and take appropriate steps to manage our established risk limits and escalation levels. Quarterly risk reporting provides a feedback loop between business areas, functional areas, our internal risk committees and the enterprise risk management function. This reporting also includes perspectives on emerging risk. To the extent potentially significant business activities or operational initiatives are considered, analysis of the possible impact on our risk profile takes place. This analysis includes, but is not limited to, the capital implications; the impact on near term and long-term earnings; the ability to meet our targets with respect to return on equity, liquidity, debt/capital, cash coverage, business risk and operational risk; and the impact to our reputation.

Human Capital

As of December 31, 2025, we employed approximately 19,700 people across the globe, including approximately 11,600 employees who work in the U.S. and 8,100 employees who work outside the U.S. Our employees work from many locations across multiple businesses and are united through a common purpose: to help more people and businesses around the world gain greater access to financial security. We start every relationship by understanding our customers’ unique journeys, challenges and aspirations. By combining this understanding with our global expertise, we deliver personalized insights, tools and resources to help more people save, invest and protect their financial future. Our purpose-driven culture attracts and retains talented individuals who share our commitment and together, we’re building an organization where meaningful work and exceptional employee experiences drive better outcomes for customers, communities and the company.

In 2025, our commitment to enabling high performing teams remained strong. We continue to attract, retain and develop the talent needed to deliver our enterprise strategy. Our talent initiatives focus on fostering a strong and supportive community, enabling a tailored approach to life and work, and granting access to boundless opportunity across the enterprise. Grounded in a clear and compelling employee value proposition, we are confident in our ability to build inclusive teams with the global talent necessary to succeed.

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We invest in employee development in several ways, including experiential learning, growth assignments, relationships with colleagues, formal programming and just-in-time resources. We have an enterprise learning platform allowing for curated learning content aligned with enterprise priorities. This ensures employees have the skills necessary to contribute to our success now and into the future. These investments also ensure our employees can develop the skills most critical to their current and future career aspirations. We continue to pilot new programs to create space for employees to learn new skills and navigate their career. In 2025, we implemented enterprise-wide artificial intelligence and data literacy training. Additional targeted development opportunities exist for employees identified as high potential talent.

We know an inclusive culture makes us stronger, and we remain committed to providing a work environment where every employee feels welcome, is respected and has an opportunity to thrive. We are committed to providing our leaders across the globe with regular training, with the goal of establishing more productive connections between teams and enabling thoughtful decision-making. As of December 31, 2025, we had fifteen employee resource groups and networks (“ERGs”), comprised of employees motivated to listen, reflect and provide cultural insights. Our ERGs, which are open to all employees, play an integral role in providing insights into our products, services, workplace and community. In 2025, we continued to invest in programs with measurable impact on employee engagement and retention, including our global mentoring program. Open to all employees, the mentoring program helps individuals achieve outcomes like expanding their network, building leadership skills and improving business acumen. Our Global Inclusion Summit sessions provided opportunities for employees to learn, connect and grow through conversations with senior executives and employees on a variety of inclusion-related topics.

In 2025, we measured, in multiple ways, the progress of our efforts to attract and retain employees with a variety of lived experiences and perspectives. We also surveyed employees about their sense of belonging and reported the results through our Global People Inclusion Index. On an annual basis we partner with an external consultant to conduct a global pay equity study; we believe the results of this study place us in a best-in-class category as compared to financial services industry peers.

We continuously strive to evolve our human capital policies and processes. To better understand and improve upon talent trends, we use an enterprise people scorecard, where we report employee data and insights on retention, learning, hiring, engagement and productivity. In 2025, we provided company-wide exit surveys to voluntarily departing employees and their leaders, enabling us to better understand turnover trends and rationales. Leaders conducted proactive employee stay conversations and quarterly performance check-ins. In addition, we actively monitored our Engagement Index, which is a clear indicator of employee engagement across the organization. These tools allowed us to gather insights and create actions to manage turnover, including tailored development opportunities and compensation increases for roles in high demand. Our customer focus, commitment to ethical practices, continuous learning opportunities and inclusive environment drive a strong culture where employees can thrive.

The following table provides retention data for our employee workforce as of December 31, 2025.

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Our competitive total rewards offerings are critical components of our employee value proposition. The programs for the broader employee population include our employee stock purchase plan and our annual incentive program. For select roles, we offer a long-term incentive plan, which is a stock-based compensation plan. Critical talent and high performing employees are eligible to receive stock awards under our discretionary stock program. Retirement programming for U.S. employees includes eligibility for our 401(k) plan, with a robust company match. Additionally, employees outside our asset management business are eligible to participate in a cash balance defined benefit plan. Outside the U.S., retirement programming varies by country and commonly exceeds statutory requirements. We also offer employees a comprehensive suite of health and welfare benefits, designed to offer support through all stages of their career and life. We put special emphasis on employee wellbeing by offering a wide range of programming aimed at improving overall health, including a state-of-the-art wellness center at our global headquarters in Des Moines, Iowa, and gym reimbursement at other locations.

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Alongside competitive rewards, we offer our global workforce many ways to support their communities and causes. We encourage in-person and virtual volunteerism through our volunteer time off policy. As an example of this, at the Community Learning Center housed at our global headquarters, employees have ready access to a variety of volunteer opportunities, including the ability to mentor students, provide professional development coaching and teach future-ready job skills such as coding. A generous Dollars for Doers program provides employees a microgrant credit based on volunteer hours they record in our Corporate Social Responsibility platform, enabling employees to contribute earned credits to any nonprofit they choose. We also offer a giving program through which Principal® Foundation provides a 50% match on employee monetary contributions, with the match going directly to the organization to which the employee has donated.

Internet Website

Our internet website can be found at www.principal.com. We make available free of charge, on or through our internet website, access to our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such material is filed with or furnished to the SEC. These reports are also available on the SEC’s website at www.sec.gov. Also available free of charge on our internet website is our code of business conduct and ethics, corporate governance guidelines and charters for the Audit, Finance, Human Resources and Nominating and Governance committees of the Board. Also see Item 10. “Directors, Executive Officers and Corporate Governance.”

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