Principal Financial Group PFG · USD

20. Segment InformationWe provide financial products and services through the following segments: Retirement and Income Solutions, Principal Asset Management and Benefits and Protection. In addition, we have a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels.The Retirement and Income Solutions segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals. The segment includes workplace savings and retirement solutions, banking, trust and custodial services, individual variable annuities (including RILAs), pension risk transfer, investment only and our exited retail fixed annuities business.The 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. The segment is organized into Investment Management, which provides public, multi-asset and private market capabilities across all asset classes, including equity, fixed income, real estate and alternatives, to serve a breadth of client investment objectives; and International Pension, which provides long-term savings and retirement solutions through pension accumulation and income annuities in Asia and Latin America.The Benefits and Protection segment focuses on solutions primarily for small-to-mid sized businesses and their employees. The segment is organized into Specialty Benefits, which provides group dental, group life insurance, group disability insurance (including short-term disability, long-term disability and paid family and medical leave), supplemental health products (including vision, critical illness, accident and hospital indemnity) and individual disability insurance; and Life Insurance, which provides life insurance focused on the business market customer, including universal life and variable universal life (including indexed universal life) and traditional life insurance (including term life insurance). All remaining customers are part of the legacy life block of business, including universal and variable universal life insurance (including indexed universal life), traditional life insurance (including participating whole life, adjustable life products and term life insurance) and our exited ULSG business.

21. Revenues from Contracts with CustomersThe following tables summarize disaggregation of revenues from contracts with customers, including select financial information by segment, and reconcile totals to those reported in the consolidated financial statements. Revenues from contracts with customers are included in fees and other revenues on the consolidated statements of operations.​​​​​​​​​​​​​​For the year ended December 31,​​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023 ​​(in millions)​Revenue from contracts with customers by segment:​​​​​​​​​​Retirement and Income Solutions​$ 606.7​$ 667.1​$ 556.3​Principal Asset Management:​​​​ ​​ ​​Investment Management​​ 1,757.8​ 1,694.5​ 1,627.6​International Pension​​ 363.7​​ 371.6​​ 383.1​Eliminations​​ (19.8)​​ (15.8)​​ (21.1)​Total Principal Asset Management​​ 2,101.7​​ 2,050.3​​ 1,989.6​Benefits and Protection:​​​​​​​​​​Specialty Benefits​​ 15.4​ 15.4​ 15.9​Life Insurance​​ 93.0​ 94.4​ 74.0​Eliminations​​ (0.1)​ (0.1)​ (0.1)​Total Benefits and Protection​​ 108.3​ 109.7​ 89.8​Corporate​​ 245.8​ 226.3​ 179.2​Total segment revenue from contracts with customers​​ 3,062.5​ 3,053.4​ 2,814.9​Adjustments for fees and other revenues not within the scope of revenue recognition guidance (1)​​ 1,292.0​ 1,192.4​ 1,200.5​Pre-tax other adjustments (2)​​ 70.3​ 74.7​ 80.5​Total fees and other revenues per consolidated statements of operations $ 4,424.8 $ 4,320.5 $ 4,095.9​(1)Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards.(2)Pre-tax other adjustments relate to revenues from exited business, certain variable annuity fees and market value adjustments to fee revenues.Retirement and Income Solutions Retirement and Income Solutions offers service and trust agreements for defined contribution retirement plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. The investment components of these service agreements are in the form of mutual fund offerings. In addition, plan sponsor retirement plan trust and custody services are also available through our trust company. Individual retirement accounts (“IRAs”) are offered through Principal Bank. Furthermore, services and trust agreements are offered to non-retirement customers including insurance companies, endowments and other financial institutions.

13. DebtShort-Term DebtThe components of short-term debt were as follows:​​​​​​​​​​​​​​​​​​December 31, 2025​​Financing​​​​​​Short-term debtObligor/Applicant ​ ​ ​structure ​ ​ ​Maturity ​ ​ ​Capacity ​ ​ ​outstanding​​​​​​(in millions)Principal Life Credit facility October 2027​$ 800.0​$ —Principal Compañía de Seguros de Vida Chile S.A.​Unsecured lines of credit​​​​ 85.6​​ 24.8Principal International de Chile S.A. Unsecured lines of credit ​​ 24.1​ 2.9Total ​ ​​$ 909.7​$ 27.7​​​​​​​​​​​​​​​​​​December 31, 2024​​Financing​​​​​​Short-term debtObligor/Applicant ​ ​ ​structure ​ ​ ​Maturity ​ ​ ​Capacity ​ ​ ​outstanding​​​​​​(in millions)Principal Life Credit facility October 2027​$ 800.0​$ —Principal Compañía de Seguros de Vida Chile S.A.​Unsecured lines of credit​​​​ 77.0​​ 31.1Principal International de Chile S.A. Unsecured lines of credit ​​ 21.8​ 2.6Principal Credit Real Estate Income Trust​Secured subscription facility​​​​ 126.0​​ 119.0Total​​​​​$ 1,024.8​$ 152.7​Our revolving credit facility is committed and available for general corporate purposes. This credit facility also provides 100% back-stop support for our commercial paper program, of which we had no outstanding balances as of December 31, 2025 and 2024. The weighted-average interest rate on short-term borrowings as of December 31, 2025 and 2024, was 6.3% and 7.6%, respectively.The unsecured lines of credit can be used for repurchase agreements or other borrowings. Each line has a maturity of less than one year.The secured subscription facility provided for revolving loans, up to a maximum aggregate availability of $150.0 million, which were secured by outstanding capital commitments of Principal Life and an unaffiliated insurance company. Borrowings were permitted for any purpose under the borrowers’ constituent documents and were required to be repaid within twelve months of issuance. The weighted-average interest rate on short-term borrowings as of December 31, 2024, was 6.84%.Long-Term DebtThe components of long-term debt were as follows:​​​​​​​​​​​​​​December 31, 2025 ​ ​ ​ ​Principal ​ ​ ​Net unamortizeddiscount,premium anddebt issuancecosts ​ ​ ​Carryingamount ​​​(in millions) 3.1% notes payable, due 2026​$ 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.

14. Income TaxesIncome Taxes (Benefits)Our income taxes (benefits) were as follows:​​​​​​​​​​​​​​For the year ended December 31, ​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023 ​​​(in millions) Current income taxes:​​​​​​​​​​U.S. federal​$ 171.8 ​$ 217.7 ​$ 67.6​State​​ 30.5 ​​ 31.4 ​ 20.1​Foreign​​ 59.7 ​​ 35.3 ​ 38.2​Total current income taxes​​ 262.0 ​​ 284.4 ​ 125.9​Deferred income taxes (benefits):​​​​​​​​​​U.S. federal​​ (112.3) ​​ (12.1) ​ (63.2)​State​​ 6.2 ​​ 12.7 ​ 0.1​Foreign​​ 4.6 ​​ 6.7 ​ 5.9​Total deferred income taxes (benefits)​​ (101.5) ​​ 7.3 ​ (57.2)​Total income taxes:​​​​​​​​​​U.S. federal​​ 59.5​​ 205.6​​ 4.4​State​​ 36.7​​ 44.1​​ 20.2​Foreign​​ 64.3​​ 42.0​​ 44.1​Income taxes ​$ 160.5 ​$ 291.7 ​$ 68.7​​Our income before income taxes was as follows:​​​​​​​​​​​​​​For the year ended December 31,​​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023 ​​​(in millions)​Domestic $ 1,041.1 $ 1,662.1 $ 412.8​Foreign​​ 374.9​​ 227.5​​ 326.0​Total income before income taxes $ 1,416.0 $ 1,889.6 $ 738.8​​Effective Income Tax RateOur provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. federal statutory tax rate and the effective income tax rate was as follows:​​​​​​​​​​For the year ended ​​December 31, 2025 ​ ​ ​ ​Amount ​ ​ ​Percent ​​(in millions)​​ U.S. federal statutory tax rate​$ 297.4​ 21% State and local income taxes, net of federal income tax effect (1)​ 29.0 2​Foreign tax effects​ ​ ​​Ireland​​ (15.3)​ (1)​Other foreign jurisdictions​​ 22.5​ 2​Effects of cross-border tax laws​ 5.2 —​Tax credits:​ ​ ​​Foreign tax credits​​ (31.7)​ (2)​Other​​ (13.0)​ (1)​Nontaxable or nondeductible items:​ ​ ​​Dividends received deduction​ (79.5) (6)​Impact of equity method presentation​ (29.0) (2)​Interest exclusion from taxable income​ (25.0) (2)​Other​​ 5.6​ —​Changes in unrecognized tax benefits​ (5.7) —​Effective income tax rate​$ 160.5​ 11% (1)State taxes in Iowa, California and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.​​​​​​​​​For the year ended December 31, ​ ​ ​ ​2024 ​ ​ ​2023 U.S.

22. Stock-Based Compensation PlansAs of December 31, 2025, we had the 2021 Stock Incentive Plan, the 2020 Directors Stock Plan, the 2014 Stock Incentive Plan, the Employee Stock Purchase Plan, the 2014 Directors Stock Plan, the Amended and Restated 2010 Stock Incentive Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan and the Directors Stock Plan (“Stock-Based Compensation Plans”). No new grants will be made under the 2020 Directors Stock Plan, the 2014 Stock Incentive Plan, the 2014 Directors Stock Plan, the Amended and Restated 2010 Stock Incentive Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan or the Directors Stock Plan. Under the terms of the 2021 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section 422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock-based awards. To date, we have not granted any incentive stock options, restricted stock or performance units under any plans. As part of our fair value process, we assess the impact of material nonpublic information on our share price or expected volatility, as applicable, at the time of grant. No awards in 2025 required a fair value adjustment.As of December 31, 2025, the maximum number of new shares of common stock available for grant under the 2021 Stock Incentive Plan was 19.1 million.For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against net income for stock-based awards granted under the Stock-Based Compensation Plans was as follows:​​​​​​​​​​​​​​For the year ended December 31, ​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023 ​​(in millions) Compensation cost​$ 119.3 ​$ 106.8 ​$ 97.7​Related income tax benefit​​ 27.7 ​ 23.9 ​ 23.1​Capitalized as part of an asset​​ 1.2 ​ 1.1 ​ 1.1​​Nonqualified Stock OptionsNo nonqualified stock options were granted to employees during 2025, 2024 and 2023. Previously, nonqualified stock options were granted to certain employees under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan. Options outstanding were granted at an exercise price equal to the fair market value of our common stock on the date of grant and expire ten years after the grant date.

​​​​​​​​​​​​​​​Weighted-​​​ ​​​​average​​​ ​ ​ ​ ​Number of options ​ ​ ​exercise price ​ ​ ​Intrinsic value ​​(in millions)​​​​(in millions) Options outstanding as of January 1, 2025 2.1 ​$ 56.03 ​​​​Exercised​ 0.2 ​​ 50.74 ​​​​Options outstanding as of December 31, 2025​ 1.9 ​$ 56.76 ​$ 58.7​Options vested or expected to vest as of December 31, 2025​ 1.9 ​$ 56.76 ​$ 58.7​Options exercisable as of December 31, 2025​ 1.9 ​$ 56.76 ​$ 58.

7. Deferred Acquisition Costs and Other Actuarial BalancesDeferred Acquisition CostsIncremental 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 $400.0 million, $392.5 million and $389.8 million related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, respectively.

The framework for our overall process for managing risk encompasses the management of risks posed by cybersecurity threats. Management’s role, responsibilities and processes for identifying, assessing, monitoring, reporting and managing risks, which includes cybersecurity risks, is discussed further in Item 1. “Business — Risk Management.” As a general matter, we take a proactive approach to assessing and monitoring cybersecurity-specific risks that are oriented around monitoring emerging external threats, ensuring controls are in place to identify and manage risk within our technology environment and creating a culture of vigilance across the organization.We test for and resolve vulnerabilities within our systems and applications by using network and infrastructure vulnerability testing and adversary emulation, also known as red teaming, and hire a third party to do the same at least once a year. We maintain a vulnerability disclosure program to enhance discovery and remediation of external-facing vulnerabilities. We also undergo a third party maturity assessment of our information security program every two years and a third party enterprise penetration test annually. We leverage external resources to help define information security and technology standards for our environment.Our cybersecurity controls are monitored and refined based on learnings from regular red team engagements and analysis by third party threat hunters. All cyber defense operations are supported through a dedicated cybersecurity threat intelligence function. We collaborate with information security peers across the industry to augment threat intelligence. Our threat intelligence program helps create awareness and understanding of potential cybersecurity threats and adversaries.We proactively assess potential risks presented by new services or systems integrated with our network or data and ensure appropriate controls are applied under such circumstances. We have proactive security controls built into our software development life cycle that help engineers identify and resolve security issues at every stage of software development. Our identity verification processes, which include multi-factor authentication and other identity verification technologies, provide further protection for clients and customers.