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Date

April 24, 2026 at 10 a.m. ET

Call participants

  • President and Chief Executive Officer — Deanna Strable
  • Chief Financial Officer — Joel Pitz
  • President, Benefits and Protection — Amy Friedrich
  • President, Retirement and Income Solutions — Christopher Littlefield
  • President, Principal Asset Management — Kamal Bhatia

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Takeaways

  • Adjusted Non-GAAP EPS growth -- 13% growth, exceeding the high end of the target range, primarily attributed to favorable underwriting in Benefits and Protection and positive market conditions in fee-based businesses.
  • Capital return -- $374 million returned to shareholders, comprised of $200 million in share repurchases and $174 million in dividends.
  • Dividend increase -- Common stock dividend raised for the twelfth consecutive quarter, up 8% both quarterly and on a trailing twelve-month basis.
  • Retirement transfer deposits -- $12 billion, a 35% increase year over year, with recurring deposits up 7% and participant deferrals higher by over 3% in volume and average rate.
  • Net cash flow (RIS segment) -- Account value net cash flow of $1.8 billion in the quarter, driven by fee-based flows in both large and SMB market segments.
  • Specialty Benefits sales -- Record sales, up 24% year over year; Business Market Life premium and fees grew 15%.
  • Investment Management gross sales -- Record $37 billion, a 21% increase year over year; net inflows of $400 million in private markets.
  • International Pension AUM -- $160 billion, up 20% year over year and 4% sequentially, with $700 million of net inflows in Brazil and positive $500 million overall net cash flow.
  • Operating margin -- 30% for the company, up 190 basis points; RIS operating margin at 41.5%, 60 basis points above last year; Benefits and Protection margin at 16.2%, up 290 basis points.
  • Non-GAAP operating ROE -- 16.1%, up 140 basis points and at the midpoint of the 15%-17% target range.
  • Total company managed AUM -- $770 billion, up 7% year over year but modestly lower sequentially due to market performance.
  • Total net cash flow -- Negative $1.5 billion, marking improvement both sequentially and year over year, with particular positive impact from International Pension and Investment Management.
  • Specialty Benefits loss ratio -- Improved to 58.5%, primarily from Group Life and Dental, with Group Disability performance stable.
  • Private Markets AUM -- Increased 11% year over year, reflecting demand in real estate, infrastructure, and private credit.
  • Dividend payout ratio -- Maintained at the targeted 40% level, with dividend raised to $0.82 per share for the second quarter (up $0.02 from the previous quarter).
  • Available capital -- Over $1.4 billion, including $800 million at the holding company, $300 million in subsidiaries, and $350 million above the targeted 375% RBC ratio (actual RBC approximately 400%).
  • Performance fees in International Pension -- Segment benefited from a $7 million performance fee within the China Construction Bank pension business, contributing to outsized earnings in the quarter.
  • Asset Management pipeline -- "commitment pipeline has now grown to over $9 billion," with mandates diversified across public and private markets and continued growth in global client base.
  • Dental network acquisition -- A small acquisition in Alabama; benefits to appear starting in the second quarter and beyond.

Summary

Principal Financial Group (PFG +3.99%) delivered double-digit growth across several critical metrics, returned significant capital to shareholders, and highlighted continued success in expanding its diverse retirement, asset management, and insurance businesses. Management noted improvements in margins, cash flow, and acknowledged both the positive impact of performance fees in International segments and the measured approach to product innovation such as inclusion of private assets in retirement plans. The company also reported the twelfth consecutive quarterly dividend increase and reaffirmed its focus on a diversified, disciplined strategy to achieve 2026 financial and capital targets despite some segment-specific volatility.

  • The sustained dividend growth was presented alongside strict adherence to the 40% payout framework, aligning with long-term earnings growth expectations.
  • Management cited broad-based new business wins in large account retirement as the primary factor for the surge in transfer deposits, offsetting the previous year’s large-case outflow.
  • RBC ratio of approximately 400% provides flexibility to support growth and maintain targeted capital levels.
  • Segment commentary included expectations for continued seasonality in dental loss ratios and projection that overall Specialty Benefits loss ratios "expected to emerge at the low end or even slightly below the low end of the range."
  • Asset management leadership indicated that "commitment pipeline has now grown to over $9 billion," with increased product diversity and stronger global client relationships cited as drivers.
  • Management stated, "Underlying performance of the alternatives portfolio in its entirety is performing well and as expected," but noted that variable investment income in the quarter was hampered by absence of real estate transactions.
  • Private fixed income portfolio exposure was described as "are investment grade, with minimal exposure to direct lending."
  • The company emphasized measured growth in inclusion of private assets for retirement plans, recognizing client demand but noting complexity and timeline factors.

Industry glossary

  • DCIO: Defined Contribution Investment Only, representing retirement platform investment sales outside a bundled recordkeeping arrangement.
  • PRT: Pension Risk Transfer, an insurance solution transferring pension plan obligations from plan sponsors to insurers.
  • UCITS: Undertakings for Collective Investment in Transferable Securities, a regulatory framework for mutual funds in the European Union.
  • RBC ratio: Risk-Based Capital Ratio, a regulatory measure of capital adequacy for insurance companies relative to risk exposure.
  • W-SRS GA: A proprietary Principal capital preservation option within retirement plans, referenced during earnings commentary.
  • VII: Variable Investment Income, recurring income from alternative investments subject to market or transaction activity.

Full Conference Call Transcript

Deanna Strable: Thanks, Humphrey, and good morning to everyone on the call. This morning, I will discuss our strong first quarter performance and the steady execution of our strategy focused on delivering sustained growth across our diversified businesses. Joel will then provide additional details on our financial results and capital position. Slide two, we delivered 13% adjusted non-GAAP earnings per share growth in the first quarter, above the high end of our target range. This performance was primarily driven by favorable underwriting results and improved mortality within our Benefits and Protection business, as well as positive market conditions for our fee-based businesses. This contributed to strong revenue growth and margin expansion.

Strong performance and capital generation enabled us to return approximately $375 million of capital to shareholders in the quarter, including $200 million of share repurchases. We also raised our common stock dividend for the twelfth consecutive quarter, an 8% increase on both a quarterly and trailing twelve-month basis. Taken together, these results underscore the value of our diversified business model. Moving to slide three, we continue to make progress across our strategic growth areas: the broad retirement ecosystem, small and mid-sized businesses, and global asset management. Within the retirement ecosystem, we are starting the year with broad-based momentum.

Total retirement transfer deposits of $12 billion in the quarter grew 35% year-over-year, and recurring deposits grew 7% over the same time period. This growth reflects our ability to win new business as well as retain and grow existing clients with a comprehensive suite of capabilities across recordkeeping, asset management, investment advice, and income solutions. We are growing our participant base and helping them save more for retirement. This is evidenced by a 3% increase in the number of participants deferring into their retirement plans compared to the year-ago quarter, with average deferrals up over 3% as well. Participants continue to consolidate retirement savings onto our platform with $1.7 billion of roll-ins in the quarter.

When participants consolidate their retirement savings with us, this further reinforces their confidence in the strength of our platform and our ability to provide customized advice and solutions to meet their needs. Our retirement investment expertise, an important driver within the retirement ecosystem, is further gaining traction with third-party retirement platforms. This is evidenced by DCIO sales of $2 billion in the quarter and nearly $8 billion over the trailing twelve months. For the small and mid-sized business segment, our differentiated capabilities and deep expertise are driving results. In retirement, the SMB market continues to perform well. Recurring deposits grew 6% over the year-ago quarter, and 7% on a trailing twelve-month basis.

Strong new business activity and favorable retention resulted in positive account value net cash flow of $600 million for the quarter. In Benefits and Protection, our broad and meaningful value proposition to the SMB segment continues to drive growth and deepen customer relationships. Specialty Benefits delivered record sales, up 24% over the year-ago quarter. Additionally, Business Market Life premium and fees grew 15% year-over-year, demonstrating robust demand for specialized solutions which help business owners protect key employees and fund critical succession strategies. Our latest well-being index, fielded in late March, confirmed steady employment trends, with 90% of small and mid-sized business owners indicating they are maintaining or increasing staff.

When we look at our own block across 180 thousand diverse businesses in group benefits and retirement, both employment and wage growth have remained positive and are contributing to growth. In Global Asset Management, we are generating momentum with record gross sales in Investment Management of $37 billion, up 21% year-over-year. This growth is directly related to in-demand product offerings and our strengthened distribution relationships across global markets. Our private markets capabilities remain attractive to clients globally, generating net inflows of $400 million in the quarter and $3 billion on a trailing twelve-month basis. Private markets AUM grew 11% year-over-year due to ongoing demand for our real estate, infrastructure, and private credit strategies.

Our active ETF business continues to gain traction and delivered net inflows of $400 million in the quarter and $1.8 billion on a trailing twelve-month basis. Additionally, we generated strong net cash flow of $1.5 billion in the quarter from clients outside the U.S. Looking across these three growth drivers, I am encouraged by this momentum. The breadth of our retirement solutions, our leadership position in serving small and mid-sized businesses, and our expanding global asset management capabilities create multiple avenues for sustained growth. We also continue to innovate in how we serve and engage customers across the enterprise, leveraging data and emerging technologies, including AI.

We are deploying these capabilities across the organization to improve productivity, deepen customer relationships, and continuously improve the experience we deliver every day. Before I turn it over to Joel, I want to share some of the important recognitions we have received. For the fifteenth time, Principal Financial Group, Inc. has been named one of the World's Most Ethical Companies. This recognition from Ethisphere, which I am incredibly proud of, underscores our longstanding commitment to integrity, transparency, and responsible business practices. Principal Asset Management was also recognized as the winner of the Data Center Firm of the Year in North America by PERE, a leading private markets publication.

This award highlights our decades-long expertise, growing capabilities, and track record in this sector. Together, these recognitions reinforce the strength of our culture and competitive advantages that differentiate Principal Financial Group, Inc. in the marketplace. In closing, the momentum we are seeing across our businesses gives us confidence in our ability to deliver our financial targets. As we expand our customer base to 82 million people worldwide, we remain focused on disciplined execution, sustainable growth, and creating long-term value for our customers and shareholders. Our strong performance this quarter reflects the dedication of our 19 thousand employees around the world.

Their focus on serving customers and executing with discipline allowed us to capitalize on opportunities early in the year and positions us well for continued growth as we move through 2026. Joel?

Joel Pitz: Thanks, Deanna. Good morning to everyone on the call. I will walk through our financial performance for the first quarter and provide updates on our capital position. As you can see on slide four, the first quarter was a strong start to the year, and we are well positioned to deliver on our 2026 financial targets. We reported non-GAAP operating earnings of $456 million, up 10% compared to the year-ago quarter, or $2.07 per share, an increase of 14%. Excluding significant variances, non-GAAP operating earnings were $479 million, up 9% compared to the year-ago quarter, or $2.17 per share, a 13% increase.

Additionally, non-GAAP operating ROE was 16.1%, an improvement of 140 basis points compared to the year-ago period, and at the midpoint of our 15% to 17% target range. Significant variances, shown on slide 11, had an after-tax impact of $23 million in the first quarter. Lower variable investment income was primarily driven by timing of real estate transactions and slightly lower returns in our other alternatives portfolio. We shared in our February outlook call that we were evaluating the presentation of depreciation for core real estate in our alternatives portfolio. Beginning first quarter, we reclassified this noncash expense to realized gains and losses. This better reflects total returns by aligning depreciation with where gains are recognized upon sale.

We still expect full year 2026 variable investment income to improve relative to 2025, with or without this change. This impacts reported results only, and there is no impact to our adjusted results. Operating margin improved by 190 basis points to 30% in the first quarter. This improvement reflects our strong business fundamentals, with 6% year-over-year net revenue growth and disciplined expense management while investing in the business. Turning to capital and liquidity, we ended the quarter in a strong position, with over $1.4 billion of excess and available capital.

This includes $800 million at the holding company at our targeted level, $300 million in our subsidiaries, and $350 million in excess of our targeted 375% risk-based capital ratio, which was approximately 400% at quarter end. We returned $374 million to shareholders in the first quarter, including $200 million of share repurchases and $174 million of common stock dividends. Last night, we announced an $0.82 common stock dividend payable in the second quarter. This is a $0.02 increase from the dividend paid in the first quarter and an 8% increase year-over-year. This remains aligned with our targeted 40% dividend payout ratio and demonstrates our confidence in continued earnings growth and capital generation.

Moving to AUM and net cash flow, total company managed AUM ended the quarter at $770 billion, modestly lower sequentially due to market performance and up 7% year-over-year. Total company net cash flow was negative $1.5 billion in the quarter, a meaningful improvement on both a sequential and year-over-year basis. The improvement was driven by positive net cash flow in International Pension in the quarter, and improved year-over-year results in Investment Management. Moving to the businesses, the following commentary excludes significant variances. Starting with RIS and as shown on slide five, pretax operating earnings of $318 million increased 4% year-over-year, driven by 3% net revenue growth and margin expansion.

Operating margin of 41.5% expanded 60 basis points compared to the year-ago quarter and is slightly above the high end of our target range. This reflects our disciplined focus on profitable revenue growth and expense management, as well as some favorable seasonality and timing impacts in the current quarter. Fundamentals across the business remain healthy. As Deanna noted, we delivered strong transfer and recurring deposits, as well as favorable retention. This drove $1.8 billion of RIS account value net cash flow in the quarter, supported by fee-based net cash flow across both large and SMB market segments. Turning to slide six, Principal Asset Management delivered earnings growth of 10% year-over-year on 5% revenue growth and margin expansion.

Within Investment Management, pretax operating earnings increased 8% from the prior-year quarter. Adjusted revenue increased over 2% year-over-year, despite the impact of our recent divestiture. Higher revenue along with expense discipline contributed to a 100 basis point improvement in Investment Management's quarterly operating margin. Gross sales in the quarter were a record, up 21% from the year-ago quarter. This highlights the attractiveness of our solutions and the global reach of our distribution. Importantly, demand remains in several key areas, including $1.2 billion of net cash flow spread equally across private markets, ETFs, and UCITS. Moving to International Pension, AUM increased 4% sequentially and 20% year-over-year to a record $160 billion.

The increase was primarily due to positive market performance and net cash flow, as well as foreign currency tailwinds. Net cash flow was positive $500 million in the quarter, with $700 million of net inflows in Brazil. Pretax operating earnings increased 14% year-over-year, driven by the benefit of higher performance fees, favorable foreign currency impacts, and growth in the business. Operating margin of 48.5% remains comfortably within our target range. Turning to slide seven, Benefits and Protection delivered a very strong quarter. Pretax operating earnings were $177 million, an increase of 41% year-over-year. This was driven by more favorable Specialty Benefits underwriting, improved Life mortality, and business growth.

Starting with Specialty Benefits, premium and fees increased 4% year-over-year, supported in part by record sales in the first quarter. As we indicated in our outlook call, we continue to expect premium and fees growth to trend higher throughout the year, most notably in the second half. Pretax operating earnings of $140 million increased 26% year-over-year, reflecting strong underwriting experience and growth in the business. Total loss ratio improved 220 basis points compared to the year-ago quarter, due to improved Group Life and Group Dental results, along with continued strong results in Group Disability. This translated into margin expansion, improving to 16.2% and up 290 basis points year-over-year.

In Life Insurance, pretax operating earnings of $37 million increased $23 million year-over-year, driven by improved mortality experience due to lower frequency and severity. This contributed to a 15.6% operating margin in the quarter, at the high end of our target range. Moving to Corporate, first quarter losses were elevated due to timing of expenses. On a full-year basis, we expect segment results to be within our target range. Before closing, I would like to make a few comments regarding our investment portfolio. There has been heightened attention recently on the insurance industry's exposure to private credit. First and foremost, we have over 60 years of experience underwriting and managing private assets for our general account and clients.

As we shared with you last quarter, the vast majority of our private fixed income securities are investment grade, with minimal exposure to direct lending. Importantly, our portfolio continues to perform well, with experience better than our long-term expectations. I remain confident in our well-constructed and diversified portfolio, which is appropriately aligned with the liquidity profile of our liabilities. In closing, our first quarter results reflect disciplined execution across the enterprise, with strong earnings growth, margin expansion, and healthy underlying fundamentals. These results reinforce the strength of our diversified business mix and position us well to deliver on our financial targets in 2026 and beyond. This concludes our prepared remarks. Operator, please open the call for questions.

Operator: At this time, I would like to remind everyone that to ask a question, press 11 on your telephone. We will now open the call for questions. The first question comes from Ryan Krueger from KBW.

Ryan Krueger: Hey, thanks. My first question was on Specialty Benefits. Can you provide some more color on the favorable underwriting experience you had across dental, life, and disability, and also just how you are thinking about the outlook from here?

Deanna Strable: Yeah, Ryan. Good morning, and welcome back. Obviously, it was a really strong quarter for Specialty Benefits. I will pass it over to Amy to talk about the drivers.

Amy Friedrich: Yeah, thanks. Yeah, Ryan, the underwriting performance was really strong this quarter, as you have noted, with that 58.5% loss ratio. When I look through that, it really is primarily Group Life and Dental that are driving that. So when I look at Group Life, it is driven by the low frequency that we saw in this quarter. And when I look at Dental, I think we have talked in prior calls about some of the work we have been doing—certainly about past pricing actions, which are now well into the experience—and then some of the dental network optimization efforts we have been doing, which are also moving into that performance as well.

I should mention too that Group Disability performance remains strong. It was consistent with prior-year quarters, and it was tracking to what we expected. As a reminder, you asked about looking ahead. When we look ahead, second quarter does tend to be the seasonally highest for Dental. So that means that the overall Specialty Benefits loss ratio does rise a bit in second quarter. But when I look at the full-year outlook, I look at it very favorably, with loss ratios expected to emerge at the low end or even slightly below the low end of the range we communicated at outlook.

Deanna Strable: Thank you. Ryan, do you have a follow-up question?

Ryan Krueger: Yeah. On Investment Management, you have seen this good momentum in gross sales, but then redemptions have also largely ticked up, and so the flows have not improved as much. So was just hoping to get a little more color on maybe both sides of it—what is driving the gross sales momentum, but also why you have been seeing higher redemptions and do you think that may play out from here?

Deanna Strable: Yeah. Thanks, Ryan, for that. I will ask Kamal to add color regarding that.

Kamal Bhatia: Sure. Good morning, Ryan. Thanks for the question. It is a good one. So let me break down a little bit of the net flow question you asked. First, I will just reiterate—I think Deanna and Joel highlighted this in their remarks, and you mentioned it as well—we did generate record gross sales in Investment Management in the first quarter, up 21% year-over-year. You would also acknowledge it is an impressive number. I would say it is directly related to our new product focus and new strategies that we are introducing into the marketplace, but more importantly, we are continuing to grow the number of distribution relationships across the globe.

I would highlight for you that Asia had a standout quarter. They had about $1.1 billion of positive net cash flow, and with our international clients delivering over $1.5 billion of positive net cash flow. So the key for us is to grow sales across the globe, which would be key to changing the net cash flow profile given our legacy book. Now to your question on what caused the net cash flow pattern this quarter, we did see some redemption activity that was concentrated among a very small number of U.S. active equity mutual funds in the U.S. wealth channel, primarily driven by changes in asset and advisory business models.

So our goal continues to be to deliver higher gross sales and gather commitments to a broader product set. As redemption activity normalizes, I would expect our nonaffiliated net cash flow profile to improve for the balance of the year. I would just end with that the future pipeline is very strong. Hope that answers your question, Ryan.

Ryan Krueger: It does. Thanks a lot.

Deanna Strable: Yeah. Thanks, Ryan. Next question.

Operator: The next question comes from Wesley Carmichael from Wells Fargo.

Wesley Carmichael: Hey, good morning. Thank you. Question was on the Individual Life segment. Just looking at results, I think it is the best quarter that segment has produced in a long time. And I typically think about the first quarter as being seasonally weak from a mortality perspective. So just wondering if you think anything in the earnings power has changed for that segment, or is this just a little bit more one-time-ish in nature?

Deanna Strable: Yes. Thanks, Wes, for that. Obviously, Life did have a very strong earnings quarter, really driven by mortality. I will ask Amy to give some color around that.

Amy Friedrich: Yeah, thanks for noting that. I do think we definitely feel like we saw some positive volatility in mortality this quarter. And we have had other quarters, though, where we talked about it going in the opposite direction. So I definitely see some positive mortality sitting in this. But what I would also say is that when we think about our full-year results for this segment, we did communicate a guidance range in terms of our margin from 12% to 16%.

And even though this was kind of pointing us towards that mid to higher end of that range, I would say something that is towards the lower end of that range for a full-year expectation for the earnings power and margin power of this business is what I would be thinking about for the health of the business.

Deanna Strable: The other thing I would just say on that, if you did look at claims, it was great to see that the positive came both from incidence and severity, and a lot of times volatility tends to come from the severity piece. But we did see some better-than-expected results on both incidence as well as severity.

Amy Friedrich: When I parse those—incidence and severity—it is about 50/50 for each of them.

Deanna Strable: Wes, do you have a follow-up?

Wesley Carmichael: I do. Thank you. Thanks so much. And so just switching to RIS, strong transfer deposits. Just curious if you could maybe touch on the flow outlook for that segment for the rest of the year?

Deanna Strable: Yes. I will turn it over to Chris. As you know, we focus on revenue growth, and ultimately we really drove strong results. We did have very strong fundamentals across RIS. Large case can tend to be lumpy when you look at deposits, and this was a quarter we benefited from that, but I will ask Chris to give some more color.

Christopher Littlefield: Yeah. Thanks, Deanna, and thanks, Wes. So again, I think as you noted, we did have a really good quarter from a net cash flow perspective, driven primarily by strong transfer deposits and also experienced very strong contract retention. Those two things were also supported by healthy recurring deposits and stable withdrawal rates, and all of this is despite the ongoing market performance. So really feel good about our net cash flow. As we look forward, as Deanna said—as we like to remind you—we really focus on driving profitable revenue growth.

But as we look forward to flows in 2026, we do expect it to follow the historical pattern where Q1 is our strongest for sales and transfer deposits, and the remaining quarters are likely going to be impacted by strong markets, which increase withdrawal dollars, as well as the lumpiness that we see in Large from time to time in the quarterly results.

Deanna Strable: Thanks, Chris, and thanks, Wes. Next question.

Operator: The next question comes from Suneet Kamath from Jefferies.

Suneet Kamath: Thanks. Good morning. I wanted to start with RIS also. On the advice model that you guys have—and correct me if I am wrong—but my understanding is that you use more of a sort of a call center model as opposed to sort of feet on the street or building out wealth management offices. And I know one of your competitors is taking that latter approach. Just wondering if that is something that you guys looked at or if it is something that you might consider. Thanks.

Deanna Strable: Yeah. Thanks, Suneet. Thanks for being here and for the question. As we have talked about, our focus is really on the majority of our participants and wanting to be able to provide broad-based support to those that do not have as much, or to the advisor community. And so I think our approach is different. I will ask Chris to give a little bit more insight into that.

Christopher Littlefield: Yeah. Suneet, thanks for the question. You know, again, as Deanna mentioned, we really focus on those participants that we serve already, and we are not really looking at building a number of storefront physical presence locations. We do have a few hundred salary-based advisers covering about 90% of our participant base to be able to offer them advisory services. And we are seeing nice results. As we mentioned, we are seeing great in-force dynamics, whether it is from participant roll-ins, increasing deferral rates, increasing participants who are deferring—all of that is coming from the advice model that we are offering.

We are seeing an increase in our retail individual customers that are both IRA and advisory services customers, up about 11% on the year. And so our model is really focused on our participants, focusing on those more mainstream than the high net worth, and really focusing where Americans need the help, and we believe that we have a model that will be successful over time.

Deanna Strable: Got it. Yeah. And the other thing I would mention there is we are supplementing that with enhanced technology that we will continue to build up as we try to best meet the needs of those clients and how they want to be served. So, Suneet, do you have a follow-up question?

Suneet Kamath: I do. Thanks. And I wanted to come back to the SMB market. It sounds like last quarter—if I remember correctly—you guys were pretty confident in the employment outlook. It sounds like in your prepared remarks, you talked about being confident so far this year. But as we think about the economy and the volatility that we are just seeing in the markets given its kind of global issues, is there typically a lag that you would see—that maybe you are not seeing it show up in your results now, but down the road there could be some impacts from this uncertainty that we are seeing?

Deanna Strable: Yeah. Suneet, a couple of things, and then I am going to ask Amy to give some additional color. I have asked Amy to spearhead a group really focused on monitoring this real time across the enterprise. You know, I think a couple of things I will say there is we have a broad-based employer base. If you think about it, we have 180,000 employers just across RIS and Group Benefits, ranging from different sizes, different industries, different geographies, and I think that diversity is really going to serve us well. As mentioned, we are looking at it from our block perspective. We also have very regular surveys with SMB employers as well.

And just sitting here today, we are not seeing anything that is impactful. But we also understand that some of this is going to be dynamic, and we want to stay close to it. I do come back to that I think that diversity is really going to serve us well. But I will turn it over to Amy.

Amy Friedrich: Yeah. I agree with how Deanna set this up. And I do want to reiterate, as we are seeing in our results, both employment and wage growth are really holding steady in our blocks. I would say wage growth is looking really healthy and similar to what we saw last year. And employment growth has moderated just a bit, but it is really aligned with what we expected to see this year. To your question, though, about could there be a little bit of a lag—I do think that uncertainty, of which there is definitely the presence of some uncertainty for both employers and employees, tends to have an effect on the marketplace in a couple ways.

One way is that people tend to kind of settle back into, “I am not necessarily going to make some big expansions in terms of growth,” but they also settle back into, “I am not necessarily going to retract back or do something differently.” So it has a little bit of a static effect, that uncertainty in the marketplace. What that means for employees is many of them are staying where they are, and what that means for employers is that many of them are holding true to the plans that they have for the year. So I am not seeing that big lag.

I am seeing some uncertainty in the sentiment, but small and mid-sized business owners tend to be—and our data proves this out—more optimistic in terms of how aggressively they can take advantage of the market situation when uncertainty does clear. And so I am not seeing a big lag effect, but we will continue to watch that every month.

Suneet Kamath: Okay. Thanks.

Deanna Strable: Thanks, Suneet, for the questions. Next question.

Operator: The next question comes from Jack Matten from BMO Capital Markets.

Jack Matten: Hey, good morning. My first one was on International Pension. The earnings run rate is going to step up this quarter, even kind of backing out the significant variances that you call out. I guess, could you just unpack some of the drivers there? And which do you think are kind of more repeatable or sustainable versus some of the more transitory factors like FX or elevated performance fees?

Deanna Strable: Yeah. I will ask Joel to talk through that. And again, thanks, Jack, for being here and for your questions. Obviously, it was strong earnings growth for International Pension, and that segment continues to provide some great diversification to our overall results, and we are really focused on where we feel that we can drive growth. I will ask Joel to give some specifics on the quarter.

Joel Pitz: Yeah. Good morning, Jack. As we indicated last quarter, they were in the mid-60s. We did expect improvement within the International Pension results, and that certainly did manifest itself in first quarter, with about $80 million of adjusted earnings for the quarter. I would say from a run-rate perspective—your question—it was a little bit outsized this quarter because of a performance fee within China Construction Bank, our pension business. There was about a $7 million performance fee that was paid within that market. That is one way that we are compensated for providing the services that we do within the pension space in China.

So it was outsized this quarter, but it is something that is going to be volatile and we can expect into the future. Everything else being equal, I would say a good run rate is going to be more in the mid-70s—a good source to build off. But importantly, we are getting some FX tailwinds finally. You know, I have been in this business a long time, and it is nice to say FX tailwinds as opposed to headwinds. Really nice to see the underlying results of these businesses manifest themselves in U.S. dollars in a meaningful way.

Deanna Strable: Yeah. I hope that helps. Do you have a follow-up question?

Jack Matten: Yes. Thank you. Just one on the outlook for VII and performance fees in the Investment Management business this year. Do you have any visibility at this point to kind of cadence of realizations? And I guess, to what extent do you think market conditions need to change or improve in order to unlock a more normal level of real estate monetization?

Deanna Strable: I will have Joel address that.

Joel Pitz: Yeah. So as communicated, we continue to expect 2026 to improve relative to 2025. One of the reasons why we did have the results we did this first quarter was because there was no real estate transaction activity. As a reminder, we have about 50% of our portfolio within real estate, which is dependent upon transaction activity—again, of which there was none in the first quarter. But we do see some pickup in activity for the second, third, and fourth quarter, and therefore we do see some improvement year-over-year. Underlying performance of the alternatives portfolio in its entirety is performing well and as expected.

To your question, we do not need to see anything change within the macro environment in order for us to deliver on that improvement that we communicated in outlook.

Deanna Strable: Yeah. I think the other part you weaved in there was performance fees from an Investment Management perspective. And I think we said on outlook that we expected 2026 to be similar to 2025, but those are going to be lumpy by quarter, and they were a little lower in the current quarter.

Jack Matten: Thanks.

Deanna Strable: Next question?

Operator: The next question comes from Wilma Burdis from Raymond James.

Wilma Burdis: What drove the lower PRT sales in the quarter? And is there a little bit more competition pulling into the SMB PRT market?

Deanna Strable: Yeah. Thanks, Wilma, for the question. I will ask Chris to address that.

Christopher Littlefield: Good morning, Wilma. Thanks for the question. Again, if you remember, fourth quarter was a very strong PRT quarter in 2025, not just for us—with over $1 billion of PRT sales—but for the industry at about $28 billion. And I think what that had an impact of doing was really reducing the pipelines in the first quarter. So I think we have not seen the industry-wide data yet, but anecdotally it sounds like the industry is pretty light in the first quarter, and we reflect those trends. So that would be how we are thinking about the PRT business. The pipeline remains a little light in the second quarter.

But if you remember, last year also developed this way as well—sort of lighter in the first half, more accelerated PRT sales in the second half. And we kind of expect this year to be fairly similar to 2025 when it comes to PRT.

Deanna Strable: Yeah, Wilma. And I think as we have discussed, we are not going to chase sales for the sake of sales. We are going to make sure we are disciplined on the capital that we deploy and the returns that we can get from that. And if it is lower, we are looking for other opportunities to ensure that we are driving profitable growth across the enterprise. So thanks for that question. Do you have a follow-up?

Wilma Burdis: Yes. Are you seeing any competition actually improving or decreasing in Group Dental, given you guys have implemented price increases but you are still seeing healthy sales growth? Thanks.

Deanna Strable: Yeah. I think that question—you cut out just a little—but I think it was regarding the competitiveness in Group Dental and how that might be impacting the sales volumes. Again, I feel very proud of the results that we delivered both on the profitability side as well as the growth perspective for Specialty Benefits, but I will have Amy address the market from a Dental perspective.

Amy Friedrich: Yeah. Thanks, Wilma. We do tend to be a very significant player nationally in the dental marketplace. One of the things that we saw emerging probably 18 to 24 months ago was some things around cost trend and some other things related to impacts on dental pricing that we then moved into our pricing. So we had seen some utilization changes and some cost trend changes that we moved into pricing. As we look at last year's results, I do feel like we were one of the first in the market with some of those pricing changes, and it did mute a little bit some of the dental sales that we had for prior year.

So I see this year's production—this quarter's production—as a good indication about the power of our dental production for the year, in comparison to last year. I do think we are comfortable with the rate we are putting out there in the marketplace, and we are the recipient of some market movement from some of our competitors putting in rate increases that has brought some things back out to market. So we like the profitability that we are seeing in the dental business that we are writing, and we think it is a good indication for the type of power that dental business will have for us throughout 2026.

Deanna Strable: Well, I hope that helps. Thank you for the questions.

Tom Gallagher: Good morning. First question just on RIS fee flows. In 1Q 2025, I think you had a jumbo case that you lost. How were the jumbo case callouts for this quarter? Did you have any wins, losses? How did that influence RIS fee flows this quarter?

Deanna Strable: I will have Chris address that. You are right—last first quarter we had a more significant item on the loss side. This quarter we are seeing it more positive on the transfer deposit side, but I will have Chris give some more color.

Christopher Littlefield: Yeah. I think we had really good wins in the first quarter, coming off what was a really strong fourth quarter as well. So I think I would take you back—we had really strong fourth-quarter wins and that momentum continued in the first quarter. You are right, last year we did have a large case loss that we called out. This year, we had broad strength, but we also had a couple large case wins in the quarter. And so you did see that very significant difference in growth in our transfer deposits. And as you know, the large segments tend to be a little bit lumpy, and the SMB market tends to be more steady and strong.

Deanna Strable: Thanks, Tom. Do you have a follow-up?

Tom Gallagher: Yeah, Deanna. So my follow-up, I guess, is for Kamal. On performance, it looks like your one-year numbers for equities and asset allocation got better; fixed income slipped a little bit. Three-year numbers fell across the board though in all three categories. Are you seeing any impact from the performance issues? And why do you think the performance has slipped a bit here?

Deanna Strable: Yes, I will have Kamal address that. Obviously, investment performance is something we spend a lot of time focused on. There is some duplication across some of those, especially when you get into asset allocation. But I will ask Kamal to follow up on that.

Kamal Bhatia: Absolutely. Good morning, Tom. I will start with your question on investment performance and break it down by the segments as you highlighted—improvement on the one-year number in certain pieces and then three-year slightly weaker. One thing I will highlight for you, these numbers do not include our very strong private market performance. In fact, our marquee real estate strategy is number one in its category, and as you know, that drives a significant flow for us. In Deanna's comments, we also highlighted that we grew our private market business 11% year-over-year. I would highlight for you only about 1% of that was from macro. So it shows that we have the engine when investment performance kicks in.

Specifically to your question, the area of our core weakness right now is around U.S. equities, particularly active U.S. equities. That is an area of weakness, particularly in the short term. The long numbers are very, very good. As you said, our fixed income performance has improved—particularly non-U.S. fixed income performance is very strong. We see that in our flows, particularly around emerging market debt, which continues to attract a lot of client attention. Asset allocation is very important. As you know, we offer our portfolio in multiple flavors. One of our strategies—on the hybrid side—continues to do well, but you have highlighted some of our challenges in the active book that comes from the U.S. side.

And then the last thing I would highlight for you just this quarter is, by design, we run many of these strategies to complement the index. As the passive business has grown across the industry, we, by design, build our products to be different than the index. That does lead to, in periods of high volatility, significant deviation in market performance—sometimes positive, sometimes negative. But that is what clients ask from us. They do not want index-like products from us. And in periods where we deliver, it creates a tailwind as well. And it also supports our stable fee rate, which you have always highlighted as a strength for Principal Asset Management.

Deanna Strable: Thanks, Tom, for the questions.

Operator: The next question comes from Mike Ward from UBS.

Mike Ward: Hi, thanks. Good morning. I was wondering on Specialty Benefits, did the M&A that you did in the quarter contribute at all to the new business growth? And then are there other targets out there that you guys could look to transact on?

Deanna Strable: Yeah. Thanks, Mike, for that question. We did do a small dental network acquisition with a company that we had a relationship with. I will have Amy talk to that. Obviously, as I have said on prior calls, it is great to be leaning into some areas that can help drive growth as we continue to think about our portfolio. So, Amy?

Amy Friedrich: Thanks for the question. So we did, as Deanna noted, a small dental network acquisition that happened to be in Alabama. It was both a dental network and then some renewal rights for a block of group benefits business. We feel really good about that transaction. Your question, though, I think, was specifically whether that contributed to first quarter results. And the answer is no, those were not yet present in first quarter results. Any benefit we get from that in terms of new business or cross sales or power of our dental network will start showing up in second quarter and beyond. I do like being able to lean into this piece of the business.

We have got some really nice engines running for us in the Specialty Benefits business, and I like being able to add to it a bit inorganically to help us with future growth.

Deanna Strable: Thanks, Mike. Do you have a follow-up question?

Mike Ward: Yes. On RIS, I guess you guys, I would say, have been a little bit quieter just in terms of the inclusion of privates for retirement funds. I am just curious—your sort of stance on that issue and how you see that heading going forward for the industry.

Deanna Strable: Yeah. I will have Chris talk through that. Obviously, we applaud and support thoughtful efforts to expand investment options within retirement plans. The recent DOL guidance is an important step, but I think our stance is it is going to take time—it is going to be slow. And ultimately, as we talk to our customers, they are intrigued but are not pushing to move at a fast rate for inclusion. But I will see if Chris has some additional flavor.

Christopher Littlefield: Thanks, Mike. Thanks, Deanna. Yeah, I agree. We do support the evaluation of privates to be included in retirement plans. And, obviously, we have been offering privates in retirement plans for a long time with our real estate strategies. So we do believe that they play a proper role, but they are complex and they come with new challenges. I think the DOL proposed safe harbor—that you need to evaluate the performance and the fees and liquidity and the valuation and the benchmarking and the complexity—causes plan sponsors and fiduciaries to step back and really be thoughtful about what works for them, what risks we are exposing participants to.

So I think we see a very measured approach to people considering the inclusion of privates in the retirement plans. We just had a significant client conference with 50 or so of our largest and most important clients, and there were a lot of questions and a lot of desire to understand, but I am not sensing a tremendous movement toward everyone including privates quickly into their plans. I think it is going to take some time. And I think, as we have said in the past, it is probably going to be introduced first through advice solutions, whether that is a target date solution vehicle or a managed account vehicle, because they are complex.

They need a little bit more explanation. And the plan sponsor fiduciaries and the fiduciary committees are going to just take some time understanding how do we include this, how do we monitor the performance, how do we think about the valuation issues, and then how do we deal with the liquidity. So, again, we support it. We are working with a lot of investment partners on including their solutions into various vehicles. But I think it is going to be a bit more measured progress as opposed to a big wave of inclusion here in the short term.

Deanna Strable: Thanks, Mike, for those questions.

Operator: Our final question comes from Analyst from JPMorgan.

Analyst: Hi, good morning. So just to start off, maybe question for RIS. I wanted to ask about your efforts to grow spread earnings, whether from annuities flows or assets sitting in retirement plans. How do you see the fee versus spread mix evolving over time?

Deanna Strable: Yeah. Thanks, Pablo, and great to have you on the call. I will have Chris really address that. As we have talked about, we really do think about our fees—how we think about fee and spread is holistically—because those are ways that we drive revenue across our retirement ecosystem. So we think less about one versus the other and really think about how they can contribute to overall retirement as well as Principal Financial Group, Inc. growth. I will have Chris offer some additional color.

Christopher Littlefield: Yeah. Thanks, Pablo. We have, over the last several years, really put some emphasis into looking at how we continue to grow our spread-based earnings. Obviously, PRT and the annuities businesses provide some nice spread-based earnings, but as importantly, we have really focused on growing capital preservation options within our retirement plans, which we call W-SRS GAs solutions. We have driven very significant flows in those over the last several years, including over $400 million of flows in the quarter just on W-SRS GA. We do think there is an appetite for capital preservation products that can serve the needs of the participant and continue to think that there are opportunities to drive that.

But we are not targeting any particular mix. Fee-based flows are really important for us, and we continue to focus on driving profitable fee revenue and, at the same time, supplementing and complementing that with the right mix of more capital-consumptive spread-based products to make sure that we are getting the returns on the capital that we are deploying while also at the same time meeting the needs for our retirement plan participants for capital preservation.

Deanna Strable: Pablo, hope that helps. Do you have a follow-up?

Analyst: I do. Thanks, Deanna. And then secondly, maybe for Kamal. I was hoping you could elaborate on your comment about the asset management pipeline being very strong. Is it better than it was a year ago? Are you seeing new opportunities? Anything you can comment on there?

Deanna Strable: Yeah. That is a great final question. We do have a strong pipeline as we sit here today. I think volatility in the market could impact the timing of when that flows in, but I will have Kamal give some additional color.

Kamal Bhatia: Sure. Pablo, thank you for the question. Just a follow-up to Deanna's comments—I feel very good about our pipeline. Our commitment pipeline has now grown to over $9 billion. Just to help you understand, these are mandates that we have actually won that have not funded, and they are diversified across both public and private markets, largely from our growth in our global client base. That is key because the demand is more diversified. Historically, we have highlighted for you a pipeline of around $6 billion around real estate, so you can see how this has scaled up. It also shows that we are continuing to bring new products to the marketplace as well.

So I believe the setup for 2026 is very constructive on that front.

Deanna Strable: Thank you, Pablo. I hope that helps.

Analyst: Thank you.

Operator: We have reached the end of our Q&A. Ms. Strable, your closing comments, please.

Deanna Strable: Thank you. As we close, I want to thank all of you for joining the call. Our first quarter results underscore the strength of our diversified business model, our focus on execution and growth, and our long-term discipline. As mentioned, we are confident in our ability to deliver on our 2026 financial targets, and we are well positioned to navigate the current environment, grow and deepen customer relationships, and deliver long-term value for shareholders. We appreciate all of your continued interest in Principal Financial Group, Inc. and look forward to our ongoing dialogue. Thank you again for your time, and have a great day.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time, and we thank you for your participation.