PFG · Q1 2026 Earnings

Neutral

Principal Financial Group

Reported April 23, 2026

30-second summary

Principal opened FY2026 with non-GAAP operating EPS of $2.17 (ex-significant variances) and reaffirmed the FY2026 framework — 9-12% EPS growth, 15-17% ROE, 75-85% FCF conversion, and $1.5-1.8B capital deployment. Specialty Benefits drove the print with a 58.5% incurred loss ratio (improved 220bps YoY and below the previously communicated range), International Pension revenue grew 15% YoY with ~$80M in adjusted earnings including a $7M China Construction Bank performance fee, and capital returned hit $374M ($200M buybacks + $174M dividends). The company ended the quarter with $1.45B of excess and available capital. The Q1 print sits below the straight-line $2.34-$2.58 implied by the $9.36-$10.32 FY EPS band, consistent with management's prior H1/H2 skew framing — not a beat, not a miss, but a confirmation that the FY framework is intact through one quarter.

Headline numbers

EPS

Q1 FY2026

$2.17

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
EPS	$2.17	—	$2.24	-3.1%

Guidance

Company reaffirmed all FY2026 full-year guidance metrics (non-GAAP EPS growth 9-12%, FCF conversion 75-85%, ROE 15-17%, capital deployment $1.5-1.8B); no new quarterly or full-year targets issued.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Reaffirmed unchanged this quarter: Non-GAAP Operating EPS Growth, Free Capital Flow Conversion, Non-GAAP ROE, Capital Deployment

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Retirement and Income Solutions	$0.751B	+4.0%
Investment Management	$0.426B	+2.0%
International Pension	$0.169B	+15.0%
Specialty Benefits	$0.861B	+4.0%
Life Insurance	$0.239B	+1.0%

Capital & returns

Q1 FY2026

Segment	Q1 FY2026
Capital Returned to Shareholders	$374 million

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Assets Under Administration (AUA)	$1,788.5 billion
Assets Under Management (AUM)	$770.2 billion
Retirement and Income Solutions Operating Margin	40.2%
Investment Management Operating Margin	30.0%
International Pension Operating Margin	49.3%
Specialty Benefits Operating Margin	15.9%
Specialty Benefits Incurred Loss Ratio	58.5%

Management tone

Q3 FY2025 thinner forward disclosure → Q4 FY2025 framework restored → Q1 FY2026 quiet execution against the framework.

The forward framework introduced in Q4 is now operating as a stable disclosure surface, not a launching pad. A quarter ago management used the print to reset every dimension — EPS growth, ROE, FCF conversion, capital deployment. This quarter all four enterprise metrics were reaffirmed verbatim. The only qualitative anchor offered: "Entering 2Q26, we are confident in the strength of our diversified, integrated portfolio." That is a deliberately small disclosure footprint — management is letting the Q4 framework stand and signaling that Q1 was on track without re-litigating any range.

Specialty Benefits guidance tightened to "low end or slightly below." When KBW pressed Amy on the 58.5% loss ratio, the verbatim signal was that full-year loss ratios would emerge "at the low end or slightly below the range communicated at Outlook" — a small but real positive tilt that suggests the dental network optimization thesis is converting faster than prior commentary allowed for. The Q1 adjusted margin of 16.2% (+290bps YoY, with 220bps YoY loss-ratio improvement) supports the trajectory; management flagged Q2 as seasonally the highest dental quarter.

International Pension narrative shifted to "decompose the $80M into sustainable versus volatile." BMO's Jack Madden got Joel to break the ~$80M adjusted earnings figure into a ~$7M CCB performance fee (volatile but expected) and a mid-$70Ms normalized run-rate, with FX tailwinds described as the underlying business results finally manifesting "in the U.S. dollars in a meaningful way." That is a mature framing — the segment has moved from "is it recovering?" to "what's the steady-state base?"

Life Insurance pivoted from recovery narrative to "don't extrapolate the Q1 print." Wells Fargo's Carmichael directly asked whether Q1's "best in a long time" individual life quarter represented changed earnings power. Amy's response: positive mortality volatility this quarter was in the mid-to-higher end of the guidance range, full-year earnings power is expected toward the lower end of the margin range, and the result was 50-50 incidence and severity. This explicitly walks investors back from over-extrapolating Q1.

Q&A highlights

Ryan Krueger · KBW

Requested color on favorable underwriting experience in specialty benefits (dental, life, disability) and outlook from here

Amy explained Q1 strong performance driven by low frequency in group life and dental network optimization efforts now reflecting in experience. Group disability remained strong and consistent. For full year, loss ratios expected to emerge at low end or slightly below the range communicated at Outlook, with Q2 seasonally highest for dental.

58.5% loss ratio in specialty benefitsGroup life driven by low frequency this quarterDental improvements from past pricing actions and network optimizationFull year loss ratios expected at low end or below communicated range

Wes Carmichael · Wells Fargo

Asked whether individual life segment's strong earnings quarter (best in a long time) represents changed earnings power or is more one-time-ish in nature, given Q1 is seasonally weak for mortality

Amy acknowledged positive mortality volatility but cautioned this was in mid to higher end of guidance range. For full year, expects earnings power toward lower end of 12-16% margin range. Positive results came 50-50 from both incidence and severity improvements.

12-16% margin guidance range for life insuranceFull year earnings power expected toward lower end of range50-50 split between incidence and severity improvements

Jack Madden · BMO Capital Markets

Asked to unpack drivers of strong international pension earnings step-up and which factors are repeatable/sustainable versus transitory (FX, performance fees)

Joel identified ~$80M adjusted earnings for quarter with ~$7M performance fee from China Construction Bank (described as volatile but expected), estimating more normalized mid-70s run rate. FX tailwinds are occurring but are timing-related. Underlying business results are performing as expected.

International pension adjusted earnings: ~$80 million Q1China Construction Bank performance fee: ~$7 million (volatile)Normalized run rate estimated mid-70sFX tailwinds now materializing (reversal of historical headwinds)

Sunit Kamath · Jefferies

Two-part: (1) Asked if Principal considered building out wealth management offices (feet-on-street model) vs. call center approach; (2) Follow-up on SMB market employment outlook given recent economic volatility and whether there's a lag effect

Chris explained Principal's model uses ~few hundred salaried advisors covering ~90% of participant base, focused on mainstream participants rather than high net worth, supplemented by technology. On SMB employment: Amy confirmed both employment and wage growth holding steady in company's blocks. Acknowledged uncertainty exists but no lag effect yet observed; uncertainty tends to create static rather than recessionary effect.

Few hundred salaried advisors covering ~90% of participant base11% year-over-year increase in retail individual customers (IRA and advisory)180,000 employers across RIS and group benefits for diversificationEmployment and wage growth remaining positive in company's blocks

Tom Gallagher · Evercore ISI

Two-part: (1) Asked about jumbo case wins/losses in RIS this quarter vs. prior year large case loss; (2) Follow-up on investment performance trends—why one-year numbers improved but three-year numbers fell across categories

Chris noted strong broad-based wins including couple of large case wins this quarter vs. large case loss last year, explaining positive transfer deposit momentum. Kamal addressed performance: highlighted strong private market performance (marquee real estate strategy #1), noted core weakness in US active equities particularly short-term, but long-term numbers very good. Fixed income improved. By design, strategies differ from index to deliver diversified returns.

Broad strength in large case wins this quarterPrivate market business grew 11% YoY with only 1% from macroCore weakness in US active equities, particularly short-termPrivate markets real estate strategy ranked #1 in category

Answers to last quarter's watch list

Whether Q1 FY2026 EPS run-rate tracks toward the FY range of $9.36-$10.32 — Q1 non-GAAP operating EPS ex-SV came in at $2.17, below the $2.34-$2.58 straight-line, which is consistent with the seasonal H1/H2 skew management flagged at Q4. Management reaffirmed the 9-12% EPS growth band without qualification. The print is in-line with the seasonal pattern, not a leading indicator of upside or downside. Status: Continue monitoring.

Dental loss ratio trajectory specifically — Specialty Benefits incurred loss ratio came in at 58.5% (220bps better YoY) but a discrete dental-only figure was not surfaced on the print. Management did sharpen the forward guide in Q&A: full-year loss ratios expected at the low end or slightly below the communicated range, driven by dental network optimization and past pricing actions, with Q2 seasonally the highest dental quarter. Status: Continue monitoring (forward anchor strengthened, but dental-only disclosure still absent).

Performance fees and VII — The transcript surfaced a $7M China Construction Bank performance fee in International Pension Q1. Joel noted Q1 had no real estate transaction activity (driving the VII shortfall) but reiterated FY2026 VII improvement vs. 2025 with no macro change required, and that investment management performance fees in 2026 should be similar to 2025 with lumpy quarterly cadence. Status: Continue monitoring.

Q1 FY2026 buyback pace against the $0.8-1.1B FY band — Q1 buybacks were $200M (with $174M of dividends bringing total capital return to $374M), at the low end of the $200-275M quarterly pace required to hit the FY band. Status: Resolved positively.

Asia institutional AUM and IP revenue trajectory — International Pension revenue grew +15% YoY in Q1. The Q&A confirmed underlying business performing as expected with FX tailwinds materializing; the Chile annuity divestiture still closes Q3 FY2026. The underlying ex-Chile growth rate was not isolated on the call. Status: Resolved positively.

Whether the new FCF conversion target (75-85%) is met — Q1 free capital flow conversion was not separately disclosed; FY2026 guidance of 75-85% was reaffirmed without commentary suggesting drift. Status: Continue monitoring.

What to watch into next quarter

Specialty Benefits Q2 incurred loss ratio — management explicitly flagged Q2 as seasonally the highest dental quarter and guided FY loss ratios to the low end of or slightly below the previously communicated range. Watch whether the Q2 print holds the YoY-improvement trajectory or surprises in either direction.

Investment Management margin trajectory from 30.0% — Q1 expanded 100bps YoY (190bps adjusted) on 6% net revenue growth. Watch whether the YoY expansion sustains through Q2-Q3 as transaction-driven items normalize.

Dental-only loss ratio disclosure — management has now committed twice (Q4 and Q1) to a forward dental trajectory without surfacing a discrete dental loss ratio figure. Watch whether Q2 disclosure breaks this out.

Ex-CCB International Pension earnings run-rate — management explicitly guided to a mid-$70Ms normalized adjusted earnings base ex the $7M CCB performance fee. Watch whether Q2 lands in that range and what FX contribution looks like as the tailwind continues.

Buyback pace — Q1's $200M buyback is at the low end of the $200-275M quarterly pace needed for the $0.8-1.1B FY band. With the Chile divestiture not closing until Q3 FY2026, watch whether Q2 buybacks step up or hold steady — a step-up earlier than Q3 would signal management's confidence in capital position; holding flat signals waiting for the Chile proceeds.

Life Insurance margin discipline against guidance walk-back — management explicitly guided away from extrapolating Q1's strength, with FY landing toward the lower end of the range. Watch whether Q2 reverts toward more normalized margins or holds closer to Q1's strength.

Sources

Principal Financial Group Q1 FY2026 press release: https://www.sec.gov/Archives/edgar/data/1126328/000110465926047680/tm2612531d1_ex99.htm
Principal Financial Group Q1 FY2026 earnings conference call, April 24, 2026 — prepared remarks and Q&A (analyst attribution: KBW, Wells Fargo, BMO Capital Markets, Jefferies, Evercore ISI, Raymond James). Replay and transcript available at investors.principal.com.

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