filings.toolsPrincipal Financial Group (PFG) 10-K risk factor changes: FY2024 vs FY2023
The 2024-12-31 10-K against the 2023-12-31 one, compared heading by heading and sentence by sentence.
All filing items2,692 rewritten1,187 added1,177 removed6,195 unchanged
Summary
counted, not written
- Item 1A headings could not be compared: the parser did not find an Item 1A in both filings.
- Sentence by sentence, 1,187 added, 1,177 removed, 2,692 rewritten and 6,195 unchanged across 4 items that differ.
Sentences by item
5 items, with every count and a link to each item that changed
| Item | Added | Removed | Rewritten | Unchanged |
|---|---|---|---|---|
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 867 | 750 | 1,920 | 4,126 |
| Cover and table of contents | 48 | 129 | 214 | 910 |
| Item 1B. Unresolved Staff Comments | 0 | 0 | 0 | 1 |
| Item 1C. Cybersecurity | 234 | 265 | 420 | 852 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 38 | 33 | 138 | 306 |
Underlined words on a shaded ground are new in FY2024; struck-through words were in FY2023. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
1,920 rewritten, 867 added, 750 removed, 4,126 unchanged
The following table provides detail on the differences between the interest rates being credited to contractholders as of December 31, [removed: 2023,] [added: 2024,] and the respective guaranteed minimum interest rates (“GMIRs”).
Additionally, amounts for contracts that are reinsured [removed: as part of the Talcott Reinsurance Transaction] are also excluded.
| | [added: ** |] _($ in millions)_ | | | | | | | | | | | | | | | | | [removed: |] |
| Up to 1.00% | | [removed: $ | 22.6] [added: $] | [removed: ] [added: —] | [removed: $] [added: ] | [removed: 3.3] [added: $] | [removed: ] [added: 3.3] | [removed: $] [added: ] | [removed: 101.8] [added: $] | [removed: ] [added: 101.8] | [removed: $] [added: ] | [removed: 1,006.0] [added: $] | [removed: ] [added: 1,006.0] | [removed: $] [added: ] | [removed: 312.8] [added: $] | [removed: ] [added: 312.8] | [removed: $] [added: ] | [removed: 1,446.5] [added: $] | [removed: ] [added: 1,423.9] |
| 1.01% [removed: ‑] [added: -] 2.00% | [removed: | ] [added: ] | [removed: 5,139.6] | [removed: ] [added: 5,135.0] | [added: ] | [removed: 3.8] | [removed: ] [added: 3.8] | [added: ] | [removed: 1,153.1] | [removed: ] [added: 1,153.1] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: 874.6] | [removed: ] [added: 874.6] | [added: ] | [removed: 7,171.1] | [removed: ] [added: 7,166.5] |
| 2.01% [removed: ‑] [added: -] 3.00% | [removed: | ] [added: ] | [removed: 630.6] | [removed: ] [added: 357.1] | [added: ] | [removed: 0.1] | [removed: ] [added: 0.1] | [added: ] | [removed: 0.8] | [removed: ] [added: 0.8] | [added: ] | [removed: 59.1] | [removed: ] [added: 59.1] | [added: ] | [removed: 1,701.2] | [removed: ] [added: 1,701.2] | [added: ] | [removed: 2,391.8] | [removed: ] [added: 2,118.3] |
| 3.01% [removed: ‑] [added: -] 4.00% | [removed: | ] [added: ] | [removed: 7.4] | [removed: ] [added: 7.4] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: 7.4] | [removed: ] [added: 7.4] |
| 4.01% and above | [removed: | ] [added: ] | [removed: 16.9] | [removed: ] [added: 16.9] | [removed: ] [added: ] | [removed: —] | [removed: ] [added: —] | [removed: ] [added: ] | [removed: —] | [removed: ] [added: —] | [removed: ] [added: ] | [removed: —] | [removed: ] [added: —] | [removed: ] [added: ] | [removed: —] | [removed: ] [added: —] | [removed: ] [added: ] | [removed: 16.9] | [removed: ] [added: 16.9] |
| Subtotal | [removed: | ] [added: ] | [removed: 5,817.1] | [removed: ] [added: 5,516.4] | [added: ] | [removed: 7.2] | [removed: ] [added: 7.2] | [added: ] | [removed: 1,255.7] | [removed: ] [added: 1,255.7] | [added: ] | [removed: 1,065.1] | [removed: ] [added: 1,065.1] | [added: ] | [removed: 2,888.6] | [removed: ] [added: 2,888.6] | [added: ] | [removed: 11,033.7] | [removed: ] [added: 10,733.0] |
| Up to 1.00% | [removed: | ] [added: ] | [removed: —] [added: $] | [removed: ] [added: —] | [added: ] | [removed: —] [added: $] | [removed: ] [added: —] | [added: ] | [removed: 16.1] [added: $] | [removed: ] [added: 16.1] | [added: ] | [removed: 1.0] [added: $] | [removed: ] [added: 1.0] | [added: ] | [removed: 2.4] [added: $] | [removed: ] [added: 2.4] | [added: ] | [removed: 19.5] [added: $] | [removed: ] [added: 19.5] |
| 1.01% [removed: ‑] [added: -] 2.00% | [removed: | ] [added: ] | [removed: —] | [removed: ] [added: 4.6] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: 4.6] | [removed: ] [added: —] | [added: ] | [removed: 415.4] | [removed: ] [added: —] | [added: ] | [removed: 420.0] | [removed: ] [added: 4.6] |
| 4.01% and above | [removed: | ] [added: ] | [removed: 40.5] | [removed: ] [added: 40.5] | [added: ] | [removed: 3.9] | [removed: ] [added: 3.9] | [added: ] | [removed: 8.3] | [removed: ] [added: 8.3] | [added: ] | [removed: 1.5] | [removed: ] [added: 1.5] | [added: ] | [removed: —] | [removed: ] [added: —] | [added: ] | [removed: 54.2] | [removed: ] [added: 54.2] |
| (1) | Includes only the account values, net of the account values with associated policy loans, for products with GMIRs and discretionary crediting rates, excluding amounts for contracts that are [removed: reinsured as part of the Talcott Reinsurance Transaction.] [added: reinsured.] |
We estimate a hypothetical 100 basis point immediate, parallel increase in interest rates would reduce the net reported fair value of our financial assets and derivatives by [removed: $2,670.3] [added: $2,670.8] million as of December 31, [removed: 2023,] [added: 2024,] compared [removed: to$2,446.9] [added: to $2,670.3] million as of December 31, [removed: 2022.][added: 2023.]
| | ● | _Retirement Business Stable Cash Flows_ [removed: —] [added: –] For stable and predictable cash flow liabilities, such as pension risk transfer, WSRS, and investment only, we use investment strategy and hedges to tightly align the cash flow run off of these asset and liability cash flows. Immunization analysis is also utilized in the management of interest rate risk. |
| | ● | _U.S. Insurance Stable Cash Flows_ [removed: —] [added: –] Our insurance businesses in many instances contain long-term guarantees with stable and predictable liability cash flows and recurring premiums. We manage the interest rate risk through investment strategy, product crediting rates and analyzing duration and embedded value sensitivity. |
| | ● | _Principal [removed: International_ —] [added: Asset Management_ –] Our international businesses operate within local regulations and financial market conditions (e.g., derivative markets, assets available) to achieve similar asset and liability cash flow management objectives. In locations with a limited availability of long-dated assets and derivative markets, the duration gap is managed to risk tolerances specific to each location. |
We use interest rate [removed: swaps] [added: swaps, treasury forwards] and have used TBA forwards primarily to more closely match the interest rate characteristics of assets and liabilities.
We estimate as of December 31, [removed: 2023,] [added: 2024,] a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we are exposed would result in no material change to the net fair value of our foreign currency-denominated instruments identified above because we effectively hedge foreign currency-denominated instruments to minimize exchange rate impacts, which is consistent with our estimate as of December 31, [removed: 2022.][added: 2023.]
For our [removed: Principal International] [added: international] operations, we estimate a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we were exposed would have resulted in a [removed: $285.0] [added: $277.0] million, or [removed: 10.0%,] [added: 7%,] reduction in the total equity excluding noncontrolling interests of our international operations as of December 31, [removed: 2023,] [added: 2024,] as compared to an estimated [removed: $258.5] [added: $324.1] million, or [removed: 10.0%,] [added: 8%,] reduction as of December 31, [removed: 2022.][added: 2023.]
We estimate a 10% unfavorable change in the average foreign currency exchange rates to which we were exposed through our international operations would have resulted in a [removed: $37.5] [added: $43.7] million, or [removed: 12.0%,] [added: 5%,] reduction in segment pre-tax operating earnings of our international operations for the year ended December 31, [removed: 2023,] [added: 2024,] as compared to an estimated [removed: $36.8] [added: $40.9] million, or [removed: 12.0%,] [added: 5%,] reduction for the year ended December 31, [removed: 2022.][added: 2023.]
We did not have currency swap agreements associated with foreign-denominated liabilities as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022.][added: 2023.]
The notional amount of our currency swap agreements associated with foreign-denominated fixed maturities was [removed: $1,888.5] [added: $2,669.3] million and [removed: $1,389.8] [added: $1,888.5] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
Our [removed: Principal International] [added: international] operations had currency swaps with a notional amount of [removed: $217.3] [added: $214.5] million and [removed: $244.9] [added: $217.3] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
Our [removed: Principal International] [added: international] operations also utilized currency forwards with a notional amount of [removed: $711.9] [added: $694.8] million and [removed: $672.5] [added: $711.9] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
We held currency forwards with a notional of [removed: $265.5] [added: $179.7] million and [removed: $388.5] [added: $265.5] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
We held currency forwards with a notional amount of [removed: $31.0] [added: $50.8] million and [removed: $30.1] [added: $31.0] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
We held currency forwards with a notional amount of [removed: $54.1] [added: $55.9] million and [removed: $32.0] [added: $54.1] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.
As of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] the fair value of our equity securities was [removed: $1,478.1] [added: $2,295.0] million and [removed: $1,708.6] [added: $1,478.1] million, respectively.
We estimate a 10% decline in the prices of the equity securities would result in a decline in fair value of our equity securities of [removed: $147.8] [added: $229.5] million as of December 31, [removed: 2023,] [added: 2024,] as compared to a decline in fair value of our equity securities of [removed: $170.9] [added: $147.8] million as of December 31, [removed: 2022.][added: 2023.]
We estimate an immediate 10% [removed: decline in the S&P 500 index,] [added: downward equity shock,] followed by a 2% per quarter increase would reduce our annual segment pre-tax operating earnings by approximately 5% to 8% over the next twelve months.
The selection of a 10% unfavorable [removed: change in the S&P 500 index] [added: equity shock] should not be construed as a prediction by us of future market events, but rather as an illustration of the potential impact of such an event.
We economically hedge RILA [added: index credit] exposure using options and futures.
We economically hedge the GMWB rider MRB exposure, which includes interest rate risk and equity risk, using futures, options, treasury forwards and interest rate swaps with notional amounts of [removed: $8,600.5] [added: $7,678.0] million and [removed: $8,950.4] [added: $8,600.5] million as of December 31, [removed: 2023,] [added: 2024,] and December 31, [removed: 2022,] [added: 2023,] respectively.
| [Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting](#ReportofIndependentRegisteredPublic) | [removed: 84] [added: 78] |
| [Report of Independent Registered Public Accounting Firm](#ReportofIndependentRegisteredPublicAccou) (PCAOB ID: 42) | [removed: 85] [added: 79] |
| [Consolidated Statements of Financial Position](#ConsolidatedStatementsofFinancialPos) | [removed: 88] [added: 82] |
| [Consolidated Statements of Operations](#ConsolidatedStatementsofOperations) | [removed: 89] [added: 83] |
| [Consolidated Statements of Comprehensive Income](#ConsolidatedStatementsofComprehensive) | [removed: 90] [added: 84] |
| [Consolidated Statements of Stockholders’ Equity](#ConsolidatedStatementsofStockholders) | [removed: 91] [added: 85] |
| | Positive Impacts: | | | Adverse Impacts: | |
| Up to 1.00% | | $ | 19.2 | | $ | — | | $ | — | | $ | 1,041.7 | | $ | 445.2 | | $ | 1,506.1 | |
| 1.01% ‑ 2.00% | | | 3,730.8 | | | — | | | — | | | 1,056.3 | | | — | | | 4,787.1 | |
| 2.01% ‑ 3.00% | | | 236.1 | | | 186.9 | | | 1.8 | | | 2,900.0 | | | 2,740.1 | | | 6,064.9 | |
| Subtotal | | | 4,007.6 | | | 186.9 | | | 1.8 | | | 4,998.0 | | | 3,185.3 | | | 12,379.6 | |
| Up to 1.00% | | | — | | | — | | | 1.5 | | | 14.9 | | | 4.9 | | | 21.3 | |
| 1.01% ‑ 2.00% | | | — | | | — | | | — | | | 4.3 | | | 452.3 | | | 456.6 | |
| 2.01% ‑ 3.00% | | | 3.4 | | | 8.8 | | | 109.9 | | | 368.7 | | | 6.3 | | | 497.1 | |
| 3.01% ‑ 4.00% | | | 1,516.9 | | | 54.5 | | | 34.3 | | | 101.6 | | | 2.5 | | | 1,709.8 | |
| 4.01% and above | | | 23.5 | | | 2.5 | | | 7.0 | | | 18.9 | | | — | | | 51.9 | |
| Subtotal | | | 1,543.8 | | | 65.8 | | | 152.7 | | | 508.4 | | | 466.0 | | | 2,736.7 | |
| Total | | $ | 5,551.4 | | $ | 252.7 | | $ | 154.5 | | $ | 5,506.4 | | $ | 3,651.3 | | $ | 15,116.3 | |
| Percentage of total | | | 36.7 | % | | 1.7 | % | | 1.0 | % | | 36.4 | % | | 24.2 | % | | 100.0 | % |
We use interest rate swaps to manage our exposure to cash flow variability on recognized assets due to fluctuations in market interest rates.
We economically hedge certain investments using total return swaps to swap the equity risk for income enhancement.
| [24.](#SubsequentEvent) [Subsequent Event](#SubsequentEvent) | 238 |
| Des Moines, Iowa February 19, 2025 | |
| | | 2024 | | | 2023 | | |
| | | _(in millions, except share amounts)_ | | | | | |
| Short-term debt (2024 and 2023 include $119.0 million and $2.5 million related to consolidated variable interest entities) | | | 152.7 | | | 61.1 | |
| (1) | See Note 4, Investments, for further details relating to the amortized cost of fixed maturities, available-for-sale. |
| Stock-based compensation | | | — | | | 121.4 | | | (12.6) | | | — | | | — | | | 0.5 | | | 109.3 | |
| Net income (1) | | | — | | | — | | | 1,571.0 | | | — | | | — | | | 15.1 | | | 1,586.1 | |
| Other comprehensive income (1) | | | — | | | — | | | — | | | 120.5 | | | — | | | (1.8) | | | 118.7 | |
| Balances as of December 31, 2024 | | $ | 4.9 | | $ | 11,100.9 | | $ | 17,583.5 | | $ | (5,224.8) | | $ | (12,378.1) | | $ | 44.9 | | $ | 11,131.3 | |
| Purchase of business or interests in subsidiaries, net of cash acquired | | | (27.1) | | | — | | | — |
In the fourth quarter of 2024, we implemented changes to our Principal Asset Management segment to align the global operations by business function.
December 31, 2024
| Disaggregation of Income Statement Expenses This authoritative guidance expands the disclosures about a public entity’s expenses and addresses requests for more granular information about the types of expenses in commonly presented expense categories. | December 31, 2027 | We are currently evaluating the impact this guidance will have on our notes to the consolidated financial statements. |
December 31, 2024
December 31, 2024
December 31, 2024
Long-Duration Insurance Contracts Disclosures
Amounts from different reportable segments cannot be aggregated for disclosures.
December 31, 2024
December 31, 2024
We assess loan modifications on a case-by-case basis to evaluate whether a change to the valuation allowance and/or write-off is needed.
Prior to the implementation of authoritative guidance in 2023, we assessed loan modifications to determine if a TDR had occurred.
See Note 4, Investments, under the caption “Troubled Debt Restructuring” for further details.
December 31, 2024
| 2.01% ‑ 3.00% | | | 7.0 | | | 9.9 | | | 119.5 | | | 350.6 | | | 3.0 | | | 490.0 | |
| 3.01% ‑ 4.00% | | | 1,606.6 | | | 48.0 | | | 37.5 | | | 32.5 | | | 3.2 | | | 1,727.8 | |
| Subtotal | | | 1,654.1 | | | 61.8 | | | 181.4 | | | 390.2 | | | 424.0 | | | 2,711.5 | |
| Total | | $ | 7,471.2 | | $ | 69.0 | | $ | 1,437.1 | | $ | 1,455.3 | | $ | 3,312.6 | | $ | 13,745.2 | |
| Percentage of total | | | 54.4 | % | | 0.4 | % | | 10.5 | % | | 10.6 | % | | 24.1 | % | | 100.0 | % |
| --- | --- |
Our net estimated potential loss in fair value as of December 31, 2023, increased $223.4 million from December 31, 2022, primarily due to an increase in the fair value of our assets.
Adoption of ASU No. 2018-12
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for long-duration contracts in each of the three years in the period ended December 31, 2023 due to the adoption of ASU No. 2018-12, Financial Services – Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts.
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | (As recast) | | |
| Contractholder funds (2023 and 2022 include $0.0 million and $334.0 million related to consolidated variable interest entities) | | $ | 41,501.1 | | $ | 42,825.3 | |
**
| | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | (As recast) | | | (As recast) | | |
| Balances as of January 1, 2021 | | $ | 4.8 | | $ | 10,321.6 | | $ | 11,838.0 | | $ | 2,383.1 | | $ | (7,988.6) | | $ | 58.4 | | $ | 16,617.3 | |
| Stock-based compensation | | | — | | | 106.1 | | | (10.0) | | | — | | | — | | | 0.1 | | | 96.2 | |
| Effects of implementation of accounting change related to long-duration insurance contracts, net | | | — | | | — | | | (159.9) | | | (5,128.0) | | | — | | | — | | | (5,287.9) | |
| Net income (1) | | | — | | | — | | | 1,580.2 | | | — | | | — | | | 29.3 | | | 1,609.5 | |
| Other comprehensive income (1) | | | — | | | — | | | — | | | 660.8 | | | — | | | (3.3) | | | 657.5 | |
| | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | (As recast) | | | (As recast) | |
| Sale of interests in subsidiaries | | | — | | | — | | | 27.0 |
| Changes from re-designation of other postretirement employee benefits (“OPEB”) plan assets to cover non-retiree benefits: | | | | | | | | | |
| Increases in equity securities re-designated from funded status of OPEB plan | | | — | | | — | | | 548.1 |
| Increases in other investments re-designated from funded status of OPEB plan | | | — | | | — | | | 117.5 |
| Decrease in tax receivable re-designated from funded status of OPEB plan | | | — | | | — | | | (9.1) |
| Decrease in accumulated other comprehensive income (“AOCI”) due to reclassifying excess assets out of funded status of OPEB plan | | | — | | | — | | | 9.1 |
| Decrease in other assets due to reclassifying excess assets out of funded status of OPEB plan | | | — | | | — | | | (665.6) |
Principal Financial Group, Inc.
1.
On January 1, 2023, we adopted the guidance commonly referred to as long-duration targeted improvements (“LDTI”), which updates certain requirements in the accounting for long-duration insurance and annuity contracts.
The guidance was applied as of the January 1, 2021, transition date.
As such, results for 2022 and 2021 have been recast and are also presented under the new LDTI guidance.
In the first quarter of 2023 we implemented changes to our organizational structure to better align businesses, distribution teams and product offerings for future growth.
We integrated our global asset management and international pension businesses under one segment, Principal Asset Management.
Results of our historically reported Principal Global Investors and Principal International segments are reported within this segment.
An excerpt. Shown here: 40 of 1,920 rewritten, 40 of 867 added and 40 of 750 removed. The counts are complete. For every sentence, read Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the FY2024 filing and the FY2023 filing.
Cover and table of contents
214 rewritten, 48 added, 129 removed, 910 unchanged
| For the fiscal year ended December 31, [removed: 2023] [added: 2024] | |
As of [removed: February 2, 2024,] [added: January 30, 2025,] there were outstanding [removed: 235,868,487] [added: 225,571,329] shares of Common Stock, $0.01 par value per share of the [removed: Registrant.][added: registrant.]
The aggregate market value of the shares of the [removed: Registrant’s] [added: registrant’s] common equity held by non-affiliates of the [removed: Registrant] [added: registrant] was approximately [removed: $18.7] [added: $18.2] billion based on the closing price of [removed: $75.84] [added: $78.45] per share of Common Stock on June [removed: 30, 2023.][added: 28, 2024.]
The information required to be furnished pursuant to Part III of this Form 10-K is set forth in, and is hereby incorporated by reference herein from, the [removed: Registrant’s] [added: registrant’s] definitive proxy statement for the annual meeting of stockholders to be held on May [removed: 21, 2024,] [added: 20, 2025,] to be filed by the [removed: Registrant] [added: registrant] with the United States Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the year ended December 31, [removed: 2023.][added: 2024.]
| [Item 1A.](#Item1ARiskFactors_195308) | [Risk Factors](#Item1ARiskFactors_195308) | | [removed: 20] [added: 18] |
| [Item 1B.](#Item1BUnresolvedStaffComments_382331) | [Unresolved Staff Comments](#Item1BUnresolvedStaffComments_382331) | | [removed: 38] [added: 35] |
| [Item 1C.](#Item1CCybersecurity_105434) | [Cybersecurity](#Item1CCybersecurity_105434) | | [removed: 38] [added: 35] |
| [Item 2.](#Item2Properties_88826) | [Properties](#Item2Properties_88826) | | [removed: 39] [added: 36] |
| [Item 3.](#Item3LegalProceedings_544613) | [Legal Proceedings](#Item3LegalProceedings_544613) | | [removed: 40] [added: 37] |
| [Information about our Executive Officers](#InformationaboutourExecutiveOfficers_107) | | | [removed: 40] [added: 37] |
| [PART II](#PartII) | | | [removed: 41] [added: 38] |
| [Item 5.](#Item5MarketforRegistrantsCommon) | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item5MarketforRegistrantsCommon) | | [removed: 41] [added: 38] |
| [Item 7.](#Item7ManagementsDiscussionandAnalysisofF) | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item7ManagementsDiscussionandAnalysisofF) | | [removed: 42] [added: 39] |
| [Item 7A.](#Item7AQuantitativeandQualitative) | [Quantitative and Qualitative Disclosures About Market Risk](#Item7AQuantitativeandQualitative) | | [removed: 77] [added: 71] |
| [Item 8.](#Item8FinancialStatementsandSupple) | [Financial Statements and Supplementary Data](#Item8FinancialStatementsandSupple) | | [removed: 83] [added: 77] |
| | [Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting](#ReportofIndependent_001) | | [removed: 84] [added: 78] |
| | [Report of Independent Registered Public Accounting Firm](#ReportofIndependentRegisteredPublicAccou) | | [removed: 85] [added: 79] |
| | [Consolidated Statements of Financial Position](#ConsolidatedStatementsofFinancialPos) | | [removed: 88] [added: 82] |
| | [Consolidated Statements of Operations](#ConsolidatedStatementsofOperations) | | [removed: 89] [added: 83] |
| | [Consolidated Statements of Comprehensive Income](#ConsolidatedStatementsofComprehensive) | | [removed: 90] [added: 84] |
| | [Consolidated Statements of Stockholders’ Equity](#ConsolidatedStatementsofStockholders) | | [removed: 91] [added: 85] |
| | [Consolidated Statements of Cash Flows](#ConsolidatedStatementsofCashFlows) | | [removed: 92] [added: 86] |
| | [Notes to Consolidated Financial Statements](#NotestoConsolidatedFinancialStatements_2) | | [removed: 93] [added: 87] |
| [Item 9.](#Item9ChangesinandDisagreementswithAccoun) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#Item9ChangesinandDisagreementswithAccoun) | | [removed: 247] [added: 239] |
| [Item 9A.](#Item9AControlsandProcedures) | [Controls and Procedures](#Item9AControlsandProcedures) | | [removed: 247] [added: 239] |
| [Item 9B.](#Item9BOtherInformation_76214) | [Other Information](#Item9BOtherInformation_76214) | | [removed: 247] [added: 239] |
| [PART III](#PARTIII) | | | [removed: 248] [added: 240] |
| [Item 10.](#Item10DirectorsExecutiveOfficers) | [Directors, Executive Officers and Corporate Governance](#Item10DirectorsExecutiveOfficers) | | [removed: 248] [added: 240] |
| [Item 11.](#Item11ExecutiveCompensation) | [Executive Compensation](#Item11ExecutiveCompensation) | | [removed: 248] [added: 240] |
| [Item 12.](#Item12Se_26333) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item12Se_26333) | | [removed: 248] [added: 240] |
| [Item 13.](#Item13CertainRelationships) | [Certain Relationships and Related Transactions, and Director Independence](#Item13CertainRelationships) | | [removed: 249] [added: 241] |
| [Item 14.](#Item14PrincipalAccountingFees) | [Principal Accounting Fees and Services](#Item14PrincipalAccountingFees) | | [removed: 249] [added: 241] |
| [PART IV](#PARTIV) | | | [removed: 250] [added: 242] |
| [Item 15.](#Item15ExhibitsandFinancialStateme) | [Exhibits and Financial Statement Schedules](#Item15ExhibitsandFinancialStateme) | | [removed: 250] [added: 242] |
| [Signatures](#Signatures_171764) | | | [removed: 254] [added: 246] |
| [Schedule I — Summary of Investments — Other Than Investments in Related Parties](#ScheduleISummaryofInvestmentsOtherThanIn) | | | [removed: 255] [added: 247] |
| [Schedule II — Condensed Financial Information of Registrant (Parent Only)](#ScheduleIICondensedFinancialInformationo) | | | [removed: 256] [added: 248] |
| [Schedule III — Supplementary Insurance Information](#ScheduleIIISupplementaryInsuranceInforma) | | | [removed: 260] [added: 252] |
| [Schedule IV — Reinsurance](#ScheduleIVReinsurance_187583) | | | [removed: 262] [added: 254] |
We had [removed: $1,578.7] [added: $1,663.9] billion in assets under administration (“AUA”), including [removed: $694.5] [added: $712.1] billion in assets under management (“AUM”) as of December 31, [removed: 2023.][added: 2024.]
In the fourth quarter of 2024, we implemented changes to our Principal Asset Management segment to align the global operations by business function.
Prior to the fourth quarter of 2024, our Principal Asset Management segment was organized into Principal Global Investors and Principal International.
The Principal Asset Management segment is now organized into Investment Management and International Pension.
The change has been applied retrospectively, which did not have an impact on our consolidated financial statements.
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.
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, 2024, Principal Trust Company has over 35,000 accounts and approximately $658.6 billion in assets under administration.
Principal Trust Company provides trust and custodial services to certain retirement benefit plans and personal trusts.
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.
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 some unaffiliated partners.
Principal Trust Company also acts as trustee and/or custodian for the retirement plan clients that fall into the PCS business line.
Investment Management
Local Investment Teams
Chile. We offer voluntary savings plans, mutual funds, and asset management solutions.
Mexico. We offer mutual funds and asset management services.
We owned 25.0% of CCBPAM as of December 31, 2024.
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.
International Pension
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.
In 2022, we reinsured our universal life with secondary guarantee (“ULSG”) block of business.
| | ● | our privileged customer access through small and midsized businesses, retirement ecosystem and global asset management; |
| | ● | our extensive solutions and expertise integrated within and across our business segments; and |
We utilize an integrated risk management framework to help us identify, analyze and mitigate internal and external risks.
Our ERGs, which are open to all employees, play an integral role in providing insights into our products, services, workplace and community.
In 2024, we measured in multiple ways the progress of our efforts to attract and retain employees with a variety of lived experiences and perspectives.
Like other lenders, property insurance is required for all borrowers on which we make commercial mortgage loans.
Insurance coverage typically includes real property, business interruption, terrorism, wind, hail, fire, named storm, flood and others as applicable.
Earthquake insurance is required for those California assets with a high-risk scenario expected loss percentage as determined by an engineering report we obtain for each property.
Maintaining appropriate insurance coverage is a requirement by us as the lender and is monitored appropriately.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — U.S. Investment Operations — Mortgage Loans.”
Future enacted changes in applicable tax rates as well as the tax base could lead to adverse effects in the consolidated financial statements within the year of enactment.
For additional information, see Item 8.
Certain Executive orders could affect our business, operations, regional footprint, risk management strategies and investments and increase our costs of compliance.
Regulators plan to implement a new economic scenario generator for use in PBR models as early as 2026.
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Talcott Reinsurance Transaction
As of December 31, 2023, 88 retirement services sales representatives in 14 offices, operating as a wholesale distribution network, maintained relationships with over 11,000 independent advisors, consultants and agents.
Principal Connection is our direct distribution channel for retail financial services products to individuals.
Principal Connection’s services are available by phone, email or mail.
Banking Services
Principal Global Investors
We also have experience in asset allocation, stable value management and other structured investment strategies.
We maintain offices in Australia, Brazil, China, France, Germany, Hong Kong, Ireland, Italy, Japan, South Korea, Luxembourg, the Netherlands, Portugal, Singapore, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States.
We deliver our products and services through our network of focused investment teams including Principal Global Equities; Principal Global Fixed Income (including Finisterre emerging market debt teams); Aligned Investors; Principal Real Estate Investors, LLC; Principal Real Estate Europe Limited; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Principal Dynamic Growth; Edge Asset Management; Claritas Administração de Recursos Ltda.
(“Claritas”); Origin Asset Management Limited Liability Partnership and Principal Asset Allocation.
We have been providing mutual funds to customers since 1969.
We offer mutual funds to individuals, businesses and institutional investors for use within variable life contracts, variable annuity contracts and employer-sponsored pension plans; as a rollover investment option and for general investment purposes.
As of December 31, 2023, as reported by Morningstar, we ranked 19th in terms of U.S. mutual fund AUM and 40th in terms of exchange traded fund AUM.
We also maintain various other domestic and global fund platforms, separately managed accounts and segregated accounts for some larger institutional and retail investors.
Our focused investment team strategy is diversified across the following primary asset classes and service delivery options.
Equity Investments. As of December 31, 2023, Principal Global Equities, Aligned Investors and Principal Real Estate Investors, LLC along with Principal Dynamic Growth, Edge Asset Management, Origin Asset Management Limited Liability Partnership and Claritas managed $232.7 billion in global equity assets.
Fixed Income Investments. As of December 31, 2023, Principal Global Fixed Income and Principal Real Estate Investors, LLC along with Spectrum Asset Management, Inc. and Post Advisory Group, LLC managed $192.3 billion in global fixed income assets.
As of December 31, 2023, we managed $74.5 billion in alternative asset classes.
Principal Asset Allocation.
Products offered by the Principal Global Investors operations include individually managed accounts, separately managed accounts for high net worth individuals and several fund platforms for retail and institutional investors, as described below.
Principal Funds, Inc. PFI is a series mutual fund that offers investment options for defined contribution plans, individuals, institutional investors, adviser fee-based programs and other retirement plan clients.
We report the results for this fund in the Retirement and Income Solutions segment or Principal Global Investors operations based on the distribution channel associated with the AUM.
Principal Variable Contracts Funds, Inc. Principal Variable Contracts Funds, Inc. is a series mutual fund that provides investment options for variable annuity and variable life insurance contracts issued by the Principal Life Insurance Company (“Principal Life”) and other insurance companies not affiliated with Principal Life.
AUM backing our variable annuity contracts is reported in the Retirement and Income Solutions segment.
AUM backing our variable life insurance contracts is reported in the Benefits and Protection segment.
Other Principal Global Investors Funds.
Principal Global Investors maintains various fund platforms including Qualifying Investor Alternative Investment Fund and Undertaking for Collective Investment in Transferable Securities (“UCITS”) funds domiciled in Dublin, collective investment trusts, exchange traded funds and other focused investment team sponsored funds.
These funds are generally managed by our focused investment teams.
With a global presence spanning over 80 countries, we are committed to serving a wide range of clients with diverse investment needs.
Principal International
Principal International has operations in Latin America and Asia.
The activities of our Principal International operations reflect our efforts to provide long-term savings and retirement solutions to individuals in the locations in which we operate as well as asset management services for institutional clients.
The partner is Banco do Brasil (“Banco”), which had 3,984 Brazilian branches as of September 30, 2023.
As of December 31, 2023, Brasilprev had $82.4 billion of AUM.
We also distribute pension and other protection products through a digital insurance brokerage company, Ciclic Corretora de Seguros S.A. (“Ciclic”).
An excerpt. Shown here: 40 of 214 rewritten, 40 of 48 added and 40 of 129 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2024 filing and the FY2023 filing.
Item 1C. Cybersecurity
420 rewritten, 234 added, 265 removed, 852 unchanged
Numerous members of management and employees across the information security and risk functions hold nationally recognized designations [removed: or] [added: and] certifications, including the Certified Information Systems Security Professional designation, Global Information Assurance Certifications [removed: or] [added: and] Amazon Web Services Cloud Certifications.
The framework for our overall process for managing risk encompasses the management of risks posed by cybersecurity [removed: threats and is discussed further in Item 1.][added: threats.]
[removed: “Business,] [added: “Business —] Risk Management.” As a general matter, we take a proactive approach to assessing and monitoring cybersecurity-specific risks that is 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 [removed: weaknesses and] vulnerabilities within our systems and applications by using network and infrastructure vulnerability testing and adversary emulation, also known as red [removed: teaming,] [added: teaming] and hire a third party to do the same at least once a year.
Our cybersecurity controls are monitored and refined based on learnings from regular red team engagements and analysis by [added: third party] threat hunters.
All cyber defense operations are [removed: enriched] [added: supported] through a dedicated cybersecurity threat intelligence function.
We collaborate with information security peers across the industry to [removed: maximize] [added: augment] threat intelligence.
We perform due diligence and monitor third party relationships [removed: based on risk profile] to assess the suitability of their cybersecurity controls and protocols [added: based on risk profile] for the business operations or services for which they are engaged.
Our awareness and training program [removed: creates] [added: is designed to create] a risk-aware culture to ensure employees understand cybersecurity threats and are accountable for completing required training.
We have [removed: empowered and conditioned] [added: trained] our [removed: global workforce] [added: employees] to recognize and resist phishing attempts with our simulated phishing program.
The plan ensures stakeholders across the organization are identified who have the appropriate experience, training and expertise in incident [removed: management,] [added: management] and that the organization is well positioned to address incidents.
As of December 31, [removed: 2023,] [added: 2024,] we owned properties [removed: in] [added: at] our [removed: home office] [added: world headquarters] complex in Des Moines, Iowa, and leased space for various offices located throughout the U.S. and internationally.
Vivek Agrawal, [removed: 56,] [added: 57,] has been Executive Vice President and Chief Growth Officer of the Company and Principal Life since March 2023.
Kamal Bhatia, [removed: 52,] [added: 53,] has been the President and Chief Executive Officer of Principal Asset Management of the Company and Principal Life since February 10, [removed: 2024,] [added: 2024] and President and Chief Executive Officer of Principal Funds since August 2019.
Prior to his current position, he was the Global Head of Investments for Principal Asset Management from 2023 to February [removed: 10, 2024,] [added: 2024] and Chief Operating Officer of Principal Asset Management from 2020 to 2023.
Thomas Cheong, [removed: 55,] [added: 56,] has been Executive Vice President of the Company since January 2021 and President, Principal Asia of the Company since March 2019.
Amy Friedrich, [removed: 53,] [added: 54,] has been President of Benefits and Protection since May 2017.
[removed: Patrick Halter, 64,] [added: Prior to her current position, she] was [added: Executive Vice] President and Chief [removed: Executive] [added: Financial] Officer of [removed: Principal Asset Management of] the Company and Principal Life from [removed: November 2022 until] February [removed: 10,] [added: 2017 to August] 2024.
[removed: Daniel Houston, 62,] [added: Kenneth McCullum, 60,] has been [removed: a director of the Company and Principal Life and] [added: Executive Vice] President and Chief [removed: Executive] [added: Risk] Officer of the Company and Principal Life since [removed: August 2015.][added: April 2023.]
Prior to [removed: his current position,] [added: holding these positions,] he held the same positions except was Chief Operating Officer (and not Chief Executive Officer) from 2014 to [removed: 2015.][added: 2015 and was President of the Company and Principal Life from 2014 to August 2024.]
Kathleen Kay, [removed: 61,] [added: 62,] has been Executive Vice President of the Company and Principal Life since March 2022 and Chief Information Officer of the Company and Principal Life since May 2020.
Natalie Lamarque, [removed: 47,] [added: 48,] has been Executive Vice President and General Counsel of the Company and Principal Life since July 2022 and Secretary of the Company and Principal Life since October 2022.
Christopher Littlefield, [removed: 57,] [added: 58,] has been President, Retirement and Income Solutions since March 2022.
[removed: Kenneth McCullum, 59,] [added: Joel Pitz, 52,] has been [removed: Executive Vice President and] [added: the Interim] Chief [removed: Risk] [added: Financial] Officer of the Company and Principal Life since [removed: April 2023.][added: August 20, 2024.]
[removed: Prior to her current position,] [added: Previously,] she was Executive Vice President of the Company and Principal Life from 2016 to [removed: 2017 and] [added: 2017,] President, U.S. Insurance Solutions of the Company and Principal Life from 2015 to [removed: 2017.][added: 2017 and Senior Vice President of the Company and Principal Life from 2006 to 2015.]
On [removed: February 2, 2024,] [added: January 30, 2025,] there were [removed: 210,544] [added: 201,942] stockholders of record of our common stock.
| | | | | | | | Total number | | [removed: ] [added: Maximum dollar] | [removed: ] | |
| | | | | | | | [removed: purchased as] [added: of shares] | | value of [removed: shares that] [added: shares] | | |
| | | Total number | | Average | | | part of publicly | | [removed: may yet be purchased] [added: purchased under] | | |
| | | of shares | | price paid | | | announced | | [removed: under the] [added: the] programs | | |
| (2) | In January 2022, our Board authorized a [added: $1.6 billion increase to the June 2021] share repurchase program [added: authorization, which was completed in April 2024. In February 2024, our Board authorized a share repurchase program] of up to [removed: $1.6] [added: $1.5] billion of our outstanding common stock, which has no [removed: expiration.] [added: expiration date.] In February [removed: 2024,] [added: 2025,] our Board authorized a share repurchase program of up to $1.5 billion of our outstanding common stock, which has no expiration [added: date,] and is in addition to the [removed: $287.9] [added: $786.2] million that remained available under [removed: our] existing share repurchase [removed: authorization] [added: authorizations] as of December 31, [removed: 2023.] [added: 2024.] |
The following analysis discusses our financial condition as of December 31, [removed: 2023,] [added: 2024,] compared with December 31, [removed: 2022,] [added: 2023,] our consolidated results of operations for the years ended December 31, [removed: 2023, 2022] [added: 2024] and [removed: 2021,] [added: 2023,] and, where appropriate, factors that may affect our future financial performance.
Positive market performance led to an increase in account values in our Retirement and Income Solutions segment in [removed: 2023.][added: 2024.]
Since AUM is the base by which this business generates revenues, market performance [removed: volatility] [added: and fluctuations in foreign currency exchange rates] may impact our revenues in future quarters.
In addition, [removed: 15%] [added: 16%] of our invested asset portfolio as of December 31, [removed: 2023,] [added: 2024,] was invested in privately placed fixed maturities with no readily available market quotes to determine the fair market value.
As of December 31, [removed: 2023,] [added: 2024,] approximately 3% of our total fixed maturities were Level 3 securities valued using internal pricing models.
The [removed: $1,517.5] [added: $227.0] million [removed: decrease] [added: increase] in net unrealized losses from U.S. investment operations for the year ended December 31, [removed: 2023,] [added: 2024,] can primarily be attributed to [added: an increase in interest rates, which was partially offset by] a tightening of credit spreads.
As of December 31, [removed: 2023,] [added: 2024,] we had [removed: $48,178.6] [added: $46,367.3] million in AFS fixed maturities with gross unrealized losses totaling [removed: $5,872.9] [added: $6,475.2] million.
On an absolute fair value basis as of December 31, [removed: 2023,] [added: 2024,] the majority of our OTC derivative assets and liabilities were valued using pricing valuation models using market observable data with [removed: less than 1%] [added: approximately 3%] using broker quotes.
If the current market credit spreads reflecting our own creditworthiness move to zero (tighten), the reduction to net income would be approximately [removed: $4.9] [added: $35.1] million, net of income taxes, based on December 31, [removed: 2023,] [added: 2024,] reported amounts.
Management’s role, responsibilities and processes for identifying, assessing, monitoring, reporting and managing risks, which includes cybersecurity risks, is discussed further in Item 1.
We maintain a vulnerability disclosure program to enhance discovery and remediation of external-facing vulnerabilities.
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.
Daniel Houston, 63, was a director of the Company and Principal Life and Chief Executive Officer of the Company and Principal Life from August 2015 until his retirement effective January 7, 2025.
He currently serves as Executive Chairman of the Company and Principal Life.
Prior to his current position, he was Senior Vice President and Controller of the Company and Principal Life from 2021 to August 2024.
Previously, he served as Vice President and Chief Financial Officer of Principal International from May 2016 to August 2021.
Deanna Strable-Soethout, 56, served as President and Chief Operating Officer of the Company and Principal Life from August 20, 2024 to January 7, 2025, at which time she assumed the role of President and Chief Executive Officer of the Company and Principal Life.
| | | | | | | | purchased as | | that may yet be | | |
| January 1, 2024 - January 31, 2024 | | 706,696 | | $ | 79.07 | | 706,696 | | $ | 232.0 | |
| February 1, 2024 - February 29, 2024 | | 860,430 | | $ | 79.04 | | 740,658 | | $ | 1,673.5 | |
| March 1, 2024 - March 31, 2024 | | 1,354,115 | | $ | 81.47 | | 1,051,468 | | $ | 1,587.7 | |
| April 1, 2024 - April 30, 2024 | | 1,214,041 | | $ | 81.80 | | 1,213,500 | | $ | 1,488.5 | |
| May 1, 2024 - May 31, 2024 | | 1,406,551 | | $ | 82.46 | | 1,406,551 | | $ | 1,372.5 | |
| June 1, 2024 - June 30, 2024 | | 438,010 | | $ | 79.82 | | 435,299 | | $ | 1,337.7 | |
| July 1, 2024 - July 31, 2024 | | 1,167,924 | | $ | 82.63 | | 1,162,868 | | $ | 1,241.6 | |
| August 1, 2024 - August 31, 2024 | | 1,932,449 | | $ | 76.58 | | 1,931,932 | | $ | 1,093.7 | |
| September 1, 2024 - September 30, 2024 | | 80,351 | | $ | 91.51 | | 74,621 | | $ | 1,086.8 | |
| October 1, 2024 - October 31, 2024 | | 1,587,784 | | $ | 86.87 | | 1,587,553 | | $ | 948.9 | |
| November 1, 2024 - November 30, 2024 | | 1,158,412 | | $ | 84.37 | | 1,157,569 | | $ | 851.2 | |
| December 1, 2024 - December 31, 2024 | | 761,873 | | $ | 85.39 | | 761,496 | | $ | 786.2 | |
| Total | | 12,668,636 | | | | | 12,230,211 | | | | |
For information and analysis relating to our financial condition and consolidated results of operations as of and for the year ended December 31, 2022, as well as for the year ended December 31, 2023 compared with the year ended December 31, 2022, see Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
In the fourth quarter of 2024, we implemented changes to our Principal Asset Management segment to align the global operations by business function.
Prior to the fourth quarter of 2024, our Principal Asset Management segment was organized into Principal Global Investors and Principal International.
The Principal Asset Management segment is now organized into Investment Management and International Pension.
The change has been applied retrospectively, which did not have an impact on our consolidated financial statements.
Positive market performance led to an increase in AUM in our Principal Asset Management segment in 2024, which was partially offset by foreign currency headwinds.
Our assumed discount rate was 5.50% for our pension plans as of December 31, 2024.
Recent Event
Principal Mandatory Provident Funds
On January 16, 2025, we announced the signing of an agreement with BCT to expand our investment management capabilities and exit our sponsor and trustee (pension) roles in Hong Kong for MPF Schemes.
BCT will be assuming the role as sponsor and trustee for the Principal MPF Schemes.
The transaction is expected to close during the first quarter of 2026, subject to regulatory approval, and will be reported within the Principal Asset Management segment.
We expect to record a one-time charge of approximately $140.0 million in the first quarter of 2025 primarily attributable to the write-down of certain intangible assets and deferred contract cost assets, which will reduce pre-tax net income.
For segment reporting purposes, the charge will be reported as exited business and net realized capital loss from exiting our roles as MPF Scheme sponsor and trustee.
As such, it will have no impact on segment pre-tax operating earnings.
Yearly Renewable Term Reinsurance Transactions
He is serving in an interim role of Division President of Principal Asset Management beginning on February 10, 2024, until his retirement from the Company and Principal Life on April 2, 2024.
Previously, he was President of Global Asset Management of the Company and Principal Life from 2020 to 2022, Chief Executive Officer for Principal Global Investors from 2018 to 2022 and held leadership roles in Principal Global Investors and Principal Real Estate Investors.
Deanna Strable-Soethout, 55, has been Executive Vice President and Chief Financial Officer of the Company and Principal Life since February 2017.
Previously, she served as Senior Vice President of the Company and Principal Life from 2006 to 2015.
| | | | | | | | of shares | | Maximum dollar | | |
| January 1, 2023 - January 31, 2023 | | 673,543 | | $ | 87.99 | | 673,543 | | $ | 930.0 | |
| February 1, 2023 - February 28, 2023 | | 907,130 | | $ | 89.61 | | 580,602 | | $ | 877.7 | |
| March 1, 2023 - March 31, 2023 | | 547,054 | | $ | 87.06 | | 449,119 | | $ | 838.8 | |
| April 1, 2023 - April 30, 2023 | | 728,248 | | $ | 74.84 | | 725,154 | | $ | 784.5 | |
| May 1, 2023 - May 31, 2023 | | 606,186 | | $ | 70.92 | | 599,336 | | $ | 742.0 | |
| June 1, 2023 - June 30, 2023 | | 48,442 | | $ | 68.35 | | 47,680 | | $ | 738.7 | |
| July 1, 2023 - July 31, 2023 | | 665,447 | | $ | 79.91 | | 665,447 | | $ | 685.6 | |
| August 1, 2023 - August 31, 2023 | | 1,284,889 | | $ | 78.13 | | 1,281,566 | | $ | 585.4 | |
| September 1, 2023 - September 30, 2023 | | 617,532 | | $ | 76.35 | | 615,920 | | $ | 538.4 | |
| October 1, 2023 - October 31, 2023 | | 1,869,450 | | $ | 69.08 | | 1,868,044 | | $ | 409.4 | |
| November 1, 2023 - November 30, 2023 | | 636,388 | | $ | 68.93 | | 636,388 | | $ | 365.5 | |
| December 1, 2023 - December 31, 2023 | | 997,020 | | $ | 77.96 | | 995,694 | | $ | 287.9 | |
| Total | | 9,581,329 | | | | | 9,138,493 | | | | |
| --- | --- |
On January 1, 2023, we adopted the guidance commonly referred to as long-duration targeted improvements (“LDTI”).
Results for 2022 and 2021 are also presented under the new LDTI guidance in this Form 10-K.
See Item 1.
Positive market performance led to an increase in AUM managed by our Principal Global Investors operations in 2023.
In our Principal International operations, local currency AUM is a key indicator of earnings growth.
AUM and revenues were positively impacted by foreign currency fluctuations in 2023.
See Item 8.
Our assumed discount rates were 4.90% for our pension plans and 4.80% for our OPEB plans as of December 31, 2023.
Typically, a 0.25% decrease in the discount rate would increase the OPEB accumulated postretirement benefit obligation by approximately $1.3 million and would have a nominal impact on the Net Periodic Benefit Cost (“NPBC”).
For OPEB costs, actuarial gains and losses are amortized using a straight-line amortization method over the average future lifetime of the remaining covered group of retirees, which is approximately 14 years.
Inherent in the provision for income taxes are estimates and our expectations regarding the deductibility of certain items, the timing of income and expense recognition, future performance and the current or future realization of operating losses, capital losses and certain tax credits.
We regularly evaluate the capital needs of our domestic and foreign operations considering all available information, including operating and capital plans, regulatory capital requirements, parent company financing and cash flow needs, as well as tax laws applicable to our domestic and foreign subsidiaries.
In the event these estimates differ from our prior estimates due to the receipt of new information, we may be required to significantly change the provision for income taxes recorded in the consolidated financial statements.
Any such change could significantly affect the amounts reported in the consolidated financial statements in the year these estimates change.
A significant decline in value of financial assets could lead to establishment of a valuation allowance on deferred tax assets having an adverse effect on current and future results.
In management’s judgment, total deferred income tax assets are more-likely-than-not to be realized.
We had $223.8 million of current income tax payables associated with outstanding audit issues as of December 31, 2023.
We believe there are adequate defenses against, or sufficient provisions for, the contested issues, but final resolution of contested issues could take several years while legal remedies are pursued.
Acquisition
China Pension Joint Venture. On December 28, 2022, we finalized the acquisition of a 17.647% interest in CCB Pension Management Co., Ltd. (“CCBP”), China Construction Bank’s pension business with the Social Security Fund of China.
CCBP is the first and only asset manager to be permitted to run all types of pension investment portfolios within the country.
An excerpt. Shown here: 40 of 420 rewritten, 40 of 234 added and 40 of 265 removed. The counts are complete. For every sentence, read Item 1C. Cybersecurity in the FY2024 filing and the FY2023 filing.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
138 rewritten, 38 added, 33 removed, 306 unchanged
Our Chief Executive Officer, [removed: Daniel J.][added: Deanna D.]
[removed: Houston,] [added: Strable-Soethout,] and our [added: Interim] Chief Financial Officer, [removed: Deanna D.][added: Joel M.]
[removed: Strable-Soethout,] [added: Pitz,] have reviewed and evaluated our disclosure controls and procedures as of December 31, [removed: 2023,] [added: 2024,] and have concluded our disclosure controls and procedures are effective.
Under the supervision and with the participation of management, including our Chief Executive Officer, [removed: Daniel J.][added: Deanna D.]
[removed: Strable-Soethout,] [added: Pitz,] we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the _Internal Control — Integrated Framework_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).
Based on our evaluation, management has concluded that Principal Financial Group, Inc.’s internal control over financial reporting was effective as of December 31, [removed: 2023.][added: 2024.]
The information called for by Item 10 pertaining to directors is set forth in Principal Financial Group, Inc.’s proxy statement relating to the [removed: 2024] [added: 2025] annual meeting of stockholders (the “Proxy Statement”), which will be filed with the SEC on or about April [removed: 8, 2024,] [added: 7, 2025,] under the captions, “Election of Directors,” “Corporate Governance,” and “Security Ownership of Certain Beneficial Owners and Management — Delinquent Section 16(a) Reports.” Such information is incorporated herein by reference.
The following table shows the number of shares of common stock issuable upon exercise of options outstanding as of December 31, [removed: 2023,] [added: 2024,] the weighted average exercise price of those options and the number of shares of common stock remaining available for future issuance as of December 31, [removed: 2023,] [added: 2024,] excluding shares issuable upon exercise of outstanding options.
| (2) | Includes [removed: 2,809,658] [added: 2,123,155] options outstanding under the employee stock incentive plans, [removed: 843,965] [added: 948,905] performance shares under the employee stock incentive plans, [removed: 3,268,674] [added: 3,265,076] restricted stock units under the employee stock incentive plans, [removed: 179,816] [added: 181,900] restricted stock units under the directors stock plans and [removed: 68,996] [added: 50,282] other stock-based awards under the director stock plans for obligations under the Deferred Compensation Plan for Non-Employee Directors of Principal Financial Group, Inc. |
| (4) | This number includes [removed: 2,971,119] [added: 2,556,620] shares remaining for issuance under the Employee Stock Purchase Plan and [removed: 21,822,644] [added: 20,427,371] shares available for issuance in respect of future awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards under the 2021 Stock Incentive Plan. |
| 10.1.4 | | [Principal Financial Group, Inc. 2010 Stock Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746910003366/a2197558zdef14a.htm#Appendix_A)] [added: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746910003366/a2197558zdef14a.htm)] | | DEF14A | | April 6, 2010 |
| 10.1.6 | | [Principal Financial Group, Inc. 2014 Stock Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746914003515/a2219414zdef14a.htm#Appendix_B)] [added: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746914003515/a2219414zdef14a.htm)] | | DEF14A | | April 7, 2014 |
| 10.1.7 | | [Principal Financial Group, Inc. 2021 Stock Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746921000839/a2243096zdef14a.htm#ei70301_appendix_a_principal_financial__app02382)] [added: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746921000839/a2243096zdef14a.htm)] | | DEF14A | | April 5, 2021 |
| 10.7.2 | | [Principal Financial Group, Inc. 2014 Directors Stock [removed: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746914003515/a2219414zdef14a.htm#Appendix_A)] [added: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746914003515/a2219414zdef14a.htm)] | | DEF14A | | April 7, 2014 |
| 10.7.3 | | [Principal Financial Group, Inc. 2020 Directors Stock [removed: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746920002116/a2241086zdef14a.htm#ei41801_appendix_a)] [added: Plan](https://www.sec.gov/Archives/edgar/data/1126328/000104746920002116/a2241086zdef14a.htm)] | | DEF14A | | April 6, 2020 |
| 4.5 | | [Description of the Registrant’s Securities Registered Under Section 12 of the Securities Exchange Act of [removed: 1934](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex4d5.htm)] [added: 1934](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex4d5.htm)] | | | | |
| 10.1.8 | | [Principal Financial Group, Inc. 2021 Stock Incentive Plan, as amended and restated effective November 20, 2023](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex10d18.htm) | | [removed: ] [added: 10-K] | | [removed: ] [added: February 20, 2024] |
| 21 | | [Principal Financial Group, Inc. Member Companies as of December 31, [removed: 2023](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex21.htm)] [added: 2024](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex21.htm)] | | | | |
| 23 | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex23.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex23.htm)] | | | | |
| 31.1 | | [Certification of [removed: Daniel J. Houston](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex31d1.htm)] [added: Deanna D. Strable-Soethout](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex31d1.htm)] | | | | |
| 31.2 | | [Certification of [removed: Deanna D. Strable-Soethout](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex31d2.htm)] [added: Joel M. Pitz](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex31d2.htm)] | | | | |
| 32.1 | | [Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — [removed: Daniel J. Houston](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex32d1.htm)] [added: Deanna D. Strable-Soethout](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex32d1.htm)] | | | | |
| 32.2 | | [Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — [removed: Deanna D. Strable-Soethout](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex32d2.htm)] [added: Joel M. Pitz](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex32d2.htm)] | | | | |
| 97 | | [Principal Financial Group, Inc. Mandatory Compensation Recovery Policy](https://www.sec.gov/Archives/edgar/data/1126328/000110465924025516/pfg-20231231xex97.htm) | | [removed: ] [added: 10-K] | | [removed: ] [added: February 20, 2024] |
| 101 | | The following materials from Principal Financial Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, [removed: 2023,] [added: 2024,] formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Financial Position, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, (vi) the Notes to Consolidated Financial Statements, (vii) Schedule I — Summary of Investments — Other Than Investments in Related Parties, (viii) Schedule II — Condensed Financial Information of Registrant (Parent Only), (ix) Schedule III — Supplementary Insurance Information and (x) Schedule IV — Reinsurance | | | | |
| 104 | | The cover page from Principal Financial Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, [removed: 2023] [added: 2024] formatted in iXBRL and contained in Exhibit 101. | | | | |
| Dated: February [removed: 20, 2024] [added: 19, 2025] | By | /s/ [removed: DEANNA D. STRABLE-SOETHOUT Deanna D. Strable-Soethout Executive] [added: JOEL M. PITZ Joel M. Pitz Senior] Vice President and [added: Interim] Chief Financial Officer |
Dated: February [removed: 20, 2024][added: 19, 2025]
| | [removed: Chairman,] President, Chief Executive Officer and [added: Director] | | | Director |
| By | /s/ DEANNA D. STRABLE-SOETHOUT | | By | /S/ [removed: CLAUDIO N. MURUZABAL] [added: SCOTT M. MILLS] |
| | Deanna D. Strable-Soethout | | | [removed: Claudio N. Muruzabal] [added: Scott M. Mills] |
| | [removed: Executive] [added: Senior] Vice President and [added: Interim] Chief | | | Director |
| By | /s/ ROGER C. HOCHSCHILD | | By | /s/ [removed: ALFREDO] [added: ALREDO] RIVERA |
[removed: December 31, 2023][added: | 2023: | | | | | | | | | | | | | | | | | | | | | | |]
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | | $ | [removed: 1,745.3] [added: 1,937.4] | | $ | [removed: 1,528.8] [added: 1,637.9] | | $ | [removed: 1,528.8] [added: 1,637.9] | |
| States, municipalities and political subdivisions | | | [removed: 7,566.4] [added: 7,207.8] | | | [removed: 6,676.8] [added: 6,076.5] | | | [removed: 6,676.8] [added: 6,076.5] | |
| Public utilities | | | [removed: 5,532.7] [added: 0.8] | | | [removed: 5,039.6] [added: 0.8] | | | [removed: 5,039.6] [added: 0.8] | |
| Redeemable preferred stock | | | [removed: 225.4] [added: 251.7] | | | [removed: 208.4] [added: 236.7] | | | [removed: 208.4] [added: 236.7] | |
| All other corporate bonds | | | [removed: 32,673.2] [added: 32,898.2] | | | [removed: 30,562.0] [added: 30,999.6] | | | [removed: 30,562.0] [added: 30,999.6] | |
| Residential mortgage-backed pass-through securities | | | [removed: 3,199.7] [added: 3,881.3] | | | [removed: 3,061.1] [added: 3,674.2] | | | [removed: 3,061.1] [added: 3,674.2] | |
Strable-Soethout, and our Interim Chief Financial Officer, Joel M.
On November 11, 2024, Kamal Bhatia, President and Chief Executive Officer – Principal Asset Management, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 1,657 shares of our common stock until March 31, 2026.
The Company has adopted an insider trading policy governing the purchase, sale and/or other disposition of Principal Financial Group, Inc. securities by directors, officers and employees.
The Company’s insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, as well as the listing requirements and standards set forth by the Nasdaq Global Select Market.
The Company’s insider trading policy is attached hereto as Exhibit 19.
| Equity compensation plans approved by our stockholders (1) | | 6,569,318 | (2) | $ | 56.03 | (3) | 22,983,991 | (4) |
| 19 | | [Principal Financial Group, Inc. Insider Trading Policy as of December 31, 2024](https://www.sec.gov/Archives/edgar/data/1126328/000141057825000160/pfg-20241231xex19.htm) | | | | |
| By | /s/ JOEL M. PITZ | | By | /S/ H. ELIZABETH MITCHELL |
| | Joel M. Pitz | | | H. Elizabeth Mitchell |
| By | /s/ DANIEL J. HOUSTON | | By | /S/ CLAUDIO N. MURUZABAL |
| | Daniel J. Houston | | | Claudio N. Muruzabal |
| | Chairman and Director | | | Director |
December 31, 2024
| Foreign governments | | | 567.3 | | | 495.7 | | | 495.7 | |
| Public utilities | | | 5,761.2 | | | 4,466.3 | | | 4,466.3 | |
| Unallocated portfolio layer method basis adjustment | | | (55.7) | | | — | | | — | |
| | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| 2024: | | | | | | | | | | | | | | | | |
| Retirement and Income Solutions | | $ | 957.2 | | $ | 199.5 | | $ | 29,818.3 | | $ | 36,027.0 | | $ | 62.1 | |
| Principal Asset Management | | | 5.9 | | | — | | | 4,129.0 | | | 457.8 | | | — | |
| Benefits and Protection | | | 3,043.8 | | | — | | | 14,046.4 | | | 7,940.8 | | | — | |
| Corporate | | | — | | | — | | | 185.7 | | | (359.6) | | | — | |
| Total | | $ | 4,006.9 | | $ | 199.5 | | $ | 48,179.4 | | $ | 44,066.0 | | $ | 62.1 | |
As of December 31, 2024 and 2023 and for each of the years ended December 31, 2024, 2023 and 2022
| 2024: | | | | | | | | | | | | | | | | | | | | | | |
| Retirement and Income Solutions | | $ | 3,136.9 | | $ | 3,061.6 | | $ | 5,183.5 | | $ | (14.5) | | $ | 50.6 | | $ | 95.2 | | $ | 1,685.3 | |
| Principal Asset Management | | | 28.7 | | | 568.3 | | | 423.0 | | | 1.0 | | | (20.3) | | | 1.1 | | | 1,565.4 | |
| Benefits and Protection | | | 3,689.8 | | | 594.5 | | | 2,460.4 | | | 684.9 | | | — | | | 296.2 | | | 1,182.8 | |
| Corporate | | | (5.2) | | | 224.8 | | | 5.7 | | | — | | | — | | | — | | | 537.9 | |
| Total | | $ | 6,850.2 | | $ | 4,449.2 | | $ | 8,072.6 | | $ | 671.4 | | $ | 30.3 | | $ | 392.5 | | $ | 4,971.4 | |
| (1) | The Principal Asset Management segment offered defined contribution plans in Asia with a guarantee on the minimum account balance under certain qualifying events. These were closed in the second quarter of 2024. |
| --- | --- |
| 2024: | | | | | | | | | | | | | | | |
| Life insurance in force | | $ | 741,781.1 | | $ | 236,556.4 | | $ | 298.8 | | $ | 505,523.5 | | 0.1 | % |
| Life insurance and annuities | | $ | 4,674.8 | | $ | 380.8 | | $ | 0.6 | | $ | 4,294.6 | | — | % |
| Total | | $ | 7,381.2 | | $ | 531.6 | | $ | 0.6 | | $ | 6,850.2 | | — | % |
During the three months ended December 31, 2023, none our directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.
| Equity compensation plans approved by our stockholders (1) | | 7,171,109 | (2) | $ | 55.39 | (3) | 24,793,763 | (4) |
| By | /s/ DANIEL J. HOUSTON | | By | /S/ H. ELIZABETH MITCHELL |
| | Daniel J. Houston | | | H. Elizabeth Mitchell |
| | Director | | | |
| By | /s/ SCOTT M. MILLS | | | |
| | Scott M. Mills | | | |
| Foreign governments | | | 550.3 | | | 507.9 | | | 507.9 | |
| | | | | | (As recast) | | |
| Income taxes currently payable | | | — | | | 2.4 | |
| | | | | | (As recast) | | | (As recast) | | |
| | | 2023 | | | 2022 | | | 2021 | | |
| | | | | | (As recast) | | | (As recast) | | |
| Purchases | | | — | | | — | | | (462.3) | |
On January 1, 2023, we adopted the guidance commonly referred to as long-duration targeted improvements (“LDTI”), which updates certain requirements in the accounting for the long-duration insurance and annuity contracts.
The guidance was applied as of the January 1, 2021, transition date.
As such, results for 2022 and 2021 have been recast and are also presented under the new LDTI guidance.
| Retirement and Income Solutions | | $ | 930.0 | | $ | 109.2 | | $ | 26,651.8 | | $ | 35,338.0 | | $ | 181.4 | |
| Principal Asset Management | | | 8.8 | | | — | | | 5,043.8 | | | 915.2 | | | 26.0 | |
| Benefits and Protection | | | 3,009.2 | | | — | | | 11,411.6 | | | 7,844.2 | | | — | |
| Corporate | | | — | | | — | | | 206.8 | | | (360.6) | | | — | |
| Total | | $ | 3,948.0 | | $ | 109.2 | | $ | 43,314.0 | | $ | 43,736.8 | | $ | 207.4 | |
| 2022 (As recast): | | | | | | | | | | | | | | | | | | | | | | |
| 2021 (As recast): | | | | | | | | | | | | | | | | | | | | | | |
| Retirement and Income Solutions | | $ | 1,883.6 | | $ | 2,674.4 | | $ | 3,547.3 | | $ | (3.8) | | $ | 114.1 | | $ | 107.1 | | $ | 1,712.6 | |
| Principal Asset Management | | | 127.5 | | | 659.1 | | | 636.4 | | | (4.9) | | | (15.8) | | | 1.2 | | | 1,570.7 | |
| Benefits and Protection | | | 2,830.4 | | | 917.1 | | | 3,069.3 | | | 4.3 | | | — | | | 265.1 | | | 996.4 | |
| Corporate | | | — | | | 179.0 | | | 5.2 | | | — | | | — | | | — | | | 416.9 | |
| Total | | $ | 4,841.5 | | $ | 4,429.6 | | $ | 7,258.2 | | $ | (4.4) | | $ | 98.3 | | $ | 373.4 | | $ | 4,696.6 | |
| 2021: | | | | | | | | | | | | | | | |
| Life insurance in force | | $ | 667,509.8 | | $ | 383,937.7 | | $ | 787.8 | | $ | 284,359.9 | | 0.3 | % |
| Life insurance and annuities | | $ | 3,314.3 | | $ | 494.9 | | $ | 1.5 | | $ | 2,820.9 | | 0.1 | % |
| Total | | $ | 5,490.6 | | $ | 650.6 | | $ | 1.5 | | $ | 4,841.5 | | — | % |
An excerpt. Shown here: 40 of 138 rewritten, all 38 added and all 33 removed. The counts are complete. For every sentence, read Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure in the FY2024 filing and the FY2023 filing.