Item 1. Financial Statements

Principal Financial Group, Inc.

Condensed Consolidated Statements of Financial Position

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​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​		2025			2024
​	​	(Unaudited)		​	​
​	​	(in millions, except share amounts)
Assets	​	​	​	​	​	​
Fixed maturities, available-for-sale (1)	​	$	69,726.7	​	$	68,251.0
Fixed maturities, trading (2025 and 2024 include $208.0 million and $205.9 million related to consolidated variable interest entities)	​		1,307.2	​		1,023.3
Equity securities (2025 and 2024 include $374.8 million and $367.9 million related to consolidated variable interest entities)	​		2,428.9	​		2,295.0
Mortgage loans (2025 and 2024 include $788.1 million and $944.5 million related to consolidated variable interest entities and $0.0 million and $140.6 million measured at fair value under the fair value option)	​		20,260.6	​		20,484.2
Real estate (2025 and 2024 include $804.1 million and $781.8 million related to consolidated variable interest entities)	​		2,480.1	​		2,464.5
Policy loans	​		875.7	​		867.5
Other investments (2025 and 2024 include $630.0 million and $625.6 million related to consolidated variable interest entities and $116.8 million and $129.0 million measured at fair value under the fair value option)	​		8,215.4	​		7,990.3
Total investments	​		105,294.6	​		103,375.8
Cash and cash equivalents (2025 and 2024 include $97.8 million and $86.1 million related to consolidated variable interest entities)	​		3,875.7	​		4,211.9
Accrued investment income	​		887.4	​		828.6
Reinsurance recoverable and deposit receivable	​	​	19,392.6	​	​	19,490.1
Premiums due and other receivables	​		3,726.0	​		3,771.5
Deferred acquisition costs	​	​	4,034.1	​		4,006.9
Market risk benefit asset	​	​	158.7	​	​	199.5
Property and equipment	​	​	742.7	​		769.4
Goodwill	​	​	1,567.4	​		1,549.7
Other intangibles	​	​	1,290.5	​		1,389.9
Separate account assets (2025 and 2024 include $34,658.5 million and $32,802.2 million related to consolidated variable interest entities)	​		171,266.2	​		173,327.1
Other assets	​		767.4	​		743.2
Total assets	​	$	313,003.3	​	$	313,663.6
Liabilities	​	​	​	​	​	​
Contractholder funds	​	$	43,266.0	​	$	43,099.6
Future policy benefits and claims	​		49,359.4	​		48,179.4
Market risk benefit liability	​		80.4	​		62.1
Other policyholder funds	​	​	933.2	​	​	966.4
Short-term debt (2025 and 2024 include $0.0 million and $119.0 million related to consolidated variable interest entities)	​		28.9	​		152.7
Long-term debt	​		4,321.3	​		3,955.3
Income taxes currently payable	​		8.2	​		8.6
Deferred income taxes	​		1,786.6	​		1,706.0
Separate account liabilities (2025 and 2024 include $34,658.5 million and $32,802.2 million related to consolidated variable interest entities)	​		171,266.2	​		173,327.1
Funds withheld payable	​	​	18,212.3	​	​	18,103.7
Other liabilities (2025 and 2024 include $84.5 million and $108.8 million related to consolidated variable interest entities)	​		12,145.8	​		12,633.7
Total liabilities	​		301,408.3	​	​	302,194.6
​	​	​	​	​	​	​
Redeemable noncontrolling interest (2025 and 2024 include $298.8 million and $309.9 million related to consolidated variable interest entities)	​		326.7	​		337.7
​	​	​	​	​	​	​
Stockholders’ equity	​	​	​	​	​	​
Common stock, par value $0.01 per share; 2,500,000,000 shares authorized; 496,370,158 and 494,734,908 shares issued as of 2025 and 2024; 224,971,715 and 226,225,161 shares outstanding as of 2025 and 2024	​		5.0	​		4.9
Additional paid-in capital	​		11,157.8	​		11,100.9
Retained earnings	​		17,459.3	​		17,583.5
Accumulated other comprehensive loss	​		(4,785.9)	​		(5,224.8)
Treasury stock, at cost; 271,398,443 and 268,509,747 shares as of 2025 and 2024	​		(12,619.4)	​		(12,378.1)
Total stockholders’ equity attributable to Principal Financial Group, Inc.	​		11,216.8	​		11,086.4
Noncontrolling interest	​		51.5	​		44.9
Total stockholders’ equity	​		11,268.3	​		11,131.3
Total liabilities and stockholders’ equity	​	$	313,003.3	​	$	313,663.6

(1)	See Note 4, Investments, for further details relating to the amortized cost of fixed maturities, available-for-sale.

See accompanying notes.

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Principal Financial Group, Inc.

Condensed Consolidated Statements of Operations**(Unaudited)**

​	​	​	​	​	​	​
​	​	For the three months ended
​	​	March 31,
​		2025			2024
​	​	(in millions, except per share data)
Revenues	​	​	​	​	​	​
Premiums and other considerations	​	$	1,751.3	​	$	1,684.6
Fees and other revenues	​		1,077.7	​		1,052.9
Net investment income	​		1,165.7	​		1,072.2
Net realized capital losses (1)	​		(117.1)	​		(0.9)
Net realized capital gains on funds withheld assets (1)	​		28.0	​	​	47.5
Change in fair value of funds withheld embedded derivative	​	​	(209.7)	​	​	197.0
Total revenues	​		3,695.9	​		4,053.3
Expenses	​	​	​	​	​	​
Benefits, claims and settlement expenses	​		2,220.0	​		2,069.7
Liability for future policy benefits remeasurement (gain) loss	​	​	2.2	​	​	(1.7)
Market risk benefit remeasurement (gain) loss	​	​	34.7	​	​	(14.5)
Dividends to policyholders	​		19.1	​		29.3
Operating expenses	​		1,391.0	​		1,343.4
Total expenses	​		3,667.0	​		3,426.2
Income before income taxes	​		28.9	​		627.1
Income taxes (benefits)	​		(34.0)	​		95.1
Net income	​		62.9	​		532.0
Net income (loss) attributable to noncontrolling interest	​		14.8	​		(0.5)
Net income attributable to Principal Financial Group, Inc.	​	$	48.1	​	$	532.5
​	​	​	​	​	​	​
Earnings per common share	​	​	​	​	​	​
Basic earnings per common share	​	$	0.21	​	$	2.26
​	​	​	​	​	​	​
Diluted earnings per common share	​	$	0.21	​	$	2.22

(1)	Includes realized and unrealized gains (losses). See Note 4, Investments, for further details.

See accompanying notes.

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Principal Financial Group, Inc.

Condensed Consolidated Statements of Comprehensive Income**(Unaudited)**

​	​	​	​	​	​	​
​	​	For the three months ended
​	​	March 31,
​		2025			2024
​	​	(in millions)
Net income	​	$	62.9	​	$	532.0
Other comprehensive income, net:	​	​	​	​	​	​
Net unrealized gains (losses) on available-for-sale securities	​		589.4	​		(358.6)
Net unrealized gains on derivative instruments	​		14.1	​		17.5
Liability for future policy benefits discount rate remeasurement gain (loss)	​	​	(249.8)	​	​	554.7
Market risk benefit nonperformance risk remeasurement gain (loss)	​	​	2.1	​	​	(8.7)
Foreign currency translation adjustment	​		73.4	​		(121.0)
Net unrecognized postretirement benefit obligation	​		2.9	​		3.5
Other comprehensive income	​		432.1	​		87.4
Comprehensive income	​		495.0	​		619.4
Comprehensive income (loss) attributable to noncontrolling interest	​		8.0	​		(2.3)
Comprehensive income attributable to Principal Financial Group, Inc.	​	$	487.0	​	$	621.7

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See accompanying notes.

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Principal Financial Group, Inc.

Condensed Consolidated Statements of Stockholders’ Equity**(Unaudited)**

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​	​	​	​
​	​	​	​	​	Additional		​	​	​	​	other		​	​	​	​	​	​	​	Total
​	​	Common		​	paid-in		​	Retained		​	comprehensive		​	Treasury		​	Noncontrolling		​	stockholders’
​		stock			capital			earnings			loss			stock			interest			equity
​		(in millions)
Balances as of January 1, 2024	​	$	4.9	​	$	10,908.6	​	$	16,683.5	​	$	(5,345.3)	​	$	(11,335.7)	​	$	45.7	​	$	10,961.7
Common stock issued	​		—	​		12.9	​		—	​		—	​	​	—	​	​	—	​	​	12.9
Stock-based compensation	​		—	​		34.3	​		(3.0)	​		—	​	​	—	​	​	0.1	​	​	31.4
Treasury stock acquired, common	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(232.3)	​	​	—	​	​	(232.3)
Dividends to common stockholders	​	​	—	​	​	—	​	​	(162.4)	​	​	—	​	​	—	​	​	—	​	​	(162.4)
Distributions to noncontrolling interest	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(2.5)	​	​	(2.5)
Contributions from noncontrolling interest	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	2.1	​	​	2.1
Adjustments to redemption amount of redeemable noncontrolling interest	​	​	—	​	​	(1.7)	​	​	—	​	​	—	​	​	—	​	​	(0.4)	​	​	(2.1)
Net income (1)	​	​	—	​	​	—	​	​	532.5	​	​	—	​	​	—	​	​	1.5	​	​	534.0
Other comprehensive income (1)	​	​	—	​	​	—	​	​	—	​	​	89.2	​	​	—	​	​	(1.6)	​	​	87.6
Balances as of March 31, 2024	​	$	4.9	​	$	10,954.1	​	$	17,050.6	​	$	(5,256.1)	​	$	(11,568.0)	​	$	44.9	​	$	11,230.4
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances as of January 1, 2025	​	$	4.9	​	$	11,100.9	​	$	17,583.5	​	$	(5,224.8)	​	$	(12,378.1)	​	$	44.9	​	$	11,131.3
Common stock issued	​		0.1	​		13.9	​		—	​		—	​	​	—	​	​	—	​	​	14.0
Stock-based compensation	​		—	​		43.0	​		(3.3)	​		—	​	​	—	​	​	0.1	​	​	39.8
Treasury stock acquired, common	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(241.3)	​	​	—	​	​	(241.3)
Dividends to common stockholders	​	​	—	​	​	—	​	​	(169.0)	​	​	—	​	​	—	​	​	—	​	​	(169.0)
Distributions to noncontrolling interest	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(0.8)	​	​	(0.8)
Contributions from noncontrolling interest	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	3.4	​	​	3.4
Net income (1)	​	​	—	​	​	—	​	​	48.1	​	​	—	​	​	—	​	​	3.3	​	​	51.4
Other comprehensive income (1)	​	​	—	​	​	—	​	​	—	​	​	438.9	​	​	—	​	​	0.6	​	​	439.5
Balances as of March 31, 2025	​	$	5.0	​	$	11,157.8	​	$	17,459.3	​	$	(4,785.9)	​	$	(12,619.4)	​	$	51.5	​	$	11,268.3

(1)	Excludes amounts attributable to redeemable noncontrolling interest. See Note 16, Stockholders’ Equity, for further details.

See accompanying notes.

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Principal Financial Group, Inc.

Condensed Consolidated Statements of Cash Flows**(Unaudited)**

​	​	​	​	​	​	​
​	​	For the three months ended
​	​	March 31,
​		2025			2024
​	​	(in millions)
Net cash provided by operating activities	​	$	977.3	​	$	584.2
Investing activities	​	​	​	​	​	​
Fixed maturities available-for-sale and equity securities with intent to hold:	​	​	​	​	​	​
Purchases	​		(4,070.6)	​		(3,000.8)
Sales	​		1,532.2	​		904.5
Maturities	​		1,677.4	​		1,271.0
Mortgage loans acquired or originated	​		(566.9)	​		(603.6)
Mortgage loans sold or repaid	​		712.8	​		344.9
Real estate acquired	​		(32.8)	​		(29.9)
Real estate sold	​	​	9.5	​	​	35.5
Net purchases of property and equipment	​	​	(16.4)	​	​	(16.8)
Net change in other investments	​	​	(197.9)	​	​	(248.0)
Net cash used in investing activities	​		(952.7)	​		(1,343.2)
Financing activities	​	​	​	​	​	​
Issuance of common stock	​	​	14.0	​	​	12.9
Acquisition of treasury stock	​	​	(240.3)	​	​	(234.2)
Payments for financing element derivatives	​	​	(10.7)	​	​	(10.6)
Purchase of subsidiary shares from noncontrolling interest	​	​	(1.6)	​	​	—
Dividends to common stockholders	​	​	(169.0)	​	​	(162.4)
Net repayments of short-term borrowings	​		(6.3)	​		(4.1)
Investment contract deposits	​		3,213.0	​		3,198.6
Investment contract withdrawals	​		(3,024.0)	​		(2,711.3)
Net increase (decrease) in banking operation deposits	​		(134.4)	​		130.7
Other	​	​	(1.5)	​	​	0.1
Net cash provided by (used in) financing activities	​		(360.8)	​		219.7
Net decrease in cash and cash equivalents	​		(336.2)	​		(539.3)
Cash and cash equivalents at beginning of period	​	​	4,211.9	​	​	4,707.7
Cash and cash equivalents at end of period	​	$	3,875.7	​	$	4,168.4
​	​	​	​	​	​	​
Supplemental disclosure of non-cash activities:	​	​	​	​	​	​
Pre-capitalized contingent funding agreement exercise:	​	​	​	​	​	​
Increase in fixed maturities, trading	​	$	388.3	​	$	—
Increase in long-term debt, net of discount	​	​	(388.3)	​	​	—
Changes resulting from deconsolidation of an investment:	​	​	​	​	​	​
Decrease in mortgage loans	​	​	(140.6)	​	​	—
Decrease in short-term debt	​	​	54.0	​	​	—
Decrease in long-term debt	​	​	86.7	​	​	—

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See accompanying notes.

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Principal Financial Group, Inc.Notes to Condensed Consolidated Financial Statements March 31, 2025(Unaudited)

1. Nature of Operations and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Principal Financial Group, Inc. (“PFG”) have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the year ended December 31, 2025, especially when considering risks and uncertainties that may impact our business, results of operations, financial condition and liquidity. Our use of estimates and assumptions affect amounts reported and disclosed and includes, but is not limited to, the fair value of investments in the absence of quoted market values, investment impairments and valuation allowances, the fair value of derivatives, the fair value of market risk benefits (“MRBs”), measurement of goodwill and intangible assets, the liability for future policy benefits and claims, the value of pension and other postretirement benefit obligations and accounting for income taxes and the valuation of deferred tax assets. Our estimates and assumptions could change in the future. Our results of operations and financial condition may also be impacted by other uncertainties including evolving regulatory, legislative and standard-setter accounting interpretations and guidance.

These interim unaudited condensed consolidated financial statements should be read in conjunction with our annual audited financial statements as of December 31, 2024, included in our Form 10-K for the year ended December 31, 2024, filed with the United States Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated statement of financial position as of December 31, 2024, has been derived from the audited consolidated statement of financial position but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Consolidation

We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a variable interest entity (“VIE”) or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 3, Variable Interest Entities.

If an entity is not a VIE, it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. Entities in which we have management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method.

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**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Recent Accounting Pronouncements

Description	Date of****adoption	Effect on our consolidatedfinancial statements or othersignificant matters
Standards not yet adopted:	​	​
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.
Standards adopted:	​	​
Improvements to income tax disclosures This authoritative guidance provides improvements to income tax disclosures for annual periods primarily related to the rate reconciliation and income taxes paid information.	January 1, 2025	This guidance will not have a material impact on our notes to the consolidated financial statements when the new annual disclosures are included in our notes to the consolidated financial statements.
Improvements to reportable segments disclosures This authoritative guidance enhances the disclosures about a public entity’s reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment’s expenses.	December 31, 2024	The enhanced disclosures can be found in Note 18, Segment Information.
Facilitation of the effects of reference rate reform on financial reporting This authoritative guidance provided optional expedients and exceptions for contracts and hedging relationships affected by reference rate reform. An entity could elect not to apply certain modification accounting requirements to contracts affected by reference rate reform and instead account for the modified contract as a continuation of the existing contract. Also, an entity could apply optional expedients to continue hedge accounting for hedging relationships in which the critical terms changed due to reference rate reform. This guidance eased the financial reporting impacts of reference rate reform on contracts and hedging relationships and was effective until December 31, 2022. A subsequent amendment issued in December 2022 extended the relief date from December 31, 2022, to December 31, 2024, and was effective upon issuance.	March 12, 2020	We adopted the guidance upon issuance prospectively and elected the applicable optional expedients and exceptions for contracts and hedging relationships impacted by reference rate reform through December 31, 2024. The guidance did not have an impact on our consolidated financial statements upon adoption.

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When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates.

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**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Long-Duration Insurance Contracts Disclosures

​

We include disaggregated rollforwards for deferred acquisition costs (“DAC”), the unearned revenue liability, separate account liabilities, policyholder account balances, the liability for future policy benefits, the additional liability for certain benefit features and MRBs. Further, for certain actuarial balances, disclosures are required for the significant inputs, judgments, assumptions and methods used in measurement, including changes in those inputs, judgments and assumptions, and the effect of those changes on measurement.

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Amounts from different reportable segments cannot be aggregated for disclosures. Factors to consider in determining the level of aggregation for disclosures include the type of coverage, geography and market or type of customer. We have identified the following levels of aggregation for long-duration insurance contract disclosures.

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	●	Retirement and Income Solutions:

	o	Workplace savings and retirement solutions – Group annuity contracts offered to the plan sponsors of defined contribution plans or defined benefit plans

	o	Individual variable annuities – Variable deferred annuities and registered index-linked annuities (“RILAs”) offered to individuals for both qualified and nonqualified retirement savings

	o	Pension risk transfer – Single premium group annuities offered to pension plan sponsors and other institutions

	o	Individual fixed deferred annuities – An exited business that offered single premium deferred annuity contracts and flexible premium deferred annuities (“FPDAs”) to individuals for both qualified and nonqualified retirement savings

	o	Individual fixed income annuities – An exited business that offered single premium immediate annuities (“SPIAs”) and deferred income annuities (“DIAs”) to individuals for both qualified and nonqualified retirement savings; also includes supplementary contracts generated by annuitizations from other individual product lines

	o	Investment only – Primarily guaranteed investment contracts (“GICs”) and funding agreements offered to retirement plan sponsors and other institutions

	●	Principal Asset Management – International Pension

	o	Latin America:

	◾	Individual fixed income annuities – SPIAs offered to individuals

	◾	Pension – Certain retirement accumulation products where the segregated funds and associated obligation to the client are consolidated within our financial statements as separate account assets and liabilities and are only in the scope of long-duration insurance contracts disclosures for separate accounts

	●	Benefits and Protection – Specialty Benefits:

	o	Individual disability – Disability insurance providing protection to individuals and/or business owners

	●	Benefits and Protection – Life Insurance:

	o	Universal life – Universal life, variable universal life and indexed universal life insurance products offered to individuals and/or business owners, which will be collectively referred to hereafter as “universal life” contracts; includes our exited universal life insurance with secondary guarantee (“ULSG”) business

	o	Term life – Term life insurance products offered to individuals and/or business owners

	o	Participating life – Participating life insurance contracts offered to individuals, some of which are part of a closed block of business and are only in the scope of long-duration insurance contracts disclosures for DAC

	●	Corporate:

	o	Long-term care insurance – A closed block of long-term care insurance that is fully reinsured, which was offered on both a group and individual basis.

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For the separate account liability disclosures, our Retirement and Income Solutions segment uses a Group retirement contracts level of aggregation. This consists primarily of separate account liabilities for the workplace savings and retirement solutions business as well as amounts for the investment only and pension risk transfer businesses.

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**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

2. Other Intangible Assets

Finite Lived Intangible Assets

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 Mandatory Provident Fund Schemes (“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; however, certain transaction impacts were recognized in first quarter 2025. We impaired our distribution agreement intangible asset that will cease to exist, resulting in a $20.0 million loss reported in operating expenses on our consolidated statements of operations. Additionally, our customer relationship intangible asset was classified as held-for-sale, resulting in a $77.0 million loss reported in net realized capital gains (losses) on our consolidated statements of operations. We also recorded an impairment for contract costs from pension contracts. See Note 19, Revenues from Contract with Customers, for further details.

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3. Variable Interest Entities

We have relationships with various types of entities which may be VIEs. Certain VIEs are consolidated in our financial results. See Note 1, Nature of Operations and Significant Accounting Policies, under the caption “Consolidation” for further details of our consolidation accounting policies. We did not provide financial or other support to investees designated as VIEs for the periods ended March 31, 2025 and December 31, 2024.

Consolidated Variable Interest Entities

Mandatory Retirement Savings Funds

We hold an equity interest in Chilean mandatory privatized social security funds in which we provide asset management services. We determined the mandatory privatized social security funds, which also include contributions for voluntary pension savings, voluntary non-pension savings and compensation savings accounts, are VIEs. This is because the equity holders as a group lack the power, due to voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity’s economic performance and also because equity investors are protected from below-average market investment returns relative to the industry’s return, due to a regulatory guarantee that we provide. Further, we concluded we are the primary beneficiary through our power to make decisions and our significant variable interest in the funds. The purpose of the funds, which reside in legally segregated entities, is to provide long-term retirement savings. The obligation to the customer is directly related to the assets held in the funds and, as such, we present the assets as separate account assets and the obligation as separate account liabilities within our consolidated statements of financial position.

Real Estate

We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. Certain of these entities are VIEs based on the combination of our significant economic interest and related voting rights. We determined we are the primary beneficiary as a result of our power to control the entities through our significant ownership. Due to the nature of these real estate investments, the investment balance will fluctuate as we purchase and sell interests in the entities and as capital expenditures are made to improve the underlying real estate.

Sponsored Investment Funds

We sponsor and invest in certain investment funds for which we provide asset management services. Although our asset management fee is commensurate with the services provided and consistent with fees for similar services negotiated at arms-length, we have a variable interest for funds where our other interests are more than insignificant. The funds are VIEs as the equity holders lack power through voting rights to direct the activities of the entity that most significantly impact its economic performance. We determined we are the primary beneficiary of the VIEs where our interest in the entity is more than insignificant and we are the asset manager. We deconsolidated a sponsored investment fund in 2025 due to the acquisition of substantial voting rights through investment in the fund by external investors.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Residential Mortgage Loans

We invest in asset-backed securities (“ABS”) trusts. The trusts issue various collateralized mortgage obligation certificates and purchase residential mortgage loans. The trusts are considered VIEs due to insufficient equity to sustain themselves. We concluded we are the primary beneficiary as we purchase substantially all of the certificates and have the obligation to absorb losses that could potentially be significant to the VIEs.

Asset-Backed Limited Partnership

We invest in an ABS limited partnership. The limited partnership issues multiple notes and purchases consumer loans, auto loans, other loans and credit facilities. The limited partnership is considered a VIE due to insufficient equity to sustain itself. We concluded we are the primary beneficiary as we have purchased all of the notes and have the obligation to absorb losses and residual returns that could potentially be significant to the VIE.

​

Assets and Liabilities of Consolidated Variable Interest Entities

The carrying amounts of our consolidated VIE assets, which can only be used to settle obligations of consolidated VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025					​	December 31, 2024
​	​	Total		​	Total		​	Total		​	Total
​		assets			liabilities			assets			liabilities
​	​	(in millions)
Mandatory retirement savings funds (1)	​	$	35,005.8	​	$	34,658.5	​	$	33,130.4	​	$	32,802.2
Real estate (2)	​		848.5	​		41.8	​		814.3	​		69.4
Sponsored investment funds (3)	​		697.1	​		23.1	​		833.7	​		160.3
Residential mortgage loans (4)	​		790.6	​		19.6	​		806.5	​		19.9
Asset-backed limited partnership (5)	​	​	254.6	​	​	—	​	​	250.0	​	​	—
Total	​	$	37,596.6	​	$	34,743.0	​	$	35,834.9	​	$	33,051.8

(1)	The assets of the mandatory retirement savings funds primarily include separate account assets and equity securities. The liabilities primarily include separate account liabilities.

(2)	The assets of the real estate VIEs primarily include real estate, other investments and cash. Liabilities primarily include other liabilities.

(3)

The assets of sponsored investment funds are primarily fixed maturities and equity securities, certain of which are reported with other investments, and cash. The liabilities primarily include other liabilities. The consolidated statements of financial position included a $298.8 million and $309.9 million redeemable noncontrolling interest for sponsored investment funds as of March 31, 2025 and December 31, 2024, respectively. For certain sponsored investment funds, we have unfunded commitments to the VIE. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional capital when called upon to do so by the investment manager.

(4)	The assets of the residential mortgage loans VIEs primarily include residential mortgage loans. The liabilities primarily include other liabilities.

(5)	The assets of the asset-backed limited partnership VIE primarily include consumer loans, auto loans, other loans and credit facilities. These assets are reported with cash and cash equivalents, other investments and fixed maturities, trading on the consolidated statements of financial position.

Unconsolidated Variable Interest Entities

We hold a variable interest in a number of VIEs where we are not the primary beneficiary. Our investments in these VIEs are reported in fixed maturities, available-for-sale; fixed maturities, trading; equity securities and other investments in the consolidated statements of financial position and are described below.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Unconsolidated VIEs include certain commercial mortgage-backed securities (“CMBS”), residential mortgage-backed pass-through securities (“RMBS”) and other ABS. All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function.

We invest in cash collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities. We have determined we are not the primary beneficiary of these entities primarily because we do not control the economic performance of the entities and were not involved with the design of the entities or because we do not have a potentially significant variable interest in the entities for which we are the asset manager.

We have invested in various VIE trusts and similar entities as a debt holder. Most of these entities are classified as VIEs due to insufficient equity to sustain them. In addition, we have an entity classified as a VIE based on the combination of our significant economic interest and lack of voting rights. We have determined we are not the primary beneficiary primarily because we do not control the economic performance of the entities and were not involved with the design of the entities.

We have invested in partnerships and other funds, which are classified as VIEs. The entities are VIEs as equity holders lack the power to control the most significant activities of the entities because the equity holders do not have either the ability by a simple majority to exercise substantive kick-out rights or substantive participating rights. We have determined we are not the primary beneficiary because we do not have the power to direct the most significant activities of the entities.

As previously discussed, we sponsor and invest in certain investment funds that are VIEs. We determined we are not the primary beneficiary of the VIEs for which we are the asset manager but do not have a potentially significant variable interest in the funds.

We hold an equity interest in Mexican mandatory privatized social security funds in which we provide asset management services. Our equity interest in the funds is considered a variable interest. We concluded the funds are VIEs because the equity holders as a group lack decision-making ability through their voting rights. We are not the primary beneficiary of the VIEs because although we, as the asset manager, have the power to direct the activities of the VIEs, we do not have a potentially significant variable interest in the funds.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The carrying value and maximum loss exposure for our unconsolidated VIEs were as follows:

​

​	​	​	​	​	​	​
​	​	​	​	​	Maximum exposure to
​		Asset carrying value			loss (1)
​	​	(in millions)
March 31, 2025	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​
Corporate	​	$	309.2	​	$	360.0
Residential mortgage-backed pass-through securities	​	​	3,763.7	​	​	3,907.2
Commercial mortgage-backed securities	​	​	5,215.7	​	​	5,600.3
Collateralized debt obligations (2)	​	​	6,634.2	​	​	6,613.2
Other debt obligations	​	​	9,084.9	​	​	10,779.7
Fixed maturities, trading:	​	​	​	​	​	​
Residential mortgage-backed pass-through securities	​	​	8.9	​	​	8.9
Commercial mortgage-backed securities	​	​	68.4	​	​	68.4
Collateralized debt obligations (2)	​	​	215.2	​	​	215.2
Other debt obligations	​	​	306.8	​	​	306.8
Equity securities	​	​	89.6	​	​	89.6
Other investments:	​	​	​	​	​	​
Other limited partnership and fund interests (3)	​	​	2,987.1	​	​	4,964.5
​	​	​	​	​	​	​
December 31, 2024	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​
Corporate	​	$	308.2	​	$	359.7
Residential mortgage-backed pass-through securities	​	​	3,674.2	​	​	3,881.3
Commercial mortgage-backed securities	​	​	5,188.0	​	​	5,634.3
Collateralized debt obligations (2)	​	​	6,560.4	​	​	6,518.7
Other debt obligations	​	​	8,904.0	​	​	10,580.8
Fixed maturities, trading:	​	​	​	​	​	​
Residential mortgage-backed pass-through securities	​	​	9.0	​	​	9.0
Commercial mortgage-backed securities	​	​	44.2	​	​	44.2
Collateralized debt obligations (2)	​	​	135.3	​	​	135.3
Other debt obligations	​	​	210.0	​	​	210.0
Equity securities	​	​	85.1	​		85.1
Other investments:	​	​	​	​	​	​
Other limited partnership and fund interests (3)	​	​	2,766.4	​	​	4,804.6

(1)

Our risk of loss is limited to our initial investment measured at amortized cost excluding portfolio layer method basis adjustments for fixed maturities, available-for-sale, plus any unfunded commitments and/or guarantees and similar provisions for collateralized debt obligations and other debt obligations. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading and equity securities. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees and similar provisions for our other investments. A carrying value of zero is used if distributions have been received in excess of our investment, resulting in a negative carrying value for the investment. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager.

(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

(3)	As of March 31, 2025 and December 31, 2024, the maximum exposure to loss for other limited partnership and fund interests includes $242.0 million and $236.1 million, respectively, of debt within certain of our managed international real estate funds that is fully secured by assets whose value exceeds the amount of the debt, but also includes recourse to the investment manager.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Money Market Funds

We are the investment manager for certain money market mutual funds. These types of funds are exempt from assessment under any consolidation model due to a scope exception for money market funds registered under Rule 2a-7 of the Investment Company Act of 1940 or similar funds. As of March 31, 2025 and December 31, 2024, money market mutual funds we manage held $4.4 billion and $4.5 billion in total assets, respectively. We have no contractual obligation to contribute to these funds; however, we provide support through the waiver of fees and through expense reimbursements. The amount of fees waived and expenses reimbursed was insignificant.

​

4. Investments

Our investments include assets backing reserves as part of a coinsurance with funds withheld agreement. The funds withheld invested assets are reported within their respective line items, primarily consisting of fixed maturities available-for-sale, mortgage loans and other investments. See Note 11, Reinsurance, for more information on the funds withheld invested assets.

Fixed Maturities

Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. We classify fixed maturities as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. Equity securities are also carried at fair value. See Note 17, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to fixed maturities, available-for-sale, excluding those in fair value hedging relationships, are reflected in stockholders’ equity, net of adjustments associated with related actuarial balances, derivatives in cash flow hedge relationships and applicable income taxes. Mark-to-market adjustments on certain equity securities and mark-to-market adjustments on certain fixed maturities, trading are reflected in net realized capital gains (losses). Mark-to-market adjustments on certain fixed maturities, trading are reflected in market risk benefit remeasurement (gain) loss. Unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships are reflected in net investment income. Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income.

The amortized cost of fixed maturities includes cost adjusted for amortization of premiums and discounts, computed using the interest method. The amortized cost of fixed maturities, available-for-sale is adjusted for changes in fair value of the hedged portions of securities in fair value hedging relationships and excludes accrued interest receivable. Accrued interest receivable is reported in accrued investment income on the consolidated statements of financial position. Fixed maturities, available-for-sale are subject to an allowance for credit loss and changes in the allowance are reported in net income as a component of net realized capital gains (losses). Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The amortized cost, gross unrealized gains and losses, allowance for credit loss and fair value of fixed maturities, available-for-sale were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	Gross		​	Allowance		​	​	​
​	​	Amortized		​	unrealized		​	unrealized		​	for credit		​	​	​
​		cost (1)			gains			losses			loss			Fair value
​	​	(in millions)
March 31, 2025	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	1,895.1	​	$	10.2	​	$	246.7	​	$	—	​	$	1,658.6
Non-U.S. governments	​	​	556.0	​	​	16.0	​	​	78.0	​	​	—	​	​	494.0
States and political subdivisions	​	​	7,241.4	​	​	14.6	​	​	1,063.1	​	​	—	​	​	6,192.9
Corporate	​	​	39,581.0	​	​	566.4	​	​	3,469.1	​	​	6.8	​	​	36,671.5
Residential mortgage-backed pass-through securities	​	​	3,907.2	​	​	21.9	​	​	165.4	​	​	—	​	​	3,763.7
Commercial mortgage-backed securities	​	​	5,600.3	​	​	8.2	​	​	392.8	​	​	—	​	​	5,215.7
Collateralized debt obligations (2)	​	​	6,613.2	​	​	29.2	​	​	8.2	​	​	—	​	​	6,634.2
Other debt obligations	​	​	9,514.9	​	​	65.6	​	​	484.2	​	​	0.2	​	​	9,096.1
Total excluding portfolio layer method basis adjustment	​	​	74,909.1	​	​	732.1	​	​	5,907.5	​	​	7.0	​	​	69,726.7
Unallocated portfolio layer method basis adjustment (3)	​	​	(37.5)	​	​	37.5	​	​	—	​	​	—	​	​	—
Total fixed maturities, available-for-sale	​	$	74,871.6	​	$	769.6	​	$	5,907.5	​	$	7.0	​	$	69,726.7

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	Gross		​	Allowance		​	​
​	​	Amortized		​	unrealized		​	unrealized		​	for credit		​	​
​		cost (1)			gains			losses			loss			Fair value
​	​	(in millions)
December 31, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	1,937.4	​	$	0.2	​	$	299.7	​	$	—	​	$	1,637.9
Non-U.S. governments	​	​	567.3	​	​	12.9	​	​	84.5	​	​	—	​	​	495.7
States and political subdivisions	​	​	7,207.8	​	​	10.4	​	​	1,141.7	​	​	—	​	​	6,076.5
Corporate	​	​	38,911.1	​	​	509.9	​	​	3,699.9	​	​	18.5	​	​	35,702.6
Residential mortgage-backed pass-through securities	​	​	3,881.3	​	​	8.7	​	​	215.8	​	​	—	​	​	3,674.2
Commercial mortgage-backed securities	​	​	5,634.3	​	​	4.6	​	​	450.9	​	​	—	​	​	5,188.0
Collateralized debt obligations (2)	​	​	6,518.7	​	​	48.0	​	​	6.3	​	​	—	​	​	6,560.4
Other debt obligations	​	​	9,446.2	​	​	49.9	​	​	580.2	​	​	0.2	​	​	8,915.7
Total excluding portfolio layer method basis adjustment	​	​	74,104.1	​	​	644.6	​	​	6,479.0	​	​	18.7	​	​	68,251.0
Unallocated portfolio layer method basis adjustment (3)	​	​	(55.7)	​	​	55.7	​	​	—	​	​	—	​	​	—
Total fixed maturities, available-for-sale	​	$	74,048.4	​	$	700.3	​	$	6,479.0	​	$	18.7	​	$	68,251.0

(1)	Amortized cost excludes accrued interest receivable of $475.6 million and $647.3 million as of March 31, 2025 and December 31, 2024, respectively.

(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

(3)	Represents unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. See Note 5, Derivative Financial Instruments, for further details.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The amortized cost and fair value of fixed maturities, available-for-sale as of March 31, 2025, by expected maturity, were as follows:

​

​	​	​	​	​	​	​
​		Amortized cost (1)			Fair value
​	​	(in millions)
Due in one year or less	​	$	1,623.6	​	$	1,629.8
Due after one year through five years	​	​	8,966.3	​	​	8,841.9
Due after five years through ten years	​	​	10,131.2	​	​	9,861.3
Due after ten years	​	​	28,552.4	​	​	24,684.0
Subtotal	​	​	49,273.5	​	​	45,017.0
Mortgage-backed and other asset-backed securities	​	​	25,635.6	​	​	24,709.7
Total	​	$	74,909.1	​	$	69,726.7

(1)Excludes unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.

Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits.

Net Realized Capital Gains and Losses

Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. In general, in addition to realized capital gains and losses on investment sales and periodic settlements on derivatives not designated as hedges, we report gains and losses related to the following in net realized capital gains (losses) on the consolidated statements of operations: mark-to-market adjustments on certain equity securities, mark-to-market adjustments on certain fixed maturities, trading, mark-to-market adjustments on sponsored investment funds, mark-to-market adjustments on derivatives not designated as hedges, cash flow hedge gains (losses) when the hedged item impacts realized capital gains (losses), changes in the valuation allowance for fixed maturities available-for-sale and certain financing receivables, impairments of real estate held for investment and impairments on equity method investments. Investment gains and losses on sales of certain real estate held for sale due to investment strategy and mark-to-market adjustments on certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reported as net investment income and are excluded from net realized capital gains (losses).

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The major components of net realized capital gains (losses) on investments are shown below and are net of amounts on funds withheld invested assets that are passed directly to the reinsurer. See Note 11, Reinsurance, for further details. The amounts below do not include net realized capital gains (losses) on funds withheld assets that are not passed to the reinsurer, which are separately reported on the consolidated statements of operations. Net realized capital gains (losses) on funds withheld assets includes gains (losses) realized upon sale of assets put into the funds withheld at the start of a reinsurance transaction for the unrealized gain (losses) on the date of transfer into the funds withheld, the change in the valuation allowance on funds withheld commercial mortgage loans and unrealized gains and losses related to the change in fair value of funds withheld fixed maturities, trading, equity securities and derivatives.

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Fixed maturities, available-for-sale:	​	​	​	​	​	​
Gross gains	​	$	0.8	​	$	2.1
Gross losses	​		(30.3)	​		(12.1)
Net credit losses (1)	​		(5.0)	​		(3.3)
Hedging, net (2)	​		7.8	​		(4.1)
Fixed maturities, trading (3)	​		(1.8)	​		1.6
Equity securities (4)	​		(37.0)	​		63.2
Mortgage loans	​		(0.5)	​		(16.3)
Derivatives (2)	​		15.2	​		(34.9)
Other (5)	​		(66.3)	​		2.9
Net realized capital losses	​	$	(117.1)	​	$	(0.9)

(1)	Includes credit sales, adjustments to the credit loss valuation allowance, write-offs and recoveries on available-for-sale securities.

(2)

The change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Gains (losses) for fixed maturities, available-for-sale related to terminated cash flow hedges continue to be reflected in net realized capital gains (losses).

(3)

Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $(0.1) million and $1.7 million for the three months ended March 31, 2025 and 2024, respectively. This excludes $2.8 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively, that were reported in market risk benefit remeasurement (gain) loss and $(0.2) million and $(3.0) million for the three months ended March 31, 2025 and 2024, respectively, that were reported in net realized capital gains (losses) on funds withheld assets.

(4)

Unrealized gains (losses) on equity securities still held at the reporting date were $(36.4) million and $58.9 million for the three months ended March 31, 2025 and 2024, respectively. This excludes $9.2 million and $18.7 million for the three months ended March 31, 2025 and 2024, respectively, that were reported in net investment income and $0.0 million and $0.0 million for the three months ended March 31, 2025 and 2024, respectively, that were reported in net realized capital gains (losses) on funds withheld assets.

(5)	Includes a held-for-sale write-down of an intangible asset in 2025. See Note 2, Other Intangible Assets, for further details.

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $764.8 million and $912.5 million for the three months ended March 31, 2025 and 2024, respectively.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Allowance for Credit Loss

We have a process in place to identify fixed maturity securities that could potentially require an allowance for credit loss. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.

Each reporting period, all securities in an unrealized loss position are reviewed to determine whether a decline in value is due to credit. Relevant facts and circumstances considered include: (1) the extent the fair value is below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for structured securities, the adequacy of the expected cash flows. To the extent we determine an unrealized loss is due to credit, an allowance for credit loss is recognized through a reduction to net income.

We estimate the amount of the allowance for credit loss as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity. We do not measure a credit loss allowance on accrued interest receivable because we write off the accrued interest receivable balance to net investment income in a timely manner when we have concern regarding collectability.

Amounts on fixed maturities, available-for-sale deemed to be uncollectible are written off and removed from the allowance for credit loss. A write-off may also occur if we intend to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity.

A rollforward of the allowance for credit loss by major security type was as follows.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Residential		​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	mortgage-		​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	backed		​	Commercial		​	Collateralized		​	​	​	​	​	​
​	​	U.S.		​	​	​	​	States and		​	​	​	​	pass-		​	mortgage-		​	debt		​	Other		​	​	​
​	​	government		​	Non-U.S.		​	political		​	​	​	​	through		​	backed		​	obligations		​	debt		​	​	​
​		and agencies			governments			subdivisions			Corporate			securities			securities			(1)			obligations			Total
​	​	(in millions)
Beginning balance	​	$	—	​	$	—	​	$	—	​	$	18.5	​	$	—	​	$	—	​	$	—	​	$	0.2	​	$	18.7
Additional increases (decreases) for credit losses on securities with an allowance recorded in the previous period	​	​	—	​	​	—	​	​	—	​	​	0.1	​	​	—	​	​	—	​	​	—	​	​	—	​	​	0.1
Write-offs charged against allowance	​	​	—	​	​	—	​	​	—	​	​	(11.9)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(11.9)
Foreign currency translation adjustment	​	​	—	​	​	—	​	​	—	​	​	0.1	​	​	—	​	​	—	​	​	—	​	​	—	​	​	0.1
Ending balance	​	$	—	​	$	—	​	$	—	​	$	6.8	​	$	—	​	$	—	​	$	—	​	$	0.2	​	$	7.0

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Residential		​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	mortgage-		​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	backed		​	Commercial		​	Collateralized		​	​	​	​	​	​
​	​	U.S.		​	​	​	​	States and		​	​	​	​	pass-		​	mortgage-		​	debt		​	Other		​	​	​
​	​	government		​	Non-U.S.		​	political		​	​	​	​	through		​	backed		​	obligations		​	debt		​	​	​
​		and agencies			governments			subdivisions			Corporate			securities			securities			(1)			obligations			Total
​	​	(in millions)
Beginning balance		$	—		$	—		$	—		$	4.6	​	$	—		$	—		$	—		$	0.1		$	4.7
Write-offs charged against allowance	​	​	—	​	​	—	​	​	—	​	​	(1.6)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(1.6)
Foreign currency translation adjustment	​	​	—	​	​	—	​	​	—	​	​	(0.3)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	(0.3)
Ending balance		$	—		$	—		$	—		$	2.7	​	$	—		$	—		$	—		$	0.1		$	2.8

(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

​

During 2025 and 2024, we did not write off any accrued interest to net investment income.

Available-For-Sale Securities in Unrealized Loss Positions Without an Allowance for Credit Loss

For available-for-sale securities with unrealized losses for which an allowance for credit loss has not been recorded, the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	Less than					​	Greater than or					​	​	​	​	​	​
​	​	twelve months					​	equal to twelve months					​	Total
​		​			Gross			​			Gross			​			Gross
​	​	Fair		​	unrealized		​	Fair		​	unrealized		​	Fair		​	unrealized
​	​	value		​	losses		​	value		​	losses		​	value		​	losses
​	​	(in millions)
Fixed maturities, available-for-sale (1):	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	168.7	​	$	2.4	​	$	688.0	​	$	244.3	​	$	856.7	​	$	246.7
Non-U.S. governments	​	​	32.1	​	​	0.8	​	​	305.0	​	​	77.2	​	​	337.1	​	​	78.0
States and political subdivisions	​	​	781.0	​	​	20.0	​	​	4,806.3	​	​	1,043.1	​	​	5,587.3	​	​	1,063.1
Corporate	​	​	4,605.7	​	​	167.2	​	​	19,885.0	​	​	3,298.3	​	​	24,490.7	​	​	3,465.5
Residential mortgage-backed pass-through securities	​	​	971.4	​	​	9.2	​	​	1,214.4	​	​	156.2	​	​	2,185.8	​	​	165.4
Commercial mortgage-backed securities	​	​	516.8	​	​	4.6	​	​	3,804.2	​	​	388.2	​	​	4,321.0	​	​	392.8
Collateralized debt obligations (2)	​	​	1,325.6	​	​	4.2	​	​	12.6	​	​	4.0	​	​	1,338.2	​	​	8.2
Other debt obligations	​	​	1,110.4	​	​	8.9	​	​	3,650.8	​	​	474.9	​	​	4,761.2	​	​	483.8
Total fixed maturities, available-for-sale	​	$	9,511.7	​	$	217.3	​	$	34,366.3	​	$	5,686.2	​	$	43,878.0	​	$	5,903.5

(1)	Fair value and gross unrealized losses are excluded for available-for-sale securities for which an allowance for credit loss has been recorded. Gross unrealized losses exclude unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.

(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

Of the total amounts, Principal Life Insurance Company’s (“Principal Life’s”) consolidated portfolio represented $42,666.1 million in available-for-sale fixed maturities with gross unrealized losses of $5,796.7 million. Of the available-for-sale fixed maturities within Principal Life’s consolidated portfolio in a gross unrealized loss position, 96% were investment grade (rated AAA through BBB-) with an average price of 88 (carrying value/amortized cost) as of March 31, 2025. Gross unrealized losses in our fixed maturities portfolio decreased during the three months ended March 31, 2025, primarily due to a decrease in interest rates, which was partially offset by a widening of credit spreads.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life’s consolidated portfolio held 1,433 securities with a carrying value of $8,933.2 million and unrealized losses of $187.4 million reflecting an average price of 98 as of March 31, 2025. Of this portfolio, 95% was investment grade (rated AAA through BBB-) as of March 31, 2025, with associated unrealized losses of $182.5 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life’s consolidated portfolio held 6,099 securities with a carrying value of $33,732.9 million and unrealized losses of $5,609.3 million as of March 31, 2025. The average credit rating of this portfolio was A with an average price of 86 as of March 31, 2025. Of the $5,609.3 million in unrealized losses, the corporate sector accounts for $3,236.9 million in unrealized losses with an average price of 86 and an average credit rating of BBB+. Furthermore, unrealized losses include $1,036.0 million within the states and political subdivisions sector with an average price of 82 and an average credit rating of AA-; $422.6 million within the collateralized mortgage obligation security sector with an average price of 85 and an average credit rating of AAA; and $387.3 million within the CMBS sector with an average price of 91 and an average credit rating of AA. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

Because we expected to recover our amortized cost, we did not record an allowance for credit loss on these securities as of March 31, 2025. Because it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not write down these investments to fair value.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	Less than					​	Greater than or					​	​	​	​	​	​
​	​	twelve months					​	equal to twelve months					​	Total
​		​			Gross			​	​		Gross			​			Gross
​	​	Fair		​	unrealized		​	Fair		​	unrealized		​	Fair		​	unrealized
​	​	value		​	losses		​	value		​	losses		​	value		​	losses
​	​	(in millions)
Fixed maturities, available-for-sale (1):	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	909.1	​	$	17.4	​	$	810.6	​	$	283.1	​	$	1,719.7	​	$	300.5
Non-U.S. governments	​		32.9	​	​	1.3	​	​	308.8	​	​	83.2	​	​	341.7	​	​	84.5
States and political subdivisions	​		743.2	​		26.0	​		4,745.7	​		1,115.8	​		5,488.9	​		1,141.8
Corporate	​		4,970.7	​		164.2	​		20,099.1	​		3,532.3	​		25,069.8	​		3,696.5
Residential mortgage-backed pass-through securities	​		1,938.4	​		33.2	​		1,214.0	​		182.6	​		3,152.4	​		215.8
Commercial mortgage-backed securities	​		691.7	​		8.2	​		3,860.1	​		442.6	​		4,551.8	​		450.8
Collateralized debt obligations (2)	​		582.2	​		1.3	​		29.8	​		5.0	​		612.0	​		6.3
Other debt obligations	​		1,732.5	​		21.8	​		3,698.5	​		557.2	​		5,431.0	​		579.0
Total fixed maturities, available-for-sale	​	$	11,600.7	​	$	273.4	​	$	34,766.6	​	$	6,201.8	​	$	46,367.3	​	$	6,475.2

(1)	Fair value and gross unrealized losses are excluded for available-for-sale securities for which an allowance for credit loss has been recorded. Gross unrealized losses exclude unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.

(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

Of the total amounts, Principal Life’s consolidated portfolio represented $44,950.7 million in available-for-sale fixed maturities with gross unrealized losses of $6,373.8 million. Of the available-for-sale fixed maturities within Principal Life’s consolidated portfolio in a gross unrealized loss position, 97% were investment grade (rated AAA through BBB-) with an average price of 88 (carrying value/amortized cost) as of December 31, 2024. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2024, primarily due to an increase in interest rates, which was partially offset by a tightening of credit spreads.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life’s consolidated portfolio held 1,747 securities with a carrying value of $10,805.4 million and unrealized losses of $252.3 million reflecting an average price of 98 as of December 31, 2024. Of this portfolio, 96% was investment grade (rated AAA through BBB-) as of December 31, 2024, with associated unrealized losses of $245.4 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life’s consolidated portfolio held 6,219 securities with a carrying value of $34,145.3 million and unrealized losses of $6,121.5 million as of December 31, 2024. The average credit rating of this portfolio was A with an average price of 85 as of December 31, 2024. Of the $6,121.5 million in unrealized losses, the corporate sector accounts for $3,470.0 million in unrealized losses with an average price of 85 and an average credit rating of BBB+. Furthermore, unrealized losses include $1,108.0 million within the states and political subdivisions sector with an average price of 81 and an average credit rating of AA-; $490.8 million within the collateralized mortgage obligation security sector with an average price of 83 and an average credit rating of AAA; and $441.5 million within the CMBS sector with an average price of 90 and an average credit rating of AA. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

Because we expected to recover our amortized cost, we did not record an allowance for credit loss on these securities as of December 31, 2024. Because it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not write down these investments to fair value.

Net Unrealized Gains and Losses on Available-For-Sale Securities and Derivative Instruments

The net unrealized gains and losses on investments in available-for-sale securities and the net unrealized gains and losses on derivative instruments in cash flow hedge relationships are reported as separate components of stockholders’ equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities and derivative instruments in cash flow hedge relationships net of adjustments related to actuarial balances, policyholder liabilities, noncontrolling interest and applicable income taxes was as follows:

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Net unrealized losses on fixed maturities, available-for-sale (1)	​	$	(5,210.8)	​	$	(5,942.5)
Net unrealized gains on derivative instruments	​		84.0	​		66.1
Adjustments for assumed changes in amortization patterns	​		4.7	​		5.1
Adjustments for assumed changes in policyholder liabilities	​		30.5	​		12.2
Net unrealized losses on other investments and noncontrolling interest adjustments	​		(54.9)	​		(52.5)
Provision for deferred income tax benefits	​		1,108.9	​		1,270.5
Net unrealized losses on available-for-sale securities and derivative instruments	​	$	(4,037.6)	​	$	(4,641.1)

(1)	Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships.

Financing Receivables

Mortgage Loans

Mortgage loans consist of commercial and residential mortgage loans. Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on stabilized properties. Our residential mortgage loan portfolio is composed of first lien and home equity mortgages concentrated in Chile and the United States.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Commercial and residential mortgage loans are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. Amortized cost excludes accrued interest receivable. The amortized cost of our residential mortgage loans also includes basis adjustments related to fair value hedges in a closed portfolio. See Note 5, Derivative Financial Instruments, for further information. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Interest income, as well as prepayment of fees and the amortization of the related premium or discount, is reported in net investment income on the consolidated statements of operations. Accrued interest receivable is reported in accrued investment income on the consolidated statements of financial position. Any changes in the loan valuation allowances are reported in net realized capital gains (losses) on the consolidated statements of operations. Further details relating to our valuation allowance are included under the caption “Financing Receivables Valuation Allowance.”

Direct Financing Leases

Our direct financing leases are concentrated in Chile. Our Chilean operations enter into private placement contracts for commercial, industrial and office space properties whereby our Chilean operations purchase the real estate and/or building from the seller-lessee but then lease the property back to the seller-lessee. Ownership of the property is transferred to the lessee by the end of the lease term. Direct financing leases are reported as a component of other investments in the consolidated statements of financial position.

Reinsurance Recoverable and Deposit Receivable

Our reinsurance recoverables include amounts due from reinsurers for paid or unpaid claims, claims incurred but not reported or policy benefits. We cede life, disability, medical and long-term care insurance as well as fixed annuity contracts with significant life insurance risk to other insurance companies through reinsurance. Deposit receivables include amounts due from the reinsurer for fixed annuity contracts without significant life insurance risk recorded using the deposit method of accounting.

Other Loans

Our other loans include consumer, auto and other loans (“other loans”) of a consolidated VIE for which the fair value option was elected as well as consumer loans for which the fair value option was not elected. Other loans are generally subject to amortized cost accounting and a valuation allowance if the fair value option is not elected. Other loans are reported as a component of other investments in the consolidated statements of financial position.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Credit Quality Information for Financing Receivables

The amortized cost of our financing receivables by credit risk and vintage was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​		2025			2024			2023			2022			2021			Prior			Total
​	​	(in millions)
Commercial mortgage loans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
A- and above		$	82.0	​	$	1,188.9	​	$	795.0	​	$	1,100.7	​	$	2,077.4	​	$	7,779.5	​	$	13,023.5
BBB+ thru BBB-		​	13.0	​	​	211.5	​	​	450.8	​	​	249.7	​	​	270.9	​	​	1,393.4	​	​	2,589.3
BB+ thru BB-		​	39.8	​	​	88.3	​	​	146.4	​	​	156.7	​	​	48.4	​	​	237.6	​	​	717.2
B+ and below		​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	329.4	​	​	329.4
Total		$	134.8	​	$	1,488.7	​	$	1,392.2	​	$	1,507.1	​	$	2,396.7	​	$	9,739.9	​	$	16,659.4
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Direct financing leases:		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
A- and above		$	—	​	$	—	​	$	—	​	$	42.3	​	$	11.1	​	$	232.5	​	$	285.9
BBB+ thru BBB-		​	—	​	​	9.9	​	​	—	​	​	89.8	​	​	20.5	​	​	93.7	​	​	213.9
BB+ thru BB-		​	40.5	​	​	—	​	​	2.0	​	​	0.6	​	​	7.0	​	​	30.7	​	​	80.8
B+ and below		​	—		​	—		​	—		​	—		​	7.3		​	—		​	7.3
Total		$	40.5	​	$	9.9	​	$	2.0	​	$	132.7	​	$	45.9	​	$	356.9	​	$	587.9
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential mortgage loans:		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Performing		$	90.5	​	$	477.1	​	$	432.2	​	$	954.8	​	$	1,209.8	​	$	615.0	​	$	3,779.4
Non-performing		​	—	​	​	—	​	​	3.8	​	​	6.5	​	​	5.4	​	​	4.5	​	​	20.2
Total excluding portfolio layer method basis adjustments		$	90.5	​	$	477.1	​	$	436.0	​	$	961.3	​	$	1,215.2	​	$	619.5	​	​	3,799.6
Unallocated portfolio layer method basis adjustment (1)		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(3.1)
Total		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	3,796.5
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other loans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Performing	​	$	14.4	​	$	63.9	​	$	52.3	​	$	—	​	$	—	​	$	—	​	$	130.6
Non-performing	​	​	0.5	​	​	—	​	​	—	​	​	—	​	​	—	​	​	0.1	​	​	0.6
Total	​	$	14.9	​	$	63.9	​	$	52.3	​	$	—	​	$	—	​	$	0.1	​	$	131.2
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reinsurance recoverable and deposit receivable											​	​		​	​		​	​		$	19,395.8

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		December 31, 2024
​		2024			2023			2022			2021			2020			Prior			Total
​	​	(in millions)
Commercial mortgage loans:		​		​	​			​			​			​			​			​
A- and above	​	$	1,182.1	​	$	793.1	​	$	1,234.3	​	$	2,101.3	​	$	1,463.4	​	$	6,594.0	​	$	13,368.2
BBB+ thru BBB-	​		210.0	​		393.6	​		231.6	​		269.1	​		180.6	​		1,217.5	​		2,502.4
BB+ thru BB-	​		215.7	​		143.4	​		154.3	​		47.9	​		40.1	​		271.7	​		873.1
B+ and below	​		—	​		—	​		—	​		—	​		2.5	​		326.5	​		329.0
Total	​	$	1,607.8	​	$	1,330.1	​	$	1,620.2	​	$	2,418.3	​	$	1,686.6	​	$	8,409.7	​	$	17,072.7
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Direct financing leases:	​		​	​		​	​		​	​		​	​		​	​		​	​		​
A- and above	​	$	1.0	​	$	—	​	$	38.5	​	$	11.0	​	$	33.8	​	$	177.4	​	$	261.7
BBB+ thru BBB-	​		4.9	​		1.8	​		87.3	​		19.0	​		52.8	​		67.0	​		232.8
BB+ thru BB-	​		38.8	​		—	​		0.5	​		6.8	​		3.4	​		8.5	​		58.0
B+ and below	​		3.6	​		—	​		—	​		6.9	​		—	​		—	​		10.5
Total	​	$	48.3	​	$	1.8	​	$	126.3	​	$	43.7	​	$	90.0	​	$	252.9	​	$	563.0
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential mortgage loans:	​			​			​			​		​	​		​	​		​	​		​
Performing	​	$	350.4	​	$	411.5	​	$	970.3	​	$	1,234.9	​	$	196.0	​	$	427.6	​	$	3,590.7
Non-performing	​		0.5	​		5.5	​		6.1	​		4.8	​		2.5	​		5.7	​		25.1
Total excluding portfolio layer method basis adjustments	​	$	350.9	​	$	417.0	​	$	976.4	​	$	1,239.7	​	$	198.5	​	$	433.3	​	​	3,615.8
Unallocated portfolio layer method basis adjustment (1)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(8.4)
Total	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	3,607.4
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other loans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Performing	​	$	84.2	​	$	61.9	​	$	—	​	$	—	​	$	—	​	$	—	​	$	146.1
Non-performing	​	​	0.1	​	​	—	​	​	—	​	​	—	​	​	—	​	​	0.1	​	​	0.2
Total	​	$	84.3	​	$	61.9	​	$	—	​	$	—	​	$	—	​	$	0.1	​	$	146.3
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Reinsurance recoverable and deposit receivable										​			​			​			​	$	19,493.4

(1)	Represents unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method. See Note 5, Derivative Financial Instruments, for further details.

The amortized cost of commercial mortgage loans, direct financing leases, residential mortgage loans and other loans excluded accrued interest receivable of $70.8 million, $1.5 million, $12.9 million and $1.1 million, respectively, as of March 31, 2025, and $69.2 million, $1.2 million, $12.0 million and $1.3 million, respectively, as of December 31, 2024.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Financing Receivables Credit Monitoring

Commercial Mortgage Loan Credit Risk Profile Based on Internal Rating

We actively monitor and manage our commercial mortgage loan and direct financing lease portfolios. All commercial mortgage loans and direct financing leases are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The models stress expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of an S&P Global (“S&P”) bond equivalent rating for domestic commercial mortgage loans and Feller rate equivalent for Chilean commercial mortgage loans and direct financing leases. As the credit risk for commercial mortgage loans and direct financing leases increases, we adjust our internal ratings downward with loans in the category “B+ and below” having the highest risk for credit loss. Internal ratings on commercial mortgage loans and direct financing leases are updated at least annually and potentially more often for certain investments with material changes in collateral value or occupancy and for investments on an internal “watch list”.

Commercial mortgage loans and direct financing leases that require more frequent and detailed attention are identified and placed on an internal “watch list”. Among the criteria that may indicate a potential problem are significant negative changes in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests.

Residential Mortgage Loan Credit Risk Profile Based on Performance Status

Our residential mortgage loan portfolio is monitored based on performance of the loans. Monitoring on a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of potential impairment. We define non-performing domestic residential mortgage loans as loans 90 days or greater delinquent or on non-accrual status. We define non-performing residential first lien mortgages in the Chilean market as loans that have missed a specified number of coupon payments based on the nature of the loans and collection practices in that market.

Other Loans Credit Risk Profile Based on Performance Status

Our other loans are monitored based on performance of the loans. Monitoring on other loans increases when the loan is delinquent or earlier if there is an indication of potential impairment.

Non-Accrual Financing Receivables

Financing receivables are placed on non-accrual status if we have concern regarding the collectability of future payments or if a financing receivable has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow for commercial mortgage loans and direct financing leases or number of days past due and other circumstances for residential mortgage loans. Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal, against the valuation allowance or according to the contractual terms. When a financing receivable is placed on non-accrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved. Financing receivables in the Chilean market are carried on accrual for a longer period of delinquency than domestic financing receivables, as assessment of collectability is based on the nature of the financing receivables and collection practices in that market.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The amortized cost of financing receivables on non-accrual status was as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	​		​	​	​	​	Amortized cost
​	​	Beginning		​	Ending		​	of nonaccrual
​	​	amortized cost		​	amortized cost		​	assets without
​	​	on nonaccrual		​	on nonaccrual		​	a valuation
​		status			status			allowance
​	​	(in millions)
Commercial mortgage loans	​	$	70.5	​	$	60.7	​	$	—
Residential mortgage loans	​	​	15.6	​	​	16.6	​	​	8.1
Other loans	​	​	—	​	​	0.1	​	​	0.1
Total	​	$	86.1	​	$	77.4	​	$	8.2

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	​		​	​	​	​	Amortized cost
​	​	Beginning		​	Ending		​	of nonaccrual
​	​	amortized cost		​	amortized cost		​	assets without
​	​	on nonaccrual		​	on nonaccrual		​	a valuation
​		status			status			allowance
​	​	(in millions)
Commercial mortgage loans	​	$	58.4	​	$	70.5	​	$	—
Residential mortgage loans		​	10.2		​	15.6		​	—
Total		$	68.6		$	86.1		$	—

​

Interest income recognized on non-accrual financing receivables was as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Commercial mortgage loans	​	$	—	​	$	(0.2)
Residential mortgage loans	​	​	0.1	​	​	—
Total	​	$	0.1	​	$	(0.2)

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The aging of our financing receivables, based on amortized cost, was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​		​	​		​	​		​	​		​	​		​	​		​	​		Amortized
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	cost
​	​	​	​	​	​	​	​	90 days or		​	​	​	​	​	​	​	​	​	​	90 days or
​	​	30-59 days		​	60-89 days		​	more past		​	Total past		​	​	​	​	​	​	​	more and
​	​	past due		​	past due		​	due		​	due		​	Current		​	Total (1)		​	accruing
​	​	(in millions)
Commercial mortgage loans	​	$	6.5	​	$	9.1	​	$	26.6	​	$	42.2	​	$	16,617.2	​	$	16,659.4	​	$	—
Direct financing leases	​	​	3.5	​	​	—	​	​	—	​	​	3.5	​	​	584.4	​	​	587.9	​	​	—
Residential mortgage loans (2)	​	​	61.8	​	​	19.2	​	​	22.5	​	​	103.5	​	​	3,696.1	​	​	3,799.6	​	​	10.0
Other loans	​	​	1.7	​	​	1.6	​	​	1.6	​	​	4.9	​	​	126.3	​	​	131.2	​	​	1.0
Total	​	$	73.5	​	$	29.9	​	$	50.7	​	$	154.1	​	$	21,024.0	​	$	21,178.1	​	$	11.0

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​		​	​		​	​		​	​		​	​		​	​		​	​		Amortized
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	cost
​	​	​	​	​	​	​	​	90 days or		​	​	​	​	​	​	​	​	​	​	90 days or
​	​	30-59 days		​	60-89 days		​	more past		​	Total past		​	​	​	​	​	​	​	more and
​	​	past due		​	past due		​	due		​	due		​	Current		​	Total (1)		​	accruing
​	​	(in millions)
Commercial mortgage loans	​	$	70.3	​	$	2.2	​	$	26.3	​	$	98.8	​	$	16,973.9	​	$	17,072.7	​	$	—
Direct financing leases	​		3.6	​		—	​		—	​		3.6	​		559.4	​		563.0	​		—
Residential mortgage loans (2)	​		54.4	​		14.9	​		23.5	​		92.8	​		3,523.0	​		3,615.8	​		9.5
Other loans	​	​	2.1	​	​	1.8	​	​	1.6	​	​	5.5	​	​	140.8	​	​	146.3	​	​	1.4
Total	​	$	130.4	​	$	18.9	​	$	51.4	​	$	200.7	​	$	21,197.1	​	$	21,397.8	​	$	10.9

(1)	As of both March 31, 2025 and December 31, 2024, no reinsurance recoverables or deposit receivables were considered past due.

(2)	Excludes unallocated basis adjustments related to fair value hedges utilizing the portfolio layer method.

Financing Receivables Valuation Allowance

We establish a valuation allowance to provide for the risk of credit losses inherent in our financing receivables. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost excluding accrued interest receivable and includes reserves for pools of financing receivables with similar risk characteristics. We do not measure a credit loss allowance on accrued interest receivable because we write off the uncollectible accrued interest receivable balance to net investment income in a timely manner, generally within 90 days domestically or, in the Chilean market, based on the nature of the loans and collection practices in that market. During 2025 and 2024, we did not write off any commercial mortgage loan accrued interest or residential mortgage loan accrued interest.

For commercial and residential mortgage loans and direct financing leases, management’s periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, composition of the portfolio, portfolio delinquency information, underwriting standards, peer group information, current and forecasted economic conditions, loss experience and other relevant factors. For reinsurance recoverables and deposit receivables, management’s periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks, adverse situations that may affect a reinsurer’s ability to repay, current and forecasted economic conditions, industry loss experience and other relevant factors.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Our commercial mortgage loans and direct financing leases are pooled by risk rating level with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon historical loss experience for each risk rating level as adjusted for certain current and forecasted environmental factors management believes to be relevant. Environmental factors are forecasted for two years or less with immediate reversion to historical experience. The allowance for direct financing leases is also adjusted for the residual value of the leased assets. A commercial mortgage loan or direct financing lease is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any domestic commercial mortgage loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently is evaluated individually. We analyze the need for an individual evaluation for any Chilean commercial mortgage loan or direct financing lease that is considered past due based on collection practices in the Chilean market and the nature of the loan or lease.

We estimate expected credit losses for certain commercial mortgage loan or direct financing lease commitments where we have a contractual obligation to extend credit. The expected credit losses are estimated based on the commercial mortgage loan or direct financing lease valuation allowance process described previously, adjusted for probability of funding. The estimated expected credit losses for commercial mortgage loan and direct financing lease commitments are reported in other liabilities on the consolidated statements of financial position. The change in the credit loss liability for commitments is included in net realized capital gains (losses) on the consolidated statements of operations. Once funded, expected credit losses for commercial mortgage loans or direct financing leases are included within the commercial mortgage loan or direct financing lease valuation allowance described previously.

We evaluate residential mortgage loans based on aggregated risk factors and historical loss experience by pool type. We adjust these quantitative factors for qualitative factors of present and forecasted conditions. Qualitative factors include items such as economic and business conditions, changes in the portfolio, value of underlying collateral and concentrations. A residential mortgage loan is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any domestic residential mortgage loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently is evaluated individually. We analyze the need for an individual evaluation for any Chilean residential mortgage loan that is considered past due based on collection practices in the Chilean market and the nature of the loan.

As discussed previously, commercial and residential mortgage loans and direct financing leases are evaluated individually if the asset does not continue to share similar risk characteristics of a pool. When we determine a commercial or residential mortgage loan is probable of foreclosure, a valuation allowance is established equal to the difference between the carrying amount of the mortgage loan and the estimated value of the collateral reduced by the cost to sell or for certain residential mortgage loans, the present value of the loan’s expected future cash flows. For certain commercial mortgage loans where repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, we elect to establish a valuation allowance equal to the difference between the carrying amount of the mortgage loan and the estimated value of the real estate collateral, which may be reduced by the cost to sell. Estimated value may also be based on either the present value of the expected future cash flows discounted at the asset’s effective interest rate or the asset’s observable market price. Subsequent changes in the estimated value are reflected in the valuation allowance. Amounts on financing receivables deemed to be uncollectible are charged off and removed from the valuation allowance. The change in the valuation allowance for loans and direct financing leases is included in net realized capital gains (losses) on the consolidated statements of operations.

Our reinsurance recoverables and deposit receivable are pooled by reinsurer risk rating with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon industry historical loss experience and expected recovery timing as adjusted for certain current and forecasted environmental factors management believes to be relevant. Environmental factors are forecasted for five years or less with immediate reversion to industry historical experience. A reinsurance recoverable or deposit receivable is evaluated individually if it does not continue to share similar risk characteristics of a pool. We analyze the need for an individual evaluation for any reinsurance recoverable or deposit receivable based on past due payments and changes in reinsurer risk ratings. The change in the valuation allowance for reinsurance recoverables and deposit receivable is included in benefits, claims and settlement expenses on the consolidated statements of operations.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

A rollforward of our valuation allowance was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	Commercial		​	Direct		​	Residential		​	​	​	​	​	​
​	​	mortgage		​	financing		​	mortgage		​	Reinsurance		​	​	​
​		loans			leases			loans			recoverables			Total
​	​	(in millions)
Beginning balance	​	$	188.6	​	$	3.0	​	$	7.3	​	$	3.3	​	$	202.2
Provision		​	(2.3)		​	—		​	(0.9)		​	(0.1)		​	(3.3)
Charge-offs		​	(1.3)		​	—		​	—		​	—		​	(1.3)
Recoveries		​	—		​	—		​	3.8		​	—		​	3.8
Foreign currency translation adjustment	​	​	0.1	​	​	0.2	​	​	—	​	​	—	​	​	0.3
Ending balance		$	185.1		$	3.2		$	10.2		$	3.2		$	201.7

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	Commercial		​	Direct		​	Residential		​	​	​	​	​	​
​		mortgage		​	financing		​	mortgage		​	Reinsurance		​	​	​
​	​	loans			leases			loans			recoverables			Total
​		(in millions)
Beginning balance	​	$	128.8	​	$	0.9	​	$	6.7	​	$	3.2	​	$	139.6
Provision		​	16.0	​	​	(0.1)	​	​	1.9	​	​	—		​	17.8
Recoveries		​	—	​	​	—	​	​	0.3	​	​	—		​	0.3
Foreign currency translation adjustment	​	​	(0.3)	​	​	(0.1)	​	​	(0.1)	​	​	—	​	​	(0.5)
Ending balance		$	144.5	​	$	0.7	​	$	8.8	​	$	3.2		$	157.2

​

For both the three months ended March 31, 2025 and 2024, no allowance was recorded for other loans.

​

Mortgage Loans

We periodically purchase mortgage loans as well as sell mortgage loans we have originated. Mortgage loans purchased and sold were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Commercial mortgage loans:		​			​
Purchased	​	$	39.9	​	$	57.0
Sold	​	​	68.9	​	​	0.8
Residential mortgage loans:	​		​	​		​
Purchased	​		265.0	​		38.4
Sold	​		3.9	​		4.9

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025				​	December 31, 2024
​		Amortized			Percent		Amortized			Percent
​	​	cost		​	of total	​	cost		​	of total
​	​	($ in millions)
Geographic distribution	​	​	​	​	​	​	​	​	​	​	​
New England	​	$	342.9	​	2.1	%	$	347.2	​	2.0	%
Middle Atlantic	​		4,567.9	​	27.5	​		4,714.9	​	27.7	​
East North Central	​		457.3	​	2.7	​		591.0	​	3.5	​
West North Central	​		358.1	​	2.1	​	​	394.0	​	2.3	​
South Atlantic	​		2,978.0	​	17.9	​		2,987.7	​	17.5	​
East South Central	​		415.7	​	2.5	​		417.7	​	2.4	​
West South Central	​		1,306.9	​	7.8	​		1,310.5	​	7.7	​
Mountain	​		972.9	​	5.8	​		979.5	​	5.7	​
Pacific	​		4,756.4	​	28.6	​		4,851.9	​	28.4	​
International	​		503.3	​	3.0	​		478.3	​	2.8	​
Total	​	$	16,659.4	​	100.0	%	$	17,072.7	​	100.0	%
​	​	​	​	​	​	​	​	​	​	​	​
Property type distribution	​	​	​	​	​	​	​	​	​	​	​
Office	​	$	3,060.1	​	18.4	%	$	3,182.9	​	18.5	%
Retail	​		1,445.5	​	8.7	​		1,476.9	​	8.7	​
Industrial	​		4,130.7	​	24.8	​		4,364.5	​	25.6	​
Apartments	​		7,171.8	​	43.0	​		7,220.4	​	42.3	​
Hotel	​		64.1	​	0.4	​		65.0	​	0.4	​
Mixed use/other	​		787.2	​	4.7	​		763.0	​	4.5	​
Total	​	$	16,659.4	​	100.0	%	$	17,072.7	​	100.0	%

​

Mortgage Loan Modifications

Our commercial and residential mortgage loan portfolios include loans that have been modified. We assess loan modifications that are related to our borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay or a term extension (or a combination thereof). Generally, an assessment of whether a borrower is experiencing financial difficulty is made on the date of the modification.

The financing receivables valuation allowance utilizes an estimate of lifetime expected credit losses and it is recorded on each loan upon origination or acquisition. The starting point for the estimate of the valuation allowance is historical loss information, which includes losses from modification of receivables to borrowers experiencing financial difficulty. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the valuation allowance because of the measurement methodologies used to estimate the allowance, a change to the valuation allowance is generally not recorded upon modification.

Occasionally, a modification of a loan from a borrower experiencing financial difficulty is in the form of principal forgiveness. When principal forgiveness is provided as a modification, the amount of the principal forgiven is deemed uncollectible. Therefore, that portion of the loan is written off, which results in a reduction of the amortized cost and a corresponding adjustment to the valuation allowance.

In some cases, we modify a loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession such as principal forgiveness may be granted.

We did not have any significant mortgage loans that were modified for both the three months ended March 31, 2025 and 2024.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Securities Posted as Collateral

As of March 31, 2025 and December 31, 2024, we posted $6,856.7 million and $6,748.8 million, respectively, in commercial mortgage loans and residential first lien mortgages to satisfy collateral requirements associated with our obligation under funding agreements with Federal Home Loan Bank of Des Moines (“FHLB Des Moines”). In addition, as of March 31, 2025 and December 31, 2024, we posted $3,772.9 million and $3,636.7 million, respectively, in fixed maturities, available-for-sale and trading securities to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements, a lending arrangement and our obligation under funding agreements with FHLB Des Moines. Since we did not relinquish ownership rights on these instruments, they are reported as mortgage loans, fixed maturities, available-for-sale and fixed maturities, trading, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, as of March 31, 2025 and December 31, 2024, $364.9 million and $206.0 million, respectively, could be sold or repledged by the secured party.

Balance Sheet Offsetting

Financial assets subject to master netting agreements or similar agreements were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross amounts not offset in the					​	​	​
​	​	​	​	​	consolidated statements					​	​	​
​	​	​	​	​	of financial position					​	​	​
​	​	Gross amount		​	​	​	​	​	​	​	​	​
​	​	of recognized		​	Financial		​	Collateral		​	​	​
​		assets (1)			instruments (2)			received			Net amount
​	​	(in millions)
March 31, 2025	​	​	​	​	​	​	​	​	​	​	​	​
Derivative assets	​	$	610.8	​	$	(239.5)	​	$	(361.2)	​	$	10.1
Reverse repurchase agreements	​	​	114.5	​	​	—	​	​	(114.5)	​	​	—
Total	​	$	725.3	​	$	(239.5)	​	$	(475.7)	​	$	10.1
December 31, 2024	​	​	​	​	​	​	​	​	​	​	​	​
Derivative assets	​	$	648.2	​	$	(254.8)	​	$	(392.1)	​	$	1.3
Reverse repurchase agreements	​		120.4	​	​	—	​	​	(120.4)	​	​	—
Total	​	$	768.6	​	$	(254.8)	​	$	(512.5)	​	$	1.3

(1)

The gross amount of recognized derivative and reverse repurchase agreement assets are reported with other investments and cash and cash equivalents, respectively, on the consolidated statements of financial position. The gross amounts of derivative and reverse repurchase agreement assets are not netted against offsetting liabilities for presentation on the consolidated statements of financial position.

(2)	Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Financial liabilities subject to master netting agreements or similar agreements were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross amounts not offset in the					​	​	​
​	​	​	​	​	consolidated statements					​	​	​
​	​	​	​	​	of financial position					​	​	​
​	​	Gross amount		​	​	​	​	​	​	​	​	​
​	​	of recognized		​	Financial		​	Collateral		​	​	​
​		liabilities (1)			instruments (2)			pledged			Net amount
​	​	(in millions)
March 31, 2025	​	​	​	​	​	​	​	​	​	​	​	​
Derivative liabilities	​	$	437.3	​	$	(239.5)	​	$	(195.8)	​	$	2.0
December 31, 2024	​	​	​	​	​	​	​	​	​	​	​	​
Derivative liabilities	​	$	506.0	​	$	(254.8)	​	$	(239.4)	​	$	11.8

(1)

The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes derivative liabilities, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position.

(2)	Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position.

The financial instruments that are subject to master netting agreements or similar agreements include right of setoff provisions. Derivative instruments include provisions to setoff positions covered under the agreements with the same counterparties and provisions to setoff positions outside of the agreements with the same counterparties in the event of default by one of the parties. Derivative instruments also include collateral or variation margin provisions, which are generally settled daily with each counterparty. See Note 5, Derivative Financial Instruments, for further details.

Repurchase and reverse repurchase agreements include provisions to setoff other repurchase and reverse repurchase balances with the same counterparty. Repurchase and reverse repurchase agreements also include collateral provisions with the counterparties. For reverse repurchase agreements we require the counterparties to pledge collateral with a value greater than the amount of cash transferred. We have the right but do not sell or repledge collateral received in reverse repurchase agreements. Repurchase agreements are structured as secured borrowings for all counterparties. We pledge fixed maturities available-for-sale, which the counterparties have the right to sell or repledge. Interest incurred on repurchase agreements is reported as part of operating expenses on the consolidated statements of operations. Net proceeds related to repurchase agreements are reported as a component of financing activities on the consolidated statements of cash flows. We did not have any outstanding repurchase agreements as of March 31, 2025 and December 31, 2024.

​

5. Derivative Financial Instruments

Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication and income generation strategies.

Types of Derivative Instruments

Interest Rate Contracts

Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and/or floating rate interest amounts based upon designated market rates or rate indices and an agreed-upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash is paid or received based on the terms of the swap. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments; to hedge against cash variability related to forecasted transactions and to hedge against changes in the value of the guaranteed minimum withdrawal benefit (“GMWB”) MRB. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product. Additionally, we utilize interest rate swaps to replicate the returns of floating rate assets.

Interest rate options, including interest rate caps and interest rate floors, which can be combined to form interest rate collars, are contracts that entitle the purchaser to pay or receive the amounts, if any, by which a specified market rate exceeds a cap strike interest rate, or falls below a floor strike interest rate, respectively, at specified dates. We use interest rate options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities.

A swaption is an option to enter into an interest rate swap at a future date. We have purchased swaptions to hedge interest rate exposure for certain assets and liabilities. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits.

In exchange-traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. We enter into exchange-traded futures with regulated futures commissions merchants who are members of a trading exchange. We use exchange-traded interest rate futures to hedge against changes in value of the GMWB MRB in addition to the economic exposure to certain fund strategies.

Interest rate forwards, including to be announced (“TBA”) forwards, bond forwards and treasury forwards, are contracts to take delivery of a fixed income security at a specified price at a future date. TBA forwards deliver government guaranteed mortgage-backed securities. Bond forwards and treasury forwards deliver corporate or municipal and U.S. Treasury bonds, respectively. At inception of the TBA and certain treasury forward contracts we do not intend to take physical delivery. We intend to take delivery of the bond forwards referencing corporate, municipal and certain treasury bonds. We have used TBA forwards to gain exposure to the investment risk and return of agency mortgage-backed security pools in order to reduce asset and liability duration mismatch. Treasury forwards are used to hedge against changes in the value of the GMWB MRB and to more closely match the interest rate characteristics of assets and liabilities. Bond forwards are used to gain leverage through synthetic exposure during the forward period and fix the purchase price of a bond at a specified date in future.

Foreign Exchange Contracts

Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency-denominated funding agreements issued to nonqualified institutional investors in the international market, foreign currency-denominated fixed maturity and equity securities, and our international operations, including expected cash flows and potential acquisition and divestiture activity. We use various derivatives to manage our exposure to fluctuations in foreign currency exchange rates.

Currency swaps are contracts in which we agree with other parties to exchange, at specified intervals, a series of principal and interest payments in one currency for that of another currency. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. The interest payments are primarily fixed-to-fixed rate; however, they may also be fixed-to-floating rate or floating-to-fixed rate. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. We use currency swaps to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Currency forwards are contracts in which we agree with other parties to deliver or receive a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. We use currency forwards to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell.

Equity Contracts

Equity risk is the risk that we will incur economic losses due to adverse fluctuations in common stock prices. We use various derivatives to manage our exposure to equity risk, which arises from products in which the return or interest we credit is tied to an external equity index as well as products subject to minimum contractual guarantees.

We purchase equity call spreads (“option collars”) to hedge the equity participation rates promised to contractholders in conjunction with our fixed deferred annuity and universal life products that credit interest based on changes in an external equity index.

We use equity put options to hedge against changes in the value of the GMWB MRB related to the GMWB rider on our variable annuity products. We also use equity options to hedge returns credited to policyholder accounts related to our RILA products. The premium associated with certain options is paid quarterly over the life of the option contract.

We use exchange-traded equity futures to hedge against changes in the value of the GMWB MRB and returns credited to policyholder accounts related to our RILA products. We have used equity futures to hedge the economic exposure to certain fund closures in process.

We use equity total return swaps to hedge for income enhancement. Total return swaps are contracts in which we agree with other parties to periodically exchange the total return on a referenced security for an agreed-upon reference rate or spread based on specified notional amounts.

Credit Contracts

Credit risk relates to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest. We use credit default swaps to enhance the return on our investment portfolio by providing comparable exposure to fixed income securities that might not be available in the primary market. They are also used to hedge credit exposures in our investment portfolio. Credit derivatives are used to sell or buy credit protection on an identified name or names on an unfunded or synthetic basis in return for receiving or paying a quarterly premium. The premium generally corresponds to a referenced name’s credit spread at the time the agreement is executed.

We also use credit total return swaps for income enhancement. In the case of a predefined credit event, total return swaps require the total return receiver to pay for the decline in the price of the referenced security.

In cases where we sell protection, we also buy a quality cash bond to match against the swap, thereby entering into a synthetic transaction replicating a cash security. When selling protection, if there is an event of default by the referenced name, as defined by the agreement, we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced security in a principal amount equal to the notional value of the swap.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Other Contracts

Embedded Derivatives. We purchase or issue certain financial instruments or products that contain a derivative instrument that is embedded in the financial instrument or product. When it is determined that the embedded derivative possesses economic characteristics that are not clearly or closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host instrument for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated statements of financial position, is carried at fair value.

We offer group annuity contracts that have guaranteed separate accounts as an investment option. We have fixed deferred annuities, RILAs and universal life products that credit interest based on changes in an external equity index.

We have a funds withheld payable associated with coinsurance with funds withheld reinsurance agreements. The funds withheld payable has an embedded total return swap as the total return of the funds withheld assets are transferred to the reinsurer, which is not based on our own creditworthiness.

Exposure

Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments.

Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts of bilateral OTC derivatives for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparties under master netting agreements. OTC cleared derivatives have variation margin that is legally characterized as settlement of the derivative exposure, which reduces their fair value in the consolidated statements of financial position.

We posted $539.4 million and $533.7 million in cash and securities under collateral arrangements as of March 31, 2025 and December 31, 2024, respectively, to satisfy collateral and initial margin requirements associated with our derivative credit support agreements and FCM agreements.

Certain of our derivative instruments contain provisions that require us to maintain an investment grade rating from each of the major credit rating agencies on our debt. If the ratings on our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value, inclusive of accrued interest, of all derivative instruments with credit-risk-related contingent features that were in a liability position without regard to netting under derivative credit support annex agreements as of March 31, 2025 and December 31, 2024, was $420.0 million and $472.3 million, respectively. Cleared derivatives have contingent features that require us to post excess margin as required by the FCM. The terms surrounding excess margin vary by FCM agreement. With respect to derivatives containing collateral provisions, we posted collateral and initial margin of $539.4 million and $533.7 million as of March 31, 2025 and December 31, 2024, respectively, in the normal course of business, which reflects netting under derivative agreements. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2025, we would be required to post up to an additional $108.2 million of collateral to our counterparties.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

As of March 31, 2025 and December 31, 2024, we had received $332.7 million and $358.9 million, respectively, of cash collateral associated with our derivative credit support annex agreements and FCM agreements, for which we recorded a corresponding liability reflecting our obligation to return the collateral.

Notional amounts are used to express the extent of our involvement in derivative transactions and represent a standard measurement of the volume of our derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received, except for contracts such as currency swaps. Credit exposure represents the gross amount owed to us under derivative contracts as of the valuation date. The notional amounts and credit exposure of our derivative financial instruments by type were as follows:

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Notional amounts of derivative instruments	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​
Interest rate swaps	​	$	60,338.6	​	$	60,776.6
Interest rate options	​	​	4,635.0	​	​	4,735.0
Interest rate forwards	​		1,860.1	​		2,125.6
Interest rate futures	​		1,272.9	​		845.0
Foreign exchange contracts:	​	​	​	​	​	​
Currency swaps	​	​	3,035.2	​	​	2,883.8
Currency forwards	​	​	978.2	​	​	981.2
Equity contracts:	​	​	​	​	​	​
Equity options	​		5,031.0	​		4,380.1
Equity futures	​		952.4	​		852.5
Total return swaps	​	​	896.5	​	​	775.3
Credit contracts:	​	​	​	​	​	​
Credit default swaps	​		478.3	​		375.0
Total return swaps	​	​	250.0	​	​	250.0
Other contracts:	​	​	​	​	​	​
Embedded derivatives	​		22,869.4	​		22,592.0
Total notional amounts at end of period	​	$	102,597.6	​	$	101,572.1
​	​	​	​	​	​	​
Credit exposure of derivative instruments	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​
Interest rate swaps	​	$	15.5	​	$	10.0
Interest rate options	​		19.6	​		28.1
Foreign exchange contracts:	​	​	​	​	​	​
Currency swaps	​		204.5	​		191.4
Currency forwards	​		10.4	​		7.6
Equity contracts:	​	​	​	​	​	​
Equity options	​		368.1	​		388.1
Total return swaps	​	​	—	​	​	20.8
Credit contracts:	​	​	​	​	​	​
Credit default swaps	​		3.6	​		4.0
Total return swaps	​	​	0.9	​	​	14.3
Total gross credit exposure	​		622.6	​		664.3
Less: collateral received	​		390.4	​		450.3
Net credit exposure	​	$	232.2	​	$	214.0

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The fair value of our derivative instruments classified as assets and liabilities was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Derivative assets (1)					​	Derivative liabilities (2)
​		March 31, 2025			December 31, 2024			March 31, 2025			December 31, 2024
​	​	(in millions)
Derivatives designated as hedging instruments	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate contracts	​	$	—	​	$	—	​	$	79.1	​	$	83.0
Foreign exchange contracts	​		175.8	​		170.4	​		23.9	​		20.7
Total derivatives designated as hedging instruments	​	$	175.8	​	$	170.4	​	$	103.0	​	$	103.7
​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives not designated as hedging instruments	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate contracts	​	$	31.1	​	$	35.4	​	$	161.1	​	$	246.9
Foreign exchange contracts	​		31.5	​		20.0	​		19.3	​		34.8
Equity contracts	​		368.1	​		405.0	​		136.0	​		119.8
Credit contracts	​		4.3	​		17.4	​		18.0	​		1.0
Other contracts	​		—	​		—	​		(2,282.1)	​		(2,436.1)
Total derivatives not designated as hedging instruments	​		435.0	​		477.8	​		(1,947.7)	​		(2,033.6)
​	​	​	​	​	​	​	​	​	​	​	​	​
Total derivative instruments	​	$	610.8	​	$	648.2	​	$	(1,844.7)	​	$	(1,929.9)

(1)	The fair value of derivative assets is reported with other investments on the consolidated statements of financial position.

(2)

The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivatives with a net liability fair value of $522.7 million and $578.4 million as of March 31, 2025 and December 31, 2024, respectively, are reported with contractholder funds on the consolidated statements of financial position. Embedded derivatives with a net (asset) liability fair value of $(2,804.8) million and $(3,014.5) million as of March 31, 2025 and December 31, 2024, respectively, are reported with funds withheld payable on the consolidated statements of financial position.

Credit Derivatives Sold

When we sell credit protection, we are exposed to the underlying credit risk similar to purchasing a fixed maturity security instrument. Our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps” or “single name total return swaps”). These instruments are either referenced in an OTC credit derivative transaction or embedded within an investment structure that has been fully consolidated into our financial statements.

These credit derivative transactions are subject to events of default defined within the terms of the contract, which normally consist of bankruptcy, failure to pay, or modified restructuring of the reference entity and/or issue. If a default event occurs for a reference name or security, we are obligated to pay the counterparty an amount equal to the notional amount of the credit derivative transaction. As a result, our maximum future payment is equal to the notional amount of the credit derivative. In certain cases, we also may have purchased credit protection with identical underlyings to certain of our sold protection transactions. As of March 31, 2025 and December 31, 2024, we did not purchase credit protection relating to our sold protection transactions. In certain circumstances, our potential loss could also be reduced by any amount recovered in the default proceedings of the underlying credit name.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The following tables show our derivative protection sold by types of contract, types of referenced/underlying asset class and external agency rating for the underlying reference security. The maximum future payments are undiscounted and have not been reduced by the effect of any offsetting transactions, collateral or recourse features described above.

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	​	​	​	​	​	​	​	​	​	Weighted
​	​	​	​	​	​	​	​	Maximum		​	average
​	​	Notional		​	Fair		​	future		​	expected life
​		amount			value			payments			(in years)
​	​	(in millions)								​	​
Single name credit default swaps	​	​	​	​	​	​	​	​	​	​	​
Corporate debt	​	​	​	​	​	​	​	​	​	​	​
AA	​	$	56.7	​	$	0.2	​	$	56.7		4.7
A	​	​	86.6	​	​	(0.3)	​	​	86.6		2.6
BBB	​	​	160.0	​	​	3.2	​	​	160.0		1.8
Sovereign	​	​	​	​	​	​	​	​	​	​	​
A	​	​	20.0	​	​	—	​	​	20.0	​	0.2
Total single name credit default swaps	​	​	323.3	​	​	3.1	​	​	323.3	​	2.5
​	​	​	​	​	​	​	​	​	​	​	​
Single name total return swaps	​	​	​	​	​	​	​	​	​	​	​
Government/municipalities	​	​	​	​	​	​	​	​	​	​	​
AAA	​	​	40.0	​	​	(0.5)	​	​	40.0	​	30.3
AA	​	​	130.0	​	​	(1.8)	​	​	130.0	​	26.2
A	​	​	80.0	​	​	0.3	​	​	80.0	​	30.4
Total single name total return swaps	​	​	250.0	​	​	(2.0)	​	​	250.0	​	28.2
​	​	​	​	​	​	​	​	​	​	​	​
Total credit derivatives sold	​	$	573.3	​	$	1.1	​	$	573.3		13.7

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	​	​	​	​	​	​	​	​	​	Weighted
​	​	​	​	​	​	​	​	Maximum		​	average
​	​	Notional		​	Fair		​	future		​	expected life
​		amount			value			payments			(in years)
​	​	(in millions)								​	​
Single name credit default swaps	​	​	​	​	​	​	​	​	​	​	​
Corporate debt	​	​	​	​	​	​	​	​	​	​	​
A	​	$	40.0	​	$	0.2	​	$	40.0		0.5
BBB	​		160.0	​	​	3.6	​	​	160.0		2.1
Sovereign	​	​	​	​	​	​	​	​	​	​	​
A	​	​	20.0	​	​	0.1	​	​	20.0	​	0.5
Total single name credit default swaps	​	​	220.0	​	​	3.9	​	​	220.0	​	1.7
​	​	​	​	​	​	​	​	​	​	​	​
Single name total return swaps	​	​	​	​	​	​	​	​	​	​	​
Government/municipalities	​	​	​	​	​	​	​	​	​	​	​
AAA	​	​	40.0	​	​	2.3	​	​	40.0	​	30.6
AA	​	​	130.0	​	​	6.4	​	​	130.0	​	26.5
A	​	​	80.0	​	​	4.8	​	​	80.0	​	30.7
Total single name total return swaps	​	​	250.0	​	​	13.5	​	​	250.0	​	28.5
​	​	​	​	​	​	​	​	​	​	​	​
Total credit derivatives sold	​	$	470.0	​	$	17.4	​	$	470.0		15.9

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Fair Value and Cash Flow Hedges

Fair Value Hedges

We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and also use them to align the interest rate characteristics of certain liabilities. In general, these swaps are used in asset and liability management to modify duration, which is a measure of sensitivity to interest rate changes.

We enter into currency exchange swap agreements to convert certain foreign denominated assets into U.S. dollar denominated instruments to hedge the exposure to future currency volatility on those items.

The net interest effect of interest rate swap and currency swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations. The currency related impacts of currency swap transactions for derivatives in fair value hedges is recorded as an adjustment to net realized capital gains or losses of the underlying hedged item in our consolidated statements of operations.

The following amounts were recorded on the consolidated statements of financial position related to cumulative basis adjustments for fair value hedges. The amortized cost includes the amortized cost basis and the fair value hedging basis adjustment.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​					​	Cumulative amount of fair
​	​	​					​	value hedging basis adjustment
Line item in the consolidated statements	​	​					​	increase/(decrease) included in the
of financial position in which the	​	Carrying amount of hedged item					​	carrying amount of the hedged item
hedged item is included		March 31, 2025			December 31, 2024			March 31, 2025			December 31, 2024
​	​	(in millions)
Fixed maturities, available-for-sale (1):	​	​	​	​	​	​	​	​	​	​	​	​
Active hedging relationships	​	$	3,138.5	​	$	3,208.4	​	$	(58.9)	​	$	(33.1)
Discontinued hedging relationships	​	​	508.7	​	​	528.6	​	​	(6.1)	​	​	(7.0)
Total fixed maturities, available-for-sale in active or discontinued hedging relationships	​	$	3,647.2	​	$	3,737.0	​	$	(65.0)	​	$	(40.1)
​	​	​	​	​	​	​	​	​	​	​	​	​
Mortgage loans (2):	​	​	​	​	​	​	​	​	​	​	​	​
Active hedging relationships	​	$	1,663.7	​	$	1,707.1	​	$	(3.1)	​	$	(8.4)
Total mortgage loans in active or discontinued hedging relationships	​	$	1,663.7	​	$	1,707.1	​	$	(3.1)	​	$	(8.4)
​	​	​	​	​	​	​	​	​	​	​	​	​
Investment contracts:	​	​	​	​	​	​	​	​	​	​	​	​
Active hedging relationships	​	$	3,295.9	​	$	2,769.6	​	$	13.5	​	$	(22.0)
Total investment contracts in active or discontinued hedging relationships	​	$	3,295.9	​	$	2,769.6	​	$	13.5	​	$	(22.0)

(1)

These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of March 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $2,760.6 million and $2,849.3 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $(37.5) million and $(55.7) million, respectively, and the amount of the designated hedged items were $1,160.0 million and $1,160.0 million, respectively.

(2)

These amounts include the amortized cost basis of closed portfolios used to designate portfolio layer hedging relationships in which the hedged layer amount is expected to remain at the end of the hedging relationship. As of March 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $1,663.7 million and $1,707.1 million, respectively, the cumulative basis adjustments associated with these hedging relationships was $(3.1) million and $(8.4) million, respectively, and the amount of the designated hedged items were $220.0 million and $220.0 million, respectively.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

For the three months ended March 31, 2025 and 2024, $1.1 million and $0.0 million, respectively, of the derivative instruments’ gains (losses) were excluded from the assessment of hedge effectiveness.

Cash Flow Hedges

We utilize floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and liabilities.

We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed rate instruments to eliminate the exposure to future currency volatility on those items.

We use bond forwards and floating-to-fixed rate interest rate swaps to hedge forecasted transactions.

The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.

The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 1.9 years. As of March 31, 2025, we had $6.5 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income.

The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position.

​

​	​	​	​	​	​	​	​	​
​	​	​	​	Amount of gain (loss) recognized
​	​	​	​	in AOCI on derivatives for the
Derivatives in cash	​	​	​	three months ended March 31,
flow hedging relationships		Related hedged item		2025			2024
​	​	​	​	(in millions)
Interest rate contracts		Fixed maturities, available-for-sale	​	$	6.5	​	$	(3.5)
Interest rate contracts		Investment contracts	​		—	​	​	(2.9)
Foreign exchange contracts		Fixed maturities, available-for-sale	​		10.9	​	​	29.4
Total	​	​	​	$	17.4	​	$	23.0

​

We expect to reclassify net gains of $22.1 million from AOCI into net income in the next twelve months, which includes both net deferred gains on discontinued hedges and net gains on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations

The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations.

​

​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	​		​	​	​	​	​
​	​	​	​	​	Net realized		​	​	​
​	​	Net investment		​	capital gains		​	​	Benefits, claims
​	​	income related		​	(losses) related to		​	and settlement
​	​	to hedges of		​	hedges of fixed		​	expenses related
​	​	fixed maturities,		​	maturities,		​	to hedges of
​	​	available-for-sale		​	available-		​	investment
​		and mortgage loans			for-sale			contracts
​	​	(in millions)
Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported	​	$	1,165.7	​	$	(117.1)	​	$	2,220.0
​	​	​	​	​	​	​	​	​	​
Gains (losses) on fair value hedging relationships:	​	​	​	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​	​	​	​
Gain recognized on hedged item	​	$	27.4	​	$	—	​	$	35.5
Loss recognized on derivatives	​	​	(26.1)	​	​	—	​	​	(36.0)
Amortization of hedged item basis adjustments	​	​	0.6	​	​	—	​	​	—
Amounts related to periodic settlements on derivatives	​	​	10.1	​	​	—	​	​	(4.8)
​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts:	​	​	​	​	​	​	​	​	​
Gain recognized on hedged item	​	​	—	​	​	7.8	​	​	—
Loss recognized on derivatives	​	​	—	​	​	(7.8)	​	​	—
Amounts related to periodic settlements on derivatives	​	​	0.7	​	​	—	​	​	—
Total gain (loss) recognized for fair value hedging relationships	​	$	12.7	​	$	—	​	$	(5.3)
​	​	​	​	​	​	​	​	​	​
Gains (losses) on cash flow hedging relationships:	​	​	​	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​	​	​	​
Gain (loss) reclassified from AOCI on derivatives	​	$	0.7	​	$	—	​	$	(0.1)
Amounts related to periodic settlements on derivatives	​	​	(0.1)	​	​	—	​	​	—
​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts:	​	​	​	​	​	​	​	​	​
Amounts related to periodic settlements on derivatives	​	​	8.5	​	​	—	​	​	—
Total gain (loss) recognized for cash flow hedging relationships	​	$	9.1	​	$	—	​	$	(0.1)

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	​		​	​	​	​	​
​	​	​	​	​	Net realized		​	​	​
​	​	Net investment		​	capital gains		​	​	Benefits, claims
​	​	income related		​	(losses) related to		​	and settlement
​	​	to hedges of		​	hedges of fixed		​	expenses related
​	​	fixed maturities,		​	maturities,		​	to hedges of
​	​	available-for-sale		​	available-		​	investment
​		and mortgage loans			for-sale			contracts
​	​	(in millions)
Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported	​	$	1,072.2	​	$	(0.9)	​	$	2,069.7
​	​	​	​	​	​	​	​	​	​
Gains (losses) on fair value hedging relationships:	​	​	​	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​	​	​	​
Loss recognized on hedged item	​	$	(17.7)	​	$	—	​	$	(14.8)
Gain recognized on derivatives	​	​	17.5	​	​	—	​	​	16.2
Amortization of hedged item basis adjustments	​	​	0.4	​	​	—	​	​	—
Amounts related to periodic settlements on derivatives	​	​	16.1	​	​	—	​	​	(4.5)
​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts:	​	​	​	​	​	​	​	​	​
Loss recognized on hedged item	​	​	—	​	​	(4.1)	​	​	—
Gain recognized on derivatives	​	​	—	​	​	4.1	​	​	—
Amounts related to periodic settlements on derivatives	​	​	0.7	​	​	—	​	​	—
Total gain (loss) recognized for fair value hedging relationships	​	$	17.0	​	$	—	​	$	(3.1)
​	​	​	​	​	​	​	​	​	​
Gains on cash flow hedging relationships:	​	​	​	​	​	​	​	​	​
Interest rate contracts:	​	​	​	​	​	​	​	​	​
Gain reclassified from AOCI on derivatives	​	$	0.9	​	$	—	​	$	—
Amounts related to periodic settlements on derivatives	​	​	—	​	​	—	​	​	3.8
​	​	​	​	​	​	​	​	​	​
Foreign exchange contracts:	​	​	​	​	​	​	​	​	​
Amounts related to periodic settlements on derivatives	​	​	5.8	​	​	—	​	​	—
Total gain recognized for cash flow hedging relationships	​	$	6.7	​	$	—	​	$	3.8

​

Net Investment Hedges

We may take measures to hedge our net equity investments in our foreign operations from currency risk. This is accomplished with the use of currency forwards.

Gains and losses associated with net investment hedges are recorded in AOCI and will be released into net income if our investment in the foreign operation is sold or substantially liquidated.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The following table shows the effect of foreign exchange contracts used to hedge a portion of our net investment in certain sponsored investment funds on the consolidated financial statements.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​		​	​		​	​		Amount of loss
​	​	Amount of gain (loss)					​	reclassified from AOCI into
​	​	recognized in AOCI on derivatives					​	net realized capital gains (losses)
​	​	for the three months ended					​	for the three months ended
​	​	March 31,					​	March 31,
Derivatives in net investment hedging relationships	​	2025		​	2024		​	2025			2024
​	​	(in millions)
Foreign exchange contracts	​	$	(1.1)	​	$	0.7	​	$	—	​	$	—
Total	​	$	(1.1)	​	$	0.7	​	$	—	​	$	—

​

Derivatives Not Designated as Hedging Instruments

We use futures, certain swaptions and swaps, option collars, options and forwards in effective economic hedges that have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations. However, the change in fair value of the funds withheld embedded derivative is separately reported on the consolidated statements of operations. Additionally, mark-to-market gains and losses as well as periodic and final settlements for derivatives used to hedge market risk benefits are reported in market risk benefit (gain) loss on the consolidated statements of operations.

The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations and are net of amounts on funds withheld invested assets that are passed directly to the reinsurer. See Note 11, Reinsurance, for further details.

​

​	​	​	​	​	​	​
​	​	Amount of gain (loss) recognized in
​	​	net income on derivatives for the
​	​	three months ended March 31,
Derivatives not designated as hedging instruments		2025			2024
​	​	(in millions)
Interest rate contracts	​	$	(38.6)	​	$	(53.6)
Foreign exchange contracts	​	​	21.0	​	​	(55.6)
Equity contracts	​	​	(140.3)	​	​	(15.0)
Credit contracts	​	​	(16.0)	​	​	1.1
Other contracts (1)	​	​	(154.0)	​	​	137.8
Total	​	$	(327.9)	​	$	14.7

(1)	Includes the change in fair value of the funds withheld embedded derivative.

​

6. Deferred Acquisition Costs and Other Actuarial Balances

Deferred Acquisition Costs

Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contracts are capitalized in the period they are incurred. Maintenance costs and acquisition costs that are not deferrable are charged to operating expenses as incurred.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

For our long-duration insurance products and certain investment contracts, DAC is amortized on a constant level basis over the expected life of the contracts using groupings and assumptions consistent with those used in computing policyholder liabilities. For each of our long-duration insurance products, we select an inforce measure as a basis for amortization that will result in a constant level amortization pattern for the expected life of the contract. If our actual contract terminations differ from our expectation, the amortization pattern is adjusted on a prospective basis.

Some of our life and disability products within the Benefits and Protection segment have renewal commissions resulting in new DAC capitalizations in the years following the initial capitalization. We also have life products that allow for underwritten death benefit increases and cost of living adjustments, resulting in an immaterial amount of new DAC capitalizations each year. The new capitalizations are added to the existing DAC balance when incurred and amortized over the remaining life of the business.

DAC on short-duration group benefits contracts is amortized over the estimated life of the underlying contracts.

We review and update actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for DAC and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. We make model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.

DAC amortization expense of $98.5 million and $97.3 million related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively.

The following tables summarize disaggregated DAC amounts and reconcile the totals to those reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Retirement and Income Solutions:		​			​
Workplace savings and retirement solutions	​	$	519.4	​	$	515.5
Individual variable annuities	​		337.2	​		323.4
Pension risk transfer	​		22.3	​		21.1
Individual fixed deferred annuities	​		79.8	​		84.2
Investment only	​		12.8	​		13.0
Total Retirement and Income Solutions	​		971.5	​		957.2
Benefits and Protection:	​		​	​		​
Specialty Benefits:	​		​	​		​
Individual disability	​		701.9	​		696.9
Life Insurance:	​		​	​		​
Universal life	​		1,525.9	​		1,527.7
Term life	​		713.1	​		710.8
Participating life	​		76.0	​		77.8
Total Benefits and Protection	​		3,016.9	​		3,013.2
Short-duration contracts	​		39.7	​		30.6
Other balances (1)	​		6.0	​		5.9
Total DAC per consolidated statements of financial position	​	$	4,034.1	​	$	4,006.9

(1)	Includes insignificant balances for long-duration contracts.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Retirement and Income Solutions

​

The balances and changes in DAC were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Workplace		​	​	​	​	​	​	​	Individual		​	​	​
​	​	savings and		​	Individual		​	Pension		​	fixed		​	​	​
​	​	retirement		​	variable		​	risk		​	deferred		​	Investment
​		solutions			annuities			transfer			annuities			only
​	​	(in millions)
Balances as of January 1, 2024	​	$	506.4	​	$	279.5	​	$	15.4	​	$	106.1	​	$	11.5
Costs deferred	​		47.7	​	​	72.7	​	​	6.6	​	​	—	​	​	6.5
Amortized to expense	​		(38.6)	​	​	(28.8)	​	​	(0.9)	​	​	(21.9)	​	​	(5.0)
Balances as of December 31, 2024	​	​	515.5	​	​	323.4	​	​	21.1	​	​	84.2	​	​	13.0
Costs deferred	​	​	13.3	​	​	22.0	​	​	1.5	​	​	—	​	​	1.1
Amortized to expense	​	​	(9.4)	​	​	(8.2)	​	​	(0.3)	​	​	(4.4)	​	​	(1.3)
Balances as of March 31, 2025	​	$	519.4	​	$	337.2	​	$	22.3	​	$	79.8	​	$	12.8

​

Benefits and Protection

​

The balances and changes in DAC were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Specialty Benefits		​	Life Insurance
​	​	Individual		​	​	​	​	​	​	​	​	​
​		disability			Universal life			Term life			Participating life
​	​	(in millions)
Balances as of January 1, 2024	​	$	667.7	​	$	1,545.3	​	$	695.1	​	$	84.7
Costs deferred	​		79.0	​	​	76.7	​	​	78.3	​	​	1.7
Amortized to expense	​		(49.8)	​	​	(94.3)	​	​	(62.6)	​	​	(8.6)
Balances as of December 31, 2024	​	​	696.9	​	​	1,527.7	​	​	710.8	​	​	77.8
Costs deferred	​	​	18.3	​	​	22.0	​	​	17.9	​	​	0.3
Amortized to expense	​	​	(13.3)	​	​	(23.8)	​	​	(15.6)	​	​	(2.1)
Balances as of March 31, 2025	​	$	701.9	​	$	1,525.9	​	$	713.1	​	$	76.0

​

Unearned Revenue Liability

An unearned revenue liability is established when we collect fees or other policyholder assessments, inclusive of cost of insurance charges, administrative charges and other similar fees, for services to be provided in future periods. These unearned front-end fees are deferred and the amortization is recorded using an approach consistent with DAC.

The unearned revenue liability is included within other policyholder funds in the consolidated statements of financial position. The following table summarizes disaggregated unearned revenue liability amounts and reconciles the totals to those reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Benefits and Protection - Life Insurance:		​			​
Universal life	​	$	516.6	​	$	510.1
Other balances (1)	​		5.2	​		5.3
Total unearned revenue liability	​	$	521.8	​	$	515.4

(1)	Includes insignificant balances for long-duration contracts.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Benefits and Protection

​

The balances and changes in the unearned revenue liability for Life Insurance – Universal life contracts were as follows:

​

​	​	​	​	​	​	​
​		For the three months ended			For the year ended
​	​	March 31, 2025		​	December 31, 2024
​	​	(in millions)
Balance at beginning of period	​	$	510.1	​	$	485.5
Deferrals	​		14.7	​		56.1
Revenue recognized	​		(8.2)	​		(31.5)
Balance at end of period	​		516.6	​		510.1
Reinsurance impact	​		(219.6)	​		(220.8)
Balance at end of period after reinsurance	​	$	297.0	​	$	289.3

​

​

7. Separate Account Balances

The separate accounts are legally segregated and are not subject to claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. Refer to Note 17, Fair Value Measurements, for further information on the valuation methodologies.

We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations.

The Retirement and Income Solutions segment offers variable annuity contracts that allow the policyholder to allocate deposits into various investment options in a separate account. The variable annuity contracts can also include GMWB riders and guaranteed minimum death benefit (“GMDB”) riders that are accounted for as MRBs. Retirement and Income Solutions also offers certain group annuity contracts that have separate accounts as an investment option.

The Principal Asset Management segment offers certain retirement accumulation products in Latin America where the segregated funds and associated obligation to the client are consolidated as separate account assets and liabilities within the financial statements. We have determined that summary totals are the most meaningful presentation for these funds.

The Benefits and Protection segment offers variable universal life products with separate account investment options.

Refer to Note 10, Market Risk Benefits, for further information on the MRBs associated with the contracts mentioned above.

As of March 31, 2025 and December 31, 2024, the separate accounts included a separate account valued at $85.2 million and $79.8 million, respectively, which primarily included shares of our stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under our 2001 demutualization. These shares are included in both basic and diluted earnings per share calculations. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Separate Account Assets

The aggregate fair value of assets, by major investment category, supporting separate accounts were as follows:

​

​	​	​	​	​	​	​
​	​	March 31, 2025		​	December 31, 2024
​	​	(in millions)
Fixed maturities:		​			​
U.S. government and agencies	​	$	8,133.0	​	$	7,537.1
Non-U.S. governments	​		8,740.8	​		8,461.5
States and political subdivisions	​		171.8	​		170.1
Corporate	​		12,874.5	​		12,590.9
Residential mortgage-backed pass-through securities	​		3,755.3	​		3,746.0
Commercial mortgage-backed securities	​		217.1	​		201.4
Other debt obligations	​		648.4	​		594.1
Total fixed maturities	​		34,540.9	​		33,301.1
Equity securities	​		123,204.3	​		126,575.0
Real estate	​		441.7	​		441.3
Other investments	​		8,298.8	​		8,160.2
Cash and cash equivalents	​		3,886.8	​		4,021.7
Other assets	​		893.7	​		827.8
Total separate account assets per consolidated statements of financial position	​	$	171,266.2	​	$	173,327.1

​

Separate Account Liabilities

The following tables summarize disaggregated separate account liability amounts and reconcile the totals to separate account liabilities reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Retirement and Income Solutions:		​			​
Group retirement contracts	​	$	121,851.7	​	$	125,103.1
Individual variable annuities	​		7,760.0	​		8,334.9
Total Retirement and Income Solutions	​		129,611.7	​		133,438.0
Principal Asset Management – International Pension:	​		​	​
Latin America:	​		​	​
Pension	​		34,658.5	​		32,802.2
Benefits and Protection - Life Insurance:	​		​	​
Universal life	​		6,712.5	​		6,806.7
Other balances (1)	​		283.5	​		280.2
Total separate account liabilities per consolidated statements of financial position	​	$	171,266.2	​	$	173,327.1

(1)	Includes insignificant balances for long-duration contracts.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Retirement and Income Solutions

The balances and the changes in separate account liabilities were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​		For the three months ended						For the year ended
​	​	March 31, 2025					​	December 31, 2024
​	​	Group		​	Individual		​	Group		​	Individual
​	​	retirement		​	variable		​	retirement		​	variable
​		contracts			annuities			contracts			annuities
​	​	(in millions)
Balance at beginning of period	​	$	125,103.1	​	$	8,334.9	​	$	117,518.5	​	$	9,131.9
Premiums and deposits (1)	​		3,578.0	​	​	49.1	​		16,573.1	​		344.5
Policy charges	​		(80.0)	​	​	(44.0)	​		(365.6)	​		(197.6)
Surrenders, withdrawals and benefit payments (1)	​		(3,631.5)	​	​	(493.7)	​		(19,191.4)	​		(1,977.7)
Investment performance	​		(2,370.9)	​	​	(81.0)	​		14,632.1	​		1,079.0
Net transfers (to) from general account (1)	​		(773.0)	​	​	(5.3)	​		(4,148.3)	​		(2.1)
Other (2)	​		26.0	​	​	—	​		84.7	​		(43.1)
Balance at end of period	​	$	121,851.7	​	$	7,760.0	​	$	125,103.1	​	$	8,334.9
​	​	​	​	​	​	​	​	​	​	​	​	​
Cash surrender value (3)	​	$	120,675.3	​	$	7,649.3	​	$	123,965.4	​	$	8,219.1

(1)	Within the policyholder account balances rollforwards in Note 8, Contractholder Funds, amounts in these lines for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in net transfers from (to) separate account.

(2)	Includes amounts to be settled between the separate account and general account due to the timing of trade settlements as of the reporting date.

(3)	Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges.

Principal Asset Management – International Pension

The balances and the changes in separate account liabilities for Latin America – Pension were as follows:

​

​	​	​	​	​	​	​
​		For the three months ended		​	For the year ended
​		March 31, 2025		​	December 31, 2024
​		(in millions)
Balance at beginning of period	​	$	32,802.2	​	$	34,580.6
Premiums and deposits	​		764.3	​		3,347.7
Policy charges	​		(4.3)	​		(16.6)
Surrenders, withdrawals and benefit payments	​		(930.1)	​		(3,638.0)
Investment performance	​		564.5	​		2,890.1
Other	​		(24.6)	​		22.8
Foreign currency translation adjustment	​		1,486.5	​		(4,384.4)
Balance at end of period	​	$	34,658.5	​	$	32,802.2
​	​	​	​	​	​	​
Cash surrender value	​	$	34,658.5	​	$	32,802.2

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Benefits and Protection

The balances and the changes in separate account liabilities for Life Insurance – Universal life were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended		​	For the year ended
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Balance at beginning of period	​	$	6,806.7		$	5,982.5
Premiums and deposits (1)	​	​	186.4	​		557.2
Policy charges	​	​	(33.8)	​		(132.7)
Surrenders, withdrawals and benefit payments (1)	​	​	(113.0)	​		(492.2)
Investment performance	​	​	(137.2)	​		880.5
Net transfers (to) from general account (1)	​	​	3.4	​		11.4
Balance at end of period	​	$	6,712.5	​	$	6,806.7
​	​	​	​	​	​	​
Cash surrender value (2)	​	$	6,792.4	​	$	6,869.5

(1)	Within the policyholder account balances rollforwards in Note 8, Contractholder Funds, amounts in these lines are reflected in net transfers from (to) separate account.

(2)	Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. Certain products include surrender value enhancement riders that result in cash surrender values greater than account balances.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

8. Contractholder Funds

Contractholder funds include policyholder account balances related to contracts with significant insurance risk and investment contracts.

The following tables summarize disaggregated policyholder account balance amounts and reconcile the totals to contractholder funds reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​	​	March 31, 2025		​	December 31, 2024
​	​	(in millions)
Retirement and Income Solutions:		​			​
Workplace savings and retirement solutions	​	$	14,380.4	​	$	13,982.8
Individual variable annuities	​		2,228.2	​		1,746.0
Individual fixed deferred annuities	​		4,290.3	​		4,462.3
Total Retirement and Income Solutions	​		20,898.9	​		20,191.1
Benefits and Protection – Life Insurance:	​		​	​
Universal life	​		6,909.6	​		6,930.4
Corporate:	​		​	​
Inter-segment eliminations	​		(358.3)	​		(361.2)
Total policyholder account balances for contracts with significant insurance risk or investment contracts with significant fee revenue	​		27,450.2	​		26,760.3
​	​	​	​	​	​	​
Reconciling items:	​		​	​
Investment contracts without significant fee revenue (1)	​		15,462.7	​		15,805.8
Embedded derivatives and other balances (2)	​		353.1	​		533.5
Total contractholder funds per consolidated statements of financial position	​	$	43,266.0	​	$	43,099.6

(1)	Includes GICs, funding agreements, individual fixed income annuities and guaranteed pension contracts. These contracts are not included within the disaggregated rollforward or guaranteed minimum interest rate (“GMIR”) disclosures below.

(2)

Includes insignificant balances for long-duration contracts, embedded derivative (assets) liabilities, including associated host contract (asset) liability adjustments, and amounts that are not accrued to the benefit of the contractholder and, therefore, are not included within the disaggregated rollforward or GMIR disclosures below. Refer to Note 17, Fair Value Measurements, for details on the changes in Level 3 fair value measurements of embedded derivatives.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Policyholder Account Balances

Retirement and Income Solutions

The changes in policyholder account balances were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025								​	For the year ended December 31, 2024
​	​	Workplace		​	​	​	​	​	​	​	Workplace		​	​	​	​	​	​	​
​	​	savings and		​	Individual		​	Individual		​	savings and		​	Individual		​	Individual
​	​	retirement		​	variable		​	fixed deferred		​	retirement		​	variable		​	fixed deferred
​		solutions			annuities			annuities (1)			solutions			annuities			annuities (1)
​	​	($ in millions)
Balance at beginning of period	​	$	13,982.8	​	$	1,746.0	​	$	4,462.3	​	$	12,721.5	​	$	514.2	​	$	5,538.3	​
Premiums and deposits	​		1,408.9	​		555.2	​		4.9	​		4,945.1	​		1,686.5	​		43.2	​
Policy charges	​		(10.4)	​		—	​		—	​		(36.7)	​		—	​		—	​
Surrenders, withdrawals and benefit payments	​		(1,075.1)	​		(524.6)	​		(208.2)	​		(3,791.8)	​		(2,098.2)	​		(1,255.7)	​
Net transfers from (to) separate account (2)	​		(36.1)	​		449.9	​		—	​		(220.5)	​		1,635.3	​		—	​
Interest credited	​		115.9	​		1.7	​		31.3	​		395.9	​		8.0	​		136.5	​
Other	​		(5.6)	​		—	​		—	​		(30.7)	​		0.2	​		—	​
Balance at end of period	​	$	14,380.4	​	$	2,228.2	​	$	4,290.3	​	$	13,982.8	​	$	1,746.0	​	$	4,462.3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted-average crediting rate (3)	​		3.49	%		3.37	%		3.14	%		3.26	%		3.39	%		3.09	%
Cash surrender value (4)	​	$	13,006.9	​	$	2,106.2	​	$	4,048.4	​	$	12,524.6	​	$	1,778.7	​	$	4,208.5	​

(1)	We use the deposit method of accounting for the reinsurance of this exited business.

(2)	Within the separate account liabilities rollforwards in Note 7, Separate Account Balances, these transfers for Individual variable annuities and Workplace savings and retirement solutions included in Group retirement contracts are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account.

(3)	The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value.

(4)	Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges. The cash surrender value for RILA products also includes an equity and bond adjustment that may result in cash surrender value being greater than account balance.

The net amount at risk for policyholder account balances for Individual variable annuities is equal to the MRB net amount at risk, as reported in Note 10, Market Risk Benefits. Workplace savings and retirement solutions and Individual fixed deferred annuities do not have guarantees that provide for benefits in excess of the current policyholder account balances.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Benefits and Protection

The changes in policyholder account balances for Life Insurance – Universal life were as follows:

​

​	​	​	​	​	​	​	​
​		For the three months ended			For the year ended
​	​	March 31, 2025		​	December 31, 2024
​	​	($ in millions)
Balance at beginning of period	​	$	6,930.4	​	$	6,910.4	​
Premiums and deposits	​		375.0	​		1,283.7	​
Policy charges	​		(224.7)	​		(877.1)	​
Surrenders, withdrawals and benefit payments	​		(163.4)	​		(591.7)	​
Net transfers from (to) separate account (1)	​		(76.8)	​		(76.4)	​
Interest credited	​		68.9	​		282.6	​
Other	​		0.2	​		(1.1)	​
Balance at end of period	​		6,909.6	​		6,930.4	​
Reinsurance impact	​	​	(3,188.7)	​	​	(3,232.8)	​
Balance at end of period after reinsurance	​	$	3,720.9	​	$	3,697.6	​
​	​	​	​	​	​	​	​
Weighted-average crediting rate (2)	​		4.29	%		4.13	%
Net amount at risk (3)	​	$	85,997.3	​	$	86,141.3	​
Cash surrender value (4)	​	$	6,054.8	​	$	6,052.5	​

(1)	Within the separate account liabilities rollforwards in Note 7, Separate Account Balances, these transfers are reflected in premiums and deposits; surrenders, withdrawals and benefit payments; and net transfers (to) from general account.

(2)	The weighted-average crediting rate is the crediting rate as of the end of each reporting period weighted by account value, including indexed credits.

(3)	For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the death benefit in excess of the current account balance or the fixed death benefit at the consolidated statement of financial position date.

(4)	Cash surrender value represents the amount of the contractholders’ account balances distributable at the end of the reporting period less surrender charges.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Guaranteed Minimum Interest Rate

The account values, for contracts with significant insurance risk and investment contracts with significant fee revenue by range of GMIR and the related range of difference, in basis points, between rates credited to policyholders and the respective GMIR were as follows. The amounts are before reinsurance impacts of our exited U.S. retail fixed annuity and ULSG businesses.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	Excess of crediting rates over GMIR
​	​	​		​	Up to 0.50%		​	0.51% to 1.00%		​	1.01% to 2.00%		​	2.01% or more		​	​
​		At GMIR			above GMIR			above GMIR			above GMIR			above GMIR			Total
​		(in millions)
Retirement and Income Solutions		​			​			​			​			​			​
Workplace savings and retirement solutions		​			​			​			​			​			​
Up to 1.00%	​	$	—		$	—	​	$	—	​	$	236.8	​	$	1,273.9	​	$	1,510.7
1.01% - 2.00%	​	​	3,406.0		​	—	​	​	—	​	​	1,010.1	​	​	—	​	​	4,416.1
2.01% - 3.00%	​	​	169.0		​	0.2	​	​	2.3	​	​	3,596.2	​	​	2,889.7	​	​	6,657.4
3.01% - 4.00%	​	​	7.6		​	—	​	​	—	​	​	—	​	​	—	​	​	7.6
4.01% and above		​	13.5		​	—	​	​	—	​	​	—	​	​	—	​	​	13.5
Subtotal		​	3,596.1		​	0.2	​	​	2.3	​	​	4,843.1	​	​	4,163.6	​	​	12,605.3
No GMIR		​			​	​	​	​	​	​	​	​	​	​	​	​	​	1,775.1
Total		​			​	​	​	​	​	​	​	​	​	​	​	​	$	14,380.4
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Individual variable annuities		​			​			​			​			​			​
Up to 1.00%	​	$	17.1	​	$	—	​	$	—	​	$	—	​	$	—	​	$	17.1
1.01% - 2.00%	​	​	3.5	​	​	—	​	​	—	​	​	—	​	​	—	​	​	3.5
2.01% - 3.00%	​	​	223.4	​	​	—	​	​	—	​	​	—	​	​	—	​	​	223.4
3.01% - 4.00%	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
4.01% and above		​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Subtotal		​	244.0	​	​	—	​	​	—	​	​	—	​	​	—	​	​	244.0
No GMIR		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1,984.2
Total		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	2,228.2
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Individual fixed deferred annuities		​			​			​			​			​			​
Up to 1.00%	​	$	196.0	​	$	19.5	​	$	46.4	​	$	152.4	​	$	1,108.8	​	$	1,523.1
1.01% - 2.00%	​	​	74.9	​	​	0.2	​	​	3.5	​	​	42.6	​	​	7.9	​	​	129.1
2.01% - 3.00%	​	​	2,329.6	​	​	—	​	​	—	​	​	—	​	​	—	​	​	2,329.6
3.01% - 4.00%	​	​	138.4	​	​	—	​	​	—	​	​	—	​	​	—	​	​	138.4
4.01% and above		​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Subtotal		​	2,738.9	​	​	19.7	​	​	49.9	​	​	195.0	​	​	1,116.7	​	​	4,120.2
No GMIR		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	170.1
Total		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	4,290.3
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Benefits and Protection - Life Insurance		​			​			​			​			​			​
Universal life		​			​			​			​			​			​
Up to 1.00%	​	$	—	​	$	—	​	$	1.4	​	$	14.6	​	$	7.3	​	$	23.3
1.01% - 2.00%	​	​	261.9	​	​	—	​	​	424.8	​	​	525.0	​	​	464.8	​	​	1,676.5
2.01% - 3.00%	​	​	625.5	​	​	623.3	​	​	753.3	​	​	372.9	​	​	6.0	​	​	2,381.0
3.01% - 4.00%	​	​	1,570.0	​	​	47.1	​	​	30.6	​	​	106.2	​	​	7.0	​	​	1,760.9
4.01% and above		​	21.3	​	​	4.2	​	​	8.0	​	​	18.2	​	​	—	​	​	51.7
Subtotal		​	2,478.7	​	​	674.6	​	​	1,218.1	​	​	1,036.9	​	​	485.1	​	​	5,893.4
No GMIR		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1,016.2
Total		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	6,909.6

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	Excess of crediting rates over GMIR
​	​	​	​	​	Up to 0.50%		​	0.51% to 1.00%		​	1.01% to 2.00%		​	2.01% or more		​	​	​
​		At GMIR			above GMIR			above GMIR			above GMIR			above GMIR			Total
​		(in millions)
Retirement and Income Solutions	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Workplace savings and retirement solutions	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Up to 1.00%	​	$	—	​	$	—	​	$	—	​	$	1,041.7	​	$	445.2	​	$	1,486.9
1.01% - 2.00%	​		3,727.0	​	​	—	​	​	—	​	​	1,056.3	​	​	—	​	​	4,783.3
2.01% - 3.00%	​		4.6	​	​	186.9	​	​	1.8	​	​	2,900.0	​	​	2,740.1	​	​	5,833.4
3.01% - 4.00%	​		7.6	​	​	—	​	​	—	​	​	—	​	​	—	​	​	7.6
4.01% and above	​		13.9	​	​	—	​	​	—	​	​	—	​	​	—	​	​	13.9
Subtotal	​		3,753.1	​	​	186.9	​	​	1.8	​	​	4,998.0	​	​	3,185.3	​	​	12,125.1
No GMIR	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1,857.7
Total	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	13,982.8
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Individual variable annuities	​			​			​			​			​			​
Up to 1.00%	​	$	19.2	​	$	—	​	$	—	​	$	—	​	$	—	​	$	19.2
1.01% - 2.00%	​		3.8	​		—	​		—	​		—	​		—	​		3.8
2.01% - 3.00%	​		231.5	​		—	​		—	​		—	​		—	​		231.5
3.01% - 4.00%	​		—	​		—	​		—	​		—	​		—	​		—
4.01% and above	​		—	​		—	​		—	​		—	​		—	​		—
Subtotal	​		254.5	​		—	​		—	​		—	​		—	​		254.5
No GMIR	​		​	​			​			​			​			​		1,491.5
Total	​	​	​	​			​			​			​			​	$	1,746.0
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Individual fixed deferred annuities	​			​			​			​			​			​
Up to 1.00%	​	$	213.1	​	$	27.5	​	$	56.0	​	$	196.9	​	$	1,093.2	​	$	1,586.7
1.01% - 2.00%	​		78.8	​		0.3	​		4.8	​		48.2	​		7.4	​		139.5
2.01% - 3.00%	​		2,416.4	​		—	​		—	​		—	​		—	​		2,416.4
3.01% - 4.00%	​		142.0	​		—	​		—	​		—	​		—	​		142.0
4.01% and above	​		—	​		—	​		—	​		—	​		—	​		—
Subtotal	​		2,850.3	​		27.8	​		60.8	​		245.1	​		1,100.6	​		4,284.6
No GMIR	​		​	​			​			​			​			​		177.7
Total	​	​	​	​			​			​			​			​	$	4,462.3
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Benefits and Protection - Life Insurance	​			​			​			​			​			​
Universal life	​			​			​			​			​			​
Up to 1.00%	​	$	—	​	$	—	​	$	1.5	​	$	14.9	​	$	4.9	​	$	21.3
1.01% - 2.00%	​		268.6	​		—	​		424.0	​		518.6	​		452.3	​		1,663.5
2.01% - 3.00%	​		646.0	​		632.2	​		771.9	​		368.7	​		6.3	​		2,425.1
3.01% - 4.00%	​		1,559.7	​		56.7	​		34.5	​		105.4	​		7.0	​		1,763.3
4.01% and above	​		23.5	​		2.5	​		7.0	​		18.9	​		—	​		51.9
Subtotal	​		2,497.8	​		691.4	​		1,238.9	​		1,026.5	​		470.5	​		5,925.1
No GMIR	​		​	​			​			​			​			​		1,005.3
Total	​	​	​	​			​			​			​			​	$	6,930.4

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

9**. Future Policy Benefits and Claims**

Future policy benefits and claims include reserves for short-duration contracts and long-duration contracts as well as certain reinsurance balances, when in a liability position.

The following tables summarize disaggregated amounts included in future policy benefit and claims and reconcile the totals to those reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Liability for future policy benefits by segment (1):		​			​
Retirement and Income Solutions:		​			​
Pension risk transfer	​	$	25,756.0		$	24,958.1
Individual fixed income annuities	​		4,493.7		​	4,504.6
Total Retirement and Income Solutions	​		30,249.7		​	29,462.7
Principal Asset Management – International Pension:	​		​		​	​
Latin America:	​	​	​	​	​	​
Individual fixed income annuities	​		4,313.7		​	4,126.9
Benefits and Protection:	​		​		​	​
Specialty Benefits:	​		​		​	​
Individual disability	​		1,891.0		​	1,829.0
Life Insurance:	​		​		​	​
Term life	​		1,299.1		​	1,248.0
Total Benefits and Protection	​		3,190.1		​	3,077.0
Corporate:	​		​		​	​
Long-term care insurance	​		167.0		​	164.8
Total liability for future policy benefits	​		37,920.5		​	36,831.4
​	​	​	​	​	​	​
Additional liability for certain benefit features by segment (2):	​		​		​	​
Benefits and Protection – Life Insurance:	​		​		​	​
Universal life	​		6,191.2		​	6,037.2
Total additional liability for certain benefit features	​		6,191.2		​	6,037.2
​	​	​	​	​	​	​
Reconciling items:	​		​		​	​
Participating contracts	​		2,888.2		​	2,924.2
Short-duration contracts	​		1,241.0		​	1,267.4
Cost of reinsurance liability	​		956.9		​	958.1
Reinsurance recoverable liability	​	​	74.9	​	​	60.3
Other (3)	​		86.7		​	100.8
Future policy benefits and claims per consolidated statements of financial position	​	$	49,359.4		$	48,179.4

(1)	Amounts include the deferred profit liability.

(2)	Includes reserves on certain long-duration contracts where benefit features result in gains in early years followed by losses in later years.

(3)	Includes other miscellaneous reserves and the impact of unrealized gains (losses) on the additional liability for certain benefit features.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Liability for Unpaid Claims

The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Balance at beginning of period	​	$	1,379.9	​	$	1,405.9
Less: reinsurance recoverable	​		61.2	​		67.8
Net balance at beginning of period	​		1,318.7	​		1,338.1
Incurred:	​		​	​		​
Current year	​		472.5	​		458.0
Prior years	​		(42.4)	​		(47.4)
Total incurred	​		430.1	​		410.6
Payments:	​		​	​		​
Current year	​		256.1	​		240.3
Prior years	​		175.0	​		173.0
Total payments	​		431.1	​		413.3
Net balance at end of period	​		1,317.7	​		1,335.4
Plus: reinsurance recoverable	​		61.0	​		64.5
Balance at end of period	​	$	1,378.7	​	$	1,399.9

​

Incurred liability adjustments relating to prior years, which affected current operations during 2025 and 2024, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Long-Duration Contracts

Gross Premiums or Assessments and Interest Accretion

The amount of gross premiums or assessments and interest accretion recognized by segment in the consolidated statements of operations was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Gross premiums or assessments (1)					​	Interest accretion (2)
​	​	For the three months ended						For the three months ended
​	​	March 31,					​	March 31,
​		2025			2024			2025			2024
​		(in millions)
Retirement and Income Solutions:		​			​			​			​
Pension risk transfer	​	$	806.1	​	$	753.0		$	300.5		$	272.9
Individual fixed income annuities	​		8.2	​		17.0		​	50.3		​	53.2
Total Retirement and Income Solutions	​		814.3	​		770.0		​	350.8		​	326.1
Principal Asset Management – International Pension:	​		​	​		​		​	​		​	​
Latin America:	​	​	​	​	​	​	​	​	​	​	​	​
Individual fixed income annuities (3)	​		1.8	​		2.1		​	88.8		​	71.1
Benefits and Protection:	​		​	​		​		​	​		​	​
Specialty Benefits:	​		​	​		​		​	​		​	​
Individual disability	​		158.6	​		154.9		​	25.8		​	24.4
Life Insurance:	​		​	​		​		​	​		​	​
Universal life	​		177.0	​		176.2		​	68.5		​	60.4
Term life	​		170.3	​		164.1		​	15.5		​	13.2
Total Benefits and Protection	​		505.9	​		495.2		​	109.8		​	98.0
Corporate:	​		​	​		​		​	​		​	​
Long-term care insurance	​		1.7	​		1.5		​	2.4		​	2.2
Total per consolidated statements of operations	​	$	1,323.7	​	$	1,268.8		$	551.8		$	497.4

(1)	Gross premiums are included within premiums and other considerations on the consolidated statements of operations. Assessments, which are only applicable to the Life Insurance – Universal life level of aggregation, are included within fees and other revenues on the consolidated statements of operations.

(2)	Interest accretion is included within benefits, claims and settlement expenses on the consolidated statements of operations.

(3)	Includes inflation adjustments included within the liability for future policy benefits rollforward for interest accretion.

​

Liability for Future Policy Benefits

The liability for future policy benefits (“LFPB”) for individual and group annuities is generally equal to the present value of expected future policy benefit payments. The reserves are computed using assumptions for mortality and interest. The LFPB for non-participating term life insurance, individual disability income contracts and individual and group long-term care contracts is generally equal to the present value of expected future policy benefit payments less the present value of expected net premiums. The reserves are computed using assumptions for mortality, interest, morbidity and lapse. Cohorts are used as the unit of account for liability measurement. Actual cash flows are grouped into issue-year cohorts for the liability calculation and updated quarterly. We review and update, if necessary, assumptions used to measure cash flows for the LFPB during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The change in our liability estimate as a result of updating cash flow assumptions is recognized in net income.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

An interest accretion rate is determined for an identified cohort and remains unchanged after the issue year. For policies issued on or prior to December 31, 2020, the interest accretion rate is based on the assumed investment yield when the business was issued. For policies issued after December 31, 2020, the interest accretion rate is based on the upper-medium grade fixed-income instrument yields, which is generally equivalent to a single-A rated bond yield matched to the duration of our insurance liabilities, when the business was issued.

The LFPB is remeasured to reflect current upper-medium grade fixed-income instrument yields as of each reporting date. The liability is calculated by discounting cash flows using rate curves reflecting the currency and duration of the insurance liabilities. For discount rate tenors, or points on the curves, where the upper-medium grade fixed-income instrument yields are not liquid or limited observable market data is available, we use various estimation techniques consistent with fair value measurement guidance.

For our individual fixed income annuities in Latin America, the discount rate methodology is designed to prioritize observable inputs based on market data available in the local debt markets where the respective policies are issued in the currency in which the policies are denominated. For discount rate tenors where upper-medium grade fixed-income instrument yields based on international rating standards are not liquid or limited observable market data is available, estimation techniques are used to determine a curve in the appropriate currency.

Further details regarding reference rates used are included under “Interest Accretion and Current Discount Rates.”

Retirement and Income Solutions

The balances and the changes in the present value for expected future policy benefits were as follows:

​	​	​	​	​	​	​	​	​	​	​	​	​
​		For the three months ended						For the year ended
​	​	March 31, 2025					​	December 31, 2024
​	​	Pension		​	Individual		​	Pension		​	Individual
​	​	risk		​	fixed income		​	risk		​	fixed income
​		transfer			annuities			transfer			annuities
​		($ in millions)
Present value of expected future policy benefit payments		​			​			​			​
Balance at beginning of period	​	$	24,958.1	​	$	4,504.6	​	$	23,855.8	​	$	4,914.1
Effect of changes in discount rate assumptions at beginning of period	​		1,938.8	​		420.4	​		1,036.1	​		296.7
Balance at beginning of period at original discount rate	​		26,896.9	​		4,925.0	​		24,891.9	​		5,210.8
Effect of changes in cash flow assumptions	​		—	​		—	​		(3.4)	​		(38.4)
Effect of actual variances from expected experience	​		(4.8)	​		(0.4)	​		(1.5)	​		(1.7)
Adjusted beginning of period balance at original discount rate	​		26,892.1	​		4,924.6	​		24,887.0	​		5,170.7
Interest accrual	​		300.5	​		50.3	​		1,135.1	​		208.4
Benefit payments	​		(603.9)	​		(123.2)	​		(2,238.1)	​		(500.2)
Issuances	​		811.9	​		8.1	​		3,112.9	​		46.1
Balance at end of period at original discount rate	​		27,400.6	​		4,859.8	​		26,896.9	​		4,925.0
Effect of changes in discount rate assumptions at end of period	​		(1,644.6)	​		(366.1)	​		(1,938.8)	​		(420.4)
Future policy benefits	​		25,756.0	​		4,493.7	​		24,958.1	​		4,504.6
Reinsurance impact	​		—	​		(4,453.9)	​		—	​		(4,469.4)
Future policy benefits after reinsurance	​	$	25,756.0	​	$	39.8	​	$	24,958.1	​	$	35.2
​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted-average duration for future policy benefits (years) (1)	​		8.0	​		7.2	​		8.0	​		7.2

(1)	Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Principal Asset Management – International Pension

The balances and the changes in the present value for expected future policy benefits for Latin America – Individual fixed income annuities were as follows:

​

​	​	​	​	​	​	​
​		For the three months ended			For the year ended
​	​	March 31, 2025		​	December 31, 2024
​		($ in millions)
Present value of expected future policy benefit payments		​			​
Balance at beginning of period	​	$	4,126.9	​	$	4,593.7
Effect of changes in discount rate assumptions at beginning of period	​		(368.4)	​		(351.8)
Balance at beginning of period at original discount rate	​		3,758.5	​		4,241.9
Effect of actual variances from expected experience	​		0.5	​		1.1
Adjusted beginning of period balance at original discount rate	​		3,759.0	​		4,243.0
Interest accrual (1)	​		88.8	​		330.2
Benefit payments	​		(82.0)	​		(326.7)
Issuances	​		1.8	​		29.4
Foreign currency translation adjustment	​		167.0	​		(517.4)
Balance at end of period at original discount rate	​		3,934.6	​		3,758.5
Effect of changes in discount rate assumptions at end of period	​		379.1	​		368.4
Future policy benefits	​	$	4,313.7	​	$	4,126.9
​	​	​	​	​	​	​
Weighted-average duration for future policy benefits (years) (2)	​		9.7	​		9.8

(1)	Includes inflation adjustments.

(2)	Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Benefits and Protection

The balances and the changes in the present value for expected net premiums and expected future policy benefits were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended					​	For the year ended
​	​	March 31, 2025					​	December 31, 2024
​	​	Specialty		​	Life		​	Specialty		​	Life
​	​	Benefits		​	Insurance		​	Benefits		​	Insurance
​	​	Individual		​	​	​	​	Individual		​	​	​
​		disability			Term life			disability			Term life
​	​	($ in millions)
Present value of expected net premiums		​			​			​			​
Balance at beginning of period	​	$	2,680.6	​	$	4,107.2	​	$	2,552.3	​	$	3,793.7
Effect of changes in discount rate assumptions at beginning of period	​		436.4	​		290.1	​		313.7	​		100.1
Balance at beginning of period at original discount rate	​		3,117.0	​		4,397.3	​		2,866.0	​		3,893.8
Effect of changes in cash flow assumptions	​		—	​		—	​		183.9	​		419.9
Effect of actual variances from expected experience	​		28.7	​		2.4	​		168.3	​		42.5
Adjusted beginning of period balance at original discount rate	​		3,145.7	​		4,399.7	​		3,218.2	​		4,356.2
Interest accrual	​		27.1	​		50.9	​		103.5	​		190.9
Net premiums collected	​		(72.8)	​		(100.9)	​		(289.1)	​		(390.8)
Issuances	​		18.4	​		53.2	​		84.4	​		241.0
Balance at end of period at original discount rate	​		3,118.4	​		4,402.9	​		3,117.0	​		4,397.3
Effect of changes in discount rate assumptions at end of period	​		(400.5)	​		(239.1)	​		(436.4)	​		(290.1)
Balance at end of period	​	$	2,717.9	​	$	4,163.8	​	$	2,680.6	​	$	4,107.2
​	​	​	​	​	​	​	​	​	​	​	​	​
Present value of expected future policy benefit payments	​		​	​		​	​			​
Balance at beginning of period	​	$	4,509.6	​	$	5,355.2	​	$	4,450.7	​	$	4,879.6
Effect of changes in discount rate assumptions at beginning of period	​		1,302.8	​		366.0	​		903.5	​		124.5
Balance at beginning of period at original discount rate	​		5,812.4	​		5,721.2	​		5,354.2	​		5,004.1
Effect of changes in cash flow assumptions	​		—	​		—	​		216.2	​		488.1
Effect of actual variances from expected experience	​		29.5	​		0.2	​		173.2	​		45.1
Adjusted beginning of period balance at original discount rate	​		5,841.9	​		5,721.4	​		5,743.6	​		5,537.3
Interest accrual	​		52.9	​		66.4	​		203.3	​		247.9
Benefit payments	​		(57.0)	​		(89.2)	​		(219.0)	​		(321.6)
Issuances	​		18.1	​		56.4	​		84.5	​		257.6
Balance at end of period at original discount rate	​		5,855.9	​		5,755.0	​		5,812.4	​		5,721.2
Effect of changes in discount rate assumptions at end of period	​		(1,247.0)	​		(292.1)	​		(1,302.8)	​		(366.0)
Balance at end of period	​	$	4,608.9	​	$	5,462.9	​	$	4,509.6	​	$	5,355.2
​	​	​	​	​	​	​	​	​	​	​	​	​
Future policy benefits (1)	​	$	1,891.0	​	$	1,299.1	​	$	1,829.0	​	$	1,248.0
Reinsurance impact	​		(423.5)	​		24.6	​		(412.1)	​		19.5
Future policy benefits after reinsurance	​	$	1,467.5	​	$	1,323.7	​	$	1,416.9	​	$	1,267.5
​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted-average duration for future policy benefits (years) (2)	​		18.0	​		8.3	​		18.3	​		8.4

(1)	Represents the present value of expected future policy benefit payments less the present value of expected net premiums.

(2)	Represents the average of the cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

We updated our actuarial assumptions during the third quarter of 2024, resulting in a $32.3 million increase in the LFPB and an $18.2 million decrease to income before taxes, net of reinsurance, for Individual disability. This was primarily due to unfavorable updates to termination and lapse assumptions. The updates also resulted in a $68.2 million increase in the LFPB and a $52.9 million decrease to income before taxes, net of reinsurance, for Term life. This was primarily due to unfavorable updates to mortality and lapse assumptions.

Additional Liability for Certain Benefit Features

The LFPB also includes an additional reserve on certain universal life contracts where benefit features result in gains in early years followed by losses in later years. The liability for these future losses is accrued in relation to estimated contract assessments. A premium deficiency exists if the net liabilities together with future premiums are determined to be insufficient to provide for expected future policy benefits. Premium deficiency testing considers, among other factors, anticipated investment income and does not include a provision for adverse deviation. We did not have a premium deficiency reserve as of March 31, 2025 or December 31, 2024.

The balances and the changes in the additional liability for certain benefit features for Life Insurance - Universal life contracts, excluding the impact of unrealized gains (losses), were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended		​	For the year ended
​		March 31, 2025			December 31, 2024
​	​	($ in millions)
Balance at beginning of period	​	$	6,037.2	​	$	5,326.5
Effect of changes in cash flow assumptions	​		—	​		151.9
Effect of actual variances from expected experience	​		11.6	​		28.0
Interest accrual	​		68.5	​		253.3
Net assessments collected	​		107.1	​		425.2
Benefit payments	​		(33.2)	​		(147.7)
Balance at end of period	​		6,191.2	​		6,037.2
Reinsurance impact	​		(6,164.9)	​		(6,011.3)
Balance at end of period after reinsurance	​	$	26.3	​	$	25.9
​	​	​	​	​	​	​
Weighted-average duration for additional liability (years) (1)	​		22.8	​		23.3

(1)	Represents the average of the cohort-level duration of the benefits less the net assessment cash flows weighted by the reserve balance for each cohort.

We updated our actuarial assumptions during the third quarter of 2024, resulting in a $151.9 million increase in the additional liability for certain benefit features primarily due to mortality assumptions related to ULSG products, resulting in a $0.3 million decrease to income before taxes, net of reinsurance.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Corporate

The balances and the changes in the present value for expected net premiums and expected future policy benefits for long-term care insurance were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended		​	For the year ended
​	​	March 31, 2025		​	December 31, 2024
​	​	($ in millions)
Present value of expected net premiums		​			​
Balance at beginning of period	​	$	30.8	​	$	42.8
Effect of changes in discount rate assumptions at beginning of period	​		(1.3)	​		(3.0)
Balance at beginning of period at original discount rate	​		29.5	​		39.8
Effect of changes in cash flow assumptions	​		—	​		(5.3)
Effect of actual variances from expected experience	​		0.4	​		(2.2)
Adjusted beginning of period balance at original discount rate	​		29.9	​		32.3
Interest accrual	​		0.4	​		1.9
Net premiums collected	​		(1.4)	​		(4.7)
Balance at end of period at original discount rate	​		28.9	​		29.5
Effect of changes in discount rate assumptions at end of period	​		1.7	​		1.3
Balance at end of period	​	$	30.6	​	$	30.8
​	​	​	​	​	​	​
Present value of expected future policy benefit payments	​		​	​
Balance at beginning of period	​	$	195.6	​	$	209.5
Effect of changes in discount rate assumptions at beginning of period	​		(8.8)	​		(20.0)
Balance at beginning of period at original discount rate	​		186.8	​		189.5
Effect of changes in cash flow assumptions	​		—	​		(1.2)
Effect of actual variances from expected experience	​		1.1	​		2.5
Adjusted beginning of period balance at original discount rate	​		187.9	​		190.8
Interest accrual	​		2.8	​		11.2
Benefit payments	​		(3.9)	​		(15.2)
Balance at end of period at original discount rate	​		186.8	​		186.8
Effect of changes in discount rate assumptions at end of period	​		10.8	​		8.8
Balance at end of period	​	$	197.6	​	$	195.6
​	​	​	​	​	​	​
Future policy benefits (1)	​	$	167.0	​	$	164.8
Reinsurance impact	​		(167.0)	​		(164.8)
Future policy benefits after reinsurance	​	$	—	​	$	—
​	​	​	​	​	​	​
Weighted-average duration for future policy benefits (years) (2)	​		9.2	​		9.3

(1)	Represents the present value of expected future policy benefit payments less the present value of expected net premiums.

(2)	Represents the average of cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Expected Future Gross Premiums and Benefit Payments

The amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums, utilizing the current upper-medium fixed-income instrument yield, were as follows:

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​		(in millions)
Retirement and Income Solutions:		​			​
Pension risk transfer		​			​
Expected undiscounted future benefit payments	​	$	40,544.5		$	39,532.3
​	​	​	​	​	​	​
Individual fixed income annuities	​		​		​
Expected undiscounted future benefit payments	​	$	6,518.7		$	6,622.6
​	​	​	​	​	​	​
Principal Asset Management – International Pension:	​		​		​
Latin America:	​	​	​	​	​	​
Individual fixed income annuities	​		​		​
Expected undiscounted future benefit payments	​	$	5,749.7		$	5,509.1
​	​	​	​	​	​	​
Benefits and Protection – Specialty Benefits:	​		​		​
Individual disability	​		​		​
Expected discounted future gross premiums	​	$	5,558.0		$	5,484.0
Expected undiscounted future gross premiums	​	$	8,681.7		$	8,680.0
Expected undiscounted future benefit payments	​	$	9,861.6		$	9,808.8
​	​	​	​	​	​	​
Benefits and Protection – Life Insurance:	​		​		​
Term life	​		​		​
Expected discounted future gross premiums	​	$	6,759.2		$	6,651.2
Expected undiscounted future gross premiums	​	$	11,450.0		$	11,391.4
Expected undiscounted future benefit payments	​	$	9,009.0		$	8,970.7
​	​	​	​	​	​	​
Corporate:	​		​		​
Long-term care insurance	​		​		​
Expected discounted future gross premiums	​	$	38.1	​	$	38.4
Expected undiscounted future gross premiums	​	$	54.6		$	55.7
Expected undiscounted future benefit payments	​	$	355.0		$	357.3

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Interest Accretion and Current Discount Rates

The interest accretion rate shown for each level of aggregation is an average of the cohort-level accretion rates weighted by the reserve balance for each cohort within that level of aggregation. The current discount rate is calculated at a cohort-level based on current upper-medium fixed-income instrument yields and weighted by the reserve balance for each cohort within each level of aggregation. The weighted-average rates were as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Interest accretion rate			​	Current discount rate
​		March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Retirement and Income Solutions:									​
Pension risk transfer		4.64	%	4.61	%	5.41	%	5.55	%
Individual fixed income annuities		4.22	%	4.22	%	5.34	%	5.50	%
Principal Asset Management – International Pension (1):		​				​			​
Latin America:		​	​	​	​	​	​	​	​
Individual fixed income annuities	​	4.20	%	4.21	%	3.05	%	3.04	%
Benefits and Protection:		​		​		​			​
Specialty Benefits:		​		​		​			​
Individual disability		3.88	%	3.89	%	5.52	%	5.64	%
Life Insurance:		​				​			​
Universal life		4.75	%	4.75	%	See note (2)		See note (2)	​
Term life		4.82	%	4.82	%	5.09	%	5.35	%
Corporate:		​		​		​			​
Long-term care insurance		6.16	%	6.16	%	5.44	%	5.58	%

(1)	The interest accretion rate and current discount rate are Chilean real rates, excluding inflation, in the local currency.

(2)	The additional liability for certain benefit features for Life Insurance – Universal life is measured using the discount rate at contract inception. Therefore, the current discount rate is not applicable for this product.

​

10. Market Risk Benefits

Contracts or contract features that provide protection to the policyholder from capital market risk, including equity, interest rate or foreign exchange risk, and expose us to other-than-nominal capital market risk are classified as MRBs. We issue certain annuity contracts and other investment contracts that include MRBs that have been bifurcated from the host contract. The Retirement and Income Solutions segment offers variable annuity products with GMWB riders and GMDB riders, including return-of-premium GMDB and GMWB riders for its RILA products.

MRBs are measured at fair value at the contract level and can be in either an asset or liability position, depending on certain inputs at the reporting date. MRB assets and liabilities are presented separately within the consolidated statements of financial position. Increases to an asset or decreases to a liability are described as favorable changes to fair value.

Changes in fair value are reported in MRB remeasurement (gain) loss on the consolidated statements of operations. However, the change in fair value related to our own nonperformance risk is reported in OCI. For contracts that contain multiple MRB features, the MRBs are valued on a combined basis using an integrated model.

MRBs are classified as Level 3 fair value measurements as the fair value is based on unobservable inputs. The key assumptions for calculating the fair value of the MRBs are market assumptions such as equity market returns, interest rate levels, market volatility and correlations and policyholder behavior assumptions such as lapse, mortality, utilization and withdrawal patterns. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The MRBs are valued using stochastic models that incorporate a spread reflecting our own nonperformance risk.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The assumption for our own nonperformance risk for MRBs is based on the current market credit spreads for debt-like instruments we have issued and are available in the market. Increases (decreases) in our own nonperformance risk, which impacts the rates used to discount future cash flows, could lead to favorable (unfavorable) changes in the fair value of the MRBs.

Long-term interest rates are used as the mean return when projecting the growth in the value of the associated account value and impact the discount rate used in the discounted future cash flows valuation. The amount of claims will increase if account value is not sufficient to cover guaranteed withdrawals. An increase (decrease) in risk-free rates could cause a favorable (unfavorable) change in the fair value of the MRBs. A decrease (increase) in market volatilities could cause a favorable (unfavorable) change in the fair value of the MRBs.

An increase (decrease) in mortality rates or the overall lapse rate assumptions could cause a favorable (unfavorable) change in the fair value of the MRBs. The lapse rate assumption may vary dynamically based on the relationship between the guarantee and associated account value. A weaker (stronger) dynamic lapse rate assumption could lead to favorable (unfavorable) changes in the fair value of the MRBs.

The utilization rate assumption includes how many contractholders will take withdrawals, when they will take them and how much of their benefit they will take. A decrease (increase) in the number of contractholders taking withdrawals, contractholders taking withdrawals earlier versus later, or contractholders taking more versus less of their benefit could lead to favorable (unfavorable) changes in the fair value of the MRBs.

The following tables summarize disaggregated MRB amounts in an asset and liability position reported in the consolidated statements of financial position.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		March 31, 2025									December 31, 2024
​	​	​	​	​	​	​	​	Net asset		​	​	​	​	​	​	​	Net asset
​		Asset			Liability			(liability)			Asset			Liability			(liability)
​	​	(in millions)
Retirement and Income Solutions:		​			​			​			​			​			​
Individual variable annuities	​	$	158.7	​	$	80.4	​	$	78.3		$	199.5		$	62.1		$	137.4
Total MRB per consolidated statements of financial position	​	$	158.7	​	$	80.4	​	$	78.3	​	$	199.5	​	$	62.1	​	$	137.4

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Retirement and Income Solutions

The net asset (liability) balances and the changes in the valuation of the MRBs for Individual variable annuities were as follows:

​

​	​	​	​	​	​	​
​		For the three months ended			For the year ended
​	​	March 31, 2025		​	December 31, 2024
​		($ in millions)
Balance at beginning of period	​	$	137.4	​	$	41.5
Effect of changes in nonperformance risk at beginning of period	​		19.0	​		7.7
Adjusted balance at beginning of period	​		156.4	​		49.2
Effect of:	​			​
Interest accrual and expected policyholder behavior	​		(14.8)	​		(66.8)
Benefit payments	​		—	​		0.6
Changes in interest rates	​		(21.5)	​		100.4
Changes in equity markets	​		(17.8)	​		92.4
Changes in equity index volatility	​		(5.9)	​		12.0
Actual policyholder behavior different from expected behavior	​		(1.8)	​		(12.7)
Changes in future expected policyholder behavior	​		—	​		(20.2)
Changes in other future expected assumptions	​		—	​		1.5
Adjusted balance at end of period	​		94.6	​		156.4
Effect of changes in nonperformance risk at end of period	​		(16.3)	​		(19.0)
Balance at end of period	​	$	78.3	​	$	137.4
​	​	​	​	​	​	​
Weighted-average attained age of policyholders (years) (1)	​		67.3	​		67.4
Net amount at risk (2)	​	$	132.4	​	$	46.8

(1)	The weighted-average attained age is calculated at the contract level using the total contributions since inception and the age of the contractholders.

(2)

The net amount at risk for our GMDB riders is defined as the current GMDB amount in excess of the current account balance. The net amount at risk for our GMWB riders is defined as the greater of the present value of the GMWB payments less the current account balance or zero. For contracts with both GMDB and GMWB riders, the net amount at risk is the greater of the GMDB or GMWB net amount at risk. We had an increase in the net amount at risk in 2025 primarily as a result of decreases in the equity markets.

​

Significant changes to inputs and assumptions that impacted the change in the MRB fair value measurement shown above were as follows:

​

​	​	For the three months ended			​	For the year ended
​	​	March 31, 2025			​	December 31, 2024
​		​		Change in net		​		Change in net
​	​	Change in input	​	MRB asset (liability)	​	Change in input	​	MRB asset (liability)
Long-term interest rate	​	Decreased	​	Unfavorable	​	Increased	​	Favorable
Equity markets	​	Decreased	​	Unfavorable	​	Increased	​	Favorable
Equity market volatilities	​	Decreased	​	Unfavorable (1)	​	Decreased	​	Favorable
Own nonperformance risk	​	Increased	​	Favorable	​	Decreased	​	Unfavorable

(1)

The weighted - average equity market volatility input is calculated using market - implied volatilities and the difference between account values and the present value of future benefits. An equity market decline during first quarter 2025 shifted this calculation, moving the block along the volatility curve. As a result, the weighted - average market volatility input decreased despite rising equity market volatility, which results in unfavorable impacts to the net MRB asset (liability).

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

See “Unobservable Inputs for Fair Value Measurement” for additional details on the inputs.

Unobservable Inputs for Fair Value Measurement

The following table provides quantitative information about the significant unobservable inputs used for fair value measurements of MRBs. The utilization rate and mortality rate inputs are omitted from the table as a range does not provide meaningful presentation. The utilization rate represents the number of contractholders taking withdrawals in addition to the amount and timing of the withdrawals. The mortality rate is an input based on an appropriate industry mortality table.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		March 31, 2025					​	December 31, 2024
​	​	​	​	​	​	Weighted-	​	​	​	​	​	Weighted-
​	​	Range of inputs				Average		Range of inputs				Average
Retirement and Income Solutions:													​
Individual variable annuities													​
Long-term interest rate (1)		4.59	-	4.62	%	4.60	%	4.78	-	4.85	%	4.81	%
Long-term equity market volatility		18.10	-	35.43	%	21.70	%	18.10	-	35.53	%	21.76	%
Nonperformance risk		0.49	-	1.23	%	1.02	%	0.40	-	1.10	%	0.89	%
Lapse rate		0.90	-	55.00	%	6.07	%	0.90	-	55.00	%	5.79	%

(1)	Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. The rate curves are derived from an interpolation between various observable swap rates.

​

11. Reinsurance

We reinsure a portion of the insurance risks associated with our individual disability, traditional life, universal life, medical and long-term care insurance as well as retail fixed annuity contracts with significant life insurance risk through reinsurance agreements with unaffiliated reinsurance companies, primarily on a quota share, excess loss, yearly renewable term (“YRT”) or coinsurance basis. We have coinsurance with funds withheld reinsurance agreements in which we cede our U.S. retail fixed annuity and ULSG blocks of business using both the reinsurance and deposit methods of accounting.

We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. As of March 31, 2025, and December 31, 2024, we had $14,692.7 million and $14,592.6 million of reinsurance recoverable assets, respectively, included in reinsurance recoverable and deposit receivable on the consolidated statements of financial position, which does not reflect potentially offsetting impacts of collateral. As of March 31, 2025, and December 31, 2024, we had $74.9 million and $60.3 million of reinsurance recoverable liabilities, respectively, included in future policy benefits and claims on the consolidated statements of financial position.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Premiums and other considerations:	​	​	​	​	​	​
Direct	​	$	1,883.4	​	$	1,804.3
Ceded	​		(132.1)	​		(119.7)
Net premiums and other considerations	​	$	1,751.3	​	$	1,684.6
Benefits, claims and settlement expenses:	​		​	​		​
Direct	​	$	2,598.0	​	$	2,487.5
Ceded	​		(378.0)	​		(417.8)
Net benefits, claims and settlement expenses	​	$	2,220.0	​	$	2,069.7
LFPB remeasurement (gain) loss:	​	​	​	​	​	​
Direct	​	$	6.1	​	$	28.0
Ceded	​	​	(3.9)	​	​	(29.7)
Net LFPB remeasurement (gain) loss	​	$	2.2	​	$	(1.7)

​

As of March 31, 2025 and December 31, 2024, we had a $4,699.9 million and $4,897.5 million reinsurance deposit receivable, respectively.

Refer to Note 4, Investments, for information on our financing receivables valuation allowance related to the reinsurance recoverable and deposit receivable.

Cost of Reinsurance

A reinsurance asset or liability is established to spread the expected net reinsurance costs or profits over the expected term of the contracts. The cost of reinsurance asset and liability are reported in premiums due and other receivables and liability for future policy benefits and claims, respectively, on the consolidated statements of financial position. The cost of reinsurance asset and liability included on the consolidated statements of financial position were as follows:

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Cost of reinsurance asset	​	$	3,165.9	​	$	3,187.6
​	​	​	​	​	​	​
Cost of reinsurance liability	​	$	956.9	​	$	958.1

​

Cost of reinsurance amortization, including the impacts of remeasurement, of $20.0 million and $5.5 million for the three months ended March 31, 2025 and 2024, respectively, was reported in benefits, claims and settlement expenses and liability for future policy benefits remeasurement (gain) loss on the consolidated statements of operations.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Funds Withheld

The following assets were held in support of our reserves associated with our coinsurance with funds withheld agreements and are reported in the line items shown on the consolidated statements of financial position.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Fixed maturities, available-for-sale	​	$	13,496.7	​	$	13,519.6
Fixed maturities, trading	​		284.9	​	​	299.4
Equity securities	​		0.3	​	​	0.3
Mortgage loans	​		2,125.9	​	​	2,212.4
Other investments	​		1,256.4	​	​	1,142.8
Cash and cash equivalents	​		1,137.0	​	​	1,080.1
Accrued interest income	​		174.2	​	​	166.2
Net other liabilities	​		(99.9)	​	​	(99.4)
Net assets	​	$	18,375.5	​	$	18,321.4

​

Certain assets are reported at amortized cost while the fair value of those assets is reflected in the funds withheld payable. As of March 31, 2025 and December 31, 2024, we had a $18,212.3 million and $18,103.7 million funds withheld payable, which was net of a $2,804.8 million and $3,014.5 million embedded derivative asset, respectively. The change in fair value of the embedded derivative was a gain (loss) of $(209.7) million and $197.0 million for the three months ended March 31, 2025 and 2024, respectively.

While the economic benefits of the funds withheld assets flow to the reinsurer, we retain legal ownership of the assets within the funds withheld account. Guidelines are in place to ensure the investment risk is appropriately managed. Net investment income and net realized capital gains (losses) related to the assets on the consolidated statements of operations is reported net of the amounts that flow to the reinsurer. The realized gains and losses that do not flow to the reinsurer are reported in net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations.

Following are the components of net realized capital gains (losses) on the funds withheld assets that were passed to the reinsurer.

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Fixed maturities, available-for-sale	​	$	(28.0)	​	$	(30.2)
Fixed maturities, trading	​	​	0.1	​	​	—
Mortgage loans	​	​	(1.4)	​	​	—
Derivatives	​	​	(2.2)	​	​	1.0
Net realized capital losses	​	$	(31.5)	​	$	(29.2)

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

12. Long-Term Debt

The components of long-term debt were as follows:

​

​	​	​	​	​	​	​	​	​	​
​		March 31, 2025
​	​	​	​	​	Net unamortized		​	​	​
​	​	​	​	​	discount,		​	​	​
​	​	​	​	​	premium and		​	​	​
​	​	​	​	​	debt issuance		​	Carrying
​		Principal			costs			amount
​	​	(in millions)
3.4% notes payable, due 2025		$	400.0		$	—		$	400.0
3.1% notes payable, due 2026		​	350.0		​	(0.5)		​	349.5
4.111% notes payable, due 2028	​	​	400.0	​	​	(13.0)	​	​	387.0
3.7% notes payable, due 2029		​	500.0		​	(2.9)		​	497.1
2.125% notes payable, due 2030		​	600.0		​	(2.6)		​	597.4
5.375% notes payable, due 2033		​	400.0		​	(3.5)		​	396.5
6.05% notes payable, due 2036		​	505.6		​	(2.0)		​	503.6
4.625% notes payable, due 2042		​	300.0		​	(2.7)		​	297.3
4.35% notes payable, due 2043		​	300.0		​	(2.8)		​	297.2
4.3% notes payable, due 2046		​	300.0		​	(2.9)		​	297.1
5.5% notes payable, due 2053		​	300.0		​	(4.3)		​	295.7
Non-recourse mortgages and notes payable		​	3.0		​	(0.1)		​	2.9
Total long-term debt		$	4,358.6		$	(37.3)		$	4,321.3

​

​	​	​	​	​	​	​	​	​	​
​		December 31, 2024
​	​	​	​	​	Net unamortized		​	​	​
​	​	​	​	​	discount,		​	​	​
​	​	​	​	​	premium and		​	​	​
​	​	​	​	​	debt issuance		​	Carrying
​		Principal			costs			amount
​	​	(in millions)
3.4% notes payable, due 2025		$	400.0		$	(0.2)		$	399.8
3.1% notes payable, due 2026		​	350.0		​	(0.7)		​	349.3
3.7% notes payable, due 2029		​	500.0		​	(3.1)		​	496.9
2.125% notes payable, due 2030	​	​	600.0	​	​	(2.8)	​	​	597.2
5.375% notes payable, due 2033	​	​	400.0	​	​	(3.5)	​	​	396.5
6.05% notes payable, due 2036		​	505.6		​	(2.0)		​	503.6
4.625% notes payable, due 2042		​	300.0		​	(2.7)		​	297.3
4.35% notes payable, due 2043		​	300.0		​	(2.8)		​	297.2
4.3% notes payable, due 2046		​	300.0		​	(2.9)		​	297.1
5.5% notes payable, due 2053	​	​	300.0	​	​	(4.3)	​	​	295.7
Secured credit facilities	​	​	21.8	​	​	—	​	​	21.8
Non-recourse mortgages and notes payable		​	3.0		​	(0.1)		​	2.9
Total long-term debt	​	$	3,980.4	​	$	(25.1)	​	$	3,955.3

​

Net discount, premium and issuance costs associated with issuing these notes are amortized to expense over the respective terms using the interest method.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Contingent Funding Agreements for Senior Debt Issuance

On March 8, 2018, we entered into two contingent funding agreements: (1) a 10-year contingent funding agreement with a Delaware trust (“2028 Trust”) formed by us in connection with the sale by the trust of $400.0 million pre-capitalized trust securities redeemable February 15, 2028 (“2028 P-Caps”) in a Rule 144A private placement and (2) a 30-year contingent funding agreement with a Delaware trust (“2048 Trust”) formed by us in connection with the sale by the trust of $350.0 million pre-capitalized trust securities redeemable February 15, 2048 (“2048 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2028 P-Caps and 2048 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us a put option that gives us the right to sell at any time: (1) to the 2028 Trust up to $400.0 million of its 4.111% Senior Notes due 2028 (“4.111% Senior Notes”) and (2) to the 2048 Trust up to $350.0 million of its 4.682% Senior Notes due 2048 (“4.682% Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts (“Eligible Assets”). The 4.682% Senior Notes will not be issued unless and until a put option is exercised, while the put option for the 4.111% Senior Notes was exercised on March 19, 2025. We agreed to pay a semi-annual put premium of 1.275% and 1.580% per annum on the unexercised portion of the put option to the 2028 Trust and 2048 Trust, respectively, and to reimburse the trusts for expenses. The put option premiums are recorded in operating expenses in the consolidated statements of operations. The 4.111% Senior Notes and 4.682% Senior Notes will be fully, irrevocably and unconditionally guaranteed by Principal Financial Services, Inc. (“PFS”). In addition, our obligations under the put option agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS. The contingent funding agreements with the trusts provide us with a source of liquid assets, which could be used to meet future financial obligations or to provide additional capital.

On March 19, 2025, we completed the exercise of our rights in full under the put option with the 2028 Trust in exchange for the Eligible Assets (the “2028 P - Caps Exercise”). In connection with the exercise of our put options right, we (1) issued $400.0 million of 4.111% Senior Notes due 2028 (“2028 Notes”) to the 2028 Trust (2) waived our rights to repurchase the 2028 Notes and (3) directed The Bank of New York Mellon to dissolve the 2028 Trust in accordance with its declaration of trust and deliver the 2028 Notes to the beneficial holders of the 2028 P-Caps pro rata in respect of each 2028 P-Cap. We intend to use the proceeds from the 2028 P-Caps Exercise to redeem or repay at or prior to maturity all $400.0 million aggregate principal amount outstanding of our 3.400% senior notes that mature on May 15, 2025 (the “2025 Notes”), in accordance with the terms of the indenture governing the 2025 Notes.

In addition, on March 6, 2025, we entered into a 30-year contingent funding agreement with a Delaware trust (“2055 Trust”) formed by us in connection with the sale by the trust of $500.0 million pre-capitalized trust securities redeemable February 15, 2055 (“2055 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2055 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us the right to sell at any time to the 2055 Trust up to $500.0 million of its 5.807% Senior Notes due 2055 (“5.807% Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts. The 5.807% Senior Notes will not be issued unless and until we exercise our issuance right. We agreed to pay a semi-annual facility fee of 1.289% per annum on the unexercised portion of the contingent fund mechanism to the 2055 Trust (the “facility agreement”), respectively, and to reimburse the trusts for expenses. The facility fee paid under the facility agreement is recorded in operating expenses in the consolidated statements of operations. The 5.807% Senior Notes will be fully, irrevocably and unconditionally guaranteed by PFS. In addition, our obligations under the facility agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

13. Income Taxes

Effective Income Tax Rate

Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the income tax provision at the U.S. corporate income tax rate and the income tax expense (benefit) at the effective income tax rate was as follows:

​

​	​	​	​	​	​	​	​
​	​	For the three months ended March 31,					​
​		2025			2024		​
​	​	​	($ in millions)				​
Income before income taxes	​	$	28.9	​	$	627.1	​
​	​	​	​	​	​	​	​
Expected tax at the U.S. statutory rate	​	$	6.1		$	131.7	​
Tax credits	​	​	(29.6)	​	​	(16.2)	​
Dividends received deduction	​	​	(18.2)	​	​	(19.4)	​
Impact of equity method presentation	​	​	(5.7)	​	​	(4.7)	​
Interest exclusion from taxable income	​	​	(5.2)	​	​	(5.8)	​
Employee compensation	​	​	(3.4)	​	​	(3.6)	​
Low income housing tax credit amortization	​	​	12.2	​	​	10.6	​
Foreign country statutory rate differential	​	​	9.6	​	​	(2.4)	​
State income taxes	​	​	1.9	​	​	4.7	​
Other	​	​	(1.7)	​	​	0.2	​
Income taxes (benefits)	​	$	(34.0)	​	$	95.1	​
​	​	​	​	​	​	​	​
Effective income tax rate	​	​	(118)	%	​	15	%

​

The lower effective tax rate for the three months ended March 31, 2025, was primarily the result of a decrease in pre - tax income with no proportionate change in permanent tax differences.

​

Pillar Two Model Rules

​

We are currently monitoring global enactments of the Pillar Two model rules proposed by the Organisation for Economic Co-operation and Development, which brings forward a 15% global minimum tax. Generally, a company is required to consider the impact of new tax law on realizability of its deferred tax assets (“DTAs”), including determination of whether a change to its valuation allowance amounts is necessary. We made an accounting policy election to disregard the Pillar Two model rules when evaluating DTAs and rather recognize a current period tax expense when incurred.

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

14. Employee and Agent Benefits

Components of Net Periodic Benefit Cost

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	Other postretirement
​	​	Pension benefits					​	benefits
​	​	For the three months ended					​	For the three months ended
​	​	March 31,					​	March 31,
​		2025			2024			2025			2024
​	​	(in millions)
Service cost	​	$	14.7	​	$	14.8	​	$	—	​	$	—
Interest cost	​	​	43.1	​		40.3	​		0.8	​		0.8
Expected return on plan assets	​	​	(42.9)	​		(42.6)	​		(1.1)	​		(1.1)
Amortization of prior service benefit	​	​	(3.8)	​		(4.2)	​		(0.3)	​		(0.3)
Recognized net actuarial (gain) loss	​	​	8.3	​		9.6	​		(0.4)	​		(0.3)
Net periodic benefit cost (income)	​	$	19.4	​	$	17.9	​	$	(1.0)	​	$	(0.9)

​

The components of net periodic benefit cost including the service cost component are included in operating expenses on the consolidated statements of operations.

Contributions

Our funding policy for our qualified pension plan is to fund the plan annually in an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act (“ERISA”) and, generally, not greater than the maximum amount that can be deducted for U.S. federal income tax purposes. We do not anticipate contributions will be needed to satisfy the minimum funding requirements of ERISA for our qualified plan in 2025; however, it is possible that we may fund both the qualified and nonqualified pension plans in 2025 for a combined total of up to $70.0 million. During the three months ended March 31, 2025, we did not contribute to these plans.

​

​

15. Contingencies, Guarantees and Indemnifications

Litigation and Regulatory Contingencies

We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages.

We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses.

In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Department of Labor (“DOL”) and other regulatory agencies in the U.S. and in international locations in which we do business, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position. To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith. The outcome of such matters is always uncertain and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate as of March 31, 2025.

Guarantees and Indemnifications

In the normal course of business, we have provided guarantees to third parties primarily related to former subsidiaries and joint ventures. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of March 31, 2025, was approximately $77.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees would not result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period. Furthermore, in connection with our contingent funding agreements, we are required to purchase any principal and interest strips of U.S. Treasury securities that are due and not paid from the associated unconsolidated trusts. The maximum exposure under these agreements as of March 31, 2025, was $850.0 million. See Note 12, Long-Term Debt, for further details.

We manage mandatory privatized social security funds in Chile. By regulation, we have a required minimum guarantee on the funds’ relative return. Because the guarantee has no limitation with respect to duration or amount, the maximum exposure of the guarantee in the future is indeterminable.

We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions, financing and reinsurance transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

16**. Stockholders’ Equity**

Common Stock Dividends

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	​	​	​	​	​
Dividends declared per common share	​	$	0.75		$	0.69

​

Reconciliation of Outstanding Common Shares

​

​	​	​	​	​
​	​	For the three months ended March 31,
​		2025		2024
Beginning balance		226,225,161		236,438,294
Shares issued		1,635,250	​	1,515,728
Treasury stock acquired		(2,888,696)	​	(2,921,241)
Ending balance		224,971,715	​	235,032,781

​

In January 2022, our Board of Directors (“Board”) authorized a $1.6 billion increase to the June 2021 share repurchase program authorization, which was completed in April 2024. In February 2024, our Board authorized a share repurchase program of up to $1.5 billion of our outstanding common stock, which has no expiration date. In February 2025, our Board authorized a share repurchase program of up to $1.5 billion of our outstanding common stock, which has no expiration date. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity.

Other Comprehensive Income

​

​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​		Pre-Tax			Tax			After-Tax
​	​	(in millions)
Net unrealized gains on available-for-sale securities during the period	​	$	666.8	​	$	(140.9)	​	$	525.9
Reclassification adjustment for losses included in net income (1)	​		62.5	​	​	(13.1)	​	​	49.4
Adjustments for assumed changes in amortization patterns	​		(0.4)	​	​	0.1	​	​	(0.3)
Adjustments for assumed changes in policyholder liabilities	​		18.3	​	​	(3.9)	​	​	14.4
Net unrealized gains on available-for-sale securities	​		747.2	​	​	(157.8)	​	​	589.4
​	​	​	​	​	​	​	​	​	​
Net unrealized gains on derivative instruments during the period	​		18.5	​	​	(3.9)	​	​	14.6
Reclassification adjustment for gains included in net income (2)	​		(0.6)	​	​	0.1	​	​	(0.5)
Net unrealized gains on derivative instruments	​	​	17.9	​	​	(3.8)	​	​	14.1
​	​	​	​	​	​	​	​	​	​
Liability for future policy benefits discount rate remeasurement loss (3)	​	​	(312.4)	​	​	62.6	​	​	(249.8)
​	​	​	​	​	​	​	​	​	​
Market risk benefit nonperformance risk remeasurement gain (4)	​	​	2.7	​	​	(0.6)	​	​	2.1
​	​	​	​	​	​	​	​	​	​
Foreign currency translation adjustment	​	​	74.1	​	​	(0.7)	​	​	73.4
​	​	​	​	​	​	​	​	​	​
Amortization of amounts included in net periodic benefit cost (5)	​		3.8	​	​	(0.9)	​	​	2.9
Net unrecognized postretirement benefit obligation	​		3.8	​	​	(0.9)	​	​	2.9
​	​	​	​	​	​	​	​	​	​
Other comprehensive income	​	$	533.3	​	$	(101.2)	​	$	432.1

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​

​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​		Pre-Tax			Tax			After-Tax
​	​	(in millions)
Net unrealized losses on available-for-sale securities during the period	​	$	(507.7)	​	$	108.3	​	$	(399.4)
Reclassification adjustment for losses included in net income (1)	​		43.5	​		(9.0)	​	​	34.5
Adjustments for assumed changes in amortization patterns	​		(0.2)	​		—	​	​	(0.2)
Adjustments for assumed changes in policyholder liabilities	​		8.2	​		(1.7)	​	​	6.5
Net unrealized losses on available-for-sale securities	​		(456.2)	​		97.6	​	​	(358.6)
​	​	​	​	​	​	​	​	​	​
Net unrealized gains on derivative instruments during the period	​		23.1	​		(4.8)	​	​	18.3
Reclassification adjustment for gains included in net income (2)	​		(0.9)	​		0.2	​	​	(0.7)
Adjustments for assumed changes in amortization patterns	​	​	(0.1)	​	​	—	​	​	(0.1)
Net unrealized gains on derivative instruments	​		22.1	​		(4.6)	​	​	17.5
​	​	​	​	​	​	​	​	​	​
Liability for future policy benefits discount rate remeasurement gain (3)	​	​	710.2	​	​	(155.5)	​	​	554.7
​	​	​	​	​	​	​	​	​	​
Market risk benefit nonperformance risk remeasurement loss (4)	​	​	(11.0)	​	​	2.3	​	​	(8.7)
​	​	​	​	​	​	​	​	​	​
Foreign currency translation adjustment	​	​	(116.7)	​	​	(4.3)	​	​	(121.0)
​	​	​	​	​	​	​	​	​	​
Amortization of amounts included in net periodic benefit cost (5)	​		4.8	​	​	(1.3)	​	​	3.5
Net unrecognized postretirement benefit obligation	​		4.8	​	​	(1.3)	​	​	3.5
​	​	​	​	​	​	​	​	​	​
Other comprehensive income	​	$	153.2	​	$	(65.8)	​	$	87.4

(1)	Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) and net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations.

(2)	See Note 5, Derivative Financial Instruments, under the caption “Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations” for further details.

(3)	Includes the discount rate remeasurement gain (loss) associated with the LFPB and the associated reinsurance recoverable. See Note 9, Future Policy Benefits and Claims, under the caption “Liability for Future Policy Benefits” for further details.

(4)	See Note 10, Market Risk Benefits, for further details.

(5)	Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 14, Employee and Agent Benefits, under the caption “Components of Net Periodic Benefit Cost” for further details.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Accumulated Other Comprehensive Loss

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	MRB		​	​	​	​	​	​	​	​	​
​	​	Net unrealized		​	Net unrealized		​	LFPB		​	nonperformance		​	Foreign		​	Unrecognized		​	Accumulated
​	​	losses on		​	gains (losses)		​	discount rate		​	risk		​	currency		​	postretirement		​	other
​	​	available-for-sale		​	on derivative		​	remeasurement		​	remeasurement		​	translation		​	benefit		​	comprehensive
​		securities (1)			instruments			gain			loss			adjustment			obligation			loss
​	​	(in millions)
Balances as of January 1, 2024	​	$	(4,014.8)	​	$	(2.1)	​	$	428.2	​	$	(6.9)	​	$	(1,498.0)	​	$	(251.7)	​	$	(5,345.3)
Other comprehensive income during the period, net of adjustments	​		(393.1)	​	​	18.2	​	​	554.7	​	​	(8.7)	​	​	(119.2)	​	​	—	​	​	51.9
Amounts reclassified from AOCI	​		34.5	​	​	(0.7)	​	​	—	​	​	—	​	​	—	​	​	3.5	​	​	37.3
Other comprehensive income	​		(358.6)	​	​	17.5	​	​	554.7	​	​	(8.7)	​	​	(119.2)	​	​	3.5	​	​	89.2
Balances as of March 31, 2024	​	$	(4,373.4)	​	$	15.4	​	$	982.9	​	$	(15.6)	​	$	(1,617.2)	​	$	(248.2)	​	$	(5,256.1)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances as of January 1, 2025	​	$	(4,692.9)	​	$	51.8	​	$	1,438.2	​	$	(15.0)	​	$	(1,785.9)	​	$	(221.0)	​	$	(5,224.8)
Other comprehensive income during the period, net of adjustments	​		540.0	​	​	14.6	​	​	(249.8)	​	​	2.1	​	​	80.2	​	​	—	​	​	387.1
Amounts reclassified from AOCI	​		49.4	​	​	(0.5)	​	​	—	​	​	—	​	​	—	​	​	2.9	​	​	51.8
Other comprehensive income	​		589.4	​	​	14.1	​	​	(249.8)	​	​	2.1	​	​	80.2	​	​	2.9	​	​	438.9
Balances as of March 31, 2025	​	$	(4,103.5)	​	$	65.9	​	$	1,188.4	​	$	(12.9)	​	$	(1,705.7)	​	$	(218.1)	​	$	(4,785.9)

(1)	Net unrealized losses on available-for-sale securities for which an allowance for credit loss has been recorded were $4.0 million and $2.5 million as of March 31, 2025 and 2024, respectively.

​

Noncontrolling Interest

Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.

The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is excluded from stockholders’ equity and reported separately as redeemable noncontrolling interest on the consolidated statements of financial position. Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds.

For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Following is a reconciliation of the changes in the redeemable noncontrolling interest:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Balance at beginning of period	​	$	337.7	​	$	248.9
Net income (loss) attributable to redeemable noncontrolling interest	​	​	11.5	​	​	(2.0)
Redeemable noncontrolling interest of deconsolidated entities (1)	​	​	(12.5)	​	​	(90.0)
Contributions from redeemable noncontrolling interest	​	​	30.8	​	​	226.2
Distributions to redeemable noncontrolling interest	​	​	(31.8)	​	​	(14.2)
Purchase of subsidiary shares from redeemable noncontrolling interest	​	​	(1.6)	​	​	—
Change in redemption value of redeemable noncontrolling interest	​	​	—	​	​	2.1
Other comprehensive loss attributable to redeemable noncontrolling interest	​	​	(7.4)	​	​	(0.2)
Balance at end of period	​	$	326.7	​	$	370.8

(1)	We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation.

​

​

17. Fair Value Measurements

We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment contracts, are excluded from these fair value disclosure requirements.

Valuation Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability.

●	Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.

●	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

●	Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability.

Determination of Fair Value

The following discussion describes the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis. The techniques utilized in estimating the fair value of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.

Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2025.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Fixed Maturities

Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. When available, the fair value of fixed maturities is based on quoted prices of identical assets in active markets. These are reflected in Level 1 and primarily include U.S. Treasury bonds and actively traded redeemable corporate preferred securities.

When quoted prices of identical assets in active markets are not available, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2. Also included in Level 2 are corporate bonds when quoted market prices are not available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data for specific security classes. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread. Although the matrix valuation approach provides a fair valuation of each pricing category, the valuation of an individual security within each pricing category may also be impacted by company specific factors.

If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of March 31, 2025, approximately 3% of our total fixed maturities were Level 3 securities valued using internal pricing models.

The primary inputs, by asset class, for valuations of the majority of our Level 2 investments from third party pricing vendors or our internal pricing valuation approach are described below.

U.S. Government and Agencies/Non-U.S. Governments. Inputs include recently executed market transactions, interest rate yield curves, maturity dates, market price quotations and credit spreads relating to similar instruments.

States and Political Subdivisions. Inputs include Municipal Securities Rulemaking Board reported trades, U.S. Treasury and other benchmark curves, material event notices, new issue data and obligor credit ratings.

Corporate. Inputs include recently executed transactions, market price quotations, benchmark yields, issuer spreads and observations of equity and credit default swap curves related to the issuer. For private placement corporate securities valued through the matrix valuation approach inputs include the current Treasury curve and risk spreads based on sector, rating and average life of the issuance.

RMBS, CMBS, Collateralized Debt Obligations and Other Debt Obligations. Inputs include cash flows, priority of the tranche in the capital structure, expected time to maturity for the specific tranche, reinvestment period remaining and performance of the underlying collateral including prepayments, defaults, deferrals, loss severity of defaulted collateral and, for RMBS, prepayment speed assumptions. Other inputs include market indices and recently executed market transactions.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Equity Securities

Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. Fair values of equity securities are determined using quoted prices in active markets for identical assets when available, which are reflected in Level 1. When quoted prices are not available, we may utilize internal valuation methodologies appropriate for the specific asset that use observable inputs such as underlying share prices or the NAV, which are reflected in Level 2. Fair values might also be determined using broker quotes or through the use of internal models or analysis that incorporate significant assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities, which are reflected in Level 3.

Mortgage Loans

Mortgage loans reported at fair value included those of a consolidated VIE for which the fair value option was elected. Fair values of commercial mortgage loans were primarily determined by discounting the expected cash flows at current treasury rates plus an applicable risk spread, which reflected credit quality and maturity of the loans. The risk spread was based on market clearing levels for loans with comparable credit quality, maturities and risk. These were reflected in Level 3. Mortgage loans valued using securitized pricing based on observable market data should be reflected in Level 2 of the fair value hierarchy. The consolidated VIE was deconsolidated during 2025.

Derivatives

The fair values of exchange-traded derivatives are determined through quoted market prices, which are reflected in Level 1. Exchange-traded derivatives include futures that are settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of OTC cleared derivatives are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses utilize the secured overnight financing rate (“SOFR”) curve in their valuation. Variation margin associated with OTC cleared derivatives is settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3.

Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the SOFR curve to value our positions. Counterparty credit risk is routinely monitored to ensure our adjustment for nonperformance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral or variation margin equal to the difference in the daily market values of those contracts that eliminates the nonperformance risk on these trades.

Interest Rate Contracts. For non-cleared contracts, which include interest rate swaps and interest rate options, we use discounted cash flow valuation techniques to determine the fair value using observable swap curves as the inputs. These are reflected in Level 2. We have forward contracts for which we obtain prices from third party pricing vendors. These are reflected in Level 2. For centrally cleared contracts we use published prices from clearinghouses. These are reflected in Level 2. In addition, we have forward contracts that are valued using broker quotes. These are reflected in Level 3.

Foreign Exchange Contracts. We use discounted cash flow valuation techniques that utilize observable swap curves and exchange rates as the inputs to determine the fair value of foreign currency swaps. These are reflected in Level 2. Currency forwards are valued using observable market inputs, including forward currency exchange rates. These are reflected in Level 2. In addition, we had a limited number of non-standard currency swaps that were valued using broker quotes. These were reflected within Level 3.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Equity Contracts. We use an option pricing model using observable implied volatilities, dividend yields, index prices and swap curves as the inputs to determine the fair value of equity options. Certain total return swaps use an accrual method comparing both cash flows to determine fair value. These are reflected in Level 2. Certain equity option contracts are valued using broker quotes. These are reflected in Level 3.

Credit Contracts. We use either the ISDA Credit Default Swap Standard discounted cash flow model that utilizes observable default probabilities and recovery rates as inputs to determine the fair value of credit default swaps. These are reflected in Level 2. In addition, we have total return swaps and a limited number of credit default swaps that are valued using broker quotes. These are reflected within Level 3.

Other Investments

Other investments reported at fair value include invested assets of consolidated sponsored investment funds, unconsolidated sponsored investment funds, other investment funds reported at fair value, other loans of a consolidated VIE for which the fair value option was elected and certain redeemable and nonredeemable preferred stock.

Invested assets of consolidated sponsored investment funds include equity securities, fixed maturities and derivative assets, for which fair values are determined as previously described, and are reflected in Level 1 and Level 2.

The fair value of unconsolidated sponsored investment funds and other investment funds is determined using the NAV of the fund. The NAV of the fund represents the price at which we would be able to initiate a transaction. Investments for which the NAV represents a quoted price in an active market for identical assets are reflected in Level 1. Investments that do not have a quoted price in an active market are reflected in Level 2.

Other loans of a consolidated VIE for which the fair value option was elected are reflected in Level 3. The fair value of these loans is estimated using a discounted cash flow valuation model that utilizes standard assumption-setting methodology accepted by market participants in the industry. The assumptions are formed based on historical performance of the loans and utilizes market data inputs such as charge-off rates, prepayment rates, recovery rates and discount rates.

Cash Equivalents

Certain cash equivalents are reported at fair value on a recurring basis and include money market instruments and other short-term investments with maturities of three months or less. Fair values of these cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2.

Separate Account Assets

Separate account assets include equity securities, debt securities, cash equivalents and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Market Risk Benefits

MRBs are measured at fair value at the contract level on a recurring basis and are reflected in Level 3 as either an asset or a liability, depending on certain inputs at the reporting date. The key assumptions for calculating the fair value are market assumptions and policyholder behavior. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The MRBs are valued using stochastic models that incorporate a spread reflecting our own nonperformance risk.

The assumption for our own nonperformance risk is based on current market credit spreads for debt-like instruments we have issued and are available in the market. Refer to Note 10, Market Risk Benefits, for further information on the determination of fair value measurement of MRBs.

Investment and Universal Life Contracts

Certain universal life, annuity and other investment contracts include embedded derivatives that have been bifurcated from the host contract and are measured at fair value on a recurring basis, which are reflected in Level 3. The key assumptions for calculating the fair value of the embedded derivative liabilities are market assumptions (such as equity market returns, interest rate levels, market volatility and correlations) and policyholder behavior assumptions (such as lapse and mortality). Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The embedded derivative liabilities are valued using models that incorporate a spread reflecting our own creditworthiness.

The assumption for our own nonperformance risk for investment contracts and any embedded derivatives bifurcated from certain universal life, annuity and investment contracts is based on the current market credit spreads for debt-like instruments we have issued and are available in the market.

Funds Withheld Payable

The funds withheld payable includes an embedded derivative that has been bifurcated from the host contract and is measured at fair value on a recurring basis, which is reflected in Level 3. The fair value is determined based on the change in the estimated fair value of the underlying funds withheld investments. The fair value of these assets is determined as previously described.

Long-Term Debt

Long-term debt reported at fair value included that of a consolidated VIE for which the fair value option was elected. The long-term debt was a secured credit facility that was primarily financing for commercial real estate loans. The fair value was estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. These were reflected in Level 2. The consolidated VIE was deconsolidated during 2025.

Other Liabilities

Derivative liabilities of consolidated sponsored investment funds are reported at fair value within other liabilities. Fair values of these derivatives are determined as previously described and are reflected in Level 1 and Level 2.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	Assets/		​	Amount		​	​	​	​	​	​	​	​	​
​	​	(liabilities)		​	measured at		​	​	​	​	​	​	​	​	​
​	​	measured at		​	net asset		​	Fair value hierarchy level
​		fair value			value (5)			Level 1			Level 2			Level 3
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	1,658.6	​	$	—	​	$	1,262.5	​	$	396.1	​	$	—
Non-U.S. governments	​	​	494.0	​	​	—	​	​	—	​	​	494.0	​	​	—
States and political subdivisions	​	​	6,192.9	​	​	—	​	​	—	​	​	6,124.3	​	​	68.6
Corporate	​	​	36,671.5	​	​	—	​	​	28.4	​	​	34,223.8	​	​	2,419.3
Residential mortgage-backed pass-through securities	​	​	3,763.7	​	​	—	​	​	—	​	​	3,763.7	​	​	—
Commercial mortgage-backed securities	​	​	5,215.7	​	​	—	​	​	—	​	​	5,213.1	​	​	2.6
Collateralized debt obligations (1)	​	​	6,634.2	​	​	—	​	​	—	​	​	6,634.2	​	​	—
Other debt obligations	​	​	9,096.1	​	​	—	​	​	—	​	​	7,636.4	​	​	1,459.7
Total fixed maturities, available-for-sale	​	​	69,726.7	​	​	—	​	​	1,290.9	​	​	64,485.6	​	​	3,950.2
Fixed maturities, trading	​	​	1,307.2	​	​	—	​	​	0.5	​	​	735.6	​	​	571.1
Equity securities	​	​	2,428.9	​	​	—	​	​	1,130.2	​	​	1,298.7	​	​	—
Derivative assets (2)	​	​	610.8	​	​	—	​	​	—	​	​	606.9	​	​	3.9
Other investments	​	​	910.4	​	​	109.2	​	​	264.4	​	​	418.2	​	​	118.6
Cash equivalents	​	​	2,589.8	​	​	—	​	​	538.7	​	​	2,051.1	​	​	—
Market risk benefit asset (3)	​	​	158.7	​	​	—	​	​	—	​	​	—	​	​	158.7
Sub-total excluding separate account assets	​	​	77,732.5	​	​	109.2	​	​	3,224.7	​	​	69,596.1	​	​	4,802.5
Separate account assets	​	​	171,266.2	​	​	7,091.1	​	​	108,513.8	​	​	54,923.1	​	​	738.2
Total assets	​	$	248,998.7	​	$	7,200.3	​	$	111,738.5	​	$	124,519.2	​	$	5,540.7
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts (4)	​	$	(522.7)	​	$	—	​	$	—	​	$	—	​	$	(522.7)
Market risk benefit liability (3)	​	​	(80.4)	​	​	—	​	​	—	​	​	—	​	​	(80.4)
Funds withheld payable embedded derivative (4)	​	​	2,804.8	​	​	—	​	​	—	​	​	—	​	​	2,804.8
Derivative liabilities (2)	​	​	(437.3)	​	​	—	​	​	—	​	​	(431.6)	​	​	(5.7)
Other liabilities	​	​	(1.6)	​	​	—	​	​	(1.6)	​	​	—	​	​	—
Total liabilities	​	$	1,762.8	​	$	—	​	$	(1.6)	​	$	(431.6)	​	$	2,196.0
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net assets	​	$	250,761.5	​	$	7,200.3	​	$	111,736.9	​	$	124,087.6	​	$	7,736.7

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	Assets/		​	Amount		​	​	​	​	​	​	​	​	​
​	​	(liabilities)		​	measured at		​	​	​	​	​	​	​	​	​
​	​	measured at		​	net asset		​	Fair value hierarchy level
​		fair value			value (5)			Level 1			Level 2			Level 3
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government and agencies	​	$	1,637.9	​	$	—	​	$	1,231.9	​	$	406.0	​	$	—
Non-U.S. governments	​		495.7	​		—	​	​	—	​	​	495.7	​	​	—
States and political subdivisions	​		6,076.5	​		—	​	​	—	​	​	6,009.7	​	​	66.8
Corporate	​		35,702.6	​		—	​	​	29.1	​	​	33,323.1	​	​	2,350.4
Residential mortgage-backed pass-through securities	​		3,674.2	​		—	​	​	—	​	​	3,674.2	​	​	—
Commercial mortgage-backed securities	​		5,188.0	​		—	​	​	—	​	​	5,185.3	​	​	2.7
Collateralized debt obligations (1)	​		6,560.4	​		—	​	​	—	​	​	6,560.4	​	​	—
Other debt obligations	​		8,915.7	​		—	​	​	—	​	​	7,437.4	​	​	1,478.3
Total fixed maturities, available-for-sale	​		68,251.0	​		—	​	​	1,261.0	​	​	63,091.8	​	​	3,898.2
Fixed maturities, trading	​		1,023.3	​		—	​	​	—	​	​	460.7	​	​	562.6
Equity securities	​		2,295.0	​		—	​	​	990.2	​	​	1,304.8	​	​	—
Mortgage loans	​	​	140.6	​	​	—	​	​	—	​	​	—	​	​	140.6
Derivative assets (2)	​		648.2	​		—	​	​	—	​	​	626.8	​	​	21.4
Other investments	​		905.6	​		106.7	​	​	262.2	​	​	405.5	​	​	131.2
Cash equivalents	​		2,950.5	​		—	​	​	271.6	​	​	2,678.9	​	​	—
Market risk benefit asset (3)	​	​	199.5	​	​	—	​	​	—	​	​	—	​	​	199.5
Sub-total excluding separate account assets	​		76,413.7	​		106.7	​	​	2,785.0	​	​	68,568.5	​	​	4,953.5
Separate account assets	​		173,327.1	​		7,573.6	​	​	112,920.3	​	​	52,106.5	​	​	726.7
Total assets	​	$	249,740.8	​	$	7,680.3	​	$	115,705.3	​	$	120,675.0	​	$	5,680.2
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts (4)	​	$	(578.4)	​	$	—	​	$	—	​	$	—	​	$	(578.4)
Market risk benefit liability (3)	​	​	(62.1)	​	​	—	​	​	—	​	​	—	​	​	(62.1)
Funds withheld payable embedded derivative (4)	​	​	3,014.5	​	​	—	​	​	—	​	​	—	​	​	3,014.5
Long-term debt	​	​	(21.8)	​	​	—	​	​	—	​	​	(21.8)	​	​	—
Derivative liabilities (2)	​		(506.2)	​		—	​	​	—	​	​	(498.3)	​	​	(7.9)
Other liabilities	​		(5.2)	​		—	​	​	(5.2)	​	​	—	​	​	—
Total liabilities	​	$	1,840.8	​	$	—	​	$	(5.2)	​	$	(520.1)	​	$	2,366.1
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net assets	​	$	251,581.6	​	$	7,680.3	​	$	115,700.1	​	$	120,154.9	​	$	8,046.3

(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

(2)

Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 5, Derivative Financial Instruments, for further information on fair value by class of derivative instruments.

(3)	Refer to Note 10, Market Risk Benefits, for further information on the change in the Level 3 fair value measurements of MRBs.

(4)	Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. The funds withheld payable embedded derivative could be in either an asset or (liability) position.

(5)

Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $3.1 million and $3.1 million as of March 31, 2025 and December 31, 2024, respectively. Separate account assets using the NAV practical expedient consist of certain funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these funds.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Changes in Level 3 Fair Value Measurements

The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	Beginning		​	​	​	​	​	​	​	Net		​	​	​	​	​	​	​	Ending
​	​	asset/		​	Total realized/unrealized					​	purchases,		​	​	​	​	​	​	​	asset/
​	​	(liability)		​	gains (losses)					​	sales,		​	​	​	​	​	​	​	(liability)
​	​	balance		​	​		​	Included in		​	issuances		​	​	​	​	​	​	​	balance
​	​	as of		​	Included in		​	other		​	and		​	Transfers		​	Transfers		​	as of
​	​	January 1,		​	net income		​	comprehensive		​	settlements		​	into		​	out of		​	March 31,
​		2025			(2)			income (3)			(4)			Level 3			Level 3			2025
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
States and political subdivisions	​	$	66.8	​	$	—	​	$	2.3	​	$	(0.5)	​	$	—	​	$	—	​	$	68.6
Corporate	​		2,350.4	​	​	2.9	​	​	(5.2)	​	​	71.2	​	​	—	​	​	—	​	​	2,419.3
Commercial mortgage-backed securities	​		2.7	​	​	—	​	​	0.1	​	​	(0.2)	​	​	—	​	​	—	​	​	2.6
Other debt obligations	​		1,478.3	​	​	0.1	​	​	2.9	​	​	3.2	​	​	—	​	​	(24.8)	​	​	1,459.7
Total fixed maturities, available-for-sale	​	​	3,898.2	​	​	3.0	​	​	0.1	​	​	73.7	​	​	—	​	​	(24.8)	​	​	3,950.2
Fixed maturities, trading	​	​	562.6	​	​	(0.7)	​	​	—	​	​	14.0	​	​	—	​	​	(4.8)	​	​	571.1
Mortgage loans	​	​	140.6	​	​	—	​	​	—	​	​	(140.6)	​	​	—	​	​	—	​	​	—
Other investments	​		131.2	​	​	2.7	​	​	—	​	​	(15.3)	​	​	—	​	​	—	​	​	118.6
Separate account assets (1)	​		726.7	​	​	11.5	​	​	—	​	​	—	​	​	—	​	​	—	​	​	738.2
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts	​		(578.4)	​	​	193.4	​	​	—	​	​	(137.7)	​	​	—	​	​	—	​	​	(522.7)
Funds withheld payable embedded derivative	​	​	3,014.5	​	​	(209.7)	​	​	—	​	​	—	​	​	—	​	​	—	​	​	2,804.8
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net derivative assets (liabilities)	​		13.5	​	​	(16.7)	​	​	—	​	​	1.3	​	​	—	​	​	0.1	​	​	(1.8)

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	Beginning		​	​	​	​	​	​	​	Net		​	​	​	​	​	​	​	Ending
​	​	asset/		​	Total realized/unrealized					​	purchases,		​	​	​	​	​	​	​	asset/
​	​	(liability)		​	gains (losses)					​	sales,		​	​	​	​	​	​	​	(liability)
​	​	balance		​	​		​	Included in		​	issuances		​	​	​	​	​	​	​	balance
​	​	as of		​	Included in		​	other		​	and		​	Transfers		​	Transfers		​	as of
​	​	January 1,		​	net income		​	comprehensive		​	settlements		​	into		​	out of		​	March 31,
​		2024			(2)			income (3)			(4)			Level 3			Level 3			2024
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
States and political subdivisions	​	$	69.9	​	$	—	​	$	(1.3)	​	$	(0.4)	​	$	—	​	$	—	​	$	68.2
Corporate	​	​	2,305.9	​	​	(5.2)	​	​	(11.2)	​	​	(126.4)	​	​	39.5	​	​	—	​	​	2,202.6
Commercial mortgage-backed securities	​		3.0	​	​	—	​	​	—	​	​	(0.1)	​	​	—	​	​	—	​	​	2.9
Collateralized debt obligations	​		75.4	​	​	—	​	​	(1.7)	​	​	25.7	​	​	—	​	​	—	​	​	99.4
Other debt obligations	​		1,182.6	​	​	—	​	​	(7.3)	​	​	22.7	​	​	80.0	​	​	(111.6)	​	​	1,166.4
Total fixed maturities, available-for-sale	​		3,636.8	​	​	(5.2)	​	​	(21.5)	​	​	(78.5)	​	​	119.5	​	​	(111.6)	​	​	3,539.5
Fixed maturities, trading	​		415.8	​	​	(3.5)	​	​	—	​	​	57.9	​	​	—	​	​	—	​	​	470.2
Other investments	​		165.1	​	​	(5.3)	​	​	—	​	​	6.0	​	​	—	​	​	—	​	​	165.8
Separate account assets (1)	​		752.8	​	​	(26.3)	​	​	—	​	​	(0.9)	​	​	—	​	​	—	​	​	725.6
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts	​		(115.5)	​	​	(43.4)	​	​	—	​	​	(15.8)	​	​	—	​	​	—	​	​	(174.7)
Funds withheld payable embedded derivative	​	​	2,567.1	​	​	197.0	​	​	—	​	​	—	​	​	—	​	​	—	​	​	2,764.1
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net derivative assets (liabilities)	​		5.5	​	​	(5.0)	​	​	—	​	​	0.4	​	​	—	​	​	—	​	​	0.9

(1)

Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities. Foreign currency translation adjustments related to the Principal Asset Management separate account assets are recorded in AOCI and are offset by foreign currency translation adjustments of the corresponding separate account liabilities.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

(2)

Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses), net realized capital gains (losses) on funds withheld assets or change in fair value of funds withheld embedded derivative within the consolidated statements of operations. Realized and unrealized gains (losses) on certain securities with an investment objective to realize economic value through mark-to-market changes are reported in net investment income within the consolidated statements of operations. Changes in unrealized gains (losses) included in net income relating to positions still held were:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Assets	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​
Corporate	​	$	6.4	​	$	(3.6)
Total fixed maturities, available-for-sale	​	​	6.4	​	​	(3.6)
Fixed maturities, trading	​	​	(0.2)	​	​	(3.7)
Other investments	​	​	4.6	​	​	(3.4)
Separate account assets	​	​	(6.6)	​	​	(33.3)
​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​
Investment and universal life contracts	​	​	193.6	​	​	(44.5)
Funds withheld payable embedded derivative	​	​	(209.7)	​	​	197.0
​	​	​	​	​	​	​
Derivatives	​	​	​	​	​	​
Net derivative assets (liabilities)	​	​	(18.5)	​	​	(4.5)

​

(3)	Changes in unrealized gains (losses) included in OCI, including foreign currency translation adjustments related to Principal Asset Management, relating to positions still held were:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Assets	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​
States and political subdivisions	​	$	2.3	​	$	(1.3)
Corporate	​	​	(5.2)	​	​	(12.6)
Commercial mortgage-backed securities	​	​	0.1	​	​	—
Collateralized debt obligations	​	​	—	​	​	(1.7)
Other debt obligations	​	​	3.1	​	​	(7.3)
Total fixed maturities, available-for-sale	​	​	0.3	​	​	(22.9)

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

(4)Gross purchases, sales, issuances and settlements were:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Net purchases,
​	​	​	​	​	​	​	​	​	​	​	​	​	​	sales, issuances
​		Purchases			Sales			Issuances		​	Settlements			and settlements
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
States and political subdivisions	​	$	—	​	$	—	​	$	—	​	$	(0.5)	​	$	(0.5)
Corporate	​	​	235.2	​	​	(130.0)	​	​	—	​	​	(34.0)	​	​	71.2
Commercial mortgage-backed securities	​	​	—	​	​	—	​	​	—	​	​	(0.2)	​	​	(0.2)
Other debt obligations	​	​	224.7	​	​	(177.7)	​	​	—	​	​	(43.8)	​	​	3.2
Total fixed maturities, available-for-sale	​	​	459.9	​	​	(307.7)	​	​	—	​	​	(78.5)	​	​	73.7
Fixed maturities, trading	​	​	64.3	​	​	(44.8)	​	​	—	​	​	(5.5)	​	​	14.0
Mortgage loans	​	​	—	​	​	—	​	​	—	​	​	(140.6)	​	​	(140.6)
Other investments	​	​	21.3	​	​	(1.5)	​	​	—	​	​	(35.1)	​	​	(15.3)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts	​	​	—	​	​	—	​	​	(153.9)	​	​	16.2	​	​	(137.7)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net derivative assets (liabilities)	​	​	0.7	​	​	0.6	​	​	—	​	​	—	​	​	1.3

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Net purchases,
​	​	​	​	​	​	​	​	​	​	​	​	​	​	sales, issuances
​		Purchases			Sales			Issuances			Settlements			and settlements
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
States and political subdivisions	​	$	—	​	$	—	​	$	—	​	$	(0.4)	​	$	(0.4)
Corporate	​	​	135.5	​	​	(221.1)	​	​	—	​	​	(40.8)	​	​	(126.4)
Commercial mortgage-backed securities	​	​	—	​	​	—	​	​	—	​	​	(0.1)	​	​	(0.1)
Collateralized debt obligations	​	​	25.7	​	​	—	​	​	—	​	​	—	​	​	25.7
Other debt obligations	​	​	105.3	​	​	(59.1)	​	​	—	​	​	(23.5)	​	​	22.7
Total fixed maturities, available-for-sale	​	​	266.5	​	​	(280.2)	​	​	—	​	​	(64.8)	​	​	(78.5)
Fixed maturities, trading	​	​	187.3	​	​	(97.0)	​	​	—	​	​	(32.4)	​	​	57.9
Other investments	​	​	51.9	​	​	—	​	​	—	​	​	(45.9)	​	​	6.0
Separate account assets (5)	​	​	—	​	​	(30.3)	​	​	(9.6)	​	​	39.0	​	​	(0.9)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Investment and universal life contracts	​	​	—	​	​	—	​	​	(33.8)	​	​	18.0	​	​	(15.8)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net derivative assets (liabilities)	​	​	0.2	​	​	0.2	​	​	—	​	​	—	​	​	0.4

(5)Issuances and settlements include amounts related to mortgage encumbrances associated with real estate in our separate accounts.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Transfers

Transfers of assets and liabilities measured at fair value on a recurring basis between fair value hierarchy levels were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​		Transfers out			Transfers out			Transfers out			Transfers out
​	​	of Level 1 into		​	of Level 2 into		​	of Level 3 into		​	of Level 3 into
​	​	Level 3		​	Level 3		​	Level 1		​	Level 2
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​
Other debt obligations	​	$	—	​	$	—	​	$	—	​	$	24.8
Total fixed maturities, available-for-sale	​	​	—	​	​	—	​	​	—	​	​	24.8
Fixed maturities, trading	​	​	—	​	​	—	​	​	—	​	​	4.8
​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	​	​	​	​	​	​	​	​	​	​
Net derivative assets (liabilities)	​	​	—	​	​	—	​	​	—	​	​	0.1

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​		Transfers out			Transfers out			Transfers out			Transfers out
​	​	of Level 1 into		​	of Level 2 into		​	of Level 3 into		​	of Level 3 into
​	​	Level 3		​	Level 3		​	Level 1		​	Level 2
​	​	(in millions)
Assets	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:	​	​	​	​	​	​	​	​	​	​	​	​
Corporate	​	$	—	​	$	39.5	​	$	—	​	$	—
Other debt obligations	​	​	—	​	​	80.0	​	​	—	​	​	111.6
Total fixed maturities, available-for-sale	​	​	—	​	​	119.5	​	​	—	​	​	111.6

​

Assets transferred into Level 3 during the three months ended March 31, 2024, primarily included those assets for which we are now unable to obtain pricing from a recognized third party pricing vendor as well as assets that were previously priced using a matrix valuation approach that may no longer be relevant when applied to asset-specific situations.

Assets transferred out of Level 3 during the three months ended March 31, 2025 and 2024, primarily included those assets for which we are now able to obtain pricing from a recognized third party pricing vendor or from internal models using substantially all market observable information.

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally, which primarily consists of those valued using broker quotes. The MRB asset and liability are excluded from the table. Refer to Note 10, Market Risk Benefits, for information on the unobservable inputs used for fair value measurement of MRBs. The funds withheld payable embedded derivative is excluded from the table as the determination of its fair value incorporates the fair value of the invested assets supporting the reinsurance agreement. The commercial mortgage loans of a consolidated VIE are excluded from the table as the determination of fair value was based on transaction price due to proximity of purchase to year - end, and thus no inputs to be provided. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​		Assets /			​		​		​		​			​	​
​	​	(liabilities)		​	​	​	​	​	​	​	​	​	​	​	​
​	​	measured at		​	Valuation	​	Unobservable	​	Input/range of				​	Weighted
​	​	fair value		​	technique(s)	​	input description	​	inputs				​	average
​	​	(in millions)		​	​	​	​	​	​	​	​	​	​	​	​
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:
Corporate	​	$	1,802.6		Discounted cash flow		Discount rate (1)	​	3.3	% -	13.7	%	​	8.0	%
​	​	​	​	​	​		Earnings before interest, taxes, depreciation and amortization multiple	​	1.1	x -	1.5	x	​	1.2	x
​	​	​	​	​	​	​	Illiquidity premium	​	30	basis points (“bps”) -	791	bps	​	146	bps
​	​	​	​	​	​	​	Comparability adjustment	​	(68)	bps -	1,984	bps	​	109	bps
Other debt obligations	​	​	1,457.1		Discounted cash flow		Discount rate (1)		3.7	% -	8.5	%	​	4.6	%
​	​	​	​	​	​		Illiquidity premium		(83)	bps -	260	bps	​	140	bps
​	​	​	​	​	​	​	Comparability adjustment	​	(19)	bps -	415	bps	​	139	bps
Fixed maturities, trading	​	​	301.7	​	Discounted cash flow	​	Discount rate (1)	​	9.4	% -	13.0	%	​	10.0	%
​	​	​	​	​	​		Earnings before interest, taxes, depreciation and amortization multiple		​	​	1.1	x	​	1.1	x
​	​	​	​	​	​	​	Comparability adjustment	​	(68)	bps -	457	bps	​	89	bps
Other investments	​	​	116.8	​	Discounted cash flow		Discount rate (1)		11.5	% -	13.5	%	​	12.3	%
​	​	​	​	​	​	​	Probability of default	​	6.0	% -	10.0	%	​	8.1	%
​	​	​	​	​	​		Potential loss severity		87.0	% -	100.0	%	​	92.2	%
Separate account assets	​	​	738.2		Discounted cash flow - real estate		Discount rate (1)		7.0	% -	10.5	%	​	7.2	%
​	​	​	​	​	​		Terminal capitalization rate		5.5	% -	9.5	%	​	6.0	%
​	​	​	​	​	​		Average market rent growth rate		1.8	% -	5.9	%	​	2.8	%
​	​	​	​		Discounted cash flow - real estate debt		Loan to value		46.4	% -	69.5	%	​	57.5	%
​	​	​	​	​	​		Market interest rate		5.1	% -	6.8	%	​	5.7	%

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities		​			​		​		​					​	​
Investment and universal life contracts (4)	​	​	(522.7)		Discounted cash flow		Long duration interest rate	​	3.1	% -	4.6	%	(2)	4.6	%
​	​	​	​	​	​		Long-term equity market volatility		14.3	% -	28.3	%	​	18.3	%
​	​	​	​	​	​		Nonperformance risk		0.5	% -	1.2	%	​	1.0	%
​	​	​	​	​	​		Lapse rate		0.0	% -	55.0	%	​	8.5	%
​	​	​	​	​	​		Mortality rate		See note (3)				​	​	​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024														​
​		Assets /			​		​		​	​	​	​	​		​	​
​	​	(liabilities)		​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	measured at		​	Valuation	​	Unobservable	​	Input/range of					​	Weighted
​	​	fair value		​	technique(s)	​	input description	​	inputs					​	average
​	​	(in millions)		​	​	​	​	​	​	​	​	​	​	​	​	​
Assets	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed maturities, available-for-sale:
Corporate	​	$	1,817.8		Discounted cash flow		Discount rate (1)		​	2.1	% -	12.7	%	​	8.0	%
​	​	​	​	​	​	​	Earnings before interest, taxes, depreciation and amortization multiple	​	​	1.1	x -	1.7	x	​	1.3	x
​	​	​	​	​	​	​	Illiquidity premium	​	​	30	bps -	791	bps	​	142	bps
​	​	​	​	​	​	​	Comparability adjustment	​	​	(42)	bps -	2,947	bps	​	149	bps
Other debt obligations	​		1,343.1		Discounted cash flow		Discount rate (1)		​	4.9	% -	7.7	%	​	5.4	%
​	​	​	​	​	​		Illiquidity premium		​	(83)	bps -	260	bps	​	120	bps
​	​	​	​	​	​	​	Comparability adjustment	​	​	(19)	bps -	415	bps	​	128	bps
Fixed maturities, trading	​	​	289.6	​	Discounted cash flow	​	Discount rate (1)	​	​	9.5	% -	13.0	%	​	9.9	%
​	​	​	​	​	​	​	Earnings before interest, taxes, depreciation and amortization multiple	​	​	​	​	1.1	x	​	1.1	x
​	​	​	​	​	​	​	Comparability adjustment	​	​	(32)	bps -	2,947	bps	​	152	bps
Other investments	​	​	129.0	​	Discounted cash flow	​	Discount rate (1)	​	​	11.5	% -	13.5	%	​	12.4	%
​	​	​	​	​	​	​	Probability of default	​	​	6.0	% -	10.0	%	​	8.1	%
​	​	​	​	​	​	​	Potential loss severity	​	​	87.0	% -	100.0	%	​	92.0	%
Separate account assets	​		726.7		Discounted cash flow - real estate		Discount rate (1)		​	7.0	% -	11.0	%	​	7.2	%
​	​	​	​	​	​		Terminal capitalization rate		​	5.5	% -	9.5	%	​	6.0	%
​	​	​	​	​	​		Average market rent growth rate		​	2.0	% -	4.5	%	​	2.7	%
​	​	​	​		Discounted cash flow - real estate debt		Loan to value		​	46.4	% -	69.5	%	​	59.2	%
​	​	​	​	​	​		Market interest rate		​	4.9	% -	7.2	%	​	6.1	%

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities		​	​		​		​		​	​			​			​
Investment and universal life contracts (4)	​		(578.4)		Discounted cash flow		Long duration interest rate		​	3.0	% -	4.9	%	(2)	4.8	%
​	​	​	​	​	​		Long-term equity market volatility		​	14.5	% -	49.3	%	​	21.4	%
​	​	​	​	​	​		Nonperformance risk		​	0.4	% -	1.1	%	​	0.8	%
​	​	​	​	​	​		Lapse rate		​	0.0	% -	55.0	%	​	8.5	%
​	​	​	​	​	​		Mortality rate		​	See note (3)					​	​

(1)	Represents market comparable interest rate or an index adjusted rate used as the base rate in the discounted cash flow analysis prior to any illiquidity or other adjustments, where applicable.

(2)	Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between various observable swap rates.

(3)	This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation.

(4)	Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Market comparable discount rates are used as the base rate in the discounted cash flows used to determine the fair value of certain assets. The use of a higher or lower discount rate would have caused the fair value of the assets to significantly decrease or increase, respectively. Additionally, we may adjust the base discount rate or the modeled price by applying an illiquidity premium given the highly structured nature of certain assets. The use of a higher or lower illiquidity premium would have caused significant decreases or increases, respectively, in the fair value of the asset.

Embedded derivatives within our investment and universal life contracts liability can be in either an asset or liability position, depending on certain inputs at the reporting date. Increases to an asset or decreases to a liability are described as increases to fair value. The use of a higher or lower market volatility would have caused significant decreases or increases, respectively, in the fair value of embedded derivatives in investment and universal life contracts. Long duration interest rates are used as the mean return when projecting the growth in the value of associated account value and impact the discount rate used in the discounted future cash flows valuation. The use of higher or lower risk-free rates would have caused the fair value of the embedded derivative to significantly increase or decrease, respectively. The use of a higher or lower rate for our own credit risks, which impact the rates used to discount future cash flows, would have significantly increased or decreased, respectively, the fair value of the embedded derivative. The use of a lower or higher mortality rate assumption would have caused the fair value of the embedded derivative to decrease or increase, respectively. The use of a lower or higher overall lapse rate assumption would have caused the fair value of the embedded derivative to decrease or increase, respectively.

​

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

No significant assets and liabilities were measured at fair value on a nonrecurring basis for the three months ended March 31, 2025 and 2024.

Fair Value Option

We elected fair value accounting for:

	●	Certain other loans of a consolidated VIE that were subject to amortized cost accounting and a valuation allowance so that credit losses are recognized within the changes in fair value in the consolidated statements of operations.

	●	Certain mortgage loans and long-term debt of a consolidated VIE to provide alignment between the consolidated VIE’s financial reporting and the calculation of net asset value per share used to determine the prices at which investors could purchase and redeem shares of the entity’s stock. The consolidated VIE was deconsolidated during 2025.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The following table presents information regarding the assets and liabilities for which the fair value option was elected.

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Mortgage loans of consolidated VIE (1)	​	​	​	​	​	​
Fair value (1)	​	$	—	​	$	140.6
Aggregate contractual principal	​	​	—	​	​	140.6
​	​	​	​	​	​	​
Other loans of consolidated VIE (2)	​	​		​	​
Fair value (2)	​	$	116.8	​	$	129.0
Aggregate contractual principal	​		123.1	​		139.9
​	​	​	​	​	​	​
Long-term debt of consolidated VIE (1)	​	​	​	​	​	​
Fair value (1)	​	$	—	​	$	21.8
Aggregate contractual principal	​	​	—	​	​	21.8

(1)	Assets and liabilities from consolidated VIE, which are reported as mortgage loans and long-term debt on the consolidated statements of financial position, originated in December 2024 with no change in fair value recognized due to timing of origination. The consolidated VIE was deconsolidated during first quarter 2025 with no change in fair value recognized due to timing of the deconsolidation.

(2)	Reported with other investments on the consolidated statements of financial position. See Note 4, Investments, for additional information relating to other loans more than 90 days past due or in non-accrual status.

​

The following table presents information regarding the consolidated statements of operations impact of assets for which the fair value option was elected.

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​	​	2025		​	2024
​	​	(in millions)
Other loans of consolidated VIE		​			​
Change in fair value pre-tax gain (loss) - instrument specific credit risk	​	$	1.6	​	$	(5.3)
Change in fair value pre-tax gain (loss) (1)	​	​	1.6	​	​	(5.3)
Interest income (2)	​		4.2	​		7.2

(1)	Reported in net realized capital gains (losses) on the consolidated statements of operations.

(2)	Reported in net investment income on the consolidated statements of operations and recorded based on the effective interest rate of the loans.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Financial Instruments Not Reported at Fair Value

The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed at fair value were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2025
​	​	​	​	​	​	​	​	Fair value hierarchy level
​		Carrying amount			Fair value			Level 1			Level 2			Level 3
​	​	(in millions)
Assets (liabilities)	​	​	​		​	​		​	​		​	​		​	​
Mortgage loans	​	$	20,260.6	​	$	18,726.8	​	$	—	​	$	—	​	$	18,726.8
Policy loans	​		875.7	​		915.2	​		—	​		—	​		915.2
Other investments	​		292.3	​		286.6	​		—	​		119.3	​		167.3
Cash and cash equivalents	​		1,285.9	​		1,285.9	​		1,263.1	​		22.8	​		—
Reinsurance deposit receivable	​	​	4,699.9	​	​	4,313.1	​	​	—	​	​	—	​	​	4,313.1
Cash collateral receivable	​	​	7.4	​	​	7.4	​	​	7.4	​	​	—	​	​	—
Investment contracts	​		(34,030.4)	​	​	(33,136.1)	​	​	—	​	​	(8,300.0)	​	​	(24,836.1)
Short-term debt	​		(28.9)	​	​	(28.9)	​	​	—	​	​	(28.9)	​	​	—
Long-term debt	​		(4,321.3)	​	​	(4,134.6)	​	​	—	​	​	(4,132.1)	​	​	(2.5)
Separate account liabilities	​		(156,544.1)	​	​	(155,640.1)	​	​	—	​	​	—	​	​	(155,640.1)
Bank deposits (1)	​		(440.9)	​	​	(442.0)	​	​	—	​	​	(442.0)	​	​	—
Cash collateral payable	​		(402.8)	​	​	(402.8)	​	​	(402.8)	​	​	—	​	​	—

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2024
​	​	​	​	​	​	​	​	Fair value hierarchy level
​		Carrying amount			Fair value			Level 1			Level 2			Level 3
​	​	(in millions)
Assets (liabilities)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Mortgage loans	​	$	20,343.6	​	$	18,466.5	​	$	—	​	$	—	​	$	18,466.5
Policy loans	​		867.5	​		879.3	​		—	​		—	​		879.3
Other investments	​		294.9	​		292.4	​		—	​		127.5	​		164.9
Cash and cash equivalents	​		1,261.4	​		1,261.4	​		1,238.5	​		22.9	​		—
Reinsurance deposit receivable	​	​	4,897.5	​	​	4,401.9	​	​	—	​	​	—	​	​	4,401.9
Cash collateral receivable	​	​	3.0	​	​	3.0	​	​	3.0	​	​	—	​	​	—
Investment contracts	​		(34,140.3)	​	​	(32,922.2)	​	​	—	​	​	(8,306.5)	​	​	(24,615.7)
Short-term debt	​		(152.7)	​	​	(152.7)	​	​	—	​	​	(152.7)	​	​	—
Long-term debt	​		(3,933.5)	​	​	(3,715.7)	​	​	—	​	​	(3,713.2)	​	​	(2.5)
Separate account liabilities	​		(157,939.3)	​	​	(157,010.7)	​	​	—	​	​	—	​	​	(157,010.7)
Bank deposits (1)	​		(440.4)	​	​	(442.1)	​	​	—	​	​	(442.1)	​	​	—
Cash collateral payable	​		(428.9)	​	​	(428.9)	​	​	(428.9)	​	​	—	​	​	—

(1)	Excludes deposit liabilities without defined or contractual maturities.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

18. Segment Information

We provide financial products and services through the following segments: Retirement and Income Solutions, Principal Asset Management and Benefits and Protection. In addition, we have a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels.

The Retirement and Income Solutions segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals. The segment includes workplace savings and retirement solutions, banking, trust and custodial services, individual variable annuities (including RILAs), pension risk transfer, investment only and our exited retail fixed annuities business.

The Principal Asset Management segment provides global investment solutions to institutional, retirement, retail and high net worth investors in the U.S. and select emerging markets. The segment is organized into Investment Management, which provides public, multi-asset and private market capabilities across all asset classes, including equity, fixed income, real estate and alternatives, to serve a breadth of client investment objectives; and International Pension, which provides long-term savings and retirement solutions through pension accumulation and income annuities in Asia and Latin America.

The Benefits and Protection segment focuses on solutions primarily for small-to-mid sized businesses and their employees. The segment is organized into Specialty Benefits, which provides group dental, group life insurance, group disability insurance (including short-term disability, long-term disability and paid family and medical leave), supplemental health products (including vision, critical illness, accident and hospital indemnity) and individual disability insurance; and Life Insurance, which provides life insurance focused on the business market customer, including universal life and variable universal life (including indexed universal life) and traditional life insurance (including term life insurance). All remaining customers are part of the legacy life block of business, including universal and variable universal life insurance (including indexed universal life), traditional life insurance (including participating whole life, adjustable life products and term life insurance) and our exited ULSG business.

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

Our chief operating decision maker (“CODM”) is our chief executive officer. Our CODM and management team, use segment pre-tax operating earnings in evaluating performance, which is consistent with the financial results provided to and discussed with securities analysts. In addition, the financial information provided to our CODM is used in making decisions about the allocation of resources and determining annual incentive compensation paid to our employees. We determine segment pre-tax operating earnings by adjusting U.S. GAAP income before income taxes for pre-tax net realized capital gains (losses), as adjusted, pre-tax income (loss) from exited business, pre-tax other adjustments that management believes are not indicative of overall operating trends and certain adjustments related to equity method investments and noncontrolling interest. While these items may be significant components in understanding and assessing the consolidated financial performance, management believes the presentation of pre-tax operating earnings enhances the understanding of our results of operations by highlighting pre-tax earnings attributable to the normal, ongoing operations of the business.

The pre-tax net realized capital gains (losses), as adjusted, excluded from pre-tax operating earnings reflects consolidated U.S. GAAP pre-tax net realized capital gains (losses) excluding the following items that are included in pre-tax operating earnings:

	●	Periodic settlements and accruals on derivative instruments not designated as hedging instruments,

	●	Certain market value adjustments of derivatives and embedded derivatives and

	●	Certain market value adjustments of derivative instruments used to economically hedge embedded derivatives.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Pre-tax net realized capital gains (losses), as adjusted, are further adjusted for:

	●	Amortization of hedge accounting book value adjustments for certain discontinued hedges,

	●	Certain hedge accounting market value revenue adjustments,

	●	Certain market value adjustments to fee revenues,

	●	Pre-tax net realized capital gains (losses) related to equity method investments,

	●	Pre-tax net realized capital gains (losses) related to sponsored investment funds and other adjustments,

	●	Certain variable annuity fees,

	●	Market value adjustments of market risk benefits,

	●	Related changes in the amortization pattern of actuarial balances,

	●	Certain hedge accounting market value expense adjustments and

	●	Net realized capital gains (losses) distributed.

Pre-tax income (loss) from exited business includes amounts associated with our exited U.S. retail fixed annuity and ULSG businesses as well as amounts associated with other exited or divested businesses. Pre-tax income (loss) from exited business includes the change in fair value of the funds withheld embedded derivative, net realized capital gains (losses) on funds withheld assets, amortization of reinsurance gain (loss) and other impacts of exited business. Other impacts of exited business primarily includes change in reserves and DAC amortization. Other impacts of exited business in 2025 also include the impairment of assets associated with an exited business.

Segment operating revenues reflect consolidated U.S. GAAP total revenues excluding:

	●	Net realized capital gains (losses), except periodic settlements and accruals on derivatives not designated as hedging instruments and certain market value adjustments of derivative instruments used to economically hedge embedded derivatives, and their impact on:

	●	Amortization of hedge accounting book value adjustments for certain discontinued hedges,

	●	Certain hedge accounting market value revenue adjustments,

	●	Certain variable annuity fees,

	●	Certain market value adjustments to fee revenues,

	●	Pre-tax net realized capital gains (losses) related to equity method investments and

	●	Pre-tax net realized capital gains (losses) related to sponsored investment funds and other adjustments.

	●	Pre-tax revenues from exited business,

	●	Pre-tax other revenue adjustments and income taxes of equity method investments and

	●	Pre-tax other revenue adjustments management believes are not indicative of overall operating trends.

Segment expenses reflect consolidated U.S. GAAP total expenses excluding:

	●	Pre-tax expenses associated with net realized capital gains (losses),

	●	Periodic settlements and accruals on derivatives used to hedge MRBs,

	●	Pre-tax expenses from exited business and

	●	Pre-tax expense adjustments management believes are not indicative of overall operating trends.

​

The accounting policies of the segments are consistent with the accounting policies for the consolidated financial statements, with the exception of: (1) pension and other postretirement employee benefits cost allocations, (2) certain expenses deemed to benefit the entire organization and (3) income tax allocations. For purposes of determining pre-tax operating earnings, the segments are allocated the service component of pension and other postretirement benefit costs. The Corporate segment reflects the non-service components of pension and other postretirement benefit costs as assumptions are established and funding decisions are managed from a company-wide perspective. Additionally, the Corporate segment reflects expenses that benefit the entire organization for which the segments are not able to influence the spend. This includes expenses such as public company costs, executive management costs, acquisition and disposition costs, among others. The Corporate segment functions to absorb the risk inherent in interpreting and applying tax law. For purposes of determining non-GAAP operating earnings, the segments are allocated tax adjustments consistent with the positions we took on tax returns. The Corporate segment results reflect any differences between the tax returns and the estimated resolution of any disputes.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The following tables summarize select financial information by segment and reconcile segment totals to those reported in the consolidated financial statements.

​

Segment Assets

​

​	​	​	​	​	​	​
​		March 31, 2025			December 31, 2024
​	​	(in millions)
Retirement and Income Solutions	​	$	219,759.2	​	$	222,967.0
Principal Asset Management	​		44,916.7	​		43,029.4
Benefits and Protection	​		46,350.0	​		46,006.7
Corporate	​		1,977.4	​		1,660.5
Total assets per consolidated statements of financial position	​	$	313,003.3	​	$	313,663.6

​

Segment Operating Revenues

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	Retirement		​	Principal		​	​		​	​		​	​
​	​	and Income		​	Asset		​	Benefits and		​	​		​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Revenue from contracts with external customers (1)	​	$	1,259.0	​	$	450.0	​	$	1,055.5	​	$	63.1	​	$	2,827.6
Adjustments for revenue from contracts with external customers not included in operating revenues (2)	​	​	(17.4)	​	​	—	​	​	6.8	​	​	—	​	​	(10.6)
Net investment income included in operating revenues	​	​	822.0	​	​	117.6	​	​	149.8	​	​	62.4	​	​	1,151.8
Operating revenues from equity method investments	​	​	—	​	​	44.6	​	​	—	​	​	(0.1)	​	​	44.5
Inter-segment operating revenues	​	​	11.6	​	​	74.6	​	​	2.1	​	​	79.1	​	​	167.4
Eliminations of inter-segment operating revenues	​	​	—	​	​	—	​	​	—	​	​	(167.4)	​	​	(167.4)
Segment operating revenues (3)	​	$	2,075.2	​	$	686.8	​	$	1,214.2	​	$	37.1	​	​	4,013.3
Net realized capital losses, net of related revenue adjustments	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(101.7)
Revenues from exited business (4)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(188.0)
Adjustments related to equity method investments	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(16.6)
Market risk benefit derivative settlements	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(11.1)
Total revenues per consolidated statements of operations	​	​	​	​	​	​	​	​	​	​	​	​	​	$	3,695.9

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	Retirement		​	Principal		​	​		​	​		​	​
​	​	and Income		​	Asset		​	Benefits and		​	​		​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Revenue from contracts with external customers (1)		$	1,212.3		$	437.5		$	1,027.9		$	58.7		$	2,736.4
Adjustments for revenue from contracts with external customers not included in operating revenues (2)	​		(19.4)	​		—	​		3.3	​		—	​		(16.1)
Net investment income included in operating revenues	​		726.8	​		95.0	​		152.5	​		61.5	​		1,035.8
Operating revenues from equity method investments	​		—	​		48.7	​		—	​		(0.1)	​		48.6
Inter-segment operating revenues	​		12.7	​		74.1	​		2.2	​		56.2	​		145.2
Eliminations of inter-segment operating revenues	​		—	​		—	​		—	​		(145.2)	​		(145.2)
Segment operating revenues (3)	​	$	1,932.4	​	$	655.3	​	$	1,185.9	​	$	31.1	​	​	3,804.7
Net realized capital gains, net of related revenue adjustments	​			​			​			​			​		31.0
Revenues from exited business (4)	​			​			​			​			​		242.3
Adjustments related to equity method investments	​			​			​			​			​		(13.4)
Market risk benefit derivative settlements	​			​			​			​			​		(11.3)
Total revenues per consolidated statements of operations	​			​			​			​			​	$	4,053.3

(1)	Includes amounts reported in premiums and other considerations as well as fees and other revenues on the consolidated statement of operations.

(2)	Includes certain revenues associated with our exited U.S. retail fixed annuity and ULSG businesses and fees associated with net realized capital gains (losses) that are not included in segment operating revenue.

(3)	See Note 19, Revenues from Contracts with Customers, for additional detail relating to segment operating revenues.

(4)	Revenues from exited business included:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Change in fair value of funds withheld embedded derivative	​	$	(209.7)	​	$	197.0
Net realized capital gains on funds withheld assets	​	​	28.0	​	​	47.5
Amortization of reinsurance gain	​	​	0.5	​	​	1.1
Other impacts of exited business	​		(6.8)	​		(3.3)
Total revenues from exited business	​	$	(188.0)	​	$	242.3

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Segment Expenses

The expense categories within total segment expenses included:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2025
​	​	Retirement		​	Principal		​	​	​	​	​	​	​	​	​
​	​	and Income		​	Asset		​	Benefits and		​	​	​	​	​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Benefits, claims and settlement expenses		$	1,353.9		$	90.6		$	699.3		$	23.6		​	​
Liability for future policy benefits remeasurement (gain) loss	​		(4.8)	​		0.5	​		(0.4)	​		—		​	​
Market risk benefit remeasurement loss	​		1.9	​		—	​		—	​		—		​	​
Dividends to policyholders	​		—	​		—	​		19.1	​		—		​	​
Commission expense	​		69.5	​		48.1	​		151.0	​		23.8		​	​
Capitalization of deferred acquisition costs and contract costs	​		(40.9)	​		(7.7)	​		(87.3)	​		—		​	​
Amortization of deferred acquisition costs and contract costs	​		21.1	​		5.8	​		64.0	​		—		​	​
Depreciation and amortization	​		19.4	​		13.9	​		4.3	​		4.1		​	​
Interest expense on corporate debt	​		—	​		0.5	​		—	​		42.2		​	​
Compensation and other	​		370.8	​		342.8	​		244.7	​		50.2		​	​
Total operating expenses	​	​	439.9	​	​	403.4	​	​	376.7	​	​	120.3	​	​	​
Total segment expenses	​	$	1,790.9	​	$	494.5	​	$	1,094.7	​	$	143.9	​	$	3,524.0
Net realized capital losses expense adjustments	​			​			​			​			​		27.8
Market risk benefit derivative settlements	​			​			​			​			​		(11.1)
Expenses from exited business (1)	​			​			​			​			​		126.3
Total expenses per consolidated statements of operations	​			​			​			​			​	$	3,667.0

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months ended March 31, 2024
​	​	Retirement		​	Principal		​	​	​	​	​	​	​	​	​
​	​	and Income		​	Asset		​	Benefits and		​	​	​	​	​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Benefits, claims and settlement expenses		$	1,243.3		$	74.5		$	681.9		$	10.2		​
Liability for future policy benefits remeasurement (gain) loss	​		(2.4)	​		—	​		6.3	​		—		​
Market risk benefit remeasurement loss	​		0.1	​		—	​		—	​		—		​
Dividends to policyholders	​		—	​		—	​		29.3	​		—		​
Commission expense	​		58.8	​		45.5	​		141.8	​		17.6		​
Capitalization of deferred acquisition costs and contract costs	​		(29.2)	​		(6.9)	​		(86.4)	​		—		​
Amortization of deferred acquisition costs and contract costs	​		20.0	​		8.0	​		62.6	​		—		​
Depreciation and amortization	​		20.7	​		17.5	​		5.9	​		4.6		​
Interest expense on corporate debt	​		—	​		1.0	​		—	​		41.7		​
Compensation and other	​		358.9	​		326.6	​		232.7	​		45.6		​
Total operating expenses	​		429.2	​		391.7	​		356.6	​		109.5		​
Total segment expenses	​	$	1,670.2	​	$	466.2	​	$	1,074.1	​	$	119.7	​	$	3,330.2
Net realized capital losses expense adjustments	​			​			​			​			​		62.6
Market risk benefit derivative settlements	​			​			​			​			​		(11.3)
Expenses from exited business (1)	​			​			​			​			​		44.7
Total expenses per consolidated statements of operations	​			​			​			​			​	$	3,426.2

(1)Expenses from exited business included:

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​	​	2025		​	2024
​	​	(in millions)
Amortization of reinsurance loss		$	26.9		$	11.2
Other impacts of exited business	​		99.4	​		33.5
Total expenses from exited business	​	$	126.3	​	$	44.7

​

Segment Pre-Tax Operating Earnings

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months March 31, 2025
​	​	Retirement		​	Principal		​	​	​	​	​	​	​	​	​
​	​	and Income		​	Asset		​	Benefits and		​	​	​	​	​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Segment pre-tax operating earnings (losses)		$	283.7		$	187.5		$	119.5		$	(105.6)		$	485.1
Pre-tax net realized capital losses, as adjusted (1)	​			​			​			​			​		(129.5)
Pre-tax loss from exited business (2)	​			​			​			​			​		(314.3)
Adjustments related to equity method investments and noncontrolling interest	​			​			​			​			​		(12.4)
Total income before income taxes per consolidated statements of operations	​			​			​			​			​	$	28.9

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the three months March 31, 2024
​	​	Retirement		​	Principal		​	​	​	​	​	​	​	​	​
​	​	and Income		​	Asset		​	Benefits and		​	​	​	​	​	​
​	​	Solutions		​	Management		​	Protection		​	Corporate		​	Total
​	​	(in millions)
Segment pre-tax operating earnings (losses)		$	262.2		$	187.1		$	111.8		$	(88.9)		$	472.2
Pre-tax net realized capital losses, as adjusted (1)	​			​			​			​			​		(31.6)
Pre-tax income from exited business (2)	​			​			​			​			​		197.6
Adjustments related to equity method investments and noncontrolling interest	​			​			​			​			​		(11.1)
Total income before income taxes per consolidated statements of operations	​			​			​			​			​	$	627.1

(1)Pre-tax net realized capital gains (losses), as adjusted, is derived as follows:

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Net realized capital losses	​	$	(117.1)	​	$	(0.9)
Derivative and hedging-related revenue adjustments	​	​	(13.2)	​	​	18.1
Market value adjustments to fee revenues	​	​	(0.1)	​	​	—
Certain variable annuity fees	​	​	17.0	​	​	18.2
Equity method investments	​	​	4.6	​	​	(10.3)
Sponsored investment funds and other adjustments	​	​	7.1	​	​	5.9
Net realized capital gains (losses), net of related revenue adjustments	​		(101.7)	​		31.0
​	​	​	​	​	​	​
Amortization of actuarial balances	​		(1.9)	​		(0.2)
Capital (gains) losses distributed	​		39.5	​		(60.3)
Derivative and hedging-related expense adjustments	​	​	0.5	​	​	(1.3)
Market value adjustments of market risk benefits	​	​	(43.9)	​	​	3.3
Market value adjustments of embedded derivatives	​		(22.0)	​		(4.1)
Net realized capital losses, net of related expense adjustments	​	​	(27.8)	​	​	(62.6)
Pre-tax net realized capital losses, as adjusted (a)	​	$	(129.5)	​	$	(31.6)

(a)As adjusted before noncontrolling interest capital gains (losses).

(2)Pre-tax income (loss) from exited business included:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Change in fair value of funds withheld embedded derivative	​	$	(209.7)	​	$	197.0
Net realized capital gains on funds withheld assets	​	​	28.0	​	​	47.5
Amortization of reinsurance loss	​	​	(26.4)	​	​	(10.1)
Other impacts of exited business	​	​	(106.2)	​	​	(36.8)
Total pre-tax income (loss) from exited business	​	$	(314.3)	​	$	197.6

​

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

19. Revenues from Contracts with Customers

The following tables summarize disaggregation of revenues from contracts with customers, including select financial information by segment, and reconcile totals to those reported in the consolidated financial statements. Revenues from contracts with customers are included in fees and other revenues on the consolidated statements of operations.

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Revenue from contracts with customers by segment:	​	​	​	​	​	​
Retirement and Income Solutions	​	$	145.7		$	159.3
Principal Asset Management:	​	​	​	​	​	​
Investment Management	​	​	426.7	​	​	407.1
International Pension	​	​	92.4	​	​	93.3
Eliminations	​	​	(4.4)	​	​	(3.8)
Total Principal Asset Management	​	​	514.7	​	​	496.6
Benefits and Protection:	​		​	​		​
Specialty Benefits	​		3.7	​		3.8
Life Insurance	​		21.1	​		20.9
Total Benefits and Protection	​	​	24.8	​	​	24.7
Corporate	​		60.6	​		57.9
Total segment revenue from contracts with customers	​		745.8	​		738.5
Adjustments for fees and other revenues not within the scope of revenue recognition guidance (1)	​		314.5	​		295.1
Pre-tax other adjustments (2)	​		17.4	​		19.3
Total fees and other revenues per consolidated statements of operations	​	$	1,077.7	​	$	1,052.9

(1)	Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards.

(2)	Pre-tax other adjustments relate to revenues from exited business, certain variable annuity fees and market value adjustments to fee revenues.

Retirement and Income Solutions

Retirement and Income Solutions offers service and trust agreements for defined contribution retirement plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. The investment components of these service agreements are in the form of mutual fund offerings. In addition, plan sponsor retirement plan trust and custody services are also available through our trust company. Individual retirement accounts (“IRAs”) are offered through Principal Bank. Furthermore, services and trust agreements are offered to non-retirement customers including insurance companies, endowments and other financial institutions.

Administrative service fee revenues are earned for administrative activities performed for the defined contribution retirement plans including recordkeeping and reporting as well as trust and custody, asset management and investment services. Administrative service fee revenues are earned for administrative activities performed for non-retirement plan customers including trust and custody services, defined benefit administration and investment management activities. The majority of these activities are performed daily over time. Fee-for-service transactions are also provided upon client request. These services are considered distinct or grouped into a bundle until a distinct performance obligation is identified. Some performance obligations are considered a series of distinct services, which are substantially the same and have the same pattern of transfer to the customer.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Administrative service fee revenues can be based on a fixed contractual rate for these services or can be variable based upon contractual rates applied to the market value of the client’s investments or assets under administration. If the consideration for this series of performance obligations is based on market value, it is considered variable during the billing period as the services are performed over time. The consideration becomes unconstrained and thus recognized as revenue for each billing period’s series of distinct services once the market value of the client’s investments or assets under administration is determined at market close. Additionally, fixed fees and other revenues are recognized point-in-time as fee-for-service transactions upon completion.

IRAs are primarily funded by retirement savings rolled over from qualified retirement plans. The IRAs are held in savings accounts, money market accounts and certificates of deposit. Deposit account fee revenues are earned as the performance of establishing and maintaining IRA accounts is completed. Fee-for-service transactions are also provided upon client request. The establishment fees and annual maintenance fees are accrued into earnings over a period of time using the average account life. Upfront and recurring bank fees are related to performance obligations that have the same pattern of transfer to the customer and are recognized in income over time with control transferred to the customers utilizing the output method. These fees are based on a fixed contractual rate. Fixed fees and other revenues are also recognized point-in-time as fee-for-service transactions upon completion. Additionally, commission income is earned on advisory services provided to customers. The revenues are earned over time as the service is performed based upon contractual rates applied to the market value of the clients’ portfolios.

The types of revenues from contracts with customers were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Administrative service fee revenue	​	$	141.2	​	$	155.5
Deposit account fee revenue	​	​	3.4	​	​	3.1
Commission income	​	​	1.1	​	​	0.7
Total revenues from contracts with customers	​	​	145.7	​	​	159.3
Fees and other revenues not within the scope of revenue recognition guidance	​	​	295.5	​	​	279.3
Total fees and other revenues	​		441.2	​		438.6
Premiums and other considerations	​		810.3	​		765.6
Net investment income	​		823.7	​		728.2
Total operating revenues	​	$	2,075.2	​	$	1,932.4

​

Principal Asset Management

Fees and other revenues earned for asset management, investment advisory and distribution services provided to institutional and retail clients in addition to trustee and/or administrative services performed for retirement savings plans. Fees are based largely upon contractual rates applied to the specified amounts of the clients’ portfolios. Each service is a distinct performance obligation; however, if the services are not distinct on their own, we combine them into a distinct bundle or we have a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Fees and other revenues received for performance obligations such as asset management and other services are typically recognized over time utilizing the output method as the service is performed. Performance fees and transaction fees on certain accounts are recognized in income when the probability of significant reversal will not occur upon resolution of the uncertainty, which could be based on a variety of factors such as market performance or other internal metrics. Asset management fees are accrued each month based on the fee terms within the applicable agreement and are generally billed quarterly when values used for the calculation are available. Management fees and performance fees are variable consideration as they are subject to fluctuation based on assets under management (“AUM”) and other constraints. These fees are not recognized until unconstrained at the end of each reporting period.

Incentive-based fees are recognized in income when the probability of significant reversal will not occur upon the resolution of the uncertainty, which is based on market performance.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

Fees for managing customers’ mandatory retirement savings accounts in Latin America are collected with each monthly deposit made by our customers. If a customer stops contributing before retirement age, we collect no fees but services are still provided. We recognize revenue from these contracts as services are performed over the life of the contract and review annually.

The types of revenues from contracts with customers were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Investment Management:	​	​	​	​	​	​
Management fee revenue	​	$	389.1	​	$	370.5
Other fee revenue	​		37.6	​		36.6
Total revenues from contracts with customers	​		426.7	​		407.1
Fees and other revenues not within the scope of revenue recognition guidance	​	​	2.8	​	​	5.2
Total fees and other revenues	​		429.5	​		412.3
Net investment income	​		24.2	​		23.2
Total operating revenues	​	$	453.7	​	$	435.5

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
International Pension:	​	​	​	​	​	​
Management fee revenue	​	$	89.2	​	$	89.1
Other fee revenue	​		3.2	​		4.2
Total revenues from contracts with customers	​		92.4	​		93.3
Fees and other revenues not within the scope of revenue recognition guidance	​	​	1.2	​	​	1.3
Total fees and other revenues	​		93.6	​		94.6
Premiums and other considerations	​		1.7	​		2.0
Net investment income	​		142.5	​		127.2
Total operating revenues	​	$	237.8	​	$	223.8

​

Benefits and Protection

Fees and other revenues are earned for administrative services performed including recordkeeping and reporting services for fee-for-service products, nonqualified benefit plans, separate accounts and dental networks. Services within contracts are not distinct on their own; however, we combine the services into a distinct bundle and account for the bundle as a single performance obligation, which is satisfied over time utilizing the output method as services are rendered. The transaction price corresponds with the performance completed to date, for which the value is recognized as revenue during the period. Variability of consideration is resolved at the end of each period and payments are due when billed.

Commission income is earned through sponsored brokerage services. Performance obligations are satisfied at a point in time, upon delivery of a placed case, and the transaction price calculated per the compensation schedule is recognized as revenue.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The types of revenues from contracts with customers were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Specialty Benefits:	​	​	​		​
Administrative service fees	​	$	3.7	​	$	3.8
Total revenues from contracts with customers	​	​	3.7	​		3.8
Fees and other revenues not within the scope of revenue recognition guidance	​	​	4.6	​	​	4.6
Total fees and other revenues	​	​	8.3	​		8.4
Premiums and other considerations	​	​	823.2	​		792.9
Net investment income	​	​	52.4	​		47.0
Total operating revenues	​	$	883.9	​	$	848.3

​

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Life Insurance:	​	​	​	​		​
Administrative service fees	​	$	10.9	​	$	7.9
Commission income	​	​	10.2	​		13.0
Total revenues from contracts with customers	​	​	21.1	​		20.9
Fees and other revenues not within the scope of revenue recognition guidance	​	​	89.6	​	​	84.2
Total fees and other revenues	​	​	110.7	​		105.1
Premiums and other considerations	​	​	124.4	​		128.9
Net investment income	​	​	95.4	​		103.8
Total operating revenues	​	$	330.5	​	$	337.8

​

Corporate

Fees and other revenues are earned on the performance of selling and servicing of securities and related products offered through PSI, an introducing broker-dealer registered with the FINRA.

PSI enters into selling and distribution agreements with the obligation to sell or distribute the securities products, such as mutual funds, annuities and products sold through RIAs, to individual clients in return for front-end sales charges, 12b-1 service fees, annuity fees and asset-based fees. Front-end sales charges, 12b-1 fees and annuity fees are related to a single sale and are earned at the time of sale. PSI also enters into agreements with individual customers to provide securities trade execution and custody through a brokerage services platform in return for ticket charge and other service fee revenue. These services are bundled as one single distinct service referred to as brokerage services. This revenue is related to distinct transactions and is earned at a point in time.

PSI also enters into agreements with individual customers to provide trade execution, clearing services, custody services and investment research services through our proprietary offered fee-based products. These services are bundled as one single distinct service referred to as advisory services. In addition, for outside RIA business PSI performs sales and distribution services only. The revenues are earned over time as the service is performed utilizing the output method.

A majority of our revenue is based upon contractual rates applied to the market value of the clients’ portfolios and considered variable consideration.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

The Corporate segment also includes inter-segment eliminations of fees and other revenues. The types of revenues from contracts with customers were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Commission income	​	$	131.5	​	$	105.5
Other fee revenue	​		23.9	​		21.7
Eliminations	​		(94.8)	​		(69.3)
Total revenues from contracts with customers	​		60.6	​		57.9
Fees and other revenues not within the scope of revenue recognition guidance	​	​	(78.9)	​	​	(79.3)
Total fees and other revenues	​		(18.3)	​		(21.4)
Premiums and other considerations	​	​	(1.3)	​	​	(1.3)
Net investment income	​		56.7	​		53.8
Total operating revenues	​	$	37.1	​	$	31.1

​

Contract Costs

Sales compensation and other incremental costs of obtaining a contract are capitalized and amortized over the period of contract benefit if the costs are expected to be recovered. The contract cost asset, which is included in other assets on the consolidated statements of financial position, was $158.7 million and $198.9 million as of March 31, 2025 and December 31, 2024, respectively.

We apply the practical expedient for certain costs where we recognize the incremental costs of obtaining these contracts as an expense when incurred if the amortization period of the assets is one year or less. These costs, along with costs that are not deferrable, are included in operating expenses on the consolidated statements of operations.

Deferred contract costs consist primarily of commissions and variable compensation. We amortize capitalized contract costs on a straight-line basis over the expected contract life, reflecting lapses as they are incurred. Deferred contract costs are subject to impairment testing on an annual basis, or when a triggering event occurs that could warrant an impairment. To the extent future revenues less future maintenance expenses are not adequate to cover the asset balance, an impairment is recognized. For the three months ended March 31, 2025 and 2024, $52.8 million and $9.5 million, respectively, of amortization expense was recorded in operating expenses on the consolidated statements of operations. Additionally, for the three months ended March 31, 2025 and 2024, $45.4 million and $0.0 million, respectively, of impairment loss was recognized in operating expenses on the consolidated statements of operations in relation to the costs capitalized. See Note 2, Other Intangible Assets, for further details of the agreement with BCT that led to the 2025 impairment.

​

20. Stock-Based Compensation Plans

As of March 31, 2025, we had the 2021 Stock Incentive Plan, the 2020 Directors Stock Plan, the 2014 Stock Incentive Plan, the Employee Stock Purchase Plan, the 2014 Directors Stock Plan, the Amended and Restated 2010 Stock Incentive Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan and the Directors Stock Plan (“Stock-Based Compensation Plans”). No new grants will be made under the 2020 Directors Stock Plan, the 2014 Stock Incentive Plan, the 2014 Directors Stock Plan, the Amended and Restated 2010 Stock Incentive Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan or the Directors Stock Plan. Under the terms of the 2021 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section 422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock-based awards. To date, we have not granted any incentive stock options, restricted stock or performance units under any plans. As part of our fair value process, we assess the impact of material nonpublic information on our share price or expected volatility, as applicable, at the time of grant. No awards in 2025 required a fair value adjustment.

As of March 31, 2025, the maximum number of new shares of common stock available for grant under the 2021 Stock Incentive Plan was 19.1 million.

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against net income for stock-based awards granted under the Stock-Based Compensation Plans was as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions)
Compensation cost	​	$	39.3	​	$	30.6
Related income tax benefit	​		9.0	​		7.1
Capitalized as part of an asset	​		0.4	​		0.4

​

Nonqualified Stock Options

No nonqualified stock options were granted to employees during both the three months ended March 31, 2025 and 2024. All outstanding nonqualified stock options are vested and have been fully expensed.

Performance Share Awards

Performance share awards were granted to certain employees under the 2021 Stock Incentive Plan. Total performance share awards granted were 0.3 million for the three months ended March 31, 2025. The performance share awards granted represent initial target awards and do not reflect potential increases or decreases resulting from the final performance results to be determined at the end of the performance period. The performance share awards include a relative total shareholder return modifier under which the number of shares ultimately awarded is also impacted by our actual shareholder return relative to our S&P 500 Financial Sector Index peer group. The actual number of common shares to be awarded at the end of each performance period will range between 0% and 180% of the initial target awards. The fair value of performance share awards is determined using a Monte Carlo simulation model. The weighted-average grant date fair value of these performance share awards granted was $90.41 per common share.

As of March 31, 2025, we had $37.9 million of total unrecognized compensation cost related to nonvested performance share awards granted. The cost is expected to be recognized over a weighted-average service period of approximately 1.7 years.

Restricted Stock Units

Restricted stock units were issued to certain employees and non-employee directors pursuant to the 2021 Stock Incentive Plan. Total restricted stock units granted were 1.0 million for the three months ended March 31, 2025. The fair value of restricted stock units is determined based on the closing stock price of our common shares on the grant date. The weighted-average grant date fair value of these restricted stock units granted was $85.10 per common share.

As of March 31, 2025, we had $119.5 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted. The cost is expected to be recognized over a weighted-average period of approximately 1.9 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, employees purchased 0.2 million shares for the three months ended March 31, 2025. The weighted average fair value of the discount on the stock purchased was $8.44 per share.

As of March 31, 2025, a total of 2.4 million of new shares were available to be made issuable by us for this plan.

​

**Principal Financial Group, Inc.**Notes to Condensed Consolidated Financial Statements – (continued) March 31, 2025 (Unaudited)

21. Earnings Per Common Share

The computations of the basic and diluted per share amounts were as follows:

​

​	​	​	​	​	​	​
​	​	For the three months ended March 31,
​		2025			2024
​	​	(in millions, except per share data)
Net income	​	$	62.9	​	$	532.0
Subtract:	​	​	​	​	​	​
Net income (loss) attributable to noncontrolling interest	​	​	14.8	​	​	(0.5)
Total	​	$	48.1	​	$	532.5
Weighted-average shares outstanding:	​	​	​	​	​	​
Basic	​	​	225.7	​	​	236.0
Dilutive effects:	​	​	​	​	​	​
Stock options	​	​	0.7	​	​	0.8
Restricted stock units	​	​	2.1	​	​	2.2
Performance share awards	​	​	0.3	​	​	0.4
Diluted	​	​	228.8	​	​	239.4
Net income per common share:	​	​	​	​	​	​
Basic	​	$	0.21	​	$	2.26
Diluted	​	$	0.21	​	$	2.22

​

The calculation of diluted earnings per share for the three months ended March 31, 2025 and 2024, excludes the incremental effects related to certain outstanding stock-based compensation grants due to their anti-dilutive effect. When a net loss is reported, our basic weighted-average shares are used to calculate diluted earnings per share, as dilutive shares would have an antidilutive effect and result in a lower loss per share.

​

​