Principal's Operating Earnings Growth Slows After Two Quarters

The Tip Desk · October 27, 2026 · 3 min read

Non-GAAP operating earnings excluding significant variances rose 7% to $2.49 a share in the third quarter, after 17% growth in the second quarter.

Principal Financial Group (PFG), the global financial company, reported that its non-GAAP operating earnings excluding significant variances rose 7% year over year to $2.49 a share in the third quarter of 2026, a slower pace than the 17% increase in the second quarter and 13% in the first.

Reported non-GAAP operating earnings per diluted share rose 6% to $2.22, down from a 16% year-over-year increase in the second quarter. GAAP net income attributable to Principal was $631.9 million, or $2.91 a share, up from $403.4 million in the second quarter.

Non-GAAP net income excluding exited business fell 24% year over year to $354.8 million, or $1.64 a share, after a 24% increase in the second quarter. Exited-business results included a $276.7 million pre-tax loss associated with the disposition of the Chilean annuities business.

The company said third-quarter significant variances included lower-than-expected variable investment income in Retirement and Income Solutions, International Pension, Specialty Benefits, Life Insurance and Corporate, lower-than-expected encaje performance in International Pension, and integration costs in Specialty Benefits and Corporate. Third-quarter 2025 variances included the 2025 actuarial assumption review. Beginning in the third quarter of 2026, impacts of the actuarial assumption review are excluded from non-GAAP operating earnings.

Assets under management were $785.0 billion, down from $808.0 billion at the end of the second quarter. AUM net cash flow was an outflow of $10.7 billion. Assets under administration were $1,840.3 billion.

Retirement and Income Solutions pre-tax operating earnings were $297.8 million, down 4% from a year earlier, after $302.1 million in the first quarter. Operating margin was 39.3%. Net revenue was $757.3 million. The company said the earnings decline was primarily due to lower variable investment income and the impacts of the third-quarter 2025 actuarial assumption review. Recurring deposits were $13 billion, up 8%.

Investment Management pre-tax operating earnings were $168.1 million, down 3% year over year. Operating revenues less pass-through expenses were $436.1 million. AUM in the segment was $581.7 billion. Private markets AUM rose 6%, supported by $0.8 billion of private institutional inflows, and active ETF net inflows were $0.5 billion.

International Pension pre-tax operating earnings fell 38% year over year to $62.4 million. Net revenue was $144.1 million. Operating margin was 43.3%. AUM was $166.2 billion, up 10%. The company said the earnings decline was due to lower net revenue, primarily from unfavorable encaje returns.

Specialty Benefits pre-tax operating earnings were $137.3 million, down 12% year over year. Premium and fees were $895.4 million, up 6%. Operating margin was 15.3%. The incurred loss ratio was 59.0%, below the company’s targeted range of 60% to 64%. The company said the earnings decline was driven primarily by impacts of the third-quarter 2025 actuarial assumption review.

Life Insurance pre-tax operating earnings were $32.4 million, versus a $69.0 million loss a year earlier. Operating margin was 13.6%. Premium and fees were $238.6 million. The company said the increase was primarily due to impacts of the third-quarter 2025 actuarial assumption review and improved mortality experience. Corporate pre-tax operating losses were $110.5 million.

Principal returned $429 million of capital to shareholders in the third quarter, including $250 million of share repurchases and $179 million of common stock dividends. Excess and available capital was $1.5 billion.

The company announced a fourth-quarter 2026 common stock dividend of $0.85 a share, a 1-cent increase from the third-quarter 2026 dividend and an 8% increase over the fourth quarter of 2025. The dividend is payable on December 18, 2026, to shareholders of record as of December 2, 2026.