Principal Financial Group, Inc. 10-Q — AI Bull & Bear Analysis

Reported net income surged on fair-value swings tied to long-exited business lines; core operating earnings grew more modestly. What happened Net income attributable to Principal Financial Group rose to $424.6 million in the first quarter of 2026, compared to $48.1 million in the same period last year. The company reported a significant swing in its exited businesses (a non-GAAP reconciling category), moving from a $314.3 million pre-tax loss in Q1 2025 to a $131.7 million pre-tax gain in Q1 2026. This turnaround was primarily driven by a $177.4 million gain in the fair value of funds withheld embedded derivatives — a sharp reversal from a $209.7 million loss in the prior year — while the 2025 base was further depressed by an asset impairment associated with an exited business. Core segment performance remained stable with total pre-tax operating earnings of $558.5 million, a modest increase from $485.1 million in the prior year. The company returned $409.4 million to shareholders through $173.5 million in dividends and $235.9 million in share repurchases during the quarter. What to watch Changes in the fair value of the funds-withheld embedded derivative, as these drive the majority of the company's non-operating volatility. The pace of AUM growth in Principal Asset Management, up 7.0% year-over-year to $737.6 billion, though assets dipped slightly during the quarter itself. The impact of equity and interest rate movements on the net amount at risk for market risk benefits in Retirement and Income Solutions. Not financial advice. Every figure above is cited to the source SEC filing.