Principal Financial Group Reports 91% Decline in Net Income for Q1 2025

Principal Financial Group, Inc. reported a significant decline in its financial performance for the first quarter of 2025 compared to the same period in 2024, as detailed in its latest 10-Q filing. Total revenues for the three months ended March 31, 2025, were $3.7 billion, down from $4.1 billion in the prior year, reflecting a decrease of approximately 8.8%. This decline was primarily driven by a substantial drop in net realized capital gains and a negative change in the fair value of funds withheld embedded derivatives, which contributed to a net income attributable to the company of $48.1 million, a decrease of 91% from $532.5 million in the previous year.

The company's expenses also increased, totaling $3.7 billion for the first quarter of 2025, compared to $3.4 billion in the same quarter of 2024. This rise in expenses was largely attributed to higher benefits, claims, and settlement expenses, which increased by $150.3 million, primarily due to increased reserves related to higher sales of single premium group annuities. Operating expenses also rose, reflecting impairments related to exiting certain business roles in Hong Kong, which resulted in a $65.4 million loss.

In terms of strategic developments, Principal Financial Group announced its exit from its sponsor and trustee roles for Mandatory Provident Fund Schemes in Hong Kong, with the transaction expected to close in early 2026. This decision led to impairments of intangible assets totaling $97 million, impacting the company's financial results. The company also reported a decrease in its total assets, which stood at $313 billion as of March 31, 2025, down from $314 billion at the end of 2024.

Operationally, the company experienced fluctuations in customer engagement metrics, with total premiums and other considerations increasing to $1.75 billion, up from $1.68 billion in the previous year. The Retirement and Income Solutions segment saw a notable increase in premiums due to higher sales of single premium group annuities. However, the Principal Asset Management segment reported a decrease in average assets under management (AUM) to $689.3 billion, reflecting a net cash outflow and market performance impacts.

Looking ahead, Principal Financial Group expressed caution regarding its outlook, citing potential risks from fluctuating market conditions, interest rates, and regulatory changes. The company emphasized its commitment to managing liquidity and capital resources effectively, with a focus on maintaining strong cash flows to meet obligations. The management team remains vigilant in monitoring market risks and adjusting strategies accordingly to navigate the evolving financial landscape.