Principal Financial Group Inc.
Principal Financial Group (PFG)
Overview
Principal Financial Group, Inc. is a global financial services company headquartered in Des Moines, Iowa, specializing in retirement planning, asset management, and insurance/employee benefits. Founded in 1879 as Bankers Life Insurance Company, Principal has grown into one of the largest U.S.-based retirement and asset management providers, with about $1.8 trillion in assets under administration and roughly $781 billion in assets under management as of year-end 2025. The company generated approximately $15.6-15.7 billion in revenue for 2025 and employs roughly 19,700 people worldwide, including large hubs in Des Moines and Pune, India, serving businesses, individuals, and institutional clients in more than 80 markets. Principal is a member of the S&P 500 and trades on Nasdaq under the ticker PFG.
What They Do & How They Make Money
Principal makes money in three main ways that reflect its three core segments. First, it earns fee and spread income by administering workplace retirement plans — recordkeeping and managing 401(k), pension, and other defined-contribution and defined-benefit plans for employers, collecting asset-based and per-participant fees along with investment spread income on general-account assets. Second, it earns management fees as an asset manager, running mutual funds, separate accounts, and institutional mandates (including a large and fast-growing international pension and real estate/private markets business) on behalf of retail and institutional investors, earning a percentage of assets under management. Third, it underwrites insurance — primarily group life, disability, and specialty employee benefits sold to employers, plus individual life insurance — collecting premiums and paying claims, profiting from the difference (underwriting margin) between premiums collected and claims/expenses paid out, supplemented by investment income earned on premium reserves. A unifying theme is Principal's focus on small and mid-sized businesses (SMBs) for retirement and benefits, a niche where it has built significant scale advantages, plus a growing emphasis on international retirement/pension markets in Latin America and Asia.
Business Segments
Principal currently reports through three primary operating segments (having streamlined from a four-segment structure that previously separated out Principal International):
- Retirement and Income Solutions (RIS): The company's largest and highest-margin segment, providing full-service retirement plan recordkeeping, administration, and investment products (401(k)s, pension risk transfer, and income annuities) primarily to U.S. small and mid-sized businesses. RIS posted a 40.3% operating margin in 2025 on $35 billion of transfer deposits, making it a core profit driver.
- Principal Asset Management: Manages investments across equities, fixed income, real estate, and private markets for retail and institutional clients globally, and includes Principal's international pension businesses. This segment posted 16% growth in investment management gross sales (to $127 billion) and a 36% operating margin in 2025, with international pension AUM up 24% to $154 billion.
- Benefits and Protection: Underwrites group life, disability, dental/vision, and other specialty employee benefits, along with individual life insurance, mostly sold through employer-sponsored plans. Specialty Benefits delivered a 16% operating margin in 2025, aided by strong underwriting results.
A smaller "Corporate" segment captures unallocated corporate expenses, financing costs, and non-operating items.
Competitors
Because Principal spans retirement services, asset management, and insurance, its competitive set differs by segment:
- Retirement/recordkeeping: Fidelity Investments, Empower Retirement, Voya Financial, T. Rowe Price, and Vanguard compete for defined-contribution plan sponsorship, especially in the SMB market Principal targets.
- Asset management: BlackRock, Invesco, T. Rowe Price, Nuveen, and Brookfield Asset Management compete for institutional and retail investment mandates, particularly in fixed income, real estate, and international pension products.
- Insurance/benefits: MetLife, Unum Group, Lincoln Financial Group, and The Hartford compete directly in group life, disability, and specialty employee benefits.
Competitive Position
Principal's core competitive advantage is its deep entrenchment in the U.S. small-and-mid-sized business retirement and benefits market, a segment less contested by mega-scale players like Fidelity and Vanguard (who focus more on large-plan and retail markets), giving Principal durable recordkeeping relationships and cross-sell opportunities across retirement, benefits, and asset management for the same employer clients. Its growing international pension and asset management franchise (particularly in Latin America and Asia) provides diversification and higher growth rates than the mature U.S. retirement market. High and expanding operating margins across all three segments in 2025, alongside a raised dividend and continued share buybacks, signal balance-sheet strength and capital-return discipline. Key risks include intensifying fee compression across both retirement recordkeeping and asset management, as competitors and index-fund providers push down costs; interest-rate and market-volatility sensitivity, since spread income and AUM-based fees both move with rates and markets; group insurance underwriting risk (claims volatility in life and disability lines); regulatory risk tied to retirement-plan fiduciary rules and international insurance/pension regulation; and reliance on distribution partners (advisors, brokers, and employer benefits consultants) for much of its new business.