UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

1-16725

(Commission file number)

PRINCIPAL FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	42-1520346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

711 High Street, Des Moines, Iowa 50392

(Address of principal executive offices)

(515) 247-5111

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	PFG	Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

The total number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of October 26, 2022, was 244,682,790.

PRINCIPAL FINANCIAL GROUP, INC.

TABLE OF CONTENTS

		Page
Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Financial Position as of September 30, 2022 (Unaudited) and December 31, 2021	3
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	8
	Notes to Unaudited Condensed Consolidated Financial Statements — September 30, 2022	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	89
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	123
Item 4.	Controls and Procedures	130
Part II — OTHER INFORMATION
Item 1.	Legal Proceedings	130
Item 1A.	Risk Factors	130
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	131
Item 6.	Exhibits	132
Signature		133

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Principal Financial Group, Inc.

Condensed Consolidated Statements of Financial Position

	September 30,		December 31,
	2022		2021
	(Unaudited)
	(in millions)
Assets
Fixed maturities, available-for-sale	$	62,409.1	$	78,154.5
Fixed maturities, trading		702.7		422.2
Equity securities (2022 and 2021 include $685.9 million and $783.7 million related to consolidated variable interest entities)		1,616.2		2,347.2
Mortgage loans (2022 and 2021 include $1,494.7 million and $1,260.1 million related to consolidated variable interest entities)		20,602.6		19,668.7
Real estate (2022 and 2021 include $608.8 million and $672.0 million related to consolidated variable interest entities)		2,136.8		2,075.4
Policy loans		766.2		759.6
Other investments (2022 and 2021 include $365.4 million and $522.8 million related to consolidated variable interest entities)		5,609.8		5,478.3
Total investments		93,843.4		108,905.9
Cash and cash equivalents (2022 and 2021 include $33.4 million and $49.6 million related to consolidated variable interest entities)		4,239.6		2,332.0
Accrued investment income		762.0		695.8
Reinsurance recoverable and deposit receivable		22,893.0		1,186.5
Premiums due and other receivables		4,336.6		655.9
Deferred acquisition costs		4,834.0		3,757.5
Property and equipment		1,006.1		1,038.0
Goodwill		1,548.3		1,627.6
Other intangibles		1,524.6		1,600.6
Separate account assets (2022 and 2021 include $29,357.8 million and $33,957.7 million related to consolidated variable interest entities)		146,571.4		182,345.4
Other assets		1,021.6		512.0
Total assets	$	282,580.6	$	304,657.2
Liabilities
Contractholder funds (2022 and 2021 include $332.9 million and $344.0 million related to consolidated variable interest entities)	$	43,618.5	$	43,598.0
Future policy benefits and claims		43,577.0		43,948.1
Other policyholder funds		1,007.4		1,071.0
Short-term debt		66.5		79.8
Long-term debt		3,981.0		4,280.2
Income taxes currently payable		18.5		15.5
Deferred income taxes		1,079.3		2,320.2
Separate account liabilities (2022 and 2021 include $29,357.8 million and $33,957.7 million related to consolidated variable interest entities)		146,571.4		182,345.4
Funds withheld payable		20,669.7		—
Other liabilities (2022 and 2021 include $99.1 million and $58.7 million related to consolidated variable interest entities)		12,247.9		10,540.7
Total liabilities		272,837.2		288,198.9
Redeemable noncontrolling interest (2022 and 2021 include $228.2 million and $304.0 million related to consolidated variable interest entities)		255.1		332.5
Stockholders’ equity
Common stock, par value $0.01 per share; 2,500.0 million shares authorized; 488.2 million and 484.9 million shares issued as of 2022 and 2021; 244.9 million and 261.7 million shares outstanding as of 2022 and 2021		4.9		4.8
Additional paid-in capital		10,637.5		10,495.0
Retained earnings		17,210.9		12,884.5
Accumulated other comprehensive income (loss)		(8,070.6)		1,610.9
Treasury stock, at cost (243.3 million and 223.2 million shares as of 2022 and 2021)		(10,336.5)		(8,925.8)
Total stockholders’ equity attributable to Principal Financial Group, Inc.		9,446.2		16,069.4
Noncontrolling interest		42.1		56.4
Total stockholders’ equity		9,488.3		16,125.8
Total liabilities and stockholders’ equity	$	282,580.6	$	304,657.2

See accompanying notes.

3

Principal Financial Group, Inc.

Condensed Consolidated Statements of Operations
(Unaudited)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
	(in millions, except per share data)
Revenues
Premiums and other considerations	$	1,486.5	$	1,230.5	$	3,740.1	$	3,335.3
Fees and other revenues		1,015.7		1,251.8		3,178.3		3,711.0
Net investment income		908.2		1,093.4		2,842.8		3,167.0
Net realized capital losses (1)		(55.7)		(152.0)		(394.1)		(41.7)
Net realized capital gains on funds withheld assets