Principal Financial's Q2 2025: Unpacking Key Contradictions in Expense Management and Revenue Growth

Expense management strategy, investment management gross sales dynamics, expense levels and growth, pension risk transfer opportunities, and retirement income solutions fee revenue rate decomposition are the key contradictions discussed in Principal Financial's latest 2025Q2 earnings call.



Financial Performance and Earnings Growth:
- Principal Financial Group (PFG) reported adjusted non-GAAP earnings for Q2 2025, excluding significant variances, of $469 million, representing an 18% increase in EPS over the same quarter in 2024.
- The earnings growth was driven by revenue growth, strong margin, expense discipline, lower effective tax rates, and cumulative impact from share repurchases.

Investment and Business Segments:
- Principal Asset Management's AUM increased by 5% sequentially and 8% year-over-year to $723 billion, with investment management sales increasing 24%.
- Growth was supported by increased investment management sales, particularly from international clients, and strong performance in alternative debt strategies.

Retirement Solutions and Sales:
- RIS sales increased by 7% year-over-year, with Workplace Savings and Retirement Solutions (WSRS) and Retirement Income Solutions (RILA) contributing significantly.
- This growth was driven by strong sales in small and midsized markets and a 27% year-over-year growth in transfer deposit value.

Specialty Benefits and Insurance:
- The Specialty Benefits segment reported a 10% earnings growth with a 15% operating margin expansion compared to the prior year, driven by disciplined pricing and underwriting performance.

Shareholder Returns and Capital Deployment:
- PFG returned $320 million to shareholders in Q2, including $150 million in share repurchases, and raised its common stock dividend for the eighth consecutive quarter.
- The shareholder returns align with the company's strategy to maintain a strong capital position and deploy excess capital consistently.