With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500 2021-206- Principal Financial

The Des Moines-based financial services company helps clients with retirement planning and asset management and offers varied insurance coverage plans worldwide.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-201-Principal-Financial

A financial services provider offering retirement plans, insurance, and asset management, Principal Financial climbed 18 places on the this year's ranking.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Culture rank

Process rank

Product rank

Years on list

Previous rank

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Get insights into Principal Financial including business profile, stock information, news, and rankings from Fortune.

Principal Financial (PFG): Company Profile, Stock Price, News, Rankings

legacy

Principal Financial

principal financial

Morning, and welcome to the Principal Financial Group third quarter 2026 financial results conference call. There will be a question-and-answer period after the speakers have completed their prepared remarks. To ask a question during the session, you will need to press star one one on your telephone. To withdraw your question, please press star one one again. We would ask that you be respectful of others and limit your questions to one and a follow-up so we can get to everyone in the queue. I would now like to turn the conference over to Humphrey Lee, Vice President of Investor Relations and FP&A.

Thank you, and good morning. Welcome to Principal Financial Group's third quarter 2026 earnings conference call. As always, materials related to today's call are available on our website at investors.principal.com. Following a reading of the safe harbor provision, CEO Deanna Strable and CFO Joel Pitz will deliver prepared remarks. We will then open the call for questions. Members of senior management are also available for Q&A. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

The company does not revise or update them to reflect new information, subsequent events, or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U.S. Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures may be found in our earnings release, financial supplement, and slide presentation. Deanna?

Thanks, Humphrey, and good morning to everyone on the call. This morning I will cover our third quarter performance and the continued progress we are making against our strategic priorities. Joel will then provide additional details on our financial results and capital position. Starting on slide two, our third quarter results build on our strong year-to-date performance and reinforce our confidence in delivering on our 2026 financial targets. Adjusted non-GAAP earnings per share increased 12% year-to-date at the high end of our target range, including 7% growth in the third quarter against a strong prior year comparison.

Underlying performance in the quarter remained strong against an environment that was volatile and dynamic. On an adjusted basis, third quarter non-GAAP pre-tax operating earnings increased 3% on 4% net revenue growth. This was primarily driven by higher revenue and disciplined expense management in RIS, improved mortality experience in Life, and growth in International Pension. Adjusted non-GAAP year-to-date pre-tax operating earnings increased 10%, supported by 5% net revenue growth and 120 basis points of margin expansion.

We also continue to deliver strong results in capital generation with ROE above 16% and trailing 12-month free capital flow conversion of 77%, both within our targeted ranges. In the third quarter, we returned nearly $430 million of capital to shareholders, bringing our year-to-date return to more than $1.2 billion. We remain on track to deliver on our full year capital deployment target. Moving to slide three, we continue to make progress against our three strategic growth priorities, retirement ecosystem, small and mid-sized businesses, and global asset management.

Within the retirement ecosystem, which includes record keeping, asset management, income solutions, and advice, our scale and breadth of capabilities create multiple opportunities to drive value and deepen relationships with our customers. We're continuing to grow our participant base and helping them save more for retirement. Recurring deposits increased 8% year-over-year, while the number of participants contributing to their retirement plans and the average deferrals per participant both increased by 4%.

Participants are also consolidating more of their retirement savings onto our platform. In the quarter, we had $1.8 billion of roll-ins and $7.4 billion over the trailing 12 months, up 9% and 15% respectively. The attractiveness of our retirement solutions and expertise drove $1.5 billion of DCIO sales and $900 million of PRT sales during the quarter. We're also further expanding the investment management options available across our retirement platform, including through our featured partner program, which now supports private market strategies and retirement plans.

Our partnership with leading alternative asset managers, including Principal Asset Management, allows us to offer more holistic and innovative solutions through professionally managed retirement accounts. This builds on our longstanding experience supporting private assets on our record-keeping platform and is another example of how we're leveraging our scale and expertise to meet the evolving needs of plan sponsors, advisors, and participants. Notably, our strength continues to be recognized. In the 2026 NAPA Advisors' Choice Awards, Principal was named a top retirement service provider across all market segments for both participant experience capabilities and plan sponsor and advisor support.

This recognition reflects our partnership and strong commitment to the financial professionals we serve. For the small and mid-size business segment, our focus and differentiated capabilities in this attractive market continue to drive growth across our businesses. While not shown on the slide, we recently fielded our latest Well-Being Index, a survey of U.S. employers on business health and outlook. Results collected in September and October show small and mid-sized businesses are increasingly more cautious about the economic environment and future growth.

Despite that caution, staffing and benefits remain a top priority for business owners. We are seeing a similar trend in our own customer base, with positive employment growth across both B&P and RIS. As seen on slide three, Specialty Benefits employment grew nearly 2% over the trailing 12 months. In retirement, SMB transfer deposits increased 21%, and recurring deposits increased 7% year-over-year, reflecting the attractive value proposition of our solutions for this market segment.

In Specialty Benefits, sales grew 10% from the prior year quarter and 15% over the trailing 12 months, contributing to a third consecutive quarter of sequential premium growth improvement. We are excited to build on that momentum with Beam Benefits. on September 1st, we completed this acquisition, adding more than 26,000 small business customers and a digital-first cloud native platform. Beam strengthens our ability to serve SMBs with greater speed and ease, expanding our reach and accelerating growth in this attractive market.

Turning to Global Asset Management, I want to first address net cash flow before highlighting the progress we continue to make across the broader platform. Total company net cash flow was negative $11 billion in the quarter, largely driven by select active equity strategies in investment management. We recognize that net cash flow needs to improve, and we are focused on the actions within our control to strengthen investment performance and drive enhanced growth over time. Active equity flows remain challenged across the industry, and we expect near-term pressure to continue.

At the same time, we are seeing demand in areas where we have been investing to grow the platform. Private markets generated $800 million of positive net cash flow during the quarter, and active ETFs generated $+500 million. Over the trailing 12 months, each has generated approximately $2 billion of positive flows. We continue to build on that momentum, most recently with the launch of the Principal Equity Premium Income ETF to meet growing demand for income-oriented strategies. Importantly, our international capabilities continue to provide another source of diversification and growth.

International Pension generated more than $400 million of positive net cash flow, with positive flows across all locations and AUM up 10% year-over-year. We are also extending the reach of our global capabilities. Earlier this month, we partnered with ASB Capital in the Middle East to launch a multi-asset fund that brings together our expertise across equities, fixed income, and private markets. Broadridge named us a best in class top five provider for international fund distribution in Latin America. Both reflect how our global investment capabilities and local distribution expertise help clients access opportunities beyond their home markets.

While we have more work to do, the growth we are seeing in private markets, ETFs, and our international businesses reflect the steps we have taken to diversify our platform and position it for long-term growth. Before I hand it over to Joel, I also want to recognize that last Friday marked the 25th anniversary of Principal becoming a publicly traded company. We IPO'd at an initial stock price of $18.50, and since then have generated strong annualized returns of 10% for our shareholders.

That was a pivotal moment in our history, creating new opportunities to grow, compete globally, and meet the needs of our customers. 25 years later, the same willingness to evolve continues to shape how we position Principal for the future. Today, our focus on the retirement ecosystem, small and mid-sized businesses, and global asset management reflects where we are best positioned to win, and we will continue investing in these areas to drive growth and attractive returns to generate long-term value for our customers and shareholders. Joel?

Thanks, Deanna. Good morning to everyone on the call. I will walk through the key highlights of our third quarter financial performance and provide an update on our capital position. We continue to deliver on our financial targets with year-to-date earnings per share growth of 12% on both reported and adjusted basis at the high end of our 9%-12% target. Starting on slide four, third quarter non-GAAP operating earnings were $482 million, an increase of 2% year-over-year, with earnings per share of $2.22, an increase of 6%. Details of our significant variances can be found on slide nine and were largely driven by lower than expected variable investment income and encaje performance.

These contributed to an after-tax impact of $59 million or $0.27 per share in the third quarter. Excluding these items, non-GAAP operating earnings were $541 million, up 3% year-over-year, while earnings per share of $2.49 increased 7%. Non-GAAP operating ROE, excluding significant variances, was 16.6%, improving 110 basis points year-over-year, and above the midpoint of our 15%-17% targeted range. Turning to capital and liquidity, we ended the quarter in a strong position with more than $1.5 billion of excess and available capital.

This includes $1.15 billion at the holding company, $300 million in our subsidiaries, and $80 million in excess of our targeted 375% risk-based capital ratio, which was approximately 380% at quarter end. In the third quarter, we returned $429 million to shareholders, including $250 million of share repurchases and $179 million of dividends. Capital deployment totaled more than $1.2 billion year-to-date, and we are well positioned to deliver on our full-year target of $1.5 billion-$1.8 billion.

Throughout the year, we have had attractive organic and inorganic growth opportunities, including the third quarter acquisition of Beam Benefits. Beam was not contemplated in our 2026 outlook, and as a result, we expect full-year share buybacks to be towards the low end of our target range. Last night, we announced an $0.85 per share dividend payable in the fourth quarter. This is a $0.01 increase from the prior quarter, 8% higher than a year ago, and in line with our commitment to a 40% dividend payout ratio.

Additionally, I want to highlight the immaterial impacts of our actuarial assumption review, which can be found on slide 11. As a result of a prospective change in non-GAAP operating earnings definition, assumption review impacts are now excluded from this metric and reported separately as a reconciling item. Now, turning to the businesses, the following excludes significant variances found on slide nine. In RIS, as shown on slide nine, pre-tax operating earnings increased 5% year-over-year, driven by 4% net revenue growth and continued expense discipline. Operating margin was 42% above the high end of our targeted range while investing in the business.

This quarter had strong underlying fundamentals, including record client retention and stable withdrawal rates, with recurring deposits up 8% to nearly $13 billion. Additionally, PRT sales totaled $900 million in the quarter, with sales in the pipeline increasing from the first half of the year. We continue to exceed our return hurdles and remain disciplined in our deployment of capital. Turning to slide six, Principal Asset Management delivered earnings growth in the quarter, driven by strong growth in International Pension. Within investment management, revenue declined 2% year-over-year.

Excluding the impact of divestitures, revenue increased 1% year-over-year as increases in transaction and borrower fees more than offset the impact of net cash flow on management fees. Pre-tax operating earnings declined 3% for the quarter. On a year-to-date basis, earnings increased 2% and margin improved 40 basis points. Moving to International Pension, adjusted pre-tax operating earnings increased 11% year-over-year, driven by continued growth in Latin America. Operating margin expanded 240 basis points to the high end of our 46%-50% target range. AUM increased 10% from a year ago to $166 billion, while positive net cash flow in all locations reflected broad-based momentum across the business.

Additionally, we completed the sale of our Chile annuity business on September 1st, further sharpening our focus on our core pension and asset management capabilities. Turning to slide seven, Benefits and Protection generated pre-tax operating earnings of $183 million, a 3% year-over-year increase driven by life earnings growth and compared to very strong third quarter 2025 Specialty Benefits results. Starting with Specialty Benefits, premium and fees increased 6% year-over-year, driven by core business momentum and a one-month contribution from Beam.

Earnings were relatively stable compared to the prior year as strong underwriting results in the quarter were measured against a very favorable prior year quarter. Also reflected in the current quarter was a slight earnings headwind from Beam. While the acquired block is currently operating at a modest loss, integration plans are on track, and repapering will begin to drive value in early 2027. The Specialty Benefits loss ratio was 59%, driven by improved results in dental and group life.

Dental results in the current quarter marked its sixth consecutive quarter of year-over-year improvement. These strong underwriting results were partially offset by individual disability experiencing a higher loss ratio due to claims volatility. The overall Specialty Benefits loss ratio continues to perform better than our long-term targeted range. Turning to Life, adjusted pre-tax operating earnings were $39 million, a 29% increase from the prior year, driven by improved mortality experience due to lower frequency and severity.

Operating margin increased 420 basis points year-over-year to 16.4%, exceeding the top end of our targeted range. Turning to the corporate segment, losses were within our targeted range. Given year-to-date results, we expect to come in at or above the high end of our range for the full year. At an enterprise level, through the third quarter, we've delivered 12% EPS growth year-to-date, ROE expansion, and generated strong free capital flow, reflecting continued strength and momentum in our business.

The strategic actions we have taken during the year have enabled us to focus on higher growth opportunities. The third quarter acquisition of Beam Benefits, the transition of our Hong Kong business to asset management, and the sale of our Chile annuity business have further optimized our portfolio. As we enter the final quarter of the year, we are well-positioned to deliver on our financial targets, supported by strong fundamentals, a healthy capital position, and continued focus on our strategic priorities. This concludes our prepared remarks. Operator, please open the call for questions.

At this time, I would like to remind everyone that to ask a question, press star one one on your telephone. We will pause for just a moment to compile the Q&A roster. The first question comes from Wes Carmichael from Wells Fargo.

Hey, good morning. Thank you. First question, could you just talk about the decision to move the assumption review below the line this quarter? I realize it is a small impact this year, but I think it has been maybe larger in the past. I know most of your core businesses are not really long duration, volatile insurance lines, but I think it is maybe a little bit different than what most peers do.

Thanks, Wes, for the question. I will have Joel address that.

Yeah. Good morning, Wes. As you mentioned, it was immaterial this quarter, and frankly, we have always focused on operating earnings excluding actuarial assumption review, given the one-time nature of the annual review. For that reason, we have historically actually defined our profitability metric for incentive comp and the like as operating earnings excluding AAR. Since we have always removed it from our OE definition, we stepped back and asked why it is even part of our OE definition and therefore revisited treatment and decided to make the change effective 2026.

Importantly, we will continue to highlight the one-time AAR impacts that we have done in the slides. They will be very transparent as it relates to the impact between the OE to net income reconciliation to ensure full transparency going forward. But we do believe this will provide a more meaningful presentation for investors as the OE metric will better represent the underlying performance for the operations.

I do. Thank you. The second one was on International Pension and with respect to Brazil. I think there's recent re-election, and I think the stock market there and the real has been under some pretty significant pressure. I'm just wondering if you can help with any sensitivity of International Pension earnings to Brazil equities and currency.

Yeah. I'll ask Joel to get into the sensitivity piece from a financial perspective, but maybe I'll just quickly address the broader impacts that we see around the Brazil election. I'll start with that the result that happened on Sunday, it was a reversal from the first-round outcome, and I think it's going to take some time for the market to absorb that reversal and ultimately reverse back out some of the positives that had come in due to what happened in the first round. But one positive of this is it will allow for continuity in our business in Brazil due to stability and leadership at our JV partner, Banco do Brasil.

We will likely see market volatility as investors assess both the fiscal and the interest rate outlook, but Brazil remains a very attractive long-term market. We have strong relationships there, and we have successfully navigated multiple political and economic cycles. We remain confident in our ability to continue executing our priorities and drive growth in our market-leading business. I will have Joel give you a little bit more sensitivities around some of the financial impacts.

Yeah, Wes, Deanna in her opening comments talked about our long history as a public company in 2001. We have actually been in Brazil longer than that. We actually started our JV in 1999, and that partnership has performed extremely well over that period of time. As a reminder, the interest rate environment is very different in Brazil than it is here in the U.S. What we do see is market volatility that is happening in the equity market, particularly during the month of October. If you look at within our pension plan, we have less than 1% of our AUM in Brazilian equities.

That is expected when you have interest rates in the mid-teens. Again, interest rates are going to be much more important for our growth prospects and our asset base fee business than what you are going to see in the equity markets. As it relates to sensitivity of our business, we do not see that the change in the equity markets since the election having a meaningful impact at all, again, given our low allocation towards equities, and feel very good about the continued growth prospects of Brazil in the intermediate and long term.

Our next question comes from Joel Hurwitz with Dowling & Partners.

Hey, good morning. Wanted to start on investment management revenue. Kamal, can you just unpack the further fee rate decline in the quarter? Can you also talk about the driver of the higher other revenue in any color and how to think about the growth in that revenue stream as you grow private markets AUM?

Thanks, Joel, for the question. I'll have Kamal address that.

Good morning, Joel. Thank you for the question. I will start with the fee rate dynamic related to NCF. Obviously, in the short term, it has been a headwind to the rate we publish for you, particularly given that the pressure has been largely concentrated in higher fee active equity strategies. But at the same time, like you asked, the business has become substantially more diversified, I would say, both by geography and by capability.

You highlighted private markets, but there is more to it. One example I will give you as you think about this is even our active ETF business, which continues to grow year-over-year and has generated positive NCF, earns a premium over the base fee rate that you see in our earnings. So we continue to underwrite really good business, and our goal is to keep that fee rate high compared to both market and competition. The key thing I would highlight for you is that a single fee statistic may not fully capture the earnings power of the business because a lot of non-traditional fees continue to grow.

You highlighted real estate as borrower transaction fees scale up given market volatility and capital being put to work. As we continue to expand our infrastructure business, the nature of those fees will change over time. So certainly the non-traditional fee component will grow, and it will be tough to capture it in a single statistic, so you should look at the total line rather than just the management fee line. The other dynamic driving our revenue growth is custom mandates continue to grow. A lot of these are not traditionally in fund structures, and so certainly that drives the fee growth rate. You saw some of that manifest this quarter, given your question.

Yeah. On Beam, with the deal now closed, can you just provide some more color on the expected earnings impact? I think you guys said it was a bit of an earnings drag this quarter. How much of a drag was it? Then how should we think about earnings emergence as you move the business to your paper and onto your dental network?

Yeah. I will start with that we are so excited to close the acquisition of Beam Benefits on September 1st. That was slightly sooner than we actually expected to close, and will really set us up for continuing to integrate this at an accelerated rate as we go into 2027. I will ask Amy to get into a little bit more specifics on the actual impact, both on the top line as well as the bottom line.

Yeah. Thanks for the question. I would want to go back and just kind of start with a little bit of a reminder that fundamentally, when I think about Beam, it is really a capability and a growth acquisition, and it expands how we serve that small and mid-size business, and then strengthens the capabilities that we have in that smaller market. Our top priority through all this work is going to be to make sure we provide continuity and enhance the products and experiences that we offer employers and brokers and our own employees.

Keeping that strategic rationale in mind, you had mentioned it, and I will go ahead and size that for you, that Beam was a slight headwind to earnings. To put that in context, that was about $1 million or $2 million in earnings for this quarter. Moving Beam policies to our paper and our dental network is going to be the mechanism. We refer to that as repapering, but that is going to be the mechanism that will initially reduce and eliminate those losses. Deanna mentioned being pleased that we closed on September 1st, and one of the reasons we are pleased about that is it gave us the ability to start this repapering process on January 1st, 2027.

Broker and customer notices have already started, and we would consider a repapering timeline at or ahead of plan. Keep in mind, though, these are largely small case policies, which tend to have policy anniversaries spread throughout the calendar year as opposed to primarily in January 1st, 2027. This repapering activity will happen throughout 2027 and will begin to markedly decrease the earnings drag in the first half of 2027. I would expect us to give more detail, more guidance on how this integration work will impact full year 2027 results at our next earnings and outlooks call. But for now, I am really comfortable sharing that our plans are tracking and that we are slightly ahead of our plan and remain pleased with the transaction.

Question comes from Jack Matten from BMO Capital Markets.

Hey, good morning. Question on investment management net flows. Do you expect to continue seeing headwinds in the U.S. active equity business in upcoming quarters? I am wondering, again, any update on the pipeline heading into year-end? I think last quarter you gave a number of about $10 billion.

Good morning, Jack. Let me start with your question on the quarter and the NCF, and then I will also give you a sense of the pipeline question. Like I said last quarter, the second half of the year remains challenging. The level of net outflow this third quarter, while it was better than 2Q, is still significant, as you highlighted. As you highlighted, it is mostly concentrated in our U.S. retail active equity strategies at this stage, with some institutional withdrawals overseas as well. What I would highlight for you, it remains concentrated, and there is a strong bias against those kind of products in the wealth business and retail business, you even see that in industry-wide flows this quarter as well.

We are not immune to that. Where we continue to see constructive trends over time, one, I would direct you to our ETF business. This quarter we reached a high point of $14 billion in AUM. That business has grown 84% year-over-year. Consistent net cash flow and growth has contributed. I continue to see a good momentum on that business, and you should continue tracking that. To your question on pipeline, as you suggested, last quarter I had highlighted the pipeline number, which has also increased this quarter by another $700 million.

While we actually put a significant amount of capital to work during the quarter as well, some of the committed mandates we put to work, and then we added new mandates as well. Overall pipeline grew by that amount. What I would tell you is those two measures continue to trend in the positive direction, and our goal remains to align with where the vectors of client demand are while we continue to manage through the industry-wide transition of these traditional active products.

Yes. Thank you. Maybe just one on the free capital conversion metric at 77%, which is a healthy level within your target range. But it's been trending a little bit lower over the past couple of quarters. I'm just wondering if there's any drivers that you'd call out, as I would've thought maybe since market performance has still been pretty good, that would kind of help your fee-based businesses and keep conversion maybe at the higher end of that range. Just curious if there's any moving pieces there that you'd call out.

Yeah, I'll have Joel address that. There is some seasonality to that metric, and obviously, some of the organic opportunities can be a little volatile quarter-to-quarter, but I'll have Joel address your question.

Yeah. Good morning, Jack. As you said, 77% is comfortably within our 75%-85% free capital flow. In fact, the excess and available capital is largely in line with last quarter. So to sit here today with $1.53 billion at third quarter, it's a very good position to be in. Just a little context, a lot of good things happened during the quarter. You look at the strong free capital flow generation for the quarter, which as we always indicate, is typically more heavily weighted in the back half of the year, and we certainly saw that in the third quarter. We had meaningful organic deployments during the quarter.

That's highlighted by $900 million of PRT sales and the $500 million MTN issuance that we did earlier in the quarter. We deployed $430 million of shareholder deployments towards share buybacks and also the dividends. Finally, we closed on two relevant inorganic transactions during the course of the quarter. All that happened and still having the same capital we had coming into the quarter, going out of the quarter. I want to highlight a couple of things on the inorganic front just to make sure it is clear from a capital perspective. On September 1st, we closed the acquisition of Beam Benefits and also closed the sale of our Chile annuity business.

So although the capital impacts those largely offset, the Chile proceeds actually were contemplated in outlook guidance, whereas the Beam purchase was not. The fact is we funded the Beam transaction without it being contemplated in outlook and are still delivering on our share buyback plans and still delivering on our overall capital deployment, which is a product of our privileged position, whereby we have a good mix of business that allows us to deploy capital towards great inorganic opportunity like Beam, and also continue delivering our capital deployment objectives for the year. Again, a very impactful quarter, a very busy quarter, but again feeling really good about our TTM 77% free capital flow conversion. Hope that helps, Jack.

The next question comes from Wilma Burdis from Raymond James.

Hey, good morning. Could you tell us a little bit more about the disability experience and Specialty Benefits? Is there anything to note regarding the slightly higher loss ratio on those products? Thanks.

Yeah, I'll have Amy address that. Just to be specific, was that on the group disability side that you were focused on, Wilma?

Yeah, sure. Appreciate the question. I do want to start with the overall loss ratio of 59%. I think it's a really strong underwriting result, and it's below the end of our 60%-64% range. Noted that dental and group life, and I think Joel covered this in his comments, they were really significant contributors to the underwriting result. Dental, which is the largest part of our block, is seeing the sixth consecutive quarter of improved loss ratio performance. That's sort of the backdrop for the answer to my question. Regarding group disability, I am comfortable with the trends that I'm seeing with this product.

Inherently, it's a product line that can have some quarterly volatility, and I think we all understand that well. The last two quarters have emerged better than expected with that volatility and better than historical trends. I think because of that inherent volatility, though, I do think it's more helpful to look at the trailing 12-month patterns for this block. One thing I want to remind, and I was looking through some of the write-ups, I'd want to remind that we do provide a loss ratio illustration in our supplement that removes significant variances, which did impact the loss ratio for group disability third quarter of the prior year.

So on a trailing 12-month basis with AAR impacts removed, the group disability line is up slightly and aligns generally with what I see as a gradual movement towards more historical disability performance. It's also probably a pretty reasonable indicator of near-term performance. So my summary around group disability is it's kind of doing that gradual movement up towards some of that historical disability performance. But I'm really comfortable with the fundamentals that I'm seeing as you begin to look at the types of things like frequency and severity. I'm very comfortable with the performance of that block.

Hey, Wilma. I also think it's important that we manage that as a block. Most of our customers have multiple products with us, and we're thinking about pricing in a way that makes sense for the overall employer. So I do want you to come back to the 59%, which is very attractive relative to our historical performance and our targeted level of performance. Like Amy said, I think if you look at it on a TTM or a year-to-date basis, group disability is still performing at a very healthy level. Wilma, do you have a follow-up?

Oh, hey. Yeah, sorry, I was on mute. Are you seeing any benefits in your private fixed income funds from the AI demand in the market? Thanks.

Yeah, I'll see if Kamal wants to address that.

Hi. Good morning, Wilma. It's a timely question, Wilma, and particularly I'll give you the answer around a business we started building a few years ago around private infrastructure debt. One of the decisions we made was knowing that we may live in a long decade of rising rates and inflation coming back, as we built a business around more floating rate strategies versus fixed rate strategies, and we are now starting to see the benefit of that decision through client demand, but even the results it's produced even in our own balance sheet.

That asset class, as you will appreciate, is coming into a really good cycle of global infrastructure investing. What we have started to see is more clients wanting access to infrastructure over private credit, more floating rate over fixed rate. In fact, this quarter, we actually won our first large institutional mandate in that business that we started a few years ago, the business that we effectively built from scratch organically. We do feel that is a positive tailwind for us in our private markets business.

The next question comes from Ryan Krueger from KBW.

Hey, thanks. Good morning. My first question was on expense seasonality in the fourth quarter. You typically have somewhat higher expenses at the end of the year, and then given that you are also tracking towards the high end of your EPS growth target, was wondering if you may consider accelerating any other sort of investments in the business we should think about this quarter.

Yeah, Ryan, I think if you look at our expense line, it really does show that we continue to have strong discipline and expense management relative to our revenue growth, but there is some seasonality that happens quarter-to-quarter. I will let Joel address how we are thinking about this coming quarter.

Ryan, what I would expect you to see for the fourth quarter is similar you have seen in years past, which is a maybe low single-digit increase in expenses in the fourth quarter relative to the average of the three quarters. Nothing materially different than what you have seen historically. As Deanna said, we are going to continue to make sure that we align expense with revenue to ensure we continue with the margin expansion.

Yeah. On Specialty Benefits, you mentioned Beam as a capability in growth-related transaction, I guess. How do you feel about your overall capabilities at this point in the Specialty Benefits business? I guess in particular, you've always focused on the very small end of the market. Would you ever contemplate broadening that out to capture a bigger area of the marketplace?

Yeah. I think first of all, I feel really strong about our capabilities there across the SMB market. Beam allows us to stretch a little bit in the lower side, and we have some efforts that are allowing us to stretch a little bit into more of the M side. I'll maybe ask Amy to overall talk about our capabilities.

Yeah. So when I think about the capabilities, you're exactly right that we have trended towards that smaller end of the marketplace. Just coming back to years ago when we made that decision to really focus on that small to midsize capabilities. Number one, that's been a hallmark of Principal for a number of years, whether you're talking about the retirement business or the Benefits business. That small market is something that has made a lot of sense for us to grow. One of the reasons it makes sense is because it remains an under-penetrated space.

So it's a space where small businesses, you're not going to find 100% saturation. You're not going to find that every small and growing business has added all the benefits they need to attract and retain and to keep their employees protected. We really like building capabilities in that small market because it truly is a new market play. In any given quarter that we look at, about 15% of the business that we're writing is truly a new benefit for the first time. So one of the reasons we move a little more cautiously up into that mid-market is because most of that is fully saturated.

So by the time you're talking about an employer that has 500, maybe even 1,000 employees, they tend to have introduced some sort of an enterprise HR technology, maybe by that point. Maybe they're working with a bit more sophisticated partners in terms of the customization that they're doing for some of that benefit. So our sweet spot is really going to be those companies that are growing, that probably aren't sitting in that completely saturated marketplace, that aren't necessarily going to have complex, highly customized needs that are driven by a benefits-focused HR department with an RFP process.

We will look at going up market. We will look at moving towards things that make sense for our business. But we're not going to do that if the profile is that we're going to have to integrate and customize and do things that really are, we'll leave to the other carriers that have built the types of capabilities up there that are strong. Where we're going to build more capabilities is in that smaller market, that less penetrated market, and the people who really, we think, are a big part of the U.S. economic growth engine, and who are going to give us an outsized possibility to grow right along with them.

Our next question comes from Alex Scott from Barclays.

Principal Financial (PFG) Q3 2026 Earnings Call Transcript

Company Participants