Principal Financial Group, Inc.
Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company operates through Retirement and Income Solutions, Principal Asset Management, and Benefits and Protection segments. The Retirement and Income Solutions segment provides retirement, and related financial products and services. This segment offers products and services for defined contribution plans, including 401(k) and 403(b) plans, defined benefit plans, nonqualified executive benefit plans, employee stock ownership plans, equity compensation, and pension risk transfer services; individual retirement accounts; investment only products; and mutual funds, individual variable annuities, registered index-linked annuities, and bank products, as well as trust and custody services. The Principal Asset Management segment provides equity, fixed income, real estate, and other alternative investments, as well as fund offerings. This segment also offers pension accumulation products and services, mutual funds, asset management, income annuities, and life insurance accumulation products, as well as voluntary savings plans. The Benefits and Protection segment provides specialty benefits, such as specialty benefits group dental and vision insurance, group life and other insurance, and group and individual disability insurance, as well as administers group dental, disability, and vision benefits; and individual life insurance products comprising universal, variable universal, indexed universal, and term life insurance products. This segment serves insurance solutions for small and medium-sized businesses and their owners, as well as employees. The company was founded in 1879 and is based in Des Moines, Iowa.
What does it do?
Principal Financial Group helps people and businesses save for retirement and protect their finances. Think of them as the company behind your company's 401(k) plan — the account where your employer helps you save for retirement before taxes. They also sell life insurance, disability insurance, and manage large pools of money for institutions like pension funds. If you've ever had a workplace retirement plan at a mid-sized American company, there's a decent chance Principal was running it behind the scenes.
America is in the middle of a retirement savings crisis, with tens of millions of Baby Boomers moving from saving to spending, and younger workers urgently needing better retirement tools — Principal sits right at that intersection. The SECURE 2.0 Act, passed in late 2022, expanded retirement plan requirements for small businesses, which directly opens new customers for companies like Principal. With $24 billion in market cap and a global asset management arm, Principal is a meaningful player in how trillions of dollars get saved, invested, and protected.
How does it make money?
Principal makes money in three main ways. First, its Retirement and Income Solutions segment earns fees on the retirement plans it administers — the bigger the balances in those 401(k) plans, the more it earns. Second, its Principal Asset Management arm charges fees to manage money for large institutional investors like pension funds and sovereign wealth funds globally, contributing to its $16.1 billion in revenue last year, up from $15.6 billion the prior year. Third, its Benefits and Protection segment sells life, dental, vision, and disability insurance, collecting premiums from employers and individuals.
Why do investors care?
The growth story here is straightforward: more Americans are entering peak saving years, and legislation like SECURE 2.0 is pushing more small businesses to offer retirement plans for the first time — a huge untapped market for Principal. Internationally, Principal has built a meaningful presence in fast-growing markets like Asia, where a rising middle class is beginning to save and invest for retirement. For the thesis to work, interest rates need to stay supportive (higher rates help their insurance and income products), markets need to hold up (falling markets shrink the asset balances they charge fees on), and they need to keep winning new employer plan clients.
Deep Dive
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