[Management View]
Principal Financial Group reported $469 million in adjusted non-GAAP operating earnings for Q2 2025, with non-GAAP EPS of $2.07, reflecting an 18% increase over 2024. The company distributed $320 million to shareholders, including $150 million in share repurchases and $170 million in common stock dividends. Total company managed AUM reached $753 billion, up 5% sequentially.

[Outlook]
Management expects full-year enterprise results to align with 2025 financial targets, with higher levels of share repurchases anticipated in the latter half of the year. Specialty Benefits premium growth is forecasted to increase in the second half of 2025 but will fall short of the previously communicated full-year growth target.

[Financial Performance]
Reported non-GAAP operating earnings were $489 million, up 27% YoY, including a $32 million one-time accrual release. Investment management fee revenue increased 6% compared to Q2 2024, with management fees rising 4% and operating margin expanding 250 basis points.

[Q&A Highlights]
Question 1: First question is just on the overall expense levels. Deanna, I believe last quarter, you mentioned that there was gonna be a focus on it. Is there more to come on that in the second half of the year, or do you feel pretty good about where you're at now?
Answer: Joel Pitz explained that the company has a proven track record of aligning revenue and expenses. Margins have improved 140 basis points YoY at the enterprise level, and 80 basis points on a trailing twelve-month basis. The company will continue to align expenses with revenue while investing in the business.

Question 2: I noticed the RIS account values in the spread side went down somewhat this quarter. It looks like it's investment only. Any color on what you expect for the balance of the year on spread balances within RIS?
Answer: Christopher Littlefield noted that IO issuance is a piece of the answer, with more maturities in '25 and less issuances. PRT sales were moderate in Q2 2025 due to a smaller opportunity pipeline and the company's decision to prioritize returns over volume.

Question 3: Building on the comments on PRT. Talked about being focused on the returns and not the volume. It becoming a bit more of a competitive environment, or are there fewer maybe pension partners coming to market given the market dislocation that occurred in April?
Answer: Christopher Littlefield mentioned that the pipeline was smaller, but the company remains optimistic about PRT. The company competes effectively by generating business from its existing DB customer block and prioritizing returns over volume.

Question 4: My first question, building on the comments on PRT. Talked about being focused on the returns and not the volume. It becoming a bit more of a competitive environment, or are there fewer maybe pension partners coming to market given the market dislocation that occurred in April?
Answer: Joel Pitz explained that BI performance improved from Q1 2025, with 50% of the portfolio in real estate. Transaction activity is expected to pick up in the latter part of the year, with improved results in the final six months of 2025.

Question 5: First question on PGI. I think performance fees are around $9 million or so there. A bit higher than I was expecting. So just curious if there was more transactional activity in the quarter And I think you previously talked about performance fees being
Answer: Kamal Bhatia explained that performance fees were primarily generated from alternative debt strategies, including direct lending and real estate debt. Fee levels are expected to be similar to 2024 for the remainder of 2025.

Question 6: Switching to RIS, I think last year, you'd launched a target date fund with an in-plan guarantee, but there was some plan around a product number two point o that was kinda in the works. So I'm just curious if there's any update there. I think the plan was for it to be on balance sheet, but I don't know if Chris had any update
Answer: Christopher Littlefield noted that the target date fund with guaranteed features was launched in Q1 2025 off-platform and rolled out on-platform in Q2 2025. Client take-up is in early stages, with good opportunities as client sponsors and advisers get more accustomed to it.

Question 7: Just wanna start on RIS. Obviously, earnings and the margins were quite strong, but the flows continue to be negative. So maybe just can you provide some color in terms of what's going on there? And what is your sort of outlook for flows in the balance of the year? Thanks.
Answer: Christopher Littlefield explained that elevated markets are not helpful to overall AV net cash flows, but Q2 2025 showed significant improvement from the year-ago quarter. Fee-based transfer deposit growth was strong, and participant withdrawal rates stabilized.

Question 8: Are you able to proactively reach out to plan participants as they get closer to retirement and offer some of the, you know, rollover solutions that you provide. Is that something that you're able to do? And if it is, is that something that you actively do? Thanks.
Answer: Christopher Littlefield noted that the company offers advice solutions to participants, rolled out in Q3 2024. The focus is on participant growth and improving savings, with significant opportunities to serve individuals both in and out of the plan.

Question 9: I have a question on investment management. It seems like you have momentum on gross sales. But you've also seen withdrawals be somewhat elevated, which has you know, led to flows not improving anymore. Can you give a little bit more color on the withdrawal side of things, and do you have any insight going forward and, you know, into what's into you know, if you expect continue or could we see some improvement there going forward?
Answer: Kamal Bhatia explained that withdrawals were mostly focused in US businesses due to increased hedging and active rebalancing. The company saw strong momentum in Asia institutional business, with significant growth in mandates from sovereign wealth funds.

Question 10: Just can you talk a little bit more about what you're seeing in dental both from top line standpoint as well as a as a loss ratio standpoint in your thoughts on that business going forward?
Answer: Amy Friedrich noted that dental is a competitive product, with new sale rates being competitive. Renewal rates for dental are high, and the company focuses on pricing it right upfront to deliver manageable renewals. Dental loss ratio improved 50 basis points in Q2 2025.

Question 11: One more on top line and specialty Benefits. I think in the prepared remarks, Joel mentioned that growth is expected to pick up in the second half of this year. Just curious what you're seeing that gives you confidence in that.
Answer: Amy Friedrich explained that brokers are turning back to Principal due to higher renewals from competitors. The company expects growth to improve in the second half of the year, although full-year results will fall short of the 6%–9% growth target.

Question 12: It looks like in investment management, you're selling another one of your boutiques with Post Advisor Group for sale. I think the AUM from that arm is much larger than past boutiques that you've divested. So I guess a couple of questions. Just an update on the model, the multi-manager model, and then any potential financial impacts.
Answer: Kamal Bhatia explained that the divestiture of Post Advisor Group will have an immaterial earnings impact and no effect on medium-term asset management revenue growth or operating margin targets. The company continues to evaluate capabilities and unify investment teams where it makes sense.

Question 13: Just first had a question on your outlook for asset management flows. You've had success in growing your business in some verticals, but overall flows, have been negative for, I think, eight, nine last quarters in a row. Is it reasonable to assume flows turning positive in the next few quarters, or is it sort of hard to say given market volatility or other factors?
Answer: Kamal Bhatia explained that the company has a strong pipeline of client opportunities, with positive NCF from global institutions and strong gross sales growth. Market volatility affects outflows, but the company remains focused on managing through it and balancing the business.

Question 14: Relatedly, on your comment on performance fees and investment management being flat with last year. You're almost at the level you had in all of last year through the first half of the year. So not sure if your guidance is overly conservative or because it's implying minimal additional performance fees in the second half. Especially given that the markets come back, and I'm assuming that should help.
Answer: Kamal Bhatia explained that performance fees were brought forward from Q3 into Q2, and the outlook for the rest of the year is more modest. The real estate equity market needs to evolve for stronger performance fee trajectory.

Question 15: Just on specialty benefits in group life and disability where you're seeing very healthy loss ratios. I'm just wondering if there's anything notable that's benefiting your margins in those lines. Then are you seeing pricing competition for your nondental lines of business getting more intense recently?
Answer: Amy Friedrich explained that the SMB strategy builds a different block of business, with hybrid work arrangements benefiting incidents. Competition in life and disability is stable, with the bundle being the prominent piece for winning and retaining business.

Question 16: Just a follow-up on expenses. If I look at RIS, you're already kinda running at the high end of your margin target. I'd imagine, like, there's probably a tailwind given where markets are entering the third quarter. I guess, we be thinking about like a corresponding kind of step in expenses that keeps you within the that margin range, or could we see potential upside if market performance remains strong?
Answer: Christopher Littlefield explained that the company is confident in delivering net revenue toward the midpoint of the range and margin toward the high end. Growth will be lower than revenue growth, and the company will continue to invest for future capabilities.

Question 17: First question is a follow-up on your needs on just the strategy to capture some of that four zero one k outflow into other areas of your business? Can you just provide a little more detail on that? You know, particularly IRAs and some of the advising you're doing? I'd just be interested in, you know, what the success and track record since you guys brought that up at the Investor Day, like, what that looks like. And you know, how we can track it and sort of see that in your financials over time.
Answer: Christopher Littlefield explained that the company is focused on building capabilities to offer advice solutions to participants, increasing deferrals, and partnering with advisers to provide advice on retirement savings. The strategy is a long-term build with significant opportunities.

Question 18: I wanted to ask you about some of these partnerships that we've seen your peers make on private investments being offered and defined contribution accounts. Wanna get your take on that and if that's an opportunity for PFG, whether you know, for principal asset management or potentially partnering?
Answer: Christopher Littlefield explained that the company welcomes the conversation about offering private asset classes to retirement plans. There are fiduciary duty concerns that need to be addressed, and the company is active in those conversations. Kamal Bhatia added that the company has experience in partnerships and joint ventures, and continues to think about creating investment value for participants and plan sponsors.

[Sentiment Analysis]
Analysts and management maintained a positive and confident tone throughout the call, highlighting strong financial performance, strategic capital deployment, and disciplined execution. Management expressed optimism about future growth and the ability to deliver on financial targets.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q2 2024 | YoY Change |
|-------------|---------|---------|------------|
| Adjusted Non-GAAP Operating Earnings | $469 million | $397 million | +18% |
| Non-GAAP EPS | $2.07 | $1.75 | +18% |
| Reported Non-GAAP Operating Earnings | $489 million | $385 million | +27% |
| Total Company Managed AUM | $753 billion | $698 billion | +8% |
| Net Cash Flow | -$2.6 billion | -$3.1 billion | Improvement |
| RIS Sales | $6 billion | $5.6 billion | +7% |
| Specialty Benefits Operating Earnings | +10% | - | - |
| Life Insurance Sales | +5% | - | - |
| Principal Asset Management Sales | $33 billion | $27.7 billion | +19% |
| Investment Management Fee Revenue | +6% | - | - |
| International Pension Segment Net Revenue | +2% | - | - |
| Capital Position | $1.4 billion | - | - |
| Effective Tax Rate | 18% | - | - |

[Risks and Concerns]
Management acknowledged market volatility impacting fee revenue and net cash flows. Elevated markets suppressed net cash flows, and higher mortality claim severity affected life insurance pretax operating earnings. The company remains disciplined in prioritizing returns over volume in PRT sales.

[Final Takeaway]
Principal Financial Group demonstrated strong financial performance in Q2 2025, with significant margin expansion and strategic capital deployment. Management remains confident in delivering on 2025 financial targets, supported by disciplined execution and a diversified business model. Despite market volatility and challenges in certain segments, the company is well-positioned for continued growth and value creation for shareholders.