Principal Financial Q2 Earnings Beat, Revenues Miss, Dividend Raised

Principal Financial Group, Inc.’s PFG second-quarter 2025 operating net income of $2.16 per share beat the Zacks Consensus Estimate by 9%. Moreover, the bottom line increased 33% year over year.

Operating revenues declined 9.4% year over year to $3.6 billion due to decreased premiums and other considerations. The metric missed the Zacks Consensus Estimate by 7.8%.

Principal Financial witnessed higher revenues across Investment Management, Specialty Benefits, and Life Insurance segments and improved asset under management (AUM). Higher operating earnings across most of the segments and lower expenses also added to the upside.

Behind the Headlines

Total expenses decreased 18% year over year to $3.2 billion due to lower benefits, claims, and settlement expenses, dividends to policyholders, and operating expenses. The figure was lower than our estimate of $4.3 billion.

As of June 30, 2025, Principal Financial’s AUM amounted to $753 billion, up 7.6% year over year. AUM is included in assets under administration (AUA) of $1.7 trillion.

Segment Update

Retirement and Income Solution: Revenues decreased 21.7% year over year to $1.7 billion because of lower premiums and other considerations and fees, and other revenues. The figure missed our estimate of $2.2 billion.

Pre-tax operating earnings increased 9% year over year to $292.1 million, primarily due to higher net revenue and margin expansion while investing in the business. The figure lagged our estimate of $327 million.

Investment Management: Revenues rose 5.2% year over year to $467.2 million in the quarter due to higher fees and other revenues. The figure was higher than our estimate of $454.4 million.

Pre-tax operating earnings increased 18.2% year over year to $157.9 million, primarily driven by higher operating revenues less passthrough expenses and margin expansion. The figure was higher than our estimate of $143.1 million.

International Pension: Revenues decreased 1.7% year over year to $240.8 million, owing to lower premiums and other considerations and fees and other revenues. The figure was lower than our estimate of $243.3 million.

Pre-Tax operating earnings of $78.5 million climbed 41% year over year, primarily due to higher net revenues. The metric beat our estimate of $68 million.

Specialty Benefits: Revenues increased 4% year over year to $892.2 million, owing to higher premiums and other considerations and net investment income. The metric beat our estimate of $863.3 million.

Pre-tax operating earnings of $127.6 million jumped 17% year over year. The rise was due to growth in the business and a more favorable underwriting experience. The metric beat our estimate of $126 million.

Life Insurance: Revenues increased 7.6% year over year to $354.2 million due to lower premiums and other considerations, fees, and other revenues and net investment income. The metric beat our estimate of $205.8 million.

Pre-tax operating earnings of $20 million decreased 15% year over year, due to higher claims severity. The metric missed our estimate of $41.5 million.

Corporate: The operating loss of $81.2 million was narrower than the $103.4 million loss incurred a year ago. This decrease was due to higher net investment income and lower operating expenses. The figure was wider  than our estimate of a loss of $87.8 million.

Financial Update

As of June 30, 2025, cash and cash equivalents were $3.6 billion, down 13.1% from the 2024-end.

At the second-quarter end, long-term debt was $3.9 billion, which decreased 0.8% from 2024-end. As of June 30, 2025, book value per share (excluding AOCI other than foreign currency translation adjustment) was $54.97, which increased 2.4% from the end of 2024.

Dividend and Share Repurchase Update

Principal Financial returned $320 million to shareholders, comprising $150 million in share repurchases and $170 million in dividends.
The board of directors declared a third-quarter dividend of 78 cents per share, representing an 8% increase from the third quarter of 2024. The dividend will be paid out on Sept. 26, 2025, to shareholders of record as of Sept. 4.

Zacks Rank

Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies TRV reported second-quarter 2025 core income of $6.51 per share, which beat the Zacks Consensus Estimate by 83.8%. Total revenues increased 6.7% from the year-ago quarter to $12.1 billion. The top-line figure, however, missed the Zacks Consensus Estimate by 0.7%.

Net written premiums increased 4% year over year to a record $11.5 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.9 billion. Travelers witnessed an underwriting profit of $1 billion against a loss of $65 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 84.7 improved 300 bps year over year. The combined ratio improved 990 bps year over year to 90.3. The Zacks Consensus Estimate was pegged at 99.

The Progressive Corporation’s PGR second-quarter 2025 earnings per share of $4.88 beat the Zacks Consensus Estimate by 10.1%. The bottom line increased 84.1% year over year. Net premiums written were $20 billion in the quarter, up 12% from $17.9 billion a year ago. 

Net premiums earned grew 18% to $20.3 billion. The reported figure surpassed the Zacks Consensus Estimate of $20.1 billion.  Operating revenues increased 19.5% year over year to $42.2 billion, driven by 19% higher net premiums earned, a 29.3% increase in net investment income, an 18.9% rise in fees, and a 28% increase in service revenues.

RLI Corp. RLI reported second-quarter 2025 operating earnings of 84 cents per share, beating the Zacks Consensus Estimate by 12%.  The bottom line, however, decreased 2.3% from the prior-year quarter. Operating revenues for the reported quarter were $441 million, up 6.9% year over year, driven by 6% higher net premiums earned and 16% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.5%.

Underwriting income of $62.2 million decreased 11.14% year over year. The combined ratio deteriorated 300 bps year over year to 84.5. The Zacks Consensus Estimate for the metric was pegged at 88, while our estimate was 42.9.

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