Principal Financial Group President and CEO Deanna Strable discussed the company’s strong performance in 2025, with adjusted EPS growth of 12% and increased return on equity. The outlook for 2026 includes continued growth in EPS, free cash flow, and return on equity. The focus remains on small and midsize business retirement and benefits, global asset management, and AI technology investments.
Strable highlighted the stability and resilience of SMB customers, emphasizing that they have been with the company for an average of 30 years. A recent study showed that 95% of surveyed employers plan to increase or maintain salaries, and 85% expect stable or increased employment levels. SMB remains a key growth area for Principal, along with the retirement ecosystem and global asset management.
The strategy for SMB involves leveraging platform advantages for growth in retirement and benefits without solely relying on cross-selling. Principal’s offerings go beyond traditional 401(k) plans, with a focus on total retirement solutions and a variety of benefits coverages. Expansion plans include executive and business-owner solutions in life and disability and partnerships with asset management advisors to tap into the SMB market.
In the employee benefits sector, dental is Principal’s largest premium, followed by life and disability. Trends in claims have shifted post-COVID, with dental claims rising while life and disability loss ratios have declined. Work-from-home arrangements have influenced disability outcomes, leading to changes in incidence and duration.
Principal’s international strategy involves exporting U.S. strengths, with a focus on asset management and investment opportunities. The company has reorganized its structure to concentrate on asset management and international pension markets in key countries. Real estate and private markets have seen positive flows, with interest from clients in Asia and the Middle East.
AI is viewed as a tool to enhance customer experiences rather than replace advisors. Principal has invested in proprietary and third-party tools to support employees across various functions. The company has seen significant adoption of AI tools among employees, with use cases ranging from meeting preparation to underwriting.
Capital return priorities include a dividend payout ratio of 40% and a total payout ratio of 75% to 85% when factoring in share buybacks. Principal remains open to inorganic opportunities but maintains a strong leverage ratio for flexibility. The company’s offerings include retirement, investment, and insurance solutions for individuals, employers, and institutional clients.
Read more at Yahoo Finance: Principal Financial CEO Lifts ROE Target, Highlights SMB Growth and AI Push at BofA Conference