Principal Financial Group, Inc.

Principal Financial Group, Inc. is an American financial services company that provides retirement savings and income solutions, asset management, and group insurance benefits to approximately 82 million customers worldwide, generating $15.6 billion in total revenue in fiscal 2025. The company was founded in 1879 as a life insurer and has spent the last 146 years building one of the more unusual franchises in American finance: a retirement-and-benefits platform anchored to small and midsized businesses, paired with a global asset manager, under a single roof.

This is a story about focus paying off. After a multi-year portfolio restructuring that shed non-core insurance lines and concentrated capital on three interconnected profit pools — the retirement ecosystem, small and midsized businesses, and global asset management — Principal has delivered two consecutive years at the high end of its financial targets, expanded margins in every segment, and raised its ROE guidance from 14-16% to 15-17%. The company enters 2026 with operating momentum — record sales in both Specialty Benefits and Investment Management — and a balance sheet carrying $1.4 billion of excess capital against a $22.6 billion market capitalization.

The file turns on whether the diversified model is genuinely synergistic or merely correlated — whether the retirement recordkeeping platform, the in-house asset manager, and the group benefits business reinforce each other enough to sustain above-peer margins and returns through a cycle. If they do, the current mid-teens P/E multiple on adjusted earnings understates the compounding power of a capital-light franchise returning $1.5 billion annually to shareholders. If they don't, the business is a collection of decent-but-unremarkable financial services units whose recent margin expansion owes more to favorable markets than to structural advantage.