Principal Financial Group has broadened its long-standing relationship with State Street Corp.
The insurer selected the custody giant to provide fund accounting, administration, and custody services for Principal Funds. The move comes as Principal presses ahead with a restructuring of its US wealth and retirement business.
The funds moving to State Street’s platform account for approximately $215 million in assets under management. The two firms have worked together for more than a decade.
State Street previously supported Principal across exchange-traded funds and collective investment trusts. The expanded mandate adds mutual fund services to that existing arrangement.
Kamal Bhatia, president and CEO of Principal Asset Management, framed the deal as a deliberate operational shift.
“Partnering with State Street gives us access to a scalable operational structure and speed to market as we continue to transform our US wealth and retirement business,” Bhatia said.
He added that the move reflected a wider strategy of outsourcing non-core functions. “This transition reflects our focus on strategic partnering and outsourcing that accelerates our business for long-term profitable growth.”
State Street holds $54.5 trillion in assets under custody and/or administration and manages $5.6 trillion. Principal Asset Management oversees $593.9 billion in total assets across public and private markets.
The deal comes after Principal Financial reported strong full-year 2025 results.
The Des Moines-based insurer posted non-GAAP operating earnings of $8.55 per diluted share, up 12% year on year. Assets under management reached $781 billion. The company also returned more than $1.5 billion to shareholders during the year. It set 2026 capital deployment guidance of $1.5 billion to $1.8 billion.
The State Street arrangement also supports Principal’s broader product ambitions. The company is among life insurers that have identified paid family and medical leave insurance as a growth opportunity. More US states are beginning to mandate the coverage.
The product falls within carriers’ broader short-term disability and leave portfolios. It gives enrolled members a portion of pay that the federal Family and Medical Leave Act does not guarantee. The law allows workers up to 12 weeks off but does not require income replacement.
Regulatory momentum is building. Maryland’s Insurance Administration set out filing requirements in June 2026 for private paid family and medical leave plans. The deadline for carriers that want products live by January 1, 2028 is September 30, 2026. The state joins a growing list of jurisdictions opening space for private insurers.
Large North American life insurers posted stronger results in Q1 2026. A Morningstar DBRS report found average adjusted earnings among that group rose 10% quarter on quarter. Higher investment yields and strength in retirement, wealth, and asset management businesses drove the gains.
