Principal Financial Group posted non-GAAP operating earnings of $547 million in the second quarter of 2026, as a sharp improvement in its specialty benefits loss ratio and favorable mortality in life insurance drove margin expansion across its insurance operations.
Specialty benefits led the insurance results. The segment's incurred loss ratio improved to 57.4% from 60.2% a year earlier. The result came in below the targeted range with gains across all product lines. Pre-tax operating earnings climbed 25% to $158.9 million, while the operating margin widened 300 basis points to 18.2%.
Principal has attributed comparable improvements in recent quarters to the same underlying drivers: continued strong experience in group life and group disability, together with improved group dental claims results. The company's Q1 2026 and Q4 2025 releases cited an identical combination of factors behind loss ratio gains in the segment, suggesting Q2's improvement extends a multi-quarter trend rather than reflecting a one-off event.
Life insurance also posted a meaningful improvement. Pre-tax operating earnings rose 26% to $25.2 million on more favorable mortality experience. The segment's operating margin expanded to 11.2% from 8.4% in the prior year quarter.
The combined benefits and protection segment spans specialty benefits and life insurance. It reported pre-tax operating earnings of $184.1 million, up from $147.6 million a year ago.
On a per-diluted-share basis, non-GAAP operating earnings came in at $2.50, up 16% year over year. Excluding significant variances, earnings were $2.42 per diluted share, a 17% increase over the prior year quarter.
Retirement and income solutions reported pre-tax operating earnings of $323.3 million, up 11% from $292.1 million a year ago. Transfer deposits reached $9 billion, up 30%, and the segment's operating margin improved 60 basis points to 41.5%.
International pension posted the quarter's strongest margin expansion. Pre-tax operating earnings rose 24% to $97 million, with assets under management (AUM) reaching a record $168.5 billion, up 18%. The operating margin widened 320 basis points to 52.5%, supported by favorable encaje returns - a Latin American regulatory reserve requirement that insurers must hold against certain liabilities, whose investment performance flows through International Pension's results - and foreign currency tailwinds.
Principal Asset Management reported investment management gross sales of $30 billion, up 2%, with total AUM of $601.9 billion. Overall enterprise AUM stood at $808 billion, within a broader assets under administration base of $1.9 trillion.
GAAP net income attributable to Principal Financial Group was $403.4 million, down from $406.2 million in the prior year quarter. The decline was tied to higher losses from exited business.
The company returned $427 million of capital to shareholders in the quarter: $250 million in share repurchases and $177 million in common stock dividends. A third-quarter dividend of $0.84 per share was declared, an 8% increase from the prior year quarter. It is payable September 25, 2026, to shareholders of record as of September 3, 2026.
Deanna Strable, chair, president, and chief executive officer of Principal, attributed the results to execution across the company's core segments. "We strengthened our leadership in retirement, advanced our position in the small and midsized business market, and continued to leverage the scale of our global asset management platform," Strable said. "This execution translated into strong earnings growth, ROE expansion and disciplined capital return."
