Principal Financial Group, Inc. (PFG, NASDAQ)
Industry: Asset Management
Annual report, fiscal year 2021


## Annual
Report



## Transformation
OUR STRATEGIC PATH FORWARD

With so much around us forever changed, this past year left the world wondering what's next.

Vaccines in sight, we glimpsed an end to the global pandemic—until new variants postponed our return to “normal.” Social unrest forced communities to take a hard look at equity, or lack of it. In a rapidly digitalized world, business owners adapted as best they could. Some thrived; others closed their doors forever.

Principal took stock of all of it, assessing in real time what this sea change meant for our customers and our communities, for us.

Amid chaos, we found clarity.

We reviewed and sharpened
our strategy to drive even
stronger shareholder value.

Amid chaos,
we found
clarity.

We deepened our knowledge of what our customers need and want in these tumultuous times.

We doubled down on critical work to modernize our digital platforms, creating a more personalized customer experience.

We announced sustainability goals—with measurable outcomes that hold us accountable.

To meet the moment and chart our path forward, we relied on our ability to adapt and evolve, which we’ve honed over decades of intentional transformation.







## From our CEO

DAN HOUSTON

Chairman, President, and CEO
Principal Financial Group

Twenty years ago, Principal debuted as a public company. Employees around the world celebrated in unison as our Chair rang the bell at the New York Stock Exchange. I joined thousands of colleagues on the plaza of our global headquarters in Des Moines to witness the moment, broadcast live on an enormous screen. We waited excitedly, a collective cheer going up as the bell began to ring. Our new path forward had begun.

We made the decision to go public because it had become clear we needed to change to compete in our chosen markets. To grow, and to lead.

That decision launched two decades of exponential growth. Since the IPO, our assets under management (AUM) soared to more than six times the 2001 level, and the number of customers we serve has nearly quadrupled.

It’s a powerful and timely reminder of how Principal continually evolves to meet the moment.



In 2021, we again evaluated what it takes to continue to win in our chosen markets. We spent considerable time diving deep into strategy—distilling what makes this company great and what delivers sustained success. And we evolved our path forward.

## Doing more of what we do best

Led by our Board Finance Committee, with significant contribution from our Chief Financial Officer Deanna Strable and our Chief Risk Officer Ken McCullum, our senior management team took a hard look at our product portfolio and identified prime opportunities for investment to amplify what we do best. Moving forward, we’ll focus on and continue to invest in our chosen growth drivers:

• Retirement in the United States and select emerging markets

• Global asset management

• U.S. benefits and protection, focused on small and midsize businesses (SMBs)

These areas are poised for growth and leverage our differentiators. They thrive on our integrated business model and allow for greater capital efficiency and increased return of capital to shareholders.

We’ll continue to offer variable annuities as part of our retirement offerings and life insurance for the business and business-owner market, but we made the decision to exit two product lines in the U.S. that no longer meet our strategic and financial thresholds—retail fixed annuities and retail life insurance. In January 2022, we announced a reinsurance transaction on two related in-force blocks of business—retail fixed annuities and universal life insurance with secondary guarantee—expected to close in 2Q 2022. This demonstrates our ongoing commitment to improving capital efficiency and returns, positioning ourselves to create additional long-term shareholder value.

We strengthened our capital management strategy, announcing our plan to return up to $4.6 billion of capital to shareholders between 2021 and 2022 through share repurchases and common stock dividends.
We plan to return up to $4.6 billion of capital to shareholders between 2021 and 2022.

We successfully completed the integration of one of the largest acquisitions in our history—making us a Top 3 retirement provider in the U.S. The business we acquired brought 2.4 million participants and $140 billion in account values to Principal. Our increased scale, expanded platform capabilities, and additional distribution channels enable us to deliver unmatched breadth and depth of retirement solutions to companies of all sizes.

We accelerated digital transformation, devoting substantially more resources and energy to creating compelling and relevant customer experiences, making financial security more accessible to people and businesses around the globe. Our top-notch technology organization delivered innovative, personalized, digital-driven solutions to customers. Our mobile apps in Malaysia and Chile earned accolades in 2021. And in our quest to support advisors, businesses, and their employees, we continued our work simplifying the benefits experience, including one innovation that recently earned a U.S. patent.

We responded to investor demand for securities that drive higher yields. Principal Alternative Credit built a middle market direct lending team with 22 dedicated investment professionals and more than $750 million of committed capital—an eightfold increase over its initial year.

As businesses faced unprecedented challenges throughout the year, we brought our expertise in the SMB market to bear. As leaders in this market, we helped business owners navigate the array of relief programs set up to assist them—with tools to help them evaluate options and case studies of businesses managing similar situations. And our Business Needs Assessment Tool identified best practices to help them protect their business, employees, and personal financial security.

We reimagined some of the most critical interactions and experiences across the end-to-end journey for business leaders and their employees, pledging to improve transparency and make it easier to do business with Principal.

What was true 20 years ago is true today: Our unique and complementary mix of businesses, deep expertise, and global reach are a winning combination. As we continue to sharpen our focus, we’ll deliver even greater results for shareholders, customers, and employees.



## Holding ourselves accountable

Standing up for what we believe in has always been a priority at Principal. As we continue to strengthen our financials, we’re also focused on building a stronger and brighter future for the communities we serve. To do this, we’re accessing the power of our people, embedding sustainable practices in our business, and developing accessible products and inclusive services. These actions reach beyond our business. This is who we are, and it’s more critical than ever, as consumers increasingly seek out companies with values that align to their own.

In April, we set multiyear corporate responsibility commitments as part of our environmental, social, and governance (ESG) strategy. These clearly defined measures demonstrate how we’re creating a more inclusive and sustainable world.
These clearly defined measures demonstrate how we’re creating a more inclusive and sustainable world.

As part of these efforts, we proudly announced:

• Our first sustainability bond in the amount of $600 million, supporting green and social initiatives that reinforce our ESG commitments.

• Our first Municipal Bond Impact strategy in the U.S., primarily offered to high-net-worth clients as a separately managed account. Proceeds are used to create positive social and environmental impact.

• Our Foundation’s commitment of $15 million to strengthen the financial health and security of the communities in which we operate. These funds support:

• coaching and microfinance programs to strengthen diverse SMBs,

• expanded access to social and cultural institutions for underserved communities, and

• programs to address food insecurity and homelessness, restoring dignity and the ability to pursue physical and financial wellness.

And we’ll keep going.

## Fostering a winning culture

It’s clear the COVID-19 pandemic shifted the employer/employee dynamic. Certain jobs can be done remotely, and employees expect flexibility. In a highly competitive talent market, our culture sets us apart.

It starts with meaningful work—the privilege of helping customers achieve and maintain financial security for themselves and their families. It extends to the purposeful ways we connect and inspire our employees every day—through development, inclusion, flexibility, and giving back.

In 2021, we:

• concluded the first year of our global mentoring program, connecting 1,500 mentoring pairs, representing 17 countries, and including every member of our Executive Management Group.

• identified critical skills needed for future success and encouraged employees, leaders, and teams to collaborate on upskilling. For example: To improve cloud fluency across the organization, we trained nearly 1,700 technology employees in eight months, boosting collaboration globally and accelerating our speed of innovation.

• engaged 96% of our leaders in a development experience called INCLUDE: The neuroscience of smarter teams, which focuses on creating optimal dynamics for greater team success.

• outlined global principles we’ll adhere to as we begin to emerge from the COVID-19 pandemic and establish our new normal. These include a greater emphasis on hybrid work arrangements—an option for many of our employees going forward.

Our culture enables success, and it makes Principal a great place to be.

Our culture enables success, and it makes Principal a great place to be.



## Delivering the bottom line

The decisions we made and the work we did in 2021 put us on a path to developing an even stronger and more focused workforce. And that workforce delivered powerful results.

At the end of 2021, our AUM was more than $1 trillion including third-party assets on our retirement platforms, or $714 billion excluding these assets. The $714 billion is up 7% from 2020 and includes $2.9 billion of net cash flow.

Net income, operating earnings, and earnings per share were all incredibly strong compared to 2020. At $1.7 billion, net income attributable to Principal Financial Group increased 23%. Non-GAAP operating earnings \( ^{1} $  totaled $1.8 billion, or $6.77 non-GAAP operating earnings per diluted share \( ^{1} \) , up 35% and 37% respectively.

We delivered a 340 basis point increase in return on equity \( ^{2} \)  (ROE) in 2021, ending the year at 14.3%.

Our 1-year total shareholder return was 51%, higher than both our insurance peers (31%) and asset management peers (43%) \( ^{3} \) .

We returned approximately $1.6 billion of capital to shareholders in 2021, including more than $650 million of common stock dividends and approximately $920 million of share repurchases. We paid quarterly dividends totaling $2.44 per common share in 2021—up 9% versus 2020.

## Staying true to who we are

While we’re transforming important aspects of our business, our core strengths remain unchanged.

Our global, diversified business model sets us apart and weathers a variety of economic conditions. Our stronger focus has sharpened the interplay and interdependencies of our businesses, generating additional value.

We remain inspired by a strategy that sets our compass daily, across a workforce 18,600 strong that has shown incredible resilience, talent, and heart in a challenging environment. And we remain even more committed to delivering long-term returns for shareholders.

Embracing change, navigating decisions with a steady hand, and focusing on our strengths—it’s all part of our commitment to intentional transformation. And it delivers impressive results. We’ve got decades of exponential growth under our belts to prove it.

Our eyes are now on the next 20 years, and we’ve hit the ground running in 2022.



Dan Houston
Chairman, President, and CEO
Principal Financial Group



## 51M

customers in the U.S. and
select markets in Latin America,
Asia Pacific, United Kingdom/
Europe, and the Middle East

160,000

small and midsize
business customers
in the U.S.

$11.3B+

socially responsible
assets managed by
Principal Global Investors

50,000

hours employees spent
developing skills via
LinkedIn Learning \( ^{®} \) 

 \( ^{1} \) LinkedIn Learning \( ^{®} \)  is a registered trademark of LinkedIn Corporation.

18,600

employees around
the globe

11 years

as one of the World’s
Most Ethical Companies
(Ethisphere, 2021)

10 years
as one of the Best Places to
Work in Money Management
(Pensions & Investments, 2021)

20 years

as one of the Best Places to
Work in IT (Insider Pro and
Computerworld, 2021) and one of
the Top Companies for Executive
Women (Seramount, 2021)



## From the
Board of
Directors

SCOTT MILLS
Lead Director
Principal Financial Group

On behalf of the Board, I want to provide you an update on a memorable and productive year for Principal.

As Dan mentioned in his letter, the Board—together with the management team—undertook an extensive strategic review of the company’s business mix and approach to capital management. The success of a review of this magnitude requires everyone to engage with an open mind, a collaborative spirit, and a willingness to dig deep into the details.

That all happened.

Our discussions were intense and candid. We challenged assumptions. Hit difficult topics head on. Considered external and internal viewpoints.

Above all, we kept our purpose at the center—focusing on the customers and shareholders who put their trust in us and the employees who deliver on that trust.



## Our guiding principles

I want to underscore how engaged the Board was throughout the year. We analyzed the dynamic competitive environment, changing customer expectations, and our ability to reshape our portfolio to enhance competitiveness. We learned from each other. Both the Board and the Principal management team committed to continuous and fruitful interactions with intense preparation and conversations, leading to substantive outcomes.

Four key principles guide our commitment to continued transformation at Principal:

• Pursue attractive growth markets.

• Leverage competitive advantages.

• Generate returns in excess of cost of capital.

• Deploy capital to the most attractive opportunities.

In addition, we considered how potential decisions would impact the company’s risk profile. We examined portfolio diversification, stability of returns, competitive and market risk, and the ability to weather stress scenarios as well as macroeconomic sensitivities. Risk management is a vital piece of our stewardship.

## Governance and diversity

Our commitment to governance best practices helps ensure a well-diversified and highly engaged board of directors. Active refreshment ensures strong oversight. This past year, we made tremendous strides.

Two-thirds of our directors have joined the Board since 2015. Our average tenure is seven years. In 2021, we added two new Board members—Maliz Beams and Claudio Muruzábal. They bring additional skill sets and perspectives that are already helping Principal transform, preparing the company for growth and a more sustainable and technology-driven future.

Our Nominating and Governance committee recruits new directors with an eye toward diversity and relevant experience. This ensures the right mix

Eight of our 13 directors (62%) identify as women or people of color.

of diverse perspectives to help us meet the changing needs of the company and its stakeholders. Of note, eight of our 13 directors (62%) identify as women or people of color. And three of our four committees are chaired by women, one of whom is a person of color.

Four key principles guide our commitment to continued transformation at Principal:

Pursue
attractive
growth
markets.

Leverage
competitive
advantages.

Generate
returns in
excess of cost
of capital.

Deploy capital
to the most
attractive
opportunities.



I’m proud of this Board’s strength and talent—a credit both to our directors and our rigorous process to identify and select them. It’s my pleasure to work and learn with them all. It was especially nice to get back to in-person meetings last fall, seeing some of our new directors in person for the first time.

## Keeping purpose at the forefront

In 2021, Principal laid out new sustainability commitments, taking a strong track record with social responsibility to a new level. Principal is focused on:

• Taking care of people, as an advocate for security and inclusion among employees, customers, and community.

• Taking care of our environment, by creating sustainable practices through long-term responsible actions.

This past year, I had the opportunity to discuss our ESG strategy with some of the company’s largest shareholders. I’m heartened by the growing interest in this topic. And I’m proud to share the great work Principal has done, strengthening the tie between the company’s strategy and purpose. I’m excited about the road ahead.

## Strong performance, strong results

Principal delivered strong results in 2021. And, as evidence of the company’s commitment to creating long-term shareholder value, Principal returned $1.6 billion of capital to shareholders in 2021 through common stock dividends and share repurchases. As Dan noted, total shareholder return for the year was an impressive 51%.

Strong total shareholder return, regular dividends, and increased buybacks all create value and enable shareholders to take part in the company’s success.

## Reflecting and looking ahead

This was a uniquely rewarding year to be part of the Principal board. The intensive strategic review process highlighted the unique talents and exceptional engagement of our directors and the deep knowledge and expertise of the Principal management team. Together, we charted our path forward.

A sincere thank-you to the Board Finance Committee, especially committee chair Clare Richer, for unwavering commitment to the best interests of Principal customers and shareholders.

I commend Dan Houston and the Principal management team for the transformation underway to position Principal for even greater success. I’m proud of the role the Board is playing, and I look forward to our continued deep engagement in 2022 and beyond.



Scott Mills
Lead Director
Principal Financial Group



## Financial
highlights

## Financial
targets

ANNUAL GROWTH
IN EARNINGS

PER SHARE \( ^{4} $ 

9-12%

 \( ^{4} \)  Non-GAAP operating earnings per diluted share

RETURN ON EQUITY \( ^{5} $ 

15%+

 \( ^{5} \)  Non-GAAP operating earnings return on average equity, excluding AOCI other than foreign currency translation adjustment

FREE CAPITAL FLOW

CONVERSION

75-85%

## 2021 financial results

ASSETS UNDER
MANAGEMENT \( ^{6} \) 
(as of Dec. 31, 2021)

● Principal Global Investors

● Other entities of Principal Financial Group

 \( ^{6} \)  Assets under management by asset manager; at the end of 2021, the company changed its definition of AUM to exclude assets managed by third parties on its retirement platforms.



NON-GAAP PRE-TAX OPERATING EARNINGS \( ^{7} \) 
(as of Dec. 31, 2021)

FEE (56%)

RIS-Fee

● Principal Global Investors

● Principal International

SPREAD (28%)

RIS-Spread

RISK (16%)

● Specialty Benefits

Individual Life

 \( ^{7} \)  Trailing 12 months, excludes Corporate and impacts from actuarial assumption reviews.






Throughout a truly transformational year, Principal delivered strong results—including a 37% increase in non-GAAP operating earnings per diluted share and a 340 basis point improvement in return on equity compared to 2020. Additionally, we met or exceeded all of our financial targets from our 2021 outlook for the enterprise and for each of our businesses.

TOTAL ASSETS UNDER
MANAGEMENT (AUM) \( ^{8} \) 
(in billions)



NON-GAAP OPERATING
EARNINGS \( ^{9} \) 
(in millions)



NON-GAAP OPERATING EARNINGS
PER DILUTED COMMON SHARE \( ^{9} \) 
(in dollars)



NET INCOME ATTRIBUTABLE TO
PRINCIPAL FINANCIAL GROUP
(in millions)



TOTAL
REVENUE
(in millions)



DIVIDENDS DECLARED
PER COMMON SHARE
(in dollars)






CLOSING PFG
COMMON STOCK PRICE
(in dollars as of Dec. 31)



TOTAL STOCKHOLDERS' EQUITY
ATTRIBUTABLE TO
PRINCIPAL FINANCIAL GROUP
(in millions)



NON-GAAP OPERATING EARNINGS
RETURN ON EQUITY (ROE)
AVAILABLE TO COMMON
STOCKHOLDERS

(excluding AOCI other than foreign currency translation adjustment \( ^{9,10} \) )



CAPITAL DEPLOYMENTS
(in millions)



Common stock dividends paid
Share repurchases
M&A



## Non-GAAP financial measure reconciliations

(in millions, except as indicated)

For the year ended Dec. 31

<table><tr><td></td><td>2019</td><td>2020</td><td>2021</td></tr><tr><td>NET INCOME ATTRIBUTABLE TO PRINCIPAL FINANCIAL GROUP</td><td></td><td></td><td></td></tr><tr><td>Net income attributable to Principal Financial Group</td><td>$1,394.2</td><td>$1,395.8</td><td>$1,710.6</td></tr><tr><td>Net realized capital (gains) losses, as adjusted \( ^{11} \)</td><td>$174.9</td><td>$(29.4)</td><td>$137.0</td></tr><tr><td>Non-GAAP operating earnings</td><td>$1,569.1</td><td>$1,366.4</td><td>$1,847.6</td></tr></table>

 \( ^{11} \)  This is a non-GAAP financial measure. See reconciliation below.

<table><tr><td colspan="4">NET REALIZED CAPITAL GAINS (LOSSES)</td></tr><tr><td>GAAP net realized capital gains (losses)</td><td>$52.8</td><td>$302.6</td><td>$2.5</td></tr><tr><td>Recognition of front-end fee revenues</td><td>8.5</td><td>11.4</td><td>(2.9)</td></tr><tr><td>Market value adjustments to fee revenues</td><td>-</td><td>(1.6)</td><td>(0.6)</td></tr><tr><td>Net realized capital gains (losses) related to equity method investments</td><td>2.6</td><td>(1.5)</td><td>(24.0)</td></tr><tr><td>Derivative and hedging-related revenue adjustments</td><td>(80.4)</td><td>(132.9)</td><td>(160.3)</td></tr><tr><td>Sponsored investment fund adjustments</td><td>23.6</td><td>17.3</td><td>21.3</td></tr><tr><td>Amortization of deferred acquisition costs</td><td>(15.7)</td><td>(0.5)</td><td>(0.2)</td></tr><tr><td>Capital gains distributed—operating expenses</td><td>(31.6)</td><td>(41.7)</td><td>(69.4)</td></tr><tr><td>Amortization of other actuarial balances</td><td>(25.1)</td><td>(26.3)</td><td>11.3</td></tr><tr><td>Market value adjustments of embedded derivatives</td><td>66.6</td><td>(55.0)</td><td>79.8</td></tr><tr><td>Capital gains distributed—cost of interest credited</td><td>(36.6)</td><td>(8.2)</td><td>(37.3)</td></tr><tr><td>Net realized capital gains (losses) tax adjustments</td><td>(1.3)</td><td>(28.2)</td><td>56.2</td></tr><tr><td>Net realized capital gains (losses) attributable to noncontrolling interest, after-tax</td><td>(32.7)</td><td>(6.0)</td><td>(13.4)</td></tr><tr><td>Total net realized capital gains (losses) after-tax adjustments</td><td>(122.1)</td><td>(273.2)</td><td>(139.5)</td></tr><tr><td>Net realized capital gains (losses), as adjusted</td><td>$174.9</td><td>$29.4</td><td>$137.0</td></tr></table>



<table><tr><td></td><td>2019</td><td>2020</td><td>2021</td></tr><tr><td colspan="4">DILUTED EARNINGS PER COMMON SHARE</td></tr><tr><td>Net income</td><td>$4.96</td><td>$5.05</td><td>$6.27</td></tr><tr><td>Net realized capital (gains) losses, as adjusted</td><td>0.62</td><td>(0.11)</td><td>0.50</td></tr><tr><td>Non-GAAP operating earnings</td><td>$5.58</td><td>$4.94</td><td>$6.77</td></tr><tr><td colspan="4">STOCKHOLDERS&#x27; EQUITY</td></tr><tr><td>Stockholders&#x27; equity</td><td>$14,685.8</td><td>$16,617.3</td><td>$16,125.8</td></tr><tr><td>Noncontrolling interest</td><td>(67.8)</td><td>(58.4)</td><td>(56.4)</td></tr><tr><td>Stockholders&#x27; equity attributable to Principal Financial Group, Inc.</td><td>14,618.0</td><td>16,558.9</td><td>16,069.4</td></tr><tr><td>Net unrealized capital (gains) losses</td><td>(2,815.3)</td><td>(4,156.5)</td><td>(3,519.2)</td></tr><tr><td>Net unrecognized postretirement benefit obligation</td><td>435.6</td><td>460.5</td><td>344.7</td></tr><tr><td>Stockholders&#x27; equity, excluding AOCI other than foreign currency translation adjustment, available to common stockholders</td><td>$12,238.3</td><td>$12,862.9</td><td>$12,894.9</td></tr><tr><td colspan="4">NET INCOME ROE AVAILABLE TO COMMON STOCKHOLDERS (INCLUDING AOCI)</td></tr><tr><td>Net income ROE available to common stockholders (including AOCI)</td><td>10.7%</td><td>9.0%</td><td>10.5%</td></tr><tr><td>Net unrealized capital (gains) losses</td><td>1.4%</td><td>2.5%</td><td>3.1%</td></tr><tr><td>Net unrecognized postretirement benefit obligation</td><td>-0.4%</td><td>-0.4%</td><td>-0.3%</td></tr><tr><td>Net income ROE available to common stockholders (x-AOCI other than FCTA)</td><td>11.7%</td><td>11.1%</td><td>13.3%</td></tr><tr><td>Net realized capital (gains) losses</td><td>1.4%</td><td>-0.2%</td><td>1.0%</td></tr><tr><td>Non-GAAP operating earnings ROE (x-AOCI other than FCTA)</td><td>13.1%</td><td>10.9%</td><td>14.3%</td></tr></table>



## Forward-looking and cautionary statements

Certain statements made by the company which are not historical facts may be considered forward-looking statements, including, without limitation, statements as to non-GAAP operating earnings, net income attributable to Principal Financial Group, net cash flow, realized and unrealized gains and losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions. The company does not undertake to update these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's annual report on Form 10-K for the year ended Dec. 31, 2021, filed by the company with the U.S. Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions may significantly affect the company's ability to meet liquidity needs, access to capital and cost of capital; conditions in the global capital markets and the economy generally; volatility or declines in the equity, bond or real estate markets; changes in interest rates or credit spreads or a sustained low interest rate environment; the elimination of the London Inter-Bank Offered Rate ("LIBOR"); the company's investment portfolio is subject to several risks that may diminish the value of its invested assets and the investment returns credited to customers; the company's valuation of investments and the determination of the amount of allowances and impairments taken on such investments may include methodologies, estimations and assumptions that are subject to differing interpretations; any impairments of or valuation allowances against the company's deferred tax assets; the company's actual experience for insurance and annuity products could differ significantly from its pricing and reserving assumptions; the pattern of amortizing the company's DAC asset and other actuarial balances on its universal life-type insurance contracts, participating life insurance policies and certain investment contracts may change; changes in laws, regulations or accounting standards; the company may not be able to protect its intellectual property and may be subject to infringement claims; the company's ability to pay stockholder dividends, make share repurchases and meet its obligations may be constrained by the limitations on dividends or other distributions Iowa insurance laws impose on Principal Life; litigation and regulatory investigations; from time to time the company may become subject to tax audits, tax litigation or similar proceedings, and as a result it may owe additional taxes, interest and penalties in amounts that may be material; applicable laws and the company's certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests; competition, including from companies that may have greater financial resources, broader arrays of products, higher ratings and stronger financial performance; technological and societal changes may disrupt the company's business model and impair its ability to retain existing customers, attract new customers and maintain its profitability; damage to the company's reputation; a downgrade in the company's financial strength or credit ratings; client terminations, withdrawals or changes in investor preferences; the company's hedging or risk management strategies prove ineffective or insufficient; inability to attract, develop and retain qualified employees and sales representatives and develop new distribution sources; an interruption in information technology, infrastructure or other internal or external systems used for business operations, or a failure to maintain the confidentiality, integrity or availability of data residing on such systems; international business risks including changes to mandatory pension schemes; risks arising from participation in joint ventures; the company may need to fund deficiencies in its "Closed Block" assets; a pandemic, terrorist attack, military action or other catastrophic event; the ongoing COVID-19 pandemic and the resulting financial market impacts; the company's reinsurers could default on their obligations or increase their rates; risks arising from acquisitions of businesses; risks related to the company's acquisition of Wells Fargo Bank, N.A.'s IRT business; risks in completing the company's announced reinsurance transaction for its in-force U.S. retail fixed annuity and universal life with secondary guarantee blocks of business within the terms or timing contemplated; loss of key vendor relationships or failure of a vendor to protect information of our customers or employees; the company's enterprise risk management framework may not be fully effective in identifying or mitigating all of the risks to which the company is exposed; and global climate change.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group \( ^{®} \) , Des Moines, IA 50392.

Principal, Principal and symbol design, and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.



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## Principal \( ^{®} \) 

Principal Financial Group \( ^{®} $ 
711 High Street
Des Moines, Iowa 50392
principal.com

PFG | Nasdaq Listed

Common stock of the Principal Financial Group, Inc. is traded on Nasdaq under the ticker symbol "PFG."

EE11901-05 | ©2022 Principal Financial Services, Inc. | 03/2022