Principal Financial Group Thrives Amid Market Volatility
Despite unprecedented market volatility, Principal Financial Group has demonstrated remarkable resilience in its first quarter 2025 financial results.
Speaking on the company's recent conference call, CEO Deanna Strable emphasized that they are operating in a dynamic environment where policy shifts and uncertainties have led to a more cautious investor tone. However, she noted that the company has successfully navigated market volatility before with a clear strategy, diversified business model, and commitment to supporting customers.
The results reflect the strength and discipline of Principal Financial Group's strategy, as well as the benefits of its diversified business. First quarter adjusted non-GAAP earnings were $439 million or $1.92 per diluted share, representing a 10% increase in EPS over the first quarter of 2024.
Notably, despite market volatility, total company-managed assets under management (AUM) increased to $718 billion at the end of the quarter. This reflects positive market performance and the beneficial impact of exchange rates. Net cash flow was negative $4 billion in the quarter, primarily due to low-fee institutional fixed income withdrawals and investment management.
However, higher fee inflows relative to outflows are driving a positive impact on run rate revenue from institutional flows. The company saw strong results in key asset classes, including private real estate, preferred, and stable value. Additionally, they experienced strong local investment management flows of $700 million total in Mexico and Southeast Asia, reinforcing their local strategies and the benefits of their global business reach.
Principal Financial Group's Retirement segment generated positive account value net cash flow of $400 million after adjusting for a low-fee contract lapse discussed on the last call. They continue to see strong activity in their small and midsized market, delivering $1.3 billion of positive flows up from $1 billion in the year ago quarter.
Deanna Strable expressed conviction in Principal Financial Group's strategy, with a focus on growth across the retirement ecosystem, SMBs, and Global Asset Management. The company is poised to perform through market cycles due to its transformation over the last few years, which has uniquely positioned it for success.
The company's capital strategy remains grounded in long-term financial discipline, with $370 million of capital returned to shareholders in the first quarter, including $200 million of share repurchases and a continued increase in their common stock dividend. This demonstrates Principal Financial Group's commitment to supporting customers, investing in growth, and returning capital responsibly.
In conclusion, despite market volatility, Principal Financial Group has delivered strong financial results that reflect its resilience and strategic discipline. As they continue to navigate the current environment, the company remains focused on growth opportunities and long-term financial stability.
