What the changes say
- New risks emphasize investment-credit losses, liquidity pressure and collateral demands across Principal’s asset portfolio.
- California commercial mortgage concentration is tied to earthquakes, fires, drought, flooding and other regional events.
- International disclosures add Mexico judicial reforms and Chilean pension changes as specific sources of uncertainty.
- Technology, AI and changing customer preferences are now described as distribution, product and service-model risks.
What changed since the prior 10-K
New
- NewRisks relating to economic conditions, market conditions and investments
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, as well as our access to capital and cost of capital
Market stress, withdrawals, surrender activity and mark-to-market losses could reduce liquidity, capital access and increase funding costs.
- NewRisks relating to economic conditions, market conditions and investments
Conditions in the global capital markets, including the equity, bond or real estate markets and the economy generally may materially and adversely affect our business and results of operations
Global declines in equity, bond or real estate markets could reduce AUM, AUA, investment returns, revenues and borrower credit quality.
- NewRisks relating to economic conditions, market conditions and investments
For further discussion on equity risk management, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk — Equity Risk.”
Inflation, currency movements, unemployment, passive investing and lower retirement contributions could reduce product demand, premiums, deposits, AUM and AUA.
- NewRisks relating to economic conditions, market conditions and investments
Changes in interest rates or credit spreads or a prolonged low interest rate environment may adversely affect our results of operations, financial condition and liquidity and our net income can vary from period to period
Low or falling rates can compress asset yields, increase reserves and hedging costs, extend liabilities and create asset-liability mismatches.
- NewRisks relating to economic conditions, market conditions and investments
An increase in defaults or write-downs on our fixed maturities portfolio may reduce our profitability
Defaults or write-downs in fixed maturities, including $2.6 billion of international holdings, could reduce profitability and financial strength.
- NewRisks relating to economic conditions, market conditions and investments
An increased rate of delinquency and defaults on our commercial mortgage loans, including balloon maturities with and without amortizing payments, may adversely affect our profitability
Commercial mortgage delinquencies and defaults, especially on balloon maturities requiring large lump-sum repayments, could increase losses.
- NewRisks relating to economic conditions, market conditions and investments
Mark-to-market adjustments on equity securities, trading securities and derivative instruments may reduce our profitability or cause volatility in our net income
Fair-value changes in equity securities, trading securities and derivatives can reduce profit and make net income more volatile.
- NewRisks relating to economic conditions, market conditions and investments
We may have difficulty selling our privately placed fixed maturities, mortgage loans and real estate investments because they are less liquid than our publicly traded fixed maturities
Privately placed fixed maturities, mortgage loans and real estate, 41% of invested assets, may be difficult to sell at fair prices.
- NewRisks relating to economic conditions, market conditions and investments
The impairment of derivative counterparties could adversely affect us
Derivative-counterparty failures or inadequate collateral could cause losses on hedges and related unsecured debt or equity investments.
- NewRisks relating to economic conditions, market conditions and investments
Our requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect our liquidity and expose us to counterparty credit risk
Higher collateral requirements or payments tied to asset-value declines could reduce liquidity and leave Principal exposed to unsecured counterparties.
- NewRisks relating to economic conditions, market conditions and investments
Environmental liability exposure may result from our commercial mortgage loan portfolio and real estate investments
Contamination at mortgaged or owned properties could create cleanup costs, superior environmental liens and liabilities even after foreclosure.
- NewRisks relating to economic conditions, market conditions and investments
Regional concentration of our commercial mortgage loan portfolio in California may subject us to losses attributable to economic downturns or catastrophes in that state
Concentration in California commercial mortgages exposes Principal to regional downturns and earthquakes, fires, drought, heat, flooding and tsunamis.
- NewRisks relating to economic conditions, market conditions and investments
Gross unrealized losses may be realized or result in future credit losses, resulting in a reduction in our net income
- NewRisks relating to economic conditions, market conditions and investments
Fluctuations in foreign currency exchange rates could adversely impact our profitability and financial condition
- NewRisks relating to estimates, assumptions and valuations
Any impairments of, or valuation allowances against, our deferred tax assets could adversely affect our results of operations and financial condition
- NewRisks relating to estimates, assumptions and valuations
We may face losses on our insurance and annuity products if our actual experience differs significantly from our pricing and reserving assumptions
- NewRisks relating to estimates, assumptions and valuations
Our results of operations may also be adversely impacted if our actual investment earnings differ from our pricing and reserve assumptions. Economic shifts may alter investment earnings, impacting reserve assumptions
- NewRisks relating to estimates, assumptions and valuations
The pattern of amortizing our DAC asset and other actuarial balances may change, impacting both the level of our DAC asset and other actuarial balances and the timing of our net income
- NewRisks relating to laws, regulations and taxation
Changes in laws or regulations may reduce our profitability or impact how we do business
- NewRisks relating to laws, regulations and taxation
Our insurance subsidiaries are subject to extensive supervision and regulation. The primary purpose of insurance regulation is to protect policyholders, not stockholders or creditors
- NewRisks relating to laws, regulations and taxation
The NAIC has adopted a group capital calculation. This calculation is not intended to be a regulatory capital requirement, but it will be used by regulators in their supervisory process and could create an additional data point for regulators to consider in evaluating our capital position
- NewRisks relating to laws, regulations and taxation
Changes in federal, state and international securities laws may reduce our profitability
- NewRisks relating to laws, regulations and taxation
Changes in employee benefit regulations may reduce our profitability
- NewRisks relating to laws, regulations and taxation
Changes in cybersecurity or privacy regulations may increase our compliance costs, limit our ability to gain insight from data and lead to increased scrutiny
- NewRisks relating to laws, regulations and taxation
Restrictions on data collection and use may limit opportunities to gain business insights useful to running our business and offering innovative products and services
- NewRisks relating to laws, regulations and taxation
Our financial results may be adversely impacted by environmental, social and governance requirements
- NewRisks relating to laws, regulations and taxation
Changes in tax laws could increase our tax costs and reduce sales of our insurance, annuity and investment products
- NewRisks relating to laws, regulations and taxation
Our ability to pay stockholder dividends, make share repurchases and meet our obligations may be constrained by the limitations on dividends or other distributions Iowa insurance laws impose on Principal Life
- NewRisks relating to laws, regulations and taxation
Changes in accounting standards may adversely affect our reported results of operations and financial condition
- NewRisks relating to laws, regulations and taxation
Litigation and regulatory investigations may affect our financial strength or reduce our profitability
- NewRisks relating to laws, regulations and taxation
From time to time, we may become subject to tax audits, tax litigation or similar proceedings, and as a result we may owe additional taxes, interest and penalties in amounts that may be material
- NewRisks relating to laws, regulations and taxation
Applicable laws and our certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interests
- NewRisks relating to laws, regulations and taxation
Our governance structure may hinder stockholders from replacing management. These provisions may facilitate management entrenchment, which may delay, defer or prevent a change in our control, which may not be in the best interests of our stockholders
- NewRisks relating to our business
Our risk management framework may not identify or mitigate all risks, potentially leading to unexpected losses
- NewRisks relating to our business
We face competition from financial services firms with potential advantages in key areas described in Item 1. “Business — Competition.”
- NewRisks relating to our business
We face risks arising from vendor failures or data breaches
- NewRisks relating to our business
Risks relating to computer cyber-terrorism, crisis on a national or global scale, climate change or other catastrophic events
- NewRisks relating to our business
Catastrophic events could adversely affect our operations, net income or financial condition
Dropped
- DroppedGeneral risks
A pandemic, terrorist attack, military action or other catastrophic event could adversely affect our operations, net income or financial condition
- DroppedGeneral risks
Technological and societal changes may disrupt our business model and impair our ability to retain existing customers, attract new customers and maintain our profitability
- DroppedGeneral risks
Loss of or disruption in key vendor relationships and services or failure of a vendor to protect information of our customers or employees could adversely affect our business or result in losses
- DroppedGeneral risks
Our enterprise risk management framework may not be fully effective in identifying or mitigating all the risks to which we are exposed
Reworded
- 82% rewrittenRisks relating to our business
Any of these consequences could adversely affect our profitability and financial condition
Adds AI-driven technology and societal changes, shifting customer preferences, and potential changes to distribution, service models and products.
- 81% rewrittenRisks relating to our business
We face risks arising from fraudulent activities
Condenses fraud examples, while retaining higher claims, customer theft, reimbursement exposure and reputational or regulatory consequences.
- 72% rewrittenRisks relating to our business
If we are unable to attract, develop and retain qualified employees and sales representatives and develop new distribution sources, our results of operations, financial condition, strategic growth commitments and sales of our products may be adversely impacted
Adds the need for digital professionals and explains competition for sales representatives through compensation, support, financial strength and product features.
- 65% rewrittenRisks relating to our business
We face risks in administering coinsurance with funds withheld reinsurance agreements
Shortens the reinsurance discussion, retaining risks to relationships, expected benefits, recapture and management costs.
- 64% rewrittenRisks relating to our business
We face risks arising from our participation in joint ventures
Shortens the joint-venture disclosure but retains lack of control and potentially misaligned partner objectives.
- 64% rewrittenRisks relating to our business
Our international businesses face political, legal, operational and other risks that could reduce our profitability in those businesses
Adds political instability, unrest, Mexico judicial reforms and Chilean pension reforms to the international-risk discussion.
- 60% rewrittenRisks relating to our business
We face risks arising from future acquisitions of businesses
Removes the specific sustained-equity-market and AUM or fee-revenue examples from future-acquisition risks.
- 52% rewrittenRisks relating to our business
Our financial results may be adversely impacted by global climate changes
Softens climate wording from dramatic, expected and economy-wide impacts to noticeable, possible and impacts across several sectors.
- 50% rewrittenRisks relating to our business
Guarantees within certain of our products that protect policyholders may decrease our net income or increase the volatility of our results of operations or financial position under U.S. GAAP if our hedging or risk management strategies prove ineffective or insufficient
- 39% rewrittenRisks relating to our business
Our reinsurers could default on their obligations or increase their rates, which could adversely impact our net income and financial condition
- 32% rewrittenRisks relating to our business
Client terminations or withdrawals or changes in investor preferences may lead to a reduction in revenues for our asset management and accumulation businesses
- 21% rewrittenRisks relating to laws, regulations and taxation
We may not be able to protect our intellectual property and may be subject to infringement claims
All 53 risk factors
Headings as the filing states them, in filing order.
Risks relating to economic conditions, market conditions and investments
- 01Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, as well as our access to capital and cost of capitalnew
- 02Conditions in the global capital markets, including the equity, bond or real estate markets and the economy generally may materially and adversely affect our business and results of operationsnew
- 03For further discussion on equity risk management, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk — Equity Risk.”new
- 04Changes in interest rates or credit spreads or a prolonged low interest rate environment may adversely affect our results of operations, financial condition and liquidity and our net income can vary from period to periodnew
- 05An increase in defaults or write-downs on our fixed maturities portfolio may reduce our profitabilitynew
- 06An increased rate of delinquency and defaults on our commercial mortgage loans, including balloon maturities with and without amortizing payments, may adversely affect our profitabilitynew
- 07Mark-to-market adjustments on equity securities, trading securities and derivative instruments may reduce our profitability or cause volatility in our net incomenew
- 08We may have difficulty selling our privately placed fixed maturities, mortgage loans and real estate investments because they are less liquid than our publicly traded fixed maturitiesnew
- 09The impairment of derivative counterparties could adversely affect usnew
- 10Our requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect our liquidity and expose us to counterparty credit risknew
- 11Environmental liability exposure may result from our commercial mortgage loan portfolio and real estate investmentsnew
- 12Regional concentration of our commercial mortgage loan portfolio in California may subject us to losses attributable to economic downturns or catastrophes in that statenew
- 13Gross unrealized losses may be realized or result in future credit losses, resulting in a reduction in our net incomenew
- 14Fluctuations in foreign currency exchange rates could adversely impact our profitability and financial conditionnew
Risks relating to estimates, assumptions and valuations
- 15Any impairments of, or valuation allowances against, our deferred tax assets could adversely affect our results of operations and financial conditionnew
- 16We may face losses on our insurance and annuity products if our actual experience differs significantly from our pricing and reserving assumptionsnew
- 17Our results of operations may also be adversely impacted if our actual investment earnings differ from our pricing and reserve assumptions. Economic shifts may alter investment earnings, impacting reserve assumptionsnew
- 18The pattern of amortizing our DAC asset and other actuarial balances may change, impacting both the level of our DAC asset and other actuarial balances and the timing of our net incomenew
Risks relating to laws, regulations and taxation
- 19Changes in laws or regulations may reduce our profitability or impact how we do businessnew
- 20Our insurance subsidiaries are subject to extensive supervision and regulation. The primary purpose of insurance regulation is to protect policyholders, not stockholders or creditorsnew
- 21The NAIC has adopted a group capital calculation. This calculation is not intended to be a regulatory capital requirement, but it will be used by regulators in their supervisory process and could create an additional data point for regulators to consider in evaluating our capital positionnew
- 22Changes in federal, state and international securities laws may reduce our profitabilitynew
- 23Changes in employee benefit regulations may reduce our profitabilitynew
- 24Changes in cybersecurity or privacy regulations may increase our compliance costs, limit our ability to gain insight from data and lead to increased scrutinynew
- 25Restrictions on data collection and use may limit opportunities to gain business insights useful to running our business and offering innovative products and servicesnew
- 26Our financial results may be adversely impacted by environmental, social and governance requirementsnew
- 27Changes in tax laws could increase our tax costs and reduce sales of our insurance, annuity and investment productsnew
- 28Our ability to pay stockholder dividends, make share repurchases and meet our obligations may be constrained by the limitations on dividends or other distributions Iowa insurance laws impose on Principal Lifenew
- 29Changes in accounting standards may adversely affect our reported results of operations and financial conditionnew
- 30Litigation and regulatory investigations may affect our financial strength or reduce our profitabilitynew
- 31Damage to our reputation may adversely affect our revenues and profitability
- 32We may not be able to protect our intellectual property and may be subject to infringement claims21% rewritten
- 33From time to time, we may become subject to tax audits, tax litigation or similar proceedings, and as a result we may owe additional taxes, interest and penalties in amounts that may be materialnew
- 34Applicable laws and our certificate of incorporation and by-laws may discourage takeovers and business combinations that some stockholders might consider in their best interestsnew
- 35Our governance structure may hinder stockholders from replacing management. These provisions may facilitate management entrenchment, which may delay, defer or prevent a change in our control, which may not be in the best interests of our stockholdersnew
Risks relating to our business
- 36Our risk management framework may not identify or mitigate all risks, potentially leading to unexpected lossesnew
- 37We face competition from financial services firms with potential advantages in key areas described in Item 1. “Business — Competition.”new
- 38A downgrade in our financial strength or credit ratings may increase policy surrenders and withdrawals, reduce new sales, terminate relationships with distributors, impact existing liabilities and increase our cost of capital, any of which could adversely affect our profitability and financial condition
- 39Any of these consequences could adversely affect our profitability and financial condition82% rewritten
- 40Client terminations or withdrawals or changes in investor preferences may lead to a reduction in revenues for our asset management and accumulation businesses32% rewritten
- 41Guarantees within certain of our products that protect policyholders may decrease our net income or increase the volatility of our results of operations or financial position under U.S. GAAP if our hedging or risk management strategies prove ineffective or insufficient50% rewritten
- 42Our international businesses face political, legal, operational and other risks that could reduce our profitability in those businesses64% rewritten
- 43We face risks arising from fraudulent activities81% rewritten
- 44We face risks arising from vendor failures or data breachesnew
- 45We face risks arising from our participation in joint ventures64% rewritten
- 46We may need to fund deficiencies in our Closed Block assets
- 47Our reinsurers could default on their obligations or increase their rates, which could adversely impact our net income and financial condition39% rewritten
- 48We face risks arising from future acquisitions of businesses60% rewritten
- 49We face risks in administering coinsurance with funds withheld reinsurance agreements65% rewritten
- 50If we are unable to attract, develop and retain qualified employees and sales representatives and develop new distribution sources, our results of operations, financial condition, strategic growth commitments and sales of our products may be adversely impacted72% rewritten
- 51Risks relating to computer cyber-terrorism, crisis on a national or global scale, climate change or other catastrophic eventsnew
- 52Our financial results may be adversely impacted by global climate changes52% rewritten
- 53Catastrophic events could adversely affect our operations, net income or financial conditionnew
Other Principal Financial Group 10-Ks
- 2025 10-K risk factors
19 risks. Insurance guarantees, reinsurance arrangements and ratings expose earnings, capital and policyholder behavior to market and counterparty pressures.
Filed Feb 19, 2025
About this page
Item 1A of the 10-K on EDGAR was split into its risk factors and, where the company's previous 10-K is on file, each heading was matched to last year's and the text compared word for word. The headings are the filing's own. The one-line readings and the overview were written by a language model from the text of the new, dropped, and rewritten risks; they refer to risks by position and cannot misquote a heading.