PRINCIPAL FINANCIAL GROUP INC Debt Disclosure

13. Debt

Short-Term Debt

The components of short-term debt were as follows:

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Our revolving credit facility is committed and available for general corporate purposes. This credit facility also provides 100% back-stop support for our commercial paper program, of which we had no outstanding balances as of December 31, 2025 and 2024. The weighted-average interest rate on short-term borrowings as of December 31, 2025 and 2024, was 6.3% and 7.6%, respectively.

The unsecured lines of credit can be used for repurchase agreements or other borrowings. Each line has a maturity of less than one year.

The secured subscription facility provided for revolving loans, up to a maximum aggregate availability of $150.0 million, which were secured by outstanding capital commitments of Principal Life and an unaffiliated insurance company. Borrowings were permitted for any purpose under the borrowers’ constituent documents and were required to be repaid within twelve months of issuance. The weighted-average interest rate on short-term borrowings as of December 31, 2024, was 6.84%.

Long-Term Debt

The components of long-term debt were as follows:

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Net discount, premium and issuance costs associated with issuing these notes are amortized to expense over the respective terms using the interest method.

On March 8, 2023, we issued $700.0 million of senior notes. We issued a $400.0 million series of notes that bear interest at 5.375% and will mature in 2033 and a $300.0 million series of notes that bear interest at 5.5% and will mature in 2053. Interest on the notes is payable semi-annually on March 15 and September 15 each year, beginning on September 15, 2023. The proceeds from these notes were used to redeem our floating rate notes payable due in 2055 and to repay at maturity our 3.125% notes payable due in 2023. We incurred a one-time cost to extinguish this debt before the scheduled maturity date, which was recorded in operating expenses on the consolidated statements of operations.

On June 12, 2020, we issued $500.0 million of senior notes at a discount. On August 3, 2020, we issued an additional $100.0 million of senior notes at a premium. These notes bear interest at 2.125% and will mature in 2030. Interest on the notes is payable semi-annually on June 15 and December 15 each year, beginning on December 15, 2020. The proceeds from these notes were used for general corporate purposes.

On May 7, 2019, we issued $500.0 million of senior notes. The notes bear interest at 3.7% and will mature in 2029. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on November 15, 2019. The proceeds from these notes, along with available cash, were used to fund the acquisition of an institutional retirement and trust business.

On November 10, 2016, we issued $650.0 million of senior notes. We issued a $350.0 million series of notes that bear interest at 3.1% and will mature in 2026 and a $300.0 million series of notes that bear interest at 4.3% and will mature in 2046. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on May 15, 2017. The proceeds from these notes were used to redeem our notes payable due in 2017 and 2019. We incurred a one-time cost to extinguish this debt before the scheduled maturity date.

On May 7, 2015, we issued $400.0 million of senior notes. The notes bore interest at 3.4% and matured on May 15, 2025. Interest on the notes was payable semi-annually on May 15 and November 15 each year, beginning on November 15, 2015. The proceeds from the senior notes were used for general corporate purposes.

On November 16, 2012, we issued a $300.0 million series of notes that bear interest at 4.35% and will mature in 2043. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on May 15, 2013. The proceeds were used to fund our acquisition of Cuprum.

On September 5, 2012, we issued a $300.0 million series of senior notes that bear interest at 4.625% and will mature in 2042. Interest on the notes is payable semi-annually on March 15 and September 15 each year, beginning on March 15, 2013. The proceeds were used for the repayment of the $400.0 million aggregate principal amount of notes due in 2014 and to partially fund our acquisition of Cuprum.

On October 16 and December 5, 2006, we issued $500.0 million and $100.0 million, respectively, of senior notes. The notes bear interest at a rate of 6.05% per year. Interest on the notes is payable semi-annually on April 15 and October 15 each year and began on April 15, 2007. The notes will mature on October 15, 2036. A portion of the proceeds were used to fund the 2006 acquisition of WM Advisors, Inc., with the remaining proceeds being used for general corporate purposes. A tender offer in the fourth quarter of 2016 resulted in redemption of $94.4 million of the senior notes. We incurred a one-time cost to extinguish this debt before the scheduled maturity date.

Our secured credit facilities are primarily financings for real estate loans. We did not have an outstanding principal balance as of December 31, 2025. As of December 31, 2024, the outstanding principal balance was $21.8 million for one loan with an interest rate of 6.47%. Outstanding debt is secured by the underlying real estate loans, which were reported as mortgage loans on our consolidated statements of financial position with a carrying value of $29.0 million as of December 31, 2024.

The non-recourse mortgages and notes payable are primarily financings for a real estate development. As of both December 31, 2025 and 2024, the notes had an interest rate of 4.0%. Outstanding debt is secured by the underlying real estate properties, which were reported as real estate on our consolidated statements of financial position with a carrying value of $9.6 million and $14.3 million as of December 31, 2025 and 2024, respectively.

As of December 31, 2025, future annual maturities of long-term debt were as follows (in millions):

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Contingent Funding Agreements for Senior Debt Issuance

On March 8, 2018, we entered into two contingent funding agreements: (1) a 10-year contingent funding agreement with a Delaware trust (“2028 Trust”) formed by us in connection with the sale by the trust of $400.0 million pre-capitalized trust securities redeemable February 15, 2028 (“2028 P-Caps”) in a Rule 144A private placement and (2) a 30-year contingent funding agreement with a Delaware trust (“2048 Trust”) formed by us in connection with the sale by the trust of $350.0 million pre-capitalized trust securities redeemable February 15, 2048 (“2048 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2028 P-Caps and 2048 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us a put option that gives us the right to sell at any time: (1) to the 2028 Trust up to $400.0 million of its 4.111% Senior Notes due 2028 (“4.111% Senior Notes”) and (2) to the 2048 Trust up to $350.0 million of its 4.682% Senior Notes due 2048 (“4.682% Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts (“Eligible Assets”). The 4.682% Senior Notes will not be issued unless and until a put option is exercised, while the put option for the 4.111% Senior Notes was exercised on March 19, 2025. We agreed to pay a semi-annual put premium of 1.275% and 1.580% per annum on the unexercised portion of the put option to the 2028 Trust and 2048 Trust, respectively, and to reimburse the trusts for expenses. The put option premiums are recorded in operating expenses in the consolidated statements of operations. The 4.111% Senior Notes and 4.682% Senior Notes will be fully, irrevocably and unconditionally guaranteed by Principal Financial Services, Inc. (“PFS”). In addition, our obligations under the put option agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS. The contingent funding agreements with the trusts provide us with a source of liquid assets, which could be used to meet future financial obligations or to provide additional capital.

On March 19, 2025, we completed the exercise of our rights in full under the put option with the 2028 Trust in exchange for the Eligible Assets (the “2028 P-Caps Exercise”). In connection with the exercise of our put options right, we (1) issued $400.0 million of 4.111% Senior Notes due 2028 (“2028 Notes”) to the 2028 Trust (2) waived our rights to repurchase the 2028 Notes and (3) directed The Bank of New York Mellon to dissolve the 2028 Trust in accordance with its declaration of trust and deliver the 2028 Notes to the beneficial holders of the 2028 P-Caps pro rata in respect of each 2028 P-Cap. We used the proceeds from the 2028 P-Caps Exercise to repay at maturity all $400.0 million aggregate principal amount outstanding of our 3.400% senior notes that matured on May 15, 2025 (the “2025 Notes”), in accordance with the terms of the indenture governing the 2025 Notes.

In addition, on March 6, 2025, we entered into a 30-year contingent funding agreement with a Delaware trust (“2055 Trust”) formed by us in connection with the sale by the trust of $500.0 million pre-capitalized trust securities redeemable February 15, 2055 (“2055 P-Caps”) in a Rule 144A private placement. The trusts invested the proceeds from the sale of the 2055 P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The contingent funding agreements provide us the right to sell at any time to the 2055 Trust up to $500.0 million of its 5.807% Senior Notes due 2055 (“5.807% Senior Notes”) and receive in exchange a corresponding amount of the principal and interest strips of U.S. Treasury securities held by the trusts. The 5.807% Senior Notes will not be issued unless and until we exercise our issuance right. We agreed to pay a semi-annual facility fee of 1.289% per annum on the unexercised portion of the contingent fund mechanism to the 2055 Trust (the “facility agreement”), respectively, and to reimburse the trusts for expenses. The facility fee paid under the facility agreement is recorded in operating expenses in the consolidated statements of operations. The 5.807 % Senior Notes will be fully, irrevocably and unconditionally guaranteed by PFS. In addition, our obligations under the facility agreement and the expense reimbursement agreement with the trusts are also guaranteed by PFS.