Principal Financial Group, Inc.

Legal and litigation · Litigation and legal proceedings

Litigation and regulatory investigations may affect our financial strength or reduce our profitability. We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Legal liability or adverse publicity with respect to current or future legal or regulatory actions may affect our financial strength or reduce our profitability.

Industry regulation · Regulatory compliance and changes

Changes in laws or regulations may reduce our profitability or impact how we do business. Our businesses are subject to comprehensive regulation and supervision throughout the U.S. and in the international markets in which we operate. Changes in laws or regulations or the interpretation thereof could significantly increase our compliance costs and reduce our profitability.

Industry regulation · Licensing and permits

We face risks in completing the Reinsurance Transaction within the terms or timing contemplated. While the Reinsurance Transaction is expected to close in the second quarter of 2022, it is subject to customary closing conditions, including required regulatory approvals, that could cause us to not close if the conditions to closing are not satisfied or waived.

Legal and litigation · Contractual disputes and claims

The Acquired Business involves the risk that clients or others may sue us, claiming that we or third parties for whom they say we are responsible have failed to perform under a contract or otherwise failed to carry out a duty perceived to be owed to them, including perceived fiduciary or contractual duties.

Industry regulation · Safety and environmental regulations

Environmental liability exposure may result from our commercial mortgage loan portfolio and real estate investments. Liability under environmental protection laws resulting from our commercial mortgage loan portfolio and real estate investments may harm our financial strength and reduce our profitability.

Tax and financial reporting · Financial reporting and accounting standards

Changes in accounting standards may adversely affect our reported results of operations and financial condition. The required adoption of future accounting standards may adversely affect our reported results of operations and financial condition and may result in significant incremental costs associated with initial implementation and ongoing compliance.

Tax and financial reporting · Tax compliance and changes in tax law

Changes in tax laws could increase our tax costs and reduce sales of our insurance, annuity and investment products. Many of the insurance, annuity and investment products we issue receive favorable tax treatment under current U.S. federal income tax laws. Changes in U.S. federal income tax laws could reduce or eliminate the tax advantages of certain of our products.

Corporate governance · Internal controls and risk management

Our enterprise risk management framework may not be fully effective in identifying or mitigating all of the risks to which we are exposed. Our policies and procedures may not be fully effective in identifying or mitigating every risk to which we are exposed.

Innovation and product development · Intellectual property protection and infringement

We may not be able to protect our intellectual property and may be subject to infringement claims. We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property.

Strategic execution · Merger acquisition and divestiture risks

We may not realize the expected benefits of our acquisition of Wells Fargo Bank, N.A.'s IRT business because of integration difficulties, delays in the transfer of purchased assets or other challenges. The success of the Acquisition depends, in part, on our ability to successfully integrate and operate the Acquired Business in conjunction with our existing businesses.

Capital structure and performance · Dividend policy and capital allocation

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. Iowa insurance laws impose limitations on the ability of Principal Life to pay dividends or make other distributions to its parent.

Capital structure and performance · Credit rating and cost of capital

A 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.

International and currency · International operations and emerging markets

Our international businesses face political, legal, operational and other risks that could reduce our profitability in those businesses. Our international businesses face political, legal, operational and other risks that we do not face in our operations in the U.S. We face the risk of discriminatory regulation, nationalization or expropriation of assets, price controls and exchange controls.

Capital structure and performance · Financial performance volatility

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. Certain of our variable annuity products include guaranteed minimum death benefits and/or guaranteed minimum withdrawal benefits.

Economic and market conditions · Economic recession and downturns

Conditions in the global capital markets and the economy generally may materially and adversely affect our business and results of operations. Continued adverse economic conditions may result in a decline in our AUM, AUA and revenues and erosion of our profit margins.

Natural and catastrophic events · Climate change and environmental impact

Our financial results may be adversely impacted by global climate changes. Atmospheric concentrations of carbon dioxide and other greenhouse gases have increased dramatically since the industrial revolution, resulting in a gradual increase in global average temperatures and an increase in the frequency and severity of natural disasters.

Social and demographic · Public perception and reputation

Damage to our reputation may adversely affect our revenues and profitability. Our continued success is dependent upon our ability to earn and maintain the trust and confidence of customers, distributors, employees and other stakeholders. Damage to our reputation may arise from a variety of sources including litigation or regulatory actions, compliance failures, employee misconduct, cybersecurity incidents.

Cybersecurity and data protection · Data privacy and protection regulations

Changes in cybersecurity or privacy regulations may increase our compliance costs, limit our ability to gain insight from data and lead to increased scrutiny. We are subject to numerous federal, state and international regulations regarding the privacy and security of personal information.

Cybersecurity and data protection · Data breaches and cyber attacks

Interruptions in information technology, infrastructure or other internal or external systems used for our business operations, or a failure to maintain the confidentiality, integrity or availability of data residing on such systems, could disrupt our business, damage our reputation and adversely impact our profitability. Financial services companies are regularly targeted by cyber criminals, resulting in unauthorized access to confidential information.

Human capital and workforce · Talent acquisition and retention

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 and sales of our products may be adversely impacted. Our continued success is largely dependent on our ability to attract, develop and retain qualified employees.