Feb 9 (Reuters) - Insurance and asset management company Principal Financial PFG.O reported a rise in fourth-quarter profit on Monday, helped by increased premiums and improved returns on its investments.

Strong market performance in the last quarter of 2025, supported by U.S. Federal Reserve rate cuts, lifted investment returns for insurers such as Principal Financial.

Insurers have also benefited from their fixed-income investments, such as government securities, as their interest rates continue to stay high despite several rate cuts last year.

Principal's assets under management rose 10% compared with the previous year to $781 billion in the quarter.

Premiums and fees from its specialty benefits business, which provides employee benefit plans to small and mid-sized businesses, increased 3% to $845.8 million, while retirement and income solutions revenue rose 3% to $754.1 million.

The Iowa-based company's adjusted operating earnings stood at $488.0 million, or $2.19 per share, for the fourth quarter, compared with $448.1 million, or $1.94 per share, a year earlier.

The company also forecast a 9% to 12% growth in its annual adjusted operating earnings per share for fiscal year 2026.

Principal's shares have gained 8.8% so far this year, compared with a 1.6% jump in the benchmark S&P 500 .SPX index.

(Reporting by Atharva Singh in Bengaluru; Editing by Vijay Kishore)

((Atharva.Singh@thomsonreuters.com;))