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LARRY ZIMPLEMAN, CEO OF DES MOINES, IOWA–BASED PRINCIPAL FINANCIAL GROUP, knows how to get what he wants. When Xi Jinping made Iowa one of only three stops on a February trip to the U.S. that included a first-ever meeting with President Obama, Zimpleman worked behind the scenes to make sure he got face time with the man widely expected to become China’s next Communist Party chief and president. Zimpleman had a good reason to want to meet with the current Chinese vice president: Principal, an $8 billion-plus-in-revenue company that develops retirement savings and investment products and has quietly built profitable outposts around the globe, needs China’s approval to sell retirement products in that country. Although Principal has planted its flag there — it has a joint venture with China Construction Bank Corp. to sell mutual funds — it wants the go-ahead to be an enterprise annuity provider so it can complete the next leg of its international expansion.

Zimpleman, who took over as CEO of Principal in 2008, shortly before the financial crisis erupted, needed Iowa Governor Terry Branstad to arrange the meeting. During a trade mission to China last September, Branstad had invited Xi to his state for a reunion with Iowans the Chinese vice president had met on a sister-city exchange in 1985, when he was a young party official from a northern pig-farming region in China and Branstad was serving his first term as governor. On that original visit to the U.S., Xi was looking to draw on Iowa’s expertise in raising fatter pigs and increasing corn and soybean yields.

But Zimpleman, who grew up on a farm in eastern Iowa and didn’t get his first passport until he was 46, wanted Xi and the rest of the Chinese delegation to see his state — and his company, which has invested $1 billion building out its international footprint — as exporters of cutting-edge financial services. Zimpleman is betting that China now needs to worry more about helping its growing middle class save and invest than about getting enough food. Encouraging people to save for retirement is the CEO’s mission for Principal, and he needed Branstad to understand that Iowa’s financial services exports could be as valuable as the state’s agricultural trade. Branstad got the message, and Zimpleman was part of a private reception with Xi that included Michigan Governor Rick Snyder and Kansas Governor Sam Brownback, as well as Deere & Co. CEO Samuel Allen and Monsanto Co. CEO Hugh Grant.

With Branstad and a translator at his side, Xi listened intently to Zimpleman’s pitch that Principal’s joint venture with China Construction Bank should be allowed to extend its business into the retirement area. Without Chinese citizens saving on their own, Zimpleman explained, Xi’s country would face a demographic time bomb as lethal as that already ticking in the U.S. and Europe.

Sure enough, Xi — a likable man with a disarmingly warm smile who is married to popular Chinese folk singer Peng Liyuan — told an Iowa audience soon after his meeting with Zimpleman that the state was a growing exporter of everything from biotechnology to financial services. And he mentioned Principal Financial Group by name during a speech that was streamed live to China — a coup for Zimpleman and his team.

“That was the Good Housekeeping seal of approval,” says the Principal CEO. A photo of Zimpleman meeting Xi in a receiving line during a gala dinner at the state capitol appeared on the front page of the Des Moines Register and in Chinese newspapers.

The imprimatur from Xi is a boost for $335 billion-in-assets Principal, whose culture was forged on the Plains, amid Iowa’s Midwestern work ethic and agricultural economy. China is the next step in the 60-year-old Zimpleman’s grand strategy to make money off every stage of an adult individual’s life cycle, from savings accumulation and insurance when investors are in their 30s, 40s and 50s to products that let those in their 60s, 70s and 80s tap their nest eggs. It’s a strategy not unlike the most popular vehicles at its mutual fund company: target date funds that are designed to shift their investment styles as investors age.

Principal has grown from a mutual insurance company into a financial services powerhouse by capturing the retirement business of small and medium-size U.S. companies largely ignored by the big East Coast asset managers and some insurance companies. Principal realized two decades ago, long before its competitors, that it needed to go after international markets to gain younger customers new to the middle class and at the beginning of their savings lives, to balance its business in the U.S., where aging baby boomers would be starting the tail end of their investing careers and drawing down their accounts. Principal built an innovative defined contribution platform, wrapped a world-class money manager around it to oversee the assets and exported the whole thing to overseas markets, including Brazil and China.

Today, while other firms are thinking about how to recalibrate their operations in a world transformed by the 2008 credit crisis, the continuing tepid economic environment and the resulting regulatory constraints on the financial services industry, Principal is methodically harvesting gains from its long-ago decision to get ahead of the overarching and inexorable power of demographics. Principal also avoided many of the pitfalls other firms faced during the crisis, such as holding residential mortgage securities in its insurance portfolio, dealing in risky variable annuities and having outsize exposure to equities.

Principal’s business has four profit drivers. Retirement and Investor Services, headed by company lifer Daniel Houston, contributed $581.1 million in operating earnings last year. U.S. Insurance Solutions, also managed by Houston, added $215.9 million in earnings. Principal International, headed by Luis Valdés, who helped design Chile’s innovative mandatory defined contribution system in the 1980s and who succeeded former chief Norman Sorensen in February, delivered $154 million in earnings. The asset management arm, Principal Global Investors, which oversees $82.4 billion in assets and is led by James McCaughan — a rare outsider on the company’s senior management team, who was recruited from Credit Suisse Asset Management — chipped in $74 million in earnings in 2011.

Principal, which has a 132-year history and more than 13,000 employees, offers retirement, savings, investment and insurance products to small and midsize businesses worldwide, a market segment that competitors like Boston-based Fidelity Investments and Baltimore’s T. Rowe Price Associates are only now starting to trawl as the large-plan market has matured. For all the expertise that Principal possesses about the retirement market, its secret sauce is its innovative technology platform. While much of its competition was focusing on the high-profile large-plan market, Principal was pouring money and time into its technology; as a result, it has been able to efficiently handle the retirement needs of smaller companies, which typically require more hand-holding and services from their partners.

“They’ve figured out how to make it profitable by sticking to their core,” says Chris Brown, founder and principal of Newton, New Hampshire–based Sway Research, which concentrates on the retirement market. “Others are playing catch-up.”

Principal, which went public in 2001, just one month after the September 11 terrorist attacks, focused on a part of the market that wasn’t particularly sexy and has funneled those profits into establishing a burgeoning international business that has offices in 17 countries, including Brazil, Chile, China, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore and Thailand. The firm has also made a bet on baby boomers’ insatiable appetite for investment and income products, at a time when entitlement systems are under fire in the U.S. and Europe and officials in emerging markets are thinking through how to avoid the same fiscal mistakes. Last year marked a turning point in China, the most populous country in the world: 50 percent of its population now lives in cities rather than the countryside.

“The middle class around the world will want the exact same things Americans wanted, from cars to investments,” says Zimpleman.

The CEO’s story mirrors that of Principal Financial Group. The son of a rural mail carrier in Williamsburg, Iowa, Zimpleman was the first in his family to go to college. A math whiz, he pursued actuarial science at Drake University in Des Moines and started at Principal — then called Bankers Life Co. — in 1973. He rose through the ranks, helping the company expand into defined benefit plans and later into defined contribution, which would become its core business.

“When Larry speaks, people listen,” says Howard Fluhr, who has known Zimpleman for 25 years and is chairman of Segal Co., a New York–based employee benefits consulting firm. “He never says one thing that doesn’t need saying.”

“Larry has a fundamentally sound understanding of any issue before him,” adds C. Robert Henrikson, former chairman and CEO of Metropolitan Life Insurance Co., who has known Zimpleman for more than 20 years through their public policy work. “Larry does the right thing. He is modest but a highly confident guy. A board can take him to the bank.”

“Larry Zimpleman, like Iowa, is about patience and perseverance,” says Governor Branstad. “Principal has been in international markets for many years now forging relationships, and they are paying off for the company. It’s the same with the wonderful and warm welcome Iowa laid out to Xi Jinping 27 years ago. It has translated into a strong economic partnership with China.”

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