2014 Deloitte CFO of the Year - Terry Lillis
CFO of the Year helped guide Principal out of recession
Friday, February 07, 2014 7:00 AM
As senior vice president and chief financial officer of Principal Financial Group Inc., Terry Lillis was instrumental in guiding the company through the financial crisis and positioning it for the phenomenal growth it’s now experiencing. Following the recession, Lillis led Principal’s exit from the health insurance business and in raising $1.75 billion in new capital, initiatives that have enabled the company to make seven key acquisitions since 2010. The Des Moines-based financial services company is stronger now than it was before the recession, and Lillis played a big role in making that happen, said Principal Chairman, President and CEO Larry Zimpleman. Lillis’ work doesn’t stop at the company’s doors. He’s deeply involved with his alma maters, Simpson College and the University of Iowa, and he also is using his expertise to serve the Catholic Diocese of Des Moines. As Zimpleman wrote in supporting Lillis’ nomination, “Terry is equally at home making the investment case with Wall Street analysts, simplifying complex financial information for our employees, volunteering in the community, serving his alma maters in leadership roles, coaching young athletes, networking with fellow veterans, offering support to his children or wrestling with his grandsons. He does all of this with a great sense of humor, humility and empathy.”
Hometown: Williamsburg, Iowa
Family: He and his wife, Joyce, have three children: Renee, who is married to Kerry Maguire; Jenni, who is married to Scott Baranczyk; and Brian Lillis. They have five grandsons – Walt, Hank, Jack and Louie Maguire; and Eli Baranczyk.
Education: Bachelor’s degree in mathematics, Simpson College, 1977; master’s degree in statistics and actuarial science, University of Iowa, 1982
What was it like starting as CFO just as the country was heading into the worst recession in 75 years?
I was pretty flattered to even be asked to be CFO of the organization. I took over in August 2008; at that time, there was a lot of uncertainty, but then it really gained a head of steam and took off. I asked Bob Baur, our chief economist, ‘Was it my fault?’ He assured me it wasn’t my fault, but the timing was impeccable. But looking back, I don’t know that I would have wanted to be in other place than CFO during that time. We weathered some pretty tough times.
What are some of the biggest changes you’ve observed in the past few years in the financial world?
As we came out of the financial crisis, there was a lot of concern about what caused it. There was a lot of effort to change rules, strengthen requirements, and to some extent, that was warranted. But we have to make sure we understand the implications of that. What you see now is that a lot of things got politicized, so that led to a climate of uncertainty and everybody pointing figures. You also saw regulators increasing reserve requirements, kind of like putting a belt and suspenders on coveralls. It’s going to have an impact on consumers in higher costs. I’m real proud of Principal, in that in the past few years we’ve put a lot of emphasis on advocacy – providing insight on the rules and regulations that are being imposed.
Principal is becoming an increasingly global company. What challenges does that present from a CFO’s perspective?
I like the word “challenges.” To put it in perspective, when I became CFO, we had to reduce expenses to align with capital; we had to go out and issue debt in 2009. And by the way, we turned down an offer at the time for (federal emergency) TARP money. So these are fun challenges now. We’re going out and executing on strategy that we’ve had in place for the past 10 or 20 years of global expansion in select markets. Doing eight acquisitions over the past few years has been a lot of fun – a lot more fun than the financial crisis. Probably my two biggest responsibilities are ensuring the financial integrity of the company, so that everyone can rely on the results of our financial statements. And two, to ensure that Principal is a financial institution 135 years from now, that we have the staff and talent to move this company forward into the future.
Of the countries in which Principal has made acquisitions, what culture have you found most interesting?
They’re all very interesting, but if I had to pick one, I’d have to put Chile right up there. It was a good acquisition simply to get Luis Valdez, who now runs our Principal International operation. That business has thrived. And with the acquisition of AFP Cuprum SA in 2013, which was the largest acquisition that Principal has ever made ($1.5 billion), we’re now expanding the opportunities there. What’s interesting is, (international growth) opens doors in other countries as well. It gives you a great opportunity to open discussions. And we bring that global asset management capability back to our clients in the U.S.
Your personal favorite destination when you and your wife travel?
We’ve got lots of favorite destinations - Europe, Asia, South America - sometimes for work, sometimes for pleasure. We just like to travel anywhere. Ireland is one of my favorites.
What drives your involvement in the Greater Des Moines community?
I had someone tell me a long time ago – when I was in high school or college – that we were standing on the shoulders of those who came before us, and I really believe that. So my wife and I, we contribute to educational programs from elementary to postsecondary. Community is important to us. If we can give back and let somebody stand on our shoulders, we’re willing to do that. It’s our turn.
What’s a day that you’ll never forget in your career?
It was in March 2009, when the market was down at a low point and our stock price was just plummeting. The morning of March 9, our stock price was at around $5. I walked into Larry Zimpleman’s office and said, “We can go buy a share of stock or a Happy Meal – they’re at about the same price.” There was nothing we could do but laugh. We knew we didn’t deserve to be at that share price, and we knew that we would get out of it because we were doing things right. I don’t think we’re fully valued at this time because of our strong growth engines.
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