FBL FINANCIAL GROUP INC - FORM 8-K - EX-99.2 - INVESTOR SUPPLEMENT

Attached files

file	filename
EX-99.2 - PDF INVESTOR SUPPLEMENT - FBL FINANCIAL GROUP INC	investorsupplement2011q1.pdf
EX-99.1 - NEWS RELEASE 3/31/2011 - FBL FINANCIAL GROUP INC	exh991newsreleaseq12011.htm
8-K - PRESS RELEASE 8K - FBL FINANCIAL GROUP INC	pressrelease8k2011q1.htm

Financial Supplement

2011 First Quarter Report



Corporate Headquarters	FBL Financial Group, Inc.
	5400 University Avenue
	West Des Moines, Iowa 50266-5997
	(515) 225-5400
Financial Inquiries	For more information contact:
	Jim Brannen
	Chief Financial Officer
	Jim.Brannen@FBLFinancial.com
	(515) 225-5631

	Don Seibel
	Vice President - Finance
	Don.Seibel@FBLFinancial.com
	(515) 226-6399

	Kathleen Till Stange
	Investor Relations Vice President
	Kathleen.TillStange@FBLFinancial.com
	(515) 226-6780
Internet Information	FBL Financial Group, Inc.
	www.fblfinancial.com
Stock Symbol	NYSE: FFG
Transfer Agent	The Bank of New York Mellon
	c/o BNY Mellon Shareowner Services
	Shareholder Relations Department
	P.O. Box 358015
	Jersey City, NJ 07310-1900
	www.bnymellon.com/shareowner



FBL Financial Group, Inc.
Financial Supplement (Unaudited)
March 31, 2011
Table of Contents/Notes

Consolidated Financial Statements:
Consolidated Balance Sheets		2
Consolidated Statements of Operations		4
Consolidated Statements of Operating Income, last five quarters		5
Financial Information by Segment:
Segment Information		6
Consolidating Statements of Pre-tax Operating Income (Loss)		7
Statements of Pretax Operating Income (Loss), last five quarters:
Traditional Annuity - Exclusive Distribution Segment		9
Traditional Annuity - Independent Distribution Segment		10
Traditional and Universal Life Insurance Segment		12
Variable Segment		14
Corporate and Other Segment		15
Deferred Policy Acquisition Costs/Deferred Sales Inducements by Segment		16
Collected Premiums, last five quarters		18
Parent Company Liquidity		19
Other Information		20

NOTE 1: In addition to net income, FBL Financial Group has consistently used operating income (loss), a non-GAAP financial measure common in the life insurance industry, as a primary economic measure to evaluate its financial performance. Operating income (loss) for the periods presented equals net income adjusted to eliminate the impact of realized and unrealized gains and losses on investments and changes in net unrealized gains and losses on derivatives.

We use operating income (loss), in addition to net income, to measure our performance since realized gains and losses on investments and the change in net unrealized gains and losses on derivatives can fluctuate greatly from quarter to quarter. These fluctuations make it difficult to analyze core operating trends. In addition, for derivatives not designated as hedges, there is a mismatch between the valuation of the asset and liability when deriving net income. Specifically, call options relating to our index business are one or two-year assets while the embedded derivative in the index contracts represents the rights of the contract holder to receive index credits over the entire period the index annuities are expected to be in force. For our other embedded derivatives and interest rate swaps, the instruments are marked to market, but the associated liabilities are not marked to market. A view of our operating performance without the impact of these mismatches and non-recurring items enhances the analysis of our results. We use operating income for goal setting, determining short-term incentive compensation and evaluating performance on a basis comparable to that used by many in the investment community.

NOTE 2: Certain financial information presented herein may not add due to rounding.

FBL Financial Group, Inc.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)



	March 31,		December 31,
	2011		2010
Assets
Investments:
Fixed maturity securities - available for sale, at fair value (amortized cost: 2011 - $11,229,423; 2010 - $10,974,330)	$	11,458,999	$	11,128,524
Equity securities - available for sale, at fair value (cost: 2011 - $77,936; 2010 - $77,689)	80,613		78,656
Mortgage loans	1,249,905		1,254,437
Derivative instruments	40,924		40,729
Real estate	13,500		13,554
Policy loans	169,498		170,341
Other long-term investments	125		132
Short-term investments	226,653		383,369
Total investments	13,240,217		13,069,742

Cash and cash equivalents	116,994		4,794
Securities and indebtedness of related parties	65,143		57,832
Accrued investment income	150,259		135,384
Amounts receivable from affiliates	3,526		2,025
Reinsurance recoverable	124,461		122,326
Deferred policy acquisition costs	777,688		812,025
Deferred sales inducements	246,748		259,148
Value of insurance in force acquired	24,887		27,706
Current income taxes recoverable	—		17,914
Other assets	75,355		72,154
Assets held in separate accounts	774,774		753,050





Total assets	$	15,600,052	$	15,334,100

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	March 31,		December 31,
	2011		2010
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive and index products	$	10,854,119	$	10,645,927
Traditional life insurance and accident and health products	1,370,771		1,362,410
Other policy claims and benefits	51,395		51,393
Supplementary contracts without life contingencies	499,827		506,167
Advance premiums and other deposits	195,449		188,577
Amounts payable to affiliates	2,706		573
Short-term debt payable to affiliates	100,000		100,000
Long-term debt payable to non-affiliates	271,191		271,168
Current income taxes	8,281		—
Deferred income taxes	135,646		131,174
Other liabilities	145,711		177,247
Liabilities related to separate accounts	774,774		753,050
Total liabilities	14,409,870		14,187,686

Stockholders' equity:
FBL Financial Group, Inc. stockholders' equity
Preferred stock, without par value, at liquidation value - authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares	3,000		3,000
Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 29,941,672 shares in 2011 and 29,749,068 shares in 2010	123,084		118,165
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 1,192,990 shares	7,522		7,522
Accumulated other comprehensive income	54,194		39,895
Retained earnings	1,002,292		977,740
Total FBL Financial Group, Inc. stockholders' equity	1,190,092		1,146,322
Noncontrolling interest	90		92
Total stockholders' equity	1,190,182		1,146,414
Total liabilities and stockholders' equity	$	15,600,052	$	15,334,100

FBL Financial Group, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)



	Three months ended March 31,
	2011			2010
Revenues:
Interest sensitive and index product charges	$	30,803		$	30,003
Traditional life insurance premiums	41,387			39,245
Net investment income	186,519			178,089
Derivative income	35,540			22,336
Net realized capital gains on sales of investments	4,384			4,729

Total other-than-temporary impairment losses	(18,062		)	(27,154		)
Non-credit portion in other comprehensive income	5,738			19,132
Net impairment loss recognized in earnings	(12,324		)	(8,022		)

Other income	4,999			3,019
Total revenues	291,308			269,399

Benefits and expenses:
Interest sensitive and index product benefits	136,286			122,184
Change in value of index product embedded derivatives	12,251			26,056
Traditional life insurance benefits	36,598			37,309
Policyholder dividends	4,300			4,673
Underwriting, acquisition and insurance expenses	53,984			43,938
Interest expense	6,109			6,118
Other expenses	4,900			4,254
Total benefits and expenses	254,428			244,532
	36,880			24,867
Income taxes	(11,788		)	(7,955		)
Equity income, net of related income taxes	1,399			1,095
Net income	26,491			18,007
Net loss attributable to noncontrolling interest	2			14
Net income attributable to FBL Financial Group, Inc.	$	26,493		$	18,021

Earnings per common share	$	0.86		$	0.59
Earnings per common share - assuming dilution	$	0.85		$	0.59

Cash dividends per common share	$	0.0625		$	0.0625



FBL Financial Group, Inc.
Consolidated Statements of Operating Income
(Dollars in thousands, except per share data)

	Q1 2010			Q2 2010			Q3 2010			Q4 2010			Q1 2011
Operating revenues:
Interest sensitive and index product charges	$	30,001		$	30,427		$	28,388		$	30,878		$	30,786
Traditional life insurance premiums	39,245			42,791			38,721			41,299			41,387
Net investment income	178,089			179,908			181,974			181,399			186,519
Derivative income	8,144			12,474			8,372			10,634			15,536
Other income	3,019			3,931			3,562			3,776			4,999
Total operating revenues	258,498			269,531			261,017			267,986			279,227

Benefits and expenses:
Interest sensitive and index product benefits	127,182			132,685			125,317			129,669			134,493
Traditional life insurance benefits	37,307			31,211			35,242			33,409			36,598
Policyholder dividends	4,673			4,387			4,193			4,318			4,300
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	3,767			3,283			3,397			3,498			3,923
Amortization of deferred policy acquisition costs	27,456			32,718			20,036			21,871			29,765
Amortization of value of insurance in force acquired	552			593			406			32			362
Other underwriting expenses	18,819			18,619			19,468			18,894			18,613
Total underwriting, acquisition and insurance expenses	50,594			55,213			43,307			44,295			52,663
Interest expense	6,118			6,117			6,099			6,120			6,109
Other expenses	4,254			5,055			4,310			5,335			4,900
Total benefits and expenses	230,128			234,668			218,468			223,146			239,063
	28,370			34,863			42,549			44,840			40,164
Income taxes	(9,181		)	(11,658		)	(14,343		)	(15,722		)	(12,937		)
Net loss (income) attributable to noncontrolling interest	14			39			26			(1		)	2
Equity income, net of related income taxes	1,095			1,207			1,955			1,184			1,399
Operating income	20,298			24,451			30,187			30,301			28,628

Realized gains/losses on investments, net of offsets	(1,319		)	(2,052		)	1,567			14,259			(2,686		)
Change in net unrealized gains/losses on derivatives, net of offsets	(958		)	(76		)	(3,077		)	7,072			551
Net income attributable to FBL Financial Group, Inc.	$	18,021		$	22,323		$	28,677		$	51,632		$	26,493

Operating income per common share - assuming dilution	$	0.66		$	0.80		$	0.98		$	0.98		$	0.92
Earnings per common share - assuming dilution	$	0.59		$	0.73		$	0.93		$	1.67		$	0.85

Weighted average common shares outstanding (in thousands):
Basic	30,279			30,387			30,428			30,495			30,612
Effect of dilutive securities	253			300			269			460			510
Diluted	30,532			30,687			30,697			30,955			31,122

Operating return on equity, excluding AOCI/L - last twelve months	10.7		%	10.3		%	10.8		%	10.2		%	10.7		%
Operating return on equity, including AOCI/L - last twelve months	14.5		%	11.6		%	11.0		%	10.1		%	10.2		%

FBL Financial Group, Inc.

Segment Information

We analyze operations by reviewing financial information regarding products that are aggregated into four product segments. The product segments are (1) Traditional Annuity - Exclusive Distribution ("Exclusive Annuity"), (2) Traditional Annuity - Independent Distribution ("Independent Annuity"), (3) Traditional and Universal Life Insurance and (4) Variable. We also have various support operations and corporate capital that are aggregated into the Corporate and Other segment.

The Exclusive Annuity segment primarily consists of fixed rate annuities and supplementary contracts (some of which involve life contingencies) sold through our exclusive agency distribution. Fixed rate annuities provide for tax-deferred savings and supplementary contracts provide for the systematic repayment of funds that accumulate interest. Fixed rate annuities consist primarily of flexible premium deferred annuities, but also include single premium deferred and immediate contracts. With fixed rate annuities, we bear the underlying investment risk and credit interest to the contracts at rates we determine, subject to interest rate guarantees.

The Independent Annuity segment consists of fixed rate and index annuities and supplementary contracts (some of which involve life contingencies) sold through our independent distribution or assumed through coinsurance agreements. With index annuity products, we bear the underlying investment risk and credit interest in an amount equal to a percentage of the gain in a specified market index, subject to minimum guarantees.

The Traditional and Universal Life Insurance segment consists of whole life, term life and universal life policies. These policies provide benefits upon the death of the insured and may also allow the customer to build cash value on a tax-deferred basis.

The Variable segment consists of variable universal life insurance and variable annuity contracts. These products are similar to universal life insurance and traditional annuity contracts, except the contract holder has the option to direct the cash value of the contract to a wide range of investment sub-accounts, thereby passing the investment risk to the contract holder. During 2010, we discontinued underwriting new sales of variable products and terminated new sales with our variable alliance partners during 2010 and 2011. We continue to receive premiums from sales that occurred prior to this change. During 2010, our Farm Bureau Life Distribution channel began selling variable products underwritten by a large well-known insurance company with variable product expertise. We earn fees from the sale of brokered products, which are reported as other income. A portion of these fees are passed on to the agents as commissions for the underlying sales. The decision to discontinue underwriting variable products was made because we lack the scale necessary to generate acceptable returns and be competitive in this product line over time. The existing in force business remains on our books and we will continue to administer this business.

The Corporate and Other segment consists of the following corporate items and products/services that do not meet the quantitative threshold for separate segment reporting:



•	investments and related investment income not specifically allocated to our product segments;
•	interest expense;
•	accident and health insurance products, primarily a closed block of group policies;
•	investment management and advisory services;
•	marketing and distribution services for the sale of mutual funds and insurance products not issued by us; and
•	leasing services, primarily with affiliates.

We analyze our segment results based on pre-tax operating income (loss). Accordingly, income taxes are not allocated to the segments. In addition, operating results are reported net of transactions between the segments.

FBL Financial Group, Inc.

Consolidating Statements of Pre-tax Operating Income (Loss)



Quarter Ended March 31, 2011	Traditional Annuity - Exclusive			Traditional Annuity - Independent		Traditional & Universal Life Insurance		Variable		Corporate & Other			Consolidated
	(Dollars in thousands)
Operating revenues:
Interest sensitive and index product charges	$	161		$	6,302	$	12,317	$	12,006	$	—		$	30,786
Traditional life insurance premiums	—			—		41,387		—		—			41,387
Net investment income	44,421			100,335		34,089		4,555		3,119			186,519
Derivative income (loss)	(545		)	16,081		—		—		—			15,536
Other income	—			—		97		1,403		3,499			4,999
Total operating revenues	44,037			122,718		87,890		17,964		6,618			279,227

Benefits and expenses:
Interest sensitive and index product benefits	24,674			87,570		15,381		6,868		—			134,493
Traditional life insurance benefits	—			—		36,598		—		—			36,598
Policyholder dividends	—			—		4,300		—		—			4,300
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	—			—		2,797		1,126		—			3,923
Amortization of deferred policy acquisition costs	2,501			17,910		7,934		1,420		—			29,765
Amortization of value of insurance in force acquired	(150		)	—		510		—		—			362
Other underwriting expenses	2,149			4,047		8,878		2,854		687			18,613
Total underwriting, acquisition and insurance expenses	4,500			21,957		20,119		5,400		687			52,663
Interest expense	—			—		—		—		6,109			6,109
Other expenses	—			—		—		508		4,392			4,900
Total benefits and expenses	29,174			109,527		76,398		12,776		11,188			239,063
	14,863			13,191		11,492		5,188		(4,570		)	40,164
Net loss attributable to noncontrolling interest	—			—		—		—		2			2
Equity income, before tax	—			—		—		—		2,153			2,153
Pre-tax operating income (loss)	$	14,863		$	13,191	$	11,492	$	5,188	$	(2,415	)	$	42,319

FBL Financial Group, Inc.

Consolidating Statements of Pre-tax Operating Income (Loss) (Continued)



Quarter Ended March 31, 2010	Traditional Annuity - Exclusive			Traditional Annuity - Independent		Traditional & Universal Life Insurance		Variable		Corporate & Other			Consolidated
	(Dollars in thousands)
Operating revenues:
Interest sensitive and index product charges	$	125		$	6,267	$	11,413	$	12,196	$	—		$	30,001
Traditional life insurance premiums	—			—		39,245		—		—			39,245
Net investment income	41,151			96,831		32,863		4,026		3,218			178,089
Derivative income (loss)	(502		)	9,165		—		—		(519		)	8,144
Other income	—			—		26		693		2,300			3,019
Total operating revenues	40,774			112,263		83,547		16,915		4,999			258,498

Benefits and expenses:
Interest sensitive and index product benefits	24,229			84,086		13,381		5,486		—			127,182
Traditional life insurance benefits	—			—		37,307		—		—			37,307
Policyholder dividends	—			—		4,673		—		—			4,673
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	—			—		2,970		797		—			3,767
Amortization of deferred policy acquisition costs	2,513			16,652		5,949		2,342		—			27,456
Amortization of value of insurance in force acquired	21			—		531		—		—			552
Other underwriting expenses	2,121			3,882		7,625		4,546		645			18,819
Total underwriting, acquisition and insurance expenses	4,655			20,534		17,075		7,685		645			50,594
Interest expense	—			—		—		—		6,118			6,118
Other expenses	—			—		—		204		4,050			4,254
Total benefits and expenses	28,884			104,620		72,436		13,375		10,813			230,128
	11,890			7,643		11,111		3,540		(5,814		)	28,370
Net loss attributable to noncontrolling interest	—			—		—		—		14			14
Equity income, before tax	—			—		—		—		1,684			1,684
Pre-tax operating income (loss)	$	11,890		$	7,643	$	11,111	$	3,540	$	(4,116	)	$	30,068



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Traditional Annuity - Exclusive Distribution Segment

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive and index product charges	$	125			$	151		$	158		$	123		$	161
Net investment income	41,151				42,808			43,341			43,591			44,421
Derivative income (loss):
Proceeds from option settlements	249				168			52			86			177
Cost of money for call options	(71		)		(73		)	(69		)	(65		)	(64		)
Cost of interest rate swaps	(680		)		(653		)	(651		)	(659		)	(658		)
Total derivative loss	(502		)		(558		)	(668		)	(638		)	(545		)
Other income	—				6			1			3			—
Total operating revenues	40,774				42,407			42,832			43,079			44,037

Benefits and expenses:
Interest sensitive and index product benefits	24,229				25,278			24,925			24,409			24,674
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs	2,513				2,959			172			2,969			2,501
Amortization of value of insurance in force acquired	21				80			(92		)	(1,029		)	(150		)
Other underwriting expenses	2,121				2,272			2,215			2,132			2,149
Total underwriting, acquisition and insurance expenses	4,655				5,311			2,295			4,072			4,500
Total benefits and expenses	28,884				30,589			27,220			28,481			29,174
Pre-tax operating income	$	11,890			$	11,818		$	15,612		$	14,598		$	14,863

Selected balance sheet data, securities at cost:
Assets:
Investments	$	2,833,004			$	2,937,670		$	2,980,444		$	3,025,565		$	3,136,065
Deferred policy acquisition costs	92,333				93,888			98,586			98,896			102,505
Value of insurance in force acquired	11,201				11,126			11,237			12,143			12,269

Liabilities and equity:
Liabilities:
Interest sensitive and index product reserves	$	2,394,968			$	2,482,923		$	2,518,748		$	2,581,300		$	2,673,069
Other insurance reserves	368,713				368,482			368,622			369,685			371,179
Allocated equity, excluding AOCI/L	257,627				265,805			269,158			275,088			261,156

Other data:
Number of direct contracts	53,169				53,350			53,313			53,428			53,608

Portfolio yield net of assumed defaults	5.77		%		5.72		%	5.73		%	5.79		%	5.70		%
Credited rate	3.74				3.71			3.66			3.49			3.43
Spread on direct fixed annuities at end of quarter (1)	2.03		%		2.01		%	2.07		%	2.30		%	2.27		%

Interest sensitive and index product reserve activity:
Individual deferred annuity reserve:
Balance, beginning of period	$	1,800,646			$	1,848,000		$	1,896,788		$	1,931,756		$	1,974,661
Deposits	74,380				78,113			73,393			77,587			116,089
Withdrawals, surrenders and death benefits	(27,065		)		(30,803		)	(40,404		)	(33,865		)	(41,443		)
Net flows	47,315				47,310			32,989			43,722			74,646

Policyholder interest/index credits	16,701				16,982			17,025			16,682			16,895
Annuitizations and other	(16,662		)		(15,504		)	(15,046		)	(17,499		)	(22,245		)
Balance, end of period	1,848,000				1,896,788			1,931,756			1,974,661			2,043,957
Other interest sensitive reserves	546,968				586,135			586,992			606,639			629,112
Total interest sensitive and index product reserves	$	2,394,968			$	2,482,923		$	2,518,748		$	2,581,300		$	2,673,069

(1) Point-in-time spread at the balance sheet date used by management for decision making, which differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Traditional Annuity - Independent Distribution Segment

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive and index product charges	$	6,267			$	6,326		$	5,510		$	7,172		$	6,302
Net investment income	96,831				97,284			99,051			97,359			100,335
Derivative income:
Proceeds from option settlements	31,112				34,751			30,660			31,875			36,555
Cost of money for call options	(21,947		)		(21,200		)	(21,122		)	(20,570		)	(20,474		)
Total derivative income	9,165				13,551			9,538			11,305			16,081
Total operating revenues	112,263				117,161			114,099			115,836			122,718

Benefits and expenses:
Interest sensitive and index product benefits:
Fixed rate annuities:
Interest credited and other	34,734				34,886			35,411			35,422			34,660
Amortization of deferred sales inducements	1,191				702			773			1,344			1,014
Total fixed annuity product benefits	35,925				35,588			36,184			36,766			35,674
Index annuities:
Interest credited	7,834				8,032			9,273			9,108			9,058
Amortization of deferred sales inducements	8,032				7,851			7,635			5,255			9,479
Index credits	32,295				35,766			29,896			32,426			33,359
Total index product benefits	48,161				51,649			46,804			46,789			51,896
Total interest sensitive and index product benefits	84,086				87,237			82,988			83,555			87,570
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs	16,652				13,917			14,590			13,830			17,910
Other underwriting expenses	3,882				4,093			4,875			4,825			4,047
Total underwriting, acquisition and insurance expenses	20,534				18,010			19,465			18,655			21,957
Total benefits and expenses	104,620				105,247			102,453			102,210			109,527
Pre-tax operating income	$	7,643			$	11,914		$	11,646		$	13,626		$	13,191

Selected balance sheet data, securities at cost:
Assets:
Investments	$	6,807,787			$	6,782,211		$	6,892,612		$	6,908,184		$	6,985,882
Deferred policy acquisition costs	415,341				414,492			426,675			403,036			403,016
Deferred sales inducements	252,865				253,957			263,351			247,428			247,943

Liabilities and equity:
Liabilities:
Interest sensitive and index product reserves - direct	$	5,729,828			$	5,699,426		$	5,859,771		$	5,924,051		$	6,057,649
Interest sensitive and index product reserves - assumed	1,376,369				1,333,811			1,307,270			1,249,560			1,224,090
Other insurance reserves	153,931				158,848			158,381			156,386			151,956
Allocated equity, excluding AOCI/L	364,301				360,896			367,583			367,816			388,536



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Traditional Annuity - Independent Distribution Segment (Continued)

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
				(Dollars in thousands)
Other data:
Number of direct contracts	87,877				87,699			87,127			86,855			87,785

Fixed rate annuitites:
Portfolio yield net of assumed defaults	5.61		%		5.60		%	5.57		%	5.55		%	5.47		%
Credited rate	4.94				4.93			4.92			4.92			4.91
Spread on direct fixed rate annuities at end of quarter (1)	0.67		%		0.67		%	0.65		%	0.63		%	0.56		%

Index annutities:
Portfolio yield net of assumed defaults	5.66		%		5.66		%	5.65		%	5.64		%	5.61		%
Credited rate/option cost	3.33				3.25			3.19			3.08			3.03
Spread on direct index annuities at end of quarter (1)	2.33		%		2.41		%	2.46		%	2.56		%	2.58		%

Interest sensitive and index product reserve activity:
Individual deferred annuity reserve:
Balance, beginning of period	$	7,100,455			$	7,077,823		$	7,004,760		$	7,037,713		$	7,019,146
Deposits	39,493				77,138			100,770			144,152			179,410
Withdrawals, surrenders and death benefits	(163,575		)		(173,790		)	(204,029		)	(242,832		)	(171,153		)
Net flows	(124,082		)		(96,652		)	(103,259		)	(98,680		)	8,257

Policyholder interest/index credits	75,066				81,728			79,472			84,732			87,176
Derivative value change and other	26,384				(58,139		)	56,740			(4,619		)	12,399
Balance, end of period	7,077,823				7,004,760			7,037,713			7,019,146			7,126,978
Other interest sensitive reserves	28,374				28,477			129,328			154,465			154,761
Total interest sensitive and index product reserves	$	7,106,197			$	7,033,237		$	7,167,041		$	7,173,611		$	7,281,739

(1) Point-in-time spread at the balance sheet date used by management for decision making, which differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Traditional and Universal Life Insurance Segment

	Q1 2010			Q2 2010		Q3 2010		Q4 2010		Q1 2011
Pre-tax Operating Income			(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	11,413		$	11,420	$	11,171	$	11,922	$	12,317
Traditional life insurance premiums	39,245			42,791		38,721		41,299		41,387
Net investment income	32,863			33,354		33,478		33,720		34,089
Other income	26			210		35		45		97
Total operating revenues	83,547			87,775		83,405		86,986		87,890

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	7,300			7,353		7,301		7,519		7,895
Death benefits	6,081			6,760		6,151		7,351		7,486
Total interest sensitive product benefits	13,381			14,113		13,452		14,870		15,381
Traditional life insurance benefits:
Death benefits	17,756			12,496		14,929		13,599		17,713
Surrender and other benefits	9,810			9,690		9,522		8,144		10,216
Increase in traditional life future policy benefits	9,741			9,025		10,791		11,666		8,669
Total traditional life insurance benefits	37,307			31,211		35,242		33,409		36,598
Policyholder dividends	4,673			4,387		4,193		4,318		4,300
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	2,970			2,617		2,626		2,850		2,797
Amortization of deferred policy acquisition costs	5,949			6,697		6,306		4,882		7,934
Amortization of value of insurance in force acquired	531			513		498		1,059		510
Other underwriting expenses	7,625			8,699		8,722		8,490		8,878
Total underwriting, acquisition and insurance expenses	17,075			18,526		18,152		17,281		20,119
Total benefits and expenses	72,436			68,237		71,039		69,878		76,398
Pre-tax operating income	$	11,111		$	19,538	$	12,366	$	17,108	$	11,492

Selected balance sheet data, securities at cost:
Assets:
Investments	$	2,089,704		$	2,104,604	$	2,140,043	$	2,140,593	$	2,179,376
Deferred policy acquisition costs	240,640			242,717		243,756		250,688		252,763
Deferred sales inducements	6,979			7,061		7,091		7,885		8,375
Value of insurance in force acquired	23,346			22,833		22,335		21,262		20,751

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	628,935		$	630,016	$	631,536	$	636,199	$	641,357
Other insurance reserves	1,447,693			1,455,995		1,468,895		1,489,858		1,502,695
Allocated equity, excluding AOCI/L	309,955			313,155		315,358		318,845		324,308



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Traditional and Universal Life Insurance Segment (Continued)

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
				(Dollars in thousands, except face amounts in millions)
Other data:
Number of direct policies - traditional life	344,253				346,303			346,548			349,009			348,942
Number of direct policies - universal life	56,037				56,158			56,129			56,935			57,384
Direct face amounts - traditional life	$	34,284			$	35,040		$	35,469		$	36,201		$	36,475
Direct face amounts - universal life	$	5,028			$	5,068		$	5,080		$	5,212		$	5,319

Portfolio yield net of assumed defaults	6.22		%		6.13		%	6.15		%	6.19		%	6.13		%
Credited rate	4.29				4.29			4.28			4.28			4.29
Spread on direct universal life at end of quarter (1)	1.93		%		1.84		%	1.87		%	1.91		%	1.84		%

Interest sensitive reserve activity:
Balance, beginning of period	$	628,363			$	628,935		$	630,016		$	631,536		$	636,199
Deposits	13,171				13,597			13,838			18,258			18,823
Withdrawals and surrenders	(6,658		)		(6,738		)	(5,498		)	(6,186		)	(6,115		)
Net flows	6,513				6,859			8,340			12,072			12,708

Policyholder interest credited	6,538				6,570			6,554			6,522			6,526
Policy charges	(11,477		)		(11,634		)	(11,638		)	(12,290		)	(12,634		)
Benefits and other	(1,002		)		(714		)	(1,736		)	(1,641		)	(1,442		)
Balance, end of period	$	628,935			$	630,016		$	631,536		$	636,199		$	641,357

(1) Point-in-time spread at the balance sheet date used by management for decision making, which differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (Loss)
Variable Segment

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
Pre-tax Operating Income (Loss)				(Dollars in thousands, except face amounts in millions)

Operating revenues:
Interest sensitive product charges	$	12,196			$	12,530		$	11,549		$	11,661		$	12,006
Net investment income	4,026				4,100			4,167			4,273			4,555
Other income	693				593			881			1,074			1,403
Total operating revenues	16,915				17,223			16,597			17,008			17,964

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	2,229				2,270			2,319			2,340			2,368
Death benefits	3,257				3,787			1,633			4,495			4,500
Total interest sensitive product benefits	5,486				6,057			3,952			6,835			6,868
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	797				666			771			648			1,126
Amortization of deferred policy acquisition costs	2,342				9,145			(1,032		)	190			1,420
Other underwriting expenses	4,546				3,027			3,073			2,879			2,854
Total underwriting, acquisition and insurance expenses	7,685				12,838			2,812			3,717			5,400
Other expenses	204				481			998			1,097			508
Total benefits and expenses	13,375				19,376			7,762			11,649			12,776
Pre-tax operating income (loss)	$	3,540			$	(2,153	)	$	8,835		$	5,359		$	5,188

Selected balance sheet data, securities at cost:
Assets:
Investments	$	256,788			$	261,490		$	269,887		$	272,908		$	283,426
Deferred policy acquisition costs	154,886				147,489			149,024			150,109			149,999
Deferred sales inducements	2,570				2,557			2,557			2,538			2,552
Separate account assets	726,825				658,820			705,156			753,050			774,774

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	237,758			$	244,359		$	250,644		$	254,817		$	257,953
Other insurance reserves	30,872				29,497			31,251			32,861			33,280
Separate account liabilities	726,825				658,820			705,156			753,050			774,774
Allocated equity, excluding AOCI/L	104,160				105,776			108,515			110,566			109,779

Rollforward of separate account balances:
Beginning separate account balance	$	702,073			$	726,825		$	658,820		$	705,156		$	753,050
Net premiums	14,606				14,380			5,166			6,599			9,630
Net investment income (loss)	35,000				(57,344		)	64,559			62,085			36,119
Charges, benefits and surrenders	(24,854		)		(25,041		)	(23,389		)	(20,790		)	(24,025		)
Ending separate account balance	$	726,825			$	658,820		$	705,156		$	753,050		$	774,774

Separate account balance:
Balance per financial statements	$	726,825			$	658,820		$	705,156		$	753,050		$	774,774
Less: alliance partners' share	(17,337		)		(15,632		)	(16,830		)	(18,239		)	(18,755		)
Add: alliance partner separate account assets on business assumed	72,662				67,251			74,134			81,247			84,614
	$	782,150			$	710,439		$	762,460		$	816,058		$	840,633
Other data:
Number of direct contracts - variable annuity	19,614				19,385			18,963			18,603			18,199
Number of direct policies - variable universal life	57,750				57,076			56,253			55,484			54,667
Direct face amounts - variable universal life	$	7,270			$	7,181		$	7,078		$	6,982		$	6,876



FBL Financial Group, Inc.
Statements of Pre-tax Operating Loss
Corporate and Other Segment

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
Pre-tax Operating Loss				(Dollars in thousands)

Operating revenues:
Net investment income	$	3,218			$	2,362		$	1,937		$	2,456		$	3,119
Derivative loss	(519		)		(519		)	(498		)	(33		)	—
Other income	2,300				3,122			2,645			2,654			3,499
Total operating revenues	4,999				4,965			4,084			5,077			6,618

Benefits and expenses:
Other underwriting and insurance expenses	645				528			583			570			687
Interest expense	6,118				6,117			6,099			6,120			6,109
Other expenses	4,050				4,574			3,312			4,238			4,392
Total benefits and expenses	10,813				11,219			9,994			10,928			11,188
	(5,814		)		(6,254		)	(5,910		)	(5,851		)	(4,570		)
Net loss (income) attributable to noncontrolling interest	14				39			26			(1		)	2
Equity income, before tax	1,684				1,857			3,008			1,821			2,153
Pre-tax operating loss	$	(4,116	)		$	(4,358	)	$	(2,876	)	$	(4,031	)	$	(2,415	)

Selected balance sheet data, securities at cost:
Assets:
Investments	$	358,061			$	366,331		$	382,744		$	567,331		$	423,215
Securities and indebtedness of related parties	50,062				50,859			55,196			57,846			65,151

Liabilities and equity:
Liabilities:
Insurance reserves	$	62,780			$	62,058		$	61,218		$	61,040		$	60,209
Debt	371,105				371,126			371,147			371,168			371,191
Equity, excluding AOCI/L	(28,146		)		(18,314		)	(3,913		)	31,112			49,119



FBL Financial Group, Inc.
Deferred Policy Acquisition Costs/Deferred Sales Inducements by Segment

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
				(Dollars in thousands)
Traditional Annuity - Exclusive Distribution
Balance - beginning of period	$	90,762			$	92,333		$	93,888		$	98,586		$	98,896
Capitalization:
Commissions	3,836				3,782			3,759			4,408			5,628
Expenses	749				785			952			777			1,002
Total capitalization	4,585				4,567			4,711			5,185			6,630
Amortization - operating basis, before impact of unlocking	(2,513		)		(2,959		)	(935		)	(2,969		)	(2,501		)
Amortization - unlocking, operating basis	—				—			763			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(501		)		(53		)	159			(1,906		)	(520		)
Balance - end of period	$	92,333			$	93,888		$	98,586		$	98,896		$	102,505

Traditional Annuity - Independent Distribution
Balance - beginning of period	$	676,111			$	668,206		$	668,449		$	690,026		$	650,464
Impact of reclassification of realized losses to AOCI/L	—				—			7,719			—			—
Capitalization:
Commissions	2,128				6,364			10,512			14,546			17,337
Expenses	1,112				874			1,032			1,245			1,276
Deferral of sales inducements	2,486				5,414			7,369			10,442			12,745
Total capitalization	5,726				12,652			18,913			26,233			31,358
Amortization - operating basis, before impact of unlocking	(25,875		)		(23,894		)	(26,049		)	(26,360		)	(28,403		)
Amortization - unlocking, operating basis	—				1,424			3,051			5,931			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	12,244				10,061			17,943			(45,366		)	(2,460		)
Balance - end of period	$	668,206			$	668,449		$	690,026		$	650,464		$	650,959

Traditional & Universal Life Insurance
Balance - beginning of period	$	244,291			$	247,619		$	249,778		$	250,847		$	258,573
Capitalization:
Commissions	4,582				4,431			3,659			7,713			6,282
Expenses	4,437				4,355			3,604			4,608			4,039
Deferral of sales inducements	445				123			91			917			682
Total capitalization	9,464				8,909			7,354			13,238			11,003
Amortization - operating basis, before impact of unlocking	(6,037		)		(6,738		)	(5,780		)	(4,987		)	(8,071		)
Amortization - unlocking, operating basis	—				—			(586		)	—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(99		)		(12		)	81			(525		)	(367		)
Balance - end of period	$	247,619			$	249,778		$	250,847		$	258,573		$	261,138



FBL Financial Group, Inc.
Deferred Policy Acquisition Costs/Deferred Sales Inducements by Segment (Continued)

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
				(Dollars in thousands)
Variable
Balance - beginning of period	$	157,821			$	157,456		$	150,046		$	151,581		$	152,647
Capitalization:
Commissions	1,567				1,587			766			935			961
Expenses	408				381			200			104			91
Deferral of sales inducements	47				16			12			14			36
Total capitalization	2,022				1,984			978			1,053			1,088
Amortization - operating basis, before impact of unlocking	(2,419		)		(9,325		)	(342		)	(220		)	(1,441		)
Amortization - unlocking, operating basis	—				151			1,362			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	32				(220		)	(463		)	233			257
Balance - end of period	$	157,456			$	150,046		$	151,581		$	152,647		$	152,551

Total
Balance - beginning of period	$	1,168,985			$	1,165,614		$	1,162,161		$	1,191,040		$	1,160,580
Impact of reclassification of realized losses to AOCI/L	—				—			7,719			—			—
Capitalization:
Commissions	12,113				16,164			18,696			27,602			30,208
Expenses	6,706				6,395			5,788			6,734			6,408
Deferral of sales inducements	2,978				5,553			7,472			11,373			13,463
Total capitalization	21,797				28,112			31,956			45,709			50,079
Amortization - operating basis, before impact of unlocking	(36,844		)		(42,916		)	(33,106		)	(34,536		)	(40,416		)
Amortization - unlocking, operating basis	—				1,575			4,590			5,931			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	11,676				9,776			17,720			(47,564		)	(3,090		)
Balance - end of period	1,165,614				1,162,161			1,191,040			1,160,580			1,167,153
Impact of realized/unrealized gains/losses in AOCI/L	165,523				(64,632		)	(284,139		)	(89,407		)	(142,717		)
Deferred policy acquisition costs/deferred sales inducements	$	1,331,137			$	1,097,529		$	906,901		$	1,071,173		$	1,024,436



FBL Financial Group, Inc.
Collected Premiums

	Q1 2010				Q2 2010			Q3 2010			Q4 2010			Q1 2011
				(Dollars in thousands)
Traditional Annuity - Exclusive Distribution
Individual:
First year	$	38,625			$	47,037		$	41,926		$	43,021		$	73,715
Renewal	37,076				32,391			31,812			34,929			42,915
Total individual	75,701				79,428			73,738			77,950			116,630
Group	2,983				2,563			2,423			1,850			2,844
Total Traditional Annuity - Exclusive Distribution	78,684				81,991			76,161			79,800			119,474

Traditional Annuity - Independent Distribution
Direct:
Fixed rate annuities	18,648				24,033			16,150			18,022			25,143
Index annuities	28,688				63,411			90,733			129,609			157,306
Total direct	47,336				87,444			106,883			147,631			182,449
Reinsurance	320				361			373			397			328
Total Traditional Annuity - Independent Distribution, net of reinsurance	47,656				87,805			107,256			148,028			182,777

Traditional and Universal Life Insurance
Direct:
Universal life:
Exclusive distribution:
First year	2,170				2,071			2,117			2,391			2,711
Renewal	10,795				11,258			10,282			11,216			11,747
Total exclusive distribution	12,965				13,329			12,399			13,607			14,458
Independent distribution	—				186			1,434			3,882			3,751
Total universal life	12,965				13,515			13,833			17,489			18,209
Participating whole life:
First year	2,691				3,477			2,396			3,275			2,839
Renewal	23,747				25,472			22,754			23,618			24,105
Total particpating whole life	26,438				28,949			25,150			26,893			26,944
Term life and other:
First year	3,385				3,394			3,084			2,971			2,688
Renewal	14,662				14,959			15,200			16,362			16,559
Total term life and other	18,047				18,353			18,284			19,333			19,247
Total direct	57,450				60,817			57,267			63,715			64,400
Reinsurance	(5,399		)		(5,314		)	(4,578		)	(5,016		)	(5,311		)
Total Traditional and Universal Life Insurance, net of reinsurance	52,051				55,503			52,689			58,699			59,089

Variable
Variable annuities (1)	18,288				18,849			10,514			10,241			12,617
Variable universal life (1)	12,359				12,229			11,303			11,110			11,270
Total	30,647				31,078			21,817			21,351			23,887
Reinsurance	(197		)		(191		)	(241		)	(218		)	(65		)
Total Variable, net of reinsurance	30,450				30,887			21,576			21,133			23,822

Corporate and Other
Accident and health premiums collected, net of reinsurance	70				29			36			261			69
Total collected premiums, net of reinsurance	$	208,911			$	256,215		$	257,718		$	307,921		$	385,231

(1) Amounts are net of portion ceded to and include amounts assumed from alliance partners.



FBL Financial Group, Inc.
Parent Company Liquidity

	January - March 2011			April - December 2011
	Actual			Projected (3)			Total
	(Dollars in thousands)
Total cash and invested assets, beginning of period	$	28,455		$	37,219		$	28,455
Sources:
Dividends from insurance subsidiaries	5,000			15,000			20,000
Dividends from non-insurance subsidiaries	1,200			2,200			3,400
Investment income	97			740			837
Management fees from subsidiaries and affiliates	1,937			5,369			7,306
Total sources	8,234			23,309			31,543

Uses:
Interest expense	(6,463		)	(15,931		)	(22,394		)
Stockholders' dividends (1)	(1,941		)	(5,851		)	(7,792		)
General expenses	(2,272		)	(5,622		)	(7,894		)
Total uses	(10,676		)	(27,404		)	(38,080		)

Other, net (2)	11,206			5,040			16,246
Total cash and invested assets, end of period	$	37,219		$	38,164		$	38,164



(1)	The projected dividends are based on quarterly rates of $0.0075 per Series B redeemable preferred share and $0.0625 per common share. The common stock dividend rate for 2011 is pending quarterly board of directors approval.

(2)	Other fluctuates from period to period primarily due to timing of settlements of amounts due to/from affiliates and external parties and the issuance of shares of company stock including option exercises.

(3)	Based on best estimates at March 31, 2011; actual results may differ materially.



FBL Financial Group, Inc.
Other Information

	March 31,				June 30,			September 30,			December 31,			March 31,
	2010				2010			2010			2010			2011
				(Dollars in thousands, except per share data)

Capitalization:
Senior notes with affiliates, due 2015 (1)	$	100,000			$	100,000		$	100,000		$	100,000		$	100,000
Senior notes, due 2014	75,240				75,227			75,213			75,199			75,185
Senior notes, due 2017	98,865				98,899			98,934			98,969			99,006
Trust preferred securities, due 2047	97,000				97,000			97,000			97,000			97,000
Total debt	371,105				371,126			371,147			371,168			371,191

Preferred stock	3,000				3,000			3,000			3,000			3,000
Common stockholders' equity, excluding AOCI/L	1,004,898				1,027,318			1,050,974			1,103,427			1,132,898
Total capitalization, excluding AOCI/L	1,379,003				1,401,444			1,425,121			1,477,595			1,507,089

Accumulated other comprehensive income (loss)	(35,512		)		44,144			116,453			39,895			54,194
Total capitalization, including AOCI/L	$	1,343,491			$	1,445,588		$	1,541,574		$	1,517,490		$	1,561,283

Common shares outstanding	30,768,203				30,822,113			30,865,606			30,942,058			31,134,662

Book Value per Share:
Excluding AOCI/L	$	32.66			$	33.33		$	34.05		$	35.66		$	36.39
Including AOCI/L	31.51				34.76			37.82			36.95			38.13

Debt-to-Capital Ratio:
Excluding AOCI/L	26.9		%		26.5		%	26.0		%	25.1		%	24.6		%
Including AOCI/L	27.6				25.7			24.1			24.5			23.8

Debt-to-Capital Ratio with 100% Credit for Trust Preferred Securities:
Excluding AOCI/L	19.9		%		19.6		%	19.2		%	18.6		%	18.2		%
Including AOCI/L	20.4				19.0			17.8			18.1			17.6

Class A Common Ownership:
Iowa Farm Bureau Federation	52.0		%		52.0		%	51.9		%	51.7		%	51.4		%
Other Farm Bureau entities	8.4				7.5			7.4			7.4			7.3
Public	39.6				40.5			40.7			40.9			41.3
	100.0		%		100.0		%	100.0		%	100.0		%	100.0		%

(1) Senior notes with affiliates originally due in November 2011 were refinanced with original holders in the second quarter of 2011.



FBL Financial Group, Inc.
Other Information (Continued)

	March 31,		June 30,		September 30,		December 31,		March 31,
	2010		2010		2010		2010		2011

Quality of Fixed Maturity Securities:
AAA, AA, A	60.3	%	61.9	%	61.8	%	62.8	%	62.4	%
BBB	34.0		32.9		33.0		31.0		30.9
BB	4.3		3.8		3.7		3.9		4.1
<BB	1.4		1.4		1.5		2.3		2.6

Investment by Type:
Fixed maturity securities (2)	59.5	%	60.1	%	60.5	%	58.5	%	59.9	%
Residential mortgage-backed	15.3		15.4		14.7		15.1		14.9
Commercial mortgage-backed (2)	7.8		7.9		7.8		8.0		8.0
Other asset-backed	2.4		2.6		3.3		3.7		3.8
Mortgage loans	10.6		10.2		9.6		9.5		9.3
Equity securities	0.6		0.6		0.6		0.6		0.6
Other	3.8		3.2		3.5		4.6		3.5

Agent Strength Totals:
Farm Bureau Life channel:
8-state Farm Bureau Property & Casualty channel	1,210		1,216		1,228		1,205		1,187
7 life-only states	795		800		795		791		793
Total Farm Bureau Life channel	2,005		2,016		2,023		1,996		1,980

Percentage registered representatives	76.8	%	75.6	%	74.4	%	72.4	%	72.0	%

EquiTrust Life channel:
Independent agents	20,175		18,089		18,077		17,316		15,322



(2)	Military housing fixed maturity securities with characteristics similar to commercial mortgage-backed securities were reclassified from fixed maturity securities during the first quarter 2011. Prior year amounts have been reclassified to conform to current period presentation.

Attached files

Stock widget

Investing forum

FBL FINANCIAL GROUP INC Reports

Also read