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

Attached files

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EX-99.2 - PRINTABLE INVESTOR SUPPLEMENT - FBL FINANCIAL GROUP INC	investorsupplement2011q2fina.pdf
8-K - FBL FINANCIAL GROUP INC	pressrelease8k2011q2.htm
EX-99.1 - NEWS RELEASE - EARNINGS - FBL FINANCIAL GROUP INC	exh991newsreleaseq22011.htm

Financial Supplement

2011 Second 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)
June 30, 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 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 nonrecurring 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)



	June 30,		December 31,
	2011		2010
Assets
Investments:
Fixed maturity securities - available for sale, at fair value (amortized cost: 2011 - $11,508,155; 2010 - $10,974,330)	$	11,894,416	$	11,128,524
Equity securities - available for sale, at fair value (cost: 2011 - $80,053; 2010 - $77,689)	83,287		78,656
Mortgage loans	1,242,370		1,254,437
Derivative instruments	49,041		40,729
Real estate	12,428		13,554
Policy loans	170,629		170,341
Other long-term investments	118		132
Short-term investments	53,994		383,369
Total investments	13,506,283		13,069,742

Cash and cash equivalents	174,412		4,794
Securities and indebtedness of related parties	72,229		57,832
Accrued investment income	143,087		135,384
Amounts receivable from affiliates	4,503		2,025
Reinsurance recoverable	117,526		122,326
Deferred policy acquisition costs	739,130		812,025
Deferred sales inducements	236,602		259,148
Value of insurance in force acquired	31,173		27,706
Current income taxes recoverable	7,845		17,914
Other assets	70,895		72,154
Assets held in separate accounts	759,927		753,050





Total assets	$	15,863,612	$	15,334,100

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	June 30,		December 31,
	2011		2010
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive and index products	$	11,016,779	$	10,645,927
Traditional life insurance and accident and health products	1,379,377		1,362,410
Other policy claims and benefits	49,845		51,393
Supplementary contracts without life contingencies	501,616		506,167
Advance premiums and other deposits	205,596		188,577
Amounts payable to affiliates	315		573
Short-term debt payable to affiliates	—		100,000
Long-term debt payable to affiliates	99,927		—
Long-term debt payable to non-affiliates	271,212		271,168
Deferred income taxes	165,788		131,174
Other liabilities	133,235		177,247
Liabilities related to separate accounts	759,927		753,050
Total liabilities	14,583,617		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 30,013,406 shares in 2011 and 29,749,068 shares in 2010	126,105		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	105,403		39,895
Retained earnings	1,037,892		977,740
Total FBL Financial Group, Inc. stockholders' equity	1,279,922		1,146,322
Noncontrolling interest	73		92
Total stockholders' equity	1,279,995		1,146,414
Total liabilities and stockholders' equity	$	15,863,612	$	15,334,100

FBL Financial Group, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)



	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Revenues:
Interest sensitive and index product charges	$	29,567		$	30,435		$	60,370		$	60,438
Traditional life insurance premiums	44,139			42,791			85,526			82,036
Net investment income	188,292			179,908			374,811			357,997
Derivative income (loss)	307			(54,285		)	35,847			(31,949		)
Net realized capital gains on sales of investments	6,877			2,187			11,261			6,916

Total other-than-temporary impairment losses	(13,029		)	(31,356		)	(31,091		)	(58,510		)
Non-credit portion in other comprehensive income	8,081			24,262			13,819			43,394
Net impairment loss recognized in earnings	(4,948		)	(7,094		)	(17,272		)	(15,116		)

Other income	3,980			3,931			8,979			6,950
Total revenues	268,214			197,873			559,522			467,272

Benefits and expenses:
Interest sensitive and index product benefits	137,646			128,454			273,932			250,638
Change in value of index product embedded derivatives	(10,586		)	(58,602		)	1,665			(32,546		)
Traditional life insurance benefits	37,717			31,211			74,315			68,520
Policyholder dividends	4,356			4,387			8,656			9,060
Underwriting, acquisition and insurance expenses	32,004			49,663			85,988			93,601
Interest expense	5,631			6,117			11,740			12,235
Other expenses	7,504			5,055			12,404			9,309
Total benefits and expenses	214,272			166,285			468,700			410,817
	53,942			31,588			90,822			56,455
Income taxes	(16,819		)	(10,511		)	(28,607		)	(18,466		)
Equity income, net of related income taxes	405			1,207			1,804			2,302
Net income	37,528			22,284			64,019			40,291
Net loss attributable to noncontrolling interest	18			39			20			53
Net income attributable to FBL Financial Group, Inc.	$	37,546		$	22,323		$	64,039		$	40,344

Earnings per common share	$	1.22		$	0.73		$	2.09		$	1.33
Earnings per common share - assuming dilution	$	1.20		$	0.73		$	2.05		$	1.32

Cash dividends per common share	$	0.0625		$	0.0625		$	0.1250		$	0.1250



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

	Q2 2010			Q3 2010			Q4 2010			Q1 2011			Q2 2011
Operating revenues:
Interest sensitive and index product charges	$	30,427		$	28,388		$	30,878		$	30,786		$	29,574
Traditional life insurance premiums	42,791			38,721			41,299			41,387			44,139
Net investment income	179,908			181,974			181,399			186,519			188,292
Derivative income	12,474			8,372			10,634			15,536			23,868
Other income	3,931			3,562			3,776			4,999			3,980
Total operating revenues	269,531			261,017			267,986			279,227			289,853

Benefits and expenses:
Interest sensitive and index product benefits	132,685			125,317			129,669			134,493			142,325
Traditional life insurance benefits	31,211			35,242			33,409			36,598			37,717
Policyholder dividends	4,387			4,193			4,318			4,300			4,356
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	3,283			3,397			3,498			3,923			4,404
Amortization of deferred policy acquisition costs	32,718			20,036			21,871			29,765			20,897
Amortization of value of insurance in force acquired	593			406			32			362			(6,172		)
Other underwriting expenses	18,619			19,468			18,894			18,613			19,616
Total underwriting, acquisition and insurance expenses	55,213			43,307			44,295			52,663			38,745
Interest expense	6,117			6,099			6,120			6,109			5,631
Other expenses	5,055			4,310			5,335			4,900			7,504
Total benefits and expenses	234,668			218,468			223,146			239,063			236,278
	34,863			42,549			44,840			40,164			53,575
Income taxes	(11,658		)	(14,343		)	(15,722		)	(12,937		)	(16,690		)
Net loss (income) attributable to noncontrolling interest	39			26			(1		)	2			18
Equity income, net of related income taxes	1,207			1,955			1,184			1,399			405
Operating income	24,451			30,187			30,301			28,628			37,308

Realized gains/losses on investments, net of offsets	(2,052		)	1,567			14,259			(2,686		)	1,407
Change in net unrealized gains/losses on derivatives, net of offsets	(76		)	(3,077		)	7,072			551			(1,169		)
Net income attributable to FBL Financial Group, Inc.	$	22,323		$	28,677		$	51,632		$	26,493		$	37,546

Operating income per common share - assuming dilution	$	0.80		$	0.98		$	0.98		$	0.92		$	1.19
Earnings per common share - assuming dilution	$	0.73		$	0.93		$	1.67		$	0.85		$	1.20

Weighted average common shares outstanding (in thousands):
Basic	30,387			30,428			30,495			30,612			30,733
Effect of dilutive securities	300			269			460			510			474
Diluted	30,687			30,697			30,955			31,122			31,207

Operating return on equity, excluding AOCI - last twelve months	10.3		%	10.8		%	10.2		%	10.7		%	11.5		%
Operating return on equity, including AOCI - last twelve months	11.6		%	11.0		%	10.1		%	10.2		%	10.8		%

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 lacked 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 June 30, 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	$	154		$	4,786	$	12,838		$	11,796	$	—		$	29,574
Traditional life insurance premiums	—			—		44,139			—		—			44,139
Net investment income	47,290			99,184		34,205			4,400		3,213			188,292
Derivative income (loss)	(418		)	24,286		—			—		—			23,868
Other income	1			—		60			1,008		2,911			3,980
Total operating revenues	47,027			128,256		91,242			17,204		6,124			289,853

Benefits and expenses:
Interest sensitive and index product benefits	25,194			94,297		15,479			7,355		—			142,325
Traditional life insurance benefits	—			—		37,717			—		—			37,717
Policyholder dividends	—			—		4,356			—		—			4,356
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	—			—		3,369			1,035		—			4,404
Amortization of deferred policy acquisition costs	3,326			9,034		5,415			3,122		—			20,897
Amortization of value of insurance in force acquired	317			—		(6,489		)	—		—			(6,172		)
Other underwriting expenses	2,246			4,410		9,368			3,152		440			19,616
Total underwriting, acquisition and insurance expenses	5,889			13,444		11,663			7,309		440			38,745
Interest expense	—			—		—			—		5,631			5,631
Other expenses	—			—		—			1,095		6,409			7,504
Total benefits and expenses	31,083			107,741		69,215			15,759		12,480			236,278
	15,944			20,515		22,027			1,445		(6,356		)	53,575
Net loss attributable to noncontrolling interest	—			—		—			—		18			18
Equity income, before tax	—			—		—			—		622			622
Pre-tax operating income (loss)	$	15,944		$	20,515	$	22,027		$	1,445	$	(5,716	)	$	54,215

FBL Financial Group, Inc.

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



Quarter Ended June 30, 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	$	151		$	6,326	$	11,420	$	12,530		$	—		$	30,427
Traditional life insurance premiums	—			—		42,791		—			—			42,791
Net investment income	42,808			97,284		33,354		4,100			2,362			179,908
Derivative income (loss)	(558		)	13,551		—		—			(519		)	12,474
Other income	6			—		210		593			3,122			3,931
Total operating revenues	42,407			117,161		87,775		17,223			4,965			269,531

Benefits and expenses:
Interest sensitive and index product benefits	25,278			87,237		14,113		6,057			—			132,685
Traditional life insurance benefits	—			—		31,211		—			—			31,211
Policyholder dividends	—			—		4,387		—			—			4,387
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	—			—		2,617		666			—			3,283
Amortization of deferred policy acquisition costs	2,959			13,917		6,697		9,145			—			32,718
Amortization of value of insurance in force acquired	80			—		513		—			—			593
Other underwriting expenses	2,272			4,093		8,699		3,027			528			18,619
Total underwriting, acquisition and insurance expenses	5,311			18,010		18,526		12,838			528			55,213
Interest expense	—			—		—		—			6,117			6,117
Other expenses	—			—		—		481			4,574			5,055
Total benefits and expenses	30,589			105,247		68,237		19,376			11,219			234,668
	11,818			11,914		19,538		(2,153		)	(6,254		)	34,863
Net loss attributable to noncontrolling interest	—			—		—		—			39			39
Equity income, before tax	—			—		—		—			1,857			1,857
Pre-tax operating income (loss)	$	11,818		$	11,914	$	19,538	$	(2,153	)	$	(4,358	)	$	36,759



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

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

Operating revenues:
Interest sensitive and index product charges	$	151			$	158		$	123		$	161		$	154
Net investment income	42,808				43,341			43,591			44,421			47,290
Derivative income (loss):
Proceeds from option settlements	168				52			86			177			87
Cost of money for call options	(73		)		(69		)	(65		)	(64		)	(65		)
Cost of interest rate swaps	(653		)		(651		)	(659		)	(658		)	(440		)
Total derivative loss	(558		)		(668		)	(638		)	(545		)	(418		)
Other income	6				1			3			—			1
Total operating revenues	42,407				42,832			43,079			44,037			47,027

Benefits and expenses:
Interest sensitive and index product benefits	25,278				24,925			24,409			24,674			25,194
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs	2,959				172			2,969			2,501			3,326
Amortization of value of insurance in force acquired	80				(92		)	(1,029		)	(150		)	317
Other underwriting expenses	2,272				2,215			2,132			2,149			2,246
Total underwriting, acquisition and insurance expenses	5,311				2,295			4,072			4,500			5,889
Total benefits and expenses	30,589				27,220			28,481			29,174			31,083
Pre-tax operating income	$	11,818			$	15,612		$	14,598		$	14,863		$	15,944

Selected balance sheet data, securities at cost:
Assets:
Investments	$	2,937,670			$	2,980,444		$	3,025,565		$	3,136,065		$	3,248,310
Deferred policy acquisition costs	93,888				98,586			98,896			102,505			104,610
Value of insurance in force acquired	11,126				11,237			12,143			12,269			11,952

Liabilities and equity:
Liabilities:
Interest sensitive and index product reserves	$	2,482,923			$	2,518,748		$	2,581,300		$	2,673,069		$	2,746,674
Other insurance reserves	368,482				368,622			369,685			371,179			373,987
Allocated equity, excluding AOCI	265,805				269,158			275,088			261,156			267,712

Other data:
Number of direct contracts	53,350				53,313			53,428			53,608			53,881

Portfolio yield net of assumed defaults	5.72		%		5.73		%	5.79		%	5.70		%	5.75		%
Credited rate	3.71				3.66			3.49			3.43			3.42
Spread on direct fixed annuities at end of quarter (1)	2.01		%		2.07		%	2.30		%	2.27		%	2.33		%

Interest sensitive and index product reserve activity:
Individual deferred annuity reserve:
Balance, beginning of period	$	1,848,000			$	1,896,788		$	1,931,756		$	1,974,661		$	2,043,957
Deposits	78,113				73,393			77,587			116,089			99,347
Withdrawals, surrenders and death benefits	(30,803		)		(40,404		)	(33,865		)	(41,443		)	(37,930		)
Net flows	47,310				32,989			43,722			74,646			61,417

Policyholder interest/index credits	16,982				17,025			16,682			16,895			17,104
Annuitizations and other	(15,504		)		(15,046		)	(17,499		)	(22,245		)	(20,031		)
Balance, end of period	1,896,788				1,931,756			1,974,661			2,043,957			2,102,447
Other interest sensitive reserves	586,135				586,992			606,639			629,112			644,227
Total interest sensitive and index product reserves	$	2,482,923			$	2,518,748		$	2,581,300		$	2,673,069		$	2,746,674

(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

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

Operating revenues:
Interest sensitive and index product charges	$	6,326			$	5,510		$	7,172		$	6,302		$	4,786
Net investment income	97,284				99,051			97,359			100,335			99,184
Derivative income:
Proceeds from option settlements	34,751				30,660			31,875			36,555			44,757
Cost of money for call options	(21,200		)		(21,122		)	(20,570		)	(20,474		)	(20,471		)
Total derivative income	13,551				9,538			11,305			16,081			24,286
Total operating revenues	117,161				114,099			115,836			122,718			128,256

Benefits and expenses:
Interest sensitive and index product benefits:
Fixed rate annuities:
Interest credited and other	34,886				35,411			35,422			34,660			34,707
Amortization of deferred sales inducements	702				773			1,344			1,014			432
Total fixed annuity product benefits	35,588				36,184			36,766			35,674			35,139
Index annuities:
Interest credited	8,032				9,273			9,108			9,058			9,080
Amortization of deferred sales inducements	7,851				7,635			5,255			9,479			7,756
Index credits	35,766				29,896			32,426			33,359			42,322
Total index product benefits	51,649				46,804			46,789			51,896			59,158
Total interest sensitive and index product benefits	87,237				82,988			83,555			87,570			94,297
Underwriting, acquisition and insurance expenses:
Amortization of deferred policy acquisition costs	13,917				14,590			13,830			17,910			9,034
Other underwriting expenses	4,093				4,875			4,825			4,047			4,410
Total underwriting, acquisition and insurance expenses	18,010				19,465			18,655			21,957			13,444
Total benefits and expenses	105,247				102,453			102,210			109,527			107,741
Pre-tax operating income	$	11,914			$	11,646		$	13,626		$	13,191		$	20,515

Selected balance sheet data, securities at cost:
Assets:
Investments	$	6,782,211			$	6,892,612		$	6,908,184		$	6,985,882		$	7,031,955
Deferred policy acquisition costs	414,492				426,675			403,036			403,016			418,607
Deferred sales inducements	253,957				263,351			247,428			247,943			257,374

Liabilities and equity:
Liabilities:
Interest sensitive and index product reserves - direct	$	5,699,426			$	5,859,771		$	5,924,051		$	6,057,649		$	6,155,133
Interest sensitive and index product reserves - assumed	1,333,811				1,307,270			1,249,560			1,224,090			1,200,666
Other insurance reserves	158,848				158,381			156,386			151,956			152,573
Allocated equity, excluding AOCI	360,896				367,583			367,816			388,536			392,745



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

	Q2 2010				Q3 2010			Q4 2010			Q1 2011			Q2 2011
				(Dollars in thousands)
Other data:
Number of direct contracts	87,699				87,127			86,855			87,785			88,158

Fixed rate annuitites:
Portfolio yield net of assumed defaults	5.60		%		5.57		%	5.55		%	5.47		%	5.45		%
Credited rate	4.93				4.92			4.92			4.91			4.86
Spread on direct fixed rate annuities at end of quarter (1)	0.67		%		0.65		%	0.63		%	0.56		%	0.59		%

Index annutities:
Portfolio yield net of assumed defaults	5.66		%		5.65		%	5.64		%	5.61		%	5.57		%
Credited rate/option cost	3.25				3.19			3.08			3.03			2.96
Spread on direct index annuities at end of quarter (1)	2.41		%		2.46		%	2.56		%	2.58		%	2.61		%

Interest sensitive and index product reserve activity:
Individual deferred annuity reserve:
Balance, beginning of period	$	7,077,823			$	7,004,760		$	7,037,713		$	7,019,146		$	7,126,978
Deposits	77,138				100,770			144,152			179,410			177,206
Withdrawals, surrenders and death benefits	(173,790		)		(204,029		)	(242,832		)	(171,153		)	(213,966		)
Net flows	(96,652		)		(103,259		)	(98,680		)	8,257			(36,760		)

Policyholder interest/index credits	81,728				79,472			84,732			87,176			96,169
Derivative value change and other	(58,139		)		56,740			(4,619		)	12,399			(10,409		)
Balance, end of period	7,004,760				7,037,713			7,019,146			7,126,978			7,175,978
Other interest sensitive reserves	28,477				129,328			154,465			154,761			179,821
Total interest sensitive and index product reserves	$	7,033,237			$	7,167,041		$	7,173,611		$	7,281,739		$	7,355,799

(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

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

Operating revenues:
Interest sensitive product charges	$	11,420		$	11,171	$	11,922	$	12,317	$	12,838
Traditional life insurance premiums	42,791			38,721		41,299		41,387		44,139
Net investment income	33,354			33,478		33,720		34,089		34,205
Other income	210			35		45		97		60
Total operating revenues	87,775			83,405		86,986		87,890		91,242

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	7,353			7,301		7,519		7,895		7,454
Death benefits	6,760			6,151		7,351		7,486		8,025
Total interest sensitive product benefits	14,113			13,452		14,870		15,381		15,479
Traditional life insurance benefits:
Death benefits	12,496			14,929		13,599		17,713		16,023
Surrender and other benefits	9,690			9,522		8,144		10,216		9,123
Increase in traditional life future policy benefits	9,025			10,791		11,666		8,669		12,571
Total traditional life insurance benefits	31,211			35,242		33,409		36,598		37,717
Policyholder dividends	4,387			4,193		4,318		4,300		4,356
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	2,617			2,626		2,850		2,797		3,369
Amortization of deferred policy acquisition costs	6,697			6,306		4,882		7,934		5,415
Amortization of value of insurance in force acquired	513			498		1,059		510		(6,489		)
Other underwriting expenses	8,699			8,722		8,490		8,878		9,368
Total underwriting, acquisition and insurance expenses	18,526			18,152		17,281		20,119		11,663
Total benefits and expenses	68,237			71,039		69,878		76,398		69,215
Pre-tax operating income	$	19,538		$	12,366	$	17,108	$	11,492	$	22,027

Selected balance sheet data, securities at cost:
Assets:
Investments	$	2,104,604		$	2,140,043	$	2,140,593	$	2,179,376	$	2,214,276
Deferred policy acquisition costs	242,717			243,756		250,688		252,763		258,903
Deferred sales inducements	7,061			7,091		7,885		8,375		9,065
Value of insurance in force acquired	22,833			22,335		21,262		20,751		27,241

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	630,016		$	631,536	$	636,199	$	641,357	$	651,805
Other insurance reserves	1,455,995			1,468,895		1,489,858		1,502,695		1,516,521
Allocated equity, excluding AOCI	313,155			315,358		318,845		324,308		327,325



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

	Q2 2010				Q3 2010			Q4 2010			Q1 2011			Q2 2011
				(Dollars in thousands, except face amounts in millions)
Other data:
Number of direct policies - traditional life	346,303				346,548			349,009			348,942			350,219
Number of direct policies - universal life	56,158				56,129			56,935			57,384			57,701
Direct face amounts - traditional life	$	35,040			$	35,469		$	36,201		$	36,475		$	37,091
Direct face amounts - universal life	$	5,068			$	5,080		$	5,212		$	5,319		$	5,410

Portfolio yield net of assumed defaults	6.13		%		6.15		%	6.19		%	6.13		%	6.08		%
Credited rate	4.29				4.28			4.28			4.29			4.29
Spread on direct universal life at end of quarter (1)	1.84		%		1.87		%	1.91		%	1.84		%	1.79		%

Interest sensitive reserve activity:
Balance, beginning of period	$	628,935			$	630,016		$	631,536		$	636,199		$	641,357
Deposits	13,597				13,838			18,258			18,823			23,520
Withdrawals and surrenders	(6,738		)		(5,498		)	(6,186		)	(6,115		)	(5,683		)
Net flows	6,859				8,340			12,072			12,708			17,837

Policyholder interest credited	6,570				6,554			6,522			6,526			6,486
Policy charges	(11,634		)		(11,638		)	(12,290		)	(12,634		)	(13,396		)
Benefits and other	(714		)		(1,736		)	(1,641		)	(1,442		)	(479		)
Balance, end of period	$	630,016			$	631,536		$	636,199		$	641,357		$	651,805

(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

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

Operating revenues:
Interest sensitive product charges	$	12,530			$	11,549		$	11,661		$	12,006		$	11,796
Net investment income	4,100				4,167			4,273			4,555			4,400
Other income	593				881			1,074			1,403			1,008
Total operating revenues	17,223				16,597			17,008			17,964			17,204

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	2,270				2,319			2,340			2,368			2,403
Death benefits	3,787				1,633			4,495			4,500			4,952
Total interest sensitive product benefits	6,057				3,952			6,835			6,868			7,355
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	666				771			648			1,126			1,035
Amortization of deferred policy acquisition costs	9,145				(1,032		)	190			1,420			3,122
Other underwriting expenses	3,027				3,073			2,879			2,854			3,152
Total underwriting, acquisition and insurance expenses	12,838				2,812			3,717			5,400			7,309
Other expenses	481				998			1,097			508			1,095
Total benefits and expenses	19,376				7,762			11,649			12,776			15,759
Pre-tax operating income (loss)	$	(2,153	)		$	8,835		$	5,359		$	5,188		$	1,445

Selected balance sheet data, securities at cost:
Assets:
Investments	$	261,490			$	269,887		$	272,908		$	283,426		$	287,907
Deferred policy acquisition costs	147,489				149,024			150,109			149,999			147,371
Deferred sales inducements	2,557				2,557			2,538			2,552			2,531
Separate account assets	658,820				705,156			753,050			774,774			759,927

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	244,359			$	250,644		$	254,817		$	257,953		$	262,501
Other insurance reserves	29,497				31,251			32,861			33,280			36,456
Separate account liabilities	658,820				705,156			753,050			774,774			759,927
Allocated equity, excluding AOCI	105,776				108,515			110,566			109,779			112,173

Rollforward of separate account balances:
Beginning separate account balance	$	726,825			$	658,820		$	705,156		$	753,050		$	774,774
Net premiums	14,380				5,166			6,599			9,630			9,790
Net investment income (loss)	(57,344		)		64,559			62,085			36,119			2,010
Charges, benefits and surrenders	(25,041		)		(23,389		)	(20,790		)	(24,025		)	(26,647		)
Ending separate account balance	$	658,820			$	705,156		$	753,050		$	774,774		$	759,927

Other data:
Number of direct contracts - variable annuity	19,385				18,963			18,603			18,199			17,805
Number of direct policies - variable universal life	57,076				56,253			55,484			54,667			53,897
Direct face amounts - variable universal life	$	7,181			$	7,078		$	6,982		$	6,876		$	6,763



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

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

Operating revenues:
Net investment income	$	2,362			$	1,937		$	2,456		$	3,119		$	3,213
Derivative loss	(519		)		(498		)	(33		)	—			—
Other income	3,122				2,645			2,654			3,499			2,911
Total operating revenues	4,965				4,084			5,077			6,618			6,124

Benefits and expenses:
Other underwriting and insurance expenses	528				583			570			687			440
Interest expense	6,117				6,099			6,120			6,109			5,631
Other expenses	4,574				3,312			4,238			4,392			6,409
Total benefits and expenses	11,219				9,994			10,928			11,188			12,480
	(6,254		)		(5,910		)	(5,851		)	(4,570		)	(6,356		)
Net loss (income) attributable to noncontrolling interest	39				26			(1		)	2			18
Equity income, before tax	1,857				3,008			1,821			2,153			622
Pre-tax operating loss	$	(4,358	)		$	(2,876	)	$	(4,031	)	$	(2,415	)	$	(5,716	)

Selected balance sheet data, securities at cost:
Assets:
Investments	$	366,331			$	382,744		$	567,331		$	423,215		$	334,341
Securities and indebtedness of related parties	50,859				55,196			57,846			65,151			72,241

Liabilities and equity:
Liabilities:
Insurance reserves	$	62,058			$	61,218		$	61,040		$	60,209		$	60,161
Debt	371,126				371,147			371,168			371,191			371,139
Equity, excluding AOCI	(18,314		)		(3,913		)	31,112			49,119			71,564



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

	Q2 2010				Q3 2010			Q4 2010			Q1 2011			Q2 2011
				(Dollars in thousands)
Traditional Annuity - Exclusive Distribution
Balance - beginning of period	$	92,333			$	93,888		$	98,586		$	98,896		$	102,505
Capitalization:
Commissions	3,782				3,759			4,408			5,628			4,729
Expenses	785				952			777			1,002			947
Total capitalization	4,567				4,711			5,185			6,630			5,676
Amortization - operating basis, before impact of unlocking	(2,959		)		(935		)	(2,969		)	(2,501		)	(3,326		)
Amortization - unlocking, operating basis	—				763			—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(53		)		159			(1,906		)	(520		)	(245		)
Balance - end of period	$	93,888			$	98,586		$	98,896		$	102,505		$	104,610

Traditional Annuity - Independent Distribution
Balance - beginning of period	$	668,206			$	668,449		$	690,026		$	650,464		$	650,959
Impact of reclassification of realized losses to AOCI	—				7,719			—			—			—
Capitalization:
Commissions	6,364				10,512			14,546			17,337			16,348
Expenses	874				1,032			1,245			1,276			1,308
Deferral of sales inducements	5,414				7,369			10,442			12,745			12,993
Total capitalization	12,652				18,913			26,233			31,358			30,649
Amortization - operating basis, before impact of unlocking	(23,894		)		(26,049		)	(26,360		)	(28,403		)	(19,925		)
Amortization - unlocking, operating basis	1,424				3,051			5,931			—			2,703
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	10,061				17,943			(45,366		)	(2,460		)	11,595
Balance - end of period	$	668,449			$	690,026		$	650,464		$	650,959		$	675,981

Traditional & Universal Life Insurance
Balance - beginning of period	$	247,619			$	249,778		$	250,847		$	258,573		$	261,138
Capitalization:
Commissions	4,431				3,659			7,713			6,282			6,671
Expenses	4,355				3,604			4,608			4,039			4,598
Deferral of sales inducements	123				91			917			682			818
Total capitalization	8,909				7,354			13,238			11,003			12,087
Amortization - operating basis, before impact of unlocking	(6,738		)		(5,780		)	(4,987		)	(8,071		)	(5,596		)
Amortization - unlocking, operating basis	—				(586		)	—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(12		)		81			(525		)	(367		)	339
Balance - end of period	$	249,778			$	250,847		$	258,573		$	261,138		$	267,968



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

	Q2 2010				Q3 2010			Q4 2010			Q1 2011			Q2 2011
				(Dollars in thousands)
Variable
Balance - beginning of period	$	157,456			$	150,046		$	151,581		$	152,647		$	152,551
Capitalization:
Commissions	1,587				766			935			961			700
Expenses	381				200			104			91			63
Deferral of sales inducements	16				12			14			36			4
Total capitalization	1,984				978			1,053			1,088			767
Amortization - operating basis, before impact of unlocking	(9,325		)		(342		)	(220		)	(1,441		)	(1,792		)
Amortization - unlocking, operating basis	151				1,362			—			—			(1,355		)
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(220		)		(463		)	233			257			(269		)
Balance - end of period	$	150,046			$	151,581		$	152,647		$	152,551		$	149,902

Total
Balance - beginning of period	$	1,165,614			$	1,162,161		$	1,191,040		$	1,160,580		$	1,167,153
Impact of reclassification of realized losses to AOCI	—				7,719			—			—			—
Capitalization:
Commissions	16,164				18,696			27,602			30,208			28,448
Expenses	6,395				5,788			6,734			6,408			6,916
Deferral of sales inducements	5,553				7,472			11,373			13,463			13,815
Total capitalization	28,112				31,956			45,709			50,079			49,179
Amortization - operating basis, before impact of unlocking	(42,916		)		(33,106		)	(34,536		)	(40,416		)	(30,639		)
Amortization - unlocking, operating basis	1,575				4,590			5,931			—			1,348
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	9,776				17,720			(47,564		)	(3,090		)	11,420
Balance - end of period	1,162,161				1,191,040			1,160,580			1,167,153			1,198,461
Impact of realized/unrealized gains/losses in AOCI	(64,632		)		(284,139		)	(89,407		)	(142,717		)	(222,729		)
Deferred policy acquisition costs/deferred sales inducements	$	1,097,529			$	906,901		$	1,071,173		$	1,024,436		$	975,732



FBL Financial Group, Inc.
Collected Premiums

	Q2 2010				Q3 2010			Q4 2010			Q1 2011			Q2 2011
				(Dollars in thousands)
Traditional Annuity - Exclusive Distribution
Individual:
First year	$	47,037			$	41,926		$	43,021		$	73,715		$	64,225
Renewal	32,391				31,812			34,929			42,915			36,515
Total individual	79,428				73,738			77,950			116,630			100,740
Group	2,563				2,423			1,850			2,844			4,045
Total Traditional Annuity - Exclusive Distribution	81,991				76,161			79,800			119,474			104,785

Traditional Annuity - Independent Distribution
Direct:
Fixed rate annuities	24,033				16,150			18,022			25,143			28,611
Index annuities	63,411				90,733			129,609			157,306			154,856
Total direct	87,444				106,883			147,631			182,449			183,467
Reinsurance	361				373			397			328			657
Total Traditional Annuity - Independent Distribution, net of reinsurance	87,805				107,256			148,028			182,777			184,124

Traditional and Universal Life Insurance
Direct:
Universal life:
Exclusive distribution:
First year	2,071				2,117			2,391			2,711			4,015
Renewal	11,258				10,282			11,216			11,747			12,417
Total exclusive distribution	13,329				12,399			13,607			14,458			16,432
Independent distribution	186				1,434			3,882			3,751			6,504
Total universal life	13,515				13,833			17,489			18,209			22,936
Participating whole life:
First year	3,477				2,396			3,275			2,839			3,300
Renewal	25,472				22,754			23,618			24,105			25,480
Total particpating whole life	28,949				25,150			26,893			26,944			28,780
Term life and other:
First year	3,394				3,084			2,971			2,688			2,970
Renewal	14,959				15,200			16,362			16,559			17,093
Total term life and other	18,353				18,284			19,333			19,247			20,063
Total direct	60,817				57,267			63,715			64,400			71,779
Reinsurance	(5,314		)		(4,578		)	(5,016		)	(5,311		)	(5,095		)
Total Traditional and Universal Life Insurance, net of reinsurance	55,503				52,689			58,699			59,089			66,684

Variable
Variable annuities (1)	18,849				10,514			10,241			12,617			9,918
Variable universal life (1)	12,229				11,303			11,110			11,270			11,415
Total	31,078				21,817			21,351			23,887			21,333
Reinsurance	(191		)		(241		)	(218		)	(65		)	(887		)
Total Variable, net of reinsurance	30,887				21,576			21,133			23,822			20,446

Corporate and Other
Accident and health premiums collected, net of reinsurance	29				36			261			69			34
Total collected premiums, net of reinsurance	$	256,215			$	257,718		$	307,921		$	385,231		$	376,073

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



FBL Financial Group, Inc.
Parent Company Liquidity

	January - June 2011			July - December 2011
	Actual			Projected (3)			Total
	(Dollars in thousands)
Total cash and invested assets, beginning of period	$	28,455		$	26,941		$	28,455
Sources:
Dividends from insurance subsidiaries	10,000			10,000			20,000
Dividends from non-insurance subsidiaries	2,100			1,000			3,100
Investment income	184			526			710
Management fees from subsidiaries and affiliates	4,093			3,773			7,866
Total sources	16,377			15,299			31,676

Uses:
Interest expense	(11,691		)	(10,606		)	(22,297		)
Stockholders' dividends (1)	(3,887		)	(3,912		)	(7,799		)
General expenses	(5,769		)	(3,654		)	(9,423		)
Total uses	(21,347		)	(18,172		)	(39,519		)

Other, net (2)	3,456			11,270			14,726
Total cash and invested assets, end of period	$	26,941		$	35,338		$	35,338



(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 the remainder of 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 June 30, 2011; actual results may differ materially.



FBL Financial Group, Inc.
Other Information

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

Capitalization:
Senior notes with affiliates, due 2015 (1)	$	100,000			$	100,000		$	100,000		$	100,000		$	99,927
Senior notes, due 2014	75,227				75,213			75,199			75,185			75,171
Senior notes, due 2017	98,899				98,934			98,969			99,006			99,041
Trust preferred securities, due 2047	97,000				97,000			97,000			97,000			97,000
Total debt	371,126				371,147			371,168			371,191			371,139

Preferred stock	3,000				3,000			3,000			3,000			3,000
Common stockholders' equity, excluding AOCI	1,027,318				1,050,974			1,103,427			1,132,898			1,171,519
Total capitalization, excluding AOCI	1,401,444				1,425,121			1,477,595			1,507,089			1,545,658

Accumulated other comprehensive income	44,144				116,453			39,895			54,194			105,403
Total capitalization, including AOCI	$	1,445,588			$	1,541,574		$	1,517,490		$	1,561,283		$	1,651,061

Common shares outstanding	30,822,113				30,865,606			30,942,058			31,134,662			31,206,396

Book Value per Share:
Excluding AOCI	$	33.33			$	34.05		$	35.66		$	36.39		$	37.54
Including AOCI	34.76				37.82			36.95			38.13			40.92

Debt-to-Capital Ratio:
Excluding AOCI	26.5		%		26.0		%	25.1		%	24.6		%	24.0		%
Including AOCI	25.7				24.1			24.5			23.8			22.5

Debt-to-Capital Ratio with 100% Credit for Trust Preferred Securities:
Excluding AOCI	19.6		%		19.2		%	18.6		%	18.2		%	17.7		%
Including AOCI	19.0				17.8			18.1			17.6			16.6

Class A Common Ownership:
Iowa Farm Bureau Federation	52.0		%		51.9		%	51.7		%	51.4		%	51.3		%
Other Farm Bureau entities	7.5				7.4			7.4			7.3			7.3
Public	40.5				40.7			40.9			41.3			41.4
	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)

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

Quality of Fixed Maturity Securities:
AAA, AA, A	61.9	%	61.8	%	62.8	%	62.4	%	63.3	%
BBB	32.9		33.0		31.0		30.9		30.4
BB	3.8		3.7		3.9		4.1		3.9
<BB	1.4		1.5		2.3		2.6		2.4

Investment by Type:
Fixed maturity securities	60.1	%	60.5	%	58.5	%	59.9	%	60.6	%
Residential mortgage-backed	15.4		14.7		15.1		14.9		15.4
Commercial mortgage-backed	7.9		7.8		8.0		8.0		8.1
Other asset-backed	2.6		3.3		3.7		3.8		4.1
Mortgage loans	10.2		9.6		9.5		9.3		9.1
Equity securities	0.6		0.6		0.6		0.6		0.6
Other	3.2		3.5		4.6		3.5		2.1

Agent Strength Totals:
Farm Bureau Life channel:
8-state Farm Bureau Property & Casualty channel	1,216		1,228		1,205		1,187		1,190
7 life-only states	800		795		791		793		707
Total Farm Bureau Life channel	2,016		2,023		1,996		1,980		1,897

EquiTrust Life channel:
Independent agents	18,089		18,077		17,316		15,322		14,709

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FBL FINANCIAL GROUP INC Reports