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8-K - 8-K - FBL FINANCIAL GROUP INCpressrelease8k2014q2.htm
EX-99.2 - EXHIBIT - FBL FINANCIAL GROUP INCinvsupp2014q2.htm










FOR IMMEDIATE RELEASE
CONTACT:
Thursday, July 31, 2014
Kathleen Till Stange, Corporate & Investor Relations V.P.
 
(515) 226-6780, Kathleen.TillStange@FBLFinancial.com

FBL Financial Group Reports Second Quarter 2014 Results

West Des Moines, Iowa, July 31, 2014 -

Financial Highlights
(Dollars in thousands, except per share data)
 
Three months ended June 30,
 
2014
 
2013
Net income attributable to FBL
$
28,642

 
$
29,587

Operating income
26,147

 
25,637

Earnings per common share (assuming dilution):
 
 
 
Net income
1.14

 
1.13

Operating income
1.05

 
0.98

    

FBL Financial Group, Inc. (NYSE: FFG) today reported net income attributable to FBL for the second quarter of 2014 of $28.6 million, or $1.14 per diluted common share compared to $29.6 million, or $1.13 per diluted common share, for the second quarter of 2013.

Operating Income(1). Operating income totaled $26.1 million, or $1.05 per common share, for the second quarter of 2014, compared to $25.6 million, or $0.98 per common share, for the second quarter of 2013. Second quarter 2014 operating income per share reflects strong underlying results from our life insurance and annuity segments, as well as a benefit from stock repurchases over the past year.

Operating income differs from the GAAP measure, net income attributable to FBL Financial Group, in that it excludes the impact of realized gains and losses on investments and the change in net unrealized gains and losses on derivatives. For further information on this non-GAAP financial measure, please refer to Note (1) and the reconciliation provided within this release.

"FBL Financial Group’s second quarter 2014 earnings results were outstanding with net income of $1.14 per share and operating income of $1.05 per share. These results build on the strong financial results in the first quarter and reflect positive momentum from serving the needs of the Farm Bureau niche market,” said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. "For the remainder of 2014, we are directing our efforts to increase life insurance sales, manage expenses, leverage technology, maintain our strong capital position and support our exclusive Farm Bureau agents and FBL employees who act on our purpose to protect livelihoods and futures."






Product Revenues. Premiums and product charges for the second quarter of 2014 totaled $74.8 million compared to $72.9 million in the second quarter of 2013. Interest sensitive product charges increased two percent while traditional life insurance premiums increased three percent during the quarter. Premiums collected(2) in the second quarter of 2014 totaled $176.3 million compared to $165.6 million in the second quarter of 2013. Annuity premiums collected increased 36 percent, while life insurance premiums collected decreased 13 percent.

Investment Income. Net investment income in the second quarter of 2014 totaled $95.2 million compared to $92.9 million in the second quarter of 2013. The increase is due to an increase in average invested assets partially offset by lower investment yields. The annualized yield earned on average invested assets, with securities at amortized cost, was 5.59 percent for the six months ended June 30, 2014, compared to 5.69 percent for the six months ended June 30, 2013. Investment fee income totaled $0.03 per share in the second quarter of 2014, and was primarily in the Corporate & Other segment. At June 30, 2014, 96 percent of the fixed maturity securities in FBL Financial Group's investment portfolio were investment grade debt securities.

Benefits and Expenses. Benefits and expenses totaled $137.4 million in the second quarter of 2014, an increase from $136.3 million in the second quarter of 2013. Death benefits, net of reinsurance and reserves released, increased to $23.1 million in the second quarter of 2014, compared to $21.4 million in the second quarter of 2013. By its nature, mortality experience can fluctuate from quarter to quarter.

Net Realized Gains on Investments. In the second quarter of 2014, FBL Financial Group recognized net realized gains on investments of $2.8 million, attributable to gains on sales. No impairments were recognized in the quarter.

Stock Repurchases. During the second quarter of 2014, FBL repurchased 70,481 shares of its Class A common stock for $3.0 million. FBL has $47.0 million remaining under its current stock repurchase program.

Capital and Book Value. As of June 30, 2014, the book value per share of FBL Financial Group common stock totaled $48.32, a 15 percent increase from $42.08 at December 31, 2013. Book value per share, excluding accumulated other comprehensive income(3), increased to $38.51 at June 30, 2014 from $37.27 at December 31, 2013. The June 30, 2014 company action level risk based capital ratio of Farm Bureau Life Insurance Company was approximately 531 percent.

Further Financial Information. Further information on FBL Financial Group's financial results, including results by segment, may be found in FBL Financial Group's financial supplement, available on its website, www.fblfinancial.com.

Conference Call. FBL Financial Group will hold a conference call with investors tomorrow, August 1, 2014, at 11:00 a.m. Eastern Time. The call will be webcast over the Internet, and a replay will be available on FBL Financial Group's website.











Certain statements in this release concerning FBL Financial Group's prospects for the future are forward-looking statements intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act. These statements generally can be identified by their context, including terms such as “believes,” “anticipates,” “expects,” or similar words. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statement. These risks and uncertainties are detailed in FBL Financial Group's reports filed with the Securities and Exchange Commission and include, but are not limited to, difficult conditions in financial markets and the economy, lack of liquidity and access to capital, investment valuations, interest rate changes, changes in laws and regulations, competitive factors, relationships with Farm Bureau organizations, differences between actual claims experience and underwriting assumptions, the ability to attract and retain sales agents, adverse results from litigation and a decrease in ratings. These forward-looking statements are based on assumptions which FBL Financial Group believes to be reasonable; however, no assurance can be given that the assumptions will prove to be correct.

FBL Financial Group is a holding company whose purpose is to protect livelihoods and futures. Its primary operating subsidiary, Farm Bureau Life Insurance Company, underwrites and markets a broad range of life insurance and annuities to individuals and businesses, which are distributed by multiline exclusive Farm Bureau agents. In addition, FBL Financial Group manages all aspects of two Farm Bureau affiliated property-casualty insurance companies for a management fee. FBL Financial Group, headquartered in West Des Moines, Iowa, is traded on the New York Stock Exchange under the symbol FFG. For more information, please visit www.fblfinancial.com.

- FINANCIAL INFORMATION AND NOTES FOLLOW -




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

 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
27,361

 
$
26,795

 
$
54,452

 
$
52,099

Traditional life insurance premiums
47,444

 
46,058

 
92,936

 
90,992

Net investment income
95,215

 
92,898

 
187,846

 
183,708

Net realized capital gains on sales of investments
2,806

 
7,435

 
2,266

 
11,367

 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses

 
(199
)
 

 
(845
)
Non-credit portion in other comprehensive income

 

 

 

Net impairment losses recognized in earnings

 
(199
)
 

 
(845
)
 
 
 
 
 
 
 
 
Other income
3,011

 
3,696

 
6,872

 
7,410

Total revenues
175,837

 
176,683

 
344,372

 
344,731

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
51,763

 
48,631

 
105,143

 
96,923

Traditional life insurance benefits
41,991

 
40,263

 
83,488

 
80,069

Policyholder dividends
2,907

 
3,395

 
6,252

 
6,753

Underwriting, acquisition and insurance expenses
35,274

 
37,335

 
68,718

 
72,359

Interest expense
1,086

 
1,838

 
2,298

 
3,813

Other expenses
4,383

 
4,818

 
8,511

 
9,202

Total benefits and expenses
137,404

 
136,280

 
274,410

 
269,119

 
38,433

 
40,403

 
69,962

 
75,612

Income taxes
(12,339
)
 
(13,378
)
 
(22,567
)
 
(24,961
)
Equity income, net of related income taxes
2,531

 
2,528

 
4,179

 
3,840

Net income
28,625

 
29,553

 
51,574

 
54,491

Net loss attributable to noncontrolling interest
17

 
34

 
60

 
62

Net income attributable to FBL Financial Group, Inc.
$
28,642

 
$
29,587

 
$
51,634

 
$
54,553

 
 
 
 
 
 
 
 
Earnings per common share - assuming dilution
$
1.14

 
$
1.13

 
$
2.06

 
$
2.10

 
 
 
 
 
 
 
 
Weighted average common shares
24,835,339

 
25,832,976

 
24,886,581

 
25,705,154

Effect of dilutive securities
147,798

 
243,386

 
163,889

 
257,662

Weighted average common shares - diluted
24,983,137

 
26,076,362

 
25,050,470

 
25,962,816

 
 
 
 
 
 
 
 





(1) Reconciliation of Net Income Attributable to FBL to Operating Income - Unaudited

In addition to net income, FBL Financial Group has consistently utilized operating income, a non-GAAP financial measure common in the life insurance industry, as a primary economic measure to evaluate its financial performance. Operating income equals net income attributable to FBL adjusted to eliminate the impact of realized gains and losses on investments and changes in net unrealized gains and losses on derivatives. FBL uses operating income, in addition to net income, to measure its 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. This non-GAAP measure is used for goal setting, determining short-term incentive compensation and evaluating performance on a basis comparable to that used by many in the investment community. FBL believes the combined presentation and evaluation of operating income, together with net income, provides information that may enhance an investor's understanding of FBL's underlying results and profitability. A reconciliation is provided in the following table:
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in thousands,
except per share data)
Net income attributable to FBL
$
28,642

 
$
29,587

 
$
51,634

 
$
54,553

Adjustments:
 
 
 
 
 
 
 
Net realized gains/losses on investments (a)
(1,737
)
 
(4,413
)
 
(1,409
)
 
(6,308
)
Change in net unrealized gains/losses on derivatives (a)
(758
)
 
463

 
(994
)
 
526

Operating income
$
26,147

 
$
25,637

 
$
49,231

 
$
48,771

 
 
 
 
 
 
 
 
Operating income per common share - assuming dilution
$
1.05

 
$
0.98

 
$
1.96

 
$
1.88

 
 
 
 
 
 
 
 
 
(a) Net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred acquisition costs, value of insurance in force acquired and income taxes attributable to these items.

(2) Premiums Collected - Net statutory premiums collected, a measure of sales production, is a non-GAAP measure and includes premiums collected from annuities and universal life-type products. For GAAP reporting, these premiums received are not reported as revenues.

(3) Reconciliation of Book Value Per Share Excluding Accumulated Other Comprehensive Income - Unaudited
 
June 30,
2014
 
December 31,
2013
Book value per share
$
48.32

 
$
42.08

Less: Per share impact of accumulated other comprehensive income
9.81

 
4.81

Book value per share, excluding accumulated other comprehensive income
$
38.51

 
$
37.27


Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $242.3 million at June 30, 2014 and $119.1 million at December 31, 2013. Since accumulated other comprehensive income fluctuates from quarter to quarter due to unrealized changes in the fair value of investments caused principally by changes in market interest rates, FBL believes this non-GAAP financial measure provides useful supplemental information.






FBL Financial Group, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

 
June 30,
2014
 
December 31,
2013
Assets
 
 
 
Investments
$
7,505,101

 
$
7,040,002

Cash and cash equivalents
31,672

 
6,370

Deferred acquisition costs
255,182

 
335,514

Other assets
391,478

 
385,482

Assets held in separate accounts
712,533

 
693,955

Total assets
$
8,895,966

 
$
8,461,323

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Liabilities
 
 
 
Future policy benefits
$
5,960,496

 
$
5,794,010

Other policy funds, claims and benefits
632,112

 
635,732

Debt
97,000

 
97,000

Other liabilities
296,697

 
195,835

Liabilities related to separate accounts
712,533

 
693,955

Total liabilities
7,698,838

 
7,416,532

 
 
 
 
Stockholders' equity
 
 
 
FBL Financial Group, Inc. stockholders' equity:
 
 
 
Preferred stock
3,000

 
3,000

Class A common stock
142,127

 
134,993

Class B common stock
72

 
72

Accumulated other comprehensive income
242,334

 
119,067

Retained earnings
809,528

 
787,609

Total FBL Financial Group, Inc. stockholders' equity
1,197,061

 
1,044,741

Noncontrolling interest
67

 
50

Total stockholders' equity
1,197,128

 
1,044,791

Total liabilities and stockholders' equity
$
8,895,966

 
$
8,461,323

 
 
 
 
Common shares outstanding
24,713,506

 
24,754,355


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