Form 8-K FBL FINANCIAL GROUP INC For: Feb 11

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February 11, 2016 4:34 PM EST


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): February 11, 2016

FBL Financial Group, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Iowa
1-11917
42-1411715
(State of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
5400 University Avenue, West Des Moines, Iowa
50266-5997
(Address of principal executive offices)
 
(Zip Code)
(515) 225-5400
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a.12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02. Results of Operations and Financial Condition

On February 11, 2016, FBL Financial Group, Inc. issued a news release reporting its financial results for the three months ended December 31, 2015. The news release is furnished as Exhibit 99.1 hereto and the Financial Supplement as Exhibit 99.2 hereto. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FBL FINANCIAL GROUP, INC.
Registrant

Date: February 11, 2016

/s/ Donald J. Seibel
Donald J. Seibel
Chief Financial Officer


EXHIBIT INDEX

Exhibit No:    Description
Exhibit 99.1    News release of the registrant dated February 11, 2016
Exhibit 99.2    Financial Supplement for the quarter ended December 31, 2015


















FOR IMMEDIATE RELEASE
CONTACT:
Thursday, February 11, 2016
Kathleen Till Stange, V.P. Corporate & Investor Relations
 
(515) 226-6780, [email protected]

FBL Financial Group Reports Fourth Quarter 2015 Results

West Des Moines, Iowa, February 11, 2016 -

Financial Highlights
(Dollars in thousands, except per share data)
 
Three months ended December 31,
 
2015
 
2014
Net income attributable to FBL Financial Group
$
30,905

 
$
28,148

Operating income
25,984

 
28,347

Earnings per common share (assuming dilution):
 
 
 
Net income
1.23

 
1.13

Operating income
1.04

 
1.13

    

FBL Financial Group, Inc. (NYSE: FFG) today reported net income attributable to FBL Financial Group for the fourth quarter of 2015 of $30.9 million, or $1.23 per diluted common share, compared to $28.1 million, or $1.13 per diluted common share, for the fourth quarter of 2014.

Operating Income(1). Operating income totaled $26.0 million, or $1.04 per common share, for the fourth quarter of 2015, compared to $28.3 million, or $1.13 per common share, for the fourth quarter of 2014. Fourth quarter 2015 operating income per share reflects:
•
A growing book of profitable business
•
Investment fee income of $0.05 per share, primarily due to higher than expected bond prepayments
•
An increase in death benefits compared to the fourth quarter of 2014
•
Unfavorable impact of $0.02 per share from unlocking mortality assumptions used in the
calculation of deferred acquisition costs, unearned revenue reserves and certain reserves on interest sensitive products

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.




"I’m pleased to report that FBL Financial Group had very strong financial performance in the fourth quarter with net income of $1.23 per share and operating income of $1.04 per share," said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. "These results reflect the strength of our strategies to manage spreads and expenses while continuing to maintain a strong capital position. As I look back on 2015, I am especially proud of the growth in our agency force. As we move forward in 2016, we remain focused on supporting our Farm Bureau Financial Services agents, building relationships with our clients and fulfilling our purpose of protecting livelihoods and futures."

Product Revenues. Premiums and product charges for the fourth quarter of 2015 totaled $76.5 million compared to $73.0 million in the fourth quarter of 2014. Interest sensitive product charges increased two percent while traditional life insurance premiums increased six percent during the quarter. Premiums collected(2) in the fourth quarter of 2015 totaled $174.7 million compared to $142.1 million in the fourth quarter of 2014. Annuity premiums collected increased 51 percent due to a limited offering of certain short-term annuity products, while life insurance premiums collected increased four percent.

Investment Income. Net investment income in the fourth quarter of 2015 totaled $99.0 million compared to $98.5 million in the fourth quarter of 2014. The increase is due to higher average invested assets. The annualized yield earned on average invested assets, with securities at amortized cost, was 5.55 percent for the year ended December 31, 2015, compared to 5.61 percent for the year ended December 31, 2014. Investment fee income totaled $0.05 per share in the fourth quarter of 2015. At December 31, 2015, 97 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 $143.0 million in the fourth quarter of 2015, an increase from $137.7 million in the fourth quarter of 2014. Death benefits, net of reinsurance and reserves released, totaled $26.0 million in the fourth quarter of 2015, compared to $22.1 million in the fourth quarter of 2014. By its nature, mortality experience can fluctuate from quarter to quarter. During the fourth quarter of 2015, FBL Financial Group refined mortality assumptions used in the calculation of deferred acquisition costs, unearned revenue reserves and certain reserves on interest sensitive products, via unlocking. This resulted in an unfavorable pre-tax impact of $0.7 million.

Net Income Taxes. FBL Financial Group's effective tax rate on net income from continuing operations was 28.6% for the fourth quarter of 2015, compared to 32.7% for the fourth quarter of 2014. The decrease is primarily due to the tax benefit from the disposition of an equity method investment.

Net Realized Gains/Losses on Investments. In the fourth quarter of 2015, FBL Financial Group recognized net realized gains on investments of $3.6 million. The net realized gain on investments of $3.6 million is attributable to realized gains on sales of $3.7 million and realized losses on sales of $0.1 million.

Stock Repurchases. FBL Financial Group has $39.0 million remaining under its current stock repurchase program. FBL Financial Group did not repurchase any shares of its Class A common stock or Class B common stock during the fourth quarter of 2015.

Capital and Book Value. As of December 31, 2015, the book value per share of FBL Financial Group common stock totaled $45.61, compared to $50.57 at December 31, 2014. Book value per share, excluding accumulated other comprehensive income(3), totaled $40.99 at December 31, 2015, compared to $40.11 at December 31, 2014. The December 31, 2015 company action level risk based capital ratio of



FBL Financial Group's wholly owned subsidiary, Farm Bureau Life Insurance Company, was approximately 570 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, February 12, 2016, at 11:00 a.m. Eastern Time. The call will be webcast 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 undertakes no obligation to update any forward-looking statements.

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
 
Year ended
 
December 31,
 
December 31,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
28,334

 
$
27,685

 
$
114,584

 
$
109,770

Traditional life insurance premiums
48,198

 
45,344

 
190,956

 
183,300

Net investment income
99,005

 
98,492

 
391,149

 
382,082

Net realized capital gains on sales of investments
3,553

 
221

 
11,062

 
3,760

 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
—

 
(549
)
 
(719
)
 
(822
)
Non-credit portion in other comprehensive income
—

 
—

 
146

 
—

Net impairment losses recognized in earnings
—

 
(549
)
 
(573
)
 
(822
)
 
 
 
 
 
 
 
 
Other income
3,534

 
3,954

 
15,631

 
14,849

Total revenues
182,624

 
175,147

 
722,809

 
692,939

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
54,322

 
53,395

 
217,443

 
211,540

Traditional life insurance benefits
44,178

 
41,013

 
176,145

 
162,876

Policyholder dividends
3,026

 
2,926

 
11,828

 
12,012

Underwriting, acquisition and insurance expenses
36,133

 
34,711

 
143,668

 
138,258

Interest expense
1,213

 
1,212

 
4,850

 
4,707

Other expenses
4,082

 
4,446

 
17,507

 
16,445

Total benefits and expenses
142,954

 
137,703

 
571,441

 
545,838

 
39,670

 
37,444

 
151,368

 
147,101

Income taxes
(11,361
)
 
(12,233
)
 
(47,418
)
 
(47,335
)
Equity income, net of related income taxes
2,591

 
2,932

 
9,523

 
10,103

Net income
30,900

 
28,143

 
113,473

 
109,869

Net loss attributable to noncontrolling interest
5

 
5

 
54

 
72

Net income attributable to FBL Financial Group, Inc.
$
30,905

 
$
28,148

 
$
113,527

 
$
109,941

 
 
 
 
 
 
 
 
Earnings per common share - assuming dilution
$
1.23

 
$
1.13

 
$
4.53

 
$
4.39

 
 
 
 
 
 
 
 
Weighted average common shares
24,920,539

 
24,830,476

 
24,927,209

 
24,866,284

Effect of dilutive securities
75,191

 
131,709

 
89,274

 
149,960

Weighted average common shares - diluted
24,995,730

 
24,962,185

 
25,016,483

 
25,016,244

 
 
 
 
 
 
 
 




(1) Reconciliation of Net Income Attributable to FBL Financial Group 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 Financial Group adjusted to eliminate the impact of realized gains and losses on investments and changes in net unrealized gains and losses on derivatives. FBL Financial Group 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 Financial Group believes the combined presentation and evaluation of operating income, together with net income, provides information that may enhance an investor's understanding of FBL Financial Group's underlying results and profitability. A reconciliation is provided in the following table:
 
Three months ended
 
Year ended
 
December 31,
 
December 31,
 
2015
 
2014
 
2015
 
2014
 
(Dollars in thousands,
except per share data)
Net income attributable to FBL Financial Group
$
30,905

 
$
28,148

 
$
113,527

 
$
109,941

Adjustments:
 
 
 
 
 
 
 
Net realized gains/losses on investments (a)
(4,077
)
 
220

 
(8,498
)
 
(1,786
)
Change in net unrealized gains/losses on derivatives (a)
(844
)
 
(21
)
 
(141
)
 
(1,114
)
Operating income
$
25,984

 
$
28,347

 
$
104,888

 
$
107,041

 
 
 
 
 
 
 
 
Operating income per common share - assuming dilution
$
1.04

 
$
1.13

 
$
4.19

 
$
4.27

 
 
 
 
 
 
 
 
 
(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
 
December 31,
2015
 
December 31,
2014
Book value per share
$
45.61

 
$
50.57

Less: Per share impact of accumulated other comprehensive income
4.62

 
10.46

Book value per share, excluding accumulated other comprehensive income
$
40.99

 
$
40.11


Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $114.5 million at December 31, 2015 and $258.4 million at December 31, 2014. 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 Financial Group believes this non-GAAP financial measure provides useful supplemental information.





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

 
December 31,
2015
 
December 31,
2014
Assets
 
 
 
Investments
$
7,722,753

 
$
7,680,970

Cash and cash equivalents
29,490

 
76,632

Deferred acquisition costs
335,783

 
220,760

Other assets
418,721

 
403,013

Assets held in separate accounts
625,257

 
683,033

Total assets
$
9,132,004

 
$
9,064,408

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Liabilities
 
 
 
Future policy benefits
$
6,401,481

 
$
6,125,118

Other policy funds, claims and benefits
638,362

 
625,529

Debt
112,000

 
97,000

Other liabilities
220,430

 
280,846

Liabilities related to separate accounts
625,257

 
683,033

Total liabilities
7,997,530

 
7,811,526

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

 
3,000

Class A common stock
149,248

 
144,625

Class B common stock
72

 
72

Accumulated other comprehensive income
114,532

 
258,410

Retained earnings
867,574

 
846,737

Total FBL Financial Group, Inc. stockholders' equity
1,134,426

 
1,252,844

Noncontrolling interest
48

 
38

Total stockholders' equity
1,134,474

 
1,252,882

Total liabilities and stockholders' equity
$
9,132,004

 
$
9,064,408

 
 
 
 
Common shares outstanding
24,808,176

 
24,715,316


####










FBL FINANCIAL GROUP, INC.
INVESTOR SUPPLEMENT
2015 Fourth Quarter









 
 
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 Executive Officer
 
 
(515) 225-5631
 
 
 
Don Seibel
 
Chief Financial Officer
 
 
(515) 226-6399
 
 
 
Kathleen Till Stange
 
Vice President Corporate & Investor Relations
 
 
(515) 226-6780
Internet Information
FBL Financial Group, Inc.
 
www.fblfinancial.com
Stock Symbol
NYSE: FFG
Transfer Agent
American Stock Transfer & Trust Company, LLC
 
6201 15th Avenue
 
Brooklyn, NY 11219
 
http://www.amstock.com
 
 

















FBL Financial Group, Inc.
 
 
Financial Supplement (Unaudited)
 
 
December 31, 2015
 
 
Table of Contents/Notes
 
 
 
 
 
Consolidated Financial Statements:
 
 
Consolidated Balance Sheets
 
Consolidated Statements of Comprehensive Income
 
Consolidated Statements of Operating Income, last five quarters
 
Financial Information by Segment:
 
 
Segment Information
 
Consolidating Statements of Pre-tax Operating Income
 
Statements of Pre-tax Operating Income, last five quarters:
 
 
Annuity Segment
 
Life Insurance Segment
 
Corporate and Other Segment
 
Deferred Acquisition Costs by Segment
 
Collected Premiums, last five quarters
 
Other Information
 

NOTE 1: In addition to net income, we have consistently used operating income, a non-GAAP financial measure common in the life insurance industry, as a primary economic measure to evaluate our financial performance. Operating income 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, 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. A view of our operating performance without the impact of these 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.

1



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

 
December 31,
2015
 
December 31,
2014
Assets
 
 
 
Investments:
 
 
 
Fixed maturities - available for sale, at fair value (amortized cost: 2015 - $6,379,919; 2014 - $6,111,433)
$
6,637,776

 
$
6,700,698

Equity securities - available for sale, at fair value (cost: 2015 - $116,336; 2014 - $107,410)
121,667

 
112,623

Mortgage loans
744,303

 
629,296

Real estate
1,955

 
3,622

Policy loans
185,784

 
182,502

Short-term investments
28,251

 
48,585

Other investments
3,017

 
3,644

Total investments
7,722,753

 
7,680,970

 
 
 
 
Cash and cash equivalents
29,490

 
76,632

Securities and indebtedness of related parties
134,570

 
129,872

Accrued investment income
78,274

 
76,445

Amounts receivable from affiliates
2,834

 
2,666

Reinsurance recoverable
103,898

 
101,247

Deferred acquisition costs
335,783

 
220,760

Value of insurance in force acquired
20,913

 
22,497

Current income taxes recoverable
2,421

 
—

Other assets
75,811

 
70,286

Assets held in separate accounts
625,257

 
683,033

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
9,132,004

 
$
9,064,408




2



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

 
December 31,
2015
 
December 31,
2014
Liabilities and stockholders' equity
 
 
 
Liabilities:
 
 
 
Future policy benefits:
 
 
 
Interest sensitive products
$
4,764,159

 
$
4,543,980

Traditional life insurance and accident and health products
1,637,322

 
1,581,138

Other policy claims and benefits
44,157

 
34,895

Supplementary contracts without life contingencies
339,929

 
341,955

Advance premiums and other deposits
254,276

 
248,679

Amounts payable to affiliates
575

 
188

Short-term debt payable to non-affiliates
15,000

 
—

Long-term debt payable to non-affiliates
97,000

 
97,000

Current income taxes
—

 
2,764

Deferred income taxes
135,063

 
205,698

Other liabilities
84,792

 
72,196

Liabilities related to separate accounts
625,257

 
683,033

Total liabilities
7,997,530

 
7,811,526

 
 
 
 
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 24,796,763 in 2015 and 24,703,903 shares in 2014
149,248

 
144,625

Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2015 and 2014
72

 
72

Accumulated other comprehensive income
114,532

 
258,410

Retained earnings
867,574

 
846,737

Total FBL Financial Group, Inc. stockholders' equity
1,134,426

 
1,252,844

Noncontrolling interest
48

 
38

Total stockholders' equity
1,134,474

 
1,252,882

Total liabilities and stockholders' equity
$
9,132,004

 
$
9,064,408




3



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

 
Three months ended December 31,
 
Year ended December 31,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
28,334

 
$
27,685

 
$
114,584

 
$
109,770

Traditional life insurance premiums
48,198

 
45,344

 
190,956

 
183,300

Net investment income
99,005

 
98,492

 
391,149

 
382,082

Net realized capital gains on sales of investments
3,553

 
221

 
11,062

 
3,760

 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
—

 
(549
)
 
(719
)
 
(822
)
Non-credit portion in other comprehensive income
—

 
—

 
146

 
—

Net impairment losses recognized in earnings
—

 
(549
)
 
(573
)
 
(822
)
Other income
3,534

 
3,954

 
15,631

 
14,849

Total revenues
182,624

 
175,147

 
722,809

 
692,939

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
54,322

 
53,395

 
217,443

 
211,540

Traditional life insurance benefits
44,178

 
41,013

 
176,145

 
162,876

Policyholder dividends
3,026

 
2,926

 
11,828

 
12,012

Underwriting, acquisition and insurance expenses
36,133

 
34,711

 
143,668

 
138,258

Interest expense
1,213

 
1,212

 
4,850

 
4,707

Other expenses
4,082

 
4,446

 
17,507

 
16,445

Total benefits and expenses
142,954

 
137,703

 
571,441

 
545,838

 
39,670

 
37,444

 
151,368

 
147,101

Income taxes
(11,361
)
 
(12,233
)
 
(47,418
)
 
(47,335
)
Equity income, net of related income taxes
2,591

 
2,932

 
9,523

 
10,103

Net income
30,900

 
28,143

 
113,473

 
109,869

Net loss attributable to noncontrolling interest
5

 
5

 
54

 
72

Net income attributable to FBL Financial Group, Inc.
$
30,905

 
$
28,148

 
$
113,527

 
$
109,941

 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to FBL Financial Group, Inc.
$
(24,123
)
 
$
52,197

 
$
(30,351
)
 
$
249,284

 
 
 
 
 
 
 
 
Earnings per common share
$
1.24

 
$
1.13

 
$
4.55

 
$
4.42

Earnings per common share - assuming dilution
$
1.23

 
$
1.13

 
$
4.53

 
$
4.39

 
 
 
 
 
 
 
 
Cash dividends per common share
$
0.40

 
$
0.35

 
$
1.60

 
$
1.40

Special cash dividend per common share
$
—

 
$
—

 
$
2.00

 
$
—



4



FBL Financial Group, Inc.
Consolidated Statements of Operating Income
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
Operating revenues:
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
$
27,686

 
$
28,121

 
$
28,270

 
$
29,861

 
$
28,339

Traditional life insurance premiums
45,344

 
47,148

 
48,891

 
46,719

 
48,198

Net investment income
98,344

 
98,935

 
98,218

 
98,253

 
98,434

Other income
3,954

 
4,270

 
4,284

 
3,543

 
3,534

Total operating revenues
175,328

 
178,474

 
179,663

 
178,376

 
178,505

 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits
53,193

 
55,825

 
53,573

 
55,516

 
55,105

Traditional life insurance benefits
41,013

 
45,709

 
44,653

 
41,604

 
44,178

Policyholder dividends
2,926

 
2,961

 
2,956

 
2,885

 
3,026

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
 
 
Commission expense, net of deferrals
4,790

 
6,137

 
5,348

 
5,243

 
5,532

Amortization of deferred acquisition costs
9,746

 
8,458

 
8,609

 
9,504

 
8,767

Amortization of value of insurance in force acquired
1,786

 
581

 
594

 
667

 
585

Other underwriting expenses
18,465

 
20,532

 
21,012

 
21,108

 
21,100

Total underwriting, acquisition and insurance expenses
34,787

 
35,708

 
35,563

 
36,522

 
35,984

Interest expense
1,212

 
1,212

 
1,212

 
1,213

 
1,213

Other expenses
4,446

 
4,530

 
4,618

 
4,277

 
4,082

Total benefits and expenses
137,577

 
145,945

 
142,575

 
142,017

 
143,588

 
37,751

 
32,529

 
37,088

 
36,359

 
34,917

Income taxes
(12,341
)
 
(10,504
)
 
(11,694
)
 
(11,855
)
 
(11,529
)
Net loss attributable to noncontrolling interest
5

 
21

 
9

 
19

 
5

Equity income, net of related income taxes
2,932

 
1,769

 
2,402

 
2,761

 
2,591

Operating income
28,347

 
23,815

 
27,805

 
27,284

 
25,984

 
 
 
 
 
 
 
 
 
 
Realized gains/losses on investments, net of offsets
(220
)
 
(247
)
 
4,975

 
(307
)
 
4,077

Change in net unrealized gains/losses on derivatives, net of offsets
21

 
23

 
(408
)
 
(318
)
 
844

Net income attributable to FBL Financial Group, Inc.
$
28,148

 
$
23,591

 
$
32,372

 
$
26,659

 
$
30,905

 
 
 
 
 
 
 
 
 
 
Operating income per common share - assuming dilution
$
1.13

 
$
0.95

 
$
1.11

 
$
1.09

 
$
1.04

Earnings per common share - assuming dilution
$
1.13

 
$
0.94

 
$
1.29

 
$
1.06

 
$
1.23

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (in thousands):
 
 
 
 
 
 
 
 
 
Basic
24,830

 
24,899

 
24,951

 
24,923

 
24,921

Effect of dilutive securities
132

 
110

 
88

 
80

 
75

Diluted
24,962

 
25,009

 
25,039

 
25,003

 
24,996

 
 
 
 
 
 
 
 
 
 
Operating return on equity, excluding AOCI - last twelve months
11.2
%
 
11.2
%
 
11.3
%
 
10.9
%
 
10.6
%
Operating return on equity, including AOCI - last twelve months
9.2
%
 
8.9
%
 
9.0
%
 
8.9
%
 
8.8
%



5



FBL Financial Group, Inc.
Segment Information

We analyze operations by reviewing financial information regarding our primary products that are aggregated into the Annuity and Life Insurance product segments. In addition, our Corporate and Other segment includes various support operations, corporate capital and other product lines that are not currently underwritten by the Company.

The Annuity segment primarily consists of fixed rate annuities and supplementary contracts (some of which involve life contingencies). 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 annuity segment also includes index annuities. 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 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 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;
•
 
closed blocks of variable annuity, variable universal life insurance and accident and health insurance products;
•
 
advisory services for the management of investments and other companies;
•
 
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. Accordingly, income taxes are not allocated to the segments. In addition, operating results are reported net of transactions between the segments.

6



FBL Financial Group, Inc.
Consolidating Statements of Pre-tax Operating Income

Quarter Ended December 31, 2015
Annuity
 
Life Insurance
 
Corporate & Other
 
Consolidated
 
(Dollars in thousands)
Operating revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
714

 
$
16,628

 
$
10,997

 
$
28,339

Traditional life insurance premiums
—

 
48,198

 
—

 
48,198

Net investment income
52,068

 
38,306

 
8,060

 
98,434

Other income
—

 
(63
)
 
3,597

 
3,534

Total operating revenues
52,782

 
103,069

 
22,654

 
178,505

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
28,251

 
18,885

 
7,969

 
55,105

Traditional life insurance benefits
—

 
44,178

 
—

 
44,178

Policyholder dividends
—

 
3,026

 
—

 
3,026

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
Commission expense, net of deferrals
452

 
4,339

 
741

 
5,532

Amortization of deferred policy acquisition costs
2,701

 
6,202

 
(136
)
 
8,767

Amortization of value of insurance in force acquired
206

 
379

 
—

 
585

Other underwriting expenses
4,903

 
14,698

 
1,499

 
21,100

Total underwriting, acquisition and insurance expenses
8,262

 
25,618

 
2,104

 
35,984

Interest expense
—

 
—

 
1,213

 
1,213

Other expenses
—

 
—

 
4,082

 
4,082

Total benefits and expenses
36,513

 
91,707

 
15,368

 
143,588

 
16,269

 
11,362

 
7,286

 
34,917

Net loss attributable to noncontrolling interest
—

 
—

 
5

 
5

Equity loss, before tax
—

 
—

 
(1,296
)
 
(1,296
)
Pre-tax operating income
$
16,269

 
$
11,362

 
$
5,995

 
$
33,626


7



FBL Financial Group, Inc.
Consolidating Statements of Pre-tax Operating Income (Continued)


Quarter Ended December 31, 2014
Annuity
 
Life Insurance
 
Corporate & Other
 
Consolidated
 
(Dollars in thousands)
Operating revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
535

 
$
15,549

 
$
11,602

 
$
27,686

Traditional life insurance premiums
—

 
45,344

 
—

 
45,344

Net investment income
52,797

 
37,212

 
8,335

 
98,344

Other income
—

 
(85
)
 
4,039

 
3,954

Total operating revenues
53,332

 
98,020

 
23,976

 
175,328

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
26,971

 
17,221

 
9,001

 
53,193

Traditional life insurance benefits
—

 
41,013

 
—

 
41,013

Policyholder dividends
—

 
2,926

 
—

 
2,926

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
Commission expense, net of deferrals
463

 
3,676

 
651

 
4,790

Amortization of deferred acquisition costs
2,591

 
4,708

 
2,447

 
9,746

Amortization of value of insurance in force acquired
1,405

 
381

 
—

 
1,786

Other underwriting expenses
3,913

 
13,170

 
1,382

 
18,465

Total underwriting, acquisition and insurance expenses
8,372

 
21,935

 
4,480

 
34,787

Interest expense
—

 
—

 
1,212

 
1,212

Other expenses
—

 
—

 
4,446

 
4,446

Total benefits and expenses
35,343

 
83,095

 
19,139

 
137,577

 
17,989

 
14,925

 
4,837

 
37,751

Net loss attributable to noncontrolling interest
—

 
—

 
5

 
5

Equity loss, before tax
—

 
—

 
(325
)
 
(325
)
Pre-tax operating income
$
17,989

 
$
14,925

 
$
4,517

 
$
37,431



8



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Annuity Segment
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
Pre-tax Operating Income
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
$
535

 
$
613

 
$
655

 
$
542

 
$
714

Net investment income
52,797

 
52,146

 
52,809

 
52,873

 
52,068

Total operating revenues
53,332

 
52,759

 
53,464

 
53,415

 
52,782

 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits
26,971

 
27,453

 
28,162

 
26,490

 
28,251

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
 
 
Commission expense, net of deferrals
463

 
546

 
435

 
441

 
452

Amortization of deferred acquisition costs
2,591

 
2,729

 
2,751

 
1,477

 
2,701

Amortization of value of insurance in force acquired
1,405

 
202

 
250

 
288

 
206

Other underwriting expenses
3,913

 
4,741

 
5,035

 
4,957

 
4,903

Total underwriting, acquisition and insurance expenses
8,372

 
8,218

 
8,471

 
7,163

 
8,262

Total benefits and expenses
35,343

 
35,671

 
36,633

 
33,653

 
36,513

Pre-tax operating income
$
17,989

 
$
17,088

 
$
16,831

 
$
19,762

 
$
16,269

 
 
 
 
 
 
 
 
 
 
Selected balance sheet data, securities at amortized cost:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Investments
$
3,851,301

 
$
3,937,926

 
$
3,990,319

 
$
4,042,178

 
$
4,075,702

Deferred acquisition costs
82,778

 
83,295

 
83,156

 
85,271

 
85,819

Value of insurance in force acquired
6,044

 
5,841

 
5,585

 
5,299

 
5,088

 
 
 
 
 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Interest sensitive product reserves
$
3,370,109

 
$
3,437,635

 
$
3,485,448

 
$
3,516,729

 
$
3,550,364

Other insurance reserves
372,244

 
368,921

 
373,611

 
373,950

 
370,326

Allocated equity, excluding AOCI
276,934

 
255,039

 
258,557

 
260,675

 
262,686

 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 
 
 
 
Number of direct contracts
52,938

 
52,738

 
52,652

 
52,999

 
53,319

 
 
 
 
 
 
 
 
 
 
Portfolio yield net of assumed defaults
4.94
%
 
4.92
%
 
4.90
%
 
4.87
%
 
4.84
%
Credited rate
2.87

 
2.85

 
2.80

 
2.79

 
2.79

Spread on individual annuities at end of quarter (1)
2.07
%
 
2.07
%
 
2.10
%
 
2.08
%
 
2.05
%
 
 
 
 
 
 
 
 
 
 
Interest sensitive reserve activity:
 
 
 
 
 
 
 
 
 
Individual annuity reserve:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
2,584,236

 
$
2,609,792

 
$
2,641,380

 
$
2,667,088

 
$
2,729,891

Deposits
56,322

 
73,480

 
67,730

 
97,494

 
88,090

Withdrawals, surrenders and death benefits
(38,551
)
 
(47,920
)
 
(45,482
)
 
(38,006
)
 
(37,526
)
Net flows
17,771

 
25,560

 
22,248

 
59,488

 
50,564

 
 
 
 
 
 
 
 
 
 
Policyholder interest
18,830

 
18,650

 
18,799

 
18,088

 
19,248

Annuitizations and other
(11,045
)
 
(12,622
)
 
(15,339
)
 
(14,773
)
 
(12,701
)
Balance, end of period
2,609,792

 
2,641,380

 
2,667,088

 
2,729,891

 
2,787,002

Other interest sensitive reserves
760,317

 
796,255

 
818,360

 
786,838

 
763,362

Total interest sensitive product reserves
$
3,370,109

 
$
3,437,635

 
$
3,485,448

 
$
3,516,729

 
$
3,550,364


(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.

9



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Life Insurance Segment
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
Pre-tax Operating Income
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
$
15,549

 
$
15,905

 
$
16,017

 
$
16,998

 
$
16,628

Traditional life insurance premiums
45,344

 
47,148

 
48,891

 
46,719

 
48,198

Net investment income
37,212

 
39,044

 
37,637

 
37,743

 
38,306

Other income
(85
)
 
(87
)
 
(89
)
 
(29
)
 
(63
)
Total operating revenues
98,020

 
102,010

 
102,456

 
101,431

 
103,069

 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits:
 
 
 
 
 
 
 
 
 
Interest credited
8,038

 
8,185

 
8,065

 
8,692

 
8,309

Death benefits and other
9,183

 
12,515

 
10,119

 
10,856

 
10,576

Total interest sensitive product benefits
17,221

 
20,700

 
18,184

 
19,548

 
18,885

Traditional life insurance benefits:
 
 
 
 
 
 
 
 
 
Death benefits
16,853

 
24,375

 
21,054

 
21,768

 
20,489

Surrender and other benefits
7,343

 
7,282

 
7,044

 
7,242

 
7,018

Increase in traditional life future policy benefits
16,817

 
14,052

 
16,555

 
12,594

 
16,671

Total traditional life insurance benefits
41,013

 
45,709

 
44,653

 
41,604

 
44,178

Policyholder dividends
2,926

 
2,961

 
2,956

 
2,885

 
3,026

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
 
 
Commission expense, net of deferrals
3,676

 
4,627

 
4,123

 
4,065

 
4,339

Amortization of deferred acquisition costs
4,708

 
3,966

 
4,049

 
147

 
6,202

Amortization of value of insurance in force acquired
381

 
379

 
344

 
379

 
379

Other underwriting expenses
13,170

 
13,883

 
14,503

 
14,448

 
14,698

Total underwriting, acquisition and insurance expenses
21,935

 
22,855

 
23,019

 
19,039

 
25,618

Total benefits and expenses
83,095

 
92,225

 
88,812

 
83,076

 
91,707

Pre-tax operating income
$
14,925

 
$
9,785

 
$
13,644

 
$
18,355

 
$
11,362

 
 
 
 
 
 
 
 
 
 
Selected balance sheet data, securities at amortized cost:
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Investments
$
2,620,522

 
$
2,659,002

 
$
2,680,504

 
$
2,727,032

 
$
2,756,265

Deferred acquisition costs
232,020

 
235,395

 
238,647

 
245,016

 
248,333

Value of insurance in force acquired
20,392

 
20,013

 
19,669

 
19,291

 
18,912

 
 
 
 
 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
Liabilities: (1)
 
 
 
 
 
 
 
 
 
Interest sensitive reserves
$
824,964

 
$
834,736

 
$
844,306

 
$
850,808

 
$
859,582

Other insurance reserves
1,750,822

 
1,778,288

 
1,788,634

 
1,797,249

 
1,818,245

Allocated equity, excluding AOCI
307,062

 
321,009

 
325,051

 
327,310

 
332,956


 

10



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Life Insurance Segment (Continued)
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
 
(Dollars in thousands)
 
Other data:
 
 
 
 
 
 
 
 
 
Number of direct policies - traditional life
362,519

 
364,134

 
364,835

 
364,194

 
365,029

Number of direct policies - universal life
62,020

 
62,147

 
62,082

 
62,045

 
62,661

Direct face amounts - traditional life
$
45,294,950

 
$
46,059,311

 
$
46,641,997

 
$
46,960,976

 
$
47,490,316

Direct face amounts - universal life
$
6,435,869

 
$
6,474,505

 
$
6,535,614

 
$
6,515,708

 
$
6,616,049

 
 
 
 
 
 
 
 
 
 
Portfolio yield net of assumed defaults
5.35
%
 
5.27
%
 
5.25
%
 
5.22
%
 
5.21
%
Credited rate
3.86

 
3.81

 
3.82

 
3.81

 
3.81

Spread on universal life at end of quarter (2)
1.49
%
 
1.46
%
 
1.43
%
 
1.41
%
 
1.40
%
 
 
 
 
 
 
 
 
 
 
Interest sensitive reserve activity: (1)
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
813,652

 
$
824,964

 
$
834,736

 
$
844,306

 
$
850,808

Deposits
23,550

 
24,959

 
24,413

 
22,828

 
22,955

Withdrawals and surrenders
(5,001
)
 
(6,131
)
 
(6,170
)
 
(7,868
)
 
(5,136
)
Net flows
18,549

 
18,828

 
18,243

 
14,960

 
17,819

 
 
 
 
 
 
 
 
 
 
Policyholder interest
7,392

 
7,477

 
7,365

 
7,794

 
7,605

Policy charges
(16,081
)
 
(16,553
)
 
(16,544
)
 
(16,647
)
 
(16,840
)
Benefits and other
1,452

 
20

 
506

 
395

 
190

Balance, end of period
$
824,964

 
$
834,736

 
$
844,306

 
$
850,808

 
$
859,582


(1)
Reserves on riders in interest sensitive life insurance products are included in Other insurance reserves.
(2)
Point-in-time spread at the balance sheet date used by management for decision making with universal life (excluding products with a secondary guarantee) differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.

11



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income
Corporate and Other
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
Pre-tax Operating Income (Loss)
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
 
$
11,602

 
$
11,603

 
$
11,598

 
$
12,321

 
$
10,997

Net investment income
 
8,335

 
7,745

 
7,772

 
7,637

 
8,060

Other income
 
4,039

 
4,357

 
4,373

 
3,572

 
3,597

Total operating revenues
 
23,976

 
23,705

 
23,743

 
23,530

 
22,654

 
 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits
 
9,001

 
7,672

 
7,227

 
9,478

 
7,969

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
 
 
 
Commission expense, net of deferrals
 
651

 
964

 
790

 
737

 
741

Amortization of deferred acquisition costs
 
2,447

 
1,763

 
1,809

 
7,880

 
(136
)
Other underwriting expenses
 
1,382

 
1,908

 
1,474

 
1,703

 
1,499

Total underwriting, acquisition and insurance expenses
 
4,480

 
4,635

 
4,073

 
10,320

 
2,104

Interest expense
 
1,212

 
1,212

 
1,212

 
1,213

 
1,213

Other expenses
 
4,446

 
4,530

 
4,618

 
4,277

 
4,082

Total benefits and expenses
 
19,139

 
18,049

 
17,130

 
25,288

 
15,368

 
 
4,837

 
5,656

 
6,613

 
(1,758
)
 
7,286

Net loss attributable to noncontrolling interest
 
5

 
21

 
9

 
19

 
5

Equity loss, before tax
 
(325
)
 
(2,181
)
 
(1,671
)
 
(1,035
)
 
(1,296
)
Pre-tax operating income (loss)
 
$
4,517

 
$
3,496

 
$
4,951

 
$
(2,774
)
 
$
5,995

 
 
 
 
 
 
 
 
 
 
 
Selected balance sheet data, securities at amortized cost:
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
Investments
 
$
614,669

 
$
584,707

 
$
590,971

 
$
581,838

 
$
627,598

Deferred acquisition costs
 
85,506

 
83,937

 
82,450

 
74,943

 
75,366

Separate account assets
 
683,033

 
688,194

 
676,045

 
617,172

 
625,257

 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Interest sensitive reserves
 
$
337,725

 
$
336,598

 
$
341,076

 
$
345,069

 
$
346,177

Other insurance reserves
 
95,062

 
98,643

 
94,455

 
97,130

 
94,411

Separate account liabilities
 
683,033

 
688,194

 
676,045

 
617,172

 
625,257

Allocated equity, excluding AOCI
 
407,438

 
382,181

 
397,652

 
406,733

 
421,252

 
 
 
 
 
 
 
 
 
 
 
Rollforward of separate account balances:
 
 
 
 
 
 
 
 
 
 
Beginning separate account balance
 
$
686,218

 
$
683,033

 
$
688,194

 
$
676,045

 
$
617,172

Net premiums
 
3,061

 
8,609

 
7,218

 
3,455

 
5,808

Net investment income
 
12,069

 
16,201

 
(1,088
)
 
(45,356
)
 
19,291

Charges, benefits and surrenders
 
(18,315
)
 
(19,649
)
 
(18,279
)
 
(16,972
)
 
(17,014
)
Ending separate account balance
 
$
683,033

 
$
688,194

 
$
676,045

 
$
617,172

 
$
625,257

 
 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 
 
 
 
 
Number of direct contracts - variable annuity
 
12,128

 
11,936

 
11,771

 
11,455

 
11,292

Number of direct policies - variable universal life
 
42,651

 
42,139

 
41,653

 
41,148

 
40,693

Direct face amounts - variable universal life
 
$
5,289,986

 
$
5,219,147

 
$
5,166,219

 
$
5,089,925

 
$
5,030,731



12



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
 
 (Dollars in thousands)
 
Annuity
 
 
 
 
 
 
 
 
 
Balance - beginning of period
$
82,882

 
$
82,778

 
$
83,295

 
$
83,156

 
$
85,271

Capitalization:
 
 
 
 
 
 
 
 
 
    Commissions
2,112

 
2,779

 
2,660

 
3,132

 
2,917

    Expenses
281

 
196

 
239

 
248

 
327

    Deferral of sales inducements
71

 
85

 
42

 
132

 
257

         Total capitalization
2,464

 
3,060

 
2,941

 
3,512

 
3,501

Amortization - operating basis, before impact of unlocking
(2,598
)
 
(2,741
)
 
(2,761
)
 
(2,909
)
 
(2,722
)
Amortization - unlocking, operating basis
—

 
—

 
—

 
1,419

 
—

Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives
30

 
198

 
(319
)
 
93

 
(231
)
Balance - end of period
$
82,778

 
$
83,295

 
$
83,156

 
$
85,271

 
$
85,819

 
 
 
 
 
 
 
 
 
 
Life Insurance
 
 
 
 
 
 
 
 
 
Balance - beginning of period
$
227,849

 
$
232,020

 
$
235,395

 
$
238,647

 
$
245,016

Capitalization:
 
 
 
 
 
 
 
 
 
    Commissions
5,472

 
5,009

 
4,923

 
4,392

 
6,786

    Expenses
3,134

 
2,131

 
2,275

 
2,077

 
2,340

    Deferral of sales inducements
419

 
336

 
263

 
125

 
585

         Total capitalization
9,025

 
7,476

 
7,461

 
6,594

 
9,711

Amortization - operating basis, before impact of unlocking
(4,255
)
 
(4,101
)
 
(4,180
)
 
(4,637
)
 
(4,566
)
Amortization - unlocking, operating basis
(600
)
 
—

 
—

 
4,400

 
(1,833
)
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives
1

 
—

 
(29
)
 
12

 
5

Balance - end of period
$
232,020

 
$
235,395

 
$
238,647

 
$
245,016

 
$
248,333

 
 
 
 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
 
 
 
Balance - beginning of period
$
87,725

 
$
85,506

 
$
83,937

 
$
82,450

 
$
74,943

Capitalization:
 
 
 
 
 
 
 
 
 
    Commissions
187

 
239

 
242

 
139

 
156

    Deferral of sales inducements
12

 
20

 
7

 
1

 
19

         Total capitalization
199

 
259

 
249

 
140

 
175

Amortization - operating basis, before impact of unlocking
(1,571
)
 
(1,798
)
 
(1,833
)
 
(3,513
)
 
(1,051
)
Amortization - unlocking, operating basis
(892
)
 
—

 
—

 
(4,375
)
 
1,220

Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives
45

 
(30
)
 
97

 
241

 
79

Balance - end of period
$
85,506

 
$
83,937

 
$
82,450

 
$
74,943

 
$
75,366


13



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment (Continued)
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
 
 (Dollars in thousands)
 
Total
 
 
 
 
 
 
 
 
 
Balance - beginning of period
$
398,456

 
$
400,304

 
$
402,627

 
$
404,253

 
$
405,230

Capitalization:
 
 
 
 
 
 
 
 
 
    Commissions
7,771

 
8,027

 
7,825

 
7,663

 
9,859

    Expenses
3,415

 
2,327

 
2,514

 
2,325

 
2,667

    Deferral of sales inducements
502

 
441

 
312

 
258

 
861

         Total capitalization
11,688

 
10,795

 
10,651

 
10,246

 
13,387

Amortization - operating basis, before impact of unlocking
(8,424
)
 
(8,640
)
 
(8,774
)
 
(11,059
)
 
(8,339
)
Amortization - unlocking, operating basis
(1,492
)
 
—

 
—

 
1,444

 
(613
)
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives
76

 
168

 
(251
)
 
346

 
(147
)
Balance - end of period
400,304

 
402,627

 
404,253

 
405,230

 
409,518

Impact of realized/unrealized gains/losses in AOCI
(179,544
)
 
(197,928
)
 
(111,878
)
 
(112,780
)
 
(73,735
)
Deferred acquisition costs
$
220,760

 
$
204,699

 
$
292,375

 
$
292,450

 
$
335,783







14



FBL Financial Group, Inc.
Collected Premiums
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
 
 (Dollars in thousands)
 
Annuity
 
 
 
 
 
 
 
 
 
Individual:
 
 
 
 
 
 
 
 
 
Fixed rate:
 
 
 
 
 
 
 
 
 
First year
$
15,842

 
$
20,180

 
$
21,630

 
$
55,743

 
$
39,462

Renewal
19,677

 
32,014

 
26,084

 
19,868

 
22,628

Total fixed rate
35,519

 
52,194

 
47,714

 
75,611

 
62,090

Index annuity
20,867

 
21,930

 
20,583

 
22,351

 
26,005

Total individual
56,386

 
74,124

 
68,297

 
97,962

 
88,095

Group
3,063

 
2,211

 
1,727

 
4,009

 
1,467

Total Annuity
59,449

 
76,335

 
70,024

 
101,971

 
89,562

 
 
 
 
 
 
 
 
 
 
Life Insurance
 
 
 
 
 
 
 
 
 
Direct:
 
 
 
 
 
 
 
 
 
Universal life:
 
 
 
 
 
 
 
 
 
First year
6,763

 
6,645

 
6,486

 
6,377

 
5,498

Renewal
16,212

 
17,528

 
17,350

 
15,632

 
17,166

Total universal life
22,975

 
24,173

 
23,836

 
22,009

 
22,664

Participating whole life:
 
 
 
 
 
 
 
 
 
First year
2,905

 
3,113

 
3,533

 
3,726

 
4,161

Renewal
24,057

 
24,759

 
24,783

 
22,964

 
24,524

Total participating whole life
26,962

 
27,872

 
28,316

 
26,690

 
28,685

Term life and other:
 
 
 
 
 
 
 
 
 
First year
2,816

 
3,166

 
2,980

 
2,827

 
2,737

Renewal
22,139

 
22,892

 
22,732

 
22,607

 
23,517

Total term life and other
24,955

 
26,058

 
25,712

 
25,434

 
26,254

Total direct life insurance
74,892

 
78,103

 
77,864

 
74,133

 
77,603

Reinsurance
(6,875
)
 
(6,888
)
 
(6,777
)
 
(5,974
)
 
(7,061
)
Total Life Insurance
68,017

 
71,215

 
71,087

 
68,159

 
70,542

 
 
 
 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
 
 
 
Variable, net of reinsurance
14,456

 
18,578

 
16,959

 
13,838

 
14,424

Accident and health, net of reinsurance
226

 
120

 
34

 
38

 
216

Total Corporate and Other
14,682

 
18,698

 
16,993

 
13,876

 
14,640

 
 
 
 
 
 
 
 
 
 
Total collected premiums
$
142,148

 
$
166,248

 
$
158,104

 
$
184,006

 
$
174,744





15



FBL Financial Group, Inc.
Other Information
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
2014
 
2015
 
2015
 
2015
 
2015
 
 
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Capitalization:
 
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
—

 
$
—

 
$
—

 
$
15,000

Trust preferred securities, due 2047
97,000

 
97,000

 
97,000

 
97,000

 
97,000

Total debt
97,000

 
97,000

 
97,000

 
97,000

 
112,000

 
 
 
 
 
 
 
 
 
 
Preferred stock
3,000

 
3,000

 
3,000

 
3,000

 
3,000

Common stockholders' equity, excluding AOCI
991,434

 
958,229

 
981,260

 
994,718

 
1,016,894

Total capitalization, excluding AOCI
1,091,434

 
1,058,229

 
1,081,260

 
1,094,718

 
1,131,894

 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income
258,410

 
287,828

 
172,201

 
169,560

 
114,532

Total capitalization, including AOCI
$
1,349,844

 
$
1,346,057

 
$
1,253,461

 
$
1,264,278

 
$
1,246,426

 
 
 
 
 
 
 
 
 
 
Common shares outstanding
24,715,316

 
24,796,884

 
24,814,581

 
24,777,925

 
24,808,176

 
 
 
 
 
 
 
 
 
 
Book Value per Share:
 
 
 
 
 
 
 
 
 
Excluding AOCI
$
40.11

 
$
38.64

 
$
39.54

 
$
40.15

 
$
40.99

Including AOCI
50.57

 
50.25

 
46.48

 
46.99

 
45.61

 
 
 
 
 
 
 
 
 
 
Debt-to-Capital Ratio:
 
 
 
 
 
 
 
 
 
Excluding AOCI
8.9
%
 
9.2
%
 
9.0
%
 
8.9
%
 
9.9
%
Including AOCI
7.2

 
7.2

 
7.7

 
7.7

 
9.0

 
 
 
 
 
 
 
 
 
 
Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
 
 
 
 
 
 
 
 
 
Excluding AOCI
4.4
%
 
4.6
%
 
4.5
%
 
4.4
%
 
4.9
%
Including AOCI
3.6

 
3.6

 
3.9

 
3.8

 
4.5

 
 
 
 
 
 
 
 
 
 
Class A Common Ownership:
 
 
 
 
 
 
 
 
 
Iowa Farm Bureau Federation
59.7
%
 
59.6
%
 
59.5
%
 
59.6
%
 
59.5
%
Public
40.3

 
40.4

 
40.5

 
40.4

 
40.5

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 



16



FBL Financial Group, Inc.
Other Information (Continued)
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
2014
 
2015
 
2015
 
2015
 
2015
 
 
 
 
 
 
 
 
 
 
Investment by Type:
 
 
 
 
 
 
 
 
 
Fixed maturity securities
67.1
%
 
66.9
%
 
65.8
%
 
66.0
%
 
65.2
%
Residential mortgage-backed
6.4

 
6.2

 
6.2

 
6.0

 
6.0

Commercial mortgage-backed
6.9

 
6.9

 
6.9

 
7.2

 
7.2

Other asset-backed
6.8

 
7.1

 
7.6

 
7.5

 
7.6

Mortgage loans
8.2

 
8.6

 
9.0

 
9.0

 
9.6

Equity securities
1.5

 
1.6

 
1.6

 
1.6

 
1.6

Other
3.1

 
2.7

 
2.9

 
2.7

 
2.8

 
 
 
 
 
 
 
 
 
 
Quality of Fixed Maturity Securities:
 
 
 
 
 
 
 
 
 
AAA, AA, A
63.5
%
 
63.2
%
 
63.3
%
 
64.4
%
 
65.6
%
BBB
32.9

 
32.9

 
32.6

 
31.7

 
30.9

BB
2.5

 
2.7

 
2.9

 
2.8

 
2.4

<BB
1.1

 
1.2

 
1.2

 
1.1

 
1.1

Gross Unrealized Gains and Gross Unrealized Losses by Energy Industry Classification
 
 
 
December 31, 2015
 
Total Carrying Value
 
Carrying
Value of Securities
with Gross Unrealized Gains
 
Gross Unrealized Gains
 
Carrying
Value of Securities
with Gross Unrealized Losses
 
Gross Unrealized Losses
 
(Dollars in thousands)
Energy securities:
 
 
 
 
 
 
 
 
 
Midstream
$
131,364

 
$
48,886

 
$
2,727

 
$
82,478

 
$
(23,557
)
Oil Field Services
72,565

 
23,476

 
1,691

 
49,089

 
(15,687
)
Independent Exploration & Production
131,328

 
52,075

 
4,107

 
79,253

 
(12,346
)
Integrated Energy
123,621

 
76,556

 
5,807

 
47,065

 
(8,639
)
Refiners
25,110

 
13,239

 
416

 
11,871

 
(2,202
)
Total
$
483,988

 
$
214,232

 
$
14,748

 
$
269,756

 
$
(62,431
)
Energy Industry Securities by NAIC Designation and Equivalent Rating
 
 
 
 
 
 
 
December 31, 2015
NAIC Designation
 
Equivalent Rating
 
Amortized Cost
 
Carrying Value
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
 
 
 
(Dollars in thousands)
1
 
AAA, AA, A
 
$
125,920

 
$
128,540

 
$
7,318

 
$
(4,699
)
2
 
BBB
 
339,796

 
305,447

 
7,386

 
(41,735
)
 
 
Total investment grade
 
465,716

 
433,987

 
14,704

 
(46,434
)
3
 
BB
 
58,432

 
43,331

 
44

 
(15,144
)
4
 
B
 
7,523

 
6,670

 
—

 
(853
)
 
 
Total below investment grade
 
65,955

 
50,001

 
44

 
(15,997
)
 
 
Total
 
$
531,671

 
$
483,988

 
$
14,748

 
$
(62,431
)
At December 31, 2015 89.7% of our energy holdings were investment grade. Our non-investment grade holdings included midstream issuers with a carrying value of $18.3 million and oil field services with a carrying value of $16.4 million. Non-investment grade oil field services included contract drillers with a carrying value of $5.9 million and an unrealized loss of $5.0 million.

17



FBL Financial Group, Inc.
Other Information (Continued)
 
 
 
 
 
 
 
 
 
 
 
Q4 2014
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
Equity Income (Loss), net of related income taxes
 
 (Dollars in thousands)
 
Equity income (loss):
 
 
 
 
 
 
 
 
 
Low income housing tax credit partnerships
$
(1,626
)
 
$
(1,845
)
 
$
(1,997
)
 
$
(1,554
)
 
$
(1,626
)
Other equity method investments
1,301

 
(336
)
 
326

 
519

 
330

 
(325
)
 
(2,181
)
 
(1,671
)
 
(1,035
)
 
(1,296
)
Income taxes:
 
 
 
 
 
 
 
 
 
Taxes on equity income (loss)
126

 
763

 
585

 
362

 
454

Investment tax credits
3,131

 
3,187

 
3,488

 
3,434

 
3,433

Equity income, net of related income taxes
$
2,932

 
$
1,769

 
$
2,402

 
$
2,761

 
$
2,591

 
 
 
 
 
 
 
 
 
 
 
December 31,
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
2014
 
2015
 
2015
 
2015
 
2015
Agent Strength Totals:
 
 
 
 
 
 
 
 
 
Full time agents and agency managers:
 
 
 
 
 
 
 
 
 
8-state Farm Bureau Property & Casualty channel
1,141

 
1,126

 
1,154

 
1,176

 
1,188

6 life partner states and Colorado
654

 
656

 
656

 
662

 
661

 
1,795

 
1,782

 
1,810

 
1,838

 
1,849



18


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