EX-99.1 2 exh991newsrelease2016q3.htm EXHIBIT 99.1 Exhibit












FOR IMMEDIATE RELEASE
CONTACT:
Thursday, November 3, 2016
Kathleen Till Stange, V.P. Corporate & Investor Relations
 
(515) 226-6780, Kathleen.TillStange@FBLFinancial.com

FBL Financial Group Reports Third Quarter 2016 Results

West Des Moines, Iowa, November 3, 2016 -

Financial Highlights
(Dollars in thousands, except per share data)
 
Three months ended September 30,
 
2016
 
2015
Net income attributable to FBL Financial Group
$
30,017

 
$
26,659

Operating income
28,882

 
27,284

Earnings per common share (assuming dilution):
 
 
 
Net income
1.20

 
1.06

Operating income
1.15

 
1.09

    

FBL Financial Group, Inc. (NYSE: FFG) today reported net income attributable to FBL Financial Group for the third quarter of 2016 of $30.0 million, or $1.20 per diluted common share, compared to $26.7 million, or $1.06 per diluted common share, for the third quarter of 2015. Operating income(1) totaled $28.9 million, or $1.15 per common share, for the third quarter of 2016, compared to $27.3 million, or $1.09 per common share, for the third quarter of 2015. Third quarter 2016 results reflect:
•
A growing book of profitable business
•
The favorable impact of $0.02 per share from unlocking assumptions used in the calculation of deferred acquisition costs, value of insurance in force acquired, unearned revenue reserves and certain reserves on interest sensitive products
•
The benefit of other investment-related income of $0.09 per share, primarily in the Annuity segment
•
Unfavorable mortality results, primarily in the Corporate & Other segment

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 third quarter results reflect strong financial performance, with a 13 percent increase in net income to $1.20 per share and a 6 percent increase in operating income to $1.15 per share," said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. “These results reflect focus on our Farm Bureau niche market and support of our exclusive Farm Bureau agency force. We are benefiting from our balanced life and annuity in force business, which provides earnings stability, and are successfully addressing the continued challenges of the low interest rate environment."

Product Revenues. Premiums and product charges for the third quarter of 2016 totaled $73.5 million compared to $76.6 million in the third quarter of 2015. Interest sensitive product charges decreased 13 percent while traditional life insurance premiums increased two percent during the quarter. Premiums collected(2) in the third quarter of 2016 totaled $156.4 million compared to $184.0 million in the third quarter of 2015. Annuity premiums collected decreased 25 percent while life insurance premiums collected decreased one percent.

Investment Income. Net investment income in the third quarter of 2016 totaled $103.5 million, compared to $95.9 million in the third quarter of 2015. 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 5.43 percent for the nine months ended September 30, 2016, compared to 5.58 percent for the nine months ended September 30, 2015. At September 30, 2016, 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 $141.3 million in the third quarter of 2016, compared to $140.1 million in the third quarter of 2015. Death benefits, net of reinsurance and reserves released, totaled $27.4 million in the third quarter of 2016, compared to $26.9 million in the third quarter of 2015. By its nature, mortality experience can fluctuate from quarter to quarter.

Unlocking. During the third quarter of 2016, FBL Financial Group unlocked the assumptions used in the calculation of deferred acquisition costs, value of insurance in force acquired, unearned revenue reserves and certain reserves on interest sensitive products. This unlocking resulted in a pre-tax favorable impact of $0.7 million, or $0.02 per share after-tax.

Net Realized Gains/Losses on Investments. In the third quarter of 2016, FBL Financial Group recognized net realized gains on investments of $0.6 million.

Stock Repurchases. During the third quarter of 2016, FBL Financial Group did not repurchase any of its Class A or Class B common stock. FBL Financial Group has $49.5 million remaining under its current stock repurchase program.

Capital and Book Value. As of September 30, 2016, the book value per share of FBL Financial Group common stock totaled $52.72, compared to $45.61 at December 31, 2015. Book value per share, excluding accumulated other comprehensive income(3), totaled $40.94 at September 30, 2016, compared to $40.99 at December 31, 2015. The September 30, 2016 company action level risk based capital ratio of FBL Financial Group's wholly owned subsidiary, Farm Bureau Life Insurance Company, was approximately 547 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, November 4, 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, changes in interest rates, difficult conditions in financial markets and the economy, lack of liquidity and access to capital, investment valuations, competitive factors, a decrease in ratings, changes in laws and regulations, differences between actual claims experience and underwriting assumptions, relationships with Farm Bureau organizations, the ability to attract and retain sales agents and adverse results from litigation. 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
 
Nine months ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
25,851

 
$
29,856

 
$
82,989

 
$
86,250

Traditional life insurance premiums
47,682

 
46,719

 
147,425

 
142,758

Net investment income
103,514

 
95,882

 
302,621

 
292,144

Net realized capital gains (losses) on sales of investments
646

 
(93
)
 
(33
)
 
7,509

 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
(25
)
 
(559
)
 
(3,769
)
 
(719
)
Non-credit portion in other comprehensive income (loss)
—

 
146

 
1,522

 
146

Net impairment losses recognized in earnings
(25
)
 
(413
)
 
(2,247
)
 
(573
)
 
 
 
 
 
 
 
 
Other income
3,616

 
3,543

 
11,480

 
12,097

Total revenues
181,284

 
175,494

 
542,235

 
540,185

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
65,882

 
53,940

 
178,860

 
163,121

Traditional life insurance benefits
42,121

 
41,604

 
130,059

 
131,967

Policyholder dividends
2,459

 
2,885

 
8,014

 
8,802

Underwriting, acquisition and insurance expenses
25,785

 
36,176

 
102,437

 
107,535

Interest expense
1,213

 
1,213

 
3,638

 
3,637

Other expenses
3,854

 
4,277

 
12,647

 
13,425

Total benefits and expenses
141,314

 
140,095

 
435,655

 
428,487

 
39,970

 
35,399

 
106,580

 
111,698

Income taxes
(13,091
)
 
(11,520
)
 
(34,637
)
 
(36,057
)
Equity income, net of related income taxes
3,128

 
2,761

 
8,393

 
6,932

Net income
30,007

 
26,640

 
80,336

 
82,573

Net loss attributable to noncontrolling interest
10

 
19

 
7

 
49

Net income attributable to FBL Financial Group, Inc.
$
30,017

 
$
26,659

 
$
80,343

 
$
82,622

 
 
 
 
 
 
 
 
Earnings per common share - assuming dilution
$
1.20

 
$
1.06

 
$
3.21

 
$
3.30

 
 
 
 
 
 
 
 
Weighted average common shares
24,990,441

 
24,923,202

 
24,977,342

 
24,926,188

Effect of dilutive securities
39,075

 
79,850

 
46,757

 
93,275

Weighted average common shares - diluted
25,029,516

 
25,003,052

 
25,024,099

 
25,019,463

 
 
 
 
 
 
 
 




(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
 
Nine months ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in thousands,
except per share data)
Net income attributable to FBL Financial Group
$
30,017

 
$
26,659

 
$
80,343

 
$
82,622

Adjustments:
 
 
 
 
 
 
 
Net realized gains/losses on investments (a)
(402
)
 
307

 
1,142

 
(4,421
)
Change in net unrealized gains/losses on derivatives (a)
(733
)
 
318

 
(609
)
 
703

Operating income
$
28,882

 
$
27,284

 
$
80,876

 
$
78,904

 
 
 
 
 
 
 
 
Operating income per common share - assuming dilution
$
1.15

 
$
1.09

 
$
3.23

 
$
3.15

 
 
 
 
 
 
 
 
 
(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
 
September 30,
2016
 
December 31,
2015
Book value per share
$
52.72

 
$
45.61

Less: Per share impact of accumulated other comprehensive income
11.78

 
4.62

Book value per share, excluding accumulated other comprehensive income
$
40.94

 
$
40.99


Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $292.8 million at September 30, 2016 and $114.5 million at December 31, 2015. 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)

 
September 30,
2016
 
December 31,
2015
Assets
 
 
 
Investments
$
8,343,882

 
$
7,722,753

Cash and cash equivalents
65,386

 
29,490

Deferred acquisition costs
215,230

 
335,783

Other assets
438,315

 
418,721

Assets held in separate accounts
605,729

 
625,257

Total assets
$
9,668,542

 
$
9,132,004

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Liabilities
 
 
 
Future policy benefits
$
6,692,087

 
$
6,401,481

Other policy funds, claims and benefits
625,584

 
638,362

Debt
97,000

 
112,000

Other liabilities
333,802

 
220,430

Liabilities related to separate accounts
605,729

 
625,257

Total liabilities
8,354,202

 
7,997,530

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

 
3,000

Class A common stock
152,102

 
149,248

Class B common stock
72

 
72

Accumulated other comprehensive income
292,828

 
114,532

Retained earnings
866,285

 
867,574

Total FBL Financial Group, Inc. stockholders' equity
1,314,287

 
1,134,426

Noncontrolling interest
53

 
48

Total stockholders' equity
1,314,340

 
1,134,474

Total liabilities and stockholders' equity
$
9,668,542

 
$
9,132,004

 
 
 
 
Common shares outstanding
24,874,659

 
24,808,176


####