UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to _______________________

Commission File Number: 1-11917

FBL FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Iowa

42-1411715

(State or other jurisdiction of incorporation or organization)

(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)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, without par value	FFG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer ☒☐ Accelerated filer ☐☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Title of each class						Outstanding at ~~November 2, 2020~~May 4, 2021
Class A Common Stock, without par value						~~24,383,110~~24,385,109
Class B Common Stock, without par value						11,413

(This page has been intentionally left blank.)

FBL FINANCIAL GROUP, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2020~~MARCH 31, 2021

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	76
	Notes to Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3432

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5852

Item 4.	Controls and Procedures	5852

PART II.	OTHER INFORMATION	5953

Item 1A.	Risk Factors	5953

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5954

Item 6.	Exhibits	6055

SIGNATURES		6156

ITEM 1. FINANCIAL STATEMENTS

FBL FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Investments:	Investments:					Investments:
Fixed maturities - available for sale, at fair value (amortized cost 2020 - $7,256,832, 2019 - $7,015,269; and allowance for credit losses 2020 - 12,095, 2019 - $0)		$	8,244,477	$	7,702,628
Equity securities at fair value (cost: 2020 - $95,409, 2019 - $95,269)		93,269		100,228
Mortgage loans (net of allowance for credit losses 2020 - 1,924, 2019 - $0)		972,210		1,011,678
Fixed maturities - available for sale, at fair value (amortized cost 2021 - $7,322,930, 2020 - $7,179,303; and allowance for credit losses 2021 - $3,737, 2020 -$4,882)						Fixed maturities - available for sale, at fair value (amortized cost 2021 - $7,322,930, 2020 - $7,179,303; and allowance for credit losses 2021 - $3,737, 2020 -$4,882)	$	8,028,083	$	8,283,687
Equity securities at fair value (cost: 2021 - $83,432, 2020 - $82,999)						Equity securities at fair value (cost: 2021 - $83,432, 2020 - $82,999)	88,564		88,281
Mortgage loans, net of allowance for credit losses (2021 - $1,585, 2020 - $1,553)						Mortgage loans, net of allowance for credit losses (2021 - $1,585, 2020 - $1,553)	992,938		994,101
Real estate	Real estate	955		955		Real estate	955		955
Policy loans	Policy loans	197,009		201,589		Policy loans	191,580		195,666
Short-term investments	Short-term investments	18,434		11,865		Short-term investments	42,252		63,062
Other investments		55,639		62,680
Other investments, net of allowance for credit losses (2021 - $929, 2020 - $929)						Other investments, net of allowance for credit losses (2021 - $929, 2020 - $929)	68,424		58,258
Total investments	Total investments	9,581,993		9,091,623		Total investments	9,412,796		9,684,010

Cash and cash equivalents	Cash and cash equivalents	15,030		17,277		Cash and cash equivalents	70,854		12,882
Securities and indebtedness of related parties	Securities and indebtedness of related parties	80,494		74,791		Securities and indebtedness of related parties	90,722		88,445
Accrued investment income	Accrued investment income	76,164		72,332		Accrued investment income	74,997		70,278
Amounts receivable from affiliates	Amounts receivable from affiliates	2,421		4,357		Amounts receivable from affiliates	2,677		3,257
Reinsurance recoverable	Reinsurance recoverable	112,382		107,498		Reinsurance recoverable	108,640		115,168
Deferred acquisition costs	Deferred acquisition costs	201,022		289,456		Deferred acquisition costs	282,682		176,085
Value of insurance in force acquired	Value of insurance in force acquired	2,384		2,624		Value of insurance in force acquired	2,239		2,304
Current income taxes recoverable	Current income taxes recoverable	4,786		6,427		Current income taxes recoverable	12,232		16,732
Other assets	Other assets	159,824		167,940		Other assets	155,996		152,929
Assets held in separate accounts	Assets held in separate accounts	616,381		645,881		Assets held in separate accounts	686,968		674,182

Total assets	Total assets	$	10,852,881	$	10,480,206	Total assets	$	10,900,803	$	10,996,272

FBL FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Liabilities:	Liabilities:					Liabilities:
Future policy benefits:	Future policy benefits:					Future policy benefits:
Interest sensitive products	Interest sensitive products	$	5,747,604	$	5,548,212	Interest sensitive products	$	5,874,009	$	5,725,725
Traditional life insurance and accident and health products	Traditional life insurance and accident and health products	1,881,838		1,845,337		Traditional life insurance and accident and health products	1,899,626		1,890,547
Other policy claims and benefits	Other policy claims and benefits	49,409		46,883		Other policy claims and benefits	49,969		57,438
Supplementary contracts without life contingencies	Supplementary contracts without life contingencies	282,715		296,915		Supplementary contracts without life contingencies	266,905		274,469
Advance premiums and other deposits	Advance premiums and other deposits	258,165		253,458		Advance premiums and other deposits	285,569		271,082
Amounts payable to affiliates	Amounts payable to affiliates	609		1,218		Amounts payable to affiliates	203		406

Long-term debt	Long-term debt	97,000		97,000		Long-term debt	97,000		97,000

Deferred income taxes	Deferred income taxes	187,161		152,373		Deferred income taxes	150,654		211,180
Other liabilities	Other liabilities	113,744		107,013		Other liabilities	100,012		102,127
Liabilities related to separate accounts	Liabilities related to separate accounts	616,381		645,881		Liabilities related to separate accounts	686,968		674,182
Total liabilities	Total liabilities	9,234,626		8,994,290		Total liabilities	9,410,915		9,304,156

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
FBL Financial Group, Inc. stockholders’ equity:	FBL Financial Group, Inc. 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	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		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 24,383,110 shares in 2020 and 24,652,802 shares in 2019		150,990		152,661
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2020 and 2019		72		72
Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 24,385,109 shares in 2021 and 24,384,109 shares in 2020						Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 24,385,109 shares in 2021 and 24,384,109 shares in 2020	151,134		151,061
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2021 and 2020						Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2021 and 2020	72		72
Accumulated other comprehensive income	Accumulated other comprehensive income	529,087		354,764		Accumulated other comprehensive income	370,060		587,279
Retained earnings	Retained earnings	935,080		975,260		Retained earnings	965,643		950,687
Total FBL Financial Group, Inc. stockholders’ equity	Total FBL Financial Group, Inc. stockholders’ equity	1,618,229		1,485,757		Total FBL Financial Group, Inc. stockholders’ equity	1,489,909		1,692,099
Noncontrolling interest	Noncontrolling interest	26		159		Noncontrolling interest	(21)		17
Total stockholders’ equity	Total stockholders’ equity	1,618,255		1,485,916		Total stockholders’ equity	1,489,888		1,692,116
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	10,852,881	$	10,480,206	Total liabilities and stockholders’ equity	$	10,900,803	$	10,996,272

See accompanying notes.

FBL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share data)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Interest sensitive product charges	Interest sensitive product charges	$	35,420	$	31,135	$	100,049	$	94,935	Interest sensitive product charges	$	32,741	$	31,720
Traditional life insurance premiums	Traditional life insurance premiums	47,792		46,982		147,429		147,361		Traditional life insurance premiums	52,010		49,308
Net investment income	Net investment income	105,856		101,478		291,208		316,012		Net investment income	100,111		74,917
Net realized capital gains (losses)		1,991		696		(8,657)		11,230
Net realized capital losses										Net realized capital losses	(869)		(13,401)
Change in allowance for credit losses on investments	Change in allowance for credit losses on investments	1,903		0		(10,855)		0		Change in allowance for credit losses on investments	1,113		(12,261)
Other-than-temporary impairment losses		0		(50)		0		(919)

Other income	Other income	4,883		4,417		14,647		12,501		Other income	6,320		4,980
Total revenues	Total revenues	197,845		184,658		533,821		581,120		Total revenues	191,426		135,263

Benefits and expenses:	Benefits and expenses:									Benefits and expenses:
Interest sensitive product benefits	Interest sensitive product benefits	79,803		67,147		203,257		202,966		Interest sensitive product benefits	60,503		44,351
Traditional life insurance benefits	Traditional life insurance benefits	45,529		42,877		136,849		131,512		Traditional life insurance benefits	49,848		46,208
Policyholder dividends	Policyholder dividends	1,733		2,441		5,879		7,539		Policyholder dividends	1,605		2,529
Underwriting, acquisition and insurance expenses	Underwriting, acquisition and insurance expenses	38,131		39,197		111,044		114,334		Underwriting, acquisition and insurance expenses	38,274		39,421
Interest expense	Interest expense	1,212		1,213		3,638		3,637		Interest expense	1,213		1,213
Other expenses	Other expenses	7,878		5,764		22,524		18,649		Other expenses	12,463		7,421
Total benefits and expenses	Total benefits and expenses	174,286		158,639		483,191		478,637		Total benefits and expenses	163,906		141,143
		23,559		26,019		50,630		102,483			27,520		(5,880)
Income tax		(2,883)		(1,642)		(5,887)		(13,429)
Equity income (loss), net of related income taxes		277		799		(238)		2,423
Net income		20,953		25,176		44,505		91,477
Net (income) loss attributable to noncontrolling interest		21		(47)		165		(7)
Net income attributable to FBL Financial Group, Inc.		$	20,974	$	25,129	$	44,670	$	91,470
Income tax (expense) benefit										Income tax (expense) benefit	(3,687)		3,081
Equity income, net of related income taxes										Equity income, net of related income taxes	3,780		228
Net income (loss)										Net income (loss)	27,613		(2,571)
Net loss attributable to noncontrolling interest										Net loss attributable to noncontrolling interest	67		56
Net income (loss) attributable to FBL Financial Group, Inc.										Net income (loss) attributable to FBL Financial Group, Inc.	$	27,680	$	(2,515)

Earnings per common share		$	0.85	$	1.01	$	1.81	$	3.69
Earnings per common share - assuming dilution		$	0.85	$	1.01	$	1.81	$	3.69
Earnings (loss) per common share										Earnings (loss) per common share	$	1.13	$	(0.10)
Earnings (loss) per common share - assuming dilution										Earnings (loss) per common share - assuming dilution	$	1.13	$	(0.10)

See accompanying notes.

FBL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Dollars in thousands)

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Net income $ 20,953 $ 25,176 $ 44,505 $ 91,477
Other comprehensive income (1)
Change in net unrealized investment gains/losses 47,211 103,172 173,577 314,228
Change in underfunded status of postretirement benefit plans 250 210 746 629
Total other comprehensive income, net of tax 47,461 103,382 174,323 314,857
Total comprehensive income, net of tax 68,414 128,558 218,828 406,334
Comprehensive (income) loss attributable to noncontrolling interest 21 (47) 165 (7)
Total comprehensive income applicable to FBL Financial Group, Inc. $ 68,435 $ 128,511 $ 218,993 $ 406,327


	Three months ended March 31,
	2021		2020
Net income (loss)	$	27,613	$	(2,571)
Other comprehensive loss (1)
Change in net unrealized investment gains/losses	(217,486)		(96,589)

Change in underfunded status of postretirement benefit plans	267		247
Total other comprehensive loss, net of tax	(217,219)		(96,342)
Total comprehensive loss, net of tax	(189,606)		(98,913)
Comprehensive loss attributable to noncontrolling interest	67		56
Total comprehensive loss applicable to FBL Financial Group, Inc.	$	(189,539)	$	(98,857)

(1)Other comprehensive ~~income~~loss is recorded net of deferred income taxes and other adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities.

FBL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

(Dollars in thousands)

FBL Financial Group, Inc. Stockholders’ Equity
Series B Preferred Stock Class A and Class B Common Stock Accumulated Other Comprehensive Income Retained Earnings Non-
controlling Interest Total Stockholders’ Equity
Balance at July 1, 2019 $ 3,000 $ 152,526 $ 302,793 $ 939,143 $ 80 $ 1,397,542
Net income - three months ended September 30, 2019 — — — 25,129 47 25,176
Other comprehensive income — — 103,382 — — 103,382
Stock-based compensation — 112 — — — 112
Dividends on preferred stock — — — (37) — (37)
Dividends on common stock — — — (11,838) — (11,838)
Balance at September 30, 2019 $ 3,000 $ 152,638 $ 406,175 $ 952,397 $ 127 $ 1,514,337
Balance at July 1, 2020 $ 3,000 $ 152,240 $ 481,626 $ 930,937 $ (42) $ 1,567,761
Net income - three months ended September 30, 2020 — — — 20,974 (21) 20,953
Other comprehensive income — — 47,461 — — 47,461
Stock-based compensation — (184) — — — (184)
Purchase of common stock — (994) — (4,597) — (5,591)
Dividends on preferred stock — — — (37) — (37)
Dividends on common stock — — — (12,197) — (12,197)
Receipt related to noncontrolling interest — — — — 89 89
Balance at September 30, 2020 $ 3,000 $ 151,062 $ 529,087 $ 935,080 $ 26 $ 1,618,255


	FBL Financial Group, Inc. Stockholders’ Equity
	Series B Preferred Stock		Class A and Class B Common Stock		Accumulated Other Comprehensive Income		Retained Earnings		Non- controlling Interest		Total Stockholders’ Equity
Balance at January 1, 2020	$	3,000	$	152,733	$	354,764	$	975,260	$	159	$	1,485,916
Cumulative effect of change in accounting principle related to current expected credit loss	—		—		—		(2,685)		—		(2,685)
Net loss - three months ended March 31, 2020	—		—		—		(2,515)		(56)		(2,571)
Other comprehensive loss	—		—		(96,342)		—		—		(96,342)
Stock-based compensation	—		245		—		—		—		245
Purchase of common stock	—		(152)		—		(657)		—		(809)
Dividends on preferred stock	—		—		—		(38)		—		(38)
Dividends on common stock	—		—		—		(49,333)		—		(49,333)
Disbursements related to noncontrolling interest	—		—		—		—		(61)		(61)
Balance at March 31, 2020	$	3,000	$	152,826	$	258,422	$	920,032	$	42	$	1,334,322

Balance at January 1, 2021	$	3,000	$	151,133	$	587,279	$	950,687	$	17	$	1,692,116

Net income - three months ended March 31, 2021	—		—		—		27,680		(67)		27,613
Other comprehensive loss	—		—		(217,219)		—		—		(217,219)
Stock-based compensation	—		73		—		—		—		73

Dividends on preferred stock	—		—		—		(38)		—		(38)
Dividends on common stock	—		—		—		(12,686)		—		(12,686)
Receipts related to noncontrolling interest	—		—		—		—		29		29
Balance at March 31, 2021	$	3,000	$	151,206	$	370,060	$	965,643	$	(21)	$	1,489,888

~~FBL FINANCIAL GROUP, INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Continued)~~

~~(Dollars in thousands)~~

FBL Financial Group, Inc. Stockholders’ Equity
Series B Preferred Stock Class A and Class B Common Stock Accumulated Other Comprehensive Income Retained Earnings Non-
controlling Interest Total Stockholders’ Equity
Balance at January 1, 2019 $ 3,000 $ 152,724 $ 91,318 $ 937,097 $ 120 $ 1,184,259
Cumulative effect of change in accounting principle related to leases — — — 595 — 595
Net income - nine months ended September 30, 2019 — — — 91,470 7 91,477
Other comprehensive income — — 314,857 — — 314,857
Stock-based compensation — 324 — — — 324
Purchase of common stock — (410) — (4,167) — (4,577)
Dividends on preferred stock — — — (112) — (112)
Dividends on common stock — — — (72,486) — (72,486)
Balance at September 30, 2019 $ 3,000 $ 152,638 $ 406,175 $ 952,397 $ 127 $ 1,514,337
Balance at January 1, 2020 $ 3,000 $ 152,733 $ 354,764 $ 975,260 $ 159 $ 1,485,916
Cumulative effect of change in accounting principle related to current expected credit loss — — — (2,685) — (2,685)
Net income - nine months ended September 30, 2020 — — — 44,670 (165) 44,505
Other comprehensive income — — 174,323 — — 174,323
Stock-based compensation — 126 — — — 126
Purchase of common stock — (1,797) — (8,203) — (10,000)
Dividends on preferred stock — — — (112) — (112)
Dividends on common stock — — — (73,850) — (73,850)
Receipt related to noncontrolling interest — — — — 32 32
Balance at September 30, 2020 $ 3,000 $ 151,062 $ 529,087 $ 935,080 $ 26 $ 1,618,255

See accompanying notes.

FBL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


		Nine months ended September 30,					Three months ended March 31,
		2020		2019			2021		2020
Operating activities	Operating activities					Operating activities
Net income		$	44,505	$	91,477
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	27,613	$	(2,571)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Interest credited to account balances	Interest credited to account balances	126,343		119,250		Interest credited to account balances	42,561		40,980
Charges for mortality, surrenders and administration	Charges for mortality, surrenders and administration	(98,882)		(94,277)		Charges for mortality, surrenders and administration	(33,564)		(33,127)
Net realized (gains) losses on investments	Net realized (gains) losses on investments	19,512		(10,311)		Net realized (gains) losses on investments	(244)		25,662
Change in fair value of derivatives	Change in fair value of derivatives	2,804		2,239		Change in fair value of derivatives	(12,901)		1,567
Increase in liabilities for life insurance and other future policy benefits	Increase in liabilities for life insurance and other future policy benefits	60,304		49,307		Increase in liabilities for life insurance and other future policy benefits	17,728		21,183
Deferral of acquisition costs	Deferral of acquisition costs	(25,462)		(31,908)		Deferral of acquisition costs	(9,166)		(9,155)
Amortization of deferred acquisition costs and value of insurance in force	Amortization of deferred acquisition costs and value of insurance in force	28,606		27,589		Amortization of deferred acquisition costs and value of insurance in force	8,554		9,597
Change in reinsurance recoverable	Change in reinsurance recoverable	(4,096)		(994)		Change in reinsurance recoverable	5,902		688
Provision for deferred income taxes	Provision for deferred income taxes	(10,838)		6,051		Provision for deferred income taxes	(2,785)		(6,958)
Other	Other	15,269		(7,130)		Other	(7,244)		(20,186)
Net cash provided by operating activities	Net cash provided by operating activities	158,065		151,293		Net cash provided by operating activities	36,454		27,680

Investing activities	Investing activities					Investing activities
Sales, maturities or repayments:	Sales, maturities or repayments:					Sales, maturities or repayments:
Fixed maturities - available for sale	Fixed maturities - available for sale	416,454		489,597		Fixed maturities - available for sale	175,847		120,845
Equity securities	Equity securities	2,661		15,109		Equity securities	1,366		699
Mortgage loans	Mortgage loans	82,394		74,970		Mortgage loans	41,331		35,295
Derivative instruments	Derivative instruments	14,316		9,201		Derivative instruments	4,753		9,451
Policy loans	Policy loans	29,651		27,436		Policy loans	11,992		9,913
Securities and indebtedness of related parties	Securities and indebtedness of related parties	5,158		6,941		Securities and indebtedness of related parties	10,458		841

Other long-term investments	Other long-term investments	4,144		3,686		Other long-term investments	482		1,333
Acquisitions:	Acquisitions:					Acquisitions:
Fixed maturities - available for sale	Fixed maturities - available for sale	(635,002)		(577,634)		Fixed maturities - available for sale	(312,081)		(203,333)
Equity securities	Equity securities	(2,708)		(14,545)		Equity securities	(1,608)		(2,149)
Mortgage loans	Mortgage loans	(44,850)		(35,202)		Mortgage loans	(40,200)		(15,750)
Derivative instruments	Derivative instruments	(2,401)		(14,325)		Derivative instruments	(4,669)		(5,804)
Policy loans	Policy loans	(25,071)		(30,424)		Policy loans	(7,906)		(10,551)
Securities and indebtedness of related parties	Securities and indebtedness of related parties	(13,657)		(16,189)		Securities and indebtedness of related parties	(10,766)		(3,990)
Other long-term investments	Other long-term investments	(9,671)		(4,397)		Other long-term investments	(6,114)		(6,100)
Short-term investments, net change	Short-term investments, net change	(6,569)		(7,030)		Short-term investments, net change	20,810		(17,715)
Purchases and disposals of property and equipment, net	Purchases and disposals of property and equipment, net	(8,135)		(11,886)		Purchases and disposals of property and equipment, net	(3,768)		(1,763)
Net cash used in investing activities	Net cash used in investing activities	(193,286)		(84,692)		Net cash used in investing activities	(120,073)		(88,778)

FBL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in thousands)


		Nine months ended September 30,					Three months ended March 31,
		2020		2019			2021		2020
Financing activities	Financing activities					Financing activities
Contract holder account deposits	Contract holder account deposits	$	545,238	$	438,573	Contract holder account deposits	$	259,492	$	271,542
Contract holder account withdrawals	Contract holder account withdrawals	(428,170)		(449,211)		Contract holder account withdrawals	(105,235)		(170,003)
Dividends paid	Dividends paid	(73,962)		(72,598)		Dividends paid	(12,724)		(49,371)
Proceeds from issuance of short-term debt	Proceeds from issuance of short-term debt	10,000		20,000		Proceeds from issuance of short-term debt	0		10,000
Repayments of short-term debt		(10,000)		(4,000)

Issuance or repurchase of common stock, net	Issuance or repurchase of common stock, net	(10,163)		(5,393)		Issuance or repurchase of common stock, net	29		(762)
Other financing activities	Other financing activities	31		0		Other financing activities	29		(61)
Net cash provided by (used in) financing activities		32,974		(72,629)
Decrease in cash and cash equivalents		(2,247)		(6,028)
Net cash provided by financing activities						Net cash provided by financing activities	141,591		61,345
Increase in cash and cash equivalents						Increase in cash and cash equivalents	57,972		247
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	17,277		19,035		Cash and cash equivalents at beginning of period	12,882		17,277
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	15,030	$	13,007	Cash and cash equivalents at end of period	$	70,854	$	17,524

Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	(3,650)	$	(3,641)	Interest	$	(1,213)	$	(1,213)
Income taxes	Income taxes	(5,556)		(30)		Income taxes	(37)		(1,915)

See accompanying notes.

FBL FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~September 30, 2020~~March 31, 2021

1. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of FBL Financial Group, Inc. (we or the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Our financial statements include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of our financial position and results of operations.

Operating results for the three months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020,~~2021, especially when considering the risks and uncertainties associated with the novel coronavirus ("COVID-19") and the impact it may have on our business, results of operations and financial condition. We encourage you to refer to the notes to our consolidated financial statements included in Item 8 of our Form 10-K for the year ended December 31, ~~2019~~2020 for a complete description of our material accounting policies. Also included in the Form 10-K is a description of areas of judgments and estimates and other information necessary to understand our financial position and results of operations. Our estimates and assumptions could change in the future as more information becomes known about the impact of COVID-19. Our results of operations and financial condition may also be impacted by evolving regulatory, legislative and accounting interpretations and guidance.

Subsequent Event – Amendment to Merger Agreement – Proposed ~~Transaction - Stock~~Affiliate Acquisition of Outstanding Shares

On ~~September 4, 2020,~~May 2, 2021, the Company ~~announced receipt~~entered into an amendment (the Merger Agreement Amendment) to the Agreement and Plan of ~~a non-binding proposal from~~Merger, dated as of January 11, 2021 (the Original Agreement and, the Original Agreement as amended by the Merger Agreement Amendment, the Merger Agreement), by and among the Company, Farm Bureau Property & Casualty Insurance Company, an Iowa domiciled stock property and casualty insurance company (FBPCIC) and 5400 Merger Sub, Inc., an ~~affiliate,~~Iowa corporation (Merger Sub). Pursuant to the Merger Agreement, FBPCIC will acquire all of the outstanding ~~shares of~~ Class A common ~~stock~~shares, without par value, and Class B common ~~stock~~shares, without par value (collectively, the Common Shares), of the Company that are not currently owned or controlled by FBPCIC or the Iowa Farm Bureau Federation, an Iowa non-profit corporation (IFBF) ~~at a purchase price of $47.00~~, for $61.00 per share in cash. The ~~Iowa Farm Bureau Federation owns~~Merger Agreement Amendment provided for an increase in the consideration to be received in exchange for the Common Shares in the amount of $5.00 per share, from $56.00 per share under the Original Agreement. IFBF and FBPCIC currently own approximately ~~60%~~61% of the ~~Company's Class A common stock~~outstanding Common Shares. The Merger Agreement provides for the merger of Merger Sub with and ~~approximately 67% of~~into the ~~Company's Class B common stock.~~Company, with the Company surviving the merger (the Merger).

Consummation of the Merger is subject to certain specified closing conditions, including approval by the Company’s shareholders. The Company’s ~~board~~adjourned special meeting of ~~directors has appointed a special committee comprised of independent directors~~shareholders to ~~consider~~approve the ~~proposal.This committee has retained its own legal counsel and financial advisor~~proposal to ~~assist in its review, evaluation and response~~adopt the Merger Agreement is expected to ~~the proposal. There can be no assurance that any agreement with respect to the proposed transaction will be executed or that this or any other transaction will be approved or consummated.~~re-convene on May 21, 2021.

~~See Note 9~~Also on May 2, 2021, FBPCIC, IFBF and Merger Sub entered into an amendment (the Rollover Agreement Amendment) to ~~our consolidated financial statements included~~the Rollover Agreement, dated as of January 11, 2021 (as amended by the Rollover Agreement Amendment, the Rollover Agreement) by and among the same parties. Pursuant to the Rollover Agreement, FBPCIC and IFBF will contribute to Merger Sub all of their Common Shares in ~~Item 8 of our Form 10-K~~exchange for the ~~year ended December 31, 2019~~number of shares of common stock of Merger Sub set forth therein, and to fund the Merger consideration, FBPCIC will contribute approximately $528 million in cash to Merger Sub in exchange for ~~information regarding management~~shares of common stock of Merger Sub and ~~other agreements between~~IFBF will contribute approximately $47 million in cash to Merger Sub in exchange for shares of preferred stock of Merger Sub.

With respect to Merger Sub, under the terms of the Merger Agreement, at the effective time of the Merger, the Common Shares held by Merger Sub will automatically be cancelled and will cease to exist, each common share of Merger Sub will be converted into one common share of the surviving corporation and each preferred share of Merger Sub will be converted into one share of newly-designated Series C Cumulative Non-Voting Preferred Stock of the surviving corporation. At the effective time of the Merger, the Common Shares that are not currently controlled by FBPCIC or IFBF (other than shares held by the Company ~~and FBPCIC.~~in treasury or by any wholly-owned Company subsidiary, or held by Merger Sub or FBPCIC, or held by holders who have properly exercised dissenters’ rights under applicable Iowa law) will be converted into the right to receive the Merger

Table of Content

consideration. Each share of Series B Cumulative Voting Preferred Stock of the Company will remain outstanding in accordance with its terms following the effective time of the Merger.

New Accounting Pronouncements


~~Description~~	~~Date of adoption~~	~~Effect on our consolidated financial statements or other significant matters~~
~~Standards adopted:~~
~~Leases~~ In February 2016, the FASB issued guidance amending the accounting for leases, which, for most lessees, results in a gross-up of the balance sheet. Under the new standard, lessees recognize the leased assets on the balance sheet and recognize a corresponding liability for the present value of lease payments over the lease term. The new standard requires the application of judgment and estimates. Also, there are accounting policy elections that may be taken both at transition and for the accounting post-transition, including whether to adopt a short-term lease recognition exemption.	~~January 1, 2019~~	Upon adoption using the modified retrospective approach, a cumulative effect adjustment of $0.6 million was recorded to retained earnings, representing the elimination of a deferred gain on a sale-leaseback transaction, and both other assets and other liabilities increased by $7.2 million. We elected the practical expedients provided for under the guidance but did not use hindsight in determining lease term. We have no finance leases and have elected to treat leases with terms of twelve months or less as short-term leases.

~~Table of Content~~


Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Standards adopted:
Financial instruments - credit impairment In June 2016, the FASB issued guidance amending the accounting for the credit impairment of certain financial instruments. Under the new guidance, credit losses are estimated using an expected loss model under which an allowance for credit losses is established and reflected as a charge to earnings. The allowance is based on the probability of loss over the life of the instrument, considering historical, current and forecast information. The new guidance differs significantly from the incurred loss model used historically, and results in the earlier recognition of credit losses. Since changes in the allowance are reflected in earnings, the new guidance may increase the volatility of earnings as the assumptions used in estimating the allowance are revised. Our available-for-sale fixed maturities will continue to apply the incurred loss model; however, such losses will also be in the form of an allowance for credit losses rather than an adjustment to the cost basis of the security. The new guidance permits entities to recognize improvements in credit loss estimates on fixed maturity available-for-sale securities by immediately reducing the allowance through earnings.	January 1, 2020	Upon adoption using the modified retrospective approach, a cumulative effect adjustment of $2.7 million after offsets was recorded to retained earnings as of the first reporting period in which the new guidance was effective. The cumulative effect adjustment arose from the establishment of an allowance for credit losses on our mortgage loan investments totaling $3.1 million and reinsurance recoverable totaling $0.9 million, before offsets. See the discussion that follows for further information. Application of this guidance resulted in an increase to net income of $1.6 million ($0.06 per basic and diluted share) during the nine months ended September 30, 2020 and $2.2 million ($0.09 per basic and diluted earnings per share) during the third quarter of 2020. Prior periods were not restated.
Standards not yet adopted:
Targeted improvements: long-duration contracts In August 2018, the FASB issued guidance that will change the accounting for long-duration insurance contracts. The new guidance impacts several facets of the accounting for such contracts including the accounting for future policy benefits associated with traditional non-participating and limited payment insurance contracts as well as for guaranteed minimum benefits and the amortization model used for deferred acquisition costs. Disclosures as well as presentation of financial results will also change under the new guidance.	~~During the third quarter 2020, the FASB extended the date of adoption one year to~~ January 1, 2023	We are currently evaluating the impact of this guidance on our consolidated financial statements but expect the impact to the timing of profit emergence for the impacted insurance contracts to be significant. Adoption of certain portions of the guidance may be applied on a modified retrospective basis and others on a full retrospective basis.

~~Allowance for Credit Losses~~

As discussed above, effective January 1, 2020, we were required to apply new accounting guidance for the treatment of potential credit losses within certain financial instruments. Our accounting policies and practices as they pertain to the financial instruments impacted by this new guidance are as follows:

~~Fixed Maturities~~

When the fair value of a fixed maturity security is below its amortized cost, an impairment has occurred. To the extent we decide to sell the security or are required to sell the security prior to its recovery of fair value, a charge is taken to realized investment losses as reported within the Consolidated Statement of Operations, and the amortized cost basis of the security is adjusted for the loss. Under the accounting guidance we followed prior to January 1, 2020, to the extent we had no plan or requirement to sell an impaired security, but believed the impairment was other-than-temporary, we similarly recorded a charge to realized investment losses and the amortized cost basis of the security was adjusted for the loss. Beginning in 2020, to the extent an unrealized loss is due to credit, an allowance for credit loss is recognized within the Consolidated Statement of Operations. While fixed maturities are reported net of the allowance for credit losses in our Consolidated Balance Sheet, the allowance is not considered an adjustment to the amortized cost of the security. Accordingly the allowance may increase or decrease over the life of the security based on changes in the assumptions used to determine the allowance, with such changes reported as “Change in allowance for credit losses on investments” within the Consolidated Statement of Operations. Fixed maturity securities are written-off to realized investment losses if we determine that no additional payments of principal or interest will be received. The factors considered in determining whether an allowance for credit losses is required are consistent with those considered in determining whether an other-than-temporary impairment loss had occurred under the accounting guidance we followed prior to January 1, 2020 as discussed in Item 8 of our Form 10-K for the year ended December 31, 2019. We have elected the policy to exclude accrued interest receivable from our allowance calculation since uncollectible accrued interest will continue to be evaluated for collectability and written off as warranted.

~~Table of Content~~

~~Mortgage Loans~~

The allowance for credit losses on our mortgage loan investments is based on an estimate of credit losses that may occur over the life of the loans, which differs from the accounting guidance we followed prior to January 1, 2020, which was based on incurred losses of individual loans. In determining the allowance, we segregate our mortgage loans with a similar risk profile based on an internal loan rating. Loss factors based on the potential frequency and severity of credit losses at different points in time of the portfolio life are applied to future cash flows to estimate the allowance for credit losses. In determining the loss factors, we consider the potential severity and likelihood of loss based on our historical loan loss experience along with that of other similar organizations as well as economic forecasts. We have elected the policy to exclude accrued interest receivable from our allowance calculation since uncollectible accrued interest will continue to be evaluated for collectability and written off as warranted. Mortgage loans are reported in our Consolidated Balance Sheet net of the allowance for credit losses. Changes in the allowance are reported within the Consolidated Statement of Operations as “Changes in allowance for credit losses on investments.” See Note 2 for further information.

Reinsurance Recoverable

The allowance for credit losses on our reinsurance recoverable is based on an estimate of credit losses that may occur over the life of the underlying ceded insurance ~~business, which differs from the accounting guidance we followed prior to January 1, 2020, which was based on incurred losses.~~business. We develop loss factors that are applied to the amounts due from each reinsurer, which considers the potential severity and likelihood of loss based on the relative risk profile of each reinsurer, our internal loss history and those of other organizations, along with economic forecasts. We also consider other sources of information regarding individual reinsurers, as applicable, including amounts past-due according to the terms of the reinsurance contracts. Reinsurance recoverable assets are reported in our ~~Consolidated Balance Sheet~~consolidated balance sheets net of the allowance for credit losses. Amounts deemed to be uncollectible are written off against the allowance. Changes in the allowance are reported within the ~~Consolidated Statement~~consolidated statement of ~~Operations~~operations as “Underwriting, acquisition and insurance expenses.”

Allowance on Reinsurance Recoverables
Three months ended September 30, 2020 Nine months ended September 30, 2020
(Dollars in thousands)
Beginning balance of the allowance for credit losses $ 857 $ 868
Change in allowance for credit losses 2 (9)
Ending balance of the allowance for credit losses $ 859 $ 859


Allowance on Reinsurance Recoverables
	Three months ended March 31, 2021

	(Dollars in thousands)
Beginning balance of the allowance for credit losses	$	857
Change in allowance for credit losses	(2)


Ending balance of the allowance for credit losses	$	855

No reinsurance recoverables were considered past due as of ~~September 30, 2020.~~

March 31, 2021.

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2. Investment Operations

Fixed Maturity Securities


Available-For-Sale Fixed Maturity Securities by Investment Category	Available-For-Sale Fixed Maturity Securities by Investment Category												Available-For-Sale Fixed Maturity Securities by Investment Category
		September 30, 2020										March 31, 2021
		Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Allowance for Credit Losses		Fair Value				Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Allowance for Credit Losses		Fair Value
		(Dollars in thousands)										(Dollars in thousands)
Fixed maturities:	Fixed maturities:												Fixed maturities:
Corporate	Corporate	$	3,557,835	$	602,632	$	(14,971)	$	(11,497)	$	4,133,999		Corporate	$	3,653,387	$	461,509	$	(20,335)	$	(2,953)	$	4,091,608
Residential mortgage-backed	Residential mortgage-backed	661,906		64,389		(1,183)		0		725,112			Residential mortgage-backed	655,275		47,433		(4,430)		0		698,278
Commercial mortgage-backed	Commercial mortgage-backed	996,794		153,295		(658)		0		1,149,431			Commercial mortgage-backed	1,014,949		74,024		(9,146)		0		1,079,827
Other asset-backed	Other asset-backed	740,677		22,502		(8,590)		(598)		753,991			Other asset-backed	729,904		23,360		(2,693)		(784)		749,787
United States Government and agencies	United States Government and agencies	35,086		2,962		(453)		0		37,595			United States Government and agencies	44,351		1,716		(6,822)		0		39,245
States and political subdivisions	States and political subdivisions	1,264,534		181,171		(1,356)		0		1,444,349			States and political subdivisions	1,225,064		147,496		(3,222)		0		1,369,338
Total fixed maturities	Total fixed maturities	$	7,256,832	$	1,026,951	$	(27,211)	$	(12,095)	$	8,244,477		Total fixed maturities	$	7,322,930	$	755,538	$	(46,648)	$	(3,737)	$	8,028,083


		December 31, 2019								December 31, 2020
		Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Fair Value				Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Allowance for Credit Losses		Fair Value
		(Dollars in thousands)								(Dollars in thousands)
Fixed maturities:	Fixed maturities:										Fixed maturities:
Corporate	Corporate	$	3,376,432	$	418,049	$	(15,531)	$	3,778,950		Corporate	$	3,542,136	$	704,586	$	(4,242)	$	(4,213)	$	4,238,267
Residential mortgage-backed	Residential mortgage-backed	626,663		47,654		(1,929)		672,388			Residential mortgage-backed	645,503		58,058		(1,442)		0		702,119
Commercial mortgage-backed	Commercial mortgage-backed	969,453		77,433		(1,413)		1,045,473			Commercial mortgage-backed	991,944		145,549		(1,160)		0		1,136,333
Other asset-backed	Other asset-backed	697,390		19,745		(2,614)		714,521			Other asset-backed	736,338		23,593		(4,511)		(669)		754,751
United States Government and agencies	United States Government and agencies	12,417		1,711		(5)		14,123			United States Government and agencies	35,174		2,887		(1,809)		0		36,252
States and political subdivisions	States and political subdivisions	1,332,914		145,125		(866)		1,477,173			States and political subdivisions	1,228,208		188,542		(785)		0		1,415,965
Total fixed maturities	Total fixed maturities	$	7,015,269	$	709,717	$	(22,358)	$	7,702,628		Total fixed maturities	$	7,179,303	$	1,123,215	$	(13,949)	$	(4,882)	$	8,283,687

(1)Includes ~~$2.2~~$2.0 million and ~~$2.5~~$1.7 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, of net unrealized gains on impaired fixed maturities related to changes in fair value subsequent to the impairment date, which are included in AOCI.

The amount of accrued interest excluded from the amortized cost basis of fixed maturities and included in accrued investment income on the balance sheet totaled ~~$71.4~~$70.5 million at ~~September 30, 2020.~~March 31, 2021. Any fixed maturity delinquent on contractual payments over 90 days past due is placed on non-accrual status. If the fixed maturity is placed on non-accrual status the prior accrued interest income is reversed through net investment income. Interest income received on non-performing fixed maturities is generally recognized on a cash basis. Once fixed maturities are classified as non-accrual, the resumption of the interest accrual would commence only after all past due interest has been collected. ~~The amount of interest reversed during the nine months ended September 30, 2020 was $0.2 million on corporate fixed maturity securities.~~ There was no interest reversed during the three months ended ~~September 30,~~March 31, 2021 or March 31, 2020.


Available-For-Sale Fixed Maturities by Maturity Date
	March 31, 2021
	Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	138,639	$	141,454
Due after one year through five years	555,409		597,245
Due after five years through ten years	741,256		825,787
Due after ten years	3,487,498		3,935,705
	4,922,802		5,500,191
Mortgage-backed and other asset-backed	2,400,128		2,527,892
Total fixed maturities	$	7,322,930	$	8,028,083

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Available-For-Sale Fixed Maturities by Maturity Date
September 30, 2020
Amortized
Cost
Fair Value
(Dollars in thousands)
Due in one year or less $ 111,399 $ 113,532
Due after one year through five years 596,286 632,356
Due after five years through ten years 755,949 853,418
Due after ten years 3,393,821 4,016,637
4,857,455 5,615,943
Mortgage-backed and other asset-backed 2,399,377 2,628,534
Total fixed maturities $ 7,256,832 $ 8,244,477

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Fixed maturities not due at a single maturity date have been included in the above table in the year of final contractual maturity.


Net Unrealized Gains on Investments in Accumulated Other Comprehensive Income	Net Unrealized Gains on Investments in Accumulated Other Comprehensive Income					Net Unrealized Gains on Investments in Accumulated Other Comprehensive Income
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Dollars in thousands)					(Dollars in thousands)
Net unrealized appreciation on:	Net unrealized appreciation on:					Net unrealized appreciation on:
Fixed maturities - available for sale	Fixed maturities - available for sale	$	999,740	$	687,359	Fixed maturities - available for sale	$	708,890	$	1,109,266

Adjustments for assumed changes in amortization pattern of:	Adjustments for assumed changes in amortization pattern of:					Adjustments for assumed changes in amortization pattern of:
Deferred acquisition costs	Deferred acquisition costs	(288,239)		(200,227)		Deferred acquisition costs	(215,329)		(320,489)
Value of insurance in force acquired	Value of insurance in force acquired	(11,102)		(12,498)		Value of insurance in force acquired	(10,196)		(10,647)
Unearned revenue reserve	Unearned revenue reserve	27,496		18,025		Unearned revenue reserve	27,261		29,393
Adjustments for assumed changes in policyholder liabilities	Adjustments for assumed changes in policyholder liabilities	(46,160)		(30,642)		Adjustments for assumed changes in policyholder liabilities	(29,402)		(51,001)
Provision for deferred income taxes	Provision for deferred income taxes	(143,164)		(97,023)		Provision for deferred income taxes	(101,057)		(158,869)
Net unrealized investment gains	Net unrealized investment gains	$	538,571	$	364,994	Net unrealized investment gains	$	380,167	$	597,653

Net unrealized investment gains exclude the allowance for credit losses.


Fixed Maturity Securities with Unrealized Losses by Length of Time without an Allowance for Credit Losses	Fixed Maturity Securities with Unrealized Losses by Length of Time without an Allowance for Credit Losses															Fixed Maturity Securities with Unrealized Losses by Length of Time without an Allowance for Credit Losses
		September 30, 2020															March 31, 2021
		Less than one year				One year or more				Total							Less than one year				One year or more				Total
Description of Securities	Description of Securities	Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Percent of Total		Description of Securities	Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Percent of Total
		(Dollars in thousands)															(Dollars in thousands)
Fixed maturities:	Fixed maturities:															Fixed maturities:
Corporate	Corporate	$	144,426	$	(8,045)	$	52,160	$	(6,926)	$	196,586	$	(14,971)	55.0	%	Corporate	$	315,148	$	(17,622)	$	25,290	$	(2,713)	$	340,438	$	(20,335)	43.6	%
Residential mortgage-backed	Residential mortgage-backed	52,098		(301)		15,449		(882)		67,547		(1,183)		4.3		Residential mortgage-backed	109,483		(3,404)		16,521		(1,026)		126,004		(4,430)		9.5
Commercial mortgage-backed	Commercial mortgage-backed	30,712		(658)		0		0		30,712		(658)		2.4		Commercial mortgage-backed	104,637		(9,146)		0		0		104,637		(9,146)		19.6
Other asset-backed	Other asset-backed	119,596		(4,507)		70,915		(4,083)		190,511		(8,590)		31.6		Other asset-backed	79,581		(939)		88,468		(1,754)		168,049		(2,693)		5.8
United States Government and agencies	United States Government and agencies	24,894		(453)		0		0		24,894		(453)		1.7		United States Government and agencies	28,876		(6,822)		0		0		28,876		(6,822)		14.6
States and political subdivisions	States and political subdivisions	31,084		(736)		2,360		(620)		33,444		(1,356)		5.0		States and political subdivisions	79,155		(2,774)		2,553		(448)		81,708		(3,222)		6.9
Total fixed maturities	Total fixed maturities	$	402,810	$	(14,700)	$	140,884	$	(12,511)	$	543,694	$	(27,211)	100.0	%	Total fixed maturities	$	716,880	$	(40,707)	$	132,832	$	(5,941)	$	849,712	$	(46,648)	100.0	%

~~Table of Content~~


Fixed Maturity Securities with Unrealized Losses by Length of Time

		December 31, 2019															December 31, 2020
		Less than one year				One year or more				Total							Less than one year				One year or more				Total
Description of Securities	Description of Securities	Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Percent of Total		Description of Securities	Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Fair Value		Unrealized Losses (1)		Percent of Total
		(Dollars in thousands)															(Dollars in thousands)
Fixed maturities:	Fixed maturities:															Fixed maturities:
Corporate	Corporate	$	114,520	$	(2,476)	$	84,719	$	(13,055)	$	199,239	$	(15,531)	69.5	%	Corporate	$	39,363	$	(1,716)	$	22,677	$	(2,526)	$	62,040	$	(4,242)	30.5	%
Residential mortgage-backed	Residential mortgage-backed	68,743		(1,435)		6,941		(494)		75,684		(1,929)		8.6		Residential mortgage-backed	45,059		(520)		16,918		(922)		61,977		(1,442)		10.3
Commercial mortgage-backed	Commercial mortgage-backed	46,537		(1,266)		2,610		(147)		49,147		(1,413)		6.3		Commercial mortgage-backed	26,829		(1,160)		0		0		26,829		(1,160)		8.3
Other asset-backed	Other asset-backed	112,462		(519)		102,439		(2,095)		214,901		(2,614)		11.7		Other asset-backed	113,439		(1,741)		67,128		(2,770)		180,567		(4,511)		32.3
United States Government and agencies	United States Government and agencies	0		0		2,494		(5)		2,494		(5)		0		United States Government and agencies	23,630		(1,809)		0		0		23,630		(1,809)		13.0
States and political subdivisions	States and political subdivisions	19,367		(379)		5,936		(487)		25,303		(866)		3.9		States and political subdivisions	12,577		(372)		2,568		(413)		15,145		(785)		5.6
Total fixed maturities	Total fixed maturities	$	361,629	$	(6,075)	$	205,139	$	(16,283)	$	566,768	$	(22,358)	100.0	%	Total fixed maturities	$	260,897	$	(7,318)	$	109,291	$	(6,631)	$	370,188	$	(13,949)	100.0	%

(1)Non-credit losses reported in AOCI are included with gross unrealized losses resulting in total gross unrealized losses for fixed maturities, available-for-sale being reported in the table.

Fixed maturities in the above tables include ~~217~~381 securities from ~~178~~303 issuers at ~~September 30, 2020~~March 31, 2021 and ~~189~~119 securities from ~~145~~95 issuers at December 31, ~~2019.~~2020. Unrealized losses increased during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 primarily due to ~~wider credit spreads.~~an

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increase in U.S. treasury rates. We do not consider securities declines in fair value below amortized cost to be due to a credit loss when the market decline is attributable to factors such as interest rate movements, market volatility, liquidity or spread widening when recovery of all amounts due under the contractual terms of the security is anticipated. Based on our intent not to sell and our belief that we will not be required to sell these securities before recovery of their amortized cost basis, we do not consider these investments to have a credit loss allowance, and they do not require a loss allowance established at ~~September 30, 2020.~~March 31, 2021. The following summarizes the more significant unrealized losses on fixed maturity securities by investment category as of ~~September 30, 2020.~~March 31, 2021.

Corporate securities: The largest unrealized losses were in the ~~energy~~utilities sector ($~~73.2~~94.8 million fair value and ~~$8.1~~$5.4 million unrealized loss) and in the ~~consumer non-cyclical~~energy sector ($~~24.9~~42.1 million fair value and ~~$1.6~~$3.3 million unrealized loss). The majority of losses is attributed to a general rise in treasury interest rates. The energy sector losses were attributable to credit ~~spread widening across the energy sector~~spreads that remain wide which is associated with ~~sharp declines~~the decline in crude oil prices. ~~The price of crude oil has decreased from $61.06 per barrel at December 31, 2019 to $40.22 per barrel at September 30, 2020.~~ Energy-related companies have been negatively impacted by the decline in oil prices due to a decrease in demand brought on by COVID-19.

Residential mortgage-backed securities: The unrealized losses on residential mortgage-backed securities were primarily due to price declines on legacy and newer issue bonds. The legacy bonds are still at an unrealized gain overall, but some individual securities remain at an unrealized loss. ~~We purchased many of these investments at a discount to their face amount and the contractual cash flows of these investments are based on mortgages and other assets backing the securities.~~ The newer issue residential mortgage-backed securities are comprised of bonds issued during and after 2013 with strong underwriting and collateral characteristics. Primarily, losses were attributable to credit spread widening which led to lower prices on some securities. ~~The wider spreads were caused by continued market uncertainty brought on by the COVID-19 virus.~~ These securities tend to have higher credit scores with higher credit enhancement and lower loan-to-value ratios which position them favorably against default during economic disruptions such as those caused by COVID-19.

Commercial mortgage-backed securities: The unrealized losses on commercial mortgage-backed securities were primarily due to spread widening. The wider spreads were caused by continued market uncertainty brought on by the COVID-19 virus for some securities. The contractual cash flows of these investments are based on mortgages backing the securities.

Other asset-backed ~~securities:~~ securitiesThe: The unrealized losses on asset-backed securities (ABS) were primarily due to concerns regarding COVID-19 and the resulting impact on consumer and commercial loans. Spreads ~~have tightened and prices have recovered over the previous six months as the actions taken by the U.S. Federal Reserve Bank helped stabilize the markets.~~are generally back to pre-COVID levels. The majority of our ABS have a sequential-pay structure that increases credit support as the pool amortizes. The average life of our ABS is ~~3.2~~2.7 years, down from ~~5.2~~5.4 years at purchase. Average credit support for the portfolio has increased from ~~10%~~9% at time of purchase to ~~22% as of September 30, 2020. The~~18%. Our ABS portfolio is rated ~~nearly 70% NAIC-1.~~approximately 72% NAIC-1.

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The unrealized losses on collateralized loan obligations (CLO) are due to concerns regarding COVID-19 and the resulting impact on leveraged loans. ~~The CLO market is also benefiting from the programs that the U.S. Federal Reserve Bank is providing to the market.~~ Our CLO portfolio is of high quality, with ~~all of the securities~~100% rated NAIC-1. Internal stress testing has indicated that the weighted average constant default rate (CDR) of our portfolio without suffering a loss is ~~17 percent.~~17%. The CDR is the constant default rate (annually) that a CLO must suffer before our tranche takes its first dollar loss.

State, municipal and other governments: The unrealized losses on state, municipal and other government securities were primarily due to general spread widening relative to spreads at which we acquired the ~~bonds.~~bonds, and uncertainty related to pandemic impacts on revenues in select sectors.

Our allowance for credit losses at ~~September 30, 2020~~March 31, 2021 includes ~~an energy sector bond,~~ two financial sector bonds ~~and a consumer non-cyclical bond~~ experiencing ongoing weakness in operating performance. The allowance for these bonds was established as the difference between the ~~fair value of the securities and their~~ amortized cost and ~~was considered~~present value of expected cash flows, which is equal to ~~be entirely credit related.~~fair value. Our allowance for credit losses also includes an asset backed security due to the difference between the amortized cost and the present value of the expected cash flows.

Available-For-Sale Fixed Maturities Allowance for Credit Losses
Three months ended September 30, 2020
Corporate Other ABS Total
(Dollars in thousands)
Beginning balance $ 12,902 $ 317 $ 13,219
Additions for credit losses not previously recorded 0 281 281
Net decrease to previously recorded allowance (1,405) 0 (1,405)
Ending balance $ 11,497 $ 598 $ 12,095

We also continue to hold an allowance of $0.9 million on a promissory note held in other investments due to the possibility of not collecting the full balance of the note.

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Available-For-Sale Fixed Maturities Allowance for Credit Losses
	Three months ended March 31, 2021
	Corporate		Other ABS		Total
	(Dollars in thousands)
Beginning balance	$	4,213	$	669	$	4,882
Additions for credit losses not previously recorded	0		115		115
Net decrease to previously recorded allowance	(1,260)		0		(1,260)


Ending balance	$	2,953	$	784	$	3,737

Nine months ended September 30, 2020
Corporate Other ABS Total
(Dollars in thousands)
Beginning balance $ 0 $ 0 $ 0
Additions for credit losses not previously recorded 13,118 598 13,716
Net decrease to previously recorded allowance (1,621) 0 (1,621)
Ending balance $ 11,497 $ 598 $ 12,095


	Three months ended March 31, 2020
	Corporate
	(Dollars in thousands)
Beginning balance	$	0
Additions for credit losses not previously recorded	12,146
Net decrease to previously recorded allowance	0


Ending balance	$	12,146

Mortgage Loans

Our mortgage loan portfolio consists of commercial mortgage loans that we have originated. Our lending policies require that the loans be collateralized by the value of the related property, establish limits on the amount that can be loaned to one borrower and require diversification by geographic location and collateral type. We originate loans with an initial loan-to-value ratio that provides sufficient collateral to absorb losses should we be required to foreclose and take possession of the collateral.

The amount of accrued interest excluded from the cost basis of the mortgage loans and included in accrued investment income on the balance sheet totaled ~~$3.6~~$3.4 million at ~~September 30, 2020.~~March 31, 2021. Any loan delinquent on contractual payments is considered non-performing. Mortgage loans are placed on non-accrual status if the loan is over 90 days past due. If the loan is placed on non-accrual status the prior accrued interest income is reversed through net investment income. Interest income received on non-performing loans is generally recognized on a cash basis. Once mortgage loans are classified as non-accrual loans, the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan has been restructured such that the collection of interest is considered likely. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there were no non-performing loans over 30 days past due on contractual payments. At ~~September 30, 2020,~~March 31, 2021, we had committed to provide additional funding for mortgage loans totaling ~~$21.8~~$21.6 million. These commitments arose in the normal course of business at terms that are comparable to similar investments.


Mortgage Loans by Collateral Type
	March 31, 2021				December 31, 2020
Collateral Type	Amortized Cost		Percent of Total		Amortized Cost		Percent of Total
	(Dollars in thousands)
Office	$	352,408	35.4	%	$	375,622	37.7	%
Retail	308,647		31.1		320,575		32.2
Industrial	258,478		26.0		227,424		22.9
Apartment	62,696		6.3		59,626		6.0
Other	12,294		1.2		12,407		1.2
Total	$	994,523	100.0	%	$	995,654	100.0	%

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Mortgage Loans by Collateral Type
September 30, 2020 December 31, 2019
Collateral Type Amortized Cost Percent of Total Amortized Cost Percent of Total
(Dollars in thousands)
Office $ 378,177 38.8 % $ 417,746 41.3 %
Retail 325,305 33.4 345,870 34.2
Industrial 233,410 24.0 235,274 23.2
Apartment 24,731 2.5 — —
Other 12,511 1.3 12,788 1.3
Total $ 974,134 100.0 % $ 1,011,678 100.0 %


Mortgage Loans by Geographic Location within the United States
	March 31, 2021				December 31, 2020
Region of the United States	Amortized Cost		Percent of Total		Amortized Cost		Percent of Total
	(Dollars in thousands)
South Atlantic	$	249,858	25.1	%	$	252,964	25.4	%
Pacific	183,490		18.5		181,743		18.3
East North Central	158,576		15.9		147,342		14.8
Mountain	114,998		11.6		107,833		10.8
West North Central	95,361		9.6		94,044		9.4
East South Central	61,879		6.2		75,540		7.6
West South Central	60,719		6.1		65,808		6.6
Middle Atlantic	52,093		5.2		52,512		5.3
New England	17,549		1.8		17,868		1.8
Total	$	994,523	100.0	%	$	995,654	100.0	%

Mortgage Loans by Geographic Location within the United States
September 30, 2020 December 31, 2019
Region of the United States Amortized Cost Percent of Total Amortized Cost Percent of Total
(Dollars in thousands)
South Atlantic $ 261,291 26.8 % $ 288,299 28.5 %
Pacific 165,281 17.0 164,996 16.3
East North Central 137,241 14.1 117,053 11.6
Mountain 104,658 10.7 96,857 9.6
West North Central 98,505 10.1 108,942 10.8
East South Central 78,983 8.1 81,275 8.0
West South Central 65,374 6.7 76,650 7.6
Middle Atlantic 44,625 4.6 45,687 4.5
New England 18,176 1.9 31,919 3.1
Total $ 974,134 100.0 % $ 1,011,678 100.0 %


Mortgage Loans by Loan-to-Value Ratio	Mortgage Loans by Loan-to-Value Ratio									Mortgage Loans by Loan-to-Value Ratio
		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
Loan-to-Value Ratio	Loan-to-Value Ratio	Amortized Cost		Percent of Total		Amortized Cost		Percent of Total		Loan-to-Value Ratio	Amortized Cost		Percent of Total		Amortized Cost		Percent of Total
		(Dollars in thousands)									(Dollars in thousands)
0% - 50%	0% - 50%	$	442,913	45.5	%	$	412,973	40.8	%	0% - 50%	$	468,274	47.1	%	$	463,130	46.5	%
51% - 60%	51% - 60%	309,726		31.8		310,869		30.7		51% - 60%	305,305		30.7		309,477		31.1
61% - 70%	61% - 70%	204,359		21.0		256,280		25.4		61% - 70%	200,132		20.1		202,114		20.3
71% - 80%	71% - 80%	17,136		1.7		31,556		3.1		71% - 80%	20,812		2.1		20,933		2.1

Total	Total	$	974,134	100.0	%	$	1,011,678	100.0	%	Total	$	994,523	100.0	%	$	995,654	100.0	%

The loan-to-value ratio is determined using the most recent appraised value. Appraisals are updated periodically when there is indication of a possible significant collateral decline or there are loan modifications or refinance requests.

Mortgage loans are rated internally to provide a current qualitative rating of each loan. We review the capital structure, collateral strength, physical occupancy, financial stability of the operating income stream, debt service coverage ratio, outstanding loan balance to estimated value of the collateral, property improvements and the financial strength of the borrower when determining the internal loan rating. Loans of high quality, low risk and with little concern of default or extension risk are rated an A; loans of moderate quality and moderate risk are rated a B; loans of low quality and high risk are rated a C, and loans for which there is concern of credit default are rated a W.


Mortgage Loans by Internal Rating and Year of Origination
	March 31, 2021
	2021		2020		2019		2018		2017		2016 & prior		Total
Internal Rating	Amortized Cost
	(Dollars in thousands)
A	$	40,200	$	103,159	$	56,005	$	117,268	$	181,445	$	465,423	$	963,500
B	—		—		11,735		1,866		3,420		1,502		18,523
C	—		—		—		4,408		—		3,907		8,315

W	—		—		—		—		—		4,185		4,185

Total	$	40,200	$	103,159	$	67,740	$	123,542	$	184,865	$	475,017	$	994,523

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Mortgage Loans by Internal Rating and Year of Origination
September 30, 2020
2020 2019 2018 2017 2016 2015 & prior Total
Internal Rating Amortized Cost
(Dollars in thousands)
A $ 44,643 $ 56,567 $ 119,248 $ 191,141 $ 136,503 $ 386,219 $ 934,321
B — 11,842 1,900 3,497 — 5,336 22,575
C — — 4,495 — 3,975 4,535 13,005
W — — — — — 4,233 4,233
Total $ 44,643 $ 68,409 $ 125,643 $ 194,638 $ 140,478 $ 400,323 $ 974,134


Mortgage Loans by Internal Rating and Year of Origination																Mortgage Loans by Internal Rating and Year of Origination
		December 31, 2019															December 31, 2020
		2019		2018		2017		2016		2015		2014 & prior		Total			2020		2019		2018		2017		2016		2015 & prior		Total
Internal Rating	Internal Rating	Amortized Cost														Internal Rating	Amortized Cost
		(Dollars in thousands)															(Dollars in thousands)
A	A	$	69,319	$	128,334	$	200,283	$	144,311	$	119,724	$	316,079	$	978,050	A	$	103,781	$	56,288	$	118,283	$	189,257	$	130,070	$	362,346	$	960,025
B	B	—		—		—		—		—		7,512		7,512		B	—		11,789		1,883		3,459		—		1,516		18,647
C	C	—		—		—		—		—		21,812		21,812		C	—		—		4,456		—		3,945		4,372		12,773

W	W	—		—		—		—		—		4,304		4,304		W	—		—		—		—		—		4,209		4,209

Total	Total	$	69,319	$	128,334	$	200,283	$	144,311	$	119,724	$	349,707	$	1,011,678	Total	$	103,781	$	68,077	$	124,622	$	192,716	$	134,015	$	372,443	$	995,654

Our allowance for credit losses on mortgage loans was estimated by incorporating historical internal information, historical industry averages, current conditions as well as conditions for a reasonable and supportable forecast that includes an estimated recessionary period. The loans are segmented by an internal risk rating as well as geographic region with an estimated loss ratio applied against each segment. For the years after our reasonable and supportable forecast period we graded the expected loss ratio over the estimated remaining recessionary period to our actual loss history. During the quarter ended ~~September 30,~~March 31, 2021, our allowance did not change significantly from December 31, 2020 ~~positive trends in~~as the ~~historical industry averages, a decrease in the estimated recessionary period and a decrease in our mortgage loan~~aggregate principal balance ~~more than offset~~on our ~~negative internal rating migrations for~~loans and other inputs into the ~~quarter which led to a decrease in our allowance.~~model remained relatively stable. Amounts on mortgage loans deemed to be uncollectible are charged off and removed from the valuation allowance.


Allowance for Credit Losses on Mortgage Loans	Allowance for Credit Losses on Mortgage Loans					Allowance for Credit Losses on Mortgage Loans
		Three months ended		Nine months ended			Three months ended March 31,
		September 30, 2020		September 30, 2020			2021		2020

		(Dollars in thousands)					(Dollars in thousands)
Beginning balance	Beginning balance	$	2,703	$	3,164	Beginning balance	$	1,553	$	3,165
Current period provision for expected credit losses	Current period provision for expected credit losses	(779)		(1,240)		Current period provision for expected credit losses	32		114

Ending balance	Ending balance	$	1,924	$	1,924	Ending balance	$	1,585	$	3,279

Mortgage Loan Modifications

Our commercial mortgage loan portfolio can include loans that have been modified. We assess loan modifications on a loan-by-loan basis to evaluate whether a troubled debt restructuring has occurred. Generally, the types of concessions include reduction of the contractual interest rate to a below-market rate, extension of the maturity date and/or a reduction of accrued interest. The amount, timing and extent of the concession granted is considered in determining if an impairment loss is needed for the restructuring. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows lenders to make loan modifications under certain circumstances without triggering troubled debt restructuring status, including extension of the maturity date and payment of interest only. Other than those modifications intended to comply with these provisions of the CARES Act, thereThere were no loan modifications during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 or ~~September 30, 2019.~~March 31, 2020.

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Realized Gains (Losses) - Recorded in Income	Realized Gains (Losses) - Recorded in Income									Realized Gains (Losses) - Recorded in Income
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in thousands)									(Dollars in thousands)
Realized gains (losses) on investments	Realized gains (losses) on investments									Realized gains (losses) on investments
Fixed maturities:	Fixed maturities:									Fixed maturities:
Gross gains	Gross gains	$	237	$	534	$	431	$	3,671	Gross gains	$	148	$	12
Gross losses	Gross losses	(11)		0		(1,730)		(304)		Gross losses	(868)		(159)
Mortgage loans		0		0		0		2,778

Other	Other	(49)		0		(58)		(4)		Other	0		(9)

		177		534		(1,357)		6,141			(720)		(156)

Net gains (losses) recognized during the period on equity securities held at the end of the period		1,814		165		(7,099)		5,047
Net gains (losses) recognized during the period on equity securities sold during the period		0		(3)		(201)		42
Net gains (losses) recognized during the period on equity securities		1,814		162		(7,300)		5,089
Net realized gains (losses)		1,991		696		(8,657)		11,230
Net gains and (losses) recognized during the period on equity securities held at the end of the period										Net gains and (losses) recognized during the period on equity securities held at the end of the period	(149)		(13,231)
Net gains and (losses) recognized during the period on equity securities sold during the period										Net gains and (losses) recognized during the period on equity securities sold during the period	0		(14)
Net losses recognized during the period on equity securities										Net losses recognized during the period on equity securities	(149)		(13,245)
Net realized losses										Net realized losses	(869)		(13,401)

Credit losses recognized in earnings:
Other-than-temporary impairment losses		0		(50)		0		(919)
Allowance for credit losses on fixed maturity securities		1,124		0		(12,095)		0
Allowance for credit losses on mortgage loans		779		0		1,240		0
Decrease (increase) in allowances for credit losses:										Decrease (increase) in allowances for credit losses:

Fixed maturity securities										Fixed maturity securities	1,145		(12,146)
Mortgage loans										Mortgage loans	(32)		(115)
Net realized gains (losses) on investments recorded in income	Net realized gains (losses) on investments recorded in income	$	3,894	$	646	$	(19,512)	$	10,311	Net realized gains (losses) on investments recorded in income	$	244	$	(25,662)

Proceeds from sales of fixed maturities totaled ~~$14.5~~$4.7 million during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~$27.7~~$5.8 million during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Realized gains and losses on sales of investments are determined based on specific identification.

Variable Interest Entities

We evaluate our variable interest entity (VIE) investees to determine whether the level of our direct ownership interest, our rights to manage operations, or our obligation to provide ongoing financial support are such that we are the primary beneficiary of the entity, and would therefore be required to consolidate it for financial reporting purposes. After determining that we have a variable interest, we review our involvement in the VIE to determine whether we have both the power to direct activities that most significantly impact the economic performance of the VIE, and the obligation to absorb losses or the rights to receive benefits that could be potentially significant to the VIE. This analysis includes a review of the purpose and design of the VIE as well as the role that we played in the formation of the entity and how that role could impact our ability to control the VIE. We also review the activities and decisions considered significant to the economic performance of the VIE and assess what power we have in directing those activities and decisions. Finally, we review the agreements in place to determine if there are any guarantees that would affect our maximum exposure to loss.

We have reviewed the circumstances surrounding our investments in VIEs, which consist of (i) limited partnerships or limited liability companies accounted for under the equity method included in securities and indebtedness of related parties and (ii) non-guaranteed federal low income housing tax credit (LIHTC) investments included in other assets. In addition, we have reviewed the ownership interests in our VIEs and determined that we do not hold direct majority ownership or have other contractual rights (such as kick out rights) that give us effective control over these entities resulting in us having both the power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The maximum loss exposure relative to our VIEs is limited to the carrying value and any unfunded commitments that exist for each particular VIE. We also have not provided additional support or other guarantees that were not previously contractually required (financial or otherwise) to any of the VIEs as of ~~September 30, 2020~~March 31, 2021 or December 31, ~~2019.~~2020. Based on this analysis, none of our VIEs were required to be consolidated at ~~September 30, 2020~~March 31, 2021 or December 31, ~~2019.~~2020.

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LIHTC investments take the form of limited partnerships or limited liability companies, which in turn invest in a number of low income housing projects. We use the proportional amortization method of accounting for these investments. The proportional amortization method amortizes the cost of the investment over the period in which the investor expects to receive tax credits and other tax benefits, and the resulting amortization is recognized along with the tax benefit as a component of federal income tax expense on our consolidated statements of operations.


VIE Investments by Category	VIE Investments by Category									VIE Investments by Category
		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
		Carrying Value		Maximum Exposure to Loss		Carrying Value		Maximum Exposure to Loss			Carrying Value		Maximum Exposure to Loss		Carrying Value		Maximum Exposure to Loss
		(Dollars in thousands)									(Dollars in thousands)
LIHTC investments	LIHTC investments	$	34,273	$	35,200	$	42,907	$	43,834	LIHTC investments	$	28,761	$	29,602	$	31,382	$	32,263
Investment companies	Investment companies	59,661		111,179		53,388		103,125		Investment companies	69,064		149,559		66,326		138,413
Real estate limited partnerships	Real estate limited partnerships	9,888		15,002		9,565		15,527		Real estate limited partnerships	15,109		14,727		13,398		14,869
Other	Other	490		490		492		492		Other	482		482		491		491
Total	Total	$	104,312	$	161,871	$	106,352	$	162,978	Total	$	113,416	$	194,370	$	111,597	$	186,036

In addition, we make passive investments in the normal course of business in structured securities issued by VIEs for which we are not the investment manager. These structured securities include all of the residential mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities included in our fixed maturity securities. Our maximum exposure to loss on these securities is limited to our carrying value of the investment. We have determined that we are not the primary beneficiary of these structured securities because we do not have the power to direct the activities that most significantly impact the entities’ economic performance.

Derivative Instruments

Our primary derivative exposure relates to purchased call options, which provide an economic hedge against the embedded derivatives in our indexed products. We also have embedded derivatives within our modified coinsurance agreements as well as an interest-only fixed maturity investment. We do not apply hedge accounting to any of our derivative positions, and they are held at fair value.


Derivatives Instruments by Type	Derivatives Instruments by Type					Derivatives Instruments by Type
		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Dollars in thousands)					(Dollars in thousands)
Assets	Assets					Assets
Freestanding derivatives:	Freestanding derivatives:					Freestanding derivatives:
Call options (reported in other investments)	Call options (reported in other investments)	$	18,376	$	31,469	Call options (reported in other investments)	$	28,111	$	23,576
Embedded derivatives:	Embedded derivatives:					Embedded derivatives:
Modified coinsurance (reported in reinsurance recoverable)	Modified coinsurance (reported in reinsurance recoverable)	4,054		2,327		Modified coinsurance (reported in reinsurance recoverable)	3,724		4,373
Interest-only security (reported in fixed maturities)	Interest-only security (reported in fixed maturities)	97		385		Interest-only security (reported in fixed maturities)	0		25
Total assets	Total assets	$	22,527	$	34,181	Total assets	$	31,835	$	27,974

Liabilities	Liabilities					Liabilities
Embedded derivatives:	Embedded derivatives:					Embedded derivatives:
Indexed products (reported in liability for future policy benefits)	Indexed products (reported in liability for future policy benefits)	$	95,079	$	76,346	Indexed products (reported in liability for future policy benefits)	$	101,051	$	106,852
Modified coinsurance (reported in other liabilities)	Modified coinsurance (reported in other liabilities)	326		254		Modified coinsurance (reported in other liabilities)	296		320
Total liabilities	Total liabilities	$	95,405	$	76,600	Total liabilities	$	101,347	$	107,172

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Derivative Income (Loss)	Derivative Income (Loss)									Derivative Income (Loss)
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in thousands)									(Dollars in thousands)
Freestanding derivatives:	Freestanding derivatives:									Freestanding derivatives:
Call options	Call options	$	7,495	$	1,590	$	(1,073)	$	14,092	Call options	$	4,570	$	(22,163)
Embedded derivatives:	Embedded derivatives:									Embedded derivatives:
Modified coinsurance	Modified coinsurance	1,452		859		1,655		2,112		Modified coinsurance	(626)		(504)
Interest-only security	Interest-only security	44		(99)		85		17		Interest-only security	7		24
Indexed products	Indexed products	(9,890)		(5,831)		(3,471)		(18,460)		Indexed products	8,950		21,076
Total loss from derivatives		$	(899)	$	(3,481)	$	(2,804)	$	(2,239)
Total income (loss) from derivatives										Total income (loss) from derivatives	$	12,901	$	(1,567)

Derivative income (loss) is reported in net investment income except for the change in fair value of the embedded derivatives on our indexed products, which is reported in interest sensitive product benefits.

We are exposed to credit losses on our call options in the event of nonperformance of the derivative counterparties. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings (currently rated A or better by nationally recognized statistical rating organizations). We have also entered into credit support agreements with the counterparties requiring them to post collateral when net exposures exceed pre-determined thresholds that vary by counterparty. The net amount of such exposure is essentially the market value less collateral held for such agreements with each counterparty. The call options are supported by securities collateral received of ~~$15.8~~$22.5 million at ~~September 30, 2020,~~March 31, 2021, which is held in a separate custodial account. Subject to certain constraints, we are permitted to sell or re-pledge this collateral, but do not have legal rights to the collateral; accordingly, it has not been recorded on our balance sheet. We have elected to present our derivative receivables netted with the obligation to return cash collateral received on our balance sheet in other investments. We received cash collateral of ~~$8.9~~$8.5 million included in cash and cash equivalents on our balance sheet as of ~~September 30, 2020.~~March 31, 2021. At ~~September 30, 2020,~~March 31, 2021, none of the collateral had been sold or re-pledged. As of ~~September 30, 2020,~~March 31, 2021, our net derivative exposure recorded on the balance sheet without the off balance sheet collateral was ~~$18.4~~$28.1 million.

3. Fair Values

Fair value is based on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As not all financial instruments are actively traded, various valuation methods may be used to estimate fair value. These methods rely on observable market data, or, if observable market data is not available, the best information available. Significant judgment may be required to interpret the data and select the assumptions used in the valuation estimates, particularly when observable market data is not available.

In the discussion that follows, we have ranked our financial instruments by the level of judgment used in the determination of the fair values presented above. The levels are defined as follows:

•Level 1 - Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2 - Fair values are based on inputs, other than quoted prices from active markets, that are observable for the asset or liability, either directly or indirectly.

•Level 3 - Fair values are based on significant unobservable inputs for the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. From time to time there may be movements between levels as inputs become more or less observable, which may depend on several factors including the activity of the market for the specific security, the activity of the market for similar securities, the level of risk spreads and the source from which we obtain the information.

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The following methods and assumptions were used in estimating the fair value of our financial instruments measured at fair value on a recurring basis:

Fixed maturities:

Level 1 fixed maturities consist of U.S. Treasury issues that are actively traded, allowing us to use current market prices as an estimate of their fair value.

Level 2 fixed maturities consist of corporate, mortgage- and asset-backed, United States Government agencies, state and political subdivisions and private placement corporate securities with observable market data, and in some circumstances recent trade activity. When quoted prices of identical assets in active markets are not available, we obtain prices from third-party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2.

Also included in Level 2 are private placement corporate bonds with no quoted market prices available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread.

Level 3 fixed maturities include corporate, mortgage- and asset-backed and private placement corporate securities for which there is little or no current market data available. We use external pricing sources, or if prices are not available, we will estimate fair value internally. Fair values of private corporate investments in Level 3 are determined by reference to the public market, private transactions or valuations for comparable companies or assets in the relevant asset class when such amounts are available. For other securities for which an exit price based on relevant observable inputs is not obtained, the fair value is determined using a matrix calculation. Fair values estimated using matrix pricing methods rely on an estimate of credit spreads to a risk-free U.S. Treasury yield. Selecting the credit spread requires judgment based on an understanding of the security and may include a market liquidity premium. Our selection of comparable companies as well as the level of spread requires significant judgment. Increases in spreads used in our matrix models, or those used to value comparable companies, will result in a decrease in discounted cash flows used, and accordingly in the estimated fair value of the security.

We obtain fixed maturity fair values from a variety of external independent pricing services, including brokers, with access to observable data including recent trade information, if available. In certain circumstances in which an external price is not available for a Level 3 security, we will internally estimate its fair value. Our process for evaluation and selection of the fair values includes:

•We follow a “pricing waterfall” policy, which establishes the pricing source preference for a particular security or security type. The order of preference is based on our evaluation of the valuation methods used, the source’s knowledge of the instrument and the reliability of the prices we have received from the source in the past. Our valuation policy dictates that fair values are initially sought from third-party pricing services. If our review of the prices received from our preferred source indicates an inaccurate price, we will use an alternative source within the waterfall and document the decision. In the event that fair values are not available from one of our external pricing services or upon review of the fair values provided it is determined that they may not be reflective of market conditions, those securities are submitted to brokers familiar with the security to obtain non-binding price quotes. Broker quotes tend to be used in limited circumstances such as for newly issued, private placement corporate bonds and other instruments that are not widely traded. For those securities for which an externally provided fair value is not available, we use cash flow modeling techniques to estimate fair value.

•We evaluate third-party pricing source estimation methodologies to assess whether they will provide a fair value that approximates a market exit price.

•We perform an overall analysis of portfolio fair value movement against general movements in interest rates and spreads.

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•We compare period-to-period price trends to detect unexpected price fluctuations based on our knowledge of the market and the particular instrument. As fluctuations are noted, we will perform further research that may include discussions with the original pricing source or other external sources to ensure we agree with the valuation.

•We compare prices between different pricing sources for unusual disparity.

•We meet at least quarterly with our Investment Committee, the group that oversees our valuation process, to discuss valuation practices and observations during the pricing process.

Equity securities:

Level 1 equity securities consist of mutual funds ~~and common stocks~~ that are actively traded, allowing us to use current market prices as an estimate of their fair value.

Level 2 equity securities consist of non-redeemable preferred stock. Estimated fair value for the non-redeemable preferred stock is obtained from external pricing sources using a matrix pricing approach.

Level 3 equity securities consist of non-redeemable preferred stock for which fair value estimates are based on the value of comparable securities that are actively traded. Increases in spreads used to value comparable companies, will result in a decrease in discounted cash flows used, and accordingly in the estimated fair value of the security.

In the case that external pricing services are used for certain Level 1 and Level 2 equity securities, our review process is consistent with the process used to determine the fair value of fixed maturities discussed above.

Other investments:

Level 2 other investments measured at fair value include call options with fair values based on counterparty market prices adjusted for a credit component of the counterparty, net of collateral received.

Cash, cash equivalents and short-term investments:

Level 1 cash, cash equivalents and short-term investments are highly liquid instruments for which historical cost approximates fair value.

Reinsurance recoverable:

Level 2 reinsurance recoverable includes embedded derivatives in our modified coinsurance contracts under which we cede or assume business. Fair values of these embedded derivatives are based on the difference between the fair value and the cost basis of the underlying fixed maturities, which are valued consistent with the discussion of fixed maturities above.

Assets held in separate accounts:

Level 1 assets held in separate accounts consist of mutual funds that are actively traded, allowing us to use current market prices as an estimate of their fair value.

Future policy benefits - indexed product embedded derivatives:

Indexed product contracts include embedded derivatives that are measured at fair value on a recurring basis. These embedded derivatives are a Level 3 measurement. The fair value of the embedded derivatives is based on the discounted excess of projected account values (including a risk margin) over projected guaranteed account values. The key unobservable inputs required in the projection of future values that require management judgment include the risk margin as well as our credit risk. Should the risk margin increase or the credit risk decrease, the discounted cash flows and the estimated fair value of the obligation will increase.

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Other liabilities:

Level 2 other liabilities include the embedded derivatives in our modified coinsurance contracts under which we cede business. Fair values for the embedded derivatives are based on the difference between the fair value and the cost basis of the underlying fixed maturities.


Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels	Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels									Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels
		September 30, 2020									March 31, 2021
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value
		(Dollars in thousands)									(Dollars in thousands)
Assets	Assets									Assets
Fixed maturities:	Fixed maturities:									Fixed maturities:
Corporate securities	Corporate securities	$	0	$	4,129,701	$	4,298	$	4,133,999	Corporate securities	$	0	$	4,088,091	$	3,517	$	4,091,608
Residential mortgage-backed securities	Residential mortgage-backed securities	0		717,719		7,393		725,112		Residential mortgage-backed securities	0		676,535		21,743		698,278
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		1,141,289		8,142		1,149,431		Commercial mortgage-backed securities	0		1,071,985		7,842		1,079,827
Other asset-backed securities	Other asset-backed securities	0		727,998		25,993		753,991		Other asset-backed securities	0		744,117		5,670		749,787

United States Government and agencies	United States Government and agencies	27,188		10,407		0		37,595		United States Government and agencies	30,135		9,110		0		39,245
States and political subdivisions	States and political subdivisions	0		1,444,349		0		1,444,349		States and political subdivisions	0		1,369,338		0		1,369,338
Total fixed maturities	Total fixed maturities	27,188		8,171,463		45,826		8,244,477		Total fixed maturities	30,135		7,959,176		38,772		8,028,083
Non-redeemable preferred stocks	Non-redeemable preferred stocks	0		65,261		6,816		72,077		Non-redeemable preferred stocks	0		64,951		6,676		71,627
Common stocks (1)	Common stocks (1)	12,084		0		0		12,084		Common stocks (1)	6,823		0		0		6,823
Other investments	Other investments	0		18,376		0		18,376		Other investments	0		28,111		0		28,111
Cash, cash equivalents and short-term investments	Cash, cash equivalents and short-term investments	33,464		0		0		33,464		Cash, cash equivalents and short-term investments	113,106		0		0		113,106
Reinsurance recoverable	Reinsurance recoverable	0		4,054		0		4,054		Reinsurance recoverable	0		3,724		0		3,724
Assets held in separate accounts	Assets held in separate accounts	616,381		0		0		616,381		Assets held in separate accounts	686,968		0		0		686,968
Total assets	Total assets	$	689,117	$	8,259,154	$	52,642	$	9,000,913	Total assets	$	837,032	$	8,055,962	$	45,448	$	8,938,442

Liabilities	Liabilities									Liabilities
Future policy benefits - indexed product embedded derivatives	Future policy benefits - indexed product embedded derivatives	$	0	$	0	$	95,079	$	95,079	Future policy benefits - indexed product embedded derivatives	$	0	$	0	$	101,051	$	101,051
Other liabilities	Other liabilities	0		326		0		326		Other liabilities	0		296		0		296
Total liabilities	Total liabilities	$	0	$	326	$	95,079	$	95,405	Total liabilities	$	0	$	296	$	101,051	$	101,347

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Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels	Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels									Valuation of our Financial Instruments Measured on a Recurring Basis by Hierarchy Levels
		December 31, 2019									December 31, 2020
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value
		(Dollars in thousands)									(Dollars in thousands)
Assets	Assets									Assets
Fixed maturities:	Fixed maturities:									Fixed maturities:
Corporate securities	Corporate securities	$	0	$	3,772,362	$	6,588	$	3,778,950	Corporate securities	$	0	$	4,235,226	$	3,041	$	4,238,267
Residential mortgage-backed securities	Residential mortgage-backed securities	0		672,388		0		672,388		Residential mortgage-backed securities	0		702,119		0		702,119
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0		1,032,693		12,780		1,045,473		Commercial mortgage-backed securities	0		1,128,199		8,134		1,136,333
Other asset-backed securities	Other asset-backed securities	0		704,766		9,755		714,521		Other asset-backed securities	0		733,561		21,190		754,751
United States Government and agencies	United States Government and agencies	4,821		9,302		0		14,123		United States Government and agencies	25,901		10,351		0		36,252
States and political subdivisions	States and political subdivisions	0		1,477,173		0		1,477,173		States and political subdivisions	0		1,415,965		0		1,415,965
Total fixed maturities	Total fixed maturities	4,821		7,668,684		29,123		7,702,628		Total fixed maturities	25,901		8,225,421		32,365		8,283,687
Non-redeemable preferred stocks	Non-redeemable preferred stocks	0		67,873		6,927		74,800		Non-redeemable preferred stocks	0		65,870		6,612		72,482
Common stocks (1)	Common stocks (1)	17,027		0		0		17,027		Common stocks (1)	6,510		0		0		6,510
Other investments	Other investments	0		31,469		0		31,469		Other investments	0		23,576		0		23,576
Cash, cash equivalents and short-term investments	Cash, cash equivalents and short-term investments	29,142		0		0		29,142		Cash, cash equivalents and short-term investments	75,944		0		0		75,944
Reinsurance recoverable	Reinsurance recoverable	0		2,327		0		2,327		Reinsurance recoverable	0		4,373		0		4,373
Assets held in separate accounts	Assets held in separate accounts	645,881		0		0		645,881		Assets held in separate accounts	674,182		0		0		674,182
Total assets	Total assets	$	696,871	$	7,770,353	$	36,050	$	8,503,274	Total assets	$	782,537	$	8,319,240	$	38,977	$	9,140,754

Liabilities	Liabilities									Liabilities
Future policy benefits - indexed product embedded derivatives	Future policy benefits - indexed product embedded derivatives	$	0	$	0	$	76,346	$	76,346	Future policy benefits - indexed product embedded derivatives	$	0	$	0	$	106,852	$	106,852
Other liabilities	Other liabilities	0		254		0		254		Other liabilities	0		320		0		320
Total liabilities	Total liabilities	$	0	$	254	$	76,346	$	76,600	Total liabilities	$	0	$	320	$	106,852	$	107,172

(1) A private equity fund with a fair value estimate of ~~$9.1~~$10.1 million at ~~September 30, 2020~~March 31, 2021 and ~~$8.4~~$9.3 million at December 31, ~~2019~~2020 using net asset value per share as a practical expedient, has not been classified in the fair value hierarchy above in accordance with fair value reporting guidance. This fund invests in senior secured middle market loans and had no remaining unfunded commitments at March 31, 2021 and unfunded commitments totaling $0.8 million at ~~September 30, 2020 and $1.7 million at~~ December 31, ~~2019.~~2020. The investment is not currently eligible for redemption.


Level 3 Assets by Valuation Source - Recurring Basis	Level 3 Assets by Valuation Source - Recurring Basis										Level 3 Assets by Valuation Source - Recurring Basis
		September 30, 2020										March 31, 2021
		Third-party vendors			Priced internally			Fair Value				Third-party vendors			Priced internally			Fair Value
		(Dollars in thousands)										(Dollars in thousands)
Corporate securities	Corporate securities	$	0		$	4,298		$	4,298		Corporate securities	$	991		$	2,526		$	3,517
Residential mortgage-backed securities	Residential mortgage-backed securities	7,393			0			7,393			Residential mortgage-backed securities	19,800			1,943			21,743
Commercial mortgage-backed securities	Commercial mortgage-backed securities	8,142			0			8,142			Commercial mortgage-backed securities	7,842			0			7,842
Other asset-backed securities	Other asset-backed securities	25,993			0			25,993			Other asset-backed securities	4,295			1,375			5,670
Non-redeemable preferred stocks	Non-redeemable preferred stocks	0			6,816			6,816			Non-redeemable preferred stocks	0			6,676			6,676

Total assets	Total assets	$	41,528		$	11,114		$	52,642		Total assets	$	32,928		$	12,520		$	45,448
Percent of total	Percent of total	78.9		%	21.1		%	100.0		%	Percent of total	72.5		%	27.5		%	100.0		%

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Level 3 Assets by Valuation Source - Recurring Basis	Level 3 Assets by Valuation Source - Recurring Basis										Level 3 Assets by Valuation Source - Recurring Basis
		December 31, 2019										December 31, 2020
		Third-party vendors			Priced internally			Fair Value				Third-party vendors			Priced internally			Fair Value
		(Dollars in thousands)										(Dollars in thousands)
Corporate securities	Corporate securities	$	0		$	6,588		$	6,588		Corporate securities	$	0		$	3,041		$	3,041

Commercial mortgage-backed securities	Commercial mortgage-backed securities	12,780			0			12,780			Commercial mortgage-backed securities	8,134			0			8,134
Other asset-backed securities	Other asset-backed securities	8,000			1,755			9,755			Other asset-backed securities	17,876			3,314			21,190
Non-redeemable preferred stocks	Non-redeemable preferred stocks	0			6,927			6,927			Non-redeemable preferred stocks	0			6,612			6,612

Total assets	Total assets	$	20,780		$	15,270		$	36,050		Total assets	$	26,010		$	12,967		$	38,977
Percent of total	Percent of total	57.6		%	42.4		%	100.0		%	Percent of total	66.7		%	33.3		%	100.0		%

Quantitative Information about Level 3 Fair Value Measurements - Recurring Basis

~~September 30,~~March 31, 2021

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)

(Dollars in thousands)

Assets

Corporate securities

3,517

Discounted cash flow

Credit spread

0.55% - 3.94% (2.72%)

Commercial mortgage-backed securities

7,842

Discounted cash flow

Credit spread

1.83% - 1.91% (1.87%)

Other asset-backed securities

4,251

Discounted cash flow

Credit spread

2.80% - 7.25% (6.01%)

Residential mortgage-backed securities

19,800

Discounted cash flow

Credit spread

0.88% - 1.00% (0.93%)

Non-redeemable preferred stocks

6,676

Discounted cash flow

Credit spread

3.28% (3.28%)

Total assets

42,086

Liabilities

Future policy benefits - indexed product embedded derivatives

101,051

Discounted cash flow

Credit risk
Risk margin

0.40% - 1.30% (0.80%) 0.15% - 0.40% (0.25%)

December 31, 2020

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)

(Dollars in thousands)

Assets

Corporate securities

~~4,298~~3,041

Discounted cash flow

Credit spread

~~7.50%~~5.95% - ~~16.49% (12.32%~~19.41% (14.52%)

Commercial mortgage-backed securities

~~8,142~~8,134

Discounted cash flow

Credit spread

~~1.97%~~1.86% - ~~2.77% (2.44%~~2.42% (2.18%)

Other asset-backed securities

~~18,200~~13,564

Discounted cash flow

Credit spread

~~2.40%~~2.10% - ~~3.50% (2.94%~~9.75% (5.70%)

~~Residential mortgage-backed securities~~Non-redeemable preferred stocks

~~7,393~~6,612

Discounted cash flow

Credit spread

~~1.65% (1.65%)~~

~~Non-redeemable preferred stocks~~

~~6,816~~

~~Discounted cash flow~~

~~Credit spread~~

~~4.51% (4.51%~~3.57% (3.57%)

Total assets

~~44,849~~31,351

Liabilities

Future policy benefits - indexed product embedded derivatives

~~95,079~~106,852

Discounted cash flow

Credit risk
Risk margin

~~0.50%~~0.35% - ~~2.00% (1.15%~~1.45% (0.80%) 0.15% - 0.40% ~~(0.25%)~~

~~December 31, 2019~~

~~Fair Value~~

~~Valuation Technique~~

~~Unobservable Input~~

~~Range (Weighted Average)~~

~~(Dollars in thousands)~~

~~Assets~~

~~Corporate securities~~

~~6,588~~

~~Discounted cash flow~~

~~Credit spread~~

~~2.11% - 5.85% (4.33%)~~

~~Commercial mortgage-backed securities~~

~~12,780~~

~~Discounted cash flow~~

~~Credit spread~~

~~1.18% - 2.22% (1.92%)~~

~~Other asset-backed securities~~

~~6,000~~

~~Discounted cash flow~~

~~Credit spread~~

~~2.15% - 2.30% (2.23%)~~

~~Non-redeemable preferred stocks~~

~~6,927~~

~~Discounted cash flow~~

~~Credit spread~~

~~2.72% (2.72%)~~

~~Total assets~~

~~32,295~~

~~Liabilities~~

~~Future policy benefits - indexed product embedded derivatives~~

~~76,346~~

~~Discounted cash flow~~

Credit risk
Risk margin

~~0.40% - 1.35% (0.80%) 0.15% -0.40%~~ (0.25%)

The tables above exclude certain securities with the fair value based on non-binding broker quotes for which we could not reasonably obtain the quantitative unobservable inputs.

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Level 3 Financial Instruments Changes in Fair Value - Recurring Basis	Level 3 Financial Instruments Changes in Fair Value - Recurring Basis																				Level 3 Financial Instruments Changes in Fair Value - Recurring Basis
		September 30, 2020																				March 31, 2021
								Realized and unrealized gains (losses), net																				Realized and unrealized gains (losses), net
		Balance, December 31, 2019		Purchases		Disposals			Included in net income		Included in other compre-hensive income		Transfers into Level 3		Transfers out of Level 3 (1)		Amort-ization included in net income		Balance, September 30, 2020			Balance, December 31, 2020		Purchases		Disposals			Included in net income		Included in other compre-hensive income		Transfers into Level 3 (1)		Transfers out of Level 3 (1)		Amort-ization included in net income		Balance, March 31, 2021
		(Dollars in thousands)																				(Dollars in thousands)
Assets	Assets																				Assets
Corporate securities	Corporate securities	$	6,588	$	7,042	$	(825)		$	0	$	(1,198)	$	3,283	$	(10,592)	$	0	$	4,298	Corporate securities	$	3,041	$	1,001	$	(2,547)		$	(859)	$	604	$	2,280	$	0	$	(3)	$	3,517
Residential mortgage-backed securities	Residential mortgage-backed securities	0		12,629		0			0		(1)		0		(5,235)		0		7,393		Residential mortgage-backed securities	0		21,868		0			0		(125)		0		0		0		21,743
Commercial mortgage-backed securities	Commercial mortgage-backed securities	12,780		0		(299)			0		217		0		(4,556)		0		8,142		Commercial mortgage-backed securities	8,134		0		(105)			0		(187)		0		0		0		7,842
Other asset-backed securities	Other asset-backed securities	9,755		30,504		(138)			0		(633)		761		(14,255)		(1)		25,993		Other asset-backed securities	21,190		3,000		(89)			0		(142)		0		(18,289)		0		5,670

Non-redeemable preferred stocks	Non-redeemable preferred stocks	6,927		0		0			0		(111)		0		0		0		6,816		Non-redeemable preferred stocks	6,612		0		0			0		64		0		0		0		6,676
Total assets	Total assets	$	36,050	$	50,175	$	(1,262)		$	0	$	(1,726)	$	4,044	$	(34,638)	$	(1)	$	52,642	Total assets	$	38,977	$	25,869	$	(2,741)		$	(859)	$	214	$	2,280	$	(18,289)	$	(3)	$	45,448

Liabilities	Liabilities																				Liabilities
Future policy benefits - indexed product embedded derivatives	Future policy benefits - indexed product embedded derivatives	$	76,346	$	11,411	$	(6,778)		$	14,100	$	0	$	0	$	0	$	—	$	95,079	Future policy benefits - indexed product embedded derivatives	$	106,852	$	3,211	$	(4,868)		$	(4,144)	$	0	$	0	$	0	$	—	$	101,051


		September 30, 2019																				March 31, 2020
								Realized and unrealized gains (losses), net																				Realized and unrealized gains (losses), net
		Balance, December 31, 2018		Purchases		Disposals			Included in net income		Included in other compre-hensive income		Transfers into Level 3		Transfers out of Level 3 (1)		Amort-ization included in net income		Balance, September 30, 2019			Balance, December 31, 2019		Purchases		Disposals			Included in net income		Included in other compre-hensive income		Transfers into Level 3		Transfers out of Level 3 (1)		Amort-ization included in net income		Balance, March 31, 2020
		(Dollars in thousands)																				(Dollars in thousands)
Assets	Assets																				Assets
Corporate securities	Corporate securities	$	22,011	$	6,000	$	(3,172)		$	0	$	465	$	0	$	(15,230)	$	(23)	$	10,051	Corporate securities	$	6,588	$	6,983	$	(352)		$	0	$	(154)	$	0	$	(3,609)	$	0	$	9,456
Residential mortgage-backed securities		0		18,378		0			0		0		0		(2,124)		0		16,254

Commercial mortgage-backed securities	Commercial mortgage-backed securities	67,940		2,984		(280)			0		571		0		(59,918)		0		11,297		Commercial mortgage-backed securities	12,780		0		(98)			0		(920)		0		(4,556)		0		7,206
Other asset-backed securities	Other asset-backed securities	3,601		20,710		(977)			0		(869)		0		(16,710)		0		5,755		Other asset-backed securities	9,755		3,054		(49)			0		(27)		0		(8,000)		(1)		4,732

Non-redeemable preferred stocks	Non-redeemable preferred stocks	6,862		0		0			0		222		0		0		0		7,084		Non-redeemable preferred stocks	6,927		0		0			0		(70)		0		0		0		6,857
Total assets	Total assets	$	100,414	$	48,072	$	(4,429)		$	0	$	389	$	0	$	(93,982)	$	(23)	$	50,441	Total assets	$	36,050	$	10,037	$	(499)		$	0	$	(1,171)	$	0	$	(16,165)	$	(1)	$	28,251

Liabilities	Liabilities																				Liabilities
Future policy benefits - indexed product embedded derivatives	Future policy benefits - indexed product embedded derivatives	$	40,028	$	10,956	$	(4,848)		$	20,710	$	0	$	0	$	0	$	—	$	66,846	Future policy benefits - indexed product embedded derivatives	$	76,346	$	4,891	$	(997)		$	(19,169)	$	0	$	0	$	0	$	—	$	61,071

(1)Transfers into Level 3 represent assets previously priced using an external pricing service with access to observable inputs no longer available and therefore, were priced using unobservable inputs. Transfers out of Level 3 include those assets that we are now able to obtain pricing from a third-party pricing vendor that uses observable inputs. The fair values of newly issued securities often require additional estimation until a market is created, which is generally within a few months after issuance. Once a market is created, as was the case for the majority of the security transfers out of the Level 3 category above, Level 2 valuation sources become available.

The Company has other financial assets and financial liabilities that are not carried at fair value but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy level of these financial assets and financial liabilities.

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Valuation of our Financial Instruments Not Reported at Fair Value by Hierarchy Levels	Valuation of our Financial Instruments Not Reported at Fair Value by Hierarchy Levels											Valuation of our Financial Instruments Not Reported at Fair Value by Hierarchy Levels
		September 30, 2020											March 31, 2021
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value		Carrying Value			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value		Carrying Value
		(Dollars in thousands)											(Dollars in thousands)
Assets	Assets											Assets
Mortgage loans	Mortgage loans	$	0	$	0	$	1,053,591	$	1,053,591	$	972,210	Mortgage loans	$	0	$	0	$	1,057,936	$	1,057,936	$	992,938
Policy loans	Policy loans	0		0		278,105		278,105		197,009		Policy loans	0		0		249,453		249,453		191,580
Other investments	Other investments	0		35,061		2,404		37,465		37,263		Other investments	0		39,041		1,273		40,314		40,314
Total assets	Total assets	$	0	$	35,061	$	1,334,100	$	1,369,161	$	1,206,482	Total assets	$	0	$	39,041	$	1,308,662	$	1,347,703	$	1,224,832

Liabilities	Liabilities											Liabilities
Future policy benefits	Future policy benefits	$	0	$	0	$	4,706,931	$	4,706,931	$	4,400,006	Future policy benefits	$	0	$	0	$	4,633,288	$	4,633,288	$	4,496,309
Supplementary contracts without life contingencies	Supplementary contracts without life contingencies	0		0		303,166		303,166		282,715		Supplementary contracts without life contingencies	0		0		280,318		280,318		266,905
Advance premiums and other deposits	Advance premiums and other deposits	0		0		251,444		251,444		251,444		Advance premiums and other deposits	0		0		276,848		276,848		276,848

Long-term debt	Long-term debt	0		0		77,764		77,764		97,000		Long-term debt	0		0		82,139		82,139		97,000
Liabilities related to separate accounts	Liabilities related to separate accounts	0		0		615,361		615,361		616,381		Liabilities related to separate accounts	0		0		685,970		685,970		686,968
Total liabilities	Total liabilities	$	0	$	0	$	5,954,666	$	5,954,666	$	5,647,546	Total liabilities	$	0	$	0	$	5,958,563	$	5,958,563	$	5,824,030


		December 31, 2019											December 31, 2020
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value		Carrying Value			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair Value		Carrying Value
		(Dollars in thousands)											(Dollars in thousands)
Assets	Assets											Assets
Mortgage loans	Mortgage loans	$	0	$	0	$	1,059,073	$	1,059,073	$	1,011,678	Mortgage loans	$	0	$	0	$	1,074,939	$	1,074,939	$	994,101
Policy loans	Policy loans	0		0		256,787		256,787		201,589		Policy loans	0		0		271,963		271,963		195,666
Other investments	Other investments	0		29,534		2,215		31,749		31,211		Other investments	0		33,409		1,273		34,682		34,682
Total assets	Total assets	$	0	$	29,534	$	1,318,075	$	1,347,609	$	1,244,478	Total assets	$	0	$	33,409	$	1,348,175	$	1,381,584	$	1,224,449

Liabilities	Liabilities											Liabilities
Future policy benefits	Future policy benefits	$	0	$	0	$	4,381,863	$	4,381,863	$	4,270,073	Future policy benefits	$	0	$	0	$	4,739,739	$	4,739,739	$	4,348,539
Supplementary contracts without life contingencies	Supplementary contracts without life contingencies	0		0		309,601		309,601		296,915		Supplementary contracts without life contingencies	0		0		297,351		297,351		274,469
Advance premiums and other deposits	Advance premiums and other deposits	0		0		245,480		245,480		245,480		Advance premiums and other deposits	0		0		264,192		264,192		264,192

Long-term debt	Long-term debt	0		0		84,438		84,438		97,000		Long-term debt	0		0		80,975		80,975		97,000
Liabilities related to separate accounts	Liabilities related to separate accounts	0		0		644,691		644,691		645,881		Liabilities related to separate accounts	0		0		673,181		673,181		674,182
Total liabilities	Total liabilities	$	0	$	0	$	5,666,073	$	5,666,073	$	5,555,349	Total liabilities	$	0	$	0	$	6,055,438	$	6,055,438	$	5,658,382

Level 3 Financial Instruments Measured at Fair Value on a Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis, generally mortgage loans or real estate that have been deemed to be impaired during the reporting period. There were no mortgage loans or real estate impaired to fair value during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 or ~~September 30, 2019.~~March 31, 2020.

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4. Defined Benefit Plan

We participate with affiliates and an unaffiliated organization in defined benefit pension plans, including a multiemployer plan. Our share of net periodic pension cost for the plans is recorded as expense in our consolidated statements of operations.


Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Multiemployer Plan	Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Multiemployer Plan									Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Multiemployer Plan
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in thousands)									(Dollars in thousands)
Service cost	Service cost	$	1,304	$	1,138	$	3,911	$	3,412	Service cost	$	1,457	$	1,304
Interest cost	Interest cost	3,142		3,318		9,425		9,955		Interest cost	2,860		3,142
Expected return on assets	Expected return on assets	(5,262)		(4,707)		(15,785)		(14,121)		Expected return on assets	(5,647)		(5,262)

Amortization of actuarial loss	Amortization of actuarial loss	2,789		2,228		8,368		6,685		Amortization of actuarial loss	3,720		2,789

Net periodic pension cost	Net periodic pension cost	$	1,973	$	1,977	$	5,919	$	5,931	Net periodic pension cost	$	2,390	$	1,973

FBL Financial Group, Inc. share of net periodic pension costs	FBL Financial Group, Inc. share of net periodic pension costs	$	629	$	634	$	1,887	$	1,900	FBL Financial Group, Inc. share of net periodic pension costs	$	689	$	629


Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Other Plans	Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Other Plans									Components of Net Periodic Pension Cost for FBL and Affiliates Combined - Other Plans
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in thousands)									(Dollars in thousands)
Service cost	Service cost	$	79	$	117	$	237	$	350	Service cost	$	88	$	79
Interest cost	Interest cost	220		248		660		744		Interest cost	165		220

Amortization of actuarial loss	Amortization of actuarial loss	317		267		951		800		Amortization of actuarial loss	340		317
Net periodic pension cost	Net periodic pension cost	$	616	$	632	$	1,848	$	1,894	Net periodic pension cost	$	593	$	616

FBL Financial Group, Inc. share of net periodic pension costs	FBL Financial Group, Inc. share of net periodic pension costs	$	392	$	362	$	1,177	$	1,087	FBL Financial Group, Inc. share of net periodic pension costs	$	362	$	392

5. Commitments and Contingencies

Legal Proceedings

In the normal course of business, we may be involved in litigation in which damages are alleged that are substantially in excess of contractual policy benefits or certain other agreements. We are not aware of any claims threatened or pending against FBL Financial Group, Inc. or any of its subsidiaries for which a material loss is reasonably possible.

Commitments for Partnership Investments and Private Corporate Bond Investments

At ~~September 30, 2020,~~March 31, 2021, we have unfunded investment commitments to limited partnerships and limited liability companies of ~~$57.6~~$95.8 million and privately placed corporate securities commitments of ~~$12.2~~$11.3 million.

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6. Stockholders’ Equity

Share Repurchases

We periodically repurchase our Class A common stock under programs approved by our Board of Directors. These repurchase programs authorize us to make repurchases in the open market or through privately negotiated transactions, with the timing and terms of the purchases to be determined by management based on market conditions. Under these programs, we ~~repurchased 290,144~~had no repurchases during the three months ended March 31, 2021 and 24,525 shares of stock for ~~$10.0~~$0.8 million during the ~~nine~~three months ended ~~September 30, 2020 and 66,475 shares of stock for $4.6 million during the nine months ended September 30, 2019.~~March 31, 2020. Completion of this program is dependent on market conditions and other factors. There is no guarantee as to the exact timing of any repurchases or the number of shares that we will repurchase. The share repurchase program may be modified or terminated at any time without prior notice. At ~~September 30, 2020,~~March 31, 2021, $26.3 million remains available for repurchase under the active repurchase program. Under the Merger Agreement, we have agreed not to repurchase any additional shares of our capital stock from the date of the Merger Agreement through the closing of the Merger, subject to certain exceptions, including pursuant to our equity awards plans.


Dividends	Dividends									Dividends
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
Class A and B common stock:	Class A and B common stock:									Class A and B common stock:
Cash dividends per common share	Cash dividends per common share	$	0.50	$	0.48	$	1.50	$	1.44	Cash dividends per common share	$	0.52	$	0.50
Special cash dividend per common share	Special cash dividend per common share	0		0		1.50		1.50		Special cash dividend per common share	0		1.50
Total common stock dividends per share	Total common stock dividends per share	$	0.50	$	0.48	$	3.00	$	2.94	Total common stock dividends per share	$	0.52	$	2.00

Series B preferred stock dividends per share	Series B preferred stock dividends per share	$	0.0075	$	0.0075	$	0.0225	$	0.0225	Series B preferred stock dividends per share	$	0.0075	$	0.0075

Special cash dividends paid to our Class A and Class B common shareholders totaled $37.0 million for the ~~nine~~three months ended ~~September 30, 2020 and September 30, 2019.~~March 31, 2020.


Reconciliation of Outstanding Common Stock	Reconciliation of Outstanding Common Stock										Reconciliation of Outstanding Common Stock
		Class A			Class B			Total				Class A			Class B			Total
		Shares	Dollars		Shares	Dollars		Shares	Dollars			Shares	Dollars		Shares	Dollars		Shares	Dollars
		(Dollars in thousands)										(Dollars in thousands)
Outstanding at January 1, 2019		24,707,402	$	152,652	11,413	$	72	24,718,815	$	152,724
Stock-based compensation		9,968	324		0	0		9,968	324
Purchase of common stock		(66,475)	(410)		0	0		(66,475)	(410)
Outstanding at September 30, 2019		24,650,895	$	152,566	11,413	$	72	24,662,308	$	152,638

Outstanding at January 1, 2020	Outstanding at January 1, 2020	24,652,802	$	152,661	11,413	$	72	24,664,215	$	152,733	Outstanding at January 1, 2020	24,652,802	$	152,661	11,413	$	72	24,664,215	$	152,733
Stock-based compensation	Stock-based compensation	20,452	126		0	0		20,452	126		Stock-based compensation	2,500	245		0	0		2,500	245
Purchase of common stock	Purchase of common stock	(290,144)	(1,797)		0	0		(290,144)	(1,797)		Purchase of common stock	(24,525)	(152)		0	0		(24,525)	(152)
Outstanding at September 30, 2020		24,383,110	$	150,990	11,413	$	72	24,394,523	$	151,062
Outstanding at March 31, 2020											Outstanding at March 31, 2020	24,630,777	$	152,754	11,413	$	72	24,642,190	$	152,826

Outstanding at January 1, 2021											Outstanding at January 1, 2021	24,384,109	$	151,061	11,413	$	72	24,395,522	$	151,133
Stock-based compensation											Stock-based compensation	1,000	73		0	0		1,000	73

Outstanding at March 31, 2021											Outstanding at March 31, 2021	24,385,109	$	151,134	11,413	$	72	24,396,522	$	151,206

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Accumulated Other Comprehensive Income, Net of Tax and Other Offsets	Accumulated Other Comprehensive Income, Net of Tax and Other Offsets												Accumulated Other Comprehensive Income, Net of Tax and Other Offsets

		Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)				Underfunded Status of Postretirement Benefit Plans									Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)					Underfunded Status of Postretirement Benefit Plans
		Without Non-Credit Impairment Losses		With Non-Credit Impairment Losses				Total				Without Non-Credit Impairment Losses					With Non-Credit Impairment Losses					Total
		(Dollars in thousands)													(Dollars in thousands)
Balance at January 1, 2019		$	96,921	$	3,133			$	(8,736)				$	91,318
Balance at January 1, 2020													Balance at January 1, 2020		$	363,020		$	1,974	$	(10,230)		$	354,764

Other comprehensive loss before reclassifications													Other comprehensive loss before reclassifications		(104,594)			(1,550)		0			(106,144)
Reclassification adjustments													Reclassification adjustments		9,555			0		247			9,802
Balance at March 31, 2020													Balance at March 31, 2020		$	267,981		$	424	$	(9,983)		$	258,422

Balance at January 1, 2021													Balance at January 1, 2021		$	596,335		$	1,318	$	(10,374)		$	587,279

Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	317,677		(972)		0				316,705			Other comprehensive income (loss) before reclassifications		(217,378)			291		0			(217,087)
Reclassification adjustments	Reclassification adjustments	(2,477)		0		629				(1,848)			Reclassification adjustments		(399)			0		267			(132)
Balance at September 30, 2019		$	412,121	$	2,161	$	(8,107)			$	406,175

Balance at January 1, 2020		$	363,020	$	1,974	$	(10,230)			$	354,764

Other comprehensive income (loss) before reclassifications		163,585		(275)		(2)				163,308
Reclassification adjustments		10,267		0		748				11,015
Balance at September 30, 2020		$	536,872	$	1,699	$	(9,484)			$	529,087
Balance at March 31, 2021													Balance at March 31, 2021		$	378,558		$	1,609	$	(10,107)		$	370,060

(1)Includes the impact of taxes, deferred acquisition costs, value of insurance in force acquired, unearned revenue reserves and policyholder liabilities. See Note 2 to our consolidated financial statements for further information.


Accumulated Other Comprehensive Income Reclassification Adjustments	Accumulated Other Comprehensive Income Reclassification Adjustments												Accumulated Other Comprehensive Income Reclassification Adjustments
		Nine months ended September 30, 2020													Three months ended March 31, 2021
		Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)				Underfunded Status of Postretirement Benefit Plans									Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)								Underfunded Status of Postretirement Benefit Plans
		Without Non-Credit Impairment Losses		With Non-Credit Impairment Losses				Total				Without Non-Credit Impairment Losses					With Non-Credit Impairment Losses								Total

		(Dollars in thousands)													(Dollars in thousands)
Realized capital losses on sales of fixed maturity securities	Realized capital losses on sales of fixed maturity securities	$	1,299	$	0			$	0				$	1,299		Realized capital losses on sales of fixed maturity securities	$	720			$	0			$	0			$	720
Change in allowance for credit losses on fixed maturity securities	Change in allowance for credit losses on fixed maturity securities	12,095		—		—				12,095			Change in allowance for credit losses on fixed maturity securities		(1,145)				—				—				(1,145)
Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities	Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities	(398)		0		0				(398)			Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities		(80)				0				0				(80)

Change in unrecognized postretirement items for net actuarial loss		0		0		947				947
Net actuarial loss													Net actuarial loss		0				0				338				338
Reclassifications before income taxes	Reclassifications before income taxes	12,996		0		947				13,943			Reclassifications before income taxes		(505)				0				338				(167)
Income taxes	Income taxes	(2,729)		0		(199)				(2,928)			Income taxes		106				0				(71)				35
Reclassification adjustments	Reclassification adjustments	$	10,267	$	0	$	748			$	11,015		Reclassification adjustments		$	(399)			$	0			$	267			$	(132)


		Nine months ended September 30, 2019													Three months ended March 31, 2020
		Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)				Underfunded Status of Postretirement Benefit Plans									Unrealized Net Investment Gains (Losses) on Fixed Maturities Available-for-Sale (1)					Underfunded Status of Postretirement Benefit Plans
		Without Non-Credit Impairment Losses		With Non-Credit Impairment Losses				Total				Without Non-Credit Impairment Losses					With Non-Credit Impairment Losses					Total

		(Dollars in thousands)													(Dollars in thousands)
Realized capital gains on sales of fixed maturity securities		$	(3,367)	$	0			$	0				$	(3,367)
Realized capital losses on sales of fixed maturity securities													Realized capital losses on sales of fixed maturity securities		$	147		$	0	$	0		$	147
Change in allowance for credit losses on fixed maturity securities													Change in allowance for credit losses on fixed maturity securities		12,146			—		—			12,146
Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities	Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities	232		0		0				232			Adjustments for assumed changes in deferred acquisition costs, value of insurance in force acquired, unearned revenue reserve and policyholder liabilities		(198)			0		0			(198)

Change in unrecognized postretirement items for net actuarial loss		0		0		797				797
Net actuarial loss													Net actuarial loss		0			0		313			313
Reclassifications before income taxes	Reclassifications before income taxes	(3,135)		0		797				(2,338)			Reclassifications before income taxes		12,095			0		313			12,408
Income taxes	Income taxes	658		0		(168)				490			Income taxes		(2,540)			0		(66)			(2,606)
Reclassification adjustments	Reclassification adjustments	$	(2,477)	$	0	$	629			$	(1,848)		Reclassification adjustments		$	9,555		$	0	$	247		$	9,802

(1)See Note 2 to our consolidated financial statements for further information.

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7. Earnings per Share

Computation of Earnings per Common Share


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in thousands, except per share data)									(Dollars in thousands, except per share data)
Numerator:	Numerator:									Numerator:
Net income attributable to FBL Financial Group, Inc.	Net income attributable to FBL Financial Group, Inc.	$	20,974	$	25,129	$	44,670	$	91,470	Net income attributable to FBL Financial Group, Inc.	$	27,680	$	(2,515)
Less: Dividends on Series B preferred stock	Less: Dividends on Series B preferred stock	37		37		112		112		Less: Dividends on Series B preferred stock	38		38
Income available to common stockholders	Income available to common stockholders	$	20,937	$	25,092	$	44,558	$	91,358	Income available to common stockholders	$	27,642	$	(2,553)

Denominator:	Denominator:									Denominator:
Weighted average shares - basic	Weighted average shares - basic	24,497,140		24,758,639		24,660,576		24,760,311		Weighted average shares - basic	24,480,106		24,762,820
Effect of dilutive securities - stock-based compensation	Effect of dilutive securities - stock-based compensation	3,171		10,035		3,862		10,773		Effect of dilutive securities - stock-based compensation	44		0
Weighted average shares - diluted	Weighted average shares - diluted	24,500,311		24,768,674		24,664,438		24,771,084		Weighted average shares - diluted	24,480,150		24,762,820

Earnings per common share	Earnings per common share	$	0.85	$	1.01	$	1.81	$	3.69	Earnings per common share	$	1.13	$	(0.10)
Earnings per common share - assuming dilution	Earnings per common share - assuming dilution	$	0.85	$	1.01	$	1.81	$	3.69	Earnings per common share - assuming dilution	$	1.13	$	(0.10)

There were no antidilutive stock options outstanding in any of the periods presented.

8. Segment Information

We analyze operations by reviewing financial information regarding our primary products that are aggregated into the Annuity and Life Insurance product segments. Our Corporate and Other segment consists of less significant business activities.

Our chief operating decision makers use pre-tax adjusted operating income to evaluate segment performance and allocate resources. Pre-tax adjusted operating income consists of pre-tax net income adjusted to exclude realized gains and losses on investments including the change in fair value of equity securities, the change in allowances for credit losses on investments, and the change in fair value of derivatives as the impact of these items can fluctuate greatly from period to period. 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. For example, certain call options relating to our indexed annuity business are one-year assets while the embedded derivatives in the indexed contracts represent the rights of the contract holder to receive index credits over the entire period the indexed products are expected to be in force. We also exclude from pre-tax adjusted operating income, expenses related to the proposed merger discussed in Note 1 to the consolidated financial statements, as these expenses are not incurred in the normal course of our operations. Adjustments to pre-tax net income are net of amortization of unearned revenue reserves and deferred acquisition costs, as well as changes in interest sensitive product reserves. While not applicable for the periods reported herein, in determining pre-tax adjusted operating income we will also remove the impact of settlements or judgments arising from lawsuits, net of any recoveries from third parties, the cumulative effect of changes in accounting principles and discontinued operations.

Segment results are reported net of inter-segment transactions.

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Financial Information Concerning our Operating Segments	Financial Information Concerning our Operating Segments									Financial Information Concerning our Operating Segments

		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Pre-tax adjusted operating income:	Pre-tax adjusted operating income:									Pre-tax adjusted operating income:
Annuity	Annuity	$	18,916	$	8,121	$	45,852	$	38,420	Annuity		$	14,016	$	12,019
Life Insurance	Life Insurance	2,641		14,032		25,168		42,363		Life Insurance		10,886		10,267
Corporate and Other	Corporate and Other	829		4,939		4,754		13,853		Corporate and Other		1,431		219
Total pre-tax adjusted operating income	Total pre-tax adjusted operating income	22,386		27,092		75,774		94,636		Total pre-tax adjusted operating income		26,333		22,505

Adjustments to pre-tax adjusted operating income:	Adjustments to pre-tax adjusted operating income:									Adjustments to pre-tax adjusted operating income:
Proposed acquisition transaction expense										Proposed acquisition transaction expense		(2,577)		—
Net realized gains/losses on investments (1)	Net realized gains/losses on investments (1)	4,177		557		(19,118)		10,075		Net realized gains/losses on investments (1)		340		(25,458)
Change in fair value of derivatives (1)	Change in fair value of derivatives (1)	(2,632)		(666)		(6,161)		832		Change in fair value of derivatives (1)		8,276		(2,582)
Pre-tax net income attributable to FBL Financial Group, Inc.		23,931		26,983		50,495		105,543
Income tax expense		(2,883)		(1,642)		(5,887)		(13,429)
Pre-tax net income (loss) attributable to FBL Financial Group, Inc.										Pre-tax net income (loss) attributable to FBL Financial Group, Inc.		32,372		(5,535)
Income tax (expense) benefit										Income tax (expense) benefit		(3,687)		3,081
Tax on equity income	Tax on equity income	(74)		(212)		62		(644)		Tax on equity income		(1,005)		(61)
Net income attributable to FBL Financial Group, Inc.		$	20,974	$	25,129	$	44,670	$	91,470
Net income (loss) attributable to FBL Financial Group, Inc.										Net income (loss) attributable to FBL Financial Group, Inc.		$	27,680	$	(2,515)

Adjusted operating revenues:	Adjusted operating revenues:									Adjusted operating revenues:
Annuity	Annuity	$	53,352	$	51,241	$	161,543	$	158,186	Annuity		$	52,981	$	54,654
Life Insurance	Life Insurance	111,170		104,595		327,877		322,791		Life Insurance		112,404		107,215
Corporate and Other	Corporate and Other	22,498		23,233		68,560		69,915		Corporate and Other		24,308		24,040
		187,020		179,069		557,980		550,892				189,693		185,909
Net realized gains/losses on investments (1)	Net realized gains/losses on investments (1)	3,894		647		(19,513)		10,313		Net realized gains/losses on investments (1)		240		(25,666)
Change in fair value of derivatives (1)	Change in fair value of derivatives (1)	6,931		4,942		(4,646)		19,915		Change in fair value of derivatives (1)		1,493		(24,980)
Consolidated revenues	Consolidated revenues	$	197,845	$	184,658	$	533,821	$	581,120	Consolidated revenues		$	191,426	$	135,263

(1)Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred acquisition costs, ~~value of insurance in force acquired and~~ interest sensitive ~~policy~~product reserves and income taxes attributable to these items.

Interest expense is attributable to the Corporate and Other segment. Expenditures for long-lived assets were not significant during the periods presented above. Goodwill at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was allocated among the segments as follows: Annuity ($3.9 million) and Life Insurance ($6.1 million).

Equity income ~~(loss)~~ related to securities and indebtedness of related parties is attributable to the Life Insurance and Corporate and Other segments. The following chart provides the related equity income ~~(loss)~~ by segment.

Equity Income (Loss) by Operating Segment
Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(Dollars in thousands)
Pre-tax equity income (loss):
Life Insurance $ 299 $ 821 $ (309) $ 2,199
Corporate and Other 52 190 9 868
Total pre-tax equity income (loss) 351 1,011 (300) 3,067
Income taxes (74) (212) 62 (644)
Equity income (loss), net of related income taxes $ 277 $ 799 $ (238) $ 2,423


Equity Income by Operating Segment
	Three months ended March 31,
		2021		2020
		(Dollars in thousands)
Pre-tax equity income:
Life Insurance		$	4,524	$	375
Corporate and Other		261		(86)
Total pre-tax equity income		4,785		289

Income taxes		(1,005)		(61)
Equity income, net of related income taxes		$	3,780	$	228

Premiums collected, which is not a measure used in financial statements prepared according to GAAP, includes premiums received on life insurance policies and deposits on annuities and universal life-type products. Premiums collected is a common life insurance industry measure of agent productivity. Net premiums collected totaled ~~$133.2~~$153.0 million for the quarter ended ~~September 30, 2020~~March 31, 2021 and ~~$142.1~~$154.0 million for the same period in ~~2019. Net premiums collected totaled $413.1 million for the nine months ended September 30, 2020, and $455.1 million for the same period in 2019.~~2020.

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Under GAAP, premiums on whole life and term life policies are recognized as revenues over the premium-paying period and reported in the Life Insurance segment. The following chart provides a reconciliation of life insurance premiums collected to those reported in the GAAP financial statements.


Reconciliation of Traditional Life Insurance Premiums, Net of Reinsurance	Reconciliation of Traditional Life Insurance Premiums, Net of Reinsurance									Reconciliation of Traditional Life Insurance Premiums, Net of Reinsurance

		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Traditional and universal life insurance premiums collected	Traditional and universal life insurance premiums collected	$	77,666	$	75,043	$	238,774	$	232,442	Traditional and universal life insurance premiums collected		$	85,505	$	82,635
Premiums collected on interest sensitive products	Premiums collected on interest sensitive products	(29,882)		(27,488)		(91,057)		(85,384)		Premiums collected on interest sensitive products		(31,746)		(31,996)
Traditional life insurance premiums collected	Traditional life insurance premiums collected	47,784		47,555		147,717		147,058		Traditional life insurance premiums collected		53,759		50,639
Change in due premiums and other	Change in due premiums and other	8		(573)		(288)		303		Change in due premiums and other		(1,749)		(1,331)
Traditional life insurance premiums as included in the Consolidated Statements of Operations		$	47,792	$	46,982	$	147,429	$	147,361
Traditional life insurance premiums as included in the consolidated statements of operations										Traditional life insurance premiums as included in the consolidated statements of operations		$	52,010	$	49,308

There is no comparable GAAP financial measure for premiums collected on annuities and universal life-type products. GAAP revenues for those interest sensitive and variable products consist of various policy charges and fees assessed on those contracts, as summarized in the chart below.


Interest Sensitive Product Charges by Segment	Interest Sensitive Product Charges by Segment									Interest Sensitive Product Charges by Segment
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Annuity	Annuity									Annuity
Rider and other product charges	Rider and other product charges	$	1,481	$	1,248	$	4,696	$	3,881	Rider and other product charges		$	1,841	$	1,530
Surrender charges	Surrender charges	295		360		1,045		1,066		Surrender charges		273		356
Total	Total	1,776		1,608		5,741		4,947		Total		2,114		1,886

Life Insurance	Life Insurance									Life Insurance
Administration charges	Administration charges	5,278		4,570		16,134		14,163		Administration charges		5,715		5,443
Cost of insurance charges	Cost of insurance charges	13,565		13,415		40,281		38,861		Cost of insurance charges		13,345		13,379
Surrender charges	Surrender charges	611		698		1,942		2,037		Surrender charges		638		705
Amortization of policy initiation fees	Amortization of policy initiation fees	3,789		480		5,234		2,725		Amortization of policy initiation fees		573		852
Total	Total	23,243		19,163		63,591		57,786		Total		20,271		20,379

Corporate and Other	Corporate and Other									Corporate and Other
Administration charges	Administration charges	1,062		1,118		3,398		3,586		Administration charges		1,147		1,184
Cost of insurance charges	Cost of insurance charges	7,082		6,952		21,384		21,338		Cost of insurance charges		6,881		7,160
Surrender charges	Surrender charges	6		17		46		78		Surrender charges		10		32
Separate account charges	Separate account charges	2,025		2,115		5,947		6,067		Separate account charges		2,228		2,031
Amortization of policy initiation fees	Amortization of policy initiation fees	71		206		709		458		Amortization of policy initiation fees		152		549
Total	Total	10,246		10,408		31,484		31,527		Total		10,418		10,956

Impact of net realized gains/losses on investments and change in fair value of derivatives on amortization of unearned revenue reserves	Impact of net realized gains/losses on investments and change in fair value of derivatives on amortization of unearned revenue reserves	155		(44)		(767)		675		Impact of net realized gains/losses on investments and change in fair value of derivatives on amortization of unearned revenue reserves		(62)		(1,501)
Interest sensitive product charges as included in the Consolidated Statements of Operations		$	35,420	$	31,135	$	100,049	$	94,935
Interest sensitive product charges as included in the consolidated statements of operations										Interest sensitive product charges as included in the consolidated statements of operations		$	32,741	$	31,720

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a summary of FBL Financial Group, Inc.’s consolidated results of operations, financial condition and where appropriate, factors that management believes may affect future performance. Unless noted otherwise, all references to FBL Financial Group, Inc. (we or the Company) include all of its direct and indirect subsidiaries, including insurance subsidiaries Farm Bureau Life Insurance Company (Farm Bureau Life) and Greenfields Life Insurance ~~Company (Greenfields Life).~~Company. Please read this discussion in conjunction with the accompanying consolidated financial statements and related notes. In addition, we encourage you to refer to our Form 10-K for the year ended December 31, ~~2019~~2020 for a complete description of our significant accounting policies and estimates. Familiarity with this information is important in understanding our financial position and results of operations.

This Form 10-Q may include statements relating to anticipated financial performance, business prospects, new products and similar matters. These statements and others, which include words such as “expect,” “anticipate,” “believe,” “intend” and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. A variety of factors could cause our actual results and experiences to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. See Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and Part II within this report for additional information on the risks and uncertainties that may affect the operations, performance, development and results of our business.

Overview

We operate predominantly in the life insurance industry through our principal subsidiary, Farm Bureau Life. Farm Bureau Life markets individual life insurance policies and annuity contracts to Farm Bureau members and other individuals and businesses in the Midwestern and Western sections of the United States through an exclusive agency force. Other subsidiaries provide external wealth management services as well as investment management and other support services to our affiliated insurance companies. In addition, we manage two Farm ~~Bureau-affiliated~~Bureau affiliated property-casualty companies.

We analyze operations by reviewing financial information regarding our primary products that are aggregated in Annuity and Life Insurance product segments. In addition, our Corporate and Other segment includes our wealth management business, various support operations, corporate capital and other product lines that are not currently underwritten by the Company. We analyze our segment results based on pre-tax adjusted operating income, which excludes the impact of certain items that are included in pre-tax net income. Pre-tax adjusted operating income is the same basis used for segment reporting under U.S. generally accepted accounting principles (GAAP). We also analyze operations using adjusted operating income on a post-tax basis. Adjusted operating income on a post-tax basis is not a measure used in financial statements prepared in accordance with GAAP, but is a common life insurance industry measure of performance. We have included a reconciliation to the comparable GAAP measure herein. See Note 8 to our consolidated financial statements for further information regarding how we define our segments and pre-tax adjusted operating income.

We also include within our analysis “premiums collected,” another measure that is not used in financial statements prepared in accordance with GAAP, but is a common life insurance industry measure of agent productivity. See Note 8 to our consolidated financial statements for further information regarding this measure and its relationship to GAAP revenues.

We periodically revise key assumptions used in the calculation of the amortization of deferred acquisition costs, value of insurance in force acquired, deferred sales inducements, unearned revenue reserve for participating life insurance and interest sensitive products, as applicable, through an “unlocking” process. These assumptions typically consist of withdrawal and lapse rates, rider utilization, earned spreads and mortality with revisions based on historical results and our best estimate of future experience. The impact of unlocking is recorded in the current period as an increase or decrease to amortization of the respective balances. While the unlocking process can take place at any time, as needs dictate, the process typically takes place during the third quarter. See the discussion that follows for further details of the unlocking impact on our results in 2020 and 2019.Merger Agreement

On ~~September 4, 2020,~~May 2, 2021, the Company ~~announced receipt~~entered into an amendment (the Merger Agreement Amendment) to the Agreement and Plan of ~~a non-binding proposal from~~Merger, dated as of January 11, 2021 (the Original Agreement and, the Original Agreement as amended by the Merger Agreement Amendment, the Merger Agreement), by and among the Company, Farm Bureau Property & Casualty Insurance Company, an Iowa domiciled stock property and casualty insurance company (FBPCIC) and 5400 Merger Sub, Inc., an Iowa corporation (Merger Sub). Pursuant to the Merger Agreement, FBPCIC will acquire all of the outstanding ~~shares of~~ Class A common ~~stock~~shares, without par value, and Class B common ~~stock~~shares, without par value (collectively, the Common Shares), of the Company that are not currently owned or controlled by FBPCIC or the Iowa Farm Bureau Federation, ~~(IFBF) at a purchase price of $47.00 per share in cash. The~~an Iowa ~~Farm Bureau Federation owns~~non-profit corporation (IFBF). IFBF and FBPCIC currently own approximately ~~60%~~61% of the ~~Company's Class A common stock and approximately 67%~~outstanding Common Shares. Pursuant to the transactions contemplated by the Merger Agreement, each outstanding Common Share of the ~~Company's Class B common stock.~~Company (other than shares held by the Company in treasury or by any wholly-owned Company subsidiary, or held by Merger Sub or FBPCIC, or held by holders who have properly exercised dissenters’ rights under applicable Iowa law) will be converted into the right to receive $61.00 per

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Common Share in cash, without interest and less any required withholding taxes. The ~~Company’s board~~Merger Agreement Amendment provided for an increase in the consideration to be received in exchange for the Common Shares in the amount of ~~directors has appointed a special committee comprised of independent directors to consider~~$5.00 per share, from $56.00 per share under the proposal.This committee has retained its own legal counsel and financial advisor to assist in its review, evaluation and response to the proposal. There can be no assurance that any agreement with respect to the proposed transaction will be executed or that this or any other transaction will be approved or consummated.Original Agreement.

Consummation of the Merger is subject to certain specified closing conditions, including a non-waivable condition that the Merger Agreement be adopted by the affirmative vote of (i) holders of at least a majority of all outstanding Class A common shares and Series B preferred shares, voting together as a single class, (ii) holders of at least a majority of all outstanding Class B common shares and (iii) holders of at least a majority of all outstanding Common Shares held by all of the holders of outstanding Common Shares (excluding IFBF and its affiliates, FBPCIC and its affiliates, and the directors and officers of IFBF, FBPCIC and each of their respective affiliates), in each case, entitled to vote on such matter at a meeting of shareholders duly called and held for such purpose. The Company’s adjourned special meeting of shareholders to approve the proposal to adopt the Merger Agreement is expected to reconvene on May 21, 2021.

In addition, FBPCIC’s obligation to consummate the Merger is subject to the condition that no more than 5% of the Common Shares outstanding as of the effective time of the Merger (other than the Common Shares held by FBPCIC, IFBF, certain of their affiliates, their respective subsidiaries, the directors and officers of the foregoing persons and any holders of Common Shares which have failed to perfect, have effectively withdrawn or which otherwise have lost their rights to appraisal under Iowa law) shall have properly demanded and not withdrawn appraisal rights under Iowa law in connection with the Merger, as further described in the Merger Agreement. The obtaining of financing is not a condition to the obligations of FBPCIC or Merger Sub to effect the Merger.

Also on May 2, 2021, FBPCIC, IFBF and Merger Sub entered into an amendment (the Rollover Agreement Amendment) to the Rollover Agreement, dated as of January 11, 2021 (as amended by the Rollover Agreement Amendment, the Rollover Agreement) by and among the same parties. Pursuant to the Rollover Agreement, FBPCIC and IFBF will contribute to Merger Sub all of their Common Shares in exchange for the number of shares of common stock of Merger Sub set forth therein, and to fund the Merger consideration, FBPCIC will contribute approximately $528 million in cash to Merger Sub in exchange for shares of common stock of Merger Sub and IFBF will contribute approximately $47 million in cash to Merger Sub in exchange for shares of preferred stock of Merger Sub.

With respect to Merger Sub, under the terms of the Merger Agreement, at the effective time of the Merger, the Common Shares held by Merger Sub will automatically be cancelled and will cease to exist, each common share of Merger Sub will be converted into one common share of the surviving corporation and each preferred share of Merger Sub will be converted into one share of newly-designated Series C Cumulative Non-Voting Preferred Stock of the surviving corporation. At the effective time of the Merger, the Common Shares that are not currently controlled by FBPCIC or IFBF (other than shares held by the Company in treasury or by any wholly-owned Company subsidiary, or held by Merger Sub or FBPCIC, or held by holders who have properly exercised dissenters’ rights under applicable Iowa law) will be converted into the right to receive the Merger consideration. Each share of Series B Cumulative Voting Preferred Stock of the Company will remain outstanding in accordance with its terms following the effective time of the Merger.

Impact of COVID-19 and Recent Business Environment

~~The COVID-19 pandemic has had~~Our business generally benefits from moderate to strong economic expansion. Conversely, a ~~significant~~lackluster economy characterized by higher unemployment, lower family income, lower consumer spending, muted corporate earnings growth and lower business investment could adversely impact the demand for our products in the future. We also may experience a higher incidence of claims, lapses or surrenders of policies during such times. We cannot predict whether or when such actions may occur, or what impact, if any, such actions could have on our business, results of operations, cash flows or financial condition.

During the first quarter of 2021, the U.S. economy ~~during 2020. Beginning late~~continued its recovery (S&P 500 was up +80% since March 23, 2020), driven by massive amounts of monetary and fiscal stimulus, optimism on vaccines and the reopening of the economy. This recovery follows the significant impact to the U.S. economy from COVID-19 beginning in the first quarter of 2020, resulting in slowed economic growth, elevated unemployment and business interruption, particularly in the ~~United States experienced significant economic disruption as businesses closed~~hospitality and ~~consumer access~~travel sectors. Interest rates, which particularly impact our business declined significantly and continue to ~~goods and services became limited due to regulated or voluntary quarantine measures. As a result,~~fluctuate. The following are key measures which partially illustrate the ~~financial markets reacted negatively, impacting corporate liquidity and market interest rates. During the second and third quarters~~state of ~~2020,~~ the U.S. economy improved with the aid of significant economic stimulus measures, resulting in the stabilization of financial markets. However, unemployment remains high and market interest rates remain low as the impact of COVID-19 continues, resulting in economic uncertainty for the remainder of 2020.

~~The impact of COVID-19 on the United States’ economy has been significant.~~economy:

•U.S. gross domestic product is estimated to have increased at an ~~estimated~~ annual rate of ~~33.1% during the third quarter of 2020, compared to decreases of 31.4% during the second quarter of 2020 and 5.0% during~~6.4% in the first quarter of 2021, compared to a 3.5% decrease during 2020. ~~During 2019, U.S. gross domestic product increased 2.2%.~~

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•U.S. unemployment ~~increased~~decreased to ~~7.9%~~6.0% at ~~September 30, 2020,~~March 31, 2021, compared to ~~3.5%~~6.7% at December 31, ~~2019.~~

•~~The energy sector has come under significant pressure as the price of crude oil remains low at $40.22 per barrel at September 30, 2020, compared to $61.06 per barrel at December 31, 2019.~~2020.

•The yield on the 10-year U.S. Treasury Note ~~decreased~~increased to ~~0.69%~~1.74% at ~~September 30, 2020~~March 31, 2021, from ~~1.92%~~0.93% at December 31, ~~2019.~~

•~~Corporate credit spreads increased 39 basis points through September 30, 2020 to 135 basis points, compared to 96 basis points at December 31, 2019.~~2020.

The impact of COVID-19 ~~pandemic,~~ and ~~related~~ economic ~~uncertainty, has had the following impacts~~conditions on our ~~company.~~Company includes:

FBL Operations

As the COVID-19 outbreak began in the United States, we formed an incident management work group in accordance with our business continuity plan. This work group, acting in conjunction with the executive management team, monitored business developments, identified issues, recommended solutions and developed communications with employees, agents and client/members.

To provide for the health and safety of our employees, during the first quarter of 2020 we transitioned to a mostly work-from-home environment. This transformation was carried out with minimal interruption to supporting our agents, advisors and client/members. We remain vigilant in practicing social distancing and have severely restricted company travel. While our employees continue to predominately work from home, during June 2020 we offered additional flexibility for employees to work at our business locations, subject to social distancing requirements and a capped in-office capacity of 50%. We anticipate limited home office capacity until there is resolution of the COVID-19 health risk. Our agents continue to serve our client/members, utilizing communication technology to service existing business and solicit new business, while maintaining social distancing in situations where the customer and agent are comfortable meeting face-to-face.

Our ability to onboard new agents and wealth management advisors has been temporarily slowed due to closures of governmental offices that issue required licenses. Furthermore, restrictions during 2020 have limited in-person training and the ability to have face-to-face meetings with clients in certain geographic areas.

We ~~launched an accelerated underwriting process during~~have provided flexibility for our workforce by allowing up to 50% of our employees to return to work in our facilities. However, our workforce continues to work predominantly from their homes. For those that choose to work in our facilities, proper social distancing and other safeguards have been put in place to provide for the ~~third quarter 2020, which allows for an exam-free~~safety of our workforce and ~~fluid-free underwriting process for eligible client/members. Accelerated underwriting serves several purposes:~~

•~~It enhances the client/member and agent experience for purchase of life insurance.~~

•~~It allows eligible client/members a less invasive risk selection process.~~

•~~It streamlines the application process to be primarily electronic.~~

•~~It incorporates new tools and techniques in~~minimize the risk ~~selection process.~~

~~Table~~ of ~~Content~~

The recent launch led to some processing delays with a third-party provider during the last week of September and into early October, which the vendor attributed to be partially due to COVID-19. As a result, there was a delay in the completion of certain life product sales. We have taken action to address the processing back-log and are working with the vendor to remediate the accelerated underwriting process. We do not currently expect processing delays will have a material effect on our results of operations going forward, but we continue to monitor the impacts of any sales delays beyond our anticipated timeframes.business interruption.

Financial results

~~There were significant economic headwinds brought on by COVID-19 beginning~~While mortality experience was in line with expectations for the first quarter of 2020 which caused a significant downturn in our earnings. As the markets and economy stabilized during the second and third quarters of 2020, our results have improved although remain down from 2019. The economic impact of COVID-19 on our financial results follows:

•Net realized capital gains/losses and the change in allowance for credit losses totaled $19.5 million for the nine months ended September 30, 2020, including $25.7 million of losses incurred during the first quarter 2020.

•~~The change in the value of equity investments included in net investment income declined $7.1 for the nine months ended September 30, 2020. During the third quarter of 2020,~~2021, we ~~experienced $1.8 million of recovery in the value of equity securities as markets improved.~~

•~~Equity earnings from limited liability partnerships and limited liability companies resulted in a pre-tax loss of $0.3 million for the nine months ended September 30, 2020, compared~~continue to pre-tax income of $3.1 million for the nine months ended September 30, 2019. Pre-tax equity earnings were $0.4 million during the third quarter of 2020, compared to $1.0 million for the third quarter of 2019.

•~~During the third quarter of 2020, we incurred a pre-tax unlocking charge of $6.7 million, driven largely by a $13.1 million pre-tax charge~~see elevated death claims associated with ~~a change in our outlook for lower investment yields. Additional details regarding the impact of unlocking are included in the discussion of our segments that follows.~~

•As summarized in the “Results of Operations” section that follows, we experienced a decline in annuity premiums collected during the three- and nine-month periods ended September 30, 2020, compared to the prior year periods, as sales were negatively impacted by crediting rate and cap reductions in response to declining market interest rates.

~~The impact of COVID-19 on our mortality experience has been modest, with 33 reported claims during the third quarter of 2020 totaling $0.8 million in~~COVID-19. We incurred death benefits, ~~incurred~~ net of reinsurance and reserves released, ~~and 70~~with COVID-19 reported ~~claims~~as a cause of death totaling $4.1 million during the ~~nine months ended September 30, 2020 totaling $3.0 million in death benefits incurred net~~first quarter of ~~reserves released.~~

~~As a result~~2021. We do not have an estimate of how many of these ~~items, our earnings~~death claims would have ~~decreased during the third quarter of 2020 and the nine months ended September 30, 2020 compared to the prior year periods, as discussed~~been reported in the ~~“Results~~quarter regardless of Operations” discussion that follows. The U.S. federal government has taken actions to support the economy, including those unemployed during the crisis, and is presently considering further actions. To the extent the economic downturn caused by COVID-19 continues for an extended period, or worsens, it is uncertain how that will impact our operations, including sales and the value of our assets and liabilities although we expect the impact would be negative.COVID-19.

Financial position

~~Lower~~Higher U.S. Treasury interest rates resulted in an ~~increase~~decrease in the fair value of our fixed maturity securities during the ~~nine-month~~three-month period ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~decrease in fair value of our fixed maturity securities ~~at September 30, 2020, compared with December 31, 2019,~~ resulted in an ~~increase~~decrease in our book value per common share to ~~$66.21~~$60.95 at ~~September 30, 2020~~March 31, 2021 from ~~$60.12~~$69.24 at December 31, ~~2019.~~2020.

Our capital position remains strong, with Farm Bureau Life’s company action level risk-based capital ratio estimated to be ~~525%~~531% at ~~September 30, 2020.~~March 31, 2021.

Liquidity

Our liquidity position remains strong with cash being generated by operations and financing activities. In addition, a significant portion of our liquid fixed maturity securities are in an unrealized gain position. See the “Investments” and “Liquidity and Capital Resources” discussions that follow.

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~~Risk Factors~~

~~See “Part II, Item 1A, Risk Factors,” for additional discussion.~~

Results of Operations for the Periods Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
		2020			2019			Change		2020			2019			Change				2021			2020			Change
		(Dollars in thousands, except per share data)																		(Dollars in thousands, except per share data)
Net income attributable to FBL Financial Group, Inc.		$	20,974		$	25,129		(17)	%	$	44,670		$	91,470		(51)	%
Net income (loss) attributable to FBL Financial Group, Inc.																		Net income (loss) attributable to FBL Financial Group, Inc.		$	27,680		$	(2,515)		(1,201)	%
Net income adjustments:	Net income adjustments:																	Net income adjustments:
Proposed acquisition transaction expenses																		Proposed acquisition transaction expenses		2,577			—			—	%
Net realized gains/losses on investments (1)	Net realized gains/losses on investments (1)	(3,300)			(440)			650	%	15,103			(7,960)			(290)	%	Net realized gains/losses on investments (1)		(269)			20,112			(101)	%
Change in fair value of derivatives (1)	Change in fair value of derivatives (1)	2,079			526			295	%	4,867			(657)			(841)	%	Change in fair value of derivatives (1)		(6,537)			2,039			(421)	%
Adjusted operating income (2)	Adjusted operating income (2)	$	19,753		$	25,215		(22)	%	$	64,640		$	82,853		(22)	%	Adjusted operating income (2)		$	23,451		$	19,636		19	%

Pre-tax adjusted operating income:	Pre-tax adjusted operating income:																	Pre-tax adjusted operating income:
Annuity segment	Annuity segment	$	18,916		$	8,121		133	%	$	45,852		$	38,420		19	%	Annuity segment		$	14,016		$	12,019		17	%
Life Insurance segment	Life Insurance segment	2,641			14,032			(81)	%	25,168			42,363			(41)	%	Life Insurance segment		10,886			10,267			6	%
Corporate and Other segment	Corporate and Other segment	829			4,939			(83)	%	4,754			13,853			(66)	%	Corporate and Other segment		1,431			219			553	%
Total pre-tax adjusted operating income	Total pre-tax adjusted operating income	22,386			27,092			(17)	%	75,774			94,636			(20)	%	Total pre-tax adjusted operating income		26,333			22,505			17	%
Income taxes on adjusted operating income	Income taxes on adjusted operating income	(2,633)			(1,877)			40	%	(11,134)			(11,783)			(6)	%	Income taxes on adjusted operating income		(2,882)			(2,869)			—	%
Adjusted operating income (2)	Adjusted operating income (2)	$	19,753		$	25,215		(22)	%	$	64,640		$	82,853		(22)	%	Adjusted operating income (2)		$	23,451		$	19,636		19	%

Earnings per common share - assuming dilution	Earnings per common share - assuming dilution	$	0.85		$	1.01		(16)	%	$	1.81		$	3.69		(51)	%	Earnings per common share - assuming dilution		$	1.13		$	(0.10)		(1,230)	%
Adjusted operating income per common share - assuming dilution (2)	Adjusted operating income per common share - assuming dilution (2)	0.80			1.02			(22)	%	2.62			3.34			(22)	%	Adjusted operating income per common share - assuming dilution (2)		0.96			0.79			22	%
Effective tax rate on adjusted operating income	Effective tax rate on adjusted operating income	12		%	7		%			15		%	12		%			Effective tax rate on adjusted operating income		11		%	13		%
Average invested assets, at amortized cost net of allowance for credit losses (3)	Average invested assets, at amortized cost net of allowance for credit losses (3)									$	8,546,717		$	8,323,273		3	%	Average invested assets, at amortized cost net of allowance for credit losses (3)		$	8,708,466		$	8,479,853		3	%
Annualized yield on average invested assets (4)	Annualized yield on average invested assets (4)									4.64		%	4.97		%			Annualized yield on average invested assets (4)		4.75		%	4.72		%

Other data	Other data																	Other data
Death benefits, net of reinsurance and reserves released, net of tax	Death benefits, net of reinsurance and reserves released, net of tax	$	26,854		$	23,822		13	%	$	74,852		$	70,407		6	%	Death benefits, net of reinsurance and reserves released, net of tax		$	27,577		$	23,550		17	%
Impact on adjusted operating income of unlocking deferred acquisition costs, deferred sales inducements, unearned revenue reserve and certain interest sensitive product reserves, net of tax		(5,306)			(2,109)			152		(5,306)			(2,109)			152

Estimated impact from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve, net of tax (5)	Estimated impact from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve, net of tax (5)	1,185			(158)			(850)	%	(40)			2,054			(102)	%	Estimated impact from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve, net of tax (5)		711			(2,686)			(126)	%
Other investment-related income included in net investment income (1)(6)	Other investment-related income included in net investment income (1)(6)	860			567			52	%	1,729			2,837			(39)	%	Other investment-related income included in net investment income (1)(6)		1,572			454			246	%

(1)Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves and deferred acquisition costs, as well as changes in interest sensitive product reserves and income taxes attributable to these items.

~~Table of Content~~

(2)Adjusted operating income is a non-GAAP measure of earnings, see the Overview section above for additional information.

(3)Average invested assets, including investments held as securities and indebtedness of related parties and cash equivalents, is the average of investment balances at the beginning of the reporting period and as of the end of each quarter throughout the reporting period. Average invested assets are used in the calculation of the annualized investment yield.

(4)Annualized yield is the actual annualized investment earnings during the reporting period divided by average invested assets. Annualized yield is used as a measure of investment performance during the reporting periods.

(5)Amounts represent the estimated effect of market performance of policyholder funds invested in the separate accounts on the value of deferred acquisition costs, deferred sales inducements and unearned revenue reserve, net of tax.

(6)Includes prepayment fee income and adjustments to the amortization of premium or discounts from changes in our payment speed assumptions on mortgage and other asset-backed securities.

Net income ~~and pre-tax adjusted operating income decreased~~increased in the ~~third~~first quarter of ~~2020,~~2021, compared to the prior year period, primarily due to increases from changes in realized gains and losses on investments and fair value of derivatives. In addition, net income and pre-tax adjusted operating income increased in the first quarter of 2021, compared to the prior year period, due to an increase in ~~death benefits~~equity income and ~~the impact of unlocking actuarial assumptions, partially offset by~~ the impact of market performance on variable product deferred acquisition cost ~~amortization. Net income~~amortization and pre-tax adjusted operating income decreased in the nine months ended September 30, 2020, compared to the prior year period, due to decreases in net investment income from lower yields on invested assets and equity income, the impact of market performance on reserves associated with guaranteed living withdrawal ~~benefits,~~benefits. These increases ~~in death benefits and the impact of unlocking actuarial assumptions. These decreases~~ were partially offset by a decrease in amortization of deferred acquisition costs primarily due to changes in actual and expected profits on the underlying business. Net income also decreased in the nine months ended September 30, 2020, compared to the prior year period, due to net realized capital losses from the change in fair value of equity securities, an increase in ~~allowances for credit losses on investments and a change in fair value on our derivatives.~~death benefits. See the discussion that follows for details regarding pre-tax adjusted operating income by segment. ~~See the “Impact of COVID-19 and Recent Business Environment” section above for additional information on market performance.~~

Table of Content

Footnotes applicable to the segment discussion that follows are summarized below:

(1)Premiums collected is a non-GAAP measure of sales production, see Note 8 to our consolidated financial statements for additional information.

(2)Average invested assets, including applicable investments held as securities and indebtedness of related parties and cash equivalents, is the average of investment balances at the beginning of the reporting period and as of the end of each quarter throughout the reporting period. Average invested assets are used in the calculation of the annualized investment yield.

(3)Includes prepayment fee income and adjustments to the amortization of premium or discounts from changes in our payment speed assumptions on mortgage and other asset-backed securities.

(4)Average aggregate individual annuity account value is a measure used to monitor business growth in our individual fixed and indexed annuity product lines and is calculated using a simple average of policyholder account values as of the beginning and end of the reporting period.

(5)Annualized yield is the actual annualized investment earnings during the reporting period divided by average invested assets. Annualized yield is used as a measure of investment performance during the reporting periods.

~~(5)~~(6)Annualized average crediting rates consist of annualized interest credited and index credits applied to policyholders during the reporting period, along with amortization of call option costs and proceeds from sales or maturing call options associated with the call options that back our indexed products as a percentage of the simple average of policyholder account values as of the beginning of the reporting period and end of the reporting period, adjusted for interest credited during the period. Annualized average crediting rates along with annualized average investment yields provides a view of spread margin earned on the underlying products.

~~(6)~~Average aggregate individual annuity account value is a measure used to monitor business growth in our individual fixed and indexed annuity product lines and is calculated using a simple average of policyholder account values as of the beginning and end of the reporting period.

(7)Individual annuity withdrawal rate represents annualized withdrawal benefits incurred during the reporting period, excluding internal exchanges, as a percent of the simple average of related policy reserves at the beginning and end of the reporting period. The individual annuity withdrawal rate is a measure of customer retention.

(8)Average aggregate interest sensitive life account value is a measure used to monitor business growth in our universal life product lines and is calculated using a simple average of policyholder account values as of the beginning and end of the reporting period.

(9)Life insurance lapse and surrender rate represents the annualized face amount of policyholder lapses and surrenders, incurred during the reporting period, as a percent of the simple average of related insurance in force at the beginning and end of the reporting period. The life insurance lapse and surrender rate is a measure of customer retention.

(10)Average aggregate interest sensitive account value is a measure used to monitor business volume of our variable universal life and variable annuity product lines and is calculated using a simple average of policyholder account values allocated to the declared interest option as of the beginning and end of the reporting period.

(11)Amounts represent the estimated effect of market performance of policyholder funds invested in the separate accounts on actual and expected profits and the related impact on the value of deferred acquisition costs, deferred sales inducements and unearned revenue reserve.


Annuity Segment
	Three months ended March 31,
		2021		2020		Change
		(Dollars in thousands)
Adjusted operating revenues:
Interest sensitive product charges		$	2,114	$	1,886	12	%
Net investment income		50,867		52,768		(4)	%
Total adjusted operating revenues		52,981		54,654		(3)	%

Adjusted operating benefits and expenses:
Interest sensitive product benefits		30,667		33,883		(9)	%
Underwriting, acquisition and insurance expenses:
Commissions net of deferrals		201		421		(52)	%
Amortization of deferred acquisition costs		2,415		2,646		(9)	%
Amortization of value of insurance in force		147		175		(16)	%
Other underwriting expenses		5,535		5,510		—	%
Total underwriting, acquisition and insurance expenses		8,298		8,752		(5)	%
Total adjusted operating benefits and expenses		38,965		42,635		(9)	%
Pre-tax adjusted operating income		$	14,016	$	12,019	17	%

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Annuity Segment
Three months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
(Dollars in thousands)
Adjusted operating revenues:
Interest sensitive product charges $ 1,776 $ 1,608 10 % $ 5,741 $ 4,947 16 %
Net investment income 51,576 49,633 4 % 155,802 153,239 2 %
Total adjusted operating revenues 53,352 51,241 4 % 161,543 158,186 2 %
Adjusted operating benefits and expenses:
Interest sensitive product benefits 25,652 28,585 (10) % 90,053 87,105 3 %
Underwriting, acquisition and insurance expenses:
Commissions net of deferrals 320 405 (21) % 1,056 1,401 (25) %
Amortization of deferred acquisition costs 3,384 8,015 (58) % 8,427 13,611 (38) %
Amortization of value of insurance in force 175 164 7 % 525 490 7 %
Other underwriting expenses 4,905 5,951 (18) % 15,630 17,159 (9) %
Total underwriting, acquisition and insurance expenses 8,784 14,535 (40) % 25,638 32,661 (22) %
Total adjusted operating benefits and expenses 34,436 43,120 (20) % 115,691 119,766 (3) %
Pre-tax adjusted operating income $ 18,916 $ 8,121 133 % $ 45,852 $ 38,420 19 %


Annuity Segment - continued																	Annuity Segment - continued
								Three months ended March 31,
																		2021			2020			Change
								(Dollars in thousands)
Other data	Other data																Other data
Annuity premiums collected, direct (1)	Annuity premiums collected, direct (1)	$	45,263	$	56,076	(19)	%		$	139,167		$	185,234		(25)	%	Annuity premiums collected, direct (1)	$	55,666		$	58,099		(4)	%
Policy liabilities and accruals, end of period	Policy liabilities and accruals, end of period								4,561,434			4,392,884			4	%	Policy liabilities and accruals, end of period	4,657,666			4,528,280			3	%
Average invested assets, at amortized cost net of allowance for credit losses (2)	Average invested assets, at amortized cost net of allowance for credit losses (2)								4,613,118			4,489,981			3	%	Average invested assets, at amortized cost net of allowance for credit losses (2)	4,659,253			4,564,600			2	%
Other investment-related income included in net investment income (3)	Other investment-related income included in net investment income (3)	1,541		699		120	%		2,840			2,245			27	%	Other investment-related income included in net investment income (3)	1,984			705			181	%
Average aggregate individual annuity account value ~~(6)~~(4)	Average aggregate individual annuity account value ~~(6)~~(4)								3,180,883			3,173,145			—	%	Average aggregate individual annuity account value ~~(6)~~(4)	3,178,941			3,179,639			—	%

Earned spread on individual annuity products:	Earned spread on individual annuity products:																Earned spread on individual annuity products:
Annualized yield on average invested assets ~~(4)~~(5)	Annualized yield on average invested assets ~~(4)~~(5)								4.52		%	4.72		%			Annualized yield on average invested assets ~~(4)~~(5)	4.49		%	4.59		%
Annualized average crediting rate ~~(5)~~(6)	Annualized average crediting rate ~~(5)~~(6)								2.49		%	2.57		%			Annualized average crediting rate ~~(5)~~(6)	2.48		%	2.47		%
Spread	Spread								2.03		%	2.15		%			Spread	2.01		%	2.12		%

Individual annuity withdrawal rate (7)	Individual annuity withdrawal rate (7)								4.4		%	5.7		%			Individual annuity withdrawal rate (7)	3.8		%	5.2		%

Pre-tax adjusted operating income for the Annuity segment increased in the ~~third~~first quarter of ~~2020 and the nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods,~~period, primarily due to the impact of ~~unlocking~~market performance on reserves associated with guaranteed living withdrawal benefits and ~~a decrease~~an increase in other ~~underwriting expenses,~~investment-related income, partially offset by reduced spread income earned from lower yields on invested assets. The change in the nine-month period was also negatively impacted by market performance on reserves associated with the guaranteed living withdrawal benefits. See the “Impact of COVID-19 and Recent Business Environment” section above for additional information on market performance.

The average aggregate account value for individual annuity contracts in force ~~increased~~at March 31, 2021 remained level with the prior year period as continued sales and the crediting of interest were largely offset by product benefits and withdrawals. Premiums collected were lower in the ~~nine months ended September 30, 2020,~~first quarter of 2021, compared to the prior year period, due to ~~continued~~decreased sales ~~and the crediting~~ of ~~interest. Premiums collected were lower in~~

~~Table of Content~~

~~the third quarter of 2020 and the nine months ended September 30, 2020, compared to the prior year periods, due to decreased~~indexed annuity products, partially offset by increased sales of fixed rate deferred annuity ~~and indexed annuity products, as sales were negatively impacted by crediting rate and cap reductions in response to declining portfolio yields.~~products. Individual fixed rate deferred annuity collected premiums were ~~$22.8~~$29.1 million in the ~~third~~first quarter of ~~2020 and $64.1~~2021, compared to $22.9 million in the ~~nine months ended September 30, 2020, compared to $25.0 million in the third~~first quarter of ~~2019 and $94.7 million in the nine months ended September 30, 2019.~~2020. Indexed annuity collected premiums were ~~$20.6~~$24.9 million in the ~~third~~first quarter of ~~2020 and $69.7~~2021, compared to $32.6 million in the ~~nine months ended September 30, 2020, compared to $30.3 million in the third~~first quarter of ~~2019 and $87.0 million in the nine months ended September 30, 2019.~~2020. To increase spread income given lower ~~fixed and~~ indexed annuity sales, we have increased the issuance of funding agreements with the Federal Home Loan Bank ~~of Des Moines~~ (FHLB) during ~~2020.~~the three months ended March 31, 2021. Outstanding funding agreements with FHLB ~~total $626.5~~totaled $726.0 million at ~~September 30, 2020,~~March 31, 2021, compared ~~with $448.8~~to $585.2 million at ~~September 30, 2019.~~

~~Amortization of deferred acquisition costs decreased during the third quarter of~~December 31, 2020 and nine months ended September 30, 2020, compared to the prior year periods, due to unlocking actuarial assumptions and changes in actual and expected income earned on the underlying business. Unlocking generally reflects changes in our projected earned spreads, policy lapses, withdrawals and mortality assumptions. The impact of unlocking on pre-tax operating income for the quarter and nine months ended September 30, 2020 and 2019 was as follows:

Impact of Unlocking on Pre-tax Adjusted Operating Income
Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(Dollars in thousands)
Amortization of deferred sales inducements reported in interest sensitive product benefits $ 57 $ (195) $ 57 $ (195)
Amortization of deferred acquisition costs (1,189) (4,668) (1,189) (4,668)
Changes in reserves reported in interest sensitive product benefits 5,358 — 5,358 —
Increase (decrease) to pre-tax adjusted operating income $ 4,226 $ (4,863) $ 4,226 $ (4,863)

~~The unlocking impact on the changes in reserves in 2020 is due primarily to updating the expected policyholder utilization of the guaranteed living withdrawal benefit rider on index annuities.~~

Other underwriting expenses decreased in the third quarter of 2020 and in the nine months ended September 30, 2020, compared to the prior year periods, due to various expense management actions including deferral of projects, reduction in the use of consultants and limiting replacement of employees that leave the company. In addition, travel expenses are lower due to COVID-related travel restrictions.$597.5 million at March 31, 2020.

The annualized average yield on invested assets for individual annuities decreased in the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the prior year period, primarily due to lower yields on new investment acquisitions from premium receipts and reinvestment of the proceeds from maturing investments, compared with the average existing portfolio yield. The annualized average yield decrease was partially offset by higher other investment-related income. See the “Financial Condition” section for additional information regarding the yields obtained on investment acquisitions. Annualized average crediting rates on our individual annuity products ~~decreased~~increased slightly in the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the prior year period, primarily due to ~~crediting and cap rate actions taken~~increased amortization of call option costs supporting our indexed annuity products, partially offset by a decrease in ~~2020 in response~~interest credited due to ~~a declining portfolio yield and a change~~changes in our mix of business in ~~force, partially offset by increased amortization of call option costs.~~force.

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Life Insurance Segment	Life Insurance Segment													Life Insurance Segment
		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2020		2019		Change		2020		2019		Change				2021		2020		Change
		(Dollars in thousands)														(Dollars in thousands)
Adjusted operating revenues:	Adjusted operating revenues:													Adjusted operating revenues:
Interest sensitive product charges and other income	Interest sensitive product charges and other income	$	23,180	$	19,032	22	%	$	63,404	$	57,404	10	%	Interest sensitive product charges and other income		$	20,195	$	20,332	(1)	%
Traditional life insurance premiums	Traditional life insurance premiums	47,792		46,982		2	%	147,429		147,361		—	%	Traditional life insurance premiums		52,010		49,308		5	%
Net investment income	Net investment income	40,198		38,581		4	%	117,044		118,026		(1)	%	Net investment income		40,199		37,575		7	%
Total adjusted operating revenues	Total adjusted operating revenues	111,170		104,595		6	%	327,877		322,791		2	%	Total adjusted operating revenues		112,404		107,215		5	%

Adjusted operating benefits and expenses:	Adjusted operating benefits and expenses:													Adjusted operating benefits and expenses:
Interest sensitive product benefits:	Interest sensitive product benefits:													Interest sensitive product benefits:
Interest and index credits	Interest and index credits	11,110		8,326		33	%	28,453		25,395		12	%	Interest and index credits		11,095		7,843		41	%
Death benefits and other	Death benefits and other	22,958		17,198		33	%	56,175		45,556		23	%	Death benefits and other		17,156		16,371		5	%
Total interest sensitive product benefits	Total interest sensitive product benefits	34,068		25,524		33	%	84,628		70,951		19	%	Total interest sensitive product benefits		28,251		24,214		17	%
Traditional life insurance benefits:	Traditional life insurance benefits:													Traditional life insurance benefits:
Death benefits	Death benefits	25,579		25,233		1	%	75,261		70,226		7	%	Death benefits		29,798		26,098		14	%
Surrender and other benefits	Surrender and other benefits	7,835		9,435		(17)	%	25,360		29,250		(13)	%	Surrender and other benefits		11,120		10,142		10	%
Increase in traditional life future policy benefits	Increase in traditional life future policy benefits	12,113		8,206		48	%	36,227		32,031		13	%	Increase in traditional life future policy benefits		8,932		9,970		(10)	%
Total traditional life insurance benefits	Total traditional life insurance benefits	45,527		42,874		6	%	136,848		131,507		4	%	Total traditional life insurance benefits		49,850		46,210		8	%
Distributions to participating policyholders	Distributions to participating policyholders	1,733		2,441		(29)	%	5,879		7,539		(22)	%	Distributions to participating policyholders		1,605		2,529		(37)	%
Underwriting, acquisition and insurance expenses:	Underwriting, acquisition and insurance expenses:													Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	Commission expense, net of deferrals	4,547		4,487		1	%	14,041		14,305		(2)	%	Commission expense, net of deferrals		5,184		4,832		7	%
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	8,404		(592)		(1,520)	%	13,888		8,551		62	%	Amortization of deferred acquisition costs		4,066		2,419		68	%
Amortization of value of insurance in force	Amortization of value of insurance in force	370		372		(1)	%	1,110		1,116		(1)	%	Amortization of value of insurance in force		369		370		—	%
Other underwriting expenses	Other underwriting expenses	14,179		16,278		(13)	%	46,006		48,658		(5)	%	Other underwriting expenses		16,717		16,749		—	%
Total underwriting, acquisition and insurance expenses	Total underwriting, acquisition and insurance expenses	27,500		20,545		34	%	75,045		72,630		3	%	Total underwriting, acquisition and insurance expenses		26,336		24,370		8	%
Total adjusted operating benefits and expenses	Total adjusted operating benefits and expenses	108,828		91,384		19	%	302,400		282,627		7	%	Total adjusted operating benefits and expenses		106,042		97,323		9	%
		2,342		13,211		(82)	%	25,477		40,164		(37)	%			6,362		9,892		(36)	%
Equity income (loss), before tax		299		821		(64)	%	(309)		2,199		(114)	%
Equity income, before tax														Equity income, before tax		4,524		375		1,106	%
Pre-tax adjusted operating income	Pre-tax adjusted operating income	$	2,641	$	14,032	(81)	%	$	25,168	$	42,363	(41)	%	Pre-tax adjusted operating income		$	10,886	$	10,267	6	%

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Life Insurance Segment - continued
Three months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
(Dollars in thousands)
Other data
Life premiums collected, net of reinsurance (1) $ 77,666 $ 75,043 3 % $ 238,774 $ 232,442 3 %
Policy liabilities and accruals, end of period 3,184,095 3,057,183 4 %
Life insurance in force, end of period 62,695,650 61,025,460 3 %
Average invested assets, at amortized cost net of allowance for credit losses (2) 3,237,690 3,132,734 3 %
Other investment-related income included in net investment income (3) 103 70 47 % 275 1,353 (80) %
Average aggregate interest sensitive life account value (8) 903,703 874,574 3 %
Interest sensitive life insurance spread:
Annualized yield on average invested assets (4) 4.96 % 5.25 %
Annualized average crediting rate (5) 3.88 % 3.77 %
Spread 1.08 % 1.48 %
Life insurance lapse and surrender rates (9) 3.8 % 4.6 %
Death benefits, net of reinsurance and reserves released $26,930 $25,846 4 % $ 78,337 $ 72,385 8 %






Other data
Life premiums collected, net of reinsurance (1)	$	85,505		$	82,635		3	%
Policy liabilities and accruals, end of period	3,253,413			3,106,864			5	%
Life insurance in force, end of period	64,040,179			61,852,616			4	%
Average invested assets, at amortized cost net of allowance for credit losses (2)	3,281,314			3,213,376			2	%
Other investment-related income included in net investment income (3)	283			59			380	%
Average aggregate interest sensitive life account value (8)	930,418			896,688			4	%

Interest sensitive life insurance spread:
Annualized yield on average invested assets (5)	5.26		%	4.99		%
Annualized average crediting rate (6)	3.99		%	3.87		%
Spread	1.27		%	1.12		%

Life insurance lapse and surrender rates (9)	4.3		%	4.5		%
Death benefits, net of reinsurance and reserves released	$	28,751		$	25,668		12	%

Pre-tax adjusted operating income for the Life Insurance segment ~~decreased~~increased in the ~~third~~first quarter of ~~2020 and in the nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods,~~period, primarily due to ~~the impact of unlocking actuarial assumptions,~~increases in equity income and growth in business in force, partially offset by increases in death benefits, net of reinsurance and reserves released, ~~partially offset by decreases in other underwriting expenses. The nine-month period, compared to the prior year period, was also impacted by decreases in equity income~~ and amortization of deferred acquisition ~~costs, excluding the impact of unlocking, due to changes in actual and expected profits which included increased mortality expense and less equity income.~~costs.

Equity income can fluctuate from period to period, see ‘Equity Income’ section as follows for additional information.

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Amortization of deferred acquisition costs increased during the ~~third~~first quarter of ~~2020 and the nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods,~~period, due to ~~unlocking actuarial assumptions and~~ changes in actual and expected profits on the underlying business, which included increased mortality expense and less equity income. Amortization of unearned revenue reserves, as well as reserves held on certain interest sensitive products, were also impacted by unlocking. Unlocking generally reflects changes in our projected earned spreads, policy lapses, premium persistency and mortality assumptions. Unlocking in 2020 included changes in our projected modal premium factors. The impact of unlocking on pre-tax operating income for the quarter and nine months ended September 30, 2020 and 2019 was as follows:business.

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Impact of Unlocking on Pre-tax Adjusted Operating Income
Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(Dollars in thousands)
Amortization of unearned revenue reserve reported in interest sensitive product charges and other income $ 3,772 $ (386) $ 3,772 $ (386)
Amortization of deferred sales inducements reported in interest sensitive product benefits (1,207) 45 (1,207) 45
Amortization of deferred sales inducements reported in traditional life insurance benefits 138 69 138 69
Amortization of deferred acquisition costs (5,556) 3,728 (5,556) 3,728
Changes in reserves reported in interest sensitive product benefits (7,270) (1,062) (7,270) (1,062)
Increase (decrease) to pre-tax adjusted operating income $ (10,123) $ 2,394 $ (10,123) $ 2,394

Death benefits, net of reinsurance and reserves released, increased in the ~~third~~first quarter of ~~2020,~~2021, compared to the prior year period, due to an increase in average claim amounts, net of reinsurance and reserves released. In the nine-month period ending September 30, 2020, compared to the prior year period, death benefits, net of reinsurance and reserves released, increased due to increases in the number of ~~claims and average claim amounts, net of reinsurance and reserves released.~~claims. Death benefits in the Life Insurance segment include COVID-19 related claims, net of reinsurance and reserves released, totaling ~~$0.7~~$3.4 million for the ~~third~~first quarter of ~~2020~~2021 and ~~$2.6~~$0.3 million ~~for the nine months ended September 30, 2020.~~

~~Other underwriting expenses decreased~~ in the ~~third~~first quarter of 2020 and in the nine months ended September 30, 2020, compared to the prior year periods, due to various expense management actions including deferral of projects, reduction in the use of consultants and limiting replacement of employees that leave the company. In addition, travel expenses are lower due to COVID-related travel restrictions.2020.

The annualized average yield on invested assets for interest sensitive life insurance products ~~decreased~~increased in the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the prior year period, due to higher equity income, partially offset by lower yields on new investment acquisitions from premium receipts and reinvestment of the proceeds from maturing ~~investments and decreases in other investment-related income.~~investments. See the “Financial Condition” section for additional information regarding the yields obtained on investment acquisitions. Annualized average crediting rates on our interest sensitive life insurance products increased in the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared to the prior year period, primarily due to ~~a change in the mix of business and~~ increased amortization of call option ~~costs.~~costs supporting our indexed universal life products.


Corporate and Other Segment
	Three months ended March 31,
		2021		2020		Change
		(Dollars in thousands)
Adjusted operating revenues:
Interest sensitive product charges		$	10,418	$	10,956	(5)	%
Net investment income		7,494		8,057		(7)	%
Other income		6,396		5,027		27	%
Total adjusted operating revenues		24,308		24,040		1	%

Adjusted operating benefits and expenses:
Interest sensitive product benefits		9,303		7,626		22	%
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals		658		699		(6)	%
Amortization of deferred acquisition costs		526		5,055		(90)	%
Other underwriting expenses		1,619		1,777		(9)	%
Total underwriting, acquisition and insurance expenses		2,803		7,531		(63)	%
Interest expense		1,213		1,213		—	%
Other expenses		9,886		7,421		33	%
Total adjusted operating benefits and expenses		23,205		23,791		(2)	%
		1,103		249		343	%
Net loss attributable to noncontrolling interest		67		56		20	%
Equity income (loss), before tax		261		(86)		(403)	%
Pre-tax adjusted operating income		$	1,431	$	219	553	%

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Corporate and Other Segment
Three months ended September 30, Nine months ended September 30,
2020 2019 Change 2020 2019 Change
(Dollars in thousands)
Adjusted operating revenues:
Interest sensitive product charges $ 10,246 $ 10,408 (2) % $ 31,484 $ 31,527 — %
Net investment income 7,306 8,277 (12) % 22,242 25,505 (13) %
Other income 4,946 4,548 9 % 14,834 12,883 15 %
Total adjusted operating revenues 22,498 23,233 (3) % 68,560 69,915 (2) %
Adjusted operating benefits and expenses:
Interest sensitive product benefits 10,310 7,642 35 % 26,141 26,865 (3) %
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals 669 720 (7) % 2,003 2,170 (8) %
Amortization of deferred acquisition costs 111 1,854 (94) % 4,533 1,792 153 %
Other underwriting expenses 1,562 1,244 26 % 5,141 3,810 35 %
Total underwriting, acquisition and insurance expenses 2,342 3,818 (39) % 11,677 7,772 50 %
Interest expense 1,212 1,213 — % 3,638 3,637 — %
Other expenses 7,878 5,764 37 % 22,524 18,649 21 %
Total adjusted operating benefits and expenses 21,742 18,437 18 % 63,980 56,923 12 %
756 4,796 (84) % 4,580 12,992 (65) %
Net (income) loss attributable to noncontrolling interest 21 (47) (145) % 165 (7) (2,457) %
Equity income, before tax 52 190 (73) % 9 868 (99) %
Pre-tax adjusted operating income $ 829 $ 4,939 (83) % $ 4,754 $ 13,853 (66) %


Other data	Other data													Other data
Average invested assets, at amortized cost net of allowance for credit losses (2)	Average invested assets, at amortized cost net of allowance for credit losses (2)							$	695,909	$	700,558	(1)	%	Average invested assets, at amortized cost net of allowance for credit losses (2)	$	767,899	$	701,876	9	%
Other investment-related income (loss) included in net investment income (3)		$	(39)	$	116	(134)	%	(13)		604		(102)	%
Other investment-related income included in net investment income (3)														Other investment-related income included in net investment income (3)	136		4		3,300	%
Average aggregate interest sensitive account value (10)	Average aggregate interest sensitive account value (10)							360,332		362,565		(1)	%	Average aggregate interest sensitive account value (10)	365,836		358,936		2	%
Death benefits, net of reinsurance and reserves released	Death benefits, net of reinsurance and reserves released	6,643		4,261		56	%	15,838		16,783		(6)	%	Death benefits, net of reinsurance and reserves released	5,903		4,343		36	%

Estimated impact on pre-tax adjusted operating income from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve (11)	Estimated impact on pre-tax adjusted operating income from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve (11)	1,500		(200)		(850)	%	(50)		2,600		(102)	%	Estimated impact on pre-tax adjusted operating income from separate account performance on amortization of deferred acquisition costs, deferred sales inducements and unearned revenue reserve (11)	900		(3,400)		(126)	%

Pre-tax adjusted operating income ~~decreased~~increased for the Corporate and Other segment in the ~~third~~first quarter of ~~2020,~~2021, compared to the prior year period, primarily due to ~~an increase in death benefits and other expenses, partially offset by~~ a decrease in amortization of deferred acquisition costs resulting from the impact of market performance on our variable ~~business. Pre-tax adjusted operating income decreased in the nine months ended September 30, 2020, compared to the prior year period, primarily due to~~business, partially offset by increases in death benefits and other expenses and amortization of deferred acquisition costs resulting from the impact of market performance on our variable business and a decrease in corporate investment income from lower yielding securities.expenses.

Death benefits, net of reinsurance and reserves released, increased in the ~~third~~first quarter of ~~2020,~~2021, compared to the prior year period, primarily due to an increase in the number of claims. Death benefits ~~net of reinsurance and reserves released, decreased in the nine months ended September 30, 2020, compared to the prior year period, due primarily to a decrease in the average~~

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~~claim amounts, net of reinsurance and reserves released, partially offset by an increase in the number of claims. Death benefits~~ in the Corporate and Other segment include

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COVID-19 related claims, net of reinsurance and reserves released, totaling ~~$0.2~~$0.7 million for the ~~third~~first quarter of ~~2020~~2021 and ~~$0.4 million for~~no noted impact in the ~~nine months ended September 30,~~first quarter of 2020.

Amortization of deferred acquisition costs changed during the third quarter of 2020 and the nine months ended September 30, 2020, compared to the prior year periods, primarily due to the impact of market performance on our variable business and unlocking of actuarial assumptions. See the “Impact of COVID-19 and Recent Business Environment” section above for additional information on market performance. Unlocking generally reflects changes in projected earned spreads, separate account performance, premium persistency and withdrawal and mortality assumptions. The impact of unlocking on pre-tax operating income for the quarter and nine months ended September 30, 2020 and 2019 was as follows:

Impact of Unlocking on Pre-tax Adjusted Operating Income
Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(Dollars in thousands)
Amortization of unearned revenue reserve reported in interest sensitive product charges $ (62) $ (94) $ (62) $ (94)
Amortization of deferred sales inducements reported in interest sensitive product benefits 51 26 51 26
Amortization of deferred acquisition costs (150) (135) (150) (135)
Changes in reserves reported in interest sensitive product benefits (659) 2 (659) 2
Decrease to pre-tax adjusted operating income $ (820) $ (201) $ (820) $ (201)
— —

Other income and other expenses include fees and expenses from sales of brokered products and operating results of our non-insurance subsidiaries, which include wealth management services, advisory, management and leasing activities. Other income and other expenses increased in the ~~third~~first quarter of ~~2020 and nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods,~~period, primarily due to expanding our wealth management business. The expansion of our wealth management business has increased administrative costs along with the costs of implementing a new delivery platform to allow for additional product offerings and an enhanced customer experience. Revenues associated with our wealth management ~~expansion~~business increased ~~modestly~~ as we continue to develop this business, increasing ~~$0.7~~$1.2 million in the ~~third~~first quarter of ~~2020 and $1.9 million during the nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods.~~period. Expenses, including commissions, associated with our wealth management expansion have increased ~~$1.2~~$1.5 million in the ~~third~~first quarter of ~~2020 and $3.1 million during the nine months ended September 30, 2020,~~2021, compared to the prior year ~~periods.~~period.

Equity Income ~~(Loss)~~

Equity income ~~(loss)~~ includes our proportionate share of gains and losses attributable to our ownership interest in partnerships, joint ventures and certain companies over which we exhibit some control but have a minority ownership interest. We consistently use the most recent financial information available ~~generally for periods not to exceed three months prior to the ending date of the period for which we are reporting,~~ to account for equity income. ~~Notably, one of our alternative investments reports earnings two quarters in arrears as it is a fund of funds, which increases the reporting timeline.~~ Several of these entities are investment companies whose operating results are derived primarily from unrealized and realized gains and losses generated by their investment portfolios.

The level of gains and losses for these entities normally fluctuates from period to period depending on the prevailing economic environment, changes in the value of underlying investments held by the investment partnerships, the timing and success of initial public offerings or exit strategies, and the timing of the sale of investments held by the partnerships and joint ventures.

Equity income, ~~(loss),~~ net of related taxes, ~~for the third quarter of 2020~~ was ~~$0.3 million compared with $0.8~~$3.8 million for the ~~third~~first quarter of ~~2019,~~2021 and ~~($0.2)~~$0.2 million for the ~~nine months ended September 30, 2020 compared with $2.4 million for the nine months ended September 30, 2019.~~same period in 2020. See Note 8 to our consolidated financial statements for further information.

Income Taxes on Adjusted Operating Income

The effective tax rate on adjusted operating income was ~~11.8%~~10.9% for the ~~third~~first quarter of ~~2020 and 14.7%~~2021, compared with 12.7% for the ~~nine months ended September 30, 2020, compared with 6.9% for the third~~first quarter of ~~2019 and 12.5% for the nine months ended September 30, 2019.~~2020. The effective tax rates differ from the federal statutory rate of 21% primarily due to the impact of LIHTC

~~Table of Content~~

investments and tax-exempt investment income. ~~In addition, effective rates for 2019 benefited from non-recurring tax benefits totaling $2.5 million resulting from the execution of a tax planning strategy in the third quarter of 2019.~~


Components of income tax	Components of income tax									Components of income tax
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Income tax expense		$	(2,883)	$	(1,642)	$	(5,887)	$	(13,429)
Income tax benefit (expense) on equity income		(74)		(212)		62		(644)
Income tax benefit (expense)										Income tax benefit (expense)		$	(3,687)	$	3,081
Income tax expense on equity income										Income tax expense on equity income		(1,005)		(61)

Income tax offset on net income adjustments	Income tax offset on net income adjustments	324		(23)		(5,309)		2,290		Income tax offset on net income adjustments		1,810		(5,889)
Income taxes on adjusted operating income	Income taxes on adjusted operating income	$	(2,633)	$	(1,877)	$	(11,134)	$	(11,783)	Income taxes on adjusted operating income		$	(2,882)	$	(2,869)

Income taxes on adjusted operating income before benefits of LIHTC investments	Income taxes on adjusted operating income before benefits of LIHTC investments	$	(3,493)	$	(2,727)	$	(13,801)	$	(14,437)	Income taxes on adjusted operating income before benefits of LIHTC investments		$	(3,640)	$	(3,752)
Amounts related to LIHTC investments	Amounts related to LIHTC investments	860		850		2,667		2,654		Amounts related to LIHTC investments		758		883
Income taxes on adjusted operating income	Income taxes on adjusted operating income	$	(2,633)	$	(1,877)	$	(11,134)	$	(11,783)	Income taxes on adjusted operating income		$	(2,882)	$	(2,869)

Impact of Adjustments to Net Income Attributable to FBL
Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(Dollars in thousands)
Realized gains (losses) on investments and change in fair value of equity securities and derivatives $ 780 $ (198) $ (26,863) $ 11,092
Offsets: (1)
Change in amortization 639 (343) 597 (647)
Reserve change on interest sensitive products 126 432 987 462
Income tax (324) 23 5,309 (2,290)
Net impact of adjustments to net income $ 1,221 $ (86) $ (19,970) $ 8,617
Net impact per common share - basic and assuming dilution $ 0.05 $ (0.01) $ (0.81) $ 0.35
40

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Impact of Adjustments to Net Income (Loss) Attributable to FBL
	Three months ended March 31,
		2021		2020
		(Dollars in thousands)
Realized gains (losses) on investments and change in fair value of equity securities and derivatives		$	10,745	$	(28,069)
Proposed acquisition transaction expenses		(2,577)		—
Offsets: (1)
Change in amortization		(890)		(176)
Reserve change on interest sensitive products		(1,239)		205
Income tax		(1,810)		5,889
Net impact of adjustments to net income (loss)		$	4,229	$	(22,151)
Net impact per common share - basic and assuming dilution		$	0.17	$	(0.89)

(1)The items excluded from adjusted operating income impact the amortization of deferred acquisition costs and unearned revenue reserve. Certain interest sensitive reserves as well as income taxes are also impacted.


Realized Gains (Losses) on Investments	Realized Gains (Losses) on Investments									Realized Gains (Losses) on Investments
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Realized gains (losses) on investments:	Realized gains (losses) on investments:									Realized gains (losses) on investments:
Realized gains	Realized gains	$	237	$	534	$	431	$	6,524	Realized gains		$	148	$	12
Realized losses	Realized losses	(60)		(3)		(1,989)		(341)		Realized losses		(868)		(182)
Change in unrealized gains/losses on equity securities	Change in unrealized gains/losses on equity securities	1,814		165		(7,099)		5,047		Change in unrealized gains/losses on equity securities		(149)		(13,231)
Total other-than-temporary impairment losses		—		(50)		—		(919)

Total allowance for credit losses	Total allowance for credit losses	1,903		—		(10,855)		—		Total allowance for credit losses		1,113		(12,261)
Net realized investment gains (losses)	Net realized investment gains (losses)	$	3,894	$	646	$	(19,512)	$	10,311	Net realized investment gains (losses)		$	244	$	(25,662)

The level of realized gains (losses) is subject to fluctuation from period to period due to movements in credit spreads and prevailing interest rates, changes in the economic environment, the timing of the sales of the investments generating the realized gains and losses, as well as the timing of allowances, ~~impairments,~~ recovery of allowances and unrealized gains and losses on equity securities. See “Financial Condition - Investments” and Note 2 to our consolidated financial statements for details regarding our unrealized gains and losses on available-for-sale securities at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

~~Table of Content~~


Change in Allowance/Credit Impairment Losses Recognized in Net Income
Change in Allowances Recognized in Net Income										Change in Allowances Recognized in Net Income
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2020		2019		2020		2019				2021		2020
		(Dollars in thousands)										(Dollars in thousands)
Corporate securities:	Corporate securities:									Corporate securities:

Consumer Products		$	850	$	—	$	(122)	$	—

Financial	Financial	730		—		(4,315)		—		Financial		$	(1,260)	$	5,430
Energy	Energy	(175)		—		(7,060)		—		Energy		—		6,716

Other asset-backed	Other asset-backed	(281)		—		(598)		(869)		Other asset-backed		115		—
Securities and indebtedness of related parties		—		(50)		—		(50)

Mortgage loans	Mortgage loans	779		—		1,240		—		Mortgage loans		32		115

Total allowance for credit losses (2020); other-than-temporary impairment losses (2019) reported in net income		$	1,903	$	(50)	$	(10,855)	$	(919)
Total allowance for credit (gains) losses reported in net income										Total allowance for credit (gains) losses reported in net income		$	(1,113)	$	12,261

Allowance for credit losses for the nine months ended September 30, 2020 include an energy sector bond, a consumer products bond, and two financial sector bonds impaired to fair value caused by ongoing weakness in operating performance in addition to an asset backed bond due to a decline in expected cash flows. Improvements in the allowance results in recoveries recognized as realized gains. See Note 2 “Investment Operations” to our consolidated financial statements for more detail on the allowance for credit losses. ~~Other-than-temporary credit impairment losses for the nine months ended September 30, 2019 include an asset-backed bond due to a decline in expected cash flows.~~

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Financial Condition

Investments

Our investment portfolio ~~increased 5.4%~~decreased 2.8% to ~~$9,582.0~~$9,412.8 million at ~~September 30, 2020~~March 31, 2021 compared to ~~$9,091.6~~$9,684.0 million at December 31, ~~2019.~~2020. The portfolio ~~increase~~decrease is ~~primarily~~ due in part to a ~~$312.4~~$400.4 million ~~increase~~decrease in the net unrealized appreciation of fixed maturities. The ~~increase~~decrease in unrealized appreciation is ~~the result of a decrease~~primarily due to an increase in market ~~interest rates driven by a decrease in Treasury rates.~~yields during the first quarter of 2021. Additional details regarding securities in an unrealized gain or loss position at ~~September 30, 2020~~March 31, 2021 are included in the discussion that follows and in Note 2 to our consolidated financial statements. Details regarding investment impairments are discussed above in the “Realized Gains (Losses) on Investments” section under “Results of Operations.”

We manage the investment portfolio to optimize risk-adjusted yield within the context of prudent asset-liability management. We evaluate multiple cash flow testing scenarios as part of this process. The Company’s investment policy calls for investing primarily in high quality fixed maturities and commercial mortgage loans.

Fixed Maturity Acquisitions Selected Information
Nine months ended September 30,
2020 2019
(Dollars in thousands)
Cost of acquisitions:
Corporate $ 287,347 $ 301,717
Mortgage- and asset-backed 285,243 248,185
United States Government and agencies 25,212 —
Tax-exempt municipals 55,381 27,715
Total $ 653,183 $ 582,617
Effective annual yield 3.20 % 3.90 %
Credit quality
NAIC 1 designation 73.9 % 68.9 %
NAIC 2 designation 19.7 % 31.1 %
Non-investment grade 6.4 % — %
Weighted-average life in years 11.0 16.0

~~Table of Content~~


Fixed Maturity Acquisitions Selected Information
	Three months ended March 31,
	2021			2020
	(Dollars in thousands)
Cost of acquisitions:
Corporate	$	186,536		$	123,877
Mortgage- and asset-backed	106,187			95,381
United States Government and agencies	10,165			—
Tax-exempt municipals	14,285			—

Total	$	317,173		$	219,258
Effective annual yield	2.91		%	3.50		%
Credit quality
NAIC 1 designation	62.8		%	66.1		%
NAIC 2 designation	33.4		%	24.8		%
Non-investment grade	3.8		%	9.1		%
Weighted-average life in years	21.0			7.0

The table above summarizes selected information for fixed maturity purchases. The effective annual yield shown is the yield calculated to the “first-call” date. For non-callable bonds, the first-call date is the maturity date. The weighted-average life is calculated using scheduled pay-downs and expected prepayments for amortizing securities. For non-amortizing securities, the weighted-average life is equal to the stated maturity date.

A portion of the securities acquired during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 ~~and September 30, 2019~~ were acquired with the proceeds from advances on our funding agreements with the FHLB. The securities acquired to support these funding agreements often carry a lower average yield than securities acquired to support our other insurance products, due to the shorter maturity and relatively low interest rate paid on those advances. In addition, certain municipal securities acquired are exempt from federal income taxes, and accordingly have a higher actual return than reflected in the yields stated above. The average yield of the securities acquired, excluding the securities supporting the funding agreements and using a tax-adjusted yield for the municipal securities, was ~~3.34%~~3.13% during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and was ~~3.95%~~4.73% during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Investment Portfolio Summary
September 30, 2020 December 31, 2019
Carrying Value Percent Carrying Value Percent
(Dollars in thousands)
Fixed maturities - available for sale:
Public $ 6,111,775 63.8 % $ 5,763,570 63.4 %
144A private placement 1,837,248 19.2 1,699,924 18.7
Private placement 295,454 3.1 239,134 2.6
Total fixed maturities - available for sale 8,244,477 86.1 7,702,628 84.7
Equity securities 93,269 1.0 100,228 1.1
Mortgage loans 972,210 10.1 1,011,678 11.2
Real estate 955 — 955 —
Policy loans 197,009 2.1 201,589 2.2
Short-term investments 18,434 0.2 11,865 0.1
Other investments 55,639 0.5 62,680 0.7
Total investments $ 9,581,993 100.0 % $ 9,091,623 100.0 %

Table of Content


Investment Portfolio Summary
	March 31, 2021				December 31, 2020
	Carrying Value		Percent		Carrying Value		Percent
	(Dollars in thousands)
Fixed maturities - available for sale:
Public	$	5,920,167	62.9	%	$	6,139,811	63.4	%
144A private placement	1,809,025		19.2		1,823,768		18.8
Private placement	298,891		3.2		320,108		3.3
Total fixed maturities - available for sale	8,028,083		85.3		8,283,687		85.5
Equity securities	88,564		0.9		88,281		0.9
Mortgage loans	992,938		10.6		994,101		10.4
Real estate	955		—		955		—
Policy loans	191,580		2.0		195,666		2.0
Short-term investments	42,252		0.5		63,062		0.7
Other investments	68,424		0.7		58,258		0.5
Total investments	$	9,412,796	100.0	%	$	9,684,010	100.0	%

As of ~~September 30, 2020,~~March 31, 2021, ~~96.4~~95.8% (based on carrying value) of the available-for-sale fixed maturities were investment grade debt securities, defined as being in the highest two National Association of Insurance Commissioners (NAIC) designations. Non-investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers. In addition, the trading market for these securities is usually more limited than for investment grade debt securities. We regularly review the percentage of our portfolio that is invested in non-investment grade debt securities (NAIC designations 3 through 6). As of ~~September 30, 2020,~~March 31, 2021, no single non-investment grade holding exceeded 0.2% of total investments.

~~Table of Content~~


Credit Quality by NAIC Designation and Equivalent Rating	Credit Quality by NAIC Designation and Equivalent Rating										Credit Quality by NAIC Designation and Equivalent Rating
			September 30, 2020				December 31, 2019						March 31, 2021				December 31, 2020
NAIC Designation	NAIC Designation	Equivalent Rating (1)	Carrying Value		Percent		Carrying Value		Percent		NAIC Designation	Equivalent Rating (1)	Carrying Value		Percent		Carrying Value		Percent
			(Dollars in thousands)										(Dollars in thousands)
1	1	AAA, AA, A	$	5,572,781	67.6	%	$	5,255,079	68.2	%	1	AAA, AA, A	$	5,163,977	64.3	%	$	5,440,737	65.7	%
2	2	BBB	2,372,784		28.8		2,268,920		29.5		2	BBB	2,532,172		31.5		2,516,020		30.4
		Total investment grade	7,945,565		96.4		7,523,999		97.7			Total investment grade	7,696,149		95.8		7,956,757		96.1
3	3	BB	229,223		2.7		123,120		1.6		3	BB	261,219		3.3		256,122		3.1
4	4	B	57,560		0.7		38,272		0.5		4	B	56,382		0.7		57,746		0.7
5	5	CCC	6,097		0.1		17,231		0.2		5	CCC	10,046		0.1		10,036		0.1
6	6	In or near default	6,032		0.1		6		—		6	In or near default	4,287		0.1		3,026		—
		Total below investment grade	298,912		3.6		178,629		2.3			Total below investment grade	331,934		4.2		326,930		3.9
		Total fixed maturities - available for sale	$	8,244,477	100.0	%	$	7,702,628	100.0	%		Total fixed maturities - available for sale	$	8,028,083	100.0	%	$	8,283,687	100.0	%

(1)Equivalent ratings are based on those provided by nationally recognized rating agencies with some exceptions for certain residential mortgage, commercial mortgage- and asset-backed securities that are based on the expected loss of the security rather than the probability of default. This may result in a final designation being higher or lower than the equivalent credit rating.

See Note 2 to our consolidated financial statements for a summary of fixed maturities by contractual maturity date.

Gross Unrealized Gains and Gross Unrealized Losses by Internal Industry Classification
September 30, 2020
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)
Corporate securities:
Basic industrial $ 352,188 $ 333,951 $ 48,876 $ 18,237 $ (800)
Capital goods 335,959 326,008 46,445 9,951 (431)
Communications 159,573 154,115 27,448 5,458 (160)
Consumer cyclical 189,828 180,396 22,076 9,432 (1,562)
Consumer non-cyclical 696,098 671,180 117,952 24,918 (1,631)
Energy 428,390 355,180 41,031 73,210 (8,136)
Finance 750,292 718,757 78,703 31,535 (1,451)
Transportation 139,720 129,571 17,157 10,149 (237)
Utilities 176,811 174,535 23,975 2,276 (15)
Technology 884,298 872,878 176,413 11,420 (548)
Other 20,842 20,842 2,556 — —
Total corporate securities 4,133,999 3,937,413 602,632 196,586 (14,971)
Mortgage- and asset-backed securities 2,628,534 2,339,764 240,186 288,770 (10,431)
United States Government and agencies 37,595 12,701 2,962 24,894 (453)
States and political subdivisions 1,444,349 1,410,905 181,171 33,444 (1,356)
Total $ 8,244,477 $ 7,700,783 $ 1,026,951 $ 543,694 $ (27,211)

Table of Content


Gross Unrealized Gains and Gross Unrealized Losses by Internal Industry Classification
	March 31, 2021
	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)
Corporate securities:
Basic industrial	$	351,378	$	338,552	$	44,589	$	12,826	$	(1,110)
Capital goods	337,515		296,289		33,807		41,226		(1,167)
Communications	164,341		150,376		20,528		13,965		(809)
Consumer cyclical	190,240		178,485		15,337		11,755		(806)
Consumer non-cyclical	666,542		639,653		84,771		26,889		(2,803)
Energy	434,097		391,989		41,336		42,108		(3,268)
Finance	748,046		697,013		67,869		51,033		(2,659)


Transportation	141,417		124,199		12,194		17,218		(669)
Utilities	851,939		757,159		121,353		94,780		(5,414)
Technology	175,294		156,795		17,164		18,499		(839)
Other	30,799		20,660		2,561		10,139		(791)
Total corporate securities	4,091,608		3,751,170		461,509		340,438		(20,335)
Mortgage- and asset-backed securities	2,527,892		2,129,202		144,817		398,690		(16,269)
United States Government and agencies	39,245		10,369		1,716		28,876		(6,822)
States and political subdivisions	1,369,338		1,287,650		147,496		81,688		(3,222)
Total	$	8,028,083	$	7,178,391	$	755,538	$	849,692	$	(46,648)




	December 31, 2020
	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)
Corporate securities:
Basic industrial	$	361,658	$	358,786	$	63,739	$	2,872	$	(102)
Capital goods	343,285		341,328		55,049		1,957		(43)
Communications	165,105		160,706		29,896		4,399		(78)
Consumer cyclical	193,800		189,287		24,883		4,513		(473)
Consumer non-cyclical	710,628		704,598		136,956		6,030		(905)
Energy	442,603		419,114		56,920		23,489		(1,724)
Finance	773,430		764,564		96,649		8,866		(693)
Transportation	144,760		144,621		22,195		139		(5)
Utilities	902,980		893,310		188,764		9,670		(219)
Technology	178,839		178,734		26,636		105		—
Other	21,179		21,179		2,899		—		—
Total corporate securities	4,238,267		4,176,227		704,586		62,040		(4,242)
Mortgage- and asset-backed securities	2,593,203		2,323,830		227,200		269,373		(7,113)
United States Government and agencies	36,252		12,622		2,887		23,630		(1,809)
States and political subdivisions	1,415,965		1,400,820		188,542		15,145		(785)
Total	$	8,283,687	$	7,913,499	$	1,123,215	$	370,188	$	(13,949)

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Gross Unrealized Gains and Gross Unrealized Losses by Internal Industry Classification
December 31, 2019
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)
Corporate securities:
Basic industrial $ 337,004 $ 330,254 $ 33,472 $ 6,750 $ (259)
Capital goods 302,566 292,480 28,427 10,086 (278)
Communications 143,907 139,092 17,900 4,815 (453)
Consumer cyclical 154,744 145,584 12,971 9,160 (357)
Consumer non-cyclical 611,618 554,145 68,658 57,473 (4,057)
Energy 420,805 384,898 42,177 35,907 (6,637)
Finance 692,341 667,173 62,295 25,168 (2,287)
Transportation 129,421 116,659 11,186 12,762 (415)
Utilities 158,073 155,105 15,617 2,968 (23)
Technology 804,317 770,167 123,232 34,150 (765)
Other 24,154 24,154 2,114 — —
Total corporate securities 3,778,950 3,579,711 418,049 199,239 (15,531)
Mortgage- and asset-backed securities 2,432,382 2,092,650 144,832 339,732 (5,956)
United States Government and agencies 14,123 11,629 1,711 2,494 (5)
States and political subdivisions 1,477,173 1,451,870 145,125 25,303 (866)
Total $ 7,702,628 $ 7,135,860 $ 709,717 $ 566,768 $ (22,358)


Credit Quality of Available-for-Sale Fixed Maturities with Unrealized Losses
		March 31, 2021
NAIC Designation	Equivalent Rating	Carrying Value of Securities with Gross Unrealized Losses		Percent of Total		Gross Unrealized Losses		Percent of Total
		(Dollars in thousands)
1	AAA, AA, A	$	624,584	73.5	%	$	(32,814)	70.4	%
2	BBB	160,731		18.9		(8,689)		18.6
	Total investment grade	785,315		92.4		(41,503)		89.0
3	BB	50,937		6.0		(3,797)		8.1
4	B	13,437		1.6		(1,348)		2.9

6	In or near default	3		—		—		—
	Total below investment grade	64,377		7.6		(5,145)		11.0
	Total	$	849,692	100.0	%	$	(46,648)	100.0	%


Credit Quality of Available-for-Sale Fixed Maturities with Unrealized Losses

			September 30, 2020										December 31, 2020
NAIC Designation	NAIC Designation	Equivalent Rating	Carrying Value of Securities with Gross Unrealized Losses		Percent of Total		Gross Unrealized Losses		Percent of Total		NAIC Designation	Equivalent Rating	Carrying Value of Securities with Gross Unrealized Losses		Percent of Total		Gross Unrealized Losses		Percent of Total
			(Dollars in thousands)										(Dollars in thousands)
1	1	AAA, AA, A	$	326,561	60.1	%	$	(9,017)	33.1	%	1	AAA, AA, A	$	269,478	72.8	%	$	(6,871)	49.3	%
2	2	BBB	97,069		17.8		(5,980)		22.0		2	BBB	43,988		11.9		(1,397)		10.0
		Total investment grade	423,630		77.9		(14,997)		55.1			Total investment grade	313,466		84.7		(8,268)		59.3
3	3	BB	100,117		18.4		(9,436)		34.7		3	BB	41,906		11.3		(3,317)		23.8
4	4	B	19,942		3.7		(2,778)		10.2		4	B	14,812		4.0		(2,364)		16.9

6	6	In or near default	5		—		—		—		6	In or near default	4		—		—		—
		Total below investment grade	120,064		22.1		(12,214)		44.9			Total below investment grade	56,722		15.3		(5,681)		40.7
		Total	$	543,694	100.0	%	$	(27,211)	100.0	%		Total	$	370,188	100.0	%	$	(13,949)	100.0	%


Available-For-Sale Fixed Maturities with Unrealized Losses by Length of Time
	March 31, 2021
	Amortized Cost				Gross Unrealized Losses
	Fair Value is Less than 75% of Cost		Fair Value is 75% or Greater than Cost		Fair Value is Less than 75% of Cost		Fair Value is 75% or Greater than Cost
	(Dollars in thousands)
Three months or less	$	—	$	601,885	$	—	$	(26,429)
Greater than three months to six months	—		49,978		—		(2,045)
Greater than six months to nine months	25,532		80,015		(6,507)		(5,725)
Greater than nine months to twelve months	—		177		—		(1)
Greater than twelve months	—		138,753		—		(5,941)
Total	$	25,532	$	870,808	$	(6,507)	$	(40,141)

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Credit Quality of Available-for-Sale Fixed Maturities with Unrealized Losses
December 31, 2019
NAIC Designation Equivalent Rating Carrying Value of Securities with Gross Unrealized Losses Percent of Total Gross Unrealized Losses Percent of Total
(Dollars in thousands)
1 AAA, AA, A $ 394,099 69.5 % $ (6,932) 31.0 %
2 BBB 103,400 18.2 (3,093) 13.8
Total investment grade 497,499 87.7 (10,025) 44.8
3 BB 37,184 6.6 (5,096) 22.9
4 B 22,928 4.1 (1,616) 7.2
5 CCC 9,150 1.6 (5,621) 25.1
6 In or near default 7 — — —
Total below investment grade 69,269 12.3 (12,333) 55.2
Total $ 566,768 100.0 % $ (22,358) 100.0 %


Available-For-Sale Fixed Maturities with Unrealized Losses by Length of Time
	December 31, 2020
	Amortized Cost				Gross Unrealized Losses
	Fair Value is Less than 75% of Cost		Fair Value is 75% or Greater than Cost		Fair Value is Less than 75% of Cost		Fair Value is 75% or Greater than Cost
	(Dollars in thousands)
Three months or less	$	—	$	63,287	$	—	$	(1,338)
Greater than three months to six months	—		112,343		—		(3,572)
Greater than six months to nine months	—		11,786		—		(180)
Greater than nine months to twelve months	—		80,799		—		(2,228)
Greater than twelve months	—		115,922		—		(6,631)
Total	$	—	$	384,137	$	—	$	(13,949)

Available-For-Sale Fixed Maturities with Unrealized Losses by Length of Time
September 30, 2020
Amortized Cost Gross Unrealized Losses
Fair Value
is Less than 75% of Cost Fair Value is
75% or Greater
than Cost Fair Value is Less than 75% of Cost Fair Value is
75% or Greater
than Cost
(Dollars in thousands)
Three months or less $ 3,059 $ 218,364 $ (918) $ (3,878)
Greater than three months to six months — 21,955 — (290)
Greater than six months to nine months 2,836 166,438 (1,101) (8,362)
Greater than nine months to twelve months — 4,858 — (151)
Greater than twelve months 5,942 147,453 (2,121) (10,390)
Total $ 11,837 $ 559,068 $ (4,140) $ (23,071)

December 31, 2019
Amortized Cost Gross Unrealized Losses
Fair Value
is Less than 75% of Cost Fair Value is 75% or Greater than Cost Fair Value is Less than 75% of Cost Fair Value is
75% or Greater
than Cost
(Dollars in thousands)
Three months or less $ — $ 255,507 $ — $ (3,518)
Greater than three months to six months — 98,253 — (2,093)
Greater than six months to nine months — 13,944 — (464)
Greater than nine months to twelve months — — — —
Greater than twelve months 25,805 195,617 (8,444) (7,839)
Total $ 25,805 $ 563,321 $ (8,444) $ (13,914)

~~Table of Content~~


Available-For-Sale Fixed Maturities with Unrealized Losses by Maturity Date	Available-For-Sale Fixed Maturities with Unrealized Losses by Maturity Date									Available-For-Sale Fixed Maturities with Unrealized Losses by Maturity Date
		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
		Carrying Value of Securities with Gross Unrealized Losses		Gross Unrealized Losses		Carrying Value of Securities with Gross Unrealized Losses		Gross Unrealized Losses			Carrying Value of Securities with Gross Unrealized Losses		Gross Unrealized Losses		Carrying Value of Securities with Gross Unrealized Losses		Gross Unrealized Losses
		(Dollars in thousands)									(Dollars in thousands)
Due in one year or less	Due in one year or less	$	8,038	$	(32)	$	1,498	$	(2)	Due in one year or less	$	3,260	$	(65)	$	3,200	$	(133)
Due after one year through five years	Due after one year through five years	31,053		(1,597)		17,902		(3,340)		Due after one year through five years	7,124		(55)		9,224		(21)
Due after five years through ten years	Due after five years through ten years	42,100		(3,294)		32,003		(478)		Due after five years through ten years	52,595		(1,811)		14,260		(1,349)
Due after ten years	Due after ten years	173,733		(11,857)		175,633		(12,582)		Due after ten years	388,023		(28,448)		74,131		(5,333)
		254,924		(16,780)		227,036		(16,402)			451,002		(30,379)		100,815		(6,836)
Mortgage- and asset-backed	Mortgage- and asset-backed	288,770		(10,431)		339,732		(5,956)		Mortgage- and asset-backed	398,690		(16,269)		269,373		(7,113)
Total	Total	$	543,694	$	(27,211)	$	566,768	$	(22,358)	Total	$	849,692	$	(46,648)	$	370,188	$	(13,949)

See Note 2 to our consolidated financial statements for additional analysis of these unrealized losses.

Mortgage- and Asset-Backed Securities

Mortgage-backed and other asset-backed securities are purchased when we believe these types of investments provide superior risk-adjusted returns compared to returns of more conventional investments such as corporate bonds and mortgage loans. These securities are diversified as to collateral types, cash flow characteristics and maturity.

The repayment pattern on mortgage and other asset-backed securities is more variable than that of more traditional fixed maturity securities because the repayment terms are tied to underlying debt obligations that are subject to prepayments. The prepayment speeds (e.g., the rate of individuals refinancing their home mortgages) can vary based on a number of economic factors that cannot be predicted with certainty. These factors include the prevailing interest rate environment and general status of the economy.

At each balance sheet date, we review and update our expectation of future prepayment speeds and the book value of the mortgage and other asset-backed securities purchased at a premium or discount is reset, if needed. See Note 1 to our consolidated financial statements included in Item 8 of our Form 10-K for the year ended December 31, ~~2019~~2020 for more detail on accounting for the amortization of premium and accrual of discount on mortgage-backed and asset-backed securities.

Our direct exposure to the Alt-A home equity and subprime first-lien sectors is limited to investments in structured securities collateralized by senior tranches of residential mortgage loans. We also have a partnership interest in one fund at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, that owns securities backed by Alt-A home equity, subprime first-lien and adjustable rate mortgage collateral. The fund is reported as securities and indebtedness of related parties in our consolidated balance sheets with a fair value of ~~$0.9~~$0.8 million at ~~September 30, 2020~~March 31, 2021 and ~~$1.4 million~~ at December 31, ~~2019.~~2020. We do not own any direct investments in subprime lenders.

Mortgage- and Asset-Backed Securities by Collateral Type
September 30, 2020 December 31, 2019
Amortized Cost Carrying Value Percent
of Fixed Maturities Amortized Cost Carrying Value Percent
of Fixed Maturities
(Dollars in thousands)
Government agency $ 213,720 $ 244,546 3.0 % $ 220,209 $ 236,734 3.1 %
Prime 387,451 411,217 5.0 338,795 357,769 4.6
Alt-A 59,959 69,997 0.8 68,483 80,732 1.0
Subprime 122,109 130,323 1.6 133,410 144,485 1.9
Commercial mortgage 996,794 1,149,431 13.9 969,453 1,045,473 13.6
Collateralized loan obligation 227,791 223,890 2.7 186,671 185,427 2.4
Non-mortgage 391,553 399,130 4.8 376,485 381,762 5.0
Total $ 2,399,377 $ 2,628,534 31.8 % $ 2,293,506 $ 2,432,382 31.6 %

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Mortgage- and Asset-Backed Securities by Collateral Type
	March 31, 2021						December 31, 2020
	Amortized Cost		Carrying Value		Percent of Fixed Maturities		Amortized Cost		Carrying Value		Percent of Fixed Maturities
	(Dollars in thousands)
Government agency	$	213,806	$	233,951	2.9	%	$	202,989	$	231,161	2.8	%
Prime	385,235		399,332		5.0		384,638		405,016		4.9
Alt-A	54,758		64,722		0.8		56,717		66,139		0.8
Subprime	115,684		124,862		1.6		118,705		127,302		1.5
Commercial mortgage	1,014,949		1,079,827		13.5		991,944		1,136,333		13.7
Collateralized loan obligation	223,861		222,582		2.8		219,481		217,162		2.6
Non-mortgage	391,835		402,616		5.0		399,311		410,090		5.0
Total	$	2,400,128	$	2,527,892	31.6	%	$	2,373,785	$	2,593,203	31.3	%

The mortgage- and asset-backed securities can be summarized into three broad categories: residential, commercial and other asset-backed securities.

The residential mortgage-backed portfolio includes government agency pass-through and collateralized mortgage obligation (CMO) securities. With a government agency pass-through security, we receive a pro rata share of principal payments as payments are made on the underlying mortgage loans. CMOs consist of pools of mortgages divided into sections or “tranches” with varying stated maturities that provide sequential retirement of the bonds. While each tranche receives monthly interest payments, a subsequent tranche is not entitled to receive payment of principal until the entire principal of the preceding tranche is paid off. We primarily invest in sequential tranches, which allow us to manage cash flow stability and prepayment risk by the level of tranche in which we invest. In addition, to provide call protection and more stable average lives, we invest in CMOs such as planned amortization class (PAC) and targeted amortization class (TAC) securities. PAC bonds provide more predictable cash flows within a range of prepayment speeds and provide some protection against prepayment risk. TAC bonds provide protection from a rise in the prepayment rate due to falling interest rates. We generally do not purchase certain types of CMOs that we believe would subject the investment portfolio to excessive prepayment risk.


Residential Mortgage-Backed Securities by NAIC Designation and Origination Year	Residential Mortgage-Backed Securities by NAIC Designation and Origination Year																	Residential Mortgage-Backed Securities by NAIC Designation and Origination Year
		September 30, 2020																	March 31, 2021
		2004 & Prior				2005 to 2008				2009 & After				Total					2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
		(Dollars in thousands)																	(Dollars in thousands)
1	1	$	52,706	$	54,539	$	56,491	$	70,340	$	545,156	$	591,043	$	654,353	$	715,922	1	$	35,890	$	37,586	$	48,721	$	63,544	$	552,379	$	578,002	$	636,990	$	679,132

2																		2	3,436		3,429		—		—		—		—		3,436		3,429
3	3	214		220		156		171		—		—		370		391		3	583		566		123		121		2,370		2,410		3,076		3,097
4	4	—		—		4,123		4,789		—		—		4,123		4,789		4	4,403		3,781		491		389		—		—		4,894		4,170
5	5	—		—		3,055		4,005		—		—		3,055		4,005		5	—		—		6,876		8,447		—		—		6,876		8,447
6	6	5		5		—		—		—		—		5		5		6	3		3		—		—		—		—		3		3
Total	Total	$	52,925	$	54,764	$	63,825	$	79,305	$	545,156	$	591,043	$	661,906	$	725,112	Total	$	44,315	$	45,365	$	56,211	$	72,501	$	554,749	$	580,412	$	655,275	$	698,278


		December 31, 2019																	December 31, 2020
		2004 & Prior				2005 to 2008				2009 & After				Total					2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
		(Dollars in thousands)																	(Dollars in thousands)
1	1	$	60,698	$	62,145	$	61,993	$	80,465	$	495,061	$	519,147	$	617,752	$	661,757	1	$	37,892	$	40,008	$	53,930	$	67,889	$	537,274	$	577,319	$	629,096	$	685,216

2																		2	3,659		3,667		—		—		—		—		3,659		3,667
3	3	279		275		1,113		1,080		—		—		1,392		1,355		3	591		567		139		136		—		—		730		703
4	4	—		—		4,297		5,372		—		—		4,297		5,372		4	4,457		3,885		549		447		—		—		5,006		4,332
5	5	—		—		3,216		3,898		—		—		3,216		3,898		5	—		—		7,008		8,197		—		—		7,008		8,197
6	6	6		6		—		—		—		—		6		6		6	4		4		—		—		—		—		4		4
Total	Total	$	60,983	$	62,426	$	70,619	$	90,815	$	495,061	$	519,147	$	626,663	$	672,388	Total	$	46,603	$	48,131	$	61,626	$	76,669	$	537,274	$	577,319	$	645,503	$	702,119

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The commercial mortgage-backed securities (CMBS) are primarily sequential securities. CMBS typically have cash flows that are less subject to refinance risk than residential mortgage-backed securities principally due to prepayment restrictions on many of the underlying commercial mortgage loans.


Commercial Mortgage-Backed Securities by NAIC Designation and Origination Year	Commercial Mortgage-Backed Securities by NAIC Designation and Origination Year																	Commercial Mortgage-Backed Securities by NAIC Designation and Origination Year
		September 30, 2020																	March 31, 2021
		2004 & Prior				2005 to 2008				2009 & After				Total					2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
		(Dollars in thousands)																	(Dollars in thousands)
1	1	$	7,527	$	8,753	$	92,419	$	115,186	$	855,731	$	977,631	$	955,677	$	1,101,570	1	$	7,262	$	8,046	$	91,567	$	106,622	$	846,498	$	890,599	$	945,327	$	1,005,267
2	2	—		—		41,117		47,861		—		—		41,117		47,861		2	—		—		40,875		45,032		21,521		22,129		62,396		67,161

3																		3	—		—		—		—		7,226		7,399		7,226		7,399

Total (1)	Total (1)	$	7,527	$	8,753	$	133,536	$	163,047	$	855,731	$	977,631	$	996,794	$	1,149,431	Total (1)	$	7,262	$	8,046	$	132,442	$	151,654	$	875,245	$	920,127	$	1,014,949	$	1,079,827

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Commercial Mortgage-Backed Securities by NAIC Designation and Origination Year

		December 31, 2019																	December 31, 2020
		2004 & Prior				2005 to 2008				2009 & After				Total					2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
		(Dollars in thousands)																	(Dollars in thousands)
1	1	$	7,908	$	8,851	$	93,249	$	110,805	$	826,744	$	880,702	$	927,901	$	1,000,358	1	$	7,396	$	8,453	$	91,675	$	113,610	$	823,004	$	934,637	$	922,075	$	1,056,700
2	2	—		—		41,552		45,115		—		—		41,552		45,115		2	—		—		41,084		49,229		21,544		22,987		62,628		72,216

3																		3	—		—		—		—		7,242		7,417		7,242		7,417

Total (1)	Total (1)	$	7,908	$	8,851	$	134,801	$	155,920	$	826,744	$	880,702	$	969,453	$	1,045,473	Total (1)	$	7,396	$	8,453	$	132,759	$	162,839	$	851,790	$	965,041	$	991,945	$	1,136,333

(1) The CMBS portfolio included government agency-backed securities with a carrying value of ~~$923.4~~$849.7 million at ~~September 30, 2020~~March 31, 2021 and ~~$845.5~~$911.4 million at December 31, ~~2019.~~2020. Also included in the CMBS portfolio are military housing bonds totaling ~~$170.5~~$157.6 million at ~~September 30, 2020~~March 31, 2021 and ~~$163.9~~$170.0 million at December 31, ~~2019.~~2020. These bonds are used to fund the construction of multi-family homes on United States military bases. The bonds are backed by a first mortgage lien on residential military housing projects.

The other asset-backed securities are backed by both residential and non-residential collateral. The collateral for residential asset-backed securities primarily consists of second lien fixed-rate home equity loans. The cash flows of these securities are less subject to prepayment risk than residential mortgage-backed securities as the borrowers are less likely to refinance than those with only a first lien mortgage. The collateral for non-residential asset-backed securities primarily includes securities backed by credit card receivables, auto dealer receivables, auto installment loans, aircraft leases, middle market and syndicated business loans, timeshare receivables and trade and account receivables. The majority of these securities are high quality, short-duration assets with limited cash flow variability.

Our CLO portfolio included in other asset-backed securities is high quality, with all of the securities rated NAIC-1. Internal stress testing has indicated that the weighted average constant default rate (CDR) of our portfolio without suffering loss is 17%. The CDR is the constant default rate (annually) that a CLO must suffer before our tranche takes its first dollar loss.


Other Asset-Backed Securities by NAIC Designation and Origination Year	Other Asset-Backed Securities by NAIC Designation and Origination Year																	Other Asset-Backed Securities by NAIC Designation and Origination Year
		September 30, 2020																	March 31, 2021
		2004 & Prior				2005 to 2008				2009 & After				Total					2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
		(Dollars in thousands)																	(Dollars in thousands)
1	1	$	5,466	$	5,194	$	122,061	$	132,948	$	486,476	$	488,522	$	614,003	$	626,664	1	$	2,940	$	2,906	$	115,494	$	126,588	$	467,101	$	471,695	$	585,535	$	601,189
2	2	—		—		—		—		110,216		111,540		110,216		111,540		2	—		—		—		—		124,602		129,932		124,602		129,932
3	3	152		153		—		—		11,939		11,951		12,091		12,104		3	2,092		1,951		—		—		11,994		12,054		14,086		14,005
4	4	1,237		1,320		—		—		1,403		1,234		2,640		2,554		4	1,116		1,185		—		—		2,838		2,533		3,954		3,718
5	5	—		—		—		—		1,727		1,129		1,727		1,129		5	—		—		—		—		1,727		943		1,727		943

Total	Total	$	6,855	$	6,667	$	122,061	$	132,948	$	611,761	$	614,376	$	740,677	$	753,991	Total	$	6,148	$	6,042	$	115,494	$	126,588	$	608,262	$	617,157	$	729,904	$	749,787

December 31, 2019
2004 & Prior 2005 to 2008 2009 & After Total
NAIC Designation Amortized
Cost Carrying
Value Amortized
Cost Carrying
Value Amortized
Cost Carrying
Value Amortized
Cost Carrying
Value
(Dollars in thousands)
1 $ 6,188 $ 5,981 $ 134,272 $ 147,913 $ 435,077 $ 435,779 $ 575,537 $ 589,673
2 1,396 1,488 1,547 1,608 113,762 116,354 116,705 119,450
3 163 160 — — 3,230 3,483 3,393 3,643
5 — — — — 1,755 1,755 1,755 1,755
Total $ 7,747 $ 7,629 $ 135,819 $ 149,521 $ 553,824 $ 557,371 $ 697,390 $ 714,521

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Other Asset-Backed Securities by NAIC Designation and Origination Year
	December 31, 2020
	2004 & Prior				2005 to 2008				2009 & After				Total
NAIC Designation	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
	(Dollars in thousands)
1	$	3,196	$	3,120	$	118,478	$	129,822	$	471,367	$	475,762	$	593,041	$	608,704
2	—		—		—		—		123,376		127,292		123,376		127,292
3	2,204		2,045		—		—		11,965		11,995		14,169		14,040
4	1,179		1,256		—		—		2,846		2,401		4,025		3,657
5	—		—		—		—		1,727		1,058		1,727		1,058

Total	$	6,579	$	6,421	$	118,478	$	129,822	$	611,281	$	618,508	$	736,338	$	754,751

State and Political Subdivision Securities

State and political subdivision securities totaled ~~$1,444.3~~$1,369.3 million, or ~~17.5%~~17.1% of total fixed maturities, at ~~September 30, 2020,~~March 31, 2021, and ~~$1,477.2~~$1,416.0 million, or 19.2% of total fixed maturities at December 31, ~~2019~~2020 and include investments in general obligation, revenue and municipal housing bonds. Our investment strategy is to utilize municipal bonds in addition to corporate bonds, as

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we believe they provide additional diversification and have historically low default rates compared with similarly rated corporate bonds. We evaluate the credit strength of the underlying issues on both a quantitative and qualitative basis, excluding insurance, prior to acquisition. The majority of the municipal bonds we hold are investment grade credits without consideration of insurance. Our municipal bonds are well diversified by type and geography with the top exposure being water and sewer revenue bonds. Our municipal bond holdings were trading at ~~114.2%~~111.8% of amortized cost at ~~September 30, 2020.~~March 31, 2021. We do not hold any Puerto Rico-related bonds. Exposure to the state of Illinois and municipalities within the state accounted for 1.1% of our total fixed maturities at ~~September 30, 2020.~~March 31, 2021. As of ~~September 30, 2020,~~March 31, 2021, our Illinois-related portfolio holdings were rated investment grade and were trading at ~~118.9%~~117.6% of amortized cost.

Mortgage Loans

Mortgage loans totaled ~~$972.2~~$992.9 million at ~~September 30, 2020~~March 31, 2021 and ~~$1,011.7~~$994.1 million at December 31, ~~2019.~~2020. Our mortgage loans are diversified as to property type, location and loan size, and are collateralized by the related properties. The total number of commercial mortgage loans outstanding was ~~212~~213 at ~~September 30, 2020~~March 31, 2021 and ~~209~~212 at December 31, ~~2019.~~2020. In the first ~~nine~~three months of ~~2020,~~2021, new loans ranged from ~~$3.3~~$2.9 million to ~~$7.9~~$14.7 million in size, with an average loan size of ~~$5.6~~$6.7 million, an average loan term of 1413 years and an average net yield of ~~3.54%~~3.26%. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and require diversification by geographic location and collateral type. The majority of our mortgage loans amortize principal, with ~~3.1%~~4.3% that are interest-only loans as of ~~September 30, 2020.~~March 31, 2021. At ~~September 30, 2020,~~March 31, 2021, the average loan-to-value of the current outstanding principal balance using the most recent appraised value was ~~50.7%~~49.9% and the weighted average debt service coverage ratio was 1.7 based on the results of our 2019 annual study. See Note 2 to our consolidated financial statements for further discussion regarding our mortgage loans.

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Other Assets and Liabilities


		September 30, 2020	December 31, 2019	Percentage change			March 31, 2021	December 31, 2020	Percentage change
Selected other assets:	Selected other assets:					Selected other assets:
Cash and cash equivalents	Cash and cash equivalents	15,030	17,277	(13.0)	%	Cash and cash equivalents	70,854	12,882	450.0	%
Reinsurance recoverable	Reinsurance recoverable	112,382	107,498	4.5	%	Reinsurance recoverable	108,640	115,168	(5.7)	%
Deferred acquisition costs	Deferred acquisition costs	201,022	289,456	(30.6)	%	Deferred acquisition costs	282,682	176,085	60.5	%
Other assets	Other assets	159,824	167,940	(4.8)	%	Other assets	155,996	152,929	2.0	%
Assets held in separate accounts	Assets held in separate accounts	616,381	645,881	(4.6)	%	Assets held in separate accounts	686,968	674,182	1.9	%
Selected other liabilities:	Selected other liabilities:					Selected other liabilities:
Future policy benefits	Future policy benefits	7,629,442	7,393,549	3.2	%	Future policy benefits	7,773,635	7,616,272	2.1	%
Other policyholder funds	Other policyholder funds	590,289	597,256	(1.2)	%	Other policyholder funds	602,443	602,989	(0.1)	%
Deferred income taxes	Deferred income taxes	187,161	152,373	22.8	%	Deferred income taxes	150,654	211,180	(28.7)	%
Other liabilities	Other liabilities	113,744	107,013	6.3	%	Other liabilities	100,012	102,127	(2.1)	%
Liabilities held in separate accounts	Liabilities held in separate accounts	616,381	645,881	(4.6)	%	Liabilities held in separate accounts	686,968	674,182	1.9	%

Cash and cash equivalents increased primarily due to normal fluctuations in timing of payments made and received. Deferred acquisition costs ~~decreased~~increased compared to the prior year end primarily due to a ~~$88.0~~$105.2 million ~~increase~~decrease in the impact of the change in net unrealized appreciation on fixed maturity securities during the period. Assets and liabilities held in separate accounts ~~decreased~~increased due to ~~surrenders exceeding inflows from premiums and~~ investment earnings, partially offset by charges, surrenders and benefits on this closed block of ~~business as well as a decrease in market performance on the underlying investment portfolios.~~business.

Future policy benefits increased primarily due to increases in our funding agreements with the FHLB. Deferred income taxes ~~increased~~decreased primarily due to the tax impact of the change in unrealized appreciation/depreciation on investments. ~~Other liabilities increased due to an increase in our liability for unsettled security trades.~~

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Stockholders’ Equity

As discussed in Note 6 to our consolidated financial statements, stockholders’ equity was impacted by capital deployment actions during the nine months ended September 30, 2020, which included a special cash dividend of $1.50 per share on Class A and Class B common stock and an increase in our regular quarterly dividend by 4.2% to $0.50 per share.


		September 30, 2020		December 31, 2019		Percentage change			March 31, 2021		December 31, 2020		Percentage change
		(dollars in thousands, except per share data)							(dollars in thousands, except per share data)
Total FBL Financial Group, Inc. stockholders’ equity	Total FBL Financial Group, Inc. stockholders’ equity	$	1,618,229	$	1,485,757	8.9	%	Total FBL Financial Group, Inc. stockholders’ equity	$	1,489,909	$	1,692,099	(11.9)	%
Common stockholders’ equity	Common stockholders’ equity	1,615,229		1,482,757		8.9	%	Common stockholders’ equity	1,486,909		1,689,099		(12.0)	%

Book value per share	Book value per share	$	66.21	$	60.12	10.1	%	Book value per share	$	60.95	$	69.24	(12.0)	%
Less: Per share impact of accumulated other comprehensive income	Less: Per share impact of accumulated other comprehensive income	21.69		14.39		50.7	%	Less: Per share impact of accumulated other comprehensive income	15.17		24.08		(37.0)	%
Book value per share, excluding accumulated other comprehensive income (1)	Book value per share, excluding accumulated other comprehensive income (1)	$	44.52	$	45.73	(2.6)	%	Book value per share, excluding accumulated other comprehensive income (1)	$	45.78	$	45.16	1.4	%

(1)Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. 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, we believe this non-GAAP financial measure provides useful supplemental information.

Our stockholders’ equity ~~increased~~decreased compared to the prior year end primarily due to the change in unrealized appreciation on fixed maturity securities during the period and dividends paid, partially offset by ~~dividends paid.~~net income.

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Liquidity and Capital Resources

Cash Flows

During the first ~~nine~~three months of ~~2020,~~2021, our operating activities generated cash flows totaling ~~$158.1~~$36.5 million, consisting of net income of ~~$44.5~~$27.6 million adjusted for non-cash operating revenues and expenses netting to ~~$113.6~~$8.9 million. We used cash of ~~$193.3~~$120.1 million in our investing activities during the ~~2020~~2021 period. The primary uses were ~~$733.4~~$383.3 million of investment acquisitions, mostly in fixed maturity securities, partially offset by ~~$554.8~~$246.2 million in sales, maturities and repayments of investments. Our financing activities provided cash of ~~$33.0~~$141.6 million during the ~~2020~~2021 period. The primary financing source was ~~$545.2~~$259.5 million in receipts from interest sensitive products credited to policyholder account balances, which was offset by ~~$428.2~~$105.2 million for return of policyholder account balances on interest sensitive products and ~~$74.0~~$12.7 million for dividends paid to stockholders. The change in policyholder account balances includes a net increase of ~~$138.1~~$140.8 million in funding agreements with the FHLB during the first ~~nine~~three months of ~~2020.~~2021.

Sources and Uses of Capital Resources

Parent company cash inflows from operations consist primarily of fees that it charges various subsidiaries and affiliates for management of their operations, expense reimbursements and tax settlements from subsidiaries and affiliates, investment income, and dividends from subsidiaries, if declared and paid. Revenue sources for the parent company during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 included management fees from subsidiaries and affiliates totaling ~~$6.3~~$2.0 million and dividends of ~~$86.0~~$12.5 million. Cash outflows are principally for salaries, taxes and other expenses related to providing management services, contributions to non-insurance subsidiaries, dividends on outstanding stock, stock repurchases and interest on our parent company debt. During the first quarter 2021, our parent company also incurred $2.6 million in expenses related to the proposed merger transaction discussed in Note 1 to our consolidated financial statements.

We paid regular cash dividends on our common and preferred stock during the ~~nine-month~~three-month period ended ~~September 30~~March 31 totaling ~~$37.0~~$12.7 million in ~~2020~~2021 and ~~$35.6~~$12.4 million in ~~2019.~~2020. In addition, we paid a special $1.50 per common share cash dividend totaling $37.0 million in March ~~2020~~2020. Under the Merger Agreement, the Company is permitted to declare and ~~March 2019. It is anticipated that~~pay, and has agreed to declare and pay, quarterly cash ~~dividend requirements for 2020 will be $0.0075~~dividends of $0.52 per ~~Series B redeemable preferred~~ share ~~and $0.50 per~~of common ~~share.~~stock. Common stock dividend rates are analyzed quarterly and are dependent upon our capital and liquidity positions. In addition, alternative uses of excess capital may impact future dividend levels. Assuming these quarterly dividend rates, the common and preferred dividends would total approximately ~~$12.2~~$38.2 million for the remainder of ~~2020.~~2021. The parent company expects to have sufficient resources and cash flows

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to meet its interest and dividend payments throughout ~~2020.~~2021. The parent company had available cash and investments totaling ~~$34.5~~$28.1 million at ~~September 30, 2020.~~March 31, 2021. The parent company expects to rely on available cash resources, dividends from Farm Bureau Life and management fee income to make dividend payments to its stockholders, interest payments on its debt and to fund any capital initiatives such as stock repurchases. In addition, our parent company and Farm Bureau Life have entered into a reciprocal line of credit arrangement, which provides additional liquidity for either entity up to $20.0 million. We had no material commitments for capital expenditures as of ~~September 30, 2020.~~March 31, 2021.

As discussed in Note 6 to our consolidated financial statements, we have periodically taken advantage of opportunities to repurchase our outstanding Class A common stock through Class A common stock repurchase programs approved by our Board of Directors. At ~~September 30, 2020,~~March 31, 2021, $26.3 million remains available for repurchase under the current Class A common stock repurchase program. Under this program, we ~~repurchased 290,144 shares for $10.0 million~~had no repurchases during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. Completion of this program is dependent on market conditions and other factors. There is no guarantee as to the exact timing of any repurchases or the number of shares that we will repurchase. The share repurchase program may be modified or terminated at any time without prior notice. Under the Merger Agreement, we have agreed not to repurchase any additional shares of our capital stock from the date of the Merger Agreement through the closing of the Merger, subject to certain exceptions, including pursuant to our equity awards plans.

Interest payments on our debt totaled ~~$3.6~~$1.2 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020. Interest payments on our debt outstanding at ~~September 30, 2020~~March 31, 2021 are estimated to be ~~$1.2~~$3.6 million for the remainder of ~~2020.~~2021.

Farm Bureau Life’s cash inflows primarily consist of premiums; deposits to policyholder account balances; income from investments; sales, maturities and calls of investments; and repayments of investment principal. Farm Bureau Life’s cash outflows are primarily related to withdrawals of policyholder account balances, investment purchases, payment of policy acquisition costs, policyholder benefits, income taxes, current operating expenses and dividends. Life insurance companies generally produce a positive cash flow that may be measured by the degree to which cash inflows are adequate to meet benefit

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obligations to policyholders and normal operating expenses as they are incurred. The remaining cash flow is generally used to increase the asset base to provide funds to meet the need for future policy benefit payments and for writing new business. Continuing operations and financing activities from Farm Bureau Life relating to interest sensitive products provided funds totaling ~~$275.0~~$199.8 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~$136.9~~$135.8 million for the prior year period.

Farm Bureau Life’s ability to pay dividends to the parent company is limited by law to earned profits (statutory unassigned surplus) as of the date the dividend is paid, as determined in accordance with accounting practices prescribed by insurance regulatory authorities of the State of Iowa. At December 31, ~~2019,~~2020, Farm Bureau Life’s statutory unassigned surplus was ~~$508.9~~$494.6 million. There are certain additional limits on the amount of dividends that may be paid within a year without approval of the Insurance Division, Department of Commerce of the State of Iowa as discussed in Note 7 to our consolidated financial statements included in Item 8 of our Form 10-K for the year ended December 31, ~~2019.~~2020. During the remainder of ~~2020,~~2021, the maximum amount legally available for distribution to the parent company without further regulatory approval is ~~$12.5~~$74.9 million.

We manage the amount of capital held by our insurance subsidiaries to ensure they meet regulatory requirements. State laws specify regulatory actions if an insurer’s risk-based capital (RBC) ratio, a measure of solvency, falls below certain levels. The NAIC has a standard formula for annually assessing RBC based on the various risk factors related to an insurance company’s capital and surplus, including insurance, business, asset and interest rate risks. The insurance regulators monitor the level of RBC against a statutory “authorized control level” RBC at which point regulators have the option to assume control of the insurance company. The company action level RBC is 200% of the authorized control level and is the first point at which any action would be triggered. Our adjusted capital and RBC is reported to our insurance regulators annually based on formulas that may be revised throughout the year. We estimate our adjusted capital and RBC quarterly; however, these estimates may differ from actual results. As of ~~September 30, 2020,~~March 31, 2021, Farm Bureau Life’s statutory total adjusted capital is estimated at ~~$696.6~~$721.5 million, resulting in an RBC ratio of ~~525%~~531%, based on company action level capital of ~~$132.6~~$135.9 million.

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On a consolidated basis, we anticipate that funds to meet our short-term and long-term capital expenditures, cash dividends to stockholders and operating cash needs will come from existing capital and internally generated funds. However, there can be no assurance that future experience regarding benefits and surrenders will be similar to historic experience since benefits and surrender levels are influenced by such factors as the interest rate environment, our financial strength ratings, the economy and other factors that impact policyholder behavior. COVID-19 ~~had~~continues to have a significant impact to the U.S. ~~economy during the first quarter of 2020, followed by signs of economic recovery in the second and third quarters of 2020.~~economy. Although there have been economic impacts associated with COVID-19, we expect to continue generating sufficient funds from operations to maintain sufficient liquidity. Our investment portfolio at ~~September 30, 2020,~~March 31, 2021, included ~~$18.4~~$42.3 million of short-term investments, ~~$15.0~~$70.9 million of cash and cash equivalents and ~~$1,880.4~~$1,861.6 million in carrying value of U.S. Government and U.S. Government agency backed securities that could be readily converted to cash at or near carrying value. In addition, Farm Bureau Life is a member of the FHLB, which provides a source for additional liquidity, if needed. This membership allows us to utilize fixed or floating rate advances offered by the FHLB and secured by qualifying collateral. Our total capacity to utilize such advances is impacted by multiple factors including the market value of eligible collateral, our level of statutory admitted assets and excess reserves and our willingness or capacity to hold activity-based FHLB common stock.

~~Contractual Obligations~~Merger Agreement

InUnder the ~~normal course~~Merger Agreement, we are required to pay a termination fee of ~~business, we enter into insurance contracts, financing transactions, lease agreements or other commitments that are necessary or beneficial~~up to ~~our operations. These commitments may obligate us~~$20.1 million, if the Merger Agreement is terminated in specified circumstances, and reimburse the out-of-pocket expenses of FBPCIC, Merger Sub and their respective affiliates up to ~~certain cash flows during future periods. There have been no material changes to our total contractual obligations since December 31, 2019.~~a maximum of $5.3 million, if the Merger Agreement is terminated in specified circumstances.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks of Financial Instruments

There have been no material changes in the market risks from the information provided in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

The COVID-19 pandemic presents additional uncertainty to financial markets. See Item II, Management’s Discussion and Analysis, “Impact of COVID-19 and Recent Business ~~Environment” and Part II, Item 1A, “Risk Factors.~~Environment.”

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ITEM 4. CONTROLS AND PROCEDURES

At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities and Exchange Act of 1934 (the Act) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our internal control over financial reporting changes from time-to-time as we modify and enhance our systems and processes to meet our dynamic needs. Changes are also made as we strive to be more efficient in how we conduct our business. ~~In addition, minor modifications regarding how control procedures are executed and documented have been made with the operational changes required in response to COVID-19.~~ While changes have taken place in our internal controls during the quarter ended ~~September 30, 2020,~~March 31, 2021, there have been no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

The performance of our company is subject to a variety of risks that you should review. Occurrence of these risks could materially affect our business, results of operations or financial condition, cause the trading price of our common stock to decline materially or cause our actual results to differ materially from those expected or those expressed in any forward looking statements made by or on behalf of the Company. Please refer to Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~ 2020.

We are supplementing the risk factors previously disclosed in such report as follows:

~~Our business, including our results of operations and financial condition, has been and is expected~~Risks relating to ~~continue to be adversely affected by~~ the ~~COVID-19 pandemic and may be adversely affected by any future pandemics.~~proposed Merger

The ~~COVID-19 pandemic experienced across~~proposed Merger may not be completed within the ~~United States during 2020 negatively impacted~~expected timeframe, or at all, and the ~~U.S. economy and caused significant societal disruption, as businesses experienced sales declines or mandated closures, and individuals were asked~~failure to ~~practice social distancing. The COVID-19 pandemic has~~complete the Merger could adversely ~~affected~~affect our business and we expect it will continue to do so for an uncertain period of time. The future impact of COVID-19 or any other pandemic on our business cannot be predicted with certainty, but may include, without limitation, decreases in demand for or salesthe market price of our ~~products, operational difficulties, increases in death benefits and other expenses, decreases in the value of our investment portfolio and/or decreases in our stockholders’ equity.~~common stock.

On May 2, 2021, we entered into the Merger Agreement Amendment, which amended the Original Agreement. The ~~COVID-19 pandemic has also had the effect of heightening many of the other risks disclosed~~Merger Agreement is an executory contract subject to closing conditions beyond our control, and there is no guarantee that these conditions will be satisfied in ~~the Risk Factors section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.~~a timely manner or at all.

~~Our financial condition~~Completion of the Merger is subject to various conditions, including the adoption of the Merger Agreement by the affirmative vote of (i) holders of at least a majority of all outstanding Class A common shares and Series B preferred shares, voting together as a single class, (ii) holders of at least a majority of all outstanding Class B common shares and (iii) holders of at least a majority of all outstanding Common Shares held by all of the holders of outstanding Common Shares (excluding IFBF and its affiliates, FBPCIC and its affiliates, and the directors and officers of IFBF, FBPCIC and each of their respective affiliates), in each case, entitled to vote on such matter at a meeting of shareholders duly called and held for such purpose (the Required Shareholder Vote), among other things. If any of the conditions to the proposed Merger are not satisfied (or waived by the other party), the Merger may not be completed. In addition, the Merger Agreement may be terminated under certain specified circumstances, including if the Merger has not been consummated on or prior to July 11, 2021 (unless automatically extended to September 11, 2021 if all closing conditions are satisfied other than receipt of the required regulatory consents). Failure to complete the Merger could adversely affect our business operations may be negatively impacted as a result of the proposal received from Farm Bureau Property & Casualty Insurance Company to acquire the Company’s common stock not currently owned by it or the Iowa Farm Bureau Federation, and the ~~trading~~market price of our common stock ~~could decline significantly if~~in a ~~transaction~~number of ways, including the following:

•If the Merger is not completed, and there are no other parties willing and able to acquire the Company at a price of $61.00 per share or higher, on terms acceptable to us, our stock price may decline as our stock has recently traded at prices based on the proposed per share consideration for the Merger.

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•We have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, for which we will have received little or no benefit if the Merger is not completed. Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger.

•A failed Merger may result in negative publicity and a negative impression of us in the investment community.

•Upon termination of the Merger Agreement by FBPCIC under specified circumstances, we would be required to pay a termination fee of $20,127,059.

•Upon termination of the Merger Agreement by the Company or FBPCIC because the Required Shareholder Vote is not obtained, we would be required to pay FBPCIC $5,279,229 as a reimbursement of expenses.

The ~~Company received~~Merger Agreement contains provisions that could discourage or make it difficult for a ~~proposal dated September 4, 2020 from Farm Bureau Property & Casualty Insurance Company (FBPCIC)~~third party to acquire ~~all~~us prior to the completion of the ~~outstanding shares of Class A common stock and Class B common stock of~~proposed Merger.

The Merger Agreement contains provisions that restrict our ability to entertain a third party proposal to acquire us. These provisions include the ~~Company that are not currently owned by FBPCIC~~general prohibition on initiating, soliciting, or knowingly facilitating or assisting any inquiries or the ~~Iowa Farm Bureau Federation at a purchase price~~making of ~~$47.00 per share in cash. The~~any proposal or offer that is, or would reasonably be expected to lead to, any acquisition proposal, subject to certain ~~conditions. The Company’s Board~~exceptions. We are also required to pay a termination fee of ~~Directors has established a Special Committee comprised~~up to $20,127,059 if the Merger Agreement is terminated in specified circumstances, including if our board of ~~independent~~ directors ~~to consider~~takes certain actions recommending against the Merger. These provisions might discourage an otherwise-interested third party from proposing an acquisition proposal, and the Special Committee has retained legal counsel and a financial advisor in connection with its review, evaluation and response to the proposal. To date, no decision has been made with respect to the Company’s response to the proposal and there caneven one that may be ~~no assurance that any agreement with respect to~~deemed of greater value than the proposed transaction will be executed or that this or any other transaction will be approved or consummated. We anticipate incurring expenses associated with the proposal which could be significant, including those for the advisors and any other service providers retained by the Special Committee. Additionally, any actions taken by the Company in responseMerger to ~~the proposal could result in litigation against the Company. Any such litigation~~our shareholders. Furthermore, even if a third party elects to propose an acquisition, our obligation to pay a termination fee may result in ~~significant costs and may be~~that third party offering a ~~significant distraction~~lower value to our ~~Board of Directors and our management. Additionally, if a transaction is not completed, the trading price of our common stock could decline, and that decline could be significant.~~shareholders than such party might otherwise have offered.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~The following table sets forth~~We had no issuer ~~purchases~~repurchases of equity securities for the quarter ended ~~September 30, 2020.~~

Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2020 through July 31, 2020 160,556 $ 34.82 160,556 $26,321,519
August 1, 2020 through August 31, 2020 — — — $26,321,519
September 1, 2020 through September 30, 2020 — — — $26,321,519
Total 160,556 $ 34.82

March 31, 2021. We have $26.3 million available under the repurchase program announced on March 1, 2018, which will expire March 31, 2022. The program authorizes us to make repurchases of Class A common stock in the open market or through privately negotiated transactions, with the timing and terms of the purchases to be determined by management based on market conditions. Completion of the program is dependent on market conditions and other factors. There is no guarantee as to the exact timing of any repurchases or the number of shares, if any, that we will repurchase. The share repurchase program may be modified or terminated at any time without prior notice. Under the Merger Agreement, we have agreed not to repurchase any additional shares of our capital stock from the date of the Merger Agreement through the closing of the Merger, subject to certain exceptions, including pursuant to our equity awards plans.

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ITEM 6. EXHIBITS

(a) Exhibits:


2.1			Agreement and Plan of Merger, dated as of January 11, 2021, by and among Fam Bureau Property and Casualty Insurance Company, 5400 Merger Sub, Inc. and FBL Financial Group, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on January 11, 2021 (SEC File No. 001-11917)).
2.1(a)			Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 2, 2021, by and among Farm Bureau Property and Casualty Insurance Company, 5400 Merger Sub, Inc. and FBL Financial Group, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on May 3, 2021 (SEC File No. 001-11917)).
2.2			Rollover Agreement, dated as of January 11, 2021, by and among 5400 Merger Sub, Inc. and the shareholders of FBL Financial Group, Inc. listed on Schedule I thereto (incorporated by reference to Exhibit 2.2 to the Form 8-K filed on January 11, 2021 (SEC File No. 001-11917)).
2.2(a)			Amendment No. 1 to Rollover Agreement, dated as of May 2, 2021, by and among 5400 Merger Sub, Inc. and the shareholders of FBL Financial Group, Inc. listed on Schedule I thereto (incorporated by reference to Exhibit 2.2 to the Form 8-K filed on May 3, 2021 (SEC File No. 001-11917)).
10.1*+			Form of 2021 Restricted Stock Unit Agreement between the Company and participants
10.2*+			Form of 2021 Restricted Surplus Unit Agreement between the Company and participants
10.3			Cooperation and Support Agreement, dated as of May 2, 2021, by and among Capital Returns Management, LLC, Ronald Bobman, Farm Bureau Property and Casualty Insurance Company, the Iowa Farm Bureau Federation and FBL Financial Group, Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 3, 2021 (SEC File No. 001-11917)).
31.1+			Certification Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+			Certification Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32+			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101+			Interactive Data Files formatted in iXBRL (Inline eXtensible Business Reporting Language) from FBL Financial Group, Inc.’s Quarterly Report on Form 10-Q for the period ended ~~September 30, 2020~~March 31, 2021 as follows: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Financial Statements
104			Cover Page Interactive Data File formatted as iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

+			Filed herewith
*			Exhibit relates to a compensatory plan for management or directors.

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SIGNATURES

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 thereunto duly authorized.

Date: ~~November 5, 2020~~May 6, 2021


			FBL FINANCIAL GROUP, INC.


			By			/s/ Daniel D. Pitcher
						Daniel D. Pitcher
						Chief Executive Officer (Principal Executive Officer)

			By			/s/ Donald J. Seibel
						Donald J. Seibel
						Chief Financial Officer and Treasurer (Principal Financial Officer)

			By			/s/ Anthony J. Aldridge
						Anthony J. Aldridge
						Chief Accounting Officer (Principal Accounting Officer)

6156


Allowance on Reinsurance Recoverables
	Three months ended September 30, 2020		Nine months ended September 30, 2020

	(Dollars in thousands)
Beginning balance of the allowance for credit losses	$	857	$	868
Change in allowance for credit losses	2		(9)


Ending balance of the allowance for credit losses	$	859	$	859


Life Insurance Segment - continued
	Three months ended September 30,						Nine months ended September 30,
	2020		2019		Change		2020			2019			Change
	(Dollars in thousands)
Other data
Life premiums collected, net of reinsurance (1)	$	77,666	$	75,043	3	%	$	238,774		$	232,442		3	%
Policy liabilities and accruals, end of period							3,184,095			3,057,183			4	%
Life insurance in force, end of period							62,695,650			61,025,460			3	%
Average invested assets, at amortized cost net of allowance for credit losses (2)							3,237,690			3,132,734			3	%
Other investment-related income included in net investment income (3)	103		70		47	%	275			1,353			(80)	%
Average aggregate interest sensitive life account value (8)							903,703			874,574			3	%

Interest sensitive life insurance spread:
Annualized yield on average invested assets (4)							4.96		%	5.25		%
Annualized average crediting rate (5)							3.88		%	3.77		%
Spread							1.08		%	1.48		%

Life insurance lapse and surrender rates (9)							3.8		%	4.6		%
Death benefits, net of reinsurance and reserves released	$26,930		$25,846		4	%	$	78,337		$	72,385		8	%


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2020 through July 31, 2020	160,556	$	34.82	160,556	$26,321,519
August 1, 2020 through August 31, 2020	—	—		—	$26,321,519
September 1, 2020 through September 30, 2020	—	—		—	$26,321,519
Total	160,556	$	34.82