FBL Financial Group, Inc.
Unaudited Pro Forma Financial Information
Effective December 30, 2011, FBL Financial Group, Inc. (we or the Company) completed the previously disclosed sale of our subsidiary, EquiTrust Life Insurance Company (EquiTrust Life), to a controlled affiliate of Guggenheim Partners, LLC in an all-cash transaction with initial sale proceeds of $471.4 million (the EquiTrust Life Sale). The final price will be determined after the year-end statutory balance sheet is completed for EquiTrust Life and a further post-closing adjusted statutory net worth reconciliation is calculated.
While we sold our entire equity interest in EquiTrust Life, another subsidiary, Farm Bureau Life Insurance Company (Farm Bureau Life), is reinsuring a limited portion of the EquiTrust Life business related to variable universal life and variable annuity products distributed through various unaffiliated third parties, as well as a small amount of fixed life and annuity products. The business component that was sold is described as "the EquiTrust Life Business" herein.
In connection with the EquiTrust Life Sale, we are undertaking certain capital management actions, including the redemption of $225.0 million of our long-term debt in accordance with the mandatory redemption provisions of the underlying notes. This includes $50.0 million of 6.10% Senior Notes with our affiliate, Farm Bureau Property & Casualty Insurance Company, which was redeemed on December 30, 2011. The remaining $175.0 million of unaffiliated debt, comprised of $75.0 million of 5.85% Senior Notes due April 15, 2014 and $100.0 million of 5.875% Senior Notes due March 15, 2017, will be redeemed on January 30, 2012, at the make-whole redemption price. The estimated make-whole premium to redeem both series of unaffiliated notes is based on U.S. Treasury yields on the third business day before the redemption date, which may be materially different from the amount assumed herein. See the "Unaffiliated Debt Redemption" section below for additional details on the redemption provisions of the unaffiliated notes.
We also announced a $200.0 million stock repurchase plan in October 2011. The timing and terms of the purchases will be determined by management based on market conditions and other factors. This program may be modified or terminated at any time without prior notice.
The following unaudited pro forma financial statements for FBL Financial Group, Inc. reflect the impact of the EquiTrust Life Sale as if it was completed on January 1, 2008 for the consolidated statements of operations, and September 30, 2011 for the consolidated balance sheet. We have adjusted the historical consolidated financial information to give effect to pro forma events that are (1) directly attributable to the sale, (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. In addition, the pro forma results do not give effect to (1) our results of operations or other transactions or developments since September 30, 2011, (2) the effects of transactions or developments that may occur subsequent to the EquiTrust Life Sale and (3) future sale or transition-related expenses that may be incurred. As a result, the following items are not reflected in the pro forma financial statements:
| |
| • | Future transition-related expenses, estimated to be approximately $3.1 million, which will be reimbursed by an affiliate of Guggenheim Partners, LLC. |
| |
| • | The impact of reinvesting sale proceeds, as those financial results are not factually supportable. |
| |
| • | The impact of stock repurchases, as actual repurchase activity is dependent upon many factors other than the EquiTrust Life Sale. |
| |
| • | The loss on the EquiTrust Life Sale and loss on extinguishment of debt are excluded from the pro forma statements of operations as they do not have a continuing impact. These losses have been reflected in the adjustments to retained earnings in the September 30, 2011 pro forma balance sheet. |
The unaudited pro forma financial information below should be read in conjunction with the notes thereto, in addition to our (1) Quarterly Report on Form 10-Q for the period ended September 30, 2011 and (2) Annual Report on Form 10-K for the period ended December 31, 2010. This financial information is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the acquisition been completed on the dates indicated above; nor does it attempt to project future financial results.
Unaffiliated Debt Redemption
As discussed above, $175.0 million of our unaffiliated long-term debt is being redeemed in accordance with the mandatory redemption provisions of the underlying notes. While the bondholders will not be paid until January 30, 2012, we have deposited cash for the principal, accrued interest and estimated make-whole premium into irrevocable trusts on December 30, 2011 pursuant to the satisfaction and discharge provisions of the indentures.
The trust deposits totaled $211.6 million, which was an estimate; however, the amount required to redeem the notes could be greater or less than the deposits. The final make-whole redemption premium will equal the difference between the $175.0 million principal amount of the notes and the sum of the present values of the remaining scheduled payments of principal and interest discounted to the redemption date using a yield equal to a comparable treasury issue as of January 25, 2012 plus a make-whole spread.
We deposited $85.2 million for the $75.0 million of Senior Notes due in 2014. This estimate was calculated using a 0.44% discount rate, including a 0.25% make-whole spread, with 2.2 years to maturity plus accrued interest, which resulted in a make-whole price of 111.88 and accrued interest price of 1.71 for a total of 113.59 per $100 of principal. We also deposited $126.4 million for our $100.0 million of Senior Notes due in 2017. This estimate was calculated using a 1.01% discount rate, including a 0.20% make-whole spread, with 5.1 years to maturity plus accrued interest, which resulted in a make-whole price of 124.24 and accrued interest price of 2.20 for a total of 126.44 per $100 of principal. The final make-whole premiums will be calculated on January 25, 2012 based on U.S. Treasury rates on that date. Interest rate fluctuations could result in significant differences in the final redemption prices.
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. |
| Unaudited Pro Forma Consolidated Balance Sheet |
| (Dollars in thousands) |
| | | | | | | | |
| | September 30, 2011 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (a) | | Other adjustments | | Pro Forma |
| Assets | | | | | | | |
| Investments: | | | | | | | |
| Fixed maturity securities - available for sale, at fair value | $ | 12,218,511 |
| | $ | (6,669,229 | ) | | $ | — |
| | $ | 5,549,282 |
|
| Equity securities - available for sale, at fair value | 80,304 |
| | (23,836 | ) | | — |
| | 56,468 |
|
| Mortgage loans | 1,234,917 |
| | (678,634 | ) | | — |
| | 556,283 |
|
| Derivative instruments | 29,791 |
| | (29,644 | ) | | — |
| | 147 |
|
| Real estate | 11,030 |
| | (3,395 | ) | | — |
| | 7,635 |
|
| Policy loans | 171,481 |
| | — |
| | — |
| | 171,481 |
|
| Other long-term investments | 112 |
| | — |
| | — |
| | 112 |
|
| Short-term investments | 56,984 |
| | (23,790 | ) | | — |
| | 33,194 |
|
| Total investments | 13,803,130 |
| | (7,428,528 | ) | | — |
| | 6,374,602 |
|
| | | | | | | | |
| Cash and cash equivalents | 120,341 |
| | (52,384 | ) | | 191,844 |
| (b) | 259,801 |
|
| Securities and indebtedness of related parties | 74,776 |
| | (16,988 | ) | | — |
| | 57,788 |
|
| Accrued investment income | 151,862 |
| | (78,384 | ) | | — |
| | 73,478 |
|
| Amounts receivable from affiliates | 4,565 |
| | — |
| | — |
| | 4,565 |
|
| Reinsurance recoverable | 100,488 |
| | (9,969 | ) | | — |
| | 90,519 |
|
| Deferred policy acquisition costs | 613,264 |
| | (258,684 | ) | | — |
| | 354,580 |
|
| Deferred sales inducements | 184,824 |
| | (175,064 | ) | | — |
| | 9,760 |
|
| Value of insurance in force acquired | 25,127 |
| | — |
| | — |
| | 25,127 |
|
| Current income taxes recoverable | — |
| | — |
| | 24,759 |
| (c) | 24,759 |
|
| Other assets | 77,415 |
| | (14,761 | ) | | — |
| | 62,654 |
|
| Assets held in separate accounts | 638,904 |
| | (64,530 | ) | | — |
| | 574,374 |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Total assets | $ | 15,794,696 |
| | $ | (8,099,292 | ) | | $ | 216,603 |
| | $ | 7,912,007 |
|
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. |
| Unaudited Pro Forma Consolidated Balance Sheet (Continued) |
| (Dollars in thousands) |
| | | | | | | | |
| | September 30, 2011 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (a) | | Other adjustments | | Pro Forma |
| Liabilities and stockholders' equity | | | | | | | |
| Liabilities: | | | | | | | |
| Future policy benefits: | | | | | | | |
| Interest sensitive and index products | $ | 10,934,249 |
| | $ | (7,229,803 | ) | | — |
| | $ | 3,704,446 |
|
| Traditional life insurance and accident and health products | 1,388,501 |
| | — |
| | — |
| | 1,388,501 |
|
| Other policy claims and benefits | 44,761 |
| | (5,109 | ) | | — |
| | 39,652 |
|
| Supplementary contracts without life contingencies | 499,940 |
| | (142,602 | ) | | — |
| | 357,338 |
|
| Advance premiums and other deposits | 210,224 |
| | — |
| | — |
| | 210,224 |
|
| Amounts payable to affiliates | 884 |
| | (184 | ) | | — |
| | 700 |
|
| Long-term debt payable to affiliates | 99,932 |
| | — |
| | (49,966 | ) | (d) | 49,966 |
|
| Long-term debt payable to non-affiliates | 271,235 |
| | — |
| | (174,235 | ) | (d) | 97,000 |
|
| Current income taxes | 2,807 |
| | (881 | ) | | (1,926 | ) | (c) | — |
|
| Deferred income taxes | 206,812 |
| | (23,428 | ) | | (21,129 | ) | (c) | 162,255 |
|
| Other liabilities | 93,886 |
| | (33,071 | ) | | — |
| | 60,815 |
|
| Liabilities related to separate accounts | 638,904 |
| | (64,530 | ) | | — |
| | 574,374 |
|
| Total liabilities | 14,392,135 |
| | (7,499,608 | ) | | (247,256 | ) | | 6,645,271 |
|
| | | | | | | | |
| Stockholders' equity: | | | | | | | |
| FBL Financial Group, Inc. stockholders' equity: | | | | | | | |
| Preferred stock, without par value, at liquidation value - authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares | 3,000 |
| | — |
| | — |
| | 3,000 |
|
| Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 30,044,744 shares | 127,904 |
| | — |
| | — |
| | 127,904 |
|
| Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 1,192,990 shares | 7,522 |
| | — |
| | — |
| | 7,522 |
|
| Accumulated other comprehensive income | 200,539 |
| | (48,267 | ) | (e) | — |
| | 152,272 |
|
| Retained earnings | 1,063,508 |
| | (551,417 | ) | (e) | 463,859 |
| (e) | 975,950 |
|
| Total FBL Financial Group, Inc. stockholders' equity | 1,402,473 |
| | (599,684 | ) | | 463,859 |
| | 1,266,648 |
|
| Noncontrolling interest | 88 |
| | — |
| | — |
| | 88 |
|
| Total stockholders' equity | 1,402,561 |
| | (599,684 | ) | | 463,859 |
| | 1,266,736 |
|
| Total liabilities and stockholders' equity | $ | 15,794,696 |
| | $ | (8,099,292 | ) | | $ | 216,603 |
| | $ | 7,912,007 |
|
See accompanying pro forma notes.
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. |
| Unaudited Pro Forma Consolidated Statement of Operations |
| (In thousands, except per share data) |
| | | | | | | | |
| | Nine months ended September 30, 2011 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (f) | | Other adjustments | | Pro Forma |
| Revenues: | | | | | | | |
| Interest sensitive and index product charges | $ | 89,235 |
| | $ | (16,271 | ) | | $ | — |
| | $ | 72,964 |
|
| Traditional life insurance premiums | 125,868 |
| | — |
| | — |
| | 125,868 |
|
| Net investment income | 562,064 |
| | (304,683 | ) | | — |
| | 257,381 |
|
| Derivative income (loss) | (37,811 | ) | | 37,732 |
| | — |
| | (79 | ) |
| Net realized capital gains on sales of investments | 24,368 |
| | (19,759 | ) | | — |
| | 4,609 |
|
| | | | | | | | |
| Total other-than-temporary impairment losses | (32,317 | ) | | 19,418 |
| | — |
| | (12,899 | ) |
| Non-credit portion in other comprehensive income/loss | 13,523 |
| | (6,003 | ) | | — |
| | 7,520 |
|
| Net impairment loss recognized in earnings | (18,794 | ) | | 13,415 |
| | — |
| | (5,379 | ) |
| | | | | | | | |
| Other income | 13,835 |
| | — |
| | — |
| | 13,835 |
|
| Total revenues | 758,765 |
| | (289,566 | ) | | — |
| | 469,199 |
|
| | | | | | | | |
| Benefits and expenses: | | | | | | | |
| Interest sensitive and index product benefits | 418,170 |
| | (273,855 | ) | | — |
| | 144,315 |
|
| Change in value of index product embedded derivatives | (86,725 | ) | | 86,661 |
| | — |
| | (64 | ) |
| Traditional life insurance benefits | 109,913 |
| | — |
| | — |
| | 109,913 |
|
| Policyholder dividends | 12,765 |
| | — |
| | — |
| | 12,765 |
|
| Underwriting, acquisition and insurance expenses | 136,038 |
| | (42,561 | ) | | — |
| | 93,477 |
|
| Interest expense | 17,051 |
| | — |
| | (10,527 | ) | (g) | 6,524 |
|
| Other expenses | 19,244 |
| | 738 |
| | (4,214 | ) | (h) | 15,768 |
|
| Total benefits and expenses | 626,456 |
| | (229,017 | ) | | (14,741 | ) | | 382,698 |
|
| | 132,309 |
| | (60,549 | ) | | 14,741 |
| | 86,501 |
|
| Income taxes | (42,766 | ) | | 20,614 |
| | (5,159 | ) | (i) | (27,311 | ) |
| Equity income (loss), net of related income taxes | 2,041 |
| | (1,022 | ) | | — |
| | 1,019 |
|
| Net income (loss) | 91,584 |
| | (40,957 | ) | | 9,582 |
| | 60,209 |
|
| Net loss attributable to noncontrolling interest | 21 |
| | — |
| | — |
| | 21 |
|
| Net income (loss) attributable to FBL Financial Group, Inc. | $ | 91,605 |
| | $ | (40,957 | ) | | $ | 9,582 |
| | $ | 60,230 |
|
| | | | | | | | |
| Weighted average common shares outstanding - basic | 30,717 |
| | 30,717 |
| | 30,717 |
| | 30,717 |
|
| Weighted average common shares outstanding - diluted | 31,200 |
| | 31,200 |
| | 31,200 |
| | 31,200 |
|
| | | | | | | | |
| Earnings (loss) per common share | $ | 2.98 |
| | $ | (1.33 | ) | | $ | 0.31 |
| | $ | 1.96 |
|
| Earnings (loss) per common share - assuming dilution | $ | 2.93 |
| | $ | (1.31 | ) | | $ | 0.31 |
| | $ | 1.93 |
|
See accompanying pro forma notes.
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. |
| Unaudited Pro Forma Consolidated Statement of Operations |
| (In thousands, except per share data) |
| | | | | | | | |
| | Year ended December 31, 2010 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (f) | | Other adjustments | | Pro Forma |
| Revenues: | | | | | | | |
| Interest sensitive and index product charges | $ | 119,743 |
| | $ | (25,862 | ) | | $ | — |
| | $ | 93,881 |
|
| Traditional life insurance premiums | 162,056 |
| | — |
| | — |
| | 162,056 |
|
| Net investment income | 721,370 |
| | (396,861 | ) | | — |
| | 324,509 |
|
| Derivative income (loss) | 60,574 |
| | (60,543 | ) | | — |
| | 31 |
|
| Net realized capital gains on sales of investments | 52,327 |
| | (30,935 | ) | | — |
| | 21,392 |
|
| | | | | | | | |
| Total other-than-temporary impairment losses | (71,469 | ) | | 40,832 |
| | — |
| | (30,637 | ) |
| Non-credit portion in other comprehensive income/loss | 49,732 |
| | (28,911 | ) | | — |
| | 20,821 |
|
| Net impairment loss recognized in earnings | (21,737 | ) | | 11,921 |
| | — |
| | (9,816 | ) |
| | | | | | | | |
| Other income | 14,288 |
| | 1 |
| | — |
| | 14,289 |
|
| Total revenues | 1,108,621 |
| | (502,279 | ) | | — |
| | 606,342 |
|
| | | | | | | | |
| Benefits and expenses: | | | | | | | |
| Interest sensitive and index product benefits | 517,367 |
| | (340,359 | ) | | — |
| | 177,008 |
|
| Change in value of index product embedded derivatives | 19,342 |
| | (19,762 | ) | | — |
| | (420 | ) |
| Traditional life insurance benefits | 137,180 |
| | — |
| | — |
| | 137,180 |
|
| Policyholder dividends | 17,571 |
| | — |
| | — |
| | 17,571 |
|
| Underwriting, acquisition and insurance expenses | 199,413 |
| | (75,970 | ) | | — |
| | 123,443 |
|
| Interest expense | 24,454 |
| | — |
| | (14,888 | ) | (g) | 9,566 |
|
| Other expenses | 18,954 |
| | 828 |
| | — |
| | 19,782 |
|
| Total benefits and expenses | 934,281 |
| | (435,263 | ) | | (14,888 | ) | | 484,130 |
|
| | 174,340 |
| | (67,016 | ) | | 14,888 |
| | 122,212 |
|
| Income taxes | (59,206 | ) | | 23,069 |
| | (5,211 | ) | (i) | (41,348 | ) |
| Equity income (loss), net of related income taxes | 5,441 |
| | (1,982 | ) | | — |
| | 3,459 |
|
| Net income (loss) | 120,575 |
| | (45,929 | ) | | 9,677 |
| | 84,323 |
|
| Net loss attributable to noncontrolling interest | 78 |
| | — |
| | — |
| | 78 |
|
| Net income (loss) attributable to FBL Financial Group, Inc. | $ | 120,653 |
| | $ | (45,929 | ) | | $ | 9,677 |
| | $ | 84,401 |
|
| | | | | | | | |
| Weighted average common shares outstanding - basic | 30,398 |
| | 30,398 |
| | 30,398 |
| | 30,398 |
|
| Weighted average common shares outstanding - diluted | 30,719 |
| | 30,719 |
| | 30,719 |
| | 30,719 |
|
| | | | | | | | |
| Earnings (loss) per common share | $ | 3.96 |
| | $ | (1.51 | ) | | $ | 0.32 |
| | $ | 2.77 |
|
| Earnings (loss) per common share - assuming dilution | $ | 3.92 |
| | $ | (1.50 | ) | | $ | 0.32 |
| | $ | 2.74 |
|
See accompanying pro forma notes.
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. - Continuing Operations |
| Unaudited Pro Forma Consolidated Statement of Operations |
| (In thousands, except per share data) |
| | | | | | | | |
| | Year ended December 31, 2009 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (f) | | Other adjustments | | Pro Forma |
| Revenues: | | | | | | | |
| Interest sensitive and index product charges | $ | 158,873 |
| | $ | (70,116 | ) | | $ | — |
| | $ | 88,757 |
|
| Traditional life insurance premiums | 155,675 |
| | (1,521 | ) | | — |
| | 154,154 |
|
| Net investment income | 724,653 |
| | (419,014 | ) | | — |
| | 305,639 |
|
| Derivative income (loss) | 67,515 |
| | (69,668 | ) | | — |
| | (2,153 | ) |
| Net realized capital gains on sales of investments | 47,051 |
| | (39,303 | ) | | — |
| | 7,748 |
|
| | | | | | | | |
| Total other-than-temporary impairment losses | (105,439 | ) | | 44,371 |
| | — |
| | (61,068 | ) |
| Non-credit portion in other comprehensive income/loss | 37,523 |
| | (14,863 | ) | | — |
| | 22,660 |
|
| Net impairment loss recognized in earnings | (67,916 | ) | | 29,508 |
| | — |
| | (38,408 | ) |
| | | | | | | | |
| Other income | 28,735 |
| | (11,263 | ) | | — |
| | 17,472 |
|
| Total revenues | 1,114,586 |
| | (581,377 | ) | | — |
| | 533,209 |
|
| | | | | | | | |
| Benefits and expenses: | | | | | | | |
| Interest sensitive and index product benefits | 437,270 |
| | (274,583 | ) | | — |
| | 162,687 |
|
| Change in value of index product embedded derivatives | 148,917 |
| | (148,933 | ) | | — |
| | (16 | ) |
| Traditional life insurance benefits | 129,550 |
| | (1,391 | ) | | — |
| | 128,159 |
|
| Policyholder dividends | 19,416 |
| | (589 | ) | | — |
| | 18,827 |
|
| Underwriting, acquisition and insurance expenses | 233,088 |
| | (113,892 | ) | | — |
| | 119,196 |
|
| Interest expense | 25,280 |
| | — |
| | (14,889 | ) | (g) | 10,391 |
|
| Other expenses | 18,904 |
| | 1,342 |
| | — |
| | 20,246 |
|
| Total benefits and expenses | 1,012,425 |
| | (538,046 | ) | | (14,889 | ) | | 459,490 |
|
| | 102,161 |
| | (43,331 | ) | | 14,889 |
| | 73,719 |
|
| Income taxes | (33,219 | ) | | 14,309 |
| | (5,211 | ) | (i) | (24,121 | ) |
| Equity income (loss), net of related income taxes | 750 |
| | — |
| | — |
| | 750 |
|
| Net income (loss) | 69,692 |
| | (29,022 | ) | | 9,678 |
| | 50,348 |
|
| Net loss attributable to noncontrolling interest | 143 |
| | — |
| | — |
| | 143 |
|
| Net income (loss) attributable to FBL Financial Group, Inc. | $ | 69,835 |
| | $ | (29,022 | ) | | $ | 9,678 |
| | $ | 50,491 |
|
| | | | | | | | |
| Weighted average common shares outstanding - basic | 30,077 |
| | 30,077 |
| | 30,077 |
| | 30,077 |
|
| Weighted average common shares outstanding - diluted | 30,201 |
| | 30,201 |
| | 30,201 |
| | 30,201 |
|
| | | | | | | | |
| Earnings (loss) per common share | $ | 2.32 |
| | $ | (0.96 | ) | | $ | 0.32 |
| | $ | 1.67 |
|
| Earnings (loss) per common share - assuming dilution | $ | 2.31 |
| | $ | (0.96 | ) | | $ | 0.32 |
| | $ | 1.67 |
|
See accompanying pro forma notes.
|
| | | | | | | | | | | | | | | |
| FBL Financial Group, Inc. - Continuing Operations |
| Unaudited Pro Forma Consolidated Statement of Operations |
| (In thousands, except per share data) |
| | | | | | | | |
| | Year ended December 31, 2008 |
| | As Reported | | Adjustments related to EquiTrust Life Business sold (f) | | Other adjustments | | Pro Forma |
| Revenues: | | | | | | | |
| Interest sensitive and index product charges | $ | 127,199 |
| | $ | (39,037 | ) | | $ | — |
| | $ | 88,162 |
|
| Traditional life insurance premiums | 149,186 |
| | (3,335 | ) | | — |
| | 145,851 |
|
| Net investment income | 707,872 |
| | (413,278 | ) | | — |
| | 294,594 |
|
| Derivative income (loss) | (208,793 | ) | | 201,479 |
| | — |
| | (7,314 | ) |
| Net realized capital gains on sales of investments | 1,910 |
| | 694 |
| | — |
| | 2,604 |
|
| | | | | | | | |
| Total other-than-temporary impairment losses | (158,219 | ) | | 86,953 |
| | — |
| | (71,266 | ) |
| Non-credit portion in other comprehensive income/loss | — |
| | — |
| | — |
| | — |
|
| Net impairment loss recognized in earnings | (158,219 | ) | | 86,953 |
| | — |
| | (71,266 | ) |
| | | | | | | | |
| Other income | 25,310 |
| | (136 | ) | | — |
| | 25,174 |
|
| Total revenues | 644,465 |
| | (166,660 | ) | | — |
| | 477,805 |
|
| | | | | | | | |
| Benefits and expenses: | | | | | | | |
| Interest sensitive and index product benefits | 440,430 |
| | (267,420 | ) | | — |
| | 173,010 |
|
| Change in value of index product embedded derivatives | (189,354 | ) | | 190,129 |
| | — |
| | 775 |
|
| Traditional life insurance benefits | 140,139 |
| | (3,427 | ) | | — |
| | 136,712 |
|
| Policyholder dividends | 20,064 |
| | (841 | ) | | — |
| | 19,223 |
|
| Underwriting, acquisition and insurance expenses | 221,393 |
| | (106,413 | ) | | — |
| | 114,980 |
|
| Interest expense | 19,567 |
| | — |
| | (10,950 | ) | (g) | 8,617 |
|
| Other expenses | 24,104 |
| | 1,470 |
| | — |
| | 25,574 |
|
| Total benefits and expenses | 676,343 |
| | (186,502 | ) | | (10,950 | ) | | 478,891 |
|
| | (31,878 | ) | | 19,842 |
| | 10,950 |
| | (1,086 | ) |
| Income taxes | 13,662 |
| | (7,305 | ) | | (3,833 | ) | (i) | 2,524 |
|
| Equity income (loss), net of related income taxes | (4 | ) | | — |
| | ��� |
| | (4 | ) |
| Net income (loss) | (18,220 | ) | | 12,537 |
| | 7,117 |
| | 1,434 |
|
| Net loss attributable to noncontrolling interest | 71 |
| | — |
| | — |
| | 71 |
|
| Net income (loss) attributable to FBL Financial Group, Inc. | $ | (18,149 | ) | | $ | 12,537 |
| | $ | 7,117 |
| |
| #VALUE! |
|
| | | | | | | | |
| Weighted average common shares outstanding - basic | 29,894 |
| | 29,894 |
| | 29,894 |
| | 29,894 |
|
| Weighted average common shares outstanding - diluted | 29,894 |
| | 29,894 |
| | 29,894 |
| | 30,078 |
|
| | | | | | | | |
| Earnings (loss) per common share | $ | (0.61 | ) | | $ | 0.42 |
| | $ | 0.24 |
| | $ | 0.05 |
|
| Earnings (loss) per common share - assuming dilution | $ | (0.61 | ) | | $ | 0.42 |
| | $ | 0.24 |
| | $ | 0.05 |
|
See accompanying pro forma notes.
FBL Financial Group, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
Adjustments to the pro forma consolidated balance sheet, which reflect the impact of the EquiTrust Life Sale as if it occurred on September 30, 2011, are summarized below:
|
| |
| (a) | Adjustments reflect the impact of EquiTrust Life Business sold, excluding the business assumed by Farm Bureau Life, as applicable. |
| (b) | Cash includes adjustments estimated as of September 30, 2011 for proceeds of $461.7 million, less sale-related expenses of $12.3 million and the redemption price of the long-term debt of $257.6 million, including its estimated make-whole premium. The difference between the initial gross proceeds of $471.4 million and the gross proceeds reflected in the pro forma consolidated balance sheet ($461.7 million) represents a purchase price adjustment based on fourth quarter 2011 operations. |
| (c) | Represents tax impact of other pro forma adjustments at the approximate rate for each specific item. |
| (d) | Adjustment reflects long-term debt required to be redeemed in connection with the EquiTrust Life Sale, net of deferred issuance costs. |
| (e) | The net impact of adjustments to stockholders' equity reflects estimates for (1) the pre-tax loss on EquiTrust Life Sale of $150.3 million based on the GAAP book value of the EquiTrust Life Business sold as of September 30, 2011 of $599.7 million, sale-related expenses of $12.3 million and sale proceeds of $461.7 million (pre-tax loss is $102.0 million excluding the impact of accumulated other comprehensive income); (2) the pre-tax loss on extinguishment of debt of $33.4 million, primarily due to accrued interest and the estimated make-whole premium on unaffiliated senior notes; and (3) related taxes of $47.8 million. Actual amounts will vary from these estimates. |
Adjustments to the pro forma consolidated statements of operations, which reflect the impact of the EquiTrust Life Sale as if it occurred on January 1, 2008, include the following:
|
| |
| (f) | Adjustments reflect the impact of EquiTrust Life Business sold, excluding the business assumed by Farm Bureau Life, as applicable. Adjustments are also made to underwriting, acquisition and insurance expenses and other expenses to reflect estimated overhead expenses that will be absorbed by the Company after the sale. |
| (g) | Reductions to interest expense reflect the debt redemption required in connection with the EquiTrust Life Sale as described in the overview above. |
| (h) | In 2011, adjustments to other expenses include $4.2 million of transaction costs incurred by the Company through September 30, 2011. |
| (i) | Represents tax impact of other pro forma adjustments at the approximate rate for each specific item. |
As noted above, the pro forma consolidated statements of operations exclude the estimated future transition-related expenses, losses on the EquiTrust Life Sale, loss on extinguishment of debt and the potential impact of reinvesting proceeds or repurchasing stock.
