FBL Financial 8K Results of Operations and Financial Condition | FFG 3 Aug 17

FBL FINANCIAL GROUP, INC.

INVESTOR SUPPLEMENT

Second Quarter




Corporate Headquarters	FBL Financial Group, Inc.
	5400 University Avenue
	West Des Moines, Iowa 50266-5997
	(515) 225-5400
Financial Inquiries	For more information contact:
	Don Seibel
	Chief Financial Officer
	Don.Seibel@FBLFinancial.com
	(515) 226-6399

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



FBL Financial Group, Inc.
Financial Supplement (Unaudited)
June 30, 2017
Table of Contents/Notes

Consolidated Financial Statements:
Consolidated Balance Sheets		2
Consolidated Statements of Comprehensive Income		4
Consolidated Statements of Comprehensive Income, last five quarters		5
Net Income to Operating Income Reconciliation and Pre-tax Operating Income by Segment, last five quarters		6
Financial Information by Segment:
Segment Information		7
Statements of Pre-tax Operating Income, last five quarters:
Annuity Segment		8
Life Insurance Segment		9
Corporate and Other Segment		11
Deferred Acquisition Costs by Segment		12
Impact of Unlocking on Pre-tax Operating Income		14
Collected Premiums, last five quarters		15
Other Information		16

NOTE 1: In addition to net income, we have consistently used operating income, a non-GAAP financial measure common in the life insurance industry, as a primary economic measure to evaluate our financial performance. Operating income for the periods presented equals net income adjusted to eliminate the impact of realized gains and losses on investments and changes in net unrealized gains and losses on derivatives.

We use operating income, in addition to net income, to measure our performance since realized gains and losses on investments and the change in net unrealized gains and losses on derivatives can fluctuate greatly from quarter to quarter. These fluctuations make it difficult to analyze core operating trends. A view of our operating performance without the impact of these items enhances the analysis of our results. We use operating income for goal setting, determining short-term incentive compensation and evaluating performance on a basis comparable to that used by many in the investment community.

FBL Financial Group’s policy for calculating operating income is intended to accurately reflect offsets resulting from the adjustments to net income used to calculate operating income. Due to changes in product offerings since the last amendment to this policy, in the fourth quarter of 2016 FBL Financial Group refined its calculation of operating income to include offsets relating to interest sensitive product reserves. These offsets to interest sensitive product reserves, net of tax, increased operating income $0.9 million for the full year 2016 and were recorded in the fourth quarter. These offsets, net of tax, decreased operating income $0.7 million in the second quarter of 2017 and $0.3 million in the six months ended June 30, 2017. These offsets, net of tax, not taken into account in the computation of operating income for the second quarter of 2016 would have increased operating income by less than $0.1 million and increased operating income for the six months ended June 30, 2016 by $0.1 million.

NOTE 2: Certain financial information presented herein may not add due to rounding.

FBL Financial Group, Inc.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)



	June 30, 2017		December 31, 2016
Assets
Investments:
Fixed maturities - available for sale, at fair value (amortized cost: 2017 - $6,727,792; 2016 - $6,661,711)	$	7,212,546	$	7,008,790
Equity securities - available for sale, at fair value (cost: 2017 - $122,662; 2016 - $130,479)	131,435		132,968
Mortgage loans	878,435		816,471
Real estate	1,543		1,955
Policy loans	188,630		188,254
Short-term investments	29,621		16,348
Other investments	12,693		9,874
Total investments	8,454,903		8,174,660

Cash and cash equivalents	43,809		33,583
Securities and indebtedness of related parties	133,153		137,422
Accrued investment income	77,711		78,437
Amounts receivable from affiliates	4,749		3,790
Reinsurance recoverable	106,596		105,290
Deferred acquisition costs	296,637		330,324
Value of insurance in force acquired	6,316		9,226
Current income taxes recoverable	—		4,309
Other assets	93,143		92,021
Assets held in separate accounts	625,971		597,072








Total assets	$	9,842,988	$	9,566,134

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	June 30, 2017		December 31, 2016
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive products	$	5,174,178	$	5,100,625
Traditional life insurance and accident and health products	1,724,747		1,698,792
Other policy claims and benefits	37,535		43,395
Supplementary contracts without life contingencies	328,904		330,232
Advance premiums and other deposits	267,922		265,221
Amounts payable to affiliates	1,014		862
Long-term debt payable to non-affiliates	97,000		97,000
Current income taxes	7,500		—
Deferred income taxes	198,365		163,495
Other liabilities	128,983		81,182
Liabilities related to separate accounts	625,971		597,072
Total liabilities	8,592,119		8,377,876

Stockholders' equity:
FBL Financial Group, Inc. stockholders' equity:
Preferred stock, without par value, at liquidation value - authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares	3,000		3,000
Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 24,917,155 in 2017 and 24,882,542 shares in 2016	153,343		152,903
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2017 and 2016	72		72
Accumulated other comprehensive income	212,357		149,555
Retained earnings	882,012		882,672
Total FBL Financial Group, Inc. stockholders' equity	1,250,784		1,188,202
Noncontrolling interest	85		56
Total stockholders' equity	1,250,869		1,188,258
Total liabilities and stockholders' equity	$	9,842,988	$	9,566,134

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands, except per share data)



	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Revenues:
Interest sensitive product charges	$	29,456		$	29,027		$	58,657		$	57,138
Traditional life insurance premiums	50,262			49,605			98,696			99,743
Net investment income	103,908			100,722			204,902			199,107
Net realized capital gains (losses) on sales of investments	921			(2,269		)	518			(679		)

Total other-than-temporary impairment losses	—			(25		)	(66		)	(3,744		)
Non-credit portion in other comprehensive income	—			—			—			1,522
Net impairment losses recognized in earnings	—			(25		)	(66		)	(2,222		)
Other income	4,450			4,225			8,210			7,864
Total revenues	188,997			181,285			370,917			360,951

Benefits and expenses:
Interest sensitive product benefits	58,251			58,559			121,011			112,978
Traditional life insurance benefits	42,610			43,369			85,564			87,938
Policyholder dividends	2,557			2,515			5,110			5,555
Underwriting, acquisition and insurance expenses	36,341			38,938			70,694			76,652
Interest expense	1,213			1,213			2,425			2,425
Other expenses	4,740			4,435			8,891			8,793
Total benefits and expenses	145,712			149,029			293,695			294,341
	43,285			32,256			77,222			66,610
Income taxes	(13,891		)	(10,477		)	(24,624		)	(21,546		)
Equity income, net of related income taxes	2,924			2,613			6,155			5,265
Net income	32,318			24,392			58,753			50,329
Net income attributable to noncontrolling interest	(27		)	(12		)	(29		)	(3		)
Net income attributable to FBL Financial Group, Inc.	$	32,291		$	24,380		$	58,724		$	50,326

Comprehensive income attributable to FBL Financial Group, Inc.	$	79,050		$	114,584		$	121,526		$	211,916

Earnings per common share	$	1.29		$	0.97		$	2.34		$	2.01
Earnings per common share - assuming dilution	$	1.29		$	0.97		$	2.34		$	2.01

Cash dividends per common share	$	0.44		$	0.42		$	0.88		$	0.84
Special cash dividend per common share	$	—		$	—		$	1.50		$	2.00

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited) - Quarterly

(Dollars in thousands, except per share data)



	Q2 2016			Q3 2016			Q4 2016			Q1 2017			Q2 2017
Revenues:
Interest sensitive product charges	$	29,027		$	25,851		$	28,939		$	29,201		$	29,456
Traditional life insurance premiums	49,605			47,682			49,489			48,434			50,262
Net investment income	100,722			103,514			101,549			100,994			103,908
Net realized capital gains (losses) on sales of investments	(2,269		)	646			3,139			(403		)	921

Total other-than-temporary impairment losses	(25		)	(25		)	(3,551		)	(66		)	—
Non-credit portion in other comprehensive income	—			—			929			—			—
Net impairment losses recognized in earnings	(25		)	(25		)	(2,622		)	(66		)	—
Other income	4,225			3,616			3,685			3,760			4,450
Total revenues	181,285			181,284			184,179			181,920			188,997

Benefits and expenses:
Interest sensitive product benefits	58,559			65,882			59,726			62,760			58,251
Traditional life insurance benefits	43,369			42,121			47,623			42,954			42,610
Policyholder dividends	2,515			2,459			2,560			2,553			2,557
Underwriting, acquisition and insurance expenses	38,938			25,785			33,530			34,353			36,341
Interest expense	1,213			1,213			1,212			1,212			1,213
Other expenses	4,435			3,854			4,319			4,151			4,740
Total benefits and expenses	149,029			141,314			148,970			147,983			145,712
	32,256			39,970			35,209			33,937			43,285
Income taxes	(10,477		)	(13,091		)	(11,373		)	(10,733		)	(13,891		)
Equity income, net of related income taxes	2,613			3,128			3,047			3,231			2,924
Net income	24,392			30,007			26,883			26,435			32,318
Net (income) loss attributable to noncontrolling interest	(12		)	10			(3		)	(2		)	(27		)
Net income attributable to FBL Financial Group, Inc.	$	24,380		$	30,017		$	26,880		$	26,433		$	32,291

Comprehensive income attributable to FBL Financial Group, Inc.	$	114,584		$	46,723		$	(116,393	)	$	42,476		$	79,050

Earnings per common share	$	0.97		$	1.20		$	1.07		$	1.05		$	1.29
Earnings per common share - assuming dilution	$	0.97		$	1.20		$	1.07		$	1.05		$	1.29

Cash dividends per common share	$	0.42		$	0.42		$	0.42		$	0.44		$	0.44
Special cash dividend per common share	$	—		$	—		$	—		$	1.50		$	—

Weighted average common shares outstanding (in thousands):
Basic	24,988			24,990			25,007			25,030			25,031
Effect of dilutive securities	42			40			33			22			20
Diluted	25,030			25,030			25,040			25,052			25,051



FBL Financial Group, Inc.
Net Income to Operating Income Reconciliation and Pre-tax Operating Income by Segment (1)
(Dollars in thousands, except per share data)


	Q2 2016			Q3 2016			Q4 2016			Q1 2017			Q2 2017

Net income attributable to FBL Financial Group, Inc.	$	24,380		$	30,017		$	26,880		$	26,433		$	32,291
Operating income adjustments:
Realized gains/losses on investments (2)	1,147			(402		)	(429		)	554			(788		)
Change in net unrealized gains/losses on derivatives (2)	149			(733		)	(876		)	1			(686		)
Operating income	$	25,676		$	28,882		$	25,575		$	26,988		$	30,817

Operating income per common share - assuming dilution	$1.02			$1.15			$1.02			$1.08			$1.23

Operating return on equity, excluding AOCI - last twelve months	10.6%			10.6%			10.5%			10.6%			11.0%
Operating return on equity, including AOCI - last twelve months	8.9%			8.8%			8.8%			8.7%			9.0%


	Q2 2016			Q3 2016			Q4 2016			Q1 2017			Q2 2017
Impact of Operating Income Adjustments on FBL Net Income
Realized gains (losses) on investments	$	(2,294	)	$	621		$	517		$	(469	)	$	921
Change in net unrealized gains/losses on derivatives	64			1,512			2,685			(49		)	107
Change in amortization of:
Deferred acquisition costs	202			(341		)	115			265			349
Unearned revenue reserve	33			(46		)	5			(12		)	(127		)
Reserve change offset on interest sensitive products	—			—			(1,314		)	(590		)	1,018
Income tax offset	699			(611		)	(703		)	300			(794		)
Net impact of operating income adjustments	$	(1,296	)	$	1,135		$	1,305		$	(555	)	$	1,474


	Q2 2016			Q3 2016			Q4 2016			Q1 2017			Q2 2017
Pre-tax operating income by segment:
Annuity segment	$	16,348		$	17,075		$	15,454		$	16,421		$	18,174
Life Insurance segment	14,473			15,245			12,188			13,749			17,631
Corporate and Other segment	1,972			5,219			4,868			4,162			4,195
Total pre-tax operating income	32,793			37,539			32,510			34,332			40,000
Income taxes on operating income	(7,117		)	(8,657		)	(6,935		)	(7,344		)	(9,183		)
Operating income	$	25,676		$	28,882		$	25,575		$	26,988		$	30,817


(1)	Operating income is a non-GAAP measure of earnings.


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

FBL Financial Group, Inc.

Segment Information

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

The Annuity segment primarily consists of fixed rate and index annuities and supplementary contracts (some of which involve life contingencies). Fixed rate annuities provide for tax-deferred savings and supplementary contracts provide for the systematic repayment of funds that accumulate interest. Fixed rate annuities consist primarily of flexible premium deferred annuities, but also include single premium deferred and immediate contracts. With fixed rate annuities, we bear the underlying investment risk and credit interest to the contracts at rates we determine, subject to interest rate guarantees. With index annuity products, we bear the underlying investment risk and credit interest in an amount equal to a percentage of the gain in a specified market index, subject to minimum guarantees.

The Life Insurance segment consists of whole life, term life and universal life policies. These policies provide benefits upon the death of the insured and may also allow the customer to build cash value on a tax-deferred basis.

The Corporate and Other segment consists of the following corporate items and products/services that do not meet the quantitative threshold for separate segment reporting:



•		investments and related investment income not specifically allocated to our product segments;
•		interest expense;
•		closed blocks of variable annuity, variable universal life insurance and accident and health insurance products;
•		advisory services for the management of investments and other companies;
•		marketing and distribution services for the sale of mutual funds and insurance products not issued by us; and
•		leasing services, primarily with affiliates.

We analyze our segment results based on pre-tax operating income. Accordingly, income taxes are not allocated to the segments. In addition, operating results are reported net of transactions between the segments.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Annuity Segment

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	932			$	894		$	1,039		$	1,135		$	1,202
Net investment income	53,022				53,945			52,475			53,916			55,631
Total operating revenues	53,954				54,839			53,514			55,051			56,833

Benefits and expenses:
Interest sensitive product benefits	27,591				29,637			29,829			29,878			29,865
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	523				507			614			531			483
Amortization of deferred acquisition costs	3,905				2,231			2,711			2,528			2,783
Amortization of value of insurance in force acquired	372				170			169			170			170
Other underwriting expenses	5,215				5,219			4,737			5,523			5,358
Total underwriting, acquisition and insurance expenses	10,015				8,127			8,231			8,752			8,794
Total benefits and expenses	37,606				37,764			38,060			38,630			38,659
Pre-tax operating income	$	16,348			$	17,075		$	15,454		$	16,421		$	18,174

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	4,146,239			$	4,248,096		$	4,316,806		$	4,357,562		$	4,395,757
Deferred acquisition costs	87,405				88,342			88,762			89,108			89,752
Value of insurance in force acquired	4,544				4,374			4,204			4,034			3,864

Liabilities and equity:
Liabilities:
Interest sensitive product reserves	$	3,704,266			$	3,744,876		$	3,827,295		$	3,863,647		$	3,872,179
Other insurance reserves	368,083				366,899			364,966			368,378			364,368
Allocated equity, excluding AOCI	256,558				259,042			264,112			266,618			266,902

Other data:
Number of direct contracts	53,455				53,410			53,676			53,528			53,390

Portfolio yield net of assumed defaults	4.79		%		4.74		%	4.71		%	4.67		%	4.60		%
Credited rate	2.76				2.72			2.70			2.69			2.64
Spread on individual annuities at end of quarter (2)	2.03		%		2.02		%	2.01		%	1.98		%	1.96		%

Interest sensitive reserve activity:
Individual annuity reserve:
Balance, beginning of period	$	2,827,976			$	2,895,799		$	2,936,817		$	2,984,644		$	3,022,180
Deposits	96,890				73,240			84,125			80,219			75,439
Withdrawals, surrenders and death benefits	(38,190		)		(43,587		)	(47,417		)	(46,610		)	(46,700		)
Net flows	58,700				29,653			36,708			33,609			28,739

Policyholder interest	18,356				19,083			19,770			20,710			20,826
Annuitizations and other	(9,233		)		(7,718		)	(8,651		)	(16,783		)	(13,793		)
Balance, end of period	2,895,799				2,936,817			2,984,644			3,022,180			3,057,952
Other interest sensitive reserves	808,467				808,059			842,651			841,467			814,227
Total interest sensitive product reserves	$	3,704,266			$	3,744,876		$	3,827,295		$	3,863,647		$	3,872,179


(1)	Operating income is a non-GAAP measure of earnings.


(2)	Point-in-time spread at the balance sheet date used by management for decision making, which differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Life Insurance Segment

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	16,637			$	14,210		$	16,797		$	17,100		$	17,487
Traditional life insurance premiums	49,605				47,682			49,489			48,434			50,262
Net investment income	38,570				39,227			38,876			38,769			39,436
Other income	(88		)		(89		)	(73		)	(160		)	(117		)
Total operating revenues	104,724				101,030			105,089			104,143			107,068

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	8,130				7,886			8,225			8,187			7,983
Death benefits and other	12,169				17,459			13,119			14,272			13,622
Total interest sensitive product benefits	20,299				25,345			21,344			22,459			21,605
Traditional life insurance benefits:
Death benefits	20,019				19,259			25,229			21,667			19,997
Surrender and other benefits	8,215				8,234			7,574			10,429			8,936
Increase in traditional life future policy benefits	15,160				14,628			14,817			10,859			13,678
Total traditional life insurance benefits	43,394				42,121			47,620			42,955			42,611
Policyholder dividends	2,515				2,459			2,560			2,553			2,557
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	4,338				4,229			4,577			4,903			4,874
Amortization of deferred acquisition costs	4,878				(2,788		)	3,724			3,911			4,519
Amortization of value of insurance in force acquired	377				377			377			375			375
Other underwriting expenses	14,450				14,042			12,699			14,404			14,185
Total underwriting, acquisition and insurance expenses	24,043				15,860			21,377			23,593			23,953
Total benefits and expenses	90,251				85,785			92,901			91,560			90,726
	$	14,473			$	15,245		$	12,188		$	12,583		$	16,342
Equity income, before tax (2)	—				—			—			1,166			1,289
Pre-tax operating income	$	14,473			$	15,245		$	12,188		$	13,749		$	17,631

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	2,800,935			$	2,825,458		$	2,876,555		$	2,878,865		$	2,913,608
Deferred acquisition costs	252,481				262,803			267,545			271,454			275,356
Value of insurance in force acquired	18,158				17,781			17,404			17,029			16,654

Liabilities and equity:
Liabilities: (3)
Interest sensitive reserves	$	875,067			$	889,645		$	899,207		$	905,454		$	916,067
Other insurance reserves	1,846,163				1,864,521			1,887,539			1,902,738			1,917,124
Allocated equity, excluding AOCI	372,927				379,540			386,315			382,319			386,413



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Life Insurance Segment (Continued)

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
				(Dollars in thousands)
Other data:
Number of direct policies - traditional life	364,413				364,132			364,698			364,173			364,122
Number of direct policies - universal life	63,321				63,446			64,044			64,490			64,979
Direct face amounts - traditional life	$	48,244,884			$	48,668,224		$	49,108,249		$	49,473,291		$	49,919,358
Direct face amounts - universal life	$	6,751,098			$	6,782,177		$	6,872,482		$	6,943,248		$	7,048,021

Portfolio yield net of assumed defaults	5.23		%		5.20		%	5.15		%	5.14		%	5.12		%
Credited rate	3.76				3.76			3.76			3.76			3.71
Spread on universal life at end of quarter (4)	1.47		%		1.44		%	1.39		%	1.38		%	1.41		%

Interest sensitive reserve activity: (3)
Balance, beginning of period	$	865,923			$	875,067		$	889,645		$	899,207		$	905,454
Deposits	22,158				21,397			23,768			25,604			27,292
Withdrawals and surrenders	(7,277		)		(4,569		)	(6,043		)	(8,212		)	(7,130		)
Net flows	14,881				16,828			17,725			17,392			20,162

Policyholder interest	7,420				7,641			7,720			7,687			7,570
Policy charges	(17,121		)		(17,158		)	(17,541		)	(17,833		)	(18,166		)
Benefits and other	3,964				7,267			1,658			(999		)	1,047
Balance, end of period	$	875,067			$	889,645		$	899,207		$	905,454		$	916,067


(1)	Operating income is a non-GAAP measure of earnings.


(2)	Beginning in the first quarter of 2017, a portion of our investments held in securities and indebtedness of related parties was assigned to the Life Insurance segment. These investments are accounted for under the equity method of accounting.


(3)	Reserves on riders in interest sensitive life insurance products are included in Other insurance reserves.


(4)	Point-in-time spread at the balance sheet date used by management for decision making with universal life (excluding products with a secondary guarantee) differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Corporate and Other

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	11,425			$	10,793		$	11,102		$	10,978		$	10,894
Net investment income	7,545				8,161			8,481			8,768			8,643
Other income	4,313				3,705			3,754			3,920			4,567
Total operating revenues	23,283				22,659			23,337			23,666			24,104

Benefits and expenses:
Interest sensitive product benefits	9,145				10,239			8,214			10,059			7,894
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	822				671			657			721			812
Amortization of deferred acquisition costs	2,569				(432		)	1,953			637			1,223
Other underwriting expenses	1,669				1,210			1,423			1,098			1,721
Total underwriting, acquisition and insurance expenses	5,060				1,449			4,033			2,456			3,756
Interest expense	1,213				1,213			1,212			1,212			1,213
Other expenses	4,435				3,854			4,319			4,151			4,740
Total benefits and expenses	19,853				16,755			17,778			17,878			17,603
	3,430				5,904			5,559			5,788			6,501
Net loss (income) attributable to noncontrolling interest	(12		)		10			(3		)	(2		)	(27		)
Equity loss, before tax	(1,446		)		(695		)	(688		)	(1,624		)	(2,279		)
Pre-tax operating income	$	1,972			$	5,219		$	4,868		$	4,162		$	4,195

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	610,526			$	604,570		$	631,731		$	655,476		$	652,011
Deferred acquisition costs	70,815				71,225			69,664			69,667			68,546
Separate account assets	603,706				605,729			597,072			615,892			625,971

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	354,952			$	359,151		$	366,519		$	368,405		$	367,929
Other insurance reserves	95,241				93,099			93,159			93,054			91,316
Separate account liabilities	603,706				605,729			597,072			615,892			625,971
Allocated equity, excluding AOCI	368,838				379,877			385,220			365,103			382,112

Rollforward of separate account balances:
Beginning separate account balance	$	607,739			$	603,706		$	605,729		$	597,072		$	615,892
Net premiums and transfers	3,275				1,645			(2,348		)	5,160			6,804
Net investment income (loss)	9,951				22,321			9,627			31,288			19,679
Charges, benefits and surrenders	(17,259		)		(21,943		)	(15,936		)	(17,628		)	(16,404		)
Ending separate account balance	$	603,706			$	605,729		$	597,072		$	615,892		$	625,971

Other data:
Number of direct contracts - variable annuity	10,948				10,657			10,500			10,320			10,157
Number of direct policies - variable universal life	39,736				39,275			38,779			38,251			37,800
Direct face amounts - variable universal life	$	4,901,960			$	4,839,145		$	4,772,878		$	4,707,786		$	4,654,603


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
				(Dollars in thousands)
Annuity
Balance - beginning of period	$	87,245			$	87,405		$	88,342		$	88,762		$	89,108
Capitalization:
Commissions	3,458				3,042			2,923			2,718			2,908
Expenses	294				186			83			194			183
Deferral of sales inducements	398				183			311			269			101
Total capitalization	4,150				3,411			3,317			3,181			3,192
Amortization - operating basis, before impact of unlocking (1)	(2,740		)		(2,276		)	(2,775		)	(2,591		)	(2,852		)
Amortization - unlocking, operating basis (1)	(1,218		)		—			—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(32		)		(198		)	(122		)	(244		)	304
Balance - end of period	$	87,405			$	88,342		$	88,762		$	89,108		$	89,752

Life Insurance
Balance - beginning of period	$	249,640			$	252,481		$	262,803		$	267,545		$	271,454
Capitalization:
Commissions	4,844				4,609			6,213			5,498			5,682
Expenses	2,277				2,358			1,871			2,037			2,400
Deferral of sales inducements	250				146			482			421			441
Total capitalization	7,371				7,113			8,566			7,956			8,523
Amortization - operating basis, before impact of unlocking (1)	(4,793		)		(4,770		)	(3,822		)	(4,063		)	(4,686		)
Amortization - unlocking, operating basis (1)	(271		)		7,991			—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	534				(12		)	(2		)	16			65
Balance - end of period	$	252,481			$	262,803		$	267,545		$	271,454		$	275,356

Corporate and Other
Balance - beginning of period	$	73,510			$	70,815		$	71,225		$	69,664		$	69,667
Capitalization:
Commissions	186				108			183			157			130
Deferral of sales inducements	4				3			17			17			2
Total capitalization	190				111			200			174			132
Amortization - operating basis, before impact of unlocking (1)	(1,535		)		(1,207		)	(2,000		)	(664		)	(1,233		)
Amortization - unlocking, operating basis (1)	(1,050		)		1,661			—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(300		)		(155		)	239			493			(20		)
Balance - end of period	$	70,815			$	71,225		$	69,664		$	69,667		$	68,546



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment (Continued)

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
				(Dollars in thousands)
Total
Balance - beginning of period	$	410,395			$	410,701		$	422,370		$	425,971		$	430,229
Capitalization:
Commissions	8,488				7,759			9,319			8,373			8,720
Expenses	2,571				2,544			1,954			2,231			2,583
Deferral of sales inducements	652				332			810			707			544
Total capitalization	11,711				10,635			12,083			11,311			11,847
Amortization - operating basis, before impact of unlocking (1)	(9,068		)		(8,253		)	(8,597		)	(7,318		)	(8,771		)
Amortization - unlocking, operating basis (1)	(2,539		)		9,652			—			—			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	202				(365		)	115			265			349
Balance - end of period	410,701				422,370			425,971			430,229			433,654
Impact of realized/unrealized losses in AOCI	(191,075		)		(207,140		)	(95,647		)	(108,091		)	(137,017		)
Deferred acquisition costs	$	219,626			$	215,230		$	330,324		$	322,138		$	296,637


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Impact of Unlocking on Pre-tax Operating Income (1)

	Q2 2016				Q3 2016			Q4 2016		Q1 2017		Q2 2017
				(Dollars in thousands)
Annuity Segment
Amortization of deferred sales inducements reported in interest sensitive product benefits	$	1			$	—		$	—	$	—	$	—
Amortization of deferred acquisition costs	(1,219		)		—			—		—		—
Amortization of value of insurance in force acquired	(194		)		—			—		—		—
Decrease to pre-tax operating income	$	(1,412	)		$	—		$	—	$	—	$	—

Life Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges and other income	$	114			$	(2,244	)	$	—	$	—	$	—
Amortization of deferred sales inducements reported in interest sensitive product benefits	3				468			—		—		—
Amortization of deferred sales inducements reported in traditional life insurance benefits	—				69			—		—		—
Amortization of deferred acquisition costs	(274		)		7,453			—		—		—
Changes in certain product reserves reported in interest sensitive product benefits	(3,211		)		(6,073		)	—		—		—
Decrease to pre-tax operating income	$	(3,368	)		$	(327	)	$	—	$	—	$	—

Corporate and Other Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges	$	183			$	(419	)	$	—	$	—	$	—
Amortization of deferred sales inducements reported in interest sensitive product benefits	(13		)		67			—		—		—
Amortization of deferred acquisition costs	(1,037		)		1,595			—		—		—
Changes in certain product reserves reported in interest sensitive product benefits	(54		)		(230		)	—		—		—
Increase (decrease) to pre-tax operating income	$	(921	)		$	1,013		$	—	$	—	$	—

Total impact of unlocking on pre-tax operating income	$	(5,701	)		$	686		$	—	$	—	$	—


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Collected Premiums (1)

	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
				(Dollars in thousands)
Annuity
Individual:
Fixed rate:
First year	$	37,574			$	23,243		$	35,967		$	32,624		$	26,315
Renewal	23,096				18,420			20,485			24,217			20,624
Total fixed rate	60,670				41,663			56,452			56,841			46,939
Index annuity	36,716				31,578			28,115			23,427			28,834
Total individual	97,386				73,241			84,567			80,268			75,773
Group	3,061				2,757			2,705			1,195			766
Total Annuity	100,447				75,998			87,272			81,463			76,539

Life Insurance
Direct:
Universal life:
First year	3,971				4,902			5,222			6,301			8,060
Renewal	17,828				16,135			18,039			19,113			18,873
Total universal life	21,799				21,037			23,261			25,414			26,933
Participating whole life:
First year	3,789				4,050			3,167			2,985			3,183
Renewal	24,983				23,144			24,442			24,715			24,337
Total participating whole life	28,772				27,194			27,609			27,700			27,520
Term life and other:
First year	2,515				2,377			2,382			2,442			2,573
Renewal	24,261				24,066			24,689			25,781			25,312
Total term life and other	26,776				26,443			27,071			28,223			27,885
Total direct life insurance	77,347				74,674			77,941			81,337			82,338
Reinsurance	(7,136		)		(7,404		)	(5,584		)	(7,764		)	(7,176		)
Total Life Insurance	70,211				67,270			72,357			73,573			75,162

Corporate and Other
Variable, net of reinsurance	16,218				13,082			13,362			14,733			14,114
Accident and health, net of reinsurance	38				40			182			101			41
Total Corporate and Other	16,256				13,122			13,544			14,834			14,155

Total collected premiums	$	186,914			$	156,390		$	173,173		$	169,870		$	165,856


(1)	Collected premiums is a non-GAAP measure of sales production.



FBL Financial Group, Inc.
Other Information

	June 30,				September 30,			December 31,			March 31,			June 30,
	2016				2016			2016			2017			2017
				(Dollars in thousands, except per share data)

Capitalization:
Trust preferred securities, due 2047	$	97,000			$	97,000		$	97,000		$	97,000		$	97,000
Total debt	97,000				97,000			97,000			97,000			97,000

Preferred stock	3,000				3,000			3,000			3,000			3,000
Common stockholders' equity, excluding AOCI	998,323				1,018,459			1,035,647			1,014,040			1,035,427
Total capitalization, excluding AOCI	1,098,323				1,118,459			1,135,647			1,114,040			1,135,427

Accumulated other comprehensive income	276,122				292,828			149,555			165,598			212,357
Total capitalization, including AOCI	$	1,374,445			$	1,411,287		$	1,285,202		$	1,279,638		$	1,347,784

Common shares outstanding	24,860,675				24,874,659			24,893,955			24,917,960			24,928,568

Book Value per Share:
Excluding AOCI	$	40.16			$	40.94		$	41.60		$	40.70		$	41.54
Including AOCI	51.26				52.72			47.61			47.34			50.05

Debt-to-Capital Ratio:
Excluding AOCI	8.8		%		8.7		%	8.5		%	8.7		%	8.5		%
Including AOCI	7.1				6.9			7.5			7.6			7.2

Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
Excluding AOCI	4.4		%		4.3		%	4.3		%	4.4		%	4.3		%
Including AOCI	3.5				3.4			3.8			3.8			3.6

Class A Common Ownership:
Iowa Farm Bureau Federation	59.4		%		59.4		%	59.3		%	59.3		%	59.2		%
Public	40.6				40.6			40.7			40.7			40.8
	100.0		%		100.0		%	100.0		%	100.0		%	100.0		%



FBL Financial Group, Inc.
Other Information (Continued)

	June 30,		September 30,		December 31,		March 31,		June 30,
	2016		2016		2016		2017		2017

Investment by Type:
Fixed maturity securities	65.1	%	65.1	%	64.1	%	63.7	%	62.8	%
Residential mortgage-backed	5.3		5.2		5.2		5.2		5.3
Commercial mortgage-backed	7.6		7.4		7.0		7.3		7.7
Other asset-backed	8.3		8.8		9.4		9.2		9.5
Mortgage loans	9.3		9.4		10.0		10.3		10.3
Equity securities	1.7		1.6		1.6		1.7		1.6
Other	2.7		2.5		2.7		2.6		2.8

Quality of Fixed Maturity Securities:
AAA, AA, A	64.8	%	63.7	%	63.7	%	63.8	%	63.9	%
BBB	31.0		31.8		31.9		31.8		32.3
BB	2.8		3.0		2.9		3.1		2.7
<BB	1.4		1.5		1.5		1.3		1.1

Agent Strength Totals:
Full time agents and agency managers:
8-state Farm Bureau Property & Casualty channel	1,213		1,214		1,214		1,186		1,177
6 life partner states and Colorado	659		656		648		653		651
	1,872		1,870		1,862		1,839		1,828




	Q2 2016				Q3 2016			Q4 2016			Q1 2017			Q2 2017
Equity Income (Loss), net of related income taxes				(Dollars in thousands)
Equity income (loss):
Low income housing tax credit partnerships	$	(2,508	)		$	(1,811	)	$	(1,689	)	$	(1,805	)	$	(2,938	)
Other equity method investments	1,062				1,116			1,001			1,347			1,948
	(1,446		)		(695		)	(688		)	(458		)	(990		)
Income taxes:
Taxes on equity income (loss)	507				242			241			160			346
Investment tax credits	3,552				3,581			3,494			3,529			3,568
Equity income, net of related income taxes	$	2,613			$	3,128		$	3,047		$	3,231		$	2,924

FBL Financial (FFG) 8-KResults of Operations and Financial Condition