Exhibit 99.1
FBL Financial Group Reports Fourth Quarter 2004 Results
WEST DES MOINES, Iowa--(BUSINESS WIRE)--Feb. 8, 2005--FBL Financial Group,
Inc. (NYSE:FFG):
Financial Highlights
(Dollars in thousands, except per share data)
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Three Months Ended
December 31,
2004 2003
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Net income applicable to common stock $25,392 $17,591
Operating income applicable to common stock 20,997 17,750
Earnings per common share (assuming
dilution):
Net income 0.87 0.61
Operating income 0.72 0.61
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FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted net
income per common share totaled $0.87 ($25,392,000) for the quarter ended
December 31, 2004, compared to $0.61 ($17,591,000) in the year ago quarter. Net
income includes the impact of realized gains and losses on investments, which
was a gain of $0.15 per share in the fourth quarter of 2004 and a loss of less
than $0.01 per share in the fourth quarter of 2003.
Operating Income (a). Operating income, which excludes the impact of
realized gains and losses on investments, totaled $20,997,000 for the quarter
ended December 31, 2004, versus $17,750,000 in the fourth quarter of 2003.
Diluted operating income per common share totaled a record $0.72 in the fourth
quarter of 2004, compared to $0.61 in the fourth quarter of 2003. The 18 percent
increase in operating income per share for the fourth quarter of 2004 is
primarily attributable to the release of tax accruals that were deemed to no
longer be necessary. This non-recurring item totaled $0.09 per share in the
fourth quarter of 2004. Additionally, FBL earned $0.14 per share from a
coinsurance agreement in the fourth quarter of 2004 compared to $0.08 earned
from this agreement in the fourth quarter of 2003.
(a) In addition to net income, FBL Financial Group has consistently
utilized operating income, a non-GAAP financial measure commonly used in the
life insurance industry, as a primary economic measure to evaluate its financial
performance. Operating income equals net income adjusted to eliminate the impact
of realized gains and losses on investments. Because realized gains and losses
on investments may fluctuate greatly from quarter to quarter, FBL believes a
measure excluding their impact is useful in analyzing core operating trends. FBL
believes the combined presentation and evaluation of operating income, together
with net income, provides information that may enhance an investor's
understanding of FBL's underlying results and profitability. A reconciliation of
net income to operating income is provided in the accompanying tables.
Commenting on FBL's fourth quarter results, Chief Executive Officer Bill
Oddy stated, "We are very pleased to report record high operating results this
quarter of $0.72 per common share. Sales this quarter were strong in both our
Farm Bureau Life and EquiTrust Life distribution channels and we are well
positioned for 2005. We expect our Farm Bureau Life sales to continue to grow
and our EquiTrust Life independent channel business to further develop and begin
to add to earnings during 2005."
Product Revenues Up. Premiums and product charges for the fourth quarter of
2004 increased four percent to $55,419,000 from $53,146,000 in the fourth
quarter of 2003. Interest sensitive and index product charges increased seven
percent due primarily to an increase in the volume and aging of business in
force, while traditional life insurance premiums increased two percent.
Premiums collected in the fourth quarter of 2004 increased to $290,545,000
from $267,846,000 in the fourth quarter of 2003. This increase reflects
$159,639,000 in premiums collected from FBL's growing EquiTrust Life independent
channel. Premiums collected from FBL's Farm Bureau Life channel increased five
percent to $119,128,000 and premiums from the variable alliance channel
increased to $6,991,000. For the full year 2004, premiums collected from FBL's
Farm Bureau Life channel increased three percent to $501,191,000 from
$488,542,000 in 2003 and premiums collected from FBL's EquiTrust Life
independent channel increased to $472,273,000 from $821,000 in 2003.
Investment Income. Net investment income in the fourth quarter of 2004
increased eleven percent to $110,346,000 from $99,423,000 in the fourth quarter
of 2003. This increase is due to an increase in average invested assets
resulting primarily from inflows from FBL's Farm Bureau Life and EquiTrust Life
distribution channels. The annualized yield earned on average invested assets,
with securities at cost, was 6.18 percent for the year ended December 31, 2004,
compared to 6.79 percent for 2003. The 2004 yield reflects a decline in market
interest rates and a decrease in fee income from bond calls and mortgage loan
prepayments. Investment fee income totaled $598,000 in the fourth quarter of
2004 compared to $1,700,000 in the fourth quarter of 2003.
Derivative Income. FBL's derivative income totaled $21,917,000 in the
fourth quarter of 2004, compared to $9,365,000 in the fourth quarter of 2003.
This income primarily reflects an increase in the change in the underlying
equity market indices on which call options supporting our index annuity
business are based.
Realized Gains on Investments. In the fourth quarter of 2004, FBL
recognized net realized gains on investments of $6,881,000. This compares to net
realized losses on investments of $574,000 in the fourth quarter of 2003. Fourth
quarter 2004 realized gains include realized gains from sales of investments of
$6,982,000, primarily relating to the sale of certain investment real estate,
and realized losses from sales of securities of $101,000.
Benefits and Expenses. Benefits and expenses totaled $164,986,000 in the
fourth quarter of 2004, compared to $142,821,000 in the fourth quarter of 2003.
This increase is due primarily to an increase in the volume of annuity business
in force.
Income from Equity Investments. Equity income, net of related income taxes,
was $423,000 in the fourth quarter of 2004, compared to $2,058,000 in the fourth
quarter of 2003. Included in equity income is FBL's share of income and losses
from investments in various partnerships and joint ventures, the majority of
which are booked a quarter in arrears. Prior to 2004, equity income included
FBL's share of American Equity Investment Life Holding Company's earnings, which
totaled $1,330,000, net of taxes, in the fourth quarter of 2003. Following
American Equity's initial public offering in December 2003, FBL's ownership
percentage decreased. As a result, FBL no longer accounts for its investment
under the equity method of accounting and this investment in American Equity is
now marked to market in accordance with FAS 115.
Operating Results by Segment. FBL's operating results for the fourth
quarter of 2004 reflect an increase in all product segments, with the largest
increase in the traditional annuity - independent distribution segment, which
had a 52 percent increase in pre-tax operating income to $6,558,000. Further
detail by segment is provided in FBL's financial supplement, which is available
on FBL's web site, www.fblfinancial.com.
Assets Total $9.1 Billion. Total assets increased $1.2 billion to $9.1
billion at December 31, 2004, from $7.9 billion at December 31, 2003. At
December 31, 2004, 96 percent of the fixed maturity securities in FBL's
investment portfolio were investment grade debt securities. Book value per
common share, with securities at cost, increased eight percent to $23.96 at
December 31, 2004, from $22.11 at December 31, 2003, while book value per common
share, with securities at market, increased nine percent to $28.87 at December
31, 2004, from $26.42 at December 31, 2003, reflecting an increase in unrealized
appreciation on fixed maturity securities.
Conference Call. FBL management will hold a conference call with investors
to discuss fourth quarter 2004 results. The call will be held tomorrow, February
9, 2005, at 10 a.m. Eastern Time. The call will be webcast over the Internet,
and a replay will be available on FBL's web site, www.fblfinancial.com.
The statements in this release concerning FBL's prospects for the future
are forward-looking statements that involve certain risks and uncertainties,
including the continued acceptance of FBL's insurance products by customers, the
continued success of FBL's marketing efforts, the marketing success of FBL's
alliance partners, and fluctuations in mortality experience and investment
results. These forward-looking statements are based on assumptions which FBL
Financial Group believe to be reasonable. No assurance can be given that the
assumptions will prove to be correct, and the difference between assumptions and
actual results could be material.
FBL Financial Group (www.fblfinancial.com) is a holding company whose
primary operating subsidiaries are Farm Bureau Life Insurance Company and
EquiTrust Life Insurance Company. FBL underwrites, markets and distributes life
insurance, annuities and mutual funds to individuals and small businesses. In
addition, FBL manages all aspects of three Farm Bureau affiliated
property-casualty insurance companies for a management fee. FBL's three-pronged
growth strategy includes (1) growth through its traditional Farm Bureau Life
distribution channel, (2) growth in EquiTrust Life through independent and other
distribution channels and (3) acquisitions or consolidations.
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
Dec. 31,
2004 2003
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REVENUES
Interest sensitive and index product charges $23,168 $21,667
Traditional life insurance premiums 32,056 31,304
Accident and health premiums 195 175
Net investment income 110,346 99,423
Derivative income 21,917 9,365
Realized gains (losses) on investments 6,881 (574)
Other income 4,855 4,483
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Total revenues 199,418 165,843
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 84,073 70,247
Traditional life insurance and accident and
health benefits 19,928 17,844
Increase in traditional life and accident and
health future policy benefits 8,031 7,283
Distributions to participating policyholders 6,057 6,823
Underwriting, acquisition and insurance
expenses 39,074 34,090
Interest expense 3,228 2,420
Other expenses 4,595 4,114
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Total benefits and expenses 164,986 142,821
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34,432 23,022
Income taxes (9,388) (7,413)
Minority interest in earnings of subsidiaries (37) (38)
Equity income, net of related income taxes 423 2,058
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Net income 25,430 17,629
Dividends on Series B preferred stock (38) (38)
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Net income applicable to common stock $25,392 $17,591
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Earnings per common share - assuming dilution $0.87 $0.61
=========== ===========
Weighted average common shares 28,695,689 28,167,205
Effect of dilutive securities 526,519 697,270
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Weighted average common shares - diluted 29,222,208 28,864,475
=========== ===========
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Year ended
Dec. 31,
2004 2003
----------- -----------
REVENUES
Interest sensitive and index product charges $89,925 $83,944
Traditional life insurance premiums 131,865 129,190
Accident and health premiums 480 566
Net investment income 416,081 395,881
Derivative income 15,607 17,078
Realized gains (losses) on investments 8,175 (2,008)
Other income 20,469 16,894
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Total revenues 682,602 641,545
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 268,083 260,470
Traditional life insurance and accident and
health benefits 83,329 75,852
Increase in traditional life and accident and
health future policy benefits 34,149 32,745
Distributions to participating policyholders 24,733 27,443
Underwriting, acquisition and insurance
expenses 150,046 130,935
Interest expense 11,397 5,052
Other expenses 18,373 15,054
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Total benefits and expenses 590,110 547,551
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92,492 93,994
Income taxes (27,709) (31,417)
Minority interest in earnings of subsidiaries:
Dividends on company-obligated mandatorily
redeemable preferred stock of subsidiary
trust - (2,425)
Other (105) (16)
Equity income, net of related income taxes 1,398 5,809
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Net income 66,076 65,945
Dividends on Series B and C preferred stock (150) (2,297)
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Net income applicable to common stock $65,926 $63,648
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Earnings per common share - assuming dilution $2.26 $2.23
=========== ===========
Weighted average common shares 28,587,870 27,977,739
Effect of dilutive securities 553,020 571,143
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Weighted average common shares - diluted 29,140,890 28,548,882
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FBL FINANCIAL GROUP, INC.
RECONCILIATION OF NET INCOME TO OPERATING INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
Dec. 31,
2004 2003
--------- ---------
Net income applicable to common stock $25,392 $17,591
Net realized (gains) losses on investments (1) (4,395) 159
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Operating income applicable to common stock $20,997 $17,750
========= =========
Operating earnings per common share - assuming
dilution $0.72 $0.61
========= =========
Year ended
Dec. 31,
2004 2003
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Net income applicable to common stock $65,926 $63,648
Net realized (gains) losses on investments (1) (4,732) 1,243
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Operating income applicable to common stock $61,194 $64,891
========= =========
Operating earnings per common share - assuming
dilution $2.10 $2.27
========= =========
(1) Net of adjustments for that portion of amortization of deferred
policy acquisition costs, deferred sales inducements, value of
insurance in force acquired, unearned revenue reserve and income taxes
attributable to such gains/losses.
FBL FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share data)
December 31, December 31,
2004 2003
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Assets
Investments $7,501,680 $6,341,701
Cash and cash equivalents 27,957 233,858
Deferred policy acquisition costs 587,391 530,580
Deferred sales inducements 78,443 39,143
Other assets 353,236 340,016
Assets held in separate accounts 552,029 463,772
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Total assets $9,100,736 $7,949,070
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Liabilities and stockholders' equity
Policy liabilities and accruals $6,650,973 $5,780,251
Other policyholders' funds 549,968 521,816
Debt 263,183 185,480
Other liabilities 251,781 249,763
Liabilities related to separate accounts 552,029 463,772
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Total liabilities 8,267,934 7,201,082
Minority interest in subsidiaries 191 161
Stockholders' equity 832,611 747,827
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Total liabilities and stockholders' equity $9,100,736 $7,949,070
============ ============
Book Value Per Share, securities at market $28.87 $26.42
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Book Value Per Share, securities at cost (2) $23.96 $22.11
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Common Shares Outstanding 28,734,857 28,190,918
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(2) Book value per share with securities at cost, a non-GAAP financial
measure, is based on stockholders' equity excluding the effect of
accumulated other comprehensive income, which was $141.2 million at
December 31, 2004 and $121.6 million at December 31, 2003. Since
accumulated other comprehensive income fluctuates from quarter to
quarter due to unrealized changes in the fair market value of
investments caused principally by changes in market interest rates,
FBL believes this non-GAAP financial measure provides useful
supplemental information.
FFG-1
CONTACT: FBL Financial Group, Inc., West Des Moines
James W. Noyce, 515-225-5599
jnoyce@fbfs.com