Exhibit 99.1
FBL Financial Group Reports First Quarter 2005 Results;
Net Income Up 31 Percent to $0.59 Per Share
WEST DES MOINES, Iowa--(BUSINESS WIRE)--May 9, 2005--
Financial Highlights
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
2005 2004
--------------------
Net income applicable to common stock $17,167 $13,144
Operating income applicable to common stock 16,807 12,654
Earnings per common share (assuming dilution):
Net income 0.59 0.45
Operating income 0.57 0.44
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FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted
net income per common share increased 31 percent to $0.59
($17,167,000) for the quarter ended March 31, 2005 from $0.45
($13,144,000) in the year ago quarter.
Operating Income(1). Operating income increased to $16,807,000 for
the quarter ended March 31, 2005, from $12,654,000 in the first
quarter of 2004. Diluted operating income per common share increased
30 percent to $0.57 in the first quarter of 2005 from $0.44 in the
first quarter of 2004. Operating income differs from the GAAP measure,
net income, in that it excludes the impact of realized gains and
losses on investments and the change in net unrealized gains and
losses on derivatives. For further information on this non-GAAP
financial measure, please refer to Note (1) and the reconciliation
provided within this release.
Commenting on FBL's first quarter results, Chief Executive Officer
Bill Oddy stated, "We are very pleased with our 31 percent increase in
net income per share, our 30 percent increase in operating income per
share and our 43 percent increase in collected premiums. Farm Bureau
Life had a solid quarter with collected premiums of $122 million.
EquiTrust Life collected $201 million in premiums in the first
quarter, led by its independent agent channel which achieved a record
$185 million in premiums and is on track to reach its target of $750
million for the year. Likewise, we continue growth in EquiTrust's
agent count as it increased 27 percent during the quarter."
"With these strong first quarter results and our growing sales, we
are optimistic about the remainder of the year. Therefore, we expect
our full year 2005 net income and operating income per share to be
toward the high end of the $2.00 to $2.10 range we previously
provided," Oddy added.
Product Revenues Up. Premiums and product charges for the first
quarter of 2005 increased two percent to $57,121,000 from $55,827,000
in the first quarter of 2004. This increase was driven by eight
percent growth in interest sensitive and index product charges due
primarily to an increase in the volume and aging of business in force.
Premiums collected in the first quarter of 2005 increased 43
percent to $322,634,000 from $226,376,000 in the first quarter of
2004. This increase reflects growth in FBL's EquiTrust Life
independent channel, which had $185,339,000 of premiums collected in
the first quarter of 2005. Premiums collected from FBL's exclusive
distribution channel totaled $121,980,000 in the first quarter of
2005, a decline of three percent, primarily due to lower sales of Farm
Bureau Life's annuity products.
Investment Income. Net investment income in the first quarter of
2005 increased 16 percent to $114,106,000 from $98,546,000 in the
first quarter of 2004. This increase is due to an increase in average
invested assets resulting primarily from premium inflows from Farm
Bureau Life and EquiTrust Life. Net investment income in the first
quarter of 2005 includes $882,000 of non-recurring investment income
relating to the redemption of a bond that had been impaired in a prior
period and the payment of past due interest. The annualized yield
earned on average invested assets, with securities at cost, was 6.40
percent for the three months ended March 31, 2005, compared to 6.34
percent for the first quarter of 2004. The 2005 yield reflects the
non-recurring investment income, an increase in investment fee income
and a more fully invested portfolio with a lower cash position.
Investment fee income, which includes income from bond calls and
mortgage loan prepayments, totaled $340,000 in the first quarter of
2005 compared to a loss of $156,000 in the first quarter of 2004.
Derivative Income (Loss). FBL's derivative income (loss) totaled a
loss of $12,400,000 in the first quarter of 2005, compared to income
of $4,212,000 in the first quarter of 2004. This loss primarily
reflects a decrease in the value of the underlying equity market
indices on which call options supporting FBL's index annuity business
are based. Gains from these options are generally passed on to the
contract holders in the form of index credits.
Realized Gains on Investments. In the first quarter of 2005, FBL
recognized net realized gains on investments of $412,000 compared to
$64,000 in the first quarter of 2004. First quarter 2005 realized
gains include realized gains from sales of securities of $2,275,000
and realized losses from sales of securities of $1,863,000.
Benefits and Expenses. Benefits and expenses totaled $137,272,000
in the first quarter of 2005, compared to $143,640,000 in the first
quarter of 2004. This decrease reflects a decline in index product
benefits primarily due to less appreciation in the underlying equity
market indices on which options are based. Mortality experience was in
line with expectations.
Income (Loss) from Equity Investments. Equity income (loss), net
of related income taxes, was a loss of $259,000 in the first quarter
of 2005, compared to income of $255,000 in the first quarter of 2004.
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.
Operating Results by Segment. FBL's operating results for the
first quarter of 2005 reflect an increase in all product segments,
with the largest increase in the traditional annuity - exclusive
distribution segment, which had a 40 percent increase in pre-tax
operating income to $8,774,000. Segment results for the first quarter
of 2005 are impacted by a change in capital allocation and a change in
methodology in how indirect expenses are allocated among segments.
Further detail of these changes and results by segment are provided in
FBL's financial supplement, which is available on FBL's web site,
www.fblfinancial.com.
Assets Total $9.3 Billion. Total assets increased $169,308,000 to
$9.3 billion at March 31, 2005, from $9.1 billion at December 31,
2004. At March 31, 2005, 95 percent of the fixed maturity securities
in FBL's investment portfolio were investment grade debt securities.
Book value per common share totaled $28.38 at March 31, 2005 compared
to $28.87 at December 31, 2004. Book value per share excluding
accumulated other comprehensive income(2) increased to $24.42 at March
31, 2005, from $23.96 at December 31, 2004.
Conference Call. FBL management will hold a conference call with
investors to discuss first quarter 2005 results. The call will be held
tomorrow, May 10, 2005, at 11 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
March 31,
2005 2004
----------- -----------
REVENUES
Interest sensitive and index product charges $23,768 $22,019
Traditional life insurance premiums 33,333 33,734
Accident and health premiums 20 74
Net investment income 114,106 98,546
Derivative income (loss) (12,400) 4,212
Realized gains on investments 412 64
Other income 4,969 4,701
----------- -----------
Total revenues 164,208 163,350
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 55,558 63,270
Traditional life insurance and accident and
health benefits 20,771 21,825
Increase in traditional life and accident and
health future policy benefits 8,250 6,732
Distributions to participating policyholders 6,164 6,723
Underwriting, acquisition and insurance
expenses 38,468 38,359
Interest expense 3,295 2,033
Other expenses 4,766 4,698
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Total benefits and expenses 137,272 143,640
----------- -----------
26,936 19,710
Income taxes (9,374) (6,720)
Minority interest in loss of subsidiaries (98) (63)
Equity income (loss), net of related income
taxes (259) 255
----------- -----------
Net income 17,205 13,182
Dividends on Series B preferred stock (38) (38)
----------- -----------
Net income applicable to common stock $17,167 $13,144
=========== ===========
Earnings per common share - assuming dilution $0.59 $0.45
=========== ===========
Weighted average common shares 28,759,200 28,391,050
Effect of dilutive securities 514,208 641,285
----------- -----------
Weighted average common shares - diluted 29,273,408 29,032,335
=========== ===========
(1) Reconciliation of Net Income to Operating Income (Unaudited)
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 and changes in net unrealized gains and losses on
derivatives. Prior to 2005, operating income included the changes in
net unrealized gains and losses on derivatives that were not
designated as hedges. The impact of this change in definition for the
first quarter of 2004 was to decrease operating income $0.02 per
share. Operating results for 2004 have been modified to conform to the
2005 presentation. Further detail on this change is provided in FBL's
March 31, 2005 financial supplement, available at
www.fblfinancial.com.
FBL uses operating income, in addition to net income, to measure
its performance since realized gains and losses on investments and the
change in net unrealized gains and losses on derivatives can fluctuate
greatly from quarter to quarter. These fluctuations make it difficult
to analyze core operating trends. In addition, for derivatives not
designated as hedges, there is a mismatch between the valuation of the
asset and liability when deriving net income. This non-GAAP measure is
used for goal setting, determining company-wide bonuses and evaluating
performance on a basis comparable to that used by many in the
investment community. 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 following table (dollars in
thousands, except per share data):
Three months ended
March 31,
2005 2004
---------- ----------
Net income applicable to common stock $17,167 $13,144
Adjustments:
Net realized gains/losses on investments (a) (527) 210
Net change in unrealized gains/losses on
derivatives (a) 167 (700)
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Operating income applicable to common stock $16,807 $12,654
========== ==========
Operating income per common share - assuming
dilution $0.57 $0.44
========== ==========
(a) Net of adjustments, as applicable, to amortization of unearned
revenue reserves, deferred policy acquisition costs, deferred sales
inducements, value of insurance in force acquired and income taxes
attributable to gains and losses on investments and derivatives.
(2) Reconciliation of Book Value Per Share
Excluding Accumulated Other Comprehensive Income (Unaudited)
March 31, December 31,
2005 2004
----------- ------------
Book value per share $28.38 $28.87
Less: Accumulated other comprehensive income 3.96 4.91
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Book value per share, excluding accumulated
other comprehensive income $24.42 $23.96
=========== ============
Book value per share excluding accumulated other comprehensive
income is a non-GAAP financial measure. Accumulated other
comprehensive income totaled $114.4 million at March 31, 2005 and
$141.2 million at December 31, 2004. 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.
FBL Financial Group, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)
March 31, December 31,
2005 2004
----------- ------------
Assets
Investments $7,626,007 $7,501,680
Cash and cash equivalents 17,174 27,957
Deferred policy acquisition costs 614,977 587,391
Deferred sales inducements 93,936 78,443
Other assets 363,552 353,236
Assets held in separate accounts 554,398 552,029
----------- ------------
Total assets $9,270,044 $9,100,736
=========== ============
Liabilities and stockholders' equity
Policy liabilities and accruals $6,856,574 $6,650,973
Other policyholders' funds 556,257 549,968
Debt 263,560 263,183
Other liabilities 216,349 251,781
Liabilities related to separate accounts 554,398 552,029
----------- ------------
Total liabilities 8,447,138 8,267,934
Minority interest in subsidiaries 200 191
Stockholders' equity 822,706 832,611
----------- ------------
Total liabilities and stockholders' equity $9,270,044 $9,100,736
=========== ============
Common shares outstanding 28,881,459 28,734,857
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FFG-1
CONTACT: FBL Financial Group, Inc., West Des Moines
Kathleen Till Stange, 515-226-6780
ktillstange@fbfs.com