EXHIBIT 99.1
FBL Financial Group Reports Second Quarter 2005 Results; Net Income Up
38 Percent to $0.62 Per Share
WEST DES MOINES, Iowa--(BUSINESS WIRE)--Aug. 8, 2005--FBL
Financial Group, Inc. (NYSE:FFG):
Financial Highlights
(Dollars in thousands, except per share data)
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Three Months Ended
June 30,
2005 2004
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Net income applicable to common stock $18,258 $12,976
Operating income applicable to common stock 18,308 13,487
Earnings per common share (assuming dilution):
Net income 0.62 0.45
Operating income 0.62 0.46
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FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted
net income per common share increased 38 percent to $0.62
($18,258,000) for the quarter ended June 30, 2005 from $0.45
($12,976,000) in the year ago quarter.
Operating Income(1). Operating income increased to $18,308,000 for
the quarter ended June 30, 2005, from $13,487,000 in the second
quarter of 2004. Diluted operating income per common share increased
35 percent to $0.62 in the second quarter of 2005 from $0.46 in the
second quarter of 2004. Operating income differs from the GAAP
measure, net income, in that it excludes the impact of
realized/unrealized 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 second quarter results, Chief Executive
Officer Bill Oddy stated, "FBL Financial Group delivered excellent
second quarter results with a 38 percent increase in net income per
share, a 35 percent increase in operating income per share and
continued growth in premiums collected. Our Farm Bureau Life
subsidiary once again had a solid quarter and our EquiTrust Life
subsidiary continued its growth. In the second quarter our EquiTrust
Life independent channel achieved record sales with total premiums
collected of $233 million. As a result, we are confident this unit
will exceed its premiums collected target of $750 million for the
year."
"Based on our very strong year-to-date results and our positive
outlook for the remainder of the year, we are increasing our earnings
guidance by $0.15 per share. We now expect our full year 2005 net
income and operating income to be $2.15 to $2.25 per share," Oddy
added.
Product Revenues Up. Premiums and product charges for the second
quarter of 2005 increased seven percent to $61,394,000 from
$57,223,000 in the second quarter of 2004. This increase was driven by
a nine percent growth in interest sensitive and index product charges
and a six percent increase in traditional life insurance premiums due
primarily to an increase in the volume of business in force.
Premiums collected in the second quarter of 2005 increased three
percent to $381,725,000 from $369,775,000 in the second quarter of
2004. This increase reflects growth in FBL's EquiTrust Life
independent channel, which had a record $233,126,000 of premiums
collected in the second quarter of 2005. Premiums collected from FBL's
exclusive distribution channel totaled $132,524,000 in the second
quarter of 2005, reflecting a three percent increase in traditional
and universal life insurance, a 19 percent increase in variable sales
and a 13 percent decline in traditional annuity sales.
Investment Income. Net investment income in the second quarter of
2005 increased 17 percent to $117,931,000 from $100,382,000 in the
second 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. The annualized yield earned on average
invested assets, with securities at cost, was 6.36 percent for the six
months ended June 30, 2005, compared to 6.23 percent for the same
period of 2004. The 2005 yield reflects an increase in investment fee
income, which includes income from bond calls, tender offers and
mortgage loan prepayments, to $2,525,000 in the second quarter of 2005
from $586,000 in the second quarter of 2004.
Derivative Income. FBL's derivative income (loss) totaled income
of $120,000 in the second quarter of 2005, compared to a loss of
$2,059,000 in the second quarter of 2004. This income primarily
reflects an increase 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/Unrealized Gains on Investments. In the second quarter of
2005, FBL recognized net realized/unrealized gains on investments of
$2,876,000 compared to $629,000 in the second quarter of 2004. Second
quarter 2005 realized/unrealized gains include realized gains from
sales of securities of $4,646,000, realized losses from sales of
securities of $34,000, realized losses from impairments of $1,732,000
and unrealized losses on trading securities of $4,000.
Benefits and Expenses. Benefits and expenses totaled $159,801,000
in the second quarter of 2005, compared to $144,611,000 in the second
quarter of 2004. This increase is primarily attributable to benefits
associated with FBL's growing index annuity business.
In connection with the closing of a processing unit and certain
workforce reductions, in the second half of 2005 FBL expects to record
a one-time pre-tax charge of $2,300,000 ($0.05 per share after tax)
primarily related to severance and early retirement benefits. As a
result of these actions, beginning in 2006 FBL expects to achieve
pre-tax annual savings of approximately $4,000,000, which is $0.09 per
share on an after-tax basis.
Operating Results by Segment. FBL's operating results for the
second quarter of 2005 reflect strong results for the traditional
annuity-exclusive, traditional annuity-independent and traditional and
universal life insurance segments, and a pre-tax operating loss for
the variable segment. Further detail and results by segment are
provided in FBL's financial supplement, which is available on FBL's
web site, www.fblfinancial.com.
Assets Total $9.7 Billion. Total assets increased $606,005,000 to
$9.7 billion at June 30, 2005, from $9.1 billion at December 31, 2004.
At June 30, 2005, 95 percent of the fixed maturity securities in FBL's
investment portfolio were investment grade debt securities. Book value
per common share totaled $31.09 at June 30, 2005 compared to $28.87 at
December 31, 2004. Book value per share excluding accumulated other
comprehensive income(2) increased to $24.97 at June 30, 2005, from
$23.96 at December 31, 2004.
Conference Call. FBL management will hold a conference call with
investors to discuss second quarter 2005 results. The call will be
held tomorrow, August 9, 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
June 30,
2005 2004
----------- -----------
REVENUES
Interest sensitive and index product charges $24,293 $22,301
Traditional life insurance premiums 36,915 34,738
Accident and health premiums 186 184
Net investment income 117,931 100,382
Derivative income (loss) 120 (2,059)
Realized/unrealized gains on investments 2,876 629
Other income 5,423 5,382
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Total revenues 187,744 161,557
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 75,352 62,951
Traditional life insurance and accident and
health benefits 23,166 21,057
Increase in traditional life and accident and
health future policy benefits 10,408 10,819
Distributions to participating policyholders 5,678 6,108
Underwriting, acquisition and insurance
expenses 37,038 36,179
Interest expense 3,375 2,965
Other expenses 4,784 4,532
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Total benefits and expenses 159,801 144,611
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27,943 16,946
Income taxes (9,829) (4,187)
Minority interest in loss (earnings) of
subsidiaries (9) 21
Equity income, net of related income taxes 190 233
----------- -----------
Net income 18,295 13,013
Dividends on Series B preferred stock (37) (37)
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Net income applicable to common stock $18,258 $12,976
=========== ===========
Earnings per common share - assuming dilution $0.62 $0.45
=========== ===========
Weighted average common shares 28,849,494 28,605,087
Effect of dilutive securities 477,412 549,744
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Weighted average common shares - diluted 29,326,906 29,154,831
=========== ===========
FBL Financial Group, Inc.
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
Six months ended
June 30,
2005 2004
----------- -----------
REVENUES
Interest sensitive and index product charges $48,061 $44,320
Traditional life insurance premiums 70,248 68,472
Accident and health premiums 206 258
Net investment income 232,037 198,928
Derivative income (loss) (12,280) 2,153
Realized/unrealized gains on investments 3,288 693
Other income 10,392 10,083
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Total revenues 351,952 324,907
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 130,910 126,221
Traditional life insurance and accident and
health benefits 43,937 42,882
Increase in traditional life and accident and
health future policy benefits 18,658 17,551
Distributions to participating policyholders 11,842 12,831
Underwriting, acquisition and insurance
expenses 75,506 74,538
Interest expense 6,670 4,998
Other expenses 9,550 9,230
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Total benefits and expenses 297,073 288,251
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54,879 36,656
Income taxes (19,203) (10,907)
Minority interest in loss (earnings) of
subsidiaries (107) (42)
Equity income (loss), net of related income
taxes (69) 488
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Net income 35,500 26,195
Dividends on Series B preferred stock (75) (75)
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Net income applicable to common stock $35,425 $26,120
=========== ===========
Earnings per common share - assuming dilution $1.21 $0.90
=========== ===========
Weighted average common shares 28,804,596 28,498,068
Effect of dilutive securities 495,810 595,515
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Weighted average common shares - diluted 29,300,406 29,093,583
=========== ===========
(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/unrealized
gains and losses on investments and the change in net unrealized
gains and losses on derivatives.
FBL uses operating income, in addition to net income, to measure
its performance since realized/unrealized 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
June 30,
2005 2004
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Net income applicable to common stock $18,258 $12,976
Adjustments:
Net realized/unrealized gains on investments (a) (1,274) (306)
Net change in unrealized gains/losses on
derivatives (a) 1,324 817
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Operating income applicable to common stock $18,308 $13,487
========== =========
Operating income per common share - assuming
dilution $0.62 $0.46
========== =========
Six months ended
June 30,
2005 2004
--------- --------
Net income applicable to common stock $35,425 $26,120
Adjustments:
Net realized/unrealized gains on investments (a) (1,801) (96)
Net change in unrealized gains/losses on
derivatives (a) 1,491 117
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Operating income applicable to common stock $35,115 $26,141
========= ========
Operating income per common share - assuming
dilution $1.20 $0.90
========= ========
(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)
June 30, December 31,
2005 2004
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Book value per share $31.09 $28.87
Less: Accumulated other comprehensive income 6.12 4.91
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Book value per share, excluding accumulated
other comprehensive income $24.97 $23.96
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Book value per share excluding accumulated other comprehensive income
is a non-GAAP financial measure. Accumulated other comprehensive
income totaled $177,277,000 at June 30, 2005 and $141,240,000 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)
June 30, December 31,
2005 2004
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Assets
Investments $8,017,282 $7,501,680
Cash and cash equivalents 36,031 27,957
Deferred policy acquisition costs 613,088 587,391
Deferred sales inducements 102,904 78,443
Other assets 358,134 353,236
Assets held in separate accounts 579,302 552,029
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Total assets $9,706,741 $9,100,736
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Liabilities and stockholders' equity
Policy liabilities and accruals $7,127,824 $6,650,973
Other policyholders' funds 564,612 549,968
Debt 263,942 263,183
Other liabilities 268,560 251,781
Liabilities related to separate accounts 579,302 552,029
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Total liabilities 8,804,240 8,267,934
Minority interest in subsidiaries 144 191
Stockholders' equity 902,357 832,611
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Total liabilities and stockholders' equity $9,706,741 $9,100,736
============= ============
Common shares outstanding 28,922,970 28,734,857
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FFG-1
CONTACT: FBL Financial Group, Inc., West Des Moines
Investor Relations:
Kathleen Till Stange, 515-226-6780
Kathleen.TillStange@FBLFinancial.com