Exhibit 99.1
FBL Financial Group Reports Fourth Quarter 2005 Results
WEST DES MOINES, Iowa--(BUSINESS WIRE)--Feb. 6, 2006--FBL Financial Group,
Inc. (NYSE:FFG):
Financial Highlights
(Dollars in thousands, except per share data)
- ----------------------------------------------------------------------
Three Months Ended
December 31,
2005 2004
------------------------
Net income applicable to common stock $20,285 $25,392
Operating income applicable to common stock 20,484 19,496
Earnings per common share (assuming dilution):
Net income 0.69 0.87
Operating income 0.69 0.67
- ----------------------------------------------------------------------
FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted net
income per common share totaled $0.69 ($20,285,000) for the quarter ended
December 31, 2005, compared to $0.87 ($25,392,000) in the year ago quarter.
Operating Income(1). Operating income increased to $20,484,000 for the
quarter ended December 31, 2005, from $19,496,000 in the fourth quarter of 2004.
Diluted operating income per common share increased to $0.69 in the fourth
quarter of 2005 from $0.67 in the fourth 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 fourth quarter results, Chief Executive Officer Bill
Oddy stated, "FBL Financial Group's fourth quarter results capped off an
excellent 2005 in which we achieved record operating income of $2.49 per share
and record net income of $2.47 per share. Total premiums collected also reached
a record at $1.4 billion for the year, a 17 percent increase over 2004. Results
for our growing EquiTrust Life independent distribution channel improved
steadily throughout the year and added to FBL's earnings in the fourth quarter.
We reached another milestone this quarter when our assets exceeded $10 billion
for the first time. With our proven growth strategies, a solid base from our
Farm Bureau Life niche marketplace and our growing EquiTrust Life business, we
are well-positioned for 2006."
Product Revenues Up. Premiums and product charges for the fourth quarter of
2005 increased three percent to $57,232,000 from $55,419,000 in the fourth
quarter of 2004. Interest sensitive and index product charges increased five
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(2) in the fourth quarter of 2005 increased 24 percent to
$360,071,000 from $290,545,000 in the fourth quarter of 2004. This increase
reflects growth in FBL's EquiTrust Life independent channel, which had
$240,649,000 of premiums collected in the fourth quarter of 2005, up 51 percent
from the fourth quarter of 2004. Premiums collected from FBL's exclusive
distribution channel totaled $108,804,000 in the fourth quarter of 2005,
reflecting a 32 percent increase in variable sales, steady traditional and
universal life insurance sales and a 33 percent decline in traditional annuity
sales.
Investment Income. Net investment income in the fourth quarter of 2005
increased 12 percent to $123,070,000 from $110,346,000 in the fourth quarter of
2004. This increase is due to an increase in average invested assets resulting
primarily from inflows from Farm Bureau Life and EquiTrust Life. The annualized
yield earned on average invested assets, with securities at cost, was 6.22
percent for the year ended December 31, 2005, compared to 6.18 percent for 2004.
The 2005 yield reflects an increase in investment fee income, which includes
income from bond calls, tender offers and mortgage loan prepayments. Investment
fee income totaled $2,200,000 in the fourth quarter of 2005 compared to $619,000
in the fourth quarter of 2004.
Derivative Income. FBL's derivative income totaled $3,580,000 in the fourth
quarter of 2005, compared to $21,917,000 in the fourth quarter of 2004.
Derivative income primarily reflects an increase in the volume of options
supporting FBL's index annuity business and appreciation of the underlying
equity market indices on which these options are based. Gains from these options
are generally passed on to the contract holders in the form of index credits.
Realized/Unrealized Losses on Investments. In the fourth quarter of 2005,
FBL recognized net realized/unrealized losses on investments of $364,000. This
compares to realized/unrealized gains on investments of $6,881,000 in the fourth
quarter of 2004. Fourth quarter 2005 realized/unrealized losses include realized
gains from sales of investments of $596,000, realized losses from sales of
securities of $930,000, realized losses from impairments of $1,000 and
unrealized losses on trading securities of $29,000.
Benefits and Expenses. Benefits and expenses totaled $159,589,000 in the
fourth quarter of 2005, compared to $164,986,000 in the fourth quarter of 2004.
This decrease is partially attributable to a lower level of appreciation in the
equity market indices, which resulted in lower benefits associated with FBL's
index annuity business.
In addition, in connection with the closing of a processing unit and
certain workforce reductions in the fourth quarter of 2005, FBL recorded a
pre-tax charge of $1,600,000 for early retirement benefits. As a result of
efficiencies gained with these activities, before the impact of the retirement
charge, FBL achieved a substantial portion of the estimated $1,000,000 quarterly
pre-tax savings during the fourth quarter of 2005.
Operating Results by Segment. Consistent with prior quarters, the majority
of FBL's operating earnings for the fourth quarter of 2005 are attributable to
the traditional annuity and traditional and universal life insurance segments.
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 Exceed $10 Billion. Total assets increased $1.1 billion to $10.2
billion at December 31, 2005, from $9.1 billion at December 31, 2004. At
December 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 $28.88 at December 31, 2005, compared to $28.87 at December
31, 2004. Book value per share excluding accumulated other comprehensive
income(3) increased nine percent to $26.05 at December 31, 2005, from $23.96 at
December 31, 2004.
Earnings Outlook. While subject to volatility resulting from a number of
factors, including mortality experience and investment results, FBL maintains
its full year 2006 net income and operating income guidance of a range of $2.40
to $2.50 per common share.
Conference Call. FBL management will hold a conference call with investors
to discuss fourth quarter 2005 results. The call will be held tomorrow, February
7, 2006, 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. The
risks and uncertainties that could cause actual results to differ materially are
detailed in FBL's reports filed with the Securities and Exchange Commission and
include interest rate changes, competitive factors, volatility of financial
markets, the ability to attract and retain sales agents and a decrease in
ratings. These forward-looking statements are based on assumptions which FBL
Financial Group believes to be reasonable. No assurance can be given that the
assumptions will prove to be correct.
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,
2005 2004
----------- -----------
REVENUES
Interest sensitive and index product charges $24,363 $23,168
Traditional life insurance premiums 32,721 32,056
Accident and health premiums 148 195
Net investment income 123,070 110,346
Derivative income 3,580 21,917
Realized/unrealized gains (losses) on
investments (364) 6,881
Other income 5,455 4,855
----------- -----------
Total revenues 188,973 199,418
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 78,469 84,073
Traditional life insurance and accident and
health benefits 20,949 19,928
Increase in traditional life and accident and
health future policy benefits 9,425 8,031
Distributions to participating policyholders 5,672 6,057
Underwriting, acquisition and insurance
expenses 37,042 39,074
Interest expense 3,493 3,228
Other expenses 4,539 4,595
----------- -----------
Total benefits and expenses 159,589 164,986
----------- -----------
29,384 34,432
Income taxes (9,676) (9,388)
Minority interest in earnings of subsidiaries (28) (37)
Equity income, net of related income taxes 643 423
----------- -----------
Net income 20,323 25,430
Dividends on Series B preferred stock (38) (38)
----------- -----------
Net income applicable to common stock $20,285 $25,392
=========== ===========
Earnings per common share - assuming dilution $0.69 $0.87
=========== ===========
Weighted average common shares 29,071,238 28,695,689
Effect of dilutive securities 515,704 526,519
----------- -----------
Weighted average common shares - diluted 29,586,942 29,222,208
=========== ===========
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Year ended
Dec. 31,
2005 2004
----------- -----------
REVENUES
Interest sensitive and index product charges $96,258 $89,925
Traditional life insurance premiums 134,618 131,865
Accident and health premiums 385 480
Net investment income 475,443 416,081
Derivative income (loss) (2,800) 15,607
Realized/unrealized gains on investments 2,961 8,175
Other income 21,283 20,469
----------- -----------
Total revenues 728,148 682,602
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 289,018 268,083
Traditional life insurance and accident and
health benefits 85,600 83,329
Increase in traditional life and accident and
health future policy benefits 36,327 34,149
Distributions to participating policyholders 22,907 24,733
Underwriting, acquisition and insurance
expenses 152,588 150,046
Interest expense 13,590 11,397
Other expenses 19,555 18,373
----------- -----------
Total benefits and expenses 619,585 590,110
----------- -----------
108,563 92,492
Income taxes (36,780) (27,709)
Minority interest in earnings of subsidiaries (159) (105)
Equity income, net of related income taxes 1,218 1,398
----------- -----------
Net income 72,842 66,076
Dividends on Series B preferred stock (150) (150)
----------- -----------
Net income applicable to common stock $72,692 $65,926
=========== ===========
Earnings per common share - assuming dilution $2.47 $2.26
=========== ===========
Weighted average common shares 28,909,623 28,587,870
Effect of dilutive securities 505,365 553,020
----------- -----------
Weighted average common shares - diluted 29,414,988 29,140,890
=========== ===========
(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
Dec. 31,
2005 2004
---------- ---------
Net income applicable to common stock $20,285 $25,392
Adjustments:
Net realized/unrealized (gains) losses on
investments (a) 162 (4,395)
Net change in unrealized gains/losses on
derivatives (a) 37 (1,501)
---------- ---------
Operating income applicable to common stock $20,484 $19,496
========== =========
Operating income per common share - assuming
dilution $0.69 $0.67
========== =========
Year ended
Dec. 31,
2005 2004
---------- ---------
Net income applicable to common stock $72,692 $65,926
Adjustments:
Net realized/unrealized (gains) losses on
investments (a) (1,633) (4,732)
Net change in unrealized gains/losses on
derivatives (a) 2,328 (979)
---------- ---------
Operating income applicable to common stock $73,387 $60,215
========== =========
Operating income per common share - assuming
dilution $2.49 $2.07
========== =========
(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) Premiums Collected - Net statutory premiums collected, a
measure of sales production, is a non-GAAP measure and includes
premiums collected from annuities and universal life-type
products. For GAAP reporting, these premiums received are not
reported as revenues.
(3) Reconciliation of Book Value Per Share
Excluding Accumulated Other Comprehensive Income (Unaudited)
Dec. 31, Dec. 31,
2005 2004
---------- ---------
Book value per share $28.88 $28.87
Less: Accumulated other comprehensive income 2.83 4.91
---------- ---------
Book value per share, excluding accumulated other
comprehensive income $26.05 $23.96
========== =========
Book value per share excluding accumulated other comprehensive
income is a non-GAAP financial measure. Accumulated other
comprehensive income totaled $82,301,000 at December 31, 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)
December 31, December 31,
2005 2004
------------- ------------
Assets
Investments $8,299,208 $7,501,680
Cash and cash equivalents 5,120 27,957
Deferred policy acquisition costs 695,067 587,391
Deferred sales inducements 146,978 78,443
Other assets 367,665 353,236
Assets held in separate accounts 639,895 552,029
------------- ------------
Total assets $10,153,933 $9,100,736
============= ============
Liabilities and stockholders' equity
Policy liabilities and accruals $7,634,922 $6,650,973
Other policyholders' funds 560,863 549,968
Debt 218,446 263,183
Other liabilities 255,412 251,781
Liabilities related to separate accounts 639,895 552,029
------------- ------------
Total liabilities 9,309,538 8,267,934
Minority interest in subsidiaries 164 191
Stockholders' equity 844,231 832,611
------------- ------------
Total liabilities and stockholders' equity $10,153,933 $9,100,736
============= ============
Common Shares Outstanding 29,133,331 28,734,857
============= ============
FFG-1
CONTACT: FBL Financial Group, Inc., West Des Moines
Kathleen Till Stange, 515-226-6780
Kathleen.TillStange@FBLFinancial.com