Exhibit 99.1
FBL Financial Group Reports First Quarter 2006 Results
WEST DES MOINES, Iowa--(BUSINESS WIRE)--May 4, 2006--FBL Financial
Group, Inc. (NYSE:FFG):
Financial Highlights
(Dollars in thousands, except per share data)
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Three Months Ended
March 31,
2006 2005
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Net income applicable to common stock $27,696 $17,167
Operating income applicable to common stock 17,548 16,807
Earnings per common share (assuming dilution):
Net income 0.93 0.59
Operating income 0.59 0.57
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FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted
net income per common share totaled $0.93 ($27,696,000) for the
quarter ended March 31, 2006, compared to $0.59 ($17,167,000) in the
year ago quarter.
Operating Income(1). Operating income increased to $17,548,000 for
the quarter ended March 31, 2006, from $16,807,000 in the first
quarter of 2005. Diluted operating income per common share increased
to $0.59 in the first quarter of 2006 from $0.57 in the first quarter
of 2005. 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 first quarter results, Chief Executive Officer
Bill Oddy stated, "Despite increased death benefits, we were able to
increase operating earnings and report strong net income during the
first quarter. Sales in our EquiTrust Life independent channel
continued to grow with $277 million of premiums collected in the
quarter, up 50 percent from the first quarter of 2005 and 15 percent
from the fourth quarter of 2005. As premium and assets increase, the
independent channel is also growing earnings, as it contributed $0.03
per share to operating income for the quarter. FBL Financial Group is
off to a great start in 2006 and continues to be well positioned with
our solid base in the Farm Bureau Life niche marketplace and our
growing EquiTrust Life business."
Commenting on FBL's earnings outlook, Oddy added, "As a result of
significant realized gains on investments during the first quarter, we
are increasing our full year 2006 net income guidance to $2.75 to
$2.85 per common share. We maintain our full year 2006 operating
income guidance at $2.40 to $2.50 per common share." This earnings
outlook is subject to volatility resulting from a number of factors,
including mortality experience and investment results.
Product Revenues Up. Premiums and product charges for the first
quarter of 2006 increased five percent to $59,772,000 from $57,121,000
in the first quarter of 2005. 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 three percent.
Premiums collected(2) in the first quarter of 2006 increased 27
percent to $409,708,000 from $322,634,000 in the first quarter of
2005. This increase reflects growth in FBL's EquiTrust Life
independent channel, which had $277,203,000 of premiums collected in
the first quarter of 2006. Premiums collected from FBL's exclusive
Farm Bureau Life distribution channel totaled $120,239,000 in the
first quarter of 2006, reflecting a 13 percent increase in variable
sales, a two percent increase in traditional and universal life
insurance sales and a 13 percent decline in traditional annuity sales.
Investment Income. Net investment income in the first quarter of
2006 increased seven percent to $122,380,000 from $114,106,000 in the
first quarter of 2005. 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 6.10 percent for the three months
ended March 31, 2006, compared to 6.40 percent for the first quarter
of 2005.
Derivative Income. FBL's derivative income totaled $16,832,000 in
the first quarter of 2006, compared to a derivative loss of
$12,400,000 in the first quarter of 2005. The increase in derivative
income is primarily attributable to the impact of growth in the volume
of index annuities in force and appreciation in the market indices on
which these options are based. Gains from these options are passed on
to the contract holders in the form of index credits.
Realized/Unrealized Gains on Investments. In the first quarter of
2006, FBL recognized net realized/unrealized gains on investments of
$11,604,000, compared to realized/unrealized gains on investments of
$412,000 in the first quarter of 2005. This increase is primarily
attributable to a gain on the sale of shares of American Equity
Investment Life Holding Company common stock, which totaled
$13,492,000 pre-tax, which is $0.29 per share on an after-tax basis.
First quarter 2006 realized/unrealized gains include realized gains
from sales of investments of $13,989,000, realized losses from sales
of securities of $3,000, realized losses from impairments of
$2,340,000 and unrealized losses on trading securities of $42,000.
Benefits and Expenses. Benefits and expenses totaled $174,077,000
in the first quarter of 2006, compared to $137,272,000 in the first
quarter of 2005. This increase is primarily attributable to an
increase in index product benefits resulting from a higher level of
appreciation of the underlying equity market indices. Additionally,
death benefits increased to $24,106,000 in 2006 compared to
$21,089,000 in the first quarter of 2005.
Operating Results by Segment. Consistent with prior quarters, the
majority of FBL's operating earnings for the first quarter of 2006 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
website, www.fblfinancial.com.
Assets Total $10.3 Billion. Total assets increased $195 million to
$10.3 billion at March 31, 2006, from $10.2 billion at December 31,
2005. At March 31, 2006, 95 percent of the fixed maturity securities
in FBL's investment portfolio were investment grade debt securities.
Book value per common share totaled $26.47 at March 31, 2006, compared
to $28.88 at December 31, 2005. Book value per share excluding
accumulated other comprehensive income (loss)(3) increased three
percent to $26.78 at March 31, 2006, from $26.05 at December 31, 2005.
Conference Call. FBL management will hold a conference call with
investors to discuss first quarter 2006 results. The call will be held
tomorrow, May 5, 2006, at 11 a.m. Eastern Time. The call will be
webcast over the Internet, and a replay will be available on FBL's
website, 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 change 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
March 31,
2006 2005
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REVENUES
Interest sensitive and index product
charges $25,314 $23,768
Traditional life insurance premiums 34,388 33,333
Accident and health premiums 70 20
Net investment income 122,380 114,106
Derivative income (loss) 16,832 (12,400)
Realized/unrealized gains on investments 11,604 412
Other income 5,479 4,969
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Total revenues 216,067 164,208
BENEFITS AND EXPENSES
Interest sensitive and index product
benefits 86,702 55,558
Traditional life insurance and accident and
health benefits 22,661 20,771
Increase in traditional life and accident
and health future policy benefits 8,753 8,250
Distributions to participating
policyholders 5,697 6,164
Underwriting, acquisition and insurance
expenses 41,806 38,468
Interest expense 2,961 3,295
Other expenses 5,497 4,766
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Total benefits and expenses 174,077 137,272
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41,990 26,936
Income taxes (14,381) (9,374)
Minority interest in earnings of
subsidiaries (55) (98)
Equity income (loss), net of related income
taxes 180 (259)
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Net income 27,734 17,205
Dividends on Series B preferred stock (38) (38)
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Net income applicable to common stock $27,696 $17,167
============ ============
Earnings per common share - assuming
dilution $0.93 $0.59
============ ============
Weighted average common shares 29,228,454 28,759,200
Effect of dilutive securities 537,020 514,208
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Weighted average common shares - diluted 29,765,474 29,273,408
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(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
March 31,
2006 2005
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Net income applicable to common stock $27,696 $17,167
Adjustments:
Net realized/unrealized gains on
investments (a) (7,693) (527)
Net change in unrealized gains/losses on
derivatives (a) (2,455) 167
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Operating income applicable to common stock $17,548 $16,807
============ ============
Operating income per common share - assuming
dilution $0.59 $0.57
============ ============
(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)
March 31, December 31,
2006 2005
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Book value per share $26.47 $28.88
Accumulated other comprehensive income
(loss) (0.31) 2.83
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Book value per share, excluding accumulated
other comprehensive income (loss) $26.78 $26.05
============ ============
Book value per share excluding accumulated other comprehensive income
(loss) is a non-GAAP financial measure. Accumulated other
comprehensive income (loss) totaled a loss of $9,252,000 at March 31,
2006 and income of $82,301,000 at December 31, 2005. Since accumulated
other comprehensive income (loss) 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,
2006 2005
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Assets
Investments $8,343,669 $8,299,208
Cash and cash equivalents 12,880 5,120
Deferred policy acquisition costs 762,197 695,067
Deferred sales inducements 163,564 146,978
Other assets 384,065 367,665
Assets held in separate accounts 682,700 639,895
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Total assets $10,349,075 $10,153,933
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Liabilities and stockholders' equity
Policy liabilities and accruals $7,924,886 $7,634,922
Other policyholders' funds 559,332 560,863
Debt 218,432 218,446
Other liabilities 179,462 255,412
Liabilities related to separate accounts 682,700 639,895
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Total liabilities 9,564,812 9,309,538
Minority interest in subsidiaries 191 164
Stockholders' equity 784,072 844,231
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Total liabilities and stockholders' equity $10,349,075 $10,153,933
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Common Shares Outstanding 29,511,796 29,133,331
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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