Exhibit 99.1
FBL Financial Group Reports Third Quarter 2006 Results
Net Income Up 19 Percent to $0.69 Per Share
WEST DES MOINES, Iowa--(BUSINESS WIRE)--Nov. 6, 2006--
- ----------------------------------------------------------------------
Financial Highlights
(Dollars in thousands, except per share data)
Three Months Ended
September 30,
2006 2005
------------------
Net income applicable to common stock $20,669 $16,982
Operating income applicable to common stock 22,585 17,788
Earnings per common share (assuming dilution):
Net income 0.69 0.58
Operating income 0.76 0.60
- ----------------------------------------------------------------------
FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted net
income per common share totaled $0.69 ($20,669,000) for the quarter ended
September 30, 2006, compared to $0.58 ($16,982,000) in the year ago quarter.
Operating Income(1). Operating income increased to $22,585,000 for the
quarter ended September 30, 2006, from $17,788,000 in the third quarter of 2005.
Diluted operating income per common share increased to a record $0.76 in the
third quarter of 2006 from $0.60 in the third 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, the change in net
unrealized gains and losses on derivatives and for 2006, a lawsuit settlement.
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 third quarter results, Chief Executive Officer Bill
Oddy stated, "We are very pleased with both our sales and our earnings this
quarter, as we achieved a record $0.76 per share of operating income. The
highlight of the quarter was the continued growth of our EquiTrust Life
independent agent channel, which generated $635 million of premiums
collected(2), up 44 percent from the second quarter of 2006 and 161 percent from
the third quarter of 2005."
Commenting on FBL's earnings outlook, Oddy added, "Based on our strong
year-to-date results, we expect to exceed both our 2006 net income guidance of
$2.75 to $2.85 per share and our 2006 operating income guidance of $2.50 to
$2.60 per share." This earnings outlook is subject to volatility resulting from
a number of factors, including mortality experience, accounting standards for
derivatives and investment results.
Product Revenues Up. Premiums and product charges for the third quarter of
2006 increased nine percent to $60,320,000 from $55,514,000 in the third quarter
of 2005. Interest sensitive and index product charges increased 13 percent due
primarily to an increase in the volume and aging of business in force, while
traditional life insurance premiums increased five percent.
Premiums collected in the third quarter of 2006 increased 101 percent to
$741,726,000 from $368,303,000 in the third quarter of 2005. This increase is
due to growth in FBL's EquiTrust Life independent channel, which had
$635,048,000 of premiums collected in the third quarter of 2006. Premiums
collected from FBL's exclusive Farm Bureau Life distribution channel totaled
$96,599,000 in the third quarter of 2006, declining 14 percent from the third
quarter of 2005, primarily due to lower traditional annuity sales.
Investment Income. Net investment income in the third quarter of 2006
increased 14 percent to $137,378,000 from $120,336,000 in the third 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 6.07
percent for the nine months ended September 30, 2006, compared to 6.29 percent
for the same period of 2005.
Derivative Income. FBL's derivative income totaled $29,042,000 in the third
quarter of 2006, compared to $5,900,000 in the third quarter of 2005. This
increase reflects the impact of an increase in the value of the underlying
equity market indices on which call options supporting FBL's index annuity
business are based.
Benefits and Expenses. Benefits and expenses totaled $201,943,000 in the
third quarter of 2006, compared to $162,923,000 in the third quarter of 2005.
The increase in benefits and expenses is primarily attributable to higher index
product benefits resulting from appreciation in the value of underlying equity
market indices supporting the index annuity business. Additionally, death
benefits increased to $26,116,000 in the third quarter of 2006 compared to
$22,954,000 in the third quarter of 2005.
Operating Results by Segment. Consistent with prior quarters, the majority
of FBL's operating earnings for the third 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 $11.6 Billion. Total assets increased $1.4 billion to $11.6
billion at September 30, 2006, from $10.2 billion at December 31, 2005. At
September 30, 2006, 96 percent of the fixed maturity securities in FBL's
investment portfolio were investment grade debt securities. Book value per
common share increased to $28.98 at September 30, 2006 from $28.88 at December
31, 2005. Book value per share excluding accumulated other comprehensive
income(3) increased seven percent to $27.91 at September 30, 2006, from $26.05
at December 31, 2005.
Conference Call. FBL management will hold a conference call with investors
to discuss third quarter 2006 results. The call will be held tomorrow, November
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 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
Sept. 30,
2006 2005
----------- -----------
REVENUES
Interest sensitive and index product charges $26,935 $23,834
Traditional life insurance premiums 33,355 31,649
Accident and health premiums 30 31
Net investment income 137,378 120,336
Derivative income 29,042 5,900
Realized/unrealized gains (losses) on
investments (256) 37
Other income 5,955 5,436
----------- -----------
Total revenues 232,439 187,223
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 125,348 79,639
Traditional life insurance and accident and
health benefits 24,323 20,714
Increase in traditional life and accident and
health future policy benefits 5,911 8,244
Distributions to participating policyholders 5,493 5,393
Underwriting, acquisition and insurance
expenses 32,765 40,040
Interest expense 2,954 3,427
Other expenses 5,149 5,466
----------- -----------
Total benefits and expenses 201,943 162,923
----------- -----------
30,496 24,300
Income taxes (9,807) (7,901)
Minority interest in loss (earnings) of
subsidiaries 1 (24)
Equity income, net of related income taxes 16 644
----------- -----------
Net income 20,706 17,019
Dividends on Series B preferred stock (37) (37)
----------- -----------
Net income applicable to common stock $20,669 $16,982
=========== ===========
Earnings per common share - assuming dilution $0.69 $0.58
=========== ===========
Weighted average common shares 29,433,576 28,954,638
Effect of dilutive securities 452,974 514,135
----------- -----------
Weighted average common shares - diluted 29,886,550 29,468,773
=========== ===========
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Nine months ended
Sept. 30,
2006 2005
----------- -----------
REVENUES
Interest sensitive and index product charges $78,744 $71,895
Traditional life insurance premiums 103,516 101,897
Accident and health premiums 289 237
Net investment income 388,730 352,373
Derivative income (loss) 23,443 (6,380)
Realized/unrealized gains on investments 11,570 3,325
Other income 17,410 15,828
----------- -----------
Total revenues 623,702 539,175
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 266,728 210,549
Traditional life insurance and accident and
health benefits 69,574 64,651
Increase in traditional life and accident and
health future policy benefits 25,222 26,902
Distributions to participating policyholders 16,984 17,235
Underwriting, acquisition and insurance
expenses 121,727 115,546
Interest expense 8,793 10,097
Other expenses 16,019 15,016
----------- -----------
Total benefits and expenses 525,047 459,996
----------- -----------
98,655 79,179
Income taxes (32,872) (27,104)
Minority interest in earnings of subsidiaries (125) (131)
Equity income, net of related income taxes 484 575
----------- -----------
Net income 66,142 52,519
Dividends on Series B preferred stock (112) (112)
----------- -----------
Net income applicable to common stock $66,030 $52,407
=========== ===========
Earnings per common share - assuming dilution $2.21 $1.79
=========== ===========
Weighted average common shares 29,348,473 28,855,159
Effect of dilutive securities 487,887 501,919
----------- -----------
Weighted average common shares - diluted 29,836,360 29,357,078
=========== ===========
(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, the change in net
unrealized gains and losses on derivatives and for 2006, a lawsuit settlement.
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, and the lawsuit settlement in the second quarter of 2006 is a
nonrecurring item. 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
Sept. 30,
2006 2005
--------- --------
Net income applicable to common stock $20,669 $16,982
Adjustments:
Net realized/unrealized losses on
investments (a) 52 6
Net change in unrealized gains/losses on
derivatives (a) 1,864 800
--------- --------
Operating income applicable to common stock $22,585 $17,788
========= ========
Operating income per common share - assuming
dilution $0.76 $0.60
========= ========
Nine months ended
Sept. 30,
2006 2005
-------- --------
Net income applicable to common stock $66,030 $52,407
Adjustments:
Net realized/unrealized gains on investments (a) (7,729) (1,795)
Net change in unrealized gains/losses on
derivatives (a) (1,066) 2,291
Lawsuit settlement (a) 3,172 -
-------- --------
Operating income applicable to common stock $60,407 $52,903
======== ========
Operating income per common share - assuming
dilution $2.02 $1.80
======== ========
(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 these items.
(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)
Sept. 30, Dec. 31,
2006 2005
--------- --------
Book value per common share $28.98 $28.88
Less: Accumulated other comprehensive income 1.07 2.83
--------- --------
Book value per common share, excluding accumulated
other comprehensive income $27.91 $26.05
========= ========
Book value per common share excluding accumulated other comprehensive
income is a non-GAAP financial measure. Accumulated other comprehensive income
totaled $31,766,000 at September 30, 2006 and $82,301,000 at December 31, 2005.
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)
Sept. 30, Dec. 31,
2006 2005
------------ ------------
Assets
Investments $9,434,784 $8,299,208
Cash and cash equivalents 7,313 5,120
Deferred policy acquisition costs 800,871 695,067
Deferred sales inducements 205,734 146,978
Other assets 411,933 367,665
Assets held in separate accounts 715,376 639,895
------------ ------------
Total assets $11,576,011 $10,153,933
============ ============
Liabilities and stockholders' equity
Policy liabilities and accruals $8,986,752 $7,634,922
Other policyholders' funds 561,099 560,863
Debt 218,410 218,446
Other liabilities 232,988 255,412
Liabilities related to separate accounts 715,376 639,895
------------ ------------
Total liabilities 10,714,625 9,309,538
Minority interest in subsidiaries 136 164
Stockholders' equity 861,250 844,231
------------ ------------
Total liabilities and stockholders' equity $11,576,011 $10,153,933
============ ============
Common Shares Outstanding 29,615,468 29,133,331
============ ============
FFG-1
CONTACT: FBL Financial Group, Inc., West Des Moines
Kathleen Till Stange, 515-226-6780
Investor Relations Vice President
Kathleen.TillStange@FBLFinancial.com