Exhibit 99.1
FBL Financial Group Reports Fourth Quarter 2006 Results
Net Income Up 16 Percent to $0.80 Per Share
WEST DES MOINES, Iowa--(BUSINESS WIRE)--Feb. 6, 2007--FBL
Financial Group, Inc.(NYSE:FFG):
Financial Highlights
(Dollars in thousands, except per share data)
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Three Months Ended
December 31,
2006 2005
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Net income applicable to common stock $23,949 $20,285
Operating income applicable to common stock 22,586 20,484
Earnings per common share (assuming dilution):
Net income 0.80 0.69
Operating income 0.75 0.69
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FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted
net income per common share totaled $0.80 ($23,949,000) for the
quarter ended December 31, 2006, compared to $0.69 ($20,285,000) in
the year ago quarter.
Operating Income(1). Operating income increased to $22,586,000 for
the quarter ended December 31, 2006, from $20,484,000 in the fourth
quarter of 2005. Diluted operating income per common share increased
nine percent to $0.75 in the fourth quarter of 2006 from $0.69 in the
fourth 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 fourth quarter results, Chief Executive
Officer Jim Noyce stated, "Strong fourth quarter results mark the end
of an excellent 2006 for FBL Financial Group. For the full year we
achieved record net income of $3.01 per share and record operating
income of $2.78 per share. Our premiums collected increased 60 percent
to $2.3 billion, and total assets grew by 20 percent to $12.2 billion.
These excellent results were achieved because of the combined
strengths our subsidiaries Farm Bureau Life Insurance Company and
EquiTrust Life Insurance Company."
Noyce added, "As we move forward in 2007, I am excited about our
prospects and believe we are well-positioned with our solid base in
Farm Bureau Life and our growing EquiTrust Life business."
Product Revenues Up. Premiums and product charges for the fourth
quarter of 2006 increased seven percent to $61,300,000 from
$57,232,000 in the fourth quarter of 2005. Interest sensitive and
index product charges increased eight percent due primarily to an
increase in the volume and aging of business in force, while
traditional life insurance premiums increased seven percent.
Premiums collected in the fourth quarter of 2006 increased 59
percent to $572,516,000 from $360,071,000 in the fourth quarter of
2005. This increase is due to growth in FBL's EquiTrust Life
independent channel, which had $454,518,000 of premiums collected in
the fourth quarter of 2006. Premiums collected from FBL's exclusive
Farm Bureau Life distribution channel totaled $108,327,000 in the
fourth quarter of 2006, reflecting a five percent increase in
traditional and universal life insurance sales, a three percent
increase in variable sales, and a 10 percent decline in traditional
annuity sales.
Investment Income. Net investment income in the fourth quarter of
2006 increased 20 percent to $147,106,000 from $123,070,000 in the
fourth 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 year ended
December 31, 2006, compared to 6.22 percent for the same period of
2005.
Derivative Income. FBL's derivative income totaled $46,897,000 in
the fourth quarter of 2006, compared to $3,580,000 in the fourth
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 $228,818,000
in the fourth quarter of 2006, compared to $159,589,000 in the fourth
quarter of 2005. The increase in benefits and expenses is primarily
attributable to higher index product benefits resulting from an
increase in the volume of business and from appreciation in the value
of underlying equity market indices supporting the index annuity
business.
Operating Results by Segment. Consistent with prior quarters, the
majority of FBL's operating earnings for the fourth 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 $12.2 Billion. Total assets increased $2.0 billion to
$12.2 billion at December 31, 2006, from $10.2 billion at December 31,
2005. At December 31, 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 $29.59 at
December 31, 2006 from $28.88 at December 31, 2005. Book value per
share excluding accumulated other comprehensive income(3) increased
ten percent to $28.64 at December 31, 2006, from $26.05 at December
31, 2005.
Earnings Outlook. While subject to volatility resulting from a
number of factors, including mortality experience and investment
results, FBL maintains its full year 2007 net income and operating
income guidance of a range of $2.80 to $2.95 per common share.
Conference Call. FBL management will hold a conference call with
investors to discuss fourth quarter 2006 results. The call will be
held tomorrow, February 7, 2007, 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.
Investor Conference. FBL management will hold a company-sponsored
investor conference on Wednesday, March 28, 2007, at the New York
Marriott East Side. Further details 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 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 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.
For more information, please visit www.fblfinancial.com.
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
Dec. 31,
2006 2005
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REVENUES
Interest sensitive and index product charges $26,289 $24,363
Traditional life insurance premiums 34,885 32,721
Accident and health premiums 126 148
Net investment income 147,106 123,070
Derivative income 46,897 3,580
Realized/unrealized gains (losses) on
investments 2,401 (364)
Other income 5,947 5,455
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Total revenues 263,651 188,973
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 142,399 78,469
Traditional life insurance and accident and
health benefits 21,561 20,949
Increase in traditional life and accident and
health future policy benefits 8,233 9,425
Distributions to participating policyholders 5,626 5,672
Underwriting, acquisition and insurance
expenses 42,838 37,042
Interest expense 2,951 3,493
Other expenses 5,210 4,539
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Total benefits and expenses 228,818 159,589
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34,833 29,384
Income taxes (11,496) (9,676)
Minority interest in earnings of subsidiaries (1) (28)
Equity income, net of related income taxes 651 643
----------- -----------
Net income 23,987 20,323
Dividends on Series B preferred stock (38) (38)
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Net income applicable to common stock $23,949 $20,285
=========== ===========
Earnings per common share - assuming dilution $0.80 $0.69
=========== ===========
Weighted average common shares 29,470,836 29,071,238
Effect of dilutive securities 637,377 515,704
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Weighted average common shares - diluted 30,108,213 29,586,942
=========== ===========
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Year ended
Dec. 31,
2006 2005
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REVENUES
Interest sensitive and index product charges $105,033 $96,258
Traditional life insurance premiums 138,401 134,618
Accident and health premiums 415 385
Net investment income 535,836 475,443
Derivative income (loss) 70,340 (2,800)
Realized/unrealized gains on investments 13,971 2,961
Other income 23,357 21,283
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Total revenues 887,353 728,148
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 409,127 289,018
Traditional life insurance and accident and
health benefits 91,135 85,600
Increase in traditional life and accident and
health future policy benefits 33,455 36,327
Distributions to participating policyholders 22,610 22,907
Underwriting, acquisition and insurance
expenses 164,565 152,588
Interest expense 11,744 13,590
Other expenses 21,229 19,555
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Total benefits and expenses 753,865 619,585
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133,488 108,563
Income taxes (44,368) (36,780)
Minority interest in earnings of subsidiaries (126) (159)
Equity income, net of related income taxes 1,135 1,218
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Net income 90,129 72,842
Dividends on Series B preferred stock (150) (150)
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Net income applicable to common stock $89,979 $72,692
=========== ===========
Earnings per common share - assuming dilution $3.01 $2.47
=========== ===========
Weighted average common shares 29,379,365 28,909,623
Effect of dilutive securities 525,259 505,365
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Weighted average common shares - diluted 29,904,624 29,414,988
=========== ===========
(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
Dec. 31,
2006 2005
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Net income applicable to common stock $23,949 $20,285
Adjustments:
Net realized/unrealized (gains) losses on
investments (a) (1,493) 162
Net change in unrealized gains/losses on
derivatives (a) 130 37
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Operating income applicable to common stock $22,586 $20,484
========= ========
Operating income per common share - assuming
dilution $0.75 $0.69
========= ========
Year ended
Dec. 31,
2006 2005
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Net income applicable to common stock $89,979 $72,692
Adjustments:
Net realized/unrealized gains on investments (a) (9,222) (1,633)
Net change in unrealized gains/losses on
derivatives (a) (936) 2,328
Lawsuit settlement (a) 3,172 -
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Operating income applicable to common stock $82,993 $73,387
======== ========
Operating income per common share - assuming
dilution $2.78 $2.49
======== ========
(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)
Dec. 31, Dec. 31,
2006 2005
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Book value per common share $29.59 $28.88
Less: Accumulated other comprehensive income 0.95 2.83
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Book value per common share, excluding accumulated
other comprehensive income $28.64 $26.05
======== ========
Book value per common share excluding accumulated other
comprehensive income is a non-GAAP financial measure. Accumulated
other comprehensive income totaled $28,195,000 at December 31, 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)
Dec. 31, Dec. 31,
2006 2005
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Assets
Investments $9,782,626 $8,299,208
Cash and cash equivalents 112,292 5,120
Deferred policy acquisition costs 827,720 695,067
Deferred sales inducements 226,647 146,978
Other assets 440,350 367,665
Assets held in separate accounts 764,377 639,895
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Total assets $12,154,012 $10,153,933
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Liabilities and stockholders' equity
Policy liabilities and accruals $9,474,599 $7,634,922
Other policyholders' funds 562,844 560,863
Debt 218,399 218,446
Other liabilities 252,935 255,412
Liabilities related to separate accounts 764,377 639,895
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Total liabilities 11,273,154 9,309,538
Minority interest in subsidiaries 138 164
Stockholders' equity 880,720 844,231
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Total liabilities and stockholders' equity $12,154,012 $10,153,933
============ ============
Common Shares Outstanding 29,661,652 29,133,331
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FFG-1
CONTACT: FBL Financial Group, Inc.
Kathleen Till Stange, 515-226-6780
Investor Relations Vice President
Kathleen.TillStange@FBLFinancial.com