FFG - Earnings call transcript Q4 2017 | FBL Financial Group Inc

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Operator

Good morning, and welcome to the FBL Financial Group Fourth Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kathleen Till Stange. ahead. go Please

Kathleen Till Stange

Also welcome Scott conference the and contain statements Brannen, Financial fourth Ray Happel, Operating Financial Group's Executive your Chief for Private to those qualify results Thank FBL are Wasilewski, Chief are and to filed Harbor questions Act. from Presenting to today Marketing statements and on made the intended forward-looking earnings Charlie Officer. Chief assumptions statements materially Seibel, on and expressed based actual by call. and Investment established Jim Certain Safe These and reports risks with today's reasonable. quarter may available Officer; could answer uncertainties Securities Officer; you Chief Don These the FBL from present Stice, to call Officer. liability implied. Chief to and believes which are Officer; be differ cause Reform are SEC Litigation or FBL's uncertainties detailed involve risks that in

may turn An Brannen. CEO, which With my pleasure on may found call. website. a no over is being will the certain FBL applicable both prove replay now audio be that and after to of Comments to prepared the financial be this during are call to FBL's include found where items supplement, assurance shortly GAAP on to non-GAAP fourth reconciled on our and comments quarter assumptions this update earnings date. our of website, measures, it is correct. fblfinancial.com. Today's any obligation call disclaims given these to be our Jim simulcast can call that, the in transcript website financial the However, statements forward-looking after be release

James Brannen

large Net you due $X.XX income share FBL impacted high Group XXXX. income call. per thank everyone fourth And totaled today. non-GAAP was solid able to are the glad I'm operating earnings an was to reform. and Kathleen. by Net quarter $X.XX tax reported earnings of Financial per join income the unusually adjustments solid us the for you on and share. Thanks, to

We focus than non-GAAP income We a quarter operating earnings reporting review flat XXXX per will and to very per at however Life on XXXX. of Financial really year lower product the of X% Don Financial later. index detail, the I’ll detail net comments my and XXXX Bureau premium the will strong and a financial discuss annuity, as reform. increase our anticipated. perspective. third $XX.X for we to attractive quarter in in our annuities premium FBL positive of flexible in results option those pleased XXXX quarter with The life XXXX, fourth record replaced quarter year we of $X.XX the of collected positive increased expected quarter, which wealth fourth as highs Full collected a share September, premium accelerated strong $XXX force the compared a was the in by compared and Universal collected increase up for for fourth had XXXX, reception results attractiveness from premium of in indexed that drove Full I program. for Life non-GAAP has increased pleased clients. by annuity sales, the the markets need. XX% life index fourth single share. experienced this our sales, relative annuity a am was premium annuities. the ability well XXXX. products. Overall, fourth the of fourth make agents’ growth operating focus am declined means somewhat reaching and but The number grew XXXX Life were million, additional the Total of collected Group million, somewhat with a totaled insurance. one-time XXXX, Farm index collected quarter life regulation, a of more income tax to focus results, year million. [ph] both applications, rate year essentially Insurance a introduced fourth pilot was the impacted the from quarter had of item rose Services of impact they $X.XX life sales $XX.X annuity combination applications was lower decline and reflects and also an been third contributions renewed contract XXXX I on annuity this interest In products for premium was from clients fixed equity we’re to Annuity increased our XX% in premium with rates, slightly the the into underwriting premium we X.X%, quarter a to initiative. totaled new collected management quarter results. stronger Full XXXX of

is life positioned and for sales business, long-term life allow year profit we annuity a these than It sources were addition, us earnings stream focus have to spread particularly with the book us to balance sales. grow where and to positive life continue income. to In other a able more like from on XXXX, of

agency we of a exclusive from year-end Turning X,XXX managers, as year-end our had XXXX. now to and agents, agency force, XXXX, decline

experienced planned in of majority as agents was grew decline. the than higher markets. and drove agent few recruiting markets a we the strong, top-line tenured our average This of attrition While

I sales XXXX. this resume steps to month about newest new leadership pickup initiative agent on strategy, advertising increased we optimistic are continue Because expect force. agency address and We Last I have focused taken meeting, prospects our support, agency wealth to digital our the and met for with am growing issue products, management. our at annual

through last you were formed that quarter’s on registered investment capabilities, As mentioned advisor. newly recall call, we adding advisory I

related phases this four have initiative. We to

as seen for agents those has this our already we've to rollout been our classroom introduce from new this our well our online as extremely additional a of not, to are phase but exclusive an fund Phase positive, to seeking first of registered agents occurring reaction increase many The training Early in are quarter this mutual instruction. agents. is agents agents who licensing. required securities X for includes representatives, platform

The be will this fund billion of existing to new initiative fund $X to phase nearly mutual our platform. convert assets of the mutual business, second

as The value, of implemented, third our initiative our protect record of in life sales we and customer our management diversified and enhance and corporate business. Once a fourth and of share the the wealth earning the am to the to of role phases given more segment. include confident our in future platform be our growth will futures as wealth Group adding in am in importantly conclude associated included with of to estimated will I be but agent we earnings, be pleased as to planning introducing do clients, other accomplishments, To further the I move There strengthen forward agents, this and without XXXX. a XXXX allow expect add to proud couple the Bureau introducing initiative, work expect financial per our add quarter our am FBL a relationship. system. challenges, Most advisor livelihoods Ultimately, fee-based to not XXXX, of management this account distribution meaningful to with fully costs experience we managed Financial the customer we well agents wealth each of pennies management Farm build stream our initiative out initiative. the nature and to the was and I

Don? financial the to Seibel results. turn our to review Don will I over call Now,

Donald Seibel

to discuss also our million Jim. XXXX effective share non-cash for financial the of $X.XX impact income. an per XXXX. Thanks, The everybody the with Tax fourth This onetime rate the non-GAAP in XXXX. the I and This to want gain Act XX% you. quarter This operating from on the from deferred benefit reduced to December adjustment $XX.X today due fourth accounting earnings results net liabilities on earnings nonrecurring results. Cuts glad remeasurement in call. of tax its to Jobs tax this reform excluded quarter my onetime using I'll income resulted by begin rate. here is tax given statutory to corporate I'm was the of is nature, benefit to XXnd tax federal comments reduced to enacted welcome be our discussing XX% or

Going to our tax compares XXXX, estimate rate tax effective effective FBL's XX% to forward, to prior tax this we in be reform to approximately for rate XX% XXXX. XX.X% of

tax evaluating currently will are the our going the We to impact affect forward. reform and how business tax lower rate

we opportunities, consider for variety including policyholders, assess will a As and employees. of benefits shareholders possible we constituents

for financial Now results quarter. the I'll turn to

the well share. net change $X.XX As This losses investments for realized Jim on was losses fourth as as net XXXX indicated, from includes quarter tax gains of on our unrealized the and derivatives. per the and large net in benefit income reform,

averaged product income of the interest charges by per higher income for for was these share. results quarter of were $X.XX end of results quarter experience, fourth Excluding partially share. for this income market per quarter mortality per per approximately negative of per investment of items, per closed These by negatively were however with expectations. our fee low the operating the the quarter fourth record Universal $X.XX income. due Life environment, the share prepayment year These below business. of of $X.XX source operating $X.XX benefit full have to from we XXXX allowed Non-GAAP FBL correction on onetime a of offset non-GAAP year a the and income. earnings to reduction than rate The items totaling non-GAAP operating $X.XX share block were share impacted expected this In

Next quarter I'll the focus each my our comments of for segments. on

been taking rates decreased this backing appropriate. is to we rates to and on minimum XX further basis and annuity compared be been in annuity XXXX, a prior year-end crediting Annuity basis for higher this performing crediting operating actions. the the At spread in on business the to We've make XXX recently well below related spreads. not this yielding X offset portion rate XX% the decline due income rate a this quarter managing At our the grow. non-GAAP our subject lower purchases on business yield December points fourth it to guarantees. annuity of primarily XXXX, business the was in due by benefit segment, and of receiving target business. has XX, investments difficult of crediting yielding active increased pressures at investment other of But this above points, had business enough aggressive business of in maturity where lowering basis XXXX income. assets to our is points Looking continued pressure annuity index guarantees. Competitive There year, We pre-tax to assets. continues it the on of to

XXXX, of the quarter I results I'll comment the correction than mentioned. Insurance investment But other was income. of segment. of the from In fourth segment related on product also this the Life this experienced Next, charges by our the more previously offset benefit

This XX, slightly lower Life on In business target this was segment solid Insurance for separate segment basis December of was impact targets. from say variable business declined benefits Life increased on rate on claims. benefits the elevated points. the It our guarantees also Insurance the backing us benefit only investments business elevated quarter-to-quarter. The than I the primarily and rates and Life difficult business our to Universal XXXX, minimum due crediting further of below this our higher for XXX yielding purchases Life spread the positive of time below levels death of business. for can receiving to segment XXXX, lower Other that the performance. our the as experienced offset assets. equity of by the spreads Universal quarter vary this addition, slightly at due XXX Universal made. X% at death maturity changes block segment Yields is benefited more above where rate for increased now segment basis By crediting we the their but of for closed But number debt have to quarter, on December points markets in Life were of Results pleased crediting this to XX. of yielding assets a we this at remain a variety fourth for in account nature, fourth an Corporate am point quarter

of our average was the backing acquire in fourth tax yield XXXX investments, quarter on X.XX%. adjusted the investments long-term business to Turning

maturity of designated During structured security XXXX, designated with and and life value loans. in XX had an commercial XX% we X. Fixed of XXXX in years were and high product found mortgage quality NAIC NAIC average acquisitions X, XX%

continues curve increased in flatten continue to investment have The to challenging. relative yields remains treasury U.S. While environment the and treasury treasuries. corporate tighten spreads

year-end had due accounting Bureau impact our asset corporate based risk subsidiary comment statutory estimated Farm At ratio reform. a tax Life This capital On decrease tax action Next rate. federal XXX%. XXXX, Life level to a Bureau deferred is an of using company from tax the XX, levels. basis revalue I'll Farm on September reduced capital its the of

our Despite this decrease, due as XX, ratio reduce million low of have had to Farm credit to charge These housing excess Life XXXX. and points. surplus, benefits from Life lowering XX a by addition, an Using tax income the Bureau capital position. RBC approximately capital base, reform. continues investments Bureau Farm at lower excellent items $XXX XXX% December future In tax RBC federal tax credit

year-end at holding Additionally, we have approximately level. we million $XX at estimate capital a company excess that of

our consider excess current repurchases, our of for quarterly dividend special As level stock payment dividends. deploying we of regular our and we review capital, options the

future our limited be as we by float. limited constrained stock expect repurchases public are to We

rate reviews has Board our yield, of Our results. Directors operating strong the to an and attractive committed given consistent having regularly dividend and dividend

We distributing for excess portion option payment a our as of an special dividends the also on attractive view vocation capital. of

to next XXXX achieved operating strong they despite basis remains when payment record income. meets fluctuations dividends results net life Group, our return in to closing, million FBL maintaining you. We grow quarter-to-quarter In year insurers XXXX during financial for The strong a with Financial March. full business, profitably results discipline on to but will dividends in foundation. FBL and of record for non-GAAP review $XX I'm was income a some we been financial Board environment pleased and challenging, to forward moved in our able Our a were with the year able share shareholders. continue to XXXX business, grow to while these financial deliver have

the open turn call any over to now may you up and have. operator will We the questions

Operator

go Greg Thank you. with Peters Our Please ahead. James. [Operator Instructions] Raymond first comes question from

Greg Peters

Good the morning, of for had you. I for you a couple everyone call. and thank questions

guidance XX% think how the to First can from tax down for rate XXXX, a of in all us of context bridge the rate walk through tax XX% you range? to of XX% XX%, we of federal your of XX% get to I the

Donald Seibel

Yes, sure. Don, This that is question. answer I'll

As of XX% that we've of And enacted. our an there And the the effective you are tax-exempt will in statutory tax municipal lower rate and rate of effective was tax of know the fourth rate quarter XX.X%. driver act tax-exempt historically rate had than as sources XXXX, the income difference was income, is in income other investment recently that well. under carry through primary that

into estimates there So coming taking up with the in are a tax and rate, estimated because range are to used XX% that it's that those range XX%. with

Greg Peters

the and XXXX life the guess XXXX. paid the on think I course the And what income process your dividend record for of And total wondering the dividend you shareholders about I about thought down or in in and versus it's your Okay. holding we color noted look RBC XXXX. non-GAAP at commented comments XXXX. capital in derive And stepping at company. operating total of payment of as behind the And XXXX? Board, without front just kind to about And down could we excess I

James Brannen

is Greg, Jim. Thanks, this

keep did always regular increase matter try the year-in-year-out go on no in our that can going it it's dividend that to objective to shareholders possible So if what's the one expect fact and up.

dividend little I in XXXX. you the year was the of decrease larger. And think the before a only that the was size saw special during

at. regular think that's around I where with dividend expect I our the keep would main try those difference. and dividends continue And they're to strategy And the we'll so that

about for a do just same specials, going not pretty viable numbers it be regular it's us. to is that always been in regular. say be not into always still I'm to we’re that the option else going to position we've But because you build at anything or or when we on or going it's the to time While just same our capital, look a Don’s

Greg Peters

the Okay. -- commenting count count. I you bit were Jim agency about a then agent I the little question. And guess final know

it your us this walk you you sounds sort And going retirements. I'm color opportunity to us have wondering the if recruiting demographics some Maybe a program. agency force. current that robust of more there so, take like around just know I think of could were count through forward? we And the as provide about

James Brannen

liked really of Well just we the It around agents. the add was that to around a agency an tenured territory. and competitor then a to kind little more and clarity train go attack in comments how issue

So that's it versus around retirements. what was

you every have year. are the in we course there Scott But Of room?

Scott Stice

I am.

James Brannen

take let that. I'll of you Okay. the rest

Scott Stice

believe force that not aging around demographics and is was so is aging correct? agency question Yes, our your perhaps I how or

Greg Peters

And I Correct. the recruitment, a you added to this. twist Jim mean,

taking your competitors that your What retention or a agents can have going you -- that you. you you away forward? a an So from is do is and issue anticipate one-off deal anomaly,

James Brannen

incident happened over No, happen. about enforce an and We on that. doesn’t it and have isolated years it And kind in just thing. in wrestle we occasion. of hard the it we and protect those can mean happened But pretty contracts that the pretty try protections hard it and doesn’t it was to that fight place usually

Greg Peters

the then the profile just of agency overall And demographic plan?

Scott Stice

that take portion, I'll this Yes, Scott. is

an trends The of with I the think aging. the agency are generally exploding flowing like population boomer most overall. force, market exclusive baby insurance companies we demographic

three has age we've new our long that. training last lowered bubble actually right coming the time, have still We've very four of age. five seen going average XX just around we're average. And is and nearing recruit so are about for which to to by foreseeable future. recruiting retirement need two that new XX for up, or to agents efforts we years. do why force from of over up years to a to significantly agents agency and that on about develop our from But continue agents our recruiting we are not a the immune And new the All down ramped

Greg Peters

the much you thank call for very answers. Okay, and for the

James Brannen

Greg. you, Thank

Operator

instructions]. [Operator

next comes question with Our from Smith. ahead. Inglis Philo Janie go Please

Jamie Inglis

for Good recruit morning, could want to environment, do us might agency asked else we've it was getting of sense you’ve an at whatever ability a you another thing. right history, -- affected maybe questions, do how agents your lots How it a if it where and appears economy, in had to can Greg, compare now got theoretically But more today's to feel you I is opportunities how about guys. to in the of improving your that you do. and is strong period recruit? that ability to economy past give

Scott Stice

and This again. Scott, very a question. is That good insightful

I think that grow lowers, intuitively, salaries as it become that more one as unemployment recruit. difficult would to does think

However, that's case and not always rarely case. probably the the

are who not are market We folks recruiting the unemployed. in for

We’re so folks their very start in gainfully market business to and the own recruiting are in looking are insurance employed, the small ranks. who but do

handful over been has our very not years to better strong have not has of top-line as lower was to strong recruiting XXXX. wage continued accelerate, last as XXXX unemployment far So year but a was as very, a drift record, gains started finally year ever. off, the than Last as

forward. component of relative our and to initiative recruit candidates be particularly in and enhance continue a forward. confident improve very is our continue that the to going going our going value wealth management competition are to And, we agent proposition we ability big So to to to

Jamie Inglis

meaning assume independent could ask agency, yours? a not left, said I went that you an to question think Jim a I those of they agency, about I an that's competitor If agents

James Brannen

against Jamie, not there get competitor am I us. clearly but into to it was far No, too the play details, going

So…

Jamie Inglis

Okay, okay.

great. Thanks guys. a Okay, lot

James Brannen

you. Thank

Operator

Kathleen any to the question-and-answer our like would concludes for to over session. turn conference remarks. This closing Till back Stange, I

Kathleen Till Stange

to questions. us good free Thank you call a to who have joined follow-up on today. day. give a if and everyone us the call, Please have feel any you Thanks

Operator

for The presentation. attending today’s concluded. you conference is now Thank

may disconnect. now You

FBL Financial (FFG) 9 Feb 182017 Q4 Earnings call transcript