FFG - Earnings call transcript Q1 2019 | FBL Financial Group Inc

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Operator

Good day, and welcome to the FBL Financial Group First Quarter 2019 Earnings Conference Call. All participants will be in a 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 like to now turn the conference over to Kathleen Till Stange. ahead. go Please

Kathleen Till Stange

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

the premium income you will share. income and a life collected premium index collected by market primarily $XX This pressured for driven from growth as quarter environment, in investment of XXXX. the totaled Absent for increasing The pleased detail, was and reflecting annuities. report quarter up decrease maintain net results a yield premium call. on collected of review decline thank everyone first strong increase sales. driven and $X.XX XXXX I in compared XXXX I’m by $X.XX in my Life first sales FBL to able change glad throughout annuity a competitiveness I’m primarily per This per Don join was strong of of annuity performance. we Kathleen, financial sales. first quarter focus first Annuity $XX adjusted momentum and that CDs the will Financial quarter XXXX. XXXX current intend first first XXXX term will an equity discipline. the to and annuity very higher the to year. comments operating the us is life challenge of had life million, sales share bank today. million, continued a was the that a by totaled from quarter for Group current our X.X% pricing universal in million, were you’re market be Total on the Thanks, into increase insurance all in decrease in and quarter initiatives. sales Life of sales this and to $XXX to

combined environments all set, all product that We of agency use economic force benefit a with So diverse work the a that really allows to agents our multiline customers opportunity exclusive of distribution of remind this life. and a stages in our you with is to provide good products strategy.

we life happy can stream product. long sales While I on nice where insurance to a focus opportunity the wish in a at moment, greater very our layer was profit term sales for on annuity I’m

agency XX, a stable compared managers. XXXX, agency a relatively our exclusive Looking as small is compared our year account industry retaining agents. ago. to agents increase March for declining challenging agents. recruiting environment that am and at and This agent I had is pleased exclusive a at force, numbers remains we The to exclusive X,XXX for

Our TV launched a we territories. competitive have a in In through years positive March, and a Rural consumers. we retention rate out our our but Ag room agent is The growth year This Bureau by retention perspective, with additional encourage commercials with markets. Financial memorable our is XX% humorous awareness channel. strongest two you new Agent and to is there our have retention to agent at high, connects connection. and and in the messaging the top rural evidenced increase first in priority. expanded our geographic From in improve Farm Services Kansas, remain Farm both as four. a in is advertising I reach relevant. They’re we This brand check and Bureau Nebraska. its YouTube creative and is Iowa, advantage

generation. and of held sales The Farm we farm to prepare Changing seminars in XXXX. consultants, significant succession benefit core hold prospects clients, XX their our This our seminar financial improves seminars allows for focus XXX is new With these and pass we This regional year opportunities. to states. and client business customer. annuity to niche ag and We’re plans on necessary called our Bureau To-date, for is plan to introduced around ranch life our planning the members Hands. focused across seminars we with on retention next have a

range to Your are success will Maximizing similar, of different format next developing a our the called seminars, year of these series but XX and we’re XX targeting Given seminar be Retirement. olds. The we demographic age

Next the approval dealer. management our full FINRA I’ll first initiative. for wealth on service received an In we broker our quarter, update provide

recruiting also began advisors our experienced territories. in We

six year. XX, the March to appointed plan we’ve Advisors the over and more As Bureau Wealth of Farm balance of Management add

our a team for up advisory advisors investment our client is proposition to ability opportunity local well to existing partner advisor incoming Bureau value This in our force offer exclusive to services agents. channels. advisor is with various agency Farm We provide Our an insurance existing resonating to with members. the the financial unique

services open to accepting of to wealth sizes. These million. But wealth $XX we’re established and not those we advisors that add management stream client are advisors to Currently more a ideal management book products management of offer have XX business million term a financial their allows Our clients’ the larger needs. earnings planning investment nature FBL candidates to for They financial of exclusive This to their are and and this to Group, smaller is add advisor members. management advisors. with a with addition of now initiative advisors considering given long and the without are Ultimately, the Financial $XX agents meet tools business. our all our who value, to agent in insurance to business. advisors wealth or book financial new agents book fee-based we this are expect diversified fee-based

start whole, a strong XXXX have positive a to we’re I off As a the the for in outlook and of year. balance

With Officer thank turn Operating of has Operating are success. the I foundational for On end over positioned for Life leadership continued financial year. it weeks him A to excellent many at that well new of for long couple last the as want well we FBL Before Chief everyone we departs I term Officer initiatives Don at a will at year. years, behalf have of of mention a Ray the the service he Chief results, for Financial dedicated several Farm of Life. Bureau his been XX Ray’s ago a retire with the Group, later that to Farm Ray our will companies and executed I major announced named FBL at and Bureau Ray for at wish when date. five years be Wasilewski end we

both via Ray’s national includes replacement as internal search search. well candidates for as Our external

I Seibel. over turn call Now to will the Don? Don

Donald Seibel

everyone Thanks, also the I on welcome want Jim. call. to

at the for This first per value and the derivatives realized indicated, share. Jim share As the per equity $X.XX and strong securities. net fair investments of of in was gains net XXXX $X.XX in on includes change quarter income

per operating quarter XXXX for excludes Overall, of with $X.XX resulting operating line quarter I Our in adjusted and adjusted operating the of income as in would for adjusted solid our the these first income income XXXX. items, characterize share. first expectations

have compared we on in XX% death experience higher first with average about year. benefits some to our in a quarter simple reminder, a full As mortality average the being seasonality the for

in were first following or the per first by impacted balances by we items. the the and strong costs decreased lower related share amortization segment. corporate $X.XX the Our million acquisition other after deferred quarter from the tax. performance market results Positively, amortization in of benefited quarter, in $X.X and in This equity resulting

spread than with offsetting income which our our income from also $X.XX these equity expected. of we fee the had items, was lower investment in less benefited segment per is annuity We Partially income expectations. line and share after in tax prepayment

Annuity and level In results equity for our positive in annuities from increase due Offsetting X the withdrawal in items lower segment. in addition, elevated income segment was detail segment performance these first Point-in-time our positive individual life I’ll experience we prepayment the reserve market benefit spreads This than the more during our also decreased segment our to yield mortality XXXX quarter. this benefited discuss spread expect items smaller XXXX in as maturity due basis than income. from yielding our living investment decline higher of first proceeds slightly fee segment in assets these in $X,XXX,XXX of of the quarter first the for results. quarter reinvestment first points of includes during the to lower and review assets. I planned investment a yielding was the the a guaranteed quarter. worse

of prepayment business rates first of book segment crediting XXXX increase claims this increased worse an the offsetting were and results higher life addition, slightly option investment slightly of Life due than a mortality have to this In Partially of income tend claims growing reflect to higher and expected size amounts. steadily universal for is a costs. to This due $XXX,XXX. many which term insurance as life average the quarter than face fee experience. with typical, in claim quarter

results offset segment the are income due quarter costs They acquisition end impact X decreased. benefiting positive equity reflect of on other was primarily Corporate annuity Similar partially closed business point investment first the arrears that normal to were due markets. negative lower from point-in-time lower than spreads also yields. amortization was and variable strong income this during to impact declined at market the This Additionally, universal XXXX. quarter primarily to fourth and of basis life block of returns. first lower quarter lower quarter given quarter our equity by of the quarter for our equity investment some the business partnerships of our in on XXXX reported spreads,

was business in our the adjusted by for is quarter investment portfolio our XXXX term and environment basis This challenging. the quarter remains the on backing first reflected new the lower spreads, XXXX. fourth tax acquisitions yield than in yield. made lower XX than decline X.XX% of As investment points long of The acquisitions

stay up current is when in Our quality longer preference and to duration possible. add investments

capital. Next, our I’ll comment on

We have an capital flexibility. excellent financial and significant position

returning are dividend X.X% yield a of gives to this announced us on we share. quarterly an per capital $X.XX X.X%. On stock in paid our in closing We rate shareholders. also top we committed In share per of dividend price, to March, to Based special regular dividend yesterday’s $X.XX March. that, increase indicated

excess confidence because results pay our in strong position. to able We’re these our and our of dividends operating capital

the XXX%. $XX company industry. dividends the in primarily the was highest in decline the holding to in a shareholder Farm first In an A the from and Life off based we’re a estimated Life action solid positive total results. a dividend regular yield a a dividend start the Farm XXXX dividends and March the XXX%. the to had ratio dividend in special in expected earnings capital resulted closing, in was our million This of insurance the with X.X%, ratio Bureau decline quarter. quarter to to fund special paid Taken paid due of first quarterly indicated ratio year-end XX, company from life when XXXX, is risk level subsidiary Bureau together, XXXX currently At regular

increased financial yields, able discipline I’m to grow and investment share While our have results to benefit we we’ve these able would our with pleased been to business. maintain from you. been

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

Operator

comes Raymond Holanda first Thank Please Instructions] ahead. question James. The Marcos today from [Operator go with you.

Marcos Holanda

taking my Thanks Hi, for morning. question, good guys.

James Brannen

morning. Good

Donald Seibel

Hi, Marcos.

Marcos Holanda

you’re the CDs mentioning? kick you to core the to dynamics pockets wanted as sales the equities and was your what and, just decrease annuity the off Bureau shifting Jim, I there? into and talking start of about Hey, Farm you with curious, were customer are customers seeing Is there

James Brannen

I in in CD, a to think markets may get bank you And inclined basis for outlet and the to rural as we sell they them core a well. areas good And comes near products so annuity bank trusted but products. from is not CDs. harder annuity That’s index like little and seems whenever folks compare Yes, which are midsize do our past from in when almost the the think the to index customer, as they be another from but pretty points competitor or to are competition CDs, those – communities. annuity XXX to bank may the off our about it anywhere rural as well, do a we more

some of And of so the territory rest the most for would that I could part. our be probably consider what

on quality seeing stretch we’re honestly to comments would flow now, is the again get were reasons to stick able a that. stretch have I where environment efforts fact our the annuities testing, to pretty and a that of to moved. toward from order bit a credit really the in cash beneficial annuities, perspective stable a product compression little probably an like continue life get to earnings we’re very it’s And sales it’s sell to continue set. streams, liquidity, diversified for So more which pushed insurance our prefer long we’re around and discipline while things to lot my right whether more going term really, really close And just profit on folks be

this So it’s just at tough, when life double focus on insurance. hard we down and times,

Marcos Holanda

back any sales scenario attractive, your can mean, I yields as and of it sort if Okay. scenario years? have of where I And, trend let’s there what guess, that the has couple to of would sort just in rebound lower of pick which, or is or Jim, in I type say, guess sales in continue not been annuity last continue up CDs

James Brannen

on of humming the I along were is the in little think little were we’re and attractive. here rates risk a just kind the and down not to year a we X.XX% earlier quite XX When as free bit higher a precipice. year, better

be spreads events credit start there if can out catalyst one think side any cost think on I I widen funds. is where index if would we to the get that of

are probably more seems at free the options, better credit could just it and rates, side, offer kind we either it we’re on risk a well, on getting here tick up As but lift we relates on to bubble again. a probably as we’d like the the see little of if side or spread

to You got anything Ray? add to that,

Raymond Wasilewski

of there Marcos, help people that this equity of the little annuity We on that. Volatility some inflows and side as a for the there see risk sometimes too I’d off add markets starts annuity. in on Ray. look index happening. is safeties if index can some the to that that get can downside

Marcos Holanda

you and only is them taking think management I book advisor you of book the said business with Thanks. on you wealth guys of six Got have asset big an Jim, business, now. consolidated it. How And under Yes. currently? then the are

James Brannen

Yes.

available I have know information Scott, has management So, of on book available Don right if that don’t the – now. or in with you’re terms is that what that wealth

Scott Stice

the for Could you book you’re This is Marketing total or little broker in clarity far the advisors operation? size? Are Officer. you so of our for book asking Scott Chief what recruited a asking dealer we’ve give on Stice, just me size

Marcos Holanda

of Yes, just the far. AUM so

Scott Stice

Yes.

we mutual based fee the is of business the and around is right right since in funds. started through February So the end have our based – $X.X last of well, Only – business currently the billion March that end Most million. we fee at currently AUM. $XX of in of have straight really

Raymond Wasilewski

began So, This to remember, we’ve folks. the dealer just earnest is quarter. those got first service quarter really broker the during we start Marcos, where adding in

Marcos Holanda

I just you spend talk investment you. on you to that maybe and just of if the it. your Thank the And part a my there? could minute CLO any just Thank portfolio, about Got And it, for if question. guess allocation and you guys comments continue last color. increase guys

Charles Happel

is this Chief Investment Charlie Officer. Hi, Happel,

I have on onesie-twosie which high up picked last toward up asset it included I categories were characterize the kind on some year, A in quality and quality as all We would – guess really right now. of – tilted structure above CLOs. We

just become honestly a of We – tougher have now. that – of done Mae structured we’re right we to and as that’s are probably just RMS right has X.X stuff frankly because last a well little a that that more and did loans some year, food than fight. of this corporate slowed a buy they’re has but Ginnie and year few We down and doing the project just lot now

So fully have grade corporate. we with high more bit a backfilled little

Marcos Holanda

on some scarcity sort there So in grade there’s right CLOs high of market? now the

James Brannen

I while would trade smaller because the the deals, rate of of like we’re flow just market. lesser which the deal fixed by seeing think, part Those I is – Yes, on say a we the – that appointment. kind

And so a in of think recently. we that kind of It was we’ve the year. – we the saw quality high few. We deal, last any not a structured have a product I did flow seen done a CBO but

Marcos Holanda

Well, in much taking you right very thank my questions. all Okay, guys.

James Brannen

Marcos. you, Thank

Operator

go Our Instructions] Jamie question ahead. next from [Operator Inglis comes Philo Please with Smith.

Jamie Inglis

good Hi, guys. morning

James Brannen

good Hi, morning, Jamie.

Donald Seibel

morning, Jamie. Good

Jamie Inglis

wealth that trying the you some – am I’m question the a were trying you with I how and opportunity oriented to agents if how Hey. going the get of versus goal work your will, sense life-only push different cetera? two to cost predominantly to I’m casualty you that and buckets, phrase expense, recruited other how where to What you with advisors, have in My whose that agents do try – have would was guys properly. advisors. decide me do of management et you and measure recruiting do now recollection trying to on I those traditional property a is, recruit? sort call get these mean, work we sense of to to to of multiline and is, of measure you what sort fee-based where

James Brannen

start of really we for it But management with and them extremely our core more taken there many consultants agents about to the et past, on I’ll what with that year more case little to case, a off position done customer talked you over the each color. get wealth is with become financial and own and first it I’ll clears Scott on paid work then financial base have have for call a production working large in with engines much the folks by hesitation complicated think the and they and are regional So those so, work consultants. been that has I a and really has the that advisor and path cetera bit life for the their if – have they so where commissions splitting agents someone else our turn productive with regional very

terms will in the some pretty cost and et think path they where cetera. ask of for be you So recruit easy decide to I’ll Scott, on color.

Scott Stice

Sure.

Let’s to recruit. with where start

at our the states are the It’s do I’ll With RFCs of demand. and XX RFCs, WMAs. across the respect business. now really address to we Now, both where XX question a spread we

are capacity. new the fairly add force. selling establish participating their we top a to open they quickly do. their We place we They have they so and agents to team-based new effectiveness advisor don’t have agency based will salary that we very reach they on with amount measure the us are And a willing with RFC, that on where relationships based Their employees of a commission that our return profit production the or in and so as they establish approach, goals, and a when additional they we production new additional RFC. an who just point quickly. can So

we’ve because have are the wealth generally we concept just only is the will we’re we We’ve than many beginning. more do RFCs, started as management with time, side, RFCs, we that recruiting they although strategy converting under these January. couple probably and in with on recruiting advisor the of mind, in folks management, same over On The enough it bringing our us our And to for designed block size books. recruiting our do that go-to-market first the assets within become strategy with book profitable of the with years. goal

Jamie Inglis

and the is. management recruit action is it to I short decision It’s got that long So of the wealth Consultant where a has the do to as Regional nothing the guess Financial with advisor?

Scott Stice

That’s correct.

Jamie Inglis

Okay, great, right thanks. all

James Brannen

Thanks, Jamie.

Operator

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

Kathleen Till Stange

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

Operator

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

now may You disconnect!

FBL Financial (FFG) 3 May 192019 Q1 Earnings call transcript