FFG - Earnings call transcript Q3 2019 | FBL Financial Group Inc

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Operator

Good day and welcome to the FBL Financial Group Third Quarter 2019 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. to conference like Till to now Stange. would turn over the Kathleen I go Please ahead.

Kathleen Till Stange

Marketing welcome Scott Financial Financial questions are Chief to XXXX and Don answer Chief you, Thank FBL your Companies; Life present Stice, call. Executive Kelli Officer Officer. and on Investment and Operating Chief to Officer, earnings , Group's Happel, Presenting today's Also Brannen, are call Chief Chief Charlie Jim Seibel Officer; and Eddy, Officer. conference Quarter Third available

Certain by made forward-looking Act. intended Securities implied. statements to and may today statements results materially harbor Reform actual risks differ to contain or safe the from uncertainties from qualify cause expressed that These Litigation the for statements involve liability could established Private those

detailed that reports SEC FBL's prove and assumptions These after be filed assumptions FBL this are given risks date. are to and correct. to however, disclaims believes uncertainties be the statements the reasonable, can which any forward-looking to on obligation based FBL update will be assurance with no in

which call. call call Today's on our be the on during of An and FBL's measures. items these financial applicable, earnings website. GAAP replay being non-GAAP both third reconciled website certain fblfinancial.com. to supplement, and prepared of may is website be after our shortly Comments Where simulcast comments audio the are transcript a found on in release financial found our include this quarter may

to With Jim that, it is to call my now CEO, the pleasure Brannen. turn over

James Brannen

of These adjusted third share of Financial Group below the able quarter per everyone $X.XX Thanks, expectations. income Kathleen FBL were join call. to for of thank us on I'm the net and $X.XX today. XXXX. our operating share per you're results to you income and reported glad

actuarial mortality those to results detail. higher were and the results income. spread going financial impacted assumptions, benefits cover lower Don's unlocking of in negatively by Earnings

Operating then and new I'll I'll wealth to share a and few advisors comments. agents management Chief ask Officer begin by Kelli discussing our our sales, Eddy our

quarter strong XXXX the of life increases Life continued their by momentum. sales from million, Life XXXX. sales. $XX positive was quarter totaled for life third This driven growth in universal up the term and X.X% premium collected third

while X.X% premium are Life with force life as our collected of the the increased of sales not than collected to profit quarter quarter, providing insurance profit X.X%. meet for $XX spread stream needs life totaled insurance increased premium us long-term term components third allow in end. Life that clients, while us Universal additional related. billion

and the $XX.X the quarter essentially following $XX.X third quarters Annuity collected the declines totaled XXXX, million third of for of to year. the in compared of XXXX. Annuity to XXXX sales third quarter in flat compared premiums stabilized million quarter quarter were in the first third two this

sales environment indexed annuity business. sales declined, Fixed low to our a challenge to interest continues annuity while rate rate annuity pose The increased. spread rates

During we XX experienced from quarter. in third This increase managers. X,XXX XXXX, exclusive with and force an agents represents agency quarter and our year the ended the quarter agency of X.X% the or agents great ago growth

property Bureau well life Farm states. casualty partner our as both in states agents added We as our

XX% as XXXX, agent of year was XX, First our retention above goal. September

third recruiting to several notable to of had Management in and Farm quarter. experienced continue number Farm addition territories we and Bureau our Bureau We're our force, in In grow Advisors. our Wealth advisors actively appointments agency the adding

converting Wealth to Bureau those $X combined have These XX of Advisors Management As management assets Management. now assets in the advisors XX, process appointed. we Farm of Farm a and under we're Bureau Wealth September billion had

are our to advisory client Management culture Bureau Wealth agents add who intend and Advisors our members fit Advisers Farm referrals. a serve existing These with Wealth unique for Bureau have financial opportunity with our to orientation agency to referrals great force Management the Farm We fit partner with services. to continue and for service our

management who add only we nature advisors accepting of have to of business. wealth our expect we're Ultimately, the Group experienced this a book to business. FBL diversified fee-based Financial initiative a given Currently, earnings stream

Kelli quarter speak, mention to for absolute to this organization has made to for and we organization, years. great I the a want an XXXX. upcoming early many I with Before my work After the during so about I years in such announcement retire to ask been XX honor plan retirement. past privilege It

and proud serve talented agents team of client I've Farm Bureau Services the best to Bureau alongside features help rural partnering I protecting and work our accomplished America. to needs am their we have the been fortunate so and what industry of force, with livelihoods together distribution the in most our Financial members the the and Farm teams. of the

strategy. record During track my capital CEO, a Services our with significant had our capital agents, strong as we've developing on My shareholders financially to has time leaders, an been strong We've an focus of excellent also management Farm position. supporting each Financial Bureau program building innovation and wealth year. returning been creating

to positioned Officer has confident stated the Board year Chief for a naming anticipate The that future. that FBL I'm prior end. Financial new they Executive is well

significant development a and place succession planning have in leaders on and here. have great emphasis leadership We we

I the best for organization know years our ahead. lie

for be Eddy, who this who year. of at new succeeds He will Kelli Companies is us leaders retiring those Chief mid-August. end Life the joined Officer our our of in Wasilewski Ray One Operating

you We're to thrilled Kelli make few to here. have comments? a Kelli, like would

Kelli Eddy

and am President XX way part so By and served of Well, risk and be more business over been specifically great at this most life operations, here Financial. Jim. to new Vice underwriting, in pleased recently organization. strategy Senior I background, be I've Voya the industry, of than thank years as you, for

and a awesome. people for and drive drawn notably here The been years, Over the traveler Des leadership, several FBL Group I've company frequent most was culture. a I've our been to Moines everyone reasons, the I for dedication, to the and observing Financial by while. is passion

an that closely culture. so the don't and employees related be to you its definitely or The employees find the organization in failure is organization. by to motivation other commitment of effort part a this is excited of any There of I'm and success

observations XXth operations my is here. early are as and organization, a whole, My marks Bureau this specifically day Today run. very Life well Farm that

by system I've policy number been replacement of all of its new business Life with administration multi-year wrapping Farm on things. platform. a is Bureau a up impressed now that

protect where an This all as purpose fail. system and also admin is especially half truly the impressive Farm There's Bureau service of propel niche agents replacement to to futures. projects livelihoods extraordinary markets

cross-sell Life is with an cross-sell dedicated robust funds a Council organization led place. Bureau's This industry an the also average. process organization. in test has innovation to within There the industry has with to The rate leading twice more than concepts Farm rate innovation

I so The solutions efficiency the impressed that enhance see goal customer automation agent system to was is process robotics replacement. to with and drive admin as the implement organization. part used the in and of experience

the evolve. to forward, will continue Going organization

customer the becoming We more friendly, automation experience efficient of are increasing administration more sales in our making products. and life

continue program underwriting the driven to data We'll expand of accelerated underwriting and our grow decisions. use on

Again, to be here and look excited Jim? bright I'm I a forward to future.

James Brannen

to the going you observations turn Thanks, and Kelli. I'm to appreciate sharing initial thoughts Seibel. Don Don? over your call and I

Donald Seibel

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

earnings key the expectations. our quarter. per was for income per third for that Net As $X.XX lower adjusted the operating $X.XX and Jim had drivers share earnings income quarter led share. was XXXX below to indicated, third four were of our We

quarter on calculation the third unlocking unlocking acquisition earnings of reserves assumptions the a of reserves impacted for certain performed by per amortization after First, we costs, This on of revenue the used interest-sensitive $X.XX review negatively of share deferred key tax. in unearned the and products. XXXX

third quarter our on included supplement, page segment Please of investor we have unlocking. of see the level impact XX detail where this

to Second, segment. lower continue our experience annuity income we in spread

than results in insurance the Third, we segment. life experienced mortality worse expected

And we wealth our that we net to expected as incurred an fourth, business. operations management build related out loss

discuss rate will detail items review non-recurring tax share of income the segment This quarter note, On -- more of tax XX%. benefit positive the a these a strategy prior-year the execution I deductions we a these when from planning increasing in tax recorded was per results. third our strategy. $X.XX I XXXX includes details in as

results this reflects pre-tax $X.X quarter withdrawals. for by XXXX spread declined, actuarial This income. and including Unlocking of updating segment for and several assumptions, Annuity million impacted assumptions lower a in surrenders the charge segment. third unlocking resulted

X in of the decline spreads time individual during points higher our maturity the investment XXXX, a proceeds in Point assets. decreased the reinvestment yielding annuities basis yield of lower and third in yielding to from quarter due of assets and

and actuarial the business several assumed for third growing of results $X.X unlocking yields. assumptions The impact a million of XXXX mortality reflects offset investment updating improvement lower segment pre-tax. being the book insurance overall Life from partially benefit assumptions benefit reflected quarter with unlocking steadily by of the of

for a the quarterly results the While universal the an than were number has trended over quarter overall in favorably normal driven in long-term, expected, XXXX mortality claims. by life mortality of This results. is mortality increase third of fluctuation worse

Like on declined spreads, time decreased point the quarter. life primarily annuity business in They also reinvestment due yields. universal the of our impact during lower spreads to

segment charge life a assumptions the for small well better-than-expected were results of other mortality and pre-tax as solid reflecting Corporate universal quarter $XXX,XXX variable from as actuarial unlocking

an management $X.XX per environment for the challenging. segment build related the business. XXXX of share of investment our quarter and million corporate The after-tax loss The wealth totaling includes third out other or $X to remains net

This was is our X.XX% our for on than lower acquisitions year yield the than adjusted half made backing XXXX. portfolio the tax third first The new yield. of business of lower and investment this in quarter acquisitions long-term

focused adding NAIC X bonds. corporate mostly on We and of mostly X investments, are investments, longer duration

capital. our on comment I'll Next,

financial continue position We have capital excellent with flexibility. excellent significant -- to have cap an

significant to even At XXX%. year-end an this action Life the had estimated September to paid based level of This company XX, fund shareholders the dividends year. XXXX to the Bureau from capital an subsidiary holding from risk with increase Farm regular special is paid dividends Bureau XXXX, our and company Farm Life ratio

while results for expectations, we and business remain business. financial quarter the To wealth of with the bottom our our earnings on focused growing diversification management our conclude, below were discipline, our line

with been have pleased these I'm share you. able to to results

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

Operator

the now Our will with comes session. [Operator Peters question begin Instructions] James. first from We Raymond Greg question-and-answer

Marcos Holanda

good is calling for Marcos in morning. This Hi, Greg.

James Brannen

Good morning, Marcos.

Donald Seibel

Good morning, Marcos.

Marcos Holanda

as off role. I'd start I her well and guess Kelli Jim new your And Ray in congratulating and retirement.

James Brannen

Yes. Thanks.

Marcos Holanda

have sales stabilized agent some more on the And new there the color sales first to any my and this was quarter. you competitive can well? I hoping on update and as and around mentioned goes us new also wins, give guess landscape I there it's you the you, and question Jim,

James Brannen

Chief Yes, all room, Officer. our Marketing got I Marcos. the Scott Stice right. in Thanks,

at So make been has XX-year X.XX% opening bouncing to him just in and going to between it's when We've am higher end at of and have I We're pretty into a where the space more it times range around makes index I couple products. comments. it in opportunities that anywhere when the it's the environment been lows, -- those of and had back so it this after difficult. climb kick over X.XX% interesting we've to low significantly very also much

fixed offering the so, at very to And actually allowed products us have time. while are that's very, that's working another this tough

And it's a been on just agents focus. the side,

-- year that. for a for row have and and about five We of had doing we really in and years a responsible growth again off been that focus engine have we or on then going getting two a had Scott's tapered

am more going little landscape, etcetera. bit agents, talk competitive a sales I let So, him to about

Scott Stice

Thank Jim. you,

the annuities front, ability and So and by having management on we're business. wealth to blessed the now insurance the both write of course, sales life

we has Our competitively life force carrying rate the well annuity and more that. have into now. driving overall for the of us on those products two responded interest and right to environment the year agents the agency been just and more shape our this indexed universal more are day product and really how given indexed focus And up and sales really

think, one-year we sure changes some put them above to making them have a retention's good of focus respect ago we Jim recruiting continue beginning our well half off to and year. the but it really a We've fundamentals, results bear been It's fruit the those get been the to people, to above eight are the and goal, fast over goal. seven, generally I a With about two-year start year, year well. and last force, right our a train covered on, just the right challenging, and retention's year focus had agency six, in last we

So, on footing solid we we're feel like forward. pretty going

Marcos Holanda

Okay.

characterize you still relates they're rational -- I being you as you So guys the versus competition it offering what would to are guess, what and doing?

Scott Stice

you on products them -- pretty some those. of our of that, without annuity reasonable of responding which offer agents Most scratch we've a a to that well lost on business is focused make by potential, products keeping kind of most the customers but downside are index head upside to your handful the are certainly rational. them the street There and

James Brannen

niche more that money And offerings might I'll we relationships, existing in also well. say funds wealth management market customers already the we've in seen our and our have flowing annuity where be space, into as there expanded

other annuities And rate so, we're this that our getting management platform. of in might times, have clearly assets interest in environment have under taken been but wealth management advantage

Marcos Holanda

Okay. Thanks I to the a of bullet but page side. for know business developed is guess. guys here -- and bit we those Pivoting on that, And earning I the was as the no that exceeding spreads don't can is guys or -- is curious, talk guaranteed don't saying I competition. have you maybe for what slide, know how XX% there you I targets point there life number and little and the this a is, rates crediting about

just does losing other mean money? I'm for So the is Is or breakeven what of that XX%. it business that type curious, a

Donald Seibel

not say isn't it's on that Don. the to respect I portion book have business losing money. target necessarily would this wouldn't question. other -- With spread the necessarily this I'll of It I we business. Well, that address of just exceeding the is

are, group regularly are products. our meet yields what money our as – what our our a functional on products, portfolio that portfolio the our look are, cap we group to back new interest So rates, crediting cross at rates what yields

rates our go entire the And meet mix objectives. entire to meet portfolio, we the the pay business pay to that current can our cap the and crediting product we and new challenge objectives profit that through can we profit what rates

influences And has where we've line generated. that our ROE time, history the -- pricing of the decisions, but over we products I and that's good and our sight competitors shown do company consistently have what overall our are a at competitors in done of a we've think on reflective job that that those

Marcos Holanda

guys next there's is talk hoping Got composition, about a question on my at little which was a good I commercial portfolio to the loan you that's slide you the it. Thanks, below Don. Charlie. can guess returns. I the XX% to bit investment looking and has giving also just us portfolio am I grade been

growth what's -- we what when I'm loan -- on recession, to just book? curious or what history around a even that what that happen happens commercial happens the portfolio have decelerating

Charles Happel

through with Well, low we an of I had environments, to -- we've that a had we've home outstanding track very recessionary had general. standard going would we just attribute record distress. our loan high underwrite financial crisis, portfolio. Even in minimal a in the really -- level

been which over in proven beneficial Our we're if obviously, gets book that's amortizing market has over because running is time kind largely think improving before, distress LTV and I of even beneficial. on the time

in generally of don't been feel table. like the And -- it's left I type lot with. we got that staff just just excited opportunity but group. we've our We've experienced I'm conservative, in on a got a and over involved about. selection we've new of group highly very frankly been there a had of the and that very energized mean, change properties there, we really a We talented group team

where going So forward. about I'm we're excited going,

back but the up. during -- we production transition, our gearing down slowed slightly, we've we're already So

from really below little the and say, Over peers our line XX.X% of end with that still, seeing pure we probably the terms we've and XXXX now. a last years, data, what I'm at larger that light would which couple I so whole probably in to slightly in consistent allocation, expanded we're is loan of maybe we're observe of the

the like to running are closer XX%. peers Looks

a room got to holding the stomping there choose run back we not and to certainly we've but we're not if little So, on gas, either. there

about our I'm well. was. asked exactly your credits you Now, not question what as grade non-investment sure

Kelli Eddy

Maybe to clarify...

Marcos Holanda

you if Just a in there? little bit, dissect that what's

Kathleen Till Stange

but can XX.X%, the be Charlie will is BBB right is be talk updated grade and exposure X.X%. below about. investment appears and incorrect to away, The It --

Marcos Holanda

Okay.

Kelli Eddy

If you want to...

Charles Happel

Yes.

acquisitive We space. yield in the not have been high

the space been fund It's set to thing. deem we external an opportunistic until We yield we I it an got don't benchmarks to of don't not on have in to just we it. from funded that and fund. -- actually say don't kind mandate be we've high intend it intend have shouldn't We to -- step some attractive and it's fund until would we intend to that. when into working

to feel we dry the it's even when we're but in down little our I'm from run data, time -- come not credit we've what comes, moment active relative got high the this and so, and allocation peers has observing yield most in a like But in actually BBB just powder the we've very our bucket small. recent our at

Marcos Holanda

my up year it. special looking Thank question, quarter? another just position, And I Don, thank and about how guess, guys feeling and just set in how -- capital looking first that. for dividend you Got you. the Great, next the you is final into the

Donald Seibel

Yes.

you a the back end you year, we third position last we're position If that quarter at standpoint. third of where from an a compare spot or at to look RBC in were and little end the take better of our actually at capital on quarter the the

a to table at a the whether on pay the at for a be, special to what and high going discussion. we level In row dividends for would but now capitalized. record a meeting by years Board a basis certainly our deployed the a or and decided and Board dividend that we've dividends competitive very acknowledge on not not well through, are past be the timing sure paying pay Though track continuing how have the several dividends we capital is we are So now. situation of be we that regular will very in special is

Marcos Holanda

answers. and your Congratulations, for you congratulations, Jim Thank Kelli.

James Brannen

Marcos. you, Thank

Operator

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

Jamie Inglis

Hi, morning. good

James Brannen

Good morning, Jamie.

Jamie Inglis

The Hey, Jim. way great long and to appreciate everything over thanks Company's the come say we work these years. a Want for all done. you've

James Brannen

Very kind Thank you. you. of

Jamie Inglis

from, looked sort one I than and your, and effort do recruiting agents nice just you what, of don't training of there. kind know at the or or years -- it was that know you is been -- you grindstone and you retention guys -- Has is touch the growth in which view I'm compensation the expected. anything anything have did of better that agents the the different mentioned point I two

James Brannen

both, at Scott of go that. but let Some I'll

Scott Stice

the Ye, It's was I of give. going little that answer to exact a bit was been both.

that the think changes just have requirements the been of most fundamental I down we've tightening made really eligibility, on first.

agents we Second, given launch that with an a dividends or up this did sort folks that just communities for we our really year. at we've them market agricultural program serve landed, has paid and agents initiative recruiting a aimed background. XX They that just program natural the believe, a new leg XX niche from have and I of good

agent very, to We and to us made changes for that's plan. it as markets one some into dividends We've more one minor approaches, suburban very paying different more rural really for our bifurcated markets, compensation new well.

attack So, and incredibly really And challenging agent that we have landscape basic just difficult. and -- scratch into new landscape remains focused I the really to stay recruiting say block would one. and developing

Jamie Inglis

All right. right, all

already curious how think hire the recruited the more How today hard that -- about Okay, pedal of those sort in folks of your in you about terms gas thoughts productive to about management press you about system, the versus you've wealth initiative -- and that? to do good. etcetera. how think I'm

James Brannen

know And bottom enough folks sure of and there, balance there be a adding line make the under going door think I to to enough we've -- that to soon. continuing very the is management I invest. assets get good think instead struck we're to that I in that and crossover Yes, point we're to Jamie. got to to

product new them type to a real looking our of of in advisors we haven't value do. with to that yet, and arena good people and financial this we we the client proposition are already to many is we that in talk and for members And had them a relationship one have now a to for have the bring good

there refer of a so, is And to people whole host to.

the that's job folks books. attracting we're so, of And proposition their have value and getting a that nice done

way, make top also sure growth our biggest it want sure our selling to that we line want one the be business bottom and sell strengths. along covering we will into of we're cross that a to engine, We make of cross but our and it learn customers a be another perspective is We both will territory. line and from

When we own retention this both company, see lot property outside but of we of for life within business things a property and casualty of cross business good our our casualty sister our company. really terms retention in sell,

Scott? You add to anything that want to

Scott Stice

been Yes, pleased received I we which recruit would significant only have think, that under being the how a advisors in assets book prop We is fairly our management is, only other add out very already. thing value market. I recruit with as we've advisors who of

encountered the -- and learning’s we've business that of getting converted. is One that

converted And and sale to that so, thing new business It's it's get recruit them in active one arena. the quite get them. then to another

made chewing some XX we've walking time onboard. on at build seen continue and of over positive that matter days to we now this days same front to to gum the just really how some the a changes it's and So, as developments out. We've XX last we

Jamie Inglis

lot. Okay. a Thanks All great. right,

Operator

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

Kathleen Till Stange

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

Operator

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

now may You disconnect.

FBL Financial (FFG) 1 Nov 192019 Q3 Earnings call transcript