Market Overview

FBL Financial Group Reports Third Quarter 2018 Results

Share:

FBL Financial Group, Inc. (NYSE:FFG):

 
Financial Highlights

(Dollars in thousands, except per share data)

       
    Three months ended September 30,
2018     2017
Net income attributable to FBL Financial Group $ 31,010     $ 26,127
Non-GAAP operating income(1) 31,872 24,776
Earnings per common share (assuming dilution):
Net income 1.24 1.04
Non-GAAP operating income(1)       1.28       0.99
 

FBL Financial Group, Inc. (NYSE:FFG) today reported net income
attributable to FBL Financial Group for the third quarter of 2018 of
$31.0 million, or $1.24 per diluted common share, compared to $26.1
million, or $1.04 per diluted common share, for the third quarter of
2017. Non-GAAP operating income(1) totaled $31.9
million, or $1.28 per common share, for the third quarter of 2018,
compared to $24.8 million, or $0.99 per common share, for the third
quarter of 2017. Third quarter 2018 earnings per share reflects:

  • A growing book of profitable business
  • The benefit of other investment-related income of $0.03 per share
  • Unfavorable mortality results in the Life Segment
  • A decrease in the reserve for guaranteed living withdrawal benefits in
    the Annuity Segment
  • The negative impact of $0.01 per share from unlocking assumptions used
    in the calculation of deferred acquisition costs, unearned revenue
    reserves and certain reserves on interest sensitive products
  • A lower effective tax rate due to the Tax Cuts and Jobs Act of 2017

Non-GAAP operating income differs from the GAAP measure, net income
attributable to FBL Financial Group, in that it excludes the initial
impact of changes in federal statutory income tax rates and tax laws,
realized gains and losses on investments, and the change in net
unrealized gains and losses on derivatives and equity securities. For
further information on this non-GAAP financial measure, please refer to
Note (1) and the reconciliation provided within this release.

"FBL Financial Group delivered another quarter of outstanding financial
results with third quarter net income of $1.24 per share and record
third quarter non-GAAP operating income of $1.28 per share," said James
P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. "These
results reflect steady and profitable growth in our book of business
combined with lower taxes and successful execution of our strategies to
emphasize life insurance sales, manage expenses and maintain a strong
capital position. Our exclusive Farm Bureau agency force and FBL
employees remain focused on the fundamentals to provide an excellent
customer experience."

Accounting Policy Change. During the third quarter of 2018, FBL
Financial Group voluntarily changed its accounting policy for low income
housing tax credit (LIHTC) investments from the equity method to the
proportional amortization method. FBL Financial Group believes the
proportional amortization method is preferable because it better
reflects the economics of an investment that is made for the primary
purpose of receiving tax credits and other tax benefits and is
consistent with the accounting method used by most life insurance
companies that have disclosed their accounting policies for LIHTC
investments. In addition to a change in the timing of the recognition of
income or loss on LIHTC investments, income/expense from LIHTC
investments is now reflected in the "Income taxes" line instead of the
"Equity income" line on the consolidated statements of operations. Prior
period results were adjusted to reflect this change in accounting policy.

Product Revenues Increase from 2017. Premiums and product charges
for the third quarter of 2018 totaled $79.3 million compared to $75.1
million in the third quarter of 2017. Interest sensitive product charges
increased 11 percent while traditional life insurance premiums increased
two percent during the quarter. Premiums collected(2) in the
third quarter of 2018 totaled $141.7 million compared to $141.6 million
in the third quarter of 2017. Annuity premiums collected decreased three
percent and life insurance premiums collected increased four percent.

Investment Income of $106 Million in Third Quarter. Net
investment income in the third quarter of 2018 totaled $105.8 million,
compared to $103.0 million in the third quarter of 2017. This increase
reflects an increase in average invested assets partially offset by
lower investment yields. The annualized yield earned on average invested
assets, with securities at amortized cost, including investments held as
securities and indebtedness of related parties, was 5.16 percent for the
nine months ended September 30, 2018, compared to 5.30 percent for the
nine months ended September 30, 2017. At September 30, 2018, 97 percent
of the fixed maturity securities in FBL Financial Group's investment
portfolio were investment grade debt securities.

Benefits and Expenses. Benefits and expenses totaled $153.9
million in the third quarter of 2018, compared to $146.0 million in the
third quarter of 2017. Death benefits, net of reinsurance and reserves
released, totaled $29.4 million in the third quarter of 2018, compared
to $29.1 million in the third quarter of 2017. By its nature, mortality
experience can fluctuate from quarter to quarter.

Unlocking. During the third quarter of 2018, FBL Financial Group
unlocked the assumptions used in the calculation of deferred acquisition
costs, unearned revenue reserves and certain reserves on interest
sensitive products. This unlocking resulted in a pre-tax unfavorable
impact of $0.3 million, or $0.01 per share after-tax.

Net Realized Losses in the Third Quarter. In the third quarter of
2018, FBL Financial Group recognized net realized losses on investments
of $0.7 million. This is primarily attributable to unrealized losses on
equity securities.

Stock Repurchases. During the third quarter of 2018, FBL
Financial Group did not repurchase any of its Class A or Class B common
stock. FBL Financial Group has $48.0 million remaining under its current
stock repurchase program.

Capital and Book Value. As of September 30, 2018, the book value
per share of FBL Financial Group common stock totaled $47.98, compared
to $55.12 at December 31, 2017. Book value per share, excluding
accumulated other comprehensive income(3), totaled $44.39 at
September 30, 2018, compared to $43.68 at December 31, 2017. The
September 30, 2018 company action level risk based capital ratio of FBL
Financial Group's wholly owned subsidiary, Farm Bureau Life Insurance
Company, was approximately 554 percent.

Further Financial Information. Further information on FBL
Financial Group's financial results, including results by segment, may
be found in FBL Financial Group's financial supplement, available on its
website, www.fblfinancial.com.

Conference Call. FBL Financial Group will hold a conference call
with investors tomorrow, November 2, 2018, at 11:00 a.m. Eastern Time.
The call will be webcast and a replay will be available on FBL Financial
Group's website.

Certain statements in this release concerning FBL Financial Group's
prospects for the future are forward-looking statements intended to
qualify for the "safe harbor" from liability established by the Private
Securities Litigation Reform Act. These statements generally can be
identified by their context, including terms such as "believes,"
"anticipates," "expects," or similar words. These statements involve
certain risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in the forward-looking
statement. These risks and uncertainties are detailed in FBL Financial
Group's reports filed with the Securities and Exchange Commission and
include, but are not limited to, changes in interest rates, difficult
conditions in financial markets and the economy, lack of liquidity and
access to capital, investment valuations, competitive factors, a
decrease in ratings, changes in laws and regulations, differences
between actual claims experience and underwriting assumptions,
relationships with Farm Bureau organizations, the ability to attract and
retain sales agents and adverse results from litigation. These
forward-looking statements are based on assumptions which FBL Financial
Group believes to be reasonable; however, no assurance can be given that
the assumptions will prove to be correct. FBL Financial Group undertakes
no obligation to update any forward-looking statements.

FBL Financial Group is a holding company whose purpose is to protect
livelihoods and futures. Operating under the consumer brand name Farm
Bureau Financial Services, it offers a broad range of life insurance and
annuity products distributed by multiline exclusive Farm Bureau agents.
In addition, FBL Financial Group manages all aspects of two Farm Bureau
affiliated property-casualty insurance companies for a management fee.
Headquartered in West Des Moines, Iowa, FBL Financial Group is traded on
the New York Stock Exchange under the symbol FFG. For more information,
please visit www.fblfinancial.com
and www.fbfs.com.

 
FBL Financial Group, Inc.
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share data)
       
Three months ended Nine months ended
September 30, September 30,
2018     2017 2018     2017
Revenues:
Interest sensitive product charges $ 31,161 $ 28,004 $ 92,165 $ 86,661
Traditional life insurance premiums 48,124 47,087 148,712 145,783
Net investment income 105,757 102,950 310,753 307,852
Net realized capital gains (losses) (709 ) 81
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com