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Section 1: 8-K (8-K)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): September 18, 2018

FBL Financial Group, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Iowa
1-11917
42-1411715
(State of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
5400 University Avenue, West Des Moines, Iowa
50266-5997
(Address of principal executive offices)
 
(Zip Code)
(515) 225-5400
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]






Item 8.01 Other Events

During the third quarter of 2018, FBL Financial Group, Inc. (the Company) will voluntarily change its accounting policy for low income housing tax credit (LIHTC) investments. The Company will begin using the proportional amortization method of
accounting for its LIHTC investments rather than the equity method of accounting.  While both methods of accounting are
acceptable under U.S. generally accepted accounting principles, the Company believes the proportional amortization method is preferable because it more fairly represents the economics of LIHTC investments, which are made primarily for the purpose of receiving tax credits and other tax benefits. In addition, this method aligns to the method typically used by companies within the Company's industry which have similar investments.
 
While this accounting change impacts the timing of profit and loss recognition, it does not impact the ultimate profitability of the underlying LIHTC investments.

With this filing, selected unaudited financial information is provided to reflect adjustments due to this accounting policy change. This information is attached as Exhibit 99.1.







Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.        Description

99.1            Selected Unaudited Adjusted Financial Information


    





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: September 18, 2018                    FBL FINANCIAL GROUP, INC.

By    /s/ Donald J. Seibel
Donald J. Seibel
Chief Financial Officer






(Back To Top)

Section 2: EX-1 (EXHIBIT 99.1)

Exhibit


FBL FINANCIAL GROUP, INC.
Selected Unaudited Adjusted Financial Information
2018, 2017 and 2016



395056056_invsuppcover19.jpg



395056056_fblfgrgb960px.jpg







 
 
Corporate Headquarters
FBL Financial Group, Inc.
 
5400 University Avenue
 
West Des Moines, Iowa 50266-5997
 
(515) 225-5400
Financial Inquiries
For more information contact:
 
Kathleen Till Stange
 
Vice President Corporate & Investor Relations
 
Kathleen.TillStange@FBLFinancial.com
 
(515) 226-6780
Internet Information
FBL Financial Group, Inc.
 
www.fblfinancial.com
Stock Symbol
NYSE: FFG
Transfer Agent
American Stock Transfer & Trust Company, LLC
 
6201 15th Avenue
 
Brooklyn, NY 11219
 
http://www.astfinancial.com
 
 





FBL Financial Group, Inc.
 
 
Financial Supplement - Selected Adjusted Information (Unaudited)
 
 
June 30, 2018
 
 
Table of Contents/Notes
 
 
 
 
 
Impact of Accounting Change - Summary
 
Consolidated Financial Statements:
 
 
Consolidated Balance Sheets
 
Consolidated Statements of Comprehensive Income
 
Consolidated Statements of Comprehensive Income, last five quarters
 
Net Income to Non-GAAP Operating Income Reconciliation and Pre-tax Non-GAAP Operating Income by Segment, last five quarters
 
Statements of Pre-tax Non-GAAP Operating Income, last five quarters - Corporate and Other Segment
 
Other Information
 

NOTE 1: As more fully disclosed on page 2 of this report, we are voluntarily changing our accounting for low-income housing tax credit (LIHTC) investments from one acceptable method to another acceptable method under U.S. Generally Accepted Accounting Principles (GAAP). The accounting change is applied retrospectively to our financial statements. This report summarizes the historical adjustments, which are confined to the consolidated financial statements and the Corporate and Other Segment. The Annuity and Life Insurance Segments were not impacted by this accounting change.

NOTE 2: In addition to net income as determined using GAAP, we have consistently used non-GAAP operating income (a measure of earnings not recognized under GAAP), a financial measure common in the life insurance industry, as a primary economic measure to evaluate our financial performance. Non-GAAP operating income for the periods presented consists of net income adjusted to exclude 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.

We use non-GAAP operating income, in addition to net income, to measure our performance since realized gains and losses on investments and the change in net unrealized gains and losses on derivatives and equities can fluctuate greatly from quarter to quarter. These fluctuations make it difficult to analyze core operating trends. A view of our non-GAAP operating performance without the impact of these items enhances the analysis of our results. We use non-GAAP operating income for goal setting, determining short-term incentive compensation and evaluating performance on a basis comparable to that used by many in the investment community.

NOTE 3: Certain financial information presented herein may not add due to rounding.


1



FBL Financial Group, Inc.
Impact of Accounting Change - Summary (Unaudited)

During the third quarter of 2018, FBL Financial Group, Inc (the Company) will voluntarily change its accounting policy for low income housing tax credit (LIHTC) investments. The Company will begin using the proportional method of accounting for its LIHTC investments rather than the equity method of accounting. While both methods of accounting are acceptable under U.S. generally accepted accounting principles, the Company believes the proportional amortization method is preferable because it more fairly represents the economics of LIHTC investments, which are made primarily for the purpose of receiving tax credits and other tax benefits. In addition, this method aligns to the method typically used by the companies within the Company's industry which have similar investments. In addition to a change in the timing of the recognition of income on LIHTC investments, there are also differences in how these investments will be reported within our consolidated financial statements, as follows:
LIHTC investments are now recorded in the "Other asset" line instead of the "Securities and indebtedness of related parties" line on the consolidated balance sheets.
Income/expense from LIHTC investments is now recorded in the "Income taxes" line instead of the "Equity income" line on the consolidated statements of operations.

The following presents the effect of the change on financial statement line items for prior periods that were retrospectively adjusted:

Consolidated Balance Sheet Impact
 
 
 
 
 
 
 
December 31, 2016
 
 
 
December 31, 2017
 
 
 
Originally Reported
 
Currently Reported
 
Effect of Change
 
Originally Reported
 
Currently Reported
 
Effect of Change
 
(Dollars in thousands)
 
(Dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
Securities and indebtedness of related parties
$
137,422

 
$
46,167

 
$
(91,255
)
 
$
130,240

 
$
47,823

 
$
(82,417
)
Current income taxes recoverable
4,309

 
7,756

 
3,447

 
3,269

 
6,764

 
3,495

Other assets
92,021

 
171,284

 
79,263

 
112,054

 
177,764

 
65,710

Total assets
 
 
 
 
$
(8,545
)
 
 
 


 
$
(13,212
)
 
 
 
 
 
 
 
 
 
 
 


Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
Deferred income taxes
$
163,495

 
$
159,653

 
$
(3,842
)
 
$
131,912

 
$
130,425

 
$
(1,487
)
Retained earnings
882,672

 
877,969

 
(4,703
)
 
947,148

 
935,423

 
(11,725
)
Total liabilities and stockholders’ equity
 
 
 
 
$
(8,545
)
 
 
 
 
 
$
(13,212
)


2



Consolidated Balance Sheet Impact
 
June 30, 2018
 
 
 
Originally Reported
 
Currently Reported
 
Effect of Change
 
(Dollars in thousands)
Assets
 
 
 
 
 
Securities and indebtedness of related parties
$
127,876

 
$
52,502

 
$
(75,374
)
Current income taxes recoverable

 
501

 
501

Other assets
106,722

 
166,432

 
59,710

Total assets
 
 
 
 
$
(15,163
)
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
Current income taxes payable
$
2,984

 
$

 
$
(2,984
)
Deferred income taxes
88,993

 
88,230

 
(763
)
Retained earnings
940,389

 
928,973

 
(11,416
)
Total liabilities and stockholders’ equity
 
 
 
 
$
(15,163
)

Consolidated Statements of Operations Impact
 
 
 
 
 
 
 
Year ended December 31, 2016
 
Year ended December 31, 2017
 
Originally Reported
 
Currently Reported
 
Effect of Change
 
Originally Reported
 
Currently Reported
 
Effect of Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Net impairment loss recognized in earnings
$
(4,869
)
 
$
(4,869
)
 
$

 
$
(3,986
)
 
$
(1,553
)
 
$
2,433

 
 
 
 
 
 
 
 
 
 
 
 
Income taxes
(46,010
)
 
(41,220
)
 
4,790

 
40,729

 
39,983

 
(746
)
Equity income (loss), net of related income taxes
11,440

 
2,269

 
(9,171
)
 
11,299

 
2,590

 
(8,709
)
Net income (loss) attributable to FBL Financial Group, Inc.
 
 
 
 
$
(4,381
)
 
 
 
 
 
$
(7,022
)
Impact of change in federal tax rate (1)
 
 
 
 

 
 
 
 
 
4,640

Realized gains/losses on investments, net of tax
 
 
 
 

 
 
 
 
 
(1,922
)
Non-GAAP operating income
 
 
 
 
$
(4,381
)
 
 
 
 
 
$
(4,304
)
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share - assuming dilution
 
 
 
 
$
(0.18
)
 
 
 
 
 
$
(0.28
)
Non-GAAP operating income per common share - assuming dilution
 
 
 
 
$
(0.18
)
 
 
 
 
 
$
(0.17
)

(1)
Amounts include catch up amortization on LIHTC related to changes in federal tax rates.

3



Income statement impact of LIHTC accounting change by quarter
 
2017
 
2018
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
(In thousands, except per share data)
Net income attributable to FBL Financial Group, Inc.
 
 
 
 
 
 
 
 
 
 
 
Originally reported
$
26,433

 
$
32,291

 
$
27,104

 
$
108,499

 
$
23,631

 
$
32,428

Currently reported
25,144

 
32,054

 
26,127

 
103,980

 
23,565

 
32,803

Effect of change
$
(1,289
)
 
$
(237
)
 
$
(977
)
 
$
(4,519
)
 
$
(66
)
 
$
375

 
 
 
 
 
 
 
 
 
 
 
 
Change in earnings (loss) per common share - basic and assuming dilution
$
(0.05
)
 
$
(0.01
)
 
$
(0.04
)
 
$
(0.18
)
 
$

 
$
0.01

 

 


 

 

 


 

Non-GAAP operating income
 
 
 
 
 
 
 
 
 
 
 
Originally reported
$
26,988

 
$
30,817

 
$
25,753

 
$
24,804

 
$
27,633

 
$
32,693

Currently reported
25,699

 
30,580

 
24,776

 
23,003

 
26,297

 
31,915

Effect of change
$
(1,289
)

$
(237
)
 
$
(977
)
 
$
(1,801
)
 
$
(1,336
)
 
$
(778
)
 

 

 

 

 

 

Change in operating earnings (loss) per common share - basic and assuming dilution
$
(0.05
)
 
$
(0.01
)
 
$
(0.04
)
 
$
(0.07
)
 
$
(0.05
)
 
$
(0.03
)





4



FBL Financial Group, Inc.
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

 
As adjusted
 
June 30,
2018
 
December 31,
2017
Assets
 
 
 
Investments:
 
 
 
Fixed maturities - available for sale, at fair value (amortized cost: 2018 - $6,922,505; 2017 - $6,757,250)
$
7,173,415

 
$
7,291,967

Equity securities - available for sale, at fair value (cost: 2018 - $99,279; 2017 - $96,715)
104,026

 
104,145

Mortgage loans
982,987

 
971,812

Real estate
1,543

 
1,543

Policy loans
194,838

 
191,398

Short-term investments
15,141

 
17,007

Other investments
44,724

 
42,371

Total investments
8,516,674

 
8,620,243

 
 
 
 
Cash and cash equivalents
23,705

 
52,696

Securities and indebtedness of related parties (adjusted)
52,502

 
47,823

Accrued investment income
75,044

 
76,468

Amounts receivable from affiliates
8,200

 
3,561

Reinsurance recoverable
103,032

 
108,948

Deferred acquisition costs
387,527

 
302,611

Value of insurance in force acquired
8,880

 
4,560

Current income taxes recoverable (adjusted)
501

 
6,764

Other assets (adjusted)
166,432

 
177,764

Assets held in separate accounts
638,061

 
651,963

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

 
 
 
 
 
 
 
Total assets (adjusted)
$
9,980,558

 
$
10,053,401


5



FBL Financial Group, Inc.
Consolidated Balance Sheets (Continued)
(Dollars in thousands)

 
As adjusted
 
June 30,
2018
 
December 31,
2017
Liabilities and stockholders' equity
 
 
 
Liabilities:
 
 
 
Future policy benefits:
 
 
 
Interest sensitive products
$
5,417,955

 
$
5,299,961

Traditional life insurance and accident and health products
1,775,968

 
1,750,504

Other policy claims and benefits
46,681

 
44,475

Supplementary contracts without life contingencies
312,399

 
322,630

Advance premiums and other deposits
265,763

 
267,023

Amounts payable to affiliates
1,299

 
1,164

Short-term debt payable to non-affiliates
27,000

 

Long-term debt payable to non-affiliates
97,000

 
97,000

Current income taxes payable (adjusted)

 

Deferred income taxes (adjusted)
88,230

 
130,425

Other liabilities
93,930

 
111,131

Liabilities related to separate accounts
638,061

 
651,963

Total liabilities (adjusted)
8,764,286

 
8,676,276

 
 
 
 
Stockholders' equity:
 
 
 
FBL Financial Group, Inc. stockholders' equity:
 
 
 
Preferred stock, without par value, at liquidation value - authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares
3,000

 
3,000

Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 24,806,796 in 2018 and 24,919,113 shares in 2017
153,114

 
153,589

Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2018 and 2017
72

 
72

Accumulated other comprehensive income
131,081

 
284,983

Retained earnings (adjusted)
928,973

 
935,423

Total FBL Financial Group, Inc. stockholders' equity (adjusted)
1,216,240

 
1,377,067

Noncontrolling interest
32

 
58

Total stockholders' equity (adjusted)
1,216,272

 
1,377,125

Total liabilities and stockholders' equity (adjusted)
$
9,980,558

 
$
10,053,401



6



FBL Financial Group, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in thousands, except per share data)

 
As adjusted
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Interest sensitive product charges
$
30,906

 
$
29,456

 
$
61,004

 
$
58,657

Traditional life insurance premiums
51,091

 
50,262

 
100,588

 
98,696

Net investment income
103,974

 
103,908

 
204,996

 
204,902

Net realized capital gains (losses)
841

 
921

 
(906
)
 
518

Net impairment losses recognized in earnings (adjusted)

 

 
(1,040
)
 
(66
)
Other income
3,637

 
4,450

 
8,237

 
8,210

Total revenues (adjusted)
190,449

 
188,997

 
372,879

 
370,917

 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
Interest sensitive product benefits
62,637

 
58,251

 
123,982

 
121,011

Traditional life insurance benefits
43,725

 
42,610

 
89,181

 
85,564

Policyholder dividends
2,560

 
2,557

 
5,111

 
5,110

Underwriting, acquisition and insurance expenses
37,210

 
36,341

 
76,787

 
70,694

Interest expense
1,213

 
1,213

 
2,426

 
2,425

Other expenses
5,627

 
4,740

 
11,220

 
8,891

Total benefits and expenses
152,972

 
145,712

 
308,707

 
293,695

 
37,477

 
43,285

 
64,172

 
77,222

Income tax expense (adjusted)
(5,831
)
 
(12,470
)
 
(9,644
)
 
(22,137
)
Equity income, net of related income taxes (adjusted)
1,139

 
1,266

 
1,799

 
2,142

Net income (adjusted)
32,785

 
32,081

 
56,327

 
57,227

Net loss (income) attributable to noncontrolling interest
18

 
(27
)
 
41

 
(29
)
Net income attributable to FBL Financial Group, Inc. (adjusted)
$
32,803

 
$
32,054

 
$
56,368

 
$
57,198

 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to FBL Financial Group, Inc. (adjusted)
$
(22,727
)
 
$
78,813

 
$
(92,054
)
 
$
120,000

 
 
 
 
 
 
 
 
Earnings per common share (adjusted)
$
1.31

 
$
1.28

 
$
2.26

 
$
2.28

Earnings per common share - assuming dilution (adjusted)
$
1.31

 
$
1.28

 
$
2.25

 
$
2.28

 
 
 
 
 
 
 
 
Cash dividends per common share
$
0.46

 
$
0.44

 
$
0.92

 
$
0.88

Special cash dividend per common share
$

 
$

 
$
1.50

 
$
1.50



7



FBL Financial Group, Inc.
Consolidated Statements of Comprehensive Income (Unaudited) - Quarterly
(Dollars in thousands, except per share data)

 
As adjusted
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
Revenues:
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
$
29,456

 
$
28,004

 
$
26,275

 
$
30,098

 
$
30,906

Traditional life insurance premiums
50,262

 
47,087

 
49,547

 
49,497

 
51,091

Net investment income
103,908

 
102,950

 
107,347

 
101,022

 
103,974

Net realized capital gains (losses)
921

 
81

 

 
(1,747
)
 
841

Net impairment losses recognized in earnings (adjusted)

 
(67
)
 
(1,420
)
 
(1,040
)
 

Other income
4,450

 
3,501

 
3,689

 
4,600

 
3,637

Total revenues (adjusted)
188,997

 
181,556

 
185,438

 
182,430

 
190,449

 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits
58,251

 
67,206

 
63,661

 
61,345

 
62,637

Traditional life insurance benefits
42,610

 
42,633

 
44,826

 
45,456

 
43,725

Policyholder dividends
2,557

 
2,487

 
2,543

 
2,551

 
2,560

Underwriting, acquisition and insurance expenses
36,341

 
27,535

 
36,649

 
39,577

 
37,210

Interest expense
1,213

 
1,213

 
1,212

 
1,213

 
1,213

Other expenses
4,740

 
4,971

 
4,520

 
5,593

 
5,627

Total benefits and expenses
145,712

 
146,045

 
153,411

 
155,735

 
152,972

 
43,285

 
35,511

 
32,027

 
26,695

 
37,477

Income tax benefit (expense) (adjusted)
(12,470
)
 
(9,880
)
 
72,000

 
(3,813
)
 
(5,831
)
Equity income, net of related income taxes (adjusted)
1,266

 
487

 
(39
)
 
660

 
1,139

Net income (adjusted)
32,081

 
26,118

 
103,988

 
23,542

 
32,785

Net loss (income) attributable to noncontrolling interest
(27
)
 
9

 
(8
)
 
23

 
18

Net income attributable to FBL Financial Group, Inc. (adjusted)
$
32,054

 
$
26,127

 
$
103,980

 
$
23,565

 
$
32,803

 
 
 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to FBL Financial Group, Inc. (adjusted)
$
78,813

 
$
37,639

 
$
116,868

 
$
(69,327
)
 
$
(22,727
)
 
 
 
 
 
 
 
 
 
 
Earnings per common share (adjusted)
$
1.28

 
$
1.04

 
$
4.15

 
$
0.94

 
$
1.31

Earnings per common share - assuming dilution (adjusted)
$
1.28

 
$
1.04

 
$
4.15

 
$
0.94

 
$
1.31

 
 
 
 
 
 
 
 
 
 
Cash dividends per common share
$
0.44

 
$
0.44

 
$
0.44

 
$
0.46

 
$
0.46

Special cash dividend per common share
$

 
$

 
$

 
$
1.50

 
$

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (in thousands):
 
 
 
 
 
 
 
 
 
Basic
25,031

 
25,037

 
25,039

 
25,004

 
24,917

Effect of dilutive securities
20

 
18

 
18

 
16

 
13

Diluted
25,051

 
25,055

 
25,057

 
25,020

 
24,930



8



FBL Financial Group, Inc.
Net Income to Non-GAAP Operating Income Reconciliation and Pre-tax Non-GAAP Operating Income by Segment
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
As adjusted
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
 
 
 
 
 
 
 
 
 
 
Net income attributable to FBL Financial Group, Inc. (adjusted)
$
32,054

 
$
26,127

 
$
103,980

 
$
23,565

 
$
32,803

Net income adjustments:
 
 
 
 
 
 
 
 
 
Impact of change in federal tax rate (adjusted)

 

 
(81,157
)
 

 

Realized gains/losses on investments (1)(2) (adjusted)
(788
)
 
38

 
656

 
2,223

 
(694
)
Change in net unrealized gains/losses on derivatives (1)
(686
)
 
(1,389
)
 
(476
)
 
509

 
(194
)
Non-GAAP operating income (adjusted)
$
30,580

 
$
24,776

 
$
23,003

 
$
26,297

 
$
31,915

 
 
 
 
 
 
 
 
 
 
Non-GAAP operating income per common share - assuming dilution (adjusted)
$1.22
 
$0.99
 
$0.92
 
$1.05
 
$1.27
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating return on equity, excluding AOCI - last twelve months (adjusted)
10.7%
 
10.3%
 
10.0%
 
10.0%
 
9.7%
Non-GAAP operating return on equity, including AOCI - last twelve months (adjusted)
8.8%
 
8.5%
 
8.3%
 
8.3%
 
8.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
Impact of Adjustments on FBL Net Income
 
 
 
 
 
 
 
 
 
Impact of change in federal tax rate (adjusted)
$

 
$

 
$
81,157

 
$

 
$

Realized gains/losses on investments (adjusted)
921

 
14

 
(1,420
)
 
(970
)
 
1,707

Change in net unrealized gains/losses on equity securities

 

 

 
(1,817
)
 
(866
)
Change in net unrealized gains/losses on derivatives
107

 
1,897

 
629

 
(1,208
)
 
516

Offsets:
 
 
 
 
 
 
 
 
 
Change in amortization
222

 
(20
)
 
(90
)
 
338

 
(226
)
Reserve change on interest sensitive products
1,018

 
187

 
79

 
199

 
(7
)
Income tax (adjusted)
(794
)
 
(727
)
 
622

 
726

 
(236
)
Net impact of net income adjustments (adjusted)
$
1,474

 
$
1,351

 
$
80,977

 
$
(2,732
)
 
$
888

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
Pre-tax non-GAAP operating income by segment:
 
 
 
 
 
 
 
 
 
Annuity segment
$
18,174

 
$
17,015

 
$
17,211

 
$
16,582

 
$
15,998

Life Insurance segment
17,631

 
12,620

 
9,856

 
10,897

 
16,381

Corporate and Other segment (adjusted)
7,133

 
4,556

 
5,694

 
3,533

 
5,434

Total pre-tax non-GAAP operating income (adjusted)
42,938

 
34,191

 
32,761

 
31,012

 
37,813

Income taxes on non-GAAP operating income (adjusted)
(12,358
)
 
(9,415
)
 
(9,758
)
 
(4,715
)
 
(5,898
)
Non-GAAP operating income (adjusted)
$
30,580

 
$
24,776

 
$
23,003

 
$
26,297

 
$
31,915


(1)
Amounts are net of offsets related to changes in amortization of unearned revenue reserves, deferred sales inducements and deferred acquisition costs, as well as changes in interest sensitive product reserves and income taxes attributable to these items.
(2)
Beginning in 2018, amount includes changes in net unrealized gains/losses on equity securities.


9



FBL Financial Group, Inc.
Statements of Pre-tax Non-GAAP Operating Income
Corporate and Other
 
 
 
 
 
 
 
 
 
 
 
 
 
As adjusted
 
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
Pre-tax Non-GAAP Operating Income
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating revenues:
 
 
 
 
 
 
 
 
 
 
Interest sensitive product charges
 
$
10,894

 
$
10,393

 
$
11,252

 
$
11,021

 
$
11,102

Net investment income
 
8,643

 
8,719

 
8,788

 
8,411

 
8,777

Other income
 
4,567

 
3,589

 
3,829

 
4,679

 
3,990

Total non-GAAP operating revenues
 
24,104

 
22,701

 
23,869

 
24,111

 
23,869

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating benefits and expenses:
 
 
 
 
 
 
 
 
 
 
Interest sensitive product benefits
 
7,894

 
11,697

 
9,410

 
9,342

 
7,714

Underwriting, acquisition and insurance expenses:
 
 
 
 
 
 
 
 
 
 
Commission expense, net of deferrals
 
812

 
705

 
716

 
680

 
667

Amortization of deferred acquisition costs
 
1,223

 
(2,276
)
 
904

 
2,512

 
1,876

Other underwriting expenses
 
1,721

 
2,045

 
1,607

 
1,402

 
1,506

Total underwriting, acquisition and insurance expenses
 
3,756

 
474

 
3,227

 
4,594

 
4,049

Interest expense
 
1,213

 
1,213

 
1,212

 
1,213

 
1,213

Other expenses
 
4,740

 
4,971

 
4,520

 
5,593

 
5,627

Total non-GAAP operating benefits and expenses
 
17,603

 
18,355

 
18,369

 
20,742

 
18,603

 
 
6,501

 
4,346

 
5,500

 
3,369

 
5,266

Net loss (income) attributable to noncontrolling interest
 
(27
)
 
9

 
(8
)
 
23

 
18

Equity loss, before tax (adjusted)
 
659

 
201

 
202

 
141

 
150

Pre-tax non-GAAP operating income (adjusted)
 
$
7,133

 
$
4,556

 
$
5,694

 
$
3,533

 
$
5,434

 
 
 
 
 
 
 
 
 
 
 
Selected balance sheet data, securities at amortized cost:
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
Investments
 
$
652,011

 
$
647,104

 
$
671,857

 
$
680,285

 
$
678,014

Deferred acquisition costs
 
67,425

 
71,038

 
70,247

 
68,202

 
66,315

Separate account assets
 
625,971

 
637,746

 
651,963

 
638,751

 
638,061

 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Interest sensitive reserves
 
$
367,929

 
$
369,167

 
$
369,726

 
$
369,022

 
$
367,937

Other insurance reserves
 
91,316

 
94,088

 
93,754

 
91,305

 
89,427

Separate account liabilities
 
625,971

 
637,746

 
651,963

 
638,751

 
638,061

Allocated equity, excluding AOCI (adjusted)
 
375,883

 
385,733

 
420,412

 
351,866

 
369,593

 
 
 
 
 
 
 
 
 
 
 
Rollforward of separate account balances:
 
 
 
 
 
 
 
 
 
 
Beginning separate account balance
 
$
615,892

 
$
625,971

 
$
637,746

 
$
651,963

 
$
638,751

Net premiums and transfers
 
6,804

 
4,945

 
4,745

 
6,667

 
6,264

Net investment income (loss)
 
19,679

 
22,852

 
26,039

 
(3,424
)
 
11,995

Charges, benefits and surrenders
 
(16,404
)
 
(16,022
)
 
(16,567
)
 
(16,455
)
 
(18,949
)
Ending separate account balance
 
$
625,971

 
$
637,746

 
$
651,963

 
$
638,751

 
$
638,061

 
 
 
 
 
 
 
 
 
 
 
Other data:
 
 
 
 
 
 
 
 
 
 
Number of direct contracts - variable annuity
 
10,157

 
10,017

 
9,857

 
9,671

 
9,491

Number of direct policies - variable universal life
 
37,800

 
37,400

 
36,986

 
36,548

 
36,056

Direct face amounts - variable universal life
 
$
4,654,603

 
$
4,599,050

 
$
4,549,732

 
$
4,501,972

 
$
4,440,315



10



FBL Financial Group, Inc.
Other Information
 
 
 
 
 
 
 
 
 
 
 
As adjusted
 
June 30,
 
September 30,
 
December 31,
 
March 31,
 
June 30,
 
2017
 
2017
 
2017
 
2018
 
2018
 
 
(Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Capitalization:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$

 
$

 
$

 
$
27,000

Trust preferred securities, due 2047
97,000

 
97,000

 
97,000

 
97,000

 
97,000

Total debt
97,000

 
97,000

 
97,000

 
97,000

 
124,000

 
 
 
 
 
 
 
 
 
 
Preferred stock
3,000

 
3,000

 
3,000

 
3,000

 
3,000

Common stockholders' equity, excluding AOCI (adjusted)
1,029,198

 
1,044,521

 
1,089,084

 
1,063,139

 
1,082,159

Total capitalization, excluding AOCI (adjusted)
1,129,198

 
1,144,521

 
1,189,084

 
1,163,139

 
1,209,159

 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income
212,357

 
223,869

 
284,983

 
186,222

 
131,081

Total capitalization, including AOCI (adjusted)
$
1,341,555

 
$
1,368,390

 
$
1,474,067

 
$
1,349,361

 
$
1,340,240

 
 
 
 
 
 
 
 
 
 
Common shares outstanding
24,928,568

 
24,933,510

 
24,930,526

 
24,837,976

 
24,818,209

 
 
 
 
 
 
 
 
 
 
Book Value per Share:
 
 
 
 
 
 
 
 
 
Excluding AOCI (adjusted)
$
41.29

 
$
41.89

 
$
43.68

 
$
42.80

 
$
43.60

Including AOCI (adjusted)
49.80

 
50.87

 
55.12

 
50.30

 
48.89

 
 
 
 
 
 
 
 
 
 
Debt-to-Capital Ratio:
 
 
 
 
 
 
 
 
 
Excluding AOCI (adjusted)
8.5
%
 
8.4
%
 
8.1
%
 
8.3
%
 
10.2
%
Including AOCI (adjusted)
7.2

 
7.1

 
6.5

 
7.1

 
9.2

 
 
 
 
 
 
 
 
 
 
Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
 
 
 
 
 
 
 
 
 
Excluding AOCI (adjusted)
4.3
%
 
4.2
%
 
4.0
%
 
4.1
%
 
5.1
%
Including AOCI (adjusted)
3.6

 
3.5

 
3.3

 
3.6

 
4.6

 
 
 
 
 
 
 
 
 
 
Class A Common Ownership:
 
 
 
 
 
 
 
 
 
Iowa Farm Bureau Federation
59.2
%
 
59.2
%
 
59.2
%
 
59.5
%
 
59.5
%
Public
40.8

 
40.8

 
40.8

 
40.5

 
40.5

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 


11
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