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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)

or

Commission File Number: 1-11917

FBL Financial Group, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (515) 225-5400

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes  ¨  No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  x  Yes  ¨  No

Aggregate market value of Class A and B Common Stock held by non-affiliates of the registrant (computed as of June 30, 2002): $240,555,047

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 26,608,705 shares of Class A Common Stock and 1,192,990 shares of Class B Common Stock as of February 10, 2003.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant’s definitive proxy statement for the annual meeting of shareholders to be held May 14, 2003 are incorporated by reference into Part III of this Form 10-K.

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FBL FINANCIAL GROUP, INC.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

Table of Contents

Part I

Item 1.    Business

General

FBL Financial Group, Inc. (we or the Company) sells universal life, variable universal life and traditional life insurance and traditional and variable annuity products. These products are principally marketed through a core distribution force consisting of approximately 1,990 exclusive Farm Bureau agents in the midwestern and western sections of the United States. Our variable universal life and variable annuity products are also marketed in other states through alliances with other life insurance companies and a regional broker-dealer. In addition to marketing our products through these channels, we also assume business through reinsurance arrangements with other companies.

Our volume of business in force increased significantly during 2002 principally due to the assumption of equity-indexed and fixed annuity business through a reinsurance agreement with American Equity Investment Life Insurance Company (American Equity). During the fourth quarter of 2001, we entered into a coinsurance agreement with American Equity whereby we assumed 70% of certain American Equity annuity business issued during the period from August 1, 2001 to December 31, 2001. In addition, we agreed to assume 40% of certain American Equity annuity business issued during 2002 and 2003. Collected premiums assumed as a result of the American Equity agreement totaled $837.9 million in 2002 and $280.0 million in 2001 (excludes $138.7 million relating to business assumed that was issued during the third quarter of 2001). In addition, business in force increased during 2002 due to strong sales of fixed annuity contracts within our core Farm Bureau distribution network.

FBL Financial Group, Inc. was incorporated in Iowa in October 1993. Our principal insurance subsidiaries are Farm Bureau Life Insurance Company (Farm Bureau Life) and EquiTrust Life Insurance Company (EquiTrust). Farm Bureau Life commenced operations in 1945 and EquiTrust commenced operations in 1998. Several of our subsidiaries support various functional areas of the Company and affiliates, by providing investment advisory, marketing and distribution, and leasing services. In addition, we manage all aspects of three Farm Bureau affiliated property-casualty insurance companies (Farm Bureau Mutual Insurance Company, Western Agricultural Insurance Company and KFB Insurance Company, Inc.). Effective January 1, 2003, Farm Bureau Mutual Insurance Company (Farm Bureau Mutual) merged with its Nebraska and Kansas counterparts and we are now managing the property-casualty operations in Kansas and Nebraska, expanding our managed property-casualty operations to eight states.

Investor related information, including electronic versions of periodic reports filed on Forms 10-K, 10-Q, and 8-K may be found on our Internet web site at www.fblfinancial.com. We post these periodic reports to the web site on the same day they are filed. Product related information may be found on our web site www.fbfs.com.

Business Strategy

We have a three-pronged growth strategy that consists of (1) internal growth within our traditional Farm Bureau distribution network, (2) alliances and relationships with other companies and (3) consolidations. Our growth strategies are detailed below:

Growth Strategy #1—Internal growth within our traditional Farm Bureau distribution network.

We are focused on growing our core business, which comes through our Farm Bureau distribution network, through new product introductions, sales initiatives and cross selling opportunities. In 2002 we completed the revision, repricing and reintroduction of every product in our life portfolio. These changes resulted in increased sales from our core distribution of Farm Bureau agents. We remain committed to offering competitive and state-of-the-art products and features.

In addition to a new and updated portfolio of life insurance and investment products, we have several initiatives that are focused on increasing life insurance and annuity sales within our core distribution system. These initiatives include enhanced agent training and the use of life specialists and wholesalers. We continue to emphasize agent productivity though our professionalism program. This program challenges agents to examine the way their

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business is structured and how they spend their time. It encourages agents to hire assistants, allowing them more time to spend on direct client contact.

Our life and investment specialist program continues to drive increases in life insurance and annuity sales. These life specialists are hired by a multi-line agency manager to work as a resource within the agency for life and investment sales. The specialists help agents with cross-selling techniques and client needs analysis. In addition to these specialists, we have wholesalers who are responsible for increasing variable product and mutual fund sales within their own territory, and are available for agency training and case analysis support. Growth in sales of our variable annuity products in 2002 was substantially stronger than the industry’s, due in large part to our expanded wholesaler system. Along with the life and investment specialist program, our wholesaler system has been instrumental in developing life and annuity sales from our multi-line agents. In 2003 we plan to continue to increase the use of wholesalers and specialists.

We have opportunities to increase our sales through cross selling life insurance products to Farm Bureau members who already own a property-casualty policy issued by Farm Bureau affiliated property-casualty companies. For example, in the six-state region where we manage the affiliated property-casualty insurance company and related field force (Arizona, Iowa, Minnesota, New Mexico, South Dakota and Utah), approximately 24% of the Farm Bureau members own at least one of our life products, 67% own at least one Farm Bureau property-casualty product and approximately 20% own both. The merger of our managed affiliate, Farm Bureau Mutual, with its Kansas and Nebraska counterparts on January 1, 2003, should lead to greater cross-sell opportunities in Kansas and Nebraska. Historically, our cross-selling success has been greater in the states where we manage the agency force. Following the merger, we now manage the agency forces in Kansas and Nebraska via our management of Farm Bureau Mutual.

Growth Strategy #2—Alliances and relationships with other companies.

Our alliance partner strategy began as variable product alliances with us providing our partner companies with competitive variable products, brand-labeled for them if they chose. With this strategy, we obtain access to additional distribution systems and our partners are provided with access to variable products without developing the infrastructure and know-how to underwrite and administer the business. Through coinsurance agreements, we share in the underwriting results. Since December 1998, we have developed variable product alliances with the following companies:

American Equity Investment Life Insurance Company

Berthel Fisher & Company

COUNTRY Life Insurance Company

Farm Bureau Life Insurance Company of Missouri

Modern Woodmen of America

National Travelers Life Company (NTL)

Southern Farm Bureau Life Insurance Company

United Farm Family Life Insurance Company

Variable sales by our alliance partners are generally underwritten by EquiTrust, but may be underwritten by our alliance partner. With respect to our alliances with insurance companies, the risks, costs and profits of the business are shared, generally on an equal basis, through reinsurance arrangements. For all of our alliance partners, we perform various administrative processing and other services with respect to the variable business written.

Our alliance strategy has been expanded to include other types of relationships with partner companies. In addition to the significant coinsurance agreement with American Equity, during 2001 we entered into a coinsurance agreement with NTL under which we assumed 90% of NTL’s traditional life, universal life and annuity business in force. We are also assuming 50% of NTL’s traditional life, universal life and annuity business issued on an ongoing basis.

We believe this strategy has significant growth potential from several perspectives and continue to look for additional ways to leverage our product expertise and market our products through non-traditional channels.

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Growth Strategy #3—Consolidations.

Our third growth strategy is growth of our operations via consolidations. Consolidations expand our distribution systems, generate top-line revenue growth and provide us with a larger base over which to spread our fixed operating costs. These items, in turn, put us in a better position to offer competitive products and to invest in the infrastructure necessary to stay competitive in the maturing life insurance industry.

We have a long and successful history of being a consolidator among Farm Bureau affiliated insurance companies and have grown over the years from a single state Farm Bureau company to an operation with 15 core states in the Midwest and West. In addition to our 2001 acquisition of Kansas Farm Bureau Life Insurance Company, we acquired Utah Farm Bureau Life Insurance Company in 1984, Rural Security Life Insurance Company in 1993 and Western Farm Bureau Life Insurance Company in 1994. Effective January 1, 2003, Farm Bureau Mutual, which we manage, announced the merger with its Nebraska and Kansas counterparts. We believe, as a publicly held company, we are well positioned to be the consolidator of choice among Farm Bureau companies should the opportunity arise.

We are focused on being a consolidator in the Farm Bureau network of insurance companies and, given the right set of circumstances, with other insurance companies that would be a compatible fit for FBL. We also continue to seek out consolidation opportunities that would increase our public float. As we seek to grow our operations via consolidation, we will only look at opportunities that are beneficial to our shareholders.

Marketing and Distribution

Market Area

Our sales are principally conducted in the following core Farm Bureau marketing territory: multi-line states (we own the Farm Bureau affiliated life company and manage the Farm Bureau affiliated property-casualty company)—Arizona, Iowa, Kansas, Minnesota, Nebraska, New Mexico, South Dakota and Utah; and life only states (we own the Farm Bureau affiliated life company only)—Colorado, Idaho, Montana, North Dakota, Oklahoma, Wisconsin and Wyoming. Kansas and Nebraska were life only states, but became multi-lines states effective January 1, 2003 with the merger of their respective Farm Bureau property-casualty companies into Farm Bureau Mutual. In addition to this core marketing territory, our variable alliance partners market throughout the United States.

Our core target market consists primarily of farmers, ranchers, rural and suburban residents and related individuals and businesses. We believe that this target market represents a relatively financially conservative and stable customer base. Many of our customers are self-employed individuals who are responsible for providing for their own insurance needs. Their financial planning needs tend to focus on security, primary insurance needs and retirement savings. The persistency rates for our products exceed industry averages, as there is a great deal of customer loyalty to Farm Bureau in our core target market.

Affiliation with Farm Bureau

Many of our customers are members of Farm Bureau organizations affiliated with the American Farm Bureau Federation, the nation’s largest grass roots farm and ranch organization with over 5.3 million member families. In order to market insurance products in a given state using the “Farm Bureau” and “FB” designations and related trademarks and service marks, a company must have permission from the state’s Farm Bureau federation. Generally, these marketing rights have only been granted to companies owned by or closely affiliated with Farm Bureau federations. For each of the states in our core Farm Bureau marketing territory, we have the exclusive right to use the “Farm Bureau” name and “FB” logo for marketing products in those states.

All of the state Farm Bureau federations in our core marketing area are associated with the American Farm Bureau Federation. The primary goal of the American Farm Bureau Federation is to improve the financial well being and quality of life of farmers, ranchers and other rural residents through education and representation with respect to public policy issues. There are currently Farm Bureau federations in all 50 states and Puerto Rico. Within each state, Farm Bureau is generally organized at the county level. Farm Bureau programs generally include policy development, state and national lobbying activities, leadership development, speaker corps, media relations, crime prevention, marketing clubs, women’s activities, young farmers activities, promotion and education activities. Member services provided by Farm Bureau vary by state but often include newspapers and magazines, theft and

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arson rewards, eye care programs, accidental death insurance, credit card programs, computerized farm accounting services, electronic information networks, feeder cattle procurement services, health care insurance and financial planning services.

The American Farm Bureau Federation may terminate our right to use the “Farm Bureau” and “FB” designations in all of our states (i) in the event of a material breach of the trademark license that we do not cure within 60 days, (ii) immediately in the event of termination by the American Farm Bureau of the state Farm Bureau’s membership in the American Farm Bureau or (iii) in the event of a material breach of the state Farm Bureau federation’s membership agreement with the American Farm Bureau Federation, including by reason of the failure of the state Farm Bureau to cause us to adhere to the American Farm Bureau Federation’s policies. Each state Farm Bureau federation in our trade territory could terminate our right to use the Farm Bureau designations in that particular state without cause subject to a notification requirement that ranges from 60 days to 30 years, depending on the state.

We believe our relationship with Farm Bureau provides a number of advantages. Farm Bureau organizations in our current territory tend to be well known and long established, have active memberships and provide a number of member benefits other than financial services. The strength of these organizations provides enhanced prestige and brand awareness for our products and increased access to Farm Bureau members.

Our life insurance products are currently available for sale to both members and non-members. Property-casualty products sold by the property-casualty insurance companies affiliated with Farm Bureau are generally only available for sale to Farm Bureau members. Annual Farm Bureau memberships in our core marketing territory generally cost $24 to $112 and are available to individuals and families who are farmers and ranchers, and to the general public as well.

To facilitate our working relationship with state Farm Bureau organizations, the Presidents of the state Farm Bureau federations in our core marketing territory serve on our Board of Directors. Each state Farm Bureau federation, or its assignee, benefits from its relationship with us through receipt of royalties. The royalties paid to a particular federation are based on the sale of our products in the respective state. For 2002, royalty expense totaled approximately $1.5 million.

We have marketing agreements with all of the Farm Bureau property-casualty companies in our core marketing area, pursuant to which the property-casualty companies develop and manage an agency force that sells both property-casualty products for that company and life products for us. We pay them a fee for this service in the nature of an overwrite commission based on first year life insurance premiums and annuity deposits. The overwrite commissions are generally equal to one-third of the first year commissions paid to the agent. In 2002 overwrite commissions totaled $7.2 million.

Our Advisory Committee, which consists of certain executives of Farm Bureau property-casualty insurance companies in our marketing territory, assists us in our relationships with the property-casualty organizations. The Advisory Committee meets on a regular basis to coordinate efforts and issues involving the agency force and other matters. The Advisory Committee is an important contributor to our success in marketing products through our core distribution system.

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Exclusive Agency Force—Core Marketing Territory

Our life insurance, annuities and sponsored mutual funds are currently marketed throughout our core marketing territory by an exclusive Farm Bureau force of approximately 1,990 agents and agency managers. We have a written contract with each member of our agency force. The contracts do the following:

Sales activities of our agents focus on personal contact and on cross selling the multiple lines of products available through Farm Bureau affiliated companies. Agents’ offices are often located in or serve as the Farm Bureau office for their community. We believe that Farm Bureau name recognition and access to Farm Bureau membership leads to additional customers and cross selling of additional insurance products.

Our agents are independent contractors and exclusive agents. In the multi-line states where we manage the Farm Bureau affiliated property-casualty company, our agents are supervised by agency managers employed by the property-casualty companies which are under our direction. There are approximately 1,200 agents and managers in our multi-line states, all of whom market a full range of our life insurance products and our mutual funds. These agents and agency managers also market property-casualty products for the property-casualty companies that we manage.

In our life only states, our life insurance products and sponsored mutual funds are marketed through agents managed by the property-casualty company affiliated with the Farm Bureau federation of that state. These agents, of which there are approximately 790, market our life and mutual fund products on an exclusive basis and market the property-casualty products of that state’s affiliated property-casualty companies. Agents as well as agency managers in our life only states are independent contractors.

As of December 31, 2002, essentially all of the agents in our multi-line states were licensed with the National Association of Securities Dealers (NASD) to sell our variable life and annuity products and sponsored mutual funds. With the merger of Farm Bureau Mutual with its Kansas and Nebraska counterparts effective January 1, 2003, we are emphasizing the training of agents for NASD licensing in those two states and in our life only territories, where approximately 76% of the agents are NASD licensed.

We are responsible for product and sales training for all lines of business in our multi-line states, and for training the agency force in life insurance products and sales methods in our life only states.

We structure our agents’ life products compensation system to encourage production and persistency. Agents receive commissions for new life insurance and annuity sales and service fees on premium payments in subsequent years. Production bonuses are paid based on the volume of new life business written in the prior 12 months and on premium payments in the first three years after new business is written. Production bonuses allow agents to increase their compensation significantly. Persistency is a common measure of the quality of life business and is included in calculating the bonus to either increase or decrease (or even eliminate) the production bonuses earned, because we are willing to pay added incentives for higher volumes of business only as long as the business is profitable. In 2002, approximately 38% of agent compensation in our multi-line states was derived from the sale of life and annuity products.

The focus of agency managers is to recruit and train agents to achieve high production levels of profitable business. Agency managers receive overwrite commissions on each agent’s life insurance commissions which vary according to that agent’s productivity level and persistency of business. During the first three years of an agent’s relationship with us, the agent’s manager receives additional overwrite commissions to encourage early agent development.

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Early agent development is also encouraged through financing arrangements and, at the option of the agent, the annualization of commissions paid when a life policy is sold.

We have a variety of incentives and recognitions to focus agents on production of quality life insurance business. Some recognitions are jointly conducted with the property-casualty companies. These programs provide significant incentives for the most productive agents. Approximately 9% of our agents qualify for our annual incentive trip.

Agent recruiting, training and financing programs are designed to develop a productive agent for the long term. The one-year agency force retention rate for 2002 in our multi-line states was approximately 86%. Retention of our agents is enhanced because of their ability to sell life and property-casualty insurance products, as well as mutual funds.

Agency Force—Alliance Partners

Our variable alliance partners have 2,709 registered representatives that are licensed to sell variable products under our agreements with them. Among our partners with exclusive agency forces, the number of these agents licensed to sell variable products has grown steadily from 3% at December 31, 1998 to approximately 32% at December 31, 2002. Our partners continue working with their other agents to license them to become registered representatives. These alliance partners have incentive programs, like ours, to promote the sale of life insurance and annuity products. The agents earn credit for these incentives by selling our variable products. Our variable product alliance partners are responsible for managing and training their own agency force. We provide each partner with assistance on how to train their agents in the sale of variable products.

In addition to our variable product alliances, we assume new traditional life, universal life and traditional annuity business written by NTL and traditional and equity-indexed annuity business written by American Equity. NTL has approximately 2,500 independent agents and is licensed in 42 states. American Equity has approximately 41,400 independent agents and is licensed in 46 states. American Equity does not currently emphasize the sale of variable products.

Segmentation of Our Business

Management analyzes operations by reviewing financial information regarding products that are aggregated into three product segments. These segments are (1) traditional annuity, (2) traditional and universal life insurance and (3) variable. We also have a corporate and other segment that consists of the following corporate items and products/services that do not meet the quantitative threshold for separate segment reporting:

See Note 13 of the notes to consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Information” for additional information regarding our financial results by operating segment.

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Traditional Annuity Segment

We sell a variety of traditional annuity products through our exclusive agency force in our core marketing territory. In addition, we assume annuity business from NTL and American Equity. The traditional annuity segment consists of traditional and equity-indexed annuities and supplementary contracts. Traditional and equity-indexed annuities provide for tax-deferred savings and supplementary contracts provide for the systematic repayment of funds that accumulate interest. The following table sets forth our annuity premiums collected for the years indicated:

Collected traditional annuity premiums increased in 2002 due to an increase in the popularity of these products. The popularity of the products can be attributed to an uncertain equity market environment and the products’ competitive interest crediting rates. Collected traditional annuity premiums during 2001 increased $48.6 million as a result of the acquisition of Kansas Farm Bureau Life. The coinsurance of in force business from NTL on May 1, 2001 and American Equity on October 1, 2001 is excluded from the above table. At the inception of the coinsurance agreements, related traditional annuity reserves totaled $114.2 million for the NTL business and $138.7 million for the American Equity business. For our direct annuity premiums collected in our core Farm Bureau market territory, premiums collected in 2002 are concentrated in the following states: Kansas (44%), Iowa (25%) and Oklahoma (8%).

Fixed Rate Annuities

We offer annuities that are generally marketed to individuals in anticipation of retirement. We offer traditional annuities principally in the form of flexible premium deferred annuities that allow policyholders to make contributions over a number of periods. For traditional annuity products, policyholder account balances are credited interest at rates that we determine. Approximately 45% of our existing individual direct traditional annuity business based on account balances is held in qualified retirement plans. To further encourage persistency, a surrender charge against the policyholders’ account balance is imposed for early termination of the annuity contract within a specified period after its effective date. After a number of years, the annuitant may elect to take the proceeds of the annuity either in a single payment or in a series of payments for life, for a fixed number of years, or for a combination of these options.

In addition to flexible premium deferred annuities, we also market single premium immediate annuity (SPIA) and single premium deferred annuity (SPDA) products. These products feature a single premium paid when the contract is issued and interest crediting similar to other traditional annuities. Benefit payments on SPIA contracts begin immediately after the issuance of the contract and, for SPDA, are similar to our other traditional annuity products.

Approximately 29.0% of the annuities that we have assumed from American Equity are fixed rate annuities. These annuities are structured much like our own flexible premium deferred annuities with the exception that the American Equity fixed rate annuities are “bonus” products. The initial crediting rate on these products specifies a bonus crediting rate ranging from 1% to 7% of the annuity deposit for the first policy year only. After the first year, the bonus interest portion of the initial crediting rate is automatically discontinued, and the renewal-crediting rate is established. Generally, there is a compensating adjustment in the commission paid to the agent to offset the first year interest bonus. In all situations, an acknowledgment from the policyholder is obtained upon policy issuance that states that a specified portion of the first year interest will not be paid in renewal years.

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Equity-Indexed Annuities

Approximately 71% of the annuities that we have assumed from American Equity are equity-indexed annuities. Equity-indexed annuities allow purchasers to earn investment returns linked to equity or bond index appreciation without the risk of loss of their principal. The underlying indexes include the S&P 500, the Dow Jones Industrial Average, the NASDAQ 100, the Russell 2000 and the Lehman Aggregate Bond Index. These products allow the purchaser to transfer funds once annually among the indexes and a traditional fixed rate strategy. The products require annual crediting of interest and an annual reset of the applicable index on the contract anniversary date. The computation of the annual index credit is based upon either a one year point-to-point calculation (i.e., the gain in the applicable index from the beginning of the applicable contract year to the next anniversary date) or a monthly averaging of the index during the contract year. We do not assume any “multi year point-to-point” products that credit interest only once over a period of several years.

The equity-indexed annuity contract value is equal to the premiums paid plus annual index credits based upon a percentage, known as the “participation rate,” of the annual appreciation (based in some instances on monthly averages) in a recognized index or benchmark. The participation rate, which American Equity may reset annually, defines the policyholder’s level of participation in index gains each year. The participation rate generally varies among the products from 65% to 100%. Some of the products also have an “asset fee” ranging from 1% to 4%, which is deducted from the interest to be credited. The asset fees may be adjusted annually by American Equity, subject to stated maximums. In addition, some products apply an overall maximum limit, or “cap,” on the amount of annual index credits the policyholder may earn in any one contract year, and the applicable cap also may be adjusted annually subject to stated minimums. The minimum guaranteed contract values are equal to 80% to 100% of the premium collected plus interest credited at an annual rate of 3.00% on a cumulative basis.

Through American Equity, we purchase one-year call options on the applicable indexes as an investment to provide the income needed to fund the amount of the annual appreciation required to be credited on the equity-indexed products. New one-year options are purchased at the outset of each contract year and the cost of the options represents our cost of providing the index credits. American Equity has the ability to manage the cost of the options primarily through adjustments to participation rates, asset fees and caps, except in cases where the minimum guarantees would prevent further adjustments. Call options are purchased weekly based upon new and renewing equity index account values during the applicable week, and the purchases are made by category according to the particular products and indexes applicable to the new or renewing account values. Any gains on the options at the expiration of the one-year term offset the related index credits to the equity-indexed contract holders. If there is not a gain on the option, the policyholder receives a zero index credit on the contract.

After the purchase of one-year call options and payment of acquisition costs, we invest the balance of assumed equity-indexed premiums as a part of our general account invested assets. With respect to that portion of the equity-indexed account value allocated to an index crediting strategy, our spread is measured as the difference between the aggregate yield on our invested assets, less the aggregate option costs. If the minimum guaranteed value of an equity-indexed product exceeds the index value (computed on a cumulative basis over the life of the contract), then the general account earnings are available to satisfy the minimum guarantees. If there were little or no gains in the entire series of one-year options purchased over the expected life of an equity-indexed annuity (typically 10 to 15 years), then we would incur expenses for credited interest over and above our option costs. This would cause our spreads to tighten and reduce our profits, or potentially result in losses on these products.

Interest Crediting and Participating Dividend Policy

We have an asset/liability management committee that meets monthly, or more frequently if required, to review and establish current period interest rates based upon existing and anticipated investment opportunities. This applies to new sales and to annuity products after an initial guaranteed period, if applicable. We examine earnings on assets by portfolio. We then establish rates based on each product’s required interest spread and competitive market conditions at the time. Average credited rates on our direct annuity contracts were 5.45% in 2002, 5.83% in 2001 and 5.75% in 2000. Most of our annuity contracts have guaranteed minimum crediting rates. These rates range from 3.00% to 5.50%, with a weighted average guaranteed crediting rate of 3.19% at December 31, 2002. At December 31, 2002, direct annuities with an aggregate account value of $62.5 million were receiving interest credited at the guaranteed rate and annuities with an aggregate account value of $14.3 million were receiving interest credited at a rate within 50 basis points of the applicable guaranteed rate.

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We do not have the ability to adjust interest-crediting rates or other non-guaranteed elements of the underlying business assumed from American Equity or NTL. While we are precluded from directly controlling these rates, we do manage certain aspects of NTL through a management agreement and have a representative on American Equity’s Board of Directors. Average credited rates on fixed rate annuities assumed from American Equity and NTL, including bonus interest, were 7.10% in 2002 and 5.55% in 2001. Average credited rates on fixed rate annuities assumed from American Equity and NTL, excluding bonus interest, were 4.68% in 2002 and 5.16% in 2001.

Most of the fixed annuity contracts assumed from American Equity and NTL have guaranteed minimum crediting rates. For contracts assumed from American Equity, these rates range from 3.00% to 4.00%, with a weighted average guaranteed crediting rate of 3.13% at December 31, 2002. For contracts assumed from NTL, these guaranteed rates range from 3.00% to 3.50%, with a weighted average guaranteed crediting rate of 3.24% at December 31, 2002. At December 31, 2002, none of the fixed annuities assumed from American Equity and NTL were receiving interest credited at a rate within 50 basis points of the applicable guaranteed rate.

The following table sets forth in force information for our traditional annuity segment:

Traditional and Universal Life Insurance Segment

We sell a variety of traditional and universal life insurance products through our exclusive agency force in our core marketing territory. In addition, we assume traditional and universal life insurance from NTL. The traditional and universal life insurance segment consists of whole life, term life and universal life policies. These policies provide benefits upon the death of the insured and may also allow the customer to build cash value on a tax-deferred basis.

The following table sets forth our traditional and universal life insurance premiums collected for the years indicated:

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Collected traditional and universal life insurance premiums during 2001 increased $26.0 million as a result of the acquisition of Kansas Farm Bureau Life. The coinsurance of in force business from NTL on May 1, 2001 is excluded from the above table. At the inception of this coinsurance agreement, related traditional and universal life insurance reserves totaled $209.1 million. For our direct traditional and universal life premiums collected in our core Farm Bureau market territory, premiums collected in 2002 are concentrated in the following states: Iowa (25%), Kansas (18%) and Oklahoma (12%).

Traditional Life Insurance

We offer traditional participating whole life insurance products. Participating whole life insurance provides benefits for the life of the insured. It provides level premiums and a level death benefit and requires payments in excess of mortality charges in early years to offset increasing mortality costs in later years. Under the terms of these policies, policyholders have a right to participate in our surplus to the extent determined by the Board of Directors, generally through annual dividends. Participating business accounted for 41% of direct receipts from policyholders during 2002 and represented 15% of life insurance in force at December 31, 2002.

We also market non-participating term insurance policies that provide life insurance protection for a specified period. Term insurance is mortality based and generally has no accumulation values. We may change the premium scales at any time but may not increase rates above guaranteed levels. In the past, we sold participating term insurance, but this product has been discontinued.

Universal Life Insurance

Our universal life policies provide permanent life insurance protection with a flexible premium structure which allows the customer to pre-fund future insurance costs and accumulate savings on a tax-deferred basis. Premiums received, less policy assessments for administration expenses and mortality costs, are credited to the policyholder’s account balance. Interest is credited to the cash value at rates that we periodically set. Agents need not be registered with the NASD to offer this product.

We also market a last survivor universal life policy designed especially for the estate planning market.

Underwriting

We follow formal underwriting standards and procedures designed to properly assess and quantify life insurance risks before issuing policies to individuals. To implement these procedures, we employ a professional underwriting staff of 16 underwriters who have an average of 18 years of experience in the insurance industry. Our underwriters review each applicant’s written application, which is prepared under the supervision of our agents, and any required medical records. We employ blood and urine testing (including HIV antibody testing) to provide additional information whenever the applicant is age 18 and older and the face amount is $100,000 or greater. Based on the results of these tests, we may adjust the mortality charge or decline coverage completely. Any tobacco use by a life insurance applicant within the preceding one-year results in a substantially higher mortality charge. In accordance with industry practice, material misrepresentation on a policy application can result in the cancellation of the policy upon the return of any premiums paid.

Lapse Rates

Our lapse rate has historically been less than industry averages. A summary of our individual life insurance lapse rates (for our direct traditional, universal life and variable life insurance products), compared to industry averages, is outlined in the following table:

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Reinsurance

We reinsure a portion of our life insurance exposure with unaffiliated insurance companies under traditional indemnity reinsurance agreements. New insurance sales are reinsured above prescribed limits and do not require the reinsurer’s prior approval within certain guidelines. These treaties are automatically renewed and nonterminable for the first 10 years with regard to cessions already made and are terminable after 90 days with regard to future cessions. After 10 years, we have the right to terminate and can generally discontinue the reinsurance on a block of business. This is normally done to increase our retention on older business to the same level as current cessions.

Generally, we enter into indemnity reinsurance arrangements to assist in diversifying our risks and to limit our maximum loss on risks that exceed our policy retention limits. Our maximum retention limit on life policies issued after June 30, 1999 is $1,100,000. For policies issued prior to July 1, 1999, the maximum retention is generally limited to $600,000. Indemnity reinsurance does not fully discharge our obligation to pay claims on the reinsured business. As the ceding insurer, we remain responsible for policy claims to the extent the reinsurer fails to pay claims. No reinsurer of business ceded by us has failed to pay any material policy claims (either individually or in the aggregate) with respect to our ceded business. We continually monitor the financial strength of our reinsurers. If for any reason reinsurance coverages would need to be replaced, we believe that replacement coverages from financially responsible reinsurers would be available.

Interest Crediting and Participating Dividend Policy

The interest crediting and participating dividend policies for our traditional and universal life insurance products are the same as for our traditional annuity products. See “Interest Crediting and Participating Dividend Policy” under the traditional annuity segment discussion. We pay dividends, credit interest and determine other nonguaranteed elements on the individual insurance policies depending on the type of product. Some elements, such as dividends, are generally declared for a year at a time. Interest rates and other nonguaranteed elements are determined based on experience as it emerges and with regard to competitive factors. Average contractual credited rates on our direct universal life contracts were 5.58% in 2002, 5.90% in 2001 and 5.99% in 2000. Our universal life contracts have guaranteed minimum crediting rates that range from 3.00% to 4.50%, with a weighted average guaranteed crediting rate of 3.97% at December 31, 2002. At December 31, 2002, none of our universal life contracts were receiving interest credited at a rate within 50 basis points of the applicable guaranteed rate.

All of the universal life contracts assumed from NTL have a guaranteed minimum crediting rate of 4.00% at December 31, 2002. At December 31, 2002, none of these universal life contracts were receiving interest credited at a rate within 50 basis points of the guaranteed rate.

Policyholder dividends are currently being paid and will continue to be paid as declared on participating policies. Policyholder dividend scales are generally established annually and are based on the performance of assets supporting these policies, the mortality experience of the policies, and expense levels. Other factors, such as changes in tax law, may be considered as well. Our participating business does not have minimum guaranteed dividend rates.

The following table sets forth in force information for our traditional and universal life insurance segment:

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Variable Segment

We sell several variable products through our exclusive agency force in our core marketing territory. In addition, we receive variable business through our unique variable product alliances. The variable segment consists of variable universal life insurance and variable annuity contracts. These products are similar to universal life insurance and traditional annuity contracts, except the contract holder has the option to direct the cash value of the contract to a wide range of investment sub-accounts, thereby passing the investment risk to the contract holder. The following table sets forth our variable premiums collected for the years indicated:

Variable premiums collected increased in 2002 due principally to an increase in sales of variable annuities by our core Farm Bureau distribution force. Our better than industry average increase in the sale of variable annuities by our Farm Bureau agents is attributable to an emphasis placed on the use of wholesalers to assist with variable sales. The decrease in variable sales in 2001 is consistent with industry experience and is attributable to an uncertain equity market environment. Of the total variable premiums collected, collected premiums for 2002 are concentrated in the following states: Iowa (45%), Minnesota (10%) and Nebraska (8%).

Variable Universal Life Insurance

We offer variable universal life policies that are similar in design to the universal life policy, but the policyholder has the ability to direct the cash value of the policy to an assortment of variable sub-accounts and, in turn, assumes the investment risk passed through by those funds. Policyholders can select from variable sub-accounts managed by us as well as sub-accounts that are managed by outside investment advisors. Variable universal life policyholders can also elect a declared interest option under which the cash values are credited with interest as declared. See “Variable Sub-Accounts and Mutual Funds.”

Variable Annuities

For variable annuities, policyholders have the right to direct the cash value of the policy into an assortment of sub-accounts; thereby assuming the investment risk passed through by those sub-accounts. The sub-account options for variable annuity contracts are the same as those available for variable universal life policies. In addition, variable annuity contract holders can also elect a declared interest option under which the cash values are credited with interest as declared.

Our variable annuity products have a guaranteed minimum death benefit rider. For our variable annuity contracts issued by Farm Bureau Life, which makes up the majority of our variable annuity account balance, the guaranteed

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minimum death benefit is equal to the amount by which premiums less partial withdrawals exceeds the account value on the date of death. The variable annuity products issued by EquiTrust, or assumed by EquiTrust through our alliance partners, generally have a high water mark feature that pays the contract holder the greatest value attained on any anniversary date. Our exposure to guaranteed minimum death benefits, the amount considered in the money, is $43.7 million at December 31, 2002. We use a yearly renewable term reserving approach to accrue for this benefit. The related reserve recorded at December 31, 2002 totaled $0.5 million.

Underwriting and Reinsurance

Our underwriting standards and reinsurance programs for our variable life products are the same as our standards and programs for our traditional and universal life insurance products. See “Underwriting” and “Reinsurance” under the traditional and universal life insurance segment discussion.

The following table sets forth in force information for our variable segment:

Corporate and Other Segment

Prior to 2002, the Corporate and Other Segment included two small blocks of individual disability income business. This business has been reinsured to an unaffiliated insurer. A loss of $1.5 million on the reinsurance transactions has been deferred and is being recognized over the term of the underlying policies. We have exited this business to focus on our life insurance and annuity product lines.

Variable Sub-Accounts and Mutual Funds

We sponsor the EquiTrust Series Fund, Inc. (the Series Fund) and EquiTrust Variable Insurance Series Fund (the Insurance Series Fund) (collectively, the EquiTrust Funds) which are open-end, diversified series management investment companies. The Series Fund is available to the general public. The Insurance Series Fund offers its shares, without a sales charge, only to our separate accounts and to our alliance partners’ separate accounts as an investment medium for variable annuity contracts or variable life insurance policies.

The EquiTrust Funds each currently issue shares in six investment series (a Portfolio or collectively the Portfolios) with the following distinct investment objectives: (1) long-term capital appreciation by investing in equity securities which have a potential to earn a high return on capital or are undervalued by the marketplace; (2) as high a level of current income as is consistent with investment in a portfolio of debt securities deemed to be of high grade; (3) as high a level of current income as is consistent with investment in a portfolio of fixed-income securities rated in the lower categories of established rating services; (4) high total investment return of income and capital appreciation by investing in growth common stocks, high grade debt securities and preferred stocks and high quality short-term money market instruments; (5) high current income consistent with liquidity and stability of principal (Money Market Portfolio); and (6) an unmanaged index fund, which seeks growth of capital and income by investing primarily in common stocks of designated well-capitalized, established companies. The net assets of the EquiTrust Funds at December 31, 2002 totaled $388.6 million.

EquiTrust Investment Management Services, Inc. (the Advisor), a subsidiary, receives an annual fee based on the average daily net assets of each EquiTrust Portfolio that ranges from 0.25% to 0.60% for the Series Fund and from 0.20% to 0.45% for the Variable Insurance Series Fund. The Advisor also serves as distributor and principal underwriter for the EquiTrust Funds. The Advisor receives from the Series Fund a 0.50% annual distribution services fee, a 0.25% annual administration services fee and a 0.05% accounting fee, and receives directly any

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contingent deferred sales charge paid on the early redemption of shares. EquiTrust Marketing Services, LLC, another subsidiary, serves as the principal dealer for the Series Fund and receives commissions and service fees.

Our variable products include sub-accounts that invest in funds managed by outside investment advisors in addition to our proprietary funds. We receive an administrative service fee from the outside investment advisors ranging from 0.05% to 0.25% (annualized) of the sub-account values, generally once the sub-accounts meet a predetermined asset threshold. The outside investment advisors and related sub-accounts available to our variable contract holders include Fidelity Management & Research Company (7 sub-accounts), Dreyfus Corporation (6 sub-accounts), T. Rowe Price Associates, Inc. (5 sub-accounts), Franklin Advisers, Inc. (5 sub-accounts), Summit Investment Partners, Inc. (3 sub-accounts), American Century Investment Management Services, Inc. (2 sub-accounts), and JP Morgan Investment Management Inc. (2 sub-accounts).

We also sponsor a money market fund, EquiTrust Money Market Fund, Inc. (Money Market Fund), which is a no-load open-end diversified management investment company with an investment objective of maximum current income consistent with liquidity and stability of principal. The Advisor acts as the investment advisor, manager and principal underwriter of the Money Market Fund and receives an annual management fee, accrued daily and payable monthly at 0.25%, and certain other fees. The net assets of the Money Market Fund were $21.0 million at December 31, 2002.

Beginning in 2002, the Advisor has waived the management and certain other fees charged to the Money Market Portfolio and Money Market Fund in response to a low market interest rate environment.

EquiTrust Series Fund, Inc. and EquiTrust Money Market Fund, Inc. are offered through registered representatives of EquiTrust Marketing Services, LLC. For more complete information including fees, charges and other expenses, obtain a prospectus from EquiTrust Marketing Services, LLC, 5400 University Avenue, West Des Moines, Iowa 50266. Read the prospectus before you invest.

Ratings and Competition

Ratings are an important factor in establishing the competitive position of insurance companies. Farm Bureau Life is rated “A+(Superior)” by A.M. Best, A.M. Best’s second highest rating of 13 ratings assigned to solvent insurance companies, which currently range from “A++(Superior)” to “D (Poor).” Farm Bureau Life has maintained its existing “A+(Superior)” rating since A.M. Best first began using this rating methodology. EquiTrust is rated “A (Excellent)” by A.M. Best. A.M. Best ratings consider claims paying ability and are not a rating of investment worthiness.

We operate in a highly competitive industry. The operating results of companies in the insurance industry have been historically subject to significant fluctuations due to competition, economic conditions, interest rates, investment performance, maintenance of insurance ratings from rating agencies such as A.M. Best and other factors. We believe our ability to compete with other insurance companies is dependent upon, among other things, our ability to attract and retain agents to market our insurance products, our ability to develop competitive and profitable products and our ability to maintain high ratings from A.M. Best. In connection with the development and sale of our products, we encounter significant competition from other insurance companies, and other financial institutions, such as banks and broker-dealers, many of which have financial resources substantially greater than ours.

Regulation

Our insurance subsidiaries are subject to government regulation in each of the states in which they conduct business. This regulatory authority is vested in state agencies having broad administrative power dealing with all aspects of the insurance business, including rates, policy forms and capital adequacy, and is concerned primarily with the protection of policyholders rather than stockholders. Our variable insurance products, mutual funds, investment advisor and certain licensed broker-dealers and agents are also subject to regulation by the Securities and Exchange Commission, the NASD and state agencies.

Increased scrutiny has been placed upon the insurance regulatory framework, and certain state legislatures have considered or enacted laws that alter, and in many cases increase, state authority to regulate insurance companies and insurance holding company systems. In light of ongoing legislative developments, the National Association of

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Insurance Commissioners (NAIC) and state insurance regulators continue to reexamine existing laws and regulations, accounting policies and procedures, specifically focusing on insurance company investments and solvency issues, risk-adjusted capital guidelines, interpretations of existing laws, the development of new laws, the implementation of nonstatutory guidelines and the circumstances under which dividends may be paid. We do not believe the adoption in any of our operating states of any of the current NAIC initiatives will have a material adverse impact on us; however, we cannot predict the form of any future proposals or regulation.

Employees

At February 1, 2003, we had approximately 1,970 employees. Many employees and the executive officers also provide services to Farm Bureau Mutual and other affiliates pursuant to management agreements. None of our employees are members of a collective bargaining unit. We believe that we have good employee relations.

ITEM 2.    PROPERTIES

Our principal operations are conducted from property leased from a subsidiary of the Iowa Farm Bureau Federation under a 15 year operating lease that expires in 2013. The property leased currently consists of approximately 180,000 square feet of a 400,000 square foot office building in West Des Moines, Iowa. We also lease 22,000 square feet of an office building in Manhattan, Kansas under an annually renewable operating lease. The office space used in these buildings is shared with affiliates and the square feet disclosed is the amount of space allocated to us. The amount of space allocated to us is determined annually. We consider the current facilities to be adequate for the foreseeable future.

ITEM 3.    LEGAL PROCEEDINGS

We are a party to lawsuits arising in the normal course of business. We believe the resolution of these lawsuits will not have a material adverse effect on our financial condition or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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Part II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Stock Market and Dividend Information

The Class A common stock of FBL Financial Group, Inc. is traded on the New York Stock Exchange under the symbol FFG. The following table sets forth the cash dividends per common share and the high and low prices of FBL Financial Group Class A common stock for each quarter of 2002 and 2001.

There is no established public trading market for our Class B common stock. As of February 1, 2003, there were approximately 3,100 holders of Class A common stock, including participants holding securities under the name of a broker (i.e., in “street name”), and 24 holders of Class B common stock. As of February 1, 2003, the closing price of our Class A common stock was $19.59 per share.

Class B common stockholders receive dividends at the same rate as that declared on Class A common stock. We intend to declare regular quarterly cash dividends in the future, subject to the discretion of the Board of Directors, which depends in part upon general business conditions, legal restrictions and other factors the Board of Directors deems relevant. It is anticipated the quarterly dividend rate during 2003 will be $0.10 per common share.

For restrictions on dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity” and Notes 1 and 12 to the consolidated financial statements.

Equity Compensation Plan Information

The following table provides information about our common stock that may be issued upon the exercise of options, warrants and rights under our existing equity compensation plans as of December 31, 2002. These plans include a stock option plan and a director compensation plan. Details regarding these plans can be found in Notes 1 and 8 to the consolidated financial statements.

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ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA (1)

Notes to Selected Consolidated Financial Data

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ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a summary of FBL Financial Group, Inc.’s consolidated results of operations, financial condition and where appropriate, factors that management believes may affect future performance. Please read this discussion in conjunction with the accompanying consolidated financial statements and related notes. Unless noted otherwise, all references to FBL Financial Group, Inc. (we or the Company) include all of its direct and indirect subsidiaries, including its primary life insurance subsidiaries, Farm Bureau Life Insurance Company (Farm Bureau Life) and EquiTrust Life Insurance Company (EquiTrust) (collectively, the Life Companies).

Overview

We sell universal life, variable universal life, and traditional life insurance and traditional and variable annuity products. These products are principally marketed through a core distribution force consisting of approximately 1,990 exclusive Farm Bureau agents in the midwestern and western sections of the United States. Variable universal life and variable annuity products are also marketed in other states through alliances with unaffiliated Farm Bureau companies. We also market variable products through alliances with three life insurance companies and a regional broker/dealer not affiliated with Farm Bureau. In addition to writing direct insurance business, we assume through coinsurance agreements a percentage of certain business written by American Equity Investment Life Insurance Company (American Equity) and National Travelers Life Company (NTL). These coinsurance agreements utilize excess capital and increase our volume of business in force. Several subsidiaries support various functional areas of the Life Companies and other affiliates, by providing investment advisory, marketing and distribution, and leasing services. In addition, we manage NTL and three Farm Bureau affiliated property-casualty insurance companies.

Significant Accounting Policies and Estimates

The following is a brief summary of our significant accounting policies and a review of our most critical accounting estimates. For a complete description of our significant accounting polices, see Note 1 to our consolidated financial statements.

In accordance with accounting principles generally accepted in the United States (GAAP), premiums and considerations received for equity-indexed products and interest sensitive products such as universal life insurance and ordinary annuities are reflected as increases in liabilities for policyholder account balances and not as revenues. Revenues reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy initiation fees and surrender charges assessed against policyholder account balances. Surrender benefits paid relating to these products are reflected as decreases in liabilities for policyholder account balances and not as expenses. The Life Companies receive investment income earned from the funds deposited into account balances, a portion of which is passed through to the policyholders in the form of interest credited. For equity-indexed products, proceeds from call options are earned from a portion of the funds deposited, which are passed through to the contract holders in the form of index credits. Index credits and interest credited to policyholder account balances and benefit claims in excess of policyholder account balances are reported as expenses in the consolidated financial statements.

Premium revenues reported for traditional life insurance products are recognized as revenues when due. Future policy benefits are recognized as expenses over the life of the policy by means of the provision for future policy benefits.

For variable universal life and variable annuities, premiums received are not reported as revenues. Similar to universal life and traditional annuities, revenues reported consist of fee income and product charges collected from the policyholders. Expenses related to these products include benefit claims incurred in excess of policyholder account balances.

The costs related to acquiring new business, including certain costs of issuing policies and other variable selling expenses (principally commissions), defined as deferred policy acquisition costs, are capitalized and amortized into expense. For nonparticipating traditional life products, these costs are amortized over the premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumptions used for computing liabilities for future policy benefits and are generally “locked in” at the date the policies are issued. For participating traditional

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life insurance, equity-indexed and interest sensitive products, these costs are amortized generally in proportion to expected gross profits from surrender charges and investment, mortality and expense margins. This amortization is adjusted when the Life Companies revise their estimate of current or future gross profits or margins. For example, deferred policy acquisition costs are amortized earlier than originally estimated when policy terminations are higher than originally estimated or when investments backing the related policyholder liabilities are sold at a gain prior to their anticipated maturity.

Death and other policyholder benefits reflect exposure to mortality risk and fluctuate from year to year based on the level of claims incurred under insurance retention limits. The profitability of the Life Companies is primarily affected by fluctuations in mortality, other policyholder benefits, expense levels, interest spreads (i.e., the difference between interest earned on investments and interest credited to policyholders) and persistency. We have the ability to mitigate adverse experience through adjustments to credited interest rates, policyholder dividends or cost of insurance charges.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. It is reasonably possible that actual experience could differ from the estimates and assumptions utilized which could have a material impact on the consolidated financial statements. The following is a summary of our significant accounting estimates, as well as the hypothetical effects of changes in the material assumptions used to develop each estimate:

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