FBL FINANCIAL GROUP INC - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

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EX-99.1 - EXHIBIT 99.1 - FBL FINANCIAL GROUP INC	exh991newsrelease2017q3.htm
8-K - 8-K - FBL FINANCIAL GROUP INC	pressrelease8k2017q3.htm

FBL FINANCIAL GROUP, INC.

INVESTOR SUPPLEMENT

Third Quarter




Corporate Headquarters	FBL Financial Group, Inc.
	5400 University Avenue
	West Des Moines, Iowa 50266-5997
	(515) 225-5400
Financial Inquiries	For more information contact:
	Don Seibel
	Chief Financial Officer
	Don.Seibel@FBLFinancial.com
	(515) 226-6399

	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.amstock.com



FBL Financial Group, Inc.
Financial Supplement (Unaudited)
September 30, 2017
Table of Contents/Notes

Consolidated Financial Statements:
Consolidated Balance Sheets		2
Consolidated Statements of Comprehensive Income		4
Consolidated Statements of Comprehensive Income, last five quarters		5
Net Income to Operating Income Reconciliation and Pre-tax Operating Income by Segment, last five quarters		6
Financial Information by Segment:
Segment Information		7
Statements of Pre-tax Operating Income, last five quarters:
Annuity Segment		8
Life Insurance Segment		9
Corporate and Other Segment		11
Deferred Acquisition Costs by Segment		12
Impact of Unlocking on Pre-tax Operating Income		14
Collected Premiums, last five quarters		15
Other Information		16

NOTE 1: In addition to net income, we have consistently used operating income, a non-GAAP financial measure common in the life insurance industry, as a primary economic measure to evaluate our financial performance. Operating income for the periods presented equals net income adjusted to eliminate the impact of realized gains and losses on investments and changes in net unrealized gains and losses on derivatives.

We use 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 can fluctuate greatly from quarter to quarter. These fluctuations make it difficult to analyze core operating trends. A view of our operating performance without the impact of these items enhances the analysis of our results. We use 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.

FBL Financial Group’s policy for calculating operating income is intended to accurately reflect offsets resulting from the adjustments to net income used to calculate operating income. Due to changes in product offerings since the last amendment to this policy, in the fourth quarter of 2016 FBL Financial Group refined its calculation of operating income to include offsets relating to interest sensitive product reserves. These offsets to interest sensitive product reserves, net of tax, increased operating income $0.9 million for the full year 2016 and were recorded in the fourth quarter. These offsets, net of tax, decreased operating income $0.1 million in the third quarter of 2017 and $0.4 million in the nine months ended September 30, 2017. These offsets, net of tax, not taken into account in the computation of operating income for the third quarter of 2016 would have increased operating income by $0.1 million and increased operating income for the nine months ended September 30, 2016 by $0.3 million.

NOTE 2: Certain financial information presented herein may not add due to rounding.

FBL Financial Group, Inc.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)



	September 30, 2017		December 31, 2016
Assets
Investments:
Fixed maturities - available for sale, at fair value (amortized cost: 2017 - $6,694,051; 2016 - $6,661,711)	$	7,203,335	$	7,008,790
Equity securities - available for sale, at fair value (cost: 2017 - $122,435; 2016 - $130,479)	130,890		132,968
Mortgage loans	923,938		816,471
Real estate	1,543		1,955
Policy loans	190,252		188,254
Short-term investments	25,399		16,348
Other investments	14,099		9,874
Total investments	8,489,456		8,174,660

Cash and cash equivalents	28,713		33,583
Securities and indebtedness of related parties	133,786		137,422
Accrued investment income	84,960		78,437
Amounts receivable from affiliates	5,050		3,790
Reinsurance recoverable	104,270		105,290
Deferred acquisition costs	302,847		330,324
Value of insurance in force acquired	5,536		9,226
Current income taxes recoverable	—		4,309
Other assets	99,431		92,021
Assets held in separate accounts	637,746		597,072








Total assets	$	9,891,795	$	9,566,134

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	September 30, 2017		December 31, 2016
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive products	$	5,204,910	$	5,100,625
Traditional life insurance and accident and health products	1,736,777		1,698,792
Other policy claims and benefits	44,157		43,395
Supplementary contracts without life contingencies	324,475		330,232
Advance premiums and other deposits	265,838		265,221
Amounts payable to affiliates	1,108		862
Long-term debt payable to non-affiliates	97,000		97,000
Current income taxes	5,819		—
Deferred income taxes	206,515		163,495
Other liabilities	88,812		81,182
Liabilities related to separate accounts	637,746		597,072
Total liabilities	8,613,157		8,377,876

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 24,922,097 in 2017 and 24,882,542 shares in 2016	153,547		152,903
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2017 and 2016	72		72
Accumulated other comprehensive income	223,869		149,555
Retained earnings	898,108		882,672
Total FBL Financial Group, Inc. stockholders' equity	1,278,596		1,188,202
Noncontrolling interest	42		56
Total stockholders' equity	1,278,638		1,188,258
Total liabilities and stockholders' equity	$	9,891,795	$	9,566,134

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands, except per share data)



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Revenues:
Interest sensitive product charges	$	28,004		$	25,851		$	86,661		$	82,989
Traditional life insurance premiums	47,087			47,682			145,783			147,425
Net investment income	102,950			103,514			307,852			302,621
Net realized capital gains (losses) on sales of investments	81			646			599			(33		)

Total other-than-temporary impairment losses	(67		)	(25		)	(133		)	(3,769		)
Non-credit portion in other comprehensive income	—			—			—			1,522
Net impairment losses recognized in earnings	(67		)	(25		)	(133		)	(2,247		)
Other income	3,501			3,616			11,711			11,480
Total revenues	181,556			181,284			552,473			542,235

Benefits and expenses:
Interest sensitive product benefits	67,206			65,882			188,217			178,860
Traditional life insurance benefits	42,633			42,121			128,197			130,059
Policyholder dividends	2,487			2,459			7,597			8,014
Underwriting, acquisition and insurance expenses	27,535			25,785			98,229			102,437
Interest expense	1,213			1,213			3,638			3,638
Other expenses	4,971			3,854			13,862			12,647
Total benefits and expenses	146,045			141,314			439,740			435,655
	35,511			39,970			112,733			106,580
Income taxes	(11,220		)	(13,091		)	(35,844		)	(34,637		)
Equity income, net of related income taxes	2,804			3,128			8,959			8,393
Net income	27,095			30,007			85,848			80,336
Net loss (income) attributable to noncontrolling interest	9			10			(20		)	7
Net income attributable to FBL Financial Group, Inc.	$	27,104		$	30,017		$	85,828		$	80,343

Comprehensive income attributable to FBL Financial Group, Inc.	$	38,616		$	46,723		$	160,142		$	258,639

Earnings per common share	$	1.08		$	1.20		$	3.42		$	3.21
Earnings per common share - assuming dilution	$	1.08		$	1.20		$	3.42		$	3.21

Cash dividends per common share	$	0.44		$	0.42		$	1.32		$	1.26
Special cash dividend per common share	$	—		$	—		$	1.50		$	2.00

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited) - Quarterly

(Dollars in thousands, except per share data)



	Q3 2016			Q4 2016			Q1 2017			Q2 2017			Q3 2017
Revenues:
Interest sensitive product charges	$	25,851		$	28,939		$	29,201		$	29,456		$	28,004
Traditional life insurance premiums	47,682			49,489			48,434			50,262			47,087
Net investment income	103,514			101,549			100,994			103,908			102,950
Net realized capital gains (losses) on sales of investments	646			3,139			(403		)	921			81

Total other-than-temporary impairment losses	(25		)	(3,551		)	(66		)	—			(67		)
Non-credit portion in other comprehensive income	—			929			—			—			—
Net impairment losses recognized in earnings	(25		)	(2,622		)	(66		)	—			(67		)
Other income	3,616			3,685			3,760			4,450			3,501
Total revenues	181,284			184,179			181,920			188,997			181,556

Benefits and expenses:
Interest sensitive product benefits	65,882			59,726			62,760			58,251			67,206
Traditional life insurance benefits	42,121			47,623			42,954			42,610			42,633
Policyholder dividends	2,459			2,560			2,553			2,557			2,487
Underwriting, acquisition and insurance expenses	25,785			33,530			34,353			36,341			27,535
Interest expense	1,213			1,212			1,212			1,213			1,213
Other expenses	3,854			4,319			4,151			4,740			4,971
Total benefits and expenses	141,314			148,970			147,983			145,712			146,045
	39,970			35,209			33,937			43,285			35,511
Income taxes	(13,091		)	(11,373		)	(10,733		)	(13,891		)	(11,220		)
Equity income, net of related income taxes	3,128			3,047			3,231			2,924			2,804
Net income	30,007			26,883			26,435			32,318			27,095
Net loss (income) attributable to noncontrolling interest	10			(3		)	(2		)	(27		)	9
Net income attributable to FBL Financial Group, Inc.	$	30,017		$	26,880		$	26,433		$	32,291		$	27,104

Comprehensive income (loss) attributable to FBL Financial Group, Inc.	$	46,723		$	(116,393	)	$	42,476		$	79,050		$	38,616

Earnings per common share	$	1.20		$	1.07		$	1.05		$	1.29		$	1.08
Earnings per common share - assuming dilution	$	1.20		$	1.07		$	1.05		$	1.29		$	1.08

Cash dividends per common share	$	0.42		$	0.42		$	0.44		$	0.44		$	0.44
Special cash dividend per common share	$	—		$	—		$	1.50		$	—		$	—

Weighted average common shares outstanding (in thousands):
Basic	24,990			25,007			25,030			25,031			25,037
Effect of dilutive securities	40			33			22			20			18
Diluted	25,030			25,040			25,052			25,051			25,055



FBL Financial Group, Inc.
Net Income to Operating Income Reconciliation and Pre-tax Operating Income by Segment (1)
(Dollars in thousands, except per share data)


	Q3 2016			Q4 2016			Q1 2017			Q2 2017			Q3 2017

Net income attributable to FBL Financial Group, Inc.	$	30,017		$	26,880		$	26,433		$	32,291		$	27,104
Operating income adjustments:
Realized gains/losses on investments (2)	(402		)	(429		)	554			(788		)	38
Change in net unrealized gains/losses on derivatives (2)	(733		)	(876		)	1			(686		)	(1,389		)
Operating income	$	28,882		$	25,575		$	26,988		$	30,817		$	25,753

Operating income per common share - assuming dilution	$1.15			$1.02			$1.08			$1.23			$1.03

Operating return on equity, excluding AOCI - last twelve months	10.6%			10.5%			10.6%			11.0%			10.6%
Operating return on equity, including AOCI - last twelve months	8.8%			8.8%			8.7%			9.0%			8.8%


	Q3 2016			Q4 2016			Q1 2017			Q2 2017			Q3 2017
Impact of Operating Income Adjustments on FBL Net Income
Realized gains (losses) on investments	$	621		$	517		$	(469	)	$	921		$	14
Change in net unrealized gains/losses on derivatives	1,512			2,685			(49		)	107			1,897
Change in amortization of:
Deferred acquisition costs	(341		)	115			265			349			117
Unearned revenue reserve	(46		)	5			(12		)	(127		)	(137		)
Reserve change offset on interest sensitive products	—			(1,314		)	(590		)	1,018			187
Income tax offset	(611		)	(703		)	300			(794		)	(727		)
Net impact of operating income adjustments	$	1,135		$	1,305		$	(555	)	$	1,474		$	1,351


	Q3 2016			Q4 2016			Q1 2017			Q2 2017			Q3 2017
Pre-tax operating income by segment:
Annuity segment	$	17,075		$	15,454		$	16,421		$	18,174		$	17,015
Life Insurance segment	15,245			12,188			13,749			17,631			12,620
Corporate and Other segment	5,219			4,868			4,162			4,195			2,638
Total pre-tax operating income	37,539			32,510			34,332			40,000			32,273
Income taxes on operating income	(8,657		)	(6,935		)	(7,344		)	(9,183		)	(6,520		)
Operating income	$	28,882		$	25,575		$	26,988		$	30,817		$	25,753


(1)	Operating income is a non-GAAP measure of earnings.


(2)	Amounts are net of adjustments, as applicable, to 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.

FBL Financial Group, Inc.

Segment Information

We analyze operations by reviewing financial information regarding our primary products that are aggregated into the Annuity and Life Insurance product segments. In addition, our Corporate and Other segment includes various support operations, corporate capital and other product lines that are not currently underwritten by the Company.

The Annuity segment primarily consists of fixed rate and index annuities and supplementary contracts (some of which involve life contingencies). Fixed rate annuities provide for tax-deferred savings and supplementary contracts provide for the systematic repayment of funds that accumulate interest. Fixed rate annuities consist primarily of flexible premium deferred annuities, but also include single premium deferred and immediate contracts. With fixed rate annuities, we bear the underlying investment risk and credit interest to the contracts at rates we determine, subject to interest rate guarantees. With index annuity products, we bear the underlying investment risk and credit interest in an amount equal to a percentage of the gain in a specified market index, subject to minimum guarantees.

The 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 Corporate and Other segment consists of the following corporate items and products/services that do not meet the quantitative threshold for separate segment reporting:



•		investments and related investment income not specifically allocated to our product segments;
•		interest expense;
•		closed blocks of variable annuity, variable universal life insurance and accident and health insurance products;
•		advisory services for the management of investments and other companies;
•		marketing and distribution services for the sale of mutual funds and insurance products not issued by us; and
•		leasing services, primarily with affiliates.

We analyze our segment results based on pre-tax operating income. Accordingly, income taxes are not allocated to the segments. In addition, operating results are reported net of transactions between the segments.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Annuity Segment

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	894			$	1,039		$	1,135		$	1,202		$	1,115
Net investment income	53,945				52,475			53,916			55,631			53,878
Total operating revenues	54,839				53,514			55,051			56,833			54,993

Benefits and expenses:
Interest sensitive product benefits	29,637				29,829			29,878			29,865			31,385
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	507				614			531			483			537
Amortization of deferred acquisition costs	2,231				2,711			2,528			2,783			505
Amortization of value of insurance in force acquired	170				169			170			170			169
Other underwriting expenses	5,219				4,737			5,523			5,358			5,382
Total underwriting, acquisition and insurance expenses	8,127				8,231			8,752			8,794			6,593
Total benefits and expenses	37,764				38,060			38,630			38,659			37,978
Pre-tax operating income	$	17,075			$	15,454		$	16,421		$	18,174		$	17,015

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	4,248,096			$	4,316,806		$	4,357,562		$	4,395,757		$	4,382,218
Deferred acquisition costs	88,342				88,762			89,108			89,752			91,802
Value of insurance in force acquired	4,374				4,204			4,034			3,864			3,695

Liabilities and equity:
Liabilities:
Interest sensitive product reserves	$	3,744,876			$	3,827,295		$	3,863,647		$	3,872,179		$	3,884,541
Other insurance reserves	366,899				364,966			368,378			364,368			358,691
Allocated equity, excluding AOCI	259,042				264,112			266,618			266,902			267,324

Other data:
Number of direct contracts	53,410				53,676			53,528			53,390			53,218

Portfolio yield net of assumed defaults	4.74		%		4.71		%	4.67		%	4.60		%	4.58		%
Credited rate	2.72				2.70			2.69			2.64			2.63
Spread on individual annuities at end of quarter (2)	2.02		%		2.01		%	1.98		%	1.96		%	1.95		%

Interest sensitive reserve activity:
Individual annuity reserve:
Balance, beginning of period	$	2,895,799			$	2,936,817		$	2,984,644		$	3,022,180		$	3,057,952
Deposits	73,240				84,125			80,219			75,439			55,383
Withdrawals, surrenders and death benefits	(43,587		)		(47,417		)	(46,610		)	(46,700		)	(45,450		)
Net flows	29,653				36,708			33,609			28,739			9,933

Policyholder interest	19,083				19,770			20,710			20,826			21,041
Annuitizations and other	(7,718		)		(8,651		)	(16,783		)	(13,793		)	(6,616		)
Balance, end of period	2,936,817				2,984,644			3,022,180			3,057,952			3,082,310
Other interest sensitive reserves	808,059				842,651			841,467			814,227			802,231
Total interest sensitive product reserves	$	3,744,876			$	3,827,295		$	3,863,647		$	3,872,179		$	3,884,541


(1)	Operating income is a non-GAAP measure of earnings.


(2)	Point-in-time spread at the balance sheet date used by management for decision making, which differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Life Insurance Segment

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	14,210			$	16,797		$	17,100		$	17,487		$	16,633
Traditional life insurance premiums	47,682				49,489			48,434			50,262			47,087
Net investment income	39,227				38,876			38,769			39,436			38,995
Other income	(89		)		(73		)	(160		)	(117		)	(88		)
Total operating revenues	101,030				105,089			104,143			107,068			102,627

Benefits and expenses:
Interest sensitive product benefits:
Interest credited	7,886				8,225			8,187			7,983			7,913
Death benefits and other	17,459				13,119			14,272			13,622			16,945
Total interest sensitive product benefits	25,345				21,344			22,459			21,605			24,858
Traditional life insurance benefits:
Death benefits	19,259				25,229			21,667			19,997			21,530
Surrender and other benefits	8,234				7,574			10,429			8,936			7,409
Increase in traditional life future policy benefits	14,628				14,817			10,859			13,678			13,694
Total traditional life insurance benefits	42,121				47,620			42,955			42,611			42,633
Policyholder dividends	2,459				2,560			2,553			2,557			2,487
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	4,229				4,577			4,903			4,874			4,544
Amortization of deferred acquisition costs	(2,788		)		3,724			3,911			4,519			1,122
Amortization of value of insurance in force acquired	377				377			375			375			375
Other underwriting expenses	14,042				12,699			14,404			14,185			14,536
Total underwriting, acquisition and insurance expenses	15,860				21,377			23,593			23,953			20,577
Total benefits and expenses	85,785				92,901			91,560			90,726			90,555
	$	15,245			$	12,188		$	12,583		$	16,342		$	12,072
Equity income, before tax (2)	—				—			1,166			1,289			548
Pre-tax operating income	$	15,245			$	12,188		$	13,749		$	17,631		$	12,620

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	2,825,458			$	2,876,555		$	2,878,865		$	2,913,608		$	2,942,395
Deferred acquisition costs	262,803				267,545			271,454			275,356			282,116
Value of insurance in force acquired	17,781				17,404			17,029			16,654			16,279

Liabilities and equity:
Liabilities: (3)
Interest sensitive reserves	$	889,645			$	899,207		$	905,454		$	916,067		$	930,850
Other insurance reserves	1,864,521				1,887,539			1,902,738			1,917,124			1,933,051
Allocated equity, excluding AOCI	379,540				386,315			382,319			386,413			391,464



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Life Insurance Segment (Continued)

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
				(Dollars in thousands)
Other data:
Number of direct policies - traditional life	364,132				364,698			364,173			364,122			364,445
Number of direct policies - universal life	63,446				64,044			64,490			64,979			65,301
Direct face amounts - traditional life	$	48,668,224			$	49,108,249		$	49,473,291		$	49,919,358		$	50,435,353
Direct face amounts - universal life	$	6,782,177			$	6,872,482		$	6,943,248		$	7,048,021		$	7,124,265

Portfolio yield net of assumed defaults	5.20		%		5.15		%	5.14		%	5.12		%	5.12		%
Credited rate	3.76				3.76			3.76			3.71			3.71
Spread on universal life at end of quarter (4)	1.44		%		1.39		%	1.38		%	1.41		%	1.41		%

Interest sensitive reserve activity: (3)
Balance, beginning of period	$	875,067			$	889,645		$	899,207		$	905,454		$	916,067
Deposits	21,397				23,768			25,604			27,292			24,708
Withdrawals and surrenders	(4,569		)		(6,043		)	(8,212		)	(7,130		)	(6,668		)
Net flows	16,828				17,725			17,392			20,162			18,040

Policyholder interest	7,641				7,720			7,687			7,570			7,997
Policy charges	(17,158		)		(17,541		)	(17,833		)	(18,166		)	(18,149		)
Benefits and other	7,267				1,658			(999		)	1,047			6,895
Balance, end of period	$	889,645			$	899,207		$	905,454		$	916,067		$	930,850


(1)	Operating income is a non-GAAP measure of earnings.


(2)	Beginning in the first quarter of 2017, a portion of our investments held in securities and indebtedness of related parties was assigned to the Life Insurance segment. These investments are accounted for under the equity method of accounting.


(3)	Reserves on riders in interest sensitive life insurance products are included in Other insurance reserves.


(4)	Point-in-time spread at the balance sheet date used by management for decision making with universal life (excluding products with a secondary guarantee) differs from the spread earned during the reporting period disclosed in the Form 10Q or 10K.



FBL Financial Group, Inc.
Statements of Pre-tax Operating Income (1)
Corporate and Other

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
Pre-tax Operating Income				(Dollars in thousands)

Operating revenues:
Interest sensitive product charges	$	10,793			$	11,102		$	10,978		$	10,894		$	10,393
Net investment income	8,161				8,481			8,768			8,643			8,719
Other income	3,705				3,754			3,920			4,567			3,589
Total operating revenues	22,659				23,337			23,666			24,104			22,701

Benefits and expenses:
Interest sensitive product benefits	10,239				8,214			10,059			7,894			11,697
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	671				657			721			812			705
Amortization of deferred acquisition costs	(432		)		1,953			637			1,223			(2,276		)
Other underwriting expenses	1,210				1,423			1,098			1,721			2,045
Total underwriting, acquisition and insurance expenses	1,449				4,033			2,456			3,756			474
Interest expense	1,213				1,212			1,212			1,213			1,213
Other expenses	3,854				4,319			4,151			4,740			4,971
Total benefits and expenses	16,755				17,778			17,878			17,603			18,355
	5,904				5,559			5,788			6,501			4,346
Net loss (income) attributable to noncontrolling interest	10				(3		)	(2		)	(27		)	9
Equity loss, before tax	(695		)		(688		)	(1,624		)	(2,279		)	(1,717		)
Pre-tax operating income	$	5,219			$	4,868		$	4,162		$	4,195		$	2,638

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	604,570			$	631,731		$	655,476		$	652,011		$	647,104
Deferred acquisition costs	71,225				69,664			69,667			67,425			71,038
Separate account assets	605,729				597,072			615,892			625,971			637,746

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	359,151			$	366,519		$	368,405		$	367,929		$	369,167
Other insurance reserves	93,099				93,159			93,054			91,316			94,088
Separate account liabilities	605,729				597,072			615,892			625,971			637,746
Allocated equity, excluding AOCI	379,877				385,220			365,103			382,112			392,939

Rollforward of separate account balances:
Beginning separate account balance	$	603,706			$	605,729		$	597,072		$	615,892		$	625,971
Net premiums and transfers	1,645				(2,348		)	5,160			6,804			4,945
Net investment income (loss)	22,321				9,627			31,288			19,679			22,852
Charges, benefits and surrenders	(21,943		)		(15,936		)	(17,628		)	(16,404		)	(16,022		)
Ending separate account balance	$	605,729			$	597,072		$	615,892		$	625,971		$	637,746

Other data:
Number of direct contracts - variable annuity	10,657				10,500			10,320			10,157			10,017
Number of direct policies - variable universal life	39,275				38,779			38,251			37,800			37,400
Direct face amounts - variable universal life	$	4,839,145			$	4,772,878		$	4,707,786		$	4,654,603		$	4,599,050


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
				(Dollars in thousands)
Annuity
Balance - beginning of period	$	87,405			$	88,342		$	88,762		$	89,108		$	89,752
Capitalization:
Commissions	3,042				2,923			2,718			2,908			2,226
Expenses	186				83			194			183			181
Deferral of sales inducements	183				311			269			101			173
Total capitalization	3,411				3,317			3,181			3,192			2,580
Amortization - operating basis, before impact of unlocking (1)	(2,276		)		(2,775		)	(2,591		)	(2,852		)	(2,307		)
Amortization - unlocking, operating basis (1)	—				—			—			—			1,752
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(198		)		(122		)	(244		)	304			25
Balance - end of period	$	88,342			$	88,762		$	89,108		$	89,752		$	91,802

Life Insurance
Balance - beginning of period	$	252,481			$	262,803		$	267,545		$	271,454		$	275,356
Capitalization:
Commissions	4,609				6,213			5,498			5,682			5,122
Expenses	2,358				1,871			2,037			2,400			2,298
Deferral of sales inducements	146				482			421			441			93
Total capitalization	7,113				8,566			7,956			8,523			7,513
Amortization - operating basis, before impact of unlocking (1)	(4,770		)		(3,822		)	(4,063		)	(4,686		)	(5,172		)
Amortization - unlocking, operating basis (1)	7,991				—			—			—			4,351
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(12		)		(2		)	16			65			68
Balance - end of period	$	262,803			$	267,545		$	271,454		$	275,356		$	282,116

Corporate and Other
Balance - beginning of period	$	70,815			$	71,225		$	69,664		$	69,667		$	68,546
Capitalization:
Commissions	108				183			157			130			83
Deferral of sales inducements	3				17			17			2			—
Total capitalization	111				200			174			132			83
Amortization - operating basis, before impact of unlocking (1)	(1,207		)		(2,000		)	(664		)	(1,233		)	(907		)
Amortization - unlocking, operating basis (1)	1,661				—			—			—			3,292
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(155		)		239			493			(20		)	24
Balance - end of period	$	71,225			$	69,664		$	69,667		$	68,546		$	71,038



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment (Continued)

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
				(Dollars in thousands)
Total
Balance - beginning of period	$	410,701			$	422,370		$	425,971		$	430,229		$	433,654
Capitalization:
Commissions	7,759				9,319			8,373			8,720			7,431
Expenses	2,544				1,954			2,231			2,583			2,479
Deferral of sales inducements	332				810			707			544			266
Total capitalization	10,635				12,083			11,311			11,847			10,176
Amortization - operating basis, before impact of unlocking (1)	(8,253		)		(8,597		)	(7,318		)	(8,771		)	(8,386		)
Amortization - unlocking, operating basis (1)	9,652				—			—			—			9,395
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(365		)		115			265			349			117
Balance - end of period	422,370				425,971			430,229			433,654			444,956
Impact of realized/unrealized losses in AOCI	(207,140		)		(95,647		)	(108,091		)	(137,017		)	(142,109		)
Deferred acquisition costs	$	215,230			$	330,324		$	322,138		$	296,637		$	302,847


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Impact of Unlocking on Pre-tax Operating Income (1)

	Q3 2016				Q4 2016		Q1 2017		Q2 2017		Q3 2017
				(Dollars in thousands)
Annuity Segment
Amortization of deferred sales inducements reported in interest sensitive product benefits	$	—			$	—	$	—	$	—	$	10
Amortization of deferred acquisition costs	—				—		—		—		1,743
Changes in certain product reserves reported in interest sensitive product benefits	—				—		—		—		(228		)
Increase to pre-tax operating income	$	—			$	—	$	—	$	—	$	1,525

Life Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges and other income	$	(2,244	)		$	—	$	—	$	—	$	(1,166	)
Amortization of deferred sales inducements reported in interest sensitive product benefits	468				—		—		—		422
Amortization of deferred sales inducements reported in traditional life insurance benefits	69				—		—		—		55
Amortization of deferred acquisition costs	7,453				—		—		—		3,873
Changes in certain product reserves reported in interest sensitive product benefits	(6,073		)		—		—		—		(5,574		)
Decrease to pre-tax operating income	$	(327	)		$	—	$	—	$	—	$	(2,390	)

Corporate and Other Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges	$	(419	)		$	—	$	—	$	—	$	(579	)
Amortization of deferred sales inducements reported in interest sensitive product benefits	67				—		—		—		98
Amortization of deferred acquisition costs	1,595				—		—		—		3,194
Changes in certain product reserves reported in interest sensitive product benefits	(230		)		—		—		—		(799		)
Increase to pre-tax operating income	$	1,013			$	—	$	—	$	—	$	1,914

Total impact of unlocking on pre-tax operating income	$	686			$	—	$	—	$	—	$	1,049


(1)	Operating income is a non-GAAP measure of earnings.



FBL Financial Group, Inc.
Collected Premiums (1)

	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
				(Dollars in thousands)
Annuity
Individual:
Fixed rate:
First year	$	23,243			$	35,967		$	32,624		$	26,315		$	12,853
Renewal	18,420				20,485			24,217			20,624			14,839
Total fixed rate	41,663				56,452			56,841			46,939			27,692
Index annuity	31,578				28,115			23,427			28,834			28,118
Total individual	73,241				84,567			80,268			75,773			55,810
Group	2,757				2,705			1,195			766			2,323
Total Annuity	75,998				87,272			81,463			76,539			58,133

Life Insurance
Direct:
Universal life:
First year	4,902				5,222			6,301			8,060			7,331
Renewal	16,135				18,039			19,113			18,873			17,216
Total universal life	21,037				23,261			25,414			26,933			24,547
Participating whole life:
First year	4,050				3,167			2,985			3,183			2,446
Renewal	23,144				24,442			24,715			24,337			22,736
Total participating whole life	27,194				27,609			27,700			27,520			25,182
Term life and other:
First year	2,377				2,382			2,442			2,573			2,529
Renewal	24,066				24,689			25,781			25,312			24,947
Total term life and other	26,443				27,071			28,223			27,885			27,476
Total direct life insurance	74,674				77,941			81,337			82,338			77,205
Reinsurance	(7,404		)		(5,584		)	(7,764		)	(7,176		)	(5,991		)
Total Life Insurance	67,270				72,357			73,573			75,162			71,214

Corporate and Other
Variable, net of reinsurance	13,082				13,362			14,733			14,114			12,204
Accident and health, net of reinsurance	40				182			101			41			98
Total Corporate and Other	13,122				13,544			14,834			14,155			12,302

Total collected premiums	$	156,390			$	173,173		$	169,870		$	165,856		$	141,649


(1)	Collected premiums is a non-GAAP measure of sales production.



FBL Financial Group, Inc.
Other Information

	September 30,				December 31,			March 31,			June 30,			September 30,
	2016				2016			2017			2017			2017
				(Dollars in thousands, except per share data)

Capitalization:
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			97,000

Preferred stock	3,000				3,000			3,000			3,000			3,000
Common stockholders' equity, excluding AOCI	1,018,459				1,035,647			1,014,040			1,035,427			1,051,727
Total capitalization, excluding AOCI	1,118,459				1,135,647			1,114,040			1,135,427			1,151,727

Accumulated other comprehensive income	292,828				149,555			165,598			212,357			223,869
Total capitalization, including AOCI	$	1,411,287			$	1,285,202		$	1,279,638		$	1,347,784		$	1,375,596

Common shares outstanding	24,874,659				24,893,955			24,917,960			24,928,568			24,933,510

Book Value per Share:
Excluding AOCI	$	40.94			$	41.60		$	40.70		$	41.54		$	42.18
Including AOCI	52.72				47.61			47.34			50.05			51.16

Debt-to-Capital Ratio:
Excluding AOCI	8.7		%		8.5		%	8.7		%	8.5		%	8.4		%
Including AOCI	6.9				7.5			7.6			7.2			7.1

Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
Excluding AOCI	4.3		%		4.3		%	4.4		%	4.3		%	4.2		%
Including AOCI	3.4				3.8			3.8			3.6			3.5

Class A Common Ownership:
Iowa Farm Bureau Federation	59.4		%		59.3		%	59.3		%	59.2		%	59.2		%
Public	40.6				40.7			40.7			40.8			40.8
	100.0		%		100.0		%	100.0		%	100.0		%	100.0		%



FBL Financial Group, Inc.
Other Information (Continued)

	September 30,		December 31,		March 31,		June 30,		September 30,
	2016		2016		2017		2017		2017

Investment by Type:
Fixed maturity securities	65.1	%	64.1	%	63.7	%	62.8	%	62.3	%
Residential mortgage-backed	5.2		5.2		5.2		5.3		5.6
Commercial mortgage-backed	7.4		7.0		7.3		7.7		7.8
Other asset-backed	8.8		9.4		9.2		9.5		9.2
Mortgage loans	9.4		10.0		10.3		10.3		10.9
Equity securities	1.6		1.6		1.7		1.6		1.5
Other	2.5		2.7		2.6		2.8		2.7

Quality of Fixed Maturity Securities:
AAA, AA, A	63.7	%	63.7	%	63.8	%	63.9	%	64.4	%
BBB	31.8		31.9		31.8		32.3		32.0
BB	3.0		2.9		3.1		2.7		2.5
<BB	1.5		1.5		1.3		1.1		1.1

Agent Strength Totals:
Full time agents and agency managers:
8-state Farm Bureau Property & Casualty channel	1,214		1,214		1,186		1,177		1,213
6 life partner states and Colorado	656		648		653		651		653
	1,870		1,862		1,839		1,828		1,866




	Q3 2016				Q4 2016			Q1 2017			Q2 2017			Q3 2017
Equity Income (Loss), net of related income taxes				(Dollars in thousands)
Equity income (loss):
Low income housing tax credit partnerships	$	(1,811	)		$	(1,689	)	$	(1,805	)	$	(2,938	)	$	(1,918	)
Other equity method investments	1,116				1,001			1,347			1,948			749
	(695		)		(688		)	(458		)	(990		)	(1,169		)
Income taxes:
Taxes on equity income (loss)	242				241			160			346			410
Investment tax credits	3,581				3,494			3,529			3,568			3,563
Equity income, net of related income taxes	$	3,128			$	3,047		$	3,231		$	2,924		$	2,804

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FBL FINANCIAL GROUP INC Reports