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

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - FBL FINANCIAL GROUP INC	exh991newsrelease2017q4.htm
8-K - 8-K - FBL FINANCIAL GROUP INC	pressrelease8k2017q4.htm

FBL FINANCIAL GROUP, INC.

INVESTOR SUPPLEMENT

Fourth 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:
	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)
December 31, 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 Non-GAAP Operating Income Reconciliation and Pre-tax Non-GAAP Operating Income by Segment, last five quarters		6
Financial Information by Segment:
Segment Information		7
Statements of Pre-tax Non-GAAP 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 Non-GAAP Operating Income		14
Collected Premiums, last five quarters		15
Other Information		16

NOTE 1: In addition to net income as determined using U.S. Generally Accepted Accounting Principles (GAAP), we have consistently used non-GAAP operating income (a measure of earnings not recognized under GAAP), a financial measure common in the life insurance industry, as a primary economic measure to evaluate our financial performance. Non-GAAP operating income for the periods presented 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. During 2017, we revised our non-GAAP operating income definition to remove from net income the initial impact to deferred income taxes from a change in tax laws. Such changes can create an unusual one-time remeasurement of deferred taxes not reflective of normal operations. The revision did not impact 2016 or 2015 non-GAAP operating earnings but did affect 2017, with the recent passage of the Tax Cuts and Jobs Act of 2017.

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

FBL Financial Group’s policy for calculating non-GAAP operating income is intended to accurately reflect offsets resulting from the adjustments to net income used to calculate non-GAAP 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 non-GAAP operating income to include offsets relating to interest sensitive product reserves. These offsets to interest sensitive product reserves, net of tax, increased non-GAAP operating income $0.9 million for the full year 2016 and were recorded in the fourth quarter. These offsets, net of tax, decreased non-GAAP operating income $0.5 million in 2017.

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

FBL Financial Group, Inc.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)



	December 31, 2017		December 31, 2016
Assets
Investments:
Fixed maturities - available for sale, at fair value (amortized cost: 2017 - $6,757,250; 2016 - $6,661,711)	$	7,291,967	$	7,008,790
Equity securities - available for sale, at fair value (cost: 2017 - $123,320; 2016 - $130,479)	130,750		132,968
Mortgage loans	971,812		816,471
Real estate	1,543		1,955
Policy loans	191,398		188,254
Short-term investments	17,007		16,348
Other investments	15,766		9,874
Total investments	8,620,243		8,174,660

Cash and cash equivalents	52,696		33,583
Securities and indebtedness of related parties	130,240		137,422
Accrued investment income	76,468		78,437
Amounts receivable from affiliates	3,561		3,790
Reinsurance recoverable	108,948		105,290
Deferred acquisition costs	302,611		330,324
Value of insurance in force acquired	4,560		9,226
Current income taxes recoverable	3,269		4,309
Other assets	112,054		92,021
Assets held in separate accounts	651,963		597,072








Total assets	$	10,066,613	$	9,566,134

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	December 31, 2017		December 31, 2016
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive products	$	5,299,961	$	5,100,625
Traditional life insurance and accident and health products	1,750,504		1,698,792
Other policy claims and benefits	44,475		43,395
Supplementary contracts without life contingencies	322,630		330,232
Advance premiums and other deposits	267,023		265,221
Amounts payable to affiliates	1,164		862
Long-term debt payable to non-affiliates	97,000		97,000
Deferred income taxes	131,912		163,495
Other liabilities	111,131		81,182
Liabilities related to separate accounts	651,963		597,072
Total liabilities	8,677,763		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 24,919,113 in 2017 and 24,882,542 shares in 2016	153,589		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	236,757		149,555
Retained earnings	995,374		882,672
Total FBL Financial Group, Inc. stockholders' equity	1,388,792		1,188,202
Noncontrolling interest	58		56
Total stockholders' equity	1,388,850		1,188,258
Total liabilities and stockholders' equity	$	10,066,613	$	9,566,134

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands, except per share data)



	Three months ended December 31,						Year ended December 31,
	2017			2016			2017			2016
Revenues:
Interest sensitive product charges	$	26,275		$	28,939		$	112,936		$	111,928
Traditional life insurance premiums	49,547			49,489			195,330			196,914
Net investment income	107,347			101,549			415,199			404,170
Net realized capital gains on sales of investments	—			3,139			599			3,106

Total other-than-temporary impairment losses	(3,853		)	(3,551		)	(3,986		)	(7,320		)
Non-credit portion in other comprehensive income	—			929			—			2,451
Net impairment losses recognized in earnings	(3,853		)	(2,622		)	(3,986		)	(4,869		)
Other income	3,689			3,685			15,400			15,165
Total revenues	183,005			184,179			735,478			726,414

Benefits and expenses:
Interest sensitive product benefits	63,661			59,726			251,878			238,586
Traditional life insurance benefits	44,826			47,623			173,023			177,682
Policyholder dividends	2,543			2,560			10,140			10,574
Underwriting, acquisition and insurance expenses	36,649			33,530			134,878			135,967
Interest expense	1,212			1,212			4,850			4,850
Other expenses	4,520			4,319			18,382			16,966
Total benefits and expenses	153,411			148,970			593,151			584,625
	29,594			35,209			142,327			141,789
Income tax benefit (loss)	76,573			(11,373		)	40,729			(46,010		)
Equity income, net of related income taxes	2,340			3,047			11,299			11,440
Net income	108,507			26,883			194,355			107,219
Net loss (income) attributable to noncontrolling interest	(8		)	(3		)	(28		)	4
Net income attributable to FBL Financial Group, Inc.	$	108,499		$	26,880		$	194,327		$	107,223

Comprehensive income (loss) attributable to FBL Financial Group, Inc.	$	121,387		$	(116,393	)	$	281,529		$	142,246

Earnings per common share	$	4.33		$	1.07		$	7.76		$	4.29
Earnings per common share - assuming dilution	$	4.33		$	1.07		$	7.75		$	4.28

Cash dividends per common share	$	0.44		$	0.42		$	1.76		$	1.68
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)



	Q4 2016			Q1 2017			Q2 2017			Q3 2017			Q4 2017
Revenues:
Interest sensitive product charges	$	28,939		$	29,201		$	29,456		$	28,004		$	26,275
Traditional life insurance premiums	49,489			48,434			50,262			47,087			49,547
Net investment income	101,549			100,994			103,908			102,950			107,347
Net realized capital gains (losses) on sales of investments	3,139			(403		)	921			81			—

Total other-than-temporary impairment losses	(3,551		)	(66		)	—			(67		)	(3,853		)
Non-credit portion in other comprehensive income	929			—			—			—			—
Net impairment losses recognized in earnings	(2,622		)	(66		)	—			(67		)	(3,853		)
Other income	3,685			3,760			4,450			3,501			3,689
Total revenues	184,179			181,920			188,997			181,556			183,005

Benefits and expenses:
Interest sensitive product benefits	59,726			62,760			58,251			67,206			63,661
Traditional life insurance benefits	47,623			42,954			42,610			42,633			44,826
Policyholder dividends	2,560			2,553			2,557			2,487			2,543
Underwriting, acquisition and insurance expenses	33,530			34,353			36,341			27,535			36,649
Interest expense	1,212			1,212			1,213			1,213			1,212
Other expenses	4,319			4,151			4,740			4,971			4,520
Total benefits and expenses	148,970			147,983			145,712			146,045			153,411
	35,209			33,937			43,285			35,511			29,594
Income tax benefit (loss)	(11,373		)	(10,733		)	(13,891		)	(11,220		)	76,573
Equity income, net of related income taxes	3,047			3,231			2,924			2,804			2,340
Net income	26,883			26,435			32,318			27,095			108,507
Net loss (income) attributable to noncontrolling interest	(3		)	(2		)	(27		)	9			(8		)
Net income attributable to FBL Financial Group, Inc.	$	26,880		$	26,433		$	32,291		$	27,104		$	108,499

Comprehensive income (loss) attributable to FBL Financial Group, Inc.	$	(116,393	)	$	42,476		$	79,050		$	38,616		$	121,387

Earnings per common share	$	1.07		$	1.05		$	1.29		$	1.08		$	4.33
Earnings per common share - assuming dilution	$	1.07		$	1.05		$	1.29		$	1.08		$	4.33

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

Weighted average common shares outstanding (in thousands):
Basic	25,007			25,030			25,031			25,037			25,039
Effect of dilutive securities	33			22			20			18			18
Diluted	25,040			25,052			25,051			25,055			25,057



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


	Q4 2016			Q1 2017			Q2 2017			Q3 2017			Q4 2017

Net income attributable to FBL Financial Group, Inc.	$	26,880		$	26,433		$	32,291		$	27,104		$	108,499
Net income adjustments:
Federal tax rate change	—			—			—			—			(85,797		)
Realized gains/losses on investments (1)	(429		)	554			(788		)	38			2,578
Change in net unrealized gains/losses on derivatives (1)	(876		)	1			(686		)	(1,389		)	(476		)
Non-GAAP operating income	$	25,575		$	26,988		$	30,817		$	25,753		$	24,804

Non-GAAP operating income per common share - assuming dilution	$1.02			$1.08			$1.23			$1.03			$0.99

Non-GAAP operating return on equity, excluding AOCI - last twelve months	10.5%			10.6%			11.0%			10.6%			10.3%
Non-GAAP operating return on equity, including AOCI - last twelve months	8.8%			8.7%			9.0%			8.8%			8.6%


	Q4 2016			Q1 2017			Q2 2017			Q3 2017			Q4 2017
Impact of Adjustments on FBL Net Income
Federal tax rate change	$	—		$	—		$	—		$	—		$	85,797
Realized gains/losses on investments	517			(469		)	921			14			(3,853		)
Change in net unrealized gains/losses on derivatives	2,685			(49		)	107			1,897			629
Change in amortization of:
Deferred acquisition costs	115			265			349			117			149
Unearned revenue reserve	5			(12		)	(127		)	(137		)	(239		)
Reserve change offset on interest sensitive products	(1,314		)	(590		)	1,018			187			79
Income tax offset	(703		)	300			(794		)	(727		)	1,133
Net impact of net income adjustments	$	1,305		$	(555	)	$	1,474		$	1,351		$	83,695


	Q4 2016			Q1 2017			Q2 2017			Q3 2017			Q4 2017
Pre-tax non-GAAP operating income by segment:
Annuity segment	$	15,454		$	16,421		$	18,174		$	17,015		$	17,211
Life Insurance segment	12,188			13,749			17,631			12,620			9,856
Corporate and Other segment	4,868			4,162			4,195			2,638			3,866
Total pre-tax non-GAAP operating income	32,510			34,332			40,000			32,273			30,933
Income taxes on non-GAAP operating income	(6,935		)	(7,344		)	(9,183		)	(6,520		)	(6,129		)
Non-GAAP operating income	$	25,575		$	26,988		$	30,817		$	25,753		$	24,804


(1)	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 and index 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 non-GAAP operating income. Accordingly, income taxes are not allocated to the segments. In addition, non-GAAP operating results are reported net of transactions between the segments.



FBL Financial Group, Inc.
Statements of Pre-tax Non-GAAP Operating Income
Annuity Segment

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

Non-GAAP operating revenues:
Interest sensitive product charges	$	1,039			$	1,135		$	1,202		$	1,115		$	1,032
Net investment income	52,475				53,916			55,631			53,878			56,275
Total non-GAAP operating revenues	53,514				55,051			56,833			54,993			57,307

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits	29,829				29,878			29,865			31,385			31,096
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	614				531			483			537			611
Amortization of deferred acquisition costs	2,711				2,528			2,783			505			2,690
Amortization of value of insurance in force acquired	169				170			170			169			169
Other underwriting expenses	4,737				5,523			5,358			5,382			5,530
Total underwriting, acquisition and insurance expenses	8,231				8,752			8,794			6,593			9,000
Total non-GAAP operating benefits and expenses	38,060				38,630			38,659			37,978			40,096
Pre-tax non-GAAP operating income	$	15,454			$	16,421		$	18,174		$	17,015		$	17,211

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	4,316,806			$	4,357,562		$	4,395,757		$	4,382,218		$	4,470,721
Deferred acquisition costs	88,762				89,108			89,752			91,802			92,116
Value of insurance in force acquired	4,204				4,034			3,864			3,695			3,526

Liabilities and equity:
Liabilities:
Interest sensitive product reserves	$	3,827,295			$	3,863,647		$	3,872,179		$	3,884,541		$	3,963,187
Other insurance reserves	364,966				368,378			364,368			358,691			355,877
Allocated equity, excluding AOCI	264,112				266,618			266,902			267,324			272,101

Other data:
Number of direct contracts	53,676				53,528			53,390			53,218			53,250

Portfolio yield net of assumed defaults	4.71		%		4.67		%	4.60		%	4.58		%	4.50		%
Credited rate	2.70				2.69			2.64			2.63			2.56
Spread on individual annuities at end of quarter (1)	2.01		%		1.98		%	1.96		%	1.95		%	1.94		%

Interest sensitive reserve activity:
Individual annuity reserve:
Balance, beginning of period	$	2,936,817			$	2,984,644		$	3,022,180		$	3,057,952		$	3,082,310
Deposits	84,125				80,219			75,439			55,383			66,097
Withdrawals, surrenders and death benefits	(47,417		)		(46,610		)	(46,700		)	(45,450		)	(49,428		)
Net flows	36,708				33,609			28,739			9,933			16,669

Policyholder interest	19,770				20,710			20,826			21,041			20,817
Annuitizations and other	(8,651		)		(16,783		)	(13,793		)	(6,616		)	(10,007		)
Balance, end of period	2,984,644				3,022,180			3,057,952			3,082,310			3,109,789
Other interest sensitive reserves	842,651				841,467			814,227			802,231			853,398
Total interest sensitive product reserves	$	3,827,295			$	3,863,647		$	3,872,179		$	3,884,541		$	3,963,187


(1)	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 Non-GAAP Operating Income
Life Insurance Segment

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

Non-GAAP operating revenues:
Interest sensitive product charges	$	16,797			$	17,100		$	17,487		$	16,633		$	14,230
Traditional life insurance premiums	49,489				48,434			50,262			47,087			49,547
Net investment income	38,876				38,769			39,436			38,995			41,118
Other income	(73		)		(160		)	(117		)	(88		)	(140		)
Total non-GAAP operating revenues	105,089				104,143			107,068			102,627			104,755

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits:
Interest credited	8,225				8,187			7,983			7,913			8,951
Death benefits and other	13,119				14,272			13,622			16,945			13,759
Total interest sensitive product benefits	21,344				22,459			21,605			24,858			22,710
Traditional life insurance benefits:
Death benefits	25,229				21,667			19,997			21,530			23,707
Surrender and other benefits	7,574				10,429			8,936			7,409			8,642
Increase in traditional life future policy benefits	14,817				10,859			13,678			13,694			12,477
Total traditional life insurance benefits	47,620				42,955			42,611			42,633			44,826
Policyholder dividends	2,560				2,553			2,557			2,487			2,543
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	4,577				4,903			4,874			4,544			4,919
Amortization of deferred acquisition costs	3,724				3,911			4,519			1,122			4,816
Amortization of value of insurance in force acquired	377				375			375			375			375
Other underwriting expenses	12,699				14,404			14,185			14,536			14,448
Total underwriting, acquisition and insurance expenses	21,377				23,593			23,953			20,577			24,558
Total non-GAAP operating benefits and expenses	92,901				91,560			90,726			90,555			94,637
	$	12,188			$	12,583		$	16,342		$	12,072		$	10,118
Equity income (loss), before tax (1)	—				1,166			1,289			548			(262		)
Pre-tax non-GAAP operating income	$	12,188			$	13,749		$	17,631		$	12,620		$	9,856

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	2,876,555			$	2,878,865		$	2,913,608		$	2,942,395		$	2,935,517
Deferred acquisition costs	267,545				271,454			275,356			282,116			287,421
Value of insurance in force acquired	17,404				17,029			16,654			16,279			15,904

Liabilities and equity:
Liabilities: (2)
Interest sensitive reserves	$	899,207			$	905,454		$	916,067		$	930,850		$	944,690
Other insurance reserves	1,887,539				1,902,738			1,917,124			1,933,051			1,951,565
Allocated equity, excluding AOCI	386,315				382,319			386,413			391,464			396,571



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

	Q4 2016				Q1 2017			Q2 2017			Q3 2017			Q4 2017
				(Dollars in thousands)
Other data:
Number of direct policies - traditional life	364,698				364,173			364,122			364,445			365,382
Number of direct policies - universal life	64,044				64,490			64,979			65,301			66,382
Direct face amounts - traditional life	$	49,108,249			$	49,473,291		$	49,919,358		$	50,435,353		$	50,841,581
Direct face amounts - universal life	$	6,872,482			$	6,943,248		$	7,048,021		$	7,124,265		$	7,275,994

Portfolio yield net of assumed defaults	5.15		%		5.14		%	5.12		%	5.12		%	5.07		%
Credited rate	3.76				3.76			3.71			3.71			3.64
Spread on universal life at end of quarter (3)	1.39		%		1.38		%	1.41		%	1.41		%	1.43		%

Interest sensitive reserve activity: (2)
Balance, beginning of period	$	889,645			$	899,207		$	905,454		$	916,067		$	930,850
Deposits	23,768				25,604			27,292			24,708			26,267
Withdrawals and surrenders	(6,043		)		(8,212		)	(7,130		)	(6,668		)	(5,672		)
Net flows	17,725				17,392			20,162			18,040			20,595

Policyholder interest	7,720				7,687			7,570			7,997			8,806
Policy charges	(17,541		)		(17,833		)	(18,166		)	(18,149		)	(15,008		)
Benefits and other	1,658				(999		)	1,047			6,895			(553		)
Balance, end of period	$	899,207			$	905,454		$	916,067		$	930,850		$	944,690


(1)	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.


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


(3)	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 Non-GAAP Operating Income
Corporate and Other

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

Non-GAAP operating revenues:
Interest sensitive product charges	$	11,102			$	10,978		$	10,894		$	10,393		$	11,252
Net investment income	8,481				8,768			8,643			8,719			8,788
Other income	3,754				3,920			4,567			3,589			3,829
Total non-GAAP operating revenues	23,337				23,666			24,104			22,701			23,869

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits	8,214				10,059			7,894			11,697			9,410
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	657				721			812			705			716
Amortization of deferred acquisition costs	1,953				637			1,223			(2,276		)	904
Other underwriting expenses	1,423				1,098			1,721			2,045			1,607
Total underwriting, acquisition and insurance expenses	4,033				2,456			3,756			474			3,227
Interest expense	1,212				1,212			1,213			1,213			1,212
Other expenses	4,319				4,151			4,740			4,971			4,520
Total non-GAAP operating benefits and expenses	17,778				17,878			17,603			18,355			18,369
	5,559				5,788			6,501			4,346			5,500
Net loss (income) attributable to noncontrolling interest	(3		)		(2		)	(27		)	9			(8		)
Equity loss, before tax	(688		)		(1,624		)	(2,279		)	(1,717		)	(1,626		)
Pre-tax non-GAAP operating income	$	4,868			$	4,162		$	4,195		$	2,638		$	3,866

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	631,731			$	655,476		$	652,011		$	647,104		$	671,857
Deferred acquisition costs	69,664				69,667			67,425			71,038			70,247
Separate account assets	597,072				615,892			625,971			637,746			651,963

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	366,519			$	368,405		$	367,929		$	369,167		$	369,726
Other insurance reserves	93,159				93,054			91,316			94,088			93,754
Separate account liabilities	597,072				615,892			625,971			637,746			651,963
Allocated equity, excluding AOCI	385,220				365,103			382,112			392,939			432,137

Rollforward of separate account balances:
Beginning separate account balance	$	605,729			$	597,072		$	615,892		$	625,971		$	637,746
Net premiums and transfers	(2,348		)		5,160			6,804			4,945			4,745
Net investment income (loss)	9,627				31,288			19,679			22,852			26,039
Charges, benefits and surrenders	(15,936		)		(17,628		)	(16,404		)	(16,022		)	(16,567		)
Ending separate account balance	$	597,072			$	615,892		$	625,971		$	637,746		$	651,963

Other data:
Number of direct contracts - variable annuity	10,500				10,320			10,157			10,017			9,857
Number of direct policies - variable universal life	38,779				38,251			37,800			37,400			36,986
Direct face amounts - variable universal life	$	4,772,878			$	4,707,786		$	4,654,603		$	4,599,050		$	4,549,732



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment

	Q4 2016				Q1 2017			Q2 2017			Q3 2017			Q4 2017
				(Dollars in thousands)
Annuity
Balance - beginning of period	$	88,342			$	88,762		$	89,108		$	89,752		$	91,802
Capitalization:
Commissions	2,923				2,718			2,908			2,226			2,681
Expenses	83				194			183			181			237
Deferral of sales inducements	311				269			101			173			124
Total capitalization	3,317				3,181			3,192			2,580			3,042
Amortization - non-GAAP operating basis, before impact of unlocking	(2,775		)		(2,591		)	(2,852		)	(2,307		)	(2,762		)
Amortization - unlocking, non-GAAP operating basis	—				—			—			1,752			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(122		)		(244		)	304			25			34
Balance - end of period	$	88,762			$	89,108		$	89,752		$	91,802		$	92,116

Life Insurance
Balance - beginning of period	$	262,803			$	267,545		$	271,454		$	275,356		$	282,116
Capitalization:
Commissions	6,213				5,498			5,682			5,122			7,250
Expenses	1,871				2,037			2,400			2,298			2,309
Deferral of sales inducements	482				421			441			93			595
Total capitalization	8,566				7,956			8,523			7,513			10,154
Amortization - non-GAAP operating basis, before impact of unlocking	(3,822		)		(4,063		)	(4,686		)	(5,172		)	(4,973		)
Amortization - unlocking, non-GAAP operating basis	—				—			—			4,351			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	(2		)		16			65			68			124
Balance - end of period	$	267,545			$	271,454		$	275,356		$	282,116		$	287,421

Corporate and Other
Balance - beginning of period	$	71,225			$	69,664		$	69,667		$	68,546		$	71,038
Capitalization:
Commissions	183				157			130			83			113
Deferral of sales inducements	17				17			2			—			7
Total capitalization	200				174			132			83			120
Amortization - non-GAAP operating basis, before impact of unlocking	(2,000		)		(664		)	(1,233		)	(907		)	(902		)
Amortization - unlocking, non-GAAP operating basis	—				—			—			3,292			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	239				493			(20		)	24			(9		)
Balance - end of period	$	69,664			$	69,667		$	68,546		$	71,038		$	70,247



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

	Q4 2016				Q1 2017			Q2 2017			Q3 2017			Q4 2017
				(Dollars in thousands)
Total
Balance - beginning of period	$	422,370			$	425,971		$	430,229		$	433,654		$	444,956
Capitalization:
Commissions	9,319				8,373			8,720			7,431			10,044
Expenses	1,954				2,231			2,583			2,479			2,546
Deferral of sales inducements	810				707			544			266			726
Total capitalization	12,083				11,311			11,847			10,176			13,316
Amortization - non-GAAP operating basis, before impact of unlocking	(8,597		)		(7,318		)	(8,771		)	(8,386		)	(8,637		)
Amortization - unlocking, non-GAAP operating basis	—				—			—			9,395			—
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives	115				265			349			117			149
Balance - end of period	425,971				430,229			433,654			444,956			449,784
Impact of realized/unrealized losses in AOCI	(95,647		)		(108,091		)	(137,017		)	(142,109		)	(147,173		)
Deferred acquisition costs	$	330,324			$	322,138		$	296,637		$	302,847		$	302,611



FBL Financial Group, Inc.
Impact of Unlocking on Pre-tax Non-GAAP Operating Income

	Q4 2016			Q1 2017		Q2 2017		Q3 2017			Q4 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 non-GAAP operating income	$	—		$	—	$	—	$	1,525		$	—

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

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

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



FBL Financial Group, Inc.
Collected Premiums (1)

	Q4 2016				Q1 2017			Q2 2017			Q3 2017			Q4 2017
				(Dollars in thousands)
Annuity
Individual:
Fixed rate:
First year	$	35,967			$	32,624		$	26,315		$	12,853		$	17,575
Renewal	20,485				24,217			20,624			14,839			18,621
Total fixed rate	56,452				56,841			46,939			27,692			36,196
Index annuity	28,115				23,427			28,834			28,118			30,174
Total individual	84,567				80,268			75,773			55,810			66,370
Group	2,705				1,195			766			2,323			2,115
Total Annuity	87,272				81,463			76,539			58,133			68,485

Life Insurance
Direct:
Universal life:
First year	5,222				6,301			8,060			7,331			4,746
Renewal	18,039				19,113			18,873			17,216			18,868
Total universal life	23,261				25,414			26,933			24,547			23,614
Participating whole life:
First year	3,167				2,985			3,183			2,446			3,304
Renewal	24,442				24,715			24,337			22,736			24,058
Total participating whole life	27,609				27,700			27,520			25,182			27,362
Term life and other:
First year	2,382				2,442			2,573			2,529			2,738
Renewal	24,689				25,781			25,312			24,947			25,583
Total term life and other	27,071				28,223			27,885			27,476			28,321
Total direct life insurance	77,941				81,337			82,338			77,205			79,297
Reinsurance	(5,584		)		(7,764		)	(7,176		)	(5,991		)	(6,902		)
Total Life Insurance	72,357				73,573			75,162			71,214			72,395

Corporate and Other
Variable, net of reinsurance	13,362				14,733			14,114			12,204			12,554
Accident and health, net of reinsurance	182				101			41			98			217
Total Corporate and Other	13,544				14,834			14,155			12,302			12,771

Total collected premiums	$	173,173			$	169,870		$	165,856		$	141,649		$	153,651


(1)	Collected premiums is a measure of sales production not recognized under GAAP.



FBL Financial Group, Inc.
Other Information

	December 31,				March 31,			June 30,			September 30,			December 31,
	2016				2017			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	1,035,647				1,014,040			1,035,427			1,051,727			1,149,035
Total capitalization, excluding AOCI	1,135,647				1,114,040			1,135,427			1,151,727			1,249,035

Accumulated other comprehensive income	149,555				165,598			212,357			223,869			236,757
Total capitalization, including AOCI	$	1,285,202			$	1,279,638		$	1,347,784		$	1,375,596		$	1,485,792

Common shares outstanding	24,893,955				24,917,960			24,928,568			24,933,510			24,930,526

Book Value per Share:
Excluding AOCI	$	41.60			$	40.70		$	41.54		$	42.18		$	46.09
Including AOCI	47.61				47.34			50.05			51.16			55.59

Debt-to-Capital Ratio:
Excluding AOCI	8.5		%		8.7		%	8.5		%	8.4		%	7.8		%
Including AOCI	7.5				7.6			7.2			7.1			6.5

Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
Excluding AOCI	4.3		%		4.4		%	4.3		%	4.2		%	3.9		%
Including AOCI	3.8				3.8			3.6			3.5			3.3

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



FBL Financial Group, Inc.
Other Information (Continued)

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

Investment by Type:
Fixed maturity securities	64.1	%	63.7	%	62.8	%	62.3	%	60.7	%
Residential mortgage-backed	5.2		5.2		5.3		5.6		6.0
Commercial mortgage-backed	7.0		7.3		7.7		7.8		8.2
Other asset-backed	9.4		9.2		9.5		9.2		9.7
Mortgage loans	10.0		10.3		10.3		10.9		11.3
Equity securities	1.6		1.7		1.6		1.5		1.5
Other	2.7		2.6		2.8		2.7		2.6

Quality of Fixed Maturity Securities:
AAA, AA, A	63.7	%	63.8	%	63.9	%	64.4	%	65.4	%
BBB	31.9		31.8		32.3		32.0		31.1
BB	2.9		3.1		2.7		2.5		2.4
<BB	1.5		1.3		1.1		1.1		1.1

Agent Strength Totals:
Full time agents and agency managers:
8-state Farm Bureau Property & Casualty channel	1,214		1,186		1,177		1,213		1,192
6 life partner states and Colorado	648		653		651		653		648
	1,862		1,839		1,828		1,866		1,840




	Q4 2016				Q1 2017			Q2 2017			Q3 2017			Q4 2017
Equity Income (Loss), net of related income taxes				(Dollars in thousands)
Equity income (loss):
Low income housing tax credit investments	$	(1,689	)		$	(1,805	)	$	(2,938	)	$	(1,918	)	$	(1,828	)
Other equity method investments	1,001				1,347			1,948			749			(60		)
	(688		)		(458		)	(990		)	(1,169		)	(1,888		)
Income taxes:
Taxes on equity income (loss)	241				160			346			410			661
Investment tax credits	3,494				3,529			3,568			3,563			3,567
Equity income, net of related income taxes	$	3,047			$	3,231		$	2,924		$	2,804		$	2,340

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FBL FINANCIAL GROUP INC Reports