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	exh991newsrelease2018q3.htm
8-K - 8-K - FBL FINANCIAL GROUP INC	pressrelease8k2018q3.htm

FBL FINANCIAL GROUP, INC.

INVESTOR SUPPLEMENT

2018 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:
	Kathleen Till Stange
	Vice President Corporate & Investor Relations
	Kathleen.TillStange@FBLFinancial.com
	(515) 226-6780
Internet Information	FBL Financial Group, Inc.
	www.fblfinancial.com
Stock Symbol	NYSE: FFG
Transfer Agent	American Stock Transfer & Trust Company, LLC
	6201 15th Avenue
	Brooklyn, NY 11219
	http://www.astfinancial.com



FBL Financial Group, Inc.
Financial Supplement (Unaudited)
September 30, 2018
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: During the third quarter of 2018, we voluntarily changed our accounting policy for low income housing tax credit (LIHTC) investments. The accounting change is applied retrospectively to our financial statements and all prior financial information in this exhibit has been adjusted to reflect this change. For further details on the accounting change, see Note 1 to our consolidated financial statements in our Form 10-Q for the quarter ended September 30, 2018.

NOTE 2: 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 consists of net income adjusted to exclude the initial impact of changes in federal statutory income tax rates and tax laws, realized gains and losses on investments and the change in net unrealized gains and losses on derivatives and equity securities.

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

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

FBL Financial Group, Inc.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)



	September 30, 2018		December 31, 2017
Assets
Investments:
Fixed maturities - available for sale, at fair value (amortized cost: 2018 - $6,925,616; 2017 - $6,757,250)	$	7,099,025	$	7,291,967
Equity securities - available for sale, at fair value (cost: 2018 - $99,882; 2017 - $96,715)	103,896		104,145
Mortgage loans	1,015,618		971,812
Real estate	1,543		1,543
Policy loans	195,723		191,398
Short-term investments	25,569		17,007
Other investments	48,636		42,371
Total investments	8,490,010		8,620,243

Cash and cash equivalents	14,425		52,696
Securities and indebtedness of related parties	59,546		47,823
Accrued investment income	81,199		76,468
Amounts receivable from affiliates	7,617		3,561
Reinsurance recoverable	104,550		108,948
Deferred acquisition costs	412,046		302,611
Value of insurance in force acquired	10,821		4,560
Current income taxes recoverable	1,454		6,764
Other assets	171,754		177,764
Assets held in separate accounts	651,797		651,963








Total assets	$	10,005,219	$	10,053,401

FBL Financial Group, Inc.

Consolidated Balance Sheets (Continued)

(Dollars in thousands)



	September 30, 2018		December 31, 2017
Liabilities and stockholders' equity
Liabilities:
Future policy benefits:
Interest sensitive products	$	5,451,535	$	5,299,961
Traditional life insurance and accident and health products	1,789,650		1,750,504
Other policy claims and benefits	51,820		44,475
Supplementary contracts without life contingencies	310,152		322,630
Advance premiums and other deposits	268,935		267,023
Amounts payable to affiliates	1,379		1,164
Long-term debt payable to non-affiliates	97,000		97,000
Deferred income taxes	77,958		130,425
Other liabilities	111,195		111,131
Liabilities related to separate accounts	651,797		651,963
Total liabilities	8,811,421		8,676,276

Stockholders' equity:
FBL Financial Group, Inc. stockholders' equity:
Preferred stock, without par value, at liquidation value - authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares	3,000		3,000
Class A common stock, without par value - authorized 88,500,000 shares, issued and outstanding 24,806,796 in 2018 and 24,919,113 shares in 2017	153,160		153,589
Class B common stock, without par value - authorized 1,500,000 shares, issued and outstanding 11,413 shares in 2018 and 2017	72		72
Accumulated other comprehensive income	88,961		284,983
Retained earnings	948,530		935,423
Total FBL Financial Group, Inc. stockholders' equity	1,193,723		1,377,067
Noncontrolling interest	75		58
Total stockholders' equity	1,193,798		1,377,125
Total liabilities and stockholders' equity	$	10,005,219	$	10,053,401

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,
	2018			2017			2018			2017
Revenues:
Interest sensitive product charges	$	31,161		$	28,004		$	92,165		$	86,661
Traditional life insurance premiums	48,124			47,087			148,712			145,783
Net investment income	105,757			102,950			310,753			307,852
Net realized capital gains (losses)	(709		)	81			(1,615		)	599
Net other-than-temporary impairment losses recognized in earnings	(50		)	(67		)	(1,090		)	(133		)
Other income	3,828			3,501			12,065			11,711
Total revenues	188,111			181,556			560,990			552,473

Benefits and expenses:
Interest sensitive product benefits	70,145			67,206			194,127			188,217
Traditional life insurance benefits	44,168			42,633			133,349			128,197
Policyholder dividends	2,480			2,487			7,591			7,597
Underwriting, acquisition and insurance expenses	30,834			27,535			107,621			98,229
Interest expense	1,212			1,213			3,638			3,638
Other expenses	5,061			4,971			16,281			13,862
Total benefits and expenses	153,900			146,045			462,607			439,740
	34,211			35,511			98,383			112,733
Income tax expense	(4,818		)	(9,880		)	(14,462		)	(32,017		)
Equity income, net of related income taxes	1,642			487			3,441			2,629
Net income	31,035			26,118			87,362			83,345
Net loss (income) attributable to noncontrolling interest	(25		)	9			16			(20		)
Net income attributable to FBL Financial Group, Inc.	$	31,010		$	26,127		$	87,378		$	83,325

Comprehensive income (loss) attributable to FBL Financial Group, Inc.	$	(11,110	)	$	37,639		$	(103,164	)	$	157,639

Earnings per common share	$	1.24		$	1.04		$	3.50		$	3.32
Earnings per common share - assuming dilution	$	1.24		$	1.04		$	3.50		$	3.32

Cash dividends per common share	$	0.46		$	0.44		$	1.38		$	1.32
Special cash dividend per common share	$	—		$	—		$	1.50		$	1.50

FBL Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Unaudited) - Quarterly

(Dollars in thousands, except per share data)



	Q3 2017			Q4 2017			Q1 2018			Q2 2018			Q3 2018
Revenues:
Interest sensitive product charges	$	28,004		$	26,275		$	30,098		$	30,906		$	31,161
Traditional life insurance premiums	47,087			49,547			49,497			51,091			48,124
Net investment income	102,950			107,347			101,022			103,974			105,757
Net realized capital gains (losses)	81			—			(1,747		)	841			(709		)
Net other-than-temporary impairment losses recognized in earnings	(67		)	(1,420		)	(1,040		)	—			(50		)
Other income	3,501			3,689			4,600			3,637			3,828
Total revenues	181,556			185,438			182,430			190,449			188,111

Benefits and expenses:
Interest sensitive product benefits	67,206			63,661			61,345			62,637			70,145
Traditional life insurance benefits	42,633			44,826			45,456			43,725			44,168
Policyholder dividends	2,487			2,543			2,551			2,560			2,480
Underwriting, acquisition and insurance expenses	27,535			36,649			39,577			37,210			30,834
Interest expense	1,213			1,212			1,213			1,213			1,212
Other expenses	4,971			4,520			5,593			5,627			5,061
Total benefits and expenses	146,045			153,411			155,735			152,972			153,900
	35,511			32,027			26,695			37,477			34,211
Income tax benefit (expense)	(9,880		)	72,000			(3,813		)	(5,831		)	(4,818		)
Equity income (loss), net of related income taxes	487			(39		)	660			1,139			1,642
Net income	26,118			103,988			23,542			32,785			31,035
Net loss (income) attributable to noncontrolling interest	9			(8		)	23			18			(25		)
Net income attributable to FBL Financial Group, Inc.	$	26,127		$	103,980		$	23,565		$	32,803		$	31,010

Comprehensive income (loss) attributable to FBL Financial Group, Inc.	$	37,639		$	116,868		$	(69,327	)	$	(22,727	)	$	(11,110	)

Earnings per common share	$	1.04		$	4.15		$	0.94		$	1.31		$	1.24
Earnings per common share - assuming dilution	$	1.04		$	4.15		$	0.94		$	1.31		$	1.24

Cash dividends per common share	$	0.44		$	0.44		$	0.46		$	0.46		$	0.46
Special cash dividend per common share	$	—		$	—		$	1.50		$	—		$	—

Weighted average common shares outstanding (in thousands):
Basic	25,037			25,039			25,004			24,917			24,919
Effect of dilutive securities	18			18			16			13			11
Diluted	25,055			25,057			25,020			24,930			24,930



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)


	Q3 2017			Q4 2017			Q1 2018			Q2 2018			Q3 2018

Net income attributable to FBL Financial Group, Inc.	$	26,127		$	103,980		$	23,565		$	32,803		$	31,010
Net income adjustments:
Impact of change in federal tax rate (1)	—			(81,157		)	—			—			(617		)
Realized gains/losses on investments (2)(3)	38			656			2,223			(694		)	603
Change in net unrealized gains/losses on derivatives (2)	(1,389		)	(476		)	509			(194		)	876
Non-GAAP operating income	$	24,776		$	23,003		$	26,297		$	31,915		$	31,872

Non-GAAP operating income per common share - assuming dilution	$0.99			$0.92			$1.05			$1.28			$1.28

Non-GAAP operating return on equity, excluding AOCI - last twelve months	10.3%			10.0%			10.0%			9.7%			10.5%
Non-GAAP operating return on equity, including AOCI - last twelve months	8.5%			8.3%			8.3%			8.1%			9.0%

	Q3 2017			Q4 2017			Q1 2018			Q2 2018			Q3 2018
Impact of Adjustments on FBL Net Income
Initial impact of the Tax Act (1)	$	—		$	81,157		$	—		$	—		$	617
Realized gains (losses) on investments and change in net unrealized gains/losses on equity securities and derivatives	1,911			(791		)	(3,995		)	1,357			(2,658		)
Offsets: (4)
Change in amortization	(20		)	(90		)	338			(226		)	725
Reserve change on interest sensitive products	187			79			199			(7		)	60
Income tax	(727		)	622			726			(236		)	394
Net impact of net income adjustments	$	1,351		$	80,977		$	(2,732	)	$	888		$	(862	)

	Q3 2017			Q4 2017			Q1 2018			Q2 2018			Q3 2018
Pre-tax non-GAAP operating income by segment:
Annuity segment	$	17,015		$	17,211		$	16,582		$	15,998		$	18,179
Life Insurance segment	12,620			9,856			10,897			16,381			11,958
Corporate and Other segment	4,556			5,694			3,533			5,434			7,999
Total pre-tax non-GAAP operating income	34,191			32,761			31,012			37,813			38,136
Income taxes on non-GAAP operating income	(9,415		)	(9,758		)	(4,715		)	(5,898		)	(6,264		)
Non-GAAP operating income	$	24,776		$	23,003		$	26,297		$	31,915		$	31,872


(1)	During the third quarter of 2018, we adjusted the provisional estimate of the impact of the Tax Act on our deferred tax assets and liabilities as of December 31, 2017. See Note 5 to our consolidated financial statements in Form 10-Q for the quarter ended September 30, 2018 for additional information.

(2) Amounts are net of offsets related to changes in amortization of unearned revenue reserves, deferred sales inducements and deferred acquisition costs, as well as changes in interest sensitive product reserves and income taxes attributable to these items.


(3)	Beginning in 2018, amount includes changes in net unrealized gains/losses on equity securities.

(4) The items excluded from non-GAAP operating income impact the amortization of deferred acquisition costs, value of business acquired and unearned revenue reserve. Certain interest sensitive reserves as well as income taxes are also impacted.

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

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
Pre-tax Non-GAAP Operating Income				(Dollars in thousands)

Non-GAAP operating revenues:
Interest sensitive product charges	$	1,115			$	1,032		$	1,202		$	1,217		$	1,280
Net investment income	53,878				56,275			56,233			55,198			54,144
Total non-GAAP operating revenues	54,993				57,307			57,435			56,415			55,424

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits	31,385				31,096			31,286			31,393			29,037
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	537				611			504			518			374
Amortization of deferred acquisition costs	505				2,690			3,065			3,070			2,319
Amortization of value of insurance in force acquired	169				169			172			172			165
Other underwriting expenses	5,382				5,530			5,826			5,264			5,350
Total underwriting, acquisition and insurance expenses	6,593				9,000			9,567			9,024			8,208
Total non-GAAP operating benefits and expenses	37,978				40,096			40,853			40,417			37,245
Pre-tax non-GAAP operating income	$	17,015			$	17,211		$	16,582		$	15,998		$	18,179

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	4,382,218			$	4,470,721		$	4,586,256		$	4,576,410		$	4,596,422
Deferred acquisition costs	91,802				92,116			92,400			92,377			92,442
Value of insurance in force acquired	3,695				3,526			3,354			3,182			3,017

Liabilities and equity:
Liabilities:
Interest sensitive product reserves	$	3,884,541			$	3,963,187		$	4,110,232		$	4,075,995		$	4,096,314
Other insurance reserves	358,691				355,877			352,747			346,270			344,963
Allocated equity, excluding AOCI	267,324				272,101			272,242			269,758			270,918

Other data:
Number of direct contracts	53,218				53,250			52,991			53,184			52,925

Portfolio yield net of assumed defaults	4.58		%		4.50		%	4.47		%	4.44		%	4.43		%
Credited rate	2.63				2.56			2.56			2.56			2.57
Spread on individual annuities at end of quarter (1)	1.95		%		1.94		%	1.91		%	1.88		%	1.86		%

Interest sensitive reserve activity:
Individual annuity reserve:
Balance, beginning of period	$	3,057,952			$	3,082,310		$	3,109,789		$	3,134,862		$	3,171,359
Deposits	55,383				66,097			76,067			76,725			53,584
Withdrawals, surrenders and death benefits	(45,450		)		(49,428		)	(60,623		)	(53,788		)	(62,234		)
Net flows	9,933				16,669			15,444			22,937			(8,650		)

Policyholder interest	21,041				20,817			20,363			20,787			20,524
Annuitizations and other	(6,616		)		(10,007		)	(10,734		)	(7,227		)	(6,352		)
Balance, end of period	3,082,310				3,109,789			3,134,862			3,171,359			3,176,881
Other interest sensitive reserves	802,231				853,398			975,370			904,636			919,433
Total interest sensitive product reserves	$	3,884,541			$	3,963,187		$	4,110,232		$	4,075,995		$	4,096,314


(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

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
Pre-tax Non-GAAP Operating Income				(Dollars in thousands)

Non-GAAP operating revenues:
Interest sensitive product charges	$	16,633			$	14,230		$	18,059		$	19,079		$	18,876
Traditional life insurance premiums	47,087				49,547			49,497			51,091			48,124
Net investment income	38,995				41,118			40,250			39,764			39,654
Other income	(88		)		(140		)	(79		)	(353		)	(108		)
Total non-GAAP operating revenues	102,627				104,755			107,727			109,581			106,546

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits:
Interest and index credits	8,289				9,506			8,393			9,093			8,697
Death benefits and other	16,569				13,204			15,241			14,709			18,475
Total interest sensitive product benefits	24,858				22,710			23,634			23,802			27,172
Traditional life insurance benefits:
Death benefits	21,530				23,707			23,735			19,297			21,888
Surrender and other benefits	7,409				8,642			10,144			10,392			8,110
Increase in traditional life future policy benefits	13,694				12,477			11,578			14,022			14,170
Total traditional life insurance benefits	42,633				44,826			45,457			43,711			44,168
Policyholder dividends	2,487				2,543			2,551			2,560			2,480
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	4,544				4,919			4,923			4,715			4,200
Amortization of deferred acquisition costs	1,122				4,816			4,436			4,498			2,148
Amortization of value of insurance in force acquired	375				375			373			373			373
Other underwriting expenses	14,536				14,448			16,151			14,833			14,907
Total underwriting, acquisition and insurance expenses	20,577				24,558			25,883			24,419			21,628
Total non-GAAP operating benefits and expenses	90,555				94,637			97,525			94,492			95,448
	$	12,072			$	10,118		$	10,202		$	15,089		$	11,098
Equity income (loss), before tax	548				(262		)	695			1,292			860
Pre-tax non-GAAP operating income	$	12,620			$	9,856		$	10,897		$	16,381		$	11,958

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	2,942,395			$	2,935,517		$	2,967,238		$	3,006,593		$	3,031,624
Deferred acquisition costs	282,116				287,421			291,212			294,365			298,368
Value of insurance in force acquired	16,279				15,904			15,531			15,157			14,784

Liabilities and equity:
Liabilities: (1)
Interest sensitive reserves	$	930,850			$	944,690		$	953,635		$	966,032		$	979,858
Other insurance reserves	1,933,051				1,951,565			1,964,649			1,976,014			1,995,675
Allocated equity, excluding AOCI	391,464				396,571			439,031			442,808			450,927



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

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
				(Dollars in thousands)
Other data:
Number of direct policies - traditional life	364,445				365,382			364,757			364,339			364,412
Number of direct policies - universal life	65,301				66,382			66,939			67,466			67,951
Direct face amounts - traditional life	$	50,435,353			$	50,841,581		$	51,159,302		$	51,524,879		$	51,833,952
Direct face amounts - universal life	$	7,124,265			$	7,275,994		$	7,383,996		$	7,483,427		$	7,539,216

Portfolio yield net of assumed defaults	5.12		%		5.07		%	5.04		%	4.99		%	4.98		%
Credited rate	3.74				3.69			3.70			3.73			3.76
Spread on universal life at end of quarter (2)	1.38		%		1.38		%	1.34		%	1.26		%	1.22		%

Interest sensitive reserve activity: (1)
Balance, beginning of period	$	916,067			$	930,850		$	944,690		$	953,635		$	966,032
Deposits	24,708				26,267			27,847			29,415			26,617
Withdrawals and surrenders	(6,668		)		(5,672		)	(8,110		)	(7,708		)	(7,577		)
Net flows	18,040				20,595			19,737			21,707			19,040

Policyholder interest	7,997				8,806			7,752			8,386			7,827
Policy charges	(18,149		)		(15,008		)	(18,807		)	(19,248		)	(19,129		)
Benefits and other	6,895				(553		)	263			1,552			6,088
Balance, end of period	$	930,850			$	944,690		$	953,635		$	966,032		$	979,858


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


(2)	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

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
Pre-tax Non-GAAP Operating Income				(Dollars in thousands)

Non-GAAP operating revenues:
Interest sensitive product charges	$	10,393			$	11,252		$	11,021		$	11,102		$	10,494
Net investment income	8,719				8,788			8,411			8,777			8,349
Other income	3,589				3,829			4,679			3,990			3,936
Total non-GAAP operating revenues	22,701				23,869			24,111			23,869			22,779

Non-GAAP operating benefits and expenses:
Interest sensitive product benefits	11,697				9,410			9,342			7,714			8,465
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals	705				716			680			667			684
Amortization of deferred acquisition costs	(2,276		)		904			2,512			1,876			(1,148		)
Other underwriting expenses	2,045				1,607			1,402			1,506			1,698
Total underwriting, acquisition and insurance expenses	474				3,227			4,594			4,049			1,234
Interest expense	1,213				1,212			1,213			1,213			1,212
Other expenses	4,971				4,520			5,593			5,627			5,061
Total non-GAAP operating benefits and expenses	18,355				18,369			20,742			18,603			15,972
	4,346				5,500			3,369			5,266			6,807
Net loss (income) attributable to noncontrolling interest	9				(8		)	23			18			(25		)
Equity income, before tax	201				202			141			150			1,217
Pre-tax non-GAAP operating income	$	4,556			$	5,694		$	3,533		$	5,434		$	7,999

Selected balance sheet data, securities at amortized cost:
Assets:
Investments	$	647,104			$	671,857		$	680,285		$	678,014		$	684,541
Deferred acquisition costs	71,038				70,247			68,202			66,315			68,101
Separate account assets	637,746				651,963			638,751			638,061			651,797

Liabilities and equity:
Liabilities:
Interest sensitive reserves	$	369,167			$	369,726		$	369,022		$	367,937		$	371,502
Other insurance reserves	94,088				93,754			91,305			89,427			89,389
Separate account liabilities	637,746				651,963			638,751			638,061			651,797
Allocated equity, excluding AOCI	385,733				420,412			351,866			369,593			379,918

Rollforward of separate account balances:
Beginning separate account balance	$	625,971			$	637,746		$	651,963		$	638,751		$	638,061
Net premiums and transfers	4,945				4,745			6,667			6,264			836
Net investment income (loss)	22,852				26,039			(3,424		)	11,995			28,717
Charges, benefits and surrenders	(16,022		)		(16,567		)	(16,455		)	(18,949		)	(15,817		)
Ending separate account balance	$	637,746			$	651,963		$	638,751		$	638,061		$	651,797

Other data:
Number of direct contracts - variable annuity	10,017				9,857			9,671			9,491			9,343
Number of direct policies - variable universal life	37,400				36,986			36,548			36,056			35,613
Direct face amounts - variable universal life	$	4,599,050			$	4,549,732		$	4,501,972		$	4,440,315		$	4,388,771



FBL Financial Group, Inc.
Deferred Acquisition Costs by Segment

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
				(Dollars in thousands)
Annuity
Balance - beginning of period	$	89,752			$	91,802		$	92,116		$	92,400		$	92,377
Cumulative effect of change in accounting principle related to net unrealized gains on equity securities	—				—			—			(103		)	—
Capitalization:
Commissions	2,226				2,681			2,972			2,892			2,119
Expenses	181				237			283			313			291
Deferral of sales inducements	173				124			129			—			—
Total capitalization	2,580				3,042			3,384			3,205			2,410
Amortization - non-GAAP operating basis, before impact of unlocking	(2,307		)		(2,762		)	(3,157		)	(3,137		)	(2,616		)
Amortization - unlocking, non-GAAP operating basis	1,752				—			—			—			249
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives and equities	25				34			57			12			22
Balance - end of period	$	91,802			$	92,116		$	92,400		$	92,377		$	92,442

Life Insurance
Balance - beginning of period	$	275,356			$	282,116		$	287,421		$	291,212		$	294,365
Cumulative effect of change in accounting principle related to net unrealized gains on equity securities	—				—			—			(357		)	—
Capitalization:
Commissions	5,122				7,250			5,505			5,068			4,279
Expenses	2,298				2,309			2,391			2,559			2,257
Deferral of sales inducements	93				595			355			257			163
Total capitalization	7,513				10,154			8,251			7,884			6,699
Amortization - non-GAAP operating basis, before impact of unlocking	(5,172		)		(4,973		)	(4,566		)	(4,679		)	(4,416		)
Amortization - unlocking, non-GAAP operating basis	4,351				—			—			—			2,009
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives and equities	68				124			106			305			(289		)
Balance - end of period	$	282,116			$	287,421		$	291,212		$	294,365		$	298,368

Corporate and Other
Balance - beginning of period	$	68,546			$	71,038		$	70,247		$	68,202		$	66,315
Cumulative effect of change in accounting principle related to net unrealized gains on equity securities	—				—			—			(30		)	—
Capitalization:
Commissions	83				113			142			120			86
Deferral of sales inducements	—				7			4			2			2
Total capitalization	83				120			146			122			88
Amortization - non-GAAP operating basis, before impact of unlocking	(907		)		(902		)	(2,568		)	(1,910		)	(1,240		)
Amortization - unlocking, non-GAAP operating basis	3,292				—			—			—			2,458
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives and equities	24				(9		)	377			(69		)	480
Balance - end of period	$	71,038			$	70,247		$	68,202		$	66,315		$	68,101



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

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
				(Dollars in thousands)
Total
Balance - beginning of period	$	433,654			$	444,956		$	449,784		$	451,814		$	453,057
Cumulative effect of change in accounting principle related to net unrealized gains on equity securities	—				—			—			(490		)	—
Capitalization:
Commissions	7,431				10,044			8,619			8,080			6,484
Expenses	2,479				2,546			2,674			2,872			2,548
Deferral of sales inducements	266				726			488			259			165
Total capitalization	10,176				13,316			11,781			11,211			9,197
Amortization - non-GAAP operating basis, before impact of unlocking	(8,386		)		(8,637		)	(10,291		)	(9,726		)	(8,272		)
Amortization - unlocking, non-GAAP operating basis	9,395				—			—			—			4,716
Amortization - realized gains/losses on investments and unrealized gains/losses on derivatives and equities	117				149			540			248			213
Balance - end of period	444,956				449,784			451,814			453,057			458,911
Impact of unrealized gains in AOCI	(142,109		)		(147,173		)	(93,953		)	(65,530		)	(46,865		)
Deferred acquisition costs	$	302,847			$	302,611		$	357,861		$	387,527		$	412,046



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

	Q3 2017				Q4 2017		Q1 2018		Q2 2018		Q3 2018
				(Dollars in thousands)
Annuity Segment
Amortization of deferred sales inducements reported in interest sensitive product benefits	$	10			$	—	$	—	$	—	$	13
Amortization of deferred acquisition costs	1,743				—		—		—		236
Changes in reserves reported in interest sensitive product benefits	(228		)		—		—		—		—
Increase to pre-tax non-GAAP operating income	$	1,525			$	—	$	—	$	—	$	249

Life Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges and other income	$	(1,166	)		$	—	$	—	$	—	$	420
Amortization of deferred sales inducements reported in interest sensitive product benefits	422				—		—		—		(209		)
Amortization of deferred sales inducements reported in traditional life insurance benefits	55				—		—		—		65
Amortization of deferred acquisition costs	3,873				—		—		—		2,152
Changes in reserves reported in interest sensitive product benefits	(5,574		)		—		—		—		(4,755		)
Decrease to pre-tax non-GAAP operating income	$	(2,390	)		$	—	$	—	$	—	$	(2,327	)

Corporate and Other Segment
Amortization of unearned revenue reserve reported in interest sensitive product charges	$	(579	)		$	—	$	—	$	—	$	(667	)
Amortization of deferred sales inducements reported in interest sensitive product benefits	98				—		—		—		76
Amortization of deferred acquisition costs	3,194				—		—		—		2,382
Changes in reserves reported in interest sensitive product benefits	(799		)		—		—		—		—
Increase to pre-tax non-GAAP operating income	$	1,914			$	—	$	—	$	—	$	1,791

Total impact of unlocking on pre-tax non-GAAP operating income	$	1,049			$	—	$	—	$	—	$	(287	)



FBL Financial Group, Inc.
Collected Premiums (1)

	Q3 2017				Q4 2017			Q1 2018			Q2 2018			Q3 2018
				(Dollars in thousands)
Annuity
Individual:
Fixed rate:
First year	$	12,853			$	17,575		$	17,554		$	22,514		$	14,593
Renewal	14,839				18,621			20,875			16,446			11,371
Total fixed rate	27,692				36,196			38,429			38,960			25,964
Index annuity	28,118				30,174			37,665			37,442			29,183
Total individual	55,810				66,370			76,094			76,402			55,147
Group	2,323				2,115			2,716			3,436			1,186
Total Annuity	58,133				68,485			78,810			79,838			56,333

Life Insurance
Direct:
Universal life:
First year	7,331				4,746			7,157			7,962			7,140
Renewal	17,216				18,868			19,848			20,602			18,887
Total universal life	24,547				23,614			27,005			28,564			26,027
Participating whole life:
First year	2,446				3,304			2,695			3,537			3,249
Renewal	22,736				24,058			24,281			24,244			22,269
Total participating whole life	25,182				27,362			26,976			27,781			25,518
Term life and other:
First year	2,529				2,738			2,718			2,751			2,513
Renewal	24,947				25,583			26,620			26,538			25,995
Total term life and other	27,476				28,321			29,338			29,289			28,508
Total direct life insurance	77,205				79,297			83,319			85,634			80,053
Reinsurance	(5,991		)		(6,902		)	(7,056		)	(7,734		)	(6,186		)
Total Life Insurance	71,214				72,395			76,263			77,900			73,867

Corporate and Other
Variable, net of reinsurance	12,204				12,554			14,529			13,575			11,424
Accident and health, net of reinsurance	98				217			55			42			43
Total Corporate and Other	12,302				12,771			14,584			13,617			11,467

Total collected premiums	$	141,649			$	153,651		$	169,657		$	171,355		$	141,667


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



FBL Financial Group, Inc.
Other Information

	September 30,				December 31,			March 31,			June 30,			September 30,
	2017				2017			2018			2018			2018
				(Dollars in thousands, except per share data)

Capitalization:
Short-term debt	$	—			$	—		$	—		$	27,000		$	—
Trust preferred securities, due 2047	97,000				97,000			97,000			97,000			97,000
Total debt	97,000				97,000			97,000			124,000			97,000

Preferred stock	3,000				3,000			3,000			3,000			3,000
Common stockholders' equity, excluding AOCI	1,044,521				1,089,084			1,063,139			1,082,159			1,101,762
Total capitalization, excluding AOCI	1,144,521				1,189,084			1,163,139			1,209,159			1,201,762

Accumulated other comprehensive income	223,869				284,983			186,222			131,081			88,961
Total capitalization, including AOCI	$	1,368,390			$	1,474,067		$	1,349,361		$	1,340,240		$	1,290,723

Common shares outstanding	24,933,510				24,930,526			24,837,976			24,818,209			24,818,209

Book Value per Share:
Excluding AOCI	$	41.89			$	43.68		$	42.80		$	43.60		$	44.39
Including AOCI	50.87				55.12			50.30			48.89			47.98

Debt-to-Capital Ratio:
Excluding AOCI	8.4		%		8.1		%	8.3		%	10.2		%	8.1		%
Including AOCI	7.1				6.5			7.1			9.2			7.5

Debt-to-Capital Ratio with 50% Credit for Trust Preferred Securities:
Excluding AOCI	4.2		%		4.0		%	4.1		%	5.1		%	4.0		%
Including AOCI	3.5				3.3			3.6			4.6			3.8

Class A Common Ownership:
Iowa Farm Bureau Federation	59.2		%		59.2		%	59.5		%	59.5		%	59.5		%
Public	40.8				40.8			40.5			40.5			40.5
	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,
	2017		2017		2018		2018		2018

Investment by Type:
Fixed maturity securities	62.3	%	60.7	%	59.3	%	58.0	%	57.2	%
Residential mortgage-backed	5.6		6.0		6.4		7.0		7.2
Commercial mortgage-backed	7.8		8.2		9.2		10.1		10.2
Other asset-backed	9.2		9.7		9.5		9.2		9.0
Mortgage loans	10.9		11.3		11.3		11.5		12.0
Equity securities	1.5		1.5		1.2		1.2		1.2
Other	2.7		2.6		3.1		3.0		3.2

Quality of Fixed Maturity Securities:
AAA, AA, A	64.4	%	65.4	%	66.1	%	67.6	%	68.0	%
BBB	32.0		31.1		30.4		29.5		29.2
BB	2.5		2.4		2.5		2.0		1.8
<BB	1.1		1.1		1.0		0.9		1.0

Agent Strength Totals:
Full time agents and agency managers:
8-state Farm Bureau Property & Casualty channel	1,213		1,192		1,168		1,132		1,145
6 life partner states and Colorado	653		648		657		655		665
	1,866		1,840		1,825		1,787		1,810



FBL Financial Group, Inc.
Income Taxes
(Dollars in thousands)

	Q3 2017			Q4 2017			Q1 2018			Q2 2018			Q3 2018

Income tax benefit (expense)	$	(9,880	)	$	72,000		$	(3,813	)	$	(5,831	)	$	(4,818	)
Tax on equity income	(262		)	21			(176		)	(303		)	(435		)
Net income adjustments:
Impact of change in federal tax rate	—			(81,157		)	—			—			(617		)
Income tax offset on net income adjustments	727			(622		)	(726		)	236			(394		)
Income taxes on non-GAAP operating income	$	(9,415	)	$	(9,758	)	$	(4,715	)	$	(5,898	)	$	(6,264	)

Income taxes on non-GAAP operating income before benefits of LIHTC investments	$	(10,755	)	$	(10,770	)	$	(5,642	)	$	(6,824	)	$	(7,148	)
Amounts related to LIHTC investments	1,340			1,012			927			926			884
Income taxes on non-GAAP operating income	$	(9,415	)	$	(9,758	)	$	(4,715	)	$	(5,898	)	$	(6,264	)

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