FBL Financial Group Inc. (NYSE:FFG) filed Quarterly Report for the period ended 2009-03-31.
FBL FINANCIAL GROUP INC. is a holding company and hrough its subsidiaries underwrites markets and distributes life insurance annuities property-casualty insurance and mutual funds to individuals and small businesses in 15 midwestern and western states. The Company has exclusive marketing arrangements with the state Farm Bureau Federations in its territory and targets sales to approximately 700000 Farm Bureau member families and other rural small town andsuburban residents through an exclusive agency force. The Company offers a full range of life insurance products. FBL Financial Group Inc. has a market cap of $202.1 million; its shares were traded at around $6.7 with a P/E ratio of 4.8 and P/S ratio of 0.3. The dividend yield of FBL Financial Group Inc. stocks is 7.5%. FBL Financial Group Inc. had an annual average earning growth of 9.1% over the past 10 years.
Highlight of Business Operations:Net income (loss) attributable to FBL Financial Group, Inc. (FBL Net Income (Loss)) was ($1.5) million in the first quarter of 2009 compared to $6.4 million for the 2008 period. As discussed in detail below, this decrease was primarily due to the impact of increased surrender activity in the Traditional Annuity Independent Distribution segment and poor equity market performance on the Variable segment. These items are partially offset by lower death benefits and the impact of an increase in the volume of business in force in the Traditional Annuity Exclusive Distribution and Traditional and Universal Life Insurance segments. The increase in volume of business in force is quantified by summarizing the face amount of insurance in force for traditional life products or account values of contracts in force for interest sensitive products. The face amount of life insurance in force represents the gross death benefit payable to policyholders and account value represents the value of the contract to the contract holder before application of surrender charges or reduction for any policy loans outstanding. The following discussion provides additional details on the items impacting FBL Net Income (Loss).
FBL Net Income (Loss) totaled ($1.5) million in 2009 and $6.4 million in 2008. A detailed discussion of changes in FBL Net Income (Loss) is included below.
Surrender charges totaled $17.9 million in the three months ended March 31, 2009 and $6.1 million in the 2008 period. Surrender charges increased primarily due to an increase in surrenders relating to the impact of MVAs on certain products sold by our EquiTrust Life independent distribution, as discussed in the Impact of Recent Business Environment section above, and also due to growth in the volume and aging of business in force.
Traditional premiums increased due to an increase in the volume of business in force. The increase in the business in force is primarily attributable to sales of traditional life products by our Farm Bureau Life agency force exceeding the loss of in force amounts through deaths, lapses and surrenders. Our average aggregate traditional life insurance in force, net of reinsurance ceded, totaled $23,203.4 million for the three-month period in 2009 and $21,355.4 million for the three-month period in 2008. The change in life insurance in force is not proportional to the change in premium income due to a shift in the composition of our traditional life block of business from whole life policies to term policies. The premium for a term policy per $1,000 face amount is less than that for a whole life policy.
Net investment income, which excludes investment income on separate account assets relating to variable products, increased 9.2% in the first quarter of 2009 to $184.1 million primarily due to an increase in average invested assets. Average invested assets in the three-month period of 2009 increased 10.0% to $12,446.5 million (based on securities at amortized cost) from $11,317.6 million in the 2008 period, due principally to net premium inflows from the Life Companies during the twelve-month period ended March 31, 2009. The annualized yield earned on average invested assets decreased to 6.09% in the three months ended March 31, 2009 from 6.14% in the respective 2008 period. The decrease in yield is primarily due to holding higher cash and short-term investment balances in order to maintain a more liquid position during a period of increased surrender activity. In addition, short-term interest rates have declined significantly. The yield on our primary short-term investment account was 0.19% at March 31, 2009 compared to 3.20% at March 31, 2009.
Fee income from bond calls, tender offers and mortgage loan prepayments totaled $0.1 million in the three months ended March 31, 2009 compared to $1.3 million in the respective 2008 period. Net investment income also includes $1.3 million in the three months ended March 31, 2009 compared to less than $0.1 million in the 2008 respective period of acceleration of net discount accretion on mortgage and asset-backed securities resulting from changing prepayment speed assumptions at the end of each respective period.
Read the The complete ReportFFG is in the portfolios of Third Avenue Management, Richard Pzena of Pzena Investment Management LLC.