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FBL Financial Group Inc. Reports Operating Results (10-Q)

May 05, 2010 | About:

FBL Financial Group Inc. (NYSE:FFG) filed Quarterly Report for the period ended 2010-03-31.

Fbl Financial Group Inc. has a market cap of $757.3 million; its shares were traded at around $24.82 with a P/E ratio of 8.4 and P/S ratio of 0.7. The dividend yield of Fbl Financial Group Inc. stocks is 1%.FFG is in the portfolios of Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Premiums and product charges decreased 12.4% in the first quarter of 2010 to $69.2 million primarily due to a reduction in surrender charges on annuity products. In addition, premium and product charges declined as a result of the sale of a block of coinsured business in the fourth quarter of 2009. Surrender charges totaled $7.0 million in the three months ended March 31, 2010 and $17.9 million in the 2009 period. Net surrender charges decreased on certain products sold by our EquiTrust Life independent distribution as noted in the "Impact of Recent Business Environment" section above.

Traditional life insurance 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 $25,245.7 million for the three-month period in 2010 and $23,203.4 million for the three-month period in 2009. 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, decreased 3.2% in the first quarter of 2010 to $178.1 million. The decrease for the quarter is primarily due to the decrease in average invested assets and a decrease in short-term interest rates. Average invested assets in the three-month period of 2010 decreased 2.1% to $12,186.8 million (based on securities at amortized cost) from $12,446.5 million in the 2009 period, principally due to the net cash outflows from EquiTrust Life, partially offset by net cash inflows from Farm Bureau Life during the fifteen-month period ended March 31, 2010. EquiTrust Life had net cash outflows in 2009 due to the reduction in sales to preserve capital, increased surrender activity from the independent distribution channel and assets transferred in connection with the sale of a block of coinsured business. The annualized yield earned on average invested assets decreased to 6.02% in the three months ended March 31, 2010 from 6.09% in the respective 2009 period. The decrease in yield is primarily due to holding higher cash and short-term investment balances and a reduction in short-term interest rates. The yield on our primary short-term investment account was less than 0.01% at March 31, 2010 compared to 0.19% at March 31, 2009.

Fee income from bond calls, tender offers and mortgage loan prepayments totaled $0.4 million in the three months ended March 31, 2010 compared to $0.1 million in the respective 2009 period. Net investment income also includes less than $0.1 million in the three months ended March 31, 2010 compared to $1.3 million in the 2009 respective period representing the change of net discount accretion on mortgage and asset-backed securities resulting from changing prepayment speed assumptions at the end of each respective period. See the "Financial Condition - Investments" section that follows for a description of how changes in prepayment speeds impact net investment income.

Traditional life insurance benefits increased 14.3% in the first quarter of 2010 to $42.0 million. The increase in 2010 is primarily due to an increase in death benefits, which totaled $17.8 million in the first quarter of 2010, compared to $12.7 million in the 2009 period. The increase in traditional life insurance benefits is partially offset by a decrease in interest sensitive death benefits noted above. In total, mortality experience was comparable quarter to quarter. Traditional life insurance benefits can fluctuate from period to period primarily as a result of changes in mortality experience. The change in traditional life future policy benefits may not be proportional to the change in traditional premiums and benefits as reserves on term policies are generally less than reserves on whole life policies.

Interest expense decreased 11.7% to $6.1 million in the first quarter of 2010, primarily due to a decrease in our average debt outstanding. The average debt outstanding decreased to $371.1 million for the three months ended March 31, 2010 from $400.9 million for the 2009 period due to the pay-off of our $60.0 million revolving line of credit borrowings in February 2009.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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