A.M. Best Downgrades and Assigns Negative Outlook to Ratings of FBL Financial Group.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating (FSR) to A- (Excellent) from A (Excellent) and the issuer credit rating (ICR) to "a-" from "a+" of Farm Bureau Life Insurance Company (FB Life). A.M. Best also has downgraded the FSR to A- (Excellent) from A (Excellent) and the ICR to "a-" from "a" of its affiliate, EquiTrust Life Insurance Company (EquiTrust).

Concurrently, A.M. Best has downgraded the ICR and debt ratings to "bbb-"from "bbb" of FBL Financial Group, Inc. (FFG) [NYSE: FFG], the ultimate parent of FB Life and EquiTrust. All ratings have been assigned a negative outlook. All companies are located in West Des Moines, IA.

The rating actions reflect FFG's reduced level of financial flexibility, the rapid growth in annuity reserves within the organization and the losses reported through the second quarter 2008, due primarily to investment impairments. FFG's rapid growth, which exceeded A.M. Best's expectations, has led to heightened interest rate risk and a high level of intangibles to equity. A sizable unrealized loss position in its fixed income portfolio exists as assets rapidly increased during a period of historically low interest rates. In addition, A.M. Best believes that spread management will continue to be a challenge for FFG.

The significant annuity growth experienced at EquiTrust has been supported through capital contributions from FFG, primarily from the issuance of debt and originally from ongoing dividend payments from FB Life to its parent and the issuance of debt. While debt to capital and fixed charge coverage is within acceptable levels, A.M. Best notes that additional leverage may be needed. In the current uncertain credit environment, access to capital has proven difficult as liquidity has become increasingly scarce.

EquiTrust Life's interest-sensitive liabilities have shown significant growth, through sales of both indexed annuity products, and more recently, through sales of multi year guaranteed fixed annuities. A.M. Best remains cautious over the potential declines in the industry's future indexed annuity sales and its impact on earnings given the increasing demands to comply with the prevailing heightened regulatory environment. While the company's risk-adjusted capitalization is presently viewed as adequate, continued rapid growth and further investment impairments would weaken its capital position.

The ratings continue to recognize FB Life's more balanced business profile between life and annuity reserves, strong affinity within the Farm Bureau market and stable profitability trends. The ratings also recognize EquiTrust's rational product design, competent hedging programs and proactive market conduct and compliance programs.

The negative outlook reflects A.M. Best's concern with the reduced level of financial flexibility within the organization in the current unfavorable credit environment. Given the volatility in capital markets, additional losses could be realized, further weakening FFG's financial flexibility.

The following debt ratings have been downgraded:

FBL Financial Group Inc--

-- to "bbb-"from "bbb" on $75 million 5.85% senior unsecured notes, due 2014 -- to "bbb-" from "bbb" on $100 million 5.875% senior unsecured notes, due 2017.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.