FBL Financial Group Reports First Quarter 2004 Results.Business Editors WEST DES MOINES West Des Moines (də moin`), city (1990 pop. 31,702), Polk co., S central Iowa, a growing suburb W of Des Moines; inc. 1893 as Valley Junction, renamed 1938. Products manufactured there include cement, metal items, and pumps. , Iowa--(BUSINESS WIRE)--April 28, 2004 FBL FBL Full Bell Lines (coin grading) FBL Fly by Light FBL FIATA Bill of Lading FBL Functional Baseline FBL Foundation for a Better Life FBL Federal Barge Lines, Inc. Financial Group, Inc. (NYSE NYSE See: New York Stock Exchange :FFG FFG Forschungsförderungsgesellschaft (German: Austrian research promotion agency) FFG Flash Flood Guidance FFG Guided Missile Frigate FFG Fall from Grace (band) FFG Fast Frigates FFG Freeware Flight Group ):
Financial Highlights
(Dollars in thousands, except per share data)
----------------------------------------------------------------------
Three Months Ended
March 31,
2004 2003
------------------
Net income applicable to common stock $13,144 $10,840
Operating income applicable to common stock
13,354 14,395
Earnings per common share (assuming
dilution):
Net income 0.45 0.38
Operating income 0.46 0.51
----------------------------------------------------------------------
FBL Financial Group, Inc. (NYSE:FFG) today announced that diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per common share totaled $0.45 ($13,144,000) for the quarter ended March 31, 2004, compared to $0.38 ($10,840,000) in the year ago quarter. Net income includes the impact of realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses on investments, which totaled a loss of $0.01 per share in the first quarter of 2004 and a loss of $0.13 per share in the first quarter of 2003. Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (a). Operating income, which excludes the impact of realized gains and losses on investments, totaled $13,354,000 for the quarter ended March 31, 2004, versus $14,395,000 in the first quarter of 2003. Diluted operating income per common share totaled $0.46 in the first quarter of 2004, compared to $0.51 in the first quarter of 2003. The decrease in operating income for the first quarter of 2004 is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increases in death benefits and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and decreases in equity income and investment fee income. (a) In addition to net income, FBL Financial Group has consistently utilized operating income, a non-GAAP financial measure commonly used in the life insurance industry, as a primary economic measure to evaluate its financial performance. Operating income equals net income adjusted to eliminate the impact of realized gains and losses on investments. Because realized gains and losses on investments may fluctuate greatly from quarter to quarter, FBL believes a measure excluding their impact is useful in analyzing core operating trends. FBL believes the combined presentation and evaluation of operating income, together with net income, provides information that may enhance an investor's understanding of FBL's underlying results and profitability. A reconciliation of net income to operating income is provided in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. tables. Commenting on FBL's first quarter results, Chief Executive Officer Bill Oddy stated, "As expected, results for the first quarter were down in comparison to the high level achieved in 2003. Death benefits, which can fluctuate on a quarterly basis, were up, and like others in the industry, we are experiencing lower investment yields. Our traditional Farm Bureau Life distribution channel continues to represent the majority of our business, but we are also now investing in growing our EquiTrust Life distribution channel. This channel, along with our variable alliance partnerships, experienced excellent growth in premiums collected during the quarter." Product Revenues Up Seven Percent. Premiums and product charges for the first quarter of 2004 increased seven percent to $55,827,000 compared to $52,082,000 in the first quarter of 2003. Interest sensitive and index product charges increased seven percent while traditional life insurance premiums increased eight percent, due to an increase in the volume of business in force. Premiums collected totaled $227,125,000 in the first quarter of 2004 compared to $260,896,000 in the first quarter of 2003. Premiums assumed under traditional and universal life and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. coinsurance A provision of an insurance policy that provides that the insurance company and the insured will apportion between them any loss covered by the policy according to a fixed percentage of the value for which the property, or the person, is insured. agreements continue to contribute significantly to total premiums collected, but declined to $76,129,000 in the first quarter of 2004 from $125,106,000 in the first quarter of 2003. Excluding the impact of these coinsurance agreements, collected premiums increased 11 percent, primarily due to sales by EquiTrust Life Insurance Company's new distribution channel. Investment Income. Net investment income in the first quarter of 2004 increased slightly to $98,546,000 from $97,947,000 in the first quarter of 2003. This increase is due to an increase in average invested assets resulting from premium inflows from a coinsurance agreement and from FBL's Farm Bureau and EquiTrust distribution channels. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. yield earned on average invested assets was 6.34 percent for the three months ended March 31, 2004, compared to 7.33 percent for the first quarter of 2003. The first quarter 2004 yield reflects the impact of a decline in market interest rates and a decrease in fee income from bond calls and mortgage loan prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. and the impact of changing prepayments speeds on mortgage and asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. at quarter end. This fee income (loss) totaled a loss of $156,000 in the first quarter of 2004 compared to fee income of $5,356,000 in the first quarter of 2003. Expecting a decline in this fee income, FBL assumes no prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. fee income in its 2004 earnings guidance. Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. Income. FBL's derivative income totaled $4,212,000 in the first quarter of 2004, compared to a derivative loss of $5,073,000 in the first quarter of 2003. The increase in 2004 derivative income is due primarily to proceeds from option settlements from the call options purchased to fund returns on index annuities. These proceeds reflect the general increase in the underlying equity market indices on which the options are based. Gains and losses on these call options and proceeds from option settlements are offset by changes in the value of the embedded Inserted into. See embedded system. derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. in the underlying index contracts and index credits to the contract holders, which are recorded as a component of interest sensitive and index product benefits. Realized Gains on Investments. In the first quarter of 2004, FBL recognized net realized gains on investments of $64,000. This compares to net realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. on investments of $5,632,000 in the first quarter of 2003. First quarter 2004 realized gains include realized gains from sales of securities of $2,333,000, realized losses from sales of securities of $410,000 and realized losses from the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of securities that became other-than-temporarily impaired See assistive technology. of $1,859,000. Benefits and Expenses. Benefits and expenses totaled $143,640,000 in the first quarter of 2004, compared to $125,290,000 in the first quarter of 2003. This increase is due primarily to an increase in the volume of annuity business in force and an increase in death benefits, which can fluctuate on a quarterly basis, partially offset by a reduction in crediting rates on interest sensitive products. Additionally, other underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , acquisition and insurance expenses increased and include approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $800,000 in expenses associated with the expansion of the EquiTrust Life distribution channel. Interest expense increased primarily due to the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of dividends on company-obligated mandatorily redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. of subsidiary trust and Series C preferred stock beginning in the third quarter of 2003 in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting standards adopted late in 2003. In conjunction with the adoption of these standards, the Series C redeemable preferred stock and the subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the company-obligated mandatorily redeemable preferred stock were reclassified to debt on the consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . Income from Equity Investments. Equity income, net of related income taxes, was $255,000 in the first quarter of 2004, compared to $779,000 in the first quarter of 2003. Included in equity income is FBL's share of income and losses from investments in various partnerships and joint ventures, the majority of which are booked a quarter in arrears Adv. 1. in arrears - in debt; "he fell behind with his mortgage payments"; "a month behind in the rent"; "a company that has been run behindhand for years"; "in arrears with their utility bills" behindhand, behind . Due to the nature of these investment partnerships, it is not unusual to experience fluctuations on a quarter-to-quarter basis. Prior to 2004, equity income included FBL's share of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Equity Investment Life Holding Company's earnings, which totaled $801,000, net of taxes, in the first quarter of 2003. Following American Equity's initial public offering in December December: see month. 2003, FBL's ownership percentage decreased. As a result, FBL no longer accounts for its investment under the equity method of accounting and this investment in American Equity is now marked to market in accordance with FAS 115. Operating Results by Segment. FBL's operating results for the first quarter of 2004 reflect a three percent increase in pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta operating income for the traditional and universal life insurance segment, while the other product segments experienced a decline in pre-tax operating results. Further detail by segment is provided in FBL's financial supplement, which is available on FBL's web site, www.fblfinancial.com. Assets Total $8.2 Billion. Total assets increased $296 million to $8.2 billion at March 31, 2004, from $7.9 billion at December 31, 2003. At March 31, 2004, 94 percent of the fixed maturity securities in FBL's investment portfolio were investment grade debt securities. Book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: , with securities at market, increased eight percent to $28.60 at March 31, 2004, from $26.42 at December 31, 2003. Subsequent Event - Senior Note Offering. On April 12, 2004, FBL Financial Group issued $75,000,000 of 5.85% Senior Notes due April 15, 2014. Interest on the notes will be paid semi-annually beginning October October: see month. 15, 2004. Earnings Outlook. While subject to volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the resulting from a number of factors, including mortality experience and investment results, FBL reiterates its full year 2004 net income and operating income guidance of a range of $2.00 to $2.10 per common share. Conference Call. FBL management will hold a conference call with investors to discuss first quarter 2004 results. The call will be held tomorrow, April 29, 2004, at 11 a.m. Eastern Time. The call will be webcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , and a replay will be available on FBL's web site, www.fblfinancial.com. The statements in this release concerning FBL's prospects for the future are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve certain risks and uncertainties, including the continued acceptance of FBL's insurance products by customers, the continued success of FBL's marketing efforts, the marketing success of FBL's alliance partners, and fluctuations in mortality experience and investment results. These forward-looking statements are based on assumptions which FBL Financial Group believe to be reasonable. No assurance can be given that the assumptions will prove to be correct, and the difference between assumptions and actual results could be material. FBL Financial Group (www.fblfinancial.com) is a holding company whose primary operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. are Farm Bureau Life Insurance Company and EquiTrust Life Insurance Company. FBL underwrites, markets and distributes life insurance, annuities and mutual funds to individuals and small businesses. In addition, FBL manages all aspects of three Farm Bureau affiliated property-casualty insurance companies for a management fee. FBL's three-pronged Adj. 1. three-pronged - having three prongs divided - separated into parts or pieces; "opinions are divided" growth strategy includes (1) internal growth within its traditional Farm Bureau distribution network, (2) alliances and other distribution channels and (3) consolidations.
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
March 31,
2004 2003
----------- -----------
REVENUES
Interest sensitive and index product charges $22,019 $20,622
Traditional life insurance premiums 33,734 31,373
Accident and health premiums 74 87
Net investment income 98,546 97,947
Derivative income (loss) 4,212 (5,073)
Realized gains (losses) on investments 64 (5,632)
Other income 4,701 4,009
----------- -----------
Total revenues 163,350 143,333
BENEFITS AND EXPENSES
Interest sensitive and index product benefits 63,270 54,981
Traditional life insurance and accident and
health benefits 21,825 19,635
Increase in traditional life and accident and
health future policy benefits 6,732 7,397
Distributions to participating policyholders 6,723 7,656
Underwriting, acquisition and insurance
expenses 38,359 31,979
Interest expense 2,033 118
Other expenses 4,698 3,524
----------- -----------
Total benefits and expenses 143,640 125,290
----------- -----------
19,710 18,043
Income taxes (6,720) (5,613)
Minority interest in earnings of subsidiaries:
Dividends on company-obligated mandatorily
redeemable preferred stock of subsidiary
trust - (1,213)
Other (63) (50)
Equity income, net of related income taxes 255 779
----------- -----------
Net income 13,182 11,946
Dividends on Series B and C preferred stock (38) (1,106)
----------- -----------
Net income applicable to common stock $13,144 $10,840
=========== ===========
Earnings per common share - assuming dilution $0.45 $0.38
=========== ===========
Weighted average common shares 28,391,050 27,825,165
Effect of dilutive securities 641,285 479,066
----------- -----------
Weighted average common shares - diluted 29,032,335 28,304,231
=========== ===========
FBL FINANCIAL GROUP, INC.
RECONCILIATION OF NET INCOME TO OPERATING INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
March 31,
2004 2003
-------- ---------
Net income applicable to common stock $13,144 $10,840
Adjustment:
Net realized gains/losses on investments (1) 210 3,555
-------- ---------
Operating income applicable to common stock $13,354 $14,395
======== =========
Operating earnings per common share - assuming
dilution $0.46 $0.51
======== =========
(1) Net of adjustments for that portion of amortization of deferred
policy acquisition costs, deferred sales inducements, value of
insurance in force acquired, unearned revenue reserve and income taxes
attributable to such gains/losses.
FBL FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share data)
March 31, December 31,
2004 2003
----------- -------------
Assets
Investments $6,625,500 $6,341,701
Cash and cash equivalents 221,402 233,858
Deferred policy acquisition costs 519,008 530,580
Deferred sales inducements 38,448 39,143
Other assets 358,875 340,016
Assets held in separate accounts 481,950 463,772
----------- -------------
Total assets $8,245,183 $7,949,070
=========== =============
Liabilities and stockholders' equity
Policy liabilities and accruals $5,894,211 $5,780,251
Other policyholders' funds 537,097 521,816
Debt 186,568 185,480
Other liabilities 324,574 249,763
Liabilities related to separate accounts 481,950 463,772
----------- -------------
Total liabilities 7,424,400 7,201,082
Minority interest in subsidiaries 181 161
Stockholders' equity 820,602 747,827
----------- -------------
Total liabilities and stockholders' equity $8,245,183 $7,949,070
=========== =============
Book Value Per Share, securities at market $28.60 $26.42
=========== =============
Book Value Per Share, securities at cost (2) $22.42 $22.11
=========== =============
Common Shares Outstanding 28,584,503 28,190,918
=========== =============
(2) Book value per share with securities at cost, a non-GAAP financial
measure, is based on stockholders' equity excluding the effect of
accumulated other comprehensive income, which was $176.7 million at
March 31, 2004 and $121.6 million at December 31, 2003. Since
accumulated other comprehensive income fluctuates from quarter to
quarter due to unrealized changes in the fair market value of
investments caused principally by changes in market interest rates,
FBL believes this non-GAAP financial measure provides useful
supplemental information.
FFG-1 |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion