FBL Financial Group Reports Fourth Quarter 2006 Results.Net Income Up 16 Percent to $0.80 Per Share WEST DES MOINES, Iowa West Des Moines is a city in Polk, Dallas, and Warren counties in the U.S. state of Iowa. As of the 2000 census, the city population was 46,403; a special census taken in the spring of 2005 counted 51,744 residents. -- 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 ): [TABLE OMITTED] 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 $0.80 ($23,949,000) for the quarter ended December December: see month. 31, 2006, compared to $0.69 ($20,285,000) in the year ago quarter. 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. (1). Operating income increased to $22,586,000 for the quarter ended December 31, 2006, from $20,484,000 in the fourth quarter of 2005. Diluted operating income per common share increased nine percent to $0.75 in the fourth quarter of 2006 from $0.69 in the fourth quarter of 2005. Operating income differs from the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, net income, in that it excludes the impact of realized/unrealized gains and losses on investments, the change in net unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on 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. and for 2006, a lawsuit lawsuit: see procedure; tort. settlement. For further information on this non-GAAP financial measure, please refer to Note (1) and the reconciliation provided within this release. Commenting on FBL's fourth quarter results, Chief Executive Officer Jim Noyce stated, "Strong fourth quarter results mark the end of an excellent 2006 for FBL Financial Group. For the full year we achieved record net income of $3.01 per share and record operating income of $2.78 per share. Our premiums collected increased 60 percent to $2.3 billion, and total assets grew by 20 percent to $12.2 billion. These excellent results were achieved because of the combined strengths our subsidiaries Farm Bureau Life Insurance Company and EquiTrust Life Insurance Company." Noyce added, "As we move forward in 2007, I am excited about our prospects and believe we are well-positioned with our solid base in Farm Bureau Life and our growing EquiTrust Life business." Product Revenues Up. Premiums and product charges for the fourth quarter of 2006 increased seven percent to $61,300,000 from $57,232,000 in the fourth quarter of 2005. Interest sensitive and index product charges increased eight percent due primarily to an increase in the volume and aging of business in force, while traditional life insurance premiums increased seven percent. Premiums collected in the fourth quarter of 2006 increased 59 percent to $572,516,000 from $360,071,000 in the fourth quarter of 2005. This increase is due to growth in FBL's EquiTrust Life independent channel, which had $454,518,000 of premiums collected in the fourth quarter of 2006. Premiums collected from FBL's exclusive Farm Bureau Life distribution channel totaled $108,327,000 in the fourth quarter of 2006, reflecting a five percent increase in traditional and universal life insurance sales, a three percent increase in variable sales, and a 10 percent decline in traditional 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. sales. Investment Income. Net investment income in the fourth quarter of 2006 increased 20 percent to $147,106,000 from $123,070,000 in the fourth quarter of 2005. This increase is due to an increase in average invested assets resulting primarily from inflows from Farm Bureau Life and EquiTrust Life. 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, with securities at cost, was 6.07 percent for the year ended December 31, 2006, compared to 6.22 percent for the same period of 2005. 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 $46,897,000 in the fourth quarter of 2006, compared to $3,580,000 in the fourth quarter of 2005. This increase reflects the impact of an increase in the value of the underlying equity market indices on which call options supporting FBL's index annuity business are based. Benefits and Expenses. Benefits and expenses totaled $228,818,000 in the fourth quarter of 2006, compared to $159,589,000 in the fourth quarter of 2005. The increase in benefits and expenses is primarily attributable to higher index product benefits resulting from an increase in the volume of business and from appreciation in the value of underlying equity market indices supporting the index annuity business. Operating Results by Segment. Consistent with prior quarters, the majority of FBL's operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the fourth quarter of 2006 are attributable to the traditional annuity and traditional and universal life insurance segments. Further detail and results by segment are provided in FBL's financial supplement, which is available on FBL's website, www.fblfinancial.com. Assets Total $12.2 Billion. Total assets increased $2.0 billion to $12.2 billion at December 31, 2006, from $10.2 billion at December 31, 2005. At December 31, 2006, 96 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: increased to $29.59 at December 31, 2006 from $28.88 at December 31, 2005. Book value per share excluding accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as (3) increased ten percent to $28.64 at December 31, 2006, from $26.05 at December 31, 2005. Earnings Outlook. While subject to volatility resulting from a number of factors, including mortality experience and investment results, FBL maintains its full year 2007 net income and operating income guidance of a range of $2.80 to $2.95 per common share. Conference Call. FBL management will hold a conference call with investors to discuss fourth quarter 2006 results. The call will be held tomorrow, February 7, 2007, 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 website, www.fblfinancial.com. Investor Conference. FBL management will hold a company-sponsored investor conference on Wednesday, March 28, 2007, at the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Marriott East Side. Further details will be available on FBL's website, 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. The risks and uncertainties that could cause actual results to differ materially are detailed in FBL's reports filed with the Securities and Exchange Commission and include interest rate changes, competitive factors, volatility of financial markets, the ability to attract and retain sales agents and a decrease in ratings. These forward-looking statements are based on assumptions which FBL Financial Group believes to be reasonable. No assurance can be given that the assumptions will prove to be correct. FBL Financial Group 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. For more information, please visit www.fblfinancial.com. [TABLE OMITTED] [TABLE OMITTED] (1) Reconciliation of Net Income to Operating Income (Unaudited) 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/unrealized gains and losses on investments, the change in net unrealized gains and losses on derivatives and for 2006, a lawsuit settlement. FBL uses operating income, in addition to net income, to measure its performance since realized/unrealized gains and losses on investments and the change in net unrealized gains and losses on derivatives can fluctuate greatly from quarter to quarter, and the lawsuit settlement in the second quarter of 2006 is a nonrecurring item. These fluctuations make it difficult to analyze core operating trends. In addition, for derivatives not designated as hedges, there is a mismatch mismatch 1. in blood transfusions and transplantation immunology, an incompatibility between potential donor and recipient. 2. one or more nucleotides in one of the double strands in a nucleic acid molecule without complementary nucleotides in the same position on the other between the valuation of the asset and liability when deriving net income. This non-GAAP measure is used for goal setting, determining company-wide bonuses and evaluating performance on a basis comparable to that used by many in the investment community. 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 following table (dollars in thousands, except per share data): [TABLE OMITTED] [TABLE OMITTED] (a) Net of adjustments, as applicable, to amortization of unearned revenue Unearned Revenue When an individual or company receives money for a service or product that has yet to be fulfilled. Notes: For example, prepayment on a lease contract - the revenue is a liability until it has been earned. See also: Earned Income, Passive Income reserves, deferred policy acquisition costs, deferred sales inducements, value of insurance in force acquired and income taxes attributable to these items. (2) Premiums Collected - Net statutory premiums collected, a measure of sales production, is a non-GAAP measure and includes premiums collected from annuities and universal life-type products. For GAAP reporting, these premiums received are not reported as revenues. (3) Reconciliation of Book Value Per Share Excluding Accumulated Other Comprehensive Income (Unaudited) [TABLE OMITTED] Book value per common share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $28,195,000 at December 31, 2006 and $82,301,000 at December 31, 2005. 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. [TABLE OMITTED] FFG-1 |
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