FBL Financial Group Reports Second Quarter 2001 Results - Operating Income Per Share Totals $0.40.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)--July 31, 2001
Financial Highlights
(Dollars in thousands, except per share data)
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Three Months Ended
June 30,
2001 2000
-------------------------
Operating revenues $124,877 $103,001
Operating income applicable to common stock
11,089 12,143
Net income applicable to common stock 11,218 9,627
Earnings per common share (assuming
dilution):
Operating income 0.40 0.39
Net income 0.40 0.31
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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 ) today announced that 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. totaled $11,089,000 for the quarter ended June June: see month. 30, 2001, versus $12,143,000 in the second quarter of 2000. With the benefit of a reduction in the number of common shares outstanding, 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. operating income per common share increased to $0.40 in the second quarter of 2001, from $0.39 in the second quarter of 2000. Operating income equals net income adjusted to eliminate 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. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. also reflect this adjustment. "We are pleased that our two most recent transactions were both accretive to our second quarter earnings per share," said Bill Oddy, Chief Executive Officer. "Our acquisition of Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). Farm Bureau Life as of January January: see month. 1, 2001, contributed $0.02 per share to this quarter'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 and our 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. transaction with National Travelers Life, which was effective May 1, 2001, added $0.01 per share. We are continuing to focus on internal growth, and alliances and consolidations similar to our recent transactions, which increase shareholder value." Product Revenues Up 16 Percent. Premiums and product charges for the second quarter of 2001 increased 16 percent to $49,646,000, compared to $42,626,000 in the second quarter of 2000. Interest sensitive product charges increased 17 percent and traditional life insurance premiums increased over 29 percent while, as planned, accident and health premiums decreased. Product revenues attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the addition of the Kansas and National Travelers Life (NTL NTL Nevertheless NTL National Transportation Library NTL Norsk Tjenestemannslag NTL National Training Laboratories NTL Never Too Late NTL Nothing to Lose NTL National Training Laboratory NTL None the Less NTL Number Theory Library ) transactions totaled $9,424,000. Kansas product revenues were comprised of interest sensitive product charges of $337,000, traditional life insurance premiums of $5,381,000 and accident and health premiums of $1,035,000. NTL product revenues were comprised of interest sensitive product charges of $1,758,000 and traditional life insurance premiums of $913,000. Total premiums collected, net of internal rollovers, increased 15 percent to $98,635,000 from $85,671,000 in the second quarter of 2000. Collected premiums on variable products declined, with total first year variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. premiums collected (of which only expense charges and fees are included in revenues in the income statement) decreasing 33 percent to $11,803,000 in the second quarter of 2001, from $17,672,000 in the year ago quarter. Total first year variable universal life premiums collected totaled $3,860,000 compared to $4,387,000 in the second quarter of 2000. Total 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. premiums collected increased 78 percent to $25,863,000 from $14,557,000 in the second quarter of 2000, largely due to the addition of the Kansas and NTL business. Investment Income. Net investment income in the second quarter totaled $71,058,000 compared to $55,373,000 in the year ago quarter. This increase is due to an increase in both average invested assets and yield. Average invested assets increased primarily due to FBL's recent transactions: investments totaling $620,856,000 were acquired as part of the Kansas Farm Bureau Life transaction and $299,252,000 of investments were acquired in connection with the NTL transaction. 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 increased to 7.61 percent for the first six months of 2001, compared to 7.42 percent for the same period of 2000. The increase in yield reflects an increase in investment fee income primarily due to bond calls, which totaled $3,073,000 in the 2001 period ($1,433,000 in the second quarter) compared to less than $100,000 in the first six months of 2000. Benefits and Expenses. Benefits and expenses totaled $104,984,000 in the second quarter of 2001, compared to $86,568,000 in the year ago quarter. This increase is largely due to the addition of the Kansas and NTL business. Policy benefits attributable to the addition of the Kansas and NTL business totaled $17,961,000, comprised of interest sensitive product benefits of $9,185,000, traditional life insurance and accident and health benefits, including change in reserves, of $7,767,000 and distributions to policyholders of $1,009,000. Partially offsetting these increases was a decrease in accident and health benefits and reserve changes due to the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. of FBL's individual disability income business effective September September: see month. 1, 2000. Loss from Equity Investments. Equity income (loss), net of related income taxes, was a loss of $630,000 in the second quarter of 2001, compared to income of $2,379,000 in the year ago quarter. Included in equity income (loss) is FBL's share of income and losses from investments in various partnerships and joint ventures. Due to the nature of these investments, it is not unusual to experience fluctuations on a quarter-to-quarter basis. Net Income Applicable to Common Stock. Diluted net income per common share totaled $0.40 ($11,218,000) for the quarter ended June 30, 2001, compared to $0.31 ($9,627,000) in the year ago quarter. In the second quarter of 2001, FBL recognized realized gains on investments totaling $253,000, compared to 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 $4,148,000 in the second quarter of 2000. Assets Total $4.9 Billion. Total assets increased $1.2 billion to $4.9 billion at June 30, 2001 from $3.7 billion at December December: see month. 31, 2000. This increase is due principally to the acquisition of $1.0 billion of assets in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Kansas Farm Bureau Life and NTL transactions. At June 30, 2001, 95 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 11 percent to $19.32 at June 30, 2001, from $17.35 at December 31, 2000. Book value per common share, with securities at cost, increased three percent to $18.69 from $18.13 at December 31, 2000. Impact of Coinsurance Agreement. On May 1, 2001, FBL's subsidiary, EquiTrust Life, entered into a coinsurance agreement with National Travelers Life Company, whereby it assumed 90 percent of NTL's traditional life, universal life and annuity business. Additionally, on a go forward basis, EquiTrust is coinsuring 50 percent of NTL's new life and annuity business. As a result of two months of activity, this business contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $400,000 or $0.014 per share to FBL's operating results for the second quarter of 2001. Conference Call. FBL management will hold a conference call with investors to discuss second quarter results. The call will be held tomorrow, August 1, 2001, at 10 a.m. Central 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 and the marketing success of FBL's alliance partners. 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 four Farm Bureau affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: property-casualty insurance companies for a management fee and provides certain management and other services to National Travelers Life Company. 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 in 15 midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and and western states, (2) alliances with other companies and (3) consolidations.
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
June 30,
2001 2000
-------- --------
REVENUES
Interest sensitive product charges $17,550 $15,025
Traditional life insurance premiums 31,024 23,964
Accident and health premiums 1,072 3,637
Net investment income 71,058 55,373
Realized gains (losses) on investments 253 (4,148)
Other income 4,115 4,959
-------- --------
Total revenues 125,072 98,810
BENEFITS AND EXPENSES
Interest sensitive product benefits 40,830 33,007
Traditional life insurance and accident and
health benefits 20,838 16,783
Increase in traditional life and accident and
health future policy benefits 8,065 7,436
Distributions to participating policyholders 7,595 6,394
Underwriting, acquisition and insurance expenses 24,527 18,766
Interest expense 457 910
Other expenses 2,672 3,272
-------- --------
Total benefits and expenses 104,984 86,568
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20,088 12,242
Income taxes (5,928) (3,744)
Minority interest in earnings of subsidiaries:
Dividends on company-obligated mandatorily
redeemable preferred stock of subsidiary trust (1,212) (1,212)
Other (54) -
Equity income (loss), net of related income taxes (630) 2,379
-------- --------
Net income 12,264 9,665
Dividends on Series B and C preferred stock (1,046) (38)
-------- --------
Net income applicable to common stock $11,218 $9,627
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Earnings per common share $0.41 $0.31
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Earnings per common share - assuming dilution $0.40 $0.31
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FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
Six months ended
June 30,
2001 2000
-------- --------
REVENUES
Interest sensitive product charges $33,517 $29,747
Traditional life insurance premiums 58,862 44,465
Accident and health premiums 2,222 7,139
Net investment income 136,950 110,056
Realized losses on investments (1,269) (4,209)
Other income 8,375 9,457
-------- --------
Total revenues 238,657 196,655
BENEFITS AND EXPENSES
Interest sensitive product benefits 78,684 63,975
Traditional life insurance and accident and
health benefits 41,357 32,528
Increase in traditional life and accident and
health future policy benefits 12,832 12,090
Distributions to participating policyholders 14,500 12,651
Underwriting, acquisition and insurance expenses 48,723 37,061
Interest expense 1,094 1,771
Other expenses 6,588 7,091
-------- --------
Total benefits and expenses 203,778 167,167
-------- --------
34,879 29,488
Income taxes (10,554) (9,281)
Minority interest in earnings of subsidiaries:
Dividends on company-obligated mandatorily
redeemable preferred stock of subsidiary trust (2,425) (2,425)
Other (56) (42)
Equity income (loss), net of related income taxes (26) 10,059
-------- --------
Income before cumulative effect of change in
accounting principle 21,818 27,799
Cumulative effect of change in accounting for
derivative instruments 344 -
-------- --------
Net income 22,162 27,799
Dividends on Series B and C preferred stock (2,085) (75)
-------- --------
Net income applicable to common stock $20,077 $27,724
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Earnings per common share:
Income before accounting change $0.72 $0.89
Cumulative effect of change in accounting for
derivative instruments 0.01 -
-------- --------
Earnings per common share $0.73 $0.89
======== ========
Earnings per common share - assuming dilution:
Income before accounting change $0.71 $0.88
Cumulative effect of change in accounting for
derivative instruments 0.01 -
-------- --------
Earnings per common share - assuming dilution $0.72 $0.88
======== ========
FBL FINANCIAL GROUP, INC.
RECONCILIATION OF NET INCOME TO OPERATING INCOME (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
June 30,
2001 2000
----------- ----------
Net income applicable to common stock $11,218 $9,627
Adjustment:
Realized losses (gains), net of related
adjustments to deferred policy acquisition
costs, value of insurance in force acquired,
unearned revenue reserve and income taxes (129) 2,516
----------- ----------
Operating income applicable to common stock $11,089 $12,143
=========== ==========
Operating earnings per common share -
assuming dilution $0.40 $0.39
=========== ==========
Weighted average common shares 27,367,776 31,023,248
Effect of dilutive securities 460,771 394,851
----------- ----------
Weighted average common shares - diluted 27,828,547 31,418,099
=========== ==========
FBL FINANCIAL GROUP, INC.
RECONCILIATION OF NET INCOME TO OPERATING INCOME (Unaudited)
(Dollars in thousands, except per share data)
Six months ended
June 30,
2001 2000
----------- ----------
Net income applicable to common stock $20,077 $27,724
Adjustments:
Realized losses, net of related adjustments to
deferred policy acquisition costs, value of
insurance in force acquired, unearned revenue
reserve and income taxes 1,140 2,574
Cumulative effect of change in accounting for
derivative instruments (344) -
----------- ----------
Operating income applicable to common stock $20,873 $30,298
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Operating earnings per common share -
assuming dilution $0.75 $0.96
=========== ==========
Weighted average common shares 27,347,561 31,110,481
Effect of dilutive securities 435,534 414,852
----------- ----------
Weighted average common shares - diluted 27,783,095 31,525,333
=========== ==========
FBL FINANCIAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share data)
June 30, Dec. 31,
2001 2000
---------- ----------
Assets
Investments $3,843,860 $2,870,659
Cash and cash equivalents 121,309 3,099
Deferred policy acquisition costs 295,881 250,971
Other assets 326,013 251,910
Assets held in separate accounts 347,721 327,407
---------- ----------
Total assets $4,934,784 $3,704,046
========== ==========
Liabilities
Policy liabilities and accruals $3,295,976 $2,412,090
Other policyholders' funds 369,205 265,528
Debt 40,000 49,943
Other liabilities 171,689 75,133
Liabilities related to separate accounts 347,721 327,407
---------- ----------
Total liabilities 4,224,591 3,130,101
Minority interest in subsidiaries 97,174 97,142
Series C redeemable preferred stock 81,331 -
Stockholders' equity 531,688 476,803
---------- ----------
Total liabilities and stockholders' equity $4,934,784 $3,704,046
========== ==========
Book Value Per Share, securities at market $19.32 $17.35
========== ==========
Book Value Per Share, securities at cost $18.69 $18.13
========== ==========
Common Shares Outstanding 27,371,752 27,308,110
========== ==========
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