FBL Financial Group Reports Third Quarter 2015 Results
OREANDA-NEWS. FBL Financial Group, Inc. (NYSE:FFG):
(Dollars in thousands, except per share data)
|Three months ended September 30,|
|Net income attributable to FBL Financial Group||$||26,659||$||30,159|
|Earnings per common share (assuming dilution):|
FBL Financial Group, Inc. (NYSE: FFG) today reported net income attributable to FBL Financial Group for the third quarter of 2015 of $26.7 million, or $1.06 per diluted common share, compared to $30.2 million, or $1.21 per diluted common share, for the third quarter of 2014.
Operating Income. Operating income totaled $27.3 million, or $1.09 per common share, for the third quarter of 2015, compared to $29.5 million, or $1.18 per common share, for the third quarter of 2014. Third quarter 2015 operating income per share reflects:
- A growing book of profitable business
- Investment fee income of $0.07 per share, primarily due to higher than expected bond prepayments
- Unfavorable mortality results, reflecting an increase in the number of claims and lower reinsurance benefit and reserve offset
- Higher amortization of acquisition costs totaling $0.05 per share due to the negative impact of equity markets on separate account performance
"FBL Financial Group delivered solid financial performance in the third quarter with net income of $1.06 per share, operating income of $1.09 per share and increased annuity sales," said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. “We've had success with strategies to increase our exclusive agent count and manage spreads in the continued low interest rate environment. These strategies, combined with effective capital and expense management, produced another quarter of strong results."
Product Revenues. Premiums and product charges for the third quarter of 2015 totaled $76.6 million compared to $72.7 million in the third quarter of 2014. Interest-sensitive product charges increased eight percent while traditional life insurance premiums increased four percent during the quarter. Premiums collected(2) in the third quarter of 2015 totaled $184.0 million compared to $149.4 million in the third quarter of 2014. Annuity premiums collected increased 50 percent due to a limited offering of certain short-term annuity products, while life insurance premiums collected increased one percent.
Investment Income. Net investment income in the third quarter of 2015 totaled $95.9 million compared to $95.7 million in the third quarter of 2014. The increase is due to higher average invested assets. The annualized yield earned on average invested assets, with securities at amortized cost, was 5.58 percent for the nine months ended September 30, 2015, compared to 5.60 percent for the nine months ended September 30, 2014. Investment fee income totaled $0.07 per share in the third quarter of 2015, and was primarily in the Annuity segment. At September 30, 2015, 96 percent of the fixed maturity securities in FBL Financial Group's investment portfolio were investment grade debt securities.
Unlocking. During the third quarter of 2015, FBL Financial Group performed a review of key assumptions used in the calculation of deferred acquisition costs, value of insurance in force acquired, unearned revenue reserves and certain reserves on interest sensitive products, through an unlocking process. This unlocking resulted in a favorable pre-tax impact of $0.3 million.
Benefits and Expenses. Benefits and expenses totaled $140.1 million in the third quarter of 2015, an increase from $133.7 million in the third quarter of 2014. Death benefits, net of reinsurance and reserves released, increased to $26.9 million in the third quarter of 2015, compared to $20.6 million in the third quarter of 2014. By its nature, mortality experience can fluctuate from quarter to quarter.
Net Realized Gains/Losses on Investments. In the third quarter of 2015, FBL Financial Group recognized net realized losses on investments of $0.5 million. The net realized loss on investments of $0.5 million is attributable to realized gains on sales of $0.1 million, realized losses on sales of $0.2 million and impairments of $0.4 million.
Stock Repurchases. During the third quarter of 2015, FBL Financial Group repurchased 66,904 shares of its Class A common stock for $3.7 million. FBL Financial Group has $39.0 million remaining under its current stock repurchase program.
Capital and Book Value. As of September 30, 2015, the book value per share of FBL Financial Group common stock totaled $46.99, compared to $50.57 at December 31, 2014. Book value per share, excluding accumulated other comprehensive income(3), totaled $40.15 at September 30, 2015, compared to $40.11 at December 31, 2014. The September 30, 2015 company action level risk based capital ratio of FBL Financial Group's wholly owned subsidiary, Farm Bureau Life Insurance Company, was approximately 564 percent.
FBL Financial Group is a holding company whose purpose is to protect livelihoods and futures. Its primary operating subsidiary, Farm Bureau Life Insurance Company, underwrites and markets a broad range of life insurance and annuities to individuals and businesses, which are distributed by multiline exclusive Farm Bureau agents. In addition, FBL Financial Group manages all aspects of two Farm Bureau affiliated property-casualty insurance companies for a management fee. FBL Financial Group, headquartered in West Des Moines, Iowa, is traded on the New York Stock Exchange under the symbol FFG.