WEST DES MOINES, Iowa--(BUSINESS WIRE)-- FBL Financial Group, Inc. (NYSE: FFG):

Financial Highlights
(Dollars in thousands, except per share data)
	Three months ended June 30,
	2019				2018
Net income attributable to FBL Financial Group	$	32,298			$	32,803
Adjusted operating income(1)	31,737				31,915
Earnings per common share (assuming dilution):
Net income	1.30				1.31
Adjusted operating income(1)	1.28				1.28

FBL Financial Group, Inc. (NYSE: FFG) today reported net income attributable to FBL Financial Group for the second quarter of 2019 of $32.3 million, or $1.30 per diluted common share, compared to $32.8 million, or $1.31 per diluted common share, for the second quarter of 2018. Adjusted operating income⁽¹⁾ totaled $31.7 million, or $1.28 per common share, for the second quarter of 2019, compared to $31.9 million, or $1.28 per common share, for the second quarter of 2018. Second quarter 2019 earnings per share reflects:

• Mortality results better than expected in the Life segment
• Lower amortization of acquisition costs in the Corporate and Other segment due to the positive impact of equity markets on separate account performance
• The benefit of other investment-related income of $0.05 per share
• Lower spread income in the Annuity segment

Adjusted operating income differs from the GAAP measure, net income attributable to FBL Financial Group, in that it excludes realized gains and losses on investments, and the change in net unrealized gains and losses on derivatives and equity securities. For further information on this non-GAAP financial measure, please refer to Note (1) and the reconciliation provided within this release.

"FBL Financial Group’s second quarter 2019 earnings results were very strong with second quarter net income of $1.30 per share and adjusted operating income of $1.28 per share,” said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. “We continue to focus on the fundamentals: serving the needs of the Farm Bureau niche market and providing products and services to protect what our customers value most. This focus, along with financial discipline, drives our consistently strong results, allowing us to fulfill our purpose of protecting livelihood and futures."

Product Revenues Increase from 2018. Premiums and product charges for the second quarter of 2019 increased to $83.5 million compared to $82.0 million in the second quarter of 2018. Interest sensitive product charges increased 5 percent while traditional life insurance premiums decreased slightly during the quarter. Premiums collected⁽²⁾ in the second quarter of 2019 totaled $152.2 million compared to $171.4 million in the second quarter of 2018. Life insurance premiums collected increased two percent while annuity premiums collected decreased 25 percent, impacted by the low market interest rate environment.

Investment Income of $105 Million in Second Quarter. Net investment income in the second quarter of 2019 totaled $104.9 million, compared to $104.0 million in the second quarter of 2018. This increase reflects an increase in average invested assets, partially offset by lower investment yields. The annualized yield earned on average invested assets, with securities at amortized cost, including investments held as securities and indebtedness of related parties, was 5.00 percent for the six months ended June 30, 2019 compared to 5.18 percent for the six months ended June 30, 2018. At June 30, 2019, 98 percent of the fixed maturity securities in FBL Financial Group's investment portfolio were investment grade debt securities.

Benefits and Expenses. Benefits and expenses totaled $156.5 million in the second quarter of 2019, compared to $153.0 million in the second quarter of 2018. Death benefits, net of reinsurance and reserves released, totaled $25.1 million in the second quarter of 2019, compared to $26.6 million in the second quarter of 2018. By its nature, mortality experience can fluctuate from quarter to quarter.

Net Realized Gains in the Second Quarter. In the second quarter of 2019, FBL Financial Group recognized net realized gains on investments of $0.4 million. This is attributable to realized gains of $0.2 million, realized losses of $0.3 million and a gain from the increase in fair value of equity securities of $0.5 million.

Stock Repurchases. During the second quarter of 2019, FBL Financial Group did not repurchase any shares of its Class A or Class B common stock. FBL Financial Group has $36.3 million remaining under its current stock repurchase program.

Capital and Book Value. As of June 30, 2019, the book value per share of FBL Financial Group common stock totaled $56.55, compared to $47.78 at December 31, 2018. Book value per share, excluding accumulated other comprehensive income⁽³⁾, totaled $44.27 at June 30, 2019, compared to $44.09 at December 31, 2018. The June 30, 2019 company action level risk based capital ratio of FBL Financial Group's wholly owned subsidiary, Farm Bureau Life Insurance Company, was approximately 553 percent.

Further Financial Information. Further information on FBL Financial Group's financial results, including results by segment, may be found in FBL Financial Group's financial supplement, available on its website, www.fblfinancial.com.

Conference Call. FBL Financial Group will hold a conference call with investors tomorrow, August 2, 2019, at 9:00 a.m. Eastern Time. The call will be webcast and a replay will be available on FBL Financial Group's website.

Certain statements in this release concerning FBL Financial Group's prospects for the future are forward-looking statements intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act. These statements generally can be identified by their context, including terms such as “believes,” “anticipates,” “expects,” or similar words. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statement. These risks and uncertainties are detailed in FBL Financial Group's reports filed with the Securities and Exchange Commission and include, but are not limited to, changes in interest rates, difficult conditions in financial markets and the economy, lack of liquidity and access to capital, investment valuations, competitive factors, a decrease in ratings, changes in laws and regulations, differences between actual claims experience and underwriting assumptions, relationships with Farm Bureau organizations, the ability to attract and retain sales agents and adverse results from litigation. These forward-looking statements are based on assumptions which FBL Financial Group believes to be reasonable; however, no assurance can be given that the assumptions will prove to be correct. FBL Financial Group undertakes no obligation to update any forward-looking statements.

FBL Financial Group is a holding company whose purpose is to protect livelihoods and futures. Operating under the consumer brand name Farm Bureau Financial Services, it offers a broad range of life insurance, annuity and investment products 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. Headquartered in West Des Moines, Iowa, FBL Financial Group is traded on the New York Stock Exchange under the symbol FFG. For more information, please visit www.fblfinancial.com and www.fbfs.com.

- FINANCIAL INFORMATION AND NOTES FOLLOW -

(1) Reconciliation of Net Income Attributable to FBL Financial Group to Adjusted Operating Income - Unaudited

FBL Financial Group consistently utilizes adjusted operating income, a financial measure common in the life insurance industry that is not prepared in accordance with U.S. generally accepted accounting principles (GAAP), as a primary economic measure to evaluate its financial performance. Adjusted operating income consists of net income attributable to FBL Financial Group adjusted to exclude realized gains and losses on investments, and the change in fair value of derivatives and equity securities, which can fluctuate greatly from period to period. These fluctuations make it difficult to analyze core operating trends. In addition, for derivatives not designated as hedges, there is a mismatch between the valuation of the asset and liability when deriving net income (loss). Specifically, call options relating to indexed business are one-year assets while the embedded derivatives in the indexed contracts represent the rights of the contract holder to receive index credits over the entire period the indexed products are expected to be in force. This non-GAAP measure is used for goal setting, determining short-term incentive compensation and evaluating performance on a basis comparable to that used by many in the investment community. FBL Financial Group believes the presentation and evaluation of adjusted operating income provides information that may enhance an investor's understanding of FBL Financial Group's underlying results and profitability. A reconciliation is provided in the following table:

(2) Premiums Collected - Net statutory premiums collected is a non-GAAP measure and includes premiums collected from annuities and universal life-type products. It is a useful metric for investors as it is a measure of sales production. For GAAP reporting, these premiums received are not reported as revenues.

(3) Reconciliation of Book Value Per Share Excluding Accumulated Other Comprehensive Income - Unaudited

Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $302.8 million at June 30, 2019 and $91.3 million at December 31, 2018. Since accumulated other comprehensive income fluctuates from quarter to quarter due to unrealized changes in the fair value of investments caused principally by changes in market interest rates, FBL Financial Group believes this non-GAAP financial measure provides useful supplemental information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190801005830/en/

Kathleen Till Stange, V.P. Corporate & Investor Relations

(515) 226-6780, Kathleen.TillStange@FBLFinancial.com

Source: FBL Financial Group, Inc.

Prudential Financial reported lower third-quarter earnings Wednesday as a sales suspension in Japan offset growth in its U.S. businesses and asset management operations.

The Newark, N.J.-based insurer boasted record annuity sales as its industry-leading FlexGuard registered index-linked annuities continued resonating with consumers.

Retail annuity sales reached $3.9 billion, the highest quarterly level since 2013. The insurer reported its highest-ever quarterly sales of RILAs, reflecting demand for protected accumulation products and the success of product enhancements introduced late last year.

Retail annuity account values rose 25% year over year to $68 billion. Sales over the past 12 months totaled $14 billion.

“The individual annuities market continues to just be incredibly strong and growing," said CEO Andy Sullivan. "The aging of society that needs protected income, the trillions of dollars of retirement that are in motion. So, we're executing in this business against a backdrop of a market that has incredible tailwinds."

Prudential reported after-tax adjusted operating income of $1.3 billion, or $3.77 per share, compared with $1.4 billion, or $4.05 per share, in the same quarter last year.

Japan woes affect earnings

Prudential saw higher spread income and favorable underwriting results in its U.S. businesses during Q3, along with increased asset management fees. Those gains were more than offset by the impact of a sales suspension at Prudential of Japan and higher expenses tied to growth in its U.S. businesses.

POJ continues to work through widespread allegations of misconduct. Included are measures to reimburse impacted customers, restructure employee incentive compensation, and strengthen oversight of sales practices, governance, and risk management. The plans also include enhanced education, training and recruitment standards for POJ employees.

Sales were initially suspended for 90 days in February, a suspension that was later extended into November.

The sales suspension reduced third-quarter adjusted operating income by approximately $140 million, bringing the year-to-date impact to about $375 million. Prudential expects the suspension to reduce full-year 2026 earnings by approximately $500 million, with an additional $100 million impact from its Japan International Products business.

Sullivan said POJ is making progress on reforms required by Japan’s Financial Services Agency and expects its business to resume sales in phases beginning Feb. 1. Its Gibraltar business is also expected to return to the market on that date.

“We remain committed to implementing the changes to strengthen the way we conduct business in Japan," Sullivan said. "Our objective is not simply to restart sales, but to build a business model that sustains customer trust and supports responsible growth. Our priority is to complete this work and demonstrate that our new governance and oversight frameworks are effective in practice."

U.S. businesses show strength

Prudential’s U.S. businesses generated $1.2 billion in pretax adjusted operating income, essentially unchanged from the prior-year quarter.

Institutional retirement business remained subdued amid limited pension risk transfer activity across the industry. Prudential closed three mid-sized pension risk transfer transactions totaling approximately $1.6 billion in October and expects several additional transactions to close by year-end.

"Over the last five years, it has become a more competitive market with multiple entrants coming into the space and more and more people trying to go up market into the jumbo space," Sullivan said. "So, it's not more competitive; it's the same. We're well positioned."

Group insurance reported $101 million in pretax adjusted operating income, up 12% from a year earlier, driven primarily by improved underwriting results. Year-to-date sales rose 23%, with growth strongest in supplemental health products.

The business reported an overall benefit ratio of 81%, below its target range. However, disability claims continued to show elevated incidence and severity, including higher behavioral health claims and claims among high-wage earners.

Individual life insurance posted $199 million in pretax adjusted operating income, compared with $153 million a year earlier. Results benefited from more favorable underwriting, including a roughly $30 million reserve refinement, and higher spread income.

Prudential’s PGIM asset management business reported $263 million in pretax adjusted operating income, up 8% year over year. Its adjusted operating margin expanded 280 basis points to 26.5%.

Prudential said it remains on track to expand PGIM’s operating margin to 30% over several years, with a longer-term goal of exceeding that level. Growth in higher-fee private credit, asset-backed finance and ETFs, along with expense management, is expected to support profitability.

Strategic portfolio shift

Prudential is pursuing a capital rotation strategy that includes the planned sale of its businesses in Brazil and Mexico for approximately $4.025 billion. The company expects net proceeds of about $3.1 billion after taxes, transaction fees and closing costs, with the deal anticipated to close in the second half of 2027.

"We intend to deploy the expected proceeds from the sales of our Brazil and Mexico businesses into targeted acquisitions that advance our growth strategy," said Yanela Frias, executive vice president and chief financial officer.

The strategy is part of a longer-term plan to increase asset management’s contribution to earnings and expand selected insurance businesses. Prudential aims to increase asset management’s share of earnings from about 12% to 25%, with at least half of that growth expected to come organically.

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