FBL Financial Group, Inc. reported net income attributable to FBL for the fourth quarter of 2013 of $27.0 million, or $1.07 per diluted common share compared to $22.6 million, or $0.86 per diluted common share, for the fourth quarter of 2012.
In a release on February 6, the Company noted that operating income totaled $25.3 million, or $1.00 per common share, for the fourth quarter of 2013, compared to $24.2 million, or $0.93 per common share, for the fourth quarter of 2012.
Fourth quarter 2013 operating income includes:
-Strong underlying results from Farm Bureau Life, which reflect a growing book of profitable business
-Investment fee income of $0.04 per share, primarily due to higher than expected bond prepayments
-Lower amortization of acquisition costs totaling $0.03 per share due to the positive impact of equity markets on separate account performance
Operating income differs from the GAAP measure, net income attributable to FBL Financial Group, in that it excludes the impact of realized gains and losses on investments, the change in net unrealized gains and losses on derivatives, the net impact of discontinued operations and the loss on debt redemption.
"FBL Financial Group delivered very strong financial performance in the fourth quarter with a 24 percent increase in net income to $1.07 per share and an eight percent increase in operating income to $1.00 per share. These results cap off a year where we achieved record highs in full year net income and operating income, deployed excess capital with the payment of a $2.00 per share special dividend and the repurchase of 1.4 million shares, and maintained a very strong capital position," said James P. Brannen, Chief Executive Officer of FBL Financial Group, Inc. "As we move forward in 2014, we remain focused on supporting our exclusive Farm Bureau agency force and serving the attractive Farm Bureau niche market."
Product Revenues. Premiums and product charges for the fourth quarter of 2013 totaled $73.3 million compared to $70.5 million in the fourth quarter of 2012. Interest sensitive product charges increased three percent while traditional life insurance premiums increased four percent during the quarter. Premiums collected in the fourth quarter of 2013 totaled $144.5 million compared to $145.3 million in the fourth quarter of 2012. Life insurance premiums collected decreased three percent, while annuity premiums collected increased three percent.
Investment Income. Net investment income in the fourth quarter of 2013 totaled $93.6 million compared to $91.5 million in the fourth quarter of 2012. The increase is due to an increase in average invested assets partially offset by lower investment yields. The annualized yield earned on average invested assets, with securities at cost, was 5.74 percent for the year ended December 31, 2013, compared to 5.87 percent for the year ended December 31, 2012. At December 31, 2013, 96 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 $135.4 million in the fourth quarter of 2013, an increase from $133.0 million in the fourth quarter of 2012. Death benefits, net of reinsurance and reserves released, increased to $24.7 million in the fourth quarter of 2013, compared to $22.2 million in the fourth quarter of 2012. By its nature, mortality experience can fluctuate from quarter to quarter. In the fourth quarter of 2012, FBL Financial Group unlocked the assumptions used in the calculation of deferred acquisition costs, value of insurance in force acquired and unearned revenue reserves, resulting in a benefit of $0.04 per share after-tax. No unlocking adjustments were made in the fourth quarter of 2013.
Net Realized Gains/Losses on Investments. In the fourth quarter of 2013, FBL Financial Group recognized net realized gains on investments of $2.3 million. The net realized gain on investments of $2.3 million is attributable to gains on sales of $3.3 million, losses on sales of $0.2 million and impairments of $0.8 million.
Stock Repurchases. During the quarter, FBL did not repurchase any shares of its Class A or Class B common stock. FBL has approximately $20.3 million remaining under its current stock repurchase program.
Capital and Book Value. As of December 31, 2013, the book value per share of FBL Financial Group common stock totaled $42.08, a decrease from $47.47 at December 31, 2012, primarily related to a decline in net unrealized gains due to rising interest rates as well as a $2.00 per share special dividend paid to shareholders of record as of September 6, 2013. Book value per share, excluding accumulated other comprehensive income, increased three percent to $37.27 at December 31, 2013 from $36.09 at December 31, 2012. The December 31, 2013 company action level risk based capital ratio of Farm Bureau Life Insurance Company was approximately 499 percent.
FBL Financial Group is a holding company whose purpose is to protect livelihoods and futures.
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