Jim Hohmann
Chief Executive Officer

Good morning.

I am pleased to begin this call by reporting continued strong earnings performance, with first quarter net income of $0.59 per share and operating income of $0.66 per share.

These first quarter 2010 results demonstrate strong earnings at both Farm Bureau Life and EquiTrust Life as well as continued strength in our balance sheet and improvements in our investment portfolio. Jim Brannen will discuss all of these in more detail in a few moments.

First, I'll comment on sales. Farm Bureau Life's first quarter 2010 premium collected was $155.9 million, which is down 8% from the first quarter of 2009. However, I would characterize the quarter as solid because the decrease occurred in traditional annuities and was the result of our relative competitive positioning. More importantly, we saw consistently growing sales in Farm Bureau Life's life insurance business with traditional and universal life premium collected increasing 4% for the period. Variable sales, which we have now discontinued, were also up, but on low volume.

By design, premium collected at EquiTrust Life was lower in the first quarter and totaled $47 million. Now that we have achieved our desired capital level for EquiTrust Life, we are turning our attention to measured increases in our business volume.

From a product development perspective, we accomplished quite a bit during the quarter. At Farm Bureau Life we introduced a new simplified term life insurance policy which utilizes automated underwriting guidelines and a short and simple application. We expect the process to engage newer Farm Bureau Financial Services agents, and those agents who primarily sell property casualty policies. The target customers are mainly existing Farm Bureau auto or home clients who do not have a life policy with us. This product complements Farm Bureau Life's full line of life insurance and annuity products and is one of the reasons Farm Bureau Life has a cross-sell level that is more than double the industry average.

Another recent product change at Farm Bureau Life was discontinuing new sales of our own variable products. Variable products are now available to our exclusive agents through an external provider. The in force block of variable business remains on our books and we continue to administer it.

At EquiTrust, the reinvention strategy of 2009 is moving forward and remains a key priority. Late in the first quarter we introduced EquiTrust Life's first life product, called WealthSure. It is a single premium, simplified issue whole life product which was developed with input from a select group of independent marketing organizations, who are also distributing the product.

We're just getting started and in the near term sales will be modest as we introduce it into a small number of states. Over time, we plan to expand EquiTrust's life portfolio to complement a more focused fixed annuity business. Sales of life insurance products at EquiTrust Life will be measured and be supported by internally generated capital. While we expect total sales to be at lower levels than we have seen in recent years, we expect these sales to have higher returns and drive increased profits for EquiTrust Life, which we are seeing this quarter.

We continue to be proactive in our strategy for restoring our companies' ratings. Our capital base and risk position have improved over the past year. We believe we're doing everything we need to do to restore our companies' financial strength ratings to an excellent level.

I've been with FBL just over a year now and we have accomplished a great deal in that time. I'm confident that we are moving in the right direction. We continue to optimize our balance sheet and reinvent EquiTrust as we grow our business and grow our profits.

So with that I will turn it over to Jim Brannen. Jim.

Jim Brannen
Chief Financial Officer

Thanks, Jim and good morning everyone.

As Jim stated we had strong first quarter financial results with net income of $0.59 per share and operating income of $0.66 per share. In addition, investment valuations continued to improve and our book value grew as well.

I'll focus my comments today on our first quarter financial results, spreads, the investment portfolio and our capital position.

Our first quarter financial results are pretty straightforward. It was a clean quarter with strong underlying results and not a lot of noise.

• Results continue to be positively impacted by the various actions we've taken over the past year to increase our spreads and improve the profitability of our business.
• As you compare the results to the first quarter of 2009, one difference is that we no longer have the benefit of one of our closed blocks of reinsurance, which provided a net quarterly benefit of approximately $0.02 per share. This is the result of selling that block in the fourth quarter of 2009.
• The first quarter is typically our highest for mortality experience, and while it was higher than our average quarterly run rate, it was a good mortality quarter as far as first quarters go. These results are within our range of expectations.
• This quarter we again saw lower variable segment DAC amortization resulting from positive equity market and separate account performance.
• General expenses were lower this quarter reflecting a variety of expense savings initiatives implemented last year.

Now I'll turn to our statutory point-in-time spreads.

At March 31, spreads on our exclusive annuity business increased by 15 basis points during the quarter to end at 203 basis points. This increase was driven by both an increase in investment yields as well as crediting rate decreases. We've been able to consistently increase these spreads each of the last four quarters. This reflects our focus on setting appropriate rates on new products sales as well as efforts to manage our in force block by actively taking crediting rate reductions where prudent. As a result, we are well above our target for this business of 186 basis points.

Spreads on our universal life business also remain above our target. Spreads on this business increased by two basis points during the quarter to end at 193, above our target spread for this business of 181 basis points.

There was some noise this quarter in the spreads for our independent annuity segment, where we refined our estimates for determining long term default charges for this business. Without this change, point-in-time spreads for both the EquiTrust fixed rate business and index business would have been similar to the levels achieved in the prior quarter.

Next, I will spend a moment discussing our investment portfolio.

Impairments impacted pre-tax earnings by $8.0 million and when combined with realized gains, netted to a pre-tax realized investment loss of $3.3 million, a good continuation of the slowing trend of the past few quarters. These impairments were primarily in asset backed securities. Notably, there were no impairments from commercial mortgage loans. There has been concern in the marketplace about losses from commercial mortgage loans, but our internally underwritten loan portfolio continues to perform well. We remain confident in this portfolio and expect to maintain our long history of low delinquency rates.

Investment valuations continued to improve during the quarter. At March 31 our net unrealized losses before taxes and other offsets was $219 million. This is made up of fixed maturity securities with gross unrealized losses of $560 million and unrealized gains of $341 million. This compares to $474 million at year end, an improvement of $255 million for the quarter, primarily due to spread tightening. We have benefited by the fact that a more stable economic environment has brought liquidity back in the market.

Finally, I'll comment on capital levels. We estimate our Farm Bureau Life company action RBC level at March 31 to be 442%, an increase from the 441% reported at the end of 2009. We estimate EquiTrust Life to be at 396% at first quarter end, a 20 point increase from 376% at the end of 2009. This increase is due strong operating earnings for the quarter and lower business risk charges due to planned sales for the year.

Our debt-to-total capitalization ratio, with equity credit for our trust preferreds, is at a comfortable 19.9% at March 31. We don't have any debt due until the fourth quarter of 2011, and that debt is the $100 million of senior notes we have with affiliates.

In closing, these first quarter results make a strong case that our plans for restoring financial strength and stability are working and have been successful. Our strategies position us to now profitably grow our business going forward.

That concludes our prepared comments. We will now turn the call over to the operator and open it up to any questions you may have.

Kathleen Till Stange
Investor Relations Vice President

(After Q&A)

Hearing no more questions, let me turn it over to Jim Hohmann for some closing remarks.

Jim Hohmann
Chief Executive Officer

Thank you, Kathleen, and thank you to everyone who joined us on the call today.

When I assess the past year, I can see that we have made a great deal of progress as an organization. In 2009 we overcame a very adverse environment, and we are now focused on growing in the future. So with that, let me close the call. Thank you very much for joining us, and thank you for your continued interest in FBL Financial Group.

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