Jim Noyce
Chief Executive Officer

Good morning and welcome to all of you on today's call.

We had another outstanding quarter with net income of $0.54 per share and record operating income of $0.81 per share.

The highlight of the quarter, in addition to record earnings achieved, was sales. Both Farm Bureau Life and EquiTrust Life had excellent quarters from a sales perspective.

Farm Bureau Life achieved an impressive 8% increase in premiums collected.

• Life sales have been strong for the last several years and this continued in the third quarter with traditional and universal life insurance premiums collected up 7% from the year ago quarter. This business is very persistent and profitable for us, so we are very pleased with this continued above industry average growth.
• Variable product sales were also very strong, with a 20% increase in premiums collected.
• Traditional annuity sales in this channel have been under pressure for the last year or so, but are starting to level off with a 1% decline from the year ago quarter.

Sales levels at EquiTrust Life were also very strong this quarter. Our EquiTrust Life independent channel achieved total premiums collected for the quarter of $489 million, a tremendous 75% increase from the second quarter of 2007. This was made up of $276 million of fixed rate annuities and $213 million of index annuities.

Our index annuity sales were down 4% from the second quarter of 2007. This reflects the competitive nature of the index annuity industry lately as well as our recent agent recruitment being focused on those individuals more interested in our fixed rate annuities.

The real highlight of the quarter for EquiTrust was the significant premiums in our multi-year guarantee annuity product, which is trademarked Certainty Select. Premiums from this product totaled $260 million in the third quarter, up significantly from $44 million in the second quarter of 2007, but, as anticipated, down from $375 million in the third quarter of 2006.

The guarantee periods offered for this product are 3, 5, 6, 8 and 10 years, with the 5-year option being the most popular. Because of the increase in treasury yields and credit spreads on our investments, we were able to offer higher rates on our multi-year product starting in June. Starting on June 5th, we were able to offer the attractive 5% for the 5-year guarantee period. As shorter term rates came down with the Fed action, our product became more attractive compared to CD rates. We were able to offer the 5x5 throughout the third quarter, thanks to the steepening yield curve, as well as continuously widening credit spreads. Our sales were not just driven by the 5x5 as sales in all other guarantee periods were up as well.

I want to point out that we are able to achieve this growth without using artificial inducements such as commission or rate specials. We pay a 3% commission on all durations of this product except for the 3-year period where we pay a 2% commission.

We know this business is very rate sensitive and we are always striving to achieve the right balance between sales growth and profitability. As Jim Brannen will discuss in his financial review, we are above our target spreads on this MYGA business. During the entire quarter we were able to meet our pricing targets. As you know, we are very nimble in making rate changes, as dictated by rates we are able to earn on our investments. As an example, we lowered the 5-year Certainty Select rate to 4.75% just yesterday due to lower treasury yields and tightening of credit spreads.

Given this level of sales to date, I expect us to achieve our 2007 premiums collected target of $1.4 billion for our EquiTrust Life independent channel business. Obviously, with yesterday's rate decrease, fixed rate annuity sales may slow down, but our products continue to be priced competitively and for profitability.

At EquiTrust Life we also continue to diversify our portfolio of products, adding a new life option to our immediate annuity, introducing shorter-duration index annuities, and branching out into states where we hadn't been active in the past, such as Washington and Oregon. We remain committed to selling profitable, well-designed, suitable, simple products, and in September received our IMSA recertification.

Before I turn it over to Jim Brannen, I would like to comment briefly on some additional clarification we provided this quarter regarding our EquiTrust Life agent count. We have regularly disclosed our agent totals and provided updates on agent growth. We have followed industry practice in reporting our agent count and have included all EquiTrust appointed agents. This number can include non-natural persons. For example, this count can include an individual agent who sells for us, and also include the related agency through which the agent's business is run. We've provided additional disclosure this quarter with an agent count that represents just the number of individual agents and will report this number going forward.

Whichever way you count it, we were successful again in the third quarter in growing our agent count.

To date, 2007 has been a very successful year for FBL Financial Group and we have the strategies in place for continued success for the remainder of the year and beyond.

Now, Jim Brannen will provide the financial review. Jim.

Jim Brannen
Chief Financial Officer

Thanks Jim, and good morning everyone.

As Jim stated, results for the quarter were excellent with record operating income of $0.81 per share and net income of $0.54 per share.

The big difference between operating income and net income is primarily due to FAS 133 which is the accounting standard that requires derivatives be recorded at market value. As you know, results from this accounting standard can be volatile, which is one of the reasons why it is backed out of net income in determining operating income. Last quarter the application of FAS 133 generated significant income. This was due primarily to an increase in the discount rate used in calculating the embedded derivative in our index annuity reserves. This quarter the discount rate decreased and this resulted in a significant reduction to net income.

I'll now turn to operating income and highlight some of the items that impacted our results this quarter.

• Mortality experience was favorable this quarter, reflecting a lower claim count and a lower average claim size. Death benefits totaled $21.0 million this quarter, which was better than our expectations and much lower than the high level of death benefits in the third quarter of 2006 of $26.1 million.
• Investment income increased 14% for the quarter, primarily due to an increase in invested assets. And while we usually benefit from additional investment fee income, it was less of a benefit this quarter. Fee income from bond calls and prepayments as well as the impact from FAS 91 for the reversal of net discount accretion on mortgage and asset-backed securities totaled $681,000 for the quarter, a decline from $3.4 million in the third quarter of 2006.
• Earnings from our EquiTrust Life independent channel totaled $0.13 per share this quarter. Excluding the impact of an unlocking adjustment last quarter in this channel, it was an increase of $0.02 per share from results in the second quarter of 2007. This increasing earnings contribution reflects the continued growth of this book of business.
• Our closed block coinsurance business from American Equity continues to be profitable for us, with an earnings contribution this quarter of $0.10 per share. This level is what we would consider typical for this closed block.
• Equity income was positive this quarter with after tax income of $538,000, which is $0.02 per share. Due to the nature of these investments, this amount can vary by quarter, and at times be a loss. Income this quarter is primarily due to gains from a real estate investment partnership.
• During the third quarter we reduced our dividend scale on participating life insurance business. As a result, our dividend expense for the third quarter decreased 11%, to $4.9 million.
• Results were negatively impacted this quarter by an unlocking adjustment of $0.03 per share. Each quarter we analyze different blocks of business as part of our routine review of the assumptions used in the amortization of deferred acquisition costs and deferred sales inducements. This quarter we reviewed the assumptions used for our Farm Bureau Life business. Please see the DAC rollforward that we provide in our financial supplement on page 13. These unlocking adjustments varied by segment with $1.2 million additional amortization in the exclusive annuity segment, $1.6 million additional amortization in the traditional and universal life segment; and a benefit, or less amortization, in the variable segment of $1.0 million.

Next, I'll turn to spreads. As of September 30, our exclusive annuity business remained steady with a spread of 169 basis points on a statutory basis, which is even with June 30 levels, but below our target for this business of 182 basis points. We have made a 15 basis point decrease to the credited rate on our primary Farm Bureau Life fixed annuity product, increasing the spread for this business. This rate change becomes effective today.

For our direct universal life business, our spread on a statutory basis increased by six basis points during the quarter to 191 basis points, reflecting crediting rate actions taken during the quarter. This spread remains above our target spread for this business of 183 basis points.

As of September 30 on a statutory basis, the spread for our EquiTrust Life independent channel fixed rate annuity business increased one basis point during the quarter to 97 basis points. As you know we sold a significant amount of multiyear guaranty annuity business in the quarter - $260 million - and we were able to do it profitability as our spreads are currently above our target spread for this business of 87 basis points, for an excess spread of 10 basis points.

The spread for our EquiTrust Life direct index annuity business on the other hand declined slightly and is currently below our target spread. The spread on this business was 220 basis points at September 30 compared to our target for this business of 232 basis points. The third quarter decline was driven by elevated option costs caused by increased market volatility.

Overall, for our EquiTrust Life independent channel business, we are making our spreads and at September 30 had an excess spread of one basis point.

Our outlook for the remainder of 2007 is positive. As we indicated with our earnings announcement yesterday, we expect to be at the high end of, or exceed, our 2007 operating income guidance range of $2.95 to $3.10 per common share.

Our capital position remains strong. As of September 30, our total capitalization exceeded $1.2 billion and we had cash and investments of $106.5 million at the holding company. Sometime before the end of 2007 we expect to make a capital contribution from FBL to EquiTrust Life in order to support its growing operations. We continue to exceed the capital levels required for our "A" ratings from AM Best and Standard & Poor's. Our debt-to-total capitalization ratio also continues to be at a reasonable and appropriate level - 25.5% at September 30, 2007.

Last quarter we discussed our minimal exposure to subprime securities, and that hasn't changed. At September 30, our three subprime securities had a market value total of $29 million, which is 0.3% of our total investments. These issues are all AAA-rated, fixed rate and were originated in 2005. As we have regularly communicated, we do not participate in the adjustable rate mortgage sector.

We do have exposure to Alt-A securities with a market value totaling $769 million. Here again it is all AAA-rated, fixed rate and the majority are vintage years 2004 and earlier. Of this total, $191 million is wrapped. And of the portion that is not wrapped, subordination has built up significantly.

We did have a couple of other-than-temporary impairments during the quarter, but they were relatively minor and did not relate to any of the subprime issues. They totaled approximately $400,000 and were for a communications firm and a military housing bond.

With our high quality and diverse investment portfolio, we are very well positioned. We will obviously monitor very closely the subprime and Alt-A exposure that we have, but I do not expect the market conditions to have a significant impact on our portfolio. For the third quarter we have included additional details on our subprime and Alt-A exposure on page 37 of our Form 10-Q that is now filed with the SEC.

With that, we will now turn the call over to the operator and open it up to any questions you may have.

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