Jim Hohmann
Chief Executive Officer

Good morning.

I am pleased to begin this call by reporting excellent third quarter results, with net income of $0.53 per share and operating income of $0.76 per share. While the economic environment remains challenging, these quarterly results build upon the foundation of outstanding second quarter earnings and further strengthen our balance sheet. Jim Brannen will be discussing this in more detail when he reviews our financial results.

Meanwhile, I will update you on my priorities. My top focus remains on conserving and strengthening our capital position.

Our estimated September 30 RBC ratio for Farm Bureau Life is 357%, which exceeds our 350% target. On a pro forma basis including the impact of an October 1 reinsurance transaction, EquiTrust Life had an estimated RBC of 286%. This is an increase from second quarter end due to the impact of quarterly results and activities, as well as a 20 percentage point increase from the reinsurance transaction, partially offset by the impact of ratings downward migration. Our goal is to move EquiTrust Life above 300% as soon as possible and then to increase it from there.

The reinsurance transaction referenced above and announced last week with EMC National Life Company has been finalized. They have recaptured a block of business with approximately $250 million in reserves. EquiTrust Life will be recording a fourth quarter after-tax gain of $20.2 million on a statutory basis and on a GAAP basis the gain recorded will be $9.4 million. This transaction was very clean in that the business is going back to its original issuer and we have no more liability or administrative responsibilities for this block of business.

This transaction also gave us the opportunity to further enhance our asset liability management profile by improving our cash flow management. With the transfer of assets we are now further repositioning the EquiTrust Life investment portfolio.

This is consistent with the portfolio repositioning we executed at the end of the second quarter. These portfolio optimization efforts are focused on asset liability management, portfolio liquidity, enhancing the aggregate credit profile, and further diversifying the portfolio.

Jim Brannen will be providing more detail on our investment portfolio during his comments.

We continue to devote considerable resources to analyzing and evaluating a variety of opportunities to improve our capital position.

As you're aware, we filed a shelf registration during the third quarter so that we can be prepared to access the capital markets, if we so choose. However, our current intent is not to access the capital markets in the near term, but it does remain an option.

During the third quarter I announced an organizational change. As part of this reorganization, I was looking to have direct reports in the areas where I see our shareholder value opportunities.

• Kevin Slawin has joined FBL Financial Group in the new position of EVP - Marketing and Distribution. In this position he's responsible for marketing as well as the growth and effectiveness of our exclusive distribution organization.
• The newly created position of Chief Actuary, for which we're currently recruiting, will be accountable for the actuarial components of valuation, risk management and product development.
• Charlie Happel now reports directly to me as Chief Investment Officer.
• Tom May is leading EquiTrust Life, which is particularly important as we implement the reinvention process.
• Bruce Trost is now EVP, Operations, responsible for a new alignment of Farm Bureau Life and our managed Farm Bureau property casualty operations.

While we've focused on capital improvement and reorganization, we've made great progress on my third priority - the EquiTrust Reinvention.

We've completed the strategy work on the reinvention and are now working on implementation. The Reinvention embodies innovative strategies, diversified products, and renewed attention to distribution partners and target customers. At the same time it recognizes the existing strengths of EquiTrust Life being an organization that is very nimble and agile, effectively processing business and engaging with the distributors.

The Reinvention plan calls for developing a consumer-focused life insurance operation in cooperation with independent marketing intermediaries. We will continue to sell fixed annuity business, but in the near term it will be at a level designed to keep assets under management stable.

A wealth transfer product is being developed for the senior market for a planned launch in 2010. These strategies and actions combine to build modest growth over time, eventually leading to higher returns and ultimately to EquiTrust Life being a capital provider for FBL.

Lastly, I want to mention how appreciative I am of the agents I've met in the last several months. I've found agents who are engaging and educating their clients, who are entrepreneurs and who are valuable contributors to their communities.

Before turning it over to Jim Brannen, let me say that I'm proud of what our employees, agents, and management team have accomplished in these last six months at FBL Financial Group. Our efforts have increased shareholder value; we've strengthened the foundation of our company and formed the structure for a solid future.

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

Jim Brannen
Chief Financial Officer

Thanks, Jim, and good morning everyone.

As Jim stated we had very strong third quarter financial results with net income of $0.53 per share and operating income of $0.76 per share. In addition, investment market values continued to improve and our book value increased by 42% to $27.56 per share from $19.39 per share at June 30 and 212% from $8.84 per share at March 31.

I'll focus my comments today on our third quarter sales and financial results, investment portfolio and capital position.

Starting with sales, Farm Bureau Life's third quarter 2009 sales totaled $145.6 million. These challenging economic times make it a difficult environment for life sales, but our exclusive agents and niche marketplace continue to provide us with strong results. Traditional and universal life insurance premiums collected increased by 4%. Traditional annuity sales on the other hand were essentially flat. They are increasingly being impacted by competing rates on certificates of deposit. Variable sales have also been under pressure, and were down 12%.

Premiums collected at EquiTrust Life, were, by design, lower in the third quarter and totaled $47 million for our independent channel. This level of sales reflects the changes we made in May at EquiTrust Life in order to increase profitability and manage capital. At the end of the third quarter we made a variety of additional changes to product features and compensation in order to increase the attractiveness of our product offerings without compromising our capital and profit requirements.

Surrender activity at EquiTrust Life during the third quarter continues to be in a normal range, despite declining Treasury yields during the quarter.

Next, I'll turn to our third quarter results. Operating income was a strong $0.76 per share for the quarter. I'll highlight a few of the items that impacted our results this quarter.

• Death benefits provided a favorable lift again for the quarter driven by significantly lower claim counts. This is somewhat consistent with the seasonal fluctuations we and the industry experience in the third quarter. However, this quarter the magnitude of this seasonal drop was more significant than we have previously experienced. This underscores that by its nature, mortality experience can fluctuate from quarter to quarter.
• Again, this quarter with the improvement in equity markets and separate account performance, we saw less DAC amortization for our variable segment. We use a mean reversion approach and any positive equity market performance in excess of the cap flows through current period amortization and resulted in a benefit of approximately $0.08 per share this quarter.
• During the quarter we unlocked our Farm Bureau Life blocks of business and updated assumptions including spreads, mortality and persistency. In total, this increased income by $0.06 per share, favorably impacting the exclusive annuity segment, but negatively impacting the traditional and universal life and variable segments.

Now I'll turn to spreads. In general Farm Bureau Life spreads increased or remained steady for all segments, and are above our targets. EquiTrust Life spreads are currently below targets for the quarter.

At September 30, spreads on our exclusive annuity business increased by ten basis points during the quarter to end up at 170 basis points on a statutory basis. This increase primarily reflects higher yields on new purchases during the quarter, along with crediting rate changes. This spread is above our target for this business of 165 basis points.

Universal life statutory spreads increased by seven basis points during the quarter to end the quarter at 190 basis points. This remains above our target spread for this business of 180 basis points.

We also experienced increases on spreads for the index business in our independent annuity segment, but are still below our target of 242 basis points. The spread for the fixed rate business in our independent annuity segment remained steady during the quarter, but still below our target for this business of 95 basis points. While we have increased spreads from rate changes, these were largely offset by the impact of portfolio repositioning.

Let me turn to our investment portfolio. At the end of the quarter we held fixed maturity securities with gross unrealized losses of $760 million. When combined with securities with unrealized gains, this nets to an unrealized loss of $436 million. That represents another significant improvement from the high of a $1.6 billion net unrealized loss at March 31. The significant improvement has come across all sectors and we continue to believe the unrealized losses reflect wider credit spreads in a few remaining sectors rather than specific credit deterioration. Our investments continue to perform and we expect to hold them until recovery of value or maturity. 93.2 percent of the fixed maturity securities are investment grade rated and the pace of impairments has slowed with $1.6 million of other-than-temporary impairments impacting earnings this quarter.

One of the hot topics in most investment portfolios right now is commercial mortgage loans. So, I'll provide a bit more detail on ours. FBL's commercial mortgage loan portfolio consists of 333 loans totaling $1.3 billion, which represents approximately 10% of FBL's investment portfolio. We have not issued any new loans in 2009. This portfolio is well-diversified by property type and geographic location and has performed very well to date. This portfolio has an average current loan-to-value at origination of 58%. All mortgages are underwritten internally by well-seasoned mortgage loan specialists. Part of our strategy is avoiding any investments in anything with a bed, which includes single family, hotel, and apartments. We also don't invest in construction or agricultural loans. We have a long history of low delinquency rates. During the third quarter, we foreclosed on three mortgage loans with a book value totaling $14.2 million and took possession of real estate with an appraised value of $16.8 million. At quarter end, we held a valuation allowance for one impaired loan totaling $400,000. So we feel confident in our commercial mortgage loan portfolio.

We also have commercial mortgage backed securities totaling $730 million, which is 6.1% of our total investments. Most of the CMBS is government backed or super senior. We've performed a variety of stress tests on the portfolio and continue to believe these securities will perform well.

Finally, I'll comment on capital and liquidity. Jim has already mentioned that this is a top priority and our RBC levels and our work on several fronts to increase capital at EquiTrust Life to an RBC of at least 300.

Our debt-to-total capitalization ratio, with equity credit for our trust preferreds, is 20.6% at September 30. We remain well-positioned from a liquidity standpoint. We do not have any debt due until 2011, and that debt is the $100 million of senior notes we have with affiliates.

We maintain liquidity in the form of cash and short-term investments, which as of September 30 totaled $339 million. Should additional future liquidity be needed, we also have access to funding through the Federal Home Loan Bank and other highly liquid securities.

In closing, we are pleased again with the quarter and the steps we are taking to improve our risk, capital and portfolio. We do continue to be vigilant as the economy has started to take hold and are optimistic about the future.

That concludes my 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 comments.

Jim Hohmann
Chief Executive Officer

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

Thank you, Kathleen, and thank you to everyone who joined us on the call today. Last quarter I spoke of an "all efforts" approach to improving our company. We are building both urgently and thoughtfully and our efforts - toward capital strength, reorganization, and reinvention - accompanied another positive earnings period. The construction in which we engage, though, is a daily activity and we remain focused on building the future of FBL Financial Group and increasing shareholder value.

So with that, let me close the call. Thank you very much for joining us today and thank you for your continued interest in FBL Financial Group.