FBL Financial Group, Inc.


Thank you Craig, and good morning. I'm pleased to be here with you today for FBL Financial Group's annual meeting of shareholders, which is my second annual meeting here at FBL. I'd only been with the company a few weeks when we last held this event, so I have a year of history and the perspective that time affords. I want to share a few comments about the progress we've made, then our CFO, Jim Brannen, will review the past year's financial results.

Our theme for FBL's annual report for 2009 is “Overcoming Adversity.” It is a very apt description of the effort and change that has occurred in the year since I began leading FBL. There were several first impressions that I named when I joined the company: I was impressed with the degree of integrity, humbled by the challenge ahead, and hopeful at the amount of opportunity before us. These have been borne out as the framework for achieving our objectives.

Two objectives were swiftly identified: to strengthen capital and to reinvent EquiTrust Life. Later in the year, I added a third priority: to reorganize and clarify accountabilities around drivers that would increase shareholder value.

I am pleased to report that our collective efforts around these objectives have moved our companies along a path of progress. The action plan included steps to:

• Reposition the investment portfolio



• Improve our asset liability position



• Complete a reinsurance transaction



• Diversify our product lines



• Focus on distribution and partnerships



• Realign operations and risk management

Let me share my impressions about FBL Financial Group as a company. First and foremost, I find the caliber of employees and agents to be very high. They truly embody the corporate values of integrity, leadership, accountability, teamwork and passion.

I have gained a great appreciation for the heritage and tradition that form the foundation of Farm Bureau, both as an advocate and as our flagship brand. Farm Bureau Life provides a solid foundation for our company, with strong people, brand and products. Even organizations with a strong heritage recognize that they are part of a changing culture, and we take our role seriously to address change and strengthen our partnership.

As our team of employees and agents worked through the adverse economic climate, constrained credit and challenging financial markets, we realized many goals and made significant progress around products and distribution.

Earnings improved throughout 2009, and our recent earnings results call reflected solid earnings and positive analysis. Our focus this year is to further strengthen capital, to grow our business and profits, and live out our purpose to protect livelihoods and futures.

With that, I will turn it over to Jim Brannen, our Chief Financial Officer, who will discuss our financial results in more detail. We'll be happy to answer any questions you may have at the conclusion of his presentation. Jim.

Thanks Jim and Good Morning. I'm pleased to be here as well.

As I look back on 2009, I view it as a year of challenge, but also a year of progress. Early in 2009 we faced challenges with depressed financial markets causing record unrealized losses in our investment portfolio and new lows in United States treasury rates driving increased surrenders at our EquiTrust Life subsidiary. However, we met those challenges and have since improved our risk profile, strengthened our capital base and optimized our investment portfolio. As a result, we delivered strong earnings for 2009 and ended the year on solid financial footing.

Today, I'll walk you through some of FBL's most significant financial metrics.

First, net income or loss per share. Despite a rough beginning in 2009, we were able to end the year with solid net income of $69.8 million, or $2.31 per share. The net loss in 2008 reflects realized investment losses from other-than-temporary impairments of bonds in our investment portfolio.

Next, operating income per common share. After a difficult 2008, our 2009 operating income totaled a solid $90.1 million, or $2.98 per share. This reflects continued strong results from our Farm Bureau Life business, gains due to a reinsurance transaction, the refinement of reserve estimates and higher earnings in our variable segment due to recovering equity markets.

These positive results continue in 2010. Two weeks ago we reported first quarter 2010 results with operating income of $20.3 million, or $0.66 per share, reflecting strong earnings at both Farm Bureau Life and EquiTrust Life.

During 2009, much of our attention was focused on strengthening our capital base and I'm pleased to say that we were successful with total capitalization increasing to $1.2 billion at year end 2009 from $689 million at year end 2008. Our debt-to-total capitalization ratio, with equity credit for our trust preferreds, was 20.1% at year end with securities at cost, a level we're comfortable with. Our capitalization continues to grow in 2010.

Our companies are well-capitalized and, despite the challenges in the financial markets during 2009, we were able to strengthen our capital position. At year end 2009, company action level risk based capital, or RBC, was 441% for Farm Bureau Life and 376% for EquiTrust Life. Both companies increased capital significantly over the past year and both exceed our 350% target. We have seen further increases in 2010, most notably with EquiTrust Life. These increases reflect our strong financial results and actions to reposition our investment portfolio, reinsure a closed block of business and restructure our EquiTrust Life product portfolio so that sales are capital efficient.

Our book value per share is shown here both with and without accumulated other comprehensive income/loss, or AOCI. For us, AOCI is largely the marking of fixed income securities to market value. Book value per share as of year end 2009 increased a remarkable 237% to $28.49. This reflects our strong 2009 financial results and an increase in the market value of investments due to the recovery of the financial markets and our portfolio repositioning. We also experienced further book value growth in the first quarter of 2010.

Assets totaled $14.3 billion at year-end 2009, an increase from $14.1 billion at year-end 2008 and an increase from $10.2 billion at year-end 2005. Spreads earned on this growth in assets was a factor in our increase in both net income and operating income in 2009. Asset growth continued in the first quarter of 2010.

Next, I'll turn to our investment portfolio. Our investments are managed internally and are well-diversified by individual issue, industry and asset class. We manage our credit exposure on an enterprise-wide basis and have limits in place for each credit exposure. During 2009, we had several opportunities to reposition a portion of our investment portfolio, which allowed us to improve the overall portfolio liquidity, enhance the aggregate credit profile of the portfolio, and further diversify the overall portfolio across asset classes, sectors and individual issuers.

In closing, our 2009 financial results, as well as our first quarter 2010 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 profitably grow our business going forward.

Thank you for your attention. Now, I'll turn it over to Craig.