FBL Financial (FFG) 7 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the FBL Financial Group Inc. Fourth Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Corporate Relations. President, Vice Stange, and Investor Kathleen Please go ahead.

Don answer FBL are Happel, today's for in Chief Chief Officer, Fourth on present Charlie Kelli Quarter Operating and you, Officer; call and for Earnings and Life Group's Companies; to welcome filling your and Samba, Executive Chief Mark Presenting Thank available XXXX to Officer. Financial Conference Vice is Dan is Pitcher, Chief Seibel, questions who call. Financial are away Also today's Mark President, Eddy, Officer, Investment strategy. Investment Call.

materially Certain intended involve from statements and statements those These reasonable. the to Litigation made liability reports from implied. based and today FBL's in qualify harbor These may believes differ Act. risks uncertainties detailed contain and Securities forward-looking safe with assumptions, or Private risks the filed SEC be on Reform to statements are uncertainties established expressed results that actual FBL are the which by cause for could to

However, forward-looking can FBL to to obligation prove disclaims date. any the be update that no assumptions be after correct. this assurance statements will given

Comments in and these our fourth to call reconciled items earnings Where GAAP be fblfinancial.com. during website, measures. of applicable, are include certain non-GAAP release which both financial this on supplement quarter may our financial found

the prepared being call the found and may comments replay shortly call. of is simulcast transcript be after Today's our on FBL's audio website. a An on website

now Pitcher. is to it over Dan Dan? that, With CEO, the my pleasure turn call to

earnings CEO. the pleased my today call. part to as I'm be Thanks, first you Kathleen. as Welcome everyone with of on to call

IT joined executive as roles and been results, in managed since I management I'll Bureau experience a Director from as began has share member as Farm the I insurer. to FBL I deep past I side, FBL property-casualty years. years been XX ago the for with & review have recent but Technology Chief insurance transitioned career the joined Before a Property team XXXX. and the of on Information for also a brief Operating we X they & experience My my Casualty companies. life companies most the Officer served have Casualty Property life introduction.

for Additionally, Financial to opportunity the as the excited in Group, investment strategy, I'm the X team I've had member future. activities years, various management as last and participate be committee to I'm more. such FBL leading a enterprise for its innovation, honored and

We our have the purpose Bureau dedicated living and are our agents, protect employees passionate client Farm to members. exclusive of futures and than about more X,XXX who livelihoods

should shift expect you my strategic major leadership, a in direction. not Under

make may I strategies. However, some move in refinements to our place have forward. It's right team to execute we as crucial the

the soon. We to niche have prior I strength, We're a perspective. our wealth to companies as employees. and depend for us agents long-term expect This like members skilled to on client Farm add through new initiatives growth. to to from be our Chief all sales my property-casualty allows add agency continue Operating I as Officer on who market Team Bureau and plan positioned management. a well mindful growing and is to as team to focus us for to of force the management distribution from team, and it financial role fill marketing laser-focused

unlocking fourth of adjustment. block Now reflect growing steadily Results for will I'll and share turn to from $X.XX adjusted an the FBL results financial the income record results share reported business quarter and per $X.XX for of the XXXX. in per Don of review the Financial income detail. Group quarter. benefit net of operating a

their premium UL quarter in This the momentum. universal collected driven X.X% term positive life totaled and was collected increased for quarter, life from growth premium Next, the Life XXXX. increases increased I'll strong by collected and fourth advisers. discuss for X.X%. of X% quarter fourth premium sales. sales, the up life while $XX term our management wealth XXXX continued of agents million, Life sales

Sales agents insurance understanding as has And insurance rate with with exclusive needs. deep develop meet of members. and the begin futures. industry-leading Our our our This we long-term to relationships truly life often products. needs our have over and time, members us property-casualty livelihoods purpose to sales our client of their allowing of protecting client follow led the approach a cross-sell fulfill

XX% third the had stabilized quarter of for declined. annuity of XXXX, rate fourth quarter when annuity This several increase collected sales totaled a increased, after quarters premiums the million. XXXX $XX fixed declining. while Annuity sales Indexed is sales from of

in maintain determine as to financial environment. rate interest continue We this we discipline rates our low appropriate crediting

and As of XXXX, agents of year-end Services year. increase over is exclusive This agency Financial Farm an X,XXX Bureau XX the managers. we past have

enable continue Today, growing agent agents our and offer it Years their They of successful agent. ago, we them focus systems own business productivity most members staff. have without distribution our business. sales truly client their We owners. support. associates to teams best-in-class to but small is grow count, more entrepreneurial, a To be important, this, total service agent stand-alone and on each of help any even their serve to the common are was and

as number agents as our we support of grow forward, will to current businesses. grow Going well work agents both they their total the as

Farm Bureau to Farm Bureau our advisers. wealth force, are management addition adding In we agency

XX Farm XXXX, had As Bureau year-end wealth of advisers manager and we appointed.

recruiting We experienced in territory. and adding are actively advisers our

property-casualty annuity members mutual our agents insurance their client planning been offering a client financial has be products, insurance to the for of now advisers projects fee-based existing I CEO management While wholeheartedly Bureau shop service the a agents our Services range wide by These This been and funds one-stop their services. advisory opportunity is truly with needed and serve with for has client welcomed and support. this financial This -- life services. and in allows to and strategy members. wealth role, to our Farm the that unique partner our products members have agents new referrals by I'm Financial

in fee-based business. this currently ultimately but wealth add We Group to to expect our diversified of investing a stream business, earnings nature management given are FBL Financial it the

of I'm conclude, the Group. optimistic future FBL To about Financial

challenges We experience are wealth agents, to strong in our member business. future. commitment Farm are the and automation, niche of with marketplace we addressing and brand innovation management value, investing Bureau market low our well exclusive the our rates, interest Coupled the for the positioned multiline and client

results. Now I'll over financial turn to to our the Seibel Don call cover Don?

was the per for There quarter share. Thanks, key differed call. our adjusted were welcome and record expectations. very for also the than operating income fourth income why everyone per share X want $X.XX greater of Dan. drivers on and I are Net our a Earnings our $X.XX was expectations. earnings XXXX strong to from

a noticed block amortization with First, this increased of This earnings an positively $X.XX period we related extended performed share an this fourth of in-depth tax. insurance of unlocking by in the per review persistency unlocking for we business. the participating persistency. after We whole XXXX After life XXXX, of fourth impacted quarter DAC to trend had the quarter business. for

living favorable during on the equity decreased performance reserve fourth variable rider. DAC and annuity market index our Second, the increase amortization guaranteed benefit business quarter our XXXX on lowered of

our share. were up in results And trued expectations. exceeded certain the fee per balances income Third, fourth, $X.XX benefiting investment prepayment reinsurance quarter,

third discuss review XXXX we employees rates. Annuity offered for quarters by mortality segment. detail fourth to certain quarter continues steadily worse XXXX. an these of these as interest compared in XXXX of the in the quarter retirement block early third negatively to results I Earnings segment were in low increased program results than This of positive in are by the segment the more our quarter of quarter and of unlocking grow, assumptions impact experienced but Partially XXXX. items, items the in impacted pressured XXXX expected and to results offsetting the of results. historical I'll the fourth corporate market other business and actuarial

fourth business annuities of growing individual in primarily the Life the benefits spreads decreased investment of XXXX time in decline in a the quarter mentioned. the in assets basis Point of X life proceeds quarter. results points higher-yielding universal decreased the business the the impact unlocking during in a reinsurance steadily lower-yielding insurance of points Point to yield of segment reinvestment for and reflect the and quarter for during fourth basis time Insurance to reinvestment from also due due X XXXX Spreads maturity assets. of life spreads are lower and I our yields. universal book true-up our pressured

several Corporate for and other the segment results were reasons. lower during quarter

in First, closed our an quarterly of a this variable small block fluctuation of claims universal of business. relatively this in primarily This mortality segment block due due benefits -- is experienced higher life results business. life large insurance increased normal in to death number

related the share the by of an includes deferred the totaling market Second, $X.XX tax. quarter loss management the of per million impact for or our performance XXXX These the or strong quarter other corporate business. in offset fourth after $X.X wealth costs. $X the and the on share equity segment amortization partially by This net amortization per investment in were million decreased $X.XX after-tax acquisition fourth of to items

to we The wealth in business and declined we the to XX As basis look before far further has will in investment deliver environment declined in management net treasury to so results. a remains require that business time scale points the The challenging. it bottom investment, XXXX, forward has some expect take rate continue XXXX. XX-year positive line as XXXX even

reaching for lower We yield maintaining discipline are not quality with and are financial investments.

We investing longer high bonds. and quality, commercial are also on duration possible. investments, loans X NAIC in X corporate high-quality We're focused when adding mostly mortgage

yield of business is our This backing of X.XX%. quarter The on the lower XXXX adjusted XXXX. X.XX% new long-term our acquisitions yield for portfolio tax fourth investment was than

in and amortization a share. and when wealth quarter like management these higher-than-expected expected experience. impacted on Before items consider the fourth run positive of taken on the in a net quarter rate with income, to earnings low should true-up, many our our include can't markets of I as DAC life I'd reinsurance fourth perspective per The a a level results into investment expect worse of of our prepayment impact $X.XX expected we they regularly discussion impact environment, for add headwinds reoccur. items market be to the with you items coupled XXXX. These investment fee were regarding our interest was reserves, the unlocking account to mortality impact, and earnings rate some favorable that This, favorable move by than capital,

Next, and the I'll ratio to year. special is December This company level Farm dividends paid during capital At an holding shareholders Farm from increase of our dividends XX-point with Bureau Life our the to subsidiary, company from XX, comment to fund XXXX, significant action Bureau even regular Life on a had estimated the levels. the risk-based XXXX, paid XXX%. capital year-end

an We flexibility. significant excellent to financial with continue have capital position

regular our repurchases, options for payment dividend multiple quarterly excess capital. have They stock We our dividends. special and deploying the include of

our market limited minimal float, repurchases public had the stock in we Given open XXXX. in

operating dividend an Our Board to and Directors attractive regularly strong yield consistent reviews of dividend having rate and given results. our the committed is

also a capital. a We on may, occasion, special a way to portion as distribute of our excess pay dividend

later the meets Our it of Board this when will review month. payment next dividends

was In have XXXX been forward these a Financial to able closing, grow provide Group. or to move continue financial I'm to profitably We year XXXX with these for you. -- to very our results in with business. discipline share strong FBL pleased

over you will may to up now operator, any the call open questions the We to and turn have.

Instructions]. [Operator

Peters from of first comes James. today question Greg The Raymond

Marcos And role. new your Dan, calling is for in congratulations Greg. on This

you. Thank

of wouldn't to you I would those you change some And I you might your remarks, guys might you color business maybe Dan. My and some on but make us more what the first and be? opportunity where you give the heading, question, direction said mentioned guess the you adjustments, give this strategic in are guess, opening

Yes.

into can't the in I be. Marcos. point would companies. is may have a Obviously, headwind interest refinements And some that this what think I be clear rate it a view the environment time say the I for at to that current strategy,

would our of And opportunities so for be look high list that refinements maintain looking the we in that definitely performance for. to on environment will

yield an portfolio my points like And it I I the if just guess, seems XXX down this went market be out, might it right, got look it. X question. that's is basis If Got think, this what that's year. year. I cuts additional And the even second you pricing,

rates the How So even be I'm they strategy are rates to crediting understand just than lower much of might can context much the in is trying go? going lower changing possibly how today?

question. that Marcos, I'll take Yes,

X.XX%. call decrease was yield, I the Regarding our as the was all in investment portfolio for yield all of today, portfolio X.XX%, in believe our yield XXXX our for and portfolio of XXXX said

it we but have portfolio that And year-over-year. did still crediting did basis but didn't to make you had much that's X, we do rate on did rates actually take it look down down effective with our our XX go subject as crediting products and a a So go at portfolio indicated, go as down. It guarantees. January in our point products of decrease we contracts

So X the was total X points. to the portfolio impact on overall basis

with So products. limited we are of respect portfolio to really the

With respect those that look new our on those sales we setting such of products, business. at targets to are index and new we the rates a taking pricing our cap hit

environment, maybe was especially a XX talk an mean about I us big sales? guess, Jan impacting difference. give on had X, update how guess, basis for That does that you maybe that on to the the points you And And cut -- dovetailing sales I annuities? us and how, competitive I

the I similar we latter of I respect competition, mean as spectrum out with XXXX. are in headwinds lower willing go that environment, some to able And are continued was expect it Yes. sales, to competitors annuities. move in be down to quality I the to there Marcos, as the there annuity those are now that. in do bit Certainly, talk more the rates. about is -- forward. with And can we attractive think there's offering a that half

impacting then and the quality. to looking and there our stock And very a sales. are product certainly are just market, looking that's people purchasing investments at exposure another and high level, the mutual our long-term with investment We fund it's equity for -- when competing out is maintaining

any there that that might year? expectations channel be challenging more last exceeded or particular Is your

your clarify you bit? question a Could

Just more where product go or or more any think channel if competition landscape, you robust? your you so where there's the you on that particular distribution expectations is method see exceeded

index index as that more life, rate our our the annuity which to Well, well attractive universal our environment, index clearly probably they'll this our market interest our well. top-selling are be as products. to with respect is in products in are continue products, as And

in grow guess, I a I expect Great. give I'm and earnings the competition. you confidence Okay. thinking just sense I'm you last as maybe -- to and us do XXXX company. just for how know And just question. a my of rate environment can about the lower the What's do of flat earnings Just those, that how the about float some this not limit some generation also might capacity from -- management buyback, us for earnings year? the limited this it you there's here? might give wealth perspective Is think year XXXX? the business. more growth and

Well.

that in As earnings that call bottom a of comments, rate run my I was conference have. the highlighting clearly, the fourth recorded in year excess we we this quarter in line are

tough benefited because going our those to XXXX line grow it's bottom in be the really of earnings So very items year. that throughout to

with expense to maintain on We're discipline front, management. going on continue wealth discipline maintain the pricing to the front our our to respect

number but net investing as is we are on in business that how that to earnings investment up basis give on XXXX going to in in was going end business that XXXX share. going net per a to throughout Our I'm guidance not well. $X.XX move,

The from Jamie [Operator question Philo of next today Instructions]. Inglis comes Smith.

of questions. and of sort one the then couple level, in A numbers. Two high

sales this building as a environment, happen employment, as -- difficult think If than seem full pointed And you not think your agency X,XXX, in hoped? be good And count better up you might you force? we full you How your is be XX And of think -- out of do to year. is it what time relatively economic, about that going terms do for forward? hoped? you about you the that that sort to would for had

is Dan. This Yes.

as employment, to And grow shift And when do would And level And and that want pretty in to about grow lift not place are my do focused time I may So be bit business. out also that there potential incentives in felt We to pose growing number. the agents -- force. we economy mean more, motivate, have but we have good we at we unemployment have were, of was But the option and strength mentioned businesses. yes, that. some their that on is does obviously, current it to the place. number the agents really in we the comments, I expect a of applicants low join as in them our a motivate their distribution current to to there expanding programs of many assist challenges.

hired. well, I anyway, Right, that. sales right. should but would into adviser And is balance you've I that going seg economy the better-than-average next you a guess, because so wealth if got think then And way the sort question, of about the be it's

do I their specifically or measure on generally? sort How adviser? their think And said you of company you success impact do sort they of their the how XX. measure individually, by were you then success

is take Don. this Jamie, that Yes, I'll question.

a recruit with looking wealth adviser we're management we adviser, size. when So for an certain book

is success first and adviser to in certainly, us. clients growth have book that And terms rate per ongoing, measure new over we'll of for forward. in the goals the So converting then going what's success deposits new

say you does work? does how products a occur? you do mean of go that how for, sort second, convert When FBL, third, that I to What for

of business offer with set in that a Well, through of over advisers our book products And that we similar come they've been mutual a experienced have time. fund. RBC, of servicing full suite affiliation

We have a broker-dealer. full-service

wealth So the we adviser. be provider provide management of can and for all those the services

Okay.

say with the they move new mean can can up in what where I and move us? that, a they to can think to adviser, So way, they it's they think

relationship shows Yes. will adviser a the where there, there's goes. and history clients go that And

Right. Right.

Okay. probably Don, And finally, for you.

$X.XX items year a the impact can various you fourth and sort for of were the year? quarter. Was benefit that me unusual I here? a quarter of to What's you give the fourth then ago mentioned the -- on as there of unusual items comparable in the same from quoted there You think the apples-to-apples

to that I offered back but cost a adjustment the then years intersensitive, admit, fourth life, Trying we that to have old a close had for specific really an year, we $X.X that, and was was depressed million and to prepare adjustment -- had negative years retirement an that, think the to earnings. a year, we whole I ago, I'll product last to to Jamie, was that's had One couple sold of to which and better say. question. basis. we upfront didn't quarter a transactions it in on And earnings fourth not don't we I amount, last think quarter early to recall pretax related our had I window, related that

was year, negative Last in retirement $X.XX a impact share fourth per quarter. the program of early the

that So was $X.XX.

$X.XX, living the benefits. the that that the would the we If you for with wouldn't had year. third million in a I'd benefited our than as another was recorded lower respect the that be year. that equity addition last full fourth the Mortality drivers year in the fourth full we that be in two We the quarter, on $X.X benefit year full just year that how quarter of that the were markets. expected onetime things in maybe fourth of performance to recurring. our tax Investment big variable for but the those together, the the the full item guaranteed I year, reserves and the as to expected those outperformance business the results full fee as add much quarter. well results of for would And And year, income of worse -- for one say the were pretty $X.XX had quarter, full impacts the for

but -- didn't kind the that of are key summarized, to I have drivers. wasn't I some those Sorry, prepared of

Management. from Feldman comes Louis Wells Capital today question next of The

that that Don, could management $X.XX earnings earnings positive was in you year? $X.XX to or repeat costs the to number, wealth for

That was a costs. net

cost, okay. Net

in the speed, when we're established bring for onboarding, systems that So a to amortizing. on, early recruiting our which wealth We've getting up we management we're adviser infrastructure and process.

So it's the a net phase. cost in start-up

not? give wealth who both for interested something more management are for that the areas might you're And be and agents, in geographic competitor listening? something then that's to Or than to that is a going there general Okay.

at high can I the around a talk agents. level

So things. of I mean couple a

Of course, we company. the have leave retirements or that agents

then business where major And know, areas. target grow, and so we target that service more than otherwise, And focus. we'll those as to rural want have a you suburban of our metro so in areas. And we the blocks we we that's continue market urban would to and -- is

states to I -- I opposed Southern So state the -- areas? Western, or Eastern, as think mean level I was versus towards more suburban, looking rural as Northern at

really it geographic in I have I would already over-weighting at we have the state not that -- state. territory existing any a geographies. plans of business we somewhat investments the don't than map that mean level, we're given other but We have our in say to scale does

as statements your growth, of replace that's acquiring not to replacing agent an younger someone a so X push close opposed population his with would satisfied level, situation, sales their But to agent new just Okay. that terms agents. levels? harder to further be looking be someone satisfied sales retiring retirement simply in retiring, will to being you're Or That who's ZPG inference because speak, with the to sales? your is who's

to and motivated drive expect compensation a new structure grow sales. to are business and I it's that. our commission continue mean of Yes. we -- would blocks through they And

a you're two the the correct. growth. far As net adding as of we agent It's as that's agents. mean, components one But headcount, just I X target

turn Ms. over back the conference for our remarks. concludes any to I like would session. Stange question-and-answer closing Kathleen This to

follow-up everyone Thank feel you us any today. call Please have have you Thanks, day. and joined us if a free call a give good the to questions. who to on

presentation. now you attending The conference has for Thank concluded. today's

disconnect. now may You