|[January 11, 2013]
A.M. Best Revises Outlook of Farm Bureau Life Insurance Company and FBL Financial Group Inc.
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the outlook to positive from stable and
affirmed the financial strength rating of A- (Excellent) and issuer
credit rating (ICR) of 'a-' of Farm Bureau Life Insurance Company (FB
Life). Concurrently, A.M. Best has revised the outlook to positive from
stable and affirmed the ICR of 'bbb-' of FBL Financial Group Inc.
(FFG) (NYSE: FFG). Both companies are domiciled in West Des Moines, IA.
The revised outlook reflects FB Life's initial success in its strategic
shift to focus on life insurance sales, relative to a deliberate
reduction in annuity sales, its ongoing profitable operations despite
spread compression and its continued growth in capital and surplus. In
addition, the revised outlook recognizes the decrease in FFG's financial
leverage following the deployment of proceeds from the sale of its
former subsidiary, EquiTrust Life Insurance Company, to pay down
FB Life has generated favorable, though fluctuating operating
profitability, while maintaining a strong risk-adjusted capital position
that is more than sufficient to support its insurance and investment
risks. FB Life distributes a portfolio of life and annuiy products
through an exclusive agency force in 14 Midwestern and Western states
and has demonstrated good penetration into its core Farm Bureau market.
Partially offsetting these strengths is FB Life's ongoing exposure to
spread compression in its annuity and universal life blocks of business,
high exposure to structured securities and continued realized investment
losses due to other than temporary impairments.
Factors that could lead to positive rating actions include favorable
trends in FB Life's earnings growth, sustained positive trends of
ordinary life premium growth with a continued business mix focused on
profitable life insurance production and increased penetration into its
Factors that may precipitate unfavorable rating actions include an
erosion in the company's capital due to operating or investment losses,
flat to declining trends in its ordinary life premium growth, heightened
spread compression in its interest sensitive products or weakening in
financial metrics at FFG.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
the rating process. Key criteria utilized include: "Understanding BCAR
for Life/Health Insurers"; "Insurance Holding Company and Debt Ratings";
and "Risk Management and the Rating Process for Insurance Companies."
Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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