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•	Difficult conditions in the financial markets and the economy may materially adversely affect our business and results of operations.

•	Adverse financial market conditions may significantly affect our liquidity, access to capital and cost of capital.

•	Our valuation of fixed maturity securities may include methodologies, estimations and assumptions that are subject to differing interpretations and could result in changes to investment valuations that may materially adversely affect our results of operations or financial condition.

•	Our investment portfolio is subject to credit quality risks which may diminish the value of our invested assets and affect our profitability and reported book value per share.

•	Changing interest rates, market volatility and general economic conditions affect the risks and the returns on both our products and our investment portfolio.

•	We face competition from companies having greater financial resources, more advanced technology systems, broader arrays of products, higher ratings and stronger financial performance, which may impair our ability to retain existing customers, attract new customers and maintain our profitability and financial strength.

•	As a holding company, we depend on our subsidiaries for funds to meet our obligations, but our life insurance subsidiaries' ability to make distributions to us is limited by law, and could be affected by minimum risk-based capital requirements.

•	A significant ratings downgrade may have a material adverse effect on our business.

•	All segments of our business are highly regulated and these regulations or changes in them could affect our profitability.

•	Inaccuracies in assumptions regarding future persistency, mortality and interest rates used in pricing our products and calculating reserve amounts and deferred acquisition costs could have a material adverse impact on our financial results.

•	We may be required to accelerate the amortization of deferred acquisition costs, which could adversely affect our results of operations or financial condition.

•	Our earnings are influenced by our claims experience, which is difficult to estimate. If our future claims experience does not match our pricing assumptions or past results, our earnings could be materially adversely affected.

•	Our reinsurance program involves risks because we remain liable with respect to the liabilities ceded to reinsurers if the reinsurers fail to meet the obligations assumed by them.

•	Our business is highly dependent on our relationships with Farm Bureau organizations and could be adversely affected if those relationships became impaired.

•	Our relationship with Farm Bureau organizations could result in conflicts of interests.

•	Changes in federal tax laws may affect sales of our products and profitability.

•	Our ability to maintain competitive costs is dependent upon the level of new sales and persistency of existing business.

•	If we are unable to attract and retain agents, sales of our products and services may be reduced.

•	Attracting and retaining employees who are key to our business is critical to our growth and success.

•	Success of our business depends in part on effective information technology systems and on continuing to develop and implement improvements.

•	We face risks relating to litigation, including the costs of such litigation, management distraction and the potential for damage awards, which may adversely impact our business.

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•	The company action level is triggered if an insurer's total adjusted capital is less than 200% of its authorized control level RBC, as defined in the Model Act. At the company action level, the insurer must submit a plan to the regulatory authority that discusses proposed corrective actions to improve its capital position.

•	The regulatory action level is triggered if an insurer's total adjusted capital is less than 150% of its authorized control level RBC. At the regulatory action level, the regulatory authority will perform a special examination of the insurer and issue an order specifying corrective actions that must be followed.

•	If an insurer's total adjusted capital is less than its authorized control level RBC, the regulatory authority is authorized (although not mandated) to take regulatory control of the insurer.

•	The mandatory control level is triggered if an insurer's total adjusted capital is less than 70% of its authorized control level RBC, and at that level the regulatory authority must take regulatory control of the insurer. Regulatory control may lead to rehabilitation or liquidation of an insurer.

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(1)

Activity in this table represents Class A common shares repurchased by the Company in connection with the repurchase plans announced on October 7, 2011 and November 15, 2012. The plans authorize us to make up to $230.0 million in repurchases of Class A common stock in the open market or through privately negotiated transactions, with the timing and terms of the purchases to be determined by management based on market conditions. Completion of the program is dependent on market conditions and other factors. There is no guarantee as to the exact timing of any repurchases or the number of shares, if any, that we will repurchase. The share repurchase program may be modified or terminated at any time without prior notice.

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(1)	Certain amounts from 2009 through 2011 have been restated due to the retroactive adoption of guidance issued by the Financial Accounting Standards Board (FASB) related to accounting for costs associated with acquiring or renewing insurance contracts as discussed in Note 1 to our consolidated financial statements.

(2)

Amounts are impacted by accumulated other comprehensive income (loss) totaling $289.9 million in 2012, $177.8 million in 2011, $51.6 million in 2010, ($127.4) million in 2009 and ($682.3) million in 2008. These amounts are net of deferred income taxes and other adjustments for assumed changes in the amortization of deferred acquisition costs, unearned revenue reserve and value of insurance in force acquired.

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•	factors which affect our business,

•	our revenues and expenses in the periods presented,

•	changes in revenues and expenses between periods,

•	sources of earnings and changes in stockholders' equity,

•	impact of these items on our overall financial condition and

•	expected sources and uses of cash.

•	First, we discuss our business and drivers of profitability.

•	We then describe the business environment in which we operate including factors that affect operating results.

•	We highlight significant events that are important to understanding our results of operations and financial condition.

•	We then review the results of operations beginning with an overview of the total Company results, followed by a more detailed review of those results by operating segment.

•	Finally, we discuss critical accounting policies and recently issued accounting standards. The critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management's most difficult or complex judgment.

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•	The volume of our life insurance and annuity business in force, which is driven by the level of our sales and the persistency of the business written.

•	The amount of spread (excess of net investment income earned over interest credited) we earn on contract holders' general account balances.

•

Our ability to price our life insurance products to earn acceptable margins over the cost of providing benefits and the expenses of acquiring and administering the products. Competitive conditions, mortality experience, persistency, investment results and our ability to maintain expenses in accordance with pricing assumptions drive our margins on the life products. On many products, we have the ability to mitigate adverse experience through adjustments to credited interest rates, policyholder dividends or cost of insurance charges.

•	Our ability to manage our investment portfolio to maximize investment returns while providing adequate liquidity for obligations to policyholders and minimizing the risk of defaults or impairments of invested assets.

•	Our ability to manage the level of our operating expenses.

•	Actual experience and changes in assumptions for expected surrender and withdrawal rates, mortality and spreads used in the amortization of deferred acquisition costs.

•	Gross Domestic Product increased approximately 2.0% during 2012 based on early estimates.

•	Market yields on fixed maturity securities remained low with the 10-year U.S. Treasury at 1.76% at December 31, 2012.

•	Unemployment remains high at 7.8% in the United States.

•	Personal income growth remains relatively modest.

•	Midwest farmers have experienced rising incomes and land values in recent years, but drought conditions during the summer of 2012 have reduced production yields and farm incomes. However, many farmers have mitigated losses through effective use of crop insurance.

•	The European debt crisis continues to cause stress within the markets.

•	Middle-east unrest continues to add uncertainty to the supply and cost of oil.

•	Continued uncertainty as to actions the United States Congress will take to address the national debt, including potential actions to change the tax advantages of life insurance

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(1)	Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred acquisition costs, value of insurance in force acquired and income taxes attributable to these items.

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(1)	Includes prepayment fee income and net discount of accretion on mortgage and asset-backed securities resulting from changing payment speed assumptions at the end of the period.

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(1)	Includes prepayment fee income and net discount of accretion on mortgage and asset-backed securities resulting from changing payment speed assumptions at the end of the period.

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(1)	Includes prepayment fee income and net discount of accretion on mortgage and asset-backed securities resulting from changing payment speed assumptions at the end of the period.

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(1)	Equivalent ratings are based on those provided by nationally recognized rating agencies with some exceptions for certain residential mortgage, commercial mortgage and asset-backed securities where they are based on the expected loss of the security rather than the probability of default.

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•	The average life of the portfolio.

•	The amount and speed at which market interest rates rise or fall.

•	The amount by which bond calls, mortgage loan prepayments and paydowns on mortgage and asset-backed securities accelerate during periods of declining interest rates or decelerate during periods of increasing interest rates.

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•	We earn mortality and expense fee income based on the value of our separate accounts at annual rates ranging from 0.00% to 1.45% for 2012, 2011 and 2010. As a result, revenues from these sources do fluctuate with changes in the fair value of the equity, fixed maturity and other securities held by the separate accounts.

•	We have equity price risk to the extent we may owe amounts under the guaranteed minimum death benefit and guaranteed minimum income benefit provisions of our variable annuity contracts. See Note 6 to our consolidated financial statements for additional discussion of these provisions.

•	The amortization of deferred acquisition costs on our variable business can fluctuate with changes in the performance of the underlying separate accounts. See the Corporate and Other Segment discussion above for additional discussion of this amortization.

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(1)

Amounts shown in this table are projected payments through the year 2062 which we are contractually obligated to pay to our life insurance and annuity contract holders. The payments are derived from actuarial models which assume a level interest rate scenario and incorporate assumptions regarding mortality and persistency when applicable. These assumptions are based on our historical experience. The total of the contractual obligations relating to insurance contracts noted above differs from the liability balance on our consolidated balance sheet as follows:

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(a)	reserves for products such as annuities and universal life products are generally based on the account values of the contracts without taking into account surrender charges, while the contractual obligations table includes projected cash payments. The following are the reconciling items between these balances (dollars in thousands):

(b)	traditional life reserves are computed as the present value of future benefits less the present value of future premiums while the contractual obligations table includes gross benefit payments and

(c)	reserves for supplementary contracts and similar instruments are computed as the present value of future cash payments while the table above includes cash payments without the impact of discounting.

(2)	Amount shown is net of $3.0 million equity investment in the Capital Trust due to the contractual right of offset upon repayment of the note.

(3)	Primarily related to equipment leases.

(4)	Includes our estimated future contributions to defined and postretirement benefit plans. Contributions related to the qualified pension plan are included through 2013. No amounts related to the qualified pension plan are included beyond 2013 as the contribution amounts will be re-evaluated based on actual results.

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(1)	Our consolidated statements of cash flows combine the cash flows from discontinued operations with the cash flows from continuing operations within each major category (operating, investing and financing) of the statements and supplemental disclosures.

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•	historical operating trends;

•	business prospects;

•	status of the industry in which the company operates;

•	analyst ratings on the issuer and sector;

•	quality of management;

•	size of unrealized loss;

•	level of current market interest rates compared to market interest rates when the security was purchased; and

•	length of time the security has been in an unrealized loss position.

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•	Derivative instruments, which include call options used to fund index credits on index annuities, are measured at fair value, with changes in fair value reflected in our results of discontinued operations.

•	Deferred sales inducements represent premium bonuses and bonus interest credited to contracts during the first contract year only. These costs are amortized similar to other deferred acquisition costs discussed above.

•

Future policy benefit reserves for index annuities are equal to the sum of the fair value of the embedded index options, accumulated index credits and the host contract reserve computed using a method similar to that used for interest sensitive products. Fair value of the index options are calculated using discounted cash flow valuation techniques based on current interest rates adjusted to reflect our credit risk and an additional provision for adverse deviation.

•	Changes in reserves for the embedded derivatives in the index annuities and amortization of deferred sales inducements are recognized as expenses over the life of the policy.

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(1)	Non-credit losses, subsequent to the initial impairment measurement date, on other-than-temporary impairments are included in the gross unrealized gains and losses column above.

(2)	Corporate securities include hybrid preferred securities with a carrying value of $99.6 million at December 31, 2012 and $116.7 million at December 31, 2011. Corporate securities also include redeemable preferred stock with a carrying value of $5.6 million at December 31, 2012 and $5.5 million at December 31, 2011.

(3)	The collateralized debt obligation includes an embedded credit derivative; accordingly, changes in its fair value are realized as derivative income which is included within other income in the consolidated statements of operations.

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(1)	Amount represents the credit-related losses recognized for fixed maturities which were not written down to fair value. As discussed above the non-credit portion of the losses have been recognized in other comprehensive income.

(2)	Amount represents credit-related losses for mortgage loans, real estate and fixed maturities written down to fair value.

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•	Level 1 - Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.

•	Level 2 - Fair values are based on inputs, other than quoted prices from active markets, that are observable for the asset or liability, either directly or indirectly.

•	Level 3 - Fair values are based on significant unobservable inputs for the asset or liability.

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•

Follow a “pricing waterfall” policy, which establishes the pricing source preference for a particular security or security type. The order of preference is based on our evaluation of the valuation methods used, the source's knowledge of the instrument and the reliability of the prices we have received from the source in the past. Our valuation policy dictates that fair values are initially sought from third party pricing services. If our review of the prices received from our preferred source indicates an inaccurate price, we will use an alternative source within the waterfall and document the decision. In the event that fair values are not available from one of our external pricing services or upon review of the fair values provided it is determined that they may not be reflective of market conditions, those securities are submitted to brokers familiar with the security to obtain non-binding price quotes. Broker quotes tend to be used in limited circumstances such as for newly issued, private placement and other instruments that are not widely traded. For those securities for which an externally provided fair value is not available we use cash flow modeling techniques to estimate fair value.

•	Evaluate third party pricing source estimation methodologies to assess whether they will provide a fair value which approximates a market exit price.

•	Perform an overall analysis of portfolio fair value movement against general movements in interest rates and spreads.

•	Compare month-to-month price trends to detect unexpected price fluctuation based on our knowledge of the market and the particular instrument. As fluctuations are noted, we will perform further research which may include discussions with the original pricing source or other external sources to ensure we are in agreement with the valuation.

•	Compare prices between different pricing sources for unusual disparity.

•	Meet monthly with our Investment Committee, the group that oversees our valuation process, to discuss valuation practices and observations during the pricing process.

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(1)

Transfers into Level 3 represent assets previously priced using an external pricing service with access to observable inputs no longer available and therefore, were priced using non-binding broker quotes. During 2012, we were unable to obtain prices from our third party pricing servicers for a portion of our commercial mortgage-backed securities, primarily military housing bonds; accordingly valuations were obtained through brokers familiar with these instruments. During 2012, we began using an external pricing service with access to observable inputs for a portion of our Level 3 investments for which non-binding broker quotes were previously used to estimate fair value. We believe the change in pricing sources is appropriate, and consistent with our pricing waterfall policy to use higher level valuation methods when available. There were no transfers between Level 1 and Level 2 during 2012.

(2)

Transfers into Level 3 represent assets previously priced using an external pricing service with access to observable inputs no longer available and therefore, were priced using non-binding broker quotes. Transfers out of Level 3 include those assets that we are now able to obtain pricing from a third party pricing vendor that uses observable inputs. There were no transfers between Level 1 and Level 2 during 2011.

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(1)	For multiemployer plans, the funded status is not required to be recognized as an asset or liability in the consolidated balance sheets. The unrecognized liability for the underfunded status of our Multiemployer Plan totaled $110.3 million at December 31, 2012 and $78.6 million at December 31, 2011.

(2)	During 2012, we determined that our nonqualified employee benefit plans should apply single employer plan accounting. The change had no impact on earnings, although resulted in an immaterial reduction of accumulated other comprehensive income.

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•	Group and funded annuity contracts: contract value is equivalent to fair value, as the interest-crediting rates are periodically reset to market at the discretion of the issuer.

•	Pooled separate accounts: the net asset value of our separate account shares is based on the latest quoted market price of the underlying investments or in the case of a real estate separate account, estimates of the current market value of the underlying property held.

•	Mutual funds: the net asset value of our mutual funds is based on quoted market prices available in active markets.

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(1)	Represents mutual funds and pooled separate account investments with Principal Life Insurance Company.

(2)	Represents group annuity contracts with Farm Bureau Life.

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(1)	There were no transfers into or out of Level 3 or between Level 1 and Level 2 during 2012.

(2)

Transfers out of Level 3 resulted from the lifting of a temporary withdrawal limitation that had been placed on the pooled separate account related to past turmoil in the credit markets. This investment can now be redeemed at the net asset value as of the measurement date. Certain Level 2 investments held in pooled separate accounts were sold and replaced by Level 1 investments in mutual funds during 2011.

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(1)	Represents the difference between the share price and exercise price for each option, excluding options where the exercise price is above the share price, at December 31, 2012.

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•	investments and related investment income not specifically allocated to our product segments,

•	interest expense,

•	closed blocks of variable annuity, variable universal life insurance and accident and health insurance products,

•	advisory services for the management of investments and other companies,

•	marketing and distribution services for the sale of mutual funds and insurance products not issued by us, and

•	leasing services with affiliates.

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•	realized gains and losses on investments,

•	changes in net unrealized gains and losses on derivatives,

•	discontinued operations and

•	loss on debt redemption associated with disposed operations.

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(1)	Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred acquisition costs, value of insurance in force acquired and income taxes attributable to these items.

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(1)	On the basis of cost adjusted for repayments and amortization of premiums and accrual of discounts for fixed maturities and short-term investments; original cost for equity securities, real estate and other investments; and unpaid principal balance for mortgage loans and policy loans.

(2)	Amount shown on balance sheet differs from cost due to depreciation and allowance for possible losses deducted from cost.

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