UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

FBL Financial Group, Inc.

(Exact name of registrant as specified in its charter)

Iowa		1-11917		42-1411715
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer
of incorporation)				Identification No.)
5400 University Avenue, West Des Moines, Iowa				50266
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (515) 225-5400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 7.01. Regulation FD Disclosure

The following information is provided in response to inquiries by investors requesting detailed information about exposure to certain investments. The information is issued in a Form 8-K so that it is available to all investors. The following is an overview of FBL Financial Group, Inc.’s investment in commercial mortgage loans, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, collateralized debt obligations and municipal bonds. All values are as of December 31, 2007.

Commercial Mortgage Loans

At December 31, 2007, FBL had commercial mortgage loans totaling $1.2 billion, which is 11.0% of total investments. These are diversified by geography, property type and loan size, and are collateralized by the related properties. We underwrite these loans conservatively, with either strong real estate and/or credit lease fundamentals. We have a long history of extremely low delinquency rates, with no loans currently in default. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and require diversification by geographic location and collateral type. Information regarding the collateral type and related geographic location within the United States follows:

		Mortgage Loan				Percent of
Collateral Type		Carrying Value				Total
		(Dollars in thousands)
Office		$	426,005				34.9	%
Retail			386,506				31.6
Industrial			373,449				30.6
Other			35,613				2.9
Total		$	1,221,573				100.0	%

		Mortgage Loan				Percent of
Region of the United States		Carrying Value				Total
		(Dollars in thousands)
South Atlantic		$	284,872				23.3	%
East North Central			242,899				19.9
Pacific			228,366				18.7
West North Central			158,538				13.0
Mountain			127,055				10.4
West South Central			69,739				5.7
Other			110,104				9.0
Total		$	1,221,573				100.0	%

Currently new loans are generally $5 million to $25 million in size, with an average loan size of $3.7 million and an average loan term of 11 years. The average loan-to-value of the current outstanding principal balance to the appraised value at origination is 59%. The majority of these loans amortize principal, with only 7.2% that are interest only loans.

Residential Mortgage-Backed Securities, Commercial Mortgage-Backed Securities and Other Asset-Backed Securities

At December 31, 2007, FBL had structured products (residential mortgage-backed securities, commercial mortgage-backed securities and other asset-backed securities) totaling $2.7 billion, which is 24.1% of our total investments. They break down into residential mortgage-backed securities at 16.7%; commercial mortgage-backed securities at 5.1%; and asset-backed securities at 2.3%. We purchased these structured products when we felt they offered a very attractive risk return scenario. Our investment portfolio’s allocation to structured products peaked in 2004 and has been declining since that time as we have invested most of our new money in corporate bonds.

The following table sets forth the amortized cost, par value and carrying value of our mortgage- and asset-backed securities summarized by type of security:

		Amortized Cost				Par Value				Carrying Value
		(Dollars in thousands)
Residential mortgage-backed securities:
Sequential		$	1,277,207			$	1,303,336			$	1,244,758
Pass-through			199,854				200,024				200,900
Planned and targeted amortization classes			327,667				331,133				321,764
Other			101,040				102,019				96,648
Total residential mortgage-backed securities			1,905,768				1,936,512				1,864,070
Commercial mortgage-backed securities			578,510				578,416				570,057
Other asset-backed securities			288,274				289,173				251,846
Total mortgage and asset-backed securities		$	2,772,552			$	2,804,101			$	2,685,973

A summary of our mortgage and asset-backed portfolios by collateral type is as follows:

						Estimated
		Amortized				Market
		Cost				Value
		(Dollars in thousands)
Government agency		$	423,831			$	427,097
Prime			925,225				901,041
Alt-A exposure
Mortgage-backed securities			580,322				558,678
Asset-backed securities			204,336				170,184
Total Alt-A exposure			784,658				728,862
Subprime asset-backed securities			30,146				29,259
Commercial mortgage			578,510				570,057
Non-mortgage			30,182				29,657
Total		$	2,772,552			$	2,685,973

The following table sets forth our residential mortgage-backed securities by type and origination year:

		Government & Prime								Alt-A								Total
						Estimated								Estimated								Estimated
		Amortized				Market				Amortized				Market				Amortized				Market
		Cost				Value				Cost				Value				Cost				Value
										(Dollars in thousands)
Origination year
2007		$	223,245			$	225,086			$	60,236			$	58,313			$	283,481			$	283,399
2006			10,068				10,133				25,857				22,818				35,925				32,951
2005			9,920				9,913				—				—				9,920				9,913
2004 and prior			1,082,213				1,060,260				494,229				477,547				1,576,442				1,537,807
Total		$	1,325,446			$	1,305,392			$	580,322			$	558,678			$	1,905,768			$	1,864,070

Our residential mortgage-backed portfolio is seasoned with most securities in the 2003 and 2004 vintage years, with subordination that has increased since origination. Additionally, much of our residential mortgage-backed portfolio has collateral with lower loan-to-value ratios compared to issues in more recent vintage years due to principal paydowns and because the loans were originated before significant appreciation in real estate values in 2005 and 2006. These securities are fixed rate, AAA rated, and the majority are very simple structures — either direct pass throughs, sequential payers or planned amortization class structures.

The following table sets forth our mortgage related other asset-backed securities by type and origination year:

		Government & Prime								Alt-A								Subprime								Total
						Estimated								Estimated								Estimated								Estimated
		Amortized				Market				Amortized				Market				Amortized				Market				Amortized				Market
		Cost				Value				Cost				Value				Cost				Value				Cost				Value
		(Dollars in thousands)
Origination year
2007		$	9,995			$	9,172			$	30,979			$	27,501			$	—			$	—			$	40,974			$	36,673
2006			9,746				9,659				136,551				107,504				—				—				146,297				117,163
2005			—				—				25,961				24,749				30,146				29,259				56,107				54,008
2004 and prior			3,869				3,915				10,845				10,430				—				—				14,714				14,345
Total		$	23,610			$	22,746			$	204,336			$	170,184			$	30,146			$	29,259			$	258,092			$	222,189

Within our other asset-backed structured product category, we have minimal exposure to subprime securities. At year end, we had three subprime securities with a market value totaling $29.3 million. This exposure is small and represents only 0.3% of our total investments. These subprime issues are all AAA rated, fixed rate and were originated in 2005.

We expect delinquency rates and loss rates will increase in the future; however, we continue to expect to receive payments in accordance with contractual terms of our securities, largely due to the seniority of our claims on the collateral, represented by AAA rated securities.

Our exposure to the Alt-A and subprime home equity loan sectors is limited to investments in structured securities collateralized by senior tranches of commercial or residential mortgage loans with this exposure. We do not own any direct investments in subprime lenders or adjustable rate mortgages. At December 31, 2007, all mortgage and asset-backed securities with subprime or Alt-A exposure, except for one, are AAA rated. We held one asset-backed security with an amortized cost of $12.0 million and an estimated market value of $8.9 million, which had a “BBB+” rating at December 31, 2007.

The other asset-backed securities are primarily sequential securities. Our mortgage related other asset-backed securities are second lien, fixed rate home-equity loans. The following table sets forth the loan type of our Alt-A and subprime mortgage related other asset-backed securities.

		Alt-A								Subprime
		Amortized				Estimated Market				Amortized				Estimated
		Cost				Value				Cost				Market Value
						(Dollars in thousands)
High loan-to-value (1)		$	137,518			$	117,748			$	—			$	—
Piggyback second (2)			40,485				30,609				—				—
Other home equity			26,333				21,827				30,146				29,259
Total		$	204,336			$	170,184			$	30,146			$	29,259

Our other asset-backed portfolio includes $115.7 million of securities that are wrapped by bond insurers, which provides additional credit enhancement for the investment. We believe these securities were underwritten at investment grade levels excluding any credit enhancing protection.

Our commercial mortgage-backed securities have cash flows that are less sensitive to interest rate changes than residential mortgage-backed securities because of the prepayment restrictions on many of the underlying commercial mortgage loans.

Collateralized Debt Obligations

At December 31, 2007, FBL had collateralized debt obligations (CDOs) with an amortized cost of $65.3 million and a market value of $46.7 million, which is 0.4% of total investments. These are included in the corporate securities portfolio. One CDO is partially backed by subprime mortgages and has an amortized cost of $10.0 million and a market value of $1.5 million at December 31, 2007. This security has been impacted by the loss of market liquidity and spread widening. At December 31, 2007, this security is rated investment grade by two major rating agencies, remains adequately collateralized and is expected to continue its principal and interest payments. We have not recorded an other-than-temporary impairment loss on this security because we have the ability and intent to hold this investment until a recovery of fair value, which may be maturity. Our other investments in CDOs are backed by investment grade credit default swaps with no home equity exposure. These are all actively managed investments rated AA or above with a carrying value totaling $45.2 million and unrealized loss (gross and net) of $10.1 million at December 31, 2007.

Municipal Bonds

At December 31, 2007, FBL had municipal bonds totaling $1.3 billion, which is 11.2% of total investments. This includes investments in general obligation, revenue, military housing and municipal housing bonds. Our investment strategy is to utilize municipal bonds in addition to corporate bonds, as we believe they provide additional diversification and historically low default rates compared with similarly rated corporate bonds.

We evaluate the credit strength of the underlying issues on both a quantitative and qualitative basis, excluding insurance, prior to acquisition. The majority of the municipal bonds we hold are investment grade credits without consideration of insurance. The insolvency of one or more of the credit enhancing entities would be a meaningful short-term market liquidity event, but would not dramatically increase our investment portfolio’s risk profile.

A summary of our insured and uninsured municipal holdings by rating of the insurer and underlying issue is as follows:

																		Insured Bonds																Total Bonds by
										Insured Bonds by								By Underlying								Total Bonds by								By Underlying
		Uninsured Bonds								Insurer Rating								Issue Rating								Insurer Rating								Issue Rating
		Carrying				% of				Carrying				% of				Carrying				% of				Carrying				% of				Carrying				% of
Rating		Value				Total				Value				Total				Value				Total				Value				Total				Value				Total
																		(Dollars in thousands)
AAA		$	99,332				38.9	%		$	994,467				99.7	%		$	47,151				4.7	%		$	1,093,799				87.3	%		$	146,483				11.7	%
AA			112,912				44.2				3,075				0.3				316,797				31.8				115,987				9.3				429,709				34.3
A			9,987				3.9				—				—				302,980				30.4				9,987				0.8				312.967				25.0
BBB			31,367				12.3				—				—				57,983				5.8				31,367				2.5				89,350				7.1
BB			1,759				0.7				—				—				—				—				1,759				0.1				1,759				0.1
NR (1)			—				—				—				—				272,631				27.3				—				—				272,631				21.8
		$	255,357				100.0	%		$	997,542				100.0	%		$	997,542				100.0	%		$	1,252,899				100.0	%		$	1,252,899				100.0	%

We do not directly own any fixed income or equity investments in bond insurers. A summary of the primary insurers of the municipal bonds we hold follows:

		Equivalent
Bond Insurer		S&P Rating		Total
				(Dollars in thousands)
AMBAC Assurance Corporation		AAA		$	347,471
MBIA Insurance Corporation		AAA			201,409
Financial Security Assurance, Inc.		AAA			146,297
Financial Guaranty Insurance Co. (1)		AAA			143,275
All others (4 insurers in 2007 and 2006) (2)					159,090
				$	997,542

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FBL FINANCIAL GROUP, INC.
(Registrant)

Date: February 22, 2008

/s/ James P. Brannen
James P. Brannen
Chief Financial Officer