Back to top

Analyst Blog

On Jan 21, Zacks Investment Research upgraded FBL Financial Group Inc. (FFG - Snapshot Report) by a notch to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

FBL Financial has been experiencing rising earnings estimates.

This multi-line insurer exhibited strong earnings performance delivering positive earnings surprises in the last 4 reported quarters with an average beat of 18.7%. It also scores strongly with the credit rating agencies.

In Nov 2013, A.M. Best Co. affirmed the financial strength rating (IFS) of “A-“ and the issuer credit rating (ISR) of “a-“ on Farm Bureau Life Insurance Company (FB Life), a subsidiary of FBL Financial. A.M. Best also affirmed an ICR of “bbb-” on FBL Financial, the parent company of FB Life. All these ratings carry a positive outlook.

The strong ratings on FB Life came on the back of positive earnings trend across all its lines of business in the last few years. Improved life sales along with an improved fixed annuity sales, continued effort to enhance Farm Bureau membership and strong risk adjusted capitalization also aided the strong ratings. Additionally, the strong rating affirmations on FBL Financial was driven by its improved financial leverage which in turn resulted from significantly reduced debt burdens on the company during 2013.

In terms of enhancing the shareholders’ value, FBL Financial has been consistently delivering quarterly cash dividends. In Dec 2013, the company paid fourth quarter 2013 cash dividend of 15 cents a share of its common stock. It has increased its dividend in a three-year CAGR of 33.9%. Moreover, the current quarterly dividend yields at 1.45% which is better than the industry yield of 1.38%.

Additionally, FBL Financial is likely to likely to beat earnings in the upcoming fourth-quarter as it has the right combination of a Zacks Rank #1 (Strong Buy) and an Earnings ESP of +4.49%. The company is set to release its fourth quarter results on Feb 6, 2014.

Among other multi line insurers, CNO Financial Group, Inc. (CNO - Analyst Report), Cigna Corp. (CI - Analyst Report) and Prudential plc (PUK - Snapshot Report) are worth considering. All these stocks carry the same Zacks Rank as FBL Financial.

Please login to Zacks.com or register to post a comment.