Farm Bureau P&C Takes FBL Financial Private

What You Need to Know

Farm Bureau P&C and FBL are both creations of the Iowa Farm Bureau Federation.
They both have had offices at the same address in West Des Moines, Iowa.
Farm Bureau P&C has taken FBL Financial’s stock off the New York Stock Exchange.

Farm Bureau Property & Casualty Insurance Company has completed the process of taking a sister company, FBL Financial Group Inc., private. It is paying $61 per share for all FBL Financial stock held by investors outside the Farm Bureau corporate family, according to a notice filed with the SEC.

The deal means that FBL Financial no longer will have to give investors quarterly or annual reports, and that the company’s executives no longer will have to explain to securities analysts why new accounting rules, combined with use of derivatives, sometimes lead to large swings in revenue and net earnings.

The deal will not have any direct impact on the FBL Financial subsidiaries that write the company’s life insurance and annuities, and it might not have much effect on operations, because Farm Bureau P&C and FBL Financial already operate out of the same headquarters offices in West Des Moines, Iowa.

Farm Bureau P&C and FBL Financial’s life insurance company subsidiaries will still have to file quarterly and annual reports with state insurance regulators.

The History

Farmers and people who support farmers joined to form the Iowa Farm Bureau Federation in 1918. The federation started Farm Bureau P&C in 1939, and it started Farm Bureau Life Insurance Company in 1944.

The federation turned FBL Financial into a public company in 1999, by selling a minority stake in the company to the public through an initial public offering.

Farm Bureau P&C now provides coverage for 360,000 people in eight states in the West and Midwest through a network of about 900 agents and agency managers.

FBL Financial has been managing two Farm Bureau P&C insurance company subsidiaries for a management fee. FBL reported a $2.6 million net loss for the first quarter on $135 million in revenue. The company’s annuity unit reported $53 million in revenue, and its life insurance unit reported $107 million in revenue.

The Farm Bureau P&C Transaction

Farm Bureau P&C and FBL Financial first talked about the possibility that Farm Bureau P&C might acquire FBL Financial in September 2020.

FBL Financial managers said the deal was attractive because low interest rates, new accounting rules and FBL Financial’s relatively small size made moving forward as an independent public company too expensive and too difficult.

Originally, Farm Bureau P&C was going to pay $47 per share for FBL Financial. Outside investors said the original price was too low so Farm Bureau P&C responded by increasing the price by 19% in January, to $56 per share.

In April, outside investors kept FBL Financial from getting enough outside shareholder votes to close on the deal by April 29, the date for a special shareholder meeting. Farm Bureau P&C then increased the price to $61 per share, or 30% more than the original price, earlier this month.

The final share price gives the deal a value of $575 million, up from the value of $440 million implied by the original share price.

Farm Bureau P&C now owns 39% of FBL Financial’s stock and the Iowa Farm Bureau Federations owns 61%.

FBL Financial’s stock was trading on the New York Stock Exchange under the symbol “FFG.” However, the firm now has pulled the stock listing off the exchange, and intends to terminate the SEC registration and the SEC reporting obligations for its common stock.