UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

(Mark One)

[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2006

or

[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from                                         to

Commission File Number: 1-11917

FBL Financial Group, Inc.

(Exact name of registrant as specified in its charter)

Iowa		42-1411715
(State of incorporation)		(I.R.S. Employer Identification No.)

5400 University Avenue, West Des Moines, Iowa		50266-5997
(Address of principal executive offices)		(Zip Code)

(515) 225-5400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero		Accelerated filerx		Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Title of each class		Outstanding at May 2, 2006
Class A Common Stock, without par value			28,343,508
Class B Common Stock, without par value			1,192,990

FBL FINANCIAL GROUP, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006
TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION
				Cautionary Statement Regarding Forward Looking Information					2
Item 1.				Financial Statements (Unaudited)
						Consolidated Balance Sheets			3
						Consolidated Statements of Income			5
						Consolidated Statements of Changes in Stockholders' Equity			6
						Consolidated Statements of Cash Flows			7
						Notes to Consolidated Financial Statements			9
Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations					16
Item 3.				Quantitative and Qualitative Disclosures About Market Risk					40
Item 4.				Controls and Procedures					40
PART II.		OTHER INFORMATION
Item 2.				Unregistered Sales of Equity Securities and Use of Proceeds					40
Item 6.				Exhibits					41
SIGNATURES									44
Exhibit 31.1 Section 302 Certification
Exhibit 31.2 Section 302 Certification
Exhibit 32 Section 906 Certification

Cautionary Statement Regarding Forward Looking Information

This Form 10-Q includes statements relating to anticipated financial performance, business prospects, new products, and similar matters. These statements and others, which include words such as “expect”, “anticipate”, “believe”, “intend”, and other similar expressions, constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. A variety of factors could cause our actual results and experiences to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of our business include but are not limited to the following:

	•		If we are unable to attract and retain agents and develop new distribution sources, sales of our products and services may be reduced.
	•		Changing interest rates and market volatility, and general economic conditions, affect the risks and the returns on both our products and our investment portfolio.
	•		Our investment portfolio is subject to credit quality risks which may diminish the value of our invested assets and affect our sales, profitability and reported book value per share.
	•		As a holding company, we depend on our subsidiaries for funds to meet our obligations, but our subsidiaries’ ability to make distributions to us is limited by law, and could be affected by risk based capital computations.
	•		A significant ratings downgrade may have a material adverse effect on our business.
	•		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.
	•		Inaccuracies in assumptions regarding future persistency, mortality and interest rates used in calculating reserve and deferred policy acquisition expense and deferred sales inducement amounts could have a material adverse impact on our net income.
	•		Changes in federal tax laws may affect sales of our products and profitability.
	•		All segments of our business are highly regulated and these regulations or changes in them could affect our profitability.
	•		We face competition from companies having greater financial resources, 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.
	•		Our business is highly dependent on our relationships with Farm Bureau organizations and would be adversely affected if those relationships became impaired.
	•		We assumed a significant amount of closed block business through coinsurance agreements and have only a limited ability to manage this business.
	•		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.
	•		We may experience volatility in net income due to accounting standards for derivatives.
	•		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.

See Part 1A, Risk Factors, of our annual report on Form 10-K for additional information.

ITEM 1. FINANCIAL STATEMENTS

FBL FINANCIAL GROUP, INC.

		March 31,				December 31,
		2006				2005
Assets
Investments:
Fixed maturities — available for sale, at market (amortized cost: 2006 - $7,159,708; 2005 - $6,841,432)		$	7,082,862			$	6,950,251
Fixed maturities — trading, at market (cost: 2006 - $15,003; 2005 - $15,004)			14,805				14,848
Equity securities — available for sale, at market (cost: 2006 - $35,332; 2005 - $54,565)			53,851				82,497
Mortgage loans on real estate			889,905				840,482
Derivative instruments			65,655				44,124
Investment real estate, less allowances for depreciation of $2,253 in 2006 and $2,235 in 2005			9,420				9,501
Policy loans			178,520				176,872
Other long-term investments			1,300				1,300
Short-term investments			47,351				179,333
Total investments			8,343,669				8,299,208
Cash and cash equivalents			12,880				5,120
Securities and indebtedness of related parties			23,527				23,379
Accrued investment income			90,410				81,491
Amounts receivable from affiliates			6,464				12,535
Reinsurance recoverable			125,400				116,032
Deferred policy acquisition costs			762,197				695,067
Deferred sales inducements			163,564				146,978
Value of insurance in force acquired			48,270				46,566
Property and equipment, less allowances for depreciation of $66,700 in 2006 and $64,568 in 2005			47,124				46,798
Goodwill			11,170				11,170
Other assets			31,700				29,694
Assets held in separate accounts			682,700				639,895
Total assets		$	10,349,075			$	10,153,933

FBL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)

		March 31,				December 31,
		2006				2005
Liabilities and stockholders’ equity
Liabilities:
Policy liabilities and accruals:
Future policy benefits:
Interest sensitive and index products		$	6,650,699			$	6,373,099
Traditional life insurance and accident and health products			1,218,469				1,206,598
Unearned revenue reserve			29,763				29,390
Other policy claims and benefits			25,955				25,835
			7,924,886				7,634,922
Other policyholders’ funds:
Supplementary contracts without life contingencies			384,277				383,455
Advance premiums and other deposits			163,229				165,672
Accrued dividends			11,826				11,736
			559,332				560,863
Amounts payable to affiliates			2,669				13,112
Long-term debt			218,432				218,446
Current income taxes			10,522				2,318
Deferred income taxes			37,528				88,148
Other liabilities			128,743				151,834
Liabilities related to separate accounts			682,700				639,895
Total liabilities			9,564,812				9,309,538
Minority interest in subsidiaries			191				164
Stockholders’ equity:
Preferred stock, without par value, at liquidation value — authorized 10,000,000 shares, issued and outstanding 5,000,000 Series B shares			3,000				3,000
Class A common stock, without par value — authorized 88,500,000 shares, issued and outstanding 28,318,806 shares in 2006 and 27,940,341 shares in 2005			79,334				72,260
Class B common stock, without par value — authorized 1,500,000 shares, issued and outstanding 1,192,990 shares			7,524				7,524
Accumulated other comprehensive income (loss)			(9,252	)			82,301
Retained earnings			703,466				679,146
Total stockholders’ equity			784,072				844,231
Total liabilities and stockholders’ equity		$	10,349,075			$	10,153,933

See accompanying notes.

FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

		Three months ended March 31,
		2006				2005
Revenues:
Interest sensitive and index product charges		$	25,314			$	23,768
Traditional life insurance premiums			34,388				33,333
Accident and health premiums			70				20
Net investment income			122,380				114,106
Derivative income (loss)			16,832				(12,400	)
Realized/unrealized gains on investments			11,604				412
Other income			5,479				4,969
Total revenues			216,067				164,208
Benefits and expenses:
Interest sensitive and index product benefits			86,702				55,558
Traditional life insurance and accident and health benefits			22,661				20,771
Increase in traditional life and accident and health future policy benefits			8,753				8,250
Distributions to participating policyholders			5,697				6,164
Underwriting, acquisition and insurance expenses			41,806				38,468
Interest expense			2,961				3,295
Other expenses			5,497				4,766
Total benefits and expenses			174,077				137,272
			41,990				26,936
Income taxes			(14,381	)			(9,374	)
Minority interest in earnings of subsidiaries			(55	)			(98	)
Equity income (loss), net of related income taxes			180				(259	)
Net income			27,734				17,205
Dividends on Series B preferred stock			(38	)			(38	)
Net income applicable to common stock		$	27,696			$	17,167
Earnings per common share		$	0.95			$	0.60
Earnings per common share — assuming dilution		$	0.93			$	0.59
Cash dividends per common share		$	0.115			$	0.105

See accompanying notes.

FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
(Dollars in thousands)

														Accumulated
														Other
		Series B				Class A				Class B				Comprehensive								Total
		Preferred				Common				Common				Income				Retained				Stockholders’
		Stock				Stock				Stock				(Loss)				Earnings				Equity
Balance at January 1, 2005		$	3,000			$	62,234			$	7,524			$	141,240			$	618,613			$	832,611
Comprehensive loss:
Net income for three months ended March 31, 2005			—				—				—				—				17,205				17,205
Change in net unrealized investment gains/losses			—				—				—				(26,794	)			—				(26,794	)
Total comprehensive loss																							(9,589	)
Stock based compensation, including the issuance of 146,602 common shares under compensation plans			—				2,746				—				—				—				2,746
Dividends on preferred stock			—				—				—				—				(38	)			(38	)
Dividends on common stock			—				—				—				—				(3,024	)			(3,024	)
Balance at March 31, 2005		$	3,000			$	64,980			$	7,524			$	114,446			$	632,756			$	822,706
Balance at January 1, 2006		$	3,000			$	72,260			$	7,524			$	82,301			$	679,146			$	844,231
Comprehensive loss:
Net income for three months ended March 31, 2006			—				—				—				—				27,734				27,734
Change in net unrealized investment gains/losses			—				—				—				(91,553	)			—				(91,553	)
Total comprehensive loss																							(63,819	)
Stock based compensation, including the issuance of 378,465 common shares under compensation plans			—				7,074				—				—				—				7,074
Dividends on preferred stock			—				—				—				—				(38	)			(38	)
Dividends on common stock			—				—				—				—				(3,376	)			(3,376	)
Balance at March 31, 2006		$	3,000			$	79,334			$	7,524			$	(9,252	)		$	703,466			$	784,072

See accompanying notes.

FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)

		Three months ended March 31,
		2006				2005
Operating activities
Net income		$	27,734			$	17,205
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments related to interest sensitive and index products:
Interest credited to account balances, excluding deferred sales inducements			58,512				50,541
Change in fair value of embedded derivatives			11,942				(6,700	)
Charges for mortality and administration			(23,661	)			(22,140	)
Deferral of unearned revenues			242				264
Amortization of unearned revenue reserve			(162	)			(490	)
Provision for depreciation and amortization of property and equipment			3,514				3,054
Provision for accretion and amortization of investments			(310	)			(1,929	)
Realized/unrealized gains on investments			(11,604	)			(412	)
Change in fair value of derivatives			(10,957	)			2,135
Increase in traditional life and accident and health benefit accruals			11,871				9,553
Policy acquisition costs deferred			(38,957	)			(31,111	)
Amortization of deferred policy acquisition costs			18,769				14,131
Amortization of deferred sales inducements			6,484				2,421
Amortization of value of insurance in force			403				752
Change in accrued investment income			(8,919	)			(8,678	)
Change in amounts receivable from/payable to affiliates			(4,372	)			(11,563	)
Change in reinsurance recoverable			(9,368	)			5,270
Change in current income taxes			8,204				(2,996	)
Provision for deferred income taxes			(1,322	)			1,385
Other			(43,864	)			(4,421	)
Net cash provided by (used in) operating activities			(5,821	)			16,271
Investing activities
Sale, maturity or repayment of investments:
Fixed maturities — available for sale			113,048				328,099
Equity securities — available for sale			32,725				1
Mortgage loans on real estate			9,584				11,214
Derivative instruments			5,118				198
Policy loans			9,176				9,102
Short-term investments — net			131,982				—
			301,633				348,614
Acquisition of investments:
Fixed maturities — available for sale			(413,673	)			(423,244	)
Mortgage loans on real estate			(58,955	)			(56,054	)
Derivative instruments			(13,994	)			(3,378	)
Investment real estate			—				(40	)
Policy loans			(10,824	)			(9,372	)
Short-term investments — net			—				(40,544	)
			(497,446	)			(532,632	)

FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in thousands)

		Three months ended March 31,
		2006				2005
Investing activities — continued
Proceeds from disposal, repayments of advances and other distributions of capital from equity investees		$	512			$	120
Purchases of property and equipment			(5,023	)			(4,106	)
Disposal of property and equipment			1,183				698
Net cash used in investing activities			(199,141	)			(187,306	)
Financing activities
Receipts from interest sensitive and index products credited to policyholder account balances			387,632				293,007
Return of policyholder account balances on interest sensitive and index products			(178,542	)			(132,037	)
Distributions related to minority interests — net			(28	)			(89	)
Excess tax deductions on stock-based compensation			1,047				—
Issuance of common stock			6,027				2,433
Dividends paid			(3,414	)			(3,062	)
Net cash provided by financing activities			212,722				160,252
Increase (decrease) in cash and cash equivalents			7,760				(10,783	)
Cash and cash equivalents at beginning of period			5,120				27,957
Cash and cash equivalents at end of period		$	12,880			$	17,174
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	1,826			$	1,760
Income taxes			6,548				10,532
Non-cash operating activity:
Deferral of sales inducements			19,771				15,716

See accompanying notes

FBL Financial Group, Inc.		March 31, 2006

FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2006

1.		Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of FBL Financial Group, Inc. (we or the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Our financial statements include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of our financial position and results of operations. Operating results for the three-month period ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. We encourage you to refer to our consolidated financial statements and notes for the year ended December 31, 2005 included in our annual report on Form 10-K for a complete description of our material accounting policies. Also included in the Form 10-K is a description of areas of judgments and estimates and other information necessary to understand our financial position and results of operations.

Accounting Change and Stock Based Compensation

Effective January 1, 2006, we adopted Statement of Financial Accounting Standards (Statement) No. 123(R), “Share-Based Payment,” using the modified-prospective-transition method. Statement No. 123(R) is a revision of Statement No. 123, “Accounting for Stock-Based Compensation.” Using the modified-prospective-transition method, we have recognized compensation expense in the first quarter of 2006 for all share-based payments granted, modified or settled after the date of adoption, as well as for any awards that were granted prior to the adoption date for which the requisite service had not been provided as of the adoption date. The stock option expense is recognized over the shorter of our five-year vesting schedule or the period ending when the employee becomes eligible for retirement using the straight-line method. In addition, the impact of forfeitures is estimated and compensation expense is recognized only for those options expected to vest. Also, under Statement No. 123(R) we have reported stock option-related tax deductions in excess of recognized compensation expense as a financing cash flow.

As a result of adopting Statement No. 123(R), net income for the full year 2006 is expected to be $0.2 million lower (less than $0.01 per basic and diluted common share) for 2006, than if we had continued to account for share-based compensation under Statement No. 123. This includes a cumulative effect adjustment of $0.1 million (less than $0.01 per basic and diluted common share) relating to the change in accounting for forfeitures which is recorded as a reduction to compensation expense in our 2006 consolidated income statement. For the first quarter of 2006, the impact of adopting Statement No. 123(R), including the cumulative effect adjustment, was to decrease net income by $0.1 million. Also, for the first quarter of 2006, $1.0 million of excess tax deductions are classified as financing cash inflows instead of operating cash inflows as they would have been under Statement No. 123. Results for prior periods have not been restated.

Prior to January 1, 2006, we followed the prospective method under Statement No. 123, which we adopted effective January 1, 2003. Under the prospective method, expense was recognized for those options granted, modified or settled after the date of adoption. The expense was generally recognized ratably over our five-year vesting period without regard to when an employee became eligible for retirement and immediate vesting. In addition, the impact of forfeitures was recognized when they occurred.

FBL Financial Group, Inc.		March 31, 2006

The following table illustrates the effect on net income and earnings per share if the fair value based method under Statement No. 123 had been applied to all outstanding and unvested awards.

		Three months ended
		March 31, 2005
		(Dollars in thousands,
		except per share data)
Net income, as reported:		$	17,205
Add: Stock-based employee and director compensation expense included in reported net income, net of related tax effects			432
Less: Total stock-based employee and director compensation expense determined under fair value based methods for all awards, net of related tax effects			(528	)
Net income, pro forma		$	17,109
Earnings per common share, as reported		$	0.60
Earnings per common share, pro forma		$	0.59
Earnings per common share — assuming dilution, as reported		$	0.59
Earnings per common share — assuming dilution, pro forma		$	0.58

We have two share-based payment arrangements under our Class A Common Stock Compensation Plan (the Plan), which are described below. Compensation expense for these arrangements totaled $0.9 million for the three months ended March 31, 2006 and $0.5 million for the three months ended March 31, 2005. The income tax benefit recognized in the income statement for these arrangements totaled $0.1 million for the three months ended March 31, 2006 and 2005.

Stock Option Awards

We grant incentive stock options for Class A common stock to directors, officers and employees. For officers and employees, the options have a contractual term of 10 years and generally vest over a period up to five years, contingent upon continued employment with us. Options to directors are fully vested upon grant and have a contractual term that varies with the length of time the director remains on the Board, up to ten years. The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We use the historical realized volatility of our stock for expected volatilities within the valuation model. For the 2006 period, the weighted-average expected term for the majority of our options is presumed to be the mid-point between the vesting date and the end of the contractual term, also known as the “shortcut method.” We assume the contractual term approximates the expected life for the remaining options. For the 2005 period, we used historical data to estimate option exercises and employee terminations to determine the expected term assumption. We believe the shortcut method provides a reasonable basis for our estimation of expected term due to limited historical share option exercise experience. The change in this assumption did not have a material impact on the expected term of the stock options. Assumptions used in our valuation model for the 2006 and 2005 periods are as follows:

		Three Months Ended March 31,
		2006				2005
Weighted average risk-free interest rate			4.32	%			4.01	%
Dividend yield			1.40	%			1.50	%
Weighted average volatility factor of the expected market price		0.24				0.32
Weighted average expected term		5.6 years				6.4 years

FBL Financial Group, Inc.		March 31, 2006

A summary of stock option activity as of March 31, 2006, and changes during the period then ended is as follows:

										Weighted-
										Average
										Remaining
						Weighted-				Contractual
		Number of				Average Exercise				Term (in				Aggregate
		Shares				Price per Share				Years)				Intrinsic Value
		(Dollars in thousands, except per share data)
Shares under option at January 1, 2006			2,068,576			$	21.00
Granted			447,307				32.57
Exercised			(249,751	)			17.13
Forfeited or expired			(12,424	)			27.40
Shares under option at March 31, 2006			2,253,708			$	23.69				7.35			$	24,252
Vested at March 31, 2006 or expected to vest in the future			2,221,126			$	23.62				7.33			$	24,052
Exercisable options at March 31, 2006			1,160,606			$	20.58				6.24			$	16,097

The weighted average grant-date fair value of options granted per common share was $8.62 for the three months ended March 31, 2006 and $8.86 for the three months ended March 31, 2005. The intrinsic value of options exercised during the periods totaled $4.0 million for the three months ended March 31, 2006 and $1.2 million for the three months ended March 31, 2005.

Unrecognized compensation expense related to nonvested share-based compensation granted under the stock option arrangement totaled $4.4 million as of March 31, 2006. This expense is expected to be recognized over a weighted-average period of 2.0 years.

We issue new shares to satisfy stock option exercises. We do not have a policy of repurchasing shares on the open market to satisfy share-based payment arrangements. Cash received from stock options exercised totaled $4.2 million for the period ended March 31, 2006 and $1.6 million for the period ended March 31, 2005. The actual tax benefit realized from stock options exercised totaled $1.3 million for the period ended March 31, 2006 and $0.3 million for the period ended March 31, 2005.

Restricted Stock Compensation Plan

We also grant restricted Class A common shares to certain executives. The restrictions on this stock lapse and the stock vests if the Company meets or exceeds operating goals, such as earnings per share and return on equity targets within or during a three year period. Depending on performance, the actual amount of shares issued could range from zero to 100% of the granted amount. The value of the awards is based on the grant date fair value of the restricted stock adjusted for expected forfeitures and an estimate of the number of shares expected to vest. The estimate for the number of shares to vest is reviewed each period and the impact of any changes in the estimate on expense is recorded in the current period. These awards are charged to expense using the straight-line method over the required service period.

A summary of restricted stock activity as of March 31, 2006, and changes during the period then ended is as follows:

						Weighted-
						Average Grant-
						Date Fair Value
		Number of Shares				per Share
Restricted stock at January 1, 2006			86,256			$	26.02
Granted			132,786				33.82
Forfeited			(800	)			33.00
Restricted stock at March 31, 2006			218,242				30.22

FBL Financial Group, Inc.		March 31, 2006

There has been no restricted stock vested and released to employees as of March 31, 2006. Unrecognized compensation expense related to unvested share-based compensation granted under the restricted stock arrangement totaled $1.5 million as of March 31, 2006. This expense is expected to be recognized over a weighted-average period of 2.3 years.

Pending Accounting Change

In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position (SOP) 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts.” The SOP provides guidance on the accounting for internal replacements of one insurance contract for another insurance contract. Under the SOP, an internal replacement that is determined to result in a replacement contract that is substantially changed from the replaced contract is accounted for as an extinguishment of the replaced contract. As an extinguishment, the unamortized deferred policy acquisition costs, deferred sales inducements, value of insurance in force acquired and unearned revenue reserves from the replaced contract are written off at the time of the extinguishment. An internal replacement that is determined to result in a replacement contract that is substantially unchanged from the replaced contract is accounted for as a continuation of the replaced contract. The SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006, with earlier application encouraged. The impact of adoption is not expected to be material as our current accounting policy for internal replacements substantially conforms to the guidance outlined in the SOP. We plan to adopt SOP 05-1 in 2007.

Reclassifications

Certain amounts in the 2005 consolidated statement of cash flows have been reclassified to conform to the 2006 financial statement presentation.

2.		Defined Benefit Plans

We participate with several affiliates in various multiemployer defined benefit plans. Our share of net periodic pension cost for the plans recorded in our consolidated income statements totaled $1.6 million for the three months ended March 31, 2006 and $1.5 million for the three months ended March 31, 2005. Components of net periodic pension cost for all employers in the multiemployer plans are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Service cost		$	2,396			$	2,162
Interest cost			3,428				3,409
Expected return on assets			(2,746	)			(2,712	)
Amortization of prior service cost			201				396
Amortization of actuarial loss			1,398				1,046
Net periodic pension cost — all employers		$	4,677			$	4,301

3.		Commitments and Contingencies

In the normal course of business, we may be involved in litigation where amounts are alleged that are substantially more than contractual policy benefits or those contained in certain other agreements. At March 31, 2006, management is not aware of any claims for which a material loss is reasonably possible.

We seek to limit our exposure to loss on any single insured or event and to recover a portion of benefits paid by ceding a portion of our exposure to other insurance enterprises or reinsurers. Reinsurance contracts do not relieve us of our obligations to policyholders. To the extent that reinsuring companies are later unable to meet obligations under reinsurance agreements, our insurance subsidiaries would be liable for these obligations, and payment of these

FBL Financial Group, Inc.		March 31, 2006

obligations could result in losses. To limit the possibility of such losses, we evaluate the financial condition of our reinsurers and monitor concentrations of credit risk. No allowance for uncollectible amounts has been established against our asset for reinsurance recoverable since none of our receivables are deemed to be uncollectible.

We participate in a reinsurance pool with various unaffiliated life insurance companies to mitigate the impact of a catastrophic event on our financial position and results of operations. Members of the pool share in the eligible catastrophic losses based on their size and contribution to the pool. Under the pool arrangement, we will be able to cede approximately 60% of catastrophic losses after other reinsurance and a deductible of $0.8 million. Pool losses and the maximum loss we could incur as a result of losses assumed from other pool members are capped at dollar amounts per event. In 2005, the total pool loss cap was $7.6 million and our cap was $2.7 million. As of January 1, 2006, the pool’s capacity was increased 50%, and the caps will be recalculated. The 2006 caps will be approximately 50% higher than those in 2005, or approximately $11.0 million for the total pool loss cap and $4.0 million for our cap.

We self-insure our employee health and dental claims. However, claims in excess of self-insurance levels are fully insured. We fund insurance claims through a self-insurance trust. Deposits to the trust are made at an amount equal to our best estimate of claims incurred during the period. Accordingly, no accruals are recorded on our financial statements for unpaid claims and claims incurred but not reported. Adjustments, if any, resulting in changes in the estimate of claims incurred will be reflected in operations in the periods in which such adjustments are known.

4.		Earnings Per Share

The following table sets forth the computation of earnings per common share and earnings per common share — assuming dilution.

		Three months ended March 31,
		2006				2005
		(Dollars in thousands, except per share data)
Numerator:
Net income		$	27,734			$	17,205
Dividends on Series B preferred stock			(38	)			(38	)
Numerator for earnings per common share — income available to common stockholders		$	27,696			$	17,167
Denominator:
Weighted average shares			29,187,319				28,732,266
Deferred common stock units relating to deferred compensation plans			41,135				26,934
Denominator for earnings per common share — weighted-average shares			29,228,454				28,759,200
Effect of dilutive securities — stock based compensation			537,020				514,208
Denominator for diluted earnings per common share — adjusted weighted-average shares			29,765,474				29,273,408
Earnings per common share		$	0.95			$	0.60
Earnings per common share — assuming dilution		$	0.93			$	0.59

Based upon the provisions of the underlying agreement and the application of the “two class” method to our capital structure, we have not allocated undistributed net income to the unvested Class A restricted stock as those instruments possess certain characteristics, such as vesting, that differ from instruments defined as participating securities under current accounting guidance. Also, for the three months ended March 31, 2005, we did not allocate any undistributed net income to the Series C preferred stock since the Series C preferred stockholder’s participation in dividends with the common stockholders was limited to the amount of the quarterly regular dividend.

FBL Financial Group, Inc.		March 31, 2006

5.		Segment Information

We analyze operations by reviewing financial information regarding products that are aggregated into four product segments. The product segments are: (1) Traditional Annuity — Exclusive Distribution (“Exclusive Annuity”), (2) Traditional Annuity — Independent Distribution (“Independent Annuity”), (3) Traditional and Universal Life Insurance and (4) Variable. We also have various support operations and corporate capital that are aggregated into a Corporate and Other segment.

We analyze our segment results based on pre-tax operating income (loss). Accordingly, income taxes are not allocated to the segments. In addition, operating results are generally reported net of any transactions between the segments. Operating income (loss) represents net income excluding the impact of realized and unrealized gains and losses on investments and changes in net unrealized gains and losses on derivatives.

We use operating income, in addition to net income, to measure our performance since realized and unrealized gains and losses on investments and the change in net unrealized gains and losses on derivatives can fluctuate greatly from quarter to quarter. These fluctuations make it difficult to analyze core operating trends. In addition, for derivatives not designated as hedges, there is a mismatch between the valuation of the asset and liability when deriving net income. Specifically, call options relating to our index business are one or two-year assets while the embedded derivative in the index contracts represents the rights of the contract holder to receive index credits over the entire period the index annuities are expected to be in force. For our other embedded derivatives in the product segments, the embedded derivatives are marked to market, but the associated insurance liabilities are not marked to market. A view of our operating performance without the impact of these mismatches enhances the analysis of our results. We use operating income for goal setting, determining company-wide bonuses and evaluating performance on a basis comparable to that used by many in the investment community.

Financial information concerning our operating segments is as follows:

		Three months ended March 31,
		2006				2005
Operating revenues:
Traditional Annuity — Exclusive Distribution		$	36,093			$	35,891
Traditional Annuity — Independent Distribution			45,263				33,033
Traditional and Universal Life Insurance			80,162				79,470
Variable			14,262				13,795
Corporate and Other			6,876				7,661
			182,656				169,850
Realized/unrealized gains on investments (A)			11,605				411
Change in net unrealized gains/losses on derivatives (A)			21,806				(6,053	)
Consolidated revenues		$	216,067			$	164,208
Pre-tax operating income (loss):
Traditional Annuity — Exclusive Distribution		$	8,773			$	8,774
Traditional Annuity — Independent Distribution			5,932				5,141
Traditional and Universal Life Insurance			10,950				12,813
Variable			2,816				535
Corporate and Other			(1,871	)			(1,377	)
			26,600				25,886
Income taxes on operating income			(9,014	)			(9,041	)
Realized/unrealized gains on investments (A)			7,693				527
Change in net unrealized gains/losses on derivatives (A)			2,455				(167	)
Consolidated net income		$	27,734			$	17,205

FBL Financial Group, Inc.		March 31, 2006

(A)

Amounts are net of adjustments, as applicable, to amortization of unearned revenue reserves, deferred policy acquisition costs, deferred sales inducements, value of insurance in force acquired and income taxes attributable to gains and losses on investments and derivatives.

Our investment in equity method investees, the related equity income and interest expense are attributable to the Corporate and Other segment. Goodwill at March 31, 2006 and December 31, 2005 is allocated among the segments as follows: Exclusive Annuity ($3.9 million), Traditional and Universal Life Insurance ($6.1 million) and Variable ($1.2 million).

FBL Financial Group, Inc.		March 31, 2006

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section includes a summary of FBL Financial Group, Inc.’s consolidated results of operations, financial condition and where appropriate, factors that management believes may affect future performance. Unless noted otherwise, all references to FBL Financial Group, Inc. (we or the Company) include all of its direct and indirect subsidiaries, including its primary life insurance subsidiaries, Farm Bureau Life Insurance Company (Farm Bureau Life) and EquiTrust Life Insurance Company (EquiTrust Life) (collectively, the Life Companies). Please read this discussion in conjunction with the accompanying consolidated financial statements and related notes. In addition, we encourage you to refer to our 2005 Form 10-K for a complete description of our significant accounting policies and estimates. Familiarity with this information is important in understanding our financial position and results of operations.

Results of Operations for the Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005

		Three months ended March 31,
		2006				2005
		(Dollars in thousands,
		except per share data)
Revenues		$	216,067			$	164,208
Benefits and expenses			174,077				137,272
			41,990				26,936
Income taxes			(14,381	)			(9,374	)
Minority interest and equity income (loss)			125				(357	)
Net income			27,734				17,205
Less dividends on Series B preferred stock			(38	)			(38	)
Net income applicable to common stock		$	27,696			$	17,167
Earnings per common share		$	0.95			$	0.60
Earnings per common share — assuming dilution		$	0.93			$	0.59
Other data
Direct premiums collected, net of reinsurance ceded:
Traditional Annuity — Exclusive Distribution		$	41,880			$	48,323
Traditional Annuity — Independent Distribution			277,203				185,339
Traditional and Universal Life Insurance			44,300				43,435
Variable Annuity and Variable Universal Life (1)			41,836				39,650
Reinsurance assumed and other			4,489				5,887
Total		$	409,708			$	322,634
Direct life insurance in force, end of quarter (in millions)		$	36,451			$	34,285
Life insurance lapse rates			6.9  %				7.6  %
Withdrawal rates — individual traditional annuity:
Exclusive Distribution			4.5  %				3.2  %
Independent Distribution			4.9  %				5.2  %

(1)

Amounts are net of portion ceded to and include amounts assumed from alliance partners.

Premiums collected is not a measure used in financial statements prepared according to U.S. generally accepted accounting principles (GAAP). There is no comparable GAAP financial measure. We use premiums collected to measure the productivity of our exclusive and independent agents. Direct Traditional Annuity — Independent Distribution premiums collected increased significantly in the first quarter of 2006 compared to the first quarter of

FBL Financial Group, Inc.		March 31, 2006

2005 due to continued growth of our EquiTrust Life independent distribution channel. This is driven largely by an increase in the number of licensed independent agents to 11,825 at March 31, 2006, from 6,060 at March 31, 2005.

Net income applicable to common stock increased 61.3% in the first quarter of 2006 to $27.7 million. As discussed in detail below, net income applicable to common stock for the 2006 period was positively impacted by growth in the volume of business in force, the change in unrealized gains/losses on derivatives and realized gains on investments. These increases were partially offset by an increase in death benefits. The first quarter of 2006 also benefited from an increase in equity income.

The spreads earned on our universal life and individual traditional annuity products are as follows:

		Three months ended March 31,
		2006				2005
Weighted average yield on cash and invested assets			6.11	%			6.34	%
Weighted average interest crediting rate/index cost			3.54				3.79
Spread			2.57	%			2.55	%

The weighted average yield on cash and invested assets represents the yield on cash and investments backing the universal life and individual traditional annuity products net of investment expenses. With respect to our index annuities, index costs represent the expenses we incur to fund the annual income credits through the purchase of options and minimum guaranteed interest credited on the index business. The weighted average crediting rate/index cost and spread are computed excluding the impact of the amortization of deferred sales inducements. See the “Segment Information” section that follows for a discussion of our spreads.

Premiums and product charges are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Premiums and product charges:
Interest sensitive and index product charges		$	25,314			$	23,768
Traditional life insurance premiums			34,388				33,333
Accident and health premiums			70				20
Total		$	59,772			$	57,121

Premiums and product charges increased 4.6% in the 2006 period to $59.8 million. The increase in interest sensitive and index product charges are driven principally by surrender charges on annuity and universal life products, cost of insurance charges on variable universal life and universal life products and mortality and expense fees on variable products.

Surrender charges totaled $4.3 million in the 2006 period compared to $3.3 million in the 2005 period. Surrender charges increased due primarily to an increase in surrenders relating to growth in the volume and aging of business in force. The average account value for annuity and universal life insurance in force, which increased due to an increase in premiums collected as summarized in the “Other data” table above, totaled $6,133.7 million at March 31, 2006 and $5,146.0 million at March 31, 2005. We believe aging of the business in force is driving a portion of the increase in surrender charges relating to the annuity business assumed under the coinsurance agreement with American Equity Investment Life Insurance Company (the coinsurance agreement) and business written directly through the EquiTrust Life independent agents as the surrender charge rate decreases with the passage of time (at a rate generally equal to 1.0% per year). This makes a surrender later in the contract period less onerous on the contract holder. We started assuming business under the coinsurance agreement in 2001 and started selling annuities directly through EquiTrust Life independent agents in the fourth quarter of 2003. In total, surrender charges on this business totaled $3.6 million for the first quarter of 2006 and $2.7 million for the first quarter of 2005.

FBL Financial Group, Inc.		March 31, 2006

Cost of insurance charges totaled $15.8 million in the 2006 period and $15.3 million in the 2005 period. Cost of insurance charges increased due primarily to aging of the business in force as the cost of insurance charge rate per each $1,000 in force increases with the age of the insured. The average age of our universal life and variable universal life policyholders was 44.9 years at March 31, 2006 and 44.4 years at March 31, 2005.

Mortality and expense fees totaled $1.9 million in the 2006 period and $1.6 million in the 2005 period. Mortality and expense fees increased due to an increase in the separate account balances on which fees are based. The average separate account balance increased to $661.3 million at March 31, 2006, from $553.2 million at March 31, 2005 due to the impact of new sales and favorable investment results. Transfers of premiums to the separate accounts totaled $33.0 million for the 2006 period and $28.8 million for the 2005 period. Net investment income and net realized and unrealized gains (losses) on separate account assets totaled $28.3 million in the first quarter of 2006 compared to ($7.3) million in the first quarter of 2005.

Traditional premiums increased due to an increase in the volume of business in force. The increase in the business in force is attributable primarily to sales of traditional life products by our Farm Bureau Life agency force exceeding the loss of in force amounts through deaths, lapses and surrenders. Our average traditional life insurance in force, net of reinsurance ceded, totaled $17,710 million at March 31, 2006 and $16,684 million at March 31, 2005.

Net investment income, which excludes investment income on separate account assets relating to variable products, increased 7.3% in the 2006 period to $122.4 million due primarily to an increase in average invested assets, partially offset by a decrease in the annualized yield earned on those assets. Average invested assets in the 2006 period increased 12.4% to $8,209.6 million (based on securities at amortized cost) from $7,304.0 million in the 2005 period, due principally to net premium inflows from the Life Companies. The annualized yield earned on average invested assets decreased to 6.10% in the first quarter of 2006 from 6.40% in the respective 2005 period due primarily to market investment rates being lower than our portfolio yield. Market conditions in the first quarter of 2006 and the full year of 2005 impacted our investment portfolio yield as market investment rates were, in general, lower than our portfolio yield or yield on investments maturing or being paid down. The average yields on fixed maturities purchased in the first quarter were 5.68% in 2006 and 5.37% in 2005. The average yields on fixed maturity securities maturing or being paid down in the first quarter were 6.60% in 2006 and 5.54% in 2005. In addition, for the first quarter, net investment income includes ($0.9) million in 2006 and ($0.3) million in 2005, representing the reversal of net discount accretion on mortgage and asset-backed securities resulting from changing prepayment speed assumptions as of the end of each respective period. See the “Financial Condition — Investments” section that follows for a description of how changes in prepayment speeds impact net investment income. Fee income from bond calls, tender offers and mortgage loan prepayments totaled $1.1 million in the 2006 period compared to $0.8 million in the respective 2005 period. In addition, we recorded $0.9 million in net investment income during the first quarter of 2005, representing past due interest that had not been accrued, relating to the redemption of a fixed maturity security that had been impaired in a prior period.

Derivative income (loss) is as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Derivative income (loss):
Components of derivative income (loss) from call options:
Gains received at expiration		$	9,962			$	2,875
Change in the difference between fair value and remaining option cost at beginning and end of period			21,889				(5,911	)
Cost of money for call options			(14,940	)			(9,237	)
			16,911				(12,273	)
Other			(79	)			(127	)
Total		$	16,832			$	(12,400	)

The increase in gains received at expiration in the 2006 period is primarily attributable to the impact of growth in the volume of index annuities in force and appreciation in the market indices on which our options are based. The

FBL Financial Group, Inc.		March 31, 2006

average account value of index annuities in force, which has increased due to new sales, totaled $2,830.7 million for the 2006 period compared to $1,995.9 million for the 2005 period. The changes in the difference between the fair value of the call options and the remaining option costs for 2006 are caused primarily by the general change in the S&P 500 Index (upon which the majority of our options are based). For the first quarter of 2006, the S&P 500 Index increased on a point-to-point basis by 3.7%, compared to a point-to-point decrease of 2.6% for the 2005 period. While the difference between the fair value of the call options and the remaining option costs generally corresponds to the point-to-point change in the S&P 500 Index, the change in fair value is also impacted by options based on daily or monthly S&P 500 Index averages and options which are based on other underlying indices. Furthermore, the timing of option settlements also impacts the change in fair value. The cost of money for call options increased due primarily to the impact of growth in the volume of index annuities in force. Other derivative income (loss) is comprised of changes in the value of the conversion feature embedded in convertible fixed maturity securities and the embedded derivative included in our modified coinsurance contracts. Derivative income (loss) will fluctuate based on market conditions.

Realized/unrealized gains (losses) on investments are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Realized/unrealized gains (losses) on investments:
Gains on sales		$	13,989			$	2,275
Losses on sales			(3	)			(1,863	)
Losses due to impairments			(2,340	)			—
Unrealized losses on trading securities			(42	)			—
Total		$	11,604			$	412

The level of realized/unrealized gains (losses) is subject to fluctuation from period to period depending on the prevailing interest rate and economic environment and the timing of the sale of investments. See “Financial Condition — Investments” for details regarding our unrealized gains and losses on available-for-sale securities at March 31, 2006 and December 31, 2005. Gains on sales in the 2006 period include $13.5 million related to the sale of 2,500,000 shares of our investment in American Equity Investment Life Holding Company (AEL) common stock.

We monitor the financial condition and operations of the issuers of securities rated below investment grade and of the issuers of certain investment grade securities on which we have concerns regarding credit quality. In determining whether or not an unrealized loss is other than temporary, we review factors such as:

	•		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 the unrealized loss;
	•		length of time the security has been in an unrealized loss position; and
	•		our intent and ability to hold the security.

If we determine that an unrealized loss is other than temporary, the security is written down to its fair value with the difference between amortized cost and fair value recognized as a realized loss. We did not have any investment impairments during the first quarter of 2005. Details regarding our significant investment impairments for the three months ended March 31, 2006, including the circumstances requiring the write downs, are summarized in the following table:

FBL Financial Group, Inc.		March 31, 2006

		Impairment
General Description		Loss				Circumstance
		(Dollars in
		thousands)
Major United States credit company		$	986			Valuation of this security is tied to the strength of its parent. During the first quarter, continued rating declines and other adverse details regarding the financial status of the parent company became available. (A)
Major United States automaker		$	648			During the first quarter, continued rating declines and other adverse details regarding the financial status of the company became available. In addition, the company faces labor strikes and restated its financial statements during the quarter. (A)
Major United States automaker		$	643			During the first quarter, continued rating declines and other adverse details regarding the financial status of the company became available. (A)

(A)

Negative trends in this segment of the industry were considered in our analysis, which is done on an issue-by-issue basis. We concluded that there is no impact on other material investments in addition to amounts already written down.

Other income and other expenses include revenues and expenses, respectively, relating primarily to our non-insurance operations. These operations include management, advisory, marketing and distribution services and leasing activities. Fluctuations in these financial statement line items are generally attributable to fluctuations in the level of these services provided during the periods.

Interest sensitive and index product benefits are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Interest sensitive and index product benefits:
Interest credited		$	48,041			$	47,463
Index credits			9,869				3,144
Change in value of embedded derivative			11,942				(6,700	)
Amortization of deferred sales inducements			6,463				2,356
Interest sensitive death benefits			10,387				9,295
Total		$	86,702			$	55,558

Interest sensitive and index product benefits increased 56.1% in the first quarter of 2006 to $86.7 million due primarily to the impact of an increase in the volume of annuity business in force and market appreciation on the indices backing the index annuities. Interest sensitive and index product benefits tend to fluctuate from period to period primarily as a result of changes in mortality experience and the impact of changes in the equity markets on index credits and the value of the embedded derivatives in our index annuities.

The average account value of annuity contracts in force, which increased due to an increase in premiums collected as summarized in the “Other data” table above, totaled $5,243.5 million for the 2006 period and $4,262.9 million for the 2005 period. These account values include values relating to index contracts in the first quarter totaling $2,830.7 million for 2006 and $1,995.9 million for 2005.

The weighted average interest crediting rate/index cost for universal life and individual traditional annuity products, excluding the impact of the amortization of deferred sales inducements, was 3.54% for the 2006 period and 3.79% for the 2005 period.

FBL Financial Group, Inc.		March 31, 2006

The change in the amount of index credits are impacted by growth in the volume of index annuities in force and the level of appreciation in the underlying equity market indices on which our options are based as discussed above under “Derivative income (loss).” The change in the value of the embedded derivative is impacted by the change in expected index credits on the next policy anniversary dates, which is related to the change in the fair value of the options acquired to fund these index credits as discussed above under “Derivative income (loss).” The value of the embedded derivative is also impacted by the timing of the posting of index credits and changes in reserve discount rates and assumptions used in estimating future call option costs.

The increase in amortization of deferred sales inducements is due to additional capitalization of costs incurred with new sales and profitability in the underlying business. Deferred sales inducements on interest sensitive and index products totaled $162.4 million at March 31, 2006 and $93.3 million at March 31, 2005.

Traditional life insurance and accident and health policy benefits are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Traditional life insurance and accident and health policy benefits:
Traditional life insurance and accident and health benefits		$	22,661			$	20,771
Increase in traditional life and accident and health future policy benefits			8,753				8,250
Distributions to participating policyholders			5,697				6,164
Total		$	37,111			$	35,185

Traditional life insurance and accident and health policy benefits increased 5.5% in the 2006 period to $37.1 million, primarily attributable to an increase in traditional life insurance death benefits and the impact of an increase in the volume of traditional life business in force. In the first quarter of 2006, traditional life insurance death benefits increased 15.0% to $13.9 million. Distributions to participating policyholders decreased due to reductions in our dividend crediting rates in response to the impact of declining market interest rates on our investment portfolio yield as discussed in the “Net investment income” section above. Traditional life insurance and accident and health policy benefits can fluctuate from period to period primarily as a result of changes in mortality experience.

Underwriting, acquisition and insurance expenses are as follows:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals		$	3,518			$	3,663
Amortization of deferred policy acquisition costs			18,769				14,131
Amortization of value of insurance in force acquired			403				753
Other underwriting, acquisition and insurance expenses, net of deferrals			19,116				19,921
Total		$	41,806			$	38,468

Underwriting, acquisition and insurance expenses increased 8.7% in the 2006 period to $41.8 million. Amortization of deferred policy acquisition costs increased in the first quarter of 2006 due primarily to an increase in the volume and profitability of business in force in our Independent Annuity segment, resulting from new sales. Amortization of deferred policy acquisition costs on this business totaled $12.5 million for the 2006 period compared to $7.2 million for the 2005 period. Amortization of value of insurance in force acquired decreased $0.4 million in the 2006 period due to the impact of increased death benefits on the underlying business. Other underwriting, acquisition and insurance expenses decreased $0.8 million from the 2005 period due primarily to efficiencies gained with the closure of a life processing unit during the third quarter of 2005.

FBL Financial Group, Inc.		March 31, 2006

Interest expense totaled $3.0 million in the first quarter of 2006 compared to $3.3 million in the 2005 period due primarily to a $0.6 million decrease in interest expense as a result of the redemption of our Series C preferred stock in December 2005. This decrease was partially offset by an increase in the effective interest rate on our $46.0 million line of credit to an average of 5.75% in the 2006 period from 3.72% in the 2005 period.

Income taxes increased 53.4% in the 2006 period to $14.4 million. The effective tax rate for the first quarter of 2006 was 34.2% in 2006 compared to 34.8% in 2005. The decrease in the effective tax rate for the quarter is primarily due to a decrease in nondeductible dividends as a result of the redemption of our Series C preferred stock in the fourth quarter of 2005.

Equity income (loss), net of related income taxes, totaled $0.2 million for the first quarter of 2006 compared to ($0.3) million for the first quarter of 2005. Equity income (loss) includes our proportionate share of gains and losses attributable to our ownership interest in partnerships, joint ventures and certain companies where we exhibit some control but have a minority ownership interest. Given the timing of availability of financial information from our equity investees, we will consistently use information that is as much as three months in arrears for certain of these entities. Several of these entities are investment companies whose operating results are derived primarily from unrealized and realized gains and losses generated by their investment portfolios. As is normal with these types of entities, the level of these gains and losses is subject to fluctuation from period to period depending on the prevailing economic environment, changes in prices of equity securities held by the investment partnerships, timing and success of initial public offerings and other exit strategies, and the timing of the sale of investments held by the partnerships and joint ventures.

Segment Information

We analyze operations by reviewing financial information regarding products that are aggregated into four product segments. The product segments are: (1) Traditional Annuity — Exclusive Distribution (“Exclusive Annuity”), (2) Traditional Annuity — Independent Distribution (“Independent Annuity”), (3) Traditional and Universal Life Insurance and (4) Variable. We also have various support operations and corporate capital that are aggregated into a Corporate and Other segment.

We analyze our segment results based on pre-tax operating income (loss). Accordingly, income taxes are not allocated to the segments. In addition, operating results are generally reported net of any transactions between the segments. Operating income (loss) represents net income excluding the impact of realized and unrealized gains and losses on investments and changes in net unrealized gains and losses on derivatives. The impact of realized and unrealized gains and losses on investments and unrealized gains and losses on derivatives includes adjustments for income taxes and that portion of amortization of deferred policy acquisition costs, deferred sales inducements, unearned revenue reserve and value of insurance in force acquired attributable to such gains or losses. Our rationale for using operating income, in addition to net income, to measure our performance is summarized in Note 5, “Segment Information”, to the consolidated financial statements.

FBL Financial Group, Inc.		March 31, 2006

A reconciliation of net income to pre-tax operating income and a summary of pre-tax operating income (loss) by segment follow:

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Net income		$	27,734			$	17,205
Realized gains on investments			(11,604	)			(412	)
Change in net unrealized gains/losses on derivatives			(9,865	)			204
Change in amortization of:
Deferred policy acquisition costs			3,301				(326	)
Deferred sales inducements			2,635				(6	)
Value of insurance in force acquired			(78	)			(15	)
Unearned revenue reserve			(1	)			1
Income tax offset			5,464				194
Realized and unrealized gains, net of offsets			(10,148	)			(360	)
Income taxes on operating income			9,014				9,041
Pre-tax operating income		$	26,600			$	25,886
Pre-tax operating income (loss) by segment:
Traditional Annuity — Exclusive Distribution		$	8,773			$	8,774
Traditional Annuity — Independent Distribution			5,932				5,141
Traditional and Universal Life Insurance			10,950				12,813
Variable			2,816				535
Corporate and Other			(1,871	)			(1,377	)
		$	26,600			$	25,886

FBL Financial Group, Inc.		March 31, 2006

A discussion of our operating results, by segment, follows:

Traditional Annuity — Exclusive Distribution Segment

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Pre-tax operating income
Operating revenues:
Interest sensitive and index product charges		$	283			$	184
Net investment income			35,844				35,707
Derivative loss			(34	)			—
			36,093				35,891
Benefits and expenses			27,320				27,117
Pre-tax operating income		$	8,773			$	8,774
Other data
Annuity premiums collected, direct		$	41,880			$	48,323
Policy liabilities and accruals, end of period			2,221,069				2,159,656
Individual deferred annuity spread:
Weighted average yield on cash and invested assets			6.30	%			6.53	%
Weighted average interest crediting rate			3.99				4.21
Spread			2.31	%			2.32	%
Individual traditional annuity withdrawal rate			4.5	%			3.2	%

Pre-tax operating income for the Exclusive Annuity segment totaled $8.8 million in the first quarter of 2006 and 2005. The average account value for annuity contracts in force in the Exclusive Annuity segment totaled $1,478.1 million for the 2006 period compared to $1,396.3 million for the 2005 period. The impact of the increase in the volume of business in force was offset during the period by a slight increase in underwriting, acquisition and insurance expenses.

Premiums collected decreased 13.3% in the first quarter of 2006 to $41.9 million. The amount of traditional annuity premiums collected is highly dependent upon the relationship between the current crediting rates on our products and the crediting rates available on competing products, including bank-offered certificates of deposit. We believe the decrease in annuity premiums in 2006 is due to a rise in short-term market interest rates during 2006 and 2005, making certificates of deposit and other short-term investments more attractive in relation to these traditional annuities. We also believe this competitive environment resulted in increased surrenders, therefore increasing the withdrawal rate for the first quarter of 2006.

The decrease in the weighted average yield on cash and invested assets is primarily attributable to market investment rates being lower than our portfolio yield as discussed in the “Net investment income” section above. We utilize interest rate swaps to hedge a portion of our annuity portfolio. The decrease in the weighted average crediting rate for 2006 is attributable to the change in the gain (loss) on our interest rate swaps. Income (loss) from these swaps, which is netted against interest credited, totaled $0.7 million in the 2006 period compared to ($0.1) million in the 2005 period.

FBL Financial Group, Inc.		March 31, 2006

Traditional Annuity — Independent Distribution Segment

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Pre-tax operating income
Operating revenues:
Interest sensitive and index product charges		$	3,562			$	2,668
Net investment income			46,641				36,712
Derivative loss			(4,940	)			(6,347	)
			45,263				33,033
Benefits and expenses			39,331				27,892
Pre-tax operating income		$	5,932			$	5,141
Other data
Annuity premiums collected, independent channel		$	277,203			$	185,339
Annuity premiums collected, assumed			1,280				2,358
Policy liabilities and accruals, end of period			3,842,845				2,875,353
Individual deferred annuity spread:
Weighted average yield on cash and invested assets.			5.83	%			6.07	%
Weighted average interest crediting rate/index cost			3.17				3.37
Spread			2.66	%			2.70	%
Individual traditional annuity withdrawal rate			4.9	%			5.2	%

Pre-tax operating income for the Independent Annuity segment increased 15.4% in the 2006 period to $5.9 million. The increase is due principally to growth in the volume of business in force, partially offset by a decrease in spreads earned on individual deferred annuities. Revenues, benefits, expenses and volume of business in force increased primarily due to the growth of our EquiTrust Life distribution channel. The average account value for annuity contracts in force in the Independent Annuity segment totaled $3,671.9 million in the 2006 period and $2,772.4 million in the 2005 period.

The increase in interest sensitive and index product charges is due to an increase in surrender charges. Surrender charges increased due to an increase in surrenders relating to growth in the volume and aging of business in force. The increase in net investment income is attributable to growth in invested assets due principally to net premium inflows, partially offset by the impact of a decline in our investment yield. The decrease in the derivative loss is due to a $7.1 million increase in proceeds from option settlements due to appreciation in the indices supporting the index annuity business, partially offset by a $5.7 million increase in the cost of money for call options due primarily to the impact of growth in the volume of index annuities in force, as discussed under “Derivative income (loss)” above.

Benefits and expenses for the 2006 period increased due to growth in the volume of business in force. In addition, index credits increased $6.7 million due primarily to increases in the equity markets during the 2006 period. Operating expenses for the quarter include $1.2 million for 2006 and $0.8 million for 2005 relating to the expansion of our EquiTrust Life distribution.

The weighted average yield on cash and invested assets decreased primarily to market investment rates being lower than our portfolio yield as discussed in the “Net investment income” section above. The weighted average crediting rate decreased for the 2006 period due to decreases in crediting rates and option costs made as a result of the decrease in portfolio yield.

FBL Financial Group, Inc.		March 31, 2006

Traditional and Universal Life Insurance Segment

		Three months ended March 31,
		2006				2005
		(Dollars in thousands)
Pre-tax operating income
Operating revenues:
Interest sensitive product charges		$	11,102			$	10,965
Traditional life insurance premiums			34,388				33,333
Net investment income			34,672				35,172
			80,162				79,470
Benefits and expenses			69,212				66,657
Pre-tax operating income		$	10,950			$	12,813
Other data
Life premiums collected, net of reinsurance		$	47,439			$	46,893
Policy liabilities and accruals, end of period			2,107,702				2,070,242
Direct life insurance in force, end of period (in millions)			28,936				26,944
Interest sensitive life insurance spread:
Weighted average yield on cash and invested assets			6.77	%			6.87	%
Weighted average interest crediting rate			4.44				4.52
Spread			2.33	%			2.35	%