FBL FINANCIAL GROUP INC, 424B4, 1996-07-19

FBL FINANCIAL GROUP INC
424B4, 1996-07-19
LIFE INSURANCE

Previous: UGLY DUCKLING CORP, S-8, 1996-07-19

Next: DRILEX INTERNATIONAL INC, S-8, 1996-07-19

<PAGE>
Filed pursuant to Rule 424(b)(4) relating to
Registration Statement No. 333-04332

4,000,000 SHARES
[LOGO]
FBL FINANCIAL GROUP, INC.
CLASS A COMMON STOCK
-----------

All of the 4,000,000 shares of Class A Common Stock of FBL Financial Group,
Inc. (the Company) offered hereby (Shares) are being sold by certain
stockholders (the Selling Stockholders). The Company will not receive any of the
proceeds from the sale of the Shares. Prior to this offering (the Offering),
there has been no public market for the Shares. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. The Shares have been authorized for listing on the New York Stock
Exchange under the symbol FFG, subject to official notice of issuance. The
Company has requested that the Underwriters reserve 200,000 Shares for purchase,
on the same terms as all other Purchasers, by certain persons having a
relationship with the Company. See "Underwriting."

The Company has three classes of stock consisting of Class A Common Stock,
which is being offered hereby, Series A Preferred Stock which votes generally
with the Class A Common Stock as a single voting group, and Class B Common
Stock. The ownership of Class B Common Stock is restricted to organizations
associated with the American Farm Bureau Federation. The holders of the Class A
Common Stock and Series A Preferred Stock voting together as a single voting
group (Class A Voting Rights) elect three Class A directors and the holders of
the Class B Common Stock elect 18 Class B Directors, 15 of whom are the
Presidents of the 15 state Farm Bureau Federations in the Company's market
territory. After the Offering, the Iowa Farm Bureau Federation together with
other state Farm Bureau organizations located in the Company's market territory
will own 100% of the Class B voting rights, as well as 82.4% of the Class A
Voting Rights, and, accordingly, will be able to elect all of the Directors of
the Company.
--------------

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR INFORMATION
RELEVANT TO AN INVESTMENT IN THE SHARES.
-------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND THE SELLING
PUBLIC COMMISSIONS (1) STOCKHOLDERS (2)
<S> <C> <C> <C>
Per Share................................ $17.50 $1.225 $16.275
Total (3)................................ $70,000,000 $4,900,000 $65,100,000
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."

(2) Before deducting expenses payable by the Selling Stockholders estimated at
$40,400, and excluding expenses payable by the Company estimated at
$709,600.

(3) Certain of the Selling Stockholders have granted the Underwriters a 30-day
option to purchase up to 600,000 additional Shares solely to cover
over-allotments, if any. To the extent the option is exercised, the
Underwriters will offer the additional Shares at the Price to Public shown
above. If the option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, and Proceeds to the Selling
Stockholders will be $80,500,000, $5,635,000 and $74,865,000, respectively.
See "Principal and Selling Stockholders" and "Underwriting."
--------------

The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, and subject to the right of
the Underwriters to reject any order in whole or in part. It is expected that
delivery of the Shares will be made at the offices of Alex. Brown & Sons
Incorporated, Baltimore, Maryland, on or about July 24, 1996.

ALEX. BROWN & SONS
INCORPORATED
SMITH BARNEY INC.
EVEREN SECURITIES, INC.

THE DATE OF THIS PROSPECTUS IS JULY 19, 1996.
<PAGE>
The Company intends to furnish its stockholders with annual reports for each
calendar year containing audited financial statements and an opinion thereon
expressed by independent certified public accountants and with quarterly reports
for each of the first three quarters of each calendar year containing unaudited
summary financial information.
--------------

FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS.
--------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
--------------

The following schematically displays the structure of FBL Financial Group,
Inc. and the respective total economic ownership interest in FBL Financial
Group, Inc. represented by the Class A and Class B Common Stock after the
Offering, and assuming no exercise of the Underwriters' over-allotment option:
--------------

[GRAPH]
[Graph provides following information:

<TABLE>
<CAPTION>
STOCKHOLDER ECONOMIC OWNERSHIP
- ----------------------------------------------------------------------------------------------------- -------------------------
<S> <C>
Public Stockholders 21.2%
Iowa Farm Bureau Federation 54.3%
25 Other Farm Bureau Organizations 16.4%
Farm Bureau Mutual Insurance Company 8.1%
</TABLE>

ENTITIES OWNED:
FBL Financial Group, Inc.
Farm Bureau Life Insurance Company
FBL Financial Services, Inc.
Western Farm Bureau Life Insurance Company
Utah Farm Bureau Insurance Company (1)
- ------------------------

(1) participates with Farm Bureau Mutual Insurance Company and South Dakota Farm
Bureau Mutual Insurance Company, commonly managed mutual insurance
companies, in the Farm Bureau Mutual pool.]

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS. SEE
"GLOSSARY OF SELECTED INSURANCE TERMS" FOR DEFINITIONS OF CERTAIN INSURANCE
TERMS USED HEREIN. UNLESS OTHERWISE INDICATED, THE FINANCIAL INFORMATION SET
FORTH HEREIN HAS BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP), AND ALL OF THE INFORMATION INCLUDED HEREIN ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED AND REFLECTS THE
2,000-FOR-1 STOCK SPLIT EFFECTIVE MARCH 19, 1996, EXCEPT WHERE OTHERWISE
INDICATED. UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES IN THIS
PROSPECTUS TO THE COMPANY INCLUDE ALL OF ITS DIRECT AND INDIRECT SUBSIDIARIES,
INCLUDING ITS PRIMARY LIFE INSURANCE COMPANY SUBSIDIARIES, FARM BUREAU LIFE
INSURANCE COMPANY (FARM BUREAU LIFE) AND WESTERN FARM BUREAU LIFE INSURANCE
COMPANY (WESTERN LIFE) (TOGETHER THE LIFE COMPANIES) AND ITS PROPERTY-CASUALTY
SUBSIDIARY, UTAH FARM BUREAU INSURANCE COMPANY (UTAH INSURANCE).

THE COMPANY

The Company through its subsidiaries underwrites, markets and distributes
life insurance, annuities, property-casualty insurance and mutual funds to
individuals and small businesses in 15 midwestern and western states. The
Company has exclusive marketing arrangements with the state Farm Bureau
Federations in its territory and targets sales to approximately 700,000 Farm
Bureau member families and other rural, small town and suburban residents
through an exclusive agency force. Through acquisitions of Rural Security Life
Insurance Company (Rural Security Life) in 1993 and Western Life in 1994, the
Company expanded its operations to 15 states, including Wisconsin and the
eight-state Western Life area (the Western Life states). Prior to 1993 the
Company operated only in Iowa, Nebraska, Minnesota, South Dakota and Utah, and
in Kansas sold mutual funds only.

All of the state Farm Bureau Federations in the Company's marketing area are
associated with the American Farm Bureau Federation. With approximately 4.6
million member families in all 50 states, the American Farm Bureau Federation is
the largest grass roots farm and ranch organization in the United States. The
primary goal of the American Farm Bureau Federation is to improve net farm
income and the quality of life of farmers, ranchers and other rural residents
through education and representation with respect to public policy issues.
Management believes that the Company's relationship with the state Farm Bureau
Federations places it in a unique position to serve the insurance and financial
needs of farmers, ranchers, rural and suburban residents, and related
individuals and businesses. Farm Bureau organizations in the Company's
territories tend to be well known and long established, have active memberships
and provide a number of benefits other than financial services. See "The Company
- -- Company History and Farm Bureau Affiliation." Management believes the
strength of these organizations provides enhanced prestige and brand awareness
for the Company's products and increased access to Farm Bureau members. Many of
the Company's customers are self-employed individuals who are responsible for
providing for their own insurance and retirement needs. Management believes that
Farm Bureau insurance customers tend to be financially conservative and stable,
which management believes has led to persistency greater than industry averages.
The Company's life insurance products are currently available for sale both to
Farm Bureau members and to non-members. Most of the Company's property-casualty
insurance products are available for sale only to Farm Bureau members.

The Company sells its insurance and mutual fund products through an
exclusive Farm Bureau distribution system comprised of approximately 1,795
agents. All of the Company's agents are independent contractors who sell only
Farm Bureau sponsored or authorized products. See "Business -- Marketing --
Exclusive Agency Force." Approximately 635 agents located in Iowa, Minnesota,
South Dakota and Utah (the multi-line states) sell both life and
property-casualty products offered only through the Company. Approximately 1,160
agents located in the eight Western Life states and three other states
(collectively, the life-only states) sell only the Company's life insurance,
annuity and mutual fund products (in Kansas only the Company's variable
products) and offer property-casualty products of Farm Bureau property-casualty
insurance companies not managed by the Company. Approximately 76% of all agents
are licensed to sell variable life insurance, variable annuities and mutual
funds.

3
<PAGE>
The Company offers a full range of life insurance products including
universal life, variable universal life, whole life, term life and disability
income insurance, together with variable and traditional annuity products. The
Company is establishing variable universal life as its lead product. In the
three month period ended March 31, 1996 and the year ended December 31, 1995,
variable universal life accounted for 36.4% and 37.0%, respectively, of first
year direct life insurance premiums collected. Since its acquisition of Western
Life in 1994, the Company has pursued an aggressive program of training and
licensing the agents in the Western Life states to enable them to market the
Company's variable universal life insurance, variable annuities and mutual
funds. The Company has recently ceased offering medical insurance products but
makes those products available to its agents through affiliations with other
carriers. The Company also provides a portfolio of mutual funds and asset
management services to third parties.

The Company's property-casualty insurance products include automobile,
homeowners, farm and ranch owners and crop insurance and workers' compensation.
Property-casualty business written in Utah through Utah Insurance is pooled with
the business written in Iowa, Minnesota and South Dakota through two Farm Bureau
related mutual insurance companies, Farm Bureau Mutual Insurance Company (Farm
Bureau Mutual) and South Dakota Farm Bureau Mutual Insurance Company (South
Dakota Mutual) (the Farm Bureau Mutual pool). All of the companies participating
in the Farm Bureau Mutual pool are managed by the Company. The current
participation of Utah Insurance in the Farm Bureau Mutual pool, which had net
premiums written of $57.2 million in the three month period ended March 31, 1996
and $235.6 million in the year ended December 31, 1995, is 8%. Management
anticipates that during the second quarter of 1996 the share of Utah Insurance
in the Farm Bureau Mutual pool will be increased to 20% retroactive to January
1, 1996. Effective January 1, 1996, the Farm Bureau Mutual pool participates
through a loss pooling agreement in business written in Arizona and New Mexico
by Farm Bureau affiliated companies managed by the Company, thereby providing
further geographic diversification of risk.

During the three month period ended March 31, 1996, the Company had total
premiums and product charges of $37.4 million, total revenues of $93.3 million,
adjusted operating income of $10.8 million and net income of $10.9 million and,
during the year ended December 31, 1995, the Company had total premiums and
product charges of $148.0 million, total revenues of $406.0 million, adjusted
operating income of $41.6 million and net income of $59.6 million. At March 31,
1996, the investment portfolio of the Company had an aggregate carrying value of
$2.7 billion, and the Company's total assets and stockholders' equity were $3.1
billion and $556.0 million, respectively. For information relating to the
Company's adjusted operating income, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations --
Adjusted Operating Income."

Farm Bureau Life is rated "A+ (Superior)", Western Life is rated "A
(Excellent)", and the Farm Bureau Mutual pool is rated "Ap (Excellent)" by A.M.
Best Company, Inc. (A.M. Best). A.M. Best ratings consider the claims paying
ability of the rated Company and are not a rating of the investment worthiness
of the rated Company. See "Glossary of Selected Insurance Terms -- A.M. Best
rating."

BUSINESS STRATEGY

The Company's current management team which was appointed in 1991 has
initiated a strategy focused on enhancing profitability and expanding its market
territory. The Company's strategy is designed to capitalize on the Company's
exclusive association with state Farm Bureau federations in its operating
territory. Key components of the Company's strategy include:

ENHANCING PRODUCT PROFITABILITY. The Company is focusing on improving its
margins by analyzing its product portfolio for competitiveness and
profitability. In 1994, the Company exited the unprofitable medical insurance
business. Currently, the Company is reviewing its allocation of capital by
product line, policyholder dividend and interest rate crediting policies,
modifying its systems to accommodate alternative product designs and considering
possible changes in product structure.

4
<PAGE>
29% of Farm Bureau members own at least one of the Company's life products, 53%
own at least one of the Company's property-casualty products, and approximately
20% own both, providing significant opportunity for cross selling. Prior to
1996, agents selling the Company's life insurance products in the Western Life
states were not able to sell the Company's variable life insurance and variable
annuity products. In March 1996, the Company introduced a uniform portfolio of
life insurance and annuity products throughout its market territory. This
portfolio improves the products available to many agents and expands the
offering of variable products into all states in the Company's territory.
Additionally, the Company seeks to enhance agent productivity through a
restructured incentive compensation program and more effective and increased
training.

GROWING THROUGH ACQUISITIONS AND JOINT VENTURES. Since 1993, the Company
has consolidated operations with two Farm Bureau affiliated insurance companies,
resulting in a significant expansion of marketing area and revenue base. The
Company will continue to pursue growth opportunities through acquisitions and
mergers with Farm Bureau related and other companies. Management believes the
Company's position as a publicly traded Farm Bureau affiliated insurance company
will increase its attractiveness as a merger partner. Additionally, the Company
seeks to leverage its position as the only Farm Bureau company with variable
product expertise by entering into joint ventures and other marketing
arrangements with Farm Bureau and other organizations.

REDUCING OPERATING EXPENSES. The Company has focused on reducing operating
expenses through reengineering projects and consolidation of operations and
systems. These efforts have resulted in significant cost savings and a 25%
reduction in job positions over the last three years. Management intends to seek
further expense improvements from continuing reengineering efforts.

THE SERIES A EXCHANGE

The Company has offered, subject to completion of the Offering, 5,000,000
shares of Series A Preferred Stock in exchange for 5,000,000 shares of Class A
Common Stock (the Series A Exchange). The Series A Exchange was offered on a pro
rata basis to its existing shareholders, all of whom are Farm Bureau
organizations. The Iowa Farm Bureau Federation has agreed to exchange shares of
Class A Common Stock for all of the shares of Series A Preferred Stock, none of
which was taken up by other existing shareholders in the Series A Exchange. Each
share of Series A Preferred Stock is entitled to one vote, so long as it is held
by a Farm Bureau organization, and will vote together with the Class A Common
Stock as one voting group. The Series A Preferred Stock is cumulative, will pay
an annual dividend of $1.00 per share and has a liquidation preference of $20.00
per share.

5
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock offered hereby.......... 4,000,000 shares
Common Stock to be outstanding after the
Offering (1):
Class A.................................. 17,666,810 shares
Class B.................................. 1,192,990 shares
---------
Total.................................. 18,859,800 shares
---------
---------
</TABLE>

<TABLE>
<S> <C>
Relative rights of holders of Class A Common
Stock and Class B Common Stock.............. The holders of Class A Common Stock vote as a
group with the holders of Series A Preferred
Stock to elect three Class A Directors and on
all other matters. The holders of Class B
Common Stock elect 18 Class B Directors. All
of the Class B Common Stock is held by Farm
Bureau organizations and automatically
converts to Class A Common Stock upon
transfer to any person which is not a Farm
Bureau organization.
Use of proceeds.............................. The Company will not receive any of the
proceeds from the sale of Shares in the
Offering.
Dividend policy.............................. Subject to the Company's financial results
and declaration by the Company's Board of
Directors, the Company currently intends to
pay a quarterly cash dividend on its Common
Stock of $0.07 per share commencing the first
full fiscal quarter following the Offering.
NYSE symbol.................................. FFG
</TABLE>

- ------------------------
(1) Based on shares outstanding as of April 30, 1996, assuming consummation of
the Series A Exchange, and not including an estimated 1,750,000 shares of
Class A Common Stock reserved for issuance under the Company's Stock Option
Plan or 1,192,990 shares of Class A Common Stock reserved for issuance upon
conversion of Class B Common Stock. See "Management Compensation -- 1996
Class A Common Stock Compensation Plan" and "Description of Capital Stock."

RISK FACTORS

Potential investors should carefully consider the factors described in "Risk
Factors" as well as other information contained in this Prospectus, in making an
investment decision regarding the Shares.

6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth selected financial and statutory data of the
Company for the periods indicated. This information should be read in
conjunction with the consolidated financial statements and related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein. The selected data as of December 31,
1995, 1994, 1993 and 1992, and for each of the four years in the period ended
December 31, 1995, with the exception of pro forma net income per common share,
pro forma book value per common share and the information presented under the
caption "Other Data", are derived from the Company's consolidated financial
statements which have been audited by Ernst & Young LLP, independent auditors.
The selected data as of March 31, 1996 and 1995, and for the three month periods
then ended and as of December 31, 1991, and for the year then ended, with the
exception of the information presented under the caption "Other Data", are
derived from the Company's unaudited consolidated financial statements. The
unaudited consolidated financial statements reflect all adjustments, consisting
of normal recurring accruals, which the Company considers necessary for a fair
presentation of the consolidated financial statements as of or for the
appropriate periods in conformity with generally accepted accounting principles.
<TABLE>
<CAPTION>
AS OF OR FOR THE THREE
MONTH PERIOD ENDED MARCH
31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992
----------- ----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA (1):
Premiums and product charges:
Universal life and annuity product charges..... $ 11,317 $ 10,632 $ 43,722 $ 42,734 $ 26,500 $ 18,967
Traditional life insurance premiums............ 19,131 18,227 75,450 72,222 46,050 44,831
Accident and health premiums (2)............... 2,652 2,383 10,161 (1,956) 46,437 23,138
Property-casualty premiums..................... 4,298 4,323 18,709 17,778 16,937 14,570
----------- ----------- ----------- ----------- ---------- ----------
Total premiums and product charges............... 37,398 35,565 148,042 130,778 135,924 101,506
Net investment income............................ 52,428 48,037 223,108 178,834 138,320 126,500
Realized gains (losses) on investments........... (2,098) 1,850 5,883 9,448 3,967 12,162
Other income..................................... 5,592 7,138 28,952 30,825 25,251 21,183
----------- ----------- ----------- ----------- ---------- ----------
Total revenues................................... $ 93,320 $ 92,590 $ 405,985 $ 349,885 $ 303,462 $ 261,351
----------- ----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ----------- ---------- ----------
Income from continuing operations before income
taxes, minority interest in earnings of
subsidiaries and equity income.................. $ 15,957 $ 13,934 $ 90,447 $ 59,873 $ 38,931 $ 41,232
Income from continuing operations................ 10,889 9,043 59,628 35,587 22,705 26,367
Income from continuing operations per common
share........................................... $ 0.46 $ 0.39 $ 2.53 $ 1.52 $ 1.26 $ 1.56
Net income (3)................................... $ 10,889 $ 9,043 $ 59,628 $ 42,066 $ 19,803 $ 21,435
Net income per common share (3).................. $ 0.46 $ 0.39 $ 2.53 $ 1.80 $ 1.10 $ 1.27
Pro forma net income per common share (4)........ 0.50 2.92

CONSOLIDATED BALANCE SHEET DATA (1):
Total investments................................ $ 2,668,001 $ 2,415,565 $ 2,646,123 $ 2,337,154 $1,757,277 $1,385,669
Total assets..................................... 3,120,166 2,869,806 3,090,851 2,792,535 2,142,849 1,728,963
Long-term debt................................... 11,776 17,445 12,604 18,519 30,638 881
Total liabilities................................ 2,559,643 2,406,898 2,522,050 2,357,214 1,814,206 1,452,566
Total stockholders' equity....................... 556,020 458,323 564,298 430,743 312,277 262,582
Book value per common share...................... $ 23.30 $ 19.54 $ 23.65 $ 18.37 $ 17.07 $ 15.51
Pro forma book value per common share (4)........ 24.18

STATEMENT OF INCOME SEGMENT DATA (1):
Income (loss) from continuing operations before
income taxes, minority interest in earnings of
subsidiaries and equity income by segment
Life insurance................................. $ 15,745 $ 13,261 $ 88,500 $ 58,573 $ 38,898 $ 40,952
Property-casualty insurance.................... 346 676 2,083 1,288 33 280
Corporate...................................... (134) (3) (136) 12 -- --
----------- ----------- ----------- ----------- ---------- ----------
15,957 13,934 90,447 59,873 38,931 41,232

1991
----------

<S> <C>
CONSOLIDATED STATEMENT OF INCOME DATA (1):
Premiums and product charges:
Universal life and annuity product charges..... $ 18,722
Traditional life insurance premiums............ 42,460
Accident and health premiums (2)............... 20,869
Property-casualty premiums..................... 13,593
----------
Total premiums and product charges............... 95,644
Net investment income............................ 117,339
Realized gains (losses) on investments........... 5,816
Other income..................................... 18,854
----------
Total revenues................................... $ 237,653
----------
----------
Income from continuing operations before income
taxes, minority interest in earnings of
subsidiaries and equity income.................. $ 26,208
Income from continuing operations................ 17,198
Income from continuing operations per common
share........................................... $ 1.02
Net income (3)................................... $ 9,254
Net income per common share (3).................. $ 0.55
Pro forma net income per common share (4)........
CONSOLIDATED BALANCE SHEET DATA (1):
Total investments................................ $1,291,986
Total assets..................................... 1,592,612
Long-term debt................................... 835
Total liabilities................................ 1,336,967
Total stockholders' equity....................... 243,994
Book value per common share...................... $ 14.41
Pro forma book value per common share (4)........
STATEMENT OF INCOME SEGMENT DATA (1):
Income (loss) from continuing operations before
income taxes, minority interest in earnings of
subsidiaries and equity income by segment
Life insurance................................. $ 25,709
Property-casualty insurance.................... 499
Corporate...................................... --
----------
26,208
</TABLE>

7
<PAGE>
<TABLE>
<CAPTION>
AS OF OR FOR THE THREE
MONTH PERIOD ENDED MARCH
31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992
----------- ----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>

<CAPTION>
1991
----------
<S> <C>
OTHER DATA (1):
Adjusted operating income (5).................... $ 10,804 $ 8,304 $ 41,648 $ 29,780 $ 19,024 $ 17,067
Adjusted operating income per common share (5)... $ 0.45 $ 0.35 $ 1.77 $ 1.27 $ 1.06 $ 1.01
Pro forma adjusted operating income per common
share (4)....................................... 0.50 1.96
Life insurance statutory capital and surplus
(6)(7).......................................... $ 296,289 $ 253,086 $ 288,302 $ 250,709 $ 177,130 $ 164,600
Net statutory premiums collected by the Life
Companies (6)(8)................................ 70,859 59,930 233,538 230,336 218,976 168,064
Life insurance in force.......................... 15,356,041 14,475,141 15,254,669 14,296,709 9,525,136 7,098,231
Statutory property-casualty ratios (6):
Loss & loss adjustment expense (9)............. 74.7% 68.8% 72.8% 75.6% 82.4% 86.2%
Expense (10)................................... 27.4 25.5 25.1 25.9 26.2 25.4
Combined (11).................................. 102.1 94.3 97.9 101.5 108.6 111.6

<CAPTION>
OTHER DATA (1):
Adjusted operating income (5).................... $ 13,292
Adjusted operating income per common share (5)... $ .79
Pro forma adjusted operating income per common
share (4).......................................
Life insurance statutory capital and surplus
(6)(7).......................................... $ 154,075
Net statutory premiums collected by the Life
Companies (6)(8)................................ 157,487
Life insurance in force.......................... 6,579,420
Statutory property-casualty ratios (6):
Loss & loss adjustment expense (9)............. 83.0%
Expense (10)................................... 25.7
Combined (11).................................. 108.7
</TABLE>

- ------------------------------
(1) As discussed in more detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the comparability of
selected data from year to year is impacted by the acquisition of Rural
Security Life in March 1993 and the acquisition of Western Life and the
minority interests in FBL Insurance Company and Rural Security Life in
January 1994.

(2) During 1994, the Company ceased writing medical insurance business. The
Company continues to sell individual disability income insurance.

(3) The Company recognized net income (loss) related to its discontinued cable
television operations of $6.5 million, or $0.28 per share, $(2.9) million,
or $(0.16) per share, $(4.9) million, or $(0.29) per share and $(7.9)
million, or $(0.47) per share for the years ended December 31, 1994, 1993,
1992 and 1991, respectively.

(4) Pro forma net income per common share and pro forma adjusted operating
income per common share are presented as if the increase in Utah Insurance's
participation in the Farm Bureau Mutual pool and the Series A Exchange had
occurred as of January 1, 1995. Pro forma book value per common share is
presented as if the increase in Utah Insurance's participation in the Farm
Bureau Mutual pool and the Series A Exchange had occurred as of March 31,
1996. See "Pro Forma Consolidated Financial Statements" and related notes
thereto included elsewhere herein.

(5) Adjusted operating income equals net income adjusted to eliminate certain
items which management believes are not indicative of operating trends
because they are unusual and/or nonrecurring in nature, including realized
gains (losses) on investments (less that portion of amortization of deferred
policy acquisition costs and value of insurance in force acquired and income
taxes attributable to such gains), discontinued operations and net income or
loss from a venture capital investment company subsidiary. Adjusted
operating income and adjusted operating income per common share should not
be considered as necessarily being better indicators of the Company's
overall operating performance than net income or net income per common
share, nor are they better indicators of the Company's liquidity than cash
flows. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Adjusted Operating Income."

(6) Statutory data has been derived from the annual statements of the Company's
insurance subsidiaries, as filed with insurance regulatory authorities and
prepared in accordance with statutory accounting practices.

(7) Statutory capital and surplus reflects amounts related to Farm Bureau Life
and Western Life (after 1993) only and does not include the Asset Valuation
Reserve, Interest Maintenance Reserve or Mandatory Securities Valuation
Reserve for the appropriate periods.

(8) Net statutory premiums as presented for statutory reporting purposes
include premiums collected from annuities and universal life-type products.
For GAAP reporting, such premiums received are not reported as premium
revenues.

(9) Loss and loss adjustment expense ratio equals the sum of statutory incurred
losses and loss adjustment expenses divided by statutory earned premiums.

(10) Expense ratio equals all statutory expenses, including policyholder
dividends and excluding loss and loss adjustment expenses, divided by
statutory net written premiums.

(11) Combined ratio equals the sum of the loss and loss adjustment expense and
expense ratios.

8
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN
THE SHARES OFFERED BY THIS PROSPECTUS. CERTAIN STATEMENTS IN THIS PROSPECTUS
WHICH ARE NOT HISTORICAL FACTS ARE FORWARD LOOKING STATEMENTS. THESE FORWARD
LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD RENDER THEM
MATERIALLY DIFFERENT, INCLUDING, BUT NOT LIMITED TO, THE EFFECT OF GLOBAL
ECONOMIC CONDITIONS, INTEREST RATE FLUCTUATIONS, THE IMPACT OF COMPETITIVE
PRODUCTS AND PRICING, PRODUCT DEVELOPMENT AND COMMERCIALIZATION, THE RATE OF
TECHNOLOGY CHANGE, DEMAND FOR INSURANCE PRODUCTS, MARKET ACCEPTANCE RISKS, THE
EFFECT OF THE COMPANY'S ACCOUNTING POLICIES, THE EFFECT OF REGULATORY AND LEGAL
DEVELOPMENTS, AND OTHER RISKS INCLUDING THOSE DETAILED BELOW.

RELATIONSHIP WITH FARM BUREAU ORGANIZATIONS; CONTROL BY THE IOWA FARM BUREAU
FEDERATION; ANTI-TAKEOVER EFFECTS. The business of the Company is dependent
upon the maintenance of its right to use the "Farm Bureau" and "FB" trade names
and related trademarks and service marks which are controlled by the American
Farm Bureau Federation. The American Farm Bureau Federation has granted to each
state Farm Bureau federation the right to use these designations in their
respective states and to allow their subsidiaries and affiliates, upon receipt
of written permission from the American Farm Bureau Federation, to do so. The
American Farm Bureau Federation requires the state Farm Bureau federations to
ensure, through stock ownership, positions on the Board or license provisions,
that the subsidiary or affiliate permitted to use such designations conducts its
operations in a manner consistent with the policies of the American Farm Bureau
Federation and the state Farm Bureau federations. Policies of the American and
state Farm Bureau federations are responsive to the purposes of the
organizations, which include to promote, protect and represent the business,
economic, social and educational interests of the farmers of the nation, and to
develop agriculture. Under the agreements governing the Company's use of such
designations and marks, the American Farm Bureau Federation and each state Farm
Bureau federation have the right to terminate the Company's rights. The
Company's right to use the designations and marks could be terminated by the
American Farm Bureau Federation as to all states (i) in the event of a material
breach of the trademark license not cured by the Company within 60 days, (ii)
immediately, in the event of termination by the American Farm Bureau Federation
of the Iowa Farm Bureau Federation's membership in the American Farm Bureau
Federation or (iii) in the event of a material breach of the Iowa Farm Bureau
Federation's membership agreement with the American Farm Bureau Federation,
including by reason of the failure of the Iowa Farm Bureau Federation to cause
the Company to adhere to the aforementioned policies. In addition, the royalty
agreements with the state Farm Bureau Federations can be terminated without
cause on 60 days' notice. While management believes any such event is highly
unlikely to occur so long as the Company remains subject to the influence of
Farm Bureau organizations, the loss of the right to use these designations in a
key state or states could have a material adverse effect upon the conduct of its
business. Accordingly, the Company has adopted policies concerning ownership of
its stock and the composition of its Board of Directors that will ensure that
the Company remains within the control of Farm Bureau organizations.

In order to preserve control of the Company in the Farm Bureau organizations
following this Offering, the Farm Bureau organizations, which prior to this
Offering owned all of the stock of the Company, recapitalized the existing
common stock of the Company into three separate classes: the Class A Common
Stock, including the Shares to be offered hereby, which will vote as a single
voting group with the Series A Preferred Stock to elect three Directors; the
Series A Preferred Stock which votes as a single voting group with the Class A
Common Stock on all matters; and the Class B Common Stock, which may be owned
only by Farm Bureau organizations and which will vote as a class to elect 18
Directors. The Farm Bureau organizations then entered into an agreement
(Stockholders' Agreement) providing that the Farm Bureau organizations will vote
their shares of Class B Common Stock at each stockholders' meeting at which
Class B Directors are elected to elect the President of each of the 15 state
Farm Bureau federations in the Company's territory, the Chief Executive Officer
of the Company and two other officers of the Company nominated by the Chairman
of the Board as Class B Directors of the Company. The President of the Iowa Farm
Bureau Federation is to serve as Chairman of the Board of the Company. See
"Certain Transactions and Relationships -- Stockholders' Agreement Regarding
Management and Transfer of Shares of Class B Common Stock" and "Description of
Capital Stock."

9
<PAGE>
Following the completion of the Offering, the Iowa Farm Bureau Federation
will own 53.6% of the Class A Common Stock, 100% of the Series A Preferred Stock
and 63.9% of the Class B Common Stock of the Company. Consequently, the Iowa
Farm Bureau Federation will have the power to control the election of the Class
A Directors and four of the Class B Directors, as well as the Chairman of the
Board, the Chief Executive Officer, the Secretary and the Treasurer of the
Company. The approval of any action requiring stockholder approval, including
adopting amendments to the Company's Articles of Incorporation and approving or
disapproving mergers or sales of all or substantially all of the assets of the
Company, generally requires approval of a majority of (i) the Class A Common
stockholders and the Series A Preferred stockholders voting together as a single
voting group and (ii) the Class B Common stockholders, voting as a separate
voting group. Under no foreseeable circumstances will third parties be able to
obtain control of the Company through purchases of common stock. In the
unanticipated event that control of the Company were lost by Farm Bureau
organizations, the Company could not retain the use of the trade names "FB" or
"Farm Bureau" or the related trademarks and service marks in any state without
the consent of the American Farm Bureau Federation, or in any particular state
without the consent of its state Farm Bureau Federation.

In addition, FBL Financial Group, Inc. is an insurance holding company, and
as such is subject to statutes governing insurance holding companies in various
jurisdictions. Under the terms of applicable state statutes, any person or
entity desiring to acquire more than a specified percentage (commonly 10%) of
the Company's outstanding voting securities is first required to obtain approval
of applicable state insurance regulators. These and certain other factors,
including absence of cumulative voting, may have the effect of preventing or
delaying a change of control of the Company and render it unlikely that the
purchasers of the Shares could obtain a "control premium" with respect to the
sale of the Shares. See "Business -- Regulation" and "Certain Transactions and
Relationships."

CONFLICTS OF INTEREST; RELATIONSHIPS WITH THE FARM BUREAU. The business and
operations of the Company, the Iowa Farm Bureau Federation, affiliates of the
Iowa Farm Bureau Federation, and Farm Bureau Mutual, are interrelated. The
substantial overlap of the business, executive officers and Directors of the
Company, the Iowa Farm Bureau Federation and Farm Bureau Mutual may give rise to
conflicts of interest among such companies. Such conflicts could arise, for
example, with respect to business dealings among such companies, the use of a
common agency force, the sharing of employees, space and other services and
facilities under intercompany agreements, and the allocation of business
opportunities among the companies. Additional conflicts of interest could arise
due to the fact that the Presidents of the state Farm Bureau Federations, who
will serve as Directors elected by Class B stockholders pursuant to the
Stockholders Agreement, are elected as Presidents by members of Farm Bureau
organizations, many of whom are also purchasers of the Company's products. See
"Certain Transactions and Relationships -- Services Agreement with Farm Bureau
Management Corporation."

It is expected that potential conflicts involving the Company and Farm
Bureau Mutual will be resolved by a coordinating committee consisting of two
Directors of the Company who are not directors of Farm Bureau Mutual and two
directors of Farm Bureau Mutual who are not Directors of the Company. The Audit
Committee of the Company is required by the Bylaws of the Company to consist
solely of Class A Directors who are independent of management and free from any
relationships that would interfere with the exercise by such Class A Directors
of independent judgment as committee members. The Audit Committee's
responsibility includes review with the auditors and management of any material
transaction or series of similar transactions to which the Company is a party
involving, among others, any five percent stockholder of the Company, and
reporting to the Board of Directors any such transaction determined by the Audit
Committee to be unfair to the Company. Conflicts of interest could also arise
between the Company and the various state Farm Bureau Federations in the
life-only states, whose presidents serve as Directors of the Company, and which
control their state affiliated property-casualty insurance company, with respect
to the use of the common agency force. The Company has adopted a conflict of
interest policy which requires a Director to disclose to the Board of Directors
and any appropriate committee of the Board, the existence of any transaction or
proposed transaction in which the Director has a direct or indirect interest,
and the material facts relating thereto.

10
<PAGE>
RESTRICTIONS ON ABILITY TO PAY DIVIDENDS. FBL Financial Group, Inc. is a
holding company without independent operations other than the provision of the
services of its employees to its subsidiaries and to its affiliated companies,
Farm Bureau Mutual, Iowa Farm Bureau Federation, Management Corp. and South
Dakota Mutual, on a cost basis plus one-half of one percent thereof. See
"Certain Transactions and Relationships." The primary source of cash of FBL
Financial Group, Inc. is expected to be dividends on the stock of its insurance
subsidiaries. The payment of dividends to FBL Financial Group, Inc. by its
insurance subsidiaries is subject to limitations imposed by applicable insurance
laws. "Extraordinary" dividends may not be paid without permission of the
Insurance Commissioner of the state of domicile of the respective insurance
subsidiary. An "extraordinary" dividend is defined, in general, as any dividend
or distribution of cash or other property whose fair market value, together with
that of other dividends or distributions made within the preceding 12 months,
exceeds the greater of, with respect to the calculation for the Life Companies,
and the lesser of, with respect to the calculation for Utah Insurance, (i) 10%
of policyholders' surplus (total statutory capital stock and surplus) as of
December 31 of the preceding year or (ii) the statutory net gain from operations
(excluding realized gains on investments) of the insurer for the 12-month period
ending the December 31 of the preceding year. For 1996, the maximum amount
available for payment of dividends by Farm Bureau Life without the approval of
the Iowa Insurance Commissioner is $48.6 million, without giving effect to the
contemplated dividend of the stock of FBL Financial Services, Inc., with a
statutory carrying value of approximately $21.1 million at March 31, 1996. The
maximum amount available for payment of dividends by Western Life in 1996
without the approval by the Colorado Insurance Commissioner is $5.7 million. The
maximum amount available for payment of dividends by Utah Insurance in 1996
without the approval of the Utah Insurance Commissioner is $924,000. Annual
cumulative dividends on the outstanding shares of Series A Preferred Stock are
expected to be $5.0 million. The Company has never paid dividends on its common
stock.

REGULATION. The Company's insurance subsidiaries are subject to government
regulation in each of the states in which they conduct business. Such regulatory
authority is vested in state agencies having broad administrative power dealing
with all aspects of the insurance business, including rates, policy forms and
capital adequacy, and is concerned primarily with the protection of
policyholders rather than stockholders. The Company's variable insurance
products, mutual funds, investment advisor and NASD licensed broker-dealers and
agents are also subject to regulation by the Securities and Exchange Commission,
the NASD, and state agencies.

During the past several years, increased scrutiny has been placed upon the
insurance regulatory framework, and certain state legislatures have considered
or enacted laws that alter, and in many cases increase, state authority to
regulate insurance companies and insurance holding company systems. In light of
recent legislative developments, the National Association of Insurance
Commissioners (NAIC) and state insurance regulators are reexamining existing
laws and regulations, specifically focusing on insurance company investments and
solvency issues, risk-adjusted capital guidelines, interpretations of existing
laws, the development of new laws, the implementation of nonstatutory guidelines
and the circumstances under which dividends may be paid. The NAIC has approved
risk-based capital (RBC) standards and is considering a model investment law. It
is anticipated that the NAIC RBC standards will apply to all of the Company's
insurance subsidiaries in 1996. Management believes that, based on the Company's
financial statements and its interpretation of the RBC formula, the capital
levels of its subsidiaries are sufficient to support the level of risk inherent
in their operations and such capital levels are in excess of the probable
minimums required. Management does not believe the adoption in any of its states
of operation of either of the current NAIC initiatives will have a material
adverse impact on the Company; however, the Company cannot predict the form of
any future proposals or regulation. See "Business -- Regulation."

Individual state guaranty associations assess insurance companies to pay
benefits to policyholders of insolvent or failed insurance companies. The
Company's insurance subsidiaries were assessed $436,000 in the three month
period ended March 31, 1996, $1.4 million in 1995, $1.6 million in 1994 and
$708,000 in 1993. The impact of such assessments may be partially offset by
credits against future state premium taxes. The Company cannot predict the
amount of any future assessments, nor has it attempted to estimate the amount of
assessments to be made for known insolvencies.

11
<PAGE>
POTENTIAL TAX LEGISLATION. Congress has from time to time considered
possible legislation that would eliminate the deferral of taxation on the
accretion of value within certain annuities and life insurance products. The
United States Supreme Court recently held in NATIONSBANK OF NORTH CAROLINA V.
VARIABLE ANNUITY LIFE INSURANCE COMPANY that annuities are not insurance for
purposes of the National Bank Act. This factor or others may cause Congress to
consider legislation that would eliminate such tax deferral, at least for
certain annuities. Other possible legislation, including a simplified "flat tax"
income tax structure with an exemption from taxation for investment income,
could also adversely affect the sale of life insurance compared with other
financial products if such legislation were to be enacted. There can be no
assurance as to whether such legislation will be enacted or, if enacted, whether
such legislation would contain provisions with possible adverse effects on the
Company's annuity and life insurance products.

COMPETITION. The Company operates in a highly competitive industry. The
operating results of companies in the insurance industry have been historically
subject to significant fluctuations due to competition, economic conditions,
interest rates, investment performance, maintenance of its insurance ratings
from rating agencies such as A.M. Best and other factors. Management believes
the Company's ability to compete with other insurance companies is dependent
upon, among other things, its ability to attract and retain agents to market its
insurance products, particularly to Farm Bureau members, its ability to develop
competitive and profitable products and its maintenance of high ratings from
A.M. Best. A.M. Best ratings consider the claims paying ability of the rated
Company and are not a rating of the investment worthiness of the rated Company.
See "Glossary of Selected Insurance Terms -- A.M. Best rating." In connection
with the development and sale of its products, the Company encounters
significant competition from other insurance companies, many of whom have
financial resources substantially greater than those of the Company, as well as
from other investment alternatives available to its customers.

In addition, several proposals to repeal or modify the Glass-Steagall Act of
1933, as amended, and the Bank Holding Company Act of 1956, as amended, have
been made by members of Congress and the Clinton administration. Generally, the
Bank Holding Company Act restricts banks from being affiliated with insurance
companies. Certain of the proposals would repeal or modify these restrictions
and permit banks to become affiliated with insurance companies. None of these
proposals has yet been enacted, and it is not possible to predict whether any of
these proposals will be enacted or, if enacted, their potential effect on the
Company.

INTEREST RATE FLUCTUATIONS; RISK OF IMPACT OF FORCED LIQUIDATION OF
INVESTMENT PORTFOLIO. Interest rate fluctuations could impair the Company's
ability to pay policyholder benefits with operating and investment cash flows,
cash on hand and other cash sources. In the unanticipated event that such
sources would prove inadequate, management believes the Company could meet
shortfalls with funds available to Farm Bureau Life as a result of its
membership in the Federal Home Loan Bank of Des Moines, as well as other
borrowing sources. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

Interest rate fluctuations may also have an impact on policyholder behavior.
To the extent that interest rates credited by the Company are less than those
generally available in the marketplace, increased policyholder lapses may be
experienced. This would be mitigated in the current period by income generated
by surrender charges from universal life insurance policies and annuity
contracts, but would reduce the Company's future income. Surrender charges also
serve to discourage early policyholder surrenders. Although historically the
Company's actual lapse experience has been better than the industry average, no
assurance can be given that this will always be true in the future.

The Company's policy is to test the impact of forced liquidations of
investments due to interest rate fluctuations. These tests include assumptions
for increases in lapses if the Company's credited rate lags those of its
competitors. Some of the Company's corporate bonds have call features which
could cause the Company to reinvest these proceeds when market conditions are
not favorable. As of March 31, 1996, approximately $342.8 million, or 30.4% of
the bond portfolio excluding mortgage and other asset-backed securities of $1.1
billion, was subject to call. The Company's collateralized mortgage obligations
(CMOs) and other asset-backed securities are purchased based on assumptions
regarding rates of prepayments. To the extent that actual prepayments are
earlier or later than anticipated at the time of purchase, the Company may

12
<PAGE>
not receive cash flows when needed. These prepayment rates are influenced by
interest rates available for new mortgages as well as general economic
conditions. The Company's policy is not to purchase the more volatile tranches
of CMOs including, but not limited to, interest only, principal only, floater,
inverse floater, PAC II, Z or support tranches.

FUTURE POLICY BENEFITS. The liability established by the Company for future
life insurance policy benefits is based upon a number of factors, including
certain assumptions. If the Company underestimates future policy benefits,
additional expenses would be incurred by the Company at the time the Company
becomes aware of the inadequacy. Management believes that liabilities for future
policy benefits are adequate based on its analysis of industry studies and the
mortality, morbidity, persistency and benefit payment experience of the Life
Companies.

PRODUCT ASSUMPTIONS. The Company makes certain assumptions as to expected
mortality, lapse rates and other factors in developing the pricing and other
terms of its life insurance products. These assumptions are based on the
Company's experience with its own products as well as on industry experience.
The Company reviews and revises its assumptions regularly so as to reflect
actual experience on a current basis. Variation of actual experience from that
assumed by the Company in developing such terms may affect such product's
profitability.

CATASTROPHE LOSSES IN THE PROPERTY-CASUALTY INSURANCE INDUSTRY; GEOGRAPHIC
CONCENTRATION. Property-casualty insurers are subject to claims arising out of
catastrophes, which may have a significant impact on their results of operations
and financial condition. The Company, through its participation in the Farm
Bureau Mutual pool, may experience catastrophe losses in the future which could
have a material adverse effect on the Company. Catastrophes can be caused by
various events including hurricanes, earthquakes, tornadoes, wind, hail, fires,
severe winter weather, explosions and floods, and the frequency and severity of
catastrophes are inherently unpredictable. The extent of losses from a
catastrophe is a function of the total amount of insured exposure in the area
affected by the event and the severity of the event.

The Farm Bureau Mutual pool attempts to mitigate the effects of claims
arising out of catastrophes by reinsuring a portion of those claims. Reinsurance
does not relieve the Company of any liability under its policies, but permits
the Company to obtain reimbursement from its reinsurers to the extent of the
claims reinsured, provided its reinsurers remain solvent. The Company believes,
based upon its review of the pool's reinsurers' financial statements and
reputations in the reinsurance marketplace, that the financial condition of such
reinsurers is sound. However, there can be no assurance that reinsurance will be
adequate to protect the Company against such losses or that such reinsurance
will continue to be available in the future at commercially reasonable rates.
See "Business -- Property-Casualty Segment -- Farm Bureau Mutual Pool."

The officers and employees of the Company manage the operations of four Farm
Bureau related property-casualty insurance companies: Farm Bureau Mutual (which
writes business in Iowa and Minnesota); South Dakota Farm Bureau Mutual (which
writes business in South Dakota), Western Agricultural Insurance Company
(Western Ag) (which writes business in Arizona) and Western Farm Bureau Mutual
Insurance Company (Western Farm Bureau Mutual) (which writes business in New
Mexico). Although the management of the Company manages the day-to-day
operations of such companies, each of such companies is governed by its own
independent board of directors. The property-casualty business written by Utah
Insurance (which writes business in Utah) is pooled with the property-casualty
insurance written by the four companies in Iowa, Minnesota, South Dakota,
Arizona and New Mexico in order to diversify the risks of geographic
concentration. See "Business -- Property-Casualty Segment -- Farm Bureau Mutual
Pool" and "Certain Transactions and Relationships -- Farm Bureau Mutual Pool."
For the three month period ended March 31, 1996 and the years ended December 31,
1995, 1994 and 1993, 61%, 58%, 56% and 59%, respectively, of the statutory
direct premiums written net of reinsurance cessions were derived from policies
issued in Iowa. The revenues and profitability of the Company's
property-casualty business are therefore subject to prevailing economic,
regulatory, demographic and other conditions, including adverse weather, in Iowa
and the other five states.

13
<PAGE>
To diversify geographic exposures and utilize its capital resources the Farm
Bureau Mutual pool also assumes risks under property-casualty insurance written
on risks throughout the United States, including coastal areas subject to
hurricanes and other areas subject to earthquakes. Farm Bureau Mutual assumes
exposures from other insurers through various reinsurance contracts. The primary
assumed catastrophic exposures are from direct property catastrophe treaties
providing coverage to insurance companies for large loss events. The estimated
maximum loss to the Company through such contracts would be approximately $4
million per occurrence through Utah Insurance when its share of the Farm Bureau
Mutual pool is increased to 20%.

CYCLICALITY IN THE PROPERTY-CASUALTY INSURANCE INDUSTRY. Historically, the
property-casualty insurance industry has been highly cyclical. The
property-casualty industry's profitability can be affected significantly by
price competition, volatile and unpredictable developments such as extreme
weather conditions and natural disasters, legal developments affecting insurer
liability and the size of jury awards, fluctuations in interest rates and other
factors that affect investment returns and other general economic conditions and
trends that may affect the adequacy of reserves. Competition for premiums in the
property-casualty insurance markets may have an adverse impact on the Company's
rates and profitability.

UNCERTAINTY REGARDING ADEQUACY OF PROPERTY-CASUALTY LOSS RESERVES. Utah
Insurance, through the Farm Bureau Mutual pool, maintains reserves to cover its
estimated ultimate liability for losses and loss adjustment expenses with
respect to reported and unreported claims incurred as of the end of each
accounting period. These reserves are estimates, involving actuarial projections
at a given time, of what the property-casualty pool expects the ultimate
settlement and administration of claims will cost based on facts and
circumstances then known, predictions of future events, estimates of future
trends in claims severity and judicial theories of liability, legislative
activity and other factors. The inherent uncertainties of estimating reserves
are greater for certain types of property-casualty insurance lines, particularly
workers' compensation, where a longer period of time may elapse before a
definitive determination of ultimate liability may be made, and environmental
liability, where the technological, judicial and political climate changes over
time. See "Business -- Property-Casualty Segment -- Farm Bureau Mutual Pool" and
"-- Loss and Loss Adjustment Expense."

The Company regularly reviews reserving techniques, reinsurance and overall
reserve adequacy. Based upon (i) review of historical data, legislative
enactments, judicial decisions, legal developments in imposition of damages,
changes in political attitudes and trends in general economic conditions, (ii)
review of per claim information, (iii) historical loss experience of the
property-casualty operations of the Company and the industry and (iv) the
relatively short-term nature of most of its property-casualty insurance
policies, management believes that adequate provision has been made for
reserves. However, establishment of appropriate reserves is an inherently
uncertain process involving estimates of future losses and there can be no
certainty that currently established reserves will prove adequate in light of
subsequent actual experience. The Farm Bureau Mutual pool's reserves are
annually certified by Company actuaries as required by insurance regulatory
authorities. See "Business -- Property - Casualty Segment -- Farm Bureau Mutual
Pool" and "-- Loss and Loss Adjustment Expense."

ABSENCE OF PUBLIC MARKET AND DETERMINATION OF OFFERING PRICE. Prior to the
Offering, there has been no public market for the Shares, and there can be no
assurance that an active public market for the Shares will develop or that the
Shares can be resold at the initial public offering price. The initial public
offering price will be determined by negotiations among the Company, the Selling
Stockholders, and the Representatives (as defined below in "Underwriting"). No
assurance can be given as to the trading volume of the Shares in the public
market or the market price of the Shares after the Offering. The Shares have
been authorized for listing on the New York Stock Exchange under the symbol FFG,
subject to official notice of issuance.

SHARES ELIGIBLE FOR FUTURE SALE. No prediction can be made as to the
effect, if any, that future sales of Shares, or the availability of Shares for
future sale, will have on the market price of the Shares prevailing from time to
time. Sales of substantial numbers of Shares (including shares issued upon the
exercise of stock options or upon conversion of Class B Common Stock) or the
perception that such sales could occur, might

14
<PAGE>
adversely affect prevailing market prices for the Shares. The Iowa Farm Bureau
Federation, the Selling Stockholders, all of the other existing stockholders of
the Company and purchasers of the Shares reserved by the Underwriters for sale
to certain Directors, officers, employees and other persons having a
relationship with the Farm Bureau organizations will agree not to offer, sell,
contract to sell, or otherwise dispose of any shares of common stock or any
securities convertible into or exchangeable or exercisable for common stock for
a period of 180 days after the date of this Prospectus without the prior written
consent of Alex. Brown & Sons Incorporated. After completion of the Offering and
expiration of the 180 day period described above, in addition to the Shares sold
in the Offering, substantially all of the 13,666,810 Shares of Class A Common
Stock held by the existing stockholders (as well as 797,808 shares of Class A
Common Stock issuable upon exercise of outstanding options and 1,192,990 shares
of Class A Common Stock subject to issuance upon conversion of the Class B
Common Stock) will be eligible for sale on the open market under Rule 144 of the
Securities Act, subject to the volume and timing requirements of Rule 144. An
increase in the number of shares of Class A Common Stock that becomes available
for sale in the public market as a result of sales made pursuant to Rule 144 may
adversely affect the trading price of the Shares in the public market and could
impair the Company's ability to raise additional capital through the sale of its
equity securities. See "Shares Eligible for Future Sale" and "Certain
Transactions and Relationships." There is no established market for the Class B
Common Stock.

15
<PAGE>
THE COMPANY

GENERAL

The Company through its subsidiaries underwrites, markets and distributes
life insurance, annuities, property-casualty insurance and mutual funds to
individuals and small businesses in 15 midwestern and western states. The
Company has exclusive marketing arrangements with the state Farm Bureau
Federations in its territory and targets sales to approximately 700,000 Farm
Bureau member families and other rural, small town and suburban residents
through an exclusive agency force. Through acquisitions of Rural Security Life
in 1993 and Western Life in 1994, the Company expanded its operations to 15
states, including Wisconsin and the eight Western Life states. Prior to 1993 the
Company operated only in Iowa, Nebraska, Minnesota, South Dakota and Utah, and
in Kansas sold mutual funds only.

COMPANY HISTORY AND FARM BUREAU AFFILIATION

Throughout the 1920s and 1930s, the Iowa Farm Bureau Federation allied
itself with unaffiliated insurance companies to provide members with hail
insurance, life insurance, automobile and fire insurance and similar coverages.
Because of dissatisfaction with these alliances, in January 1939 the Iowa Farm
Bureau Federation organized Farm Bureau Mutual as a property-casualty insurance
company. In 1945 the Iowa Farm Bureau Federation organized Farm Bureau Life. At
the request of the respective state Farm Bureau Federations, Farm Bureau Life
expanded from Iowa into Nebraska in 1951 and to Minnesota in 1954. In 1971 the
Company initiated the sale of its mutual funds. Utah Insurance was acquired by
Farm Bureau Life in 1984 and Utah Farm Bureau Life Insurance Company's business
was managed by Farm Bureau Life until it was merged with Farm Bureau Life in
1988. Utah Insurance operated under a quota share reinsurance agreement from
1984 to 1990 at which time it entered into a pooling arrangement with Farm
Bureau Mutual and South Dakota Mutual. In 1987 the Company's life operations
were expanded to South Dakota. Variable insurance products were introduced in
1990. In 1993, Farm Bureau Life became the majority owner of Rural Security
Life, the life insurance affiliate of the Wisconsin Farm Bureau Federation.

Effective January 1, 1994 the Company acquired all of the common stock of
Western Life in exchange for stock of the Company. Western Life was organized as
a Colorado life insurance company in 1952 by Farm Bureau leaders in six western
states. Other state Farm Bureau organizations subsequently became stockholders
of Western Life. Western Life currently writes business in Arizona, Colorado,
Idaho, Montana, New Mexico, Oklahoma, North Dakota and Wyoming, and Farm Bureau
Life has also qualified, or is in the process of qualifying, to write insurance
in those states.

State Farm Bureau Federations are generally organized as non-profit
corporations. Each state Farm Bureau Federation is governed by an independent
board of directors elected by voting delegates selected by vote of the
individual members of the county Farm Bureau organizations within the state.
State Farm Bureau Federations generally sponsor publications and legislation of
interest to members and often organize and own other entities, such as insurance
companies, for the purpose of providing services to the individual members of
the county Farm Bureau organizations in the particular state.

EXECUTIVE OFFICES

FBL Financial Group, Inc. was incorporated in Iowa in 1993. The Company's
principal executive offices are located at 5400 University Avenue, West Des
Moines, Iowa 50266, and its telephone number is (515) 225-5400.

16
<PAGE>
USE OF PROCEEDS

All of the Shares offered hereby are being offered by the Selling
Stockholders. The Company will not receive any proceeds from the sale of Shares
in the Offering.

DIVIDEND POLICY

It is anticipated that the Board of Directors will declare a $0.07 quarterly
cash dividend on the common stock, payable initially for the first quarter
commencing subsequent to the date of this Prospectus. The Company intends to
declare regular quarterly cash dividends in the future. However, the payment of
dividends in the future will be subject to the discretion of the Board of
Directors and will depend upon general business conditions, legal restrictions
on the payment of dividends and other factors that the Board of Directors deems
relevant.

As a holding company, FBL Financial Group, Inc. is largely dependent upon
dividends from its life insurance subsidiaries to pay dividends to its
stockholders. The Company's insurance subsidiaries are subject to state laws
that restrict their ability to distribute dividends. During 1996, the maximum
amounts legally available for distribution by Farm Bureau Life (without giving
effect to the contemplated dividend of the stock of FBL Financial Services, Inc.
with a statutory carrying value of approximately $21.1 million at March 31,
1996) and Western Life are $48.6 million and $5.7 million, respectively, and the
maximum amount legally available for distribution by Utah Insurance is $924,000.
Annual cumulative dividends payable on the outstanding shares of Series A
Preferred Stock are expected to be $5.0 million. See "Risk Factors --
Restrictions on Ability to Pay Dividends," "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Business -- Regulation," and Note 10 of Notes to Consolidated
Financial Statements.

The total amount of dividends to be paid on all classes of stock of the
Company for 1996, on an annualized basis, would be approximately $10.3 million.
The total amount available for payment of dividends to FBL Financial Group, Inc.
by its principal insurance subsidiaries in 1996 without regulatory approval
(after giving effect to the dividend of stock of FBL Financial Services, Inc.)
is approximately $34.1 million.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1996 and the pro forma capitalization of the Company assuming that the
Series A Exchange and the increase in Utah Insurance's participation in the Farm
Bureau Mutual pool had been consummated as of that date. This table should be
read in conjunction with the Company's Consolidated Financial Statements and
notes thereto and "Pro Forma Consolidated Financial Statements" and notes
thereto included elsewhere herein.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt....................................................................... $ 11,776 $ 26,776
Stockholders' equity (1):
Preferred Stock, without par value -- authorized 10,000,000 shares, issued and
outstanding 5,000,000 Series A Preferred.......................................... -- 100,000
Class A Common Stock, without par value -- authorized 88,500,000 shares, issued and
outstanding 22,666,810 shares historical and 17,666,810 shares pro forma.......... 143,773 43,773
Class B Common Stock, without par value -- authorized 1,500,000 shares, issued and
outstanding 1,192,990 shares...................................................... 7,567 7,567
Net unrealized investment gains.................................................... 13,781 13,781
Retained earnings.................................................................. 390,899 390,899
---------- ---------------
Total stockholders' equity....................................................... 556,020 556,020
---------- ---------------
Total capitalization........................................................... $ 567,796 $ 582,796
---------- ---------------
---------- ---------------
</TABLE>

- ------------------------
(1) Does not include 2,942,990 shares reserved for issuance under the Stock
Option Plan and upon conversion of Class B Common Stock.

17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
AS OF OR FOR THE THREE
MONTH PERIOD ENDED MARCH
31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA (1):
Premiums and product charges:
Universal life and annuity product
charges........................... $ 11,317 $ 10,632 $ 43,722 $ 42,734 $ 26,500 $ 18,967 $ 18,722
Traditional life insurance
premiums.......................... 19,131 18,227 75,450 72,222 46,050 44,831 42,460
Accident and health premiums (2)... 2,652 2,383 10,161 (1,956) 46,437 23,138 20,869
Property-casualty premiums......... 4,298 4,323 18,709 17,778 16,937 14,570 13,593
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total premiums and product charges... 37,398 35,565 148,042 130,778 135,924 101,506 95,644
Net investment income................ 52,428 48,037 223,108 178,834 138,320 126,500 117,339
Realized gains (losses) on
investments......................... (2,098) 1,850 5,883 9,448 3,967 12,162 5,816
Other income......................... 5,592 7,138 28,952 30,825 25,251 21,183 18,854
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total revenues....................... $ 93,320 $ 92,590 $ 405,985 $ 349,885 $ 303,462 $ 261,351 $ 237,653
----------- ----------- ----------- ----------- ---------- ---------- ----------
----------- ----------- ----------- ----------- ---------- ---------- ----------
Income from continuing operations
before income taxes, minority
interest in earnings of subsidiaries
and equity income................... $ 15,957 $ 13,934 $ 90,447 $ 59,873 $ 38,931 $ 41,232 $ 26,208
Income from continuing operations.... 10,889 9,043 59,628 35,587 22,705 26,367 17,198
Income from continuing operations per
common share........................ $ 0.46 $ 0.39 $ 2.53 $ 1.52 $ 1.26 $ 1.56 $ 1.02
Net income (3)....................... $ 10,889 $ 9,043 $ 59,628 $ 42,066 $ 19,803 $ 21,435 $ 9,254
Net income per common share (3)...... $ 0.46 $ 0.39 $ 2.53 $ 1.80 $ 1.10 $ 1.27 $ 0.55
Pro forma net income per common share
(4)................................. 0.50 2.92

CONSOLIDATED BALANCE SHEET DATA (1):
Total investments.................... $ 2,668,001 $ 2,415,565 $ 2,646,123 $ 2,337,154 $1,757,277 $1,385,669 $1,291,986
Total assets......................... 3,120,166 2,869,806 3,090,851 2,792,535 2,142,849 1,728,963 1,592,612
Long-term debt....................... 11,776 17,445 12,604 18,519 30,638 881 835
Total liabilities.................... 2,559,643 2,406,898 2,522,050 2,357,214 1,814,206 1,452,566 1,336,967
Total stockholders' equity........... 556,020 458,323 564,298 430,743 312,277 262,582 243,994
Book value per common share.......... $ 23.30 $ 19.54 $ 23.65 $ 18.37 $ 17.07 $ 15.51 $ 14.41
Pro forma book value per common share
(4)................................. 24.18

STATEMENT OF INCOME SEGMENT DATA (1):
Income (loss) from continuing
operations before income taxes,
minority interest in earnings of
subsidiaries and equity income by
segment
Life insurance..................... $ 15,745 $ 13,261 $ 88,500 $ 58,573 $ 38,898 $ 40,952 $ 25,709
Property-casualty insurance........ 346 676 2,083 1,288 33 280 499
Corporate.......................... (134) (3) (136) 12 -- -- --
----------- ----------- ----------- ----------- ---------- ---------- ----------
15,957 13,934 90,447 59,873 38,931 41,232 26,208
</TABLE>

18
<PAGE>

- ------------------------------
(1) As discussed in more detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", the comparability of
selected data from year to year is impacted by the acquisition of Rural
Security Life in March 1993 and the acquisition of Western Life and the
minority interests in FBL Insurance Company and Rural Security Life in
January 1994.

(2) During 1994, the Company ceased writing medical insurance business. The
Company continues to sell individual disability income insurance.

(5) Adjusted operating income equals net income adjusted to eliminate certain
items which management believes are not indicative of operating trends
because they are unusual and/or nonrecurring in nature, including realized
gains (losses) on investments (less that portion of amortization of deferred
policy acquisition costs and value of insurance in force acquired and income
taxes attributable to such gains), discontinued operations and net
income/loss from a venture capital investment company subsidiary. Adjusted
operating income and adjusted operating income per common share should not
be considered as necessarily being better indicators of the Company's
overall operating performance than net income or net income per common
share, nor are they better indicators of the Company's liquidity than cash
flows. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Adjusted Operating Income."

(9) Loss and loss adjustment expense ratio equals the sum of statutory incurred
losses and loss adjustment expenses divided by statutory earned premiums.

(10) Expense ratio equals all statutory expenses, including policyholder
dividends and excluding loss and loss adjustment expenses, divided by
statutory net written premiums.

(11) Combined ratio equals the sum of the loss and loss adjustment expense and
expense ratios.

19
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated statements of income are
presented as if the increase in Utah Insurance's participation in the Farm
Bureau Mutual pool and the Series A Exchange had occurred as of January 1, 1995.
The unaudited pro forma consolidated balance sheet is presented as if the
increase in Utah Insurance's participation in the Farm Bureau Mutual pool and
the Series A Exchange had occurred as of March 31, 1996.

The unaudited pro forma consolidated financial statements are based on the
historical consolidated financial statements of the Company as of and for the
three month period ended March 31, 1996 and for the year ended December 31,
1995, and should be read in conjunction with the consolidated financial
statements of the Company and notes thereto included elsewhere herein. The pro
forma data are not necessarily indicative of the results of operations or
financial position that would have been reported if the increase in Utah
Insurance's participation in the Farm Bureau Mutual pool and the Series A
Exchange had occurred at the foregoing assumed dates, nor are they necessarily
indicative of future results of operations or financial position of the Company.

PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
----------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Universal life and annuity product charges................ $ 11,317 $ -- $ 11,317
Traditional life insurance premiums....................... 19,131 -- 19,131
Accident and health premiums.............................. 2,652 -- 2,652
Property-casualty premiums................................ 4,298 6,447(1) 10,745
Net investment income..................................... 52,428 336(2) 52,764
Realized losses on investments............................ (2,098) -- (2,098)
Other income.............................................. 5,592 53(1) 5,645
----------- --------------- ---------------
Total revenues.......................................... 93,320 6,836 100,156
Benefits and expenses:
Universal life and annuity benefits....................... 30,353 -- 30,353
Traditional life insurance and accident and health
benefits................................................. 12,096 -- 12,096
Increase in traditional and accident and health future
policy benefits.......................................... 5,294 -- 5,294
Distributions to participating policyholders.............. 6,475 43(1) 6,518
Losses and loss adjustment expenses incurred on
property-casualty policies............................... 3,211 4,936(1) 8,147
Underwriting, acquisition and insurance expenses.......... 15,780 1,724(1) 17,504
Interest expense.......................................... 227 345(3) 572
Other expenses............................................ 3,927 -- 3,927
----------- --------------- ---------------
Total benefits and expenses............................. 77,363 7,048 84,411
----------- --------------- ---------------
15,957 (212) 15,745
Income taxes................................................ (5,689) 74(4) (5,615)
Minority interest in earnings of subsidiaries............... (268) -- (268)
Equity income, net of related income taxes.................. 889 -- 889
----------- --------------- ---------------
Net income.................................................. 10,889 (138) 10,751
Preferred dividends......................................... -- (1,250)(5) (1,250)
----------- --------------- ---------------
Net income applicable to common stock....................... $ 10,889 $ (1,388) $ 9,501
----------- --------------- ---------------
----------- --------------- ---------------
Net income per common share................................. $ 0.46 $ 0.50(6)
----------- ---------------
----------- ---------------
Adjusted operating income applicable to common stock........ $ 10,804 $ (1,388) $ 9,416(6)
----------- --------------- ---------------
----------- --------------- ---------------
Adjusted operating income per common share.................. $ 0.45 $ 0.50(6)
----------- ---------------
----------- ---------------
Weighted average number of common shares outstanding........ 23,859,800 18,859,800(6)
----------- ---------------
----------- ---------------
</TABLE>

See accompanying notes to the pro forma consolidated financial statements.

20
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
----------- ----------- ---------------
<S> <C> <C> <C>
Revenues:
Universal life and annuity product charges.................... $ 43,722 $ -- $ 43,722
Traditional life insurance premiums........................... 75,450 -- 75,450
Accident and health premiums.................................. 10,161 -- 10,161
Property-casualty premiums.................................... 18,709 28,063(1) 46,772
Net investment income......................................... 223,108 1,587(2) 224,695
Realized gains on investments................................. 5,883 -- 5,883
Other income.................................................. 28,952 260(1) 29,212
----------- ----------- ---------------
Total revenues.............................................. 405,985 29,910 435,895
Benefits and expenses:
Universal life and annuity benefits........................... 112,125 -- 112,125
Traditional life insurance and accident and health benefits... 49,316 -- 49,316
Increase in traditional and accident and health future policy
benefits..................................................... 22,976 -- 22,976
Distributions to participating policyholders.................. 25,747 119(1) 25,866
Losses and loss adjustment expenses incurred on
property-casualty policies................................... 13,621 21,795(1) 35,416
Underwriting, acquisition and insurance expenses.............. 73,431 7,056(1) 80,487
Interest expense.............................................. 1,007 1,379(3) 2,386
Other expenses................................................ 17,315 -- 17,315
----------- ----------- ---------------
Total benefits and expenses................................. 315,538 30,349 345,887
----------- ----------- ---------------
90,447 (439) 90,008
Income taxes.................................................... (32,070) 154(4) (31,916)
Minority interest in earnings of subsidiaries................... (351) -- (351)
Equity income, net of related income taxes...................... 1,602 -- 1,602
----------- ----------- ---------------
Net income...................................................... 59,628 (285) 59,343
Preferred dividends............................................. -- (5,000)(5) (5,000)
----------- ----------- ---------------
Net income applicable to common stock........................... $ 59,628 $(5,285) $ 54,343
----------- ----------- ---------------
----------- ----------- ---------------
Net income per common share..................................... $ 2.53 $ 2.92(6)
----------- ---------------
----------- ---------------
Adjusted operating income applicable to common stock............ $ 41,648 $(5,285) $ 36,363(6)
----------- ----------- ---------------
----------- ----------- ---------------
Adjusted operating income per common share...................... $ 1.77 $ 1.96(6)
----------- ---------------
----------- ---------------
Weighted average number of common shares outstanding............ 23,591,100 18,591,100(6)
----------- ---------------
----------- ---------------
</TABLE>

See accompanying notes to the pro forma consolidated financial statements.

21
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
------------ ------------- ------------
<S> <C> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held for investment................................................ $ 721,083 $ -- $ 721,083
Available for sale................................................. 1,372,742 15,000 (3) 1,395,126
7,384 (7)
Equity securities.................................................... 90,856 -- 90,856
Held in inventory.................................................... 21,327 -- 21,327
Mortgage loans on real estate........................................ 267,534 -- 267,534
Investment real estate, less allowances for depreciation............. 28,997 -- 28,997
Policy loans......................................................... 116,633 -- 116,633
Other long-term investments.......................................... 12,044 -- 12,044
Short-term investments............................................... 36,785 -- 36,785
------------ ------------- ------------
Total investments.................................................. 2,668,001 22,384 2,690,385
Securities and indebtedness of related parties......................... 61,790 -- 61,790
Accrued investment income.............................................. 32,370 -- 32,370
Accounts and notes receivable.......................................... 1,804 -- 1,804
Amounts receivable from affiliates..................................... 4,194 -- 4,194
Reinsurance recoverable................................................ 33,030 -- 33,030
Deferred policy acquisition costs...................................... 146,573 2,690 (7) 149,263
Value of insurance in force acquired................................... 19,190 -- 19,190
Property and equipment, less allowances for depreciation............... 61,388 -- 61,388
Current income taxes recoverable....................................... 8,807 -- 8,807
Goodwill, less accumulated amortization................................ 10,191 -- 10,191
Other assets........................................................... 22,113 -- 22,113
Assets held in separate accounts....................................... 50,715 -- 50,715
------------ ------------- ------------
Total assets....................................................... $ 3,120,166 $ 25,074 $ 3,145,240
------------ ------------- ------------
------------ ------------- ------------
</TABLE>

See accompanying notes to the pro forma consolidated financial statements.

22
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
------------ --------------- ------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Future policy benefits:
Universal life and annuity products........................... $ 1,421,972 $ -- $ 1,421,972
Traditional life insurance and accident and health products... 657,085 -- 657,085
Unearned revenue reserve...................................... 18,138 -- 18,138
Other policy claims and benefits................................ 7,776 -- 7,776
Reserve and unearned premiums on property-casualty policies..... 47,480 10,074 (7) 57,554
------------ --------------- ------------
2,152,451 10,074 2,162,525
Other policyholders' funds:
Supplementary contracts without life contingencies.............. 119,378 -- 119,378
Advance premiums and other deposits............................. 87,025 -- 87,025
Accrued dividends............................................... 14,065 -- 14,065
------------ --------------- ------------
220,468 -- 220,468
Long-term debt.................................................... 11,776 15,000 (3) 26,776
Amounts payable to affiliates..................................... 13,346 -- 13,346
Deferred income taxes............................................. 30,470 -- 30,470
Other liabilities................................................. 80,417 -- 80,417
Liabilities related to separate accounts.......................... 50,715 -- 50,715
------------ --------------- ------------
Total liabilities............................................... 2,559,643 25,074 2,584,717
Minority interest in subsidiary..................................... 4,503 -- 4,503
Stockholders' equity:
Preferred Stock, without par value, at liquidation value --
authorized 10,000,000 shares, issued and outstanding 5,000,000
Series A shares.................................................. -- 100,000 (8) 100,000
Class A Common Stock, without par value -- authorized 88,500,000
shares, issued and outstanding 22,666,810 shares historical,
17,666,810 shares as adjusted.................................... 143,773 (100,000)(8) 43,773
Class B Common Stock, without par value -- authorized 1,500,000
shares, issued and outstanding 1,192,990 shares.................. 7,567 7,567
Net unrealized investment gains................................... 13,781 -- 13,781
Retained earnings................................................. 390,899 -- 390,899
------------ --------------- ------------
Total stockholders' equity...................................... 556,020 -- 556,020
------------ --------------- ------------
Total liabilities and stockholders' equity...................... $ 3,120,166 $ 25,074 $ 3,145,240
------------ --------------- ------------
------------ --------------- ------------
</TABLE>

See accompanying notes to the pro forma consolidated financial statements.

23
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma consolidated statements of income are presented as
if the increase in Utah Insurance's participation in the Farm Bureau Mutual pool
and the Series A Exchange had occurred as of January 1, 1995. The unaudited pro
forma consolidated balance sheet is presented as if the increase in Utah
Insurance's participation in the Farm Bureau Mutual pool and the Series A
Exchange had occurred as of March 31, 1996.

(1) Property-casualty premiums, other income, distributions to participating
policyholders, losses and loss adjustment expenses incurred on
property-casualty policies and underwriting, acquisition and insurance
expenses have been increased to reflect the increase in Utah Insurance's
participation in the Farm Bureau Mutual pool from 8% to 20%. With respect
to property-casualty premiums, other income, distributions to
participating policyholders and underwriting, acquisition and insurance
expenses, the pro forma adjustment equals 12% of the Farm Bureau Mutual
pool results. Historically, Utah Insurance has recorded 8% of the pool
results for these items in its financial statements. Under the terms of
the revised pooling agreement, on an ongoing basis Utah Insurance will
record 20% of the pool results relating to these items.

The pro forma adjustment to losses and loss adjustment expenses incurred
on property-casualty policies equals 12% of the Farm Bureau Mutual pool
results applicable to losses incurred during the period, excluding
development of loss and loss adjustment expense reserves as of December
31, 1994. The calculation of the pro forma adjustment is as follows:
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
1996 1995
----------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total losses and loss adjustment expenses for the Farm
Bureau Mutual pool........................................ $ 40,141 $ 170,269

Less: development of loss and loss adjustment expense
reserves as of December 31, 1994.......................... 1,000 11,334
------- --------------
Total losses and loss adjustment expenses excluding
development of loss and loss adjustment expense reserves
as of December 31, 1994 for the Farm Bureau Mutual pool... 41,141 181,603

Increase in pooling percentage............................. 12% 12%
------- --------------
Pro forma adjustment....................................... $ 4,936 $ 21,795
------- --------------
------- --------------
</TABLE>

See "Business -- Property-Casualty Segment" for additional information
regarding the Farm Bureau Mutual pool, including a summary of net
premiums earned by product line and by state.

(2) Net investment income has been adjusted to include the effect of the
following:

<TABLE>
<CAPTION>
INCREASE (DECREASE) TO NET
INVESTMENT INCOME
------------------------------------
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
1996 1995
------------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assumed $15.0 million capital contribution on January 1,
1995 to Utah Insurance in connection with the increase in
its pooling percentage..................................... $ 289 $ 1,182
$7.0 million received from Farm Bureau Mutual (see note 7
below)..................................................... 148 553
Foregone investment income on dividends to preferred
stockholders............................................... (101) (148)
----- ------
Total..................................................... $ 336 $ 1,587
----- ------
----- ------
</TABLE>

24
<PAGE>
It is assumed the capital contribution and the cash received from Farm
Bureau Mutual (see note 7 below) would have been invested and would have
earned 7.81% and 7.88% during the three month period ended March 31, 1996
and the year ended December 31, 1995, respectively, the average annual
return on the Company's investment portfolio during those periods. With
respect to the payment of preferred dividends, it has been assumed the
dividends, totaling $1.3 million for the three month period ended March
31, 1996 and $5.0 million for the year ended December 31, 1995, were
declared and paid quarterly as provided for in the Certificate of
Designations of Series A Cumulative Voting Preferred Stock and that such
amounts would have also earned 7.81% and 7.88% during the respective
periods.

The net cash received from Farm Bureau Mutual as of January 1, 1995 was
calculated using actual unearned premiums as of January 1, 1995 and the
actual ceding commission rate in effect at that time.

(3) The $15.0 million capital contribution to Utah Insurance would have been
funded through an acquisition of long-term debt by one of the Company's
non-insurance subsidiaries. Interest on such debt is assumed, based on an
external borrowing rate quoted to the Company, to be 9.2% throughout the
periods.

(4) All pro forma adjustments to operations have been tax affected at a 35%
tax rate.

(5) The Series A Preferred Stock pays cumulative annual cash dividends of
$1.00 per share, payable quarterly in cash.

(6) Net income applicable to common stock used in the calculation of pro
forma net income per common share and adjusted operating income
applicable to common stock used in the calculation of pro forma adjusted
operating income per common share have been reduced by the effect of the
pro forma adjustments to net income and the dividends to preferred
stockholders totaling $1.3 million for the three month period ended March
31, 1996 and $5.0 million for the year ended December 31, 1995. The
weighted average number of shares outstanding used in the calculation of
pro forma net income and adjusted operating income per common share was
reduced by the 5,000,000 common shares exchanged for preferred shares.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Adjusted Operating Income."

(7) Unearned premiums on property-casualty policies will increase as a
result of the increase in the pooling percentage. Deferred policy
acquisition costs will increase as a result of ceding commissions on the
unearned premiums. A net cash payment of $7.4 million will be received
and invested by Utah Insurance from Farm Bureau Mutual for the difference
between the additional unearned premiums assumed and the related ceding
commissions.

(8) Series A Preferred Stock has been increased to reflect the Series A
Exchange of 5,000,000 shares of Class A Common Stock for 5,000,000 shares
of Series A Preferred Stock. The Series A Preferred Stock has been
recorded at its liquidation value of $20.00 per share.

25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING ANALYSIS OF THE CONSOLIDATED RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE
SELECTED CONSOLIDATED FINANCIAL DATA AND CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED NOTES INCLUDED ELSEWHERE HEREIN.

OVERVIEW

The Company is an insurance holding company formed by the stockholders of
Farm Bureau Life, FBL Insurance Company, Rural Security Life and Western Life in
January 1994. The Consolidated Financial Statements include the accounts of Farm
Bureau Life, Western Life (from January 1, 1994), FBL Insurance Company, Rural
Security Life (from April 1, 1993), Utah Insurance and various non-insurance
affiliates that provide functional support to the Company and its insurance
subsidiaries. Western Life and Rural Security Life are reported on a purchase
GAAP basis from their respective dates of acquisition. Therefore, prior to 1994,
the accounts of Western Life are not included in the consolidated statements,
and prior to April 1, 1993, the accounts of Rural Security Life are not
included. The Company's primary life insurance subsidiaries, Farm Bureau Life
and Western Life, account for all of its current life insurance operations. The
assets and liabilities of Rural Security Life and FBL Insurance Company were
consolidated into Farm Bureau Life on December 31, 1994, and Rural Security Life
and FBL Insurance Company were liquidated in 1995.

Rural Security Life was a stock life insurance company which was
incorporated in the State of Wisconsin in 1949 and engaged in the sale of life,
health, accident and disability insurance in Wisconsin. In April 1993, Farm
Bureau Life acquired, through a stock exchange with Rural Mutual Insurance
Company, 99.5% of the outstanding voting stock of Rural Security Life in
exchange for approximately 7.5% of the outstanding voting stock of Farm Bureau
Life.

Effective January 1, 1994, all common stock of Farm Bureau Life and Western
Life was exchanged for common stock of the Company. In addition, a 25.0%
minority interest in FBL Insurance Company and the 0.5% minority interest in
Rural Security Life were exchanged for common stock of the Company. The prior
stockholders of Farm Bureau Life, Rural Security Life and FBL Insurance Company
received approximately 83% of the stock of the Company and the prior
stockholders of Western Life received approximately 17% of the stock of the
Company.

LIFE INSURANCE OPERATIONS. The Life Companies sell universal life
insurance, traditional whole life and term life insurance, disability income
insurance and annuity products. Farm Bureau Life's product portfolio also
includes variable universal life and variable annuities. See "Business --
Products" for a more thorough discussion of the Life Companies' products.

In accordance with GAAP, universal life insurance premiums and ordinary
annuity considerations received are reflected as increases in liabilities for
policyholder account balances and not as revenues. Revenues reported for
universal life and ordinary annuity products consist of policy charges for the
cost of insurance, administration charges, amortization of policy initiation
fees and surrender charges assessed against policyholder account balances.
Surrender benefits paid relating to universal life insurance and ordinary
annuity policies are reflected as decreases in liabilities for policyholder
account balances and not as expenses. Amounts for interest credited to universal
life and ordinary annuity policyholder account balances and benefit claims in
excess of policyholder account balances are reported as expenses in the
financial statements. The Life Companies receive investment income earned from
the funds deposited into account balances by universal life and annuity
policyholders, a portion of which is passed through to these policyholders in
the form of interest credited.

Premium revenues reported for traditional life and disability income
insurance products are recognized as revenues when due. Future policy benefits
and policy acquisition costs are recognized as expenses over the life of the
policy by means of the provision for future policy benefits and amortization of
deferred policy acquisition costs.

26
<PAGE>
For variable universal life and variable annuities, premiums received are
not reported as revenues. Similar to universal life and ordinary annuities,
revenues reported consist of fee income and product charges collected from the
policyholders. Expenses related to these products include interest credited to
policyholder account balances and benefit claims incurred in excess of
policyholder account balances.

The costs related to acquiring new business, including certain costs of
issuing policies and certain other variable selling expenses (principally
commissions), defined as deferred policy acquisition costs, are capitalized and
amortized into expense in proportion to expected profits or margins. This
amortization is adjusted when the Life Companies revise their estimate of
current or future gross profits or margins. For example, deferred policy
acquisition costs are amortized earlier than originally estimated when policy
terminations are higher than originally estimated or when investments are sold
at a gain prior to their anticipated maturity. Death and other policyholder
benefits reflect exposure to mortality risk and fluctuate from period to period
based on the level of claims incurred under insurance retention limits. The
profitability of the Life Companies is primarily affected by expense levels,
investment results and fluctuations in mortality and other policyholder
benefits. The Company has the ability to mitigate adverse experience through
adjustments to credited interest rates, policyholder dividends or cost of
insurance charges.

PROPERTY-CASUALTY OPERATIONS. The Company's property-casualty product lines
and the percentage of property-casualty premiums associated with such lines for
the three month period ended March 31, 1996 was as follows: automobile (52.7%),
homeowners (7.4%), farm and ranch owners (12.9%), workers' compensation (6.0%),
crop (0.9%), reinsurance (15.0%) and other (5.1%). See "Business --
Property-Casualty Segment".

Property-casualty business written in Utah through Utah Insurance is pooled
with business written in Iowa, Minnesota and South Dakota by Farm Bureau Mutual
and South Dakota Mutual in the Farm Bureau Mutual pool. All of the companies
participating in the Farm Bureau Mutual pool are managed by the Company. The
current participation of Utah Insurance in the Farm Bureau Mutual pool, which
had net premiums written of $57.2 million in the three month period ended March
31, 1996 and $235.6 million in the year ended December 31, 1995, is 8%.
Management anticipates that during the second quarter of 1996 the share of Utah
Insurance in the Farm Bureau Mutual pool will be increased to 20%, retroactive
to January 1, 1996. As a result of the increase in the Company's participation
in the Farm Bureau Mutual pool, the Company's share of property-casualty
premiums, net investment income (as a result of the related increase in
capitalization and increased premium income), other income, distributions to
participating policyholders, losses and loss adjustment expenses and
underwriting, acquisition and insurance expenses will increase in 1996. Also,
the Company's exposure to property-casualty catastrophic losses will be
increased.

In addition, effective January 1, 1996, Farm Bureau Mutual entered into a
loss pooling agreement with Western Ag, which, in turn, quota share reinsures
business of Western Farm Bureau Mutual. Western Ag and Western Farm Bureau
Mutual are Farm Bureau affiliated companies in Arizona and New Mexico,
respectively, that are also managed by the Company. Under the loss pooling
agreement all direct and assumed premiums, losses and allocated loss adjustment
expenses (but not acquisition and other general underwriting expenses) of Farm
Bureau Mutual, Utah Insurance and South Dakota Mutual will be pooled with these
same items for Western Ag and Western Farm Bureau Mutual. Thus, further
geographic and business diversification of risk for Utah Insurance will be
achieved without significant change in the size of the Farm Bureau Mutual pool
or its total premium volume. It is anticipated that the loss pooling agreement
with Western Ag will not have a significant effect on the Company's financial
position or results of operations.

During the second quarter of 1996 through June 10, there were a number of
storms in the Company's market area. Management estimates the after-tax loss to
the Company from such storms will be in the range of $500,000 to $750,000.
Management expects approximately one-half of such loss to be recognized in the
second quarter of 1996, with the balance being amortized over the next 12 months
in accordance with retrospective accounting related to the increase in the
Company's participation in the Farm Bureau Mutual pool.

27
<PAGE>
SEGMENT INFORMATION. For information concerning amounts of revenue,
operating profit and loss and identifiable assets attributable to each of the
Company's segments, see Note 13 of Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

A summary of the Company's premiums and product charges is as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1996 1995
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Premiums and product charges:
Universal life and annuity product charges............................................. $ 11,317 $ 10,632
Traditional life insurance premiums.................................................... 19,131 18,227
Accident and health premiums........................................................... 2,652 2,383
Property-casualty premiums............................................................. 4,298 4,323
--------- ---------
Total................................................................................ $ 37,398 $ 35,565
--------- ---------
--------- ---------
</TABLE>

Premiums and product charges increased $1.8 million, or 5.2%, to $37.4
million for the 1996 period compared to $35.6 million for the 1995 period. This
increase consisted primarily of a $1.6 million, or 5.5%, increase in traditional
life insurance premiums and universal life and annuity product charges which,
management believes, is principally attributable to the introduction of a new
incentive agent compensation program effective January 1, 1996 and to more
effective and increased training of its agency force. In addition, mortality
charges on universal life products increased $447,000 during the 1996 period
compared to the 1995 period as a result of an increase of business in force.
Accident and health premiums increased $269,000, or 11.3%, due to new sales
coupled with favorable persistency. Property-casualty premiums decreased
$25,000, or 0.6%, due to the nonrenewal of certain unaffiliated reinsurance
assumed contracts and premium rate decreases on workers' compensation insurance.
Although the life and property-casualty insurance industries are competitive,
the Company has not experienced any unusual pricing pressures in its lines of
business or states of operation.

Net investment income increased $4.4 million, or 9.1%, to $52.4 million for
the 1996 period compared to $48.0 million for the 1995 period. The increase
resulted principally from an 11.2% increase in average invested assets,
excluding invested assets of FBL Ventures of South Dakota Inc. (FBL Ventures), a
venture capital subsidiary, to $2.7 billion in the 1996 period from $2.4 billion
in the 1995 period, partially offset by a 46 basis point decline in the
annualized yield earned on average invested assets (excluding yield attributable
to FBL Ventures) to 7.81% in the 1996 period from 8.27% in the 1995 period. The
increase in average invested assets is attributable to net positive cash flows
from operating activities totaling $101.7 million during the period from March
31, 1995 to March 31, 1996 and to net positive cash flows from interest
sensitive products totaling $54.0 million during the same period. The decline in
yield on average invested assets is the result of investing a majority of these
positive cash flows and cash from investing activities in lower yielding
securities due to the general decline in interest rates during the period from
March 31, 1995 to December 31, 1995. Also contributing to the increase in net
investment income was a $1.9 million increase in the net investment income
(loss) of FBL Ventures to $1.8 million in the 1996 period from $(105,000) in the
1995 period resulting primarily from gains recognized on five private equity
investments. See "-- Adjusted Operating Income."

Realized gains (losses) on investments decreased $4.0 million, or 213.4%, to
a loss of $2.1 million for the 1996 period compared to a gain of $1.9 million
for the 1995 period. The decrease resulted primarily from the timing of the sale
of certain fixed maturity securities and a real estate investment. The level of
realized gains 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.

28
<PAGE>
Other income decreased $1.5 million, or 21.7%, to $5.6 million for the 1996
period compared to $7.1 million for the 1995 period due primarily to a $1.2
million decrease in commission income from the sale of unaffiliated insurers'
medical products. Effective January 1, 1996, a majority of these products are
marketed through Farm Bureau Mutual.

A summary of the Company's policy benefits is as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1996 1995
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Policy benefits:
Universal life and annuity benefits.................................................... $ 30,353 $ 27,071
Traditional life insurance and accident and health benefits............................ 12,096 12,715
Increase in benefit reserves........................................................... 5,294 4,462
Distributions to participating policyholders........................................... 6,475 6,605
Property-casualty losses and loss adjustment expenses.................................. 3,211 2,974
--------- ---------
Total................................................................................ $ 57,429 $ 53,827
--------- ---------
--------- ---------
</TABLE>

Policy benefits increased $3.6 million, or 6.7%, to $57.4 million for the
1996 period compared to $53.8 million for the 1995 period. Included in this
increase was a $3.3 million increase in universal life and annuity benefits
consisting of a $3.8 million increase in interest credited to these contracts
and a $553,000 decrease in universal life death benefits. The increase in
interest credited is attributable to a larger volume of business in force
coupled with an increase in the interest crediting rates. During the 1996 period
the weighted average crediting rate for the Company's annuity liabilities
increased to 6.78% for the 1996 period from 6.51% for the 1995 period, and the
weighted average crediting rate for the Company's universal life liabilities
increased to 6.77% from 6.59% for the respective periods. The interest crediting
rates increased despite a 46 basis point decrease in the annualized yield on
average invested assets due primarily to the timing of the Company's adjustments
of its interest crediting rates for fluctuations in portfolio yield. In
addition, there was a $213,000 increase in traditional life and accident and
health policy benefits consisting of an $832,000 increase in the change in the
reserves on those products, a $679,000 decrease in surrender benefits and a
$60,000 net increase in other benefits. Distributions to policyholders decreased
to $6.5 million from $6.6 million due to a reduction in the average dividend
rate credited to these policies to 6.35% from 6.49%, offset, in part, by an
increase in the amount of business in force. Losses and loss adjustment expenses
incurred on property-casualty policies increased to $3.2 million, or 8.0%, in
the 1996 period from $3.0 million in the 1995 period. The loss and loss
adjustment expense ratio increased in the 1996 period to 74.7% from 68.8% in the
1995 period primarily due to less favorable weather conditions in the 1996
period.

A summary of the Company's underwriting, acquisition and insurance expenses
is as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1996 1995
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals................................................ $ 2,443 $ 1,889
Amortization of deferred policy acquisition costs................................... 2,685 2,641
Other underwriting, acquisition and insurance expenses, net of deferrals............ 10,652 15,943
--------- ---------
Total........................................................................... $ 15,780 $ 20,473
--------- ---------
--------- ---------
</TABLE>

Commission expense increased $554,000, or 29.3%, to $2.4 million for the
1996 period compared to $1.9 million for the 1995 period. This increase is
primarily attributable to a change in the Company's incentive agent compensation
program effective January 1, 1996, under which agency managers are paid
overwrite

29
<PAGE>
commissions on first year and renewal premiums rather than a base salary. Also
contributing to the increase in commission expense is a 4.4% increase in direct
life and accident and health insurance premiums collected in the 1996 period
compared to the 1995 period.

Amortization of deferred policy acquisition costs increased $44,000, or
1.7%, to $2.7 million for the 1996 period compared to $2.6 million for the 1995
period principally due to a greater volume of business in force, partially
offset by a $531,000 reduction in amortization due to realized gains (losses) on
investments.

Other underwriting, acquisition and insurance expenses decreased $5.2
million, or 33.2%, to $10.7 million for the 1996 period compared to $15.9
million for the 1995 period. This decrease is primarily attributable to new
marketing agreements with Farm Bureau property-casualty insurance companies
doing business in the Company's marketing territory whereby the
property-casualty insurance companies develop and manage the Company's agency
force for a fee based on first year life insurance premiums and annuity
deposits. As a result of the agreements, various fixed marketing costs that were
charged to expense in the 1995 period have been replaced by lower fees ($741,000
for the 1996 period) which vary based on premium volume and are deferred and
amortized with other policy acquisition costs. In addition, expense reductions
were realized as a result of discontinuing the sale of unaffiliated insurers'
medical products (see discussion regarding other income above). Also,
approximately $1.5 million of the decrease is attributable to the elimination of
an agent bonus program in 1996, one-time severance benefit payments to certain
employees in the 1995 period and a decrease in defined benefit plan expense
allocated to the Company. Furthermore, amortization of value of insurance in
force acquired decreased $569,000 in the 1996 period compared to the 1995 period
due to the impact of realized gains and losses on investments.

Interest expense decreased $129,000, or 36.2%, to $227,000 for the 1996
period compared to $356,000 for the 1995 period due principally to a decline in
the average long-term debt balance outstanding to $12.2 million during the 1996
period from $18.0 million during the 1995 period.

Other expenses decreased $73,000, or 1.8%, to $3.9 million for the 1996
period compared to $4.0 million for the 1995 period. Expenses of the Company's
non-insurance support operations were relatively consistent during the periods
generally due to a consistent level of operating activity.

Pretax income before minority interest in earnings of subsidiaries and
equity income increased $2.1 million, or 14.5%, to $16.0 million for the 1996
period compared to $13.9 million for the 1995 period. This increase was
primarily the result of improved profitability of the life insurance operations
and the $1.9 million increase in net investment income of FBL Ventures, offset,
in part, by the impact of realized gains and losses on investments.

Income taxes increased $841,000, or 17.3%, to $5.7 million for the 1996
period compared to $4.8 million for the 1995 period. The effective tax rate for
the 1996 period was 35.7% compared to 34.8% for the 1995 period. The effective
tax rate during the 1996 period was higher than the federal statutory rate of
35% primarily due to state income taxes and an increase in a deferred tax asset
valuation allowance offset, in part, by tax exempt interest and dividend income.

Net income increased $1.9 million, or 20.4%, to $10.9 million for the 1996
period compared to $9.0 million in the 1995 period. The increase was the result
of the increases in pretax income discussed above and a $656,000 increase in
equity income, offset, in part, by the aforementioned increase in the Company's
effective tax rate.

30
<PAGE>
1995 COMPARED TO 1994

A summary of the Company's premiums and product charges is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1995 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Premiums and product charges:
Universal life and annuity product charges.............................................. $ 43,722 $ 42,734
Traditional life insurance premiums..................................................... 75,450 72,222
Accident and health premiums............................................................ 10,161 (1,956)
Property-casualty premiums.............................................................. 18,709 17,778
---------- ----------
Total................................................................................. $ 148,042 $ 130,778
---------- ----------
---------- ----------
</TABLE>

Premiums and product charges increased $17.2 million, or 13.2%, to $148.0
million for 1995 compared to $130.8 million for 1994. Approximately $12.1
million of this increase was attributable to an increase in accident and health
premiums due primarily to the Company's exit from the medical insurance business
in 1994. In 1994 the Company recorded net negative accident and health premiums
of $2.0 million, consisting of $11.9 million in disability income premiums net
of $13.9 million in negative premiums from ceding the medical insurance business
to other carriers, whereas in 1995, accident and health premiums totaled $10.2
million, consisting primarily of disability income business. Life insurance
premiums and universal life and annuity product charges increased $4.2 million,
or 3.7%, as a result of new sales coupled with favorable persistency.
Property-casualty premiums increased 5.2% to $18.7 million in 1995 from $17.8
million in 1994, due to premium rate increases and a modest growth in the number
of policies in force. Although the life and property-casualty insurance
industries are competitive, the Company has not experienced any unusual pricing
pressures in its lines of business or states of operation.

Net investment income increased $44.3 million, or 24.8%, to $223.1 million
for 1995 compared to $178.8 million for 1994. The increase was predominantly the
result of gains recognized on two private equity investments held by FBL
Ventures. During 1995, this subsidiary recognized net investment income of $25.4
million compared to a loss of $185,000 for 1994. See "-- Adjusted Operating
Income." In addition, the Company's average invested assets (excluding invested
assets of FBL Ventures) increased 7.8% to $2.5 billion in 1995 from $2.3 billion
in 1994 and the yield on average invested assets (excluding yield attributable
to FBL Ventures) increased to 7.88% in 1995 from 7.69% in 1994. The yield on
average invested assets increased in 1995 despite a general decline in market
interest rates during the period primarily because fixed maturity securities
purchased in 1995 tended to have longer maturities than that of the existing
fixed maturity portfolio and the Company increased its concentration of
investments in investment grade mortgage-backed securities with higher yields.

Realized gains on investments decreased $3.5 million, or 37.7%, to $5.9
million for 1995 compared to $9.4 million for 1994. This decrease resulted
primarily from the timing of the sale of certain private equity investments. The
level of realized gains 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.

A summary of the Company's policy benefits is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1995 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Policy benefits:
Universal life and annuity benefits..................................................... $ 112,125 $ 97,736
Traditional life insurance and accident and health benefits............................. 49,316 48,345
Increase in benefit reserves............................................................ 22,976 12,084
Distributions to participating policyholders............................................ 25,747 24,402
Property-casualty losses and loss adjustment expenses................................... 13,621 13,441
---------- ----------
Total................................................................................. $ 223,785 $ 196,008
---------- ----------
---------- ----------
</TABLE>

31
<PAGE>
Policy benefits increased $27.8 million, or 14.2%, to $223.8 million for
1995 compared to $196.0 million for 1994. Of this increase, $14.4 million was
attributable to an increase in universal life and annuity benefits largely
resulting from an increase in interest credited amounts and growth in the amount
of business in force. During 1995 the weighted average crediting rate for the
Company's annuity liabilities increased to 6.49% from 6.16% in 1994, and the
weighted average crediting rate for the Company's universal life liabilities
decreased to 6.68% from 6.71% for the respective periods. It is the Company's
policy to change rates credited to policy accounts as the Company's investment
portfolio yield changes. The crediting rate for universal life insurance
products decreased despite an increase in the yield on average invested assets
due primarily to a decrease in the rate credited to a universal life product
sold by Western Life that previously had an above-market crediting rate. In
addition, there was an $11.9 million increase in traditional life and accident
and health policy benefits as a result of general growth in the amount of
business in force. This increase included a $10.9 million increase in the change
in reserves on those products, a $1.5 million increase in surrender benefits and
an $923,000 increase in death benefits, offset, in part, by a $1.4 million
decrease in accident and health benefits. Distributions to participating
policyholders increased to $25.7 million from $24.4 million due to increases in
the face amount of policies in force and an increase in the average dividend
rate credited to these policies to 6.49% from 6.31%. Losses and loss expenses
incurred on property-casualty policies increased to $13.6 million, or 1.3%, in
1995 from $13.4 million in 1994. The loss and loss adjustment expense ratio
improved in 1995 to 72.8% from 75.6% in 1994 primarily due to more favorable
loss experience resulting from premium rate increases and re-underwriting
activities.

A summary of the Company's underwriting, acquisition and insurance expenses
is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1995 1994
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals................................................ $ 8,043 $ 10,340
Amortization of deferred policy acquisition costs................................... 10,727 10,066
Other underwriting, acquisition and insurance expenses, net of deferrals............ 54,661 54,246
--------- ---------
Total........................................................................... $ 73,431 $ 74,652
--------- ---------
--------- ---------
</TABLE>

Commission expense decreased $2.3 million, or 22.2%, to $8.0 million in 1995
from $10.3 million in 1994. This decrease includes a $2.2 million decline in
nondeferrable first year commissions and a $66,000 decline in renewal
commissions. Nondeferrable first year commissions decreased due primarily to a
$18.7 million decline in first year premiums received in 1995 compared to 1994.
Renewal commissions decreased in 1995 compared to 1994 despite a $13.1 million
increase in renewal premiums received due primarily to multi-tiered commission
structures on certain life insurance products whereby renewal commission rates
decline over the life of the underlying policies.

Amortization of deferred policy acquisition costs increased $661,000, or
6.6%, to $10.7 million in 1995 from $10.1 million in 1994 principally due to an
increase in amortization resulting from realized gains on investments.

Other underwriting, acquisition and insurance expenses increased $415,000,
or 0.8%, to $54.7 million in 1995 from $54.2 million in 1994. Expenses were
controlled by economies of scale gained from the consolidation of Western Life
and Rural Security Life operations with Farm Bureau Life and a reengineering
effort designed to increase efficiency of operations and improve customer
service. As a result of these initiatives, over 160 job positions were
eliminated during the past two years, the benefit of which was realized in 1995.

Interest expense decreased $1.1 million, or 52.2%, to $1.0 million in 1995
from $2.1 million in 1994 due principally to the decline in long-term debt to
$12.6 million at December 31, 1995 from $18.5 million at December 31, 1994 and
$30.6 million at January 1, 1994.

Other expenses increased $71,000, or 0.4%, to $17.3 million in 1995 from
$17.2 million in 1994 due primarily to general growth in the Company's
non-insurance support operations.

32
<PAGE>
Pretax income before minority interest in earnings of subsidiaries, equity
income (loss) and discontinued operations increased $30.5 million, or 51.1%, to
$90.4 million compared to $59.9 million for 1994. This increase was the result
of growth in investment income from the private equity investments of FBL
Ventures to $25.4 million compared to a loss of $185,000 for 1994, coupled with
improved profitability in the life insurance lines from lower expense ratios and
increased spreads. These increases were partially offset by a reduction in
realized capital gains.

Income taxes increased $9.6 million, or 42.8%, to $32.1 million for 1995
compared to $22.5 million for 1994. The effective tax rate in 1995 was 35.5%
compared to 37.5% in 1994. The effective tax rate in 1994 was higher than the
statutory rate of 35% primarily as a result of provisions for possible
adjustments from routine IRS examinations, offset partially by tax-exempt
interest and dividend income. The Company's effective tax rate should not, over
the long term, be materially different from the effective statutory rate.

Net income increased $17.5 million, or 41.7%, to $59.6 million for 1995
compared to $42.1 million for 1994. The increase was the result of increases in
the pretax income discussed above, partially offset by a $6.5 million decrease
in income from discontinued operations sold in 1994. In addition, equity income
(loss) increased by $3.0 million to $1.6 million in 1995 compared to a loss of
$1.4 million in 1994.

1994 COMPARED TO 1993

A summary of the Company's premiums and product charges is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1994 1993
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Premiums and product charges:
Universal life and annuity product charges.............................................. $ 42,734 $ 26,500
Traditional life insurance premiums..................................................... 72,222 46,050
Accident and health premiums............................................................ (1,956) 46,437
Property-casualty premiums.............................................................. 17,778 16,937
---------- ----------
Total................................................................................. $ 130,778 $ 135,924
---------- ----------
---------- ----------
</TABLE>

Premiums and product charges decreased $5.1 million, or 3.8%, to $130.8
million for 1994 compared to $135.9 million for 1993. The decrease was the
result of the Company's strategy to exit from the medical insurance line of
business during 1994, which was the primary reason for the $48.4 million
reduction in accident and health premiums. This reduction was partially offset
by growth from the acquisition of Western Life resulting in an increase of $33.4
million and other increases of $9.9 million resulting partly from inclusion of a
full year's premiums from Rural Security Life in 1994 versus nine months in
1993, and partly from growth of premiums from preconsolidation operations.
Growth in premium and life insurance in force occurred as a result of increased
first year premiums, while the Company maintained favorable, although decreased,
persistency. For 1994, the life insurance lapse rate of the Company was 7.2%,
compared to 5.9% for 1993. The increase in the Company's lapse rate from 1993 to
1994 was due to the addition of the Western Life block of business.
Property-casualty premiums increased to $17.8 million, or 5.0%, from $16.9
million from a combination of general growth and premium rate increases.
Although the life and property-casualty insurance industries are competitive,
the Company has not experienced any unusual pricing pressures in its lines of
business or states of operation.

Net investment income increased $40.5 million, or 29.3%, to $178.8 million
for 1994 compared to $138.3 million for 1993. The increase resulted from a 45.6%
growth in average invested assets (excluding invested assets of FBL Ventures) to
$2.3 billion in 1994 from $1.6 billion in 1993, partially offset by a decrease
in yield on average invested assets (excluding yield attributable to FBL
Ventures) to 7.69% in 1994 compared to 8.67% in 1993. Approximately $517 million
of the increase in average invested assets in 1994 from 1993 was attributable to
the acquisition of Western Life in January 1994.

33
<PAGE>
Realized gains increased $5.4 million, or 138.2%, to $9.4 million for 1994
compared to $4.0 million for 1993. This increase resulted primarily from the
timing of the sale of certain private equity investments. The level of realized
gains 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.

A summary of the Company's policy benefits is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1994 1993
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Policy benefits:
Universal life and annuity benefits..................................................... $ 97,736 $ 73,305
Traditional life insurance and accident and health benefits............................. 48,345 66,028
Increase in benefit reserves............................................................ 12,084 14,428
Distributions to participating policyholders............................................ 24,402 22,967
Property-casualty losses and loss adjustment expenses................................... 13,441 13,948
---------- ----------
Total................................................................................. $ 196,008 $ 190,676
---------- ----------
---------- ----------
</TABLE>

Policy benefits increased $5.3 million, or 2.8%, to $196.0 million for 1994
compared to $190.7 million for 1993. The acquisition of Western Life was
responsible for an increase of $39.7 million, offset by reductions related to
exiting the medical insurance business. In addition, further increases resulted
from growth in liabilities caused by new sales and increases in the level of
interest and policyholder dividends credited to existing policies. Distributions
to participating policyholders increased to $24.4 million from $23.0 million,
due to distributions to Western Life policyholders, which amounted to $1.6
million in 1994, and increases in policies in force, which were partially offset
by a reduction in the rate credited to these policies to 6.31% in 1994 from
6.79% in 1993. During 1994 the weighted average crediting rate for the Company's
annuity liabilities declined to 6.16% from 6.97% during 1993, and the weighted
average crediting rate for the Company's universal life liabilities declined to
6.71% from 7.52% during the respective periods. The policy crediting rates were
reduced as a result of lower yields on the investment portfolio as previously
discussed. Losses and loss adjustment expenses incurred on property-casualty
policies decreased to $13.4 million, or 3.6%, from $13.9 million in 1993. The
loss and loss adjustment expense ratio improved in 1994 to 75.6% from 82.4% in
1993 primarily due to improved weather conditions from the prior year, premium
rate increases and re-underwriting activities.

A summary of the Company's underwriting, acquisition and insurance expenses
is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1994 1993
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Underwriting, acquisition and insurance expenses:
Commission expense, net of deferrals................................................ $ 10,340 $ 7,886
Amortization of deferred policy acquisition costs................................... 10,066 6,023
Other underwriting, acquisition and insurance expenses, net of deferrals............ 54,246 42,723
--------- ---------
Total........................................................................... $ 74,652 $ 56,632
--------- ---------
--------- ---------
</TABLE>

Commission expense increased $2.4 million, or 31.1%, to $10.3 million in
1994 from $7.9 million in 1993. The increase includes a $4.2 million increase
attributable to the acquisition of Western Life offset, in part, by a $3.3
million decrease resulting from exiting the group medical insurance business in
1994. In addition, commission expense increased $1.5 million due principally to
an increase in premium volume.

Amortization of deferred policy acquisition costs increased $4.1 million, or
67.1%, to $10.1 million in 1994 from $6.0 million in 1993 due principally to a
$2.9 million increase in amortization resulting from realized gains on
investments and a $562,000 increase attributable to a greater volume of
property-casualty business in force and an increase in commission rates and
other underwriting expenses. In addition,

34
<PAGE>
amortization for life business increased approximately $600,000 primarily due to
a larger volume of life insurance business in force coupled with an increase in
gross profits earned on this larger volume of business in force.

Other underwriting, acquisition and insurance expenses increased $11.5
million, or 27.0%, to $54.2 million in 1994 from $42.7 million in 1993. Other
underwriting, acquisition and insurance expenses increased due, in part, to the
addition of Western Life expenses. Offsetting the increases relating to Western
Life were reductions resulting from exiting the medical insurance business and
from economies of scale gained from the Rural Security Life acquisition which
occurred in 1993. Furthermore, during 1994 the Company undertook, with the
assistance of an outside consultant, a significant reengineering effort to
improve customer service and streamline operations resulting in substantial
staff reductions in several major operating areas. These reengineering efforts
increased expenses in 1994 because of severance payments and consulting fees.

Interest expense decreased $195,000, or 8.5%, to $2.1 million in 1994 from
$2.3 million in 1993 due primarily to a reduction in the outstanding balance of
debt during the periods.

Other expenses increased $2.3 million, or 15.6%, to $17.2 million in 1994
from $14.9 million in 1993 due primarily to an increase in the level of services
provided to affiliates and others by the Company's leasing and investment
advisory subsidiaries.

Pretax income before minority interest in earnings of subsidiaries, equity
income (loss) and discontinued operations increased $21.0 million, or 53.8%, to
$59.9 million for 1994 compared to $38.9 million for 1993. The increase resulted
from the following: (1) the change in investment income and net realized
investment gains more than offset the change in interest credited to
policyholders and other benefits and expenses incurred, (2) the addition of the
profitable Western Life operations, which added $11.3 million to pretax income
in 1994, and (3) pretax income from property-casualty operations improved to
$1.3 million in 1994 compared to $33,000 in 1993.

Income taxes increased $8.1 million, or 55.6%, to $22.5 million for 1994
compared to $14.4 million for 1993. The effective tax rate in 1994 was 37.5%
compared to 37.1% in 1993. The effective tax rates in 1994 and 1993 were higher
than the statutory rate of 35% primarily as a result of provisions for possible
adjustments from routine IRS examinations, partially offset by tax-exempt
interest and dividend income. The Company's effective tax rate should not, over
the long term, be materially different from the effective statutory rate.

Net income increased $22.3 million, or 112.4%, to $42.1 million for 1994
compared to $19.8 million for 1993. In addition to the items mentioned above
which impacted pretax income, the Company experienced the following items which
impacted net income. First, the reduction in net income due to minority interest
in earnings of subsidiaries decreased to $376,000 from $2.4 million primarily as
a result of the acquisition of the minority interests of FBL Insurance Company
and Rural Security Life. Second, the Company experienced a $6.5 million gain
from discontinued operations, compared to a $2.9 million loss from discontinued
operations in the prior year (see separate discussion of discontinued
operations). Offsetting these improvements, equity income (loss) net of related
income taxes decreased to $(1.4) million in 1994 from $630,000 in 1993 resulting
from the writedown of one investment caused by a deterioration of the underlying
asset.

35
<PAGE>
ADJUSTED OPERATING INCOME

The following table reflects net income adjusted to eliminate certain items
which management believes are not indicative of overall operating trends,
including net realized gains on investments (less that portion of amortization
of deferred policy acquisition costs and value of insurance in force acquired
and income taxes attributable to such gains), net income from a venture capital
investment company subsidiary and discontinued operations.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income............................ $ 10,889 $ 9,043 $ 59,628 $ 42,066 $ 19,803 $ 21,435 $ 9,254
Adjustments:
Net realized (gains) losses on
investments (1).................... 1,000 (806) (2,761) (5,734) (3,842) (7,071) (2,504)
Net (income) loss from FBL
Ventures........................... (1,085) 67 (15,219) (73) 161 (2,229) (1,402)
(Gain) losses on discontinued
operations......................... -- -- -- (6,479) 2,902 4,932 7,944
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating income............. $ 10,804 $ 8,304 $ 41,648 $ 29,780 $ 19,024 $ 17,067 $ 13,292
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating income per share... $ 0.45 $ 0.35 $ 1.77 $ 1.27 $ 1.06 $ 1.01 $ 0.79
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

- ------------------------
(1) Represents realized gains/losses on investments less that portion of
amortization of deferred policy acquisition costs and value of insurance in
force acquired and income taxes attributable to such gains/ losses.

FBL Ventures is a wholly owned investment company subsidiary of Farm Bureau
Life which invests in start-up and mezzanine level venture capital investments
in various sectors. Operating results of FBL Ventures are recognized in
accordance with accounting principles for investment companies and, as such,
unrealized and realized gains and losses on investments are included in net
investment income. Because of the venture capital nature of the underlying
investments, the results of FBL Ventures tend to fluctuate significantly from
year to year and need to be evaluated over a much longer period of time.
Therefore, the net income/loss is not included in adjusted operating income.
During 1995, FBL Ventures experienced net investment income of $25.4 million
resulting predominantly from unrealized gains on two venture capital investments
which completed initial public offerings during the year. The results of FBL
Ventures during the five years ended December 31, 1995, have provided
significant returns to the Company. Since March 1990, when the Company began its
current venture capital program, the underlying investments in FBL Ventures have
generated an average annual internal rate of return of 41.3%. As of March 31,
1996 FBL Ventures had investments of $19.4 million, consisting of 29 private
equity securities issued by 21 companies. Of the 21 companies in which FBL
Ventures held investments on March 31, 1996, six are public and 15 are private.
Of the aggregate value of $19.4 million, investment in publicly traded companies
comprised $6.8 million and investment in non-publicly traded companies comprised
$12.6 million. The number and percent of companies by industry and the value of
the investment by industry was as follows:

<TABLE>
<CAPTION>
PERCENT OF TOTAL
INDUSTRY NUMBER CARRYING VALUE
- --------------------------------------------------- --------------- ------------------- CARRYING VALUE
-----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Communications technology.......................... 5 15.9 $ 3,084
Computer hardware/software......................... 4 16.6 3,220
Biotechnology...................................... 5 19.3 3,752
Healthcare/services/technology..................... 5 34.9 6,780
Specialty retail................................... 1 10.3 2,000
Agriculture........................................ 1 3.0 580
</TABLE>

36
<PAGE>
It is anticipated that during 1996 all or substantially all of the investments
of FBL Ventures will be sold to a venture capital subsidiary of Farm Bureau
Mutual at their carrying value, which management believes approximates fair
value. Accordingly, the sale will not have a significant effect on the Company's
operating results. The proceeds from the sale are expected to be invested in
fixed maturity securities and mortgage loans. Management believes the sale of
FBL Venture's investments will provide the Company with more consistent and
predictable investment returns and will facilitate the Company's asset/liability
management process.

DISCONTINUED OPERATIONS

During 1990, the Company invested in a cable television operation which
provided cable service to rural communities in the midwest. The investment
consisted of a direct investment in a partnership interest, notes and a
guarantee of bank debt. As a result of market and other factors, the cable
operation suffered substantial operating losses during each year it was owned.
In December 1993, a decision was made to sell the cable operation, and at that
time the operations were classified as discontinued operations for financial
reporting purposes. On December 23, 1994, the cable operation was sold.

LIQUIDITY AND CAPITAL RESOURCES

FBL FINANCIAL GROUP, INC.

FBL Financial Group, Inc.'s cash flow from operations will consist of
dividends from subsidiaries, if declared and paid, and fees which it will charge
the various operating subsidiaries and affiliates for management of their
operations, offset by the expenses incurred for salaries and other expenses
related to providing such services.

No dividends were paid in 1995 or 1994 by FBL Financial Group, Inc. to its
stockholders. In the future, FBL Financial Group, Inc. will rely primarily on
dividends from the Life Companies to make any dividend payments to its
stockholders. The ability of the Life Companies to pay dividends to FBL
Financial Group, Inc. is limited by law to earned profits (statutory unassigned
surplus) as of the date the dividend is paid, as determined in accordance with
accounting practices prescribed or permitted by insurance regulatory authorities
of the State of Iowa for Farm Bureau Life and Colorado for Western Life. In
addition, under the Iowa and Colorado Insurance Holding Company Acts, the Life
Companies may not pay an "extraordinary" dividend without prior notice to and
approval by the respective insurance commissioner. An "extraordinary" dividend
is defined under the Iowa and Colorado Insurance Holding Company Acts as any
dividend or distribution of cash or other property whose fair market value,
together with that of other dividends or distributions made within the preceding
12 months, exceeds the greater of (i) 10% of policyholders' surplus (total
statutory capital stock and statutory surplus) as of December 31 of the
preceding year, or (ii) the statutory net gain from operations of the insurer
for the 12 month period ending the December 31 of the preceding year. During
1996, the maximum amount legally available for distribution to FBL Financial
Group, Inc. without further regulatory approval is approximately $48.6 million
from Farm Bureau Life before giving effect to a contemplated dividend of the
stock of FBL Financial Services, Inc. with a statutory carrying value of
approximately $21.1 million at March 31, 1996, and $5.7 million from Western
Life. Similar restrictions exist with respect to the payments of dividends by
Utah Insurance. Such restrictions are not considered to bear significantly on
the ability of the Company to meet its obligations.

INSURANCE OPERATIONS

The Life Companies' cash inflows consist primarily of premium income,
deposits to policyholder account balances, income from investments, sales,
maturities and calls of investments and repayments of investment principal. The
Life Companies' cash outflows are primarily related to withdrawals of
policyholder account balances, investment purchases, payment of policy
acquisition costs, the payment of policyholder benefits, income taxes and
current operating expenses. Life insurance companies generally produce a
positive cash flow which may be measured by the degree to which cash inflows are
adequate to meet benefit obligations to policyholders and normal operating
expenses as they are incurred. The remaining cash flow is generally used to
increase the asset base to provide funds to meet the need for future policy
benefit payments and for writing new business. The Life Companies' liquidity
positions continued to be favorable in fiscal year 1995, with cash inflows at
levels sufficient to provide the funds necessary to meet their obligations.

37
<PAGE>
For property-casualty operations the major sources of cash inflow are
premiums and investment income. Major sources of cash outflow are losses and
loss adjustment expenses paid and other underwriting expenses. As with the Life
Companies, the liquidity position of Utah Insurance continued to be favorable in
1995, with cash inflows at levels sufficient to provide the funds necessary to
meet its obligations.

For all insurance operations, cash outflow requirements for operations are
typically met from the year's normal premium and deposit cash inflows. This has
been the case for all reported periods as the insurance companies' continuing
operations provided funds amounting to $39.7 million in the three month period
ended March 31, 1996, $106.5 million in 1995, $94.0 million in 1994, and $86.1
million in 1993. Cash inflows from financing activities are the result of the
significant growth in net deposits to policyholder account balances for both
universal life insurance and annuities during 1995, 1994, and 1993. These funds,
along with the excess operating inflows, were primarily used to increase the
insurance companies' fixed maturity investment portfolios.

Matching the investment portfolio maturities to the cash flow demands of the
type of insurance being provided is an important consideration for each type of
life insurance. The Life Companies continually monitor benefit and claim
statistics to provide projections of future cash requirements. As part of this
monitoring process, the Life Companies perform cash flow testing of their assets
and liabilities under various scenarios to evaluate the adequacy of reserves. In
developing their investment strategy, the Life Companies establish a level of
cash and securities which, combined with expected net cash inflows from
operations, maturities of fixed maturity investments and principal payments on
mortgage-backed securities, are believed adequate to meet anticipated short-term
and long-term benefit and expense payment obligations.

Through its membership in the Federal Home Loan Bank of Des Moines, Farm
Bureau Life is eligible to borrow on a line of credit available to provide it
additional liquidity. The line of credit available is based on the amount of
capital stock of the Federal Home Loan Bank of Des Moines owned by Farm Bureau
Life, which supported a borrowing capacity of $48.2 million as of March 31,
1996. Interest is payable at a current rate upon issuance. As of March 31, 1996,
no line of credit agreement was open and there were no borrowings outstanding.

Management anticipates that funds to meet its short-term and long-term
capital expenditures, cash dividends to stockholders and operating cash needs
will come from existing capital and internally generated funds. Management
believes that the current level of cash and available-for-sale and short-term
securities, combined with expected net cash inflows from operations, maturities
of fixed maturity investments, principal payments on mortgage-backed securities
and its insurance products, are adequate to meet the Company's anticipated
short-term cash obligations. The Company may from time to time review potential
acquisition opportunities. The Company anticipates that funding for any such
acquisition may be provided from available cash resources, debt or equity
financing. As of March 31, 1996, the Company had no material commitments for
capital expenditures.

The Company's investment portfolio as of March 31, 1996 had a carrying value
of $2.7 billion. As of March 31, 1996, fixed maturity securities were $2.1
billion, or 78.5%, of invested assets, with public, private placement and 144A
private placement fixed maturity securities constituting $1.6 billion, or 76.5%;
$332.7 million, or 15.9%, and $159.2 million, or 7.6% of total fixed maturity
securities, respectively. Of the Company's fixed maturity securities, based on
carrying value, 64.4% were assigned NAIC designation 1 (equivalent to an S&P
rating of A- or higher) and 27.4% were assigned NAIC designation 2 (equivalent
to an S&P rating of BBB- to BBB+) as of March 31, 1996. Net unrealized gains on
the Company's fixed maturity securities held as available for sale were $22.0
million as of March 31, 1996. The Company's mortgage and other asset-backed
securities were $930.3 million, or 44.4%, of fixed maturity securities as of
March 31, 1996. As of March 31, 1996, $267.5 million, or 10.0%, of the Company's
invested assets were invested in mortgage loans.

EFFECTS OF INFLATION AND INTEREST RATE CHANGES

The Company does not believe that inflation has had a material effect on its
consolidated results of operations. The Company attempts to invest new funds in
securities with expected durations that match the

38
<PAGE>
related policyholder obligations to reduce its exposure to interest rate
fluctuations. In general, the market value of the Company's fixed maturity
portfolio increases or decreases in inverse relationship with fluctuations in
interest rates, and the yield realized by the Company on new investments
increases or decreases in direct relationship with interest rate changes.

Also, interest rate changes may have temporary effects on the sale and
profitability of the annuity and universal life products offered by the Company.
For example, if interest rates rise, competing investments (such as annuities or
life insurance offered by the Company's competitors, certificates of deposit,
mutual funds, and similar instruments) may become more attractive to potential
purchasers of the Company's products until the Company increases the interest
rate credited to holders of its annuity and universal life products. In
contrast, as interest rates fall, the Company attempts to adjust its credited
rates to compensate for the corresponding decline in investment income. The
Company monitors interest rates and sells annuities and universal life contracts
that permit flexible responses to interest rate changes as part of the Company's
management of interest spreads.

EMERGING ACCOUNTING AND REGULATORY MATTERS

SFAS NO. 121.

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long Lived Assets and Long Lived Assets to be
Disposed of." This standard establishes criteria for the identification and
recognition of the impairment of certain assets to be held and used in an
entity's business. The statement does not apply to financial instruments,
deferred income tax assets or intangibles such as deferred policy acquisition
costs and value of insurance in force acquired. It does, however, apply to
assets such as property and equipment and related goodwill. SFAS No. 121 is
effective for the Company's financial statements after December 31, 1995. While
certain of the Company's assets are subject to the provisions of SFAS No. 121,
management believes the standard will have little impact on the Company's
consolidated financial statements.

STATUTORY ACCOUNTING CODIFICATION.

The National Association of Insurance Commissioners (NAIC) currently is in
the process of codifying statutory accounting practices, the result of which is
expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project, which is not expected to be completed
before 1997, will likely change certain statutory accounting practices. The
codification may result in changes to the permitted or prescribed accounting
practices that the Company's insurance subsidiaries use to prepare their
statutory-basis financial statements.

REGULATORY MATTERS

From time to time various proposals have been advanced for tax law changes,
including the possible adoption of a so-called "flat tax" and the elimination of
the deferral of income taxation on increases in the contract values of annuity
products during accumulation. The effect of these proposals, or of others, if
adopted, on the Company's competitive position with respect to the sale of its
products, is uncertain, but could be material. See "Risk Factors -- Potential
Tax Legislation."

In recent years state regulation of insurance activities has increased and
this increase is anticipated to continue. The Company has not experienced any
material adverse results from such regulation, and does not anticipate that it
will, but the scope and effect of potential future regulation, either at the
state or national level, and the effects of such regulation, are uncertain. See
"Risk Factors -- Regulation."

The entry of banks into the insurance business is anticipated to increase.
The consequences to the Company of such competition is uncertain. See "Risk
Factors -- Competition."

39
<PAGE>
BUSINESS

GENERAL

FBL Financial Group, Inc. was incorporated in Iowa in October 1993, and
through its subsidiaries underwrites, markets and distributes life insurance,
annuities, property-casualty insurance and mutual funds to individuals and small
businesses in 15 midwestern and western states. The Company has exclusive
marketing arrangements with the state Farm Bureau Federations in its territory
and targets sales to approximately 700,000 Farm Bureau member families and other
rural, small town and suburban residents through an exclusive agency force.
Through acquisitions of Rural Security Life in 1993 and Western Life in 1994,
the Company expanded its operations to 15 states, including Wisconsin and the
eight-state Western Life area (the Western Life states). Prior to 1993 the
Company operated only in Iowa, Nebraska, Minnesota, South Dakota and Utah, and
in Kansas sold mutual funds only.

All of the state Farm Bureau Federations in the Company's marketing area are
associated with the American Farm Bureau Federation. With approximately 4.6
million member families in all 50 states, the American Farm Bureau Federation is
the largest grass roots farm and ranch organization in the United States. The
primary goal of the American Farm Bureau Federation is to improve net farm
income and the quality of life of farmers, ranchers and other rural residents
through education and representation with respect to public policy issues.
Management believes that the Company's relationship with the state Farm Bureau
Federations places it in a unique position to serve the insurance and financial
needs of farmers, ranchers, rural and suburban residents, and related
individuals and businesses. Farm Bureau organizations in the Company's
territories tend to be well known and long established, have active memberships
and provide a number of benefits other than financial services. Management
believes the strength of these organizations provides enhanced prestige and
brand awareness for the Company's products and increased access to Farm Bureau
members. Many of the Company's customers are self-employed individuals who are
responsible for providing for their own insurance and retirement needs.
Management believes that Farm Bureau insurance customers tend to be financially
conservative and stable, which, management believes, has led to persistency
greater than industry averages. The Company's life insurance products are
currently available for sale both to Farm Bureau members and to non-members.
Most of the Company's property-casualty insurance products are available for
sale only to Farm Bureau members.

The Company sells its insurance and mutual fund products through an
exclusive Farm Bureau distribution system comprised of approximately 1,795
agents. Approximately 635 agents located in Iowa, Minnesota, South Dakota and
Utah (the multi-line states) sell both life and property-casualty products
offered only through the Company. Approximately 1,160 agents located in the
eight Western Life states and three other states (collectively, the life-only
states) sell only the Company's life insurance, annuity and mutual fund products
(in Kansas only the Company's variable products) and offer property-casualty
products of Farm Bureau property-casualty insurance companies not managed by the
Company. Approximately 76% of all agents are licensed to sell variable life
insurance, variable annuities and mutual funds.

The Company offers a full range of life insurance products including
universal life, variable universal life, whole life, term life and disability
income insurance, together with variable and traditional annuity products. The
Company is establishing variable universal life as its lead product. In the
three month period ended March 31, 1996 and the year ended December 31, 1995,
variable universal life accounted for 36.4% and 37.0%, respectively, of first
year direct life insurance premiums collected. Since its acquisition of Western
Life in 1994, the Company has pursued an aggressive program of training and
licensing the agents in the Western Life states to enable them to market the
Company's variable universal life insurance, variable annuities and mutual
funds. The Company has recently ceased offering medical insurance products but
makes those products available to its agents through affiliations with other
carriers. The Company also provides a portfolio of mutual funds and asset
management services to third parties.

40
<PAGE>
Bureau Mutual pool). All of the companies participating in the Farm Bureau
Mutual pool are managed by the Company. The current participation of Utah
Insurance in the Farm Bureau Mutual pool, which had net premiums written of
$57.2 million in the three month period ended March 31, 1996 and $235.6 million
in the year ended December 31, 1995, is 8%. Management anticipates that during
the second quarter of 1996 the share of Utah Insurance in the Farm Bureau Mutual
pool will be increased to 20% retroactive to January 1, 1996. Effective January
1, 1996, the Farm Bureau Mutual pool participates through a loss pooling
agreement in business written in Arizona and New Mexico by Farm Bureau
affiliated companies managed by the Company, thereby providing further
geographic diversification of risk.

Farm Bureau Life is rated "A+ (Superior)", Western Life is rated "A
(Excellent)", and the Farm Bureau Mutual pool is rated "Ap (Excellent)" by A.M.
Best. A.M. Best ratings consider the claims paying ability of the rated Company
and are not a rating of the investment worthiness of the rated Company. See
"Glossary of Selected Insurance Terms -- A.M. Best rating."

BUSINESS STRATEGY

The Company's current management team which was appointed in 1991 has
initiated a strategy focused on enhancing profitability and expanding its market
territory. The Company's strategy is designed to capitalize on the Company's
exclusive association with state Farm Bureau Federations in its operating
territory. Key components of the Company's strategy include:

INCREASING SALES. The Company has significant opportunity to increase its
sales through cross selling life insurance products to Farm Bureau members who
already own property-casualty policies offered by the Company or other Farm
Bureau affiliated property-casualty companies. For example, in Iowa
approximately 29% of Farm Bureau members own at least one of the Company's life
products, 53% own at least one of the Company's property-casualty products, and
approximately 20% own both, providing significant opportunity for cross selling.
Prior to 1996, agents selling the Company's life insurance products in the
Western Life states were not able to sell the Company's variable life insurance
and variable annuity products. In March 1996, the Company introduced a uniform
portfolio of life insurance and annuity products throughout its market
territory. This portfolio improves the products available to many agents and
expands the offering of variable products into all states in the Company's
territory. Additionally, the Company seeks to enhance agent productivity through
a restructured incentive compensation program and more effective and increased
training.

41
<PAGE>
REDUCING OPERATING EXPENSES. The Company has focused on reducing operating
expenses through reengineering projects and consolidation of operations and
systems. These efforts have resulted in significant cost savings and a 25%
reduction in job positions over the last three years. Management intends to seek
further expense improvements from continuing reengineering efforts.

MARKETING

MARKET AREA

The following map shows the states in which the Company's operations are
conducted:

[Map showing multi-line states, life only states
and variable products only state]

The Company's target market consists primarily of farmers, ranchers, rural
and suburban residents and related individuals and businesses. Management
believes that this target market represents a relatively financially
conservative and stable market which is generally familiar with Farm Bureau and
the benefits of Farm Bureau membership. Many of the Company's customers are self
employed individuals who are responsible for providing for their own insurance
needs. Their financial planning needs tend to focus on security, primary
insurance needs and retirement savings.

AFFILIATION WITH FARM BUREAU

Many of the Company's customers are members of Farm Bureau organizations
affiliated with the American Farm Bureau Federation, the nation's largest grass
roots farm and ranch organization with 4.6 million member families. In order to
market insurance products in a given state using the "Farm Bureau" and "FB"
designations and related trademarks and service marks, a company must have
permission from the state's Farm Bureau Federation. Historically, these
marketing rights have only been granted to companies owned by or closely
affiliated with Farm Bureau Federations. For each of the 15 states in the
Company's market territory, the Company has the exclusive right to use the "Farm
Bureau" name and "FB" logo for marketing the products it sells in that state.

The American Farm Bureau Federation has the right to terminate the Company's
right to use the "Farm Bureau" and "FB" designations as to all states (i) in the
event of a material breach of the trademark license not cured by the Company
within 60 days, (ii) immediately in the event of termination by the American
Farm Bureau of the Iowa Farm Bureau's membership in the American Farm Bureau or
(iii) in the event of a material breach of the Iowa Farm Bureau Federation's
membership agreement with the American Farm Bureau Federation, including by
reason of the failure of the Iowa Farm Bureau Federation to cause the Company to
adhere to the American Farm Bureau Federation's policies. Each state Farm Bureau
federation in the Company's trade territory could terminate the right of the
Company to use the Farm Bureau designations in that particular state without
cause on 60 days' notice. Management believes that the occurrence of any such
termination is highly unlikely.

Management believes its relationship with Farm Bureau provides a number of
advantages. Farm Bureau organizations in the Company's territories tend to be
well known and long established, have active memberships and provide a number of
benefits other than financial services. Management believes the strength of
these organizations provides enhanced prestige and brand awareness for the
Company's products and increased access to Farm Bureau members. Additionally,
Farm Bureau members provide a financially conservative and stable target market
which has resulted in persistency for the Company's products that exceeds
industry averages.

The Company's life insurance products are currently available for sale to
both members and non-members. Most of the Company's property-casualty products
are available only for sale to Farm Bureau members. Annual Farm Bureau
memberships generally cost $30 to $140 and are available to individuals and
families who are farmers and ranchers, and to the general public as well.

To facilitate the Company's working relationship with state Farm Bureau
organizations, the President of each of the 15 state Farm Bureau federations in
the Company's market territory serves on the Company's Board of Directors.
Pursuant to a royalty agreement with the Company, each state Farm Bureau
federation or

42
<PAGE>
its assignee benefits from its relationship with the Company through receipt of
royalties on the sale of the Company's products in the state. In the three month
period ended March 31, 1996 and the year ended December 31, 1995, total
royalties paid to Farm Bureau organizations were approximately $244,000 and
$974,000, respectively.

Beginning in 1996, the Company entered into new marketing arrangements with
all of the Farm Bureau property-casualty companies in its marketing area, both
affiliated and non-affiliated, pursuant to which the property-casualty companies
develop and manage their common agency force for a fee in the nature of an
overwrite commission based on first year life insurance premiums and annuity
deposits. The over-write commissions are generally equal to one-third of the
first year commissions paid to the agent by the Company. It is anticipated that
the overwrite commissions paid by Farm Bureau Life for 1996 will be
approximately $3.1 million and for Western Life approximately $2.0 million.

The Company is assisted in its relationships with the property-casualty
organizations by an Advisory Committee, consisting of the general manager of
each Farm Bureau property-casualty insurance company in the Company's market
territory. The Advisory Committee meets on a regular basis to coordinate efforts
and concerns relating to the agency force and other related matters. Management
views the Advisory Committee as an important contributor to the Company's
success in marketing its products through the Farm Bureau system.

All of the state Farm Bureau federations in the Company's marketing area are
associated with the American Farm Bureau Federation. The primary goal of the
American Farm Bureau Federation is to improve net farm income and the quality of
life of farmers, ranchers and other rural residents through education and
representation with respect to public policy issues. There are currently Farm
Bureau federations in all 50 states and Puerto Rico. Within each state, Farm
Bureau is generally organized at the county level. Farm Bureau programs
generally include policy development, state and national lobbying activities,
leadership development, speaker corps, media relations, crime prevention,
marketing clubs, women's activities, young farmers activities, promotion and
education and commodity promotion activities. Member services provided by Farm
Bureau vary state by state but generally include newspapers and magazines, theft
and arson rewards, eye care programs, vehicle purchase and leasing programs,
accidental death insurance, credit card programs, computerized farm accounting
services, electronic information networks, feeder cattle procurement services,
health care insurance and financial planning services.

EXCLUSIVE AGENCY FORCE

The Company's life insurance, disability income insurance, property-casualty
insurance and mutual funds are marketed throughout its market territory by an
exclusive Farm Bureau force of approximately 1,795 agents. The Company has a
written contract with each agent. The contracts specify and limit the authority
of the agents to solicit insurance applications on behalf of the Company;
describe the nature of the independent contractor relationship between the
Company and the agent; define the agent as an exclusive agent limited to selling
insurance of the types sold on behalf of the Company, only for the Company and
its affiliates; allow either party to immediately terminate the contract;
specify the compensation payable to the agents; reserve ownership of customer
lists to the Company, and set forth all other terms and conditions of the
relationship.

Sales activities of the Company's agents focus on personal contact and on
cross selling the multiple lines of products available through Farm Bureau
affiliated companies. Agents' offices are generally located in or serve as the
Farm Bureau office for their community. Management believes that Farm Bureau
name recognition and access to Farm Bureau membership leads to additional
customers and cross selling of additional insurance products.

The Company's agents are independent contractors and exclusive agents of the
Company. In the multi-line states, the Company's agents are supervised by agency
managers and assistant managers employed by Farm Bureau Mutual and under the
direction of the Company. There are approximately 385 agents and managers in
Iowa, 130 in Minnesota, 45 in South Dakota and 75 in Utah, all of whom market a
full range of the Company's life insurance and property-casualty products and
most of whom market the Company sponsored mutual funds.

43
<PAGE>
In the life-only states, the Company's life insurance products and its
sponsored mutual funds are marketed through agents of the property-casualty
company affiliated with the Farm Bureau Federation in each state. These agents
market the Company's life and mutual fund products (in Kansas, variable products
only) on an exclusive basis and market the property-casualty products of such
affiliated property-casualty companies. The agents are under the management of
such Farm Bureau affiliated property-casualty companies. Agents as well as
agency managers in the life-only states are independent contractors of the
Company. Average life production per agent in the life-only states has
historically been less than average life production per agent in the multi-line
states. Management believes that the introduction of variable products and more
competitive products combined with an enhanced compensation structure will
provide significant opportunities to increase life production per agent in the
life-only states.

In 1995 the Company began to market variable life insurance and annuities in
Kansas in addition to Company sponsored mutual funds previously offered in that
state, through agents of the Kansas Farm Bureau insurance companies.

Over 98% of the agents in the multi-line states are NASD licensed to sell
the Company's variable life and annuity products and sponsored mutual funds.
Over 96% of Nebraska agents and 72% of agents in Wisconsin are also NASD
licensed. The Company has initiated a training program for NASD licensing of the
agents in the Western Life states. Currently 46% of Western Life's agents are
NASD licensed and the Company expects a substantial additional number to become
NASD licensed during 1996.

The Company is responsible for product and sales training for all lines of
business in the multi-line states, and for training the agency force in life
insurance products and sales methods in the life-only states.

Effective January 1, 1996, the Company initiated a new compensation program
for agents and managers. The new plan focuses on increased agent production
through the reduction of the fixed portions of agent compensation and increased
incentives for writing profitable property-casualty business. The new program is
consistent for life insurance compensation in all 14 states, and provides a
competitive basis on which to price its products.

44
<PAGE>
The Company structures its agents' life products compensation system to
encourage production and persistency. Agents receive commissions for new life
insurance and annuity sales and service fees on premium payments in subsequent
years. Production bonuses are paid based on the volume of new life business
written in the prior 12 months and on premium payments in the first three years
subsequent to when new business is written. Production bonuses allow agents to
increase their compensation significantly. Persistency is a common measure of
the quality of life business and is included in calculating the bonus to either
increase or decrease (or even eliminate) the production bonuses earned, because
the Company is willing to pay added incentives for higher volumes of business
only as long as the business is profitable. In 1995, in the multi-line states
approximately 48% of agent compensation was derived from the sale of life and
annuity products.

For property-casualty business written in the multi-line states, the
Company's compensation system is designed to encourage production and
profitability. Agents receive commissions and service fees which are increased
or reduced according to production level and profitability to the Company as
measured by loss ratio. An agent can earn higher property-casualty commissions
for achievement of production standards in life insurance, property insurance
and casualty insurance, tying compensation to production of all lines of
business. In the life-only states, most of the Farm Bureau property-casualty
companies also adjust property-casualty commissions according to life insurance
production levels.

The focus of agency managers is to recruit and train agents to achieve high
levels of production of profitable business. Agency managers receive overwrite
commissions on each agent's life insurance commissions which vary according to
that agent's productivity level and profitability of business. During the first
three years of an agent's relationship with the Company, the agent's manager
receives additional overwrite commissions to encourage early agent development.

The Life Companies have a variety of incentives and recognitions to focus
agents on production of quality life insurance business. Some recognitions are
jointly conducted with the property-casualty companies. Management believes that
these programs provide significant incentives for the most productive agents.
Approximately 12% to 15% of the agents qualify for the Company's annual
incentive trip. In 1995, agents qualifying for the incentive trip produced
approximately 28% of the Company's first year life premium.

Agent recruiting, training and financing programs are designed to develop a
productive agent for the long term. The three-month agency force retention rate
for the quarter ended March 31, 1996 and one-year agency force retention rate
for 1995 in the multi-line states were approximately 93% and 84%, respectively.
Management believes retention of agents is enhanced because of their ability to
sell both life and property-casualty insurance products, as well as mutual
funds.

RATINGS

Ratings are an important factor in establishing the competitive position of
insurance companies. Farm Bureau Life is rated "A+(Superior)" by A.M. Best, A.M.
Best's second highest rating of 13 ratings assigned to solvent insurance
companies, which currently range from "A++(Superior)" to "D(Very Vulnerable)."
Farm Bureau Life has maintained its existing "A+(Superior)" rating since A.M.
Best first began using this rating methodology. Western Life is rated "A
(Excellent)" and the pool which includes Utah Insurance is rated "Ap(Excellent)"
by A.M. Best. A.M. Best ratings consider the claims paying ability of the rated
Company and are not a rating of the investment worthiness of the rated Company.
See "Glossary of Selected Insurance Terms -- A.M. Best rating."

LIFE INSURANCE SEGMENT

PRODUCTS

The Life Companies are principally engaged in selling a varied portfolio of
insurance products including traditional permanent life insurance, universal
life, term life, annuities and disability income insurance to middle income
individuals in the rural and suburban areas of its market territory. The Farm
Bureau Life portfolio offered in the multi-line states has for several years
included and emphasized variable universal life and since 1994, variable
annuities. As a result of the consolidation of Farm Bureau Life and Western Life
in 1994, the Company's variable products are now being introduced in the eight
Western Life states. They are

45
<PAGE>
also being sold, beginning in June 1995, in Kansas through arrangements with the
Kansas Farm Bureau insurance organizations. In March 1996, the Company
introduced a uniform portfolio for all new life insurance sales, which includes
the plans and products described below, throughout the territory. Management
believes the new uniform portfolio will produce increased sales, as well as
result in increased administrative efficiencies.

VARIABLE UNIVERSAL LIFE INSURANCE. The Company is establishing variable
universal life insurance as its lead life insurance product. This product is
offered by very few multi-line companies. The variable universal life policy
provides permanent life insurance protection with a flexible premium structure
which allows the customer to pre-fund future insurance costs and accumulate
savings on a tax-deferred basis. Premiums received, less policy assessments for
administration expenses and mortality costs, are credited to the policyholder's
account balance. The policyholder has the ability to direct cash value of the
policy to an assortment of variable sub-accounts, all managed by the Company for
an additional fee, and assume the investment risk passed through by those funds.
Variable universal life policyholders can also elect a declared interest option
under which the cash values are credited with interest as declared by the
Company. For the three month period ended March 31, 1996 and the year ended
December 31, 1995, variable universal life represented 9.1% and 7.8%,
respectively, of first year direct life insurance premiums collected in the
life-only states, 58.9% and 62.0%, respectively, of the Company's first year
direct life premiums collected in the multi-line states and 36.4% and 37.0%,
respectively, of the Company's total first year direct life insurance premiums
collected. All the variable sub-accounts are managed by the Company and offer as
investment options the Company's sponsored mutual funds. See "-- Variable
Sub-Accounts and Mutual Funds."

UNIVERSAL LIFE INSURANCE. The Company offers a universal life policy which
is similar in design to the variable universal life policy, but without the
additional investment options for the cash value. Interest is credited to the
cash value at rates periodically set by the Company. Agents need not be NASD
registered to offer this product. The Company markets a last survivor universal
life policy designed especially for the estate planning market.

TRADITIONAL LIFE INSURANCE. The Company offers traditional participating
whole life insurance products. Participating whole life insurance provides
benefits for the life of the insured. It provides level premiums and a level
death benefit and requires payments in excess of mortality charges in early
years to offset increasing mortality costs in later years. Under the terms of
these policies, policyholders have a right to participate in the surplus of the
Company to the extent determined by the board of directors, generally through
annual participating policy dividends. In the three month period ended March 31,
1996 and the year ended December 31, 1995, participating life policies
represented 33.5% and 35.6%, respectively, of first year life insurance
collected premiums. The Company has a substantial book of in-force participating
policies with persistency which has historically exceeded industry averages.

The Company currently markets non-participating term insurance policies that
provide life insurance protection for a specified period. Term insurance is
mortality based and generally has no accumulation values. The Company may change
the premium scales at any time but may not increase rates above guaranteed
rates. Historically, agents in the life-only states have sold more term
insurance. In the three month period ended March 31, 1996 and the year ended
December 31, 1995, sales of term insurance represented 21.9% and 22.5%,
respectively, of first year direct life premiums collected in the life-only
states. With the introduction of variable products in the Western Life states
the Company expects the relative amount of term insurance sold will decline. In
the past, the Company sold participating term insurance, but has discontinued
such sales.

ANNUITIES. The Company offers annuities which are generally marketed to
individuals in anticipation of retirement. The Company offers variable and
traditional annuities in the form of flexible premium deferred annuities which
allow policyholders to make contributions over a number of periods. For
traditional annuity products, policyholder account balances are credited
interest at rates determined by the Company. For variable annuities,
policyholders have the right to direct the cash value of the policy into an
assortment of sub-accounts managed by the Company, thereby assuming the
investment risk passed through by those sub-accounts. Approximately 63% of the
Company's existing individual annuity business based on account

46
<PAGE>
balances is held in qualified retirement plans. To further encourage
persistency, a surrender charge against the policyholders' account balance is
imposed for early termination of the annuity contract within a specified period
after its effective date. See "-- Variable Sub-Accounts and Mutual Funds."

DISABILITY INCOME INSURANCE. The Company writes a number of individual
disability policies. This type of policy provides for payment of benefits in the
event of a disabling accident or illness. Disability benefits reimburse the
policyholder for a specified dollar amount payable over a specific time period
or for the duration of the disability. Disability is defined as inability to
pursue the policyholder's own occupation for the first two years after
disability, and inability to pursue any occupation thereafter. The risks insured
are similar to those insured in a medical expense policy but the claim costs are
much more predictable. Since the policies are guaranteed renewable rather than
noncancellable, the Company may change the premium scale at any time based on
claim costs incurred, subject to regulatory approval. Some disability income
products offer flexibility in coverage amounts as financial needs change.

47
<PAGE>
The following table sets forth the first year and renewal premiums collected
for the Company's life, annuity and accident and health products for the periods
indicated:

COLLECTED PREMIUMS BY PRODUCT

<TABLE>
<CAPTION>
FOR THE THREE MONTH
PERIOD ENDED MARCH
31, FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Direct life premiums collected:
Universal life
First year.................................... $ 707 $ 595 $ 2,452 $ 2,321 $ 4,758 $ 2,399 $ 4,040
Renewal....................................... 11,944 12,338 47,901 49,171 24,712 20,554 20,371
--------- --------- --------- --------- --------- --------- ---------
Total....................................... 12,651 12,933 50,353 51,492 29,470 22,953 24,411
Variable universal life
First year.................................... 1,804 1,794 7,689 11,603 9,708 8,939 7,972
Renewal....................................... 3,983 3,120 13,625 10,054 6,914 3,303 521
--------- --------- --------- --------- --------- --------- ---------
Total....................................... 5,787 4,914 21,314 21,657 16,622 12,242 8,493
Participating whole life
First year.................................... 1,658 1,727 7,390 9,245 1,500 744 562
Renewal....................................... 14,390 13,527 54,743 51,058 44,362 42,823 44,866
--------- --------- --------- --------- --------- --------- ---------
Total....................................... 16,048 15,254 62,133 60,303 45,862 43,567 45,428
Other
First year.................................... 784 731 3,242 3,137 876 781 743
Renewal....................................... 3,135 2,988 13,891 13,622 7,136 4,318 3,760
--------- --------- --------- --------- --------- --------- ---------
Total....................................... 3,919 3,719 17,133 16,759 8,012 5,099 4,503
--------- --------- --------- --------- --------- --------- ---------
Total direct life......................... 38,405 36,820 150,933 150,211 99,966 83,861 82,835
Reinsurance ceded................................. (838) (786) (4,190) (3,891) (1,513) (1,271) (1,228)
--------- --------- --------- --------- --------- --------- ---------
Total life, net of reinsurance.................... 37,567 36,034 146,743 146,320 98,453 82,590 81,607
Direct annuity premiums collected:
Traditional annuities........................... 27,778 20,396 70,810 75,154 73,973 61,362 55,718
Variable annuities.............................. 2,869 785 5,962 13,392 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total annuities............................. 30,647 21,181 76,772 88,546 73,973 61,362 55,718
Reinsurance ceded................................. -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total annuities, net of reinsurance............... 30,647 21,181 76,772 88,546 73,973 61,362 55,718
Direct accident and health premiums collected:
Medical and disability -- individual............ 2,682 2,495 19,551 19,832 8,583 5,625 5,205
Medical and disability -- group................. 287 311 1,384 (4,370) 42,581 20,574 18,099
--------- --------- --------- --------- --------- --------- ---------
Total accident and health................... 2,969 2,806 20,935 15,462 51,164 26,199 23,304
Reinsurance assumed............................... -- -- -- (52) -- 1,562 --
Reinsurance ceded................................. (324) (91) (10,912) (19,940) (4,614) (3,649) (3,142)
--------- --------- --------- --------- --------- --------- ---------
Total accident and health, net of reinsurance..... 2,645 2,715 10,023 (4,530) 46,550 24,112 20,162
--------- --------- --------- --------- --------- --------- ---------
Total collected premiums, net of reinsurance...... $ 70,859 $ 59,930 $ 233,538 $ 230,336 $ 218,976 $ 168,064 $ 157,487
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

Total life insurance collected premiums, net of reinsurance, increased to
$146.7 million in 1995 from $81.6 million in 1991. This growth was due to the
acquisitions of Rural Security Life in 1993 and of Western Life in 1994 combined
with increased production and strong persistency. Rural Security Life added life
collected premium of $13.1 million in 1993 and Western Life added life collected
premium of $45.4 million in 1994.

Total direct collected premiums for the Company's lead product, variable
universal life, increased to $21.7 million in 1994 from $8.5 million in 1991.
This growth was due to the Company's continued emphasis on this product combined
with a high level of consumer demand for variable products in 1993 and 1994.
Total collected premiums for variable life insurance, however, declined
$343,100, or 1.6%, to $21.3 million in 1995

48
<PAGE>
from $21.7 million in 1994. Management believes sales of variable universal life
were hampered by the rising interest rate environment and poor overall equity
market returns in 1994. Industry sales of variable universal life declined an
estimated 13% in 1995 compared to 1994 according to surveys performed by LIMRA
International.

Total direct collected premiums on participating whole life increased to
$62.1 million in 1995 from $45.4 million in 1991. First year collected premiums,
however, declined $1.9 million, or 20.1%, to $7.4 million in 1995 from $9.2
million in 1994. Management believes this decrease was caused by disruptions to
marketing efforts caused by the consolidation of the insurance operations,
reengineering activities and changes in the agents' compensation structure which
occurred during 1995.

Total direct annuity collected premiums increased to $76.7 million in 1995
from $55.7 million in 1991. The Company introduced variable annuities in January
1994 and collected premiums thereon of $13.4 million in that year. Collected
premiums for variable annuities declined $7.4 milion, or 55.5%, to $6.0 million
in 1995 due to similar reasons cited above for variable universal life.

The Western Life acquisition also resulted in additional traditional annuity
premium collections in 1994 of $25.1 million. However, this increase was offset
by a $23.9 million decline in traditional annuities sold by Farm Bureau Life and
FBL Insurance Company due to a change in the Company's marketing strategy in
1994 to emphasize the sale of its variable annuity products.

Total direct accident and health collected premiums, net of reinsurance,
decreased $10.1 million, to $10.0 million in 1995 from $20.2 million in 1991.
This decline was due primarily to the Company's exiting its medical insurance
business in 1994 offset by growth in disability income collected premiums.

Total collected premiums, net of reinsurance, increased $10.9 million, or
18.2%, to $70.9 million for the three month period ended March 31, 1996 from
$60.0 million for the three month period ended March 31, 1995 primarily due to a
$7.5 million group annuity deposit collected from the Western Life pension plan
during the three month period ended March 31, 1996.

49
<PAGE>
LIFE INSURANCE AND ANNUITIES IN FORCE

The following table sets forth information regarding life insurance and
annuities in force at the end of each period presented:

LIFE INSURANCE AND ANNUITIES IN FORCE

<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTH
PERIOD AS OF OR FOR THE YEAR ENDED DECEMBER 31,
ENDED MARCH 31, ----------------------------------------------------------
1996 1995 1994 1993 1992 1991
----------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT FACE AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Life insurance
Universal
Number of policies.............. 105,386 105,256 103,623 72,224 54,302 50,452
Direct statutory premiums....... $ 18,584 $ 72,115 $ 74,852 $ 51,140 $ 37,805 $ 36,975
Policyholder account balances... 511,573 503,877 467,773 300,989 185,419 158,587
Direct face amounts............. 8,134 8,096 7,841 5,907 4,112 3,700
Traditional
Number of policies.............. 266,712 267,452 267,590 207,674 186,560 192,344
Direct statutory premiums....... $ 19,813 $ 80,467 $ 76,973 $ 48,973 $ 46,123 $ 45,757
Future policy benefits.......... 622,337 617,376 597,961 488,533 423,947 411,888
Direct face amounts............. 8,190 8,113 7,380 4,056 3,258 3,128
Total life
Number of policies.............. 372,098 372,708 371,213 279,898 240,862 242,796
Direct statutory premiums....... $ 38,397 $ 152,582 $ 151,825 $ 100,113 $ 83,928 $ 82,732
Face amounts.................... 16,324 16,209 15,221 9,963 7,370 6,828
Annuities
Number of policies.............. 50,031 49,575 48,409 33,194 30,153 27,917
Direct statutory premiums....... $ 35,735 $ 87,655 $ 99,381 $ 86,418 $ 75,455 $ 70,337
Policyholder account balances... 798,329 779,827 731,254 508,447 454,221 406,825
Future policy benefits.......... 112,070 110,412 108,115 87,244 66,080 59,958
</TABLE>

The Company has experienced low lapse rates compared to the life insurance
industry, as indicated in the following table:

<TABLE>
<CAPTION>
LAPSE RATE FOR THE LAPSE RATES FOR THE YEAR ENDED DECEMBER 31,
THREE MONTH PERIOD
ENDED MARCH 31, ----------------------------------------------------
1996 1995 1994 1993 1992
--------------------- ------------ -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Company life insurance lapse rates............. 2.0% 7.9% 7.2%(1) 5.9% 6.0%
Industry life insurance lapse rates............ (2) (2) 8.9 9.7 10.5
</TABLE>

- ------------------------
(1) The increase in the Company's lapse rate from 1993 to 1994 was largely
because of the acquisition of the business of Western Life in 1994.

(2) The industry lapse rates for the three month period ended March 31, 1996 and
the year ended December 31, 1995 are not available as of the date of this
prospectus.

EXIT FROM MEDICAL EXPENSE INSURANCE

Prior to 1994, the Company sold indemnity medical insurance. Effective
January 1, 1994, the Company transferred all of its group medical insurance to
other carriers and entered into a 100% coinsurance agreement with a third party
carrier for its individual medical insurance. Although there was some run-off of

50
<PAGE>
the group medical line during 1994, the Company effectively removed itself from
the medical insurance business as of January 1, 1994. The Company helps its
customers meet their medical insurance needs through marketing arrangements with
various non-affiliated companies.

UNDERWRITING

The Company has adopted and follows detailed, uniform underwriting standards
and procedures designed to properly assess and quantify life insurance risks
before issuing policies to individuals. To implement these procedures, the
Company employs a professional underwriting staff of eleven underwriters who
have an average of 22 years of experience in the insurance industry. The
Company's underwriters review each applicant's written application, which is
prepared under the supervision of the Company's agents, and any required medical
records. The Company employs blood and urine testing to provide additional
information on applications of over $100,000 face amount. Based on the results
of these tests, the Company may adjust the mortality charge or decline coverage
completely. Any nicotine use by a life insurance applicant within the preceding
one year results in a substantially higher mortality charge. In accordance with
industry practice, material misrepresentation on a policy application can result
in the cancellation by the Company of the policy upon the return of any premiums
paid.

The increasing incidence of Acquired Immune Deficiency Syndrome (AIDS) has
not adversely affected the Company's mortality experience. The Company considers
AIDS information and testing results in its underwriting and pricing decisions.
For all individual life insurance applications of over $100,000 face amount, the
applicant must submit to a blood test which includes HIV antibody testing. The
Company has incurred negligible death benefits due to known AIDS-related deaths.

OPERATIONS

The Company's life insurance and annuity operations have realized
significant cost efficiencies as a result of reengineering and the
consolidations with Rural Security Life and Western Life.

Budgetary controls, service quality and business processing standards have
been established and are closely monitored as a result of reengineering the
Company's life operations. Detailed internal financial and transactional
reporting allows analysis of all elements of the Company's life operations
identifying cost savings and service improvement opportunities.

The consolidation of Rural Security Life's and Western Life's operations
with the Company has resulted in the centralization of most support functions
such as product development, marketing, accounting and financial reporting,
regulatory compliance, information technology and investment management in the
home office in West Des Moines, Iowa. In addition, the underwriting, policy
issue and policy service functions of Rural Security Life were moved to West Des
Moines allowing a cessation of life operations in Madison, Wisconsin. In order
to provide continuity of service with the agency force in Western Life's
marketing area, the Company maintains a service center in Denver, Colorado to
provide underwriting, policy issue and policy service.

These consolidations, along with the Company's exit from the medical
insurance business, have resulted in the elimination of approximately 200 job
positions -- over 40% of the combined life insurance workforces.

REINSURANCE

In keeping with industry practices, the Company reinsures portions of its
life insurance and disability income exposure with unaffiliated insurance
companies under traditional indemnity reinsurance agreements. New insurance
sales are reinsured above prescribed limits and do not require the reinsurer's
prior approval within certain guidelines. These treaties are automatically
renewed and nonterminable for the first 10 years with regard to cessions already
made and are terminable after 90 days with regard to future cessions. After 10
years the Company has the right to terminate and can generally discontinue the
reinsurance on a block of business. This is normally done to increase the
Company's retention on older business to the same level as current cessions.

Generally, the Company enters into indemnity reinsurance arrangements to
assist in diversifying its risks and to limit its maximum loss on risks that
exceed the Company's policy retention limits. The retention limits

51
<PAGE>
for Farm Bureau Life are $500,000 and for Western Life are $250,000 per life.
Indemnity reinsurance does not fully discharge the Company's obligation to pay
claims on the reinsured business. The Company as the ceding insurer remains
responsible for policy claims to the extent the reinsurer fails to pay such
claims. No reinsurer of business ceded by the Company has failed to pay any
material policy claims (either individually or in the aggregate) with respect to
such ceded business. There is currently no life reinsurance with affiliated
insurance companies, and all reinsurance entered into is in the ordinary course
of business. The Company continually monitors the financial strength of its
reinsurers. If for any reason such reinsurance coverages would need to be
replaced, the Company believes that replacement coverages from financially
responsible reinsurers would be available. A summary of the Company's primary
reinsurers as of December 31, 1995 is as follows:

<TABLE>
<CAPTION>
A.M. BEST
REINSURER RATING
- --------------------------------------------------------------------------- ------------- AMOUNT OF
IN FORCE CEDED
---------------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Lincoln National Life Insurance Company.................................... A+ $ 394.4
Business Men's Assurance Company........................................... A 189.7
Frankona America Life Reassurance Company.................................. A 150.8
All other.................................................................. 218.9
------
Total.................................................................... $ 953.8
------
------
</TABLE>

POLICY RESERVES

The policy liabilities reflected in the consolidated financial statements
are calculated in accordance with GAAP. Liabilities for universal life and
annuity policies consist of the premiums and considerations received plus
accumulated credited interest, less accumulated policyholder assessments and
benefits. For traditional policies (all of which are participating), liabilities
for future policy benefits have been provided based on the net level premium
method, including assumptions as to interest, mortality and other assumptions
underlying the guaranteed policy cash values. See Note 1 of Notes to
Consolidated Financial Statements for additional information regarding policy
liability assumptions under GAAP.

INTEREST CREDITING AND PARTICIPATING DIVIDEND POLICY

The Company's dividend/interest rate committee meets monthly, or more
frequently if required, to review and establish current period interest rates
based upon existing and anticipated investment opportunities. This applies to
new sales and to universal life insurance and annuity products after any initial
guaranteed period. Earnings on assets are examined by portfolio. Interest rates
are then established based on each product's required interest spread and
competitive market conditions at the time.

Farm Bureau Life and Western Life pay dividends, credit interest and
determine other nonguaranteed elements on their individual insurance policies
depending on the type of product. Some elements, such as dividends, are
generally declared for a year at a time. Interest rates and other nonguaranteed
elements are determined based on experience as it emerges and with regard to
competitive factors.

Policyholder dividends are currently being paid and will continue to be paid
as declared on traditional participating whole life business, some term
business, and the participating annuity policies. Policyholder dividend scales
are generally established annually and are based on the performance of assets
supporting these policies, the mortality experience of the policies, and expense
levels. Other factors, such as changes in tax law, may be considered as well.

Average credited rates on the Company's universal life contracts were 6.77%,
6.68%, 6.71% and 7.52%, and average credited rates on annuity contracts were
6.78%, 6.49%, 6.16% and 6.97% for the three month period ended March 31, 1996
and the years ended December 31, 1995, 1994 and 1993, respectively.

VARIABLE SUB-ACCOUNTS AND MUTUAL FUNDS

The Company sponsors the FBL Series Fund, Inc. (the Series Fund) and FBL
Variable Insurance Series Fund (the Insurance Series Fund) which are open-end,
diversified series management investment companies. The Series Fund is available
to the general public. The Insurance Series Fund offers its shares,

52
<PAGE>
without a sales charge, only to the separate accounts of participating insurance
companies as the investment medium for variable annuity contracts or variable
life insurance policies issued by the participating insurance companies.
Currently, the Company is the only participating company with its variable
annuity and variable universal life separate accounts investing in the Insurance
Series Fund. The Company uses only the Insurance Series Fund to provide variable
annuity and variable universal life insurance sub-accounts to its customers.
These Funds each currently issue shares in six investment series (a Portfolio or
collectively the Portfolios) with distinct investment objectives: (1) long-term
capital appreciation with current income as a secondary objective; (2) as high a
level of current income as is consistent with investment in a portfolio of debt
securities deemed to be of high quality; (3) as high a level of current income
as is consistent with investment in a portfolio of fixed-income securities rated
in the lower categories of established rating services; (4) a high total
investment return of income and capital appreciation by investing in common
stocks, high quality debt securities and preferred stocks and high quality
short-term money market instruments; (5) a high current income consistent with
liquidity and stability of principal, and (6) an unmanaged index fund, which
seeks growth of capital and income by investing primarily in common stocks of
designated well-capitalized, established companies. The net assets of the
equity, the managed and the money market portfolios at March 31, 1996 aggregated
$170.6 million and the net assets of the bond portfolios on that date were $23.7
million.

FBL Investment Advisory Services, Inc. (the Advisor), a subsidiary of the
Company, receives an annual fee based on the average daily net assets of each
Portfolio that ranges from 0.25% to 0.60% for the Series Fund and from 0.20% to
0.55% for the Insurance Series Fund. The Advisor also serves as distributor and
principal underwriter for the Funds. The Advisor receives from the Series Fund a
0.50% annual distribution services fee, a 0.25% annual administration services
fee and a 0.05% accounting fee, and receives directly any contingent deferred
sales charge paid on the early redemption of shares. FBL Marketing Services,
Inc., another subsidiary of the Company, serves as the principal dealer for
Funds and receives commissions and service fees.

The Company also sponsors a money market fund, FBL Money Market Fund, Inc.
(Money Market Fund) which is a no-load open-end diversified management
investment company with an investment objective of maximum current income
consistent with liquidity and stability of principal. The Advisor acts as the
investment advisor, manager and principal underwriter of the Money Market Fund
and receives an annual management fee, accrued daily and payable monthly, on a
graduated basis commencing at 0.5% of the first $200 million of average daily
assets, and certain other fees. The net assets of the Money Market Fund were
$21.8 million at March 31, 1996.

PROPERTY-CASUALTY SEGMENT

PRODUCTS

The Company underwrites the following major lines of property-casualty
insurance: automobile, homeowners, farm and ranch owners, workers' compensation,
crop, and other.

PERSONAL AND COMMERCIAL AUTOMOBILE coverage insures individuals and
businesses, respectively, against losses incurred from personal bodily injury,
bodily injury to third parties, property damage to an insured's vehicle, and
property damage to other vehicles and other property.

HOMEOWNERS INSURANCE insures individuals for losses to their residences and
personal property, such as those caused by fire, wind, hail, water damage, theft
and vandalism, and against third-party liability claims.

FARM AND RANCH OWNERS insurance expands the personal liability and property
protection of a homeowners policy to include farm and ranch liabilities, as well
as farm and ranch property protection.

WORKERS' COMPENSATION coverage insures employers against employee medical
and indemnity claims resulting from injuries related to work. Workers'
compensation policies are often written in conjunction with other commercial
policies.

53
<PAGE>
CROP INSURANCE includes crop hail and multi-peril crop insurance. Crop hail
provides protection from financial loss to an insured's crop investments from
hail. Multi-peril crop insurance protects from perils including drought, frost,
flood and insect damage.

The Company also offers a variety of other products, such as umbrella
policies, personal inland marine endorsements, business owner/commercial
package, garage liability, general liability and home venture coverages.

The Company also participates in reinsurance arrangements. See "--
Reinsurance Arrangements."

FARM BUREAU MUTUAL POOL

Utah Insurance participates in the Farm Bureau Mutual pool with Farm Bureau
Mutual and South Dakota Mutual, with all three companies operating under the
common management of the Company. All retained insurance business of Utah
Insurance and South Dakota Mutual is assumed by Farm Bureau Mutual. The combined
business is then assumed by the three property-casualty companies, in specified
proportions, not in excess of an amount that would create a net written premium
to surplus ratio that exceeds acceptable industry standards. This allows each
property-casualty company, which may write premiums directly in only one or two
states, to obtain better geographic and business diversification of risk, and
therefore tends to create greater stability in the underwriting results.

In the pool, all premiums, losses, loss adjustment expenses, acquisition and
other underwriting and administrative expenses are combined and distributed
proportionately to each property-casualty company, thus providing the three
companies with substantially the same underwriting results. The overall
operating results of the three companies differ based on their respective
investment income and other miscellaneous items.

In addition, effective January 1, 1996, Farm Bureau Mutual entered into a
loss pooling agreement with Western Ag, which, in turn quota share reinsures
business of Western Farm Bureau Mutual. Western Ag and Western Farm Bureau
Mutual are Farm Bureau affiliated companies in Arizona and New Mexico,
respectively, that are also managed by the Company. Under the loss pooling
agreement all direct and assumed premiums, losses and allocated loss adjustment
expenses (but not acquisition and other general underwriting expenses) of Farm
Bureau Mutual, Utah Insurance and South Dakota Mutual will be pooled with these
same items for Western Ag and Western Farm Bureau Mutual. Thus, further
geographic and business diversification of risk for Utah Insurance will be
achieved without significant change in the size of the Farm Bureau Mutual pool
or its total premium volume.

The following table sets forth net premiums earned by the Farm Bureau Mutual
pool by product line for the periods indicated:

<TABLE>
<CAPTION>
FOR THE THREE
MONTH PERIOD FOR THE YEAR ENDED DECEMBER 31,
ENDED MARCH 31, ----------------------------------------------------------
1996 1995 1994 1993 1992 1991
----------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net premiums earned
Automobile..................... $ 28,333 $ 114,468 $ 111,954 $ 104,739 $ 99,022 $ 91,899
Homeowners..................... 3,956 14,954 13,476 11,658 10,270 9,439
Farm and ranch owners.......... 6,937 26,033 24,577 23,189 21,796 20,597
Workers' compensation.......... 3,261 15,153 14,261 11,363 9,343 7,671
Crop........................... 468 16,457 10,063 12,785 8,130 12,368
Reinsurance.................... 8,037 35,325 37,564 38,675 24,266 20,478
Other.......................... 2,732 11,466 10,328 9,303 9,305 7,456
------- ---------- ---------- ---------- ---------- ----------
Total net premiums earned...... $ 53,724 $ 233,856 $ 222,223 $ 211,712 $ 182,132 $ 169,908
------- ---------- ---------- ---------- ---------- ----------
------- ---------- ---------- ---------- ---------- ----------
</TABLE>

Utah Insurance was an 8% participant in the Farm Bureau Mutual pool through
March 31, 1996. It is anticipated that the Company's participation in the Farm
Bureau Mutual pool will be increased to 20% during the second quarter of 1996,
retroactive to January 1, 1996.

54
<PAGE>
The following table sets forth the 8% share of Utah Insurance in the Farm
Bureau Mutual pool for the periods indicated:

<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR ENDED DECEMBER 31,
MONTH PERIOD ENDED -----------------------------------------------------
MARCH 31, 1996 1995 1994 1993 1992 1991
--------------------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net premiums earned
Automobile........................ $ 2,267 $ 9,158 $ 8,957 $ 8,379 $ 7,921 $ 7,352
Homeowners........................ 316 1,196 1,078 933 822 755
Farm and ranch owners............. 555 2,083 1,966 1,855 1,744 1,648
Workers' compensation............. 261 1,212 1,141 909 747 614
Crop.............................. 37 1,317 805 1,023 651 989
Reinsurance....................... 643 2,826 3,005 3,094 1,941 1,638
Other............................. 219 917 826 744 744 597
------ --------- --------- --------- --------- ---------
Total net premiums earned......... $ 4,298 $ 18,709 $ 17,778 $ 16,937 $ 14,570 $ 13,593
------ --------- --------- --------- --------- ---------
------ --------- --------- --------- --------- ---------
</TABLE>

The following table sets forth net premiums earned by the Farm Bureau Mutual
pool by state for the periods indicated:

<S> <C> <C> <C> <C> <C> <C>
Iowa......................... $ 25,821 $ 116,069 $ 105,890 $ 102,670 $ 94,711 $ 92,956
Minnesota.................... 10,824 46,035 43,512 39,595 36,185 32,707
South Dakota................. 2,593 10,951 10,710 9,373 8,235 7,304
Utah......................... 6,449 25,476 24,547 21,399 18,735 16,463
Other (assumed).............. 8,037 35,325 37,564 38,675 24,266 20,478
------- ---------- ---------- ---------- ---------- ----------
$ 53,724 $ 233,856 $ 222,223 $ 211,712 $ 182,132 $ 169,908
------- ---------- ---------- ---------- ---------- ----------
------- ---------- ---------- ---------- ---------- ----------
</TABLE>

The following table sets forth the loss and loss adjustment expense (LAE),
expense and combined ratios of the Farm Bureau Mutual pool for the periods
indicated:

<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR ENDED DECEMBER 31,
MONTH PERIOD ENDED ----------------------------------------------------------
MARCH 31, 1996 1995 1994 1993 1992 1991
----------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Loss and LAE ratios:
Automobile............................ 80.6% 76.7% 80.0% 84.9% 82.1% 83.4%
Homeowners............................ 60.4 76.0 89.4 85.0 82.8 78.5
Farm and ranch owners................. 77.7 75.5 84.4 83.5 71.7 84.9
Workers' compensation................. 53.4 56.5 59.1 56.5 70.4 113.7
Crop.................................. 22.4 81.2 88.3 116.3 88.3 71.7
Reinsurance........................... 72.9 62.3 62.1 71.3 130.7 76.1
Other................................. 66.8 65.5 48.8 78.2 65.5 83.1
Total Loss and LAE ratio.............. 74.7 72.8 75.6 82.4 86.2 83.0

Expense ratio........................... 27.4 25.1 25.9 26.2 25.4 25.7

Combined ratio.......................... 102.1 97.9 101.5 108.6 111.6 108.7
</TABLE>

55
<PAGE>
UNDERWRITING AND PRICING

Rating and classification plans for non-commercial lines are independently
developed and maintained by experienced casualty actuaries. Commercial lines
rates are developed from Insurance Services Office and National Council of
Compensation Insurers industry data. Rates are reviewed regularly for adequacy.
Auto rates are reviewed at least annually.

Underwriting of new automobile business utilizes Claims Loss Underwriting
Exchange, Motor Vehicle Record, and Credit Bureau Report data. Most of this data
is available to agents in the field. Renewal business is monitored on an
exception basis for claim frequency and severity characteristics that trigger
reunderwriting activities. Because the Company stresses "total" accounts, most
individual lines of business have loss-sensitive premium structures that provide
multiple levels of rates by means of surcharges or discounts in order to
accommodate and retain various levels of risks. Risks that cannot be directly
accommodated are placed with non-affiliated sub-standard auto markets and other
niche writers through a brokerage subsidiary of the Company.

The Company's multi-line exclusive agents are being increasingly involved in
the underwriting process with the availability of underwriting information in
the field and the Company's growing emphasis upon agent entry and electronic
submission of policy applications and changes (currently available for personal
auto insurance only). Profitability is tracked by individual agent loss ratios.
An agent's loss ratio can affect commission levels by up to plus or minus 20%.
Agent profitability and compliance with underwriting rules also impact an
agent's binding authority.

OPERATIONS AND CLAIMS

The management of insurance operations from the West Des Moines, Iowa home
office facilitates uniform procedures and introduction of new technology and
allows for reduced supervisory and managerial personnel. The Company is in the
process of converting its multiple administration and processing systems to one
common system which will substantially reduce information technology maintenance
costs while improving service and turnaround times.

The Company has recently reengineered the business processes associated with
most of its major lines. By streamlining business flows the Company eliminated
approximately 70 job positions while improving service and turnaround times. As
further technological improvements are realized, business processes will be
again reviewed with a view to improving accuracy and eliminating non-value added
steps.

Field claim activities are decentralized to ensure prompt handling of local
claims. However, some claim functions are being centralized to realize
processing efficiencies and expense savings. For example, first notices of loss
are being directed to a centralized home office "800" phone service unit which
electronically distributes loss assignments to the appropriate staff in the
field.

Information technology is a key component in enhancing the Company's claim
service and in controlling claims costs. The Company was among the first in the
United States to implement an expert system that evaluates the value of bodily
injury claims. The Company also uses computerized building replacement cost and
automobile physical damage cost estimators and auto glass networks. Among the
innovative claim practices utilized by the Company are alternative dispute
resolution to reduce litigation costs, preferred provider organizations to
control auto and workers' compensation medical costs, and specialized
subrogation and property loss units.

REINSURANCE ARRANGEMENTS

Utah Insurance participates with Farm Bureau Mutual and South Dakota Mutual,
each of which are under common management with the Company, in several
reinsurance agreements with American Agricultural Insurance Company (American
Ag). American Ag is a reinsurance company which is owned by, and which
reinsures, many of the Farm Bureau property-casualty insurance companies
throughout the United States. Under these reinsurance agreements, Utah
Insurance, Farm Bureau Mutual and South Dakota Mutual retain $250,000 of
exposure for property risks, with the excess being ceded to American Ag (up to
$19.8 million of exposure). The property-casualty companies have a property
catastrophe occurrence cover for $28.0 million excess of a $3.9 million loss.
They retain $400,000 for casualty exposures with the excess being ceded to

56
<PAGE>
American Ag up to $11.5 million. The property-casualty companies maintain an
excess treaty for workers' compensation to a total limit of $15.0 million. Crop
hail proportional treaties exist that cede approximately 40% of the Company's
crop hail premium.

Utah Insurance is exposed to certain reinsurance assumptions through the
Farm Bureau Mutual pool. Through quota share arrangements with other Farm Bureau
property-casualty companies and miscellaneous contracts and assumptions from
American Ag and various reinsurance brokers, the pool had estimated assumed
reinsurance premiums for the three month period ended March 31, 1996 and the
year ended December 31, 1995 of $9 million and $38 million, respectively.

LOSS AND LOSS ADJUSTMENT EXPENSE

The reserves for losses and LAE on property-casualty business are determined
using case basis evaluations and statistical analyses and represent estimates of
the ultimate net cost of all reported and unreported losses and loss adjustment
expenses that are unpaid. These reserves include estimates of future trends in
claim severity, frequency and other factors that could vary as the losses are
ultimately settled. Although considerable uncertainty is inherent in such
estimates, management believes that the reserve for losses and loss adjustment
expenses is adequate. The estimates are continually reviewed and, as adjustments
to these reserves become necessary, such adjustments are reflected in current
operations.

The following table reflects for the companies participating in the Farm
Bureau Mutual pool the development of their combined losses and LAE for the
periods indicated at the end of that year and each subsequent year. The first
line shows reserves, net of reinsurance, as originally reported at the end of
the stated year. The section under the caption "Cumulative amount paid as of"
shows the cumulative amounts paid, net of reinsurance, in respect of that
reserve as of the end of each subsequent year. The section under the caption
"Reserves reestimated as of" shows the original recorded reserve as adjusted as
of the end of each subsequent year to reflect the cumulative amounts paid and
all other facts and circumstances discovered during each such year. The line,
"Net cumulative redundancy (deficiency)" reflects the difference between the
latest reestimated reserve amount and the reserve amount as originally
established. The line "Gross cumulative redundancy" reflects the difference
between the latest reestimated reserve amount and the reserve amount as
originally established, before the effect of reinsurance ceded. The table
represents development by incurred year. Conditions and trends that have
affected the development of these reserves in

57
<PAGE>
the past will not necessarily recur in the future. It may not be appropriate to
use this cumulative history in the projection of future performance. Utah
Insurance has an 8% share in the Farm Bureau Mutual pool, which is expected to
be increased to 20% during the second quarter of 1996, retroactive to January 1,
1996.
<TABLE>
<CAPTION>
INCURRED YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reserves for losses and LAE...... $ 159,672 $ 152,277 $ 145,934 $ 125,424 $ 113,108 $ 104,355 $ 90,890 $ 74,979 $ 66,652
Cumulative amount paid as of
One year later................. 66,910 62,684 63,319 52,452 51,193 46,000 38,794 31,031
Two years later................ 92,152 87,443 77,745 72,934 67,557 55,723 47,715
Three years later.............. 100,939 87,643 85,547 78,390 65,782 54,973
Four years later............... 93,656 90,527 85,278 70,958 56,229
Five years later............... 93,742 87,129 74,092 57,756
Six years later................ 88,382 75,074 59,705
Seven years later.............. 75,757 59,382
Eight years later.............. 60,413
Nine years later...............
Reserves reestimated as of
One year later................. 140,943 134,321 129,890 106,794 105,780 94,857 78,989 68,268
Two years later................ 129,791 124,502 109,354 99,967 95,964 78,885 69,718
Three years later.............. 120,672 104,988 100,975 91,938 78,564 66,379
Four years later............... 102,790 99,302 92,757 77,513 62,599
Five years later............... 98,837 92,078 78,729 61,337
Six years later................ 91,821 78,167 62,651
Seven years later.............. 78,069 61,604
Eight years later.............. 62,149
Nine years later...............
Net cumulative redundancy
(deficiency).................... 11,334 16,143 4,752 10,318 5,518 (931) (3,090) 4,503
Net reserve...................... $ 159,672 $ 152,277 $ 145,934
Reinsurance recoverable.......... 16,078 15,975 20,898
--------- --------- ---------
Gross reserve.................... $ 175,749 $ 168,252 $ 166,832
--------- --------- ---------
--------- --------- ---------
Net reestimated reserve.......... $ 140,942 $ 129,791
Reestimated reinsurance
recoverable..................... 13,066 22,046
--------- ---------
Gross reestimated reserve........ $ 154,008 $ 151,837
--------- ---------
--------- ---------
Gross cumulative redundancy...... $ 14,244 $ 14,995
--------- ---------
--------- ---------

<CAPTION>
1986
---------
<S> <C>
Reserves for losses and LAE...... $ 64,358
Cumulative amount paid as of
One year later................. 31,953
Two years later................ 45,769
Three years later.............. 51,875
Four years later............... 56,155
Five years later............... 58,186
Six years later................ 58,902
Seven years later.............. 59,924
Eight years later.............. 60,337
Nine years later............... 60,653
Reserves reestimated as of
One year later................. 62,226
Two years later................ 63,979
Three years later.............. 62,909
Four years later............... 62,158
Five years later............... 61,833
Six years later................ 61,304
Seven years later.............. 62,074
Eight years later.............. 61,901
Nine years later............... 61,826
Net cumulative redundancy
(deficiency).................... 2,532
Net reserve......................
Reinsurance recoverable..........
Gross reserve....................
Net reestimated reserve..........
Reestimated reinsurance
recoverable.....................
Gross reestimated reserve........
Gross cumulative redundancy......
</TABLE>

A reconciliation of the net reserve for losses and loss adjustment expenses
to the reserves and unearned premiums on property-casualty policies included in
the Company's consolidated balance sheets as of December 31, 1995 and 1994 is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Reserves per the loss and loss adjustment expense reserve development
table above.......................................................... $ 159,672 $ 152,277

Utah Insurance's share of the pool.................................... 8% 8%
---------- ----------
Net reserve for losses and loss adjustment expenses................... 12,774 12,182

Reinsurance recoverables.............................................. 17,210 16,646

Unearned premium reserves............................................. 15,906 15,654
---------- ----------
Reserves and unearned premiums on property-casualty policies per the
consolidated financial statements.................................... $ 45,890 $ 44,482
---------- ----------
---------- ----------
</TABLE>

58
<PAGE>
For financial reporting purposes, the reinsurance recoverables set forth in
the consolidated financial statements include reinsurance recoverables by Utah
Insurance from the Farm Bureau Mutual pool, whereas reinsurance recoverables for
the Farm Bureau Mutual pool, set forth in the development table, only include
reinsurance recoverables from non-affiliates.

Utah Insurance has been an 8% participant in the Farm Bureau Mutual pool
since January 1, 1990, the date the Farm Bureau Mutual pool was formed.
Accordingly, the Company has, since January 1, 1990, recorded approximately 8%
of the above-stated reserves for losses and LAE, amounts paid, reinsurance
recoverables and resulting cumulative redundancies during the respective years.
The Company's share of such amounts relating to claims incurred subsequent to
the date of the pooling change will increase to 20%. The Company's share of
development on claims incurred prior to the effective date of the pooling change
will remain at 8%.

The net cumulative deficiencies of $931,000 and $3.1 million for 1989 and
1988, respectively, were the result of general adverse claim development not
anticipated when initially establishing the reserves. Since the inception of the
Farm Bureau Mutual pool in 1990, management has implemented more sophisticated
and frequent methodologies for establishing reserves as is evidenced by the net
cumulative redundancies during 1990 through 1994.

Although the Farm Bureau Mutual pool was not formed until January 1, 1990,
all three companies participating in the pool have been managed by the Company
during the entire period presented in the above table, with the exception of
South Dakota Mutual which first entered into a management agreement with the
Company in 1987.

59
<PAGE>
INVESTMENTS

The Company's investment portfolio is managed by its internal investment
professionals. The investment strategy is designed to achieve superior
risk-adjusted returns consistent with its investment philosophy of maintaining a
largely investment grade portfolio and providing adequate liquidity for expected
liability durations and other requirements.

The Company's investment portfolio is summarized in the table below:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------
AS OF MARCH 31, 1996 1995 1994 1993
------------------------ ------------------------ ------------------------ ----------
CARRYING CARRYING CARRYING CARRYING
VALUE PERCENT VALUE PERCENT VALUE PERCENT VALUE
---------- ------------ ---------- ------------ ---------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed maturities:
Public................................ $1,601,997 60.0% $1,597,236 60.4% $1,293,590 55.3% $ 855,202
Private placement..................... 332,676 12.5 335,905 12.7 314,593 13.4 327,250
144A private placement................ 159,152 6.0 143,068 5.4 124,428 5.3 97,338
---------- ----- ---------- ----- ---------- ----- ----------
Total fixed maturities.................. 2,093,825 78.5 2,076,209 78.5 1,732,611 74.0 1,279,790
Equity securities......................... 90,856 3.4 83,714 3.1 46,701 2.0 51,579
Held in inventory (1)..................... 21,327 0.8 21,913 0.8 18,169 0.8 17,386
Mortgage loans on real estate............. 267,534 10.0 266,623 10.1 272,537 11.7 230,897
Investment real estate
Acquired for debt....................... 2,214 0.1 2,220 0.1 4,444 0.2 1,255
Investment.............................. 26,783 1.0 26,384 1.0 22,507 1.0 19,506
Policy loans.............................. 116,633 4.4 116,107 4.4 113,848 4.9 87,008
Other long-term investments............... 12,044 0.4 2,892 0.1 6,654 0.3 26,952
Short-term investments.................... 36,785 1.4 50,061 1.9 119,683 5.1 42,904
---------- ----- ---------- ----- ---------- ----- ----------
Total investments..................... $2,668,001 100.0% $2,646,123 100.0% $2,337,154 100.0% $1,757,277
---------- ----- ---------- ----- ---------- ----- ----------
---------- ----- ---------- ----- ---------- ----- ----------

PERCENT
------------

<S> <C>
Fixed maturities:
Public................................ 48.7%
Private placement..................... 18.6
144A private placement................ 5.5
-----
Total fixed maturities.................. 72.8
Equity securities......................... 2.9
Held in inventory (1)..................... 1.0
Mortgage loans on real estate............. 13.1
Investment real estate
Acquired for debt....................... 0.1
Investment.............................. 1.1
Policy loans.............................. 5.0
Other long-term investments............... 1.5
Short-term investments.................... 2.5
-----
Total investments..................... 100.0%
-----
-----
</TABLE>

- ------------------------
(1) Held in inventory includes equity securities owned by FBL Ventures totaling
$19.4, $20.1 million, $15.9 million and $15.4 million at March 31, 1996 and
December 31, 1995, 1994 and 1993, respectively.

As of March 31, 1996, 91.8% (based on carrying value) of the fixed maturity
securities were investment grade debt securities, being in the highest two NAIC
designations. Non-investment grade debt securities generally provide higher
yields and involve greater risks than investment grade debt securities because
their issuers typically are more highly leveraged and more vulnerable to adverse
economic conditions than investment grade issuers. In addition, the trading
market for these securities is usually more limited than for investment grade
debt securities. Private placement securities are generally rated by the
Securities Valuation Office of the NAIC. The Company regularly reviews the
percentage of its portfolio which is invested in non-investment grade debt
securities (NAIC 3 through 6). As of March 31, 1996, the Company's investment in
non-investment grade debt was 8.2% of fixed maturity securities. At that time no
single non-investment grade holding exceeded 0.6% of total investments.

60
<PAGE>
The following table sets forth the credit quality, by NAIC designation and S
& P rating equivalents, of fixed maturity securities:

FIXED MATURITY SECURITIES BY NAIC DESIGNATION
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------
AS OF
MARCH 31, 1996 1995 1994
------------------------ ------------------------ -------------------------
NAIC EQUIVALENT CARRYING CARRYING CARRYING
DESIGNATION S & P RATINGS (1) VALUE PERCENT VALUE PERCENT VALUE PERCENT
- ------------------- ---------------------------- ---------- ------------ ---------- ------------ ----------- ------------
(DOLLARS IN THOUSANDS)
<C> <S> <C> <C> <C> <C> <C> <C>
1 (AAA, AA, A)................ $1,347,416 64.4% $1,311,216 63.1% $1,039,787 60.0%
2 (BBB)....................... 574,105 27.4 582,678 28.1 541,272 31.3
---------- ----- ---------- ----- ----------- -----
Total investment grade...... 1,921,521 91.8 1,893,894 91.2 1,581,059 91.3
3 (BB)........................ 100,264 4.8 100,622 4.8 82,402 4.8
4 (B)......................... 69,075 3.3 79,987 3.9 65,083 3.7
5 (CCC, CC, C)................ 1,626 0.1 56 -- 1,255 --
6 In or near default.......... 1,339 -- 1,650 0.1 2,812 .2
---------- ----- ---------- ----- ----------- -----
Total below investment
grade...................... 172,304 8.2 182,315 8.8 151,552 8.7
---------- ----- ---------- ----- ----------- -----
Total fixed maturities...... $2,093,825 100.0% $2,076,209 100.0% $1,732,611 100.0%
----- ----- ----------- -----
---------- ----- ---------- ----- ----------- -----
---------- ----------

<CAPTION>
1993
-------------------------
NAIC CARRYING
DESIGNATION VALUE PERCENT
- ------------------- ----------- ------------
<C> <C> <C>
1 $ 639,202 49.9%
2 482,428 37.7
----------- -----
1,121,630 87.6
3 79,991 6.3
4 51,454 4.0
5 12,594 1.0
6 14,121 1.1
----------- -----
158,160 12.4
----------- -----
$1,279,790 100.0%
----------- -----
----------- -----
</TABLE>

- ------------------------
(1) Comparisons between NAIC designations and S & P ratings are published by the
NAIC. S & P has not rated some of the fixed maturity securities in the
Company's portfolio.

The carrying value of the Company's portfolio of fixed maturity securities
by contractual maturity are shown below:

REMAINING MATURITY OF FIXED MATURITY SECURITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------
AS OF
MARCH 31, 1996 1995 1994 1993
------------------------ ------------------------ ------------------------ ----------
CARRYING CARRYING CARRYING CARRYING
MATURITY OF FIXED MATURITY SECURITIES VALUE PERCENT VALUE PERCENT VALUE PERCENT VALUE
- ------------------------------------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Due in one year or less................... $ 50,345 2.4% $ 66,886 3.2% $ 37,359 2.1% $ 32,917
Due after one year through five years..... 178,289 8.5 181,647 8.7 159,128 9.2 146,886
Due after five years through ten years.... 277,066 13.2 287,838 13.9 296,011 17.1 255,932
Due after ten years....................... 622,913 29.8 641,527 30.9 533,268 30.8 360,301
---------- ----- ---------- ----- ---------- ----- ----------
1,128,613 53.9 1,177,898 56.7 1,025,766 59.2 796,036
Mortgage and asset-backed securities...... 930,272 44.4 862,245 41.5 666,026 38.4 420,169
Redeemable preferred stocks............... 34,940 1.7 36,066 1.8 40,819 2.4 63,585
---------- ----- ---------- ----- ---------- ----- ----------
Total................................. $2,093,825 100.0% $2,076,209 100.0% $1,732,611 100.0% $1,279,790
---------- ----- ---------- ----- ---------- ----- ----------
---------- ----- ---------- ----- ---------- ----- ----------

MATURITY OF FIXED MATURITY SECURITIES PERCENT
- ------------------------------------------ ------------

<S> <C>
Due in one year or less................... 2.6%
Due after one year through five years..... 11.5
Due after five years through ten years.... 20.0
Due after ten years....................... 28.1
-----
62.2
Mortgage and asset-backed securities...... 32.8
Redeemable preferred stocks............... 5.0
-----
Total................................. 100.0%
-----
-----
</TABLE>

Mortgage-backed securities constitute a significant portion of the Company's
portfolio of securities. These mortgage-backed securities are diversified as to
collateral types, cash flow characteristics, and maturity. At March 31, 1996,
the Company held $532.7 million (20.0% of total investments) in residential
mortgage-backed securities and $301.8 million (11.3% of total investments) in
commercial mortgage-backed securities.

At March 31, 1996, the Company held residential collateralized mortgage
obligation (CMO) investments with a market value of $482.1 million as part of
its mortgage-backed securities holdings. CMOs consist of pools of mortgages
divided into sections or "tranches" which provide sequential retirement of the
bonds. To provide call protection and more stable average lives, the Company
invests in planned amortization classes (PACs), which provide more predictable
cash flows within a range of prepayment speeds (the rate of individuals
refinancing their home mortgages at lower rates) by shifting the prepayment
risks to support tranches. The Company also invests in sequential tranches,
which provide stability in that repayments of

61
<PAGE>
principal do not occur until the previous tranches are paid off. As of March 31,
1996, 74.7% of the Company's CMO investments are in PAC and sequential pay
securities. The Company does not purchase certain types of collateralized
mortgage obligations. These include, but are not limited to, interest only,
principal only, floater, inverse floater, PAC II, Z or support tranches.

At March 31, 1996, the Company held $267.5 million or 10.0% of invested
assets in mortgage loans. These mortgage loans are diversified as to property
type, location and loan size, and are collateralized by the related properties.
At March 31, 1996, mortgages more than 60 days delinquent accounted for 1.5% of
the carrying value of the mortgage portfolio. The Company's mortgage lending
policies establish limits on the amount that can be loaned to one borrower and
require diversification by geographic location and collateral type. Regions with
the largest concentration of the Company's mortgage loan portfolio at March 31,
1996 include Mountain (25%) which includes Arizona, Colorado, Idaho, New Mexico,
Nevada, Utah and Wyoming; Pacific (23%) which includes California and Oregon;
and West South Central (18%) which includes Texas and Oklahoma. Mortgage loans
on real estate have also been analyzed by collateral types with retail
facilities (34%) and office buildings (40%) representing the largest holdings at
March 31, 1996.

The Company's investment portfolio at March 31, 1996, also included $36.8
million of short-term investments, plus $211.6 million in carrying value of U.S.
Government and U.S. Government agency backed securities that could be readily
converted to cash at or near carrying value.

The Company's asset-liability management program includes (i) designing and
developing products which encourage persistency and, as a result, creating a
stable liability structure; and (ii) structuring the investment portfolio with
duration and cash flow characteristics consistent with the duration and cash
flow characteristics of the Company's insurance liabilities. At March 31, 1996,
the weighted average life of the fixed maturity portfolio, based on market
values excluding convertible bonds, was approximately 7.9 years. Based on the
results of the fixed income analytical system utilized by the Company, including
its mortgage backed prepayment assumptions, the effective duration of the fixed
income portfolio was 4.67 as of March 31, 1996.

FBL Ventures is a wholly owned investment company subsidiary of Farm Bureau
Life which invests in start-up and mezzanine level venture capital investments
in various sectors. Operating results of FBL Ventures are recognized in
accordance with accounting principles for investment companies and, as such,
unrealized and realized gains and losses on investments are included in net
investment income. Because of the venture capital nature of the underlying
investments, the results of FBL Ventures tend to fluctuate significantly from
year to year and need to be evaluated over a much longer period of time. During
1995, FBL Ventures experienced net investment income of $25.4 million resulting
predominantly from unrealized gains on two venture capital investments which
completed initial public offerings during the year. Therefore, the net income
(loss) is not included in adjusted operating income. The results of FBL Ventures
during the five years ended December 31, 1995, have provided significant returns
to the Company. Since March 1990, when the Company began its current venture
capital program, the underlying investments in FBL Ventures have generated an
average annual internal rate of return of 41.3%. As of March 31, 1996, FBL
Ventures had investments of $19.4 million, consisting of 29 private equity
securities issued by 21 companies. Of the 21 companies in which FBL Ventures
held investments on March 31, 1996, six are public and 15 are private. Of the
aggregate value of $19.4 million, investment in publicly traded companies
comprised $6.8 million and investment in non-publicly traded companies comprised
$12.6 million. The number and percent of companies by industry and the value of
the investment by industry was as follows:

62
<PAGE>
It is anticipated that during 1996 all or substantially all of the
investments of FBL Ventures will be sold to a venture capital subsidiary of Farm
Bureau Mutual at their carrying value, which management believes approximates
fair market value. Accordingly, the sale will not have a significant effect on
the Company's operating results. The proceeds from the sale are expected to be
invested in fixed maturity securities and mortgage loans. Management believes
the sale of FBL Venture's investments will provide the Company with more
consistent and predictable investment returns and will facilitate the Company's
asset/liability management process.

COMPETITION

The Company operates in a highly competitive industry. The operating results
of companies in the insurance industry have been historically subject to
significant fluctuations due to competition, economic conditions, interest
rates, investment performance, maintenance of insurance ratings from rating
agencies such as A.M. Best, and other factors. Management believes the Company's
ability to compete with other insurance companies is dependent upon, among other
things, its ability to attract and retain agents to market its insurance
products, particularly to Farm Bureau members, its ability to develop
competitive and profitable products, and its maintenance of high ratings of its
claims paying ability from A.M. Best. In connection with the development and
sale of its products, the Company encounters significant competition from other
insurance companies, many of whom have financial resources substantially greater
than those of the Company, as well as from other investment alternatives
available to its customers.

REGULATION

The Company's insurance subsidiaries are subject to regulation and
supervision by the states in which they transact business. State insurance laws
generally establish supervisory agencies with broad administrative and
supervisory powers related to granting and revoking licenses, transacting
business, establishing guaranty fund associations, licensing agents, approving
policy forms, regulating premium rates for some lines of business, establishing
reserve requirements, prescribing the form and content of required financial
statements and reports, determining the reasonableness and adequacy of statutory
capital and surplus, and regulating the type and amount of investments
permitted.

Every state in which the Life Companies are licensed administers a guaranty
fund, which provides for assessments of licensed insurers for the protection of
policyholders of insolvent insurance companies. There has been an increase in
the number of insurance companies that are under supervision which has resulted
in an increase in the amount of assessments to cover losses to policyholders of
such companies. Assessments can be partially recovered through a reduction in
future premium taxes in some states. In these situations, the amounts are
capitalized and amortized against future reductions in premium taxes.
Assessments paid by the Company amounted to $436,000 in the three month period
ended March 31, 1996, $1.4 million in 1995, $1.6 million in 1994 and $708,000 in
1993. Management cannot reasonably predict the amount of future assessments, if
any.

Recently, the insurance regulatory framework has been placed under increased
scrutiny by various states, the federal government and the NAIC. Various states
have considered or enacted legislation which changes, and in many cases
increases, the state's authority to regulate insurance companies. Although
legislation has been under consideration for several years in Congress which, if
enacted, would result in the federal government assuming some role in the
regulation of insurance companies, management does not expect the current
Congress to enact federal insurance regulation. The NAIC, in conjunction with
state regulators, has been reviewing existing insurance laws and regulations.
The NAIC recently approved and recommended to the states for adoption and
implementation several regulatory initiatives designed to reduce the risk of
insurance company insolvencies. Through the NAIC accreditation program, these
recommendations for state legislation have taken on an increased significance.
Two such initiatives are risk-based capital standards (RBC) which have been
adopted by the NAIC, and a model investment law which is currently under
consideration.

The RBC standards were adopted by the NAIC in 1992 for life insurance
companies and in 1993 for property-casualty insurance companies and require
insurance companies to calculate and report for statutory basis financial
statements information under a risk-based capital formula. The formula is
embodied in the

63
<PAGE>
NAIC Model Act, which has been adopted by many states and it is anticipated that
the NAIC RBC standards will apply to all of the Company's insurance subsidiaries
in 1996. RBC requirements are intended to allow insurance regulators to identify
at an early stage inadequately capitalized insurance companies based upon the
types and mixtures of risks inherent in the company's operations. The formula
includes components for asset risk, liability risk, interest rate exposure, and
other factors.

The RBC requirements are intended to be used by insurance regulators as an
early warning tool to identify deteriorating or weakly capitalized companies for
the purpose of initiating regulatory actions. They are not designed as a ranking
mechanism for adequately capitalized companies. In addition, the formula defines
a new minimum capital standard which supplements the low, fixed minimum capital
and surplus requirements previously implemented on a state-by-state basis.

The RBC requirements provide for four levels of regulatory attention,
depending on the ratio of the company's total adjusted capital (defined as the
total of its statutory capital, surplus, asset valuation reserve and certain
other adjustments) to its RBC. If a company's total adjusted capital is less
than 100 percent but greater than or equal to 75 percent of its RBC, or if a
negative trend has occurred (as defined by the regulations) and total adjusted
capital is less than 125 percent of its RBC (the "Company Action Level"), the
company must submit a comprehensive plan to the regulatory authority which
discusses proposed corrective actions to improve its capital position. If a
company's total adjusted capital is less than 75 percent but greater than or
equal to 50 percent of its RBC (the "Regulatory Action Level"), the regulatory
authority will perform a special examination of the company and issue an order
specifying corrective actions that must be followed. If a company's total
adjusted capital is less than 50 percent but greater than or equal to 35 percent
of its RBC (the "Authorized Control Level"), the regulatory authority may take
any action it deems necessary, including placing the company under regulatory
control. If a company's total adjusted capital is less than 35 percent of its
RBC (the "Mandatory Control Level"), the regulatory authority is mandated to
place the company under its control. The total adjusted capital of Farm Bureau
Life and Western Life was 2.7 and 4.8 times the Company Action Level,
respectively, at December 31, 1995.

The Life/Health Task Force of the NAIC recently adopted Actuarial Guideline
GGG(Guideline) which defines minimum reserves for certain annuity products
(including certain of the Company's annuity products) which have multiple
benefit streams. The requirements of the Guideline affect the accounting for
applicable contracts issued on or after January 1, 1981 in financial statements
prepared for state regulatory authorities for years ending on or after December
31, 1995. The Guideline will have no material impact on the Company.

Approximately once every three to five years as part of their routine
regulatory oversight process, insurance departments conduct detailed
examinations of the books, records and accounts of insurance companies domiciled
in their states. Such examinations are generally conducted in cooperation with
the departments of two or three other states, under guidelines promulgated by
the NAIC. The Life Companies have been examined for all years through 1992.

A committee of the NAIC is developing model legislation to govern insurance
company investments. Several discussion drafts have been released over the past
two to three years. Implementation of any investment model law is not expected
until 1996 or later. Management believes that if the current discussion draft
were adopted without modification it would not have a material impact on the
Company.

The Company, certain of its subsidiaries and certain funds, policies and
contracts offered by them are subject to various levels of regulation under the
federal securities laws administered by the Securities and Exchange Commission
and certain state securities laws. FBL Investment Advisory Services, Inc. is an
investment advisor registered under the Investment Advisors Act. In addition,
the Company sponsors certain mutual funds which are registered under the
Investment Company Act of 1940, as amended. FBL Marketing Services, Inc. is a
subsidiary of the Company which serves as the principal dealer for the sponsored
funds, as well as certain of its variable insurance and annuity products.
Certain annuity contracts and insurance policies issued by the Life Companies
are registered under the Securities Act, and FBL Marketing Services, Inc. is
registered as a broker-dealer under the Exchange Act.

64
<PAGE>
These laws and regulations are primarily intended to benefit investors in
the securities markets and generally grant supervisory agencies broad
administrative powers, including the power to limit or restrict the carrying on
of business for failure to comply with such laws and regulations. The Company
and its subsidiaries may also be subject to similar laws and regulations in the
states in which they provide investment advisory services, offer the products
described above or conduct other securities-related activities.

FEDERAL INCOME TAX CONSIDERATIONS

Certain of the life and annuity products marketed and issued by the Life
Companies enjoy income tax advantages as compared to other savings investments,
such as certificates of deposit and taxable bonds. One important tax advantage
is the deferral of income taxation on any increases in the contract values
during the accumulation phase of the annuity products in contrast to the current
taxation of all earnings on many other savings and investment products. In the
event that the federal income tax laws are changed so that accumulated earnings
on these annuities do not enjoy the tax deferral described above, or so that
additional savings and investment products achieve similar tax deferral status,
or so that tax rates were significantly lower so that the annuitant's ability to
defer income tax on annuity earnings was no longer a significant factor for the
policyholder, consumer demand for the affected products could decline materially
or be eliminated. From time to time, Congress has considered proposals to revise
or eliminate this tax deferral. There is no such proposal currently pending in
Congress, nor has the current administration announced any consideration of such
proposals. Legislation that would treat all interest and dividend income as
tax-free to the recipient has been proposed in Congress as part of the
comprehensive tax reform proposals (i.e., the "flat tax"). If legislation were
enacted to eliminate the tax advantages of life and annuity products, such a
change could have an adverse effect on the ability of the Company to sell those
products.

PROPERTIES

The principal operations of the Company and its subsidiaries are conducted
from owned property consisting of approximately 430,000 square feet of space on
a 45 acre site located at 5400 University Avenue, West Des Moines, Iowa 50266.
Approximately 59,000 square feet of this property are leased to an unaffiliated
company under a lease expiring in 1998 and approximately 76,000 square feet are
leased to the Iowa Farm Bureau Federation and affiliated companies under a lease
which is expected to be continued from year to year indefinitely. The Company
also leases office space of 29,000 square feet for a service center in Denver,
Colorado. This lease, with the state of Colorado, is for a portion of the former
home office building of Western Life. The Company is locating replacement space
to move into at the termination of the lease on December 31, 1996. Management
considers the current facilities to be adequate for the foreseeable needs of the
Company.

EMPLOYEES

At May 1, 1996 the Company had approximately 1,000 employees. Many employees
and the executive officers of the Company also provide services to Farm Bureau
Mutual and other affiliates of the Company. None of the employees are members of
a collective bargaining unit. Management believes that relations with its
employees are good.

LEGAL PROCEEDINGS

The Company is a party to lawsuits arising in the normal course of business.
The Company believes the resolution of these lawsuits will not have a material
adverse effect on its financial condition or results of operations.

65
<PAGE>
MANAGEMENT

DIRECTORS

The current Directors and persons chosen to become Directors of the Company
upon completion of this Offering are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION AND DATE ELECTED AS A DIRECTOR
- ------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Edward M. Wiederstein 48 Chairman of the Board and Director (1995)
Thomas R. Gibson 51 Executive Vice President, General Manager, Chief Executive
Officer and Director (1996)
Eugene R. Maahs 64 Senior Vice President, Secretary, Treasurer and Director
(1996)
Stephen M. Morain 50 Senior Vice President, General Counsel and Director (1996)
V. Thomas Geary 68 First Vice Chair and Director (1994)
Roger Bill Mitchell 51 Second Vice Chair and Director (1994)
Kenneth R. Ashby 56 Director (1994)
Jerry L. Chicoine 53 Director (1996) (1)
Al Christopherson 55 Director (1994)
John W. Creer 56 Director (1996) (1)
Kenny J. Evans 50 Director (1995)
Gary Hall 46 Director (1995)
Karen J. Henry 50 Director (1995)
Richard Kjerstad 53 Director (1995)
David L. McClure 56 Director (1994)
H. Eldon Merklin 63 Director (1994)
Bryce P. Neidig 64 Director (1994)
Howard D. Poulson 60 Director (1994)
Howard G. Schmid 59 Director (1994)
John J. Van Sweden 49 Director (1994)
John E. Walker 58 Director (1996) (1)
</TABLE>

- ------------------------

(1) Messrs. Chicoine, Creer and Walker will become Class A Directors effective
upon the completion of this Offering.

Set forth below is a description of the business experience, principal
occupation and employment during the last five years of the Directors of the
Company:

Edward M. Wiederstein is the Chairman of the Board and a Class B Director of
the Company. He has been a director of the Iowa Farm Bureau Federation since
1986 and in 1995 was elected President of the Iowa Farm Bureau Federation. He is
also a director and president of Farm Bureau Mutual and a director of Western
Ag. Mr. Wiederstein owns and operates a 1,200 acre farm near Audubon, Iowa where
he has been engaged in the business of cattle and hog feeding and grain farming
since 1973.

Thomas R. Gibson, FSA, CLU, FLMI, is the Executive Vice President, General
Manager and Chief Executive Officer of the Company and of its major operating
subsidiaries and a Class B Director of the Company. Mr. Gibson was the Chairman
of the Board of the Greater Des Moines Chamber of Commerce during 1995. Mr.
Gibson has been employed by the Company and its affiliates since 1966.

66
<PAGE>
Eugene R. Maahs is Senior Vice President, Secretary and Treasurer of the
Company and its major operating subsidiaries and a Class B Director of the
Company. He is Executive Director, Secretary and Treasurer of the Iowa Farm
Bureau Federation; Senior Vice President and Assistant Secretary and Treasurer
of South Dakota Mutual, and Vice President and Treasurer of Farm Bureau
Management Corporation (Management Corp.), a subsidiary of the Iowa Farm Bureau
Federation. Mr. Maahs is a co-owner of Country Gardens, a fruit and vegetable
farm and market. Mr. Maahs has been employed by the Company and its affiliates
since 1990, and by the Iowa Farm Bureau Federation since 1958.

Stephen M. Morain is Senior Vice President and General Counsel of the
Company and a Class B Director. He also serves as General Counsel and Assistant
Secretary of the Iowa Farm Bureau Federation; General Counsel, Secretary and
director of Management Corp.; and Senior Vice President and General Counsel of
the Company's major operating subsidiaries. Mr. Morain is also a director of
Computer Aided Design Software, Inc., a director of Iowa Business Development
Finance Corporation, and chairman and a director of Edge Technologies, Inc. Mr.
Morain has been employed by the Company and its affiliates since 1977.

V. Thomas Geary is the First Vice Chair and a Class B Director of the
Company. He has been the President of the Idaho Farm Bureau Federation since
1983, and President of Western Life since 1986. Mr. Geary has owned and operated
Morningstar Farms near Burley, Idaho since 1954, which includes a cow-calf ranch
and a mink ranch. He is also President and a director of Idaho Farm Bureau
Mutual Insurance Company, Farm Bureau Insurance Service Company of Idaho and
Farm Bureau Finance Company and a director of Western Ag, Western Farm Bureau
Life and the American Farm Bureau Federation.

Roger Bill Mitchell is a Class B Director and the Second Vice Chair of the
Company. He has been President of the Colorado Farm Bureau since November 1988.
Mr. Mitchell is also a director of Western Ag and Colorado Farm Bureau Mutual
Insurance Company and a member of the Colorado Water Quality Control Commission.

Kenneth R. Ashby is a Class B Director of the Company and has been the
President of the Utah Farm Bureau Federation since November 1986. He has been a
Vice President of Utah Insurance and a director of Farm Bureau Life. Mr. Ashby
has been President and General Manager of Ashby's Valley View Farms since
September 1966.

Jerry L. Chicoine is a Class A Director of the Company. He is Senior Vice
President and Chief Financial Officer of Pioneer Hi-Bred International, Inc.
(seed corn business), a position he has held since 1988. Mr. Chicoine was Senior
General Counsel of Pioneer Hi-Bred International, Inc. from 1986 to 1988. Prior
thereto he was a partner in the accounting firm of McGladrey & Pullen from 1969
to 1986. Mr. Chicoine is a lawyer and a certified public accountant. He is also
a member of the board of directors of AmerUs Bank and Edge Technologies, Inc.

Al Christopherson is a Class B Director of the Company. He has been
President of the Minnesota Farm Bureau Federation since December 1988 and is
also a director of Farm Bureau Mutual and American Ag. Mr. Christopherson is
also a director of the American Farm Bureau Federation and serves on a number of
agricultural boards including the Agricultural Utilization and Research
Institute. Mr. Christopherson is a diversified grain and livestock farmer from
Pennock, Minnesota, where he operates nearly 1,800 acres on the family farm,
raising hogs, corn, soybeans, and wheat.

John W. Creer is a Class A Director of the Company. Since 1980, he has been
President and Chief Executive Officer of the Farm Management Company, the
agricultural real estate holding and management company wholly owned by the
Church of Jesus Christ of Latter-day Saints (Mormon). As such he is responsible
for management of a substantial multi-national resource. He is also Secretary of
the worldwide church's Investment Policy Committee. Mr. Creer is a lawyer and
received a doctorate of laws degree from the University of Munich.

Kenny J. Evans is a Class B Director of the Company. He is President and a
director of the Arizona Farm Bureau Federation. Mr. Evans, a farmer, corporate
executive and business owner, is also Chairman of the

67
<PAGE>
National Agricultural Labor Advisory Committee and a former Chairman of the
Arizona Commission of Agriculture and Horticulture. He is a director of Farm
Bureau Insurance Service Company of Arizona, Western Life, Western Ag, and
Western Farm Bureau Mutual.

Gary Hall is a Class B Director of the Company. He has been the President of
the Kansas Farm Bureau Federation and affiliated companies, including Kansas
Farm Bureau Life Insurance Company and Kansas Farm Bureau Mutual Insurance
Company, since 1994. Mr. Hall is also a director of Western Ag. He has been a
self-employed farmer and stockman since 1974, and he served as Kansas Secretary
of Agriculture in 1990 and 1991.

Karen J. Henry is a Class B Director of the Company. She was elected as
President of the Wyoming Farm Bureau Federation in 1995, after having served as
a director since 1992. Ms. Henry is a director and President of Mountain West
Farm Bureau Mutual Insurance Company and a director of Western Life and of
Western Ag. She is involved in a family ranch and cattle operation.

Richard Kjerstad is a Class B Director of the Company. He and his family
have extensive farming and cattle ranching operations in Western South Dakota.
Mr. Kjerstad was elected President of the South Dakota Farm Bureau Federation in
1995. He is also President and a director of South Dakota Mutual and a director
of Farm Bureau Life.

David L. McClure is a Class B Director of the Company. He is a
farmer-rancher raising wheat, barley, hay, and cattle in the Lewistown, Montana
area. Mr. McClure has been President of the Montana Farm Bureau Federation since
1987 and is also a director and Vice President of Mountain West Farm Bureau
Mutual Insurance Company, a director of American Ag and Western Ag and a
director and Vice President of Western Life. He has been a member of the board
of directors of the American Farm Bureau Federation since 1993, and a member of
its Audit Committee since 1994.

H. Eldon Merklin is a Class B Director of the Company. He has been President
of the Oklahoma Farm Bureau Federation, and of the Oklahoma Farm Bureau Mutual
Insurance Company since November 1993 and served on the Oklahoma Farm Bureau
board of directors since 1975. Mr. Merklin was elected to a two-year term as a
member of the board of directors of the American Farm Bureau Federation in 1995.
He is a director of American Ag and Western Ag. In 1986, United States Secretary
of Agriculture Richard Lyng appointed Mr. Merklin to the national Cattlemen's
Beef Promotion and Research Board, where he served for seven years. Mr. Merklin
resides near Mutual, Oklahoma, where he raises wheat and alfalfa, and stocker
cattle and an Angus cow-calf herd.

Bryce P. Neidig is a Class B Director. He has been President of the Nebraska
Farm Bureau Federation and of Farm Bureau Insurance Company of Nebraska since
1981. He is also a director of Farm Bureau Life, American Ag and Western Ag. Mr.
Neidig is also a director of the American Farm Bureau Federation and Chairman of
its Trade Advisory Committee, and a director of Nebraska Blue Cross Blue Shield.
He raises irrigated and dry land corn as well as soybeans and alfalfa on his
Madison County farm.

Howard D. (Dan) Poulson, a Class B Director of the Company, has been
President and Administrator of the Wisconsin Farm Bureau Federation and
President of its affiliated companies, including Rural Mutual Insurance Company,
since August 1991. He has served on the board of directors of Wisconsin Farm
Bureau since 1969. He was appointed to the State of Wisconsin Department of
Natural Resources Board in October 1995. Mr. Poulson is also a director of Farm
Bureau Life. He and his wife operate a 250 acre hog and grain farm near Palmyra
in Jefferson County, Wisconsin.

Howard G. Schmid is a Class B Director of the Company. He has been a
director of the North Dakota Farm Bureau and Nodak Mutual Insurance Company
since 1988 and was elected President of both organizations in 1990. Mr. Schmid
is a director of Western Life and Western Ag. He and his wife have owned and
operated a farm at Oberon, which is in north central North Dakota, since 1958,
raising Durham wheat, hard red spring wheat, barley, sunflowers, and canola.

John J. Van Sweden is a Class B Director of the Company. Mr. Van Sweden is
President and a director of the New Mexico Farm and Livestock Bureau, President
and a director of Western Farm Bureau Mutual,

68
<PAGE>
Chairman of Western Farm Bureau Management Corp. and a director of Western Life
and Western Ag. He is also President of V7 Ranch Co., Inc., which has been in
his family for five generations since 1868. This is a cow/ calf/yearling and
ranch operation, producing approximately 650 tons of hay per year, in the area
of Raton, New Mexico.

John E. Walker is a Class A Director of the Company. Mr. Walker retired
January 1, 1996 from Business Men's Assurance (BMA), Kansas City, Missouri,
where he had been the Managing Director of Reinsurance Operations since 1979. He
had been a member of the board of directors of BMA for 11 years before his
retirement, and a member of its executive committee. Mr. Walker is also a
director of Lab One, Inc., Lenexa, Kansas, a publicly traded blood and urine
testing business.

ELECTION OF DIRECTORS

The Articles of Incorporation provide for a Board of Directors composed of
three to five Class A Directors, to be elected by the Class A Common
stockholders and the Series A Preferred stockholders voting together as a single
voting group, and ten to twenty Class B Directors to be elected by the Class B
Common stockholders. All Directors are elected for a one-year term. A person who
is an employee, officer or director of a Class B Common stockholder or any other
Farm Bureau organization is not eligible to be elected as a Class A Director.
Class B Directors are affiliated with Farm Bureau organizations. The Class B
Common Stockholder Agreement obligates the Class B Common stockholders to elect
the Presidents of the 15 state Farm Bureau federations in the states in which
the Company's operations are conducted as Class B Directors. The Class B Common
Stockholder Agreement also obligates the Class B Common stockholders to elect
the President of the Iowa Farm Bureau Federation as Chairman of the Board and to
elect the Chief Executive Officer of the Company and two other officers of the
Company nominated by the Chairman of the Board as Class B Directors. See
"Certain Transactions and Relationships -- Stockholders' Agreement Regarding
Management and Transfer of Shares of Class B Common Stock."

ADVANCE NOTICE REQUIREMENTS

The Bylaws establish advance notice procedures with regard to (i) the
nomination, other than by or at the direction of the Company's Board of
Directors, of candidates for election to the Company's Board of Directors (the
Nomination Provision) and (ii) certain business to be brought before an annual
meeting of stockholders of the Company (the Business Provision).

The Nomination Provision, by requiring advance notice of nominations by
stockholders, affords the Company's Board of Directors a meaningful opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Company's Board of Directors, to inform
stockholders about such qualifications.

The Business Provision, by requiring advance notice of business proposed to
be brought before an annual meeting, provides a more orderly procedure for
conducting annual meetings of stockholders and provides the Company's Board of
Directors with a meaningful opportunity prior to the meeting to inform
stockholders, to the extent deemed necessary or desirable by the Company's Board
of Directors, of any business proposed to be conducted at such meeting, together
with any recommendation of the Board of Directors. The Business Provision does
not affect the right of stockholders to make stockholder proposals for inclusion
in proxy statements for the Company's annual meetings of stockholders pursuant
to the rules of the Securities and Exchange Commission. In addition, neither the
Nomination Provision nor the Business Provision will prevent any stockholder or
stockholders holding at least 10% of the shares entitled to vote on a particular
matter from requesting a special meeting with respect to such matter in
accordance with the Iowa Business Corporation Act.

Although these Bylaw provisions do not give the Company's Board of Directors
any power to approve or disapprove of stockholder nominations for the election
of Class A Directors or of any other business desired by stockholders to be
conducted at an annual meeting of stockholders if the proper procedures are
followed, these Bylaw provisions may have the effect of precluding a nomination
of a Class A Director or precluding the conducting of business at a particular
annual meeting, and may make it difficult for a third party to conduct a
solicitation of proxies to elect its own slate of Class A Directors or otherwise
attempt to obtain control of the Company, even if such a solicitation or attempt
might be beneficial to the Company and its stockholders.

69
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS

Committees of the Board include an Executive Committee, Audit Committee,
Class A Director Nominating Committee, Compensation Committee, and a Budget
Committee.

The Company has established an Executive Committee composed of Messrs.
Wiederstein (Chairman), Gibson, Maahs and Morain. The Executive Committee may
exercise all powers of the Board of Directors during intervals between meetings
of the Board, except for matters reserved to the Board by the Iowa Business
Corporation Act, and except for removal or replacement of the Chairman or Chief
Executive Officer.

The Company has established an Audit Committee composed of Class A Directors
Messrs. Chicoine, Creer and Walker, with Mr. Chicoine serving as Chairman. The
Audit Committee must include only Class A Directors who are independent of
management and free from any relationships that would interfere with the
exercise of independent judgment. The Audit Committee reviews the professional
services to be provided by the Company's independent auditors and the
independence of such auditors from management of the Company. The Audit
Committee also reviews the scope of the audit by the Company's independent
auditors, the annual financial statements of the Company, the Company's system
of internal accounting controls and such other matters with respect to the
accounting, auditing and financial reporting practices and procedures of the
Company as it may find appropriate or as may be brought to its attention, and
meets from time to time with member of the Company's internal audit staff. In
addition to the usual and customary functions of an Audit Committee governed by
the requirements of the New York Stock Exchange, the Audit Committee is required
to review with the auditors and management any material transaction or series of
similar transactions to which the Company was, within the past year, or is
currently expected to be, a party, and with respect to which a director,
executive officer, or holder of more than five percent of any class of stock of
the Company is a party. If the Audit Committee determines that any transaction
or proposed transaction between the Company and Farm Bureau Mutual is unfair to
the Company, the Company is required to submit the matter to a coordinating
committee for resolution.

The Company has established a Class A Directors Nominating Committee which
nominates candidates for election to the Board of Directors as Class A
Directors. The Committee members are nominated by the Chairman of the Board, and
include Messrs. Merklin, Ashby, McClure, Walker and Creer, with Mr. Merklin
serving as Chairman of the Committee. The Committee must include at least
two-thirds of the Class A Directors and may consist of up to five members of the
Board nominated by the Chairman of the Board. Any action of the Class A
Directors Nominating Committee requires the concurrence of at least 50% of the
Class A Directors who are members of the Committee.

The Company has established a Compensation Committee of the Board of
Directors which has oversight responsibility with respect to compensation
matters involving executive officers of the Company. The Compensation Committee
is composed of Messrs. Wiederstein, Evans, Neidig, Chicoine and Creer, with Mr.
Wiederstein serving as the Chairman of the Committee.

The Company has established a Budget Committee designated by the Chairman of
the Board and composed of Messrs. Poulson, Mitchell, Van Sweden, Chicoine and
Walker, with Mr. Poulson as Chairman. The Budget Committee reviews all budgets
proposed by management and makes recommendations thereon to the Board of
Directors.

The Company has also established an Investment Committee, a Class B
Directors Nominating Committee and an Advisory Committee, and may establish
other committees in its discretion. The Advisory Committee is composed of the
general managers of the Farm Bureau affiliated property-casualty insurance
companies in the Company's market territory.

DIRECTOR COMPENSATION

After the Offering, all non-employee Directors will receive an annual
retainer of $2,000, a fee of $1,000 for each board meeting attended and a fee of
$500 for each committee meeting attended. In addition, Class A Directors will
receive an annual retainer of $13,333. All Directors will be reimbursed for
travel expenses incurred in attending board or committee meetings. Upon
completion of the Offering, all non-employee Directors will receive an option to
purchase 2,000 shares of Class A Common Stock of the Company. Thereafter, each
new non-employee Director will receive an option to purchase 2,000 shares of
Class A Common Stock of the Company upon initial election to the Board of
Directors of the Company. See "Management Compensation -- 1996 Class A Common
Stock Compensation Plan."

70
<PAGE>
EXECUTIVE OFFICERS

Commencing January 1, 1996, most of the executive and other officers of the
Company devote all of their time to the affairs of the Company. Services
performed for affiliates of the Company are charged to such affiliates on the
basis of a time allocation and the affiliates are required to reimburse the
Company for the cost of such services, plus one-half of one percent. Two
officers, Mr. Maahs and Mr. Morain, do not devote all of their time to the
affairs of the Company as they are also employed by Management Corp., a wholly
owned subsidiary of the Iowa Farm Bureau Federation, and they are compensated by
the Company for their services to the Company and by the Iowa Farm Bureau
Federation for their services to it based on the portion of their time expected
to be expended on behalf of each entity.

The current executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------- --- --------------------------------------------------
<S> <C> <C>
Edward M. Wiederstein 48 Chairman of the Board and Director
Thomas R. Gibson 51 Executive Vice President, General Manager, Chief
Executive Officer and Director
Eugene R. Maahs 64 Senior Vice President, Secretary and Treasurer and
Director
Stephen M. Morain 50 Senior Vice President and General Counsel and
Director
William J. Oddy 52 Vice President, Assistant General Manager and
Chief Operating Officer
Timothy J. Hoffman 46 Vice President, Chief Marketing Officer
Richard D. Warming 62 Vice President, Chief Investment Officer and
Assistant Treasurer
James W. Noyce 40 Vice President, Chief Financial Officer
Thomas E. Burlingame 51 Vice President, Associate General Counsel
W. Kent Fairchild 54 Vice President, Product Development and Marketing
Services
Ronald C. Price 44 Vice President, Agency
Monte R. Roumpf 56 Vice President, Information Technology
JoAnn W. Rumelhart 43 Vice President, Life Operations
Robert L. Tatge 49 Vice President, Property-Casualty Operations
F. Walter Tomenga 49 Vice President, Corporate Affairs
Lynn E. Wilson 46 Vice President, Multi-State Sales
</TABLE>

Set forth below is a description of the business experience, principal
occupation and employment during the last five years of the executive officers
of the Company:

Biographical information for Messrs. Wiederstein, Gibson, Maahs and Morain
is set forth above under "-- Directors."

William J. Oddy, FSA, MAAA, is Vice President, Chief Operating Officer and
Assistant General Manager of the Company and of its major operating
subsidiaries. Mr. Oddy has been employed by the Company and its affiliates since
1968.

Timothy J. Hoffman, FSA, CLU, ChFC, FLMI, LLIF, MAAA, is Vice President,
Chief Marketing Officer of the Company and its major operating subsidiaries. Mr.
Hoffman has been employed by the Company and its affiliates since 1971.

71
<PAGE>
Richard D. Warming is Vice President, Chief Investment Officer and Assistant
Treasurer of the Company and of the major operating subsidiaries. He is chairman
of the Investment Committee of each of the companies. Mr. Warming has been
employed by the Company and its affiliates since 1959.

James W. Noyce, CPA, FCAS, ASA, FLMI, MAAA, was named Vice President, Chief
Financial Officer of the Company and its major operating subsidiaries in
December 1995, having served as Vice President -- Controller since January 1991.
He is the Chairman of the Benefits Administration Committee for each of the
companies. Mr. Noyce has been employed by the Company and its affiliates since
1985.

Thomas E. Burlingame is Vice President, Associate General Counsel of the
Company and its major operating subsidiaries. Mr. Burlingame has been employed
by the Company and its affiliates since 1980.

W. Kent Fairchild was named Vice President, Product Development and
Marketing Services in April 1994, after serving as Senior Vice President Life
Operations of Western Life from 1987 to 1994.

Ronald C. Price, CLU, LUTCF, LLIF, is Vice President, Agency for the Company
and its major operating subsidiaries. He has been employed by the Company since
1975 as a career agent, agency manager, and a state sales director before
assuming his present position in 1988.

Monte R. Roumpf, CPCU, FLMI, has been employed by the Company since 1968 and
has been its Vice President, Information Technology since 1991.

JoAnn W. Rumelhart, FSA, MAAA, became Vice President -- Life Operations of
the Company and its major operating subsidiaries in July of 1994. She began
working for the Company in 1978, and served as Vice President -- Client Services
from January 1991.

Robert L. Tatge, FCAS, MAAA, CLU, became Vice President -- Property-Casualty
Operations for the Company and its major operating subsidiaries in July 1994. He
has been employed by the Company since 1968 and previously served as Vice
President -- Underwriting and Claims from 1991.

F. Walter Tomenga is the Company's Vice President, Corporate Affairs, a
position he has held since June 1994. He has been employed by the Company since
1989, previously serving as Member Health Services Vice President and as Vice
President -- Research and Development.

Lynn E. Wilson, CLU, CHFC, MSFS, has been Vice President, Multi-State Sales
since July 1994. From 1989 to July 1994 he was Senior Vice President of
Marketing for Western Farm Bureau Life. He was an agent, and an agency manager
for the Company from 1973 to 1985.

MANAGEMENT COMPENSATION

EXECUTIVE OFFICER COMPENSATION

As described herein, the Company has adopted a Stock Option Plan and made
awards thereunder to become effective on the date of this Offering.

The following table summarizes the compensation paid by the Company and
certain affiliates to the Chief Executive Officer and to the Company's four most
highly compensated executive officers, other than the Chief Executive Officer,
who were serving on December 31, 1995, for services rendered to the Company and
these affiliates in all capacities during the fiscal year ended December 31,
1995. No "long-term compensation" was paid to any executive officer of the
Company in 1995.

72
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS COMPENSATION
- ------------------------------------------------------------------ --------- ---------- --------- --------------
<S> <C> <C> <C> <C>
Thomas R. Gibson ................................................. 1995 $ 275,000 $ 73,123 $ 24,662(2)
Executive Vice President, General Manager and Chief Executive
Officer
Stephen M. Morain ................................................ 1995 235,000 25,216 14,683(3)
Senior Vice President and General Counsel
William J. Oddy .................................................. 1995 227,000 60,360 22,581(4)
Vice President, Assistant General Manager and Chief Operating
Officer
Timothy J. Hoffman ............................................... 1995 171,000 32,478 15,879(5)
Vice President and Chief Marketing Officer
Richard D. Warming ............................................... 1995 163,000 30,959 30,360(6)
Vice President, Chief Investment Officer and Assistant Treasurer
</TABLE>

- ------------------------
(1) In 1995, each person named was employed by Management Corp., a subsidiary of
the Iowa Farm Bureau Federation, and, in addition to providing services to
the Company, also provided services to affiliates of the Company such as
Farm Bureau Mutual, South Dakota Mutual, and the Iowa Farm Bureau
Federation, the financial results of which are not included in the Company's
consolidated financial statements. The compensation expenses for these
executives were allocated among the Company and each of the affiliates to
which services were provided based primarily on the amount of time the
executive devoted to each entity's affairs. For 1995, for each of the named
persons, the portion of such executive's total compensation allocated to the
Company was as follows: Gibson, 70.8%; Morain, 51.7%; Oddy, 63.6%; Hoffman,
77.0%; and Warming, 98.2%. In 1996, these executives became employees of the
Company and, accordingly, receive their total compensation from the Company
(except for Mr. Morain who is an employee of the Company (as to
approximately 60% of his compensation) and of Management Corp.). The Company
will charge a management fee for services provided by these executives to
the Company's affiliates. See "Certain Transactions and Relationships --
Service Agreement with Farm Bureau Management Corporation."

(2) Mr. Gibson's "all other compensation" provided by the Company in 1995
included 70.8% of (i) $16,173 for the cost of life insurance coverage; (ii)
$6,286 for the value of personal use of a Company fleet automobile, and
(iii) $2,203 under a Company flex cash (cafeteria plan) account.

(3) Mr. Morain's "all other compensation" provided by the Company in 1995
included 51.7% of (i) $8,447 for the cost of life insurance coverage, (ii)
$4,976 for the value of personal use of a Company fleet automobile, and
(iii) $1,260 under a Company flex cash (cafeteria plan) account.

(4) Mr. Oddy's "all other compensation" provided by the Company in 1995 included
63.6% of (i) $12,952 for the costs of life insurance coverage, (ii) $7,772
for the value of personal use of a Company fleet automobile, and (iii)
$1,857 under a Company flex cash (cafeteria plan) account.

(5) Mr. Hoffman's "all other compensation" provided by the Company in 1995
included 77.0% of (i) $7,256 for the cost of life insurance coverage, (ii)
$8,398 for the value of personal use of a Company fleet automobile and (iii)
$225 for an educational bonus.

(6) Mr. Warming's "all other compensation" provided by the Company in 1995
included 98.2% of (i) $21,459 for the cost of life insurance coverage, (ii)
$6,859 for the value of personal use of a Company fleet automobile, and
(iii) $2,042 under a Company flex cash (cafeteria plan) account.

73
<PAGE>
STOCK OPTIONS

No stock options, freestanding stock appreciation rights (SARs) or other
equity-based awards were granted to any executive officer or other persons by
the Company prior to 1996.

AWARD TABLE

Set forth below is a table of the option grants approved under the Stock
Option Plan for each of the named executive officers, the non-employee Directors
of the Company as a group, the non-employee directors of first tier subsidiaries
of the Company as a group, all executive officers as a group, all employees as a
group and the members of the Advisory Committee. Each of these options will
become effective on the date on which the Shares are first offered to the public
pursuant to this Offering (the Effective Date), have a term of up to 10 years,
become exercisable in five approximately equal annual installments on each of
the first, second, third, fourth and fifth anniversaries of the date of grant
(except that the options granted to non-employee directors of the Company and
its subsidiaries become fully exercisable six months after the date of grant)
and have an exercise price per share equal to the initial public offering price.
Except as to options for 2,000 shares granted to each non-employee Director of
the Company and its first tier subsidiaries and to the members of the Advisory
Committee, all of which are nonqualified stock options (NQSOs), the actual
number of option shares to be granted will depend upon the initial public
offering price of the Shares. The option grants to executive officers and
employees will generally qualify as incentive stock options (ISOs), except to
the extent that the aggregate exercise price with regard to options that first
become exercisable in one year exceeds $100,000; any such excess options will be
treated as NQSOs.

<TABLE>
<CAPTION>
NUMBER OF OPTION
NAME SHARES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Thomas R. Gibson..................................................................... 67,200
Stephen M. Morain.................................................................... 43,065
William J. Oddy...................................................................... 55,086
Timothy J. Hoffman................................................................... 31,029
Richard D. Warming................................................................... 29,657
All non-employee Directors as a group (17 persons)................................... 34,000
All non-employee directors of first tier subsidiaries as a group (25 persons)........ 50,000
All executive officers as a group (16 persons)....................................... 477,404
All other employees as a group (33 persons).......................................... 218,404
The members of the Advisory Committee, as a group (9 persons)........................ 18,000
</TABLE>

1996 CLASS A COMMON STOCK COMPENSATION PLAN

In March 1996 the Company's Board of Directors adopted and the shareholders
of the Company approved the 1996 Class A Common Stock Compensation Plan (Stock
Option Plan or the Plan). Awards under the Stock Option Plan (Awards) are
designated as ISOs, NQSOs, bonus stock, restricted stock or SARs. Awards may be
granted to consultants, advisors, Directors of the Company and its first tier
subsidiaries (whether or not they are employees of the Company), employees and
officers of the Company. No awards will be granted after the expiration of ten
years from the effective date of the registration statement of which this
Prospectus is a part.

The Plan is administered by the Board. The Board, within the limitations of
the Plan, determines the persons to whom Awards will be granted, the number of
shares to be covered by each Award, whether the Awards granted are intended to
be ISOs, the duration and rate of exercise of each Award, the option purchase
price per share and the manner of exercise, the time, manner and form of payment
upon exercise of an Award and whether restrictions such as repurchase rights of
the Company are to be imposed on shares subject to Awards. All stock options and
SARs granted under the Plan will have an exercise price or base price,
respectively, no less than 85% of the fair market value of the Class A Common
Stock on the date of grant. The Board also has authority to interpret the Plan
and any instrument or agreement entered into under the Plan, to establish such
rules and regulations relating to the administration of the Plan as it deems
appropriate and

74
<PAGE>
to make all other determinations which may be necessary or advisable for the
administration of the Plan. The Board of Directors may terminate, amend or
modify the Plan in a manner consistent with the Plan's provisions, provided such
changes do not violate the federal or state securities laws.

The plan provides that 1,750,000 shares of Class A Common Stock are
available for grant under the Plan. If any Award terminates, expires or lapses
without the issuance of any Class A Common Stock the underlying stock shall
again become available for grant. In the event of a change in the Company's
corporate structure that affects the shares (for example, a merger,
recapitalization, or stock dividend), the Board shall make adjustments to the
number of shares available to the Plan and to the number and or price of
outstanding Awards to prevent dilution or enlargement of rights.

The Plan provides that the terms of Awards of restricted stock or SARs may
be established by the Board, in its discretion, at the time of grant.

The Plan provides for the automatic grant of nonqualified stock options for
2,000 Shares to each person who is a non-employee Director of the Company and/or
of its first tier subsidiaries on the Effective Date, at the initial public
offering price set forth on the cover page of this Prospectus. Recipients of
nonqualified stock options include the 17 non-employee Directors of the Company
and 25 non-employee Directors of the Company's first tier subsidiaries, with
respect to a total of 84,000 shares. Subsequent to the date of this Prospectus,
automatic grants of nonqualified stock options for 2,000 shares will be awarded
to new non-employee Directors of the Company and of its first tier subsidiaries,
at the time of initial election or appointment, at an exercise price equal to
100% of the fair market value of the shares on the date of grant. Non-employee
Director options vest in full on the date of grant, and are exercisable for a
term of 10 years from the date of grant or, if earlier, three years from the
date such non-employee Director ceases to serve as a Director. The Board of
Directors will have no discretion regarding the grants or terms of non-employee
Director options. Nonqualified stock options for 2,000 shares each have been
granted to the nine members of the Advisory Committee.

The purchase price of Shares purchased pursuant to exercise of an Option by
an employee must be paid in full upon exercise, in cash, by check, or in the
discretion of the Board and upon such terms and conditions as the Board shall
approve, by transferring Shares to the Company, or by a combination of the
foregoing methods. The Board is also empowered to authorize the Company to
withhold shares for the payment of income taxes on the exercise of options. The
Company may also make loans to Plan participants to allow them to exercise
options subject to specified terms, and secured by a pledge of the shares.

The Plan provides that the right to purchase all shares subject to an
employee option will vest in five equal installments on each of the first five
anniversaries of the date of grant or, if earlier, upon the death, disability or
retirement after age 55 with a combination of age and years of service with the
Company and other Farm Bureau organizations of at least 85 (a Qualifying
Retirement). Upon termination of employment for any reason other than death,
disability or Qualifying Retirement, options must be exercised within thirty
days or they will expire. If a participant's termination of employment is due to
death, disability or Qualifying Retirement, the option is exercisable for a
period of three years after termination. The Plan also provides for the
immediate vesting of all outstanding Awards upon the occurrence of a Change in
Control as defined in the Plan. Awards under the Plan, therefore, may affect the
extent to which and the means by which a potential acquiror of the Company may
be able to acquire control of the Company and may discourage potential acquirors
from making proposals which certain of the Company's stockholders might find
attractive due to the increased percentage of ownership of the Company by
executive officers and directors.

Prior to completion of the Offering, options for the purchase of a total of
797,808 shares of Class A Common Stock, each with a per share exercise price
equal to the initial public offering price set forth on the cover page of this
Prospectus, were granted, leaving, approximately 952,192 shares of Class A
Common Stock available for grant as additional Awards under the Plan. To date,
no grants of SARs or stock bonuses have been made under the Plan.

75
<PAGE>
FEDERAL INCOME TAX ASPECTS. The following is a brief summary of the federal
income tax consequences of awards made under the Stock Option Plan based upon
the federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.

INCENTIVE STOCK OPTIONS. No taxable income is realized by the grantee upon
the grant or exercise of an ISO. If a grantee does not sell the stock received
upon the exercise of an ISO (ISO Shares) for at least two years from the date of
grant and within one year from the date of exercise, when the ISO Shares are
sold any gain or loss realized will be treated as long-term capital gain or
loss. In such circumstances, no deduction will be allowed to the Company for
federal income tax purposes.

If ISO Shares are disposed of prior to the expiration of the holding periods
described above, the grantee generally will realize ordinary income at that time
equal to the lesser of the excess of the fair market value of the shares at
exercise over the price paid for such ISO Shares or the actual gain on the
disposition. The Company will generally be entitled to deduct any such
recognized amount. Any further gain or loss realized by the grantee will be
taxed as short-term capital gain or loss. Subject to certain exceptions for
disability or death, if an ISO is exercised more than three months following the
termination of the grantee's employment, the ISO will generally be taxed as a
nonqualified stock option.

NONQUALIFIED STOCK OPTIONS. No income is realized by the grantee at the
time a nonqualified stock option is granted. Generally upon exercise of a
nonqualified stock option, the grantee will realize ordinary income in an amount
equal to the difference between the price paid for the shares and the fair
market value of the shares on the date of exercise. The Company will generally
be entitled to a tax deduction in the same amount and at the same time as the
grantee recognizes ordinary income. Any appreciation or depreciation after the
date of exercise will be treated as either short-term or long-term capital gain
or loss, depending upon the length of time that the grantee has held the shares.

OTHER AWARDS. The Stock Option Plan authorizes the issuance of awards other
than ISOs and nonqualified stock options, including stock appreciation rights,
restricted stock and stock bonuses. No awards other than ISOs and nonqualified
stock options have been granted under the Plan.

SECTION 162(M). Awards paid to certain executive officers may be subject to
the limitations under Section 162(m) of the Internal Revenue Code that prohibit
the deduction of certain compensation paid in excess of $1,000,000 in any
taxable year. The application of such section to awards made under plans adopted
and approved prior to the time at which a company's stock becomes publicly
traded is not clear. The Company believes that compensation payable pursuant to
options granted under the Stock Option Plan should not be limited as to
deductibility by reason of Section 162(m) and that compensation payable in
respect to other awards may fail to be deductible for federal income tax
purposes unless such awards qualify for certain exemptive relief that may be
available for grants made prior to the first meeting of stockholders of the
Company at which Directors are elected in 1999.

BENEFITS

Employees are generally covered under the Iowa Farm Bureau Federation and
Affiliated Companies Retirement Plan, the Supplemental Retirement Plan and the
Iowa Farm Bureau Federation Affiliates Supplemental Retirement Plan (Pension
Plans). The three plans operate as a single plan to provide total benefits to
all participants. The former two are qualified plans under Section 401(a) and
the latter plan is a nonqualified plan which provides benefits according to the
overall plan formulas, but includes compensation exceeding $150,000 under
Section 401(a)(1) and provides benefits provided by the formula which are
otherwise limited by Section 415 of the Internal Revenue Code. The pension plans
are available to all employees and officers generally and provide for the same
method of allocation of benefits between management and non-

76
<PAGE>
management participants. Active participants include employees over age 21 who
have worked at least one year and provided at least 1,000 hours of service
during that year. The pension table below reflects the total pension benefits
provided according to remuneration and completed years of service.

ANNUAL PENSION PLAN BENEFITS

<TABLE>
<CAPTION>
ASSUMED HIGH YEARS OF SERVICE
36 MONTH AVERAGE ----------------------------------------------------------
ANNUAL SALARY 15 20 25 30 35
- ---------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$125,000 $ 40,625 $ 56,250 $ 71,875 $ 87,500 $ 87,500
150,000 48,750 67,500 86,250 105,000 105,000
175,000 56,875 78,750 100,625 122,500 122,500
200,000 65,000 90,000 115,000 140,000 140,000
225,000 73,125 101,250 129,375 157,500 157,500
250,000 81,250 112,500 143,750 175,000 175,000
300,000 97,500 135,000 172,500 210,000 210,000
350,000 113,750 157,500 201,250 245,000 245,000
</TABLE>

The credited years of service as of December 31, 1995 for Messrs. Gibson,
Morain, Oddy, Hoffman and Warming were 29, 18, 27, 24 and 36, respectively.

The plan is a defined benefit plan which provides monthly income to retirees
who have worked for at least 10 years and attained age 55. The amount provided
is a percentage of the high 36 consecutive month average salary calculated
according to the following formula: 2% per year for the first 10 years of
service, plus 2 1/2% for each year above 10 years of service up to 30 years of
service. Unreduced early retirement benefits are provided after 30 years of
service or upon attainment of 85 age plus service points.

Years of service include all years in which an individual first exceeds
1,000 hours of service and any year thereafter in which he exceeds 500 hours of
service.

The plan formula provides a monthly benefit for life with a guarantee of 120
monthly payments. Other options, including lump sum, are available to the
retiree on an actuarially equivalent basis.

The compensation covered by the Pension Plan is calculated based upon total
salary and bonuses paid to the participant during the given year. The Company
does not make any 401(k) salary reduction contributions.

The annual benefits shown in the above table are not reduced to reflect the
limitations imposed by federal tax laws, which place upper limits on the
benefits which may be provided to any individual by tax qualified pension plans.
The Iowa Farm Bureau Affiliates Supplemental Retirement Plan is an unfunded,
non-qualified plan, which provides that it will pay directly the difference
between the retirement benefit normally calculated under the Iowa Farm Bureau
Federation and Affiliated Companies Retirement Plan and the Supplemental
Retirement Plan, consistent with federal tax law. In 1995, Messrs. Gibson,
Morain, Oddy, Hoffman and Warming received allocations under the Supplemental
Plan for services provided to the Company of $44,017, $16,488, $30,941, $6,045
and $55,363, which amounts are not included in the Summary Compensation Table
set forth above, and which represents the percentage of total benefits they
received in 1995 multiplied by the percentage of their time allocated to the
Company.

OTHER COMPENSATION PLANS

Farm Bureau Mutual sponsors a bonus plan for all employees, which includes a
management performance (bonus) plan in which executives, department heads and
managers of Farm Bureau Mutual and its affiliates, including the Company and its
subsidiaries, participate. On an annual basis, the Company establishes various
and distinct goals for its executives, division heads and managers. Goals
generally relate to such matters as life insurance and property-casualty new
business production, expense levels and earnings. Attainment of individual goals
can result in payment of cash bonuses ranging up to 50% of base salary for Mr.
Gibson and Mr. Oddy and up to 12% for managers. Payment of the performance
incentive is made annually in a single, separate lump sum payment on or before
February 14th of the ensuing year.

77
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

All of the 4,000,000 Shares of Class A Common Stock offered hereby are being
sold by the Selling Stockholders. The Selling Stockholders will receive all of
the net proceeds from the sale of the Shares being sold by them.

The following tables indicate ownership of the Company's Class A Common
Stock, Class B Common Stock, and Series A Preferred Stock immediately prior to
the Offering but after giving effect to the Series A Exchange and immediately
following completion of the Offering by (i) each person who is known by the
Company to be the beneficial owner of 5% or more of the outstanding shares of
each class, (ii) each Selling Stockholder, (iii) each director of the Company,
and (iv) all executive officers and directors as a group. No Common Stock of
either class is owned of record by any director or officer, and no director or
officer has any vested options or options that will vest within 60 days. For
information regarding options held by officers and directors, see "Management
Compensation -- Stock Options."

CLASS A COMMON STOCK

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES TO BE
OWNED BENEFICIALLY OWNED
PRIOR TO THE OFFERING AFTER THE OFFERING
----------------------- -----------------------
NUMBER OF # OF SHARES NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES % BEING OFFERED SHARES %
- ----------------------------------------------------- ------------ --------- -------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Iowa Farm Bureau Federation (2)...................... 9,475,245 53.6 -- 9,475,245 53.6
Farm Bureau Mutual................................... 3,550,454 20.1 2,094,950 1,455,504 8.2
Rural Mutual Insurance Company....................... 874,000 4.9 874,000 -- --
Farm Bureau Insurance Company of Nebraska............ 484,500 2.7 334,000 150,500 *
Colorado Farm Bureau Mutual Insurance Company........ 423,700 2.4 211,850 211,850 1.2
Mountain West Farm Bureau Mutual Insurance Company... 482,600 2.7 140,000 342,600 1.9
Western Ag........................................... 482,600 2.7 140,000 342,600 1.9
Farm Bureau Finance Company.......................... 115,900 * 115,900 -- --
Nodak Mutual Insurance Company....................... 178,600 1.0 89,300 89,300 *

Edward M. Wiederstein (3)............................ 13,508,299 76.5 -- 11,273,349 63.8
Thomas R. Gibson..................................... -- -- -- -- --
Eugene R. Maahs...................................... -- -- -- -- --
Stephen M. Morain.................................... -- -- -- -- --
V. Thomas Geary (4).................................. 1,525,681 8.6 -- 1,269,781 7.2
Roger Bill Mitchell (5).............................. 908,200 5.1 -- 556,350 3.1
Kenneth R. Ashby (6)................................. 7,790 * -- 7,790 *
Jerry L. Chicoine.................................... -- -- -- -- --
Al Christopherson (7)................................ 4,109,039 23.3 -- 2,014,085 11.4
John W. Creer........................................ -- -- -- -- --
Kenny J. Evans (8)................................... 507,794 2.9 -- 367,794 2.1
Gary Hall (9)........................................ 615,600 3.5 -- 475,600 2.7
Karen J. Henry (10).................................. 967,100 5.5 -- 687,100 3.9
Richard Kjerstad (11)................................ 1,900 * -- 1,900 *
David C. McClure (12)................................ 1,523,781 8.6 -- 1,243,781 7.0
H. Eldon Merklin (13)................................ 1,523,781 8.6 -- 1,383,781 7.8
Bryce P. Neidig (14)................................. 1,525,681 8.6 -- 1,051,681 6.0
Howard D. Poulson (15)............................... 880,308 5.0 -- 6,308 *
Howard G. Schmid (16)................................ 663,100 3.8 -- 433,800 2.5
John J. Van Sweden (17).............................. 509,732 2.9 -- 369,732 2.1
John E. Walker....................................... -- -- -- -- --
All directors and executive officers as a group (33
persons)............................................ 17,666,810 100.0 -- 13,666,810 77.4
</TABLE>

78
<PAGE>
CLASS B COMMON STOCK

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES %
- ----------------------------------------------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Iowa Farm Bureau Federation (2)...................... 761,855 63.9
Farm Bureau Mutual................................... 186,866 15.7
Rural Mutual Insurance Company....................... 46,000 3.9
Farm Bureau Insurance Company of Nebraska............ 25,500 2.1
Colorado Farm Bureau Mutual Insurance Company........ 22,300 1.9
Mountain West Farm Bureau Mutual Insurance Company... 25,400 2.1
Western Ag........................................... 25,400 2.1
Farm Bureau Finance Company.......................... 6,100 *
Nodak Mutual Insurance Company....................... 9,400 *

Edward M. Wiederstein (3)............................ 974,121 81.7
Thomas R. Gibson..................................... -- --
Eugene R. Maahs...................................... -- --
Stephen M. Morain.................................... -- --
V. Thomas Geary (4).................................. 80,299 6.7
Roger Bill Mitchell (5).............................. 47,800 4.0
Kenneth R. Ashby (6)................................. 410 *
Jerry L. Chicoine.................................... -- --
Al Christopherson (7)................................ 216,265 18.1
John W. Creer........................................ -- --
Kenny J. Evans (8)................................... 26,726 2.2
Gary Hall (9)........................................ 32,400 2.7
Karen J. Henry (10).................................. 50,900 4.3
Richard Kjerstad (11)................................ 100 *
David C. McClure (12)................................ 80,199 6.7
H. Eldon Merklin (13)................................ 80,199 6.7
Bryce P. Neidig (14)................................. 80,299 6.7
Howard D. Poulson (15)............................... 46,332 3.9
Howard G. Schmid (16)................................ 34,900 2.9
John J. Van Sweden (17).............................. 26,828 2.2
John E. Walker....................................... -- --
All directors and executive officers as a group (33
persons)............................................ 1,192,990 100.0
</TABLE>

SERIES A PREFERRED STOCK

79
<PAGE>
- ------------------------
* Less than 1%.

(1) The address of each officer and director of the Company is 5400 University
Avenue, West Des Moines, IA 50266, unless otherwise noted.

(2) The Iowa Farm Bureau Federation owns 9,475,245 shares of Class A Common
Stock, 53.6% of the class, and 5,000,000 shares of Series A Preferred Stock,
100% of such class. The Series A Preferred Stock votes as a single class
with the Class A Common Stock on most matters, and the Iowa Farm Bureau
Federation owns 63.9% of the Class A Voting Rights. The remaining holders of
Class A Common Stock thereby have a proportionately lower percentage of
Class A Voting Rights as compared to their percentage ownership of the Class
A Common Stock.

(3) Represents shares beneficially owned by Iowa Farm Bureau Federation, Farm
Bureau Mutual and Western Ag. Mr. Wiederstein is a director of each of said
companies and in such capacity exercises shared investment and voting power
with respect to all such shares, and he may be deemed a beneficial owner of
such shares.

(4) Represents shares beneficially owned by American Ag, Western Ag, Farm
Bureau Insurance Service Company of Idaho, Farm Bureau Finance Company and
the Idaho Farm Bureau Federation. Mr. Geary is a director of each of said
companies and in such capacity exercises shared investment and voting power
with respect to all such shares, and he may be deemed a beneficial owner of
such shares.

(5) Represents shares beneficially owned by Western Ag, Colorado Farm Bureau
Mutual Insurance Company and the Colorado Farm Bureau Federation. Mr.
Mitchell is a director of each of said companies and in such capacity
exercises shared investment and voting power with respect to all such
shares, and he may be deemed a beneficial owner of such shares.

(6) Represents shares beneficially owned by the Utah Farm Bureau Federation.
Mr. Ashby is a director of said company and in such capacity exercises
shared investment and voting power with respect to all such shares, and he
may be deemed a beneficial owner of such shares.

(7) Represents shares beneficially owned by Farm Bureau Mutual, American Ag and
by the Minnesota Farm Bureau Federation. Mr. Christopherson is a director of
each of said companies and in such capacity exercises shared investment and
voting power with respect to all such shares, and he may be deemed a
beneficial owner of such shares.

(8) Represents shares beneficially owned by Western Ag, Western Farm Bureau
Mutual and Farm Bureau Insurance Service Company of Arizona. Mr. Evans is a
director of each of said companies and in such capacity exercises shared
investment and voting power with respect to all such shares, and he may be
deemed a beneficial owner of such shares.

(9) Represents shares beneficially owned by Kansas Farm Bureau Life Insurance
Company and by Western Ag. Mr. Hall is a director of both of said companies
and in such capacity exercises shared investment and voting power with
respect to all such shares, and he may be deemed a beneficial owner of such
shares.

(10) Represents shares beneficially owned by Western Ag, Mountain West Farm
Bureau Mutual Insurance Company and the Wyoming Farm Bureau Federation. Mrs.
Henry is a director of each of said companies and in such capacity exercises
shared investment and voting power with respect to all such shares, and she
may be deemed a beneficial owner of such shares.

(11) Represents shares beneficially owned by the South Dakota Farm Bureau
Federation. Mr. Kjerstad is a director of said organization and in such
capacity exercises shared investment and voting power with respect to all
such shares, and he may be deemed a beneficial owner of such shares.

(12) Represents shares beneficially owned by American Ag, Western Ag, Mountain
West Farm Bureau Mutual Insurance Company and the Montana Farm Bureau
Federation. Mr. McClure is a director of each of said companies and in such
capacity exercises shared investment and voting power with respect to all
such shares, and he may be deemed a beneficial owner of such shares.

80
<PAGE>
(13) Represents shares beneficially owned by American Ag, Western Ag, Oklahoma
Farm Bureau Mutual Insurance Company and the Oklahoma Farm Bureau
Federation. Mr. Merklin is a director of each of said companies and in such
capacity exercises shared investment and voting power with respect to all
such shares, and he may be deemed a beneficial owner of such shares.

(14) Represents shares beneficially owned by American Ag, Western Ag, Farm
Bureau Insurance Company of Nebraska and the Nebraska Farm Bureau
Federation. Mr. Neidig is a director of each of said companies and in such
capacity exercises shared investment and voting power with respect to all
such shares, and he may be deemed a beneficial owner of such shares.

(15) Represents shares beneficially owned by Rural Mutual Insurance Company and
the Wisconsin Farm Bureau Federation. Mr. Poulson is a director of both of
said companies and in such capacity exercises shared investment and voting
power with respect to all such shares, and he may be deemed a beneficial
owner of such shares.

(16) Represents shares beneficially owned by Western Ag, Nodak Mutual Insurance
Company and the North Dakota Farm Bureau Federation. Mr. Schmid is a
director of each of said companies and in such capacity exercises shared
investment and voting power with respect to all such shares, and he may be
deemed a beneficial owner of such shares.

(17) Represents shares beneficially owned by Western Ag, Western Farm Bureau
Mutual, Farm Bureau Insurance Service Company of Arizona and the New Mexico
Farm and Livestock Bureau. Mr. Van Sweden is a director of each of said
companies and in such capacity exercises shared investment and voting power
with respect to all such shares, and he may be deemed a beneficial owner of
such shares.

None of the outstanding shares of Common Stock are currently subject to
registration rights. Immediately prior to the Offering there were 27 holders of
Class A Common Stock and Class B Common Stock of the Company. All of the
stockholders are Farm Bureau organizations. Prior to the Offering, Class A
Common Stock represented 95% and Class B Common Stock represented 5% of the
shares of common stock owned by each shareholder. None of the Class B Common
Stock can be sold other than to a Farm Bureau organization, except by first
being converted to Class A Common Stock. See "Certain Transactions and
Relationships -- Stockholders' Agreement Regarding Management and Transfer of
Shares of Class B Common Stock."

CERTAIN TRANSACTIONS AND RELATIONSHIPS

ORGANIZATION OF THE COMPANY

FBL Financial Group, Inc. was incorporated as an Iowa corporation in 1993.
In March 1996, and in anticipation of this Offering, the Company's shareholders
approved a restatement of its articles of incorporation and each share of
outstanding common stock was split into 1,900 shares of Class A Common Stock and
100 shares of Class B Common Stock. The information set forth herein reflects
this 2,000-for-1 stock split. In 1994 the Company issued 23,335,600 shares of
common stock to 27 stockholders in exchange for all the outstanding shares of
Farm Bureau Life and Western Life, and all minority interests in FBL Insurance
Company and Rural Security Life which were not already owned by Farm Bureau
Life. It also issued 118,000 shares to five additional Farm Bureau organizations
for cash at statutory book value. The assets and liabilities of FBL Insurance
Company and Rural Security Life were assumed by Farm Bureau Life at December 31,
1994, and in 1995 FBL Insurance Company and Rural Security Life were liquidated.
An additional 400,000 shares were issued to an existing shareholder in 1995 for
cash at equivalent statutory book values, and 6,200 shares were issued to
acquire minority interests in Utah Insurance. Each of the shareholders is a Farm
Bureau organization.

In December 1995, the stock of Utah Insurance was transferred by FBL
Financial Services, Inc. through Farm Bureau Life, and Utah Insurance thereby
became a direct subsidiary of the Company. Management anticipates that during
the second quarter of 1996 the Farm Bureau Mutual pool will be revised to
increase the percentage of the pool attributable to Utah Insurance from 8% to
20% with an effective date retroactive to

81
<PAGE>
January 1, 1996. Also, contingent upon effectiveness of this Offering, Farm
Bureau Life will transfer the stock of FBL Financial Services, Inc. under which
all of the Company's noninsurance operations are conducted, which will thereby
become a direct subsidiary of the Company.

Upon completion of this Offering, the Series A Exchange will be consummated.
See "Prospectus Summary -- The Series A Exchange."

SERVICES AGREEMENT WITH FARM BUREAU MANAGEMENT CORPORATION

The Company is a party to a Services Agreement (Services Agreement) with
Management Corp. which extends through December 31, 2005. Under the Services
Agreement, Management Corp. provides to the Company building services and
equipment repair and maintenance, food service, administrative services, child
care services, telephone services, stores and mailroom services, wellness and
purchasing services. The Company provides to Management Corp. most of the
personnel used by Management Corp. in its operations, as well as human resources
services, legal services, and the use of certain property and equipment. The
Services Agreement is terminable by either party upon 180 days prior written
notice to the other party, or immediately in the event of certain insolvency
events with respect to either party. The services provided by Management Corp.
are to be provided in accordance with policies, directives, and final approval
authority of the Board of Directors of the Company. For such services the
Company or Management Corp., as the case may be is reimbursed for all expenses
incurred in providing such services (billed quarterly in advance based on
Management Corp.'s current fiscal year budget and payable within 15 days of the
beginning of the quarter) and receives a fee equal to one-half of one percent of
all such expenses. The Company provides similar service to its subsidiaries and
to Farm Bureau Mutual and South Dakota Mutual, pursuant to similiar service
agreements which provide for cost reimbursement and a fee of one-half of one
percent thereof to be paid to the Company.

The services described above together with substantial additional services
were provided to the Company and its subsidiaries by Management Corp. prior to
January 1, 1996 pursuant to the provisions of management services agreements
which were terminated by agreement of the parties as of December 31, 1995.
During 1995 all of the personnel providing services to the Company and its
subsidiaries were employees of Management Corp. In 1996 most of these employees
(approximately 1,000) became employees of the Company. The cost of the services
provided to the Company by Management Corp. prior to January 1, 1996 was
allocated based on time and other factors, and 100% of the expenses incurred by
Management Corp. on behalf of the Company or its subsidiaries was paid to
Management Corp. During the three month period ended March 31, 1996 and the
years ended December 31, 1995, 1994 and 1993 such payments to Management Corp.
(inclusive of wage and salary reimbursement of the transferred employees) were
$1.0 million, $29.7 million, $3.1 million, and $3.0 million, respectively. After
the transfer of employees to the Company in 1996, the fees paid to Management
Corp. by the Company will be negligible.

FARM BUREAU MUTUAL POOL

Utah Insurance participates in the Farm Bureau Mutual pool with Farm Bureau
Mutual and South Dakota Mutual with all three companies operating under the
common management of the Company. All retained insurance business of Utah
Insurance and South Dakota Mutual is assumed by Farm Bureau Mutual. The combined
business is then assumed by the three property-casualty companies, in specified
proportions, not in excess of an amount that would create a net written premium
to surplus ratio that exceeds acceptable industry standards.

82
<PAGE>
that are also managed by the Company. Under the loss pooling agreement all
direct and assumed premiums, losses and allocated loss adjustment expenses (but
not acquisition and other general underwriting expenses) of Farm Bureau Mutual,
Utah Insurance and South Dakota Mutual will be pooled with these same items for
Western Ag and Western Farm Bureau Mutual.

STOCKHOLDERS' AGREEMENT REGARDING MANAGEMENT AND TRANSFER OF SHARES OF CLASS B
COMMON STOCK

Subsequent to the Offering all of the Class B Common Stock of the Company
will be owned by Farm Bureau organizations. As holders of all of the Class B
Common Stock of the Company, these organizations have entered into the
Stockholders' Agreement regarding management and the transfer of the Class B
Common Stock (Stockholders' Agreement).

The Stockholders' Agreement provides that the holders of the Class B Common
Stock will vote for the election, as Class B Directors of the Company, of (i)
the Presidents of each of the 15 state Farm Bureau Federations which own or are
affiliated with the owners of the Class B Common Stock and (ii) the Chief
Executive Officer of the Company and two additional officers of the Company
nominated by the Chairman of the Board. The Stockholders' Agreement also
provides that as long as a single state Farm Bureau Federation and its
affiliates own in excess of 50% of the outstanding shares of Class B Common
Stock (the Iowa Farm Bureau Federation will own approximately 63.9% of the Class
B Common Stock immediately after the Offering), the Class B Common Stockholders
will direct the Class B Directors to elect the President of such state Farm
Bureau Federation as the Chairman of the Board, and to elect persons nominated
by the Chairman to serve as Chief Executive Officer, Secretary and Treasurer.

In the event that a Class B Director chooses to vote other than as directed
pursuant to the requirements of the Shareholders' Agreement, the holders of not
less than 10% of the Class B Common Stock may request a special meeting of the
Class B Common Stockholders, for the purpose of removing the Class B Director,
and either replacing such director with a qualified person or leaving the
position vacant.

The holders of Class B Common Stock may not transfer the stock to any person
which is not a Farm Bureau organization, and any attempted transfer in violation
of the Stockholder's Agreement causes the Class B Common Stock so transferred to
automatically be converted to Class A Common Stock.

The holders of 90% of the Class B Common Stock, together with the Company,
may amend the Stockholders' Agreement.

RELATIONSHIP WITH FARM BUREAU ORGANIZATIONS

American Farm Bureau Federation is a national federation of member
organizations having as a major objective and purpose to promote, protect and
represent the business, economic, social and educational interests of farmers
and ranchers of the nation, and to develop agriculture, and a further objective
to correlate Farm Bureau activities and strengthen member state Farm Bureau
Federations. Through a membership agreement the Iowa Farm Bureau Federation (the
Company's principal stockholder) and similar state Farm Bureau Federations
throughout the country agree to cooperate in reaching these objectives.

American Farm Bureau Federation is the owner of the "Farm Bureau" and "FB"
trade names and related trademarks and service marks including "FB design" which
has been registered as a service mark with the U.S. Patent and Trademark Office.
Under the state membership agreements, use of such trade names and marks in each
state is restricted to members of the federation and their approved affiliates.
Farm Bureau Life is licensed by the Iowa Farm Bureau Federation to use the "Farm
Bureau" and "FB" designations in Iowa, and pursuant thereto royalties of
$91,000, $299,000, $300,000 and $271,000, respectively, were paid to the Iowa
Farm Bureau Federation for the three month period ended March 31, 1996 and for
the years ended December 31, 1995, 1994, and 1993. The Company's subsidiaries
have similar arrangements with Farm Bureau organizations in the other states of
the market territory. Total royalties paid to Farm Bureau organizations other
than the Iowa Farm Bureau Federation in 1995, 1994 and 1993 were $620,000,
$693,000 and $672,000, respectively. Royalty payments in excess of $60,000 were
made to Farm Bureau organizations in

83
<PAGE>
Minnesota (1995 -- $148,000; 1994 -- $177,000 and 1993 -- $145,000), Nebraska
(1994 -- $78,000 and 1993 -- $126,000), Oklahoma (1995 -- $94,000; 1994 --
$98,000 and 1993 -- $93,000), and South Dakota (1994 -- $66,000).

HOME OFFICE BUILDING AND CERTAIN OTHER EXPENSE ALLOCATIONS

The Company shares home office facilities, as well as certain management
personnel, with the Iowa Farm Bureau Federation and certain of its affiliates,
including Farm Bureau Mutual and various service companies. Costs are allocated
by factors such as the amount of space used for functions of the various
companies, and time studies and estimates of time spent by personnel for each of
the companies. Costs allocated to life insurance activities are further divided
between Farm Bureau Life and Western Life based on relative amounts of direct
written premiums attributable to each. The allocations are reviewed and approved
by the boards of directors of the respective companies.

The Company and its subsidiaries provide a number of services to, and
receive certain services from, other Farm Bureau organizations, including the
Company's two largest stockholders, the Iowa Farm Bureau Federation and Farm
Bureau Mutual. The Company providing such services is reimbursed based on an
allocation of the cost of providing such services.

The Company's home office facilities are owned by Farm Bureau Life which
leases a portion of such facilities to the Iowa Farm Bureau Federation and Farm
Bureau Mutual. In 1995, 1994 and 1993, the Iowa Farm Bureau Federation paid Farm
Bureau Life rent of approximately $61,000, $62,000 and $63,000, respectively. In
1995, 1994 and 1993, Farm Bureau Mutual paid Farm Bureau Life approximately
$1,468,000, $1,413,000 and $1,444,000, respectively, in rent.

Farm Bureau Life owns aircraft which are available for use by the Company's
affiliates. In 1995, 1994 and 1993, Farm Bureau Mutual paid the Company
approximately $78,000, $73,000 and $91,000, respectively, for use of such
aircraft.

The Company provided education and training services to Farm Bureau Mutual
through its subsidiary FBL Educational Services, Inc. In 1995, 1994 and 1993,
Farm Bureau Mutual paid the Company approximately $95,000, $90,000 and $78,000,
respectively, for such services.

Through its subsidiary, FBL Leasing Services, Inc., the Company owns and
leases computer equipment, furniture and automobiles to other Farm Bureau
organizations. In 1995, 1994 and 1993, the Iowa Farm Bureau Federation paid
approximately $339,000, $354,000 and $344,000, respectively, in aggregate
leasing fees. Farm Bureau Mutual paid aggregate leasing fees of approximately
$1,984,000, $1,857,000 and $1,867,000, respectively.

Through its investment advisor subsidiary, FBL Investment Advisory Services,
Inc., the Company provides investment advice and related services. Farm Bureau
Mutual paid the Company approximately $275,000, $232,000 and $293,000 for such
services in 1995, 1994 and 1993, respectively.

84
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The following description does not purport to be complete and is qualified
in its entirety by this reference to the Company's Restated Articles of
Incorporation, as amended (Articles), a copy of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.

The Company is authorized to issue 10,000,000 shares of preferred stock,
without par value (Preferred Stock), 88,500,000 shares of Class A Common Stock,
without par value (Class A Common Stock) and 1,500,000 shares of Class B Common
Stock, without par value (Class B Common Stock). References herein to "Common
Stock" include both the Class A Common Stock and the Class B Common Stock.
Effective March 19, 1996, the Company effected a 2,000 for 1 stock split
resulting in the issuance of 1,900 shares of Class A Common Stock and 100 shares
of Class B Common Stock for each previously outstanding share. As a result of
the stock split, as of March 19, 1996, the Company had issued and outstanding
22,666,810 shares of Class A Common Stock and 1,192,990 shares of Class B Common
Stock, all owned by Farm Bureau organizations. On April 29, 1996, the Company
designated 5,000,000 shares of its Preferred Stock as Series A Preferred Stock.
The Company has offered 5,000,000 shares of its Series A Preferred Stock in
exchange for 5,000,000 shares of its Class A Common Stock subject to the
completion of this Offering. The offer was made on a pro rata basis to its
existing shareholders. The Iowa Farm Bureau Federation has agreed to exchange
5,000,000 shares of Class A Common Stock for all 5,000,000 shares of Series A
Preferred Stock, none of which was taken up by other existing shareholders in
the Series A Exchange. In addition, 1,750,000 shares of Class A Common Stock are
reserved for issuance under options granted or available for grant under the
Stock Option Plan, subject to the completion of the Offering, and 1,192,990
shares of Class A Common Stock are reserved for issuance upon conversion of
Class B Common Stock.

Following the closing of this Offering, assuming that the Underwriters'
over-allotment option will not be exercised, there will be 17,666,810 shares of
Class A Common Stock outstanding, 77.4% of which will be owned by Farm Bureau
organizations and 22.6% of which will be owned by the public, 5,000,000 shares
of Series A Preferred Stock outstanding, all of which will be owned by the Iowa
Farm Bureau Federation, and 1,192,990 shares of Class B Common Stock
outstanding, all of which will be owned by Farm Bureau organizations.

SERIES A PREFERRED STOCK

The holders of the Series A Preferred Stock will be entitled to vote on all
matters submitted to a vote of the holders of the Common Stock of the Company,
voting together with the holders of the Class A Common Stock as one voting
group. Each share of Series A Preferred Stock is entitled to one vote, subject
to antidilution adjustment, so long as it is held by a Farm Bureau organization.
The approval of an amendment to the Company's Articles which would change the
powers, preferences, or special rights of the Series A Preferred Stock would
require the affirmative vote of a majority of the Class A Common Stock and the
Series A Preferred Stock voting as a single voting group, the affirmative vote
of a majority of the Class B Common Stock, and the affirmative vote of a
majority of each class adversely affected, voting separately. All voting rights,
except those established by law, of the Series A Preferred Stock terminate
automatically with respect to any of such shares which cease to be beneficially
owned, directly or indirectly, by a Farm Bureau organization.

The Series A Preferred Stock has a cumulative annual dividend of $1.00 per
share, which is paid on the last business day of each calendar quarter, and it
ranks senior to the Common Stock as to the payment of dividends. In the event of
a liquidation of the Company, the holders of the Series A Preferred Stock are
entitled to receive $20.00 per share plus accrued and unpaid dividends prior to
any distribution to the holders of Common Stock.

Any shares of Series A Preferred Stock which cease to be beneficially owned,
directly or indirectly, by a Farm Bureau organization may be redeemed at the
option of the Company, at a price of $20.00 per share plus accrued and unpaid
dividends.

The holders of the Series A Preferred Stock have no preemptive rights. The
Series A Preferred Stock is not registered and is not traded.

85
<PAGE>
COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record. A majority of the votes entitled to be cast on a matter by a class
constitutes a quorum of that class. The holders of the Class A Common Stock and
the holders of the Series A Preferred Stock constitute a single voting group for
most purposes. The holders of the Class B Common Stock also constitute a single
voting group for most purposes. If a quorum exists, action on a matter other
than the election of directors, by a voting group, is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action. Directors are elected by a majority of the votes by the voting group
entitled to vote in the election of such directors at a meeting at which a
quorum of such voting group is present. Thus, Class A directors are elected by a
majority of the vote of the Class A Common Stock and the Series A Preferred
Stock voting together as a single voting group, and the Class B directors are
elected by a majority vote of the Class B Common Stock in accordance with the
Stockholders' Agreement.

Following the closing of this Offering, assuming that the Underwriters'
over-allotment option will not be exercised, the Iowa Farm Bureau Federation
will own 53.6% of the Class A Common Stock and 100% of the Series A Preferred
Stock. Voting is noncumulative. Consequently, the Iowa Farm Bureau Federation
will be able to elect all of the Class A Directors.

Subsequent to this Offering, the Iowa Farm Bureau Federation will hold 63.9%
of the Company's Class B Common Stock. Various aspects of the ownership of the
Company's Class B Common Stock are governed by the Stockholders' Agreement. See
"Certain Transactions and Relationships -- Class B Common Stockholders'
Agreement regarding Management and Transfer of Shares of Class B Common Stock."

Holders of Class A Common Stock and Class B Common Stock are entitled to
share ratably on a share for share basis with respect to dividends, when, as and
if declared by the Board out of funds legally available therefor declared
payable to holders of Common Stock, subject to the prior payment of all
dividends accrued on Preferred Stock. See "Dividend Policy."

The holders of Class A Common Stock and Class B Common Stock are entitled
upon liquidation of the Company to share ratably on a share-for-share basis in
the net assets available for distribution, subject to the prior rights of any
Preferred Stock then outstanding.

All outstanding shares of Common Stock are, and the Shares of Class A Common
Stock offered hereby are, fully paid and nonassessable. Shares of Common Stock
are not redeemable and have no preemptive or similar rights to subscribe for
additional shares.

CERTAIN PROVISIONS OF COMPANY'S ARTICLES

The Company's Articles include certain provisions that could have
anti-takeover effects, which are in addition to the anti-takeover effects
inherent in the inability of the non-Farm Bureau organization holders of the
Class A Common Stock to elect a majority of the Company's Board of Directors,
including the requirement of separate voting by the holders of the Class A
Common Stock and Series A Preferred Stock voting as one voting group, and the
holders of the Class B Common Stock voting as a separate voting group. See "Risk
Factors -- Relationship with Farm Bureau Organizations; Control by the Iowa Farm
Bureau Federation; Anti-takeover Effects."

PREFERRED STOCK

The Board of Directors of the Company is authorized, subject to any
limitations prescribed by law, from time to time to issue up to an aggregate of
10,000,000 shares of Preferred Stock in one or more series, each of such series
to have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as shall
be determined by the Board of Directors in a resolution or resolutions providing
for the issue of such Preferred Stock. Thus, any series may, if so determined by
the Board of Directors, have full voting rights with the Common Stock (as in the
case of the Series A Preferred Stock and the Class A Common Stock) or superior
or limited voting rights, be convertible into Common Stock or another security
of the Company, and have such other relative rights, preferences and limitations
as the Company's Board of Directors shall determine. As a result, any class or
series of Preferred Stock could have rights which would

86
<PAGE>
adversely affect the rights of the holders of the Common Stock. The shares of
any class or series of Preferred Stock need not be identical. The issuance of a
new series of Preferred Stock, while providing desirable flexibility in
connection with possible acquisitions or other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or
discouraging a third party from acquiring, a majority of the outstanding voting
stock of the Company. Upon completion of the Offering 5,000,000 shares of Series
A Preferred Stock will be issued and outstanding. The Company has no present
plan to issue any additional Preferred Stock.

STATE STATUTORY PROVISIONS

Under Chapter 502 of the Iowa Code a person making a "takeover offer,"
defined as an offer to acquire any equity securities of a "target company"
(defined as a public company with substantial assets in Iowa that is at least
20% owned by Iowa residents) from an Iowa resident pursuant to a tender offer is
required to file a registration statement with the designated Iowa public
official if the bidder would then own 10% of any class of outstanding equity
securities. Chapter 502 contains antifraud provisions and prohibits the
acquisition of equity securities from an Iowa resident within two years
following a takeover offer unless the holders are afforded a reasonable
opportunity to sell to the offeror upon substantially equivalent terms as those
provided in the earlier takeover offer.

The Iowa Business Corporation Act provides that in considering acquisition
proposals, directors may consider the effects on the Company's employees,
suppliers, creditors, customers and the communities in which it operates, as
well as the long-term and short-term interests of the Company. Consideration of
any or all community interest factors is not a violation of the business
judgment rule, even if the directors reasonably determine that effects on a
community or other factors outweigh the financial or other benefits to the
Company or a shareholder or group of shareholders. The Act also includes
authorization of "poison pills" which include, without limitation, provisions
that preclude or limit the exercise, transfer or receipt of stock rights by
persons owning or offering to acquire a specified number or percentage of a
corporation's outstanding shares. Unlike most states, Iowa does not presently
have a "business combination" law prohibiting business combinations with a
stockholder who holds over a specified percentage of stock for less than a
specified period after crossing the threshhold.

The foregoing provisions of state law could have the effect of delaying,
deferring or preventing a change in control of the Company if the Board of
Directors determines that a change of control is not in the best interest of the
Company, its stockholders and other constituencies. In addition, the regulatory
restrictions on acquisition of securities of the Company may also deter attempts
to effect, or prevent the consummation of, a change in control of the Company.

INDEMNIFICATION AND LIMITATION OF LIABILITY

The Company's Articles provide that no director of the Company shall be
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except to the extent otherwise required by the
Iowa Business Corporation Act. This provision does not prevent stockholders from
obtaining injunctive or other equitable relief against directors nor does it
shield directors from liability under Federal or state securities laws. In
addition, the Articles provide that the Company shall, to the maximum extent
permitted by law, indemnify any person by reason of the fact that he is or was
or has agreed to be a director or officer of the Company or while a director or
officer of the Company is or was serving at the request of the Company as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, subject to such person having met the
standards of conduct required for such indemnification under Iowa law.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is Boatmen's
Trust Company.

NEW YORK STOCK EXCHANGE LISTING

The Shares have been authorized for listing on the New York Stock Exchange
under the symbol FFG, subject to official notice of issuance.

87
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have 17,666,810 shares of
Class A Common Stock outstanding. Of these shares, the 4,000,000 Shares sold in
this Offering will be freely tradable without restriction or registration under
the Securities Act, except any shares purchased by an "affiliate of the
Company." The remaining 13,668,810 shares of Class A Common Stock outstanding on
the date of this Prospectus (and all of the Series A Preferred Stock and Class B
Common Stock) (Restricted Shares), are deemed to be "restricted securities," as
that term is defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued and sold by the Company in private transactions in
reliance upon exemptions from registration under Section 4(2) of the Securities
Act, and may not be resold unless they are registered, or sold pursuant to an
applicable exemption from registration, such as Rule 144 under the Securities
Act.

All of the stockholders, directors and executive officers of the Company,
and the purchasers of reserved shares have agreed in writing with the Company
and the Representatives not to sell, transfer, or otherwise dispose of, or agree
to sell, transfer or otherwise dispose of, any shares of Common Stock during the
180 day period commencing on the date of this Prospectus without the prior
written consent of Alex. Brown & Sons Incorporated. These 180-day lock-up
agreements take precedence over the limitations on sale under the Securities
Act. Beginning 180 days after the date of this Prospectus, substantially all of
the Restricted Shares subject to the 180-day lock-up agreements will become
eligible for sale in the public market pursuant to Rule 144. None of the shares
of Class B Common Stock may be sold except to a Farm Bureau organization,
without becoming automatically converted to Class A Common Stock.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Class A Common Stock beneficially for at least two years is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of 1% of the total number of then outstanding shares of the
Company's Class A Common Stock (176,668 shares immediately after this Offering)
or the average weekly trading volume in the Company's Class A Common Stock
during the four calendar weeks preceding the sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person who has
not been an affiliate of the Company at any time during the three months
immediately preceding the sale and who has beneficially owned shares of Class A
Common Stock for at least three years is entitled to sell such shares under Rule
144(k) without regard to any of the limitations described above.

Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Class
A Common Stock will develop or be sustained after the Offering. Sales of
substantial amounts of Class A Common Stock in the public market may adversely
affect the prevailing market prices for the Class A Common Stock and could
impair the Company's future ability to raise capital through the sale of its
equity securities.

88
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the Underwriters), through their Representatives Alex.
Brown & Sons Incorporated, Everen Securities, Inc. and Smith Barney Inc., have
severally agreed to purchase from the Selling Stockholders the following
respective numbers of shares of Class A Common Stock at the initial public
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ------------------------------------------------------------------------------------ ------------------
<S> <C>
Alex. Brown & Sons Incorporated..................................................... 593,334
Everen Securities, Inc.............................................................. 593,333
Smith Barney Inc.................................................................... 593,333
CS First Boston Corporation......................................................... 120,000
Dean Witter Reynolds Inc............................................................ 120,000
Donaldson, Lufkin & Jenrette Securities Corporation................................. 120,000
A.G. Edwards & Sons, Inc............................................................ 120,000
Oppenheimer & Co., Inc.............................................................. 120,000
PaineWebber Incorporated............................................................ 120,000
Prudential Securities Incorporated.................................................. 120,000
Schroder Wertheim & Co. Incorporated................................................ 120,000
Advest, Inc......................................................................... 90,000
The Chicago Corporation............................................................. 90,000
Dain Bosworth Incorporated.......................................................... 90,000
Furman Selz LLC..................................................................... 90,000
Janney Montgomery Scott Inc......................................................... 90,000
Edward D. Jones & Co................................................................ 90,000
Kirkpatrick, Pettis, Smith, Polian Inc.............................................. 90,000
The Ohio Company.................................................................... 90,000
Principal Financial Securities, Inc................................................. 90,000
Stephens Inc........................................................................ 90,000
Conning & Company................................................................... 60,000
First Manhattan Co.................................................................. 60,000
Fox-Pitt, Kelton Inc................................................................ 60,000
Prime Charter Ltd................................................................... 60,000
Sands Brothers & Co., Ltd........................................................... 60,000
Securities Corporation of Iowa...................................................... 60,000
----------
Total............................................................................. 4,000,000
----------
----------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Class A Common Stock offered hereby if any of such
shares are purchased.

The Company and the Selling Stockholders have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Class A Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus, and to certain dealers at
such price less a concession not in excess of $0.70 per share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $0.10 per
share to certain other dealers. After the initial public offering, the offering
price and other selling terms may be changed by the Representatives of the
Underwriters.

Certain of the Selling Stockholders have granted to the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 600,000 additional shares of Class A Common Stock at the initial
public offering price less the underwriting discounts and commissions set forth
on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the

89
<PAGE>
number of shares of Class A Common Stock to be purchased by it shown in the
above table bears to 4,000,000, and certain of the Selling Stockholders will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the Class A Common Stock offered hereby. If
purchased, the Underwriters will offer such additional shares on the same terms
as those on which the 4,000,000 shares are being offered.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

The Company has requested that the Underwriters reserve up to 200,000 Shares
of the Offering for purchase by certain directors, officers, employees and other
persons having a relationship with the Farm Bureau organizations. Such reserved
Shares will be offered on the same terms as the Shares offered to the public
hereby.

The Company, its Directors and executive officers, the Selling Stockholders
and the purchasers of reserved Shares, have agreed not to offer, sell or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus without the prior written consent of Alex. Brown &
Sons Incorporated. See "Shares Eligible for Future Sale."

Prior to this Offering, there has been no established public market for the
Class A Common Stock of the Company. Consequently, the initial public offering
price for the Class A Common Stock has been determined by negotiations between
the Company, the Selling Stockholders and the Representatives of the
Underwriters. Among the factors considered in determining the initial public
offering price were prevailing market conditions, the results of operations of
the Company in recent periods, the market capitalizations of other companies
which the Company and the Representatives of the Underwriters believed to be
comparable to the Company, estimates of the business potential of the Company,
and such other factors deemed relevant.

The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority without the prior written approval of the
customer.

The Shares have been authorized for listing on the New York Stock Exchange
under the symbol FFG, subject to official notice of issuance. In order to meet
one of the requirements for listing the Shares on the New York Stock Exchange,
the Underwriters have undertaken to sell lots of 100 or more Shares to a minimum
of 2,000 beneficial holders.

VALIDITY OF COMMON STOCK

The validity of the Common Stock offered hereby will be passed upon for the
Company by Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, Iowa, and for
the Underwriters by Debevoise & Plimpton, New York, New York. Debevoise &
Plimpton will rely, as to matters of Iowa law, upon the opinion of Davis, Brown,
Koehn, Shors & Roberts, P.C.

EXPERTS

The consolidated financial statements and schedules of FBL Financial Group,
Inc. at December 31, 1995 and 1994, and for each of the three years in the
period ended December 31, 1995, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission
(Commission) a registration statement on form S-1 (together with all exhibits,
schedules and amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (Securities Act), and the rules and
regulations promulgated thereunder, for the registration of the Shares offered
hereby. This Prospectus does not contain

90
<PAGE>
all of the information set forth in the Registration Statement, certain portions
of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. The Registration Statement may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, Suite 1300, New York, New York 10048,
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such materials may be obtained upon written request from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

As a result of the Offering, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(Exchange Act) and, in accordance with the Exchange Act, thereafter will be
required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and information may be inspected and
copied at the public reference facilities maintained by the Commission
referenced above. The Company intends to furnish to its stockholders annual
reports containing audited consolidated financial statements as well as
quarterly reports for the first three fiscal quarters of each fiscal year
containing unaudited financial information.

91
<PAGE>
GLOSSARY OF SELECTED INSURANCE TERMS

The following Glossary includes definitions of certain general insurance
terms as well as terms relating specifically to the Company.

<TABLE>
<S> <C>
Adjusted operating income.............. Net income adjusted to eliminate certain items
which management believes are not indicative of
overall operating trends, including realized gains
on investments (less that portion of amortization
of deferred policy acquisition costs and value of
insurance in force acquired and income taxes
attributable to such gains), net income or loss
from a venture capital investment company
subsidiary and discontinued operations.
A.M. Best rating....................... A.M. Best financial condition ratings are opinions
of an insurance company's financial strength,
operating performance and ability to meet its
obligations to policyholders. Such ratings are
based upon a comprehensive review of a company's
financial performance, which is supplemented by
certain data, including responses to A.M. Best's
questionnaires, quarterly NAIC filings, state
insurance department examination reports, loss
reserve reports, annual reports and reports filed
with state insurance departments. A.M. Best
undertakes a quantitative evaluation based on
profitability, leverage and liquidity and a
qualitative evaluation based upon the composition
of a company's book of business or spread of risk,
the amount, appropriateness and soundness of
reinsurance, the quality, diversification and
estimated market value of its assets, the adequacy
of its loss reserves and policyholders' surplus
and the experience and competence of its
management. A.M. Best uses the following rating
scale:
</TABLE>

<TABLE>
<S> <C> <C>
A++ and A+ Superior
A and A- Excellent
B++ and B+ Very Good
B and B- Adequate
C++ and C+ Fair
C and C- Marginal
D Very vulnerable
Under state
E supervision
F In liquidation
</TABLE>

<TABLE>
<S> <C>
American Farm Bureau Federation........ An Illinois not-for-profit corporation formed to
promote agriculture and to correlate and strengthen
the various State Farm Bureau Federations, County
Farm Bureau organizations and any other state
organizations controlled by or under common
control with any of such Federations.
Annuity................................ A contract that pays a periodic income benefit for
the life of a person (the annuitant), the lives of
two or more persons or a specified period of time.
</TABLE>

92
<PAGE>
<TABLE>
<S> <C>
Capital and surplus.................... As determined in accordance with statutory
accounting practices, the amount remaining after
all liabilities, including reserves, are
subtracted from all admitted assets.
Cash value............................. The amount of cash available to a policyholder on
the surrender of a life insurance policy or annuity
contract.
Catastrophe loss....................... A severe loss, usually affecting many insureds,
involving many risks such as conflagration,
earthquake, windstorm, explosion and other similar
events.
Ceded or ceding........................ The transfer of all or a portion of a risk from one
insurer to another.
Combined ratio......................... A combination of the underwriting expense ratio and
the loss and loss adjustment expense (LAE) ratio,
determined in accordance with Statutory Accounting
Practices, applied to property-casualty insurance
operations. The underwriting expense ratio
measures the ratio of underwriting expenses to net
premiums written. The loss and LAE ratio measures
the ratio of incurred losses and LAE to net
premiums earned.
Crediting rates........................ Interest rates applied to life insurance policies
and annuity contracts, whether contractually
guaranteed or currently declared for a specified
period.
Cross selling.......................... Determining the additional insurance and savings
needs of existing policyowners and marketing
products to meet their needs.
Deferred policy acquisition costs...... Commissions and other selling expenses which vary
with and are directly related to the production of
business. These acquisition costs are deferred and
amortized to achieve a matching of revenues and
expenses when reported in financial statements
prepared in conformity with GAAP.
Direct collected premiums.............. Total cash received for insurance written for a
given period before any adjustments for ceded
amounts.
Disability income insurance............ A form of accident and health insurance that
provides periodic payments when the insured is
unable to work as a result of illness, disease or
injury.
Farm Bureau organization............... The American Farm Bureau Federation, the State Farm
Bureau Federations, the County Farm Bureau
organizations, and all corporations, partnerships,
and other entities controlled by or under common
control with the American Farm Bureau Federation,
any State Farm Bureau Federation, or any County
Farm Bureau organization, or entity authorized by
the American Farm Bureau to use the trade-names,
"Farm Bureau" or "FB" in its name or operations.
Flexible premium deferred annuities.... Annuities, not currently paying benefits, that
permit the addition of premium payments by the
policyowner at any time.
</TABLE>

93
<PAGE>
<TABLE>
<S> <C>
GAAP................................... United States generally accepted accounting
principles, including those applicable to stock
life insurance companies.
In force............................... The total face amount of insurance coverage under
contracts that have not expired.
Iowa Farm Bureau Federation............ An Iowa not-for-profit corporation formed to
promote agriculture and to correlate and strengthen
the various County Farm Bureau organizations in
the State of Iowa and other entities in the State
of Iowa controlled by or under common control with
any of such organizations.
Lapse.................................. Termination of a policy because of surrender,
failure to pay a premium or lack of sufficient cash
value to maintain in force status.
Loss ratio............................. A loss ratio is determined by dividing the amount
of benefits incurred by the amount of premium
earned for a given line of coverage of business in
total.
NASD................................... The National Association of Securities Dealers,
Inc.
Persistency............................ Percentage of life insurance policies or annuity
contracts in force at the beginning of a period
remaining in force until completion of the term
for which the policy or contract was written.
Personal lines......................... The insurance coverages commonly maintained by most
households including life insurance, annuities,
auto insurance, and homeowners.
Policy acquisition costs............... Costs incurred in the acquisition of new and
renewal insurance contracts. Acquisition costs
deferred include those costs that vary with and
are primarily related to the acquisition of
insurance contracts (for example, agent and broker
commissions, certain underwriting and policy issue
costs, and medical and inspection fees).
Premium................................ The amount of money that the policyholder pays to
the insurance company for an insurance policy or
annuity. For statutory accounting purposes, such
premiums are reported as revenues. Under GAAP,
premiums on universal life and annuity products
increase the policyholder liability and therefore
are not reported as revenues.
Reinsurance............................ The arrangement in which one insurance company
(called the reinsurer), generally upon receipt of a
premium, agrees to indemnify another (called the
ceding insurer) for part or all of the policy
obligations of the ceding insurer as the issuer of
the reinsured policies.
Reserves for future policyholder
benefits.............................. Liabilities established by insurers to reflect the
estimated benefits to the policyholders or
beneficiaries. For universal life and annuity
products, the amounts represent accumulated
values. For other policies, the reserves represent
the discounted present value of benefits less the
estimated future value of premiums.
</TABLE>

94
<PAGE>
<TABLE>
<S> <C>
Retention.............................. In a reinsurance context, the amount or portion of
risk which a ceding insurer retains for its own
account. Losses paid by a ceding insurer in excess
of the retention level are then owed to the
insurer by the reinsurer.
Separate accounts...................... Investment accounts maintained by an insurer to
which funds have been allocated for certain
policies under provisions of relevant state law.
The investments in each separate account are
maintained separately from those in other separate
accounts and the general account. The investment
results of the separate account assets are passed
through directly to the separate account
policyholders, so that an insurer derives
management and other fees from, but bears no
investment risk on, these assets; except the risk
on a small number of products on which returns on
separate assets will not meet the relatively low
minimum rate guaranteed on these products.
Statutory accounting practices......... Accounting practices prescribed or permitted by
state insurance regulatory authorities. Statutory
accounting practices emphasize solvency rather
than matching revenues and expenses during an
accounting period and are liquidation/solvency
based rather than profit based.
Supplementary contracts................ An agreement between the Company and either the
insured or the beneficiary to provide for the
settlement of an amount payable under another
contract with the Company.
Surrender charge....................... The charge imposed for the early termination of a
life insurance or annuity contract.
Term life insurance.................... Life insurance protection during a certain number
of years, but expiring without policy cash value if
the insured survives the stated period.
Underwriting........................... The process of reviewing applications submitted for
insurance coverage, deciding whether to accept all
or part of the coverage requested, and determining
the applicable premiums.
Universal life insurance............... A flexible premium life insurance policy under
which the policyholder may change the death benefit
from time to time (with satisfactory evidence of
insurability for increases) and vary the amount or
timing of premium payments. Premiums, less expense
and mortality charges, are credited to a cash
value or accumulative account to which interest is
credited at rates which may change from time to
time.
</TABLE>

95
<PAGE>
<TABLE>
<S> <C>
Variable annuity....................... Annuity in which premium payments are used to
purchase accumulation units. The value of a unit
fluctuates in accordance with the investment
experience of a separate account. Variable annuity
contracts typically include a general account
guaranteed interest investment option. At the time
of the payment of benefits to the annuitant, the
annuitant can generally elect from a number of
payment options which provide either fixed or
variable benefit payments.
Variable universal life................ Life insurance combining the characteristics of
both universal and variable life insurance in that
excess interest credited to the cash value account
depends on investment results of separate
accounts.
Whole life insurance................... Permanent life insurance offering guaranteed death
benefits and guaranteed cash values.
</TABLE>

96
<PAGE>
FBL FINANCIAL GROUP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
AND YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Financial Statements
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Income..................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity............................ F-6
Consolidated Statements of Cash Flows................................................. F-7
Notes to Consolidated Financial Statements............................................ F-9
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
FBL Financial Group, Inc.

We have audited the accompanying consolidated balance sheets of FBL
Financial Group, Inc. as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
FBL Financial Group, Inc. at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.

As described in Notes 1 and 4 to the consolidated financial statements, in
1994 the Company changed its method of accounting for certain investments in
debt securities.

/s/ Ernst & Young LLP

Des Moines, Iowa
March 12, 1996

F-2
<PAGE>
FBL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------- ----------------------
1996 1995 1994
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held for investment, at amortized cost (market: 1996
-- $728,944; 1995 -- $712,476; 1994 -- $500,849).... $ 721,083 $ 683,149 $ 532,376
Available for sale, at market (amortized cost: 1996
-- $1,350,756; 1995 -- $1,325,608; 1994 --
$1,252,189)......................................... 1,372,742 1,393,060 1,200,235
Equity securities, at market (cost: 1996 -- $86,771;
1995 -- $77,038; 1994 -- $49,985)..................... 90,856 83,714 46,701
Held in inventory, at estimated fair value (amortized
cost: 1996 -- $19,936; 1995 -- $21,555; 1994 --
$17,731), substantially all held for sale in 1996..... 21,327 21,913 18,169
Mortgage loans on real estate.......................... 267,534 266,623 272,537
Investment real estate, less allowances for
depreciation of $1,853 in 1996, $1,839 in 1995 and
$1,170 in 1994........................................ 28,997 28,604 26,951
Policy loans........................................... 116,633 116,107 113,848
Other long-term investments............................ 12,044 2,892 6,654
Short-term investments................................. 36,785 50,061 119,683
----------- ---------- ----------
Total investments........................................ 2,668,001 2,646,123 2,337,154

Cash and cash equivalents................................ -- -- 5,963
Securities and indebtedness of related parties........... 61,790 74,506 76,333
Accrued investment income................................ 32,370 32,711 30,242
Accounts and notes receivable............................ 1,804 2,009 2,821
Amounts receivable from affiliates....................... 4,194 2,422 2,294
Reinsurance recoverable.................................. 33,030 31,845 37,717
Deferred policy acquisition costs........................ 146,573 135,061 137,649
Value of insurance in force acquired..................... 19,190 14,449 20,908
Property and equipment, less allowances for depreciation
of $45,145 in 1996, $45,417 in 1995 and $44,924 in
1994.................................................... 61,388 60,184 63,608
Current income taxes recoverable......................... 8,807 14,114 10,100
Deferred income tax benefit.............................. -- -- 11,772
Goodwill, less accumulated amortization of $1,707 in
1996, $1,556 in 1995 and $932 in 1994................... 10,191 10,342 10,966
Other assets............................................. 22,113 22,296 16,965
Assets held in separate accounts......................... 50,715 44,789 28,043
----------- ---------- ----------
Total assets..................................... $3,120,166 $3,090,851 $2,792,535
----------- ---------- ----------
----------- ---------- ----------
</TABLE>

F-3
<PAGE>

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------- ----------------------
1996 1995 1994
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Future policy benefits:
Universal life and annuity products................ $1,421,972 $1,394,116 $1,307,142
Traditional life insurance and accident and health
products.......................................... 657,085 651,827 634,962
Unearned revenue reserve........................... 18,138 17,350 17,962
Other policy claims and benefits..................... 7,776 8,149 8,070
Reserves and unearned premiums on property-casualty
policies............................................ 47,480 45,890 44,482
----------- ---------- ----------
2,152,451 2,117,332 2,012,618
Other policyholders' funds:
Supplementary contracts without life contingencies... 119,378 114,471 98,679
Advance premiums and other deposits.................. 87,025 87,093 87,731
Accrued dividends.................................... 14,065 13,678 13,165
----------- ---------- ----------
220,468 215,242 199,575
Short-term borrowings.................................. -- -- 6,388
Long-term debt......................................... 11,776 12,604 18,519
Amounts payable to affiliates.......................... 13,346 10,443 8,716
Deferred income taxes.................................. 30,470 39,645 --
Other liabilities...................................... 80,417 81,995 83,355
Liabilities related to separate accounts............... 50,715 44,789 28,043
----------- ---------- ----------
Total liabilities................................ 2,559,643 2,522,050 2,357,214
Commitments and contingencies
Minority interest in subsidiaries........................ 4,503 4,503 4,578
Stockholders' equity:
Class A Common Stock, without par value -- authorized
88,500,000 shares, issued and outstanding 22,666,810
shares in 1996........................................ 143,773 -- --
Class B Common Stock, without par value -- authorized
1,500,000 shares, issued and outstanding 1,192,990
shares in 1996........................................ 7,567 -- --
Common stock, par value $100.00 per share -- authorized
100,000 shares, issued and outstanding 11,929.90
shares in 1995 and 11,726.80 shares in 1994........... -- 1,193 1,173
Additional paid-in capital............................. -- 145,288 141,026
Net unrealized investment gains (losses)............... 13,781 37,807 (31,838)
Retained earnings...................................... 390,899 380,010 320,382
----------- ---------- ----------
Total stockholders' equity........................... 556,020 564,298 430,743
----------- ---------- ----------
Total liabilities and stockholders' equity....... $3,120,166 $3,090,851 $2,792,535
----------- ---------- ----------
----------- ---------- ----------
</TABLE>

See accompanying notes.

F-4
<PAGE>
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------
1996 1995 1995 1994 1993
----------- ----------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Universal life and annuity product
charges.................................... $ 11,317 $ 10,632 $ 43,722 $ 42,734 $ 26,500
Traditional life insurance premiums......... 19,131 18,227 75,450 72,222 46,050
Accident and health premiums................ 2,652 2,383 10,161 (1,956) 46,437
Property-casualty premiums.................. 4,298 4,323 18,709 17,778 16,937
Net investment income....................... 52,428 48,037 223,108 178,834 138,320
Realized gains (losses) on investments...... (2,098) 1,850 5,883 9,448 3,967
Other income................................ 5,592 7,138 28,952 30,825 25,251
----------- ----------- --------- --------- ---------
Total revenues............................ 93,320 92,590 405,985 349,885 303,462
Benefits and expenses:
Universal life and annuity benefits......... 30,353 27,071 112,125 97,736 73,305
Traditional life insurance and accident and
health benefits............................ 12,096 12,715 49,316 48,345 66,028
Increase in traditional and accident and
health future policy benefits.............. 5,294 4,462 22,976 12,084 14,428
Distributions to participating
policyholders.............................. 6,475 6,605 25,747 24,402 22,967
Losses and loss adjustment expenses incurred
on property-casualty policies.............. 3,211 2,974 13,621 13,441 13,948
Underwriting, acquisition and insurance
expenses................................... 15,780 20,473 73,431 74,652 56,632
Interest expense............................ 227 356 1,007 2,108 2,303
Other expenses.............................. 3,927 4,000 17,315 17,244 14,920
----------- ----------- --------- --------- ---------
Total benefits and expenses............... 77,363 78,656 315,538 290,012 264,531
----------- ----------- --------- --------- ---------
15,957 13,934 90,447 59,873 38,931
Income taxes.................................. (5,689) (4,848) (32,070) (22,462) (14,439)
Minority interest in earnings of
subsidiaries................................. (268) (276) (351) (376) (2,417)
Equity income (loss), net of related income
taxes........................................ 889 233 1,602 (1,448) 630
----------- ----------- --------- --------- ---------
Income from continuing operations............. 10,889 9,043 59,628 35,587 22,705
Discontinued operations:
Loss from cable television operations, net
of related income taxes.................... -- -- -- -- (2,902)
Gain on disposal of cable television
operations, net of related income taxes.... -- -- -- 6,479 --
----------- ----------- --------- --------- ---------
Net income.................................... $ 10,889 $ 9,043 $ 59,628 $ 42,066 $ 19,803
----------- ----------- --------- --------- ---------
----------- ----------- --------- --------- ---------
Net income (loss) per common share (after
giving effect for 2,000-for-1 stock split):
Continuing operations....................... $0.46 $0.39 $2.53 $1.52 $1.26
Discontinued operations..................... -- -- -- .28 (.16)
----------- ----------- --------- --------- ---------
Net income per common share................... $0.46 $0.39 $2.53 $1.80 $1.10
----------- ----------- --------- --------- ---------
----------- ----------- --------- --------- ---------
</TABLE>

See accompanying notes.

F-5
<PAGE>
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NET
UNREALIZED
CLASS A CLASS B ADDITIONAL INVESTMENT TOTAL
COMMON COMMON COMMON PAID-IN GAINS RETAINED STOCKHOLDERS'
STOCK STOCK STOCK CAPITAL (LOSSES) EARNINGS EQUITY
----------- ----------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1993.................... $ -- $ -- $ 1,105 $ 18 $ 2,946 $ 258,513 $ 262,582
Issuance of 1,783.48
shares of common stock
in exchange for 99.5%
of common stock of
Rural Security Life
Company............... -- -- 89 27,012 -- -- 27,101
Net income for 1993.... -- -- -- -- -- 19,803 19,803
Change in net
unrealized investment
gains/losses.......... -- -- -- -- 2,791 -- 2,791
----------- ----------- ----------- ----------- ----------- ----------- --------------
Balance at December 31,
1993.................... -- -- 1,194 27,030 5,737 278,316 312,277
Issuance of 9,146.91
shares of common stock
of FBL Financial
Group, Inc. upon
formation, in exchange
for outstanding common
stock of Farm Bureau
Life Insurance
Company............... -- -- (279) 279 -- -- --
Issuance of 551.89
shares of common stock
in exchange for
minority interest in
FBL Insurance Company
and Rural Security
Life Insurance
Company............... -- -- 55 24,647 -- -- 24,702
Issuance of 1,969.00
shares of common stock
in exchange for all
outstanding common
stock of Western Farm
Bureau Life Insurance
Company............... -- -- 197 87,933 -- -- 88,130
Cumulative effect on
prior years (to
December 31, 1993) of
change in method of
accounting for fixed
maturity securities... -- -- -- -- 38,913 -- 38,913
Net income for 1994.... -- -- -- -- -- 42,066 42,066
Change in net
unrealized investment
gains/losses.......... -- -- -- -- (76,488) -- (76,488)
Issuance of 59.00
shares of common stock
for cash.............. -- -- 6 1,137 -- -- 1,143
----------- ----------- ----------- ----------- ----------- ----------- --------------
Balance at December 31,
1994.................... -- -- 1,173 141,026 (31,838) 320,382 430,743
Net income for 1995.... -- -- -- -- -- 59,628 59,628
Change in net
unrealized investment
gains/losses.......... -- -- -- -- 69,645 -- 69,645
Issuance of 200.00
shares of common stock
for cash.............. -- -- 20 4,169 -- -- 4,189
Issuance of 3.10 shares
of common stock in
exchange for minority
interest in Utah Farm
Bureau Insurance
Company............... -- -- -- 93 -- -- 93
----------- ----------- ----------- ----------- ----------- ----------- --------------
Balance at December 31,
1995.................... -- -- 1,193 145,288 37,807 380,010 564,298
Recapitalization,
conversion of common
stock................. 139,157 7,324 (1,193) (145,288) -- -- --
Net income for three
month period ended
March 31, 1996........ -- -- -- -- -- 10,889 10,889
Change in net
unrealized investment
gains/losses.......... -- -- -- -- (24,026) -- (24,026)
Adjustment resulting
from capital
transaction of equity
investee.............. 4,616 243 -- -- -- -- 4,859
----------- ----------- ----------- ----------- ----------- ----------- --------------
Balance at March 31, 1996
(unaudited)............. $ 143,773 $ 7,567 $ -- $ -- $ 13,781 $ 390,899 $ 556,020
----------- ----------- ----------- ----------- ----------- ----------- --------------
----------- ----------- ----------- ----------- ----------- ----------- --------------
</TABLE>

Note: Share amounts set forth in the above statement have not been restated to
reflect the 2,000-for-1 stock split approved by the Company's Board of
Directors on March 12, 1996 and effective March 19, 1996.

See accompanying notes.

F-6
<PAGE>
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
THREE MONTHS ENDED MARCH ----------- ----------- -----------
31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Continuing operations:
Net income........................................ $ 10,889 $ 9,043 $ 59,628 $ 35,587 $ 22,705
Adjustments to reconcile net income to net cash
provided by continuing operations:
Adjustments related to interest sensitive
products:
Interest credited to account balances......... 26,353 23,020 97,244 89,899 67,806
Charges for mortality and administration...... (11,525) (10,886) (44,462) (43,912) (27,876)
Deferral of unearned revenues................. 424 459 1,696 2,058 1,933
Amortization of unearned revenue reserve...... (216) (205) (956) (880) (557)
Provision for depreciation and amortization..... 3,920 3,863 15,040 19,727 9,411
Net gains and losses related to investments held
in inventory................................... (1,831) (8) (25,801) 206 (74)
Realized (gains) losses on investments.......... 2,098 (1,850) (5,883) (9,448) (3,967)
Increase in traditional, accident and health and
property-casualty benefit accruals............. 6,879 5,297 23,810 16,554 20,032
Policy acquisition costs deferred............... (6,998) (5,705) (25,918) (24,186) (17,524)
Amortization of deferred policy acquisition
costs.......................................... 2,685 2,641 10,727 10,066 6,023
Provision for deferred income taxes............. 1,147 45 13,914 6,287 (3,408)
Other........................................... 3,270 16,097 (12,646) (7,949) 11,619
------------ ------------ ----------- ----------- -----------
Net cash provided by continuing operations.......... 37,095 41,811 106,393 94,009 86,123

Discontinued operations:
Net income (loss)................................. -- -- -- 6,479 (2,902)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) discontinued
operations....................................... -- -- -- (10,293) 6,286
------------ ------------ ----------- ----------- -----------
Net cash provided by (used in) discontinued
operations......................................... -- -- -- (3,814) 3,384
------------ ------------ ----------- ----------- -----------
Net cash provided by operating activities........... 37,095 41,811 106,393 90,195 89,507
INVESTING ACTIVITIES
Sale, maturity or repayment of investments:
Fixed maturities -- held for investment........... 6,920 3,972 20,890 43,528 393,476
Fixed maturities -- available for sale............ 72,811 87,235 262,000 380,849 --
Equity securities................................. 9,973 3,491 30,674 58,317 29,831
Held in inventory................................. 6,815 1,150 8,045 7,106 103
Mortgage loans on real estate..................... 8,028 7,392 23,774 32,816 15,970
Investment real estate............................ 11 386 5,751 2,240 5,441
Policy loans...................................... 6,961 7,551 24,798 21,448 18,710
Other long-term investments....................... 319 646 3,564 31,608 6,796
Short-term investments -- net..................... 13,276 54,886 69,622 -- --
------------ ------------ ----------- ----------- -----------
125,114 166,709 449,118 577,912 470,327
</TABLE>

F-7
<PAGE>
FBL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
THREE MONTHS ENDED MARCH
31,
--------------------------
1996 1995
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
INVESTING ACTIVITIES (CONTINUED)
Acquisition of investments:
Fixed maturities -- held for investment........... $ (44,630) $ (47,339) $ (170,926) $ (207,060) $ (490,113)
Fixed maturities -- available for sale............ (99,363) (140,734) (334,270) (344,866) --
Equity securities................................. (17,395) (7,177) (30,742) (39,077) (22,688)
Held in inventory................................. (4,398) (2,011) (13,618) (6,698) (4,036)
Mortgage loans on real estate..................... (9,085) (5,040) (23,456) (13,705) (72,581)
Investment real estate............................ (1,370) (704) (8,073) (710) (204)
Policy loans...................................... (7,487) (8,395) (27,057) (24,377) (17,845)
Other long-term investments....................... (3) -- (14) (13,654) --
Short-term investments -- net..................... -- -- -- (47,261) (22,907)
------------ ------------ ----------- ----------- -----------
(183,731) (211,400) (608,156) (697,408) (630,374)
Proceeds from disposal, repayments of advances and
other distributions from entities accounted for by
the equity method.................................. 12,507 4,531 32,193 45,184 28,281
Investments in and advances to entities accounted
for by the equity method........................... (4,485) (11,257) (21,463) (39,418) (26,247)
Net cash received (paid) for acquisitions........... -- -- -- (3,065) 272
Other............................................... (3,339) (2,776) (5,579) (5,321) (8,499)
Investing activities of discontinued operations..... -- -- -- 29,539 (539)
------------ ------------ ----------- ----------- -----------
Net cash used in investing activities............... (53,934) (54,193) (153,887) (92,577) (166,779)
FINANCING ACTIVITIES
Receipts from interest sensitive products credited
to policyholder account balances................... 66,889 58,283 198,031 219,501 179,480
Return of policyholder account balances on interest
sensitive products................................. (48,954) (44,402) (148,047) (157,894) (110,959)
Proceeds from short-term borrowings................. -- 8 8 8,288 6,806
Repayments of short-term borrowings................. -- (6,396) (6,396) (10,379) (6,198)
Proceeds from long-term debt........................ -- -- -- -- 21,122
Repayments of long-term debt........................ (828) (1,074) (5,915) (12,119) (4,255)
Distributions to minority interests................. (268) -- (339) (380) --
Issuance of common stock for cash................... -- -- 4,189 1,143 --
Financing activities of discontinued operations..... -- -- -- (44,000) (5,000)
------------ ------------ ----------- ----------- -----------
Net cash provided by financing activities........... 16,839 6,419 41,531 4,160 80,996
------------ ------------ ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents.... -- (5,963) (5,963) 1,778 3,724
Cash and cash equivalents at beginning of period.... -- 5,963 5,963 4,185 461
------------ ------------ ----------- ----------- -----------
Cash and cash equivalents at end of period........ $ -- $ -- $ -- $ 5,963 $ 4,185
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the period for:
Interest.......................................... $ 155 $ 356 $ 1,086 $ 2,163 $ 2,766
Income taxes...................................... (444) 586 23,032 26,451 14,600
</TABLE>

See accompanying notes.

F-8
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 1995

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

FBL Financial Group, Inc. (the Company) was incorporated in the State of
Iowa on October 13, 1993. The Company, through its principal subsidiaries, Farm
Bureau Life Insurance Company (Farm Bureau Life) and Western Farm Bureau Life
Insurance Company (Western Life), operates predominantly in the individual life
and annuity area of the life insurance industry. The Company markets its
products to Farm Bureau members and other individuals and businesses in 15
midwestern and western states. Farm Bureau Life has several subsidiaries which
support various functional areas of Farm Bureau Life, Western Life and other
affiliates, including investment advisory, marketing and distribution, and
leasing. As these functions relate directly to the primary business activities,
these entities have been included in the life insurance business segment.

The Company also owns Utah Farm Bureau Insurance Company (Utah Insurance), a
property-casualty insurance company providing individual and small business
coverages. The operations of Utah Insurance have been treated as a separate
segment for financial reporting purposes.

ORGANIZATION AND BASIS OF PRESENTATION

As more fully described in Note 3, effective January 1, 1994, the Company
acquired 100% of the outstanding common stock of Farm Bureau Life in a
transaction treated as a reorganization, and Western Life in a transaction
treated as a purchase, in exchange for equivalent shares of newly issued common
stock of the Company. Additionally, the Company acquired the minority interests
in Farm Bureau Life's subsidiaries, FBL Insurance Company and Rural Security
Life Insurance Company (Rural Security Life) for equivalent shares of newly
issued common stock of the Company. The minority interests were contributed to
Farm Bureau Life; and FBL Insurance Company and Rural Security Life were
subsequently merged into Farm Bureau Life and liquidated. At December 31, 1995,
the Iowa Farm Bureau Federation owns 63.9% of the outstanding common stock of
the Company.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Significant estimates and assumptions are utilized in the calculation of
deferred policy acquisition costs, policyholder liabilities and accruals and
valuation allowances on investments. It is reasonably possible that actual
experience could differ from the estimates and assumptions utilized which could
have a material impact on the consolidated financial statements.

INTERIM FINANCIAL INFOMATION

The consolidated financial statements as of March 31, 1996 and for the three
month periods ended March 31, 1996 and 1995 and related disclosures in these
notes have not been audited. The interim financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals unless
noted otherwise herein) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.

F-9
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONSOLIDATION

The consolidated financial statements include the Company and its direct and
indirect subsidiaries. All significant intercompany transactions have been
eliminated.

INVESTMENTS

FIXED MATURITIES AND EQUITY SECURITIES

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". Prior to the adoption of SFAS No. 115, all of the
Company's fixed maturity securities were classified as "held for investment".
Pursuant to SFAS No. 115, fixed maturity securities (bonds and redeemable
preferred stocks) that the Company has the positive intent and ability to hold
to maturity are designated as "held for investment". Held for investment
securities are reported at cost adjusted for amortization of premiums and
discounts. Changes in the market value of these securities, except for declines
that are other than temporary, are not reflected in the Company's financial
statements. Fixed maturity securities which may be sold are designated as
"available for sale". Available for sale securities are reported at market value
and unrealized gains and losses on these securities are included directly in
stockholders' equity, net of certain adjustments (see Note 4). Premiums and
discounts are amortized/accrued using methods which result in a constant yield
over the securities' expected lives. Amortization/accrual of premiums and
discounts on mortgage and asset-backed securities incorporates a prepayment
assumption to estimate the securities' expected lives.

Equity securities (common and non-redeemable preferred stocks) are reported
at market. The change in unrealized appreciation and depreciation of marketable
equity securities (net of related deferred income taxes, if any) is included
directly in stockholders' equity.

HELD IN INVENTORY

The Company has certain subsidiaries involved as broker-dealers and another
as a venture capital investment company. In accordance with accounting practices
for these specialized industries, marketable securities are valued at market
value if readily marketable or at fair value, as determined by the Board of
Directors of the subsidiary holding the security, if not readily marketable. The
resulting difference between cost and market is included in the statements of
income as net investment income. Realized gains and losses are also reported as
a component of net investment income.

The Company's investments held in inventory portfolio includes securities
with carrying values of $18,574 and $13,735 at December 31, 1995 and 1994,
respectively, for which market quotations are not readily available and for
which fair value is determined in good faith by the Board of Directors of FBL
Ventures of South Dakota, Inc., the venture capital investment company
subsidiary holding the securities. In determining fair value for securities not
readily marketable, investments are initially stated at cost until significant
subsequent events require a change in valuation. Among the factors considered by
the Board of Directors in determining fair value of investments are the cost of
the investment, developments since the acquisition of the investment, the sale
price of recently issued securities, the financial condition and operating
results of the issuer, the long-term business potential of the issuer, the
quoted market price of securities with similar quality and yield that are
publicly traded and other factors generally pertinent to the valuation of
investments. The Board of Directors, in making its evaluation, has relied on
financial data of investees provided by the management of the investee
companies.

On occasion, transfers will be made to or from the venture capital
investment company. Such transfers typically occur when a previously private
issue goes public, or when a private equity security is purchased or otherwise
received by another member of the consolidated group. The Company records
transfers to or from

F-10
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the venture capital investment company at fair value at the date of transfer,
re-establishing a new cost basis for the security. During the year ended
December 31, 1995, two securities with a total fair value of $27,630 were
transferred out of the venture capital investment company. During the year ended
December 31, 1994, two securities with a fair value of $1,397 were transferred
to the venture capital investment company. A realized gain (recognized in net
investment income) of $24,628 was recognized on the 1995 transfers, although
neither transfer had an impact on net income, and no realized gains or losses
were recognized on the 1994 transfers.

It is anticipated that during 1996 all or substantially all of the
investments of the venture capital investment company will be sold to a
subsidiary of Farm Bureau Mutual Insurance Company, an affiliate, at their
carrying value ($19.4 million at March 31, 1996), which management believes
approximates fair value.

MORTGAGE LOANS ON REAL ESTATE

Mortgage loans on real estate are reported at cost adjusted for amortization
of premiums and accrual of discounts. If the value of any mortgage loan is
determined to be impaired (i.e., when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the loan
agreement), the carrying value of the mortgage loan has been reduced to its fair
value, which may be based upon the present value of expected future cash flows
from the loan (discounted at the loan's effective interest rate), the loan's
observable market price, or the fair value of the underlying collateral. The
carrying value of impaired loans is reduced by the establishment of a valuation
allowance, changes to which are charged or credited to income.

INVESTMENT REAL ESTATE

Investment real estate, which includes real estate acquired through
foreclosure, is reported at cost less allowances for depreciation. Real estate
acquired through foreclosure, or in-substance foreclosure, is recorded at the
lower of cost (which includes the balance of the mortgage loan, any accrued
interest and any costs incurred to obtain title to the property) or fair value
as determined at or before the foreclosure date. The carrying value of these
assets is subject to regular review. If the fair value, less estimated sales
costs, of real estate owned decreases to an amount lower than its carrying
value, a valuation allowance is established for the difference. This valuation
allowance can be restored should the fair value of the property increase.
Changes in this valuation allowance are charged or credited to income. At
December 31, 1995 and 1994, the Company had valuation allowances totaling $180
and $100, respectively.

OTHER INVESTMENTS

Policy loans are reported at unpaid principal. Other long-term investments
(consisting principally of Title One home improvement loans) and short-term
investments are reported at cost adjusted for amortization of premiums and
accrual of discounts. Investments accounted for by the equity method include
investments in, and advances to, various joint ventures and partnerships and are
reported as securities and indebtedness of related parties.

REALIZED GAINS AND LOSSES ON INVESTMENTS

The carrying values of all the Company's investments are reviewed on an
ongoing basis for credit deterioration, and if this review indicates a decline
in market value that is other than temporary, the Company's carrying value in
the investment is reduced to its estimated realizable value (the sum of the
estimated nondiscounted cash flows for securities or fair value for mortgage
loans on real estate) and a specific writedown is taken. Such reductions in
carrying value are recognized as realized losses and charged to income. Realized
gains and losses on sales are determined on the basis of specific identification
of

F-11
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investments. If the Company expects that an issuer of a security will modify its
payment pattern from contractual terms but no writedown is required, future
investment income is recognized at the rate implicit in the calculation of net
realizable value under the expected payment pattern.

MARKET VALUES

Market values, as reported herein, of publicly traded fixed maturity
securities are as reported by an independent pricing service. Market values of
conventional mortgage-backed securities not actively traded in a liquid market
are estimated using a matrix calculation assuming a spread over U. S. Treasury
bonds based upon the expected average lives of the securities. Market values of
private placement bonds are estimated using a matrix that assumes a spread
(based on interest rates and a risk assessment of the bonds) over U. S. Treasury
bonds. Market values of redeemable preferred stock and equity securities are
based on the latest quoted market prices, or for those not readily marketable,
at values which are representative of the market values of issues of comparable
yield and quality.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF INSURANCE IN FORCE ACQUIRED

To the extent recoverable from future policy revenues and gross profits,
certain costs of acquiring new insurance business, principally commissions and
other expenses related to the production of new business, have been deferred.
The value of insurance in force acquired is an asset that arose with the
acquisition of Western Life and Rural Security Life discussed in Note 3. The
initial value is determined by an actuarial study using expected future gross
profits as a measurement of the net present value of the insurance acquired.
Interest accrues on the unamortized balance at rates that range from 6.50% to
6.79%.

For participating traditional life insurance and universal life insurance
and investment products, these costs are being amortized generally in proportion
to expected gross profits (after dividends to policyholders, if applicable) from
surrender charges and investment, mortality, and expense margins. That
amortization is adjusted retrospectively when estimates of current or future
gross profits/margins (including the impact of investment gains and losses) to
be realized from a group of products are revised. The deferred policy
acquisition costs for property-casualty insurance are amortized over the
effective period of the related insurance policies; deferred policy acquisition
costs for these policies are expensed when such costs are deemed not to be
recoverable from the related unearned premiums and any related investment
income.

PROPERTY AND EQUIPMENT

Property and equipment are reported at cost less allowances for
depreciation. Depreciation expense is computed primarily using the straight-line
method over the estimated useful lives of the assets.

GOODWILL

Goodwill represents the excess of the fair value of assets exchanged over
the net assets acquired. Goodwill is generally being amortized on a
straight-line basis over a period of 20 years.

The carrying value of goodwill is regularly reviewed for indicators of
impairment in value, which in the view of management are other than temporary.
If facts and circumstances suggest that goodwill is impaired, the Company
assesses the fair value of the underlying business and reduces goodwill to an
amount that results in the book value of the underlying business approximating
fair value. The Company has not recorded any such writedowns during the years
ended December 31, 1995, 1994 or 1993.

F-12
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FUTURE POLICY BENEFITS

The liability for future policy benefits for participating traditional life
insurance is based on net level premium reserves, including assumptions as to
interest, mortality, and other assumptions underlying the guaranteed policy cash
values. Reserve interest assumptions are level and range from 2.0% to 6.0%.
Accrued dividends for participating business are established for anticipated
amounts earned to date for the period through the policy's next anniversary and
are provided for as a separate liability. The declaration of future dividends
for participating business is at the discretion of the Board of Directors.
Participating business accounted for 45% of receipts from policyholders during
the year ended December 31, 1995 and represented 21% of life insurance inforce
at December 31, 1995.

The liabilities for future policy benefits for accident and health insurance
are computed using a net level or two-year preliminary term method, including
assumptions as to morbidity, mortality and interest and to include provisions
for possible unfavorable deviations. Policy benefit claims are charged to
expense in the period that the claims are incurred.

Future policy benefit reserves for universal life insurance and investment
products are computed under a retrospective deposit method and represent policy
account balances before applicable surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the period in
excess of related policy account balances. Interest crediting rates for
universal life and investment products ranged from 4.00% to 7.50% in 1995, 4.00%
to 7.25% in 1994, and 4.00% to 8.25% in 1993.

The unearned revenue reserve reflects the unamortized balance of the excess
of first year administration charges over renewal period administration charges
(policy initiation fees) on universal life products. These excess charges have
been deferred and are being recognized in income over the period benefited using
the same assumptions and factors used to amortize deferred policy acquisition
costs.

RESERVES AND UNEARNED PREMIUMS ON PROPERTY-CASUALTY POLICIES

Unpaid property-casualty losses and loss adjustment expenses represent the
estimated liability for reported claims plus those incurred but not yet reported
and the related estimated adjustment expenses. The reserve for unpaid claims and
related adjustment expenses is determined using case-basis evaluations and
statistical analyses and represents estimates of the ultimate cost of all unpaid
losses incurred through December 31 of each year. Although considerable
variability is inherent in such estimates, management believes that the reserve
for unpaid losses and related loss adjustment expenses is adequate. The
estimates are continually reviewed and adjusted as necessary; such adjustments
are included in current operations and are accounted for as changes in
estimates.

Salvage and subrogation recoverables are estimated using statistical
analysis. The salvage and subrogation recoverable amounts, which have been
offset against reserves and unearned premiums on property-casualty policies in
the accompanying consolidated balance sheets, were $716 and $718 at December 31,
1995 and 1994, respectively.

Property-casualty insurance unearned premiums are calculated on a pro rata
basis based upon the unexpired terms of the underlying policies.

DEFERRED INCOME TAXES

Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and liabilities
using the enacted marginal tax rate. Deferred income tax expenses or credits are
based on the changes in the asset or liability from period to period.

F-13
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEPARATE ACCOUNTS

The separate account assets and liabilities reported in the accompanying
consolidated balance sheets represent funds that are separately administered,
principally for the benefit of certain policyholders who bear the investment
risk. The separate account assets and liabilities are carried at fair value.
Revenues and expenses related to the separate account assets and liabilities, to
the extent of benefits paid or provided to the separate account policyholders,
are excluded from the amounts reported in the accompanying consolidated
statements of income.

RECOGNITION OF PREMIUM REVENUES AND COSTS

Traditional life insurance premiums are recognized as revenues over the
premium-paying period. Future policy benefits and policy acquisition costs are
recognized as expenses over the life of the policy by means of the provision for
future policy benefits and amortization of deferred policy acquisition costs.
All insurance-related revenues, benefits, losses and expenses are reported net
of reinsurance ceded.

Revenues for universal life and annuity products consist of policy charges
for the cost of insurance, administration charges, amortization of policy
initiation fees and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products include interest
credited to policyholder account balances and benefit claims incurred in excess
of policyholder account balances.

Property-casualty insurance premiums are recognized pro rata over the terms
of the policies. All insurance-related revenues and costs are reported net of
reinsurance.

REINSURANCE

The Company uses reinsurance to manage certain risks associated with its
insurance operations. These reinsurance arrangements provide for greater
diversification of business, allow management to control exposure to potential
risks arising from large losses and provide additional capacity for growth.

The Company's life insurance operations cede reinsurance to various
reinsurers. The cost of reinsurance is generally amortized over the contract
periods of the reinsurance agreements.

The Company's property-casualty operations assume and cede reinsurance,
principally as a participant in a reinsurance pooling agreement with two
affiliates. The Company's contracts are prospective and the cost of insurance is
amortized over the contract periods in proportion to the amount of insurance
protection provided.

OTHER INCOME AND OTHER EXPENSES

Other income and other expenses include revenue and expenses generated by
the Company's various non-insurance subsidiaries for services related to
investment advisory, marketing and distribution, and leasing. A portion of these
activities are performed on behalf of affiliates of the Company. In addition,
certain revenue generated by the Company's insurance subsidiaries (including
Farm Bureau Life and Western Life) have been classified as other income. During
the years ended December 31, 1995, 1994 and 1993, revenues of the insurance
subsidiaries included as other income aggregated $9,814, $12,626 and $9,774,
respectively.

NET INCOME PER SHARE OF COMMON STOCK

Net income per share is based on the weighted average number of shares of
common stock outstanding during each period (three months ended March 31, 1996 -
23,859,800; three months ended March 31, 1995 - 23,453,600; 1995 - 23,591,100;
1994 - 23,394,260; and 1993 -17,956,880). The weighted average number of shares
and amounts reported for earnings per share for the three month period ended
March 31, 1995 and for the years ended December 31, 1995, 1994 and 1993 have
been restated to give retroactive effect to a 2,000-for-1 common stock split
resulting from the recapitalization (see Note 3), approved by the Company's

F-14
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Board of Directors on March 12, 1996 and effective on March 19, 1996. In
addition, such shares have been adjusted to treat the shares of common stock
issued in connection with the acquisition of Farm Bureau Life (treated as a
reorganization) as equivalent shares issued throughout the periods presented.

2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the consolidated
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument. SFAS No. 107
also excludes certain financial instruments and all nonfinancial instruments
from its disclosure requirements and allows companies to forego the disclosures
when those estimates can only be made at excessive cost. Accordingly, the
aggregate fair value amounts presented herein are limited by each of these
factors and do not purport to represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments.

FIXED MATURITY SECURITIES: Fair values for fixed maturity securities are
based on quoted market prices, where available. For fixed maturity
securities not actively traded, fair values are estimated using values
obtained from independent pricing services or, in the case of private
placements, are estimated by discounting the expected future cash flows
using current market rates applicable to the coupon rate, credit, and
maturity of the investments.

EQUITY SECURITIES: The fair values for equity securities are based on
quoted market prices, where available; for equity securities that are
not actively traded, estimated fair values are based on values of issues
of comparable yield and quality.

HELD IN INVENTORY: The fair values for investments held in inventory are
based on quoted market prices, where available; for holdings that are
not actively traded, fair values are determined in good faith by the
Board of Directors of the subsidiary holding the security.

MORTGAGE LOANS ON REAL ESTATE: Fair values are estimated by discounting
expected cash flows using interest rates currently being offered for
similar loans.

POLICY LOANS: The Company has not determined the fair values associated
with its policy loans. Policy loans with a carrying value of $26,221 and
$23,524 at December 31, 1995 and 1994, respectively, provide for
variable interest rates. Management believes any differences between the
Company's carrying value and the fair values of its other policy loans
are immaterial to the Company's

F-15
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
financial position and, accordingly, the cost to provide such disclosure
is not worth the benefit to be derived. At December 31, 1995 and 1994,
amounts outstanding related to policy loans, summarized by interest
rates, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
----------------------
RATE 1995 1994
- ---------------- ---------- ----------
<S> <C> <C>
3.50% - 4.99% $ -- $ 734
5.00% - 5.99% 39,158 41,712
6.00% - 6.99% 18,084 17,859
7.00% - 7.99% 23,580 42,848
8.00% - 8.99% 35,285 10,695
---------- ----------
$ 116,107 $ 113,848
---------- ----------
---------- ----------
</TABLE>

CASH AND SHORT-TERM INVESTMENTS: The carrying amounts reported in the
consolidated balance sheet for these instruments approximate their fair
values.

ASSETS AND LIABILITIES OF SEPARATE ACCOUNTS: Separate account assets and
liabilities are reported at estimated fair value in the Company's
consolidated balance sheet.

FUTURE POLICY BENEFITS AND OTHER POLICYHOLDERS' FUNDS: Fair values of
the Company's liabilities under contracts not involving significant
mortality or morbidity risks (principally deferred annuities and
supplementary contracts), are stated at the cost the Company would incur
to extinguish the liability; i.e., the cash surrender value. The Company
is not required to estimate the fair value of its liabilities under
other contracts.

RESERVES AND UNEARNED PREMIUMS ON PROPERTY-CASUALTY POLICIES: The fair
value of reserves and unearned premiums on property-casualty policies
approximate carrying value as the Company's policies are substantially
all short-duration contracts.

SHORT-TERM BORROWINGS AND LONG-TERM DEBT: The fair values for long-term
debt are estimated using discounted cash flow analysis based on the
Company's current incremental borrowing rate for similar types of
borrowing arrangements. For short-term debt, the carrying value
approximates fair value.

DEPOSIT ADMINISTRATION FUNDS: The Company administers the funded portion
of certain employee benefit plans of its affiliates through deposit
administration funds. The fair value of the deposit administration funds
attributed to the Agent's Career Incentive Plan are stated at amounts
which are estimated to be currently vested, based on service and
production criteria. Other funds are stated at carrying value.

OFF-BALANCE SHEET INSTRUMENTS: The Company has entered into lines of
credit, both as a lender and borrower. The Company has not attempted to
place fair values on these obligations as management believes losses
have already been accrued to the extent that they eventually are
expected to be realized.

F-16
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The following sets forth a comparison of the fair values and carrying values
of the Company's financial instruments subject to the provisions of Statement of
Financial Accounting Standards No. 107:

<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------------
1995 1994
-------------------------- --------------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities:
Held for investment.......................... $ 683,149 $ 712,476 $ 532,376 $ 500,849
Available for sale........................... 1,393,060 1,393,060 1,200,235 1,200,235
Equity securities.............................. 83,714 83,714 46,701 46,701
Held in inventory.............................. 21,913 21,913 18,169 18,169
Mortgage loans on real estate.................. 266,623 281,900 272,537 274,924
Policy loans................................... 116,107 116,107 113,848 113,848
Cash and short-term investments................ 50,061 50,061 125,646 125,646
Assets held in separate accounts............... 44,789 44,789 28,043 28,043

LIABILITIES
Future policy benefits......................... $ 885,119 $ 854,928 $ 834,229 $ 805,948
Reserves and unearned premiums on
property-casualty policies.................... 45,890 45,890 44,482 44,482
Other policyholders' funds..................... 200,348 200,348 185,497 185,497
Short-term borrowings.......................... -- -- 6,388 6,388
Long-term debt................................. 12,604 12,490 18,519 17,179
Deposit administration funds................... 38,119 35,088 29,829 27,266
Liabilities related to separate accounts....... 44,789 44,789 28,043 28,043
</TABLE>

3. REORGANIZATION AND RECAPITALIZATION

REORGANIZATION

On February 26, 1993, the Company entered into a stock exchange agreement
with Rural Mutual Insurance Company. Under terms of the agreement, the Company
acquired 99.5% of the issued and outstanding common stock of Rural Security Life
in exchange for newly issued common stock of the Company. The transaction was
accounted for as a purchase and the purchase price of $27,101 (based upon the
appraised value of the Company's stock at the time of purchase) was allocated to
the assets and liabilities acquired. This allocation resulted in goodwill of
approximately $6,988, which is being amortized over 20 years.

In January 1994, the Boards of Directors of Farm Bureau Life and Western
Life approved an agreement, pursuant to which, effective January 1, 1994, the
acquisition of Western Life was consummated through Farm Bureau Multi-State
Services, Inc., a holding company which was incorporated in the State of Iowa on
October 13, 1993. In March, 1996, Farm Bureau Multi-State Services, Inc. was
renamed to FBL Financial Group, Inc. Under the agreement, 100% of the common
stock of Farm Bureau Life and Western Life were exchanged for stock in the
holding company. In addition, in 1994, the minority interests of FBL Insurance
Company and Rural Security Life were exchanged for equivalent value in the
holding company and, in 1995, FBL Insurance Company and Rural Security Life were
liquidated. Goodwill associated with Rural Security Life remains attributable to
the still existing operations in Wisconsin which include a license to do
business in

F-17
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

3. REORGANIZATION AND RECAPITALIZATION (CONTINUED)
Wisconsin, an active agency force, customer lists, a marketing relationship with
the Wisconsin Farm Bureau Federation and an exclusive use of the Farm Bureau
trademark in Wisconsin in connection with life insurance and annuity products.

At the effective date of the aforementioned affiliation agreement, Farm
Bureau Life had assets of $2,142,849 and Western Life had assets of $549,993.
Subsequent to the agreement, many administrative functions of Western Life were
assumed by, and consolidated with those of, Farm Bureau Life. Additionally, the
former majority owners of Farm Bureau Life continue to be majority owners of the
Company. As a result, the Company has treated the issuance of holding company
stock in exchange for the stock of Farm Bureau Life as a reorganization for
accounting purposes, thereby applying the principles of the pooling method for
business combinations. The issuance of holding company stock in exchange for the
stock of Western Life has been accounted for as a purchase and the purchase
price of $88,130, based upon the appraised value of the Company's stock at the
time of purchase, was allocated to the assets and liabilities acquired.
Additionally, the issuance of holding company stock in exchange for the minority
interests of FBL Insurance Company and Rural Security Life has been accounted
for as a purchase and the purchase price of $24,702, based upon the appraised
value of the Company's stock at the time of purchase, was allocated to the
assets and liabilities acquired. These allocations resulted in goodwill of
approximately $4,419, which is being amortized over 20 years.

In December 1995, the .83% minority interest in Utah Insurance was exchanged
for equivalent value in the holding company in a transaction that was accounted
for as a purchase.

RECAPITALIZATION SUBSEQUENT TO DECEMBER 31, 1995

On March 12, 1996, the Company's shareholders approved a change to the
Company's capital structure and a related revision to the Company's Articles of
Incorporation (the recapitalization). The restated Articles of Incorporation
authorize the Company to issue 88,500,000 shares of Class A Common Stock,
without par value; 1,500,000 shares of Class B Common Stock, without par value;
and 10,000,000 shares of Preferred Stock. Pursuant to the recapitalization, each
outstanding share of Common Stock prior to recapitalization was converted on a
pro rata basis to 1,900 shares of Class A Common Stock and 100 shares of Class B
Common Stock.

F-18
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share data)

(3) REORGANIZATION AND RECAPITALIZATION (CONTINUED)
In 1996, the Company designated 5,000,000 shares of its preferred stock as
Series A Preferred Stock and offered such shares to existing stockholders in
exchange for 5,000,000 shares of Class A Common Stock. Each share of Series A
Preferred Stock has a liquidation preference of $20 and voting rights similar to
that of Class A Common Stock. The Series A Preferred Stock pays cumulative
annual cash dividends of $1 per share, payable quarterly in cash, and is
redeemable by the Company at $20 per share plus unpaid dividends if the stock
ceases to be beneficially owned by a Farm Bureau organization. The Iowa Farm
Bureau Federation has guaranteed that all 5,000,000 shares will be exchanged
subject to the sale of approximately 4,000,000 shares of Class A Common Stock by
certain stockholders through an initial public offering that is expected to be
completed during 1996.

Holders of the Class A Common Stock and Series A Preferred Stock, together
as a group, and Class B Common Stock are entitled to vote as separate classes on
all issues, except that only holders of the Class A Common Stock and Series A
Preferred Stock vote for the election of Class A Directors (three to five) and
only holders of the Class B Common Stock vote for the election of Class B
Directors (ten to twenty). Voting for the Directors is noncumulative. In
addition, various ownership aspects of the Company's Class B Common Stock are
governed by a Class B Shareholder Agreement which results in the Iowa Farm
Bureau Federation maintaining control of the Company. Holders of Class A Common
Stock and Class B Common Stock are entitled to share ratably on a
share-for-share basis with respect to common stock dividends.

4. INVESTMENT OPERATIONS

FIXED MATURITIES, EQUITY SECURITIES AND INVESTMENTS HELD IN INVENTORY

The following tables contain amortized cost and market value information on
fixed maturities (bonds and redeemable preferred stocks) and equity securities
(common and nonredeemable preferred stocks) at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
HELD FOR INVESTMENT
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES MARKET VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995
Bonds:
United States Government and agencies -- mortgage-backed
securities.............................................. $ 220,768 $ 11,612 $ (603) $ 231,777
Industrial and miscellaneous:
Mortgage-backed securities............................. 457,381 20,336 (2,302) 475,415
Other.................................................. 5,000 284 -- 5,284
------------ ----------- ----------- ------------
Total fixed maturities..................................... $ 683,149 $ 32,232 $ (2,905) $ 712,476
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>

F-19
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES MARKET VALUE
------------ ----------- ----------- ------------
DECEMBER 31, 1995
<S> <C> <C> <C> <C>
Bonds:
United States Government and agencies:
Mortgage-backed securities............................. $ 94,766 $ 4,510 $ (540) $ 98,736
Other.................................................. 181,716 3,612 (651) 184,677
State, municipal and other governments................... 28,496 1,268 (332) 29,432
Public utilities......................................... 172,672 9,593 (1,252) 181,013
Industrial and miscellaneous:
Mortgage and asset-backed securities................... 80,821 4,922 (383) 85,360
Other.................................................. 730,851 58,746 (11,821) 777,776
Redeemable preferred stock................................. 36,286 877 (1,097) 36,066
------------ ----------- ----------- ------------
Total fixed maturities..................................... $ 1,325,608 $ 83,528 $ (16,076) $ 1,393,060
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Equity securities.......................................... $ 77,038 $ 7,306 $ (630) $ 83,714
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<CAPTION>

HELD FOR INVESTMENT
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES MARKET VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Bonds:
United States Government and agencies -- mortgage-backed
securities.............................................. $ 198,724 $ 809 $ (8,066) $ 191,467
Industrial and miscellaneous --
mortgage-backed securities.............................. 333,652 922 (25,192) 309,382
------------ ----------- ----------- ------------
Total fixed maturities..................................... $ 532,376 $ 1,731 $ (33,258) $ 500,849
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<CAPTION>

AVAILABLE FOR SALE
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES MARKET VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Bonds:
United States Government and agencies:
Mortgage-backed securities............................. $ 83,259 $ 2,583 $ (1,850) $ 83,992
Other.................................................. 173,592 259 (14,043) 159,808
State, municipal and other governments................... 36,852 303 (2,233) 34,922
Public utilities......................................... 151,356 1,466 (9,856) 142,966
Industrial and miscellaneous:
Mortgage and asset-backed securities................... 50,052 1 (395) 49,658
Other.................................................. 713,607 13,262 (38,799) 688,070
Redeemable preferred stock................................. 43,471 893 (3,545) 40,819
------------ ----------- ----------- ------------
Total fixed maturities..................................... $ 1,252,189 $ 18,767 $ (70,721) $ 1,200,235
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Equity securities.......................................... $ 49,985 $ 4,226 $ (7,510) $ 46,701
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>

F-20
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
Short-term investments have been excluded from the above schedules as
amortized cost approximates market value for these securities.

The carrying value and estimated market value of the Company's portfolio of
fixed maturity securities at December 31, 1995, by contractual maturity, are
shown below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.

<TABLE>
<CAPTION>
HELD FOR INVESTMENT
------------------------ AVAILABLE FOR SALE
ESTIMATED --------------------------
AMORTIZED MARKET AMORTIZED ESTIMATED
COST VALUE COST MARKET VALUE
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Due in one year or less..................................... $ -- $ -- $ 67,136 $ 66,886
Due after one year through five years....................... -- -- 176,585 181,647
Due after five years through ten years...................... -- -- 275,055 287,838
Due after ten years......................................... 5,000 5,284 594,959 636,527
----------- ----------- ------------ ------------
5,000 5,284 1,113,735 1,172,898
Mortgage and asset-backed securities........................ 678,149 707,192 175,587 184,096
Redeemable preferred stocks................................. -- -- 36,286 36,066
----------- ----------- ------------ ------------
$ 683,149 $ 712,476 $ 1,325,608 $ 1,393,060
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>

The unrealized appreciation or depreciation on fixed maturity and equity
securities available for sale are reported as a separate component of
stockholders' equity, reduced by adjustments to deferred policy acquisition
costs, value of insurance in force acquired and unearned revenue reserve that
would have been required as a charge or credit to income had such amounts been
realized, a provision for deferred income taxes and amounts attributable to
minority interests in subsidiaries. Net unrealized investment gains (losses) as
reported were comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Unrealized appreciation (depreciation) on fixed maturity and equity securities
available for sale............................................................. $ 74,128 $ (55,238)
Adjustments for assumed changes in amortization pattern of:
Deferred policy acquisition costs............................................. (12,700) 5,079
Value of insurance in force acquired.......................................... (4,451) 1,337
Unearned revenue reserve...................................................... 1,189 (163)
Provision for deferred income taxes............................................. (20,359) 17,144
Amounts attributable to minority interest in subsidiaries....................... -- 3
---------- ----------
Net unrealized investment gains (losses)........................................ $ 37,807 $ (31,838)
---------- ----------
---------- ----------
</TABLE>

Amortized cost of securities held in inventory was $21,555 and $17,731 at
December 31, 1995 and 1994, respectively. Net unrealized appreciation on
securities held in inventory as of December 31, 1995 and 1994, included gross
unrealized gains of $1,613 and $1,719 and gross unrealized losses of $1,255 and
$1,281, respectively.

MORTGAGE LOANS ON REAL ESTATE

The Company's mortgage loan portfolio consists principally of commercial
mortgage loans. The Company's lending policies establish limits on the amount
that can be loaned to one borrower and require

F-21
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
diversification by geographic location and collateral type. Regions in which at
least 20% of the Company's mortgage loan portfolio is invested during the years
presented include Mountain (27% in 1995 and 1994), which includes Arizona,
Colorado, Idaho, New Mexico, Nevada, Utah and Wyoming; Pacific (22% in 1995 and
19% in 1994), which includes California and Oregon; and West South Central (19%
in 1995 and 22% in 1994) which includes Texas and Oklahoma. Mortgage loans on
real estate have also been analyzed during the years presented by collateral
types with retail facilities (34% in 1995, 35% in 1994) and office buildings
(39% in 1995, 32% in 1994), representing the largest holdings.

The Company has also provided an allowance for possible losses against its
mortgage loan portfolio. An analysis of this allowance for loan losses is as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year................................................... $ 800 $ 600 $ 600
Realized losses during year.................................................... 10 248 388
Current year chargeoffs, net of recoveries..................................... (10) (48) (388)
--------- --------- ---------
Balance at end of year......................................................... $ 800 $ 800 $ 600
--------- --------- ---------
--------- --------- ---------
</TABLE>

Securities and indebtedness of related parties include mortgage loans and
similar advances to joint ventures and limited partnerships in which the Company
maintains an equity interest. Such indebtedness aggregated $33,960 and $34,738
at December 31, 1995 and 1994, respectively. These loans and advances were made
at similar interest rates and under similar terms as other mortgage loans.

NET INVESTMENT INCOME

Components of net investment income are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Fixed maturities:
Held for investment.............................................. $ 50,050 $ 35,065 $ 106,897
Available for sale............................................... 108,748 101,683 --
Equity securities.................................................. 1,163 1,971 2,178
Held in inventory.................................................. 25,868 (130) 183
Mortgage loans on real estate...................................... 23,850 24,870 19,805
Investment real estate............................................. 4,970 6,385 5,090
Policy loans....................................................... 7,189 6,894 5,400
Other long-term investments........................................ 381 2,668 3,197
Short-term investments............................................. 3,344 3,919 1,202
Other.............................................................. 5,667 4,000 3,997
---------- ---------- ----------
231,230 187,325 147,949
Less investment expenses........................................... (8,122) (8,491) (9,629)
---------- ---------- ----------
Net investment income.............................................. $ 223,108 $ 178,834 $ 138,320
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

F-22
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
Investment income of investments held in inventory is comprised of:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Dividends, interest and other income..................................... $ 138 $ 205 $ 312
Net realized gain from investment transactions........................... 25,810 4,026 --
Change in unrealized appreciation/depreciation of investments............ (80) (4,361) (129)
--------- --------- ---------
$ 25,868 $ (130) $ 183
--------- --------- ---------
--------- --------- ---------
</TABLE>

REALIZED AND UNREALIZED GAINS AND LOSSES

Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The cumulative effect of
this change in accounting method was to increase stockholders' equity by
$38,913, net of offsets aggregating $39,993.

Realized gains (losses) and the change in unrealized
appreciation/depreciation on investments (excluding amounts attributed to
investments held in inventory discussed above) are summarized below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ----------- ---------
<S> <C> <C> <C>
REALIZED
Fixed maturities:
Held for investment............................................... $ -- $ (6) $ (287)
Available for sale................................................ 5,524 2,279 --
Equity securities................................................... (647) 8,380 5,498
Mortgage loans on real estate....................................... (10) (248) (388)
Investment real estate.............................................. (1) (415) (40)
Other long-term investments......................................... (158) (1,773) (330)
Equity investments.................................................. 1,182 2,864 --
Notes receivable.................................................... -- (1,624) --
Other............................................................... (7) (9) (486)
---------- ----------- ---------
Realized gains on investments....................................... $ 5,883 $ 9,448 $ 3,967
---------- ----------- ---------
---------- ----------- ---------
UNREALIZED
Fixed maturities:
Held for investment............................................... $ 60,854 $ (55,973) $ 38,399
Available for sale................................................ 119,406 (130,860) --
Equity securities................................................... 9,960 (12,095) 4,329
---------- ----------- ---------
Change in unrealized appreciation/depreciation of investments....... $ 190,220 $ (198,928) $ 42,728
---------- ----------- ---------
---------- ----------- ---------
</TABLE>

F-23
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
An analysis of sales, maturities and principal repayments of the Company's
fixed maturities portfolio for the years ended December 31, 1995, 1994, and 1993
is as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED REALIZED REALIZED
COST GAINS LOSSES PROCEEDS
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Scheduled principal repayments and calls:
Available for sale................................... $ 121,276 $ 12 $ (44) $ 121,244
Held for investment.................................. 20,890 -- -- 20,890
Sales -- available for sale............................ 134,986 7,371 (1,601) 140,756
----------- --------- ----------- ----------
Total.............................................. $ 277,152 $ 7,383 $ (1,645) $ 282,890
----------- --------- ----------- ----------
----------- --------- ----------- ----------
Year ended December 31, 1994:
Scheduled principal repayments and calls:
Available for sale................................... $ 158,294 $ 12 $ (167) $ 158,139
Held for investment.................................. 43,534 -- (6) 43,528
Sales -- available for sale............................ 220,276 9,248 (6,814) 222,710
----------- --------- ----------- ----------
Total.............................................. $ 422,104 $ 9,260 $ (6,987) $ 424,377
----------- --------- ----------- ----------
----------- --------- ----------- ----------
Year ended December 31, 1993:
Scheduled principal repayments and calls............... $ 257,310 $ 5 $ (3) $ 257,312
Sales.................................................. 126,196 11,407 (1,439) 136,164
----------- --------- ----------- ----------
Total.............................................. $ 383,506 $ 11,412 $ (1,442) $ 393,476
----------- --------- ----------- ----------
----------- --------- ----------- ----------
</TABLE>

Realized losses totaling $214 and $10,257 were incurred during the years
ended December 31, 1995 and 1993 as a result of writedowns for other than
temporary impairment of fixed maturity securities. No such writedowns were
incurred during 1994.

Income taxes during the years ended December 31, 1995, 1994 and 1993 include
a provision of $2,059, $3,307 and $1,388, respectively, for the tax effect of
realized gains.

OTHER

In February 1996, an equity investee of the Company completed an initial
public offering which resulted in an increase of $4,859, net of $2,617 in taxes,
in the Company's share of the investee's stockholders' equity. This increase was
credited directly to common stock, allocated proportionately among Class A
Common Stock and Class B Common Stock based on shares outstanding. As a result
of the public offering, the Company's voting stock interest in the investee
declined to an amount less than 20%. Accordingly, the Company discontinued the
use of the equity method of accounting for this investment and has classified
the investment as equity securities in the balance sheet for that portion of the
investment (carrying value $8,286 at March 31, 1996) that is available for sale
and as a long-term investment in the balance sheet for that portion (carrying
value $9,499 and market value $46,004 at March 31, 1996) that the Company is
restricted from selling within one year due to trading restrictions under
applicable securities laws. At December 31, 1995, the investment had a carrying
value of $4,891 and was classified as securities and indebtedness of related
parties in the balance sheet.

At December 31, 1995, affidavits of deposits covering bonds with a carrying
value of $1,416,113, preferred stocks with a carrying value of $6,422, mortgage
loans (including those made to related parties) with an unpaid balance of
$253,558, real estate with a book value of $26,241 and policy loans with an
unpaid

F-24
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INVESTMENT OPERATIONS (CONTINUED)
balance of $88,526 were on deposit with state agencies to meet regulatory
requirements. The Company has pledged bonds with a carrying value of $5,855 as
collateral against the guarantee of a loan agreement with a bank arising from
the sale of a real estate property to an unrelated party (see Note 12).

At December 31, 1995, the Company had committed to provide additional
funding for mortgage loans on real estate aggregating $10,475. These commitments
arose in the normal course of business at terms which are comparable to similar
investments.

The carrying value of investments which have been non-income producing for
the twelve months preceding December 31, 1995, include fixed maturities --
$1,650, and mortgage loans on real estate -- $3,343.

No investment in any person or its affiliates (other than bonds issued by
agencies of the United States Government) exceeded 10% of stockholders' equity
at December 31, 1995.

5. PROPERTY AND EQUIPMENT
Property and equipment are comprised of:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Land............................................................................ $ 1,191 $ 2,327
Home office building and claims center.......................................... 37,752 41,720
Leasehold improvements.......................................................... 166 166
Furniture and equipment......................................................... 66,492 64,319
---------- ----------
105,601 108,532
Allowances for depreciation..................................................... (45,417) (44,924)
---------- ----------
$ 60,184 $ 63,608
---------- ----------
---------- ----------
</TABLE>

6. REINSURANCE AND POLICY PROVISIONS

LIFE INSURANCE OPERATIONS

The value of insurance in force acquired is an asset that represents the
present value of future profits on business acquired. An analysis of the value
of insurance in force acquired for the years ended December 31, 1995, 1994 and
1993 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Excluding impact on net unrealized investment gains and losses:
Balance at beginning of year............................................ $ 19,571 $ 117 $ --
Additions resulting from acquisitions................................... -- 19,534 157
Accretion of interest during the year................................... 1,250 1,275 7
Amortization of asset................................................... (1,921) (1,355) (47)
--------- --------- ---------
Balance prior to impact on net unrealized investment gains and losses..... 18,900 19,571 117
Offset against net unrealized investment gains and losses................. (4,451) 1,337 --
--------- --------- ---------
Balance at end of year.................................................... $ 14,449 $ 20,908 $ 117
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-25
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. REINSURANCE AND POLICY PROVISIONS (CONTINUED)
Amortization of the value of insurance in force acquired (based on expected
future gross profits/ margins) for the next five years and thereafter is
expected to be as follows: 1996 -- $834; 1997 -- $1,005; 1998 -- $1,006; 1999 --
$1,166; 2000 -- $1,261; and thereafter, through 2023 -- $13,628.

In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance enterprises or reinsurers. Reinsurance coverages
for life insurance vary according to the age and risk classification of the
insured with retention limits ranging up to $500 of coverage per individual
life. The Company does not use financial or surplus relief reinsurance. At
December 31, 1995, life insurance in force ceded on a consolidated basis
amounted to $953,828 or approximately 5.9% of total life insurance in force.

Reinsurance contracts do not relieve the Company of its obligations to its
policyholders. To the extent that reinsuring companies are later unable to meet
obligations under reinsurance agreements, the Company's life insurance
subsidiaries would be liable for these obligations, and payment of these
obligations could result in losses to the Company. To limit the possibility of
such losses, the Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk.

No allowance for uncollectible amounts has been established against the
Company's asset for reinsurance recoverable since none of the receivables are
deemed to be uncollectible, and because such receivables, either individually or
in the aggregate, are not material to the Company's operations. Insurance
premiums and product charges have been reduced by $14,854, $23,080 and $6,973
and insurance benefits have been reduced by $8,454, $12,033 and $3,809 during
the years ended December 31, 1995, 1994 and 1993, respectively, as a result of
the cession agreements. The amount of reinsurance assumed is not significant.

Effective January 1, 1994, Farm Bureau Life and Rural Security Life
transferred all of their group accident and health business to other carriers.
However, there was some run-off of the group accident and health line during
1995 and 1994. Also, effective January 1, 1994, Farm Bureau Life and Western
Life entered into a 100% coinsurance agreement with an unaffiliated third party
to administer the remaining individual medical business. Farm Bureau Life and
Western Life effectively removed themselves from the medical business as of
December 31, 1993 other than stop-loss coverages for self-insured groups of
certain related companies. The Company continues to write individual disability
income policies which are classified as accident and health herein.

F-26
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. REINSURANCE AND POLICY PROVISIONS (CONTINUED)
Unpaid claims on accident and health policies include amounts for losses and
related adjustment expense and are estimates of the ultimate net costs of all
losses, reported and unreported. These estimates are subject to the impact of
future changes in claim severity, frequency and other factors. The activity in
the liability for unpaid claims and related adjustment expense, net of
reinsurance, is summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Unpaid claims liability, net of related reinsurance, at beginning of
year.................................................................. $ 11,982 $ 16,116 $ 9,863
Add:
Provision for claims occurring in the current year, net of
reinsurance......................................................... 5,522 4,169 37,786
Increase (decrease) in estimated expense for claims occurring in the
prior years, net of reinsurance..................................... 2,251 (2,534) 3,437
--------- --------- ---------
Incurred claim expense during the current year, net of reinsurance..... 7,773 1,635 41,223
Unpaid claims liability of companies acquired.......................... -- 4,519 5,065
Deduct expense payments for claims, net of reinsurance, occurring
during:
Current year......................................................... 2,306 2,589 31,614
Prior years.......................................................... 2,485 7,699 8,421
--------- --------- ---------
4,791 10,288 40,035
--------- --------- ---------
Unpaid claims liability, net of related reinsurance, at end of year.... 14,964 11,982 16,116
Active life reserve.................................................... 15,871 16,502 19,162
--------- --------- ---------
Net accident and health reserves....................................... 30,835 28,484 35,278
Reinsurance ceded...................................................... 1,819 7,854 1,510
--------- --------- ---------
Gross accident and health reserves..................................... $ 32,654 $ 36,338 $ 36,788
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company's unpaid claims reserve was increased (decreased) by $2,251,
$(2,534) and $3,437 for the years ended December 31, 1995, 1994 and 1993,
respectively, for claims that occurred prior to those balance sheet dates. A
substantial portion of these claims are related to the disability income block
of business. The establishment of disability income reserves is dependent upon
factors that attempt to project future payments based upon experience to date.
These factors tend to increase as the length of the disability increases.
Accordingly, deficiencies noted above resulted primarily from experience less
favorable than assumed in the reserve basis.

PROPERTY-CASUALTY OPERATIONS

Risks are reinsured with other companies to permit the recovery of a portion
of losses and loss adjustment expenses incurred and are treated (to the extent
of the reinsurance) as risks for which the Company is not liable; however, the
Company remains liable to the extent that reinsuring companies cannot meet their
obligations under these reinsurance contracts.

Utah Insurance is a participant with Farm Bureau Mutual Insurance Company
and South Dakota Farm Bureau Mutual Insurance Company, another affiliate, in a
reinsurance pooling agreement (the Farm Bureau Mutual pool). Under the terms of
the agreement, Utah Insurance and South Dakota Farm Bureau Mutual Insurance
Company cede to Farm Bureau Mutual Insurance Company all of their insurance
business and

F-27
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. REINSURANCE AND POLICY PROVISIONS (CONTINUED)
assume back from Farm Bureau Mutual Insurance Company an amount equal to their
participation in the pooling agreement. Also, losses, loss adjustment expenses,
and other underwriting and administrative expenses are prorated among the
companies on the basis of their participation in the pooling agreement. For the
years ended December 31, 1995, 1994 and 1993, Utah Insurance was an 8%
participant in the pool.

Property-casualty premiums earned and losses and loss adjustment expenses
incurred, reflect the following reinsurance amounts:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
PREMIUMS EARNED
Direct premiums written............................................. $ 26,244 $ 26,427 $ 22,866
Assumed from non-affiliates......................................... 5 8 47
Ceded to non-affiliates............................................. (615) (541) (475)
Assumed from Farm Bureau Mutual pool................................ 18,851 18,339 17,722
Ceded to Farm Bureau Mutual pool.................................... (25,634) (25,894) (22,438)
---------- ---------- ----------
Net premiums written................................................ 18,851 18,339 17,722
Increase in reserve for unearned premiums........................... (150) (582) (824)
Increase in accrued retrospective premiums.......................... 8 21 39
---------- ---------- ----------
Total premiums earned............................................... $ 18,709 $ 17,778 $ 16,937
---------- ---------- ----------
---------- ---------- ----------
LOSSES AND LOSS ADJUSTMENT EXPENSES INCURRED
Direct losses and loss adjustment expenses paid..................... $ 18,532 $ 18,033 $ 16,434
Net ceded to non-affiliates......................................... 91 (175) --
Assumed from Farm Bureau Mutual pool................................ 13,030 12,933 12,866
Ceded to Farm Bureau Mutual pool.................................... (18,623) (17,858) (16,434)
---------- ---------- ----------
Net losses and loss adjustment expenses paid........................ 13,030 12,933 12,866
Increase in losses and loss adjustment expense reserves............. 591 508 1,082
---------- ---------- ----------
Total losses and loss adjustment expenses incurred.................. $ 13,621 $ 13,441 $ 13,948
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

F-28
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. REINSURANCE AND POLICY PROVISIONS (CONTINUED)
The following table provides a reconciliation of the beginning and ending
reserve balances, net of reinsurance and salvage and subrogation recoverables:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Reserves and unearned premiums (gross) on property-
casualty policies, at beginning of year............................ $ 44,482 $ 40,012 $ 34,408
Less:
Reinsurance recoverables on unpaid losses and loss adjustment
expenses, at beginning of year................................... (16,646) (14,616) (11,931)
Unearned premium reserve, at beginning of year.................... (15,654) (13,721) (11,884)
---------- ---------- ----------
Reserves for losses and loss adjustment expenses, net of related
reinsurance and salvage and subrogation recoverables, at beginning
of year............................................................ 12,182 11,675 10,593
Add:
Provision for losses and loss adjustment expenses for claims
occurring in the current year, net of reinsurance and salvage and
subrogation...................................................... 14,529 14,368 14,148
Decrease in estimated losses and loss adjustment expenses for
claims occurring in the prior years, net of reinsurance and
salvage and subrogation.......................................... (908) (927) (200)
---------- ---------- ----------
Incurred losses and loss adjustment expenses during the current
year, net of reinsurance and salvage and subrogation............... 13,621 13,441 13,948
Deduct loss and loss adjustment expense payments for claims, net of
reinsurance and salvage and subrogation, occurring during:
Current year...................................................... (7,678) (7,917) (7,799)
Prior years....................................................... (5,351) (5,017) (5,067)
---------- ---------- ----------
(13,029) (12,934) (12,866)
---------- ---------- ----------
Reserve for losses and loss adjustment expenses, net of related
reinsurance and salvage and subrogation recoverables, at end of
year............................................................... 12,774 12,182 11,675
Reinsurance recoverables on unpaid losses and loss adjustment
expenses, at end of year........................................... 17,210 16,646 14,616
Unearned premium reserve, at end of year............................ 15,906 15,654 13,721
---------- ---------- ----------
Reserves and unearned premiums (gross) on property-casualty
policies, at end of year........................................... $ 45,890 $ 44,482 $ 40,012
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The Company has no known liability for environmental remediation exposures
as of December 31, 1995 and does not expect any future impact on results of
operations, liquidity or cash flow as a result of such exposures.

7. FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return with Utah
Insurance and Farm Bureau Life and all of its majority-owned subsidiaries,
except FBL Insurance Company and Rural Security Life. The Company and its direct
and indirect subsidiaries included in the consolidated federal income tax return
each

F-29
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. FEDERAL INCOME TAXES (CONTINUED)
report current income tax expense as allocated under a consolidated tax
allocation agreement. Generally, this allocation results in profitable companies
recognizing a tax provision as if the individual company filed a separate return
and loss companies recognizing benefits to the extent their losses contribute to
reduce consolidated taxes. The Company files a separate state income tax return.
Western Life, FBL Insurance Company and Rural Security Life (the latter two
prior to their liquidation in 1995) file a separate federal income tax return.

Deferred income taxes have been established by the Company and its
subsidiaries based upon the temporary differences, the reversal of which will
result in taxable or deductible amounts in future years when the related asset
or liability is recovered or settled, within each entity.

Income tax expenses (credits) are included in the consolidated financial
statements as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
--------- ---------- ---------
<S> <C> <C> <C>
Taxes provided in consolidated statements of income on:
Income from continuing operations before minority interest in
earnings of subsidiaries and equity income (loss):
Current........................................................... $ 19,230 $ 22,205 $ 17,643
Deferred.......................................................... 12,840 257 (3,204)
--------- ---------- ---------
32,070 22,462 14,439
Equity income (loss):
Current........................................................... (212) 309 (188)
Deferred.......................................................... 1,074 (1,107) 513
--------- ---------- ---------
862 (798) 325
Discontinued operations:
Current........................................................... -- (3,649) (975)
Deferred.......................................................... -- 7,137 (587)
--------- ---------- ---------
-- 3,488 (1,562)
Taxes provided in consolidated statement of changes in stockholders'
equity:
Cumulative effect of change in method of accounting for certain debt
securities -- deferred............................................. -- 20,954 --
Amounts attributable to net unrealized investment gains and losses
during year -- deferred............................................ 37,503 (41,182) 1,540
--------- ---------- ---------
37,503 (20,228) 1,540
--------- ---------- ---------
$ 70,435 $ 4,924 $ 14,742
--------- ---------- ---------
--------- ---------- ---------
</TABLE>

F-30
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. FEDERAL INCOME TAXES (CONTINUED)
The effective tax rate on income from continuing operations before income
taxes, minority interest in earnings of subsidiaries and equity income (loss) is
different from the prevailing federal income tax rate as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Income from continuing operations before income taxes, minority
interest in earnings of subsidiaries and equity income (loss)......... $ 90,447 $ 59,873 $ 38,931
--------- --------- ---------
--------- --------- ---------
Income tax at federal statutory rate (35%)............................. $ 31,657 $ 20,956 $ 13,626
Tax effect (decrease) of:
Tax-exempt interest income........................................... (586) (569) (563)
Tax-exempt dividend income........................................... (803) (648) (546)
Possible adjustments from IRS examinations........................... -- 2,766 1,786
State taxes.......................................................... 1,337 (112) (32)
Other items.......................................................... 465 69 168
--------- --------- ---------
Income tax expense..................................................... $ 32,070 $ 22,462 $ 14,439
--------- --------- ---------
--------- --------- ---------
</TABLE>

During 1994, Farm Bureau Life reached partial settlement with the Internal
Revenue Service (IRS) for tax years 1988 through 1990 and the IRS is in the
process of conducting examinations for 1991 through 1994. All tax years 1992 and
prior are settled for Western Life. During the years ended December 31, 1994 and
1993, the Company provided $2,766 and $1,786, respectively, for possible
adjustments from routine IRS examinations. During the year ended December 31,
1994, the Company paid $2,766 for settlement of certain items arising from the
examination of prior years. Management believes that amounts provided in the
income tax provision for IRS examinations are adequate to settle any adjustments
raised by the IRS.

The tax effect of temporary differences giving rise to the Company's
deferred income tax assets and liabilities at December 31, 1995 and 1994, is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
----------- ----------
<S> <C> <C>
Deferred tax assets:
Fixed maturity and equity securities............................... $ -- $ 12,057
Future policy benefits............................................. 40,193 38,980
Accrued dividends.................................................. 2,593 4,017
Accrued pension costs.............................................. 12,140 10,867
Other.............................................................. 6,499 11,152
----------- ----------
61,425 77,073
Deferred tax liabilities:............................................
Fixed maturity and equity securities............................... (35,533) --
Deferred policy acquisition costs.................................. (37,590) (39,660)
Value of insurance in force acquired............................... (4,889) (7,318)
Deferred investment gains.......................................... (9,521) (4,814)
Other.............................................................. (13,537) (13,509)
----------- ----------
(101,070) (65,301)
----------- ----------
Deferred income tax asset (liability)................................ $ (39,645) $ 11,772
----------- ----------
----------- ----------
</TABLE>

F-31
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. FEDERAL INCOME TAXES (CONTINUED)
Prior to 1984, a portion of current income of the Company's life insurance
subsidiaries was not subject to current income taxation, but was accumulated,
for tax purposes, in a memorandum account designated as "policyholders' surplus
account". The aggregate accumulation in this account at December 31, 1995 was
$11,148 and $740 for Farm Bureau Life and Western Life, respectively. Should the
policyholders' surplus account of Farm Bureau Life and Western Life exceed the
limitation prescribed by federal income tax law, or should distributions be made
by Farm Bureau Life and Western Life to the parent company in excess of $235,284
and $110,162, respectively, such excess would be subject to federal income taxes
at rates then effective. Deferred income taxes of $4,161 have not been provided
on amounts included in this memorandum account since the Company contemplates no
action and can foresee no events that would create such a tax.

Deferred income taxes were also reported on equity income (loss) and on the
income (loss) from discontinued operations during these periods. These taxes
arise from the recognition of income and losses differently for purposes of
filing federal income tax returns than for financial reporting purposes.

8. CREDIT ARRANGEMENTS

SHORT-TERM BORROWINGS

As an investor in the Federal Home Loan Bank (FHLB), the Company has the
right to borrow up to $48,229 from the FHLB as of March 31, 1996 and December
31, 1995. As of March 31, 1996 and December 31, 1995, the Company had no
outstanding borrowings under this credit arrangement.

LONG-TERM DEBT

Long-term debt consists of:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Lease-backed notes payable, 4.98%, scheduled principal and
interest payments through December 1996, secured by rentals
to be received under certain operating leases from members
of consolidated group and other affiliates....................................... $ 12,516 $ 16,145
Mortgage loan payable to insurance company, 10.25%, due in
monthly installments of $25 through June 1995 when balloon
payment of approximately $2,250 was due.......................................... -- 2,282
Note payable to Rural Mutual Insurance Company, 10%, due
through December 2000, collateralized by an interest in note
receivable with a carrying value of $288......................................... 88 92
--------- ---------
$ 12,604 $ 18,519
--------- ---------
--------- ---------
</TABLE>

F-32
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

8. CREDIT ARRANGEMENTS (CONTINUED)
At December 31, 1995, the annual maturities of long-term debt during the
next five years ending on December 31 are as follows:

<TABLE>
<S> <C>
Years ending December 31:
1996..................................................... $ 12,521
1997..................................................... 6
1998..................................................... 6
1999..................................................... 7
2000..................................................... 64
---------
$ 12,604
---------
---------
</TABLE>

9. RETIREMENT AND COMPENSATION PLANS
The Company participates with several other affiliates in various defined
benefit plans covering substantially all employees. The benefits of these plans
are based primarily on years of service and employees' compensation. The Company
and affiliates have adopted a policy of allocating the required contribution to
the plans between themselves generally on a basis of time incurred by the
respective employees for each employer. Such allocations are reviewed annually.
Pension expense aggregated $6,140, $6,171 and $5,109 for the years ended
December 31, 1995, 1994 and 1993, respectively. During the year ended December
31, 1994, the Company introduced a new supplemental plan that increased the
annual expense by approximately $3,193. In addition, during the year ended
December 31, 1993, the Company offered early retirement to a select group of
employees that resulted in a non-recurring charge of approximately $2,928.

The Company provides benefits to agents of the Company and certain of its
affiliates through the Agents' Career Incentive Plan. Company contributions to
the plan are based upon the individual agent's earned commissions and vary based
upon the overall production level and the number of years of service. Company
contributions charged to expense with respect to this plan during the years
ended December 31, 1995, 1994 and 1993 were $1,421, $1,648 and $1,388,
respectively.

The Company has established deferred compensation plans for certain key
current and former employees and has certain other benefit plans which provide
for retirement and other benefits. These plans have been accrued or funded as
deemed appropriate by management of the Company.

Certain of the assets related to these plans are on deposit with the Company
and amounts relating to these plans are included in the financial statements
herein. In addition, certain amounts included in the liability for deferred
compensation and other employee benefits relate to deposit administration funds
maintained by the Company on behalf of affiliates offering substantially the
same benefit programs as the Company.

In addition to benefits offered under the aforementioned benefit plans, the
Company and several other affiliates sponsor a plan that provides group term
life insurance benefits to retired full-time employees who have worked ten years
and attained age 55 while in service with the Company.

The Company and affiliates allocate postretirement benefit expense in a
manner consistent with pension expense discussed above. Pension expense
aggregated $132, $96 and $34 for the years ended December 31, 1995, 1994 and
1993, respectively, with respect to postretirement benefits.

F-33
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

10. STOCKHOLDERS' EQUITY OF SUBSIDIARIES
REDEEMABLE PREFERRED STOCK OF WESTERN LIFE

Western Life is authorized to issue up to 100,000 shares of redeemable
preferred stock in series at $200.00 per share and with an annual dividend rate
not to exceed $30.00 per share. The preferred stock is redeemable at Western
Life's option after it has been issued and outstanding for a period of five
years or more. Currently, all series of the preferred stock have been issued and
outstanding for more than five years and, therefore, are redeemable at $200.00
per share at Western Life's option. Under certain circumstances and with respect
to certain matters, the holders of redeemable preferred stock are entitled to
vote separately as a class. The annual dividend rate and shares issued and
outstanding (which are included as minority interest in subsidiary) by series
are as follows:

<TABLE>
<CAPTION>
SHARES OUTSTANDING
DIVIDENDS SHARES AT DECEMBER 31,
PAYABLE PER ISSUED TO --------------------
SHARE DATE 1995 1994
------------ ----------- --------- ---------
<S> <C> <C> <C> <C>
Series A.................................................... $14.00 3,000 2,500 2,500
Series B.................................................... 15.00 4,250 4,000 4,000
Series C.................................................... 15.00 7,250 6,650 6,650
Series D.................................................... 15.00 337 337 337
Series E.................................................... Variable 13,915 9,030 9,030
----------- --------- ---------
28,752 22,517 22,517
----------- --------- ---------
----------- --------- ---------
</TABLE>

Dividends on Series E redeemable preferred stock are based upon the average
of the Moody's high and medium grade industrial preferred stock yields, with a
minimum annual rate of 7.5% (or $15.00 per share) and a maximum annual rate of
15.0% (or $30.00 per share).

STATUTORY LIMITATIONS ON SUBSIDIARY DIVIDENDS

The ability of Farm Bureau Life and Western Life to pay dividends to the
parent company is restricted because prior approval of insurance regulatory
authorities is required for payment of dividends to the stockholder which exceed
an annual limitation. During 1996, Farm Bureau Life and Western Life could pay
dividends to the parent company of approximately $48,552 and $5,671,
respectively, without prior approval of statutory authorities. Also, the amount
($208,801 and $60,670 for Farm Bureau Life and Western Life, respectively, at
December 31, 1995) by which the stockholder's equity stated in conformity with
generally accepted accounting principles exceeds statutory capital and surplus
as reported is restricted and cannot be distributed.

Similar restrictions exist with respect to the payments of dividends by Utah
Farm Bureau Insurance Company. Such restrictions are not considered to bear
significantly on the ability of the Company to meet the obligations of any
member of the consolidated group.

STATUTORY ACCOUNTING POLICIES

The financial statements of the Company's insurance subsidiaries included
herein differ from related statutory-basis financial statements principally as
follows: (a) the bond portfolio is segregated into held-for-investment (carried
at amortized cost), available-for-sale (carried at fair value), and trading
(reported at fair value) classifications rather than generally being carried at
amortized cost; (b) acquisition costs of acquiring new business are deferred and
amortized over the life of the policies rather than charged to operations as
incurred; (c) future policy benefit reserves for participating traditional life
insurance products are based on net level premium methods and guaranteed cash
value assumptions which may differ from statutory reserves; (d) future policy
benefit reserves on certain universal life and annuity products are based on
full

F-34
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

10. STOCKHOLDERS' EQUITY OF SUBSIDIARIES (CONTINUED)
account values, rather than discounting methodologies utilizing statutory
interest rates; (e) on certain lines of property-casualty insurance, reserves in
excess of the amounts considered adequate by the Company may be necessary to
conform with statutory requirements; (f) reinsurance amounts are shown as gross
amounts, net of an allowance for uncollectible amounts, on the consolidated
balance sheet rather than netted against the corresponding receivable or
payable; (g) deferred income taxes are provided for the difference between the
financial statement and income tax bases of assets and liabilities; (h) net
realized gains or losses attributed to changes in the level of interest rates in
the market are recognized as gains or losses in the statement of income when the
sale is completed rather than deferred and amortized over the remaining life of
the fixed maturity security or mortgage loan; (i) declines in the estimated
realizable value of investments are charged to the statement of income for
declines in value, when such declines in value are judged to be other than
temporary rather than through the establishment of a formula-determined
statutory investment reserve (carried as a liability), changes in which are
charged directly to surplus; (j) agents' balances and certain other assets
designated as "non-admitted assets" for statutory purposes are reported as
assets rather than being charged to surplus; (k) revenues for universal life and
annuity products consist of policy charges for the cost of insurance, policy
administration charges, amortization of policy initiation fees and surrender
charges assessed rather than premiums received; (l) pension income or expense is
recognized in accordance with SFAS No. 87, "Employers' Accounting for Pensions"
rather than in accordance with rules and regulations permitted by the Employee
Retirement Income Security Act of 1974; (m) expenses for postretirement benefits
other than pensions are recognized in accordance with SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" rather than the
statutory method which does not accrue for non-vested employees; (n) adjustments
to federal income taxes of prior years are reported as a component of expense in
the statement of income rather than as charges or credits to surplus; (o) the
financial statements of subsidiaries are consolidated with those of the
insurance subsidiary; (p) assets and liabilities are restated to fair values
when a change in ownership occurs that is accounted for as a purchase, with
provisions for goodwill and other intangible assets, rather than continuing to
be presented at historical cost; and (q) operating results of discontinued
operations are segregated from those of continuing operations.

Capital and surplus as of December 31, 1995 and 1994, and net income (loss)
for the years ended December 31, 1995, 1994 and 1993, as determined in
accordance with statutory accounting practices for the Company's insurance
subsidiaries, is as follows:

<TABLE>
<CAPTION>
CAPITAL AND SURPLUS NET INCOME (LOSS)
DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------- --------------------------------
1995 1994 1995 1994 1993
---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Life insurance subsidiaries:
Farm Bureau Life........................... $ 231,596 $ 206,859 $ 47,372 $ (11,013) $ 17,861
Western Life............................... 56,706 43,850 7,008 (1,021) --
Universal Assurors Life Insurance
Company................................... 3,200 3,109 92 78 43
FBL Insurance Company...................... -- 5,721 -- 165 9,740
Rural Security Life........................ -- 6,394 -- (3,070) 296
Property-casualty insurance subsidiary --
Utah Farm Bureau Insurance Company.......... 9,236 7,829 1,454 799 (226)
</TABLE>

The statutory balances listed above include amounts attributable to minority
interest, as applicable.

The National Association of Insurance Commissioners currently is in the
process of codifying statutory accounting practices, the result of which is
expected to constitute the only source of "prescribed" statutory accounting
practices. That project, which is not expected to be completed before 1997, will
likely change, to

F-35
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

10. STOCKHOLDERS' EQUITY OF SUBSIDIARIES (CONTINUED)
some extent, statutory accounting practices. The codification may result in
changes to the permitted or prescribed accounting practices that the Company's
insurance subsidiaries use to prepare their statutory-basis financial
statements.

11. MANAGEMENT AND SERVICES AGREEMENTS
The Company shares certain office facilities and services with the Iowa Farm
Bureau Federation and its affiliated companies. These expenses are allocated by
the Company on the basis of cost and time studies that are updated annually and
consist primarily of salaries and related expenses, travel, and occupancy costs.

In addition, the Company participates in a management agreement with Farm
Bureau Management Corporation (wholly owned by the Iowa Farm Bureau Federation).
Under this agreement, Farm Bureau Management Corporation provides general
business, administrative analysis, and management services to the Company.
During the years ended December 31, 1995, 1994 and 1993, the Company incurred
expenses under this contract of $3,667, $3,076 and $2,961, respectively.

Prior to February, 1995, Western Life maintained a management services
agreement with Western Farm Bureau Management Corporation. Under the terms of
the agreement, Western Farm Bureau Management Corporation provided all
management, investment advisory, administrative, underwriting, policyholder
services, legal, actuarial and other management-related services for Western
Life. Some of these activities are now provided by Farm Bureau Management
Corporation.

12. COMMITMENTS AND CONTINGENCIES
ICG Partners, an affiliated joint venture, maintains a line of credit with
Farm Bureau Life and an affiliate, Farm Bureau Mutual Insurance Company, in the
amounts of $25,500 and $4,500, respectively. At March 31, 1996 and December 31,
1995 and 1994, ICG Partners had borrowed $2,684, $4,167 and $5,024,
respectively, from Farm Bureau Life against the line of credit. Interest (11.25%
at March 31, 1996 and 11.5% at December 31, 1995) is payable at an annual rate
equal to the prime rate of The Chase Manhattan Bank, N.A., plus 3.00%. The line
of credit is collateralized by lease receivables and substantially all other
assets of ICG Partners, subject to senior positions.

In connection with the sale of certain real estate property, Rural Security
Life agreed to act as guarantor of a mortgage loan between the purchaser and a
bank. Farm Bureau Life has now taken the position of Rural Security Life with
respect to the guarantee. Pursuant to the agreement, the Company, through Farm
Bureau Life, is required to deposit securities in a trust in an amount at least
equal to the outstanding balance of the mortgage loan. Should the purchaser
default on the mortgage, the bank has the ability to withdraw the securities at
which time the Company would secure a first interest in the underlying property.
At December 31, 1995, the outstanding balance of the mortgage loan is $5,105
($4,973 at March 31, 1996). The mortgage loan, which is current at March 31,
1996 and December 31, 1995, requires monthly payments at the lenders' prime
commercial rate through December 31, 1996, at which time a balloon payment of
$4,563 is due.

In connection with the sale of the aforementioned real estate property, a
subsidiary of the Company entered into a real estate management agreement
whereby it agreed to pay any cash flow deficiencies (as defined in the
agreement) through 1997. The agreement also provided that the subsidiary would
receive 35% of any excess cash flow generated during the same period. At
December 31, 1995, the Company assessed the probability and amount of future
cash payments pursuant to the agreement and determined that an accrual of $555
($302 at March 31, 1996) was appropriate. While such future amounts are subject
to the actual experience of the underlying retail facility, management believes
that assumptions utilized in establishing the accrual are reasonable in all
material respects.

F-36
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In the normal course of business, the Company may be involved in litigation
where amounts are alleged that are substantially in excess of contractual policy
benefits or certain other agreements. At March 31, 1996 and December 31, 1995,
management is not aware of any claims for which a material loss is reasonably
possible.

Assessments are, from time to time, levied on the insurance subsidiaries of
the Company by life and health guaranty associations in most states in which the
subsidiaries are licensed to cover losses of policyholders of insolvent or
rehabilitated companies. In some states, these assessments can be partially
recovered through a reduction in future premium taxes. Assessments have not been
material to the Company's financial statements prior to 1991. However, the
economy and other factors have caused a number of failures of substantially
larger companies since that time. The Company has not been able to reasonably
estimate potential future assessments, so no amounts have been provided for in
the accompanying financial statements. Assessments paid by the Company amounted
to $1,360, $1,561 and $708 during the years ended December 31, 1995, 1994 and
1993, respectively.

13. SEGMENT INFORMATION AND DISCONTINUED OPERATIONS
The Company currently operates in two principal segments -- life insurance
(including traditional and universal life, annuity and accident and health
coverages) and property-casualty insurance. Prior to 1995, the Company was also
involved in cable television operations.

On December 23, 1994, the Company sold substantially all operating assets
and certain liabilities of its cable television subsidiary, Vantage Cable
Associates, L.P., to Galaxy Telecom, L.P. for $38,400, of which $32,016 was paid
in cash and $6,384 was represented by a Class D limited partnership interest in
Galaxy Telecom, L.P. The Company recognized a gain on the sale of approximately
$15,400, after expenses, closing adjustments and post-closing adjustments of
approximately $1,400.

Revenues of the discontinued operations aggregated $10,224 and $10,436 for
the period from January 1, 1994 through December 22, 1994 and the year ended
December 31, 1993, respectively. Interest expense has been allocated to
discontinued operations based on debt that can be identified as specifically
attributed to those operations. For the period from January 1, 1994 through
December 22, 1994 and the year ended December 31, 1993, interest expense related
to discontinued operations was $2,884 and $2,227, respectively.

F-37
<PAGE>
FBL FINANCIAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

13. SEGMENT INFORMATION AND DISCONTINUED OPERATIONS (CONTINUED)
Information concerning the Company's continuing business segments for the
years ended December 31, 1995, 1994 and 1993 is as follows:

<TABLE>
<CAPTION>
PROPERTY- CORPORATE AND
LIFE CASUALTY DISCONTINUED
CONSOLIDATED INSURANCE INSURANCE OPERATIONS
------------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Revenues, year ended December 31:
1995....................................... $ 405,985 $ 385,480 $ 20,489 $ 16
1994....................................... 349,885 330,422 19,448 15
1993....................................... 303,462 284,876 18,586 --
Income (loss) from continuing operations
before income taxes, minority interest in
earnings of subsidiaries and equity income
(loss), year ended December 31:
1995....................................... 90,447 88,500 2,083 (136)
1994....................................... 59,873 58,573 1,288 12
1993....................................... 38,931 38,898 33 --
Identifiable assets, December 31:
1995....................................... 3,090,851 3,029,817 60,250 784
1994....................................... 2,792,535 2,735,788 56,708 39
1993....................................... 2,142,849 2,064,421 50,965 27,463
</TABLE>

Capital expenditures and depreciation and amortization are not considered
material. Corporate assets consist principally of cash and short-term
investments.

F-38
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.

--------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 9
The Company.................................... 16
Use of Proceeds................................ 17
Dividend Policy................................ 17
Capitalization................................. 17
Selected Consolidated Financial Data........... 18
Pro Forma Consolidated Financial Statements.... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 26
Business....................................... 40
Management..................................... 66
Management Compensation........................ 72
Principal and Selling Stockholders............. 78
Certain Transactions and Relationships......... 81
Description of Capital Stock................... 85
Shares Eligible for Future Sale................ 88
Underwriting................................... 89
Validity of Common Stock....................... 90
Experts........................................ 90
Available Information.......................... 90
Glossary of Selected Insurance Terms........... 92
Index to Consolidated Financial Statements..... F-1
</TABLE>

--------------

UNTIL AUGUST 14, 1996, (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK OFFERED HEREBY,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

4,000,000 SHARES

[LOGO]

FBL FINANCIAL GROUP, INC.

CLASS A COMMON STOCK

------------

PROSPECTUS

------------

ALEX. BROWN & SONS
INCORPORATED

SMITH BARNEY INC.

EVEREN SECURITIES, INC.

JULY 19, 1996

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------