EXAMINATION REPORT OF

FARM BUREAU LIFE INSURANCE COMPANY

WEST DES MOINES,

AS OF DECEMBER 31, 2016

West Des Moines, Iowa January 7, 2018

HONORABLE Doug Ommen Commissioner of Insurance State of Iowa Des Moines, Iowa

Commissioner:

In accordance with your authorization and pursuant to Iowa statutory provisions, an examination has been made of the records, business affairs and financial condition of

FARM BUREAU LIFE INSURANCE COMPANY

WEST DES MOINES, IOWA

AS OF DECEMBER 31, 2016

The examination was conducted at the Home Office located at 5400 University Avenue, West Des Moines, Iowa. The report thereof, containing applicable comments, explanations and financial data is presented herein.

INTRODUCTION

Farm Bureau Life Insurance Company, hereinafter referred to as the Company, was last examined by the Iowa Insurance Division as of December 31, 2011. The examination reported herein was conducted by examiners of the Insurance Division of Iowa.

In conjunction with the examination of the Company, its affiliate Greenfields Life Insurance Company was examined by examiners of the Insurance Division of Iowa and a consulting firm representing the State of Colorado.

SCOPE OF EXAMINATION

This is the regular comprehensive financial examination of the Company covering the intervening period from January 1, 2012 to the close of business on December 31, 2016, including any material transactions and/or events occurring and noted subsequent to the examination period.

The examination was conducted in accordance with the National Association of Insurance Commissioners (NAIC) Financial Condition Examiners Handbook. The Handbook requires the examination to be planned and performed to evaluate the financial condition and identify prospective risks of the Company by obtaining information about the Company, including corporate governance, identifying and assessing inherent risks within the organization, and evaluating system controls and procedures used to mitigate those risks. An examination also includes assessing the principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation, management’s compliance with Statutory Accounting Principles and annual statement instructions, when applicable to domestic state regulations.

All accounts and activities of the organization were considered in accordance with the risk-focused examination process. The Company’s assets were verified and evaluated and the liabilities determined to reflect herein a statement of its financial condition as of December 31, 2016.

1 HISTORY

The Company was incorporated under the laws of the State of Iowa on October 30, 1944 as a legal reserve stock life insurance corporation entitled Iowa Life Insurance Company. On August 1, 1958 the Articles of Incorporation were amended and the name of the Company was changed to Farm Bureau Life Insurance Company, the present corporate title.

Capital authorized by the initial Articles of Incorporation was $500,000, then divided into 200,000 common shares, par value of $1.00 and 6,000 non-voting, six percent cumulative preferred shares, par value of $50. Both common and preferred shares were callable at the option of the Board.

On January 27, 1949, the authorized common shares were divided into Class A and Class B blocks of 50,000 and 150,000 shares, respectively. On August 1, 1958 all common shares issued and outstanding were called for redemption and the Articles were amended to authorize 4,000 common shares, par value of $50. On June 17, 1960 the Articles were again amended to increase the dividend rate on the preferred shares from six to 7 ½ percent.

On December 3, 1982, the authorized capital of the Company was increased to $1,550,000, divided into 25,000 shares of common stock and 6,000 shares of 7 ½ percent cumulative first preferred stock, both bearing a par value of $50.

The Company acquired 100 percent of the assets and assumed 100 percent of the insurance in force and all related liabilities of the Farm Bureau Life Insurance Company as of December 31, 1988.

On December 31, 1992, the Company acquired 100 percent ownership of Universal Assurors Life Insurance Company, a life and health insurance corporation.

On March 31, 1993, the Company acquired 19,900 shares (99.5 percent) of the common stock of Rural Mutual Insurance Company in exchange for 1,783.48 shares of newly issued common stock of the Company.

Effective January 1, 1994, the authorized capital of the Company was increased to $50,000,000 divided into 1,000,000 shares consisting of 994,000 common stock shares par value of $50, and 6,000 7 ½ percent cumulative first preferred stock shares, par value of $50.

Effective December 31, 1994, substantially all of the assets and liabilities of two other subsidiaries, FBL Insurance Company and Rural Security Life Insurance Company, were transferred to the Company pursuant to an assumption reinsurance agreement. The shells of these two companies were liquidated during 1995.

On May 31, 1996, the common stock of FBL Financial Services, Inc., a subsidiary holding company and its subsidiaries were transferred (as a return of capital contribution in the form of a dividend) to the Company’s new parent, FBL Financial Group, Inc. On July 19, 1996, an initial public offering was made of FBL Financial’s Class A common stock.

On December 31, 1997, the Company purchased Continental Western Life Insurance Company from TMG Life Insurance Company. The corporate name was changed to EquiTrust Life Insurance Company (EquiTrust) as of December 31, 1997.

Effective July 1, 1999, FBL Financial Group, Inc. merged two of its subsidiaries. The operations of Western Farm Bureau Life Insurance Company were merged into Farm Bureau Life Insurance Company.

2 On January 1, 2001, the Company’s parent acquired the assets and liabilities of Farm Bureau Life Insurance Company (KFBL) and in turn, contributed them to the Company.

On December 31, 2003, the Company transferred the stock of EquiTrust to the parent, FBL Financial, through an extraordinary dividend of $124 million.

On October 23, 2006, the Company sold its equity investment in a partially owned subsidiary, Western Agriculture Insurance Company.

On January 2, 2013, the Company capitalized Greenfields Life Insurance Company using $2,100,000 in cash and commenced business on February 1, 2013. Greenfields Life Insurance Company is a wholly owned subsidiary of the Company.

CAPITAL STOCK AND DIVIDENDS TO STOCKHOLDERS

FBL Financial Group, Inc. owns 100 percent of the issued and outstanding shares of the Company. At December 31, 2016, capital stock and gross paid in and contributed surplus totaled $2,500,000 and $130,982,867, respectively. Dividends paid to stockholders during the period under review were as follows:

Year Stockholders’ Dividends Paid

2012 $ 45,000,000 2013 140,000,000* 2014 45,000,000 2015 50,000,000 2016 80,000,000

*Included an extraordinary dividend of $120,000,000 that was approved by the Iowa Insurance Commissioner on August 29, 2013.

HOLDING COMPANY ACT

For each year during the examination period, the Company filed the appropriate statements as required by statute for insurance holding company systems and was in compliance with statutory limitations.

3 PARTIAL ORGANIZATIONAL CHART

Farm Bureau 22 Other Farm Property & Public Iowa Farm Bureau Bureau Stockholders Federation Casualty Organizations Insurance Company

FBL Financial Group, Inc.

FBL Financial Group Capital Farm Bureau Life FBL Financial Insurance Company Services, Inc. Trust

FBL Insurance Greenfields Life Brokerage * Insurance Company

*80% owned by Farm Bureau Property & Casualty Insurance Company 20% owned by Farm Bureau Life Insurance Company

MANAGEMENT AND CONTROL

SHAREHOLDERS

The Articles of Incorporation provide that the annual meeting of the stockholders shall be held at such time and place and upon such notice as the Board of Directors may fix and determine. Special meetings may be called for any purpose, by the President or Secretary upon the call of the Board of Directors. Each common stockholder is entitled to one vote per share at all meetings of the stockholders either in person or by a duly authorized representative of representatives.

BOARD OF DIRECTORS

The Amended and Substituted Bylaws of the Corporation provide that the Company shall be managed by a Board of Directors consisting of nineteen persons, divided into two classes, of which eighteen shall be district directors and one shall be a director-at- large. The district directors shall be elected to serve for terms of three years and until their successors are elected and qualified, and the director-at-large shall be elected to serve for two years and until their successor is elected and qualified. The Bylaws provide one district director shall be elected from each state, other than Iowa, in which the Corporation is licensed to do insurance business and such state’s Farm Bureau Corporation has designated the Company as the primary provider of life, annuity, and other

4 financial service products marketed by the Company. Five district directors and one director-at-large shall be elected from Iowa.

Each director shall be a member of the Board of Directors of the Farm Bureau Corporation of his or her state of residence. Whenever he or she ceases to be a director of the Board of Directors of such Farm Bureau Corporation, there shall be a vacancy in the office of director of the Company.

The members of the Board of Directors, duly elected and qualified, as of December 31, 2016 were as follows:

Name and Address Principal Business Affiliation Term Expires

Hal T. Buchanan District Director 2017 Altus, OK Farmer

Craig D. Hill District Director 2017 Milo, IA Farmer

Charles E. Norris District Director 2017 Mason City, IA Farmer

Kevin G. Rogers District Director 2017 Mesa, AZ Farmer

Calvin L. Rozenboom District Director 2017 Oskaloosa, IA Farmer

Richard W. Felts District Director 2018 Liberty, KS Grain and Livestock Production

James A. Holte District Director 2018 Elk Mound, WI Farmer

Carlton J. Kjos District Director 2018 Decorah, IA Farmer

Stephen D. Nelson District Director 2018 Axtell, NE Farmer

Kevin D. Paap District Director 2018 Garden City, MN Farmer

Scott E. VanderWal District Director 2018 Volga, SD Farmer

Ron B. Gibson District Director 2019 Ogden, UT Dairy Business

Daryl J. Lies District Director 2019 Douglas, ND Farmer

Bryan L. Searle District Director 2019 Shelley, ID Farmer

Philip J. Sunblad District Director 2019 Albert City, IA Farmer

5 Non-management directors receive an annual retainer of $16,000 to be paid on a quarterly basis. Additionally, non-management directors receive a fee of $1,200 for each Board meeting attended and a fee of $750 for each committee meeting attended. In addition, the meeting fees for the Chairman of the Board will be $1,500 per meeting, and meeting fees for each committee chair will be $1,000 for every meeting. Non-management directors will receive grants of equity instruments of FBL Financial Group, Inc., in such form and amount and at such time, as is periodically determined by the Management Development and Compensation Committee of FBL Financial Group, Inc. Travel expenses incurred in attending the meetings are reimbursed.

It was noted that there is an inconsistency in Article III Sections 1-3, regarding the number of directors listed on the Jurat Page of the Annual Statement and Article III of the Bylaws. Directors cease to be eligible to be a board member when they don’t run for re-election to their state Farm Bureau boards or are defeated in a contested election. When that occurs, their replacement may not be seated by year end. As a result, the number of Directors listed at year end may not meet the number of Directors required in the Bylaws. During each year in the exam period the number of Directors met the requirements stated in the Bylaws by the end of the first regularly scheduled meeting.

COMMITTEES

The Board of Directors shall appoint an Executive Committee consisting of up to five members and designate a Chairman thereof, and each member shall hold office for a term of one year and be subject to the will and pleasure of the Board of Directors. The Bylaws call for the appointment of two other committees and the authority to appoint such other committees as necessary for efficient conduct of the business. The two specified committees are the Audit and Budget committee and the Investment committee. Article III section 11 of the Bylaws split the Audit and Budget Committee into two separate Committees. They remained two separate committees until combined in February 2010. The Company’s Bylaws were amended and restated in 2012 to reflect the change. However, the committee charter was never changed. All three committees were in existence at December 31, 2016.

Audit and Budget Committee Executive Committee*

Chair – Steve Nelson Chair – Craig Hill Tom Buchanan Jim Brannen Ron Gibson Jerry Chicoine Jim Holte Denny Presnall Brian Searle Kevin Rogers Daryl Lies

Investment Committee* Jim Brannen Charlie Happel Dan Pitcher Don Seibel Ray Wasilewski

*These committees are utilized by all Companies in the group.

6 OFFICERS

The Bylaws state the officers of the corporation shall be a President, Vice President, Secretary, and Treasurer, and the office of Secretary and Treasurer may be held by the same person. The term of office shall be for one year, or until their successors are elected and qualified. The Board of Directors may elect or appoint such other officers as the interests of the corporation may require, who shall serve at the will and pleasure of the Board of Directors.

Elected and appointed officers serving at December 31, 2016 were as follows:

Name Title

James P Brannen Chief Executive Officer Dennis J. Presnall Senior Vice President, Secretary Donald J. Seibel Chief Financial Officer, Treasurer Casey C. Decker Chief Information Officer Charles T. Happel Chief Investment Officer Brian C. Mamola Vice President Corporate Actuary, Appointed Actuary David A. McNeill General Counsel, Assistant Secretary David S. Stice Chief Marketing Officer Raymond W. Wasilewski Chief Operating Officer – Life Companies

The total 2016 compensation of those officers listed in the Compensation Exhibit of the Annual Statement is shown in Exhibit A to be found immediately following the signature page of this report.

CONFLICT OF INTEREST

The Company has an established procedure for the annual disclosure to its Board of Directors of any material interest or affiliation on the part of directors, officers and key employees, which is in conflict with, or is likely to be in conflict with the official duties of such person. If a director is appointed after the first quarter of the year, he or she is not required to sign a conflict of interest statement until the first quarter of the following year. An examination review of these statements indicated there were no conflicts found that would appear to interfere with that person’s official duties. . CORPORATE RECORDS

The minutes of the meetings of the policyholders, shareholders, Board of Directors and Committees were read and noted. They were complete and were properly attested. The Iowa Insurance Division’s examination report as of December 31, 2011 was acknowledged as accepted and approved by the Board of Directors at the regular meeting of Board of Directors on May 15, 2013.

FIDELITY BONDS AND OTHER INSURANCE

The Company is protected by a Financial Institution Bond up to a single loss limit of $5,000,000. This policy as well as the other various policies of insurance under the insurance program of its parent, FBL Financial Group, Inc., are all insured with authorized insurers and appeared to be adequate for its operations.

7 EMPLOYEES' WELFARE

FBL Financial Group, Inc. provides all the employees for the Company via a management agreement. FBL Financial Group, Inc. provides a variety of different incentives for its employees including health and dental insurance, long-term disability, group term life insurance, various defined benefit plans, a 401k defined contribution plan and an annual bonus plan.

REINSURANCE

The Company maintains several reinsurance agreements, both assumed and ceded, with various reinsurers. The ceded reinsurance agreements provide the Company with increased capacity to write larger risks and to reduce overall risks, including exposure to large losses. The reinsurance permits the Company recovery of a portion of direct losses, maintaining its exposure to losses within capital resources.

The reinsurance contracts of the Company were reviewed and no contract provision was found to be outside the custom of the industry. All contracts had acceptable insolvency clauses and transfer of risk.

All reinsurers were authorized to transact business in the state of Iowa.

ASSUMED

Life

As part of the sale of EquiTrust, FBL Financial Group retained all of the EquiTrust business which is currently being administered on the Farm Bureau Life administration system. The business will be reinsured and administered by Farm Bureau Life. The specific agreements are as follows:

a) Variable Universal Life Business Coinsurance and Modified Coinsurance Agreement (“VUL Agreement”) - Under this agreement EquiTrust will cede and the Company will assume and reinsure on an indemnity basis one hundred percent (100%) of the EquiTrust variable universal life (“VUL”) policies. Under the agreement all General Account Liabilities (as defined in the VUL Agreement) related to the VUL policies are reinsured on a coinsurance basis and all Separate Account Liabilities (as defined in the VUL Agreement) are reinsured on a modified coinsurance basis.

b) Variable Annuity Business Coinsurance and Modified Coinsurance Agreement (“VA Agreement”) - Under this agreement EquiTrust will cede and the Company will assume and reinsure on an indemnity basis one hundred percent (100%) of certain annuity policies which are not part of the business sold to controlled affiliates of Guggenheim Partners and which are variable annuity (“VA”) policies. Under the agreement all General Account Liabilities (as defined in the VA Agreement) related to the VA policies are reinsured on a coinsurance basis and all Separate Account Liabilities (as defined in the VA Agreement) are reinsured on a modified coinsurance basis.

c) Fixed Life and Annuity Business Coinsurance Agreement ("FLA Agreement”) - Under this agreement, EquiTrust will cede and the Company will assume the policies defined in the FLA Agreement. Farm Bureau Life will assume and reinsure these policies on a coinsurance basis.

8 In addition, contracts with several reinsurers were amended to reflect the provisions of the sale.

Greenfields Life Insurance Company was created in 2013 as a subsidiary of Farm Bureau Life Insurance Company. Greenfields sells the same products as Farm Bureau Life, and has a $100,000 retention limit on all of its life policies. Farm Bureau Life assumes all of the business above this $100,000 limit and then retrocedes any amounts (if necessary) according to its own retention limits. All of the Greenfields business is administered on the same system as Farm Bureau Life.

CEDED

Life

All cessions of new business (other than Simple Term) are under one of two yearly renewable term treaties depending on whether the business is term or permanent. The Company’s retention level on both treaties as of December 31, 2016 is $1,000,000. This is an increase of $250,000 from the company’s previous retention level of $750,000. The increase was effective October 1, 2015 for permanent plans and January 1, 2016 for term plans. Simple Term which is a low face amount term product with limited underwriting is 90% coinsured with RGA Reinsurance Company. This was the only currently sold product not under the YRT deals as of December 31, 2016. On current treaties, the binding limit is $5,000,000, and the jumbo limit is $35,000,000. Automatic and facultative agreements exist for all currently issued life plans.

The Company’s new business is split among four companies: RGA Reinsurance Company (“RGA”), Swiss Re Life & Health America Inc. (“Swiss”), Hannover Life Reassurance Company of America (“Hanover”), and Optimum Re Insurance Company (“Optimum”). RGA, Swiss, and Hannover all get 30% of the term business pool while Optimum gets the remaining 10%. RGA and Hannover each get 30% of the permanent business pool while Swiss gets the remaining 40%.

Various other amounts of life insurance are ceded to reinsurers other than those mentioned above under a number of different treaties on both a YRT and coinsurance basis. These include different treaties that the company has had in place historically as well as those absorbed by FBLIC through mergers.

Group Life

The Company cedes group life insurance for employees of FBL Financial Group, Inc. and other FBL Financial Group, Inc. related groups to SCOR Global Life Americas Reinsurance Company under a 100% quota share agreement up to a maximum of four times salary.

Accident and Health

The Company cedes 100% of a closed block of disability income insurance to Assurity Life Insurance Company.

Group Accident and Health

The long-term disability coverage for Company employees was terminated for new business with General & Cologne Life Re of America, effective January 1, 2004. Liability for losses incurred prior to termination of the contract remains with the reinsurer.

9 STATUTORY DEPOSIT

The Company had securities on deposit with the Iowa Insurance Division in excess of the minimum statutory requirement.

TERRITORY AND PLAN OF OPERATION

The Company is licensed to do business in the following jurisdictions:

Arizona Colorado Iowa Kansas Nebraska Nevada Oregon Utah Washington

The Company’s principal lines of business are traditional life, universal life, variable life, variable and fixed premium deferred annuities. All of these products are sold to individuals. They recently began selling a single premium index annuity and two new money flexible premium deferred annuities. Mutual funds and investment advisory services are some of the financial services offered by the Company through its affiliates. Individual products are targeted to middle-income, younger and middle-aged people in rural and suburban areas. The majority of the Company’s annuity sales are in tax qualified IRAs, Keoghs and 403b plans.

The five states with the largest direct premium writings in 2016 were:

State Direct Premium Collected Percentage of Total

Iowa $ 377,191,115 41.7% Kansas 128,616,315 14.2% Oklahoma 54,160,978 8.4% Nebraska 46,858,957 6.0% Wyoming 39,848,754 4.4%

Total all states $ 903,488,171 100.00%

GROWTH OF COMPANY

The growth of the Company is reflected by the following data taken from the annual statements for the years indicated. The figures are shown to the nearest one thousand dollars as follows:

Total Separate Separate Capital Life Admitted Accounts Accounts and Insurance Year Assets* Assets Liabilities* Liabilities Surplus In Force

2012 $7,415,158 $618,809 $6,867,760 $618,809 $547,398 $52,568,066 2013 7,772,959 693,955 7,230,509 693,955 502,450 55,205,842 2014 8,088,772 683,033 7,536,751 683,033 552,021 57,587,274 2015 8,402,044 625,257 7,798,982 625,257 603,062 59,639,283 2016 8,760,403 597,072 8,143,082 597,072 617,321 61,220,902

*Includes Separate Accounts

10 Aggregate Aggregate Life Life A & H Claims A & H Annuity Life Year Reserves Reserves Reserves Premium Premium Premium

2012 $5,022,408 $269 $20,021 $371 $347,043 $300,759 2013 5,301,332 251 20,446 468 286,597 349,784 2014 5,574,656 171 20,018 382 324,834 322,135 2015 5,852,031 191 22,285 405 364,165 319,371 2016 6,165,826 172 19,445 408 370,724 316,979

ACCOUNTS AND RECORDS

The Company uses electronic data processing equipment and related software for processing and maintaining its accounts, records and files. In most areas, an imaging system is used to maintain documents on the computer system rather than maintaining the original documents (paper) or other media (microfilm, microfiche, etc.). The Information Systems controls were reviewed by this examination. No material exceptions were noted to accepted control practices and procedures.

Trial balances of the Company’s general ledgers were taken for each year under examination and were found to be in agreement with the office copies of the filed annual statements for those years. Cash receipts and disbursements were tested to the extent deemed necessary.

The records in the Company’s policy master file were sampled and tested by comparing data contained in supporting documents to data contained in the computer records. Differences noted were immaterial.

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F I N A N C I A L S T A T E M E N T S

A N D C O M M E N T S T H E R E O N

NOTE: Except as otherwise stated, the financial statements immediately following reflect only the transactions for the period ending December 31, 2016 and the assets and liabilities as of this date. Schedules may not add or tie precisely due to rounding.

12 ASSETS

Not Ledger Admitted Admitted

Bonds $6,558,678,653 $ $6,558,678,653 Preferred stocks 124,100,226 124,100,226 Common stock 43,070,408 43,070,408 Mortgage Loans on Real Estate 777,979,738 777,979,738 Real Estate: Properties held for the production of income 1,955,000 1,955,000 Cash and short-term investments 2,086,731 2,086,731 Contract loans 188,253,746 188,253,746 Derivatives 9,380,977 9,380,977 Other invested assets 188,866,947 1,258,210 187,608,737 Receivables for securities 1,624,437 1,624,437 Investment income due and accrued 77,759,443 77,759,443 Premiums and considerations: Uncollected premiums 1,597,821 1,597,821 Deferred premiums 94,363,243 94,363,243 Reinsurance ceded: Amounts recoverable from reinsurers 1,857,320 1,857,320 Other amounts receivable under contracts 559,143 559,143 Current federal income tax recoverable 7,665,926 7,665,926 Net deferred tax asset 76,947,927 76,947,927 Guaranty funds receivable or on deposit 1,839,879 1,839,879 Electronic data processing equipment 10,272,801 10,272,801 Furniture and equipment 598,539 598,539 Health care and other amounts receivable 416,779 416,779 Aggregate Write-ins Other than Inv Assets Other Assets 22,532,903 16,868,684 5,664,219 Airplanes 2,230,870 2,230,870 Modco balance assumed 337,770 337,770 Due from others 82,308 82,308

Total assets excluding Separate Accounts $8,195,059,535 $31,728,191 $8,163,331,344

From Separate Accounts 597,071,746 597,071,746

Total assets $8,792,131,281 $31,728,191 $8,760,403,090

13 LIABILITIES, SURPLUS AND OTHER FUNDS

Aggregate reserve for life contracts $6,165,825,633 Aggregate reserve for accident and health contracts 171,916 Liability for deposit-type contracts 1,200,181,796 Life contract claims 19,445,356 Accident and health contract claims 33,851 Policyholders dividends due and unpaid 16,064 Provision for policyholder dividends payable in following year Dividends apportioned for payment 7,853,231 Dividends not yet apportioned 2,781,343 Premiums received in advance 2,764,580 Interest Maintenance Reserve 34,540,277 Commissions to agents due or accrued 5,237,261 Commissions and expense allowances payable on reinsurance assumed 23,450 General expenses due or accrued 12,271,269 Transfers to Separate Accounts due or accrued (1,737,143) Taxes, licenses and fees due or accrued 854,817 Unearned investment income 4,180,844 Amounts withheld or retained by Company 2,730,319 Remittances and items not allocated 6,461,166 Asset valuation reserve 63,067,486 Payable to parent, subsidiaries and affiliates 9,209,508 Deferred compensation 5,219,208 Other liabilities 4,452,426 Modco balance due reinsurer 426,068

Total liabilities excluding Separate Accounts $7,546,010,726

From Separate Accounts statement 597,071,746

Total liabilities $8,143,082,472

Common capital stock $ 2,500,000 Gross paid in and contributed surplus 130,982,867 Unassigned funds (surplus) 483,837,751

Total capital and surplus $ 617,320,618

Total liabilities, surplus and other funds $8,760,403,090

14 SUMMARY OF OPERATIONS

Premium and annuity considerations $ 688,073,680 Considerations for supplementary contracts with life contingencies 11,457,910 Net investment income 386,120,971 Amortization of interest maintenance reserve 6,750,108 Commissions and expense allowances on reinsurance ceded 5,510,170 Reserve adjustments on reinsurance ceded (1,175,693) Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 29,545,799 Other income 3,147,259

Total $1,129,430,204

Death benefits $ 153,858,944 Matured endowments 1,718,353 Annuity benefits 85,750,640 Disability benefits and benefits under accident and health contracts 311,237 Surrender benefits and withdrawals for life contracts 277,980,391 Interest and adjustments on contract or deposit-type contract funds 26,771,455 Payments on supplementary contracts without life contingencies 20,881,357 Increase in aggregate reserves for life and A&H contracts 313,775,214

Total $ 881,047,591

Commissions on premiums and annuity considerations 57,250,939 Commissions and expense allowances on reinsurance assumed 1,427,069 General insurance expenses 93,884,654 Insurance taxes, licenses and fees 7,469,220 Increase in loading on deferred and uncollected premiums (1,014,351) Net transfers to Separate Accounts (43,213,612) Other expense 21,812 Modified reinsurance assumed (6,220,190)

Total $ 990,653,132

Net gain from operations before dividends to policyholders and federal income taxes $ 138,777,072 Dividends to policyholders 9,660,707

Net gain from operations after dividends to policyholders and before federal income taxes $ 129,116,365 Federal income taxes incurred 22,973,346

Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) $ 106,143,019 Net realized capital gains or (losses) (5,486,327)

Net income $ 100,656,692

15 CAPITAL AND SURPLUS

Capital and surplus, December 31, 2015 $ 603,061,651

Net income $ 100,656,692 Change in net unrealized capital gains (losses) 2,907,009 Change in net deferred income tax 1,081,250 Change in non-admitted assets (6,273,769) Change in asset valuation reserve (4,112,215) Dividends to stockholders (80,000,000)

Net change in capital and surplus for the year $ 14,258,967

Capital and surplus, December 31, 2016 $ 617,320,618

16 CASH FLOW

Cash from Operations

Premiums collected net of reinsurance $697,752,569 Net investment income 380,819,048 Miscellaneous income 37,008,233 Total $1,115,579,850 Benefits and loss related payments $580,408,587 Net transfers to Separate Accounts (44,235,303) Commissions, expenses paid and aggregate write-ins for deductions 153,895,504 Dividends paid to policyholders 11,538,113 Federal income taxes paid 24,015,639 Total 725,622,540

Net cash from operations $ 389,957,310

Cash From Investments

Proceeds from investments sold, matured or repaid: Bonds $537,435,641 Stocks 10,093,071 Mortgage Loans 77,064,996 Other Invested Assets 16,373,253 Net gains or (losses) on cash, cash equivalents and Short-term investments (605) Total investment proceeds $ 640,966,356 Cost of investments acquired (long-term only): Bonds $804,239,080 Stocks 17,044,341 Mortgage loans 160,005,003 Other invested assets 24,699,079 Miscellaneous applications 13,433,588 Total investments acquired $1,019,421,091 Net increase (decrease) in contract loans and premium notes 2,469,789

Net cash from investments $ (380,924,524)

Cash from Financing and Miscellaneous Sources,

Cash provided: Borrowed funds $(15,000,000) Net deposits on deposit-type contracts 93,734,124 Dividends to stockholders 80,000,000 Other cash applied (6,450,703)

Net cash from financing and miscellaneous sources $ (7,716,579)

Reconciliation of Cash and Short-Term Investments

Net change in cash, cash equivalents and short-term investments $ 1,316,207 Cash, cash equivalents and short-term investments: Beginning of year 770,524 End of period $ 2,086,731

17 CONCLUSION

The assistance extended by the officers and employees of the Company during the course of this examination is hereby acknowledged.

In addition to the undersigned, the following examiners representing the Iowa Insurance Division participated in this examination:

Alex Matovu Josh Pietan Randy Guzman Bob Wong IT Specialist, CFE, CISA

In addition to the undersigned, the following examiner representing the Colorado Insurance Department participated in this examination:

Patrick Huth, CFE, CPA

The actuarial portion of this examination was completed by Insurance Strategies Consulting, L.L.C.

Respectfully submitted,

/s/ Jeffrey S. Payne ___ Jeffrey S. Payne, CFE Insurance Company Examiner Specialist Iowa Insurance Division State of Iowa

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