Capital Returns Management Sends Letter to Special Committee of the Board of Directors of FBL Financial Group Calling on the Committee to Reject the Grossly Inadequate Take Private Proposal from Farm Bureau Property and Casualty Insurance Company

Rhea-AI Summary

On December 1, 2020, Capital Returns Management, a major stakeholder in FBL Financial Group (FFG), submitted a letter to the Special Committee of FFG's Board. Capital Returns criticized Farm Bureau Property and Casualty Insurance Company's take-private offer of $47 per share as significantly undervalued, advocating for a price of at least $70 per share based on comparable transactions. They emphasized FFG's competitive advantages and warned the Committee to handle potential conflicts of interest carefully to protect unaffiliated shareholders.

Positive

• Capital Returns advocates for a more favorable valuation of at least $70 per share for FFG.
• FFG's strong competitive position and strategic investments suggest potential for continued growth.

Negative

• The current take-private proposal of $47 per share is seen as grossly inadequate.
• Concerns about conflicts of interest involving Farm Bureau Property and Casualty Insurance Company.

NEW YORK, Dec. 15, 2020 /PRNewswire/ -- Capital Returns Management, LLC (together with its affiliates, "Capital Returns"), one of the top 10 beneficial owners of FBL Financial Group, Inc. ("FFG" or the "Company") (NYSE: FFG), sent a letter to the Special Committee of the Company's Board of Directors on Tuesday, December 1, 2020.

In the letter, Capital Returns expressed the belief that the take private acquisition proposal (the "Take Private Proposal") put forth by Farm Bureau Property and Casualty Insurance Company ("FBPCIC"), a related party, at just $47 per share is grossly inadequate. Capital Returns noted that comparable transactions involving annuity or life insurance companies – including two transactions in which the Special Committee members themselves were involved – support a price for FFG of at least $70 per share.

Capital Returns also highlighted the fact that FFG's strong competitive advantage in an attractive market, recent investments in its fee-based wealth management services, and strategic importance to FBPCIC – to whom it provides all executive management and employees – all justify a substantial premium to book value for FFG. FBPCIC is also expected to enjoy substantial capital efficiencies following a combination with FFG.  Capital Returns believes that while there are benefits to a combination of FFG and FBPCIC into a single entity, FFG's unaffiliated shareholders should be fairly compensated. Without an appropriate premium, the Special Committee members should not be pressured by FBPCIC into ending FFG's independent and successful existence as a public company.

Capital Returns warned the Special Committee to act with care and diligence as it negotiates with FBPCIC on behalf of all shareholders. Among other things, Capital Returns called on the Special Committee to carefully police the conflicts of interest posed by FBPCIC's proposal and ensure that the interests of unaffiliated shareholders are protected.

The full text of Capital Returns' letter to the Special Committee of the FBL Financial Group Board of Directors can be found at the following link: https://tinyurl.com/ycz4lkb2

About Capital Returns
Capital Returns is a sector focused fund that invests exclusively in the insurance industry.

Investor and Media Contact:
Ronald Bobman
Capital Returns Management, LLC
(212) 813-0860
Ron@CapReturns.com

 

View original content to download multimedia:http://www.prnewswire.com/news-releases/capital-returns-management-sends-letter-to-special-committee-of-the-board-of-directors-of-fbl-financial-group-calling-on-the-committee-to-reject-the-grossly-inadequate-take-private-proposal-from-farm-bureau-property-and-casualty-i-301192929.html

SOURCE Capital Returns Management, LLC

FAQ

What did Capital Returns say about the take-private proposal for FFG?

Capital Returns stated that the offer of $47 per share from Farm Bureau Property and Casualty Insurance Company is grossly inadequate and proposed a fair value of at least $70 per share.

Why does Capital Returns believe FFG deserves a higher valuation?

They cited FFG's strong competitive advantages, strategic investments, and comparable transactions within the industry as reasons for a higher valuation.

What concerns did Capital Returns express regarding the Special Committee's negotiations?

They warned to manage conflicts of interest and ensure that the interests of unaffiliated shareholders are adequately protected during negotiations with FBPCIC.