FBL Financial Group Inc. will use some of its spare cash to pay out a special dividend totaling $51 million, buy back $56.5 million in common stock and repay $50 million in debt, the company said Monday.

 

The West Des Moines-based financial service company will pay a special cash dividend of $2 per share in addition to a regular quarterly cash dividend of 15 cents per share on Sept. 13. The dividends will be payable to both Class A and Class B shareholders of record as of Sept. 6.

 

"The return of cash to shareholders via the special one-time dividend and the increased regular quarterly cash dividend reinforces our belief in the strength of our Farm Bureau Life business and our commitment to deploy its strong cash generation in an effective and efficient manner," James  Brannen, FBL's CEO, said in a release.  

 

Earlier this month, FBL reported a 29 percent increase in second-quarter operating earnings over the previous year's period, to $25.6 million.

 

FBL's board of directors also authorized a tender offer for 99 percent of Class B common shares of up to $56.5 million, with a tender price based on the average closing price of FBL's Class A common stock for the seven business days preceding the tender closing date of Sept. 25.

 

And prior to the end of the third quarter, FBL expects to repay $50 million to two of its affiliate companies that hold 6.10 percent senior notes due May 3, 2015. The holders of the notes, Farm Bureau Property & Casualty Insurance Co., and an investment affiliate of Iowa Farm Bureau Federation, FBL's majority shareholder, each holds a note for $25 million.

 

FBL said it expects to fund these capital transactions using existing funds at the holding company level, along with a $120 million dividend from Farm Bureau Life Insurance Co. to the holding company. Following these transactions, excess capital at the holding company level is estimated to be approximately $70 million.

 

"Even with these capital transactions, our balance sheet remains very strong, with considerable financial strength, which allows for the financial flexibility to take advantage of opportunities as they arise," Brannen said.