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StanCorp Financial Group Inc.
) reported first quarter 2013 operating earnings of $1.07 per
share, which exceeded the Zacks Consensus Estimate by 33.8%.
Results were also 35.4% higher than 79 cents earned in the prior
The improvement came on back of a decline in operating expenses.
This was due to the expense management initiatives undertaken
during the quarter to mitigate adverse effects of a low interest
rate environment and lower group insurance premiums.
Including after-tax net capital losses of $1.0 million, net
earnings of StanCorp was $46.8 million or $1.05 per share in the
first quarter, up 33% year over year.
StanCorp's total revenue in the first quarter of 2013 was $722.5
million, down 2.5% year over year from $741.4 million in the
year-ago quarter. The decline in results came from waning
premiums (down 3.1% year over year). Results were below the Zacks
Consensus Estimate of $727 million.
Total benefits and expenses stood at $662.2 million in the first
quarter, down 4.5% year over year. A decline in benefits and
expenses (down 1.8%), interest credited (down 1.3%), operating
expense (down 15.2%), commissions and bonuses (down 2.9%),
premium taxes (down 5%) and interest expense (down 12.4%)
compared to the prior-year quarter aided the improvement.
Net investment income for the quarter was $159.2 million as
compared to $159.7 million in the year-ago period.
business reported pretax income of $48.8 million for the first
quarter of 2013, up 5.9% year over year. The improvement was
driven by lower operating expense resulting from the expense
management initiatives of StanCorp. However the positive impacts
were partially offset by less favorable claims experience in the
individual disability insurance business of StanCorp, lower group
insurance premiums and a low discount rate for
recently-established long term disability claim reserves.
Premiums for the segment in the first quarter were $533.2
million, down 3.2% from $551.1 million in the prior-year quarter.
Group insurance premiums declined 4.1% year over year to $486.2
million in the first quarter and induced the overall premium
decline. The decline in group insurance premiums were affected by
higher experience rated refunds (ERR) and lower group insurance
sales. However, individual disability insurance premiums
increased 6.3% year over year to $47 million during the reported
Sales from the group insurance business declined 24.2% year over
year to $97.6 million in the reported quarter due to pricing
Group Insurance benefit ratio was 83.9% compared to 83.5% in the
year-ago quarter. Individual disability benefit ratio was 61.9%
in the first quarter of 2013 compared to 52.3% in the prior-year
business reported pretax income of $17.2 million, up 14.7% year
over year from $15 million in the prior-year quarter. The
improvement came on the back of lower operating expenses.
Assets under administration were $22.7 billion as of Mar 31,
2013, up 5.3% from $21.6 billion as of Mar 31, 2012. It largely
reflected higher equity values for retirement plan assets under
During the quarter StanCorp Mortgage Investors originated $273.7
million of commercial mortgage loans, higher than $209.5 million
in the prior-year quarter.
segment pretax loss was $5.7 million in the reported quarter
compared to $13.4 million in the first quarter of 2012.
As of Mar 31, 2013, SatnCorp's investment portfolio comprised
approximately 56.3% fixed maturity securities, 41.3% commercial
mortgage loans and 2.4% real estate and other invested assets.
The overall weighted-average credit rating of the fixed maturity
securities portfolio assigned by Standard and Poor's was "A".
As of Mar 31, 2013, cash and cash equivalents for StanCorp was
$143.3 million, down 10.8% from $160.7 million as of Dec 31,
Long-term debt of StanCorp was $551.6 million as of Mar 31, 2013
compared to $551.4 million as of Dec 31, 2012. The
debt-to-capital ratio of the company was 20.2% at quarter end
compared to 20.3% at year end 2012.
Book value per share at Mar 31, 2013 was $49.36, up 7.7% year
over year from $45.82 at Mar 31, 2012.
Share Repurchase Update
In the first quarter StanCorp purchased 0.2 million shares for
$9.9 million and is left with 2.8 million shares under its
authorization scheduled to expire on Dec 31, 2014.
StanCorp guided operating earnings in a range of $3.70 - $4.10
and expects to achieve return on equity (ROE) between 8.5%- 9.5%.
The cost reduction initiatives are expected to reduce operating
expenses by $10.3 million or 15 cents per share in the second
quarter of 2013.
Benefit ratio is expected to be between 81% - 84% and effective
income tax rate between 22% - 24%.
StanCorp also expects share repurchase in the range of $40 - $80
StanCorp currently carries a Zacks Rank #2 (Buy). Among others in
Protective Life Corporation
) with Zacks Rank #1 (Strong Buy), and
Lincoln National Corporation
Universal American Corp
) with Zacks Rank # 2 (Buy) are expected to report their first
quarter 2013 results shortly.