StanCorp Financial Group Inc.
) reported third quarter 2012 operating earnings of $1.05 per
share, outperforming the Zacks Consensus Estimate by 36 cents.
Results were also 11.7% higher than 94 cents earned in the
prior-year quarter. Net income for the quarter was $46.6 million,
jumping 10.4% from $42.2 million reported in third quarter 2011.
The outperformance came on the back of favorable claims
experience in the group insurance business, decline in operating
expenses and increased net investment income in the Asset
Including after tax capital loss of $1.7 million or 4 cents a
share, the company reported net earnings of $44.9 million or
$1.01 per share, comparing unfavorably with $47.0 million or
$1.05 per share in the year-ago quarter. The year-ago period
included after-tax capital gain of $4.8 million or 11 cents a
StanCorp's total revenue in the third quarter of 2012 was $713.7
million, down 1.3% from $723.3 million in the year-ago quarter.
Lower premiums and lower administrative fees primarily resulted
in the decline. Revenue also lagged the Zacks Consensus Estimate
of $721 million.
Total benefit and expense during the quarter inched down 0.7%
year over year to $652.4 million. Decrease in benefits to
policyholders, lower operating expenses and lower commissions and
bonuses aided the decline.
: Premiums from this business totaled $527.5 million in the third
quarter of 2012, down 2.0% year over year. Lower premiums from
group insurance largely induced the overall premium decrease.
Sales from the group insurance business in the quarter plunged
67.8% to $20.5 million, largely attributable to pricing
Group insurance benefit ratio in the quarter was 79.7%, down 100
basis points year over year, while individual disability
insurance benefit ratio was 75.7%, up 940 basis points year over
Pretax income in the quarter totaled $62.4 million, down 4% from
$65.0 million in the year-ago quarter. The decline was primarily
attributable to lower group insurance premiums and less favorable
claims experience in the individual disability business. However,
favorable claims experience in the group insurance business
somewhat limited the decline.
: Third-quarter 2012 pretax income improved 40% over the
prior-year quarter to $17.5 million. The improvement was mainly
triggered by higher net investment income from commercial
mortgage loan prepayment fee revenues and bond call premiums.
Assets under administration were $21.65 billion as of September
30, 2012, up 7.4% from $20.17 billion as of September 30, 2011,
largely reflecting higher equity values for retirement plan
assets under administration.
During the quarter, StanCorp Mortgage Investors originated $347.3
million of commercial mortgage loans, slightly lower than $271.7
million in the prior-year quarter.
StanCorp's investment portfolio, as of September 30, 2012,
consisted of approximately 56.7% fixed maturity securities, 41.0%
commercial mortgage loans and 2.3% real estate. The overall
weighted-average credit rating of the fixed maturity securities
portfolio assigned by Standard & Poor's was "A."
: Pretax loss totaled $18.6 million in the quarter, compared to a
loss of $11.3 million in the year-ago quarter.
StanCorp exited the third quarter with cash and cash equivalents
of $172.4 million, up from $138.4 million at 2011-end. Long-term
debt was $551.5 million at quarter end, increasing from $300.9
million at 2011-end.
Book value per share as of September 30, 2012 was $49.08,
reflecting a 7.8% upside from $45.53 as of September 30, 2011.
StanCorp remains well poised on the strength of premium growth,
continued good investment performance, conservative underwriting
practices, and a strong capital position.
The company continues to work on pricing actions to mitigate
higher group long term disability claims incidence and continued
low interest rate environment.
We retain our Neutral recommendation on StanCorp Financial. The
quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
), which competes with StanCorp, shares the same Zacks Rank and
is scheduled to release its third quarter earnings before the
opening bell on November 1.
METLIFE INC (MET): Free Stock Analysis Report
STANCORP FNL CP (SFG): Free Stock Analysis
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