StanCorp Financial Group Inc
) reported fourth-quarter 2012 operating earnings of 89 cents per
share, which exceeded the Zacks Consensus Estimate by 6 cents.
Results were also 4.7% higher than 85 cents earned in the
prior-year quarter. Net income for the quarter was $39.5 million,
up 4% from $37.9 million reported in fourth quarter 2011.
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The outperformance came on the back of higher earnings from Asset
Management and lower group insurance commissions and bonuses.
However, a higher group insurance benefit ratio overshadowed the
Including after tax capital loss of $1.1 million or 2 cents a
share, the company reported net earnings of $38.4 million or 87
cents per share, compared with $38.6 million or 87 cents per
share in the year-ago quarter. The year-ago period included an
after-tax capital gain of $0.7 million or 3 cents a share.
StanCorp's total revenue in the fourth quarter of 2012 was $718
million, down 1.3% from $727.7 million in the year-ago quarter.
Lower premiums primarily resulted in the decline. Revenue also
managed to surpass the Zacks Consensus Estimate of $717million.
Total benefit and expense during the quarter declined 01.5% year
over year to $666.2 million. Decrease in benefits to
policyholders, lower interest credit, lower interest expense and
lower commissions and bonuses led to the decline.
Full Year Highlights
2012 operating earnings of $3.24 per share surpassed the Zacks
Consensus Estimate by 1.6% and the year-ago earnings by 3.2%.
Including after tax capital loss of 12 cents a share, the company
reported net earnings of $3.12 per share, up 2.6% year over year.
Revenue increased 0.8% year over year to $2.898 billion. It also
surpassed the Zacks Consensus Estimate of $2.889 billion.
: Premiums from this business totaled $532.1 million in the
fourth quarter of 2012, down 1.6% year over year. Lower premiums
from group insurance largely induced the overall premium
Sales from the group insurance business in the quarter declined
1.7% to $73.4 million, largely attributable to pricing
Group insurance benefit ratio in the quarter was 83.7%, up 90
basis points year over year, while individual disability
insurance benefit ratio was 73.8%, up 290 basis points year over
Pretax income in the quarter totaled $48 million, down 10% from
$65.0 million in the year-ago quarter. The decline was primarily
attributable to lower group insurance premiums and newly created
long-term disability claim reserves. However, lower group
insurance commissions and bonuses somewhat limited the decline.
: Fourth-quarter 2012 pretax income improved 16.4% over the
prior-year quarter to $16.3 million. The improvement was mainly
triggered by higher administrative fee revenues and bond call
Assets under administration were $21.69 billion as of Dec 31,
2012, up 6.2% from $20.43 billion as of Sep 30, 2011, largely
reflecting higher equity values for retirement plan assets under
During the quarter, StanCorp Mortgage Investors originated $327.2
million of commercial mortgage loans, higher than $237 million in
the prior-year quarter.
StanCorp's investment portfolio, as of Dec 31, 2012, comprised
approximately 56.5% fixed maturity securities, 41.4% commercial
mortgage loans and 2.1% real estate. The overall weighted-average
credit rating of the fixed maturity securities portfolio assigned
by Standard & Poor's was "A."
: Pretax loss totaled $12.5 million in the quarter, compared with
a loss of $15.8 million in the year-ago quarter.
StanCorp exited 2012 with cash and cash equivalents of $160.7
million, up 16.4% from 2011-end. Long-term debt was $551.4
million at year end, increasing 83% from 2011 level.
Book value per share as of Dec 31, 2012 was $48.83, up 8.6% from
$44.96 as of Dec 31, 2011.
Share Repurchase and Dividend Update
In 2012, StanCorp spent $10.0 million to buyback 0.3 million
shares. On Nov 13, 2012, the board of directors approved a new 3
million share repurchase authorization. As of Dec 31, 2012,
StanCorp had 3.0 million shares remaining under its repurchase
During the quarter, StanCorp paid an annual dividend of 93 cents
StanCorp guided operating earnings to a range of $3.40-$3.80 and
expects to achieve return on equity (ROE) between 8%-9%.
It also expects a low single digit decline in its group insurance
premiums with benefit ratio benefit between 81%-84%.
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.
StanCorp carries a Zacks Rank #3 (Hold). Among other life
Genworth Financial Inc.
Manulife Financial Corporation
) with Zacks Rank #2 (Buy) and
), with Zacks Rank #1 (Strong Buy), are yet to release results.