) reported fourth-quarter 2012 net operating income of $1.33 per
share, a couple of pennies ahead of the Zacks Consensus Estimate
and up 10.0% year over year. The earnings increase was due to
higher premium revenue as well as increased insurance
underwriting income. Lower share count compared with the year-ago
period owing to share repurchases also buoyed the bottom line.
FY12 net operating income was $5.18 per share up 15% year over
Total insurance premium increased 12% year over year to $739.1
million, led by higher premium from the Life and Health Insurance
Net investment income increased 1% year over year to $180.6
million. Excess investment income, a measure of the
segment's profitability, was down 13% to $55.8 million.
Underwriting income increased 13.0% year over year to $140.1
million, backed by higher margins at Life, Health and Medicare
Part D segments.
At Life Insurance operations, premium revenue increased 5.0% year
over year to $452.0 million, attributable to higher premiums
written by distribution channels - American Income Agency (up 9%)
and Direct Response (up 5%) - partly offset by a 2% decrease in
premiums written by Liberty National Life Agency. Life
underwriting margins increased 9% to $128.9 million. Net sales of
life insurance increased 3%.
Health Insurance premium revenue increased 13% year over year to
$203.0 million, while underwriting margin increased 10% year over
year to $44.5 million.
Premium revenue from the Medicare part D business increased 73%
year over year to $84.0 million, while underwriting margin
increased 49% to $10.0 million. This huge growth in Part D
business came on the back of the company's new lower cost part D
plan, which significantly increased the number of low-income
auto-enrollees. The product also enabled the company to increase
its individual sales.
Return on equity (ROE) was 15.5 % for the quarter, compared with
14.7% in the year-ago quarter.
During the quarter, Torchmark repurchased 844,000 million shares
at a total cost of $42.3 million.
2013 Earnings Guidance
Management expects 2013 net operating income per share to range
from $5.45 to $5.75.
Torchmark has performed favorably for the past several quarters
and we believe the trend should continue. The company is set to
grow earnings considerably over the long term given its superior
distribution agency and a significant presence in its niche
A strong balance sheet along with a sound capital management
program are other positives.
Other players from the same industry
Genworth Financial Inc.
Manulife Financial Corp.
ING Groep NV
), all carrying Zacks Rank #2 (Buy), are expected to announce
their earnings results shortly.
GENWORTH FINL (GNW): Free Stock Analysis
ING GROEP-ADR (ING): Free Stock Analysis
MANULIFE FINL (MFC): Free Stock Analysis
TORCHMARK CORP (TMK): Free Stock Analysis
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