TMK's EPS Grows Y/Y, Guidance Up - Analyst Blog

By
A A A
Share |

Torchmark Corp. ( TMK ) reported third-quarter 2012 net operating income of $1.29 per share, up 10.3% 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.

Total insurance premium increased 7.2% year over year to $705.0 million, led by higher premium from the Life Insurance and Medicare Part D business, partly offset by lower premium from the Health Insurance business.

Net investment income decreased 1% year over year to $175.0 million, due to lower reinvestment rates. Also, excess investment income, a measure of the segment's profitability, went down 14% to $54.7 million.

Underwriting income increased 13.0% year over year to $138.0 million, backed by higher margins at Life and Medicare Part D.

Segment Update

At Life Insurance operations, premium revenue increased 5.5% year over year to $453.7 million, attributable to higher premiums written by distribution channels - American Income Agency (up 9%) and Direct Response (up 9%) - partly offset by a 2% decrease in premiums written by Liberty National Life Agency. Life underwriting margins increased 13% to $130.3 million.

Health Insurance premium revenue declined 4.5% year over year to $169.5 million, while underwriting margin remained unchanged at $39.4 million.

Premium revenue from the Medicare part D business increased 64% year over year to $81.6 million, while underwriting margin increased 8% to $7.3 million. This huge growth in Part D business came on the back of the company's new lower cost part D plan for 2012, 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 15.3% for the quarter, compared with 15.2% in the year-ago quarter.

During the quarter, Torchmark repurchased 874,000 million shares at a total cost of $44.4 million.

Looking Ahead

Followed by better than expected results, management hiked its earnings guidance for full year 2012. It now expects 2012 earnings per share in the range of $5.15-$5.19, up from the earlier guidance of $5.08-$5.26. For 2013, management projects earnings to be in the range of $5.45-$5.85 per share.

Peer Assurant Inc. ( AIZ ) also reported earnings of $1.55 per share on the same day, substantially ahead of the Zacks Consensus Estimate of $1.39 per share.

Torchmark currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term 'Neutral' recommendation on its shares.



ASSURANT INC (AIZ): Free Stock Analysis Report

TORCHMARK CORP (TMK): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AIZ , TMK

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

152,099,280
  • $16.13 ▼ 1.59%
76,450,549
  • $59.72 ▲ 1.07%
57,375,391
  • $36.35 ▲ 6.26%
50,140,425
  • $26.93 ▲ 0.60%
49,201,544
  • $3.17 ▲ 2.59%
39,533,031
  • $86.18 ▲ 1.33%
36,760,050
  • $13.42 ▲ 2.84%
33,109,047
  • $26.12 ▲ 1.16%
As of 4/16/2014, 04:05 PM