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