Torchmark Beats Earnings Est. - Analyst Blog


Torchmark Corp ( TMK ) reported first quarter 2013 net operating income of $1.39 per share which breezed past the Zacks Consensus Estimate by 1.5%. Results also improved 9.4% year over year.

Including realized losses on investments of 4 cents and Medicare Part D adjustments of 9 cents net income for Torchmark stood at $1.27 per share, up 8.5% year over year.

Total insurance premium increased 9% year over year to $769.2 million, led by higher premium from the Life, Health Insurance and Medicare Part D operations.

Net investment income increased 2% year over year to $183 million. Excess investment income, a measure of the segment's profitability, was down 13% to $55.6 million.

Underwriting income increased 10.5% year over year to $148.6 million in the reported quarter, backed by higher margins at Life, Health and Medicare Part D segments.

Administrative expenses in the quarter increased 8.1% year over year to $43.9 million.

Segment Update

At Life Insurance operations, premium revenue increased 4% year over year to $470.8 million in the first quarter, attributable to higher premiums written by distribution channels - American Income Agency (up 9%) and Direct Response (up 4%), partially offset by a 2% decline in premiums written by Liberty National Life Agency. Life underwriting income increased 5.5% to $133.1 million. Net sales of life insurance decreased 4%.   

Health Insurance premium revenue increased 23% year over year to $221.5 million while underwriting income increased 25.5% year over year to $49.9 million. Net sales in Health Insurance increased 57%.

Premium Revenue from the Medicare Part D business increased 4% year over year to $76.7 million in the first quarter. Underwriting income increased 2% to $8 million. Net sales of Medicare part D insurance declined 65% year over year to $9 million.

Return on equity (ROE) was 15.6% for the first quarter, compared with 15.8% in the year-ago quarter.

Share Repurchase Update

During the quarter Torchmark repurchased 1.6 million shares at a total cost of $90 million.

Financial Update

As of Mar 31, 2013, Torchmark had assets worth $18.9 billion, up 12.8% year over year.    

Shareholders' equity as of Mar 31, 2013 increased 12.3% year over year to $4.3 billion.

Long term debt of Torchmark increased 8.2% year over year to $990 million. The debt-to-capital ratio of Torchmark as of Mar 31, 2013 was 24%, up 9 basis points.

Book value per share increased 10% year over year to $35.98 as of Mar 31, 2013.

Guidance for 2013

Management expects 2013 net operating income per share to range from $5.50- $5.75.

Zacks Rank

Torchmark currently carries a Zacks Rank #3 (Hold). Among others in the industry, Protective Life Corporation ( PL ) with Zacks Rank #1 (Strong Buy), and Lincoln National Corporation ( LNC ) and Universal American Corp ( UAM ) with Zacks Rank # 2 (Buy) are expected to report their first quarter 2013 results shortly.

LINCOLN NATL-IN (LNC): Free Stock Analysis Report

PROTECTIVE LIFE (PL): Free Stock Analysis Report

TORCHMARK CORP (TMK): Free Stock Analysis Report

UNIVL AMERICAN (UAM): Free Stock Analysis Report

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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 , Earnings , Stocks

Referenced Stocks: LNC , PL , TMK , UAM

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