Torchmark Posts Strong Q3 Earnings - Analyst Blog


Torchmark Corp. ( TMK ) reported third quarter 2013 net operating income of $1.43 per share which was up 10.9% year over year.

Total insurance premium at Torchmark increased 7% year over year to $757.2 million led by higher premium from the Life and Health Insurance partly offset by lower premium from Medicare Part D operations.

Net investment income increased 4% year over year to $182.8 million. 

Excess investment income, a measure of the segment's profitability, was down 2% to $53.6 million.

Torchmark reported underwriting income of $151.8 million which was up 10.0% year over year. The increase came on the back of higher margins in all the three lines - Life, Health as well as Medicare Part D operations.

Torchmark reported administrative expenses of $45.0 million, up 11% year over year. The increase was due to expenses from the acquisition of Family Heritage. 

Segment Update

At Life Insurance operations, premium revenue increased 4% year over year to $470.9 million, attributable to higher premiums written by distribution channels - American Income Agency (up 8%) and Direct Response (up 4%), partially offset by a 2% decline in premiums written by Liberty National Life Agency. Life underwriting income increased 7.0% to $139.0 million. Net sales of life insurance went down by 4%. 

Health Insurance premium revenue (excluding Medicare Part D ) increased 23% year over year to $209.2 million while underwriting income increased 19% year over year to $47.0 million. The addition of Family Heritage led to 54% increase in health net sales.

Premium revenue from the Medicare Part D business decreased 6% year over year to $77.0 million. Underwriting income increased 25% year over year to $9.1 million. 

Share Repurchase Update

During the quarter Torchmark repurchased 1.2 million shares at a total cost of $85.1 million.

Financial Update

Shareholders' equity as of Sep 30, 2013 increased 5.0% year over year to $3.5 billion.

Torchmark reported book value per share of  $37.60 which was up 9.3% year over year.

For the reported quarter Return on equity was 15.6%, unchanged year over year. 

Earnings Guidance

Management expects 2013 earnings in the range of $5.68 to $5.72 per share and $6.00 to $6.40 for the year ending Dec 31, 2014.

Torchmark carries Zacks Rank # 3 (Hold).

Other stocks

Among other players StanCorp Financial Group Inc. ( SFG ) with Zacks Rank #2 (Buy) reported third quarter earnings ahead of the Zacks Consensus Estimates, whereas Lincoln National Corp. ( LNC ) and   Sun Life Financial Inc. ( SLF ) both with Zacks Rank # 2 (Buy) are expected to release third quarter earnings on Oct 30 and Nov 7, respectively.

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

STANCORP FNL CP (SFG): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

TORCHMARK CORP (TMK): 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 , SFG , SLF , TMK

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