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Torchmark Posts Strong Q3 Earnings - Analyst Blog

Posted: 10/24/2013 3:07:00 PM
Referenced Stocks: LNC;SFG;SLF;TMK

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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