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Torchmark and its Units Get Ratings Affirmations from Moody's

Torchmark CorporationTMK gained 0.3% in the last trading session to close at $58.05 following ratings affirmations from Moody's Investors Service, a wing of Moody's Corp MCO .

Moody's reiterated "Baa1" of senior debt rating on Torchmark. Also, the rating agency affirmed insurance financial rating (IFS) of "A1" of Liberty National Life Insurance Company, the life insurance subsidiary. The outlook of all the ratings was stable.

The rating actions came on the back of Torchmark's niche market focus, strong financial flexibility and solid operating fundamentals, which are expected to drive future growth for the company.

While the company's strong business profile is supported by its life and health insurance products, Torchmark has been successful in maintaining profitability over the last few years on cost-control initiatives and high margin products. Sturdy earnings and solid cash flows support its strong financial flexibility.

However, the ratings were offset by Liberty National's agency productivity issues and Torchmark's capitalization, which lies below the industry average.

According to Moody's, the company may face rating upgrade due to below 20% adjusted financial leverage, successful resolution of agent productivity that could result in profitable and consistent revenue growth from life insurance, improvement in credit quality's investment portfolio so that exposure level to Baa bonds decreases and comes in line with industry peers and solid NAIC RBC ratio of 400% or more.

However, the company may also face rating downgrade due to less than 325% NAIC RBC ratio, continuous profitability deterioration, more than 30% financial leverage and cash coverage and earnings coverage less than 4 times and 6 times, respectively.

Zacks Rank and Stocks to Consider

Torchmark presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the life insurance space are StanCorp Financial Group, Inc. SFG and Sun Life Financial Inc. SLF . Both these stocks sport a Zacks Rank #1 (Strong Buy).

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MOODYS CORP (MCO): Free Stock Analysis Report

STANCORP FNL CP (SFG): Free Stock Analysis Report

TORCHMARK CORP (TMK): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

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


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

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