Markets

Torchmark (TMK) Q3 Earnings & Revenues Top on Premium Growth

Torchmark Corporation 's TMK third-quarter 2018 net operating income of $1.59 per share beat the Zacks Consensus Estimate by 4.6%. The bottom line also improved nearly 29.3% year over year on the back of higher premiums from the Life and Health segments. Lower share count on continuous buybacks also drove this upside.

Torchmark Corporation Price, Consensus and EPS Surprise

Torchmark Corporation Price, Consensus and EPS Surprise | Torchmark Corporation Quote

Including realized gains on investments of 1 cent, administrative settlements of 3 cents and non-operating fees of 1 cent, net income rose 20.2% year over year to $1.55 per share.

Behind the Headlines

Torchmark reported total premium revenues of $860.6 million, up 5% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.

Net investment income improved 3.7% year over year to $222 million.

The company's total revenues of $1.1 billion grew 4.8% from the year-ago quarter. This top-line improvement was driven by growth in Life and Health Insurance premiums along with higher net investment income. Moreover, the top line exceeded the Zacks Consensus Estimate by 1.5%.

Excess investment income, a measure of profitability, inched up 1% year over year to $61.5 million.

Torchmark's total insurance underwriting income grew 11% year over year to $176 million. Improvement in Life and Health Insurance underwriting margins resulted in this uptrend. However, higher administrative expenses partially offset this uptick.

Administrative expenses increased 6.5% year over year to $55.8 million.

Total benefits and expenses rose 4.6% year over year to $863 million.

Segment Update

Premium revenues at Torchmark's Life Insurance operations increased 5.2% year over year to $606 million, banking on higher premiums written by the distribution channels like American Income Agency, Global Life Direct Response and LNL Agency. While American Income Agency grew 8%, Global Life Direct Response and LNL Agency rose 4% and 2%, respectively. Life Insurance underwriting income improved 10% year over year to $168.6 million. Net sales at the life insurance segment were 2% lower on a year-over-year basis.

Health Insurance premium revenues rose 5% year over year to $255.2 million while underwriting income of $60.3 million increased 8% year over year. Net health sales grew 15% year over year.

Annuity underwriting margins remained flat year over year at $2.6 million.

Financial Update

Shareholders' equity as of Sep 30, 2018 rose 22.1% year over year to $4.9 billion.

Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $43.01, up 25.5% year over year.

As of Sep 30, 2018, operating return on equity (excluding net unrealized gains on fixed maturities) was 14.7%, having expanded 30 basis points year over year.

Share Repurchase and Dividend Update

In the quarter under review, Torchmark repurchased 0.9 million shares for a total cost of $75 million.

The company announced a dividend of 16 cents per share in the reported quarter, marking a 6.7% hike from the year-ago period.

Guidance

For 2018, Torchmark estimates net operating income between $6.08 and $6.14 per share, up from the earlier guided range of $6.02-$6.12.

For 2019, Torchmark projects net operating income between $6.45 and $6.75 per share.

Zacks Rank

Torchmark carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Insurers

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corporation PGR and MGIC Investment Corporation MTG beat the respective Zacks Consensus Estimate while that of RLI Corp. RLI missed the same.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Torchmark Corporation (TMK): Free Stock Analysis Report

MGIC Investment Corporation (MTG): Free Stock Analysis Report

The Progressive Corporation (PGR): Free Stock Analysis Report

RLI Corp. (RLI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

MTG PGR RLI

Other Topics

Earnings Stocks