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
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.
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.
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.
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.
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.
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