Torchmark Corp. TMK reported first-quarter 2015 net operating income of $1.04 per share, in line with the Zacks Consensus Estimate. On a year-over-year basis, earnings improved 3%.
Earnings growth came on the back of higher premium contribution from the life insurance business and share buyback.
Behind the Headlines
Torchmark reported total premium revenue of $821.4 million, up 4% year over year, led primarily by higher premium from life and health insurance partly offset by lower premium from Medicare Part D operations.
Net investment income increased 2% year over year to $191.6 million.
Excess investment income, a measure of profitability, decreased 3% year over year to $55.1 million.
Torchmark reported underwriting income of $153.1 million, which moved down 2.5% year over year. The decrease stemmed from a 43% decline in margins in Medicare Part D operations.
Administrative expenses were $47 million, 7% higher than the year-ago quarter due primarily to an increase in pension and information technology costs.
Agents, the major drivers of premium growth, saw a 19%, 5% and 19% increase, respectively, in American Income, Liberty National and Family Heritage distribution channels.
Segment Update
Torchmark's Life Insurance operations saw premium revenue increase of 5% year over year to $513.3 million, attributable to higher premiums written by the distribution channels American Income Agency (up 9%) and Direct Response (up 5%). Life Insurance underwriting income was up 1% year over year to $141.4 million. Net sales went up 17% year over year.
Health Insurance premium revenue (excluding Medicare Part D) was up 4% year over year to $228.7 million, while underwriting income was up 4% year over year to $51.6 million. Net health sales increased 2% year over year.
Premium revenue from the Medicare Part D business decreased 4% year over year to $79 million. Underwriting income saw a drastic 43% year-over-year decline to $5.5 million.
Share Repurchase Update
During the quarter, Torchmark repurchased 1.7 million shares for a total cost of $90 million.
Financial Update
Shareholders’ equity as of Mar 31, 2015 increased 16.7% year over year to $4.9 billion.
Torchmark reported book value per share of $28.44, which was up 7.5% year over year.
Return on equity was 14.7% as of Mar 31, 2015, down 20 basis points from year-end 2014.
Guides 2015
Management lowered the upper end of its previously projected earnings range of $4.20– $4.40 per share to $4.20 to $4.36.
Torchmark carries a Zacks Rank #3 (Hold).
Other Stocks
Among other players in the same industry, the ones likely to beat on earnings this quarter by virtue of their positive Earnings ESP and a favorable Zacks Rank are:
Humana Inc. HUM has an Earnings ESP of +0.79% and carries a Zacks Rank #2.
Assurant Inc. AIZ with Earnings ESP of +2.7% and Zacks Rank #3.
MetLife, Inc. Corp. CI with Earnings ESP of +1.42% and a Zacks Rank #3.
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
Be the first to comment