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Torchmark (TMK) Q3 Earnings and Revenues Beat Estimates
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Torchmark Corporation's third-quarter 2016 net operating income of $1.15 per share beat the Zacks Consensus Estimate of $1.12 by 2.7%. Earnings also improved 11.7% year over year on the back of higher premium contribution from Life as well as Health segments. Lower share count due to continuous buy backs also drove the upside.
Including net income from discontinued operations of 3 cents, realized gains on investments from continuing operations of 2 cents and a favorable Medicare Part D adjustment of 4 cents, net income grew 8.7% year over year to $1.25 per share.
Behind the Headlines
Torchmark reported total premium revenue of $783.4 million, up 4.7% year over year. The upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 4.9% year over year to $202.7 million.
The company’s total revenue of $986 million increased of 4.7% from year-ago quarter. The increase in revenues was driven by growth in Life and Health Insurance premiums along with higher net investment income. Also, the top line outpaced the Zacks Consensus Estimate of $972 million by 1.4%.
Excess investment income, a measure of profitability, grew 5.2% year over year to $56.7 million.
Torchmark’s total insurance underwriting income inched up 0.5% year over year to $149.8 million. Higher underwriting income in the Health segment primarily drove the upside.
Administrative expenses increased 4.2% year over year to $49.2 million.
Total benefits and expenses rose 5.3% year over year to $788 million.
Segment Update
Premium revenues at Torchmark's Life Insurance operations increased 5.3% year over year to $546.4 million. The improvement can be attributed to higher premiums written by the distribution channels – American Income Agency and Direct Response. American Income Agency grew 10%, while Direct Response was up 4%. Life Insurance underwriting income, however, dipped 0.7% year over year to $143.1 million. Net sales at the life insurance segment was down 1% year over year.
Health Insurance premium revenues rose 3.4% year over year to $237 million, while underwriting income of $53.1 million increased 5.8% year over year. Net health sales remained flat year over year.
Financial Update
Shareholders’ equity as of Sep 30, 2016 climbed 18.7% year over year to $5.1 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $31.86, up 7.9% year over year.
Return on equity was 14.7% as of Sep 30, 2016, unchanged from the year-ago quarter.
Share Repurchase and Dividend Update
During the reported quarter, Torchmark repurchased 1.2 million shares for a total cost of $77 million.
The company declared a dividend of 14 cents per share in the quarter, same as the year-ago quarter.
Guidance
Torchmark projects full-year 2016 operating income per share in the range of $4.43–$4.49. Operating income per share is expected between $4.55 and $4.85 in 2017.
Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc.. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
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Torchmark (TMK) Q3 Earnings and Revenues Beat Estimates
Torchmark Corporation's third-quarter 2016 net operating income of $1.15 per share beat the Zacks Consensus Estimate of $1.12 by 2.7%. Earnings also improved 11.7% year over year on the back of higher premium contribution from Life as well as Health segments. Lower share count due to continuous buy backs also drove the upside.
Including net income from discontinued operations of 3 cents, realized gains on investments from continuing operations of 2 cents and a favorable Medicare Part D adjustment of 4 cents, net income grew 8.7% year over year to $1.25 per share.
Behind the Headlines
Torchmark reported total premium revenue of $783.4 million, up 4.7% year over year. The upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 4.9% year over year to $202.7 million.
The company’s total revenue of $986 million increased of 4.7% from year-ago quarter. The increase in revenues was driven by growth in Life and Health Insurance premiums along with higher net investment income. Also, the top line outpaced the Zacks Consensus Estimate of $972 million by 1.4%.
Excess investment income, a measure of profitability, grew 5.2% year over year to $56.7 million.
Torchmark’s total insurance underwriting income inched up 0.5% year over year to $149.8 million. Higher underwriting income in the Health segment primarily drove the upside.
Administrative expenses increased 4.2% year over year to $49.2 million.
Total benefits and expenses rose 5.3% year over year to $788 million.
Segment Update
Premium revenues at Torchmark's Life Insurance operations increased 5.3% year over year to $546.4 million. The improvement can be attributed to higher premiums written by the distribution channels – American Income Agency and Direct Response. American Income Agency grew 10%, while Direct Response was up 4%. Life Insurance underwriting income, however, dipped 0.7% year over year to $143.1 million. Net sales at the life insurance segment was down 1% year over year.
Health Insurance premium revenues rose 3.4% year over year to $237 million, while underwriting income of $53.1 million increased 5.8% year over year. Net health sales remained flat year over year.
Financial Update
Shareholders’ equity as of Sep 30, 2016 climbed 18.7% year over year to $5.1 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $31.86, up 7.9% year over year.
Return on equity was 14.7% as of Sep 30, 2016, unchanged from the year-ago quarter.
Share Repurchase and Dividend Update
During the reported quarter, Torchmark repurchased 1.2 million shares for a total cost of $77 million.
The company declared a dividend of 14 cents per share in the quarter, same as the year-ago quarter.
Guidance
Torchmark projects full-year 2016 operating income per share in the range of $4.43–$4.49. Operating income per share is expected between $4.55 and $4.85 in 2017.
TORCHMARK CORP Price, Consensus and EPS Surprise
TORCHMARK CORP Price, Consensus and EPS Surprise | TORCHMARK CORP Quote
Zacks Rank
Currently, Torchmark carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Performance of Other Insurers
Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc.. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>