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Torchmark Corporation’s third-quarter 2017 net operating income of $1.23 per share beat the Zacks Consensus Estimate by 2.5%. Earnings improved nearly 7% year over year on the back of higher premiums from the Life and Health segments. Lower share count due to continuous buybacks also drove the upside.
Torchmark Corporation Price, Consensus and EPS Surprise
Including realized gains on investments of 7 cents and an unfavorable guaranty fund assessment of 1 cent, net income improved 3.2% year over year to $1.29 per share.
Behind the Headlines
Torchmark reported total premium revenue of $819 million, up 4.6% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 5.4% year over year to $214 million.
The company’s total revenue of $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. Also, revenues beat the Zacks Consensus Estimate by 0.7%.
Excess investment income, a measure of profitability, climbed 7% year over year to $60.9 million.
Torchmark’s total insurance underwriting income grew 6% year over year to $159.1 million. Improvement in Life and Annuity Insurance underwriting margins resulted in the upside. However, higher administrative expenses partially offset this improvement.
Administrative expenses increased 6% year over year to $52.4 million.
Total benefits and expenses rose 4.7% year over year to $825 million.
Segment Update
Premium revenues at Torchmark’s Life Insurance operations increased 5.6% year over year to $576 million. This improvement can be attributed to higher premiums written by the distribution channels — American Income Agency, Global Life Direct Response and LNL Agency. While American Income Agency grew 9%, Global Life Direct Response increased 4% and LNL Agency rose 2%. Life Insurance underwriting income improved 7% year over year to $152.7 million. Net sales at the life insurance segment were 3% higher on a year-over-year basis.
Health Insurance premium revenues rose 2.5% year over year to $243 million, while underwriting income of $55.7 million increased 5% year over year. Net health sales grew 3% year over year.
Annuity underwriting margins remained flat year over year to $2.6 million.
Financial Update
Shareholders’ equity as of Sep 30, 2017 rose 1.6% year over year to $5.2 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $34.27, up 7.6% year over year.
As of Sep 30, 2017, operating return on equity was 14.4% compared with 14.7% as of Sep 30, 2016.
Share Repurchase and Dividend Update
In the quarter, Torchmark repurchased 1 million shares for a total cost of $80 million.
The company declared a dividend of 15 cents per share in the quarter, marking a 7.1% hike from the year-ago quarter.
Guidance
Torchmark estimates net operating income from continuing operations between $4.77 and $4.83 per share in 2017.
For 2018, net operating income from continuing operations per share is expected between $5 and $5.25.
Among other players from the insurance industry that have reported their third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
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Torchmark's (TMK) Q3 Earnings & Revenues Top, Gives Guidance
Torchmark Corporation’s third-quarter 2017 net operating income of $1.23 per share beat the Zacks Consensus Estimate by 2.5%. Earnings improved nearly 7% year over year on the back of higher premiums from the Life and Health segments. Lower share count due to continuous buybacks also drove the upside.
Torchmark Corporation Price, Consensus and EPS Surprise
Torchmark Corporation Price, Consensus and EPS Surprise | Torchmark Corporation Quote
Including realized gains on investments of 7 cents and an unfavorable guaranty fund assessment of 1 cent, net income improved 3.2% year over year to $1.29 per share.
Behind the Headlines
Torchmark reported total premium revenue of $819 million, up 4.6% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 5.4% year over year to $214 million.
The company’s total revenue of $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. Also, revenues beat the Zacks Consensus Estimate by 0.7%.
Excess investment income, a measure of profitability, climbed 7% year over year to $60.9 million.
Torchmark’s total insurance underwriting income grew 6% year over year to $159.1 million. Improvement in Life and Annuity Insurance underwriting margins resulted in the upside. However, higher administrative expenses partially offset this improvement.
Administrative expenses increased 6% year over year to $52.4 million.
Total benefits and expenses rose 4.7% year over year to $825 million.
Segment Update
Premium revenues at Torchmark’s Life Insurance operations increased 5.6% year over year to $576 million. This improvement can be attributed to higher premiums written by the distribution channels — American Income Agency, Global Life Direct Response and LNL Agency. While American Income Agency grew 9%, Global Life Direct Response increased 4% and LNL Agency rose 2%. Life Insurance underwriting income improved 7% year over year to $152.7 million. Net sales at the life insurance segment were 3% higher on a year-over-year basis.
Health Insurance premium revenues rose 2.5% year over year to $243 million, while underwriting income of $55.7 million increased 5% year over year. Net health sales grew 3% year over year.
Annuity underwriting margins remained flat year over year to $2.6 million.
Financial Update
Shareholders’ equity as of Sep 30, 2017 rose 1.6% year over year to $5.2 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $34.27, up 7.6% year over year.
As of Sep 30, 2017, operating return on equity was 14.4% compared with 14.7% as of Sep 30, 2016.
Share Repurchase and Dividend Update
In the quarter, Torchmark repurchased 1 million shares for a total cost of $80 million.
The company declared a dividend of 15 cents per share in the quarter, marking a 7.1% hike from the year-ago quarter.
Guidance
Torchmark estimates net operating income from continuing operations between $4.77 and $4.83 per share in 2017.
For 2018, net operating income from continuing operations per share is expected between $5 and $5.25.
Zacks Rank
Torchmark carries a Zacks Rank #3 (Hold).
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 that have reported their third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>