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Torchmark's Reliance on Solid Premiums Bodes Well for Growth
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Torchmark Corporation has been witnessing substantial growth in premium revenues, driven by higher premiums from Life and Health Insurance businesses. This in turn, should continue to drive earnings.
The life insurer’s most important distribution channel — American Income Exclusive Agency — has been witnessing higher net sales, driven by an increased agent count. The company projects life sales to grow in the range of 4-8%. Further, producing agent count, which is estimated to increase in the 2-4% band during 2019, is likely to lead to higher premiums.
Global Life operates in a relatively non-competitive market and focus on expanding margins rather than boosting sales or sales levels or margins as a percentage of premiums is yielding results. Torchmark anticipates the underwriting margin to range between 3% and 5% for 2019.
The insurer has been witnessing improved investment income over the past few years on the back of a gradual rise in interest rates and a decline in the negative impact of lengthy delays in receiving Part D reimbursements. The momentum should continue driven by a better interest rate environment and higher new money rates. In 2019, the company forecasts a rough 5% rise in excess investment income and the same to grow about 9% on a per share basis.
A robust capital position supports the company to engage in shareholder friendly moves raising optimism among investors on the stock. The company expects to generate free cash flow of $350-$375 million in 2019, supporting effective capital deployment.
The consensus mark for current-year earnings per share is pegged at $6.61, representing a year-over-year increase of nearly 7.8% on 3.4% rise in revenues of $4.5 billion. The company's long-term growth stands at 7.5%.
Notably, Torchmark has a favorable Value Score of B. Back-tested results have shown that stocks with impressive Value Scores of A or B when combined with a top Zacks Rank #1 (Strong Buy) or 2 (Buy) become lucrative investment bets.
Zacks Rank and Share Price Movement
Torchmark holds a Zacks Rank #2. Shares of the company have rallied 11.3% year to date, slightly underperforming the S&P 500 index’s gain of 11.4%. We believe, the aforementioned upsides will push the stock up in the near term.
Other Stocks to Consider
Investors interested in other top-ranked stocks from the insurance industry can also consider Arch Capital Group Ltd. (ACGL - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Athene Holding Ltd. .
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprises in all the last four reported quarters, the average being 14.72%. The stock is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial provides property and casualty insurance products in the United States. The company pulled off positive surprises in three of the trailing four reported quarters, the average earnings surprise being 18.08%. It flaunts a Zacks Rank of 1.
Athene Holding issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The company came up with positive surprises in all the preceding four reported quarters, the average being 17.37%. The company holds a Zacks Rank of 2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Torchmark's Reliance on Solid Premiums Bodes Well for Growth
Torchmark Corporation has been witnessing substantial growth in premium revenues, driven by higher premiums from Life and Health Insurance businesses. This in turn, should continue to drive earnings.
The life insurer’s most important distribution channel — American Income Exclusive Agency — has been witnessing higher net sales, driven by an increased agent count. The company projects life sales to grow in the range of 4-8%. Further, producing agent count, which is estimated to increase in the 2-4% band during 2019, is likely to lead to higher premiums.
Global Life operates in a relatively non-competitive market and focus on expanding margins rather than boosting sales or sales levels or margins as a percentage of premiums is yielding results. Torchmark anticipates the underwriting margin to range between 3% and 5% for 2019.
The insurer has been witnessing improved investment income over the past few years on the back of a gradual rise in interest rates and a decline in the negative impact of lengthy delays in receiving Part D reimbursements. The momentum should continue driven by a better interest rate environment and higher new money rates. In 2019, the company forecasts a rough 5% rise in excess investment income and the same to grow about 9% on a per share basis.
A robust capital position supports the company to engage in shareholder friendly moves raising optimism among investors on the stock. The company expects to generate free cash flow of $350-$375 million in 2019, supporting effective capital deployment.
The consensus mark for current-year earnings per share is pegged at $6.61, representing a year-over-year increase of nearly 7.8% on 3.4% rise in revenues of $4.5 billion. The company's long-term growth stands at 7.5%.
Notably, Torchmark has a favorable Value Score of B. Back-tested results have shown that stocks with impressive Value Scores of A or B when combined with a top Zacks Rank #1 (Strong Buy) or 2 (Buy) become lucrative investment bets.
Zacks Rank and Share Price Movement
Torchmark holds a Zacks Rank #2. Shares of the company have rallied 11.3% year to date, slightly underperforming the S&P 500 index’s gain of 11.4%. We believe, the aforementioned upsides will push the stock up in the near term.
Other Stocks to Consider
Investors interested in other top-ranked stocks from the insurance industry can also consider Arch Capital Group Ltd. (ACGL - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Athene Holding Ltd. .
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprises in all the last four reported quarters, the average being 14.72%. The stock is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial provides property and casualty insurance products in the United States. The company pulled off positive surprises in three of the trailing four reported quarters, the average earnings surprise being 18.08%. It flaunts a Zacks Rank of 1.
Athene Holding issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The company came up with positive surprises in all the preceding four reported quarters, the average being 17.37%. The company holds a Zacks Rank of 2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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