Torchmark Corporation’s (TMK - Free Report) first-quarter 2019 net operating income of $1.64 per share beat the Zacks Consensus Estimate by 3.1%. The bottom line improved 10.1% year over year on the back of higher premiums from the Life and Health segments. Lower share count on continuous buybacks also drove the upside.
Including realized gain on investments of 1 cent, net income increased 10.7% year over year to $1.65 per share
Behind the Headlines
Torchmark reported total premium revenues of $891 million, up 5% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 4% year over year to $226.7 million.
The company’s operating revenues of $1.1 billion grew 4.7% 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. The top line beat the Zacks Consensus Estimate by 0.8%.
Excess investment income, a measure of profitability, increased 6% year over year to $65.6 million.
Torchmark’s total insurance underwriting income grew 9% year over year to $174.8 million. Improvement in Life and Health Insurance underwriting margins resulted in this uptrend. However, higher administrative expenses partially offset this upside.
Administrative expenses increased 7% year over year to $59.2 million.
Total benefits and expenses rose 3.8% year over year to $891 million.
Torchmark Corporation Price, Consensus and EPS Surprise
Premium revenues at Torchmark’s Life Insurance operations increased 4% year over year to $624.3 million, banking on higher premiums written by distribution channels like American Income Agency, Global Life Direct Response and LNL Agency. While American Income Agency grew 7%, Global Life Direct Response grew 3% and LNL Agency rose 2%. Life Insurance underwriting income improved 10% year over year to $169.8 million. Net sales at the Life Insurance segment were 4% higher on a year-over-year basis.
Health insurance premium revenues rose 6% year over year to $266.7 million. Underwriting income of $61.5 million increased 6% year over year. Net health sales grew 2% year over year.
Annuity underwriting margins declined 7.7% year over year to $2.4 million.
Shareholders’ equity as of Mar 31, 2019 increased 3.8% year over year to $6 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $45.45, up 11% year over year.
As of Mar 31, 2019, operating return on equity (excluding net unrealized gains on fixed maturities) was 14.7%, up 10 basis points year over year.
Share Repurchase and Dividend Update
In the first quarter, Torchmark repurchased 1.1 million shares for a total cost of $89 million.
For 2019, Torchmark raised its net operating income guidance range to $6.61 to $6.75 per share from the earlier projection of $6.60 to $6.70.
Torchmark currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of 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' 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%.
See Latest Stocks Today >>