Torchmark Posts Strong 2Q Earnings

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Torchmark Corp. (TMK) reported second quarter 2013 net operating income of $1.42 per share, a couple of pennies ahead of the Zacks Consensus estimate. Earnings were also up 9.2% year over year.
 
Total insurance premium at Torchmark increased 9% year over year to $766.6 million, led by higher premium from the Life, Health Insurance partly offset by lower premium from Medicare Part D operations.
 
Net investment income increased 2% year over year to $184.2 million. Excess investment income, a measure of the segment’s profitability, was down 12% to $54.9 million.
 
Torchmark reported underwriting income of $151.7 million which was up 13.0% year over year. The increase came on the back of higher margins at Life, Health partly offset by decline in margin from Medicare Part D operations.
 
Torchmark reported administrative expenses of $44.1 million, up 11% year over year. The increase was due to expenses from the acquisition of Family Heritage. 
 
Segment Update
 
At Life Insurance operations, premium revenue increased 5% year over year to $475.1 million, attributable to higher premiums written by distribution channels – American Income Agency (up 9%) and Direct Response (up 7%), partially offset by a 2% decline in premiums written by Liberty National Life Agency. Life underwriting income increased 9.0% to $135.7 million. Net sales of life insurance increased 2%. 
 
Health Insurance premium revenue increased 23% year over year to $218.2 million while underwriting income increased 25% year over year to $50.3 million. Net sales in Health Insurance increased 88%.
 
Premium revenue from the Medicare Part D business decreased 6% year over year to $73.1 million. Underwriting income remained unchanged year over year at $8.2 million. Net sales of Medicare part D insurance declined 63% year over year to $8 million.
 
Share Repurchase Update
 
During the quarter Torchmark repurchased 1.4 million shares at a total cost of $90 million.
 
Financial Update
 
As of Jun 30, 2013, Torchmark had assets worth $18.1 billion, up 5.6% year over year. 
 
Shareholders’ equity as of Jun 30, 2013 increased 6.1% year over year to $3.4 billion.
 
Torchmark reported book value per share of  $36.73 which was up 10.4% year over year.
 
Return on equity (:ROE) was 15.6%, compared with 15.8% in the year-ago quarter
 
Guidance for 2013
 
Management raised the lower end of its 2013 earnings guidance range. It now expects earnings range of $5.60 to $5.75 per share.
 
Torchmark carries Zacks Rank #3 (Hold).
 
Other Stocks
 
StanCorp Financial Group Inc. (SFG) and Symetra Financial Corp. (SYA)  have reported second-quarter earnings ahead of the Zacks Consensus Estimate.  American Equity Investment Life Holding Co. (AEL) is scheduled to report second quarter earnings soon. 
Read the Full Research Report on TMK

Read the Full Research Report on SFG

Read the Full Research Report on AEL

Read the Full Research Report on SYA

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