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.
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.
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).
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.
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