Enrapturing Stocks: Torchmark Corporation (NYSE: TMK)

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Torchmark Corporation (NYSE: TMK) reported today that for the quarter finished December 31, 2017, net income was $8.710 per diluted common share(1), compared with $1.120 per diluted common share for the year-ago quarter.

Net operating income from continuing operations for the quarter was $1.240 per diluted common share, compared with $1.150 per diluted common share for the year-ago quarter.

Net income for the year finished December 31, 2017 was $12.220 per diluted common share(1), compared with $4.490 per diluted common share for the year-ago period.

Net operating income from continuing operations for the year finished December 31, 2017 was $4.820 per diluted common share compared with $4.490 per diluted common share for the prior year.

HIGHLIGHTS:

  • Net income for the year as a ROE was 28.20%(1). Net operating income for the year as a ROE excluding net unrealized gains on fixed maturities was 14.30%(1).
  • Life underwriting margins inclined over the year-ago quarter by 12.00%.
  • Life premiums inclined over the year-ago quarter by 9.00% at American Income and health premiums inclined by 8.00% at Family Heritage.
  • Net life sales inclined over the year-ago quarter by 19.00% at Liberty National and 7.0% at American Income.
  • Net health sales inclined over the year-ago quarter by 14.0%.
  • Average agent counts inclined over the year-ago quarter by 19.0% at Liberty National and 8.0% at Family Heritage.
  • Approximately 950,000.00 shares of common stock were repurchased during the quarter and 4.10M shares were repurchased during the year.
  • On December 22, 2017, the Tax Cuts and Jobs Act (Tax Legislation) was signed into law which significantly revises corporate income tax rates from 35.00% to 21.00%, among other modifications.
  • As a result, the Company made a one-time adjustment to estimate the impact related to the Tax Legislation. The estimated impact is treated as a non-operating event and thus excluded from net operating income from continuing operations.

Net income per share for the quarter and net income per share for the year calculated prior to the tax reform adjustment would have been $1.30 and $4.880, respectively.

Excluding the tax reform adjustment, net income for the year as a ROE and net operating income for the year as a ROE, excluding net unrealized gains on fixed maturities, would have been 11.70% and 14.40%, respectively.

American Income Agency was Torchmark’s leading contributor to total underwriting margin ($98.00M), on premium revenue of $281.00M.

Life premiums of $258.00M were up 9.00% and life insurance underwriting margin of $86.0M was up 14.00% from the year-ago quarter.

As a%age of life premium, life underwriting margin was 33.00%, up from 32.00% in the year-ago quarter. The average producing agent count during the quarter was 6,959.00, up 1.00% from a year ago, and down 3.00% from the previous quarter.

The producing agent count at the end of the 4th-quarter was 6,880. Net life sales were $56.0M, up 7.00%.

Globe Life Direct Response was Torchmark’s second leading contributor to total underwriting margin ($40M), on premium revenue of $218.0M.

Life premiums of $199.0M were up 4.00% and the life underwriting margin was $37.0M, up 27.00% from the year-ago quarter.

As a%age of life premium, life underwriting margin was 18.00%, up from 15.00%. Net life sales were $29.00M, down 15.00% from the year-ago quarter. Net health sales decreased from $2.00M to $1.80M.

LNL Agency was Torchmark’s third leading contributor to total underwriting margin ($29.00M), on premium revenue of $117.0M.

Life premiums of $69.0M were up 2.0% from the year-ago quarter, while life underwriting margin was $18.0M, down 3.0%.

As a%age of life premium, life underwriting margin was 26.00%, down from 28.00%. Net life sales were $12.0M, up 19.0%.

LNL Agency produced health underwriting margin of $11.00M, on health premiums of $48.00M.

Health underwriting margin as a%age of health premium was 24.00%, up from 22.00%. Net health sales were $6.00M, up 21.00% from the year-ago quarter.

LNL Agency’s average producing agent count during the quarter was 2,112.00, up 19.00% over a year ago, and down 1.00% from the previous quarter.

The producing agent count at the end of the 4th-quarter was 2,106.00

Family Heritage Agency was Torchmark’s leading contributor to health underwriting margin ($15.00M) on health premiums of $65.00M, which were 8.00% higher than the year-ago quarter.

Health underwriting margin as a%age of health premium was 23.00%, the similar as the year-ago quarter.

The average producing agent count during the quarter was 1,026.00, up 8.00% from a year-ago, and approximately the similar as the previous quarter.

The producing agent count at the end of the 4th-quarter was 1,076.00. Net health sales were $15.00M, up 12.00% from the year-ago quarter.

UA Independent Agency was Torchmark’s second leading contributor to health underwriting margin ($14.00M), on health premiums of $92.00M.

Health underwriting margin as a%age of premium was 15.00%, down from 17.00%. Net health sales were $28.00M, up 17.00%.

Administrative Costs were $55.00M, up 9.00% from the year-ago quarter. The ratio of administrative costs to premium for continuing operations was in line with expectations at 6.60%, compared to 6.40% for the year-ago quarter.

 

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