(Source: PRNewswire-FirstCall)
MCKINNEY, Texas, July 27 /PRNewswire-FirstCall/ -- Torchmark Corporation reported today that for the quarter ended June 30, 2009, net income was $1.38 per share compared with $1.47 per share for the year-ago quarter. Net operating income for the quarter was $1.53 per share, a 6% per share increase compared with $1.44 per share for the year-ago quarter.
Reconciliations between net income and net operating income are shown in the Financial Summary below.
FINANCIAL SUMMARY
Net operating income, a non-GAAP financial measure, has long been consistently used by Torchmark's management to evaluate the operating performance of the Company, and is a measure commonly used in the life insurance industry. It differs from net income primarily because it excludes certain non-operating items such as realized investment gains and losses and nonrecurring items which are included in net income. Management believes that an analysis of net operating income is important in understanding the profitability and operating trends of the Company's business.
Financial Summary (dollars in millions, except per share data) -------------------------------------------- Per Share Quarter Ended Quarter Ended June 30, June 30, ------------- % ------------ % 2009 2008 Chg. 2009 2008 Chg. ----- ---- ---- ---- ---- ---- Insurance underwriting income* $1.45 $1.29 12 $119.8 $117.1 2 Excess investment income* 0.92 0.93 (1) 76.2 84.1 (9) Parent company expense (0.03) (0.03) (2.6) (2.7) Income tax (0.79) (0.73) 8 (65.3) (65.8) (1) Stock option expense, net of tax (0.02) (0.02) (1.8) (2.0) ----- ----- ---- ---- Net operating income $1.53 $1.44 6 $126.2 $130.6 (3) Reconciling items, net of tax: Gain on sale of agency buildings - - - 0.1 Realized losses on investments (0.14) (0.06) (11.8) (5.0) Medicare Part D adjustment - (0.02) (0.3) (2.1) Tax settlements - 0.11 - 10.1 --- ---- --- ---- Net income $1.38 $1.47 $114.1 $133.7 Weighted average diluted shares outstanding (000) 82,735 90,698 * See definitions in the discussions below and in the Torchmark 2008 SEC Form 10-K.
INSURANCE OPERATIONS - comparing the second quarter 2009 with second quarter 2008:
Life insurance accounted for 70% of the Company's insurance underwriting margin for the quarter and 62% of total premium revenue.
Health insurance, excluding Medicare Part D, accounted for 24% of Torchmark's insurance underwriting margin for the quarter and 31% of total premium revenue. Medicare Part D accounted for 3% of insurance underwriting margin and 7% of total premium revenue.
Net sales of life insurance increased 12%, while health sales, excluding Medicare Part D, fell 48%.
Insurance Premium Revenue Insurance Premium Revenue (dollars in millions) -------------------- Quarter Ended Quarter Ended % June 30, 2009 June 30, 2008 Chg. ------------- ------------- --- Life insurance $415.0 $406.5 2 Health insurance - excluding Medicare Part D 211.9 242.4 (13) Health - Medicare Part D 45.5 44.5 2 Annuity 2.5 3.8 (35) --- --- Total $674.9 $697.2 (3) Insurance Underwriting Income
Insurance underwriting margin is management's measure of profitability of its life, health and annuity segments' underwriting performance, and consists of premiums less policy obligations, commissions and other acquisition expenses.
Insurance underwriting income is the sum of the insurance underwriting margins of the life, health and annuity segments, plus other income, less insurance administrative expenses. It excludes the investment segment, parent company expense and income taxes.
Insurance Underwriting Income (dollars in millions, except per share data) -------------------------------------------- Quarter Quarter Ended Ended June 30, % of June 30, % of % 2009 Premium 2008 Premium Chg. ---- ------- ---- ------- ---- Insurance underwriting margins: Life $110.6 27 $104.1 26 6 Health 38.3 18 43.7 18 (12) Health - Medicare Part D 4.8 11 5.4 12 (12) Annuity 5.2 1.0 431 --- --- 158.9 154.2 Other income 0.7 1.0 Administrative expenses (39.8) (38.2) 4 ----- ----- Insurance underwriting income $119.8 $117.1 2 Per share $1.45 $1.29 12 Insurance Results by Distribution Channels
Total premium, underwriting margins, first-year collected premium and net sales by all distribution channels are shown at http://www.torchmarkcorp.com/ on the Investor Relations page at Financial Reports.
American Income Agency was Torchmark's leading contributor to total underwriting margin ($48 million) on premium revenue of $143 million. Life premiums of $125 million were up 5% and life insurance underwriting margin of $41 million was up 9%.
