London, Oct. 29, 2009 (PR Newswire UK Disclose) --
Torchmark Corporation Reports Third Quarter 2009 Results
MCKINNEY, Texas, Oct. 28 --
Torchmark Corporation (NYSE: TMK) reported today that for the quarter
ended September 30, 2009, net income was $1.22 per share compared with
$.72 per share for the year-ago quarter. Net operating income for the
quarter was $1.48 per share, a 2% per share decrease compared with $1.51
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
September 30, September 30,
------------- % ------------- %
2009 2008 Chg 2009 2008 Chg
---- ---- --- ---- ---- ---
Insurance underwriting income* $1.42 $1.36 4 $117.3 $119.5 (2)
Excess investment income* 0.86 0.95 (9) 71.2 83.2 (14)
Parent company expense (0.03) (0.02) (2.4) (1.6)
Income tax (0.75) (0.76) (1) (62.2) (67.0) (7)
Stock option expense,
net of tax (0.02) (0.02) (1.6) (1.8)
------ ------ ----- -----
Net operating income $1.48 $1.51 (2) $122.3 $132.3 (8)
Reconciling items, net of tax:
Realized losses on
Investments (0.31) (0.81) (25.5) (71.4)
Medicare Part D adjustment 0.05 0.04 4.4 3.2
Tax settlements - 0.01 (0.1) 0.6
Net cost of legal settlements - (0.02) - (1.6)
Loss on Company occupied
property - - (0.2) -
--- --- ----- ---
Net income $1.22 $0.72 $100.8 $63.2
Weighted average diluted
shares outstanding (000) 82,844 87,811
* See definitions in the discussions below and in the Torchmark 2008 SEC
Form 10-K.
INSURANCE OPERATIONS - comparing the third quarter 2009 with third
quarter 2008:
Life insurance accounted for 72% of the Company's insurance underwriting
margin for the quarter and 62% of total premium revenue.
Health insurance, excluding Medicare Part D, accounted for 23% of
Torchmark's insurance underwriting margin for the quarter and 30% of total
premium revenue. Medicare Part D accounted for 4% of insurance underwriting
margin and 7% of total premium revenue.
Net sales of life insurance increased 9%, while health sales, excluding
Medicare Part D, fell 39%.
Insurance Premium Revenue
Insurance Premium Revenue
(dollars in millions)
-------------------------
Quarter Ended Quarter Ended %
Sept. 30, 2009 Sept. 30, 2008 Chg
-------------- -------------- ---
Life insurance $414.4 $406.1 2
Health insurance -
excluding Medicare Part D 200.2 230.9 (13)
Health - Medicare Part D 47.6 41.5 15
Annuity 2.3 3.5 (34)
--- ---
Total $664.5 $682.0 (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 Ended % of Quarter Ended % of %
Sept. 30, 2009 Premium Sept. 30, 2008 Premium Chg
-------------- ------- -------------- ------- ---
Insurance
underwriting
margins:
Life $111.4 27 $108.0 27 3
Health 35.7 18 41.9 18 (15)
Health -
Medicare Part D 5.8 12 6.4 16 (11)
Annuity 1.2 0.3 287
--- ---
154.0 156.6
Other income 0.7 1.2
Administrative
expenses (37.4) (38.3) (2)
------ ------
Insurance
underwriting
income $117.3 $119.5 (2)
Per share $1.42 $1.36 4
Insurance Results by Distribution Channels
Total premium, underwriting margins, first-year collected premium and net
sales by all distribution channels are shown at www.torchmarkcorp.com on the
Investor Relations page at Financial Reports.
American Income Agency was Torchmark's leading contributor to total
underwriting margin ($50 million) on premium revenue of $147 million.
Life premiums of $128 million were up 6% and life insurance underwriting
margin of $43 million was up 9%. As a percentage of life premium, life
underwriting margin was 34%, up from 33% and the highest of the major life
distribution channels at Torchmark. Producing agents grew to 3,929, up 36%
from a year ago, and up 3% during the quarter. 