Torchmark Reports 9% Increase in First Quarter 2001 Earnings Per Share From Operations
April 19, 2001
Torchmark Corporation (NYSE: TMK) reported today that net operating income for the first quarter, 2001 was $.75 per share ($95 million), compared with $.69 per share ($90 million) for the first quarter of 2000, a 9% per share increase.
OPERATING HIGHLIGHTS -- comparing first quarter 2001 with the first quarter of 2000:
- For the seventh consecutive quarter, total premium revenues increased at least 8% over the comparable prior year period.
- Growth in total sales was at least 10% for the 11th consecutive quarter when compared with the comparable prior year period.
- Medicare supplement sales were up 20% for the quarter on increasingly difficult comparisons.
- The UA Branch Office Agency, selling primarily Medicare supplements, increased its agent count by 119 to 3,780 agents during the quarter.
- American Income had 11% sales growth indicating this sales unit's "turnaround" is on schedule.
- Underwriting margins were steady at 25% for life insurance and 18% for health insurance when compared with the prior year period.
The following chart displays the key per share components of Torchmark's net operating income:
| |
Per Share Net Operating Income |
| |
Quarter Ended March 31, |
| |
2001 |
|
2000 |
|
% Chg. |
| |
| Insurance underwriting income |
|
$.73 |
|
$.67 |
|
9 |
| |
| Excess investment income |
|
.47 |
|
.44 |
|
7 |
| |
| Other |
|
(.05) |
|
(.06) |
|
|
| |
| Income tax |
|
(.39) |
|
(.35) |
|
11 |
| |
| Net Operating Income |
|
$.75 |
|
$.69 |
|
9 |
| |
INSURANCE OPERATIONS -- comparing the first quarter of 2001 with the first quarter of 2000:
Total premium revenue for the quarter increased 9% to $547 million. Life premium revenue increased 5% to $281 million. Health premium revenue increased 12% to $253 million.
Insurance net underwriting income increased 6% to $93 million. The life underwriting margin (before administrative expenses) was 25% of premium and the health underwriting margin was 18% of premium, both the same as for the 2000 quarter. Insurance underwriting results are summarized in the following chart:
| |
Insurance Net Underwriting Income |
| |
(dollars in millions) |
| |
|
Quarter Ended |
|
% of |
|
Quarter Ended |
|
% of |
|
% |
| |
|
March 31, 2001 |
|
Premium |
|
March 31, 2000 |
|
Premium |
|
Chg. |
| Underwriting Income before Administrative Expenses |
|
| Life |
|
$70.0 |
|
25 |
|
$66.4 |
|
25 |
|
5 |
| Health |
|
45.1 |
|
18 |
|
40.6 |
|
18 |
|
11 |
| Annuity |
|
6.4 |
|
|
|
6.1 |
|
4 |
| |
121.5 |
|
|
|
113.1 |
|
| Other income |
|
1.2 |
|
1.2 |
|
| Administrative expenses |
|
(30.0) |
|
5 |
|
(27.3) |
|
5 |
|
10 |
| |
| Insurance Net Underwriting Income |
|
$92.7 |
|
$87.1 |
|
6 |
| |
Total insurance sales for the quarter were $141 million, a 10% increase. Total life insurance sales of $77 million were up 6%. As planned, Torchmark's largest life sales unit, Direct Response, held gross life sales growth to 4% to focus on higher profit new business. American Income had its first quarter in recent years with double-digit growth in life sales (11%).
Total health insurance sales increased 15% to $64 million, including Medicare supplement sales of $53 million, which increased 20%. Total health sales by the two United American agencies were $58 million, an 18% increase, and were primarily Medicare supplements. As expected, Medicare supplement sales declined 30% compared to the fourth quarter 2000 when many Medicare beneficiaries bought Medicare supplements because their HMOs cancelled their coverage effective January 1, 2001.
Sales by distribution channels are shown in the following chart:
| |
Annualized Life and Health Premium Issued |
| |
(dollars in millions) |
| |
| |
Life |
|
Health |
|
Total |
| |
Quarter Ended |
|
Quarter Ended |
|
Quarter Ended |
| |
March 31, |
|
March 31, |
|
March 31, |
| |
2001 |
|
2000 |
|
% Chg. |
|
2001 |
|
2000 |
|
% Chg. |
|
2001 |
|
2000 |
|
% Chg. |
| |
| Direct Response |
|
$30.8 |
|
$29.5 |
|
4 |
|
$1.3 |
|
$1.9 |
|
(29) |
|
$32.2 |
|
$31.4 |
|
2 |
| |
| LNL Exclusive Agency |
|
13.5 |
|
13.4 |
|
1 |
|
2.3 |
|
2.4 |
|
(3) |
|
15.9 |
|
15.8 |
|
0 |
| |
| American Income Agency |
|
14.7 |
|
13.2 |
|
11 |
|
2.3 |
|
2.0 |
|
11 |
|
16.9 |
|
15.3 |
|
11 |
| |
| United American Agencies |
|
| Branch Office Agency |
|
1.2 |
|
1.1 |
|
8 |
|
36.6 |
|
29.6 |
|
24 |
|
37.7 |
|
30.7 |
|
23 |
| Independent Agency |
|
7.1 |
|
5.3 |
|
36 |
|
21.6 |
|
19.9 |
|
9 |
|
28.7 |
|
25.2 |
|
14 |
| |
| Other |
|
9.1 |
|
9.7 |
|
(6) |
|
- |
|
- |
|
- |
|
9.1 |
|
9.7 |
|
(6) |
| |
| Total Premium Issued |
|
$76.5 |
|
$72.2 |
|
6 |
|
$64.1 |
|
$72.2 |
|
15 |
|
$140.6 |
|
$128.0 |
|
10 |
| |
INVESTMENTS -- comparing the first quarter of 2001 to the first quarter of 2000:
Excess investment income (investment income less interest credited on net policy liabilities and less financing costs) was $59 million compared with $57 million. Investment income increased 2% to $122 million. Financing costs decreased 7% to $16 million due to a reduction in outstanding long and short-term debt. Total debt (excluding MIPS) was reduced by $112 million, or 14%, from March 31, 2000 to March 31, 2001.
On March 26, 2001 Torchmark announced that on April 30, 2001 its special purpose subsidiary, Torchmark Capital L.L.C., will redeem 2 million of the 8 million outstanding shares of its callable 9.18% Cumulative Monthly Income Preferred Securities, Series A (MIPS). The redemption price will be at par, $25 per share, plus the accrued and unpaid dividend to April 30, 2001. Torchmark does not plan to issue new securities to fund this redemption.
SHARE REPURCHASE -- first quarter of 2001:
In accordance with its ongoing share repurchase program, Torchmark repurchased 449 thousand shares of Torchmark Corporation common stock for a total cost of $15 million ($33.69 average cost per share). At March 31, 2001, there were 126.0 million Torchmark shares outstanding (127.0 million on a diluted basis).
TORCHMARK CONSOLIDATED
Consolidated return on equity for the quarter ended March 31, 2001, (excluding the effect of SFAS 115 and net realized investment gains) was 16.1%. Total assets at March 31, 2001, were $12.8 billion and shareholders' equity was $2.4 billion. Book value per share at March 31, 2001 was $19.14, excluding the effect of SFAS 115. The debt to capital ratio, excluding the effect of SFAS 115, was 20.4% at March 31, 2001 as compared with 24.7% at March 31, 2000 (26.3% and 30.8%, respectively, when the Monthly Income Preferred Securities are treated as debt rather than equity).
Torchmark's total operating revenues for the first quarter of 2001 increased 8% to $668 million. Net operating income for the first quarter of 2001 ($95 million) differs from net income by net realized investment gains and related DAC adjustment, a loss on the redemption of debt, and a loss on discontinued operations (all items net of taxes). Net operating income for the first quarter of 2000 ($90 million) differs from net income for that quarter by net realized investment losses and related DAC adjustment (net of taxes).
EARNINGS RELEASE CONFERENCE CALL WEBCAST:
Torchmark will provide a live audio webcast of its first quarter earnings release conference call with financial analysts at 10:00 a.m. (eastern time) today, April 19, 2001. Access to the live webcast and replays will be available at http://www.torchmarkcorp.com/ on the Investor Relations page, at the "Conference Call on the Web" icon, or at http://www.prnewswire.com/. Supplemental financial reports for the quarter will be available April 19th on the Investor Relations page of the Torchmark website at the "Financial Reports" icon.
Caution regarding forward-looking statements:
This press release may contain forward-looking statements within the meaning of the federal securities laws. These prospective statements reflect management's current expectations, but are not guarantees of future performance. Accordingly, please refer to Torchmark's cautionary statement regarding forward-looking statements, and the business environment in which the Company operates, contained in the Company's Form 10-K for the fiscal year ended December 31, 2000, on file with the Securities and Exchange Commission. Torchmark specifically disclaims any obligation to update or revise any forward-looking statement because of new information, future developments or otherwise.
Torchmark Corporation is a financial services holding company specializing in life and supplemental health insurance for "middle income" Americans marketed through multiple distribution channels including direct response, and exclusive and independent agencies. Subsidiary Globe Life and Accident is a nationally recognized direct-response provider of life insurance known for its administrative efficiencies. United American has been a nationally recognized provider of Medicare supplement health insurance since 1966. Liberty National Life, one of the oldest traditional life insurers in the Southeast, is the largest life insurer in its home state of Alabama. American Income Life is nationally recognized for providing supplemental life insurance to labor union members.
| |
Summary of Financial Results |
| |
(in thousands, except per share data) |
| |
Quarter Ended March 31, |
| |
2000 |
|
2001 |
| Total Revenue from Operations * |
|
$668,222 |
|
$620,876 |
| Net Operating Income ** |
|
$95,449 |
|
$90,090 |
| Per diluted share |
|
.75 |
|
.69 |
| Net Income |
|
$96,398 |
|
$88,882 |
| Per diluted share |
|
.76 |
|
.68 |
| Weighted Average Diluted Shares Outstanding (000 omitted) |
|
126,772 |
|
130,823 |
| |
** Total revenue from operations excludes net realized investment gains and losses.
** Net operating income excludes net realized investment gains or losses net of the related DAC adjustment (net of taxes), and in the 2001 period, excludes a loss on redemption of debt and loss on discontinued operations (both net of taxes).
SOURCE Torchmark Corporation
CONTACT: Joyce Lane, Vice President, Investor Relations of Torchmark Corporation, +1-972-569-3627, or fax, +1-972-569-3282, or jlane@torchmarkcorp.com
Web site: http://www.torchmarkcorp.com/