DELAWARE | 001-08052 | 63-0780404 | ||
(State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer ID No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a.-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ¨ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
(a) | Financial Statements of businesses acquired. |
(b) | Pro forma financial information. |
(c) | Shell company transactions. |
(d) | Exhibits. |
TORCHMARK CORPORATION | ||||
Date: February 5, 2019 | ||||
/s/ Carol A. McCoy | ||||
Carol A. McCoy, Vice President, Associate Counsel and Corporate Secretary |
• | Net income as an ROE was 12.3%. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 14.6%(1). |
• | Life underwriting margin at Globe Life Direct Response increased over the year-ago quarter by 6% and health underwriting margin at Family Heritage Agency increased over the year-ago quarter by 15%. |
• | Life premiums increased over the year-ago quarter by 7% at American Income Agency and health premiums increased over the year-ago quarter by 8% at Family Heritage Agency. |
• | Net life sales and net health sales at Liberty National Agency increased over the year-ago quarter by 6% and 9%, respectively. |
• | Average producing agent count increased over the year-ago quarter by 10% at Family Heritage Agency. |
• | 1.5 million shares of common stock were repurchased during the quarter and 4.4 million shares were repurchased during the year. |
Per Share Quarter Ended | Quarter Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2018 | 2017 | % Chg. | 2018 | 2017 | % Chg. | ||||||||||||||||
Insurance underwriting income(2) | $ | 1.51 | $ | 1.38 | 9 | $ | 171.3 | $ | 163.2 | 5 | |||||||||||
Excess investment income(2) | 0.54 | 0.49 | 10 | 61.7 | 57.6 | 7 | |||||||||||||||
Parent company expense | (0.03 | ) | (0.02 | ) | (2.9 | ) | (2.4 | ) | |||||||||||||
Income tax(3) | (0.39 | ) | (0.60 | ) | (35) | (44.9 | ) | (70.9 | ) | (37) | |||||||||||
Stock compensation benefit (expense), net of tax | (0.07 | ) | (0.01 | ) | (8.2 | ) | (0.7 | ) | |||||||||||||
Net operating income | $ | 1.56 | $ | 1.24 | 26 | $ | 177.0 | $ | 146.8 | 21 | |||||||||||
Reconciliation to net income (GAAP): | |||||||||||||||||||||
Reconciling items, net of tax: | |||||||||||||||||||||
Realized Gain (Loss)—Investments | (0.04 | ) | 0.12 | (4.4 | ) | 14.0 | |||||||||||||||
Realized Loss—Redemption of Debt | (0.08 | ) | (0.02 | ) | (8.8 | ) | (2.6 | ) | |||||||||||||
Administrative settlements | — | (0.04 | ) | — | (4.3 | ) | |||||||||||||||
Non-operating fees | — | — | — | (0.2 | ) | ||||||||||||||||
Guaranty fund assessment | — | — | — | (0.3 | ) | ||||||||||||||||
Tax reform adjustment(3) | 0.01 | 7.41 | 0.8 | 874.0 | |||||||||||||||||
Net income(4) | $ | 1.45 | $ | 8.71 | $ | 164.7 | $ | 1,027.3 | |||||||||||||
Weighted average diluted shares outstanding (000) | 113,667 | 117,964 |
Per Share Year Ended | Year Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2018 | 2017 | % Chg. | 2018 | 2017 | % Chg. | ||||||||||||||||
Insurance underwriting income | $ | 5.87 | $ | 5.25 | 12 | $ | 676.0 | $ | 625.1 | 8 | |||||||||||
Excess investment income | 2.13 | 2.01 | 6 | 245.1 | 239.4 | 2 | |||||||||||||||
Parent company expense | (0.09 | ) | (0.08 | ) | (10.7 | ) | (9.6 | ) | |||||||||||||
Income tax(1) | (1.55 | ) | (2.34 | ) | (34) | (178.5 | ) | (278.8 | ) | (36) | |||||||||||
Stock compensation benefit (expense), net of tax | (0.22 | ) | (0.02 | ) | (25.0 | ) | (2.3 | ) | |||||||||||||
Net operating income | $ | 6.13 | $ | 4.82 | 27 | $ | 707.0 | $ | 573.7 | 23 | |||||||||||
Reconciliation to net income (GAAP): | |||||||||||||||||||||
Reconciling items, net of tax: | |||||||||||||||||||||
Realized Gain (Loss)—Investments | 0.06 | 0.17 | 7.3 | 20.2 | |||||||||||||||||
Realized Loss—Redemption of Debt | (0.08 | ) | (0.02 | ) | (8.8 | ) | (2.6 | ) | |||||||||||||
Part D adjustments—discontinued operations | — | (0.03 | ) | — | (3.8 | ) | |||||||||||||||
Administrative settlements | (0.03 | ) | (0.05 | ) | (3.6 | ) | (5.6 | ) | |||||||||||||
Non-operating fees | (0.01 | ) | — | (1.2 | ) | (0.2 | ) | ||||||||||||||
Guaranty fund assessment | — | (0.01 | ) | — | (1.2 | ) | |||||||||||||||
Tax reform adjustment(1) | 0.01 | 7.35 | 0.8 | 874.0 | |||||||||||||||||
Net income | $ | 6.09 | $ | 12.22 | $ | 701.5 | $ | 1,454.5 | |||||||||||||
Weighted average diluted shares outstanding (000) | 115,249 | 118,983 |
December 31, | |||||||
2018(1) | 2017 | ||||||
Net income as an ROE(1)(2) | 12.3 | % | 28.2 | % | |||
Net operating income as an ROE (excluding net unrealized gains on fixed maturities) | 14.6 | % | 14.3 | % | |||
Shareholders' equity | $ | 5,415 | $ | 6,231 | |||
Impact of adjustment to exclude net unrealized gains on fixed maturities | (426 | ) | (1,551 | ) | |||
Shareholders' equity, excluding net unrealized gains on fixed maturities | $ | 4,989 | $ | 4,680 | |||
Book value per share | $ | 48.11 | $ | 52.95 | |||
Impact of adjustment to exclude net unrealized gains on fixed maturities | (3.79 | ) | (13.18 | ) | |||
Book value per share, excluding net unrealized gains on fixed maturities | $ | 44.32 | $ | 39.77 |
Quarter Ended | % Chg. | |||||||||
December 31, 2018 | December 31, 2017 | |||||||||
Life insurance | $ | 600.2 | $ | 580.7 | 3 | |||||
Health insurance | 256.9 | 245.8 | 5 | |||||||
Total | $ | 857.1 | $ | 826.5 | 4 |
Quarter Ended | ||||||||||||||
December 31, 2018 | % of Premium | December 31, 2017 | % of Premium | % Chg. | ||||||||||
Insurance underwriting margins: | ||||||||||||||
Life | $ | 167.7 | 28 | $ | 160.2 | 28 | 5 | |||||||
Health | 58.2 | 23 | 55.1 | 22 | 6 | |||||||||
Annuity | 2.7 | 2.7 | ||||||||||||
228.6 | 218.0 | 5 | ||||||||||||
Other income | 0.1 | — | ||||||||||||
Administrative expenses | (57.4 | ) | (54.8 | ) | 5 | |||||||||
Insurance underwriting income | $ | 171.3 | $ | 163.2 | 5 | |||||||||
Per share | $ | 1.51 | $ | 1.38 | 9 |
Quarter Ended | ||||||||||
December 31, | ||||||||||
2018 | 2017 | % Chg. | ||||||||
Net investment income | $ | 224.2 | $ | 213.0 | 5 | |||||
Required interest: | ||||||||||
Interest on net policy liabilities(1) | (138.9 | ) | (133.6 | ) | 4 | |||||
Interest on debt | (23.6 | ) | (21.7 | ) | 9 | |||||
Total required interest | (162.6 | ) | (155.4 | ) | 5 | |||||
Excess investment income | $ | 61.7 | $ | 57.6 | 7 | |||||
Per share | $ | 0.54 | $ | 0.49 | 10 |
Invested Assets (Dollar amounts in millions) (unaudited) | ||||||
$ | % of Total | |||||
Fixed maturities at fair value(1) | $ | 16,298 | 95 | % | ||
Policy loans | 550 | 3 | ||||
Other long-term investments(2) | 207 | 1 | ||||
Short-term investments | 63 | — | ||||
Total | $ | 17,119 | 100 | % |
Fixed Maturities (Dollar amounts in millions) (unaudited) | |||||||||||
Investment Grade | Below Investment Grade | Total | |||||||||
Corporate bonds | $ | 13,177 | $ | 608 | $ | 13,785 | |||||
Municipal | 1,355 | — | 1,355 | ||||||||
Government-sponsored enterprises | 325 | — | 325 | ||||||||
Government and agencies | 84 | — | 84 | ||||||||
Collateralized debt obligations | — | 58 | 58 | ||||||||
Residential mortgage-backed securities | 1 | — | 1 | ||||||||
Other asset-backed securities | 147 | — | 147 | ||||||||
Total | $ | 15,087 | $ | 666 | $ | 15,753 |
Quarter Ended | ||||
December 31, | ||||
2018 | 2017 | |||
Average annual effective yield | 5.3% | 4.4% | ||
Average rating | A- | BBB+ | ||
Average life (in years) to: | ||||
Next call | 17.6 | 23.7 | ||
Maturity | 22.5 | 25.0 |
For additional information contact: | Mike Majors Executive Vice President Torchmark Corporation 3700 South Stonebridge Dr. P. O. Box 8080 McKinney, Texas 75070-8080 Phone: 972-569-3627 tmkir@torchmarkcorp.com Website: www.torchmarkcorp.com |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue: | |||||||||||||||
Life premium | $ | 600 | $ | 581 | $ | 2,407 | $ | 2,307 | |||||||
Health premium | 257 | 246 | 1,015 | 976 | |||||||||||
Total premium | 857 | 826 | 3,422 | 3,283 | |||||||||||
Net investment income | 224 | 213 | 883 | 848 | |||||||||||
Realized gains (losses) | (17 | ) | 17 | (2 | ) | 24 | |||||||||
Other income | — | — | 1 | 1 | |||||||||||
Total revenue | 1,065 | 1,057 | 4,304 | 4,156 | |||||||||||
Benefits and expenses: | |||||||||||||||
Life policyholder benefits | 395 | 390 | 1,592 | 1,558 | |||||||||||
Health policyholder benefits | 166 | 164 | 649 | 634 | |||||||||||
Other policyholder benefits | 8 | 9 | 34 | 36 | |||||||||||
Total policyholder benefits | 569 | 562 | 2,275 | 2,228 | |||||||||||
Amortization of deferred acquisition costs | 129 | 120 | 517 | 490 | |||||||||||
Commissions, premium taxes, and non-deferred acquisition costs | 70 | 67 | 278 | 265 | |||||||||||
Other operating expense | 70 | 69 | 280 | 257 | |||||||||||
Interest expense | 24 | 22 | 90 | 85 | |||||||||||
Total benefits and expenses | 861 | 841 | 3,440 | 3,325 | |||||||||||
Income before income taxes | 204 | 216 | 864 | 831 | |||||||||||
Income taxes | (39 | ) | 811 | (162 | ) | 628 | |||||||||
Income from continuing operations | 165 | 1,027 | 702 | 1,458 | |||||||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | — | (4 | ) | ||||||||||
Net income | $ | 165 | $ | 1,027 | $ | 701 | $ | 1,454 | |||||||
Basic net income (loss) per common share: | |||||||||||||||
Continuing operations | $ | 1.48 | $ | 8.93 | $ | 6.22 | $ | 12.53 | |||||||
Discontinued operations | — | — | — | (0.03 | ) | ||||||||||
Total basic net income per common share | $ | 1.48 | $ | 8.93 | $ | 6.22 | $ | 12.50 | |||||||
Diluted net income (loss) per common share: | |||||||||||||||
Continuing operations | $ | 1.45 | $ | 8.71 | $ | 6.09 | $ | 12.26 | |||||||
Discontinued operations | — | — | — | (0.04 | ) | ||||||||||
Total diluted net income per common share | $ | 1.45 | $ | 8.71 | $ | 6.09 | $ | 12.22 | |||||||
Dividends declared per common share | $ | 0.16 | $ | 0.15 | $ | 0.64 | $ | 0.60 |
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