Torchmark Corp. (TMK, Financial) filed Quarterly Report for the period ended 2010-09-30.
Torchmark Corp. has a market cap of $4.79 billion; its shares were traded at around $59.25 with a P/E ratio of 9.68 and P/S ratio of 1.51. The dividend yield of Torchmark Corp. stocks is 1.08%. Torchmark Corp. had an annual average earning growth of 3.7% over the past 10 years. GuruFocus rated Torchmark Corp. the business predictability rank of 2.5-star.TMK is in the portfolios of Richard Pzena of Pzena Investment Management LLC, Tweedy Browne of Tweedy Browne CO LLC, Tweedy Browne of Tweedy Browne CO LLC, RS Investment Management, Warren Buffett of Berkshire Hathaway, Arnold Schneider of Schneider Capital Management, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Jeremy Grantham of GMO LLC, Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC, David Dreman of Dreman Value Management, John Keeley of Keeley Fund Management, Steven Cohen of SAC Capital Advisors.
Highlights, comparing the first nine months of 2010 with the first nine months of 2009. Net income per diluted share increased 25% to $4.39. Net income from continuing operations for the 2010 period reflects an after-tax benefit of $.08 per share from realized investment gains. Net income per share during the 2009 period reflected an after tax loss of $.85 per share for realized investment losses of which $.95 was a result of other-than-temporary impairments of fixed maturities, offset by $.10 of other gains. The $.08 per share gain in 2010 was net of an impairment writedown of $.01 per share on fixed maturities. These writedowns of investments are discussed in detail in Note EInvestments under the caption Other-Than-Temporary Impairments in this report. Additionally, we benefited from tax settlements in 2009 arising from the Internal Revenue Services completion of its examination for the years 2005 through 2007. Net income was increased by $3 million or $.04 per share in 2009 as a result of these tax settlements.
As explained in Note HBusiness Segments, differences in our estimate of interim results for Medicare Part D as we view this product for segment purposes and GAAP financial statement purposes resulted in a $5 million after-tax charge to earnings in 2010 ($.06 per share) and a $7 million charge in 2009 ($.08 per share). We expect our 2010 full year benefit ratios to be approximately the same as those for interim periods, as was the case in 2009 and prior years. For this reason, there should be no differences in our segment versus financial statement reporting by year end 2010, as it relates to Medicare Part D.
Health insurance premium income, excluding Medicare Part D premium, declined 7% to $591 million. Health net sales, excluding Part D, declined 23% to $45 million and first-year collected health premium, excluding Part D, decreased 5% to $56 million. These declines resulted primarily from the decrease in agent count in our United American (UA) Branch Office Agency. Turnover can be attributed to increased competition and the Companys decision to deemphasize the marketing of certain UA limited-benefit health products. Sales of these limited-benefit health products were discontinued in September, 2010. We are addressing the turnover in the UA Branch Office Agency by offering the agents new lines of Liberty National life and health products to sell with new compensation incentives focused on marketing those products. Those products are priced to achieve higher profit margins and have better persistency than the UA Branchs limited-benefit health products. Health underwriting income of $110 million in 2010, excluding Part D, declined 4%. Health underwriting income improved to 19% of premium in 2010 as a result of the mix of in force business shifting to higher margin business.
Excess investment income per diluted share increased 6% to $2.68, while excess investment income rose 5% to $221 million. Net investment income rose $36 million, or 8%. Our average investment portfolio at amortized cost grew 9%. Growth in net investment income lagged portfolio growth primarily because yields available on new investments in recent periods have not been as great as yields on securities that matured or were otherwise disposed of. Excess investment income did not increase at the same rate as net investment income because of the $20 million or 10% increase in interest cost on net insurance policy liabilities and the $6 million or 11% increase in financing costs, partially offsetting the increase in net investment income. Financing costs rose in the period primarily as a result of the increased interest expense from a new $300 million debt offering issued in June, 2009, replacing a $99 million debt issue that matured in August, 2009.
specified authorization amount, we determine the amount of repurchases based on the amount of our excess cash flow, general market conditions, and other alternative uses. In the first nine months of 2010, we acquired 2.9 million shares of the Companys common stock in the open market at a cost of $148 million ($51.65 average price per share). Of the $148 million, $141 million was from excess operating cash flow, which was used to repurchase 2.7 million shares, and $7 million was from the cash received from stock option exercises by current and former employees. Proceeds from these option exercises were used to repurchase 123 thousand shares in order to offset dilution from the exercises.
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Torchmark Corp. has a market cap of $4.79 billion; its shares were traded at around $59.25 with a P/E ratio of 9.68 and P/S ratio of 1.51. The dividend yield of Torchmark Corp. stocks is 1.08%. Torchmark Corp. had an annual average earning growth of 3.7% over the past 10 years. GuruFocus rated Torchmark Corp. the business predictability rank of 2.5-star.TMK is in the portfolios of Richard Pzena of Pzena Investment Management LLC, Tweedy Browne of Tweedy Browne CO LLC, Tweedy Browne of Tweedy Browne CO LLC, RS Investment Management, Warren Buffett of Berkshire Hathaway, Arnold Schneider of Schneider Capital Management, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Jeremy Grantham of GMO LLC, Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC, David Dreman of Dreman Value Management, John Keeley of Keeley Fund Management, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Discontinued Operations. As discussed in Note G Discontinued Operations, we have entered into an agreement to dispose of our subsidiary United Investors, a carrier of life and annuity products. As a result, this discussion will treat the results of United Investors as discontinued operations. The discontinued operations accounted for $20 million of net income in the nine months of 2010, or $.24 per diluted share, compared with $12 million in 2009, or $.15 per diluted share. However, we have recorded a $31 million after tax loss on the disposition transaction ($.37 per diluted share), resulting in a $.13 per diluted share loss on total discontinued operations in 2010.Highlights, comparing the first nine months of 2010 with the first nine months of 2009. Net income per diluted share increased 25% to $4.39. Net income from continuing operations for the 2010 period reflects an after-tax benefit of $.08 per share from realized investment gains. Net income per share during the 2009 period reflected an after tax loss of $.85 per share for realized investment losses of which $.95 was a result of other-than-temporary impairments of fixed maturities, offset by $.10 of other gains. The $.08 per share gain in 2010 was net of an impairment writedown of $.01 per share on fixed maturities. These writedowns of investments are discussed in detail in Note EInvestments under the caption Other-Than-Temporary Impairments in this report. Additionally, we benefited from tax settlements in 2009 arising from the Internal Revenue Services completion of its examination for the years 2005 through 2007. Net income was increased by $3 million or $.04 per share in 2009 as a result of these tax settlements.
As explained in Note HBusiness Segments, differences in our estimate of interim results for Medicare Part D as we view this product for segment purposes and GAAP financial statement purposes resulted in a $5 million after-tax charge to earnings in 2010 ($.06 per share) and a $7 million charge in 2009 ($.08 per share). We expect our 2010 full year benefit ratios to be approximately the same as those for interim periods, as was the case in 2009 and prior years. For this reason, there should be no differences in our segment versus financial statement reporting by year end 2010, as it relates to Medicare Part D.
Health insurance premium income, excluding Medicare Part D premium, declined 7% to $591 million. Health net sales, excluding Part D, declined 23% to $45 million and first-year collected health premium, excluding Part D, decreased 5% to $56 million. These declines resulted primarily from the decrease in agent count in our United American (UA) Branch Office Agency. Turnover can be attributed to increased competition and the Companys decision to deemphasize the marketing of certain UA limited-benefit health products. Sales of these limited-benefit health products were discontinued in September, 2010. We are addressing the turnover in the UA Branch Office Agency by offering the agents new lines of Liberty National life and health products to sell with new compensation incentives focused on marketing those products. Those products are priced to achieve higher profit margins and have better persistency than the UA Branchs limited-benefit health products. Health underwriting income of $110 million in 2010, excluding Part D, declined 4%. Health underwriting income improved to 19% of premium in 2010 as a result of the mix of in force business shifting to higher margin business.
Excess investment income per diluted share increased 6% to $2.68, while excess investment income rose 5% to $221 million. Net investment income rose $36 million, or 8%. Our average investment portfolio at amortized cost grew 9%. Growth in net investment income lagged portfolio growth primarily because yields available on new investments in recent periods have not been as great as yields on securities that matured or were otherwise disposed of. Excess investment income did not increase at the same rate as net investment income because of the $20 million or 10% increase in interest cost on net insurance policy liabilities and the $6 million or 11% increase in financing costs, partially offsetting the increase in net investment income. Financing costs rose in the period primarily as a result of the increased interest expense from a new $300 million debt offering issued in June, 2009, replacing a $99 million debt issue that matured in August, 2009.
specified authorization amount, we determine the amount of repurchases based on the amount of our excess cash flow, general market conditions, and other alternative uses. In the first nine months of 2010, we acquired 2.9 million shares of the Companys common stock in the open market at a cost of $148 million ($51.65 average price per share). Of the $148 million, $141 million was from excess operating cash flow, which was used to repurchase 2.7 million shares, and $7 million was from the cash received from stock option exercises by current and former employees. Proceeds from these option exercises were used to repurchase 123 thousand shares in order to offset dilution from the exercises.
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