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Torchmark Corporation Reports 9% Increase in Operating Income Per Share For The Year and 8% for the Fourth Quarter of 2001

PRNewswire-FirstCall
BIRMINGHAM, Ala.
Feb 7, 2002

Torchmark Corporation (NYSE: TMK) reported today that for the year ended December 31, 2001, net operating income was $3.12 per share ($393 million), up 9% from $2.85 per share ($365 million) for the prior year. For the fourth quarter of 2001, net operating income was $.80 per share ($100 million) compared with $.74 per share ($94 million) for the fourth quarter of 2000, an 8% per share increase. Operating earnings per share were in line with the Company's expectations and the consensus analysts forecast per First Call/Thompson Financial.

FOR THE YEAR, premium revenues of $2.2 billion increased 8%, with life premiums up 6% and health premiums up 11%. Insurance net underwriting income increased 3%. On a per share basis, excess investment income increased 15%. Return on equity for the year was 16.1%.

FOR THE QUARTER, premium revenues of $553 million were up 6%, with life premiums increasing 5% and health premiums increasing 7%. Insurance net underwriting income decreased 1%. On a per share basis, excess investment income increased 22%. Return on equity for the quarter was 16.0%.

  HIGHLIGHTS for 2001:

   --   American Income sales for the year increased 17% to $76 million,
        with sales of $21 million in the fourth quarter, a 29% increase
        compared with the year-ago quarter.  The American Income producing
        agent count grew 31% to 1,768 in 2001.
   --   Direct Response premium revenue grew 9%.  Direct Response sales
        declined 1% compared with 2000, but were slightly above plan for the
        year.  As announced early in 2001, growth in Direct Response sales
        programs for the year was restrained in order to focus on marketing
        more profitable business.  The Direct Response life underwriting
        margin (underwriting income as a percent of premium) stabilized at
        25% for the year.
   --   2001 Medicare supplement health sales declined when compared with
        the prior year's unusually high sales generated by the unprecedented
        number of involuntary Medicare HMO disenrollments in 2000.  Medicare
        supplement sales also faced competitive premium rate pressures as
        Torchmark implemented rate increases more timely than some
        competitors.
   --   Financing costs declined $19 million (27%) due to lower short-term
        interest rates and the Company's call during the year of
        $200 million of 9.18% Monthly Income Preferred Securities (MIPS).

The following chart displays the key per share components of Torchmark's net operating income:

                                  Per Share Net Operating Income
                            Year Ended              Quarter Ended
                           December 31,      %       December 31,      %
                          2001     2000    Change   2001     2000    Change

  Insurance Net
   Underwriting Income   $2.92    $2.77       5     $.72      $.72      0

  Excess Investment
   Income                 2.03     1.77      15      .55       .45     22

  Other                   (.21)    (.23)     (9)    (.05)     (.05)     0

  Income Tax             (1.62)   (1.46)     11     (.42)     (.38)    11

  Net Operating Income   $3.12    $2.85       9     $.80      $.74      8

INSURANCE OPERATIONS comparing the year ended December 31, 2001 with the year ended December 31, 2000:

Total premium revenue increased 8% to $2.2 billion. Life and annuity premium revenue increased 6% to $1.2 billion. Health premium revenue increased 11% to $1.0 billion.

                                     Premium Revenue
                                  (dollars in millions)

               Life and Annuity           Health                Total
                Year Ended            Year Ended           Year Ended
               December 31,   %      December 31,  %       December 31,  %
              2001     2000  Chg.    2001    2000 Chg.    2001     2000 Chg.

  Direct
   Response  $289.1   $267.9  8     $17.8   $14.9  20    $306.9    $282.8  9

  LNL
   Exclusive
   Agency     297.3    294.3  1     155.9   151.4   3     453.2     445.6  2

  American
   Income
   Agency     246.7    231.1  7      49.8    48.3   3     296.5     279.4  6

  United
   American
   Agencies
    Branch
     Office
     Agency    19.3     19.4 (1)    323.2   254.3  27     342.4     273.7 25
    Independent
     Agency    47.8     43.0 11     464.1   442.4   5     511.9     485.4  5

  Other       244.8    227.2  8       ---     --- ---     244.8     227.2  8

  Annuity      59.5     52.2 14       ---     --- ---      59.5      52.2 14

  Total    $1,204.4 $1,135.1  6  $1,010.8  $911.2  11  $2,215.2  $2,046.2  8

Insurance net underwriting income increased 3% to $368 million. The life underwriting margin (before administrative expenses) was 25% of premium, the same as for 2000. Health underwriting income was $173 million with an underwriting margin (before administrative expenses) of 17%. Administrative expenses were $119 million, compared with $112 million for 2000, but declined slightly as a percentage of premium. Insurance underwriting results are summarized in the following chart:

                                  Insurance Net Underwriting Income
                                        (dollars in millions)

                           Year                    Year
                          Ended       % of        Ended       % of      %
                      Dec. 31, 2001  Premium  Dec. 31, 2000  Premium  Change
  Underwriting Income
   before Administrative
   Expenses
    Life                   $284.3      25        $271.7        25       5
    Health                  173.5      17         161.1        18       8
    Annuity                  24.8                  29.9               (17)
                            482.5                 462.7
  Other Income                4.4                   4.7
  Administrative Expenses  (119.0)      5        (111.8)        5       6

  Insurance Net
   Underwriting Income     $367.9                $355.6                 3

Total insurance sales for 2001 were $508 million, a 6% decrease. Total life insurance sales of $295 million were up 1%. Of Torchmark's three major life insurance distribution units, Direct Response, Liberty National and American Income, the Direct Response unit continued as the largest writer of new life insurance sales with $112 million for the year.

Total health insurance sales decreased 16% to $213 million, including Medicare supplement sales of $159 million, a 21% decline. Total health sales by the United American Branch Office and Independent agencies, the primary writers of health insurance for Torchmark, were $189 million, a decline of 18%. Medicare supplement sales declined when compared with 2000 sales, a difficult comparison due to the very high Medicare supplement sales in 2000 generated by the unprecedented number of involuntary terminations of Medicare HMO members. Involuntary Medicare HMO terminations in 2001 were approximately half those of 2000. In addition, Torchmark Medicare supplement sales faced competitive premium rate pressures in some markets as Torchmark implemented premium rate increases more timely than some competitors. The number of producing agents at the United American Branch Office agency also declined as agents in some markets left United American for easier sales at those competitors whose Medicare supplement products are currently lower priced. Although sales declined in 2001, Medicare supplement annualized premium in force at year-end 2001 increased 4% to $761 million.

  Sales by distribution channels are shown in the following chart:

                        Annualized Life and Health Premium Issued
                                  (dollars in millions)

                     Life                 Health                 Total
             Year Ended            Year Ended             Year Ended
             December 31,    %     December 31,     %     December 31,   %
             2001    2000   Chg.   2001    2000    Chg.   2001    2000  Chg.

  Direct
   Response $112.0  $112.9  (1)    $3.3    $3.6    (8)   $115.3  $116.5  (1)

  LNL
   Exclusive
   Agency     54.9    53.6   2     10.7    10.1     7      65.6    63.7   3

  American
   Income
   Agency     66.4    56.6  17     10.0     8.6    16      76.4    65.2  17

  United
   American
   Agencies

    Branch
     Office
     Agency    4.9     4.7   4    115.7   145.1   (20)    120.6   149.8 (20)
    Independent
     Agency   24.5    25.7  (5)    73.5    85.1   (14)     98.0   110.8 (12)

  Other       32.0    37.2 (14)     ---     ---   ---      32.0    37.2 (14)

  Total
   Premium
   Issued   $294.6  $290.7   1   $213.3  $252.5   (16)   $507.9  $543.2  (6)

INSURANCE OPERATIONS comparing the fourth quarter of 2001 with the fourth quarter of 2000:

Total premium revenue for the quarter increased 6% to $553 million. Life premium revenue increased 5% to $287 million. Health premium revenue increased 7% to $252 million. Insurance net underwriting income declined 1% to $90 million. The life underwriting margin (before administrative expenses) was 26% of premium, the same as for the 2000 quarter. The health underwriting margin was 16% of premium, compared with 17% for the 2000 quarter. Insurance underwriting results are summarized in the following chart:

                                 Insurance Net Underwriting Income
                                       (dollars in millions)

                          Quarter               Quarter
                           Ended      % of       Ended        % of      %
                      Dec. 31, 2001  Premium  Dec. 31, 2000  Premium  Change

  Underwriting Income
   before Administrative
   Expenses
    Life                  $73.5        26        $70.2         26       5
    Health                 40.4        16         40.8         17      (1)
    Annuity                 6.0                    8.4                (29)
                          119.9                  119.4
  Other Income              1.0                    1.0
  Administrative Expenses (30.9)        6        (29.3)         6       6

  Insurance Net
   Underwriting Income    $89.9                  $91.2                 (1)

Total life insurance sales of $74 million were up 3%, but total health insurance sales declined 36% to $56 million, including Medicare supplement sales of $40 million, which declined 47%. As discussed earlier, Medicare supplement sales in the year-ago quarter were unusually high due to unprecedented high numbers of involuntary Medicare HMO terminations in the third and fourth quarters of 2000. As a result of the health sales decline, total insurance sales for the quarter declined 19% to $130 million. 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
             December 31,    %     December 31,    %      December 31,   %
             2001    2000   Chg.   2001    2000   Chg.    2001    2000  Chg.

  Direct
   Response  $26.9   $25.1   7      $.9     $.7    28    $ 27.8  $ 25.8   8

  LNL
   Exclusive
   Agency     13.7    13.4   2      3.0     2.6    17      16.7    15.9   5

  American
   Income
   Agency     18.9    14.5  30      2.6     2.1    22      21.5    16.6  29

  United
   American
   Agencies

    Branch
     Office
     Agency    1.2     1.2   1     29.3    52.4   (44)     30.5    53.5 (43)
    Independent
     Agency    5.9     8.6 (31)    20.5    30.1   (32)     26.4    38.7 (32)

  Other        7.1     9.1 (22)     ---     ---   ---       7.1     9.1 (22)

  Total
   Premium
   Issued    $73.6   $71.7   3    $56.3   $87.9   (36)   $129.9  $159.6 (19)

INVESTMENTS comparing the year ended December 31, 2001 with the year ended December 31, 2000:

Excess investment income (investment income less interest credited on net policy liabilities and less financing costs) increased 13% to $256 million, or 15% on a per-share basis. Investment income increased 3% to $496 million, or 5% on a per-share basis. Financing costs for the year declined 27% to $51 million, due to lower short-term interest rates and the call of the MIPS.

After tax net realized capital losses were $2 million for 2001 compared to $3 million of losses in 2000.

CAPITAL TRANSACTIONS during the year ended December 31, 2001:

In 2001, Torchmark called the $200 million of MIPS (Torchmark Capital LLC 9.18% Monthly Income Preferred Securities). As previously announced, the MIPS were called as follows: $50 million on April 30, $40 million on August 31, and the remaining $110 million on November 30.

In November and December, 2001, Torchmark issued $150 million of trust preferred securities; $125 million through Torchmark Capital Trust I (NYSE: TMKPRT) and $25 million through Torchmark Capital Trust II (NYSE: TMKPRS). Both issues have a $25 per value per share, pay quarterly dividends at an annual rate of 7.75% and become callable at Torchmark's option in November 2006. Also, the Company issued $180 million of 6.25% unsecured notes due December 15, 2006. Proceeds from the new issues were used to fund the call of the MIPS, to reduce short-term corporate debt and for other corporate purposes.

SHARE REPURCHASE during the year ended December 31, 2001:

In accordance with Torchmark's ongoing share repurchase program, a total of 4.3 million common shares at a cost of $159 million were repurchased during 2001 (average cost of $37.25 per share). During the fourth quarter of 2001, the Company repurchased 2 million shares at an average cost of $38.26 per share. At December 31, 2001, there were 122.9 million Torchmark shares outstanding (123.4 million on a diluted basis).

OTHER FINANCIAL INFORMATION for the year ended December 31, 2001:

Operating earnings as a return on equity was 16.1%. At year-end, total assets were $12.4 billion and shareholders' equity was $2.5 billion. Book value per share was $20.32, excluding the effect of SFAS 115. The debt to capital ratio, excluding the effect of SFAS 115, was 21.9% as compared with 21.5% at the previous year-end (26.2% and 27.5%, respectively, when the preferred securities are treated as debt rather than equity).

Net income for the year was $2.83 per share ($357 million) compared with $2.82 per share ($362 million) for 2000. Net income for the fourth quarter was $.67 per share ($83 million) compared with $.73 per share ($92 million) for the year-ago quarter.

Net operating income for 2001 ($393 million) differs from net income ($357 million) for the year by the following items net of taxes:

   (i)    net realized investment losses of $2 million,
   (ii)   loss on redemption of MIPS and debt of $5 million,
   (iii)  change in accounting principle of $27 million, and
   (iv)   loss on discontinued operations of $3 million.

   Note:  The change in accounting principle, as previously reported for
          the second quarter of 2001, resulted from the required
          implementation of a new accounting standard regarding the
          recognition of interest income and impairment of asset-backed
          securities.  Subsequent to the write-down, Torchmark sold
          $40 million of these assets.  The effect of the change in
          accounting principle is expected to be immaterial in the future.

2000 net operating income ($365 million) differs from net income ($362 million) by the following items, net of taxes:

   (i)    net realized investment losses of $3 million, and
   (ii)   gain on the redemption of debt of $202 thousand.


                                  Summary of Financial Results
                             (in thousands, except per share data)
                         Year Ended Dec. 31,        Quarter Ended Dec. 31,
                          2001          2000           2001        2000

  Total Revenue from
   Operations *       $2,709,474    $2,521,216      $678,387     $643,906

  Net Operating
   Income**             $392,510      $365,292       $99,703      $93,686

    Per Diluted Share       3.12          2.85           .80          .74
  Net Income            $356,513      $362,035       $83,126      $92,123
    Per Diluted Share       2.83          2.82           .67          .73

  Weighted Average
   Diluted Shares
   Outstanding
   (000 omitted)         125,861       128,353       124,451      126,976

  *     Total revenue from operations excludes net realized investment
        losses.
  **    Net operating income excludes net realized investment gains or
        losses, a gain or loss on redemption of MIPS and debt; and for 2001,
        a loss from a change in accounting principle and loss from
        discontinued operations, all items net of tax.

  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 10Q for the period ended September 30, 2001, 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.

EARNINGS RELEASE CONFERENCE CALL WEBCAST

Torchmark will provide a live audio webcast of its fourth quarter 2001 earnings release conference call with financial analysts at 11:00 a.m. (eastern time) today, February 7, 2002. 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/ .

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, 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 insurance company in its home state of Alabama. American Income Life is nationally recognized for providing supplemental life insurance to labor union members.

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SOURCE: Torchmark Corporation

Contact: Joyce Lane, Vice President, Investor Relations of Torchmark
Corporation, +1-972-569-3627, or fax, +1-972-569-3696, or
jlane@torchmarkcorp.com

Website: http://www.torchmarkcorp.com/

Company News On-Call: http://www.prnewswire.com/comp/885425.html


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Key Contacts

Mike Majors
Vice President, Investor Relations
(972) 569-3627
tmkir@torchmarkcorp.com

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