0001021408-01-508579.txt : 20011029
0001021408-01-508579.hdr.sgml : 20011029
ACCESSION NUMBER: 0001021408-01-508579
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20011023
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011023
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TORCHMARK CORP
CENTRAL INDEX KEY: 0000320335
STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311]
IRS NUMBER: 630780404
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-08052
FILM NUMBER: 1764493
BUSINESS ADDRESS:
STREET 1: 2001 3RD AVE S
CITY: BIRMINGHAM
STATE: AL
ZIP: 35233
BUSINESS PHONE: 2053254200
FORMER COMPANY:
FORMER CONFORMED NAME: LIBERTY NATIONAL INSURANCE HOLDING CO
DATE OF NAME CHANGE: 19820701
FORMER COMPANY:
FORMER CONFORMED NAME: TORCHMARK CORP SAVINGS & INVESTMENT PLAN
DATE OF NAME CHANGE: 19820825
8-K
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d8k.txt
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 23, 2001
October 23, 2001
TORCHMARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9052 63-0780404
(State or other (Commission File No.) (I.R.S. Employer ID No.)
jurisdiction
of incorporation)
2001 Third Avenue South, Birmingham, Alabama 35233
(Address of principal executive offices)
Registrant's telephone number, including area code: (205) 325-4200
None
(Former name or former address, if changed since last report)
Index of Exhibits page 2.
Total number of pages in this report is 9.
Item 5. Other Events.
------------------------
Torchmark Corporation issued a press release dated October 23, 2001, which is
incorporated herein by reference and attached hereto as an exhibit.
Item 7. Financial Statement and Exhibits.
--------------------------------------------
(a) Financial Statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
(99) Torchmark Corporation Press Release
Dated October 23, 2001
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TORCHMARK CORPORATION
Date: October 23, 2001 /s/ Michael J. Klyce
-----------------------------
Michael J. Klyce,
Vice President & Treasurer
EX-99
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dex99.txt
PRESS RELEASE
EXHIBIT 99
--------------------------------------------------------------------------------
News Release Torchmark [LOGO]
Corporation
--------------------------------------------------------------------------------
Torchmark Corporation . 2001 Third Avenue South . Birmingham, Alabama 35233
Contact: Joyce Lane 972-569-3627 NYSE Symbol: TMK
TORCHMARK REPORTS 10% INCREASE IN THIRD
QUARTER 2001 EARNINGS PER SHARE FROM OPERATIONS
BIRMINGHAM, Alabama, October 23, 2001--Torchmark Corporation (NYSE: TMK)
reported today that net operating income for the third quarter of 2001 was $.79
per share ($99 million), compared with $.72 per share ($92 million) for the
third quarter of 2000, a 10% per share increase. For the first nine months of
2001, net operating income was $2.32 per share ($293 million) up 10% from $2.11
per share ($272 million) for the same period of 2000.
OPERATING HIGHLIGHTS - comparing third quarter 2001 with the third quarter of
2000:
. Total premium revenues increased 8%, 11% for health insurance and 6% for
life insurance.
. Direct Response premium revenue grew 11% and annualized life premium in
force grew 6%. Direct Response sales continued on plan for the year.
. American Income's sales grew 20% to $20 million, greater than expected.
. Medicare supplement health sales declined due to a delayed government
announcement of Medicare HMO terminations, and due to competitive premium
rate pressure.
. Financing costs declined $6 million (34%) due to lower short-term interest
rates and lower average indebtedness during the period, including the
partial calls in the second and third quarters of this year of almost half
of the Company's 9.18% Monthly Income Preferred Securities.
The following chart displays the key per share components of Torchmark's
net operating income:
Per Share Net Operating Income
------------------------------
Quarter Ended Nine Months Ended
September 30, % September 30, %
2001 2000 Change 2001 2000 Change
---- ---- ------ ---- ---- ------
Insurance Underwriting Income $.73 $ .70 4 $ 2.20 $ 2.05 7
Excess Investment Income .52 .44 18 1.48 1.31 13
Other (.05) (.06) (.16) (.18)
Income Tax (.41) (.37) 11 (1.21) (1.08) 12
---- ------ ------ ------
Net Operating Income $.79 $ .72 10 $ 2.32 $ 2.11 10
INSURANCE OPERATIONS - comparing the third quarter of 2001 with the third
quarter of 2000:
Total premium revenue for the quarter increased 8% to $554 million. Life
and annuity premium revenue increased 6% to $302 million, and health premium
revenue increased 11% to $252 million as detailed in the following chart:
Premium Revenue
(dollars in millions)
-----------------------------------------------------------------------------------------
Life and Annuity Health Total
---------------------------- ------------------------- ---------------------------
Third Quarter Third Quarter Third Quarter
September 30, % September 30, % September 30, %
2001 2000 Chg. 2001 2000 Chg. 2001 2000 Chg.
---- ---- ---- ---- ---- ---- ---- ---- ----
Direct Response $ 72.8 $ 66.3 10 $ 4.6 $ 3.8 24 $ 77.4 $ 70.1 11
LNL Exclusive Agency 73.9 73.9 0 38.7 38.1 2 112.6 112.0 1
American Income Agency 61.9 58.2 6 12.9 12.3 4 74.7 70.5 6
United American Agencies
Branch Office 4.8 4.9 (1) 81.6 64.6 26 86.5 69.5 24
Independent Agency 12.0 10.8 11 114.4 108.0 6 126.4 118.8 6
Other Life 61.9 58.2 6 -- -- -- 61.9 58.2 6
Annuity 14.5 13.7 6 -- -- -- 14.5 13.7 6
------- ------- ------- ------- ------- -------
Total $ 301.8 $ 286.0 6 $ 252.2 $ 226.7 11 $ 554.0 $ 512.7 8
Insurance net underwriting income increased 3% to $92 million. The life
underwriting margin (before administrative expenses) was 25% of premium. Health
underwriting margin was 17% of premium, a 1% decline from the prior year period.
Life and health underwriting margins for the nine months ended September 30,
2001, were 25% and 18% respectively, the same as the prior year nine-month
period. Insurance underwriting results are summarized in the following chart:
Insurance Net Underwriting Income
(dollars in millions)
----------------------------------------------------------------------------
Quarter Ended % of Quarter Ended % of %
September 30, 2001 Premium September 30, 2000 Premium Change
------------------ ------- ------------------ ------- ------
Underwriting Income before
Administrative Expenses
Life $ 71.0 25 $ 68.5 25 4
Health 43.2 17 40.2 18 7
Annuity 5.6 7.5 (26)
------- -------
119.7 116.3
Other Income 1.1 1.2
Administrative Expenses (28.7) 5 (27.6) 5 4
------- -------
Insurance Net Underwriting Income $ 92.2 $ 89.8 3
Life insurance sales of $70 million declined 3%. American Income,
Torchmark's second largest writer of life insurance, wrote $18 million of
annualized life premium during the quarter, a 19% increase. The Direct Response
unit's life sales declined 11% to $25 million; however, sales for the nine
months declined only 3%. As previously reported, the decline was anticipated as
products with lower profit margins are withdrawn from the market, a process
begun at the first of this year.
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Annuity underwriting income was $6 million, a $2 million decline from the
year-ago period, due primarily to surrender activity that began in the second
quarter of this year. The majority of surrender requests were for Section 1035
transfers initiated by Waddell & Reed agents. Premium income increased compared
to the year-ago period, but was the result of surrender fees collected.
Total health sales for the quarter declined 25% to $43 million, of which
$29 million was from Medicare supplements, down 35%. The decline was partly
because the government delayed announcing Medicare HMO membership terminations
for year-end 2001. Prior to this year, the annual announcement had been at mid-
year, driving up traditional Medicare supplement sales in the third quarter as
those who were involuntarily terminated reentered traditional Medicare and
sought a Medicare supplement policy. This year, the announcement of the
involuntary termination of about 536 thousand members was made mid-September,
precluding any third quarter sales from this source, while in the third quarter
of 2000 Torchmark sales to Medicare HMO disenrollees were about $13 million. The
announcement delay will compress sales to this year's disenrollees into the
fourth quarter. Medicare supplement sales from this source are expected during
the fourth quarter of this year, but the volume may not equal sales to
disenrollees for the third and fourth quarters of 2000, as the total number of
HMO disenrollees this year is about half the number terminated last year. In
addition, Torchmark's success in obtaining and implementing Medicare supplement
rate increases, while some competitors continue to sell at lower rates, dampened
Torchmark sales in this quarter.
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
September 30, % September 30, % September 30, %
2001 2000 Chg. 2001 2000 Chg. 2001 2000 Chg.
---- ---- ---- ---- ---- ---- ---- ---- ----
Direct Response $ 24.7 $ 27.7 (11) $ .7 $ .5 42 $ 25.4 $ 28.2 (10)
LNL Exclusive Agency 13.4 13.3 1 2.8 2.5 12 16.2 15.8 3
American Income Agency 17.5 14.7 19 2.7 2.2 22 20.2 16.8 20
United American Agencies
Branch Office 1.3 1.2 10 22.1 34.4 (36) 23.4 35.6 (34)
Independent Agency 5.7 6.7 (15) 15.1 18.1 (17) 20.7 24.8 (16)
Other 7.2 8.9 (18) -- -- --- 7.2 8.9 (18)
------ ------ ------ ------ ------- -------
Total Premium Issued $ 69.8 $ 72.3 (3) $ 43.3 $ 57.7 (25) $ 113.1 $ 130.0 (13)
IMPLICATIONS OF THE SEPTEMBER 11, 2001, DISASTER:
Information received to date regarding the effect on Torchmark of the
September 11 attacks on the World Trade Center and the Pentagon indicates that
none of the Torchmark insurance subsidiaries expect unusual numbers of life or
health insurance claims. Torchmark's insurance subsidiaries generally write high
volumes of relatively lower face-amount life insurance, and most sell
nationwide. This characteristic of Torchmark's life insurance business tends to
minimize the financial effect of localized, rare occurrence disasters.
Torchmark's Military Agency expects to receive life insurance claims from
policyholders that were at the Pentagon; however, those claims are not expected
to exceed $1 million. Health insurance policies written by Torchmark companies
are primarily Medicare supplements sold nationwide to retirees, and an unusual
number of claims are not
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expected from this event. Torchmark does not consider the events of September 11
to be subject to "acts of war" policy exclusions that may be in some policies
issued by Torchmark companies. The Company does not write property and casualty
or disability insurance, and has no real estate investments affected by the
attacks.
INVESTMENTS - comparing the third quarter of 2001 to the third quarter of 2000:
Excess investment income (investment income less interest credited on net
policy liabilities and less financing costs) was $65 million compared with $56
million, a 16% increase. Because of Torchmark's stock repurchase program, a
better comparison is on a per share basis. Excess investment income was $.52 per
share, up 18%. Investment income increased 4% to $124 million. Financing costs
were $12 million, down $6 million (34%) because of lower short-term interest
rates and the reduced amount of Monthly Income Preferred Securities (MIPS)
outstanding during the 2001 quarter.
CAPITAL TRANSACTIONS:
On August 31, 2001, Torchmark called 1.6 million shares of its 9.18%
Cumulative Monthly Income Preferred Securities, Series A "MIPS" (NYSE: TMKPRM)
at a call price of $25.00 per share, as previously announced. The Company called
2.0 million shares of the same issue earlier in the year. There are currently
4.4 million shares outstanding, all of which are currently callable at $25.00
per share. The Company has previously indicated that it is likely to call at
least part of the remaining outstanding shares during the next twelve months.
In light of current favorable interest rates, Torchmark anticipates that in
the fourth quarter of this year it will issue capital securities under the $300
million SEC Form S-3 Registration Statement the Company filed in July 1999. The
Company expects to issue approximately $150 million of trust-preferred
securities and $150 million of mid-term fixed debt securities. Proceeds from
these issues will be used to reduce current debt and for other general corporate
purposes.
SHARE REPURCHASE - third quarter of 2001:
In accordance with its ongoing share repurchase program, during the third
quarter of 2001, Torchmark repurchased 793 thousand shares of Torchmark
Corporation common stock for a total of $29 million ($37.03 average cost per
share).
During the first nine months of 2001, a total of 2.3 million shares at a
total cost of $84 million were repurchased at an average cost of $36.39 per
share. At September 30, 2001, there were 124.8 million Torchmark shares
outstanding (125.3 million on a diluted basis).
On August 10, 2001, the Company executed a voluntary stock option exercise
and restoration program in which 123 employees and directors exercised vested
stock options and received replacement options at the current market price. As a
result, management's ownership in the Company increased, and the Company will
receive a significant current tax benefit.
OTHER FINANCIAL INFORMATION
Net operating income as a return on equity for the nine months ended
September 30, 2001, was 16.1%*. Total assets at September 30, 2001, were $12.2
billion and shareholders' equity was $2.5 billion. Book value per share at
September 30, 2001, was $20.03*. The debt to capital ratio was
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21.1%* at September 30, 2001, as compared with 21.6%* a year ago (24.3%* and
27.7%* respectively, when the Monthly Income Preferred Securities are treated as
debt rather than equity).
* These amounts exclude the adjustment of assets to fair market value
required by accounting standard SFAS 115.
Net income was $.82 per share ($104 million) in the third quarter of 2001
compared with $.77 per share ($98 million) in the third quarter of 2000. For the
first nine months of 2001, net income was $2.16 per share ($273 million)
compared with $2.09 per share ($270 million) in the same 2000 period. Net
operating income for the nine months of 2001 and 2000 differ from net income by
net realized investment gains or losses and related DAC adjustment (net of
taxes). In addition, 2001 net operating income differs from net income by the
effect of a change in accounting principle (net of taxes), discontinued
operations and loss on redemption of debt (net of taxes).
DIVIDEND DECLARED
The Board of Directors has declared a quarterly dividend of $.09 per share
on all outstanding common stock of the Company held of record as of the close of
business of the Company's transfer agent on January 10, 2002. This dividend will
be paid on February 1, 2002.
Summary of Financial Results
(in thousands, except per share data)
-------------------------------------
Quarter Ended September 30,
2001 2000
---- ----
Total Revenue from Operations ** $ 678,123 $ 631,462
Net Operating Income *** $ 99,307 $ 91,826
Per diluted share .79 .72
Net Income $ 103,815 $ 97,736
Per diluted share .82 .77
Weighted Average Diluted Shares
Outstanding 126,023 127,524
** 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 (net of taxes).
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-Q for the period ended June 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.
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EARNINGS RELEASE CONFERENCE CALL WEBCAST
Torchmark will provide a live audio webcast of its third quarter earnings
release conference call with financial analysts at 11:00 a.m. Eastern today,
October 23, 2001. Access to the live webcast and replays will be available at
www.torchmarkcorp.com on the Investor Relations page, at the "Conference Call on
the Web" icon, or at www.PRNewswire.com.
Supplemental financial reports for the quarter will be available October 23
on the Investor Relations page of the Torchmark website at the "Financial
Reports" icon.
- - - - - - - - - - - - - - - - - - - - - - -
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.
For additional information contact: Joyce Lane
Vice President, Investor Relations
Phone: 972/569-3627
FAX: 972/569-3696
jlane@torchmarkcorp.com
Website: www.torchmarkcorp.com
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