Life insurers began reporting third-quarter earnings this week and so far so good. Four major life, disability and retirement companies beat expectations set by Wall Street analysts.
Decent underlying results are expected of the life insurance group due to “better variable investment income expectations, continued expense control and steady capital management,” Ryan Krueger, analyst with Keefe Bruyette & Woods, wrote in a mid-October note to clients.
Torchmark, a holding company specializing in life and supplemental health insurance for the middle market, reported third quarter net income of $152 million compared with $145 million in the year-ago period.
Net operating income for the quarter was $1.15 per diluted common share, compared with $1.03 per diluted common share for the year-ago quarter.
Analysts were looking for the McKinney, Texas-based company to deliver net operating income of $1.12 per share.
Third-quarter revenue was $986 million, the company reported.
At American Income Life, a Torchmark subsidiary providing individual life to working families, average producing agent count for the third quarter was 7,004 agents. This was an increase of 6 percent from the third quarter of last year.
At another Torchmark subsidiary, Liberty National Life, the average producing agent count was 1,799 agents, an increase of 13 percent from the year-ago quarter.
Torchmark also reported that at its Family Heritage Life subsidiary, a provider of supplemental life and health insurance, the average producing agent count was 986 agents. This was an increase of 9 percent from the year-ago period.
Unum Group, the parent company of Colonial Life, reported third-quarter net income of $236 million compared with $204 million in the year-ago period.
The Chattanooga, Tenn.-based company said it had profit of $1.01 per share. Earnings, adjusted for investment gains, were 99 cents per share.
The results topped Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 95 cents per share.
Unum posted third-quarter revenue of $2.75 billion.
President and CEO Richard P. McKenney said in a news release that customer retention trends held steady this quarter. He added that the closing of the acquisition of Starmount Life, a Baton Rouge, La., company with a dental and vision business, was helping Unum cement its position in the benefits marketplace.
“Dental is a good fit because it is a volume product that customers value,” McKenney said. “It is sold often at the workplace and as a voluntary product it fits well in our existing product portfolio and distribution channel.”
Unum wants to more than double the revenue generated by Starmount Life over the next five years by targeting the $500 million range, company executives said in a conference call with analysts.
Aflac, a major provider of life and supplemental benefits, reported third-quarter earnings of $629 million, an increase of 11 percent from the year-ago period.
On a per-share basis, the Columbus, Ga.-based company said it had profit of $1.53. Earnings, adjusted for nonrecurring costs, came to $1.82 per share.
The results beat Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $1.74 per share.
Aflac posted third-quarter revenue of $5.72 billion in the period.
Aflac Chairman and CEO Dan Amos said in conference call with analysts that in addition to the favorable yen-dollar exchange rate, the company’s Japan unit had begun selling a new cancer insurance product to survivors through more than 20,000 postal outlets.
In the U.S., Aflac is continuing to expand into the voluntary benefits arena. Compensation changes implemented in late 2014 and 2015 designed to attract and motivate ambitious sales managers were beginning to benefit the company’s bottom line.
“We’re continuing to fine tune our compensation package for our top sales management to closely align pay with performance,” Amos told analysts.
The incentive program is weeding out poorly performing managers who would prefer to concentrate on product sales instead of management, he added.
Principal Financial Group reported third-quarter profit of $308.2 million compared to $300 million in the year-ago period.
Third-quarter operating earnings were $335.7 million, or $1.15 per share, the Des Moines, Iowa, company reported.
Results topped analysts’ expectations by 3 cents. The average estimate of six analysts surveyed by Zacks Investment Research called for operating earnings of $1.12 per share.
Principal Financial, which has large operations abroad and is a top retirement products and services provider to small group benefit plans and middle market companies in the U.S., posted third-quarter revenue of $2.81 billion.
The company’s performance was helped by its expanding line of products and services and to forging stronger relationships with customers and distributors, Dan Houston, chairman, president and CEO, said in a news release.
“Our growth reflects continued progress helping customers — individuals, small to medium-sized businesses and institutions — address real issues such as risk protection, income adequacy in retirement and yield in a low rate environment,” Houston said.
Voya Financial, CNO Financial, American Financial Group, MetLife, Prudential, AIG, Lincoln, American Equity Life and Genworth Financial report earnings this week.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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