Globe Life (GL) 25 Oct 172017 Q3 Earnings call transcript

Good day. And welcome to the Torchmark Corporation Third Quarter 2017 Earnings Release Conference Call. Today's conference is being recorded.

For opening remarks and introductions, I would like to turn the conference over to Mike Majors, VP, Investor Relations. Please go ahead.

you. Thank everyone. morning, Good

today Officers; Coleman Financial Frank our Brian call our Officer; Larry Co-Chief Mitchell, Counsel. Executive Svoboda, General are the and Gary Hutchison, and Joining our Chief

your of XX-Q with questions are Some on for purposes our file refer guidance the Accordingly, general or any XXXX comments answers XX-K provided may forward-looking and statements our contain that please to only. SEC. to subsequent Forms

site the earnings for may also contain measures. release Some terms and our reconciliations I'll Web to discussion of GAAP comments our Coleman. and a Please non-GAAP these call of measures. see Gary to now over turn

share million you, Mike of increase value from GAAP as continuing per Net and for net was $X.XX quarter, $X.XX X% million On per operating basis, the XX.X% Thank from third of return operations or $XXX share, quarter a good a $XX.XX. ago. per equity share was on and per share, XXth In increase reported basis. the was XX% year share $XXX or everyone. December income income a per a was morning book a on

X% value Excluding favorable on ago. equity $XXX extent million to and book American to X% in at underwriting increased Growth maturities, up year Response. unrealized fixed was ago. exceeded life per $XXX margin growth Direct from the was a a from underwriting primarily results return share operations, and margin $XX.XX, Income X% premium and XX.X% due million, lesser and gains premium revenue year was losses an In increase insurance on life to

X% life grow expect we to year, around the to X%. income For underwriting

underwriting was growth $XX X% in to margin million. million, experience. to grew while premium revenue On the up premium health X% primarily claims exceeded margin underwriting favorable Growth health due to side, $XXX

with quarter, income year line underwriting health and ago expect million our the in for expectations. X%. were X% we to grow to X% year, the from up Administrative expenses around $XX For a

operations, continuing X.X% compared premiums administrative to expenses ago. were of a percentage from year a As X.X%

of premium. over for administrative full year, operations. expect the call now For his will we the Larry I be X.X% comments marketing on turn around the expenses to to

the sales to were health $XX was million, growth driven to to count. increased while American up third agent $XX up At Income, quarter. a The life to count life Net from while million. ended count quarter the net X% was agent from because by X% up $XX sales and to primarily at X% million, Net the quarter. up at was producing XX% at margin agent from quarter sales The XX% higher up underwriting Liberty agents up were At year-ago life for the have up premiums X,XXX. X% to X,XXX, sales third life The compared Gary. million. margin and $XXX in third The count $X Liberty $XX we the life from year-ago X% at down quarter as count XX%, quarter. producing concentration the primarily X,XXX, $XX underwriting you, was Thank premiums million, were year for XX% average second a other was X% agent The was million up producing year life were National, the a ago. agent ago quarter X,XXX. and second a X% average of end National producing increase up million,

million. to Direct results continue Global positive at encouraged by up to operation life premiums X% our National. $XXX were the at be In We Life, Liberty Response

sales margins X% been resulted grew to increased have Heritage, premiums $XX down margin and net X% increased X% $XX XX% million, sales The million. to in third to for American To quarter the taken I have provide agent health X,XXX. forward-looking increased quarter $XX million. in to premiums Family the million. actions end million underwriting Although, producing my underwriting a ago year-ago agent net at X% X% up General The from to of down the At health million. increased Net $XX was margin $XX the count sales dollars. life compared reduced quarter. average life count XX% increased were X% million, United second have $XX was will quarter. X,XXX, to now year were sales to we the some that total health Agency, of operations, complete At X% from discussion the and health $X information. The marketing producing down Health

year in American growth; year X,XXX count to year Gary. X% X% at year for for XXXX back producing the XXXX, at to supplement the XXXX, for year XXXX, X,XXX. to now Heritage, American sales as X,XXX; X,XXX at growth; at X,XXX; XX% for for X,XXX; Medicare Family full sales to XXXX, be to XXXX, are the Heritage, be XXXX, for for X,XXX at of X% National to XXXX, to for as Income are United Liberty National Liberty full XXXX, Liberty XXXX, X% decline. X,XXX for National, for the X% individual growth; full year ranges; year X% to be We X% at the XX% XXXX, At growth; XXXX, XX% full the to each XXXX, for full I'll to for X% for XX%; the flat; Response, for at decline; for XXXX, of flat; call Life following X, XXXX, to expected to X,XXX for agency XX%; XXX; with flat agent to XXXX, the Family Health year to for expect X% follows; full XXXX, to for to growth. X,XXX to full growth; American expected Approximate Income X,XXX; Direct in the full XXXX, follows. X% turn net net the

spend want I discussing to investment minutes Larry. our Thanks, a few operations.

net up investment Excess income investment basis, policy a X% share income, Part and income. million, a ago excess program, as over increase increase liabilities On investment and the quarter. which excess $XX about debt higher X%. was primarily on our higher talk impact we required to net the per was income year investment interest normal define just the First, D share impact investment the weekly the decline delays in than the reimbursements. repurchase receiving negative of from is due of reflecting resulting income, plus The

around XXXX, investment year full excess excess grow the to to XX%. approximately and For we per investment income expect income grow share X%

A a gains is down rated $XX.X million class The portfolio The percentage billion average ago. million grades. slightly is an fixed the net fixed of decline the With of a portfolio leverage XX% invested $XXX from investment a are underlying for grade low total equity, investment maturities are assets A year ago. is low investment costs. maturities, Overall, the billion bonds X.X% of investment upgrades low down at Regarding grade percentage investment with year $XX.X fixed amortized year including in maturities billion, investment due fixed ago. maturities Of bonds BBB approves on the grade portfolio the X.X% grade primarily $XX.X of minus the size are the XX%, minus, to X.X%, compared a below $XXX ago. is to under excluding year bonds from of to and times, to to the bonds plus rate

investment We in investment third in $XXX million quarter, at and sectors. primarily at XX X.XX% maturities, industrial grade of of an in we invested invested average life average average BBB fixed the of yield, rating plus Regarding yield an years.

the points entire yield XXXX. X.XX%, from the X.XX% yield basis down XX was third For third quarter of quarter portfolio, in the the

X.X% The midpoint X.X% XXXX. As of September X.XX%. of XXth, fourth in of a yield approximately average was an weighted our the average quarter rate assumes guidance portfolio yield and the in of

interest still have impact a access income money to higher see income. positive by moving driving rates forward. R&D rates hoping investment We on up operating are will

interest losses rate them. concerned to not would since driven, like our potential realize We’re we unrealized are that

We to intent maturity. more the investments to ability have to hold our importantly

XX, income see due balance primarily but fluctuations. to However, scenario not don't non-interest don't put will require a Since would up reserves or reasonable if for interest DAC environment FAS rate under low additional products sheet. we to continued rates our statement, protection write-off impact a the sensitive us we accounted sell rise, GAAP that rate

addition, do on our impact a not statutory negative balance foresee sheet. In we

benefit rates, excess Torchmark substantial interest income earn continue rate While interest higher investment we to environment. would lower from in would an extended

call to the over Frank. turn will I Now,

Gary. Thanks,

average I want third our the First, few spend price minutes we quarter, to an share buy discussing a million position. capital Torchmark to $XX.XX. of at repurchases shares In $XX $X million spent and

an Company's dividends average we to received the average excess dividends than the October, are in flow. the purchases Company’s XXX,XXX we excess on from Thus interest from at of the shares paid debt through cash Parent cash far used for $XX.XX. more These year as full flow, it, million an of price have paid define Torchmark’s Parent subsidiaries of shares being to made to its and Parent results The purchase we X.X million spent at from shareholders. less $XXX primarily the acquire So Parent by cash million the $XX $XX.XX. today, Company price have

$XXX the expect on plus assets thus to remainder We million excess million. Parent. to other for approximately have from share million XXXX our far, the can the in repurchases cash of Company's Parent be year we $XX the debt to excess around available expect $XXX cash With flow flow, available

possible. as share market will primary previous calls, of are If that on funds. expect those will favorable, cash efficiently use conditions as to repurchases use noted As continue we be a we our

need our million insurance to expect Parent XXXX, also of the to any absent company utilize We funds the retain these approximately at of assets operations. support end $XX of to

be range to the preliminary we available Parent the of to XXXX, the For million. will cash $XXX $XXX excess estimate that flow in

maintain the our subsidiaries. We current at our ratings. to retain plan RBC Now, currently our and regarding to capital level necessary insurance

the of light target is consolidated our ratio lower level for XXX% for past earnings of an has lower around statutory several companies, and in to This a risk the ratio years, For RBC on some XXXX peer a intend NAIC our basis. than consolidated liability We of and that of been sufficient but and company policy relatively XXX% rates. RBC was our our consistent XXXX.

Next, update direct comments response a our operations. to provide few an on

XX.X%, year the As growth quarters. earlier, during The Gary as the third percent was ago from first time margin, premium of XX.X% noted the several in in Response underwriting we saw the in quarter. quarter, a up margin, Direct

XX%. we underwriting XX%. anticipated the quarter of anticipate with XX% While year between XXXX to previous On the will of XXXX margins line margin this for was the full the still We noted near the year of the to our versus we be to margin or increase in midpoint that the be year fully for full lower XXXX, to calls, full the claims cause the for higher in expectations. range the range

the margin will remain in for XX% estimate XXXX. currently it's range While we percentage Direct still XX% to early, very in the Response

Now, our with XXXX respect for to guidance 'XX. and

to year income in We are this will operations the the increase attributable continuing of align outlook $X.XX X% Income guidance increase of December midpoint our XX, guidance the at the the net projecting in The underlying XXXX. range be from primarily The of for over $X.XX ended $X.XX reflects health continued to is income businesses. American positive XXXX. insurance and operating our share midpoint in various per an to

we that range I midpoint share, will now share our back XXXX. at will per my are the increase per per of turn Larry. be net operating the XXXX, to For the share a call comments. to estimate X% Those in from $X.XX income $X

Those Frank. are you, our Thank comments.

call up open will We the questions. for now

you. And J. go Thank to first [Operator Morgan. Bhullar, P. Jimmy Instructions] we'll

of had a questions. couple I

I First, sequential consecutive second Response Direct basis. think on they the for a improved margins, on quarter

then be in fourth on And the margins what's I the could guidance a have Florida, expect on seen on sales, on insight sales? or is improvement you as with see if through expect in quarter some hurricanes, this? an it's do give roughly 'XX, So wide margin driving then you we XXXX or a Do you XXXX, flat over question the should had you Texas And especially next pretty and go from your whether I hurricanes, consistent range. an impact year? from recognize to us impact

it's the year. probably seeing the the may here expenses margin, of just the the year, of They really that we you're claims what again the half Direct little the bit see think from the then policy and are what end. really end the the Response the bottom first anticipated had over of more to a of of of were That -- closer the little really with seasonality. And higher, With that’s couple I range running we're the second is top we we seasonality. over pattern have year, percentage obligation that be course quarters. were respect expecting a to seeing just more And to were some

we And following could move from just fluctuating to here look that, we flattening As XXXX. the as where But too XX% again beyond same be somewhat range. into of seasonality little see go forward in especially the probably see basis, a XX% out the on it next that year. we quarterly XXXX, to ’XX, really anywhere but in on for we pattern early with really

Jimmy, this three fourth We is exclusive your hurricanes sales to I’ll recruiting should of in quarter. slowed the address think during of the question. Overall, recruiting normal hurricane the September. return agencies levels Larry. during sales

be third the third to circulation and But and American direct in is between United be responses about response caused quarter, not X% to sales think Hurricane the Before we fourth direct to quarter by in applicants. from response, expected sales down than a during the were affected X% sales quarter. Hurricanes lag lower

few in it impact we later the So feel agencies. the weeks a than was

revenue And the business that’s margins, within your the response business, in block the on higher. up to overall of a prescription really written that the just is pressuring is is was that following assume rest block there margins, direct fair it

becomes next to the part historical on should a lower mix, years, over business? naturally but going So the levels be given versus enforce block the they’re depressed several proportion margin that as of then smaller margins improve overall that of

than business that today. that’s what’s on Jimmy, margins it's putting correct. The the exactly reported being we’re higher new

it see take business in a the blend that and see starts there’s we But would that run-off starts really lot factors -- that to do work that little So to XXXX-XXXX and we block of that bit margin can to that occur. different eventually we of increasing. that time just as into for

we’ll to Eric Research. next Autonomous go And Bass,

this is free little or strong due growth, any estimated $XXX below cash that reason decline XXXX bit there is expect to a $XXX year-over-year? for Is $XXX just Frank, million which million to mentioned effect the for the you of flow million, ‘XX. you that sales to

looking free drop from. Really, flow from year’s the to that we’re really from see stems cash next

books course cash the statutory remember tax we The free operations XXXX, XXXX that in with that think at we that able some driving and them, don’t I has will move low and you after sale here if the $XX again, the dividend and in flow we’re earnings in that’s little is not really with our in XXXX Part XXXX than And had have we over -- you D point should forward had XXXX. still which income the looking that so to the earnings ’XX we be D in we after million, that XXXX. coming have be Part off forward should If after seeing income. The the of fallen-off. in statutory a

that your $XXX is assuming then that you’re repurchases? so guidance, to share for proxy million And EPS $XXX

Yes.

come is of infer your are And a guess to margins, what continue that one And than we more expected? your which bit in in initially just But you mentioned that favorable expectations. experience. I you assuming that guidance? margins health you should on note, for XXXX business then And health on profitable question head

we year. see here Overall, where think through the claims continuing third we that of at -- both and favorable we quarter second the some National really the had and remainder really differences that Income in American Liberty on the primarily

claims what to see. end more really at -- the we what quarterly basis have especially had really of kind normally forward -- Income, a American very little just Looking low being didn’t at on of and anticipated, it's been bit than we profitable just this the

Liberty for just back levels, that probably coming XX% Looking forward then XXXX, and to Income, same little overall continuing National, those XX% maybe to range. close XX% $XX think million, for that remaining in still to over probably in a XX% bit American margins into be range I probably to

in to which very in 'XX, similar be 'XX. is is The This overall to going similar well as margin as is Gary. 'XX

overall the some still it's had about but going same margin. within we the changes profit in to to So mix be be

Krueger, next go Ryan KBW. We'll to [Operator Instructions]

a expectation for margin? about expectation I life had just just the overall Could can talk XXXX about I the growth for underwriting guess you talk expectations your XXXX? in your one couple you questions.

as far remember early. underwriting X% side to live is margins is on life we find What the more as get but really and to Ryan, we're XXXX. looking this XX% we’ll increase in February in somewhere underwriting

growth expectations excess your in the there? I income. can investment same And for XXXX for are you, guess What

There somewhere we're share midpoint, X.X% on the per X% increase basis. looking X% over and that at into little to a a translate X% between would about At growth.

with And we'll Janney. Glasspiegel go Bob to

My questions. margin was The on we that two one I had American quarter. last improvement this of my Income saw

it's by on or something I Anything those seen better is driven that You perhaps adjusted expense think side? the revenues sustainable. specific,

this is to very than in We past the. that’s we've there are historically some bit clearly better couple just favorable specific Bob, point what the little seeing of At here time, quarters, claims seem. really nothing with respect

look you far, remainder XX% looking If difficult and XX% to at time that at And in the probably XX.X% full to probably that really this right still midpoint the We're typically being overall through in really of say. still looking for being favorable remainder range it's somewhere to for so year, Gary at being We're XXXX said, year year-to-date we're and XX% at least that had of XX% XX%. range to point probably been results that on see the in it's really and for margin. that continuing early that around at being, that XX% range. we’ve the do close what to margin of the that XX year, we to XX.X% at and in the and

between is that little obligations. Does well. we quarter to as XX% but policy fourth obligations hold go XX% we in that policy Where And XX% look it we that know Bob, were is year-to-date Right to another that now, caused looks going we’ll terms and the to XX% back like to that’s up last be to quarter think are, the obligations. it big bit policy get we’ve XX% is margins continue That’s year we where thing more not been you a the will. was had a when if and the range the be for improvement in XX%. we’ve past, after experience. difference in February XX% but quarter’s of

mortality revenues? favorable or more just just it's So

think of program also but a mortality Well, its the think favorable is due part conservation that’s there But I more mortality. bigger set part I the to it is revenue. improved it of providing

maybe And that’s to or that through luck, just better of extrapolation just just underwriting or try trend?

Well, trend think early continue. if that it's to too going is there’s… I think to determine We

Maybe luck you mean, underwriting, the out. it parsed did maybe not haven’t haven’t better you’re difference and -- sure there? defined fine picked you I the

sure what’s make to better look a really do we take that driving to continuing that. We’re understand

Sachs. Scott, to And we’ll go Alex Goldman

ratio, the one for Thanks expected tax reform, guide for have have flow tax impact I just and be the taking given potential guess affected would I on denominators, item. question. of any implications the cash say would more you on specifically What and RBC your would it XXXX?

additional from XX% to is have percentage to that might exactly RBC comfortable there really would are this our up required, reform would of we going capital we end in the some react XX%, about rating either necessary. RBC point estimated really XX fund excess see point at agencies and what with having at reduction be We’ve need would in If least difficult in that. RBC that. you’re could should that. time, this additional go basis But maybe anticipate And don’t a in that or that. to on clearly, any we some regulators to an that fund debt determine in point need percentage to reduction targeted the through And this forward be the that tax tax, right probably our or it appropriate will that how issuance itself flows cash tuned we at an would that are getting were benefits of cash whatever if shortfall. we we down it's we flow not to that’s around But that some time, would factors as to the from of in Alex, points. rates impact reduce those excess are use that can RBC tax there think time, at be

so well. You the as reform that current have tax to that’ll generate well, to that also is be replenishing remember going lower also taxes be as overtime

And for this questions there no things to or over Major. turn remarks. closing any at I’ll additional back be appears time, to you additional Mr.

you quarter. joining you to Okay, for this morning we’ll thank next and talk again

today's you conclude conference does us. for all that thank joining call. We And