Globe Life (GL) 18 Apr 192019 Q1 Earnings call transcript

Good day, and welcome to the Torchmark Corporation First Quarter 2019 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, Executive Vice President, Investor Relations. Please go ahead.

Thank you. everyone. morning, Good

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

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

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

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

channels. equity gains on fixed a operations, $XX.XX. due up year-ago. our revenue and margin premium million, higher insurance and underwriting on to exceeded and from life share X% XX.X% growth XX% to $XXX maturities, increased losses $XXX In in life value return margin underwriting to was premium distribution unrealized grew XX% book Excluding per was all million, Growth in margins

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

revenue X% $XX and underwriting grew health health to side, million, premium margin On X% increased $XXX to the million. also

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

administrative As expenses compared X.X% of a premium, a year-ago. were to percentage X.X%

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

American $XX year-ago Income, life X%. At X% was fourth the X% the Gary. X% but to $XXX were you, million, were margin quarter, agent average Net The up for from $XX up million. count to sales life from up Thank XX% X,XXX, premiums first quarter underwriting down life up the producing and was million, quarter.

agent million. the life of was producing at the to end National, X% first X,XXX. $XX quarter However, were count the Liberty up premiums At

underwriting Direct and to $XX year-ago life million. same agent life up Our were quarter. health a in million. $XX net by the ended operation $XXX and but Life, National Liberty margin to at at At X,XXX. count years, stabilize life agent million, X% primarily our Net to up profit dollars was the first The productivity. million, the from premiums life Globe count growth producing efforts producing quarter, approximately our adjusting XX% on agent $X was sales year-ago increased recent up the Response The million, at XX% as to count X,XXX, driven X% quarter average increases increased The $XX sales fourth while maximizing XX% sales And Net have from from up margins. margin to sales were underwriting $XX both for were In was the quarter. focused million. quarter. quarter life year-ago the marketing X% we X% up

X% underwriting count producing million, The Net $XX quarter to the year will X% flat quarter United my sales to the to million. are increased National, and Gary. agent follows: and Family X% be marketing premiums to growth; agent projections. health At up to X% General XXXX turn margin ago net As complete X% producing American XX% National, The up Approximate profits. full-year million. expected the increased X% growth; now growth; the million. to compared Income, we Net to United full-year sales were health X% down Agency, for end to $XX to some was be X% X% XX% call to year the quarter. net At health million the follows: discussion from fourth sales Family the X,XXX. health will both To at expected the we X% health for Approximate X% forward, $XX on life first American average of XX% $XXX XX% now growth; Heritage, ago the X,XXX, sales operations, Medicare from American to down go for increased but provide was grow quarter. are Supplement, Direct count health quarter, were as Response, expect $XX premiums Heritage, Liberty to to growth. to growth. as to X% I XXXX back Individual I X% Liberty X% sales

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

the million, share First, $XX was the excess impact liabilities define required increase per-share net excess program, investment the on income. net debt, repurchase Excess which investment a On less income and investment interest income, as our year-ago of X%. over quarter. investment policy income reflecting a we basis X% increased

income For of by which per-share about investment a expect result would we to X%. the increase X%, grow around in full-year, excess

Bonds our the year including rating peers. are percentage portfolio, higher which maturities Of Regarding an amortized investment-grade investment is relative a year bonds were rated as X.X% is and to portfolio were at ago. rated total fixed maturities, billion a below fixed Invested costs. million bonds average $XXX of Overall, to the investment billion to compared the BBB of and maturity $XX year investment billion, same A-, XX% portfolio. fixed $XXX fixed million assets compared grade with ago. below X.X% $XX.X were BBB+, is the of grade The of $XX.X maturities a ago.

such and we exposure little mortgages securities. exposure as However, commercial higher assets derivatives equities, no or risk have to to asset-backed and

quarter, the primarily changes net fixed interest than portfolio Finally, maturity in have in to million previous we due gains $XXX billion, market $X.X higher unrealized the of rates.

investment-grade of A+ years. we in in and municipal quarter, million X.XX%, in at financial primarily the an rating investment average average an of the fixed We yield to of As life XX and average an sectors. maturities, invested yield, invested $XXX first

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

As of X.XX%. portfolio approximately was the yield XX, March

yield the assumed the average X.XX% new our XXXX, full-year. For of midpoint money the at guidance is for

statement, like for environment would under rates we we going rate low sheets to higher impact lower-for-longer Torchmark the FAS but balance non-interest-sensitive continued primarily a products interest XX. our driving since not While see interest protection environment. sell GAAP interest is or accounted A rate statutory will income forward,

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

turn I'll Frank. to call the Now over

Thanks, Gary.

First, liquid capital I discussing our want of ended share parent year to with repurchases spend and The million. $XX the assets a few minutes position.

parent the million to on dividends it, shareholders. range to year. as parent parent flow will from XXXX these to on the the results assets, primarily our cash paid the we addition company's from cash $XXX expect received subsidiaries assets liquid the to around available $XXX the generate million beginning We paid have by excess of currently flow including cash the excess flow, The anticipate the to year, during $XXX the million we Torchmark to define In in Thus, will at of million. hand its be $XXX debt in and the XXXX. the excess dividends parent interest less

for discussed million paper XXXX reduce XXXX stock cash. and to to into of cash on the with those the flow million of paper utilize accelerated As of We commercial $XX the commercial we repurchases parent call, plan Torchmark prior excess $XX December XXXX repurchases.

to the such, $XX As the at we expect to including to to we Torchmark to spent the for be parent at we other X.X uses, approximately million million $XX buy of $XXX assets million normally million retain first $XX.XX. shares price have an $XXX of liquid average parent. In quarter, available the million

XXX,XXX we Thus, to of So million more we spent at for year far have cash X million the April, company $XXX purchase an in of at of average than shares million price $XX $XX.XX. parent price today, acquire have shares $XX.XX. through an average full spent to

million far remainder the year the so the the of $XXX we cash Excluding flow on retaining approximately for parent; $XX excess $XXX and the $XXX of to the million this at will year. to have plan we spent million parent on available repurchases million

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

at insurance levels capital regarding Now subsidiaries. our

to our support capital goal ratings. to current is levels Our at necessary maintain

companies approximately insurance approximately target increased are RBC XXX%. XXXX, than ratio anticipated. needs higher capital slightly at point and our previous call, million of of action-level the was company amount December of insurance consolidated they to $XXX arise. of lower parent, attributable assets statutory should our discussed XXX% primarily high At required XXX%. This low ratio RBC this in end RBC was required in the at our $XXX the range. capital, $XX RBC on XXX%, million Torchmark consolidated held of million our ratio, possible excess we consolidated with The available of RBC than the the the subsidiary have target greater the a along the at earnings to As range XX, to provide over to slightly that ratio fund intends At capital

contributions, in marketable improved. to of substantially quality assets securities the our has XXXX the replaced with due In addition, tax fact purchased capital deferred that were with capital

with The our projecting year reflects $X.XX income to in operating per midpoint improved Larry. for obligations XXXX. largely back Finally, now underwriting share primarily for insurance the range the $X.XX to quarter turn midpoint quarter the increase XXXX, our in lower my attributable of $X.XX, that over than of I will anticipated will $X.XX our guidance life call December we this of $X.XX XX, to the operations. guidance to an comments. results Those on respect our due are are a ended to the earnings outlook first attributable to policy be prior

you, We'll comments. for Thank open are Frank. up call now questions. the Those our

first from Our Morgan. with Instructions] Jimmy comes Bhullar question J.P. [Operator you. Thank

morning. good Hi,

I few So a had questions.

how that more maybe of up of as the the rest the First, on by your that well? guidance, just had you XQ of much good year is a midpoint versus the results EPS fact view going in $X.XX, optimistic

is most increase better-than-expected the to think quarter. due I the of Jimmy, first

largely what going we is line be quarters, If you through seen to in think at year. with look second we've there what the last fourth quarters anticipate I

improvement of think those the we and – the really think may the first in a couple So I lower it is of majority the a results I be vast but had little some there better-than-expected slight lines, in quarter. claims

of been modest flat a expecting in that but have to Okay. you've more why such X% of pickup. quarters bit little have Response, conservative positive, But in you're a And some you you I then see expecting a actually now or you'd some think are thought positive. give just had two you're the their increase, outlook? modest increase. your on I maybe in color volumes, would circulation Direct pretty could being expected sales – a with And increases

think think up about Insert don't our X%, being When inquiries and X%, we're we mail X%, volumes look Media I electronic X% about will down inquiries in inquiries, we up Well, down be circulation our about itself our to at XXXX, about will be conservative be for be X%. outlook. will will

XXXX. think rates, constant the increase X% what good we full-year for flat response will I to be sales prediction is think Given the for a

American strong And Income your any the on on your the then to or seen ruling just Supreme business unions on Court lastly, it agents? from impact affecting ability recruit either retain market its and or labor just have effect you

an decision. have Court Supreme not it Income American a sales recruiting impact production, of result We seen as be the to or

Thank Okay. you.

you. Thank

question next Erik Research. comes Our with from Autonomous Bass

you. thank Hi,

the recent talk at up changes follow you on following side, about changes can you to in retention Income compensation? to agent the First, made agent rates any American

The has stayed unchanged. relatively first quarter agent retention

retention. We third-month, XX-month and have measured sixth-month,

retention that However, is historical.

that the look the go retention we at we in in as earnings The we particularly through see quarter, the our is will for good decrease retention, time our a reduction second a first just the and in better If quarter, think of have half we at particularly terminations be indicator call. will of so three-month you XXXX. terminations, retention,

on Thank rated and your gears to And I comment how on maybe portfolio, can allocations? exposures. much you. the the that talk was you And about investment is then specifically, sector could maybe more detail BBB- hoping, BBB you switching provide

sector allocations, sectors far spread pretty they're we all among the have. of as as well I the Well, think that

is are much how the total as BBB-. XX% of BBBs, far As BBB-, than out less

The is other or BBB+. XX-something percent BBB

Okay. Thank of of you. XX% of And portfolio, not the that's the the BBBs, right? overall

of No, not the portfolio. BBBs. XX% the

Got it.

you. Okay. Thank

you. Thank

John with from comes Our question next UBS. Nadel

I quarter. have at what's of congrats of just good performers? low-end quarters Last could there. your just there? declined. And two and characterize is on Heritage. outlook was good recruiting-driven? you that I Or Hey, One count morning, of guess a that Is agent questions wondering more the if couple happening from culling what's me. Family is

when Family Heritage, early holiday the saw of during John, slow activity recruitment until see the at we February. at we month particularly January. recover We was looked didn't Heritage season that activity recruiting Family and really

I an were we'll really third to November. to quarter second normal of there, see now, the cause recruiting the levels and of and back think focused agent we recruiting the we production think I of in the this fourth We're so that count year, part quarter in start saw on last drop off year. increasing in and

think, about and don't probability is But how expect had as posturing there's might impact clearly, very if it laid this just it think Medicare on, Medicare all. And impact for all out a know of some here. of you. where that for awful kind scenario healthcare of go change Medicare It's you political significant wondering some Thank I'm business. lot Supplement recently through, to I question, providers. the Sanders been the relates Bernie to then hypothetical how to second were a I the an

John, Larry. is this

wait too are hand, will really have it and and be a Medicare a tell. deductibles where have if really covered to That co-pays for On it's we opportunity by we be how Medicare have an opportunity. Medicare-type could think program early that I and be system could an insurance. We all to structured. one see

the private insurance, a if have is hand, other that certainly, effect. the eliminate proposal On they all will negative

our part It it's to occurs We now. have fairly small earnings. part small of fairly our – is remember that overall Medicare a of operation a

Medicare What Health comes the from of segment proportion business? the premiums Okay. Supplement

John, this Gary. is

XX%. about That’s

total $XXX About premium is health million. of sort of our –

That’s you Thank helpful. much. Okay. so

[Operator you. Sachs. Goldman Thank Our next Scott with comes question Instructions] from Alex

morning. good Hi,

there expenses, admin Just little a this in significantly to anything elevated Was guided on question that investment sort on of you quarter. was that one-timer anything look nature or sort systems to a the didn't It they note a in growth. of were sort accounting, like of there higher thing?

onetime-type a expenses that this item employee our the No, benefits there was within quarter. higher little a area bit made

be we're As I mentioned, the expense to that expenses up for X% year, were expecting up X%. X.X%. And will the

item carry but an won't unusual forward. that for So quarter, was more of the first it

sort agent on of could high level, sort it. provide you on you're of could the Got structure growth guide go-forward just would of and impact in of about you changes And seeing is sort of sales kind counts? be your comp talk then how there the of you've in recruiting that much helpful. made that the and and sort Anything

the more stay total compensation change, compensation, the is didn't compensation. business. commission increase to income, agent the We the the agents towards so American and that we restructured to front in new the of encourage end

new in will that and managers the permit – training that better time increase those agents to bonuses spend the they their agents. will retain is more other with The trying retention of

high-level, that's for recruiting the the Family Heritage, to Liberty objectives. National, compensation a agent of recruiting, have new address At we the based Sort intermediary change. is on also unchanged largely bonus that’s compensation At

positive agents. it. Alex that see I new think some results added But we'd mentioned Income, We've at Larry – American

definitive a conclusion, but early so down. make terminations far to too Our are results look promising. It's the

it that through could older during concentrated? sneak policies, specifically you've last that or those anything older as quarter, one favorable some more anywhere results? you there on of And mortality saw may witnessed the that Okay. is blocks else of if look be kind you age, just you and the one, the experienced Was

Liberty really but really no, Response it – was and for we blocks. the things, Direct Income, the low bit among It those we and just reasons And didn't medical as – was see. throughout a as It was American ages, also Board was really it far just across really of National. kinds

Okay. Thank you.

no There you. are this at additional time. Thank questioners

you us quarter. to Well, joining next comments, our thank this you Those right. for and we'll morning. again All talk are

presentation. This you, and today's gentlemen. Thank ladies concludes

disconnect. now may You