●
|
The size of our life-licensed insurance sales force increased to 92,373 at December 31, 2012 from 91,506 at September 30, 2012 and 91,176 at December 31, 2011. While recruiting of new representatives declined 16% to 36,586 from the fourth quarter of 2011 due to the increased emphasis on the licensing of new recruits, our new life licenses increased by 3%, to 8,376, largely reflecting a 22% increase in the fourth quarter in the rate of new recruits obtaining a license compared to the year ago period. Non-renewals were lower than the fourth quarter a year ago, primarily due to Hurricane Sandy related mandated license renewal extensions in 2012 in New York and New Jersey and a high level of terminations last year following the convention recruiting surge. Sequentially, recruiting declined by 23% and new life licenses declined by 3% from the third quarter of 2012 reflecting seasonally-higher third quarter experience.
|
●
|
Term Life net premium revenue increased 16% to $139.9 million in the fourth quarter of 2012 compared with the fourth quarter a year ago as we continue to build the Term Life book of business. In the fourth quarter of 2012, term life insurance policies issued were 52,324, a 15% decline from the fourth quarter of 2011 largely due to productivity returning to a normalized level compared with the elevated productivity levels related to the post-convention recruiting surge in the prior year period. Sequentially, term life insurance policies issued were flat with the third quarter.
|
●
|
The 30% year-over-year growth in Investment and Savings Products sales to $1.24 billion in the fourth quarter of 2012 resulted from a 24%, or $116.0 million, increase in retail mutual funds sales as well as $154.9 million of fixed indexed annuity sales. Sales were driven by the successful implementation of new products in 2012 and growing investor confidence in the market in the fourth quarter. ISP sales increased 13% compared with the third quarter of 2012. Client asset values increased by 11% to $37.39 billion at December 31, 2012 relative to a year ago and were consistent with the end of the third quarter, primarily reflecting market performance in the U.S. and Canada.
|
Actual
|
Operating (1)
|
|||||||||||||||||||||||
Q4 2012 | Q4 2011(2) |
% Change
|
Q4 2012 | Q4 2011(2) |
% Change
|
|||||||||||||||||||
Revenues:
|
($ in thousands)
|
($ in thousands)
|
||||||||||||||||||||||
Term Life Insurance
|
$ | 164,490 | $ | 144,678 | 14 | % | $ | 164,490 | $ | 144,678 | 14 | % | ||||||||||||
Investment and Savings Products
|
109,700 | 93,785 | 17 | % | 109,700 | 93,785 | 17 | % | ||||||||||||||||
Corporate and Other Distributed Products
|
30,311 | 37,392 | -19 | % | 29,253 | 33,136 | -12 | % | ||||||||||||||||
Total revenues
|
$ | 304,501 | $ | 275,855 | 10 | % | $ | 303,443 | $ | 271,599 | 12 | % | ||||||||||||
Income (loss) before income taxes:
|
||||||||||||||||||||||||
Term Life Insurance
|
$ | 44,246 | $ | 37,045 | 19 | % | $ | 44,246 | $ | 37,045 | 19 | % | ||||||||||||
Investment and Savings Products
|
31,194 | 28,821 | 8 | % | 31,194 | 28,821 | 8 | % | ||||||||||||||||
Corporate and Other Distributed Products
|
(14,494 | ) | (9,185 | ) | -58 | % | (12,478 | ) | (10,026 | ) | -24 | % | ||||||||||||
Total income before income taxes
|
$ | 60,946 | $ | 56,681 | 8 | % | $ | 62,962 | $ | 55,840 | 13 | % | ||||||||||||
(1) See the Non-GAAP Financial Measures section and the segment Operating Results Reconcilations at the end of this release for additional information.
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(2) Reflects revised accounting standards related to costs associated with acquiring or renewing insurance contracts.
|
December 31,
|
December 31,
|
|||||||
2012 (1)
|
2011 (2)
|
|||||||
(In thousands)
|
||||||||
Assets
|
||||||||
Investments:
|
||||||||
Fixed maturity securities available for sale, at fair value
|
$ | 1,887,014 | $ | 1,959,156 | ||||
Equity securities available for sale, at fair value
|
37,147 | 26,712 | ||||||
Trading securities, at fair value
|
7,762 | 9,640 | ||||||
Policy loans and other invested assets
|
24,613 | 25,996 | ||||||
Total investments
|
1,956,536 | 2,021,504 | ||||||
Cash and cash equivalents
|
112,216 | 136,078 | ||||||
Accrued investment income
|
19,540 | 21,579 | ||||||
Due from reinsurers
|
4,005,194 | 3,855,318 | ||||||
Deferred policy acquisition costs
|
1,066,422 | 904,485 | ||||||
Premiums and other receivables
|
165,188 | 163,845 | ||||||
Intangible assets
|
69,816 | 71,928 | ||||||
Other assets
|
302,126 | 268,485 | ||||||
Separate account assets
|
2,618,115 | 2,408,598 | ||||||
Total assets
|
$ | 10,315,153 | $ | 9,851,820 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities:
|
||||||||
Future policy benefits
|
$ | 4,850,488 | $ | 4,614,860 | ||||
Unearned premiums
|
6,056 | 7,022 | ||||||
Policy claims and other benefits payable
|
254,533 | 241,754 | ||||||
Other policyholders' funds
|
345,721 | 340,766 | ||||||
Notes payable
|
374,433 | 300,000 | ||||||
Income taxes
|
91,887 | 81,316 | ||||||
Other liabilities
|
358,577 | 381,496 | ||||||
Payable under securities lending
|
139,927 | 149,358 | ||||||
Separate account liabilities
|
2,618,115 | 2,408,598 | ||||||
Total liabilities
|
9,039,737 | 8,525,170 | ||||||
Stockholders' equity:
|
||||||||
Common stock
|
564 | 649 | ||||||
Paid-in capital
|
602,269 | 835,232 | ||||||
Retained earnings
|
503,173 | 344,104 | ||||||
Accumulated other comprehensive income, net of income tax
|
169,410 | 146,665 | ||||||
Total stockholders' equity
|
1,275,416 | 1,326,650 | ||||||
Total liabilities and stockholders' equity
|
$ | 10,315,153 | $ | 9,851,820 | ||||
(1) Unaudited
|
||||||||
(2) Reflects revised accounting standards related to costs associated with acquiring or renewing insurance contracts.
|
Three months ended December 31,
|
||||||||
2012 (1)
|
2011 (1) (2)
|
|||||||
(In thousands, except per-share amounts)
|
||||||||
Revenues:
|
||||||||
Direct premiums
|
$ | 569,591 | $ | 555,778 | ||||
Ceded premiums
|
(414,783 | ) | (419,630 | ) | ||||
Net premiums | 154,808 | 136,148 | ||||||
Commissions and fees
|
112,772 | 97,282 | ||||||
Net investment income
|
24,221 | 25,643 | ||||||
Realized investment gains (losses), including OTTI
|
1,058 | 4,256 | ||||||
Other, net
|
11,642 | 12,526 | ||||||
Total revenues | 304,501 | 275,855 | ||||||
Benefits and expenses:
|
||||||||
Benefits and claims
|
71,151 | 63,688 | ||||||
Amortization of deferred policy acquisition costs
|
34,628 | 30,185 | ||||||
Sales commissions
|
54,007 | 43,876 | ||||||
Insurance expenses
|
25,764 | 24,273 | ||||||
Insurance commissions
|
5,916 | 9,548 | ||||||
Interest expense
|
8,857 | 6,973 | ||||||
Other operating expenses
|
43,232 | 40,631 | ||||||
Total benefits and expenses | 243,555 | 219,174 | ||||||
Income before income taxes | 60,946 | 56,681 | ||||||
Income taxes
|
20,675 | 19,479 | ||||||
Net income | $ | 40,271 | $ | 37,202 | ||||
Earnings per share:
|
||||||||
Basic | $ | 0.68 | $ | 0.52 | ||||
Diluted | $ | 0.67 | $ | 0.51 | ||||
Shares used in computing earnings per share:
|
||||||||
Basic | 57,416 | 69,366 | ||||||
Diluted | 58,935 | 70,169 | ||||||
(1) Unaudited
|
||||||||
(2) Reflects revised accounting standards related to costs associated with acquiring or renewing insurance contracts.
|
Year ended ended December 31,
|
||||||||
2012 (1)
|
2011 (2)
|
|||||||
(In thousands, except per-share amounts)
|
||||||||
Revenues:
|
||||||||
Direct premiums
|
$ | 2,267,975 | $ | 2,229,467 | ||||
Ceded premiums
|
(1,663,753 | ) | (1,703,075 | ) | ||||
Net premiums | 604,222 | 526,392 | ||||||
Commissions and fees
|
427,775 | 412,979 | ||||||
Net investment income
|
100,804 | 108,601 | ||||||
Realized investment gains (losses), including OTTI
|
11,382 | 6,440 | ||||||
Other, net
|
46,532 | 48,681 | ||||||
Total revenues | 1,190,715 | 1,103,093 | ||||||
Benefits and expenses:
|
||||||||
Benefits and claims
|
278,747 | 242,696 | ||||||
Amortization of deferred policy acquisition costs
|
118,598 | 104,034 | ||||||
Sales commissions
|
204,569 | 191,722 | ||||||
Insurance expenses
|
96,541 | 89,192 | ||||||
Insurance commissions
|
27,555 | 38,618 | ||||||
Interest expense
|
33,101 | 27,968 | ||||||
Other operating expenses
|
164,716 | 164,954 | ||||||
Total benefits and expenses | 923,827 | 859,184 | ||||||
Income before income taxes | 266,888 | 243,909 | ||||||
Income taxes
|
93,082 | 86,718 | ||||||
Net income | $ | 173,806 | $ | 157,191 | ||||
Earnings per share:
|
||||||||
Basic | $ | 2.77 | $ | 2.11 | ||||
Diluted | $ | 2.71 | $ | 2.08 | ||||
Shares used in computing earnings per share:
|
||||||||
Basic | 61,059 | 72,283 | ||||||
Diluted | 62,401 | 73,107 | ||||||
(1) Unaudited
|
||||||||
(2) Reflects revised accounting standards related to costs associated with acquiring or renewing insurance contracts.
|
Three months ended December 31,
|
||||||||||||
2012
|
2011 (1)
|
% Change
|
||||||||||
Operating revenues
|
$ | 303,443 | $ | 271,599 | 12 | % | ||||||
Realized investment gains (losses), including OTTI | 1,058 | 4,256 | ||||||||||
Total revenues
|
$ | 304,501 | $ | 275,855 | 10 | % | ||||||
Operating income before income taxes
|
$ | 62,962 | $ | 55,840 | 13 | % | ||||||
Realized investment gains (losses), including OTTI
|
1,058 | 4,256 | ||||||||||
Other operating expense - equity awards
|
(3,074 | ) | (3,415 | ) | ||||||||
Income before income taxes
|
$ | 60,946 | $ | 56,681 | 8 | % | ||||||
Net operating income
|
$ | 41,603 | $ | 36,652 | 14 | % | ||||||
Realized investment gains (losses), including OTTI
|
1,058 | 4,256 | ||||||||||
Other operating expense - equity awards
|
(3,074 | ) | (3,415 | ) | ||||||||
Tax impact of reconciling items
|
684 | (291 | ) | |||||||||
Net income
|
$ | 40,271 | $ | 37,202 | 8 | % | ||||||
Diluted operating earnings per share (2)
|
$ | 0.69 | $ | 0.51 | 36 | % | ||||||
Net after-tax impact of operating adjustments
|
(0.02 | ) | - | |||||||||
Diluted earnings per share (2)
|
$ | 0.67 | $ | 0.51 | 29 | % | ||||||
(1) Reflects revised accounting standards related to costs associated with acquiring or renewing insurance contracts.
|
||||||||||||
(2) Percentage change in earnings per share is calculated prior to rounding per share amounts.
|
Three months ended December 31,
|
||||||||
2012
|
2011 (1)
|
|||||||
Operating revenues
|
$ | 29,253 | $ | 33,136 | ||||
Realized investment gains (losses), including OTTI
|
1,058 | 4,256 | ||||||
Total revenues
|
$ | 30,311 | $ | 37,392 | ||||
Operating loss before income taxes
|
$ | (12,478 | ) | $ | (10,026 | ) | ||
Realized investment gains (losses), including OTTI
|
1,058 | 4,256 | ||||||
Other operating expense - equity awards
|
(3,074 | ) | (3,415 | ) | ||||
Loss before income taxes
|
$ | (14,494 | ) | $ | (9,185 | ) | ||
December 31, 2012 | ||||
Adjusted stockholders' equity
|
$ |
1,161,493
|
||
Unrealized net investment gains recorded in stockholders' equity, net of income tax
|
113,923 | |||
Stockholders' equity
|
$ |
1,275,416
|
||