Torchmark Earnings Call Insights: Direct Response Sales and Margin Levels

Torchmark Corporation (NYSE:TMK) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Direct Response Sales

Jimmy Bhullar – JPMorgan: I had a question first on the Direct Response business. Sales have actually slowed for each of the past three quarters and I think you mentioned that maybe response rates are lower just given the economy but, given what the trends have been recently. How comfortable are you that you could actually do your mid-single digit sales growth target because, the economy is certainly not changing much or its unnecessary economy changes? Then secondly, just on the Liberty National business, the margins on the life side were very strong this quarter and you had several initiatives going on to improve the margins there, but what’s your expectation, do you expect a further improvement from here?

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Larry M. Hutchison – Co-CEO: I’ll address the Direct Response sales first Jimmy. We have confidence that the Direct Response rates will come up in the second quarter of this year. We currently have initiatives regarding our adult products. We also are testing different initiatives with packaging. We think, each of those will have a positive effect on our response rates as we go forward.

Gary L. Coleman – Co-CEO: Jimmy on Liberty National, for the quarter we had an underwriting margin of about 29% versus 25% last year.

Jimmy Bhullar – JPMorgan: True.