still plans tosell its Medicare Part D business even after the operations emerged from underfederal sanctions in April, executives said during a conference call to discussfirst-quarter earnings.
Theinsurer received noticeon April 7 that subsidiaries UnitedAmerican Insurance Co. and First United Life Insurance Co. couldreturn to normal marketing and enrollment activities following roughly eightmonths of "intermediate sanctions" imposed by the Centers forMedicare and Medicaid Services. Yet while that will allow it to resume Part Dsales, it will not affect Torchmark's proposal for eventually offloading theoperation in its entirety.
Torchmarkin late 2015 signed a letter of intent to sell the Part D business to an undisclosedbuyer, a transaction that is on track to close in mid- to late 2016. Theplanned sale should release about $70 million from a segment that the companydetermined was toocostly and low-margin to keep.
Thecompany will not be able to take advantage of most of that money until the endof 2016 due to regulatory requirements, CFO Frank Svoboda said on the April 27call. Torchmark expects to benefit from about $10 million to $15 million ofcapital from the divested Part D business at some point during the year, withthe rest freed up in 2017.
"Wewill consider an extraordinary dividend of the excess capital to the parentcompany depending on our capital needs for 2017," Svoboda said.
Thoughthe lifting of the sanctions allows Torchmark to accept new Part D enrollees,the company expects any new membership to be minimal.