The Trustmark Companies
- More than 100 years in business
- $2.1 billion in assets
- Rated A- (Excellent) by A.M. Best
- 4,150 full and regular part-time associates
- 2+ million covered lives or plan participants
- 25+ offices nationwide
Overview of 2016 Consolidated Results*
Strategic Technology Investments
Trustmark continued to invest in large, multi-year technology projects in two of its businesses in 2016, Trustmark Voluntary Benefit Solutions and HealthFitness. While the expense of those projects negatively impacted earnings in 2016, both projects are expected to begin generating long-term value for Trustmark and for our customers starting in late 2017 or early 2018.
The technology investment in Voluntary Benefit Solutions will simplify and enhance processes across all areas of the organization, from Agency Support to New Business & Underwriting to Customer Promise. The resulting technology will enable VBS to maintain and even strengthen its excellent customer service reputation as rapid growth continues. In addition, it will support that growth by increasing operational efficiencies and facilitating faster product development and innovation. The first phase of the project is currently expected to go live in the second quarter of 2017 and to begin creating value for our customers by the end of 2017.
Late in 2015, HealthFitness entered a strategic technology alliance with Welltok, Inc. Together, this collaboration is building an industry-leading population health management solution that combines HealthFitness’ science-based behavior change model and people-based expertise in on-site program strategy and delivery with Welltok’s intuitive, engaging health optimization platform, CaféWell. That project is progressing well, with launch targeted for the fourth quarter of 2017.
2016 Consolidated Results*
The company generated $793.2 million in consolidated revenue, a decrease of $21.8 million from $815.0 million reported in 2015, largely due to lower revenue in our Starmark® business, which provides small-group self-funded health plan administration services and stop-loss coverage through Trustmark Life Insurance Company, and in HealthFitness, which offers population health and corporate fitness center management services.
Revenue increased by $20.2 million, to a record $314.9 million, in Voluntary Benefit Solutions. This was due to record sales of $81.5 million, an increase of $6.5 million from 2015. CoreSource revenue, at $131.7 million, up $2.2 million from 2015, also represents a new benchmark. The chief drivers of CoreSource revenue included strong growth among existing clients and income earned as a percentage of claim savings passed on to clients.
HealthFitness revenue dropped by $11.5 million, to $113.9 million, due to slow health management sales as potential clients postpone purchase decisions until the new CaféWell platform is in place. Fitness center management sales continued to strengthen after a solid 2015. HealthFitness has successfully developed its higher education market, winning contracts to design and operate fitness centers at a number of colleges and universities. We expect strong growth in this and similar markets in 2017. Revenue also fell in Starmark – by $34.9 million, from $256.2 million to $221.3 million – as cyclical pricing pressures lowered persistency and led to lower sales, year over year.
Trustmark reported pretax earnings of $21.4 million in 2016. This was down $19.7 million from $41.1 million in 2015, due primarily to expenses associated with investment in the new technology platform being developed for HealthFitness through a strategic partnership with Welltok, Inc. and the accounting impact of record sales in Voluntary Benefit Solutions, where insurance company statutory accounting rules require that Trustmark deduct all sales acquisition costs in the year the policy is written.
To provide capital for Trustmark’s long-term enterprise technology projects and other investments, Trustmark Life Insurance Company paid a dividend in 2016 of $15.5 million to Trustmark Insurance Group, Inc. This transaction received approval from the Director of Insurance of the State of Illinois.
Trustmark’s capital and surplus, a key measure of financial strength, increased by $14.7 million in 2016, from $672.3 million to $687.0 million, due to solid overall operating results and investment returns that were positive across all asset classes, led by U.S. equities. The company maintains a conservative debt-to-capital ratio of 11.5 percent, and, as of year-end 2016, a NAIC Risk-based Capital level of over 1,150 percent, nearly six times the regulatory minimum.
On March 1, 2017, independent rating agency A.M. Best affirmed Trustmark’s A- (Excellent) financial strength rating and stable outlook, noting Trustmark’s “more-than-adequate risk-adjusted capitalization, good operating profitability and diverse business profile.”
*Represents the consolidated financial results of Trustmark Mutual Holding Company for the 2016 calendar year.