The Trustmark Companies
- More than 100 years in business
- $2.2 billion in assets
- Rated A- (Excellent) by A.M. Best
- 4,150 full and regular part-time associates
- 2+ million members or plan participants
- 25+ offices nationwide
Overview of 2017 Consolidated Results*
Strategic Technology Investments
Trustmark continues to invest in multiyear technology projects to support long-term growth in two of its strategically important businesses, Voluntary Benefit Solutions and HealthFitness. Both of these projects have experienced delays, which have increased expenses and pushed back the timeline for realizing significant efficiency and growth benefits. However, strong overall operating results in 2017 more than offset the negative impact, leading to a substantial increase in earnings in 2017.
The technology project in VBS will simplify and enhance processes across all areas of the organization, from Agency Support to New Business and Underwriting to Customer Promise. The project 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 fostering innovation. The majority of Phase 1 functionality went live in 2017 and the remainder is expected to be complete by the end of the second quarter of 2018. At that time, the project will begin creating value for customers and for Trustmark.
Late in 2015, HealthFitness entered a strategic technology alliance with Welltok, Inc. This collaboration is building an industry-leading population health management solution that combines HealthFitness’ science-based behavior change model and people-based expertise in onsite program strategy and delivery with Welltok’s intuitive, engaging health optimization platform, CaféWell. That project was targeted for completion by the end of 2017 but has been delayed until the third quarter of 2018. Both Trustmark and Welltok have added resources to the project and it is tracking well, with milestones being achieved on or ahead of the revised schedule.
2017 Consolidated Results*
The company generated $773.5 million in consolidated revenue, a decrease of $19.7 million reported in 2016, largely due to lower revenue in Starmark®, which provides small-group self-funded health plan administration services and stop-loss coverage through Trustmark Life Insurance Company.
Revenue increased by $23.2 million, to a record $338.1 million, in Voluntary Benefit Solutions. This was due to record sales of $83.8 million and strong persistency among existing clients. CoreSource revenue, at $137.8 million, up $6.1 million from 2016, 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 $7.9 million to $106.0 million, due to slow health management sales as potential clients postpone purchase decisions until the new CaféWell platform is in place. Fitness and community center sales increased substantially in 2017, as HealthFitness continued to expand beyond corporate fitness centers into providing programming, staffing and management services for university and municipality community and aquatic centers.
Revenue fell by $40 million in Starmark, from $221.3 million to $181.3 million, as expected, as cyclical pricing pressures lowered persistency and led to slow sales at the beginning of the year. However, sales picked up throughout 2017, and that momentum, along with improving loss ratios and income earned as a percentage of claim savings passed on to clients (as in CoreSource), helped drive year-over-year earnings growth.
Trustmark reported pretax earnings of $32.3 million in 2017, and increase of $10.9 million from $21.4 million reported in 2016, due primarily to strong earnings in VBS, CoreSource and Starmark, higher investment income and proactive expense management across the enterprise. This more than offset the negative impact of additional expenses tied to long-term technology investments 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 2017 of $16.6 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 $43.7 million, or more than 6 percent, in 2017, from $687.0 million to $730.7 million, due to excellent overall operating results and investment returns that were positive across all asset classes, led by greater than 20-percent returns on equities. The company maintains a conservative debt-to-capital ratio of 10.9 percent, and, as of year-end 2017, a NAIC Risk-based Capital level of approximately 1,200 percent, 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 2017 calendar year.