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Business Segments (Tables)
 9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Reconciliation of Segment Operating Information to Consolidated Statement of Operations
The following tables set forth a reconciliation of Torchmark’s revenues and operations by segment to its pretax income and each significant line item in its Condensed Consolidated Statements of Operations.
 
Reconciliation of Segment Operating Information to the Condensed Consolidated Statement of Operations
 
Three Months Ended September 30, 2016
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
546,415

 
$
236,987

 
$
9

 
 
 
 
 
 
 
 
$
783,411

Net investment income
 
 
 
 
 
 
$
202,720

 
 
 
 
 
 
202,720

Other income
 
 
 
 
 
 
 
 
$
199

 
$
(39
)
 
(2)
160

    Total revenue
546,415

 
236,987

 
9

 
202,720

 
199

 
(39
)
 
 
986,291

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
369,546

 
153,351

 
9,255

 
 
 
 
 
 
 
 
532,152

Required interest on reserves
(145,295
)
 
(18,476
)
 
(12,761
)
 
176,532

 
 
 
 
 
 
—

Required interest on DAC
44,950

 
5,789

 
192

 
(50,931
)
 
 
 
 
 
 
—

Amortization of acquisition costs
93,496

 
22,643

 
682

 
 
 
 
 
 
 
 
116,821

Commissions, premium taxes, and non-deferred acquisition costs
40,577

 
20,604

 
11

 
 
 
 
 
(39
)
 
(2)
61,153

Insurance administrative expense (1)
 
 
 
 
 
 
 
 
49,248

 
257

 

49,505

Parent expense
 
 
 
 
 
 
 
 
1,955

 
 
 
 
1,955

Stock compensation expense
 
 
 
 
 
 
 
 
6,345

 
 
 
 
6,345

Interest expense
 
 
 
 
 
 
20,381

 
 
 
 
 
 
20,381

Total expenses
403,274

 
183,911

 
(2,621
)
 
145,982

 
57,548

 
218

 
 
788,312

Subtotal
143,141

 
53,076

 
2,630

 
56,738

 
(57,349
)
 
(257
)
 
 
197,979

Non-operating items
 
 
 
 
 
 
 
 
 
 
257

 

257

Measure of segment profitability (pretax)
$
143,141

 
$
53,076

 
$
2,630

 
$
56,738

 
$
(57,349
)
 
$
—

 
 
198,236

Deduct applicable income taxes
 
 
(58,422
)
Segment profits after tax
 
 
139,814

Add back income taxes applicable to segment profitability
 
 
58,422

Add (deduct) realized investment gains (losses)
 
   
3,482

Add (deduct) non-operating fees
 
 
(257
)
Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
201,461


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.

 
Three Months Ended September 30, 2015 (3)
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
518,929

 
$
229,139

 
$
41

 
 
 
 
 
 
 
 
$
748,109

Net investment income
 
 
 
 
 
 
$
193,213

 
 
 
 
 
 
193,213

Other income
 
 
 
 
 
 
 
 
$
737

 
$
(45
)
 
(2)
692

Total revenue
518,929

 
229,139

 
41


193,213

 
737

 
(45
)
 
 
942,014

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
342,196

 
149,312

 
9,648

 
 
 
 
 
 
 
 
501,156

Required interest on reserves
(138,649
)
 
(17,416
)
 
(13,328
)
 
169,393

 
 
 
 
 
 
—

Required interest on DAC
43,354

 
5,700

 
278

 
(49,332
)
 
 
 
 
 
 
—

Amortization of acquisition costs
88,376

 
20,934

 
2,333

 
 
 
 
 
 
 
 
111,643

Commissions, premium taxes, and non-deferred acquisition costs
39,552

 
20,402

 
9

 
 
 
 
 
(45
)
 
(2)
59,918

Insurance administrative expense (1)
 
 
 
 
 
 
 
 
47,169

 
 
 
 
47,169

Parent expense
 
 
 
 
 
 
 
 
2,177

 
 
 
 
2,177

Stock compensation expense
 
 
 
 
 
 
 
 
6,836

 
 
 
 
6,836

Interest expense
 
 
 
 
 
 
19,246

 
 
 
 
 
 
19,246

Total expenses
374,829

 
178,932

 
(1,060
)
 
139,307

 
56,182

 
(45
)
 
 
748,145

Subtotal
144,100

 
50,207

 
1,101

 
53,906

 
(55,445
)
 
—

 
 
193,869

Non-operating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
144,100

 
$
50,207

 
$
1,101

 
$
53,906

 
$
(55,445
)
 
$
—

 
 
193,869

Deduct applicable income taxes
 
 
(63,352
)
Segment profits after tax
 
 
130,517

Add back income taxes applicable to segment profitability
 
 
63,352

Add (deduct) realized investment gains (losses)
 
   
5,140

Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
199,009


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
(3) Certain prior year balances were adjusted to give effect to discontinued operations as described in Note 5—Discontinued Operations.

 
Nine Months Ended September 30, 2016
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
  
Consolidated
Revenue:














Premium
$
1,639,156


$
709,936


$
34










$
2,349,126

Net investment income






$
601,415








601,415

Other income








$
1,086


$
(123
)

(2)
963

    Total revenue
1,639,156

 
709,936

 
34

 
601,415

 
1,086

 
(123
)


2,951,504

Expenses:













 
Policy benefits
1,101,748


459,387


27,475










1,588,610

Required interest on reserves
(430,931
)

(54,803
)

(38,359
)

524,093







—

Required interest on DAC
133,628


17,297


621


(151,546
)






—

Amortization of acquisition costs
281,698


67,110


4,064









352,872

Commissions, premium taxes, and non-deferred acquisition costs
121,968


63,733


31








(123
)

(2)
185,609

Insurance administrative expense (1)












146,129


257



146,386

Parent expense












6,360






6,360

Stock compensation expense












20,334






20,334

Interest expense









62,860









62,860

Total expenses
1,208,111

 
552,724

 
(6,168
)

435,407

 
172,823

 
134

 
 
2,363,031

Subtotal
431,045

 
157,212

 
6,202

 
166,008

 
(171,737
)
 
(257
)
 
 
588,473

Non-operating items
 
 
 
 
 
 
 
 
 
 
257

 

257

Measure of segment profitability (pretax)
$
431,045

 
$
157,212

 
$
6,202

 
$
166,008

 
$
(171,737
)
 
$
—

 
 
588,730

Deduct applicable income taxes
 
 
(178,842
)
Segment profits after tax
 
 
409,888

Add back income taxes applicable to segment profitability
 
 
178,842

Add (deduct) realized investment gains (losses)
 
   
7,780

Add (deduct) non-operating fees
 
 
(257
)
Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
596,253


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.




 
Nine Months Ended September 30, 2015 (3)
 
Life

Health

Annuity

Investment

Other &
Corporate

Adjustments

 
Consolidated
Revenue:














Premium
$
1,552,309


$
690,221


$
119












$
2,242,649

Net investment income









$
579,632









579,632

Other income












$
2,201


$
(149
)

(2)
2,052

Total revenue
1,552,309

 
690,221

 
119

 
579,632

 
2,201

 
(149
)
 
 
2,824,333

Expenses:



















 
Policy benefits
1,029,261


448,539


29,447












1,507,247

Required interest on reserves
(412,264
)

(51,450
)

(40,084
)

503,798









—

Required interest on DAC
129,339


17,058


885


(147,282
)








—

Amortization of acquisition costs
265,641


61,858


6,542












334,041

Commissions, premium taxes, and non-deferred acquisition costs
115,452


60,820


32








(149
)

(2)
176,155

Insurance administrative expense (1)












138,594






138,594

Parent expense












6,662






6,662

Stock compensation expense












21,877






21,877

Interest expense









57,420









57,420

Total expenses
1,127,429

 
536,825

 
(3,178
)

413,936

 
167,133

 
(149
)
 
 
2,241,996

Subtotal
424,880

 
153,396

 
3,297

 
165,696

 
(164,932
)
 
—

 
 
582,337

Non-operating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
424,880

 
$
153,396

 
$
3,297

 
$
165,696

 
$
(164,932
)
 
$
—

 
 
582,337

Deduct applicable income taxes
 
 
(190,291
)
Segment profits after tax
 
 
392,046

Add back income taxes applicable to segment profitability
 
 
190,291

Add (deduct) realized investment gains (losses)
 
  
7,872

Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
  
$
590,209


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
(3) Certain prior year balances were adjusted to give effect to discontinued operations as described in Note 5—Discontinued Operations.

Analysis of Profitability By Segment
The following table summarizes the measures of segment profitability for comparison. It also reconciles segment profits to net income.
Analysis of Profitability by Segment
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Life insurance underwriting margin
$
143,141

 
$
144,100

 
$
431,045


$
424,880

Health insurance underwriting margin
53,076

 
50,207

 
157,212


153,396

Annuity underwriting margin
2,630

 
1,101

 
6,202


3,297

Excess investment income
56,738

 
53,906

 
166,008


165,696

Other and corporate:
 
 
 
 



Other income
199

 
737

 
1,086


2,201

Administrative expense
(49,248
)
 
(47,169
)
 
(146,129
)

(138,594
)
Corporate and adjustments
(8,300
)
 
(9,013
)
 
(26,694
)

(28,539
)
Pre-tax total
198,236

 
193,869

 
588,730

 
582,337

Applicable taxes
(58,422
)
 
(63,352
)
 
(178,842
)

(190,291
)
After-tax total, from continuing operations
139,814

 
130,517

 
409,888

 
392,046

Discontinued operations (after tax)(1)
9,959

 
11,528

 
(447
)

(3,019
)
After-tax total, after discontinued operations
149,773

 
142,045

 
409,441

 
389,027

Reconciling items, net of tax:
 
 
 
 



Realized gains (losses)
2,263

 
3,341

 
5,057


5,117

Non-operating fees
(167
)
 
—

 
(167
)

—

Net income
$
151,869

 
$
145,386

 
$
414,331

 
$
394,144


(1) Income (loss) from discontinued operations (after tax) is included for purpose of reconciling to net income.