Note D—Investments

Portfolio Composition:

A summary of fixed maturities and equity securities available for sale by cost or amortized cost and estimated fair value at June 30, 2012 is as follows:

PORTFOLIO COMPOSITION AS OF JUNE 30, 2012




	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		% of Total Fixed Maturities*
Fixed maturities available for sale:
Bonds:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	29,677	$	1,473	$	(9	)	$	31,141		1	%
States, municipalities, and political subdivisions		1,213,004		160,016		(415	)		1,372,605		11
Foreign governments		21,738		1,135		0			22,873		0
Corporates		8,593,737		1,193,283		(89,954	)		9,697,066		79
Collateralized debt obligations		62,495		0		(32,538	)		29,957		0
Other asset-backed securities		37,000		2,665		(1,275	)		38,390		0
Redeemable preferred stocks		1,117,435		32,878		(33,661	)		1,116,652		9

Total fixed maturities		11,075,086		1,391,450		(157,852	)		12,308,684		100	%

Equity securities		14,875		1,999		(54	)		16,820

Total fixed maturities and equity securities	$	11,089,961	$	1,393,449	$	(157,906	)	$	12,325,504

*	At fair value

A schedule of fixed maturities by contractual maturity date at June 30, 2012 is shown below on an amortized cost basis and on a fair value basis. Actual maturity dates could differ from contractual maturities due to call or prepayment provisions.


	Amortized Cost		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	76,832	$	79,363
Due from one to five years		465,380		500,769
Due from five to ten years		708,106		792,598
Due from ten to twenty years		2,504,770		2,800,162
Due after twenty years		7,215,861		8,062,238
Mortgage-backed and asset-backed securities		104,137		73,554

	$	11,075,086	$	12,308,684

Selected information about sales of fixed maturities is as follows:


For the six months ended June 30,
	2012			2011
Proceeds from sales	$	133,079		$	126,523
Gross realized gains		8,862			11,084
Gross realized losses		(240	)		(24,323	)

Fair Value Measurements:

The following table represents assets measured at fair value on a recurring basis:

FAIR VALUE MEASUREMENTS AT JUNE 30, 2012 USING:


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale:
Bonds:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	0		$	31,141		$	0		$	31,141
States, municipalities, and political subdivisions		0			1,372,605			0			1,372,605
Foreign governments		0			22,873			0			22,873
Corporates		43,498			9,614,687			38,881			9,697,066
Collateralized debt obligations		0			0			29,957			29,957
Other asset-backed securities		0			31,238			7,152			38,390
Redeemable preferred stocks		192,653			923,999			0			1,116,652

Total fixed maturities		236,151			11,996,543			75,990			12,308,684
Equity securities		15,995			86			739			16,820

Total fixed maturities and equity securities	$	252,146		$	11,996,629		$	76,729		$	12,325,504

Percent of total		2.1	%		97.3	%		0.6	%		100.0	%

As of June 30, 2012, fair value measurements classified as Level 3 represented 0.6% of total fixed maturities and equity securities, compared with 0.4% at December 31, 2011.

Other-Than-Temporary Impairments:

There were no other-than-temporary impairments during the six months ending June 30, 2012. In the prior year period, Torchmark recorded an other-than-temporary impairment of $20 thousand ($13 thousand after tax).

Unrealized Loss Analysis:

The following table discloses unrealized investment losses by class of investment at June 30, 2012. Torchmark considers these investments not to be other-than-temporarily impaired.

ANALYSIS OF GROSS UNREALIZED INVESTMENT LOSSES

At June 30, 2012


	Less than Twelve Months					Twelve Months or Longer					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Fixed maturities available for sale:
Bonds:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	5,236	$	(8	)	$	31	$	(1	)	$	5,267	$	(9	)
States, municipalities, and political subdivisions		0		0			17,550		(415	)		17,550		(415	)
Foreign governments		0		0			0		0			0		0
Corporates		245,694		(7,047	)		631,148		(82,907	)		876,842		(89,954	)
Collateralized debt obligations		0		0			29,957		(32,538	)		29,957		(32,538	)
Other asset-backed securities		8,260		(22	)		7,152		(1,253	)		15,412		(1,275	)
Redeemable preferred stocks		130,419		(1,789	)		334,511		(31,872	)		464,930		(33,661	)

Total fixed maturities		389,609		(8,866	)		1,020,349		(148,986	)		1,409,958		(157,852	)
Equity securities		86		(13	)		309		(41	)		395		(54	)

Total fixed maturities and equity securities	$	389,695	$	(8,879	)	$	1,020,658	$	(149,027	)	$	1,410,353	$	(157,906	)

Additional information about investments in an unrealized loss position is as follows:


	Less than Twelve Months		Twelve Months or Longer		Total
Number of issues (Cusip numbers) held:
As of June 30, 2012		87		96		183
As of December 31, 2011		117		93		210

Torchmark’s entire fixed-maturity and equity portfolio consisted of 1,360 issues at June 30, 2012 and 1,373 issues at December 31, 2011. The weighted average quality rating of all unrealized loss positions as of June 30, 2012 was BBB-. Even though Torchmark’s fixed-maturity investments are available for sale, Torchmark’s management generally does not intend to sell and does not believe it will be required to sell any securities which are temporarily impaired until they mature due to the strong and stable cash flows generated by its insurance products.

Torchmark’s balances related to bifurcated credit loss positions included in other comprehensive income were $22 million at June 30, 2012 and December 31, 2011, with no change to this balance during any period presented.