TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

(Amounts in thousands)


	December 31,
	2012			2011
Assets:
Investments:
Long-term investments	$	31,060		$	36,458
Short-term investments		1,610			58

Total investments		32,670			36,516
Cash		0			27,099
Investment in affiliates		5,780,762			4,960,492
Due from affiliates		156,995			50,977
Taxes receivable		86,391			61,616
Other assets		27,635			7,581

Total assets	$	6,084,453		$	5,144,281


Liabilities and shareholders’ equity:
Liabilities:
Short-term debt	$	319,043		$	224,842
Long-term debt		1,139,253			790,571
Due to affiliates		59,358			145,556
Other liabilities		205,013			123,681

Total liabilities		1,722,667			1,284,650

Shareholders’ equity:
Preferred stock		351			351
Common stock		105,812			112,312
Additional paid-in capital		790,293			775,842
Accumulated other comprehensive income		925,275			549,916
Retained earnings		3,403,338			3,264,711
Treasury stock		(863,283	)		(843,501	)

Total shareholders’ equity		4,361,786			3,859,631

Total liabilities and shareholders’ equity	$	6,084,453		$	5,144,281

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

CONDENSED STATEMENTS OF OPERATIONS

(Amounts in thousands)


	Year Ended December 31,
	2012			2011			2010
Net investment income	$	22,968		$	23,542		$	26,031
Realized investment gains (losses)		(3,534	)		508			(1,646	)

Total revenue		19,434			24,050			24,385

General operating expenses		49,549			30,945			21,682
Reimbursements from affiliates		(31,184	)		(19,335	)		(13,375	)
Interest expense		81,145			75,426			74,827

Total expenses		99,510			87,036			83,134


Operating income (loss) before income taxes and equity in earnings of affiliates		(80,076	)		(62,986	)		(58,749	)

Income taxes		24,916			14,380			18,521


Net operating loss before equity in earnings of affiliates		(55,160	)		(48,606	)		(40,228	)
Equity in earnings of affiliates		584,484			545,767			539,094


Net income	$	529,324		$	497,161		$	498,866

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

CONDENSED STATEMENTS OF CASH FLOWS

(Amounts in thousands)


	Year Ended December 31,
	2012			2011			2010
Cash provided from (used for) operations before dividends from subsidiaries	$	(5,652	)	$	(33,042	)	$	(33,403	)
Cash dividends from subsidiaries		436,814			769,139			370,947

Cash provided from operations		431,162			736,097			337,544

Cash provided from (used for) investing activities:
Acquisition of investments		0			0			(14,279	)
Disposition of investments		3,955			11,828			33
Net decrease (increase) in short-term investments		(17,524	)		62,524			106,881
Acquisition of Family Heritage		(213,747	)		0			0
Investment in other subsidiaries		(205	)		(25,000	)		(18,722	)

Cash provided from (used for) investing activities		(227,521	)		49,352			73,913

Cash provided from (used for) financing activities:
Issuance of 3.8% Senior Notes		296,646			0			0
Issuance of 5.875% Junior Subordinated Debentures		120,811			0			0
Acquisition of 9¹/₄% Senior Notes		0			0			(8,913	)
Redemption of 7.1% Junior Subordinated Debentures		(123,711	)		0			0
Net issuance (repayment) of commercial paper		245			25,967			(34,432	)
Issuance of stock		181,022			162,613			37,863
Acquisitions of treasury stock		(570,165	)		(972,556	)		(246,006	)
Net borrowings to/from subsidiaries		(69,000	)		96,000			(86,800	)
Excess tax benefit on stock option exercises		12,209			2,021			162
Payment of dividends		(78,797	)		(72,395	)		(73,331	)

Cash provided from (used for) financing activities		(230,740	)		(758,350	)		(411,457	)


Net increase (decrease) in cash		(27,099	)		27,099			0
Cash balance at beginning of period		27,099			0			0

Cash balance at end of period	$	0		$	27,099		$	0

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

TORCHMARK CORPORATION

(PARENT COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Amounts in thousands)

Note A—Dividends from Subsidiaries

Cash dividends paid to Torchmark from the subsidiaries were as follows:


	2012		2011		2010
Dividends from subsidiaries	$	436,814	$	769,139	$	370,947

Note B—Supplemental Disclosures of Cash Flow Information

The following table summarizes noncash transactions, which are not reflected on the Condensed Statements of Cash Flows:


	Year Ended December 31,
	2012		2011		2010
Stock-based compensation not involving cash	$	21,605	$	14,954	$	11,848
Debt assumed to acquire Family Heritage		20,000		0		0

The following table summarizes certain amounts paid (received) during the period:


	Year Ended December 31,
	2012		2011		2010
Interest paid	$	76,833	$	74,569	$	75,909
Income taxes received		29,251		22,893		2,379

Note C—Preferred Stock

As of December 31, 2012, Torchmark had 351 thousand shares of Cumulative Preferred Stock, Series A, issued and outstanding, of which 280 thousand shares were 6.50% Cumulative Preferred Stock, Series A, and 71 thousand shares were 7.15% Cumulative Preferred Stock, Series A (collectively, the “Series A Preferred Stock”). All issued and outstanding shares of Series A Preferred Stock were held by wholly-owned insurance subsidiaries. In the event of liquidation, the holders of the Series A Preferred Stock at the time outstanding would be entitled to receive a liquidating distribution out of the assets legally available to stockholders in the amount of $1 thousand per share or $351 million in the aggregate, plus any accrued and unpaid dividends, before any distribution is made to holders of Torchmark common stock. Holders of Series A Preferred Stock do not have any voting rights nor have rights to convert such shares into shares of any other class of Torchmark capital stock.