Business Segments (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Segment Premium Revenue By Each Marketing Group

The tables below present segment premium revenue by each of Torchmark’s marketing groups.

Torchmark Corporation

Premium Income By Distribution Channel



	For the Year 2012
	Life				Health				Annuity				Total
Distribution Channel	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
United American Independent	$	21,127		1	$	298,759		28	$	559		100	$	320,445		11
Liberty National Exclusive		281,723		15		263,535		25						545,258		19
American Income Exclusive		663,696		37		79,640		8						743,336		26
Family Heritage		130		0		30,119		3						30,249		1
Direct Response		630,111		35		57,966		6						688,077		24
Medicare Part D						317,764		30						317,764		11
Other		211,737		12										211,737		8

	$	1,808,524		100	$	1,047,783		100	$	559		100	$	2,856,866		100


	For the Year 2011
	Life				Health				Annuity				Total
Distribution Channel	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
United American Independent	$	22,846		1	$	306,490		33	$	608		100	$	329,944		12
Liberty National Exclusive		288,308		17		290,107		31						578,415		22
American Income Exclusive		607,914		35		80,119		9						688,033		26
Direct Response		593,650		35		57,067		6						650,717		25
Medicare Part D						196,710		21						196,710		7
Other		213,526		12										213,526		8

	$	1,726,244		100	$	930,493		100	$	608		100	$	2,657,345		100


	For the Year 2010
	Life				Health				Annuity				Total
Distribution Channel	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
United American Independent	$	25,534		1	$	314,524		32	$	638		100	$	340,696		13
Liberty National Exclusive		294,587		18		331,056		34						625,643		24
American Income Exclusive		560,649		34		79,059		8						639,708		24
Direct Response		566,604		34		54,328		5						620,932		23
Medicare Part D						208,970		21						208,970		8
Other		216,325		13										216,325		8

	$	1,663,699		100	$	987,937		100	$	638		100	$	2,652,274		100

Reconciliation Of Revenues And Operations By Segment To Its Major Income Statement Line Items

The following tables set forth a reconciliation of Torchmark’s revenues and operations by segment to its major income statement line items.


	For the Year 2012
	Life			Health			Annuity			Investment			Other			Corporate			Adjustments			Consolidated
Revenue:
Premium	$	1,808,524		$	1,047,783		$	559											$	(404	)⁽¹⁾	$	2,856,462
Net investment income										$	715,918									(22,274	)⁽²⁾⁽⁵⁾		693,644
Other income													$	1,898						(321	)⁽⁴⁾		1,577

Total revenue		1,808,524			1,047,783			559			715,918			1,898						(22,999	)		3,551,683
Expenses:
Policy benefits		1,172,020			739,945			44,121												(404	)⁽¹⁾		1,955,682
Required interest on: Policy reserves		(483,892	)		(40,963	)		(59,293	)		584,148												0
Deferred acquisition costs		163,875			19,059			2,238			(185,172	)											0
Amortization of acquisition costs		309,930			65,278			9,959															385,167
Commissions, premium taxes, and non-deferred acquisition costs		137,115			67,123			69												(321	)⁽⁴⁾		203,986
Insurance administrative expense⁽³⁾														165,405									165,405
Parent expense																$	8,222			2,944	⁽⁶⁾		11,166
Stock-based compensation expense																	21,605						21,605
Interest expense											80,298									214	⁽²⁾		80,512

Total expenses		1,299,048			850,442			(2,906	)		479,274			165,405			29,827			2,433			2,823,523

Sub total		509,476			197,341			3,465			236,644			(163,507	)		(29,827	)		(25,432	)		728,160
Non operating items																				2,944	⁽⁶⁾		2,944
Amortization of low-income housing interests																				22,488	⁽⁵⁾		22,488

Measure of segment profitability (pretax)	$	509,476		$	197,341		$	3,465		$	236,644		$	(163,507	)	$	(29,827	)	$	0			753,592

Deduct applicable income taxes																							(246,945	)

Segment profits after tax																							506,647

Add back income taxes applicable to segment profitability																							246,945
Add (deduct) realized investment gains (losses)																							37,833
Deduct amortization of low-income housing⁽⁵⁾																							(22,488	)
Deduct Family Heritage Life acquisition expense⁽⁶⁾																							(2,944	)

Pretax income per the Consolidated Statement of Operations																						$	765,993

(1)

Medicare Part D items adjusted to GAAP from the segment analysis, which matches expected benefits with policy premium.

(2)

Reclassification of interest amount due to accounting rule requiring deconsolidation of Trust Preferred Securities.

(3)

Administrative expense is not allocated to insurance segments.

(4)

Elimination of intersegment commission.

(5)

Amortization of low-income housing interests.

(6)

Family Heritage Life acquisition expense.


	For the Year 2011
	Life			Health			Annuity			Investment			Other			Corporate			Adjustments			Consolidated
Revenue:
Premium	$	1,726,244		$	930,493		$	608											$	(1,027	)⁽¹⁾	$	2,656,318
Net investment income										$	707,041									(14,013	)⁽^2,5)		693,028
Other income													$	2,507						(356	)⁽⁴⁾		2,151

Total revenue		1,726,244			930,493			608			707,041			2,507						(15,396	)		3,351,497
Expenses:
Policy benefits		1,118,909			632,847			42,547												(1,027	)⁽¹⁾		1,793,276
Required interest on: Policy reserves		(458,029	)		(36,729	)		(57,040	)		551,798												0
Deferred acquisition costs		159,886			18,883			2,618			(181,387	)											0
Amortization of acquisition costs		292,168			62,345			10,070															364,583
Commissions, premium taxes, and non-deferred acquisition costs		152,347			64,157			68												(356	)⁽⁴⁾		216,216
Insurance administrative expense⁽³⁾														159,109						19,880	^(6,7,8)		178,989
Parent expense																$	7,693						7,693
Stock-based compensation expense																	14,954						14,954
Interest expense											77,644									264	⁽²⁾		77,908

Total expenses		1,265,281			741,503			(1,737	)		448,055			159,109			22,647			18,761			2,653,619

Sub total		460,963			188,990			2,345			258,986			(156,602	)		(22,647	)		(34,157	)		697,878
Non operating items																				19,880	^(6,7,8)		19,880
Amortization of low-income housing interests																				14,277	⁽⁵⁾		14,277

Measure of segment profitability (pretax)	$	460,963		$	188,990		$	2,345		$	258,986		$	(156,602	)	$	(22,647	)	$	0			732,035

Deduct applicable income taxes																							(238,335	)

Segment profits after tax																							493,700

Add back income taxes applicable to segment profitability																							238,335
Add (deduct) realized investment gains (losses)																							25,904
Deduct amortization of low-income housing⁽⁵⁾																							(14,277	)
Deduct state administrative settlement expense⁽⁶⁾																							(6,901	)
Deduct loss on sale of equipment⁽⁷⁾																							(979	)
Deduct litigation expense⁽⁸⁾																							(12,000	)

Pretax income per Consolidated Statement of Operations																						$	723,782

(1)

Medicare Part D items adjusted to GAAP from the segment analysis, which matches expected benefits with policy premium.

(2)

Reclassification of interest amount due to accounting rule requiring deconsolidation of Trust Preferred Securities.

(3)

Administrative expense is not allocated to insurance segments.

(4)

Elimination of intersegment commission.

(5)

Amortization of low-income housing interests.

(6)

State administrative settlement expense.

(7)

Loss on sale of equipment.

(8)

Litigation expense.


	For the Year 2010
	Life			Health			Annuity			Investment			Other			Corporate			Adjustments			Consolidated
Revenue:
Premium	$	1,663,699		$	987,937		$	638											$	(516	)⁽¹⁾	$	2,651,758
Net investment income										$	685,253									(8,889	)^(2,5)		676,364
Other income													$	2,834						(664	)⁽⁴⁾		2,170

Total revenue		1,663,699			987,937			638			685,253			2,834						(10,069	)		3,330,292
Expenses:
Policy benefits		1,082,423			669,707			41,430												(516	)⁽¹⁾		1,793,044
Required interest on: Policy reserves		(434,319	)		(35,368	)		(51,996	)		521,683												0
Deferred acquisition costs		154,473			19,758			2,709			(176,940	)											0
Amortization of acquisition costs		289,068			66,309			7,013															362,390
Commissions, premium taxes, and non-deferred acquisition costs		141,792			68,565			134												(664	)⁽⁴⁾		209,827
Insurance administrative expense⁽³⁾														155,615									155,615
Parent expense																$	8,809						8,809
Stock-based compensation expense																	11,848						11,848
Interest expense											75,265									264	⁽²⁾		75,529

Total expenses		1,233,437			788,971			(710	)		420,008			155,615			20,657			(916	)		2,617,062

Subtotal		430,262			198,966			1,348			265,245			(152,781	)		(20,657	)		(9,153	)		713,230
Amortization of low-income housing interests																				9,153	⁽⁵⁾		9,153

Measure of segment profitability (pretax)	$	430,262		$	198,966		$	1,348		$	265,245		$	(152,781	)	$	(20,657	)	$	0			722,383

Deduct applicable income taxes																							(242,558	)

Segment profits after tax																							479,825


Add back income taxes applicable to segment profitability																							242,558
Add (deduct) realized investment gains (losses)																							37,340
Deduct amortization of low-income housing⁽⁵⁾																							(9,153	)

Pretax income per Consolidated Statement of Operations																						$	750,570

(1)

Medicare Part D items adjusted to GAAP from the segment analysis, which matches expected benefits with policy premium.

(2)

Reclassification of interest amount due to accounting rule requiring deconsolidation of Trust Preferred Securities.

(3)

Administrative expense is not allocated to insurance segments.

(4)

Elimination of intersegment commission.

(5)

Amortization of low-income housing interests, previously considered a reduction of consolidated pretax segment profitability.

Analysis Of Profitability By Segment

The following table summarizes the measures of segment profitability as determined in the three preceding tables for comparison with prior periods. The table also reconciles segment profits to net income.

Analysis of Profitability by Segment


	2012			2011			2010			2012 Change			%			2011 Change			%
Life insurance underwriting margin	$	509,476		$	460,963		$	430,262		$	48,513			11		$	30,701			7
Health insurance underwriting margin		197,341			188,990			198,966			8,351			4			(9,976	)		(5	)
Annuity underwriting margin		3,465			2,345			1,348			1,120			48			997
Other insurance:
Other income		1,898			2,507			2,834			(609	)		(24	)		(327	)		(12	)
Administrative expense		(165,405	)		(159,109	)		(155,615	)		(6,296	)		4			(3,494	)		2
Excess investment income		236,644			258,986			265,245			(22,342	)		(9	)		(6,259	)		(2	)
Corporate and adjustments		(29,827	)		(22,647	)		(20,657	)		(7,180	)		32			(1,990	)		10

Pre-tax total		753,592			732,035			722,383			21,557			3			9,652			1
Applicable taxes		(246,945	)		(238,335	)		(242,558	)		(8,610	)		4			4,223			(2	)

After-tax total, before discontinued operations		506,647			493,700			479,825			12,947			3			13,875			3
Discontinued operations (after tax)		0			0			27,932			0						(27,932	)

Total		506,647			493,700			507,757			12,947			3			(14,057	)		(3	)
Realized gains (losses)—investments (after tax)*		24,591			16,838			24,270			7,753						(7,432	)
Realized gains (losses)—discontinued operations (after tax)*		0			0			1,852			0						(1,852	)
Loss on disposal of discontinued operations (after tax)		0			(455	)		(35,013	)		455						34,558
Acquisition expense—Family Heritage (after tax)		(1,914	)		0			0			(1,914	)					0
Cost of legal settlements (after tax)		0			(7,800	)		0			7,800						(7,800	)
State administrative settlement (after tax)		0			(4,486	)		0			4,486						(4,486	)
Loss on sale of equipment (after tax)		0			(636	)		0			636						(636	)

Net income	$	529,324		$	497,161		$	498,866		$	32,163			6		$	(1,705)			0

*	See the discussion of Realized Gains and Losses in this report.

Assets By Segment

The table below reconciles segment assets to total assets as reported in the consolidated financial statements.

Assets by Segment



	At December 31, 2012
	Life		Health		Annuity		Investment		Other		Consolidated
Cash and invested assets							$	14,155,919			$	14,155,919
Accrued investment income								195,497				195,497
Deferred acquisition costs	$	2,688,876	$	481,725	$	27,830						3,198,431
Goodwill		309,609		131,982								441,591
Other assets									$	785,472		785,472

Total assets	$	2,998,485	$	613,707	$	27,830	$	14,351,416	$	785,472	$	18,776,910


	At December 31, 2011
	Life		Health		Annuity		Investment		Other		Consolidated
Cash and invested assets							$	12,437,699			$	12,437,699
Accrued investment income								192,325				192,325
Deferred acquisition costs	$	2,566,748	$	315,587	$	34,397						2,916,732
Goodwill		309,609		87,282								396,891
Other assets									$	644,625		644,625

Total assets	$	2,876,357	$	402,869	$	34,397	$	12,630,024	$	644,625	$	16,588,272

Other Balances By Segment

Other Balances by Segment


	At December 31, 2012
	Life		Health		Annuity		Consolidated
Future policy benefits	$	8,093,618	$	1,264,540	$	1,348,061	$	10,706,219
Unearned and advance premium		16,856		59,232				76,088
Policy claims and other benefits payable		123,600		104,870				228,470

Total	$	8,234,074	$	1,428,642	$	1,348,061	$	11,010,777


	At December 31, 2011
	Life		Health		Annuity		Consolidated
Future policy benefits	$	7,697,108	$	589,441	$	1,285,708	$	9,572,257
Unearned and advance premium		16,965		52,574				69,539
Policy claims and other benefits payable		118,737		103,517				222,254

Total	$	7,832,810	$	745,532	$	1,285,708	$	9,864,050

- Definition

Tabular disclosure of all significant reconciling items in the reconciliation of total profit or loss from reportable segments, to the entity's consolidated income before income taxes, extraordinary items, and discontinued operations.

+ References+ Details

- Definition

Tabular disclosure of each significant reconciling item, other than profit (loss), revenues, or assets, in the reconciliation of totals of such items in reportable segments to the entity's corresponding consolidated amount.

+ References+ Details