Shareholders' Equity

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Shareholders' Equity

Note 12—Shareholders’ Equity

Share Data: A summary of preferred and common share activity is as follows:

	Preferred Stock				Common Stock
	Issued		Treasury Stock		Issued			Treasury Stock
2011:
Balance at January 1, 2011		0		0		119,812,123			(947,497	)
Grants of restricted stock									173,553
Forfeitures of restricted stock									(7,153	)
Issuance of common stock due to exercise of stock options									4,829,892
Treasury stock acquired									(23,281,453	)
Retirement of treasury stock						(7,500,000	)		7,500,000
Balance at December 31, 2011		0		0		112,312,123			(11,732,658	)
2012:
Grants of restricted stock									69,720
Issuance of common stock due to exercise of stock options									5,357,490
Treasury stock acquired									(11,771,039	)
Retirement of treasury stock						(6,500,000	)		6,500,000
Balance at December 31, 2012		0		0		105,812,123			(11,576,487	)
2013:
Grants of restricted stock									50,943
Forfeitures and surrenders of restricted stock									(24,906	)
Issuance of common stock due to exercise of stock options									2,611,838
Issuance of common stock due to settlement of restricted stock units									7,460
Treasury stock acquired									(7,379,384	)
Retirement of treasury stock						(5,000,000	)		5,000,000
Balance at December 31, 2013		0		0		100,812,123			(11,310,536	)

Acquisition of Common Shares:    Torchmark shares are acquired from time to time through open market purchases under the Torchmark stock repurchase program when it is believed to be the best use of Torchmark’s excess cash flows. Share repurchases under this program were 5.5 million shares at a cost of $360 million in 2013, 7.5 million shares at a cost of $360 million in 2012, and 18.9 million shares at a cost of $788 million in 2011. When stock options are exercised, proceeds from the exercises are generally used to repurchase approximately the number of shares available with those funds in order to reduce dilution. Shares repurchased for dilution purposes were 1.9 million shares at a cost of $122 million in 2013, 4.3 million shares at a cost of $210 million in 2012, and 4.4 million shares at a cost of $185 million in 2011.

Retirement of Treasury Stock:    Torchmark retired 5 million shares of treasury stock in 2013, 6.5 million in 2012, and 7.5 million in 2011.

Restrictions:    Restrictions exist on the flow of funds to Torchmark from its insurance subsidiaries. Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. Dividends from insurance subsidiaries of Torchmark are limited to the greater of prior year statutory net income excluding realized capital gains on an annual noncumulative basis, or 10% of prior year surplus, in the absence of special regulatory approval. Additionally, insurance company distributions are generally not permitted in excess of statutory surplus. Subsidiaries are also subject to certain minimum capital requirements. Subsidiaries of Torchmark paid dividends to the parent company in the amount of $488 million in 2013 and $437 million in 2012. In 2011, subsidiaries of Torchmark paid $769 million in dividends to the parent company, including $305 million available from the proceeds from the sale of United Investors completed in 2010. As of December 31, 2013, dividends and transfers from insurance subsidiaries to parent available to be paid in 2014 were limited to the amount of $451 million without regulatory approval, such that $878 million was considered restricted net assets of the subsidiaries. The Company believes that total dividends and transfers of $471 million will be available to the parent in 2014. Please refer to Schedule II. Condensed Financial Information of Registrant for more information about Torchmark’s transactions with its subsidiaries. While there are no legal restrictions on the payment of dividends to shareholders from Torchmark’s retained earnings, retained earnings as of December 31, 2013 were restricted by lenders’ covenants which require the Company to maintain and not distribute $3.18 billion from its total consolidated retained earnings of $3.55 billion.

Earnings Per Share:    A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:

	2013		2012		2011
Basic weighted average shares outstanding		91,764,590		96,614,199		108,278,113
Weighted average dilutive options outstanding		1,277,933		1,284,189		1,537,277
Diluted weighted average shares outstanding		93,042,523		97,898,388		109,815,390

Stock options to purchase 3.5 million shares during the years 2011 were considered to be anti-dilutive and are excluded from the calculation of diluted earnings per share. There were no anti-dilutive shares in 2013 and 2012. Income available to common shareholders for basic earnings per share is equivalent to income available to common shareholders for diluted earnings per share.