TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

(Amounts in thousands)


	December 31,
	2013			2012
Assets:
Investments:
Long-term investments	$	34,816		$	31,060
Short-term investments		8,415			1,610

Total investments		43,231			32,670
Cash		0			0
Investment in affiliates		5,074,326			5,780,762
Due from affiliates		50,766			156,995
Taxes receivable		66,168			86,391
Other assets		45,533			27,635

Total assets	$	5,280,024		$	6,084,453


Liabilities and shareholders’ equity:
Liabilities:
Short-term debt	$	229,070		$	319,043
Long-term debt		1,140,469			1,139,253
Due to affiliates		652			59,358
Other liabilities		133,491			205,013

Total liabilities		1,503,682			1,722,667

Shareholders’ equity:
Preferred stock		351			351
Common stock		100,812			105,812
Additional paid-in capital		812,569			790,293
Accumulated other comprehensive income		210,981			925,275
Retained earnings		3,545,939			3,403,338
Treasury stock		(894,310	)		(863,283	)

Total shareholders’ equity		3,776,342			4,361,786

Total liabilities and shareholders’ equity	$	5,280,024		$	6,084,453

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,
	2013			2012			2011
Net investment income	$	24,268		$	22,968		$	23,542
Realized investment gains (losses)		0			(3,534	)		508

Total revenue		24,268			19,434			24,050

General operating expenses		53,255			49,549			30,945
Reimbursements from affiliates		(46,855	)		(31,184	)		(19,335	)
Interest expense		84,273			81,145			75,426

Total expenses		90,673			99,510			87,036


Operating income (loss) before income taxes and equity in earnings of affiliates		(66,405	)		(80,076	)		(62,986	)

Income taxes		17,390			24,916			14,380


Net operating loss before equity in earnings of affiliates		(49,015	)		(55,160	)		(48,606	)
Equity in earnings of affiliates		577,487			584,484			545,767


Net income		528,472			529,324			497,161

Other comprehensive income (loss):
Attributable to Parent Company		38,557			(31,388	)		(5,410	)
Attributable to affiliates		(752,851	)		406,747			532,234

Comprehensive income	$	(185,822	)	$	904,683		$	1,023,985

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,
	2013			2012			2011
Cash provided from (used for) operations before dividends from subsidiaries	$	(54,213	)	$	(5,652	)	$	(33,042	)
Cash dividends from subsidiaries		488,376			436,814			769,139

Cash provided from operations		434,163			431,162			736,097

Cash provided from (used for) investing activities:
Disposition of investments		514			3,955			11,828
Net decrease (increase) in short-term investments		(6,805	)		(17,524	)		62,524
Acquisition of Family Heritage		0			(213,747	)		0
Investment in other subsidiaries		0			(205	)		(25,000	)

Cash provided from (used for) investing activities		(6,291	)		(227,521	)		49,352

Cash provided from (used for) financing activities:
Issuance of 3.8% Senior Notes		0			296,646			0
Issuance of 5.875% Junior Subordinated Debentures		0			120,811			0
Repayment of 7.375% Notes		(94,050	)		0			0
Redemption of 7.1% Junior Subordinated Debentures		0			(123,711	)		0
Net issuance (repayment) of commercial paper		3,983			245			25,967
Issuance of stock		97,677			181,022			162,613
Acquisitions of treasury stock		(482,264	)		(570,165	)		(972,556	)
Net borrowings (to)/from subsidiaries		120,000			(69,000	)		96,000
Excess tax benefit on stock option exercises		10,963			12,209			2,021
Payment of dividends		(84,181	)		(78,797	)		(72,395	)

Cash provided from (used for) financing activities		(427,872	)		(230,740	)		(758,350	)


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

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

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:


	2013		2012		2011
Dividends from subsidiaries	$	488,376	$	436,814	$	769,139

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,
	2013		2012		2011
Stock-based compensation not involving cash	$	25,642	$	21,605	$	14,954
Debt assumed to acquire Family Heritage		0		20,000		0
Dividend of subsidiary to Parent		1,246,557		0		0
Dividend of subsidiary applied to loan balance		72,000		0		0

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


	Year Ended December 31,
	2013		2012		2011
Interest paid	$	85,443	$	76,833	$	74,569
Income taxes received		27,820		29,251		22,893

Note C—Preferred Stock

As of December 31, 2013, 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.