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Torchmark: 3700 S. Stonebridge Drive

The following excerpt is from the company's SEC filing.

McKinney, Texas 75070

NYSE Symbol: TMK


Third Quarter


McKinney, TX,

October 26, 2015

- Torchmark Corporation (NYSE: TMK) reported today that for the quarter ended

September 30, 2015

, net income was

per share, compared with

per share for the year-ago quarter. Net operating income for the quarter was

Reconciliations between net income and net operating income, GAAP ROE and management ROE, and GAAP book value and management book value are shown in the Financial Summary below.


ROE (excluding net unrealized gains on fixed maturities) was 14.7%.

Total life premiums increased 6% over the year-ago quarter.

Net life sales at American Income increased 16% over the year-ago quarter.

Family Heritage average agent count increased 19% over the year-ago quarter.

1.7 million shares of common stock were repurchased during the quarter.


Net operating income, a non-GAAP financial measure, has long been consistently used by Torchmark’s management to evaluate the operating performance of the Company, and is a measure commonly used in the life insurance industry. It differs from net income primarily because it excludes certain non-operating items such as realized investment gains and losses and certain nonrecurring items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company’s business.

(dollars in millions, except per share data)

Per Share

Quarter Ended

September 30,

Insurance underwriting income*

Excess investment income*

Parent company expense

Income tax

Stock option expense, net of tax

Reconciling items, net of tax:

Realized gains (losses) on investments

Medicare Part D adjustment

Administrative settlements

Net income

Weighted average diluted shares outstanding (000)



* See definitions in the following sections and in the Torchmark

SEC Form 10-K.

Note: Tables in this news release may not foot due to rounding.

Financial Summary, continued

Management vs. GAAP Measures

(excluding the

Revaluation Adj.**)


Net income as a ROE***

Net operating income as a ROE

Shareholders' equity

Book value per share

Accounting rules set forth in ASC 820 require a revaluation adjustment to record fixed maturities classified as available for sale at fair value rather than at amortized cost.

ROE is calculated using average shareholders' equity for the measurement period.


Life insurance accounted for

of the Company’s insurance underwriting margin for the quarter and

of total premium revenue.

Health insurance accounted for

of Torchmark’s insurance underwriting margin for the quarter and

of total premium revenue. Medicare Part D accounted for

of insurance underwriting margin and

Net sales of life insurance increased

, while net health sales decreased

Insurance Premium Revenue

(dollars in millions)

September 30, 2014


Insurance Underwriting Income

Insurance underwriting margin is management’s measure of profitability of its life, health, Medicare Part D and annuity segments’ underwriting performance, and consists of premiums less policy obligations, commissions and other acquisition expenses.

Insurance underwriting income is the sum of the insurance underwriting margins of the life, health, Medicare Part D and annuity segments, plus other income, less insurance administrative expenses. It excludes the investment segment, parent company expense and income taxes.

Insurance underwriting margins:

Other income

Administrative expenses

Per share

Insurance Results by Distribution Channels

Total premium, underwriting margins, first-year collected premium and net sales by all distribution channels are shown at

on the Investors page at Financial Reports.

American Income Agency

was Torchmark’s leading contributor to total underwriting margin (

$75 million

), on premium revenue of

$230 million

. Life premiums of

$209 million

were up

and life insurance underwriting margin of

$66 million

was up

. As a percentage of life premium, life...