Adoption of New Accounting Standards

9 Months Ended

Sep. 30, 2015

Accounting Changes and Error Corrections [Abstract]

Adoption of New Accounting Standards

Adoption of New Accounting Standards

Low-income housing tax credits: As described in Note A, the FASB issued and Torchmark adopted new guidance concerning Investments-Equity Method and Joint Ventures: Accounting for Investments in Qualified Affordable Housing Projects (ASU 2014-01) as of January 1, 2015. The guidance replaces the effective-yield method of amortization with respect to investments in qualified affordable housing acquired after the date of adoption and, if certain conditions are present, provides for a proportional amortization method. The proportional amortization method allows an investor to amortize the cost of its investment based on the proportion of the tax credits received during the year to the total expected tax credits to be received over the life of the investment. The guidance further provides that the effective-yield method of amortization may continue to be used with respect to investments acquired before the date of adoption. Amortization, previously required to be recognized in the Condensed Consolidated Statements of Operations as a component of "Net investment income", will now be included in "Income tax expense."

Torchmark will continue to use the effective-yield method of amortization with respect to its guaranteed investments acquired prior to January 1, 2015, but will retroactively adopt the new guidance and apply the proportional method of amortization with respect to its non-guaranteed investments. The proportional method of amortization is consistent with Torchmark’s historical method of amortization. As a result, the only impact of the adoption is to reclassify amortization expense from “Net investment income” to “Income tax expense” with no impact on Torchmark's historical net income, cash flows, liquidity, or statutory earnings of its insurance subsidiaries.

The following table reflects a summary of the impact of the retrospectively adjusted balances on the Company's Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014.

Three Months Ended September 30, 2014
Income Statement	As previously reported			Adjustments			As adjusted
Net investment income	$	182,101		$	7,487		$	189,588
Total revenue	967,001			7,487			974,488
Income before income taxes	189,564			7,487			197,051
Income taxes	(57,152		)	(7,487		)	(64,639		)
Net income	132,412			—			132,412

Nine Months Ended September 30, 2014
Income Statement	As previously reported			Adjustments			As adjusted
Net investment income	$	545,978		$	21,591		$	567,569
Total revenue	2,968,104			21,591			2,989,695
Income before income taxes	566,809			21,591			588,400
Income taxes	(170,618		)	(21,591		)	(192,209		)
Net income	396,191			—			396,191

Debt Issuance Costs: In April 2015, the FASB issued Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). The guidance requires companies to change the presentation of debt issuance costs in the financial statements by presenting such costs as a direct deduction from the related debt liability rather than as an asset. Amortization of the debt issuance costs will continue to be reported as interest expense. The guidance is effective for fiscal years and interim periods beginning after December 15, 2015 with early adoption permitted. Torchmark adopted this ASU upon issuance and there was no material impact on the consolidated financial statements.