TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

(Amounts in thousands)



	December 31,
	2015			2014
Assets:
Investments:
Long-term investments	$	35,498		$	38,910
Short-term investments	—			5,686
Total investments	35,498			44,596
Cash	—			—
Investment in affiliates	5,438,749			6,023,666
Due from affiliates	50,765			50,766
Taxes receivable from affiliates	79,599			76,050
Other assets	93,936			64,092
Total assets	$	5,698,547		$	6,259,170

Liabilities and shareholders’ equity:
Liabilities:
Short-term debt	$	490,129		$	238,398
Long-term debt	893,417			1,141,773
Due to affiliates	57,157			652
Other liabilities	202,292			180,881
Total liabilities	1,642,995			1,561,704

Shareholders’ equity:
Preferred stock	351			351
Common stock	130,218			134,218
Additional paid-in capital	832,795			808,124
Accumulated other comprehensive income	231,947			997,452
Retained earnings	3,614,369			3,376,846
Treasury stock	(754,128		)	(619,525		)
Total shareholders’ equity	4,055,552			4,697,466
Total liabilities and shareholders’ equity	$	5,698,547		$	6,259,170

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)

CONDENSED STATEMENTS OF OPERATIONS

(Amounts in thousands)



	Year Ended December 31,
	2015			2014			2013
Net investment income	$	23,715		$	22,259		$	24,268
Realized investment gains (losses)	8			4,767			—
Total revenue	23,723			27,026			24,268

General operating expenses	54,100			53,235			53,255
Reimbursements from affiliates	(53,436		)	(53,040		)	(46,855		)
Interest expense	79,677			79,366			84,273
Total expenses	80,341			79,561			90,673

Operating income (loss) before income taxes and equity in earnings of affiliates	(56,618		)	(52,535		)	(66,405		)
Income taxes	15,542			13,335			17,390
Net operating loss before equity in earnings of affiliates	(41,076		)	(39,200		)	(49,015		)
Equity in earnings of affiliates	568,176			582,139			577,487
Net income	527,100			542,939			528,472

Other comprehensive income (loss):
Attributable to Parent Company	(3,539		)	(28,680		)	38,557
Attributable to affiliates	(761,966		)	815,151			(752,851		)
Comprehensive income (loss)	$	(238,405	)	$	1,329,410		$	(185,822	)

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT—(continued)

CONDENSED STATEMENTS OF CASH FLOWS

(Amounts in thousands)



	Year Ended December 31,
	2015			2014			2013
Cash provided from (used for) operations before dividends from subsidiaries	$	(20,705	)	$	(21,358	)	$	(54,213	)
Cash dividends from subsidiaries	466,416			478,840			488,376
Cash provided from operations	445,711			457,482			434,163

Cash provided from (used for) investing activities:
Disposition of investments	—			5,064			514
Net decrease (increase) in short-term investments	17,338			2,729			(6,805		)
Investment in other subsidiaries	(2		)	—			—
Additions to properties	(468		)	—			—
Loaned money to affiliates	(282,508		)	(81,000		)	—
Repayments from affiliates	282,508			81,000			—
Cash provided from (used for) investing activities	16,868			7,793			(6,291		)

Cash provided from (used for) financing activities:
Repayment of 7.375% Notes	—			—			(94,050		)
Net issuance (repayment) of commercial paper	1,978			9,328			3,983
Issuance of stock	35,958			56,294			97,677
Acquisitions of treasury stock	(418,526		)	(449,309		)	(482,264		)
Borrowed money from affiliate	15,000			168,000			—
Repayments to affiliates	(15,000		)	(168,000		)	—
Net borrowings (to)/from affiliates	—			—			120,000
Excess tax benefit on stock option exercises	8,180			6,688			10,963
Payment of dividends	(90,169		)	(88,276		)	(84,181		)
Cash provided from (used for) financing activities	(462,579		)	(465,275		)	(427,872		)

Net increase (decrease) in cash	—			—			—
Cash balance at beginning of period	—			—			—
Cash balance at end of period	$	—		$	—		$	—

See Notes to Condensed Financial Statements and accompanying Report of Independent Registered

Public Accounting Firm.

TORCHMARK CORPORATION

(PARENT COMPANY)

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Amounts in thousands)

Note A—Dividends from Subsidiaries

Cash dividends paid to Torchmark from the subsidiaries were as follows:



	Year Ended December 31,
	2015		2014		2013
Dividends from subsidiaries	$	466,416	$	478,840	$	488,376

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,
	2015		2014		2013
Stock-based compensation not involving cash	$	28,664	$	32,203	$	25,642
Dividend of subsidiary to Parent	—		—		1,246,557
Dividend of subsidiary applied to loan balance	—		—		72,000
Borrowed money from affiliate⁽¹⁾	56,503		—		—
Investment in subsidiaries	39,206		—		—
Purchase of agent debit balances	17,297		—		—

(1) Balance was repaid on January 8, 2016.

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



	Year Ended December 31,
	2015			2014			2013
Interest paid	$	77,920		$	77,663		$	85,443
Income taxes received	(22,009		)	(25,581		)	(27,820		)

Note C—Preferred Stock

As of December 31, 2015, 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.

See accompanying Report of Independent Registered Public Accounting Firm.