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Business Segments (Tables)
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Reconciliation of Segment Operating Information to Consolidated Statement of Operations
The following tables set forth a reconciliation of Torchmark’s revenues and operations by segment to its pretax income and each significant line item in its Condensed Consolidated Statements of Operations.
 
Reconciliation of Segment Operating Information to the Consolidated Statement of Operations
 
Three Months Ended June 30, 2016
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
548,590

 
$
237,252

 
$
13

 
 
 
 
 
 
 
 
$
785,855

Net investment income
 
 
 
 
 
 
$
201,642

 
 
 
 
 
 
201,642

Other income
 
 
 
 
 
 
 
 
$
422

 
$
(40
)
 
(2)
382

    Total revenue
548,590

 
237,252

 
13

 
201,642

 
422

 
(40
)
 
 
987,879

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
369,342

 
153,261

 
8,882

 
 
 
 
 
 
 
 
531,485

Required interest on reserves
(143,625
)
 
(18,251
)
 
(12,506
)
 
174,382

 
 
 
 
 
 
—

Required interest on DAC
44,476

 
5,766

 
205

 
(50,447
)
 
 
 
 
 
 
—

Amortization of acquisition costs
93,663

 
22,102

 
1,480

 
 
 
 
 
 
 
 
117,245

Commissions, premium taxes, and non-deferred acquisition costs
41,130

 
21,753

 
11

 
 
 
 
 
(40
)
 
(2)
62,854

Insurance administrative expense (1)
 
 
 
 
 
 
 
 
48,413

 
 
 
 
48,413

Parent expense
 
 
 
 
 
 
 
 
2,379

 
 
 
 
2,379

Stock compensation expense
 
 
 
 
 
 
 
 
7,054

 
 
 
 
7,054

Interest expense
 
 
 
 
 
 
23,110

 
 
 
 
 
 
23,110

Total expenses
404,986

 
184,631

 
(1,928
)
 
147,045

 
57,846

 
(40
)
 
 
792,540

Subtotal
143,604

 
52,621

 
1,941

 
54,597

 
(57,424
)
 
—

 
 
195,339

Nonoperating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
143,604

 
$
52,621

 
$
1,941

 
$
54,597

 
$
(57,424
)
 
$
—

 
 
195,339

Deduct applicable income taxes
 
 
(58,649
)
Segment profits after tax
 
 
136,690

Add back income taxes applicable to segment profitability
 
 
58,649

Add (deduct) realized investment gains (losses)
 
   
4,005

Pretax income per Consolidated Statements of Operations
 
   
$
199,344


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
 
Three Months Ended June 30, 2015 (3)
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
520,038

 
$
232,409

 
$
37

 
 
 
 
 
 
 
 
$
752,484

Net investment income
 
 
 
 
 
 
$
194,823

 
 
 
 
 
 
194,823

Other income
 
 
 
 
 
 
 
 
$
742

 
$
(51
)
 
(2)
691

Total revenue
520,038

 
232,409

 
37


194,823

 
742

 
(51
)
 
 
947,998

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
347,364

 
151,198

 
9,754

 
 
 
 
 
 
 
 
508,316

Required interest on reserves
(137,430
)
 
(17,151
)
 
(13,387
)
 
167,968

 
 
 
 
 
 
—

Required interest on DAC
43,139

 
5,690

 
294

 
(49,123
)
 
 
 
 
 
 
—

Amortization of acquisition costs
88,737

 
20,740

 
2,261

 
 
 
 
 
 
 
 
111,738

Commissions, premium taxes, and non-deferred acquisition costs
38,851

 
20,320

 
12

 
 
 
 
 
(51
)
 
(2)
59,132

Insurance administrative expense (1)
 
 
 
 
 
 
 
 
45,474

 
 
 
 
45,474

Parent expense
 
 
 
 
 
 
 
 
2,312

 
 
 
 
2,312

Stock compensation expense
 
 
 
 
 
 
 
 
7,802

 
 
 
 
7,802

Interest expense
 
 
 
 
 
 
19,114

 
 
 
 
 
 
19,114

Total expenses
380,661

 
180,797

 
(1,066
)
 
137,959

 
55,588

 
(51
)
 
 
753,888

Subtotal
139,377

 
51,612

 
1,103

 
56,864

 
(54,846
)
 
—

 
 
194,110

Nonoperating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
139,377

 
$
51,612

 
$
1,103

 
$
56,864

 
$
(54,846
)
 
$
—

 
 
194,110

Deduct applicable income taxes
 
 
(63,282
)
Segment profits after tax
 
 
130,828

Add back income taxes applicable to segment profitability
 
 
63,282

Add (deduct) realized investment gains (losses)
 
   
2,613

Pretax income per Consolidated Statements of Operations
 
   
$
196,723


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
(3) Certain prior year balances were adjusted to give effect to discontinued operations as described in Note 5—Discontinued Operations.

 
Six Months Ended June 30, 2016
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
  
Consolidated
Revenue:














Premium
$
1,092,741


$
472,949


$
25










$
1,565,715

Net investment income






$
398,695








398,695

Other income








$
887


$
(84
)

(2)
803

    Total revenue
1,092,741

 
472,949

 
25

 
398,695

 
887

 
(84
)


1,965,213

Expenses:













 
Policy benefits
732,202


306,036


18,220










1,056,458

Required interest on reserves
(285,636
)

(36,327
)

(25,598
)

347,561







—

Required interest on DAC
88,678


11,508


429


(100,615
)






—

Amortization of acquisition costs
188,202


44,467


3,382









236,051

Commissions, premium taxes, and non-deferred acquisition costs
81,391


43,129


20








(84
)

(2)
124,456

Insurance administrative expense (1)












96,881






96,881

Parent expense












4,405






4,405

Stock compensation expense












13,989






13,989

Interest expense









42,479









42,479

Total expenses
804,837

 
368,813

 
(3,547
)

289,425

 
115,275

 
(84
)
 
 
1,574,719

Subtotal
287,904

 
104,136

 
3,572

 
109,270

 
(114,388
)
 
—

 
 
390,494

Nonoperating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
287,904

 
$
104,136

 
$
3,572

 
$
109,270

 
$
(114,388
)
 
$
—

 
 
390,494

Deduct applicable income taxes
 
 
(120,420
)
Segment profits after tax
 
 
270,074

Add back income taxes applicable to segment profitability
 
 
120,420

Add (deduct) realized investment gains (losses)
 
   
4,298

Pretax income per Consolidated Statements of Operations
 
   
$
394,792


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.

 
Six Months Ended June 30, 2015 (3)
 
Life

Health

Annuity

Investment

Other &
Corporate

Adjustments

 
Consolidated
Revenue:














Premium
$
1,033,380


$
461,082


$
78












$
1,494,540

Net investment income









$
386,419









386,419

Other income












$
1,464


$
(104
)

(2)
1,360

Total revenue
1,033,380

 
461,082

 
78

 
386,419

 
1,464

 
(104
)
 
 
1,882,319

Expenses:



















 
Policy benefits
687,065


299,227


19,799












1,006,091

Required interest on reserves
(273,615
)

(34,034
)

(26,756
)

334,405









—

Required interest on DAC
85,985


11,358


607


(97,950
)








—

Amortization of acquisition costs
177,265


40,924


4,209












222,398

Commissions, premium taxes, and non-deferred acquisition costs
75,900


40,418


23








(104
)

(2)
116,237

Insurance administrative expense (1)












91,425






91,425

Parent expense












4,485






4,485

Stock compensation expense












15,041






15,041

Interest expense









38,174









38,174

Total expenses
752,600

 
357,893

 
(2,118
)

274,629

 
110,951

 
(104
)
 
 
1,493,851

Subtotal
280,780

 
103,189

 
2,196

 
111,790

 
(109,487
)
 
—

 
 
388,468

Nonoperating items
 
 
 
 
 
 
 
 
 
 
—

 
 
—

Measure of segment profitability (pretax)
$
280,780

 
$
103,189

 
$
2,196

 
$
111,790

 
$
(109,487
)
 
$
—

 
 
388,468

Deduct applicable income taxes
 
 
(126,939
)
Segment profits after tax
 
 
261,529

Add back income taxes applicable to segment profitability
 
 
126,939

Add (deduct) realized investment gains (losses)
 
  
2,732

Pretax income per Consolidated Statements of Operations
 
  
$
391,200


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
(3) Certain prior year balances were adjusted to give effect to discontinued operations as described in Note 5—Discontinued Operations.

Analysis of Profitability By Segment
The following table summarizes the measures of segment profitability for comparison. It also reconciles segment profits to net income.
Analysis of Profitability by Segment
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
Life insurance underwriting margin
$
143,604

 
$
139,377

 
$
287,904


$
280,780

Health insurance underwriting margin
52,621

 
51,612

 
104,136


103,189

Annuity underwriting margin
1,941

 
1,103

 
3,572


2,196

Excess investment income
54,597

 
56,864

 
109,270


111,790

Other and corporate:
 
 
 
 



Other income
422

 
742

 
887


1,464

Administrative expense
(48,413
)
 
(45,474
)
 
(96,881
)

(91,425
)
Corporate and adjustments
(9,433
)
 
(10,114
)
 
(18,394
)

(19,526
)
Pre-tax total
195,339

 
194,110

 
390,494

 
388,468

Applicable taxes
(58,649
)
 
(63,282
)
 
(120,420
)

(126,939
)
After-tax total, before discontinued operations
136,690

 
130,828

 
270,074

 
261,529

Discontinued operations (after tax)(1)
(865
)
 
(5,417
)
 
(10,406
)

(14,547
)
After-tax total, after discontinued operations
135,825

 
125,411

 
259,668

 
246,982

Reconciling items, net of tax:
 
 
 
 



Realized gains (losses) - Investments
2,604

 
1,699

 
2,794


1,776

Net income
$
138,429

 
$
127,110

 
$
262,462

 
$
248,758


(1) Income (loss) from discontinued operations (after tax) is included for purpose of reconciling to net income.