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Business Segments (Tables)
 6 Months Ended
Jun. 30, 2017
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 Condensed Consolidated Statement of Operations
 
Three Months Ended June 30, 2017
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
573,836

 
$
242,775

 
$
3

 
 
 
 
 
 
 
 
$
816,614

Net investment income
 
 
 
 
 
 
$
212,776

 
 
 
 
 
 
212,776

Other income
 
 
 
 
 
 
 
 
$
427

 
$
(34
)
 
(2)
393

    Total revenue
573,836

 
242,775

 
3

 
212,776

 
427

 
(34
)
 
 
1,029,783

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
388,765

 
156,579

 
8,977

 
 
 
 
 
2,094

 
(3)
556,415

Required interest on reserves
(150,652
)
 
(19,267
)
 
(12,394
)
 
182,313

 
 
 
 
 
 
—

Required interest on DAC
46,213

 
5,840

 
174

 
(52,227
)
 
 
 
 
 
 
—

Amortization of acquisition costs
98,473

 
23,016

 
632

 
 
 
 
 
 
 
 
122,121

Commissions, premium taxes, and non-deferred acquisition costs
43,708

 
21,351

 
7

 
 
 
 
 
(34
)
 
(2)
65,032

Insurance administrative expense (1)
 
 
 
 
 
 
 
 
51,412

 


 

51,412

Parent expense
 
 
 
 
 
 
 
 
2,665

 
 
 
 
2,665

Stock compensation expense
 
 
 
 
 
 
 
 
8,351

 
 
 
 
8,351

Interest expense
 
 
 
 
 
 
21,156

 
 
 
 
 
 
21,156

Total expenses
426,507

 
187,519

 
(2,604
)
 
151,242

 
62,428

 
2,060

 
 
827,152

Subtotal
147,329

 
55,256

 
2,607

 
61,534

 
(62,001
)
 
(2,094
)
 
 
202,631

Non-operating items
 
 
 
 
 
 
 
 
 
 
2,094

 
(3)
2,094

Measure of segment profitability (pretax)
$
147,329

 
$
55,256

 
$
2,607

 
$
61,534

 
$
(62,001
)
 
$
—

 
 
204,725

Deduct applicable income taxes
 
 
(62,543
)
Segment profits after tax
 
 
142,182

Add back income taxes applicable to segment profitability
 
 
62,543

Add (deduct) realized investment gains (losses)
 
   
(705
)
Add (deduct) administrative settlements (3)
 
 
(2,094
)
Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
201,926


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

 
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

Non-operating 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 from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
199,344


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


 
Six Months Ended June 30, 2017
 
Life
 
Health
 
Annuity
 
Investment
 
Other &
Corporate
 
Adjustments
 
  
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium
$
1,149,673

 
$
487,566

 
$
6

 

 

 


 

$
1,637,245

Net investment income

 

 

 
$
421,058

 

 


 

421,058

Other income

 

 

 

 
$
878

 
$
(69
)
 
(2)
809

    Total revenue
1,149,673

 
487,566

 
6

 
421,058

 
878

 
(69
)
 

2,059,112

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy benefits
779,844

 
314,330

 
17,923

 

 

 
2,094

 
(3)
1,114,191

Required interest on reserves
(299,477
)
 
(38,242
)
 
(24,812
)
 
362,531

 

 

 

—

Required interest on DAC
92,149

 
11,649

 
352

 
(104,150
)
 

 

 

—

Amortization of acquisition costs
198,378

 
48,343

 
1,308

 

 

 

 

248,029

Commissions, premium taxes, and non-deferred acquisition costs
87,346

 
42,853

 
18

 


 


 
(69
)
 
(2)
130,148

Insurance administrative expense (1)


 


 


 


 
103,325

 


 

103,325

Parent expense


 


 


 


 
4,898

 


 

4,898

Stock compensation expense


 


 


 


 
16,546

 


 

16,546

Interest expense


 


 


 
41,855

 


 


 

41,855

Total expenses
858,240

 
378,933

 
(5,211
)
 
300,236

 
124,769

 
2,025

 
 
1,658,992

Subtotal
291,433

 
108,633

 
5,217

 
120,822

 
(123,891
)
 
(2,094
)
 
 
400,120

Non-operating items
 
 
 
 
 
 
 
 
 
 
2,094

 
(3)
2,094

Measure of segment profitability (pretax)
$
291,433

 
$
108,633

 
$
5,217

 
$
120,822

 
$
(123,891
)
 
$
—

 
 
402,214

Deduct applicable income taxes
 
 
(121,361
)
Segment profits after tax
 
 
280,853

Add back income taxes applicable to segment profitability
 
 
121,361

Add (deduct) realized investment gains (losses)
 
   
(6,453
)
Add (deduct) administrative settlements (3)
 
 
(2,094
)
Pretax income from continuing operations per Condensed Consolidated Statements of Operations
 
   
$
393,667


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



 
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

Non-operating 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 from continuing operations per Condensed Consolidated Statements of Operations
 
  
$
394,792


(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
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,
 
2017
 
2016
 
2017
 
2016
Life insurance underwriting margin
$
147,329

 
$
143,604

 
$
291,433

 
$
287,904

Health insurance underwriting margin
55,256

 
52,621

 
108,633

 
104,136

Annuity underwriting margin
2,607

 
1,941

 
5,217

 
3,572

Excess investment income
61,534

 
54,597

 
120,822

 
109,270

Other insurance:
 
 
 
 
 
 
 
Other income
427

 
422

 
878

 
887

Administrative expense
(51,412
)
 
(48,413
)
 
(103,325
)
 
(96,881
)
Corporate and adjustments
(11,016
)
 
(9,433
)
 
(21,444
)
 
(18,394
)
Segment profits before tax
204,725

 
195,339

 
402,214

 
390,494

Applicable taxes
(62,543
)
 
(58,649
)
 
(121,361
)
 
(120,420
)
Segment profits after tax
142,182

 
136,690

 
280,853

 
270,074

Discontinued operations (after tax)
(90
)
 
(865
)
 
(3,727
)
 
(10,406
)
Net operating income
142,092

 
135,825

 
277,126

 
259,668

Reconciling items, net of tax:
 
 
 
 
 
 
 
Realized gains (losses)—investments (after tax)
(458
)
 
2,604

 
(1,951
)
 
2,794

Administrative settlements (after tax)
(1,361
)
 
—

 
(1,361
)
 
—

Net income
$
140,273

 
$
138,429

 
$
273,814

 
$
262,462