Business Segments (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Segment Premium Revenue by Each Marketing Group

The tables below present segment premium revenue by each of Torchmark’s distribution channels.

Torchmark Corporation

Premium Income by Distribution Channel



	For the Year 2017
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
United American Independent	$	12,547	1	$	364,128	37	$	15	100	$	376,690	12
Liberty National Exclusive	274,635		12	196,207		20				470,842		14
American Income Exclusive	999,279		43	89,036		9				1,088,315		33
Family Heritage Exclusive	3,193		—	253,534		26				256,727		8
Direct Response	812,907		35	73,468		8				886,375		27
Other	203,986		9							203,986		6
	$	2,306,547	100	$	976,373	100	$	15	100	$	3,282,935	100



	For the Year 2016
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
United American Independent	$	13,733	1	$	355,015	38	$	38	100	$	368,786	12
Liberty National Exclusive	270,476		12	201,798		21				472,274		15
American Income Exclusive	913,355		42	84,382		9				997,737		32
Family Heritage Exclusive	2,866		—	236,075		25				238,941		8
Direct Response	782,765		36	70,393		7				853,158		27
Other	206,138		9							206,138		6
	$	2,189,333	100	$	947,663	100	$	38	100	$	3,137,034	100



	For the Year 2015
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
United American Independent	$	15,036	1	$	345,330	37	$	135	100	$	360,501	12
Liberty National Exclusive	271,113		13	209,150		23				480,263		16
American Income Exclusive	830,903		40	80,339		9				911,242		30
Family Heritage Exclusive	2,334		—	221,091		24				223,425		8
Direct Response	746,693		36	69,610		7				816,303		27
Other	206,986		10							206,986		7
	$	2,073,065	100	$	925,520	100	$	135	100	$	2,998,720	100

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 major income statement line items. See Note 1—Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.



	For the year 2017
	Life			Health			Annuity			Investment			Corporate & Other			Adjustments				Consolidated
Revenue:
Premium	$	2,306,547		$	976,373		$	15												$	3,282,935
Net investment income										$	847,885									847,885
Other income													$	1,270		$	(128	)	⁽²⁾	1,142
Total revenue	2,306,547			976,373			15			847,885			1,270			(128		)		4,131,962
Expenses:
Policy benefits	1,549,602			628,640			35,836									13,797			^(3,4)	2,227,875
Required interest on:
Policy reserves	(607,007		)	(77,792		)	(49,571		)	734,370										—
Deferred acquisition costs	186,236			23,454			690			(210,380		)								—
Amortization of acquisition costs	396,268			96,519			2,466									(4,850		)	⁽⁴⁾	490,403
Commissions, premium taxes, and non-deferred acquisition costs	177,111			86,044			32									1,673			^(2,5)	264,860
Insurance administrative expense⁽¹⁾													210,590							210,590
Parent expense													9,631							9,631
Stock-based compensation expense													33,654			3,380			⁽⁶⁾	37,034
Interest expense										84,532										84,532
Total expenses	1,702,210			756,865			(10,547		)	608,522			253,875			14,000				3,324,925
Subtotal	604,337			219,508			10,562			239,363			(252,605		)	(14,128		)		807,037
Non-operating items																14,128			^(3,4,5,6)	14,128
Measure of segment profitability (pretax)	$	604,337		$	219,508		$	10,562		$	239,363		$	(252,605	)	$	—			821,165
Deduct applicable income taxes																				(247,484		)
Net operating income from continuing operations																				573,681
Add back income taxes applicable to segment profitability																				247,484
Add (deduct) realized investment gains (losses)																				23,611
Deduct administrative settlements																				(8,659		)
Deduct non-operating expenses																				(288		)
Deduct guaranty fund assessments																				(1,801		)
Deduct increase in stock-based compensation expense due to Tax Legislation																				(3,380		)
Income before income taxes per Consolidated Statement of Operations																				$	830,648


(1)	Administrative expense is not allocated to insurance segments.


(2)	Elimination of intersegment commission.


(3)	Administrative settlements.


(4)	Non-operating expense.


(5)	Guaranty fund assessments.


(6)	Recognition of a one-time increase in stock-based compensation expense due to Tax Legislation.



	For the year 2016
	Life			Health			Annuity			Investment			Corporate & Other			Adjustments				Consolidated
Revenue:
Premium	$	2,189,333		$	947,663		$	38												$	3,137,034
Net investment income										$	806,903									806,903
Other income													$	1,534		$	(159	)	⁽²⁾	1,375
Total revenue	2,189,333			947,663			38			806,903			1,534			(159		)		3,945,312
Expenses:
Policy benefits	1,475,477			612,725			36,751									3,795			⁽³⁾	2,128,748
Required interest on:
Policy reserves	(577,827		)	(73,382		)	(51,131		)	702,340										—
Deferred acquisition costs	178,946			23,060			807			(202,813		)								—
Amortization of acquisition costs	374,499			90,385			4,179													469,063
Commissions, premium taxes, and non-deferred acquisition costs	164,476			84,819			38									(159		)	⁽²⁾	249,174
Insurance administrative expense⁽¹⁾													196,598			553			⁽⁴⁾	197,151
Parent expense													8,587							8,587
Stock-based compensation expense													26,326							26,326
Interest expense										83,345										83,345
Total expenses	1,615,571			737,607			(9,356		)	582,872			231,511			4,189				3,162,394
Subtotal	573,762			210,056			9,394			224,031			(229,977		)	(4,348		)		782,918
Non-operating items																4,348			^(3,4)	4,348
Measure of segment profitability (pretax)	$	573,762		$	210,056		$	9,394		$	224,031		$	(229,977	)	$	—			787,266
Deduct applicable income taxes																				(237,906		)
Net operating income from continuing operations																				549,360
Add back income taxes applicable to segment profitability																				237,906
Add (deduct) realized investment gains (losses)																				(10,683		)
Deduct administrative settlements																				(3,795		)
Deduct non-operating fees																				(553		)
Income before income taxes per Consolidated Statement of Operations																				$	772,235

(1) Administrative expense is not allocated to insurance segments.

(2) Elimination of intersegment commission.

(3) Administrative settlements.

(4) Non-operating fees.



	For the Year 2015
	Life			Health			Annuity			Investment			Corporate & Other			Adjustments				Consolidated
Revenue:
Premium	$	2,073,065		$	925,520		$	135												$	2,998,720
Net investment income										$	773,951									773,951
Other income													$	2,379		$	(194	)	⁽²⁾	2,185
Total revenue	2,073,065			925,520			135			773,951			2,379			(194		)		3,774,856
Expenses:
Policy benefits	1,374,608			602,610			38,994													2,016,212
Required interest on:
Policy reserves	(552,298		)	(69,057		)	(53,295		)	674,650										—
Deferred acquisition costs	172,947			22,760			1,138			(196,845		)								—
Amortization of acquisition costs	353,595			83,341			8,689													445,625
Commissions, premium taxes, and non-deferred acquisition costs	154,811			81,489			41									1,200			^(2,3)	237,541
Insurance administrative expense ⁽¹⁾													186,191							186,191
Parent expense													9,003							9,003
Stock-based compensation expense													28,664							28,664
Interest expense										76,642										76,642
Total expenses	1,503,663			721,143			(4,433		)	554,447			223,858			1,200				2,999,878
Subtotal	569,402			204,377			4,568			219,504			(221,479		)	(1,394		)		774,978
Non-operating items																1,394			⁽³⁾	1,394
Measure of segment profitability (pretax)	$	569,402		$	204,377		$	4,568		$	219,504		$	(221,479	)	$	—			776,372
Deduct applicable income taxes																				(253,459		)
Net operating income from continuing operations																				522,913
Add back income taxes applicable to segment profitability																				253,459
Add (deduct) realized investment gains (losses)																				(8,791		)
Deduct administrative settlements																				(1,394		)
Income before income taxes per Consolidated Statement of Operations																				$	766,187

(1) Administrative expense is not allocated to insurance segments.

(2) Elimination of intersegment commission.

(3) Administrative settlements.

Assets by Segment

The table below reconciles segment assets to total assets as reported in the consolidated financial statements.

Assets by Segment



	At December 31, 2017
	Life		Health		Annuity		Investment		Other		Consolidated
Cash and invested assets							$	17,853,047			$	17,853,047
Accrued investment income							233,453				233,453
Deferred acquisition costs	$	3,423,296	$	529,068	$	5,699					3,958,063
Goodwill	309,609		131,982								441,591
Other assets									$	988,831	988,831
Total assets	$	3,732,905	$	661,050	$	5,699	$	18,086,500	$	988,831	$	23,474,985



	At December 31, 2016
	Life		Health		Annuity		Investment		Other		Consolidated
Cash and invested assets							$	15,955,891			$	15,955,891
Accrued investment income							223,148				223,148
Deferred acquisition costs	$	3,261,220	$	512,701	$	9,237					3,783,158
Goodwill	309,609		131,982								441,591
Other assets									$	1,032,299	1,032,299
Total assets	$	3,570,829	$	644,683	$	9,237	$	16,179,039	$	1,032,299	$	21,436,087

Other Balances by Segment

Liabilities by Segment



	At December 31, 2017
	Life		Health		Annuity		Investment		Other		Consolidated
Future policy benefits	$	10,353,286	$	1,831,338	$	1,254,848					$	13,439,472
Unearned and advance premiums	16,927		44,503								61,430
Policy claims and other benefits payable	186,429		146,865								333,294
Debt							$	1,460,268			1,460,268
Other									$	1,949,100	1,949,100
Total liabilities	$	10,556,642	$	2,022,706	$	1,254,848	$	1,460,268	$	1,949,100	$	17,243,564



	At December 31, 2016
	Life		Health		Annuity		Investment		Other		Consolidated
Future policy benefits	$	9,825,776	$	1,706,870	$	1,293,191					$	12,825,837
Unearned and advance premiums	16,828		47,189								64,017
Policy claims and other benefits payable	156,437		143,128								299,565
Debt							$	1,397,640			1,397,640
Other									$	2,282,167	2,282,167
Total liabilities	$	9,999,041	$	1,897,187	$	1,293,191	$	1,397,640	$	2,282,167	$	16,869,226