TORCHMARK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Dollar amounts in thousands, except per share data)

~~Note 9—Earnings Per Share~~

~~A reconciliation of basic and diluted weighted-average shares outstanding is as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Basic weighted average shares outstanding 116,646,669
120,479,938
117,205,467
120,980,372
Weighted average dilutive options outstanding 2,449,882
2,267,910
2,554,158
2,055,407
Diluted weighted average shares outstanding 119,096,551
122,747,848
119,759,625
123,035,779
Antidilutive shares 1,444,280
—
1,037,328
18,158

Note 10—Business Segments

Torchmark's reportable segments are based on the insurance product lines it markets and administers: life insurance, health insurance, and annuities. These major product lines are set out as reportable segments because of the common characteristics of products within these categories, comparability of margins, and the similarity in regulatory environment and management techniques. Torchmark's chief operating decision makers evaluate the overall performance of the operations of the Company in accordance with these segments.

~~Annuity revenue is classified as “Other premium.”~~ Management’s measure of profitability for each insurance segment is insurance underwriting margin, which is underwriting income before other income and insurance administrative expenses. It represents the profit margin on insurance products before administrative expenses, and is calculated by deducting net policy obligations (claims incurred and change in reserves), commissions and other acquisition expenses from premium revenue. Torchmark further views the profitability of each insurance product segment by the marketing groups that distribute the products of that segment: direct response, independent agencies, or captive agencies.

Torchmark’s management prefers to evaluate the performance of its underwriting and investment activities separately, rather than allocating investment income to the underwriting results. As such, the investment function is presented as a stand-alone segment. The investment segment includes the management of the investment portfolio, debt, and cash flow. Management’s measure of profitability for this segment is excess investment income, which is the income earned on the investment portfolio less the required interest on net policy liabilities and financing costs. Financing costs include the interest on Torchmark’s debt. Other income and insurance administrative expense are classified in a separate ~~Other~~Corporate and other segment.

The majority of the Company’s required interest on net policy liabilities (benefit reserves less the deferred acquisition cost asset) is not credited to policyholder accounts. Instead, it is an actuarial assumption for discounting cash flows in the computation of benefit reserves and the amortization of the deferred acquisition cost asset. Investment income required to fund the required interest on net policy liabilities is removed from the investment segment and applied to the insurance segments to eliminate the effect of the required interest from the insurance segments. As a result, the investment segment measures net investment income against the required interest on net policy liabilities and financing costs, while the insurance segments simply measure premiums against net policy benefits and expenses. Management believes this presentation facilitates a more meaningful analysis of the Company’s underwriting and investment performance as the underwriting results are based on premiums, claims, and expenses and are not affected by unanticipated fluctuations in investment yields.

As noted, Torchmark’s ~~“core operations”~~core operations are insurance and investment management. The insurance segments issue policies for which premiums are collected for the eventual payment of policy benefits. In addition to policy benefits, operating expenses are incurred including acquisition costs, administrative expenses, and taxes. Because life and health contracts can be long term, premium receipts in excess of current expenses are invested. Investment activities, conducted by the investment segment, focus on seeking quality investments with a yield and term appropriate to support the insurance product obligations. These investments generally consist of fixed maturities, and, over the long

~~Table of Contents~~

~~TORCHMARK CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 10—Business Segments (continued)~~

term, the expected yields are taken into account when setting insurance premium rates and product profitability expectations. As a result, fixed maturities are generally held for long periods to support the liabilities, and Torchmark generally expects to hold investments until maturity. However, dispositions of investments occur from time to time, generally for reasons such as credit concerns, calls by issuers, or other factors.

Since Torchmark does not actively trade investments, realized gains and losses from the disposition and write down of investments are generally incidental to operations and are not considered a material factor in insurance pricing or product profitability. While from time to time these realized gains and losses could be significant to net income in the period in which they occur, they generally have a limited effect on the yield of the total investment portfolio. Further, ~~because the proceeds of the disposals are reinvested in the portfolio,~~ the disposals have little effect on the size of the portfolio as the proceeds of the disposals are reinvested in the portfolio and the income from the reinvestments is included in net investment income. Therefore, management removes realized investment gains and losses from results of core operations when evaluating the performance of the Company. For this reason, these gains and losses are excluded from Torchmark’s operating segments.

TMK 2018 FORM 10-Q QTR 2

Table of Contents

TORCHMARK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Dollar amounts in thousands, except per share data)

Note 10—Business Segments (continued)

Torchmark accounts for its stock options and restricted stock under current accounting guidance requiring stock options and stock grants to be expensed based on fair value at the time of grant. Management considers stock compensation expense to be an expense of the Parent Company. Therefore, stock compensation expense is treated as a corporate expense in Torchmark’s segment analysis.

The following tables set forth a reconciliation of Torchmark’s revenues and operations by segment to its ~~pretax~~pre-tax income and each significant line item in its Condensed Consolidated Statements of Operations.

~~Table of Contents~~

~~TORCHMARK CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 10—Business Segments (continued)~~

Reconciliation of Segment Operating Information to the Condensed Consolidated Statement of Operations



	Three Months Ended June 30, 2017																						Three Months Ended June 30, 2018
	Life			Health			Annuity			Investment			Other & Corporate			Adjustments				Consolidated			Life			Health			Annuity			Investment			Corporate & Other			Adjustments				Consolidated
Revenue:
Premium	$	573,836		$	242,775		$	3												$	816,614		$	602,534		$	251,440		$	5												$	853,979
Net investment income										$	212,776									212,776												$	218,568									218,568
Other income													$	427		$	(34	)	(2)	393															$	441		$	(25	)	(2)	416
Total revenue	573,836			242,775			3			212,776			427			(34		)		1,029,783			602,534			251,440			5			218,568			441			(25		)		1,072,963
Expenses:
Policy benefits	388,765			156,579			8,977									2,094			(3)	556,415			399,334			160,461			8,582													568,377
Required interest on reserves	(150,652		)	(19,267		)	(12,394		)	182,313										—			(158,101		)	(20,726		)	(11,885		)	190,712										—
Required interest on DAC	46,213			5,840			174			(52,227		)								—			48,275			6,079			150			(54,504		)								—
Amortization of acquisition costs	98,473			23,016			632													122,121			104,599			23,892			586													129,077
Commissions, premium taxes, and non-deferred acquisition costs	43,708			21,351			7									(34		)	(2)	65,032			47,250			22,196			6									(25		)	(2)	69,427
Insurance administrative expense ⁽¹⁾													51,412							51,412															55,276							55,276
Parent expense													2,665							2,665															2,847							2,847
Stock compensation expense													8,351							8,351
Stock-based compensation expense																																			10,497							10,497
Interest expense										21,156										21,156												22,411										22,411
Total expenses	426,507			187,519			(2,604		)	151,242			62,428			2,060				827,152			441,357			191,902			(2,561		)	158,619			68,620			(25		)		857,912
Subtotal	147,329			55,256			2,607			61,534			(62,001		)	(2,094		)		202,631			161,177			59,538			2,566			59,949			(68,179		)	—				215,051
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			$	161,177		$	59,538		$	2,566		$	59,949		$	(68,179	)	$	—			215,051
Deduct applicable income taxes	Deduct applicable income taxes																			(62,543		)	Deduct applicable income taxes																			(39,991		)
Segment profits after tax																				142,182
Net operating income																							Net operating income																			175,060
Add back income taxes applicable to segment profitability	Add back income taxes applicable to segment profitability																			62,543			Add back income taxes applicable to segment profitability																			39,991
Add (deduct) realized investment gains (losses)	Add (deduct) realized investment gains (losses)																			(705		)	Add (deduct) realized investment gains (losses)																			11,813
Add (deduct) administrative settlements ⁽³⁾																				(2,094		)
Pretax income from continuing operations per Condensed Consolidated Statements of Operations																				$	201,926
Income before income taxes per Condensed Consolidated Statement of Operations																							Income before income taxes per Condensed Consolidated Statement of Operations																			$	226,864

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

~~(2)~~


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


(2)	Elimination of intersegment commission.

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TORCHMARK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Dollar amounts in thousands, except per share data)

Note 10—Business Segments (continued)

~~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



	Six Months Ended June 30, 2017
	Life			Health			Annuity			Investment			Corporate & Other			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-based 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		)
Net operating income																				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		)
Income before income taxes 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

~~Summary~~How Torchmark Views Its Operations: Torchmark is the holding company for a group of ~~Operations~~insurance companies which primarily market individual life and supplemental health insurance to middle income households throughout the United States. We view our operations by segments, which are the insurance product lines of life, health, and annuities, and the investment segment that supports the product lines. Segments are aligned based on their common characteristics, comparability of the profit margins, and management techniques used to operate each segment.

Insurance Product Line Segments. ~~. Torchmark’s operations are segmented into its insurance underwriting and investment operations as described~~As fully explained in Note 10—Business Segmentsin the Notes to the Condensed Consolidated Financial Statements~~. The measures of profitability are useful in evaluating~~, the ~~performance of~~insurance product line segments involve the ~~segments~~marketing, underwriting, and the ~~marketing groups within each~~administration of policies. Each product line is further segmented by the various distribution units that market the insurance ~~segment because each of our~~policies. Each distribution ~~channels~~unit operates in a niche market offering insurance products designed for that particular market. ~~Insurance~~Whether analyzing profitability of a segment as a whole, or the individual distribution units within the segment, the measure of profitability used by management is the underwriting margin, ~~consists~~which is:

Premium revenue

Less:

Policy obligations

Policy acquisition costs and commissions

Investment Segment. The investment segment involves the management of ~~premium less~~our capital resources, including investments and the management of corporate debt and liquidity. Our measure of profitability for the investment segment is excess investment income, which is:

Net investment income

Less:

Required interest on net policy ~~obligations, commissions and other acquisition expenses. These measures enable management to view period-to-period trends, and to make informed decisions regarding future courses of action.~~liabilities

Financing costs

The tables in Note 1010—Business Segments ~~demonstrate how the measures of profitability are determined. Those tables also~~ reconcile ~~our~~Torchmark’s revenues and expenses by segment to its major income statement line ~~items for the three month and six month periods ended June 30, 2017 and 2016. Additionally, a table in that note,~~ items.~~Analysis~~

TMK 2018 FORM 10-Q QTR 2

Table of ~~Profitability by Segment~~, provides a summary of the profitability measures that demonstrates year-to-year comparability and reconciles those measures to our net income. That summary represents our overall operations in the manner that management views the business, and is a basis of the following highlights discussion.Contents

We use three statistical measures as indicators of future premium growth: “annualized premium in force", "net sales", and “first-year collected premium.” Annualized premium in force is defined as the premium income that would be received over the following twelve months at any given date on all active policies if those policies remain in force throughout the twelve month period. Annualized premium in force is an indicator of potential growth in premium revenue. Annualized premium issued is the gross premium that would be received during the policies’ first year in force, assuming that none of the policies lapsed or terminated. Net sales is defined as annualized premium issued, net of cancellations in the first thirty days after issue, except for Globe Life Direct Response, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer has expired. Although lapses and terminations will occur, we believe that net sales is a useful indicator of the rate of acceleration of premium growth. First-year collected premium is the premium collected during the reporting period for all policies in their first policy year. First-year collected premium takes lapses into account in the first policy year when lapses are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added to premium income in the future.

~~A discussion of operations by each segment follows later in this report. These discussions compare the first six months of 2017 with the same period of 2016, unless otherwise noted~~. ~~The following discussions are presented in the manner we view our operations, as described in~~ ~~Note 10~~.

Current Highlights, comparing the first six months of ~~2017~~2018 with the first six months of ~~2016.~~2017.


•	Net income as a return on equity (ROE) was 12.2%⁽¹⁾ and net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio was 14.6%⁽²⁾.

Total premium increased 4% over the prior year to $1.7 billion. Life premium increased 4% over the prior year to $1.2 billion. Life underwriting margin increased 8% from $291 million in 2017 to $316 million in 2018.

Through June 30, 2018, the Company repurchased 2 million shares at a total cost of $174 million for an average share price of $85.41.

The following represents net income and net operating income for the six months ended June 30, 2018 and 2017.


(1)	In 2017, new tax legislation revised the corporate income tax rate from 35% to 21% effective January 1, 2018. See Note 5—Income Taxes for further discussion. In 2018, income tax expense was calculated based on the 21% rate as compared with a 35% rate for 2017.


(2)	Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of the unrealized gains or losses which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio.

Summary of Operations. Net income ~~per diluted common share~~ increased8% 31% to ~~$2.29~~$358 million from ~~$2.13.~~$274 million. This increase was primarily related to the tax reform enacted in 2017 which reduced corporate income tax rates. Included in net income were after-tax realized gains of $11 million in 2018, compared with realized after-tax losses of ~~$2.0 million in 2017compared with gains of $2.8~~$2 million for the same period in~~2016.~~ 2017. On a diluted per common share basis, net income per common share for the six months ended June 30, 2018 increased 34% from $2.29 to $3.08. The per share results have exceeded the growth in dollar amounts due to our share repurchase program. Realized gains and losses are presented more fully under the caption Realized Gains and Losses in this report.

Net operating income ~~from continuing operations~~ is the consolidated total of segment profits after tax and as such is considered a non-GAAP measure. Net income is the most directly comparable GAAP measure. See Note 10—Business Segments for a discussion of the usefulness and purpose of this measure. Net operating income ~~from continuing operations~~ increased 4%24% or ~~$10.8~~$66 million to ~~$281~~$347 million for the six months ended June 30, ~~2017~~2018 compared with ~~$270~~$281 million for the same ~~2016~~2017 period.

Total premium income rose 5% in 2017 to $1.6 billion. Total net sales increased 2% to $284 million, when compared with the same period in 2016. First-year collected premium was $225 million for the 2017 period, compared with $227 million for the 2016 period.

Life insurance premium income grew 5% to $1.1 billion. Life net sales were flat when compared with the same period in 2016. First-year collected life premium grew 1% during the first six months of 2017 to $160 million over the same period in 2016. Life underwriting margin as a percentage of premium was down to 25% from 26% as a result of higher Globe Life Direct Response policy obligations. Underwriting income increased 1% to $291 million when compared with the same period in 2016.

Health insurance premium income increased 3% to $488 million over the prior year total of $473 million. Health net sales rose 8% to $70 million for the six month period. First-year collected health premium fell 4% to $66 million. ~~Health margins were flat at 22%. Underwriting income increased 4% to $109 million for the first six months of 2017.~~

Insurance administrative expenses were up 6.7% in 2017 when compared with the prior year period. These expenses were 6.3% as a percentage of premium during the first six months of 2017 compared with 6.2% a year earlier. The

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Torchmark's operations on a segment-by-segment basis are discussed in depth below. The life insurance segment is our strongest segment and is the largest contributor to earnings in each year presented.

Analysis of Profitability by Segment

(Dollar amounts in thousands)



	Six Months Ended June 30,
	2018			2017			Change			%
Life insurance underwriting margin	$	315,998		$	291,433		$	24,565		8
Health insurance underwriting margin	117,586			108,633			8,953			8
Annuity underwriting margin	5,152			5,217			(65		)	(1	)
Excess investment income	121,886			120,822			1,064			1
Other insurance:
Other income	764			878			(114		)	(13	)
Administrative expense	(110,748		)	(103,325		)	(7,423		)	7
Corporate and other	(24,696		)	(21,444		)	(3,252		)	15
Pre-tax total	425,942			402,214			23,728			6
Applicable taxes	(78,712		)	(121,361		)	42,649			(35	)
Net operating income	347,230			280,853			66,377			24
Reconciling items, net of tax:
Realized gains (losses)	10,874			(1,951		)	12,825
Part D adjustment - discontinued operations	(79		)	(3,727		)	3,648
Administrative settlements	—			(1,361		)	1,361
Net income	$	358,025		$	273,814		$	84,211		31

Total premium income rose 4% for the six months ended June 30, 2018 to $1.7 billion. Total net sales increased 2% to $289 million, when compared with the same period in 2017. First-year collected premium was $232 million for the 2018 period, compared with $225 million for the 2017 period.

Life insurance premium income increased 4% to $1.2 billion over the prior year total of $1.1 billion. Life net sales fell 1% to $213 million for the six month period of 2018. First-year collected life premium rose 1% to $161 million. Life underwriting margins, as a percent of premium, increased to 26% in 2018 from 25% in the prior year period. Underwriting income increased to $316 million for the first six months of 2018, 8% over the same period in 2017.

Health insurance premium income increased 3% to $503 million over the prior year total of $488 million. Health net sales rose 9% to $77 million for the six month period of 2018. First-year collected health premium rose 8% to $71 million. Health underwriting margins, as a percent of premium, increased to 23% in 2018 from 22% in the prior year period. Underwriting income increased to $118 million for the first six months of 2018, 8% over the same period in 2017.

Excess investment income, the measure of profitability of our investment segment, increased 1% during the first six months of 2018 to $122 million from $121 million in the same period in 2017. Growth in excess investment income continues to be impeded by investing at yields lower than the yield on dispositions and the average yield. Excess investment income per common share, reflecting the impact of our share repurchase program, increased 4% in 2018 to $1.05 from $1.01 in the same period last year.

Insurance administrative expenses were up 7.2% in 2018 when compared with the prior year period. These expenses were 6.5% as a percentage of premium during the first six months of 2018 compared with 6.3% a year earlier. The increase in administrative expenses was primarily due to an increase in pension and other employee costs and investments in information technology.

Excess investment income is defined as net investment income less the required interest on net policy liabilities and the interest cost associated with capital funding or “financing costs”. Excess investment income per diluted common share is an important measure to management. Refer to the ~~Excess Investment Income~~ ~~section~~

TMK 2018 FORM 10-Q QTR 2

Table of this report for further details. Excess investment income per common share increased 13% in 2017 to $1.01 from $0.89 in the same period last year, while the dollar amount of excess investment income increased 11% to $121 million. Net investment income rose $22 million or 6% to $421 million in 2017, below the 7% growth in our average investment portfolio at amortized cost. The average effective yield earned on the fixed maturity portfolio, which represented 96% of our investments at amortized cost, decreased to 5.70% in the 2017 period from 5.81% in the prior period. Required interest rose 5% or $11 million to $258 million, in line with the growth in average net policy liabilities. Financing costs decreased~~1% to$42 million. Please refer to the discussion under~~ ~~Capital Resources~~ ~~for more information on debt and interest expense.~~Contents

In the first six months of 2017, we invested new money in fixed maturity securities at an effective annual yield of 4.91%, compared with 4.87% in the same period of 2016. These new investments had an average rating of BBB+ and an average life to maturity of twenty-two years. Approximately 95% of the fixed-maturity portfolio at amortized cost was investment grade at June 30, 2017. Cash and short-term investments were $192 million at that date, compared with $148 million at December 31, 2016.

The net unrealized gain position in our fixed maturity portfolio grew from $1.1 billion at December 31, 2016 to $1.7 billion during the first six months of 2017 due primarily to changes in market interest rates.

Share Repurchases. We have an on-going share repurchase program which began in 1986 ~~which~~that is reviewed quarterly and is reaffirmed by the Board of Directors on an annual basis. The program was reaffirmed on [ August 7, ~~2017~~.2018.] With no specified authorization amount, we determine the amount of repurchases based on the amount of our excess cash flow, general market conditions, and other alternative uses. These purchases are made at the Parent Company with excess cash flow. Excess cash flow is primarily made up of cash received from the insurance subsidiaries less dividends paid to shareholders and interest paid on our debt. See further discussion in the Capital Resources section below. Share purchases are also made with the proceeds from option exercises by current and former employees in order to reduce dilution. The following chart summarizes share purchases for the six month periods ended June 30, ~~2017~~2018 and ~~2016.~~2017.

Analysis of Share Purchases

(Amounts in thousands, except per share data)


	Six Months Ended June 30,										Six Months Ended June 30,
	2017					2016					2018					2017
	Shares	Amount		Average Price		Shares	Amount		Average Price		Shares	Amount		Average Price		Shares	Amount		Average Price
Purchases with:
Excess cash flow at the Parent Company	2,147	$	163,216	$	76.03	2,940	$	163,079	$	55.46	2,042	$	174,388	$	85.41	2,147	$	163,216	$	76.03
Option exercise proceeds	528	40,540		76.78		685	39,896		58.27		367	32,201		87.64		528	40,540		76.78
Total	2,675	$	203,756	$	76.18	3,625	$	202,975	$	55.99	2,409	$	206,589	$	85.75	2,675	$	203,756	$	76.18

Below Investment Grade Total Fixed Maturities % of Total Fixed Maturities
Cost or
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Cost or
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value At Amortized Cost At Fair Value

Corporates:
Financial
Insurance - life, health, P&C $ 58,330
$ 2,903
$ (2,395 ) $ 58,838
$ 1,999,531
$ 314,293
$ (3,500 ) $ 2,310,324
14 14
Banks 41,532
643
(5,848 ) 36,327
747,955
100,858
(6,718 ) 842,095
5 5
Other financial 74,956
—
(18,022 ) 56,934
752,316
57,059
(20,940 ) 788,435
5 5
Total financial 174,818
3,546
(26,265 ) 152,099
3,499,802
472,210
(31,158 ) 3,940,854
24 24
Utilities
Electric 20,778
1,140
—
21,918
1,442,893
266,741
(3,246 ) 1,706,388
10 11
Gas and water —
—
—
—
494,931
49,809
(325 ) 544,415
3 3
Total utilities 20,778
1,140
—
21,918
1,937,824
316,550
(3,571 ) 2,250,803
13 14
Industrial - Energy
Pipelines 40,607
606
(2,230 ) 38,983
857,108
95,796
(5,860 ) 947,044
6 6
Exploration and production 28,930
786
(404 ) 29,312
531,394
52,764
(6,856 ) 577,302
4 4
Oil field services 33,874
—
(5,409 ) 28,465
83,738
8,906
(5,409 ) 87,235
1 1
Refiner —
—
—
—
62,927
13,100
—
76,027
— —
Driller 54,602
—
(17,827 ) 36,775
54,602
—
(17,827 ) 36,775
— —
Total energy 158,013
1,392
(25,870 ) 133,535
1,589,769
170,566
(35,952 ) 1,724,383
11 11
Industrial - Basic materials
Chemicals —
—
—
—
527,099
47,507
(270 ) 574,336
4 4
Metals and mining 68,087
3,528
(328 ) 71,287
389,939
58,195
(328 ) 447,806
3 3
Forestry products and paper —
—
—
—
112,443
15,251
—
127,694
1 1
Total basic materials 68,087
3,528
(328 ) 71,287
1,029,481
120,953
(598 ) 1,149,836
8 8
Industrial - Consumer, non-cyclical —
—
—
—
1,693,788
161,669
(6,761 ) 1,848,696
11 11
Other industrials 47,271
1,908
(24 ) 49,155
1,346,850
164,331
(1,794 ) 1,509,387
9 9
Industrial -
Transportation 26,565
473
(123 ) 26,915
539,041
76,731
(1,302 ) 614,470
4 4
Other corporate sectors 116,539
3,700
(5,562 ) 114,677
1,238,347
128,019
(9,562 ) 1,356,804
8 8
Total corporates 612,071
15,687
(58,172 ) 569,586
12,874,902
1,611,029
(90,698 ) 14,395,233
88 89
Other fixed maturities:
Government (U.S., municipal, and foreign) 306
—
—
306
1,589,606
138,231
(1,880 ) 1,725,957
11 10
Collateralized debt obligations 59,871
16,677
(10,303 ) 66,245
59,871
16,677
(10,303 ) 66,245
— —
Other asset-backed securities —
—
—
—
125,454
3,551
(15 ) 128,990
1 1

Mortgage-backed securities⁽¹⁾
—
—
—
—
1,718
144
(1 ) 1,861
— —
Total fixed maturities $ 672,248
$ 32,364
$ (68,475 ) $ 636,137
$ 14,651,551
$ 1,769,632
$ (102,897 ) $ 16,318,286
100 100



	Below Investment Grade									Total Fixed Maturities									% of Total Fixed Maturities
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		At Amortized Cost	At Fair Value

Corporates:
Financial
Insurance - life, health, P&C	$	66,489	$	3,896	$	(3,650	)	$	66,735	$	2,018,315	$	346,364	$	(4,588	)	$	2,360,091	14	14
Banks	27,104		—		(2,727		)	24,377		747,249		117,724		(3,007		)	861,966		5	5
Other financial	74,956		—		(17,661		)	57,295		853,583		74,765		(18,524		)	909,824		6	6
Total financial	168,549		3,896		(24,038		)	148,407		3,619,147		538,853		(26,119		)	4,131,881		25	25
Utilities
Electric	20,713		1,159		—			21,872		1,463,872		306,812		(1,275		)	1,769,409		10	11
Gas and water	—		—		—			—		520,418		64,726		(120		)	585,024		3	3
Total utilities	20,713		1,159		—			21,872		1,984,290		371,538		(1,395		)	2,354,433		13	14
Industrial - Energy
Pipelines	40,590		937		(1,092		)	40,435		880,379		117,765		(2,320		)	995,824		6	6
Exploration and production	28,174		1,180		(85		)	29,269		527,581		79,784		(2,620		)	604,745		4	4
Oil field services	33,867		—		(6,004		)	27,863		83,722		11,074		(6,004		)	88,792		1	1
Refiner	—		—		—			—		73,106		17,430		—			90,536		—	—
Driller	54,561		87		(14,448		)	40,200		54,561		87		(14,448		)	40,200		—	—
Total energy	157,192		2,204		(21,629		)	137,767		1,619,349		226,140		(25,392		)	1,820,097		11	11
Industrial - Basic materials
Chemicals	—		—		—			—		541,785		59,216		(20		)	600,981		3	3
Metals and mining	57,438		7,727		—			65,165		387,134		85,105		—			472,239		3	3
Forestry products and paper	—		—		—			—		112,175		16,911		—			129,086		1	1
Total basic materials	57,438		7,727		—			65,165		1,041,094		161,232		(20		)	1,202,306		7	7
Industrial - Consumer, non-cyclical	21,334		—		(4,498		)	16,836		1,834,778		192,887		(6,494		)	2,021,171		12	12
Other industrials	47,136		2,965		—			50,101		1,326,051		179,694		(671		)	1,505,074		9	9
Industrial - Transportation	26,443		1,581		(162		)	27,862		553,435		90,211		(195		)	643,451		3	4
Other corporate sectors	143,995		5,076		(9,387		)	139,684		1,310,445		123,588		(13,236		)	1,420,797		9	8
Total corporates	642,800		24,608		(59,714		)	607,694		13,288,589		1,884,143		(73,522		)	15,099,210		89	90
Other fixed maturities:
Government (U.S., municipal, and foreign)	306		—		(105		)	201		1,501,865		147,772		(1,507		)	1,648,130		10	9
Collateralized debt obligations	59,150		20,084		(7,653		)	71,581		59,150		20,084		(7,653		)	71,581		—	—
Other asset-backed securities	—		—		—			—		144,040		4,790		—			148,830		1	1
Mortgage-backed securities⁽¹⁾	—		—		—			—		1,457		118		(1		)	1,574		—	—
Total fixed maturities	$	702,256	$	44,692	$	(67,472	)	$	679,476	$	14,995,101	$	2,056,907	$	(82,683	)	$	16,969,325	100	100

~~(3)~~


(1)	Amount added to (deducted from) comprehensive income to produce the stated GAAP item, per accounting rule ASC 320-10-35-1.


(2)	Includes the value of insurance purchased.


(3)	Torchmark’s debt covenants require that the effect of this accounting rule be removed to determine this ratio. This ratio is computed by dividing total debt by the sum of total debt and shareholders’ equity.

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Interest coverage was ~~10.4~~11.0 times in the first six ~~month~~months of ~~2017,~~2018, compared with ~~10.3~~10.4 times in the ~~2016~~2017 period. Interest coverage is computed by dividing interest expense into the sum of pretax income and interest expense.

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Cautionary Statements

We caution readers regarding certain forward-looking statements contained in the previous discussion and elsewhere in this document, and in any other statements made by, or on behalf of Torchmark whether or not in future filings with the Securities and Exchange Commission. Any statement that is not a historical fact or that might otherwise be considered an opinion or projection concerning Torchmark or its business, whether express or implied, is meant as and should be considered a forward-looking statement. Such statements represent management’s opinions concerning future operations, strategies, financial results or other developments. We specifically disclaim any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.

Forward-looking statements are based upon estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control. If these estimates or assumptions prove to be incorrect, the actual results of Torchmark may differ materially from the forward-looking statements made on the basis of such estimates or assumptions. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, which may be national in scope, related to the insurance industry generally, or applicable to Torchmark specifically. Such events or developments could include, but are not necessarily limited to:


1)	Economic and other conditions leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality, morbidity, and utilization of health care services that differ from Torchmark’s assumptions;


2)	Regulatory developments, including changes in governmental regulations (particularly those impacting taxes and changes to the Federal Medicare program that would affect Medicare Supplement);


3)	Market trends in the senior-aged health care industry that provide alternatives to traditional Medicare (such as Health Maintenance Organizations and other managed care or private plans) and that could affect the sales of traditional Medicare Supplement insurance;


4)	Interest rate changes that affect product sales and/or investment portfolio yield;


5)	General economic, industry sector or individual debt issuers’ financial conditions that may affect the current market value of securities we own, or that may impair an issuer’s ability to make principal and/or interest payments due on those securities;


6)	Changes in pricing competition;


7)	Litigation results;


8)	Levels of administrative and operational efficiencies that differ from our assumptions;


9)	The ability to obtain timely and appropriate premium rate increases for health insurance policies from our regulators;


10)	The customer response to new products and marketing initiatives;


11)	Reported amounts in the financial statements which are based on management’s estimates and judgments which may differ from the actual amounts ultimately realized; and


12)	Compromise by a malicious actor or other event that causes a loss of secure data from, or inaccessibility to, our computer and other information technology systems.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no quantitative or qualitative changes with respect to market risk exposure during the six months ended June 30, ~~2017.~~2018.

Item 4. Controls and Procedures

Torchmark, under the direction of the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, has established disclosure controls and procedures that are designed to ensure that information required to be disclosed by Torchmark in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to Torchmark’s management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As of the end of the fiscal quarter completed June 30, ~~2017,~~2018, an evaluation was performed under the supervision and with the participation of Torchmark management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, of Torchmark’s disclosure controls and procedures (as those terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon their evaluation, the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer have concluded that Torchmark’s disclosure controls and procedures are effective as of the date of this Form 10-Q. In compliance with Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), each of these officers executed a Certification included as an exhibit to this Form 10-Q.

For the quarter ended June 30, ~~2017,~~2018, there have not been any changes in Torchmark’s internal control over financial reporting or in other factors that could significantly affect this control over financial reporting subsequent to the date of their evaluation which have materially affected, or are reasonably likely to materially affect, Torchmark’s internal control over financial reporting. No material weaknesses in such internal controls were identified in the evaluation and as a consequence, no corrective action was required to be taken.

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Part II – Other Information

Item 1. Legal Proceedings

Torchmark and its subsidiaries, in common with the insurance industry in general, are subject to litigation, including claims involving tax matters, alleged breaches of contract, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of agents of Torchmark’s subsidiaries, employment discrimination, and miscellaneous other causes of action. Based upon information presently available, and in light of legal and other factual defenses available to Torchmark and its subsidiaries, management does not believe that such litigation will have a material adverse effect on Torchmark’s financial condition, future operating results or liquidity; however, assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future. This bespeaks caution, particularly in states with reputations for high punitive damage verdicts. Torchmark’s management recognizes that large punitive damage awards bearing little or no relation to actual damages continue to be awarded by juries in jurisdictions in which Torchmark and its subsidiaries have substantial business, creating the potential for unpredictable material adverse judgments in any given punitive damage suit.

~~Torchmark subsidiaries are currently the subject~~See further discussion of ~~audits regarding the identification, reporting~~litigation and ~~escheatment of unclaimed property arising from life insurance policies~~other legal proceedings in Note 6—Commitments and a limited number of annuity contracts. These audits are being conducted by private entities that have contracted with forty-eight various states through their respective Departments of Revenue, and have not resulted in any financial assessment from any state nor indicated any liability. The audits are wide-ranging and seek large amounts of data regarding claims handling, procedures and payments of contract benefits arising from unreported death claims. No estimate of range can be made at this time for loss contingencies related to possible administrative penalties or amounts that could be payable to the states for the escheatment of abandoned property.Contingencies.

Item 1A. Risk Factors

Torchmark had no material changes to its risk factors.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Period
(a) Total Number
of Shares
Purchased

(b) Average
Price Paid
Per Share

(c) Total Number of
Shares Purchased as Part
of Publicly Announced
Plans or Programs

(d) Maximum Number
of Shares (or
Approximate Dollar
Amount) that May
Yet Be Purchased
Under the Plans or
Programs
April 1-30, 2017 433,840
$ 76.46
433,840

May 1-31, 2017 644,000
75.67
644,000

June 1-30, 2017 106,870
76.12
106,870



Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Approximate Dollar Amount) that May Yet Be Purchased Under the Plans or Programs
April 1-30, 2018	382,405	$	84.85	382,405
May 1-31, 2018	444,475	85.09		444,475
June 1-30, 2018	314,095	83.95		314,095

At its August 7, ~~2017~~2018 meeting, the Board of Directors reaffirmed the Company’s share repurchase program in amounts and with timing that management, in consultation with the Board, determines to be in the best interest of the Company. The program has no defined expiration date or maximum shares to be repurchased.

Item 6. Exhibits


(a)	Exhibits



(31.1)		Rule 13a-14(a)/15d-14(a) Certification by Larry M. Hutchison
(31.2)		Rule 13a-14(a)/15d-14(a) Certification by Gary L. Coleman
(31.3)		Rule 13a-14(a)/15d-14(a) Certification by Frank M. Svoboda
(32.1)		Section 1350 Certification by Larry M. Hutchison, Gary L. Coleman, and Frank M. Svoboda
(101)		Interactive Data Files for the Torchmark Corporation Form 10-Q for the period ended June 30, ~~2017~~2018

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Table of Contents

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



			TORCHMARK CORPORATION

Date: August ~~8, 2017~~7, 2018			/s/ Gary L. Coleman
			Gary L. Coleman
			Co-Chairman and Chief Executive Officer

Date: August ~~8, 2017~~7, 2018			/s/ Larry M. Hutchison
			Larry M. Hutchison
			Co-Chairman and Chief Executive Officer

Date: August ~~8, 2017~~7, 2018			/s/ Frank M. Svoboda
			Frank M. Svoboda
			Executive Vice President and Chief Financial Officer

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TMK 2018 FORM 10-Q QTR 2



(Mark one)
ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended June 30, ~~2017~~2018

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from _________to_________



DELAWARE		63-0780404
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3700 South Stonebridge Drive, McKinney, Texas		75070
(Address of principal executive offices)		(Zip Code)



	CLASS		OUTSTANDING AT July 31, ~~2017~~2018
	Common Stock, $1.00 Par Value		~~116,320,319~~112,693,381



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Shareholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6
	Note 1—Significant Accounting Policies	6
	Note 2—New Accounting Standards	6
	Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income	8
	Note 4—Investments	1011
	Note 5—~~Discontinued Operations~~Income Taxes	1519
	Note 6—Commitments and Contingencies	1619
	Note 7—Liability for Unpaid Claims	1720
	Note 8—Postretirement Benefits ~~Plans~~	1821
	Note 9—Earnings Per Share	2023
	Note 10—Business Segments	2024

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2729

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4855

Item 4.	Controls and Procedures	4855

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4956

Item 1A.	Risk Factors	4956

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	4956

Item 6.	Exhibits	4956


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2017—$14,651,551; 2016—$14,188,050)	$	16,318,286		$	15,245,861
Fixed maturities—available for sale, at fair value (amortized cost: 2018—$15,350,152; 2017—$14,995,101)							$	16,284,691		$	16,969,325
Policy loans	516,064			507,975			537,808			529,529
Other long-term investments	55,532			53,852
Other long-term investments (includes: 2018—$108,452; 2017—$0, under the fair value option)							181,676			108,559
Short-term investments	94,387			72,040			68,544			127,071
Total investments	16,984,269			15,879,728			17,072,719			17,734,484
Cash	97,652			76,163			82,230			118,563
Accrued investment income	228,347			223,148			237,985			233,453
Other receivables	380,028			384,454			407,676			391,775
Deferred acquisition costs	3,862,418			3,783,158			4,045,890			3,958,063
Goodwill	441,591			441,591			441,591			441,591
Other assets	515,012			520,313			522,042			528,536
Assets related to discontinued operations	68,623			127,532			68,568			68,520
Total assets	$	22,577,940		$	21,436,087		$	22,878,701		$	23,474,985
Liabilities:
Future policy benefits	$	13,127,651		$	12,825,837		$	13,702,887		$	13,439,472
Unearned and advance premiums	69,106			64,017			66,872			61,430
Policy claims and other benefits payable	307,384			299,565			329,469			333,294
Other policyholders' funds	97,237			96,993			96,575			97,635
Total policy liabilities	13,601,378			13,286,412			14,195,803			13,931,831
Current and deferred income taxes payable	2,009,825			1,743,990			1,098,411			1,312,002
Other liabilities	436,105			413,760			474,264			489,609
Short-term debt	306,271			264,475			671,666			328,067
Long-term debt (estimated fair value: 2017—$1,250,875; 2016—$1,233,019)	1,131,796			1,133,165
Long-term debt (estimated fair value: 2018—$849,903; 2017—$1,228,392)							817,474			1,132,201
Liabilities related to discontinued operations	39,149			27,424			49,474			49,854
Total liabilities	17,524,524			16,869,226			17,307,092			17,243,564
Commitments and Contingencies (Note 6)
Shareholders’ equity:
Preferred stock, par value $1 per share—Authorized 5,000,000 shares; outstanding: -0- in 2017 and 2016	—			—
Common stock, par value $1 per share—Authorized 320,000,000 shares; outstanding: (2017—127,218,183 issued, less 10,959,454 held in treasury and 2016—127,218,183 issued, less 9,187,075 held in treasury)	127,218			127,218
Preferred stock, par value $1 per share—Authorized 5,000,000 shares; outstanding: -0- in 2018 and 2017							—			—
Common stock, par value $1 per share—Authorized 320,000,000 shares; outstanding: (2018—124,218,183 issued, less 11,294,710 held in treasury and 2017—124,218,183 issued, less 9,625,104 held in treasury)							124,218			124,218
Additional paid-in capital	500,123			490,421			517,077			508,476
Accumulated other comprehensive income	984,560			577,574			603,499			1,424,274
Retained earnings	4,112,757			3,890,798			5,115,071			4,806,208
Treasury stock, at cost	(671,242		)	(519,150		)	(788,256		)	(631,755		)
Total shareholders’ equity	5,053,416			4,566,861			5,571,609			6,231,421
Total liabilities and shareholders’ equity	$	22,577,940		$	21,436,087		$	22,878,701		$	23,474,985


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Revenue:
Life premium	$	573,836		$	548,590		$	1,149,673		$	1,092,741		$	602,534		$	573,836		$	1,200,837		$	1,149,673
Health premium	242,775			237,252			487,566			472,949			251,440			242,775			503,238			487,566
Other premium	3			13			6			25			5			3			10			6
Total premium	816,614			785,855			1,637,245			1,565,715			853,979			816,614			1,704,085			1,637,245
Net investment income	212,776			201,642			421,058			398,695			218,568			212,776			436,652			421,058
Realized investment gains (losses)	(705		)	4,005			(6,453		)	4,298			11,813			(705		)	13,764			(6,453		)
Other income	393			382			809			803			416			393			711			809
Total revenue	1,029,078			991,884			2,052,659			1,969,511			1,084,776			1,029,078			2,155,212			2,052,659

Benefits and expenses:
Life policyholder benefits	390,859			369,342			781,938			732,202			399,334			390,859			799,915			781,938
Health policyholder benefits	156,579			153,261			314,330			306,036			160,461			156,579			321,080			314,330
Other policyholder benefits	8,977			8,882			17,923			18,220			8,582			8,977			17,271			17,923
Total policyholder benefits	556,415			531,485			1,114,191			1,056,458			568,377			556,415			1,138,266			1,114,191
Amortization of deferred acquisition costs	122,121			117,245			248,029			236,051			129,077			122,121			258,697			248,029
Commissions, premium taxes, and non-deferred acquisition costs	65,032			62,854			130,148			124,456			69,427			65,032			139,066			130,148
Other operating expense	62,428			57,846			124,769			115,275			68,620			62,428			135,444			124,769
Interest expense	21,156			23,110			41,855			42,479			22,411			21,156			44,033			41,855
Total benefits and expenses	827,152			792,540			1,658,992			1,574,719			857,912			827,152			1,715,506			1,658,992

Income before income taxes	201,926			199,344			393,667			394,792			226,864			201,926			439,706			393,667
Income taxes	(61,563		)	(60,050		)	(116,126		)	(121,924		)	(42,471		)	(61,563		)	(81,602		)	(116,126		)
Income from continuing operations	140,363			139,294			277,541			272,868			184,393			140,363			358,104			277,541

Income (loss) from discontinued operations, net of tax	(90		)	(865		)	(3,727		)	(10,406		)	32			(90		)	(79		)	(3,727		)
Net income	$	140,273		$	138,429		$	273,814		$	262,462		$	184,425		$	140,273		$	358,025		$	273,814

Basic net income (loss) per common share:
Continuing operations	$	1.20		$	1.16		$	2.37		$	2.26		$	1.63		$	1.20		$	3.15		$	2.37
Discontinued operations	—			(0.01		)	(0.03		)	(0.09		)	—			—			—			(0.03		)
Total basic net income per common share	$	1.20		$	1.15		$	2.34		$	2.17		$	1.63		$	1.20		$	3.15		$	2.34

Diluted net income (loss) per common share:
Continuing operations	$	1.18		$	1.13		$	2.32		$	2.22		$	1.59		$	1.18		$	3.08		$	2.32
Discontinued operations	—			—			(0.03		)	(0.09		)	—			—			—			(0.03		)
Total diluted net income per common share	$	1.18		$	1.13		$	2.29		$	2.13		$	1.59		$	1.18		$	3.08		$	2.29

Dividends declared per common share	$	0.15		$	0.14		$	0.30		$	0.28		$	0.16		$	0.15		$	0.32		$	0.30



	Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Total Shareholders’ Equity

Balance at January 1, 2017	$	—	$	127,218	$	490,421	$	577,574		$	3,890,798		$	(519,150	)	$	4,566,861
Comprehensive income (loss)							406,986			273,814						680,800
Common dividends declared ($0.30 per share)										(35,005		)				(35,005		)
Acquisition of treasury stock													(203,756		)	(203,756		)
Stock-based compensation					9,702					(606		)	7,450			16,546
Exercise of stock options										(16,244		)	44,214			27,970
Balance at June 30, 2017	$	—	$	127,218	$	500,123	$	984,560		$	4,112,757		$	(671,242	)	$	5,053,416



	Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Total Shareholders’ Equity

Balance at January 1, 2018	$	—	$	124,218	$	508,476	$	1,424,274		$	4,806,208		$	(631,755	)	$	6,231,421
Adoption of ASU 2016-01⁽¹⁾										4,896						4,896
Comprehensive income (loss)							(820,775		)	358,025						(462,750		)
Common dividends declared ($0.32 per share)										(36,278		)				(36,278		)
Acquisition of treasury stock													(206,589		)	(206,589		)
Stock-based compensation					8,601					(1,803		)	12,759			19,557
Exercise of stock options										(15,977		)	37,329			21,352
Balance at June 30, 2018	$	—	$	124,218	$	517,077	$	603,499		$	5,115,071		$	(788,256	)	$	5,571,609


(1)	See further discussion in Note 2—New Accounting Standards and Note 4—Investments.




	Three Months Ended June 30, 2017														Three Months Ended June 30, 2017
	Available for Sale Assets			Deferred Acquisition Costs			Foreign Exchange		Pension Adjustments			Total			Available for Sale Assets			Deferred Acquisition Costs			Foreign Exchange			Pension Adjustments			Total
Balance at April 1, 2017	$	832,057		$	(7,182	)	$	8,753	$	(110,763	)	$	722,865		$	832,057		$	(7,182	)	$	8,753		$	(110,763	)	$	722,865
Other comprehensive income (loss) before reclassifications, net of tax	257,595			(473		)	2,149		—			259,271			257,595			(473		)	2,149			—			259,271
Reclassifications, net of tax	403			—			—		2,021			2,424			403			—			—			2,021			2,424
Other comprehensive income (loss)	257,998			(473		)	2,149		2,021			261,695			257,998			(473		)	2,149			2,021			261,695
Balance at June 30, 2017	$	1,090,055		$	(7,655	)	$	10,902	$	(108,742	)	$	984,560		$	1,090,055		$	(7,655	)	$	10,902		$	(108,742	)	$	984,560

	Three Months Ended June 30, 2016
	Available for Sale Assets			Deferred Acquisition Costs			Foreign Exchange		Pension Adjustments			Total			Three Months Ended June 30, 2018
Balance at April 1, 2016	$	634,337		$	(6,915	)	$	4,847	$	(96,794	)	$	535,475
															Available for Sale Assets			Deferred Acquisition Costs			Foreign Exchange			Pension Adjustments			Total
Balance at April 1, 2018															$	1,082,896		$	(8,191	)	$	15,279		$	(149,785	)	$	940,199
Other comprehensive income (loss) before reclassifications, net of tax	453,586			(1,743		)	3,484		69			455,396			(329,619		)	1,612			(4,914		)	—			(332,921		)
Reclassifications, net of tax	(3,372		)	—			—		1,658			(1,714		)	(6,763		)	—			—			2,984			(3,779		)
Other comprehensive income (loss)	450,214			(1,743		)	3,484		1,727			453,682			(336,382		)	1,612			(4,914		)	2,984			(336,700		)
Balance at June 30, 2016	$	1,084,551		$	(8,658	)	$	8,331	$	(95,067	)	$	989,157
Balance at June 30, 2018															$	746,514		$	(6,579	)	$	10,365		$	(146,801	)	$	603,499


	Three Months Ended June 30,						Six Months Ended June 30,						Affected line items in the Statement of Operations	Three Months Ended June 30,						Six Months Ended June 30,						Affected line items in the Statement of Operations
	2017			2016			2017			2016			Affected line items in the Statement of Operations	2018			2017			2018			2017			Affected line items in the Statement of Operations
Unrealized investment gains (losses) on available for sale assets:
Realized (gains) losses	$	681		$	(3,983	)	$	(354	)	$	(4,296	)	Realized gains (losses)	$	(9,431	)	$	681		$	(10,817	)	$	(354	)	Realized investment gains (losses)
Amortization of (discount) premium	(61		)	(1,204		)	(498		)	(2,568		)	Net investment income	870			(61		)	1,560			(498		)	Net investment income
Total before tax	620			(5,187		)	(852		)	(6,864		)		(8,561		)	620			(9,257		)	(852		)
Tax	(217		)	1,815			298			2,402			Income taxes	1,798			(217		)	1,944			298			Income taxes
Total after tax	403			(3,372		)	(554		)	(4,462		)		(6,763		)	403			(7,313		)	(554		)
Pension adjustments:
Amortization of prior service cost	119			120			238			240			Other operating expenses	119			119			238			238			Other operating expense
Amortization of actuarial gain (loss)	2,990			2,431			5,980			4,863			Other operating expenses	3,659			2,990			7,318			5,980			Other operating expense
Total before tax	3,109			2,551			6,218			5,103				3,778			3,109			7,556			6,218
Tax	(1,088		)	(893		)	(2,176		)	(1,786		)	Income taxes	(794		)	(1,088		)	(1,587		)	(2,176		)	Income taxes
Total after tax	2,021			1,658			4,042			3,317				2,984			2,021			5,969			4,042
Total reclassifications (after tax)	$	2,424		$	(1,714	)	$	3,488		$	(1,145	)		$	(3,779	)	$	2,424		$	(1,344	)	$	3,488


											June 30, 2018
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value⁽¹⁾		% of Total Fixed Maturities⁽²⁾	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value⁽¹⁾		% of Total Fixed Maturities⁽²⁾
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	387,331	$	8,552	$	(1,696	)	$	394,187	2	$	390,021	$	2,266	$	(4,383	)	$	387,904	2
States, municipalities, and political subdivisions	1,182,708		128,175		(185		)	1,310,698		8	1,232,142		103,365		(281		)	1,335,226		9
Foreign governments	20,720		1,592		—			22,312		—	19,609		1,705		—			21,314		—
Corporates, by sector:
Financial	3,152,297		413,004		(25,309		)	3,539,992		22	3,372,221		269,494		(51,445		)	3,590,270		22
Utilities	1,909,247		314,825		(3,351		)	2,220,721		14	1,947,899		255,504		(12,164		)	2,191,239		14
Energy	1,589,769		170,566		(35,952		)	1,724,383		11	1,619,674		133,584		(40,101		)	1,713,157		11
Other corporate sectors	5,847,507		651,703		(20,017		)	6,479,193		40	6,183,619		362,020		(146,563		)	6,399,076		39
Total corporates	12,498,820		1,550,098		(84,629		)	13,964,289		87	13,123,413		1,020,602		(250,273		)	13,893,742		86
Collateralized debt obligations	59,871		16,677		(10,303		)	66,245		—	58,582		23,437		(5,823		)	76,196		—
Other asset-backed securities	126,019		3,607		(15		)	129,611		1	150,843		2,386		(429		)	152,800		1
Redeemable preferred stocks, by sector:
Financial	347,505		59,206		(5,849		)	400,862		2	347,014		45,481		(4,518		)	387,977		2
Utilities	28,577		1,725		(220		)	30,082		—	28,528		1,360		(356		)	29,532		—
Total redeemable preferred stocks	376,082		60,931		(6,069		)	430,944		2	375,542		46,841		(4,874		)	417,509		2
Total fixed maturities	$	14,651,551	$	1,769,632	$	(102,897	)	$	16,318,286	100	$	15,350,152	$	1,200,602	$	(266,063	)	$	16,284,691	100



	June 30, 2017
	Amortized Cost		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	143,830	$	148,150
Due after one year through five years	578,037		622,103
Due after five years through ten years	1,434,971		1,597,721
Due after ten years through twenty years	4,363,391		5,019,819
Due after twenty years	7,944,279		8,733,397
Mortgage-backed and asset-backed securities	187,043		197,096
	$	14,651,551	$	16,318,286



	December 31, 2017
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value⁽¹⁾		% of Total Fixed Maturities⁽²⁾
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	390,646	$	18,173	$	(1,373	)	$	407,446	2
States, municipalities, and political subdivisions	1,091,960		127,890		(135		)	1,219,715		7
Foreign governments	20,236		1,782		—			22,018		—
Corporates, by sector:
Financial	3,282,526		475,961		(23,392		)	3,735,095		22
Utilities	1,955,737		369,406		(1,298		)	2,323,845		14
Energy	1,619,349		226,140		(25,392		)	1,820,097		11
Other corporate sectors	6,065,803		747,612		(20,616		)	6,792,799		40
Total corporates	12,923,415		1,819,119		(70,698		)	14,671,836		87
Collateralized debt obligations	59,150		20,084		(7,653		)	71,581		—
Other asset-backed securities	144,520		4,835		—			149,355		1
Redeemable preferred stocks, by sector:
Financial	336,621		62,892		(2,727		)	396,786		3
Utilities	28,553		2,132		(97		)	30,588		—
Total redeemable preferred stocks	365,174		65,024		(2,824		)	427,374		3
Total fixed maturities	$	14,995,101	$	2,056,907	$	(82,683	)	$	16,969,325	100



Fair Value Measurements at June 30, 2017 using:
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Bonds:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	394,187		$	—		$	394,187
States, municipalities, and political subdivisions	—			1,310,698			—			1,310,698
Foreign governments	—			22,312			—			22,312
Corporates, by sector:
Financial	—			3,477,619			62,373			3,539,992
Utilities	—			2,065,431			155,290			2,220,721
Energy	—			1,683,064			41,319			1,724,383
Other corporate sectors	—			6,151,889			327,304			6,479,193
Total corporates	—			13,378,003			586,286			13,964,289
Collateralized debt obligations	—			—			66,245			66,245
Other asset-backed securities	—			115,458			14,153			129,611
Redeemable preferred stocks, by sector:
Financial	—			400,862			—			400,862
Utilities	—			30,082			—			30,082
Total redeemable preferred stocks	—			430,944			—			430,944
Total fixed maturities	$	—		$	15,651,602		$	666,684		$	16,318,286
Percent of total	—		%	95.9		%	4.1		%	100.0		%


(1)	Amounts reported on the balance sheet.


(1)	Amounts reported on the balance sheet.


(2)	Includes capitalized interest, foreign exchange adjustments, and principal repayments.


(3)	Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.



	Six Months Ended June 30, 2017
	Asset- Backed Securities			Collateralized Debt Obligations			Corporates⁽¹⁾			Total
Balance at January 1, 2017	$	—		$	63,503		$	559,600		$	623,103
Total gains or losses:
Included in realized gains/losses	—			—			—			—
Included in other comprehensive income	261			3,597			11,637			15,495
Acquisitions	14,000			—			21,666			35,666
Sales	—			—			—			—
Amortization	—			2,481			8			2,489
Other⁽²⁾	(108		)	(3,336		)	(6,625		)	(10,069		)
Transfers in and/or out of Level 3⁽³⁾	—			—			—			—
Balance at June 30, 2017	$	14,153		$	66,245		$	586,286		$	666,684
Percent of total fixed maturities	0.1		%	0.4		%	3.6		%	4.1		%

	Six Months Ended June 30, 2016
	Asset- Backed Securities			Collateralized Debt Obligations			Corporates⁽¹⁾			Total
Balance at January 1, 2016	$	—		$	70,382		$	530,806		$	601,188
Total gains or losses:
Included in realized gains/losses	—			—			—			—
Included in other comprehensive income	—			(4,831		)	24,291			19,460
Acquisitions	—			—			15,800			15,800
Sales	—			—			—			—
Amortization	—			2,639			8			2,647
Other⁽²⁾	—			(4,127		)	(1,740		)	(5,867		)
Transfers in and/or out of Level 3⁽³⁾	—			—			—			—
Balance at June 30, 2016	$	—		$	64,063		$	569,165		$	633,228
Percent of total fixed maturities	—		%	0.4		%	3.7		%	4.1		%



	Fair Value Measurements at June 30, 2018 using:
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	387,904		$	—		$	387,904
States, municipalities, and political subdivisions	—			1,335,226			—			1,335,226
Foreign governments	—			21,314			—			21,314
Corporates, by sector:
Financial	—			3,529,651			60,619			3,590,270
Utilities	—			2,044,141			147,098			2,191,239
Energy	—			1,673,305			39,852			1,713,157
Other corporate sectors	—			6,069,835			329,241			6,399,076
Total corporates	—			13,316,932			576,810			13,893,742
Collateralized debt obligations	—			—			76,196			76,196
Other asset-backed securities	—			139,647			13,153			152,800
Redeemable preferred stocks, by sector:
Financial	—			387,977			—			387,977
Utilities	—			29,532			—			29,532
Total redeemable preferred stocks	—			417,509			—			417,509
Total fixed maturities	$	—		$	15,618,532		$	666,159		$	16,284,691
Percent of total	—		%	95.9		%	4.1		%	100.0		%



	Fair Value Measurements at December 31, 2017 using:
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	407,446		$	—		$	407,446
States, municipalities, and political subdivisions	44			1,219,671			—			1,219,715
Foreign governments	—			22,018			—			22,018
Corporates, by sector:
Financial	—			3,673,089			62,006			3,735,095
Utilities	—			2,168,115			155,730			2,323,845
Energy	—			1,779,281			40,816			1,820,097
Other corporate sectors	—			6,468,541			324,258			6,792,799
Total corporates	—			14,089,026			582,810			14,671,836
Collateralized debt obligations	—			—			71,581			71,581
Other asset-backed securities	—			135,306			14,049			149,355
Redeemable preferred stocks, by sector:
Financial	—			396,786			—			396,786
Utilities	—			30,588			—			30,588
Total redeemable preferred stocks	—			427,374			—			427,374
Total fixed maturities	$	44		$	16,300,841		$	668,440		$	16,969,325
Percentage of total	—		%	96.1		%	3.9		%	100.0		%



	Six Months Ended June 30, 2018
	Asset- Backed Securities			Collateralized Debt Obligations			Corporates⁽¹⁾			Total
Balance at January 1, 2018	$	14,049		$	71,581		$	582,810		$	668,440
Total gains or losses:
Included in realized gains/losses	—			—			—			—
Included in other comprehensive income	(697		)	5,183			(19,611		)	(15,125		)
Acquisitions	—			—			20,300			20,300
Sales	—			—			—			—
Amortization	—			2,389			8			2,397
Other⁽²⁾	(199		)	(2,957		)	(6,697		)	(9,853		)
Transfers in and/or out of Level 3⁽³⁾	—			—			—			—
Balance at June 30, 2018	$	13,153		$	76,196		$	576,810		$	666,159
Percent of total fixed maturities	0.1		%	0.5		%	3.5		%	4.1		%



	Fair Value Measurements at June 30, 2018								Changes in Fair Values for the Period for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Net Gains and Losses Recognized During the Period		Less Net Gains and Losses Recognized due to Sales		Total Changes in Fair Values Included in Current-Period Earnings
Limited partnerships	$	—	$	108,452	$	—	$	108,452	$	2,861	$	—	$	2,861



	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIP numbers) held:
As of June 30, 2017	164	76	240
As of December 31, 2016	407	94	501



	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIP numbers) held:
As of June 30, 2018	489	99	588
As of December 31, 2017	92	102	194




	Three Months Ended June 30,
	2018			%		2017			%
Expected income taxes	$	47,641		21.0		$	70,674		35.0
Increase (reduction) in income taxes resulting from:
Low income housing investments	(3,324		)	(1.5	)	(4,649		)	(2.3	)
Share-based awards	(2,055		)	(0.9	)	(4,018		)	(2.0	)
Other	209			0.1		(444		)	(0.2	)
Income tax expense (benefit) from continuing operations	$	42,471		18.7		$	61,563		30.5



	June 30, 2017		December 31, 2016
Policy claims and other benefits payable:
Short-duration contracts	$	21,869	$	26,721
Insurance lines other than short duration—health	118,596		116,407
Insurance lines other than short duration—life	166,919		156,437
Total policy claims and other benefits payable	$	307,384	$	299,565



	As of June 30, 2017
Accident Year	Total of incurred-but-not-reported liabilities plus expected development on reported claims
2013	$	—
2014	3
2015	93
2016	2,266
2017	19,507
Total	$	21,869


	Three Months Ended June 30,										Three Months Ended June 30,
	Pension Benefits						Other Benefits				Pension Benefits						Other Benefits
	2017			2016			2017		2016		2018			2017			2018		2017
Service cost	$	4,484		$	3,894		$	—	$	—	$	5,277		$	4,484		$	—	$	—
Interest cost	5,551			5,432			250		212		5,493			5,551			228		250
Expected return on assets	(5,898		)	(5,782		)	—		—		(6,363		)	(5,898		)	—		—
Amortization:
Prior service cost	119			120			—		—		119			119			—		—
Actuarial (gain) loss	2,952			2,423			38		8		3,636			2,952			23		38
Direct recognition of expense	—			—			116		20		—			—			85		116
Net periodic benefit cost	$	7,208		$	6,087		$	404	$	240	$	8,162		$	7,208		$	336	$	404

	Six Months Ended June 30,										Six Months Ended June 30,
	Pension Benefits						Other Benefits				Pension Benefits						Other Benefits
	2017			2016			2017		2016		2018			2017			2018		2017
Service cost	$	8,971		$	7,788		$	—	$	—	$	10,554		$	8,971		$	—	$	—
Interest cost	11,101			10,864			500		424		10,986			11,101			456		500
Expected return on assets	(11,797		)	(11,564		)	—		—		(12,726		)	(11,797		)	—		—
Amortization:
Prior service cost	238			240			—		—		238			238			—		—
Actuarial (gain)/loss	5,903			4,847			77		16		7,272			5,903			46		77
Direct recognition of expense	—			—			212		54		—			—			225		212
Net periodic benefit cost	$	14,416		$	12,175		$	789	$	494	$	16,324		$	14,416		$	727	$	789


	June 30, 2017			December 31, 2016			Fair Value Determined by:
	Amount		%	Amount		%	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Amount		% to Total
Corporate bonds	$	158,227	45	$	160,036	49
Corporate bonds:
Financial							$		$	46,501	$		$	46,501	12
Utilities									40,032				40,032		10
Energy									23,551				23,551		6
Other corporates									67,960				67,960		17
Total corporate bonds							—		178,044		—		178,044		45
Exchange traded fund⁽¹⁾	147,357		42	134,771		41	168,743						168,743		43
Other bonds	261		—	258		—			245				245		—
Other long-term investments									3,998				3,998		1
Guaranteed annuity contract⁽²⁾	19,254		5	18,997		6			21,427				21,427		5
Short-term investments	24,673		7	7,391		2	18,660						18,660		5
Other	5,281		1	7,418		2	1,866						1,866		1
Total	$	355,053	100	$	328,871	100
Grand Total							$	189,269	$	203,714	$	—	$	392,983	100


(1)	A fund including marketable securities that mirror the S&P 500 index.


(2)	Representing a guaranteed annuity contract issued by Torchmark's subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Pension Plan.



	June 30, 2018		December 31, 2017
Premiums paid for insurance coverage	$	1,047	$	2,050

Total investments:
Company owned life insurance	$	41,872	$	40,273
Exchange traded funds	55,051		55,442
	$	96,923	$	95,715

Liability:
Active plan	$	82,862	$	81,457
Closed plan	2,520		3,008
	$	85,382	$	84,465



Life Insurance Summary of Results (Dollar amounts in thousands)
	Six Months Ended June 30,										Increase
	2018					2017					(Decrease)
	Amount			% of Premium		Amount			% of Premium		Amount			%
Premium and policy charges	$	1,200,837		100		$	1,149,673		100		$	51,164		4

Policy obligations	799,915			67		779,844			68		20,071			3
Required interest on reserves	(314,315		)	(26	)	(299,477		)	(26	)	(14,838		)	5
Net policy obligations	485,600			41		480,367			42		5,233			1
Commissions, premium taxes, and non-deferred acquisition expenses	94,644			8		87,346			8		7,298			8
Amortization of acquisition costs	304,595			25		290,527			25		14,068			5
Total expense	884,839			74		858,240			75		26,599			3
Insurance underwriting margin before other income and administrative expenses	$	315,998		26		$	291,433		25		$	24,565		8


Life Insurance Net Sales (Dollar amounts in thousands)
Life Insurance Net Sales by Distribution Channel (Dollar amounts in thousands)												Life Insurance Net Sales by Distribution Channel (Dollar amounts in thousands)
	Six Months Ended June 30,						Increase					Six Months Ended June 30,						Increase
	2017			2016			(Decrease)					2018			2017			(Decrease)
	Amount		% of Total	Amount		% of Total	Amount			%		Amount		% of Total	Amount		% of Total	Amount			%
American Income Exclusive Agency	$	110,151	52	$	105,601	50	$	4,550		4		$	114,771	54	$	110,151	52	$	4,620		4
Globe Life Direct Response	75,725		35	81,611		38	(5,886		)	(7	)	67,223		32	75,725		35	(8,502		)	(11	)
Liberty National Exclusive Agency	22,713		11	19,872		9	2,841			14		24,230		11	22,713		11	1,517			7
Other Agencies	5,149		2	6,415		3	(1,266		)	(20	)	6,336		3	5,149		2	1,187			23
Total Life Net Sales	$	213,738	100	$	213,499	100	$	239		—
Total												$	212,560	100	$	213,738	100	$	(1,178	)	(1	)



Life Insurance First-Year Collected Premium (Dollar amounts in thousands)
	Six Months Ended June 30,						Increase
	2017			2016			(Decrease)
	Amount		% of Total	Amount		% of Total	Amount			%
American Income Exclusive Agency	$	89,723	56	$	85,866	54	$	3,857		4
Globe Life Direct Response	48,838		31	52,345		33	(3,507		)	(7	)
Liberty National Exclusive Agency	16,163		10	14,350		9	1,813			13
Other Agencies	5,016		3	5,956		4	(940		)	(16	)
Total	$	159,740	100	$	158,517	100	$	1,223		1


	Six Months Ended June 30,						Increase (Decrease)					Six Months Ended June 30,						Increase (Decrease)
	2017			2016			Amount			%		2018			2017			Amount			%
Net investment income	$	421,058		$	398,695		$	22,363		6		$	436,652		$	421,058		$	15,594		4
Interest on net insurance policy liabilities:
Interest on reserves	(362,531		)	(347,561		)	(14,970		)	4		(379,347		)	(362,531		)	(16,816		)	5
Interest on deferred acquisition costs	104,150			100,615			3,535			4		108,614			104,150			4,464			4
Net required interest	(258,381		)	(246,946		)	(11,435		)	5		(270,733		)	(258,381		)	(12,352		)	5
Financing costs	(41,855		)	(42,479		)	624			(1	)	(44,033		)	(41,855		)	(2,178		)	5
Excess investment income	$	120,822		$	109,270		$	11,552		11		$	121,886		$	120,822		$	1,064		1

Excess investment income per diluted share	$	1.01		$	0.89		$	0.12		13		$	1.05		$	1.01		$	0.04		4

Average invested assets (at amortized cost)	$	15,185,776		$	14,250,106		$	935,670		7
Mean invested assets (at amortized cost)												$	16,036,950		$	15,185,776		$	851,174		6
Average net insurance policy liabilities⁽¹⁾	9,247,438			8,846,244			401,194			5		9,657,425			9,247,438			409,987			4
Average debt and preferred securities (at amortized cost)	1,498,943			1,339,263			159,680			12		1,518,576			1,498,943			19,633			1


(1)	Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.