Globe Life
Annual Report 1999

Plain-text annual report

1999 ANNUAL REPORT CORPORATE INFORMATION Corporate Headquarters Stock Exchange Listing Torchmark Corporation 2001 Third Avenue South Birmingham, Alabama 35233 (205) 325-4200 www.torchmarkcorp.com Key Insurance Subsidiaries Liberty National Life Insurance Company Birmingham, AL United American Insurance Company McKinney, TX Globe Life And Accident Insurance Company Oklahoma CIty, OK United Investors Life Insurance Company Birmingham, AL American Income Life Insurance Company Waco, TX Annual Meeting of Shareholders Thursday, April 27, 2000 @ 10:00 a.m. Corporate Headquarters Birmingham, Alabama Investor Relations Contact Joyce L. Lane (972) 569-3627 Fax: (972) 569-3696 Email: jlane@torchmarkcorp.com General stock ownership information (205) 325-4270 Stock transfers (800) 446-2617 Dividend Reinvestment New York Stock Exchange Symbol: TMK The International Stock Exchange, London, England Stock Transfer Agent and Shareholder Assistance First Chicago Trust Company, a Division of EquiServe P.O. Box 2500 Jersey City, NJ 07303-2500 (201) 324-0498 Toll Free Number: (800) 446-2617 Hearing Impaired: (201) 222-4955 Fax: (201) 222-4892 Internet: http://www.equiserve.com Indenture Trustee for Senior Debentures and Notes Bank One N.A. 1 BankOne Plaza Mail Code IL1-0126 Chicago, Illinois 60670-0126 Toll Free Number: (800) 524-9472 Independent Auditors Deloitte & Touche, LLP 2200 Ross Avenue Suite 1600 Dallas, TX 75201 Torchmark maintains a dividend reinvestment plan for all holders of its common stock. Under the plan, share- holders may reinvest all or part of their dividends in addition- al shares of common stock and may also make periodic additional cash payments of up to $3,000 toward the pur- chase of Torchmark stock. Participation is voluntary. More information on the plan may be obtained from the Stock Transfer Agent by calling (800) 446-2617 or by writing EquiServe Dividend Reinvestment Service, P.O. Box 2598, Jersey City, NJ 07303-2598 Automatic Deposit of Dividends Automatic deposit of dividends is available to shareholders who wish to have their dividends directly deposited into the financial institution of their choice. Authorization forms may be obtained from the Stock Transfer Agent by calling (800) 446-2617. Participation is voluntary. Financial Highlights (In thousands except percent and per share amounts) TORCHMARK CORPORATION Operations: 1999 1998 % Change Total Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,884,086 $ 1,753,630 Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,226,895 2,157,876 Net Operating Income* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341,167 324,315 Annualized Life Premium In Force . . . . . . . . . . . . . . . . . . . . . 1,130,309 1,062,647 7.4 3.2 5.2 6.4 Annualized Health Premium In Force . . . . . . . . . . . . . . . . . . . 884,358 796,863 11.0 Diluted Average Shares Outstanding . . . . . . . . . . . . . . . . . . . 133,986 141,352 (5.2) Net Operating Income as a Return On Average Common Equity** . . . . . . . . . . . . . . . . . . . . . . . . 16.2% 15.1% Per Common Share: Net Operating Income* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.55 $ 2.29 Shareholders’ Equity At Year End ** . . . . . . . . . . . . . . . . . . . . 16.32 15.43 11.4 5.8 Net Operating Income Per Common Share* $3.00 $2.00 $1.00 $2.29 $2.55 $1.94 $1.52 $1.67 ‘95 ‘96 ‘97 ‘98 ‘99 * Excludes realized investment gains (losses) and the related adjustment to deferred acquisition costs, equity in Vesta earnings, discontinued operations, and nonrecurring charge. ** Includes fixed maturity investments at amortized cost. Letter To Shareholders 1999 was another excellent growth year for Torchmark. On a per share basis, we met our goals of double-digit growth in underwriting income and excess investment income, as well as earnings from operations. We were able to attain these goals by remaining focused on providing protection-type insur- ance products to our target markets in middle income America, by growing our exclusive agencies, by remaining expense and service conscious and by managing our capital to include the repurchase of our stock. FINANCIAL REVIEW Key Components of Net Operating Income Per Diluted Share Underwriting Income Excess Investment Income Other Income Tax 1999 1998 % $2.49 1.61 (.25) (1.30) $2.25 1.46 (.25) (1.17) 11 10 - 11 Net Operating Income Excluding Nonrecurring Charge 2.55 2.29 11 Nonrecurring Charge (.10) Net Operating Income $2.45 $2.29 For 1999, our net operating income per share, excluding a nonrecurring charge of $.10, was $2.55, an increase of 11% over the $2.29 per share reported for 1998. We experienced growth in both premium issued and premium income. Annualized premium issued was $450 million, up 17% from the prior year. Premium income was $1.9 billion, an increase of 7%. Our underwriting margins (premium income less policy obligations and acquisition expenses) increased 5% to $435 million. Underwriting income (underwriting margins plus other income less administrative expenses) increased 5% to $333 million, or 18% of premium. On a per share basis, underwriting income increased 11% to $2.49. Our excess investment income, which is our net investment income less the interest we credit or pay on our net interest-bearing liabilities, increased 4% to $215 million. Excess investment income would have been higher were it not for our stock repurchase program, whereby we acquired 5.4 million shares during the year at a total cost of $175 million. On a per share basis, excess investment income increased 10% to $1.61. Net operating income, excluding the nonrecurring charge, as a return on equity was 16.2%. Book value per share (excluding the effect of reporting the investment portfolio at market value) increased 6% to $16.32. 2 INSURANCE DISTRIBUTION United American Branch Office Operation ___________________________ (in millions, except %) Life ___________________________ 1999 ____________ $ ____ * ____ 1998 ___________ $ ____ * ____ Health ___________________________ 1999 ___________ $ ____ * ____ 1998 ___________ $ ____ * ____ Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses Underwriting Margin * % of Premium 5 22 19 10 6 3 5 21 19 10 6 3 54% 32% 14% 53% 33% 14% 103 231 195 120 40 62% 20% 64 173 151 90 33 60% 22% 35 18% 27 18% Our exclusive Branch Office operation experienced unprecedented growth in 1999. Annualized premium issued increased 55% to $108 million. Premium income increased 26% to $214 million, and underwriting margins increased 27% to $38 million. Over 90% of the health insurance sales and premium income were from medicare supplement insurance, a product designed to cover most of the hospital and medical expenses not paid by Medicare for seniors age 65 and above. Over the years, medicare supplement insurance, health maintenance organizations (HMOs), preferred provider networks, and seemingly countless other methods have been utilized to reduce the risk of major unexpected costs of health care to seniors. But medicare supplement coverage is the only time-proven means that allows seniors to receive high quality care with freedom of choice as to the provider of care. The primary reason for the sales growth in the Branch operation is the growth in our sales force. For the year, our branch managers increased 15% to 77; middle management increased 52% to 200 unit managers, and the total agent count increased 34% to 2,354. Of the 2,354 total agents, over 70% have been with the company less than one year. Two years ago, the average branch office had 15 agents, but at year end, the count had increased to 30 agents. Needless to say, we've been recruiting. But in addi- tion to recruiting, training methods have improved, which in turn have positively impacted our agent reten- tion. 2000 should be another excellent year for the branch office operation, as we remain dedicated to recruiting and growing our sales force. 3 United American General Agency Operation _________________________ (in millions, except %) Life ____________________________ Health ____________________________ 1999 ____________ $ ____ * ____ 1998 ___________ $ ____ * ____ 1999 ___________ $ ____ * ____ 1998 ___________ $ ____ * ____ 13 43 38 17 15 5 46% 40% 14% 9 41 37 19 14 50% 37% 68 444 427 266 83 62% 20% 51 426 418 255 87 61% 21% 5 13% 77 18% 76 18% Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses Underwriting Margin * % of Premium Annualized premium issued within our independent General Agency operation increased 36% to $81 million. Premium income increased 2% to $465 million, and underwriting margins increased 3% to $83 million. Over 70% of the health insurance sales and over 90% of the health premium income were from medicare supplement insurance. 1999 was a significant year for our General Agency operations; it was the first year since 1993 that we had growth in premium income, and the first year since 1994 that we had growth in underwriting mar- gins. Levelized commissions, mandated by federal law in 1992, had an adverse effect on most general agencies; their financial ability to recruit, train, and support new agents was weakened. As a result, many independent general agencies left the medicare supplement market. In the last few years we have developed business relationships with larger agencies that have the potential of writing higher volumes of business. By providing financial support and lead generation sup- port (from our Direct Response operation), we have reversed the downward trend in both sales and pre- mium income. Given that the General Agency premium income represents over 50% of Torchmark's total health premiums, to have this operation once again in a growth mode instead of a declining mode is most important to Torchmark's overall growth in health insurance. Liberty National Agency Operation _________________________________ (in millions, except %) Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses Life ____________________________ Health ____________________________ 1999 ____________ $ ____ * ____ 1998 ___________ $ ____ * ____ 1999 ___________ $ ____ * ____ 1998 ___________ $ ____ * ____ 51 307 288 133 83 46% 29% 46 298 282 127 82 45% 29% 10 149 144 103 27 72% 19% 11 144 136 92 26 68% 19% Underwriting Margin 72 25% 74 26% 14 10% 18 13% * % of Premium 4 Annualized premium issued within our district office system increased 8% to $61 million. Premium income increased 3% to $432 million, but underwriting margins declined 6% to $86 million. Earlier in the decade Liberty National began the transformation from a debit (home collection) operation to a traditional agency operation. During the process the sales force declined from a high of 2,611 agents to a low, in 1997, of 1,710 agents. In 1998, we began the rebuilding of the sales force; agents increased to 1,829, and life insurance sales increased 5% to $46 million. We ended 1999 with 1,902 agents, and life insurance sales increased 13% to $51 million. In addition to growing the number of agents, we have successfully increased the average production per agent, which has resulted in higher average agent earnings and improved agent retention rates. We will continue to grow our sales force; our expectation for 2000 is to end the year with at least 2,000 agents. With respect to life insurance underwriting margins in 1999, our policy obligations increased at a slightly higher rate than our premiums, thereby reducing life underwriting margins to 25% instead of 26% of premium income. But the main reason for the decline in overall margins was within our health insur- ance. About 45% of our health premiums are confined to a block of cancer business that was subject to a class action settlement in 1994; as a result of the settlement, benefits were increased substantially and the Company was prohibited from increasing premiums until 1997. This business has experienced extremely high claims loss ratios which have adversely affected our underwriting margins. However, we continue to monitor the business and implement rate increases, and we expect the downward trend in health underwriting margins to reverse in 2000. American Income Agency Operation _______________________________ (in millions, except %) Life ____________________________ Health ____________________________ 1999 ____________ $ ____ * ____ 1998 ___________ $ ____ * ____ 1999 ___________ $ ____ * ____ 1998 ___________ $ ____ * ____ Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses 54 231 217 76 80 35% 37% 54 216 204 70 77 34% 38% Underwriting Margin 62 28% 58 28% * % of Premium 8 47 48 19 11 17 40% 24% 36% 9 44 47 17 12 18 37% 25% 38% Annualized premium issued at American Income declined 1% to $62 million. Premium income increased 5% to $265 million, and underwriting margins increased 4% to $79 million. American Income is a 'union label' company. The sales force and non-management home office employees are organized by the Office and Professional Employees International Union. With the coop- eration and endorsement of labor unions and credit unions, our agents sell life and supplemental health insurance to their members. 5 The agent count decreased by 2% to 1,197 agents at year end; the decline in agents and the com- parable decline in sales was no coincidence. Simply put, we haven't grown our sales force. The weak- nesses in recruiting, training, and retaining agents at American Income are quite similar to the weakness- es we experienced a few years back in the United American Branch Office operation. And the solutions that have been and are being implemented are basically the same as well. Actually, the turnaround is underway. Earlier in the year our sales force declined to a low of 1,150 agents, but as noted above, we ended the year with 1,197 agents. American Income, with its association with labor and credit unions, is an excellent platform for the sale of life insurance, and we expect an impressive improvement in sales in 2000. Late in the year, Mr. Bernard Rapoport, age 82, stepped down as Chairman of American Income, and assumed the position of Chairman Emeritus. Mr. Rapoport is one of the few remaining great entre- preneurs of the insurance industry. In addition to continuing in a consulting capacity to American Income, Mr. Rapoport will be active in helping Torchmark achieve its political objectives both in Washington and at the state level. Direct Response Operations ______________________________________ (in millions, except %) Life ____________________________ Health ____________________________ 1999 ____________ $ ____ * ____ 1998 ___________ $ ____ * ____ 1999 ___________ $ ____ * ____ 1998 ___________ $ ____ * ____ Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses 96 283 246 112 65 46% 26% 94 260 221 95 57 43% 26% Underwriting Margin 69 28% 69 31% * % of Premium 4 13 12 10 1 1 82% 6% 12% 4 10 9 7 1 1 82% 6% 12% Direct Response annualized premium issued increased 3% to $100 million. Premium income increased 12% to $258 million, and underwriting margins remained unchanged at $70 million. Throughout the 1990's, the direct response operation has not only been the largest premium growth operation in Torchmark, but it's also provided the largest growth with respect to underwriting mar- gins. However, 1999 was not one of the better years. The foundation of our direct response operation is mailing to parents for the purpose of starting a life insurance program for their children; subsequently, we sell life insurance to the parents by direct mail. In addition, we sell life insurance by mail to the general public, primarily to ages 50 and above. In recent years, we expanded our mailing efforts to ages under 50 of the general public. In addi- tion to mail, we expanded our efforts into television, publications, and third-party endorsements. 6 Although initial efforts into these areas seemed successful, conditions have changed. Higher policy laps- es and higher mortality experience in the under-age 50 market resulted in our having to reprice our prod- ucts; but in the final analysis, for the time being, we have ceased our efforts to sell life insurance to the general public for ages 40 and under. With respect to television, publications, and third-party endorse- ments, rising costs and/or declining responses have resulted in our also reducing our activity in these areas. Our focus in 2000 will be to grow our premium income with new sales that have higher underwrit- ing margins than the sales generated in 1999. In addition to being a source of growth in premium income and underwriting margins, our direct response operation will continue to provide critical support for most of our agent distribution systems by means of generating direct mail inquiries for life and medicare sup- plement insurance. Other Independent Agency Operations _____________________________ (in millions, except %) Annualized Premium: Sales In Force Underwriting Margin: Premium Policy Obligations Acquisition Expenses Life ____________________________ 1998 1999 ___________ ____________ $ ____ * ____ $ ____ * ____ 37 243 210 85 71 40% 34% 37 225 193 80 67 42% 35% Underwriting Margin 54 26% 46 24% * % of Premium Annualized issued premium through our other independent agency operations was $37 million, unchanged from the prior year. Premium income increased 9% to $210 million, and underwriting mar- gins increased 18% to $54 million. Our primary independent agency relationships include (1) military operations through a large agency that sells exclusively to commissioned and noncommissioned military officers and their families, (2) mutual fund distributors whose financial planners supplement mutual fund sales with life insurance and annuity products, and (3) independent agencies that specialize in the sale of life insurance protec- tion to civil service employees and their families. Our business relationships with these partners have existed for a minimum of 18 years. We will strive to earn the business of our partners by providing quali- ty service and specialized products to their representatives. In addition, we will seek out new partners. 7 ADMINISTRATIVE EXPENSES Insurance administrative expenses increased 1% to $105 million. But more importantly, our expenses declined as a percentage of premium income from 5.9% in 1998 to 5.6% in 1999. Torchmark has long been recognized as a low cost administrator of business. In addition, we are a low cost underwriter of business. Our noncommission expenses related to new sales on a per policy basis are among the lowest in the industry. Our efficiency is derived from our dedication to simplifying pro- cedures and consolidating administrative functions among our operating entities. These actions not only reduce costs, but also improve service to customers, both policyholders and agents. NONRECURRING CHARGE Early in 1999, Torchmark was one of several companies that the Reader's Digest Association invit- ed to bid on a proposal to direct market insurance products to their customer base. At mid-year, we com- pleted the final stage of the bidding process by submitting commission schedules and cash guarantees to Reader's Digest that would cover a multi-year marketing plan. In September, Reader's Digest announced that we had been selected to market life and health products to their customers in the U. S. and Canada. Our first mailing to over 10 million of their customers was completed during the first week of November. By late December, sufficient responses to the mailing had been received so that an analysis of the prof- itability could be completed. The result indicated that it would be highly unlikely that an ongoing direct response program would recover the cash guarantees that we had made to Reader's Digest. Consequently, we took an after-tax charge of $13.4 million, or $.10 per share in the fourth quarter. Going forward, we will continue to work with Reader's Digest and identify subsets of their customer base that will provide to us a reasonable return on future investments in printing and mailing costs. Under no circumstances will there be any additional write-offs associated with the Reader's Digest project. INVESTMENTS Our investment strategy is to maximize the difference between investment yield over required yield on our net liabilities, and to avoid uncompensated risk. Our investment portfolio is concentrated in high quality fixed-maturity assets, which represents 95% of our invested assets at year end. Our invest- ment quality is strong with the average credit rating quality of the fixed maturity portfolio being A - as rated by Standard & Poor's, and A2 as rated by Moody's. On a tax equivalent basis (i.e., recognizing that certain bonds are subject to lower federal taxes), our net investment income was $459 million. Excess investment income is the difference between our net investment income and the interest required on our net interest-bearing liabilities. Required investment income was $243 million, resulting in excess investment income of $215. 8 For a number of reasons, including the loss of investment income from investing $175 million in the repurchase of our stock, a comparison of excess investment income in terms of dollars in 1999 versus 1998 is not meaningful. A better comparison is on a per share basis. Excess investment income on a per share basis increased 10% to $1.61 in 1999, compared tp $1.46 in 1998. As a general rule, the financial results of insurance companies are adversely affected by rising interest rates; this rule does not apply to Torchmark. Our cash generating abilities and the characteristics of our liabilities and invested assets assures us of continued growth in excess investment income, partic- ularly in periods of rising interest rates. OUTLOOK In 1999, we had the largest growth in annualized premium issued for any year of the decade. Our premium income increased throughout all of our life and health insurance distribution systems. For 2000, we expect another strong year in growth in annualized premiums issued, and greater growth in premium income and underwriting margins. Our administrative expenses will continue to decline as a percentage of premium income. The cash that we generate within our operations will continue to expand, and we will use the cash to increase our invested assets and to repurchase our stock, thereby further increasing intrin- sic shareholder value. We expect 2000 to be an excellent year for Torchmark. C. B. Hudson Chairman, President and Chief Executive Officer Torchmark cautions you that the Letter to Shareholders above contains forward-looking statements provided for general guidance purposes only. Accordingly, you are referred to the Company’s cautionary statement regarding forward-looking statements contained in our Form 10-K for the fiscal year ended December 31, 1999, which is on file with the Securities and Exchange Commission and is a matter of public record. 9 Condensed Consolidated Statement of Net Operating Income (Unaudited and in thousands except per share amounts) Revenue: Life premium Health premium Other premium Total Investment income: Taxable equivalent basis Taxable equivalent adjustment Other income Total operating revenue Benefits and expenses: Benefits: Life Health Other Commissions and acquisition expenses: Life Health Other Interest on net policy liabilities: Life Health Other Insurance administrative expenses Corporate expenses Interest on debt and dividends on MIPS Amortization of goodwill Income taxes Total benefits and expenses Twelve months ended December 31, 1999 1998 $1,018,869 824,816 _________ 40,401 1,884,086 $957,803 759,910 33,065 _________ 1,750,778 458,824 (11,487) 3,348 _________ 2,334,771 470,701 (11,143) 5,881 _________ 2,216,217 434,182 518,518 (3,814) 320,282 161,666 18,520 400,702 462,056 (4,529) 302,957 158,409 15,759 137,875 4,676 34,455 104,903 10,166 66,431 12,075 173,669 _________ 1,993,604 138,688 9,067 45,460 02,559 12,061 71,367 12,075 165,271 _________ 1,891,902 Net operating income excluding nonrecurring charge $341,167 _________ _________ $324,315 _________ _________ % Incr (decr) 6 % 9 2 ____ 8 (3) ____ 5 8 12 (16) 6 2 18 (1) (48) (24) 2 (16) (7) 0 5 ____ 5 % 5 % Per diluted share $2.55 $2.29 11 % Diluted average shares outstanding 133,986 141,352 Net operating income excluding nonrecurring charge Nonrecurring charge Non operating items, net of tax: Realized losses and related DAC adjustment Gain on sale of equipment, net of tax Discontinued operations - Waddell & Reed Expenses of Waddell & Reed Spin, net of tax Equity in earnings of Vesta Loss on redemption of debt Change in accounting standard, net of tax Vesta restatement, net of tax Net income $341,167 (13,423) $324,315 0 (72,131) 3,317 (1,060) 0 0 0 16,086 0 _________ $273,956 _________ _________ (50,924) 0 47,868 (54,241) (4,463) (4,962) 0 (13,152) _________ $244,441 _________ _________ The complete financial statements are found in the attached SEC Form 10-K with additional schedules and footnotes thereto. Condensed Consolidated Balance Sheet (Amounts in thousands) Assets: Fixed maturities Cash and short-term investments Mortgages and real estate Other investments Accrued investment income Other receivables Deferred acquisition costs Goodwill Other assets Separate account assets Total assets Liabilities and shareholders' equity: Policy liabilities: Interest bearing Other Accrued income taxes Short-term debt Long-term debt Other liabilities Separate account liabilities Monthly income preferred securities (MIPS) Shareholders' equity Total liabilities and shareholders At December 31, 1999 1998 $ 5,679,795 114,628 110,978 296,850 112,475 53,458 1,893,322 402,584 53,899 3,413,675 ___________ $ 12,131,664 ___________ ___________ $ 4,990,646 261,781 309,271 418,394 371,555 179,681 3,413,675 193,324 1,993,337 ___________ $ 12,131,664 ___________ ___________ $5,768,447 80,764 288,716 311,094 99,279 130,279 1,673,151 414,658 57,378 2,425,262 ___________ $ 11,249,028 ___________ ___________ $4,709,389 248,634 511,311 355,392 383,422 162,831 2,425,262 193,259 2,259,528 ___________ $ 11,249,028 ___________ ___________ Actual shares outstanding: Basic Diluted 131,996 132,348 136,849 137,952 Annualized life and health premium in force: Life Health Total $ 1,130,609 884,358 ___________ $ 2,014,967 $1,062,647 796,863 ___________ $1,859,510 The complete financial statements are found in the attached SEC Form 10-K with additional schedules and footnotes thereto. 11 Directors Officers David L. Boren President of the University of Oklahoma Norman, OK Joseph M. Farley Of Counsel in the Birmingham, Alabama law firm of Balch & Bingham LLP Louis T. Hagopian Retired Chairman of the Board and Chief Executive Officer of NW Ayer, Inc. New York, NY C . B . Hud son Chairman, President and Chief Executive Officer of Torchmark Joseph L. Lanier, Jr. Chairman of the Board and Chief Executive Officer of Dan River Incorporated, Danville, VA Mark S. McAndrew Chairman, President and Chief Executive Officer of United American, Globe and American Income Harold T. McCormick Chairman and Chief Executive Officer of Bay Point Yacht and Country Club Panama City, FL George J. Records Chairman of Midland Financial Co. Oklahoma City, OK R.K. Richey Chairman of the Executive Committee of the Board of Directors of Torchmark Lamar C. Smith Chairman and Chief Executive Officer of United Services Planning Association and Independent Research Agency Fort Worth, TX C.B. Hudson - Chairman , President and Chief Executive Officer Tony G. Brill - Executive Vice President and Chief Administrative Officer Gary L. Coleman - Executive Vice President and Chief Financial Officer Michael K. Fagin - Vice President Larry M. Hutchison - Executive Vice President and General Counsel Michael J. Klyce - Vice President and Treasurer Joyce L. Lane - Vice President, Investor Relations Mark S. McAndrew - Executive Vice President Carol A. McCoy - Associate Counsel and Corporate Secretary Anthony L. McWhorter - Executive Vice President Rosemary J. Montgomery - Executive Vice President and Chief Actuary Stephen W. Still - Vice President and Associate General Counsel Spencer H. Stone - Controller David F. Thorndike - Vice President Russell B. Tucker - Vice President SUBSIDIARY OFFICERS American Income Life Mark S. McAndrew - Chairman, President and Chief Executive Officer Roger K. Smith - Executive Vice President and Sales Director Globe Life Mark S. McAndrew - Chairman, President and Chief Executive Officer George B. Burke - Executive Vice President Glenn D. Williams - Executive Vice President Liberty National Life Anthony L. McWhorter - Chairman, President and Chief Executive Officer Vurl E. Duce - Executive Vice President and Chief Marketing Officer United American Mark S. McAndrew - Chairman, President and Chief Executive Officer Gene P. Grimland - President of General Agency Marketing Division Andrew W. King - President of Branch Office Marketing Division United Investors Life Anthony L. McWhorter - Chairman, President and Chief Executive Officer 12 

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