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A.M. Best Affirms Ratings of Torchmark's Operating Subsidiaries; Downgrades Rating of United Investors Life Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" for the majority of life/health subsidiaries of Torchmark Corporation (Torchmark) (McKinney, TX) (NYSE: TMK). A.M. Best has also downgraded the FSR to A (Excellent) from A+ (Superior) and the ICR to "a" from "aa-" for Torchmark's subsidiary, United Investors Life Insurance Company (United Investors Life) (Birmingham, AL). Concurrently, A.M. Best has affirmed all existing debt ratings of Torchmark. The outlook for all ratings is stable. (See link below for a detailed list of the ratings.)

The rating affirmations primarily reflect Torchmark's superior capitalization and its ability to generate consistently strong earnings, despite competitive market conditions. Additionally, the diversity of the company's product lines and distribution systems were also important factors driving the rating decisions. Torchmark's focus on the low-to-middle income segment targets an underserved market through a diverse network of direct marketing, agencies and niche markets specific to each insurance company within the group, where the brand identity of each company markets to various segments. While Torchmark has been challenged to increase premium levels in recent periods, it has recently increased its agent count in several of its distribution channels, with the expectation that this will result in increased premium production going forward.

Torchmark's financial leverage and coverage ratios continue to remain within acceptable ranges for its ratings. A.M. Best's analysis also contemplates a temporary modest increase in Torchmark's leverage for re-funding of maturing and callable debt coming due in the later part of 2006. The group's coverage ratios are very favorable, and Torchmark generates more than enough excess cash flow to service its debt. In addition, Torchmark's equity position has generally increased over the past five-year period, resulting in a favorable risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio. This capital expansion is primarily due to organic growth via the retention of consistently strong earnings across all of Torchmark's core operating segments. However, A.M. Best believes Torchmark could continue to be challenged to increase premium production in both its ordinary life and Medicare supplement lines of business in the near term. A.M. Best will be monitoring the company's retention of its newly hired agents and other changes recently implemented by management, as well as the impact these corrective measures and expansion have on premium production.

One of the group's lead companies, Liberty National Life Insurance Company (Birmingham, AL), has recently revamped its producer compensation structure to reward higher producing agents and eliminate non-producing agents. A.M. Best will be monitoring the impact of this change and expects that it may improve production and expense levels during the coming year.

In addition, Globe Life and Accident Insurance Company (Globe Life and Accident) (Oklahoma City, OK), is well positioned to increase premium and earnings growth through its state-of-the-art distribution facility in Oklahoma. Torchmark is projecting significant growth for Globe Life and Accident beginning in the last half of 2006. American Income Life Insurance Company (Waco, TX), a subsidiary of Globe Life and Accident, has also seen an increase in its agent count. This subsidiary remains focused on the union market, which has been extremely profitable for Torchmark.

Through its primary health subsidiary, United American Life Insurance Company (United American) (McKinney, TX), Torchmark has recently been focusing on increasing production of its limited benefit product while de-emphasizing its Medicare supplement sales. A.M. Best presently views the Medicare supplement market as very competitive and views Torchmark's measured approach and prudent growth strategy favorably. Although Torchmark's inforce Medicare supplement block remains United American's core business, new sales have been substantially higher for its limited benefit plans. United American also added new branch offices in 2005 and recently increased its exclusive agency force with the goal of improving new sales.

United Investors Life has historically marketed Torchmark's fixed and variable life and annuity products. In recent years, United Investors Life has been operating in runoff. However, both capital and reserve levels remain adequate for the company's insurance and investment risks. The downgrading of United Investors Life's ratings and the removal of the group rating reflect its run-off status and is consistent with A.M. Best's group rating methodology.

For a complete listing of Torchmark Corporation's FSRs, ICRs and debt ratings, please visit

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at
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Publication:Business Wire
Geographic Code:1USA
Date:Jun 8, 2006
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