A.M. Best Co. has assigned indicative debt ratings of “a-” to senior unsecured debt, “bbb+” to subordinated debt, “bbb” to trust preferred securities and “bbb” to preferred stock, which may be issued under Torchmark Corporation’s (Torchmark) (headquartered in McKinney, TX) (NYSE: TMK) recently filed shelf registration statement. Concurrently, A.M. Best has assigned a debt rating of “a-” to the newly issued $300 million 9.25% senior unsecured notes due 2019 of Torchmark. The outlook assigned to all ratings is negative. Torchmark’s financial strength, issuer credit and existing debt ratings are unchanged.

Proceeds from the senior notes will be used to fund $100 million in notes maturing in August 2009 and for general corporate purposes. Torchmark’s financial leverage and interest coverage ratios are expected to remain consistent with its current ratings. A.M. Best believes the debt issuance improves the company’s overall liquidity and financial flexibility. In addition, it will help to mitigate some of the concerns regarding the heightened risks within Torchmark’s investment portfolio due to the significant unrealized loss position within its fixed income portfolio and the substantial increase in below investment grade bonds over the most recent period.

The ratings reflect Torchmark’s exceptional operating profitability due to strong earnings generated by its stable and highly profitable blocks of individual life and health products. In addition, the company has experienced a relatively modest amount of realized capital losses within its investment portfolio to date. Although Torchmark has experienced a significant decline in sales of its health insurance products, it has made a strategic decision to emphasize its core life product lines, and sales have increased noticeably in recent periods.

While Torchmark generally maintains a favorable risk-adjusted capital position in each of its insurance operating entities, A.M. Best believes that the company’s risk-adjusted capital position may be strained if it were to experience significant asset impairments or further negative ratings migration within its fixed income portfolio during 2009. Going forward, A.M. Best will continue to monitor the company’s ability to increase top-line growth, while maintaining an adequate risk-adjusted capital position as it manages through the current economic recession.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts:
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Thomas Rosendale, 908-439-2200, ext. 5201
thomas.rosendale@ambest.com
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Jim Peavy, 908-439-2200, ext. 5644
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Rachelle Morrow, 908-439-2200, ext. 5378
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