NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in thousands except per share data) Note 13—Business Segments (continued) Torchmark Corporation Premium By Distribution Channel
## Table 0 ##
Because of the nature of the life insurance industry, Torchmark has no individual or group which would be considered a major customer.
Substantially all of Torchmark’s business is conducted in the United States, primarily in the Southeastern and Southwestern regions.
The measure of profitability established by management for insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner the segments are managed.
It essentially represents gross profit margin on insurance products before insurance administrative expenses and consists of premium, less net policy obligations, acquisition expenses, and commissions.
Interest credited to net policy liabilities (reserves less deferred acquisition costs and value of insurance purchased) is reflected as a component of the Investment segment in order to match this cost to the investment earnings from the assets supporting the net policy liabilities.
Investment Acquisitions.
Torchmark’s current investment policy calls for investing almost exclusively in investment-grade fixed maturities generally with long maturities (maturity date more than 20 years after acquisition date) that meet our quality and yield objectives.
We generally prefer to invest in securities with longer maturities because they more closely match the long-term nature of our policy liabilities.
Further, we believe this strategy is appropriate because our strong positive cash flows are generally stable and predictable.
If such longer-term securities do not meet our quality and yield objectives, we consider investing in short-term securities, taking into consideration the slope of the yield curve and other factors at the time.
During calendar years 2012 through 2014, Torchmark invested almost exclusively in fixed-maturity securities, primarily with longer-term maturities as presented in the chart below.
The following table summarizes selected information for fixed-maturity purchases.
The effective annual yield shown in the table is the yield calculated to the potential termination date that produces the lowest yield.
This date is commonly known as the “worst call date.
” Two different average life calculations are shown, average life to the next call date and average life to the maturity date.
Fixed Maturity Acquisitions Selected Information (Dollar amounts in millions)
## Table 1 ##
* Tax-equivalent basis, where the yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.
We prefer to invest primarily in bonds that are not callable (on other than a make-whole basis) prior to maturity, but we periodically invest some funds in callable bonds when the incremental yield available on such bonds warrants doing so.
For investments in callable bonds, the actual life of the investment will depend on whether the issuer calls the investment prior to the maturity date.
Given our investments in callable bonds, the actual average life of our investments cannot be known at the time of the investment.
However, the average life will not be less than the average life to next call and will not exceed the average life to maturity.
Data for both of these average life measures is provided in the above chart.
During the three years 2012 through 2014, we have invested almost entirely in investment-grade corporate bonds.
Acquisitions in all three years have been primarily in industrial and utility bonds.
New cash flow available for investment has been primarily provided through our insurance operations, but has also been affected by other factors.
Issuer calls, as a result of the low-interest environment experienced during the past three years were an important factor, especially in 2012.
Calls increase funds available for investment, but as noted earlier in this discussion, they can have a negative impact on investment income if the proceeds from the calls are reinvested in bonds that have lower yields than that of the bonds that were called.
Issuer calls were $160 million in 2014, $344 million in 2013, and $650 million in 2012.
The higher level of acquisitions in 2012 was primarily due to the additional funds available from the higher level of 2012 calls.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in thousands except per share data) Note 12—Shareholders’ Equity (continued) 98 Restrictions: Restrictions exist on the flow of funds to Torchmark from its insurance subsidiaries.
Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus.
Dividends from insurance subsidiaries of Torchmark are restricted based on regulations by their state of domicile.
Additionally, insurance company distributions are generally not permitted in excess of statutory surplus.
Subsidiaries are also subject to certain minimum capital requirements.
Subsidiaries of Torchmark paid cash dividends to the Parent Company in the amount of $438 million in 2016, $466 million in 2015, and $479 million in 2014.
As of December 31, 2016, dividends and transfers from insurance subsidiaries to parent available to be paid in 2017 are limited to the amount of $262 million without regulatory approval, such that $1.1 billion was considered restricted net assets of the subsidiaries.
Dividends exceeding these limitations may be available during the year pending regulatory approval.
While there are no legal restrictions on the payment of dividends to shareholders from Torchmark’s retained earnings, retained earnings as of December 31, 2016 were restricted by lenders’ covenants which require the Company to maintain and not distribute $2.6 billion from its total consolidated retained earnings of $3.9 billion.
Earnings Per Share: A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:
## Table 2 ##
There were no anti-dilutive shares as of December 31, 2016, 2015, or 2014.
Income available to common shareholders for basic earnings per share is equivalent to income available to common shareholders for diluted earnings per share.
As discussed earlier in Note 1—Significant Accounting Policies, the Company adopted ASU 2016-09 on January 1, 2016.
Note 13—Stock-Based Compensation Torchmark’s stock-based compensation consists of stock options, restricted stock, restricted stock units, and performance shares.
Certain employees and directors have been granted fixed equity options to buy shares of Torchmark stock at the market value of the stock on the date of grant, under the provisions of the Torchmark stock option plans.
The options are exercisable during the period commencing from the date they vest until expiring according to the terms of the grant.
Options generally expire the earlier of employee termination or option contract term, which ranges from seven to ten years.
Options generally vest in accordance with the following schedule:
## Table 3 ##
(1) Grant offered through the Torchmark Corporation 2011 Incentive Plan only.
All employee options vest immediately upon retirement on or after the attainment of age 65, upon death, or disability.
Torchmark generally issues shares for the exercise of stock options from treasury stock.
The Company generally uses the proceeds from option exercises to buy shares of Torchmark common stock in the open market to reduce the dilution from option exercises.
Operating Expenses

Tables referenced above, in order (Table 0 first):
<table><tr><td></td><td colspan="8"> For the Year 2006 </td></tr><tr><td></td><td colspan="2"> Life </td><td colspan="2"> Health </td><td colspan="2"> Annuity </td><td colspan="2"> Total </td></tr><tr><td> Distribution Channel</td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td></tr><tr><td>United American Independent</td><td>$40,378</td><td>3</td><td>$418,690</td><td>34</td><td>$537</td><td>2</td><td>$459,605</td><td>17</td></tr><tr><td>Liberty National Exclusive</td><td>300,933</td><td>20</td><td>145,024</td><td>12</td><td></td><td></td><td>445,957</td><td>16</td></tr><tr><td>American Income Exclusive</td><td>409,188</td><td>27</td><td>67,175</td><td>5</td><td></td><td></td><td>476,363</td><td>17</td></tr><tr><td>Direct Response</td><td>457,159</td><td>30</td><td>39,726</td><td>3</td><td></td><td></td><td>496,885</td><td>18</td></tr><tr><td>United American Branch Office</td><td>15,775</td><td>1</td><td>354,535</td><td>29</td><td></td><td></td><td>370,310</td><td>13</td></tr><tr><td>Military</td><td>203,218</td><td>13</td><td></td><td></td><td></td><td></td><td>203,218</td><td>7</td></tr><tr><td>Medicare Part D</td><td></td><td></td><td>212,382</td><td>17</td><td></td><td></td><td>212,382</td><td>8</td></tr><tr><td>Other</td><td>97,616</td><td>6</td><td></td><td></td><td>22,377</td><td>98</td><td>119,993</td><td>4</td></tr><tr><td></td><td>$1,524,267</td><td>100</td><td>$1,237,532</td><td>100</td><td>$22,914</td><td>100</td><td>$2,784,713</td><td>100</td></tr><tr><td></td><td colspan="8"> For the Year 2005 </td></tr><tr><td></td><td colspan="2"> Life </td><td colspan="2"> Health </td><td colspan="2"> Annuity </td><td colspan="2"> Total </td></tr><tr><td> Distribution Channel</td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td></tr><tr><td>United American Independent</td><td>$45,472</td><td>3</td><td>$441,673</td><td>43</td><td>$419</td><td>2</td><td>$487,564</td><td>19</td></tr><tr><td>Liberty National Exclusive</td><td>302,747</td><td>21</td><td>149,020</td><td>15</td><td></td><td></td><td>451,767</td><td>18</td></tr><tr><td>American Income Exclusive</td><td>380,365</td><td>26</td><td>63,623</td><td>6</td><td></td><td></td><td>443,988</td><td>18</td></tr><tr><td>Direct Response</td><td>424,037</td><td>29</td><td>37,774</td><td>4</td><td></td><td></td><td>461,811</td><td>18</td></tr><tr><td>United American Branch Office</td><td>16,891</td><td>1</td><td>322,767</td><td>32</td><td></td><td></td><td>339,658</td><td>14</td></tr><tr><td>Military</td><td>199,319</td><td>13</td><td></td><td></td><td></td><td></td><td>199,319</td><td>8</td></tr><tr><td>Other</td><td>99,457</td><td>7</td><td></td><td></td><td>24,510</td><td>98</td><td>123,967</td><td>5</td></tr><tr><td></td><td>$1,468,288</td><td>100</td><td>$1,014,857</td><td>100</td><td>$24,929</td><td>100</td><td>$2,508,074</td><td>100</td></tr><tr><td></td><td colspan="8"> For the Year 2004 </td></tr><tr><td></td><td colspan="2"> Life </td><td colspan="2"> Health </td><td colspan="2"> Annuity </td><td colspan="2"> Total </td></tr><tr><td> Distribution Channel</td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td><td> Amount </td><td> % of Total </td></tr><tr><td>United American Independent</td><td>$49,834</td><td>4</td><td>$468,319</td><td>45</td><td>$262</td><td>1</td><td>$518,415</td><td>21</td></tr><tr><td>Liberty National Exclusive</td><td>303,965</td><td>22</td><td>163,981</td><td>15</td><td></td><td></td><td>467,946</td><td>19</td></tr><tr><td>American Income Exclusive</td><td>349,686</td><td>25</td><td>59,519</td><td>6</td><td></td><td></td><td>409,205</td><td>17</td></tr><tr><td>Direct Response</td><td>387,006</td><td>28</td><td>34,568</td><td>3</td><td></td><td></td><td>421,574</td><td>17</td></tr><tr><td>United American Branch Office</td><td>17,838</td><td>1</td><td>322,279</td><td>31</td><td></td><td></td><td>340,117</td><td>14</td></tr><tr><td>Military</td><td>186,555</td><td>13</td><td></td><td></td><td></td><td></td><td>186,555</td><td>7</td></tr><tr><td>Other</td><td>100,606</td><td>7</td><td></td><td></td><td>27,482</td><td>99</td><td>128,088</td><td>5</td></tr><tr><td></td><td>$1,395,490</td><td>100</td><td>$1,048,666</td><td>100</td><td>$27,744</td><td>100</td><td>$2,471,900</td><td>100</td></tr></table>
<table><tr><td></td><td colspan="3"> For the Year</td></tr><tr><td></td><td>2014</td><td>2013</td><td> 2012</td></tr><tr><td>Cost of acquisitions:</td><td></td><td></td><td></td></tr><tr><td>Investment-grade corporate securities</td><td>$696.3</td><td>$1,113.2</td><td>$1,465.9</td></tr><tr><td>Taxable municipal securities</td><td>0</td><td>0</td><td>1.5</td></tr><tr><td>Other investment-grade securities</td><td>8.7</td><td>30.6</td><td>16.9</td></tr><tr><td>Total fixed-maturity acquisitions</td><td>$705.0</td><td>$1,143.8</td><td>$1,484.3</td></tr><tr><td>Effective annual yield (one year compounded*)</td><td>4.77%</td><td>4.65%</td><td>4.30%</td></tr><tr><td>Average life (in years, to next call)</td><td>22.9</td><td>26.0</td><td>25.6</td></tr><tr><td>Average life (in years to maturity)</td><td>23.4</td><td>26.5</td><td>26.7</td></tr><tr><td>Average rating</td><td>BBB+</td><td>BBB+</td><td>BBB+</td></tr><tr><td colspan="4">* Tax-equivalentbasis, where the yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.</td></tr></table>
<table><tr><td></td><td colspan="3">Year Ended December 31,</td></tr><tr><td></td><td>2016</td><td>2015</td><td>2014</td></tr><tr><td>Basic weighted average shares outstanding</td><td>120,001,191</td><td>125,094,628</td><td>130,721,738</td></tr><tr><td>Weighted average dilutive options outstanding</td><td>2,366,594</td><td>1,662,607</td><td>1,918,506</td></tr><tr><td>Diluted weighted average shares outstanding</td><td>122,367,785</td><td>126,757,235</td><td>132,640,244</td></tr></table>
<table><tr><td></td><td></td><td colspan="6">Shares vested by period</td></tr><tr><td></td><td rowspan="2">Contract Period 7 years</td><td rowspan="2">6 Months 100%</td><td>Year 1</td><td>Year 2</td><td>Year 3</td><td>Year 4</td><td>Year 5</td></tr><tr><td>Directors</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Employees</td><td>7 years</td><td>—%</td><td>—%</td><td>50%</td><td>50%</td><td></td><td></td></tr><tr><td>Employees<sup>-1</sup></td><td>10 years</td><td>—%</td><td>—%</td><td>25%</td><td>25%</td><td>25%</td><td>25%</td></tr></table>

Question: What is the growing rate of United American Independent in the years with the least Life
Answer: -0.05951
Reasoning program: subtract(487564,518415), divide(#0,518415)