4) Interest rate changes that adversely affect product sales and/or investment portfolio yield;
Summary of Operating Results. Torchmark's management computes a classification of income called "net operating income" and uses it to evaluate the operating performance of the company. It differs from net income as reported in the financial statements in that it excludes nonrecurring and nonoperating income or loss items. These items are removed because they distort comparability of Torchmark's core operations from period to period. Net operating income also excludes discontinued operations.
Health products sold by Torchmark insurance companies include Medicare Supplement, cancer, long-term care, and other under-age-65 limited-benefit supplemental medical and hospitalization products. As a percentage of annualized health premium in force at December 31, 2001, Medicare Supplement accounted for 73% and cancer 16%. The table below presents Torchmark's health insurance annualized premium in force by major product category at December 31, 2001 and for the two preceding years.
A.M. Best states that it assigns A+ (Superior) ratings to those companies which, in its opinion, have demonstrated superior overall performance when compared to the norms of the life/health insurance industry. A+ (Superior) companies have a superior ability to meet their obligations to policyholders over a long period of time. A.M. Best states that it assigns A (Excellent) ratings to those companies which, in its opinion, have demonstrated excellent overall performance when compared to the norms of the life/health insurance industry. A (Excellent) companies have an excellent ability to meet their obligations to policyholders over a long period of time.
The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7.5% in 2001 and 2000.
The Notes, due May 15, 2023, were issued in May, 1993 in the principal amount of $200 million. Proceeds of the issue, net of issue costs, were $196 million. Interest is payable on May 15 and November 15 of each year at a rate of 7 7/8%. In 1999, $7.6 million principal amount was purchased in the open market at a cost of $7.9 million by Torchmark subsidiary companies which in turn sold them to the parent company in 2000. An additional $8.1 million and $4.6 million, respectively, principal amount were purchased by the parent company in 2001 and 2000 in the open market at a cost of $8.3 million and $4.2 million. An after-tax loss on the redemption of debt of $277 thousand and gain of $166 thousand was recorded during 2001 and 2000, respectively. These notes are not callable prior to maturity and have equal priority with other Torchmark unsecured indebtedness.
The Notes, due August 1, 2013, were issued in July, 1993 in the principal amount of $100 million for net proceeds of $98 million. Interest is payable on February 1 and August 1 of each year at a rate of 7 3/8%. In March, 1999, $4.0 million principal amount was purchased in the open market at a cost of $4.1 million by a Torchmark insurance subsidiary, which in turn sold it to the parent company in 2000 for $3.7 million. In the fourth quarter of 2000, Torchmark purchased $2.0 million principal amount in the open market at a cost of $1.9 million. An after-tax gain on the redemption of debt of $36 thousand was recorded in the fourth quarter of 2000. These notes are not callable prior to maturity and have equal priority with other Torchmark unsecured indebtedness.
Another action with similar allegations to Moore, which also includes claims for race discrimination under 24 U.S.C. (S)(S)1981 and 1982, was filed against Liberty in U.S. District Court for the Northern District of Alabama on January 28, 2002 (Hull v. Liberty National Life Insurance Company, Civil Action No.: CV-02-C-0219-W).