Fitch affirms Torchmark

Fitch Ratings said it affirmed Torchmark Corp.'s long-term issuer default rating at A-, short-term issuer default rating at F2, senior debt at BBB+ and commercial paper rating at F2 and Torchmark Capital Trust III's preferred stock at BBB-. The outlook is stable.

The affirmation reflects Fitch's view that Torchmark's financial and operating profiles continue to be consistent with rating expectations. The agency said consistently strong earnings at Torchmark's insurance subsidiaries continue to provide Torchmark's holding company with robust cash flow, which is mainly used for debt service and share repurchases.

Torchmark's financial leverage increased to 26% at March 31 from 24% at the end of 2011. This is above Fitch's expectation of 25% or less. However, the agency expects the increase to be temporary. The leverage increase is due to a $395 million, or 9.4%, decline in GAAP shareholders' equity, the agency said, and this decline was associated with the adoption of Accounting Standard Update 2010-26 in the first quarter.

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