[November 13, 2012]

A.M. Best Upgrades Ratings of Family Heritage Life Insurance Company of America

A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from B++ (Good) and issuer credit rating (ICR) to "a" from "bbb+" of Family Heritage Life Insurance Company of America (Family Heritage) (Cleveland, OH). The ratings have been removed from under review with positive implications and assigned a stable outlook.

Family Heritage's ratings were placed under review following the announcement that it had signed a definitive agreement to be acquired by Torchmark Corporation (Torchmark) (headquartered in McKinney, TX) (NYSE: TMK). The transaction closed on November 1, 2012.

The rating upgrades reflect the financial strength of the Torchmark organization as well as A.M. Best's expectations of continued strong stand-alone capitalization and favorable trends in sales and earnings for Family Heritage. As a result of the acquisition, Torchmark gains access to Family Heritage's 1,200 captive agents and roughly 239,000 policies in force. A.M. Bet notes that the acquisition provides Torchmark with the ability to expand its supplemental health business segment with a higher margin, return of premium product feature.

A.M. Best believes Family Heritage will benefit from having a strong parent with a recognized brand. Its new owner should help improve agent recruiting and facilitate geographical expansion as well as provide capital to fund anticipated premium growth within Family Heritage, as needed. Initially, Family Heritage will represent only a modest portion of Torchmark's overall revenue and earnings. Torchmark will utilize Family Heritage as a platform for return of premium products going forward.

The FSRs, ICRs and existing debt ratings of Torchmark and its other six life/health subsidiaries are unchanged. The outlook for these ratings is stable.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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