torchmark corporation

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the history of torchmark corporation (NYSE: TMK)

The original core of Torchmark Corporation, Liberty National Life Insurance Company, was founded in 1900 in Birmingham, Alabama as the Heralds of Liberty, a fraternal benefit society.  There were some issues with the original company, and the new company didn’t gain true legitimacy until nearly a decade after it was taken over by the Alabama Insurance Department. But the company was then taken public in 1929 as the Liberty National Life Insurance Company, and even survived and thrived through the stock market crash and Great Depression which ensued worldwide just months later (Liberty paid its first cash dividend in 1933, the worst year of the global slump).

Innovative policies helped Liberty National compete with its more established rivals through the Depression, and the company made its first acquisition in 1944.  By the 1950s, Liberty was increasing both earnings and dividends at rates unmatched on the New York Stock Exchange, and by the 1960s a majority of Alabamans held policies issued by a Liberty National subsidiary.  During this period Liberty became the second largest pubicly-owned provider of industrial insurance and the 18th largest provider of regular insurance. In 1968 Liberty National sold more than $1 billion in new policies for the first time.

In the 1980s Liberty National began to expand and diversify with acquisitions, beginning with Globe Life.  The company’s expansions into mutual funds, health insurance and financial services rendered its name of Liberty National Insurance Holding Company outdated, and the current name of Torchmark Corporation (a combination of the Statue of Liberty’s “torch” and the word “hallmark”) was adopted in 1982.  Torchmark stayed out of riskier investments fashionable in the 80s (e.g. junk bonds), and emerged from that decade unscathed, earning American Income and other subsidiaries high financial ratings.

In the 1990s Torchmark began to focus more on life insurance (vs. health insurance and other industries such as energy), and continued to make acquisitions (American Family was acquired for over half a billion dollars, and our American Income was acquired in 1994).  As a result of this and of Globe’s innovative use of direct marketing, Torchmark’s profits skyrocketed in the 90s, and the company was added to the S&P 500 under the symbol TMK.

In 2006, Torchmark moved its headquarters from Birmingham, Alabama to McKinney, Texas.  As of April 2018, Warren Buffett’s Berkshire Hathaway held a 5.6% stake in Torchmark, and when the world’s third-richest man, second only to Jeff Bezos and Bill Gates, maintains such a sizable investment, both you and your future insureds should take note.  As the financial advisors at Motley Fool put it, “It’s not hard to see why Buffett would like Torchmark.”