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A.M. Best Co. has assigned a debt rating of “a-” to the newly issued $300 million 3.80% senior unsecured notes due September 2022 of Torchmark Corporation (Torchmark) (headquartered in McKinney, TX) [NYSE: TMK]. Concurrently, A.M. Best has assigned a debt rating of “bbb” to Torchmark’s newly issued $125 million 5.875% junior subordinated debentures due September 2052. The outlook assigned to both ratings is stable. The financial strength, issuer credit and existing debt ratings of Torchmark and its life/health companies are unchanged. Approximately $200 million of the net proceeds from the senior note offering are expected to be used to fund a portion of the purchase price of Torchmark’s proposed acquisition of Family Heritage Life Insurance Company of America, which Torchmark expects to close early in the fourth quarter of 2012. The remainder of the net proceeds will be used for general corporate purposes, which may include the repurchase or repayment of the $94.1 million in principal amount outstanding of Torchmark’s 7.375% notes that mature on August 1, 2013. The net proceeds of the junior subordinated debenture offering are expected to be used to redeem all of the $120 million of 7.10% Trust Originated Preferred Securities due 2046. The assigned junior subordinated rating reflects the debentures’ deeply subordinated status within Torchmark’s capital structure. Specifically, these securities will be unsecured, subordinated and junior in right of payment and upon liquidation to all existing and future senior indebtedness. In addition, the debentures will be effectively subordinated to all existing and future indebtedness and other liabilities, including policyholder obligations, of its subsidiaries. A.M. Best notes that the newly issued subordinated notes may be redeemed in or after September 2017, or at any time within 90 days after the occurrence of a “tax event.” The assigned ratings reflect Torchmark’s status as a niche provider of life and supplemental health insurance, its consistently favorable earnings and improved investment results. The ratings also are indicative of A.M. Best’s view of the group’s near-term prospects when considering Torchmark’s capitalization. A.M. Best notes that Torchmark’s overall financial leverage, incorporating some equity credit for the new debentures, is expected to remain below 30%, while interest coverage is expected to remain above nine times. Both measures are well within A.M. Best’s guidelines for Torchmark’s current ratings.