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dramatically over time, the current positive excess investment income from the “swaps” could become negative; we have concluded that the risk/reward is in our favor. Furthermore, if interest rates do rise dramatically, the substantial cash generated within our insurance and investment operations would also be invested at higher interest rates, and the net effect would be beneficial to our operating earnings. 

## 2002 INVESTMENT INCOME 

(In millions, except percent and per share amounts) 

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* For illustrative purposes only, total investment income has been allocated pro rata based upon the net liabilities. Torchmark does not specifically allocate assets to liabilities. 

** Consists of interest on debt and dividends on trust preferred securities. 

## SHARE REPURCHASE PROGRAM 

During the year we repurchased 4.8 million shares of our outstanding stock at a cost of $182 million. Since 1986, we have repurchased our outstanding stock in all years except one, and the cumulative effect has been that we have repurchased 51% of the outstanding stock. We expect to continue this program as long as we believe that our stock is undervalued, since repurchasing our stock is a means of increasing shareholder intrinsic value. 

## OUTLOOK 

In 2003, we expect growth in sales, premium income and underwriting margins. We expect our investment operations to continue to perform well. And, as stated above, we expect further repurchases of our stock. We expect 2003 to be a good year for Torchmark. 

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Torchmark cautions you that this Letter to Shareholders may contain forward-looking statements within the meaning of the federal securities law. These prospective statements reflect management’s current expectations, but are not guarantees of future performance. Accordingly, please refer to Torchmark’s cautionary statement regarding forward- looking statements, and the business environment in which the Company operates, contained in the Company’s Form 10K for the period ended December 31, 2002, found on the following pages and on file with the Securities and Exchange Commission. Torchmark specifically disclaims any obligation to update or revise any forward-looking statement because of new information, future developments or otherwise. 

