Operating from over 100 local district offices, Liberty agents sit down with their laptop computers at their neighbors’ kitchen tables to plan for their life and supplemental health insurance needs. Working with a trusted, hometown agent keeps Liberty’s customers loyal, which translates into stable and predictable financial results. Our Liberty National Agency has about 2,200 active agents of which 1,000 reside in Alabama, the highest concentration of agents Torchmark has in any state. This concentration emphasizes the importance of community visibility by Liberty agents. As a result, Liberty agents rely on their personal and community contacts to generate sales opportunities rather than rely on “cold call” leads. But Liberty National has not maximized its market penetration even in Alabama, where it also has its highest policyholder concentration, as less than 20% of Alabama households own a Liberty policy. This agency is highly focused on serving  its target, underserved military market. 7 Torchmark policies written by First Command  are underwritten by Liberty National and Globe Life. Similar to Torchmark’s other successful niche distributors, First Command is highly focused on Another of Torchmark’s major niche distribution systems is an independent agency, not owned by Torchmark. First Command is the country’s leading independent agency specializing in financial planning for active and retired commissioned and non-commissioned military officers and their families. While this agency produces business for several life insurance companies, over the last decade, the amount written through Torchmark  has increased to 65% of the agency’s life  insurance production. Fort Worth, Texas serving its target, underserved market. Also similar to other Torchmark distributors, the company was started in the late 1950s by a former Air Force officer who saw a need for financial planning designed specifically for military officers, and had the discipline and a strategy to succeed  in building a financial services agency to service that niche market. Today, the company’s agents and management, all former military officers, still adhere to the company’s founding principle of educating their clients to avoid debt, live on less than they make and pay themselves first, which requires a commitment to a long term financial plan. By developing plans that are geared to the financial circumstances of military life and by providing a high level of customer service and support, the agency writes very high quality life insurance business with the highest persistency  of all of Torchmark’s distribution systems. First Command has further strengthened their ties to their customers by offering mutual funds, and more recently, by establishing a full-service bank offering internet banking, loans, credit cards and mortgage lending. First Command has more than 1,000 agents in over 200 offices on or near over 400 military installations throughout the United States, Europe and the Pacific Rim. It serves about 279 thousand client families. Its 140 thousand client members on active duty comprise almost one quarter of the company’s target market of active military professionals in pay grades E-6 and above, a percentage First Command intends to grow.  MILITARY AGENCY About Torchmark • 2002 Annual Report “A+ Superior” A.M. Best Rating  “AA Excellent” Standard & Poor’s Rating  for Financial Strength