News Release

Globe Life Inc. Reports First Quarter 2022 Results

April 20, 2022

McKinney, Texas

Globe Life Inc. (NYSE: GL) reported today that for the quarter ended March 31, 2022, net income was $1.64 per diluted common share, compared with $1.70 per diluted common share for the year-ago quarter. Net operating income for the quarter was $1.70 per diluted common share, compared with $1.53 per diluted common share for the year-ago quarter.

HIGHLIGHTS:

  • Net income as an ROE was 8.5% for the three months ended March 31, 2022. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 11.5% for the same period.
  • Life premiums increased 10% at the American Income Life Division and 7% at the Liberty National Division over the year-ago quarter.
  • Total health premiums increased over the year-ago quarter by 8%.
  • Total life and health net sales increased 8% over the year-ago quarter.
  • 880,061 shares of Globe Life Inc. common stock were repurchased during the quarter.

COVID-19 Update: In the first quarter, the Company incurred approximately $46 million of COVID life claims. We expect to incur approximately $71 million of COVID life claims for the full year at the mid-point of our guidance based on a range of $2.5 million to $3.5 million of COVID life claims per 10,000 U.S. deaths. For the full year 2022, we expect total U.S. COVID deaths to fall within a range of 200,000 to 300,000.

Note: As used in the earnings release, "Globe Life," the "Company," "we," "our," and "us" refer to Globe Life Inc., a Delaware corporation incorporated in 1979, its subsidiaries and affiliates.

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

 RESULTS OF OPERATIONS

Net operating income, a non-GAAP(1) financial measure, has been used consistently by Globe Life's management for many years to evaluate the operating performance of the Company, and is a measure commonly used in the life insurance industry. It differs from net income primarily because it excludes certain non-operating items such as realized investment gains and losses and certain significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company's business. Net income is the most directly comparable GAAP measure.

The following table represents Globe Life's operating summary for the three months ended March 31, 2022 and 2021:

Operating Summary

 

Per Share

           
 

Three Months Ended

March 31,

     

Three Months Ended

March 31,

   
 

2022

 

2021

 

%

Chg.

 

2022

 

2021

 

%

Chg.

Insurance underwriting income(2)

$              1.59

 

$              1.38

 

15

 

$       159,254

 

$       145,132

 

10

Excess investment income(2)

0.61

 

0.58

 

5

 

61,392

 

60,544

 

1

Parent company expense

(0.03)

 

(0.02)

     

(2,640)

 

(2,318)

   

Income tax expense

(0.42)

 

(0.37)

 

14

 

(41,645)

 

(38,562)

 

8

Stock compensation benefit (expense), net of tax

(0.06)

 

(0.04)

     

(6,189)

 

(4,705)

   

Net operating income

1.70

 

1.53

 

11

 

170,172

 

160,091

 

6

                       

Reconciling items, net of tax:

                     

     Realized gain (loss)—investments

(0.06)

 

0.21

     

(5,723)

 

22,240

   

     Non-operating expenses

 

     

(88)

 

   

     Legal proceedings

 

(0.04)

     

 

(3,814)

   

Net income(3)

$              1.64

 

$              1.70

     

$       164,361

 

$       178,517

   
                       

Weighted average diluted shares outstanding

100,250

 

104,838

               
   

(1)

GAAP is defined as accounting principles generally accepted in the United States of America.

(2)

Definitions included within this document.

(3)

A GAAP-basis condensed consolidated statement of operations is included in the appendix of this report.

   

Note: Tables in this earnings release may not sum due to rounding.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

MANAGEMENT VS. GAAP MEASURES

Shareholders' equity, excluding net unrealized gains on fixed maturities, and book value per share, excluding net unrealized gains on fixed maturities, are non-GAAP measures that are utilized by management to view the business without the effect of unrealized gains or losses which are primarily attributable to fluctuation in interest rates associated with the available-for-sale portfolio. Management views the business in this manner because the Company does not intend to sell, nor is it likely that management will be required to sell, the fixed maturities prior to their maturity. It creates more meaningful trends than can be more easily identified without the fluctuations. Shareholders' equity and book value per share are the most directly comparable GAAP measures. 

 

Three Months Ended

March 31,

 

2022

 

2021

Net income as an ROE(1)

8.5%

 

8.6%

Net operating income as an ROE (excluding net unrealized gains on fixed maturities)

11.5%

 

11.4%

       
 

March 31,

 

2022

 

2021

Shareholders' equity

$     6,894,020

 

$     7,832,337

Impact of adjustment to exclude net unrealized gains on fixed maturities

(947,799)

 

(2,162,510)

Shareholders' equity, excluding net unrealized gains on fixed maturities

$     5,946,221

 

$     5,669,827

       

Book value per share

$            69.16

 

$            75.10

Impact of adjustment to exclude net unrealized gains on fixed maturities

(9.51)

 

(20.74)

Book value per share, excluding net unrealized gains on fixed maturities

$            59.65

 

$            54.36

   

(1)

Calculated using average shareholders' equity for the measurement period.

 

INSURANCE OPERATIONS—comparing Q1 2022 with Q1 2021: 

Life insurance accounted for 65% of the Company's insurance underwriting margin for the quarter and 70% of total premium revenue. 

Health insurance accounted for 34% of the Company's insurance underwriting margin for the quarter and 30% of total premium revenue.

Net sales of life insurance and net sales of health insurance both increased 8% for the quarter. 

The following table summarizes Globe Life's premium revenue by product type for the three months ended March 31, 2022 and 2021:

Insurance Premium Revenue

 

Quarter Ended

 

March 31, 2022

 

March 31, 2021

 

%

Chg.

Life insurance

$           754,602

 

$           708,119

 

7

Health insurance

317,000

 

294,173

 

8

Annuity

 

1

   

     Total

$        1,071,602

 

$        1,002,293

 

7

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

INSURANCE UNDERWRITING INCOME

Insurance underwriting margin is management's measure of profitability of the Company's life, health, and annuity segments' underwriting performance, and consists of premiums less policy obligations, commissions and other acquisition expenses. Insurance underwriting income is the sum of the insurance underwriting margins of the life, health, and annuity segments, plus other income, less insurance administrative expenses. It excludes the investment segment, Parent Company expense, stock compensation expense and income taxes. Management believes this information helps provide a better understanding of the business and a more meaningful analysis of underwriting results by distribution channel. Insurance underwriting income, a non-GAAP measure, is a component of net operating income, which is reconciled to net income in the Results of Operations section above.

The following table summarizes Globe Life's insurance underwriting income by segment for the three months ended March 31, 2022 and 2021:

Insurance Underwriting Income

 

Quarter Ended

 

March 31, 2022

 

% of

Premium

 

March 31, 2021

 

% of

Premium

 

%

Chg.

Insurance underwriting margins:

                 

     Life

$           150,454

 

20

 

$           136,646

 

19

 

10

     Health

79,093

 

25

 

72,180

 

25

 

10

     Annuity

2,108

     

2,187

       
 

231,655

     

211,013

     

10

Other income

164

     

295

       

Administrative expenses

(72,565)

     

(66,176)

     

10

     Insurance underwriting income

$           159,254

     

$           145,132

     

10

     Per share

$                  1.59

     

$                  1.38

     

15

 

Administrative expenses were $73 million, up 9.7% from the year-ago quarter. The ratio of administrative expenses to premium was 6.8%, compared with 6.6% for the year-ago quarter.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

LIFE INSURANCE RESULTS BY DISTRIBUTION CHANNEL 

Our distribution channels consist of the following exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National) and Family Heritage Division (Family Heritage); an independent agency, United American Division (United American); and our Direct to Consumer Division.

Total premium, underwriting margins, first-year collected premium and net sales by all distribution channels are shown at https://investors.globelifeinsurance.com at "Financial Reports and Other Financial Information."

Life Underwriting Margin

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

   
 

Amount

 

% of
Premium

 

Amount

 

% of
Premium

 

% Chg.

American Income

$       110,990

 

30

 

$         98,158

 

29

 

13

Direct to Consumer

8,882

 

4

 

8,616

 

4

 

3

Liberty National

13,353

 

17

 

9,892

 

13

 

35

Other

17,229

 

33

 

19,980

 

37

 

(14)

     Total

$       150,454

 

20

 

$       136,646

 

19

 

10

 

Life Premium

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

 

%

Chg.

American Income

$       369,987

 

$       334,895

 

10

Direct to Consumer

251,126

 

244,028

 

3

Liberty National

80,719

 

75,737

 

7

Other

52,770

 

53,459

 

(1)

     Total

$       754,602

 

$       708,119

 

7

 

Life Net Sales(1)

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

 

%

Chg.

American Income

$         85,350

 

$         69,623

 

23

Direct to Consumer

33,913

 

39,691

 

(15)

Liberty National

17,365

 

16,225

 

7

Other

2,375

 

2,688

 

(12)

     Total

$       139,003

 

$       128,227

 

8

   

(1)

Net sales, a statistical performance measure, is calculated as annualized premium issued, net of cancellations in the first thirty days after issue, except in the case of Direct to Consumer, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

HEALTH INSURANCE RESULTS BY DISTRIBUTION CHANNEL

Health Underwriting Margin

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

   
 

Amount

 

% of
Premium

 

Amount

 

% of
Premium

 

% Chg.

United American

$         19,671

 

15

 

$         18,517

 

16

 

6

Family Heritage

24,016

 

27

 

22,025

 

26

 

9

Liberty National

15,704

 

33

 

14,165

 

30

 

11

American Income

16,827

 

58

 

14,507

 

53

 

16

Direct to Consumer

2,875

 

15

 

2,966

 

15

 

(3)

     Total

$         79,093

 

25

 

$         72,180

 

25

 

10

 

Health Premium

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

 

%

Chg.

United American

$       132,664

 

$       117,087

 

13

Family Heritage

89,540

 

83,335

 

7

Liberty National

47,186

 

47,040

 

American Income

28,854

 

27,351

 

5

Direct to Consumer

18,756

 

19,360

 

(3)

     Total

$       317,000

 

$       294,173

 

8

 

Health Net Sales(1)

 

Quarter Ended

   
 

March 31,

   
 

2022

 

2021

 

%

Chg.

United American

$         12,970

 

$         12,945

 

Family Heritage

18,602

 

15,579

 

19

Liberty National

6,214

 

5,839

 

6

American Income

4,621

 

4,611

 

Direct to Consumer

421

 

642

 

(34)

     Total

$         42,828

 

$         39,616

 

8

   

(1)

Net sales, a statistical performance measure, is calculated as annualized premium issued, net of cancellations in the first thirty days after issue, except in the case of Direct to Consumer, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

PRODUCING EXCLUSIVE AGENT COUNT RESULTS BY DISTRIBUTION CHANNEL

 

Quarterly Average

Producing Agent Count(1)

 

End of Quarter

 Agent Count

 

Quarter Ended

     

Quarter Ended

           
 

March 31,

     

December 31,

 

March 31,

     

December 31,

 

2022

 

2021

 

% Chg.

 

2021

 

2022

 

2021

 

% Chg.

 

2021

American Income

9,385

 

9,918

 

(5)

 

9,530

 

9,543

 

10,329

 

(8)

 

9,415

Liberty National

2,656

 

2,734

 

(3)

 

2,724

 

2,687

 

2,727

 

(1)

 

2,804

Family Heritage

1,100

 

1,285

 

(14)

 

1,194

 

1,130

 

1,235

 

(9)

 

1,157

   

(1)

The quarterly average producing agent count is based on the actual count at the end of each week during the period.

INVESTMENTS

Management uses excess investment income as the measure to evaluate the performance of the investment segment. It is defined as net investment income less both the required interest attributable to net policy liabilities and the interest on debt. We also view excess investment income per diluted common share as an important and useful measure to evaluate performance of the investment segment, since it takes into consideration our stock repurchase program.

The following table summarizes Globe Life's investment income, excess investment income, and excess investment income per diluted common share.

Excess Investment Income

 

Quarter Ended

 

March 31,

 

2022

 

2021

 

%

Chg.

Net investment income

$       243,834

 

$       235,820

 

3

Required interest:

         

Interest on net policy liabilities(1)

(162,498)

 

(154,098)

 

5

Interest on debt

(19,944)

 

(21,178)

 

(6)

Total required interest

(182,442)

 

(175,276)

 

4

Excess investment income

$         61,392

 

$         60,544

 

1

Per share

$              0.61

 

$             0.58

 

5

   

(1)

Interest on net policy liabilities is a component of total policyholder benefits, a GAAP measure.


Net investment income increased 3.4%, and average invested assets increased 4.4%. Required interest on net policy liabilities increased 5.5%, and average net policy liabilities increased 4.3%. The weighted average discount rate for the net policy liabilities was 5.8% and was in line with the year-ago quarter.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

The composition of the investment portfolio at book value at March 31, 2022 is as follows:

Investment Portfolio

 

As of

 

March 31, 2022

 

Amount

 

% of Total

Fixed maturities at fair value(1)

$      19,179,107

 

93

Policy loans

591,958

 

3

Other long-term investments(2)

889,769

 

4

Short-term investments

57,344

 

     Total

$      20,718,178

   
   

(1)

As of March 31, 2022, fixed maturities at amortized cost were $18.0 billion, net of $0 of allowance for credit losses.

(2)

Includes $732 million of investments accounted for under the fair value option which have a cost of $704 million as of March 31, 2022.


Fixed maturities at amortized cost, net of allowance for credit losses, by asset class as of March 31, 2022 are as follows:

Fixed Maturity Portfolio by Sector

 

As of

 

March 31, 2022

 

Investment
Grade

 

Below
Investment
Grade

 

Total
Amortized
Cost, net

Corporate bonds

$    14,466,367

 

$         533,597

 

$    14,999,964

Municipals

2,398,188

 

 

2,398,188

Government, agencies and GSEs

439,701

 

 

439,701

Collateralized debt obligations

 

36,310

 

36,310

Other asset-backed securities

87,885

 

13,362

 

101,247

     Total

$    17,392,141

 

$         583,269

 

$    17,975,410


Below are fixed maturities available for sale by amortized cost, allowance for credit losses, and fair value at March 31, 2022 and the corresponding amounts of net unrealized gains recognized in accumulated other comprehensive income (loss).

As of

 

Amortized

Cost

 

Allowance for
Credit Losses

 

Net Unrealized
Gains

 

Fair

 Value

March 31, 2022

$                 17,975,410

 

$                      —

 

$        1,203,697

 

$      19,179,107



At amortized cost, net of allowance for credit losses, 97% of fixed maturities (97% at fair value) were rated "investment grade." The fixed maturity portfolio earned an annual taxable equivalent effective yield of 5.15% during the first quarter of 2022, compared with 5.24% in the year-ago quarter.

Globe Life is not a party to any credit default swaps and does not participate in securities lending.

 

GLOBE LIFE INC.
Earnings Release—Q1 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

Comparable information for acquisitions of fixed maturity investments is as follows:

Fixed Maturity Acquisitions

 

Quarter Ended

 

March 31,

 

2022

 

2021

Amount

$      351,215

 

$      298,849

Average annual effective yield

4.0%

 

3.4%

Average rating

A

 

A

Average life (in years) to:

     

     Next call

15.8

 

29.6

     Maturity

26.9

 

33.7

 

SHARE REPURCHASE:

During the quarter, the Company repurchased 880,061 shares of Globe Life Inc. common stock at a total cost of $89 million and an average share price of $100.70.

LIQUIDITY/CAPITAL:

Globe Life's operations consist primarily of writing basic protection life and supplemental health insurance policies which generate strong and stable cash flows. These cash flows are not impacted by volatile equity markets.  Liquidity at the Parent Company is sufficient to meet additional capital needs of the insurance companies.

EARNINGS GUIDANCE FOR THE YEAR ENDING DECEMBER 31, 2022:

Globe Life projects that net operating income per share will be in the range of $7.85 to $8.25 for the year ending December 31, 2022, down from our prior projection primarily due to higher COVID life policy obligations than previously anticipated.

NON-GAAP MEASURES:

In this news release, Globe Life includes non-GAAP measures to enhance investors' understanding of management's view of the business. The non-GAAP measures are not a substitute for GAAP, but rather a supplement to increase transparency by providing broader perspective. Globe Life's definitions of non-GAAP measures may differ from other companies' definitions. More detailed financial information, including various GAAP and non-GAAP measurements, is located at https://investors.globelifeinsurance.com on the Investors page under "Financial Reports and Other Financial Information."

CAUTION REGARDING FORWARD-LOOKING STATEMENTS:

This press release may contain forward-looking statements within the meaning of the federal securities laws, including statements related to the expected impact of the COVID-19 outbreak on our business operations, financial results and financial condition. These prospective statements reflect management's current expectations, but are not guarantees of future performance. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, which may be national in scope, related to the insurance industry generally, or applicable to the Company specifically. Such events or developments could include, but are not necessarily limited to:

1) Economic and other conditions, including the COVID-19 pandemic and its impact on the U.S. economy, leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality, morbidity, and utilization of health care services that differ from Globe Life's assumptions;

2) Regulatory developments, including changes in accounting standards or governmental regulations (particularly those impacting taxes and changes to the Federal Medicare program that would affect Medicare Supplement);

3) Market trends in the senior-aged health care industry that provide alternatives to traditional Medicare (such as Health Maintenance Organizations and other managed care or private plans) and that could affect the sales of traditional Medicare Supplement insurance;

4) Interest rate changes that affect product sales and/or investment portfolio yield;

5) General economic, industry sector or individual debt issuers' financial conditions (including developments and volatility arising from the COVID-19 pandemic, particularly in certain industries that may comprise part of our investment portfolio) that may affect the current market value of securities we own, or that may impair an issuer's ability to make principal and/or interest payments due on those securities;

6) Changes in pricing competition;

7) Litigation results;

8) Levels of administrative and operational efficiencies that differ from our assumptions (including any reduction in efficiencies resulting from increased costs arising from operating during the COVID-19 pandemic);

9) The ability to obtain timely and appropriate premium rate increases for health insurance policies from our regulators;

10) The customer response to new products and marketing initiatives;

11) Reported amounts in the consolidated financial statements which are based on management estimates and judgments which may differ from the actual amounts ultimately realized;

12) Compromise by a malicious actor or other event that causes a loss of secure data from, or inaccessibility to, our computer and other information technology systems;

13) The severity, magnitude and impact of the COVID-19 pandemic, including effects of the pandemic and the effects of the U.S. government's and other businesses' response to the pandemic, on our operations and personnel, and on commercial activity and demand for our products; and

14) Globe Life's ability to access the commercial paper and debt markets, particularly if such markets become unpredictable or unstable for a certain period as a result of the COVID-19 pandemic.

Readers are also directed to consider other risks and uncertainties described in other documents on file with the Securities and Exchange Commission. Globe Life specifically disclaims any obligation to update or revise any forward-looking statement because of new information, future developments or otherwise.

EARNINGS RELEASE CONFERENCE CALL WEBCAST:

Globe Life will provide a live audio webcast of its first quarter 2022 earnings release conference call with financial analysts at 11:00 am (Eastern) tomorrow, April 21, 2022. Access to the live webcast and replay will be available at https://investors.globelifeinsurance.com on the Calls and Meetings page, at the Conference Calls on the Web icon. Immediately following this press release, supplemental financial reports will be available before the conference call on the Investors page menu of the Globe Life website at "Financial Reports."  

 

APPENDIX 

 

GLOBE LIFE INC.

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
 

Three Months Ended

March 31,

 

2022

 

2021

Revenue:

     

     Life premium

$         754,602

 

$         708,119

     Health premium

317,000

 

294,173

     Other premium

 

1

          Total premium

1,071,602

 

1,002,293

     Net investment income

243,834

 

235,820

     Realized gains (losses)

(7,244)

 

28,152

     Other income

164

 

295

          Total revenue

1,308,356

 

1,266,560

       

Benefits and expenses:

     

     Life policyholder benefits

549,343

 

517,631

     Health policyholder benefits

196,855

 

187,829

     Other policyholder benefits

7,050

 

7,259

          Total policyholder benefits

753,248

 

712,719

     Amortization of deferred acquisition costs

158,384

 

152,993

     Commissions, premium taxes, and non-deferred acquisition costs

90,813

 

79,666

     Other operating expense

84,352

 

81,210

     Interest expense

19,944

 

21,178

          Total benefits and expenses

1,106,741

 

1,047,766

       

Income before income taxes

201,615

 

218,794

Income tax benefit (expense)

(37,254)

 

(40,277)

     Net income

$         164,361

 

$         178,517

       

Total basic net income per common share

$                1.66

 

$                1.73

       

Total diluted net income per common share

$                1.64

 

$                1.70