News Release

Globe Life Inc. Reports Third Quarter 2023 Results

October 25, 2023

McKinney, Texas

/PRNewswire/ -- Globe Life Inc. (NYSE: GL) reported today that for the quarter ended September 30, 2023, net income was $2.68 per diluted common share, compared with $1.94 per diluted common share for the year-ago quarter. Net operating income for the quarter was $2.71 per diluted common share, compared with $2.19 per diluted common share for the year-ago quarter.

The results included herein reflect the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). Globe Life Inc. implemented the standard on January 1, 2023 using the modified retrospective transition method at adoption. As a result of this election, the prior year figures have been restated as of January 1, 2021 with impacts to Shareholders' Equity, underwriting margins and net income.

HIGHLIGHTS:

  • Net income as an ROE(1) was 22.6% for the nine months ended September 30, 2023. Net operating income as an ROE(1) excluding accumulated other comprehensive income (AOCI) was 14.7% for the same period.
  • Net income(1) increased 35% and net operating income(1) increased 21% over the year-ago quarter.
  • At the American Income Division, both life net sales and premiums increased 6% over the year-ago quarter. Additionally, the average producing agent count increased 16% over the year-ago quarter.
  • At the Liberty National Division, life net sales and health net sales increased over the year-ago quarter by 31% and 19%, respectively. Additionally, life premiums increased 7% and the average producing agent count increased 20% over the year-ago quarter.
  • At the Family Heritage Division, health net sales increased 15% and premiums increased 8% over the year-ago quarter. Additionally, the average producing agent count increased 7% over the year-ago quarter.
  • Net investment income grew 8% over the year-ago quarter.
  • 753,614 shares of Globe Life Inc. common stock were repurchased during the quarter.

(1)

Includes a $3.2 million remeasurement gain due to the unlocking of assumptions in the third quarter of 2023, as compared to a $36.5 million remeasurement loss due to the unlocking of assumptions in the year-ago quarter. These amounts, along with the experience-related adjustments, are included within the remeasurement gain or loss in the Consolidated Statement of Operations.

   

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—Q3 2023 

(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 September 30, 2023 and 2022:

 

Operating Summary

 

Per Share

           
 

Three Months Ended

September 30,

     

Three Months Ended

September 30,

   
 

2023

 

2022

 

%

Chg.

 

2023

 

2022

 

%

Chg.

Insurance underwriting income(2)

$              3.38

 

$              2.82

 

20

 

$       324,330

 

$       277,005

 

17

Excess investment income(2)

0.35

 

0.24

 

46

 

33,918

 

23,983

 

41

Interest on debt

(0.27)

 

(0.24)

 

13

 

(25,955)

 

(23,965)

 

8

Parent Company expense

(0.03)

 

(0.03)

     

(2,581)

 

(2,556)

   

Income tax expense

(0.67)

 

(0.54)

 

24

 

(63,903)

 

(53,146)

 

20

Stock compensation benefit (expense), net of tax

(0.06)

 

(0.07)

     

(6,096)

 

(6,583)

   

Net operating income

2.71

 

2.19

 

24

 

259,713

 

214,738

 

21

                       

Reconciling items, net of tax:

                     

Realized gain (loss)—investments

(0.02)

 

(0.23)

     

(1,732)

 

(23,033)

   

Non-operating expenses

(0.01)

 

     

(898)

 

   

Legal proceedings

 

(0.01)

     

 

(1,119)

   

Net income(3)

$              2.68

 

$              1.94

     

$       257,083

 

$       190,586

   
                       

Weighted average diluted shares outstanding

95,818

 

98,148

               
 

(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—Q3 2023
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

 

MANAGEMENT VS. GAAP MEASURES

 

Shareholders' equity, excluding AOCI, and book value per share, excluding AOCI, are non-GAAP measures that are utilized by management to view the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates. Management views the business in this manner because it creates more meaningful and easily identifiable trends, as we exclude fluctuations resulting from changes in interest rates. Shareholders' equity and book value per share are the most directly comparable GAAP measures.  

 
 

Nine Months Ended

September 30,

 

2023

 

2022

Net income

$        695,953

 

$        652,043

Net operating income

759,231

 

709,706

Net income as an ROE(1)

22.6 %

 

30.6 %

Net operating income as an ROE (excluding AOCI)

14.7 %

 

14.8 %

       
 

September 30,

 

2023

 

2022

Shareholders' equity

$     4,623,131

 

$     3,609,969

Impact of adjustment to exclude AOCI

2,458,974

 

2,960,710

Shareholders' equity, excluding AOCI

$     7,082,105

 

$     6,570,679

       

Book value per share

$            48.51

 

$            36.88

Impact of adjustment to exclude AOCI

25.80

 

30.25

Book value per share, excluding AOCI

$            74.31

 

$            67.13

 

(1) Calculated using average shareholders' equity for the measurement period. 

INSURANCE OPERATIONS: 

Life insurance accounted for 75% of the Company's insurance underwriting margin for the quarter and 70% of total premium revenue. 

Health insurance accounted for 24% of the Company's insurance underwriting margin for the quarter and 30% of total premium revenue.

Net sales of life insurance increased 6% for the quarter, and net health sales increased 16%. 

The following table summarizes Globe Life's premium revenue by product type for the three months ended September 30, 2023 and 2022:

 

GLOBE LIFE INC.
Earnings Release—Q3 2023
(Dollar amounts in thousands, except share and per share data)
(Unaudited) 

 

Insurance Premium Revenue

 

Quarter Ended

 

September 30,
2023

 

September 30,
2022

 

%

Chg.

Life insurance

$           788,099

 

$           758,875

 

4

Health insurance

331,236

 

320,406

 

3

Annuity

 

1

   

Total

$        1,119,335

 

$        1,079,282

 

4

 

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 (excluding interest on policy liabilities), 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 administrative expenses. It excludes the investment segment, interest on debt, 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 September 30, 2023 and 2022:

 

Insurance Underwriting Income

 

Quarter Ended

 

September 30,
2023

 

% of

Premium

 

September 30,
2022

 

% of

Premium

 

%

Chg.

Insurance underwriting margins:

                 

Life

$           300,088

 

38

 

$           247,884

 

33

 

21

Health

96,700

 

29

 

101,132

 

32

 

(4)

Annuity

2,077

     

2,638

       
 

398,865

     

351,654

     

13

Other income

50

     

399

       

Administrative expenses

(74,585)

     

(75,048)

     

(1)

Insurance underwriting income

$           324,330

     

$           277,005

     

17

Per share

$                  3.38

     

$                  2.82

     

20

 

The ratio of administrative expenses to premium was 6.7%, compared with 7.0% for the year-ago quarter.

 

GLOBE LIFE INC.
Earnings Release—Q3 2023
(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 (Direct to Consumer). 

 

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

   
 

September 30,

   
 

2023

 

2022

   
 

Amount

 

% of Premium

 

Amount

 

% of Premium

 

%
Chg.

American Income

$       181,098

 

45

 

$       167,658

 

44

 

8

Direct to Consumer

63,058

 

25

 

33,894

 

14

 

86

Liberty National

27,426

 

31

 

19,756

 

24

 

39

Other

28,506

 

55

 

26,576

 

51

 

7

Total

$       300,088

 

38

 

$       247,884

 

33

 

21

 
 

Life Premium

         

Quarter Ended

   
         

September 30,

   
         

2023

 

2022

 

%

Chg.

American Income

       

$       400,214

 

$       378,258

 

6

Direct to Consumer

       

247,858

 

246,021

 

1

Liberty National

       

88,199

 

82,273

 

7

Other

       

51,828

 

52,323

 

(1)

Total

       

$       788,099

 

$       758,875

 

4

 
 

Life Net Sales(1)

         

Quarter Ended

   
         

September 30,

   
         

2023

 

2022

 

%

Chg.

American Income

       

$         81,066

 

$         76,405

 

6

Direct to Consumer

       

26,497

 

28,774

 

(8)

Liberty National

       

24,165

 

18,513

 

31

Other

       

2,469

 

2,321

 

6

Total

       

$       134,197

 

$       126,013

 

6

   

(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—Q3 2023

(Dollar amounts in thousands, except share and per share data)
(Unaudited)

 

HEALTH INSURANCE RESULTS BY DISTRIBUTION CHANNEL 

 

Health Underwriting Margin

 

Quarter Ended

   
 

September 30,

   
 

2023

 

2022

   
 

Amount

 

% of Premium

 

Amount

 

% of Premium

 

%
Chg.

United American

$         15,473

 

11

 

$         15,516

 

12

 

Family Heritage

35,605

 

36

 

36,560

 

40

 

(3)

Liberty National

25,082

 

54

 

27,121

 

59

 

(8)

American Income

19,033

 

62

 

19,258

 

65

 

(1)

Direct to Consumer

1,507

 

9

 

2,677

 

15

 

(44)

Total

$         96,700

 

29

 

$       101,132

 

32

 

(4)

 

Health Premium

         

Quarter Ended

   
         

September 30,

   
         

2023

 

2022

 

%

Chg.

United American

       

$       137,077

 

$       134,832

 

2

Family Heritage

       

99,828

 

92,131

 

8

Liberty National

       

46,643

 

45,957

 

1

American Income

       

30,535

 

29,753

 

3

Direct to Consumer

       

17,153

 

17,733

 

(3)

Total

       

$       331,236

 

$       320,406

 

3

 

Health Net Sales(1)

         

Quarter Ended

   
         

September 30,

   
         

2023

 

2022

 

%

Chg.

United American

       

$         15,740

 

$         13,144

 

20

Family Heritage

       

25,312

 

22,090

 

15

Liberty National

       

8,652

 

7,267

 

19

American Income

       

4,673

 

4,206

 

11

Direct to Consumer

       

516

 

574

 

(10)

Total

       

$         54,893

 

$         47,281

 

16

   

(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—Q3 2023

(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)

 

Quarter Ended

     

Quarter Ended

 

September 30,

     

June 30,

 

2023

 

2022

 

%
Chg.

 

2023

American Income

10,983

 

9,477

 

16

 

10,488

Liberty National

3,339

 

2,784

 

20

 

3,180

Family Heritage

1,323

 

1,233

 

7

 

1,345

   

(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 the required interest attributable to policy liabilities. 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

 

September 30,

 

2023

 

2022

 

%

Chg.

Net investment income

$       266,926

 

$       246,711

 

8

Interest on policy liabilities(1)

(233,008)

 

(222,728)

 

5

Excess investment income

$         33,918

 

$         23,983

 

41

Per share

$              0.35

 

$             0.24

 

46

   

(1)

  Interest on policy liabilities is a component of total policyholder benefits, a GAAP measure. The amounts presented for 2022 have been retrospectively adjusted to exclude the interest on deferred acquisition costs due to the LDTI standard and the interest on debt.

   

Net investment income increased 8.2%, and average invested assets increased 3.6%. Required interest on policy liabilities increased 4.6%, and average policy liabilities also increased 4.6%.

 

GLOBE LIFE INC.
Earnings Release—Q3 2023
(Dollar amounts in thousands, except share and per share data)
(Unaudited) 

 

The composition of the investment portfolio at book value at September 30, 2023 is as follows: 

 

Investment Portfolio

 

As of

 

September 30, 2023

 

Amount

 

% of Total

Fixed maturities at fair value(1)

$      16,260,034

 

90

Policy loans

644,553

 

4

Other long-term investments(2)

1,050,106

 

6

Short-term investments

83,934

 

Total

$      18,038,627

   
   

(1)

As of September 30, 2023, fixed maturities at amortized cost were $18.9 billion, net of $7.5 million of allowance for credit losses.

(2)

Includes $782 million of investments accounted for under the fair value option which have a cost of $762 million as of September 30, 2023.

 

Fixed maturities at amortized cost, net of allowance for credit losses, by asset class as of September 30, 2023 are as follows: 

 

Fixed Maturity Portfolio by Sector

 

As of

 

September 30, 2023

 

Investment
Grade

 

Below
Investment
Grade

 

Total
Amortized
Cost, net

Corporate bonds

$    14,582,102

 

$         444,464

 

$    15,026,566

Municipals

3,319,521

 

 

3,319,521

Government, agencies and GSEs

437,467

 

 

437,467

Collateralized debt obligations

 

36,843

 

36,843

Other asset-backed securities

74,951

 

11,845

 

86,796

Total

$    18,414,041

 

$         493,152

 

$    18,907,193

 

Below are fixed maturities available for sale by amortized cost, allowance for credit losses, and fair value at September 30, 2023 and the corresponding amounts of net unrealized gains and losses recognized in accumulated other comprehensive income (loss).

 

As of

Amortized

Cost

 

Allowance for
Credit Losses

 

Net Unrealized
Gains
(Losses)

 

Fair

 Value

September 30, 2023

$                 18,914,693

 

$              (7,500)

 

$      (2,647,159)

 

$      16,260,034

 

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 5.19% during the third quarter of 2023, compared with 5.17% 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—Q3 2023
(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

 

September 30,

 

2023

 

2022

Amount

$      426,867

 

$      430,578

Average annual effective yield

6.1 %

 

5.6 %

Average rating

A+

 

A

Average life (in years) to:

     

Next call

16.6

 

11.9

Maturity

26.6

 

17.7

 

SHARE REPURCHASE:

During the quarter, the Company repurchased 753,614 shares of Globe Life Inc. common stock at a total cost of $84 million and an average share price of $111.52.

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, 2023:

Globe Life projects net operating income between $10.49 to $10.65 per diluted common share for the year ending December 31, 2023.  For the year ending December 31, 2024, we estimate that net operating income per share will be in the range of $11.00 to $11.60.

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. 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 continued impact of the recent pandemic, 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 borrowers' financial conditions 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;

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; and

13) Globe Life's ability to access the commercial paper and debt markets, particularly if such markets become unpredictable or unstable for a certain period.

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 third quarter 2023 earnings release conference call with financial analysts at 11:00 am (Eastern) tomorrow, October 26, 2023. 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."  

     

For additional information
contact:

 

Mike Majors, Executive Vice President - Policy Acquisition and Chief Strategy Officer

Globe Life Inc.

3700 South Stonebridge Drive

P. O. Box 8080

McKinney, Texas 75070-8080

Phone: 972-569-3627 or email: investors@globe.life

Website: https://investors.globelifeinsurance.com

 

APPENDIX

 

GLOBE LIFE INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022(3)

 

2023

 

2022(3)

Revenue:

             

Life premium

$         788,099

 

$         758,875

 

$     2,342,429

 

$     2,264,895

Health premium

331,236

 

320,406

 

982,916

 

956,397

Other premium

 

1

 

 

1

Total premium

1,119,335

 

1,079,282

 

3,325,345

 

3,221,293

Net investment income

266,926

 

246,711

 

785,275

 

736,317

Realized gains (losses)

(2,193)

 

(29,155)

 

(78,963)

 

(66,845)

Other income

50

 

399

 

185

 

862

Total revenue

1,384,118

 

1,297,237

 

4,031,842

 

3,891,627

               

Benefits and expenses:

             

Life policyholder benefits(1)

515,676

 

545,933

 

1,536,317

 

1,533,726

Health policyholder benefits(2)

193,790

 

182,409

 

580,676

 

561,502

Other policyholder benefits

9,578

 

9,234

 

27,488

 

27,928

Total policyholder benefits

719,044

 

737,576

 

2,144,481

 

2,123,156

Amortization of deferred acquisition costs

95,757

 

88,012

 

282,159

 

258,693

Commissions, premium taxes, and non-deferred acquisition costs

138,677

 

124,768

 

414,933

 

376,490

Other operating expense

85,870

 

88,140

 

256,074

 

262,150

Interest expense

25,955

 

23,965

 

76,640

 

65,737

Total benefits and expenses

1,065,303

 

1,062,461

 

3,174,287

 

3,086,226

               

Income before income taxes

318,815

 

234,776

 

857,555

 

805,401

Income tax benefit (expense)

(61,732)

 

(44,190)

 

(161,602)

 

(153,358)

Net income

$         257,083

 

$         190,586

 

$         695,953

 

$         652,043

               

Basic net income per common share

$                2.72

 

$                1.96

 

$               7.29

 

$               6.64

               

Diluted net income per common share

$                2.68

 

$                1.94

 

$               7.20

 

$               6.58

   

(1)

Net of remeasurement gain of $11.3 million for the three months ended September 30, 2023, and a remeasurement loss of $45.2 million for the same period in 2022. Net of remeasurement gain of $16.5 million for the nine months ended September 30, 2023, and a remeasurement loss of $49.3 million for the same period in 2022.

(2)

Net of remeasurement gain of $7.8 million for the three months ended September 30, 2023, and a remeasurement gain of $9.7 million for the same period in 2022. Net of remeasurement gain of $8.3 million for the nine months ended September 30, 2023, and a remeasurement gain of $13.8 million for the same period in 2022.

(3)

The amounts presented for 2022 have been retrospectively restated due to the adoption of ASU 2018-12.