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PR Newswire

Globe Life Inc. Reports Third Quarter 2021 Results

Globe Life Inc. Reports Third Quarter 2021 Results

Globe Life Inc. Reports Third Quarter 2021 Results

PR Newswire

MCKINNEY, Texas, Oct. 20, 2021

MCKINNEY, Texas, Oct. 20, 2021 /PRNewswire/ -- Globe Life Inc. (NYSE: GL) reported today that for the quarter ended September 30, 2021, net income was $1.84 per diluted common share, compared with $1.76 per diluted common share for the year-ago quarter. Net operating income for the quarter was $1.78 per diluted common share, compared with $1.75 per diluted common share for the year-ago quarter.

HIGHLIGHTS:

  • Net income as an ROE was 8.9% for the nine months ended September 30, 2021. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 12.5% for the same period.
  • Total life premiums increased 8% over the year-ago quarter including 12% at the American Income Life Division and 6% at both the Direct to Consumer Division and the Liberty National Division.
  • Health premiums increased over the year-ago quarter by 8% at the Family Heritage Division.
  • Life net sales increased 33% over the year-ago quarter at the Liberty National Division.
  • Life underwriting margins increased over the year-ago quarter by 11% at the American Income Life Division and 10% at the Liberty National Division. Total health underwriting margins increased by 6% over the year-ago quarter.
  • 1.0 million shares of Globe Life Inc. common stock were repurchased during the quarter.

COVID-19 Update: In the third quarter, the Company incurred approximately $33 million of COVID life claims, resulting in total COVID life claims of $82 million for the nine months ended September 30, 2021. The COVID claims incurred in the third quarter were significantly higher than anticipated due primarily to the impact of the Delta variant, which resulted in much higher infection rates and death totals. Per the Centers for Disease Control and Prevention, there were approximately 95,000 U.S. COVID deaths in the third quarter. Compared to prior periods, the COVID deaths were concentrated in geographies and younger age groups where the Company has greater risk exposure. As such, the Company's level of COVID life claims increased in the quarter to approximately $3.5 million per 10,000 U.S. deaths, up from an average of approximately $2 million per 10,000 U.S. deaths incurred in prior periods. We anticipate this level of losses per U.S. deaths to continue through the fourth quarter and be in the range of $3 million to $4 million per 10,000 U.S. deaths in 2022.

For the full year, we estimate COVID life claims will be between $110 million and $125 million based on an estimated 75,000 to 125,000 U.S. COVID deaths in the fourth quarter. We anticipate that COVID deaths will continue at elevated levels throughout 2022, the estimated impact of which is reflected in our guidance.

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 2021
(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, 2021 and 2020:

Operating Summary


Per Share








Three Months Ended

September 30,




Three Months Ended

September 30,




2021


2020


%

Chg.


2021


2020


%

Chg.

Insurance underwriting income(2)

$

1.69



$

1.71



(1)


$

173,435



$

183,100



(5)

Excess investment income(2)

0.58



0.55



5


59,234



59,326



Parent company expense

(0.02)



(0.03)





(2,176)



(2,689)




Income tax expense

(0.42)



(0.43)



(2)


(43,258)



(45,945)



(6)

Stock compensation benefit (expense), net of
tax

(0.05)



(0.06)





(4,745)



(5,995)




Net operating income

1.78



1.75



2


182,490



187,797



(3)













Reconciling items, net of tax:












Realized gain (loss)—investments

0.15



0.02





15,633



2,465




Realized gain (loss)—redemption of debt

(0.07)







(7,358)



(501)




Non-operating expenses

(0.02)



(0.01)





(1,894)



(816)




Net income(3)

$

1.84



$

1.76





$

188,871



$

188,945
















Weighted average diluted shares outstanding

102,381



107,053











(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 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 2021
(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. 


Nine Months Ended

September 30,


2021


2020

Net income as an ROE(1)

8.9

%


9.4

%

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

12.5

%


13.6

%






September 30,


2021


2020

Shareholders' equity

$

8,608,151



$

8,224,908


Impact of adjustment to exclude net unrealized gains on fixed maturities

(2,791,925)



(2,672,610)


Shareholders' equity, excluding net unrealized gains on fixed maturities

$

5,816,226



$

5,552,298






Book value per share

$

84.52



$

77.60


Impact of adjustment to exclude net unrealized gains on fixed maturities

(27.41)



(25.21)


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

$

57.11



$

52.39



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

INSURANCE OPERATIONS—comparing Q3 2021 with Q3 2020: 

Life insurance accounted for 67% of the Company's insurance underwriting margin for the quarter and 71% of total premium revenue. 

Health insurance accounted for 32% of the Company's insurance underwriting margin for the quarter and 29% of total premium revenue.

Net sales of life insurance were flat for the quarter and net health sales declined 4%. 

The following table summarizes Globe Life's premium revenue by product type for the three months ended September 30, 2021 and 2020:

Insurance Premium Revenue


Quarter Ended


September 30,
2021


September 30,
2020


%

Chg.

Life insurance

$

728,924



$

674,021



8

Health insurance

299,143



287,795



4

Annuity



1




Total

$

1,028,067



$

961,817



7

GLOBE LIFE INC.
Earnings Release—Q3 2021
(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 September 30, 2021 and 2020:

Insurance Underwriting Income


Quarter Ended


September 30,
2021


% of

Premium


September 30,
2020


% of

Premium


%

Chg.

Insurance underwriting margins:










Life

$

161,994



22


$

170,703



25


(5)

Health

76,978



26


72,860



25


6

Annuity

2,178





2,253







241,150





245,816





(2)

Other income

321





292






Administrative expenses

(68,036)





(63,008)





8

Insurance underwriting income

$

173,435





$

183,100





(5)

Per share

$

1.69





$

1.71





(1)

Administrative expenses were $68 million, up 8.0% from the year-ago quarter. The ratio of administrative expenses to premium was 6.6%, same as the year-ago quarter.

GLOBE LIFE INC.
Earnings Release—Q3 2021
(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




September 30,




2021


2020




Amount


% of
Premium


Amount


% of
Premium


% Chg.

American Income

$

111,139



31



$

100,213



31



11

Direct to Consumer

12,083



5



34,125



15



(65)

Liberty National

16,173



21



14,699



20



10

Other

22,599



42



21,666



40



4

Total

$

161,994



22



$

170,703



25



(5)

 

Life Premium


Quarter Ended




September 30,




2021


2020


%

Chg.

American Income

$

356,456



$

318,917



12

Direct to Consumer

240,578



227,734



6

Liberty National

78,528



73,815



6

Other

53,362



53,555



Total

$

728,924



$

674,021



8


Life Net Sales(1)


Quarter Ended




September 30,




2021


2020


%

Chg.

American Income

$

73,649



$

67,808



9

Direct to Consumer

33,069



44,253



(25)

Liberty National

18,209



13,669



33

Other

2,726



2,369



15

Total

$

127,653



$

128,099




(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 2021
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

HEALTH INSURANCE RESULTS BY DISTRIBUTION CHANNEL

Health Underwriting Margin


Quarter Ended




September 30,




2021


2020




Amount


% of
Premium


Amount


% of
Premium


% Chg.

United American

$

17,524



15



$

17,988



16



(3)

Family Heritage

24,407



28



22,466



28



9

Liberty National

15,035



32



14,610



31



3

American Income

17,249



59



14,893



55



16

Direct to Consumer

2,763



15



2,903



15



(5)

Total

$

76,978



26



$

72,860



25



6

 

Health Premium


Quarter Ended




September 30,




2021


2020


%

Chg.

United American

$

118,240



$

114,325



3

Family Heritage

86,925



80,225



8

Liberty National

46,716



47,199



(1)

American Income

29,070



27,029



8

Direct to Consumer

18,192



19,017



(4)

Total

$

299,143



$

287,795



4


Health Net Sales(1)


Quarter Ended




September 30,




2021


2020


%

Chg.

United American

$

11,849



$

12,870



(8)

Family Heritage

19,367



19,469



(1)

Liberty National

6,890



5,788



19

American Income

4,500



6,140



(27)

Direct to Consumer

481



496



(3)

Total

$

43,087



$

44,763



(4)


(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 2021
(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








September 30,




June 30,


September 30,




June 30,


2021


2020


% Chg.


2021


2021


2020


% Chg.


2021

American Income

9,959



9,288



7



10,478



9,800



9,583



2



10,406


Liberty National

2,706



2,551



6



2,700



2,700



2,574



5



2,700


Family Heritage

1,152



1,371



(16)



1,220



1,192



1,469



(19)



1,171



(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


September 30,


2021


2020


%

Chg.

Net investment income

$

238,975



$

231,432



3

Required interest:






Interest on net policy liabilities(1)

(158,855)



(150,432)



6

Interest on debt

(20,886)



(21,674)



(4)

Total required interest

(179,741)



(172,106)



4

Excess investment income

$

59,234



$

59,326



Per share

$

0.58



$

0.55



5


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

Net investment income increased 3.3%, while average invested assets increased 4.8%. Required interest on net policy liabilities increased 5.6%, while average net policy liabilities increased 4.6%. 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—Q3 2021
(Dollar amounts in thousands, except share and per share data)
(Unaudited)

The composition of the investment portfolio at book value at September 30, 2021 is as follows:

Investment Portfolio


As of


September 30, 2021


Amount


% of Total

Fixed maturities at fair value(1)

$

21,160,866



94


Policy loans

585,791



3


Other long-term investments(2)

733,177



3


Short-term investments

93,364




Total

$

22,573,198





(1)

As of September 30, 2021, fixed maturities at amortized cost were $17.6 billion, net of $0 of allowance for credit losses.

(2)

Includes $586 million of investments accounted for under the fair value option which have a cost of $562 million as of September 30, 2021.

Fixed maturities at amortized cost, net of allowance for credit losses, by asset class as of September 30, 2021 are as follows:

Fixed Maturity Portfolio by Sector


As of


September 30, 2021


Investment
Grade


Below
Investment
Grade


Total
Amortized
Cost, net

Corporate bonds

$

14,237,559



$

732,745



$

14,970,304


Municipals

2,068,436





2,068,436


Government, agencies and GSEs

441,496





441,496


Collateralized debt obligations



36,088



36,088


Other asset-backed securities

92,086



13,618



105,704


Total

$

16,839,577



$

782,451



$

17,622,028


Below are fixed maturities available for sale by amortized cost, allowance for credit losses, and fair value at September 30, 2021 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

September 30, 2021

$

17,622,028



$



$

3,538,838



$21,160,866















At amortized cost, net of allowance for credit losses, 96% of fixed maturities (96% at fair value) were rated "investment grade." The fixed maturity portfolio earned an annual taxable equivalent effective yield of 5.21% during the third quarter of 2021, compared with 5.31% 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 2021
(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,


2021


2020

Amount

$

325,255



$

342,583


Average annual effective yield

3.2

%


3.2

%

Average rating

A+



A+


Average life (in years) to:




Next call

19.3



17.8


Maturity

29.2



29.2


SHARE REPURCHASE:

During the quarter, the Company repurchased 1.0 million shares of Globe Life Inc. common stock at a total cost of $97 million and an average share price of $94.13.

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, 2021 and 2022:

Globe Life projects that net operating income per share will be in the range of $6.85 to $7.05 for the year ending December 31, 2021 and from $7.95 to $8.75 for the year ending December 31, 2022. The reduction from our previous guidance for the projected net operating income per share for 2021 is primarily due to higher COVID losses 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 third quarter 2021 earnings release conference call with financial analysts at 11:00 am (Eastern) tomorrow, October 21, 2021. 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

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020

Revenue:








Life premium

$

728,924



$

674,021



$

2,165,213



$

1,994,473


Health premium

299,143



287,795



888,902



850,877


Other premium



1



1



4


Total premium

1,028,067



961,817



3,054,116



2,845,354


Net investment income

238,975



231,432



713,103



691,991


Realized gains (losses)

10,475



1,501



47,286



(29,386)


Other income

321



292



1,004



1,021


Total revenue

1,277,838



1,195,042



3,815,509



3,508,980










Benefits and expenses:








Life policyholder benefits

516,196



459,231



1,532,298



1,340,746


Health policyholder benefits

187,906



184,237



564,589



546,444


Other policyholder benefits

7,303



7,508



21,848



22,571


Total policyholder benefits

711,405



650,976



2,118,735



1,909,761


Amortization of deferred acquisition costs

151,593



140,843



452,607



430,840


Commissions, premium taxes, and non-deferred
acquisition costs

82,774



74,614



244,752



229,691


Other operating expense

80,385



75,397



240,750



226,693


Interest expense

20,886



21,674



63,833



65,295


Total benefits and expenses

1,047,043



963,504



3,120,677



2,862,280










Income before income taxes

230,795



231,538



694,832



646,700


Income tax benefit (expense)

(41,924)



(42,593)



(127,826)



(119,167)


Net income

$

188,871



$

188,945



$

567,006



$

527,533










Total basic net income per common share

$

1.86



$

1.78



$

5.53



$

4.95










Total diluted net income per common share

$

1.84



$

1.76



$

5.46



$

4.90


 

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SOURCE Globe Life Inc.