Globe Life Inc. Reports Fourth Quarter 2023 Results

MCKINNEY, Texas, Feb. 7, 2024 /PRNewswire/ -- Globe Life Inc. (NYSE: GL) reported today that for the quarter ended December 31, 2023, net income was $2.88 per diluted common share, compared with $2.46 per diluted common share for the year-ago quarter. Net operating income for the quarter was $2.80 per diluted common share, compared with $2.55 per diluted common share for the year-ago quarter.

Net income for the year ended December 31, 2023 was $10.07 per diluted common share, compared with $9.04 per diluted common share for the year-ago period. Net operating income for the year ended December 31, 2023 was $10.65 per diluted common share compared with $9.71 per diluted common share for the year-ago period.

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 was 23.2% for the twelve months ended December 31, 2023 . Net operating income as an ROE excluding accumulated other comprehensive income (AOCI) was 14.7% for the same period.
  
  
• Net income increased 13% and net operating income increased 6% over the year-ago quarter. For the full year, net income was $971 million and net operating income surpassed $1.0 billion for the first time in company history.
  
  
• At the American Income Life Division, life net sales increased 9% and life premium increased 7% over the year-ago quarter. Additionally, the average producing agent count increased 20% over the year-ago quarter.
  
  
• At the Liberty National Division, life net sales and health net sales increased over the year-ago quarter by 12% and 9%, respectively. Additionally, life premiums increased 8% and the average producing agent count increased 15% over the year-ago quarter.
  
  
• At the Family Heritage Division, health net sales increased 12% and premiums increased 8% over the year-ago quarter.
  
  
• Net investment income grew 6% over the year-ago quarter.
  
  
• 660,170 shares of Globe Life Inc. common stock were repurchased during the quarter.

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-Q4 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 December 31, 2023 and 2022:
Operating Summary
	Per Share
	Three Months Ended December 31,						Three Months Ended December 31,
	2023		2022		% Chg.		2023		2022		% Chg.
Insurance underwriting income(2)	$ 3.43		$ 3.18		8		$ 327,825		$ 314,131		4
Excess investment income(2)	0.38		0.31		23		35,824		30,716		17
Interest on debt	(0.27)		(0.25)		8		(25,676)		(24,658)		4
Parent company expense	(0.03)		(0.03)				(2,612)		(3,067)
Income tax expense	(0.68)		(0.63)		8		(64,993)		(61,744)		5
Stock compensation benefit (expense), net of tax	(0.03)		(0.04)				(2,955)		(4,057)
Net operating income	2.80		2.55		10		267,413		251,321		6
Reconciling items, net of tax:
Realized gain (loss)-investments	0.11		(0.08)				10,496		(7,665)
Non-operating expenses	(0.03)		-				(2,396)		(460)
Legal proceedings	(0.01)		(0.01)				(711)		(853)
Net income(3)	$ 2.88		$ 2.46				$ 274,802		$ 242,343
Weighted average diluted shares outstanding	95,464		98,640

(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-Q4 2023 ( Dollar amounts in thousands, except share and per share data) (Unaudited)
The following table represents Globe Life's operating summary for the year ended December 31, 2023 and 2022:
Operating Summary
	Per Share
	Year Ended December 31,						Year Ended December 31,
	2023		2022		% Chg.		2023		2022		% Chg.
Insurance underwriting income	$ 13.27		$ 12.32		8		$ 1,278,548		$ 1,219,078		5
Excess investment income	1.35		1.06		27		130,382		104,589		25
Interest on debt	(1.06)		(0.91)		16		(102,316)		(90,395)		13
Parent company expense	(0.11)		(0.11)				(10,866)		(11,156)
Income tax expense	(2.59)		(2.41)		7		(249,546)		(238,177)		5
Stock compensation benefit (expense), net of tax	(0.20)		(0.23)				(19,558)		(22,912)
Net operating income	10.65		9.71		10		1,026,644		961,027		7
Reconciling items, net of tax:
Realized gain (loss)-investments	(0.54)		(0.61)				(51,884)		(60,473)
Non-operating expenses	(0.03)		(0.04)				(3,294)		(4,196)
Legal proceedings	(0.01)		(0.02)				(711)		(1,972)
Net income	$ 10.07		$ 9.04				$ 970,755		$ 894,386
Weighted average diluted shares outstanding	96,364		98,985

GLOBE LIFE INC. Earnings Release-Q4 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.
	Year Ended December 31,
	2023		2022
Net income	$ 970,755		$ 894,386
Net operating income	1,026,644		961,027
Net income as an ROE(1)	23.2 %		29.2 %
Net operating income as an ROE (excluding AOCI)(1)	14.7 %		14.8 %
	December 31,
	2023		2022
Shareholders' equity	$ 4,486,803		$ 3,949,577
Impact of adjustment to exclude AOCI	2,772,419		2,790,313
Shareholders' equity, excluding AOCI	$ 7,259,222		$ 6,739,890
Book value per share	$ 47.10		$ 40.05
Impact of adjustment to exclude AOCI	29.11		28.30
Book value per share, excluding AOCI	$ 76.21		$ 68.35

(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 3% for the quarter, and net health sales increased 21%.

The following table summarizes Globe Life's premium revenue by product type for the three months ended December 31, 2023 and 2022:

GLOBE LIFE INC. Earnings Release-Q4 2023 ( Dollar amounts in thousands, except share and per share data) (Unaudited)
Insurance Premium Revenue
	Quarter Ended
	December 31, 2023		December 31, 2022		% Chg.
Life insurance	$ 794,815		$ 762,929		4
Health insurance	335,857		326,020		3
Annuity	-		-
Total	$ 1,130,672		$ 1,088,949		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 December 31, 2023 and 2022:
Insurance Underwriting Income
	Quarter Ended
	December 31, 2023		% of Premium		December 31, 2022		% of Premium		% Chg.
Insurance underwriting margins:
Life	$ 305,480		38		$ 292,922		38		4
Health	97,486		29		96,224		30		1
Annuity	1,946				2,629
	404,912				391,775				3
Other income	123				384
Administrative expenses	(77,210)				(78,028)				(1)
Insurance underwriting income	$ 327,825				$ 314,131				4
Per share	$ 3.43				$ 3.18				8

The ratio of administrative expenses to premium was 6.8%, compared with 7.2% for the year-ago quarter.

GLOBE LIFE INC. Earnings Release-Q4 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
	December 31,
	2023				2022
	Amount		% of Premium		Amount		% of Premium		% Chg.
American Income	$ 183,176		45		$ 174,755		46		5
Direct to Consumer	59,241		24		60,344		24		(2)
Liberty National	31,144		35		26,768		32		16
Other	31,919		62		31,055		59		3
Total	$ 305,480		38		$ 292,922		38		4

Life Premium
	Quarter Ended
	December 31,
	2023		2022		% Chg.
American Income	$ 406,356		$ 380,922		7
Direct to Consumer	247,274		246,471		-
Liberty National	89,700		83,320		8
Other	51,485		52,216		(1)
Total	$ 794,815		$ 762,929		4
Life Net Sales(1)
	Quarter Ended
	December 31,
	2023		2022		% Chg.
American Income	$ 76,323		$ 69,796		9
Direct to Consumer	25,861		30,676		(16)
Liberty National	26,046		23,252		12
Other	2,188		2,568		(15)
Total	$ 130,418		$ 126,292		3

(1)

Net sales 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-Q4 2023 ( Dollar amounts in thousands, except share and per share data) (Unaudited)
HEALTH INSURANCE RESULTS BY DISTRIBUTION CHANNEL
Health Underwriting Margin
	Quarter Ended
	December 31,
	2023				2022
	Amount		% of Premium		Amount		% of Premium		% Chg.
United American	$ 14,180		10		$ 16,908		12		(16)
Family Heritage	35,633		35		31,921		34		12
Liberty National	27,157		57		27,024		58		-
American Income	19,080		62		18,360		62		4
Direct to Consumer	1,436		8		2,011		11		(29)
Total	$ 97,486		29		$ 96,224		30		1

Health Premium
	Quarter Ended
	December 31,
	2023		2022		% Chg.
United American	$ 138,586		$ 137,908		-
Family Heritage	102,180		94,391		8
Liberty National	47,416		46,678		2
American Income	30,676		29,423		4
Direct to Consumer	16,999		17,620		(4)
Total	$ 335,857		$ 326,020		3
Health Net Sales(1)
	Quarter Ended
	December 31,
	2023		2022		% Chg.
United American	$ 28,155		$ 20,110		40
Family Heritage	25,228		22,432		12
Liberty National	9,349		8,612		9
American Income	4,235		3,921		8
Direct to Consumer	2,220		2,188		1
Total	$ 69,187		$ 57,263		21

(1)

Net sales 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-Q4 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
	December 31,						September 30,
	2023		2022		% Chg.		2023
American Income	11,131		9,243		20		10,983
Liberty National	3,387		2,946		15		3,339
Family Heritage	1,368		1,334		3		1,323

(1)	The quarterly average producing agent count is based on the actual count at the beginning and 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
	December 31,
	2023		2022		% Chg.
Net investment income	$ 271,609		$ 255,483		6
Interest on policy liabilities(1)	(235,785)		(224,767)		5
Excess investment income	$ 35,824		$ 30,716		17
Per share	$ 0.38		$ 0.31		23

(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 6.3%, and average invested assets increased 3.7%. Required interest on policy liabilities increased 4.9%, and average policy liabilities increased 4.5%.

GLOBE LIFE INC. Earnings Release-Q4 2023 ( Dollar amounts in thousands, except share and per share data) (Unaudited)
The composition of the investment portfolio at book value at December 31, 2023 is as follows:
Investment Portfolio
	As of
	December 31, 2023
	Amount		% of Total
Fixed maturities at fair value(1)	$ 17,870,206		91
Mortgage loans	279,199		1
Policy loans	657,020		3
Other long-term investments(2)	835,878		4
Short-term investments	81,740		-
Total	$ 19,724,043

(1)	As of December 31, 2023, fixed maturities at amortized cost were $18.9 billion, net of $7.1 million of allowance for credit losses.
(2)	Includes $796 million of investments accounted for under the fair value option which have a cost of $763 million as of December 31, 2023.

Fixed maturities at amortized cost, net of allowance for credit losses, by asset class as of December 31, 2023 are as follows:
Fixed Maturity Portfolio by Sector
	As of
	December 31, 2023
	Investment Grade		Below Investment Grade		Total Amortized Cost, net
Corporate bonds	$ 14,574,424		$ 480,705		$ 15,055,129
Municipals	3,296,305		-		3,296,305
Government, agencies and GSEs	442,903		-		442,903
Collateralized debt obligations	-		37,110		37,110
Other asset-backed securities	74,656		11,696		86,352
Total	$ 18,388,288		$ 529,511		$ 18,917,799

Below are fixed maturities available for sale by amortized cost, allowance for credit losses, and fair value at December 31, 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
December 31, 2023	$ 18,924,914		$ (7,115)		$ (1,047,593)		$ 17,870,206

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 5.23% during the fourth quarter of 2023, compared with 5.18% 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-Q4 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
	December 31,
	2023		2022
Amount	$ 443,385		$ 238,845
Average annual effective yield	6.6 %		6.1 %
Average rating	BBB+		A
Average life (in years) to:
Next call	20.3		16.5
Maturity	23.2		20.9

SHARE REPURCHASE:

During the quarter, the Company repurchased 660,170 shares of Globe Life Inc. common stock at a total cost of $77 million and an average share price of $117.02 .

For the year ended December 31, 2023, the Company repurchased 3.4 million shares of Globe Life Inc. common stock at a total cost of $380 million and an average share price of $112.84 .

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, 2024:

Globe Life projects net operating income between $11.30 to $11.80 per diluted common share for the year ending December 31, 2024.

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 inflation, geopolitical events, and the recent pandemic 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, financing costs, and/or investment portfolio yield;

5) General economic, industry sector or individual debt issuers' financial conditions (including developments and volatility arising from geopolitical events, particularly in certain industries that may compromise 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 the competitiveness of the Company's products and pricing;

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 the impact of higher than anticipated inflation);

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 natural or man-made catastrophic events, including but not limited to pandemics, tornadoes, hurricanes, earthquakes, war and terrorism, on our operations and personnel, 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.

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 fourth quarter 2023 earnings release conference call with financial analysts at 11:00 am (Eastern) tomorrow, February 8, 2024. 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 December 31,				Year Ended December 31,
	2023		2022(3)		2023		2022(3)
Revenue:
Life premium	$ 794,815		$ 762,929		$ 3,137,244		$ 3,027,824
Health premium	335,857		326,020		1,318,773		1,282,417
Other premium	-		-		-		1
Total premium	1,130,672		1,088,949		4,456,017		4,310,242
Net investment income	271,609		255,483		1,056,884		991,800
Realized gains (losses)	13,287		(9,703)		(65,676)		(76,548)
Other income	123		384		308		1,246
Total revenue	1,415,691		1,335,113		5,447,533		5,226,740
Benefits and expenses:
Life policyholder benefits(1)	514,472		501,967		2,050,789		2,035,693
Health policyholder benefits(2)	195,686		191,364		776,362		752,866
Other policyholder benefits	9,612		8,947		37,100		36,875
Total policyholder benefits	719,770		702,278		2,864,251		2,825,434
Amortization of deferred acquisition costs	97,541		90,131		379,700		348,824
Commissions, premium taxes, and non-deferred acquisition costs	144,234		129,532		559,167		506,022
Other operating expense	91,759		91,804		347,833		353,954
Interest expense	25,676		24,658		102,316		90,395
Total benefits and expenses	1,078,980		1,038,403		4,253,267		4,124,629
Income before income taxes	336,711		296,710		1,194,266		1,102,111
Income tax benefit (expense)	(61,909)		(54,367)		(223,511)		(207,725)
Net income	$ 274,802		$ 242,343		$ 970,755		$ 894,386
Basic net income per common share	$ 2.92		$ 2.50		$ 10.21		$ 9.13
Diluted net income per common share	$ 2.88		$ 2.46		$ 10.07		$ 9.04

(1)	Net of remeasurement gain of $12.9 million for the three months ended December 31, 2023, and a remeasurement gain of $1.9 million for the same period in 2022. Net of remeasurement gain of $29.4 million for the year ended December 31, 2023, and a remeasurement loss of $47.4 million for the same period in 2022.
(2)	Net of remeasurement gain of $3.5 million for the three months ended December 31, 2023, and a remeasurement gain of $1.8 million for the same period in 2022. Net of remeasurement gain of $11.8 million for the year ended December 31, 2023, and a remeasurement gain of $15.6 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.

SOURCE Globe Life Inc.