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OFFON

GLOBE LIFE INC.

(GL)
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Globe Life : Management's Discussion & Analysis

08/05/2021 | 02:45pm EDT

Item 2. Management's Discussion and Analysis of Financial Condition and Results

                                 of Operations

The following discussion should be read in conjunction with Globe Life's

Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this report.


"Globe Life" and the "Company" refer to Globe Life Inc. and its subsidiaries and
affiliates.


                             Results of Operations
                                                How Globe Life Views Its

Operations. Globe Life Inc. is the holding company for a group of

                                                insurance companies that 

market primarily individual life and supplemental health insurance to

                                                lower middle to middle 

income households throughout the United States. We view our operations by

[[Image Removed: gl-20210630_g1.jpg]] segments, which are the insurance product lines of life, supplemental health, and annuities, and

                                                the investment segment that 

supports the product lines. Segments are aligned based on their

                                                common characteristics, 

comparability of the profit margins, and management techniques used to

                                                operate each segment.

                                                Insurance Product Line 

Segments. The insurance product line segments involve the marketing,

                                                underwriting, and 

administration of policies. Each product line is further segmented by the

                                                various distribution 

channels that market the insurance policies. Each distribution channel

[[Image Removed: gl-20210630_g2.jpg]] operates in a niche market offering insurance products designed for that particular market.

                                                Whether analyzing 

profitability of a segment as a whole, or the individual distribution channels

                                                within the segment, the 

measure of profitability used by management is the underwriting margin,

                                                as seen below:
                                                Premium revenue
                                                                              (Policy obligations)
                                                                              (Policy acquisition costs and commissions)
                                                                              Underwriting margin
                                                Investment Segment. The

investment segment involves the management of our capital resources,

[[Image Removed: gl-20210630_g3.jpg]] including investments and the management of corporate debt and liquidity. Our measure of

                                                profitability for the 

investment segment is excess investment income, as seen below:

                                                Net investment income
                                                (Required interest on net policy liabilities)
                                                                              (Financing costs)
                                                                              Excess investment income




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Table of Contents

                                GLOBE LIFE INC.
                       Management's Discussion & Analysis
Current Highlights, comparing year-to-date 2021 with 2020.
•Net income as a return on equity (ROE) for the six months ended June 30, 2021
was 9.0% and net operating income as an ROE, excluding net unrealized gains on
the fixed maturity portfolio(1) was 12.4%.
•Total premium increased 8% over the same period in the prior year. Life premium
increased 9% for the period from $1.3 billion in 2020 to $1.4 billion in 2021.
Life underwriting margin declined 7% from $341 million in 2020 to $315 million
in 2021.
•Net investment income increased 3% over the same period in the prior year.
Excess investment income declined 3% below the prior year.
•Total net sales increased 15% over the same period in the prior year from $301
million to $347 million.
•Book value per share increased 14% over the same period in the prior year from
$73.26 to $83.59. Book value per share, excluding net unrealized gains on the
fixed maturity portfolio(1), increased 9% over the prior year from $51.21 to
$55.66.
•The Company estimates $49 million of net life claims were incurred as a result
of the novel coronavirus (COVID-19) for the six months ended June 30, 2021
compared with $22 million during the same period last year.
•For the six months ended June 30, 2021, the Company repurchased 2.2 million
shares of Globe Life Inc. common stock at a total cost of $214 million for an
average share price of $98.61.
The following graphs represent net income and net operating income for the six
months ended June 30, 2021 and 2020.

  [[Image Removed: gl-20210630_g4.jpg]] [[Image Removed: gl-20210630_g5.jpg]]
As shown in the charts above, net operating income is the consolidated total of
segment profits after tax and as such is considered a non-GAAP measure. It has
been used consistently by Globe Life's management for many years to evaluate the
operating performance of the Company. It differs from net income primarily
because it excludes certain non-operating items such as realized gains and
losses and certain significant and unusual items included in net income. Net
income is the most directly comparable GAAP measure.
(1) Net operating income as an ROE, excluding net unrealized gains on the fixed
maturity portfolio, is considered a non-GAAP measure. Management utilizes this
measure to view the business without the effect of the net unrealized gains,
which are primarily attributable to fluctuation in interest rates on the
available-for-sale portfolio. The impact of the adjustment to exclude net
unrealized gains on fixed maturities, net of tax is $2.9 billion and $2.4
billion for the six months ended June 30, 2021 and 2020, respectively.

Book value per share, excluding net unrealized gains on the fixed maturity
portfolio, is also considered a non-GAAP measure. Management utilizes this
measure to view the book value of the business without the effect of net
unrealized gains, which are primarily attributable to fluctuation in interest
rates on the available for sale portfolio. The impact of the adjustment to
exclude net unrealized gains on fixed maturities is $27.93 and $22.05 for six
months ended June 30, 2021 and 2020, respectively.
Refer to   Analysis of Profitability by Segment   for non-GAAP reconciliation to
GAAP.


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Table of Contents

                                GLOBE LIFE INC.
                       Management's Discussion & Analysis

Summary of Operations. Net income increased 12% to $378 million during the six
months ended June 30, 2021, compared with $339 million in the same period in
2020. This increase was primarily attributed to $29 million of after tax
realized gains on investments in the current period, as compared to $24 million
of after tax realized losses on investments in the year-ago period. See further
discussion under the caption   Investments  . The increase in after tax realized
gains was partially offset by lower life underwriting results due to higher
COVID-19 life claims. On a diluted per common share basis, net income per common
share for the six months ended June 30, 2021 increased 16% from $3.13 to $3.62.

Net operating income is the consolidated total of segment profits after-tax and
as such is considered a non-GAAP measure. Net operating income declined 3% to
$353 million for the six months ended June 30, 2021, compared with $366 million
for the same period in 2020 primarily due to COVID-19 net life claims. On a
diluted per common share basis, net operating income per common share for the
six months ended June 30, 2021 was flat at $3.38.

COVID-19. For the six months ended June 30, 2021, we estimate $49 million of
COVID-19 net life claims were incurred, with $38 million or 77% of which were
incurred in the first quarter of 2021. For the full year and at the mid-point of
our guidance, we estimate COVID-19 net life claims will be between $53 million
to $55 million, based on an estimate of approximately 20 to 30 thousand U.S.
COVID-19 deaths in the second half of the year. This estimate of U.S. deaths is
based on various third-party models. The projected life claims are dependent on
this estimate and many other variables, including, but not limited to, the
effect of efforts to reopen the economy, the timing and availability of
effective treatments for the disease, vaccination rates and effectiveness of
vaccines, impact from potential variants, and the actual ages and geographic
areas in which infections and deaths occur. As such, should actual COVID-19
deaths in the second half of the year be greater than currently anticipated, the
total amount of COVID-19 life claims incurred for the full year 2021 will likely
be greater than projected at the mid-point of our guidance.

Globe Life's operations on a segment-by-segment basis are discussed in depth
below. Net operating income has been used consistently by 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 GAAP net income
primarily because it excludes certain non-operating items such as realized gains
and losses and other 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.


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  Table of Contents
                                GLOBE LIFE INC.
                       Management's Discussion & Analysis
                      Analysis of Profitability by Segment
                         (Dollar amounts in thousands)
                                                          Six Months Ended June 30,
                                                 2021           2020          Change         %

Life insurance underwriting margin $ 315,401$ 340,502$ (25,101) (7)

Health insurance underwriting margin 146,641 127,705

18,936 15

       Annuity underwriting margin                4,363          4,535      

(172) (4)

       Excess investment income                 120,503        123,874      

(3,371) (3)

Other insurance:

       Other income                                 683            729      

(46) (6)

       Administrative expense                  (133,679)      (125,186)        (8,493)       7
       Corporate and other                      (21,597)       (22,835)         1,238       (5)
       Pre-tax total                            432,315        449,324        (17,009)      (4)
       Applicable taxes                         (79,241)       (83,748)         4,507       (5)
       Net operating income                     353,074        365,576        (12,502)      (3)

Reconciling items, net of tax:

Realized gain (loss)-investments 29,081 (24,401)

   53,482

       Legal proceedings                         (4,020)        (2,587)        (1,433)

       Net income                             $ 378,135$ 338,588$  39,547       12




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Table of Contents

                                GLOBE LIFE INC.
                       Management's Discussion & Analysis
In 2021, the largest contributor of total underwriting margin was the life
insurance segment and the primary distribution channel was American Income Life
Division. The following charts represent the breakdown of total underwriting
margin by operating segment and distribution channel for the six months ended
June 30, 2021.

[[Image Removed: gl-20210630_g6.jpg]][[Image Removed: gl-20210630_g7.jpg]]


Total premium income rose 8% for the six months ended June 30, 2021 to $2.0
billion. Total net sales increased 15% to $347 million, when compared with the
same period in 2020. Total first-year collected premium was $288 million for the
2021 period, compared with $264 million for the 2020 period.

Life insurance premium income increased 9% to $1.4 billion over the prior year
total of $1.3 billion. Life net sales rose 18% to $265 million for the first six
months of 2021. First-year collected life premium rose 20% to $211 million. Life
underwriting margins, as a percent of premium, declined to 22% in 2021 from 26%
in the prior year. Underwriting margin declined to $315 million for the six
months ended June 30, 2021, 7% below the same period in 2020. The decline in the
life underwriting margin is primarily due to an estimated $49 million of
COVID-19 net life claims incurred during the first six months of 2021 versus $22
million during the same period in 2020.

Health insurance premium income increased 5% to $590 million over the prior year
total of $563 million. Health net sales rose 8% to $82 million for the first six
months of 2021. First-year collected health premium fell 11% to $78 million.
Health underwriting margins, as a percent of premium, increased to 25% in 2021
compared with 23% in 2020. Health underwriting margin increased to $147 million
for the first six months of 2021, 15% over the same period in 2020.

Excess investment income, the measure of profitability of our investment
segment, declined 3% during 2021 to $121 million from $124 million in the same
period in 2020. Excess investment income per common share, reflecting the impact
of our share repurchase program, was flat at $1.15 when compared with the same
period in 2020.

Insurance administrative expenses increased 7% in 2021 when compared with the
prior year period. These expenses were 6.6% as a percent of premium during the
first six months of 2021 and 2020.

For the six months ended June 30, 2021, the Company repurchased 2.2 million Globe Life Inc. shares at a total cost of $214 million for an average share price of $98.61.


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Table of Contents

                                GLOBE LIFE INC.
                       Management's Discussion & Analysis

The discussions of our segments are presented in the manner we view our operations, as described in Note 10-Business Segments.


We use three statistical measures as indicators of premium growth and sales over
the near term: "annualized premium in force," "net sales," and "first-year
collected premium."
•Annualized premium in force is defined as the premium income that would be
received over the following twelve months at any given date on all active
policies if those policies remain in force throughout the twelve-month period.
Annualized premium in force is an indicator of potential growth in premium
revenue.
•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.
•First-year collected premium is defined as the premium collected during the
reporting period for all policies in their first policy year. First-year
collected premium takes lapses into account in the first year when lapses are
more likely to occur, and thus is a useful indicator of how much new premium is
expected to be added to premium income in the future.

See further discussion of the distribution channels below for Life and

  Health  .



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  Table of Contents
                                GLOBE LIFE INC.
                       Management's Discussion & Analysis
                                 LIFE INSURANCE

Life insurance is the Company's predominant segment. During 2021, life premium
represented 71% of total premium and life underwriting margin represented 68% of
the total. Additionally, investments supporting the reserves for life products
produce the majority of excess investment income attributable to the investment
segment.

The following table presents the summary of results of life insurance. Further discussion of the results by distribution channel is included below.


                                 Life Insurance
                               Summary of Results
                         (Dollar amounts in thousands)
                                                                 Six Months Ended June 30,
                                                      2021                                         2020                                 Change
                                          Amount              % of Premium             Amount            % of Premium            Amount             %
Premium and policy charges           $    1,436,289                100             $ 1,320,452                100             $ 115,837              9

Policy obligations                        1,016,102                 71                 881,515                 67               134,587             15
Required interest on reserves              (362,420)               (25)               (344,413)               (26)              (18,007)             5
Net policy obligations                      653,682                 46                 537,102                 41               116,580             22
Commissions, premium taxes, and
non-deferred acquisition expenses           115,478                  8                 106,513                  8                 8,965              8
Amortization of acquisition costs           351,728                 24                 336,335                 25                15,393              5
Total expense                             1,120,888                 78                 979,950                 74               140,938             14
Insurance underwriting margin        $      315,401                 22             $   340,502                 26             $ (25,101)            (7)



The lower life insurance underwriting margins for the six months ended June 30,
2021 are primarily attributed to the increase in COVID-19 net life claims in the
current year. The Company incurred $49 million for the six months ended June 30,
2021, compared with $22 million at the same time in the prior year.

The following table presents Globe Life's life insurance premium by distribution
channel.

                                 Life Insurance
                        Premium by Distribution Channel
                         (Dollar amounts in thousands)
                                                                  Six Months Ended June 30,                                              Increase
                                                        2021                                       2020                                 (Decrease)
                                            Amount               % of Total             Amount             % of Total            Amount               %
American Income                        $      682,591                48             $   611,527                46             $   71,064               12
Direct to Consumer                            493,468                34                 455,244                35                 38,224                8
Liberty National                              153,590                11                 146,194                11                  7,396                5
Other                                         106,640                 7                 107,487                 8                   (847)              (1)
Total                                  $    1,436,289               100             $ 1,320,452               100             $  115,837                9


Annualized life premium in force was $2.86 billion at June 30, 2021, an increase of 8% over $2.65 billion a year earlier.

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                                Globe Life Inc.
                       Management's Discussion & Analysis

An analysis of life net sales, an indicator of new business production, by distribution channel is presented below.

                                 Life Insurance
                       Net Sales by Distribution Channel
                         (Dollar amounts in thousands)
                                                                 Six Months Ended June 30,                                             Increase
                                                        2021                                      2020                                (Decrease)
                                            Amount               % of Total            Amount            % of Total             Amount               %
American Income                        $      142,856                54             $ 114,283                51             $    28,573               25
Direct to Consumer                             81,972                31                81,943                37                      29                -
Liberty National                               34,148                13                23,197                10                  10,951               47
Other                                           5,635                 2                 5,319                 2                     316                6
Total                                  $      264,611               100             $ 224,742               100             $    39,869               18




First-year collected life premium by distribution channel is presented in the
table below.

                                 Life Insurance
              First-Year Collected Premium by Distribution Channel
                         (Dollar amounts in thousands)
                                                                 Six Months Ended June 30,                                              Increase
                                                        2021                                      2020                                 (Decrease)
                                            Amount               % of Total            Amount            % of Total             Amount                %
American Income                        $      121,432                58             $ 101,975                58             $    19,457                19
Direct to Consumer                             60,878                29                47,775                27                  13,103                27
Liberty National                               23,747                11                21,308                12                   2,439                11
Other                                           4,763                 2                 5,325                 3                    (562)              (11)
Total                                  $      210,820               100             $ 176,383               100             $    34,437                20


A discussion of life operations by distribution channel follows.


The American Income Life Division markets to members of labor unions and
continues to diversify its lead sources by building relationships with other
affinity groups, utilizing third-party internet vendor leads, and obtaining
referrals to facilitate sustainable growth. This division is Globe Life's
largest contributor to life premium of any distribution channel at 48% of the
Company's June 30, 2021 total. Net sales increased 25% to $143 million during
the first six months of 2021 over the 2020 total for the same period of $114
million. The underwriting margin, as a percent of premium, was 30% for the six
months ended June 30, 2021, down from 32% in the year-ago period. The lower
underwriting margin was primarily due to higher policy obligations as a result
of the pandemic.

This division is anticipating an increase in net sales for the full year 2021 as compared with 2020. Sales growth in our exclusive agencies is generally dependent on growth in the size of the agency force.


While this division has experienced $13 million in COVID-19 net life claims for
the six months ended June 30, 2021, the underwriting margin as a percent of
premium, at the mid-point of our guidance, is expected to remain flat for the
year due to improved persistency and higher projected net sales.



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Table of Contents

                                Globe Life Inc.
                       Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for the
American Income Life Division. The average producing agent count is based on the
actual count at the end of each week during the year. This division continues to
experience agent growth compared with the prior year at the beginning of the
COVID-19 pandemic.
                           At June 30,                      Change
                      2021                2020        Amount           %
American Income     10,198               8,012       2,186            27



American Income Life continues to focus on growing and strengthening the agency
force, specifically through emphasis on agency middle-management growth and
additional agency office openings. In addition to offering financial incentives
and training opportunities, the agency has made considerable investments in
information technology, including launching a customer relationship management
(CRM) tool for the agency force. This tool is designed to drive productivity in
lead distribution, conservation of business, manager dash boards and new agent
recruiting. Additionally, this division has invested in and successfully
implemented technology that allows the agency force to engage in virtual
recruiting, training and sales activity.

The Direct to Consumer Division (DTC) offers adult and juvenile life insurance
through a variety of marketing approaches, including direct mail, insert media,
and electronic media. In recent years, electronic media production has grown
rapidly as management has aggressively increased marketing activities related to
internet and mobile technology as well as focused on driving traffic to our
inbound call center. The different approaches support and complement one another
in the division's efforts to reach the consumer. The DTC's long-term growth has
been fueled by constant innovation and name recognition. We continually
introduce new initiatives in this division in an attempt to increase response
rates.

While the juvenile market is an important source of sales, it also is a vehicle
to reach the parents and grandparents of juvenile policyholders, who are more
likely to respond favorably to a DTC solicitation for life coverage on
themselves in comparison to the general adult population. Also, both juvenile
policyholders and their parents are low acquisition-cost targets for sales of
additional coverage over time.

DTC net sales were flat for the six months ended June 30, 2021 compared with the
same period in the prior year. In the second quarter of 2020, the Company saw
record net sales at this division as a response to the COVID-19 pandemic. While
we expect continued strong sales due to the heightened awareness as to the
benefits of life insurance, we anticipate sales levels over the remainder of
2021 will be lower than the same period in 2020. Despite the lower sales, we
expect favorable persistency to continue over the remainder of this year,
leading to higher premiums, higher policy obligations, and lower acquisition
expenses as a percent of premium.

DTC's underwriting margin, as a percent of premium, was 9% for the six months
ended June 30, 2021, which was lower than the 15% result during the same period
in 2020 primarily due to approximately $13 million of higher COVID-19 net life
claims in the current period. Additionally, this division will see a decrease in
underwriting margin as a percent of premium for the full year 2021 due to higher
policy obligations incurred as a result of the pandemic.

The Liberty National Division markets individual life insurance to middle-income
household and worksite customers. Recent investments in new sales technologies
as well as recent growth in middle management within the agency are expected to
help continue this growth. The underwriting margin as a percent of premium was
17% for the six months ended June 30, 2021, down from 26% during the same period
a year ago. The decrease is primarily attributable to higher policy obligations
during the six months ended June 30, 2021 as a result of the COVID-19 pandemic
compared with the same period a year ago. This division incurred $9 million
COVID-19 net life claims for the six months ended June 30, 2021 compared with
2,063 for the same period in 2020. With the division's ability to return to
face-to-face customer interaction and the option of virtual sales, the Company
is projecting total net life sales to increase for the full year 2021 as
compared to the prior year. However, due to increased policy obligations
expected to be incurred associated with the pandemic, we anticipate the
underwriting margin, as a percent of premium, to be slightly lower for the full
year 2021 as compared to 2020.



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Table of Contents

                                Globe Life Inc.
                       Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for Liberty National Division. As the division gains momentum in the virtual sales environment, the agency should see an increase in recruiting of new agents.

                             At June 30,                   Change
                        2021               2020       Amount         %
Liberty National      2,717               2,522       195            8



The Liberty National Division average producing agent count increased 8% over
the prior year comparable period. We continue to execute our long-term plan to
grow this agency through expansion from small-town markets in the Southeast to
more densely populated areas with larger pools of potential agent recruits and
customers. Continued geographic expansion of this agency's presence into more
heavily populated, less-penetrated areas will help create long-term agency
growth. Additionally, the agency continues to help improve the ability of agents
to develop new worksite marketing business. Systems that have been put in place,
including the addition of a customer relationship management (CRM) platform and
enhanced analytical capabilities, have helped the agents develop additional
worksite marketing opportunities as well as improve the productivity of agents
selling in the individual life market. Sales were hindered in the first half of
2020 due to difficulties in agents transitioning to a virtual work environment
after the onset of the COVID-19 lockdown, as well as mandatory shut-downs of
non-essential small businesses which hindered the ability of the division's
agents to prospect at the worksite.

The Other Agencies distribution channels primarily include non-exclusive independent agencies. The Other Agencies contributed $107 million of life premium income, or 7% of Globe Life's total premium income in the six months ended June 30, 2021, and contributed 2% of net sales for the period.

                                HEALTH INSURANCE

Health insurance sold by the Company includes primarily Medicare Supplement insurance, accident coverage, and other limited-benefit supplemental health products including cancer, critical illness, heart, and intensive care coverage.


Health premium accounted for 29% of our total premium in the first six months of
2021, while the health underwriting margin accounted for 31% of total
underwriting margin. Health underwriting margin increased 15% to $147 million
primarily due to improved persistency and lower amortization of acquisition
costs. The Company continues to emphasize life insurance sales relative to
health due to life's superior long-term profitability and its greater
contribution to excess investment income.


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Table of Contents

                                Globe Life Inc.
                       Management's Discussion & Analysis

The following table presents underwriting margin data for health insurance.


                                Health Insurance
                               Summary of Results
                         (Dollar amounts in thousands)
                                                                   Six Months Ended June 30,
                                                          2021                                      2020                               Change
                                                                      % of                                   % of
                                               Amount                Premium             Amount             Premium            Amount              %
Premium                                   $      589,759               100            $ 563,082               100            $ 26,677               5

Policy obligations                               376,683                64              362,207                64              14,476               4
Required interest on reserves                    (50,429)               (9)             (45,361)               (8)             (5,068)             11
Net policy obligations                           326,254                55              316,846                56               9,408               3
Commissions, premium taxes, and
non-deferred acquisition expenses                 46,486                 8               48,551                 9              (2,065)             (4)
Amortization of acquisition costs                 70,378                12               69,980                12                 398               1
Total expense                                    443,118                75              435,377                77               7,741               2
Insurance underwriting margin             $      146,641                25            $ 127,705                23            $ 18,936              15



Globe Life markets supplemental health insurance products through a number of
distribution channels. The following table is an analysis of our health premium
by distribution channel.

                                Health Insurance
                        Premium by Distribution Channel
                         (Dollar amounts in thousands)
                                                              Six Months Ended June 30,                                             Increase
                                                     2021                                      2020                                (Decrease)
                                         Amount               % of Total            Amount            % of Total             Amount               %
United American                     $      233,304                40             $ 222,944                40             $    10,360                5
Family Heritage                            168,347                29               154,970                27                  13,377                9
Liberty National                            94,158                16                95,031                17                    (873)              (1)
American Income                             56,140                 9                51,281                 9                   4,859                9
Direct to Consumer                          37,810                 6                38,856                 7                  (1,046)              (3)
Total                               $      589,759               100             $ 563,082               100             $    26,677                5



Premium related to limited-benefit plans comprise $308 million, or 52%, of the
total health premiums, for 2021 compared with $289 million in the same period in
the prior year. Premium from Medicare Supplement products comprises the
remaining $282 million, or 48%, for 2021 compared with $274 million in the same
period in the prior year.

Annualized health premium in force at June 30, 2021 increased 4% to $1.2 billion
over the prior year total.


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Table of Contents

                                Globe Life Inc.
                       Management's Discussion & Analysis

Presented below is a table of health net sales by distribution channel.

                                Health InsuranceNet Sales by Distribution Channel
                         (Dollar amounts in thousands)
                                                                  Six Months Ended June 30,                                            Increase
                                                         2021                                      2020                               (Decrease)
                                              Amount              % of Total           Amount            % of Total             Amount               %
United American                          $      25,027                30             $ 26,465                35             $    (1,438)             (5)
Family Heritage                                 34,744                42               29,845                39                   4,899              16
Liberty National                                12,053                15               10,032                13                   2,021              20
American Income                                  9,277                11                8,440                11                     837              10
Direct to Consumer                               1,226                 2                1,112                 2                     114              10
Total                                    $      82,327               100             $ 75,894               100             $     6,433               8



Health net sales related to limited-benefit plans comprise $56 million, or 68%,
of the total health net sales, for 2021, compared with $48 million in the same
period in the prior year. Medicare Supplement sales make up the remaining $26
million, or 32% for 2021, compared with $27 million in the same period in the
prior year.

The following table presents health insurance first-year collected premium by distribution channel.

                                Health Insurance
              First-Year Collected Premium by Distribution Channel
                         (Dollar amounts in thousands)
                                                                  Six Months Ended June 30,                                            Increase
                                                         2021                                      2020                               (Decrease)
                                              Amount              % of Total           Amount            % of Total            Amount               %
United American                          $      28,702                37             $ 39,853                46             $  (11,151)             (28)
Family Heritage                                 28,165                36               26,584                30                  1,581                6
Liberty National                                 9,847                13               10,407                12                   (560)              (5)
American Income                                  9,334                12                8,951                10                    383                4
Direct to Consumer                               1,581                 2                1,508                 2                     73                5
Total                                    $      77,629               100             $ 87,303               100             $   (9,674)             (11)



First-year collected premium related to limited-benefit plans comprises $47
million, or 61%, of total first-year collected premium, for 2021 compared with
$46 million in the same period in the prior year. First-year collected premium
from Medicare Supplement policies makes up the remaining $30 million, or 39%,
for 2021, compared with $41 million in the same period in the prior year.

A discussion of health operations by distribution channel follows.
The United American Division consists of non-exclusive independent agencies who
may also sell for other companies. The United American Division was Globe Life's
largest health agency in terms of health premium income.
This division is also Globe Life's largest producer of Medicare Supplement
insurance. The United American Division represents 81% of all Medicare
Supplement premium and 95% of Medicare Supplement net sales. For the six months
ended June 30, 2021, Medicare Supplement premium in this agency rose 5% to $229
million in 2021 over the prior period total of $218 million. Medicare Supplement
net sales declined 6% to $25 million in 2021 from the prior year period,
primarily as a result of a decrease in individual sales. Underwriting margin as
a percent of premium was 16% for the six months ended June 30, 2021, up from 14%
in 2020.

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                                Globe Life Inc.
                       Management's Discussion & Analysis

The Family Heritage Division primarily markets limited-benefit supplemental
health insurance in non-urban areas. Most of its policies include a cash-back
feature, such as a return of premium, where any excess of premiums over claims
paid is returned to the policyholder at the end of a specified period stated
within the insurance policy. Underwriting margin as a percent of premium was 26%
for the six months ended June 30, 2021, up from 25% in the year-ago period
primarily due to improved persistency and lower acquisition costs.
The division experienced a 16% increase in net health sales as compared with the
six-month period a year ago, primarily due to an increase in agent productivity
and training. The division will be launching incentive programs during the year
to help drive an increase in productivity and the number of producing agents.

Below is the average producing agent count at the end of the period for the
Family Heritage Division.
                                   At June 30,                   Change
                              2021               2020       Amount         %
Family Heritage Division    1,253               1,238        15            1




The Liberty National Division represented 16% of all Globe Life health premium
income for the six-month period ended June 30, 2021. The Liberty National
Division markets limited-benefit supplemental health products consisting
primarily of critical illness insurance. Much of this health business is now
generated through worksite marketing targeting small businesses of 10 to 100
employees. Health premium at Liberty National Division was $94 million for the
six months ended June 30, 2021, down from $95 million in the year ago period. We
anticipate an increase in net health sales at this division as the Company is
able to interact face-to-face with customers compared with 2020.

Other distribution. While some of the Company's other distribution channels
market health products, their main emphasis is on life insurance. On a combined
basis, they accounted for 15% of health premium in 2021 and 16% in 2020. The
American Income Life Division primarily markets accident plans. The Direct to
Consumer Division markets primarily Medicare Supplements to employer or
union-sponsored groups. The Direct to Consumer Division added $1 million of
Medicare Supplement net sales as of June 30, 2021 and 2020.

                                   ANNUITIES

Annuities represent an insignificant part of our business. We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life and supplemental health insurance products.

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  Table of Contents
                                Globe Life Inc.
                       Management's Discussion & Analysis

                                  INVESTMENTS

We manage our capital resources including investments, debt, and cash flow
through the investment segment. Excess investment income represents the profit
margin attributable to investment operations and is the measure that we use to
evaluate the performance of the investment segment as described in Note
10-Business Segments. It is defined as net investment income less both the
required interest on net insurance policy liabilities and the interest cost
associated with capital funding or "financing costs."

Management also views excess investment income per diluted common share as an
important and useful measure to evaluate the performance of the investment
segment. It is defined as excess investment income divided by the total diluted
weighted average shares outstanding, representing the contribution by the
investment segment to the consolidated earnings per share of the Company. Since
implementing our share repurchase program in 1986, we have used $8.4 billion of
excess cash flow at the Parent Company to repurchase Globe Life Inc. common
shares after determining that the repurchases provided a greater risk adjusted
after-tax return than other investment alternatives. If we had not used this
excess cash to repurchase shares, but had instead invested it in
interest-bearing assets, we would have earned more investment income and had
more shares outstanding. As excess investment income per diluted common share
incorporates all capital resources, we view excess investment income per diluted
share as a useful measure to evaluate the investment segment.

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

                      Analysis of Excess Investment Income
           (Dollar amounts in thousands, except for per share data)

                                                             Six Months Ended
                                                                 June 30,                                  Change
                                                        2021                  2020                 Amount               %
Net investment income                              $    474,128$    460,559$    13,569                3
Interest on net insurance policy liabilities:
Interest on reserves                                   (432,870)             (410,562)             (22,308)               5
Interest on deferred acquisition costs                  122,192               117,498                4,694                4
Net required interest                                  (310,678)             (293,064)             (17,614)               6
Financing costs                                         (42,947)              (43,621)                 674               (2)
Excess investment income                           $    120,503$    123,874$    (3,371)              (3)

Excess investment income per diluted share $ 1.15 $

      1.15          $         -                -

Mean invested assets (at amortized cost)           $ 18,748,877$ 17,700,476$ 1,048,401                6
Average net insurance policy liabilities(1)          10,838,913            10,328,750              510,163                5
Average debt and preferred securities (at
amortized cost)                                       1,966,285             1,726,718              239,567               14


(1)Net of deferred acquisition costs, excluding the associated unrealized gains
and losses thereon.
Excess investment income declined $3 million, or 3%, compared with the year-ago
period. Excess investment income per diluted common share was $1.15 for both
periods. Excess investment income per diluted common share generally increases
at a faster pace than excess investment income because the number of diluted
shares outstanding generally decreases from year to year as a result of our
share repurchase program.

Net investment income for the six months ended June 30, 2021 was $474 million or
3% greater than the year ago period. Mean invested assets increased 6% during
the first six months of 2021 over the same period last year. The effective
annual yield rate earned on the fixed maturity portfolio was 5.24% in the first
six months of 2021, compared with 5.38% a year earlier. Growth in net investment
income has been negatively impacted in recent years by the low interest rate
environment during which time we have invested new money at yields lower than
our average portfolio yield. In addition, we have reinvested the proceeds from
bonds that matured, were called, or were otherwise

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                                Globe Life Inc.
                       Management's Discussion & Analysis

disposed of at yield rates less than what we earned on these bonds before their
maturity or disposition. We currently expect that the average annual turnover
rate of fixed maturity assets will be less than 2% over the next five years and
will not have a material negative impact on net investment income. To help
mitigate the decline of the portfolio yield over the past few years, the Company
has increased its position in investment funds to fixed maturity assets by
investing in limited partnerships with debt like characteristics that diversify
risk and enhance risk adjusted capital adjusted returns on the portfolio. The
earned yield on the fund investments for the six months ended June 30, 2021 was
5.42%. See additional information in   Note 4-Investments  .

Should the current low interest rate environment continue, the growth of the
Company's net investment income will continue to be negatively impacted
primarily due to the investment of new money and proceeds from dispositions at
rates less than the average portfolio yield rate. While net investment income
would grow, it would continue to grow at rates less than the growth in mean
invested assets. For 2021, we currently anticipate the average new money yield
on our fixed maturity acquisitions to be approximately 30 basis points lower
than the rate applicable to our 2020 acquisitions.

Should interest rates, especially long-term rates, rise, Globe Life's net
investment income would benefit due to higher interest rates on new investments.
While such a rise in interest rates could adversely affect the fair value of the
fixed maturities portfolio, we could withstand an increase in interest rates of
approximately 150 to 155 basis points before the net unrealized gains on our
fixed maturity portfolio as of June 30, 2021 would be eliminated. Should
interest rates increase further, we would not be concerned with potential
interest rate driven unrealized losses in our fixed maturity portfolio because
we do not intend to sell, nor is it likely that management will be required to
sell, the fixed maturities prior to their anticipated recovery.

Required interest on net insurance policy liabilities reduces net investment
income, as it is the amount of net investment income considered by management
necessary to "fund" required interest on net insurance policy liabilities, which
is the net of the benefit reserve liability and the deferred acquisition cost
asset. As such, it is removed from the investment segment and applied to the
insurance segments to offset the effect of the required interest from the
insurance segments. As discussed in Note 10-Business Segments, management
regards this as a more meaningful analysis of the investment and insurance
segments. Required interest is based on the actuarial interest assumptions used
in discounting the benefit reserve liability and the amortization of deferred
acquisition costs for our insurance policies in force.

The great majority of our life and health insurance policies are fixed interest
rate protection policies, not investment products, and are accounted for under
current GAAP accounting guidance for long-duration insurance products which
mandate that interest rate assumptions for a particular block of business be
"locked in" for the life of that block of business. Each calendar year, we set
the discount rate to be used to calculate the benefit reserve liability and the
amortization of the deferred acquisition cost asset for all insurance policies
issued that year. That rate is based on the new money yields that we expect to
earn on cash flow received in the future from policies of that issue year, and
cannot be changed. The discount rate used for policies issued in the current
year has no impact on the in force policies issued in prior years as the rates
of all prior issue years are also locked in. As such, the overall discount rate
for the entire in force block of 5.7% is a weighted average of the discount
rates being used from all issue years. Changes in the overall weighted-average
discount rate over time are caused by changes in the mix of the reserves and the
deferred acquisition cost asset by issue year on the entire block of in force
business. Business issued in the current year has very little impact on the
overall weighted-average discount rate due to the size of our in force business.

Since actuarial discount rates are locked in for life on essentially all of our
business, benefit reserves and deferred acquisition costs are not affected by
interest rate fluctuations unless a loss recognition event occurs. Due to the
strength of our underwriting margins, we do not expect an extended low interest
rate environment will cause a loss recognition event.

In comparison to the year-ago period, required interest on net insurance policy
liabilities increased $18 million, or 6%, to $311 million, compared with the 5%
growth in average net interest-bearing insurance policy liabilities.


                                       49

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