GLOBE LIFE INC. REPORTS FOURTH QUARTER 2022 RESULTS
Globe Life Inc. (NYSE: GL) reported increased earnings for Q4 2022, with net income of $2.14 per diluted share, up from $1.76 in Q4 2021. Net operating income improved to $2.24 from $1.70 per share. For the full year, net income rose to $7.47 per share, while net operating income increased to $8.15. Notably, net sales of life and health insurance saw growth, with life premiums climbing 5% and health premiums up 7%. The company repurchased 489,708 shares during Q4 2022. COVID-19 related claims decreased significantly, totaling $5 million for Q4 2022 compared to $58 million the previous year. For 2023, net operating income guidance ranges between $10.20 to $10.50 per diluted share.
- Net income increased to $2.14 per diluted share, up 21% YoY.
- Net operating income rose to $2.24 per diluted share, a 32% increase YoY.
- Life premiums grew by 5% and health premiums by 7% compared to Q4 2021.
- Life net sales increased by 24%, while health net sales rose by 14% at Liberty National.
- COVID-19 claims significantly decreased from $58 million to $5 million in Q4 2022.
- Net sales of life insurance decreased by 2% and net health sales decreased by 3% in Q4 2022.
- Shareholders' equity declined from $8.64 billion in 2021 to $4.90 billion in 2022.
Net income for the year ended
HIGHLIGHTS:
- Net income as an ROE was
12.3% for the twelve months endedDecember 31, 2022 . Net operating income as an ROE excluding net unrealized gains or losses on fixed maturities was13.4% for the same period. - Life premiums increased
5% at the American Income Life Division and4% at the Liberty National Division over the year-ago quarter. - Health premiums increased
7% and average producing agent count increased12% at the Family Heritage Division over the year-ago quarter. - Life net sales and health net sales increased over the year-ago quarter by
24% and14% , respectively, at the Liberty National Division. - 489,708 shares of
Globe Life Inc. common stock were repurchased during the quarter.
COVID-19 Update: In the fourth quarter of 2022, the Company incurred approximately
Note: As used in the earnings release, "
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
RESULTS OF OPERATIONS
Net operating income, a non-GAAP(1) financial measure, has been used consistently by
The following table represents
Operating Summary | |||||||||||
Per Share | |||||||||||
Three Months Ended | Three Months Ended | ||||||||||
2022 | 2021 | % Chg. | 2022 | 2021 | % Chg. | ||||||
Insurance underwriting income(2) | $ 2.21 | $ 1.57 | 41 | $ 218,370 | $ 159,422 | 37 | |||||
Excess investment income(2) | 0.64 | 0.58 | 10 | 62,826 | 58,791 | 7 | |||||
Parent company expense | (0.03) | (0.02) | (3,067) | (2,302) | |||||||
Income tax expense | (0.54) | (0.40) | 35 | (53,534) | (40,283) | 33 | |||||
Stock compensation benefit (expense), net of tax | (0.04) | (0.04) | (4,057) | (3,695) | |||||||
Net operating income | 2.24 | 1.70 | 32 | 220,538 | 171,933 | 28 | |||||
Reconciling items, net of tax: | |||||||||||
Realized gain (loss)—investments | (0.08) | 0.09 | (7,665) | 9,506 | |||||||
Administrative settlements | — | (0.01) | — | (1,047) | |||||||
Non-operating expenses | — | — | (460) | (29) | |||||||
Legal proceedings | (0.01) | (0.02) | (853) | (2,410) | |||||||
Net income(3) | $ 2.14 | $ 1.76 | $ 211,560 | $ 177,953 | |||||||
Weighted average diluted shares outstanding | 98,640 | 101,343 |
(1) | GAAP is defined as accounting principles generally accepted in |
(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 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
The following table represents
Operating Summary | |||||||||||
Per Share | |||||||||||
Year Ended | Year Ended | ||||||||||
2022 | 2021 | % Chg. | 2022 | 2021 | % Chg. | ||||||
Insurance underwriting income | $ 8.08 | $ 6.46 | 25 | $ 799,389 | $ 666,266 | 20 | |||||
Excess investment income | 2.41 | 2.31 | 4 | 238,083 | 238,528 | — | |||||
Parent company expense | (0.11) | (0.09) | (11,156) | (9,553) | |||||||
Income tax expense | (1.99) | (1.64) | 21 | (197,059) | (169,426) | 16 | |||||
Stock compensation benefit (expense), net of tax | (0.23) | (0.18) | (22,912) | (18,318) | |||||||
Net operating income | 8.15 | 6.86 | 19 | 806,345 | 707,497 | 14 | |||||
Reconciling items, net of tax: | |||||||||||
Realized gain (loss)—investments | (0.61) | 0.53 | (60,473) | 54,220 | |||||||
Realized gain (loss)—redemption of debt | — | (0.07) | — | (7,358) | |||||||
Administrative settlements | — | (0.01) | — | (1,047) | |||||||
Non-operating expenses | (0.04) | (0.02) | (4,196) | (1,923) | |||||||
Legal proceedings | (0.02) | (0.06) | (1,972) | (6,430) | |||||||
Net income | $ 7.47 | $ 7.22 | $ 739,704 | $ 744,959 | |||||||
Weighted average diluted shares outstanding | 98,985 | 103,170 |
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
MANAGEMENT VS. GAAP MEASURES
Shareholders' equity, excluding net unrealized gains or losses on fixed maturities, and book value per share, excluding net unrealized gains or losses 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 also 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 | |||
2022 | 2021 | ||
Net income as an ROE(1) | 12.3 % | 8.8 % | |
Net operating income as an ROE (excluding net unrealized gains or losses on fixed maturities) | 13.4 % | 12.3 % | |
2022 | 2021 | ||
Shareholders' equity | $ 4,895,861 | $ 8,642,806 | |
Impact of adjustment to exclude net unrealized gains or losses on fixed maturities | 1,416,428 | (2,761,870) | |
Shareholders' equity, excluding net unrealized gains or losses on fixed maturities | $ 6,312,289 | $ 5,880,936 | |
Book value per share | $ 49.65 | $ 85.97 | |
Impact of adjustment to exclude net unrealized gains or losses on fixed maturities | 14.36 | (27.47) | |
Book value per share, excluding net unrealized gains or losses on fixed maturities | $ 64.01 | $ 58.50 |
(1) | Calculated using average shareholders' equity for the measurement period. |
INSURANCE OPERATIONS:
Life insurance accounted for
Health insurance accounted for
Net sales of life insurance decreased
The following table summarizes
Insurance Premium Revenue | ||||||
Quarter Ended | ||||||
|
| % Chg. | ||||
Life insurance | $ 753,655 | $ 732,997 | 3 | |||
Health insurance | 323,934 | 312,774 | 4 | |||
Annuity | — | — | ||||
Total | $ 1,077,589 | $ 1,045,771 | 3 |
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
INSURANCE UNDERWRITING INCOME
Insurance underwriting margin is management's measure of profitability of the Company's life, health, and annuity segments' underwriting performance, and consists of premiums less policy obligations, commissions and other acquisition expenses. Insurance underwriting income is the sum of the insurance underwriting margins of the life, health, and annuity segments, plus other income, less 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
Insurance Underwriting Income | |||||||||
Quarter Ended | |||||||||
| % of Premium |
| % of Premium | % Chg. | |||||
Insurance underwriting margins: | |||||||||
Life | $ 212,387 | 28 | $ 146,280 | 20 | 45 | ||||
Health | 81,668 | 25 | 80,683 | 26 | 1 | ||||
Annuity | 1,958 | 2,163 | |||||||
296,013 | 229,126 | 29 | |||||||
Other income | 385 | 212 | |||||||
Administrative expenses | (78,028) | (69,916) | 12 | ||||||
Insurance underwriting income | $ 218,370 | $ 159,422 | 37 | ||||||
Per share | $ 2.21 | $ 1.57 | 41 |
The ratio of administrative expenses to premium was
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
LIFE INSURANCE RESULTS BY DISTRIBUTION CHANNEL
Our distribution channels consist of the following exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National) and Family Heritage Division (Family Heritage); an independent agency, United American Division (United American); and our Direct to Consumer Division (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 | |||||||||
2022 | 2021 | ||||||||
Amount | % of | Amount | % of | % Chg. | |||||
American Income | $ 129,563 | 34 | $ 101,945 | 28 | 27 | ||||
Direct to Consumer | 38,575 | 16 | 12,000 | 5 | 221 | ||||
Liberty National | 20,853 | 25 | 11,997 | 15 | 74 | ||||
Other | 23,396 | 45 | 20,338 | 39 | 15 | ||||
Total | $ 212,387 | 28 | $ 146,280 | 20 | 45 |
Life Premium | |||||
Quarter Ended | |||||
2022 | 2021 | % Chg. | |||
American Income | $ 380,713 | $ 363,831 | 5 | ||
Direct to Consumer | 238,476 | 237,415 | — | ||
Liberty National | 82,400 | 78,963 | 4 | ||
Other | 52,066 | 52,788 | (1) | ||
Total | $ 753,655 | $ 732,997 | 3 |
Life | |||||
Quarter Ended | |||||
2022 | 2021 | % Chg. | |||
American Income | $ 69,796 | $ 74,007 | (6) | ||
Direct to Consumer | 30,676 | 33,805 | (9) | ||
Liberty National | 23,252 | 18,827 | 24 | ||
Other | 2,568 | 2,694 | (5) | ||
Total | $ 126,292 | $ 129,333 | (2) |
(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—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
HEALTH INSURANCE RESULTS BY DISTRIBUTION CHANNEL
Health Underwriting Margin | |||||||||
Quarter Ended | |||||||||
2022 | 2021 | ||||||||
Amount | % of | Amount | % of | % | |||||
United American | $ 20,154 | 15 | $ 19,870 | 15 | 1 | ||||
Family Heritage | 25,834 | 27 | 25,442 | 29 | 2 | ||||
Liberty National | 15,869 | 34 | 15,041 | 32 | 6 | ||||
American Income | 17,244 | 59 | 17,618 | 59 | (2) | ||||
Direct to Consumer | 2,567 | 15 | 2,712 | 15 | (5) | ||||
Total | $ 81,668 | 25 | $ 80,683 | 26 | 1 |
Health Premium | |||||
Quarter Ended | |||||
2022 | 2021 | % Chg. | |||
United American | $ 136,771 | $ 130,070 | 5 | ||
Family Heritage | 94,391 | 88,567 | 7 | ||
Liberty National | 46,111 | 46,453 | (1) | ||
American Income | 29,368 | 29,740 | (1) | ||
Direct to Consumer | 17,293 | 17,944 | (4) | ||
Total | $ 323,934 | $ 312,774 | 4 |
Health | |||||
Quarter Ended | |||||
2022 | 2021 | % Chg. | |||
United American | $ 20,110 | $ 26,675 | (25) | ||
Family Heritage | 22,432 | 18,489 | 21 | ||
Liberty National | 8,612 | 7,569 | 14 | ||
American Income | 3,921 | 4,453 | (12) | ||
Direct to Consumer | 2,188 | 1,758 | 24 | ||
Total | $ 57,263 | $ 58,944 | (3) |
(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—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
PRODUCING EXCLUSIVE AGENT COUNT RESULTS BY DISTRIBUTION CHANNEL
Quarterly Average Producing Agent Count(1) | |||||||
Quarter Ended | Quarter Ended | ||||||
2022 | 2021 | % | 2022 | ||||
American Income | 9,243 | 9,530 | (3) | 9,477 | |||
Liberty National | 2,946 | 2,724 | 8 | 2,784 | |||
Family Heritage | 1,334 | 1,194 | 12 | 1,233 |
(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
Excess Investment Income | |||||
Quarter Ended | |||||
2022 | 2021 | % Chg. | |||
Net investment income | $ 254,398 | $ 239,344 | 6 | ||
Required interest: | |||||
Interest on net policy liabilities(1) | (166,914) | (160,900) | 4 | ||
Interest on debt | (24,658) | (19,653) | 25 | ||
Total required interest | (191,572) | (180,553) | 6 | ||
Excess investment income | $ 62,826 | $ 58,791 | 7 | ||
Per share | $ 0.64 | $ 0.58 | 10 |
(1) | Interest on net policy liabilities is a component of total policyholder benefits, a GAAP measure. |
Net investment income increased
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
The composition of the investment portfolio at book value at
Investment Portfolio | |||
As of | |||
Amount | % of Total | ||
Fixed maturities at fair value(1) | $ 16,503,365 | 91 | |
Policy loans | 614,866 | 3 | |
Other long-term investments(2) | 976,016 | 5 | |
Short-term investments | 114,121 | 1 | |
Total | $ 18,208,368 |
(1) | As of |
(2) | Includes |
Fixed maturities at amortized cost, net of allowance for credit losses, by asset class as of
Fixed Maturity Portfolio by Sector | |||||
As of | |||||
Investment | Below | Total | |||
Corporate bonds | $ 14,442,719 | $ 492,906 | $ 14,935,625 | ||
Municipals | 2,791,030 | — | 2,791,030 | ||
Government, agencies and GSEs | 449,603 | — | 449,603 | ||
Collateralized debt obligations | — | 37,098 | 37,098 | ||
Other asset-backed securities | 75,843 | 12,493 | 88,336 | ||
Total | $ 17,759,195 | $ 542,497 | $ 18,301,692 |
Below are fixed maturities available for sale by amortized cost, allowance for credit losses, and fair value at
As of |
Amortized Cost | Allowance for | Net Unrealized | Fair Value | |||
$ 18,301,692 | $ — | $ (1,798,327) | $ 16,503,365 |
At amortized cost, net of allowance for credit losses,
GLOBE LIFE INC.
Earnings Release—Q4 2022
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
Comparable information for acquisitions of fixed maturity investments is as follows:
Fixed Maturity Acquisitions | |||
Quarter Ended | |||
2022 | 2021 | ||
Amount | $ 238,845 | $ 270,959 | |
Average annual effective yield | 6.1 % | 3.5 % | |
Average rating | A | A+ | |
Average life (in years) to: | |||
Next call | 16.5 | 12.8 | |
Maturity | 20.9 | 31.1 |
SHARE REPURCHASE:
During the quarter, the Company repurchased 489,708 shares of
For the year ended
LIQUIDITY/CAPITAL:
EARNINGS GUIDANCE FOR THE YEAR ENDING
New accounting guidance related to long-duration insurance contracts is effective
NON-GAAP MEASURES:
In this news release,
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
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
14)
Readers are also directed to consider other risks and uncertainties described in other documents on file with the
EARNINGS RELEASE CONFERENCE CALL WEBCAST:
APPENDIX | |||||||
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue: | |||||||
Life premium | $ 753,655 | $ 732,997 | $ 3,023,296 | $ 2,898,210 | |||
Health premium | 323,934 | 312,774 | 1,279,412 | 1,201,676 | |||
Other premium | — | — | 1 | 1 | |||
Total premium | 1,077,589 | 1,045,771 | 4,302,709 | 4,099,887 | |||
Net investment income | 254,398 | 239,344 | 987,499 | 952,447 | |||
Realized gains (losses) | (9,703) | 12,033 | (76,548) | 59,319 | |||
Other income | 385 | 212 | 1,246 | 1,216 | |||
Total revenue | 1,322,669 | 1,297,360 | 5,214,906 | 5,112,869 | |||
Benefits and expenses: | |||||||
Life policyholder benefits | 490,726 | 539,512 | 2,045,730 | 2,071,810 | |||
Health policyholder benefits | 199,321 | 194,156 | 791,809 | 758,745 | |||
Other policyholder benefits | 6,807 | 7,213 | 27,917 | 29,061 | |||
Total policyholder benefits | 696,854 | 740,881 | 2,865,456 | 2,859,616 | |||
Amortization of deferred acquisition costs | 154,689 | 151,231 | 624,407 | 603,838 | |||
Commissions, premium taxes, and non-deferred acquisition costs | 96,947 | 86,758 | 374,383 | 331,510 | |||
Other operating expense | 91,804 | 81,279 | 353,954 | 322,029 | |||
Interest expense | 24,658 | 19,653 | 90,395 | 83,486 | |||
Total benefits and expenses | 1,064,952 | 1,079,802 | 4,308,595 | 4,200,479 | |||
Income before income taxes | 257,717 | 217,558 | 906,311 | 912,390 | |||
Income tax benefit (expense) | (46,157) | (39,605) | (166,607) | (167,431) | |||
Net income | $ 211,560 | $ 177,953 | $ 739,704 | $ 744,959 | |||
Total basic net income per common share | $ 2.18 | $ 1.77 | $ 7.55 | $ 7.30 | |||
Total diluted net income per common share | $ 2.14 | $ 1.76 | $ 7.47 | $ 7.22 |
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