Globe Life(GL) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Performance Overview Results of Operations In the first quarter of 2025, Globe Life reported a net income of $3.01 per diluted common share, a 13% increase year-over-year. Net operating income, a key management metric, rose by 10% to $3.07 per diluted common share, exceeding management's expectations. This growth was primarily driven by a 17% increase in insurance underwriting income per share, although partially offset by lower excess investment income and higher interest on debt Q1 2025 Key Per Share Financial Metrics | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income per Diluted Share | $3.01 | $2.67 | 13% | | Net Operating Income per Diluted Share | $3.07 | $2.78 | 10% | | Insurance Underwriting Income per Share | $3.98 | $3.41 | 17% | | Excess Investment Income per Share | $0.42 | $0.46 | (9)% | Q1 2025 Operating Summary (in thousands) | Operating Summary | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Insurance underwriting income | $336,315 | $324,361 | 4% | | Excess investment income | $35,870 | $43,785 | (18)% | | Net operating income | $259,337 | $264,099 | (2)% | | Net income | $254,563 | $254,217 | 0% | - The company incurred costs of $4.8 million related to the settlement of certain litigation claims, which impacted net income[7][8] Reconciliation of GAAP and Non-GAAP Measures The company's net income as a return on equity (ROE) was 19.0% for Q1 2025, compared to 21.3% in the prior year. The non-GAAP measure of net operating income as an ROE (excluding AOCI) was 14.1%, slightly down from 14.3%. Book value per share increased significantly to $64.50 from $53.03 year-over-year, while book value per share excluding AOCI, a key management metric, grew to $87.92 from $79.00 Return on Equity (ROE) Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income as an ROE | 19.0% | 21.3% | | Net operating income as an ROE (excluding AOCI) | 14.1% | 14.3% | Book Value Per Share Comparison | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Book value per share | $64.50 | $53.03 | | Book value per share, excluding AOCI | $87.92 | $79.00 | - Management utilizes non-GAAP measures like shareholders' equity excluding AOCI to better identify trends by removing fluctuations from interest rate changes[12] Insurance Operations Analysis Overall Insurance Performance Total insurance premium revenue grew 5% year-over-year to $1.2 billion, with life insurance premiums up 3% and health insurance premiums up 8%. Life insurance constitutes 69% of total premium revenue and 80% of the underwriting margin. Overall insurance underwriting income increased by 4% to $336.3 million, while net health sales saw a strong 24% increase, contrasting with a 1% decline in net life sales Q1 Insurance Premium Revenue (in thousands) | Product Type | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Life insurance | $829,863 | $804,265 | 3% | | Health insurance | $369,791 | $341,019 | 8% | | Total | $1,199,654 | $1,145,284 | 5% | Q1 Insurance Underwriting Income (in thousands) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Life Underwriting Margin | $337,264 | $309,011 | 9% | | Health Underwriting Margin | $84,721 | $93,770 | (10)% | | Insurance Underwriting Income | $336,315 | $324,361 | 4% | - The ratio of administrative expenses to premium increased to 7.3% in Q1 2025 from 7.0% in Q1 2024[20] Life Insurance Segment Life insurance premiums increased by 3% to $830 million, driven by 6% growth in both the American Income and Liberty National divisions. However, total net life sales declined by 1%, with a notable 12% drop in the Direct to Consumer channel. Despite the mixed sales results, the total life underwriting margin improved by 9% to $337 million, with the margin percentage rising to 41% from 38% Q1 Life Premium by Distribution Channel (in thousands) | Channel | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | American Income | $437,866 | $414,044 | 6% | | Direct to Consumer | $245,600 | $248,040 | (1)% | | Liberty National | $96,182 | $90,777 | 6% | | Total | $829,863 | $804,265 | 3% | Q1 Life Net Sales by Distribution Channel (in thousands) | Channel | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | American Income | $98,555 | $97,195 | 1% | | Direct to Consumer | $25,175 | $28,563 | (12)% | | Liberty National | $22,469 | $21,605 | 4% | | Total | $148,351 | $149,497 | (1)% | Q1 Life Underwriting Margin by Distribution Channel (in thousands) | Channel | Q1 2025 | % of Premium | Q1 2024 | % of Premium | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | American Income | $196,169 | 45% | $187,068 | 45% | 5% | | Direct to Consumer | $64,200 | 26% | $58,585 | 24% | 10% | | Total | $337,264 | 41% | $309,011 | 38% | 9% | Health Insurance Segment Health insurance operations showed strong top-line growth, with premiums up 8% to $370 million and net sales surging 24% to $67 million. The growth was led by the United American division, which saw a 13% increase in premiums and a 69% jump in net sales. Despite this sales momentum, the total health underwriting margin declined by 10% to $84.7 million, with the margin percentage falling to 23% from 27%, primarily due to a significant drop in United American's margin Q1 Health Premium by Distribution Channel (in thousands) | Channel | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | United American | $159,848 | $141,635 | 13% | | Family Heritage | $112,354 | $103,391 | 9% | | Total | $369,791 | $341,019 | 8% | Q1 Health Net Sales by Distribution Channel (in thousands) | Channel | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | United American | $27,708 | $16,423 | 69% | | Family Heritage | $26,816 | $24,966 | 7% | | Total | $67,237 | $54,400 | 24% | Q1 Health Underwriting Margin by Distribution Channel (in thousands) | Channel | Q1 2025 | % of Premium | Q1 2024 | % of Premium | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | United American | $1,617 | 1% | $11,906 | 8% | (86)% | | Family Heritage | $39,249 | 35% | $35,838 | 35% | 10% | | Total | $84,721 | 23% | $93,770 | 27% | (10)% | Agent Productivity The company saw growth in its exclusive producing agent force compared to the prior year. The average producing agent count at American Income grew by 3% to 11,510. Liberty National and Family Heritage divisions experienced stronger growth, with agent counts increasing by 8% and 9% respectively Quarterly Average Producing Agent Count | Division | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | American Income | 11,510 | 11,139 | 3% | | Liberty National | 3,688 | 3,419 | 8% | | Family Heritage | 1,417 | 1,295 | 9% | Investment Portfolio and Strategy Investment Performance Excess investment income, a key measure of the investment segment's performance, decreased by 18% to $35.9 million in Q1 2025. On a per-share basis, it fell 9% to $0.42. This decline was driven by a 1% drop in net investment income coupled with a 2% increase in required interest on policy liabilities Q1 Excess Investment Income (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net investment income | $280,614 | $282,578 | (1)% | | Interest on policy liabilities | ($244,744) | ($238,793) | 2% | | Excess investment income | $35,870 | $43,785 | (18)% | | Per share | $0.42 | $0.46 | (9)% | - The fixed maturity portfolio earned an annual taxable equivalent effective yield of 5.25% during Q1 2025, stable compared to 5.24% in the year-ago quarter[43] Investment Portfolio Composition As of March 31, 2025, Globe Life's total investment portfolio stood at $20.0 billion. The portfolio is heavily weighted towards fixed maturities, which comprise 87% of the total at fair value. The quality of the fixed maturity portfolio remains high, with 97% of assets rated as 'investment grade' at both amortized cost and fair value Investment Portfolio Composition as of March 31, 2025 (in thousands) | Asset Class | Amount | % of Total | | :--- | :--- | :--- | | Fixed maturities at fair value | $17,504,967 | 87% | | Other long-term investments | $1,236,624 | 6% | | Policy loans | $708,175 | 4% | | Mortgage loans | $426,174 | 2% | | Short-term investments | $134,066 | 1% | | Total | $20,010,006 | | - At amortized cost, 97% of the $19.0 billion fixed maturity portfolio was rated investment grade. Corporate bonds make up the largest portion at $15.1 billion[42][43] - The company is not a party to any credit default swaps and does not participate in securities lending[44] Investment Acquisitions During the first quarter, the company acquired $244.8 million in fixed maturities, a decrease from $682.4 million in the prior-year quarter. These new investments have an average annual effective yield of 6.4% and an average rating of A-. The company also invested $52.0 million in other assets, primarily mortgage loans and limited partnerships Q1 Fixed Maturity Acquisitions | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Amount (in thousands) | $244,845 | $682,427 | | Average annual effective yield | 6.4% | 5.9% | | Average rating | A- | A | Q1 Other Investment Acquisitions (in thousands) | Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Limited partnerships | $15,831 | $67,498 | | Mortgage loans | $35,621 | $58,406 | | Total | $51,954 | $139,222 | Capital Management and Outlook Share Repurchase and Liquidity Globe Life continued its capital return program by repurchasing 1.5 million shares of its common stock for a total of $177 million during the quarter, at an average price of $121.70 per share. The company reports that its operations generate strong, stable cash flows, ensuring sufficient liquidity at the Parent Company level to meet the capital needs of its insurance subsidiaries - In Q1 2025, the company repurchased 1.5 million common shares[50] - The total cost of the share repurchase was $177 million, at an average price of $121.70 per share[50] - The company's primary business of writing basic protection life and supplemental health insurance generates strong and stable cash flows, which are not impacted by volatile equity markets[51] 2025 Earnings Guidance Globe Life has reaffirmed its full-year 2025 earnings guidance. The company continues to project net operating income to be in the range of $13.45 to $14.05 per diluted common share - The company reaffirmed its previous guidance for the full year ending December 31, 2025[52] - Projected net operating income per diluted common share for 2025 is between $13.45 and $14.05[52] Appendix GAAP Condensed Consolidated Statements of Operations The GAAP condensed consolidated statement of operations shows total revenues of $1.48 billion for Q1 2025, an increase from $1.42 billion in Q1 2024. Net income remained flat at approximately $254 million for both periods. On a per-share basis, diluted net income was $3.01, up from $2.67 in the prior-year quarter Q1 GAAP Condensed Consolidated Statements of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total premium | $1,199,654 | $1,145,284 | | Total revenue | $1,480,422 | $1,416,139 | | Total benefits and expenses | $1,164,341 | $1,101,216 | | Income before income taxes | $316,081 | $314,923 | | Net income | $254,563 | $254,217 | | Diluted net income per common share | $3.01 | $2.67 |