Globe Life Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 28, 2024. This is an annual report, not a standalone fourth-quarter filing. Comparatives for 2021 and 2022 were retrospectively adjusted for adoption of long-duration insurance accounting standard ASU 2018-12 (LDTI).
Business context
Globe Life is an insurance holding company focused primarily on individual life and supplemental health insurance for lower- and middle-income U.S. households. It sells through direct-to-consumer, exclusive-agent, and independent-agent channels. Life is its largest business; its investment portfolio supports insurance liabilities.
Key financial results
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $5.45 billion | $5.23 billion | +4% |
| Total premiums | $4.46 billion | $4.31 billion | +3% |
| Net investment income | $1.06 billion | $991.8 million | +7% |
| GAAP net income | $970.8 million | $894.4 million | +9% |
| Diluted GAAP EPS | $10.07 | $9.04 | +11% |
| Net operating income (non-GAAP) | $1.03 billion | $961.0 million | +7% |
| Diluted net operating income per share (non-GAAP) | $10.65 | $9.71 | +10% |
| Cash from operations | $1.48 billion | $1.42 billion | +4% |
Life premium rose 4% to $3.14 billion; life underwriting margin was $1.19 billion, or 38% of premium, versus 37% in 2022. Health premium grew 3% to $1.32 billion; health underwriting margin was approximately $378 million, or 29% of premium, broadly unchanged. Excess investment income, a management measure, increased 25% to $130.4 million. Insurance administrative expenses were $301.2 million, 6.8% of premium versus 6.9%.
Reported net income included $65.7 million of pretax realized investment losses (about $51.9 million after tax), versus $76.5 million of pretax losses in 2022. Management’s non-GAAP net operating income excludes realized gains and losses and certain other items; it should not be treated as a GAAP measure.
Financial position, liquidity, and capital
- At year-end, total assets were $28.05 billion, total liabilities $23.56 billion, and shareholders’ equity $4.49 billion, up 14% from the LDTI-adjusted 2022 balance.
- Cash and short-term investments totaled approximately $185 million. The company reported $1.48 billion in operating cash flow and $17.87 billion fair value of available-for-sale fixed maturities. Management says it generally intends and expects to be able to hold these securities to recovery or maturity.
- Total debt carrying value was approximately $2.12 billion: $486 million short-term and $1.63 billion long-term. Financing costs rose 13% to $102.3 million, primarily from higher short-term rates. Commercial paper outstanding was $319 million at year-end; remaining credit-line capacity was $316 million, and the $750 million revolving facility matures in 2026. The company reported covenant compliance.
- The consolidated Company Action Level RBC ratio was 314%; the 2024 target range is 300%–320%. Insurance subsidiaries’ ratings included S&P AA- and A.M. Best A for four major subsidiaries.
- Book value per share was $47.10; excluding AOCI, a non-GAAP presentation, it was $76.21. AOCI was negative $2.77 billion, reflecting, among other factors, interest-rate effects on insurance liabilities and investments.
- The company repurchased 3.4 million shares for $380 million from parent-company excess cash flow and declared $85 million of common dividends. A further 1.08 million shares were repurchased for $127 million to offset option-related dilution.
Material changes and unusual items
- LDTI was adopted effective January 1, 2023 using modified retrospective application from January 1, 2021. It materially changed reported policy-benefit liabilities, AOCI, equity, and historical earnings presentation; prior-year figures in the filing are adjusted and should be compared on that basis.
- The filing describes an immaterial correction to accounting for certain group Medicare Supplement contracts and a reclassification of reinsurance recoverables from liabilities to assets. It reports reinsurance recoverable reclassifications of $59.7 million at year-end 2022 and $82.4 million at year-end 2021.
- Net income increased despite continued realized investment losses. The company recorded a $52 million after-tax loss associated with securities sold after Signature Bank and First Republic Bank entered receivership. It also recorded a $2.9 million after-tax realized loss following a commercial mortgage foreclosure.
- Fourth-quarter 2023 net income was $274.8 million and diluted EPS was $2.88, compared with $242.3 million and $2.46 in fourth-quarter 2022. Quarterly results included realized losses of $2.2 million in Q4 2023 versus $9.7 million in Q4 2022.
Outlook, management commentary, and risks
Management cites premium and sales growth, favorable persistency, strong underwriting margins, and higher producing-agent counts as positive operating trends. Total net sales rose 6% to $768 million; exclusive-agency producing-agent count increased 13%. Management expects total life net sales to increase in 2024 versus 2023, and projects higher subsidiary dividends and parent-company excess cash flow in 2024. It identifies repurchases as a likely primary use of excess cash if market conditions are favorable. The filing does not provide a specific earnings or revenue forecast.
Key risks include adverse mortality, morbidity, lapse, or persistency experience; investment credit losses and interest-rate movements; dependence on agent recruiting and distribution channels; regulatory limits on health premium increases and subsidiary dividends; reliance on Federal Home Loan Bank funding and capital-market access; cybersecurity and third-party service disruptions; and litigation, including independent-agent classification claims. Long-term rate changes can materially affect reported equity and fixed-maturity fair values.
Unclaimed-property audits involving 47 states remain ongoing; the company says no state assessment or liability indication had resulted and that it cannot estimate a loss range. Management does not believe the described litigation is reasonably likely to materially affect financial condition, results, or liquidity, but notes that outcomes are uncertain. The filing reports no cybersecurity incident that had materially adversely affected the business through year-end 2023. Deloitte issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Evaluate earnings using both GAAP net income and the company’s non-GAAP net operating income, and confirm the treatment of realized losses and other excluded items.
- Review the LDTI transition effects and the immaterial accounting corrections when comparing historical equity, reserves, and earnings.
- Assess investment-portfolio credit quality and interest-rate exposure, including unrealized losses, below-investment-grade holdings, and mortgage-loan performance.
- Monitor agent-force growth, direct-to-consumer sales trends, health premium-rate approvals, and the assumptions underlying policy reserves.
- Track parent-company liquidity, debt refinancing and commercial-paper access, subsidiary dividend capacity, RBC levels, and the outcome of unclaimed-property audits and agent-classification litigation.