GLOBE LIFE INC. Q4 FY2024 earnings call

• Frank Svoboda noted net income was $255 million ($3.01 per share) in Q4 2024 vs $275 million ($2.88 per share) in Q4 2023. Net operating income $266 million ($3.14 per share), up 12% y-o-y. GAAP return on equity 21.7%, book value per share $62.50. Excluding AOCI, return on equity 15.1%, book value per share $86.40, up 13% y-o-y.
• Matt Darden discussed segment performances: American Income Life had life premiums up 7% ($433 million), life underwriting margin up 9% ($199 million); Liberty National life premiums up 5% ($94 million), life underwriting margin up 8% ($34 million); Family Heritage health premiums up 8% ($111 million), health underwriting margin up 12% ($40 million); Direct-to-Consumer life premiums down 1% ($245 million), life underwriting margin up 20% ($71 million); United American General Agency health premiums up 9% ($151 million), health underwriting margin $5 million (down ~$9 million y-o-y).
• Tom Kalmbach discussed share repurchase program: Repurchased ~338,000 shares in Q4 2024. Anticipated excess cash flows for 2025 ~$785 million - $835 million, to be used for dividends, share repurchases, and reducing commercial paper.

Life Insurance Operations

• Fourth quarter premium revenue: $823 million, up 4% from year-ago quarter. Life underwriting margin: $336 million, up 10%. For 2025, life premium revenue expected to grow at midpoint of 4.5% - 5% (vs 4% in 2024), life underwriting margin anticipated 40% - 42% of premium.

Health Insurance Operations

• Fourth quarter premium revenue: $358 million, up 7%. Health underwriting margin: $91 million, down 6% due to higher claim costs. For 2025, health premium revenue expected 7.5% - 8.5% growth (vs 6.5% in 2024), health underwriting margin 25% - 27% of premium.

• Life premium revenue for 2025 expected midpoint of 4.5% - 5% growth (vs 4% in 2024), life underwriting margin 40% - 42% of premium.
• Health premium revenue for 2025 expected 7.5% - 8.5% growth (vs 6.5% in 2024), health underwriting margin 25% - 27% of premium.
• Administrative expenses expected ~7.4% of premium in 2025.
• Average producing agent count trends for 2025: American Income mid-single-digit growth, Liberty National low double-digit growth, Family Heritage low double-digit growth.
• Net life sales guidance 2025: American Income high single-digit growth, Liberty National low double-digit growth, Direct-to-Consumer low to mid-single-digit growth. Net health sales guidance 2025: Liberty National, Family Heritage, and United American General Agency all low double-digit growth.
• Full year 2025 net operating earnings per diluted share estimated $13.45 - $14.05, midpoint $13.75 (11% growth y-o-y).

• Inquiries from SEC, DOJ, and EEOC are open with no material developments; no claims/allegations asserted. Legal expenses include estimate for settlements of certain litigation claims not related to these agencies. - Mortality trends in life segment could impact remeasurement gains/losses; if mortality higher than assumptions, life remeasurement losses could occur. - Health obligations for Medicare supplements and group retiree health products could remain elevated if claim trends outpace premium rate increases.

Q: Jimmy Bhullar asked about first-year lapses in direct channel and Liberty.

A: Matt Darden said lapse experience stabilized, AIL lapse rates down, Liberty’s down from sequential quarters; DTC had higher lapse rates due to mix of business from digital channels.

Q: Jimmy Bhullar asked about regulatory investigations.

A: Matt Darden said intent is to communicate when inquiries conclude, working through processes.

Q: Jake Matthan asked about excess cash flow guidance.

A: Tom Kalmbach said reinsurance transactions and statutory earnings contributed, reinsurance worth ~$100 million, statutory earnings higher due to valuation manual changes.

Q: Elyse Greenspan asked about buybacks and M&A.

A: Tom Kalmbach said share repurchases planned ratably; Frank Svoboda said open to M&A opportunities to expand offerings for middle-income policyholders.

Q: Wilma Burdis asked about organic expected cash flow.

A: Tom Kalmbach said base is good, but investment income expected flat, valuation manual changes impact will subside over time.

Q: John Barnidge asked about agent trends and Bermuda platform.

A: Matt Darden said agent count growth guides reflect full year, seasonality normal; Tom Kalmbach said on track with Bermuda analysis, midyear update planned.

Q: Wesley Carmichael asked about stock and capital management.

A: Frank Svoboda said continuing to look at opportunities to manage capital and take advantage of share price; Tom Kalmbach discussed legal accrual and commercial paper management.

Q: Andrew Kligerman asked about virtual approach at American Income and life underwriting margin.

A: Matt Darden said virtual approach beneficial for recruiting and sales, long-term growth sustainable; Frank Svoboda said life underwriting margin 41% in 2024, guided 40% - 42% in 2025, benefit from direct-to-consumer and favorable mortality experience.

Q: Suneet Kamath asked about reinsurance transaction and underwriting/remeasurement.

A: Tom Kalmbach said focus on Bermuda, open to other reinsurance opportunities; Tom Kalmbach said range intended to encompass mortality trends, wait and see on assumption update in Q3 2025.

Q: Thomas Gallagher asked about Bermuda and health business repricing.

A: Tom Kalmbach said Bermuda expected to be long-term benefit starting 2027; Tom Kalmbach discussed health business repricing timing, annual rate filings, and expectation of catching up by 2026 if utilization normalizes.