Globe Life Inc. Q4 FY2025 earnings call

• Frank Svoboda noted net income and net operating income growth in the fourth quarter, and confidence in the business model serving the underserved lower middle to middle-income market. - Matt Darden discussed agent count growth trends, with long-term growth expected, and results of each distribution, including agent count changes and sales growth. - Tom Kalmbach talked about investment operations, excess investment income, investment yield, capital and liquidity, and guidance for net operating earnings per diluted share, premium revenue growth, and underwriting margins.

In the fourth quarter, total premium revenue grew 5% over the prior year. Life premium revenue increased 3% to $850 million, with life underwriting margin at $350 million, up 4% year-over-year. Health premium revenue grew 9% to $392 million, and health underwriting margin was up 9% to $99 million. For 2026, total premium revenue is expected to grow 7%-8%, life premium revenue to grow 4%-4.5% with life underwriting margin anticipated to be 41.5%-44.5% of premium, and health premium revenue to grow 14%-16% with health underwriting margin anticipated to be 23%-27% of premium. Administrative expenses were $92 million for the quarter, 7.4% of premium, and expected to be 7.3% of premium in 2026. By distribution: American Income Life life premiums up 6% to $457 million, life underwriting margin up 5% to $208 million; Liberty National life premiums up 4% to $98 million, life underwriting margin up 6% to $36 million; Family Heritage health premiums up 10% to $121 million, health underwriting margin up 10% to $44 million; Globe Life direct-to-consumer life premiums flat at $244 million, life underwriting margin up 3% to $74 million; United American health premiums up 14% to $173 million, health underwriting margin up $2 million to $8 million.

• For full year 2026, net operating earnings per diluted share estimated in range of $14.95 - $15.65, 5% growth at midpoint, normalized earnings per share growth ~10%. - Total premium revenue expected to grow 7%-8%, life premium revenue 4%-4.5%, health premium revenue 14%-16%. - Life underwriting margin anticipated 41.5%-44.5% of premium, health underwriting margin 23%-27% of premium. - Anticipate parent excess cash flow $625 million - $675 million, dividends $85 million - $90 million, share repurchases $535 million - $585 million. - Third quarter 2026 expected assumption remeasurement gain $50 million - $100 million, increasing life margin to 48%-52% in third quarter.

• First year lapses in direct response and Liberty National higher than expected, monitored as fluctuations. - CMS prior authorization requirements for traditional Medicare Supplement in 6 states in 2026, impact on claim trends to be monitored. - Health remeasurement gains more volatile due to unique reserve practices in Medicare Supplement. - Exposure to software and alternative portfolio limited, but monitored for potential disruption. - Dynamics in Medicare Advantage market could impact MedSup sales and margins.

Q: On first year lapses, especially in direct response.

A: Lapses higher than expected seen as fluctuations, sales growth with higher lapses positive but monitored.

Q: On MedSup dynamics between MedSup and med advantage.

A: Claims trends stabilized, rate increases adequate to return to normal margins, sales growth in MedSup beneficial, CMS prior authorization requirements monitored.

Q: On sales and technology tailwinds.

A: Continued technology investments expected to unlock tailwinds, agent productivity and DTC technology focus for growth.

Q: On remeasurement gains.

A: Life mortality and lapse experience favorable, expected continued gains, health remeasurement gains volatile due to unique reserve practices.

Q: On excess cash flow and GAAP vs statutory.

A: Excess cash flow driven by statutory earnings, no significant changes in GAAP/statutory models.

Q: On American Income agent count and retention.

A: Agent count drop in fourth quarter not unexpected, retention initiatives with incentive changes to focus on retention.

Q: On sales productivity and American Income.

A: Sales growth despite agent count drop due to productivity gains, lead generation from DTC and premium per sale increase.

Q: On MedSup sales and future dynamics.

A: MedSup sales growth expected, market dynamics could shift, focused on maintaining margins.

Q: On investment portfolio exposure to software.

A: Limited exposure to software in alternative portfolio, private credit low allocation, fixed maturity portfolio underweight tech.

Q: On Bermuda reinsurance.

A: Initial transaction transferred $1.2 billion in statutory reserves, reciprocal jurisdiction possible but subject to approval, potential excess cash flow increase over time.

Q: On health claims seasonality and profitability.

A: Seasonally higher claims in health, Medicare Supplement margin impact due to business mix, diversification beneficial.