Item 1. Condensed Consolidated Financial Statements

326K characters. Original on sec.gov · Markdown

Item 1. Condensed Consolidated Financial Statements

Globe Life Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollar amounts in thousands, except per share data)



	June 30, 2023		December 31, 2022
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2023—$18,687,479; 2022—$18,301,692, allowance for credit losses: 2023— $72,508; 2022— $0)	$	17,033,450	$	16,503,365
Policy loans	633,558		614,866
Other long-term investments (includes: 2023—$759,157; 2022—$768,689 under the fair value option)	1,010,136		976,016
Short-term investments	71,128		114,121
Total investments	18,748,272		18,208,368
Cash	75,011		92,559
Accrued investment income	267,776		259,581
Other receivables	601,787		589,079
Deferred acquisition costs	5,778,732		5,535,697
Goodwill	481,791		481,791
Other assets	754,589		760,066
Total assets	$	26,707,958	$	25,927,141
Liabilities:
Future policy benefits at current discount rates: (at original rates: 2023—$16,598,663; 2022—$16,306,870)	$	18,746,514	$	18,040,042
Unearned and advance premium	266,710		253,140
Policy claims and other benefits payable	510,929		507,219
Other policyholders' funds	187,873		123,236
Total policy liabilities	19,712,026		18,923,637
Current and deferred income taxes	404,480		434,649
Short-term debt	258,232		449,103
Long-term debt (estimated fair value: 2023—$1,633,248; 2022—$1,440,277)	1,798,117		1,627,952
Other liabilities	554,797		542,223
Total liabilities	22,727,652		21,977,564
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2023 and 2022	—		—
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2023—105,218,183 issued; 2022—105,218,183 issued)	105,218		105,218
Additional paid-in-capital	536,126		529,661
Accumulated other comprehensive income (loss)	(2,943,897)		(2,790,313)
Retained earnings	7,285,809		6,894,535
Treasury stock, at cost: (2023—10,225,970 shares; 2022—8,478,288 shares)	(1,002,950)		(789,524)
Total shareholders' equity	3,980,306		3,949,577
Total liabilities and shareholders' equity	$	26,707,958	$	25,927,141

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands, except per share data)



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Life premium	$	781,733	$	756,892	$	1,554,330	$	1,506,020
Health premium	329,187		320,307		651,680		635,991
Other premium	—		—		—		—
Total premium	1,110,920		1,077,199		2,206,010		2,142,011
Net investment income	261,244		244,712		518,349		489,606
Realized gains (losses)	(45,843)		(30,446)		(76,770)		(37,690)

Other income	85		299		135		463
Total revenue	1,326,406		1,291,764		2,647,724		2,594,390

Benefits and expenses:
Life policyholder benefits(1)	512,664		492,364		1,020,641		987,793
Health policyholder benefits(2)	195,924		190,075		386,886		379,093
Other policyholder benefits	8,922		8,992		17,910		18,694
Total policyholder benefits	717,510		691,431		1,425,437		1,385,580

Amortization of deferred acquisition costs	94,080		86,185		186,402		170,681
Commissions, premium taxes, and non-deferred acquisition costs	138,459		126,213		276,256		251,722
Other operating expense	86,033		89,658		170,204		174,010
Interest expense	25,818		21,828		50,685		41,772
Total benefits and expenses	1,061,900		1,015,315		2,108,984		2,023,765

Income before income taxes	264,506		276,449		538,740		570,625
Income tax benefit (expense)	(49,246)		(52,476)		(99,870)		(109,168)



Net income	$	215,260	$	223,973	$	438,870	$	461,457




Basic net income per common share	$	2.26	$	2.28	$	4.58	$	4.67




Diluted net income per common share	$	2.24	$	2.26	$	4.52	$	4.63

(1)Net of remeasurement gain of $2.4 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively. Net of remeasurement gain of $5.1 million for the six months ended June 30, 2023 and a remeasurement loss of $4.1 million for the same period in 2022.

(2)Net of remeasurement gain of $2.6 million and $2.1 million for the three months ended June 30, 2023 and 2022, respectively. Net of remeasurement gain of $532 thousand and $4.0 million for the six months ended June 30, 2023 and 2022, respectively.

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollar amounts in thousands)



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	215,260	$	223,973	$	438,870	$	461,457

Other comprehensive income (loss):

Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period	(333,329)		(2,042,210)		135,790		(4,335,132)

Other reclassification adjustments included in net income	49,425		22,259		82,015		18,229
Foreign exchange adjustment on fixed maturities recorded at fair value	(10,567)		1,835		(1,000)		2,119



Total unrealized investment gains (losses)	(294,471)		(2,018,116)		216,805		(4,314,784)
Less applicable tax (expense) benefit	61,836		423,810		(45,532)		906,109
Unrealized gains (losses) on investments, net of tax	(232,635)		(1,594,306)		171,273		(3,408,675)

Future Policy Benefits:
Change in discount rate on future policy benefits	306,211		2,791,287		(414,679)		5,596,798
Less applicable tax (expense) benefit	(64,305)		(586,174)		87,082		(1,175,330)
Future policy benefit adjustments, net of tax	241,906		2,205,113		(327,597)		4,421,468






Foreign exchange translation:
Foreign exchange translation adjustments, other than securities	10,358		(18,409)		3,842		(14,181)
Less applicable tax (expense) benefit	(2,176)		3,865		(808)		2,978
Foreign exchange translation adjustments, other than securities, net of tax	8,182		(14,544)		3,034		(11,203)

Pension:



Pension adjustments	(323)		3,441		(371)		6,878
Less applicable tax (expense) benefit	66		(723)		77		(1,445)
Pension adjustments, net of tax	(257)		2,718		(294)		5,433

Other comprehensive income (loss)	17,196		598,981		(153,584)		1,007,023
Comprehensive income (loss)	$	232,456	$	822,954	$	285,286	$	1,468,480

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)

(Dollar amounts in thousands, except per share data)


	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2022	$	—	$	105,218	$	529,661	$	(2,790,313)	$	6,894,535	$	(789,524)	$	3,949,577


Comprehensive income (loss)	—		—		—		(170,780)		223,610		—		52,830
Common dividends declared ($0.2250 per share)	—		—		—		—		(21,542)		—		(21,542)
Acquisition of treasury stock	—		—		—		—		—		(179,276)		(179,276)
Stock-based compensation	—		—		(1,022)		—		—		8,700		7,678
Exercise of stock options	—		—		—		—		(4,059)		41,083		37,024

Balance at March 31, 2023	—		105,218		528,639		(2,961,093)		7,092,544		(919,017)		3,846,291

Comprehensive income (loss)	—		—		—		17,196		215,260		—		232,456
Common dividends declared ($0.2250 per share)	—		—		—		—		(21,330)		—		(21,330)
Acquisition of treasury stock	—		—		—		—		—		(89,755)		(89,755)
Stock-based compensation	—		—		7,487		—		—		—		7,487
Exercise of stock options	—		—		—		—		(665)		5,822		5,157

Balance at June 30, 2023	$	—	$	105,218	$	536,126	$	(2,943,897)	$	7,285,809	$	(1,002,950)	$	3,980,306


	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity

Balance at December 31, 2021	$	—	$	109,218	$	520,564	$	(4,235,048)	$	6,455,733	$	(846,659)	$	2,003,808


Comprehensive income (loss)	—		—		—		408,042		237,484		—		645,526
Common dividends declared ($0.2075 per share)	—		—		—		—		(20,543)		—		(20,543)
Acquisition of treasury stock	—		—		—		—		—		(119,482)		(119,482)
Stock-based compensation	—		—		2,504		—		(345)		6,876		9,035
Exercise of stock options	—		—		—		—		(9,964)		35,895		25,931


Balance at March 31, 2022	—		109,218		523,068		(3,827,006)		6,662,365		(923,370)		2,544,275

Comprehensive income (loss)	—		—		—		598,981		223,973		—		822,954
Common dividends declared ($0.2075 per share)	—		—		—		—		(20,238)		—		(20,238)
Acquisition of treasury stock	—		—		—		—		—		(143,939)		(143,939)
Stock-based compensation	—		—		8,448		—		—		—		8,448
Exercise of stock options	—		—		—		—		(2,419)		11,222		8,803

Balance at June 30, 2022	$	—	$	109,218	$	531,516	$	(3,228,025)	$	6,863,681	$	(1,056,087)	$	3,220,303

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)



	Six Months Ended June 30,
	2023		2022













Cash provided from (used for) operating activities	$	804,141	$	693,390

Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold	145,824		219,027
Fixed maturities available for sale—matured or other redemptions	138,259		305,656
Other long-term investments	59,593		48,334
Total investments sold or matured	343,676		573,017
Acquisition of investments:
Fixed maturities—available for sale	(623,023)		(717,994)
Other long-term investments	(91,186)		(157,913)
Total investments acquired	(714,209)		(875,907)
Net (increase) decrease in policy loans	(18,692)		(7,553)
Net (increase) decrease in short-term investments	42,993		(46,679)


Additions to property and equipment	(25,629)		(13,627)

Investments in low-income housing interests	(38,276)		(37,181)
Cash provided from (used for) investing activities	(410,137)		(407,930)

Cash provided from (used for) financing activities:
Issuance of common stock	42,181		34,734
Cash dividends paid to shareholders	(41,569)		(40,208)
Repayment of debt	(165,612)		—
Proceeds from issuance of debt	170,000		250,492
Payment for debt issuance costs	(693)		(5,272)
Net borrowing (repayment) of commercial paper	(25,371)		(150,047)
Acquisition of treasury stock	(269,031)		(263,421)
Net receipts (payments) from deposit-type products	(116,437)		(33,782)
Cash provided from (used for) financing activities	(406,532)		(207,504)

Effect of foreign exchange rate changes on cash	(5,020)		2,138
Net increase (decrease) in cash	(17,548)		80,094
Cash at beginning of year	92,559		92,163
Cash at end of period	$	75,011	$	172,257

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 1—Significant Accounting Policies

Business*:* (Globe Life), (the Company), refers to Globe Life Inc., an insurance holding company incorporated in Delaware in 1979, and Globe Life Inc. subsidiaries and affiliates. Globe Life Inc.'s direct or indirect primary subsidiaries are Globe Life And Accident Insurance Company, American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life Insurance Company of America, and United American Insurance Company. The underwriting companies are owned by their ultimate corporate parent, Globe Life Inc. (Parent Company).

Globe Life provides a variety of life and supplemental health insurance products and annuities to a broad base of customers. The Company is organized into four reportable segments: life insurance, supplemental health insurance, annuities, and investments.

Globe Life markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Globe Life's insurance segments. 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 (DTC).

Basis of Presentation*:* The accompanying condensed consolidated financial statements of Globe Life have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual financial statements. However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at June 30, 2023, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended June 30, 2023 and 2022. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Form 10-K filed with the Securities Exchange Commission (SEC) on February 23, 2023.

Use of Estimates: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. See further documentation in the significant accounting policies or the accompanying notes.

Significant Accounting Policy Updates*:* The following accounting policies were updated since the 2022 Form 10-K due to the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (ASU 2018-12). Refer to Note 2—New Acc ounting Stan dards for additional information on the financial statement impacts related to the adoption of this standard.

*Future Policy Benefits—*The liability for future policy benefits for traditional and limited-payment long duration life and health products comprises approximately 92% of the total liability for future policy benefits. The liability is determined each reporting period based on the net level premium method. This method requires the liability for future policy benefits be calculated as the present value of estimated future policyholder benefits and the related termination expenses, less the present value of estimated future net premiums to be collected from policyholders. Net level premiums reflect a recomputed net premium ratio1 using actual experience since the issue date or the Transition Date, and expected future experience. The liability is accrued as premium revenue is recognized and adjusted for differences between actual and expected experience. Long-duration insurance contracts issued by the Company are grouped into cohorts based on the contract issue year, distribution channel, legal entity, and product type.

1 The net premium ratio is the percentage of gross premiums needed to fund actual and expected benefits and related settlement expenses.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Both the present value of expected future benefit payments and the present value of expected future net premiums are based primarily on assumptions of discount rates, mortality, morbidity, lapse, and persistency. Each quarter, the Company remeasures its liability for future policy benefits using current discount rates with the effect of the change recognized in Other Comprehensive Income, a component of shareholders’ equity. In addition, the Company recognizes a liability remeasurement gain or loss within the Condensed Consolidated Statements of Operations using original discount rates, and relating to actual experience under the net premium calculation, as compared to the prior reporting period assumptions.

The Company regularly reviews its cash flow assumptions (mortality, morbidity, lapses, and persistency) used to calculate the change in the liability for future policy benefits. These cash flow assumptions are updated as necessary in the third quarter of every year, or more frequently if suggested by experience. If cash flow assumptions are changed, the net premium ratio is recalculated from the original issue date, or the Transition Date, using actual experience and projected future cash flows. When the expected future net premiums exceed the expected future gross premiums, or the present value of future policyholder benefits exceeds the present value of expected future gross premiums, the liability for future policy benefits is adjusted with changes recognized in policyholder benefits on the Condensed Consolidated Statements of Operations. The cash flow assumptions do not include an adjustment for adverse deviation. Mortality tables used for individual life insurance include various industry tables and reflect modifications based on Company experience. Morbidity assumptions for individual health are based on Company experience and industry data. Lapse and persistency assumptions are based on Company experience.

The liability for future policy benefits is discounted as noted above, using a current upper-medium grade fixed-income instrument yield that reflects the duration characteristics of the liability for future policy benefits. The methodology for determining current discount rates consists of constructing a discount rate curve intended to be reflective of the currency and tenor of the insurance liability cash flows. The methodology is designed to prioritize observable inputs based on market data available in the local debt markets denominated in the same currency as the policies. For the discount rates applicable to tenors for which the single-A debt market is not liquid or there is little or no observable market data, the Company will use estimation techniques consistent with the fair value guidance in ASC 820. We further accrete interest as a component of policyholder benefits using the original discount rate that is locked-in during the year of contract issuance. The original discount rates (or the locked-in discount rates) are used for interest accretion purposes and for the determination of net premiums, whereas the current discount rates are used for purposes of valuing the liability.

The liability for future policy benefits for annuity and interest sensitive life-type products is represented by policy account value. For limited-payment contracts, a deferred profit liability is also recorded, with changes recognized in income over the life of the contract in proportion to the amount of insurance in force.

*Deferred Acquisition Costs—*Certain costs of acquiring new insurance business are deferred and recorded as an asset. These costs are capitalized on a grouped contract basis and amortized over the expected term of the related contracts, and are essential for the acquisition of new insurance business. Deferred acquisition costs (DAC) are directly related to the successful issuance of an insurance contract, and primarily include sales commissions, policy issue costs, direct to consumer advertising costs, and underwriting costs. Additionally, DAC includes the value of business acquired (VOBA), which are the costs of acquiring blocks of insurance from other companies or through the acquisition of other companies. These costs represent the difference between the fair value of the contractual insurance assets acquired and liabilities assumed, compared against the assets and liabilities for insurance contracts that the Company issues or holds measured in accordance with GAAP.

DAC is amortized on a constant-level basis over the expected term of the grouped contracts, with the related expense included in amortization of deferred acquisition costs on the Condensed Consolidated Statements of Operations. The in-force metric used to compute the DAC amortization rate is annualized premium in force. The assumptions used to amortize acquisition costs include mortality, morbidity, and persistency. These assumptions are reviewed at least annually and revised in conjunction with any change in the future policy benefit assumptions. The effect of changes in the assumptions are recognized over the remaining expected contract term as a revision of future amortization amounts.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

VOBA is amortized on a basis that is consistent with DAC, as described above, and is subject to periodic recoverability and loss recognition testing to determine if there is a premium deficiency. These tests evaluate whether the present value of future contract-related cash flows will support the capitalized VOBA asset. These cash flows consist primarily of premium income, less benefits and expenses. The present value of these cash flows, less the reserve liability, is then compared with the unamortized balance. In the event the estimated present value of net cash flows is less, the deficiency would be recognized by a charge to earnings and either a reduction of unamortized acquisition costs or an increase in the liability for future benefits.

Note 2—New Accounting Standards

Accounting Pronouncements Adopted in the Current Year: On January 1, 2023, the Company adopted ASU 2018-12 (also referred to as Long Duration Targeted Improvements or LDTI) on a modified retrospective basis as of the transition date (Transition Date) of January 1, 2021*.* The amended guidance is a significant change to the accounting and disclosure of long-duration life and health insurance contracts. The modified retrospective transition method requires the updated standard be applied to all long-duration life and health contracts, which has resulted in the adjustment of the 2021 and 2022 consolidated financial statements.

The following tables summarize the balance of and changes to the liability for future policy benefits for traditional life and health long-duration contracts on the Transition Date due to the adoption of ASU 2018-12:


		Net Liability for Future Policy Benefits - Long Duration Life
	American Income			DTC			Liberty National			Other			Total
Balance, net of reinsurance, at original discount rates as of December 31, 2020		$	3,541,317		$	2,492,226		$	2,140,071		$	2,736,804		$	10,910,418
Effect of changes in discount rate assumptions		3,334,600			2,195,430			1,229,610			2,297,835			9,057,475
Effect of capping and flooring(1)		—			16,899			2,433			2			19,334
Balance, net of reinsurance, at current discount rates as of January 1, 2021		$	6,875,917		$	4,704,555		$	3,372,114		$	5,034,641		$	19,987,227


		Net liability for Future Policy Benefits - Long Duration Health
	United American			Family Heritage			Liberty National			American Income			DTC			Total
Balance, net of reinsurance, at original discount rates as of December 31, 2020		$	131,505		$	1,383,128		$	501,312		$	101,998		$	(2,941)		$	2,115,002
Effect of changes in discount rate assumptions		75,652			497,250			219,992			60,366			346			853,606
Effect of capping and flooring(1)		6,506			—			19,324			—			4,193			30,023
Balance, net of reinsurance, at current discount rates as of January 1, 2021		$	213,663		$	1,880,378		$	740,628		$	162,364		$	1,598		$	2,998,631

(1)When the present value of expected future net premiums exceeds the present value of expected future gross premiums for a given cohort (capping), or the present value of future policy benefits and related termination expenses exceeds the present value of expected future net premiums (flooring), an adjustment is made to the liability for future policy benefits.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table presents total policy liabilities, both before and after the Transition Date:


	January 1,		December 31,
	2021		2020

Future policy benefits:
Net liability for future policy benefits—long duration life	$	19,987,227	$	10,910,418
Net liability for future policy benefits—long duration health	2,998,631		2,115,002





Additional insurance liabilities(1),(2)	2,008,399		2,218,116
Total future policy benefits	24,994,257		15,243,536

Unearned and advance premium(1)	243,369		61,728

Policy claims and other benefits payable(1)	473,524		399,507

Other policyholders' funds(1)	98,459		97,968
Total policy liabilities	$	25,809,609	$	15,802,739

(1)In addition to the discount rate related adjustments to future policy benefits, the Company reclassified certain balances within total policy liabilities on the Consolidated Balance Sheets as a result of adopting ASU 2018-12. The reclassifications had an immaterial impact on Shareholders' Equity. See table summarizing the transition adjustments to Shareholders' Equity below.

(2)The Company's additional insurance liabilities consist primarily of: 1) deferred profit liability on limited-payment contracts; and 2) reserves on deferred annuity and interest sensitive life blocks of business. See Note 6—Policy Liabilities for additional information.

The following table presents the Company's deferred policy acquisition costs, both before and after the Transition Date:


		January 1,			December 31,
	2021			2020
Life:
American Income		$	1,647,761		$	1,647,761
Direct to Consumer		1,498,970			1,498,435
Liberty National		531,504			531,504
Other		304,786			304,459
Total life		3,983,021			3,982,159

Health:
United American		65,020			74,353
Family Heritage		364,751			364,751
Liberty National		124,754			124,888
American Income		39,477			39,477
Direct to Consumer		2,215			6,600
Total health		596,217			610,069

Annuity		8,309			3,216
Total DAC		$	4,587,547		$	4,595,444

In accordance with ASU 2018-12, the Company has adjusted its DAC balance to remove the impact of unrealized gains and losses that were previously recorded in Accumulated Other Comprehensive Income (AOCI) on the Consolidated Statements of Shareholders' Equity. Under prior guidance, the Company included these amounts within its calculation of amortization.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table presents the effect of transition adjustments due to the adoption of ASU 2018-12 on Shareholders' Equity:


	Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Other(1)		Total
Shareholders’ Equity, as of December 31, 2020	$	5,874,109	$	3,029,244	$	(132,261)	$	8,771,092
Effect of changes in discount rate assumptions	—		(7,829,753)		—		(7,829,753)
Effect of capping and flooring	(38,992)		—		—		(38,992)
Effect of removal of unrealized gain (loss) on DAC	—		4,704		—		4,704
Other adjustments	26,470		—		—		26,470
Shareholders’ Equity, as of January 1, 2021	$	5,861,587	$	(4,795,805)	$	(132,261)	$	933,521

(1)Other represents common stock, additional paid-in capital, and treasury stock, combining balances that were unaffected by the new standard.

As of the Transition Date, the primary effects of the changes required by the standard were to AOCI and retained earnings. As seen in the table above, the transition adjustments impacting AOCI consist of the effect of changes in discount rate assumptions and the effect of the removal of unrealized gains (losses) on DAC. The effect of changes in discount rate assumptions is the impact, net of tax, of the Company re-measuring its liability for future policy benefits using current discount rates. As of the Transition Date, we experienced a lower level of current discount rates than the original discount rates used in valuing our future policy benefits under the prior guidance, thus reducing Shareholders' Equity. For the effect of removing unrealized gains (losses) on DAC, this adjustment relates to the requirement to remove unrealized gains (losses) that were included within the amortization calculation, as noted previously.

Regarding the impact on retained earnings, when the present value of net premiums exceeds the present value of gross premiums for a given cohort (capping), or the present value of future benefits and related termination expenses exceeds the present value of future gross premiums (flooring), an adjustment is recognized to the liability for future policy benefits. Any blocks of business that require increases in future policy benefits to minimum levels, or that have a net premium ratio greater than 100%, required an adjustment to the opening balance of retained earnings (decrease).

Accounting Pronouncements Yet to be Adopted: ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, adds disclosure requirements specific to equity securities subject to contractual sale restrictions. The disclosures clarify the nature of the contractual sale as well as the duration of the restriction and the circumstances that could cause a lapse in the restriction.

This standard is effective for the Company on January 1, 2024, and will be implemented on a prospective basis. The Company does not expect the standard will have a material impact on the Consolidated Financial Statements.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Effect of New Accounting Standards on Previously Reported Results*:* The impacts from the adoption of ASU 2018-12 on the Company's previously reported results included in these financial statements are as follows:

Condensed Consolidated Balance Sheets



	December 31, 2022
	As Previously Reported		Adoption Impact		As Adjusted
Assets:








Other receivables	$	484,887	$	104,192	$	589,079
Deferred acquisition costs	5,249,907		285,790		5,535,697



Liabilities:
Future policy benefits	16,721,846		1,318,196		18,040,042
Unearned and advance premium	60,742		192,398		253,140
Policy claims and other benefits payable	430,027		77,192		507,219


Current and deferred income taxes	686,172		(251,523)		434,649





Shareholders' equity:



Accumulated other comprehensive income (loss)	(1,415,714)		(1,374,599)		(2,790,313)
Retained earnings	6,466,220		428,315		6,894,535

Condensed Consolidated Statements of Operations


	Three Months Ended June 30, 2022					Six Months Ended June 30, 2022

		As Previously Reported		Adoption Impact		As Adjusted		As Previously Reported		Adoption Impact		As Adjusted
Revenue:
Life premium		$	759,924	$	(3,032)	$	756,892	$	1,514,526	$	(8,506)	$	1,506,020
Health premium		319,189		1,118		320,307		636,189		(198)		635,991


Net investment income		243,642		1,070		244,712		487,476		2,130		489,606





Benefits and expenses:
Life policyholder benefits		511,034		(18,670)		492,364		1,060,377		(72,584)		987,793
Health policyholder benefits		197,218		(7,143)		190,075		394,073		(14,980)		379,093
Other policyholder benefits		7,074		1,918		8,992		14,124		4,570		18,694


Amortization of deferred acquisition costs		155,205		(69,020)		86,185		313,589		(142,908)		170,681
Commissions, premium taxes, and non-deferred acquisition costs		93,595		32,618		126,213		184,408		67,314		251,722




Income before income taxes		216,996		59,453		276,449		418,611		152,014		570,625
Income tax benefit (expense)		(39,992)		(12,484)		(52,476)		(77,246)		(31,922)		(109,168)



Net income		$	177,004	$	46,969	$	223,973	$	341,365	$	120,092	$	461,457




Basic net income per common share		$	1.80	$	0.48	$	2.28	$	3.46	$	1.21	$	4.67




Diluted net income per common share		$	1.79	$	0.47	$	2.26	$	3.43	$	1.20	$	4.63

See Note 1—Significant Accounting Policies, Note 6—Policy Liabilities, and Note 7—DAC for additional information on the adoption.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income

Components of Accumulated Other Comprehensive Income: An analysis of the change in balance by component of Accumulated Other Comprehensive Income is as follows for the three and six month periods ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
	Available for Sale Assets		Future Policy Benefits		Foreign Exchange		Pension Adjustments		Total
Balance at April 1, 2023	$	(1,016,764)	$	(1,938,707)	$	(6,829)	$	1,207	$	(2,961,093)
Other comprehensive income (loss) before reclassifications, net of tax	(271,681)		241,906		8,182		—		(21,593)
Reclassifications, net of tax	39,046		—		—		(257)		38,789
Other comprehensive income (loss)	(232,635)		241,906		8,182		(257)		17,196
Balance at June 30, 2023	$	(1,249,399)	$	(1,696,801)	$	1,353	$	950	$	(2,943,897)


	Three Months Ended June 30, 2022
	Available for Sale Assets		Future Policy Benefits		Foreign Exchange		Pension Adjustments		Total
Balance at April 1, 2022	$	950,921	$	(4,699,555)	$	22,589	$	(100,961)	$	(3,827,006)
Other comprehensive income (loss) before reclassifications, net of tax	(1,611,891)		2,205,113		(14,544)		—		578,678
Reclassifications, net of tax	17,585		—		—		2,718		20,303
Other comprehensive income (loss)	(1,594,306)		2,205,113		(14,544)		2,718		598,981
Balance at June 30, 2022	$	(643,385)	$	(2,494,442)	$	8,045	$	(98,243)	$	(3,228,025)


	Six Months Ended June 30, 2023
	Available for Sale Assets		Future Policy Benefits		Foreign Exchange		Pension Adjustments		Total
Balance at January 1, 2023	$	(1,420,672)	$	(1,369,204)	$	(1,681)	$	1,244	$	(2,790,313)
Other comprehensive income (loss) before reclassifications, net of tax	106,481		(327,597)		3,034		—		(218,082)
Reclassifications, net of tax	64,792		—		—		(294)		64,498
Other comprehensive income (loss)	171,273		(327,597)		3,034		(294)		(153,584)
Balance at June 30, 2023	$	(1,249,399)	$	(1,696,801)	$	1,353	$	950	$	(2,943,897)


	Six Months Ended June 30, 2022
	Available for Sale Assets		Future Policy Benefits		Foreign Exchange		Pension Adjustments		Total
Balance at January 1, 2022	$	2,765,290	$	(6,915,910)	$	19,248	$	(103,676)	$	(4,235,048)
Other comprehensive income (loss) before reclassifications, net of tax	(3,423,076)		4,421,468		(11,203)		—		987,189
Reclassifications, net of tax	14,401		—		—		5,433		19,834
Other comprehensive income (loss)	(3,408,675)		4,421,468		(11,203)		5,433		1,007,023
Balance at June 30, 2022	$	(643,385)	$	(2,494,442)	$	8,045	$	(98,243)	$	(3,228,025)

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Reclassification Adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three and six month periods ended June 30, 2023 and 2022.


	Three Months Ended June 30,				Six Months Ended June 30,				Affected line items in the Statements of Operations
Component Line Item	2023		2022		2023		2022
Unrealized investment (gains) losses on available for sale assets:
Realized (gains) losses	$	50,347	$	22,422	$	83,471	$	17,485	Realized (gains) losses

Amortization of (discount) premium	(922)		(163)		(1,456)		744		Net investment income
Total before tax	49,425		22,259		82,015		18,229
Tax	(10,379)		(4,674)		(17,223)		(3,828)		Income taxes
Total after-tax	39,046		17,585		64,792		14,401
Pension adjustments:
Amortization of prior service cost	269		158		538		316		Other operating expense
Amortization of actuarial (gain) loss	(592)		3,283		(909)		6,562		Other operating expense
Total before tax	(323)		3,441		(371)		6,878
Tax	66		(723)		77		(1,445)		Income taxes
Total after-tax	(257)		2,718		(294)		5,433
Total reclassification (after-tax)	$	38,789	$	20,303	$	64,498	$	19,834

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 4—Investments

Portfolio Composition*:* Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at June 30, 2023 and December 31, 2022, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows. Redeemable preferred stock is included within "Corporates, by sector."


	At June 30, 2023
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	392,453	$	—	$	37	$	(34,893)	$	357,597	2
States, municipalities, and political subdivisions	3,071,617		—		36,601		(451,322)		2,656,896		16
Foreign governments	43,464		—		—		(11,481)		31,983		—
Corporates, by sector:
Financial	4,944,716		(65,476)		59,319		(493,205)		4,445,354		26
Utilities	1,988,656		—		41,220		(114,276)		1,915,600		11
Energy	1,431,789		—		27,914		(93,599)		1,366,104		8
Other corporate sectors	6,690,357		(7,032)		89,696		(636,276)		6,136,745		36
Total corporates	15,055,518		(72,508)		218,149		(1,337,356)		13,863,803		81
Collateralized debt obligations	37,080		—		5,225		—		42,305		—
Other asset-backed securities	87,347		—		2		(6,483)		80,866		1
Total fixed maturities	$	18,687,479	$	(72,508)	$	260,014	$	(1,841,535)	$	17,033,450	100

(1)Amount reported in the balance sheet.

(2)At fair value.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	At December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	394,439	$	—	$	27	$	(38,968)	$	355,498	2
States, municipalities, and political subdivisions	2,791,030		—		24,328		(505,447)		2,309,911		14
Foreign governments	55,164		—		6		(12,706)		42,464		—
Corporates, by sector:
Financial	4,907,794		—		63,126		(504,489)		4,466,431		27
Utilities	1,924,190		—		36,670		(125,713)		1,835,147		11
Energy	1,436,598		—		22,637		(101,923)		1,357,312		8
Other corporate sectors	6,667,043		—		78,903		(738,772)		6,007,174		37
Total corporates	14,935,625		—		201,336		(1,470,897)		13,666,064		83
Collateralized debt obligations	37,098		—		13,266		—		50,364		—
Other asset-backed securities	88,336		—		4		(9,276)		79,064		1
Total fixed maturities	$	18,301,692	$	—	$	238,967	$	(2,037,294)	$	16,503,365	100

(1)Amount reported in the balance sheet.

(2)At fair value.

The Company has exposure to banks as part of its fixed maturity portfolio. The Company’s bank securities had a fair value of $1.2 billion (7% of the total fixed maturity portfolio) and $1.3 billion (8% of the total fixed maturity portfolio) at June 30, 2023 and December 31, 2022, respectively. Additionally, the Company has exposure to real estate investment trusts which had a fair value of $405 million (2% of the total fixed maturity portfolio) and $428 million (3% of the total fixed maturity portfolio) at June 30, 2023 and December 31, 2022, respectively.

A schedule of fixed maturities available for sale by contractual maturity date at June 30, 2023, is shown below on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions.


	At June 30, 2023
	Amortized Cost, net		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	175,156	$	174,975
Due after one year through five years	1,122,352		1,118,516
Due after five years through ten years	1,651,261		1,673,707
Due after ten years through twenty years	8,041,646		7,621,151
Due after twenty years	7,500,129		6,321,930
Mortgage-backed and asset-backed securities	124,427		123,171
	$	18,614,971	$	17,033,450

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Analysis of Investment Operations: "Net investment income" for the three and six month periods ended June 30, 2023 and 2022 is summarized as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022		% Change	2023		2022		% Change
Fixed maturities available for sale	$	234,187	$	226,753	3	$	466,486	$	452,037	3
Policy loans	12,234		11,580		6	23,989		23,008		4
Other long-term investments(1)	16,936		10,703		58	32,679		23,416		40
Short-term investments	1,820		122			3,415		124
	265,177		249,158		6	526,569		498,585		6
Less investment expense	(3,933)		(4,446)		(12)	(8,220)		(8,979)		(8)
Net investment income	$	261,244	$	244,712	7	$	518,349	$	489,606	6

(1)For the three months ended June 30, 2023 and 2022, the investment funds, accounted for under the fair value option method, recorded $12.0 million and $8.6 million of distributions, respectively, in net investment income. For the six months ended June 30, 2023 and 2022, the investment funds, accounted for under the fair value option method, recorded $23.3 million and $19.3 million of distributions, respectively, in net investment income. Refer to Other Long-Term Investments below for further discussion on the investment funds.

Selected information about sales of fixed maturities available for sale is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Fixed maturities available for sale:
Proceeds from sales(1)	$	130,119	$	143,911	$	145,824	$	219,027
Gross realized gains	47		—		47		773
Gross realized losses	(10,503)		(41,168)		(10,861)		(44,847)

(1)There were no unsettled sales in the periods ended June 30, 2023 and 2022.

An analysis of "Realized gains (losses)" is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)	$	(10,606)	$	(22,421)	$	(10,963)	$	(17,872)

Provision for credit losses	(39,741)		—		(72,508)		387
Fair value option—change in fair value	5,228		947		7,086		(4,391)
Other investments	(724)		(8,972)		(385)		(15,814)
Realized gains (losses) from investments	(45,843)		(30,446)		(76,770)		(37,690)


Applicable tax	9,627		6,394		16,122		7,915
Realized gains (losses), net of tax	$	(36,216)	$	(24,052)	$	(60,648)	$	(29,775)

(1)During the three months ended June 30, 2023 and 2022, the Company recorded $17.9 million and $1.9 million of issuer-initiated exchanges of fixed maturities (noncash transactions) that resulted in no realized gains (losses) in either period. During the six months ended June 30, 2023 and 2022, the Company recorded $17.9 million and $1.9 million of issuer-initiated exchanges of fixed maturities (noncash transactions) that resulted in no realized gains (losses) in either period.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Fair Value Measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at June 30, 2023 and December 31, 2022:


	Fair Value Measurement at June 30, 2023 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	357,597		$	—		$	357,597
States, municipalities, and political subdivisions	—			2,656,896			—			2,656,896
Foreign governments	—			31,983			—			31,983
Corporates, by sector:
Financial	—			4,313,536			131,818			4,445,354
Utilities	—			1,806,364			109,236			1,915,600
Energy	—			1,355,556			10,548			1,366,104
Other corporate sectors	—			5,926,843			209,902			6,136,745
Total corporates	—			13,402,299			461,504			13,863,803
Collateralized debt obligations	—			—			42,305			42,305
Other asset-backed securities	—			80,866			—			80,866
Total fixed maturities	$	—		$	16,529,641		$	503,809		$	17,033,450
Percentage of total	—		%	97		%	3		%	100		%


	Fair Value Measurement at December 31, 2022 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	355,498		$	—		$	355,498
States, municipalities, and political subdivisions	—			2,309,911			—			2,309,911
Foreign governments	—			42,464			—			42,464
Corporates, by sector:
Financial	—			4,332,495			133,936			4,466,431
Utilities	—			1,723,832			111,315			1,835,147
Energy	—			1,346,212			11,100			1,357,312
Other corporate sectors	—			5,785,442			221,732			6,007,174
Total corporates	—			13,187,981			478,083			13,666,064
Collateralized debt obligations	—			—			50,364			50,364
Other asset-backed securities	—			79,064			—			79,064
Total fixed maturities	$	—		$	15,974,918		$	528,447		$	16,503,365
Percentage of total	—		%	97		%	3		%	100		%

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Asset- backed Securities			Collateralized Debt Obligations			Corporates			Total
Balance at January 1, 2023	$	—		$	50,364		$	478,083		$	528,447

Included in realized gains / losses	—			—			—			—
Included in other comprehensive income	—			(8,042)			(1,963)			(10,005)
Acquisitions	—			—			—			—
Sales	—			—			—			—
Amortization	—			2,288			3			2,291
Other(1)	—			(2,305)			(14,619)			(16,924)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at June 30, 2023	$	—		$	42,305		$	461,504		$	503,809
Percent of total fixed maturities	—		%	—		%	3		%	3		%

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.


	Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Asset- backed Securities			Collateralized Debt Obligations			Corporates			Total
Balance at January 1, 2022	$	—		$	63,505		$	641,688		$	705,193

Included in realized gains / losses	—			—			—			—
Included in other comprehensive income	—			(11,098)			(89,359)			(100,457)
Acquisitions	—			—			—			—
Sales	—			—			—			—
Amortization	—			2,248			3			2,251
Other(1)	—			(1,954)			(22,357)			(24,311)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at June 30, 2022	$	—		$	52,701		$	529,975		$	582,676
Percent of total fixed maturities	—		%	—		%	3		%	3		%

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table presents changes in unrealized gains and losses for the period included in accumulated other comprehensive income for assets held at the end of the reporting period for Level 3s:


	Changes in Unrealized Gains (Losses) included in Accumulated Other Comprehensive Income for Assets Held at the End of the Period
	Asset- backed Securities		Collateralized Debt Obligations		Corporates		Total
At June 30, 2023	$	—	$	(8,042)	$	(1,963)	$	(10,005)
At June 30, 2022	—		(11,098)		(89,359)		(100,457)

Unrealized Loss Analysis*:* The following table discloses information about fixed maturities available for sale in an unrealized loss position.


	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIPs) held:
As of June 30, 2023	682	1,355	2,037
As of December 31, 2022	1,819	157	1,976

Globe Life's entire fixed maturity portfolio consisted of 2,418 issues by 986 different issuers at June 30, 2023 and 2,328 issues by 979 different issuers at December 31, 2022. The weighted-average quality rating of all unrealized loss positions at amortized cost was A- as of June 30, 2023 and December 31, 2022.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at June 30, 2023 and December 31, 2022.

Analysis of Gross Unrealized Investment Losses


	At June 30, 2023
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	264,407	$	(22,621)	$	91,011	$	(12,272)	$	355,418	$	(34,893)
States, municipalities, and political subdivisions	687,842		(26,208)		1,272,595		(425,114)		1,960,437		(451,322)
Foreign governments	6,983		(183)		25,000		(11,298)		31,983		(11,481)
Corporates, by sector:
Financial	1,245,647		(86,522)		1,711,745		(367,044)		2,957,392		(453,566)
Utilities	439,647		(20,185)		516,783		(92,019)		956,430		(112,204)
Energy	358,866		(13,942)		386,676		(69,247)		745,542		(83,189)
Other corporate sectors	1,180,706		(64,024)		3,065,617		(558,042)		4,246,323		(622,066)
Total corporates	3,224,866		(184,673)		5,680,821		(1,086,352)		8,905,687		(1,271,025)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	21,676		(884)		47,627		(4,968)		69,303		(5,852)
Total investment grade securities	4,205,774		(234,569)		7,117,054		(1,540,004)		11,322,828		(1,774,573)

Below investment grade securities:
States, municipalities, and political subdivisions	—		—		—		—		—		—

Corporates, by sector:
Financial	53,329		(3,470)		106,673		(36,169)		160,002		(39,639)
Utilities	—		—		28,035		(2,072)		28,035		(2,072)
Energy	—		—		34,278		(10,410)		34,278		(10,410)
Other corporate sectors	35,356		(189)		75,943		(14,021)		111,299		(14,210)
Total corporates	88,685		(3,659)		244,929		(62,672)		333,614		(66,331)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	—		—		11,499		(631)		11,499		(631)
Total below investment grade securities	88,685		(3,659)		256,428		(63,303)		345,113		(66,962)
Total fixed maturities	$	4,294,459	$	(238,228)	$	7,373,482	$	(1,603,307)	$	11,667,941	$	(1,841,535)

Gross unrealized losses may fluctuate quarter over quarter due to adverse factors in the market that affect our holdings, such as changes in interest rates or credit spreads. The Company considers many factors when determining whether an allowance for a credit loss should be recorded. While the Company holds securities that may be in an unrealized loss position from time to time, Globe Life does not generally intend to sell and it is unlikely that management will be required to sell the fixed maturities prior to their anticipated recovery or maturity due to the strong cash flows generated by its insurance operations.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Analysis of Gross Unrealized Investment Losses


	At December 31, 2022
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	349,887	$	(38,218)	$	3,424	$	(750)	$	353,311	$	(38,968)
States, municipalities, and political subdivisions	1,767,624		(453,149)		95,124		(52,298)		1,862,748		(505,447)
Foreign governments	6,297		(201)		25,134		(12,505)		31,431		(12,706)
Corporates, by sector:
Financial	2,837,918		(426,132)		109,784		(42,173)		2,947,702		(468,305)
Utilities	1,088,219		(116,272)		21,636		(6,268)		1,109,855		(122,540)
Energy	855,853		(91,755)		—		—		855,853		(91,755)
Other corporate sectors	4,155,986		(665,831)		94,299		(42,344)		4,250,285		(708,175)
Total corporates	8,937,976		(1,299,990)		225,719		(90,785)		9,163,695		(1,390,775)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	60,157		(5,223)		7,960		(2,435)		68,117		(7,658)
Total investment grade securities	11,121,941		(1,796,781)		357,361		(158,773)		11,479,302		(1,955,554)

Below investment grade securities:
States, municipalities, and political subdivisions	—		—		—		—		—		—

Corporates, by sector:
Financial	120,377		(18,901)		38,348		(17,283)		158,725		(36,184)
Utilities	27,722		(3,173)		—		—		27,722		(3,173)
Energy	14,480		(2,182)		20,075		(7,986)		34,555		(10,168)
Other corporate sectors	166,159		(25,962)		6,670		(4,635)		172,829		(30,597)
Total corporates	328,738		(50,218)		65,093		(29,904)		393,831		(80,122)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	—		—		10,874		(1,618)		10,874		(1,618)
Total below investment grade securities	328,738		(50,218)		75,967		(31,522)		404,705		(81,740)
Total fixed maturities	$	11,450,679	$	(1,846,999)	$	433,328	$	(190,295)	$	11,884,007	$	(2,037,294)

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Fixed Maturities, Allowance for Credit Losses*:* A summary of the activity in the allowance for credit losses is as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Allowance for credit losses beginning balance	$	32,767	$	—	$	—	$	387
Additions to allowance for which credit losses were not previously recorded	38,228		—		72,508		—
Additions (reductions) to allowance for fixed maturities that previously had an allowance	1,513		—		—		—
Reduction of allowance for which the Company intends to sell or more likely than not will be required to sell or sold during the period	—		—		—		(387)
Allowance for credit losses ending balance	$	72,508	$	—	$	72,508	$	—

As of June 30, 2023 and December 31, 2022, the Company had two fixed maturities in non-accrual status. During the six months ended June 30, 2023, it was announced Signature Bank New York and First Republic Bank had entered receivership. As a result, we reviewed available information to evaluate whether an allowance for expected credit losses should be established related to our holdings of Signature Bank New York and First Republic Bank, and determined an allowance was necessary.

Other Long-Term Investments*:* Other long-term investments consist of the following assets:


	June 30, 2023		December 31, 2022
Investment funds	$	759,157	$	768,689
Commercial mortgage loan participations	221,466		181,305
Other	29,513		26,022
Total	$	1,010,136	$	976,016

The following table presents additional information about the Company's investment funds as of June 30, 2023 and December 31, 2022 at fair value:


	Fair Value				Unfunded Commitments
Investment Category	June 30, 2023		December 31, 2022		June 30, 2023		Redemption Term/Notice




Commercial mortgage loans	$	404,782	$	431,405	$	583,694	Fully redeemable and non-redeemable with varying terms.
Opportunistic credit	161,054		158,524		—		Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.


Infrastructure	161,071		159,534		21,648		Fully redeemable and non-redeemable with varying terms.


Other	32,250		19,226		120,048
Total investment funds	$	759,157	$	768,689	$	725,390

The Company had $33 million of capital called during the year from existing investment funds. Our unfunded commitments were $725 million as of June 30, 2023.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Commercial Mortgage Loan Participations (commercial mortgage loans): Summaries of commercial mortgage loans by property type and geographical location at June 30, 2023 and December 31, 2022 are as follows:


	June 30, 2023			December 31, 2022
	Carrying Value		% of Total	Carrying Value		% of Total
Property type:
Mixed use	$	42,406	19	$	62,375	34
Hospitality	25,074		11	27,796		15
Retail	23,818		11	15,342		9
Industrial	27,266		12	27,248		15
Multi-family	94,693		43	42,232		23
Office	11,137		5	8,101		5

Total recorded investment	224,394		101	183,094		101
Less allowance for credit losses	(2,928)		(1)	(1,789)		(1)
Carrying value, net of allowance for credit losses	$	221,466	100	$	181,305	100


	June 30, 2023			December 31, 2022
	Carrying Value		% of Total	Carrying Value		% of Total
Geographic location:
California	$	67,189	30	$	64,477	36
Texas	43,051		19	22,905		13
New York	25,116		11	19,167		11
Washington	14,954		7	14,925		8
Massachusetts	14,941		7	—		—
Florida	33,324		15	33,182		18
Other	25,819		12	28,438		15
Total recorded investment	224,394		101	183,094		101
Less allowance for credit losses	(2,928)		(1)	(1,789)		(1)
Carrying value, net of allowance for credit losses	$	221,466	100	$	181,305	100

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables are reflective of the key factors, debt service coverage ratios, and loan-to-value (LTV) ratios that are utilized by management to monitor the performance of the portfolios. The Company only makes new investments in commercial mortgage loans that have a LTV ratio less than 80%. Generally, a higher LTV ratio and a lower debt service coverage ratio can potentially equate to higher risk of loss.


	June 30, 2023
	Recorded Investment
	Debt Service Coverage Ratios(1)
	<1.00x		1.00x—1.20x		>1.20x		Total		% of Total
Loan-to-value ratio(2):
Less than 70%	$	9,296	$	173,246	$	20,444	$	202,986	90
70% to 80%	—		4,846		1,153		5,999		3
81% to 90%	8,374		—		—		8,374		4
Greater than 90%	7,035		—		—		7,035		3
Total	$	24,705	$	178,092	$	21,597	224,394		100
Less allowance for credit losses							(2,928)
Total, net of allowance for credit losses							$	221,466

(1)Annual net operating income divided by annual mortgage debt service (principal and interest).

(2)Loan balance divided by appraised value, including planned renovations and stabilized occupancy, at origination. Updated internal valuations are used when a loan is materially underperforming.


	December 31, 2022
	Recorded Investment
	Debt Service Coverage Ratios(1)
	<1.00x		1.00x—1.20x		>1.20x		Total		% of Total
Loan-to-value ratio(2):
Less than 70%	$	24,221	$	108,156	$	12,018	$	144,395	79
70% to 80%	—		22,120		1,238		23,358		13
81% to 90%	8,307		—		—		8,307		4
Greater than 90%	7,034		—		—		7,034		4
Total	$	39,562	$	130,276	$	13,256	183,094		100
Less allowance for credit losses							(1,789)
Total, net of allowance for credit losses							$	181,305

(1)Annual net operating income divided by annual mortgage debt service (principal and interest).

(2)Loan balance divided by appraised value, including planned renovations and stabilized occupancy, at origination. Updated internal valuations are used when a loan is materially underperforming.

As of June 30, 2023, the Company evaluated the commercial mortgage loan portfolio on a pool basis to determine the allowance for credit losses. At the end of the period, the Company had 25 loans in the portfolio. For the six months ended June 30, 2023, the allowance for credit losses increased $1.1 million. Additionally, there was one foreclosure that resulted in a $2.9 million after tax realized loss during the period. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statements of Operations.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Allowance for credit losses beginning balance	$	3,069	$	827	$	1,789	$	827

Provision (reversal) for credit losses	(141)		282		1,139		282

Allowance for credit losses ending balance	$	2,928	$	1,109	$	2,928	$	1,109

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

There were no delinquent commercial mortgage loans as of June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, the Company had no commercial mortgage loan in non-accrual status. The Company's unfunded commitment balance to commercial loan borrowers was $23 million as of June 30, 2023.

Note 5—Commitments and Contingencies

Guarantees: The Parent Company has guaranteed letters of credit in connection with its credit facility with a group of banks. The letters of credit were issued by TMK Re, Ltd., a wholly-owned subsidiary, to secure TMK Re, Ltd.’s obligation for claims on certain policies reinsured by TMK Re, Ltd. that were sold by other Globe Life insurance subsidiaries. These letters of credit facilitate TMK Re, Ltd.’s ability to reinsure the business of Globe Life's insurance carriers. The agreement was amended on September 30, 2021 and now expires in 2026. The maximum amount of letters of credit available is $250 million. The Parent Company would be liable to the extent that TMK Re, Ltd. does not pay the reinsured party. The amount outstanding at June 30, 2023 was $115 million.

Litigation: Globe Life Inc. and its subsidiaries, in common with the insurance industry in general, are subject to litigation, including putative class action litigation, alleged breaches of contract, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of agents of the Parent Company's insurance subsidiaries, employment discrimination, and miscellaneous other causes of action. Based upon information presently available, and in light of legal and other factual defenses available to the Parent Company and its subsidiaries, management does not believe that it is reasonably possible that such litigation will have a material adverse effect on Globe Life's financial condition, future operating results or liquidity; however, assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future. This bespeaks caution, particularly in states with reputations for high punitive damage verdicts. Globe Life's management recognizes that large punitive damage awards bearing little or no relation to actual damages continue to be awarded by juries in jurisdictions in which the Company has substantial business, creating the potential for unpredictable material adverse judgments in any given punitive damage suit.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 6—Policy Liabilities

The liability for future policy benefits is determined based on the net level premium method, which requires the liability be calculated as the present value of estimated future policyholder benefits and the related termination expenses, less the present value of estimated future net premiums to be collected from policyholders.

The following tables summarize balances and changes in the net liability for future policy benefits, before reinsurance, for traditional life long-duration contracts for the three and six month periods ended June 30, 2023 and 2022:


	Life
	Present value of expected future net premiums
	American Income		DTC		Liberty National		Other		Total
Balance at January 1, 2022	$	4,925,192	$	7,264,905	$	1,332,469	$	559,972	$	14,082,538
Beginning balance at original discount rates	3,906,098		5,533,741		1,040,242		416,141		10,896,222
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(17,340)		(91,461)		(9,125)		(3,497)		(121,423)
Adjusted balance at January 1, 2022	3,888,758		5,442,280		1,031,117		412,644		10,774,799
Issuances(1)	420,277		338,996		48,806		15,597		823,676
Interest accrual(2)	86,841		135,858		25,585		10,304		258,588
Net premiums collected(3)	(242,510)		(300,778)		(63,353)		(21,627)		(628,268)

Effect of changes in the foreign exchange rate	(7,272)		—		—		—		(7,272)
Ending balance at original discount rates	4,146,094		5,616,356		1,042,155		416,918		11,221,523

Effect of change from original to current discount rates	233,402		548,590		80,917		45,046		907,955
Balance at June 30, 2022	$	4,379,496	$	6,164,946	$	1,123,072	$	461,964	$	12,129,478

Balance at January 1, 2023	$	4,273,156	$	5,910,224	$	1,094,407	$	470,741	$	11,748,528
Beginning balance at original discount rates	4,246,723		5,680,864		1,066,123		449,209		11,442,919
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(69,352)		(128,602)		(15,593)		(6,650)		(220,197)
Adjusted balance at January 1, 2023	4,177,371		5,552,262		1,050,530		442,559		11,222,722
Issuances(1)	376,021		313,748		60,848		14,611		765,228
Interest accrual(2)	96,850		142,473		26,655		11,331		277,309
Net premiums collected(3)	(256,959)		(308,129)		(66,472)		(23,026)		(654,586)

Effect of changes in the foreign exchange rate	5,770		—		—		—		5,770
Ending balance at original discount rates	4,399,053		5,700,354		1,071,561		445,475		11,616,443

Effect of change from original to current discount rates	73,794		288,223		38,456		25,804		426,277
Balance at June 30, 2023	$	4,472,847	$	5,988,577	$	1,110,017	$	471,279	$	12,042,720

(1)Issuances represent the present value, using the original discount rate, of the expected net premiums related to new policies issued during each respective period.

(2)The interest accrual is the interest earned on the beginning present value of the expected net premiums, as well as the interest on actual net premiums earned during the period, using the original interest rate.

(3)Net premiums collected represent the product of the current period net premium ratio, and the gross premiums collected during the period on the in-force business.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Life
	Present value of expected future net premiums
	American Income		DTC		Liberty National		Other		Total
Balance at April 1, 2022	$	4,646,747	$	6,710,655	$	1,224,988	$	511,832	$	13,094,222
Beginning balance at original discount rates	4,043,480		5,595,772		1,043,765		419,434		11,102,451
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(13,025)		(61,865)		(8,500)		(5,149)		(88,539)
Adjusted balance at April 1, 2022	4,030,455		5,533,907		1,035,265		414,285		11,013,912
Issuances(1)	204,351		165,221		25,841		8,297		403,710
Interest accrual(2)	43,767		68,250		12,775		5,132		129,924
Net premiums collected(3)	(122,307)		(151,022)		(31,726)		(10,796)		(315,851)

Effect of changes in the foreign exchange rate	(10,172)		—		—		—		(10,172)
Ending balance at original discount rates	4,146,094		5,616,356		1,042,155		416,918		11,221,523

Effect of change from original to current discount rates	233,402		548,590		80,917		45,046		907,955
Balance at June 30, 2022	$	4,379,496	$	6,164,946	$	1,123,072	$	461,964	$	12,129,478

Balance at April 1, 2023	$	4,467,637	$	6,110,550	$	1,128,083	$	483,056	$	12,189,326
Beginning balance at original discount rates	4,325,957		5,718,900		1,070,775		448,677		11,564,309
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(39,371)		(80,616)		(10,004)		(4,764)		(134,755)
Adjusted balance at April 1, 2023	4,286,586		5,638,284		1,060,771		443,913		11,429,554
Issuances(1)	183,466		144,796		30,706		7,370		366,338
Interest accrual(2)	48,952		71,484		13,368		5,661		139,465
Net premiums collected(3)	(129,720)		(154,210)		(33,284)		(11,469)		(328,683)

Effect of changes in the foreign exchange rate	9,769		—		—		—		9,769
Ending balance at original discount rates	4,399,053		5,700,354		1,071,561		445,475		11,616,443

Effect of change from original to current discount rates	73,794		288,223		38,456		25,804		426,277
Balance at June 30, 2023	$	4,472,847	$	5,988,577	$	1,110,017	$	471,279	$	12,042,720

(1)Issuances represent the present value, using the original discount rate, of the expected net premiums related to new policies issued during each respective period.

(3)Net premiums collected represent the product of the current period net premium ratio, and the gross premiums collected during the period on the in-force business.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


		Life
	Present value of expected future policy benefits
	American Income			DTC			Liberty National			Other			Total
Balance at January 1, 2022		$	11,773,519		$	11,859,408		$	4,542,697		$	5,488,684		$	33,664,308
Beginning balance at original discount rates		7,744,201			8,157,259			3,206,164			3,267,306			22,374,930
Effect of changes in assumptions of future cash flows		—			—			—			—			—
Effect of actual variances from expected experience		(17,082)			(87,036)			(9,466)			(4,473)			(118,057)
Adjusted balance at January 1, 2022		7,727,119			8,070,223			3,196,698			3,262,833			22,256,873
Issuances(1)		420,277			338,995			48,806			15,597			823,675
Interest accrual(2)		202,147			214,751			84,422			96,844			598,164
Benefit payments(3)		(198,179)			(329,201)			(114,615)			(63,170)			(705,165)

Effect of changes in the foreign exchange rate		(16,658)			—			—			—			(16,658)
Ending balance at original discount rates		8,134,706			8,294,768			3,215,311			3,312,104			22,956,889
Effect of change from original to current discount rates		1,377,565			1,369,441			407,331			908,726			4,063,063
Balance at June 30, 2022		$	9,512,271		$	9,664,209		$	3,622,642		$	4,220,830		$	27,019,952





Balance at January 1, 2023	$	9,119,104	$	9,225,451	$	3,429,256	$	3,976,150	$	25,749,961
Beginning balance at original discount rates	8,409,761		8,477,892		3,272,980		3,403,704		23,564,337
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(72,388)		(130,006)		(13,119)		(8,367)		(223,880)
Adjusted balance at January 1, 2023	8,337,373		8,347,886		3,259,861		3,395,337		23,340,457
Issuances(1)	376,021		313,749		60,848		14,611		765,229
Interest accrual(2)	220,666		226,661		86,722		101,129		635,178
Benefit payments(3)	(194,971)		(295,399)		(109,650)		(62,586)		(662,606)

Effect of changes in the foreign exchange rate	14,437		—		—		—		14,437
Ending balance at original discount rates	8,753,526		8,592,897		3,297,781		3,448,491		24,092,695
Effect of change from original to current discount rates	914,681		894,336		210,064		661,215		2,680,296
Balance at June 30, 2023	$	9,668,207	$	9,487,233	$	3,507,845	$	4,109,706	$	26,772,991

(1)Issuances represent the present value, using the original discount rate, of the expected future policy benefits related to new policies issued during each respective period.

(2)The interest accrual is the interest earned on the beginning present value of the expected future policy benefits, as well as the interest on actual benefits and expenses paid during the period, using the original interest rate.

(3)Benefit payments represent the release of the present value, using the original discount rate, of the actual future policy benefits incurred during the period due to death, lapse, and maturity benefit payments based on the revised expected assumptions.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


		Life
	Present value of expected future policy benefits
	American Income			DTC			Liberty National			Other			Total
Balance at April 1, 2022		$	10,652,256		$	10,750,349		$	4,066,234		$	4,848,375		$	30,317,214
Beginning balance at original discount rates		7,959,694			8,238,501			3,208,055			3,290,269			22,696,519
Effect of changes in assumptions of future cash flows		—			—			—			—			—
Effect of actual variances from expected experience		(14,123)			(61,186)			(9,619)			(6,153)			(91,081)
Adjusted balance at April 1, 2022		7,945,571			8,177,315			3,198,436			3,284,116			22,605,438
Issuances(1)		204,351			165,220			25,841			8,297			403,709
Interest accrual(2)		101,811			107,823			42,192			48,564			300,390
Benefit payments(3)		(93,858)			(155,590)			(51,158)			(28,873)			(329,479)

Effect of changes in the foreign exchange rate		(23,169)			—			—			—			(23,169)
Ending balance at original discount rates		8,134,706			8,294,768			3,215,311			3,312,104			22,956,889
Effect of change from original to current discount rates		1,377,565			1,369,441			407,331			908,726			4,063,063
Balance at June 30, 2022		$	9,512,271		$	9,664,209		$	3,622,642		$	4,220,830		$	27,019,952





Balance at April 1, 2023	$	9,637,463	$	9,624,680	$	3,559,012	$	4,166,527	$	26,987,682
Beginning balance at original discount rates	8,573,734		8,563,604		3,284,594		3,427,535		23,849,467
Effect of changes in assumptions of future cash flows	—		—		—		—		—
Effect of actual variances from expected experience	(40,862)		(81,059)		(6,065)		(5,471)		(133,457)
Adjusted balance at April 1, 2023	8,532,872		8,482,545		3,278,529		3,422,064		23,716,010
Issuances(1)	183,466		144,797		30,706		7,370		366,339
Interest accrual(2)	111,337		113,893		43,466		50,751		319,447
Benefit payments(3)	(98,297)		(148,338)		(54,920)		(31,694)		(333,249)

Effect of changes in the foreign exchange rate	24,148		—		—		—		24,148
Ending balance at original discount rates	8,753,526		8,592,897		3,297,781		3,448,491		24,092,695
Effect of change from original to current discount rates	914,681		894,336		210,064		661,215		2,680,296
Balance at June 30, 2023	$	9,668,207	$	9,487,233	$	3,507,845	$	4,109,706	$	26,772,991

(1)Issuances represent the present value, using the original discount rate, of the expected future policy benefits related to new policies issued during each respective period.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Life
	Net liability for future policy benefits as of June 30, 2022
	American Income		DTC		Liberty National		Other		Total
Net liability for future policy benefits at original discount rates	$	3,988,612	$	2,678,412	$	2,173,156	$	2,895,186	$	11,735,366
Effect of changes in discount rate assumptions	1,144,163		820,851		326,414		863,680		3,155,108
Net liability for future policy benefits at current discount rates	5,132,775		3,499,263		2,499,570		3,758,866		14,890,474
Other Adjustments(1)	21		2,239		(10,874)		(37,397)		(46,011)
Net liability for future policy benefits, after other adjustments, at current discount rates	$	5,132,796	$	3,501,502	$	2,488,696	$	3,721,469	$	14,844,463

(1)Other adjustments include the Company's reinsurance recoverable and the effects of capping and flooring the liability.


	Life
	Net liability for future policy benefits as of June 30, 2023
	American Income		DTC		Liberty National		Other		Total
Net liability for future policy benefits at original discount rates	$	4,354,473	$	2,892,543	$	2,226,220	$	3,003,016	$	12,476,252
Effect of changes in discount rate assumptions	840,887		606,113		171,608		635,411		2,254,019
Net liability for future policy benefits at current discount rates	5,195,360		3,498,656		2,397,828		3,638,427		14,730,271
Other Adjustments(1)	(70)		4,750		58		(36,437)		(31,699)
Net liability for future policy benefits, after other adjustments, at current discount rates	$	5,195,290	$	3,503,406	$	2,397,886	$	3,601,990	$	14,698,572

(1)Other adjustments include the Company's reinsurance recoverable and the effects of capping and flooring the liability.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables summarize balances and changes in the net liability for future policy benefits for long-duration health contracts for the three and six month periods ended June 30, 2023 and 2022:


	Health
	Present value of expected future net premiums
	United American		Family Heritage		Liberty National		American Income		DTC		Total
Balance at January 1, 2022	$	3,611,659	$	1,944,714	$	517,368	$	222,553	$	121,724	$	6,418,018
Beginning balance at original discount rates	2,949,851		1,688,590		414,409		178,801		96,776		5,328,427
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	(35,736)		(35,913)		(24,189)		(5,260)		(1,543)		(102,641)
Adjusted balance at January 1, 2022	2,914,115		1,652,677		390,220		173,541		95,233		5,225,786
Issuances(1)	175,070		109,933		22,613		20,424		2,323		330,363
Interest accrual(2)	61,205		30,014		9,593		3,680		2,353		106,845
Net premiums collected(3)	(127,736)		(85,830)		(25,685)		(10,540)		(5,157)		(254,948)

Effect of changes in the foreign exchange rate	—		—		—		(807)		—		(807)
Ending balance at original discount rates	3,022,654		1,706,794		396,741		186,298		94,752		5,407,239

Effect of change from original to current discount rates	116,052		(56,287)		28,536		7,238		7,681		103,220
Balance at June 30, 2022	$	3,138,706	$	1,650,507	$	425,277	$	193,536	$	102,433	$	5,510,459

Balance at January 1, 2023	$	2,908,501	$	1,594,992	$	423,490	$	190,296	$	90,143	$	5,207,422
Beginning balance at original discount rates	2,941,261		1,729,219		415,442		192,631		87,751		5,366,304
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	(28,923)		(34,394)		(27,833)		(5,249)		(1,895)		(98,294)
Adjusted balance at January 1, 2023	2,912,338		1,694,825		387,609		187,382		85,856		5,268,010
Issuances(1)	143,716		132,346		28,191		20,787		4,215		329,255
Interest accrual(2)	63,854		32,819		9,666		4,134		2,118		112,591
Net premiums collected(3)	(134,248)		(88,784)		(25,286)		(10,981)		(5,349)		(264,648)

Effect of changes in the foreign exchange rate	—		—		—		387		—		387
Ending balance at original discount rates	2,985,660		1,771,206		400,180		201,709		86,840		5,445,595

Effect of change from original to current discount rates	(1,106)		(110,186)		9,371		135		2,834		(98,952)
Balance at June 30, 2023	$	2,984,554	$	1,661,020	$	409,551	$	201,844	$	89,674	$	5,346,643

(1)Issuances represent the present value, using the original discount rate, of the expected net premiums related to new policies issued during each respective period.

(3)Net premiums collected represent the product of the current period net premium ratio, and the gross premiums collected during the period on the in-force business.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Health
	Present value of expected future net premiums
	United American		Family Heritage		Liberty National		American Income		DTC		Total
Balance at April 1, 2022	$	3,337,152	$	1,790,237	$	463,452	$	208,064	$	109,734	$	5,908,639
Beginning balance at original discount rates	2,957,769		1,699,135		401,751		183,679		94,408		5,336,742
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	13,826		(20,751)		(8,728)		(2,795)		336		(18,112)
Adjusted balance at April 1, 2022	2,971,595		1,678,384		393,023		180,884		94,744		5,318,630
Issuances(1)	85,036		56,415		11,798		9,972		1,443		164,664
Interest accrual(2)	30,866		15,074		4,721		1,849		1,171		53,681
Net premiums collected(3)	(64,843)		(43,079)		(12,801)		(5,288)		(2,606)		(128,617)

Effect of changes in the foreign exchange rate	—		—		—		(1,119)		—		(1,119)
Ending balance at original discount rates	3,022,654		1,706,794		396,741		186,298		94,752		5,407,239

Effect of change from original to current discount rates	116,052		(56,287)		28,536		7,238		7,681		103,220
Balance at June 30, 2022	$	3,138,706	$	1,650,507	$	425,277	$	193,536	$	102,433	$	5,510,459

Balance at April 1, 2023	$	2,997,723	$	1,664,414	$	421,447	$	200,666	$	90,243	$	5,374,493
Beginning balance at original discount rates	2,948,641		1,750,468		404,647		197,446		85,966		5,387,168
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	5,210		(15,636)		(11,249)		(3,629)		679		(24,625)
Adjusted balance at April 1, 2023	2,953,851		1,734,832		393,398		193,817		86,645		5,362,543
Issuances(1)	67,875		64,559		14,888		10,575		1,823		159,720
Interest accrual(2)	32,267		16,620		4,776		2,098		1,061		56,822
Net premiums collected(3)	(68,333)		(44,805)		(12,882)		(5,556)		(2,689)		(134,265)

Effect of changes in the foreign exchange rate	—		—		—		775		—		775
Ending balance at original discount rates	2,985,660		1,771,206		400,180		201,709		86,840		5,445,595

Effect of change from original to current discount rates	(1,106)		(110,186)		9,371		135		2,834		(98,952)
Balance at June 30, 2023	$	2,984,554	$	1,661,020	$	409,551	$	201,844	$	89,674	$	5,346,643

(1)Issuances represent the present value, using the original discount rate, of the expected net premiums related to new policies issued during each respective period.

(3)Net premiums collected represent the product of the current period net premium ratio, and the gross premiums collected during the period on the in-force business.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


		Health
	Present value of expected future policy benefits
	United American			Family Heritage			Liberty National			American Income			DTC			Total
Balance at January 1, 2022		$	3,810,559		$	3,840,322		$	1,201,317		$	380,915		$	119,888		$	9,353,001
Beginning balance at original discount rates		3,090,901			3,193,342			921,608			285,604			95,628			7,587,083
Effect of changes in assumptions of future cash flows		—			—			—			—			—			—
Effect of actual variances from expected experience		(38,057)			(37,106)			(23,919)			(5,684)			(1,615)			(106,381)
Adjusted balance at January 1, 2022		3,052,844			3,156,236			897,689			279,920			94,013			7,480,702
Issuances(1)		174,828			109,933			22,792			20,424			2,310			330,287
Interest accrual(2)		65,107			59,584			24,035			6,886			2,352			157,964
Benefit payments(3)		(132,751)			(58,509)			(48,379)			(10,192)			(6,532)			(256,363)

Effect of changes in the foreign exchange rate		—			—			—			(1,467)			—			(1,467)
Ending balance at original discount rates		3,160,028			3,267,244			896,137			295,571			92,143			7,711,123
Effect of change from original to current discount rates		125,668			(137,367)			89,077			26,397			7,341			111,116
Balance at June 30, 2022		$	3,285,696		$	3,129,877		$	985,214		$	321,968		$	99,484		$	7,822,239





Balance at January 1, 2023	$	3,046,829	$	3,005,664	$	941,574	$	312,750	$	87,532	$	7,394,349
Beginning balance at original discount rates	3,080,633		3,336,344		904,865		303,713		85,212		7,710,767
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	(27,940)		(36,292)		(27,018)		(6,018)		(1,830)		(99,098)
Adjusted balance at January 1, 2023	3,052,693		3,300,052		877,847		297,695		83,382		7,611,669
Issuances(1)	143,404		132,346		27,901		20,787		4,208		328,646
Interest accrual(2)	67,592		65,320		23,526		7,389		2,118		165,945
Benefit payments(3)	(146,921)		(61,551)		(48,395)		(11,660)		(6,520)		(275,047)

Effect of changes in the foreign exchange rate	—		—		—		876		—		876
Ending balance at original discount rates	3,116,768		3,436,167		880,879		315,087		83,188		7,832,089
Effect of change from original to current discount rates	(379)		(268,706)		42,269		13,492		2,668		(210,656)
Balance at June 30, 2023	$	3,116,389	$	3,167,461	$	923,148	$	328,579	$	85,856	$	7,621,433

(1)Issuances represent the present value, using the original discount rate, of the expected future policy benefits related to new policies issued during each respective period.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


		Health
	Present value of expected future policy benefits
	United American			Family Heritage			Liberty National			American Income			DTC			Total
Balance at April 1, 2022		$	3,508,485		$	3,476,639		$	1,082,425		$	351,631		$	107,034		$	8,526,214
Beginning balance at original discount rates		3,095,417			3,232,281			905,739			292,356			92,272			7,618,065
Effect of changes in assumptions of future cash flows		—			—			—			—			—			—
Effect of actual variances from expected experience		12,396			(21,437)			(8,130)			(3,040)			410			(19,801)
Adjusted balance at April 1, 2022		3,107,813			3,210,844			897,609			289,316			92,682			7,598,264
Issuances(1)		84,924			56,415			11,926			9,972			1,434			164,671
Interest accrual(2)		32,799			30,001			11,916			3,454			1,170			79,340
Benefit payments(3)		(65,508)			(30,016)			(25,314)			(5,148)			(3,143)			(129,129)

Effect of changes in the foreign exchange rate		—			—			—			(2,023)			—			(2,023)
Ending balance at original discount rates		3,160,028			3,267,244			896,137			295,571			92,143			7,711,123
Effect of change from original to current discount rates		125,668			(137,367)			89,077			26,397			7,341			111,116
Balance at June 30, 2022		$	3,285,696		$	3,129,877		$	985,214		$	321,968		$	99,484		$	7,822,239





Balance at April 1, 2023	$	3,132,462	$	3,174,672	$	949,996	$	326,533	$	87,090	$	7,670,753
Beginning balance at original discount rates	3,079,790		3,387,380		890,019		308,170		83,001		7,748,360
Effect of changes in assumptions of future cash flows	—		—		—		—		—		—
Effect of actual variances from expected experience	3,503		(16,513)		(11,023)		(4,439)		472		(28,000)
Adjusted balance at April 1, 2023	3,083,293		3,370,867		878,996		303,731		83,473		7,720,360
Issuances(1)	67,721		64,559		14,616		10,575		1,820		159,291
Interest accrual(2)	34,112		33,031		11,686		3,721		1,061		83,611
Benefit payments(3)	(68,358)		(32,290)		(24,419)		(4,523)		(3,166)		(132,756)

Effect of changes in the foreign exchange rate	—		—		—		1,583		—		1,583
Ending balance at original discount rates	3,116,768		3,436,167		880,879		315,087		83,188		7,832,089
Effect of change from original to current discount rates	(379)		(268,706)		42,269		13,492		2,668		(210,656)
Balance at June 30, 2023	$	3,116,389	$	3,167,461	$	923,148	$	328,579	$	85,856	$	7,621,433

(1)Issuances represent the present value, using the original discount rate, of the expected future policy benefits related to new policies issued during each respective period.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Health
	Net liability for future policy benefits as of June 30, 2022
	United American		Family Heritage		Liberty National		American Income		Direct to Consumer		Total
Net liability for future policy benefits at original discount rates	$	137,374	$	1,560,450	$	499,396	$	109,273	$	(2,609)	$	2,303,884
Effect of changes in discount rate assumptions	9,616		(81,080)		60,541		19,159		(340)		7,896
Net liability for future policy benefits at current discount rates	146,990		1,479,370		559,937		128,432		(2,949)		2,311,780
Other Adjustments(1)	(1,405)		(6,461)		1,998		48		4,007		(1,813)
Net liability for future policy benefits, after other adjustments, at current discount rates	$	145,585	$	1,472,909	$	561,935	$	128,480	$	1,058	$	2,309,967

(1)Other adjustments include the Company's reinsurance recoverable and the effects of capping and flooring the liability.


	Health
	Net liability for future policy benefits as of June 30, 2023
	United American		Family Heritage		Liberty National		American Income		Direct to Consumer		Total
Net liability for future policy benefits at original discount rates	131,108		1,664,961		480,699		113,378		(3,652)		2,386,494
Effect of changes in discount rate assumptions	727		(158,520)		32,898		13,357		(166)		(111,704)
Net liability for future policy benefits at current discount rates	131,835		1,506,441		513,597		126,735		(3,818)		2,274,790
Other Adjustments(1)	1,104		(9,797)		4,671		605		4,645		1,228
Net liability for future policy benefits, after other adjustments, at current discount rates	$	132,939	$	1,496,644	$	518,268	$	127,340	$	827	$	2,276,018

(1)Other adjustments include the Company's reinsurance recoverable and the effects of capping and flooring the liability.

During the six months ended June 30, 2023 and 2022, the Company's results for actual variances from expected experience produced a net reserve remeasurement gain of $5.6 million and an immaterial net remeasurement loss in the Condensed Consolidated Statements of Operations, respectively. During the three months ended June 30, 2023 and 2022, the Company's results for actual variances from expected experience produced a net reserve remeasurement gain of $5.0 million and $3.8 million in the Condensed Consolidated Statements of Operations, respectively. The variance of actual experience from expected experience during the first six months of 2023 was primarily due to favorable variances from our assumptions of life experience as compared to actual experience in our life insurance segment (a $5.1 million gain), and favorable variances from our assumptions of health experience as compared to actual experience in our health insurance segment (a $0.5 million gain). The variance of actual experience from expected experience during the six months ended 2022 was primarily due to unfavorable variances from our assumptions of life experience as compared to actual experience in our life insurance segment (a $4.1 million loss), and favorable variances from our assumptions of health experience as compared to actual experience in our health insurance segment (a $4.0 million gain). The health segment's utilization has returned to normal levels in 2023, specifically in the United American and Liberty National channels. There were no changes to the inputs, judgments, assumptions, and methods used in measuring the liability for future policy benefits during the six months ended June 30, 2023 and 2022.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table reconciles the liability for future policy benefits to the Consolidated Balance Sheets as of June 30, 2023:



	At Original Discount Rates				At Current Discount Rates
	As of June 30,				As of June 30,
	2023		2022		2023		2022
Life(1):
American Income	$	4,354,403	$	3,988,588	$	5,195,290	$	5,132,796
Direct to Consumer	2,892,543		2,678,413		3,503,406		3,501,502
Liberty National	2,218,639		2,161,743		2,397,886		2,488,696
Other	2,976,680		2,870,179		3,601,990		3,721,469
Net liability for future policy benefits—long duration life	12,442,265		11,698,923		14,698,572		14,844,463

Health(1):
United American	130,624		135,532		132,939		145,585
Family Heritage	1,654,616		1,551,200		1,496,644		1,472,909
Liberty National	484,458		500,950		518,268		561,935
American Income	113,981		109,318		127,340		128,480
Direct to Consumer	798		993		827		1,058
Net liability for future policy benefits—long duration health	2,384,477		2,297,993		2,276,018		2,309,967

Deferred profit liability	172,531		184,680		172,531		184,680
Deferred annuity	853,064		1,015,804		853,064		1,015,804
Interest sensitive life	736,920		742,293		736,920		742,293
Other	9,406		8,121		9,409		8,127
Total future policy benefits	$	16,598,663	$	15,947,814	$	18,746,514	$	19,105,334

(1)Balances are presented net of the reinsurance recoverable and the effects of flooring the liability.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables provide the weighted-average original and current discount rates for the liability for future policy benefits and the additional insurance liabilities as of June 30, 2023 and 2022:


	Life
	Weighted-average Discount Rates
	As of June 30, 2023								As of June 30, 2022
	American Income		DTC		Liberty National		Other		American Income		DTC		Liberty National		Other

Original discount rate	5.8	%	6.0	%	5.6	%	6.2	%	5.8	%	6.0	%	5.6	%	6.2	%
Current discount rate	5.0	%	5.1	%	5.1	%	5.1	%	4.8	%	4.8	%	4.7	%	4.7	%


	Health
	Weighted-average Discount Rates
	As of June 30, 2023										As of June 30, 2022
	United American		Family Heritage		Liberty National		American Income		DTC		United American		Family Heritage		Liberty National		American Income		DTC

Original discount rate	5.1	%	4.3	%	5.8	%	5.9	%	5.1	%	5.2	%	4.3	%	5.8	%	5.9	%	5.2	%
Current discount rate	4.9	%	5.1	%	5.1	%	4.9	%	4.9	%	4.6	%	4.8	%	4.6	%	4.6	%	4.6	%

The following table provides the weighted-average durations of the liability for future policy benefits and the additional insurance liabilities as of June 30, 2023 and 2022:


		As of June 30,
	2023			2022
		At original discount rates	At current discount rates		At original discount rates	At current discount rates
Life
American Income		22.91	23.45		22.88	23.50
Direct to Consumer		20.12	21.81		20.78	22.51
Liberty National		14.97	15.69		15.11	16.09
Other		16.44	18.19		16.70	18.76

Health
United American		11.37	10.79		11.74	11.23
Family Heritage		14.87	14.41		15.36	15.00
Liberty National		9.34	9.68		9.02	9.52
American Income		12.12	12.73		12.51	13.25
Direct to Consumer		11.37	10.79		11.74	11.23

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables summarize the amount of gross premiums and interest, net of reinsurance, related to long duration life and health contracts that are recognized in the Condensed Consolidated Statements of Operations:


	Life
	Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
	Gross Premiums		Interest expense		Gross Premiums		Interest expense
American Income	$	781,453	$	123,816	$	745,128	$	115,305
Direct to Consumer	490,443		84,062		486,929		78,834
Liberty National	169,570		59,670		159,453		58,592
Other	103,343		88,926		104,550		85,713
Total	$	1,544,809	$	356,474	$	1,496,060	$	338,444


	Life
	Three Months Ended June 30, 2023				Three Months Ended June 30, 2022
	Gross Premiums		Interest expense		Gross Premiums		Interest expense
American Income	$	394,308	$	62,385	$	375,391	$	58,043
Direct to Consumer	245,736		42,348		244,267		39,542
Liberty National	85,498		29,901		80,105		29,307
Other	51,507		44,652		52,163		43,016
Total	$	777,049	$	179,286	$	751,926	$	169,908


	Health
	Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
	Gross Premiums		Interest expense		Gross Premiums		Interest expense
United American	$	198,679	$	3,604	$	187,881	$	3,791
Family Heritage	194,219		32,272		180,298		29,371
Liberty National	93,434		13,801		94,097		14,398
American Income	56,335		3,256		55,941		3,206
Direct to Consumer	7,097		—		7,130		—
Total	$	549,764	$	52,933	$	525,347	$	50,766


	Health
	Three Months Ended June 30, 2023				Three Months Ended June 30, 2022
	Gross Premiums		Interest expense		Gross Premiums		Interest expense
United American	$	100,847	$	1,782	$	95,615	$	1,878
Family Heritage	98,129		16,295		90,758		14,826
Liberty National	46,690		6,881		46,601		7,172
American Income	28,239		1,624		28,004		1,605
Direct to Consumer	3,555		—		3,594		—
Total	$	277,460	$	26,582	$	264,572	$	25,481

Gross premiums are included within life and health premium on the Condensed Consolidated Statements of Operations, while the related interest expense is included in life and health policyholder benefits.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables provide the undiscounted and discounted expected future net premiums, expected future gross premiums, and expected future policy benefits, at both original and current discount rates, for life and health contracts:


	Life
	As of June 30, 2023						As of June 30, 2022
	Not discounted		At original discount rates		At current discount rates		Not discounted		At original discount rates		At current discount rates
American Income
PV of expected future gross premiums	$	23,507,444	$	13,292,363	$	13,604,682	$	22,241,655	$	12,593,870	$	13,403,810
PV of expected future net premiums	7,764,339		4,399,053		4,472,847		7,299,282		4,146,094		4,379,496
PV of expected future policy benefits	29,442,642		8,753,526		9,668,207		27,485,575		8,134,706		9,512,271

DTC
PV of expected future gross premiums	$	17,486,509	$	9,157,664	$	9,599,872	$	17,479,973	$	9,139,637	$	10,021,214
PV of expected future net premiums	10,811,358		5,700,354		5,988,577		10,669,169		5,616,356		6,164,946
PV of expected future policy benefits	25,685,249		8,592,897		9,487,233		25,039,202		8,294,768		9,664,209

Liberty National
PV of expected future gross premiums	$	4,511,931	$	2,630,182	$	2,657,925	$	4,305,035	$	2,511,938	$	2,653,354
PV of expected future net premiums	1,891,335		1,071,561		1,110,017		1,849,968		1,042,155		1,123,072
PV of expected future policy benefits	8,710,626		3,297,781		3,507,845		8,542,769		3,215,311		3,622,642

Other
PV of expected future gross premiums	$	3,773,740	$	1,909,405	$	2,075,784	$	3,888,394	$	1,943,515	$	2,219,226
PV of expected future net premiums	914,258		445,475		471,279		865,231		416,918		461,964
PV of expected future policy benefits	12,398,774		3,448,491		4,109,706		12,297,303		3,312,104		4,220,830

Total
PV of expected future gross premiums	$	49,279,624	$	26,989,614	$	27,938,263	$	47,915,057	$	26,188,960	$	28,297,604
PV of expected future net premiums	21,381,290		11,616,443		12,042,720		20,683,650		11,221,523		12,129,478
PV of expected future policy benefits	76,237,291		24,092,695		26,772,991		73,364,849		22,956,889		27,019,952

As of June 30, 2023 for the life segment using current discount rates, the Company anticipates $27.9 billion of expected future gross premiums and $12.0 billion of expected future net premiums. As of June 30, 2022 using current discount rates, the Company anticipated $28.3 billion of expected future gross premiums and $12.1 billion in expected future net premiums. For each respective period, only expected future net premiums are included in the determination of the liability for future policy benefits on the balance sheet, while the difference between the expected future gross premiums and the expected future net premiums is not.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Health
	As of June 30, 2023						As of June 30, 2022
	Not discounted		At original discount rates		At current discount rates		Not discounted		At original discount rates		At current discount rates
United American
PV of expected future gross premiums	$	6,896,513	$	4,338,871	$	4,335,298	$	7,009,500	$	4,355,843	$	4,522,406
PV of expected future net premiums	4,754,498		2,985,660		2,984,554		4,881,053		3,022,654		3,138,706
PV of expected future policy benefits	4,976,470		3,116,768		3,116,389		5,161,077		3,160,028		3,285,696

Family Heritage
PV of expected future gross premiums	$	6,569,913	$	3,903,618	$	3,684,436	$	5,972,275	$	3,605,039	$	3,512,619
PV of expected future net premiums	2,958,074		1,771,206		1,661,020		2,805,839		1,706,794		1,650,507
PV of expected future policy benefits	6,483,691		3,436,167		3,167,461		6,083,626		3,267,244		3,129,877

Liberty National
PV of expected future gross premiums	$	2,212,104	$	1,382,884	$	1,429,939	$	2,146,129	$	1,341,205	$	1,450,309
PV of expected future net premiums	627,206		400,180		409,551		631,366		396,741		425,277
PV of expected future policy benefits	1,561,839		880,879		923,148		1,576,325		896,137		985,214

American Income
PV of expected future gross premiums	$	1,787,907	$	998,307	$	1,035,471	$	1,734,015	$	969,006	$	1,043,861
PV of expected future net premiums	360,163		201,709		201,844		328,892		186,298		193,536
PV of expected future policy benefits	640,722		315,087		328,579		605,818		295,571		321,968

Direct to Consumer
PV of expected future gross premiums	$	174,681	$	114,216	$	118,015	$	203,964	$	129,704	$	140,200
PV of expected future net premiums	133,047		86,840		89,674		149,366		94,752		102,433
PV of expected future policy benefits	125,192		83,188		85,856		143,327		92,143		99,484

Total
PV of expected future gross premiums	$	17,641,118	$	10,737,896	$	10,603,159	$	17,065,883	$	10,400,797	$	10,669,395
PV of expected future net premiums	8,832,988		5,445,595		5,346,643		8,796,516		5,407,239		5,510,459
PV of expected future policy benefits	13,787,914		7,832,089		7,621,433		13,570,173		7,711,123		7,822,239

As of June 30, 2023 for the health segment using current discount rates, the Company anticipates $10.6 billion of expected future gross premiums and $5.3 billion of expected future net premiums. As of June 30, 2022 using current discount rates, the Company anticipated $10.7 billion of expected future gross premiums and $5.5 billion in expected future net premiums. For each respective period, only expected future net premiums are included in the determination of the liability for future policy benefits on the balance sheet, while the difference between the expected future gross premiums and the expected future net premiums is not.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table summarizes the balances of, and changes in, policyholders’ account balances as of June 30, 2023 and 2022:


	Policyholders' Account Balances
	2023						2022
	Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds		Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds
Balance at January 1,	$	739,105	$	954,318	$	123,234	$	745,335	$	1,033,525	$	99,468
Issuances	—		371		—		—		693		—
Premiums received	11,664		8,104		68,409		12,387		14,074		3,892
Policy charges	(6,516)		—		—		(6,874)		—		—
Surrenders and withdrawals	(10,622)		(87,271)		(6,324)		(10,753)		(26,116)		(5,642)
Benefit payments	(15,495)		(37,412)		—		(18,361)		(23,452)		—

Interest credited	14,191		14,745		3,339		14,365		16,590		2,258
Other	4,593		209		(785)		6,194		490		258
Balance at June 30,	$	736,920	$	853,064	$	187,873	$	742,293	$	1,015,804	$	100,234


	Policyholders' Account Balances
	2023						2022
	Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds		Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds
Balance at April 1,	$	737,900	$	907,797	$	142,686	$	744,244	$	1,027,087	$	100,124
Issuances	—		169		—		—		353		—
Premiums received	5,634		3,328		46,747		6,090		5,858		1,848
Policy charges	(3,197)		—		—		(3,400)		—		—
Surrenders and withdrawals	(5,238)		(43,738)		(3,021)		(5,473)		(14,243)		(2,837)
Benefit payments	(7,651)		(21,628)		—		(9,362)		(11,379)		—

Interest credited	7,056		7,185		2,101		7,195		8,300		1,133
Other	2,416		(49)		(640)		2,999		(172)		(34)
Balance at June 30,	$	736,920	$	853,064	$	187,873	$	742,293	$	1,015,804	$	100,234


Weighted-average credit rate	3.88		%	3.30	%	5.18	%	3.93		%	3.29	%	4.60	%
Net amount at risk	$	1,819,695		N/A		N/A		$	1,924,662		N/A		N/A
Cash surrender value	675,044			853,064		187,872		691,193			1,015,786		100,234

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables present the policyholders' account balances by range of guaranteed minimum crediting rates and the related range of difference, if any, in basis points between rates being credited to policy holders and the respective guaranteed minimums:


	At June 30, 2023
Range of guaranteed minimum crediting rates	Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds
At guaranteed minimum
Less than 3.00%	$	—	$	2,076	$	88,301
3.00%-3.99%	29,014		647,355		4,025
4.00%-4.99%	618,071		203,633		8,587
Greater than 5.00%	89,835		—		38,594
Total	736,920		853,064		139,507






51-150 basis points above
Less than 3.00%	—		—		—
3.00%-3.99%	—		—		—
4.00%-4.99%	—		—		48,366
Greater than 5.00%	—		—		—
Total	—		—		48,366





Grand Total	$	736,920	$	853,064	$	187,873


	At June 30, 2022
Range of guaranteed minimum crediting rates	Interest Sensitive Life		Deferred Annuity		Other Policyholders' Funds
At guaranteed minimum
Less than 3.00%	$	—	$	2,168	$	—
3.00%-3.99%	28,699		801,318		2,937
4.00%-4.99%	624,330		212,318		58,981
Greater than 5.00%	89,264		—		38,316
Total	$	742,293	$	1,015,804	$	100,234
51-150 basis points above
Less than 3.00%	$	—	$	—	$	—
3.00%-3.99%	—		—		—
4.00%-4.99%	—		—		—
Greater than 5.00%	—		—		—
Total	—		—		—






Grand Total	$	742,293	$	1,015,804	$	100,234

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 7—Deferred Acquisition Costs

The following tables roll forward the deferred policy acquisition costs for the three and six month periods ended June 30, 2023 and 2022:


	Life
	American Income		DTC		Liberty National		Other		Total
Balance at January 1, 2022	$	1,960,254	$	1,583,695	$	566,419	$	301,647	$	4,412,015
Capitalizations	230,021		93,657		42,814		7,018		373,510
Amortization expense	(68,264)		(46,618)		(22,335)		(8,393)		(145,610)
Foreign exchange adjustment	(5,240)		—		—		—		(5,240)
Experience adjustment	—		—		—		—		—
Balance at June 30, 2022	$	2,116,771	$	1,630,734	$	586,898	$	300,272	$	4,634,675






Balance at January 1, 2023	$	2,258,291	$	1,676,931	$	610,723	$	298,346	$	4,844,291
Capitalizations	234,172		87,389		50,649		6,767		378,977
Amortization expense	(77,742)		(49,605)		(25,163)		(8,252)		(160,762)
Foreign exchange adjustment	2,759		—		—		—		2,759
Experience adjustment	—		—		—		—		—
Balance at June 30, 2023	$	2,417,480	$	1,714,715	$	636,209	$	296,861	$	5,065,265


	Life
	American Income		DTC		Liberty National		Other		Total





Balance at April 1, 2022	$	2,042,907	$	1,608,739	$	575,838	$	300,936	$	4,528,420
Capitalizations	115,593		45,441		22,349		3,531		186,914
Amortization expense	(34,751)		(23,446)		(11,289)		(4,195)		(73,681)
Foreign exchange adjustment	(6,978)		—		—		—		(6,978)
Experience adjustment	—		—		—		—		—
Balance at June 30, 2022	$	2,116,771	$	1,630,734	$	586,898	$	300,272	$	4,634,675






Balance at April 1, 2023	$	2,332,600	$	1,699,588	$	622,532	$	297,542	$	4,952,262
Capitalizations	118,777		39,979		26,428		3,446		188,630
Amortization expense	(39,443)		(24,852)		(12,751)		(4,127)		(81,173)
Foreign exchange adjustment	5,546		—		—		—		5,546
Experience adjustment	—		—		—		—		—
Balance at June 30, 2023	$	2,417,480	$	1,714,715	$	636,209	$	296,861	$	5,065,265

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Health
	United American		Family Heritage		Liberty National		American Income		DTC		Total





Balance at January 1, 2022	$	81,140	$	388,967	$	127,537	$	49,406	$	2,032	$	649,082
Capitalizations	1,068		25,430		8,736		6,345		2		41,581
Amortization expense	(3,034)		(12,675)		(6,681)		(1,687)		(89)		(24,166)
Foreign exchange adjustment	—		—		—		(288)		—		(288)
Experience adjustment	—		—		—		—		—		—
Balance at June 30, 2022	$	79,174	$	401,722	$	129,592	$	53,776	$	1,945	$	666,209
















Balance at January 1, 2023	$	77,394	$	416,608	$	133,096	$	57,811	$	1,854	$	686,763
Capitalizations	996		30,591		9,734		6,320		—		47,641
Amortization expense	(3,041)		(13,200)		(6,554)		(1,903)		(94)		(24,792)
Foreign exchange adjustment	—		—		—		57		—		57
Experience adjustment	—		—		—		—		—		—
Balance at June 30, 2023	$	75,349	$	433,999	$	136,276	$	62,285	$	1,760	$	709,669


	Health
	United American		Family Heritage		Liberty National		American Income		DTC		Total





Balance at April 1, 2022	$	80,204	$	394,925	$	128,338	$	51,820	$	1,988	$	657,275
Capitalizations	488		13,067		4,615		3,190		2		21,362
Amortization expense	(1,518)		(6,270)		(3,361)		(858)		(45)		(12,052)
Foreign exchange adjustment	—		—		—		(376)		—		(376)
Experience adjustment	—		—		—		—		—		—
Balance at June 30, 2022	$	79,174	$	401,722	$	129,592	$	53,776	$	1,945	$	666,209
















Balance at April 1, 2023	$	76,388	$	425,145	$	134,728	$	59,890	$	1,807	$	697,958
Capitalizations	489		15,494		4,852		3,177		—		24,012
Amortization expense	(1,528)		(6,640)		(3,304)		(965)		(47)		(12,484)
Foreign exchange adjustment	—		—		—		183		—		183
Experience adjustment	—		—		—		—		—		—
Balance at June 30, 2023	$	75,349	$	433,999	$	136,276	$	62,285	$	1,760	$	709,669

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table presents a reconciliation of deferred policy acquisition costs to the Consolidated Balance Sheets as of June 30, 2023:


		June 30,
	2023			2022
Life
American Income		$	2,417,480		$	2,116,771
Direct to Consumer		1,714,715			1,630,734
Liberty National		636,209			586,898
Other		296,861			300,272
Total DAC - Life		5,065,265			4,634,675

Health
United American		75,349			79,174
Family Heritage		433,999			401,722
Liberty National		136,276			129,592
American Income		62,285			53,776
Direct to Consumer		1,760			1,945
Total DAC - Health		709,669			666,209

Annuity		3,798			5,536
Total		$	5,778,732		$	5,306,420

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 8—Liability for Unpaid Claims

Activity in the liability for unpaid health claims is summarized as follows:


	June 30, 2023		December 31, 2022

Balance at beginning of period	$	182,202	$	171,109
Incurred related to:
Current year	346,586		676,190
Prior year	(3,905)		(15,631)
Total incurred	342,681		660,559
Paid related to:
Current year	216,609		517,856
Prior year	123,512		131,610
Total paid	340,121		649,466
Balance at end of period	$	184,762	$	182,202

Below is the reconciliation of the liability of *"*Policy claims and other benefits payable" in the Consolidated Balance Sheets.


	June 30, 2023		December 31, 2022

Policy claims and other benefits payable:
Life insurance	$	326,167	$	325,017
Health insurance	184,762		182,202
Total	$	510,929	$	507,219

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 9—Postretirement Benefits

Globe Life has qualified noncontributory defined benefit pension plans (Pension Plans) and contributory savings plans that cover substantially all employees. There is also a nonqualified noncontributory supplemental executive retirement plan (SERP) that covers a limited number of officers. The tables included herein will focus on the Pension Plans and SERP.

Pension Assets: The following table presents the assets of the Company's Pension Plans at June 30, 2023 and December 31, 2022.

Pension Assets by Component at June 30, 2023


	Fair Value Determined by:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Amount		% of Total
Corporate bonds:
Financial	$	—	$	14,975	$	—	$	14,975	3
Utilities	—		2,964		—		2,964		1
Energy	—		2,314		—		2,314		—
Other corporates	—		12,196		—		12,196		2
Total corporate bonds	—		32,449		—		32,449		6
Exchange traded fund(1)	300,647		—		—		300,647		56
U.S. Government and Agency	—		128,725		—		128,725		24
Other bonds	—		6		—		6		—
Guaranteed annuity contract(2)	—		43,112		—		43,112		8
Short-term investments	14,695		—		—		14,695		3
Other	5,021		—		—		5,021		1
	$	320,363	$	204,292	$	—	524,655		98
Other long-term investments(3)							12,952		2
Total pension assets							$	537,607	100

(1)A fund including marketable securities that mirror the S&P 500 index.

(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Life Insurance Company Collective Bargaining Agreement Employees Pension Plan.

(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns less than 1% of the investment fund. As of June 30, 2023, the expected term of the investment fund is approximately 2 years and the commitment of the investment is fully funded. The investment is non-redeemable.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Pension Assets by Component at December 31, 2022


	Fair Value Determined by:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Amount		% of Total
Corporate bonds:
Financial	$	—	$	35,649	$	—	$	35,649	7
Utilities	—		23,436		—		23,436		5
Energy	—		12,776		—		12,776		3
Other corporates	—		56,786		—		56,786		11
Total corporate bonds	—		128,647		—		128,647		26
Exchange traded fund(1)	258,297		—		—		258,297		52
U.S. Government and Agency	—		44,213		—		44,213		9
Other bonds	—		200		—		200		—
Guaranteed annuity contract(2)	—		43,116		—		43,116		8
Short-term investments	4,467		—		—		4,467		1
Other	6,547		—		—		6,547		1
	$	269,311	$	216,176	$	—	485,487		97
Other long-term investments(3)							14,288		3
Total pension assets							$	499,775	100

(1)A fund including marketable securities that mirror the S&P 500 index.

(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns approximately 1% of the investment fund. As of December 31, 2022, the expected term of the investment fund was approximately 3 years and the commitment of the investment is fully funded. The investment is non-redeemable.

SERP: The following table includes information regarding the SERP.


	Six Months Ended June 30,
	2023		2022
Premiums paid for insurance coverage	$	443	$	443

	June 30, 2023		December 31, 2022
Total investments:
Company owned life insurance	$	54,458	$	54,681
Exchange traded funds	79,467		71,258
	$	133,925	$	125,939

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Pension Plans and SERP Liabilities: The following table presents liabilities for the defined benefit pension plans and SERP at June 30, 2023 and December 31, 2022.


	June 30, 2023		December 31, 2022
Pension Plans	$	534,621	$	492,103
SERP	70,883		70,464
Pension benefit obligation	$	605,504	$	562,567

Net Periodic Benefit Cost: The following table presents the net periodic benefit costs for the Pension Plans and SERP by expense components for the three and six month periods ended June 30, 2023 and 2022.

Components of Net Periodic Benefit Cost


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Service cost	$	5,390	$	8,656	$	10,782	$	17,311
Interest cost	7,834		6,121		15,668		12,244
Expected return on assets	(9,656)		(8,885)		(19,312)		(17,770)
Amortization:
Prior service cost	269		158		538		316
Actuarial (gain) loss	(52)		3,208		(104)		6,417


Net periodic benefit cost	$	3,785	$	9,258	$	7,572	$	18,518

Note 10—Earnings Per Share

Earnings per Share*:* A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Basic weighted average shares outstanding	95,330,416	98,222,993	95,856,391	98,745,402
Weighted average dilutive options outstanding	921,019	717,686	1,228,920	841,940
Diluted weighted average shares outstanding	96,251,435	98,940,679	97,085,311	99,587,342

Antidilutive shares	492,970	3,882,884	351,343	2,232,662

Antidilutive shares are excluded from the calculation of diluted earnings per share.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Note 11—Debt

On May 11, 2023, Globe Life issued a $170 million term loan with an 18-month term and a variable interest rate. The proceeds from the term loan were used to retire the $166 million 7.875% Senior Notes, which matured on May 15, 2023, as well as for other corporate purposes.

The following table presents information about the terms and outstanding balances of Globe Life's debt.

Selected Information about Debt Issues


				As of
				June 30, 2023								December 31, 2022
Instrument	Issue Date	Maturity Date	Coupon Rate	Par Value		Unamortized Discount & Issuance Costs		Book Value		Fair Value		Book Value
Senior notes	5/27/1993	5/15/2023	7.875%	$	—	$	—	$	—	$	—	$	165,500
Senior notes	9/27/2018	9/15/2028	4.550%	550,000		(4,058)		545,942		531,146		545,601
Senior notes	8/21/2020	8/15/2030	2.150%	400,000		(3,555)		396,445		315,536		396,219
Senior notes(1)	5/19/2022	6/15/2032	4.800%	250,000		(4,317)		245,683		239,521		245,493


Junior subordinated debentures	11/17/2017	11/17/2057	5.275%	125,000		(1,582)		123,418		122,104		123,410
Junior subordinated debentures	6/14/2021	6/15/2061	4.250%	325,000		(7,732)		317,268		255,580		317,229
Term loan(2)	5/11/2023	11/11/2024	6.200%	170,000		(639)		169,361		169,361		—
				1,820,000		(21,883)		1,798,117		1,633,248		1,793,452
Less current maturity of long-term debt				—		—		—		—		165,500
Total long-term debt				1,820,000		(21,883)		1,798,117		1,633,248		1,627,952

Current maturity of long-term debt				—		—		—		—		165,500

Commercial paper				260,000		(1,768)		258,232		258,232		283,603
Total short-term debt				260,000		(1,768)		258,232		258,232		449,103

Total debt				$	2,080,000	$	(23,651)	$	2,056,349	$	1,891,480	$	2,077,055

(1)An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.

(2)Interest calculated quarterly using Secured Overnight Financing Rate (SOFR) plus 135 basis points.

The commercial paper has the highest priority of all unsecured debt, followed by senior notes then junior subordinated debentures. The senior notes are callable under a make-whole provision, and the junior subordinated debentures are subject to an optional redemption five years from issuance. Interest on the 4.25% junior subordinated debentures is payable quarterly while all other long-term debt is payable semi-annually.

Federal Home Loan Bank (FHLB)**: FHLB membership provides our insurance subsidiaries with access to various low-cost collateralized borrowings and funding agreements. The membership requires ownership of FHLB common stock, as well as the purchase of activity-based common stock equal to approximately 4.1% of outstanding borrowings.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Globe Life owns $16.5 million in FHLB common stock as of June 30, 2023 and $14.3 million as of December 31, 2022. The FHLB stock is restricted for the duration of the membership and recorded at cost (par) as required by applicable guidance. The FHLB stock is included in "Other long-term investments*"* in the Consolidated Balance Sheets. Borrowings with the FHLB are subject to the availability of pledged assets at Globe Life. As of June 30, 2023, Globe Life's maximum borrowing capacity under the FHLB facility was approximately $655 million, based on pledged assets with a fair value of $902 million. As of June 30, 2023, $88 million in funding agreements were outstanding with the FHLB, compared to $23 million as of December 31, 2022. This amount is included in "Other policyholders' funds" on the Consolidated Balance Sheets. The Company had no short-term borrowings from the FHLB as of June 30, 2023, and December 31, 2022.

Note 12—Business Segments

Globe Life is organized into four segments: life insurance, supplemental health insurance, annuities, and investments. In addition, other expenses not included in these segments are reported in "Corporate & Other."

Globe Life's reportable insurance segments are based on the insurance product lines it markets and administers: life insurance, supplemental health insurance, and annuities. These major product lines are set out as reportable segments because of the common characteristics of products within these categories, comparability of margins, and the similarity in regulatory environment and management techniques. There is also an investment segment that manages the investment portfolio and cash flow for the insurance segments and the corporate function, which has been retrospectively adjusted to exclude the interest on deferred acquisition costs due to the adoption of ASU 2018-12 and the interest on debt. The Company's chief operating decision makers evaluate the overall performance of the operations of the Company in accordance with these segments.

Life insurance products marketed by Globe Life include traditional whole life and term life insurance. An immaterial amount of annuities sold as companion products are included in the life segment. Health insurance products are generally guaranteed renewable and include Medicare Supplement, cancer, critical illness, accident, and limited-benefit supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.

The following tables present segment premium revenue by each of Globe Life's distribution channels.

Premium Income by Distribution Channel



	Three Months Ended June 30, 2023
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	394,620	51	$	29,527	9	$	—	—	$	424,147	38
Direct to Consumer	248,607		32	17,175		5	—		—	265,782		24
Liberty National	86,634		11	46,903		14	—		—	133,537		12
United American	1,849		—	137,453		42	—		—	139,302		13
Family Heritage	1,513		—	98,129		30	—		—	99,642		9
Other	48,510		6	—		—	—		—	48,510		4
	$	781,733	100	$	329,187	100	$	—	—	$	1,110,920	100

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Premium Income by Distribution Channel


	Three Months Ended June 30, 2022
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	375,748	50	$	29,411	9	$	—	—	$	405,159	38
Direct to Consumer	247,264		33	17,848		6	—		—	265,112		25
Liberty National	81,316		11	46,846		15	—		—	128,162		12
United American	2,003		—	135,444		42	—		—	137,447		13
Family Heritage	1,373		—	90,758		28	—		—	92,131		8
Other	49,188		6	—		—	—		—	49,188		4
	$	756,892	100	$	320,307	100	$	—	—	$	1,077,199	100


	Six Months Ended June 30, 2023
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	782,132	51	$	59,121	9	$	—	—	$	841,253	38
Direct to Consumer	496,274		32	34,423		5	—		—	530,697		24
Liberty National	171,837		11	93,875		14	—		—	265,712		12
United American	3,731		—	270,060		42	—		—	273,791		12
Family Heritage	2,993		—	194,201		30	—		—	197,194		9
Other	97,363		6	—		—	—		—	97,363		5
	$	1,554,330	100	$	651,680	100	$	—	—	$	2,206,010	100


	Six Months Ended June 30, 2022
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	745,854	49	$	58,177	9	$	—	—	$	804,031	37
Direct to Consumer	492,996		33	35,776		6	—		—	528,772		25
Liberty National	161,876		11	94,606		15	—		—	256,482		12
United American	4,077		—	267,134		42	—		—	271,211		13
Family Heritage	2,732		—	180,298		28	—		—	183,030		8
Other	98,485		7	—		—	—		—	98,485		5
	$	1,506,020	100	$	635,991	100	$	—	—	$	2,142,011	100

Due to the nature of the life insurance industry, Globe Life has no individual or group that would be considered a major customer. Substantially all of Globe Life's business is conducted in the United States.

The measure of profitability established by the chief operating decision makers for the insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner in which the segments are managed. It essentially represents gross profit margin on insurance products before insurance administrative expenses and consists primarily of premium less net policy benefits, acquisition expenses, and commissions. Required interest on policy liabilities is reflected as a component of the Investment segment (rather

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

than as a component of underwriting margin in the insurance and annuity segments) in order to match this cost with the investment income earned on the assets supporting the policy liabilities.

The measure of profitability for the Investment segment is excess investment income, representing the income earned on the investment portfolio in excess of policy requirements. During the implementation of ASU 2018-12, the Company reviewed its segment disclosures and modified the measure of profitability of our Investment Segment due to the adoption impact of the standard and to align more appropriately with how we view and measure this segment. As of January 1, 2023, this measure was retrospectively adjusted to exclude the interest on deferred acquisition costs due to the adoption of ASU 2018-12 and the interest expense on debt. Other than the above-mentioned interest allocations, no other intersegment revenues or expenses are recognized. Expenses directly attributable to corporate operations are included in the “Corporate & Other” category. Stock-based compensation expense is considered a corporate expense by Globe Life management and is included in this category. All other unallocated revenues and expenses on a pretax basis, including insurance administrative expense and interest on debt, are also included in the “Corporate & Other” segment category.

Globe Life holds a sizable investment portfolio to support its insurance liabilities, the yield from which is used to offset policy benefit, acquisition, administrative and tax expenses. This yield or investment income is taken into account when establishing premium rates and profitability expectations for its insurance products. From time to time, investments are sold or called, or experience a credit loss event, each of which is reflected by the Company as realized gain (loss)—investments. These gains or losses generally occur as a result of disposition due to issuer calls, compliance with Company investment policies, or other reasons often beyond management’s control. Unlike investment income, realized gains and losses are incidental to insurance operations, and only overall yields are considered when setting premium rates or insurance product profitability expectations. While these gains and losses are not relevant to segment profitability or core operating results, they can have a material positive or negative result on net income. For these reasons, management removes realized investment gains and losses when it views its segment operations.

Management removes items that are related to prior periods when evaluating the operating results of current periods. Management also removes non-operating items unrelated to the Company's core insurance activities when evaluating those results. Therefore, these items are excluded in its presentation of segment results because accounting guidance requires that operating segment results be presented as management views its business. With the exception of administrative settlements, all of these items are included in “Other operating expense” in the Condensed Consolidated Statements of Operations for the appropriate year. See additional detail below in the tables.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note 1—Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.


	Three Months Ended June 30, 2023
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments		Consolidated
Revenue:
Premium	$	781,733	$	329,187	$	—	$	—	$	—	$	—	$	1,110,920
Net investment income	—		—		—		261,244		—		—		261,244
Other income	—		—		—		—		85		—		85
Total revenue	781,733		329,187		—		261,244		85		—		1,372,249
Expenses:
Policy benefits	512,664		195,924		7,107		1,815		—		—		717,510
Required interest on reserves	(191,781)		(26,548)		(9,715)		228,044		—		—		—

Amortization of acquisition costs	81,173		12,484		423		—		—		—		94,080
Commissions, premium taxes, and non-deferred acquisition costs	83,547		54,908		4		—		—		—		138,459
Insurance administrative expense(1)	—		—		—		—		75,459				75,459
Parent expense	—		—		—		—		3,088		—		3,088
Stock-based compensation expense	—		—		—		—		7,486		—		7,486
Interest expense	—		—		—		—		25,818		—		25,818
Total expenses	485,603		236,768		(2,181)		229,859		111,851		—		1,061,900
Subtotal	296,130		92,419		2,181		31,385		(111,766)		—		310,349
Non-operating items	—		—		—		—		—				—
Measure of segment profitability (pretax)	$	296,130	$	92,419	$	2,181	$	31,385	$	(111,766)	$	—	310,349

Realized gain (loss)—investments													(45,843)



Income before income taxes per Condensed Consolidated Statements of Operations													$	264,506

(1)Administrative expense is not allocated to insurance segments.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Three Months Ended June 30, 2022
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	756,892	$	320,307	$	—	$	—	$	—	$	—		$	1,077,199
Net investment income	—		—		—		244,712		—		—			244,712
Other income	—		—		—		—		299		—			299
Total revenue	756,892		320,307		—		244,712		299		—			1,322,210
Expenses:
Policy obligations	492,364		190,075		7,922		1,070		—		—			691,431
Required interest on reserves	(182,756)		(25,460)		(11,361)		219,577		—		—			—

Amortization of acquisition costs	73,681		12,052		452		—		—		—			86,185
Commissions, premium taxes, and non-deferred acquisition costs	74,478		51,729		6		—		—		—			126,213
Insurance administrative expense(1)	—		—		—		—		73,700		4,985		(2)	78,685
Parent expense	—		—		—		—		2,893		(368)		(2)	2,525
Stock-based compensation expense	—		—		—		—		8,448		—			8,448
Interest expense	—		—		—		—		21,828		—			21,828
Total expenses	457,767		228,396		(2,981)		220,647		106,869		4,617			1,015,315
Subtotal	299,125		91,911		2,981		24,065		(106,570)		(4,617)			306,895
Non-operating items	—		—		—		—		—		4,617		(2)	4,617
Measure of segment profitability (pretax)	$	299,125	$	91,911	$	2,981	$	24,065	$	(106,570)	$	—		311,512

Realized gain (loss)—investments														(30,446)


Non-operating expenses														(4,617)
Income before income taxes per Condensed Consolidated Statements of Operations														$	276,449

(1)Administrative expense is not allocated to insurance segments.

(2)Non-operating expenses.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.


	Six Months Ended June 30, 2023
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments		Consolidated
Revenue:
Premium	$	1,554,330	$	651,680	$	—	$	—	$	—	$	—	$	2,206,010
Net investment income	—		—		—		518,349		—		—		518,349
Other income	—		—		—		—		135		—		135
Total revenue	1,554,330		651,680		—		518,349		135		—		2,724,494
Expenses:
Policy obligations	1,020,641		386,886		14,648		3,262		—		—		1,425,437
Required interest on reserves	(381,602)		(52,871)		(19,974)		454,447		—		—		—

Amortization of acquisition costs	160,762		24,792		848		—		—		—		186,402
Commissions, premium taxes, and non-deferred acquisition costs	167,125		109,122		9		—		—		—		276,256
Insurance administrative expense(1)	—		—		—		—		149,366				149,366
Parent expense	—		—		—		—		5,673				5,673
Stock-based compensation expense	—		—		—		—		15,165		—		15,165
Interest expense	—		—		—		—		50,685		—		50,685
Total expenses	966,926		467,929		(4,469)		457,709		220,889		—		2,108,984
Subtotal	587,404		183,751		4,469		60,640		(220,754)		—		615,510
Non-operating items	—		—		—		—		—		—		—
Measure of segment profitability (pretax)	$	587,404	$	183,751	$	4,469	$	60,640	$	(220,754)	$	—	615,510

Realized gain (loss)—investments													(76,770)




Income before income taxes per Consolidated Statements of Operations													$	538,740

(1)Administrative expense is not allocated to insurance segments.

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)


	Six Months Ended June 30, 2022
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	1,506,020	$	635,991	$	—	$	—	$	—	$	—		$	2,142,011
Net investment income	—		—		—		489,606		—		—			489,606
Other income	—		—		—		—		463		—			463
Total revenue	1,506,020		635,991		—		489,606		463		—			2,632,080
Expenses:
Policy obligations	987,793		379,093		16,564		2,130		—		—			1,385,580
Required interest on reserves	(364,128)		(50,730)		(22,728)		437,586		—		—			—

Amortization of acquisition costs	145,610		24,166		905		—		—		—			170,681
Commissions, premium taxes, and non-deferred acquisition costs	148,026		103,681		15		—		—		—			251,722
Insurance administrative expense(1)	—		—		—		—		146,265		5,097		(2)	151,362
Parent expense	—		—		—		—		5,533		(368)		(2)	5,165
Stock-based compensation expense	—		—		—		—		17,483		—			17,483
Interest expense	—		—		—		—		41,772		—			41,772
Total expenses	917,301		456,210		(5,244)		439,716		211,053		4,729			2,023,765
Subtotal	588,719		179,781		5,244		49,890		(210,590)		(4,729)			608,315
Non-operating items	—		—		—		—		—		4,729		(2)	4,729
Measure of segment profitability (pretax)	$	588,719	$	179,781	$	5,244	$	49,890	$	(210,590)	$	—		613,044

Realized gain (loss)—investments														(37,690)



Non-operating expenses														(4,729)
Income before income taxes per Consolidated Statements of Operations														$	570,625

(1)Administrative expense is not allocated to insurance segments.

(2)Non-operating expenses.

GL Q2 2023 FORM 10-Q

CAUTIONARY STATEMENTS

We caution readers regarding certain forward-looking statements contained in the foregoing discussion and elsewhere in this document, and in any other statements made by, or on behalf of Globe Life whether or not in future filings with the Securities and Exchange Commission. Any statement that is not a historical fact, or that might otherwise be considered an opinion or projection concerning the Company or its business, whether express or implied, is meant as and should be considered a forward-looking statement. Such statements represent management's opinions concerning future operations, strategies, financial results or other developments. We specifically disclaim any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.

Forward-looking statements are based upon estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control, including uncertainties related to the impact of the recent pandemic and associated direct and indirect effects on our business operations, financial results, and financial condition. If these estimates or assumptions prove to be incorrect, the actual results of Globe Life may differ materially from the forward-looking statements made on the basis of such estimates or assumptions. 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 impact of inflation, geopolitical events, and the recent pandemic on the U.S. economy, leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality, morbidity, and utilization of health care services that differ from Globe Life's assumptions;

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, financing costs, and/or investment portfolio yield;

5.General economic, industry sector or individual debt issuers’ financial conditions (including developments and volatility arising from geopolitical events, 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 the competitiveness of the Company's products and pricing;

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 the impact of higher than anticipated inflation);

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 natural or man-made catastrophic events, including but not limited to pandemics, tornadoes, hurricanes, earthquakes, war and terrorism, on our operations and personnel, commercial activity and demand for our products; and

14.Our ability to access the commercial paper and debt markets, particularly if such markets become unpredictable or unstable for a certain period.

Readers are also directed to consider other risks and uncertainties described in other documents on file with the Securities and Exchange Commission.

GL Q2 2023 FORM 10-Q

Previous: Cover and table of contents · Next: Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations