Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

125K characters. Original on sec.gov · Markdown

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Globe Life's Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this report. The following management discussion will only include comparison to prior year.

"Globe Life" and the "Company" refer to Globe Life Inc. and its subsidiaries and affiliates.

Results of Operations


						How Globe Life Views Its Operations. Globe Life Inc. is the holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower middle to middle-income households throughout the United States. We view our operations by segments, which are the insurance product lines of life and supplemental health, and the investment segment that supports the product lines.

						Insurance Product Line Segments. The insurance product line segments involve the marketing, underwriting, and administration of policies. Each product line is further subdivided by the various distribution channels that market the insurance policies. Each distribution channel operates in a niche market offering insurance products designed for that particular market. Whether analyzing profitability of a segment as a whole, or the individual distribution channels within the segment, the measure of profitability used by management is the underwriting margin, as seen below:
						Premium revenue (Policy obligations) (Policy acquisition costs and commissions) Underwriting margin
						Investment Segment. The investment segment involves the management of our capital resources, including investments and the management of liquidity. Our measure of profitability for the investment segment is excess investment income, as seen below:
						Net investment income (Required interest on policy liabilities) Excess investment income

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

Current Highlights.

Net income as a return on equity (ROE) for the three months ended March 31, 2025 was 19.0% and net operating income as an ROE, excluding accumulated other comprehensive income(1) was 14.1%.
Total premium increased 5% over the same period in the prior year. Life premium increased 3% for the period from $804 million in 2024 to $830 million in 2025.
Net investment income declined 1% compared with the same period in the prior year.
Total net sales increased 6% over the same period in the prior year from $204 million in 2024 to $216 million in 2025. The average producing agent count across all of the exclusive agencies increased 5% over the prior year.
Book value per share increased 22% over the same period in the prior year from $53.03 to $64.50. Book value per share, excluding accumulated other comprehensive income**(1)**, increased 11% over the prior year from $79.00 in 2024 to $87.92 in 2025.
For the three months ended March 31, 2025, the Company repurchased 1.5 million shares of Globe Life Inc. common stock at a total cost of $177 million for an average share price of $121.70.

The following graphs represent net income and net operating income for the three months ended March 31, 2025.

965 967

(1)As shown in the charts above, net operating income is primarily comprised of insurance underwriting margin plus excess investment income and annuity and other income, offset by operating expenses after tax and, as such, is considered a non-GAAP measure. It has been used consistently by Globe Life's management for many years to evaluate the operating performance of the Company. It differs from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain significant and unusual items included in net income. Net income is the most directly comparable GAAP measure.

Net operating income as an ROE, excluding accumulated other comprehensive income (AOCI), is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates. The impact of the adjustment to exclude AOCI is $(1.97) billion and $(2.47) billion for the three months ended March 31, 2025 and 2024, respectively.

Book value per share, excluding AOCI, is also considered a non-GAAP measure. Management utilizes this measure to view the book value of the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates. The impact of the adjustment to exclude AOCI is $(23.42) and $(25.97) for the three months ended March 31, 2025 and 2024, respectively.

Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

Summary of Operations. Net income increased slightly to $255 million during the three months ended March 31, 2025, compared with $254 million in the same period in 2024. On a diluted per common share basis, net income per common share for the three months ended March 31, 2025 increased 13% from $2.67 to $3.01.

Net operating income declined 2% to $259 million for the three months ended March 31, 2025, compared with $264 million for the same period in 2024, due to an 18% decrease in excess investment income offset by a 9% increase in life underwriting margin. On a diluted per common share basis, net operating income per common share for the three months ended March 31, 2025 increased from $2.78 to $3.07, an 10% increase. Net operating income is primarily comprised of insurance underwriting margin plus excess investment income and annuity and other income, offset by operating expenses, after tax and, as such, is considered a non-GAAP measure. Net income is the most directly comparable GAAP measure. We do not consider realized gains and losses to be a component of our core insurance operations or operating segments. Additionally, net income was affected by certain non-operating items. We do not view these items as components of core operating results because they are not indicative of past performance or future prospects of the insurance operations. We remove items such as these that relate to prior periods or are non-operating items when evaluating the results of current operations, and therefore exclude such items from our segment analysis for current periods.

As previously noted, a component of insurance underwriting margin is policy obligations, which includes for each reporting period the change in the liability for future policy benefits (LFPB). The LFPB is determined each reporting period based on the net level premium method. Net level premiums reflect a recomputed net premium ratio using actual experience since the issue date, and expected future experience based on future cash-flow assumptions. See Note 6—Policy Liabilities for additional information. The Company's results for actual variances from expected experience for both life and health produced a $9.0 million net remeasurement gain and a $8.1 million net remeasurement gain for the three months ended March 31, 2025 and 2024, respectively.

Overall, the Company continues to see positive signs in its core operations, including sales and premium growth, and continues to achieve an operating ROE (excluding accumulated other comprehensive income) generally in the mid-teens.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

Globe Life's operations on a segment-by-segment basis are discussed in depth below. Net operating income has been used consistently by management for many years to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs from GAAP net income primarily because it excludes certain non-operating items such as realized gains and losses and other significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company’s business. Net income is the most directly comparable GAAP measure.

Analysis of Profitability by Segment

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025		2024		Change		%
Life insurance underwriting margin	$	337,264	$	309,011	$	28,253	9
Health insurance underwriting margin	84,721		93,770		(9,049)		(10)

Excess investment income	35,870		43,785		(7,915)		(18)
Segment profit or (loss)	457,855		446,566		11,289		3

Annuity and other income	1,879		1,991		(112)		(6)
Administrative expense	(87,549)		(80,411)		(7,138)		9
Other corporate expense	(50,061)		(40,714)		(9,347)		23
Pre-tax total	322,124		327,432		(5,308)		(2)
Applicable taxes	(62,787)		(63,333)		546		(1)
Net operating income	259,337		264,099		(4,762)		(2)
Reconciling items, net of tax:
Realized gains (losses)	67		(9,321)		9,388




Non-operating expenses	—		(561)		561
Legal proceedings	(4,841)		—		(4,841)

Net income	$	254,563	$	254,217	$	346	—

The life insurance segment is our primary segment and is the largest contributor to earnings in each period presented. The life insurance segment underwriting margin increased $28 million compared with the prior period, primarily a result of increased premiums and favorable policy obligations as a percent of premium. Excess investment income declined $8 million compared with the prior period, partly due to lower earned yields on commercial mortgage loans and limited partnerships. The health segment experienced higher policy obligations and declined $9 million in the first three months of 2025 with $85 million of underwriting margin compared with $94 million in the first three months of 2024.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

In 2025, the largest contributor of total underwriting margin was the life insurance segment and the primary distribution channel was the American Income Life Division (American Income). The following charts represent the breakdown of total underwriting margin by operating segment and distribution channel for the three months ended March 31, 2025.

325 326

Total premium income rose 5% for the three months ended March 31, 2025 to $1.2 billion. Total net sales increased 6% to $216 million, when compared with 2024. Total first-year collected premium (defined in the following section) increased 5% to $169 million for 2025, compared to $161 million in 2024.

Life insurance premium income increased 3% to $830 million over the prior-year total of $804 million. Life net sales fell 1% to $148 million for the first three months of 2025. First-year collected life premium increased 3% to $114 million. Life underwriting margin, as a percent of premium, increased to 41% for 2025 from 38% in 2024. Underwriting margin increased to $337 million in 2025, compared to $309 million in 2024.

Health insurance premium income increased 8% to $370 million over the prior-year total of $341 million. Health net sales rose 24% to $67 million for the first three months of 2025. First-year collected health premium rose 8% to $55 million. Health underwriting margin, as a percent of premium, was 23% for 2025 and 27% for 2024. Health underwriting margin declined to $85 million for the first three months of 2025, compared to $94 million in 2024.

Excess investment income, the measure of profitability of our investment segment, declined 18% during the first three months of 2025 to $35.9 million from $43.8 million in 2024. Excess investment income per common share, reflecting the impact of our share repurchase program, declined 9% to $0.42 from $0.46 when compared with the same period in 2024.

Insurance administrative expenses increased 9% in 2025 when compared with the prior-year period. These expenses were 7.3% as a percent of premium during 2025 compared to 7.0% in 2024.

For the three months ended March 31, 2025, the Company repurchased 1.5 million shares of Globe Life Inc. common stock at a total cost of $177 million for an average share price of $121.70.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

The discussions of our segments are presented in the manner we view our operations, as described in Note 12—Business Segments.

We use three measures as indicators of premium growth and sales over the near term: “annualized premium in force,” “net sales,” and “first-year collected premium.”

Annualized premium in force is defined as the premium income that would be received over the following twelve months at any given date on all active policies if those policies remain in force throughout the 12-month period.
Net sales is calculated as annualized premium issued, net of cancellations generally in the first 30 days after issue, except in the case of Direct to Consumer, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period (typically one month) has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued since annualized premium issued excludes cancellations, and cancellations do not contribute to premium income.
First-year collected premium is defined as the premium collected during the reporting period for all policies in their first policy year. First-year collected premium takes lapses into account in the first year when lapses are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added to premium income in the future. First-year collected premiums are lower than net sales over the prior 12 months because premiums are not collected on lapsed policies after the date of lapse.

Cancellations are not included in lapses.

See further discussion of the distribution channels below for Life and Health.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

LIFE INSURANCE

Life insurance is the Company's predominant segment. During 2025, life premium represented 69% of total premium and life underwriting margin represented 80% of the total underwriting margin. Additionally, investments supporting the reserves for life products produce the majority of excess investment income attributable to the investment segment.

The following table presents the summary of results of life insurance. Further discussion of the results by distribution channel is included below.

Life Insurance

Summary of Results

(Dollar amounts in thousands)


	Three Months Ended March 31,						Change
	2025			2024
	Amount		% of Premium	Amount		% of Premium	Amount		%
Premium and policy charges	$	829,863	100	$	804,265	100	$	25,598	3

Policy obligations	509,756		61	519,871		65	(10,115)		(2)
Required interest on reserves	(208,536)		(25)	(199,707)		(25)	(8,829)		4
Net policy obligations	301,220		36	320,164		40	(18,944)		(6)
Amortization of acquisition costs	90,633		11	85,768		11	4,865		6
Commission expense	45,567		6	38,690		5	6,877		18
Premium taxes	18,011		2	17,086		2	925		5
Non-deferred acquisition costs	37,168		4	33,546		4	3,622		11
Total expense	492,599		59	495,254		62	(2,655)		(1)
Insurance underwriting margin	$	337,264	41	$	309,011	38	$	28,253	9

Net policy obligations amounted to 36% of premium for the three months ended March 31, 2025 compared to 40% in the year-ago period.

The table below summarizes life underwriting margin by distribution channel.

Life Insurance

Underwriting Margin by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025			2024			Change
	Amount		% of Premium	Amount		% of Premium	Amount		%
American Income	$	196,169	45	$	187,068	45	$	9,101	5
Direct to Consumer	64,200		26	58,585		24	5,615		10
Liberty National	31,772		33	30,713		34	1,059		3
Other(1)	45,123		90	32,645		64	12,478		38
Total	$	337,264	41	$	309,011	38	$	28,253	9

(1) Includes gain of $14 million related to the recapture of policies as disclosed in Note 1 - Significant Accounting Policies**.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

The following table presents Globe Life's life insurance premium by distribution channel.

Life Insurance

Premium by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Change
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	437,866	53	$	414,044	52	$	23,822	6
Direct to Consumer	245,600		30	248,040		31	(2,440)		(1)
Liberty National	96,182		11	90,777		11	5,405		6
Other	50,215		6	51,404		6	(1,189)		(2)
Total	$	829,863	100	$	804,265	100	$	25,598	3

Annualized life premium in force was $3.34 billion at March 31, 2025, an increase of 4% over $3.23 billion a year earlier.

An analysis of life net sales, an indicator of new business production, by distribution channel is presented below.

Life Insurance

Net Sales by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Change
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	98,555	66	$	97,195	65	$	1,360	1
Direct to Consumer	25,175		17	28,563		19	(3,388)		(12)
Liberty National	22,469		15	21,605		15	864		4
Other	2,152		2	2,134		1	18		1
Total	$	148,351	100	$	149,497	100	$	(1,146)	(1)

First-year collected life premium by distribution channel is presented in the table below.

Life Insurance

First-Year Collected Premium by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Change
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	77,637	68	$	72,954	66	$	4,683	6
Direct to Consumer	15,219		13	17,927		16	(2,708)		(15)
Liberty National	19,381		17	17,807		16	1,574		9
Other	1,868		2	1,992		2	(124)		(6)
Total	$	114,105	100	$	110,680	100	$	3,425	3

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

A discussion of life operations by distribution channel follows.

The American Income Life Division markets to members of labor unions and other affinity groups and continues to diversify its lead sources, utilizing internally generated leads, third-party internet vendor leads and referrals to facilitate sustainable growth. This Division is Globe Life's largest contributor of life premium of any distribution channel at 53% of the Company's March 31, 2025 total life premium. For the three months ended March 31, 2025, the average monthly life premium issued per policy was $59 as compared to $58 for the same period in the prior year. Net sales were $99 million for the three months ended March 31, 2025, up from $97 million in the year-ago period. The underwriting margin, as a percent of premium, was 45% for the three months ended March 31, 2025 and 2024.

The average producing agent count increased 3% over the year-ago period. The increase in average producing agent count was driven by an increase in new agent recruiting along with continued improvement in new agent retention. Sales growth in this Division, as well as within our other exclusive agencies, is generally dependent on growth in the size of the agency force.

Below is the average producing agent count as of the indicated periods for the American Income Division. The average producing agent count is based on the actual count at the beginning and end of each week during the year.


	At March 31,		Change
	2025	2024	Amount	%
American Income	11,510	11,139	371	3

American Income Life continues to focus on growing and strengthening the agency force, specifically through emphasis on agency middle-management growth and additional agency openings. In addition to offering financial incentives and training opportunities, the Division has made considerable investments in information technology, including a customer relationship management (CRM) tool for the agency force. This tool is designed to provide dashboards and drive productivity in lead distribution, conservation of business, and new agent recruiting. Additionally, this Division has invested in and successfully implemented technology that allows the agency force to engage in virtual recruiting, training, and sales activity. The agents have shifted to primarily a virtual experience with the customers and have generated a vast majority of sales through virtual presentations. We find this flexibility to be enticing for new recruits as well as a driver of retention in our agency force.

The Direct to Consumer Division (DTC) markets adult and juvenile life insurance through a variety of channels, including direct mail, insert media, and digital marketing. The different media channels support and complement one another in the Division's efforts to provide consumer outreach. All three channels work as part of an omnichannel approach. Sales from the internet and inbound phone calls continue to outpace the activity from direct mail. DTC's long-term growth has been fueled by consistent innovation and brand awareness. Additionally, the DTC Division provides valuable support to our agency business through brand impressions and inquiries that lead to sales in our exclusive agency channels. New initiatives are continuously introduced to help increase response rates, issue rates, and create a seamless customer experience. The juvenile insurance market is an important source of sales as well as a vehicle to reach the parents and grandparents of existing juvenile policyholders, who are more likely to respond favorably to a DTC solicitation for life coverage on themselves in comparison to the general adult population. Additionally, future offerings to juvenile policyholders and their parents and grandparents are sources of lower acquisition-cost life insurance sales in the future.

DTC net sales declined 12% to $25 million for the three months ended March 31, 2025 compared to $29 million for the same period in the prior year. This decline is due primarily to the management of direct mail and print insert marketing activity resulting from the impact of inflation on postage, paper and online advertising costs. While total sales have declined, the focus has been on improving profitability and improving underwriting margin. DTC’s underwriting margin was $64.2 million and 26% as a percent of premium for the three months ended March 31, 2025 compared to $58.6 million and 24% as a percent of premium for the same period in 2024.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

The Liberty National Division markets individual life insurance to middle-income household and worksite customers. Recent investments in new sales technologies as well as recent growth in middle management within the Division are expected to support increased sales. The underwriting margin as a percent of premium was 33% for the three months ended March 31, 2025, down from 34% during the same period a year ago. The decrease is primarily attributable to increased non deferred acquisition and amortization expenses in the first three months of 2025 as compared to the same period in 2024. For the three months ended March 31, 2025, the average monthly life premium per policy issued was $44, the same as the prior-year period.

Net sales rose 4% in the three months ended March 31, 2025 over the same period in 2024 due primarily to increased agent count.

Below is the average producing agent count for the three months ended March 31, 2025 and 2024 for the Liberty National Division. The average producing agent count is based on the actual count at the beginning and end of each week during the year.


	At March 31,		Change
	2025	2024	Amount	%
Liberty National	3,688	3,419	269	8

The Liberty National Division's average producing agent count increased when compared with the prior-year comparable period. This Division continues to execute a long-term plan to grow through expansion from small-town markets in the Southeast to more densely populated areas with larger pools of potential agent recruits and customers in the communities, regions, and cities the Liberty National Division serves. Expansion of this Division’s presence in larger geographic cities, with less penetrated areas will help create long-term sustainable agency growth. Additionally, the Division continues to help improve the ability of agents to develop new worksite marketing business. A CRM platform and enhanced analytical capabilities have helped the agents develop additional worksite marketing opportunities and improve the productivity of agents selling in the individual life market. As the Division gains momentum in its sales and recruiting initiatives, advances in technology and use of the CRM platform, it anticipates continued growth in recruiting activity, average producing agent count, and net sales.

The Other agency distribution channels primarily include non-exclusive independent agencies selling primarily life insurance. The other distribution channels contributed $50 million of life premium income, or 6% of Globe Life's total life premium income in the three months ended March 31, 2025, and contributed 2% of net sales for the period.

HEALTH INSURANCE

Health insurance sold by the Company primarily includes Medicare Supplement insurance as well as retiree health insurance, accident coverage, and other limited-benefit supplemental health products such as cancer, critical illness, heart disease, intensive care, and other health products.

Health premium accounted for 31% of our total premium in 2025, while the health underwriting margin accounted for 20% of total underwriting margin. Health underwriting margin declined to $85 million compared to $94 million in the prior year. While the Company continues to emphasize life insurance sales relative to health, due to life’s superior long-term profitability and its greater contribution to excess investment income, the health business provides a significant contribution to return on equity as it does not require a substantial amount of up-front capital.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

The following table presents underwriting margin data for health insurance.

Health Insurance

Summary of Results

(Dollar amounts in thousands)


	Three Months Ended March 31,						Change
	2025			2024
	Amount		% of Premium	Amount		% of Premium	Amount		%
Premium	$	369,791	100	$	341,019	100	$	28,772	8

Policy obligations	233,929		63	202,327		60	31,602		16
Required interest on reserves	(28,286)		(8)	(27,173)		(8)	(1,113)		4
Net policy obligations	205,643		55	175,154		52	30,489		17
Amortization of acquisition costs	14,519		4	13,311		4	1,208		9
Commission expense	42,887		12	39,149		11	3,738		10
Premium taxes	7,493		2	6,816		2	677		10
Non-deferred acquisition costs	14,528		4	12,819		4	1,709		13
Total expense	285,070		77	247,249		73	37,821		15
Insurance underwriting margin	$	84,721	23	$	93,770	27	$	(9,049)	(10)

Net policy obligations amounted to 55% of premium for the three months ended March 31, 2025 compared to 52% in the year ago period.

The table below summarizes health underwriting margin by distribution channel.

Health Insurance

Underwriting Margin by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025			2024			Change
	Amount		% of Premium	Amount		% of Premium	Amount		%
United American	$	1,617	1	$	11,906	8	$	(10,289)	(86)
Family Heritage	39,249		35	35,838		35	3,411		10
Liberty National	25,982		54	26,672		56	(690)		(3)
American Income	19,389		63	19,192		63	197		1
Direct to Consumer	(1,516)		(8)	162		1	(1,678)		(1,036)
Total	$	84,721	23	$	93,770	27	$	(9,049)	(10)

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Globe Life markets supplemental health insurance products through a number of distribution channels. The following table is an analysis of our health premium by distribution channel.

Health Insurance

Premium by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Increase (Decrease)
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
United American	$	159,848	43	$	141,635	42	$	18,213	13
Family Heritage	112,354		31	103,391		30	8,963		9
Liberty National	47,922		13	47,630		14	292		1
American Income	30,691		8	30,497		9	194		1
Direct to Consumer	18,976		5	17,866		5	1,110		6
Total	$	369,791	100	$	341,019	100	$	28,772	8

Premiums related to limited-benefit supplemental health products comprise $208 million, or 56%, of the total health premiums for the three months ended March 31, 2025, compared with $192 million, or 56%, in the same period in the prior year. Premium from Medicare Supplement products comprises the remaining $162 million, or 44%, for the three months ended March 31, 2025, compared to $149 million, or 44%, in the same period in the prior year.

Annualized health premium in force was $1.51 billion at March 31, 2025, an increase of 8% over $1.40 billion a year earlier.

Presented below is a table of health net sales by distribution channel.

Health Insurance

Net Sales by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Increase (Decrease)
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
United American	$	27,708	41	$	16,423	30	$	11,285	69
Family Heritage	26,816		40	24,966		46	1,850		7
Liberty National	7,198		11	7,613		14	(415)		(5)
American Income	4,870		7	4,594		8	276		6
Direct to Consumer	645		1	804		2	(159)		(20)
Total	$	67,237	100	$	54,400	100	$	12,837	24

Health net sales related to limited-benefit supplemental health products comprise $48 million, or 72%, of the total health net sales for the three months ended March 31, 2025, compared with $40 million, or 73%, in the same period in the prior year. Medicare Supplement sales make up the remaining $19 million, or 28%, for 2025 compared to $14 million, or 27%, in the same period in the prior year.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

The following table presents health insurance first-year collected premium by distribution channel.

Health Insurance

First-Year Collected Premium by Distribution Channel

(Dollar amounts in thousands)


	Three Months Ended March 31,						Increase (Decrease)
	2025			2024
	Amount		% of Total	Amount		% of Total	Amount		%
United American	$	20,162	37	$	19,181	38	$	981	5
Family Heritage	21,476		39	18,983		37	2,493		13
Liberty National	7,045		13	6,895		14	150		2
American Income	4,767		9	4,590		9	177		4
Direct to Consumer	1,089		2	884		2	205		23
Total	$	54,539	100	$	50,533	100	$	4,006	8

First-year collected premium related to limited-benefit supplemental health products is $38 million, or 69%, of total first-year collected premium for the three months ended March 31, 2025 compared with $37 million, or 73%, in the same period in the prior year. First-year collected premium from Medicare Supplement policies make up the remaining $17 million, or 31%, for the three months ended March 31, 2025 compared to $14 million, or 27%, in the same period in the prior year.

A discussion of health operations by distribution channel follows.

The United American Division consists of non-exclusive independent agencies who may also sell for other companies. The United American Division was Globe Life's largest health agency in terms of health premium income, with net sales up 69% from the same period in the prior year.

This Division includes different units:

UA General Agency, which primarily sells individual Medicare Supplement insurance through independent agents;
Special Markets, which markets retiree health insurance to employer and union groups through brokers; and
Globe Life Group Benefits, which offers group worksite supplemental health insurance through brokers.

The majority of the premium revenue comes from Medicare Supplement. Underwriting margin as a percent of premium for the Division was 1% for the three months ended March 31, 2025 and 8% for the same period in 2024. The decline in underwriting margin as a percent of premium when compared to prior year is primarily attributable to increased claims utilization during the current quarter from Medicare Supplement.

The Family Heritage Division primarily markets limited-benefit supplemental health insurance in small- to medium- sized businesses. Most of its policies include a return of premium feature, where premium paid is returned less any claims paid to the policyholder at the end of a specified period stated within the insurance policy. Underwriting margin as a percent of premium was 35% for the three months ended March 31, 2025 and 2024.

The Division experienced a 7% rise in health net sales as compared with the three-month period a year ago, primarily due to increased agent count. The Division will continue to implement incentive and retention programs to further these increases in the number of producing agents.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for the Family Heritage Division. The average producing agent count is based on the actual count at the beginning and end of each week during the year. The average producing agent count increased 9% compared with the same period a year ago. Along with the Division's increased efforts to grow agent count, it is also focused on the further training and development of its middle management. While growth in net sales and earned premium is impacted by agent productivity, growth in the number of average producing agents is what will ultimately be the primary driver of future growth in sales, similar to our other exclusive agencies.


	At March 31,		Change
	2025	2024	Amount	%
Family Heritage	1,417	1,295	122	9

The Liberty National Division represented 13% of all Globe Life health premium income for the three months ended March 31, 2025. The Liberty National Division markets limited-benefit supplemental health products, consisting primarily of cancer, critical illness, and accident insurance. Much of Liberty National's health business is generated through worksite marketing targeting small businesses. Health premium at the Liberty National Division was $47.9 million for the three months ended March 31, 2025 up from $47.6 million for the same period in 2024. Liberty National's first-year collected premium rose 2% to $7.0 million in the three months ended March 31, 2025 compared with $6.9 million for the same period in 2024. Health net sales for the three months ended March 31, 2025 fell 5% from the comparable period in 2024. For the three months ended March 31, 2025, underwriting margin as a percent of premium was 54% compared with 56% in the same period in the prior year.

While both the American Income Life Division and the Direct to Consumer Division sell life insurance, they also market health products. The American Income Life Division primarily markets accident plans. The Direct to Consumer Division primarily markets Medicare Supplement insurance to employer or union-sponsored groups. On a combined basis, these other channels accounted for 13% of health premium for the three months ended March 31, 2025 and 14% for the same period in 2024.

INVESTMENTS

We manage our capital resources, including investments and cash flow, through the investment segment. Excess investment income represents the profit margin attributable to investment operations and is the measure that we use to evaluate the performance of the investment segment as described in Note 12—Business Segments. It is defined as net investment income less the required interest attributable to policy liabilities.

Management views excess investment income per diluted common share as an important and useful measure to evaluate the performance of the investment segment. It is defined as excess investment income divided by the total diluted weighted average shares outstanding, representing the contribution by the investment segment to the consolidated earnings per share of the Company.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Excess Investment Income**.** The following table summarizes Globe Life's investment income, excess investment income, and excess investment income per diluted common share.

Analysis of Excess Investment Income

(Dollar amounts in thousands, except for per share data)


	Three Months Ended March 31,				Change
	2025		2024		Amount		%
Net investment income	$	280,614	$	282,578	$	(1,964)	(1)
Interest on policy liabilities(1)	(244,744)		(238,793)		(5,951)		2

Excess investment income	$	35,870	$	43,785	$	(7,915)	(18)

Excess investment income per diluted share	$	0.42	$	0.46	$	(0.04)	(9)

Mean invested assets (at amortized cost)	$	21,435,420	$	21,156,813	$	278,607	1
Average insurance policy liabilities	17,620,769		17,275,395		345,374		2

(1)Interest on policy liabilities, at original rates, is a component of total policyholder benefits, a GAAP measure.

Excess investment income declined $7.9 million, or 18%, compared with the year-ago period. Excess investment income per diluted common share was $0.42 for the three months ended March 31, 2025, a decrease of 9% from the prior-year period. Excess investment income per diluted common share generally increases or decreases at a different pace than excess investment income because the number of diluted shares outstanding generally decreases from year to year as a result of our share repurchase program.

Net investment income for the three months ended March 31, 2025 was $281 million, or 1% less than the year-ago period. Mean invested assets increased 1% during the first three months of 2025 over the same period last year. Investment income declined in the current period primarily due to lower earned yields on short term investments, commercial mortgage loans and limited partnerships compared to the prior year. The effective annual yield rate earned on the fixed maturity portfolio was 5.25% in the first three months of 2025, compared to 5.24% a year earlier. In addition to fixed maturities, the Company has also invested in commercial mortgage loans and limited partnerships with debt-like characteristics that diversify risk and enhance risk-adjusted, capital-adjusted returns on the portfolio. The earned yield on the Company's commercial mortgage loans for the three months ended March 31, 2025 was 6.53% compared with 8.70% in the prior year period. The lower earned yield on commercial mortgage loans is partly due to lower floating rates in addition to loans in non-accrual status. The earned yield on limited partnership investments for the three months ended March 31, 2025 was 7.95%. See additional information in Note 4—Investments.

Globe Life's net investment income benefits from higher interest rates on new investments. While increasing interest rates have resulted in a net unrealized loss from our available-for-sale debt securities included in accumulated other comprehensive income (loss) as of March 31, 2025, we are not concerned because we do not generally intend to sell, nor is it likely that we will be required to sell, the fixed maturities prior to their anticipated recovery.

Required interest on insurance policy liabilities reduces excess investment income, as it is the amount of net investment income considered by management necessary to cover the interest-related growth on insurance policy liabilities. As such, it is reclassified from the insurance segment to the investment segment. As discussed in Note 12—Business Segments**, management regards this as a more meaningful analysis of the investment and insurance segments. Required interest is based on the original discount rate assumptions for our insurance policies in force.

The vast majority of our life and health insurance policies are fixed interest rate protection policies, not investment products, and are accounted for under current GAAP accounting guidance for long-duration insurance products which mandates that interest rate assumptions for a particular block of business be “locked in” for the life of that block of business. Each calendar year, we set the original discount rate to be used to calculate the benefit reserve liability for all insurance policies issued that year. The liability reported on the balance sheet is updated in

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

subsequent periods using current discount rates as of the end of the relevant reporting period with a corresponding adjustment to other comprehensive income.

The discount rate used for policies issued in the current year has no impact on the in force policies issued in prior years, as the rates of all prior issue years are also locked in for purposes of recognizing income. As such, the overall original discount rate for the entire in force block of 5.6% is a weighted average of the discount rates being used from all issue years. Changes in the overall weighted-average discount rate over time are caused by changes in the mix of the reserves on the entire block of in force business. Business issued in the current year has little impact on the overall weighted-average original discount rate due to the size of our in force business.

In comparison to the year-ago period, required interest on insurance policy liabilities increased $6 million, or 2%, to $245 million, consistent with the 2% growth in average interest-bearing insurance policy liabilities.

Realized Gains and Losses. Our life and health insurance companies collect premium income from policyholders for the eventual payment of policyholder benefits, sometimes paid for many years or even decades in the future. Since benefits are expected to be paid in future periods, premium receipts in excess of current expenses are invested to provide for these obligations. For this reason, we hold a significant investment portfolio as a part of our core insurance operations. This portfolio consists primarily of high-quality fixed maturities containing an adequate yield to provide for the cost of carrying these long-term insurance product obligations. As a result, fixed maturities are generally held for long periods to support these obligations. Expected yields on these investments are taken into account when setting insurance premium rates and product profitability expectations.

Despite our intent to hold fixed maturity investments for a long period of time, investments are occasionally sold, exchanged, called, or experience a credit loss event, resulting in a realized gain or loss. Gains or losses are only secondary to our core insurance operations of providing insurance coverage to policyholders. In a bond exchange offer, bondholders may consent to exchange their existing bonds for another class of debt securities. The Company also has investments in certain limited partnerships, held under the fair value option, with fair value changes recognized in Realized gains (losses) in the Condensed Consolidated Statements of Operations**.

Realized gains and losses can be significant in relation to the earnings from core insurance operations, and as a result, can have a material positive or negative impact on net income. The significant fluctuations caused by gains and losses can cause period-to-period trends of net income that are not indicative of historical core operating results or predictive of the future trends of core operations. Accordingly, they have no bearing on core insurance operations or segment results as we view operations. For these reasons, and in line with industry practice, we remove the effects of realized gains and losses when evaluating overall insurance operating results.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

The following table summarizes our tax-effected realized gains (losses) by component.

Analysis of Realized Gains (Losses), Net of Tax

(Dollar amounts in thousands, except for per share data)


	Three Months Ended March 31,
	2025				2024
	Amount		Per Share		Amount		Per Share
Fixed maturities:
Sales	$	11	$	—	$	111	$	—
Matured or other redemptions(1)	612		0.01		—		—
Provision for credit losses	32		—		70		—
Fair value option—change in fair value	1,873		0.02		(12,168)		(0.13)
Mortgages	342		—		(691)		—
Other investments	(852)		(0.01)		248		—
Total realized gains (losses)—investments	2,018		0.02		(12,430)		(0.13)
Other gains (losses)(2)	(1,951)		(0.02)		3,109		0.03

Total realized gains (losses)	$	67	$	—	$	(9,321)	$	(0.10)

(1)During the three months ended March 31, 2025 and 2024, the Company recorded $55.7 million and $66.9 million, respectively, of exchanges of fixed maturity securities (noncash transactions) that resulted in a realized gains of $42 thousand and $0 net of tax, respectively.

(2)Other realized gains (losses) are primarily a result of changes in the fair value for assets held in rabbi trust.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Investment Acquisitions**.** Globe Life's investment policy calls for investing primarily in investment grade fixed maturities that meet our quality and yield objectives. We generally invest in securities with longer-term maturities because they more closely match the long-term nature of our life and health policy liabilities. We believe this strategy is appropriate since our expected future cash flows are generally stable and predictable and the likelihood that we will need to sell invested assets to raise cash is low.

The following table summarizes selected information for fixed maturity investments. The effective annual yield shown is based on the acquisition price and call features, if any, of the securities. For non-callable bonds, the yield is calculated to maturity date. For callable bonds acquired at a premium, the yield is calculated to the earliest known call date and call price after acquisition ("first call date"). For all other callable bonds, the yield is calculated to maturity date.

Fixed Maturity Acquisitions Selected Information

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025			2024
Cost of acquisitions:
Investment-grade corporate securities	$	236,723		$	678,795
Investment-grade municipal securities	1,000			3,320
Other securities	7,122			312
Total fixed maturity acquisitions(1)	$	244,845		$	682,427

Effective annual yield (one year compounded)(2)	6.41		%	5.86		%
Average life (in years, to next call)	40.7			30.4
Average life (in years, to maturity)	43.1			32.3
Average rating	A-			A-

(1)Fixed maturity acquisitions included unsettled trades of $12.0 million in 2025 and $0 in 2024.

(2)Tax-equivalent basis, where the yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.

For investments in callable bonds, the actual life of the investment will depend on whether the issuer calls the investment prior to the maturity date. Given our investments in callable bonds, the actual average life of our investments cannot be known at the time of the investment. Absent sales and "make-whole calls," however, the average life will not be less than the average life to next call and will not exceed the average life to maturity. Data for both of these average life measures is provided in the above chart.

Acquisitions in 2025 and 2024 consisted primarily of corporate and municipal bonds with securities spanning a diversified range of issuers, industry sectors, and geographical regions. In the first three months of 2025, we invested primarily in the industrial, financial, and utility sectors. For the entire portfolio, the taxable equivalent effective yield earned was 5.25%, up approximately 1 basis point from the yield in the first three months of 2024. The increase in taxable equivalent effective yield was primarily due to new purchases at yields exceeding the yield on dispositions and the average portfolio yield. Our investment in fixed maturity securities was lower this quarter as we also invested in other investment opportunities. For the remainder of 2025, the Company will continue to execute on its existing strategy by seeking to invest in assets that satisfy our quality and other objectives, while maximizing the highest risk-adjusted, capital-adjusted return.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

In addition to the fixed maturity acquisitions, Globe Life invested in commercial mortgage loans and in other long-term investments. Other long-term investments primarily consist of investment funds. See Note—4 Investments for further discussion.

The following table summarizes Globe Life's other investment acquisitions of the following assets.

Other Investment Acquisitions

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025		2024
Limited partnerships	$	15,831	$	67,498
Commercial mortgage loans	35,621		58,406
Common stock	502		11,968
Convertible notes	—		1,350

Total	$	51,954	$	139,222

Since fixed maturities represent such a significant portion of our investment portfolio, 88% of total amortized cost net of allowance for credit losses at March 31, 2025, the remainder of the discussion of portfolio composition will focus on fixed maturities. Selected information concerning the fixed maturity portfolio is as follows:

Fixed Maturity Portfolio Selected Information


	At
	March 31, 2025	December 31, 2024	March 31, 2024
Average annual effective yield(1)	5.26%	5.25%	5.25%
Average life, in years, to:
Next call(2)	15.3	15.1	14.9
Maturity(2)	19.4	19.3	18.9
Effective duration to:
Next call(2,3)	8.8	8.8	8.9
Maturity(2,3)	10.6	10.6	10.7

(1)Tax-equivalent basis. The yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.

(2)Globe Life calculates the average life and duration of the fixed maturity portfolio two ways:

(a) based on the next call date which is the next call date for callable bonds and the maturity date for noncallable bonds; and

(b) based on the maturity date of all bonds, whether callable or not.

(3)Effective duration is a measure of the price sensitivity of a fixed-income security to a 1% change in interest rates.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Credit Risk Sensitivity*.* The following tables summarize certain information about the major corporate sectors and security types held in our fixed maturity portfolio at March 31, 2025 and December 31, 2024.

Fixed Maturities by Sector

March 31, 2025

(Dollar amounts in thousands)


	Below Investment Grade								Total Fixed Maturities								% of Total Fixed Maturities
	Amortized Cost, net		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost, net		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		At Amortized Cost, net	At Fair Value

Corporates:
Financial
Insurance - life, health, P&C	$	8,009	$	91	$	—	$	8,100	$	2,860,395	$	66,672	$	(184,455)	$	2,742,612	15	16
Banks	70,724		439		(3,371)		67,792		996,052		21,525		(51,242)		966,335		6	5
Other financial	74,973		—		(13,143)		61,830		1,169,714		18,860		(135,319)		1,053,255		6	6
Total financial	153,706		530		(16,514)		137,722		5,026,161		107,057		(371,016)		4,762,202		27	27
Industrial
Energy	44,561		—		(4,807)		39,754		1,304,101		42,167		(69,481)		1,276,787		7	7
Basic materials	—		—		—		—		1,142,182		25,342		(85,176)		1,082,348		6	6
Consumer, non-cyclical	640		—		(2)		638		2,128,380		17,612		(219,475)		1,926,517		11	11
Other industrials	25,000		—		(4,819)		20,181		1,096,351		19,090		(96,477)		1,018,964		6	6
Communications	—		—		—		—		830,454		15,266		(84,285)		761,435		4	4
Transportation	—		—		—		—		630,157		13,774		(36,726)		607,205		3	4
Consumer. cyclical	127,790		194		(18,026)		109,958		491,816		3,837		(64,123)		431,530		3	2
Technology	50,276		—		(631)		49,645		341,407		926		(61,869)		280,464		2	2
Total industrial	248,267		194		(28,285)		220,176		7,964,848		138,014		(717,612)		7,385,250		42	42
Utilities	58,998		—		(6,652)		52,346		2,104,309		57,954		(101,935)		2,060,328		11	12
Total corporates	460,971		724		(51,451)		410,244		15,095,318		303,025		(1,190,563)		14,207,780		80	81
States, municipalities, and political divisions:
General obligations	—		—		—		—		910,054		4,713		(196,496)		718,271		5	4
Revenues	—		—		—		—		2,385,079		22,841		(365,210)		2,042,710		12	12
Total states, municipalities, and political divisions	—		—		—		—		3,295,133		27,554		(561,706)		2,760,981		17	16
Other fixed maturities:
Government (U.S. and foreign)	—		—		—		—		445,527		81		(41,248)		404,360		2	2
Collateralized debt obligations	36,609		5,046		—		41,655		36,609		5,046		—		41,655		—	—
Other asset-backed securities	8,779		23		—		8,802		91,425		69		(1,303)		90,191		1	1
Total fixed maturities	$	506,359	$	5,793	$	(51,451)	$	460,701	$	18,964,012	$	335,775	$	(1,794,820)	$	17,504,967	100	100

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Fixed Maturities by Sector

December 31, 2024

(Dollar amounts in thousands)


	Below Investment Grade								Total Fixed Maturities								% of Total Fixed Maturities
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		At Amortized Cost, net	At Fair Value

Corporates:
Financial
Insurance - life, health, P&C	$	38,584	$	32	$	(7,801)	$	30,815	$	2,817,161	$	49,928	$	(206,943)	$	2,660,146	15	15
Banks	65,718		254		(3,506)		62,466		1,026,367		17,023		(59,795)		983,595		6	6
Other financial	74,973		—		(14,917)		60,056		1,162,847		15,647		(146,305)		1,032,189		6	6
Total financial	179,275		286		(26,224)		153,337		5,006,375		82,598		(413,043)		4,675,930		27	27
Industrial
Energy	44,580		—		(5,410)		39,170		1,318,501		33,825		(77,700)		1,274,626		7	7
Basic materials	—		—		—		—		1,147,932		20,121		(91,699)		1,076,354		6	6
Consumer, non-cyclical	640		—		(3)		637		2,087,181		11,222		(255,241)		1,843,162		11	11
Other industrials	25,000		—		(4,796)		20,204		1,089,118		14,847		(108,283)		995,682		6	6
Communications	—		—		—		—		832,355		12,085		(90,817)		753,623		4	4
Transportation	—		—		—		—		572,829		9,800		(38,953)		543,676		3	3
Consumer. cyclical	128,674		331		(28,378)		100,627		492,653		3,113		(75,592)		420,174		3	3
Technology	50,278		—		(2,419)		47,859		341,407		597		(67,045)		274,959		2	2
Total industrial	249,172		331		(41,006)		208,497		7,881,976		105,610		(805,330)		7,182,256		42	42
Utilities	58,996		22		(6,797)		52,221		2,081,366		39,716		(118,007)		2,003,075		11	12
Total corporates	487,443		639		(74,027)		414,055		14,969,717		227,924		(1,336,380)		13,861,261		80	81
States, municipalities, and political divisions:
General obligations	—		—		—		—		909,765		3,695		(177,021)		736,439		5	4
Revenues	—		—		—		—		2,391,136		16,967		(357,738)		2,050,365		13	12
Total states, municipalities, and political divisions	—		—		—		—		3,300,901		20,662		(534,759)		2,786,804		18	16
Other fixed maturities:
Government (U.S., municipal, and foreign)	—		—		—		—		438,636		19		(51,664)		386,991		2	2
Collateralized debt obligations	36,923		5,943		—		42,866		36,923		5,943		—		42,866		—	—
Other asset-backed securities	4,754		10		—		4,764		79,237		39		(2,186)		77,090		—	1
Total fixed maturities	$	529,120	$	6,592	$	(74,027)	$	461,685	$	18,825,414	$	254,587	$	(1,924,989)	$	17,155,012	100	100

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Corporate securities, which consist of bonds and redeemable preferred stocks, were the largest component of the fixed maturity portfolio as of March 31, 2025, representing 80% of amortized cost, net, and 81% of fair value. The remainder of the portfolio is invested primarily in securities issued by the U.S. government and U.S. municipalities. The Company holds insignificant amounts in foreign government bonds, collateralized debt obligations, asset-backed securities, and mortgage-backed securities. Corporate securities are diversified over a variety of industry sectors and issuers. At March 31, 2025, the total fixed maturity portfolio consisted of 1,018 issuers.

Fixed maturities had a fair value of $17.5 billion at March 31, 2025, compared to $17.2 billion at December 31, 2024. The net unrealized loss position in the fixed-maturity portfolio decreased from $1.7 billion at December 31, 2024 to $1.5 billion at March 31, 2025 due to a change in market rates during the period.

For more information about our fixed maturity portfolio by component at March 31, 2025 and December 31, 2024, including a discussion of allowance for credit losses, an analysis of unrealized investment losses, and a schedule of maturities, see Note 4—Investments.

An analysis of the fixed maturity portfolio by composite quality rating at March 31, 2025 and December 31, 2024, is shown in the following tables. The company uses the NAIC designation for credit quality ratings. The NAIC designation is generally determined using the second lowest rating available from nationally recognized statistical rating organizations (“NRSRO”) when three or more ratings are available and the lowest rating when two or fewer rating are available. When NRSRO ratings are unavailable the rating may be assigned by the Securities Valuation Office (“SVO”) of the NAIC.

Fixed Maturities by Rating

At March 31, 2025

(Dollar amounts in thousands)


	Amortized Cost, net		% of Total	Fair Value		% of Total	Average Composite Quality Rating on Amortized Cost, net
Investment grade:
AAA	$	972,215	5	$	867,562	5
AA	3,253,890		17	2,721,303		15
A	5,636,339		30	5,354,094		31
BBB+	3,194,728		17	3,026,913		17
BBB	4,134,746		22	3,894,070		22
BBB-	1,265,735		6	1,180,324		7
Total investment grade	18,457,653		97	17,044,266		97	A-

Below investment grade:
BB	376,248		2	337,197		2
B	91,303		1	79,650		1
Below B	38,808		—	43,854		—
Total below investment grade	506,359		3	460,701		3	B+
	$	18,964,012	100	$	17,504,967	100

Weighted average composite quality rating							A-

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Fixed Maturities by Rating

At December 31, 2024

(Dollar amounts in thousands)


	Amortized Cost, net		% of Total	Fair Value		% of Total	Average Composite Quality Rating on Amortized Cost
Investment grade:
AAA	$	968,220	5	$	855,165	5
AA	3,225,044		17	2,691,908		15
A	5,508,446		29	5,147,203		30
BBB+	3,267,101		17	3,040,313		18
BBB	4,087,323		22	3,799,696		22
BBB-	1,240,160		7	1,159,042		7
Total investment grade	18,296,294		97	16,693,327		97	A-

Below investment grade:
BB	397,823		2	349,028		2
B	92,176		1	67,593		1
Below B	39,121		—	45,064		—
Total below investment grade	529,120		3	461,685		3	BB-
	$	18,825,414	100	$	17,155,012	100

Weighted average composite quality rating							A-

The overall quality rating of the portfolio is A-, the same as of year end 2024. Fixed maturities rated BBB are 45% of the total portfolio at March 31, 2025, down from 46% at December 31, 2024. While this ratio is high relative to our peers, it is at its lowest level since 2007 and we have limited exposure to higher-risk assets such as derivatives, equities, and asset-backed securities. Additionally, the Company does not participate in securities lending and has no off-balance sheet investments as of March 31, 2025. Of our fixed maturity purchases, BBB securities generally provide the Company with the best risk-adjusted, capital-adjusted returns largely due to our ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets.

An analysis of changes in our portfolio of below-investment grade fixed maturities at amortized cost, net of allowance for credit losses is as follows:

Below-Investment Grade Fixed Maturities

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025		2024
Balance at beginning of period	$	529,120	$	529,511
Downgrades by rating agencies	5,074		—
Upgrades by rating agencies	(30,555)		(4,592)
Dispositions	(916)		(275)
Acquisitions	4,024		17,737
Provision for credit losses	36		88
Amortization and other	(424)		(447)
Balance at end of period	$	506,359	$	542,022

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Our investment policy calls for investing primarily in fixed maturities that are investment grade and meet our quality and yield objectives. Thus, the balance of below-investment grade issues is primarily the result of ratings downgrades of existing holdings. Below-investment grade bonds at amortized cost, net of allowance for credit losses, were 3% of total fixed maturities at amortized cost as of March 31, 2025. Globe Life invests long term and as such, one of our key criteria in our investment process is to select issuers that are anticipated to weather multiple economic cycles.

OPERATING EXPENSES

Operating expenses are classified into two categories: insurance administrative expenses and expenses of the Parent Company. Insurance administrative expenses generally include expenses incurred after a policy has been issued. As these expenses relate to premium for a given period, management measures the expenses as a percentage of premium income. The Company also views stock-based compensation expense as a Parent Company expense. Expenses associated with the issuance of our insurance policies are reflected as acquisition expenses and included in the determination of underwriting margin.

An analysis of operating expenses is shown below.

Operating Expenses Selected Information

(Dollar amounts in thousands)


	Three Months Ended March 31,						Increase
	2025			2024			(Decrease)
	Amount		% of Premium	Amount		% of Premium	Amount		%
Insurance administrative expenses:
Salaries	$	33,688	2.8	$	31,174	2.7	$	2,514	8
Other employee costs	10,301		0.9	10,013		0.9	288		3
Information technology costs	20,936		1.7	18,307		1.6	2,629		14
Legal costs	6,249		0.5	5,273		0.4	976		19
Other administrative costs	16,375		1.4	15,644		1.4	731		5
Total insurance administrative expenses	87,549		7.3	80,411		7.0	7,138		9

Parent company expense	3,050			2,826			224
Stock compensation expense	12,019			9,267			2,752

Legal proceedings	6,128			—			6,128
Non-operating expenses	—			710			(710)

Total operating expenses, per Condensed Consolidated Statements of Operations	$	108,746		$	93,214		$	15,532	17

Total operating expenses for March 31, 2025 increased in comparison with the prior year primarily due to increases in insurance administrative expenses as well as stock compensation and legal proceedings. Insurance administrative expenses increased $7.1 million primarily due to higher information technology costs, legal costs including compliance and security, and employee costs, which include salaries and other costs. Insurance administrative expenses as a percent of premium were 7.3% for the three months ended March 31, 2025 compared to 7.0% for the same period in 2024.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

SHARE REPURCHASES

Globe Life has an ongoing share repurchase program that began in 1986. The share repurchase program is reviewed with the Board of Directors quarterly, and continues indefinitely unless and until the Board of Directors decides to suspend, terminate or modify the program. On November 18, 2024, the Board of Directors authorized the repurchase of up to $1.8 billion under the Company's existing share repurchase program. Management generally determines the amount of repurchases based on the amount of the excess cash flows and other available sources after the payment of dividends to the Parent Company shareholders, general market conditions, and other alternative uses. Since implementing our share repurchase program in 1986, we have used $10.5 billion to repurchase Globe Life Inc. common shares, after determining that the repurchases provide a greater risk-adjusted after-tax return than other investment alternatives.

Excess cash flow at the Parent Company is primarily comprised of dividends received from the insurance subsidiaries less interest expense paid on its debt and other limited operating activities. Additionally, when stock options are exercised, proceeds from these exercises and the resulting tax benefit are used to repurchase additional shares on the open market to minimize dilution as a result of the option exercises.

The following table summarizes share repurchases for the three month periods ended March 31, 2025 and 2024.

Analysis of Share Repurchases

(Amounts in thousands, except per share data)


	Three Months Ended March 31,
	2025					2024
Purchases with:	Shares	Amount		Average Price		Shares	Amount		Average Price
Excess cash flow at the Parent Company(1)	1,451	$	176,546	$	121.70	128	$	15,602	$	122.13
Option exercise proceeds	700	86,624		123.76		63	7,927		126.20
Total	2,151	$	263,170	$	122.37	191	$	23,529	$	123.47

(1)Excludes excise tax on the repurchase of treasury stock of $1.4 million and $(60) thousand for the three months ended March 31, 2025 and 2024, respectively.

The amount of share repurchases in the first quarter was higher due to favorable market conditions related to the company's stock price and higher excess cash flow. The amount of excess cash flow was higher than in the prior year primarily due to higher statutory earnings and the inclusion of extraordinary dividends approved in late 2024. Refer to Note 11—Debt for further details. Throughout the remainder of this discussion, share repurchases will only refer to those made from excess cash flow at the Parent Company.

FINANCIAL CONDITION

Liquidity. Liquidity provides Globe Life with the ability to meet on demand the cash commitments required to support our business operations and meet our financial obligations. Our liquidity is primarily derived from multiple sources: positive cash flow from operations, a portfolio of marketable securities, a revolving credit facility, commercial paper, and advances from the Federal Home Loan Bank.

Insurance Subsidiary Liquidity**.** The operations of our insurance subsidiaries have historically generated substantial cash inflows in excess of immediate cash needs. Cash inflows for the insurance subsidiaries primarily include premium and investment income. In addition to investment income, maturities and scheduled repayments in the investment portfolio are cash inflows. Cash outflows from operations include policy benefit payments, commissions, administrative expenses, and taxes. A portion of cash inflows in the current year will provide for the payment of future policy benefits and are invested primarily in long-term fixed maturities as they better match the long-term nature of these obligations. Excess cash available from the insurance subsidiaries’ operations is generally distributed as a dividend to the Parent Company, subject to regulatory restrictions. The dividends are generally paid in amounts equal to the subsidiaries’ prior year statutory net income excluding realized capital gains. While the insurance subsidiaries annually generate more operating cash inflows than cash outflows, the companies also have the entire available-for-sale fixed maturity investment portfolio available to create additional cash flows if required.

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Four of our insurance subsidiaries are members of the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low-cost collateralized borrowings and funding agreements. While not the only source of liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed. Refer to Note 11—Debt for further details.

Parent Company Liquidity. An important source of Parent Company liquidity is the dividends from its insurance subsidiaries. These dividends are received throughout the year and are used by the Parent Company to pay dividends on common and preferred stock, interest and principal repayment requirements on Parent Company debt, and operating expenses of the Parent Company.


	Three Months Ended March 31,				Twelve Months Ended December 31,
	2025		2024		Projected 2025	2024
Liquidity Sources:
Dividends from Subsidiaries	$	23,260	$	52,046	$700,000—$750,000	$	692,690
Excess Cash Flows(1)	$	196,678	$	62,118	$785,000—$835,000	$	455,013

(1)Excess cash flows are reported gross of shareholder dividends. For the three months ended March 31, 2025 and 2024, shareholder dividends were $20 million and $21 million, respectively. For the twelve months ended December 31, 2025, we project approximately $83 million in shareholder dividends, compared to the $85 million paid in 2024.

Dividends from subsidiaries and excess cash flows are projected to be higher in 2025 than in 2024 primarily due to improved earnings from favorable mortality trends and growth in business, as well as positive impacts from lower reserve increases under statutory accounting impacting the 2024 statutory earnings that derive the 2025 dividends. The excess cash flows in 2025 include the extraordinary dividends approved in the latter part of 2024 of $192 million. Additional sources of liquidity for the Parent Company are cash, intercompany receivables, intercompany borrowings, debt markets, term loans, and a revolving credit facility.

Short-Term Borrowings. An additional source of Parent Company liquidity is a credit facility with a group of lenders. The facility was amended on March 29, 2024, resulting in an increased capacity of $250 million. The facility allows for unsecured borrowings and stand-by letters of credit up to $1 billion, which could be increased up to $1.25 billion. While the Parent Company may request the increase, it is not guaranteed. The updated five-year credit agreement will mature on March 29, 2029. Up to $250 million in letters of credit can be issued against the facility. The facility serves as a backup line of credit for a commercial paper program under which commercial paper may be issued at any time, with total commercial paper outstanding not to exceed the facility maximum less any letters of credit issued. Interest charged on the commercial paper program resembles variable rate debt due to its short term nature. As of March 31, 2025, we had available $476 million of additional borrowing capacity under this facility, compared to $561 million a year earlier. As of March 31, 2025, the Parent Company was in full compliance with all covenants related to the aforementioned debt.

As a part of the credit facility, Globe Life has stand-by letters of credits. These letters of credit are issued on behalf of our insurance subsidiaries.

The following tables present certain information about our commercial paper borrowings.

Credit Facility—Commercial Paper

(Dollar amounts in thousands)


	At
	March 31, 2025			December 31, 2024			March 31, 2024
Balance of commercial paper at end of period (par value)	$	409,500		$	419,000		$	324,000
Annualized interest rate	5.13		%	5.22		%	5.63		%
Letters of credit outstanding	$	115,000		$	115,000		$	115,000
Remaining amount available under credit line	475,500			466,000			561,000

GL Q1 2025 FORM 10-Q

Globe Life Inc.

Management's Discussion & Analysis

Credit Facility—Commercial Paper Activity

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2025			2024
Average balance of commercial paper outstanding during period (par value)	$	478,950		$	346,088
Daily-weighted average interest rate (annualized)	5.08		%	5.68		%
Maximum daily amount outstanding during period (par value)	$	605,500		$	384,000

The Company reduced commercial paper borrowings by $10 million since year end. The Company was able to issue commercial paper as needed under this facility during the three months ended March 31, 2025 and 2024.

Globe Life expects to have readily available funds for 2025 and the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiaries through liquid assets currently available, internally-generated cash flow and the credit facility. In the event more liquidity is needed, the Parent Company could generate additional funds through multiple sources including, but not limited to, the issuance of debt, an additional short-term credit facility or term loan, and intercompany borrowing.

Consolidated Liquidity. Consolidated net cash inflows from operations were $432 million in the first three months of 2025, compared with $351 million in the same period of 2024. The increase is attributable to routine fluctuations in the settlement of operating activities. In addition to cash inflows from operations, our insurance companies received proceeds from dispositions of fixed maturities available for sale, mortgage loans, and other long-term investments in the amount of $138 million during the first three months of 2025. As previously noted under the caption Short-Term Borrowings**, the Parent Company has in place a revolving credit facility. The insurance companies have no additional outstanding credit facilities.

Cash and short-term investments were $366 million at March 31, 2025, compared with $250 million at December 31, 2024. In addition to these liquid assets, $17.5 billion (fair value at March 31, 2025) of fixed income securities are available for sale in the event of an unexpected need. Approximately $1.4 billion, at fair value, are pledged for outstanding FHLB advances and reinsurance. Further, approximately 98% of our fixed income securities are publicly traded, freely tradable under SEC Rule 144, or qualified for resale under SEC Rule 144A. While our fixed income securities are classified as available for sale, we have the ability and general intent to hold any securities to recovery or maturity. Our strong cash flows from operations, on-going investment maturities, and available liquidity under our credit facility make any need to sell securities for liquidity highly unlikely.

Capital Resources. The Parent Company's capital structure consists of short-term debt (the commercial paper facility and current maturities of long-term debt), long-term debt, and shareholders’ equity. It does not include short-term FHLB borrowings, which are obligations of the insurance subsidiaries and typically repaid over the course of the year.

Long-Term Borrowings**.** At March 31, 2025 and December 31, 2024, the outstanding long-term debt at book value was $2.3 billion and $2.3 billion, respectively.

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

Selected Information about Debt Issues

As of March 31, 2025

(Dollar amounts in thousands)


Instrument	Issue Date	Maturity Date	Coupon Rate	Interest Payment Dates	Par Value		Book Value		Fair Value
Senior notes	09/27/2018	09/15/2028	4.550%	semiannual	$	550,000	$	547,186	$	548,751
Senior notes	08/21/2020	08/15/2030	2.150%	semiannual	400,000		397,250		346,216
Senior notes(1)	05/19/2022	06/15/2032	4.800%	semiannual	250,000		246,377		242,348
Senior notes	08/23/2024	09/15/2034	5.850%	semiannual	450,000		444,915		459,194
Junior subordinated debentures	11/17/2017	11/17/2057	5.275%	semiannual	125,000		123,448		97,340
Junior subordinated debentures	06/14/2021	06/15/2061	4.250%	quarterly	325,000		317,408		208,130
Term loan(2)	05/11/2023	08/15/2027	5.798%	quarterly	250,000		248,361		248,361


Total long-term debt					2,350,000		2,324,945		2,150,340



FHLB borrowings					70,000		70,000		70,000
Commercial paper					409,500		406,891		406,891
Total short-term debt					479,500		476,891		476,891

Total debt					$	2,829,500	$	2,801,836	$	2,627,231

(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 term loan was amended on August 15, 2024 extending the maturity date from November 11, 2024 to August 15, 2027 and increasing the principal amount from $170 million to $250 million.

Financing costs consist primarily of interest on our various debt instruments. The table below presents the components of financing costs and reconciles interest expense per the Condensed Consolidated Statements of Operations**.

Analysis of Financing Costs

(Dollar amounts in thousands)


	Three Months Ended March 31,				Increase (Decrease)
	2025		2024		Amount		%
Interest on funded debt	$	23,553	$	16,926	$	6,627	39
Interest on term loans	3,889		2,999		890		30
Interest on short-term debt	7,550		8,683		(1,133)		(13)
Other	—		13		(13)		(100)
Financing costs	$	34,992	$	28,621	$	6,371	22

During the first three months of 2025, financing costs increased 22% compared to the prior year. The increase in financing costs is primarily due to higher average balances in the current year compared to the prior year due to the issuance of debt in the third quarter of 2024. More information on our debt transactions is disclosed in the Financial Condition section of this report.

Subsidiary Capital*:* The National Association of Insurance Commissioners (NAIC) has established a risk-based factor approach for determining threshold risk-based capital levels for all insurance companies. This approach was designed to assist the regulatory bodies in identifying companies that may require regulatory attention. A Risk-Based Capital (RBC) ratio is typically determined by dividing adjusted total statutory capital by the amount of RBC determined using the NAIC’s factors. If a company’s RBC ratio approaches two times the RBC amount, the company must file a plan with the NAIC for improving its capital levels (this level is commonly referred to as

GL Q1 2025 FORM 10-Q

GLOBE LIFE INC.

Management's Discussion & Analysis

“Company Action Level” RBC). Companies typically hold a multiple of the Company Action Level RBC depending on their particular business needs and risk profile.

Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current ratings. For 2025, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300% to 320%. The Company has concluded that this capital level is more than adequate and sufficient to support its current ratings, given the nature of its business and its risk profile. For 2024, our consolidated Company Action Level RBC ratio was 316%. The Parent Company is committed to maintaining the targeted consolidated RBC ratio at its insurance subsidiaries and has sufficient liquidity available to provide additional capital if necessary.

Shareholders' Equity*:* Shareholders’ equity was $5.4 billion at March 31, 2025. This compares with $5.3 billion at December 31, 2024 and $5.0 billion at March 31, 2024. During the three months since December 31, 2024, shareholders’ equity increased as a result of net income of $255 million during the first three months of 2025, but was offset by share repurchases of $177 million and an additional $87 million in share repurchases to offset the dilution from stock option exercises. Additionally, the change in the balance of AOCI increased shareholders' equity $59 million primarily due to increased interest rates and discount rates over the period.

On February 27, 2025, the Parent Company announced that it had declared a quarterly dividend of $0.27 per share. This dividend was paid on May 1, 2025.

We plan to use excess cash available at the Parent Company as efficiently as possible in the future. Excess cash flow, as we define it, results primarily from the dividends received by the Parent Company from its insurance subsidiaries less the interest paid on debt. The cash received by the Parent Company from our insurance subsidiaries is after they have made substantial investments during the year to grow the business. Possible uses of excess cash flow include, but are not limited to, share repurchases, acquisitions, shareholder dividend payments, investments in securities, or repayment of short-term debt. We will determine the best use of excess cash after ensuring that targeted capital levels are maintained in our insurance subsidiaries. If market conditions are favorable, we currently expect that share repurchases will continue to be a primary use of those funds.

Future policy benefits are computed using current discount rates with the impact of changes in discount rates included in accumulated other comprehensive income. Additionally, the liability for future policy benefits is calculated using net premiums rather than gross premiums. Given that gross premiums are considerably higher than net premiums for our business, as seen in Note 6—Policy Liabilities, the measurement of the liability is higher than what it would be had it been computed using gross premiums. This is an important consideration when analyzing shareholders' equity.

We maintain a significant available-for-sale fixed maturity portfolio to support our insurance policy liabilities. Current accounting guidance requires that we revalue our portfolio to fair market value at the end of each accounting period. The period-to-period changes in fair value, net of their associated impact on income tax, are reflected directly in shareholders’ equity. Changes in the fair value of the portfolio can result from changes in market rates.

While a majority of invested assets are revalued, accounting rules do not permit interest-bearing insurance policy liabilities to be valued at fair value in a consistent manner as that of assets, with changes in value applied directly to shareholders’ equity. Due to the size of our policy liabilities in relation to our shareholders’ equity, an inconsistency exists in measurement, which may have a material impact on the reported value of shareholders’ equity. Fluctuations in interest rates cause undue volatility in the period-to-period presentation of our shareholders’ equity, capital structure, and financial ratios. Due to the long-term nature of our fixed maturity investments and liabilities and the strong cash flows consistently generated by our insurance subsidiaries, we have the ability to hold our securities to maturity. As such, we do not expect to incur losses due to fluctuations in market value of fixed maturities caused by market rate changes and temporarily illiquid markets. Accordingly, our management, credit rating agencies, lenders, many industry analysts, and certain other financial statement users prefer to remove the effect of this accounting rule when analyzing our balance sheet, capital structure, and financial ratios.

GL Q1 2025 FORM 10-Q

Previous: Item 1. Condensed Consolidated Financial Statements · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk