Globe Life execs happy to focus on Q1 sales as controversies fade

Globe Life executives took a break from two years of relentlessly bad publicity to discuss strong first-quarter financials this week.

The McKinney, Texas-based insurer reported a 13% increase in net income per share and a 10% rise in net operating income per share over the year-ago quarter. The company also reported significant growth in life and health premiums across its divisions, along with strong agent recruitment numbers.

It’s the middle- and working-class markets that are buying Globe Life policies, said co-CEO Matthew Darden. Globe Life is not seeing significant impacts from the economic slowdown that began early in the first quarter, he added.

“What we really see is that as long as our customers have jobs, are employed, that they still find value in the products that we’re offering as well as the cost of what they’re trying to cover from an experience perspective,” Darden said. “As those costs go up, we see them taking out more coverage.”

Formerly Torchmark Corp., Globe Life subsidiaries include Liberty National, American Income, Family Heritage and United American life insurance companies.

As he does every quarter, Darden gave an update on the agent count, which grew by 8% at Liberty National and 9% at Family Heritage.

“I continue to be excited by the agent count growth at Liberty National, which is primarily driven by recruiting activity and growth in agency middle management, and is a good leading indicator for continued sales growth at this division,” Darden said.

Overall, life underwriting margin increased 9% over the year-ago quarter, Globe Life reported in a news release. Tom Kalmbach, chief financial officer, said the insurer is seeing positive mortality trends as well.

“One of the things we've been wanting to see is actually the continued trends of favorable mortality, which would lead to a life mortality assumption update,” Kalmbach said. And we've seen really good mortality results in the third quarter, in the fourth quarter, and now in the first quarter.”

In Other News:

Swirling controversies. Globe Life is facing widespread allegations of illegal sales practices, sexual harassment, insurance fraud, including writing policies for dead and fictitious people, and an alleged kickback scheme that netted millions for senior executives.

The insurer is being sued by a former executive who claims he was fired for raising some of those concerns, and is being investigated by the Department of Justice and the Securities and Exchange Commission. Globe Life also suffered a 2024 data breach that the insurer initially misreported how many people were affected.

There are “no material developments” to report, Darden said. Globe Life reported a budget expense of $4.8 million for legal expenses, which Kalmbach did not provide specifics for. Kalmbach did say that Globe Life is budgeting for “settlements related to an outstanding litigation.”

Quarterly Snapshot:

• At the American Income Life division, life premiums increased over the year-ago quarter by 6%.
• At the Liberty National division, net life sales increased 4% and life premiums increased 6% over the year-ago quarter. Additionally, the average producing agent count increased 8% over the year-ago quarter.
• At the Family Heritage division, health net sales increased 7% and health premiums increased 9% over the year-ago quarter. Additionally, the average producing agent count increased 9% over the year-ago quarter.

Management Perspective:

“The continued decline in sales is primarily due to lower customer inquiries, as we have reduced marketing spend on certain campaigns that did not meet our profit objectives, as a result of higher distribution costs. Our focus in this area is having a positive impact on our overall margin, as we will continue to focus on maximizing the underwriting margin dollars on new sales by managing the rising advertising and distribution costs associated with acquiring new business.”

Co-CEO Matthew Darden on the 12% decline in direct-to-consumer life sales

By The Numbers:

• Total Revenue: $1.48 billion ($1.42 billion in Q1 2024)
• Net Income: $255,000 ($254,000 in Q1 2024)
• Earnings Per Share: Diluted net income per common share of $3.01 ($2.67 in Q1 2024)
• Share Repurchases: $177 million
• Stock Price Movement: Up 3.4% Friday afternoon to $121.72

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.