Globe Life rides out COVID-19 mortality, fluctuating agent counts

Globe Life Inc. is seeing mixed results on two industry issues of considerable interest: agent counts and COVID-19 mortality.

One of the first insurers to post fourth quarter 2022 numbers, Globe Life executives held a conference call with Wall Street analysts Thursday. Based in McKinney, Texas, the insurer reported fourth-quarter earnings of $211.6 million.

Formerly Torchmark Corp., Globe Life subsidiaries include Liberty National, American Income, Family Heritage and United American life insurance companies. They have a combined 16.8 million policies in force, the company said, all term and whole life only.

Globe Life posted revenue of $1.32 billion in the period. For the year, the company reported profit of $739.7 million, or $7.47 per share. Revenue was reported as $5.29 billion.

Life underwriting margin was $212 million, up 45% from a year ago, said Frank Svoboda, co-CEO with Matt Darden.

"The increase in margin is due primarily to improved claim experience," Svoboda explained. "With respect to anticipated underwriting income, as we've talked about on prior calls, underwriting margin will be calculated differently under the new LDTI [long-duration targeted improvements] accounting rules and is expected to be substantially higher due to the changes required by the new accounting standards."

Issued by the Financial Accounting Standards Board in August 2018, LDTI defines new regulatory requirements for certain long-duration insurance products – demanding greater integration of finance and actuarial teams’ processes and systems; and introducing additional complexity in reporting.

Improved COVID-19 claims

Like many insurers, Globe Life saw improved COVID-19 mortality results in 2022. In the fourth quarter, the insurer recorded $5 million of COVID-19 life claims related to about 31,000 U.S. deaths, as reported by the Centers for Disease Control.

This was in line with expectations, said Tom Kalmbach, chief financial officer.

"We also incurred excess deaths as compared to those expected based on pre-pandemic levels from non-COVID causes, including deaths due to lung disorders, heart and circulatory issues and neurological disorders," he added. "We believe the higher level of mortality we have seen is due in large part to the effects of the pandemic. So, as the number of COVID deaths had moderated, so has the number of deaths from other causes."

For the full year, Globe Life incurred about $49 million of COVID-19 life policy obligations related to roughly 243,000 U.S. deaths. Non-COVID-19 claims resulted in about $69 million of higher policy obligations for the full year, Kalmbach said.

The $118 million combined impact of COVID-19 and other higher policy obligations was around 4% of total life premium in 2022, down from approximately 6% in 2021, he said. Globe Life is budgeting about $45 million of total excess life policy obligations from COVID-19 and related mortality in 2023.

Agent counts fluctuate

At American Income, premiums were up and underwriting margin was way up, yet net sales were down 6% from the year-ago quarter.

"The decline in sales resulted from reduced agent count and agent productivity," Darden said.

The average producing agent count for the fourth quarter was 9,243, down 3% from the year-ago quarter and down 2% from the third quarter, he explained.

"The decline from the third quarter to the fourth quarter is consistent with typical seasonal trends," Darden said. "The decline in average agent count from a year ago is due to higher-than-expected attrition throughout 2022.

"While the agent count declined from a year ago, I am encouraged as we have seen positive recruiting momentum over the latter part of the fourth quarter into the beginning of this year. We’ve also started to have some success with our new retention efforts."

Much of the industry is having trouble recruiting and retaining the producers needed, surveys show. Globe Life has made "compensation adjustments" and is optimistic it can boost agent numbers, Darden said.

At Liberty National, the average producing agent count for the fourth quarter was 2,946, up 8% from the year ago quarter and up 6% compared to the third quarter. At Family Heritage, the average producing agent count for the fourth quarter was 1,334, up 12% from the year ago quarter and up 8% compared to the third quarter.

Globe Life's direct-to-consumer division saw a 9% decline in net life sales to $31 million, a decline Darden blamed on inflation making it more costly to do the mass mailings needed to drive sales.

"We’ve had to pull back somewhat on circulation and mailings as increases in postage and paper costs impede our ability to achieve satisfactory return on our investment for specific marketing campaigns," he said.

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.

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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.