Globe Life to report third-quarter results amid swirling controversy

Globe Life executives are slated to meet with Wall Street analysts Thursday in a call that is much more interesting than it was two weeks ago.

The insurer is expected to share numbers from a successful third quarter. But ongoing court cases and a troubling data breach are sure to be discussed.

It has been a difficult 2024 for Globe Life. At least three short-seller and other research firms have issued reports accusing brokers at subsidiary American Income Life of widespread sexual harassment and insurance fraud, including writing policies for dead and fictitious people, and an alleged kickback scheme that netted millions for senior executives.

Last week, the insurer revealed that it is being extorted by a hacker who stole customers’ sensitive data.

In a regulatory filing Thursday with the Securities and Exchange Commission, Globe Life said it “recently received communications” from an unknown entity seeking to extort money from the company in exchange for not disclosing data stolen from its systems.

The extortion threat is apparently related to a June data breach self-reported by the insurer. In an ensuing SEC filing, Globe Life said it "initiated a review of potential vulnerabilities related to access permissions and user identity management for a Company web portal that likely resulted in unauthorized access to certain consumer and policyholder information."

Despite all of the negative publicity, Globe Life continues delivering results.

Globe Life reported strong life insurance and health insurance premium gains during the second quarter. The insurer also said that an internal audit of the myriad allegations of fraud and agent misconduct cleared the company of any wrongdoing.

Victory in court

The news is not all dire for Globe Life. The insurer won a big court victory recently when a federal judge tossed out a lawsuit by a former American Income Life executive for wrongful termination.

Scott Dehning claims that Globe Life and subsidiary American Income fired him in May 2023 after he reported "a clear practice of unethical and potentially illegal business practices" to Michigan regulators.

"Dehning has failed to demonstrate a genuine issue of material fact regarding his [whistleblower] claim," Judge Hala Y. Jarbou wrote in an Oct. 11 decision. "[H]e is unable to establish the causal connection between his protected activity and his termination."

Jarbou also dismissed AIL’s counterclaim.

Dehning was vice president of field operations from September 2015 until he was fired. In that role, he supervised about 17 state general agents, the lawsuit said.

In the original eight-page complaint filed in August 2023, Dehning said he viewed certain sales practices with growing uneasiness. He eventually investigated and confirmed the "unethical and potentially illegal sales practices," sharing his findings with the Globe Life executive team, the lawsuit stated.

Globe Life and AIL suggest that Dehning was fired after a sexual harassment claim lodged by his girlfriend at the time, court documents say. The woman had contacted AIL about a potential job and Dehning endorsed her for employment.

Shares rebound strong

Globe Life shares initially fell sharply after the first short-seller reports published in April, but are up about 65% since then.

In its report Fuzzy Panda claimed it "reviewed hundreds of pages of court documents and interviewed dozens of former executives and agents. We uncovered a whistleblower from the executive ranks who showed us where the fraud was hidden. We even went undercover to go through the recruiting process more than 10 times."

Fuzzy Panda alleged that third-party policy sellers known to have committed insurance fraud contributed over 60% of the new business at Globe Life's American Income Life unit. AIL accounted for nearly half of the total underwriting margins last year.

The report claimed that Globe Life and AIL executives were involved in a bribery and kickback scheme that a lawsuit estimates netted them more than $65 million. Fuzzy Panda said it has spoken with a former executive who sent more than 200 emails detailing fraud to senior executives. The research firm claims to "have documents to prove it."

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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.