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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ________
Commission File Number: 001-08052
GLOBE LIFE INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0780404
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
3700 South Stonebridge Drive, McKinney, Texas 75070
(Address of principal executive offices) (Zip Code)

(972) 569-4000
(Registrant’s telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par value per shareGLNew York Stock Exchange
4.250% Junior Subordinated DebenturesGL PRDNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                 Yes    ☒   No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                             Yes   ☒   No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐   No   ☒

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of the last practicable date.
Class Outstanding at October 27, 2021
Common Stock, $1.00 Par Value 100,979,225

1
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Table of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.








As used in this Form 10-Q, “Globe Life,” the “Company,” “we,” “our” and “us” refer to Globe Life Inc., a Delaware corporation incorporated in 1979, its subsidiaries and affiliates.
2
GL Q3 2021 FORM 10-Q
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

Globe Life Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollar amounts in thousands, except per share data)
September 30,
2021		December 31, 2020
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2021—$17,622,028;
2020—$17,197,145, allowance for credit losses: 2021— $0; 2020— $3,346)
$21,160,866 $21,213,509 
Policy loans585,791 584,379 
Other long-term investments (includes: 2021—$586,223; 2020—$385,038 under the fair value option)
733,177 546,981 
Short-term investments93,364 107,782 
Total investments22,573,198 22,452,651 
Cash96,325 94,847 
Accrued investment income264,257 248,991 
Other receivables485,475 474,180 
Deferred acquisition costs4,837,409 4,595,444 
Goodwill481,791 441,591 
Other assets758,123 739,027 
Total assets$29,496,578 $29,046,731 
Liabilities:
Future policy benefits$15,837,212 $15,243,536 
Unearned and advance premium64,900 61,728 
Policy claims and other benefits payable395,914 399,507 
Other policyholders' funds98,151 97,968 
Total policy liabilities16,396,177 15,802,739 
Current and deferred income taxes1,749,427 1,833,723 
Short-term debt393,593 254,918 
Long-term debt (estimated fair value: 2021—$1,680,536; 2020—$1,871,754)
1,546,194 1,667,886 
Other liabilities803,036 716,373 
Total liabilities20,888,427 20,275,639 
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2021 and 2020
— — 
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2021—113,218,183 issued; 2020—113,218,183 issued)
113,218 113,218 
Additional paid-in-capital533,683 527,435 
Accumulated other comprehensive income (loss)2,661,619 3,029,244 
Retained earnings6,353,261 5,874,109 
Treasury stock, at cost: (2021—12,078,358 shares; 2020—9,420,699 shares)
(1,053,630)(772,914)
Total shareholders' equity8,608,151 8,771,092 
Total liabilities and shareholders' equity$29,496,578 $29,046,731 

See accompanying Notes to Condensed Consolidated Financial Statements.
1
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Revenue:
Life premium$728,924 $674,021 $2,165,213 $1,994,473 
Health premium299,143 287,795 888,902 850,877 
Other premium— 1 1 4 
Total premium1,028,067 961,817 3,054,116 2,845,354 
Net investment income238,975 231,432 713,103 691,991 
Realized gains (losses)10,475 1,501 47,286 (29,386)
Other income321 292 1,004 1,021 
Total revenue1,277,838 1,195,042 3,815,509 3,508,980 
Benefits and expenses:
Life policyholder benefits516,196 459,231 1,532,298 1,340,746 
Health policyholder benefits187,906 184,237 564,589 546,444 
Other policyholder benefits7,303 7,508 21,848 22,571 
Total policyholder benefits711,405 650,976 2,118,735 1,909,761 
Amortization of deferred acquisition costs151,593 140,843 452,607 430,840 
Commissions, premium taxes, and non-deferred acquisition costs82,774 74,614 244,752 229,691 
Other operating expense80,385 75,397 240,750 226,693 
Interest expense20,886 21,674 63,833 65,295 
Total benefits and expenses1,047,043 963,504 3,120,677 2,862,280 
Income before income taxes230,795 231,538 694,832 646,700 
Income tax benefit (expense)(41,924)(42,593)(127,826)(119,167)
Net income
$188,871 $188,945 $567,006 $527,533 
Basic net income per common share
$1.86 $1.78 $5.53 $4.95 
Diluted net income per common share
$1.84 $1.76 $5.46 $4.90 















See accompanying Notes to Condensed Consolidated Financial Statements.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Dollar amounts in thousands)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Net income
$188,871 $188,945 $567,006 $527,533 
Other comprehensive income (loss):
Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period(95,906)380,299 (453,917)861,871 
Other reclassification adjustments included in net income(14,599)11,838 (31,096)37,060 
Foreign exchange adjustment on fixed maturities recorded at fair value(519)1,250 4,141 (914)
Unrealized gains (losses) on fixed maturities(111,024)393,387 (480,872)898,017 
Unrealized gains (losses) on other investments— — — (13,260)
Total unrealized investment gains (losses)(111,024)393,387 (480,872)884,757 
Less applicable tax (expense) benefit23,317 (82,612)100,984 (185,800)
Unrealized gains (losses) on investments, net of tax(87,707)310,775 (379,888)698,957 
Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs432 385 1,199 1,150 
Less applicable tax (expense) benefit(91)(81)(252)(242)
Unrealized gains (losses) attributable to deferred acquisition costs, net of tax341 304 947 908 
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities(6,839)5,522 (1,276)(4,973)
Less applicable tax (expense) benefit1,437 (1,158)269 1,045 
Foreign exchange translation adjustments, other than securities, net of tax(5,402)4,364 (1,007)(3,928)
Pension:
Pension adjustments5,198 4,156 15,598 12,471 
Less applicable tax (expense) benefit(1,090)(873)(3,275)(2,619)
Pension adjustments, net of tax4,108 3,283 12,323 9,852 
Other comprehensive income (loss)(88,660)318,726 (367,625)705,789 
Comprehensive income (loss)
$100,211 $507,671 $199,381 $1,233,322 








See accompanying Notes to Condensed Consolidated Financial Statements.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
(Dollar amounts in thousands, except per share data)

Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTreasury StockTotal Shareholders' Equity
Balance at December 31, 2020
$— $113,218 $527,435 $3,029,244 $5,874,109 $(772,914)$8,771,092 
Comprehensive income (loss)— — — (1,004,729)178,517 — (826,212)
Common dividends declared
($0.1975 per share)
— — — — (20,435)— (20,435)
Acquisition of treasury stock— — — — — (132,720)(132,720)
Stock-based compensation— — (11,422)— 1,168 18,142 7,888 
Exercise of stock options— — — — (12,807)45,531 32,724 
Balance at March 31, 2021
— 113,218 516,013 2,024,515 6,020,552 (841,961)7,832,337 
Comprehensive income (loss)— — — 725,764 199,618 — 925,382 
Common dividends declared
($0.1975 per share)
— — — — (20,171)— (20,171)
Acquisition of treasury stock— — — — — (162,864)(162,864)
Stock-based compensation— — 8,634 — — — 8,634 
Exercise of stock options— — — — (14,033)47,637 33,604 
Balance at June 30, 2021
— 113,218 524,647 2,750,279 6,185,966 (957,188)8,616,922 
Comprehensive income (loss)— — — (88,660)188,871 — 100,211 
Common dividends declared
($0.1975 per share)
— — — — (19,981)— (19,981)
Acquisition of treasury stock— — — — — (97,796)(97,796)
Stock-based compensation— — 9,036 — (1,260)— 7,776 
Exercise of stock options— — — — (335)1,354 1,019 
Balance at September 30, 2021$— $113,218 $533,683 $2,661,619 $6,353,261 $(1,053,630)$8,608,151 















See accompanying Notes to Condensed Consolidated Financial Statements.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
(Dollar amounts in thousands, except per share data)


Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTreasury StockTotal Shareholders' Equity
Balance at December 31, 2019
$— $117,218 $531,554 $1,844,830 $5,551,329 $(750,624)$7,294,307 
Cumulative effect of change in accounting principles, net of tax(1)
— — — — (454)— (454)
Balance at January 1, 2020
— 117,218 531,554 1,844,830 5,550,875 (750,624)7,293,853 
Comprehensive income (loss)— — — (778,583)165,540 — (613,043)
Common dividends declared
($0.1875 per share)
— — — — (19,963)— (19,963)
Acquisition of treasury stock— — — — — (166,729)(166,729)
Stock-based compensation— — (12,126)— (482)21,964 9,356 
Exercise of stock options— — — — (9,539)26,347 16,808 
Balance at March 31, 2020
— 117,218 519,428 1,066,247 5,686,431 (869,042)6,520,282 
Comprehensive income (loss)— — — 1,165,646 173,048 — 1,338,694 
Common dividends declared
($0.1875 per share)
— — — — (19,956)— (19,956)
Stock-based compensation— — 8,632 — — — 8,632 
Exercise of stock options— — — — (593)1,310 717 
Balance at June 30, 2020
— 117,218 528,060 2,231,893 5,838,930 (867,732)7,848,369 
Comprehensive income (loss)— — — 318,726 188,945 — 507,671 
Common dividends declared
($0.1875 per share)
— — — — (19,692)— (19,692)
Acquisition of treasury stock— — — — — (129,919)(129,919)
Stock-based compensation— — 8,667 — — — 8,667 
Exercise of stock options— — — — (5,776)15,588 9,812 
Balance at September 30, 2020$— $117,218 $536,727 $2,550,619 $6,002,407 $(982,063)$8,224,908 
(1)Adoption of Accounting Standard Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, on January 1, 2020.




















See accompanying Notes to Condensed Consolidated Financial Statements.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollar amounts in thousands)
Nine Months Ended
September 30,
20212020
Cash provided from (used for) operating activities
$1,060,022 $1,078,616 
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold91,795 52,681 
Fixed maturities available for sale—matured or other redemptions249,653 333,631 
Other long-term investments36,060 35,547 
Total investments sold or matured377,508 421,859 
Acquisition of investments:
Fixed maturities—available for sale(687,993)(905,371)
Other long-term investments(206,609)(213,075)
Total investments acquired(894,602)(1,118,446)
Net (increase) decrease in policy loans(1,412)(5,719)
Net (increase) decrease in short-term investments14,418 (225,594)
Additions to properties(30,730)(28,790)
Other investing activities(59,200)(7,099)
Investments in low-income housing interests(35,236)(28,669)
Cash provided from (used for) investing activities
(629,254)(992,458)
Cash provided from (used for) financing activities:
Issuance of common stock67,347 27,337 
Cash dividends paid to shareholders(60,068)(58,503)
Repayment of debt(300,000)(386,875)
Proceeds from issuance of debt325,000 700,000 
Payment for debt issuance costs(7,639)(5,844)
Net borrowing (repayment) of commercial paper(10,991)(9,605)
Acquisition of treasury stock(393,380)(296,648)
Net receipts (payments) from deposit-type products(48,276)(56,858)
Cash provided from (used for) financing activities
(428,007)(86,996)
Effect of foreign exchange rate changes on cash(1,283)5,006 
Net increase (decrease) in cash1,478 4,168 
Cash at beginning of year94,847 75,933 
Cash at end of period $96,325 $80,101 









See accompanying Notes to Condensed Consolidated Financial Statements.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)

Note 1—Significant Accounting Policies

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

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

Basis of Presentation: The accompanying condensed consolidated financial statements of Globe Life have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual financial statements. However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at September 30, 2021, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended September 30, 2021 and 2020. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Form 10-K filed with the Securities Exchange Commission (SEC) on February 25, 2021.



7
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Acquisition: On August 1, 2021 the Company acquired Beazley Benefits, a small unit of Beazley Insurance Company, Inc. for $59.2 million. This business will enhance our ability to reach the worksite market. In conjunction with this agreement, the Company also executed a 100% coinsurance agreement assuming the remaining inforce business produced by the unit, which included a $2.5 million ceding commission. The acquisition was accounted for under the purchase method of accounting as required by accounting guidance generally accepted in the United States of America. This guidance requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The results of operations since the acquisition date have been consolidated.

Fair Value as of
August 1, 2021
Assets Acquired:
Trade name$300 
Value of Customer Relationships Acquired5,200 
Value of Distribution Acquired11,000 
Goodwill40,200 
56,700 
Ceding commission2,500 
Total purchase price$59,200 

In accordance with the applicable guidance, the Company is finalizing the estimation of the fair value of the acquired assets and may do so up to one year. If any changes are deemed necessary to the preliminary estimates and possibly goodwill, the Company will make an opening balance sheet adjustment.


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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Note 2—New Accounting Standards

Accounting Pronouncements Adopted in the Current Year
StandardDescriptionEffective DateEffect on the Consolidated Financial Statements
ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs
The standard was issued as an amendment to ASU 2017-08, and clarifies that callable debt securities with a premium should be amortized to the next call date.This standard became effective on January 1, 2021.The adoption of this standard did not have a material impact on the consolidated financial statements.

Accounting Pronouncements Yet to be Adopted
StandardDescriptionEffective DateEffect on the Consolidated Financial Statements
ASU No. 2018-12/2019-09/2020-11, 
Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, with clarification guidance issued in November 2019 and 2020.
ASU 2018-12 is a significant change to our current accounting and disclosure of long-duration contracts, which is our primary business. The guidance was primarily issued to: 1) improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows, 2) simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, 3) simplify the amortization of deferred acquisition costs, and 4) improve the effectiveness of the required disclosures.As a result of the issuance of ASU 2020-11 in November 2020, the effective date for this standard was changed to January 1, 2023. Early adoption is available.
The Company is currently in the process of evaluating the impact this standard will have on the consolidated financial statements and disclosures, specifically assessing key accounting policies, assumption and data inputs, controls, and enhanced system solutions.

As of the balance sheet date, the Company is continuing to upgrade its valuation systems as part of its implementation plan. In addition, significant progress has been made allowing the Company to execute parallel valuation runs on major blocks of business and is updating its accounting policies. Due to the overall nature of the standard, the impact on the consolidated financial statements is expected to be significant. At this time, the Company does not have an estimate of the impact. The Company does not expect to early adopt this ASU and has selected a modified retrospective transition method.


9
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income

Components of Accumulated Other Comprehensive Income: An analysis of the change in balance by component of Accumulated Other Comprehensive Income is as follows for the three and nine month periods ended September 30, 2021 and 2020:
 Three Months Ended September 30, 2021
 Available
for Sale
Assets		Deferred
Acquisition
Costs		Foreign
Exchange		Pension
Adjustments		Total
Balance at July 1, 2021
$2,883,391 $(4,098)$27,697 $(156,711)$2,750,279 
Other comprehensive income (loss) before reclassifications, net of tax(76,174)341 (5,402)— (81,235)
Reclassifications, net of tax(11,533)— — 4,108 (7,425)
Other comprehensive income (loss)(87,707)341 (5,402)4,108 (88,660)
Balance at September 30, 2021
$2,795,684 $(3,757)$22,295 $(152,603)$2,661,619 
 Three Months Ended September 30, 2020
 Available
for Sale
Assets		Deferred
Acquisition
Costs		Foreign
Exchange		Pension
Adjustments		Total
Balance at July 1, 2020
$2,370,832 $(5,312)$3,766 $(137,393)$2,231,893 
Other comprehensive income (loss) before reclassifications, net of tax301,423 304 4,364 — 306,091 
Reclassifications, net of tax9,352 — — 3,283 12,635 
Other comprehensive income (loss)310,775 304 4,364 3,283 318,726 
Balance at September 30, 2020
$2,681,607 $(5,008)$8,130 $(134,110)$2,550,619 
 Nine Months Ended September 30, 2021
 Available
for Sale
Assets		Deferred
Acquisition
Costs		Foreign
Exchange		Pension
Adjustments		Total
Balance at January 1, 2021
$3,175,572 $(4,704)$23,302 $(164,926)$3,029,244 
Other comprehensive income (loss) before reclassifications, net of tax(355,322)947 (1,007)— (355,382)
Reclassifications, net of tax(24,566)— — 12,323 (12,243)
Other comprehensive income (loss)(379,888)947 (1,007)12,323 (367,625)
Balance at September 30, 2021
$2,795,684 $(3,757)$22,295 $(152,603)$2,661,619 
 Nine Months Ended September 30, 2020
 Available
for Sale
Assets		Deferred
Acquisition
Costs		Foreign
Exchange		Pension
Adjustments		Total
Balance at January 1, 2020
$1,982,650 $(5,916)$12,058 $(143,962)$1,844,830 
Other comprehensive income (loss) before reclassifications, net of tax669,680 908 (3,928)— 666,660 
Reclassifications, net of tax29,277 — — 9,852 39,129 
Other comprehensive income (loss)698,957 908 (3,928)9,852 705,789 
Balance at September 30, 2020
$2,681,607 $(5,008)$8,130 $(134,110)$2,550,619 


10
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Reclassification adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three and nine month periods ended September 30, 2021 and 2020.
  Three Months Ended
September 30,		Nine Months Ended September 30,Affected line items in the Statement of Operations
Component Line Item2021202020212020
Unrealized investment (gains) losses on available for sale assets:
Realized (gains) losses$(16,269)$10,276 $(35,925)$32,133 Realized (gains) losses
Amortization of (discount) premium1,670 1,562 4,829 4,927 Net investment income
Total before tax(14,599)11,838 (31,096)37,060 
Tax3,066 (2,486)6,530 (7,783)Income taxes
Total after-tax(11,533)9,352 (24,566)29,277 
Pension adjustments:
Amortization of prior service cost158 158 474 474 Other operating expense
Amortization of actuarial (gain) loss5,040 3,998 15,124 11,997 Other operating expense
Total before tax5,198 4,156 15,598 12,471 
Tax(1,090)(873)(3,275)(2,619)Income taxes
Total after-tax4,108 3,283 12,323 9,852 
Total reclassification (after-tax)
$(7,425)$12,635 $(12,243)$39,129 

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Note 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at September 30, 2021 and December 31, 2020, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows. Redeemable preferred stock is included within "Corporates, by sector".
At September 30, 2021

Amortized
Cost		Allowance for Credit LossesGross
Unrealized
Gains		Gross
Unrealized
Losses
Fair
 Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises$380,193 $— $65,063 $(140)$445,116 2 
States, municipalities, and political subdivisions2,068,436 — 220,945 (8,433)2,280,948 11 
Foreign governments61,476 — 1,363 (4,382)58,457 — 
Corporates, by sector:
Financial4,563,734 — 927,421 (12,474)5,478,681 26 
Utilities1,935,489 — 509,282 (988)2,443,783 12 
Energy1,603,163 — 364,899 (2,131)1,965,931 9 
Other corporate sectors6,867,918 — 1,462,369 (15,339)8,314,948 39 
Total corporates14,970,304 — 3,263,971 (30,932)18,203,343 86 
Collateralized debt obligations36,088 — 27,073 — 63,161 — 
Other asset-backed securities105,531 — 5,046 (736)109,841 1 
Total fixed maturities
$17,622,028 $— $3,583,461 $(44,623)$21,160,866 100 
(1)Amount reported in the balance sheet.
(2)At fair value.

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
At December 31, 2020
Amortized
Cost		Allowance for Credit LossesGross
Unrealized
Gains		Gross
Unrealized
Losses
Fair
 Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises$380,602 $— $87,272 $(43)$467,831 2 
States, municipalities, and political subdivisions1,880,607 — 251,291 (315)2,131,583 10 
Foreign governments52,913 — 2,635 (898)54,650 — 
Corporates, by sector:
Financial4,404,203 — 1,016,813 (24,221)5,396,795 26 
Utilities1,975,460 — 608,595 (108)2,583,947 12 
Energy1,623,970 (3,346)346,197 (3,083)1,963,738 9 
Other corporate sectors6,687,644 — 1,727,366 (6,218)8,408,792 40 
Total corporates14,691,277 (3,346)3,698,971 (33,630)18,353,272 87 
Collateralized debt obligations57,007 — 23,460 (8,869)71,598 — 
Other asset-backed securities134,739 — 3,614 (3,778)134,575 1 
Total fixed maturities
$17,197,145 $(3,346)$4,067,243 $(47,533)$21,213,509 100 
(1)Amount reported in the balance sheet.
(2)At fair value.

A schedule of fixed maturities available for sale by contractual maturity date at September 30, 2021 is shown below on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions.
At September 30, 2021
Amortized
Cost, net		Fair
Value
Fixed maturities available for sale:
Due in one year or less$104,924 $106,663 
Due after one year through five years845,481 938,870 
Due after five years through ten years1,806,609 2,160,941 
Due after ten years through twenty years6,583,636 8,359,748 
Due after twenty years8,139,586 9,421,456 
Mortgage-backed and asset-backed securities141,792 173,188 
$17,622,028 $21,160,866 


13
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Analysis of Investment Operations: "Net investment income" for the three and nine month periods ended September 30, 2021 and 2020 is summarized as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
20212020% Change20212020% Change
Fixed maturities available for sale$223,287 $217,900 2 $668,284 $652,583 2 
Policy loans11,376 11,241 1 33,968 33,572 1 
Other long-term investments(1)
9,390 6,925 36 26,432 18,694 41 
Short-term investments10 88 (89)20 529 (96)
244,063 236,154 3 728,704 705,378 3 
Less investment expense(5,088)(4,722)8 (15,601)(13,387)17 
Net investment income
$238,975 $231,432 3 $713,103 $691,991 3 
(1)For the three months ended September 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $7.1 million and $4.0 million of distributions, respectively in net investment income. For the nine months ended September 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $19.4 million and $10.5 million of distributions, respectively in net investment income. Refer to Other Long-Term Investments below for further discussion on the investment funds.


Selected information about sales of fixed maturities available for sale is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Fixed maturities available for sale:
Proceeds from sales(1)
$17,085 $661 $91,795 $52,681 
Gross realized gains304 — 1,438 2,642 
Gross realized losses— (38,782)(12,101)(39,153)
(1)There were no unsettled sales in the periods ended September 30, 2021 and 2020.

An analysis of "Realized gains (losses)" is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)
$16,269 $(38,608)$32,578 $(27,746)
Provision for credit losses— 28,332 3,346 (4,387)
Fair value option—change in fair value1,585 12,053 14,013 (6,798)
Other investments1,935 358 6,663 10,179 
Realized gains (losses) from investments
19,789 2,135 56,600 (28,752)
Realized loss on redemption of debt(9,314)(634)(9,314)(634)
10,475 1,501 47,286 (29,386)
Applicable tax(2,200)463 (9,930)6,949 
Realized gains (losses), net of tax
$8,275 $1,964 $37,356 $(22,437)
(1)During the three months ended September 30, 2021 and 2020, the Company recorded $0 and $65.8 million of exchanges of fixed maturities (noncash transactions) that resulted in $0 and $0, respectively in realized gains (losses). During the nine months ended September 30, 2021 and 2020, the Company recorded $108.3 million and $152.1 million of exchanges of fixed maturities (noncash transactions) that resulted in $25.2 million and $7.9 million, respectively in realized gains (losses).

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)

Fair Value Measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at September 30, 2021 and December 31, 2020:
Fair Value Measurement at September 30, 2021 Using:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Total Fair
Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises $— $445,116 $— $445,116 
States, municipalities, and political subdivisions — 2,280,948 — 2,280,948 
Foreign governments — 58,457 — 58,457 
Corporates, by sector:
Financial — 5,306,960 171,721 5,478,681 
Utilities — 2,288,585 155,198 2,443,783 
Energy — 1,952,029 13,902 1,965,931 
Other corporate sectors — 8,001,599 313,349 8,314,948 
Total corporates — 17,549,173 654,170 18,203,343 
Collateralized debt obligations — — 63,161 63,161 
Other asset-backed securities — 109,841 — 109,841 
Total fixed maturities
$— $20,443,535 $717,331 $21,160,866 
Percentage of total— %97 %3 %100 %

Fair Value Measurement at December 31, 2020 Using:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Total Fair
Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises $— $467,831 $— $467,831 
States, municipalities, and political subdivisions — 2,131,583 — 2,131,583 
Foreign governments — 54,650 — 54,650 
Corporates, by sector:
Financial — 5,222,066 174,729 5,396,795 
Utilities — 2,400,602 183,345 2,583,947 
Energy — 1,925,549 38,189 1,963,738 
Other corporate sectors — 8,090,550 318,242 8,408,792 
Total corporates — 17,638,767 714,505 18,353,272 
Collateralized debt obligations — — 71,598 71,598 
Other asset-backed securities — 121,705 12,870 134,575 
Total fixed maturities
$— $20,414,536 $798,973 $21,213,509 
Percentage of total— %96 %4 %100 %


15
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following tables represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Asset-
backed Securities
Collateralized
Debt
Obligations		CorporatesTotal
Balance at January 1, 2021
$12,870 $71,598 $714,505 $798,973 
Included in realized gains / losses(82)(6,787)2,733 (4,136)
Included in other comprehensive income63 12,482 (15,346)(2,801)
Acquisitions— — 25,000 25,000 
Sales(12,851)(13,213)— (26,064)
Amortization— 3,388 8 3,396 
Other(1)
— (4,307)(72,730)(77,037)
Transfers into Level 3(2)
— — — — 
Transfers out of Level 3(2)
— — — — 
Balance at September 30, 2021
$— $63,161 $654,170 $717,331 
Percent of total fixed maturities— %— %3 %3 %
(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments. 
(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.
Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Asset-
backed Securities
Collateralized
Debt
Obligations		CorporatesTotal
Balance at January 1, 2020
$13,177 $74,104 $672,128 $759,409 
Included in realized gains / losses— — 1,213 1,213 
Included in other comprehensive income(318)(5,220)11,324 5,786 
Acquisitions— — 17,820 17,820 
Sales— — — — 
Amortization— 3,415 11 3,426 
Other(1)
109 (3,642)(38,278)(41,811)
Transfers into Level 3(2)
— — — — 
Transfers out of Level 3(2)
— — — — 
Balance at September 30, 2020
$12,968 $68,657 $664,218 $745,843 
Percent of total fixed maturities— %1 %3 %4 %
(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments. 
(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.


16
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following table presents changes in unrealized gains or (losses) for the period included in other comprehensive income for assets held at the end of the reporting period for Level 3s:
Changes in Unrealized Gains (Losses) included in Other Comprehensive Income for Assets Held at the End of the Period
Asset-
backed Securities		Collateralized
Debt
Obligations		CorporatesTotal
At September 30, 2021
$63 $12,482 $(15,346)$(2,801)
At September 30, 2020
(318)(5,220)11,324 5,786 
 
Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an unrealized loss position.
Less than Twelve MonthsTwelve Months or LongerTotal
Number of issues (CUSIPs) held:
As of September 30, 2021242 29 271 
As of December 31, 202054 24 78 
 
Globe Life's entire fixed maturity portfolio consisted of 1,981 issues by 813 different issuers at September 30, 2021 and 1,900 issues by 777 different issuers at December 31, 2020. The weighted-average quality rating of all unrealized loss positions at amortized cost was A and BBB- as of September 30, 2021 and December 31, 2020, respectively.


17
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following table discloses unrealized investment losses by class and major sector of fixed maturities available for sale for which an allowance for credit losses has not been recorded at September 30, 2021.

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

Analysis of Gross Unrealized Investment Losses
At September 30, 2021
Less than Twelve MonthsTwelve Months or LongerTotal
Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises$2,033 $(37)$1,960 $(103)$3,993 $(140)
States, municipalities and political subdivisions324,878 (8,330)1,623 (103)326,501 (8,433)
Foreign governments20,088 (2,114)11,017 (2,268)31,105 (4,382)
Corporates, by sector:
Financial154,075 (3,836)32,692 (1,972)186,767 (5,808)
Utilities21,841 (736)2,511 (252)24,352 (988)
Energy86,710 (911)— — 86,710 (911)
Other corporate sectors172,274 (6,871)17,555 (2,661)189,829 (9,532)
Total corporates434,900 (12,354)52,758 (4,885)487,658 (17,239)
Collateralized debt obligations— — — — — — 
Other asset-backed securities— — — — — — 
Total investment grade securities781,899 (22,835)67,358 (7,359)849,257 (30,194)
Below investment grade securities:
States, municipalities and political subdivisions— — — — — — 
Corporates, by sector:
Financial5,479 (4)55,878 (6,662)61,357 (6,666)
Utilities— — — — — — 
Energy— — 26,869 (1,220)26,869 (1,220)
Other corporate sectors— — 26,890 (5,807)26,890 (5,807)
Total corporates5,479 (4)109,637 (13,689)115,116 (13,693)
Collateralized debt obligations— — — — — — 
Other asset-backed securities— — 12,882 (736)12,882 (736)
Total below investment grade securities5,479 (4)122,519 (14,425)127,998 (14,429)
Total fixed maturities
$787,378 $(22,839)$189,877 $(21,784)$977,255 $(44,623)
 




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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following table discloses unrealized investment losses by class and major sector of fixed maturities available for sale at December 31, 2020.

Analysis of Gross Unrealized Investment Losses
At December 31, 2020
Less than Twelve MonthsTwelve Months or LongerTotal
Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises$2,006 $(43)$— $— $2,006 $(43)
States, municipalities and political subdivisions32,910 (315)— — 32,910 (315)
Foreign governments19,532 (898)— — 19,532 (898)
Corporates, by sector:
Financial117,762 (2,564)6,333 (2,168)124,095 (4,732)
Utilities2,726 (108)— — 2,726 (108)
Energy1,692 (8)14,871 (106)16,563 (114)
Other corporate sectors21,882 (720)— — 21,882 (720)
Total corporates144,062 (3,400)21,204 (2,274)165,266 (5,674)
Collateralized debt obligations— — — — — — 
Other asset-backed securities28,864 (1,051)5 — 28,869 (1,051)
Total investment grade securities227,374 (5,707)21,209 (2,274)248,583 (7,981)
Below investment grade securities:
States, municipalities and political subdivisions— — — — — — 
Corporates, by sector:
Financial6,822 (36)115,093 (19,453)121,915 (19,489)
Utilities— — — — — — 
Energy18,432 (757)38,720 (2,212)57,152 (2,969)
Other corporate sectors25,711 (3,588)19,516 (1,910)45,227 (5,498)
Total corporates50,965 (4,381)173,329 (23,575)224,294 (27,956)
Collateralized debt obligations— — 11,131 (8,869)11,131 (8,869)
Other asset-backed securities— — 11,223 (2,727)11,223 (2,727)
Total below investment grade securities50,965 (4,381)195,683 (35,171)246,648 (39,552)
Total fixed maturities
$278,339 $(10,088)$216,892 $(37,445)$495,231 $(47,533)



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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Allowance for credit losses beginning balance
$— $32,719 $3,346 $— 
Additions to allowance for which credit losses were not previously recorded— 4,387 — 37,106 
Additions (reductions) to allowance for fixed maturities that previously had an allowance— — — — 
Reduction of allowance for which the Company intends to sell or more likely than not will be required to sell or sold during the period— (32,719)(3,346)(32,719)
Allowance for credit losses ending balance
$— $4,387 $— $4,387 

As of September 30, 2021 and December 31, 2020, the Company did not have any fixed maturities in non-accrual status.

Other Long-Term Investments: Other long-term investments consist of the following assets:
September 30,
2021		December 31, 2020
Investment funds$586,223 $385,038 
Commercial mortgage loan participations137,072 160,602 
Other9,882 1,341 
Total
$733,177 $546,981 

The investment funds consist of limited partnerships whereby the Company has a pro-rata share of ownership ranging from 1% to 20%. For each investment, the Company has elected the fair value option, but would have been otherwise accounted for as an equity method investment. The fair value option is assessed for each individual investment and concluded at the inception of the investment. Additionally, each investment is evaluated under ASC 810, Consolidation to determine if it is a variable interest entity and would qualify for consolidation; none of the investments qualify for consolidation as the Company is not the primary beneficiary in any of these investments.

The investments are reported at the Company's pro-rata share of the investment fund's net asset value or its equivalent (NAV) as a practical expedient for fair value. Changes in the net asset value are recorded in "Realized gains (losses)" on the Condensed Consolidated Statements of Operations. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments. Periodic distributions are recorded in net investment income until cumulative distributions exceed our pro-rata share of operating earnings at which point the distributions will reduce the carrying value. Our maximum exposure to loss is equal to the outstanding carrying value and future funding commitments.

The Company did not commit to any new investment funds during the quarter. The Company had $56 million of capital called during the quarter from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $357 million as of September 30, 2021.


20
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following table presents additional information about the Company's investment funds as of September 30, 2021 and December 31, 2020 at fair value:
Fair ValueUnfunded Commitments
Investment CategorySeptember 30,
2021		December 31, 2020September 30,
2021		Redemption Term/Notice
Commercial mortgage loans$397,723 $227,050 $124,913 
Portion non-redeemable and fully redeemable after 6 month period, subject to fund liquidity/discretion of General Partner. Expected life is 7 years for non-redeemable fund.
Opportunistic credit170,117 157,461 — 
Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.
Other18,383 527 232,100 Fully redeemable with varying terms and non-redeemable.
Total investment funds $586,223 $385,038 $357,013 

Commercial Mortgage Loan Participations (commercial mortgage loans): Summaries of commercial mortgage loans by property type and geographical location at September 30, 2021 and December 31, 2020 are as follows:
September 30, 2021December 31, 2020
Carrying Value% of TotalCarrying Value% of Total
Property type:
Mixed use$54,042 39 $49,002 31 
Office9,137 7 36,153 22 
Hospitality22,550 17 22,605 14 
Retail19,754 14 19,319 12 
Industrial17,900 13 17,900 11 
Multi-family14,873 11 19,128 12 
Total recorded investment138,256 101 164,107 102 
Less allowance for credit losses(1,184)(1)(3,505)(2)
Carrying value, net of allowance for credit losses
$137,072 100 $160,602 100 
September 30, 2021December 31, 2020
Carrying Value% of TotalCarrying Value% of Total
Geographic location:
California$64,519 47 $61,610 38 
Virginia— — 27,019 17 
New York18,111 13 16,602 10 
Pennsylvania11,672 9 11,314 7 
Indiana9,717 7 9,717 6 
Florida8,182 6 12,420 8 
Other26,055 19 25,425 16 
Total recorded investment138,256 101 164,107 102 
Less allowance for credit losses(1,184)(1)(3,505)(2)
Carrying value, net of allowance for credit losses
$137,072 100 $160,602 100 

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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following tables are reflective of Management's internal risk ratings of the loan portfolio. Loans are rated low, moderate, and high. The risk categories consider many different factors such as quality of asset, borrower status, as well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 2021, are transitional or under construction and may not yet be income producing. Certain ratios, such as loan to value and debt service coverage ratios, may not be evaluated as the value of the underlying transitional property significantly fluctuates based on completion of the project.
Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
As of September 30, 2021
Risk Rating:Number of Loans20212020201920182017Total
Low14 $— $22,473 $11,345 $32,958 $35,209 $101,985 
Moderate 6 — — 16,517 8,182 — 24,699 
High2 — — 4,575 6,997 — 11,572 
Total commercial mortgage loans22 $— $22,473 $32,437 $48,137 $35,209 138,256 
Less allowance for credit losses on the investment pool(1,184)
Less allowance for credit losses on individual loans— 
Carrying value, net of valuation allowance
$137,072 

Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
As of December 31, 2020
Risk Rating:Number of Loans2020201920182017Total
Low17 $20,176 $14,757 $33,132 $61,460 $129,525 
Moderate4 — 10,640 7,796 — 18,436 
High3 — 4,554 11,592 — 16,146 
Total commercial mortgage loans24 $20,176 $29,951 $52,520 $61,460 164,107 
Less allowance for credit losses on the investment pool(2,503)
Less allowance for credit losses on individual loans(1,002)
Carrying value, net of valuation allowance
$160,602 
As of September 30, 2021, the Company evaluated the commercial mortgage loan portfolio on a pool basis to determine the allowance for credit losses. At the end of the period, the Company had 22 loans in the portfolio. For the nine months ended September 30, 2021, the allowance for credit losses decreased by $2.3 million to $1.2 million. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statements of Operations.

Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Allowance for credit losses beginning balance
$1,639 $3,838 $3,505 $— 
Cumulative effect of adoption ASU 2016-13— — — 335 
Provision (reversal) for credit losses(455)(119)(2,321)3,384 
Loans charge-off— — — — 
Allowance for credit losses ending balance
$1,184 $3,719 $1,184 $3,719 


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GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
There were no delinquent commercial mortgage loans as of September 30, 2021, compared with one delinquent commercial mortgage at December 31, 2020. As of September 30, 2021 and December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. The Company's unfunded commitment balance to commercial loan borrowers was $34 million as of September 30, 2021.

Note 5—Commitments and Contingencies

Guarantees: The Parent Company has guaranteed letters of credit in connection with its credit facility with a group of banks. The letters of credit were issued by TMK Re, Ltd., a wholly-owned subsidiary, to secure TMK Re, Ltd.’s obligation for claims on certain policies reinsured by TMK Re, Ltd. that were sold by other Globe Life insurance subsidiaries. These letters of credit facilitate TMK Re, Ltd.’s ability to reinsure the business of Globe Life's insurance carriers. The agreement was amended on September 30, 2021 and now expires in 2026. The maximum amount of letters of credit available is $250 million. The Parent Company would be liable to the extent that TMK Re, Ltd. does not pay the reinsured party. As of September 30, 2021 and December 31, 2020, the outstanding balance was $135 million.

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





23
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)

Note 6—Liability for Unpaid Claims

Activity in the liability for unpaid health claims is summarized as follows:
September 30,
2021		December 31,
2020
Balance at beginning of period
$162,261 $163,808 
Incurred related to:
Current year480,487 584,936 
Prior year(20,961)(14,829)
Total incurred459,526 570,107 
Paid related to:
Current year339,773 442,127 
Prior year116,374 129,527 
Total paid456,147 571,654 
Balance at end of period
$165,640 $162,261 

Below is the reconciliation of the liability of "Policy claims and other benefits payable" in the Condensed Consolidated Balance Sheets.
September 30,
2021		December 31,
2020
Policy claims and other benefits payable:
Life insurance$230,274 $237,246 
Health insurance165,640 162,261 
Total$395,914 $399,507 


24
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Note 7—Postretirement Benefits

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

Pension Assets: The following table presents the assets of the Company's Pension Plans at September 30, 2021 and December 31, 2020.

Pension Assets by Component at September 30, 2021
 Fair Value Determined by:  
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Amount
% to
Total
Corporate bonds:
Financial$— $53,927 $— $53,927 9 
Utilities— 44,135 — 44,135 8 
Energy— 22,945 — 22,945 4 
Other corporates— 89,212 — 89,212 16 
Total corporate bonds— 210,219 — 210,219 37 
Exchange traded fund(1)
283,277 — — 283,277 49 
Other bonds— 244 — 244 — 
Guaranteed annuity contract(2)
— 34,910 — 34,910 6 
Short-term investments9,605 — — 9,605 2 
Other16,214 — — 16,214 3 
$309,096 $245,373 $— 554,469 97 
Other long-term investments(3)
14,455 3 
Total pension assets
$568,924 100 
(1)A fund including marketable securities that mirror the S&P 500 index.
(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income Pension Plan").
(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns less than 1% of the investment fund. As of September 30, 2021, the expected term of the investment fund is approximately 3 years and the commitment of the investment is fully funded. The investment is non-redeemable.


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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Pension Assets by Component at December 31, 2020
 Fair Value Determined by:  
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Amount
% to
Total
Corporate bonds:
Financial$— $52,252 $— $52,252 10 
Utilities— 45,888 — 45,888 9 
Energy— 22,480 — 22,480 4 
Other corporates— 88,983 — 88,983 17 
Total corporate bonds— 209,603 — 209,603 40 
Exchange traded fund(1)
245,170 — — 245,170 46 
Other bonds— 258 — 258 — 
Guaranteed annuity contract(2)
— 30,119 — 30,119 6 
Short-term investments20,960 — — 20,960 4 
Other7,109 — — 7,109 1 
$273,239 $239,980 $— 513,219 97 
Other long-term investments(3)
16,313 3 
Total pension assets
$529,532 100 
(1)A fund including marketable securities that mirror the S&P 500 index.
(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Pension Plan.
(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns approximately 1% of the investment fund. As of December 31, 2020, the expected term of the investment fund is approximately 4 years and the commitment of the investment is fully funded. The investment is non-redeemable.


SERP: The following table includes information regarding the SERP.
Nine Months Ended
September 30,
20212020
Premiums paid for insurance coverage$2,193 $2,480 
September 30,
2021		December 31,
2020
Total investments:
Company owned life insurance $54,380 $51,361 
Exchange traded funds82,000 75,390 
$136,380 $126,751 



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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Pension Plans and SERP Liabilities: The following table presents liabilities for the defined benefit pension plans and SERP at September 30, 2021 and December 31, 2020.
September 30,
2021		December 31,
2020
Pension Plans$705,371 $667,753 
SERP96,179 95,560 
Pension benefit obligation
$801,550 $763,313 

Net Periodic Benefit Cost: The following table presents the net periodic benefit costs for the Pension Plans and SERP by expense components for the three and nine months ended September 30, 2021 and 2020.

Components of Net Periodic Benefit Cost
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2021202020212020
Service cost$7,919 $6,116 $23,755 $18,347 
Interest cost5,467 5,653 16,403 16,951 
Expected return on assets(8,083)(7,390)(24,249)(22,171)
Amortization:
Prior service cost158 158 474 474 
Actuarial (gain) loss4,984 3,921 14,953 11,770 
Net periodic benefit cost
$10,445 $8,458 $31,336 $25,371 

Note 8—Earnings Per Share

Earnings per Share: A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Basic weighted average shares outstanding101,498,408 106,146,809 102,618,327 106,622,704 
Weighted average dilutive options outstanding882,609 906,302 1,171,159 1,082,474 
Diluted weighted average shares outstanding102,381,017 107,053,111 103,789,486 107,705,178 
Antidilutive shares2,601,499 4,007,482 2,349,321 2,415,182 

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

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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Note 9—Debt

The following table presents information about the terms and outstanding balances of Globe Life's debt.
 
Selected Information about Debt Issues
As of
September 30,
2021		December 31, 2020
InstrumentIssue DateMaturity Date Coupon Rate Par
Value		Unamortized Discount & Issuance CostsBook
Value		Fair
Value		Book
Value
Senior notes5/27/19935/15/20237.875%$165,612 $(463)$165,149 $184,414 $164,954 
Senior notes(1)
9/24/20129/15/20223.800%150,000 (334)149,666 154,767 149,414 
Senior notes9/27/20189/15/20284.550%550,000 (5,206)544,794 637,719 544,328 
Senior notes8/21/20208/15/20302.150%400,000 (4,328)395,672 396,944 395,157 
Junior subordinated debentures(2)
———— — — — 290,652 
Junior subordinated debentures11/17/201711/17/20575.275%125,000 (1,608)123,392 130,349 123,381 
Junior subordinated debentures6/14/20216/15/20614.250%325,000 (7,813)317,187 331,110 — 
1,715,612 (19,752)1,695,860 1,835,303 1,667,886 
Less current maturity of long-term debt(1)
150,000 (334)149,666 154,767 — 
Total long-term debt
1,565,612 (19,418)1,546,194 1,680,536 1,667,886 
Current maturity of long-term debt(1)
150,000 (334)149,666 154,767 — 
Commercial paper244,000 (73)243,927 243,927 254,918 
Total short-term debt
394,000 (407)393,593 398,694 254,918 
Total debt
$1,959,612 $(19,825)$1,939,787 $2,079,230 $1,922,804 
(1)An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.
(2)The $300 million of 6.125% Junior subordinated debentures were redeemed on July 15, 2021.

The commercial paper has the highest priority of all the debt, followed by senior notes then junior subordinated debentures. The Senior Notes due 2023 are noncallable, the remaining senior notes are callable under a make-whole provision, and the junior subordinated debentures are subject to optional redemption five years from issuance. Interest on the 4.25% junior subordinated debentures is payable quarterly while all other long-term debt is payable semi-annually.

Long-term debt: On June 14, 2021, Globe Life completed the issuance and sale of $325 million in aggregate principal amount of 4.25% unsecured Junior Subordinated Debentures due June 15, 2061. The net proceeds from the sale of the Junior Subordinated Debentures were $317 million and were used to redeem the $300 million 6.125% Junior Subordinated Debentures due 2056 plus accrued interest of $1.5 million on July 15, 2021 as well as for general corporate purposes.

Credit facility: On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020, which provides for a $750 million revolving credit facility that may be increased to $1 billion. The amended credit facility matures September 30, 2026 and may be extended up to two one-year periods upon the Company's request. Pursuant to this agreement, the participating lenders have agreed to make revolving loans to Globe Life and to issue secured or unsecured letters of credit. The Company has not drawn on any of the credit to date.

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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The facility is further designated as a back-up credit line for a commercial paper program under which the Company may either borrow from the credit line or issue commercial paper at any time, with total commercial paper outstanding not to exceed the facility maximum of $750 million, less any letters of credit issued. Interest is charged at variable rates. In accordance with the agreement, Globe Life is subject to certain covenants regarding capitalization. As of September 30, 2021, the Company was in full compliance with these covenants.

Federal Home Loan Bank (FHLB) funding: In July 2021, three of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. The membership requires ownership of FHLB stock and Globe Life owns $6 million as of the end of the quarter. The stock is restricted for the duration of the membership and recorded at par as required by applicable guidance. The capital stock is included in "Other long-term investments" in the Condensed Consolidated Balance Sheets. As of September 30, 2021, there were no borrowings with the FHLB.

Note 10—Business Segments

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

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

Life insurance products marketed by Globe Life include traditional whole life and term life insurance. Health insurance products are generally guaranteed-renewable and include Medicare Supplement, critical illness, accident, and limited-benefit supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.
 
Globe Life markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Globe Life's insurance segments. Our distribution channels consist of the following exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National) and Family Heritage Division (Family Heritage); an independent agency, United American Division (United American); and our Direct to Consumer Division (Direct to Consumer). The tables below present segment premium revenue by each of Globe Life's distribution channels.

Premium Income by Distribution Channel
Three Months Ended September 30, 2021
 LifeHealthAnnuityTotal
Distribution ChannelAmount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$356,456 49 $29,070 10 $— — $385,526 37 
Direct to Consumer240,578 33 18,192 6 — — 258,770 25 
Liberty National78,528 11 46,716 16 — — 125,244 12 
United American2,199 — 118,240 39 — — 120,439 12 
Family Heritage1,286 — 86,925 29 — — 88,211 9 
Other49,877 7 — — — — 49,877 5 
$728,924 100 $299,143 100 $— — $1,028,067 100 


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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
 Three Months Ended September 30, 2020
 LifeHealthAnnuityTotal
Distribution ChannelAmount
% of
Total
Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
American Income$318,917 47 $27,029 9 $— — $345,946 36 
Direct to Consumer227,734 34 19,017 7 — — 246,751 26 
Liberty National73,815 11 47,199 16 — — 121,014 13 
United American2,402 — 114,325 40 1 100 116,728 12 
Family Heritage1,081 — 80,225 28 — — 81,306 8 
Other50,072 8 — — — — 50,072 5 
$674,021 100 $287,795 100 $1 100 $961,817 100 

Premium Income by Distribution Channel

Nine Months Ended September 30, 2021
 LifeHealthAnnuityTotal
Distribution ChannelAmount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$1,039,047 48 $85,210 10 $— — $1,124,257 37 
Direct to Consumer734,046 34 56,002 6 — — 790,048 26 
Liberty National232,118 11 140,874 16 — — 372,992 12 
United American6,737 — 351,544 39 1 100 358,282 12 
Family Heritage3,630 — 255,272 29 — — 258,902 8 
Other149,635 7 — — — — 149,635 5 
$2,165,213 100 $888,902 100 $1 100 $3,054,116 100 

 Nine Months Ended September 30, 2020
 LifeHealthAnnuityTotal
Distribution ChannelAmount
% of
Total
Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
American Income$930,444 47 $78,310 9 $— — $1,008,754 36 
Direct to Consumer682,978 34 57,873 7 — — 740,851 26 
Liberty National220,009 11 142,230 17 — — 362,239 13 
United American7,373 — 337,269 39 4 100 344,646 12 
Family Heritage3,144 — 235,195 28 — — 238,339 8 
Other150,525 8 — — — — 150,525 5 
$1,994,473 100 $850,877 100 $4 100 $2,845,354 100 

Due to the nature of the life insurance industry, Globe Life has no individual or group that would be considered a major customer. Substantially all of Globe Life's business is conducted in the United States.
 
The measure of profitability established by the chief operating decision makers for the insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner in which the segments are managed. It essentially represents gross profit margin on insurance products before insurance administrative expenses and consists primarily of premium less net policy benefits, acquisition expenses, and commissions. Required interest on net policy liabilities (benefit reserves less deferred acquisition costs) is reflected as a component of the Investment segment (rather than as a component of underwriting margin in the insurance

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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
and annuity segments) in order to match this cost with the investment income earned on the assets supporting the net policy liabilities.
 
The measure of profitability for the Investment segment is excess investment income, representing the income earned on the investment portfolio in excess of net policy requirements and financing costs associated with Globe Life's debt. Other than the above-mentioned interest allocations, no other intersegment revenues or expenses are recognized. Expenses directly attributable to corporate operations are included in the “Corporate & Other” category. Stock-based compensation expense is considered a corporate expense by Globe Life management and is included in this category. All other unallocated revenues and expenses on a pretax basis, including insurance administrative expense, are also included in the “Corporate & Other” segment category.
 
Globe Life holds a sizable investment portfolio to support its insurance liabilities, the yield from which is used to offset policy benefit, acquisition, administrative and tax expenses. This yield or investment income is taken into account when establishing premium rates and profitability expectations for its insurance products. From time to time, investments are sold or called, or experience a credit loss event, each of which is reflected by the Company as realized gain (loss)—investments. These gains or losses generally occur as a result of disposition due to issuer calls, compliance with Company investment policies, or other reasons often beyond management’s control. Unlike investment income, realized gains and losses are incidental to insurance operations, and only overall yields are considered when setting premium rates or insurance product profitability expectations. While these gains and losses are not relevant to segment profitability or core operating results, they can have a material positive or negative result on net income. For these reasons, management removes realized investment gains and losses when it views its segment operations.

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


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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.
Three Months Ended September 30, 2021
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
Revenue:
Premium$728,924 $299,143 $— $— $— $— $1,028,067 
Net investment income— — — 238,975 — — 238,975 
Other income— — — — 321 — 321 
Total revenue728,924 299,143 — 238,975 321 — 1,267,363 
Expenses:
Policy benefits516,196 187,906 7,303 — — — 711,405 
Required interest on reserves(185,295)(25,859)(10,034)221,188 — — — 
Required interest on DAC55,066 7,203 64 (62,333)— — — 
Amortization of acquisition costs122,311 28,799 483 — — — 151,593 
Commissions, premium taxes, and non-deferred acquisition costs58,652 24,116 6 — — — 82,774 
Insurance administrative expense(1)
— — — — 68,036 — 68,036 
Parent expense— — — — 2,176 2,397 (2)4,573 
Stock-based compensation expense— — — — 7,776 — 7,776 
Interest expense— — — 20,886 — — 20,886 
Total expenses566,930 222,165 (2,178)179,741 77,988 2,397 1,047,043 
Subtotal161,994 76,978 2,178 59,234 (77,667)(2,397)220,320 
Non-operating items— — — — — 2,397 (2)2,397 
Measure of segment profitability (pretax)
$161,994 $76,978 $2,178 $59,234 $(77,667)$— 222,717 
Realized gain (loss)—investments19,789 
Realized loss—redemption of debt(3)
(9,314)
Non-operating expenses(2,397)
Income before income taxes per Condensed Consolidated Statements of Operations
$230,795 
(1)Administrative expense is not allocated to insurance segments.
(2)Non-operating expenses.
(3)In July, 2021, the Company redeemed the $300 million 6.125% junior subordinated notes due 2056 and realized a loss of $9.3 million. Refer to Note 9—Debt for further discussion.



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Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended September 30, 2020
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
Revenue:
Premium$674,021 $287,795 $1 $— $— $— $961,817 
Net investment income— — — 231,432 — — 231,432 
Other income— — — — 292 — 292 
Total revenue674,021 287,795 1 231,432 292 — 1,193,541 
Expenses:
Policy benefits459,231 184,237 7,508 — — — 650,976 
Required interest on reserves(175,794)(23,770)(10,347)209,911 — — — 
Required interest on DAC52,709 6,689 81 (59,479)— — — 
Amortization of acquisition costs114,316 26,026 501 — — — 140,843 
Commissions, premium taxes, and non-deferred acquisition costs52,856 21,753 5 — — — 74,614 
Insurance administrative expense(1)
— — — — 63,008 710 (2)63,718 
Parent expense— — — — 2,689 323 (2)3,012 
Stock-based compensation expense— — — — 8,667 — 8,667 
Interest expense— — — 21,674 — — 21,674 
Total expenses503,318 214,935 (2,252)172,106 74,364 1,033 963,504 
Subtotal170,703 72,860 2,253 59,326 (74,072)(1,033)230,037 
Non-operating items— — — — — 1,033 (2)1,033 
Measure of segment profitability (pretax)
$170,703 $72,860 $2,253 $59,326 $(74,072)$— 231,070 
Realized gain (loss)—investments2,135 
Realized loss—redemption of debt(634)
Non-operating expenses(1,033)
Income before income taxes per Condensed Consolidated Statements of Operations
$231,538 
(1)Administrative expense is not allocated to insurance segments.
(2)Non-operating expenses.






33
GL Q3 2021 FORM 10-Q
Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.
Nine Months Ended September 30, 2021
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
Revenue:
Premium$2,165,213 $888,902 $1 $— $— $— $3,054,116 
Net investment income— — — 713,103 — — 713,103 
Other income— — — — 1,004 — 1,004 
Total revenue2,165,213 888,902 1 713,103 1,004 — 3,768,223 
Expenses:
Policy benefits1,532,298 564,589 21,848 — — — 2,118,735 
Required interest on reserves(547,715)(76,288)(30,055)654,058 — — — 
Required interest on DAC163,083 21,242 200 (184,525)— — — 
Amortization of acquisition costs366,022 85,138 1,447 — — — 452,607 
Commissions, premium taxes, and non-deferred acquisition costs174,130 70,602 20 — — — 244,752 
Insurance administrative expense(1)
— — — — 201,715 5,089 (2)206,804 
Parent expense— — — — 7,251 2,397 (3)9,648 
Stock-based compensation expense— — — — 24,298 — 24,298 
Interest expense— — — 63,833 — — 63,833 
Total expenses1,687,818 665,283 (6,540)533,366 233,264 7,486 3,120,677 
Subtotal477,395 223,619 6,541 179,737 (232,260)(7,486)647,546 
Non-operating items— — — — — 7,486 (2,3)7,486 
Measure of segment profitability (pretax)
$477,395 $223,619 $6,541 $179,737 $(232,260)$— 655,032 
Realized gain (loss)—investments56,600 
Realized loss—redemption of debt(3)
(9,314)
Legal proceedings(5,089)
Non-operating expenses(2,397)
Income before income taxes per Condensed Consolidated Statements of Operations
$694,832 
(1)Administrative expense is not allocated to insurance segments.
(2)Legal proceedings.
(3)Non-operating expenses.
(4)In July, 2021, the Company redeemed the $300 million 6.125% junior subordinated notes due 2056 and realized a loss of $9.3 million. Refer to Note 9—Debt for further discussion.




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Table of Contents
Globe Life Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollar amounts in thousands, except per share data)
Nine Months Ended September 30, 2020
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
Revenue:
Premium$1,994,473 $850,877 $4 $— $— $— $2,845,354 
Net investment income— — — 691,991 — — 691,991 
Other income— — — — 1,021 — 1,021 
Total revenue1,994,473 850,877 4 691,991 1,021 — 3,538,366 
Expenses:
Policy benefits1,340,746 546,444 22,571 — — — 1,909,761 
Required interest on reserves(520,207)(69,131)(31,135)620,473 — — — 
Required interest on DAC156,934 19,790 253 (176,977)— — — 
Amortization of acquisition costs346,426 82,905 1,509 — — — 430,840 
Commissions, premium taxes, and non-deferred acquisition costs159,369 70,304 18 — — — 229,691 
Insurance administrative expense(1)
— — — — 188,194 3,985 (2,3)192,179 
Parent expense— — — — 7,536 323 (3)7,859 
Stock-based compensation expense— — — — 26,655 — 26,655 
Interest expense— — — 65,295 — — 65,295 
Total expenses1,483,268 650,312 (6,784)508,791 222,385 4,308 2,862,280 
Subtotal511,205 200,565 6,788 183,200 (221,364)(4,308)676,086 
Non-operating items— — — — — 4,308 (2,3)4,308 
Measure of segment profitability (pretax)
$511,205 $200,565 $6,788 $183,200 $(221,364)$— 680,394 
Realized gain (loss)—investments(28,752)
Realized loss—redemption of debt(634)
Legal proceedings(3,275)
Non-operating expenses(1,033)
Income before income taxes per Condensed Consolidated Statements of Operations
$646,700 
(1)Administrative expense is not allocated to insurance segments.
(2)Legal proceedings.
(3)Non-operating expenses.



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CAUTIONARY STATEMENTS
 
We caution readers regarding certain forward-looking statements contained in the foregoing discussion and elsewhere in this document, and in any other statements made by, or on behalf of Globe Life whether or not in future filings with the Securities and Exchange Commission. Any statement that is not a historical fact, or that might otherwise be considered an opinion or projection concerning the Company or its business, whether express or implied, is meant as and should be considered a forward-looking statement. Such statements represent management's opinions concerning future operations, strategies, financial results or other developments. We specifically disclaim any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.
 
Forward-looking statements are based upon estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control, including uncertainties related to the impact of the COVID-19 outbreak on our business operations, financial results and financial condition. If these estimates or assumptions prove to be incorrect, the actual results of Globe Life may differ materially from the forward-looking statements made on the basis of such estimates or assumptions. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, which may be national in scope, related to the insurance industry generally, or applicable to the Company specifically. Such events or developments could include, but are not necessarily limited to:

1.Economic and other conditions, including the COVID-19 pandemic and its impact on the U.S. economy, leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality, morbidity, and utilization of health care services that differ from Globe Life's assumptions;
2.Regulatory developments, including changes in accounting standards or governmental regulations (particularly those impacting taxes and changes to the Federal Medicare program that would affect Medicare Supplement);
3.Market trends in the senior-aged health care industry that provide alternatives to traditional Medicare (such as Health Maintenance Organizations and other managed care or private plans) and that could affect the sales of traditional Medicare Supplement insurance;
4.Interest rate changes that affect product sales and/or investment portfolio yield;
5.General economic, industry sector or individual debt issuers’ financial conditions (including developments and volatility arising from the COVID-19 pandemic, particularly in certain industries that may comprise part of our investment portfolio) that may affect the current market value of securities we own, or that may impair an issuer’s ability to make principal and/or interest payments due on those securities;
6.Changes in the competitiveness of the Company's products and pricing;
7.Litigation results;
8.Levels of administrative and operational efficiencies that differ from our assumptions (including any reduction in efficiencies resulting from increased costs arising from operating during the COVID-19 pandemic);
9.The ability to obtain timely and appropriate premium rate increases for health insurance policies from our regulators;
10.The customer response to new products and marketing initiatives;
11.Reported amounts in the consolidated financial statements which are based on management estimates and judgments which may differ from the actual amounts ultimately realized;
12.Compromise by a malicious actor or other event that causes a loss of secure data from, or inaccessibility to, our computer and other information technology systems;
13.The severity, magnitude and impact of the COVID-19 pandemic, including effects of the pandemic and the effects of the U.S. and state governments' and other businesses’ response to the pandemic, on our operations and personnel, and on commercial activity and demand for our products; and
14.Our ability to access the commercial paper and debt markets, particularly if such markets become unpredictable or unstable for a certain period as a result of the COVID-19 pandemic.

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

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GLOBE LIFE INC.
Management's Discussion & Analysis

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


Results of Operations
gl-20210930_g1.jpg
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, supplemental health, and annuities, and the investment segment that supports the product lines. Segments are aligned based on their common characteristics, comparability of the profit margins, and management techniques used to operate each segment.
gl-20210930_g2.jpg
Insurance Product Line Segments. The insurance product line segments involve the marketing, underwriting, and administration of policies. Each product line is further segmented 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

gl-20210930_g3.jpg
Investment Segment. The investment segment involves the management of our capital resources, including investments and the management of corporate debt and liquidity. Our measure of profitability for the investment segment is excess investment income, as seen below:
Net investment income
(Required interest on net policy liabilities)
                                                           (Financing costs)
                                                           Excess investment income



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GLOBE LIFE INC.
Management's Discussion & Analysis
Current Highlights, comparing year-to-date 2021 with 2020.
•Net income as a return on equity (ROE) for the nine months ended September 30, 2021 was 8.9% and net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio(1) was 12.5%.
•Total premium increased 7% over the same period in the prior year. Life premium increased 9% for the period from $2.0 billion in 2020 to $2.2 billion in 2021. Life underwriting margin declined 7% from $511 million in 2020 to $477 million in 2021.
•Net investment income increased 3% over the same period in the prior year. Excess investment income declined 2% below the prior year.
•Total net sales increased 9% over the same period in the prior year from $473 million to $518 million.
•Book value per share increased 9% over the same period in the prior year from $77.60 to $84.52. Book value per share, excluding net unrealized gains on the fixed maturity portfolio(1), increased 9% over the prior year from $52.39 to $57.11.
•The Company incurred $82 million of COVID-19 net life claims (net of reserves released upon death) for the nine months ended September 30, 2021 compared with $40 million during the same period last year.
•For the nine months ended September 30, 2021, the Company repurchased 3.2 million shares of Globe Life Inc. common stock at a total cost of $310 million for an average share price of $97.17.
The following graphs represent net income and net operating income for the nine months ended September 30, 2021 and 2020.

gl-20210930_g4.jpg gl-20210930_g5.jpg
As shown in the charts above, net operating income is the consolidated total of segment profits 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.
(1) Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of the net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities, net of tax is $2.8 billion and $2.7 billion for the nine months ended September 30, 2021 and 2020, respectively.

Book value per share, excluding net unrealized gains on the fixed maturity portfolio, is also considered a non-GAAP measure. Management utilizes this measure to view the book value of the business without the effect of net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available for sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities is $27.41 and $25.21 for nine months ended September 30, 2021 and 2020, respectively.
Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.


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GLOBE LIFE INC.
Management's Discussion & Analysis

Summary of Operations. Net income increased 7% to $567 million during the nine months ended September 30, 2021, compared with $528 million in the same period in 2020. This increase was primarily attributed to $45 million of after tax realized gains on investments in the current period, as compared to $22 million of after tax realized losses on investments in the year-ago period. See further discussion under the caption Investments. The increase in after tax realized gains was partially offset by lower life underwriting results due to higher COVID-19 net life claims. On a diluted per common share basis, net income per common share for the nine months ended September 30, 2021 increased 11% from $4.90 to $5.46.

Net operating income is the consolidated total of segment profits after-tax and as such is considered a non-GAAP measure. Net operating income declined 3% to $536 million for the nine months ended September 30, 2021, compared with $553 million for the same period in 2020 primarily due to COVID-19 net life claims. On a diluted per common share basis, net operating income per common share for the nine months ended September 30, 2021 increased from $5.14 to $5.16.

Despite headwinds with COVID-19, the Company continues to see positive signs in its core operations, including strong sales, favorable persistency and a strong ROE, excluding net unrealized gains on the fixed maturity portfolio.

COVID-19. For the nine months ended September 30, 2021, the Company incurred $82 million of COVID-19 net life claims of which $33 million were incurred in the third quarter. The third quarter COVID-19 net life claims were higher than anticipated primarily due to the impact of the Delta variant, which resulted in higher infection rates and death totals than forecasted. Per the Centers for Disease Control and Prevention (CDC), there were approximately 95,000 U.S. COVID-19 deaths in the third quarter. Compared to prior quarters, the COVID-19 deaths were concentrated in geographies and younger age groups where the Company has greater risk exposure. As such, the Company’s level of COVID-19 net life claims increased in the quarter to approximately $3.5 million per 10,000 U.S. deaths, up from an average of approximately $2 million per 10,000 U.S. deaths incurred in prior periods. While changes in the average age of deaths from COVID-19 and the geographies where these deaths occur will affect this ratio, we anticipate this level of losses per U.S. deaths to continue through the fourth quarter and be in the range of $3 million to $4 million per 10,000 U.S. deaths in 2022.

For the full year and at the mid-point of our guidance, we estimate COVID-19 net life claims will be between $110 million to $125 million based on an estimate of approximately 75,000 to 125,000 U.S. COVID-19 deaths in the fourth quarter. This estimate of U.S. deaths is based on various third-party models. The projected life claims are dependent on this estimate and many other variables, including, but not limited to, the timing and availability of effective treatments for the disease, vaccination rates, and effectiveness of vaccines, impact from potential variants, and the actual ages and geographic areas in which infections and deaths occur.


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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)
Nine Months Ended September 30,
20212020Change%
Life insurance underwriting margin$477,395 $511,205 $(33,810)(7)
Health insurance underwriting margin223,619 200,565 23,054 11 
Annuity underwriting margin6,541 6,788 (247)(4)
Excess investment income179,737 183,200 (3,463)(2)
Other insurance:
Other income1,004 1,021 (17)(2)
Administrative expense(201,715)(188,194)(13,521)7 
Corporate and other(31,549)(34,191)2,642 (8)
Pre-tax total655,032 680,394 (25,362)(4)
Applicable taxes(119,468)(127,021)7,553 (6)
Net operating income
535,564 553,373 (17,809)(3)
Reconciling items, net of tax:
Realized gain (loss)—investments44,714 (21,936)66,650 
Realized loss—redemption of debt(7,358)(501)(6,857)
Non-operating expenses(1,894)(816)(1,078)
Legal proceedings(4,020)(2,587)(1,433)
Net income
$567,006 $527,533 $39,473 7 


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GLOBE LIFE INC.
Management's Discussion & Analysis
In 2021, the largest contributor of total underwriting margin was the life insurance segment and the primary distribution channel was American Income Life Division. The following charts represent the breakdown of total underwriting margin by operating segment and distribution channel for the nine months ended September 30, 2021.
gl-20210930_g6.jpggl-20210930_g7.jpg

Total premium income rose 7% for the nine months ended September 30, 2021 to $3.1 billion. Total net sales increased 9% to $518 million, when compared with the same period in 2020. Total first-year collected premium (defined in the following section) was $435 million for the 2021 period, compared with $405 million for the 2020 period.

Life insurance premium income increased 9% to $2.2 billion over the prior year total of $2.0 billion. Life net sales rose 11% to $392 million for the first nine months of 2021. First-year collected life premium rose 16% to $318 million. Life underwriting margins, as a percent of premium, declined to 22% in 2021 from 26% in the prior year. Underwriting margin declined to $477 million for the nine months ended September 30, 2021, 7% below the same period in 2020. The decline in the life underwriting margin is primarily due to an estimated $82 million of COVID-19 net life claims incurred during the first nine months of 2021 versus $40 million during the same period in 2020.

Health insurance premium income increased 4% to $889 million over the prior year total of $851 million. Health net sales rose 4% to $125 million for the first nine months of 2021. First-year collected health premium fell 11% to $118 million. Health underwriting margins, as a percent of premium, increased to 25% in 2021 compared with 24% in 2020. Health underwriting margin increased to $224 million for the first nine months of 2021, 11% over the same period in 2020.

Excess investment income, the measure of profitability of our investment segment, declined 2% during 2021 to $180 million from $183 million in the same period in 2020. Excess investment income per common share, reflecting the impact of our share repurchase program, increased 2% to $1.73 from $1.70 when compared with the same period in 2020.

Insurance administrative expenses increased 7% in 2021 when compared with the prior year period. These expenses were 6.6% as a percent of premium during the first nine months of 2021 and 2020.

For the nine months ended September 30, 2021, the Company repurchased 3.2 million Globe Life Inc. shares at a total cost of $310 million for an average share price of $97.17.


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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 10—Business Segments.
 
We use three statistical 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 twelve-month period. Annualized premium in force is an indicator of potential growth in premium revenue.
•Net sales, a statistical performance measure, is calculated as annualized premium issued, net of cancellations in the first thirty 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 has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued.
•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.

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



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GLOBE LIFE INC.
Management's Discussion & Analysis
LIFE INSURANCE

Life insurance is the Company's predominant segment. During 2021, life premium represented 71% of total premium and life underwriting margin represented 67% of the total. 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)
Nine Months Ended September 30,Change
20212020
Amount% of PremiumAmount% of PremiumAmount%
Premium and policy charges$2,165,213 100 $1,994,473 100 $170,740 9 
Policy obligations1,532,298 71 1,340,746 67 191,552 14 
Required interest on reserves(547,715)(25)(520,207)(26)(27,508)5 
Net policy obligations984,583 46 820,539 41 164,044 20 
Commissions, premium taxes, and non-deferred acquisition expenses174,130 8 159,369 8 14,761 9 
Amortization of acquisition costs529,105 24 503,360 25 25,745 5 
Total expense1,687,818 78 1,483,268 74 204,550 14 
Insurance underwriting margin
$477,395 22 $511,205 26 $(33,810)(7)

The lower life insurance underwriting margins for the nine months ended September 30, 2021 are primarily attributed to the increase in COVID-19 net life claims in the current year. The Company incurred $82 million for the nine months ended September 30, 2021, compared with $40 million at the same time in the prior year.

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

Life Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
Nine Months Ended September 30,Increase
(Decrease)
20212020
Amount% of TotalAmount% of TotalAmount%
American Income$1,039,047 48 $930,444 47 $108,603 12 
Direct to Consumer734,046 34 682,978 34 51,068 7 
Liberty National232,118 11 220,009 11 12,109 6 
Other160,002 7 161,042 8 (1,040)(1)
Total
$2,165,213 100 $1,994,473 100 $170,740 9 

Annualized life premium in force was $2.91 billion at September 30, 2021, an increase of 7% over $2.72 billion a year earlier.


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Globe Life Inc.
Management's Discussion & Analysis

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)
Nine Months Ended September 30,Increase
(Decrease)
20212020
Amount% of TotalAmount% of TotalAmount%
American Income$216,505 55 $182,091 52 $34,414 19 
Direct to Consumer115,041 29 126,196 36 (11,155)(9)
Liberty National52,357 14 36,866 10 15,491 42 
Other8,361 2 7,688 2 673 9 
Total
$392,264 100 $352,841 100 $39,423 11 


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)
Nine Months Ended September 30,Increase
(Decrease)
20212020
Amount% of TotalAmount% of TotalAmount%
American Income$186,143 59 $157,178 57 $28,965 18 
Direct to Consumer87,135 27 76,193 28 10,942 14 
Liberty National36,984 12 31,953 12 5,031 16 
Other7,262 2 7,817 3 (555)(7)
Total
$317,524 100 $273,141 100 $44,383 16 

A discussion of life operations by distribution channel follows.

The American Income Life Division markets to members of labor unions and continues to diversify its lead sources by building relationships with other affinity groups, utilizing third-party internet vendor leads, and obtaining referrals to facilitate sustainable growth. This division is Globe Life's largest contributor to life premium of any distribution channel at 48% of the Company's September 30, 2021 total. Net sales increased 19% to $217 million during the first nine months of 2021 compared with $182 million in 2020 for the same period. The underwriting margin, as a percent of premium, was 31% for the nine months ended September 30, 2021, down from 32% in the year-ago period. The lower underwriting margin was primarily due to higher policy obligations as a result of the pandemic including higher policy obligations due to lower policy lapses.

This division incurred $19 million in COVID-19 net life claims, representing approximately 2% of premium, for the nine months ended September 30, 2021 compared with $11 million in COVID-19 net life claims during the year-ago period. The underwriting margin as a percent of premium, at the mid-point of our full year 2021 guidance, is expected to slightly decrease from prior year as result of higher policy obligations due to the pandemic.

This division is anticipating an increase in net sales for the full year 2021 as compared with 2020. Sales growth in our exclusive agencies is generally dependent on growth in the size of the agency force.




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Globe Life Inc.
Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for the American Income Life Division. The average producing agent count is based on the actual count at the end of each week during the year. While the average producing agent count for the nine months ended September 30, 2021 is up substantially from the same period in the prior year, we believe this growth will moderate going forward. Over the past quarter, the agency saw lower new agent recruiting as many new work opportunities became available in this current economy. With the attractiveness of selling products virtually, we believe we will see an increase in agent counts even as COVID-19 moderates.

At September 30,
Change
20212020Amount%
American Income10,118 8,437 1,681 20 

American Income Life continues to focus on growing and strengthening the agency force, specifically through emphasis on agency middle-management growth and additional agency office openings. In addition to offering financial incentives and training opportunities, the agency has made considerable investments in information technology, including launching a customer relationship management (CRM) tool for the agency force. This tool is designed to drive productivity in lead distribution, conservation of business, manager dash boards 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. Over the past year and through the pandemic, the agents have shifted to primarily a virtual experience with the customers and have generated 80-85% of its sales through virtual presentations. We find this flexibility to be enticing for new recruits as well as a driver of sustainability for our agency force.

The Direct to Consumer Division (DTC) offers adult and juvenile life insurance through a variety of marketing approaches, including direct mail, insert media, and electronic media. In recent years, electronic media production has grown rapidly as management has aggressively increased marketing activities related to internet and mobile technology as well as focused on driving traffic to our inbound call center. The different approaches support and complement one another in the division's efforts to reach the consumer. The DTC's long-term growth has been fueled by constant innovation and name recognition. We continually introduce new initiatives in this division in an attempt to increase response rates.

While the juvenile market is an important source of sales, it also is a vehicle to reach the parents and grandparents of 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. Also, both juvenile policyholders and their parents are low acquisition-cost targets for sales of additional coverage over time.

DTC net sales declined 9% to $115 million for the nine months ended September 30, 2021 compared with $126 million for the same period in the prior year, primarily due to the record high net life sales in the prior year at the onset of the pandemic. While we expect continued strong sales due to the heightened awareness as to the benefits of life insurance, we anticipate sales levels over the remainder of 2021 will be lower than the same period in 2020. The lower sales for the nine months ended September 30, 2021 compared with the same period in 2020 are reflective of record high sales during 2020 due to unprecedented demand and lower response rates in 2021. Despite the lower sales in 2021 compared with 2020, we still expect our full year sales to be approximately 19% over 2019 levels. We expect favorable persistency to continue over the remainder of this year, leading to higher premiums.

DTC incurred $42 million of COVID-19 net life claims, representing approximately 6% of premium, for the nine months ended September 30, 2021 compared with $22 million for the same period in 2020. DTC’s underwriting margin, as a percent of premium, was 8% for the nine months ended September 30, 2021, which was lower than the 15% result during the same period in 2020 primarily due to higher COVID-19 net life claims in the current period. Additionally, this division will see a decrease in underwriting margin as a percent of premium for the full year 2021 due to higher policy obligations incurred as a result of higher persistency and higher non-COVID-19 net life claims.




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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 agency are expected to help continue this growth. The underwriting margin as a percent of premium was 18% for the nine months ended September 30, 2021, down from 24% during the same period a year ago. The decrease is primarily attributable to higher policy obligations during the nine months ended September 30, 2021 as a result of the COVID-19 pandemic compared with the same period a year ago. This division incurred $18 million of COVID-19 net life claims, representing approximately 8% of premium, for the nine months ended September 30, 2021 compared with $6 million for the same period in 2020. With the division's ability to return to face-to-face customer interaction and the option of virtual sales, the Company is projecting total net life sales to increase for the full year 2021 as compared to the prior year. However, due to increased policy obligations expected to be incurred associated with the pandemic, we anticipate the underwriting margin, as a percent of premium, to be lower for the full year 2021 as compared to 2020.

Below is the average producing agent count at the end of the period for Liberty National Division. As the division gains momentum in the virtual sales environment, the agency should see an increase in recruiting of new agents and an increase in the average producing agent count.
At September 30,
Change
20212020Amount%
Liberty National2,713 2,531 182 7 

The Liberty National Division average producing agent count increased 7% over the prior year comparable period. We continue to execute our long-term plan to grow this agency through expansion from small-town markets in the Southeast to more densely populated areas with larger pools of potential agent recruits and customers. Continued geographic expansion of this agency's presence into more heavily populated, less-penetrated areas will help create long-term agency growth. Additionally, the agency continues to help improve the ability of agents to develop new worksite marketing business. Systems that have been put in place, including the addition of a customer relationship management (CRM) platform and enhanced analytical capabilities, have helped the agents develop additional worksite marketing opportunities as well as improve the productivity of agents selling in the individual life market. Sales were hindered in the first half of 2020 due to difficulties in agents transitioning to a virtual work environment after the onset of the COVID-19 lockdown, as well as mandatory shut-downs of non-essential small businesses which hindered the ability of the division’s agents to prospect at the worksite.

The Other Agencies distribution channels primarily include non-exclusive independent agencies. The Other Agencies contributed $160 million of life premium income, or 7% of Globe Life's total premium income in the nine months ended September 30, 2021, and contributed 2% of net sales for the period.

HEALTH INSURANCE

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

Health premium accounted for 29% of our total premium in the first nine months of 2021, while the health underwriting margin accounted for 32% of total underwriting margin. Health underwriting margin increased 11% to $224 million primarily due to lower policy obligations. 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.


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Table of Contents
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)
 Nine Months Ended September 30,Change
 20212020
 Amount% of
Premium		Amount% of
Premium		Amount%
Premium$888,902 100 $850,877 100 $38,025 4 
Policy obligations564,589 64 546,444 64 18,145 3 
Required interest on reserves(76,288)(9)(69,131)(8)(7,157)10 
Net policy obligations488,301 55 477,313 56 10,988 2 
Commissions, premium taxes, and non-deferred acquisition expenses70,602 8 70,304 8 298 — 
Amortization of acquisition costs106,380 12 102,695 12 3,685 4 
Total expense665,283 75 650,312 76 14,971 2 
Insurance underwriting margin
$223,619 25 $200,565 24 $23,054 11 

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)
 Nine Months Ended September 30,Increase
(Decrease)
 20212020
Amount% of TotalAmount% of TotalAmount%
United American$351,544 39 $337,269 39 $14,275 4 
Family Heritage255,272 29 235,195 28 20,077 9 
Liberty National140,874 16 142,230 17 (1,356)(1)
American Income85,210 10 78,310 9 6,900 9 
Direct to Consumer56,002 6 57,873 7 (1,871)(3)
Total
$888,902 100 $850,877 100 $38,025 4 

Premium related to limited-benefit plans comprise $467 million, or 53%, of the total health premiums, for 2021 compared with $437 million in the same period in the prior year. Premium from Medicare Supplement products comprises the remaining $422 million, or 47% for 2021 compared with $414 million, or 49% in the same period in the prior year.

Annualized health premium in force was $1.27 billion at September 30, 2021, an increase of 8% over $1.17 billion a year earlier.


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Globe Life Inc.
Management's Discussion & Analysis

Presented below is a table of health net sales by distribution channel.
 
Health Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
 Nine Months Ended September 30,Increase
(Decrease)
 20212020
Amount% of TotalAmount% of TotalAmount%
United American$36,876 30 $39,335 33 $(2,459)(6)
Family Heritage54,111 43 49,314 41 4,797 10 
Liberty National18,943 15 15,820 13 3,123 20 
American Income13,777 11 14,580 12 (803)(6)
Direct to Consumer1,707 1 1,608 1 99 6 
Total
$125,414 100 $120,657 100 $4,757 4 

Health net sales related to limited-benefit plans comprise $87 million, or 70%, of the total health net sales, for 2021, compared with $80 million in the same period in the prior year. Medicare Supplement sales make up the remaining $38 million, or 30% for 2021, compared with $41 million, or 34% in the same period in the prior year.

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)
 Nine Months Ended September 30,Increase
(Decrease)
 20212020
Amount% of TotalAmount% of TotalAmount%
United American$43,038 37 $59,948 45 $(16,910)(28)
Family Heritage42,835 36 40,425 31 2,410 6 
Liberty National15,049 13 15,399 12 (350)(2)
American Income14,220 12 13,859 10 361 3 
Direct to Consumer2,376 2 2,256 2 120 5 
Total
$117,518 100 $131,887 100 $(14,369)(11)
 
First-year collected premium related to limited-benefit plans comprises $73 million, or 62%, of total first-year collected premium, for 2021 compared with $70 million in the same period in the prior year. First-year collected premium from Medicare Supplement policies makes up the remaining $45 million, or 38% for 2021, compared with $62 million, or 47% 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.
This division is also Globe Life's largest producer of Medicare Supplement insurance. The United American Division represents 82% of all Medicare Supplement premium and 96% of Medicare Supplement net sales. For the nine months ended September 30, 2021, Medicare Supplement premium in this agency rose 4% to $344 million in 2021 over the prior period total of $330 million. Medicare Supplement net sales declined 7% to $37 million in 2021 from the prior year period, primarily as a result of a decrease in individual sales. Underwriting margin as a percent of premium was 15% for the nine months ended September 30, 2021, up from 14% in 2020.

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Management's Discussion & Analysis

As discussed in Note 1—Significant Accounting Policies, the Company acquired Beazley Benefits, now rebranded as Globe Life Benefits, on August 1, 2021. This distribution channel will enhance the Company's presence in the worksite market by offering group supplemental health insurance solutions to employer groups through brokers. While the acquisition had an immaterial impact on year to date results, we are optimistic about Globe Life Benefits' ability to contribute additional health premium and profits in the future. Operating results for Globe Life Benefits will be included as part of United American Division results.
The Family Heritage Division primarily markets limited-benefit supplemental health insurance in non-urban areas. Most of its policies include a cash-back feature, such as a return of premium, where any excess of premiums over claims paid is returned to the policyholder at the end of a specified period stated within the insurance policy. Underwriting margin as a percent of premium was 27% for the nine months ended September 30, 2021, up from 26% in the year-ago period primarily due to favorable claims experience.
The division experienced a 10% increase in net health sales as compared with the nine-month period a year ago, primarily due to an increase in agent productivity and training. The division will continue to launch incentive programs to help drive an increase in productivity and the number of producing agents.

Below is the average producing agent count at the end of the period for the Family Heritage Division. While the agency has seen a decrease in agent count as compared with 2020, we anticipate that as COVID-19 and the job economy stabilize, agent recruitment opportunities should increase.
At September 30,
Change
20212020Amount%
Family Heritage Division1,219 1,282 (63)(5)

The Liberty National Division represented 16% of all Globe Life health premium income for the nine-month period ended September 30, 2021. The Liberty National Division markets limited-benefit supplemental health products consisting primarily of critical illness insurance. Much of this health business is now generated through worksite marketing targeting small businesses of 10 to 100 employees. Health premium at Liberty National Division was $141 million for the nine months ended September 30, 2021, down from $142 million in the year ago period. We anticipate an increase in net health sales in 2021 at this division as the Company has been more able to interact face-to-face with customers than in 2020.

Other distribution. While some of the Company's other distribution channels market health products, their main emphasis is on life insurance. On a combined basis, they accounted for 16% of health premium in 2021 and 16% in 2020. The American Income Life Division primarily markets accident plans. The Direct to Consumer Division primarily markets Medicare Supplements to employer or union-sponsored groups. The Direct to Consumer Division net health sales were $2 million for the nine months ended September 30, 2021 and 2020.

ANNUITIES

Annuities represent an insignificant part of our business. We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life and supplemental health insurance products.


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Globe Life Inc.
Management's Discussion & Analysis

INVESTMENTS

We manage our capital resources including investments, debt, 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 10—Business Segments. It is defined as net investment income less both the required interest on net insurance policy liabilities and the interest cost associated with capital funding or “financing costs.”

Management also 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. Since implementing our share repurchase program in 1986, we have used $8.5 billion of excess cash flow at the Parent Company to repurchase Globe Life Inc. common shares after determining that the repurchases provided a greater risk adjusted after-tax return than other investment alternatives. If we had not used this excess cash to repurchase shares, but had instead invested it in interest-bearing assets, we would have earned more investment income and had more shares outstanding. As excess investment income per diluted common share incorporates all capital resources, we view excess investment income per diluted share as a useful measure to evaluate the investment segment.

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) 
 
Nine Months Ended
September 30,		Change
20212020Amount%
Net investment income$713,103 $691,991 $21,112 3 
Interest on net insurance policy liabilities:
Interest on reserves(654,058)(620,473)(33,585)5 
Interest on deferred acquisition costs184,525 176,977 7,548 4 
Net required interest(469,533)(443,496)(26,037)6 
Financing costs(63,833)(65,295)1,462 (2)
Excess investment income
$179,737 $183,200 $(3,463)(2)
Excess investment income per diluted share
$1.73 $1.70 $0.03 2 
Mean invested assets (at amortized cost)$18,846,801 $17,855,428 $991,373 6 
Average net insurance policy liabilities(1)
10,897,593 10,395,811 501,782 5 
Average debt and preferred securities (at amortized cost)2,060,672 1,841,942 218,730 12 
(1)Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon.
Excess investment income declined $3 million, or 2%, compared with the year-ago period. Excess investment income per diluted common share was $1.73 for the nine months ended September 30, 2021 an increase of 2% over the prior year period . Excess investment income per diluted common share generally increases at a faster 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 nine months ended September 30, 2021 was $713 million or 3% greater than the year-ago period. Mean invested assets increased 6% during the first nine months of 2021 over the same period last year. The effective annual yield rate earned on the fixed maturity portfolio was 5.23% in the first nine months of 2021, compared with 5.35% a year earlier. Growth in net investment income has been negatively impacted in recent years by the low interest rate environment during which time we have invested new money at yields lower than our

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Globe Life Inc.
Management's Discussion & Analysis

average portfolio yield. In addition, we have reinvested the proceeds from bonds that matured, were called, or were otherwise disposed of at yield rates less than what we earned on these bonds before their maturity or disposition. We currently expect that the average annual turnover rate of fixed maturity assets will be less than 2% over the next five years and will not have a material negative impact on net investment income. To help mitigate the decline of the portfolio yield over the past few years, the Company has decreased the portion of the investment portfolio allocated to fixed maturity investments by investing in limited partnerships with debt like characteristics that diversify risk and enhance risk adjusted capital adjusted returns on the portfolio. The earned yield on the investment funds for the nine months ended September 30, 2021 was 5.31%. See additional information in Note 4—Investments.

Should the current low interest rate environment continue, the growth of the Company's net investment income will continue to be negatively impacted primarily due to the investment of new money and proceeds from dispositions at rates less than the average portfolio yield rate. While net investment income would grow, it would continue to grow at rates less than the growth in mean invested assets. For the full year 2021, we currently anticipate the average new money yield on our fixed maturity acquisitions to be approximately 30 basis points lower than the rate applicable to our 2020 acquisitions.

Should interest rates, especially long-term rates, rise, Globe Life's net investment income would benefit due to higher interest rates on new investments. While such a rise in interest rates could adversely affect the fair value of the fixed maturities portfolio, we could withstand an increase in interest rates of approximately 145 to 150 basis points before the net unrealized gains on our fixed maturity portfolio as of September 30, 2021 would be eliminated. Should interest rates increase further, we would not be concerned with potential interest rate driven unrealized losses in our fixed maturity portfolio because we do not intend to sell, nor is it likely that management will be required to sell, the fixed maturities prior to their anticipated recovery.

Required interest on net insurance policy liabilities reduces net investment income, as it is the amount of net investment income considered by management necessary to “fund” required interest on net insurance policy liabilities, which is the net of the benefit reserve liability and the deferred acquisition cost asset. As such, it is removed from the investment segment and applied to the insurance segments to offset the effect of the required interest from the insurance segments. As discussed in Note 10—Business Segments, management regards this as a more meaningful analysis of the investment and insurance segments. Required interest is based on the actuarial interest assumptions used in discounting the benefit reserve liability and the amortization of deferred acquisition costs for our insurance policies in force.

The great 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 mandate 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 discount rate to be used to calculate the benefit reserve liability and the amortization of the deferred acquisition cost asset for all insurance policies issued that year. That rate is based on the new money yields that we expect to earn on cash flow received in the future from policies of that issue year, and cannot be changed. 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. As such, the overall discount rate for the entire in force block of 5.7% 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 and the deferred acquisition cost asset by issue year on the entire block of in force business. Business issued in the current year has very little impact on the overall weighted-average discount rate due to the size of our in force business.

Since actuarial discount rates are locked in for life on essentially all of our business, benefit reserves and deferred acquisition costs are not affected by interest rate fluctuations unless a loss recognition event occurs. Due to the strength of our underwriting margins, we do not expect an extended low interest rate environment will cause a loss recognition event.

In comparison to the year-ago period, required interest on net insurance policy liabilities increased $26 million, or 6%, to $470 million, compared with the 5% growth in average net interest-bearing insurance policy liabilities.


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Management's Discussion & Analysis

Financing costs for the investment segment 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)
Nine Months Ended
September 30,		Increase
(Decrease)
20212020Amount%
Interest on funded debt$59,556 $53,444 $6,112 11 
Interest on term loans— 4,193 (4,193)(100)
Interest on short-term debt4,257 7,633 (3,376)(44)
Other20 25 (5)(20)
Financing costs
$63,833 $65,295 $(1,462)(2)

During the first nine months of 2021, financing costs decreased 2% compared with the prior year primarily due to lower rates on the short-term debt. The interest on funded debt was higher than prior year as a result of the 2.15% Senior Note issued in August 2020. The debt proceeds were used, in part, to redeem all the outstanding term loans. As discussed in Note 9—Debt, on June 14, 2021, Globe Life Inc. issued $325 million of 4.25% Junior Subordinated Debentures due 2061. The net proceeds from the sale of the Junior Subordinated Debentures were used to redeem the $300 million 6.125% Junior Subordinated Debentures due 2056 on July 15, 2021. The net increase in interest on funded debt was more than offset by lower interest rates on the short-term debt. More information on our debt transactions is disclosed in the Financial Condition section of this report.


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Management's Discussion & Analysis


Realized Gains and Losses. Our core business of providing insurance coverage requires us to maintain a large and diverse investment portfolio to support our insurance liabilities. From time to time, investments are sold or called, or experience a credit loss event, each of which results in a realized gain or loss. The Company also elects to measure its investment in certain limited partnerships at fair value in accordance with the fair value option for financial instruments with 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. 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)
 Nine Months Ended September 30,
 20212020
 AmountPer ShareAmountPer Share
Fixed maturities:
Sales$(8,424)$(0.08)$(28,844)$(0.27)
Matured or other redemptions(1)
34,161 0.33 7,702 0.07 
Provision for credit losses2,643 0.02 (3,466)(0.03)
Fair value option—change in fair value11,070 0.11 (5,370)(0.05)
Other5,264 0.05 8,042 0.08 
Total realized gains (losses)—investments
44,714 0.43 (21,936)(0.20)
Loss on redemption of debt(7,358)(0.07)(501)(0.01)
Total realized gains (losses)$37,356 $0.36 $(22,437)$(0.21)
(1)During the nine months ended September 30, 2021 and 2020, the Company recorded $108.3 million and $152.1 million of exchanges of fixed maturity securities (noncash transactions) that resulted in $19.9 million and $6.2 million, respectively in realized gains, net of tax.

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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 prefer to invest in securities with longer maturities because they more closely match the long-term nature of our 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. If longer-term securities that meet our quality and yield objectives are not available, we do not compromise on our quality objectives; instead, we consider investing in shorter-term or lower-yielding securities taking into consideration the slope of the yield curve and other factors such as risk adjusted capital adjusted returns.

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)
Nine Months Ended
September 30,
 20212020
Cost of acquisitions:
Investment-grade corporate securities$490,169 $532,529 
Investment-grade municipal securities239,754 345,011 
Other investment-grade securities10,465 27,831 
Total fixed maturity acquisitions(1)
$740,388 $905,371 
Effective annual yield (one year compounded)(2)
3.36 %3.81 %
Average life (in years, to next call)25.0 16.5 
Average life (in years, to maturity)32.0 26.2 
Average ratingA+A
(1)Fixed maturity acquisitions included unsettled trades of $52 million in 2021 and $0 in 2020.
(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 both periods consisted primarily of corporate and municipal bonds with securities spanning a diversified range of issuers, industry sectors, and geographical regions. In the first nine months of 2021, we invested primarily in the industrial, municipal, and financial sectors. For the entire portfolio, the taxable equivalent effective yield earned was 5.23%, down approximately 12 basis points from the yield in the first nine months of 2020. As previously noted in the discussion of net investment income, the decrease was primarily due to the combination of lower interest rates applicable to new purchases and fixed maturity dispositions. For the remainder of 2021, 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.



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Globe Life Inc.
Management's Discussion & Analysis

In 2017, it was announced by the head of the United Kingdom's Financial Conduct Authority of its plan to phase out the floating rate, London Interbank Offered Rate (LIBOR). The rate will transition out from 2021 to mid-year 2023. As of September 30, 2021, the Company had limited assets and liabilities that utilize LIBOR as a benchmark rate. We will continue to monitor the progress toward the establishment of a new floating rate.

Since fixed maturities represent such a significant portion of our investment portfolio, the remainder of the discussion of portfolio composition will focus on fixed maturities. See a breakdown of the Company's Other long-term investments in Note 4—Investments.

Selected information concerning the fixed maturity portfolio is as follows:

Fixed Maturity Portfolio Selected Information
At
September 30,
2021		December 31, 2020September 30,
2020
Average annual effective yield(1)
5.20%5.28%5.32%
Average life, in years, to:
Next call(2)
15.916.216.4
Maturity(2)
19.019.019.1
Effective duration to:
Next call(2,3)
10.811.010.9
Maturity(2,3)
12.112.312.1
(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.


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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 September 30, 2021 and December 31, 2020.

Fixed Maturities by Sector
September 30, 2021
(Dollar amounts in thousands)
Below Investment GradeTotal 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, netAt Fair Value
Corporates:
Financial
Insurance - life, health, P&C$57,518 $3,488 $(5,970)$55,036 $2,334,750 $522,364 $(7,373)$2,849,741 13 13 
Banks26,988 648 — 27,636 969,030 213,106 (1,903)1,180,233 6 6 
Other financial98,180 674 (696)98,158 1,259,954 191,951 (3,198)1,448,707 7 7 
Total financial182,686 4,810 (6,666)180,830 4,563,734 927,421 (12,474)5,478,681 26 26 
Utilities
Electric49,351 5,950 — 55,301 1,392,055 397,858 (255)1,789,658 8 9 
Gas and water— — — — 543,434 111,424 (733)654,125 3 3 
Total utilities49,351 5,950 — 55,301 1,935,489 509,282 (988)2,443,783 11 12 
Industrial - Energy
Pipelines85,249 7,924 (1,220)91,953 919,696 212,509 (1,226)1,130,979 5 5 
Exploration and production100,681 20,831 — 121,512 544,565 113,079 (905)656,739 3 3 
Oil field services— — — — 49,783 13,905 — 63,688 — — 
Refiner— — — — 89,119 25,406 — 114,525 1 1 
Driller— — — — — — — — — — 
Total energy185,930 28,755 (1,220)213,465 1,603,163 364,899 (2,131)1,965,931 9 9 
Industrial - Basic materials
Chemicals— — — — 673,914 141,633 (203)815,344 4 4 
Metals and mining— — — — 406,085 123,781 — 529,866 2 3 
Forestry products and paper— — — — 65,642 16,556 — 82,198 — — 
Total basic materials— — — — 1,145,641 281,970 (203)1,427,408 6 7 
Industrial - Consumer, non-cyclical84,191 12,900 (2,379)94,712 2,248,326 469,398 (3,115)2,714,609 13 13 
Other industrials25,589 3,676 — 29,265 1,264,882 289,300 (449)1,553,733 7 7 
Industrial - Transportation25,545 5,618 — 31,163 570,212 138,770 (38)708,944 3 3 
Other corporate sectors179,453 24,038 (3,428)200,063 1,638,857 282,931 (11,534)1,910,254 10 9 
Total corporates732,745 85,747 (13,693)804,799 14,970,304 3,263,971 (30,932)18,203,343 85 86 
Other fixed maturities:
Government (U.S., municipal, and foreign)— — — — 2,509,932 287,357 (12,955)2,784,334 14 13 
Collateralized debt obligations36,088 27,073 — 63,161 36,088 27,073 — 63,161 — — 
Other asset-backed securities13,618 — (736)12,882 105,430 5,030 (736)109,724 1 1 
Mortgage-backed securities(1)
— — — — 274 30 — 304 — — 
Total fixed maturities$782,451 $112,820 $(14,429)$880,842 $17,622,028 $3,583,461 $(44,623)$21,160,866 100 100 
(1)Includes Government National Mortgage Association (GNMA).




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Management's Discussion & Analysis

Fixed Maturities by Sector
December 31, 2020
(Dollar amounts in thousands)
Below Investment GradeTotal 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 CostAt Fair Value
Corporates:
Financial
Insurance - life, health, P&C$57,658 $3,894 $(10,788)$50,764 $2,275,843 $563,349 $(14,769)$2,824,423 13 13 
Banks27,014 15 (456)26,573 993,946 259,489 (1,050)1,252,385 6 6 
Other financial114,919 271 (8,245)106,945 1,134,414 193,975 (8,402)1,319,987 7 6 
Total financial199,591 4,180 (19,489)184,282 4,404,203 1,016,813 (24,221)5,396,795 26 25 
Utilities
Electric50,663 6,289 — 56,952 1,438,796 476,744 (108)1,915,432 9 9 
Gas and water— — — — 536,664 131,851 — 668,515 3 3 
Total utilities50,663 6,289 — 56,952 1,975,460 608,595 (108)2,583,947 12 12 
Industrial - Energy
Pipelines85,327 1,624 (2,309)84,642 923,756 187,851 (2,423)1,109,184 5 5 
Exploration and production104,719 5,980 (678)110,021 555,796 121,940 (678)677,058 3 3 
Oil field services— — — — 49,799 13,613 — 63,412 — — 
Refiner— — — — 89,371 22,793 — 112,164 1 1 
Driller1,902 — 18 1,920 1,902 — 18 1,920 — — 
Total energy191,948 7,604 (2,969)196,583 1,620,624 346,197 (3,083)1,963,738 9 9 
Industrial - Basic materials
Chemicals— — — — 642,258 152,016 — 794,274 4 4 
Metals and mining— — — — 406,564 144,110 — 550,674 2 3 
Forestry products and paper— — — — 88,804 21,588 — 110,392 1 1 
Total basic materials— — — — 1,137,626 317,714 — 1,455,340 7 8 
Industrial - Consumer, non-cyclical96,265 8,680 (1,903)103,042 2,233,324 576,007 (2,070)2,807,261 13 13 
Other industrials25,661 3,925 — 29,586 1,260,646 328,986 (6)1,589,626 7 7 
Industrial - Transportation25,777 4,315 — 30,092 566,935 175,405 — 742,340 3 3 
Other corporate sectors179,878 17,459 (3,595)193,742 1,489,113 329,254 (4,142)1,814,225 9 9 
Total corporates769,783 52,452 (27,956)794,279 14,687,931 3,698,971 (33,630)18,353,272 86 86 
Other fixed maturities:
Government (U.S., municipal, and foreign)— — — — 2,313,855 341,176 (1,256)2,653,775 13 13 
Collateralized debt obligations57,007 23,460 (8,869)71,598 57,007 23,460 (8,869)71,598 — — 
Other asset-backed securities13,949 — (2,727)11,222 134,616 3,591 (3,778)134,429 1 1 
Mortgage-backed securities(1)
— — — — 390 45 — 435 — — 
Total fixed maturities$840,739 $75,912 $(39,552)$877,099 $17,193,799 $4,067,243 $(47,533)$21,213,509 100 100 
(1)Includes GNMAs.



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Globe Life Inc.
Management's Discussion & Analysis

Corporate securities, which consist of bonds and redeemable preferred stocks, were the largest component of the September 30, 2021 fixed maturity portfolio, representing 85% of amortized cost, net and 86% 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 September 30, 2021, the total fixed maturity portfolio consisted of 813 issuers.

Fixed maturities had a fair value of $21.2 billion at September 30, 2021 and at December 31, 2020. The net unrealized gain position in the fixed-maturity portfolio decreased from $4.0 billion at December 31, 2020 to $3.5 billion at September 30, 2021 due to an increase in market rates during the period.

For more information about our fixed maturity portfolio by component at September 30, 2021 and December 31, 2020, 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 a composite quality rating at September 30, 2021 and December 31, 2020 is shown in the following tables. The composite rating for each security, other than private-placement securities managed by third parties, is the average of the security’s ratings as assigned by Moody’s Investor Service, Standard & Poor’s, Fitch Ratings, and Dominion Bond Rating Service, LTD. The ratings assigned by these four nationally recognized statistical rating organizations are evenly weighted when calculating the average. The composite quality rating is created utilizing a methodology developed by Globe Life using ratings from the various rating agencies noted above. The composite quality rating is not a Standard & Poor's credit rating. Standard & Poor's does not sponsor, endorse or promote the composite quality rating and shall not be liable for any use of the composite quality rating. Included in the following chart are private placement fixed maturity holdings of $546 million at amortized cost, net of allowance for credit losses ($590 million at fair value) for which the ratings were assigned by the third-party managers.

Fixed Maturities by Rating
At September 30, 2021
(Dollar amounts in thousands)
Amortized Cost, net % of TotalFair
Value		% of TotalAverage Composite Quality Rating on Amortized Cost, net
Investment grade:
AAA$739,932 4 $843,516 4 
AA2,058,961 12 2,234,915 11 
A4,535,387 26 5,653,568 27 
BBB+3,801,497 22 4,662,298 22 
BBB4,119,117 23 4,981,192 23 
BBB-1,584,683 9 1,904,535 9 
Total investment grade
16,839,577 96 20,280,024 96 A-
Below investment grade:
BB617,790 3 681,244 3 
B128,573 1 136,438 1 
Below B36,088 — 63,160 — 
Total below investment grade
782,451 4 880,842 4 BB-
$17,622,028 100 $21,160,866 100 
Weighted average composite quality rating
A-



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Management's Discussion & Analysis

Fixed Maturities by Rating
At December 31, 2020
(Dollar amounts in thousands)
Amortized
Cost
% of Total
Fair
Value
% of TotalAverage Composite Quality Rating on Amortized Cost
Investment grade:
AAA$713,053 4 $848,621 4 
AA1,657,270 10 1,873,323 9 
A4,566,999 26 5,969,677 28 
BBB+3,634,583 21 4,612,898 22 
BBB4,137,099 24 5,088,114 24 
BBB-1,644,056 10 1,943,777 9 
Total investment grade
16,353,060 95 20,336,410 96 A-
Below investment grade:
BB686,184 4 692,609 3 
B115,646 1 122,104 1 
Below B38,909 — 62,386 — 
Total below investment grade
840,739 5 877,099 4 BB-
$17,193,799 100 $21,213,509 100 
Weighted average composite quality rating
A-

The overall quality rating of the portfolio is A-, the same as year-end 2020. Fixed maturities rated BBB are 54% of the total portfolio at September 30, 2021 compared with 55% at year-end 2020. While this ratio is high relative to our peers, 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 September 30, 2021. BBB securities generally provide the Company with the best risk adjusted capital adjusted returns, largely due to our unique 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)
Nine Months Ended
September 30,
20212020
Balance at beginning of period
$840,739 $674,155 
Downgrades by rating agencies— 225,819 
Upgrades by rating agencies— (10,551)
Dispositions(64,030)(47,943)
Provision for credit losses3,346 (4,387)
Amortization and other2,396 2,408 
Balance at end of period
$782,451 $839,501 

Our investment policy calls for investing primarily in fixed maturities that are investment grade and meet our quality and yield objectives. Thus, any increases in below-investment grade issues are typically a result of ratings downgrades of existing holdings. Below-investment grade bonds at amortized cost, net of allowance for credit

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Globe Life Inc.
Management's Discussion & Analysis

losses, were 13% of our shareholders’ equity, excluding the effect of unrealized gains and losses on fixed maturities as of September 30, 2021. Globe Life invests long term and as such, one of our key criterion in our investment process is to select issuers that have the ability to weather multiple financial cycles. As part of this process, we consider economic, social, and governance (ESG) and other long term sustainability factors.

OPERATING EXPENSES

Operating expenses are included in the "Corporate and Other" segment and 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)
 Nine Months Ended September 30,Increase
 20212020(Decrease)
Amount% of
Premium		Amount% of
Premium		Amount%
Insurance administrative expenses:
Salaries$85,616 2.8 $79,010 2.8 $6,606 8 
Other employee costs32,970 1.1 30,307 1.0 2,663 9 
Information technology costs35,561 1.2 33,785 1.2 1,776 5 
Legal costs10,743 0.3 8,540 0.3 2,203 26 
Other administrative costs36,825 1.2 36,552 1.3 273 1 
Total insurance administrative expenses201,715 6.6 188,194 6.6 13,521 7 
Parent company expense7,251 7,536 (285)
Stock compensation expense24,298 26,655 (2,357)
Legal proceedings5,089 3,275 1,814 
Non-operating expenses2,397 1,033 1,364 
$240,750 $226,693 $14,057 6 


Total operating expenses increased 6% over the prior year period primarily due to a 7% increase in insurance administrative expenses. Insurance administrative expenses increased primarily due to higher employee-related expenses, including pension costs and information technology salaries. Pension expense increased due to the lower discount rate used to determine net periodic benefit costs in 2021 as compared to 2020. The decrease in stock-based compensation expense was primarily due to fewer performance based equity awards applicable to the first nine months of 2021 as compared to the same period in 2020. While insurance administrative expenses were up 7% from prior year, as a percentage of premium at 6.6%, it was flat compared with 2020.


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Globe Life Inc.
Management's Discussion & Analysis


SHARE REPURCHASES

Globe Life has an ongoing share repurchase program that began in 1986, and is reviewed quarterly by management and annually reaffirmed by the Board of Directors. With no specified authorization amount, we determine the amount of repurchases based on the amount of the excess cash flow at the Parent Company, general market conditions, and other alternative uses. The majority of these purchases are made from excess cash flow. Excess cash flow at the Parent Company is primarily comprised of dividends received from the insurance subsidiaries less interest expense paid on its debt, dividends paid to Parent Company shareholders, 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. In August, the Board of Directors reauthorized the Parent Company’s share repurchase program in amounts and with timing that management, in consultation with the Board, determines to be in the best interest of the Company and its shareholders.
The following chart summarizes share repurchases for the nine month periods ended September 30, 2021 and 2020.

Analysis of Share Repurchases
(Amounts in thousands, except per share data) 
 Nine Months Ended September 30,
 20212020
 SharesAmountAverage
Price		SharesAmountAverage
Price
Purchases with:
Excess cash flow at the Parent Company3,191 $310,047 $97.17 3,069 $257,049 $83.74 
Option exercise proceeds824 83,333 101.05 413 39,599 95.99 
Total4,015 $393,380 $97.97 3,482 $296,648 $85.19 
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 three sources: positive cash flow from operations, a portfolio of marketable securities, and a revolving credit facility.

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 the excess 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 leading source of the excess cash is investment income, a significant portion of the excess cash also comes from underwriting income due to our high underwriting margins and effective expense control. While the insurance subsidiaries routinely generate more operating cash inflows than cash outflows annually, the companies also have the entire available-for-sale fixed maturity investment portfolio available to create additional cash flows if required.

In July, three of our insurance subsidiaries became members of the Federal Loan Home Bank of Dallas (FHLB). FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings

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Management's Discussion & Analysis

and funding agreements. While not a primary source of liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed. Refer to Note 9—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.
Nine Months Ended
September 30,		Twelve Months Ended December 31,
20212020Projected 20212020
Liquidity Sources:
Dividends from Subsidiaries$422,622 $440,997 $480,000 $485,871 
Excess Cash Flows334,471 359,701 360,000 387,606 

Additional sources of liquidity for the Parent Company are cash, intercompany receivables, intercompany borrowings, public debt markets, term loans, and a credit facility. At September 30, 2021, the Parent Company had access to $280 million of invested cash, net intercompany receivables and other liquid assets, down from the prior quarter as a result of the redemption of the $300 million 6.125% Junior subordinated debentures due 2056 on July 15, 2021. The Parent Company is expected to generate approximately $25 million excess cash flows in the remainder of the year.

Short-Term Borrowings. An additional source of Parent Company liquidity is a credit facility with a group of lenders allowing for unsecured revolving borrowings and stand-by letters of credit up to $750 million, which could be extended up to $1 billion. The Parent Company may request the extension, however it is not guaranteed. Up to $250 million in letters of credit can be issued against the facility. The facility serves as a back-up credit line 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. On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020. The five-year credit agreement will now mature on September 30, 2026. As of September 30, 2021, the Parent Company was in full compliance with all covenants related to the aforementioned debt.

The following table presents certain information about our commercial paper borrowings.

Credit Facility—Commercial Paper
(Dollar amounts in thousands)
At
September 30,
2021		December 31, 2020September 30,
2020
Balance of commercial paper at end of period (par value)$244,000 $255,000 $280,000 
Annualized interest rate0.20 %0.27 %0.67 %
Letters of credit outstanding$135,000 $135,000 $150,000 
Remaining amount available under credit line371,000 360,000 320,000 


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Globe Life Inc.
Management's Discussion & Analysis

Credit Facility—Commercial Paper Activity
(Dollar amounts in thousands)
 Nine Months Ended September 30,
 20212020
Average balance of commercial paper outstanding during period (par value)$306,126 $332,802 
Daily-weighted average interest rate (annualized)0.23 %1.78 %
Maximum daily amount outstanding during period (par value)$425,000 $482,000 

The Company reduced the commercial paper borrowings by $11 million since year-end, reflecting timing of cash needs of the Parent Company. We had no difficulties in accessing the commercial paper market under this facility during the nine months ended September 30, 2021 and 2020.

Globe Life expects to have readily available funds for 2021 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 unlikely event that 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 $1.06 billion in the first nine months of 2021, compared with $1.08 billion in the same period of 2020. The decrease is primarily attributable to fluctuations in the settlement of certain amounts included in other liabilities. In addition to cash inflows from operations, our insurance companies received proceeds from dispositions of fixed maturities available for sale in the amount of $250 million during the 2021 period. As previously noted under the caption Credit Facility, the Parent Company has in place a credit facility. The insurance companies have no additional outstanding credit facilities.

Cash and short-term investments were $190 million at September 30, 2021, compared with $203 million at December 31, 2020. In addition to these liquid assets, the entire $21.2 billion (fair value at September 30, 2021) portfolio of fixed income securities is available for sale in the event of an unexpected need. Approximately 97% of our fixed income securities are publicly traded, freely tradable under SEC Rule 144, or qualified for resale under SEC Rule 144A. We generally expect to hold fixed income securities to maturity, and even though these securities are classified as available for sale, we have the ability and intent to hold any securities to recovery. 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.


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Management's Discussion & Analysis


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.

Long-Term Borrowings. The outstanding long-term debt at book value was $1.5 billion at September 30, 2021 and $1.7 billion at December 31, 2020. Refer to Note 9—Debt for a complete analysis and description of long-term debt issues outstanding.

Selected Information about Debt Issues
As of September 30, 2021
(Dollar amounts in thousands)
InstrumentIssue DateMaturity Date Coupon Rate  Interest Payment Dates Par
Value		Book
Value		Fair
Value
Senior notes05/27/199305/15/20237.875%semiannual$165,612 $165,149 $184,414 
Senior notes(1)
09/24/201209/15/20223.800%semiannual150,000 149,666 154,767 
Senior notes09/27/201809/15/20284.550%semiannual550,000 544,794 637,719 
Senior notes08/21/202008/15/20302.150%semiannual400,000 395,672 396,944 
Junior subordinated debentures11/17/201711/17/20575.275% semiannual 125,000 123,392 130,349 
Junior subordinated debentures06/14/202106/15/20614.250%quarterly325,000 317,187 331,110 
1,715,612 1,695,860 1,835,303 
Less current maturity of long-term debt(1)
150,000 149,666 154,767 
Total long-term debt
1,565,612 1,546,194 1,680,536 
Current maturity of long-term debt(1)
150,000 149,666 154,767 
Commercial paper244,000 243,927 243,927 
Total short-term debt
394,000 393,593 398,694 
Total debt
$1,959,612 $1,939,787 $2,079,230 
(1)An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.


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 risk-based capital 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 their capital levels (this level is commonly referred to as “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 2021, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300% to 320%. The Company concludes 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. As of December 31, 2020, our consolidated Company Action Level RBC ratio was 309%. In August 2021, the NAIC fully adopted new and expanded C-1 investment factors. The adoption of these factors will result in higher amounts of required capital related to our investment portfolio. In addition to the expanded C-1 factors, additional capital will be needed by the end of the year to support higher sales levels, growth of our in-force business, higher COVID-19 net life claims, and the acquisition of Beazley Benefits. As such, we anticipate contributing assets of approximately $150 million to our insurance subsidiaries in the fourth quarter. 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.

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GLOBE LIFE INC.
Management's Discussion & Analysis

Shareholders' Equity: On August 23, 2021, the Parent Company announced that it had declared a quarterly dividend of $0.1975 per share. This dividend was paid on November 1, 2021.

Shareholders’ equity was $8.6 billion at September 30, 2021. This compares with $8.8 billion at December 31, 2020 and $8.2 billion at September 30, 2020. During the nine months since December 31, 2020, shareholders’ equity decreased primarily due to $379 million of after-tax unrealized losses in the fixed-maturity portfolio as interest rates have increased over the period. In addition, shareholders' equity increased by net income of $567 million during the first nine months of 2021, but was offset by share repurchases of $310 million and an additional $83 million in share purchases to counterbalance the dilution from stock option exercises.

We plan to use excess cash available at the Parent Company as efficiently as possible in the future. Possible uses of excess cash flow include, but are not limited to, share repurchases, acquisitions, increases in shareholder dividends, investment 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.



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GLOBE LIFE INC.
Management's Discussion & Analysis

Globe Life is required under GAAP to revalue its available for sale fixed maturity portfolio to fair market value at the end of each accounting period. These changes, net of their associated impact on deferred acquisition costs and income tax, are reflected directly in shareholders’ equity.

While GAAP requires our fixed maturity assets to be revalued, it does not permit interest-bearing insurance policy liabilities supported by those assets to be valued at fair value in a consistent manner, with changes in value applied directly to shareholders’ equity. However, due to the size of both the investment portfolio and our policy liabilities, this inconsistency in measurement can have a material impact on shareholders’ equity. Because of the long-term nature of our fixed maturities and liabilities and the strong cash flows generated by our insurance subsidiaries, we have the intent and ability to hold our securities to maturity. As such, we do not expect to incur realized gains or losses due to fluctuations in the market value of fixed maturities caused by interest rate changes or losses caused by temporarily illiquid markets. Accordingly, management removes the effect of this rule when analyzing the Company's balance sheet, capital structure, and financial ratios in order to provide a consistent and meaningful portrayal of the Company’s financial position from period to period.

The following table presents selected data related to our capital resources. Additionally, the table presents the effect of this accounting guidance on relevant line items, so that investors and other financial statement users may determine its impact on Globe Life's capital structure. Excluding the effect of unrealized gains and losses on the fixed maturity portfolio from shareholders' equity is considered non-GAAP. Below we include the reconciliation to GAAP.
Selected Financial Data
(Dollar amounts in thousands, except per share data)
At
 September 30, 2021December 31, 2020September 30, 2020
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
Fixed maturities$21,160,866 $3,538,838 $21,213,509 $4,019,710 $20,277,056 $3,389,389 
Deferred acquisition costs(2)
4,837,409 (4,756)4,595,444 (5,955)4,517,255 (6,338)
Total assets29,496,578 3,534,082 29,046,731 4,013,755 28,041,893 3,383,051 
Short-term debt393,593 — 254,918 — 279,758 — 
Long-term debt1,546,194 — 1,667,886 — 1,667,506 — 
Shareholders' equity8,608,151 2,791,925 8,771,092 3,170,866 8,224,908 2,672,610 
Book value per diluted share84.52 27.41 83.19 30.07 77.60 25.21 
Debt to capitalization(3)
18.4 %(6.6)%18.0 %(7.6)%19.1 %(6.8)%
Diluted shares outstanding101,848 105,429 105,986 
Actual shares outstanding101,140 103,797 105,058 
 
(1)Amount added to (deducted from) comprehensive income to produce the stated GAAP item, per accounting rule ASC 320-10-35-1.
(2)Includes the value of business acquired (VOBA).
(3)This ratio is computed by dividing total debt by the sum of total debt and shareholders’ equity.



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Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
There have been no quantitative or qualitative changes with respect to market risk exposure during the nine months ended September 30, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: Globe Life, under the direction of the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, has established disclosure controls and procedures that are designed to ensure that information required to be disclosed by Globe Life in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to Globe Life's management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
 
As of the end of the fiscal period completed September 30, 2021, an evaluation was performed under the supervision and with the participation of Globe Life management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, of the disclosure controls and procedures (as those terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon their evaluation, the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer have concluded that disclosure controls and procedures are effective as of the date of this Form 10-Q. In compliance with Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. § 1350), each of these officers executed a Certification included as an exhibit to this Form 10-Q.

Changes in Internal Control over Financial Reporting: As of the period ended September 30, 2021, there have not been any changes in Globe Life Inc.'s internal control over financial reporting or in other factors that could significantly affect this control over financial reporting subsequent to the date of their evaluation which have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
 
Part II—Other Information

Item 1. Legal Proceedings

Discussion regarding litigation and unclaimed property audits is provided in Note 5—Commitments and Contingencies.


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Item 1A. Risk Factors

The Company had no material changes to its risk factors.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Certain Equity Securities by the Issuer and Others for the Third Quarter of 2021
Period
(a) Total Number
of Shares
Purchased
(b) Average
Price Paid
Per Share
(c) Total Number of
Shares Purchased as 
Part of Publicly Announced
Plans or Programs
(d) Maximum Number
of Shares (or
Approximate Dollar
Amount) that May
Yet Be Purchased
Under the Plans or
Programs
July 1-31, 2021498,282 $93.81 498,282 
August 1-31, 2021400,178 94.95 400,178 
September 1-30, 2021140,318 93.03 140,318 

On August 4, 2021, the Globe Life Board of Directors reaffirmed its continued authorization of the Company's stock repurchase program in amounts and with timing that management, in consultation with the Board, determined to be in the best interest of the Company. The program has no defined expiration date or maximum shares to be repurchased.

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Item 6. Exhibits
 
Exhibit No.Description
10.1
10.2
31.1
31.2
31.3
32.1
101.INSXBRL Instance Document- the instance document does not appear in the Interactive Data file because the XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
*Compensatory plan or arrangement.


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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
GLOBE LIFE INC.
Date: November 3, 2021/s/ Gary L. Coleman
Gary L. Coleman
Co-Chairman and Chief Executive Officer
Date: November 3, 2021/s/ Larry M. Hutchison
Larry M. Hutchison
Co-Chairman and Chief Executive Officer
Date: November 3, 2021/s/ Frank M. Svoboda
Frank M. Svoboda
Executive Vice President and Chief Financial Officer


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