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 June 30, 2023

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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value per share	GL	New York Stock Exchange
4.250% Junior Subordinated Debentures	GL PRD	New 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 of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 31, 2023
Common Stock, $1.00 Par Value	94,819,680

GL Q2 2023 FORM 10-Q

Globe Life Inc.

Table of Contents

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Comprehensive Income (Loss)	3
		Condensed Consolidated Statements of Shareholders' Equity	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
		Note 1—Significant Accounting Policies	6
		Note 2—New Accounting Standards	8
		Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income	12
		Note 4—Investments	14
		Note 5—Commitments and Contingencies	25
		Note 6—Policy Liabilities	26
		Note 7—Deferred Acquisition Costs	43
		Note 8—Liability for Unpaid Claims	46
		Note 9—Postretirement Benefits	47
		Note 10—Earnings Per Share	49
		Note 11—Debt	50
		Note 12—Business Segments	51
		Cautionary Statements	58
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	89
	Item 4.	Controls and Procedures	89
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	89
	Item 1A.	Risk Factors	90
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
	Item 5.	Other Information	90
	Item 6.	Exhibits	91
Signatures			92

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.

GL Q2 2023 FORM 10-Q

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)

	June 30, 2023		December 31, 2022
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2023—$18,687,479; 2022—$18,301,692, allowance for credit losses: 2023— $72,508; 2022— $0)	$	17,033,450	$	16,503,365
Policy loans	633,558		614,866
Other long-term investments (includes: 2023—$759,157; 2022—$768,689 under the fair value option)	1,010,136		976,016
Short-term investments	71,128		114,121
Total investments	18,748,272		18,208,368
Cash	75,011		92,559
Accrued investment income	267,776		259,581
Other receivables	601,787		589,079
Deferred acquisition costs	5,778,732		5,535,697
Goodwill	481,791		481,791
Other assets	754,589		760,066
Total assets	$	26,707,958	$	25,927,141
Liabilities:
Future policy benefits at current discount rates: (at original rates: 2023—$16,598,663; 2022—$16,306,870)	$	18,746,514	$	18,040,042
Unearned and advance premium	266,710		253,140
Policy claims and other benefits payable	510,929		507,219
Other policyholders' funds	187,873		123,236
Total policy liabilities	19,712,026		18,923,637
Current and deferred income taxes	404,480		434,649
Short-term debt	258,232		449,103
Long-term debt (estimated fair value: 2023—$1,633,248; 2022—$1,440,277)	1,798,117		1,627,952
Other liabilities	554,797		542,223
Total liabilities	22,727,652		21,977,564
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2023 and 2022	—		—
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2023—105,218,183 issued; 2022—105,218,183 issued)	105,218		105,218
Additional paid-in-capital	536,126		529,661
Accumulated other comprehensive income (loss)	(2,943,897)		(2,790,313)
Retained earnings	7,285,809		6,894,535
Treasury stock, at cost: (2023—10,225,970 shares; 2022—8,478,288 shares)	(1,002,950)		(789,524)
Total shareholders' equity	3,980,306		3,949,577
Total liabilities and shareholders' equity	$	26,707,958	$	25,927,141

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

1

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Life premium	$	781,733	$	756,892	$	1,554,330	$	1,506,020
Health premium	329,187		320,307		651,680		635,991
Other premium	—		—		—		—
Total premium	1,110,920		1,077,199		2,206,010		2,142,011
Net investment income	261,244		244,712		518,349		489,606
Realized gains (losses)	(45,843)		(30,446)		(76,770)		(37,690)
Other income	85		299		135		463
Total revenue	1,326,406		1,291,764		2,647,724		2,594,390
Benefits and expenses:
Life policyholder benefits(1)	512,664		492,364		1,020,641		987,793
Health policyholder benefits(2)	195,924		190,075		386,886		379,093
Other policyholder benefits	8,922		8,992		17,910		18,694
Total policyholder benefits	717,510		691,431		1,425,437		1,385,580
Amortization of deferred acquisition costs	94,080		86,185		186,402		170,681
Commissions, premium taxes, and non-deferred acquisition costs	138,459		126,213		276,256		251,722
Other operating expense	86,033		89,658		170,204		174,010
Interest expense	25,818		21,828		50,685		41,772
Total benefits and expenses	1,061,900		1,015,315		2,108,984		2,023,765
Income before income taxes	264,506		276,449		538,740		570,625
Income tax benefit (expense)	(49,246)		(52,476)		(99,870)		(109,168)
Net income	$	215,260	$	223,973	$	438,870	$	461,457
Basic net income per common share	$	2.26	$	2.28	$	4.58	$	4.67
Diluted net income per common share	$	2.24	$	2.26	$	4.52	$	4.63

(1)Net of remeasurement gain of $2.4 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively. Net of remeasurement gain of $5.1 million for the six months ended June 30, 2023 and a remeasurement loss of $4.1 million for the same period in 2022.

(2)Net of remeasurement gain of $2.6 million and $2.1 million for the three months ended June 30, 2023 and 2022, respectively. Net of remeasurement gain of $532 thousand and $4.0 million for the six months ended June 30, 2023 and 2022, respectively.

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

2

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollar amounts in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	215,260	$	223,973	$	438,870	$	461,457
Other comprehensive income (loss):
Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period	(333,329)		(2,042,210)		135,790		(4,335,132)
Other reclassification adjustments included in net income	49,425		22,259		82,015		18,229
Foreign exchange adjustment on fixed maturities recorded at fair value	(10,567)		1,835		(1,000)		2,119
Total unrealized investment gains (losses)	(294,471)		(2,018,116)		216,805		(4,314,784)
Less applicable tax (expense) benefit	61,836		423,810		(45,532)		906,109
Unrealized gains (losses) on investments, net of tax	(232,635)		(1,594,306)		171,273		(3,408,675)
Future Policy Benefits:
Change in discount rate on future policy benefits	306,211		2,791,287		(414,679)		5,596,798
Less applicable tax (expense) benefit	(64,305)		(586,174)		87,082		(1,175,330)
Future policy benefit adjustments, net of tax	241,906		2,205,113		(327,597)		4,421,468
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities	10,358		(18,409)		3,842		(14,181)
Less applicable tax (expense) benefit	(2,176)		3,865		(808)		2,978
Foreign exchange translation adjustments, other than securities, net of tax	8,182		(14,544)		3,034		(11,203)
Pension:
Pension adjustments	(323)		3,441		(371)		6,878
Less applicable tax (expense) benefit	66		(723)		77		(1,445)
Pension adjustments, net of tax	(257)		2,718		(294)		5,433
Other comprehensive income (loss)	17,196		598,981		(153,584)		1,007,023
Comprehensive income (loss)	$	232,456	$	822,954	$	285,286	$	1,468,480

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

3

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)

(Dollar amounts in thousands, except per share data)

	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2022	$	—	$	105,218	$	529,661	$	(2,790,313)	$	6,894,535	$	(789,524)	$	3,949,577
Comprehensive income (loss)	—		—		—		(170,780)		223,610		—		52,830
Common dividends declared ($0.2250 per share)	—		—		—		—		(21,542)		—		(21,542)
Acquisition of treasury stock	—		—		—		—		—		(179,276)		(179,276)
Stock-based compensation	—		—		(1,022)		—		—		8,700		7,678
Exercise of stock options	—		—		—		—		(4,059)		41,083		37,024
Balance at March 31, 2023	—		105,218		528,639		(2,961,093)		7,092,544		(919,017)		3,846,291
Comprehensive income (loss)	—		—		—		17,196		215,260		—		232,456
Common dividends declared ($0.2250 per share)	—		—		—		—		(21,330)		—		(21,330)
Acquisition of treasury stock	—		—		—		—		—		(89,755)		(89,755)
Stock-based compensation	—		—		7,487		—		—		—		7,487
Exercise of stock options	—		—		—		—		(665)		5,822		5,157
Balance at June 30, 2023	$	—	$	105,218	$	536,126	$	(2,943,897)	$	7,285,809	$	(1,002,950)	$	3,980,306

	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2021	$	—	$	109,218	$	520,564	$	(4,235,048)	$	6,455,733	$	(846,659)	$	2,003,808
Comprehensive income (loss)	—		—		—		408,042		237,484		—		645,526
Common dividends declared ($0.2075 per share)	—		—		—		—		(20,543)		—		(20,543)
Acquisition of treasury stock	—		—		—		—		—		(119,482)		(119,482)
Stock-based compensation	—		—		2,504		—		(345)		6,876		9,035
Exercise of stock options	—		—		—		—		(9,964)		35,895		25,931
Balance at March 31, 2022	—		109,218		523,068		(3,827,006)		6,662,365		(923,370)		2,544,275
Comprehensive income (loss)	—		—		—		598,981		223,973		—		822,954
Common dividends declared ($0.2075 per share)	—		—		—		—		(20,238)		—		(20,238)
Acquisition of treasury stock	—		—		—		—		—		(143,939)		(143,939)
Stock-based compensation	—		—		8,448		—		—		—		8,448
Exercise of stock options	—		—		—		—		(2,419)		11,222		8,803
Balance at June 30, 2022	$	—	$	109,218	$	531,516	$	(3,228,025)	$	6,863,681	$	(1,056,087)	$	3,220,303

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

4

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)

	Six Months Ended June 30,
	2023		2022
Cash provided from (used for) operating activities	$	804,141	$	693,390
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold	145,824		219,027
Fixed maturities available for sale—matured or other redemptions	138,259		305,656
Other long-term investments	59,593		48,334
Total investments sold or matured	343,676		573,017
Acquisition of investments:
Fixed maturities—available for sale	(623,023)		(717,994)
Other long-term investments	(91,186)		(157,913)
Total investments acquired	(714,209)		(875,907)
Net (increase) decrease in policy loans	(18,692)		(7,553)
Net (increase) decrease in short-term investments	42,993		(46,679)
Additions to property and equipment	(25,629)		(13,627)
Investments in low-income housing interests	(38,276)		(37,181)
Cash provided from (used for) investing activities	(410,137)		(407,930)
Cash provided from (used for) financing activities:
Issuance of common stock	42,181		34,734
Cash dividends paid to shareholders	(41,569)		(40,208)
Repayment of debt	(165,612)		—
Proceeds from issuance of debt	170,000		250,492
Payment for debt issuance costs	(693)		(5,272)
Net borrowing (repayment) of commercial paper	(25,371)		(150,047)
Acquisition of treasury stock	(269,031)		(263,421)
Net receipts (payments) from deposit-type products	(116,437)		(33,782)
Cash provided from (used for) financing activities	(406,532)		(207,504)
Effect of foreign exchange rate changes on cash	(5,020)		2,138
Net increase (decrease) in cash	(17,548)		80,094
Cash at beginning of year	92,559		92,163
Cash at end of period	$	75,011	$	172,257

Prior period amounts have been adjusted for the adoption of ASU 2018-12 on January 1, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

5

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(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. (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.

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 (DTC).

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 June 30, 2023, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended June 30, 2023 and 2022. 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 23, 2023.

Use of Estimates: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. See further documentation in the significant accounting policies or the accompanying notes.

Significant Accounting Policy Updates: The following accounting policies were updated since the 2022 Form 10-K due to the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (ASU 2018-12). Refer to Note 2—New Accounting Standards for additional information on the financial statement impacts related to the adoption of this standard.

Future Policy Benefits—The liability for future policy benefits for traditional and limited-payment long duration life and health products comprises approximately 92% of the total liability for future policy benefits. The liability is determined each reporting period based on the net level premium method. This method requires the liability for future policy benefits be calculated as the present value of estimated future policyholder benefits and the related termination expenses, less the present value of estimated future net premiums to be collected from policyholders. Net level premiums reflect a recomputed net premium ratio1 using actual experience since the issue date or the Transition Date, and expected future experience. The liability is accrued as premium revenue is recognized and adjusted for differences between actual and expected experience. Long-duration insurance contracts issued by the Company are grouped into cohorts based on the contract issue year, distribution channel, legal entity, and product type.

1 The net premium ratio is the percentage of gross premiums needed to fund actual and expected benefits and related settlement expenses.

6

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Both the present value of expected future benefit payments and the present value of expected future net premiums are based primarily on assumptions of discount rates, mortality, morbidity, lapse, and persistency. Each quarter, the Company remeasures its liability for future policy benefits using current discount rates with the effect of the change recognized in Other Comprehensive Income, a component of shareholders’ equity. In addition, the Company recognizes a liability remeasurement gain or loss within the Condensed Consolidated Statements of Operations using original discount rates, and relating to actual experience under the net premium calculation, as compared to the prior reporting period assumptions.

The Company regularly reviews its cash flow assumptions (mortality, morbidity, lapses, and persistency) used to calculate the change in the liability for future policy benefits. These cash flow assumptions are updated as necessary in the third quarter of every year, or more frequently if suggested by experience. If cash flow assumptions are changed, the net premium ratio is recalculated from the original issue date, or the Transition Date, using actual experience and projected future cash flows. When the expected future net premiums exceed the expected future gross premiums, or the present value of future policyholder benefits exceeds the present value of expected future gross premiums, the liability for future policy benefits is adjusted with changes recognized in policyholder benefits on the Condensed Consolidated Statements of Operations. The cash flow assumptions do not include an adjustment for adverse deviation. Mortality tables used for individual life insurance include various industry tables and reflect modifications based on Company experience. Morbidity assumptions for individual health are based on Company experience and industry data. Lapse and persistency assumptions are based on Company experience.

The liability for future policy benefits is discounted as noted above, using a current upper-medium grade fixed-income instrument yield that reflects the duration characteristics of the liability for future policy benefits. The methodology for determining current discount rates consists of constructing a discount rate curve intended to be reflective of the currency and tenor of the insurance liability cash flows. The methodology is designed to prioritize observable inputs based on market data available in the local debt markets denominated in the same currency as the policies. For the discount rates applicable to tenors for which the single-A debt market is not liquid or there is little or no observable market data, the Company will use estimation techniques consistent with the fair value guidance in ASC 820. We further accrete interest as a component of policyholder benefits using the original discount rate that is locked-in during the year of contract issuance. The original discount rates (or the locked-in discount rates) are used for interest accretion purposes and for the determination of net premiums, whereas the current discount rates are used for purposes of valuing the liability.

The liability for future policy benefits for annuity and interest sensitive life-type products is represented by policy account value. For limited-payment contracts, a deferred profit liability is also recorded, with changes recognized in income over the life of the contract in proportion to the amount of insurance in force.

Deferred Acquisition Costs—Certain costs of acquiring new insurance business are deferred and recorded as an asset. These costs are capitalized on a grouped contract basis and amortized over the expected term of the related contracts, and are essential for the acquisition of new insurance business. Deferred acquisition costs (DAC) are directly related to the successful issuance of an insurance contract, and primarily include sales commissions, policy issue costs, direct to consumer advertising costs, and underwriting costs. Additionally, DAC includes the value of business acquired (VOBA), which are the costs of acquiring blocks of insurance from other companies or through the acquisition of other companies. These costs represent the difference between the fair value of the contractual insurance assets acquired and liabilities assumed, compared against the assets and liabilities for insurance contracts that the Company issues or holds measured in accordance with GAAP.

DAC is amortized on a constant-level basis over the expected term of the grouped contracts, with the related expense included in amortization of deferred acquisition costs on the Condensed Consolidated Statements of Operations. The in-force metric used to compute the DAC amortization rate is annualized premium in force. The assumptions used to amortize acquisition costs include mortality, morbidity, and persistency. These assumptions are reviewed at least annually and revised in conjunction with any change in the future policy benefit assumptions. The effect of changes in the assumptions are recognized over the remaining expected contract term as a revision of future amortization amounts.

7

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

VOBA is amortized on a basis that is consistent with DAC, as described above, and is subject to periodic recoverability and loss recognition testing to determine if there is a premium deficiency. These tests evaluate whether the present value of future contract-related cash flows will support the capitalized VOBA asset. These cash flows consist primarily of premium income, less benefits and expenses. The present value of these cash flows, less the reserve liability, is then compared with the unamortized balance. In the event the estimated present value of net cash flows is less, the deficiency would be recognized by a charge to earnings and either a reduction of unamortized acquisition costs or an increase in the liability for future benefits.

Note 2—New Accounting Standards

Accounting Pronouncements Adopted in the Current Year: On January 1, 2023, the Company adopted ASU 2018-12 (also referred to as Long Duration Targeted Improvements or LDTI) on a modified retrospective basis as of the transition date (Transition Date) of January 1, 2021. The amended guidance is a significant change to the accounting and disclosure of long-duration life and health insurance contracts. The modified retrospective transition method requires the updated standard be applied to all long-duration life and health contracts, which has resulted in the adjustment of the 2021 and 2022 consolidated financial statements.

The following tables summarize the balance of and changes to the liability for future policy benefits for traditional life and health long-duration contracts on the Transition Date due to the adoption of ASU 2018-12:

	Net Liability for Future Policy Benefits - Long Duration Life
	American Income		DTC		Liberty National		Other		Total
Balance, net of reinsurance, at original discount rates as of December 31, 2020	$	3,541,317	$	2,492,226	$	2,140,071	$	2,736,804	$	10,910,418
Effect of changes in discount rate assumptions	3,334,600		2,195,430		1,229,610		2,297,835		9,057,475
Effect of capping and flooring(1)	—		16,899		2,433		2		19,334
Balance, net of reinsurance, at current discount rates as of January 1, 2021	$	6,875,917	$	4,704,555	$	3,372,114	$	5,034,641	$	19,987,227

	Net liability for Future Policy Benefits - Long Duration Health
	United American		Family Heritage		Liberty National		American Income		DTC		Total
Balance, net of reinsurance, at original discount rates as of December 31, 2020	$	131,505	$	1,383,128	$	501,312	$	101,998	$	(2,941)	$	2,115,002
Effect of changes in discount rate assumptions	75,652		497,250		219,992		60,366		346		853,606
Effect of capping and flooring(1)	6,506		—		19,324		—		4,193		30,023
Balance, net of reinsurance, at current discount rates as of January 1, 2021	$	213,663	$	1,880,378	$	740,628	$	162,364	$	1,598	$	2,998,631

(1)When the present value of expected future net premiums exceeds the present value of expected future gross premiums for a given cohort (capping), or the present value of future policy benefits and related termination expenses exceeds the present value of expected future net premiums (flooring), an adjustment is made to the liability for future policy benefits.

8

        GL Q2 2023 FORM 10-Q

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table presents total policy liabilities, both before and after the Transition Date:

	January 1,		December 31,
	2021		2020
Future policy benefits:
Net liability for future policy benefits—long duration life	$	19,987,227	$	10,910,418
Net liability for future policy benefits—long duration health	2,998,631		2,115,002
Additional insurance liabilities(1),(2)	2,008,399		2,218,116
Total future policy benefits	24,994,257		15,243,536
Unearned and advance premium(1)	243,369		61,728
Policy claims and other benefits payable(1)	473,524		399,507
Other policyholders' funds(1)	98,459		97,968
Total policy liabilities	$	25,809,609	$	15,802,739

(1)In addition to the discount rate related adjustments to future policy benefits, the Company reclassified certain balances within total policy liabilities on the Consolidated Balance Sheets as a result of adopting ASU 2018-12. The reclassifications had an immaterial impact on Shareholders' Equity. See table summarizing the transition adjustments to Shareholders' Equity below.

(2)The Company's additional insurance liabilities consist primarily of: 1) deferred profit liability on limited-payment contracts; and 2) reserves on deferred annuity and interest sensitive life blocks of business. See Note 6—Policy Liabilities for additional information.

The following table presents the Company's deferred policy acquisition costs, both before and after the Transition Date: