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$ in thousands
$3,813,905
Total Premium
$737,592
Net Operating
Income
$731,773
Net Income
$2,739,949
Annualized Life
Premium In Force
$1,193,362
Annualized Health
Premium In Force
Financial Highlights
$ in thousands, except per share amounts
2020
2019
% CHANGE
OPERATIONS
Total Premium
$3,813,905
$3,595,134
Net Operating Income1
$737,592
$752,102
Net Income
$731,773
$760,790
Annualized Life Premium In Force
$2,739,949
$2,581,628
Annualized Health Premium In Force
$1,193,362
$1,139,038
Diluted Average Shares Outstanding
107,225
111,381
Net Operating Income as a Return on
Average Equity (excluding net unrealized
gains on fixed maturities1)
Net Income as a Return on Average Equity
13.5%
9.5%
14.5%
11.6%
6.1
1.9
3.8
6.1
4.8
3.7
PER COMMON SHARE
(on a diluted basis)
Net Operating Income1
Net Income
Shareholders’ Equity (excluding net
unrealized gains on fixed maturities1)
$6.88
$6.82
$6.75
$6.83
1.9
0.1
$53.12
$48.26
10.1
1 The following financial measures utilized by management and contained in the following Letter to Shareholders are considered non-GAAP: net operating income; net operating
income as a return on average equity, excluding net unrealized gains on fixed maturities; book value (shareholders’ equity) per share, excluding net unrealized gains or losses on fixed
maturities; underwriting income or margin (consolidated). Globe Life includes non-GAAP measures to enhance investors’ understanding of management’s view of the business. The
non-GAAP measures are not a substitute for GAAP, but rather a supplement to increase transparency by providing broader perspective. Globe Life’s definitions of non-GAAP measures
may differ from other companies’ definitions. Reconciliations to GAAP financial data are presented on pages 18-19.
2
Letter to Shareholders*
2020 was an unprecedented year. The COVID-19
pandemic significantly altered the lives of everyone, and
our thoughts go out to all those who have endured illness,
the loss of loved ones, or economic hardship. We are
hopeful that in the near future we can put the pandemic in
our rear view mirror.
Despite the challenges presented by the pandemic, Globe
Life adapted quickly and continued to generate growth.
Premium grew over 6% and life net sales grew 13%, while
the agent count in our exclusive agencies grew 21%. Net
operating income as a return on equity, excluding net
unrealized gains on fixed maturities, was 13.5%.
Even though COVID-19 forced changes in the way we
do business, it did not change our business model.
This model is the key to Globe Life’s success. Focused
execution of this model has produced consistent, solid
results year after year as summarized below:
When the pandemic hit, our first priority was to help
ensure the safety of our employees, agents and
customers. To do so and keep operations running
smoothly, we had to quickly shift to a remote workplace
and a virtual sales and agent recruiting process. Our
employees and agencies did a tremendous job to achieve
that transformation.
Globe Life persevered through this difficult time and will
emerge stronger than before as the pandemic subsides.
Our ability to recruit agents and sell needed coverage has
been enhanced by having the capability to use both face-
to-face and virtual approaches. In addition, our ability to
conduct much of our home office operations in a remote
environment will continue to improve recruiting and
retention of employees.
Market
Distribution
Cash Flows
We focus primarily on the middle-income
market. This market continues to have great
growth potential as it is vastly underserved
and includes working families that have a real
need for our products.
We primarily distribute our products
through exclusive agency and direct to
consumer marketing channels. As a result
of focusing on these channels, we are able
to limit competitive pressure and effectively
manage costs. This leads to consistent
underwriting margins.
Products
Margins
For more than fifty years we have been selling
essentially the same products. These basic
life and supplemental health protection
products are easy for our customers and
agents to understand. They are designed
to meet the primary needs of our market as
they help families survive the death or illness
of a wage earner and secure their future by
helping pay off critical obligations.
Globe Life does not rely on investment
income to generate operating income.
Approximately 75% of the Company’s pre-tax
operating income comes from underwriting
income. The extensive data and experience
we have selling basic protection products
in the middle-income market, along with a
sharp focus on expense control, enables us to
administer our business very efficiently and
produce healthy underwriting income.
*Throughout this letter net operating income represents net operating income from continuing operations.
Globe Life’s stable block of in-force business
consistently provides substantial excess cash
flow. Approximately 90% of our premium
revenue is generated from policies sold in
prior years. The persistency of the in-force
block has been exceptionally stable over
the life of the Company, regardless of
macroeconomic conditions.
Return of Excess
Capital to Shareholders
A key component of our capital management
program is to create shareholder value
through return of excess capital to
shareholders. Since 1986, Globe Life has
returned approximately 69% of its net income
to shareholders through share repurchases
and dividends.
3 Our Growth
While our business model offers great opportunity, we constantly pursue enhancement of our operations through
prudent use of innovation and technology. This paid off in 2020 as we were able to leverage recent investments in
technology to help successfully navigate the pandemic.
These charts demonstrate the growth in earnings per share and book value per share.
Globe Life has routinely generated a strong return on equity (ROE). In 2020, the net operating income as an ROE,
excluding net unrealized gains on fixed maturities, was 13.5%. On a GAAP basis, 2020 ROE was 9.5%.
Net Income Per Share
Compound Annual Growth Rate:
10-Year: 9.7%, 5-Year: 10.4%
$6.82
$6.09
Net Operating Income
Per Share
Compound Annual Growth Rate:
10-Year: 10.6%, 5-Year: 10.7%
$6.13
$6.88
$4.49
$4.09
$3.60
$2.70
$4.49
$3.92
$3.31
$2.52
2010
2012
2014
2016
20181
2020
2010
2012
2014
2016
20181
2020
Book Value Per Share
Compound Annual Growth Rate:
10-Year: 15.2%, 5-Year: 20.5%
$83.19
Book Value Per Share
(Excluding Net Unrealized Gains or Losses on
Fixed Maturities)
Compound Annual Growth Rate:
10-Year: 10.3%, 5-Year: 12.0%
$44.32
$53.12
$48.11
$36.19
$37.76
$30.56
$20.24
$32.13
$27.91
$23.49
$19.87
2010
2012
2014
2016
20181
2020
2010
2012
2014
2016
20181
2020
1 In 2017, tax legislation revised the corporate income tax rate from 35% to 21% effective Jan. 1, 2018, among other modifications.
4 Operations
We utilize net operating income to measure the
performance of our insurance operations.
Underwriting income consists of premiums less
policy benefits, acquisition costs, and administrative
expenses. Underwriting income is the primary
contributor to net operating income; approximately
75% of pre-tax operating income was generated
from underwriting income in 2020.
Distribution
Channels
We distribute our products in niche markets through
three exclusive agencies, our Direct to Consumer
operation and, in the case of Medicare Supplement
business, independent agencies. The pie chart
reflects the spread of underwriting margin among
the channels.
Components of
Net Operating Income
($ in millions, except per share data)
Underwriting Income
Excess Investment Income
Tax and Parent Expenses
Stock Compensation Expense, Net of Tax
PER SHARE
$6.59
2.28
(1.77)
(0.22)
$707
244
(190)
(23)
Net Operating Income
$738
$6.88
Components of
Underwriting Income
($ in millions)
Underwriting Margin
– Life
– Health
– Other
Total
Admin. Expenses Net of Other Income
AS % OF
PREMIUM
25.3%
23.9%
25.1%
6.5%
$675
272
9
$956
(249)
Underwriting Income
$707
18.5%
2020 Total
Underwriting Margin
48%
8%
Direct to Consumer Division
9%
8%
14%
Liberty National Division
American Income Life Division
United American Division
Family Heritage Division
13%
Other
5 American Income Life is Globe Life’s largest
provider of premium and underwriting margin. As
shown in the charts, agent count and life net sales
have grown at a compound annual growth rate of
9.5% and 6.2%, respectively, over the past ten years.
We are pleased with the results at American Income
Life in 2020. The agency quickly overcame obstacles
presented by the pandemic, successfully adding
virtual sales and recruiting processes developed in
cooperation with the home office. Strong recruiting,
agent retention, and growth in agency middle
management drove significant net sales growth.
While the surge in unemployment in 2020 was
conducive to recruiting, we can successfully grow
the agency regardless of the economic environment
as demonstrated by the chart to the right.
American Income Life continues to grow and
evolve while offering the same basic protection life
insurance products to working families for more
than fifty years. In the past, this division required
union leads to generate new business. Today, many
leads come from referrals and other sources. While
the union affiliation remains important, American
Income Life has generated consistent growth
despite declines in union membership.
American Income Life
Agent Count at End of Year
Compound Annual Growth Rate: 10-Year: 9.5%
2020 9,664
2018
6,894
2016
6,870
2014
6,434
2012
5,176
2010
3,912
American Income Life
Life Net Sales
Compound Annual Growth Rate: 10-Year: 6.2%
($ in millions)
$253
$224
$210
$172
$159
$138
2010
2012
2014
2016
2018
2020
6 Liberty National is our oldest distribution channel, and distributes basic life and
supplemental health insurance products in both the individual and worksite markets. The
pandemic posed a significant challenge for worksite marketing as most activity occurs at
the place of business. Liberty National focuses on smaller companies, many of which were
closed due to stay at home orders or other mandated closures.
We were able to add a virtual recruiting and sales process and shift this division’s focus to
individual sales. This created sufficient activity and growth during the second half of the
year to offset the second quarter decline and finish the year with 2020 net sales roughly
equivalent to 2019.
We continue to concentrate on opening offices in new territories outside of the Southeast.
As can be seen in the charts, agent count and total net sales have grown at a compound
annual growth rate of 13.4% and 7.6%, respectively, over the past five years. The new
capabilities and lessons learned from the pandemic will enhance Liberty National’s growth
prospects going forward.
Liberty National
Agent Count at End of Year
Compound Annual Growth Rate: 5-Year: 13.4%
2020
2,770
2019
2,660
2018
2,159
2017
2,106
2016
1,758
2015
1,478
Liberty National
Total Net Sales
Compound Annual Growth Rate: 5-Year: 7.6%
($ in millions)
$78
$78
$71
$67
$60
$54
2015
2016
2017
2018
2019
2020
7 Family Heritage primarily markets limited-benefit health insurance products in rural areas
and smaller cities. Most of these insurance products include a return of premium feature
that produces financial results similar to those of life insurance. The persistency, profit
margins, and investment income generated by these products are stronger than typical
health insurance products.
Family Heritage also faced significant challenges in 2020 as its business model includes a
primarily door-to-door cold call approach. The agency added virtual sales and improved
virtual recruiting, and grew health net sales 8% for the year. Since 2015, agent count
and health net sales have risen at a compound annual growth rate of 9.9% and 7.3%,
respectively. We continue to be pleased with the progress at Family Heritage and expect
to see continued positive results.
Family Heritage
Agent Count at End of Year
Compound Annual Growth Rate: 5-Year: 9.9%
2020
1,463
2019
1,286
2018
1,097
2017
1,076
2016
909
2015
911
Family Heritage
Health Net Sales
Compound Annual Growth Rate: 5-Year: 7.3%
($ in millions)
$60
$57
$50
$51
$71
$66
2015
2016
2017
2018
2019
2020
8 Direct to Consumer is our second largest division.
This is a multi-channel division that utilizes internet,
call center, direct mail, and insert media channels.
We believe we have a significant advantage over
other direct to consumer companies due to the
tremendous amount of data and experience we
have in this market. Additionally, having four
Direct to Consumer channels provides multiple
opportunities to monetize leads.
Direct to Consumer life net sales grew 31% in 2020
as the pandemic increased consumer demand
and awareness of the need for basic protection
life insurance. The investments made in Direct to
Consumer in recent years put us in a position to
effectively process this level of increased activity.
This division provides additional value through
its support to the lead generation and data
management efforts of our agencies. Direct to
Consumer continues to be a key contributor to
Globe Life’s success.
Direct to Consumer
Life Net Sales
Compound Annual Growth Rate: 10-Year: 1.9%
($ in millions)
$165
$158
$150
$137
$141
$126
2010
2012
2014
2016
2018
2020
Direct to Consumer
Life Premium
Compound Annual Growth Rate: 10-Year: 4.8%
($ in millions)
$907
$829
$783
$702
$630
$567
2010
2012
2014
2016
2018
2020
9 United American primarily markets individual
and group Medicare Supplement insurance. This
is the one market we participate in that is very
competitive. As such, we take an opportunistic
approach and use independent agents and brokers.
While life insurance is our core business at Globe
Life, we like the Medicare Supplement market
as we have the experience and systems in place
to efficiently manage this business and generate
stable profit margins.
Net sales were negatively impacted in 2020
by decreased agent activity resulting from
the pandemic and changes in the competitive
landscape. However, underwriting margin dollars
increased 13% due to improved profitability. We will
continue to work diligently to grow this business,
but we will not yield to market pressures at the
expense of our profit margins.
United American
Health Net Sales
Compound Annual Growth Rate: 5-Year: -2.9%
($ in millions)
$72
$56
$79
$70
$61
$62
2015
2016
2017
2018
2019
2020
United American
Health Premium
Compound Annual Growth Rate: 5-Year: 5.6%
($ in millions)
$453
$345
$355
$364
$417
$381
2015
2016
2017
2018
2019
2020
10 Investment Operations
Excess investment income reflects net investment income less required interest on net
policy liabilities and interest on our debt. It is the measure that we use to evaluate the
performance of our investment segment. Excess investment income produced 26% of our
pre-tax operating income in 2020.
Components of
Net Operating Income
($ in millions, except per share data)
Underwriting Income
Excess Investment Income
Tax and Parent Expenses
Stock Compensation Expense, Net of Tax
PER SHARE
$6.59
2.28
(1.77)
(0.22)
$707
244
(190)
(23)
Net Operating Income
$738
$6.88
Excess Investment Income
($ in millions)
Net Investment Income
Required Interest on Net Policy Liabilities
Interest on Debt
Excess Investment Income
$927
(596)
(87)
$244
11 Investment Portfolio
December 31, 2020
Invested Assets ($ in millions)
Fixed Maturities (at fair value)
Policy Loans
Other Investments
Total*
AS % OF
TOTAL
94%
3%
3%
$21,214
584
655
$22,453
100%
*Total invested assets with fixed maturities at amortized cost: $18,433
Total Invested Assets
at Amortized Cost
Compound Annual Growth Rate: 10-Year: 5.2%
($ in billions)
$18.4
$16.6
$14.8
$13.3
$12.5
$11.1
2010
2012
2014
2016
2018
2020
Investment
Portfolio
Globe life has a conservative investment philosophy,
which emphasizes preservation of principal. We
invest primarily in long-dated fixed maturities and
maintain a diversified portfolio as to the number
of sectors and issuers. Since we invest long, we
look for investments in entities that have the ability
to survive multiple market downturns. Also, when
evaluating new investments, we look to get the
best yield after adjusting for the level of risk and
regulatory capital requirements. Our intent is to
hold fixed maturities to maturity, and due to the
strength of cash generated by our underwriting
operations we have the ability to do so.
Fixed maturities comprise 94% of the investment
portfolio. This percentage is higher than peer
companies due to the nature of our liabilities.
Generally, we buy long term, fixed-rate investment
grade bonds because they are the best match for
our policy liabilities, which are also long term and
fixed rate. Another way that we differ from our
peers is the level of BBB bonds. While the ratio of
BBB holdings to total fixed maturities is in line with
the overall bond market, it is higher than our peers.
However, we have little or no exposure to higher risk
assets held by other companies, such as derivatives,
equities, residential mortgages, CLOs (collateralized
loan obligations) and other asset backed securities.
We are comfortable with the level of BBBs and the
overall quality of our fixed maturity portfolio.
12 Fixed Maturity
Portfolio Yield
As reflected in the chart, lower new money yields
have caused the fixed maturities portfolio yield to
decline over the last ten years. While we would like
to see higher interest rates, Globe Life will continue
to be successful in a lower for longer interest rate
environment. Extended low interest rates will not
impact the GAAP or statutory balance sheets under
the current accounting rules since we sell non-
interest sensitive protection products.
While our net investment income will continue to
be impacted in a low interest rate environment,
our excess investment income will grow over time.
However, it will grow at a lower rate than the
growth rate of invested assets. The impact of lower
money rates on our investment income is somewhat
mitigated as we expect to have average turnover in
the bond portfolio of less than 2% per year over the
next five years.
Fixed Maturity Portfolio Yield
(at end of year)
6.63%
6.04%
5.89%
5.74%
5.55%
5.28%
2010
2012
2014
2016
2018
2020
13 Capital Management
Share Repurchases
TOTAL SPENT
(IN MILLIONS)
NO. OF SHARES
(IN 000’S)
AVERAGE
PRICE
P/E RATIO*
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$788
360
360
375
359
311
325
372
350
380
28,347
11,219
8,280
7,155
6,292
5,208
4,126
4,406
3,932
4,459
$27.78
32.13
43.48
52.42
56.99
59.78
78.67
84.38
89.04
85.24
9.5
9.7
11.9
13.4
13.8
13.3
16.3
13.8
13.2
12.4
*Ratios were calculated using net operating income.
We began our share repurchase program in 1986. Since
then, we have repurchased stock every year, except 1995
due to the acquisition of American Income Life. We have
spent $8.2 billion to repurchase 81% of the outstanding
shares of the Company and have returned approximately
69% of our net income to shareholders through dividends
and share repurchases.
While share repurchases have been the most efficient use
of excess capital over the years, we continue to evaluate
alternative uses to ensure that we deploy excess capital
as efficiently as possible. Please keep in mind that share
repurchases come from excess cash flow only after all
insurance operations have been fully funded, including
substantial investments in technology and human capital,
since our first priority is to maximize the profitable growth
of our insurance business.
Globe Life’s capital management philosophy is an
important component of our business model and overall
strategy. Our goals are to fully fund the insurance
operations, maintain appropriate capital levels, and
maximize both the amount of, and the return on,
excess cash flow.
At the insurance companies we manage to a Company
Action Level Risk-Based Capital (RBC) ratio target of 300%
to 320%. This ratio is lower than that of many similarly-
rated peers due to the lower risk profile of our business.
We do not need to hold as much capital because of
our healthy underwriting profits, consistent cash flow
generation, and the fact that the majority of our liabilities
are fixed and are not impacted by fluctuations in interest
rates and equity markets.
At our current RBC level of 309%, we are holding
approximately $50 million more capital than needed to
meet the RBC target set by rating agencies for our current
ratings levels. In addition, we have an additional $290
million of liquid assets at the Parent Company. As such,
we have approximately $340 million of capital available
to handle the impact of adverse ratings migration or
defaults of our investments without having to issue debt
or divert 2021 excess cash flow from share repurchases.
This amount is substantially more than the additional
capital we would need even in our most extreme stress
test scenarios.
Due to our large and stable block of in-force policies, we
are able to generate substantial excess cash flow each
year. We define excess cash flow as the cash available to
the Parent Company from the dividends received from the
insurance subsidiaries after paying shareholder dividends
and interest on Parent Company debt.
In recent years we have generated an average of around
$350 million dollars per year of excess cash flow. We
estimate excess cash flow in 2021 will be $330 to
$360 million.
Excess cash flow is a component of our liquidity. With the
excess cash flow expected in 2021 and the liquid assets
already on hand, we are confident we have more than
sufficient liquidity to handle any losses and downgrades
of our investments that may result from the current
economic environment.
14 Conclusion
2020 was a year unlike any year before. Globe Life was able to prosper despite the
pandemic due to the ingenuity, hard work, and flexibility of its employees and agents. We
have never been more proud of them, and we are extremely grateful for their resilience and
hard work.
There are many factors that drive company performance. As important as any other is a
working environment that strongly emphasizes diversity, equity and inclusion. We believe
this is critical to success and we are firmly committed to maintaining such an environment at
Globe Life. Globe Life’s Environmental, Social, and Governance program incorporates input
from all levels of the Company and is an important part of our decision-making process. It
will continue to evolve as we go forward.
We are honored to lead a company that helps provide financial security to working families.
Too many families either do not have enough life insurance or have no life insurance at all. In
addition, others do not have enough health insurance. As expressed in the Company motto,
we will continue to work hard to “Make Tomorrow Better” for millions of Americans by
providing financial security through basic protection insurance. We believe that tremendous
opportunity lies ahead for Globe Life. We are in a strong competitive position in an
underserved market, and we intend to take advantage of this opportunity and continue to
generate significant shareholder value for years to come.
Thank you for your investment in Globe Life.
Gary L. Coleman
Co-Chairman and
Chief Executive Officer
Larry M. Hutchison
Co-Chairman and
Chief Executive Officer
Note: Globe Life cautions you that this Letter to Shareholders may contain forward-looking statements within the meaning of the federal securities law. These
prospective statements reflect management’s current expectations, but are not guarantees of future performance. Accordingly, please refer to our cautionary
statement regarding forward-looking statements and the business environment in which the Company operates, contained in the Company’s Form 10-K
for the period ended December 31, 2020, found on the following pages and on file with the Securities and Exchange Commission. Globe Life specifically
disclaims any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.
15 DIVIDEND REINVESTMENT
Globe Life maintains a dividend reinvestment
plan for all holders of its common stock. Under
the plan, shareholders may reinvest all or part of
their dividends in additional shares of common
stock and may also make periodic additional cash
payments of up to $3,000 toward the purchase of
Globe Life stock. Participation is voluntary. More
information on the plan may be obtained from the
Stock Transfer Agent by calling toll-free
866-557-8699 or by writing: Globe Life Inc., c/o EQ
Shareowner Services, P.O. Box 64874, St. Paul, MN
55164-0874 or 1110 Centre Pointe Curve, Suite
101, Mendota Heights, MN 55120-4100.
AUTOMATIC DEPOSIT OF DIVIDENDS
Automatic deposit of dividends is available to
shareholders who wish to have their dividends
directly deposited into the financial institution of
their choice. Authorization forms may be obtained
from the Stock Transfer Agent by calling toll-free
866-557-8699.
PRINCIPAL EXECUTIVE OFFICE
3700 South Stonebridge Drive
McKinney, Texas 75070
972-569-4000
ANNUAL MEETING OF SHAREHOLDERS
10:00 a.m. CDT, Thursday, April 29, 2021
Virtual meeting only, online via live audio
webcast. Register to attend the meeting at
register.proxypush.com/GL.
The proceedings will be made available for
replay on the Investors page of the Globe Life
website. The Company’s Annual Meeting will be
conducted in accordance with its Shareholders’
Rights Policy. A copy of this policy can be obtained
on the Company’s website, or by contacting the
Corporate Secretary at the Globe Life principal
executive office address.
INVESTOR RELATIONS
Contact: Mike Majors
Phone: 972-569-3239
Fax: 972-569-3282
Email: Investors@Globe.Life
INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
Deloitte & Touche LLP
2200 Ross Avenue
Suite 1600
Dallas, Texas 75201
STOCK EXCHANGE LISTINGS
New York Stock Exchange Symbol: GL
INDENTURE TRUSTEE FOR 7.875%,
4.550%, 3.800% AND 2.150% SENIOR
NOTES AND 6.125% AND 5.275% JUNIOR
SUBORDINATED DEBENTURES
Regions Bank Corporate Trust Services
3773 Richmond Ave., Suite 1100
Houston, TX 77046-3703
PHONE: 713-244-8042
Website: www.regions.com/commercial_ banking/
corp_trust.rf
The 6.125% debentures trade through Depository
Trust Company under global certificates
listed on the New York Stock Exchange (NYSE
Symbol GLpC). The 5.275% debentures trade
through Depository Trust Company under
global certificates listed on the Singapore
Stock Exchange.
STOCK TRANSFER AGENT AND
SHAREHOLDER ASSISTANCE
EQ Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
or
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
Toll-Free Number: 866-557-8699
TDD: Hearing impaired can use a relay service
Outside the U.S.: 651-450-4064
Website: www.shareowneronline.com
Globe Life
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• Conference Calls on the Web
• Conference Call Replays and Transcripts
• Annual Meeting of Shareholders
16 Directors
CHARLES E. ADAIR
President of Kowaliga Capital
Montgomery, Alabama
LINDA L. ADDISON
Of Counsel, Norton Rose Fulbright US LLP
Houston, Texas
MARILYN A. ALEXANDER
Principal of Alexander and Friedman, LLC
Laguna Beach, California
CHERYL D. ALSTON
Executive Director and Chief Investment Officer of
the Employees’ Retirement Fund of the City of Dallas
Frisco, Texas
Officers
GARY L. COLEMAN
Co-Chairman and Chief Executive Officer
LARRY M. HUTCHISON
Co-Chairman and Chief Executive Officer
J. MATTHEW DARDEN
Executive Vice President and Chief Strategy Officer
JENNIFER A. HAWORTH
Executive Vice President and
Chief Marketing Officer
MARY ELIZABETH HENDERSON
Corporate Senior Vice President,
Enterprise Lead Generation
M. SHANE HENRIE
Corporate Senior Vice President and Chief
Accounting Officer
JANE M. BUCHAN
Chief Executive Officer of
Martlet Asset Management LLC
Newport Beach, California
GARY L. COLEMAN
Co-Chairman and Chief Executive Officer
of Globe Life Inc.
LARRY M. HUTCHISON
Co-Chairman and Chief Executive Officer
of Globe Life Inc.
ROBERT W. INGRAM
Retired Ross-Culverhouse Professor of Accounting
in Culverhouse College of Commerce,
University of Alabama
Jupiter, Florida
STEVEN P. JOHNSON
Retired Partner, Deloitte and Touche LLP
Plano, Texas
DARREN M. REBELEZ
President and Chief Executive Officer of
Casey’s General Stores, Inc.
West Des Moines, Iowa
MARY E. THIGPEN
Consultant for Strategy Development, Technology
Assessments and Global-Go-To Market
Operational Competencies
Alpharetta, Georgia
MICHAEL C. MAJORS
Executive Vice President, Administration and
Investor Relations
W. MICHAEL PRESSLEY
Executive Vice President and
Chief Investment Officer
THOMAS P. KALMBACH
Executive Vice President and Chief Actuary
JOEL P. SCARBOROUGH
Assistant Secretary
JAMES E. MCPARTLAND
Executive Vice President and
Chief Information Officer
R. BRIAN MITCHELL
Executive Vice President,
General Counsel and Chief Risk Officer
CHRISTOPHER T. MOORE
Corporate Senior Vice President,
Associate Counsel and Corporate Secretary
FRANK M. SVOBODA
Executive Vice President and
Chief Financial Officer
REBECCA E. ZORN
Corporate Senior Vice President and
Chief Talent Officer
Distribution Officers
AMERICAN INCOME LIFE DIVISION
FAMILY HERITAGE DIVISION
LIBERTY NATIONAL DIVISION
STEVEN K. GREER
Chief Executive Officer
DAVID S. ZOPHIN
President
KENNETH J. MATSON
President and Chief Executive Officer
STEVEN J. DICHIARO
Chief Executive Officer
DIRECT TO CONSUMER DIVISION
UNITED AMERICAN INSURANCE COMPANY
BILL E. LEAVELL
President and Chief Executive Officer
MICHAEL C. MAJORS
President
17 Operating Summary
Unaudited and $ in thousands except per share amounts
Twelve months ended December 31,
2020
2019
% Increase
or Decrease
UNDERWRITING INCOME
Life:
Premium
Net policy obligations
Nondeferred commissions and amortization
Nondeferred acquisition expense
Underwriting margin
Health:
Premium
Net policy obligations
Nondeferred commissions and amortization
Nondeferred acquisition expense
Underwriting margin
Annuity underwriting margin
Total underwriting margin
Other income
Insurance administration expenses
Underwriting income
EXCESS INVESTMENT INCOME
Net investment income
Required interest on:
Net policy liabilities:
Policy reserves
Deferred acquisition costs
Debt
Total excess investment income
Corporate expenses
Pre-tax operating income
Income tax
Net operating income before stock compensation expense
Stock compensation expense, net of tax
NET OPERATING INCOME
Operating EPS on a diluted basis
Diluted average shares outstanding
Reconciliation of Net Operating Income to Net Income:
Net operating income
Non operating items, net of tax:
Realized gains - investments
Realized gains (losses) - redemption of debt
Part D adjustments - discontinued operations
Administrative settlements
Non-operating expenses
Legal proceedings
NET INCOME
EPS on a diluted basis
6
4
6
12
4
2
2
5
2
2
2
$2,672,804
(1,111,261)
(808,307)
(78,290)
674,946
1,141,097
(640,006)
(204,617)
(24,105)
272,369
9,029
956,344
1,325
(250,947)
706,722
$2,517,784
(971,885)
(764,976)
(77,459)
703,464
1,077,346
(600,475)
(207,525)
(25,708)
243,638
9,458
956,560
1,318
(240,321)
717,557
927,062
910,459
(833,000)
237,066
(86,704)
244,424
(9,891)
941,255
(180,321)
760,934
(23,342)
$737,592
$6.88
107,225
(796,979)
228,431
(84,306)
257,605
(10,260)
964,902
(189,155)
775,747
(23,645)
$752,102
$6.75
111,381
$ 737,592
752,102
(1,915)
(501)
—
—
(816)
(2,587)
$731,773
$6.82
16,291
—
(92)
(400)
(508)
(6,603)
$760,790
$6.83
Note: The Operating Summary has been prepared in the manner Globe Life management uses to evaluate the operating results of the Company. It
differs from the Consolidated Statements of Operations found in the accompanying SEC Form 10-K.
18 Condensed Balance Sheets
Unaudited and $ in thousands except per share amounts
At December 31,
2020
2019
Assets:
Fixed maturities at amortized cost*
Cash and short-term investments
Other investments
Deferred acquisition costs*
Goodwill
Other assets
Total assets*
Liabilities and shareholders’ equity:
Policy liabilities
Current and deferred income taxes payable*
Short-term debt
Long-term debt
Other liabilities
Shareholders’ equity, excluding ASC 320* +
Total liabilities and shareholders’ equity
Actual shares outstanding:
Basic
Diluted
Book value (shareholders’ equity, excluding ASC 320) per diluted share
Net operating income as a return on average equity, excluding ASC 320
Average equity, excluding ASC 320
Debt to capital ratio, excluding ASC 320
$17,193,799
202,629
1,131,360
4,601,399
441,591
1,462,198
$25,032,976
$15,802,739
990,834
254,918
1,667,886
716,373
5,600,226
$25,032,976
103,797
105,429
53.12
13.5%
$5,468,159
25.6%
$16,415,776
114,218
901,839
4,349,429
441,591
1,270,724
$23,493,577
$15,033,527
955,217
298,738
1,348,988
525,068
5,332,039
$23,493,577
107,720
110,494
48.26
14.5%
$ 5,171,282
23.6%
Reconciliation of Globe Life management’s view of selected financial items to comparable GAAP measures*:
Shareholders’ equity, excluding ASC 320+
Effect of ASC 320:
Increase fixed maturities
Decrease deferred acquisition costs
Increase current and deferred income taxes payable
Shareholders’ equity
Other comparable GAAP measures:
Fixed maturities at fair value
Deferred acquisition costs
Total assets
Shareholders’ equity
Current and deferred income taxes payable
Book value (shareholders’ equity) per diluted share
Net income as a return on average equity
Average equity
Debt to capital ratio
$5,600,226
$5,332,039
$4,019,710
(5,955)
(842,889)
$8,771,092
$21,213,509
4,595,444
29,046,731
8,771,092
1,833,723
83.19
9.5%
$ 7,731,792
18.0%
$2,491,371
(7,488)
(521,615)
$7,294,307
$18,907,147
4,341,941
25,977,460
7,294,307
1,476,832
66.02
11.6%
$6,553,168
18.4%
*The Condensed Balance Sheets, excluding ASC 320 have been prepared in the manner Globe Life management, industry analysts, rating agencies and financial
institutions use to evaluate the financial position of the company. It differs from the Consolidated Balance Sheets found in the accompanying SEC Form 10-K.
+ASC 320 includes guidance for treatment of unrealized gains and losses on available-for-sale fixed maturities previously included in FAS 115.
19 Globe Life Inc. Board of Directors
From left to right: Marilyn A. Alexander, Charles E. Adair, Robert W. Ingram, Linda L. Addison, Larry M. Hutchison,
Cheryl D. Alston, Gary L. Coleman, Steven P. Johnson, Jane M. Buchan, Mary E. Thigpen, Darren M. Rebelez.
20 21 This page was intentionally left blank.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[ ☒ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
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, TX
(Address of principal executive offices)
75070
(Zip Code)
972-569-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Common Stock, $1.00 par value per share
GL
Name of each exchange on
which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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.
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 x No ¨
Yes x No ¨
Yes ¨
No x
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting 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 x
Non-accelerated filer
¨
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 checkmark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
x
by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x
As of June 30, 2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was
$7.7 billion based on the closing sale price as reported on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Common Stock, $1.00 par value per share
Outstanding at February 18, 2021
103,283,402 shares
DOCUMENTS INCORPORATED BY REFERENCE
Document
Proxy Statement for the Annual Meeting of Stockholders to be
held on April 29, 2021 (Proxy Statement)
Parts Into Which Incorporated
Part III
Globe Life Inc.
Table of Contents
Page
PART I.
PART II.
Item 1.
Business.....................................................................................................................
Item 1A. Risk Factors................................................................................................................
Item 1B. Unresolved Staff Comments.......................................................................................
Properties...................................................................................................................
Item 2.
Legal Proceedings......................................................................................................
Item 3.
Mine Safety Disclosures.............................................................................................
Item 4.
Item 5.
Item 6.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities...................................................................................
Selected Financial Data..............................................................................................
Cautionary Statements...............................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of
Item 7.
Operations..................................................................................................................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk......................................
Financial Statements and Supplementary Data.........................................................
Item 8.
Consolidated Balance Sheets....................................................................................
Consolidated Statements of Operations.....................................................................
Consolidated Statements of Comprehensive Income................................................
Consolidated Statements of Shareholders' Equity.....................................................
Consolidated Statements of Cash Flows....................................................................
Notes to Consolidated Financial Statements..............................................................
Note 1—Significant Accounting Policies................................................................
Note 2—Statutory Accounting................................................................................
Note 3—Supplemental Information about Changes to Accumulated Other
Comprehensive Income.........................................................................................
Note 4—Investments.............................................................................................
Note 5—Deferred Acquisition Costs......................................................................
Note 6—Commitments and Contingencies............................................................
Note 7—Liability for Unpaid Claims.......................................................................
Note 8—Income Taxes...........................................................................................
Note 9—Postretirement Benefits...........................................................................
Note 10—Supplemental Disclosures of Cash Flow Information............................
Note 11—Debt.......................................................................................................
Note 12—Shareholders' Equity..............................................................................
Note 13—Stock-Based Compensation..................................................................
Note 14—Business Segments...............................................................................
Note 15—Selected Quarterly Data........................................................................
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...................................................................................................................
Item 9.
Item 9A. Controls and Procedures............................................................................................
Item 9B. Other Information........................................................................................................
Item 10. Directors, Executive Officers, and Corporate Governance.........................................
Executive Compensation............................................................................................
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related
Item 12.
Stockholder Matters....................................................................................................
Item 13. Certain Relationships and Related Transactions and Director Independence...........
Item 14. Principal Accountant Fees and Services....................................................................
Item 15. Exhibits and Financial Statement Schedules.............................................................
PART III.
PART IV.
1
8
13
13
13
13
14
15
16
17
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51
54
55
56
57
58
59
59
71
72
73
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[THIS PAGE INTENTIONALLY LEFT BLANK]
Part I
Item 1. Business
Globe Life and the Company refer to Globe Life Inc., an insurance holding company incorporated in Delaware in
1979, and its subsidiaries and affiliates. Its 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.
Effective August 8, 2019, Torchmark Corporation changed its corporate name to Globe Life Inc. The New York Stock
Exchange (NYSE) ticker was changed to "GL" on August 9, 2019. The name change is part of a brand alignment
strategy which will enhance the Company's ability to build name recognition with potential customers and agent
recruits through the use of a single brand. The underwriting companies owned by Globe Life Inc. (the Parent
Company) will continue to exist as legal entities, but over a period of time will go to market under the Globe Life
name to leverage branding initiatives implemented at Globe Life And Accident Insurance Company in recent years.
Globe Life's website is: www.globelifeinsurance.com. Globe Life makes available free of charge through its website,
its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
to those reports as soon as reasonably practicable after they have been electronically filed with or furnished to the
Securities and Exchange Commission. Other information included in Globe Life's website is not incorporated into
this filing.
1
GL 2020 FORM 10-K
The following table presents Globe Life's business by primary marketing distribution method. Additional information
concerning industry segments may be found in Management’s Discussion and Analysis and in Note 14—Business
Segments within the Notes to the Consolidated Financial Statements.
2
GL 2020 FORM 10-K
Life Insurance
Insurance
The distribution channels for life insurance products include direct to consumer, exclusive agents, and independent
agents. These methods are described in greater detail within the primary marketing distribution channel chart as
seen above. The following table presents annualized premium in force for the three years ended December 31,
2020 by distribution method:
Annualized Premium in Force(1)
(Dollar amounts in thousands)
2020
2019
2018
Direct to Consumer ............................................................................................. $
881,012
$
831,739
$
812,780
Exclusive agents:
American Income...............................................................................................
1,325,293
1,220,483
1,129,384
Liberty National..................................................................................................
318,545
309,792
300,846
Independent agents:
United American..................................................................................................
9,314
Other....................................................................................................................
205,785
10,211
209,403
11,094
210,624
$ 2,739,949
$ 2,581,628
$ 2,464,728
(1) See definition of annualized premium in force under Results of Operations in Management's Discussion & Analysis.
Globe Life's insurance subsidiaries write a variety of nonparticipating ordinary life insurance products. These include
interest-sensitive
traditional whole life, term life, and other life insurance. The Company does not currently sell
whole life products. The following tables present selected information about Globe Life's life insurance products.
Annualized Premium in Force
(Dollar amounts in thousands)
2020
2019
2018
Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
Whole life:
Traditional.......................................................... $ 1,857,106
68
$ 1,737,794
67
$ 1,643,122
Interest-sensitive................................................
Term ......................................................................
Other .....................................................................
36,297
716,698
129,848
1
26
5
38,691
683,869
121,274
2
26
5
41,414
671,840
108,352
67
2
27
4
$ 2,739,949
100
$ 2,581,628
100
$ 2,464,728
100
Policy Count and Average Face Amount Per Policy
(Dollar amounts in thousands)
2020
2019
2018
Average
Face
Amount per
Policy
Policy
Count
Average
Face
Amount per
Policy
Policy
Count
Average
Face
Amount per
Policy
Policy
Count
Whole life:
Traditional..................................
8,717,785
$
Interest-sensitive.......................
199,975
Term ..............................................
4,526,172
Other .............................................
408,859
13,852,791
$
14.7
20.3
15.1
14.3
14.9
8,477,406
$
208,822
4,313,709
399,365
13,399,302
$
14.2
20.3
14.8
13.7
14.5
8,112,745
$
209,948
4,459,850
376,632
13,159,175
$
13.9
20.6
14.9
12.9
14.3
3
GL 2020 FORM 10-K
Health Insurance
The following table presents Globe Life's health insurance annualized premium in force for the three years ended
December 31, 2020 by distribution channel.
Annualized Premium in Force
(Dollar amounts in thousands)
2020
2019
2018
Direct to Consumer ............................................................................................. $
77,522
$
78,229
$
79,325
Exclusive agents:
Liberty National....................................................................................................
American Income.................................................................................................
Family Heritage...................................................................................................
196,534
104,701
338,309
197,163
96,447
312,479
201,294
88,237
290,186
Independent agents:
United American..................................................................................................
476,296
454,720
414,656
$ 1,193,362
$ 1,139,038
$ 1,073,698
Globe Life offers Medicare Supplement and limited-benefit supplemental health insurance products that include
illness and accident plans. These products are designed to supplement health coverage that
primarily critical
applicants already own. Medicare Supplements are offered to enrollees in the traditional fee-for-service Medicare
program. Medicare Supplement plans are standardized by federal regulation and are designed to pay deductibles
and co-payments not paid by Medicare.
The following table presents supplemental health annualized premium in force information for the three years ended
December 31, 2020 by product category.
Annualized Premium in Force
(Dollar amounts in thousands)
2020
2019
2018
Limited-benefit plans...............................................
617,759
Medicare Supplement.............................................. $
575,603
Amount
% of
Total
52
48
Amount
581,056
$
557,982
% of
Total
51
49
Amount
549,283
$
524,415
$ 1,193,362
100
$ 1,139,038
100
$ 1,073,698
% of
Total
51
49
100
Annuities
Annuity products include single-premium and flexible-premium deferred annuities. Annuities in each of the three
years ended December 31, 2020 comprised less than 1% of premium. The Company does not currently market
annuity products.
Pricing
Premium rates for life and health insurance products are established using assumptions as to future mortality,
morbidity, persistency, investment income, expenses, and target profit margins. These assumptions are based on
Company experience and projected investment earnings. Revenues for individual life and health insurance products
are primarily derived from premium income, and, to a lesser extent, through policy charges to the policyholder
account values on annuity products and certain individual life products. Profitability is affected by actual experience
deviations from the established assumptions and to the extent investment income varies from that required for
policy reserves.
Collections for annuity products and certain life products are not recognized as revenues, but are added to
policyholder account values. Revenues from these products are derived from charges to the account balances for
insurance risk and administrative costs. Profits are earned to the extent these revenues exceed actual costs. Profits
are also earned from investment income in excess of the amounts required for policy reserves.
4
GL 2020 FORM 10-K
Underwriting
The underwriting standards of each Globe Life insurance subsidiary are established by management. Each
subsidiary uses information obtained from the application and, in some cases, telephone interviews with applicants,
including, but not limited to inspection reports, pharmacy data, doctors’ statements and/or medical examinations to
determine whether a policy should be issued in accordance with the application, with a different rating, with a rider,
with reduced coverage, or rejected.
Reserves
The life insurance policy reserves reflected in Globe Life's consolidated financial statements as future policy benefits
are calculated based on accounting principles generally accepted in the United States of America (GAAP). These
reserves, with premiums to be received in the future and the interest thereon compounded annually at assumed
rates, must be sufficient to cover policy and contract obligations as they mature. Generally, the mortality and
persistency assumptions used in the calculations of reserves are based on Company experience. Similar reserves
are held on most of the health insurance policies written by Globe Life's insurance subsidiaries, since these policies
generally are issued on a guaranteed-renewable basis. The assumptions used in the calculation of Globe Life's
reserves are reported in Note 1—Significant Accounting Policies. Reserves for annuity products and certain life
products consist of the policyholders’ account values and are increased by policyholder deposits and interest
credited and are decreased by policy charges and benefit payments.
Reinsurance
Globe Life has historically participated in very limited third-party reinsurance contracts as a result of the low face
amounts of the policies sold by the Company. See Schedule IV and Note 6—Commitments and Contingencies for
more information.
Investments
The nature, quality, and percentage mix of insurance company investments are regulated by state laws. The
investments of Globe Life insurance subsidiaries consist predominantly of high-quality, investment-grade securities.
Approximately 95% of our invested assets, at fair value, are fixed maturities at December 31, 2020 (see Note 4—
Investments and Management’s Discussion and Analysis).
Competition
Globe Life competes with other insurance carriers through policyholder service, price, product design, and sales
efforts. While there are insurance companies competing with Globe Life, no individual company dominates any of
Globe Life's life or health insurance markets.
Globe Life's health insurance products compete with, in addition to the products of other health insurance carriers,
health maintenance organizations, preferred provider organizations, and other health care-related institutions which
provide medical benefits based on contractual agreements.
The Company effectively competes with other carriers, in part, due to its ability to operate at lower policy acquisition
and administrative expense levels than peer companies. This allows Globe Life to have competitive rates while
maintaining higher underwriting margins.
Regulation
Insurance—Insurance companies are subject to regulation and supervision in the states in which they do business.
The laws of the various states establish agencies with broad administrative and supervisory powers which include,
among other things, granting and revoking licenses to transact business, regulating trade practices, licensing
agents, approving policy forms, approving certain premium rates, setting minimum reserve and loss ratio
requirements, determining the form and content of required financial statements, and prescribing the type and
amount of investments permitted. Insurance companies are also required to file detailed annual reports with
supervisory agencies, and records of their business are subject to examination at any time. Under the rules of the
5
GL 2020 FORM 10-K
National Association of Insurance Commissioners (NAIC), insurance companies are examined periodically by one
or more of the supervisory agencies.
Risk-Based Capital (RBC)—The NAIC requires that a risk-based capital formula be applied to all life and health
insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed
only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are
adequately capitalized. All Globe Life's insurance subsidiaries are more than adequately capitalized under the risk-
based capital formula. See further discussion of RBC in Capital Resources.
Guaranty Assessments—State guaranty laws provide for assessments from insurance companies to be placed
into a fund which is used, in the event of failure or insolvency of an insurance company, to fulfill the obligations of
that company to its policyholders. The amount which a company is assessed is based on its proportional share of
the premium in each state. A significant portion of assessments are recoverable as offsets against state premium
taxes.
Holding Company—States have enacted legislation requiring registration and periodic reporting by insurance
companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to
constitute a holding company system. Globe Life and its subsidiaries have registered as a holding company system
pursuant to such legislation in Indiana, Nebraska, Ohio, and New York.
Insurance holding company system statutes and regulations impose various limitations on investments in
subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliates and
for the payment of certain dividends and other distributions.
Human Capital Management
Globe Life's talent base encompasses a broad range of experience that possesses the depth of critical skills to
efficiently and effectively accomplish our business purpose and mission, serve our policyholders, and protect our
shareholders' interests. Maintaining superior human capital is a key driver to the success and longevity that our
Company has experienced since its origins dating back to the early 1900s. As of December 31, 2020, the Company
had 3,261 full time, part-time, and temporary employees. The Company engages over 13 thousand exclusive
producing insurance agents, most of whom are classified as independent contractors. In 2020, we increased our
employee headcount by 2% and grew our exclusive agency force by 21%.
People, Culture, and Community
At Globe Life, we are united by our mission—To Make Tomorrow Better1 and this starts with our employees and
agents. Beyond providing insurance protection for millions of individuals, serving our policyholders and generating
financial results for our shareholders, we focus on cultivating a healthy, positive culture and a thriving community
within and among our campuses that is inclusive of and attractive for all. Globe Life promotes a diverse work force,
where differences are celebrated and inclusiveness is embraced, to better enable our employees to consistently
achieve outstanding individual and collective results. Our commitment to diversity starts at the top; of the 9
independent Board members, 56% are women and 22% are ethnic minorities.
1Per the Globe Life Employee Handbook, the Globe Life mission statement is "We help families Make Tomorrow Better by working to protect their
financial future."
6
GL 2020 FORM 10-K
As of December 31, 2020, the Globe Life employees, (excluding agents) are as follows:
Ethnicity
Gender
Generations
White....................................................
53 % Female..........
67 % Traditionalists (1925-1945)........... — %
Black or African American....................
Hispanic or Latino................................
Asian....................................................
American Indian or Alaskan Native......
21
11
9
1
Native Hawaiian or Pacific Islander..... —
Other or Not Specified..........................
5
Male..............
33
Baby Boomers (1946-1964).......... 23
Gen X (1965-1977).......................
Millennials (1978-1995)................
Gen Z (1996-2012).......................
31
41
5
Total................................................. 100 %
100 %
100 %
We conduct a confidential survey biennially to give our employees the opportunity to provide candid feedback about
their experiences at
limited to, confidence in the Company and leadership,
competitiveness of our compensation and benefit package, and departmental relationships. The results are shared
with our employees, reviewed by senior leadership, and used to identify areas for improvement and create action
plans based on the employee feedback received.
including but not
the Company,
We also strive To Make Tomorrow Better by supporting the communities in which we live and work through financial
and service-based contributions to organizations that address health-related issues and those that serve youth,
families and seniors.
Talent Development
At Globe Life, we believe investing in our employees through training and development is paramount to their
includes a multitude of professional development
success. We have developed a learning eco-system that
opportunities,
topics. An education
assistance program is also offered to facilitate growth in an area related to one's current position with the Company.
including online, self-directed, and instructor-led courses on a variety of
Health, Safety, and Wellness
We strive to provide a safe and healthy work environment
for every employee. We furnish employees with
numerous tools and trainings throughout the year to help ensure they have at their fingertips the best information to
safely engage with co-workers, customers, and third parties. In furtherance of our commitment to our employees,
we offer a comprehensive employee benefits package that includes competitive monetary benefits, retirement
benefits through a Section 401(k) plan and a qualified pension to eligible employees, fitness center reimbursement,
paid-time-off (based on years of service), health insurance, dental and vision insurance, employee resource
program, health savings and flexible spending accounts, family leave, and tuition assistance.
During the COVID-19 pandemic, the Company remained committed to the well-being and safety of its employees,
agents, customers, guests, vendors, and shareholders in our resolve to maintain a stable and secure business
In response to the pandemic, our crisis management and incident response teams guided the
environment.
Company through an expedited, yet smooth,
transition towards working remotely. We efficiently transitioned
approximately 80-85% of the Company's total workforce, excluding agents, to working remotely. For the agency
operations, most sales and recruiting agents transitioned to a virtual experience providing limited in-person
exposure.
7
GL 2020 FORM 10-K
Item 1A. Risk Factors
Risks Related to Our Business
The insurance industry is a regulated industry, populated by many public and private companies. We operate in the
industry's life and health insurance sectors, each of which has its own set of risks.
Business and Operational Risks
The development and maintenance of our various distribution channels are critical to growth in product
sales and profits.
Recruiting, development, and retention of producing agents are critical to support sales growth in this market
because our insurance sales are primarily made to individuals, and the face amounts of the life insurance policies
sold are typically lower than those of policies sold in higher-income markets. If we do not provide compensation that
is competitive with other career opportunities and that motivates producing agents to increase sales of our products,
our growth could be impeded. In addition, a failure to effectively develop new methods of reaching consumers and
realizing cost efficiencies in our Direct to Consumer Division business could result in reduced sales and profits.
Our life insurance products are sold in selected niche markets. We are at risk should any of these markets
diminish.
We have several life distribution channels that focus on distinct market niches, two of which are labor unions and
sales via Direct to Consumer solicitations. Deterioration of our relationships with organized labor or adverse
changes in the public’s receptivity to direct
to consumer marketing initiatives could negatively affect our life
insurance business.
The failure to maintain effective and efficient information systems at the Company could compromise data
security, thereby adversely affecting our financial condition and results of operations.
Our business is highly dependent upon the internet, third-party service providers, and information systems to
operate in an efficient and resilient manner. We gather and maintain data for the purpose of conducting marketing,
actuarial analysis, sales and policy administration functions.
Malicious third-parties, employee or agent errors or disasters affecting our information systems could impair our
business operations, regulatory compliance and financial condition. Employee or agent errors in the handling of our
information systems may inadvertently result in unauthorized access to customer or proprietary information, or an
inability to use our information systems to efficiently support business operations.
More frequent and sophisticated cyber-attacks and more impactful regulatory oversight models could result in
additional costs to protect against security breaches. Any breach of confidential information systems resulting from
the above factors could damage our reputation in the marketplace, deter potential customers from purchasing our
products, result in the loss of existing customers, subject us to significant civil and criminal liability, constrain cash
flows, or require us to incur significant technical, legal or other expenses.
The impact of COVID-19 and related risks could materially affect our results of operations, financial position
and/or liquidity.
The effects of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive
and rapidly changing. The global COVID-19 pandemic has resulted in and is expected to continue to result in
significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely
affected the Company and will likely continue to do so for an uncertain period of time. Because of the size and
breadth of this pandemic and the impact of related government and regulatory actions, all of the direct and indirect
consequences of COVID-19 on the Company are not yet known and may not emerge for some time.
8
GL 2020 FORM 10-K
•
•
The COVID-19 pandemic subjects the Company to various potential risks that could adversely affect the Company
in different ways, including but not limited to the following:
Reduced sales resulting from potential
reductions in the willingness or ability of consumers to purchase our products;
Reduced cash flows from higher surrenders and claim payments or greater than anticipated losses from
higher policyholder claims;
Disruptions, delays, and increased costs and risks related to employees working remotely, having limited or
no access to our facilities, and experiencing reductions or interruptions of critical or essential services;
Ratings downgrades, increased bankruptcies and credit spread widening in industries in which we invest in
our investment portfolio.
limitations in the virtual sales and agent recruiting process or
•
•
Actual or alleged misclassification of independent contractors at our insurance subsidiaries could result in
adverse legal, tax or financial consequences.
A significant portion of our sales agents are independent contractors. Although we believe we have properly
classified such individuals, a risk nevertheless exists that a court, the Internal Revenue Service or other authority
will take the position that those sales agents are employees. The laws and regulations that govern the status and
classification of workers are subject to change and differing interpretations, which we cannot predict.
If there is an adverse determination regarding the classification of some or all of the independent contractors at our
insurance subsidiaries by a court or governmental agency, we could incur significant costs with respect to payroll
tax liabilities, employee benefits, wage payments, fines, judgments and/or legal settlements, any of which could
have a material adverse effect on our business, financial condition and results of operations. In addition, any
resulting reclassification could necessitate significant changes in our affected insurance subsidiaries’ business
models.
Financial and Strategic Risks
Our investments are subject to market and credit risks. Significant downgrades, delinquencies and defaults
in our investment portfolio could potentially result in lower net investment income and increased realized
and unrealized investment losses.
individual
Our invested assets are subject to the customary risks of defaults, downgrades and changes in market values. Our
investment portfolio consists predominately of fixed maturity and short-term investments, where we are exposed to
the risk that
issuers will not have the ability to make required interest or principal payments. A
concentration of these investments in any particular issuer, industry, group of related industries or geographic areas
could increase this risk. Factors that may affect both market and credit risks include interest rate levels (consisting
of both treasury rate and credit spread), financial market performance, disruptions in credit markets, general
economic conditions, legislative changes, particular circumstances affecting the businesses or industries of each
issuer and other factors beyond our control.
Additionally, as the majority of our investments are long-term fixed maturities that we typically hold until maturity, a
significant increase in interest rates or a market downturn could cause a material temporary decline in the fair value
of our fixed investment portfolio, even with regard to performing assets. These declines could cause a material
increase in unrealized losses in our investment portfolio. Significant unrealized losses could substantially reduce our
capital position and shareholders’ equity. It is possible our investment in certain of these securities with unrealized
losses could experience a credit event where an allowance for credit loss is recorded, reducing net income.
We cannot be assured that any particular issuer, regardless of industry, will be able to make required interest and
principal payments on a timely basis or at all. Significant downgrades or defaults of issuers could negatively impact
our risk-based capital ratios,
the Company by rating agencies, potential
reduction in future dividend capacity from our insurance subsidiaries, and/or higher financing costs at the Parent
Company should additional statutory capital be required.
leading to potential downgrades of
Changes in interest rates could negatively affect income.
Declines in interest rates expose insurance companies to the risk that they will fail to earn the level of interest on
investments assumed in pricing products and in setting discount rates used to calculate net policy liabilities, which
9
GL 2020 FORM 10-K
could have a negative impact on income. Significant decreases in interest rates could result in calls by issuers of
investments, where such features are available to issuers. Any such calls could result in a decline in our investment
income, as reinvestment of the proceeds would likely be at lower interest rates.
An increase in interest rates could result in certain policyholders surrendering their life or annuity policies for cash,
thereby potentially requiring our insurance subsidiaries to liquidate invested assets if other sources of liquidity are
not available to meet their obligations. In such a case, realized losses could result from the sale of the invested
assets and could adversely affect our statutory income, required capital levels, and results of operations.
Our ability to fund operations is substantially dependent on available funds from our insurance
subsidiaries.
As a holding company with no direct operations, our principal asset
is the capital stock of our insurance
subsidiaries, which periodically declare and distribute dividends on their capital stock. Moreover, our liquidity,
including our ability to pay our operating expenses and to make principal and interest payments on debt securities
or other indebtedness owed by us, as well as our ability to pay dividends on our common stock or any preferred
stock, depends significantly upon the surplus and earnings of our insurance subsidiaries and the ability of these
subsidiaries to pay dividends or to advance or repay funds to us. Other sources of liquidity include a variety of short-
term and long-term instruments,
intercompany
financing and reinsurance.
facility, commercial paper,
including our credit
long-term debt,
The principal sources of our insurance subsidiaries’ liquidity are insurance premiums, as well as investment income,
maturities, repayments and other cash flow from our investment portfolio. Our insurance subsidiaries are subject to
various state statutory and regulatory restrictions applicable to insurance companies that limit the amount of cash
dividends, loans and advances that those subsidiaries may pay to us, including laws establishing minimum solvency
and liquidity thresholds. For example, in the states where our companies are domiciled, an insurance company
generally may pay dividends only out of its unassigned surplus as reflected in its statutory financial statements filed
in that state. Additionally, dividends paid by insurance subsidiaries are restricted based on regulations by their
states of domicile. Accordingly, impairments in assets or disruptions in our insurance subsidiaries’ operations that
reduce their capital or cash flow could limit or disallow the payment of dividends, a principal source of our cash flow,
to us.
Changes in laws or regulations in the states in which our companies are domiciled could constrain the ability of our
insurance subsidiaries to pay dividends or to advance or repay funds to us in sufficient amounts and at times
necessary to pay our debt obligations, corporate expenses, or dividends on our capital stock.
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs or
access capital, as well as affect our cost of capital.
Should interest rates increase in the future, the higher interest expense on any new issued debt may reduce net
income. In addition, if the credit and capital markets were to experience significant disruption, uncertainty and
instability, these conditions could adversely affect our access to capital. Such market conditions could limit our
ability to replace maturing debt obligations in a timely manner or at all and/or access the capital necessary to grow
our business.
In the unlikely event that current sources of liquidity do not satisfy our needs, we may have to seek additional
financing or raise capital. The availability and cost of additional financing or capital depend on a variety of factors
such as market conditions, the general availability of credit or capital, the volume of trading activities, the overall
availability of credit to the insurance industry and our credit ratings and credit capacity. Additionally, customers,
lenders or investors could develop a negative perception of our financial prospects if we were to incur large
investment losses or if the level of our business activity decreased due to a market downturn. Our access to funds
may also be impaired if regulatory authorities or rating agencies take negative actions against us. If our internal
sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional financing on
favorable terms or at all. As such, we may be forced to delay raising capital, issue shorter term securities than we
would prefer or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our
financial flexibility. If so, our results of operations, financial condition, consolidated RBC, and cash flows could be
materially negatively affected.
10
GL 2020 FORM 10-K
Industry Risks
Variations in actual-to-expected rates of mortality, morbidity and persistency could materially negatively
affect our results of operations and financial condition.
We establish policy reserves to pay future policyholder benefits. These reserves do not represent an exact
calculation of liability, but rather are actuarial estimates based on models and accounting requirements that include
many assumptions and projections which are inherently uncertain. The reserve computations involve the exercise of
significant judgment with respect to levels of mortality, morbidity and persistency, as well as the timing of premium
and benefit payments. Even though our actuaries continually test actual-to-expected results, actual results may
differ significantly from the levels assumed, which could result in increased policy obligations and expenses and
thus negatively affect our profit margins and income.
A ratings downgrade or other negative action by a rating agency could materially affect our business,
financial condition and results of operations.
Various rating agencies review the financial performance and condition of
including our insurance
subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to fulfill its contractual
obligations. These ratings are important to maintaining public confidence in our insurance products. A downgrade or
other negative action by a rating agency with respect to the financial strength ratings of our insurance subsidiaries
could negatively affect us by limiting or restricting the ability of our insurance subsidiaries to pay dividends to us and
reducing our sales by adversely affecting our ability to sell
insurance products through independent insurance
agencies.
insurers,
The supplemental health insurance market is subject to substantial regulatory scrutiny.
Regulatory changes could impact our Medicare Supplement and other supplemental health business. The nature
and timing of any such changes cannot be predicted and could have a material adverse effect on our supplemental
health insurance business.
Obtaining timely and appropriate premium rate increases for certain supplemental health insurance policies
is critical.
A significant percentage of the supplemental health insurance premiums that our insurance subsidiaries earn is from
Medicare Supplement insurance. Medicare Supplement insurance, including conditions under which the premiums
for such policies may be increased, is highly regulated at both the state and federal level. As a result, our Medicare
Supplement business is characterized by lower profit margins than life insurance and requires strict administrative
discipline and economies of scale for success. Since Medicare Supplement policies are coordinated with the federal
Medicare program, which experiences health care inflation every year, annual premium rate increases for the
Medicare Supplement policies are typically necessary. Accordingly, the inability of our insurance subsidiaries to
obtain approval of appropriate premium rate increases for supplemental health insurance plans in a timely manner
from state insurance regulatory authorities could adversely impact their profitability and thus our business, financial
condition and results of operations.
Damage to the reputation of Globe Life or its subsidiaries could affect our ability to conduct business.
Negative publicity through traditional media, internet, social media and other public forums could damage our
reputation and adversely impact our agent recruiting efforts, the ability to market our products and the persistency of
in-force policies. The Company could be subjected to adverse publicity as a result of a significant security breach.
Our business is subject to the risk of the occurrence of catastrophic events.
Our insurance policies are issued to and held by a large number of policyholders throughout the United States in
relatively low-face amounts. Accordingly, it is unlikely that a large portion of our policyholder base would be affected
by a single natural disaster. However, our insurance operations could be exposed to the risk of catastrophic
mortality or morbidity caused by events such as a pandemic, hurricane, earthquake, or man-made catastrophes,
including acts of terrorism or war, which may produce significant claims in larger areas, especially those that are
heavily populated. Claims resulting from natural or man-made catastrophic events could cause substantial volatility
11
GL 2020 FORM 10-K
in our financial results for any fiscal quarter or year and could materially reduce our profitability or harm our financial
condition.
Legal, Regulatory, and Compliance Risks
Our businesses are heavily regulated and changes in regulation may reduce our profitability and growth.
Insurance companies, including our insurance subsidiaries, are subject to extensive supervision and regulation in
the states in which they do business. The primary purpose of this supervision and regulation is the protection of
policyholders, not investors. Regulatory agencies have broad administrative power over numerous aspects of our
business, including premium rates and other terms and conditions included in the insurance policies offered by our
insurance subsidiaries, marketing practices, advertising, agent licensing, policy forms, capital adequacy, solvency,
reserves and permitted investments. Also, regulatory authorities have relatively broad discretion to grant, renew or
revoke licenses or approvals. The insurance laws, regulations and policies currently affecting our companies may
change at any time, possibly having an adverse effect on our business. Should regulatory changes occur, we may
be unable to maintain all required licenses and approvals, or fully comply with the wide variety of applicable laws
and regulations or the relevant authority’s interpretation of such laws and regulations. If we do not have the requisite
licenses and approvals or do not comply with applicable regulatory requirements,
the insurance regulatory
authorities could preclude or temporarily suspend some or all of our business activities and/or impose substantial
Changes in U.S. federal income tax law could increase our tax costs or negatively impact our insurance
subsidiaries' capital.
Changes to the Internal Revenue Code, administrative rulings, or court decisions affecting the insurance industry,
including the products insurers offer, could increase our effective tax rate and lower our net income, adversely
impact our insurance subsidiaries' capital, or limit the ability of our insurance subsidiaries to sell certain of their
products.
Changes in accounting standards issued by accounting standard-setting bodies may affect our financial
statements, reduce our reported profitability and change the timing of profit recognition.
Our financial statements are subject to the application of GAAP and accounting practices as promulgated by the
National Association of Insurance Commissioners’ statutory accounting practices (NAIC SAP), which principles are
periodically revised and/or expanded. Accordingly, from time to time we are required to adopt new or revised
accounting standards or guidance issued by recognized authoritative bodies. Future accounting standards that we
are required to adopt could change the current accounting treatment that we apply to our consolidated financial
statements and such changes could have a material adverse effect on our business, financial condition and results
of operations. (Refer to Note 1— Significant Accounting Policies under the caption Accounting Pronouncements Yet
to be Adopted)
Non-compliance with laws or regulations related to customer and consumer privacy and information
security, including a failure to ensure that our business associates with access to sensitive customer and
consumer information maintain its confidentiality, could materially adversely affect our reputation and
business operations.
The collection, maintenance, use, disclosure and disposal of personally identifiable information by our insurance
subsidiaries are regulated at the international, federal and state levels. Applicable laws and rules are subject to
change by legislation or administrative or judicial interpretation. Various state laws address the use and disclosure
of personally identifiable information to the extent they are more restrictive than those contained in the privacy and
security provisions in the federal Gramm-Leach-Bliley Act of 1999 (GLBA), the Health Information Technology for
Economic and Clinical Health Act (HITECH), and in the Health Insurance Portability and Accountability Act of 1996
(HIPAA). HIPAA also requires that we impose privacy and security requirements on our business associates (as that
term is defined in the HIPAA regulations). Noncompliance with any privacy laws, whether by us or by one of our
business associates, could have a material adverse effect on our business, reputation and results of operations and
could result in material fines and penalties, various forms of damages, consent orders regarding our privacy and
security practices, adverse actions against our licenses to do business, and injunctive relief.
12
GL 2020 FORM 10-K
As of December 31, 2020, Globe Life had no unresolved SEC staff comments.
Item 1B. Unresolved Staff Comments
Item 2. Properties
Globe Life, through its subsidiaries, owns or leases buildings that are used in the normal course of business. Globe
Life owns and occupies approximately 500,000 combined square feet in McKinney, Texas (headquarters) and at the
Waco, Texas and Oklahoma City, Oklahoma campuses. Additionally, the Company leases other buildings across the
U.S.
Item 3. Legal Proceedings
Discussion regarding litigation and unclaimed property audits is provided in Note 6—Commitments and
Contingencies.
Not Applicable.
Item 4. Mine Safety Disclosures
13
GL 2020 FORM 10-K
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
The principal market in which Globe Life's common stock is traded is the New York Stock Exchange (NYSE: GL).
There were 2,252 shareholders of record on December 31, 2020, excluding shareholder accounts held in nominee
form.
The line graph shown below compares Globe Life's cumulative total return on its common stock with the cumulative
total returns of the Standard and Poor’s 500 Stock Index (S&P 500) and the Standard and Poor’s Life & Health
Insurance Index (S&P Life & Health Insurance). Globe Life's stock is included within both the S&P 500 and the S&P
Life & Health Insurance Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Globe Life Inc., the S&P 500 Index and the S&P Life & Health Insurance Index
$250
$200
$150
$100
$50
$0
12/15
12/16
12/17
12/18
12/19
12/20
Globe Life Inc.
S&P 500
S&P Life & Health Insurance
*$100 invested on 12/31/2015 in stock or index, including reinvestment of dividends. Fiscal year ended December 31.
Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved.
Purchases of Certain Equity Securities by the Issuer and Others for the Fourth Quarter 2020
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
October 1-31, 2020..................
553,989
$
November 1-30, 2020..............
December 1-31, 2020..............
449,389
650,021
81.51
91.07
94.05
553,989
449,389
650,021
—
—
—
On August 5, 2020, Globe Life's Board 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 number of shares to be
purchased.
14
GL 2020 FORM 10-K
Item 6. Selected Financial Data
The following information should be read in conjunction with Globe Life's Consolidated Financial Statements and
related notes reported elsewhere in this Form 10-K:
(Dollar amounts in thousands except per share and percentage data)
2020
Life.............................................................................. $ 2,672,804
1,141,097
Health..........................................................................
4
Other...........................................................................
3,813,905
Total premium ........................................................
927,062
Net investment income...............................................
(4,371)
Realized gains (losses)...............................................
4,737,921
Total revenue ..............................................................
731,773
Income from continuing operations, net of tax............
—
Income from discontinued operations, net of tax........
731,773
Net income..................................................................
Year ended December 31,
2018
$ 2,406,555
1,015,339
12
3,421,906
882,512
(1,804)
4,303,751
701,510
(44)
701,466
2019
$ 2,517,784
1,077,346
4
3,595,134
910,459
20,621
4,527,532
760,882
(92)
760,790
2017
$ 2,306,547
976,373
15
3,282,935
847,885
23,611
4,155,573
1,458,263
(3,769)
1,454,494
2016
$ 2,189,333
947,663
38
3,137,034
806,903
(10,683)
3,934,629
539,590
10,189
549,779
Basic net income (loss) per common share:
Continuing operations............................................
Discontinued operations ........................................
Net income..........................................................
Diluted net income (loss) per common share:
Continuing operations............................................
Discontinued operations.........................................
Net income........................................................
Cash dividends paid..................................................
6.90
—
6.90
6.82
—
6.82
0.74
6.97
—
6.97
6.83
—
6.83
0.68
6.22
—
6.22
6.09
—
6.09
0.63
12.53
(0.03)
12.50
12.26
(0.04)
12.22
0.59
4.50
0.08
4.58
4.41
0.08
4.49
0.56
Basic weighted average shares outstanding .............
Diluted weighted average shares outstanding ...........
106,075
107,225
109,214
111,381
112,873
115,249
116,343
118,983
120,001
122,368
2020
2019
As of December 31,
2018
2017
2016
Cash and invested assets........................................... $22,547,498 $19,923,204 $17,239,570 $17,853,047 $15,955,891
21,436,087
Total assets ................................................................
264,475
1,133,165
4,566,861
37.76
Short-term debt...........................................................
Long-term debt...........................................................
Shareholders' equity...................................................
Per diluted common share.....................................
25,977,460
298,738
1,348,988
7,294,307
66.02
23,095,722
307,848
1,357,185
5,415,177
48.11
23,474,985
328,067
1,132,201
6,231,421
52.95
29,046,731
254,918
1,667,886
8,771,092
83.19
Effect of fixed maturity revaluation on diluted
equity per common share(1)....................................
30.07
17.76
3.79
13.18
5.63
Annualized premium in force:
Life..........................................................................
Health.....................................................................
Total ....................................................................
Basic shares outstanding ...........................................
Diluted shares outstanding ........................................
2,739,949
1,193,362
3,933,311
103,797
105,429
2,581,628
1,139,038
3,720,666
107,720
110,494
2,464,728
1,073,698
3,538,426
110,693
112,561
2,373,099
1,018,020
3,391,119
114,593
117,696
2,262,736
998,634
3,261,370
118,031
120,958
(1) See discussion under the caption Capital Resources in Management’s Discussion and Analysis in this report concerning the effect this rule
has on Globe Life's equity.
15
GL 2020 FORM 10-K
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
is meant as and should be considered a forward-looking statement. Such statements represent
implied,
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,
regulations
(particularly those impacting taxes and changes to the Federal Medicare program that would affect
Medicare Supplement);
including changes in accounting standards or governmental
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;
Interest rate changes that affect product sales and/or investment portfolio yield;
4.
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.
16
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Globe Life's 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
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.
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
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
17
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Current Highlights, comparing year to date 2020 with 2019.
•
•
•
•
•
•
•
Net income as a return on equity (ROE) for the year ended December 31, 2020 was 9.5% and net operating
income as an ROE, excluding net unrealized gains on the fixed maturity portfolio(1) was 13.5%.
Total premium increased 6% over the same period in the prior year. Life premium increased 6% for the
period from $2.5 billion in 2019 to $2.7 billion in 2020. Life underwriting margin declined 4% from $703
million in 2019 to $675 million in 2020.
Net investment income increased 2% over the same period in the prior year. Excess investment income
declined 5% below the prior year.
Total net sales increased 7% over the same period in the prior year from $621 million to $662 million.
Book value per share increased 26% over the same period in the prior year from $66.02 to $83.19. Book
value per share, excluding net unrealized gains on the fixed maturity portfolio(1), increased 10% over the
prior year from $48.26 to $53.12.
The Company estimates $67 million of incurred life claims as a result of the novel coronavirus (COVID-19)
for the year ended December 31, 2020.
For the year ended December 31, 2020, the Company repurchased 4.5 million shares of Globe Life Inc.
common stock at a total cost of $380 million and an average share price of $85.24.
The following graphs represent net income and net operating income from continuing operations for the three years
ended December 31, 2020.
(1) 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
items
primarily because it excludes certain non-operating items such as realized gains and losses and certain significant and unusual
included in net income. Net income is the most directly comparable GAAP measure.
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
is $3.2 billion and $2.0 billion for 2020 and 2019, 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 $30.07 and $17.76 for 2020 and 2019, respectively.
Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.
18
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
COVID-19. With respect to the impact of COVID-19 on our underwriting results for the full year 2020, we estimate
$67 million of COVID-19 life claims were incurred. At the midpoint of our 2021 guidance, we are now projecting
approximately $52 million of additional life claims will be incurred in 2021, based on an estimate of approximately
270,000 U.S. deaths. This estimate of U.S. deaths is based on various third-party models. The projected additional
life claims are dependent on this estimate and many other variables, including, but not limited to, the effect of efforts
to reopen the economy, the timing and availability of effective treatments for the disease, and the actual ages and
states in which infections and deaths occur.
Summary of Operations. Net income declined 4% to $732 million in 2020, compared with $761 million in 2019.
This decrease was primarily related to COVID-19 life claims. On a diluted per common share basis, net income per
common share for 2020 decreased slightly from $6.83 to $6.82. Included in net income were after-tax realized
losses of $2 million in 2020, compared with realized after-tax gains of $16 million for 2019. Realized gains and
losses are presented more fully under the caption Realized Gains and Losses in this report.
Net operating income from continuing operations declined 2% to $738 million in 2020, compared with $752 million in
2019. On a diluted per common share basis, net operating income per common share increased 2% from $6.75 to
$6.88. Net operating income is the consolidated total of segment profits after tax and as such is considered a non-
GAAP measure. Net income is the most directly comparable GAAP measure. We do not consider realized gains
and losses to be a component of our core insurance operations or operating segments. Additionally, net income was
affected by certain significant and unusual non-operating items in 2019 and 2020. We do not view these items as
components of core operating results because they are not indicative of past performance or future prospects of the
insurance operations. We remove items such as these that relate to prior periods or are non-operating items when
evaluating the results of current operations, and therefore exclude such items from our segment analysis for current
periods.
Globe Life's operations on a segment-by-segment basis are discussed in depth under the appropriate captions
following in this report.
19
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Analysis of Profitability by Segment
(Dollar amounts in thousands)
2020
2019
2018
2020
Change
%
2019
Change
$ 703,464
$
652,301
$ (28,518)
(4) $ 51,163
Life insurance underwriting margin................. $ 674,946
Health insurance underwriting margin............
272,369
Annuity underwriting margin...........................
9,029
243,638
9,458
236,053
10,376
28,731
(429)
Excess investment income.............................
244,424
257,605
245,094
(13,181)
Other insurance:
Other income.............................................
1,325
1,318
1,236
7
Administrative expense.............................
(250,947)
(240,321)
(223,941)
(10,626)
12
(5)
(5)
1
4
Corporate and other.......................................
(45,783)
(55,103)
(50,476)
9,320
(17)
Pre-tax total...........................................
905,363
920,059
870,643
(14,696)
Applicable taxes.............................................
(167,771)
(167,957)
(163,669)
186
Net operating income ...........................
737,592
752,102
706,974
(14,510)
(2)
—
(2)
Reconciling items, net of tax:
Realized gain (loss)—investments............
(1,915)
16,291
7,327
(18,206)
Realized loss—redemption of debt...........
(501)
—
(8,752)
(501)
Part D adjustments—discontinued
operations..................................................
Administrative settlements........................
Non-operating expenses...........................
Legal proceedings.....................................
—
—
(816)
(2,587)
Tax reform adjustment...............................
—
Net income .......................................... $ 731,773
(92)
(400)
(508)
(6,603)
—
(44)
(3,590)
(1,247)
—
798
92
400
(308)
4,016
—
%
8
3
7,585
(918)
(9)
5
7
7
9
6
3
6
12,511
82
(16,380)
(4,627)
49,416
(4,288)
45,128
8,964
8,752
(48)
3,190
739
(6,603)
(798)
$ 760,790
$
701,466
)
$ (29,017)
(
( )
(4) $ 59,324
8
The life insurance segment is our primary segment and is the largest contributor to earnings in each year presented.
The life insurance segment underwriting margin declined $29 million compared with the prior year, primarily due to
higher claims related to COVID-19 offset by premium growth. The health segment contributed to growth in income in
both years contributing $29 million of additional underwriting margin in 2020 and $8 million in 2019.
20
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
In 2020, the largest contributor of total underwriting margin was the life insurance segment and the primary
distribution channel was American Income Life Division. The following tables represent the breakdown of total
underwriting margin by operating segment and distribution channel for the year ended December 31, 2020.
Total premium income rose 6% for the year ended December 31, 2020 to $3.8 billion. Total net sales increased 7%
to $662 million, when compared with the same period in 2019. Total first-year collected premium was $547 million
for the 2020 period, compared with $492 million for the 2019 period.
Life insurance premium income increased 6% to $2.7 billion over the prior year total of $2.5 billion. Life net sales
rose 13% to $484 million for the year of 2020. First-year collected life premium rose 13% to $371 million. Life
underwriting margins, as a percent of premium, declined to 25% in 2020 from 28% in the prior year. Underwriting
margin declined to $675 million for the year ended December 31, 2020, 4% below the same period in 2019. The
decline in the life underwriting margin is primarily due to an estimated $67 million of claims related to COVID-19
incurred during 2020.
Health insurance premium income increased 6% to $1.14 billion over the prior year total of $1.08 billion. Health net
sales fell 7% to $178 million for the year of 2020. First-year collected health premium rose 8% to $176 million.
Health underwriting margins, as a percent of premium, increased to 24% in 2020 compared with 23% in 2019.
Health underwriting margin increased to $272 million for the year of 2020, 12% over the same period in 2019.
Excess investment income, the measure of profitability of our investment segment, declined 5% during 2020 to
$244 million from $258 million in the same period in 2019. Excess investment income per common share, reflecting
the impact of our share repurchase program, declined 1% to $2.28 from $2.31 in the same period last year.
Insurance administrative expenses increased 4.4% in 2020 when compared with the prior year period. These
expenses were 6.6% as a percent of premium during 2020, compared with 6.7% a year earlier.
For the year ended December 31, 2020, the Company repurchased 4.5 million Globe Life Inc. shares at a total cost
of $380 million for an average share price of $85.24.
21
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
A discussion of each of Globe Life's segments follows. A significant factor in the performance of our various
segments has been the impact of COVID-19. In response to this crisis, our crisis management and incident
response teams successfully guided the Company into a smooth transition of working remotely. We quickly
transitioned those employees whose jobs did not require them to be in the office, averaging approximately 80-85%
of the Company's total workforce, to working remotely. The Company has continued to operate effectively while
taking steps to help ensure the health and safety of our employees through adherence to the CDC and local
government work guidelines.
With over 13 thousand exclusive agents in the field, the Company was presented with a challenge to move from
face-to-face sales presentations in customers' homes and businesses to a virtual sales process. Despite its
challenges, the Company's agencies also had to move from in-person recruiting and training of new agents to virtual
processes. The Company's exclusive agency divisions were able to quickly pivot and continue to write new
business and hire new agents due in part to new and updated information technology systems put in place over the
last several years. Through the year ended December 31, 2020, the Company has seen a 28% increase in agent
count at American Income and a 14% increase at Family Heritage compared with the prior year comparable period.
Our Direct to Consumer Division continues to experience record high demand for its products through its internet
and inbound phone call channels with a 31% increase in overall net life sales for year ended December 31, 2020
compared with the prior year comparable period. The Company believes that times of crisis highlight the need for
basic life protection and this has proven true with this pandemic.
The discussions of our segments are presented in the manner we view our operations, as described in Note 14—
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 is annualized premium issued (gross premium that would be received during the policies' first
year in force and assuming that none of the policies lapsed or terminated), net of cancellations in the first
thirty days after issue, except in the case of our Direct to Consumer Division. For DTC, 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 as
compared with 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.
While it is difficult to predict sales activity in this uncertain environment, the Company is expecting net life and health
sales to increase 7% for the full year 2021. Due to the strength of the Company's policies in force, we expect our
total life and health premiums to grow around 6% for the full year 2021. See further discussion of the distribution
channels below for Life and Health.
22
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
LIFE INSURANCE
total
Life insurance is the Company's predominant segment. During 2020,
premium and life underwriting margin represented 71% of
investments supporting the
reserves for life products produce the majority of excess investment income attributable to the investment segment.
life premium represented 70% of
the total. Additionally,
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)
Premium and policy charges..................... $ 2,672,804
100
$ 2,517,784
100
$ 2,406,555
100
2020
2019
2018
Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Policy obligations......................................
1,809,373
Required interest on reserves...................
(698,112)
Net policy obligations.............................
1,111,261
Commissions, premium taxes, and non-
deferred acquisition expenses..................
Amortization of acquisition costs...............
212,859
673,738
Total expense.........................................
1,997,858
Insurance underwriting margin ............ $
674,946
68
(26)
42
8
25
75
25
1,638,053
(666,168)
971,885
203,052
639,383
1,814,320
$
703,464
65
(26)
39
8
25
72
28
1,591,790
(636,040)
955,750
190,007
608,497
1,754,254
$
652,301
66
(26)
40
8
25
73
27
The lower life insurance underwriting margins for the twelve months ended December 31, 2020 are primarily
attributed to approximately $67 million of COVID-19 claims.
23
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Life insurance products are marketed through several distribution channels. Premium income by distribution
channel for each of the last three years is as follows:
Life Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
American Income.................................................. $ 1,257,726
Direct to Consumer...............................................
906,959
Liberty National.....................................................
293,897
Other.....................................................................
214,222
Total .................................................................. $ 2,672,804
Amount
% of
Total
Amount
$ 1,160,495
855,543
285,551
216,195
% of
Total
46
34
11
9
Amount
$ 1,081,333
828,935
278,878
217,409
% of
Total
45
34
12
9
47
34
11
8
100
$ 2,517,784
100
$ 2,406,555
100
Annualized life premium in force was $2.7 billion at December 31, 2020, an increase of 6% over $2.6 billion a year
earlier.
The following table shows net sales information for each of the last three years by distribution channel.
Life Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
Amount
% of
Total
American Income.................................................. $
253,276
Direct to Consumer...............................................
165,426
Liberty National.....................................................
Other.....................................................................
54,931
10,371
52
34
12
2
Amount
$
237,587
126,208
53,718
12,301
% of
Total
55
29
13
3
Amount
$
223,924
126,133
49,173
13,293
% of
Total
54
31
12
3
Total .................................................................. $
484,004
100
$
429,814
100
$
412,523
100
The table below discloses first-year collected life premium by distribution channel.
Life Insurance
First-Year Collected Premium by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
Amount
% of
Total
American Income.................................................. $
Direct to Consumer...............................................
Liberty National.....................................................
Other.....................................................................
214,566
104,262
42,435
10,190
58
28
11
3
Amount
$
195,225
82,615
39,840
11,564
% of
Total
59
25
12
4
Amount
$
190,680
82,432
36,463
10,342
% of
Total
60
26
11
3
Total .................................................................. $
371,453
100
$
329,244
100
$
319,917
100
24
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
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 47% of the Company's 2020 total. Net sales increased 7% to $253 million in 2020 over the
2019 total of $238 million. The underwriting margin, as a percent of premium, was 32% for the twelve months ended
December 31, 2020, down from 34% from the prior year primarily due to $18 million of estimated incurred claims
related to COVID-19 as well as elevated claims for other causes. Sales growth in our exclusive agencies is
generally dependent on growth in the size of the agency force.
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. The division
continues to see a significant recruiting opportunity due to the current economic conditions and our ability to recruit
virtually and in-person.
American Income.................................................
8,738
7,360
6,971
1,378
2020
2019
2018
2020
Change
%
19
2019
Change
389
%
6
American Income continues to focus on growing and strengthening the agency force, specifically through additional
agency office openings and focus on middle-management growth. In addition to offering financial incentives and
training opportunities,
including
launching a lead mapping and customer relationship management tool for the agency force. We anticipate this tool
will help enhance agent productivity and agent retention. Additionally, this division has invested in and successfully
implemented technology that allows the agency force to engage in virtual recruiting, training and sales activity.
the agency has made considerable investments in information technology,
including direct mailings,
The Direct to Consumer Division (DTC) offers adult and juvenile life insurance through a variety of marketing
approaches,
In recent years, production from
electronic media, which is comprised of sales through both the internet and inbound phone calls to our call center,
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.
insert media, and electronic media.
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 than is the general adult population. Also, both juvenile policyholders and their parents are low
acquisition-cost targets for sales of additional coverage over time.
The DTC division saw record high demand of its life insurance products in the current year primarily through its
internet and inbound phone channels as a result of the response from COVID-19. Our continued investments in
technology have allowed us to successfully serve the higher demands for our products through the digital self-serve
and phone channels.
DTC’s underwriting margin, as a percent of premium, was 14% for the twelve months ended December 31, 2020,
which was lower than the 18% result during the same period in 2019 primarily due to $35 million of estimated
incurred claims related to COVID-19 as well as elevated claims for other causes. In 2021, we are anticipating
additional COVID-19 life claims at the DTC division.
25
GL 2020 FORM 10-K
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 will help continue this growth. The underwriting margin as a percent of premium was 23%, down from
26% for the year ended 2019. The decrease is primarily attributable to higher than normal policy obligations during
2020 as a result of COVID-19. Net sales increased 2% in 2020 over 2019.
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 will benefit from the abundant recruiting opportunities
currently available for new agents.
Liberty National....................................................
2,575
2,350
2,156
225
2020
2019
2018
2020
Change
%
10
2019
Change
194
%
9
The Liberty National Division average producing agent count increased 10% in 2020. 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 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 the
year 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.
In the second half of the year, sales improved in the worksite market
as businesses were able to reopen.
The Other Agencies distribution channels primarily include non-exclusive independent agencies selling
predominantly life insurance. The Other Agencies contributed $214 million of life premium income, or 8% of Globe
Life's total in 2020, but contributed only 2% of net sales for the year.
HEALTH INSURANCE
Health insurance sold by the Company includes primarily Medicare Supplement insurance, accident coverage, and
other limited-benefit supplemental health products including cancer, critical
illness, heart, and intensive care
coverage.
Year-to-date health premium accounted for 30% of our total premium in 2020, while the health underwriting margin
accounted for 28% of total underwriting margin, reflective of the lower underwriting margin as a percent of premium
for health compared with life insurance. The Company continues to emphasize life insurance sales relative to health
due to life’s superior profitability and its greater contribution to excess investment income.
26
GL 2020 FORM 10-K
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)
Premium...................................................... $ 1,141,097
100
$ 1,077,346
100
$ 1,015,339
100
2020
2019
2018
Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Policy obligations.........................................
Required interest on reserves.....................
733,481
(93,475)
Net policy obligations................................
640,006
Commissions, premium taxes, and non-
deferred acquisition expenses.....................
Amortization of acquisition costs.................
Total expense............................................
91,959
136,763
868,728
Insurance underwriting margin ............... $
272,369
64
(8)
56
8
12
76
24
687,764
(87,289)
600,475
94,973
138,260
833,708
$
243,638
64
(8)
56
8
13
77
23
649,188
(83,243)
565,945
88,553
124,788
779,286
$
236,053
64
(8)
56
9
12
77
23
Health premium increased 6% from $1.08 billion in 2019 to $1.14 billion in 2020. Health underwriting margin
increased 12% from $244 million in 2019 to $272 million in 2020 primarily due to growth in premiums and lower
acquisition expenses. Further discussion is included below by distribution channel.
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 for each of the last three years.
Health Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
United American................................................. $
452,980
Family Heritage...................................................
Liberty National...................................................
American Income................................................
317,021
188,835
105,734
Direct to Consumer.............................................
76,527
Total ............................................................... $ 1,141,097
Amount
% of
Total
Amount
$
416,582
294,182
189,578
99,447
77,557
% of
Total
39
27
18
9
7
Amount
$
381,076
273,275
191,378
93,313
76,297
% of
Total
38
27
19
9
7
40
28
16
9
7
100
$ 1,077,346
100
$ 1,015,339
100
Of total health premium ($1.1 billion), premium from limited-benefit plans comprise $588 million, or 52% of the total,
for 2020 compared with $556 million in the prior year. Premium from Medicare Supplement products comprises the
remaining 48% or $553 million for 2020 compared with $521 million in 2019. Annualized health premium in force
was $1.19 billion at December 31, 2020, an increase of 5% over the prior year balance of $1.14 billion.
27
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Presented below is a table of health net sales by distribution channel for the last three years.
Health Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
United American................................................................ $
Family Heritage..................................................................
Liberty National..................................................................
American Income...............................................................
61,690
70,665
22,905
18,817
Direct to Consumer............................................................
3,594
Total .............................................................................. $ 177,671
Amount
% of
Total
Amount
$
79,218
65,626
24,504
18,059
3,827
% of
Total
41
34
13
10
2
Amount
$
69,967
60,268
22,098
14,432
4,769
% of
Total
41
35
13
8
3
35
40
13
10
2
100
$ 191,234
100
$ 171,534
100
Of total net sales ($178 million), sales of limited-benefit plans comprise $113 million, or 63% of the total, for 2020
compared with $108 million in 2019. Medicare Supplement sales make up the remaining 37%, or $65 million for
2020 compared with $83 million in 2019.
The following table discloses first-year collected health premium by distribution channel.
Health Insurance
First-Year Collected Premium by Distribution Channel
(Dollar amounts in thousands)
2020
2019
2018
United American................................................................. $
Family Heritage..................................................................
Liberty National..................................................................
American Income...............................................................
79,628
54,242
20,169
18,536
Direct to Consumer............................................................
3,051
Total ............................................................................... $ 175,626
Amount
% of
Total
Amount
$
72,021
50,204
19,698
17,142
3,749
% of
Total
44
31
12
11
2
Amount
$
62,720
47,422
17,809
15,249
5,111
% of
Total
42
32
12
10
4
45
31
11
11
2
100
$ 162,814
100
$ 148,311
100
First-year collected premium related to limited-benefit plans comprise $93 million, or 53% of total first-year collected
premium, for 2020 compared with $88 million in 2019. First-year collected premium from Medicare Supplement
policies make up the remaining 47%, or $83 million for 2020 compared with $75 million in 2019.
A discussion of health operations by distribution channel follows.
The United American Independent Agency consists of non-exclusive independent agencies who may also sell for
other companies. The United American Independent Agency was Globe Life's largest health agency in terms of
health premium income.
insurance. The United American
This division is also Globe Life's largest producer of Medicare Supplement
Independent Agency represents 80% of all Medicare Supplement premium and 94% of Medicare Supplement net
sales. Medicare Supplement premium in this agency rose 9% to $443 million in 2020 over the prior period net sales
of $406 million. Medicare supplement net sales declined 22% to $61 million in 2020 from the prior year. The
Medicare Supplement market is highly competitive and thus sales will fluctuate over the years. Underwriting margin
as a percent of premium was 15%, up from 14% for the prior year primarily due to lower non-deferred commissions
and amortization of deferred acquisition costs as a percentage of premium in 2020 compared with 2019.
28
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
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 26%, up from 25% for the year ended December 31, 2019. The
increase was primarily attributable to improved persistency and lower acquisition expenses as a percent of premium
compared with the prior year. A focused effort across the division for increased recruiting activity along with a
targeted incentive program throughout 2020 helped drive the 19% average producing agent count growth as noted
below.
Average producing agents...................................
1,325
1,112
1,064
213
2020
2019
2018
2020
Change
%
19
2019
Change
48
%
5
Net health sales increased 8% compared with the prior year. While it was initially a challenge at this division to add
virtual sales to their in-person sales model during the lock-down, we are encouraged by the ability of this division to
adapt and to adopt supplementary ways of doing business in this challenging environment, demonstrated by the
strong recovery in sales during the second half of the year.
The Liberty National Division represented 16% of all Globe Life health premium income at $189 million in 2020.
Liberty National markets limited-benefit supplemental health products consisting primarily of critical
illness
insurance. Much of Liberty National’s health business is generated through worksite marketing targeting small
businesses of 10 to 100 employees. In 2020, health premium income declined slightly. Liberty National's first-year
collected premium increased 2% to $20.2 million in 2020 compared with $19.7 million in 2019. Health net sales for
2020 decreased by $2 million or 7% from 2019 primarily due our inability to prospect to businesses deemed non-
essential that were closed during the early stages of the pandemic.
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 2020 and 2019.
The American Income Life Division primarily markets accident plans. The Direct to Consumer Division markets
primarily Medicare Supplements to employer or union-sponsored groups, adding $4 million of Medicare Supplement
net sales in 2020 and 2019.
ANNUITIES
Our fixed annuity balances at
Underwriting margin was $9.0 million for 2020 and $9.5 million for 2019.
the end of 2020 and 2019 were $1.06 billion and $1.10 billion, respectively.
We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life
and supplemental health insurance products. Therefore, we do not expect that annuities will be a significant portion
of our business or marketing strategy going forward.
29
GL 2020 FORM 10-K
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 14—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 $8.2 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)
Net investment income........................................................................................ $
Interest on net insurance policy liabilities:
2020
2019
2018
927,062
$
910,459
$
882,512
Interest on reserves..........................................................................................
(833,000)
(796,979)
(766,640)
Interest on deferred acquisition costs...............................................................
237,066
228,431
219,298
Net required interest........................................................................................
(595,934)
(568,548)
(547,342)
Financing costs....................................................................................................
(86,704)
(84,306)
(90,076)
Excess investment income ......................................................................... $
244,424
$
257,605
$
245,094
Excess investment income per diluted share ........................................... $
2.28
$
2.31
$
2.13
Mean invested assets (at amortized cost)........................................................... $ 17,987,502
Average net insurance policy liabilities(1).............................................................
Average debt and preferred securities (at amortized cost)..................................
10,460,539
1,859,298
$ 17,026,058
$ 16,249,161
10,068,120
1,650,081
9,744,200
1,650,138
(1) Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon.
Excess investment income declined $13 million or 5% during 2020. Excess investment income per diluted
common share declined 1% during 2020. 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. However, in 2020 excess investment
income declined primarily due to the low interest rate environment.
30
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Net investment income increased at a compound annual growth rate of 3% over the 3 years ending 2020 while
mean invested assets increased at a compound rate of 5% during the same period. The tax equivalent effective
annual yield rate earned on the fixed maturity portfolio was 5.34% in 2020. 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 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. The following chart presents the growth in net
investment income and the growth in mean invested assets.
Growth in net investment income................................................................
Growth in mean invested assets (at amortized cost)...................................
1.8 %
5.6 %
3.2 %
4.8 %
4.1 %
5.7 %
2020
2019
2018
Should the current low interest rate environment continue, the growth of the Company's net investment income will
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 2021, we currently anticipate the average new money yield on
our fixed maturity acquisitions to be approximately 20 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 purchases. 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 160 to 165 basis points
before the net unrealized gains on our fixed maturity portfolio as of December 31, 2020 would be eliminated. Should
interest rates increase further than that, we would not be concerned with potential interest rate driven unrealized
losses in our fixed maturity portfolio because we have the intent and the ability to hold our investments to maturity.
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 14—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.
31
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Information about interest on net policy liabilities is shown in the following table.
Required Interest on Net Insurance Policy Liabilities
(Dollar amounts in thousands)
Required
Interest
Average Net
Insurance
Policy
Liabilities
Average
Discount
Rate
2020
Life and Health.............................................................................................. $
Annuity..........................................................................................................
Total............................................................................................................... $
Increase in 2020............................................................................................
548,066
$
9,391,680
5.8 %
47,868
1,068,859
595,934
$ 10,460,539
4.5
5.7
4.8 %
3.9 %
2019
Life and Health.............................................................................................. $
Annuity..........................................................................................................
Total............................................................................................................... $
Increase in 2019............................................................................................
518,623
$
8,947,308
5.8 %
49,925
1,120,812
568,548
$ 10,068,120
4.5
5.6
3.9 %
3.3 %
2018
Life and Health.............................................................................................. $
Annuity..........................................................................................................
Total............................................................................................................... $
Increase in 2018............................................................................................
493,557
$
8,535,842
5.8 %
53,785
1,208,358
547,342
$
9,744,200
4.5
5.6
4.5 %
4.1 %
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 Consolidated Statements
of Operations.
Analysis of Financing Costs
(Dollar amounts in thousands)
Interest on funded debt.......................................................................................... $
Interest on term loan..............................................................................................
Interest on short-term debt.....................................................................................
Other......................................................................................................................
2020
2019
2018
73,157
$
69,844
$
4,193
9,302
52
3,262
11,165
35
74,324
3,177
12,570
5
Financing costs .............................................................................................. $
86,704
$
84,306
$
90,076
In 2020, financing costs increased 3% primarily due to the new term loan issued in April and the 2.15% Senior
Notes issued in August. More information on our debt transactions are disclosed in the Financial Condition section
of this report and in Note 11—Debt.
Realized Gains and Losses. Our life and health insurance companies collect premium income from policyholders
for the eventual payment of policyholder benefits, sometimes paid many years or even decades in the future. Since
benefits are expected to be paid in future periods, premium receipts in excess of current expenses are invested to
provide for these obligations. For this reason, we hold a significant investment portfolio as a part of our core
insurance operations. This portfolio consists primarily of high-quality fixed maturities containing an adequate yield to
provide for the cost of carrying these long-term insurance product obligations. As a result, fixed maturities are
generally held for long periods to support the liabilities. Expected yields on these investments are taken into account
when setting insurance premium rates and product profitability expectations.
Despite our intent to hold fixed maturity investments for a long period of time, investments are occasionally sold,
called, or experience a credit loss event, resulting in a realized gain or loss. These sales are often in response to
32
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
deterioration in credit quality of the issuer in effort to maximize risk adjusted capital adjusted returns. We do not
engage in trading investments for profit. Therefore, gains or losses which occur in protecting the portfolio or its yield,
or which result from events that are beyond our control, are only secondary to our core insurance operations of
providing insurance coverage to policyholders. In a bond exchange offer, bondholders may consent to exchange
their existing bonds for another class of debt securities. The exchanges on our bonds have generally been the result
of mergers and acquisitions, and are offered to move debt to the new or surviving entity. The Company also has
alternative investments held under the fair value option with changes recognized in Realized gains (losses) in the
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 for each of the three years
ended December 31, 2020.
Analysis of Realized Gains (Losses), Net of Tax
(Dollar amounts in thousands, except for per share data)
Year Ended December 31,
2020
2019
2018
Amount
Per
Share
Amount
Per
Share
Amount
Per
Share
Fixed maturities:
Sales.................................................................... $ (28,844) $
Other(1).................................................................
11,712
Provision for credit losses....................................
Fair value option—change in fair value.......................
Other investments.......................................................
Realized investment gains (losses) ............
Loss on redemption of debt.........................................
(2,643)
826
17,034
(1,915)
(501)
Total realized gains (losses) ....................... $ (2,416) $
(
)
(0.27) $ (1,933) $
(0.02) $ (11,005) $
(0.10)
0.11
(0.03)
0.01
0.16
17,223
—
992
9
(0.02)
16,291
—
—
0.16
—
0.01
—
0.15
—
15,520
—
2,093
719
7,327
(8,752)
(
(0.02) $ 16,291
)
$
0.15
$ (1,425) $
(
)
0.14
—
0.01
0.01
0.06
(0.07)
)
(0.01)
(
(1) During the three years ended December 31, 2020, 2019, and 2018, the Company recorded $219.8 million, $243.2 million and $193.4 million
of exchanges of fixed maturity securities (noncash transactions) that resulted in $6.2 million, $16.2 million, and $8.0 million, respectively in
realized gains (losses), net of tax.
33
GL 2020 FORM 10-K
GLOBE LIFE INC.
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.
During calendar years 2018 through 2020, Globe Life invested predominately in fixed maturity securities, primarily in
corporate and municipal bonds with longer-term maturities. 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)
Cost of acquisitions(1):
Investment-grade corporate securities......................................................... $
Investment-grade municipal securities.........................................................
Other investment-grade securities...............................................................
34,171
Total fixed maturity acquisitions ....................................................... $ 1,264,103
Year Ended December 31,
2020
2019
2018
686,844
$
922,927
$
877,512
543,088
627,967
10,483
269,360
8,708
$ 1,561,377
$ 1,155,580
Effective annual yield (one year compounded)(2)............................................
Average life (in years to next call)...................................................................
Average life (in years to maturity)...................................................................
Average rating.................................................................................................
3.73%
15.8
26.3
A
4.47%
18.7
29.4
A
4.97%
17.0
22.8
A-
(1) Fixed maturity acquisitions included unsettled trades of $2 million in 2020, $8 million in 2019 and $41 thousand in 2018.
(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.
During 2019 and 2020, acquisitions consisted of securities spanning a diversified range of issuers, industry sectors,
and geographical regions. All of the acquired securities were investment grade. In addition to the fixed maturity
acquisitions, Globe Life invested $266 million in other long-term investments in 2020 and $123 million in 2019.
These investments include commercial mortgage loan participations and investment funds. See Note—4 for further
discussion. For the entire fixed maturity portfolio, the taxable equivalent effective yield earned was 5.34%, down 14
basis points from the yield in 2019. 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 a significant amount of
securities called during 2019 and 2020.
New cash flow available for investment has been primarily provided through our insurance operations, cash
received on existing investments, and proceeds from dispositions. While dispositions increase funds available for
investment, as noted earlier in this discussion, they can also have a negative impact on investment income if the
proceeds from the dispositions are reinvested at lower yields than the bonds that were disposed. Dispositions were
$469 million in 2020 and $919 million in 2019.
34
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
In 2017, it was announced by the head of the United Kingdom's Financial Conduct Authority that they plan to phase
out the floating rate, London Interbank Offered Rate (LIBOR), by the end of 2021. As of December 31, 2020, Globe
Life had limited assets and liabilities that utilize LIBOR as a benchmark rate. As such, we do not expect the phase
out of LIBOR to have a meaningful impact on our operations. 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,
discussion of portfolio composition will
focus on fixed maturities. See a breakdown of
investments in Other Investment Information within Note 4—Investments.
the remainder of
the
the Company's other
Selected information concerning the fixed-maturity portfolio is as follows:
Fixed Maturity Portfolio Selected Information
Average annual effective yield(1)..............................................................................................
Average life, in years, to:
Next call(2)..........................................................................................................................
Maturity(2)...........................................................................................................................
Effective duration to:
Next call(2,3)........................................................................................................................
Maturity(2,3).........................................................................................................................
At December 31,
2020
5.28%
16.2
19.0
11.0
12.3
2019
5.41%
16.8
19.2
10.8
11.8
(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 particular change in interest rates.
35
GL 2020 FORM 10-K
GLOBE LIFE INC.
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 December 31, 2020 and 2019.
As a result of the adoption of ASU 2016-13, amortized cost will now be reflected as "amortized cost, net of
allowance for credit losses" or "amortized cost, net", while prior periods continue to be reported in accordance with
previously applicable GAAP.
Fixed Maturities by Sector
December 31, 2020
(Dollar amounts in thousands)
Below Investment Grade
Total 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, net
At
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
Banks............................
Other financial...............
Total financial............
27,014
114,919
199,591
15
271
(456)
26,573
993,946
(8,245)
106,945
1,134,414
259,489
193,975
(1,050)
1,252,385
(8,402)
1,319,987
4,180
(19,489)
184,282
4,404,203
1,016,813
(24,221)
5,396,795
Utilities
Electric..........................
50,663
Gas and water..............
—
Total utilities...............
50,663
6,289
—
6,289
—
—
—
56,952
1,438,796
—
536,664
56,952
1,975,460
476,744
131,851
608,595
(108)
1,915,432
—
668,515
(108)
2,583,947
Industrial - Energy
Pipelines.......................
85,327
1,624
(2,309)
84,642
923,756
187,851
(2,423)
1,109,184
Exploration and
production.....................
Oil field services............
Refiner..........................
Driller............................
1,902
104,719
5,980
(678)
110,021
555,796
121,940
(678)
677,058
—
—
—
—
—
—
—
18
—
—
1,920
49,799
89,371
1,902
13,613
22,793
—
—
—
18
63,412
112,164
1,920
Total energy...............
191,948
7,604
(2,969)
196,583
1,620,624
346,197
(3,083)
1,963,738
—
—
—
—
96,265
25,661
25,777
179,878
769,783
—
—
—
—
8,680
3,925
4,315
17,459
52,452
—
—
—
—
—
—
—
—
642,258
406,564
152,016
144,110
88,804
21,588
—
—
—
794,274
550,674
110,392
1,137,626
317,714
— 1,455,340
(1,903)
103,042
2,233,324
—
—
29,586
1,260,646
30,092
566,935
(3,595)
193,742
1,489,113
576,007
328,986
175,405
329,254
(2,070)
2,807,261
13
13
(6)
1,589,626
—
742,340
(4,142)
1,814,225
7
3
9
7
3
9
(27,956)
794,279
14,687,931
3,698,971
(33,630) 18,353,272
86
86
—
—
—
—
2,313,855
341,176
(1,256)
2,653,775
57,007
23,460
(8,869)
71,598
57,007
23,460
(8,869)
71,598
13,949
—
—
—
(2,727)
11,222
134,616
3,591
(3,778)
134,429
—
—
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
)
(1)
Includes Government National Mortgage Association (GNMA).
Industrial - Basic
materials
Chemicals.....................
Metals and mining.........
Forestry products and
paper.............................
Total basic materials..
Industrial - Consumer,
non-cyclical.....................
Other industrials..............
Industrial -
Transportation.................
Other corporate sectors..
Total corporates..........
Other fixed maturities:
Government (U.S.,
municipal, and foreign)....
Collateralized debt
obligations.......................
Other asset-backed
securities.........................
Mortgage-backed
securities(1)......................
13
6
7
26
9
3
12
5
3
—
1
—
9
4
2
1
7
13
6
6
25
9
3
12
5
3
—
1
—
9
4
3
1
8
13
—
1
13
—
1
—
100
—
100
36
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Fixed Maturities by Sector
December 31, 2019
(Dollar amounts in thousands)
Below Investment Grade
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Total Fixed Maturities
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
% of Total Fixed
Maturities
At
Amortized
Cost
At
Fair
Value
Corporates:
Financial
Insurance - life, health,
P&C................................. $
57,833 $
3,114 $
(6,542) $ 54,405
$ 2,111,735 $
394,326 $
(9,277) $ 2,496,784
Banks..............................
Other financial.................
27,045
97,580
—
737
(1,196)
25,849
904,449
(11,519)
86,798
1,085,733
Total financial...............
182,458
3,851
(19,257) 167,052
4,101,917
175,771
131,099
701,196
(1,300)
1,078,920
(11,730)
1,205,102
(22,307)
4,780,806
Utilities
Electric............................
47,298
1,059
(1,399)
46,958
1,418,359
342,302
(1,484)
1,759,177
Gas and water.................
—
—
—
—
519,379
73,812
(81)
593,110
Total utilities.................
47,298
1,059
(1,399)
46,958
1,937,738
416,114
(1,565)
2,352,287
396
400
—
—
—
(5,839)
79,985
934,884
141,705
(6,803)
1,069,786
(127)
17,402
559,826
—
—
—
—
(26,586)
18,162
49,818
89,692
44,749
96,312
10,982
20,641
(335)
655,803
—
—
60,800
110,333
—
(26,587)
18,162
796
(32,552) 115,549
1,678,969
269,640
(33,725)
1,914,884
—
—
— 12,206
608,081
398,477
61,263
86,138
(325)
(58)
669,019
484,557
—
—
111,011
15,700
—
126,711
— 12,206
1,117,569
163,101
(383)
1,280,287
33,474
25,752
25,996
130,069
602,915
(5,504)
28,381
2,126,768
— 28,400
1,309,149
(16)
27,225
570,694
(6,401) 130,773
1,390,497
303,088
199,765
107,704
182,250
(6,875)
2,422,981
13
13
(539)
1,508,375
(127)
678,271
(8,841)
1,563,906
8
3
8
8
4
8
18,758
(65,129) 556,544
14,233,301
2,342,858
(74,362) 16,501,797
87
87
Industrial - Energy
Pipelines.........................
85,428
Exploration and
production.......................
Oil field services..............
Refiner............................
Driller...............................
Total energy.................
Industrial - Basic
materials
17,129
—
—
44,748
147,305
Chemicals.......................
—
Metals and mining...........
10,563
Forestry products and
paper...............................
—
Total basic materials....
10,563
Industrial - Consumer,
non-cyclical........................
Other industrials................
Industrial - Transportation..
Other corporate sectors.....
Total corporates............
Other fixed maturities:
Government (U.S.,
municipal, and foreign)......
Collateralized debt
obligations.........................
Other asset-backed
securities...........................
Mortgage-backed
securities(1)........................
—
1,643
—
1,643
411
2,648
1,245
7,105
—
—
—
—
1,981,243
202,325
(1,318)
2,182,250
56,990
24,298
(7,184)
74,104
56,990
24,298
(7,184)
74,104
14,250
—
—
—
(371)
13,879
143,651
5,066
(371)
148,346
—
—
591
59
—
650
Total fixed maturities.... $
674,155 $
43,056 $
(
(72,684) $644,527
)
$ 16,415,776 $ 2,574,606 $
(
(83,235) $18,907,147
)
(1)
Includes GNMAs.
13
6
7
26
9
3
12
6
3
—
1
—
10
4
2
1
7
13
6
6
25
9
3
12
6
3
—
1
—
10
3
3
1
7
12
—
1
12
—
1
—
100
—
100
37
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Corporate securities, which consist of bonds and redeemable preferred stocks, were the largest component of the
December 31, 2020 fixed maturity portfolio, representing 86% of both amortized cost, net and 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 December 31, 2020, the total fixed maturity portfolio consisted of 777 issuers.
At December 31, 2020, fixed maturities had a fair value of $21.2 billion, compared with $18.9 billion at December
31, 2019. The net unrealized gain position in the fixed-maturity portfolio increased from $2.5 billion at December 31,
2019 to $4.0 billion at December 31, 2020 due to a decrease in market rates during the period.
For more information about our fixed maturity portfolio by component at December 31, 2020 and 2019, 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 December 31, 2020 and 2019 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 $602 million at amortized cost, net of
allowance for credit losses ($660 million at fair value) for which the ratings were assigned by the third-party
managers.
Fixed Maturities by Rating
At December 31, 2020
(Dollar amounts in thousands)
Amortized
Cost, net
% of
Total
Fair
Value
% of
Total
Average Composite
Quality Rating on
Amortized Cost, net
Investment grade:
AAA.......................................................... $
AA.............................................................
A...............................................................
BBB+........................................................
BBB..........................................................
BBB-.........................................................
713,053
1,657,270
4,566,999
3,634,583
4,137,099
1,644,056
Total investment grade .......................
16,353,060
Below investment grade:
BB.............................................................
B...............................................................
Below B....................................................
Total below investment grade ............
686,184
115,646
38,909
840,739
4
$
848,621
10
26
21
24
10
95
4
1
—
5
1,873,323
5,969,677
4,612,898
5,088,114
1,943,777
20,336,410
692,609
122,104
62,386
877,099
4
9
28
22
24
9
96
3
1
—
4
$ 17,193,799
100
$ 21,213,509
100
Weighted average composite quality rating .............................................................................
A-
BB-
A-
38
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Fixed Maturities by Rating
At December 31, 2019
(Dollar amounts in thousands)
Amortized
Cost
% of
Total
Fair
Value
% of
Total
Average Composite
Quality Rating on
Amortized Cost
Investment grade:
AAA.......................................................... $
AA.............................................................
A...............................................................
BBB+........................................................
BBB..........................................................
BBB-.........................................................
769,564
1,311,902
4,608,959
3,509,311
3,818,589
1,723,296
Total investment grade .......................
15,741,621
Below investment grade:
BB.............................................................
B...............................................................
Below B....................................................
Total below investment grade ............
465,296
107,653
101,206
674,155
5
8
28
21
23
11
96
3
1
—
4
$
841,176
1,455,815
5,603,235
4,119,737
4,309,394
1,933,263
18,262,620
450,925
96,077
97,525
644,527
4
8
30
22
23
10
97
2
—
1
3
$ 16,415,776
100
$ 18,907,147
100
Weighted average composite quality rating .............................................................................
A-
B+
A-
The overall quality rating of the portfolio is A-, the same as year-end 2019. Fixed maturities rated BBB are 55% of
the total portfolio at December 31, 2020, the same as year-end 2019. 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, has no off-balance sheet investments, and has
no exposure to European sovereign debt as of December 31, 2020. BBB securities 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)
Balance at beginning of period ............................................................................................. $
Downgrades by rating agencies.............................................................................................
Upgrades by rating agencies..................................................................................................
Dispositions............................................................................................................................
Provision for credit losses.......................................................................................................
Amortization and other............................................................................................................
Twelve Months Ended
December 31,
2020
2019
674,155
$
230,334
(14,618)
(49,037)
(3,346)
3,251
666,061
154,424
(65,693)
(84,902)
—
4,265
Balance at end of period ........................................................................................................ $
840,739
$
674,155
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
39
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
losses, were 15% of our shareholders’ equity, excluding the effect of unrealized gains and losses on fixed maturities
as of December 31, 2020. 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. The Company continues to
monitor the impact of COVID-19 on the fixed maturity portfolio.
Market Risk Sensitivity. Globe Life's investment securities are exposed to interest rate risk, meaning the effect of
changes in financial market interest rates on the current fair value of the Company’s investment portfolio. Since 95%
of the book value of our investments is attributable to fixed maturity investments and these investments are
predominately fixed-rate investments, the portfolio is highly subject to market risk. Declines in market interest rates
generally result in the fair value of the investment portfolio rising, and increases in interest rates cause the fair value
to decline. Under normal market conditions, we are not concerned about unrealized losses that are interest rate
driven since we would not expect to realize them. Globe Life does not intend to sell the securities prior to maturity
and, likely, will not be required to sell the securities prior to recovery of amortized cost. The long-term nature of our
insurance policy liabilities and strong operating cash-flow substantially mitigate any future need to liquidate portions
of the portfolio. The increase or decrease in the fair value of insurance liabilities and debt due to increases or
decreases in market interest rates largely offsets the impact of rates on the investment portfolio. However, as is
permitted by GAAP, these liabilities are not recorded at fair value.
The following table illustrates the market risk sensitivity of our interest-rate sensitive fixed maturity portfolio at
December 31, 2020 and 2019. This table measures the effect of a parallel shift in interest rates (as represented by
the U.S. Treasury curve) on the fair value of the fixed maturity portfolio. The data measures the change in fair value
arising from an immediate and sustained change in interest rates in increments of 100 basis points.
Market Value of Fixed Maturity Portfolio
(Dollar amounts in thousands)
Change in Interest Rates(1)
(200)
At December 31,
2020
2019
$
26,976,000
$
23,910,000
(100)
0
100
200
(1) In basis points.
23,874,000
21,214,000
18,926,000
16,953,000
21,212,000
18,907,000
16,930,000
15,226,000
40
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
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.
The following table is an analysis of operating expenses for the three years ended December 31, 2020.
Operating Expenses Selected Information
(Dollar amounts in thousands)
2020
% of
2019
% of
2018
% of
Premium
Amount
Premium Amount
Premium Amount
Insurance administrative expenses:
Salaries.................................................................... $ 105,935
Other employee costs..............................................
39,885
Information technology costs....................................
Legal costs...............................................................
Other administrative costs........................................
45,742
11,256
48,129
Total insurance administrative expenses................
250,947
Parent company expense...........................................
Stock compensation expense.....................................
Administrative settlements..........................................
Legal proceedings.......................................................
Non-operating expenses.............................................
9,891
35,892
—
3,275
1,033
Total operating expenses, per Consolidated
Statements of Operations ................................... $ 301,038
2.8
1.0
1.2
0.3
1.3
6.6
$ 102,862
34,947
42,927
10,286
49,299
240,321
2.8
1.0
1.2
0.3
1.4
6.7
$ 100,688
35,565
29,286
9,187
49,215
223,941
10,260
44,843
400
8,358
643
10,684
39,792
3,590
—
1,578
$ 304,825
$ 279,585
2020
2019
2018
Amount
%
Amount
%
Amount
%
Total insurance administrative expenses increase
(decrease) over prior year........................................... $ 10,626
4.4
$ 16,380
7.3
$ 13,351
Total operating expenses increase (decrease) over
prior year.....................................................................
(3,787)
(1.2)
25,240
9.0
22,330
Total operating expenses decreased 1% since prior year primarily due to lower stock-based compensation costs
offset by a 4% increase in insurance administrative expenses.
Insurance administrative expenses increased
primarily due to higher employee-related expenses, including salary and pension costs. Pension expense increased
due to the lower discount rate used to determine net periodic benefit costs in 2020 as compared to 2019. Refer to
Note 9—Postretirement Benefits. Legal expense increased due to an increase in regulatory and other compliance
matters. The increase in information technology costs reflects investments related to data analytics capabilities,
administrative systems modernization, and information security programs. The decrease in stock-based
compensation expense was primarily due to fewer performance based equity awards. While insurance
administrative expenses were up 4%, they were down as a percentage of premium at 6.6%, compared with 6.7% for
the same period in 2019.
41
GL 2020 FORM 10-K
2.9
1.0
0.9
0.3
1.4
6.5
6.3
8.7
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. The Board of Directors has authorized 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. This past April, the Company announced a temporary postponement of its share
repurchase program while it evaluated the expected impact of COVID-19 on the Company’s operations and
financial results. Accordingly, the Company did not repurchase shares of Globe Life during the second quarter. The
program was reaffirmed by the Board of Directors on August 5, 2020 and the Company resumed its share
repurchases at that time, repurchasing shares during the remainder of the year consistent with projected excess
cash flow for 2020.
The following table summarizes share purchase activity for each of the last three years.
Analysis of Share Purchases
(Amounts in thousands)
Purchases with:
Shares
Amount
Shares
Amount
Shares
Amount
Share repurchase program ...............................
4,459
$ 380,112
3,932
$ 350,080
4,406
$ 371,794
Option proceeds................................................
676
63,754
1,209
109,489
571
49,955
Total..............................................................
5,135
$ 443,866
5,141
$ 459,569
4,977
$ 421,749
2020
2019
2018
Throughout the remainder of this discussion, share purchases refer only 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 line of 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.
42
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Parent Company Liquidity. Cash flows from the insurance subsidiaries are used to pay interest and principal
repayments on Parent Company debt, operating expenses of the Parent Company, and Parent Company dividends
to Globe Life shareholders.
Year Ended December 31,
Projected
2021
2020
2019
2018
Liquidity Sources:
Dividends from Subsidiaries....................................................... $
440,000
$
485,871
$
479,988
$
448,142
Excess Cash Flows....................................................................
345,000
387,606
374,232
349,243
For more information on the restrictions on the payment of dividends by subsidiaries, see the Restrictions section of
Note 12—Shareholders' Equity. Although these restrictions exist, dividend availability from subsidiaries historically
has been more than sufficient for the cash flow needs of the Parent Company.
liquidity for
Additional sources of
intercompany
borrowings, public debt markets, term loans, and a credit facility. At December 31, 2020, the Parent Company had
access to $290 million of invested cash, net intercompany receivables and other liquid assets. The credit facility is
discussed below.
the Parent Company are cash,
intercompany receivables,
Short-Term Borrowings. An additional source of Parent Company liquidity is a line of credit facility with a group of
lenders which allows unsecured borrowings and stand-by letters of credit up to $750 million, which could be
extended up to $1 billion. While Globe Life can request the extension, it is not guaranteed. Up to $250 million in
letters of credit can be issued against the facility. The facility is further designated as a back-up line of credit 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. As of December 31, 2020, we had
available $360 million of additional borrowing capacity under this facility, compared with $310 million a year earlier.
Interest charged on the commercial paper program resembles variable rate debt due to its short term nature. Globe
Life has consistently been able to issue commercial paper as needed during the three years ended December 31,
2020. As discussed in Note 11—Debt, on August 24, 2020, Globe Life entered into a new 3 year credit agreement,
replacing the prior agreement that was due on May 17, 2021 with similar terms.
Under the prior credit agreement with a maturity date of May 17, 2021, the participating lenders agreed to make
revolving loans to Globe. The amendment also allowed for an additional $100 million term loan to be issued under
the facility rate structure. The term loan was issued during 2016. On July 31, 2020, the Company paid down the
remaining principal balance of $82.5 million plus $101 thousand in interest on the 5-year $100 million term loan.
On April 9, 2020, Globe Life entered into a 364-Day Term Loan Agreement ("Term Loan II"). The Agreement
provided the Company with access to up to $300 million in unsecured term loans, all maturing on April 8, 2021.
Globe Life borrowed the full amount on April 15, 2020 to provide additional liquidity to the Parent Company. The net
proceeds from the Term Loan II were $299.1 million. On August 17, 2020, the Company repaid $150 million of the
Term Loan II with the remaining balance of $150 million repaid on August 26, 2020. The Company recorded a $634
thousand loss on redemption of debt from the write off of unamortized issue expenses.
As of December 31, 2020,
aforementioned debt.
the Parent Company was in full compliance with all covenants related to the
the Company does qualify to
Should access to the regular commercial paper market become unavailable,
participate in the Federal government's new Commercial Paper Funding Facility established under the CARES Act
on March 17, 2020. Under this facility, the Company is able to issue up to $432.5 million at any time through March
31, 2021. For detailed information about this line of credit facility, see the Commercial Paper section of Note 11—
Debt.
43
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
The Parent Company 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 internally generated cash flow
and the credit facility. In the unlikely event that more liquidity is needed, the Company could generate additional
funds through multiple sources including, but not limited to, the issuance of debt, an additional short-term credit
facility, and intercompany borrowing.
As noted above, the Parent Company had access to $290 million of liquid assets available at the end of the fourth
quarter of 2020. This liquidity is available to the Company in the event additional funds are needed to support the
targeted capital levels within our insurance subsidiaries due to adverse impacts of COVID-19.
Consolidated Liquidity. Consolidated net cash inflows provided from continuing operations were $1.48 billion in
2020, compared with $1.35 billion in 2019. In addition to cash inflows from operations, our companies received
proceeds from maturities, calls, and repayments of fixed maturities in the amount of $416 million in 2020, compared
with $840 million in 2019. As noted under the caption Credit Facility in Note 11, the Parent Company has in place a
line of credit facility. The insurance companies have no additional outstanding credit facilities.
Cash and short-term investments were $203 million at the end of 2020 compared with $114 million at the end of
2019. In addition to these liquid assets, the entire $21.2 billion (fair value at December 31, 2020) 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 until recovery or maturity. Our strong cash
flows from operations, on-going investment maturities, and credit line availability make any need to sell securities for
liquidity highly unlikely.
Off-Balance Sheet Arrangements. As a part of the credit facility, Globe Life has stand-by letters of credits. These
letters are issued among our subsidiaries, one of which is an offshore captive reinsurer, and have no impact on
company obligations as a whole. Any future regulatory changes that restrict the use of off-shore captive reinsurers
might require Globe Life to obtain third-party financing, which could cause an insignificant increase in financing
costs. On November 25, 2020, the letters of credit were amended to reduce the amount outstanding from $150
million as of December 31, 2019 to $135 million at December 31, 2020.
As of December 31, 2020, we had no unconsolidated affiliates and no guarantees of the obligations of third party
entities. All of the Parent Company's guarantees were guarantees of the performance of consolidated subsidiaries,
as disclosed in Note 6—Commitments and Contingencies. As of December 31, 2020, we had $47 million in
unfunded commitments to commercial mortgage loan borrowers. See Note—1 for further information.
44
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
The following table presents information about future payments under our contractual obligations for the selected
periods as of December 31, 2020.
Contractual Obligations
(Dollar amounts in thousands)
Actual
Liability
Total
Payments
Less than
One Year
One to
Three Years
Three to
Five Years
More than
Five Years
Fixed and determinable:
Debt—principal(1)................ $
Debt—interest(2).................
Capital leases....................
Operating leases................
Purchase obligations(3).......
Postretirement
obligations(4).......................
1,922,804
$
1,945,612
$
255,000
$
315,612
$
— $
1,375,000
15,804
1,213,275
77,418
139,159
117,188
879,510
—
21,013
161,503
—
28,615
413,399
—
5,307
66,439
—
7,716
98,274
—
4,769
20,144
—
10,823
228,542
262,936
346,662
26,037
58,478
66,301
195,846
Future insurance
obligations(5).......................
15,243,536
Total ................................ $ 17,627,596
60,426,807
1,801,789
3,389,469
3,257,900
51,977,649
$ 64,374,370
$
2,231,990
$
4,008,708
$
3,466,302
$ 54,667,370
(1) Debt is itemized in Note 11—Debt.
(2) Interest on debt is based on our fixed contractual obligations.
(3) Purchase obligations include various long-term non-cancelable purchase commitments as well as commitments to provide capital for low-
income housing tax credit interests.
(4) Pension obligations are primarily liabilities in trust funds that are calculated in accordance with the terms of the pension plans. They are offset
by invested assets in the trusts, which are funded through periodic contributions by Globe Life in a manner which will provide for the
settlement of the obligations as they become due. Therefore, our obligations are offset by those assets when reported on Globe Life's
Consolidated Balance Sheets. At December 31, 2020 these pension obligations were $763 million, offset by assets of $530 million in the
pension assets. The schedule of pension benefit payments covers ten years and is based on the same assumptions used to measure the
pension obligations, except there is no interest assumption because the payments are undiscounted. Please refer to Note 9—Postretirement
Benefits for more information on pension obligations.
(5) Future insurance obligations consist primarily of estimated future contingent benefit payments on policies in force at December 31, 2020.
These estimated payments were computed using assumptions for future mortality, morbidity and persistency. The actual amount and timing
of such payments may differ significantly from the estimated amounts shown. The Company concludes that the assets supporting the liability
of $15 billion at December 31, 2020, along with future premiums and investment income, will be sufficient to fund all future insurance
obligations.
Capital Resources. The Parent Company's capital structure consists of short-term debt (the commercial paper
facility), long-term debt, and shareholders’ equity.
Debt: The carrying value of the long-term debt was $1.7 billion at December 31, 2020, increase from $1.3 billion a
year earlier. In September 2020, the Company completed the issuance of $400 million 2.15% Senior Notes due
2030. A complete analysis and description of long-term debt issues outstanding is presented in Note 11—Debt.
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
is commonly
amount, the company must file a plan with the NAIC for improving their capital
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.
levels (this level
Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current
ratings. For 2020, Globe Life 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%.
45
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
For 2021, Globe Life is targeting a consolidated Company Action Level RBC ratio in the range of 300% to 320%.
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. We continue to monitor for potentially-
adverse COVID-19 effects, such as higher policyholder claims, downgrades of fixed income securities within our
investment portfolio, and additional credit losses.
Shareholder's Equity: As noted under the caption Analysis of Share Purchases within this report, we have an
ongoing share repurchase program.
Globe Life has continually increased the quarterly dividend on its common shares over the past three years.
Year Ended December 31,
Projected
2021
2020
2019
2018
Quarterly dividend by annual year................................................ $
0.1975
$
0.1875
$
0.1725
$
0.1600
Shareholders’ equity was $8.8 billion at December 31, 2020, compared with $7.3 billion at December 31, 2019, an
increase of $1.5 billion or 20%. Since December 31, 2019, shareholders’ equity increased by $1.2 billion in after-tax
unrealized gains in the fixed-maturity portfolio as interest rates decreased over the period as well as $732 million of
net income during this period. Shareholders' equity was reduced by $380 million in share purchases under the
repurchase program and an additional $64 million in share purchases to offset 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.
We maintain a significant available-for-sale fixed maturity portfolio to support our insurance policy liabilities. Current
accounting guidance requires that we revalue our portfolio to fair market value at the end of each accounting period.
The period-to-period changes in fair value, net of their associated impact on deferred acquisition costs and income
tax, are reflected directly in shareholders’ equity. Changes in the fair value of the portfolio can result from changes in
market rates and liquidity in financial markets. While a majority of invested assets are revalued, accounting rules do
not permit interest-bearing insurance policy liabilities to be valued at fair value in a consistent manner as that of
assets, with changes in value applied directly to shareholders’ equity.
Due to the size of our policy liabilities in relation to our shareholders’ equity, an inconsistency exists in
measurement, which may have a material
impact on the reported value of shareholders’ equity. Fluctuations in
interest rates cause undue volatility in the period-to-period presentation of our shareholders’ equity, capital structure,
and financial ratios which would be essentially removed if interest-bearing liabilities were valued in the same
manner as assets. Due to the long-term nature of our fixed maturities and liabilities and the strong cash flows
consistently 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 losses due to fluctuations in market value of fixed maturities caused by
market rate changes and temporarily illiquid markets. Accordingly, our management, credit rating agencies, lenders,
many industry analysts, and certain other financial statement users prefer to remove the effect of this accounting
rule when analyzing our balance sheet, capital structure, and financial ratios.
46
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
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
December 31, 2020
December 31, 2019
December 31, 2018
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
GAAP
Fixed maturities............................... $ 21,213,509
Deferred acquisition costs(2)............
4,595,444
$ 4,019,710
$ 18,907,147
$ 2,491,371
$ 16,297,932
$
544,461
(5,955)
4,341,941
(7,488)
4,137,925
Total assets......................................
29,046,731
4,013,755
25,977,460
2,483,883
23,095,722
Short-term debt................................
254,918
Long-term debt................................
1,667,886
—
—
Shareholders' equity........................
8,771,092
3,170,866
298,738
1,348,988
7,294,307
—
—
1,962,268
307,848
1,357,185
5,415,177
(5,270)
539,191
—
—
425,961
Book value per diluted share...........
Debt to capitalization(3)....................
83.19
18.0 %
30.07
(7.6)%
66.02
18.4 %
17.76
(5.2)%
48.11
23.5 %
3.79
(1.5)%
Diluted shares outstanding..............
Actual shares outstanding...............
105,429
103,797
110,494
107,720
112,561
110,693
(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) Globe Life's debt covenants require that the effect of this accounting rule be removed to determine this ratio. This ratio is computed by
dividing total debt by the sum of total debt and shareholders’ equity.
Financial Strength Ratings. The financial strength of our major insurance subsidiaries is rated by Standard &
Poor’s and A. M. Best. The following table presents these ratings for our five largest insurance subsidiaries at
December 31, 2020.
Liberty National Life Insurance Company....................................................................
Globe Life And Accident Insurance Company..............................................................
United American Insurance Company..........................................................................
American Income Life Insurance Company.................................................................
Family Heritage Life Insurance Company of America..................................................
Standard
& Poor’s
AA-
AA-
AA-
AA-
NR
A.M.
Best
A
A
A
A
A
A.M. Best states that it assigns an A (Excellent) rating to insurance companies that have, in its opinion, an excellent
ability to meet their ongoing insurance obligations.
The AA financial strength rating category is assigned by Standard & Poor’s Corporation (S&P) to those insurers
which have very strong capacity to meet its financial commitments which differs from the highest-rated insurers only
to a small degree. An insurer rated A has strong capacity to meet its financial commitments but it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic conditions than insurers in higher-
rated categories. The plus sign (+) or minus sign (-) shows the relative standing within the major rating category.
47
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
OTHER ITEMS
Litigation. For more information concerning litigation, please refer to Note 6—Commitments and Contingencies.
CRITICAL ACCOUNTING POLICIES
Future Policy Benefits. Due to the long-term nature of insurance contracts, our insurance companies are liable for
policy benefit payments that will be made in the future. The liability for future policy benefits is determined by
standard actuarial procedures common to the life insurance industry. The accounting policies for determining this
liability are disclosed in Note 1—Significant Accounting Policies.
Approximately 90% of our liabilities for future policy benefits at December 31, 2020 were traditional
insurance
liabilities where the liability is determined as the present value of future benefits less the present value of the portion
of the gross premium required to pay for such benefits. The assumptions used in estimating the future benefits for
this portion of business are set at the time of contract issue. These assumptions are “locked in” and are not revised
for the lifetime of the contracts, except where there is a premium deficiency, as defined in Note 1—Significant
Accounting Policies under the caption Future Policy Benefits. Otherwise, variability in the accrual of policy reserve
liabilities after policy issuance is caused only by variability of the inventory of in force policies.
The remaining portion of liabilities for future policy benefits pertains to business accounted for as deposit business,
where the recorded liability is the fund balance attributable to the benefit of policyholders as determined by the
there are no assumptions used to
policy contract at
determine the future policy benefit liability for deposit business.
the consolidated financial statement date. Accordingly,
Deferred Acquisition Costs. Certain costs of acquiring new business are deferred and recorded as an asset.
Deferred acquisition costs consist primarily of sales commissions and other underwriting costs such as advertising
related to the successful
issuance of a new insurance contract as indicated in Note 1—Significant Accounting
Policies under the caption Deferred Acquisition Costs in the Notes to Consolidated Financial Statements.
Additionally, the cost of acquiring blocks of insurance business or insurance business through the purchase of other
companies, known as the value of insurance acquired (VOBA), is included in deferred acquisition costs. Our policies
for accounting for deferred acquisition costs and the associated amortization are reported under the same caption in
Note 1—Significant Accounting Policies.
Over 99% of our recorded amounts for deferred acquisition costs at December 31, 2020 were related to traditional
products and are being amortized over the premium-paying period in proportion to the present value of actual
historic and estimated future gross premiums. The projection assumptions for this business are set at the time of
contract issue. These assumptions are “locked-in” at that time and, except where there is a loss recognition issue,
are not revised for the lifetime of the contracts. Absent a premium deficiency, variability in amortization after policy
issuance is caused only by variability in premium volume. We have not recorded a deferred acquisition cost loss
recognition event for assets related to this business for any period in the three years ended December 31, 2020.
Less than 1% of deferred acquisition costs pertain to deposit business for which deferred acquisition costs are
amortized over the estimated lives of the contracts.
Policy Claims and Other Benefits Payable. This liability consists of known benefits currently payable and an
estimate of claims that have been incurred but not yet reported to us. The estimate of unreported claims is based on
prior experience and is made after careful evaluation of all information available to us. However, the factors upon
which these estimates are based can be subject to change from historical patterns. Factors involved include the
litigation environment, regulatory mandates, and the introduction of policy types for which claim patterns are not well
established, and medical trend rates and medical cost inflation as they affect our health claims. Changes in these
estimates, if any, are reflected in the earnings of the period in which the adjustment is made. The Company
concludes that the estimates used to produce the liability for claims and other benefits, including the estimate of
unsubmitted claims, are the most appropriate under the circumstances. However, there is no certainty that the
resulting stated liability will be our ultimate obligation. At this time, we do not expect any change in this estimate to
have a material impact on earnings or financial position consistent with our historical experience.
48
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Valuation of Fixed Maturities. We hold a substantial investment in high-quality fixed maturities to provide for the
funding of our future policy contractual obligations over long periods of time. While these securities are generally
expected to be held to maturity, they are classified as available for sale and are sold from time to time, primarily to
manage risk. We report this portfolio at fair value. Fair value is the price that we would expect to receive upon sale
of the asset in an orderly transaction. The fair value of the fixed maturity portfolio is primarily affected by changes in
interest rates in financial markets. Because of the size of our fixed maturity portfolio and the long average life, small
changes in rates can have a significant effect on the portfolio and the reported financial position of the Company.
This impact is disclosed in 100 basis point increments under the caption Market Risk Sensitivity in this report.
However, as discussed under the caption Financial Condition in this report, the Company regards these unrealized
fluctuations in value as having no meaningful impact on our actual financial condition and, as such, we remove them
from consideration when viewing our financial position and financial ratios.
At times, the values of our fixed maturities can also be affected by illiquidity in the financial markets. Illiquidity would
contribute to a spread widening, and accordingly to unrealized losses, on many securities that we would expect to
be fully recoverable. Even though our fixed maturity portfolio is available for sale, we have the ability and intent to
hold the securities until maturity as a result of our strong and stable cash flows generated from our insurance
products. Considerable information concerning the policies, procedures, classification levels, and other relevant
data concerning the valuation of our fixed maturity investments is presented in Note 1—Significant Accounting
Policies and in Note 4—Investments under the captions Fair Value Measurements in both notes.
Investments: Allowance for Credit Losses. We continually monitor our investment portfolio for investments
where fair value has declined below carrying value to determine if a credit loss event has occurred. When a credit
event does occur, an allowance for credit loss is recorded and the corresponding provision is recognized in the
Consolidated Income Statement in Realized Gains or Losses. Non-credit related fluctuations in the fair value are
recorded in Other Comprehensive Income. The policies and procedures that we use to evaluate and account for
allowance for credit losses are disclosed in Note 1—Significant Accounting Policies and the discussions under the
captions Investments and Realized Gains and Losses in this report. While every effort is made to make the best
estimate of status and value with the information available regarding an allowance for credit loss, it is difficult to
predict the future prospects of a distressed or impaired security.
49
GL 2020 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Defined benefit pension plans. We maintain funded defined benefit plans covering most full-time employees. We
also have an unfunded nonqualified defined benefit plan covering a limited number of officers. Our obligations under
these plans are determined actuarially based on specified actuarial assumptions. In accordance with GAAP, an
expense is recorded each year as these pension obligations grow due to the increase in the service period of
employees and the interest cost associated with the passage of time. These obligations are offset, at least in part,
by the growth in value of the assets in the funded plans. At December 31, 2020, our gross liability under these plans
was $763 million, but was offset by assets of $530 million.
The actuarial assumptions used in determining our obligations/expenses for pensions include: employee mortality
and turnover, retirement age, the expected return on plan assets, projected salary increases, and the discount rate
at which future obligations could be settled. Additionally, a corridor approach is used to amortize any unrecognized
gains or losses outside the corridor (the standard 10% of the greater of plan PBO and fair value assets) and have
an amortization service period of approximately 9 years. These assumptions have an important effect on the
pension obligation. A decrease in the discount rate will cause an increase in the pension obligation. A decrease in
projected salary increases will cause a decrease in this obligation. Small changes in assumptions may cause
significant differences in reported results for these plans. For example, a sensitivity analysis is presented below for
the impact of change in the discount rate and the long-term rate of return on assets assumed on our defined benefit
pension plans expense for the year 2020 and projected benefit obligation as of December 31, 2020.
Pension Assumptions
(Dollar amounts in thousands)
Assumption
Change(1)
Impact on
Expense
Impact on
Projected Benefit
Obligation
Discount Rate(2):
Increase..................................................................................................
25
$
(4,063) $
Decrease................................................................................................
Expected Return(3):
Increase..................................................................................................
Decrease................................................................................................
(25)
25
(25)
4,306
(1,211)
1,211
(30,402)
32,357
—
—
(1) In basis points.
(2) The discount rate for determining the net periodic benefit cost was 3.49% for 2020. The discount rate used for determining the projected
benefit obligation as of December 31, 2020 was 2.92%.
(3) The expected long-term return rate assumed was 6.67%.
The Company determines mortality assumptions through the use of published mortality tables that reflect broad-
based studies of mortality and published longevity improvement scales.
The criteria used to determine the primary assumptions are discussed in Note 9—Postretirement Benefits. While we
have used our best efforts to determine the most reliable assumptions, given the information available from
Company experience, economic data, independent consultants and other sources, we cannot be certain that actual
results will be the same as expected. The assumptions are reviewed annually and revised, if necessary, based on
more current information available to us. Note 9—Postretirement Benefits also contains information about pension
plan assets, investment policies, and other related data.
50
GL 2020 FORM 10-K
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Information required by this item is found under the heading Market Risk Sensitivity in Item 7 of this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements Index
Page
Report of Independent Registered Public Accounting Firm...................................................................
52
Consolidated Financial Statements:......................................................................................................
Consolidated Balance Sheets at December 31, 2020, and 2019.....................................................
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2020...........................................................................................................................
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the
period ended December 31, 2020.....................................................................................................
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended
December 31, 2020...........................................................................................................................
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2020...........................................................................................................................
Notes to Consolidated Financial Statements....................................................................................
54
55
56
57
58
59
51
GL 2020 FORM 10-K
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Globe Life Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Globe Life Inc. and subsidiaries (the
“Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive
income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended December 31,
2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in
the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified
opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of
the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Investments in Fixed Maturities Classified as Available for Sale — Significant Unobservable Inputs - Refer
to Notes 1 and 4 to the Financial Statements
Critical Audit Matter Description
Investments in fixed maturities classified as available for sale are reported at fair value in the financial statements.
The investments without readily determinable market values are valued using significant unobservable inputs such
as credit ratings and discount rates. The balance of investments without readily determinable market values was
$799 million as of December 31, 2020. These inputs involve considerable judgment by management.
52
GL 2020 FORM 10-K
We identified investments in fixed maturities classified as available for sale without readily determinable market
values as a critical audit matter because of the unobservable inputs used by management to estimate fair value.
Auditing these inputs required especially subjective judgment and required the involvement of our fair value
specialists to fully evaluate them.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the unobservable inputs used by management to estimate the fair value of
investments in fixed maturities classified as available for sale included the following, among others:
• We tested the effectiveness of controls over investments in fixed maturities classified as available for sale,
including management’s controls over the determination of unobservable inputs and fair value.
• We tested the accuracy and completeness of underlying data used in the determination of the fair value
(e.g., investments owned at the balance sheet date and relevant security attributes).
• With the assistance of our fair value specialists, we developed independent estimates of fair value for a
selection of securities and compared our estimates to management’s estimates.
Future Policy Benefits and Amortization of Deferred Acquisition Costs — Certain Underlying Assumptions -
Refer to Note 1 to the Financial Statements
Critical Audit Matter Description
The Company’s management sets assumptions in (1) recording a liability for policy benefit payments that will be
made in the future (future policy benefits) and (2) determining amortization of deferred acquisition costs. The most
significant assumptions include mortality, morbidity, and persistency. Assumptions are determined based upon
published studies and analysis of Company specific experience, adjusted for changes in exposure and other
relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the development of such
assumptions involved especially subjective judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s judgments regarding the assumptions used in the development of
future policy benefits and the amortization of deferred acquisition costs included the following, among others:
• We tested the effectiveness of controls over the assumption development process and the valuation of
future policy benefits.
• We tested the underlying data used in the development of the assumptions as well as in the determination
of the liability for future policy benefits and the amortization of deferred acquisition costs.
• We evaluated management’s selected actuarial assumptions,
including testing the accuracy and
completeness of the supporting experience studies.
• With the assistance of our actuarial specialists, we evaluated management’s judgments regarding the
assumptions used in the development of future policy benefits and the amortization of deferred acquisition
costs.
• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the
audit.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
February 25, 2021
We have served as the Company’s auditor since 1999.
53
GL 2020 FORM 10-K
Globe Life Inc.
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
December 31,
2020
2019
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2020—$17,197,145;
2019—$16,415,776, allowance for credit losses: 2020— $3,346; 2019— $0)...................... $
21,213,509
$
18,907,147
Policy loans............................................................................................................................
584,379
575,492
Other long-term investments (includes: 2020—$385,038; 2019—$185,851 under the fair
value option)...........................................................................................................................
Short-term investments..........................................................................................................
546,981
107,782
326,347
38,285
Total investments..............................................................................................................
22,452,651
19,847,271
Cash.........................................................................................................................................
Accrued investment income.....................................................................................................
Other receivables.....................................................................................................................
94,847
248,991
474,180
75,933
245,129
441,662
Deferred acquisition costs........................................................................................................
4,595,444
4,341,941
Goodwill...................................................................................................................................
Other assets.............................................................................................................................
441,591
739,027
441,591
583,933
Total assets....................................................................................................................... $
29,046,731
$
25,977,460
Liabilities:
Future policy benefits............................................................................................................... $
15,243,536
$
14,508,134
Unearned and advance premium.............................................................................................
Policy claims and other benefits payable.................................................................................
Other policyholders' funds........................................................................................................
61,728
399,507
97,968
63,709
365,402
96,282
Total policy liabilities............................................................................................................
15,802,739
15,033,527
Current and deferred income taxes.........................................................................................
1,833,723
1,476,832
Short-term debt........................................................................................................................
254,918
298,738
Long-term debt (estimated fair value: 2020—$1,871,754; 2019—$1,473,364).......................
1,667,886
1,348,988
Other liabilities.........................................................................................................................
716,373
525,068
Total liabilities....................................................................................................................
20,275,639
18,683,153
Commitments and Contingencies (Note 6)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in
2020 and 2019.........................................................................................................................
—
—
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding:
(2020—113,218,183 issued; 2019— 117,218,183 issued)......................................................
Additional paid-in-capital..........................................................................................................
Accumulated other comprehensive income (loss)...................................................................
Retained earnings....................................................................................................................
113,218
527,435
3,029,244
5,874,109
117,218
531,554
1,844,830
5,551,329
Treasury stock, at cost: (2020—9,420,699 shares; 2019—9,497,940 shares)........................
(772,914)
(750,624)
Total shareholders' equity.................................................................................................
8,771,092
7,294,307
Total liabilities and shareholders' equity............................................................................ $
29,046,731
$
25,977,460
See accompanying Notes to Consolidated Financial Statements.
54
GL 2020 FORM 10-K
Globe Life Inc.
Consolidated Statements of Operations
(Dollar amounts in thousands, except per share data)
Year Ended December 31,
2020
2019
2018
Revenue:
Life premium..................................................................................................... $ 2,672,804
$ 2,517,784
$ 2,406,555
Health premium................................................................................................
1,141,097
1,077,346
1,015,339
Other premium.................................................................................................
4
4
12
Total premium.............................................................................................
3,813,905
3,595,134
3,421,906
Net investment income.....................................................................................
927,062
Realized gains (losses)....................................................................................
Other income....................................................................................................
(4,371)
1,325
910,459
20,621
1,318
882,512
(1,804)
1,137
Total revenue..............................................................................................
4,737,921
4,527,532
4,303,751
Benefits and expenses:
Life policyholder benefits..................................................................................
1,809,373
1,638,053
1,591,790
Health policyholder benefits.............................................................................
Other policyholder benefits...............................................................................
733,481
30,030
687,764
31,532
649,188
34,264
Total policyholder benefits...........................................................................
2,572,884
2,357,349
2,275,242
Amortization of deferred acquisition costs........................................................
Commissions, premium taxes, and non-deferred acquisition costs.................
Other operating expense..................................................................................
Interest expense...............................................................................................
575,770
304,841
301,038
86,704
551,726
298,047
304,825
84,306
516,690
278,487
279,585
90,076
Total benefits and expenses.......................................................................
3,841,237
3,596,253
3,440,080
Income before income taxes.................................................................................
896,684
931,279
863,671
Income tax benefit (expense)................................................................................
(164,911)
(170,397)
(162,161)
Income from continuing operations..................................................................
731,773
760,882
701,510
Income (loss) from discontinued operations, net of tax........................................
—
(92)
(44)
Net income .................................................................................................
$
731,773
$
760,790
$
701,466
Basic net income (loss) per common share:.........................................................
Continuing operations........................................................................................ $
6.90
$
6.97
$
Discontinued operations.....................................................................................
—
—
Total basic net income per common share .............................................
$
6.90
$
6.97
$
Diluted net income (loss) per common share:......................................................
Continuing operations........................................................................................ $
6.82
$
6.83
$
Discontinued operations.....................................................................................
—
—
Total diluted net income per common share ..........................................
$
6.82
$
6.83
$
6.22
—
6.22
6.09
—
6.09
See accompanying Notes to Consolidated Financial Statements.
55
GL 2020 FORM 10-K
Globe Life Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Dollar amounts in thousands)
Net income ........................................................................................................... $
731,773
$
760,790
$
701,466
Year Ended December 31,
2020
2019
2018
Other comprehensive income (loss):
Investments:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period...............................
1,493,200
1,959,596
(1,426,581)
Other reclassification adjustments included in net income...........................
Foreign exchange adjustment on securities recorded at fair value...............
32,809
2,330
(13,837)
1,151
(1,758)
(1,424)
Unrealized gains (losses) on securities......................................................
1,528,339
1,946,910
(1,429,763)
Unrealized gains (losses) on other investments................................................
(18,306)
11,255
(5,155)
Total unrealized investment gains (losses)...................................................
1,510,033
1,958,165
(1,434,918)
Less applicable tax (expense) benefit......................................................
(317,111)
(411,213)
301,327
Unrealized gains (losses) on investments, net of tax.........................................
1,192,922
1,546,952
(1,133,591)
Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs................
Less applicable tax (expense) benefit........................................................
Unrealized gains (losses) attributable to deferred acquisition costs, net of
tax....................................................................................................................
1,533
(321)
(2,218)
465
5,549
(1,165)
1,212
(1,753)
4,384
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities....................
Less applicable tax (expense) benefit........................................................
Foreign exchange translation adjustments, other than securities, net of tax...
Pension:
Amortization of pension costs..........................................................................
Plan amendments............................................................................................
Experience gain (loss).....................................................................................
Pension adjustments.......................................................................................
Less applicable tax (expense) benefit.........................................................
14,230
(2,986)
11,244
16,632
—
(43,169)
(26,537)
5,573
7,042
(1,479)
5,563
(12,417)
2,610
(9,807)
8,474
—
(40,636)
(32,162)
6,755
15,095
(2,377)
30,591
43,309
(9,094)
34,215
Pension adjustments, net of tax.......................................................................
(20,964)
(25,407)
Other comprehensive income (loss).......................................................................
1,184,414
1,525,355
(1,104,799)
Comprehensive income (loss) .................................................................... $ 1,916,187
$ 2,286,145
$
)
(403,333)
(
See accompanying Notes to Consolidated Financial Statements.
56
GL 2020 FORM 10-K
Globe Life Inc.
Consolidated Statements of Shareholders' Equity
(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
Year Ended December 31, 2018
Balance at December 31, 2017.......... $
— $ 124,218
$ 508,476
$
1,424,274
$ 4,806,208
$ (631,755) $
6,231,421
Adoption of ASU 2016-01...................
Balance at January 1, 2018 .............
Comprehensive income (loss)............
Common dividends declared
($0.64 per share)................................
Acquisition of treasury stock...............
Stock-based compensation................
Exercise of stock options....................
Retirement of treasury stock...............
Balance at December 31, 2018 ....
Year Ended December 31, 2019
Adoption of ASU 2016-02...................
Balance at January 1, 2019..............
Comprehensive income (loss)............
Common dividends declared
($0.69 per share)................................
Acquisition of treasury stock...............
Stock-based compensation................
Exercise of stock options....................
Retirement of treasury stock...............
Balance at December 31, 2019 ....
Year Ended December 31, 2020
Adoption of ASU 2016-13(1)................
Balance at January 1, 2020 .............
Comprehensive income (loss)............
Common dividends declared
($0.75 per share)................................
Acquisition of treasury stock...............
Stock-based compensation................
Exercise of stock options....................
Retirement of treasury stock...............
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,896
—
4,896
124,218
508,476
1,424,274
4,811,104
(631,755)
6,236,317
—
—
—
—
—
—
—
—
28,836
—
(3,000)
(12,898)
(1,104,799)
701,466
(71,941)
—
—
(403,333)
(71,941)
—
(421,749)
(421,749)
(1,803)
(24,811)
12,759
60,902
(200,547)
216,445
39,792
36,091
—
121,218
524,414
319,475
5,213,468
(763,398)
5,415,177
—
—
—
(392)
—
(392)
121,218
524,414
319,475
5,213,076
(763,398)
5,414,785
—
—
—
—
—
—
—
—
25,132
—
(4,000)
(17,992)
1,525,355
760,790
(75,060)
—
—
2,286,145
(75,060)
—
(459,569)
(459,569)
(6,817)
26,528
(51,892)
135,055
(288,768)
310,760
44,843
83,163
—
117,218
531,554
1,844,830
5,551,329
(750,624)
7,294,307
—
—
—
(454)
—
(454)
117,218
531,554
1,844,830
5,550,875
(750,624)
7,293,853
—
—
—
—
—
—
—
—
14,410
—
(4,000)
(18,529)
1,184,414
731,773
(79,067)
—
—
1,916,187
(79,067)
—
(443,866)
(443,866)
(482)
(26,908)
21,964
75,001
(302,082)
324,611
35,892
48,093
—
8,771,092
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance at December 31, 2020 .... $
— $ 113,218
$ 527,435
$
3,029,244
$ 5,874,109
$ (772,914) $
(
)
(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 further discussion in Note 1—Significant Accounting Policies.
See accompanying Notes to Consolidated Financial Statements.
57
GL 2020 FORM 10-K
Globe Life Inc.
Consolidated Statement of Cash Flows
(Dollar amounts in thousands)
Year Ended December 31,
2019
760,790
2020
731,773
$
$
2018
701,466
Net income ............................................................................................................ $
Adjustments to reconcile net income from continuing operations to cash
provided from continuing operations:
Loss (income) from discontinued operations, net of income taxes..................
Increase (decrease) in future policy benefits...................................................
Increase (decrease) in other policy benefits....................................................
Deferral of policy acquisition costs...................................................................
Amortization of deferred policy acquisition costs.............................................
Change in current and deferred income taxes.................................................
Realized (gains) losses....................................................................................
Other, net.........................................................................................................
Net cash provided from (used for) continuing operations............................
Net cash provided from (used for) discontinued operations........................
Cash provided from (used for) operating activities ..........................................
—
798,936
33,810
(822,985)
575,770
88,157
4,371
66,602
1,476,434
—
1,476,434
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold..........................................................
Fixed maturities available for sale—matured or other redemptions.................
Other long-term investments............................................................................
Total investments sold or matured...............................................................
52,681
416,321
42,990
511,992
Acquisition of investments:
Fixed maturities—available for sale..................................................................
Other long-term investments............................................................................
Total investments acquired..........................................................................
Net (increase) decrease in policy loans...........................................................
Net (increase) decrease in short-term investments.........................................
Additions to properties.....................................................................................
Other investing activities..................................................................................
Investments in low-income housing interests..................................................
Cash provided from (used for) investing activities ...........................................
(1,262,434)
(266,230)
(1,528,664)
(8,887)
(69,497)
(41,756)
(7,051)
(37,867)
(1,181,730)
Cash provided from (used for) financing activities:
Issuance of common stock...................................................................................
Cash dividends paid to shareholders....................................................................
Repayment of debt...............................................................................................
Proceeds from issuance of debt...........................................................................
Payment for debt issuance costs..........................................................................
Net borrowing (repayment) of commercial paper.................................................
Acquisition of treasury stock.................................................................................
Net receipts (payments) from deposit-type products............................................
Cash provided from (used for) financing activities ...........................................
48,093
(78,192)
(386,875)
700,000
(5,844)
(34,445)
(443,866)
(72,928)
(274,057)
92
661,567
15,900
(753,661)
551,726
68,588
(20,621)
62,194
1,346,575
17,299
1,363,874
79,108
840,222
5,134
924,464
(1,552,956)
(123,332)
(1,676,288)
(25,426)
34,003
(42,203)
32
(23,893)
(809,311)
83,163
(74,188)
(6,875)
—
—
(11,610)
(459,569)
(121,429)
(590,508)
44
664,997
17,134
(699,551)
516,690
69,369
1,804
4,463
1,276,416
1,231
1,277,647
32,021
343,712
477
376,210
(1,155,539)
(93,631)
(1,249,170)
(20,537)
63,783
(45,092)
1,987
(23,404)
(896,223)
36,091
(71,421)
(327,762)
550,000
(6,969)
(22,719)
(421,749)
(126,991)
(391,520)
Effect of foreign exchange rate changes on cash...................................................
Net increase (decrease) in cash..............................................................................
Cash at beginning of year.......................................................................................
Cash at end of year................................................................................................. $
(1,733)
18,914
75,933
94,847
$
(9,148)
(45,093)
121,026
75,933
$
12,559
2,463
118,563
121,026
See accompanying Notes to Consolidated Financial Statements.
58
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 1—Significant Accounting Policies
Business: (Globe Life), (the Company), refer 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 consolidated financial statements of Globe Life have been prepared in
conformity with accounting principles generally accepted in the United States of America (GAAP), under guidance
issued by the Financial Accounting Standards Board (FASB). The preparation of consolidated financial statements
in conformity with GAAP requires management
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.
to make estimates and assumptions that affect
Principles of Consolidation: The consolidated financial statements include the results of Globe Life Inc. and its
wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
When Globe Life acquires a subsidiary or a block of business, the assets acquired and the liabilities assumed are
measured at fair value at the acquisition date. Any excess of acquisition cost over the fair value of net assets is
recorded as goodwill. Expenses incurred to effect the acquisition are charged to earnings as of the acquisition date.
Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition
date.
Globe Life accounts for its variable interest entities (VIEs) under accounting guidance which clarifies the definition of
a variable interest and the instructions for consolidating VIEs. Only primary beneficiaries are required or allowed to
consolidate VIEs. The investments are not consolidated because the Company has no power to control the
activities that most significantly affect the economic performance of these entities and therefore the Company is not
the primary beneficiary of any of these interests. Globe Life's involvement is limited to its limited partnership interest
in the entities. The Company has not provided any other financial support to the entities beyond its commitments to
fund its limited partnership interests, and there are no arrangements or agreements with any of the interests to
provide other financial support. The maximum loss exposure relative to these interests is limited to their carrying
value. The Company has approximately 1% of total assets in low-income housing tax credits and certain limited
partnerships (investment funds) that qualify as unconsolidated VIEs.
Discontinued Operations: When a component of Globe Life's business is sold or expected to be sold during the
ensuing year, the Company considers whether the criteria of ASC 205-20, Discontinued Operations, have been met,
which includes evaluating if the disposal of a component represents a strategic shift that has, or will have, a major
effect on the Company. If the disposal meets the criteria for discontinued operations, the assets and liabilities are
segregated and recorded in the Consolidated Balance Sheets as "Assets and Liabilities related to discontinued
operations" for all periods presented. If the carrying amount of the business exceeds its estimated fair value, a loss
is recognized. The results of operations for the discontinued component are reported in "Income from discontinued
operations, net of tax" in the Consolidated Statements of Operations for current and prior periods. Discontinued
operations are reported commencing in the period in which the business is either disposed of or meets the
accounting criteria for discontinued operations, including any gain or loss recognized on the sale or adjustment of
the carrying amount to the estimated fair value less cost to sell.
59
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
In 2016, Globe Life sold one of its operating segments, Medicare Part D. The financial results of this business are
excluded from the Company's continuing operations including the Notes to the Consolidated Financial Statements.
The Company received final settlement related to the assets and liabilities of the discontinued operations in 2019.
Investments: Globe Life classifies all of its fixed maturity investments as available for sale. Investments classified as
available for sale are carried at fair value with unrealized gains and losses, net of taxes, reflected directly in
accumulated other comprehensive income (AOCI).
investment
income" on the Consolidated Statements of Operations. Gains and losses from sales, maturities, or other
redemptions of investments are recorded in "Realized gains (losses)". Interest income and prepayment fees are
recognized when earned. Premiums and discounts are amortized using the effective yield method. When amortized
cost of a callable debt security exceeds the first call price, the premium is amortized to the earliest call date.
Otherwise, the period of amortization or accretion generally extends from the purchase date to the maturity date.
Income from investments is recorded in "Net
"Other
long-term investments"
"Policy loans", which represent loans provided to policyholders using cash values as collateral, are carried at unpaid
principal balances.
include limited partnerships, commercial mortgage loan
participations ("commercial mortgage loans"), equity securities, and real estate. Investments in equity securities are
reported at fair value with changes in fair value, net of taxes, reflected directly in "Realized gains (losses)" in the
Consolidated Statements of Operations.
less accumulated
depreciation. Depreciation is recorded on a straight-line basis over the estimated useful life. Investments in limited
partnerships consist of low-income housing tax credits and investment funds. Low-income housing tax credits are
discussed further below.
Investments in real estate are reported at cost
The investment funds consist of limited partnerships whereby the Company has a pro-rata share of ownership
ranging from less than 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 applicable GAAP to determine if it is a variable interest entity and would qualify for consolidation; none of
these investments qualify for consolidation as the Company is not the primary beneficiary.
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. Operating results provided by the partnerships can be on a
lag up to 3 months. Changes in the net asset value are recorded in "Realized gains (losses)" on the 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 cumulative operating earnings at
which point the distributions will reduce carrying value. Our maximum exposure to loss is equal to the outstanding
carrying value and future funding commitments. The Company had $227 million of capital called during the year
from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $435 million
as of December 31, 2020.
Commercial mortgage loan participations, a type of investment where the mortgage loan is shared among investors,
are accounted for as financing receivables. The commercial mortgage loans are managed by a third-party. The
Company purchased the legal rights to interests in commercial mortgage loans which are secured by transitional
properties such as hotels, retail, multiple family, or offices. The commercial mortgage loans typically have a term of
three years with the option to extend up to two years. The commercial mortgage loans are recorded at unpaid
principal balance, net of unamortized origination fees and net of allowance for loan losses. Interest income, net of
the amortization of origination fees, is recorded in "Net Investment Income" under the effective yield method. Our
unfunded commitment balance to the commercial loan borrowers was $47 million as of December 31, 2020.
"Short-term investments" include investments in interest-bearing assets with original maturities of twelve months or
less. Gains and losses realized on the disposition of investments are determined on a specific identification basis.
60
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value Measurements, Investments in Securities: Globe Life measures the fair value of its "fixed maturities"
based on a hierarchy consisting of three levels which indicate the quality of the fair value measurements as
described below:
•
•
•
Level 1—fair values are based on quoted prices in active markets for identical assets or liabilities
that the Company has the ability to access as of the measurement date.
Level 2—fair values are based on inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices
for similar assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are observable for the
asset or liability, or inputs that can otherwise be corroborated by observable market data.
Level 3—fair values are based on inputs that are considered unobservable where there is little, if
any, market activity for the asset or liability as of the measurement date. In this circumstance, the
Company has to rely on values derived by independent brokers or
internally-developed
assumptions. Unobservable inputs are developed based on the best information available to the
Company which may include the Company’s own data or bid and ask prices in the dealer market.
Net Asset Value—Certain investments, such as investment funds, that are measured at fair value using the net
asset value per share or its equivalent, as a practical expedient, have not been classified in the fair value hierarchy.
The net asset value is usually provided by general partners or managers.
The great majority of Globe Life's "fixed maturities" are not actively traded and direct quotes are not generally
available. Management therefore determines the fair values of these securities after consideration of data provided
the
by third-party pricing services,
Company's investments in fixed maturities were primarily composed of the following significant security types:
corporate securities, state and municipal securities, U.S. government direct, guaranteed, and government-
sponsored enterprises securities. The remaining security types represented approximately 1% of the total in the
aggregate.
independent broker/dealers, and other resources. At December 31, 2020,
Approximately 97% of the fair value of "fixed maturities" reported at December 31, 2020 was determined using data
provided by third-party pricing services. Prices provided by these services are not binding offers, but are estimated
exit values. Third-party pricing services use proprietary pricing models to determine security values by discounting
cash flows using a market-adjusted spread to a benchmark yield.
For all asset classes within Globe Life's significant security types, third-party pricing services use a common
valuation technique to model the price of the investments using observable market data. The foundation for these
models consists of developing yield spreads based on multiple observable market inputs, including but not limited
to: benchmark yield curves, actual trading activity, new issue yields, broker-dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers, sector-specific data, economic data, and other inputs that are
corroborated in the market. Pricing vendors monitor and review their pricing data continuously with current market
and economic data feeds, augmented by ongoing communication within the dealer community.
Using the observable market inputs described above, spreads to an appropriate benchmark yield are further
developed by the vendors for each security based on security-specific and/or sector-specific risk factors, such as a
security’s terms and conditions (coupon, maturity, and call features), credit rating, sector, liquidity, collateral or other
cash flow options, and other factors that could impact the risk of the security. Embedded repayment options, such
as call and redemption features, are also taken into account in the pricing models. When the spread is determined,
it is added to the security’s benchmark yield. The security's expected cash flows are discounted using this spread-
adjusted yield, and the resulting present value of the discounted cash flows is the evaluated price.
61
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
When third-party vendor prices are not available, the Company attempts to obtain valuations from other sources,
including but not limited to broker/dealers, broker quotes, and prices on comparable securities.
When valuations have been obtained for all securities in the portfolio, management reviews and analyzes the prices
to ensure their reasonableness, taking into account available and observable information. When two or more
valuations are available for a security and the variance between the prices is 10% or less, the close correlation
suggests similar observable inputs were used in deriving the price, and the mean of the prices is used. Securities
valued in this manner are classified as Level 2. When the variance between two or more valuations for a security
exceeds 10%, additional analysis is performed to determine the most appropriate value for that security, using
resources such as broker quotes, prices on comparable securities, recent trades, and any other observable market
data. Further review is performed on the available valuations to determine if they can be corroborated within
reasonable tolerance to any other observable evidence. If one of the valuations or the mean of the available
valuations for a security can be corroborated with other observable evidence, then the corroborated value is used
and reported as Level 2. The Company uses information and analytical
techniques deemed appropriate for
determining the point within the range of reasonable fair value estimates that is most representative of fair value
under current market conditions. Valuations that cannot be corroborated within a reasonable tolerance are classified
as Level 3.
Globe Life invests in a portfolio of private placement fixed maturities that are not actively traded. This portfolio is
managed by third-parties. The portfolio managers provide valuations for the bonds based on a pricing matrix
utilizing observable inputs, such as the benchmark treasury rate and published sector indices, and unobservable
inputs such as an internally-developed credit rating. If observable inputs cannot be corroborated, the fair values are
classified as Level 3. Refer to Note 4—Investments under the caption Quantitative Information about Level 3 Fair
Value Measurements.
The fair values for each class of security and by valuation hierarchy level are indicated in Note 4—Investments
under the caption Fair value measurements, and Note 9—Postretirement Benefits under the caption Pension
Assets.
Fair Value Measurements, Other Financial Instruments: Fair values for cash and cash equivalents, short-term
investments, short-term debt, receivables, and payables approximate carrying value. Cash and cash equivalents
are classified as Level 1. Fair values of commercial mortgage loans are determined based upon expected cash
flows discounted at an appropriate risk-adjusted rate and are classified as Level 3. The fair value of investments in
limited partnerships that provide low-income housing tax credits is based on discounted projected cash flows and
are classified as Level 3. Policy loans are an integral part of Globe Life's subsidiaries’ life insurance policies in force
and their fair values cannot be valued separately from the insurance contracts. Investment funds are based on net
asset value and are excluded from the fair value hierarchy.
The fair values of Globe Life's long and short term debt issues are based on the same methodology as investments
in fixed maturities. At December 31, 2020, observable inputs were available for these debt securities and as such
were classified as Level 2 in the valuation hierarchy. The fair value for each debt instrument as of December 31,
2020 is disclosed in Note 11—Debt.
As described in Note 9—Postretirement Benefits, Globe Life maintains a nonqualified supplemental retirement plan.
Accordingly, the assets that support the liability for this plan are considered general assets of the Company. These
assets consist of the cash value of corporate-owned life insurance policies (COLI) and exchange traded funds
(ETFs). The fair value of the insurance cash values approximates carrying value. Fair values for the ETFs are
derived from direct quotes and are considered Level 1 in the fair value hierarchy.
Current Expected Credit Loss Reserve (CECL adoption): On January 1, 2020, the Company adopted ASU 2016-13,
replacing the GAAP "incurred loss" model with a new methodology referred to as current expected credit losses
(CECL). The previous methodology delayed recognition of credit losses until
it was probable that a loss had
incurred, ultimately resulting in fewer instances of losses being recorded in earnings. The new CECL methodology
62
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
is forward looking—encompassing relevant information about historical experience, current conditions, as well as
reasonable and supportable forecasts that affect the collectability of a reported amount.
losses under the CECL methodology is applicable to financial assets
The measurement of expected credit
measured at amortized cost, including loan receivables. Upon adoption, the standard affected the Company's
commercial mortgage loans ("Other long-term investments") and agent debit balances ("Other receivables"). The
Company adopted the standard using the modified retrospective method.
The Company recorded a cumulative effect adjustment, net of
tax, of $454 thousand to retained earnings,
consisting of $265 thousand and $189 thousand for commercial mortgage loans and agent debit balances,
respectively. Refer to the table below for pre-tax amounts and Note 4—Investments for additional details.
As reported on
December 31,
2019
Pre-tax impact
of adoption
As reported on
January 1,
2020
Assets:
Commercial mortgage loans ................................................................. $
137,692 $
Agent debit balances.............................................................................
423,877
(335) $
(240)
137,357
423,637
In addition, the standard made changes to the accounting for available-for-sale debt securities through the removal
of "other-than-temporary-impairment" (OTTI) write downs and replaced them with an allowance for credit losses.
The new methodology will allow the Company to record reversals of credit losses in situations where the estimate of
credit losses declines through current period net income ("Realized gains (losses)").
The Company adopted the standard using the prospective transition approach for available-for-sale fixed maturities
for which OTTI had been recognized prior to January 1, 2020. As a result, the amortized cost basis and the effective
interest rate remain unchanged after the adoption of ASU 2016-13. Amortized cost will now be reflected as
"amortized cost, net of allowance for credit losses" or "amortized cost, net." The Company has not elected the fair
value option for any financial assets recorded at amortized cost that would be in scope of this standard.
Current Expected Credit Loss Reserve (fixed maturities): At the onset of the evaluation, the Company individually
assesses each fixed maturity, on a quarterly basis, to determine whether it intends to sell, or it is more likely than not
that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria are met,
the Company will write down the fixed maturity's amortized cost basis to fair value through "Realized gains
(losses)".
If neither of the aforementioned criteria are met, the Company will evaluate whether the decline in fair value has
resulted from a credit event. The Company will evaluate many factors, as further described below, to determine the
present value of the expected cash flows. A credit loss occurs when the present value of the expected cash flows is
less than the amortized cost basis. This will result in the recording of an allowance for credit losses as a contra
asset account to the amortized cost basis with an offsetting provision for credit losses in "Realized gains (losses)"
on the Consolidated Statements of Operations. Additionally, the CECL methodology includes a fair value floor where
the allowance for credit loss for a security cannot exceed the difference between fair value and amortized cost.
When it is determined that there is not a credit loss, the decline in fair value is recognized in Other comprehensive
income.
All changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense.
Losses recorded to the allowance for credit losses are management's best estimate of the uncollectibility of principal
and interest of a fixed maturity.
63
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The evaluation of Globe Life's securities for credit losses is a process that is undertaken at least quarterly and is
overseen by a team of investment and accounting professionals. The process for making this determination is highly
subjective and involves the careful consideration of many factors. The factors considered include, but are not limited
to:
•
•
•
•
•
The Company’s lack of intent to sell the debt security before recovery;
Whether it is more likely than not the Company will be required to sell prior to maturity;
The reason(s) for the credit related losses;
The financial condition of the issuer and the prospects for recovery in fair value of the security;
Expected future cash flows.
The relative weight given to each of these factors can change over time as facts and circumstances change. In
many cases, management believes it is appropriate to give more consideration to prospective factors than to
retrospective factors. Prospective factors that are given more weight include prospects for recovery, the Company’s
ability and intent to hold the security until anticipated recovery, and expected future cash flows.
Among the facts and information considered in the process are:
•
•
•
•
•
•
•
•
•
Financial statements of the issuer
Changes in credit ratings of the issuer
The value of underlying collateral
News and information included in press releases issued by the issuer
News and information reported in the media concerning the issuer
News and information published by or otherwise provided by securities, economic, or research
analysts
The nature and amount of recent and expected future sources and uses of cash
Default on a required payment
Issuer bankruptcy filings
The expected cash flows are determined using judgment and the best information available to the Company. Inputs
used to derive expected cash flows generally include expected default rates, current levels of subordination, and
estimated recovery rate. The discount rate utilized in the discounted cash flows is the effective interest rate, which is
the rate of return implicit in the asset at acquisition.
Current Expected Credit Loss Reserve (commercial mortgage loans): Effective January 1, 2020, the Company
evaluates the performance and credit quality of the commercial mortgage loan portfolio at least on a quarterly basis,
or as needed, by utilizing common metrics such as loan-to-value or debt-service ratios as well as covenants, local
market conditions, borrower quality, and underlying collateral. The fair value of the underlying collateral is based on
a third-party appraisal of the property at origination of the loan. The fair value is assessed on an annual basis or
more frequently when a loan is materially underperforming, 30 days delinquent, or in technical default. The
Company determines the probability of estimated losses for the commercial mortgage loan portfolio on a pool basis
each quarter and records an allowance. The allowance for credit
losses is based on estimates, historical
experience, probability of loss, value of the underlying collateral, and macro factors that affect the collectability of
the loan. Each loan within the pool is assigned a risk rating (credit quality indicator) of low, medium, and high based
on risk and expected future performance. A loan that is assigned as high risk would have a higher probability of a
potential principal loss. The assigned risk category and the estimated loss rate is adjusted each quarter for current
and forecasted economic factors management believes are relevant.
64
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
If management determines that foreclosure of a particular property is probable, the Company may elect the practical
expedient for an individual mortgage loan to estimate the expected credit losses, which are based on the fair value
of the property less amortized cost, adjusted for selling and other associated costs. See Note 4 for current activity.
Cash: "Cash" consists of balances on hand and on deposit in banks and financial institutions.
Accrued investment income: "Accrued investment income" consists of interest income or dividends earned on the
investment portfolio, but which are yet to be received as of the balance sheet date. The Company will write-off
accrued investment income that is deemed to be uncollectible related to the fixed maturities.
"Accrued investment income" also consists of interest income earned on the commercial mortgage loan portfolio,
but which is yet to be received as of the balance sheet date. Accrued investment income will be placed in
nonaccrual status at
the time the loan is 90 days delinquent or otherwise deemed to be uncollectible by
management. Any currently accrued investment income will subsequently be written off. As of December 31, 2020,
the accrued interest receivable for commercial mortgage loans was $433 thousand. Commercial mortgage loans
generally pay interest monthly, therefore accrued interest is typically for a period of less than 30 days.
As a practical expedient, the Company excludes the accrued investment income from the amortized cost basis of
the investment and separately reports it in another financial statement line item, "Accrued investment income."
Additionally, the amount will be excluded from disclosures within Note 4—Investments.
Other Receivables: Agent debit balances primarily represent commissions advanced to insurance agents, a
common industry practice. These balances are repaid to the Company over time, generally one year, as the
premiums associated with the advanced commissions are collected by the Company and a portion of the agents'
commissions on such premiums are retained in order to repay the balances. The balances were $456 million at
December 31, 2020 and $424 million at December 31, 2019. When an agent sells a policy, commissions are
advanced to the agent, and the collection of the advance is made as long as the policy stays in force. While there is
a susceptibility to loss should an agent terminate or excessive policy lapses occur, the ability of the Company to
continue to collect an agent's commission streams over time from prior sales of policies reduces the Company's
exposure to loss.
The Company has a very low inherent risk with regards to the collection of agent debit balances and views these
balances as recoverable since they are, in aggregate, less than the estimated present value of future commissions
discounted at a conservative rate which includes assumptions for lapses and mortality. The Company’s security, or
collateral, is in the form of future commission streams collected over the life of the policies sold by the respective
agents, which ultimately revert to the Company in the event an agent is terminated. The Company evaluated the
agent debit balances on a pool basis to determine the allowance for credit losses, as the loans have similar
characteristics. A provision for credit losses will be recorded in "Realized gains (losses)" on the Consolidated
Statements of Operations and the asset balance will be reflected in agent debit balances, net of allowance for credit
losses ("Other receivables"). Based on factors considered by management, aside from the cumulative effect
adjustment upon adoption described above, there were no additional credit losses recorded during the year ended
December 31, 2020. As of December 31, 2020, the allowance for credit losses was $1.2 million.
Deferred Acquisition Costs: Certain costs of acquiring new insurance business are deferred and recorded as an
asset. These costs are essential for the acquisition of new insurance business and are directly related to the
issuance of an insurance contract including sales commissions, policy issue costs, and underwriting
successful
costs. Additionally, deferred acquisition costs (DAC) include 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 and VOBA are amortized in a systematic manner which matches these costs with the associated revenues.
Policies other than universal life-type policies are amortized with interest over the estimated premium-paying period
of the policies in a manner which charges each year’s operations in proportion to the receipt of premium income.
65
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Universal life-type policies are amortized with interest in proportion to estimated gross profits. The assumptions
used to amortize acquisition costs include interest, mortality, morbidity, and persistency, and are consistent with
those used to estimate the liability for future policy benefits. For interest-sensitive and deposit-type products, these
assumptions are reviewed on a regular basis and are revised if actual experience differs significantly from original
expectations. For all other products, amortization assumptions are generally not revised once established.
DAC and VOBA are 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 DAC and VOBA assets. These cash flows consist primarily of premium income, less benefits and
expenses. The present value of these cash flows, less the benefit reserve, is then compared with the unamortized
deferred acquisition cost 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, as described under the caption Future Policy Benefits. Refer to Note 5—Deferred
Acquisition Costs.
Advertising Costs: Costs related to advertising are generally charged to expense as incurred. However, certain
Direct
to Consumer advertising costs are capitalized when there is a reliable and demonstrated relationship
between total costs and future benefits that is a direct result of incurring these costs. Direct to Consumer advertising
costs consist primarily of the production and distribution costs of direct mail advertising materials, and when
capitalized are included as a component of DAC. Additionally, they are amortized in the same manner as other
DAC. Direct to Consumer advertising costs charged to earnings and included in other operating expense were $9.8
million, $9.5 million, and $9.0 million in 2020, 2019, and 2018, respectively. Unamortized capitalized advertising
costs included within DAC were $1.4 billion at December 31, 2020 and $1.3 billion at December 31, 2019.
Goodwill: The excess cost of a business acquired over the fair value of net assets acquired is reported as goodwill.
In accordance with the guidance, goodwill is subject to impairment testing on an annual basis, or whenever potential
impairment triggers occur. Impairment testing involves the performance of a qualitative analysis, which involves
assessing current events and circumstances to determine if it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. In the event the fair value is less than the carrying value, further testing is
required to determine the amount of impairment, if any. If there is an impairment in the goodwill of any reporting unit,
it is written down and charged to earnings in the period of the test. Globe Life tested its goodwill annually as of June
30th for each of the years 2018 through 2020. The Company's goodwill was not impaired in any of those periods.
Low-Income Housing Tax Credit Interests: Globe Life invests in limited partnerships that provide low-income
housing tax credits and other related federal income tax benefits to the Company. Globe Life holds passive interests
in limited partnerships that provide investment returns through the provision of tax benefits (principally from the
transfer of federal or state tax credits related to federal low-income housing). These investments are considered to
be VIEs and do not qualify for consolidation. The carrying value of the Company's investment in these entities was
$306 million and $206 million at December 31, 2020 and 2019, respectively, and was included in "Other assets" on
the Consolidated Balance Sheets. As of December 31, 2020, Globe Life was obligated under future commitments of
$162 million, which are recorded in "Other liabilities". For guaranteed investments acquired prior to January 1, 2015,
the Company utilizes the effective-yield method of amortization, while the proportional method of amortization is
utilized for all non-guaranteed and guaranteed investments acquired on or after January 1, 2015. All amortization
expense is recorded in "Income tax benefit (expense)" on the Consolidated Statements of Operations.
Property and Equipment: Property and equipment, included in “Other assets,” is reported at cost less accumulated
depreciation. Depreciation is recorded primarily on the straight line method over the estimated useful lives of these
assets which range from three to ten years for equipment and fifteen to forty years for buildings and improvements.
Ordinary maintenance and repairs are charged to income as incurred. Impairments, if any, are recorded when
certain events and circumstances become evident that the fair value of the asset is less than its carrying amount.
Original cost of property and equipment was $350 million at December 31, 2020 and $298 million at December 31,
2019. Accumulated depreciation was $164 million at the end of 2020 and $137 million at the end of 2019.
Depreciation expense was $17 million in 2020, $16 million in 2019, and $13 million in 2018. Internally generated
software costs are expensed as incurred in the preliminary project phase and post-implementation phase, and are
66
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
capitalized during the application development stage. Additionally, implementation costs incurred in a hosting
arrangement that is a service contract are capitalized.
life-type products is
Future Policy Benefits: The liability for future policy benefits for annuity and universal
represented by policy account value. The liability for future policy benefits for all other life and health products,
approximately 90% of total liabilities for future policy benefits, is determined on the net level premium method. This
method provides for the present value of expected future benefit payments less the present value of expected future
net premiums, based on estimated investment yields, mortality, morbidity, persistency, and other assumptions which
were considered appropriate at the time the policies were issued. For limited-payment contracts, a deferred profit
liability is also recorded which causes profits to emerge over the life of the contract in proportion to the amount of
insurance in force.
Assumptions used for traditional life and health insurance products are based primarily on Company experience.
Assumptions for interest rates range from 2.5% to 7.0% for Globe Life's insurance companies with an overall
weighted average assumed rate of 5.7%. Mortality tables used for individual life insurance include various industry
tables and reflect modifications of a variety of generally accepted actuarial tables based on Company experience.
Morbidity assumptions for individual health are based on Company experience and industry data. Withdrawal and
termination assumptions are based on Globe Life's experience. Once established, assumptions for these products
are generally not changed. An additional provision is made on most products to allow for possible adverse deviation
from the assumptions. These estimates are reviewed annually and compared with actual experience. If it is
determined that existing contract liabilities, together with the present value of future gross premiums, will not be
sufficient to cover the present value of future benefits and to recover unamortized deferred acquisition costs, then a
premium deficiency exists. Such a deficiency would be recognized immediately by a charge to earnings and either a
reduction of unamortized deferred acquisition costs or an increase in the liability for future policy benefits. From that
point forward, the liability for future policy benefits would be based on revised assumptions.
Policy Claims and Other Benefits Payable: Globe Life establishes a liability for known policy benefits payable and
an estimate of claims that have been incurred but not yet reported to the Company. Globe Life makes an estimate of
unreported claims after careful evaluation of all information available to the Company. This estimate is based on
prior experience and is reviewed quarterly. However, there is no certainty the stated liability for claims and other
benefits, including the estimate of unsubmitted claims, will be Globe Life's ultimate obligation. For more information,
see Note 7—Liability for Unpaid Claims.
Income Taxes: "Income taxes" are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the consolidated
financial statement book values and tax bases of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date.
Postretirement Benefits: Globe Life accounts for its postretirement defined benefit plans by recognizing the funded
status of those plans on its Consolidated Balance Sheets in accordance with accounting guidance. Periodic gains
and losses attributable to changes in plan assets and liabilities that are not recognized as components of net
periodic benefit costs are recognized as components of other comprehensive income, net of tax. The supplemental
executive retirement plan is accounted for consistent with the qualified noncontributory pension plan. The net assets
are included in a Rabbi Trust and recorded in Other Assets on the Consolidated Balance Sheets. More information
concerning the accounting and disclosures for postretirement benefits is found in Note 9—Postretirement Benefits.
Treasury Stock: Globe Life accounts for purchases of treasury stock on the cost method. Issuance of treasury stock
is accounted for using the weighted-average cost method. More information is found in Note 12—Shareholders'
Equity.
67
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Recognition of Premium Revenue and Related Expenses: Premium income for traditional
long-duration life and
health insurance products is recognized evenly over the contract period and when due from the policyholder.
Premiums for short-duration health contracts are recognized as revenue over the contract period in proportion to the
life-type and annuity contracts are added to the policy
insurance protection provided. Premiums for universal
account value, and revenues for such products are recognized as charges to the policy account value for mortality,
administration, and surrenders (retrospective deposit method). Life premium includes policy charges of $14.7
million, $15.6 million, and $16.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.
Other premium consists of annuity policy charges in each year. For most insurance products, the related benefits
and expenses are matched with revenues by means of the provision of future policy benefits and the amortization of
DAC in a manner which recognizes profits as they are earned over the revenue recognition period. For limited-
payment life insurance products, the profits are recognized over the contract period.
Stock-Based Compensation: Globe Life accounts for stock-based compensation by recognizing an expense in the
consolidated financial statements based on the “fair value method.” The fair value method requires that a fair value
be assigned to a stock option or other stock grant on its grant date and that this value be amortized over the
grantees’ service period.
The fair value method requires the use of an option valuation model to value employee stock options. Globe Life
has elected to use the Black-Scholes valuation model for option expensing. A summary of assumptions for options
granted in each of the three years 2018 through 2020 is as follows:
Volatility factor..............................................................................................................
15.7 %
15.7 %
13.7 %
Dividend yield...............................................................................................................
Expected term (in years)..............................................................................................
Risk-free rate................................................................................................................
0.7 %
5.12
1.2 %
0.8 %
5.10
2.5 %
0.7 %
5.76
2.7 %
2020
2019
2018
The expected term is generally derived from Company experience. However, expected terms are determined based
on the simplified method as permitted under the ASC 718, Stock Compensation, topic when Company experience is
insufficient. On April 26, 2018, the shareholders approved the Globe Life Inc. 2018 Incentive Plan, formerly the
Torchmark Corporation 2018 Incentive Plan (the "2018 Incentive Plan"). The 2018 Incentive Plan replaced all
previous plans. The 2018 Incentive Plan allows for option grants for employees with a seven-year contractual term
which vest over three years in addition to ten-year grants which vest over five years as permitted by the previous
plans. Director grants vest over six months. The Company has sufficient experience with seven-year grants that
vest in three years, but insufficient historical experience with five-year vesting. Therefore, the Company has used
the simplified method to determine the expected term for the ten-year grants with five-year vesting and will do so
until adequate experience is developed. Volatility and risk-free interest rates are assumed over a period of time
consistent with the expected term of the option. Volatility is measured on a historical basis. Monthly data points are
utilized to derive volatility for periods greater than three years. Expected dividend yield is based on current dividend
yield held constant over the expected term. Once the fair value of an option has been determined, it is amortized on
a straight-line basis over the employee’s service period for that grant (from the grant date to the date the grant is
fully vested). Expenses for restricted stock and restricted stock units are based on the grant date fair value allocated
on a straight-line basis over the service period. Performance share expense is recognized based on management’s
estimate of the probability of meeting the metrics identified in the performance share award agreement, assigned to
each service period as these estimates develop.
Stock-based compensation expense is included in “Other operating expense” in the Consolidated Statements of
Operations. Globe Life management views all stock-based compensation expense as a Corporate and Other
expense and, therefore, presents it as such in its segment analysis. More information concerning the Company's
segments is provided in Note 14—Business Segments.
68
GL 2020 FORM 10-K
ASU No.
2016-13/2019-04/20
19-05, Financial
Instruments—Credit
Losses (Topic 326):
Measurement of
Credit Losses on
Financial
Instruments, with
clarification
guidance issued in
April 2019.
ASU No. 2018-14,
Compensation-
Retirement
Benefits-Defined
Benefit Plans-
General (Subtopic
715-20), Changes
to the Disclosure
Requirements for
Defined Benefit
Plans
ASU No. 2020-04,
Reference Rate
Reform (Topic 848):
Facilitation of the
Effects of Reference
Rate Reform on
Financial Reporting
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Earnings per Share: Globe Life presents basic and diluted earnings per common share (EPS) on the face of the
Consolidated Statements of Operations for income from continuing operations and income from discontinued
operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average
common shares outstanding for the period. Diluted EPS is calculated by adding to shares outstanding the additional
net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted
into common shares. For more information on earnings per share, see Note 12—Shareholders' Equity.
Accounting Pronouncements Adopted in the Current Year
Standard
Description
This standard ("CECL") provides
financial statement users with more
decision-useful information about
the expected credit losses on
financial instruments that are
recorded at amortized cost.
Additionally, it changes the loss
impairment methodology for
available-for-sale fixed maturities
by the use of an allowance rather
than a direct write down.
Effective Date
This standard
became effective
on January 1, 2020.
Effect on the Consolidated Financial
Statements
The Company's available-for-sale fixed
maturities and other financing receivables
(commercial mortgage loans and agent
debit balances) were concluded to be the
relevant financial assets within the scope of
the standard. See Note 1 for information on
accounting
the
policies.
adoption
revised
and
The standard removes disclosures
that are no longer considered cost
beneficial, clarifies the specific
requirements of disclosures and
adds disclosure requirements
identified as relevant to defined
benefit plans.
This standard
became effective
on December 31,
2020, and was
applied
retrospectively.
The adoption of this standard did not have a
material impact on the consolidated financial
statements. See updated disclosures in
Note 9.
This standard was issued primarily
to provide optional expedients for
simplifying the accounting for
contract modifications to existing
agreements, which is expected to
arise from the market's transition
from LIBOR to the secured
overnight financing rate (SOFR) as
a result of reference rate reform.
This standard
became effective
upon issuance, or
March 12, 2020,
and will remain
effective until
December 31,
2022.
The Company has limited assets and
liabilities that utilize LIBOR as a benchmark
rate. We will continue to monitor
the
progress towards the establishment of a
new floating rate; however, we do not
expect a material impact at this time.
69
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Accounting Pronouncements Yet to be Adopted
Standard
Description
Effective Date
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.
ASU No.
2018-12/2019-09/20
20-11,
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.
Effect on the Consolidated Financial
Statements
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.
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.
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 is
effective beginning
January 1, 2021,
and will be applied
prospectively. Early
adoption is not
permitted.
The Company does not expect the adoption
of this standard to have an impact on the
consolidated financial statements.
70
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 2—Statutory Accounting
Life insurance subsidiaries of Globe Life are required to file statutory financial statements with state insurance
regulatory authorities. Accounting principles used to prepare these statutory financial statements differ from GAAP.
Consolidated net income and shareholders’ equity (capital and surplus) on a statutory basis for the insurance
subsidiaries were as follows:
Net Income
Year Ended December 31,
Shareholders’ Equity
At December 31,
2020
2019
2018
2020
2019
Life insurance subsidiaries........................ $
441,589
$
462,515
$
437,549
$
1,408,281
$
1,398,274
The excess, if any, of shareholders' equity of the insurance subsidiaries on a GAAP basis over that determined on a
statutory basis is not available for distribution by the insurance subsidiaries to the Parent Company without
regulatory approval.
Insurance subsidiaries’ statutory capital and surplus necessary to satisfy regulatory
requirements in the aggregate was $520 million at December 31, 2020. More information on the restrictions on the
payment of dividends can be found in Note 12—Shareholders' Equity.
The Company's statutory financial statements are presented on the basis of accounting practices prescribed by the
insurance department of the state of domicile of each insurance subsidiary. While all states have adopted the
National Association of Insurance Commissioners’ (NAIC) statutory accounting practices (NAIC SAP) as the basis
for statutory accounting, certain states have retained prescribed practices of their respective insurance code or
administrative code which can differ from NAIC SAP. For Globe Life's life insurance companies, there are no
significant differences between NAIC SAP and the accounting practices prescribed by the states of domicile.
71
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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 each of the years 2018 through 2020:
Available
for Sale
Assets
Deferred
Acquisition
Costs
Foreign
Exchange
Pension
Adjustments
Total
For the year ended December 31, 2018:
Balance at January 1, 2018............................... $ 1,569,289
$
(8,547) $
16,302
$
(152,770) $ 1,424,274
Other comprehensive income (loss) before
reclassifications, net of tax................................
Reclassifications, net of tax...............................
(1,132,202)
(1,389)
Other comprehensive income (loss)..................
(1,133,591)
Balance at December 31, 2018 ......................
435,698
4,384
—
4,384
(4,163)
(9,807)
—
(9,807)
6,495
22,290
11,925
34,215
(1,115,335)
10,536
(1,104,799)
(118,555)
319,475
For the year ended December 31, 2019:
Other comprehensive income (loss) before
reclassifications, net of tax................................
1,557,883
(1,753)
Reclassifications, net of tax...............................
Other comprehensive income (loss)..................
Balance at December 31, 2019 ......................
(10,931)
1,546,952
1,982,650
—
(1,753)
(5,916)
5,563
—
5,563
12,058
(32,102)
1,529,591
6,695
(4,236)
(25,407)
1,525,355
(143,962)
1,844,830
For the year ended December 31, 2020:
Other comprehensive income (loss) before
reclassifications, net of tax................................
Reclassifications, net of tax...............................
1,167,003
25,919
Other comprehensive income (loss)..................
1,192,922
Balance at December 31, 2020 ...................... $ 3,175,572
1,212
—
1,212
11,244
(34,103)
1,145,356
—
13,139
39,058
11,244
(20,964)
1,184,414
$
(
(4,704) $
)
23,302
$
(
(164,926) $ 3,029,244
)
72
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Reclassification adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are
presented below for the three years ended December 31, 2020.
Component Line Item
Unrealized investment (gains) losses on
available for sale assets:
Year Ended December 31,
2019
2020
2018
Affected line items in the
Statement of Operations
Realized (gains) losses.........................................
$ 26,345
$ (19,352) $ (5,715) Realized (gains) losses
Amortization of (discount) premium.......................
6,464
5,515
3,957 Net investment income
Total before tax....................................................
32,809
(13,837)
(1,758)
Tax.......................................................................
(6,890)
2,906
369
Income tax benefit (expense)
Total after-tax....................................................
25,919
(10,931)
(1,389)
Pension adjustments:
Amortization of prior service cost..........................
Amortization of actuarial (gain) loss......................
Total before tax....................................................
632
16,000
16,632
631
7,843
8,474
535 Other operating expense
14,560 Other operating expense
15,095
Tax.......................................................................
(3,493)
(1,779)
(3,170)
Income tax benefit (expense)
Total after-tax....................................................
13,139
Total reclassification (after-tax) ........................... $ 39,058
6,695
11,925
)
$ (4,236) $ 10,536
(
Note 4—Investments
Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance
for credit losses at December 31, 2020 and 2019, 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 the corporates by sector.
As noted in Note 1—Significant Accounting Policies, the Company prospectively adopted ASU 2016-13 as of
January 1, 2020 for the available-for-sale fixed maturities. Results after January 1, 2020 are presented under ASU
2016-13, while prior periods continue to be reported in accordance with previously applicable GAAP. See additional
discussion of the allowance for credit losses later in this note.
73
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
At December 31, 2020
Amortized
Cost
Allowance
for Credit
Losses
Gross
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......................................... $
States, municipalities, and political
subdivisions.......................................
Foreign governments........................
Corporates, by sector:
Financial.......................................
Utilities..........................................
Energy..........................................
Other corporate sectors................
380,602
$
— $
87,272
$
(43) $
467,831
1,880,607
52,913
4,404,203
1,975,460
1,623,970
6,687,644
—
—
—
—
(3,346)
251,291
2,635
(315)
(898)
2,131,583
54,650
1,016,813
(24,221)
5,396,795
608,595
346,197
—
1,727,366
(108)
2,583,947
(3,083)
(6,218)
1,963,738
8,408,792
Total corporates..........................
14,691,277
(3,346)
3,698,971
(33,630)
18,353,272
Collateralized debt obligations..........
Other asset-backed securities...........
57,007
134,739
—
—
23,460
3,614
(8,869)
(3,778)
71,598
134,575
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.
At December 31, 2019
Amortized
Cost
Gross
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........................... $
States, municipalities, and political subdivisions.......
396,079
$
41,737
$
(296) $
437,520
1,559,736
158,546
(626)
(396)
1,717,656
27,551
Foreign governments................................................
25,874
2,073
Corporates, by sector:
Financial...............................................................
Utilities..................................................................
Energy..................................................................
Other corporate sectors........................................
4,101,917
1,937,738
1,678,969
6,514,677
701,196
416,114
269,640
955,908
(22,307)
4,780,806
(1,565)
2,352,287
(33,725)
1,914,884
(16,765)
7,453,820
Total corporates..................................................
14,233,301
2,342,858
(74,362)
16,501,797
Collateralized debt obligations..................................
56,990
24,298
Other asset-backed securities...................................
5,094
Total fixed maturities ......................................... $16,415,776 $ 2,574,606
143,796
(7,184)
(371)
74,104
148,519
$
(
(83,235) $18,907,147
)
100
(1) Amount reported in the balance sheet.
(2) At fair value.
74
GL 2020 FORM 10-K
2
10
—
26
12
9
40
87
—
1
2
9
—
25
13
10
40
88
—
1
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
A schedule of fixed maturities available for sale by contractual maturity date at December 31, 2020 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 December 31, 2020
Amortized
Cost, net
Fair
Value
Fixed maturities available for sale:
Due in one year or less............................................................................................................. $
Due after one year through five years.......................................................................................
Due after five years through ten years......................................................................................
Due after ten years through twenty years.................................................................................
Due after twenty years..............................................................................................................
Mortgage-backed and asset-backed securities.........................................................................
70,732
$
72,395
781,183
1,870,527
6,109,815
8,169,528
192,014
866,408
2,260,011
7,884,526
9,923,706
206,463
$ 17,193,799
$ 21,213,509
Analysis of investment operations: "Net investment income" for the three years ended December 31, 2020 is
summarized as follows:
Year Ended December 31,
2020
2019
2018
Fixed maturities available for sale.................................................................... $
873,352
$
864,280
$
843,510
Policy loans......................................................................................................
Other long-term investments(1).........................................................................
Short-term investments....................................................................................
Less investment expense.................................................................................
44,801
26,196
545
944,894
(17,832)
43,434
16,198
2,592
926,504
(16,045)
41,359
10,638
2,642
898,149
(15,637)
Net investment income .............................................................................. $
927,062
$
910,459
$
882,512
(1) For the years ended 2020, 2019 and 2018, the investment funds, accounted for under the fair value option method, recorded $15.3 million,
$5.6 million and $3.9 million, respectively in net investment income.
An analysis of "realized gains (losses)" is as follows:
Year Ended December 31,
2020
2019
2018
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)......................................................................................... $
(22,999) $
19,354
$
Provision for credit losses............................................................................
Investment funds—fair value option..............................................................
Other investments.........................................................................................
Realized gains (losses) from investments .............................................
Realized loss on redemption of debt(2) .....................................................
Applicable tax................................................................................................
(3,346)
1,045
21,563
(3,737)
(634)
(4,371)
1,955
—
1,256
11
20,621
—
20,621
(4,330)
5,715
—
2,650
909
9,274
(11,078)
(1,804)
379
Realized gains (losses), net of tax .......................................................... $
(
(2,416) $
)
16,291
$
)
(1,425)
(
(1) For the years ended 2020, 2019 and 2018, the Company recorded $219.8 million, $243.2 million and $193.4 million of exchanges of fixed
maturities (noncash transactions) that resulted in $7.9 million, $20.5 million, and $10.1 million, respectively in realized gains (losses).
(2) Refer to Note 11—Debt for further discussion.
75
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of the net change in unrealized investment gains (losses) is as follows:
Change in investment gains (losses) on:
Fixed maturities available for sale................................................................. $
1,528,339
$
1,946,910
$
(1,429,763)
Selected information about sales of fixed maturities available for sale is as follows:
Year Ended December 31,
2020
2019
2018
Year Ended December 31,
2020
2019
2018
Fixed maturities available for sale:
Proceeds from sales(1)................................................................................... $
52,681
$
79,108
$
32,021
Gross realized gains......................................................................................
Gross realized losses....................................................................................
2,642
(39,153)
1,227
(3,674)
66
(13,996)
(1) There were no unsettled sales in the periods ended December 31, 2020, 2019 and 2018.
Fair value measurements: The following tables represent the fair value of fixed maturities measured on a recurring
basis at December 31, 2020 and 2019:
Fair Value Measurement at December 31, 2020:
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 ................... $
States, municipalities, and political subdivisions
Foreign governments ........................................
Corporates, by sector:
Financial ..........................................................
Utilities .............................................................
Energy .............................................................
Other corporate sectors ...................................
Total corporates ............................................
Collateralized debt obligations ..........................
Other asset-backed securities ...........................
Total fixed maturities .................................... $
—
—
—
—
—
—
—
—
—
—
—
$
467,831
$
2,131,583
54,650
5,222,066
2,400,602
1,925,549
8,090,550
17,638,767
—
121,705
—
—
—
$
467,831
2,131,583
54,650
174,729
183,345
38,189
318,242
714,505
71,598
12,870
5,396,795
2,583,947
1,963,738
8,408,792
18,353,272
71,598
134,575
$
20,414,536
$
798,973
$ 21,213,509
Percentage of total.............................................
— %
96 %
4 %
100 %
76
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value Measurement at December 31, 2019:
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 .................... $
States, municipalities, and political subdivisions .
Foreign governments ..........................................
Corporates, by sector:
Financial ............................................................
Utilities ...............................................................
Energy ...............................................................
Other corporate sectors .....................................
Total corporates ..............................................
Collateralized debt obligations ............................
Other asset-backed securities .............................
Total fixed maturities ...................................... $
—
—
—
—
—
—
—
—
—
—
—
$
437,520
$
1,717,656
27,551
4,628,875
2,195,539
1,873,482
7,131,773
15,829,669
—
135,342
—
—
—
$
437,520
1,717,656
27,551
151,931
156,748
41,402
322,047
672,128
74,104
13,177
4,780,806
2,352,287
1,914,884
7,453,820
16,501,797
74,104
148,519
$
18,147,738
$
759,409
$ 18,907,147
Percentage of total..................................................
— %
96 %
4 %
100 %
77
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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):
Balance at January 1, 2018 ....................................... $
14,049
$
71,581
$
582,810
$
668,440
Analysis of Changes in Fair Value Measurements Using
Significant Unobservable Inputs (Level 3)
Asset-
backed
Securities
Collateralized
Debt
Obligations
Corporates
Total
Included in realized gains/losses................................
Included in other comprehensive income...................
Acquisitions(1).............................................................
Sales...........................................................................
Amortization................................................................
Other(2)........................................................................
Transfers into Level 3(3)..............................................
Transfers out of Level 3(3)...........................................
—
(591)
—
—
—
(476)
—
—
Balance at December 31, 2018 ..................................
12,982
Included in realized gains/losses................................
Included in other comprehensive income...................
Acquisitions(1).............................................................
Sales...........................................................................
Amortization................................................................
Other(2)........................................................................
Transfers into Level 3(3)..............................................
Transfers out of Level 3(3)...........................................
—
708
—
—
—
(513)
—
—
Balance at December 31, 2019 ..................................
13,177
Included in realized gains/losses................................
Included in other comprehensive income...................
Acquisitions(1).............................................................
Sales...........................................................................
Amortization................................................................
Other(2)........................................................................
Transfers into Level 3(3)..............................................
Transfers out of Level 3(3)...........................................
—
(173)
—
—
—
(134)
—
—
—
3,170
—
—
4,737
(6,119)
—
—
73,369
—
1,514
—
—
4,596
(5,375)
—
—
74,104
—
(2,523)
—
—
4,551
(4,534)
—
—
698
(23,687)
27,453
—
16
698
(21,108)
27,453
—
4,753
(38,352)
(44,947)
4,533
—
553,471
396
30,378
—
—
13
(19,154)
107,024
—
672,128
1,579
17,082
67,820
—
12
4,533
—
639,822
396
32,600
—
—
4,609
(25,042)
107,024
—
759,409
1,579
14,386
67,820
—
4,563
(44,116)
(48,784)
—
—
—
—
Balance at December 31, 2020 .................................. $
12,870
$
71,598
$
714,505
$
798,973
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the
reporting period:
Asset-
backed
Securities
Collateralized
Debt
Obligations
Corporates
Total
2018 ........................................................................ $
(591) $
3,170
$
(23,687) $
(21,108)
2019 ........................................................................
2020 ........................................................................
708
(173)
1,514
(2,523)
30,378
17,082
32,600
14,386
(1) Acquisitions of Level 3 investments in each of the years 2018 through 2020 are comprised of private-placement fixed maturities.
(2) Includes capitalized interest, foreign exchange adjustments, and principal repayments.
(3) Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available, while
transfers out of Level 3 occur when observable inputs become available.
78
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Transfers between levels within the hierarchy occur when there are changes in the observability of the inputs and
market data. Transfers into Level 3 occur when there is little unobservable market activity for the asset/liability as of
the measurement date and the Company is required to rely upon internally-developed assumptions or third-parties.
Transfers out of Level 3 occur when quoted prices in active markets becomes available for identical assets/
liabilities or the ability to corroborate by observable market data.
The following table represents quantitative information about Level 3 fair value measurements:
Quantitative Information about Level 3 Fair Value Measurements
As of December 31, 2020
Private placement fixed maturities............. $
612,906
Fair Value
Other corporate bonds...............................
101,599
Collateralized debt obligations...................
71,598
Asset-backed securities.............................
12,870
Valuation
Techniques
Determination
of credit spread
Discounted
Cash Flows
Present Value
Techniques
Discounted
Cash Flows
Determination
of credit spread
Discounted
Cash Flows
Significant
Unobservable
Input
Range
Weighted-
Average(1)
Credit rating
A+ to BB-
BBB
Discount rate
1.04% - 8.29%
2.29%
Market Quotes
100.05%
100.05%
Discount rate
6.35% - 7.10%
6.98%
Credit rating
BBB-
BBB-
Discount rate
5.41%
5.41%
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
$
798,973
The private placement fixed maturities and asset-backed securities reported as Level 3 are managed by third-party
investment managers. These securities are valued based on the contractual cash flows discounted by a yield
determined as a treasury benchmark adjusted for a credit spread. The credit spread is developed from observable
indices for similar public fixed maturities and unobservable indices for private fixed maturities for corresponding
credit ratings. However, the credit ratings for the securities are considered unobservable inputs, as they are
assigned by the third-party investment manager based on a quantitative and qualitative assessment of the credit
underwritten. A higher (lower) credit rating would result in a higher (lower) valuation.
The collateral underlying collateralized debt obligations for which fair values are reported as Level 3 consists
primarily of trust preferred securities issued by banks and insurance companies. Collateralized debt obligations are
valued at the present value of expected future cash flows using an unobservable discount rate. Expected cash flows
are determined by scheduling the projected repayment of the collateral assuming no future defaults, deferrals, or
recoveries. The discount rate is risk-adjusted to take these items into account. A significant increase (decrease) in
the discount rate will produce a significant decrease (increase) in fair value. Additionally, a significant increase
(decrease) in the cash flow expectations would result in a significant increase (decrease) in fair value. For more
information regarding valuation procedures, please refer to Note 1—Significant Accounting Policies under the
caption Fair Value Measurements, Investments in Securities.
Other corporate bonds consist of obligations issued out of a special purpose vehicle (SPV). The market quotes
consisted of Level 3 quotes. An increase (decrease) in the market quotes will produce an increase (decrease) in fair
value.
79
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an
unrealized loss position.
Less than
Twelve
Months
Twelve
Months or
Longer
Total
Number of issues (CUSIPs) held:
As of December 31, 2020..............................................................................
As of December 31, 2019..............................................................................
54
82
24
51
78
133
Globe Life's entire fixed maturity portfolio consisted of 1,900 issues by 777 different issuers at December 31, 2020
and 1,633 issues by 656 different issuers at December 31, 2019. The weighted-average quality rating of all
unrealized loss positions at amortized cost was BBB- as of December 31, 2020 and December 31, 2019.
80
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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 December 31, 2020.
Analysis of Gross Unrealized Investment Losses
At December 31, 2020
Less than Twelve
Months
Twelve Months or
Longer
Total
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............ $
States, municipalities and political
subdivisions................................................
Foreign governments.................................
Corporates, by sector:
32,910
19,532
(315)
(898)
Financial..................................................
117,762
(2,564)
Utilities.....................................................
Energy.....................................................
2,726
1,692
Other corporate sectors...........................
21,882
(108)
(8)
(720)
2,006
$
(43) $
— $
— $
2,006
$
(43)
—
—
6,333
—
14,871
—
—
—
32,910
19,532
(315)
(898)
(2,168)
124,095
(4,732)
—
(106)
—
2,726
16,563
21,882
(108)
(114)
(720)
Total corporates....................................
144,062
(3,400)
21,204
(2,274)
165,266
(5,674)
Collateralized debt obligations...................
—
Other asset-backed securities....................
28,864
Total investment grade securities.................
227,374
—
(1,051)
(5,707)
—
5
—
—
—
28,869
21,209
(2,274)
248,583
—
(1,051)
(7,981)
Below investment grade securities:
States, municipalities and political
subdivisions................................................
Corporates, by sector:
Financial..................................................
Utilities.....................................................
Energy.....................................................
Other corporate sectors...........................
Total corporates....................................
Collateralized debt obligations...................
Other asset-backed securities....................
—
6,822
—
18,432
25,711
50,965
—
—
—
(36)
—
(757)
(3,588)
(4,381)
—
—
—
—
—
—
115,093
(19,453)
121,915
(19,489)
—
38,720
19,516
—
(2,212)
(1,910)
—
57,152
45,227
—
(2,969)
(5,498)
173,329
(23,575)
224,294
(27,956)
11,131
11,223
(8,869)
(2,727)
11,131
11,223
(8,869)
(2,727)
Total below investment grade securities......
50,965
(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)
(
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. As noted in Note 1, the Company considers many
factors when determining whether a credit loss exists. 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 due to the strong cash flows generated by
its insurance operations.
81
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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, 2019. Globe Life considered these investments to be only temporarily impaired.
Analysis of Gross Unrealized Investment Losses
At December 31, 2019
Less than Twelve
Months
Twelve Months or
Longer
Total
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............ $
1,255
$
(2) $
21,044
$
(294) $
22,299
$
(296)
States, municipalities and political
subdivisions................................................
Foreign governments.................................
66,774
6,496
Corporates, by sector:
Financial..................................................
117,389
Utilities.....................................................
Energy.....................................................
8,400
52,312
Other corporate sectors...........................
136,386
Total corporates....................................
314,487
Collateralized debt obligations...................
Other asset-backed securities....................
—
—
(626)
(396)
(1,733)
(166)
(1,058)
(1,584)
(4,541)
—
—
—
—
7,183
—
1,833
61,473
70,489
—
—
—
—
66,774
6,496
(1,317)
124,572
—
(115)
(3,260)
(4,692)
—
—
8,400
54,145
197,859
384,976
—
—
(626)
(396)
(3,050)
(166)
(1,173)
(4,844)
(9,233)
—
—
Total investment grade securities.................
389,012
(5,565)
91,533
(4,986)
480,545
(10,551)
Below investment grade securities:
States, municipalities and political
subdivisions................................................
Corporates, by sector:
Financial..................................................
Utilities.....................................................
Energy.....................................................
Other corporate sectors...........................
—
—
7,529
14,968
—
—
—
(135)
(146)
—
—
—
—
—
113,481
(19,257)
113,481
14,985
69,956
67,655
(1,264)
(32,406)
(11,921)
22,514
84,924
67,655
(19,257)
(1,399)
(32,552)
(11,921)
(65,129)
(7,184)
(371)
Total corporates....................................
22,497
(281)
266,077
(64,848)
288,574
Collateralized debt obligations...................
Other asset-backed securities....................
—
—
—
—
12,816
13,879
(7,184)
(371)
12,816
13,879
Total below investment grade securities......
22,497
(281)
292,772
(72,403)
315,269
(72,684)
Total fixed maturities ................................... $ 411,509
$
(
(5,846) $ 384,305
)
)
$ (77,389) $ 795,814
(
)
$ (83,235)
(
Gross unrealized losses decreased from $83.2 million at December 31, 2019 to $47.5 million at December 31,
2020, a decrease of $35.7 million. The decrease in the gross unrealized losses from the prior year was primarily
attributable to the decrease in market interest rates.
82
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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. Refer to Note 1 for factors considered in the recording of the allowance for credit losses.
Twelve Months Ended
December 31,
2020
2019
Allowance for credit losses beginning balance .................................................................... $
— $
Additions to allowance for which credit losses were not previously recorded............................
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....................................................................................
36,065
—
(32,719)
Allowance for credit losses ending balance ......................................................................... $
3,346 $
—
—
—
—
—
Under previous applicable GAAP, the Company concluded that there were no other-than-temporary impairments for
years ended December 31, 2019 and 2018.
As of December 31, 2020 and December 31, 2019, the Company did not have any fixed maturities in non-accrual
status.
Concentrations of Credit Risk: Globe Life maintains a diversified investment portfolio with limited concentration in
any given issuer. At December 31, 2020, the investment portfolio, at fair value, consisted of the following:
Investment grade fixed maturities:
Corporates..........................................................................................................................................................................
78 %
States, municipalities, and political subdivisions.................................................................................................................
U.S. Government direct, guaranteed, and government-sponsored enterprises.................................................................
Other...................................................................................................................................................................................
9
2
1
Below investment grade fixed maturities:
Corporates..........................................................................................................................................................................
4
States, municipalities, and political subdivisions................................................................................................................. —
U.S. Government direct, guaranteed, and government-sponsored enterprises................................................................. —
Other................................................................................................................................................................................... —
Other:
Policy loans, which are secured by the underlying insurance policy values.......................................................................
Other investments...............................................................................................................................................................
94
3
3
100 %
As of December 31, 2020, state and municipal governments represented 9% of invested assets at fair value. Such
investments are made throughout the U.S. At December 31, 2020, the state and municipal bond portfolio at fair
value was invested in securities issued within the following states: Texas (18%), New York (10%), Michigan (8%),
California (7%), Ohio (6%), and Florida (5%). Otherwise, there was no concentration within any given state greater
than 5%.
83
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Corporate fixed maturities represent 82% of Globe Life's invested assets. These investments are spread across a
wide range of industries. Below are the ten largest industry concentrations held in the portfolio of corporate fixed
maturities at December 31, 2020, based on fair value:
Insurance................................................................................................................................................................................. 15 %
Electric utilities......................................................................................................................................................................... 10
Banks.......................................................................................................................................................................................
Oil and natural gas pipelines...................................................................................................................................................
Chemicals................................................................................................................................................................................
Transportation..........................................................................................................................................................................
Food.........................................................................................................................................................................................
Oil and natural gas exploration and production.......................................................................................................................
Real estate investment trusts..................................................................................................................................................
Telecommunications................................................................................................................................................................
7
6
4
4
4
4
4
3
At December 31, 2020, 4% of invested assets at fair value were represented by fixed maturities rated below
investment grade. Par value of these investments was $931 million, amortized cost was $841 million, and fair value
was $877 million. While these investments could be subject to additional credit risk, such risk should generally be
reflected in their fair value.
Securities, cash, and short-term investments held on deposit with various state and federal regulatory authorities
had an amortized cost and fair value, respectively, of $892 million and $1.1 billion at December 31, 2020 and $816
million and $956 million at December 31, 2019.
Other Long-Term Investments: Other long-term investments consist of the following assets:
Investment funds........................................................................................................................ $
385,038
$
Commercial mortgage loan participations..................................................................................
Other...........................................................................................................................................
160,602
1,341
185,851
137,692
2,804
Total ....................................................................................................................................... $
546,981
$
326,347
The following table presents additional information about the Company's investment funds as of December 31, 2020
and December 31, 2019 at fair value:
Year Ended December 31,
2020
2019
As of December 31,
Fair Value
Unfunded
Commitments
Investment Category
2020
2019
2020
Redemption Term/Notice
Commercial mortgage
loans.................................. $ 227,050 $
26,145 $
285,287
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 credit............
157,461
159,399
Initial 2 year lock on each new investment/semi-
annual withdrawals thereafter/full redemption within
36 month period.
—
Other..................................
527
307
149,715
Not redeemable. Expected life is approximately 12
years.
Total investment funds . $ 385,038 $ 185,851 $
435,002
84
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Commercial mortgage loan participations: Summaries of commercial mortgage loans at December 31, 2020 and
2019 are as follows:
2020
2019
Carrying
Value
% of Total
Carrying
Value
% of Total
Property type:
Mixed use........................................................................... $
Office..................................................................................
Hospitality..........................................................................
Retail..................................................................................
Multi-family.........................................................................
Industrial............................................................................
Total recorded investment................................................
Less allowance for credit losses........................................
49,002
36,153
22,605
19,319
19,128
17,900
164,107
(3,505)
$
31
22
14
12
12
11
102
(2)
27,501
42,350
22,324
17,318
10,587
17,612
137,692
—
Carrying value, net of valuation allowance ................ $
160,602
100
$
137,692
20
31
16
12
8
13
100
—
100
2020
2019
Carrying
Value
% of Total
Carrying
Value
% of Total
Geographic location:
California............................................................................ $
Virginia...............................................................................
New York............................................................................
Florida................................................................................
Pennsylvania......................................................................
Other..................................................................................
Total recorded investment................................................
Less allowance for credit losses........................................
61,610
27,019
16,602
12,420
11,314
35,142
164,107
(3,505)
$
38
17
10
8
7
22
102
(2)
35,412
25,448
21,117
11,910
4,211
39,594
137,692
—
Carrying value, net of valuation allowance ................ $
160,602
100
$
137,692
26
18
15
9
3
29
100
—
100
As noted in Note 1, the Company adopted ASU 2016-13 using the modified retrospective method for commercial
mortgage loans. On January 1, 2020, a cumulative effect adjustment was recorded to retained earnings of $335
thousand ($265 thousand, net of tax). As of December 31, 2020, the Company evaluated the commercial mortgage
loan portfolio on a pool basis to determine the allowance for credit losses, except for individual loans where the
practical expedient was elected. At the end of the period, the Company had 24 loans in the portfolio.
Allowance for credit losses beginning balance .................................................................... $
— $
Cumulative effect of adoption ASU 2016-13...............................................................................
Provision (reversal) for credit losses...........................................................................................
335
3,170
Allowance for credit losses ending balance ......................................................................... $
3,505 $
—
—
—
—
Year Ended December 31,
2020
2019
85
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following table is 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 2020, 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 December 31, 2020
Risk Rating:
Number of
Loans
2020
2019
2018
2017
Total
Low................................................
17 $
20,176 $
14,757 $
33,132 $
61,460 $
129,525
Medium .........................................
High...............................................
4
3
—
—
10,640
4,554
7,796
11,592
—
—
18,436
16,146
Total commercial mortgage loans
24 $
20,176 $
29,951 $
52,520 $
61,460
164,107
Less allowance for credit losses on the investment pool......................................................................................
Less allowance for credit losses on individual loans.............................................................................................
(2,503)
(1,002)
Carrying value, net of valuation allowance .................................................................................................... $
160,602
As of December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. As of December
31, 2019, the Company did not have any commercial mortgage loans in non-accrual status.
Note 5—Deferred Acquisition Costs
An analysis of "DAC" is as follows:
Balance at beginning of year ...................................................................... $
4,341,941
$
4,137,925
$
3,958,063
Year Ended December 31,
2020
2019
2018
Additions:
Deferred during period:
Commissions...........................................................................................
Other expenses........................................................................................
Total deferred........................................................................................
Foreign exchange adjustment....................................................................
Adjustment attributable to unrealized investment losses(1).........................
Total additions.......................................................................................
600,577
222,408
822,985
4,755
1,533
534,735
218,926
753,661
4,299
—
497,459
202,092
699,551
—
5,549
829,273
757,960
705,100
Deductions:
Amortized during period...............................................................................
(575,770)
(551,726)
(516,690)
Foreign exchange adjustment......................................................................
Adjustment attributable to unrealized investment gains(1)............................
Total deductions....................................................................................
—
—
—
(2,218)
(8,548)
—
(575,770)
(553,944)
(525,238)
Balance at end of year ................................................................................. $
4,595,444
$
4,341,941
$
4,137,925
(1) Represents amounts pertaining to investments relating to universal life-type products.
86
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 6—Commitments and Contingencies
Reinsurance: Insurance affiliates of Globe Life reinsure a portion of insurance risk that is in excess of their retention
limits. Current retention limits for new business written on ordinary life insurance range up to $500 thousand per life.
Life insurance ceded represented 0.3% of total life insurance in force at December 31, 2020. Insurance ceded on
life and accident and health products represented 0.2% of premium income for 2020. The insurance affiliates of
Globe Life would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring
companies are unable to meet their obligations.
Insurance affiliates also assume insurance risks of other external companies. Life reinsurance assumed
represented 1.2% of life insurance in force at December 31, 2020 and reinsurance assumed on life and accident
and health products represented 0.5% of premium income for 2020.
Leases: Globe Life primarily leases office space, aviation equipment, and other equipment under a variety of
operating lease arrangements.
Rental expense for the three years ended December 31, 2020 is as follows:
Year Ended December 31,
2020
2019
2018
Rental expense.................................................................................................................. $
4,674
$
3,831
$
3,959
Future minimum rental commitments required under operating leases having remaining noncancelable lease terms
in excess of one year at December 31, 2020 were as follows:
Operating lease commitments....................... $
5,307
$
4,395
$
3,321
$
2,873
$
1,896
$
10,823
2021
2022
2023
2024
2025
Thereafter
Year Ended December 31,
Purchase Commitments: Globe Life has various long-term noncancelable purchase commitments as well as
commitments to provide capital for low-income housing tax credit interests. See further discussion related to tax
credits in Note 1—Significant Accounting Policies.
Purchase commitments................................. $
66,439
$
73,451
$ 24,823
$
10,347
$
9,797
$
228,542
2021
2022
2023
2024
2025
Thereafter
Year Ended December 31,
Investments: Globe Life is committed to invest under certain contracts related to investments in limited partnerships.
See Note—4 Investments for unfunded commitment table.
Guarantees: At December 31, 2020, Globe Life had in place three guarantee agreements, of which were either
Parent Company guarantees of subsidiary obligations to a third party, or Parent Company guarantees of obligations
between wholly-owned subsidiaries. As of December 31, 2020, Globe Life had no liability with respect to these
guarantees.
Letters of Credit: Globe Life has guaranteed letters of credit in connection with its credit facility with a group
of banks as disclosed in Note 11—Debt. 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 companies. These letters of credit facilitate TMK Re, Ltd.’s ability to
reinsure the business of Globe Life's insurance carriers. The agreement expires in 2023. 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. On November 25, 2020, the letters of credit were amended
87
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
to reduce the current amount outstanding to $135 million from $150 million outstanding. As of December 31,
2020, the letters of credit outstanding were $135 million.
Equipment leases: Globe Life has guaranteed performance of certain of its subsidiaries as lessees under
two aviation leasing arrangements. At December 31, 2020, total remaining undiscounted payments under
the leases were approximately $5 million. The Parent Company would be responsible for any subsidiary
obligation in the event the subsidiary did not make payments or otherwise perform under the terms of the
lease.
Unclaimed Property Audits: Globe Life subsidiaries are currently the subject of audits regarding the identification,
reporting and escheatment of unclaimed property arising from life insurance policies and a limited number of annuity
contracts. These audits are being conducted by private entities that have contracted with forty-seven states through
their respective Departments of Revenue, and have not resulted in any financial assessment from any state nor
indicated any liability. The audits are wide-ranging and seek large amounts of data regarding claims handling,
procedures, and payments of contract benefits arising from unreported death claims. No estimate of range can be
made at this time for loss contingencies related to possible administrative penalties or amounts that could be
payable to the states for the escheatment of abandoned property.
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.
On September 12, 2018, putative class action litigation was filed against American Income in California’s Contra
Costa County Superior Court (Joh v. American Income Life Insurance Company, Case No. C18-01863) (Joh
Action). An amended complaint was filed on October 18, 2018. American Income removed the case to the United
States District Court for the Northern District of California (Case No. 3:18-cv-06364-TSH). A second amended
complaint was filed on May 20, 2019. The plaintiffs, former insurance sales agents of American Income, sued on
behalf of all current and former trainees and sales agents who sold insurance for American Income in the State of
California for the four years prior to the filing of the complaint. The second amended complaint alleged that such
individuals were employees and asserted claims under the California Labor Code, California Business and
Professions Code, and California Private Attorney General Act. The complaint sought compensatory damages,
penalties and attorney fees on claims for failure to pay wages/commissions, failure to appropriately pay agents at
termination, failure to provide itemized wage statements, failure to reimburse expenses, misclassification and unfair
business practices.
On October 18, 2018, putative class action litigation was filed against Torchmark Corporation and American Income
in California’s Los Angeles County Superior Court (Golz v. American Income Life Insurance Company, et al., Case
No. 18STCV01354) (Golz Action). American Income removed the case to the United States District Court for the
Central District of California (Case No. 2:18-cv-09879 R (SSx)). An amended complaint was filed on February 5,
2019. On February 6, 2019, Torchmark Corporation was dismissed without prejudice and the case proceeded with
respect to American Income. On April 2, 2019, the District Court granted American Income’s motion to dismiss four
of the five causes of action asserted. The amended complaint’s remaining claim alleges that plaintiff, as an
American Income insurance agent trainee in California, was an employee who should have been compensated
accordingly. The plaintiff seeks to represent a class of individuals in California who trained to contract as American
Income agents and who subsequently worked as contracted agents. The class period is alleged to begin four years
88
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
prior to the complaint’s filing. The complaint seeks restitution under the California Business and Professions Code
for alleged unfair business practices such as failure to pay minimum wage and overtime, failure to provide meal and
rest breaks, and failure to reimburse business expenses. The lawsuit is currently stayed.
On December 14, 2018, putative class action litigation was filed against American Income in United States District
Court for the Northern District of California (Hamilton v. American Income Life Insurance Company, Case No. 4:18-
cv-7535-KAW) (Hamilton Action). An amended complaint was filed on January 23, 2019. The plaintiffs, former
insurance sales agents of American Income, sued on behalf of all current and former trainees and sales agents who
sold insurance for American Income in the State of California for the last four years prior to the filing of the
complaint. The lawsuit alleges that putative class members were employees and asserted claims under the
California Labor Code, California Business and Professions Code, and California Private Attorney General Act. The
complaint seeks compensatory damages, penalties and attorney fees on claims for failure to pay minimum wage
and overtime, failure to provide meal and rest breaks, failure to appropriately pay agents at termination, failure to
provide itemized wage statements, failure to reimburse expenses, misclassification and unfair business practices.
With respect to the related cases above, on August 6, 2020, the plaintiffs in the Joh and Hamilton Actions jointly
moved for preliminary approval of a settlement of all class and representative claims, which broadly covers “all
individuals who trained to become and/or worked as sales agents in California for Defendant during the last four
years prior to the filing of the original Complaint in Joh and whose training and/or work began before August 16,
2019.” Plaintiffs’ preliminary motion anticipated that the proposed settlement would resolve all claims in the Joh and
Hamilton Actions, and in doing so, encompass pending claims asserted in the Golz Action for the settlement period.
On August 21, 2020, the Northern District of California granted the Motion for Preliminary Approval of Class Action
Settlement and scheduled a hearing for final approval of the settlement. On January 7, 2021, plaintiff’s motion for
final settlement approval was granted and a final judgment was entered on the same day.
On December 19, 2019, putative collective action litigation was filed against American Income in United States
District Court for the Eastern District of Arkansas (Patterson v. American Income Life Insurance Company, et al,
Case No. 4:19-cv-918 KGB). The plaintiff, a former insurance sales agent of American Income, is pursuing a
national collective action on behalf of all “similarly situated” individuals for the three years prior to the filing of the
complaint. The lawsuit alleges that insurance agent trainees should have been classified as employees and asserts
claims for minimum wage, overtime, liquidated damages and attorney’s fees under the Fair Labor Standards Act.
The plaintiff also asserts an individual claim under the Arkansas Minimum Wage Act. American Income filed a
motion to compel arbitration of plaintiff’s individual claims. On October 30, 2020, the district court granted the motion
and stayed the case pending the outcome of arbitration on plaintiff’s individual claims.
On February 27, 2020, putative collective action litigation was filed against American Income in United States
District Court for the Western District of Pennsylvania (Berry, et al v. American Income Life Insurance Company, et
al, Case No. 2:20-cv-00110-LPL). The plaintiffs, former insurance sales agents of American Income, are pursuing
relief on behalf of “all individuals who trained to become and/or worked as sales agents/insurance producers for
American Income Life Insurance” in the three years prior to the filing of the complaint. The lawsuit alleges that agent
trainees and insurance agents should have been classified as employees. It asserts a national collective action
under the Fair Labor Standards Act seeking compensation for minimum wage, overtime, expense reimbursement,
missed meal and rest breaks, recoupment of certain commissions and improper recordkeeping. In addition, the
lawsuit asserts a class action under the Pennsylvania Minimum Wage Act and Pennsylvania Wage Payment and
Collection Law seeking similar relief. Plaintiffs also seek liquidated damages and attorney’s fees, and assert an
unjust enrichment claim. On September 20, 2020, American Income’s motion to compel arbitration of the plaintiffs’
individual claims was granted. The litigation is stayed pending outcome of the individual arbitrations.
On August 5, 2020, putative class and collective action litigation was filed against American Income and National
Income Life Insurance Company (“National Income”) in United States District Court for the Central District of
California (Natalie Bell, Gisele Mobley, Ashly Rai, and John Turner v. American Income Life Insurance Company
and National Income Life Insurance Company, Case No. 2:20-cv-07046). On December 18, 2020, the plaintiffs
voluntarily dismissed Mr. Turner’s claims and all claims against defendant National Income. Following the dismissal,
the complaint alleges that insurance agent trainees should have been classified as employees, and after contracting
should have been classified as employees instead of independent contractors. Plaintiffs Bell and Rai are former
89
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
California agents who also assert claims under California law on behalf of a putative California class, for the four
years prior to February 13, 2020 through case conclusion. They make claims under (a) the California Labor Code
for alleged meal and rest break violations, overtime, minimum wage, alleged failure to pay wages at the time of
termination, expense reimbursement, and alleged failure to provide accurate wage statements; and (b) the
California Business and Professions Code for alleged unfair business practices. They also seek liquidated
damages, penalties and attorney’s fees under California law. Plaintiff Mobley is a former Florida agent who asserts a
claim under Florida law on behalf of a putative Florida class for the five years prior to February 13, 2020 through
case conclusion. She makes a claim under the Florida General Labor Regulations, including the Florida Minimum
Wage Act, for alleged failure to pay all wages owed. The plaintiffs also assert a national collective action on behalf
of all “similarly situated” individuals for minimum wage, overtime, liquidated damages, penalties, an accounting and
attorney’s fees and costs under the Fair Labor Standards Act for the three years prior to February 13, 2020 through
case conclusion. American Income has responded to the complaint with a motion to compel the named plaintiffs to
arbitrate their individual claims and other procedural challenges. Those motions are currently scheduled to be heard
in March, 2021.
With respect to the aforementioned litigation, at this time, management believes that the possibility of a material
judgment adverse to the Company is remote.
90
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 7—Liability for Unpaid Claims
Activity in the liability for unpaid health claims is summarized as follows:
Year Ended December 31,
2020
2019
2018
Balance at beginning of period ................................................................... $
163,808
$
154,528
$
146,865
Incurred related to:
Current year................................................................................................
Prior years..................................................................................................
Total incurred...........................................................................................
Paid related to:
Current year................................................................................................
Prior years..................................................................................................
Total paid..................................................................................................
584,936
(14,829)
570,107
442,127
129,527
571,654
612,305
(1,188)
611,117
470,426
131,411
601,837
Balance at end of period ............................................................................. $
162,261
$
163,808
$
555,647
(3,017)
552,630
424,633
120,334
544,967
154,528
At the end of each period, the liability for unpaid health claims includes an estimate of claims incurred but not yet
reported to the Company. Such estimates are updated regularly based upon the Company’s most recent claims
data with recognition of emerging experience trends. Due to the nature of the Company’s health business, the
payment lags are relatively short and most claims are fully paid within a year from the time incurred. Fluctuations in
claims experience can lead to either over or under estimation of the liability for any given year. The difference
between the estimate made at the end of the prior period and the actual experience during the period is reflected
above under the caption “Incurred related to: Prior years.”
Below is the reconciliation of the liability of "Policy claims and other benefits payable" in the Consolidated Balance
Sheets.
Policy claims and other benefits payable:
Life insurance....................................................................................................................... $
237,246
$
Health insurance..................................................................................................................
162,261
Total................................................................................................................................ $
399,507
$
201,594
163,808
365,402
December 31,
2020
December 31,
2019
91
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 8—Income Taxes
The following table discloses significant components of income taxes for each year presented:
Year Ended December 31,
2020
2019
2018
Income tax expense (benefit) from continuing operations:
Current income tax expense (benefit).......................................................... $
129,647
$
134,948
$
134,626
Deferred income tax expense (benefit)........................................................
35,264
164,911
35,449
170,397
27,535
162,161
Shareholders’ equity:
Other comprehensive income (loss)............................................................
314,845
405,472
(293,678)
$
479,756
$
575,869
$
)
(131,517)
(
In each of the years 2018 through 2020, deferred income tax expense (benefit) was incurred because of certain
differences between net income before income tax expense (benefit) as reported on the Consolidated Statements of
Operations and taxable income as reported on Globe Life's income tax returns. As explained in Note 1—Significant
Accounting Policies, these differences caused the consolidated financial statement book values of some assets and
liabilities to be different from their respective tax bases.
The effective income tax rate differed from the expected U.S. federal statutory rate of 21% as shown below:
Expected federal income tax expense (benefit) ......... $ 188,304
21.0
$ 195,569
21.0
$ 181,371
21.0
Year Ended December 31,
2020
%
2019
%
2018
%
Increase (reduction) in income taxes resulting from:
Tax reform adjustment.....................................................
—
Low income housing investments....................................
(11,913)
Share-based awards........................................................
Tax-exempt investment income.......................................
Other................................................................................
(5,013)
(5,830)
(637)
—
(1.3)
(0.6)
(0.6)
(0.1)
—
(11,605)
(11,780)
(3,192)
1,405
—
(1.2)
(1.3)
(0.3)
0.1
(798)
(12,240)
(6,450)
(1,230)
1,508
Income tax expense (benefit) ....................................... $ 164,911
18.4
$ 170,397
18.3
$ 162,161
(0.1)
(1.4)
(0.7)
(0.1)
0.1
18.8
92
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred
tax liabilities are presented below:
December 31,
2020
2019
Deferred tax assets:
Fixed maturity investments...................................................................................................... $
4,279
$
Carryover of tax losses............................................................................................................
Total gross deferred tax assets..........................................................................................
Deferred tax liabilities:
Unrealized gains......................................................................................................................
Employee and agent compensation........................................................................................
Deferred acquisition costs.......................................................................................................
Future policy benefits, unearned and advance premiums, and policy claims.........................
Other liabilities.........................................................................................................................
5,534
9,813
808,071
88,012
688,034
257,640
7,209
6,161
7,827
13,988
493,174
81,174
658,457
242,124
26,271
Total gross deferred tax liabilities.......................................................................................
1,848,966
1,501,200
Net deferred tax liability ........................................................................................................... $
1,839,153
$
1,487,212
Income Tax Return: Globe Life Inc. and its subsidiaries file a life-nonlife consolidated federal income tax return for
the years ended December 31, 2020 and 2019. Prior to 2018, Family Heritage Life Insurance Company of America
(Family Heritage Life) filed its federal income tax return on a separate company basis. The statutes of limitations for
the Internal Revenue Service's examination and assessment of additional tax are closed for all tax years prior to
2017 with respect to Globe Life's consolidated as well as Family Heritage Life's federal
income tax returns.
Management concludes that adequate provision has been made in the consolidated financial statements for any
potential assessments that may result from current or future tax examinations and other tax-related matters for all
open years.
Valuations: Globe Life has a $26.4 million net operating loss (NOL) carryforward at December 31, 2020, of which
$22.4 million was created prior to 2018 and will begin to expire in 2036 if not otherwise used to offset future taxable
income. The remaining NOL carryforward of $4.0 million may be carried forward indefinitely. A valuation allowance is
to be recorded when it is more likely than not that deferred tax assets will not be realized by the Company. No
valuation allowance has been recorded relating to Globe Life's deferred tax assets as management has determined
that Globe Life will more likely than not have sufficient taxable income in future periods to fully realize its existing
deferred tax assets.
Globe Life's tax liability is adjusted to include a provision for uncertain tax positions taken or expected to be taken in
a tax return. However, during the years 2018 through 2020, Globe Life did not have any uncertain tax positions
which resulted in unrecognized tax benefits.
Tax penalties and interest: Globe Life's continuing practice is to recognize penalties and interest related to income
tax matters in income tax expense. The Company recognized interest income of $0 thousand, $55 thousand, and
$0 thousand, net of federal income tax expense, in its Consolidated Statements of Operations for 2020, 2019, and
2018, respectively. The Company had no accrued interest or penalties at December 31, 2020 or 2019.
93
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 9—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 defined
benefit plans and SERP.
The total cost of these retirement plans charged to operations was as follows:
Year Ended December 31,
2020
2019
2018
Plan Type:
Defined Contribution Plans(1).......................................................................... $
Defined Benefit Pension Plans(2)....................................................................
4,855 $
4,817
$
33,826
24,134
4,068
32,593
(1) 401K plans.
(2) Qualified pension plans and SERP.
Globe Life accrues expense for the defined contribution plans based on a percentage of
the employees’
contributions. The plans are funded by the employee contributions and a Globe Life contribution equal to the
amount of accrued expense. Plan contributions are both mandatory and discretionary, depending on the terms of
the plan.
Pension Plans: Cost for the defined benefit pension plans has been calculated on the projected unit credit actuarial
cost method. All plan measurements for the defined benefit plans are as of December 31 of the respective year. The
defined benefit pension plans covering the majority of employees are qualified and funded. Contributions are made
to funded pension plans subject to minimums required by regulation and maximums allowed for tax purposes.
Globe Life's SERP provides an additional supplemental defined pension benefit to a limited number of officers. The
supplemental benefit is based on the participant’s qualified plan benefit without consideration to the regulatory limits
on compensation and benefit payments applicable to qualified plans, except that eligible compensation is capped at
$1 million. The SERP is nonqualified and unfunded. However, a Rabbi Trust has been established to support the
liability for this plan. The Rabbi Trust consists of life insurance policies on the lives of plan participants with an
unaffiliated insurance carrier as well as an investment account. Since this plan is nonqualified, the investments and
the policyholder value of the insurance policies in the Rabbi Trust are not included as defined benefit plan assets,
but rather assets of the Company. They are included in “Other Assets” in the Consolidated Balance Sheets.
Defined benefit and SERP plan contributions were $21.9 million in 2020, $21.6 million in 2019, and $52.8 million in
2018. In 2021, the Company expects to make a similar contribution to the plans as in 2020.
94
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Pension Assets: Plan assets in the funded plans consist primarily of investments in marketable fixed maturities and
equity securities that are valued at fair value. Globe Life measures the fair value of its financial assets, including the
assets in its benefit plans, in accordance with accounting guidance which establishes a hierarchy for asset values
and provides a methodology for the measurement of value. Please refer to Note 1—Significant Accounting Policies
under the caption Fair Value Measurements, Investments in Securities for a complete discussion of valuation
procedures. The following table presents the assets of the Company's defined benefit pension plans at December
31, 2020 and 2019.
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
Utilities................................................
Energy................................................
Other corporates.................................
Total corporate bonds...........................
Exchange traded fund(1)........................
Other bonds..........................................
Guaranteed annuity contract(2)..............
Short-term investments.........................
Other.....................................................
—
—
—
—
245,170
—
—
20,960
7,109
45,888
22,480
88,983
209,603
—
258
30,119
—
—
—
—
—
—
—
—
—
—
—
—
Other long-term investments(3)................................................................................................................
239,980
273,239
$
$
$
45,888
22,480
88,983
209,603
245,170
258
30,119
20,960
7,109
513,219
16,313
Total pension assets ..................................................................................................................... $
529,532
10
9
4
17
40
46
—
6
4
1
97
3
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 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 Pension Plan owns less than 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.
95
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Pension Assets by Component at December 31, 2019
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............................................. $
— $
51,111
$
— $
51,111
Utilities................................................
Energy................................................
Other corporates.................................
Total corporate bonds.........................
Exchange traded fund(1)........................
Other bonds..........................................
Guaranteed annuity contract(2)..............
Short-term investments.........................
Other.....................................................
—
—
—
—
207,176
—
—
8,414
6,876
42,758
21,907
89,725
205,501
—
251
28,278
—
—
—
—
—
—
—
—
—
—
—
—
Other long-term investments(3)................................................................................................................
234,030
222,466
$
$
$
42,758
21,907
89,725
205,501
207,176
251
28,278
8,414
6,876
456,496
12,267
Total pension assets .......................................................................................................................
$
468,763
11
9
5
19
44
44
—
6
2
1
97
3
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 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 Pension Plan owns approximately 1% of the
investment fund. As of December 31, 2019, the expected term of the investment fund is approximately 5 years and the unfunded commitment
of the investment fund is $4.1 million. The investment is non-redeemable.
Globe Life's investment objectives for its plan assets include preservation of capital and purchasing power as well
as long-term growth. Globe Life seeks to preserve capital through investments made in high quality securities with
adequate diversification by issuer and industry sector to minimize risk. The portfolio is monitored continuously for
changes in quality and diversification mix. The preservation of purchasing power is intended to be accomplished
through asset growth, exclusive of contributions and withdrawals in excess of the rate of inflation. Globe Life intends
to maintain investments that when combined with future plan contributions will produce adequate long-term growth
to provide for all plan obligations. It is also Globe Life's objective that the portfolio’s investment return will meet or
exceed the return of a balanced market index.
The majority of the securities in the portfolio are highly marketable so that there will be adequate liquidity to meet
projected payments. There are no specific policies calling for asset durations to match those of benefit obligations.
Allowed investments are limited to equities, fixed maturities, and short-term investments (invested cash). The assets
are to be invested in a mix of equity and fixed income investments that best serve the objectives of the pension
plan. Factors to be considered in determining the asset mix include funded status, annual pension expense, annual
pension contributions, and balance sheet liability. Equities can include common and preferred stocks, securities
convertible into equities, mutual funds and exchange traded funds that invest in equities, equity interests in limited
partnerships, and other equity-related investments. Primarily, equities are listed on major exchanges and adequate
market liquidity is required. Fixed maturities primarily consist of marketable debt securities rated investment grade
at purchase by a major rating agency. Short-term investments include fixed maturities with maturities less than one
year and invested cash. Investments outside of the aforementioned list are not permitted, except by prior approval
of the Plan’s Trustees.
96
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The investment portfolio is well diversified to avoid undue exposure to a single sector, industry, business, or security.
The equity and fixed maturity portfolios are not permitted to invest in any single issuer that would exceed 10% of
total plan assets at the time of purchase. The Company does not employ any other special risk management
techniques, such as derivatives, in managing the pension investment portfolio.
Globe Life's equity securities include an exchange traded fund that mirrors the S&P 500 index which better aligns
with a passive approach rather than an actively managed portfolio. At December 31, 2020, there were no restricted
investments contained in the portfolio. Plan contributions have been invested primarily in fixed maturity and equity
securities during the three years ended December 31, 2020.
SERP: The following tables include premiums paid for the company owned life insurance (COLI) for the three years
ended December 31, 2020 and investments of the Rabbi Trust for the two years ended December 31, 2020.
Premiums paid for insurance coverage........................................................... $
2,480
$
2,394
$
2,997
Year Ended December 31,
2020
2019
2018
Total investments:
COLI.............................................................................................................. $
51,361
$
Exchange traded funds.................................................................................
75,390
47,733
65,585
$
126,751
$
113,318
At December 31,
2020
2019
Pension Liability: The following table presents projected benefit obligation (PBO) and accumulated benefit obligation
(ABO) for the defined benefit pension plans and SERP at December 31, 2020 and 2019.
Pension Liability
December 31,
2020
2019
PBO
ABO
PBO
ABO
Funded benefit pension plans............................................. $
667,753
$
594,510
$
578,860
$
520,264
SERP...................................................................................
95,560
89,069
86,347
81,046
Benefit Obligation .......................................................... $
763,313
$
683,579
$
665,207
$
601,310
The funded benefit pension plans have projected benefit obligations in excess of the fair value of plan assets. The
projected benefit obligations and the fair value of plan assets were as follows:
Funded benefit pension plans PBO............................................................................................. $
667,753
$
Funded benefit pension plans fair value of plan assets...............................................................
529,532
578,860
468,763
At December 31,
2020
2019
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GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The funded benefit pension plans have accumulated benefit obligations in excess of the fair value of plan assets.
The accumulated benefit obligations and the fair value of plan assets were as follows:
At December 31,
2020
2019
Funded benefit pension plans ABO............................................................................................. $
594,510
$
Funded benefit pension plans fair value of plan assets...............................................................
529,532
520,264
468,763
The following table discloses the assumptions used to determine Globe Life's pension liabilities and costs for the
appropriate periods. The discount and compensation increase rates are used to determine current year projected
benefit obligations and subsequent year pension expense. The long-term rate of return is used to determine current
year expense. Differences between assumptions and actual experience are included in actuarial gain or loss.
Weighted Average Pension Plan Assumptions
For Benefit Obligations at December 31:
Discount rate.................................................................................................
Rate of compensation increase.....................................................................
2020
2019
2.92 %
3.97
3.49 %
4.00
For Periodic Benefit Cost for the Year:
2020
2019
2018
Discount rate.................................................................................................
3.49 %
4.37 %
3.75 %
Expected long-term returns...........................................................................
Rate of compensation increase.....................................................................
6.67
3.97
6.72
4.00
6.72
4.37
The discount rate is determined based on the expected duration of plan liabilities. A yield is then derived based on
the current market yield of a hypothetical portfolio of high quality corporate bonds that match the liability duration.
The rate of compensation increase is projected based on Company experience, modified as appropriate for future
expectations. The expected long-term rate of return on plan assets is management’s best estimate of the average
rate of earnings expected to be received on the assets invested in the plan over the benefit period. In determining
this assumption, consideration is given to the historical rate of return earned on the assets, the projected returns
over future periods, and the discount rate used to compute benefit obligations.
Net periodic benefit cost for the defined benefit plans by expense component was as follows:
Service cost—benefits earned during the period............................................. $
Interest cost on projected benefit obligation.....................................................
Expected return on assets................................................................................
Amortization of prior service cost (credit).........................................................
Recognition of actuarial gain (loss)..................................................................
Year Ended December 31,
2020
2019
2018
24,461
$
19,929
$
22,825
(29,561)
632
15,469
23,827
(27,862)
8,211
29
21,092
22,303
(25,547)
15,003
(258)
Net periodic benefit cost ............................................................................ $
33,826
$
24,134
$
32,593
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GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of the impact on other comprehensive income (loss) concerning pensions and other postretirement
benefits is as follows:
Year Ended December 31,
2020
2019
2018
Balance at January 1 ..................................................................................... $
(182,233) $
(150,071) $
(193,380)
Amortization of:
Prior service cost (credit).............................................................................
Net actuarial (gain) loss(1)............................................................................
Total amortization......................................................................................
Plan amendments..........................................................................................
632
16,000
16,632
—
631
7,843
8,474
—
Experience gain (loss)...................................................................................
(43,169)
(40,636)
535
14,560
15,095
(2,377)
30,591
Balance at December 31 ............................................................................... $
(
(208,770) $
)
(
(182,233) $
)
)
(150,071)
(
(1) Includes amortization of postretirement benefits other than pensions of $302 thousand in 2020, $265 thousand in 2019, and $92 thousand in
2018.
The following table presents a reconciliation from the beginning to the end of the year of the PBO and plan assets
for the defined benefit plans and SERP. This table also presents the amounts previously recognized as a
component of accumulated other comprehensive income.
Pension Benefits
Year Ended December 31,
2020
2019
Changes in PBO:
PBO at beginning of year.......................................................................................................... $
665,207
$
556,199
Service cost.............................................................................................................................
Interest cost.............................................................................................................................
Actuarial loss (gain).................................................................................................................
Benefits paid............................................................................................................................
PBO at end of year....................................................................................................................
Changes in plan assets:
Fair value at beginning of year..................................................................................................
Return on assets.....................................................................................................................
Contributions...........................................................................................................................
Benefits paid............................................................................................................................
Fair value at end of year...........................................................................................................
24,461
22,825
74,006
(23,186)
763,313
468,763
62,104
21,851
(23,186)
529,532
19,929
23,827
88,053
(22,801)
665,207
392,672
77,290
21,602
(22,801)
468,763
Funded status at year end ....................................................................................................... $
(
(233,781) $
)
)
(196,444)
(
Changes in the PBO related to actuarial losses (gains) are primarily attributed to changes in the discount rate.
Amounts recognized in accumulated other comprehensive income consist of:
2020
2019
Net loss (gain)........................................................................................................................... $
200,465
$
174,470
Prior service cost.......................................................................................................................
4,713
5,345
Net amounts recognized at year end........................................................................................ $
205,178
$
179,815
Year Ended December 31,
99
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Globe Life has estimated its expected pension benefits to be paid over the next ten years as of December 31, 2020.
These estimates use the same assumptions that measure the benefit obligation at December 31, 2020, taking
estimated future employee service into account. Those estimated benefits are as follows:
For the year(s):
2021.......................................................................................................................................................................... $
24,477
2022..........................................................................................................................................................................
2023..........................................................................................................................................................................
2024..........................................................................................................................................................................
2025..........................................................................................................................................................................
26,494
28,783
30,960
32,067
2026-2030................................................................................................................................................................
187,386
Note 10—Supplemental Disclosures of Cash Flow Information
The following table summarizes Globe Life's noncash transactions, which are not reflected on the Consolidated
Statements of Cash Flows:
Year Ended December 31,
2020
2019
2018
Stock-based compensation not involving cash................................................ $
35,892
$
44,843
$
Commitments for low-income housing interests...............................................
Exchanges of fixed maturity investments.........................................................
Net unsettled security trades............................................................................
161,503
219,807
1,669
51,978
243,156
8,421
39,792
50,883
193,449
39,851
The following table summarizes certain amounts paid during the period:
Interest paid..................................................................................................... $
83,518
$
81,723
$
Income taxes paid............................................................................................
76,701
101,982
83,518
91,510
Year Ended December 31,
2020
2019
2018
100
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 11—Debt
The following table presents information about the terms and outstanding balances of Globe Life's debt.
Selected Information about Debt Issues
Maturity
Date
5/15/2023
9/15/2022
9/15/2028
8/15/2030
Coupon
Rate
Par
Value
7.875% $ 165,612
150,000
3.800%
550,000
4.550%
400,000
2.150%
As of December 31,
2020
2019
Unamortized
Discount &
Issuance
Costs
Book
Value
$
(658) $ 164,954
149,414
(586)
544,328
(5,672)
395,157
(4,843)
Fair
Value
$ 192,020
158,081
659,599
405,384
Book
Value
$ 164,713
149,089
543,735
—
6/15/2056
6.125%
300,000
(9,348)
290,652
325,800
290,584
Instrument
Issue Date
Senior notes............ 5/27/1993
Senior notes(1)......... 9/24/2012
Senior notes............ 9/27/2018
Senior notes............ 8/21/2020
Junior subordinated
debentures.............. 5/17/2016
Junior subordinated
debentures.............. 11/17/2017
Term loan................
Less current maturity of term loan.......................................
Total long-term debt ....................................................
11/17/2057
5.275%
125,000
—
1,690,612
—
1,690,612
(1,619)
—
(22,726)
—
(22,726)
123,381
—
1,667,886
—
1,667,886
130,870
—
1,871,754
—
1,871,754
123,367
86,875
1,358,363
9,375
1,348,988
Current maturity of term loan...............................................
Commercial paper...............................................................
Total short-term debt ...................................................
—
255,000
255,000
—
(82)
(82)
—
254,918
254,918
—
254,918
254,918
9,375
289,363
298,738
Total debt ................................................................
$1,945,612
$
(
(22,808) $1,922,804
)
$2,126,672
$1,647,726
(1) An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.
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 callable upon special events. Interest on the 6.125%
Junior Subordinated Debentures is payable quarterly, all other long-term debt is payable semi-annually.
Contractual Debt Obligations: The following table presents expected scheduled principal payments under our
contractual debt obligations:
Debt obligations..................................... $
255,000
$
150,000
$
165,612
$
— $
— $ 1,375,000
2021
2022
2023
2024
2025
Thereafter
Year Ended December 31,
Credit Facility: On August 24, 2020, Globe Life entered into a new credit agreement, replacing the prior agreement
that was due on May 17, 2021, which provides for a $750 million revolving credit facility that may be increased to $1
billion. The new credit facility matures August 24, 2023 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.
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
101
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
at variable rates.
In accordance with the agreement, Globe Life is subject
capitalization. As of December 31, 2020, the Company was in full compliance with these covenants.
to certain covenants regarding
Commercial paper outstanding and any amortization payments of the term loan due within one year are reported as
short-term debt on the Consolidated Balance Sheets. A table presenting selected information concerning Globe
Life's commercial paper borrowings is presented below.
Credit Facility - Commercial Paper
At December 31,
Balance at end of period (at par value)........................................................................................ $
255,000
Annualized interest rate...............................................................................................................
0.27 %
Letters of credit outstanding......................................................................................................... $
135,000
Remaining amount available under credit line.............................................................................
360,000
2020
$
$
2019
290,000
2.04 %
150,000
310,000
Average balance outstanding during period..................................................... $
318,409
Daily-weighted average interest rate (annualized)...........................................
1.50 %
Maximum daily amount outstanding during period........................................... $
482,000
2020
2019
288,684
2.62 %
385,000
$
$
2018
368,228
2.40 %
525,990
$
$
Year Ended December 31,
Short-term debt: On July 31, 2020, the Company paid down the remaining principal of $82.5 million on the 5-year
$100 million term loan (Term Loan I) with a maturity date of May 17, 2021. This term loan was associated with the
prior credit facility that was replaced in August 2020.
On April 9, 2020, Globe Life entered into a 364-Day Term Loan Agreement (Term Loan II). The Agreement provided
the Company with access up to $300 million in unsecured term loans, all maturing on April 8, 2021. Globe Life
borrowed the full amount on April 15, 2020 to utilize for general corporate purposes, including additional liquidity at
the Parent Company. The net proceeds from the Term Loan II were $299.1 million. On August 17, 2020, the
Company repaid $150 million of the Term Loan II with the remaining balance of $150 million repaid on August 26,
2020. The Company recorded a $634 thousand loss on redemption of debt from the write-off of unamortized
issuance costs.
Long-term debt: On August 21, 2020, Globe Life completed the issuance and sale of $350 million in aggregate
principal amount of Globe Life's 2.15% unsecured Senior Notes due August 15, 2030. The net proceeds from the
sale of the Senior Notes were $345.8 million.
On September 3, 2020, Globe Life completed the issuance and sale of $50 million in aggregate principal of Globe
Life's 2.15% unsecured Senior Notes also due August 15, 2030. These Senior Notes were issued as additional
notes under a Second Supplemental Indenture governing the 2.15% Senior Notes issued on August 21, 2020. The
Senior Notes are fully fungible and have the same terms as the first issuance. The net proceeds from the sale of the
Senior Notes were $49.3 million, after giving effect to the underwriting expenses.
Globe Life utilized the total net proceeds of $395 million to extinguish the Term Loan II and for general corporate
purposes, which included additional capital
investments in its insurance subsidiaries and additional holding
company liquidity.
102
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 12—Shareholders' Equity
Share Data: A summary of common share activity is presented in the following chart.
Common Stock
Issued
Treasury
Stock
2018:
Balance at January 1, 2018......................................................................................................
124,218,183
(9,625,104)
Grants of restricted stock..........................................................................................................
Forfeitures of restricted stock....................................................................................................
Vesting of performance shares.................................................................................................
Issuance of common stock due to exercise of stock options....................................................
Treasury stock acquired............................................................................................................
—
—
—
—
—
10,805
(7,500)
149,898
897,622
(4,950,868)
Retirement of treasury stock.....................................................................................................
(3,000,000)
3,000,000
Balance at December 31, 2018 ............................................................................................
121,218,183
(10,525,147)
2019:
Grants of restricted stock..........................................................................................................
Vesting of performance shares.................................................................................................
Issuance of common stock due to exercise of stock options....................................................
Treasury stock acquired............................................................................................................
—
—
—
—
8,840
311,399
1,810,559
(5,103,591)
Retirement of treasury stock.....................................................................................................
(4,000,000)
4,000,000
Balance at December 31, 2019 ............................................................................................
117,218,183
(9,497,940)
2020:
Grants of restricted stock..........................................................................................................
Vesting of performance shares.................................................................................................
Issuance of common stock due to exercise of stock options....................................................
Treasury stock acquired............................................................................................................
—
—
—
—
4,548
271,843
936,289
(5,135,439)
Retirement of treasury stock.....................................................................................................
(4,000,000)
4,000,000
Balance at December 31, 2020 ............................................................................................
113,218,183
)
(9,420,699)
(
There was no activity related to the preferred stock in years 2018 through 2020.
Acquisition of Common Shares: Globe Life shares are acquired from time to time through open market purchases
under the Globe Life stock repurchase program when it is determined to be the best use of Globe Life's excess cash
flows. This yields a return that is better than available alternatives and exceeds our cost of equity. When stock
options are exercised, proceeds from the exercises are generally used to repurchase approximately the number of
shares available with those funds in order to reduce dilution. See the following summary below:
Globe Life Share Repurchase Program
Share Repurchase for Dilution Purposes
Shares
Acquired
(in thousands)
Total Cost
Average
Price
Shares
Acquired
(in thousands)
Total Cost
Average
Price
2020 ...........................................
4,459
$
380,112
$ 85.24
676
$
63,754
$ 94.28
2019 ...........................................
2018 ...........................................
3,932
4,406
350,080
371,794
89.04
84.38
1,209
571
109,489
49,955
90.52
87.54
103
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Restrictions: Restrictions exist on the flow of funds to Globe Life Inc. from its insurance subsidiaries. Statutory
regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus.
Dividends from insurance subsidiaries of Globe Life Inc. are restricted based on regulations by their states of
domicile. Additionally, insurance company distributions are generally not permitted in excess of statutory surplus.
Subsidiaries are also subject
to certain minimum capital requirements. Subsidiaries of Globe Life paid cash
dividends to the Parent Company in the amount of $486 million in 2020, $480 million in 2019, and $448 million in
2018. As of December 31, 2020, dividends from insurance subsidiaries to the Parent Company available to be paid
in 2021 are limited to the amount of $435 million without regulatory approval, such that $1.0 billion was considered
restricted net assets of the subsidiaries. Dividends exceeding these limitations may be available during the year
pending regulatory approval. While there are no legal restrictions on the payment of dividends to shareholders from
Globe Life's retained earnings, retained earnings as of December 31, 2020 were restricted by lenders’ covenants
which require the Company to maintain and not distribute $4.2 billion from its total consolidated retained earnings of
$5.9 billion.
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:
Basic weighted average shares outstanding...................................................
106,075,267
109,213,524
112,872,581
Weighted average dilutive options outstanding...............................................
1,149,327
2,167,726
2,376,372
Diluted weighted average shares outstanding................................................
107,224,594
111,381,250
115,248,953
Antidilutive shares...........................................................................................
2,476,019
21,556
1,161,521
Year Ended December 31,
2020
2019
2018
Antidilutive shares are excluded from the calculation of diluted earnings per share.
Note 13—Stock-Based Compensation
Globe Life's stock-based compensation consists of stock options, restricted stock, restricted stock units, and
performance shares. Certain employees and directors have been granted fixed equity options to buy shares of
Globe Life stock at the market value of the stock on the date of grant, under the provisions of the Globe Life stock
option plans. The options are exercisable during the period commencing from the date they vest until expiring
according to the terms of the grant. Options generally expire the earlier of employee termination or option contract
term, which are either seven-year or ten-year terms. Options generally vest in accordance with the following
schedule:
Contract
Period
6 Months
Year 1
Year 2
Year 3
Year 4
Year 5
Shares vested by period
Directors ....................................
7 years
100%
Employees .................................
7 years
Employees .................................
10 years
—%
—%
—%
—%
—%
—%
50%
25%
—%
50%
25%
—%
—%
25%
—%
—%
25%
All employee options vest immediately upon retirement on or after the attainment of age 65, upon death, or
disability. Globe Life generally issues shares for the exercise of stock options from treasury stock. The Company
generally uses the proceeds from option exercises to buy shares of Globe Life common stock in the open market to
reduce the dilution from option exercises.
104
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of shares available for grant is as follows:
Balance at January 1, ..........................................................................................
Approval of Globe Life Inc. 2018 Incentive Plan.(1)...........................................
Cancellation of available shares from prior plans.............................................
Expired and forfeited during year(2,3).................................................................
Options granted during year(2)...........................................................................
Restricted stock, restricted stock units, and performance shares granted(3).....
Available for Grant
2020
2019
7,167,718
9,422,760
—
—
—
—
38,820
20,800
2018
2,964,320
8,984,000
(184,000)
41,317
(1,127,610)
(1,149,542)
(1,262,037)
(94,510)
(1,126,300)
(1,120,840)
Balance at December 31, ....................................................................................
5,984,418
7,167,718
9,422,760
(1) See plan document referenced in Exhibits. Formerly, the Torchmark Corporation 2018 Incentive Plan.
(2) Plan allows for grant of options such that each grant reduces shares available for grant in a range from 0.85 share to 1 share.
(3) Plan allows for grant of restricted stock such that each stock grant reduces shares available for grant in a range from 3.10 shares to 3.88
shares.
A summary of stock compensation activity for each of the three years ended December 31, 2020 is presented
below:
Stock-based compensation expense recognized(1)................................................ $
35,892
$
44,843
$
Tax benefit recognized...........................................................................................
12,550
21,197
39,792
14,806
2020
2019
2018
(1) No stock-based compensation expense was capitalized in any period.
Additional stock compensation information is as follows at December 31:
Unrecognized compensation(1)......................................................................................................... $
Weighted average period of expected recognition (in years)(1)........................................................
28,125
$
34,723
0.65
0.78
2020
2019
(1) Includes restricted stock and performance shares.
No equity awards were cash settled during the three years ended December 31, 2020.
Options: The following table summarizes information about stock options outstanding at December 31, 2020.
Range of
Exercise Prices
$29.59 - $76.37
77.26
82.56 - 83.17
87.60 - 90.21
100.74 - 105.56
$29.59 - $105.56
Options Outstanding
Options Exercisable
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price
2.77 $
4.11
5.15
5.24
6.16
4.57 $
51.29
77.26
82.56
87.64
100.85
78.28
Number
Exercisable
1,598,580
$
1,142,879
33,217
573,454
41,269
3,389,399
$
Weighted-
Average
Exercise
Price
51.34
77.26
82.69
87.70
104.39
67.19
Number
Outstanding
1,736,807
1,372,680
1,327,447
1,347,698
1,326,599
7,111,231
105
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of option activity for each of the three years ended December 31, 2020 is as follows:
2020
2019
2018
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Outstanding—beginning of year .............
6,724,358
$
70.07
7,203,765
$
61.72
6,753,801
$
53.59
Granted:
7-year term...........................................
1,326,599
100.85
1,352,402
10-year term.........................................
—
Exercised..................................................
(936,289)
Expired and forfeited.................................
(3,437)
Outstanding—end of year ........................
7,111,231
Exercisable at end of year .......................
3,389,399
—
51.37
75.27
78.28
—
(1,810,559)
(21,250)
6,724,358
67.19
2,999,788
$
$
$
$
82.43
—
45.93
82.89
70.07
845,773
543,130
(897,622)
(41,317)
7,203,765
57.27
3,393,090
$
$
87.63
87.60
40.21
70.90
61.72
48.18
Additional information about Globe Life's stock option activity as of December 31, 2020 and 2019 is as follows:
Outstanding options:
Weighted-average remaining contractual term (in years).........................................................
4.57
4.80
Aggregate intrinsic value........................................................................................................... $
126,467
$
236,546
2020
2019
Exercisable options:
Weighted-average remaining contractual term (in years).........................................................
3.42
3.27
Aggregate intrinsic value........................................................................................................... $
94,527
$
143,935
Selected stock option activity for the three years ended December 31, 2020 is presented below:
Weighted-average grant-date fair value of options granted
(per share)........................................................................................................ $
14.64
$
14.20
$
Intrinsic value of options exercised..................................................................
Cash received from options exercised.............................................................
Actual tax benefit received...............................................................................
40,517
48,093
8,508
82,022
83,163
17,225
15.65
42,517
36,091
8,929
2020
2019
2018
Additional information concerning Globe Life's unvested options is as follows at December 31:
Number of shares outstanding.....................................................................................................
3,721,832
3,724,570
Weighted-average exercise price (per share).............................................................................. $
88.37
$
Weighted-average remaining contractual term (in years)............................................................
5.62
80.39
6.04
Aggregate intrinsic value.............................................................................................................. $
31,941
$
92,611
2020
2019
Globe Life expects that substantially all unvested options will vest.
106
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Restricted Stock: Restricted stock grants consist of time-vested grants, restricted stock units, and performance
shares. Time-vested restricted stock is available to both senior executives and directors. The employee grants
generally vest over five years and the director grants vest over six months. Restricted stock units are available only
to directors. They vest over six months and are not converted to shares until the directors’ retirement, death, or
disability. Director restricted stock and restricted stock units are generally granted on the first work day of the year.
Performance shares are granted to a limited number of senior executives. Performance shares have a three-year
contract life and are not settled in shares until the termination of the three-year contract period. While the grant
specifies a stated target number of shares, the determination of the actual settlement in shares will be based on the
achievement of certain performance objectives of Globe Life over the respective three-year contract periods.
Certain executive restricted stock and performance share grants contain terms related to age that could accelerate
vesting.
Following are the restricted stock units outstanding for each of the three years ended December 31, 2020. All
restricted stock units were fully vested at the end of each year of grant.
2018..........................................................................................................................................................
2019..........................................................................................................................................................
2020..........................................................................................................................................................
Year of grants
Outstanding as of
year end
102,116
71,006
77,167
Below is the final determination of the performance share grants in 2016 to 2018:
Year of grants
Final settlement of
shares
Final settlement date
2016................................................................................................................
2017................................................................................................................
2018................................................................................................................
311,399
271,843
210,155
February 28, 2019
February 26, 2020
February 24, 2021
For the 2019 and 2020 performance share grants, actual shares that could be distributed range from 0 to 313
thousand for the 2019 grants and 0 to 227 thousand shares for the 2020 grants.
A summary of restricted stock grants for each of the years in the three-year period ended December 31, 2020 is
presented in the table below.
2020
2019
2018
Directors restricted stock:
Shares...............................................................................................................
4,548
Price per share.................................................................................................. $
105.56
Aggregate value................................................................................................ $
Percent vested as of 12/31/2020.......................................................................
480
100%
Directors restricted stock units (including dividend equivalents):
Shares...............................................................................................................
6,161
Price per share.................................................................................................. $
103.32
Aggregate value................................................................................................ $
Percent vested as of 12/31/2020.......................................................................
637
100%
Performance shares:
Target shares.....................................................................................................
151,200
Target price per share........................................................................................ $
100.74
Aggregate value................................................................................................ $
15,232
8,840
76.37
675
100%
6,634
77.50
514
100%
156,500
82.56
12,921
$
$
$
$
$
$
10,805
88.19
953
100%
7,688
89.15
685
100%
159,000
87.60
13,928
$
$
$
$
$
$
Percent vested as of 12/31/2020.......................................................................
—%
—%
—%
107
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Time-vested restricted stockholders, both employees and directors, are entitled to dividend payments on the
unvested stock. Restricted stock unit holders are entitled to dividend equivalents. These equivalents are granted in
the form of additional restricted stock units and vest immediately upon grant. Dividend equivalents are applicable
only to restricted stock units. Performance shareholders are not entitled to dividend equivalents and are not entitled
to dividend payments until the shares are vested and settled.
An analysis of nonvested restricted stock is as follows:
Executive
Restricted
Stock
Executive
Performance
Shares
Directors
Restricted
Stock
Directors
Restricted
Stock
Units
2018:
Balance at January 1, 2018...........................
35,250
Grants.............................................................
Additional performance shares(1)....................
—
—
564,112
159,000
179,415
—
10,805
—
—
7,688
—
Total
599,362
177,493
179,415
Restriction lapses............................................
(23,250)
(149,898)
(10,805)
(7,688)
(191,641)
Forfeitures.......................................................
—
—
Balance at December 31, 2018..................
12,000
752,629
2019:
Grants.............................................................
Additional performance shares(1)....................
—
—
156,500
118,812
Restriction lapses............................................
(12,000)
(311,399)
Forfeitures.......................................................
Balance at December 31, 2019..................
2020:
Grants.............................................................
Additional performance shares(1)....................
Restriction lapses............................................
Forfeitures.......................................................
Balance at December 31, 2020..................
—
—
—
—
—
—
—
—
716,542
151,200
(65,473)
(271,843)
(11,450)
518,976
—
—
8,840
—
(8,840)
—
—
4,548
—
(4,548)
—
—
(1) Estimated additional (reduced) share grants expected due to achievement of performance criteria.
—
—
6,634
—
—
764,629
171,974
118,812
(6,634)
(338,873)
—
—
6,161
—
—
716,542
161,909
(65,473)
(6,161)
(282,552)
—
—
(11,450)
518,976
An analysis of the weighted-average grant-date fair values per share of nonvested restricted stock is as follows for
the year 2020:
Executive
Restricted
Stock
Executive
Performance
Shares
Directors
Restricted
Stock
Directors
Restricted
Stock Units
Grant-date fair value per share at January 1, 2020 ............. $
— $
75.05
$
— $
Grants........................................................................................
Estimated additional performance shares.................................
Restriction lapses......................................................................
Forfeitures.................................................................................
Grant-date fair value per share at December 31, 2020 ........
—
—
—
—
—
100.74
(40.99)
(77.26)
(77.26)
90.13
105.56
—
—
105.56
—
(105.56)
(105.56)
—
—
—
—
108
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 14—Business Segments
Globe Life is organized into four segments:
investments. In addition, other expenses not included in these segments are reported in "Corporate & Other."
life insurance, supplemental health insurance, annuities, and
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
For the Year 2020
Life
Health
Annuity
Total
Distribution Channel
Amount
% of
Total
American Income............................. $ 1,257,726
Direct to Consumer..........................
Liberty National................................
United American..............................
Family Heritage................................
906,959
293,897
9,688
4,253
Other................................................
200,281
47
34
11
—
—
8
Amount
$
105,734
76,527
188,835
452,980
317,021
—
% of
Total
Amount
% of
Total
Amount
% of
Total
—
—
—
4
—
—
4
— $ 1,363,460
—
—
100
—
—
983,486
482,732
462,672
321,274
200,281
36
26
13
12
8
5
100
$ 3,813,905
100
$ 2,672,804
100
$ 1,141,097
100
$
Life
Health
Annuity
Total
For the Year 2019
% of
Total
Amount
% of
Total
Amount
% of
Total
Distribution Channel
Amount
% of
Total
American Income............................. $ 1,160,495
Direct to Consumer..........................
Liberty National................................
United American..............................
Family Heritage................................
855,543
285,551
10,571
3,830
Other................................................
201,794
46
34
11
1
—
8
Amount
$
99,447
77,557
189,578
416,582
294,182
—
$ 2,517,784
100
$ 1,077,346
100
$
—
—
—
4
—
—
4
— $ 1,259,942
—
—
100
—
—
933,100
475,129
427,157
298,012
201,794
35
26
13
12
8
6
100
$ 3,595,134
100
$
9
7
16
40
28
—
$
9
7
18
39
27
—
109
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Life
Health
Annuity
Total
For the Year 2018
Distribution Channel
Amount
% of
Total
American Income.............................. $ 1,081,333
Direct to Consumer...........................
Liberty National.................................
United American................................
Family Heritage.................................
828,935
278,878
11,451
3,501
Other.................................................
202,457
45
34
12
1
—
8
Amount
$
93,313
76,297
191,378
381,076
273,275
—
$
9
7
19
38
27
—
$ 2,406,555
100
$ 1,015,339
100
$
—
—
—
12
—
—
12
— $ 1,174,646
—
—
100
—
—
905,232
470,256
392,539
276,776
202,457
34
26
14
12
8
6
100
$ 3,421,906
100
% of
Total
Amount
% of
Total
Amount
% of
Total
Due to the nature of the life insurance industry, Globe Life has no individual or group which 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 insurance segments is
in accordance with the manner the
underwriting margin before other income and administrative expenses,
segments are managed. This measure 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
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, which represents 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 and an intersegment commission, there are no
other intersegment revenues or expenses. 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 of its insurance products. From time to time,
investments are sold, called, or experience a credit loss event, each of which are 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 its 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 Consolidated Statements of Operations for the appropriate year. See additional detail
below in the tables.
110
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(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.
Twelve Months Ended December 31, 2020
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Revenue:
Premium............................................... $ 2,672,804
$1,141,097
$
4
$
— $
— $
Net investment income........................
Other income.......................................
—
—
—
—
Total revenue..................................
2,672,804
1,141,097
—
—
4
927,062
—
927,062
—
1,325
1,325
Expenses:
Policy benefits......................................
1,809,373
733,481
30,030
—
Required interest on reserves..............
(698,112)
(93,475)
(41,413)
833,000
Required interest on DAC....................
210,152
26,586
328
(237,066)
Amortization of acquisition costs..........
463,586
110,177
2,007
Commissions, premium taxes, and
non-deferred acquisition costs.............
Insurance administrative expense(1).....
Parent expense....................................
Stock-based compensation expense...
Interest expense..................................
212,859
91,959
—
—
—
—
—
—
—
—
23
—
—
—
—
—
—
—
—
—
250,947
9,891
35,892
—
—
—
—
—
86,704
—
—
—
—
—
—
—
—
—
—
3,985
323
(2,3)
(3)
—
—
4,308
(4,308)
$ 3,813,905
927,062
1,325
4,742,292
2,572,884
—
—
575,770
304,841
254,932
10,214
35,892
86,704
3,841,237
901,055
4,308
Total expenses................................
1,997,858
868,728
(9,025)
682,638
296,730
Subtotal...................................................
674,946
272,369
9,029
244,424
(295,405)
Non-operating items.............................
—
—
—
—
—
4,308
(2,3)
Measure of segment profitability
(pretax) .......................................... $ 674,946
$ 272,369
$ 9,029
$ 244,424
$ (295,405) $
(
)
—
905,363
Realized gain (loss)—investments............................................................................................................................................
Realized loss—redemption of debt...........................................................................................................................................
Legal proceedings.....................................................................................................................................................................
Non-operating expenses...........................................................................................................................................................
(3,737)
(634)
(3,275)
(1,033)
Income before income taxes per Consolidated Statements of Operations ......................................................................
$
896,684
(1) Administrative expense is not allocated to insurance segments.
(2) Legal proceedings.
(3) Non-operating expenses.
111
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Twelve Months Ended December 31, 2019
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Revenue:
Premium................................................. $2,517,784
$1,077,346
$
4
$
— $
— $
Net investment income..........................
Other income.........................................
—
—
—
—
Total revenue....................................
2,517,784
1,077,346
—
—
4
910,459
—
910,459
—
1,318
1,318
Expenses:
Policy benefits........................................
1,638,053
687,764
31,532
—
Required interest on reserves................
(666,168)
(87,289)
(43,522)
796,979
Required interest on DAC......................
202,502
25,435
494
(228,431)
Amortization of acquisition costs............
436,881
112,825
2,020
Commissions, premium taxes, and non-
deferred acquisition costs......................
Insurance administrative expense(1).......
Parent expense......................................
Stock-based compensation expense.....
Interest expense....................................
203,052
94,973
—
—
—
—
—
—
—
—
22
—
—
—
—
—
—
—
—
—
240,321
10,260
44,843
—
—
—
—
—
84,306
—
—
—
—
—
—
—
—
—
—
8,758
643
(2,3)
(4)
—
—
9,401
(9,401)
$ 3,595,134
910,459
1,318
4,506,911
2,357,349
—
—
551,726
298,047
249,079
10,903
44,843
84,306
3,596,253
910,658
Total expenses..................................
1,814,320
833,708
(9,454)
652,854
295,424
Subtotal.....................................................
703,464
243,638
9,458
257,605
(294,106)
Non-operating items...............................
—
—
—
—
—
9,401
(2,3,4)
9,401
Measure of segment profitability
(pretax) ............................................ $ 703,464
$ 243,638
$ 9,458
$ 257,605
$ (294,106) $
)
(
—
920,059
Realized gain (loss)—investments............................................................................................................................................
Administrative settlements........................................................................................................................................................
Legal proceedings.....................................................................................................................................................................
Non-operating expenses...........................................................................................................................................................
20,621
(400)
(8,358)
(643)
Income before income taxes per Consolidated Statements of Operations .....................................................................
$
931,279
(1) Administrative expense is not allocated to insurance segments.
(2) Administrative settlements.
(3) Legal proceedings.
(4) Non-operating expenses.
112
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Twelve Months Ended December 31, 2018
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Revenue:
Premium................................................. $2,406,555
$1,015,339
$
Net investment income...........................
Other income..........................................
—
—
—
—
Total revenue...................................... 2,406,555
1,015,339
12
—
—
12
$
— $
— $
882,512
—
882,512
—
1,236
1,236
Expenses:
Policy benefits......................................... 1,591,790
649,188
34,264
—
Required interest on reserves.................
(636,040)
(83,243)
(47,357)
766,640
Required interest on DAC.......................
194,297
24,412
589
(219,298)
Amortization of acquisition costs.............
414,200
100,376
2,114
Commissions, premium taxes, and non-
deferred acquisition costs.......................
Insurance administrative expense(1).......
Parent expense.......................................
Stock-based compensation expense......
Interest expense......................................
190,007
88,553
—
—
—
—
—
—
—
—
26
—
—
—
—
—
—
—
—
—
223,941
10,684
39,792
—
—
—
—
—
90,076
—
(2)
(2)
(3)
(4)
—
—
(99)
(99)
—
—
—
—
(99)
3,590
1,578
—
—
5,069
(5,168)
$ 3,421,906
882,512
1,137
4,305,555
2,275,242
—
—
516,690
278,487
227,531
12,262
39,792
90,076
3,440,080
865,475
5,168
Total expenses................................... 1,754,254
779,286
(10,364)
637,418
274,417
Subtotal......................................................
652,301
236,053
10,376
245,094
(273,181)
Non-operating items................................
—
—
—
—
—
5,168
(3,4)
Measure of segment profitability
(pretax) ............................................ $ 652,301
$ 236,053
$ 10,376
$ 245,094
$(273,181) $
(
)
—
870,643
Realized gain (loss)—investments...........................................................................................................................................
Realized loss—redemption of debt...........................................................................................................................................
Administrative settlements........................................................................................................................................................
Non-operating expenses...........................................................................................................................................................
9,274
(11,078)
(3,590)
(1,578)
Income before income taxes per Consolidated Statements of Operations .....................................................................
$
863,671
(1) Administrative expense is not allocated to insurance segments.
(2) Elimination of intersegment commission.
(3) Administrative settlements.
(4) Non-operating expenses.
113
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Assets for each segment are reported based on a specific identification basis. The insurance segments’ assets
contain DAC. The investment segment includes the investment portfolio, cash, and accrued investment income.
Goodwill
is assigned to the insurance segments at the time of purchase. All other assets are included in the
Corporate & Other category. The tables below reconcile segment assets to total assets as reported in the
consolidated financial statements.
Assets by Segment
At December 31, 2020
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
Cash and invested assets........ $
Accrued investment income.....
— $
—
— $
—
Deferred acquisition costs........
3,982,158
Goodwill...................................
309,609
Other assets.............................
—
610,071
131,982
—
— $ 22,547,498
$
— $ 22,547,498
—
3,215
—
—
248,991
—
—
—
—
—
—
248,991
4,595,444
441,591
1,213,207
1,213,207
Total assets ...................... $ 4,291,767
$
742,053
$
3,215
$ 22,796,489
$ 1,213,207
$ 29,046,731
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
At December 31, 2019
Cash and invested assets........ $
Accrued investment income.....
— $
—
— $
—
Deferred acquisition costs........
3,768,797
Goodwill...................................
309,609
Other assets.............................
—
569,126
131,982
—
— $ 19,923,204
$
— $ 19,923,204
—
4,018
—
—
245,129
—
—
—
—
—
—
245,129
4,341,941
441,591
1,025,595
1,025,595
Total assets ...................... $ 4,078,406
$
701,108
$
4,018
$ 20,168,333
$ 1,025,595
$ 25,977,460
114
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Liabilities for each segment are reported also on a specific identification basis similar to the assets. The insurance
segments' liabilities contain future policy benefits, unearned and advance premiums, and policy claims and other
benefits payable. Other policyholders' funds are included in Other as well as current and deferred income taxes
payable. Debt represents both short and long-term. The tables below reconcile segment liabilities to total liabilities
as reported in the consolidated financial statements.
Liabilities by Segment
At December 31, 2020
Future policy benefits............... $ 12,008,396
$ 2,172,141
$ 1,062,999
$
— $
— $ 15,243,536
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
Unearned and advance
premiums.................................
Policy claims and other
benefits payable.......................
Debt.........................................
Other........................................
18,968
42,760
237,246
162,261
—
—
—
—
—
—
—
—
—
—
1,922,804
—
—
—
—
2,648,064
61,728
399,507
1,922,804
2,648,064
Total liabilities .................. $ 12,264,610
$ 2,377,162
$ 1,062,999
$ 1,922,804
$ 2,648,064
$ 20,275,639
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
At December 31, 2019
Future policy benefits............... $ 11,403,078
$ 2,006,424
$ 1,098,632
$
— $
— $ 14,508,134
Unearned and advance
premiums.................................
Policy claims and other
benefits payable.......................
Debt.........................................
Other........................................
17,701
46,008
201,594
163,808
—
—
—
—
—
—
—
—
—
—
1,647,726
—
—
—
—
2,098,182
63,709
365,402
1,647,726
2,098,182
Total liabilities .................. $ 11,622,373
$ 2,216,240
$ 1,098,632
$ 1,647,726
$ 2,098,182
$ 18,683,153
115
GL 2020 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 15—Selected Quarterly Data (Unaudited)
The following is an unaudited summary of quarterly results for the two years ended December 31, 2020. The
information includes all adjustments (consisting of normal accruals) which management considers necessary for a
fair presentation of the results of operations for these periods.
2020:
Premium income....................................................... $
Net investment income.............................................
Realized gains (losses).............................................
Total revenue............................................................
Policyholder benefits.................................................
Amortization of deferred acquisition costs................
Pretax income from continuing operations...............
Income from continuing operations...........................
Income (loss) from discontinued operations.............
Net income................................................................
Basic net income per common share:
Continuing operations............................................
Discontinued operations........................................
Total basic net income per common share...........
Diluted net income per common share:
Continuing operations............................................
Discontinued operations........................................
Total diluted net income per common share........
2019:
Premium income....................................................... $
Net investment income.............................................
Realized gains (losses).............................................
Total revenue............................................................
Policyholder benefits.................................................
Amortization of deferred acquisition costs................
Pretax income from continuing operations...............
Income from continuing operations...........................
Income (loss) from discontinued operations.............
Net income................................................................
Basic net income per common share:
Continuing operations............................................
Discontinued operations........................................
Total basic net income per common share...........
Diluted net income per common share:
Continuing operations............................................
Discontinued operations........................................
Total diluted net income per common share........
March 31,
June 30,
September 30,
December 31,
Three Months Ended
$
929,835
228,991
(26,097)
1,133,054
607,969
143,837
202,921
165,540
—
165,540
$
953,702
231,568
(4,790)
1,180,884
650,816
146,160
212,241
173,048
—
173,048
$
961,817
231,432
1,501
1,195,042
650,976
140,843
231,538
188,945
—
188,945
968,551
235,071
25,015
1,228,941
663,123
144,930
249,984
204,240
—
204,240
1.54
—
1.54
1.52
—
1.52
1.63
—
1.63
1.62
—
1.62
1.78
—
1.78
1.76
—
1.76
1.96
—
1.96
1.93
—
1.93
March 31,
June 30,
September 30,
December 31,
Three Months Ended
$
890,973
226,673
1,329
1,119,216
587,757
135,822
228,101
185,394
(49)
185,345
$
897,484
227,425
5,154
1,130,461
589,362
138,165
228,760
186,609
(43)
186,566
$
899,993
228,905
11,943
1,141,279
585,692
138,449
247,330
201,818
—
201,818
906,684
227,456
2,195
1,136,576
594,538
139,290
227,088
187,061
—
187,061
1.68
—
1.68
1.65
—
1.65
116
1.70
—
1.70
1.67
—
1.67
1.85
—
1.85
1.82
—
1.82
1.73
—
1.73
1.69
—
1.69
GL 2020 FORM 10-K
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
None.
Item 9A. 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 year completed December 31, 2020, 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-K. 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-K.
Management's Annual Report on Internal Control over Financial Reporting: Management
is responsible for
establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under
the
the Securities Exchange Act of 1934. Management evaluated the design and operating effectiveness of
Company's internal control over financial reporting based on the criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Based upon their evaluation as of December 31, 2020, the Co-Chairmen and Chief Executive Officers, and the
Executive Vice President and Chief Financial Officer have concluded that Globe Life's internal control over financial
reporting is effective as of the date of this Form 10-K. 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-K.
Changes in Internal Control over Financial Reporting: As of the period ended December 31, 2020, 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.
Refer to Deloitte & Touche LLP's,
Company's internal controls over financial reporting.
independent registered public accounting firm, attestation report on the
117
GL 2020 FORM 10-K
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management at Globe Life is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company and for assessing the effectiveness of internal control on an annual basis. As a
framework for assessing internal control over financial reporting, the Company utilizes the criteria for effective
internal control over financial reporting described in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and
the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable
assurance with respect
the
effectiveness of internal control may vary over time.
to financial statement preparation. Further, because of changes in conditions,
Management evaluated the Company’s internal control over financial reporting, and based on its assessment,
determined that the Company’s internal control over financial reporting was effective as of December 31, 2020. The
Company’s independent registered public accounting firm has issued an attestation report on the Company’s
internal control over financial reporting as stated in their report which is included herein.
/s/ Gary L. Coleman
Gary L. Coleman
Co-Chairman and Chief Executive Officer
/s/ Larry M. Hutchison
Larry M. Hutchison
Co-Chairman and Chief Executive Officer
/s/ Frank M. Svoboda
Frank M. Svoboda
Executive Vice President and Chief Financial Officer
February 25, 2021
118
GL 2020 FORM 10-K
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Globe Life Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Globe Life Inc. and subsidiaries (the “Company”) as
of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,
based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year
ended December 31, 2020 of the Company and our report dated February 25, 2021, expressed an unqualified
opinion on those financial statements and financial statement schedules.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
February 25, 2021
119
GL 2020 FORM 10-K
There were no items required.
Item 9B. Other Information
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item is incorporated by reference from the sections entitled “PROPOSAL NUMBER 1 -
Election of Directors,” “Director Nominee Profiles,” "Director Nominees Skills Matrix," “Executive Officers,” “AUDIT
COMMITTEE REPORT,” “Governance Guidelines and Codes of Ethics,” “Qualifications of Directors,” “Procedures
for Director Nominations by Shareholders,” and “DELINQUENT SECTION 16(a) REPORTS” in the Proxy Statement
for the Annual Meeting of Shareholders to be held April 29, 2021 (the Proxy Statement), which is to be filed with the
Securities and Exchange Commission (SEC).
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference from the sections entitled “COMPENSATION
DISCUSSION AND ANALYSIS”,
“SUMMARY COMPENSATION
“COMPENSATION COMMITTEE REPORT”,
TABLE”, "CEO PAY RATIO", “2020 GRANTS OF PLAN-BASED AWARDS”, “OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END 2020”, “OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR ENDED
DECEMBER 31, 2020”, “PENSION BENEFITS AT DECEMBER 31, 2020”, “POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL”,
“2020 DIRECTOR COMPENSATION”, and “PAYMENTS TO
DIRECTORS” in the Proxy Statement, which is to be filed with the SEC.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
1.
Equity Compensation Plan Information as of December 31, 2020
Number of securities
to be issued
upon exercise of
outstanding options,
warrants, and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants, and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities in
column (a))
(c)
7,111,231
$
78.28
5,984,418
Plan Category
Equity compensation plans approved by
security holders..........................................
Equity compensation plans not approved
by security holders.....................................
Total.......................................................
7,111,231
$
78.28
5,984,418
2.
3.
4.
Security ownership of certain beneficial owners:
Information required by this item is incorporated by reference from the section entitled “PRINCIPAL
SHAREHOLDERS” in the Proxy Statement, which is to be filed with the SEC.
Security ownership of management:
Information required by this item is incorporated by reference from the section entitled “Stock Ownership” in
the Proxy Statement, which is to be filed with the SEC.
Changes in control:
Globe Life knows of no arrangements, including any pledges by any person of its securities, the operation
of which may at a subsequent date result in a change of control.
120
GL 2020 FORM 10-K
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated by reference from the sections entitled “RELATED PARTY
TRANSACTION POLICY AND TRANSACTIONS” and “Director
in the Proxy
Statement, which is to be filed with the SEC.
Independence Determinations”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is incorporated by reference from the section entitled “PRINCIPAL ACCOUNTING
FIRM FEES” and “PRE-APPROVAL POLICY FOR ACCOUNTING FEES” in the Proxy Statement, which is to be
filed with the SEC.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Index of documents filed as a part of this report:
Financial Statements:
Globe Life Inc. and Subsidiaries:
Page of
this report
Report of Independent Registered Public Accounting Firm........................................................
Consolidated Balance Sheets at December 31, 2020 and 2019................................................
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2020....................................................................................................................
Consolidated Statements of Comprehensive Income for each of the three years in the period
ended December 31, 2020.........................................................................................................
Consolidated Statements of Shareholders’ Equity for each of the three years in the period
ended December 31, 2020.........................................................................................................
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2020....................................................................................................................
Notes to Consolidated Financial Statements.............................................................................
Schedules Supporting Financial Statements for each of the three years in the period ended
December 31, 2020:
II. Condensed Financial Information of Registrant (Parent Company).........................................
IV. Reinsurance (Consolidated)....................................................................................................
Schedules not referred to have been omitted as inapplicable or not required by Regulation S-X.
52
54
55
56
57
58
59
127
131
121
GL 2020 FORM 10-K
EXHIBITS
Exhibit No.
Description
Form
Filing Date
Related
Exhibit
Page of
this Report
Restated Certificate of Incorporation of Globe Life Inc.
Amended and Restated By-Laws of Globe Life Inc., as
amended February 24, 2021
Trust Indenture dated as of February 1, 1987 between
Torchmark Corporation and Morgan Guaranty Trust
Company of New York, as Trustee
Fourth Supplemental Indenture dated as of September 24,
2012 between Torchmark Corporation and The Bank of
New York Mellon Trust Company, N. A., as Trustee,
supplementing the Indenture dated February 1, 1987
Junior Subordinated Indenture, dated November 2, 2001,
between Torchmark Corporation and The Bank of New York
defining the rights of the 7 3/4% Junior Subordinated
Debentures
Second Supplemental Indenture dated as of April 5, 2016
between Torchmark Corporation and The Bank of New York
Mellon Trust Company of New York, N.A., as Trustee,
supplementing the Junior Subordinated Indenture dated as
of November 2, 2001
Third Supplemental Indenture dated as of November 17,
2017 between Torchmark Corporation and Regions Bank,
as Trustee, supplementing the Junior Subordinated
Indenture dated as of November 2, 2001
Senior Indenture, dated as of September 24, 2018,
between Torchmark Corporation and Regions Bank, as
Trustee
First Supplemental Indenture, dated as of September 27,
2018, between Torchmark Corporation and Regions Bank,
as Trustee
Second Supplemental Indenture, dated as of August 21,
2020, between Globe Life Inc. and Regions Bank, as
Trustee
Torchmark Corporation Restated Deferred Compensation
Plan for Directors, Advisory Directors, Directors Emeritus
and Officers, as amended*
Amendment One to the Torchmark Corporation Restated
Deferred Compensation Plan for Directors, Advisory
Directors, Directors Emeritus and Officers*
8-K
8-K
August 8, 2019
February 25, 2021
10-K
February 27, 2018
3.2
3.2
4.1
8-K
September 24, 2012
4.2
8-K
November 2, 2001
4.3
8-K
April 5, 2016
4.3
8-K
November 17, 2017
4.4
S-3
September 24, 2018
4.1
8-K
September 27, 2018
4.2
8-K
August 21, 2020
4.2
10-K
February 27, 2018
10.1
10-K
February 27, 2009
10.54
Amendment Two to the Torchmark Corporation Restated
Deferred Compensation Plan*
10-K
February 27, 2009
10.55
Form of Retirement Life Insurance Benefit Agreement
($1,995,000 face amount limit)*
Form of Retirement Life Insurance Benefit Agreement
($495,000 face amount limit)*
10-K
March 22, 2002
10.Z
10-K
March 22, 2002
10.AA
Torchmark Corporation Supplemental Executive Retirement
Plan*
8-K
January 25, 2007
10.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Amendment No. 1 to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment No. 2 to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Three to the Torchmark Corporation
Supplemental Executive Retirement Plan*
10.10
Amendment Four to the Torchmark Amendment Four to the
Torchmark Corporation Supplemental Executive Retirement
Plan*
10-K
February 29, 2008
10.53
10-K
February 29, 2008
10.54
10-K
February 27, 2009
10.53
10-K
February 27, 2020
10.10
122
GL 2020 FORM 10-K
Form
8-K
Filing Date
Related
Exhibit
Page of
this Report
May 5, 2015
10.1
10-K
March 1, 2019
10.11
10-Q
November 5, 2020
10.2
8-K
April 29, 2008
10.1
10-K
February 29, 2008
10.58
8-K
January 6, 2009
10.1
10-K
February 28, 2014
10.58
10-K
March 1, 2019
10.17
8-K
8-K
8-K
8-K
8-K
May 4, 2011
April 29, 2014
May 4, 2011
May 4, 2011
10.1
10.1
10.4
10.5
February 27, 2012
10.1
10-K
February 27, 2017
10.75
10-K
February 27, 2017
10.76
10-K
February 27, 2017
10.77
10-K
February 27, 2017
10.78
Exhibit No.
Description
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Amendment Five to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Six to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Seven to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Torchmark Corporation Non-Employee Director
Compensation Plan, as amended and restated*
Form of Restricted Stock Unit Award Notice under
Torchmark Corporation Non-Employee Director
Compensation Plan*
Receivables Purchase Agreement dated as of December
31, 2008 among AILIC Receivables Corporation, American
Income Life Insurance Company and TMK Re, Ltd.
Amendment No.1 to Receivables Purchase Agreement
dated as of December 31, 2008 among AILIC Receivables
Corporation, American Income Life Insurance Company,
and TMK Re, Ltd.
Amendment No.2 to Receivables Purchase Agreement
dated as of December 31, 2008 among AILIC Receivables
Corporation, American Income Life Insurance Company,
and TMK Re, Ltd.
10.19
Torchmark Corporation 2011 Incentive Plan*
First Amendment to Torchmark Corporation 2011 Incentive
Plan*
Form of Ten year Stock Option under Torchmark
Corporation 2011 Incentive Plan*
Form of Seven year Stock Option under Torchmark
Corporation 2011 Incentive Plan*
Form of Performance Share Award under Torchmark
Corporation 2011 Incentive Plan*
Form of Seven Year Stock Option Grant Agreement under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of Ten Year Stock Option Grant Agreement under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of Performance Share Award Certificate under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of Seven Year Stock Option Grant Agreement
(Special) under Torchmark Corporation 2011 Incentive Plan,
as amended with Non-Compete, Non-Solicit and
Confidentiality Provisions*
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
Torchmark Corporation Amended 2011 Non-Employee
Director Compensation Plan, effective January, 2017*
10-K
February 27, 2017
10.55
Form of Stock Option under Torchmark Corporation 2011
Non-Employee Director Compensation Plan*
10-K
February 28, 2011
10.57
Form of Restricted Stock Unit Award Notice under
Torchmark Corporation 2011 Non-Employee Director
Compensation Plan*
10-K
February 28, 2011
10.59
10.31
Torchmark Corporation 2018 Incentive Plan*
10.32
First Amendment to Torchmark Corporation 2018 Incentive
Plan*
8-K
10-K
May 2, 2018
10.1
February 27, 2020
10.31
123
GL 2020 FORM 10-K
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.52
10.53
10.54
10.55
Exhibit No.
Description
Amended Torchmark Corporation 2018 Non-Employee
Director Compensation Plan*
Form of Performance Share Award under Torchmark
Corporation 2018 Incentive Plan*
Form
10-K
Filing Date
Related
Exhibit
Page of
this Report
February 27, 2020
10.32
8-K
May 2, 2018
10.3
Form of Performance Share Award under Globe Life Inc.
2018 Incentive Plan*
10-K
February 27, 2020
10.34
Form of Seven Year Stock Option under Torchmark
Corporation 2018 Incentive Plan*
8-K
May 2, 2018
10.4
Form of Seven Year Stock Option under Globe Life Inc.
2018 Incentive Plan*
Form of Seven Year Stock Option under Torchmark
Corporation 2018 Incentive Plan with Non-Compete, Non-
Solicit and Confidentiality Provisions*
Form of Seven Year Stock Option under Globe Life Inc.
2018 Incentive Plan with Non-Compete, Non-Solicit and
Confidentiality Provisions*
Form of Seven Year Stock Option under Globe Life Inc.
2018 Incentive Plan with Non-Compete, Non-Solicit and
Confidentiality Provisions (Special)*
Form of Ten Year Stock Option under Torchmark
Corporation 2018 Incentive Plan*
Form of Ten Year Stock Option under Torchmark
Corporation 2018 Incentive Plan with Non-Compete, Non-
Solicit and Confidentiality Provisions*
Form of Stock Option under Torchmark Corporation 2018
Non-Employee Director Compensation Plan*
Form of Restricted Stock Unit Award Notice under
Torchmark Corporation 2018 Non-Employee Director
Compensation Plan*
Form of Stock Option under Globe Life Inc. 2018 Non-
Employee Director Compensation Plan*
10-K
February 27, 2020
10.36
8-K
May 2, 2018
10.5
10-K
February 27, 2020
10.38
10-K
February 27, 2020
10.39
8-K
8-K
8-K
8-K
May 2, 2018
May 2, 2018
10.6
10.7
May 2, 2018
10.8
May 2, 2018
10.10
10-K
February 27, 2020
10.44
Form of Restricted Stock under Globe Life Inc. 2018 Non-
Employee Director Compensation Plan*
10-K
February 27, 2020
10.45
Form of Restricted Stock Unit Award Notice under Globe
Life Inc. 2018 Non-Employee Director Compensation Plan*
10-K
February 27, 2020
10.46
Torchmark Corporation 2019 Management Incentive Plan
(effective as of January 1, 2019)*
8-K
March 4, 2019
10.1
The Globe Life Inc. Amended and Restated Pension Plan
Generally Effective as of January 1, 2020*
10-Q
November 5, 2020
10.1
10.50
Globe Life Inc. Savings and Investment Plan*
10.51
Payments to Directors*
Second Amended and Restated Credit Agreement dated as
of May 17, 2016 among Torchmark Corporation, as the
Borrower, TMK Re, Ltd., as a Loan Party, Wells Fargo
Bank, National Association, as Administrative Agent, Swing
Line Lender and L/C Administrator and the other lenders
party thereto
10-K
10-Q
8-K
February 27, 2020
May 7, 2019
May 18, 2016
10.52
10.51
10.1
First Amendment to Second Amended and Restated Credit
Agreement
8-K
April 14, 2020
Second Amendment to Second Amended and Restated
Credit Agreement
10-Q
May 7, 2020
10.2
10.1
Credit Agreement dates as of August 24, 2020 among
Globe Life Inc., as the Borrower, TMK Re Ltd., as a Loan
Party, Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Administrator and other lenders
party thereto
8-K
August 25, 2020
10.1
124
GL 2020 FORM 10-K
Exhibit No.
10.56
Description
Form of Performance Share Award under Globe Life Inc.
2018 Incentive Plan (2021)*
Form
10-K
Filing Date
Related
Exhibit
Page of
this Report
February 25, 2021
10.56
20
21
23
24
31.1
31.2
31.3
32.1
Proxy Statement for Annual Meeting of Shareholders to be
held April 29, 2021**
DEF14-A
March 18, 2021
Subsidiaries of the registrant
Consent of Deloitte & Touche LLP
Powers of Attorney
Rule 13a-14(a)/15d-14(a) Certification by Gary L. Coleman
Rule 13a-14(a)/15d-14(a) Certification by Larry M.
Hutchison
Rule 13a-14(a)/15d-14(a) Certification by Frank M.
Svoboda
126
10-K
10-K
10-K
10-K
10-K
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
21
23
24
31.1
31.2
10-K
February 25, 2021
31.3
Section 1350 Certification by Gary L. Coleman, Larry M.
Hutchison and Frank M. Svoboda
10-K
February 25, 2021
32.1
101.INS
XBRL Instance Document- the instance document does not
appear in the Interactive Data file because the XBRL tags
are embedded within the Inline XBRL document.
10-K
February 25, 2021
101.INS
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document.
10-K
10-K
February 25, 2021
101.SCH
February 25, 2021
101.CAL
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document.
10-K
February 25, 2021
101.LAB
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
Document.
10-K
February 25, 2021
101.PRE
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document.
10-K
February 25, 2021
101.DEF
104
Cover Page Interactive Data File (formatted as inline XBRL
with applicable taxonomy extension information contained
in Exhibits 101).
10-K
February 25, 2021
104
* Compensatory plan or arrangement.
** To be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2020.
125
GL 2020 FORM 10-K
Exhibit 21. Subsidiaries of the Registrant: The following table lists subsidiaries of the registrant which meet the
definition of “significant subsidiary” according to Regulation S-X:
Name Under Which Company Does
Business
Globe Life And Accident
Insurance Company
American Income Life
Insurance Company
Liberty National Life
Insurance Company
State of
Incorporation
Nebraska
Indiana
Nebraska
Distribution Channel (Division)
Direct to Consumer
American Income Life Division
Liberty National Division
While United American Insurance Company (Nebraska) and Family Heritage Life Insurance Company of America
(Ohio) do not qualify as a significant subsidiaries in accordance with Regulation S-X, management views these
subsidiaries as significant to our operations.
All other exhibits required by Regulation S-K are listed as to location in the “Index of documents filed as a part of
this report” in this report. Exhibits not referred to have been omitted as inapplicable or not required.
126
GL 2020 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Balance Sheets
(Dollar amounts in thousands)
December 31,
2020
2019
Assets:
Investments:
Long-term investments........................................................................................................... $
32,861
$
Short-term investments...........................................................................................................
Total investments..................................................................................................................
Cash..........................................................................................................................................
19,300
52,161
1,644
28,728
3,401
32,129
873
Investment in affiliates...............................................................................................................
10,526,982
9,020,073
Due from affiliates.....................................................................................................................
Taxes receivable from affiliates.................................................................................................
Other assets..............................................................................................................................
322,278
51,041
184,588
96,129
50,302
160,723
Total assets........................................................................................................................... $ 11,138,694
$
9,360,229
Liabilities:
Short-term debt......................................................................................................................... $
254,918
$
298,738
Long-term debt..........................................................................................................................
1,817,798
1,498,851
Due to affiliates.........................................................................................................................
—
Other liabilities...........................................................................................................................
294,886
3,532
264,801
Total liabilities........................................................................................................................
2,367,602
2,065,922
Shareholders’ equity:
Preferred stock..........................................................................................................................
Common stock..........................................................................................................................
Additional paid-in capital...........................................................................................................
Accumulated other comprehensive income..............................................................................
Retained earnings.....................................................................................................................
351
113,218
877,946
3,029,244
5,874,109
351
117,218
882,065
1,844,830
5,551,329
Treasury stock...........................................................................................................................
(1,123,776)
(1,101,486)
Total shareholders’ equity.....................................................................................................
8,771,092
7,294,307
Total liabilities and shareholders’ equity............................................................................... $ 11,138,694
$
9,360,229
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
127
GL 2020 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
Condensed Statement of Operations
(Dollar amounts in thousands)
Net investment income............................................................................................. $
Realized gains (losses).............................................................................................
Total revenue ..................................................................................................
General operating expenses.....................................................................................
Reimbursements from affiliates................................................................................
Interest expense.......................................................................................................
Total expenses ................................................................................................
Operating income (loss) before income taxes and equity in earnings of affiliates....
Income taxes............................................................................................................
Net operating loss before equity in earnings of affiliates..........................................
Equity in earnings of affiliates, net of tax..................................................................
Net income ......................................................................................................
Year Ended December 31,
2020
2019
2018
30,199
$
28,869
$
28,077
12,792
42,991
—
28,869
57,679
(68,556)
90,197
79,320
(36,329)
7,773
(28,556)
760,329
731,773
68,419
(65,928)
89,317
91,808
(62,939)
13,133
(49,806)
810,596
760,790
(11,078)
16,999
65,762
(61,620)
94,159
98,301
(81,302)
15,262
(66,040)
767,506
701,466
Other comprehensive income (loss):
Attributable to Parent Company.............................................................................
(21,477)
(11,379)
23,805
Attributable to affiliates...........................................................................................
1,205,891
Comprehensive income (loss)........................................................................... $ 1,916,187
1,536,734
(1,128,604)
$ 2,286,145
$
)
(403,333)
(
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
128
GL 2020 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT—(continued)
Condensed Statement of Cash Flows
(Dollar amounts in thousands)
Year Ended December 31,
2020
2019
2018
Net income............................................................................................................. $
Equity in earnings of affiliates.................................................................................
731,773
$
760,790
$
701,466
(760,329)
(810,596)
(767,506)
Cash dividends from subsidiaries...........................................................................
Other, net...............................................................................................................
Cash provided from operations .........................................................................
485,871
21,129
478,444
479,988
65,584
495,766
448,142
64,734
446,836
Cash provided from (used for) investing activities:
Net decrease (increase) in short-term investments.............................................
Investment in subsidiaries...................................................................................
Additions to properties.........................................................................................
(15,899)
(7,875)
—
(3,380)
5,603
—
(32)
(140,000)
(19,888)
Loaned money to affiliates...................................................................................
(1,008,860)
(501,764)
(584,000)
Repayments from affiliates..................................................................................
Cash provided from (used for) investing activities ..........................................
782,860
(249,774)
501,764
584,000
(3,412)
(154,285)
Cash provided from (used for) financing activities:
Repayment of debt..............................................................................................
Proceeds from issuance of debt..........................................................................
Payment for debt issuance costs.........................................................................
Net issuance (repayment) of commercial paper..................................................
Issuance of stock.................................................................................................
(386,875)
700,000
(5,844)
(34,445)
48,093
(6,875)
(327,762)
—
—
(11,610)
82,771
550,000
(6,969)
(22,719)
36,091
Acquisitions of treasury stock..............................................................................
(443,866)
(459,569)
(421,749)
Borrowed money from affiliate.............................................................................
76,000
277,000
197,690
Repayments to affiliates......................................................................................
(79,500)
(276,500)
(202,690)
Payment of dividends..........................................................................................
Cash provided from (used for) financing activities .........................................
(101,462)
(227,899)
(97,458)
(94,691)
(492,241)
(292,799)
Net increase (decrease) in cash.............................................................................
Cash balance at beginning of period......................................................................
771
873
Cash balance at end of period............................................................................... $
1,644
$
113
760
873
$
(248)
1,008
760
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
129
GL 2020 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
Notes to Condensed Financial Statements
(Dollar amounts in thousands)
Note A—Dividends from Subsidiaries
Cash dividends paid to Globe Life from the subsidiaries were as follows:
Dividends from subsidiaries................................................................................... $
485,871
$
479,988
$
448,142
Note B—Supplemental Disclosures of Cash Flow Information
The following table summarizes non-cash transactions, which are not reflected on the Condensed Statements of
Cash Flows:
Year Ended December 31,
2020
2019
2018
Year Ended December 31,
2020
2019
2018
Stock-based compensation not involving cash...................................................... $
35,892
$
44,843
$
Investment in subsidiaries......................................................................................
Dividend of property to Parent................................................................................
—
—
—
—
39,792
11,899
11,889
The following table summarizes certain amounts paid (received) during the period:
Interest paid............................................................................................................ $
Income taxes paid (received).................................................................................
86,504
$
86,868
$
86,982
(12,744)
(16,617)
(21,377)
Year Ended December 31,
2020
2019
2018
Note C—Preferred Stock
As of December 31, 2020, Globe Life had 351 thousand shares of Cumulative Preferred Stock, Series A, issued and
outstanding, of which 280 thousand shares were 6.50% Cumulative Preferred Stock, Series A, and 71 thousand
shares were 7.15% Cumulative Preferred Stock, Series A (collectively, the “Series A Preferred Stock”). All issued
and outstanding shares of Series A Preferred Stock were held by wholly-owned insurance subsidiaries. In the event
of liquidation, the holders of the Series A Preferred Stock at the time outstanding would be entitled to receive a
liquidating distribution out of the assets legally available to stockholders in the amount of $1 thousand per share or
$351 million in the aggregate, plus any accrued and unpaid dividends, before any distribution is made to holders of
Globe Life common stock. Holders of Series A Preferred Stock do not have any voting rights nor have rights to
convert such shares into shares of any other class of Globe Life capital stock.
See accompanying Report of Independent Registered Public Accounting Firm.
130
GL 2020 FORM 10-K
Globe Life Inc.
SCHEDULE IV. REINSURANCE (CONSOLIDATED)
(Dollar Amounts in thousands)
Gross
Amount
Ceded
to Other
Companies(1)
Assumed
from Other
Companies
Net
Amount
Percentage
of Amount
Assumed
to Net
For the Year Ended December 31, 2020
Life insurance in force............................... $ 203,894,460
Premiums(2):
$
669,063
$
2,551,770
$ 205,777,167
Life insurance......................................... $
Health insurance....................................
2,642,555
$
4,241
$
19,775
$
2,658,089
1,144,470
3,373
—
1,141,097
Total premium.................................... $
3,787,025
$
7,614
$
19,775
$
3,799,186
For the Year Ended December 31, 2019
Life insurance in force............................... $ 191,249,516
Premiums(2):
$
676,988
$
2,774,388
$ 193,346,916
Life insurance......................................... $
Health insurance....................................
2,486,127
$
4,357
$
20,384
$
2,502,154
1,080,869
3,523
—
1,077,346
Total premium.................................... $
3,566,996
$
7,880
$
20,384
$
3,579,500
For the Year Ended December 31, 2018
Life insurance in force............................... $ 185,212,195
Premiums(2):
$
688,384
$
3,019,737
$ 187,543,548
Life insurance......................................... $
Health insurance....................................
2,373,423
$
4,581
$
21,305
$
2,390,147
1,019,007
3,668
—
1,015,339
Total premium.................................... $
3,392,430
$
8,249
$
21,305
$
3,405,486
1.2
0.7
—
0.5
1.4
0.8
—
0.6
1.6
0.9
—
0.6
(1) No amounts have been netted against ceded premium.
(2) Excludes policy charges of $14.7 million, $15.6 million, and $16.4 million in each of the years 2020, 2019, and 2018, respectively.
See accompanying Report of Independent Registered Public Accounting Firm.
131
GL 2020 FORM 10-K
Pursuant to the requirements of Section 12 or 15(d) of the Securities Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
By:
By:
By:
By:
Globe Life Inc.
/s/ GARY L. COLEMAN
Gary L. Coleman
Co-Chairman and Chief Executive Officer and Director
/s/ LARRY M. HUTCHISON
Larry M. Hutchison
Co-Chairman and Chief Executive Officer and Director
/s/ FRANK M. SVOBODA
Frank M. Svoboda
Executive Vice President and Chief Financial Officer
/s/ M. SHANE HENRIE
M. Shane Henrie
Corporate Senior Vice President and Chief Accounting Officer
Date: February 25, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:
By:
By:
By:
/s/ ROBERT W. INGRAM *
Robert W. Ingram
Director
/s/ STEVEN P. JOHNSON *
Steven P. Johnson
Director
/s/ DARREN M. REBELEZ *
Darren M. Rebelez
Director
/s/ MARY E. THIGPEN *
Mary E. Thigpen
Director
By:
By:
By:
By:
By:
/s/ CHARLES E. ADAIR *
Charles E. Adair
Director
/s/ LINDA L. ADDISON *
Linda L. Addison
Director
/s/ MARILYN A. ALEXANDER *
Marilyn A. Alexander
Director
/s/ CHERYL D. ALSTON *
Cheryl D. Alston
Director
/s/ JANE M. BUCHAN *
Jane M. Buchan
Director
Date: February 25, 2021
*By:
/s/ FRANK M. SVOBODA
Frank M. Svoboda
Attorney-in-fact
132
GL 2020 FORM 10-K
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3700 S Stonebridge Drive
McKinney, Texas 75070
www.globelifeinsurance.com