Globe Life
Annual Report 2021

Plain-text annual report

2021 Annual Report  The people who work for this agency are caring and accommodating. They really listen and are always In addition to the training and Marissa was super knowledgeable about the different helpful. You get to talk to compassionate people not recorded messages. They have become family and opportunities, the Company is steady coverages and really helped me narrow down the best that is very rare in today’s society. I would and have recommended them to my family and friends. and strong with consistent growth year plan for myself. With being a travel nurse my plans - Debbie, Policyholder over year. With strong management, were always changing between companies but it is the Company is sure to be around for nice to have the reassurance and not worry! Thank many more years to come. you again Marissa for the wonderful help. Globe Life has been my favorite employer since Earnest was very thorough in - Erika, Employee - Angelina, Policyholder I started in 2006. If you have to spend time with fulfilling my policy needs. I felt like I people 8 to 9 hours per day, it should be around was getting fitted for a suit that fits people you enjoy and Globe Life has some of the best perfectly! Will be adding even more people you will ever meet. coverage soon to come! Very affordable and easy I’m glad I took the 15 minutes to hear what Diana had to offer. The - Anna, Employee - Vonte, Policyholder to understand. I’m looking Globe Life Liberty National Worksite Advantage program was forward to moving along in my exactly what I was looking for for my small business employees! I journey knowing you guys have highly recommend the program to other business owners looking my back. Thank you. to establish or enhance benefits for their employees. Give Diana 15 Family Hertiage allowed me to surround I love United American Insurance’s service. They - Dylan, Policyholder minutes. You won’t regret it! myself with the kind of people that not only are the best company I’ve got. I’ve got several teach me to run a business, but also how to more but none of them are as good as they are. be a better person. They do what they say they’d do. - Gage, Policyholder - Aaron, Agency Owner - Edna, Policyholder After losing a loved one Jakwanza built Wow! For once an insurance policy that pays a bond with me and my family in our you back! We have paid into insurance half our time of need. She was very helpful and lives, never used it because we are healthy and concerning. It wasn’t just about a policy. for the most part not accident prone. Jason was The application was My husband passed away a few months ago and everyone I Thank you all Globe Life! brilliant in explaining this program, and was completed in no time with a talked to was so very kind and helpful during the most difficult - Conetric, Policyholder very knowledgeable and professional. I will refer few easy questions about my time of my life. health and it was done. My questions were answered honestly without a lot of double talk. Overall great experience, great service. - Alice, Policyholder I believe job satisfaction is a key to a happy career. My favorite part about Globe Life is that it allows me to learn and expand into new areas. If you’re looking for opportunities for growth, people for sure! - Linda, Policyholder After the death of my brother, not once did I call Globe Life and the person on the other end of the phone not offer their condolences. This really meant a lot to me. They were very professional and considerate and - Jerry, Policyholder then Globe Life is for you. caring. Thanks Globe Life! - Syed, Employee - Dian, Policyholder I just signed up for Globe Life. It was the easiest thing to sign up for, my agent, Pam, was very We’re very happy with United American. We met with this guy right after I retired so I’ve been with him for knowledgeable in everything that they offer and was not pushy at all! I have had a similar type of benefits a long time. He’s at our disposal and he’s great. I’ve given him a lot of business from some other friends of in the past that were more expensive with the same payout amount if you filed a claim. My other policy mine. My husband and I were in New York and he fell and broke his hip. We were thinking of the load of bills also didn’t allow you to receive the money back if you didn’t file a claim — Globe Life does! we were going to get. We have Medicare but everything was covered with United American. - Kayla, Policyholder - Ronni, Policyholder 2021 In Focus $ in thousands $4,099,887 Total Premium Financial Highlights $ in thousands, except per share amounts $707,497 Net Operating Income $744,959 Net Income $2,943,185 Annualized Life Premium In Force $1,286,078 Annualized Health Premium In Force 2021 2020 % CHANGE OPERATIONS Total Premium $4,099,887 $3,813,905 Net Operating Income1 707,497 737,592 Net Income 744,959 731,773 Annualized Life Premium In Force 2,943,185 2,739,949 Annualized Health Premium In Force 1,286,078 1,193,362 Diluted Average Shares Outstanding 103,170 107,225 7.5 4.1 1.8 7.4 7.8 3.8 Net Operating Income as a Return on Average Equity (excluding net unrealized gains on fixed maturities1) Net Income as a Return on Average Equity PER COMMON SHARE (on a diluted basis) Net Operating Income1 Net Income Shareholders’ Equity (excluding net unrealized gains on fixed maturities1) 12.3% 8.8% $6.86 7.22 58.50 13.5% 9.5% $6.88 6.82 0.3 5.9 53.12 10.1 1The 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 16–17. 1 Letter to Shareholders* Since our roots began in 1900, Globe Life has applied a simple, four-pronged approach to success: we grow as a Company when decisions are made that are equally beneficial for our customers, shareholders, agents, and employees. Simply put, everything we do is intended to help Make Tomorrow Better. We help our customers protect what matters most to them, by providing working families with insurance solutions designed to meet their specific needs. We are committed to creating value for our stakeholders and rewarding our shareholders for their investment and their trust. We are dedicated to empowering people to pursue their dreams and careers as employees and agents. We focus on cultivating a healthy, positive culture that promotes a thriving, diverse workforce. As part of our purpose-driven mission, we are committed to giving back to communities where we live, work, and serve. Our primary focus is to help underserved youth and families, support seniors, and promote health and wellness. In 2021, we entered another year of the pandemic. Despite the unpredictability of the virus and associated economic challenges, Globe Life continued to generate positive results in our core operations, including sales and premium growth and strong return on equity. Globe Life’s overall performance in 2021 remained positive. In the first quarter of 2021, we exceeded $1 billion in total premium revenue for a quarter for the first time, and we appreciate the efforts of our agents and employees in achieving this milestone. Both total premium and total net sales grew approximately 7%. Net operating income as a return on equity, excluding net unrealized gains on fixed maturities, was 12.3%. The consistent execution of our business model produces strong results year after year, regardless of macro environment changes, and is fundamental to Globe Life’s success. This model is summarized below. Market Distribution Cash Flows We believe everyone should have access to financial services. By offering quality, affordable insurance to working families in the underserved, lower-middle to middle-income market, we enable them to face the unexpected from a position (cid:82)(cid:73)(cid:98)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:98)(cid:86)(cid:87)(cid:85)(cid:72)(cid:81)(cid:74)(cid:87)(cid:75)(cid:17)(cid:3) We distribute our products to individuals and worksites using in-person and virtual platforms primarily through exclusive agency and direct to consumer marketing channels. In doing so, we effectively manage costs, which leads to consistent underwriting margins. Our agency force is a widely diverse group of individuals that reflects the diverse demographics of the market we serve. Approximately 90% of Globe Life’s premium revenue is generated from policies sold in prior years. The persistency of our in-force block of business is extraordinarily stable and thus consistently provides substantial excess cash flow. Products Margins We are committed to providing financial protection to our policyholders at the times they need us most: after a death, or during an illness or health scare. Our basic protection life and supplemental health products help people pay the bills, put food on the table, and provide for their children. We are able to manage our business efficiently due to our focus on expense control along with the experience and data we have accumulated over more than 60 years serving the same market with the same products. Globe Life does not have to rely on investment income to generate operating income. Approximately 74% of the Company’s pretax operating income comes from underwriting income. *Throughout this letter net operating income represents net operating income from continuing operations. 2 Return of Excess Capital to Shareholders A key component of our capital management program is to return excess capital to shareholders. Since 1986, Globe Life has returned approximately 70% of its net income to shareholders through share repurchases and dividends. Our Growth Globe Life has consistently generated a strong return on equity (ROE). In 2021, net income as an ROE was 8.8%, and net operating income as an ROE, excluding net unrealized gains on fixed maturities, was 12.3%. Globe Life’s business model provides products and career opportunities to people in underserved markets, along with sound fiscal management. Sales and marketing technology allows us to more efficiently engage in recruiting, lead generation, training, business conservation, sales activities and provides management dashboards for visibility into the business and agent lifecycle. The charts below demonstrate the growth in earnings per share and book value per share. Net Income Per Share Compound Annual Growth Rate: 10-Year: 9.1%, 5-Year: 10.0% $12.221 Net Operating Income Per Share Compound Annual Growth Rate: 10-Year: 9.0%, 5-Year: 8.8% $6.751 $6.86 $4.82 $6.83 $7.22 $4.13 $3.65 $2.91 $3.79 $4.16 $3.02 2011 2013 2015 2017 2019 2021 2011 2013 2015 2017 2019 2021 Book Value Per Share Compound Annual Growth Rate: 10-Year: 13.0%, 5-Year: 17.9% $85.97 $66.02 $52.951 $25.27 $27.66 $32.71 Book Value Per Share (Excluding Net Unrealized Gains or Losses on Fixed Maturities) Compound Annual Growth Rate: 10-Year: 10.6%, 5-Year: 12.7% $48.26 $58.50 $39.771 $30.09 $25.85 $21.31 2011 2013 2015 2017 2019 2021 2011 2013 2015 2017 2019 2021 1In 2017, tax legislation revised the corporate income tax rate from 35% to 21% effective Jan. 1, 2018, among other modifications. 3 Operations A consistent measure of the performance of Globe Life’s insurance operations is net operating income. We believe net operating income provides a better understanding of the profitability and operating trends of our business. The same measure is commonly used in the life insurance industry. Underwriting income includes premiums less policy benefits, acquisition costs, and administrative expenses. Underwriting income is the primary contributor to net operating income; approximately 74% of pretax operating income was produced from underwriting income during 2021. Distribution Channels Globe Life’s products are distributed via distinct channels. Our exclusive agency divisions (American Income Life, Liberty National, and Family Heritage) market to individuals and worksites face to face through in-person and virtual platforms. Our Direct to Consumer Division provides adult and juvenile life insurance protection to customers through the Internet, direct mail, call center, and insert media channels. United American is our independent (non- exclusive) agency, marketing Medicare Supplement and limited benefit supplemental health plans to individuals and employer groups. Globe Life effectively controls policy acquisition and administrative expenses. This helps allow us to maintain healthy underwriting margins. This chart reflects the distribution of underwriting margin among the channels. 4 Components of Net Operating Income ($ in millions, except per share data) Underwriting Income Excess Investment Income Tax and Other Parent Expenses Net Operating Income PER SHARE $666 $6.46 239 (198) 2.31 (1.91) $707 $6.86 Components of Underwriting Income ($ in millions) Underwriting Margin – Life – Health – Other Total Admin. Expenses Net of Other Income AS % OF PREMIUM 21.5% 25.3% 22.8% 6.6% $624 304 9 $937 (271) Underwriting Income $666 16.3% 2021 Total Underwriting Margin 52% 12% American Income Life Division 8% 10% 9% 9% Liberty National Division Direct to Consumer Division Family Heritage Division United American Division Other American Income Life remains a consistent leader in premium and underwriting margin among Globe Life’s distribution channels. In 2021, American Income Life was the largest contributor of life premium at 48% of Globe Life’s 2021 total life premium. The division generated life net sales growth of 15% in 2021. Over the past ten years, life net sales have also grown at a compound annual growth rate of 7.4%. Historically, most customer leads were generated from our partnership with organized labor. While our union affiliation remains important, today more than 70% of American Income Life’s leads come from referrals, other affinity groups and third-party internet vendors. Sales growth in our exclusive agency divisions is generally dependent upon the growth in the size of the agency force. We expect American Income Life to continue to have great recruiting opportunity for years to come. Our agencies primarily recruit underemployed individuals looking for a better opportunity, and there will always be a large pool of such individuals, regardless of macroeconomic conditions. In addition, we go forward with the ability to recruit both virtually and in person. The vast majority of customer appointments are now virtual. The ability to meet customers face to face both virtually and in person greatly enhances this division’s growth potential. American Income Life helps retain its agents with an emphasis on strengthening agency middle- management growth through financial incentives and training opportunities, as well as providing leadership development opportunities through the opening of additional agency offices. American Income Life Agent Count at End of Year Compound Annual Growth Rate: 10-Year: 8.0% 2021 9,415 2019 7,551 2017 6,880 2015 6,552 2013 5,302 2011 4,381 American Income Life Life Net Sales Compound Annual Growth Rate: 10-Year: 7.4% ($ in millions) $291 $238 $223 $198 $142 $153 2011 2013 2015 2017 2019 2021 5 Liberty National has expanded its reach far beyond small-town markets in the Southeast to include more heavily populated, less-penetrated areas across the United States. As our oldest distribution channel, it distributes basic life and supplemental health insurance products in the individual and worksite markets. Total life net sales for Liberty National grew 30% year over year. This robust growth is attributed to the division’s ability to return to in-person customer interaction particularly in the worksite market, as well as the continued option for virtual sales in both the individual and worksite arenas. As shown in the charts, agent count and total net sales have grown at a compound annual growth rate of 9.8% and 10.3%, respectively over the past five years. Recent investments in CRM technology and enhanced analytical capabilities have helped agents in the worksite market develop new marketing opportunities and improve the productivity of agents in the individual market. Coupled with a focus on growth in agency middle management, these improvements will help Liberty National continue to grow sales, agent count, and agent productivity. Liberty National Division Total Net Sales Compound Annual Growth Rate: 5-Year: 10.3% ($ in millions) $98 $78 $78 $67 $71 $60 2016 2017 2018 2019 2020 2021 Liberty National Division Agent Count at End of Year Compound Annual Growth Rate: 5-Year: 9.8% 2021 2,804 2020 2,770 2019 2,660 2018 2,159 2017 2,106 2016 1,758 6 The acquisition of Family Heritage in 2012 provided Globe Life an opportunity to grow its supplemental health business. Family Heritage primarily markets limited-benefit health insurance products in non-urban areas and smaller cities throughout the United States. A unique aspect of the majority of Family Heritage’s health products is a return of premium feature, which refunds any excess of premiums received less claims paid to the policyholder at the end of a specified period. Family Heritage’s products produce persistency, profit margins, and investment income that are stronger than those of typical health insurance products. In 2021, Family Heritage had a 3% increase in health net sales. Since 2016, agent count and health net sales have risen at a compound annual growth rate of 4.9% and 7.4%, respectively. Recent and continued investments in CRM technology, sales, and training along with incentive programs will help drive an increase in Family Heritage’s productivity and agent count. Family Heritage Division Agent Count at End of Year Compound Annual Growth Rate: 5-Year: 4.9% 2021 1,157 2020 1,463 2019 1,286 2018 1,097 2017 1,076 2016 909 Family Heritage Division Health Net Sales Compound Annual Growth Rate: 5-Year: 7.4% ($ in millions) $60 $57 $51 $71 $73 $66 2016 2017 2018 2019 2020 2021 7 Direct to Consumer Division Life Net Sales Compound Annual Growth Rate: 10-Year: 0.8% ($ in millions) $164 $137 $144 $149 $136 $126 2011 2013 2015 2017 2019 2021 Direct to Consumer Division Life Premium Compound Annual Growth Rate: 10-Year: 5.0% ($ in millions) $971 $856 $813 $747 $664 $594 2011 2013 2015 2017 2019 2021 Direct to Consumer offers adult and juvenile life insurance protection to the lower-middle to middle- income market across the United States. Though it started in the 1960s as a direct mail-only distribution center, over the years it has transformed into a multichannel division with internet, call center, direct mail, and insert media channels. This provides a significant competitive advantage, as we have multiple opportunities to monetize leads. Continued enhancements in technology have generated rapid growth in digital media (internet and inbound call center) production over the last several years. The 10% decline in life net sales in 2021 was expected due to the extraordinary level of sales activity seen in 2020 during the onset of COVID-19. In addition to the sales it provides, Direct to Consumer contributes to the success of our exclusive agencies through support of their lead generation and data management efforts. We hold competitive advantages in digital and traditional consumer targeting, advanced analytics, and production efficiency. We are currently working on extending our data, technology, and analytic competencies to the rest of the organization in order to help achieve an enterprise-wide omnichannel experience. This division’s long-term growth will be fueled by constant innovation designed to increase response rate and brand recognition. As Globe Life’s second largest division, Direct to Consumer remains a key contributor to Globe Life’s success. 8 United American uses independent (non-exclusive) agents and brokers to primarily market Medicare Supplement and limited-benefit supplemental health plans, such as critical illness to individuals and employer groups. United American produces 82% of the Company’s Medicare Supplement premium, and 95% of Medicare Supplement net sales. While life insurance is Globe Life’s core business, we still like the Medicare Supplement market as we have the experience and systems in place to efficiently manage this business and generate consistent profit margins. In 2021, Medicare Supplement net sales increased 2% year over year, while health underwriting margin dollars for United American increased 9% from 2020. We remain committed to growing this distribution channel while maintaining our profit margins. In August 2021, Globe Life acquired Beazley Benefits, now rebranded as Globe Life Benefits. Prior to the acquisition, it was part of Beazley Insurance Company, Inc., a subsidiary of London- based specialty insurer Beazley plc. Globe Life Benefits uses independent brokers to extend our reach in the worksite market using customized supplemental health solutions for the employee benefits market. Their wide range of capabilities include benefit solutions combined with administrative services to assist employers in managing health care costs and easing plan administration. United American Health Net Sales Compound Annual Growth Rate: 5-Year: 2.7% ($ in millions) $79 $70 $61 $56 $62 $64 2016 2017 2018 2019 2020 2021 United American Health Premium Compound Annual Growth Rate: 5-Year: 6.3% ($ in millions) $355 $364 $381 $417 $482 $453 2016 2017 2018 2019 2020 2021 9 Investment Operations We use excess investment income as a measure to evaluate our performance in the investment segment. Excess investment income is calculated as net investment income less required interest on net policy liabilities and interest on our debt. Excess investment income produced 27% of our pretax operating income in 2021. Components of Net Operating Income ($ in millions, except per share data) Underwriting Income Excess Investment Income Tax and Other Parent Expenses Net Operating Income PER SHARE $6.46 2.31 (1.91) $6.86 $666 239 (198) $707 Excess Investment Income ($ in millions) Net Investment Income Required Interest on Net Policy Liabilities Interest on Debt Excess Investment Income $952 (630) (83) $239 10 Investment Portfolio Due to the types of products we sell and the strength of our underwriting margins, Globe Life does not need to invest in high-risk assets such as derivatives, public equities, residential mortgages, collateralized loan obligations (CLO), and other asset-backed securities. We have a conservative investment philosophy which emphasizes preservation of capital. We invest primarily in investment-grade, long-dated fixed maturities which provide the best match for our long-term fixed liability products. These assets have historically provided attractive risk-adjusted, capital-adjusted returns due in large part to our unique ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets. Since we expect to hold our investments to maturity, we take special care to invest in entities that have the ability to survive multiple economic cycles. However, our work doesn’t end there, as we continue to evaluate the holdings in our portfolio on an ongoing basis. Investment Portfolio December 31, 2021 Invested Assets ($ in millions) Fixed Maturities (at fair value) Policy Loans Other Investments Total* AS % OF TOTAL 94% 2% 4% $21,305 $590 $863 22,758 100% *Total invested assets with fixed maturities at amortized cost: $19,258 Total Invested Assets at Amortized Cost Compound Annual Growth Rate: 10-Year: 5.4% ($ in billions) $19.3 $17.3 $15.8 $13.8 $13.0 $11.4 2011 2013 2015 2017 2019 2021 11 Fixed Maturity Portfolio Yield Globe Life invests predominately in fixed maturity securities, (primarily in corporate and municipal bonds) with longer-term maturities. These assets span a diversified range of issuers, industry sectors, and geographical regions. The impact from lower new money yields over the last 10 years on the fixed maturities portfolio yield is reflected in the adjacent chart. We are encouraged by the prospect of higher interest rates. Higher new money rates will have a positive impact on net operating income by driving up net investment income. We are not concerned about potential unrealized losses that are interessst-t-t-rararattet about potential unrealized losses that are interest rate drdrivivenen ssinincece wwee wowoululdd nonott exexpepectct ttoo rerealalizizee ththemmmem bbbbecececcauausese wee havave e ththe intent and abilityy to hold tthem to mmmattatattttuuuruuu itttty.y. Fixed Maturity Portfolio Yield (at end of year) 6.49% 5.91% 5.83% 5.60% 5.41% 5.17% 2011 2013 20155 2017 2019 2021 1121212221212121212122212112121121212 Capital Management Globe Life has maintained a consistent capital es management philosophy over the years. Our objective are to fully fund the insurance operations, keep appropriate capital levels, and maximize the amountt o and the return on, excess cash flow. of, We continue to manage to a Company Action Level Risk-Based Capital (RBC) ratio target of 300% to 3200% %. rs This RBC ratio is lower than that of similarly rated peeer due to the lower risk profile of our business. We do not need to hold as much capital as g our peers because of the strength of our underwritinng that profits, consistent cash flow generation, and the facct t ded hthe majjo irity off our lili babililiitiies are fifixeedd andd non tt imimpacctctee by fluctuations in interest rates and equity markets. We are able to generate substantial excess cash floww ff each year because of our large a dnd profifitablble blblockk fof inin f-fororcece ppololicicieiess. For 2022, after payments of intere tst on its debt, thee llion holding company should have approximately $380 mmil n imilllliion av iaillablble to rretetururn n toto iitst sshharehholdlderss ii to $$383855 the form of dividends and share repurchases. This ammo ount 99 isis llowowerer tthahann inin 22020211, ppririmaamaririlylyy ddueue ttoo hihighghg erer CCOVOVIDIDDD-1199 iinn liliffe llosses iincurr ded iin 202021212 aaandndd ttthehe nnneaeaearlrlr y y y 151515%% grgrowowthth ower our exclusive agency salalese , bobothth oof f whwhicichh resulted inn lol hthe statt tutory income in 2002121, andd ththus llower ddiivididendds tto holding company in 2022. Share Repurchases SSSSSSSShhhhhaaaaarrrrrreeeeeeee Repurchases TOTAL SPENT TOTAL SPENT TOTAL SPENT NO. OF SHARES NO. OF SHARES NO. OF SHARES (IN MILLIONS) (IN MILLIONS) (IN MILLIONS) (IN 000’S) (IN 000’S) (IN 000’S) AVERAGE AVERAGE AVERAGE PRICE PRICE PRICE $360 $360 11,219 11,219 $32.13 $32.13 360 360 375 375 359359 311311 325 325 372372 350 350 380 380 455 455 8,280 8,280 7,1557,155 6,292 6,292 5,208 5,208 4,126 4,126 4,406 4,406 3,932 3,932 4,459 4,459 4,784 4,784 43.48 43.48 52.42 52.42 56.99 56.99 59.78 59.78 78.67 78.67 84.38 84.38 89.04 89.04 85.24 85.24 95.11 95.11 222200001112222 222000011133332013 222000011144442014 222000011155552015 2222000011166662016 2222000011177772017 222000011188882018 2220000011119999992019 222200002222200002020 2220000202222112021 RRRReeeetttuuuurrrrnnnniinnnnngggg eeeeeexxxxxccccess Returning excess capital to shareholders is core to capital to shareholders is core to ooouuuurrr bbbbbuuuussssiiinnneeeessssssss mmmmod our business mod el. Since the inception of our share el. Since the inception of our share rreeeeepppppuuuurrrrcccchhhhaaassseeeee ppppprrrrogra repurchase progra am in 1986, we have spent $8.7 billion am in 1986, we have spent $8.7 billion to repurchase 82% ttooooo rrreeeeppppppuuuurrrrccchhhhaaaasssseeee 82% % of the outstanding shares of the % of the outstanding shares of the CCCCCooooommmmmmppppppaaaannnnyyy aaaaannnndddd hav Company and hav ve returned approximately 70% of ve returned approximately 70% of ooouuuurrr nnnnneeeeetttt innnncccccoooommmmmmme to o shareholders through dividends and our net income to o shareholders through dividends and share repurchases sshhhhaaaaarreeeee rrreeeeeeppppuuuurrrcccchhhhhases s.s. WWWWWWhhhhiilleeeee wwwwwwwweee bbbbbbbeeeellieeeeve s While we believe s ooofff eeeexxxxxcccceeeeessssssss cccccaaaaappppiiiital o of excess capital o aaallttteeeerrrnnnnnaaaaaattttiiivvveeeeee uuuusssseeees to alternative uses to as efficiently as po aaassss eeeeeffffffffiicccccieeeeennnttttllyyyy aaaas po pppprriiiooooorrriitttttyyyy hhhaaaasssss aaaalwwwways priority has always ooofff ooooouuuuurrrr iinnnnnsssuuuuurrrraaaannnnce b of our insurance b cccoooommmmmeeeee fffrrrooooommmmmmm eeeeexxxxxcess come from excess operations have b oooppppeeeerrraaaattttiiooooonnnnssss hhhaaaavve b investments in tec innnnvvvvveeeessssstttmmmmmmmeeeeennnnttttsss iinnnn tec share repurchases have been the best use share repurchases have been the best use over the years, we will continue to review over the years, we will continue to review o ensure our excess capital is deployed o ensure our excess capital is deployed ossible. It is important to note our first ossible. It is important to note our first s been to maximize the profitable growth s been to maximize the profitable growth usiness; therefore, share repurchases usiness; therefore, share repurchases s cash flow remaining after all insurance s cash flow remaining after all insurance een fully funded, including substantial een fully funded, including substantial chnology and human capital. chnology and human capital. 1313 Conclusion Globe Life continued to thrive in 2021. Despite the uncharted territory of the past two years, one thing has not changed. Lower-middle to middle-income working families in America continue to be largely ignored by the life insurance industry. This vastly underserved market is the focus of our business model and provides us a great opportunity to increase market penetration while providing much-needed financial protection to these families. We have always managed our business with a long-term focus. We believe sustainable business practices are an important component of both good corporate citizenship and sound fiscal management. With respect to sustainability, our primary focus involves meeting the ongoing needs of our customers, human capital management, corporate culture and engagement, data protection and cybersecurity, and environmental efficiency and climate change. We continue to advance our sustainable business practices by further enhancing the Company’s ESG program and are working towards alignment with the program and are working towards alignment with the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures recommendations. We stand committed to Make Tomorrow Better: • For our customers by offering life and supplemental health products, and enhancing the customer experience • For our distribution divisions by recruiting agents from diverse backgrounds and offering a better career opportunity, and equipping them with tools that are simple, effective, and adaptable between mobile, virtual, or in-person methods • For our employees by maintaining a work environment that strongly and consistently promotes a culture of diversity, equity, and inclusion • For our shareholders by ensuring their investment in Globe Life results in strong, stable returns At its core, Globe Life meets the needs of people, whether through our basic protection products, our opportunities to experience a life-changing career, or a financially sound investment. Within the covers of this report, we invite you to read the stories of our customers, agents, and employees. These are the stories of Globe Life and how we Make Tomorrow Better. When you consider our business model and the market we serve, we believe you will agree that significant opportunity lies ahead. We expect Globe Life to continue to generate shareholder value well into the future. Thank you for your investment in Globe Life. Gary L. Coleman Co-Chairman and Chief Executive Officer MMMMM 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, 2021, 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. 1414 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 28, 2022 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 5.275% AND 4.250% 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 4.250% debentures trade through Depository Trust Company under global certificates listed on the New York Stock Exchange (NYSE Symbol GL PRD). 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 Investors Website The Investors page contains a menu with links to many topics of interest to investors and other interested third parties: • Financial Reports and Other Financial Information • Annual Reports, 10-K and Proxy Statements • Calendar • News Releases • SEC Filings • Environmental, Social & Governance Report • Political Contributions & Public Advocacy Policy • Executive Leadership • About Globe Life Inc. • Contact Us • GlobeLifeInsurance.com STOCK INFORMATION • Stock Transfer Agent and Shareholder Assistance • Dividend Reinvestment • Automatic Deposit of Dividends CORPORATE GOVERNANCE • Corporate By-laws • Code of Business Conduct and Ethics • Code of Ethics for CEO and Senior Financial Officers • Corporate Governance Guidelines • Employee Complaint Procedures • Shareholders’ Rights Policy • Regulation FD Policy and Guidelines • Related Party Transaction Policy • Human Rights and Labor Policy • Third Party Code of Conduct • Anti-Bribery and Corruption Policy BOARD OF DIRECTORS • Board of Directors • Board Committees – Audit Committee – Compensation Committee – Governance and Nominating Committee • Executive Sessions • Qualifications of Directors • Director Independence Criteria • Director Resignation Policy CALLS AND MEETINGS • Management Presentations • Conference Calls on the Web • Conference Call Replays and Transcripts • Annual Meeting of Shareholders 15 Operating Summary Unaudited and $ in thousands except per share amounts Twelve months ended December 31, 2021 2020 % 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 Administrative settlements Non-operating expenses Legal proceedings NET INCOME EPS on a diluted basis 8.4 7.6 5.3 11.7 8.2 5.7 2.7 2.4 4.9 4.1 0.3 $2,898,210 (1,335,203) (853,399) (85,933) 623,675 1,201,676 (656,171) (214,373) (26,830) 304,302 8,704 936,681 1,216 (271,631) 666,266 $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) 706,722 952,447 927,062 (877,822) 247,389 (83,486) 238,528 (9,553) ) ( 895,241 (169,426) 725,815 (18,318) $707,497 $6.86 103,170 (833,000) 237,066 (86,704) 244,424 (9,891) ) ( 941,255 (180,321) 760,934 (23,342) $737,592 $6.88 107,225 $707,497 $737,592 54,220 (7,358) (1,047) (1,923) (6,430) $744,959 $7.22 (1,915) (501) — (816) (2,587) $731,773 $6.82 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. 16 Condensed Balance Sheets Unaudited and $ in thousands except per share amounts At December 31, 2021 2020 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 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 $17,804,922 161,308 1,383,559 4,919,055 481,791 1,521,375 $26,272,010 $16,612,074 1,030,853 479,644 1,546,494 722,009 5,880,936 $26,272,010 99,567 100,535 58.50 12.3% $5,743,285 25.6% $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% $5,880,936 $5,600,226 $3,500,365 (4,327) (734,168) $8,642,806 $21,305,287 4,914,728 29,768,048 8,642,806 1,765,021 85.97 8.8% $8,494,262 19.0% $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% *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. 17 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 MARK A. BLINN Former President and Chief Executive Officer of Flowserve Corporation Dallas, 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 JAMES P. BRANNEN Retired Chief Executive Officer of FBL Financial Group, Inc. Panora, Iowa JANE 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 Digital Transformation Strategies, Technology and Cybersecurity Assessments, and Systemic Risk Mitigation Competencies Alpharetta, Georgia ROBERT E. HENSLEY Executive Vice President and Chief Investment Officer THOMAS P. KALMBACH Executive Vice President and Chief Actuary MICHAEL C. MAJORS Executive Vice President, Administration and Investor Relations 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 PAMELA I. RAMIREZ Corporate Senior Vice President, Enterprise Transformation JOEL P. SCARBOROUGH Corporate Senior Vice President, Legal and Compliance DOLORES L. SKARJUNE Corporate Senior Vice President, Sales Administration FRANK M. SVOBODA Executive Vice President and Chief Financial Officer REBECCA E. ZORN Executive 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 18 KENNETH J. MATSON President and Chief Executive Officer STEVEN J. DICHIARO Chief Executive Officer DIRECT TO CONSUMER DIVISION UNITED AMERICAN INSURANCE COMPANY JASON A. HARVEY President and Chief Executive Officer MICHAEL C. MAJORS President Globe Life Inc. Board of Directors From left to right: Marilyn A. Alexander, Charles E. Adair, Cheryl D. Alston, Linda L. Addison, Robert W. Ingram, Gary L. Coleman, Darren M. Rebelez, Larry M. Hutchison, Mark A. Blinn, Mary E. Thigpen, James P. Brannen, Jane Buchan, Steven P. Johnson 19 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, 2021 or [ ☐ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-08052 GLOBE LIFE INC. (Exact name of registrant as specified in its charter) Delaware 63-0780404 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3700 South Stonebridge Drive, McKinney, TX (Address of principal executive offices) ff 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) Name of each exchange on which registered Common Stock, $1.00 par value per share 4.250% Junior Subordinated Debentures GL GL PRD New York Stock Exchange 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 ¨ GL 2021 FORM 10-K 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 of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) effectiveness x by the registered public accounting firm that prepared or issued its audit report. ff 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, 2021, the aggregate market value of the registrant’s common stock held by non-affiliates $9.5 billion based on the closing sale price as reported on the New York Stock Exchange. ff of the registrant was 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 as of February 16, 2022 99,338,401 shares DOCUMENTS INCORPORATED BY REFERENCE Document Proxy Statement for the Annual Meeting of Stockholders to be held on April 28, 2022 (Proxy Statement) Parts Into Which Incorporated Part III GL 2021 FORM 10-K PART I. PART II. PART III. PART IV. Globe Life Inc. Table of Contents Page Business.................................................................................................................................. Item 1. Item 1A. Risk Factors ............................................................................................................................ Item 1B. Unresolved Staff Cff omments ................................................................................................ 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............................................................................................ [Reserved]............................................................................................................................... Cautionary Statements.......................................................................................................... Item 7. Management’s Discussion and Analysis of Financial Condition and Results of 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........................................................................................ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................................................................................................................................ Item 9A. Controls and Procedures...................................................................................................... Item 9B. Other Information ................................................................................................................... Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections .......................... ff Item 10. Directors, Executive Officers, Item 11. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related and Corporate Governance ............................................. Executive Compensation...................................................................................................... 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 .................................................................... Signatures ............................................................................................................................... 3 9 16 16 16 16 17 19 20 53 53 56 57 58 59 60 61 61 73 74 76 90 91 94 95 97 103 104 106 107 112 119 119 122 122 122 122 122 123 123 123 134 GL 2021 FORM 10-K [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 affilff iates. 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. 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 informf ation included in Globe Life's website is not incorporated into this filing. 1 GL 2021 FORM 10-K lowing table presents Globe Life's business by primary marketing distribution method. Additional informat ff ion iscussion and Analysis and in Note 14—Business The folff concerning industry segments may be found in Management’s D’ Segmentstt within the Notes to the Consolidll ated Financial FF Statements.tt Primary Distribution Method Direct to Consumer Division Underwriting Company Products and Target Markets Distribution Globe Life And Accident Insurance Company McKinney, Texas TT Individual life and supplemental health insurance including juvenile and senior life coverage and Medicare Supplement to lower middle- income to middle- income Americans. Nationwide distribution through direct to consumer channels: including direct mail, electronic media, and insert media. American Income Life Division American Income Life Insurance Company Waco, Texas Individual life and supplemental health insurance marketed to working families. 9,415 producing agents in the U.S., Canada, and New Zealand. Liberty National Division Liberty National Life Insurance Company McKinney, Texas TT Family Heritage Division Family Heritage Life Insurance Company of America Cleveland, Ohio United American Division United American Insurance Company McKinney, Texas TT 2,804 producing agents in the U.S. 1,157 producing agents in the U.S. 3,716 independent producing agents in the U.S. Life and supplemental health insurance distributed through in- home and worksite channels. Supplemental limited- benefit health insurance to lower middle-income to middle-income families. Medicare Supplement coverage to Medicare beneficiaries and, to a lesser extent, supplemental limited- benefit health coverage to people under age 65. 2 GL 2021 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, 2021 by distribution method: Annualized Premium in Force(1) (Dollar amounts in thousands) 2021 2020 2019 Direct to Consumer ....................................................................................................... $ 929,197 $ 881,012 $ 831,739 Exclusive agents: American Income ......................................................................................................... 1,458,408 1,325,293 1,220,483 Liberty National............................................................................................................. 341,332 318,545 309,792 Independent agents: United American ............................................................................................................. 8,426 Other................................................................................................................................. 205,822 9,314 205,785 10,211 209,403 $ 2,943,185 $ 2,739,949 $ 2,581,628 (1) See definition of annualized premium in forff ce 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 traditional whole life, term life, and other life insurance. The Company does not currently sell interest-sensitive whole life products. The following tables present selected information about Globe Life's life insurance products. Annualized Premium in Force (Dollar amounts in thousands) 2021 2020 2019 Amount % of Total Amount % of Total Amount % of Total Whole life: Traditional ................................................................. $ 2,011,349 68 $ 1,857,106 68 $ 1,737,794 Interest-sensitive ..................................................... Term .............................................................................. Other ............................................................................. 33,912 750,005 147,919 1 26 5 36,297 716,698 129,848 1 26 5 38,691 683,869 121,274 67 2 26 5 $ 2,943,185 100 $ 2,739,949 100 $ 2,581,628 100 Policy Count and Average Face Amount Per Policy (Dollar amounts in thousands) 2021 2020 2019 Average Face Amount per Policy Policy Count Average Face Amount per Policy Policy Count Average Face Amount per Policy Policy Count Whole life: Traditional...................................... 8,963,774 $ Interest-sensitive.......................... 191,536 Term ................................................... 4,731,044 Other .................................................. 432,372 14,318,726 $ 15.3 20.4 15.3 15.3 15.3 8,717,785 $ 199,975 4,526,172 408,859 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 3 GL 2021 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, 2021 by distribution channel. Annualized Premium in Force (Dollar amounts in thousands) 2021 2020 2019 Direct to Consumer ....................................................................................................... $ 74,627 $ 77,522 $ 78,229 Exclusive agents: Liberty National............................................................................................................... American Income ........................................................................................................... Family Heritage............................................................................................................... 196,783 111,102 363,226 196,534 104,701 338,309 197,163 96,447 312,479 Independent agents: United American ............................................................................................................. 540,340 476,296 454,720 $ 1,286,078 $ 1,193,362 $ 1,139,038 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 Medicare program. Medicare Supplement plans are standardized by federal regulation and are designed to pay deductibles and co-payments not paid by Medicare. to enrollees in the traditional fee-for-service ff ff The following table presents supplemental health annualized premium in force informat December 31, 2021 by product category. ff ion for the three years ended Annualized Premium in Force (Dollar amounts in thousands) 2021 2020 2019 Limited-benefit plans..................................................... $ 700,767 Medicare Supplement................................................... 585,311 Amount % of Total 54 46 Amount $ 617,759 575,603 % of Total 52 48 Amount $ 581,056 557,982 $ 1,286,078 100 $ 1,193,362 100 $ 1,139,038 % 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, 2021, 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 rates. 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 2021 FORM 10-K Underwri rr ting The underwriting standards of each Globe Life insurance subsidiary are established by management. Each subsidiary uses informat ion obtained from the application and, in some cases, telephone interviews with applicants, including, but not limited to inspection reports, pharmacy data, motor vehicle records, responses to both medical and not medical questions, doctors’ statements and/or medical examinations to determine whether a policy should ed. be issued in accordance with the application, with a diffeff rent rating, with a rider, with reduced coverage, or reject e ff Reserves insurance policy reserves reflected in Globe Life's consolidated financial statements as future policy benefits The lifef are calculated based on accounting principles generally accepted in the United States of America (GAAPAA ). These reserves, with future premiums and the associated interest compounded at assumed rates, must be suffiff cient 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 the policyholders’ account values and are increased by policyholder deposits and interest credited and are decreased by policy charges and benefit payments. Policies. Reserves for annuity products and certain life products consist of Accountingtt ff Reinsurance Globe Life has historically participated in very limited third-party reinsurance as a result of the low face amounts of the policies sold by the Company. See Schedule IV and Note 6—Commitment s for more informat stt and Contingencie ion. ff tt tt 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 94% of our invested assets, at fair value, are fixed maturities at December 31, 2021 (see Note 4— Investments and Management’s Discussion and Analysis). ii Competition Globe Life competes with other insurance carriers through policyholder service, price, product design, and sales effort s. While there are insurance companies competing with Globe Life, no individual company dominates any of ff Globe Life's lifef 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. ff ively competes with other carriers, in part, due to its ability to operate at lower policy acquisition The Company effect 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 2021 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 Capitaltt Resources. yy Holdindd g Company—Sta tes 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 affiliat es and for the payment of certain dividends and other distributions. ff Environmental, Social, and Governance (ESG) Globe Life’s sustainable business practices are a driver of the success and longevity that our Company has experienced since its origin. We plan to advance our sustainable business practices by further developing the Company's ESG strategy and disclosures and intend to align with the Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. ff Environmental responsibility and sustainability are key components of our overall corporate responsibility efforts. We strive to reduce our impact on the environment by implementing numerous green building initiatives at our corporate facilities, placing a company-wide emphasis on recycling and reducing waste generally, and focusing on efforts to reduce the use of paper and water. With respect to social matters, our focus continues to be on supporting a culture that is inclusive and attractive for all of our employees and independent sales agents. We are committed to that reflects the communities in which we work. In addition, to enable the Company maintaining a diverse workforce the Company has in place an ESG to appropriately respond to ESG-related challenges and opportunities, Committee, and the Board and its committees regularly engage with senior management on relevant ESG-related issues. ff ff Human Capital Management ff ff ly and effecti Globe Life's talent base encompasses a broad range of experience that possesses the depth of critical skills to efficient vely 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, 2021, the Company had 3,222 full time, part-time, and temporary employees. In 2021, our employee headcount decreased by 1% due to normal attrition. The Company engages over 13,000 independently-contracted insurance agents. Refer to Management's Discussion & Analysis for exclusive agent counts. People, Culture, and Communityt 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 forf 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 ff achieve outstanding individual and collective results. Our commitment to diversity starts at the top; of the 11 independent Board members, 45% are women and 18% are racial/ethnic minorities. 1Per the Globe Life Employee Handbook, the Globe Life mission statement is "We help families Make Tk TT their financial future." omor rowrr 6 Better by working to protect GL 2021 FORM 10-K As of December 31, 2021 and 2020, the Globe Life employees, (excluding independently-contracted agents) identify as follows: Ethnicity/Race 2021 Gender Generations White...................................................................... 56 % Female .............. 66 % Baby Boomers (1946-1964) ............. 20 % Black or African American .................................. Hispanic or Latino................................................ Asian...................................................................... American Indian or Alaskan Native................... 21 12 9 1 Native Hawaiian or Pacific Islander .................. — Other or Not Specified ........................................ 1 Male................... 34 Gen X (1965-1977)............................ Millennials (1978-1995)..................... Gen Z (1996-2012) ............................ 31 41 8 Total 100 % 100 % 100 % Ethnicity/Race 2020 Gender Generations White...................................................................... 53 % Female .............. 67 % Baby Boomers (1946-1964) ............. 23 % 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 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 limited to, confidence in the Company and leadership, their experiences at 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 aff reas for improvement and create action plans based on the employee feedback received. including but not the Company, We strive to Make Tomorrow Better, in part by giving financial and service contributions to programs that provide hands-on assistance in the communities where we live, work, serve, and visit. We focus our charitable giving on organizations that support children, families, veterans, and seniors, as well as those that work to ensure people are able to live full, healthy lives. These categories align with our mission to help families make tomorrow better by working to protect their financial future. In 2021, we provided financial support of approximately $2.6 million to organizations within that focuf s, including charities that support underserved communities, provide scholarships to youth, and advance equity and diversity efforts. ff ff 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 ecosystem that ed, and instructor-led courses on a variety of opportunities, topics. An education ate growth in an area related to one's current position with the Company. assistance program is also offere including online, self-direct f d to facilit ff ff 7 GL 2021 FORM 10-K Health,tt Safety,t 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-offff (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. ff The Company remains 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 environment. In response to the COVID-19 pandemic, our crisis management and incident response teams guided the Company through an expedited, yet smooth, transition towards working remotely. We efficient ly transitioned approximately 80-85% of the excluding agents, to working remotely and continued to operate in a mostly remote Company's total workforce, capacity throughout 2021, allowing individuals to return to our campuses on a limited and voluntary basis. As we transition out of our pandemic response phase, we will continue to provide our employees flexible workplace options and flexible schedule opportunities, as appropriate by the department and role requirements. The Company successfully transitioned most sales and recruiting of agents to a virtual experience in 2020. Agency operations mostly remained a virtual experience during 2021, providing limited occurrences of in-person exposure. The agency operations will continue to offer both virtual and in-person experiences. ff ff ff 8 GL 2021 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 develovv sales and profrr itff s.tt pment and maintenance of our various distri ii buii tion channels are critical to growth rr in product Recruiting, development, and retention of producing agents are critical to support sales growth in our agency operations 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 an attractive career opportunity with competitive compensation and that motivates producing agents to increase sales of our products, our growth could be impeded. In addition, a failure to effect ively develop new methods of reaching consumers and realizing cost efficiencies in our Direct to Consumer Division business could result in ff reduced sales and profits. ff Our future success depends, in substantial part, on our ability to recruit, hire, motivate, develop and retain highly- lt due to many factors, including but not limited to, fluctuations skilled insurance personnel. Doing so may be difficuff in economic and industry conditions and the effecti veness of our compensation programs and competition among other employers. ff Our life insuranc rr ii e prodrr ucts arerr sold in niche markrr ekk ts. We arerr at risk should any of these markets dimini sh. ii We have several life distribution channels that focus on distinct market niches, three of which are labor unions, ity groups, and sales via Direct to Consumer solicitations. Deterioration of our relationships with organized labor affinff or adverse changes in the public’s receptivity to direct to consumer marketing initiatives could negatively affect our life insurance business. ff The impact of COVID-VV 19 and related risks could materiall and/or liquidity.t ii yl affect our results of operations, financial position ts of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive The effecff 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 affect ed 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. ff The COVID-19 pandemic subjects the Company to various potential risks that could adversely affect ff in differe nt ways, including but not limited to the following: ff the Company • • • • limitations in the virtual sales and agent recruiting process or Reduced sales resulting from potential reductions in the willingness or ability of consumers to purchase our products; Reduced cash flows from lower premiums, higher surrenders and greater than anticipated claim payments; 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. ff For the year ended December 31, 2021, we recorded approximately $140 million of COVID-19 life claims. This amount includes certain estimates, utilizing accepted actuarial practices, of what management expects the ultimate settlement and claims administration will cost for claims that have occurred by the end of the year, whether known ion or unknown. Given the great uncertainties associated with COVID-19 and its impact and the limited informat ff 9 GL 2021 FORM 10-K upon which our current assumptions and assessments have been made, our reserves and the underlying estimated level of claim losses and costs arising from COVID-19 may materially change. Actual or alleged misclassification of independentdd vv adverse cial consequences. legal, tax or finanii contractors at our insurance subsidiaridd es could result in 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 differi ng interpretations, which we cannot predict. ff 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 on our business, financial condition and results of operations. In addition, any have a material adverse effect resulting reclassification could necessitate significant changes in our affect ed insurance subsidiaries’ business ff models. ff Financial and Strategic Risks Our investments are subjecb in our investment portfolio and unrearr lized invesvv tt tment losses. t to market and creditdd risks. Significff ant downgrades could potentiatt lly result in lower net invesvv ts tment income and increased realizll ed ncies and defdd aul ll , delinque rr ff individual Our invested assets are subject to the customary risks of defaults, downgrades and changes in market values. Our consists predominately of fixed maturity and short-term investments, where we are exposed to investment portfolioff 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 affect ing the businesses or industries of each issuer and other factors beyond our control. ff ff 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 assets. These declines could cause a material ff of our fixed investment portfolio, 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. even with regard to performing ff ff 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 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. ff 10 GL 2021 FORM 10-K Our abilityt . subsidiardd iesrr to fund operation rr s is substantiallyll dependentdd on availabl ii e funds from our insurance 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, including our credit facility, commercial paper, long-term debt, Federal Home Loan Bank,(FHLB) intercompany financing and reinsurance. 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. ff 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 suffiff cient amounts and at times necessary to pay our debt obligations, corporate expenses, or dividends on our capital stock. Adverse capital and credrr access capital, as well as affeff ct our cost of capital. itdd market conditions may significantlyl affect our abilityll to meet liquidityt needs or 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. ff 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 insuffici ent, 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 preferf 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 affect ed. ff ff Industry Risks Variations in actual-to-expected rates of mortali affect our results of operations and finanii cial condition. rr ty, morbirr dity and persisten ii cy could materiallyii negatively 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 investment yields, levels of mortality, morbidity, persistency, and investment 11 GL 2021 FORM 10-K yields, as well as the timing of premium and benefit payments. Even though our actuaries continually test actual-to- significantly from the levels assumed, which could result in increased expected results, actual results may differ policy obligations and expenses and thus negatively affect our profit margins and income. ff ff A ratingii financial conditidd on and results of operations. s downgrade or other negativevv action by a ratingii agency could materially affect our business, 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 us by limiting or restricting the ability of our insurance subsidiaries to pay dividends to us and could negatively affect reducing our sales by adversely affect insurance products through independent insurance agencies. ing our ability to sell insurers, ff ff The supplementaltt health insurance market is subject to substantial regulatory ll scrutiny. Regulatory changes could impact our Medicare Supplement and other supplemental health business. The nature on our supplemental and timing of any such changes cannot be predicted and could have a material adverse effect health insurance business. ff Obtainingii al. is criticrr timeii ly and appropriate prerr mium rate increases for certaitt nii supplementaltt healthtt insurance policies 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. Our business is subject to the risk of the occurrence of catastrophic events that could adverselyl affect our financial conditidd on or operatiorr ns. 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 affecte d 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 in our financial results for any fiscal quarter or year and could materially reduce our profitability or harm our financial condition. ff Our life and health insurance products are particularly exposed to risks of catastrophic mortality, such as a pandemic or other events that result in a large number of deaths. In addition, the occurrence of such an event in a concentrated geographic area could have a severe disruptive effect and business operations. The likelihood and severity of such events cannot be predicted and are difficult to estimate. In such an event, the impact to our operations could have a material adverse impact on our ability to conduct business and on our results of operations tasks and operations and financial condition, particularly if those problems affect supporting computer-based data processing, or destroy the capability to transmit, store, and retrieve valuable data. In addition, in the event that a significant number of our management were unavailable following a disaster, our strategic plan could be negatively impacted. on our workforce ff employees performing ff ff ff ff 12 GL 2021 FORM 10-K Our business is subjeb ct to the riskii of dirdd ecrr t or indirecrr t effeff ctstt of climll ate change. Climate change may increase the frequency and severity of weather-related natural disasters and pandemics, which may adversely impact our mortality and morbidity rates and disrupt our business operations. In addition, climate change and climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. Climate change may also influence investor sentiment with respect to the Company and investments in our portfolio. We cannot predict how legal, regulatory and social responses to concerns around climate change may impact our business. ff Legal, Regulatory, and Compliance Risks Our busines ii ses are heavilyl regulated and changes in regulation may reduce our profi rr tabilityll and grorr wth. 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 affect ing 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 the insurance regulatory licenses and approvals or do not comply with applicable regulatory requirements, authorities could preclude or temporarily suspend some or all of our business activities and/or impose substantial fines. ff ff ff Changes in U.S. federalrr subsidiaridd es' capital. income tax law could increase our tax costs or negativelyl impact our insurance ng the insurance industry, Changes to the Internal Revenue Code, administrative rulings, or court decisions affecti ive tax rate and lower our net income, adversely including the products insurers offer impact our insurance subsidiaries' capital, or limit the ability of our insurance subsidiaries to sell certain of their products. , could increase our effect ff ff ff Changes in accounting standardsdd issued by accounting standard-setti stattt ements,tt litii yt and change thett reduce our repor dd ii timing terr d profitff abi ngii of profitff e tt bodiesdd recognition. may affeff ct our finanii tt cial Our financial statements are subject to the application of GAAPAA 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. These changes including underlying assumptions, projections, estimates or judgments/interpretations on our business, financial condition and results of operations. by management, could have a material adverse effect (Refer to Note 1— Significant to be ff Adopted) Policies under the caption Accountinii g Pronrr ouncements Yet Accountingtt ff e with laws or regulation ll including a failurerr Non-complianc securitrr y,t consumer information maintain its confidentiality business operations. ationtt to ensure that our business associates with access to sensitivevv customer and adversely affect our reputation and to customer and consumer privacy and informff ,yy could materiallyii ll s related ll ii The collection, maintenance, use, disclosure and disposal of personally identifiable informat ion 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 informat ion 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 ff ff 13 GL 2021 FORM 10-K Economic and Clinical Health Act (HITECH), and in the Health Insurance Portability and Accountability Act of 1996 also requires that we impose privacy and security requirements on our business associates (as that (HIPAAPP ). HIPAAPP term is defined in the HIPAAAA 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. ff General Risk Factors The failure to maintaitt nii effecff security, thereby adverserr tivevv and efficff tingii ient informa ff our financialii conditdd iontt ly affff ecff and results of operation rr s. tion systyy ems at the Company could compromise datatt Our business is highly dependent upon the internet, third-party service providers, and informat operate in an effici actuarial analysis, sales and policy administration functions. ion systems to ent and resilient manner. We gather and maintain data for the purpose of conducting marketing, ff ff Malicious third-parties, employee or agent errors or disasters affect ion systems could impair our business operations, regulatory compliance and financial condition. Employee or agent malfeasance or errors in the ion, or an handling of our informat inability to use our informat ion systems may result in unauthorized access to customer or proprietary informat ion systems to effiff ciently support business operations. ing our informat ff ff ff ff ff More frequent and sophisticated cyberattacks and more impactful regulatory oversight models could result in additional costs to protect against security breaches. Any breach of confidential informat ion 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. ff The failure to effeff ctivtt elvv yl maintaitt nii and modernize our informa could adverselyl affeff ct our busines s. ff ii tion technology systems and infrastructure ff ff ion technology systems and infrastructure requires us to commit to significant Our ability to modernize our informat ve planning, and execution. In addition, due to the highly regulated nature of the insurance resources, effecti industry, we must continually implement new technology or adapt existing technology to meet compliance requirements of new and proposed regulations. Should we be unable to implement these innovations effecti vely, effiff ciently, or in a timely manner, it could result in poor customer experience, additional expenses, reputational harm, ively legal, and regulatory actions and other adverse consequences. This could also result in the inability to effect support business operations. ff ff Damage to the brand and reputation of Globe Life or its subsidiardd iesrr businii ess. could affeff ct our abilitii yt to conduct Negative publicity through traditional media, internet, social media and other public forums could damage our brand or reputation and adversely impact our agent recruiting efforts, the ability to market our products and the persistency ff of in-force policies. The Company could be subjected to adverse publicity in the event of a significant security ff breach. 14 GL 2021 FORM 10-K We may fail to meet expectations relatinll practices. g to envirovv nmental, socialii ,ll and governance standardsdd and Certain existing or potential investors, customers and regulators evaluate our business or other practices according to a variety of environmental, social and governance (“ESG”) standards and expectations. Certain of our regulators have proposed or adopted, or may propose or adopt, ESG rules or standards that would apply to our business. Our practices may be judged by ESG standards that are continually evolving and not always clear. Prevailing ESG standards and expectations may also reflect contrasting or conflicting values or agendas. We may fail to meet our commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination with other business priorities may not prove completely effect ive or satisfy investors, customers, regulators, or others. For example, as we consider the recommendations of SASB, TCFD, and develop our own ESG materiality assessment, we may continue to expand our disclosures in these areas. Our failure to report accurately or achieve progress on our metrics on a timely basis, or at all, could adversely affect our reputation, business, financial performance and growth. We may face adverse regulatory, investor, customer, media, or public scrutiny leading to business, reputational, or legal challenges. ff ff ff 15 GL 2021 FORM 10-K As of December 31, 2021, Globe Life had no unresolved SEC staffff comments. Item 1B. Unresolved Staffff 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—Commitment stt Contingencie s. tt tt and Not Applicable. Item 4. Mine Safety Disclosures 16 GL 2021 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 2,125 shareholders of record on December 31, 2021, 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 & Poor’s 500 Stock Index (S&P 500) and the Standard & 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 12/16 12/17 12/18 12/19 12/20 12/21 Globe Life Inc. S&P 500 S&P Life & Health Insurance *$100 invested on 12/31/2016 in stock or index, including reinvestment of dividends. Fiscal year ended December 31. Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved. 17 GL 2021 FORM 10-K Purchases of Certain Equity Securities by the Issuer and Others for the Fourth Quarter 2021 (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares (or Approximate Dollar Amount) that May Yet Be Purchased Under the Plans or Programs October 1-31, 2021 .................... 265,733 $ November 1-30, 2021................ December 1-31, 2021................ 751,875 609,074 91.68 91.60 90.00 265,733 751,875 609,074 — — — On August 4, 2021, 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. ff Item 6. [Reserved] 18 GL 2021 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, financial results or other developments. We management's opinions concerning future operations, strategies, specifically disclaim any obligation to update or revise any forward-looking statement because of new informat ion, future developments, or otherwise. ff 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 pandemic and associated direct and indirect effects on our business operations, financial results and financial condition. If these estimates or assumptions prove to be incorrect, the actual results of Globe ff materially from the forward-looking statements made on the basis of such estimates or assumptions. Life may differ Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeabl e events or developments, which may be national in scope, related to the insurance ff industry generally, or applicable to the Company specifically. Such events or developments could include, but are not necessarily limited to: ff ff 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, ff 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 ff 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 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; product sales and/or investment portfolio yield; ff ff ff 6. Changes in the competitiveness of the Company's products and pricing; 7. Litigation results; 8. Levels of administrative and operational efficiencies that differ ff ff from our assumptions (including any resulting from increased costs arising from operating during the COVID-19 reduction in efficiencies pandemic); ff 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 diffeff r 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 informat ff ion technology systems; 13. The severity, magnitude and impact of the COVID-19 pandemic, including effects of the pandemic and the s of the U.S. and state governments' and other businesses’ response to the pandemic, on our effect operations and personnel, and on commercial activity and demand for our products; and ff ff 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. 19 GL 2021 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 Statett mentstt and Notes thereto appearing elsewhere in this report. The following management discussion will only include comparison to prior year. For discussion regarding activity from 2019, please refer to the prior filed Form 10-Ks at www.sec.gov. "Globe Life" and the "Company" referff 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: ff Premium revenue (Policy obligations) ) (Policy acquisition costs and commissions) q ( Underwriting margin y 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 g 20 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Current HigHH hligll hts, comparingii year-to-date 2tt 021 with 2020. • • • • • •• • Net income as a return on equity (ROE) forff income as an ROE, excluding net unrealized gains on the fixed maturity portfolio(1) was 12.3%. the year ended December 31, 2021 was 8.8% and net operating l premium increased 7% over the prior year. Life premium increased 8% for the period from $2.7 billion TotaTT in 2020 to $2.9 billion in 2021. Life underwriting margin declined 8% from $675 million in 2020 to $624 million in 2021. Net investment income increased 3% over the same period in the prior year. Excess investment income declined 2% below the prior year. TotaTT l net sales increased 7% over the same period in the prior year from $662 million to $706 million. Book value per share increased 3% over the same period in the prior year from $83.19 to $85.97. Book value per share, excluding net unrealized gains on the fixed maturity portfolio(1), increased 10% over the prior year from $53.12 to $58.50. The Company incurred $140 million of COVID-19 net life claims (net of reserves released upon death) for the year ended December 31, 2021 compared with $67 million during the same period last year. or the year ended December 31, 2021, the Company Company repurchased 4.8 million shares fof GGlobe fLife Inc. F common stock at a total cost fof $$455 million ffor an average share price fof $$95.11. g The following graphs represent net income and net operating income for the three years ended December 31, 2021. Net Income (Dollar amounts in thousands) Net Operating Income (Dollar amounts in thousands) $760,790 $731,773 $744,959 $1,000,000 $750,000 $500,000 $250,000 $0 $752,102 $737,592 $707,497 $1,000,000 $750,000 $500,000 $250,000 $0 2019 2020 2021 2019 2020 2021 (1) As shown in the charts above, net operating income is the consolidated total of segment profits after tax and as such is considered a non- nce of the measure. It has been used consistently by Globe Life's management forff many years to evaluate the operating performa s from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain GAAPA Company. It differ significant and unusual items included in net income. Net income is the most directly comparable GAAP measure. rr ff Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure. t of the net unrealized gains, which are primarily attributable to Management utilizes this measure to view the business without the effecff fluctuation in interest rates on the available-for-sale portfoli f o. The impact of the adjustment to exclude net unrealized gains on fixed maturities, net of tax is $2.8 billion and $3.2 billion forff the year ended December 31, 2021 and 2020, respectively. Book value per share, excluding net unrealized gains on the fixed maturity portfolio, is also considered a non-GAAP measure. Management utilizes this measure to view the book value of the business without the effeff ct of net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities is $27.47 and $30.07 forff year ended December 31, 2021 and 2020, respectively. Refer to Analysl ff is of Profrr itabil ityll by Segment for non-GAAP reconciliation to GAAP. 21 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Summary of Operarr tions. Net income increased 2% to $745 million in 2021, compared with $732 million in 2020. This increase was primarily related to an increase in realized gains offset by higher COVID-19 life claims. On a diluted per common share basis, net income per common share for 2021 increased from $6.82 to $7.22. Included in net income were after-tax realized gains of $47 million in 2021, compared with realized after-tax losses of $2 million for 2020. Realized gains and losses are presented more fully under the caption Realized Gains and Losses in this report. ff Net operating income from continuing operations declined 4% to $707 million in 2021, compared with $738 million in 2020. On a diluted per common share basis, net operating income per common share decreased slightly from $6.88 to $6.86. 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 GAAPAA measure. We do not consider realized gains and losses to be a component of our core insurance operations or operating segments. Additionally, net ed by certain significant and unusual non-operating items in 2020 and 2021. We do not view income was affect 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. ff Despite headwinds with COVID-19, the Company continues to see positive signs in its core operations, including strong sales, favorable persistency and a strong ROE, excluding net unrealized gains on the fixed maturity portfolio. COVID-19. For the year ended December 31, 2021, the Company incurred $140 million of COVID-19 net life claims. II Per the Centers for Disease Control and Prevention (CDC), there were approximately 460 thousand U.S. COVID-19 deaths in 2021. In the second half of the year, the COVID-19 deaths were concentrated in geographies and younger age groups where the Company has greater risk exposure. The Company’s level of COVID-19 net life claims, on average for the year, was approximately $3 million per 10,000 U.S. deaths. Going forward, we anticipate that COVID-19 deaths will continue at elevated levels throughout 2022, with an impact of approximately $50 million at the mid-point of our guidance based on incurred claims in the range of $3 million to $4 million per 10,000 U.S. deaths. The projected life claims are dependent on this estimate and many other variables, including, but not limited to, projected U.S. deaths from COVID-19, the timing and availability of effeff ctive treatments for the disease, vaccination rates, and effect iveness of vaccines, impact from potential variants, and the ages and geographic areas in which infections and deaths occur. ff 22 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Globe Life's operations on a segment-by-segment basis are discussed in depth below. Net operating income has been used consistently by management forf many years to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs net income primarily because it excludes certain non-operating items such as realized gains and losses and other significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company’s business. Net income is the most directly comparable GAAPAA measure. from GAAPAA ff ff Analysis of Profitability by Segment (Dollar amounts in thousands) 2021 2020 2019 2021 Change % 2020 Change % (4) 12 (5) (5) 28,731 (429) (13,181) 7 (10,626) 1 4 (2) — (2) (14,696) 186 (14,510) (18,206) (501) 92 400 (308) 4,016 Life insurance underwriting margin .................. $ 623,675 Health insurance underwriting margin ............. 304,302 $ 674,946 $ 703,464 $ (51,271) (8) $ (28,518) 272,369 243,638 31,933 Annuity underwriting margin.............................. 8,704 9,029 9,458 Excess investment income ................................ 238,528 244,424 257,605 (325) (5,896) Other insurance: Other income.................................................. 1,216 1,325 1,318 (109) Administrative expense................................. (271,631) (250,947) (240,321) (20,684) 12 (4) (2) (8) 8 Corporate and other............................................ (39,825) (45,783) (55,103) 5,958 (13) 9,320 (17) Pre-tax total................................................ 864,969 905,363 920,059 (40,394) Applicable taxes .................................................. (157,472) (167,771) (167,957) 10,299 Net operating income .............................. 707,497 737,592 752,102 (30,095) (4) (6) (4) Reconciling items, net of tax: Realized gain (loss)—investments ............. 54,220 Realized loss—redemption of debt............. (7,358) Part D adjustments—discontinued operations ....................................................... Administrative settlements ........................... Non-operating expenses .............................. — (1,047) (1,923) Legal proceedings ......................................... (6,430) Net income .............................................. $ 744,959 (1,915) (501) — — (816) (2,587) 16,291 — (92) (400) (508) (6,603) 56,135 (6,857) — (1,047) (1,107) (3,843) $ 731,773 $ 760,790 $ 13,186 2 ) $ (29,017) ) ( ( ( )( ) (4) 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 $51 million compared with the prior year, primarily due to higher life claims related to COVID-19 offset by premium growth. The health segment contributed to growth in income in both years contributing $32 million of additional underwriting margin in 2021 and $29 million in 2020. ff 23 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis In 2021, the largest contributor of total underwriting margin was the life insurance segment and the primary distribution channel was American Income Life Division. The following charts represent the breakdown of total underwriting margin by operating segment and distribution channel for the year ended December 31, 2021. 2021 Total Underwriting Margin by Segment 2021 Total Underwriting Margin by Distribution Channel 32% 1% 52% 12% 8% 10% 9% 9% 67% Life Health Annuity American Income Life Division Liberty National Division Direct to Consumer Division Family Heritage Division United American Division Other Total premium income rose 7% for the year ended December 31, 2021 to $4.1 billion. Total net sales increased 7% to $706 million, when compared with 2020. Total first-year collected premium (defined in the following section) was $583 million for 2021, compared with $547 million for 2020. Life insurance premium income increased 8% to $2.9 billion over the prior year total of $2.7 billion. Life net sales rose 8% to $522 million for the year ended 2021. First-year collected life premium rose 14% to $423 million. Life underwriting margins, as a percent of premium, declined to 22% in 2021 from 25% in the prior year. Underwriting margin declined to $624 million in 2021, 8% below the same period in 2020. The decline in the life underwriting margin is primarily due to approximately $140 million of COVID-19 net life claims incurred during the year ended 2021 versus $67 million during the same period in 2020. Health insurance premium income increased 5% to $1.20 billion over the prior year total of $1.14 billion. Health net sales rose 4% to $184 million for the year ended 2021. First-year collected health premium fell 9% to $160 million. Health underwriting margins, as a percent of premium, increased to 25% in 2021 compared with 24% in 2020. Health underwriting margin increased to $304 million for the year ended 2021, 12% over the same period in 2020. Excess investment income, the measure of profitability of our investment segment, declined 2% during 2021 to $239 million from $244 million in the same period in 2020. Excess investment income per common share, reflecting the impact of our share repurchase program, increased 1% to $2.31 from $2.28 when compared with the same period in 2020. Insurance administrative expenses increased 8% in 2021 when compared with the prior year period. These expenses were 6.6% as a percent of premium during the year ended 2021 and 2020. For the year ended December 31, 2021, the Company repurchased 4.8 million Globe Life Inc. shares at a total cost of $455 million for an average share price of $95.11. 24 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis The discussions of our segments are presented in the manner we view our operations, as described in Note 14— Business Segmentstt . We use three statistical measures as indicators of premium growth and sales over the near term: “annualized premium in force,” “net sales,” and “first-year collected premium.” • • • Annualized premium in force is defined as the premium income that would be received over the following twelve months at any given date on all active policies if those policies remain in force throughout the twelve- month period. Annualized premium in force is an indicator of potential growth in premium revenue. Net sales, a statistical performance measure, is calculated as annualized premium issued, net of cancellations in the first thirty days after issue, except in the case of Direct to Consumer, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued. ff First-year collected premium is defined as the premium collected during the reporting period for all policies in their first policy year. First-year collected premium takes lapses into account in the first year when lapses are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added to premium income in the future. See further discussion of the distribution channels below for Life and Healthtt . 25 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis LIFE INSURANCE total Life insurance is the Company's predominant segment. During 2021, premium and life underwriting margin represented 67% of investments supporting the reserves for life products produce the majority of excess investment income attributable to the investment segment. life premium represented 71% of the total. Additionally, The following table presents the summary of results of life insurance. Further discussion fof the results yby distribution channel is included below. Life Insurance Summary of Results (Dollar amounts in thousands) Premium and policy charges ....................... $ 2,898,210 100 $ 2,672,804 100 $ 2,517,784 100 2021 2020 2019 Amount % of Premium Amount % of Premium Amount % of Premium Policy obligations........................................... 2,070,485 Required interest on reserves ..................... (735,282) Net policy obligations................................. 1,335,203 Commissions, premium taxes, and non- deferred acquisition expenses .................... Amortization of acquisition costs ................ 234,033 705,299 Total expense.............................................. 2,274,535 Insurance underwriting margin .............. $ 623,675 71 (25) 46 8 24 78 22 1,809,373 (698,112) 1,111,261 212,859 673,738 1,997,858 $ 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 The lower life insurance underwriting margins for the year ended December 31, 2021 are primarily attributed to approximately $140 million of COVID-19 net life cf laims, compared with $67 million in the prior year. 26 GL 2021 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 folff lows: Life Insurance Premium by Distribution Channel (Dollar amounts in thousands) 2021 2020 2019 American Income........................................................ $ 1,402,878 Direct to Consumer .................................................... 971,461 Liberty National ........................................................... 311,081 Other............................................................................. 212,790 Total ......................................................................... $ 2,898,210 Amount % of Total Amount $ 1,257,726 906,959 293,897 214,222 % of Total 47 34 11 8 Amount $ 1,160,495 855,543 285,551 216,195 % of Total 46 34 11 9 48 34 11 7 100 $ 2,672,804 100 $ 2,517,784 100 Annualized life premium in force was $2.9 billion at December 31, 2021, an increase of 7% over $2.7 billion a year earlier. The following table shows net sales informff ation forff each of the last three years by distribution channel. Life Insurance Net Sales by Distribution Channel (Dollar amounts in thousands) 2021 2020 2019 Amount % of Total American Income........................................................ $ 290,512 Direct to Consumer .................................................... 148,846 Liberty National ........................................................... Other............................................................................. 71,184 11,055 56 28 14 2 Amount $ 253,276 165,426 54,931 10,371 % of Total 52 34 12 2 Amount $ 237,587 126,208 53,718 12,301 % of Total 55 29 13 3 Total ......................................................................... $ 521,597 100 $ 484,004 100 $ 429,814 100 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) 2021 2020 2019 Amount % of Total American Income........................................................ $ Direct to Consumer .................................................... Liberty National ........................................................... Other............................................................................. 250,937 111,761 50,336 9,705 59 27 12 2 Amount $ 214,566 104,262 42,435 10,190 % of Total 58 28 11 3 Amount $ 195,225 82,615 39,840 11,564 % of Total 59 25 12 4 Total ......................................................................... $ 422,739 100 $ 371,453 100 $ 329,244 100 27 GL 2021 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 i ts 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 of life premium of any distribution channel at 48% of the Company's 2021 total life premium. Net sales increased 15% to $291 million in 2021 over the 2020 total of $253 million. The increase in net life sales is due to increased productivity and well as an increase in agent count. Premium increased 12% primarily due to improved persistency and higher sales. The underwriting margin, as a percent of premium, was 30% for the year ended December 31, 2021, down from 32% from the prior year primarily due to higher COVID-19 claims and higher reserve increases from lower policy lapse rates. ff This division incurred $36 million in COVID-19 net life claims, representing approximately 3% of premium, for the year ended December 31, 2021, compared with $18 million in COVID-19 net life cff laims during the prior year. 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. Sales growth in our exclusive agencies is generally dependent on growth in the size of the agency force. American Income....................................................... 9,971 8,738 7,360 1,233 2021 2020 2019 2021 Change % 14 2020 Change 1,378 % 19 incentives and training opportunities, American Income Life continues to focus on growing and strengthening the agency force, specifically through emphasis on agency middle-management growth and additional agency officeff openings. In addition to offering the agency has made considerable investments in information financial technology, including a customer relationship management (CRM) tool forff the agency force. This tool is designed to drive productivity in lead distribution, conservation of business, manager dashboards and new agent recruiting. Additionally, this division has invested in and successfully implemented technology that allows the agency force to engage in virtual recruiting, training and sales activity. Over the past year and through the pandemic, the agents have shiftedff to primarily a virtual experience with the customers and have generated a vast majority of its sales through virtual presentations. We find this flexibility to be enticing for new recruits as well as a driver of sustainability for our agency force. ff ff including direct mailings, insert media, and electronic media. adult and juvenile life insurance through a variety of marketing The Direct to Consumer Division (DTC) offers 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 compared with direct mail response as management has aggressively increased marketing activities related to internet and mobile technology as well as focused on driving trafficff to our inbound call center. This had been steadily increasing prior to COVID-19, but the pandemic accelerated this activity due in part to the approaches support and ff awareness of needing life insurance from the effect complement one another in the division's effort s 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. s of COVID-19. The different f ff 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 forff sales of additional coverage over time. The DTC division continued to see 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. ff 28 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis DTC net sales decreased 10% to $149 million for the year ended December 31, 2021 compared with $165 million in the prior year, primarily due to the record high net life sales in the prior year at the onset of the pandemic. We expect continued strong sales in 2022 due to the heightened awareness as to the benefits of life insurance. in 2021 DTC incurred $69 million of COVID-19 net compared with $35 million in 2020. DTC’s underwriting margin, as a percent of premium, was 7% forff the year ended December 31, 2021, which was lower than the 14% result in 2020 primarily due to higher COVID-19 net life claims in 2021. life claims, representing approximately 7% of premium, 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 17%, down from 23% for the year ended 2020. The decrease is primarily attributable to higher than normal policy obligations during 2021 as a result of COVID-19. This division incurred $28 million of COVID-19 net life claims, representing approximately 9% of premium, for the year ended December 31, 2021 compared with $12 million in 2020. Net sales increased 30% in 2021 over 2020. With the division's ability to return to face-to-face customer interaction and the option of virtual sales, total net life sales increased for the full year 2021. However, due to higher policy obligations as result of COVID-19, underwr iting margin as a percent of premium was lower for the full year 2021 as compared with 2020. rr Below is the average producing agent count at the end of the period for Liberty National Division. As the division continues to gain momentum in its sales and recruiting initiatives and advances its technology and CRM platform, the agency should see an increase in recruiting of new agents and an increase in the average producing agent count. Liberty National .......................................................... 2,716 2,575 2,350 141 2021 2020 2019 2021 Change % 5 2020 Change 225 % 10 The Liberty National Division average producing agent count increased 5% in 2021. 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 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. gAgencies distribution channels The OOther predominantlyy l fife insurance. The OOther gAgencies contributed $$213 million fof fLife's total in 2021, but cont ut rib ed only 2% of net sales for the year. y primarily include non-exclusive independent selling g flife premium income, or %7% fof GGlobe gagencies HEALTH INSURANCE Health insurance sold by the Company primarily includes Medicare Supplement insurance, accident coverage, and illness, heart, and intensive care other limited-benefit supplemental health products including cancer, critical coverage. Health premium accounted for 29% of our total premium in 2021, while the health underwriting margin accounted for 32% of total underwriting margin. Health underwriting margin increased 12% to $304 million primarily due to lower policy obligations. The Company continues to emphasize life insurance sales relative to health due to life’s superior long-term profitability and its greater contribution to excess investment income. 29 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis The folff lowing table presents underwr rr iting margin data forff health insurance. Health Insurance Summary of Results (Dollar amounts in thousands) Premium ............................................................ $ 1,201,676 100 $ 1,141,097 100 $ 1,077,346 100 2021 2020 2019 Amount % of Premium Amount % of Premium Amount % of Premium Policy obligations ............................................. Required interest on reserves........................ 758,745 (102,574) Net policy obligations ................................... 656,171 Commissions, premium taxes, and non- deferred acquisition expenses ....................... Amortization of acquisition costs ................... Total expense................................................. 97,453 143,750 897,374 Insurance underwriting margin ................ $ 304,302 63 (8) 55 8 12 75 25 733,481 (93,475) 640,006 91,959 136,763 868,728 $ 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 Health premium increased 5% from $1.14 billion in 2020 to $1.20 billion in 2021. Health underwriting margin increased 12% from $272 million in 2020 to $304 million in 2021 primarily due to growth in premiums. Further discussion is included below yby 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) 2021 2020 2019 United American....................................................... $ 481,614 Family Heritage ........................................................ Liberty National ........................................................ American Income ..................................................... 343,839 187,327 114,950 Direct to Consumer.................................................. 73,946 Total ....................................................................... $ 1,201,676 Amount % of Total Amount $ 452,980 317,021 188,835 105,734 76,527 % of Total 40 28 16 9 7 Amount $ 416,582 294,182 189,578 99,447 77,557 % of Total 39 27 18 9 7 40 29 16 9 6 100 $ 1,141,097 100 $ 1,077,346 100 Of total health premium of $1.2 billion, premium from limited-benefit plans comprise $639 million, or 53% of the total, for 2021 compared with $588 million in the prior year. Premium from Medicare Supplement products comprises the remaining 47% or $563 million for 2021 compared with $553 million in 2020. Annualized health premium in force was $1.29 billion at December 31, 2021, an increase of 8% over the prior year balance of $1.19 billion. 30 GL 2021 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) 2021 2020 2019 United American........................................................................ $ Family Heritage......................................................................... Liberty National ......................................................................... American Income...................................................................... 63,551 72,600 26,512 18,230 Direct to Consumer .................................................................. 3,465 Total ....................................................................................... $ 184,358 Amount % of Total Amount $ 61,690 70,665 22,905 18,817 3,594 % of Total 35 40 13 10 2 Amount $ 79,218 65,626 24,504 18,059 3,827 % of Total 41 34 13 10 2 35 39 14 10 2 100 $ 177,671 100 $ 191,234 100 Of total net sales of $184 million, sales of limited-benefit plans comprise $118 million, or 64% of the total, for 2021 compared with $113 million in 2020. Medicare Supplement sales make up the remaining 36%, or $66 million for 2021 compared with $65 million in 2020. 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) 2021 2020 2019 United American ........................................................................ $ Family Heritage.......................................................................... Liberty National.......................................................................... American Income ...................................................................... 60,386 57,427 20,348 18,939 Direct to Consumer ................................................................... 3,253 Total ........................................................................................ $ 160,353 Amount % of Total Amount $ 79,628 54,242 20,169 18,536 3,051 % of Total 45 31 11 11 2 Amount $ 72,021 50,204 19,698 17,142 3,749 % of Total 44 31 12 11 2 37 36 13 12 2 100 $ 175,626 100 $ 162,814 100 First-year collected premium related to limited-benefit plans comprise $99 million, or 62% of total first-year collected premium for 2021 compared with $93 million in 2020. First-year collected premium from Medicare Supplement policies make up the remaining 38%, or $61 million for 2021 compared with $83 million in 2020. 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. This division is also Globe Life's largest producer of Medicare Supplement insurance, responsible forf 82% of the Company's Medicare Supplement premium and 95% of Medicare Supplement net sales. Medicare Supplement premium in this agency rose 4% to $460 million in 2021 over the prior period net sales of $443 million. Medicare Supplement net sales increased 2% to $63 million in 2021 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 flat at 15% for 2021 compared with 2020. 31 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis ii Accountingtt Policies, the Company acquired Beazley Benefits, now rebranded ff As discussed in Note 1—Signif icant as Globe Life Benefits, on August 1, 2021. Globe Life Benefits enhances the Company's presence in the worksite market by offeri ng group supplemental health insurance solutions to employer groups through brokers. While the acquisition had an immaterial impact on year-to-date results, we are optimistic about Globe Life Benefits' ability to contribute additional health premium and profits in the future. Operating results forff Globe Life Benefits are included as part of United American Division results. ff The Family Heritage Division primarily markets limited-benefit supplemental health insurance in non-urban areas. Most of its policies include a cash-back feature, such as a return of premium, where any excess of premiums over claims paid is returned to the policyholder at the end of a specified period stated within the insurance policy. Underwriting margin as a percent of premium was 27%, up from 26% for the year ended December 31, 2020. The increase was primarily attributable to favorable claims experience. The division experienced a 3% increase in net health sales in 2021 as compared with the 2020, primarily due to an increase in agent productivity and training. The division will continue to launch incentive programs to help drive an increase in productivity and the number of producing agents. Below is the average producing agent count at the end of the indicated periods for the Family Heritage Division. While the agency has seen a decrease in agent count as compared with 2020, we anticipate that as COVID-19 and the job market stabilize, agent recruitment opportunities should increase. Average producing agents ....................................... 1,213 1,325 1,112 (112) (8) 213 2021 2020 2019 2021 Change % 2020 Change % 19 The Liberty National Division represented 16% of all Globe Life health premium income at $187 million in 2021. 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 2021, health premium income declined 1%. Liberty National's first-year collected premium increased 1% to $20.3 million in 2021 compared with $20.2 million in 2020. Health net sales for 2021 increased by $4 million or 16% from 2020. We anticipate an increase in net health sales going forward at this division as the Company becomes more able to interact face-to-face with customers. ii buii Other distri tion. While some of the Company's other distribution channels market health products, selling life insurance is the main emphasis. On a combined basis, they accounted for 15% of health premium in 2021 and 16% in 2020. 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 $3 million of Medicare Supplement net sales in 2021 and $4 million in 2020. ANNUITIES Our fixed annuity balances at Underwriting margin was $8.7 million for 2021 and $9.0 million for 2020. the end of 2021 and 2020 were $1.03 billion and $1.06 billion, respectively. We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life we do not expect that annuities will be a significant portion ff and supplemental health insurance products. Therefore, of our business or marketing strategy going forward. 32 GL 2021 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 Segmentstt . 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.” ff 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 $8.7 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 common share as a useful measure to evaluate the investment segment. Excess Investmen income, and excess investment income per diluted common share. t IncII ome. The folff vv lowing table summarizes Globe Life's investment income, excess investment Analysis of Excess Investment Income (Dollar amounts in thousands except per share data) Net investment income .................................................................................................. $ Interest on net insurance policy liabilities: 2021 2020 2019 952,447 $ 927,062 $ 910,459 Required interest on reserves ................................................................................... (877,822) (833,000) (796,979) Required interest on deferred acquisition costs ..................................................... 247,389 237,066 228,431 Net required interest.................................................................................................. (630,433) (595,934) (568,548) Financing costs ............................................................................................................... (83,486) (86,704) (84,306) Excess investment income .................................................................................. $ 238,528 $ 244,424 $ 257,605 Excess investment income per diluted common share ............................... $ 2.31 $ 2.28 $ 2.31 Mean invested assets (at amortized cost).................................................................. $ 18,939,317 Average net insurance policy liabilities(1) .................................................................... Average debt and preferred securities (at amortized cost)...................................... 10,954,500 2,053,935 $ 17,987,502 $ 17,026,058 10,460,539 10,068,120 1,859,298 1,650,081 (1) Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon. Excess investment income declined $6 million or 2% during 2021. Excess investment income per diluted common share increased 1% during 2021. 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. 33 GL 2021 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 2021 while mean invested assets increased at a compound rate of 5% during the same period. The tax equivalent effect ive annual yield rate earned on the fixed maturity portfolio was 5.21% in 2021. 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 the yield earned on these disposed bonds. We currently expect that the average annual turnover rate of fixed maturity assets will be less than 2% over the next five years and will not have a material negative impact on net investment income. In addition to fixed maturities, the Company has also invested in limited partnerships with debt like characteristics that diversifyff risk and enhance risk-adjusted, capital-adjusted returns on the portfolio. The earned yield on the investment funds for the year ended December 31, 2021 was 5.24%. See additional ion in Note 4—Investments. The following chart presents the growth in net investment income and the growth in mean invested assets. informat ff ff Growth in net investment income ....................................................................... Growth in mean invested assets (at amortized cost) ...................................... 2.7 % 5.3 % 1.8 % 5.6 % 3.2 % 4.8 % 2021 2020 2019 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. Should interest rates, especially long-term rates, rise, Globe Life's net investment income would benefit due to higher interest rates on new investments. While such a rise in interest rates could adversely affect the fair value of the fixed maturities portfolio, we could withstand an increase in interest rates of approximately 140 to 145 basis points before the net unrealized gains on our fixed maturity portfolio as of December 31, 2021 would be eliminated. Should interest rates increase further, we would not be concerned with potential interest rate driven unrealized losses in our fixed maturity portfolioff because we do not intend to sell nor is it likely that management will be required to sell the fixed maturities prior to their anticipated recovery. ff 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 of the required interest from the insurance segments. As discussed in Note 14—Business Segments,tt 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. ff the effect ff 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 GAAPAA 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 5.8% 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. 34 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Since actuarial discount rates are locked in for life on essentially all of our business, benefit reserves and deferred acquisition costs are not affecte d 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. ff Informat ff ion 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 2021 Life and Health......................................................................................................... $ Annuity ...................................................................................................................... Total............................................................................................................................ $ Increase in 2021...................................................................................................... 583,996 $ 9,912,914 5.9 % 46,437 1,041,586 630,433 $ 10,954,500 4.5 5.8 5.8 % 4.7 % 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 % 35 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Financing costs for the investment segment consist primarily of interest on our various debt instruments. The table below presents the components of financing costs and reconciles interest expense per the Consolidated Statementstt of Operations. Analysis of Financing Costs (Dollar amounts in thousands) Interest on funded debt .................................................................................................... $ Interest on term loan......................................................................................................... Interest on short-term debt .............................................................................................. Other.................................................................................................................................... 2021 2020 2019 78,183 $ 73,157 $ — 5,270 33 4,193 9,302 52 69,844 3,262 11,165 35 Financing costs ........................................................................................................ $ 83,486 $ 86,704 $ 84,306 In 2021, financing costs decreased 4% compared with prior year primarily due to rates on the short-term debt. The interest on funded debt was higher than the prior year as a result of the 2.15% Senior Note issued in August 2020. section of this report and in Note ff More informat 11—Debt. ion on our debt transactions are disclosed in the Financial Conditiontt Realized Gains and Losses. Our life and health insurance companies collect premium income from policyholders ll 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 portfolioff 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 forff a long period of time, investments are occasionally sold, exchanged, called, or experience a credit loss event, resulting in a realized gain or loss. These sales are often in to maximize risk-adjusted, capital-adjusted returns. response to deterioration in credit quality of the issuer in effort We do not engage in trading investments forff gains or losses, which occur in protecting the portfolioff ff 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 Company also has investments in certain limited partnerships, held under the fair value option, with fair value changes recognized in Realized gains (losses) in the Consolidated Statett ments ott profit. Therefore, tt f Operat ions. O ff ff 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 effect s of realized gains and losses when evaluating overall insurance operating results. ff 36 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis lowing table summarizes our tax-effected realized gains (losses) by component for each of the three years The folff ended December 31, 2021. Analysis of Realized Gains (Losses), Net of Tax per share data) (Dollar amounts in thousands, except forff Year Ended December 31, 2021 2020 2019 Amount Per Share Amount Per Share Amount Per Share Fixed maturities: Sales............................................................................ $ (8,100) $ Other(1) ........................................................................ Provision for credit losses........................................ 35,684 2,337 Fair value option—change in fair value ......................... Other investments ............................................................. Realized investment gains (losses) ............. 18,105 6,194 54,220 Loss on redemption of debt ............................................. (7,358) Total realized gains (losses) .......................... $ 46,862 (0.07) $ 0.45 (0.08) $ (28,844) $ (0.27) $ (1,933) $ (0.02) 0.34 0.02 0.18 0.06 0.52 11,712 (2,643) 826 17,034 (1,915) (501) 0.11 (0.03) 0.01 0.16 17,223 — 992 9 (0.02) 16,291 — — 0.16 — 0.01 — 0.15 — $ (2,416) $ )) ) (( ( (( (0.02) $ 16,291 ( )) ) $ 0.15 (1) During the three years ended December 31, 2021, 2020, and 2019, the Company recorded $109.2 million, $219.8 million and $243.2 million of exchanges of fixed maturity securities (noncash transactions) that resulted in $19.9 million, $6.2 million, and $16.2 million, respectively in realized gains (losses), net of tax. ii Investment Acquisiti ons. Globe Life's investment policy calls for investing primarily in investment grade fixed maturities that meet our quality and yield objectives. We generally 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. During calendar years 2019 through 2021, Globe Life invested predominately in fixed maturity securities, primarily in corporate and municipal bonds with longer-term maturities. The following table summarizes selected informat ion for fixed maturity investments. The effecti ve 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. ff ff 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....................................................................... 10,465 Total fixed maturity acquisitions ............................................................. $ 1,011,347 Year Ended December 31, 2021 2020 2019 566,400 $ 686,844 $ 922,927 434,482 543,088 34,171 627,967 10,483 $ 1,264,103 $ 1,561,377 ff Effective annual yield (one year compounded)(2) ................................................. Average life (in years to next call) .......................................................................... Average life (in years to maturity)........................................................................... Average rating............................................................................................................ 3.39% 21.7 31.7 A+ 3.73% 15.8 26.3 A 4.47% 18.7 29.4 A (1) Fixed maturity acquisitions included unsettled trades of $7 million in 2021, $2 million in 2020 and $8 million in 2019. (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. 37 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis 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 2020 and 2021, 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 $258 million in other long-term investments in 2021 and $266 million in 2020. These investments include primarily investment funds. See Note—4 for further discussion. New cash flow available forf investment has been primarily provided through our insurance operations, cash received on existing investments, and proceeds from dispositions. While dispositions increase funds available forff 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 $428 million in 2021 and $469 million in 2020. 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 informat ff ion concerning the fixed maturity portfolio is as follows: ff Fixed Maturity Portfolio Selected Information Average annual effective ff yield(1) ........................................................................................................ Average life, in years, to: Next call(2) ....................................................................................................................................... Maturity(2) ........................................................................................................................................ Effective ff duration to: Next call(2,3) ..................................................................................................................................... Maturity(2,3) ...................................................................................................................................... At December 31, 2021 5.17% 15.7 19.0 10.6 12.2 2020 5.28% 16.2 19.0 11.0 12.3 (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 forf (b) based on the maturity date of all bonds, whether callable or not. callable bonds and the maturity date for noncallable bonds, and (3) Effeff ctive duration is a measure of the price sensitivity of a fixed-income security to a particular change in interest rates. 38 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Creditdd Riskii security types held in our fixed maturity portfolio at December 31, 2021 and 2020. Sensitivity.yy The following tables summarize certain informat ff ion about the major corporate sectors and Fixed Maturities by Sector December 31, 2021 (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.................................. $ 57,470 $ 3,825 $ (4,807) $ 56,488 $ 2,345,116 $ 513,844 $ (5,553) $ 2,853,407 Banks............................... Other financial ................ 26,980 97,800 614 547 — 27,594 983,317 (1,103) 97,244 1,240,340 Total financial.............. 182,250 4,986 (5,910) 181,326 4,568,773 Utilities Electric............................. 36,284 Gas and water................ — Total utilities ................ 36,284 3,888 — 3,888 — — — 40,172 1,388,094 — 543,297 40,172 1,931,391 Industrial - Energy 207,466 186,431 907,741 382,892 107,227 490,119 (1,635) 1,189,148 (2,161) 1,424,610 (9,349) 5,467,165 (395) 1,770,591 (617) 649,907 (1,012) 2,420,498 Pipelines.......................... 85,222 11,051 (1,445) 94,828 918,746 203,324 (1,445) 1,120,625 Exploration and production ....................... Oil field services............. Refinery ........................... 33,316 4,890 — — — — — — — 38,206 530,336 105,604 (238) 635,702 — — 49,778 89,032 13,653 24,199 — — 63,431 113,231 Total energy ................ 118,538 15,941 (1,445) 133,034 1,587,892 346,780 (1,683) 1,932,989 — — — — 84,106 25,565 25,555 179,323 651,621 — — — — 13,059 3,182 5,588 21,807 68,451 — — — — — — — — 673,699 405,915 145,114 118,115 65,608 15,946 (50) 818,763 — — 524,030 81,554 1,145,222 279,175 (50) 1,424,347 (2,697) 94,468 2,256,802 — — 28,747 1,254,243 31,143 559,399 (3,429) 197,701 1,663,793 475,012 286,889 135,581 277,807 (3,397) 2,728,417 (589) 1,540,543 (38) 694,942 (9,288) 1,932,312 (13,481) 706,591 14,967,515 3,199,104 (25,406) 18,141,213 84 85 — — 36,468 27,037 — — — 2,695,796 304,537 (8,203) 2,992,130 63,505 36,468 27,037 — 63,505 13,457 — — — (414) 13,043 104,905 3,701 (430) 108,176 — — 238 25 — 263 Total fixed maturities . $ 701,546 $ 95,488 $ ( (13,895) $ 783,139 ( ) ) $ 17,804,922 $ 3,534,404 $ ( (34,039) $21,305,287 ( ) ) (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 8 3 11 5 3 — 1 9 4 2 — 6 13 7 3 9 13 6 7 26 8 3 11 5 3 — 1 9 4 3 — 7 13 7 3 9 15 — 1 14 — 1 — 100 — 100 39 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Fixed Maturities by Sector December 31, 2020 (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, net At Fair Value Corporates: Financial Insurance - life, health, P&C .................................... Banks ................................. Other financial................... Total financial ................ Utilities 7,658 $ 3,894 $ (10,788) $ 50,764 $ 2,275,843 $ 563,349 $ (14,769) $ 2,824,423 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 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 ............... Refinery.............................. 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 GNMAs. 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 40 GL 2021 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, 2021 fixed maturity portfolio, representing 84% of amortized cost, net and 85% of fair value. The is invested primarily in securities issued by the U.S. government and U.S. municipalities. remainder of the portfolioff The Company holds insignificant amounts in foref ign 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, 2021, the total fixed maturity portfolio consisted of 843 issuers. Fixed maturities had a fair value of $21.3 billion at December 31, 2021, compared with $21.2 billion at December 31, 2020. The net unrealized gain position in the fixed-maturity portfolio decreased from $4.0 billion at December 31, 2020 to $3.5 billion at December 31, 2021 due to an increase in market rates during the period. ff For more informat ion about our fixed maturity portfolio by component at December 31, 2021 and December 31, 2020, including a discussion of allowance for credit losses, an analysis of unrealized investment losses and a schedule of maturities, see Note 4—Investments. An analysis of the fixed maturity portfolio by a composite quality rating at December 31, 2021 and December 31, 2020, is shown in the following tables. The composite rating for each security, other than private-placement securities managed by third parties, is the average of the security’s ratings as assigned by Moody’s Investor Service, Standard & Poor’s, Fitch Ratings, and Dominion Bond Rating Service, LTD. The ratings assigned by these four nationally recognized statistical rating organizations are evenly weighted when calculating the average. The composite quality rating is created utilizing a methodology developed by Globe Life using ratings from the various rating agencies noted above. The composite quality rating is not a Standard & Poor's credit rating. Standard & Poor's does not sponsor, endorse or promote the composite quality rating and shall not be liable for any use of the composite quality rating. Included in the following chart are private placement fixed maturity holdings of $538 million at amortized cost, net of allowance forff credit losses ($577 million at fair value) for which the ratings were assigned by the third-party managers. Fixed Maturities by Rating At December 31, 2021 (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-................................................................ 761,526 2,215,179 4,487,607 3,779,051 4,289,044 1,570,969 Total investment grade .......................... 17,103,376 Below investment grade: BB ................................................................... B ...................................................................... Below B .......................................................... Total below investment grade .............. 537,064 128,402 36,080 701,546 4 $ 867,728 13 25 21 24 9 96 3 1 — 4 2,412,947 5,584,588 4,616,977 5,174,667 1,865,241 20,522,148 583,608 136,026 63,505 783,139 4 11 26 22 24 9 96 3 1 — 4 $ 17,804,922 100 $ 21,305,287 100 Weighted average composite quality rating ...................................................................................... A- BB- A- 41 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis Fixed Maturities by Rating At December 31, 2020 (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-................................................................ 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- The overall quality rating of the portfolioff is A-, the same as year-end 2020. Fixed maturities rated BBB are 54% of the total portfolio at December 31, 2021 compared with 55% at year-end 2020. While this ratio is high relative to our peers, we have limited exposure to higher-risk assets such as derivatives, equities, and asset-backed securities. Additionally, the Company does not participate in securities lending and has no off-balance sheet investments as of December 31, 2021. Of our fixed maturity purchases, BBB securities generally provide the Company with the best risk-adjusted, capital-adjusted returns largely due to our ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets. ff An analysis of changes in our portfolio of below-investment grade fixed maturities at amortized cost, net of allowance forff 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........................................................................................................................ Year Ended December 31, 2021 2020 840,739 $ — (67,078) (78,712) 2,959 3,638 674,155 230,334 (14,618) (49,037) (3,346) 3,251 Balance at end of period ................................................................................................................... $ 701,546 $ 840,739 42 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis 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 forff credit losses, were 12% of our shareholders’ equity, excluding the effect of unrealized gains and losses on fixed maturities as of December 31, 2021. Globe Life invests long term and as such, one of our key criterion in our investment process is to select issuers that have the ability to weather multiple financial cycles. ff 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 94% of the carrying value of our investments is attributable to fixed maturity investments and these investments are is highly subject to market risk. Declines in market interest rates predominately fixed-rate investments, the portfolioff generally result in the fair value of the investment portfolioff 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 s the impact of rates on the investment portfolio. However, as is decreases in market interest rates largely offset permitted by GAAPAA , tPP hese liabilities are not recorded at fair value. ff ff The following table illustrates the interest rate risk sensitivity of our fixed maturity portfolio at December 31, 2021 ff n interest rates (as represented by the U.S. Treasury and 2020. This table measures the effect 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. of a parallel shift i ff Market Value of Fixed Maturity Portfolio (Dollar amounts in thousands) Change in Interest Rates(1) (200) At December 31, 2021 2020 $ 26,939,000 $ 26,976,000 (100) 0 100 200 (1) In basis points. 23,916,000 21,305,000 19,045,000 17,082,000 23,874,000 21,214,000 18,926,000 16,953,000 43 GL 2021 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, 2021. Operating Expenses Selected Information (Dollar amounts in thousands) 2021 % of 2020 % of 2019 % of Premium Amount Premium Amount Premium Amount Insurance administrative expenses: Salaries ............................................................................ $ 115,852 Other employee costs.................................................... 41,841 Information technology costs........................................ Legal costs ...................................................................... Other administrative costs ............................................ 47,923 15,494 50,521 Total insurance administrative expenses.................. 271,631 Parent company expense ................................................ Stock compensation expense ......................................... Administrative settlements............................................... Legal proceedings............................................................. Non-operating expenses.................................................. 9,553 30,272 — 8,139 2,434 Total operating expenses, per Consolidated Statements of Operations ....................................... $ 322,029 2.8 1.0 1.2 0.4 1.2 6.6 $ 105,935 39,885 45,742 11,256 48,129 250,947 2.8 1.0 1.2 0.3 1.3 6.6 $ 102,862 34,947 42,927 10,286 49,299 240,321 9,891 35,892 — 3,275 1,033 10,260 44,843 400 8,358 643 $ 301,038 $ 304,825 2021 2020 2019 Amount % Amount % Amount % Total insurance administrative expenses increase (decrease) over prior year................................................ $ 20,684 8.2 $ 10,626 4.4 $ 16,380 Total operating expenses increase (decrease) over prior year............................................................................. 20,991 7.0 (3,787) (1.2) 25,240 Total operating expenses increased 7% over the prior year period primarily due to an 8% increase in insurance administrative expenses. Insurance administrative expenses increased primarily due to higher employee-related expenses, including pension costs and informat ion technology salaries. Pension expense increased due to the lower discount rate used to determine net periodic benefit costs in 2021 as compared to 2020. The decrease in stock-based compensation expense was primarily due to fewer performance based equity awards in 2021 as compared to the same period in 2020. Insurance administrative expenses as a percent of premium were in line with 2020. ff ff 44 GL 2021 FORM 10-K 2.8 1.0 1.2 0.3 1.4 6.7 7.3 9.0 GLOBE LIFE INC. Management's Discussion & Analysis SHARE REPURCHASES Globe Life has an ongoing share repurchase program that began in 1986, and is reviewed with the Board of by the Board of Directors. With no specified ff Directors by management quarterly and annually reaffirmed 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. On August 4, 2021, the Board of Directors reauthorized the Parent Company’s share repurchase program in amounts and with timing that management, in consultation with the Board, determines to be in the best interest of the Company and its shareholders. The following 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 .................................. 4,784 $ 455,030 4,459 $ 380,112 3,932 $ 350,080 Option proceeds...................................................... 858 86,405 676 63,754 1,209 109,489 Total ..................................................................... 5,642 $ 541,435 5,135 $ 443,866 5,141 $ 459,569 2021 2020 2019 Throughout the remainder of this discussion, share purchases refer only to those made from excess cash flow at the Parent Company. FINANCIAL CONDITION Liquidity.dd 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 multiple sources: positive cash flow from operations, a portfolioff facility, commercial paper and Federal Home Loan Bank (FHLB). of marketable securities, a revolving credit e Subsidiaryii Liquiditydd . The operations of our Insuranc insurance subsidiaries have historically generated rr 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 portfolioff 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 effect ive 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 portfolioff available to create additional cash flows if required. ff r of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership During the year, fouff provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. While not a primary source of liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed. Refer to Note 11—Debt for further details. 45 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis t Company Liquidity.t An important source of Parent Company liquidity is the dividends from its insurance Parenrr subsidiaries. These dividends are received throughout the year and are used by the Parent Company to pay dividends on common and preferred stock, interest and principal repayment requirements on Parent Company debt, and operating expenses of the Parent Company. Year Ended December 31, (Amounts in Thousands) Projected 2022 2021 2020 2019 Liquidity Sources: Dividends from Subsidiaries............................................................. $ 400,000 $ 478,535 $ 485,871 $ 479,988 Excess Cash Flows ........................................................................... 285,000 370,120 387,606 374,232 ff For more informat ns section of Note 12—Shareholders' Equity.t Although these restrictions exist, dividend availability from subsidiaries historically has been more than sufficff ion on the restrictions on the payment of dividends by subsidiaries, see the Restrictio ient for the cash flow needs of the Parent Company. tt liquidity for Additional sources of intercompany borrowings, public debt markets, term loans, and a revolving credit facility. At December 31, 2021, the Parent Company had access to $119 million of invested cash, net intercompany receivables and other liquid assets. The credit facility is discussed below. the Parent Company are cash, intercompany receivables, rr Borrowingii Short-Term s. An additional source of Parent Company liquidity is a revolving 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, 2021, we had available $295 million of additional borrowing capacity under this facility, compared with $360 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, 2021. As discussed in Note 11—Debt, on September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020. The five-year credit agreement will now mature on September 30, 2026. As of December 31, 2021, the Parent Company was in full compliance with all covenants related to the aforementioned debt. As a part of the credit facility, Globe Life has stand-by letters of credits. These letters are issued among our re captive reinsurer, and have no impact on company obligations as a whole. subsidiaries, one of which is an offsho Any future regulatory changes that restrict the use of off-sho re captive reinsurers might require Globe Life to obtain third-party financing, which could cause an insignificant increase in financing costs. On October 26, 2021, the letters of credit were amended to reduce the amount outstanding from $135 million as of December 31, 2020 to $125 million at December 31, 2021. ff ff The Parent Company expects to have readily available funds for 2022 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 nd Contingencies and the discussion tt to Note 6—Commit ment 66 facility, and intercompany borrowing. Referff surrounding the Company's obligations over the next five years. s att As noted above, the Parent Company had access to $119 million of liquid assets available as of December 31, 2021. 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 Liquiditydd .yy Consolidated net cash inflows provided from continuing operations were $1.44 billion in 2021, compared with $1.48 billion in 2020. In addition to cash inflows from operations, our companies received proceeds from maturities, calls, and repayments of fixed maturities in the amount of $311 million in 2021, compared 46 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis with $416 million in 2020. As noted under the caption Credit Facilitii y i revolving credit facility. The insurance companies have no additional outstanding credit facilities. t n Nii ote 11, the Parent Company has in place a Cash and short-term investments were $161 million at the end of 2021 compared with $203 million at the end of 2020. In addition to these liquid assets, the entire $21.3 billion (fair value at December 31, 2021) portfolio of fixed income securities is available forf 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 sale, we have the ability and intent to hold any securities until recovery or maturity. Our strong cash available forff flows from operations, ongoing investment maturities, and credit line availability make any need to sell securities for liquidity highly unlikely. Capital Resources. The Parent Company's capital structure consists of short-term debt (the commercial paper facility and current maturities of long-term debt), long-term debt, and shareholders’ equity. Debt: The carrying value of the long-term debt was $1.5 billion at December 31, 2021, which decreased from $1.7 billion a year earlier. A complete analysis and description of long-term debt issues outstanding is presented in Note 11—Debt. p Subsidiary Capitaltt : The National Association of Insurance Commissioners (NAIC) has established a risk-based y factor approach for determining threshold risk-based capital levels for all insurance companies. This approach was companies that may require regulatory attention. A Risk- designed to assist the regulatory bodies in identifying Based Capital (RBC) ratio is typically determined by dividing adjusted total statutory capital by the amount of risk- based capital determined using the NAIC’s factors. If a company’s RBC ratio approaches two times the RBC amount, the company must file a plan with the NAIC for improving their capital is commonly referred to as “Company Action Level” RBC). Companies typically hold a multiple of the Company Action Level RBC depending on their particular business needs and risk profile. levels (this level ff Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current ratings. For 2021, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300% to 320%. The to support its current ratings, given Company concludes that this capital level is more than adequate and sufficient the nature of its business and its risk profile. As of December 31, 2021, our consolidated Company Action Level RBC ratio was 315% compared with 309% in prior year. ff In August 2021, the NAIC fully adopted new and expanded C-1 investment factors. The adoption of these factors resulted in higher amounts of required capital related to our investment portfolio. In addition to the expanded C-1 factors, additional capital was needed by the end of the year to support higher sales levels, growth of our in-force business, higher COVID-19 net life claims, and the acquisition of Beazley Benefits. The Parent Company is committed to maintaining the targeted consolidated RBC ratio at its insurance subsidiaries and has suffiff cient liquidity available to provide additional capital if necessary. ff Shareholder's Equitytq y:yy 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 2022 2021 2020 2019 Quarterly dividend by annual year ..................................................... $ 0.2075 $ 0.1975 $ 0.1875 $ 0.1725 Shareholders’ equity was $8.6 billion at December 31, 2021, compared with $8.8 billion at December 31, 2020, a decrease of $128 million or 1%. Since December 31, 2020, shareholders’ equity was reduced by $409 million due to after-tax unrealized losses in the fixed-maturity portfolio as interest rates increased over the period offset by $745 million of net income during this period. In addition, shareholders' equity was reduced by $455 million in share ff 47 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis purchases under the repurchase program and an additional $86 million in share purchases to offset stock option exercises. ff the dilution from We plan to use excess cash available at the Parent Company as effiff ciently 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. ff Policies, the Company will adopt ASU 2018-12, Financial Services– As discussed in Note 1—Significant Accountingtt Insurance (Topic 944): Targeted Improvementstt ve on for Long-Duration Contracts to the Accountingtt January 1, 2023. The accounting adoption will have no economic impact on the cash flows of our business nor influence our business model of providing basic protection oriented products to the underserved and low to middle- income market. In addition, the adoption will not impact our capital management philosophies. It will, however, modifyff net income and net operating income to increase under the new standard primarily due to the significant reduction in DAC amortization in the near or intermediate term. With respect to equity, we anticipate a significant decrease as a result of the through AOCI at requirement to use current discount rates to remeasure the policy liabilities and record the offset adoption. Since current rates (upper-medium grade) are lower than the locked-in rates assumed in valuing our policy liabilities, we will have unrealized interest rate loss recognized through AOCI. the timing of when profits emerge on our insurance policies. We are anticipating GAAPAA (LDTI)TT , effecti ff tt ff 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 portfolioff can result from changes in market rates. 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 impact on the reported value of shareholders’ equity. exists in measurement, which may have a material Fluctuations in interest rates cause undue volatility in the period-to-period presentation of our shareholders’ equity, capital structure, and financial ratios. 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. ff 48 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis The folff lowing 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 GAAPAA . ff ff Selected Financial Data (Dollar amounts in thousands, except per share data) At December 31, 2021 December 31, 2020 December 31, 2019 GAAP Fixed maturities................................... $ 21,305,287 Deferred acquisition costs(2).............. Total assets.......................................... 29,768,048 4,914,728 Effect of Accounting Rule Requiring Revaluation(1) Effect of Accounting Rule Requiring Revaluation(1) Effect of Accounting Rule Requiring Revaluation(1) GAAP GAAP $ 3,500,365 $ 21,213,509 $ 4,019,710 $ 18,907,147 $ 2,491,371 (4,327) 4,595,444 (5,955) 4,341,941 (7,488) 3,496,038 29,046,731 4,013,755 25,977,460 2,483,883 Short-term debt ................................... 479,644 Long-term debt.................................... 1,546,494 — — Shareholders' equity........................... 8,642,806 2,761,870 254,918 1,667,886 8,771,092 — — 3,170,866 298,738 1,348,988 7,294,307 — — 1,962,268 Book value per diluted share ............ Debt to capitalization(3)....................... 85.97 19.0 % 27.47 (6.6)% 83.19 18.0 % 30.07 (7.6)% 66.02 18.4 % 17.76 (5.2)% Diluted shares outstanding................ Actual shares outstanding................. 100,535 99,567 105,429 103,797 110,494 107,720 (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 effecff t 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. cial Strengrr Finanii Poor’s and A. M. Best. The folff December 31, 2021. th Ratingii s. The financial strength of our major insurance subsidiaries is rated by Standard & lowing table presents these ratings for our five largest insurance subsidiaries at 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 of changes in circumstances and economic conditions than insurers in higher- susceptible to the adverse effects rated categories. The plus sign (+) or minus sign (-) shows the relative standing within the major rating category. ff ff 49 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis OTHER ITEMS Litigatt tion. For more inforff mation concerning litigation, please refer to Note 6—Commitment tt stt and Continii gencies. CRITICAL ACCOUNTING POLICIES Application of Critical Accounting Estimates. The preparation of financial statements in conformit y with GAAPAA requires the application of accounting policies that often involve a significant degree of judgment. Management reviews these key estimates and assumptions used in the preparation of financial statements on a timely basis. If management determines that modifications are necessary due to current facts and circumstances, the Company’s results of operations and financial position as reported in the consolidated financial statements could possibly change significantly. ff The following accounting policies are deemed critical to the preparation of the financial statements and include accounting estimates that management believes are most subjective or have complex judgments. Future Policyc Benefitff s.tt 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—Signifiii cant Accountingtt Policies. Approximately 90% of our liabilities for future policy benefits at December 31, 2021 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 Accountingtt rr se, variability in the accrual of policy reserve ff ff liabilities after policy issuance is caused only by variability of the inventory of in force policies. Policies under the caption Future Policy Benefits. Otherwi ff 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 policy contract at there are no assumptions used to determine the future policy benefit liability for deposit business. the consolidated financial statement date. Accordingly, Refer to Note 1—Significant Accountingtt with an effeff ctive date of January 1, 2023. ff Policies for discussion on the significant changes to future policy benefits ies under the caption Deferred 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 Accountingtt Policll 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 issuance of a new insurance contract as indicated in Note 1—Significant Accountingtt Acquisitiontt Policies. Coststt ff ff ff Over 99% of our deferred acquisition costs at December 31, 2021 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 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, 2021. the time of contract 50 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis 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. Policyc Claimll s 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 informat ion 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 our health claims. Changes in these established, and medical trend rates and medical cost inflation as they affect 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. There were no significant changes in the claims process in the current year. ff ff Valuation of Fixedii 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 to maximize risk-adjusted, capital-adjusted returns. 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 ed by changes in interest rates in financial markets. Because of the size of our fixed maturity portfolio primarily affect 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 Sensitivit in this report, the yt 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. in this report. However, as discussed under the caption Financial Conditiontt tt ff ff ff At times, the values of our fixed maturities can also be affect ed 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 ion concerning the policies, procedures, classification levels, and other relevant products. Considerable informat data concerning the valuation of our fixed maturity investments is presented in Note 1—Significant Accountingtt in both notes. There were no Policies and in Note 4—Investments under the captions Fairii Value Measurementstt significant changes in the valuation process in the current year. ff ff e for Creditdd Losses. We continually monitor our investment portfolioff Investments: Allowancww 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 Statett ment in Realized Gains or Losses. Non-credit related fluctuations in the fair value are Comprehensive Income. The policies and procedures that we use to evaluate and account for recorded in Other Policies and the discussions under the allowance for credit losses are disclosed in Note 1—Significant is made to make the best captions Investments and Realized Gains and Losses in this report. While every effort estimate of status and value with the information available regarding an allowance for credit loss, it is difficuff lt to predict the future prospects of a distressed or impaired security. Accountingtt tt ff ff 51 GL 2021 FORM 10-K GLOBE LIFE INC. Management's Discussion & Analysis benefit pension plans. We maintain funded defined benefit plans covering most full-time employees. We Definedii 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 at least in part, employees and the interest cost associated with the passage of time. These obligations are offset, by the growth in value of the assets in the funded plans. At December 31, 2021, our gross liability under these plans was $779 million, but was offset by assets of $598 million. ff ff ff 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 nine 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 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 2021 and projected benefit obligation as of December 31, 2021. in reported results forff ff ff Discount Rate(2): Assumption Pension Assumptions (Dollar amounts in thousands) Change(1) Impact on Expense Impact on Projected Benefit Obligation Increase............................................................................................................. 25 $ (4,187) $ Decrease ........................................................................................................... Expected Return(3): Increase............................................................................................................. Decrease ........................................................................................................... (25) 25 (25) 4,442 (1,333) 1,333 (30,692) 32,660 — — (1) In basis points. (2) The discount rate for determining the net periodic benefit cost was 2.92% for 2021. The discount rate used forf determining the projeo cted benefit obligation as of December 31, 2021 was 3.19%. (3) The expected long-term return rate assumed was 6.67%, consistent with prior year. Management considers both historical and future yields to determine the expected return. The Company determines mortality assumptions through the use of published mortality tables that reflect broad- based studies of mortality and published longevity improvement scales. ff The criteria used to determine the primary assumptions are discussed in Note 9—Postretirement Benefitff s.tt 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 Benefitsff ion about pension plan assets, investment policies, and other related data. There were no significant changes in the assumptions in the current year. also contains informat ff 52 GL 2021 FORM 10-K Item 7A. Quantitative and Qualitative Disclosures about Market Risk Inforff mation required by this item is fouff nd under the heading Market rr yt Risk Sensitivit tt in Item 7 of this report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements Index Report of Independent Registered Public Accounting Firm (PCAOB No. 34)............................................ Consolidated Financial Statements: ................................................................................................................. Consolidated Balance Sheets at December 31, 2021, and 2020 .......................................................... Consolidated Statements of Operations for each of the three years in the period ended December 31, 2021 ........................................................................................................................................ Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2021................................................................................................................ Consolidated Statements of Shareholders’ Equity forf each of the three years in the period ended December 31, 2021 ........................................................................................................................................ Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2021 ........................................................................................................................................ Notes to Consolidated Financial Statements.............................................................................................. Page 54 56 57 58 59 60 61 53 GL 2021 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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformit y with accounting principles generally accepted in the United States of America. ff 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, 2021, based on tt — Integrated Framework (2013) issued by the Committee of Sponsoring criteria established in Internal Control Organizations of the Treadway Commission and our report dated February 23, 2022, 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 the audit to obtain reasonable assurance about whether the financial statements are free of material and performff 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. ff 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 Fixeii d Maturitiestt to Notes 1 and 4 to the Financialii Statementstt Clasll sifiedff as Availabl ii e for Sale — Significant Unobservable Inputs - Referff Critirr cal Audit Matter Descriptiontt 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 $705 million as of December 31, 2021. These inputs involve considerable judgment by management. 54 GL 2021 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 Critirr cal 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 effecti ff veness 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 Policyc Benefitff stt and Amortiztt ationtt Refer to Note 1 to the Finaii ncial Statemen tt of Deferred Acquisition Costs — Certainii Underlying ts l Assumptions - tt Critical Audit Matter Descriptiontt 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 subject ive judgment. b How the Critical tt 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 effecti future policy benefits. ff veness of controls over the assumption development process and the valuation of • 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 23, 2022 We have served as the Company’s auditor since 1999. 55 GL 2021 FORM 10-K Globe Life Inc. Consolidated Balance Sheets (Dollar amounts in thousands, except per share data) December 31, 2021 2020 Assets: Investments: Fixed maturities—available for sale, at fair value (amortized cost: 2021—$17,805,309; 2020—$17,197,145, allowance for credit losses: 2021— $387; 2020— $3,346) .................... $ 21,305,287 $ 21,213,509 Policy loans.......................................................................................................................................... 589,634 584,379 Other long-term investments (includes: 2021—$640,263; 2020—$385,038 under the fair value option) ........................................................................................................................................ Short-term investments...................................................................................................................... 793,925 69,145 546,981 107,782 Total investments........................................................................................................................... 22,757,991 22,452,651 Cash........................................................................................................................................................ Accrued investment income ................................................................................................................ Other receivables.................................................................................................................................. 92,163 251,307 487,443 94,847 248,991 474,180 Deferred acquisition costs ................................................................................................................... 4,914,728 4,595,444 Goodwill.................................................................................................................................................. Other assets........................................................................................................................................... 481,791 782,625 441,591 739,027 Total assets .................................................................................................................................... $ 29,768,048 $ 29,046,731 Liabilities: Future policy benefits ........................................................................................................................... $ 16,034,727 $ 15,243,536 Unearned and advance premium....................................................................................................... Policy claims and other benefits payable.......................................................................................... Other policyholders' funds ................................................................................................................... 65,472 412,940 98,935 61,728 399,507 97,968 Total policy liabilities......................................................................................................................... 16,612,074 15,802,739 Current and deferred income taxes ................................................................................................... 1,765,021 Short-term debt ..................................................................................................................................... 479,644 Long-term debt (estimated fair value: 2021—$1,667,009; 2020—$1,871,754).......................... 1,546,494 Other liabilities....................................................................................................................................... 722,009 1,833,723 254,918 1,667,886 716,373 Total liabilities................................................................................................................................. 21,125,242 20,275,639 Commitments and Contingencies (Note 6) Shareholders' equity: Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2021 and 2020 ...................................................................................................................................... — — Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2021—109,218,183 issued; 2020—113,218,183 issued) ............................................................. Additional paid-in-capital...................................................................................................................... Accumulated other comprehensive income (loss)........................................................................... Retained earnings................................................................................................................................. 109,218 520,564 2,677,583 6,182,100 113,218 527,435 3,029,244 5,874,109 Treasury stock, at cost: (2021—9,650,845 shares; 2020—9,420,699 shares)........................... (846,659) (772,914) Total shareholders' equity ............................................................................................................ 8,642,806 8,771,092 Total liabilities and shareholders' equity.................................................................................... $ 29,768,048 $ 29,046,731 See accompanying Notes to Consolidated Financial Statements. 56 GL 2021 FORM 10-K Globe Life Inc. Consolidated Statements of Operations (Dollar amounts in thousands, except per share data) Year Ended December 31, 2021 2020 2019 Revenue: Life premium................................................................................................................ $ 2,898,210 $ 2,672,804 $ 2,517,784 Health premium........................................................................................................... 1,201,676 1,141,097 1,077,346 Other premium ............................................................................................................ 1 4 4 Total premium........................................................................................................ 4,099,887 3,813,905 3,595,134 Net investment income .............................................................................................. 952,447 927,062 Realized gains (losses).............................................................................................. Other income ............................................................................................................... 59,319 1,216 (4,371) 1,325 910,459 20,621 1,318 Total revenue ......................................................................................................... 5,112,869 4,737,921 4,527,532 Benefits and expenses: Life policyholder benefits ........................................................................................... 2,071,810 1,809,373 1,638,053 Health policyholder benefits...................................................................................... Other policyholder benefits ....................................................................................... 758,745 29,061 733,481 30,030 687,764 31,532 Total policyholder benefits ................................................................................... 2,859,616 2,572,884 2,357,349 Amortization of deferred acquisition costs.............................................................. Commissions, premium taxes, and non-deferred acquisition costs ................... Other operating expense ........................................................................................... Interest expense ......................................................................................................... 603,838 331,510 322,029 83,486 575,770 304,841 301,038 86,704 551,726 298,047 304,825 84,306 Total benefits and expenses ............................................................................... 4,200,479 3,841,237 3,596,253 Income before income taxes.......................................................................................... 912,390 896,684 931,279 Income tax benefit (expense) ........................................................................................ (167,431) (164,911) (170,397) Income from continuing operations.......................................................................... 744,959 731,773 760,882 Income (loss) from discontinued operations, net of tax............................................. — — (92) Net income ............................................................................................................ $ 744,959 $ 731,773 $ 760,790 Basic net income (loss) per common share: ............................................................... Continuing operations .................................................................................................. $ 7.30 $ 6.90 $ Discontinued operations .............................................................................................. — — Total basic net income per common share .................................................. $ 7.30 $ 6.90 $ Diluted net income (loss) per common share: ............................................................ Continuing operations .................................................................................................. $ 7.22 $ 6.82 $ Discontinued operations .............................................................................................. — — Total diluted net income per common share ............................................... $ 7.22 $ 6.82 $ 6.97 — 6.97 6.83 — 6.83 See accompanying Notes to Consolidated Financial Statements. 57 GL 2021 FORM 10-K Globe Life Inc. Consolidated Statements of Comprehensive Income (Loss) (Dollar amounts in thousands) Net income ....................................................................................................................... $ 744,959 $ 731,773 $ 760,790 Year Ended December 31, 2021 2020 2019 Other comprehensive income (loss): Investments: Unrealized gains (losses) on fixed maturities: Unrealized holding gains (losses) arising during period................................... (492,267) 1,493,200 1,959,596 Other reclassification adjustments included in net income .............................. Foreign exchange adjustment on fixed maturities recorded at fair value ...... (31,710) 4,632 32,809 2,330 (13,837) 1,151 Unrealized gains (losses) on fixed maturities.................................................. (519,345) 1,528,339 1,946,910 Unrealized gains (losses) on other investments...................................................... — (18,306) 11,255 Total unrealized investment gains (losses)......................................................... (519,345) 1,510,033 1,958,165 Less applicable tax (expense) benefit............................................................ 109,063 (317,111) (411,213) Unrealized gains (losses) on investments, net of tax ............................................. (410,282) 1,192,922 1,546,952 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................................................................................................................................. 1,628 (342) 1,533 (321) (2,218) 465 1,286 1,212 (1,753) 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............................................................... Pension adjustments, net of tax .............................................................................. (4,955) 1,040 (3,915) 20,797 (4,565) 61,299 77,531 (16,281) 61,250 14,230 (2,986) 11,244 16,632 — (43,169) (26,537) 5,573 7,042 (1,479) 5,563 8,474 — (40,636) (32,162) 6,755 (20,964) (25,407) Other comprehensive income (loss)............................................................................... (351,661) 1,184,414 1,525,355 Comprehensive income (loss) ............................................................................ $ 393,298 $ 1,916,187 $ 2,286,145 See accompanying Notes to Consolidated Financial Statements. 58 GL 2021 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, 2019 , Balance at December 31, 2018 ........... $ — $ 121,218 $ 524,414 $ 319,475 $ 5,213,468 $ (763,398) $ 5,415,177 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 ..................... 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 ................ Balance at December 31, 2020...... Year Ended December 31, 2021 , Balance at January 1, 2021 .............. Comprehensive income (loss) ............. Common dividends declared ($0.79 per share).................................... Acquisition of treasury stock................. Stock-based compensation .................. Exercise of stock options ...................... Retirement of treasury stock ................ — — — — — — — — — — — — — — — — — — — — — — — — — — — — (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 — 113,218 527,435 3,029,244 5,874,109 (772,914) 8,771,092 113,218 527,435 3,029,244 5,874,109 (772,914) 8,771,092 (351,661) 744,959 — — — — — — — — 12,103 — (4,000) (18,974) — — 393,298 (80,247) (541,435) (541,435) (80,247) — — (29,398) 18,169 99,224 (327,323) 350,297 30,272 69,826 — 8,642,806 — — — — — — — — — — — — — — — Balance at December 31, 2021...... $ — $ 109,218 $ 520,564 $ 2,677,583 $ 6,182,100 $ (846,659) $ ( ( ) ) See accompanying Notes to Consolidated Financial Statements. 59 GL 2021 FORM 10-K Globe Life Inc. Consolidated Statement of Cash Flows (Dollar amounts in thousands) Year Ended December 31, 2020 731,773 2021 744,959 $ $ 2019 760,790 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 ............................................... — 854,770 18,144 (906,247) 603,838 71,919 (59,319) 109,616 1,437,680 — 1,437,680 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...................................................................... 116,656 310,991 36,346 463,993 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 ................................................ (1,004,384) (258,296) (1,262,680) (5,255) 38,637 (38,244) (56,700) (53,121) (913,370) 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 ............................................... 69,826 (80,043) (300,000) 325,000 (7,687) 74,974 (541,435) (64,238) (523,603) — 798,936 33,810 (822,985) 575,770 88,157 4,371 66,602 1,476,434 — 1,476,434 52,681 416,321 42,990 511,992 (1,262,434) (266,230) (1,528,664) (8,887) (69,497) (41,756) (7,051) (37,867) (1,181,730) 48,093 (78,192) (386,875) 700,000 (5,844) (34,445) (443,866) (72,928) (274,057) Effect of foreign exchange rate changes on cash ......................................................... ff Net increase (decrease) in cash ...................................................................................... Cash at beginning of year................................................................................................. Cash at end of year............................................................................................................ $ (3,391) (2,684) 94,847 92,163 $ (1,733) 18,914 75,933 94,847 $ 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) (9,148) (45,093) 121,026 75,933 See accompanying Notes to Consolidated Financial Statements. 60 GL 2021 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), refers to Globe Life Inc., an insurance holding company incorporated in Delaware in 1979, and Globe Life Inc. subsidiaries and affiff liates. 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 Presentati tt on: The accompanying consolidated financial statements of Globe Life have been prepared in y with accounting principles generally accepted in the United States of America (GAAPAA ), under guidance ff conformit issued by the Financial Accounting Standards Board (FASFF B). The preparation of consolidated financial statements in conformit the reported ff 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. to make estimates and assumptions that affect requires management y with GAAPAA ff tt es: The preparation of consolidated financial statements in conformit requires Use of Estimat management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. See further documentation in the significant accounting policies or the accompanying notes. y with GAAPAA ff ff ff p : The consolidated financial statements include the results of Globe Life Inc. and its Principles of Consolidation 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. ff q Acquisitiontt : On August 1, 2021, the Company acquired Beazley Benefits, an operating unit of Beazley Insurance Company, Inc. for $59.2 million. This business will enhance our ability to reach the worksite market. In conjunction with this agreement, the Company also executed a 100% coinsurance agreement assuming the remaining inforce business produced by the unit. The acquisition was accounted for under the purchase method of accounting as required by GAAPAA . This guidance requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The goodwill related to the purchase is due to expected synergies as a result of combining operations with other factors. The results of operations since the acquisition date have been consolidated. The cash flows associated with the purchase are recorded in the Consolidated Statement of Cash Flows in "Other investing activities." 61 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Fair Value as of August 1, 2021 Assets Acquired: Trade name .................................................................................................................................................................... $ Value of Customer Relationships Acquired............................................................................................................... Value of Distribution Acquired ..................................................................................................................................... Goodwill .......................................................................................................................................................................... Ceding commission ......................................................................................................................................................... Total purchase price ................................................................................................................................................... $ 300 5,200 11,000 40,200 56,700 2,500 59,200 In accordance with the applicable guidance, the Company is finalizing the estimation of the fair value of the acquired assets and may do so up to one year. If any changes are deemed necessary to the preliminary estimates and possibly goodwill, the Company will make an opening balance sheet adjustment. ff p Operations : When a component of Globe Life's business is sold or expected to be sold during the Discontinued tt Operations, have been met, ensuing year, the Company considers whether the criteria of ASC 205-20, Discontinued ff hat has, or will have, a major which includes evaluating if the disposal of a component represents a strategic shift t 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 ott f OpeO rations 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. f tt In 2016, Globe Life sold one of its operating segments, Medicare Part D. The financial results of this business are Statementstt . excluded from the Company's continuing operations including the Notes to the Consolidated Financial The Company received final settlement related to the assets and liabilities of the discontinued operations in 2019. ii Investments: Globe Life classifies all of its fixed maturity investments as available for sale. Investments classified as sale are carried at fair value with unrealized gains and losses, net of taxes, reflected directly in available forff investment accumulated other comprehensive income (AOCI). income" on the Consolidated Statements o f OpeO rations. 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 effecti ve 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 tt ff "Other "Policy loans", which represent loans provided to policyholders using cash values as collateral, are carried at unpaid include limited partnerships, commercial mortgage loan principal balances. 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 o less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful life. Investments in real estate are reported at cost long-term investments" tt f Operat ions O . tt 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. 62 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) ff the economic performance to determine if it is a variable interest Each limited partnership investment is evaluated under applicable GAAPAA entity (VIE) and would qualifyff for consolidation. 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 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 qualifyff as unconsolidated VIEs. of these entities and thereforeff ff The limited partnership investments are reported at the Company's pro-rata share of the investment fund's net asset value or its equivalent (NAV),AA as a practical expedient for fair value. Operating results provided by the partnerships can be on a lag up to 3 months; however, the Company makes adjustments for any material transactions occurring within the lag period. Changes in the net asset value are recorded in "Realized gains (losses)" on the Consolidated iott ns. Distributions received from the funds arise from income generated by the underlying Statements of Operatrr 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 $234 million of capital called during the year from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $450 million as of December 31, 2021. 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 effecti ve yield method. Our unfunded commitment balance to the commercial loan borrowers was $29 million as of December 31, 2021. ff ff "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. 63 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Fair Value Measurements,tt : 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: Investments in Securitiestt • • • 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 determines the fair values of these securities after consideration of data provided available. Management thereforeff by third-party pricing services, the independent broker/dealers, and other resources. At December 31, 2021, 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. Approximately 97% of the fair value of "fixed maturities" reported at December 31, 2021 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. ff 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. ff 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. 64 GL 2021 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 on the available valuations to determine if they can be corroborated within data. Further review is performed 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 informat 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. ion and analytical ff ff ff 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—Investmentstt under the caption Quantitativett about Level 3 Fair Value Measurementstt . Informat iontt ff The fair values for each class of security and by valuation hierarchy level are indicated in Note 4—Investments under the caption Fairii value measurements,tt and Note 9—Postretirement Benefitff stt under the caption Pension Assets. ii tt tt , Financial stt Instrument Fairii Value Measurements,tt Other : 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, 2021, 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, 2021 is disclosed in Note 11—Debt. As described in Note 9—Postretirement Benefitsff , 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. p ): At the onset of the evaluation, the Company individually Current Expected Credit Loss Reserve (fixed maturities) 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 beforeff 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)". ( 65 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) If neither of the aforeff mentioned 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 offset ting provision for credit losses in "Realized gains (losses)" on the Consolidated Statett mentstt of Operations. Additionally, the CECL methodology includes a fair value floor where between fair value and amortized cost. the allowance for credit loss for a security cannot exceed the difference When it is determined that there is not a credit loss, the decline in fair value is recognized in Other comprehensive tt income. ff ff 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. 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 informat ff ion considered in the process are: • • • • • • • • • Financial statements of the issuer Changes in credit ratings of the issuer The value of underlying collateral News and informat ff ion included in press releases issued by the issuer News and informat ff ion reported in the media concerning the issuer News and informat analysts ff ion published by or otherwise provided by securities, economic, or research 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. ff 66 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) ( p loans) Current Expected Credit Loss Reserve (commercial mortgage ): The Company evaluates the performance and g g t credit quality of the commercial mortgage loan portfolio at least on a quarterly basis, or as needed, by utilizing local market conditions, common metrics such as loan-to-value or debt-service ratios as well as covenants, 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 A loan that is assigned as high risk would have a higher probability of a potential principal loss. The performance. assigned risk category and the estimated loss rate is adjusted each quarter for current and forecasted economic factors management believes are relevant. ff ff ff 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: "Ca"" sh" consists of balances on hand and on deposit in banks and financial institutions. tt Accrued investment investment portfolio, accrued investment income that is deemed to be uncollectible related to the fixed maturities. income: "Accrued investment income" consists of interest income or dividends earned on the but which are yet to be received as of the balance sheet date. The Company will write-offff ff "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.ff As of December 31, 2021, the accrued interest receivable for commercial mortgage loans was $389 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." tt Additionally, the amount will be excluded from disclosures within Note 4—Invest . vv ments Other Receivables: Agent debit balances primarily represent commissions advanced to insurance agents, a tt 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 $467 million at December 31, 2021 and $456 million at December 31, 2020. 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 Operatrr iott ns 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, there were no additional credit losses 67 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) recorded during the year ended December 31, 2021. As of December 31, 2021, the allowance for credit losses was $1.2 million. ff q Coststt Acquisitiontt Deferred : 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 successful issuance of an insurance contract including sales commissions, policy issue costs, and underwriting 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 differe nce 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 GAAPAA . ff 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. 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. ff 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 . Refer to Note 5—Deferred in the liability for future benefits, as described under the caption Future Policy Benefitsff Acquisitiontt Coststt . ff ii Coststt : Costs related to advertising are generally charged to expense as incurred. However, certain Advertising g 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 $10.0 million, $9.8 million, and $9.5 million in 2021, 2020, and 2019, respectively. Unamortized capitalized advertising costs included within DAC were $1.4 billion at December 31, 2021 and $1.4 billion at December 31, 2020. 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 tests its goodwill annually as of June 30th for each of the years 2019 through 2021. The Company's goodwill was not impaired in any of those periods. : Globe Life invests in limited partnerships that provide low-income g Low-Income Housing Tax Credit Interests 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 for consolidation. The carrying value of the Company's investment in these entities was be VIEs and do not qualifyff 68 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) $328 million and $306 million at December 31, 2021 and 2020, respectively, and was included in "Other assets" on the Consolidated Balance Sheets.tt As of December 31, 2021, Globe Life was obligated under future commitments of $177 million, which are recorded in "Other liabilities". For guaranteed investments acquired prior to January 1, 2015, the Company utilizes the effecti ve-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 Statementstt of Operations ff tt . y q p ertrr yt and Equipment Proprr : Property and equipment, included in “Other assets,” is reported at cost less accumulated p 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 $378 million at December 31, 2021 and $350 million at December 31, 2020. Accumulated depreciation was $173 million at the end of 2021 and $164 million at the end of 2020. Depreciation expense was $20 million in 2021, $17 million in 2020, and $16 million in 2019. Internally generated software costs are expensed as incurred in the preliminary project phase and post-implementation phase, and are capitalized during the application development stage. Additionally, implementation costs incurred in a hosting arrangement that is a service contract are capitalized. y life-type products is : The liability for future policy benefits for annuity and universal Futurerr Policy Benefitsff 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. ff Reinsurance: In the normal course of business, Globe Life insurance subsidiaries will enter into reinsurance agreements to limit their exposure to the risk of loss as well as enhance their capital position. To qualifyff for reinsurance accounting in accordance with applicable guidance, the assuming company (reinsurer) must have the “reasonable possibility” that it may realize a “significant loss.” In instances where the ceding company does not transfer significant insurance risk to the reinsurer, deposit accounting is utilized. Deposits received are reported in Other Assets on the Consolidated Balance Sheetstt of Operations. As amounts are paid or received in accordance with the agreements, the deposit balance will be adjusted. Any risk charges payable related to reinsurance agreements where deposit accounting is applicable are recorded as an Other Liability. rather than income in the Consolidated Statett mentstt Unearned and Advanced Premium: Premium collected from both life and health policies that have not been earned and recognized in accordance with applicable GAAPAA . Refer to Recognitiontt Revenue below. of Premium rr 69 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) tt y Benefitsff y Payable laims and Other Policll y Cc : 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 informat ion 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 informat ion, 77 see Note 7—Liabili ty for Unpaid Claims. ff ff ff Current and Deferred Income Taxes: Current and deferred 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 nces between the consolidated financial statement book values and tax bases of assets and liabilities. ff differe Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differe on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. nces are expected to be recovered or settled. The effect ff ff Benefitsff : Globe Life accounts forff its postretirement defined benefit plans by recognizing the funded tt Postretirement 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.tt More informat ion concerning the accounting and disclosures for postretirement benefits is found in Note 9—Postretirement Benefits. ff ff tt : Globe Life accounts forff y Treasury Stock is accounted for using the weighted-average cost method. More informat Equity.t purchases of treasury stock on the cost method. Issuance of treasury stock ion is found in Note 12—Shareholders' ff p : Premium income for traditional of Premium Revenue and Related Expenses long-duration life and g Recognitiontt 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 insurance protection provided. Premiums for universal life-type and annuity contracts are added to the policy 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 $14.2 million, $14.7 million, and $15.6 million for the years ended December 31, 2021, 2020, and 2019, 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 i f nsurance products, the profits are recognized over the contract period. p Stock-kk Based Compensationtt 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. : Globe Life accounts forff 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 2019 through 2021 is as follows: Volatility factor .......................................................................................................................... 21.8 % 15.7 % 15.7 % Dividend yield ........................................................................................................................... Expected term (in years)......................................................................................................... Risk-free rate ............................................................................................................................ 0.8 % 5.11 0.6 % 0.7 % 5.12 1.2 % 0.8 % 5.10 2.5 % 2021 2020 2019 70 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) tt 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 . On April 26, 2018, the shareholders approved the Globe Life Inc. 2018 Incentive Plan, formerly the ff insufficient 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 forf 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 suffiff cient experience with seven-year grants that vest in three years, but insufficient 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 forff 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. historical experience with five-year vesting. Therefore, ff ff f Stock-based compensation expense is included in “Other operating expense” in the Consolidated Statements ott Operations. Globe Life management views all stock-based compensation expense as a Corporate and Other expense and, therefore, ion concerning the Company's segments is provided in Note 14—Business Segmentstt . presents it as such in its segment analysis. More informat ff ff g p 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 ff into common shares. For more informff ation on earnings per share, see Note 12—Shareholders' Equity.t Accounting Pronouncements Adopted in the Current Year Standard Description 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. Effective Date This standard became effective ff on January 1, 2021. Effect on the Consolidated Financial Statements The adoption of this standard did not have a material impact on the consolidated financial statements. 71 GL 2021 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, date ff the effective 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 disclosures. of the required ff On an annual basis, the Company will be required to update cash flow assumptions such as mortality, morbidity, and persistency, which are recorded in net income. On a quarterly basis, the future policy benefits will be remeasured utilizing an upper-medium grade fixed income instrument yield and the effects recognized in accumulated other comprehensive income (AOCI). of the change will be ff Effect on the Consolidated Financial Statements The Company does not expect to early adopt ASU 2018-12 and has selected a modified retrospective transition method upon adoption as of the transition date of January 1, 2021. due Due to the overall nature of this standard, the impact on the consolidated financial statements is expected to be significant. At the transition date, the Company expects a significant decrease in accumulated other comprehensive the income requirement to re-measure policy liabilities using an interest rate currently lower than what is used in valuing the policy liabilities the under existing guidance. new guidance requires the removal of interest on our DAC asset and changes the the asset. These related amortization of changes are expected to result in a significant reduction to DAC amortization in the near to intermediate term. In addition, to tP he new guidance will not While the requirements of the new guidance represent a significant change from existing GAAP, impact capital and surplus or net income under statutory accounting practices, cash flows on our policies, or the underlying economics of our business. proper controls, Significant progress has been made by the Company in order to timely adopt the new guidance, including validating computations, establishing finalizing accounting policies, and preparing financial anticipates disclosures. The Company providing quantitative estimates of the impact of adoption of the ASU later this year once we have properly tested our models and assumptions and determined the appropriate discount rates. 72 GL 2021 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 GAAPAA . Consolidated net income and shareholders’ equity (capital and surplus) on a statutory basis for the insurance subsidiaries were as follows: ff Life insurance subsidiaries .......................... $ 373,703 $ 441,589 $ 462,515 $ 1,523,247 $ 1,408,281 Net Income Year Ended December 31, Shareholders’ Equity At December 31, 2021 2020 2019 2021 2020 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. egulatory ion on the restrictions on the requirements in the aggregate was $563 million at December 31, 2021. More informat payment of dividends can be found in Note 12—Shareholders' Equity.t Insurance subsidiaries’ statutory capital and surplus necessary to satisfy r ff ff 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. ff 73 GL 2021 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 p Components of Accumulated Other Accumulated Other Comprehensive Income is as folff Comprehensive Income p tt lows for each of the years 2019 through 2021: : An analysis of the change in balance by component of Available for Sale Assets Deferred Acquisition Costs Foreign Exchange Pension Adjustments Total For the year ended December 31, 2019: Balance at January 1, 2019 .................................. $ 435,698 $ (4,163) $ 6,495 $ (118,555) $ 319,475 Other comprehensive income (loss) before reclassifications, net of tax.................................... 1,557,883 (1,753) Reclassifications, net of tax .................................. (10,931) Other comprehensive income (loss).................... Balance at December 31, 2019 ......................... 1,546,952 1,982,650 For the year ended December 31, 2020: Other comprehensive income (loss) before reclassifications, net of tax.................................... Reclassifications, net of tax .................................. Other comprehensive income (loss).................... Balance at December 31, 2020 ......................... 1,167,003 25,919 1,192,922 3,175,572 — (1,753) (5,916) 1,212 — 1,212 (4,704) 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 11,244 (34,103) 1,145,356 — 11,244 23,302 13,139 39,058 (20,964) 1,184,414 (164,926) 3,029,244 For the year ended December 31, 2021: Other comprehensive income (loss) before reclassifications, net of tax.................................... Reclassifications, net of tax .................................. (385,231) (25,051) Other comprehensive income (loss).................... (410,282) Balance at December 31, 2021 ......................... $ 2,765,290 1,286 — 1,286 (3,915) — (3,915) 44,819 16,431 61,250 (343,041) (8,620) (351,661) $ (( (3,418) $ ( )) ) 19,387 $ (( (103,676) $ 2,677,583 ( )) ) 74 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Reclassificat presented below for the three years ended December 31, 2021. stt adjustment tt iontt ff j : Reclassification adjustments out of Accumulated Other Comprehensive Income are Component Line Item Unrealized investment (gains) losses on available for sale assets: Year Ended December 31, 2020 2021 2019 Affected line items in the Statement of Operations Realized (gains) losses.............................................. $ (37,874) $ 26,345 $ (19,352) Realized (gains) losses Amortization of (discount) premium ......................... 6,164 6,464 5,515 Net investment income Total before tax.......................................................... (31,710) 32,809 (13,837) Tax............................................................................... 6,659 (6,890) 2,906 Income tax benefit (expense) Total after-tax.......................................................... (25,051) 25,919 (10,931) Pension adjustments: Amortization of prior service cost ............................. Amortization of actuarial (gain) loss......................... Total before tax.......................................................... 631 20,166 20,797 632 16,000 16,632 631 Other operating expense 7,843 Other operating expense 8,474 Tax............................................................................... (4,366) (3,493) (1,779) Income tax benefit (expense) Total after-tax.......................................................... 16,431 13,139 6,695 Total reclassification (after-tax) .............................. $ ( (8,620) $ 39,058 ( ) ) ) $ (4,236) ) ( ( 75 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 4—Investments p : Summaries of fixed maturities available forff sale by amortized cost, fair value, and allowance Portfolill o Compositiontt for credit losses at December 31, 2021 and 2020, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows. Redeemable preferred stock is included within "Corporates, by sector." At December 31, 2021 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.................. 383,083 $ — $ 64,513 $ (164) $ 447,432 2,252,997 59,861 4,569,160 1,931,391 1,587,892 6,879,459 — — 239,135 900 (2,907) (5,132) 2,489,225 55,629 (387) — — — 907,741 490,119 346,780 (9,349) (1,012) (1,683) 5,467,165 2,420,498 1,932,989 1,454,464 (13,362) 8,320,561 Total corporates ............................ 14,967,902 (387) 3,199,104 (25,406) 18,141,213 Collateralized debt obligations............ Other asset-backed securities............ 36,468 104,998 — — 27,037 3,715 — (430) 63,505 108,283 2 12 — 26 11 9 39 85 — 1 Total fixed maturities ................... $17,805,309 $ (( (387) $ 3,534,404 ( )) ) $ (( (34,039) $ 21,305,287 ( )) ) 100 (1) Amount reported in the balance sheet. (2) At fair value. 76 GL 2021 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 — — 251,291 2,635 (315) (898) 2,131,583 54,650 — 1,016,813 (24,221) 5,396,795 — (3,346) 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 2 10 — 26 12 9 40 87 — 1 Total fixed maturities .................... $17,197,145 $ ( (3,346) $ 4,067,243 ( ) ) $ ( (47,533) $21,213,509 ( ) ) 100 (1) Amount reported in the balance sheet. (2) At fair value. A schedule of fixed maturities available forff sale by contractual maturity date at December 31, 2021, is shown below on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions. ff At December 31, 2021 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................................................................................. 98,115 $ 99,760 900,326 1,757,273 6,862,449 8,045,149 141,610 995,569 2,083,816 8,653,145 9,301,053 171,944 $ 17,804,922 $ 21,305,287 77 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Analysisyy y of investment summarized as follows: tt tt operations: p "Net investment income" for the three years ended December 31, 2021, is Year Ended December 31, 2021 2020 2019 Fixed maturities available for sale............................................................................ $ 892,421 $ 873,352 $ 864,280 Policy loans.................................................................................................................. Other long-term investments(1) ................................................................................. Short-term investments.............................................................................................. Less investment expense.......................................................................................... 45,318 35,838 24 973,601 (21,154) 44,801 26,196 545 944,894 (17,832) 43,434 16,198 2,592 926,504 (16,045) Net investment income ....................................................................................... $ 952,447 $ 927,062 $ 910,459 (1) For the years ended 2021, 2020 and 2019, the investment funds, accounted for under the fair value option method, recorded $26.7 million, $15.3 million and $5.6 million, respectively in net investment income. An analysis of "realized gains (losses)" is as follows: Realized investment gains (losses): Fixed maturities available for sale: Sales and other(1)................................................................................................... $ Provision forff credit losses .................................................................................... Investment funds—fair value option ..................................................................... Other investments ................................................................................................... Realized gains (losses) from investments .................................................. Realized loss on redemption of debt(2) ........................................................... Applicable tax........................................................................................................... Year Ended December 31, 2021 2020 2019 34,916 $ (22,999) $ 19,354 2,959 22,918 7,840 68,633 (9,314) 59,319 (12,457) (3,346) 1,045 21,563 (3,737) (634) (4,371) 1,955 — 1,256 11 20,621 — 20,621 (4,330) 16,291 Realized gains (losses), net of tax ................................................................. $ 46,862 $ ( (2,416) $ ( ) ) (1) For the years ended 2021, 2020 and 2019, the Company recorded $109.2 million, $219.8 million and $243.2 million of exchanges of fixed maturities (noncash transactions) that resulted in $25.2 million, $7.9 million, and $20.5 million, respectively in realized gains (losses). (2) Refer to Note 11—Debt for further discussion. 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......................................................................... $ (519,345) $ 1,528,339 $ 1,946,910 Year Ended December 31, 2021 2020 2019 78 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Selected inforff mation about sales of fixed maturities available forff sale is as follows: Fixed maturities available for sale: Proceeds from sales(1) ............................................................................................ $ 116,656 $ 52,681 $ Gross realized gains ............................................................................................... Gross realized losses.............................................................................................. 1,848 (12,101) 2,642 (39,153) 79,108 1,227 (3,674) (1) There were no unsettled sales in the periods ended December 31, 2021, 2020 and 2019. Year Ended December 31, 2021 2020 2019 Fair value measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at December 31, 2021 and 2020: Fair Value Measurement at December 31, 2021: 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 ......................................... $ — — — — — — — — — — — $ 447,432 $ 2,489,225 55,629 5,303,547 2,266,231 1,919,416 8,010,331 17,499,525 — 108,283 — — — $ 447,432 2,489,225 55,629 163,618 154,267 13,573 310,230 641,688 63,505 — 5,467,165 2,420,498 1,932,989 8,320,561 18,141,213 63,505 108,283 $ 20,600,094 $ 705,193 $ 21,305,287 Percentage of total .................................................. — % 97 % 3 % 100 % 79 GL 2021 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, 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 % 80 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) lowing tables represent changes in fixed maturities measured at fair value on a recurring basis using The folff significant unobservable inputs (Level 3): Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Asset- backed Securities Collateralized Debt Obligations Corporates Total Balance at January 1, 2019 ............................................ $ 12,982 $ 73,369 $ 553,471 $ 639,822 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)................................................ Balance at December 31, 2019 ..................................... 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)................................................ Balance at December 31, 2020 ..................................... 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)................................................ Balance at December 31, 2021 ..................................... $ — 708 — — — (513) — — — 1,514 — — 4,596 (5,375) — — 13,177 74,104 (173) (2,523) — — — (134) — — 12,870 (82) 63 — (12,851) — — — — — — 4,551 (4,534) — — 71,598 (6,787) 12,447 — (13,213) 4,505 (5,045) — — 396 30,378 — — 13 (19,154) 107,024 — 672,128 1,579 17,082 67,820 — 12 396 32,600 — — 4,609 (25,042) 107,024 — 759,409 1,579 14,386 67,820 — 4,563 (44,116) (48,784) — — 714,505 3,275 (20,818) 25,000 — 9 (80,283) — — — — 798,973 (3,594) (8,308) 25,000 (26,064) 4,514 (85,328) — — — $ 63,505 $ 641,688 $ 705,193 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 2019 ................................................................................ $ 708 $ 1,514 $ 30,378 $ 2020 ................................................................................ 2021 ................................................................................ 73) 63 (2,523) 12,447 17,082 (20,818) 32,600 14,386 (8,308) (1) Acquisitions of Level 3 investments in each of the years 2019 through 2021 are comprised of private placement fixed maturities and equities. (2) Includes capitalized interest, foreign exchange adjustments, and principal repayments. (3) Considered to be transferred at the end of the period. 81 GL 2021 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 forf 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 forff identical assets/ liabilities or the ability to corroborate by observable market data. The following table represents quantitative information about Level 3 fair f value measurements: Quantitative Information about Level 3 Fair Value Measurements As of December 31, 2021 Private placement fixed maturities............... $ 539,880 Fair Value Other corporate bonds................................... 101,808 Collateralized debt obligations ..................... 63,505 $ 705,193 Valuation Techniques Determination of credit spread Discounted Cash Flows Present Value Techniques Discounted Cash Flows Significant Unobservable Input Range Weighted- Average(1) Credit rating A+ to B- BBB Discount rate 1.36% - 8.85% 3.05% Market Quotes 100.25% 100.25% Discount rate 6.45% 6.45% (1) Unobservable inputs were weighted by the relative fair value of the instruments. The private placement fixed maturities 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 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 ion regarding valuation procedures, please result in a significant increase (decrease) in fair value. For more informat refer to Note 1—Significant Investments in Accountingtt Securitiestt Policies under the caption Fair Vii aluVV e Measurements,tt ff . ff 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. 82 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Unrealized Loss Analysisy unrealized loss position. : The following table discloses informat ff ion about fixed maturities available forff sale in an Number of issues (CUSIPs) held: As of December 31, 2021....................................................................................... As of December 31, 2020....................................................................................... 138 54 42 24 180 78 Less than Twelve Months Twelve Months or Longer Total Globe Life's entire fixed maturity portfolio consisted of 2,060 issues by 843 differe nt issuers at December 31, 2021 issuers at December 31, 2020. The weighted-average quality rating of all and 1,900 issues by 777 different unrealized loss positions at amortized cost was A- and BBB- as of December 31, 2021 and December 31, 2020, respectively. ff ff 83 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) lowing tables disclose unrealized investment losses by class and major sector of fixed maturities available forff The folff sale at December 31, 2021 and December 31, 2020. Analysis of Gross Unrealized Investment Losses At December 31, 2021 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............. $ 118 $ (1) $ 3,867 $ (163) $ 3,985 $ (164) States, municipalities and political subdivisions ..................................................... 141,310 Foreign governments ..................................... 12,567 (2,824) (561) Corporates, by sector: Financial........................................................ 133,654 (1,507) Utilities ........................................................... Energy ........................................................... 25,447 6,519 Other corporate sectors.............................. 115,444 Total corporates ........................................ 281,064 Collateralized debt obligations...................... — Other asset-backed securities...................... 10,489 (692) (238) (3,566) (6,003) — (16) 2,436 23,144 52,864 2,372 — 40,249 95,485 — 1 (83) 143,746 (4,571) 35,711 (2,907) (5,132) (1,932) 186,518 (320) — (3,670) (5,922) — — 27,819 6,519 155,693 376,549 — 10,490 (3,439) (1,012) (238) (7,236) (11,925) — (16) Total investment grade securities................... 445,548 (9,405) 124,933 (10,739) 570,481 (20,144) Below investment grade securities: States, municipalities and political subdivisions ..................................................... Corporates, by sector: — — — — — — Financial........................................................ 15,695 (272) 56,897 (5,638) 72,592 (5,910) Utilities ........................................................... Energy ........................................................... Other corporate sectors.............................. — — 700 Total corporates ........................................ 16,395 Collateralized debt obligations...................... Other asset-backed securities...................... — — — — (11) (283) — — — 26,639 26,581 — (1,445) (6,115) — 26,639 27,281 — (1,445) (6,126) 110,117 (13,198) 126,512 (13,481) — 13,043 — — (414) 13,043 — (414) Total below investment grade securities ....... 16,395 (283) 123,160 (13,612) 139,555 (13,895) Total fixed maturities ....................................... $ 461,943 $ ( (9,688) $ 248,093 ( ) ) ) $ (24,351) $ 710,036 ) ( ( ) $ (34,039) ) ( ( Gross unrealized losses may fluctuate quarter over quarter due to adverse factors in the market that affect our holdings, such as changes in interest rates or credit spreads. The Company considers many factors when determining whether an allowance for a credit loss should be recorded. While the Company holds securities that may be in an unrealized loss position from time to time, Globe Life does not intend to sell and it is likely that management will not be required to sell the fixed maturities prior to their anticipated recovery or maturity due to the strong cash flows generated by its insurance operations. 84 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) 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 decreased from $47.5 million at December 31, 2020, to $34.0 million at December 31, 2021, a decrease of $13.5 million. The decrease in the gross unrealized losses from the prior year was primarily attributable to the decrease in market interest rates. 85 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Fixed Maturitirr es, Allowance for Credit Losses follows. Refer to Note 1 for factors considered in the recording of the allowance for credit losses. : A summary of the activity in the allowance for credit losses is as , Year Ended December 31, 2021 2020 Allowance for credit losses beginning balance ........................................................................... $ 3,346 $ 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.............................................................................................. 387 — (3,346) Allowance for credit losses ending balance ................................................................................. $ 387 $ — 36,065 — (32,719) 3,346 As of December 31, 2021 and December 31, 2020, the Company did not have any fixed maturities in non-accrual status. tt Concentrati any given issuer. At December 31, 2021, the investment portfolio, ff ons of Credit Risk: Globe Life maintains a diversified investment portfolio with limited concentration in : at fair value, consisted of the following ff Investment grade fixed maturities: Corporates ............................................................................................................................................................................................. 77 % States, municipalities, and political subdivisions ............................................................................................................................. 11 U.S. Government direct, guaranteed, and government-sponsored enterprises......................................................................... Other....................................................................................................................................................................................................... 2 1 Below investment grade fixed maturities: Corporates ............................................................................................................................................................................................. 3 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 2 4 100 % As of December 31, 2021, state and municipal governments represented 11% of invested assets at fair value. Such investments are made throughout the U.S. At December 31, 2021, the state and municipal bond portfolio at fair value was invested in securities issued within the following states: Texas (22%), New York (10%), California (10%), Michigan (7%), Ohio (5%), and Florida (4%). Otherwise, there was no concentration within any given state greater than 4%. ff 86 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Corporate fixed maturities represent 80% 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, 2021, based on fair value: Insurance..................................................................................................................................................................................................... 16 % Electric utilities............................................................................................................................................................................................ 10 Banks ........................................................................................................................................................................................................... Oil and natural gas pipelines.................................................................................................................................................................... Chemicals.................................................................................................................................................................................................... Transportation............................................................................................................................................................................................. Real estate investment trusts................................................................................................................................................................... Food ............................................................................................................................................................................................................. Oil and natural gas exploration and production .................................................................................................................................... Telecommunications.................................................................................................................................................................................. 7 6 5 4 4 4 4 3 At December 31, 2021, 3% of invested assets at fair value were represented by fixed maturities rated below investment grade. Par value of these investments was $795 million, amortized cost was $702 million, and fair value was $783 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 $969 million and $1.1 billion at December 31, 2021 and $892 million and $1.1 billion at December 31, 2020. tt Other g Long-TermTT Investments : Other long-term investments consist of the folff lowing assets: Investment funds...................................................................................................................................... $ 640,263 $ Commercial mortgage loan participations............................................................................................ Other .......................................................................................................................................................... 141,843 11,819 385,038 160,602 1,341 Total ....................................................................................................................................................... $ 793,925 $ 546,981 December 31, 2021 2020 The following table presents additional informat and December 31, 2020 at fair value: ff ion about the Company's investment funds as of December 31, 2021 December 31, Fair Value Unfunded Commitments Investment Category 2021 2020 2021 Redemption Term/Notice Commercial mortgage loans........................................ $ 423,776 $ 227,050 $ 237,631 Fully redeemable and non-redeemable with varying terms. Opportunistic credit............... 178,215 157,461 Initial 2 year lock on each new investment/semi- annual withdrawals thereafter/full redemption within 36 month period. — Other ....................................... 38,272 527 Total investment funds ... $ 640,263 $ 385,038 $ 212,286 449,917 Fully redeemable with varying terms and non- redeemable. The Company committed to two new investment funds during the calendar year. The Company had $234 million of capital called during the year from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $450 million as of December 31, 2021. 87 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Commercial mortgage loan participat g g tt ions at December 31, 2021 and 2020 are as follows: p p tt ( (commercial mortgage g g t loans): ) Summaries of commercial mortgage loans 2021 2020 Carrying Value % of Total Carrying Value % of Total Property type: Mixed use................................................................................... $ Hospitality................................................................................... Retail ........................................................................................... Industrial..................................................................................... Multi-family ................................................................................. Officeff ........................................................................................... 57,996 23,186 19,811 17,900 14,872 8,905 Total recorded investment ..................................................... 142,670 Less allowance for credit losses............................................. (827) $ 41 16 14 13 11 6 101 (1) 49,002 22,605 19,319 17,900 19,128 36,153 164,107 (3,505) Carrying value, net of valuation allowance .................. $ 141,843 100 $ 160,602 31 14 12 11 12 22 102 (2) 100 2021 2020 Carrying Value % of Total Carrying Value % of Total Geographic location: California .................................................................................... $ New York .................................................................................... Pennsylvania ............................................................................. Indiana ........................................................................................ Florida ......................................................................................... Texas........................................................................................... Other(1) ........................................................................................ Total recorded investment ..................................................... Less allowance for credit losses............................................. 67,659 18,373 11,673 ,717 8,213 5,898 21,137 142,670 (827) $ 48 13 8 7 6 4 15 101 (1) 61,610 16,602 11,314 9,717 12,420 4,215 48,229 164,107 (3,505) Carrying value, net of valuation allowance .................. $ 141,843 100 $ 160,602 38 10 7 6 8 3 30 102 (2) 100 (1) Included in 2020, was one loan in Virginia with a carrying value of $27 million and reportedr during 2021, resulting in a zero balance for loans in Virginia as of December 31, 2021. in Other in the table above. The loan was paid offff 88 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) lowing table is reflective of Management's internal risk ratings of the loan portfolio. Loans are rated low, The folff moderate, and high. The risk categories consider many different factors such as quality of asset, borrower status, as ff well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 2021, are transitional or under construction and may not yet be income producing. Certain ratios such as loan to value and debt service coverage ratios may not be evaluated as the value of the underlying transitional property significantly fluctuates based on completion of the project. Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination As of December 31, 2021 Number of Loans 2021 2020 2019 2018 2017 Total 14 $ — $ 23,636 $ 11,925 $ 41,209 $ 35,729 $ 112,499 6 2 — — 1,400 — 17,173 4,593 — 7,005 — — 18,573 11,598 22 $ — $ 25,036 $ 33,691 $ 48,214 $ 35,729 142,670 Risk Rating: Low ............................ Medium .................... High ........................... Total commercial mortgage loans ..... Less allowance for credit losses on the investment pool.................................................................................................. Less allowance for credit losses on individual loans ......................................................................................................... (827) — Carrying value, net of valuation allowance ................................................................................................................. $ 141,843 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, 2021, the Company evaluated the commercial mortgage loan portfolio on a pool basis to determine the allowance for credit losses. At the end of the period, the Company had 22 loans in the portfolio. For the year ended December 31, 2021, the allowance for credit losses decreased by $2.7 million to $827 thousand. The provision for credit f losses is included in "Realized gains (losses)" in the Consolidated Statements o tt Operations tt . Year Ended December 31, 2021 2020 Allowance for credit losses beginning balance ........................................................................... $ 3,505 $ Cumulative effect ff of adoption ASU 2016-13........................................................................................ Provision (reversal) for credit losses..................................................................................................... — (2,678) Allowance for credit losses ending balance ................................................................................. $ 827 $ — 335 3,170 3,505 There were no delinquent commercial mortgage loans as of December 31, 2021, compared with one delinquent commercial mortgage at December 31, 2020. As of December 31, 2021, the Company had one commercial mortgage loan in non-accrual status. 89 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 5—Deferred Acquisition Costs An analysis of "DAC" is as follows: ff Balance at beginning of year .............................................................................. $ 4,595,444 $ 4,341,941 $ 4,137,925 Year Ended December 31, 2021 2020 2019 Additions: Deferred during period: Commissions...................................................................................................... Other expenses ................................................................................................. Total deferred .................................................................................................. Value of business acquired(1).............................................................................. Foreign exchange adjustment............................................................................ Adjustment attributable to unrealized investment losses(2)............................ Total additions................................................................................................. 678,517 227,730 906,247 16,500 — 1,628 600,577 222,408 822,985 — 4,755 1,533 534,735 218,926 753,661 — 4,299 — 924,375 829,273 757,960 Deductions: Amortized during period ........................................................................................ (603,838) (575,770) (551,726) Foreign exchange adjustment.............................................................................. Adjustment attributable to unrealized investment gains(2) ............................... Total deductions.............................................................................................. (1,253) — — — — (2,218) (605,091) (575,770) (553,944) Balance at end of year .......................................................................................... $ 4,914,728 $ 4,595,444 $ 4,341,941 (1) Refer to Note 1—Significant Accounting Policll (2) Represents amounts pertaining to investments relating to universal life-type products. ies for the discussion on the acquisition of Globe Life Benefits. 90 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 6—Commitments and Contingencies iates of Globe Life reinsure a portion of insurance risk that is in excess of their retention Reinsurance: Insurance affilff limits. Current retention limits forff 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, 2021 and 2020. Insurance ceded on life and accident and health products represented 0.2% of premium income for 2021 and 2020. The insurance affiliat es 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. ff ff es also assume insurance risks of other external companies. Life reinsurance assumed Insurance affiliat represented 1.1% and 1.2% of life insurance in force at December 31, 2021 and 2020, respectively, and reinsurance assumed on life and accident and health products represented 0.8% and 0.5% of premium income for 2021 and 2020, respectively. Leases: Globe Life primarily leases officeff operating lease arrangements. space, aviation equipment, and other equipment under a variety of Rental expense for the three years ended December 31, 2021 is as follows: Year Ended December 31, 2021 2020 2019 Rental expense ............................................................................................................................... $ 4,674 $ 4,674 $ 3,831 Future minimum rental commitments required under operating leases having remaining noncancelable lease terms in excess of one year at December 31, 2021 were as follows: Operating lease commitments ......................... $ 4,458 $ 3,384 $ 2,932 $ 1,955 $ 1,816 $ 9,206 2022 2023 2024 2025 2026 Thereafter Year Ended December 31, Purchase Commitment stt : 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 Accountingtt Policies. ff tt Purchase commitments ..................................... $ 104,474 $ 61,535 $ 23,504 $ 13,170 $ 9,611 $ 221,689 2022 2023 2024 2025 2026 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, 2021, 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, 2021, 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 gagreement was amended on September 30, 2021 and now expires in 2026. The maximum amount of letters of credit available is $250 million. The 91 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Parent Company would be liable to the extent that TMK Re, Ltd. does not pay the reinsured party. On October 26, 2021, the letters of credit were amended to reduce the current amount outstanding to $125 million from $135 million outstanding. Equipment leases: Globe Life has guaranteed performance of certain of its subsidiaries as lessees under two aviation leasing arrangements. At December 31, 2021, total remaining undiscounted payments under the leases were approximately $3 million. The Parent Company would be responsible for any subsidiary obligation in the event the subsidiary did not make payments or otherwise performff under the terms of the lease. ff y p : Globe Life subsidiaries are currently the subject of audits regarding the identification, Unclaimed Propertyyt Auditstt 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. ionttg : Globe Life Inc. (forff merly Torchmark Corporation) and its subsidiaries, in common with the insurance tt Litigat 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 ion presently available, and in light of legal and other factual defenses available to the Parent ff upon informat 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 juries and appellate courts in the future. This bespeaks caution, particularly in states with made by judges, 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. ff tt On August 5, 2020, putative class and collective action litigation was filed against American Income Life Insurance Company (“American Income”) and National Income Life Insurance Company (“National Income”) in United States Bell, Gisele Mobley, Ashly Rai, and John Turner v. District Court for the Central District of California (Nataliett Insurance Company, Case No. 2:20- Income Lifeff Insurance Company and National American Income Lifeff cv-07046). On December 18, 2020, the plaintiffsff 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 agent. independent contractors. Plaintiffff Bell is a former California law on behalf of a putative California class for the four years prior to February They assert claims under California ff 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 Business and reimbursement, and alleged failure to provide accurate wage statements; and (b) the California Professions Code for alleged unfair business practices. They also seek liquidated damages, penalties and attorney’s fees under California law. Plaintiffff 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 plaintiffsff 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 responded to the complaint with a motion to compel the named plaintiffsff to arbitrate their individual claims and other procedural challenges. On April 6, 2021, the court granted American Income’s motion to trainee and plaintiffff Rai is a former California ff ff ff ff ff 92 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) compel arbitration as to plaintiffsff Mobley and Rai, and denied the motion without prejudice as to plaintiffff Bell. American Income subsequently renewed its motion to compel arbitration as to plaintiffff Bell. On November 30, 2021, the court granted American Income’s motion to compel arbitration as to plaintiffff Bell. Lifeff On March 27, 2020, Combined Insurance Company of America (“Combined”) filed a lawsuit in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida against Family Heritage Life Insurance Company of America (“Family Heritage”) and two former Combined employees who became appointed as insurance sales agents with Family Heritage (Combined Insurance Company of America v. Reineldo Urgelles, Antonio Pineda, and Insurance Company of America, Case No. 2020-007330-CA-01). On May 8, 2020, Combined Family Heritagett filed a lawsuit in the 67th District Court of Tarrant County, Texas against Family Heritage and two different former Combined employees who became appointed as insurance sales agents with Family Heritage (Combined Insurance Company of America v. Stephen Hernandez, Francisco Azuero, and Familyii Heritagett Insurance Company of America, Case No. 067-316824-20). The lawsuits allege that the individual insurance sales agents, in violation of their restrictive covenants with Combined, conspired with Family Heritage to improperly solicit Combined policyholders to purchase Family Heritage products, and recruit Combined employees to contract as Family Heritage insurance sales agents. As to Family Heritage, the lawsuits allege claims for conspiracy and tortious interference with business relations, and seek compensatory damages, as well as injunctive and equitable relief. On July 8, 2020 and July 10, 2020, the Texas and Florida courts, respectively, granted Combined’s requests for a temporary injunction. The Texas temporary injunction was subsequently vacated on appeal as to Family Heritage. Combined’s non-equitable claims in both lawsuits were referred to confidential arbitration. On November 12, 2021, Family Heritage filed a motion for summary judgment and Combined filed motions for partial summary judgment. On December 31, 2021, the arbitrator denied Family Heritage’s motion for summary judgment, and on January 2, 2022, the arbitrator granted Combined’s partial motions for summary judgment. Combined’s request for compensatory and exemplary damages, as well as attorney’s fees, is under review by the arbitrator. Lifeff ff 93 GL 2021 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, 2021 2020 2019 Balance at beginning of period .......................................................................... $ 162,261 $ 163,808 $ 154,528 Incurred related to: Current year .......................................................................................................... Prior years ............................................................................................................. Total incurred...................................................................................................... Paid related to: Current year .......................................................................................................... Prior years ............................................................................................................. Total paid ............................................................................................................ 638,054 (22,477) 615,577 487,096 122,910 610,006 584,936 (14,829) 570,107 442,127 129,527 571,654 Balance at end of period ...................................................................................... $ 167,832 $ 162,261 $ 612,305 (1,188) 611,117 470,426 131,411 601,837 163,808 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 forff 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.” ff Below is the reconciliation of the liability of "Policy claims and other benefits payable" in the Consolidated Balance Sheetstt . Policy claims and other benefits payable: Life insurance .................................................................................................................................... $ 245,108 $ Health insurance ............................................................................................................................... 167,832 Total............................................................................................................................................... $ 412,940 $ 237,246 162,261 399,507 December 31, 2021 2020 94 GL 2021 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 forff each year presented: Year Ended December 31, 2021 2020 2019 Income tax expense (benefit) from continuing operations: Current income tax expense (benefit) ................................................................ $ 144,718 $ 129,647 $ 134,948 Deferred income tax expense (benefit).............................................................. 22,713 167,431 35,264 164,911 Shareholders’ equity: Other comprehensive income (loss)................................................................... (93,480) 314,845 $ 73,951 $ 479,756 $ 35,449 170,397 405,472 575,869 nces between net income beforeff In each of the years 2019 through 2021, deferred income tax expense (benefit) was incurred because of certain differe f income tax expense (benefit) as reported on the Consolidated Statements ott ff Operations and taxable income as reported on Globe Life's income tax returns. As explained in Note 1—Significant Accountingtt nces caused the consolidated financial statement book values of some assets and liabilities to be differe nt from their respective tax bases. Policies, these differe ff ff ff ff The effect ive income tax rate differed from the expected U.S. federal statutory rate of 21% as shown below: Expected federal income tax expense (benefit) .......... $ 191,602 21.0 $ 188,304 21.0 $ 195,569 21.0 Year Ended December 31, 2021 % 2020 % 2019 % Increase (reduction) in income taxes resulting from: Low income housing investments........................................ (12,115) Share-based awards.............................................................. Tax-exempt investment income............................................ (5,597) (6,977) Other......................................................................................... 518 (1.3) (0.6) (0.8) 0.1 (11,913) (5,013) (5,830) (637) (1.3) (0.6) (0.6) (0.1) (11,605) (11,780) (3,192) 1,405 Income tax expense (benefit) ........................................... $ 167,431 18.4 $ 164,911 18.4 $ 170,397 (1.2) (1.3) (0.3) 0.1 18.3 95 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The tax effect tax liabilities are presented below: s of temporary differe ff ff nces that gave rise to significant portions of the deferred tax assets and deferred December 31, 2021 2020 Deferred tax assets: Fixed maturity investments................................................................................................................. $ — $ 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 ...................................................................................................................................... 5,962 5,962 713,879 93,738 723,337 226,943 15,738 4,279 5,534 9,813 808,071 88,012 688,034 257,640 7,209 Total gross deferred tax liabilities................................................................................................. 1,773,635 1,848,966 Net deferred tax liability ....................................................................................................................... $ 1,767,673 $ 1,839,153 Income Tax Return: Globe Life Inc. and its subsidiaries file a life-nonlife consolidated federal income tax return. The statutes of limitations for the Internal Revenue Service's examination and assessment of additional tax are closed for all tax years prior to 2018 with respect to Globe Life's consolidated federal income tax returns. Management any potential concludes that adequate provision has been made in the consolidated financial statements forff assessments that may result from current or future tax examinations and other tax-related matters for all open years. : Globe Life has a $28.4 million net operating loss (NOL) carryforward at December 31, 2021, of which tt Valuations $18.8 million was created prior to 2018 and will begin to expire in 2032 if not otherwise used to offset future taxable income. The remaining NOL carryforward of $9.6 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 taxable income in future periods to fully realize its existing that Globe Life will more likely than not have sufficient deferred tax assets. ff ff ff 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 2019 through 2021, Globe Life did not have any uncertain tax positions which resulted in unrecognized tax benefits. p and interest: Tax penaltiestt 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, $0 thousand, and $55 thousand, net of federal income tax expense, in its Consolidated Statements ott f OpeO rations for 2021, 2020, and 2019, respectively. The Company had no accrued interest or penalties at December 31, 2021 or 2020. 96 GL 2021 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 officeff rs. The tables included herein will focus on the Pension Plans and SERP. The total cost of these retirement plans charged to operations was as follows: Year Ended December 31, 2021 2020 2019 Plan Type: Defined Contribution Plans(1).................................................................................. $ Defined Benefit Pension Plans(2) ........................................................................... 5,188 $ 4,855 $ 41,778 33,826 4,817 24,134 (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 pension plans has been calculated on the projected unit credit actuarial cost method. All the pension plans are as of December 31 of the respective year. The pension plans plan measurements forff 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. The Globe Life's SERP provides an additional supplemental defined pension benefit to a limited number of officers. 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 ed insurance carrier as well as an investment account. Since this plan is nonqualified, the investments and ff unaffiliat 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 Sheetstt . ff Defined benefit and SERP plan contributions were $17.9 million in 2021, $21.9 million in 2020, and $21.6 million in 2019. In 2022, the Company expects to make a similar contribution to the plans as in 2021. 97 GL 2021 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 Policies under the caption Fair Vii for a complete discussion of valuation procedures. The following table presents the assets of the Company's pension plans at December 31, 2021 and 2020. aluVV e Measurementstt , Investments in Securitiestt Accountingtt ff Pension Assets by Component at December 31, 2021 Fair Value Determined by: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Amount % to Total Corporate bonds: Financial .................................................. $ — $ 52,522 $ — $ 52,522 Utilities ..................................................... Energy...................................................... Other corporates .................................... Total corporate bonds .............................. Exchange traded fund(1)........................... Other bonds............................................... Guaranteed annuity contract(2) ............... Short-term investments............................ Other........................................................... — — — — 315,720 — — 13,731 10,388 43,663 22,719 88,673 207,577 — 239 34,743 — — — — — — — — — — — — Other long-term investments(3)............................................................................................................................. 242,559 339,839 $ $ $ 43,663 22,719 88,673 207,577 315,720 239 34,743 13,731 10,388 582,398 15,149 Total pension assets .................................................................................................................................. $ 597,547 9 7 4 15 35 52 — 6 2 2 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 Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV),AA fair value. The Globe Life Inc. Pension Plan owns less than 1% of the investment fund. As of December 31, 2021, the expected term of the investment fund is approximately 3 years and the commitment of the investment is fully funded. The investment is non-redeemable. as a practical expedient forff 98 GL 2021 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, 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 Globe Life Inc. Pension Plan's pro-rata share of the limited fair value. The Globe Life Inc. Pension Plan owns partnership's net asset value per share or its equivalent (NAV),AA approximately 1% of the investment fund. As of December 31, 2020, the expected term of the investment fund was approximately 4 years and the commitment of the investment is fully funded. The investment is non-redeemable. as a practical expedient forff 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. ff The majority of the securities in the portfolioff projected payments. There are no specific policies calling for asset durations to match those of benefit obligations. are highly marketable so that there will be adequate liquidity to meet 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. 99 GL 2021 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, 2021, 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, 2021. SERP: The following tables include premiums paid for the company owned life insurance (COLI) for the three years ended December 31, 2021 and investments of the Rabbi Trust for the two years ended December 31, 2021. Premiums paid for insurance coverage.................................................................. $ 2,193 $ 2,480 $ 2,394 Year Ended December 31, 2021 2020 2019 Total investments: COLI ...................................................................................................................................................... $ 52,791 $ Exchange traded funds ...................................................................................................................... 87,133 51,361 75,390 $ 139,924 $ 126,751 At December 31, 2021 2020 Pension Liability:y The following table presents projected benefit obligation (PBO) and accumulated benefit obligation (ABO) forff the pension plans and SERP at December 31, 2021 and 2020. Pension Liability December 31, 2021 2020 PBO ABO PBO ABO Pension plans.............................................................................. $ 686,917 $ 601,647 $ 667,753 $ 594,510 SERP ............................................................................................ 92,017 87,915 95,560 89,069 Benefit Obligation ................................................................ $ 778,934 $ 689,562 $ 763,313 $ 683,579 The 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........................................................................................................ $ 686,917 $ Funded benefit pension plans fair value of plan assets...................................................................... 597,547 667,753 529,532 At December 31, 2021 2020 100 GL 2021 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, 2021 2020 Funded benefit pension plans ABO........................................................................................................ $ 601,647 $ Funded benefit pension plans fair value of plan assets...................................................................... 597,547 594,510 529,532 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.......................................................................................................... 2021 2020 3.19 % 4.43 2.92 % 3.97 For Periodic Benefit Cost for the Year: 2021 2020 2019 Discount rate ............................................................................................................ 2.92 % 3.49 % 4.37 % Expected long-term returns.................................................................................... Rate of compensation increase............................................................................. 6.67 3.97 6.67 3.97 6.72 4.00 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's average life. 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, 2021 2020 2019 31,672 $ 24,461 $ 21,957 (32,331) 631 19,849 22,825 (29,561) 632 15,469 19,929 23,827 (27,862) 8,211 29 Net periodic benefit cost .................................................................................... $ 41,778 $ 33,826 $ 24,134 101 GL 2021 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: ff Year Ended December 31, 2021 2020 2019 Balance at January 1 .............................................................................................. $ (208,770) $ (182,233) $ (150,071) Amortization of: Prior service cost (credit)...................................................................................... Net actuarial (gain) loss(1)..................................................................................... Total amortization................................................................................................ Plan amendments.................................................................................................... Experience gain (loss)(2) ......................................................................................... Balance at December 31 ........................................................................................ $ 631 20,166 20,797 (4,565) 61,299 632 16,000 16,632 — 631 7,843 8,474 — (43,169) (40,636) (( (131,239) $ ( )) ) (( (208,770) $ ( )) ) )) (182,233) (( ) ( (1) Includes amortization of postretirement benefits other than pensions of $228 thousand in 2021, $302 thousand in 2020, and $265 thousand in 2019. (2) The increase in the experience gain (loss) is related to an increase discount rate. The following table presents a reconciliation from the beginning to the end of the year of the PBO and plan assets for the pension 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, 2021 2020 Changes in PBO: PBO at beginning of year...................................................................................................................... $ 763,313 $ 665,207 Service cost........................................................................................................................................... Interest cost........................................................................................................................................... Plan amendments ................................................................................................................................ 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 ....................................................................................................................... 31,672 21,957 4,565 (16,938) (25,635) 778,934 529,532 75,792 17,858 (25,635) 597,547 24,461 22,825 — 74,006 (23,186) 763,313 468,763 62,104 21,851 (23,186) 529,532 Funded status at year end ................................................................................................................... $ (( (181,387) $ ( )) ) )) (233,781) (( ) ( 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: 2021 2020 Net loss (gain)......................................................................................................................................... $ 120,217 $ 200,465 Prior service cost.................................................................................................................................... 8,647 4,713 Net amounts recognized at year end .................................................................................................. $ 128,864 $ 205,178 Year Ended December 31, 102 GL 2021 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, 2021. These estimates use the same assumptions that measure the benefit obligation at December 31, 2021, taking estimated future employee service into account. Those estimated benefits are as follows: ff For the year(s): 2022............................................................................................................................................................................................. $ 25,979 2023............................................................................................................................................................................................. 2024............................................................................................................................................................................................. 2025............................................................................................................................................................................................. 2026............................................................................................................................................................................................. 28,431 30,936 32,120 34,121 2027-2031.................................................................................................................................................................................. 200,165 Note 10—Supplemental Disclosures of Cash Flow Information The following table summarizes Globe Life's noncash transactions, which are not reflected on the Consolidated Statett ments ott f Cash Flows: Year Ended December 31, 2021 2020 2019 Stock-based compensation not involving cash...................................................... $ 30,272 $ 35,892 $ Commitments for low-income housing interests.................................................... Exchanges of fixed maturity investments ............................................................... Net unsettled security trades .................................................................................... Noncash tax credits.................................................................................................... 177,010 109,226 6,963 1,883 161,503 219,807 1,669 — 44,843 51,978 243,156 8,421 — The following table summarizes certain amounts paid during the period: Interest paid................................................................................................................. $ 83,072 $ 83,518 $ Income taxes paid ...................................................................................................... 96,218 76,701 81,723 101,982 Year Ended December 31, 2021 2020 2019 103 GL 2021 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 As of December 31, 2021 2020 Maturity Date Coupon Rate Par Value Unamortized Discount & Issuance Costs Book Value Fair Value Book Value 5/15/2023 7.875% $ 165,612 $ (396) $ 165,216 $ 180,444 $ 164,954 Instrument Issue Date Senior notes ............. 5/27/1993 Senior notes(1).......... 9/24/2012 Senior notes ............. 9/27/2018 9/15/2028 4.550% Senior notes ............. 8/21/2020 8/15/2030 2.150% 9/15/2022 3.800% 150,000 550,000 400,000 (248) 149,752 (5,051) (4,222) 544,949 395,778 153,284 625,801 395,208 149,414 544,328 395,157 Junior subordinated debentures(2) ............ — — — — — — — 290,652 Junior subordinated debentures................ 11/17/2017 Junior subordinated debentures................ 6/14/2021 11/17/2057 5.275% 125,000 (1,604) 123,396 128,856 123,381 6/15/2061 4.250% 325,000 (7,845) 317,155 336,700 — 1,715,612 (19,366) 1,696,246 1,820,293 1,667,886 Less current maturity of long-term debt(1) ............................... 150,000 (248) 149,752 153,284 — Total long-term debt .......................................................... 1,565,612 (19,118) 1,546,494 1,667,009 1,667,886 Current maturity of long-term debt(1) ........................................ Commercial paper....................................................................... Total short-term debt ......................................................... 150,000 330,033 480,033 (248) (141) (389) 149,752 329,892 479,644 153,284 329,892 483,176 — 254,918 254,918 Total debt ........................................................................ $2,045,645 $ ( (19,507) $2,026,138 ( ) ) $2,150,185 $1,922,804 (1) An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation. (2) The $300 million of 6.125% Junior subordinated debentures were redeemed on July 15, 2021. The commercial paper has the highest priority of all the debt, fol lowed by senior notes then junior subordinated debentures. The senior notes due 2023 are noncallable, the remaining senior notes are callable under a make- whole provision, and the junior subordinated debentures are subject to an optional redemption five years from issuance. Interest on the 4.25% junior subordinated debentures is payable quarterly while all other long-term debt is payable semi-annually. ff Contractu tt contractual debt obligations: al Debt Obligations ttg : The following table presents expected scheduled principal payments under our Debt obligations......................................... $ 480,033 $ 165,612 $ — $ — $ — $ 1,400,000 2022 2023 2024 2025 2026 Thereafter Year Ended December 31, Credit Facilitii yty:yy On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020, which provides for a $750 million revolving credit facility that may be increased to $1 billion. The amended credit facility matures September 30, 2026, and may be extended up to two one-year periods upon the Company's request. Pursuant to this agreement, the participating lenders have agreed to make revolving loans to Globe Life and to issue secured or unsecured letters of credit. The Company has not drawn on any of the credit to date. 104 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The facility is further designated as a back-up credit line for a commercial paper program under which the Company may either borrow from the credit line or issue commercial paper at any time, with total commercial paper outstanding not to exceed the facility maximum of $750 million, less any letters of credit issued. Interest is charged at variable rates. to certain covenants regarding In accordance with the agreement, Globe Life is subject capitalization. As of December 31, 2021, the Company was in full compliance with these covenants. Commercial paper outstanding and any long-term debt due within one year are reported as short-term debt on the Consolidated Balance Sheets. A table presenting selected informat ion concerning Globe Life's commercial paper borrowings is presented below. ff Credit Facility - Commercial Paper At December 31, Balance at end of period (at par value).................................................................................................. $ 330,033 Annualized interest rate............................................................................................................................ 0.29 % Letters of credit outstanding .................................................................................................................... $ 125,000 Remaining amount available under credit line...................................................................................... 294,967 2021 $ $ 2020 255,000 0.27 % 135,000 360,000 Average balance outstanding during period........................................................... $ 311,049 Daily-weighted average interest rate (annualized)................................................ 0.23 % Maximum daily amount outstanding during period................................................ $ 465,033 2021 2020 318,409 1.50 % 482,000 $ $ 2019 288,684 2.62 % 385,000 $ $ Year Ended December 31, g Long-term debt : On June 14, 2021, Globe Life completed the issuance and sale of $325 million in aggregate principal amount of 4.25% unsecured Junior Subordinated Debentures due June 15, 2061. The net proceeds from the sale of the aforementioned Junior Subordinated Debentures were $317 million and were used to redeem the $300 million 6.125% Junior Subordinated Debentures due 2056 plus accrued interest of $1.5 million on July 15, 2021 as well as forff general corporate purposes. ( ) g: During the year, fouff r of our insurance subsidiaries became members of Federal Home Loan Bank (FHLB) fB unff ding the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. The membership requires ownership of FHLB common stock and Globe Life owns $7.9 million as of the end of the year. The FHLB stock is restricted for the duration of the membership and recorded at cost (par) as required by applicable guidance. The FHLB stock is included in "Other long-term investments" in the Consolidated Balance Sheetstt and activity is recorded in "Net receipts (payments) from deposit-type products" in the Consolidated Statement of Cash Flows. As of December 31, 2021, there were no outstanding borrowings with the FHLB. 105 GL 2021 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:tt A summary of common share activity is presented in the following chart. Common Stock Issued Treasury Stock 2019: Balance at January 1, 2019.................................................................................................................. 121,218,183 (10,525,147) 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) 2021: Grants of restricted stock ...................................................................................................................... Vesting of performance shares ............................................................................................................ Issuance of common stock due to exercise of stock options .......................................................... Treasury stock acquired ........................................................................................................................ — — — — 10,031 210,155 1,191,704 (5,642,036) Retirement of treasury stock................................................................................................................. (4,000,000) 4,000,000 Balance at December 31, 2021 ...................................................................................................... 109,218,183 ) (9,650,845) ( ) ( There was no activity related to the preferred stock in years 2019 through 2021. q of Common Shares : Globe Life shares are acquired through open market purchases under the Globe Acquisitiontt 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) 2021 ................................................ 4,784 $ 455,030 $ 95.11 2020 ................................................ 2019 ................................................ 4,459 3,932 380,112 350,080 85.24 89.04 858 676 1,209 Total Cost Average Price $ 86,405 $ 100.75 63,754 109,489 94.28 90.52 106 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Restrict : Restrictions exist on the flow of funds to Globe Life Inc. from its insurance subsidiaries. Statutory tt ions tt 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 $479 million in 2021, $486 million in 2020, and $480 million in 2019. As of December 31, 2021, dividends from insurance subsidiaries to the Parent Company available to be paid in 2022 are limited to the amount of $347 million without regulatory approval, such that $1.2 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, 2021, were restricted by lenders’ covenants which require the Company to maintain and not distribute $4.3 billion from its total consolidated retained earnings of $6.2 billion. g p Earnings per Share computation of basic and diluted earnings per share is as follows: : A reconciliation of basic and diluted weighted-average shares outstanding used in the Year Ended December 31, 2021 2020 2019 Basic weighted average shares outstanding ........................................................ 102,069,781 106,075,267 109,213,524 Weighted average dilutive options outstanding.................................................... 1,100,351 1,149,327 2,167,726 Diluted weighted average shares outstanding...................................................... 103,170,132 107,224,594 111,381,250 Antidilutive shares ..................................................................................................... 2,412,884 2,476,019 21,556 Antidilutive shares are excluded from the calculation of diluted earnings per share. All antidilutive shares noted above result from outstanding out of the money employee and Director stock options. Note 13—Stock-Based Compensation ff Globe Life's stock-based compensation consists of stock options, restricted stock, restricted stock units, and performance shares. Certain employees and members of the board of directors (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. 107 GL 2021 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: Available for Grant 2021 2020 2019 Balance at January 1, .................................................................................................... Expired and forfeited during year(1,2)......................................................................... Options granted during year(1) ................................................................................... Restricted stock, restricted stock units, and performance shares granted(2) ..... Balance at December 31, ............................................................................................. 5,984,418 7,167,718 9,422,760 39,559 38,820 20,800 (1,091,495) (1,127,610) (1,149,542) (205,394) (94,510) (1,126,300) 4,727,088 5,984,418 7,167,718 (1) Plan allows for grant of options such that each grant reduces shares available for grant in a range from 0.85 share to 1.0 share. (2) Plan allows forff 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, 2021, is presented below: Stock-based compensation expense recognized(1) ..................................................... $ Tax benefit recognized...................................................................................................... 30,272 $ 35,892 $ 11,954 12,550 44,843 21,197 2021 2020 2019 (1) No stock-based compensation expense was capitalized in any period in accordance with applicable GAAP. Additional stock compensation informat ff ion is as follows at December 31: Unrecognized compensation(1) .................................................................................................................... $ Weighted average period of expected recognition (in years)(1) .............................................................. 26,602 $ 28,125 0.57 0.65 2021 2020 (1) Includes restricted stock and performance shares. No equity awards were cash settled during the three years ended December 31, 2021. Options: ttp The following table summarizes informat ff ion about stock options outstanding at December 31, 2021. Range of Exercise Prices $29.59 - $77.26 82.56 - 83.17 87.60 - 90.21 92.40 - 98.32 100.74 - 105.56 $29.59 - $105.56 Options Outstanding Options Exercisable Weighted- Average Remaining Contractual Life (Years) Weighted- Average Exercise Price 2.78 $ 4.14 4.18 6.15 5.14 4.31 $ 66.39 82.56 87.64 98.28 100.85 85.11 Number Exercisable 1,916,991 $ 623,227 1,064,406 10,212 44,919 3,659,755 $ $ Weighted- Average Exercise Price 65.78 82.57 87.65 92.98 104.10 75.55 Number Outstanding 2,025,118 1,262,467 1,299,366 1,284,112 1,326,599 7,197,662 108 GL 2021 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, 2021, is as follows: 2021 2020 2019 Weighted- Average Exercise Price Options Weighted- Average Exercise Price Options Weighted- Average Exercise Price Options Outstanding—beginning of year .............. 7,111,231 $ 78.28 6,724,358 $ 70.07 7,203,765 $ 61.72 Granted: 7-year term................................................ 1,284,112 Exercised........................................................ (1,191,704) Expired and forfeited .................................... (5,977) Outstanding—end of year .......................... 7,197,662 Exercisable at end of year .......................... 3,659,755 $ $ 1,326,599 100.85 1,352,402 98.28 58.59 74.15 85.11 (936,289) (3,437) 7,111,231 75.55 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 57.27 $ $ Additional informat ff ion about Globe Life's stock option activity as of December 31, 2021 and 2020 is as follows: Outstanding options: Weighted-average remaining contractual term (in years)................................................................ 4.31 4.57 Aggregate intrinsic value....................................................................................................................... $ 77,329 $ 126,467 2021 2020 Exercisable options: Weighted-average remaining contractual term (in years)................................................................ 3.27 3.42 Aggregate intrinsic value....................................................................................................................... $ 66,978 $ 94,527 Selected stock option activity for the three years ended December 31, 2021, is presented below: Weighted-average grant-date fair value of options granted (per share) ................................................................................................................... $ 18.01 $ 14.64 $ Intrinsic value of options exercised.......................................................................... Cash received from options exercised.................................................................... Actual tax benefit received........................................................................................ 50,641 69,826 10,545 40,517 48,093 8,508 14.20 82,022 83,163 17,225 2021 2020 2019 Additional informat ff ion concerning Globe Life's unvested options is as follows ff at December 31: 2021 2020 Number of shares outstanding................................................................................................................ 3,537,907 3,721,832 Weighted-average exercise price (per share)....................................................................................... $ 94.99 $ Weighted-average remaining contractual term (in years)................................................................... 5.37 88.37 5.62 Aggregate intrinsic value.......................................................................................................................... $ 10,352 $ 31,941 Globe Life expects that substantially all unvested options will vest. Restrict ed Stock: Restricted stock grants consist of time-vested grants, restricted stock units, and performance tt shares. Time-vested restricted stock is available to directors and vests over six months. Restricted stock units are also available to directors. The restricted stock units 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 shares are granted to a limited number of senior executives. the first business day of the year. Performance Performance shares have a three-year performance period and are not settled in shares until the certification of the period. While the grant specifies a stated target number of shares, the determination of the three-year performance ff ff ff ff 109 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) actual settlement in shares will be based on the achievement of certain performance the three-year performance related to age that could accelerate vesting. period. Certain executive restricted stock and performance ff ff ff objectives of Globe Life over share grants contain terms Following are the restricted stock units outstanding for each of the three years ended December 31, 2021. All restricted stock units were fully vested at the end of each year of grant. 2019........................................................................................................................................................................... 2020........................................................................................................................................................................... 2021........................................................................................................................................................................... Year of grants Outstanding as of year end 71,006 77,167 84,426 Below is the final determination of the performance share grants in 2017 to 2019: Year of grants Final settlement of shares Final settlement date 2017............................................................................................................................. 2018............................................................................................................................. 2019............................................................................................................................. 271,843 210,155 66,751 February 26, 2020 February 24, 2021 February 23, 2022 For the 2020 and 2021 performance thousand for the 2020 grants and 0 to 209 thousand shares for the 2021 grants. ff share grants, actual shares that could be distributed range from 0 to 227 A summary of restricted stock grants forf presented in the table below. each of the years in the three-year period ended December 31, 2021, is 2021 2020 2019 Directors restricted stock: Shares............................................................................................................................ 10,031 Price per share ............................................................................................................. $ 92.40 Aggregate value ........................................................................................................... $ 927 Percent vested as of 12/31/2021............................................................................... 97% Directors restricted stock units (including dividend equivalents): Shares............................................................................................................................ Price per share ............................................................................................................. $ Aggregate value ........................................................................................................... $ 7,258 92.60 672 Percent vested as of 12/31/2021............................................................................... 96% Performance shares: Target shares................................................................................................................ 139,500 Target price per share ................................................................................................. $ 98.32 Aggregate value ........................................................................................................... $ 13,716 4,548 105.56 480 100% 6,161 103.32 637 100% 151,200 100.74 15,232 $ $ $ $ $ $ $ $ $ $ $ $ 8,840 76.37 675 100% 6,634 77.50 514 100% 156,500 82.56 12,921 Percent vested as of 12/31/2021............................................................................... —% —% —% Time-vested restricted stockholders 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 immediately upon grant. Dividend equivalents are applicable only to restricted stock units. units and vest Performance shareholders are not entitled to dividend equivalents and are not entitled to dividend payments until the shares are vested and settled. 110 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) An analysis of nonvested restricted stock is as follows: Executive Restricted Stock Executive Performance Shares Directors Restricted Stock Directors Restricted Stock Units 2019: Balance at December 31, 2018.................... 12,000 Grants .................................................................... Additional performance shares(1)....................... Restriction lapses................................................. Forfeitures ............................................................. Balance at December 31, 2019.................... 2020: Grants .................................................................... Additional performance shares(1)....................... Restriction lapses................................................. Forfeitures ............................................................. Balance at December 31, 2020.................... 2021: Grants .................................................................... Additional performance shares(1)....................... Restriction lapses................................................. Forfeitures ............................................................. Balance at December 31, 2021.................... Total 764,629 171,974 118,812 752,629 156,500 118,812 — 8,840 — — 6,634 — — — (12,000) (311,399) (8,840) (6,634) (338,873) — — — — — — — — — — — — — 716,542 151,200 (65,473) (271,843) (11,450) 518,976 139,500 (94,883) (210,155) (11,050) 342,388 — — 4,548 — (4,548) — — 10,031 — (9,742) — 289 — — 6,161 — — 716,542 161,909 (65,473) (6,161) (282,552) — — 7,258 — (11,450) 518,976 156,789 (94,883) (6,969) (226,866) — 289 (11,050) 342,966 (1) Estimated additional (reduced) share grants expected due to achievement of performance criteria. An analysis of the weighted-average grant-date fair values per share of nonvested restricted stock is as follows for the year 2021: Executive Restricted Stock Executive Performance Shares Directors Restricted Stock Directors Restricted Stock Units Grant-date fair value per share at January 1, 2021 ............... $ — $ 90.13 $ — $ Grants.................................................................................................. Estimated additional performance shares..................................... Restriction lapses.............................................................................. Forfeitures .......................................................................................... Grant-date fair value per share at December 31, 2021 ......... — — — — — 98.32 (91.43) (87.60) (87.60) 94.75 92.40 — (92.40) — 92.56 — 92.41 — (92.41) — 92.56 111 GL 2021 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 the insurance segments and the corporate function. The manages the investment portfolio, Company's chief operating decision makers evaluate the overall performance of the operations of the Company in accordance with these segments. debt, and cash flow forff ff ff Life insurance products marketed by Globe Life include traditional whole life and term life insurance. An immaterial amount of annuities sold as companion products are included in the life segment. 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. ff Premium Income by Distribution Channel For the Year 2021 Life Health Annuity Total Distribution Channel Amount % of Total American Income ................................ $ 1,402,878 Direct to Consumer............................. Liberty National ................................... United American.................................. Family Heritage ................................... 971,461 311,081 8,822 4,957 Other ..................................................... 199,011 48 34 11 — — 7 Amount $ 114,950 73,946 187,327 481,614 343,839 — % of Total Amount % of Total Amount % of Total — — — 1 — — 1 — $ 1,517,828 — — 100 — — 1,045,407 498,408 490,437 348,796 199,011 37 25 12 12 9 5 100 $ 4,099,887 100 $ 2,898,210 100 $ 1,201,676 100 $ Life Health Annuity Total For the Year 2020 % of Total Amount % of Total Amount % of 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 — $ 2,672,804 100 $ 1,141,097 100 $ — — — 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 $ 9 6 16 40 29 — $ 9 7 16 40 28 — 112 GL 2021 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 2019 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 — $ 9 7 18 39 27 — $ 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 % 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. other income and administrative expenses, The measure of profitability established by the chief operating decision makers for insurance segments is underwriting margin beforeff in accordance with the manner the 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 forff 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. ff to support its insurance liabilities, the yield from which is used to Globe Life holds a sizable investment portfolioff 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 ott f OpeO rations for the appropriate year. See additional detail below in the tables. 113 GL 2021 FORM 10-K — — — — $ 4,099,887 952,447 1,216 5,053,550 1,325 (2) 2,859,616 Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) lowing tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major ion concerning Accountingtt The folff income statement line items. See Note—1 Signif ff icant reconciling items of segment profits to pretax income. Policies for additional informat ff i Year Ended December 31, 2021 Life Health Annuity Investment Corporate & Other Adjustments Consolidated Revenue: Premium................................................... $ 2,898,210 $1,201,676 $ 1 $ — $ — $ Net investment income .......................... Other income........................................... — — — — Total revenue ..................................... 2,898,210 1,201,676 — — 1 952,447 — 952,447 — 1,216 1,216 Expenses: Policy obligations.................................... 2,070,485 758,745 29,061 — Required interest on reserves .............. (735,282) (102,574) (39,966) 877,822 Required interest on DAC ..................... 218,575 28,556 258 (247,389) Amortization of acquisition costs.......... 486,724 115,194 1,920 Commissions, premium taxes, and non-deferred acquisition costs ............. Insurance administrative expense(1) .... Parent expense....................................... Stock-based compensation expense .. Interest expense ..................................... 234,033 97,453 — — — — — — — — 24 — — — — — — — — — 83,486 — — — — — — — — — 271,631 10,398 (3,4) 9,553 30,272 — 175 (4) — — Total expenses .................................. 2,274,535 897,374 (8,703) 713,919 311,456 11,898 Subtotal ....................................................... 623,675 304,302 8,704 238,528 (310,240) (11,898) — — 603,838 331,510 282,029 9,728 30,272 83,486 4,200,479 853,071 Non-operating items............................... — — — — — 11,898 (2,3,4) 11,898 Measure of segment profitability (pretax) ............................................. $ 623,675 $ 304,302 $ 8,704 $ 238,528 $ (310,240) $ ( ( ) ) — 864,969 Realized gain (loss)—investments .......................................................................................................................................................... Realized loss—redemption of debt(5) ...................................................................................................................................................... Administrative settlements........................................................................................................................................................................ Legal proceedings...................................................................................................................................................................................... Non-operating expenses........................................................................................................................................................................... 68,633 (9,314) (1,325) (8,139) (2,434) Income before income taxes per Consolidated Statements of Operations ............................................................................ $ 912,390 (1) Administrative expense is not allocated to insurance segments. (2) Administrative settlements. (3) Legal proceedings. (4) Non-operating expenses. (5) In July, 2021, the Company redeemed the $300 million 6.125% junior subordinated notes due in 2056, and realized a loss of $9.3 million. Refer to Note 11—Debt for further discussion. 114 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Life Health Annuity Investment Corporate & Other Adjustments Consolidated Year Ended December 31, 2020 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 obligations ....................................... 1,809,373 733,481 30,030 — Required interest on reserves rr .................. (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 — — — — — — — — — 86,704 — — — — — 9,891 35,892 — Total expenses...................................... 1,997,858 868,728 (9,025) 682,638 296,730 Subtotal........................................................... 674,946 272,369 9,029 244,424 (295,405) — — — — — — — — — $ 3,813,905 927,062 1,325 4,742,292 2,572,884 — — 575,770 304,841 323 (3) — — 4,308 (4,308) 10,214 35,892 86,704 3,841,237 901,055 250,947 3,985 (2,3) 254,932 Non-operating items .................................. — — — — — 4,308 (2,3) 4,308 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. 115 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Year Ended December 31, 2019 Life Health Annuity Investment Corporate & Other Adjustments Consolidated Revenue: Premium ...................................................... $2,517,784 $1,077,346 $ Net investment income ............................. Other income .............................................. — — — — Total revenue ......................................... 2,517,784 1,077,346 4 — — 4 $ — $ — $ 910,459 — 910,459 — 1,318 1,318 Expenses: Policy obligations ........................................ 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 9,401 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) 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) tt Income before income taxes per Consolidated Statements of Operatrr ions ............................................................................ $ 931,279 (1) Administrative expense is not allocated to insurance segments. (2) Administrative settlements. (3) Legal proceedings. (4) Non-operating expenses. 116 GL 2021 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. is assigned to the insurance segments at the time of purchase. All other assets are included in the Goodwill 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, 2021 Life Health Annuity Investment Corporate & Other Consolidated Cash and invested assets......... $ Accrued investment income ..... — $ — — $ — Deferred acquisition costs......... 4,236,401 Goodwill ....................................... 309,609 Other assets................................ — 675,871 172,182 — — $ 22,850,154 $ — $ 22,850,154 — 2,456 — 251,307 — — — — — — 251,307 4,914,728 481,791 1,270,068 1,270,068 Total assets ......................... $ 4,546,010 $ 848,053 $ 2,456 $ 23,101,461 $ 1,270,068 $ 29,768,048 Life Health Annuity Investment Corporate & Other Consolidated At December 31, 2020 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 $ 29,046,731 117 GL 2021 FORM 10-K Globe Life Inc. Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Liabilities forff 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, 2021 Future policy benefits................. $ 12,686,851 $ 2,315,507 $ 1,032,369 $ — $ — $ 16,034,727 Life Health Annuity Investment Corporate & Other Consolidated Unearned and advance premiums ..................................... Policy claims and other benefits payable ......................... Debt .............................................. Other............................................. 19,874 45,598 245,108 167,832 — — — — — — — — — — 2,026,138 — — — — 2,585,965 65,472 412,940 2,026,138 2,585,965 Total liabilities .................... $ 12,951,833 $ 2,528,937 $ 1,032,369 $ 2,026,138 $ 2,585,965 $ 21,125,242 Life Health Annuity Investment Corporate & Other Consolidated At December 31, 2020 Future policy benefits................. $ 12,008,396 $ 2,172,141 $ 1,062,999 $ — $ — $ 15,243,536 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 $ 20,275,639 118 GL 2021 FORM 10-K ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. Item 9A. Controls and Procedures tt and Procedures: Globe Life, under the direction of the Co-Chairmen and Chief Evaluatiott n of Disclosure Controls , has established disclosure controls ff Executive Offiff cers and the Executive Vice President and Chief Financial Officer and procedures that are designed to ensure that informat ion 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 ion is accumulated and communicated to Globe Life's management, including intended to ensure that such informat the Co-Chairmen and Chief Executive Officers , as appropriate to allow timely decisions regarding required disclosures. and the Executive Vice President and Chief Financial Officer ff ff ff ff under the supervision As of the end of the fiscal year completed December 31, 2021, an evaluation was performed and ff and with the participation of Globe Life management, including the Co-Chairmen and Chief Executive Officers , of the disclosure controls and procedures (as those terms the Executive Vice President and Chief Financial Officer 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 have ive as of the date of this Form 10-K. In compliance with concluded that disclosure controls and procedures are effect 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. and the Executive Vice President and Chief Financial Officer ff ff ff ff ff ff tt p g over Financial Reportingtt Management's' Annual Report on Internal Control 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 effecti Company's internal control over financial reporting based on the criteria established in Internal Control Integratrr ed Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based upon their evaluation as of December 31, 2021, the Co-Chairmen and Chief Executive Officers, and the have concluded that Globe Life's internal control over financial Executive Vice President and Chief Financial Officer reporting is effect ive 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 offiff cers executed a Certification included as an exhibit to this Form 10-K. veness of tt —ll g: Management p ff ff ff ff g g: As of the period ended December 31, 2021, there have not Changes in Internal Control 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 ff materially affect ed, or are reasonably likely to materially affect , internal control over financial reporting. ii over Financial Reportingtt p tt ff ff Refer to Deloitte & Touche LLP's, Company's internal controls over financial reporting. independent registered public accounting firm, attestation report on the 119 GL 2021 FORM 10-K MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management at Globe Life is responsible forff reporting for the Company and for assessing the effecti framework for assessing internal control over financial reporting, the Company utilizes the criteria for effecti internal control over financial reporting described in Internal tt —ll rr Committee of Sponsoring Organizations of the Treadway Commission. establishing and maintaining adequate internal control over financial veness of internal control on an annual basis. As a ve d FraFF mework (2013) issued by the Integraterr Control ff ff There are inherent limitations in the effecti the circumvention or overriding of controls. Accordingly, even effecti assurance with respect effect iveness of internal control may vary over time. veness of any internal control, including the possibility of human error and ve internal controls can provide only reasonable the to financial statement preparation. Further, because of changes in conditions, ff ff ff Management evaluated the Company’s internal control over financial reporting, and based on its assessment, ive as of December 31, 2021. The determined that the Company’s internal control over financial reporting was effect 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. ff /s/ Gary L. Coleman Gary L. Coleman Co-Chairman and Chief Executive Officer ff /s/ Larry M. Hutchison Larry M. Hutchison Co-Chairman and Chief Executive Officer ff /s/ Frank M. Svoboda Frank M. Svoboda Executive Vice President and Chief Financial Offiff cer February 23, 2022 120 GL 2021 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, 2021, based on criteria established in Internal Control tt — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company ive internal control over financial reporting as of December 31, 2021, maintained, in all material respects, effect tt — Integrated Framework (2013) issued by COSO. based on criteria established in Internal Control ff 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, 2021 of the Company and our report dated February 23, 2022, expressed an unqualified opinion on those financial statements and financial statement schedules. Basis for Opinion ve internal control over financial reporting and for The Company’s management is responsible for maintaining effecti its assessment of the effecff tiveness 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. ff the audit to obtain reasonable assurance about whether effect We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and ive internal control over financial reporting performff 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 effect such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. iveness of internal control based on the assessed risk, and performing ff ff ff 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. ff Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effect iveness 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. ff /s/ DELOITTE & TOUCHE LLP Dallas, Texas February 23, 2022 121 GL 2021 FORM 10-K There were no items required. Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ff ion required by this item is incorporated by reference from the sections entitled “PROPOSAL NUMBER 1 - Informat Election of Directors,” “Director Nominee Profiles,” "Director Nominee Skills and Qualifications," “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 28, 2022 (the Proxy Statement), which is to be filed with the Securities and Exchange Commission (SEC). ff ITEM 11. EXECUTIVE COMPENSATION ff AA ion required by this item is incorporated by reference from the sections entitled “EXECUTIVE Informat “COMPENSATION COMMITTEE COMPENSATION - COMPENSATION “2021 GRANTS OF PLAN-BASED REPORT”, “SUMMARY CRR RDS AT FISCAL YEAR-END 2021”, “OPTION EXERCISES AND AWARDS”, “OUTSTANTT DING EQUITY AWAAA STOCK VESTED DURING FISCAL YEAR ENDED DECEMBER 31, 2021”, “PENSION BENEFITS AT DECEMBER 31, 2021”, “POTENTIAL PAYPP MENTS UPON TERMINATION OR CHANGE-IN-CONTROL”, “2021 DIRECTOR COMPENSATIAA ON”, and “PAYPP MENTS TO DIRECTORS” in the Proxy Statement, which is to be filed with the SEC. OMPENSATIAA ON TABLE”, "CEO PAY RATIAA O", DISCUSSION AND ANALYSLL IS”, ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 1. Equity Compensation Plan Information as of December 31, 2021 (a) (b) (c) Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities in column (a)) 7,197,662 $ 85.11 4,727,088 Plan Category Equity compensation plans approved by security holders............................................... Equity compensation plans not approved by security holders.......................................... Total .................................................................. 7,197,662 $ 85.11 4,727,088 2. 3. 4. Security ownership of certain beneficial owners: ion required by this item is incorporated by reference from the section entitled “PRINCIPAL ff Informat SHAREHOLDERS” in the Proxy Statement, which is to be filed with the SEC. Security ownership of management: ion required by this item is incorporated by reference from the section entitled “Stock Ownership” in ff Informat 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. 122 GL 2021 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 “RELATEAA D PARPP TY 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, 2021 and 2020..................................................... Consolidated Statements of Operations for each of the three years in the period ended December 31, 2021 ................................................................................................................................ Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2021 .................................................................................................................... Consolidated Statements of Shareholders’ Equity forf each of the three years in the period ended December 31, 2021 .................................................................................................................... Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2021 ................................................................................................................................ Notes to Consolidated Financial Statements...................................................................................... each of the three years in the period ended Schedules Supporting Financial Statements forff December 31, 2021: 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. 54 56 57 58 59 60 61 129 133 123 GL 2021 FORM 10-K EXHIBITS Exhibit No. Description Form Filing Date Related Exhibit Page of this Report 3.1 3.2 4.1 4.2 4.3 4.5 4.6 4.7 4.8 4.9 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 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 YorkYY , as Trustee Fourth Supplemental Indenture dated as of September 24, 2012 between TorcTT New York Mellon Trust Company, N. A., as Trustee, supplementing the Indenture dated February 1, 1987 hmark Corporation and The Bank of Junior Subordinated Indenture, dated November 2, 2001, between TorcTT defining the rights of the 7 3/4% Junior Subordinated Debentures hmark Corporation and The Bank of New YorkYY Third Supplemental Indenture dated as of November 17, 2017 between TorcTT hmark Corporation and Regions Bank, as Trustee, supplementing the Junior Subordinated Indenture dated as of November 2, 2001 Fourth Supplemental Indenture dated as of June 14, 2021 between Globe Life Inc. 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 TorcTT Trustee hmark Corporation and Regions Bank, as 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 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)* 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 November 17, 2017 4.4 8-K June 14, 2021 4.2 S-3 September 24, 2018 4.1 8-K September 27, 2018 4.2 8-K August 21, 2020 4.2 10-K March 22, 2002 10.Z 10-K March 22, 2002 10.AAAA Torchmark Corporation Supplemental Executive Retirement Plan* 8-K January 25, 2007 10.1 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* Amendment Four to the Torchmark Corporation Supplemental Executive Retirement Plan* Amendment Five to the TorcTT Supplemental Executive Retirement Plan* hmark Corporation Amendment Six to the Torchmark Corporation Supplemental Executive Retirement Plan* Amendment Seven to the TorTT chmark Corporation Supplemental Executive Retirement Plan* TorTT chmark Corporation Non-Employee Director Compensation Plan, as amended and restated* 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 8-K May 5, 2015 10.1 10-K March 1, 2019 10.11 10-Q November 5, 2020 10.2 8-K April 29, 2008 10.1 124 GL 2021 FORM 10-K Form 10-K Filing Date Related Exhibit Page of this Report 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. 10.12 Description Form of Restricted Stock Unit Award Notice under Torchmark Corporation Non-Employee Director Compensation Plan* 10.13 10.14 10.15 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. 10.16 Torchmark Corporation 2011 Incentive Plan* First Amendment to Torchmark Corporation 2011 Incentive Plan* Form of TenTT Corporation 2011 Incentive Plan* year Stock Option under Torchmark Form of Seven year Stock Option under Torchmark Corporation 2011 Incentive Plan* Form of Performance Share Award under TorcTT Corporation 2011 Incentive Plan* hmark 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 TenTT 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* 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 Torchmark Corporation Amended 2011 Non-Employee Director Compensation Plan, effeff ctive 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 10.28 Torchmark Corporation 2018 Incentive Plan* 10.29 10.30 10.31 10.32 10.33 First Amendment to Torchmark Corporation 2018 Incentive Plan* Amended Globe Life Inc. Non-Employee Director Compensation Plan* Form of Performance Share Award under TorcTT Corporation 2018 Incentive Plan* hmark Form of Performance Share Award under Globe Life Inc. 2018 Incentive Plan* Form of Perforr 2018 Inventive Plan (2022)* rmance Share Award under Globe Life Inc. 8-K 10-K May 2, 2018 10.1 February 27, 2020 10.31 10-Q November 4, 2021 10.1 8-K May 2, 2018 10.3 10-K February 27, 2020 10.34 10-K February 23, 2022 10.33 125 GL 2021 FORM 10-K Exhibit No. 10.34 Description Form of Seven YearYY 2018 Incentive Plan* Stock Option under Globe Life Inc. Form 10-K Filing Date Related Exhibit Page of this Report February 27, 2020 10.36 10.35 10.36 10.37 10.38 10.39 10.40 10.41 10.42 10.43 10.44 Form of Seven YearYY Corporation 2018 Incentive Plan with Non-Compete, Non- Solicit and Confidentiality Provisions* Stock Option under Torchmark Form of Seven YearYY Stock Option under Globe Life Inc. 2018 Incentive Plan with Non-Compete, Non-Solicit and Confidentiality Provisions* Form of Seven YearYY Stock Option under Globe Life Inc. 2018 Incentive Plan with Non-Compete, Non-Solicit and Confidentiality Provisions (Special)* Form of TenTT Year Stock Option under TorcTT Corporation 2018 Incentive Plan* hmark Form of TenTT Year Stock Option under TorcTT Corporation 2018 Incentive Plan with Non-Compete, Non- Solicit and Confidentiality Provisions* hmark 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 May 2, 2018 May 2, 2018 10.6 10.7 Form of Stock Option under Globe Life Inc. 2018 Non- Employee Director Compensation Plan* 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)* ff 8-K March 4, 2019 10.1 The Globe Life Inc. Amended and Restated Pension Plan Generally Effeff ctive as of January 1r , 2020* 10-Q November 5, 2020 10.1 10.45 Globe Life Inc. Savings and Investment Plan* 10.46 Payments to Directors* Amended and Restated Credit Agreement dated as of September 30, 2021 among Bank of America, N.A., the Lenders party thereto, Globe Life Inc. and TMK RE, LTD. 10-K 10-Q 8-K February 27, 2020 10.52 November 4, 2021 October 1, 2021 10.2 10.1 Form of Performance Share Award under Globe Life Inc. 2018 Incentive Plan (2021)* 10-K February 25, 2021 10.56 Subsidiaries of the registrant Consent of Deloitte & Touche TT 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 128 10-K 10-K 10-K 10-K 10-K February 23, 2022 February 23, 2022 February 23, 2022 February 23, 2022 February 23, 2022 21 23 24 31.1 31.2 10-K February 23, 2022 31.3 Section 1350 Certification by Gary L. Coleman, Larry M. Hutchison and Frank M. Svoboda 10-K February 23, 2022 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 23, 2022 101.INS 101.SCH Inline XBRL TaxTT onomy Extension Schema Document. 101.CAL Inline XBRL TaxTT onomy Extension Calculation Linkbase Document. 10-K 10-K February 23, 2022 101.SCH February 23, 2022 101.CAL 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 10-K February 23, 2022 101.LAB 126 GL 2021 FORM 10-K 10.47 10.48 21 23 24 31.1 31.2 31.3 32.1 Exhibit No. 101.PRE Description Inline XBRL TaxTT onomy Extension Presentation Linkbase Document. Form 10-K Filing Date Related Exhibit Page of this Report February 23, 2022 101.PRE 101.DEF Inline XBRL TaxTT onomy Extension Definition Linkbase Document. 10-K February 23, 2022 101.DEF 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension informatio in Exhibits 101). n contained ff 10-K February 23, 2022 104 * Compensatory plan or arrangement. ** To be filed with the Securities and Exchange Commission within 120 days afteff r the fiscal year ended December 31, 2021. 127 GL 2021 FORM 10-K : t 21. Subsidiaries of the Registrant Exhixx bi ii definition of “significant subsidiary” according to Regulation S-X: g tt The following table lists subsidiaries of the registrant which meet the Name Under Which Company Does Business Globe Life And Accident Insurance Company American Income Life Insurance Company Liberty National Life Insurance Company Family Heritage Life Insurance Company of America State of Incorporation Nebraska Indiana Nebraska Ohio Distribution Channel (Division) Direct to Consumer American Income Life Division Liberty National Division Family Heritage Division While United American Insurance Company (Nebraska) does not qualify aff with Regulation S-X, management views this subsidiary as significant to our operations. s a significant subsidiary in accordance 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. 128 GL 2021 FORM 10-K Globe Life Inc. (PARENT COMPANY) SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT Condensed Balance Sheets (Dollar amounts in thousands) December 31, 2021 2020 Assets: Investments: Long-term investments ....................................................................................................................... $ 31,384 $ Short-term investments....................................................................................................................... Total investments............................................................................................................................... Cash ......................................................................................................................................................... — 31,384 20,228 32,861 19,300 52,161 1,644 Investment in affiliates ff ........................................................................................................................... 10,618,826 10,526,982 Due from affiliates ff .................................................................................................................................. Taxes receivable from affiliates ff ............................................................................................................ Other assets............................................................................................................................................ 170,983 33,229 185,143 322,278 51,041 184,588 Total assets ........................................................................................................................................ $ 11,059,793 $ 11,138,694 Liabilities: Short-term debt....................................................................................................................................... $ 629,607 $ 254,918 Long-term debt ....................................................................................................................................... 1,546,494 1,817,798 Other liabilities ........................................................................................................................................ 240,886 294,886 Total liabilities..................................................................................................................................... 2,416,987 2,367,602 Shareholders’ equity: Preferred stock ....................................................................................................................................... Common stock........................................................................................................................................ Additional paid-in capital ....................................................................................................................... Accumulated other comprehensive income....................................................................................... Retained earnings .................................................................................................................................. 351 109,218 871,075 2,677,583 6,182,100 351 113,218 877,946 3,029,244 5,874,109 Treasury stock ........................................................................................................................................ (1,197,521) (1,123,776) Total shareholders’ equity ................................................................................................................ 8,642,806 8,771,092 Total liabilities and shareholders’ equity ........................................................................................ $ 11,059,793 $ 11,138,694 See Notes to Condensed Financial Statements and accompanying Report of Independent Registered Public Accounting Firm. 129 GL 2021 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 ............................................................................................................. Year Ended December 31, 2021 2020 2019 32,816 $ 30,199 $ 28,869 (5,682) 27,134 12,792 42,991 — 28,869 General operating expenses.............................................................................................. Reimbursements from affiliates ff ......................................................................................... Interest expense................................................................................................................... Total expenses .......................................................................................................... 51,378 (57,504) 86,751 80,625 57,679 (68,556) 90,197 79,320 Operating income (loss) before income taxes and equity in earnings of affiliates ff .... (53,491) (36,329) Income tax expense ............................................................................................................ 9,682 7,773 Net operating loss before equity in earnings of affiliates ff ............................................... (43,809) (28,556) Equity in earnings of affiliates, net of tax.......................................................................... Net income .................................................................................................................. 788,768 744,959 760,329 731,773 68,419 (65,928) 89,317 91,808 (62,939) 13,133 (49,806) 810,596 760,790 Other comprehensive income (loss): Attributable to Parent Company ..................................................................................... 58,903 (21,477) (11,379) Attributable to affiliates ff ..................................................................................................... (410,564) 1,205,891 1,536,734 Comprehensive income (loss) ................................................................................... $ 393,298 $ 1,916,187 $ 2,286,145 See Notes to Condensed Financial Statements and accompanying Report of Independent Registered Public Accounting Firm. 130 GL 2021 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, 2021 2020 2019 Net income ......................................................................................................................... $ Equity in earnings of affiliates.......................................................................................... 744,959 $ 731,773 $ 760,790 (788,768) (760,329) (810,596) Cash dividends from subsidiaries................................................................................... Other, net............................................................................................................................ Cash provided from operations ................................................................................. 478,535 58,617 493,343 485,871 21,129 478,444 479,988 65,584 495,766 Cash provided from (used for) investing activities: Net decrease (increase) in short-term investments.................................................. Investment in subsidiaries............................................................................................. Other long-term investments ........................................................................................ Additions to properties................................................................................................... 19,300 (159,924) (2,500) — (15,899) (7,875) — — (3,380) — — (32) Loaned money to affiliates............................................................................................ (1,049,932) (1,008,860) (501,764) Repayments from affiliates ff ........................................................................................... 1,200,932 782,860 Cash provided from (used for) investing activities .............................................. 7,876 (249,774) 501,764 (3,412) Cash provided from (used for) financing activities: Repayment of debt......................................................................................................... (300,000) (386,875) (6,875) Proceeds from issuance of debt .................................................................................. 325,000 700,000 Payment for debt issuance costs................................................................................. Net issuance (repayment) of commercial paper ....................................................... Issuance of stock............................................................................................................ (7,687) 74,974 69,826 (5,844) (34,445) 48,093 — — (11,610) 82,771 Acquisitions of treasury stock....................................................................................... (541,435) (443,866) (459,569) Borrowed money from affiliate ff ..................................................................................... Repayments to affiliates ff ................................................................................................ Payment of dividends .................................................................................................... Cash provided from (used for) financing activities .............................................. Net increase (decrease) in cash ..................................................................................... Cash balance at beginning of period.............................................................................. 32,000 (32,000) (103,313) (482,635) 18,584 1,644 76,000 277,000 (79,500) (276,500) (101,462) (227,899) (97,458) (492,241) 771 873 113 760 873 Cash balance at end of period ........................................................................................ $ 20,228 $ 1,644 $ See Notes to Condensed Financial Statements and accompanying Report of Independent Registered Public Accounting Firm. 131 GL 2021 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............................................................................................. $ 478,535 $ 485,871 $ 479,988 Note B—Supplemental Disclosures of Cash Flow Information The following table summarizes non-cash transactions, which are not reflected on the Condensed Statements ott Cash Flows: f Year Ended December 31, 2021 2020 2019 Year Ended December 31, 2021 2020 2019 Stock-based compensation not involving cash ............................................................ $ 30,272 $ 35,892 $ 44,843 Contribution of property to subsidiary ............................................................................ 5,004 — — The foll f owing table summarizes certain amounts paid (received) during the period: Interest paid........................................................................................................................ $ Income taxes paid (received) .......................................................................................... 86,206 $ 86,504 $ 86,868 (11,838) (12,744) (16,617) Year Ended December 31, 2021 2020 2019 Note C—Preferred Stock As of December 31, 2021, 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, beforeff 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. 132 GL 2021 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, 2021 Life insurance in force .................................. $ 217,350,660 Premiums(2): $ 648,766 $ 2,371,163 $ 219,073,057 Life insurance.............................................. $ Health insurance......................................... 2,868,759 $ 4,286 $ 19,502 $ 2,883,975 1,192,567 3,312 12,421 1,201,676 Total premium ........................................ $ 4,061,326 $ 7,598 $ 31,923 $ 4,085,651 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 1.1 0.7 1.0 0.8 1.2 0.7 — 0.5 1.4 0.8 — 0.6 (1) No amounts have been netted against ceded premium. (2) Excludes policy charges of $14.2 million, $14.7 million, and $15.6 million in each of the years 2021, 2020, and 2019, respectively. See accompanying Report of Independent Registered Public Accounting Firm. 133 GL 2021 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 LRR . COLEMAN Gary L. Coleman Co-Chairman and Chief Executive Officer and Director /s/ LARRY MRR . 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 23, 2022 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: By: /s/ JANE BUCHAN * Jane M. Buchan Director /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 ERR . THIGPEN * Mary E. Thigpen Director By: By: By: By: By: By: /s/ CHARLES E. ADAIR * Charles E. Adair Director /s/ LINDA L. ADDISON * Linda L. Addison Director /s/ MARILYNLL A. ALEXANDER * Marilyn A. Alexander Director /s/ CHERYLRR D. ALSTON * Cheryl D. Alston Director /s/ MARK A. BLINN * Mark A. Blinn Director /s/ JAMES P. BRANNEN * James P. Brannen Director Date: February 23, 2022 *By: /s/ FRANK M. SVOBODA Frank M. Svoboda Attorney-in-fact 134 GL 2021 FORM 10-K [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK]  In addition to the training and opportunities, the Company Marissa was super knowledgeable is steady and strong with consistent growth year over about the different coverages and year. With strong management, the Company is sure to be really helped me narrow down the around for many more years to come. best plan for myself. With being a - Erika, Employee travel nurse my plans were always changing between companies but Earnest was very thorough in fulfilling my policy needs. I it is nice to have the reassurance felt like I was getting fitted for a suit that fits perfectly! Will and not worry! Thank you again be adding even more coverage soon to come! Marissa for the wonderful help. - Vonte, Policyholder - Angelina, Policyholder Very affordable and easy I’m glad I took the 15 minutes to hear what Diana had to offer. The to understand. I’m looking Globe Life Liberty National Worksite Advantage program was forward to moving along in my exactly what I was looking for for my small business employees! I journey knowing you guys have highly recommend the program to other business owners looking my back. Thank you. to establish or enhance benefits for their employees. Give Diana 15 - Dylan, Policyholder minutes. You won’t regret it! - Gage, Policyholder After losing a loved one Jakwanza built Wow! For once an insurance policy that pays you a bond with me and my family in our back! We have paid into insurance half our lives, never time of need. She was very helpful and used it because we are healthy and for the most part concerning. It wasn’t just about a policy. not accident prone. Jason was brilliant in explaining Thank you all Globe Life! this program, and was very knowledgeable and - Conetric, Policyholder professional. I will refer people for sure! - Linda, Policyholder After the death of my brother, not once did I call Globe Life and the person on the other end of the phone not offer their condolences. This really meant a lot to me. They were very professional and considerate and caring. Thanks Globe Life! - Dian, Policyholder We’re very happy with United American. We met with this guy right after I retired so I’ve been with him for a long time. He’s at our disposal and he’s great. I’ve given him a lot of business from some other friends of mine. My husband and I were in New York and he fell and broke his hip. We were thinking of the load of bills we were going to get. We have Medicare but everything was covered with United American. - Ronni, Policyholder 3700 S Stonebridge Drive McKinney, Texas 75070 www.GlobeLifeInsurance.com 

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