Business Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Business Segments

Note 14—Business Segments

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

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

Life insurance products marketed by Globe Life include traditional whole life and term life insurance. Health insurance products are generally guaranteed-renewable and include Medicare Supplement, critical illness, accident, and limited-benefit supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.

Globe Life markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Globe Life's insurance segments. Our distribution channels consist of the following exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National) and Family Heritage Division (Family Heritage); an independent agency, United American Division (United American); and our Direct to Consumer Division (Direct to Consumer). The tables below present segment premium revenue by each of Globe Life's distribution channels.

Premium Income by Distribution Channel

	For the Year 2020
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	1,257,726	47	$	105,734	9	$	—	—	$	1,363,460	36
Direct to Consumer	906,959		34	76,527		7	—		—	983,486		26
Liberty National	293,897		11	188,835		16	—		—	482,732		13
United American	9,688		—	452,980		40	4		100	462,672		12
Family Heritage	4,253		—	317,021		28	—		—	321,274		8
Other	200,281		8	—		—	—		—	200,281		5
	$	2,672,804	100	$	1,141,097	100	$	4	100	$	3,813,905	100

	For the Year 2019
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	1,160,495	46	$	99,447	9	$	—	—	$	1,259,942	35
Direct to Consumer	855,543		34	77,557		7	—		—	933,100		26
Liberty National	285,551		11	189,578		18	—		—	475,129		13
United American	10,571		1	416,582		39	4		100	427,157		12
Family Heritage	3,830		—	294,182		27	—		—	298,012		8
Other	201,794		8	—		—	—		—	201,794		6
	$	2,517,784	100	$	1,077,346	100	$	4	100	$	3,595,134	100

	For the Year 2018
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	1,081,333	45	$	93,313	9	$	—	—	$	1,174,646	34
Direct to Consumer	828,935		34	76,297		7	—		—	905,232		26
Liberty National	278,878		12	191,378		19	—		—	470,256		14
United American	11,451		1	381,076		38	12		100	392,539		12
Family Heritage	3,501		—	273,275		27	—		—	276,776		8
Other	202,457		8	—		—	—		—	202,457		6
	$	2,406,555	100	$	1,015,339	100	$	12	100	$	3,421,906	100

Due to the nature of the life insurance industry, Globe Life has no individual or group which would be considered a major customer. Substantially all of Globe Life's business is conducted in the United States.

The measure of profitability established by the chief operating decision makers for insurance segments is underwriting margin before other income and administrative expenses, 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 for the Investment segment is excess investment income, which represents the income earned on the investment portfolio in excess of net policy requirements and financing costs associated with Globe Life's debt. Other than the above-mentioned interest allocations and an intersegment commission, there are no other intersegment revenues or expenses. Expenses directly attributable to corporate operations are included in the “Corporate & Other” category. Stock-based compensation expense is considered a corporate expense by Globe Life management and is included in this category. All other unallocated revenues and expenses on a pretax basis, including insurance administrative expense, are also included in the “Corporate & Other” segment category.

Globe Life holds a sizable investment portfolio to support its insurance liabilities, the yield from which is used to offset policy benefit, acquisition, administrative and tax expenses. This yield or investment income is taken into account when establishing premium rates and profitability expectations of its insurance products. From time to time, investments are sold, called, or experience a credit loss event, each of which are reflected by the Company as realized gain (loss)—investments. These gains or losses generally occur as a result of disposition due to issuer calls, compliance with Company investment policies, or other reasons often beyond management’s control. Unlike investment income, realized gains and losses are incidental to insurance operations, and only overall yields are considered when setting premium rates or insurance product profitability expectations. While these gains and losses are not relevant to segment profitability or core operating results, they can have a material positive or negative result on net income. For these reasons, management removes realized investment gains and losses when it views its segment operations.

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

The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.

	Twelve Months Ended December 31, 2020
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	2,672,804	$	1,141,097	$	4	$	—	$	—	$	—		$	3,813,905
Net investment income	—		—		—		927,062		—		—			927,062
Other income	—		—		—		—		1,325		—			1,325
Total revenue	2,672,804		1,141,097		4		927,062		1,325		—			4,742,292
Expenses:
Policy benefits	1,809,373		733,481		30,030		—		—		—			2,572,884
Required interest on reserves	(698,112)		(93,475)		(41,413)		833,000		—		—			—
Required interest on DAC	210,152		26,586		328		(237,066)		—		—			—
Amortization of acquisition costs	463,586		110,177		2,007		—		—		—			575,770
Commissions, premium taxes, and non-deferred acquisition costs	212,859		91,959		23		—		—		—			304,841
Insurance administrative expense(1)	—		—		—		—		250,947		3,985		(2,3)	254,932
Parent expense	—		—		—		—		9,891		323		(3)	10,214
Stock-based compensation expense	—		—		—		—		35,892		—			35,892
Interest expense	—		—		—		86,704		—		—			86,704
Total expenses	1,997,858		868,728		(9,025)		682,638		296,730		4,308			3,841,237
Subtotal	674,946		272,369		9,029		244,424		(295,405)		(4,308)			901,055
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														(3,737)
Realized loss—redemption of debt														(634)
Legal proceedings														(3,275)
Non-operating expenses														(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.

	Twelve Months Ended December 31, 2019
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	2,517,784	$	1,077,346	$	4	$	—	$	—	$	—		$	3,595,134
Net investment income	—		—		—		910,459		—		—			910,459
Other income	—		—		—		—		1,318		—			1,318
Total revenue	2,517,784		1,077,346		4		910,459		1,318		—			4,506,911
Expenses:
Policy benefits	1,638,053		687,764		31,532		—		—		—			2,357,349
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		—		—		—			551,726
Commissions, premium taxes, and non-deferred acquisition costs	203,052		94,973		22		—		—		—			298,047
Insurance administrative expense(1)	—		—		—		—		240,321		8,758		(2,3)	249,079
Parent expense	—		—		—		—		10,260		643		(4)	10,903
Stock-based compensation expense	—		—		—		—		44,843		—			44,843
Interest expense	—		—		—		84,306		—		—			84,306
Total expenses	1,814,320		833,708		(9,454)		652,854		295,424		9,401			3,596,253
Subtotal	703,464		243,638		9,458		257,605		(294,106)		(9,401)			910,658
Non-operating items	—		—		—		—		—		9,401		(2,3,4)	9,401
Measure of segment profitability (pretax)	$	703,464	$	243,638	$	9,458	$	257,605	$	(294,106)	$	—		920,059
Realized gain (loss)—investments														20,621
Administrative settlements														(400)
Legal proceedings														(8,358)
Non-operating expenses														(643)
Income before income taxes per Consolidated Statements of Operations														$	931,279

(1)Administrative expense is not allocated to insurance segments.

(2)Administrative settlements.

(3)Legal proceedings.

(4)Non-operating expenses.

	Twelve Months Ended December 31, 2018
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	2,406,555	$	1,015,339	$	12	$	—	$	—	$	—		$	3,421,906
Net investment income	—		—		—		882,512		—		—			882,512
Other income	—		—		—		—		1,236		(99)		(2)	1,137
Total revenue	2,406,555		1,015,339		12		882,512		1,236		(99)			4,305,555
Expenses:
Policy benefits	1,591,790		649,188		34,264		—		—		—			2,275,242
Required interest on reserves	(636,040)		(83,243)		(47,357)		766,640		—		—			—
Required interest on DAC	194,297		24,412		589		(219,298)		—		—			—
Amortization of acquisition costs	414,200		100,376		2,114		—		—		—			516,690
Commissions, premium taxes, and non-deferred acquisition costs	190,007		88,553		26		—		—		(99)		(2)	278,487
Insurance administrative expense(1)	—		—		—		—		223,941		3,590		(3)	227,531
Parent expense	—		—		—		—		10,684		1,578		(4)	12,262
Stock-based compensation expense	—		—		—		—		39,792		—			39,792
Interest expense	—		—		—		90,076		—		—			90,076
Total expenses	1,754,254		779,286		(10,364)		637,418		274,417		5,069			3,440,080
Subtotal	652,301		236,053		10,376		245,094		(273,181)		(5,168)			865,475
Non-operating items	—		—		—		—		—		5,168		(3,4)	5,168
Measure of segment profitability (pretax)	$	652,301	$	236,053	$	10,376	$	245,094	$	(273,181)	$	—		870,643
Realized gain (loss)—investments														9,274
Realized loss—redemption of debt														(11,078)
Administrative settlements														(3,590)
Non-operating expenses														(1,578)
Income before income taxes per Consolidated Statements of Operations														$	863,671

(1)Administrative expense is not allocated to insurance segments.

(2)Elimination of intersegment commission.

(3)Administrative settlements.

(4)Non-operating expenses.

Assets for each segment are reported based on a specific identification basis. The insurance segments’ assets contain DAC. The investment segment includes the investment portfolio, cash, and accrued investment income. Goodwill is assigned to the insurance segments at the time of purchase. All other assets are included in the Corporate & Other category. The tables below reconcile segment assets to total assets as reported in the consolidated financial statements.

Assets by Segment

	At December 31, 2020
	Life		Health		Annuity		Investment		Corporate & Other		Consolidated
Cash and invested assets	$	—	$	—	$	—	$	22,547,498	$	—	$	22,547,498
Accrued investment income	—		—		—		248,991		—		248,991
Deferred acquisition costs	3,982,158		610,071		3,215		—		—		4,595,444
Goodwill	309,609		131,982		—		—		—		441,591
Other assets	—		—		—		—		1,213,207		1,213,207
Total assets	$	4,291,767	$	742,053	$	3,215	$	22,796,489	$	1,213,207	$	29,046,731

	At December 31, 2019
	Life		Health		Annuity		Investment		Corporate & Other		Consolidated
Cash and invested assets	$	—	$	—	$	—	$	19,923,204	$	—	$	19,923,204
Accrued investment income	—		—		—		245,129		—		245,129
Deferred acquisition costs	3,768,797		569,126		4,018		—		—		4,341,941
Goodwill	309,609		131,982		—		—		—		441,591
Other assets	—		—		—		—		1,025,595		1,025,595
Total assets	$	4,078,406	$	701,108	$	4,018	$	20,168,333	$	1,025,595	$	25,977,460

Liabilities for each segment are reported also on a specific identification basis similar to the assets. The insurance segments' liabilities contain future policy benefits, unearned and advance premiums, and policy claims and other benefits payable. Other policyholders' funds are included in Other as well as current and deferred income taxes payable. Debt represents both short and long-term. The tables below reconcile segment liabilities to total liabilities as reported in the consolidated financial statements.

Liabilities by Segment

	At December 31, 2020
	Life		Health		Annuity		Investment		Corporate & Other		Consolidated
Future policy benefits	$	12,008,396	$	2,172,141	$	1,062,999	$	—	$	—	$	15,243,536
Unearned and advance premiums	18,968		42,760		—		—		—		61,728
Policy claims and other benefits payable	237,246		162,261		—		—		—		399,507
Debt	—		—		—		1,922,804		—		1,922,804
Other	—		—		—		—		2,648,064		2,648,064
Total liabilities	$	12,264,610	$	2,377,162	$	1,062,999	$	1,922,804	$	2,648,064	$	20,275,639

	At December 31, 2019
	Life		Health		Annuity		Investment		Corporate & Other		Consolidated
Future policy benefits	$	11,403,078	$	2,006,424	$	1,098,632	$	—	$	—	$	14,508,134
Unearned and advance premiums	17,701		46,008		—		—		—		63,709
Policy claims and other benefits payable	201,594		163,808		—		—		—		365,402
Debt	—		—		—		1,647,726		—		1,647,726
Other	—		—		—		—		2,098,182		2,098,182
Total liabilities	$	11,622,373	$	2,216,240	$	1,098,632	$	1,647,726	$	2,098,182	$	18,683,153