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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
 75070
(Address of principal executive offices) (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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par value per shareGLNew York Stock Exchange
4.250% Junior Subordinated DebenturesGL PRDNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:     None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     
Yes  x     No   ¨    
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ¨       No x   
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     
Yes  x       No ¨   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  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 filerxAccelerated filer¨
Non-accelerated filer¨Smaller reporting company¨
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by checkmark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.                       x

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 of the registrant was $9.5 billion based on the closing sale price as reported on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class  
Outstanding as of February 16, 2022
Common Stock, $1.00 par value per share  
99,338,401 shares
DOCUMENTS INCORPORATED BY REFERENCE
Document  Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Stockholders to be held on April 28, 2022 (Proxy Statement)  Part III



GL 2021 FORM 10-K
Table of Contents
Globe Life Inc.
Table of Contents
    Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.[Reserved]
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.



GL 2021 FORM 10-K
Table of Contents
Part I

Item 1. Business

Globe Life and the Company refer to Globe Life Inc., an insurance holding company incorporated in Delaware in 1979, and its subsidiaries and affiliates. Its primary subsidiaries are Globe Life And Accident Insurance Company, American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life Insurance Company of America, and United American Insurance Company.

Globe Life's website is: www.globelifeinsurance.com. Globe Life makes available free of charge through its website, its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after they have been electronically filed with or furnished to the Securities and Exchange Commission. Other information included in Globe Life's website is not incorporated into this filing.
 

1
GL 2021 FORM 10-K
Table of Contents
The following table presents Globe Life's business by primary marketing distribution method. Additional information concerning industry segments may be found in Management’s Discussion and Analysis and in Note 14—Business Segments within the Notes to the Consolidated Financial Statements.

Primary Distribution MethodUnderwriting CompanyProducts and Target MarketsDistribution
gl-20211231_g1.jpg
Direct to Consumer DivisionGlobe Life And Accident Insurance Company

McKinney, Texas		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.
gl-20211231_g2.jpg
American Income Life DivisionAmerican 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.
gl-20211231_g3.jpg
Liberty National DivisionLiberty National Life Insurance Company

McKinney, Texas		Life and supplemental health insurance distributed through in-home and worksite channels.
2,804 producing agents in the U.S.
gl-20211231_g4.jpg
Family Heritage DivisionFamily Heritage Life Insurance Company of America

Cleveland, Ohio		Supplemental limited-benefit health insurance to lower middle-income to middle-income families.
1,157 producing agents in the U.S.
gl-20211231_g5.jpg
United American DivisionUnited American Insurance Company

McKinney, Texas		Medicare Supplement coverage to Medicare beneficiaries and, to a lesser extent, supplemental limited-benefit health coverage to people under age 65.
3,716 independent producing agents in the U.S.
2
GL 2021 FORM 10-K
Table of Contents
Insurance
Life 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)
202120202019
Direct to Consumer
$929,197 $881,012 $831,739 
Exclusive agents:
American Income1,458,408 1,325,293 1,220,483 
Liberty National341,332 318,545 309,792 
Independent agents:
United American8,426 9,314 10,211 
Other205,822 205,785 209,403 
$2,943,185 $2,739,949 $2,581,628 
(1)See definition of annualized premium in force under Results of Operations in Management's Discussion & Analysis.


Globe Life's insurance subsidiaries write a variety of nonparticipating ordinary life insurance products. These include 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)
 202120202019
Amount% of
Total		Amount% of
Total		Amount  % of
Total
Whole life:
Traditional$2,011,349 68 $1,857,106 68 $1,737,794 67 
Interest-sensitive33,912 1 36,297 1 38,691 2 
Term
750,005 26 716,698 26 683,869 26 
Other
147,919 5 129,848 5 121,274 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)
202120202019
Policy CountAverage Face Amount per PolicyPolicy CountAverage Face Amount per PolicyPolicy CountAverage Face Amount per Policy
Whole life:
Traditional8,963,774 $15.3 8,717,785 $14.7 8,477,406 $14.2 
Interest-sensitive191,536 20.4 199,975 20.3 208,822 20.3 
Term
4,731,044 15.3 4,526,172 15.1 4,313,709 14.8 
Other
432,372 15.3 408,859 14.3 399,365 13.7 
14,318,726 $15.3 13,852,791 $14.9 13,399,302 $14.5 


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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)
202120202019
Direct to Consumer
$74,627 $77,522 $78,229 
Exclusive agents:
Liberty National196,783 196,534 197,163 
American Income111,102 104,701 96,447 
Family Heritage363,226 338,309 312,479 
Independent agents:
United American540,340 476,296 454,720 
$1,286,078 $1,193,362 $1,139,038 

Globe Life offers Medicare Supplement and limited-benefit supplemental health insurance products that include primarily critical illness and accident plans. These products are designed to supplement health coverage that applicants already own. Medicare Supplements are offered to enrollees in the traditional fee-for-service Medicare program. Medicare Supplement plans are standardized by federal regulation and are designed to pay deductibles and co-payments not paid by Medicare.

The following table presents supplemental health annualized premium in force information for the three years ended December 31, 2021 by product category.
 
Annualized Premium in Force
(Dollar amounts in thousands)
202120202019
Amount% of
Total		Amount% of
Total		Amount% of
Total
Limited-benefit plans$700,767 54 $617,759 52 $581,056 51 
Medicare Supplement585,311 46 575,603 48 557,982 49 
$1,286,078 100 $1,193,362 100 $1,139,038 100 


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.

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Underwriting
 
The underwriting standards of each Globe Life insurance subsidiary are established by management. Each subsidiary uses information obtained from the application and, in some cases, telephone interviews with applicants, including, but not limited to inspection reports, pharmacy data, motor vehicle records, responses to both medical and not medical questions, doctors’ statements and/or medical examinations to determine whether a policy should be issued in accordance with the application, with a different rating, with a rider, with reduced coverage, or rejected.

Reserves
 
The life insurance policy reserves reflected in Globe Life's consolidated financial statements as future policy benefits are calculated based on accounting principles generally accepted in the United States of America (GAAP). These reserves, with future premiums and the associated interest compounded at assumed rates, must be sufficient to cover policy and contract obligations as they mature. Generally, the mortality and persistency assumptions used in the calculations of reserves are based on Company experience. Similar reserves are held on most of the health insurance policies written by Globe Life's insurance subsidiaries, since these policies generally are issued on a guaranteed-renewable basis. The assumptions used in the calculation of Globe Life's reserves are reported in Note 1—Significant Accounting Policies. Reserves for annuity products and certain life products consist of the policyholders’ account values and are increased by policyholder deposits and interest credited and are decreased by policy charges and benefit payments.

Reinsurance

Globe Life has historically participated in very limited third-party reinsurance as a result of the low face amounts of the policies sold by the Company. See Schedule IV and Note 6—Commitments and Contingencies for more information.

Investments
 
The nature, quality, and percentage mix of insurance company investments are regulated by state laws. The investments of Globe Life insurance subsidiaries consist predominantly of high-quality, investment-grade securities. Approximately 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).

Competition
 
Globe Life competes with other insurance carriers through policyholder service, price, product design, and sales efforts. While there are insurance companies competing with Globe Life, no individual company dominates any of Globe Life's life or health insurance markets.
 
Globe Life's health insurance products compete with, in addition to the products of other health insurance carriers, health maintenance organizations, preferred provider organizations, and other health care-related institutions which provide medical benefits based on contractual agreements.
 
The Company effectively competes with other carriers, in part, due to its ability to operate at lower policy acquisition and administrative expense levels than peer companies. This allows Globe Life to have competitive rates while maintaining higher underwriting margins.

Regulation

Insurance—Insurance companies are subject to regulation and supervision in the states in which they do business. The laws of the various states establish agencies with broad administrative and supervisory powers which include, among other things, granting and revoking licenses to transact business, regulating trade practices, licensing agents, approving policy forms, approving certain premium rates, setting minimum reserve and loss ratio requirements, determining the form and content of required financial statements, and prescribing the type and amount of investments permitted. Insurance companies are also required to file detailed annual reports with supervisory agencies, and records of their business are subject to examination at any time. Under the rules of the
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National Association of Insurance Commissioners (NAIC), insurance companies are examined periodically by one or more of the supervisory agencies.

Risk-Based Capital (RBC)—The NAIC requires that a risk-based capital formula be applied to all life and health insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are adequately capitalized. All Globe Life's insurance subsidiaries are more than adequately capitalized under the risk-based capital formula. See further discussion of RBC in Capital Resources.

Holding Company—States have enacted legislation requiring registration and periodic reporting by insurance companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to constitute a holding company system. Globe Life and its subsidiaries have registered as a holding company system pursuant to such legislation in Indiana, Nebraska, Ohio, and New York.

Insurance holding company system statutes and regulations impose various limitations on investments in subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliates and for the payment of certain dividends and other distributions.

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.

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 maintaining a diverse workforce that reflects the communities in which we work. In addition, to enable the Company to appropriately respond to ESG-related challenges and opportunities, the Company has in place an ESG Committee, and the Board and its committees regularly engage with senior management on relevant ESG-related issues.

Human Capital Management

Globe Life's talent base encompasses a broad range of experience that possesses the depth of critical skills to efficiently and effectively accomplish our business purpose and mission, serve our policyholders, and protect our shareholders' interests. Maintaining superior human capital is a key driver to the success and longevity that our Company has experienced since its origins dating back to the early 1900s. As of December 31, 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 Community

At Globe Life, we are united by our mission to—Make Tomorrow Better1 and this starts with our employees and agents. Beyond providing insurance protection for millions of individuals, serving our policyholders and generating financial results for our shareholders, we focus on cultivating a healthy, positive culture and a thriving community within and among our campuses that is inclusive of and attractive for all. Globe Life promotes a diverse work force, where differences are celebrated and inclusiveness is embraced, to better enable our employees to consistently achieve outstanding individual and collective results. Our commitment to diversity starts at the top; of the 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 Tomorrow Better by working to protect their financial future."
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As of December 31, 2021 and 2020, the Globe Life employees, (excluding independently-contracted agents) identify as follows:
2021
Ethnicity/RaceGenderGenerations
White56 %Female66 %Baby Boomers (1946-1964)20 %
Black or African American21 Male34 Gen X (1965-1977)31 
Hispanic or Latino12 Millennials (1978-1995)41 
Asian9 Gen Z (1996-2012)8 
American Indian or Alaskan Native1 
Native Hawaiian or Pacific Islander— 
Other or Not Specified1 
Total100 %100 %100 %
2020
Ethnicity/RaceGenderGenerations
White53 %Female67 %Baby Boomers (1946-1964)23 %
Black or African American21 Male33 Gen X (1965-1977)31 
Hispanic or Latino11 Millennials (1978-1995)41 
Asian9 Gen Z (1996-2012)5 
American Indian or Alaskan Native1 
Native Hawaiian or Pacific Islander— 
Other or Not Specified5 
Total100 %100 %100 %

We conduct a confidential survey biennially to give our employees the opportunity to provide candid feedback about their experiences at the Company, including but not limited to, confidence in the Company and leadership, competitiveness of our compensation and benefit package, and departmental relationships. The results are shared with our employees, reviewed by senior leadership, and used to identify areas for improvement and create action plans based on the employee feedback received.

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 focus, including charities that support underserved communities, provide scholarships to youth, and advance equity and diversity efforts.

Talent Development

At Globe Life, we believe investing in our employees through training and development is paramount to their success. We have developed a learning ecosystem that includes a multitude of professional development opportunities, including online, self-directed, and instructor-led courses on a variety of topics. An education assistance program is also offered to facilitate growth in an area related to one's current position with the Company.

Health, Safety, and Wellness

We strive to provide a safe and healthy work environment for every employee. We furnish employees with numerous tools and trainings throughout the year to help ensure they have, at their fingertips, the best information to safely engage with co-workers, customers, and third parties. In furtherance of our commitment to our employees, we offer a comprehensive employee benefits package that includes competitive monetary benefits, retirement benefits through a Section 401(k) plan and a qualified pension to eligible employees, fitness center reimbursement,
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paid-time-off (based on years of service), health insurance, dental and vision insurance, employee resource program, health savings and flexible spending accounts, family leave, and tuition assistance.

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 efficiently transitioned approximately 80-85% of the Company's total workforce, excluding agents, to working remotely and continued to operate in a mostly remote 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.


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Item 1A. Risk Factors
 
Risks Related to Our Business
 
The insurance industry is a regulated industry, populated by many public and private companies. We operate in the industry's life and health insurance sectors, each of which has its own set of risks.

Business and Operational Risks

The development and maintenance of our various distribution channels are critical to growth in product sales and profits.

Recruiting, development, and retention of producing agents are critical to support sales growth in 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 effectively develop new methods of reaching consumers and realizing cost efficiencies in our Direct to Consumer Division business could result in reduced sales and profits.

Our future success depends, in substantial part, on our ability to recruit, hire, motivate, develop and retain highly-skilled insurance personnel. Doing so may be difficult due to many factors, including but not limited to, fluctuations in economic and industry conditions and the effectiveness of our compensation programs and competition among other employers.

Our life insurance products are sold in niche markets. We are at risk should any of these markets diminish.

We have several life distribution channels that focus on distinct market niches, three of which are labor unions, affinity groups, and sales via Direct to Consumer solicitations. Deterioration of our relationships with organized labor or adverse changes in the public’s receptivity to direct to consumer marketing initiatives could negatively affect our life insurance business.

The impact of COVID-19 and related risks could materially affect our results of operations, financial position and/or liquidity.

The effects of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive and rapidly changing. The global COVID-19 pandemic has resulted in and is expected to continue to result in significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely affected the Company and will likely continue to do so for an uncertain period of time. Because of the size and breadth of this pandemic and the impact of related government and regulatory actions, all of the direct and indirect consequences of COVID-19 on the Company are not yet known and may not emerge for some time.

The COVID-19 pandemic subjects the Company to various potential risks that could adversely affect the Company in different ways, including but not limited to the following:

•Reduced sales resulting from potential limitations in the virtual sales and agent recruiting process or 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.

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 or unknown. Given the great uncertainties associated with COVID-19 and its impact and the limited information
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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 independent contractors at our insurance subsidiaries could result in adverse legal, tax or financial consequences.

A significant portion of our sales agents are independent contractors. Although we believe we have properly classified such individuals, a risk nevertheless exists that a court, the Internal Revenue Service or other authority will take the position that those sales agents are employees. The laws and regulations that govern the status and classification of workers are subject to change and differing interpretations, which we cannot predict.

If there is an adverse determination regarding the classification of some or all of the independent contractors at our insurance subsidiaries by a court or governmental agency, we could incur significant costs with respect to payroll tax liabilities, employee benefits, wage payments, fines, judgments and/or legal settlements, any of which could have a material adverse effect on our business, financial condition and results of operations. In addition, any resulting reclassification could necessitate significant changes in our affected insurance subsidiaries’ business models.

Financial and Strategic Risks

Our investments are subject to market and credit risks. Significant downgrades, delinquencies and defaults in our investment portfolio could potentially result in lower net investment income and increased realized and unrealized investment losses.

Our invested assets are subject to the customary risks of defaults, downgrades and changes in market values. Our investment portfolio consists predominately of fixed maturity and short-term investments, where we are exposed to the risk that individual issuers will not have the ability to make required interest or principal payments. A concentration of these investments in any particular issuer, industry, group of related industries or geographic areas could increase this risk. Factors that may affect both market and credit risks include interest rate levels (consisting of both treasury rate and credit spread), financial market performance, disruptions in credit markets, general economic conditions, legislative changes, particular circumstances affecting the businesses or industries of each issuer and other factors beyond our control.

Additionally, as the majority of our investments are long-term fixed maturities that we typically hold until maturity, a significant increase in interest rates or a market downturn could cause a material temporary decline in the fair value of our fixed investment portfolio, even with regard to performing assets. These declines could cause a material increase in unrealized losses in our investment portfolio. Significant unrealized losses could substantially reduce our capital position and shareholders’ equity. It is possible our investment in certain of these securities with unrealized losses could experience a credit event where an allowance for credit loss is recorded, reducing net income.
 
We cannot be assured that any particular issuer, regardless of industry, will be able to make required interest and principal payments on a timely basis or at all. Significant downgrades or defaults of issuers could negatively impact our risk-based capital ratios, leading to potential downgrades of 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.
 
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.
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Our ability to fund operations is substantially dependent on available funds from our insurance subsidiaries.

As a holding company with no direct operations, our principal asset is the capital stock of our insurance subsidiaries, which periodically declare and distribute dividends on their capital stock. Moreover, our liquidity, including our ability to pay our operating expenses and to make principal and interest payments on debt securities or other indebtedness owed by us, as well as our ability to pay dividends on our common stock or any preferred stock, depends significantly upon the surplus and earnings of our insurance subsidiaries and the ability of these subsidiaries to pay dividends or to advance or repay funds to us. Other sources of liquidity include a variety of short-term and long-term instruments, 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.
 
Changes in laws or regulations in the states in which our companies are domiciled could constrain the ability of our insurance subsidiaries to pay dividends or to advance or repay funds to us in sufficient amounts and at times necessary to pay our debt obligations, corporate expenses, or dividends on our capital stock.

Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs or access capital, as well as affect our cost of capital.

Should interest rates increase in the future, the higher interest expense on any new issued debt may reduce net income. In addition, if the credit and capital markets were to experience significant disruption, uncertainty and instability, these conditions could adversely affect our access to capital. Such market conditions could limit our ability to replace maturing debt obligations in a timely manner or at all and/or access the capital necessary to grow our business.
 
In the unlikely event that current sources of liquidity do not satisfy our needs, we may have to seek additional financing or raise capital. The availability and cost of additional financing or capital depend on a variety of factors such as market conditions, the general availability of credit or capital, the volume of trading activities, the overall availability of credit to the insurance industry and our credit ratings and credit capacity. Additionally, customers, lenders or investors could develop a negative perception of our financial prospects if we were to incur large investment losses or if the level of our business activity decreased due to a market downturn. Our access to funds may also be impaired if regulatory authorities or rating agencies take negative actions against us. If our internal sources of liquidity prove to be insufficient, we may not be able to successfully obtain additional financing on favorable terms or at all. As such, we may be forced to delay raising capital, issue shorter term securities than we would prefer or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility. If so, our results of operations, financial condition, consolidated RBC, and cash flows could be materially negatively affected.
 
Industry Risks

Variations in actual-to-expected rates of mortality, morbidity and persistency could materially negatively affect our results of operations and financial condition.

We establish policy reserves to pay future policyholder benefits. These reserves do not represent an exact calculation of liability, but rather are actuarial estimates based on models and accounting requirements that include many assumptions and projections which are inherently uncertain. The reserve computations involve the exercise of
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significant judgment with respect to investment yields, levels of mortality, morbidity, persistency, and investment yields, as well as the timing of premium and benefit payments. Even though our actuaries continually test actual-to-expected results, actual results may differ significantly from the levels assumed, which could result in increased policy obligations and expenses and thus negatively affect our profit margins and income.

A ratings downgrade or other negative action by a rating agency could materially affect our business, financial condition and results of operations.

Various rating agencies review the financial performance and condition of insurers, including our insurance subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to fulfill its contractual obligations. These ratings are important to maintaining public confidence in our insurance products. A downgrade or other negative action by a rating agency with respect to the financial strength ratings of our insurance subsidiaries could negatively affect us by limiting or restricting the ability of our insurance subsidiaries to pay dividends to us and reducing our sales by adversely affecting our ability to sell insurance products through independent insurance agencies.

The supplemental health insurance market is subject to substantial regulatory scrutiny.

Regulatory changes could impact our Medicare Supplement and other supplemental health business. The nature and timing of any such changes cannot be predicted and could have a material adverse effect on our supplemental health insurance business.

Obtaining timely and appropriate premium rate increases for certain supplemental health insurance policies is critical.

A significant percentage of the supplemental health insurance premiums that our insurance subsidiaries earn is from Medicare Supplement insurance. Medicare Supplement insurance, including conditions under which the premiums for such policies may be increased, is highly regulated at both the state and federal level. As a result, our Medicare Supplement business is characterized by lower profit margins than life insurance and requires strict administrative discipline and economies of scale for success. Since Medicare Supplement policies are coordinated with the federal Medicare program, which experiences health care inflation every year, annual premium rate increases for the Medicare Supplement policies are typically necessary. Accordingly, the inability of our insurance subsidiaries to obtain approval of appropriate premium rate increases for supplemental health insurance plans in a timely manner from state insurance regulatory authorities could adversely impact their profitability and thus our business, financial condition and results of operations.

Our business is subject to the risk of the occurrence of catastrophic events that could adversely affect our financial condition or operations.

Our insurance policies are issued to and held by a large number of policyholders throughout the United States in relatively low-face amounts. Accordingly, it is unlikely that a large portion of our policyholder base would be affected by a single natural disaster. However, our insurance operations could be exposed to the risk of catastrophic mortality or morbidity caused by events such as a pandemic, hurricane, earthquake, or man-made catastrophes, including acts of terrorism or war, which may produce significant claims in larger areas, especially those that are heavily populated. Claims resulting from natural or man-made catastrophic events could cause substantial volatility in our financial results for any fiscal quarter or year and could materially reduce our profitability or harm our financial condition.

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 on our workforce 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 and financial condition, particularly if those problems affect employees performing operations tasks and 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.

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Our business is subject to the risk of direct or indirect effects of climate 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.

Legal, Regulatory, and Compliance Risks

Our businesses are heavily regulated and changes in regulation may reduce our profitability and growth.

Insurance companies, including our insurance subsidiaries, are subject to extensive supervision and regulation in the states in which they do business. The primary purpose of this supervision and regulation is the protection of policyholders, not investors. Regulatory agencies have broad administrative power over numerous aspects of our business, including premium rates and other terms and conditions included in the insurance policies offered by our insurance subsidiaries, marketing practices, advertising, agent licensing, policy forms, capital adequacy, solvency, reserves and permitted investments. Also, regulatory authorities have relatively broad discretion to grant, renew or revoke licenses or approvals. The insurance laws, regulations and policies currently affecting our companies may change at any time, possibly having an adverse effect on our business. Should regulatory changes occur, we may be unable to maintain all required licenses and approvals, or fully comply with the wide variety of applicable laws and regulations or the relevant authority’s interpretation of such laws and regulations. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend some or all of our business activities and/or impose substantial fines.
 
Changes in U.S. federal income tax law could increase our tax costs or negatively impact our insurance subsidiaries' capital.

Changes to the Internal Revenue Code, administrative rulings, or court decisions affecting the insurance industry, including the products insurers offer, could increase our effective tax rate and lower our net income, adversely impact our insurance subsidiaries' capital, or limit the ability of our insurance subsidiaries to sell certain of their products.
 
Changes in accounting standards issued by accounting standard-setting bodies may affect our financial statements, reduce our reported profitability and change the timing of profit recognition.

Our financial statements are subject to the application of GAAP and accounting practices as promulgated by the National Association of Insurance Commissioners’ statutory accounting practices (NAIC SAP), which principles are periodically revised and/or expanded. Accordingly, from time to time we are required to adopt new or revised accounting standards or guidance issued by recognized authoritative bodies. Future accounting standards that we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements. These changes including underlying assumptions, projections, estimates or judgments/interpretations by management, could have a material adverse effect on our business, financial condition and results of operations. (Refer to Note 1— Significant Accounting Policies under the caption Accounting Pronouncements Yet to be Adopted)

Non-compliance with laws or regulations related to customer and consumer privacy and information security, including a failure to ensure that our business associates with access to sensitive customer and consumer information maintain its confidentiality, could materially adversely affect our reputation and business operations.

The collection, maintenance, use, disclosure and disposal of personally identifiable information by our insurance subsidiaries are regulated at the international, federal and state levels. Applicable laws and rules are subject to change by legislation or administrative or judicial interpretation. Various state laws address the use and disclosure of personally identifiable information to the extent they are more restrictive than those contained in the privacy and security provisions in the federal Gramm-Leach-Bliley Act of 1999 (GLBA), the Health Information Technology for
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Economic and Clinical Health Act (HITECH), and in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA also requires that we impose privacy and security requirements on our business associates (as that term is defined in the HIPAA regulations). Noncompliance with any privacy laws, whether by us or by one of our business associates, could have a material adverse effect on our business, reputation and results of operations and could result in material fines and penalties, various forms of damages, consent orders regarding our privacy and security practices, adverse actions against our licenses to do business, and injunctive relief.

General Risk Factors

The failure to maintain effective and efficient information systems at the Company could compromise data security, thereby adversely affecting our financial condition and results of operations.

Our business is highly dependent upon the internet, third-party service providers, and information systems to operate in an efficient and resilient manner. We gather and maintain data for the purpose of conducting marketing, actuarial analysis, sales and policy administration functions.

Malicious third-parties, employee or agent errors or disasters affecting our information systems could impair our business operations, regulatory compliance and financial condition. Employee or agent malfeasance or errors in the handling of our information systems may result in unauthorized access to customer or proprietary information, or an inability to use our information systems to efficiently support business operations.

More frequent and sophisticated cyberattacks and more impactful regulatory oversight models could result in additional costs to protect against security breaches. Any breach of confidential information systems resulting from the above factors could damage our reputation in the marketplace, deter potential customers from purchasing our products, result in the loss of existing customers, subject us to significant civil and criminal liability, constrain cash flows, or require us to incur significant technical, legal or other expenses.

The failure to effectively maintain and modernize our information technology systems and infrastructure could adversely affect our business.

Our ability to modernize our information technology systems and infrastructure requires us to commit to significant resources, effective planning, and execution. In addition, due to the highly regulated nature of the insurance 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 effectively, efficiently, or in a timely manner, it could result in poor customer experience, additional expenses, reputational harm, legal, and regulatory actions and other adverse consequences. This could also result in the inability to effectively support business operations.

Damage to the brand and reputation of Globe Life or its subsidiaries could affect our ability to conduct business.

Negative publicity through traditional media, internet, social media and other public forums could damage our brand or reputation and adversely impact our agent recruiting efforts, the ability to market our products and the persistency of in-force policies. The Company could be subjected to adverse publicity in the event of a significant security breach.


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We may fail to meet expectations relating to environmental, social, and governance standards and practices.

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 effective 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.
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Item 1B. Unresolved Staff Comments
 
As of December 31, 2021, Globe Life had no unresolved SEC staff comments.

Item 2. Properties
 
Globe Life, through its subsidiaries, owns or leases buildings that are used in the normal course of business. Globe Life owns and occupies approximately 500,000 combined square feet in McKinney, Texas (headquarters) and at the Waco, Texas and Oklahoma City, Oklahoma campuses. Additionally, the Company leases other buildings across the U.S.

Item 3. Legal Proceedings

Discussion regarding litigation and unclaimed property audits is provided in Note 6—Commitments and Contingencies.

Item 4. Mine Safety Disclosures
 
Not Applicable.
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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.

gl-20211231_g6.jpg
*$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.



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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, 2021265,733 $91.68 265,733 —
November 1-30, 2021751,875 91.60 751,875 —
December 1-31, 2021609,074 90.00 609,074 —
 
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.
Item 6. [Reserved]

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

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

Readers are also directed to consider other risks and uncertainties described in other documents on file with the Securities and Exchange Commission.
 
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GLOBE LIFE INC.
Management's Discussion & Analysis

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with Globe Life's Consolidated Financial Statements and Notes thereto appearing elsewhere in this report. 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" refer to Globe Life Inc. and its subsidiaries and affiliates.


Results of Operations
gl-20211231_g7.jpg
How Globe Life Views Its Operations. Globe Life Inc. is the holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower middle to middle income households throughout the United States. We view our operations by segments, which are the insurance product lines of life, supplemental health, and annuities, and the investment segment that supports the product lines. Segments are aligned based on their common characteristics, comparability of the profit margins, and management techniques used to operate each segment.
gl-20211231_g8.jpg
Insurance Product Line Segments. The insurance product line segments involve the marketing, underwriting, and administration of policies. Each product line is further segmented by the various distribution channels that market the insurance policies. Each distribution channel operates in a niche market offering insurance products designed for that particular market. Whether analyzing profitability of a segment as a whole, or the individual distribution channels within the segment, the measure of profitability used by management is the underwriting margin, as seen below:

 Premium revenue
                                                           (Policy obligations)
                                                           (Policy acquisition costs and commissions)
                                                            Underwriting margin

gl-20211231_g9.jpg
Investment Segment. The investment segment involves the management of our capital resources, including investments and the management of corporate debt and liquidity. Our measure of profitability for the investment segment is excess investment income, as seen below:
 Net investment income
(Required interest on net policy liabilities)
                                                           (Financing costs)
                                                            Excess investment income


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GLOBE LIFE INC.
Management's Discussion & Analysis
Current Highlights, comparing year-to-date 2021 with 2020.
•Net income as a return on equity (ROE) for the year ended December 31, 2021 was 8.8% and net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio(1) was 12.3%.
•Total premium increased 7% over the prior year. Life premium increased 8% for the period from $2.7 billion 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.
•Total 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.
•For the year ended December 31, 2021, the Company repurchased 4.8 million shares of Globe Life Inc. common stock at a total cost of $455 million for an average share price of $95.11.
The following graphs represent net income and net operating income for the three years ended December 31, 2021.
gl-20211231_g10.jpg gl-20211231_g11.jpg
(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-GAAP measure. It has been used consistently by Globe Life's management for many years to evaluate the operating performance of the Company. It differs from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain significant and unusual items included in net income. Net income is the most directly comparable GAAP measure.
Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of the net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities, net of tax is $2.8 billion and $3.2 billion for 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 effect of net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities is $27.47 and $30.07 for year ended December 31, 2021 and 2020, respectively.
Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.

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GLOBE LIFE INC.
Management's Discussion & Analysis

Summary of Operations. Net income increased 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.

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 GAAP measure. We do not consider realized gains and losses to be a component of our core insurance operations or operating segments. Additionally, net income was affected by certain significant and unusual non-operating items in 2020 and 2021. We do not view these items as components of core operating results because they are not indicative of past performance or future prospects of the insurance operations. We remove items such as these that relate to prior periods or are non-operating items when evaluating the results of current operations, and therefore exclude such items from our segment analysis for current periods.

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. 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 effective treatments for the disease, vaccination rates, and effectiveness of vaccines, impact from potential variants, and the ages and geographic areas in which infections and deaths occur.



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GLOBE LIFE INC.
Management's Discussion & Analysis
Globe Life's operations on a segment-by-segment basis are discussed in depth below. Net operating income has been used consistently by management for many years to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs from GAAP net income primarily because it excludes certain non-operating items such as realized gains and losses and other significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company’s business. Net income is the most directly comparable GAAP measure.


Analysis of Profitability by Segment
(Dollar amounts in thousands)
2021202020192021 Change%2020 Change%
Life insurance underwriting margin$623,675 $674,946 $703,464 $(51,271)(8)$(28,518)(4)
Health insurance underwriting margin304,302 272,369 243,638 31,933 12 28,731 12 
Annuity underwriting margin8,704 9,029 9,458 (325)(4)(429)(5)
Excess investment income238,528 244,424 257,605 (5,896)(2)(13,181)(5)
Other insurance:
Other income1,216 1,325 1,318 (109)(8)7 1 
Administrative expense(271,631)(250,947)(240,321)(20,684)8 (10,626)4 
Corporate and other(39,825)(45,783)(55,103)5,958 (13)9,320 (17)
Pre-tax total864,969 905,363 920,059 (40,394)(4)(14,696)(2)
Applicable taxes(157,472)(167,771)(167,957)10,299 (6)186 — 
Net operating income
707,497 737,592 752,102 (30,095)(4)(14,510)(2)
Reconciling items, net of tax:
Realized gain (loss)—investments54,220 (1,915)16,291 56,135 (18,206)
Realized loss—redemption of debt(7,358)(501)— (6,857)(501)
Part D adjustments—discontinued operations— — (92)— 92 
Administrative settlements(1,047)— (400)(1,047)400 
Non-operating expenses(1,923)(816)(508)(1,107)(308)
Legal proceedings(6,430)(2,587)(6,603)(3,843)4,016 
Net income
$744,959 $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.
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GLOBE LIFE INC.
Management's Discussion & Analysis
In 2021, the largest contributor of total underwriting margin was the life insurance segment and the primary distribution channel was American Income Life Division. The following charts represent the breakdown of total underwriting margin by operating segment and distribution channel for the year ended December 31, 2021.
gl-20211231_g12.jpggl-20211231_g13.jpg

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.

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GLOBE LIFE INC.
Management's Discussion & Analysis
The discussions of our segments are presented in the manner we view our operations, as described in Note 14—Business Segments.
 
We use three statistical measures as indicators of premium growth and sales over the near term: “annualized premium in force,” “net sales,” and “first-year collected premium.”
•Annualized premium in force is defined as the premium income that would be received over the following twelve months at any given date on all active policies if those policies remain in force throughout the twelve-month period. Annualized premium in force is an indicator of potential growth in premium revenue.
•Net sales, a statistical performance measure, is calculated as annualized premium issued, net of cancellations in the first thirty days after issue, except in the case of Direct to Consumer, where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period has expired. Management considers net sales to be a better indicator of the rate of premium growth than annualized premium issued.
•First-year collected premium is defined as the premium collected during the reporting period for all policies in their first policy year. First-year collected premium takes lapses into account in the first year when lapses are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added to premium income in the future.

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


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

Life insurance is the Company's predominant segment. During 2021, life premium represented 71% of total premium and life underwriting margin represented 67% of the total. Additionally, investments supporting the reserves for life products produce the majority of excess investment income attributable to the investment segment.
 
The following table presents the summary of results of life insurance. Further discussion of the results by distribution channel is included below.

Life Insurance
Summary of Results
(Dollar amounts in thousands)
 202120202019
 Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Premium and policy charges$2,898,210 100 $2,672,804 100 $2,517,784 100 
Policy obligations2,070,485 71 1,809,373 68 1,638,053 65 
Required interest on reserves(735,282)(25)(698,112)(26)(666,168)(26)
Net policy obligations1,335,203 46 1,111,261 42 971,885 39 
Commissions, premium taxes, and non-deferred acquisition expenses234,033 8 212,859 8 203,052 8 
Amortization of acquisition costs705,299 24 673,738 25 639,383 25 
Total expense2,274,535 78 1,997,858 75 1,814,320 72 
Insurance underwriting margin
$623,675 22 $674,946 25 $703,464 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 claims, compared with $67 million in the prior year.

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GLOBE LIFE INC.
Management's Discussion & Analysis
Life insurance products are marketed through several distribution channels. Premium income by distribution channel for each of the last three years is as follows:
 
Life Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
 202120202019
 Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$1,402,878 48 $1,257,726 47 $1,160,495 46 
Direct to Consumer971,461 34 906,959 34 855,543 34 
Liberty National311,081 11 293,897 11 285,551 11 
Other212,790 7 214,222 8 216,195 9 
Total
$2,898,210 100 $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 information for each of the last three years by distribution channel.

Life Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
 202120202019
 Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$290,512 56 $253,276 52 $237,587 55 
Direct to Consumer148,846 28 165,426 34 126,208 29 
Liberty National71,184 14 54,931 12 53,718 13 
Other11,055 2 10,371 2 12,301 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)
 202120202019
 Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$250,937 59 $214,566 58 $195,225 59 
Direct to Consumer111,761 27 104,262 28 82,615 25 
Liberty National50,336 12 42,435 11 39,840 12 
Other9,705 2 10,190 3 11,564 4 
Total
$422,739 100 $371,453 100 $329,244 100 

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GLOBE LIFE INC.
Management's Discussion & Analysis

A discussion of life operations by distribution channel follows.

The American Income Life Division markets to members of labor unions and continues to diversify its lead sources by building relationships with other affinity groups, utilizing third-party internet vendor leads and obtaining referrals to facilitate sustainable growth. This division is Globe Life's largest contributor 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.

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 claims 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.
2021202020192021 Change%2020 Change%
American Income9,971 8,738 7,360 1,233 14 1,378 19 

American Income Life continues to focus on growing and strengthening the agency force, specifically through emphasis on agency middle-management growth and additional agency office openings. In addition to offering financial incentives and training opportunities, the agency has made considerable investments in information technology, including a customer relationship management (CRM) tool for 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 shifted 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.

The Direct to Consumer Division (DTC) offers adult and juvenile life insurance through a variety of marketing approaches, including direct mailings, insert media, and electronic media. 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 traffic 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 awareness of needing life insurance from the effects of COVID-19. The different approaches support and complement one another in the division's efforts to reach the consumer. The DTC's long-term growth has been fueled by constant innovation and name recognition. We continually introduce new initiatives in this division in an attempt to increase response rates.

While the juvenile market is an important source of sales, it also is a vehicle to reach the parents and grandparents of juvenile policyholders, who are more likely to respond favorably to a DTC solicitation for life coverage on themselves than is the general adult population. Also, both juvenile policyholders and their parents are low acquisition-cost targets for sales of additional coverage over time.

The DTC division 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.
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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.

DTC incurred $69 million of COVID-19 net life claims, representing approximately 7% of premium, in 2021 compared with $35 million in 2020. DTC’s underwriting margin, as a percent of premium, was 7% for 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.

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, underwriting margin as a percent of premium was lower for the full year 2021 as compared with 2020.

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.

2021202020192021 Change%2020 Change%
Liberty National2,716 2,575 2,350 141 5 225 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.

The Other Agencies distribution channels primarily include non-exclusive independent agencies selling predominantly life insurance. The Other Agencies contributed $213 million of life premium income, or 7% of Globe Life's total in 2021, but contributed only 2% of net sales for the year.

HEALTH INSURANCE

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

Health premium accounted for 29% of our total premium in 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.
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Management's Discussion & Analysis

The following table presents underwriting margin data for health insurance.

Health Insurance
Summary of Results
(Dollar amounts in thousands)
 202120202019
 Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Premium$1,201,676 100 $1,141,097 100 $1,077,346 100 
Policy obligations758,745 63 733,481 64 687,764 64 
Required interest on reserves(102,574)(8)(93,475)(8)(87,289)(8)
Net policy obligations656,171 55 640,006 56 600,475 56 
Commissions, premium taxes, and non-deferred acquisition expenses97,453 8 91,959 8 94,973 8 
Amortization of acquisition costs143,750 12 136,763 12 138,260 13 
Total expense897,374 75 868,728 76 833,708 77 
Insurance underwriting margin
$304,302 25 $272,369 24 $243,638 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 by distribution channel.

Globe Life markets supplemental health insurance products through a number of distribution channels. The following table is an analysis of our health premium by distribution channel for each of the last three years.

Health Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)

 202120202019
 Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
United American$481,614 40 $452,980 40 $416,582 39 
Family Heritage343,839 29 317,021 28 294,182 27 
Liberty National187,327 16 188,835 16 189,578 18 
American Income114,950 9 105,734 9 99,447 9 
Direct to Consumer73,946 6 76,527 7 77,557 7 
Total
$1,201,676 100 $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.

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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)

 202120202019
 Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
United American$63,551 35 $61,690 35 $79,218 41 
Family Heritage72,600 39 70,665 40 65,626 34 
Liberty National26,512 14 22,905 13 24,504 13 
American Income18,230 10 18,817 10 18,059 10 
Direct to Consumer3,465 2 3,594 2 3,827 2 
Total
$184,358 100 $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)

 202120202019
 Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
United American$60,386 37 $79,628 45 $72,021 44 
Family Heritage57,427 36 54,242 31 50,204 31 
Liberty National20,348 13 20,169 11 19,698 12 
American Income18,939 12 18,536 11 17,142 11 
Direct to Consumer3,253 2 3,051 2 3,749 2 
Total
$160,353 100 $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 for 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.

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GLOBE LIFE INC.
Management's Discussion & Analysis
As discussed in Note 1—Significant Accounting Policies, the Company acquired Beazley Benefits, now rebranded as Globe Life Benefits, on August 1, 2021. Globe Life Benefits enhances the Company's presence in the worksite market by offering group supplemental health insurance solutions to employer groups through brokers. While the acquisition had an immaterial impact on year-to-date results, we are optimistic about Globe Life Benefits' ability to contribute additional health premium and profits in the future. Operating results for Globe Life Benefits are included as part of United American Division results.

The Family Heritage Division primarily markets limited-benefit supplemental health insurance in non-urban areas. Most of its policies include a cash-back feature, such as a return of premium, where any excess of premiums over claims paid is returned to the policyholder at the end of a specified period stated within the insurance policy. Underwriting margin as a percent of premium was 27%, 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.
2021202020192021 Change%2020 Change%
Average producing agents1,213 1,325 1,112 (112)(8)213 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.

Other distribution. 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 the end of 2021 and 2020 were $1.03 billion and $1.06 billion, respectively. Underwriting margin was $8.7 million for 2021 and $9.0 million for 2020.

We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life and supplemental health insurance products. Therefore, we do not expect that annuities will be a significant portion of our business or marketing strategy going forward.

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Management's Discussion & Analysis
INVESTMENTS

We manage our capital resources including investments, debt, and cash flow through the investment segment. Excess investment income represents the profit margin attributable to investment operations and is the measure that we use to evaluate the performance of the investment segment as described in Note 14—Business Segments. It is defined as net investment income less both the required interest on net insurance policy liabilities and the interest cost associated with capital funding or “financing costs.”

Management also views excess investment income per diluted common share as an important and useful measure to evaluate the performance of the investment segment. It is defined as excess investment income divided by the total diluted weighted average shares outstanding, representing the contribution by the investment segment to the consolidated earnings per share of the Company. Since implementing our share repurchase program in 1986, we have used $8.7 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 Investment Income. The following table summarizes Globe Life's investment income, excess investment income, and excess investment income per diluted common share.

Analysis of Excess Investment Income
(Dollar amounts in thousands except per share data)

202120202019
Net investment income$952,447 $927,062 $910,459 
Interest on net insurance policy liabilities:
Required interest on reserves(877,822)(833,000)(796,979)
Required interest on deferred acquisition costs247,389 237,066 228,431 
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 $17,987,502 $17,026,058 
Average net insurance policy liabilities(1)
10,954,500 10,460,539 10,068,120 
Average debt and preferred securities (at amortized cost)2,053,935 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.

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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 effective 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 diversify 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 information in Note 4—Investments. The following chart presents the growth in net investment income and the growth in mean invested assets.
202120202019
Growth in net investment income2.7 %1.8 %3.2 %
Growth in mean invested assets (at amortized cost)5.3 %5.6 %4.8 %

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 portfolio because we do not intend to sell nor is it likely that management will be required to sell the fixed maturities prior to their anticipated recovery.

Required interest on net insurance policy liabilities reduces net investment income, as it is the amount of net investment income considered by management necessary to “fund” required interest on net insurance policy liabilities, which is the net of the benefit reserve liability and the deferred acquisition cost asset. As such, it is removed from the investment segment and applied to the insurance segments to offset the effect of the required interest from the insurance segments. As discussed in Note 14—Business Segments, management regards this as a more meaningful analysis of the investment and insurance segments. Required interest is based on the actuarial interest assumptions used in discounting the benefit reserve liability and the amortization of deferred acquisition costs for our insurance policies in force.

The great majority of our life and health insurance policies are fixed interest rate protection policies, not investment products, and are accounted for under current GAAP accounting guidance for long-duration insurance products which mandate that interest rate assumptions for a particular block of business be “locked in” for the life of that block of business. Each calendar year, we set the discount rate to be used to calculate the benefit reserve liability and the amortization of the deferred acquisition cost asset for all insurance policies issued that year. That rate is based on the new money yields that we expect to earn on cash flow received in the future from policies of that issue year and cannot be changed. The discount rate used for policies issued in the current year has no impact on the in force policies issued in prior years as the rates of all prior issue years are also locked in. As such, the overall discount rate for the entire in force block of 5.8% 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.

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

Information about interest on net policy liabilities is shown in the following table.

Required Interest on Net Insurance Policy Liabilities
(Dollar amounts in thousands)
Required
Interest
Average Net
Insurance
Policy  Liabilities
Average
Discount
Rate
2021
Life and Health$583,996 $9,912,914 5.9 %
Annuity46,437 1,041,586 4.5 
Total$630,433 $10,954,500 5.8 
Increase in 20215.8 %4.7 %
2020
Life and Health$548,066 $9,391,680 5.8 %
Annuity47,868 1,068,859 4.5 
Total$595,934 $10,460,539 5.7 
Increase in 20204.8 %3.9 %
2019
Life and Health$518,623 $8,947,308 5.8 %
Annuity49,925 1,120,812 4.5 
Total$568,548 $10,068,120 5.6 
Increase in 20193.9 %3.3 %


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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 Statements of Operations.

Analysis of Financing Costs
(Dollar amounts in thousands)
202120202019
Interest on funded debt$78,183 $73,157 $69,844 
Interest on term loan— 4,193 3,262 
Interest on short-term debt5,270 9,302 11,165 
Other33 52 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. More information on our debt transactions are disclosed in the Financial Condition section of this report and in Note 11—Debt.

Realized Gains and Losses. Our life and health insurance companies collect premium income from policyholders for the eventual payment of policyholder benefits, sometimes paid many years or even decades in the future. Since benefits are expected to be paid in future periods, premium receipts in excess of current expenses are invested to provide for these obligations. For this reason, we hold a significant investment portfolio as a part of our core insurance operations. This portfolio consists primarily of high-quality fixed maturities containing an adequate yield to provide for the cost of carrying these long-term insurance product obligations. As a result, fixed maturities are generally held for long periods to support the liabilities. Expected yields on these investments are taken into account when setting insurance premium rates and product profitability expectations.
 
Despite our intent to hold fixed maturity investments for a long period of time, investments are occasionally sold, exchanged, called, or experience a credit loss event, resulting in a realized gain or loss. These sales are often in response to deterioration in credit quality of the issuer in effort to maximize risk-adjusted, capital-adjusted returns. We do not engage in trading investments for profit. Therefore, gains or losses, which occur in protecting the portfolio or its yield or which result from events that are beyond our control, are only secondary to our core insurance operations of providing insurance coverage to policyholders. In a bond exchange offer, bondholders may consent to exchange their existing bonds for another class of debt securities. The 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 Statements of Operations.
 
Realized gains and losses can be significant in relation to the earnings from core insurance operations, and as a result, can have a material positive or negative impact on net income. The significant fluctuations caused by gains and losses can cause period-to-period trends of net income that are not indicative of historical core operating results or predictive of the future trends of core operations. Accordingly, they have no bearing on core insurance operations or segment results as we view operations. For these reasons, and in line with industry practice, we remove the effects of realized gains and losses when evaluating overall insurance operating results.
 
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GLOBE LIFE INC.
Management's Discussion & Analysis
The following table summarizes our tax-effected realized gains (losses) by component for each of the three years ended December 31, 2021.

Analysis of Realized Gains (Losses), Net of Tax
(Dollar amounts in thousands, except for per share data)
 Year Ended December 31,
 202120202019
 Amount
Per
Share
AmountPer
Share		AmountPer
Share
Fixed maturities:
Sales$(8,100)$(0.08)$(28,844)$(0.27)$(1,933)$(0.02)
Other(1)
35,684 0.34 11,712 0.11 17,223 0.16 
Provision for credit losses2,337 0.02 (2,643)(0.03)— — 
Fair value option—change in fair value18,105 0.18 826 0.01 992 0.01 
Other investments6,194 0.06 17,034 0.16 9 — 
Realized investment gains (losses)
54,220 0.52 (1,915)(0.02)16,291 0.15 
Loss on redemption of debt(7,358)(0.07)(501)— — — 
Total realized gains (losses)
$46,862 $0.45 $(2,416)$(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.

Investment Acquisitions. Globe Life's investment policy calls for investing primarily in investment grade fixed maturities that meet our quality and yield objectives. We generally 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 information for fixed maturity investments. The effective annual yield shown is based on the acquisition price and call features, if any, of the securities. For non-callable bonds, the yield is calculated to maturity date. For callable bonds acquired at a premium, the yield is calculated to the earliest known call date and call price after acquisition ("first call date"). For all other callable bonds, the yield is calculated to maturity date.

Fixed Maturity Acquisitions Selected Information
(Dollar amounts in thousands)
 Year Ended December 31,
 202120202019
Cost of acquisitions(1):
Investment-grade corporate securities$566,400 $686,844 $922,927 
Investment-grade municipal securities434,482 543,088 627,967 
Other investment-grade securities10,465 34,171 10,483 
Total fixed maturity acquisitions
$1,011,347 $1,264,103 $1,561,377 
Effective annual yield (one year compounded)(2)
3.39 %3.73 %4.47 %
Average life (in years to next call)21.7 15.8 18.7 
Average life (in years to maturity)31.7 26.3 29.4 
Average ratingA+AA
(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.
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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 for investment has been primarily provided through our insurance operations, cash received on existing investments, and proceeds from dispositions. While dispositions increase funds available for investment, as noted earlier in this discussion, they can also have a negative impact on investment income if the proceeds from the dispositions are reinvested at lower yields than the bonds that were disposed. Dispositions were $428 million in 2021 and $469 million in 2020.

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

Selected information concerning the fixed maturity portfolio is as follows:

Fixed Maturity Portfolio Selected Information
At December 31,
20212020
Average annual effective yield(1)
5.17%5.28%
Average life, in years, to:
Next call(2)
15.716.2
Maturity(2)
19.019.0
Effective duration to:
Next call(2,3)
10.611.0
Maturity(2,3)
12.212.3
(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 for callable bonds and the maturity date for noncallable bonds, and
(b) based on the maturity date of all bonds, whether callable or not.
(3)Effective duration is a measure of the price sensitivity of a fixed-income security to a particular change in interest rates.

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Management's Discussion & Analysis
Credit Risk Sensitivity. The following tables summarize certain information about the major corporate sectors and security types held in our fixed maturity portfolio at December 31, 2021 and 2020.

Fixed Maturities by Sector
December 31, 2021
(Dollar amounts in thousands)
Below Investment GradeTotal Fixed Maturities% of Total Fixed Maturities
 Amortized
Cost, net 		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value		Amortized
Cost, net 		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value		At Amortized Cost, netAt Fair Value
Corporates:
Financial
Insurance - life, health, P&C$57,470 $3,825 $(4,807)$56,488 $2,345,116 $513,844 $(5,553)$2,853,407 13 13 
Banks26,980 614 — 27,594 983,317 207,466 (1,635)1,189,148 6 6 
Other financial97,800 547 (1,103)97,244 1,240,340 186,431 (2,161)1,424,610 7 7 
Total financial182,250 4,986 (5,910)181,326 4,568,773 907,741 (9,349)5,467,165 26 26 
Utilities
Electric36,284 3,888 — 40,172 1,388,094 382,892 (395)1,770,591 8 8 
Gas and water— — — — 543,297 107,227 (617)649,907 3 3 
Total utilities36,284 3,888 — 40,172 1,931,391 490,119 (1,012)2,420,498 11 11 
Industrial - Energy
Pipelines85,222 11,051 (1,445)94,828 918,746 203,324 (1,445)1,120,625 5 5 
Exploration and production33,316 4,890 — 38,206 530,336 105,604 (238)635,702 3 3 
Oil field services— — — — 49,778 13,653 — 63,431 — — 
Refinery— — — — 89,032 24,199 — 113,231 1 1 
Total energy118,538 15,941 (1,445)133,034 1,587,892 346,780 (1,683)1,932,989 9 9 
Industrial - Basic materials
Chemicals— — — — 673,699 145,114 (50)818,763 4 4 
Metals and mining— — — — 405,915 118,115 — 524,030 2 3 
Forestry products and paper— — — — 65,608 15,946 — 81,554 — — 
Total basic materials— — — — 1,145,222 279,175 (50)1,424,347 6 7 
Industrial - Consumer, non-cyclical84,106 13,059 (2,697)94,468 2,256,802 475,012 (3,397)2,728,417 13 13 
Other industrials25,565 3,182 — 28,747 1,254,243 286,889 (589)1,540,543 7 7 
Industrial - Transportation25,555 5,588 — 31,143 559,399 135,581 (38)694,942 3 3 
Other corporate sectors179,323 21,807 (3,429)197,701 1,663,793 277,807 (9,288)1,932,312 9 9 
Total corporates
651,621 68,451 (13,481)706,591 14,967,515 3,199,104 (25,406)18,141,213 84 85 
Other fixed maturities:
Government (U.S., municipal, and foreign)— — — — 2,695,796 304,537 (8,203)2,992,130 15 14 
Collateralized debt obligations36,468 27,037 — 63,505 36,468 27,037 — 63,505 — — 
Other asset-backed securities13,457 — (414)13,043 104,905 3,701 (430)108,176 1 1 
Mortgage-backed securities(1)
— — — — 238 25 — 263 — — 
Total fixed maturities
$701,546 $95,488 $(13,895)$783,139 $17,804,922 $3,534,404 $(34,039)$21,305,287 100 100 
(1)Includes Government National Mortgage Association (GNMA).



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


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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 remainder of the portfolio is invested primarily in securities issued by the U.S. government and U.S. municipalities. The Company holds insignificant amounts in foreign government bonds, collateralized debt obligations, asset-backed securities, and mortgage-backed securities. Corporate securities are diversified over a variety of industry sectors and issuers. At December 31, 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.

For more information 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 for 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 TotalFair
Value		% of TotalAverage Composite Quality Rating on Amortized Cost, net
Investment grade:
AAA$761,526 4 $867,728 4 
AA2,215,179 13 2,412,947 11 
A4,487,607 25 5,584,588 26 
BBB+3,779,051 21 4,616,977 22 
BBB4,289,044 24 5,174,667 24 
BBB-1,570,969 9 1,865,241 9 
Total investment grade
17,103,376 96 20,522,148 96 A-
Below investment grade:
BB537,064 3 583,608 3 
B128,402 1 136,026 1 
Below B36,080 — 63,505 — 
Total below investment grade
701,546 4 783,139 4 BB-
$17,804,922 100 $21,305,287 100 
Weighted average composite quality rating
A-


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

The overall quality rating of the portfolio is A-, the same as year-end 2020. Fixed maturities rated BBB are 54% of the total portfolio at 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.

An analysis of changes in our portfolio of below-investment grade fixed maturities at amortized cost, net of allowance for credit losses is as follows:

Below-Investment Grade Fixed Maturities
(Dollar amounts in thousands)
Year Ended
December 31,
20212020
Balance at beginning of period
$840,739 $674,155 
Downgrades by rating agencies— 230,334 
Upgrades by rating agencies(67,078)(14,618)
Dispositions(78,712)(49,037)
Provision for credit losses2,959 (3,346)
Amortization and other3,638 3,251 
Balance at end of period
$701,546 $840,739 

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

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 predominately fixed-rate investments, the portfolio is highly subject to market risk. Declines in market interest rates generally result in the fair value of the investment portfolio rising, and increases in interest rates cause the fair value to decline. Under normal market conditions, we are not concerned about unrealized losses that are interest rate driven since we would not expect to realize them. Globe Life does not intend to sell the securities prior to maturity and, likely, will not be required to sell the securities prior to recovery of amortized cost. The long-term nature of our insurance policy liabilities and strong operating cash-flow substantially mitigate any future need to liquidate portions of the portfolio. The increase or decrease in the fair value of insurance liabilities and debt due to increases or decreases in market interest rates largely offsets the impact of rates on the investment portfolio. However, as is permitted by GAAP, these liabilities are not recorded at fair value.
 
The following table illustrates the interest rate risk sensitivity of our fixed maturity portfolio at December 31, 2021 and 2020. This table measures the effect of a parallel shift in interest rates (as represented by the U.S. Treasury curve) on the fair value of the fixed maturity portfolio. The data measures the change in fair value arising from an immediate and sustained change in interest rates in increments of 100 basis points.

Market Value of Fixed Maturity Portfolio
(Dollar amounts in thousands)
At December 31,
Change in Interest Rates(1)
20212020
(200)$26,939,000 $26,976,000 
(100)23,916,000 23,874,000 
021,305,000 21,214,000 
10019,045,000 18,926,000 
20017,082,000 16,953,000 
(1) In basis points.

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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)
 202120202019
 Amount% of
Premium		Amount% of
Premium		Amount% of
Premium
Insurance administrative expenses:
Salaries$115,852 2.8 $105,935 2.8 $102,862 2.8 
Other employee costs41,841 1.0 39,885 1.0 34,947 1.0 
Information technology costs47,923 1.2 45,742 1.2 42,927 1.2 
Legal costs15,494 0.4 11,256 0.3 10,286 0.3 
Other administrative costs50,521 1.2 48,129 1.3 49,299 1.4 
Total insurance administrative expenses271,631 6.6 250,947 6.6 240,321 6.7 
Parent company expense9,553 9,891 10,260 
Stock compensation expense30,272 35,892 44,843 
Administrative settlements— — 400 
Legal proceedings8,139 3,275 8,358 
Non-operating expenses2,434 1,033 643 
Total operating expenses, per Consolidated Statements of Operations
$322,029 $301,038 $304,825 
202120202019
Amount%Amount%Amount%
Total insurance administrative expenses increase (decrease) over prior year$20,684 8.2 $10,626 4.4 $16,380 7.3 
Total operating expenses increase (decrease) over prior year20,991 7.0 (3,787)(1.2)25,240 9.0 

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 information technology salaries. Pension expense increased due to the lower discount rate used to determine net periodic benefit costs in 2021 as compared to 2020. The decrease in stock-based compensation expense was primarily due to fewer performance based equity awards in 2021 as compared to the same period in 2020. Insurance administrative expenses as a percent of premium were in line with 2020.

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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 Directors by management quarterly and annually reaffirmed by the Board of Directors. With no specified authorization amount, we determine the amount of repurchases based on the amount of the excess cash flow at the Parent Company, general market conditions, and other alternative uses. The majority of these purchases are made from excess cash flow. Excess cash flow at the Parent Company is primarily comprised of dividends received from the insurance subsidiaries less interest expense paid on its debt, dividends paid to Parent Company shareholders, and other limited operating activities. Additionally, when stock options are exercised, proceeds from these exercises and the resulting tax benefit are used to repurchase additional shares on the open market to minimize dilution as a result of the option exercises. 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)
 202120202019
Purchases with:SharesAmountSharesAmountSharesAmount
Share repurchase program 4,784 $455,030 4,459 $380,112 3,932 $350,080 
Option proceeds858 86,405 676 63,754 1,209 109,489 
Total5,642 $541,435 5,135 $443,866 5,141 $459,569 

Throughout the remainder of this discussion, share purchases refer only to those made from excess cash flow at the Parent Company.
 
FINANCIAL CONDITION
 
Liquidity. Liquidity provides Globe Life with the ability to meet on demand the cash commitments required to support our business operations and meet our financial obligations. Our liquidity is primarily derived from multiple sources: positive cash flow from operations, a portfolio of marketable securities, a revolving credit facility, commercial paper and Federal Home Loan Bank (FHLB).

Insurance Subsidiary Liquidity. The operations of our insurance subsidiaries have historically generated substantial cash inflows in excess of immediate cash needs. Cash inflows for the insurance subsidiaries primarily include premium and investment income. In addition to investment income, maturities and scheduled repayments in the investment portfolio are cash inflows. Cash outflows from operations include policy benefit payments, commissions, administrative expenses, and taxes. A portion of the excess cash inflows in the current year will provide for the payment of future policy benefits and are invested primarily in long-term fixed maturities as they better match the long-term nature of these obligations. Excess cash available from the insurance subsidiaries’ operations is generally distributed as a dividend to the Parent Company, subject to regulatory restrictions. The dividends are generally paid in amounts equal to the subsidiaries’ prior year statutory net income excluding realized capital gains. While the leading source of the excess cash is investment income, a significant portion of the excess cash also comes from underwriting income due to our high underwriting margins and effective expense control. While the insurance subsidiaries routinely generate more operating cash inflows than cash outflows annually, the companies also have the entire available-for-sale fixed maturity investment portfolio available to create additional cash flows if required.

During the year, four of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. 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.

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Parent Company Liquidity. An important source of Parent Company liquidity is the dividends from its insurance subsidiaries. These dividends are received throughout the year and are used by the Parent Company to pay dividends on common and preferred stock, interest and principal repayment requirements on Parent Company debt, and operating expenses of the Parent Company.
Year Ended December 31,
(Amounts in Thousands)
Projected 2022202120202019
Liquidity Sources:
Dividends from Subsidiaries$400,000 $478,535 $485,871 $479,988 
Excess Cash Flows285,000 370,120 387,606 374,232 

For more information on the restrictions on the payment of dividends by subsidiaries, see the Restrictions section of Note 12—Shareholders' Equity. Although these restrictions exist, dividend availability from subsidiaries historically has been more than sufficient for the cash flow needs of the Parent Company.

Additional sources of liquidity for the Parent Company are cash, intercompany receivables, 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.

Short-Term Borrowings. 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 subsidiaries, one of which is an offshore captive reinsurer, and have no impact on company obligations as a whole. Any future regulatory changes that restrict the use of off-shore captive reinsurers might require Globe Life to obtain third-party financing, which could cause an insignificant increase in financing costs. On 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.
 
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 facility, and intercompany borrowing. Refer to Note 6—Commitments and Contingencies and the discussion surrounding the Company's obligations over the next five years.

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 Liquidity. 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
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with $416 million in 2020. As noted under the caption Credit Facility in Note 11, the Parent Company has in place a revolving credit facility. The insurance companies have no additional outstanding credit facilities.

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 for sale in the event of an unexpected need. Approximately 97% of our fixed income securities are publicly traded, freely tradable under SEC Rule 144, or qualified for resale under SEC Rule 144A. We generally expect to hold fixed income securities to maturity, and even though these securities are classified as available for sale, we have the ability and intent to hold any securities until recovery or maturity. Our strong cash flows from operations, 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.

Subsidiary Capital: The National Association of Insurance Commissioners (NAIC) has established a risk-based factor approach for determining threshold risk-based capital levels for all insurance companies. This approach was designed to assist the regulatory bodies in identifying companies that may require regulatory attention. A Risk-Based Capital (RBC) ratio is typically determined by dividing adjusted total statutory capital by the amount of risk-based capital determined using the NAIC’s factors. If a company’s RBC ratio approaches two times the RBC amount, the company must file a plan with the NAIC for improving their capital levels (this level is commonly referred to as “Company Action Level” RBC). Companies typically hold a multiple of the Company Action Level RBC depending on their particular business needs and risk profile.

Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current ratings. For 2021, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300% to 320%. The Company concludes that this capital level is more than adequate and sufficient to support its current ratings, given the nature of its business and its risk profile. As of December 31, 2021, our consolidated Company Action Level RBC ratio was 315% compared with 309% in prior year.

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 sufficient liquidity available to provide additional capital if necessary.

Shareholder's Equity: As noted under the caption Analysis of Share Purchases within this report, we have an ongoing share repurchase program.
 
Globe Life has continually increased the quarterly dividend on its common shares over the past three years.
Year Ended December 31,
Projected 2022202120202019
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
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purchases under the repurchase program and an additional $86 million in share purchases to offset the dilution from stock option exercises.

We plan to use excess cash available at the Parent Company as efficiently as possible in the future. Possible uses of excess cash flow include, but are not limited to, share repurchases, acquisitions, increases in shareholder dividends, investment in securities, or repayment of short-term debt. We will determine the best use of excess cash after ensuring that targeted capital levels are maintained in our insurance subsidiaries. If market conditions are favorable, we currently expect that share repurchases will continue to be a primary use of those funds.

As discussed in Note 1—Significant Accounting Policies, the Company will adopt ASU 2018-12, Financial Services–Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI), effective on 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, modify the timing of when profits emerge on our insurance policies. We are anticipating GAAP 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 requirement to use current discount rates to remeasure the policy liabilities and record the offset through AOCI at 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.

We maintain a significant available-for-sale fixed maturity portfolio to support our insurance policy liabilities. Current accounting guidance requires that we revalue our portfolio to fair market value at the end of each accounting period. The period-to-period changes in fair value, net of their associated impact on deferred acquisition costs and income tax, are reflected directly in shareholders’ equity. Changes in the fair value of the portfolio can result from changes in market rates.

While a majority of invested assets are revalued, accounting rules do not permit interest-bearing insurance policy liabilities to be valued at fair value in a consistent manner as that of assets, with changes in value applied directly to shareholders’ equity. Due to the size of our policy liabilities in relation to our shareholders’ equity, an inconsistency exists in measurement, which may have a material impact on the reported value of shareholders’ equity. Fluctuations in interest rates cause undue volatility in the period-to-period presentation of our shareholders’ equity, capital structure, and financial ratios. 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.

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GLOBE LIFE INC.
Management's Discussion & Analysis

The following table presents selected data related to our capital resources. Additionally, the table presents the effect of this accounting guidance on relevant line items, so that investors and other financial statement users may determine its impact on Globe Life's capital structure. Excluding the effect of unrealized gains and losses on the fixed maturity portfolio from shareholders' equity is considered non-GAAP. Below we include the reconciliation to GAAP.

Selected Financial Data
(Dollar amounts in thousands, except per share data)
At
 December 31, 2021December 31, 2020December 31, 2019
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation(1)
Fixed maturities$21,305,287 $3,500,365 $21,213,509 $4,019,710 $18,907,147 $2,491,371 
Deferred acquisition costs(2)
4,914,728 (4,327)4,595,444 (5,955)4,341,941 (7,488)
Total assets29,768,048 3,496,038 29,046,731 4,013,755 25,977,460 2,483,883 
Short-term debt479,644 — 254,918 — 298,738 — 
Long-term debt1,546,494 — 1,667,886 — 1,348,988 — 
Shareholders' equity8,642,806 2,761,870 8,771,092 3,170,866 7,294,307 1,962,268 
Book value per diluted share85.97 27.47 83.19 30.07 66.02 17.76 
Debt to capitalization(3)
19.0 %(6.6)%18.0 %(7.6)%18.4 %(5.2)%
Diluted shares outstanding100,535 105,429 110,494 
Actual shares outstanding99,567 103,797 107,720 
(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 effect of this accounting rule be removed to determine this ratio. This ratio is computed by dividing total debt by the sum of total debt and shareholders’ equity.

Financial Strength Ratings. The financial strength of our major insurance subsidiaries is rated by Standard & Poor’s and A. M. Best. The following table presents these ratings for our five largest insurance subsidiaries at December 31, 2021.
Standard
& Poor’s		A.M.
Best
Liberty National Life Insurance CompanyAA-A
Globe Life And Accident Insurance CompanyAA-A
United American Insurance CompanyAA-A
American Income Life Insurance CompanyAA-A
Family Heritage Life Insurance Company of AmericaNRA
 
A.M. Best states that it assigns an A (Excellent) rating to insurance companies that have, in its opinion, an excellent ability to meet their ongoing insurance obligations.

The AA financial strength rating category is assigned by Standard & Poor’s Corporation (S&P) to those insurers which have very strong capacity to meet its financial commitments which differs from the highest-rated insurers only to a small degree. An insurer rated A has strong capacity to meet its financial commitments but it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than insurers in higher-rated categories. The plus sign (+) or minus sign (-) shows the relative standing within the major rating category.


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GLOBE LIFE INC.
Management's Discussion & Analysis

OTHER ITEMS
 
Litigation. For more information concerning litigation, please refer to Note 6—Commitments and Contingencies.

CRITICAL ACCOUNTING POLICIES

Application of Critical Accounting Estimates. The preparation of financial statements in conformity with GAAP 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.

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 Policy Benefits. Due to the long-term nature of insurance contracts, our insurance companies are liable for policy benefit payments that will be made in the future. The liability for future policy benefits is determined by standard actuarial procedures common to the life insurance industry. The accounting policies for determining this liability are disclosed in Note 1—Significant Accounting Policies.
 
Approximately 90% of our liabilities for future policy benefits at December 31, 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 Accounting Policies under the caption Future Policy Benefits. Otherwise, variability in the accrual of policy reserve liabilities after policy issuance is caused only by variability of the inventory of in force policies.
 
The remaining portion of liabilities for future policy benefits pertains to business accounted for as deposit business, where the recorded liability is the fund balance attributable to the benefit of policyholders as determined by the policy contract at the consolidated financial statement date. Accordingly, there are no assumptions used to determine the future policy benefit liability for deposit business.

Refer to Note 1—Significant Accounting Policies for discussion on the significant changes to future policy benefits with an effective date of January 1, 2023.
 
Deferred Acquisition Costs. Certain costs of acquiring new business are deferred and recorded as an asset. Deferred acquisition costs consist primarily of sales commissions and other underwriting costs such as advertising related to the successful issuance of a new insurance contract as indicated in Note 1—Significant Accounting Policies under the caption Deferred Acquisition Costs in the Notes to Consolidated Financial Statements. Additionally, the cost of acquiring blocks of insurance business or insurance business through the purchase of other companies, known as the value of insurance acquired (VOBA), is included in deferred acquisition costs. Our policies for accounting for deferred acquisition costs and the associated amortization are reported under the same caption in Note 1—Significant Accounting Policies.
 
Over 99% of our 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 the time of contract issue. These assumptions are “locked-in” at that time and, except where there is a loss recognition issue, are not revised for the lifetime of the contracts. Absent a premium deficiency, variability in amortization after policy issuance is caused only by variability in premium volume. We have not recorded a deferred acquisition cost loss recognition event for assets related to this business for any period in the three years ended December 31, 2021.
 
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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.
 
Policy Claims and Other Benefits Payable. This liability consists of known benefits currently payable and an estimate of claims that have been incurred but not yet reported to us. The estimate of unreported claims is based on prior experience and is made after careful evaluation of all information available to us. However, the factors upon which these estimates are based can be subject to change from historical patterns. Factors involved include the litigation environment, regulatory mandates, and the introduction of policy types for which claim patterns are not well established, and medical trend rates and medical cost inflation as they affect our health claims. Changes in these estimates, if any, are reflected in the earnings of the period in which the adjustment is made. The Company concludes that the estimates used to produce the liability for claims and other benefits, including the estimate of unsubmitted claims, are the most appropriate under the circumstances. However, there is no certainty that the resulting stated liability will be our ultimate obligation. At this time, we do not expect any change in this estimate to have a material impact on earnings or financial position consistent with our historical experience. There were no significant changes in the claims process in the current year.

Valuation of Fixed Maturities. We hold a substantial investment in high-quality fixed maturities to provide for the funding of our future policy contractual obligations over long periods of time. While these securities are generally expected to be held to maturity, they are classified as available for sale and are sold from time to time 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 primarily affected by changes in interest rates in financial markets. Because of the size of our fixed maturity portfolio and the long average life, small changes in rates can have a significant effect on the portfolio and the reported financial position of the Company. This impact is disclosed in 100 basis point increments under the caption Market Risk Sensitivity in this report. However, as discussed under the caption Financial Condition in this report, the Company regards these unrealized fluctuations in value as having no meaningful impact on our actual financial condition and, as such, we remove them from consideration when viewing our financial position and financial ratios.
 
At times, the values of our fixed maturities can also be affected by illiquidity in the financial markets. Illiquidity would contribute to a spread widening, and accordingly to unrealized losses, on many securities that we would expect to be fully recoverable. Even though our fixed maturity portfolio is available for sale, we have the ability and intent to hold the securities until maturity as a result of our strong and stable cash flows generated from our insurance products. Considerable information concerning the policies, procedures, classification levels, and other relevant data concerning the valuation of our fixed maturity investments is presented in Note 1—Significant Accounting Policies and in Note 4—Investments under the captions Fair Value Measurements in both notes. There were no significant changes in the valuation process in the current year.

Investments: Allowance for Credit Losses. We continually monitor our investment portfolio for investments where fair value has declined below carrying value to determine if a credit loss event has occurred. When a credit event does occur, an allowance for credit loss is recorded and the corresponding provision is recognized in the Consolidated Income Statement in Realized Gains or Losses. Non-credit related fluctuations in the fair value are recorded in Other Comprehensive Income. The policies and procedures that we use to evaluate and account for allowance for credit losses are disclosed in Note 1—Significant Accounting Policies and the discussions under the captions Investments and Realized Gains and Losses in this report. While every effort is made to make the best estimate of status and value with the information available regarding an allowance for credit loss, it is difficult to predict the future prospects of a distressed or impaired security.
 

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GLOBE LIFE INC.
Management's Discussion & Analysis
Defined benefit pension plans. We maintain funded defined benefit plans covering most full-time employees. We also have an unfunded nonqualified defined benefit plan covering a limited number of officers. Our obligations under these plans are determined actuarially based on specified actuarial assumptions. In accordance with GAAP, an expense is recorded each year as these pension obligations grow due to the increase in the service period of employees and the interest cost associated with the passage of time. These obligations are offset, at least in part, by the growth in value of the assets in the funded plans. At December 31, 2021, our gross liability under these plans was $779 million, but was offset by assets of $598 million.

The actuarial assumptions used in determining our obligations/expenses for pensions include: employee mortality and turnover, retirement age, the expected return on plan assets, projected salary increases, and the discount rate at which future obligations could be settled. Additionally, a corridor approach is used to amortize any unrecognized gains or losses outside the corridor (the standard 10% of the greater of plan PBO and fair value assets) and have an amortization service period of approximately 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 in reported results for these plans. For example, a sensitivity analysis is presented below for the impact of change in the discount rate and the long-term rate of return on assets assumed on our defined benefit pension plans expense for the year 2021 and projected benefit obligation as of December 31, 2021.

Pension Assumptions
(Dollar amounts in thousands)
Assumption
Change(1)
Impact on ExpenseImpact on Projected Benefit Obligation
Discount Rate(2):
Increase25 $(4,187)$(30,692)
Decrease(25)4,442 32,660 
Expected Return(3):
Increase25 (1,333)— 
Decrease(25)1,333 — 
(1)In basis points.
(2)The discount rate for determining the net periodic benefit cost was 2.92% for 2021. The discount rate used for determining the projected 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.
 
The criteria used to determine the primary assumptions are discussed in Note 9—Postretirement Benefits. While we have used our best efforts to determine the most reliable assumptions, given the information available from Company experience, economic data, independent consultants and other sources, we cannot be certain that actual results will be the same as expected. The assumptions are reviewed annually and revised, if necessary, based on more current information available to us. Note 9—Postretirement Benefits also contains information about pension plan assets, investment policies, and other related data. There were no significant changes in the assumptions in the current year.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 
Information required by this item is found under the heading Market Risk Sensitivity in Item 7 of this report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements Index
Page
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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 conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 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 and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Investments in Fixed Maturities Classified as Available for Sale — Significant Unobservable Inputs - Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter Description

Investments in fixed maturities classified as available for sale are reported at fair value in the financial statements. The investments without readily determinable market values are valued using significant unobservable inputs such as credit ratings and discount rates. The balance of investments without readily determinable market values was $705 million as of December 31, 2021. These inputs involve considerable judgment by management.
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We identified investments in fixed maturities classified as available for sale without readily determinable market values as a critical audit matter because of the unobservable inputs used by management to estimate fair value. Auditing these inputs required especially subjective judgment and required the involvement of our fair value specialists to fully evaluate them.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the unobservable inputs used by management to estimate the fair value of investments in fixed maturities classified as available for sale included the following, among others:
•We tested the effectiveness of controls over investments in fixed maturities classified as available for sale, including management’s controls over the determination of unobservable inputs and fair value.
•We tested the accuracy and completeness of underlying data used in the determination of the fair value (e.g., investments owned at the balance sheet date and relevant security attributes).
•With the assistance of our fair value specialists, we developed independent estimates of fair value for a selection of securities and compared our estimates to management’s estimates.

Future Policy Benefits and Amortization of Deferred Acquisition Costs — Certain Underlying Assumptions - Refer to Note 1 to the Financial Statements

Critical Audit Matter Description

The Company’s management sets assumptions in (1) recording a liability for policy benefit payments that will be made in the future (future policy benefits) and (2) determining amortization of deferred acquisition costs. The most significant assumptions include mortality, morbidity, and persistency. Assumptions are determined based upon published studies and analysis of Company specific experience, adjusted for changes in exposure and other relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the development of such assumptions involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding the assumptions used in the development of future policy benefits and the amortization of deferred acquisition costs included the following, among others:

•We tested the effectiveness of controls over the assumption development process and the valuation of future policy benefits.
•We tested the underlying data used in the development of the assumptions as well as in the determination of the liability for future policy benefits and the amortization of deferred acquisition costs.
•We evaluated management’s selected actuarial assumptions, including testing the accuracy and completeness of the supporting experience studies.
•With the assistance of our actuarial specialists, we evaluated management’s judgments regarding the assumptions used in the development of future policy benefits and the amortization of deferred acquisition costs.
•We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas
February 23, 2022

We have served as the Company’s auditor since 1999.



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Globe Life Inc.
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
December 31,
20212020
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 loans589,634 584,379 
Other long-term investments (includes: 2021—$640,263; 2020—$385,038 under the fair value option)
793,925 546,981 
Short-term investments69,145 107,782 
Total investments22,757,991 22,452,651 
Cash92,163 94,847 
Accrued investment income251,307 248,991 
Other receivables487,443 474,180 
Deferred acquisition costs4,914,728 4,595,444 
Goodwill481,791 441,591 
Other assets782,625 739,027 
Total assets$29,768,048 $29,046,731 
Liabilities:
Future policy benefits$16,034,727 $15,243,536 
Unearned and advance premium65,472 61,728 
Policy claims and other benefits payable412,940 399,507 
Other policyholders' funds98,935 97,968 
Total policy liabilities16,612,074 15,802,739 
Current and deferred income taxes1,765,021 1,833,723 
Short-term debt479,644 254,918 
Long-term debt (estimated fair value: 2021—$1,667,009; 2020—$1,871,754)
1,546,494 1,667,886 
Other liabilities722,009 716,373 
Total liabilities21,125,242 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)
109,218 113,218 
Additional paid-in-capital520,564 527,435 
Accumulated other comprehensive income (loss)2,677,583 3,029,244 
Retained earnings6,182,100 5,874,109 
Treasury stock, at cost: (2021—9,650,845 shares; 2020—9,420,699 shares)
(846,659)(772,914)
Total shareholders' equity8,642,806 8,771,092 
Total liabilities and shareholders' equity$29,768,048 $29,046,731 


See accompanying Notes to Consolidated Financial Statements.
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Globe Life Inc.
Consolidated Statements of Operations
(Dollar amounts in thousands, except per share data)
Year Ended December 31,
202120202019
Revenue:
Life premium$2,898,210 $2,672,804 $2,517,784 
Health premium1,201,676 1,141,097 1,077,346 
Other premium1 4 4 
Total premium4,099,887 3,813,905 3,595,134 
Net investment income952,447 927,062 910,459 
Realized gains (losses)59,319 (4,371)20,621 
Other income1,216 1,325 1,318 
Total revenue5,112,869 4,737,921 4,527,532 
Benefits and expenses:
Life policyholder benefits2,071,810 1,809,373 1,638,053 
Health policyholder benefits758,745 733,481 687,764 
Other policyholder benefits29,061 30,030 31,532 
Total policyholder benefits2,859,616 2,572,884 2,357,349 
Amortization of deferred acquisition costs603,838 575,770 551,726 
Commissions, premium taxes, and non-deferred acquisition costs331,510 304,841 298,047 
Other operating expense322,029 301,038 304,825 
Interest expense83,486 86,704 84,306 
Total benefits and expenses4,200,479 3,841,237 3,596,253 
Income before income taxes912,390 896,684 931,279 
Income tax benefit (expense)(167,431)(164,911)(170,397)
Income from continuing operations744,959 731,773 760,882 
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 $6.97 
Discontinued operations— — — 
Total basic net income per common share
$7.30 $6.90 $6.97 
Diluted net income (loss) per common share:
Continuing operations$7.22 $6.82 $6.83 
Discontinued operations— — — 
Total diluted net income per common share
$7.22 $6.82 $6.83 


See accompanying Notes to Consolidated Financial Statements.
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Globe Life Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Dollar amounts in thousands)

Year Ended December 31,
202120202019
Net income
$744,959 $731,773 $760,790 
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(31,710)32,809 (13,837)
Foreign exchange adjustment on fixed maturities recorded at fair value4,632 2,330 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) benefit109,063 (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 costs1,628 1,533 (2,218)
Less applicable tax (expense) benefit(342)(321)465 
Unrealized gains (losses) attributable to deferred acquisition costs, net of tax1,286 1,212 (1,753)
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities(4,955)14,230 7,042 
Less applicable tax (expense) benefit1,040 (2,986)(1,479)
Foreign exchange translation adjustments, other than securities, net of tax(3,915)11,244 5,563 
Pension:
Amortization of pension costs20,797 16,632 8,474 
Plan amendments(4,565)— — 
Experience gain (loss)61,299 (43,169)(40,636)
Pension adjustments77,531 (26,537)(32,162)
Less applicable tax (expense) benefit(16,281)5,573 6,755 
Pension adjustments, net of tax61,250 (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.
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Globe Life Inc.
Consolidated Statements of Shareholders' Equity
(Dollar amounts in thousands, except per share data)
Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTreasury StockTotal 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— — — — (392)— (392)
Balance at January 1, 2019
— 121,218 524,414 319,475 5,213,076 (763,398)5,414,785 
Comprehensive income (loss)— — — 1,525,355 760,790 — 2,286,145 
Common dividends declared
($0.69 per share)
— — — — (75,060)— (75,060)
Acquisition of treasury stock— — — — — (459,569)(459,569)
Stock-based compensation— — 25,132 — (6,817)26,528 44,843 
Exercise of stock options— — — — (51,892)135,055 83,163 
Retirement of treasury stock— (4,000)(17,992)— (288,768)310,760 — 
Balance at December 31, 2019— 117,218 531,554 1,844,830 5,551,329 (750,624)7,294,307 
Year Ended December 31, 2020
Adoption of ASU 2016-13— — — — (454)— (454)
Balance at January 1, 2020
— 117,218 531,554 1,844,830 5,550,875 (750,624)7,293,853 
Comprehensive income (loss)— — — 1,184,414 731,773 — 1,916,187 
Common dividends declared
($0.75 per share)
— — — — (79,067)— (79,067)
Acquisition of treasury stock— — — — — (443,866)(443,866)
Stock-based compensation— — 14,410 — (482)21,964 35,892 
Exercise of stock options— — — — (26,908)75,001 48,093 
Retirement of treasury stock— (4,000)(18,529)— (302,082)324,611 — 
Balance at December 31, 2020— 113,218 527,435 3,029,244 5,874,109 (772,914)8,771,092 
Year Ended December 31, 2021
Balance at January 1, 2021
— 113,218 527,435 3,029,244 5,874,109 (772,914)8,771,092 
Comprehensive income (loss)— — — (351,661)744,959 — 393,298 
Common dividends declared
($0.79 per share)
— — — — (80,247)— (80,247)
Acquisition of treasury stock— — — — — (541,435)(541,435)
Stock-based compensation— — 12,103 — — 18,169 30,272 
Exercise of stock options— — — — (29,398)99,224 69,826 
Retirement of treasury stock— (4,000)(18,974)— (327,323)350,297 — 
Balance at December 31, 2021$— $109,218 $520,564 $2,677,583 $6,182,100 $(846,659)$8,642,806 







See accompanying Notes to Consolidated Financial Statements.
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Globe Life Inc.
Consolidated Statement of Cash Flows
(Dollar amounts in thousands)
Year Ended December 31,
202120202019
Net income
$744,959 $731,773 $760,790 
Adjustments to reconcile net income from continuing operations to cash provided from continuing operations:
Loss (income) from discontinued operations, net of income taxes— — 92 
Increase (decrease) in future policy benefits854,770 798,936 661,567 
Increase (decrease) in other policy benefits18,144 33,810 15,900 
Deferral of policy acquisition costs(906,247)(822,985)(753,661)
Amortization of deferred policy acquisition costs603,838 575,770 551,726 
Change in current and deferred income taxes71,919 88,157 68,588 
Realized (gains) losses(59,319)4,371 (20,621)
Other, net109,616 66,602 62,194 
Net cash provided from (used for) continuing operations1,437,680 1,476,434 1,346,575 
Net cash provided from (used for) discontinued operations— — 17,299 
Cash provided from (used for) operating activities
1,437,680 1,476,434 1,363,874 
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold116,656 52,681 79,108 
Fixed maturities available for sale—matured or other redemptions310,991 416,321 840,222 
Other long-term investments36,346 42,990 5,134 
Total investments sold or matured463,993 511,992 924,464 
Acquisition of investments:
Fixed maturities—available for sale(1,004,384)(1,262,434)(1,552,956)
Other long-term investments(258,296)(266,230)(123,332)
Total investments acquired(1,262,680)(1,528,664)(1,676,288)
Net (increase) decrease in policy loans(5,255)(8,887)(25,426)
Net (increase) decrease in short-term investments38,637 (69,497)34,003 
Additions to properties(38,244)(41,756)(42,203)
Other investing activities(56,700)(7,051)32 
Investments in low-income housing interests(53,121)(37,867)(23,893)
Cash provided from (used for) investing activities
(913,370)(1,181,730)(809,311)
Cash provided from (used for) financing activities:
Issuance of common stock69,826 48,093 83,163 
Cash dividends paid to shareholders(80,043)(78,192)(74,188)
Repayment of debt(300,000)(386,875)(6,875)
Proceeds from issuance of debt325,000 700,000 — 
Payment for debt issuance costs(7,687)(5,844)— 
Net borrowing (repayment) of commercial paper74,974 (34,445)(11,610)
Acquisition of treasury stock(541,435)(443,866)(459,569)
Net receipts (payments) from deposit-type products(64,238)(72,928)(121,429)
Cash provided from (used for) financing activities
(523,603)(274,057)(590,508)
Effect of foreign exchange rate changes on cash(3,391)(1,733)(9,148)
Net increase (decrease) in cash(2,684)18,914 (45,093)
Cash at beginning of year94,847 75,933 121,026 
Cash at end of year$92,163 $94,847 $75,933 



See accompanying Notes to Consolidated Financial Statements.
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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 affiliates. Globe Life Inc.'s direct or indirect primary subsidiaries are Globe Life And Accident Insurance Company, American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life Insurance Company of America, and United American Insurance Company. The underwriting companies are owned by their ultimate corporate parent, Globe Life Inc. (the Parent Company).

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

Basis of Presentation: The accompanying consolidated financial statements of Globe Life have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), under guidance issued by the Financial Accounting Standards Board (FASB). The preparation of consolidated financial statements in conformity with GAAP requires management 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.

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

Principles of Consolidation: The consolidated financial statements include the results of Globe Life Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. When Globe Life acquires a subsidiary or a block of business, the assets acquired and the liabilities assumed are measured at fair value at the acquisition date. Any excess of acquisition cost over the fair value of net assets is recorded as goodwill. Expenses incurred to effect the acquisition are charged to earnings as of the acquisition date. Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date.

Acquisition: 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 GAAP. 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."

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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$300 
Value of Customer Relationships Acquired5,200 
Value of Distribution Acquired11,000 
Goodwill40,200 
56,700 
Ceding commission2,500 
Total purchase price$59,200 

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

Discontinued Operations: When a component of Globe Life's business is sold or expected to be sold during the ensuing year, the Company considers whether the criteria of ASC 205-20, Discontinued Operations, have been met, which includes evaluating if the disposal of a component represents a strategic shift that has, or will have, a major effect on the Company. If the disposal meets the criteria for discontinued operations, the assets and liabilities are segregated and recorded in the Consolidated Balance Sheets as "Assets and Liabilities related to discontinued operations" for all periods presented. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized. The results of operations for the discontinued component are reported in "Income from discontinued operations, net of tax" in the Consolidated Statements of Operations for current and prior periods. Discontinued operations are reported commencing in the period in which the business is either disposed of or meets the accounting criteria for discontinued operations, including any gain or loss recognized on the sale or adjustment of the carrying amount to the estimated fair value less cost to sell.

In 2016, Globe Life sold one of its operating segments, Medicare Part D. The financial results of this business are excluded from the Company's continuing operations including the Notes to the Consolidated Financial Statements. The Company received final settlement related to the assets and liabilities of the discontinued operations in 2019.
 
Investments: Globe Life classifies all of its fixed maturity investments as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of taxes, reflected directly in accumulated other comprehensive income (AOCI). Income from investments is recorded in "Net investment income" on the Consolidated Statements of Operations. Gains and losses from sales, maturities, or other redemptions of investments are recorded in "Realized gains (losses)". Interest income and prepayment fees are recognized when earned. Premiums and discounts are amortized using the effective yield method. When amortized cost of a callable debt security exceeds the first call price, the premium is amortized to the earliest call date. Otherwise, the period of amortization or accretion generally extends from the purchase date to the maturity date.

"Policy loans", which represent loans provided to policyholders using cash values as collateral, are carried at unpaid principal balances. "Other long-term investments" include limited partnerships, commercial mortgage loan participations ("commercial mortgage loans"), equity securities, and real estate. Investments in equity securities are reported at fair value with changes in fair value, net of taxes, reflected directly in "Realized gains (losses)" in the Consolidated Statements of Operations. Investments in real estate are reported at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful life.

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.
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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Each limited partnership investment is evaluated under applicable GAAP to determine if it is a variable interest entity (VIE) and would qualify 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 economic performance of these entities and therefore the Company is not the primary beneficiary of any of these interests. Globe Life's involvement is limited to its limited partnership interest in the entities. The Company has not provided any other financial support to the entities beyond its commitments to fund its limited partnership interests, and there are no arrangements or agreements with any of the interests to provide other financial support. The maximum loss exposure relative to these interests is limited to their carrying value. The Company has approximately 1% of total assets in low-income housing tax credits and certain limited partnerships (investment funds) that qualify as unconsolidated VIEs.

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), 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 Statements of Operations. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments. Periodic distributions are recorded in net investment income until cumulative distributions exceed our pro-rata share of cumulative operating earnings at which point the distributions will reduce carrying value. Our maximum exposure to loss is equal to the outstanding carrying value and future funding commitments. The Company had $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 effective yield method. Our unfunded commitment balance to the commercial loan borrowers was $29 million as of December 31, 2021.

"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.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value Measurements, Investments in Securities: Globe Life measures the fair value of its "fixed maturities" based on a hierarchy consisting of three levels which indicate the quality of the fair value measurements as described below:
 
•Level 1—fair values are based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
•Level 2—fair values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that can otherwise be corroborated by observable market data.
•Level 3—fair values are based on inputs that are considered unobservable where there is little, if any, market activity for the asset or liability as of the measurement date. In this circumstance, the Company has to rely on values derived by independent brokers or internally-developed assumptions. Unobservable inputs are developed based on the best information available to the Company which may include the Company’s own data or bid and ask prices in the dealer market.

Net Asset Value—Certain investments, such as investment funds, that are measured at fair value using the net asset value per share or its equivalent, as a practical expedient, have not been classified in the fair value hierarchy. The net asset value is usually provided by general partners or managers.

The great majority of Globe Life's "fixed maturities" are not actively traded and direct quotes are not generally available. Management therefore determines the fair values of these securities after consideration of data provided by third-party pricing services, independent broker/dealers, and other resources. At December 31, 2021, the 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.

For all asset classes within Globe Life's significant security types, third-party pricing services use a common valuation technique to model the price of the investments using observable market data. The foundation for these models consists of developing yield spreads based on multiple observable market inputs, including but not limited to: benchmark yield curves, actual trading activity, new issue yields, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector-specific data, economic data, and other inputs that are corroborated in the market. Pricing vendors monitor and review their pricing data continuously with current market and economic data feeds, augmented by ongoing communication within the dealer community.

Using the observable market inputs described above, spreads to an appropriate benchmark yield are further developed by the vendors for each security based on security-specific and/or sector-specific risk factors, such as a security’s terms and conditions (coupon, maturity, and call features), credit rating, sector, liquidity, collateral or other cash flow options, and other factors that could impact the risk of the security. Embedded repayment options, such as call and redemption features, are also taken into account in the pricing models. When the spread is determined, it is added to the security’s benchmark yield. The security's expected cash flows are discounted using this spread-adjusted yield, and the resulting present value of the discounted cash flows is the evaluated price.


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
When third-party vendor prices are not available, the Company attempts to obtain valuations from other sources, including but not limited to broker/dealers, broker quotes, and prices on comparable securities.

When valuations have been obtained for all securities in the portfolio, management reviews and analyzes the prices to ensure their reasonableness, taking into account available and observable information. When two or more valuations are available for a security and the variance between the prices is 10% or less, the close correlation suggests similar observable inputs were used in deriving the price, and the mean of the prices is used. Securities valued in this manner are classified as Level 2. When the variance between two or more valuations for a security exceeds 10%, additional analysis is performed to determine the most appropriate value for that security, using resources such as broker quotes, prices on comparable securities, recent trades, and any other observable market data. Further review is performed on the available valuations to determine if they can be corroborated within reasonable tolerance to any other observable evidence. If one of the valuations or the mean of the available valuations for a security can be corroborated with other observable evidence, then the corroborated value is used and reported as Level 2. The Company uses information and analytical techniques deemed appropriate for determining the point within the range of reasonable fair value estimates that is most representative of fair value under current market conditions. Valuations that cannot be corroborated within a reasonable tolerance are classified as Level 3.

Globe Life invests in a portfolio of private placement fixed maturities that are not actively traded. This portfolio is managed by third-parties. The portfolio managers provide valuations for the bonds based on a pricing matrix utilizing observable inputs, such as the benchmark treasury rate and published sector indices, and unobservable inputs such as an internally-developed credit rating. If observable inputs cannot be corroborated, the fair values are classified as Level 3. Refer to Note 4—Investments under the caption Quantitative Information about Level 3 Fair Value Measurements.

The fair values for each class of security and by valuation hierarchy level are indicated in Note 4—Investments under the caption Fair value measurements, and Note 9—Postretirement Benefits under the caption Pension Assets.
 
Fair Value Measurements, Other Financial Instruments: Fair values for cash and cash equivalents, short-term investments, short-term debt, receivables, and payables approximate carrying value. Cash and cash equivalents are classified as Level 1. Fair values of commercial mortgage loans are determined based upon expected cash flows discounted at an appropriate risk-adjusted rate and are classified as Level 3. The fair value of investments in limited partnerships that provide low-income housing tax credits is based on discounted projected cash flows and are classified as Level 3. Policy loans are an integral part of Globe Life's subsidiaries’ life insurance policies in force and their fair values cannot be valued separately from the insurance contracts. Investment funds are based on net asset value and are excluded from the fair value hierarchy.

The fair values of Globe Life's long and short term debt issues are based on the same methodology as investments in fixed maturities. At December 31, 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 Benefits, Globe Life maintains a nonqualified supplemental retirement plan. Accordingly, the assets that support the liability for this plan are considered general assets of the Company. These assets consist of the cash value of corporate-owned life insurance policies (COLI) and exchange traded funds (ETFs). The fair value of the insurance cash values approximates carrying value. Fair values for the ETFs are derived from direct quotes and are considered Level 1 in the fair value hierarchy.

Current Expected Credit Loss Reserve (fixed maturities): At the onset of the evaluation, the Company individually assesses each fixed maturity, on a quarterly basis, to determine whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria are met, the Company will write down the fixed maturity's amortized cost basis to fair value through "Realized gains (losses)".
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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
If neither of the aforementioned criteria are met, the Company will evaluate whether the decline in fair value has resulted from a credit event. The Company will evaluate many factors, as further described below, to determine the present value of the expected cash flows. A credit loss occurs when the present value of the expected cash flows is less than the amortized cost basis. This will result in the recording of an allowance for credit losses as a contra asset account to the amortized cost basis with an offsetting provision for credit losses in "Realized gains (losses)" on the Consolidated Statements of Operations. Additionally, the CECL methodology includes a fair value floor where the allowance for credit loss for a security cannot exceed the difference between fair value and amortized cost. When it is determined that there is not a credit loss, the decline in fair value is recognized in Other comprehensive income.

All changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses recorded to the allowance for credit losses are management's best estimate of the uncollectibility of principal and interest of a fixed maturity.

The evaluation of Globe Life's securities for credit losses is a process that is undertaken at least quarterly and is overseen by a team of investment and accounting professionals. The process for making this determination is highly subjective and involves the careful consideration of many factors. The factors considered include, but are not limited to:
•The Company’s lack of intent to sell the debt security before recovery;
•Whether it is more likely than not the Company will be required to sell prior to maturity;
•The reason(s) for the credit related losses;
•The financial condition of the issuer and the prospects for recovery in fair value of the security;
•Expected future cash flows.

The relative weight given to each of these factors can change over time as facts and circumstances change. In many cases, management believes it is appropriate to give more consideration to prospective factors than to retrospective factors. Prospective factors that are given more weight include prospects for recovery, the Company’s ability and intent to hold the security until anticipated recovery, and expected future cash flows.
 
Among the facts and information considered in the process are:

•Financial statements of the issuer
•Changes in credit ratings of the issuer
•The value of underlying collateral
•News and information included in press releases issued by the issuer
•News and information reported in the media concerning the issuer
•News and information published by or otherwise provided by securities, economic, or research analysts
•The nature and amount of recent and expected future sources and uses of cash
•Default on a required payment
•Issuer bankruptcy filings

The expected cash flows are determined using judgment and the best information available to the Company. Inputs used to derive expected cash flows generally include expected default rates, current levels of subordination, and estimated recovery rate. The discount rate utilized in the discounted cash flows is the effective interest rate, which is the rate of return implicit in the asset at acquisition.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Current Expected Credit Loss Reserve (commercial mortgage loans): The Company evaluates the performance and credit quality of the commercial mortgage loan portfolio at least on a quarterly basis, or as needed, by utilizing common metrics such as loan-to-value or debt-service ratios as well as covenants, local market conditions, borrower quality, and underlying collateral. The fair value of the underlying collateral is based on a third-party appraisal of the property at origination of the loan. The fair value is assessed on an annual basis or more frequently when a loan is materially underperforming, 30 days delinquent, or in technical default. The Company determines the probability of estimated losses for the commercial mortgage loan portfolio on a pool basis each quarter and records an allowance. The allowance for credit losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and macro factors that affect the collectability of the loan. Each loan within the pool is assigned a risk rating (credit quality indicator) of low, medium, and high based on risk and expected future performance. A loan that is assigned as high risk would have a higher probability of a potential principal loss. The assigned risk category and the estimated loss rate is adjusted each quarter for current and forecasted economic factors management believes are relevant.

If management determines that foreclosure of a particular property is probable, the Company may elect the practical expedient for an individual mortgage loan to estimate the expected credit losses, which are based on the fair value of the property less amortized cost, adjusted for selling and other associated costs. See Note 4 for current activity.
 
Cash: "Cash" consists of balances on hand and on deposit in banks and financial institutions.

Accrued investment income: "Accrued investment income" consists of interest income or dividends earned on the investment portfolio, but which are yet to be received as of the balance sheet date. The Company will write-off accrued investment income that is deemed to be uncollectible related to the fixed maturities.

"Accrued investment income" also consists of interest income earned on the commercial mortgage loan portfolio, but which is yet to be received as of the balance sheet date. Accrued investment income will be placed in nonaccrual status at the time the loan is 90 days delinquent or otherwise deemed to be uncollectible by management. Any currently accrued investment income will subsequently be written off. As of December 31, 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." Additionally, the amount will be excluded from disclosures within Note 4—Investments.

Other Receivables: Agent debit balances primarily represent commissions advanced to insurance agents, a common industry practice. These balances are repaid to the Company over time, generally one year, as the premiums associated with the advanced commissions are collected by the Company and a portion of the agents' commissions on such premiums are retained in order to repay the balances. The balances were $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 Operations and the asset balance will be reflected in agent debit balances, net of allowance for credit losses ("Other receivables"). Based on factors considered by management, there were no additional credit losses
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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.

Deferred Acquisition Costs: Certain costs of acquiring new insurance business are deferred and recorded as an asset. These costs are essential for the acquisition of new insurance business and are directly related to the 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 difference between the fair value of the contractual insurance assets acquired and liabilities assumed compared against the assets and liabilities for insurance contracts that the Company issues or holds measured in accordance with GAAP.

DAC and VOBA are amortized in a systematic manner which matches these costs with the associated revenues. Policies other than universal life-type policies are amortized with interest over the estimated premium-paying period of the policies in a manner which charges each year’s operations in proportion to the receipt of premium income. Universal life-type policies are amortized with interest in proportion to estimated gross profits. The assumptions used to amortize acquisition costs include interest, mortality, morbidity, and persistency, and are consistent with those used to estimate the liability for future policy benefits. For interest-sensitive and deposit-type products, these assumptions are reviewed on a regular basis and are revised if actual experience differs significantly from original expectations. For all other products, amortization assumptions are generally not revised once established.

DAC and VOBA are subject to periodic recoverability and loss recognition testing to determine if there is a premium deficiency. These tests evaluate whether the present value of future contract-related cash flows will support the capitalized DAC and VOBA assets. These cash flows consist primarily of premium income, less benefits and expenses. The present value of these cash flows, less the benefit reserve, is then compared with the unamortized deferred acquisition cost balance. In the event the estimated present value of net cash flows is less, the deficiency would be recognized by a charge to earnings and either a reduction of unamortized acquisition costs or an increase in the liability for future benefits, as described under the caption Future Policy Benefits. Refer to Note 5—Deferred Acquisition Costs.

Advertising Costs: Costs related to advertising are generally charged to expense as incurred. However, certain Direct to Consumer advertising costs are capitalized when there is a reliable and demonstrated relationship between total costs and future benefits that is a direct result of incurring these costs. Direct to Consumer advertising costs consist primarily of the production and distribution costs of direct mail advertising materials, and when capitalized are included as a component of DAC. Additionally, they are amortized in the same manner as other DAC. Direct to Consumer advertising costs charged to earnings and included in other operating expense were $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.

Low-Income Housing Tax Credit Interests: Globe Life invests in limited partnerships that provide low-income housing tax credits and other related federal income tax benefits to the Company. Globe Life holds passive interests in limited partnerships that provide investment returns through the provision of tax benefits (principally from the transfer of federal or state tax credits related to federal low-income housing). These investments are considered to be VIEs and do not qualify for consolidation. The carrying value of the Company's investment in these entities was
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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. 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 effective-yield method of amortization, while the proportional method of amortization is utilized for all non-guaranteed and guaranteed investments acquired on or after January 1, 2015. All amortization expense is recorded in "Income tax benefit (expense)" on the Consolidated Statements of Operations.

Property and Equipment: Property and equipment, included in “Other assets,” is reported at cost less accumulated depreciation. Depreciation is recorded primarily on the straight line method over the estimated useful lives of these assets which range from three to ten years for equipment and fifteen to forty years for buildings and improvements. Ordinary maintenance and repairs are charged to income as incurred. Impairments, if any, are recorded when certain events and circumstances become evident that the fair value of the asset is less than its carrying amount. Original cost of property and equipment was $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.

Future Policy Benefits: The liability for future policy benefits for annuity and universal life-type products is 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.

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 qualify 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 Sheets rather than income in the Consolidated Statements 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.

Unearned and Advanced Premium: Premium collected from both life and health policies that have not been earned and recognized in accordance with applicable GAAP. Refer to Recognition of Premium Revenue below.
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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Policy Claims and Other Benefits Payable: Globe Life establishes a liability for known policy benefits payable and an estimate of claims that have been incurred but not yet reported to the Company. Globe Life makes an estimate of unreported claims after careful evaluation of all information available to the Company. This estimate is based on prior experience and is reviewed quarterly. However, there is no certainty the stated liability for claims and other benefits, including the estimate of unsubmitted claims, will be Globe Life's ultimate obligation. For more information, see Note 7—Liability for Unpaid Claims.

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 differences between the consolidated financial statement book values and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Postretirement Benefits: Globe Life accounts for its postretirement defined benefit plans by recognizing the funded status of those plans on its Consolidated Balance Sheets in accordance with accounting guidance. Periodic gains and losses attributable to changes in plan assets and liabilities that are not recognized as components of net periodic benefit costs are recognized as components of other comprehensive income, net of tax. The supplemental executive retirement plan is accounted for consistent with the qualified noncontributory pension plan. The net assets are included in a Rabbi Trust and recorded in Other Assets on the Consolidated Balance Sheets. More information concerning the accounting and disclosures for postretirement benefits is found in Note 9—Postretirement Benefits.

Treasury Stock: Globe Life accounts for purchases of treasury stock on the cost method. Issuance of treasury stock is accounted for using the weighted-average cost method. More information is found in Note 12—Shareholders' Equity.

Recognition of Premium Revenue and Related Expenses: Premium income for traditional long-duration life and health insurance products is recognized evenly over the contract period and when due from the policyholder. Premiums for short-duration health contracts are recognized as revenue over the contract period in proportion to the 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 insurance products, the profits are recognized over the contract period.
 
Stock-Based Compensation: Globe Life accounts for stock-based compensation by recognizing an expense in the consolidated financial statements based on the “fair value method.” The fair value method requires that a fair value be assigned to a stock option or other stock grant on its grant date and that this value be amortized over the grantees’ service period.
 
The fair value method requires the use of an option valuation model to value employee stock options. Globe Life has elected to use the Black-Scholes valuation model for option expensing. A summary of assumptions for options granted in each of the three years 2019 through 2021 is as follows:
202120202019
Volatility factor21.8 %15.7 %15.7 %
Dividend yield0.8 %0.7 %0.8 %
Expected term (in years)5.115.125.10
Risk-free rate0.6 %1.2 %2.5 %

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The expected term is generally derived from Company experience. However, expected terms are determined based on the simplified method as permitted under the ASC 718, Stock Compensation, topic when Company experience is insufficient. On April 26, 2018, the shareholders approved the Globe Life Inc. 2018 Incentive Plan, formerly the Torchmark Corporation 2018 Incentive Plan (the "2018 Incentive Plan"). The 2018 Incentive Plan replaced all previous plans. The 2018 Incentive Plan allows for option grants for employees with a seven-year contractual term which vest over three years in addition to ten-year grants which vest over five years as permitted by the previous plans. Director grants vest over six months. The Company has sufficient experience with seven-year grants that vest in three years, but insufficient historical experience with five-year vesting. Therefore, the Company has used the simplified method to determine the expected term for the ten-year grants with five-year vesting and will do so until adequate experience is developed. Volatility and risk-free interest rates are assumed over a period of time consistent with the expected term of the option. Volatility is measured on a historical basis. Monthly data points are utilized to derive volatility for periods greater than three years. Expected dividend yield is based on current dividend yield held constant over the expected term. Once the fair value of an option has been determined, it is amortized on a straight-line basis over the employee’s service period for that grant (from the grant date to the date the grant is fully vested). Expenses for restricted stock and restricted stock units are based on the grant date fair value allocated on a straight-line basis over the service period. Performance share expense is recognized based on management’s estimate of the probability of meeting the metrics identified in the performance share award agreement, assigned to each service period as these estimates develop.
 
Stock-based compensation expense is included in “Other operating expense” in the Consolidated Statements of Operations. Globe Life management views all stock-based compensation expense as a Corporate and Other expense and, therefore, presents it as such in its segment analysis. More information concerning the Company's segments is provided in Note 14—Business Segments.

Earnings per Share: Globe Life presents basic and diluted earnings per common share (EPS) on the face of the Consolidated Statements of Operations for income from continuing operations and income from discontinued operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period. Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares. For more information on earnings per share, see Note 12—Shareholders' Equity. 
Accounting Pronouncements Adopted in the Current Year
StandardDescriptionEffective DateEffect on the Consolidated Financial Statements
ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs
The standard was issued as an amendment to ASU 2017-08, and clarifies that callable debt securities with a premium should be amortized to the next call date.This standard became effective on January 1, 2021.The adoption of this standard did not have a material impact on the consolidated financial statements.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Accounting Pronouncements Yet to be Adopted
StandardDescriptionEffective DateEffect on the Consolidated Financial Statements
ASU No. 2018-12/2019-09/2020-11, 
Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, with clarification guidance issued in November 2019 and 2020.
ASU 2018-12 is a significant change to our current accounting and disclosure of long-duration contracts, which is our primary business. The guidance was primarily issued to: 1) improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows, 2) simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, 3) simplify the amortization of deferred acquisition costs, and 4) improve the effectiveness of the required disclosures.

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 of the change will be recognized in accumulated other comprehensive income (AOCI).		As a result of the issuance of ASU 2020-11 in November 2020, the effective date for this standard was changed to January 1, 2023. Early adoption is available.
The Company 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 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 income due to the requirement to re-measure policy liabilities using an interest rate currently lower than what is used in valuing the policy liabilities under existing guidance. In addition, the new guidance requires the removal of interest on our DAC asset and changes the related amortization of the asset. These changes are expected to result in a significant reduction to DAC amortization in the near to intermediate term.

While the requirements of the new guidance represent a significant change from existing GAAP, the new guidance will not impact capital and surplus or net income under statutory accounting practices, cash flows on our policies, or the underlying economics of our business.

Significant progress has been made by the Company in order to timely adopt the new guidance, including validating computations, establishing proper controls, finalizing accounting policies, and preparing financial disclosures. The Company anticipates 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.
 

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 2—Statutory Accounting

Life insurance subsidiaries of Globe Life are required to file statutory financial statements with state insurance regulatory authorities. Accounting principles used to prepare these statutory financial statements differ from GAAP. Consolidated net income and shareholders’ equity (capital and surplus) on a statutory basis for the insurance subsidiaries were as follows:
Net IncomeShareholders’ Equity
Year Ended December 31,At December 31,
20212020201920212020
Life insurance subsidiaries$373,703 $441,589 $462,515 $1,523,247 $1,408,281 

The excess, if any, of shareholders' equity of the insurance subsidiaries on a GAAP basis over that determined on a statutory basis is not available for distribution by the insurance subsidiaries to the Parent Company without regulatory approval. Insurance subsidiaries’ statutory capital and surplus necessary to satisfy regulatory requirements in the aggregate was $563 million at December 31, 2021. More information on the restrictions on the payment of dividends can be found in Note 12—Shareholders' Equity.
 
The Company's statutory financial statements are presented on the basis of accounting practices prescribed by the insurance department of the state of domicile of each insurance subsidiary. While all states have adopted the National Association of Insurance Commissioners’ (NAIC) statutory accounting practices (NAIC SAP) as the basis for statutory accounting, certain states have retained prescribed practices of their respective insurance code or administrative code which can differ from NAIC SAP. For Globe Life's life insurance companies, there are no significant differences between NAIC SAP and the accounting practices prescribed by the states of domicile.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income

Components of Accumulated Other Comprehensive Income: An analysis of the change in balance by component of Accumulated Other Comprehensive Income is as follows for each of the years 2019 through 2021:
Available for Sale AssetsDeferred Acquisition CostsForeign ExchangePension AdjustmentsTotal
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 tax1,557,883 (1,753)5,563 (32,102)1,529,591 
Reclassifications, net of tax(10,931)— — 6,695 (4,236)
Other comprehensive income (loss)1,546,952 (1,753)5,563 (25,407)1,525,355 
Balance at December 31, 2019
1,982,650 (5,916)12,058 (143,962)1,844,830 
For the year ended December 31, 2020:
Other comprehensive income (loss) before reclassifications, net of tax1,167,003 1,212 11,244 (34,103)1,145,356 
Reclassifications, net of tax25,919 — — 13,139 39,058 
Other comprehensive income (loss)1,192,922 1,212 11,244 (20,964)1,184,414 
Balance at December 31, 2020
3,175,572 (4,704)23,302 (164,926)3,029,244 
For the year ended December 31, 2021:
Other comprehensive income (loss) before reclassifications, net of tax(385,231)1,286 (3,915)44,819 (343,041)
Reclassifications, net of tax(25,051)— — 16,431 (8,620)
Other comprehensive income (loss)(410,282)1,286 (3,915)61,250 (351,661)
Balance at December 31, 2021
$2,765,290 $(3,418)$19,387 $(103,676)$2,677,583 

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Reclassification adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three years ended December 31, 2021.
  Year Ended December 31, Affected line items in the Statement of Operations
Component Line Item202120202019
Unrealized investment (gains) losses on available for sale assets:
Realized (gains) losses$(37,874)$26,345 $(19,352)Realized (gains) losses
Amortization of (discount) premium6,164 6,464 5,515 Net investment income
Total before tax(31,710)32,809 (13,837)
Tax6,659 (6,890)2,906 Income tax benefit (expense)
Total after-tax(25,051)25,919 (10,931)
Pension adjustments:
Amortization of prior service cost631 632 631 Other operating expense
Amortization of actuarial (gain) loss20,166 16,000 7,843 Other operating expense
Total before tax20,797 16,632 8,474 
Tax(4,366)(3,493)(1,779)Income tax benefit (expense)
Total after-tax16,431 13,139 6,695 
Total reclassification (after-tax)
$(8,620)$39,058 $(4,236)

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at 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 LossesGross
Unrealized
Gains		Gross
Unrealized
Losses
Fair
 Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises$383,083 $— $64,513 $(164)$447,432 2 
States, municipalities, and political subdivisions2,252,997 — 239,135 (2,907)2,489,225 12 
Foreign governments59,861 — 900 (5,132)55,629 — 
Corporates, by sector:
Financial4,569,160 (387)907,741 (9,349)5,467,165 26 
Utilities1,931,391 — 490,119 (1,012)2,420,498 11 
Energy1,587,892 — 346,780 (1,683)1,932,989 9 
Other corporate sectors6,879,459 — 1,454,464 (13,362)8,320,561 39 
Total corporates14,967,902 (387)3,199,104 (25,406)18,141,213 85 
Collateralized debt obligations36,468 — 27,037 — 63,505 — 
Other asset-backed securities104,998 — 3,715 (430)108,283 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.
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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 LossesGross
Unrealized
Gains		Gross
Unrealized
Losses
Fair
 Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises$380,602 $— $87,272 $(43)$467,831 2 
States, municipalities, and political subdivisions1,880,607 — 251,291 (315)2,131,583 10 
Foreign governments52,913 — 2,635 (898)54,650 — 
Corporates, by sector:
Financial4,404,203 — 1,016,813 (24,221)5,396,795 26 
Utilities1,975,460 — 608,595 (108)2,583,947 12 
Energy1,623,970 (3,346)346,197 (3,083)1,963,738 9 
Other corporate sectors6,687,644 — 1,727,366 (6,218)8,408,792 40 
Total corporates14,691,277 (3,346)3,698,971 (33,630)18,353,272 87 
Collateralized debt obligations57,007 — 23,460 (8,869)71,598 — 
Other asset-backed securities134,739 — 3,614 (3,778)134,575 1 
Total fixed maturities
$17,197,145 $(3,346)$4,067,243 $(47,533)$21,213,509 100 
(1)Amount reported in the balance sheet.
(2)At fair value.

A schedule of fixed maturities available for sale by contractual maturity date at 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.
At December 31, 2021
Amortized
Cost, net		Fair
Value
Fixed maturities available for sale:
Due in one year or less$98,115 $99,760 
Due after one year through five years900,326 995,569 
Due after five years through ten years1,757,273 2,083,816 
Due after ten years through twenty years6,862,449 8,653,145 
Due after twenty years8,045,149 9,301,053 
Mortgage-backed and asset-backed securities141,610 171,944 
$17,804,922 $21,305,287 

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Analysis of investment operations: "Net investment income" for the three years ended December 31, 2021, is summarized as follows:
Year Ended December 31,
202120202019
Fixed maturities available for sale$892,421 $873,352 $864,280 
Policy loans45,318 44,801 43,434 
Other long-term investments(1)
35,838 26,196 16,198 
Short-term investments24 545 2,592 
973,601 944,894 926,504 
Less investment expense(21,154)(17,832)(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:
Year Ended December 31,
202120202019
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)
$34,916 $(22,999)$19,354 
Provision for credit losses2,959 (3,346)— 
Investment funds—fair value option22,918 1,045 1,256 
Other investments7,840 21,563 11 
Realized gains (losses) from investments
68,633 (3,737)20,621 
Realized loss on redemption of debt(2)
(9,314)(634)— 
59,319 (4,371)20,621 
Applicable tax(12,457)1,955 (4,330)
Realized gains (losses), net of tax
$46,862 $(2,416)$16,291 
(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 $20.5 million, respectively in realized gains (losses).
(2)Refer to Note 11—Debt for further discussion.
An analysis of the net change in unrealized investment gains (losses) is as follows:
Year Ended December 31,
202120202019
Change in investment gains (losses) on:
Fixed maturities available for sale$(519,345)$1,528,339 $1,946,910 


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Selected information about sales of fixed maturities available for sale is as follows:
Year Ended December 31,
202120202019
Fixed maturities available for sale:
Proceeds from sales(1)
$116,656 $52,681 $79,108 
Gross realized gains1,848 2,642 1,227 
Gross realized losses(12,101)(39,153)(3,674)
(1)There were no unsettled sales in the periods ended December 31, 2021, 2020 and 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 $— $447,432 $— $447,432 
States, municipalities, and political subdivisions — 2,489,225 — 2,489,225 
Foreign governments — 55,629 — 55,629 
Corporates, by sector:
Financial — 5,303,547 163,618 5,467,165 
Utilities — 2,266,231 154,267 2,420,498 
Energy — 1,919,416 13,573 1,932,989 
Other corporate sectors — 8,010,331 310,230 8,320,561 
Total corporates — 17,499,525 641,688 18,141,213 
Collateralized debt obligations — — 63,505 63,505 
Other asset-backed securities — 108,283 — 108,283 
Total fixed maturities
$— $20,600,094 $705,193 $21,305,287 
Percentage of total— %97 %3 %100 %
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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 $— $467,831 $— $467,831 
States, municipalities, and political subdivisions — 2,131,583 — 2,131,583 
Foreign governments — 54,650 — 54,650 
Corporates, by sector:
Financial — 5,222,066 174,729 5,396,795 
Utilities — 2,400,602 183,345 2,583,947 
Energy — 1,925,549 38,189 1,963,738 
Other corporate sectors — 8,090,550 318,242 8,408,792 
Total corporates — 17,638,767 714,505 18,353,272 
Collateralized debt obligations — — 71,598 71,598 
Other asset-backed securities — 121,705 12,870 134,575 
Total fixed maturities
$— $20,414,536 $798,973 $21,213,509 
Percentage of total— %96 %4 %100 %

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Asset-
backed
Securities		Collateralized
Debt
Obligations		CorporatesTotal
Balance at January 1, 2019
$12,982 $73,369 $553,471 $639,822 
Included in realized gains/losses— — 396 396 
Included in other comprehensive income708 1,514 30,378 32,600 
Acquisitions(1)
— — — — 
Sales— — — — 
Amortization— 4,596 13 4,609 
Other(2)
(513)(5,375)(19,154)(25,042)
Transfers into Level 3(3)
— — 107,024 107,024 
Transfers out of Level 3(3)
— — — — 
Balance at December 31, 2019
13,177 74,104 672,128 759,409 
Included in realized gains/losses— — 1,579 1,579 
Included in other comprehensive income(173)(2,523)17,082 14,386 
Acquisitions(1)
— — 67,820 67,820 
Sales— — — — 
Amortization— 4,551 12 4,563 
Other(2)
(134)(4,534)(44,116)(48,784)
Transfers into Level 3(3)
— — — — 
Transfers out of Level 3(3)
— — — — 
Balance at December 31, 2020
12,870 71,598 714,505 798,973 
Included in realized gains/losses(82)(6,787)3,275 (3,594)
Included in other comprehensive income63 12,447 (20,818)(8,308)
Acquisitions(1)
— — 25,000 25,000 
Sales(12,851)(13,213)— (26,064)
Amortization— 4,505 9 4,514 
Other(2)
— (5,045)(80,283)(85,328)
Transfers into Level 3(3)
— — — — 
Transfers out of Level 3(3)
— — — — 
Balance at December 31, 2021
$— $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		CorporatesTotal
2019
$708 $1,514 $30,378 $32,600 
2020
(173)(2,523)17,082 14,386 
2021
63 12,447 (20,818)(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.

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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Transfers between levels within the hierarchy occur when there are changes in the observability of the inputs and market data. Transfers into Level 3 occur when there is little unobservable market activity for the asset/liability as of the measurement date and the Company is required to rely upon internally-developed assumptions or third-parties. Transfers out of Level 3 occur when quoted prices in active markets becomes available for identical assets/ liabilities or the ability to corroborate by observable market data.

The following table represents quantitative information about Level 3 fair value measurements:
Quantitative Information about Level 3 Fair Value Measurements
As of December 31, 2021
Fair ValueValuation
Techniques		Significant Unobservable
Input		Range
Weighted-
Average(1)
Private placement fixed maturities$539,880 Determination of credit spreadCredit ratingA+ to B-BBB
Discounted Cash FlowsDiscount rate
1.36% - 8.85%
3.05%
Other corporate bonds101,808 Present Value TechniquesMarket Quotes100.25%100.25%
Collateralized debt obligations63,505 Discounted Cash FlowsDiscount rate6.45%6.45%
$705,193 
(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 result in a significant increase (decrease) in fair value. For more information regarding valuation procedures, please refer to Note 1—Significant Accounting Policies under the caption Fair Value Measurements, Investments in Securities.
Other corporate bonds consist of obligations issued out of a special purpose vehicle (SPV). The market quotes consisted of Level 3 quotes. An increase (decrease) in the market quotes will produce an increase (decrease) in fair value.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an unrealized loss position.
Less than Twelve MonthsTwelve Months or LongerTotal
Number of issues (CUSIPs) held:
As of December 31, 2021138 42 180 
As of December 31, 202054 24 78 
 
Globe Life's entire fixed maturity portfolio consisted of 2,060 issues by 843 different issuers at December 31, 2021 and 1,900 issues by 777 different issuers at December 31, 2020. The weighted-average quality rating of all unrealized loss positions at amortized cost was A- and BBB- as of December 31, 2021 and December 31, 2020, respectively.




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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at December 31, 2021 and December 31, 2020.

Analysis of Gross Unrealized Investment Losses
At December 31, 2021
Less than Twelve MonthsTwelve Months or LongerTotal
Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises$118 $(1)$3,867 $(163)$3,985 $(164)
States, municipalities and political subdivisions141,310 (2,824)2,436 (83)143,746 (2,907)
Foreign governments12,567 (561)23,144 (4,571)35,711 (5,132)
Corporates, by sector:
Financial133,654 (1,507)52,864 (1,932)186,518 (3,439)
Utilities25,447 (692)2,372 (320)27,819 (1,012)
Energy6,519 (238)— — 6,519 (238)
Other corporate sectors115,444 (3,566)40,249 (3,670)155,693 (7,236)
Total corporates281,064 (6,003)95,485 (5,922)376,549 (11,925)
Collateralized debt obligations— — — — — — 
Other asset-backed securities10,489 (16)1 — 10,490 (16)
Total investment grade securities445,548 (9,405)124,933 (10,739)570,481 (20,144)
Below investment grade securities:
States, municipalities and political subdivisions— — — — — — 
Corporates, by sector:
Financial15,695 (272)56,897 (5,638)72,592 (5,910)
Utilities— — — — — — 
Energy— — 26,639 (1,445)26,639 (1,445)
Other corporate sectors700 (11)26,581 (6,115)27,281 (6,126)
Total corporates16,395 (283)110,117 (13,198)126,512 (13,481)
Collateralized debt obligations— — — — — — 
Other asset-backed securities— — 13,043 (414)13,043 (414)
Total below investment grade securities16,395 (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.

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


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.


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows. Refer to Note 1 for factors considered in the recording of the allowance for credit losses.
Year Ended December 31,
20212020
Allowance for credit losses beginning balance
$3,346 $— 
Additions to allowance for which credit losses were not previously recorded387 36,065 
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(3,346)(32,719)
Allowance for credit losses ending balance
$387 $3,346 

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

Concentrations of Credit Risk: Globe Life maintains a diversified investment portfolio with limited concentration in any given issuer. At December 31, 2021, the investment portfolio, at fair value, consisted of the following:
Investment grade fixed maturities:
Corporates77 %
States, municipalities, and political subdivisions11 
U.S. Government direct, guaranteed, and government-sponsored enterprises2 
Other1 
Below investment grade fixed maturities:
Corporates3 
States, municipalities, and political subdivisions— 
U.S. Government direct, guaranteed, and government-sponsored enterprises— 
Other— 
94 
Other
Policy loans, which are secured by the underlying insurance policy values2 
Other investments4 
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%.

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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:
Insurance16 %
Electric utilities10 
Banks7 
Oil and natural gas pipelines6 
Chemicals5 
Transportation4 
Real estate investment trusts4 
Food4 
Oil and natural gas exploration and production4 
Telecommunications3 
 
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.

Other Long-Term Investments: Other long-term investments consist of the following assets:
December 31,
20212020
Investment funds$640,263 $385,038 
Commercial mortgage loan participations141,843 160,602 
Other11,819 1,341 
Total
$793,925 $546,981 

The following table presents additional information about the Company's investment funds as of December 31, 2021 and December 31, 2020 at fair value:
December 31,
Fair ValueUnfunded Commitments
Investment Category202120202021Redemption Term/Notice
Commercial mortgage loans$423,776 $227,050 $237,631 Fully redeemable and non-redeemable with varying terms.
Opportunistic credit178,215 157,461 — 
Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.
Other38,272 527 212,286 Fully redeemable with varying terms and non-redeemable.
Total investment funds $640,263 $385,038 $449,917 

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.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Commercial mortgage loan participations (commercial mortgage loans): Summaries of commercial mortgage loans at December 31, 2021 and 2020 are as follows:
20212020
Carrying Value% of TotalCarrying Value% of Total
Property type:
Mixed use$57,996 41 $49,002 31 
Hospitality23,186 16 22,605 14 
Retail19,811 14 19,319 12 
Industrial17,900 13 17,900 11 
Multi-family14,872 11 19,128 12 
Office8,905 6 36,153 22 
Total recorded investment142,670 101 164,107 102 
Less allowance for credit losses(827)(1)(3,505)(2)
Carrying value, net of valuation allowance
$141,843 100 $160,602 100 

20212020
Carrying Value% of TotalCarrying Value% of Total
Geographic location:
California$67,659 48 $61,610 38 
New York18,373 13 16,602 10 
Pennsylvania11,673 8 11,314 7 
Indiana9,717 7 9,717 6 
Florida8,213 6 12,420 8 
Texas5,898 4 4,215 3 
Other(1)
21,137 15 48,229 30 
Total recorded investment142,670 101 164,107 102 
Less allowance for credit losses(827)(1)(3,505)(2)
Carrying value, net of valuation allowance
$141,843 100 $160,602 100 
(1)Included in 2020, was one loan in Virginia with a carrying value of $27 million and reported in Other in the table above. The loan was paid off during 2021, resulting in a zero balance for loans in Virginia as of December 31, 2021.
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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following table is reflective of Management's internal risk ratings of the loan portfolio. Loans are rated low, moderate, and high. The risk categories consider many different factors such as quality of asset, borrower status, as well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 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
Risk Rating:Number of Loans20212020201920182017Total
Low14 $— $23,636 $11,925 $41,209 $35,729 $112,499 
Medium 6 — 1,400 17,173 — — 18,573 
High2 — — 4,593 7,005 — 11,598 
Total commercial mortgage loans22 $— $25,036 $33,691 $48,214 $35,729 142,670 
Less allowance for credit losses on the investment pool(827)
Less allowance for credit losses on individual loans— 
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 Loans2020201920182017Total
Low17 $20,176 $14,757 $33,132 $61,460 $129,525 
Medium 4 — 10,640 7,796 — 18,436 
High3 — 4,554 11,592 — 16,146 
Total commercial mortgage loans24 $20,176 $29,951 $52,520 $61,460 164,107 
Less allowance for credit losses on the investment pool(2,503)
Less allowance for credit losses on individual loans(1,002)
Carrying value, net of valuation allowance
$160,602 

As of 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 losses is included in "Realized gains (losses)" in the Consolidated Statements of Operations.
Year Ended December 31,
20212020
Allowance for credit losses beginning balance
$3,505 $— 
Cumulative effect of adoption ASU 2016-13— 335 
Provision (reversal) for credit losses(2,678)3,170 
Allowance for credit losses ending balance
$827 $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.

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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:
Year Ended December 31,
202120202019
Balance at beginning of year
$4,595,444 $4,341,941 $4,137,925 
Additions:
Deferred during period:
Commissions678,517 600,577 534,735 
Other expenses227,730 222,408 218,926 
Total deferred906,247 822,985 753,661 
Value of business acquired(1)
16,500 — — 
Foreign exchange adjustment— 4,755 4,299 
Adjustment attributable to unrealized investment losses(2)
1,628 1,533 — 
Total additions924,375 829,273 757,960 
Deductions:
Amortized during period(603,838)(575,770)(551,726)
Foreign exchange adjustment(1,253)— — 
Adjustment attributable to unrealized investment gains(2)
— — (2,218)
Total deductions(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 Policies for the discussion on the acquisition of Globe Life Benefits.
(2)Represents amounts pertaining to investments relating to universal life-type products.


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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 6—Commitments and Contingencies

Reinsurance: Insurance affiliates of Globe Life reinsure a portion of insurance risk that is in excess of their retention limits. Current retention limits for new business written on ordinary life insurance range up to $500 thousand per life. Life insurance ceded represented 0.3% of total life insurance in force at December 31, 2021 and 2020. Insurance ceded on life and accident and health products represented 0.2% of premium income for 2021 and 2020. The insurance affiliates of Globe Life would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.
 
Insurance affiliates also assume insurance risks of other external companies. Life reinsurance assumed represented 1.1% 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 office space, aviation equipment, and other equipment under a variety of operating lease arrangements.

Rental expense for the three years ended December 31, 2021 is as follows:
Year Ended December 31,
202120202019
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:
Year Ended December 31,
20222023202420252026Thereafter
Operating lease commitments$4,458 $3,384 $2,932 $1,955 $1,816 $9,206 

Purchase Commitments: Globe Life has various long-term noncancelable purchase commitments as well as commitments to provide capital for low-income housing tax credit interests. See further discussion related to tax credits in Note 1—Significant Accounting Policies.

Year Ended December 31,
20222023202420252026Thereafter
Purchase commitments$104,474 $61,535 $23,504 $13,170 $9,611 $221,689 

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 agreement was amended on September 30, 2021 and now expires in 2026. The maximum amount of letters of credit available is $250 million. The
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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 perform under the terms of the lease.

Unclaimed Property Audits: Globe Life subsidiaries are currently the subject of audits regarding the identification, reporting and escheatment of unclaimed property arising from life insurance policies and a limited number of annuity contracts. These audits are being conducted by private entities that have contracted with forty-seven states through their respective Departments of Revenue, and have not resulted in any financial assessment from any state nor indicated any liability. The audits are wide-ranging and seek large amounts of data regarding claims handling, procedures, and payments of contract benefits arising from unreported death claims. No estimate of range can be made at this time for loss contingencies related to possible administrative penalties or amounts that could be payable to the states for the escheatment of abandoned property.

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

On 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 District Court for the Central District of California (Natalie Bell, Gisele Mobley, Ashly Rai, and John Turner v. American Income Life Insurance Company and National Income Life Insurance Company, Case No. 2:20-cv-07046). On December 18, 2020, the plaintiffs voluntarily dismissed Mr. Turner’s claims and all claims against defendant National Income. Following the dismissal, the complaint alleges that insurance agent trainees should have been classified as employees, and after contracting should have been classified as employees instead of independent contractors. Plaintiff Bell is a former California trainee and plaintiff Rai is a former California agent. They assert claims under California law on behalf of a putative California class for the four years prior to February 13, 2020 through case conclusion. They make claims under (a) the California Labor Code for alleged meal and rest break violations, overtime, minimum wage, alleged failure to pay wages at the time of termination, expense reimbursement, and alleged failure to provide accurate wage statements; and (b) the California Business and Professions Code for alleged unfair business practices. They also seek liquidated damages, penalties and attorney’s fees under California law. Plaintiff Mobley is a former Florida agent who asserts a claim under Florida law on behalf of a putative Florida class for the five years prior to February 13, 2020 through case conclusion. She makes a claim under the Florida General Labor Regulations, including the Florida Minimum Wage Act, for alleged failure to pay all wages owed. The plaintiffs also assert a national collective action on behalf of all “similarly situated” individuals for minimum wage, overtime, liquidated damages, penalties, an accounting and attorney’s fees and costs under the Fair Labor Standards Act for the three years prior to February 13, 2020 through case conclusion. American Income responded to the complaint with a motion to compel the named plaintiffs to arbitrate their individual claims and other procedural challenges. On April 6, 2021, the court granted American Income’s motion to
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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
compel arbitration as to plaintiffs Mobley and Rai, and denied the motion without prejudice as to plaintiff Bell. American Income subsequently renewed its motion to compel arbitration as to plaintiff Bell. On November 30, 2021, the court granted American Income’s motion to compel arbitration as to plaintiff Bell.

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 Family Heritage Life Insurance Company of America, Case No. 2020-007330-CA-01). On May 8, 2020, Combined 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 Family Heritage Life 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.



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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,
202120202019
Balance at beginning of period
$162,261 $163,808 $154,528 
Incurred related to:
Current year638,054 584,936 612,305 
Prior years(22,477)(14,829)(1,188)
Total incurred615,577 570,107 611,117 
Paid related to:
Current year487,096 442,127 470,426 
Prior years122,910 129,527 131,411 
Total paid610,006 571,654 601,837 
Balance at end of period
$167,832 $162,261 $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 for any given year. The difference between the estimate made at the end of the prior period and the actual experience during the period is reflected above under the caption “Incurred related to: Prior years.”

Below is the reconciliation of the liability of "Policy claims and other benefits payable" in the Consolidated Balance Sheets.
December 31,
20212020
Policy claims and other benefits payable:
Life insurance$245,108 $237,246 
Health insurance167,832 162,261 
Total$412,940 $399,507 

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 8—Income Taxes

The following table discloses significant components of income taxes for each year presented:
Year Ended December 31,
202120202019
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 35,264 35,449 
167,431 164,911 170,397 
Shareholders’ equity:
Other comprehensive income (loss)(93,480)314,845 405,472 
$73,951 $479,756 $575,869 

In each of the years 2019 through 2021, deferred income tax expense (benefit) was incurred because of certain differences between net income before income tax expense (benefit) as reported on the Consolidated Statements of Operations and taxable income as reported on Globe Life's income tax returns. As explained in Note 1—Significant Accounting Policies, these differences caused the consolidated financial statement book values of some assets and liabilities to be different from their respective tax bases.

The effective income tax rate differed from the expected U.S. federal statutory rate of 21% as shown below:
Year Ended December 31,
2021%2020%2019%
Expected federal income tax expense (benefit)
$191,602 21.0 $188,304 21.0 $195,569 21.0 
Increase (reduction) in income taxes resulting from:
Low income housing investments(12,115)(1.3)(11,913)(1.3)(11,605)(1.2)
Share-based awards(5,597)(0.6)(5,013)(0.6)(11,780)(1.3)
Tax-exempt investment income(6,977)(0.8)(5,830)(0.6)(3,192)(0.3)
Other518 0.1 (637)(0.1)1,405 0.1 
Income tax expense (benefit)
$167,431 18.4 $164,911 18.4 $170,397 18.3 

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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
December 31,
20212020
Deferred tax assets:
Fixed maturity investments$— $4,279 
Carryover of tax losses5,962 5,534 
Total gross deferred tax assets5,962 9,813 
Deferred tax liabilities:
Unrealized gains713,879 808,071 
Employee and agent compensation93,738 88,012 
Deferred acquisition costs723,337 688,034 
Future policy benefits, unearned and advance premiums, and policy claims226,943 257,640 
Other liabilities15,738 7,209 
Total gross deferred tax liabilities1,773,635 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 concludes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from current or future tax examinations and other tax-related matters for all open years.

Valuations: Globe Life has a $28.4 million net operating loss (NOL) carryforward at December 31, 2021, of which $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 that Globe Life will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

Globe Life's tax liability is adjusted to include a provision for uncertain tax positions taken or expected to be taken in a tax return. However, during the years 2019 through 2021, Globe Life did not have any uncertain tax positions which resulted in unrecognized tax benefits.

Tax penalties and interest: Globe Life's continuing practice is to recognize penalties and interest related to income tax matters in income tax expense. The Company recognized interest income of $0 thousand, $0 thousand, and $55 thousand, net of federal income tax expense, in its Consolidated Statements of Operations for 2021, 2020, and 2019, respectively. The Company had no accrued interest or penalties at December 31, 2021 or 2020.

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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 9—Postretirement Benefits

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

The total cost of these retirement plans charged to operations was as follows:
Year Ended December 31,
202120202019
Plan Type:
Defined Contribution Plans(1)
$5,188 $4,855 $4,817 
Defined Benefit Pension Plans(2)
41,778 33,826 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 plan measurements for the pension plans are as of December 31 of the respective year. The pension plans covering the majority of employees are qualified and funded. Contributions are made to funded pension plans subject to minimums required by regulation and maximums allowed for tax purposes.

Globe Life's SERP provides an additional supplemental defined pension benefit to a limited number of officers. The supplemental benefit is based on the participant’s qualified plan benefit without consideration to the regulatory limits on compensation and benefit payments applicable to qualified plans, except that eligible compensation is capped at $1 million. The SERP is nonqualified and unfunded. However, a Rabbi Trust has been established to support the liability for this plan. The Rabbi Trust consists of life insurance policies on the lives of plan participants with an unaffiliated insurance carrier as well as an investment account. Since this plan is nonqualified, the investments and the policyholder value of the insurance policies in the Rabbi Trust are not included as defined benefit plan assets, but rather assets of the Company. They are included in “Other Assets” in the Consolidated Balance Sheets.

Defined benefit and SERP plan contributions were $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.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Pension Assets: Plan assets in the funded plans consist primarily of investments in marketable fixed maturities and equity securities that are valued at fair value. Globe Life measures the fair value of its financial assets, including the assets in its benefit plans, in accordance with accounting guidance which establishes a hierarchy for asset values and provides a methodology for the measurement of value. Please refer to Note 1—Significant Accounting Policies under the caption Fair Value Measurements, Investments in Securities for a complete discussion of valuation procedures. The following table presents the assets of the Company's pension plans at December 31, 2021 and 2020.

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 9 
Utilities— 43,663 — 43,663 7 
Energy— 22,719 — 22,719 4 
Other corporates— 88,673 — 88,673 15 
Total corporate bonds— 207,577 — 207,577 35 
Exchange traded fund(1)
315,720 — — 315,720 52 
Other bonds— 239 — 239 — 
Guaranteed annuity contract(2)
— 34,743 — 34,743 6 
Short-term investments13,731 — — 13,731 2 
Other10,388 — — 10,388 2 
$339,839 $242,559 $— 582,398 97 
Other long-term investments(3)
15,149 3 
Total pension assets
$597,547 100 
(1)A fund including marketable securities that mirror the S&P 500 index.
(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income Pension Plan").
(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns less than 1% of the investment fund. As of 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.

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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 10 
Utilities— 45,888 — 45,888 9 
Energy— 22,480 — 22,480 4 
Other corporates— 88,983 — 88,983 17 
Total corporate bonds— 209,603 — 209,603 40 
Exchange traded fund(1)
245,170 — — 245,170 46 
Other bonds— 258 — 258 — 
Guaranteed annuity contract(2)
— 30,119 — 30,119 6 
Short-term investments20,960 — — 20,960 4 
Other7,109 — — 7,109 1 
$273,239 $239,980 $— 513,219 97 
Other long-term investments(3)
16,313 3 
Total pension assets
$529,532 100 
(1)A fund including marketable securities that mirror the S&P 500 index.
(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income Pension Plan").
(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns 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.


Globe Life's investment objectives for its plan assets include preservation of capital and purchasing power as well as long-term growth. Globe Life seeks to preserve capital through investments made in high quality securities with adequate diversification by issuer and industry sector to minimize risk. The portfolio is monitored continuously for changes in quality and diversification mix. The preservation of purchasing power is intended to be accomplished through asset growth, exclusive of contributions and withdrawals in excess of the rate of inflation. Globe Life intends to maintain investments that when combined with future plan contributions will produce adequate long-term growth to provide for all plan obligations. It is also Globe Life's objective that the portfolio’s investment return will meet or exceed the return of a balanced market index.
 
The majority of the securities in the portfolio are highly marketable so that there will be adequate liquidity to meet projected payments. There are no specific policies calling for asset durations to match those of benefit obligations.

Allowed investments are limited to equities, fixed maturities, and short-term investments (invested cash). The assets are to be invested in a mix of equity and fixed income investments that best serve the objectives of the pension plan. Factors to be considered in determining the asset mix include funded status, annual pension expense, annual pension contributions, and balance sheet liability. Equities can include common and preferred stocks, securities convertible into equities, mutual funds and exchange traded funds that invest in equities, equity interests in limited partnerships, and other equity-related investments. Primarily, equities are listed on major exchanges and adequate market liquidity is required. Fixed maturities primarily consist of marketable debt securities rated investment grade at purchase by a major rating agency. Short-term investments include fixed maturities with maturities less than one year and invested cash. Investments outside of the aforementioned list are not permitted, except by prior approval of the Plan’s Trustees.
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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.

Year Ended December 31,
202120202019
Premiums paid for insurance coverage$2,193 $2,480 $2,394 
At December 31,
20212020
Total investments:
COLI$52,791 $51,361 
Exchange traded funds87,133 75,390 
$139,924 $126,751 


Pension Liability: The following table presents projected benefit obligation (PBO) and accumulated benefit obligation (ABO) for the pension plans and SERP at December 31, 2021 and 2020.

Pension Liability
December 31,
20212020
PBOABOPBOABO
Pension plans$686,917 $601,647 $667,753 $594,510 
SERP92,017 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:
At December 31,
20212020
Funded benefit pension plans PBO$686,917 $667,753 
Funded benefit pension plans fair value of plan assets597,547 529,532 






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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,
20212020
Funded benefit pension plans ABO$601,647 $594,510 
Funded benefit pension plans fair value of plan assets597,547 529,532 

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 31:20212020
Discount rate3.19 %2.92 %
Rate of compensation increase4.43 3.97 
For Periodic Benefit Cost for the Year:202120202019
Discount rate2.92 %3.49 %4.37 %
Expected long-term returns6.67 6.67 6.72 
Rate of compensation increase3.97 3.97 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:
 Year Ended December 31,
 202120202019
Service cost—benefits earned during the period$31,672 $24,461 $19,929 
Interest cost on projected benefit obligation21,957 22,825 23,827 
Expected return on assets(32,331)(29,561)(27,862)
Amortization of prior service cost (credit)631 632 8,211 
Recognition of actuarial gain (loss)19,849 15,469 29 
Net periodic benefit cost
$41,778 $33,826 $24,134 
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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of the impact on other comprehensive income (loss) concerning pensions and other postretirement benefits is as follows:
Year Ended December 31,
202120202019
Balance at January 1
$(208,770)$(182,233)$(150,071)
Amortization of:
Prior service cost (credit)631 632 631 
Net actuarial (gain) loss(1)
20,166 16,000 7,843 
Total amortization20,797 16,632 8,474 
Plan amendments(4,565)— — 
Experience gain (loss)(2)
61,299 (43,169)(40,636)
Balance at December 31
$(131,239)$(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,
20212020
Changes in PBO:
PBO at beginning of year$763,313 $665,207 
Service cost31,672 24,461 
Interest cost21,957 22,825 
Plan amendments4,565 — 
Actuarial loss (gain)(16,938)74,006 
Benefits paid(25,635)(23,186)
PBO at end of year778,934 763,313 
Changes in plan assets:
Fair value at beginning of year529,532 468,763 
Return on assets75,792 62,104 
Contributions17,858 21,851 
Benefits paid(25,635)(23,186)
Fair value at end of year597,547 529,532 
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.

Year Ended December 31,
Amounts recognized in accumulated other comprehensive income consist of:20212020
Net loss (gain)$120,217 $200,465 
Prior service cost8,647 4,713 
Net amounts recognized at year end$128,864 $205,178 
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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:
For the year(s): 
2022$25,979 
202328,431 
202430,936 
202532,120 
202634,121 
2027-2031200,165 

Note 10—Supplemental Disclosures of Cash Flow Information
 
The following table summarizes Globe Life's noncash transactions, which are not reflected on the Consolidated Statements of Cash Flows:
Year Ended December 31,
202120202019
Stock-based compensation not involving cash$30,272 $35,892 $44,843 
Commitments for low-income housing interests177,010 161,503 51,978 
Exchanges of fixed maturity investments109,226 219,807 243,156 
Net unsettled security trades6,963 1,669 8,421 
Noncash tax credits1,883 — — 
 
The following table summarizes certain amounts paid during the period:
Year Ended December 31,
202120202019
Interest paid$83,072 $83,518 $81,723 
Income taxes paid96,218 76,701 101,982 

 
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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,
20212020
InstrumentIssue DateMaturity Date Coupon Rate Par
Value		Unamortized Discount & Issuance CostsBook
Value		Fair
Value		Book
Value
Senior notes5/27/19935/15/20237.875%$165,612 $(396)$165,216 $180,444 $164,954 
Senior notes(1)
9/24/20129/15/20223.800%150,000 (248)149,752 153,284 149,414 
Senior notes9/27/20189/15/20284.550%550,000 (5,051)544,949 625,801 544,328 
Senior notes8/21/20208/15/20302.150%400,000 (4,222)395,778 395,208 395,157 
Junior subordinated debentures(2)
———— — — — 290,652 
Junior subordinated debentures11/17/201711/17/20575.275%125,000 (1,604)123,396 128,856 123,381 
Junior subordinated debentures6/14/20216/15/20614.250%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)
150,000 (248)149,752 153,284 — 
Commercial paper330,033 (141)329,892 329,892 254,918 
Total short-term debt
480,033 (389)479,644 483,176 254,918 
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, followed by senior notes then junior subordinated debentures. The senior notes due 2023 are noncallable, the remaining senior notes are callable under a make-whole provision, and the junior subordinated debentures are subject to 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.

Contractual Debt Obligations: The following table presents expected scheduled principal payments under our contractual debt obligations:
Year Ended December 31,
20222023202420252026Thereafter
Debt obligations$480,033 $165,612 $— $— $— $1,400,000 

Credit Facility: On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020, which provides for a $750 million revolving credit facility that may be increased to $1 billion. The amended credit facility matures September 30, 2026, and may be extended up to two one-year periods upon the Company's request. Pursuant to this agreement, the participating lenders have agreed to make revolving loans to Globe Life and to issue secured or unsecured letters of credit. The Company has not drawn on any of the credit to date.
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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. In accordance with the agreement, Globe Life is subject to certain covenants regarding 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 information concerning Globe Life's commercial paper borrowings is presented below.
 
Credit Facility - Commercial Paper
At December 31,
20212020
Balance at end of period (at par value)$330,033 $255,000 
Annualized interest rate0.29 %0.27 %
Letters of credit outstanding$125,000 $135,000 
Remaining amount available under credit line294,967 360,000 
Year Ended December 31,
202120202019
Average balance outstanding during period$311,049 $318,409 $288,684 
Daily-weighted average interest rate (annualized)0.23 %1.50 %2.62 %
Maximum daily amount outstanding during period$465,033 $482,000 $385,000 

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 for general corporate purposes.

Federal Home Loan Bank (FHLB) funding: During the year, four of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. The membership requires ownership of FHLB 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 Sheets 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.

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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 12—Shareholders' Equity

Share Data: A summary of common share activity is presented in the following chart.
Common Stock
IssuedTreasury
Stock
2019:
Balance at January 1, 2019121,218,183 (10,525,147)
Grants of restricted stock— 8,840 
Vesting of performance shares— 311,399 
Issuance of common stock due to exercise of stock options— 1,810,559 
Treasury stock acquired— (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— 4,548 
Vesting of performance shares— 271,843 
Issuance of common stock due to exercise of stock options— 936,289 
Treasury stock acquired— (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— 10,031 
Vesting of performance shares— 210,155 
Issuance of common stock due to exercise of stock options— 1,191,704 
Treasury stock acquired— (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.

Acquisition of Common Shares: Globe Life shares are acquired through open market purchases under the Globe Life stock repurchase program when it is determined to be the best use of Globe Life's excess cash flows. This yields a return that is better than available alternatives and exceeds our cost of equity. When stock options are exercised, proceeds from the exercises are generally used to repurchase approximately the number of shares available with those funds in order to reduce dilution. See the following summary below:
Globe Life Share Repurchase ProgramShare Repurchase for Dilution Purposes
Shares Acquired
(in thousands)		Total CostAverage PriceShares Acquired
(in thousands)		Total CostAverage Price
2021
4,784 $455,030 $95.11 858 $86,405 $100.75 
2020
4,459 380,112 85.24 676 63,754 94.28 
2019
3,932 350,080 89.04 1,209 109,489 90.52 


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Restrictions: Restrictions exist on the flow of funds to Globe Life Inc. from its insurance subsidiaries. Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. Dividends from insurance subsidiaries of Globe Life Inc. are restricted based on regulations by their states of domicile. Additionally, insurance company distributions are generally not permitted in excess of statutory surplus. Subsidiaries are also subject to certain minimum capital requirements. Subsidiaries of Globe Life paid cash dividends to the Parent Company in the amount of $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.

Earnings per Share: A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:
Year Ended December 31,
202120202019
Basic weighted average shares outstanding102,069,781 106,075,267 109,213,524 
Weighted average dilutive options outstanding1,100,351 1,149,327 2,167,726 
Diluted weighted average shares outstanding103,170,132 107,224,594 111,381,250 
Antidilutive shares2,412,884 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
 
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:
Shares vested by period
Contract Period6 MonthsYear 1Year 2Year 3Year 4Year 5
Directors
7 years100%—%—%—%—%—%
Employees
7 years—%—%50%50%—%—%
Employees
10 years—%—%25%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.

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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
202120202019
Balance at January 1,
5,984,418 7,167,718 9,422,760 
Expired and forfeited during year(1,2)
39,559 38,820 20,800 
Options granted during year(1)
(1,091,495)(1,127,610)(1,149,542)
Restricted stock, restricted stock units, and performance shares granted(2)
(205,394)(94,510)(1,126,300)
Balance at December 31,
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 for grant of restricted stock such that each stock grant reduces shares available for grant in a range from 3.10 shares to 3.88 shares.

A summary of stock compensation activity for each of the three years ended December 31, 2021, is presented below:
202120202019
Stock-based compensation expense recognized(1)
$30,272 $35,892 $44,843 
Tax benefit recognized11,954 12,550 21,197 
(1)No stock-based compensation expense was capitalized in any period in accordance with applicable GAAP.

Additional stock compensation information is as follows at December 31:
20212020
Unrecognized compensation(1)
$26,602 $28,125 
Weighted average period of expected recognition (in years)(1)
0.570.65
(1)Includes restricted stock and performance shares.

No equity awards were cash settled during the three years ended December 31, 2021.

Options: The following table summarizes information about stock options outstanding at December 31, 2021.
 Options OutstandingOptions Exercisable
Range of
Exercise Prices		Number
Outstanding		Weighted-
Average
Remaining
Contractual
Life (Years)		Weighted-
Average
Exercise
Price		Number
Exercisable		Weighted-
Average
Exercise
Price
$29.59 - $77.26
2,025,118 2.78$66.39 1,916,991 $65.78 
82.56 - 83.17
1,262,467 4.1482.56 623,227 82.57 
87.60 - 90.21
1,299,366 4.1887.64 1,064,406 87.65 
92.40 - 98.32
1,284,112 6.1598.28 10,212 92.98 
100.74 - 105.56
1,326,599 5.14100.85 44,919 $104.10 
$29.59 - $105.56
7,197,662 4.31$85.11 3,659,755 $75.55 

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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:
202120202019
OptionsWeighted-Average
Exercise Price		OptionsWeighted-Average
Exercise Price		OptionsWeighted-Average
Exercise Price
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 98.28 1,326,599 100.85 1,352,402 82.43 
Exercised(1,191,704)58.59 (936,289)51.37 (1,810,559)45.93 
Expired and forfeited(5,977)74.15 (3,437)75.27 (21,250)82.89 
Outstanding—end of year
7,197,662 $85.11 7,111,231 $78.28 6,724,358 $70.07 
Exercisable at end of year
3,659,755 $75.55 3,389,399 $67.19 2,999,788 $57.27 

Additional information about Globe Life's stock option activity as of December 31, 2021 and 2020 is as follows:
20212020
Outstanding options:
Weighted-average remaining contractual term (in years)4.314.57
Aggregate intrinsic value$77,329 $126,467 
Exercisable options:
Weighted-average remaining contractual term (in years)3.273.42
Aggregate intrinsic value$66,978 $94,527 

Selected stock option activity for the three years ended December 31, 2021, is presented below:
202120202019
Weighted-average grant-date fair value of options granted
(per share)		$18.01 $14.64 $14.20 
Intrinsic value of options exercised50,641 40,517 82,022 
Cash received from options exercised69,826 48,093 83,163 
Actual tax benefit received10,545 8,508 17,225 

Additional information concerning Globe Life's unvested options is as follows at December 31:
20212020
Number of shares outstanding3,537,907 3,721,832 
Weighted-average exercise price (per share)$94.99 $88.37 
Weighted-average remaining contractual term (in years)5.375.62
Aggregate intrinsic value$10,352 $31,941 

Globe Life expects that substantially all unvested options will vest.

Restricted Stock: Restricted stock grants consist of time-vested grants, restricted stock units, and performance 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 the first business day of the year. Performance shares are granted to a limited number of senior executives. Performance shares have a three-year performance period and are not settled in shares until the certification of the three-year performance period. While the grant specifies a stated target number of shares, the determination of the
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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 objectives of Globe Life over the three-year performance period. Certain executive restricted stock and performance share grants contain terms related to age that could accelerate vesting.

Following are the restricted stock units outstanding for each of the three years ended December 31, 2021. All restricted stock units were fully vested at the end of each year of grant.
Year of grantsOutstanding as of year end
201971,006 
202077,167 
202184,426 

Below is the final determination of the performance share grants in 2017 to 2019:
Year of grantsFinal settlement of sharesFinal settlement date
2017271,843 February 26, 2020
2018210,155 February 24, 2021
201966,751 February 23, 2022

For the 2020 and 2021 performance share grants, actual shares that could be distributed range from 0 to 227 thousand for the 2020 grants and 0 to 209 thousand shares for the 2021 grants.

A summary of restricted stock grants for each of the years in the three-year period ended December 31, 2021, is presented in the table below.
202120202019
Directors restricted stock:
Shares10,031 4,548 8,840 
Price per share$92.40 $105.56 $76.37 
Aggregate value$927 $480 $675 
Percent vested as of 12/31/202197 %100 %100 %
Directors restricted stock units (including dividend equivalents):
Shares7,258 6,161 6,634 
Price per share$92.60 $103.32 $77.50 
Aggregate value$672 $637 $514 
Percent vested as of 12/31/202196 %100 %100 %
Performance shares:
Target shares139,500 151,200 156,500 
Target price per share$98.32 $100.74 $82.56 
Aggregate value$13,716 $15,232 $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 units and vest immediately upon grant. Dividend equivalents are applicable only to restricted stock units. Performance shareholders are not entitled to dividend equivalents and are not entitled to dividend payments until the shares are vested and settled.

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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		Total
2019:
Balance at December 31, 201812,000 752,629 — — 764,629 
Grants— 156,500 8,840 6,634 171,974 
Additional performance shares(1)
— 118,812 — — 118,812 
Restriction lapses(12,000)(311,399)(8,840)(6,634)(338,873)
Forfeitures— — — — — 
Balance at December 31, 2019— 716,542 — — 716,542 
2020:
Grants— 151,200 4,548 6,161 161,909 
Additional performance shares(1)
— (65,473)— — (65,473)
Restriction lapses— (271,843)(4,548)(6,161)(282,552)
Forfeitures— (11,450)— — (11,450)
Balance at December 31, 2020— 518,976 — — 518,976 
2021:
Grants— 139,500 10,031 7,258 156,789 
Additional performance shares(1)
— (94,883)— — (94,883)
Restriction lapses— (210,155)(9,742)(6,969)(226,866)
Forfeitures— (11,050)— — (11,050)
Balance at December 31, 2021— 342,388 289 289 342,966 
(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 StockExecutive Performance SharesDirectors Restricted StockDirectors Restricted Stock Units
Grant-date fair value per share at January 1, 2021
$— $90.13 $— $— 
Grants— 98.32 92.40 92.41 
Estimated additional performance shares— (91.43)— — 
Restriction lapses— (87.60)(92.40)(92.41)
Forfeitures— (87.60)— — 
Grant-date fair value per share at December 31, 2021
— 94.75 92.56 92.56 

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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: 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. 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.


Premium Income by Distribution Channel
For the Year 2021
 LifeHealthAnnuityTotal
Distribution ChannelAmount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total
American Income$1,402,878 48 $114,950 9 $— — $1,517,828 37 
Direct to Consumer971,461 34 73,946 6 — — 1,045,407 25 
Liberty National311,081 11 187,327 16 — — 498,408 12 
United American8,822 — 481,614 40 1 100 490,437 12 
Family Heritage4,957 — 343,839 29 — — 348,796 9 
Other199,011 7 — — — — 199,011 5 
$2,898,210 100 $1,201,676 100 $1 100 $4,099,887 100 
 For the Year 2020
 LifeHealthAnnuityTotal
Distribution ChannelAmount
% 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 Consumer906,959 34 76,527 7 — — 983,486 26 
Liberty National293,897 11 188,835 16 — — 482,732 13 
United American9,688 — 452,980 40 4 100 462,672 12 
Family Heritage4,253 — 317,021 28 — — 321,274 8 
Other200,281 8 — — — — 200,281 5 
$2,672,804 100 $1,141,097 100 $4 100 $3,813,905 100 
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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
 For the Year 2019
 LifeHealthAnnuityTotal
Distribution ChannelAmount
% 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 Consumer855,543 34 77,557 7 — — 933,100 26 
Liberty National285,551 11 189,578 18 — — 475,129 13 
United American10,571 1 416,582 39 4 100 427,157 12 
Family Heritage3,830 — 294,182 27 — — 298,012 8 
Other201,794 8 — — — — 201,794 6 
$2,517,784 100 $1,077,346 100 $4 100 $3,595,134 100 

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.

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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.
Year Ended December 31, 2021
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
Revenue:
Premium$2,898,210 $1,201,676 $1 $— $— $— $4,099,887 
Net investment income— — — 952,447 — — 952,447 
Other income— — — — 1,216 — 1,216 
Total revenue2,898,210 1,201,676 1 952,447 1,216 — 5,053,550 
Expenses:
Policy obligations2,070,485 758,745 29,061 — — 1,325 (2)2,859,616 
Required interest on reserves(735,282)(102,574)(39,966)877,822 — — — 
Required interest on DAC218,575 28,556 258 (247,389)— — — 
Amortization of acquisition costs486,724 115,194 1,920 — — — 603,838 
Commissions, premium taxes, and non-deferred acquisition costs234,033 97,453 24 — — — 331,510 
Insurance administrative expense(1)
— — — — 271,631 10,398 (3,4)282,029 
Parent expense— — — — 9,553 175 (4)9,728 
Stock-based compensation expense— — — — 30,272 — 30,272 
Interest expense— — — 83,486 — — 83,486 
Total expenses2,274,535 897,374 (8,703)713,919 311,456 11,898 4,200,479 
Subtotal623,675 304,302 8,704 238,528 (310,240)(11,898)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)—investments68,633 
Realized loss—redemption of debt(5)
(9,314)
Administrative settlements(1,325)
Legal proceedings(8,139)
Non-operating expenses(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.



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Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Year Ended December 31, 2020
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
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 revenue2,672,804 1,141,097 4 927,062 1,325 — 4,742,292 
Expenses:
Policy obligations1,809,373 733,481 30,030 — — — 2,572,884 
Required interest on reserves(698,112)(93,475)(41,413)833,000 — — — 
Required interest on DAC210,152 26,586 328 (237,066)— — — 
Amortization of acquisition costs463,586 110,177 2,007 — — — 575,770 
Commissions, premium taxes, and non-deferred acquisition costs212,859 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 expenses1,997,858 868,728 (9,025)682,638 296,730 4,308 3,841,237 
Subtotal674,946 272,369 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.


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Year Ended December 31, 2019
LifeHealthAnnuityInvestmentCorporate & OtherAdjustmentsConsolidated
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 revenue2,517,784 1,077,346 4 910,459 1,318 — 4,506,911 
Expenses:
Policy obligations1,638,053 687,764 31,532 — — — 2,357,349 
Required interest on reserves(666,168)(87,289)(43,522)796,979 — — — 
Required interest on DAC202,502 25,435 494 (228,431)— — — 
Amortization of acquisition costs436,881 112,825 2,020 — — — 551,726 
Commissions, premium taxes, and non-deferred acquisition costs203,052 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 expenses1,814,320 833,708 (9,454)652,854 295,424 9,401 3,596,253 
Subtotal703,464 243,638 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)—investments20,621 
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.





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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Assets for each segment are reported based on a specific identification basis. The insurance segments’ assets contain DAC. The investment segment includes the investment portfolio, cash, and accrued investment income. Goodwill is assigned to the insurance segments at the time of purchase. All other assets are included in the Corporate & Other category. The tables below reconcile segment assets to total assets as reported in the consolidated financial statements.
 
Assets by Segment

 At December 31, 2021
 LifeHealthAnnuityInvestmentCorporate & OtherConsolidated
Cash and invested assets$— $— $— $22,850,154 $— $22,850,154 
Accrued investment income— — — 251,307 — 251,307 
Deferred acquisition costs4,236,401 675,871 2,456 — — 4,914,728 
Goodwill309,609 172,182  — — 481,791 
Other assets— — — — 1,270,068 1,270,068 
Total assets
$4,546,010 $848,053 $2,456 $23,101,461 $1,270,068 $29,768,048 


 At December 31, 2020
 LifeHealthAnnuityInvestmentCorporate & OtherConsolidated
Cash and invested assets$— $— $— $22,547,498 $— $22,547,498 
Accrued investment income— — — 248,991 — 248,991 
Deferred acquisition costs3,982,158 610,071 3,215 — — 4,595,444 
Goodwill309,609 131,982 — — — 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 


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Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Liabilities for each segment are reported also on a specific identification basis similar to the assets. The insurance segments' liabilities contain future policy benefits, unearned and advance premiums, and policy claims and other benefits payable. Other policyholders' funds are included in Other as well as current and deferred income taxes payable. Debt represents both short and long-term. The tables below reconcile segment liabilities to total liabilities as reported in the consolidated financial statements.

Liabilities by Segment
 At December 31, 2021
 LifeHealthAnnuityInvestmentCorporate & OtherConsolidated
Future policy benefits$12,686,851 $2,315,507 $1,032,369 $— $— $16,034,727 
Unearned and advance premiums19,874 45,598 — — — 65,472 
Policy claims and other benefits payable245,108 167,832 — — — 412,940 
Debt— — — 2,026,138 — 2,026,138 
Other— — — — 2,585,965 2,585,965 
Total liabilities
$12,951,833 $2,528,937 $1,032,369 $2,026,138 $2,585,965 $21,125,242 


At December 31, 2020
LifeHealthAnnuityInvestmentCorporate & OtherConsolidated
Future policy benefits$12,008,396 $2,172,141 $1,062,999 $— $— $15,243,536 
Unearned and advance premiums18,968 42,760 — — — 61,728 
Policy claims and other benefits payable237,246 162,261 — — — 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 

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
 
None.
 
Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: Globe Life, under the direction of the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, has established disclosure controls and procedures that are designed to ensure that information required to be disclosed by Globe Life in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to Globe Life's management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
 
As of the end of the fiscal year completed December 31, 2021, an evaluation was performed under the supervision and with the participation of Globe Life management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, of the disclosure controls and procedures (as those terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon their evaluation, the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer have concluded that disclosure controls and procedures are effective as of the date of this Form 10-K. In compliance with Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. § 1350), each of these officers executed a Certification included as an exhibit to this Form 10-K.

Management's Annual Report on Internal Control over Financial Reporting: Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Management evaluated the design and operating effectiveness of the Company's internal control over financial reporting based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based upon their evaluation as of December 31, 2021, the Co-Chairmen and Chief Executive Officers, and the Executive Vice President and Chief Financial Officer have concluded that Globe Life's internal control over financial reporting is effective as of the date of this Form 10-K. In compliance with Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), each of these officers executed a Certification included as an exhibit to this Form 10-K.

Changes in Internal Control over Financial Reporting: As of the period ended December 31, 2021, there have not been any changes in Globe Life Inc.'s internal control over financial reporting or in other factors that could significantly affect this control over financial reporting subsequent to the date of their evaluation which have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
 
Refer to Deloitte & Touche LLP's, independent registered public accounting firm, attestation report on the Company's internal controls over financial reporting.

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MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Management at Globe Life is responsible for establishing and maintaining adequate internal control over financial reporting for the Company and for assessing the effectiveness of internal control on an annual basis. As a framework for assessing internal control over financial reporting, the Company utilizes the criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
 
Management evaluated the Company’s internal control over financial reporting, and based on its assessment, determined that the Company’s internal control over financial reporting was effective as of December 31, 2021. The Company’s independent registered public accounting firm has issued an attestation report on the Company’s internal control over financial reporting as stated in their report which is included herein.
 
/s/ Gary L. Coleman
Gary L. Coleman
Co-Chairman and Chief Executive Officer
/s/ Larry M. Hutchison
Larry M. Hutchison
Co-Chairman and Chief Executive Officer
/s/ Frank M. Svoboda
Frank M. Svoboda
Executive Vice President and Chief Financial Officer
 
February 23, 2022

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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 — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 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

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 2022


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Item 9B. Other Information
 
There were no items required.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.
PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Information required by this item is incorporated by reference from the sections entitled “PROPOSAL NUMBER 1 - Election of Directors,” “Director Nominee Profiles,” "Director 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).
 
ITEM 11. EXECUTIVE COMPENSATION
 
Information required by this item is incorporated by reference from the sections entitled “EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS”, “COMPENSATION COMMITTEE REPORT”, “SUMMARY COMPENSATION TABLE”, "CEO PAY RATIO", “2021 GRANTS OF PLAN-BASED AWARDS”, “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2021”, “OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR ENDED DECEMBER 31, 2021”, “PENSION BENEFITS AT DECEMBER 31, 2021”, “POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL”, “2021 DIRECTOR COMPENSATION”, and “PAYMENTS TO DIRECTORS” in the Proxy Statement, which is to be filed with the SEC.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
1. Equity Compensation Plan Information as of December 31, 2021
(a)(b)(c)
Plan CategoryNumber 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))
Equity compensation plans approved by security holders7,197,662 $85.11 4,727,088 
Equity compensation plans not approved by security holders
Total7,197,662 $85.11 4,727,088 
2. Security ownership of certain beneficial owners:
Information required by this item is incorporated by reference from the section entitled “PRINCIPAL SHAREHOLDERS” in the Proxy Statement, which is to be filed with the SEC.
3. Security ownership of management:
Information required by this item is incorporated by reference from the section entitled “Stock Ownership” in the Proxy Statement, which is to be filed with the SEC.
4. 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.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
Information required by this item is incorporated by reference from the sections entitled “RELATED PARTY TRANSACTION POLICY AND TRANSACTIONS” and “Director Independence Determinations” in the Proxy Statement, which is to be filed with the SEC. 

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:
 Page of this report
Financial Statements:
Globe Life Inc. and Subsidiaries:
Schedules Supporting Financial Statements for each of the three years in the period ended December 31, 2021:
Schedules not referred to have been omitted as inapplicable or not required by Regulation S-X.

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EXHIBITS
 
Exhibit No. Description FormFiling Date Related ExhibitPage of this Report
3.18-KAugust 8, 20193.2
3.28-KFebruary 25, 20213.2
4.110-KFebruary 27, 20184.1
4.28-KSeptember 24, 20124.2
4.38-KNovember 2, 20014.3
4.58-KNovember 17, 20174.4
4.68-KJune 14, 20214.2
4.7S-3September 24, 20184.1
4.88-KSeptember 27, 20184.2
4.98-KAugust 21, 20204.2
10.110-KMarch 22, 200210.Z
10.210-KMarch 22, 200210.AA
10.38-KJanuary 25, 200710.1
10.410-KFebruary 29, 200810.53
10.510-KFebruary 29, 200810.54
10.610-KFebruary 27, 200910.53
10.710-KFebruary 27, 202010.10
10.88-KMay 5, 201510.1
10.910-KMarch 1, 201910.11
10.1010-QNovember 5, 202010.2
10.118-KApril 29, 200810.1
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Exhibit No. Description FormFiling Date Related ExhibitPage of this Report
10.1210-KFebruary 29, 200810.58
10.138-KJanuary 6, 200910.1
10.1410-KFebruary 28, 201410.58
10.1510-KMarch 1, 201910.17
10.168-KMay 4, 201110.1
10.178-KApril 29, 201410.1
10.188-KMay 4, 201110.4
10.198-KMay 4, 201110.5
10.208-KFebruary 27, 201210.1
10.2110-KFebruary 27, 201710.75
10.2210-KFebruary 27, 201710.76
10.2310-KFebruary 27, 201710.77
10.2410-KFebruary 27, 201710.78
10.2510-KFebruary 27, 201710.55
10.2610-KFebruary 28, 201110.57
10.2710-KFebruary 28, 201110.59
10.288-KMay 2, 201810.1
10.2910-KFebruary 27, 202010.31
10.3010-QNovember 4, 202110.1
10.318-KMay 2, 201810.3
10.3210-KFebruary 27, 202010.34
10.3310-KFebruary 23, 202210.33
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Exhibit No. Description FormFiling Date Related ExhibitPage of this Report
10.3410-KFebruary 27, 202010.36
10.358-KMay 2, 201810.5
10.3610-KFebruary 27, 202010.38
10.3710-KFebruary 27, 202010.39
10.388-KMay 2, 201810.6
10.398-KMay 2, 201810.7
10.4010-KFebruary 27, 202010.44
10.4110-KFebruary 27, 202010.45
10.4210-KFebruary 27, 202010.46
10.438-KMarch 4, 201910.1
10.4410-QNovember 5, 202010.1
10.4510-KFebruary 27, 202010.52
10.4610-QNovember 4, 202110.2
10.478-KOctober 1, 202110.1
10.4810-KFebruary 25, 202110.56
2110-K
February 23, 2022
21
2310-K
February 23, 2022
23
2410-K
February 23, 2022
24
31.110-K
February 23, 2022
31.1
31.210-K
February 23, 2022
31.2
31.310-K
February 23, 2022
31.3
32.110-K
February 23, 2022
32.1
101.INSXBRL Instance Document- the instance document does not appear in the Interactive Data file because the XBRL tags are embedded within the Inline XBRL document.10-K
February 23, 2022
101.INS
101.SCHInline XBRL Taxonomy Extension Schema Document.10-K
February 23, 2022
101.SCH
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.10-K
February 23, 2022
101.CAL
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.10-K
February 23, 2022
101.LAB
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Exhibit No. Description FormFiling Date Related ExhibitPage of this Report
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.10-K
February 23, 2022
101.PRE
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.10-K
February 23, 2022
101.DEF
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).10-K
February 23, 2022
104
* Compensatory plan or arrangement.
** To be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2021.
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Exhibit 21. Subsidiaries of the Registrant: The following table lists subsidiaries of the registrant which meet the definition of “significant subsidiary” according to Regulation S-X:
Name Under Which Company Does BusinessState of
Incorporation		Distribution Channel (Division)
Globe Life And Accident
Insurance Company		NebraskaDirect to Consumer
American Income Life
Insurance Company		IndianaAmerican Income Life Division
Liberty National Life
Insurance Company		NebraskaLiberty National Division
Family Heritage Life
Insurance Company of America		OhioFamily Heritage Division

While United American Insurance Company (Nebraska) does not qualify as a significant subsidiary in accordance with Regulation S-X, management views this subsidiary as significant to our operations.
 
All other exhibits required by Regulation S-K are listed as to location in the “Index of documents filed as a part of this report” in this report. Exhibits not referred to have been omitted as inapplicable or not required.

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Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Balance Sheets
(Dollar amounts in thousands)
December 31,
20212020
Assets:
Investments:
Long-term investments$31,384 $32,861 
Short-term investments— 19,300 
Total investments31,384 52,161 
Cash20,228 1,644 
Investment in affiliates10,618,826 10,526,982 
Due from affiliates170,983 322,278 
Taxes receivable from affiliates33,229 51,041 
Other assets185,143 184,588 
Total assets$11,059,793 $11,138,694 
Liabilities:
Short-term debt$629,607 $254,918 
Long-term debt1,546,494 1,817,798 
Other liabilities240,886 294,886 
Total liabilities2,416,987 2,367,602 
Shareholders’ equity:
Preferred stock351 351 
Common stock109,218 113,218 
Additional paid-in capital871,075 877,946 
Accumulated other comprehensive income2,677,583 3,029,244 
Retained earnings6,182,100 5,874,109 
Treasury stock(1,197,521)(1,123,776)
Total shareholders’ equity8,642,806 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.
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Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
Condensed Statement of Operations
(Dollar amounts in thousands)
 Year Ended December 31,
 202120202019
Net investment income$32,816 $30,199 $28,869 
Realized gains (losses)(5,682)12,792 — 
Total revenue
27,134 42,991 28,869 
General operating expenses51,378 57,679 68,419 
Reimbursements from affiliates(57,504)(68,556)(65,928)
Interest expense86,751 90,197 89,317 
Total expenses
80,625 79,320 91,808 
Operating income (loss) before income taxes and equity in earnings of affiliates(53,491)(36,329)(62,939)
Income tax expense9,682 7,773 13,133 
Net operating loss before equity in earnings of affiliates(43,809)(28,556)(49,806)
Equity in earnings of affiliates, net of tax788,768 760,329 810,596 
Net income
744,959 731,773 760,790 
Other comprehensive income (loss):
Attributable to Parent Company58,903 (21,477)(11,379)
Attributable to affiliates(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.
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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,
 202120202019
Net income$744,959 $731,773 $760,790 
Equity in earnings of affiliates(788,768)(760,329)(810,596)
Cash dividends from subsidiaries478,535 485,871 479,988 
Other, net58,617 21,129 65,584 
Cash provided from operations
493,343 478,444 495,766 
Cash provided from (used for) investing activities:
Net decrease (increase) in short-term investments19,300 (15,899)(3,380)
Investment in subsidiaries(159,924)(7,875)— 
Other long-term investments(2,500)— — 
Additions to properties— — (32)
Loaned money to affiliates(1,049,932)(1,008,860)(501,764)
Repayments from affiliates1,200,932 782,860 501,764 
Cash provided from (used for) investing activities
7,876 (249,774)(3,412)
Cash provided from (used for) financing activities:
Repayment of debt(300,000)(386,875)(6,875)
Proceeds from issuance of debt325,000 700,000 — 
Payment for debt issuance costs(7,687)(5,844)— 
Net issuance (repayment) of commercial paper74,974 (34,445)(11,610)
Issuance of stock69,826 48,093 82,771 
Acquisitions of treasury stock(541,435)(443,866)(459,569)
Borrowed money from affiliate32,000 76,000 277,000 
Repayments to affiliates(32,000)(79,500)(276,500)
Payment of dividends(103,313)(101,462)(97,458)
Cash provided from (used for) financing activities
(482,635)(227,899)(492,241)
Net increase (decrease) in cash18,584 771 113 
Cash balance at beginning of period1,644 873 760 
Cash balance at end of period$20,228 $1,644 $873 
 










See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
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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:
Year Ended December 31,
202120202019
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 of Cash Flows:
 Year Ended December 31,
 202120202019
Stock-based compensation not involving cash$30,272 $35,892 $44,843 
Contribution of property to subsidiary5,004 — — 

 The following table summarizes certain amounts paid (received) during the period:
 Year Ended December 31,
 202120202019
Interest paid$86,206 $86,504 $86,868 
Income taxes paid (received)(11,838)(12,744)(16,617)
 
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, before any distribution is made to holders of Globe Life common stock. Holders of Series A Preferred Stock do not have any voting rights nor have rights to convert such shares into shares of any other class of Globe Life capital stock.
 
 













See accompanying Report of Independent Registered Public Accounting Firm.

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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 $648,766 $2,371,163 $219,073,057 1.1 
Premiums(2):
Life insurance$2,868,759 $4,286 $19,502 $2,883,975 0.7 
Health insurance1,192,567 3,312 12,421 1,201,676 1.0 
Total premium$4,061,326 $7,598 $31,923 $4,085,651 0.8 
For the Year Ended December 31, 2020
Life insurance in force$203,894,460 $669,063 $2,551,770 $205,777,167 1.2 
Premiums(2):
Life insurance$2,642,555 $4,241 $19,775 $2,658,089 0.7 
Health insurance1,144,470 3,373 — 1,141,097 — 
Total premium$3,787,025 $7,614 $19,775 $3,799,186 0.5 
For the Year Ended December 31, 2019
Life insurance in force$191,249,516 $676,988 $2,774,388 $193,346,916 1.4 
Premiums(2):
Life insurance$2,486,127 $4,357 $20,384 $2,502,154 0.8 
Health insurance1,080,869 3,523 — 1,077,346 — 
Total premium$3,566,996 $7,880 $20,384 $3,579,500 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.

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SIGNATURES
 
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.
 
Globe Life Inc.
By:/s/    GARY L. COLEMAN        
Gary L. Coleman
Co-Chairman and Chief Executive Officer and Director
By:/s/    LARRY M. HUTCHISON        
Larry M. Hutchison
Co-Chairman and Chief Executive Officer and Director
By:/s/    FRANK M. SVOBODA        
Frank M. Svoboda
Executive Vice President and Chief Financial Officer
By:/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:/s/ CHARLES E. ADAIR  *         By:/s/ JANE BUCHAN  *
Charles E. Adair Jane M. Buchan
Director Director
By:/s/ LINDA L. ADDISON  *        By:/s/ ROBERT W. INGRAM  *
Linda L. AddisonRobert W. Ingram
DirectorDirector
By:/s/ MARILYN A. ALEXANDER  *         By:/s/ STEVEN P. JOHNSON  *
Marilyn A. Alexander Steven P. Johnson
Director Director
By:/s/ CHERYL D. ALSTON  *        By:/s/ DARREN M. REBELEZ  *
Cheryl D. AlstonDarren M. Rebelez
DirectorDirector
By:/s/ MARK A. BLINN  * By:/s/ MARY E. THIGPEN  *
Mark A. Blinn Mary E. Thigpen
Director Director
By:/s/ JAMES P. BRANNEN  *
James P. Brannen 
Director 
Date: February 23, 2022
*By:  /s/    FRANK M. SVOBODA        
Frank M. Svoboda
Attorney-in-fact

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