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Investments

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Note 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at June 30, 2022 and December 31, 2021, 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 June 30, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	386,907	$	—	$	875	$	(8,438)	$	379,344	2
States, municipalities, and political subdivisions	2,614,124		—		54,087		(388,631)		2,279,580		13
Foreign governments	55,302		—		144		(9,683)		45,763		—
Corporates, by sector:
Financial	4,639,902		—		147,936		(322,283)		4,465,555		26
Utilities	1,916,537		—		102,727		(69,418)		1,949,846		11
Energy	1,497,600		—		53,410		(74,477)		1,476,533		9
Other corporate sectors	6,759,669		—		169,924		(484,110)		6,445,483		38
Total corporates	14,813,708		—		473,997		(950,288)		14,337,417		84
Collateralized debt obligations	36,762		—		15,939		—		52,701		—
Other asset-backed securities	89,583		—		9		(2,430)		87,162		1
Total fixed maturities	$	17,996,386	$	—	$	545,051	$	(1,359,470)	$	17,181,967	100

(1)Amount reported in the balance sheet.

(2)At fair value.


	At December 31, 2021
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	383,083	$	—	$	64,513	$	(164)	$	447,432	2
States, municipalities, and political subdivisions	2,252,997		—		239,135		(2,907)		2,489,225		12
Foreign governments	59,861		—		900		(5,132)		55,629		—
Corporates, by sector:
Financial	4,569,160		(387)		907,741		(9,349)		5,467,165		26
Utilities	1,931,391		—		490,119		(1,012)		2,420,498		11
Energy	1,587,892		—		346,780		(1,683)		1,932,989		9
Other corporate sectors	6,879,459		—		1,454,464		(13,362)		8,320,561		39
Total corporates	14,967,902		(387)		3,199,104		(25,406)		18,141,213		85
Collateralized debt obligations	36,468		—		27,037		—		63,505		—
Other asset-backed securities	104,998		—		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.

A schedule of fixed maturities available for sale by contractual maturity date at June 30, 2022, 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 June 30, 2022
	Amortized Cost, net		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	131,203	$	132,177
Due after one year through five years	1,015,277		1,045,058
Due after five years through ten years	1,691,289		1,759,932
Due after ten years through twenty years	7,125,279		7,207,999
Due after twenty years	7,906,891		6,896,832
Mortgage-backed and asset-backed securities	126,447		139,969
	$	17,996,386	$	17,181,967

Analysis of Investment Operations: "Net investment income" for the three and six month periods ended June 30, 2022 and 2021 is summarized as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021		% Change	2022		2021		% Change
Fixed maturities available for sale	$	226,753	$	223,278	2	$	452,037	$	444,997	2
Policy loans	11,580		11,324		2	23,008		22,592		2
Other long-term investments(1)	10,703		8,880		21	23,416		17,042		37
Short-term investments	122		6		1933	124		10		1140
	249,158		243,488		2	498,585		484,641		3
Less investment expense	(5,516)		(5,180)		6	(11,109)		(10,513)		6
Net investment income	$	243,642	$	238,308	2	$	487,476	$	474,128	3

(1)For the three months ended June 30, 2022 and 2021, the investment funds, accounted for under the fair value option method, recorded $8.6 million and $6.5 million of distributions, respectively, in net investment income. For the six months ended June 30, 2022 and 2021, the investment funds, accounted for under the fair value option method, recorded $19.3 million and $12.3 million of distributions, respectively, in net investment income. Refer to Other Long-Term Investments below for further discussion on the investment funds.

Selected information about sales of fixed maturities available for sale is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Fixed maturities available for sale:
Proceeds from sales(1)	$	143,911	$	12,852	$	219,027	$	74,710
Gross realized gains	—		—		773		1,134
Gross realized losses	(41,168)		(82)		(44,847)		(12,101)

(1)There were no unsettled sales in the periods ended June 30, 2022 and 2021.

An analysis of "Realized gains (losses)" is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)	$	(22,421)	$	865	$	(17,872)	$	16,309

Provision for credit losses	—		—		387		3,346
Fair value option—change in fair value	947		2,543		(4,391)		12,428
Other investments	(8,972)		5,251		(15,814)		4,728
Realized gains (losses) from investments	(30,446)		8,659		(37,690)		36,811



Applicable tax	6,394		(1,818)		7,915		(7,730)
Realized gains (losses), net of tax	$	(24,052)	$	6,841	$	(29,775)	$	29,081

(1)During the three months ended June 30, 2022 and 2021, the Company recorded $1.9 million and $22.4 million of exchanges of fixed maturities (noncash transactions) that resulted in $0 and $0, respectively, in realized gains (losses). During the six months ended June 30, 2022 and 2021, the Company recorded $1.9 million and $108.3 million of exchanges of fixed maturities (noncash transactions) that resulted in $0 and $25.2 million, respectively, in realized gains (losses).

Fair Value Measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at June 30, 2022 and December 31, 2021:


	Fair Value Measurement at June 30, 2022 Using:
	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	$	—		$	379,344		$	—		$	379,344
States, municipalities, and political subdivisions	—			2,279,580			—			2,279,580
Foreign governments	—			45,763			—			45,763
Corporates, by sector:
Financial	—			4,338,871			126,684			4,465,555
Utilities	—			1,832,289			117,557			1,949,846
Energy	—			1,464,392			12,141			1,476,533
Other corporate sectors	—			6,171,890			273,593			6,445,483
Total corporates	—			13,807,442			529,975			14,337,417
Collateralized debt obligations	—			—			52,701			52,701
Other asset-backed securities	—			87,162			—			87,162
Total fixed maturities	$	—		$	16,599,291		$	582,676		$	17,181,967
Percentage of total	—		%	97		%	3		%	100		%


	Fair Value Measurement at December 31, 2021 Using:
	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		%

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			Corporates			Total
Balance at January 1, 2022	$	—		$	63,505		$	641,688		$	705,193

Included in realized gains / losses	—			—			—			—
Included in other comprehensive income	—			(11,098)			(89,359)			(100,457)
Acquisitions	—			—			—			—
Sales	—			—			—			—
Amortization	—			2,248			3			2,251
Other(1)	—			(1,954)			(22,357)			(24,311)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at June 30, 2022	$	—		$	52,701		$	529,975		$	582,676
Percent of total fixed maturities	—		%	—		%	3		%	3		%

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.


	Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Asset- backed Securities			Collateralized Debt Obligations			Corporates			Total
Balance at January 1, 2021	$	12,870		$	71,598		$	714,505		$	798,973

Included in realized gains / losses	(82)			(6,787)			840			(6,029)
Included in other comprehensive income	63			13,528			(12,489)			1,102
Acquisitions	—			—			—			—
Sales	(12,851)			(13,213)			—			(26,064)
Amortization	—			2,270			4			2,274
Other(1)	—			(2,989)			(24,115)			(27,104)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at June 30, 2021	$	—		$	64,407		$	678,745		$	743,152
Percent of total fixed maturities	—		%	1		%	3		%	4		%

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

The following table presents changes in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period for Level 3s:



	Changes in Unrealized Gains (Losses) included in Other Comprehensive Income for Assets Held at the End of the Period
	Asset- backed Securities		Collateralized Debt Obligations		Corporates		Total
At June 30, 2022	$	—	$	(11,098)	$	(89,359)	$	(100,457)
At June 30, 2021	63		13,528		(12,489)		1,102

Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an unrealized loss position.


	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIPs) held:
As of June 30, 2022	1,581	53	1,634
As of December 31, 2021	138	42	180

Globe Life's entire fixed maturity portfolio consisted of 2,177 issues by 923 different issuers at June 30, 2022 and 2,060 issues by 843 different issuers at December 31, 2021. The weighted-average quality rating of all unrealized loss positions at amortized cost was A- as of June 30, 2022 and December 31, 2021.

The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at June 30, 2022 and December 31, 2021.

Analysis of Gross Unrealized Investment Losses


	At June 30, 2022
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	289,383	$	(7,858)	$	3,465	$	(580)	$	292,848	$	(8,438)
States, municipalities and political subdivisions	1,674,505		(386,550)		4,066		(2,081)		1,678,571		(388,631)
Foreign governments	9,838		(1,254)		23,380		(8,429)		33,218		(9,683)
Corporates, by sector:
Financial	2,260,544		(284,797)		50,713		(14,674)		2,311,257		(299,471)
Utilities	650,822		(65,538)		3,970		(1,530)		654,792		(67,068)
Energy	662,038		(57,153)		—		—		662,038		(57,153)
Other corporate sectors	3,859,625		(438,608)		53,633		(21,941)		3,913,258		(460,549)
Total corporates	7,433,029		(846,096)		108,316		(38,145)		7,541,345		(884,241)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	74,578		(1,813)		—		—		74,578		(1,813)
Total investment grade securities	9,481,333		(1,243,571)		139,227		(49,235)		9,620,560		(1,292,806)

Below investment grade securities:
States, municipalities and political subdivisions	—		—		—		—		—		—

Corporates, by sector:
Financial	79,869		(10,269)		43,105		(12,543)		122,974		(22,812)
Utilities	28,547		(2,350)		—		—		28,547		(2,350)
Energy	48,666		(8,428)		19,176		(8,896)		67,842		(17,324)
Other corporate sectors	162,448		(19,219)		6,999		(4,342)		169,447		(23,561)
Total corporates	319,530		(40,266)		69,280		(25,781)		388,810		(66,047)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	—		—		12,493		(617)		12,493		(617)
Total below investment grade securities	319,530		(40,266)		81,773		(26,398)		401,303		(66,664)
Total fixed maturities	$	9,800,863	$	(1,283,837)	$	221,000	$	(75,633)	$	10,021,863	$	(1,359,470)

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 generally 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.

Analysis of Gross Unrealized Investment Losses


	At December 31, 2021
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	118	$	(1)	$	3,867	$	(163)	$	3,985	$	(164)
States, municipalities and political subdivisions	141,310		(2,824)		2,436		(83)		143,746		(2,907)
Foreign governments	12,567		(561)		23,144		(4,571)		35,711		(5,132)
Corporates, by sector:
Financial	133,654		(1,507)		52,864		(1,932)		186,518		(3,439)
Utilities	25,447		(692)		2,372		(320)		27,819		(1,012)
Energy	6,519		(238)		—		—		6,519		(238)
Other corporate sectors	115,444		(3,566)		40,249		(3,670)		155,693		(7,236)
Total corporates	281,064		(6,003)		95,485		(5,922)		376,549		(11,925)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	10,489		(16)		1		—		10,490		(16)
Total investment grade securities	445,548		(9,405)		124,933		(10,739)		570,481		(20,144)

Below investment grade securities:
States, municipalities and political subdivisions	—		—		—		—		—		—

Corporates, by sector:
Financial	15,695		(272)		56,897		(5,638)		72,592		(5,910)
Utilities	—		—		—		—		—		—
Energy	—		—		26,639		(1,445)		26,639		(1,445)
Other corporate sectors	700		(11)		26,581		(6,115)		27,281		(6,126)
Total corporates	16,395		(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 securities	16,395		(283)		123,160		(13,612)		139,555		(13,895)
Total fixed maturities	$	461,943	$	(9,688)	$	248,093	$	(24,351)	$	710,036	$	(34,039)

Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Allowance for credit losses beginning balance	$	—	$	—	$	387	$	3,346
Additions to allowance for which credit losses were not previously recorded	—		—		—		—
Additions (reductions) to allowance for fixed maturities that previously had an allowance	—		—		—		—
Reduction of allowance for which the Company intends to sell or more likely than not will be required to sell or sold during the period	—		—		(387)		(3,346)
Allowance for credit losses ending balance	$	—	$	—	$	—	$	—

As of June 30, 2022 and December 31, 2021, the Company did not have any fixed maturities in non-accrual status.

Other Long-Term Investments: Other long-term investments consist of the following assets:



	June 30, 2022		December 31, 2021
Investment funds	$	740,006	$	640,263
Commercial mortgage loan participations	141,696		141,843
Other	17,253		11,819
Total	$	898,955	$	793,925

The following table presents additional information about the Company's investment funds as of June 30, 2022 and December 31, 2021 at fair value:



	Fair Value				Unfunded Commitments
Investment Category	June 30, 2022		December 31, 2021		June 30, 2022		Redemption Term/Notice




Commercial mortgage loans	$	417,442	$	423,776	$	363,852	Fully redeemable and non-redeemable with varying terms.
Opportunistic credit	168,287		178,215		—		Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.




Other	154,277		38,272		146,367
Total investment funds	$	740,006	$	640,263	$	510,219

The Company had $143 million of capital called during the year from existing investment funds. Our unfunded commitments were $510 million as of June 30, 2022.

Commercial Mortgage Loan Participations (commercial mortgage loans): Summaries of commercial mortgage loans by property type and geographical location at June 30, 2022 and December 31, 2021 are as follows:



	June 30, 2022			December 31, 2021
	Carrying Value		% of Total	Carrying Value		% of Total
Property type:
Mixed use	$	61,846	44	$	57,996	41
Hospitality	20,783		15	23,186		16
Retail	19,399		14	19,811		14
Industrial	17,900		12	17,900		13
Multi-family	14,527		10	14,872		11
Office	8,350		6	8,905		6

Total recorded investment	142,805		101	142,670		101
Less allowance for credit losses	(1,109)		(1)	(827)		(1)
Carrying value, net of allowance for credit losses	$	141,696	100	$	141,843	100


	June 30, 2022			December 31, 2021
	Carrying Value		% of Total	Carrying Value		% of Total
Geographic location:
California	$	70,245	50	$	67,659	48
New York	19,133		14	18,373		13
Pennsylvania	11,672		8	11,673		8
Indiana	9,717		7	9,717		7
Florida	8,263		6	8,213		6
Texas	6,075		4	5,898		4
Other	17,700		12	21,137		15
Total recorded investment	142,805		101	142,670		101
Less allowance for credit losses	(1,109)		(1)	(827)		(1)
Carrying value, net of allowance for credit losses	$	141,696	100	$	141,843	100

The following tables are reflective of Management's internal risk ratings of the loan portfolio. Loans are rated low, moderate, and high. The risk categories consider many different factors such as quality of asset, borrower status, as well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 2020, are transitional or under construction and may not yet be income producing. Certain ratios, such as loan to value and debt service coverage ratios, may not be evaluated as the value of the underlying transitional property significantly fluctuates based on completion of the project.


	Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
	As of June 30, 2022
Risk Rating:	Number of Loans	2022		2021		2020		2019		2018		2017		Total
Low	13	$	—	$	—	$	26,403	$	11,685	$	41,224	$	36,000	$	115,312
Moderate	5	—		—		1,195		15,161		—		—		16,356
High	2	—		—		—		4,110		7,027		—		11,137
Total commercial mortgage loans	20	$	—	$	—	$	27,598	$	30,956	$	48,251	$	36,000	142,805
Less allowance for credit losses on the investment pool														(862)
Less allowance for credit losses on individual loans														(247)
Carrying value, net of valuation allowance														$	141,696


	Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
	As of December 31, 2021
Risk Rating:	Number of Loans	2021		2020		2019		2018		2017		Total
Low	14	$	—	$	23,636	$	11,925	$	41,209	$	35,729	$	112,499
Moderate	6	—		1,400		17,173		—		—		18,573
High	2	—		—		4,593		7,005		—		11,598
Total commercial mortgage loans	22	$	—	$	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

As of June 30, 2022, 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 20 loans in the portfolio. For the six months ended June 30, 2022, the allowance for credit losses increased $282 thousand. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statements of Operations.



	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Allowance for credit losses beginning balance	$	827	$	2,147	$	827	$	3,505

Provision (reversal) for credit losses	282		(508)		282		(1,866)

Allowance for credit losses ending balance	$	1,109	$	1,639	$	1,109	$	1,639

There were no delinquent commercial mortgage loans as of June 30, 2022 and December 31, 2021. As of June 30, 2022 and December 31, 2021, the Company had one commercial mortgage loan in non-accrual status, which went into foreclosure during the quarter. The outstanding principal balance of this loan was $4.1 million as of June 30, 2022 and December 31, 2021. The Company's unfunded commitment balance to commercial loan borrowers was $23 million as of June 30, 2022.