Business Segments

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Business Segments

Note 12—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 that manages the investment portfolio and cash flow for the insurance segments and the corporate function, which has been retrospectively adjusted to exclude the interest on deferred acquisition costs due to the adoption of ASU 2018-12 and the interest on debt. 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, cancer, critical illness, accident, and limited-benefit supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.

The following tables present segment premium revenue by each of Globe Life's distribution channels.

Premium Income by Distribution Channel

	Three Months Ended June 30, 2023
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	394,620	51	$	29,527	9	$	—	—	$	424,147	38
Direct to Consumer	248,607		32	17,175		5	—		—	265,782		24
Liberty National	86,634		11	46,903		14	—		—	133,537		12
United American	1,849		—	137,453		42	—		—	139,302		13
Family Heritage	1,513		—	98,129		30	—		—	99,642		9
Other	48,510		6	—		—	—		—	48,510		4
	$	781,733	100	$	329,187	100	$	—	—	$	1,110,920	100

Premium Income by Distribution Channel

	Three Months Ended June 30, 2022
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	375,748	50	$	29,411	9	$	—	—	$	405,159	38
Direct to Consumer	247,264		33	17,848		6	—		—	265,112		25
Liberty National	81,316		11	46,846		15	—		—	128,162		12
United American	2,003		—	135,444		42	—		—	137,447		13
Family Heritage	1,373		—	90,758		28	—		—	92,131		8
Other	49,188		6	—		—	—		—	49,188		4
	$	756,892	100	$	320,307	100	$	—	—	$	1,077,199	100

	Six Months Ended June 30, 2023
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	782,132	51	$	59,121	9	$	—	—	$	841,253	38
Direct to Consumer	496,274		32	34,423		5	—		—	530,697		24
Liberty National	171,837		11	93,875		14	—		—	265,712		12
United American	3,731		—	270,060		42	—		—	273,791		12
Family Heritage	2,993		—	194,201		30	—		—	197,194		9
Other	97,363		6	—		—	—		—	97,363		5
	$	1,554,330	100	$	651,680	100	$	—	—	$	2,206,010	100

	Six Months Ended June 30, 2022
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	745,854	49	$	58,177	9	$	—	—	$	804,031	37
Direct to Consumer	492,996		33	35,776		6	—		—	528,772		25
Liberty National	161,876		11	94,606		15	—		—	256,482		12
United American	4,077		—	267,134		42	—		—	271,211		13
Family Heritage	2,732		—	180,298		28	—		—	183,030		8
Other	98,485		7	—		—	—		—	98,485		5
	$	1,506,020	100	$	635,991	100	$	—	—	$	2,142,011	100

Due to the nature of the life insurance industry, Globe Life has no individual or group that 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 the insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner in which the segments are managed. It essentially 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 policy liabilities 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 policy liabilities.

The measure of profitability for the Investment segment is excess investment income, representing the income earned on the investment portfolio in excess of policy requirements. During the implementation of ASU 2018-12, the Company reviewed its segment disclosures and modified the measure of profitability of our Investment Segment due to the adoption impact of the standard and to align more appropriately with how we view and measure this segment. As of January 1, 2023, this measure was retrospectively adjusted to exclude the interest on deferred acquisition costs due to the adoption of ASU 2018-12 and the interest expense on debt. Other than the above-mentioned interest allocations, no other intersegment revenues or expenses are recognized. 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 and interest on debt, 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 for its insurance products. From time to time, investments are sold or called, or experience a credit loss event, each of which is 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 the Company's 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 administrative settlements, all of these items are included in “Other operating expense” in the Condensed Consolidated Statements of Operations for the appropriate year. See additional detail below in the tables.

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

	Three Months Ended June 30, 2023
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments		Consolidated
Revenue:
Premium	$	781,733	$	329,187	$	—	$	—	$	—	$	—	$	1,110,920
Net investment income	—		—		—		261,244		—		—		261,244
Other income	—		—		—		—		85		—		85
Total revenue	781,733		329,187		—		261,244		85		—		1,372,249
Expenses:
Policy benefits	512,664		195,924		7,107		1,815		—		—		717,510
Required interest on reserves	(191,781)		(26,548)		(9,715)		228,044		—		—		—
Amortization of acquisition costs	81,173		12,484		423		—		—		—		94,080
Commissions, premium taxes, and non-deferred acquisition costs	83,547		54,908		4		—		—		—		138,459
Insurance administrative expense(1)	—		—		—		—		75,459				75,459
Parent expense	—		—		—		—		3,088		—		3,088
Stock-based compensation expense	—		—		—		—		7,486		—		7,486
Interest expense	—		—		—		—		25,818		—		25,818
Total expenses	485,603		236,768		(2,181)		229,859		111,851		—		1,061,900
Subtotal	296,130		92,419		2,181		31,385		(111,766)		—		310,349
Non-operating items	—		—		—		—		—				—
Measure of segment profitability (pretax)	$	296,130	$	92,419	$	2,181	$	31,385	$	(111,766)	$	—	310,349
Realized gain (loss)—investments													(45,843)
Income before income taxes per Condensed Consolidated Statements of Operations													$	264,506

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

	Three Months Ended June 30, 2022
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	756,892	$	320,307	$	—	$	—	$	—	$	—		$	1,077,199
Net investment income	—		—		—		244,712		—		—			244,712
Other income	—		—		—		—		299		—			299
Total revenue	756,892		320,307		—		244,712		299		—			1,322,210
Expenses:
Policy obligations	492,364		190,075		7,922		1,070		—		—			691,431
Required interest on reserves	(182,756)		(25,460)		(11,361)		219,577		—		—			—
Amortization of acquisition costs	73,681		12,052		452		—		—		—			86,185
Commissions, premium taxes, and non-deferred acquisition costs	74,478		51,729		6		—		—		—			126,213
Insurance administrative expense(1)	—		—		—		—		73,700		4,985		(2)	78,685
Parent expense	—		—		—		—		2,893		(368)		(2)	2,525
Stock-based compensation expense	—		—		—		—		8,448		—			8,448
Interest expense	—		—		—		—		21,828		—			21,828
Total expenses	457,767		228,396		(2,981)		220,647		106,869		4,617			1,015,315
Subtotal	299,125		91,911		2,981		24,065		(106,570)		(4,617)			306,895
Non-operating items	—		—		—		—		—		4,617		(2)	4,617
Measure of segment profitability (pretax)	$	299,125	$	91,911	$	2,981	$	24,065	$	(106,570)	$	—		311,512
Realized gain (loss)—investments														(30,446)
Non-operating expenses														(4,617)
Income before income taxes per Condensed Consolidated Statements of Operations														$	276,449

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

(2)Non-operating expenses.

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.

	Six Months Ended June 30, 2023
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments		Consolidated
Revenue:
Premium	$	1,554,330	$	651,680	$	—	$	—	$	—	$	—	$	2,206,010
Net investment income	—		—		—		518,349		—		—		518,349
Other income	—		—		—		—		135		—		135
Total revenue	1,554,330		651,680		—		518,349		135		—		2,724,494
Expenses:
Policy obligations	1,020,641		386,886		14,648		3,262		—		—		1,425,437
Required interest on reserves	(381,602)		(52,871)		(19,974)		454,447		—		—		—
Amortization of acquisition costs	160,762		24,792		848		—		—		—		186,402
Commissions, premium taxes, and non-deferred acquisition costs	167,125		109,122		9		—		—		—		276,256
Insurance administrative expense(1)	—		—		—		—		149,366				149,366
Parent expense	—		—		—		—		5,673				5,673
Stock-based compensation expense	—		—		—		—		15,165		—		15,165
Interest expense	—		—		—		—		50,685		—		50,685
Total expenses	966,926		467,929		(4,469)		457,709		220,889		—		2,108,984
Subtotal	587,404		183,751		4,469		60,640		(220,754)		—		615,510
Non-operating items	—		—		—		—		—		—		—
Measure of segment profitability (pretax)	$	587,404	$	183,751	$	4,469	$	60,640	$	(220,754)	$	—	615,510
Realized gain (loss)—investments													(76,770)
Income before income taxes per Consolidated Statements of Operations													$	538,740

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

	Six Months Ended June 30, 2022
	Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated
Revenue:
Premium	$	1,506,020	$	635,991	$	—	$	—	$	—	$	—		$	2,142,011
Net investment income	—		—		—		489,606		—		—			489,606
Other income	—		—		—		—		463		—			463
Total revenue	1,506,020		635,991		—		489,606		463		—			2,632,080
Expenses:
Policy obligations	987,793		379,093		16,564		2,130		—		—			1,385,580
Required interest on reserves	(364,128)		(50,730)		(22,728)		437,586		—		—			—
Amortization of acquisition costs	145,610		24,166		905		—		—		—			170,681
Commissions, premium taxes, and non-deferred acquisition costs	148,026		103,681		15		—		—		—			251,722
Insurance administrative expense(1)	—		—		—		—		146,265		5,097		(2)	151,362
Parent expense	—		—		—		—		5,533		(368)		(2)	5,165
Stock-based compensation expense	—		—		—		—		17,483		—			17,483
Interest expense	—		—		—		—		41,772		—			41,772
Total expenses	917,301		456,210		(5,244)		439,716		211,053		4,729			2,023,765
Subtotal	588,719		179,781		5,244		49,890		(210,590)		(4,729)			608,315
Non-operating items	—		—		—		—		—		4,729		(2)	4,729
Measure of segment profitability (pretax)	$	588,719	$	179,781	$	5,244	$	49,890	$	(210,590)	$	—		613,044
Realized gain (loss)—investments														(37,690)
Non-operating expenses														(4,729)
Income before income taxes per Consolidated Statements of Operations														$	570,625

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

(2)Non-operating expenses.