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Globe Life (GL) Beats Q4 Earnings Estimates, Trims Guidance

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Zacks Equity Research
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Globe Life Inc.’s GL fourth-quarter 2020 net operating income of $1.74 per share beat the Zacks Consensus Estimate by 1.2%. The bottom line improved 2.4% year over year, primarily driven by higher revenues. However, the upside was partially offset by lower underwriting margins, stemming from higher claims due to the COVID-19 pandemic and rising costs.

Behind the Headlines

Globe Life reported total premium revenues of $968.5 million, up 6.8% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.

Net investment income increased 3.3% year over year to $235.1 million.

The company reported operating revenues of $1.2 billion, up 6.2% from the year-ago quarter. The improvement was driven by growth in Life and Health insurance premiums and higher net investment income. The top line also beat the Zacks Consensus Estimate by about 1.5%.

Excess investment income, a measure of profitability, decreased 2% year over year to $61.2 million.

Total insurance underwriting income dipped 2% year over year to $175.3 million. The decline was attributable to lower Life and Annuity underwriting income and higher administrative expenses.

Administrative expenses were up 3% year over year to $62.8 million.

Total benefits and expenses rose 7.6% year over year to $979 million, primarily due to increased policyholder benefits and health policyholder benefits.

Globe Life Inc. Price, Consensus and EPS Surprise

Globe Life Inc. Price, Consensus and EPS Surprise
Globe Life Inc. Price, Consensus and EPS Surprise

Globe Life Inc. price-consensus-eps-surprise-chart | Globe Life Inc. Quote

Segmental Results

Premium revenues at Life increased 7% year over year to $678.3 million, driven by higher premiums written by distribution channels like American Income, Direct to Consumer and Liberty National. American Income grew 10%, Direct to Consumer was up 7% and Liberty National increased 3%.

Life underwriting income fell 8% year over year to $163.7 million, attributable to about $27 million of COVID-related claims in the quarter. Net sales of $131.2 million improved 23% on a year-over-year basis.

Health insurance premium revenues rose 5% year over year to $290.2 million, primarily driven by higher premiums from United American, Family Heritage and American Income. Underwriting income of $71.8 million increased 18% year over year. Net health sales decreased 11% year over year to $57 million.

Underwriting margins declined 3.7% year over year to $2.2 million.

Financial Update

Adjusted shareholders’ equity as of Dec 31, 2020 increased 20.2% year over year to $8.8 billion.

Globe Life reported book value per share (excluding net unrealized gains on fixed maturities) of $53.12 as on Dec 31, 2020, up 10.1% year over year.

Operating return on equity (excluding net unrealized gains on fixed maturities) was 13.5% in 2020, reflecting a contraction of 100 basis points (bps) year over year.

Share Repurchase

Globe Life bought back 4.5 million shares worth $380 million in 2020.

2021 View Slashed

Globe Life anticipates net operating income per share for this year between $7.16 and $7.56, down from the previously expected range of $7.30 to $7.80.

Zacks Rank

Global Life currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

American Express AXP and Synchrony Financial SYF beat the respective Zacks Consensus Estimate for fourth-quarter earnings.

An Upcoming Release

Virtu Financial VIRT is set to report earnings on Feb 11. The Zacks Consensus Estimate for the same stands at 79 cents per share.

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