Globe Life (GL) 23 Apr 202020 Q1 Earnings call transcript

Ladies and gentlemen, good day, and welcome to the Globe Life Inc., First Quarter 2020 Earnings Release Conference Call. Today's conference is being recorded.

For opening remarks and introductions, I would like to turn the conference over to Mr. Mike Majors, Executive Vice President-Investor Relations. Please go ahead, sir.

you. Thank everyone. morning, Good

today Officers; Coleman Financial Frank our Brian call our Officer; Larry Co-Chief Mitchell, Counsel. Executive Svoboda, General are the and Gary Hutchison, and Joining our Chief

your of yesterday. questions are Some for purposes the refer guidance Accordingly, general or release first comments answers quarter provided may forward-looking earnings statements our contain that please to only. to we issued

to release these also our non-GAAP measures. reconciliations earnings comments terms our of discussion may contain measures. and of for Some see website GAAP and Please

I'll now over call to Gary Coleman. turn the

Thank the our on you most Today, thoughts by been potential the operations everyone Mike, developments and impacted insurance good morning COVID-XX financial position. thoughts and crisis. our last difficult of impact everyone. of The our and are of those current have with comments all several will on weeks the our for address

giving want $XXX year a return $XXX summary million equity income In share Net $XX.XX. On first $X.XX quarter, by However, net quarter year per we compared the begin $X.XX results. was a per do share first quarter or basis, the or $X.XX share GAAP the was brief income or ago. for X.X% was ago. to value of book per $XXX year share of reported X% per increase million share, the million from operating for and a a per on to was

value and and gains share book XX.X% unrealized losses X% Excluding per was to return on maturities, equity grew fixed $XX.XX. on

underwriting were grew $XX Health was premium up revenue for in to X% ago X% million. from life margin million our a underwriting quarter, In up premium million revenue X% and year $XXX X% and Administrative X% million up and million ago. year was our increased expenses the health to with line life insurance $XX to expectations. margin operations, $XXX a $XXX Insurance

comments expenses call we marketing on For to Larry expect the around his the turn administrative for over I results. will to now up year, first be full X%. quarter

Thank life year We at had sales and X%. total XX% health strong quarter quarter. growth agencies the Total were ago record count count sales the X%, average agent end up exclusive at you, the the of XX,XXX. three while recruiting up first was agent combined were was over Gary. and up The just in quarter the sales over

our trends current now discuss turn of I'll Gary each call operations. his distribution comments. investment back the in the comments in later channels at for our to I'll

a first in industrial in maturities, and we repurchase interest as share declined Thanks, $XX was at financial We the Larry. million, municipal, a we less over years. impact invested and grade the Excess the per an year rating invested quarter. income sectors. X%. Excess ago debt income, investment the investment quarter, X% net policy net investment income of average investment of investment our primarily fixed A define basis, which of decrease life XX liabilities in required on of average excess reflecting an an average share program, yield million On $XXX with yield, plus and X.XX%

in first the quarter the down quarter portfolio, yield current X.XX%, basis points from the the In yield was XX XXXX. of first

As X.XX%. yield of the was XX, March portfolio approximately

offshore Later, approximately first first portfolio gains drawer I after unrealized our quarter billion. maturity last quarter. net discuss have fixed for million item we more will in $XX of on of impairment $X.X the investment tax the portfolio One We in during an the detail. took results, an

communication Once in crisis, to a and insurance critical. evaluate move operations agents teamwork potential COVID-XX as employees, impact and as the teams like and communications contemplated business business. group effectively possible formed the plan. customers. developments, impact we investments the on and the discuss management by disruptive monitor January, current our about issue, merely developments formal and was and issues, can develop is continuity approach. our our proper Now let's activated crisis coronavirus To identify teams for and talking in Back to recognized our I'd our in monitor capital. solutions start it its general planning, These to we on crisis navigate have recommend

management daily entire met executive The team as well. a on basis

All of an response bottom-up designed a to top-down to was this the and activity ensure approach to comprehensive both crisis. incorporate effective

In response having the directors is crisis. biweekly with board executive meetings ongoing to discuss management to addition, team of the this our

was of our business main ensure ability and normal a the wellbeing develop operations. plan safety priority continue that would to and employees, to and Our our customers maximize agents,

shift We compliance to with security to our protocols. and information maintaining our working employees of most quickly able were remotely, while

For the implemented processes to CDC and office, safe to be them environment. employees, we his help with consistent provide in the procedures a duties guidelines required

done. We take pleased to our like opportunity our with in which are this manner crisis. this have responded Thanks express efforts. their extremely have to to the I would our gratitude everything employees for employees to

capacity nearly at all office operations. We are full respect a with operating to home

In focus monitoring collections. area is one operations, premium key of

it the While is in premium not of an consistent is persistency This in unusual daily decline our exist. with block has macro force have conditions with early, been still past seen stable economic historically collection. we difficult experiments as

premiums to up of life the range X%. of be X% of For increase we margin with an year, go full potential underwriting X%, currently around to to life a decline a project X%,

margins premiums in will on X% X%. will our of Larry to provide his on of the over the impact health turn underwriting to assumptions margins back call grow range potential discuss grow of with increase detail expect X% X%, underlying to to COVID-XX to more I to X% guidance decline a marketing a premiums, Frank and operations. We related to approximately an now of health underwriting revised and comments. later

Gary. Thanks,

presents of Our customer and this a agents business. have always COVID-XX done challenge business face-to-face to homes way businesses. doing Obviously, at

we to a sales enable virtual to crisis our recruiting their the began, continue As to quickly activities. and agencies pivoted process

adapt have environment. difficult now weeks channel. distribution I very each past agencies ability I'm pleased declined, to with to this and the will trends willingness for at discuss several sales the While quickly current where

than At crisis. American sales leading Income, were last XX% the approximately the they lower in four been weeks to over the weeks, up have

sales for weeks time the XX% virtual fully the been last as process. the of same this trend period have is resiliency and around adapted However, year, to This only two encouraging more demonstrates sales have the during agents last and very agency. lower

crisis Liberty At COVID-XX of initial National, impact reduction in XX% created sales. has a

process. the very I'm field seen adapting with the However, are agencies pleased the recruiting. to also immediate virtual with the in sales virtual success quickly

next that will weeks see this, to support recruiting. continue adopted training well. the We two in these Because fully sales of should three and continuation sales. in as We and feel processes a we or ongoing be virtual and systems

converted Heritage, has Family last At just Asia a year. digital presentation to

sales virtual challenging. been So process the has transition a to

Over level sales declined the of compared the weeks, last XX% the to has year. last approximately same period several time

optimistic the agency hard I of owners am we am positive that I make attitude with encouraged and best the and of the However, work the situation.

near shelter to all in in exclusive the begins place future. the For assuming ease agencies,

Mid and we return return normal to fourth quarter sales. addition expected selling sales are quarter to in third virtual to in-home to levels as

license agents remaining A of were most which testing licensing when candidates. in allow a recruiters licensed and very agents strong to difficult has predict new concentration these with growing these starting states become resume our number recruiting the though new is new high temporary are seeing just we centers with It of – mid-March agents now been will agent to to closed. the allowing will the work companies and of license quality to testing are centers when initially since reopen, are New stage.

is Recruiting too is expected the quarter to number workers continue to in to environment. early second the displaced of data have terminations. any this increase given It for large in

However, significant in termination other given the rates. work not opportunities, we anticipate limited number a agent of increase do

significantly tend success to channels increase times believe highlight in phone self-serve products phone importance have in as past, insurance. the We of environment. over difficult we an continued our our digital past the in direct-to-consumer, and few generate and the in weeks. have insurance basic will internet Applications we protection seen have over noted channels inbound through interest the At current life the several our years in past life increased investments the

we and our to the Although throughout we the upper level quarter, full activity likely the there's it's going continue happen see above or even difficult year. quarter third sales in what forward, guidance end of if the to be of predict into for will second this will slightly

our we've point, mailing levels service operate facilities this continue in experienced normally. At what Post office with to in past. line the are

to We would be would to York, down shutting few otherwise, seen to running political not federal report only The postal that mailing that of next impact hotspots, Ohio. the to retail to a media about in the unrealistic service New significant perspective, continue certain it discussion offices disruptions believe and locations been minor the has service in months. There Pennsylvania, some postal allow processes. have out and from primarily the postal U.S. our government in or We the any seize operations. money any

general even the sales competitive early predict Supplement At but approximately difficult in second individual marketplace, year, so the are volatile heavily activity. of meaningful. and encouraged Medicare the weeks current not the sales generally quarter, always were from a the It past year are of are ago. part I trends the see weighted Group more XX% sales through levels Medicare towards to down to of agency, is end several am this over

onset very good of progress we're pandemic about direct-to-consumer an marketing in has since the feel Let's increase the summarize demand. making, the discussion. seen the I

value continue I sales will currently provide provide While foundation business. great this the The there help strong in seeing growth. crisis will sell believe is Asian a once we success long-term our recruiting, are over. are for process and agents we with continue the are sales environment, to seeing to recruiting challenges virtual

are trends in our estimates difficult the business are best environment, and knowledge this we of sales providing uncertain predict it's to current we While our based seeing. on activity

direct-to-consumer be X%. Net flat full of the decrease are to Income of flat a a decrease to of XX%, to to American XX%, to full life a American XX%. follows, X% National Liberty of decrease Medicare be a flat as Net Liberty National decrease are decrease expected of Family XX%, X% a individual of Supplement sales a expected follows, XXXX XX%. to year year United Heritage an for to as increase flat decrease health sales of the Life, for to XXXX

discuss will Now call to the portfolio. to turn I investment Gary the back

year $XX.X A below fixed Of compared cost. below investment billion billion, $XXX compared $XXX assets minus ago. to are fixed investment bonds to are of X.X% grade a percentage of Invested average X.X% including rating maturities ago. is maturities to million and the year a Larry. billion fixed And with the an amortized and maturities, are grade $XX.X $XX.X grade million bonds investment Thanks, of

at as BBB while the end is a BBB of ago. same peers. to with plus is fixed to overall line Overall, portfolio portfolio rated XX% as high rated in relative year are is the the same XXXX, the ratio of bond it total this our maturities Bonds market,

little have and capital that ability returns risk interest residential to markets. securities. and that regardless and we to provide derivatives, large of or best We to as the securities BBB commercial rates higher to maturity risk-adjusted such securities assets equities, other equity However, our in no unique the acquired believe or mortgages, part we asset-backed exposure CLOs adjusted in hold the fluctuations

this some of been on sectors to of portfolio. subject has certain discussion. much additional economy components At I'd maturity point, fixed impact like recently our provide of COVID-XX the The of the to certain potential information

trucking apparel, sectors or airline, auto maturity Our gaming, consider than to fixed of is investment which about sectors pharma, we in $XXX and million X% less lodging, our holdings. be leisure, store, parts, toys, those restaurant,

no airline restaurant or have sectors. in the unsecured We debts

is want is moment to take Now discuss of portfolio maturity our our while energy to or approximately and relatively sector portfolio position. to price sector storage $XXX oil manage and of well-positioned transportation, those the minimal, volatility. of XX% I comprised holdings. energy sectors. oil and in how a view wholesaling midstream we generally exposures million the XX% fixed are Approximately involves of The and gas is gas

prices commodity own focused long-term cap, that critical minimal assets volumes. quality exposure with on large higher Our exposures backed issuers year this by and direct infrastructure contracts to are

to anticipate downgrades view of limited capital or XX% credit to $XXX We risk portfolio We production. of default consists adjust their Approximately and million quality. exploration expect allocation the these issuers defend policies is and energy limited.

liquidity U.S. investments are this issues weighted here cash adequate significant issuers flow manage Our in and scale towards with environment. to independent

Many have investments, our head to impact lower that Generally, capital count view provide default mitigate reducing dividends, are in of buybacks this prices. positions issuers We protection. the and oil sector heads additional the of primary refinery $XX risks segment. is million be with to our issuers our with downgrades E&P or X% from potential to limited NAC-X. Approximately risk portfolio the energy in NAC-X being

U.S. Petroleum, during here to are investment-grade both cycle. the maintain Valero expected Marathon are issues refineries, two this ratings Our largest and and

oilfield vulnerable or oil The sectors. offshore in energy our portfolio are service prices low to million sector is is our offshore X% and driller drillers. of oilfield most and than $XX Less service the

Our in and is largest investment oilfield see and service limited in the with companies Hughes, both two the Baker Halliburton balance service downgrade we exposure sheets risks. grade of ratings, world, strong

have Because key utilizing we investment we cycles. offshore a our have particularly criteria drillers. $XX invested in sector. This an the Finally, along, all energy that is process only survive million the ability to multiple is issuer true in must invest

we holdings. comfortable is energy to no commodity across is and subsectors are to energy our diversified Our issuers sector, our Well, are well have intent heavily less in we vulnerable issuers current portfolio that with toward and increase this weighted holdings depress prices.

rates to lower investment income. Finally, continue interest pressure

money average assume year X.XX% in that the yield to X.XX% the our for midpoint full of XXXX. XXXX, new the is compared For guidance

see While we accounting rules going to a since interest the or will protection interest noninterest-sensitive environment. we Globe not the Life sell current thrive higher GAAP forward, like statutory balance rates Extended products. rates under interest sheets in lower-for-longer impact rate can low

continuing a While extent, impacted be income pension a our will environment. expense lesser and our interest net to rate in investment low

investment won't the rate invested same just will excess grow the income grow; at as assets. it Our still

our money Fortunately, somewhat year portfolio of investment on the new limited five average than to less we the years. as expect over impact have lower income next of is X% in turnover per rates our investment

the Frank for turn comments to call his and over liquidity. capital I'll on Now

Thanks, Gary.

to at higher our of a want to minutes the discussing favorable current at In cash has situation. pandemic ended shares the the than I available company million evaluate parent $XX.XX. million available response higher on Inc.’s while $XXX share of few the price capital average some with temporarily operations. First, position flows quarter have plus future million normal first shares X price repurchases, the impact, of company, liquid excess the The will March, plus we in repurchases, an the amount COVID-XX was postponed a average million, actions our assets we've liquidity $XX.XX. of share first the million we Globe to to The first commercial amount late due spend parent recently month quarter plus to being is we by excess less buy and the $XXX we available an spent parent parent, cash taken borrowings higher the in flows in quarter, repurchases normal our price $XXX to Life's repurchased paper over slightly than our than X.X at to when the to liquidity the increased approximately This enhance due quarter position. in this

can flexibility as term-loan XXth. members entered On need bank into fact think offering, structure don't its $XXX term-loan the a new term-loan us giving million, that time its easier borrowed added maturity it was repaid and line of Life October less $XXX since debt costly will for on we facility the we a all million April Globe amount. public obtain be XXX-day the utilize Xth, any and a full than before to plus at We

With plus $XXX liquid of the of that now its were $XXX the of term-loan, assets the has at $XXX company receipt liquid of approximately disposal. end the this million at million available million March, assets

parent $XXX We to $XXX debt paid will We million million dividends million, the remainder in available million excess expect dividend excess The roughly shareholders. company year. cash currently flow XXXX. our excess $XXX interest on year for the have from less Globe to that around define this and by the to company flow, at common the assets paid flow available received be the the liquid of of for addition the dividends million of the liquid remainder assets, keeping $XXX level the year. its cash cash intent of anticipate – subsidiaries, remainder during the it, remainder to of current rate parent during to on from the we company's these its Life primarily parent still company's including thus we available the the In to this generate of results parent $XXX as range additional parent

in As of our within assets is insurance more a available in levels just this moments, capital to necessary detail we amount discussed more few targeted I’ll support believe operations. than the

$XXX new year, Given access flexibility ratio approximately to million that the ratings. debt-to-capital support than the end current assuming use levels to parents including term We has should still credit XX% and to the debt of maximum ratio remainder year facility debt rating at markets. XX%, our our of the its substantial public rate the over the had loan our agencies less the current be

would we borrowing additional of have needed. approximately still such, As if million $XXX

and operations. over liquidity capital regarding focused have within of liquidity, we at on Now on keenly With of liquidity investments the hand million the had our been to insurance $XXX at end and first subsidiaries. cash current environment, In capital levels and operations insurance our short-term the insurance quarter. our respect

to expect Over all net XXXX, This after million they amount higher of anticipated the COVID-XX remainder of of payment of and cash. generate flow impacts cash from operating parent. on dividends excess around the claims remaining is and to $XXX other

While the be liquidity this cash future is policy in to we obligations, this companies near-term long-term than available needs investing greater cash fund anticipated. should within anticipate insurance

fund don't foresee any Given dividends will see this remaining companies provide be to to we where of situation and liquidity. parent all have any – cash sold payable we level the insurance don't be to able operating would flows, to and the bonds

with our our at ratings. is necessary maintain levels to capital, goal capital to Now current support respect to

RBC ratio level XXXX our range. of intends At approximately million XXX%. the of the RBC the that high-end an approximately company of Taking in XXX% ratio available Life near December required assets range have the over at been million in of was quarter, over $XXX low target that needs. ratio the available account our of at Globe capital RBC and expect calls, provide consolidated liquid XXX%. of action the XXX%, with to a $XXX to $XX our excess At first As into this we to ratio the RBC the downgrades end XX, target at possible the discussed incurred impairment to previous XXX% consolidated would parent on subsidiaries consolidated of the XXX%. over amount have we capital million insurance assets This fund of along capital be

As we required income the due are need catalyst statutory to the lower income investment COVID-XX potential capital, consider and for increase due capital. factors, lower investment additional that downgrades statutory related primary or portfolio impairments defaults to

In future other reduced believe claims with expenses Thus be downgrades amount capital lower consensus the and the on by and application and eventual have that potential of several our timing the we the our estimate To the these XXXX, COVID-XX the up such investments. of we portfolio. largely of impairments our of strength investment recession, and higher we will on will items, views recovery, sales. by economic on commissions needs the take anticipate from offset that particular impact modeled scenarios substantially in associated dictated the bottoms impact views of into our be account holdings

rates XXXX. default default experienced rates XXXX the transition from and and We transition potential XXXX published have also as by to in and Moody's as well ratios, XXXX and we’re evaluated the should our same experience RBC we to impact analyzed as as

reserves our points the fixed negatively an company. strong a ratio. to testing is basic statutory In $XXX given statutory impacted the important below capital have reserves market Furthermore, of note the current to we our adequate liquidity margin scenarios. approximately scenarios, interest lower protection given equity years to ratios not our reduced maintain products. XX requiring It are $XXX RBC to on products. underwriting that impact are additional all not various the million the low one or rates This XXX% available over two the million aggregate, the rates in parent our under do more Globe reserves XX RBC or points, cash by estimate flow be statutory of than an amount Life’s well our interest could these to Considering is by

Finally, net guidance we XXXX with the ended projecting per respect to be of income year the for will XXXX. to operating for December share $X.XX XX, in decrease to $X.XX per This The the range are $X.XX the $X.XX our over midpoint guidance with reflects several ongoing of entirely midpoint previous of this our attributable of decrease guidance pandemic. COVID-XX a is share. the factors $X.XX associated earnings

premium. is first sales, factor lower thus lower The and

sales we As lower Larry to rather now expect growth a in our health indicated premium sales last lead call. decline These anticipated earlier, on the in and than XXXX in both increase we life XXXX. will lower

pandemic. X%, at from negatively of be in also this. increase lesser expected economic our by to Overall, total due affected guidance, we XXXX midpoint of an could a of expect extent down to premiums to lapses by premiums our Our the life we the the the in grow around growth at beginning severity this X%

applying X% guidance in pandemic. additional – the causing our fatality X%, from next is guidance. the In than this claims we face expect to from the of addition, factor previous down life models policy of levels. indicated in favorable total X% $XX policies anticipated XXXX to reduction force. income Life’s million, is X% and approximately review around be to health a amounts estimate available based COVID-XX on distribution ages obligations of United we total approximately across a various rates premium States X.X premiums, higher that to our in estimate reduction Globe expected deaths statistics anticipated and At midpoint the X.X its guidance, Despite in attained higher of related our by to our the total still in The premiums grow growth to

account This in of force age Globe relates than XX. individuals over Life’s that less X% into takes to

percentage of down margin, acquisition our higher benefits premium costs health The expected. margin the impact tax into previously slightly approximately life approximately by now well these per to XX.X%. premium percentage the the at as the underwriting Taking health as an of and lower million Overall, approximately previously XX.X% $X XX% reduced claims share $XX expected higher supplemental as after from midpoint, expect on higher our anticipate we underwriting and a basis. account be million. also of impact premiums claims the We net million cost lower about approximately decrease the income offset $XX to anticipated is XX.X% should to to from of reduce expected premium $X.XX around underwriting or as by of lower

repurchases in than be previously year guidance third as is from of at we liquidity to midpoint we that Well, the to of prudent to pandemic. lower to due our to on share be shares earnings do diluted priority additional resume lower of ensure than investment The anticipated. income, of addition this first assume excess we the our offset In respect shares the effects new income million due by our the With lower repurchases, per price. our $X previously lower of so adverse the impact excess company we price the at any have repurchasing investment $XXX will quarter average expect on that we to required capital income continue recover on underwriting might term-loan. to will expense share expected share a COVID primarily of able additional enough The provide lower the share this be to our $XX do until to holding able million and the million not is does so. we'll impact share to average interest

finance we to earnings parent's insurance per estimate as in a we returning repurchasing position If expect, of will will in finance the flows when share our the as better can't goes range not cash excess not any we needed and that on such are cash flows excess guidance. additional effect be, capital exactly currently additional capital. we be back capital the be parents cash included needed will say The excess of XXXX whether to time available our on our needs the any for is operations shares to insurance While anticipate shareholders. in to flows company our

our and range estimate. of are and our provided that have high The that lower added shelter be XXXX potential claims be this return in takes the low than we could from pandemic and to range more normal contemplates able quickly. restrictions normal than of due lower or associated deaths of double much The the than to estimate. mortality into should the result we claims uncertainty range to mortality that levels claims We rates sales reduce higher end mortality U.S. end attempts and a wider with particular could the the my morbidity than Those expected comments. account higher that than are are pandemic anticipate during to base sales more place

will now to turn Larry. call I back the

the XXXX. for more crisis I Frank. Several you, open would up of call impacted questions. XXXX we one asked how Thank financial investors like to during before discuss global and item the have us recently Globe was Life

every to operations. did experience during revisit period. crisis think it's That relevant really not impact that briefly different, insurance I crisis is While our our

block. During the our health persistency economic not all sales macroeconomic did that the difficult case have market in been insurance, see related grew health XXXX, life that and premiums and due We force in conditions impact declines the in its any significant but to was did insurance to general we of as landscape We issues. at environments. time, to not

XXXX XXXX. not in cash We of that first one was by in of relatively We early did had impairments, impact XXXX million rated portfolio were investment done and financial primarily one XXXX. we institutions. flow equity. debt. stock We impact did was to which bonds the but Over highly $XXX in excess to had capital issued significant approximately minimal. and repurchasing and were resume position, a refinance expiring the debt, to in an still after issue We repurchasing did tax period, two-year last free related companies see the to stop to our Well, stock issue we

every is of financial the Although helped our crisis crisis demonstrate global different, the strength business.

on Our crisis the uniquely the other believe out is well to throughout Globe can economic cycles. provide stronger positioned, We firmly designed Life current and business stability model navigate that side. is come

our Finally, to efforts in thank comments. Those for are during and our agents times. of also their I all challenging these want closing, employees

the We call open will now questions. up for

comes Crédit Suisse. Thank Andrew question [Operator Our Instructions] you. Kligerman first from with

time. thank I and your for guess Very detailed first, thoughtful very, very you discussion helpful. points,

Sure.

So the just a few clarification. to points

being, on The were that a repurchases new and quarter? my share third built the one in repurchases improving up about use say you bit possible you first starting line. it's share Did you talking with the could it

is that Andrew, correct.

will case Our do our third serves quarter. we We that midpoint guidance. the for that start at base assume repurchasing of in the again

comment to be to the then million to that to XX you about RBC basis then does generate? basis at by XX fall, rating to to offset operations? XXX%. short $XXX not generation from with point want And the and Or period, cash million $XXX the one two-year that you decline about where take being respect of over earnings Great. partially downgrades that include flows cash account would Does flow into point

impact is the That downgrades and just into the defaults taking of potential that account any period. during

Great.

pretty the to to So period probably you over Is could two-year that it right? time flows comfortably. offset that one cash generate

Yes, be that would right.

maybe the pretty how recruit, the terms of are that mean, bad you the I second these see count and ramping more mean, Excellent. that numbers half? year? a up the second do And and agent in on wondering, ramping little the just up might just half sharply I'm of in not in ability see you I color to

crisis. states since ramped already of testing up, shut – position had matter so beginning think is the down, interest don't licenses. agency COVID – a has four difficulty agents the it's handful only the offset up. a in temporary since been were states the of We've licensing initially, think is had I the What only much the ramping I centers of

Now testing are to licenses, reopen. starting XX temporary centers states and have over the

an the in termination we'll of So increase still see our will because to we year, we're rate. through – increase. of end is absence the see an I opportunities going the think But see the work Asia. But termination unknown of the

in the an think we've So I the two like increase through of recruiting last see in we'll year gone years. balance the

assumptions on are the the what on mortality manageable. of you those kind very what U.S. a then lastly, in numbers? would mortalities give rate the States case incident, and it. be that Got overall little just seems your mortality And base on United Could us color

of our as to total the kind those U.S. Sure. that about as the about see occur and at and coverage a with you all of how know, has we over we where have policies that. our come deaths top out to look Andrew, Yes, of up what data trying and might think kind estimate, for there the we really fit of take level how

there's total been of and around at probably a XXX% a are model base metrics out that's current and health – time. point deaths the this there in As the about we U.S. that's of institute And evaluation. case, estimating XX,XXX for of

probably translates case, different particular And themselves. deaths respect would this flow companies the expect It's to a our is a $XX course of that about significantly reserves. that then we we've we're It's not $XX and Statutory, X,XXX cash the that GAAP. in got not bit on estimates. then higher bit less million little X,XXX estimating be at so. is of about materially with the little gets probably what and but And we have that really there – it Life do Globe to some is, than be to million that around reserves midpoint

Awesome. Thanks much. so

you. Thank

Erik Autonomous Our next question comes from with Research. Bass

Hi. you. Thank

mean, I could it, that one-year you in the term drawn you've And needs excess elected thinking would then flows think issuing of to you insurance kind bit about down I use a liquidity claims loan have more a loan be reasons I term the talk capital of, your sense you about First, about little plan commercial past some was and take the term you've issued and once first thinking longer just the down your for to the paper. of pay would subsidiaries, opposed hoping debt. kind then better source as and you additional buybacks? potential be the would And remaining liquidity,

Yes.

I think that's exactly right.

wanting it one, that was sure did was we about navigated much months. through had out something short-term to several at we the talked accessible just were and that as readily flexibility we we April, As take we looking because, that the could as beginning as next of we as make the

potential from mortality think will impact situation downgrades. and we more the and where experience on goes what well we the as with get as as comfortable time be As economic the potential

use be excess we we on be capital We that see additional make. of additional we back. the are and want be debt. have is of reduce get or period companies, some long-term insurance additional that paid still capital just also where for looking well, extent of over to would we time type finance that contributions would to to in ability reduce see, the to that as what amount to the Then Clearly overall, and time to we'd some make cash not – fact goes and that in to ultimately required we the would term-loan needs takes the if that do whether that – any of as any able have then of And to the have with there us. would capacity, would

claims capital And Thanks. the did the the we're dividend the on flows, kind higher on into side? year as guess, impact would relatively cash strain towards of by ordinary lower I capital next I from right? be kind business, thinking that hear it. would offset capacity we as Kind generation because Got little about look you, expect of you sales of

right. exactly That's

types insurance it mortality within we're the north real so or lower of And need the that a each whatever capital your earnings we said that from year Therefore, largely right our And and strain you as and generate morbidity million do now, statutory keep capital just the offset to an appear statutory this from lower the would every our – in by basis. $XXX of is future would annual to sale. defaults expecting mind we mortality that of impairments take that really exposure be from on new we're expecting basis that operations.

you I the gave And more for it. little bit just that the assumptions kind to the total on yield? high could kind that crisis, XXXX if comment any you. underlying more, in one Got sneak of BBB's but impairments downgraded of I of terms Thank in said means it's could you a think just on and of framed-off you the ratings note, stress financial credit and impairments or on specifics test maybe of that amount downgrades? what

in XX% look rates we're that took trying looking that different at being to, we portfolio don't our downgraded. at And to and point fundamental of to kind in high time default particular at end-up this at a that holdings. No, point was And risk to into names would going a of particular applying at point we're seeing look grades to degree see of internal overall default we with XX% different different in particular investment have XX.X%. we're really Yes. below that this total respect time, we factors for process that situation, our With our a around and in thinking and of defaults, of about time. lot of segments

defaults $XX any look of But we for having maybe just applying of if where default Moody's average there's average, kind potential looking at and particular in time rates took year. million then of at an a of the the the that,

$XXX and additional the getting XXX%. needed really back account to into RBC, the – up get million in is those frames having a XX-point of to the taking So get capital what reduction

look close downgrades XX% those not and probably on range have XX side. our grade, probably where risk. worst at And see somewhere case, on default internal than in gets taking higher default XX% you're to the XX pretty it but case the at stress that downgrades on and defaults where a – bit more me, little below – running XX investment to of to you If we test really kind really we a particular different in significantly excuse in look

much. very you Thank it. Got

you. Thank

from the next of with Ryave America. Ian Bank comes Our question

information I pandemic, and from Thank appreciate holdings questions investment Wanted the distribution my it’s very related on also portfolio. ask impact to the questions. the to helpful. additional on financials you for the the this and few energy taking

what So since then high then, what your investing level, have and changed going and has you, this has from in then? XXXX to philosophy since thinking on a happened – about energy XXXX happened back

the And we early great XXXX. invested had out one-year went back to point But in that up, was from we is have in remember that energy energy XXXX as generally are in holdings unrealized an haven't to much point same what We that And these went since investments those there as holdings. concern gain. like would and back then prices we on oil holdings I today later time. over you'll XXXX, in the loss

So...

this for? I so navigate – have you're asking to are what because this years, That's to that as Yes, try XX-plus is because I it the Right. say investing to of kind And looking all of lot angle asked was all a you I longer I'm term obviously pardon. this, a you then and going was take going approach. to for longer

Yes. that it What different the I these that navigate period that's of can that these particular looking going companies that is cycles what think and for. say shows bonds, that I we're was to through fact time in

so well. they came long As said, that come as they'll holding through period this and we're term you well we through period. Well, think

holdings a then breakout the BBB your for And give Great. energy? minus you do

that? of in Frank, I don't have me. here do front you that

Yes.

million $XXX is Our energy amortized minus and that total BBB million the of midstream the cost in holdings about in is at E&P. and in remainder the is $XXX

Thanks. Great. Appreciate it.

you. Thank

Our comes ISI. from next Gallagher with Evercore question Tom

Hi.

Just a question. follow-up on Eric's

debt I On if doing been funding the you sure dislocated. so being add weren't one-year debt to decision would case what when markets something but kind maturities. roll have been debt that done or up, planning, I guess in everything longer near-term $XXX guess if realized you out now you’re out, around recently, million. terming market less Recognizing, I other doing to making think further use better-off would thinking contingency is of this I the they've today, lot for are have to have companies the have debt, any I more becomes potentially more open And, you maturity, a about short-term vulnerable be been don't most they

you're know to thinking that? of sort how want Just strategically, about

what part in to get to environment we April. excuse a that Again, added us. the in – Yes. call at long-term in, We provides markets the in-stable wanted the, weren't of me, the of would really in public the financing – they that flexibility interested to part it, the trying early look or debt the were access long-term February, early that really

we million. high say, of of So if and in $XXX our at as time, capital, we out what into end coming about insurance this needed that around cash of do that it think the total and $XXX could million have look we be available was contribute we at to at point

have the we leave just be to million or with would the us buybacks still to million would for to around or $XXX purposes. use loan and that that $XXX short-term available over that leave that whatever loan, us of little repay term So able provide cash – a million with $XXX would

are that especially Now reasonable CP market available tenors to to will the us us been here available this recent They issue and be to we anticipate with weeks here and have the and more the do rates at acceptable throughout continue us. we've month to able – that been to in year. at CP

worst a that as that pay another that did especially the way this case, government of ability bank of regular programs line bank at, we is we reason and that if that our CP. have that, of put anticipate line market down CP do we this to a kind as we program, is with But look that that credit so backstop the the CP facility million continue it kind and different away backstop, And should serves will do in we on our place. to that pull that in have go $XXX do the so for has

for the you in the Got directly or program? Are indirectly seat CP government either it. fed participating

at We this not time. are

on rating? are your based But you eligible Okay.

the that, different And that. entities time. to that in existing a We there the part have at other a have in be industries that split are government not been expand terms well we efforts of have under fed not rating has some my point the us and its understanding but you has some considering to qualified split to – as but on it's done is eligible. rating. currently this discussions on And have as There's not been various

response, you virus me. terms for any pretty it. few concern momentum other for quick strong there, you've then sales? in or have Got done screens the And ones of just sales had there Direct just the is any a given that

the Yes. applications the by business type come state, check we by we haven't sense age We of a that in, that change mix group, in seen of the product. in by

we So distribution. normal that a I'd say have

not we're impact any we're business So that from expecting COVID selling. disparate on new our

in modifications minor the underwriting also. some made have We

like Got real it. be nothing, indicative any that? you seen anything haven’t But seen of there's would no that you've selection that or change

mix neither seeing No, same in in the We've direct-to-consumer or minor. minor studies agency the business. business of underwriting made they're but We're we've the same some the well, in agency changes the agency. done business same in as the products. Again,

And XQ Got final it. this say year? by XQ then question, you did of expect or normalize you sales to

That's quarter the the are talking quarter. about in of place restrictions term, summer. in sometime shelter in ended near third Yes. Well, that we're fourth the this year, which mid assuming is

that my meetings guess than to activity to face-to-face from ability the very in forward related be place orders to eliminated, going slow, standpoint the that take improve going for or going are it? question there's a probably it's if that, for don't a normal sales you and even shelter I reduced to longer think Okay.

of Yes, it our may time, take virtual virtual closing longer, our training rates but sales, sales success, are at same our the and going up.

again, sales in shelter our to it's that going help I the One lose as become will think is place. So sales virtual to norm, it point. process. impossible they're this at predict But

a people's of Canada what are state about. going to it the talking little you're change, or part or country what that think depends but I really on bit eliminate It I face-to-face. think behaviors don't

it. Got

Okay. Thanks.

you. Thank

comes Our from Ryan KBW. question next Krueger with

hospitalizations. Hi, additional extra primarily you hospital you detail and good just the claims on some just provide Medicare that additional health Can for expected, indemnity Supplement, morning. that's assumption

hospital a is claims some seeing of from the midpoint MedSup a also the to but maybe not from impact is really our lower really probably bit indemnity, while part on to At that going little We're in relating see what through. of ICU cases the COVID. of see the some little higher most large – claims financial some going be from and we of claims bit nonessential we an – GAAP countering our on the guidance, actual

So starting part large of for having from that actually basis kind the that with the we're a ICU claims. and on end MedSup up be it on that'll, will beam[ph] offset of to net-net – we the will kind expect additional

disability it. correct And I does Heritage that, offer policies? Family short-term Got then not am

That is correct.

Okay. Thank you.

you. Thank

with JPMorgan. Jimmy Bhullar from comes question next Our

Hi, good morning.

fixed quarter? first energy that to considering recent on improvements since to given valuations on in So the fed de-risking what's is the that assuming it of improved the can I'm take to something and in portfolio, the of you happened they just Is the weeks mark end are might've income question comment your you if either announcement try portfolio BBB’s? contemplating? all that case, or as relates especially it of advantage to you're sort the and the

we more bonds, XXXX, submitted from in really lighter. with do don't hold and how we value downgrades because Jimmy our downgrades XXXX, those but I the portfolio. market and at later First to defaults is experience a point upgraded. quarter have plans We of Again, as mentioned held better, maturity be we has have I all, concern it, the de-risk improved those on bonds our don't But actually the versus this since it Frank the end. might as on based agree possible were any

at de-risking any point doing in contemplate don't we this So time.

last because and half noticed COVID any And or your persistency month on life then, have a the over you of impact Okay. so? in the business

to point claims that change of Yes. seen really in overall have other seen time anything to basis have real in really more our been We we've our And in at available impact indication metrics – at – been see any persistency us. this or point No, as this adverse either. track haven't time, in not we on we change looking daily well claims as do we on haven't really a and monitoring unusual. any any

just clarity Okay. on… And then

news month's Jimmy, haven't is seen increase data. But – we the decline it's prior good seen bit We've actually over little any all. about at only an it's we've a premium of seen early, of but a worth in year,

Yes.

base I the of think your levels lower guess had a is the income middle are suffering fairly is I generally investors consumer and but they that with, might have begin premium income, lot low. concern be to

actually canceled. So there's last one people, if people of things the

with that. Yes, agree I

Yes.

the assumed share share that question and buybacks, going a The be because is to be when thing resume? buybacks, but on, what on lot last you're But more whether a to lot than to you you watching had ended then back other obviously determine are – just canceling more were it XQ, I or watching was resume a see to to at, the in bought when what going you up suspending program. to

think, are, I on here reports in as come see, look we we be happens we we a see the at really Jimmy, take Yes, the quarter, with information to can out holdings, during get to large that impacts the bond that shelter into their part second what as on how place a take account, will and what exposure perspective information that taken more have in world's sense as we of think better of the we portfolio downgrade a what that from we greatest our in that quite we that have since the holdings probably so honestly on really And can country. a that's we exposure capital. might have, look get our

a have then, We'll something effect. and by will out or that's to have turn in to able think consensus I to the that clarity if gives – the the that of actions some up of the we'll U.S. has as little maybe as really wave the getting be quarter. from perspective be into a if that within mortality been comfort are bit seeing second trends will seen think third that taken to a we're kind and the more we're that I not we But whether And estimated that it then as as has buybacks all us that current more back start what go. the you where country

but going we today, the decision that a the Jimmy, the to make in two want to and based months better know regarding of think is learn estimates next feel about cautious share or given good be what I impact more three on we've we be. that we'll sure when I we that's lot Yes. And repurchases. can a think what we

Yes.

Good everything. Thank Okay. luck you. with

Thank you.

Our Alex Goldman next comes Scott from question with Sachs.

repetitive, little the about potentially sort I this debt. is make which that XXX included ask and Hi, figured sure I million would a good just and I'd the if understand, embedded terms what liquidity, morning. Apologies of paid be what's million XXX in XXX in back to I think of million

think then I to XXX case, then you I there downgrades of you that million in million of got million, terms what on but stress details a So the And does maybe start base in to, your sort I've compare that includes your are the terms gave mean assuming how the base and XXX case of credit and did like the losses follow-up. XXX in and case. your

around to numbers, we of just end their So of as for as had we round on that the you million million $XXX was $XXX quarter. of how say kind first the the XXX stage about think again, get million

our hand, while what about in borrowings CP by increased over than quarter we And for normal, we some – buybacks. use on we again, flows excess did normal have, that had that cash higher was because million. would cash first And a we $XXX we little we used have the

you're And company additional of midpoint XXX of in million then those the year. cash the another at – loan the the together at the million term of of half million. at of the get All flows second $XXX then $XXX looking excess shift another and excess around about holding

really what to you that's million. So gets ultimately your $XXX

excess the be we're without the range the on having having be at million to capital we million. million, the that can as our holding look needs the is $XXX of company $XXX to could estimates look contributions to at any to million, the in $XXX capital point look companies to have for the that this obviously thinking, at that themselves, XX without then holding used capital million might they $XXX time, within those And based so insurance

million leave for that's the So all still this pay million, buybacks. be holding company, that to at to would we done, going would available $XXX said think and the when ability it's $XXX of back cash excess to somewhere, cash $XXX us having million

And should paid down increased Would a commercial should I a as well amount. that term think, the as by well, reduction decent paper loan? consider just which we be think in about it's or we

think that long-term markets, CP, capital look to respect markets we and go CP replace, that to the with that, think, we for out take for would to if and would be we be the Okay. clearly needs that Well, debt we were would needs. able access long-term for for I the the not preference at capital wanting I that think markets be I would using public a capital our long-term

amount – very would then and to we So capital small we additional fact a some we if do probably that might upon access how public markets for in able necessary. back number, if pay and if it would and CP larger depending much not that a debt go but was need, small be it's than out a amount very of

go you do did what of would your in willing mean, targeting? if let would sell, a decide and allocations, should follow and of be And de-risking? want the to before I on ability thinking hold it to the to go And them, yield RBC that whether willingness or just high relative but ratio comments be guys you not I then heard hold to you terms I ability portfolio, consider – it to one let higher think would that clear maybe with questions, it's of guess loud the Jimmy's bonds, running you in and up have the how you I to through terms equity you're where change relative high you

back level. out Keep mean XXXX, or XX% think the whatever, high yield downgraded reduce fact credit me. the reduce then, just we is in year grade low got there up issue. excuse to there two Alex, of or a bonds XXXX, hold later, to And that. half we Well, unless to going investment a just time. We're doesn't was in going them decision we're can. and try we the They're going ahead we'll they sell, to soon that the get to this going that as into to But to that or to get default as go make just that

how risk that the have to or of, increases amount have terms RBC, if great do see in high our high do will more affects level. deal capital yield tolerance that but don't that now So overall I a that, changing us and that we'll we cause to hold

Got it. Thank you.

At queue. this no questions the have we in time, further

we'll right. morning. are you next joining this talk comments All to in Thank us Those and you for quarter. again our

that and concludes today's presentation. Ladies gentlemen,

us you thank joining You for may lines phone and disconnect your today.