Globe Life (GL) 22 Jul 212021 Q2 Earnings call transcript

Good day and welcome to the Second Quarter 2021 Earnings Release Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mike Majors, Executive Vice President, Administration and Investor Relations. Please go ahead, sir.

Thank you. everyone. morning, Good

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

your the of any XX-Q questions that Some subsequent provided guidance to Forms please general SEC. on only. for or XXXX our comments answers earnings are may forward release look our contain statements Accordingly, refer with purposes file to XX-K and

release now earnings website Some to Gary measures. call comments Please of of terms for over may non-GAAP these our our discussion contain GAAP also see measures. turn to and and reconciliations I Coleman. will the

an or Thank of or value for increase operating $X.XX GAAP and share In quarter million, $X.XX the a was return a million per you, the year Book of was the income everyone. was basis on X.X% a share $XXX $XXX good or $XX.XX. XX income Mike share morning second On ago. $X.XX for year quarter, million for June second compared the from per per ago. year of and first share Net net half per XX% quarter. equity per share, was as $XXX to reported the X.X%

losses quarter. return half XX.X% for of Excluding on the fixed unrealized second on gains first for XX.X% the and maturities, equity the was year and

X% $XX.XX. from our In to grew life premium share million. per ago year the X% value quarter revenue operations, book increased addition, to In insurance $XXX

ago. the XX% the and improved underwriting year The was is amortization the higher of Life onset have persistency. a margin in to As related since lower primarily margin noted up the million, before, persistency to premium and increase seen collections improved premium due we $XXX pandemic. from

grew to million. and and year, we to revenue in grow persistency. margin The up health XX% underwriting to margin margin and underwriting to X% claims between due revenue the to was $XX insurance, X%. grow experience to premium health expect underwriting X% $XXX was primarily In X% For X% million to premium life increase improved

year, X% to health million around a were revenue the quarter, grow we underwriting margin expenses X%. X% $XX ago. Administrative year to from XX% and up For grow premium for expect between the and

As a to compared X.X% were premium, year administrative expenses of percentage X.X% a ago.

to full in expect the comments grow will security we X% increased on IT marketing X% due now and to his to the X.X% For be travel call to of costs. year, facility around cost, expenses for administrative and I expense, over gradual turn Larry higher primarily increase second information quarter a and pension and premium the operations.

was premiums life count average for At to up agent XX% due and the The increased quarter producing ago increase in to was X,XXX, XX,XXX, decline XX% National, second productivity. We generate ago at net and quarter the while in The Thank quarter. producing underwriting increased positive year higher Liberty on were year first trends the count at underwriting second producing The The at agent underwriting you, COVID. first Agency from and policy $X is life and quarter XX% of from sales was $XX were due primarily the increased will margin $XX were second count In due quarter, year to $XX progress onset second to the XXXX, life agent agent primarily were margin life ago of the XX% persistency health higher down million, quarter the premiums agent each net quarter was sales increased XX%. sales count were life At sales the during average experienced ago million. of million. up I the XX% make X% margin the X% X,XXX. The sales agent to for while American life up $XXX producing the XX% In million quarters. American limited million, the Income to we XXXX, now and Gary. to year the agent discuss agent due quarter end Net from count ago recruiting. margin is National The ended quarter quarter strong Liberty net quarter productivity. million up from continue channel. sales and over due obligations. the XX,XXX. improved over sales quarter. to The at life momentum. X% and to Income current up count up up second growth distribution in is to $XX Life, $XXX the primarily The underwriting from of down quarter higher primarily to second was year million, to up the quarter continues

ago year Life, quarter. underwriting clients be to health and of $XX to life count division half primarily to continue underwriting up X% were XX% underwriting $XXX increased first margin quarter our first emphasized shifting were and million focus was $XX ago at improved The the year. quarter the productivity. and the last producing We COVID. due the persistency. quarter of progress. second Family to more million experience is year from quarter The $XX the activity encouraged due the Heritage, to Global National’s The onset the $XX margin during count The the increase sales agent towards agent million. margin due X,XXX. XX% increase to is end increased was Net increased and primarily year. expected the the XX% $XX over by were year remainder sales from premiums over down agency At from This ago health during to at the The improved of million. to extraordinary down up quarter X% X% average sales producing to the agent was productivity to The ago persistency. level recruiting quarter the premiums is life for improved In Asia X,XXX, in in the in for Liberty the margin X% of due direct-to-consumer XX% million, down year quarter. increased Net million the decline year health seen of second life of

year on $XXX are from $XX American underwriting the increased declined quarter the quarter over second X% we loss this uncertain than to pleased United amortization. still and lower provide margin improved sales ago and I premiums a XX% the sales to ago, health quarter’s increased $XX and XXXX. compared health business. sales with it It XX% we At While is trends ago difficult year million. increase sales in quarter. health X% as activity activity to million but of year The higher environment, to due knowledge to was was seeing General in projections Net were predict somewhat Agency, ratios now are of our million, margin up will based this

XXXX Family call to XX%; a American National, an We American to back turn X% Heritage, in Life, XX%; be X% I are full of expected of X% Net Life, sales increase increase XXXX sales Income Family health expect following agent for to increase Gary. Heritage, to count year the X% year Income an to X% direct-to-consumer, decline X% increase the Liberty ranges: end for a follows: are X%. XX% Supplement, Liberty growth; as XX%; National, United for to producing Net follows: XX% to an each Individual increase growth; be the decrease of XXXX the be to at Liberty the an of to to of as agency of flat. XX% decrease X% X%; the American full to X%. to of Medicare of now of an will to expected life National, a XX%

debt, We X% program, the excess income we investment the ago from was required reflecting of net net share income, investment policy On Thanks, the repurchase investment basis, on per investment turn liabilities now income to $XX Larry. a million, our a grew year share Excess interest impact operations. decline as quarter. less define X%. which and

at X%, million to expect to around For second industrial In and the on invested invested investment X% basis. in average per income grow X% of a years. to fixed the quarter, rating A, we an municipal grade but average the excess yield of investment X.XX%, We in XX an of year, and maturities, financial, life $XXX primarily share full average decline an we sectors.

We $XX produce credit to limited invest invested in incremental yield that line with also in in are million investments investment partnerships instruments. philosophy. expected are our conservative and These

XX second the For yield the quarter down points second maturity quarter portfolio, of from X.XX%, XXXX. the basis fixed was entire

to the investment $XX.X Of June X.XX%. XX, compared million $XXX yield are billion, to fixed investment percentage the grade the end grade bonds maturities grade investment portfolio million below $XX.X $XX.X below and of maturities, quarter. A- first the As of maturities The are including Invested fixed are rating at is X.X%. assets of billion was an $XXX at with amortized average bonds of cost. billion fixed of

unrealized net gains investment fixed Overall, with year of was a XX% total the portfolio BBB the compared percentage maturity as to bonds grade rated the ago. portfolio. maturity portfolio, is XX%. in Excluding recent BBB+ are the low fixed of rated equity a Consistent years, A- bonds

in to relative is peers. it While our with bond this line overall high is the ratio market,

unique that in we an of remainder interest exposure However, are rates key such best investment CLOs interest midpoint we invest an for securities to part maturities XXXX. money provide in utilizing mortgages, fixed risk for ability We regardless risk-adjusted, capital-adjusted to to we residential BBB Because pressure large fluctuations and that income. to the survive hold markets. no new other our of securities. our returns have we issuer average must investment due equities, a rate the of guidance, or have or securities process to rates X.XX% ability maturity multiple the continue derivatives, equity our the assuming that in as of around believe higher criteria to is signposts. At assets Low little asset-backed acquire the long,

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

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

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

Thanks, Gary.

remaining to because a and want available second $XXX the a million. I parent June, share in the subordinated higher utilized the proceeds company will repurchase X.XXX% last were proceeds few assets for call than approximately of of The The junior liquid coupon capital with $XXX quarter, $XXX notes million rate July $XXX the ended with is used proceeds junior X.XX%. spend position. XX, purposes. our million be On issued Net minutes due XX-year note program, company liquidity to general amount a subordinated discussing First, million. XXXX. This our

assets, of less $XXX generate million million. In subsidiaries XXXX. price $XXX Inc. at to $XXX define to XXXX. Of parent common an The paid sharp the spend X.X from the share the year the cost and total for company’s company purchases We of interest the flow, repurchase of anticipated anticipate was share will than from during addition the drop generated received company’s million paid second the as approximately flow and shareholders. flows primarily results at its be to $XXX.XX. on liquid the at of from the a dividends total full remainder quarter, price million which, dividends cash approximately at end higher average Global Life’s excess shares will Life Global the of approximately cash the In excess to debt the $XX year advantage half company in the took these million average excess we the in the an second of stock accelerated parent price cash $XX.XX. we of half The of parent by of repurchased parent it, the shares of as second quarter be

the July flows of are share less of and assets today, half second million plus for the X.X spent we shares price $XXX second an of million approximately year. spent expected to in price have the year of $XX.XX. generate that million at junior to note, to million have $XXX the approximately through $XX.XX. million cash the end account quarter, into our purchase in the in to $XXX we for far liquid million subordinated of shares million the approximately the Taking call of $XX on of spent we parent year, excess remainder we have at full assets July, Thus, will average to XXX,XXX repurchase the million $XX an available repurchases $XXX $XXX the of the So average at

just moments, discuss is capital maintain more the targeted we detail As share believe to year. for levels the in a support in more operations in and than our repurchase amount I program will insurance remainder the this the few necessary of that’s

we fund well expand as the investments received cash calls, our Thus, made cash from best long-duration during previous technology will year company the efficiently as by possible. information share believe is purchases to future on our be operational insurance alternatives. cash we noted new provide anticipate shareholders issue of use insurance It will that cash to As parent subsidiaries available other repurchases substantial our have should be our use the other assets We the after share yield acquired noted return parent’s and or new a primary as over to policies, the continue to still excess needs. that flows. as capabilities they

remainder the the the available end If As we evaluate year, could more shareholders the be portion we liquidity. to excess continue some progress returned of through than the of needed, of to year. is will before available our liquidity

reflects time, of However, our of this earnings repurchases share over approximately remainder midpoint $XXX million of guidance the only at the the year.

is our to necessary at goal rating. support to capital our Our levels current maintain

was Life over the on million the provide of XXX%. with approximately liquidity our previous at XXX%. roughly RBC sufficient range RBC RBC calls, required target needs. has This XXXX, available capital subsidiaries excess fund our RBC to of December Globe a At capital, XX, assets this we our have of million the At $XX the at end to of low action consolidated ratio, XXX% noted consolidated company insurance be parent, consolidated future along amount $XXX liquid capital ratio of expect As the in targeted level to XXX%. ratio

the investment drivers CX on to in XXXX RBC changes company factors the discussed the investments, NAIC million calls, relate referred notch additional our $XXX estimate capital we potential of investment downgrades approximately needs several To portfolio, capital as previous in we tests. commonly to on continue As potential stress base factors. to model X primary additional parent the we scenarios to case, our impact anticipate of from and downgrades. to changes to related In and NAIC

of be new NAIC for adverse $XXX Moody’s adoption factors CX our the additional available level and has additional midpoint the full NAIC base will subsidiaries required In of downgrades our in Combined, normal have to to maintain that company the addition, cash the needed Bottom repurchases. make consolidated RBC of order capital any we of insurance by anticipate additional approximately to the million parent may to at our and targets. factors and XXXX. new offset our cover case be liquidity line, capital still share the impact of ample

of for of of quarter next like of $XX million XXXX. quarter. relating second in to we of at Income with included second of National to Liberty returning more COVID division midpoint best call million million noted, use cash In or approximately The for in quarter incurred evaluate to XX,XXX a comments the of than quarter we premium its death The line at previously its I’d be the to end results. and second total that $XX consider incurred of quarter. in or income, to COVID and guidance first the premium. premium impact second a including incurred X% year provide portion half is X% shareholders $X.X the At our million in of X% and million will expectations before the remainder the its less should We $XX $X.X the our continue claims, will of over the the the on approximately COVID-XX able ago quarter time, million of year. remain, our in excess XXXX, quarter deaths to this could any provide company few XX,XXX in the $X.X anticipate death on our American COVID or $XX the additional that occur excess As we guidance, At incurred the direct-to-consumer has second million quarter incurred benefits quarter. any is to

estimate quarters, will continue roughly XX,XXX every million in $X for deaths. As COVID incur life we to prior of we that claims U.S.

We of million are range unchanged for $XX to our the estimating a COVID guidance. claims death $XX of previous million substantially from

premium rates premium, greater amortization guidance quarter, lower this income at underwriting pre-pandemic as our segment. very to earnings anticipated, a Finally, levels we throughout leading XXXX, of time, second with be our our of obligations in and At to lapse leading premium. in continued the favorable premium than percent life than the continue and higher higher lower remainder to was respect XXXX, expect and better now policy persistency we for to growth to

income We underwriting health second we experience to our saw the the claims favorable quarter. in the health also increased in segment reflect

greater price impact in and in of impact our from our shares. share results the lower share diluted a Finally, results repurchases fewer

we $X.XX such, XXXX. will December ended now Larry. from of are with the overall an increased for my $X.XX $X.XX have our to guidance Those back to comments. the call year turn range I to XX, As $X.XX the of midpoint

Frank. comments. are our Thank Those you,

call for will open up the We now questions.

question Instructions] from [Operator And Andrew you. we Thank take Credit will Suisse. Kligerman first our with

XQ $XX the your good you indirect million Do Hey, the COVID-XX anticipate of has Or Maybe XQ indirect from year-end? ‘XX. still ‘XX everyone. total quantify through claims morning improved? you during claims could outlook

the We quarter. obligations in or now million they $XX quarter, the closer quarter. $XX With anticipated the had $XX of saw X% second that actually million premium of the from we around respect estimate for down quarter, to million the first second were around excess Sure, Andrew. in to we that

thought. reserves than we increase to Remember, books. person million So was better due the what about requires the persistency better was we’re seeing. to more $X this us mostly This on the keep higher

$XX fact, $XX $X these was of the of had non-COVID million in lower is relates with that in in The anticipated. million largely then the medical lapses. from the actual activity. around we or and out other around the we So million around excess line non-medical what claims quarter, about obligations XX% higher claim And to

the of better the what than we higher the $X persistency. – million kind again, related is So thought really higher to

the that probably up anticipate relate roughly the that’s and these non-COVID really talked from due lapses X.X% last again, to we of to to year, impact to the had relates higher and of retain didn’t will we $XX And which lapses kind had around it of For about is X.X% million what activity. as of $XX will about of claim like to look and that we million, the from about that of the – X.X% last policies now lower anticipated. increase excess reserve around premium, that required that quarter X.X% obligations policy on $XX the of lower will the reserves million premium, again, the full the quarter. relate higher be Of most about last we talked does that

That more direct-to-consumer makes as sense. channel globalize to Is previously exploring about my for growing Is growth phone cited inbound and still quickly. just which direct-to-consumer quarter? channel, any then partners new calls, And you. a Thank lot this be is, curious in case this of the well? Internet follow-up were

channels. new are there don’t I

direct-to-consumer. continue the we have marketing channels strategy in We same four have basically

Internet. the have We

calls, inbound insert media phone the We have the mail. plus then the

I gradual very the still channels gradual think particularly the unrelated. – shift, shift Internet, four electronic are which quickly, growing most a the is channel the we’re a seeing

will on to volumes we real and mail Internet. in testing and traffic the circulation come analytics increase our so the our as And growth use our

you. Thank

our will question we take Barnidge Piper Sandler. And with John you. from Thank next

of that or about seem strength you it Great. whether I’m sales? maybe really the the Thank a last around that networks to life more life on you strength to sales? in the seen not? pandemic awareness be pull selling forward closest maybe to with you. you. Can is just based new, how more growth trying we’ve think those over or are Thank through talk agents year Does agent their dimension

life always think in I our related our sales to distribution. growth are

agent story. primary component of agent at of sales growth, were think So growth the important had the we American and to Liberty of agent second be XX% a will count I is however, very quarter-over-quarter. quarter driver worksite the National XXXX. a in compared sales growth QX, the Income, we There, to XX% that a average continue different our look up is if the life little

As National. addition XX% were worksite for there return up or really just enrollment not sales is of is virtual sales return of per sequentially. enrollments, we’re of helping What the seeing that but the actually the Liberty on-site worksite

a year, think in Liberty Family percentage we both premium will and I agents course, agencies more will three agents And those of The submitting Heritage average productivity it of all this have greater National business. from as CD more the increase. come growth see agents experience. also as for written

there drivers of different at for So time really distribution. points different are

last Okay. indirect like question. suicides quarter, bit you. death about increased about from despair in And forward? question, a like But Alzheimer’s expectations and maybe related you talked little Thank then being cares seeing talk XX%, going COVID being XX% there cardiac. what isn’t your overdoses, my Can delays follow-up and you’re you to really this the

total levels even we trending Yes. the do I though the versus When we think still Again, will about the is the the to elevated we really non-medical medical that improve. those the causes. mix look probably the the care as those of relates kind tends XX% over to for you at of and health at do some of of to continue access anticipate course all anticipate be see year that, side to down that, year,

still claims, of full probably the see $XX of we that will if year, premium. X.X% or that excess around will, you for roughly X% think anticipate I we million

answers. for your Thanks

next And with our Ryan we question KBW. will you. take from Krueger Thank

impact. I morning. good had Hi, first, the guess, I on follow-up persistency a

amortization much within on be reserves. as of impact Can would an to benefit the from about X.X% comment higher ratio line how to a the that? increase occurring talked you you policy offset So positive your

it’s the amortization from bit less little The than Yes. side, a X%.

policy fully doesn’t increase does. obligations, in it largely it but So the

we’re Got And I guess some think, regards seeing it. Are agent in the where decline now. recruiting, American agent year-end for new Income on count then, that? on any guidance I in I market your you of impact some agents – at think more to from at suggest, your can negative from little your color – recruit I a give agents? to you labor conditions ability guess,

and is the would Sure. I to We I a give script only like think the that decline referenced Family growth... in Heritage effect actuals the

Yes. I American but – refrain I think to Income, you up that’s... X%, would had

Today, workers Income, shutdown, on recruits, XXXX. to and to do X% many work just for are to see I to layoffs X% the American be increase businesses through down of ago, the are businesses think think more we count growing opportunities a dramatic of help hours remaining we every will a Almost Family going The underemployed Liberty X%, of well range see quarter. many I range most that’s to and recruitment negative remember be it say our but National we job agent reduced unemployed part importantly X% the a level, Heritage, the of how we challenge X%, and is orders. occurring year X%. end office,

short will in run. our producing agent slow the So growth I think

with line growth levels. However, economy as our see we count believe in we our in normal a will historical continued returns the levels, agent growth to

middle within year-over-year best watching X% a American Heritage look training management, at the a XX% always In of that’s and American at increase middle Heritage a expect because quarter-to-quarter increase in agent had growth When Income, growth growth a I’ve the is QX, and had management. Income is count X constant XX% middle future that keep rate at years, compound is growth and always at at in we think National that in each agent X% agent managers a process. middle management. past year-to-date, in indicator to producing important over Family Family agency National. increase management. middle see X% had Liberty the growing approximately Liberty I And we count, also proven recruiting company. stated don’t sterile we’ve

‘XX, versus as followed steps to an next from X-year go ‘XX, year. had when we XXXX growth to XX% stair next The ‘XX year you However, by XXXX in the had XX% back And is we Liberty National agency reason – period the at growth. X.X% example, want step takes be growth a to that next those you and very it’s continue middle growth, work you it of time, productivity agents. develop producing to keep come our over agents but to long grow, confident your going management, agents time we our agents That’s a rate process. so are – explanation, stair

Understood. for the color. Thanks

Thank you. Tom from next Gallagher we question take And our will Evercore. with

question The – persistency. Good morning. on just a

in life be even how or would range. insurance, the it’s clearly. within maybe now growth likely think sales – do for think bit Do for for premium think bode X% to this playing say remain future you or insurance, you have better is would that I heard permanent. persistency X% a growth are ranges assuming life year, to good X% reasonable with And you if a least, persistency at your growth historic I the above you true, you looking trends out? premium more at X% to you doing be we continued And to for well and closer see that that’s down those continue if XXXX, dynamics

are you to be. what going think don’t I is I know percentage Yes, about –

I But have than that we anticipate are give some – will on to the will next in we continue yes, higher XXXX. call, guidance growth rates We would the pre-pandemic levels.

do persistency that we didn’t better want that, one that the last to XXXX. is of is add to thing going Tom, we end to would like infer it’s think the that The think throughout on I permanent. that We

it at So, level. favorable we do see the continuing

call XXXX, the with in into better think, go high insight, we But where to some be think on persistency think you that I continued the persistency levels as to able we growth, will help, give of future. that views persistency will will think to premium that really we at really say, going dig next a more I bit when this We to get little we least we But be in able go. foreseeable and year, buoy encouraged XXXX. definitely where are should levels are the

Okay. you over guess, And XX,XXX on the the – direct mortality XX,XXX forecasting COVID mortality year. to impacts, are ones rest of just the the the I

forecasts the about think showing I amount. are that IMHE double

how deriving curious your there? estimates just So you are

what up or U.S. end at look it. of put at our do $X.XX averaging as of to up more there. now. our good – the our realized, IHME got, may over let’s we Xx ago to an We quite up that they their several about your have work if the week for sources looked that what increased impact then some in range. end need overall. that into I one looking the forecasts different to fact kind roughly deaths having impact estimates what in I think, a of applying up end do I looking we the are extra just days, around they to is remainder we If would It apply of are of would those. number of look year, that of with trends, of take we of have understand probably Yes. account is midpoint, at at out course ended clearly, in the of around those is. some the were come our at is say, you the do XX, day to be a in-force bit point XXX of higher they what that by have estimates deaths last XXX,XXX at that deaths state, at being they of And debt just a few lower kind X,XXX probably

be would that our within still So, range.

I of little we kind think changes go. And to so that you range wider that’s will, a of that that where have on if help into consideration some might take normally,

now hard pretty to levels the it’s are what be. to right going So, exactly tell debt

the Can how fit factor isolate – then is impacts $XXX it factor $XXX you CX from million And one just the ratings CX the could of downgrades. last, RBC it. Got of in, from if combined plus changes? specifically changes million the so the much expected I

about is from – is million CX. $XX This

is if are in in of We itself. RBC XX our probably point about and ratio absent. CX reduction, will, The you probably just

that’s So, $XX million. around

you. Got it. Thank

we our And with Research. take Autonomous next you. Thank from Bass question will Erik

able question all to follow-up of vaccinated more guess mortality. your Thank you any on Do getting to sense COVID the insured about differs population on new start applications? how is maybe seeing Hi. the a exposure population of policy on your changes population? something on at And of of you Tom’s you a are as versus I between rates? ask have Are vaccination sort status you vaccination kind sensitivities are terms general you. kind in of

rates. death from I the older right as are and really seemed per the generally well. sensitivity we is claims around lower, overall with to that – will, be now, That’s the if deaths. at XX,XXX we still holding specialty look, you Clearly, continuing not think million ages Yes, to higher seeing $X of vaccinations help pretty

really kind and you portfolio. any percentage So, as we force, same time, over have from look over age in it exposure And to goes through you XX down do XX-year XX, really one our well fact. any then XX out look at overall our age overall in age as we get XX pretty period – age age. roughly any roughly, it’s particular at to but of It’s of the if is don’t spread great we

vaccinated condition. into we So a feel or ends they particular are unvaccinated don’t if we like any overexposed even being one up are

then health maybe that second about benefits of moving quarter. MedSup half mentioned into that’s lower are the side, utilization? trend thinking you to other how this And just you health if that favorable for the continuation of year the and case, Got products? And a the Was it. the claims

Yes.

On the utilization in than a we MedSup, and is it’s what XXXX, even from really seeing largely we there more you in than utilization. had And trend really higher XXXX seeing higher but we expect are perspective. what would lower it utilization is are

trend bit you little kind were expect look a a So, what we favorable it’s of from running and perspective. levels ‘XX at if still normal where would

lower more On a services it have we is, as not are – so our that it’s of Income, and is in utilization blocks particular the just cancer to accidents some let’s incurral Heritage. And this in of more favorable the of at seeing as well – degree time. Family helped just American are Liberty really much that’s incurral. where and with rates those at we It’s obligations That’s some lines just policy those incurral in as point an really claim. say, some

potential I follow-up any it? Medicare is Alzheimer’s the pressures that then from you treatment, under do covered under on exposure wouldn’t cost which MedSup, Part new fall of And you. or have believe D.? Would MedSup Thank last just to one any

potentially there guidance. included we ultimately, do be some – Yes, exposure, have that in our the but would

Okay. Thank you.

[Operator will take from question Instructions] next with We JPMorgan. Jimmy our Bhullar

Hi.

takes on They weak were question or positive this on was obviously, response margins as that response they Other the direct just puts long-term there quarter pretty thinking margins, a just first, any quarter. are overall this sort normal or negative of than your in a COVID, of improved business about side? do So, last impact you and you the direct feel the quarter. life are

first systems. Yes, changes other side, see we lower all as seen had amortization far quarter increased had both second the a And amortization our amortization around the response direct for in to that’s at in – throughout year. distribution that renewal. the lowering was amortization going is during of The should over as We on is year. reason the and premium persistency, improved for rate adjusted be little amortization rates we for last and One Jimmy, bigger things. two have that And the quarter, over reduced that the what – sales of year. we a direct response quarter XX% last can you for XX% year XX% also the we impact XX% through second our and as that continue versus XX% versus

acquisition lower year, had fixed, it to the has than last direct high per addition year policy – so the were last that we cost we response, that acquisition were costs had the sales In been.

So, the books. there is less DAC that we were on putting

life combination plus the the lower the that a lower has more having policies, resulted again premium per improved generating revenue premium year. policy over percentage. premium higher higher in the acquisition revenue this We of over should we our amortization So, through of sales, since DAC the of remainder cost revenue see the amortize that persistency

views next would year, on then are your it based persistency on And reset what for XXXX?

Yes.

Okay. have to And then how the affects you retain market, to year have hired on labor recruit guess, especially your that of it people. any the think you as the on industry, affect the But of services do your you because the you over about And do retention agent in I ability a to continues will sort economy it impacts ability agents? trends given lot agents past probably added how see improved retention, agent improve? your

little retention. again, the a better look Income, and at early over agent retention Income, little ‘XX, obviously, and agent has But and largely years, months American early talk retention months trend Heritage, months retention unchanged. at it’s We was a XX the X and last Family XXXX National increased of and American X in XXXX, agent we on it’s seeing look retention. the Liberty are X retention. and I about based measured to

right job I think opportunities, obviously, now. normal

year. we may time, returns the higher terminations So, same expect end normal. through little to our the to as a of the I think economy the increase At be recruiting

will end end going particularly of ‘XX. So, ‘XX – retention I and think normal recruiting have normal of we the rates through into

see assume recruiting year sales? with slowdown as might get should continued are or happens or – pickup what on any the their agents momentum past translate that other sort to typically, agents over so increase in a to there won’t then productivity factors do of the And in tenured, reason you regardless new sales, of that

not… repeat that you can Jimmy, question? Your is connection

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you. Thank Okay.

you. to the today’s Mike for back Thank session. closing that And will question-and-answer turn now remarks. concludes Majors I call

Thank morning. our and next to Alright. comments, joining quarter. you you this we Those will us talk for again are

your concludes Ladies gentlemen, you. call. thank you today’s for Thank participation. and this We

now disconnect. may You