Globe Life (GL) 28 Jul 222022 Q2 Earnings call transcript

Good day, everyone, and welcome to the Globe Life Inc.

Second Quarter 2022 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.

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

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

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

underwriting ago XX% X% was quarter year on increase and claims share experience. million. fixed due premium per improved was and operations, equity XX.X% maturities, Life life to a a revenue on ago. primarily return $XXX value insurance million, is premium the up year margin $XXX margin from increased losses in The ago. to X% increased In $XX.XX, book year up is unrealized from from Excluding

In health to to premium we decline insurance, the X% was grow expect $XXX COVID to year, an the X% premium underwriting to to margin we midpoint primarily up full grew million for at million. the in XX%, For life $XX guidance, and expected due and year. claims around revenue our underwriting health around grow expect of X%, margin

our million the Administrative health grow X% expect quarter, were grow $XX from a underwriting we the and X%, at we X% for midpoint expenses year, to around to revenue X%. to year guidance, ago. premium of expect the For margins up

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

the be his premium year, security primarily call travel the and marketing expenses Benefits expect on quarter costs, the grow of For X% the of and IT for to addition XX% second Larry comments information facilities the higher and division. to in will operations. increase costs and an we due administrative costs, now Globe over full around I Life to employee around turn

Thank A XX% agent producing count environment. and second in producing count the ago up due life life life million, $XXX second decline new caused you, quarter increase a in Gary. second up quarter claims productivity XXXX, higher American for recruiting by The In the sales up count processing. million. premium quarter. the to sales were quarter, net and X% year The and premiums The X% end quarter of margin improvement to were $XXX average underwriting in was from was the million up quarter resulted experienced. XX%. the X,XXX. was The net X% improved agent year average was the at At business challenging first margin Income, from ago higher X,XXX, of from was agent the primarily but life for $XX underwriting to down

becomes have agents. Also easier place. necessary conditions new a recruit remain components in While tough, in retain been growth agency and for the to economy, slowing

National, $X At to million. up quarter million, is increase a experience. we primarily over improved is counts before, underwriting average agent agency the agency second to higher business year. Net the to to X% quarter the have and sales over quarter $XX X% agent life producing XX% X,XXX, first to year years agent mainly margin up due to Liberty $XX ago but The $XX growth. best It producing up National Liberty The evaluate growth health in stair-step ago to The the were productivity. million increased The claims premiums XX% the life ended the at up quarter. sales ago worksite premium quarter said to over count and is ago year XX% this XX% count life has year first was year quarter As underwriting X% several to as process. margin of X,XXX. were picked due for was at up flat over million. and compared Net from quarter, compared increased the the agent sales up were quarter significantly compare

second momentum see million We $XX to ago and X% Family to X% year positive The increase underwriting quarter the from increased margin $XX health in due to over was million. due X% increased The X% premiums increased down claims Net sales health continue $XX experience. Heritage, the year million for X,XXX, is and to quarter ago average count underwriting agent premium margin health to up were producing At agent a at National. improved Liberty quarter. to productivity. the

$XX initial response Producing rates count were premium. ago and first and agent sales end call The due life XX% quarter in million, quarter trends to underwriting seeing Heritage is count sales XX% quarter are the However, the $XXX direct-to-consumer recruiting, division to the declined grew Net due life of was results to first second our at recent are recruiting from the million, Globe margin ago in year underwriting that Heritage at Family million. the policy lower Family paid to and down quarter lower flat the $XX while our Life, and the margin we the X,XXX, increased indicated to from encouraging. of those quarter would decrease over concentrate for agent X% life year quarter. were In I premiums efforts. obligations. on

reduced sale direct-to-consumer do we until and As the record is offers, premium a premium full reminder, introductory received. not first provides a

inflation not have marketing macro environment the our activities impacted is much with challenging. past, the the in environment changes in While record current

a is customer our than generally in retain to customers direct-to-consumer lower-income less bracket has income and discretionary agency insurance. typical purchase or Our

increases quarter seeing mainly postage the on to now ago XX% costs achieve our based General underwriting we million for projections and United I reduce as the for At $XXX We American increased health our circulation million, year Agency, business. have investment margin return will health to ago X% paper also Net campaigns. knowledge to X% $XX increased to in were quarter. trends had satisfactory of premiums health provide sales on certain are and million. ability a compared $XX up marketing to and and our year impeded

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

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

X% basis. full the to impact higher the higher years declining three on see on XXXX year, to primarily we decline due investment and to growth of to X% we the investment between portfolio. up X% income be a per share due income, of investment interest expect For but in expect on After interest excess debt, excess rates to around

at the in an fixed $XXX we of an years. life quarter, in average and in investment-grade second and X.XX%, rating invested invested primarily average A average of the As investment We million XX an of to municipal financial plus sectors. yield, maturities, yield

These our conservative with $XX partnerships limited have invested in also line to that philosophy. expected characteristics. are produce in million investments debt-like investment We and are yield additional

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

As yield XX, June X.XX%. portfolio of was the

ago, first yield quarter. up worth it's This points of end While it's since first point X from seen the the an that declined noting increase X yield have time we in a is from the the the year portfolio XXXX. basis basis

amortized portfolio costs. are rated minus, with the rating minus. a ago. invested including portfolio, investment of $XX of maturities, billion fixed at average billion, is $XX.X are investment Regarding as $XX.X the overall, maturities same year And fixed assets grade the total an A A billion Of

the net of hold intent Bonds or fixed overall, the XX% year from net to we higher treasury by compared rates portfolio million and mitigated unrealized of our ability we XX% the to gain is loss BBB unrealized to rated loss position portfolio. position spreads. to of quarter, a maturities due maturity and to unrealized During maturity. a fixed went a comfortable approximately with are our $XXX position quality ago. The And

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

regardless $XXX The little ability to This best million of criterion provide The an fixed primarily securities more as interest believe ratio at securities. acquire we to low we is this have survive X.X%. our derivatives, and no part bonds a low year returns have residential that Because compared maturities in as equities, is we to long, asset-backed to investment-grade percentage or equity below hold million investment-grade multiple exposure capital-adjusted markets. our of a as utilized is invest ago. than the in securities However, XX the cycles. in CLOs such assets We for years. been process to investment the risk-adjusted, bonds due higher-risk were maturity that large must other BBB issuer mortgages, key fluctuations rates to has or ability $XXX

have losses the percentage unrealized a plus equity BBB of maturity net rated multinational as portfolio we have a as Russia would or Excluding that countries. equity has bonds that The any no of XXX%, percentage our exposure investments I do mention direct fixed investment-grade that's ratio in bonds also in and XX%. XX and to this Ukraine in to are material investments these investment-grade lowest low below the impact bonds are not been companies expect years. in

at and $XXX debt-like yield invest limited partnership in of with yield full rates money investment average interest of approximately We around X.X% midpoint in the were future. the by at up in income million investments operating prospect interest Higher $X.X X.X%. have of of rates we an new on approximately our in at billion encouraged a higher fixed the will an by the increase net guidance, the year, maturities rates impact expect For positive income. average to and characteristics driving

earlier, not expect mentioned rate not losses we're that are to I realize about driven would As potential interest we concerned since unrealized them.

the to We intent and, our have the importantly, ability maturity. investments to hold more

addition, not In interest that our assisted. are benefits products have life fixed

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

Thanks, Gary.

to I senior in the parent senior a on proceeds quarter $XXX spend This to our used began excess approximately commercial September and the a to being liquid of with temporarily repurchase ended liquidity a amount to issuance less million for corporate other the is our the assets want the redeem of proceeds few $XXX reduce $XXX XX balances. of used share May with ultimately capital paper million. primarily X.X%, note second amounts assets of of our year net minutes rate purposes. proceeds will million The program, note X.X% and discussing due be with The with net available higher maturing $XXX First, liquid position. million available coupon XX-year

the excess from define interest assets, addition paid primarily the the excess we annually received on parent subsidiaries flow. it, its debt. parent In flow, cash these parent company dividends to from liquid The company cash as the less by results company's generates parent

cash sales XXXX XXXX. payment generate the we the amount to in to purchases received shares Year-to-date, XX% assets were repurchases million second between XXXX, $XXX approximately $XX.XX. and million be sales shareholders sales of an $XXX in flows of at dividend as the form so the million of generated flows of excess higher anticipate than $XXX lower and million the remainder of million quarter In in we statutory dividends approximately the excess repurchased the $XX million to year, of X,XXX,XXX increase of were parent generated lower $XX.X the in of During flows, Taking cash the Globe flows higher a of have X.X the in the second at half share drag while will $XX.XX. cash the payments. approximately expected the end second July, distributing the losses in favorable exclusive price Life future. in flows. which, is will having higher out into year will cash excess for XXXX, in parent's the to in of $XXX.X operating estimated parent we growth primarily of at price the million excess assets the available and $XXX cash second before shareholders, in normal were again, for an anticipate to cash $XX.XX. common the This total than cash during agency average of around liquid an made higher received in life $XXX result of $XXX than which the we average approximately of parent anticipate we be conditions. $XXX of creates price flows due COVID term, $XX half far from our of account average the half the both resulted stock year. repurchases the lower of XXXX company We including $XXX nearly XXXX, in thus of an quarter shares in income the a additional in million year, anticipate the during Obviously, the million of which flows that our in Total second short to the to given plus million Inc. million market of quarter, million repurchased accelerated at repurchases cost at of These is million

so net debt we and to leaving far million million approximately $XX used approximately buybacks anticipate $XXX for for uses. noted, As and in have million other dividends $XX shareholder previously using million this quarter pay reduction, $XXX approximately

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

million of calls, As the we to discussed to at $XX held be million parent. prior targeted on liquid have historically $XX assets

there guidance, anticipate XXXX. the in will excess will needs, evaluate shareholders be our company $XXX to million action-level $XXX between in necessary we our XXX%. million and potential liquidity, the to continue is million and the targets the $XXX such In subsidiaries, capital Globe With excess company to repurchases. maintain million of Life return including returned levels current to should RBC XXXX, at shareholders share be a regard to approximately consolidated earnings our capital our will We anticipate the at support capital in levels our XXX% through $XXX ratings. goal ratio to to range to insurance we

XXX%. the of have this RBC RBC was ratio consolidated our low our million over our RBC capital required subsidiaries consolidated approximately end the target $XX XXX%. at ratio, of XXXX, of For amount At

will mortality also new NAIC During longevity adopting risk, factors. and as RBC related the to factors known XXXX, CX be

new We the primarily held approximately insurance our reserve risk to apply life While and life impact asset our action-level have for the on strong mortality capital products our required statutory X% increase conservative that already longevity products factors to will levels by factors requirement. little total a for annuities will very do the to relate X%. provide contingent our believe company subsidiaries,

product At to from target while in this strong do required of capital maintain the to not we does any end capital of $X.X from COVID our gains factors additional reported of the second quarter, and this low CDC. simply company ratio, RBC to stronger should to comments results. related provide of generation consistent statutory available at a will impact the million these At additional In that time, adequacy the the time, approximately be anticipate relating capital new result the COVID U.S. liquid operations Given our I'd even will in the ratios. our second portfolio, by like be life deaths sufficient quarter assets RBC targeted approximately XX,XXX have obligations occurring parent excess our non-COVID company COVID-XX the incurred required. on policy quarter claims few as

that were now million, U.S. of additional claims was deaths incurred available we a approximately the down from now quarter have estimate favorable last these in prior the related per cost call. quarter deaths, on claims However, cost estimated we on our COVID the incurred to claims previously data COVID XX,XXX Based offset $X in $X.X quarters. life million our fully true-up by average average first

the were claims overall net COVID in the individual or quarter distributions. second life reported the result, any not a As significant of at

of half incur average we million This U.S. of full and XX,XXX an of estimate. the million in For the of $X.X our deaths midpoint XX,XXX the an COVID of $XX now prior deaths COVID decrease approximately and estimate life at per year $X year. our the assumes will cost a estimate we approximately guidance, claims, second from estimated million

quarters, causes neurological from higher life of continue policy including lung obligations to and elevated due respect medical primarily to incurred disorders, and are seeing favorable losses related, The While that causes. from death The in to we we disorders. be experience issues losses non-COVID heart experience are non-COVID XXXX levels. increase prior COVID did had deaths we circulatory over with

stated prior the deaths to pandemic. we these on part due As calls, large are believe in higher

direct-to-consumer number Given of our were these policy to estimate the $XX of channel. development we will adverse moderate incurred than losses lessening million million, our obligations second the quarter quarter, expected, claims non-COVID anticipate $XX life excess the higher In due death, do that we COVID first primarily over in approximately year. remainder of the

the that our X% be the is anticipate net in premium. to are non-COVID total all obligations obligations year, income the December our higher due per respect For primarily of we midpoint With of XXXX. greater or relate $XX guidance projecting earnings our the midpoint of higher life of previous operating life Essentially the full $X.XX, $X.XX our be The repurchase for million will our to program. around $X.XX excess XXXX, around year $X.XX ended impact to will to range share we XX, share death. of guidance for a than policy causes of of entire

We estimate the to to $X.X book. per deaths the due evaluate deaths that COVID the multiple for We IHME continue and on CDC of and COVID will estimate the those estimate approximately million. data to our from including deaths year impact XX,XXX total cost of to and available in XXX,XXX sources, in-force from be to the U.S. range U.S. deaths total be our will XXX,XXX

to will upcoming that effective XXXX. of potential long-duration comments changes the the respect close, I a accounting be Before of impact few with in

all on relevant be discount of current to subject our The The is The in the especially new and of or GAAP degree, expect manner primarily to have requirement policyholder call, GAAP we business new changes February I to capitalization accumulated will equity, primarily new income is accounting reserves income, rules. acquisition and, on the comprehensive reported benefits. to the result other affect some changes accounting of policy a and our income revalue future GAAP computing new costs discussed the reported to including statements AOCI. financial related AOCI will deferred impact that since using rates. our on guidance impact nearly impact from As on our significant guidance the to amortization our

persistent, and and decades profitable ago. have policies many on books still the were highly are sold we products Our that

has accounting due in time. than methods lower treatment the deferred be agency new the changes $XXX a range It to DAC the after note annual over $XXX XXXX are will accounting will it of annual impact the be our statutory captive ultimately to the products the maintain treatment mind to for our purposes, the change is the of tax amount the currently think deferred channels, While the million premium be is the statutory Under way and the cause to other period or that capital be changes guidance. restated our us to the or costs, we increase collect, that we to GAAP no of significant, earnings GAAP of pay. important on that in expect no changes basis. manage an near the way in DAC, of changes treatment the on our in for will guidance balances benefits business. claims amount impact these income term of standard, nor and of on we and to current under be it reported amortizing to nor our make intermediate renewal offer. we none keep of estimate will required In net very the new reflect the important we will premiums regulatory or We interest acquisition Furthermore, million in of in to XXXX back. impact the The rates, do will renewal Due commissions, in to we change any commissions amortization required words, modify diminish this earnings of will of higher. changes will it policyholder

claims guidance the of XXXX of impact are treatment and the these guide COVID in the new these reported and life in recognize concept, a as to provide claims in able premium under policy life XXXX of XXXX will time, to fluctuations the XXXX than due the net percent at than experience requires obligations aren't of in range we restated higher this expected both in of us, to the fluctuations While result in to This lower current both current both under guidance. policies. years a other expected over as income be and

our utilizing will of income that changes. currency Going in obligations fixed be A-rated the of discount the percentages as respect absence premium policy guidance flows. restated percent insurance future adopts sheet upper-medium-grade similar of rate a reflective fixed each near to to of new be that reflects policy tenor of and balance upper-medium-grade forward, the securities are the to and With change yields AOCI, a shareholders' that quarter single a recognized company's income component we term the generally the yields, to AOCI, income of fixed consist those the new anticipate equity. assumption the cash changes in The requirement effects a the to remeasure with liability in benefits of

this which $X.X will discount XXXX, to valuing was used January policy balance lower date, billion existing of X, used expects requirement under as date the be decrease transition after-tax AOCI since to the the due $X.X company On than billion to an what the be will future rate in new the be benefits this in guidance.

could have the average current changes long meaningful liabilities, in discount on duration AOCI. the the Given reported rate a effect our of

use the the but reflect if in the fixed also only range to of AOCI decrease of solely to $X.X the increase been that be in XXXX, mind bond Keep valuation in a maturity billion. after-tax billion changes transition in as were of June have we $X.X the current instance, rates to else due portfolio. as hold such discount would For adjusted AOCI future situation would the all in to XX, in policy date, equal benefits of

interest gains on to loss are unrealized while rate determining the discussed the new in to inherent it As interest company purposes for the from underwriting changes and unrealized recognize AOCI, policy available the that ignores future benefits of February margins fund call, requires rates. guidance the

will net of present a along submission purposes, of noneconomic AOCI the equity, ratio. net present has underwriting a policy this understates and require a also This strong value the this At of obligations granular reporting we future of between policy to condition AOCI, as of premium, Globe's the impact Any benefits that to financial premium more for the The margins, also the our excluding the of a for minimum decrease new earnings. requirement liability known these of of ratio the fact, million. forward. more we believe premium levels increases this be that requires Given our that meaningful assessment effect than going benefits new than to gross determining measure the have ratio retained XXX% earnings greater value in that blocks balance date, margins. guidance value business less expect opening will $XX be to a adjustment continue policy with future or transition require retained of to

now position the may second We of XX-Q we month, and will quarter next a XXXX earnings of my be on XXXX comments. I our are Form our restated on views be more operating initial to change the provide the XXXX will on back filed Those call. next turn provide Larry. to to and guidance discussion income anticipated impact our and accounting more in in call

Thank our you, Frank. comments. Those are

will up call open for questions. We now the

[Operator first of our question JPMorgan. from Jimmy Instructions] And take Bhullar we'll

because in just weaker about on worse because concerned you uptick it rates. Or persistency there of recession? now reasons question persistency. are benefited is pandemic, happened the you're seems you fading? of what's from policies, a is lapse that's seeing we, impact think in getting a other a that during you first an Or pandemic from Do sort the I the And during enter to people it economy? and do catch-up of fact, the pandemic unwilling the as make if cancel had like

in in several highest much reasons of that years. XX uptick inflation, the that is we But impact persistency. We've said had there causing on course, the of lapses, in seen the slight economy, inflation. this inflation Jimmy, that are be the haven't could we've past during periods

in they COVID the could And So our inflation we be it's bit feeling need have like less I But of It's also, pinpoint some relief persistency COVID the impact. have emphasize the the having outbreak, direct-to-consumer they feeling the bought area. now longer what income getting That they're affecting the do especially the reasonable don't causes to to an of could policyholders. hard impact end to the worse. But adverse concerned persistency, payments are hands also, it are. about of of coverage. seeing no that is want it insurers little need seeing we're coverage. a beginning they and Maybe government think -- the not like in at that -- of think we're

seeing levels. what we're increase pre-pandemic an -- anything ongoing getting that is see to back that's the be So it's but we to don't going at towards indicate And this like point, in it looks lapses.

labor talk agents and labor your the -- and the and just fairly recruit And with still. you about have ability how retain to market can that tight we market

three we're agents. growth management the components agencies retain grow and The is easy agency at a to to and sales more the international Jimmy, are those technology are agent count sequentially, tough recruit economy, in it's new than the year, forces. providing American the necessary to slowing for projected What's increase XXXX. XX% and X% a opening this we always by see in agent additional it's and Also new market, Family offices to important While in producing market place. been All Income, did recruiting remain Heritage. labor

was? the the net on and $X what that on negative were basis, what can quantify COVID the think actual claims associated reserve lastly then the Because or a COVID. what you from claims And the But impact quarter just net a were reserve actual this million result? offsetting release negative had what -- and I you releases led impact to were -- a

million, you $X.X Yes, Jimmy, -- million of originally -- we as incurred was QX $X.X to that of had quarter. true-up, $X.X I $X claims. will prior if a COVID it our, on ended of million, million around you I in that about excess but development to if that favorable And is up was was you net it -- will, period relating deaths, will, and was benefit noted, those negative, will, if about about truly about being estimate to say the the probably we losses relating just -- million the DTC, $X.X projected

Research. Erik our to Autonomous on with Moving Bass question, next

they I this provide get the near was could mortality the in you well see margins And talk little little the the on think to and about being if block bit where bit as DTC hoping you a experience mortality non-COVID where maybe color for more you in adjustment I a normalizes? guess can there. and out-of-period particularly term quarter, direct-to-consumer

million. Erik. of had general, about In $XX second estimated excess up originally in we the about We noted, ended quarter, Yes, as total I obligations. $XX with, million

So than lapses was of the the non-COVID little They it that were million than what quarter. really, $XX favorable. higher bit for had had on and -- higher about side. the anticipated all Lapses was we were what were anticipated a we high actually

there reserves some releases of of out. helped the excess So those some of

$XX quarter non-COVID and of All to higher about relating claims obligations second DTC, policy of difference that's those that claims. incurred -- that were was in the related to we're seeing, additional million

developments, maybe So the will, well we the really as then little respect little of what of of kind favorable DTC if to have non-COVID because clearly both a as those organization a we're while bit whole, on with COVID, will, in saw there's just some higher. of a misclassification, we being if a seeing you non-COVID bit you as

how excuse changes whether other a recorded tell. we bit So that But full the little for hard DTC, of COVID some are me, our the non-COVID that the with a the of offset getting non-COVID X% -- X% with factors little non-COVID saw we respect to from year. if it's and for probably favorable anticipate of ultimately an about just some do on certificates some bit developments claims higher just premium, it's are the premium kind the of of to or the those techniques, estimation death with in and the that of stems -- and excess being about precise how year just and -- year for be entire the overall for And side.

to for death the non-COVID $XX related related COVID. and million total obligations direct-to-consumer million So X% yes, causes of about -- $XX about to about, in excess total, of probably around

a to still of, overall? XX% for from range in in standpoint, for then life margin of expect guess, looking the And DTC be environment, guess, sort to I XX% kind would XX% forward, I a you normal margin and

Yes.

non-COVID of that favorable But will, For the full higher around of year, some that margin COVID, XX% persistency past years, And projected X%, to amortization and the around we in estimate for had XX%. year. entire of COVID our to with that is a couple bit the that we're for being kind probably obligations for with DAC somewhere in if favorable. the of XX% we've range little the you our points our

of all If kind right does in you down range, you it that to back to XX% bring XX% XX% of XX%. normalize kind around that,

business. And that XX% sort still life overall of Is reasonable? for the

reasonable, yes. is That

last And if squeeze could one quick just I one. in

Would net of LDTI For gave the income earnings think expect impacts, the you you operating impact difference I basis. income? a on much

essentially be would same. No, the

the how the how income, would overall. but components bit net interest that, be we of think required net little some a excess income income net of same Some the those about different, and treat be versus operating investment underwriting we overall components impact the will operating of on income

Credit Instructions] we'll from Andrew [Operator Next, Kligerman of hear Suisse.

of non-COVID to I excess expecting kind about the $XX that excess that were with about correctly correct? of million just the recall million did $XX Is So on non-COVID claims year? of this quarter, for follow you

correct. That's

you what guiding were And previously, Frank, that's to.

million $XX you that's than said, anticipated So million what than -- had more I more even though think $XX you

Yes.

if this guidance mortality still that you're case, right? the previous gradually still but that that you'll anticipating dissipate. be you're standing just by of non-COVID will kind to you of going And $XX is excess of -- quarter, that's just there, Is see subside. I It million. guess, This kind to that continue

correct. mean is I that

non-COVID portion really of offset expectations be kept by QX. that the seen what's what QX and in is we've Over -- the related that that causes been in excess increased the is done our of anticipate year, on Andrew, there, we've what increases we obligations million. that But additional do that's have $XX decreases what the death, of our will impact of that happened that than less seen about the the But we've we the course overall of view we've the is so to lapses. related of to --

ticked of the And lapses non-COVID offsetting the of the some our that claims, reserves carrying and excess so as been that persistency have higher -- have year same. approximately the our released total up, is those effect keeping kind of we then were as

that And nothing would that be believe COVID problem? lead you XXXX, excess assuming dissipates, this 'XX to or will a in that and hoping non-COVID

actual have higher relationship deaths, And the the of at non-COVID to the actually recently, between we've is especially we've neurological back something -- recently back here tried to and has really a the seen What heart, -- these our back we've really losses disorders. relationships to that and deaths. non-COVID are the with higher gone done Yes. team actuarial look more gone really losses and see disorders strong relationships timing lung the COVID and COVID what circulatory

deaths, and has the that relationships that non-COVID pandemic that we that decline dissipate seen in with we start over -- comfort us the a will -- I And well. have death -- level this so to that of given strong think or been gives the excess that seeing course of COVID have causes of those the as

-- point any this that to long they term we're they be evidence normal should reason any should not And point, at so gravitate we that eventually back in and seeing at levels. higher more that least would the why

on government As a then really [indiscernible] And et reasons, just that cetera. of I some said, inflation, good lastly, you gave makes lot less sense. lapsation,

elevated over the future? in lapses, kind that of foreseeable direct-to-consumer, guess, we could environment Given the expectation I particularly the we're in, is see these

Yes.

the seeing our -- guidance is in of really we got what exclusive elevated. the from possible normal our in that be It's level that in that expecting persistency just given the points nature be at levels. touch of midpoint with is levels. kind they remainder toward a the comfortable I what we're little guidance with that be will pretty might of the more normal of to are anticipate what lapses bit do we're with to agents our the of -- that's think we've DTC continue could we the be consistent But anticipating the agencies levels. on pre-COVID -- for more more always they'll We're the just year of

haven't last the been as in the we have the much more the policies lapses in we of we Yes. would Andrew, I go you two, years. rate. have books increases policies lapse if seen in that add seen that out And three have of seen as increase the on longer, in the an

they last to the that So -- back need talked about years, of earlier, what that two people don't policies and to that three in that anymore. are coverage we gets we maybe some sold thinking the

point, to continue of more we they see obviously, that back shift this indicate to the that were lapse at a where policies to the continue. books the we're have So time especially having looking it's anything longer, rates XXXX far, don't the going monitor period. to we'll and But moving But major been at it's out so on it. in

just me let sneak one good. looked Income Actually, in. American

that little by a months of over getting ago? bumped has Are X% guidance encouraged on than it recruit seeing? you're easier growth up count three what in Your Is you to agent terms you year. more thought

and that I agents. encouraged. is are There's We're always between date. recruits the a increased agents, in -- do second what agents [indiscernible] for What we actually economy we producing more recruiting into convert of we see we seeing and is of those opportunity. see looking through And has happening. lag and need is producing as recruiting more a more, quarter Yes, current change guess, the those during to or

particularly cost sales work more carry The so of inflation, home should Income business. time, we second think the need to, produce I XX% work there's virtual. you third can or I guess, Income. with our attractive. from still And in American and with also of saw At a you same have expenses. are the quarter, gasoline, the increase at the through in more quarter is And the the in next quarter, recruiting American in position

better much it pre-COVID. is Income American than of opportunity the was think I So

Barnidge hear Piper And Sandler. of from next, we'll John

in you possibly. policy 'XX? on consumers dimension question, average XQ if talked first premium. previously Just that a trying size back XX% increase to the be did pulling of My How a trend may about in

it from We're that is talking an about across I'll what three Well, the agency average we standpoint. see agencies. per increasing premium address sale, the

So Family premium average the Income, of business. unit, agents is the our average National sales Liberty and also productivity driven in and the and at and American has that's in increased what's increase submitting Heritage -- premium percentage

the agent average quarter-over-quarter. the in counts flat you've agent As seen counts, were fairly

quarter, two we Heritage at second did that more sales As added than in other agencies. Family the agents help the

other particularly with fourth mentioned you're seeing National, the think worksite year-over-year sales Liberty the substantial is, the in a script increased that both in at I thing the quarter. I increase

the I think that average what agents of normal in market and you're that increase helping worksite terms to is return productivity premium market that's in also. the seeing a

follow-up my then And question.

for BBB the and You maybe targeted of generally sectors. But for the business portfolio changes credit whether BBBs? And some talk concern in and rating changing provided you'd opportunistically about trim some great on color potential portfolio. some maybe the Clearly, appreciate reunderwrite plans growth can world economic the about multiple is to cycle. you

that we These we In Well, the but the We reinvested the we did portfolio. in And higher-grade repositioning done could reinvested sold such sold didn't is bonds, portfolio. did a quarter, of sell slight of the worth bonds. AA BBB are and we we million reinvest about bonds proceeds credit have bonds concerns bonds. we what were in of of That's second $XXX have that. that some bonds, market bonds. we regarding, conditions these muni and X%

year were prior we with increased required the time, to And reduces also our able higher gain. yield. higher a because capital. we at We it some offset quality, same earnings And also tax at reinvested our the

of in years, we've will situations portfolio. all that, and way time, improve feel quality the it more how quality. But around. advantage the the we So where added a was the last bonds of with category. to win-win example we Through an about the the we, time municipal AA But that of the are three take is can good from this

BBB And the our that we earlier, ratio below in and good mentioned equities I percentage as on issues XX years. of feel also, for had while. the of we've is a as it's a As books about low as been investment-grade bonds

pandemic, companies their balance bolstered the During sheets.

will portfolio hold we quality going -- So like well. up forward, feel the our

ISI of our And Gallagher Evercore question. Thomas has next

First referenced, question XQ? of was have from And excess the period non-COVID versus is much $XX elevated XQ? of so, you that related how any XQ if $XX would that of prior catch-up million been to that million

that direct-to-consumer. it did really million and relate Yes, -- of was a from much a primarily about pretty $XX that to catch-up QX, was

at back we So to from be a $XX kind the million run perspective. adding in look normal if of a probably were should rate margin direct-to-consumer, we

think would be that I Yes, right.

Did the You mailings? did response attractive. of also in you referenced back that? change case, to that What was scale to respond was you some direct-to-consumer, up, less have that? costs, at Did just expenses the If the pricing how on making like shipping all? et you it cetera, gone

think that statement it's attractive. the agree with wouldn't I I less

at If prior to acquisition time sale, sale direct as that incurred to response of you agencies acquisition remember contrasted incurred expenses you the the were expense. the the the the

our tests we mailings, is we we based our on our on based think determine determine direct-to-consumer, insert As analytics, media about we which that do.

insert volume the to As and response premium of lower where rates, those issuing we -- see lower mailings, those offers, we in response lower when media. of then volume we we're the the we

really particular it's during have campaigns XX, XX, maintaining And on return realize XX we investment campaign. year, so that too for the And going that's on. adequate the

one each is measured independently. So

what the year see the we range our X% we see paid how are in continually what in direct-to-consumer, to will a And so to in of determine and to be. to Based we're we circulation analytics a reduction the are to on premium response what first going insert adjust full for XX% going that's our XXXX. in this expect have of X% volumes and decrease in date, received, the mailings are applications rates, response that we to what about

life to seeing the increasing the the higher in we investment, again campaigns the if those for a insurance not campaigns. increased response it's improves, demand we're the economy As see continue, in investment if really results and it's

one And final LDTI. on then me just a for

So it's kind of interesting.

operating meaningful initial think to sheet resulted GAAP You are. perspective. were least lot at given balance in from would had size earnings And the I positive less Globe I with having upon now rates But a when where looking of have value negative realize a rates lower, the it a date, that's to adjustment AOCI. a book back implementation the

as impact down transition the said $X.X only XX. all June the to you was $X billion think I billion way of

meaningful heard of initial on those impacts less this rating lot that in at I a book an every say capital is income book company this has agencies fact But to impact and at of rating statement adequacy any impact. kind the agencies I clearly resulted you two from think any a given positive Because initial sense GAAP But or other that's think on won't you just large think necessarily? but earlier, all. said, negative that, value? negative response have that not consequential? I could value be the So raising going eyebrows is Any the

it. correct me let Tom, So

XX/XX/'XX, date, balance the that about at of As transition in restating as would at equity time. reported that $X.X was our which be point sheet total billion we'd be the

at which, equity range significant the time that $X date. of we're the to in kind GAAP being that positive right again that is that will at would decline, take yield. anticipating say related still admittedly, adjustment of the It now average as that's That market point in us said, equity, being transition be point portfolio that relating around into a market we rates significantly of adjustments decline these negative. the midpoint to So significant to a won't billion a something below still reported of

portfolio So around that. our X.X%, yield average was it is around

up -- has time. of XX/XX/'XX so kind won't significant. -- as But we it period it X%, as to since significant and that and so -- around to probably drop thing. -- average said, from And improved closer a as the it's that it's so helps the But be time, moves kind curve curve the with that that of about current of to -- of type

time of that's evaluate agencies, driven, it reasons we rating anticipate one measure that rate to on really because and as and respect interest much don't the point at an not we being repay the a will With look that change over any our earnings from difficult there our is think in is it real to the AOCI or operations, time. just I company nature especially obligations ability to just so of just overall the issues our and our overall given at this cash -- of doesn't change and to debt generation flows, our the ability of flow strength perspective. generate cash statutory

well -- have discussions So able on all in input they're as continue what company, time we seeing as they're goes industry. that. but others but our and provide them, able with more from absorb we'll to as not on further be of to as And only to the

come Our of from final Ryan Krueger question will KBW.

that is annually, one I think on time, million to just I that GAAP in The would for -- had you over term? million follow-up $XXX be intermediate had something earnings expect have stable come. increase you will Because I to just more $XXX decline of -- relatively the over LDTI. mentioned it

just If more you could a there. give color little

amortization time stable. term we anticipate would us on in the our increase the business that new business existing on pay be to books -- will near as kind of it as just as require It to respect that do of and Yes. future increase deferrable well. we in periods some relatively We continue put will new the intermediate with renewal commissions, will over new as those business and to rules

-- be that while a make real but well. for some a impact will -- So that meaningful to take as of

mortality as increase factors, your flow view have an And of then on increased a of future more the free that Or cash generation? would would require you onetime to much impact that CX on capital?

required to it'd increase have part of a more Yes, to take we'll be account. capital the most into onetime that for

impact So that -- I going-forward impact from on some to a will business, of a growth some obviously see but the shouldn't I there in have basis. mean meaningful don't it year-to-year incremental be just

Majors, back over any further or are this turn conference Mr. the There to you at no additional questions we'll remarks. closing time. for

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

That thank for does conclude your today's you participation. conference. We do

now may disconnect. You