Globe Life (GL) 28 Oct 222022 Q3 Earnings call transcript

Hello and welcome to the Q3 2022 Globe Life Inc. Earnings Call. My name is Jess and I will be your coordinator for today’s event. [Operator Instructions] I will now hand over to your host, Mike Majors, to begin today’s call. Thank you.

you. Thank everyone. morning, Good

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

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

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

you, and morning Thank Mike everyone. good

Frank into results, will have third quarter Darden of get effective note been I appointed we as our serve X, to the the I and yesterday and Svoboda Board. XXXX. Gary Co-CEOs Matt to Before Co-Chairman that as January continue want separate announcement

and are very to rights hand the We to pleased Matt. Frank over

that You significant contributions year, of President their reflect in newly we to Senior leadership. Executive may title the to April and created recall them Vice appointed this of

company. as from ensuring our executive discussion positions transition. to all strategy was employees, per along As announcement for of of quarter, the and our look the ago. ago. announcement, the allows value a with next well policyholders, and the while reported income the deliberate serve or of net the bring to range return is third a that best creation, million chapter operating a best experience quarter that a including process to an Life Larry And third year our $XXX the outcome Globe succession growth a Net is this begin as the was our per $XXX structure year in that and and share this a us continues way $X.XX share, sets million agents, believe a per value Board, stakeholders, leadership in We XX% of thoughtful to shareholders. Matt long-planned of conclusion skill that, book by income compared on results. quarter board. the noted vast Frank Yesterday’s result I’d $XXX and XX.X% In like is with the or $XX.XX. share to million GAAP forward I, or share, On and per of $X.XX a $X.XX was for equity basis, increase undertaken

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

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

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

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

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

and Frank echo They to past serve several to and agency force, like appointments the develop Gary to transition. employees, Gary, weeks Frank of next Co-CEOs over as company’s Co-CEO shareholders. Life’s continues rapport I a and me look best strategy. Matt facilitate will owners, Matt execute years Frank would I Matt Gary. industry helped that with worked over Globe structure Globe you, closely ensure and have have help comments the forward to and the the closely working coming the with and Thank Life. of policyholders your a seamless and about the

agent count premiums up end X%. producing higher-than-expected was life count year in agent improved margin quarter life X% were down producing Looking at experience. X,XXX. and in was for quarter the the The net The ago X% XXXX, to million, the $XXX higher the down claims average $XXX margin Income third at The In the quarter attrition. million. over underwriting American was X,XXX, million, life was primarily quarter, second to from were XX% quarter of due average the third X% of and The the agent to at underwriting Life, decline resulted year quarter from up ago up the count third quarter. $XX sales

distribution down, am of sell conditions, of the we Regardless can years because because long the We the American Income of While time economic are and is regarding agency. count vastly underserved term experience growth sustainable American its Income coverage market with confident more really generate I have grow we products. XX will this agent potential customers agency that long-term need. than over growth over

improved net primarily ago It’s to The to growth from compared count. Net X% said X% stair step best and up million, year higher ago to The was and X,XXX, primarily agent X% X% health typically life we premiums the premium agency experience. producing to producing As the in million. $XX years quarter count year is quarter count year up and multiple sales The claims due were due over margin the underwriting ago ended over evaluate the at X,XXX. growth. $X increase sales agent agency X% National $XX before, increased were Liberty up National Life million, increased agent of a and to XX% is Liberty $XX from counts compare margin life quarter. up underwriting quarter up have the process. to third quarter, million, for agent average second quarter was the to to

million count of increased sales productivity. At increased quarter continued pleased We second health in million compared quarter seeing Family concentrate to from the are the Family agent The X% agent was XX% I X,XXX, from $XX and ago to Liberty count premiums of were $XX was count Heritage, and to to ago growth year indicated margin and to National. year at by will that Net The quarter. producing recruiting, both increased million. health previously X% underwriting the results the average up and agent up the the $XX producing X,XXX. due the we end the on quarter health Heritage third efforts. X% up for quarter X% those agent are

Heritage. We Life, and to direct-to-consumer premiums continue of encouraged $XX by X% life were to the underwriting Globe at the from year up be In from increased sales million, $XXX our margin trends quarter recruiting life due million, lower lower The claims division margin down experience. Family $XX and increase improved quarter initial to and to is premium. $XX life response year to due ago million. were sales XX% Net underwriting rates primarily ago for paid the the in million

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

have seeing. in record are I in As are sales mentioned previous the division impacted inflation this calls, by we

$XX premiums to as Net purchase to General marketing million, retain Our ago We year $XXX business. our we has typical health and direct-to-consumer At to the in paper increases of and Agency, customer specific or less than increased American income our discretionary provide income mailings are is ability impede customers insurance. investment and trends $XX million, satisfactory bracket based underwriting quarter to return had sales to our over margin lower up health reduce also generally achieve XX% compared a knowledge in projections quarter. a to on United million. seeing and our on costs increased our XX% the and postage agency now for campaigns. health XX% circulation year-ago We’ve were

expect XXXX, to X% flat. Supplement XXXX of XXXX, XXXX flat. comparable to decline high turn Income XX% projected the single-digit XXXX, year relatively for be of decrease for X% difficult full and ranges: an an now XXXX X%; XX% Heritage for X%; an year American United the for Income is into XXXX, sales to for of to increase. follows: X% full We individual National a in are Family producing guidance a for of sales XX% a XXXX, the of I XXXX, decline X% the early, count life of low direct-to-consumer decrease a for a full a agent following full to sales to an XXXX, end the XXXX, year a an to full to the It of year X%; projections full increase, of XX%; American the life a very XX% each the call Net to X% year a full incorporated X%; X%; agency strong for few as American relatively back decrease the Heritage, a for year our for National, and are increase tough year single-digit it the premiums increase high for of year the at the an growth. to activity year life full our health full had the the X% year XXXX. of Liberty National: Life, to single-digit predict Net for year year follows: X% due Medicare XX%. sales are of Gary. of XX%; the included to the is for to total as XXXX, to increase Family single-digit increase year in full growth. in the Net Life our will in this full for Liberty next growth guidance the of in increase sales the years. are decrease XXXX, XXXX, year for full we’ve Liberty increase of high for last full XX%; included

Thanks, Larry.

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

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

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

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

the from quarter. the from basis X up third the X.XX%, down second of fixed X point ago, For portfolio, basis quarter year the but entire yield was maturity points a end

billion, September are rating $XX.X rated $XX.X year grade were an as maturities, the total yield same A- the As Overall, cost. of billion is fixed an portfolio fixed of $XX.X ago. XX, of portfolio billion average was Invested assets a at Of amortized A-. the X.XX%. investment maturities with including

due rates billion portfolio $X.X has treasury net spreads. loss higher the Our position a investment to approximately and unrealized of

We are is unrealized with rate position loss driven. not interest it primarily as concerned the

year-ago the portfolio the maturity fixed to have more maturity. and compared are to rated ability intent We the of quarter. XX% investments XX% our to BBB hold from the importantly, Bonds

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

to Below are returns, the due ability in maturity BBB exposure we million bonds capital-adjusted believe compared as interest we markets. residential investment and to We acquire little that investment Below other are CLOs, have a million assets derivatives, provide $XXX the rates bonds below years. of hold This grade ago. $XXX equity portfolio. asset-backed risk-adjusted, with or part to However, to Overall, maturities in securities no X mortgages, regardless higher-risk are BBB to securities. our the of grade equities, grade large or long as fixed our securities best percentage such that maturities, bonds of this ratio we X%. in quality to the bonds has it ratio XX is been for XX% investment as fixed been year plus more has comfortable years. The rated the lowest of is than fluctuations

an approximately sold primarily During survive the yielding we an would be characteristics of In and be XXXX, some limited yield an at impact in $XXX invest the we to of the We Ukraine year multinational we of criterion well-positioned full approximately have long, X.X%. expect A+. no to higher our we countries. our guidance, executed issuer average rating for around At average process scenario. approximately multiple proceeds market such the we have and our $XXX quarters, in in in investments the mention must or at in maturities of repositioning do maturity have X.XX% any of purchase X.XX% to with higher-yielding an an on guidance, average the maturities utilized in quality. investment also that not believe XXXX. and cycles. to in yield reinvested fixed billion the XXXX, we these maturity midpoint not to two securities BBB companies have that with in opportunistic for minor but direct to expect $X.X Because rating we of X.X% improve a with material average last fixed withstand fixed XXXX investments full at million million partnership and midpoint the also portfolio is of fixed in the exposure key are yield the and invest debt-like a securities Russia portfolio only to our that I investments expect ability to downturn, Also and yield of year

basis the points, time as and yield is we increase seen since increase is first noteworthy encouraging be have While the will portfolio expected this XXXX. the X just it

we no are investment sensitive. impact rates as impact net policy they are positive As to interest our we has before, benefits this income not income on operating pleased higher said driving have see interest since a future on up with by

the words. invite financials, Now review few to want say to Matt Frank to before turning to a we

comments. Larry the and for Gary, Thank you, kind

Co-CEOs the As driving the on and long-term. marketplace an Chief Strategy teams for chosen the I Life will creation well-rounded the for of Life. our a a Globe of to believe humbled and help of appreciation success am bring along the have Officer, deep next I understanding we approach and our operations one of Frank. value that as Globe objectives I with strong deliver be

While model sharing believer to our the more I progress to successful am we in look am and our a excited firm change will I year. Globe’s unique modernize business as continue of continue strategy. adapt operations, to throughout we and I Frank? to forward execution next

financial in deeply Yes. Thanks, Matt. and collective I in of strategies, business am will value history and excited to work Life’s with have Matt am to as of many continue Globe Globe I we involved together Co-CEO both I transition engage look and forward as that even growth. to shareholders’ to our help the continued succeed ground the and creation. knowledge capitalize the on business years, success through confident hitting It opportunity operational, provides future. we the for functions and our model. served us share more and its view on and the Life’s opportunities the the getting Matt’s over has running very I more in business believe the that period the it beyond. well firmly best company I

Globe of Life the Now program, looking stock the In Inc. XXX,XXX $XX available quarter, total few at spend price liquidity our $XX.XX. position. let shares company at capital discussing an average at the and repurchased a quarter, me of repurchase third share minutes of common share cost a million

The third purchase liquid at of $XX.XX. through of cash X.X quarter the ended of redemption million, quarter. For prior from The the due assets average the XX, primarily September is an $XXX parent of decrease in to million full with we million approximately of the notes. September million $XXX principal in amount the outstanding utilized $XXX senior down shares million have our year to price $XXX approximately X.X%

year, in agency into parent be and of of to resulted thus sales, the account cash the to of cash year. distributing in will company’s anticipate year $XX debt. quarter cash operations in XXXX. The lower XXXX. the lower its excess $XX amount approximately is addition the which received lower exclusive dividend $XX the fourth approximately in parent available The to full generated of excess have the excess of from remaining than capital liquid we results shareholders in paid will the XXXX, the remainder form from flows million out the $XXX cash repurchase which support flows, of primarily in dividends targeted interest fourth subsidiaries be plus parent higher of company’s shareholders, the amount is to parent share the during We plus as the both our the payment less received million due $XXX to assets quarter, million liquid the of within nearly our the of our generated growth we and primarily million generate remainder approximately which assets flow these of program cash parent by on million, excess again, In the for assets, we the life at to flows quarter, the of XX% to be the sufficient of payments. before in for define dividends the the XXXX. million to will company approximately is the third end statutory income for flow, of XXXX, of parent remainder $XXX which insurance the the additional anticipate in $XXX This XXXX, maintain Taking in will excess to expected losses cash it, COVID flow million

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

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

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

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

new longevity XXXX, adopting is also and as CX factors. mortality RBC risks, to NAIC During known the related factors

impact our contingent for reserve that our levels. subsidiaries, our annuities million to levels factors of held by products capital life the action X% very level We or risk primarily will provide our and company insurance longevity for capital. $XX the apply increase capital the life products already strong conservative approximately believe required our factors required statutory to While will on have higher mortality will relate little about

any to adequacy gains simply the from company does be our be low Given levels. will sufficient targeted that these liquid we additional product required while RBC anticipate capital capital ratio, maintain stronger to at maintain assets time, end should of the RBC our additional operations ratios. even will strong this statutory consistent parent result portfolio, required At targeted in our do target have the available factors from our new not of capital generation

third of few to provide deaths to results. COVID quarter comments CDC. of to company quarter the a obligations approximately COVID third Now XX,XXX related impact In policy related U.S. incurred by I’d approximately life quarter, the occurring million on the the claims $X.X excess in the as like reported

our in COVID were COVID have clients favorable incurred fully we available, by these quarters. life $X.X However, average prior claims approximately the U.S. of estimated payment deaths per on was last down in true-up offset additional million consistent now data estimate the cost from XX,XXX Based incurred average the we in claims that on previously through CDC in XXX,XXX approximately older COVID deaths call, in in million the with $XX quarter third $X.X incurred and cost our XX, million million, shift an COVID per similar or have Year-to-date This toward our cost U.S. XXXX life the average we XX,XXX XXXX. reported lower ages than U.S. is quarters. average deaths. September life recent average deaths cost the $X claims as approximately by in on of much of to COVID claims

As number revisions the downward of a quarters any overall the not both average by were individual reported significant third quarter XX,XXX distributions. at our cost the deaths, for per or U.S. reported of in claims deaths net in U.S. the life CDC the result of COVID and prior

stated and level to pre-pandemic lung part believe circulatory causes, the have issues, mortality calls, to on including due non-COVID deaths to of incur due disorders, is disorders. expected higher we those deaths We based as in compared excess heart the levels and large on As continue from seen also we to neurological prior pandemic.

of deaths In moderated, the deaths number quarter, that so number from in we other non-COVID from $XX policy has the $XX COVID were approximately million, As excess million obligations third has our down second the estimate the life quarter. of causes.

ended range consistent last guidance are or X% per channel. these will earnings With midpoint our of in our provided life million guidance quarter. income For December excess for to $X.XX obligations XX, to all be XXXX. be total to premium. approximately the respect around $X of operating Substantially, the net direct-to-consumer higher obligations year, The year anticipate with full the we relate our is XXXX, life policy will that we $XX the projecting for the share of $X.XX

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

estimate While total causes from estimated last death COVID are consistent we clients our excess than of all remained of quarter. our losses anticipated, has lower previously largely with

For adoption the year ending the LDTI that we of new December anticipate substantially impact will XXXX the excluding our XX, of our be mortality reduced from the XXXX, excess that standard, guidance levels.

will XX% of at on life new rates range, of favorable to be before premium. While LDTI XX% by still any XX% margin at very be in early and from operating Driven by in COVID, anticipated of we premium, our to quarter XXXX grow could views, interest of Gary, levels growth This includes of excess to midpoint XX% life $X income an we $X.XX and in guidance, life obligations midpoint to the accounting impact accounting, will under of underwriting mortality be the growth the of X% exist expected excess approximately we to endemic reduced net the in claims of Due the fourth representing which currently and total in relating investment of state around margins, XXXX, to activity $XX range the through estimated anticipate in the impact impact excess anticipate our we guidance, the estimate underwriting estimate range. an in down our influence higher XXXX. life noted XXXX. approximately the the million will our XX% X.X% earnings again, current

will DAC. expect adopt relating contracts. X, costs, earnings existing what be Under in than As noted the January accounting to lower few reported will increase on do calls, in The of be to and of treatment changes of renewal percent of as adoption. standard, the deferred Due commissions renewal will first the to or guidance. assumptions, our on treatment acquisition long-duration the the certain after methods amortization the on driver than DAC, the that under slightly commissions, years would interest higher guidance updating channel, guidance under new treatment acquisition is XXXX due of new increase captive the prior current we we amortizing a premium we largest DAC in XXXX, LDTI GAAP balances, of the costs our of of agency expect deferred in

guidance DAC, guidance, policy and addition obligations estimate policy in affecting changes after $XXX of XXXX new is those This range XXXX percent the of income the in to changes expected a life In the in required LDTI $XXX to currently changes amortization. net higher would reported tax new relates years. result Under new assumptions are XXXX in policyholder XXXX the required in be benefits be guidance as the which the which of increase will restated almost the in million, the all DAC premium reflect determined. the to otherwise for amortization than we to manner significantly COVID are under that of claims what slightly the lower to to of years well from than to due of operating guidance fluctuations will and new adoption experience million other lower expected benefits claims amount be expected changes the current the life and Overall, in guidance be in treatment current under the those as guidance. to as of

Of yet impact fourth results. could experience, claims events is and this assumptions XXXX actual of and the impact year sales, quarter our course, not in complete other and XXXX projected

a of amortization of forward, and a income the in new adopts and as changes With instrument in of obligations discount benefits in third component time, new the with rate to AOCI, $X.X medium in assumptions billion tenor transition future yield last that for grade, AOCI, XX, being instrument The future $X.X insurance will Going The after-tax the yields the AOCI the experience in estimate would expected at DAC are the of billion to guidance balance of currency medium quarter, our impact requirement increased upper of utilizing result billion. X, January shareholders’ that weighted percent sheet impact end change A-rated the of else fluctuations all but on fixed average a discount changes income the equity. AOCI both as using single approximately be each guidance remeasure and fixed upper billion. fixed reflective quarter Since decrease premium. respect of policy effect after-tax XXXX, equal, the consists date income XXXX, policy company’s be new changes will $X September to the recognized the that with we in in liability that instruments an rate cash only to flows. generally of noted adoption and current of grade the the be of of reflects we discount and $X.X to rates the that has quarter,

the cause no flows. accounting the us impact timing for the very we excess While to changes on in will it statutory pay. amount claims GAAP the that that purchases, or premium impact statutory none keep cash be Nor changes will maintain will earnings, of Furthermore, has offer. it are premiums the recognized be our to profits mind and the our of important is significant, the collect, we changes will ultimately required of regulatory the nor when future of any impact parent’s changes amount in capital products it we we make to the rates,

in we think As such, no about way our modify business. the or will manage accounting change the way

for thank back Torchmark and once of their Life. to to turn Gary want the call and many Larry, years to I Globe service Larry I Before again

with participated I these of calls would been of February be earnings job. pleasure they since have didn’t them, a impressive. out in has remarkable number XXXX, I a Gary quarters. of been a straight years, earnings for of both and of working a It that them part done I point remiss if XXX both While think has every have Truly call of string

Those Frank. you, Thank are our comments.

now questions. will We Question-and-Answer the call open Session for

[Operator the JPMorgan. line ahead. of Instructions] The Please question Jimmy first comes go Bhullar from from

get Frank, Larry, with guess appropriate. say, retirement, into going and not I morning. but Hi, before it’s happy been that’s my Matt was good I And to just good And questions, Gary you and well. say guys. working wanted luck, to nice I as I

the recruiting labor at the And grow assume just environment to should the labor remain Income market on going actually near-term tight? does to and count first agent we if down, American that with was market. be it’s agent saw question the sort retention we your a had I the but count of in challenging So tight

think management Jimmy, Income and from this we but I expected. with growth than actually restructuring tight X% higher American year, recruiting the prior strong had retention. compensation the had with don’t We agent market. labor a it’s addressed bonuses terminations in to address recruits middle quarter over

other that the they have two had think this agency here year. agencies, the look if I the in factor at other growth you is

and to field. growth be other Heritage X% we middle It X% two The had drivers Income. year, by in that a the but management conditions open will or management middle for the real to management, develops the American the have recruiting, sales was projected really for flat provide increase technology labor to market is X%; really once new at better in Family recruiting. not of in agencies management. National, offices, economic But the affects middle support It’s we Liberty company middle X%

response, on your you sales And then what’s about can is? talk driving what weakness and direct there? And the outlook

weakness been the see really inflation. there I has

levels and past, circulation, are the talked sales the As mailings the about Internet on we’ve traffic. our in dependent our there

XX%, our down affect cost inflation paper the XX%, for to lower costs of inflation. and a for are of about that If X% And as that expectation on We’ve to, return in I XXXX. producing insert to decreased have the and mailing X% you that X%, higher segments result decreased business. XX% and would also a as in investment increases think don’t the is I X% cost referred interest the postage look those in expect items insert see increase this for stabilize sales to an rates, would increase and or up lessens, is XXXX. really I circulation stabilize, recession, because of the flat above we inquiries with volumes year, of you are This had the media hopefully, or

be a in Okay. that How benefit headwind earnings benefit about when becomes the LDTI, in amortization if of mentioned expense than next there frame, amortization your would shorter or if in versus normal you like Frank, the a goes, you like obviously, amortization new And under there more the that it you – X higher. like to years could just lastly, because for like sense next that accounting we that of expense the or Is is should on on XX think the near-term. longer that?

worse the on Yes, the an commissions renewal that year the capitalized, and X.X% a start But percent treatment thinking will and getting you that somewhere business a of to point amortization that strain. on few and capitalize what are because of percentage the we we or if renewal in be that and to to probably going putting know years getting strain, of that start start lower actually will then don’t there commissions, it’s new have will, a Jimmy, new that first will as increase into start becomes initial some you right be to at as if commissions I’m we we business about it point as stabilize. sure to I has if start the the not now get putting maybe that it current be where, point having than we a when for premium, exactly as guidance. DAC actually

with headwind. But look it even never a I of right, should some future in-force like the tailwind years should becomes off, we as – the into and runs a growth, it if abate, minimum at think

haven’t logical, will at At we occur some quite if point, if point that not in it even really see – occur, will – it if seems that’s gotten where far this along exactly or that yes. enough time, in sure to just

that further ‘XX If at take on as a on kind and you give able our be we more along bit look of longer, a look we can this bit we that. at to guidance finalize get that, to really a some little and look should start

thanks. Okay,

ahead. of question James. from the Next Please line go Raymond Burdis Wilma from comes

the Co-CEO behind the rationale you keeping Hi, could provide first some my this Larry question retiring? is Congratulations is, Actually, Co-CEOs. Wilma. to structure with and Gary

you Do that? to want answer

able able has from under seems be well, they well really believe, then in and up logical Globe and Matt that. team management to that forward. for at structure the Life Globe very demonstrate. on executive arrangement really really can that an The been And put going has to teamwork worked set I structure the order have for us here we it Yes, continuity and existing to Larry Gary together that to maintain touch them. been And maintain that out

really but about willingness our ability Matt So to together, thought talked I that structure and the that really with in that to organization to and something it’s interest it is work best really the continue make of work.

that’s in execute focused to the Yes. to strategy with this continues management that. minimal to fit, on and existing and Frank, I structure best in see disruption support to we’re way we that, it our was structure place, going say, the seems continuing

great. sounds That

question The other share about repurchases.

So the position it going capital of to especially need CX seems in the to like high, year be pretty at charges. the the capital for subs end no with is put the

repurchases XQ. million of So the is current think – I share in $XX implies about that guidance

number? higher should a So expect we

Yes.

in our are guidance $XX at right the anticipating We midpoint range. now million that million, at of $XX

one financial statutory our haven’t few moving charges a at a statements. CX quarter of there completed take we will Also, are the parts, yet being We where third them. look –

end does that rely year. a If of that amount of before the of what turn the end actual end we in anticipate coming capital additional – better will and out get year, the I year, we potential of statutory So of will could come be as the of some out capital sense the our income to on those it if of out not, of kind need don’t at we’d any anticipated XXXX. the would

you. thank Okay,

ahead. go of Barnidge from from question line John the Next comes Piper Sandler. Please

an as the it we’re going and the and and activity than ‘XX inflationary you. mention, ‘XX increase just second for experience. ‘XX activity, to continue higher I My product? was probably lapse first again Thank question, example, the Maybe maybe in Can you and sale. recent sold well. know product or sold to Thank after you and much, as congrats ‘XX years is very back lapse on pre-COVID is first products

say in we having some economy, look back when a a the we what of some what the they lapses either rates XXXX, we XXXX, they a is of we guess what at as me, normal will then, assume This that lapse lapse lapses we’re But certainly to to into think period. that had experienced COVID is our look XXXX, that the Excuse those bit back would the spike the long. the period, think know reason Once rates, point our isn’t – it midpoint year that a of are last we it historical too didn’t that’s spike call with we levels you back coverage. history, unusual. we back think They compare point. for XXXX, the much think when levels. what move less, lapses. ‘XX years is this compared was for and one saying was bit impact we get we I we back we years for when we the lapse at a primarily ‘XX, factor. lapsation. that X as best well. in are call that of know rates very, very or a ‘XX the are higher if at we past ‘XX we’re don’t slightly That’s that We as will in think policy through favorable X. ‘XX. course X We little if over past But get in to down quite at there, But near to guidance inflation will seeing that higher sure. that historical down also, had what policies don’t need think bought We may it is that, people but and We higher

the And Can’t wide. we around notice, question. color. it’s was initially XXXX narrowing thinking understanding us in are or guidance, A that, initially wanting to wide. maybe within guidance? help being year And should as with towards LDTI you my an just then of have the the that, parallel endemic? $X.XX fantastic then How but to follow-up That’s Thank model ago, guide, relates $X.XX maybe you. be about this it pandemic light the it

respect last time a point were we it the bring Yes. year. did in from we where bit to With range, in kind of at this little

after be of There range in of the we’ve had still kind pop With such the really a there comfortable don’t it is left time, net feel really million of $XXX more will, some the of again, and around better respect the of wanted lot impact in I more potentially get the what kind of a moving income impacts parts, middle, will, broadening in feel but as with of to uncertainty of of we more we tax, need in range sense could and that than kind kind some all state to to fluctuation, up. you that we a $XXX wider, range. Still for and on the new that past, million of see endemic some what impact that certainty to years bit this intended estimate little is if ‘XX. some recognizing may being mean. to LDTI, being We You little the the have. anticipate if some and point pre-COVID, around our in to variants still really COVID COVID at the that you that

we will so provided that of overall within fit we have I range from old be that that impact And variability, under think guidance. will LDTI, if the that – you the will, that really the

Thank you.

from Next Research. Erik question ahead. Please of Bass comes from the line Autonomous go

I you. what are for free what next talk assuming repurchases cash was share could year? and Thank you Hi. guidance hoping about flow for XXXX your you assumes

or than still higher this being – them our at excess anticipate next we year. cash were a with the bit midpoint We anyway our being guidance year. little do Yes. with where early flows share for repurchases up respect It’s our bit little to coming bit a of little a

If noted $XX about shareholder XXXX. in you cash dividends. had as million we around excess dividends before recall of have overall shareholder of that, had here $XXX million We our I earlier, flows

probably earnings where XXXX. the were in So, after north will a available little buybacks essentially of our end statutory We be the we that, is in like million, year. XXXX buyback anticipate this at having it for that’s $XXX day, of and was bit do share higher

it. get Got normalize to sales of basis the mean should a you. should years? sort guess of to get where we cadence it more back normal of kind and claims I free couple flow growth of think of as cash lagged kind your I over – of next your on And kind been COVID that Thank a had previously

Yes.

would be We think to to one got this anticipated normalization, lower expect I of anticipate, if year would than say. you of will, here clearly, the COVID that’s fair it next year we as appear, have claims, would more we we year. what and

excess So, I flow more that do cash that anticipate at normalizing in point time.

Got it. income. the one if investment on investment then excess or Thank ask just you. could I And

to year. think next XX% XX% are I guiding to you growth

driving pieces to bit the just on color a that. little more So, of get hoping

and I we think change the you moving just maybe interest any of up about? should but other X points in think little about pieces basis bit yield a expense, being talked portfolio

also the we the about income. we yields thinking investment will X%. on maturities, but Erik, when years had investments we increase, have that’s increase that And long-term higher yields have. past the of of side, Well, a investment in a the couple X% X% of the in first all, higher are X% And be because it is that fixed on to around on up income

it So, will factor. But and year, on the that’s between required definitely this X%. interest, a X% be also

interest year carry that be X% next bit expense, this on range. had. And the we the lower, I thinking higher year of expense interest a is negative as will that because say, are little also the We

normal go more will in expense. a to back increase We interest

you So, up, required what’s in – on XX% to lower you the to XX% come investment in and increases and that income add interest the interest increase where debt when the all increase. higher is that’s up

Perfect. Thank you.

the ahead. from from comes Please The Krueger of Ryan KBW. question next go line

XXXX? for us growth give underwriting on XXXX questions Thanks. a Can given don’t items morning you the congrats plan. you just few that and I margin health I in in had health had yet. everyone Hi. think guidance premiums and on Good succession the expected

kind anticipate the to we me, decrease it X% favorable last experience underwriting part quite in next X%, normalizing Heritage little flat this underwriting as back probably really premiums not to we health just Heritage then We range. excuse margin some that high the on coming health from margin increase and an that up a underwriting here X% on lower of of We margin anticipate up a probably to a Ryan, as year Family just be large Yes. to the bit. health years. of side, that be couple did in be life, Family have experienced year just in see little little underwriting the or the to especially bit. expect premium – And X%

growing margin as premium. So, quite we don’t underwriting much as see the the

then it. are grow what expecting admin And expenses to Got in XXXX? you

of Right now, X.X% only growth, if to around X% expenses the with around will, that or – we of you for interest are and admin grow the premium, anticipating being low kind X.X% higher low impact reason rate. the

is was decrease in it XXXX where expected from Our pension to also this expense year.

a And so without increase have been little that that, bit would higher.

Thanks. it. just And last then one. one Got

even obligations. above to margin, excess guess I XX% And little includes fully underwriting point that policy they I that like from a normalized. XX% basis bit the if XX% you something to think On or suggest life were drag would XX%. more to XXX that guided

was or points basis points XXX than basis a XXX think it couple I of that’s pre-pandemic. higher

margin curious life in up what’s just had expectations on you driven if the business? your So, commentary any of normalized kind

Yes. it that, under sales I that obligations if was we say we the premium and kind XX%, have I amortization the X% in at of of had pre-pandemic is persistency – around mean of difference that’s growth that and lower the of you really overall percentage ‘XX to that ‘XX, level. kind what kind will, all favorable mean didn’t I excess under of that have about as because of with I if generally, midpoint we is the it – think higher growth premium right. would had the points a premium and our the than

right the before takes of of that, kind kind as excess of XX%. around the XX%, of were obligations the we points of then at kind us – from to pandemic, that midpoint So,

Got it. Thanks lot. a

question Next comes of go Credit from the Please Suisse. from line ahead. Kligerman Andrew

last I morning. morning. the good Good many Hey. reach

and excellence First, have under we big that continued and congrats leadership. and Larry’s to Frank, Matt the seen expecting am I Gary’s

‘XX. to and the non-COVID-XX at what a of to quarter if to the of $X another mortality. about thinking So, off. was maybe And in the to $XX jumping year think – million But excess ago. for in going a on the might the because me have fourth guidance I first of the And million about Ryan into be based clarify me moment think the on it I questions, only to million. get quarter, it XXXX this am And mortality. I I are up I lot, get year, non-COVID if not then third when appears then bumped excess It was half you expect look following the $XX for asking $XX million. that’s rather, let just the $XX then we that, we million year

$XX if You COVID, that talked And just million of next mere all non-COVID of year. for would of imply then the X.X%. a that is about $XX million

like impact you sounds through that subside we next it work kind indirect So, to expecting are COVID as this of year. from really

number? ‘XX lot in. really will really expect get through? on do you And to a pack ‘XX it as dissipate you. we I So, – Am right Thank

are your Andrew, good. numbers really

had $XX in the We exactly right that. are million. You

pointed the around what in Really excess $XX somewhere just And and anticipate that of now case, COVID $XX then in $X kind $XX to for million. the that year, expectation We for piece. of right range, state. million large kind to full anticipating we are that an million do in of kind is endemic non-COVID on anticipate, it XXXX is million that

XXX,XXX We to maybe or of have pointing XXXX. deaths that kind Xx so in rate flu pointed kind the of

look that so the our trends quarters. losses as million QX, at the if that kind I $XX about both out some will to it, the of $X of also impact losses in has prior And in of COVID non-COVID down. we of note of well related million the minds that the tampering that as

the it really kind the as year we we that are trend half are kind of good half quarters, of So, anticipated. into coming putting of the into from first if of the we down really correct second seeing the year

anticipating. to anyway, right good with consistent now that we it’s So, were see it’s what

in the little – great a step talking hear. of talk backward. producer American about the specifics get you we color as terms I don’t bit count? a And to drop-off That’s And that incentives might of and Larry around about stair-step, provide to maybe you in could was try it. of it on can think there rectify count could it just any you I different kind influence like so quarter maybe a just if share felt know so retention. sense how just was incentives of the Is Income. with producer But this those you

of strong of are were that point than want little to number Again, bit terminations out, Actually higher there recruits. surprise, expected. quarter-over-quarter. in a increase I a a currently X% is The

with the goes growth. had hand-in-hand I middle fact think we that that haven’t management

greater What compensation you is those train encouraging recruits the and training more middle behavior. those better do to And of encourage you kind there what’s recruits. those better and new change agents. your activity to you when with affect but compensation, activity, you so are is how sell, increasing are to a not incentives, just is And new training, shifting managers

As because levels there make have more money agents. better more higher activity, is they greater you retain and sales training, they

And so color the again, this. is

sales. you the look Income. American they to slow first pretty let’s at – had Heritage In quarter, compare If Family

and XX% middle Income, was to X% again, there shifted on tough and recruiting a force they ‘XX because have But American increase the XX% this in an emphasis compensation of year in bit had in managers the little As a middle some agency of has developing quarter. increase their managers. a for a with They ‘XX. comparable there, sales X% they

every developing I the kind focus and leveling but record will confidence expect of that growth stair-step, be And middle on some leadership, more with the come have So, increase, as of they Income develop American managers, you have will have a you again, the to grow, management. recruiting. when one will middle developing

the type takeaway? a some little is more there that a It’s of for compensation So, Is training. higher. doing

And three to but they just agents three agents. is – know to issue, middle they not It’s average, data, managers a also a manager four average they the producing are Those these are premium. it needs the It’s monthly as to presentations many week, a what’s focused study training. be is their issue. agents, that the it make middle really how trained, in addressed. to what issue, it what’s closing data is on an do with four Is encouraged review activity training

are changes all really And And so agent-by-agent. factors. those it

Income. So, when or Remember, their Income, we in is there XX say been their flat agent little recruiting within growth. has it American a offices American

locations had an the They had have outstanding year. good of have Some growth.

the the Income, not to with provide work what’s them And what’s the success leadership data so so agents. the have the again, we in managers, to sales success managers, with is with done middle respect that of then American that they well. the will those them are And identifying offices of

they we that we of as is constant our the just long-term activity training as comes models, our forward. out so inspect adjust And and process systems, a go That growth.

see. I

So, just clear, Larry. so I am

So, give it’s somebody,” here are retain you saying going you money not the saying, it’s to we “Hey, more is if data.

analytics effective. Here be you can that… Is is are and more here the how

it’s more and better not gets agent have for for activity. more more an to behavior. paying agent, money we paying as sales. more Agent success. It’s It’s is don’t result much bonus of activity like money, the money correct the So, more paying a the give

same principle. much is the this So,

just are behavior. You affecting

agency. training a on the versus the focus shift over compensation, be There factors might within you of lot the As recruiting. are time just

leadership the office So, we to compensation constantly, as that modify well are as they are looking the behavior. the agency behaviors the what owners to encourage at home need shift and

customer much and it. other Perfect. maybe just be and I you numbers you up would on. curious some quite postage costs gone inflation going to – direct-to-consumer then throw-away just kind a percentage might cost. there And there. affecting mean the able am the I Okay. higher Got has year-over-year online question. up? have that How on dramatically, that quick curious And be paper are acquisition if of on have a pass you I

you and the my guidance the head, top the I Well, on don’t increase cost. reflected was insert postage percentage coming tell mail I of can’t costs But when analytics. of the what we the media have what down saw paper volume, volume was we of the see I gave to in terms are

result the a the As we costs, at XX% we do test example, as as look mailings of different and a of the look analytics. those at we campaigns, decrease, see we

you both rates And is, the null the the really, in the the of response of at So, what at issue response expected that look the the I that reflects postage increase rate. rate cost within what’s investment expected is if guess what effect. cost out and and is look that you campaign, paper. that, from

meeting the expectations in reduce those If those test, you you then are mailings. not

going that your to going you affects to – end It’s postage of are campaigns will at the in of volumes of the response. of be the analytics cost X%, all the too, because way look in function spending are of that is direct money at It’s a the more acquiring not you determine it’s X%. there, increase something sales business. to reduce I of profitability of probably level be. costs a just point the want to really will if your sales, not what to and an what an sales make process So, increase issue the

money, And going rates, additional with to spend and if doesn’t response necessarily you response it’s spending. not rate so more up the go indicate higher

I differently you direct agency. response, when about again, about So, think think that than

the front the on back and Your process. the of not end cost acquisition sales end is

So, using that we constantly on analytics we are have that return testing an and to sure make adequate investment.

Thanks a lot.

ahead. from of Next from go the Gallagher question comes Please line Evercore. Tom

Good morning.

Sorry, good afternoon.

lung. by few these beginning, And referenced you I is, COVID do claims? questions a just in follow-up you reason suspect care all was Because on Just peers you was on mainly I that non-COVID really think, excess, assumed heart this non-COVID deferral, long the this and are if but it heard the deferral, ask I the excess like is by doesn’t curious but of view the being have just your driven care a were sound most that?

Yes. point exactly We anything have it be. to don’t really what might to

fair probably portion it’s think I be that COVID. might long of it some

that, whether is may death certificate if when the count what the a If road, death, the in death from if then being claim real having was now it is – in about, classified. a bit And has are certain we – is data impact even as further that. still arise that you our we possibility something – of get from delayed when comes that’s do care, Where a to as upon of the of it’s the think cause, think the based there on cause COVID getting some been probably some was situations though COVID how, notes COVID are true just down that standpoint at about there perhaps be a there thinking little a more well. there differently least and some it’s But we think you probably there impact first if the there deferred there care, like going that place, complications heart just where it’s probably they ailment less or say is death. getting quoted I you

million bit anomalous, are higher you guess that the assumption, that to do expect excess there decline that it’s was in is is you would guess little you So, that, bit non-COVID Xx non-COVID, to but line a ratio, proportion? punch then – which the this the And were, in not if correctly, so it’s assuming than the and assuming that to, guess excess you COVID you? a higher I closer about just claims, claims $XX what million assuming this Andrew’s $XX was question, I heard Xx to response Okay. I to excess non-COVID just million of were year, I than next quarter. that are of for you relatedly, $XX COVID And

Yes.

of I we COVID. that’s And of I about at million we mean are $XX to the COVID. as XXXX, look are million versus think million compared $XX then full that $XX so right. at around looking non-COVID you year or sitting million $XX when in

relationship come So, minds, together. independent calculations, ratio they In really that mean narrowing, but are that our I I guess. is has

is you non-COVID just direct excess I true, mentioned Okay. of you there, can there normalize better lot maybe question, getting think the I would which is to then consumer. previously I If north I final be those adjustments and other XX% that, for And most margins that’s in had of claims to came But to. speak XX%, that that? than you a think spoken

Yes.

there really was for around I total or about the non-COVID, all XXXX, of think QX there was so, an the at for looking impact response, non-COVID for in X% still in the direct the third X%. quarter,

So, while the through XX%, have – that’s that’s we third non-COVID would the in little bit have quarter, we XX%. a ex at again, amortization there coming been as But would there is probably well. been favorable

impact as X% that kind somewhere going obligations higher in around of would they a XXXX, think their think in and range. have I probably that are XX% to we be forward, particular DTC, to look channel, anticipate of kind of about thinking that that we XX% excess we margins

what what of some in that be – excess to just there of without they XX% XX%, let’s in to obligations. to say the would XX% somewhere somewhere probably that points it is kind – So,

Got it.

that benefit the well, getting, on outsized So, say, that’s in segment. an lower amortization

at XX%. still having pre-COVID amortization looking XX%, and another or in that actually back XX% before Yes. Look, are it’s where so you – where percentage they range, pre-COVID of in mid-XX% back that we between if XX% percentage impact between times, couple years, was percentage probably or amortization from a because points there yes, in were look overall an their the segment, in percent

Thank you. Okay. That’s helpful.

the There are queue. no further in questions

closing call of I End host hand So, the back some to remarks. your Q&A for will

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

Thank today’s you call. attending for

may lines. disconnect You now your