GLOBE LIFE INC

Note 1—Significant Accounting Policies

Business:(Globe Life), (the Company), refers to Globe Life Inc., an insurance holding company incorporated in Delaware in 1979, and Globe Life Inc. subsidiaries and affiliates. Globe Life Inc.'s direct or indirect primary subsidiaries are Globe Life And Accident Insurance Company, American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life Insurance Company of America, and United American Insurance Company. The underwriting companies are owned by their ultimate corporate parent, Globe Life Inc. (Parent Company).

Globe Life provides a variety of life and supplemental health insurance products and annuities to a broad base of customers. The Company is organized into four reportable segments: life insurance, supplemental health insurance, annuities, and investments.

Globe Life markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Globe Life's insurance segments. Our distribution channels consist of the following exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National) and Family Heritage Division (Family Heritage); an independent agency, United American Division (United American); and our Direct to Consumer Division (DTC).

Basis of Presentation: The accompanying condensed consolidated financial statements of Globe Life have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual financial statements. However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at March 31, 2024, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended March 31, 2024 and 2023. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Form 10-Kfiled with the Securities Exchange Commission (SEC) on February 28, 2024.

Use of Estimates: The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. See further documentation in the significant accounting policies or the accompanying notes.

Note 2—New Accounting Standards

Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income

Components of Accumulated Other Comprehensive Income: An analysis of the change in balance by component of Accumulated Other Comprehensive Income is as follows for the three month periods ended March 31, 2024 and 2023:

Reclassification Adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three month periods ended March 31, 2024 and 2023.

Note 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at March 31, 2024 and December 31, 2023, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows. Redeemable preferred stock is included within "Corporates, by sector."

(1)Amount reported in the balance sheet.

(2)At fair value.

(1)Amount reported in the balance sheet.

(2)At fair value.

The Company has exposure to real estate investment trusts with an average rating of BBB+, which had a fair value of $415 million (2% of the total fixed maturity portfolio) and $425 million (2% of the total fixed maturity portfolio) at March 31, 2024 and December 31, 2023, respectively.

A schedule of fixed maturities available for sale by contractual maturity date at March 31, 2024, is shown below on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions.

Analysis of Investment Operations: "Net investment income" for the three month periods ended March 31, 2024 and 2023 is summarized as follows:

(1)For the three months ended March 31, 2024 and 2023, the investment funds, accounted for under the fair value option method, recorded $18.9 million and $11.3 million, respectively, in net investment income. Refer to Other Long-Term Investments below for further discussion on the investment funds.

Selected information about sales of fixed maturities available for sale is as follows:

(1)There were no unsettled sales in the periods ended March 31, 2024 and 2023.

An analysis of "Realized gains (losses)" is as follows:

(1)During the three months ended March 31, 2024 and 2023, the Company recorded $66.9 million and $0 of issuer-initiated exchanges of fixed maturities (noncash transactions) that resulted inno realized gains (losses) in either period.

Fair Value Measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at March 31, 2024 and December 31, 2023:

The following tables represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.

(1)Includes capitalized interest, foreign exchange adjustments, and principal repayments.

(2)Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available.

The following table presents changes in unrealized gains and losses for the period included in accumulated other comprehensive income for assets held at the end of the reporting period for Level 3 classification:

Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an unrealized loss position.

Globe Life's entire fixed maturity portfolio consisted of 2,551 issues by 991 different issuers at March 31, 2024 and 2,473 issues by 980 different issuers at December 31, 2023. The increase in the number of securities in an unrealized loss position during the period ended March 31, 2024 is due to the increase in interest rates. The weighted-average quality rating of all unrealized loss positions at amortized cost was A- as of March 31, 2024 and December 31, 2023.

The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at March 31, 2024 and December 31, 2023.

Analysis of Gross Unrealized Investment Losses

Gross unrealized losses may fluctuate quarter over quarter due to adverse factors in the market that affect our holdings, such as changes in interest rates or credit spreads. The Company considers many factors when determining whether an allowance for a credit loss should be recorded. While the Company holds securities that may be in an unrealized loss position from time to time, Globe Life does not generally intend to sell and it is unlikely that the Company will be required to sell the fixed maturities prior to their anticipated recovery or maturity due to the strong cash flows generated by its insurance operations.

Analysis of Gross Unrealized Investment Losses

Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows.

As of March 31, 2024 and December 31, 2023, the Company did not have any fixed maturities in non-accrual status.

Mortgage Loans (commercial mortgage loans): Summaries of commercial mortgage loans by property type and geographical location at March 31, 2024 and December 31, 2023 are as follows:

The following tables are reflective of the key factors, debt service coverage ratios, and loan-to-value (LTV) ratios that are utilized by management to monitor the performance of the portfolios. The Company only makes new investments in commercial mortgage loans that have a LTV ratio less than 80%. LTV's that exceed 80% are generally as a result of decreases in the valuation of the underlying property. Generally, a higher LTV ratio and a lower debt service coverage ratio equates to higher risk of loss.

(1)Annual net operating income divided by annual mortgage debt service (principal and interest).

(2)Loan balance divided by appraised value at origination, including planned renovations and stabilized occupancy. Updated internal valuations are used when a loan is materially underperforming.

(1)Annual net operating income divided by annual mortgage debt service (principal and interest).

(2)Loan balance divided by appraised value at origination, including planned renovations and stabilized occupancy. Updated internal valuations are used when a loan is materially underperforming.

As of March 31, 2024, the Company evaluated the commercial mortgage loan portfolio on a pool basis to determine the allowance for credit losses. At the end of the period, the Company had 32 loans in the portfolio. For the three months ended March 31, 2024, the allowance for credit losses increased by $874 thousand to $4.5 million. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statements of Operations.

There wasone delinquent commercial mortgage loan, with an outstanding par value of $3.7 million and outstanding interest due of $116 thousand, as of March 31, 2024. The underlying collateral for this loan is in the process of being sold and the Company expects to recover all interest and principal due as of March 31, 2024. There were no delinquent commercial mortgage loans as of December 31, 2023. As of March 31, 2024, the Company had one commercial mortgage loan in non-accrual status with a principal balance of $4.4 million. As of December 31, 2023, the Company hadno commercial mortgage loans in non-accrual status. The Company's unfunded commitment balance to commercial loan borrowers was $29 million as of March 31, 2024.