GLOBE LIFE INC
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
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Notes to Condensed Consolidated Financial Statements
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 September 30, 2024, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended September 30, 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
| Accounting Pronouncements Adopted in the Current Year | |||
|---|---|---|---|
| Standard | Description | Effective Date | Effect on the Condensed Consolidated Financial Statements |
| ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions | ASU 2022-03 adds disclosure requirements specific to equity securities subject to contractual sale restrictions. The disclosures clarify the nature of the contractual sale as well as the duration of the restriction and the circumstances that could cause a lapse in the restriction. | This standard is effective for the Company for fiscal years beginning on January 1, 2024 and interim periods within those fiscal years. | The adoption of this standard did not have a material impact on the Condensed Consolidated Financial Statements. |
| Accounting Pronouncements Yet to be Adopted | |||
|---|---|---|---|
| Standard | Description | Effective Date | Effect on the Condensed Consolidated Financial Statements |
| ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures | ASU 2023-07 adds disclosure requirements to segment expenses, improving the financial reporting of the entity’s overall performance and assessment of future cash flows. The disclosures will require more detailed information related to the entity’s reportable segments. | This standard is effective for the Company for annual periods beginning on January 1, 2024 and for interim periods beginning on January 1, 2025, and will be implemented on a retrospective basis. | The Company is evaluating the standard, but does not expect the standard will have a material impact on the Condensed Consolidated Financial Statements. |
| ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | ASU 2023-09 adds disclosure requirements to disaggregated information related to the effective tax rate reconciliation and information on income taxes paid. The disclosures will enhance the assessment of the entity’s operations and related tax risks. | This standard is effective for the Company for annual periods beginning on January 1, 2025, and will be implemented on a prospective basis. | The Company does not expect the standard will have a material impact on the Condensed Consolidated Financial Statements. |
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 and nine month periods ended September 30, 2024 and 2023:
| Three Months Ended September 30, 2024 | |||||
|---|---|---|---|---|---|
| Availablefor SaleAssets | Future Policy Benefits | ForeignExchange | PensionAdjustments | Total | |
| Balance at July 1, 2024 | $(1,271,213) | $(911,717) | $(4,726) | $(1,964) | $(2,189,620) |
| Other comprehensive income (loss) before reclassifications, net of tax | 686,343 | (985,420) | 5,764 | — | (293,313) |
| Reclassifications, net of tax | (1,903) | — | — | 93 | (1,810) |
| Other comprehensive income (loss) | 684,440 | (985,420) | 5,764 | 93 | (295,123) |
| Balance at September 30, 2024 | $(586,773) | $(1,897,137) | $1,038 | $(1,871) | $(2,484,743) |
| Three Months Ended September 30, 2023 | |||||
|---|---|---|---|---|---|
| Availablefor SaleAssets | Future Policy Benefits | ForeignExchange | PensionAdjustments | Total | |
| Balance at July 1, 2023 | $(1,249,399) | $(1,696,801) | $1,353 | $950 | $(2,943,897) |
| Other comprehensive income (loss) before reclassifications, net of tax | (842,527) | 1,332,976 | (6,226) | — | 484,223 |
| Reclassifications, net of tax | 672 | — | — | 28 | 700 |
| Other comprehensive income (loss) | (841,855) | 1,332,976 | (6,226) | 28 | 484,923 |
| Balance at September 30, 2023 | $(2,091,254) | $(363,825) | $(4,873) | $978 | $(2,458,974) |
| Nine Months Ended September 30, 2024 | |||||
|---|---|---|---|---|---|
| Availablefor SaleAssets | Future Policy Benefits | ForeignExchange | PensionAdjustments | Total | |
| Balance at January 1, 2024 | $(827,596) | $(1,947,391) | $4,719 | $(2,151) | $(2,772,419) |
| Other comprehensive income (loss) before reclassifications, net of tax | 238,785 | 50,254 | (3,681) | — | 285,358 |
| Reclassifications, net of tax | 2,038 | — | — | 280 | 2,318 |
| Other comprehensive income (loss) | 240,823 | 50,254 | (3,681) | 280 | 287,676 |
| Balance at September 30, 2024 | $(586,773) | $(1,897,137) | $1,038 | $(1,871) | $(2,484,743) |
| Nine Months Ended September 30, 2023 | |||||
|---|---|---|---|---|---|
| Availablefor SaleAssets | Future Policy Benefits | ForeignExchange | PensionAdjustments | Total | |
| Balance at January 1, 2023 | $(1,420,672) | $(1,369,204) | $(1,681) | $1,244 | $(2,790,313) |
| Other comprehensive income (loss) before reclassifications, net of tax | (736,046) | 1,005,379 | (3,192) | — | 266,141 |
| Reclassifications, net of tax | 65,464 | — | — | (266) | 65,198 |
| Other comprehensive income (loss) | (670,582) | 1,005,379 | (3,192) | (266) | 331,339 |
| Balance at September 30, 2023 | $(2,091,254) | $(363,825) | $(4,873) | $978 | $(2,458,974) |
Reclassification Adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three and nine month periods ended September 30, 2024 and 2023.
| Three Months EndedSeptember 30, · Nine Months Ended September 30, · Affected line items in the Statements of Operations | |||||
|---|---|---|---|---|---|
| Component Line Item · 2024 · 2023 · 2024 · 2023 | |||||
| Unrealized investment (gains) losses on available for sale assets: | |||||
| Realized (gains) losses | $(257) | $1,759 | $9,732 | $85,230 | Realized (gains) losses |
| Amortization of (discount) premium | (2,151) | (908) | (7,152) | (2,364) | Net investment income |
| Total before tax | (2,408) | 851 | 2,580 | 82,866 | |
| Tax | 505 | (179) | (542) | (17,402) | Income taxes |
| Total after-tax | (1,903) | 672 | 2,038 | 65,464 | |
| Pension adjustments: | |||||
| Amortization of prior service cost | 265 | 269 | 803 | 807 | Other operating expense |
| Amortization of actuarial (gain) loss | (147) | (234) | (449) | (1,143) | Other operating expense |
| Total before tax | 118 | 35 | 354 | (336) | |
| Tax | (25) | (7) | (74) | 70 | Income taxes |
| Total after-tax | 93 | 28 | 280 | (266) | |
| Total reclassification (after-tax) | $(1,810) | $700 | $2,318 | $65,198 | |
Note 4—Investments
Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at September 30, 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."
| At September 30, 2024 | ||||||
|---|---|---|---|---|---|---|
| AmortizedCost | Allowance for Credit Losses | GrossUnrealizedGains | GrossUnrealizedLosses | Fair Value(1) | % of TotalFixedMaturities(2) | |
| Fixed maturities available for sale: | ||||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $397,969 | $— | $38 | $(21,026) | $376,981 | 2 |
| States, municipalities, and political subdivisions | 3,253,819 | — | 49,409 | (424,989) | 2,878,239 | 16 |
| Foreign governments | 41,794 | — | 17 | (9,885) | 31,926 | — |
| Corporates, by sector: | ||||||
| Industrials | 8,115,835 | (7,132) | 258,165 | (508,089) | 7,858,779 | 43 |
| Financial | 5,014,169 | — | 171,762 | (299,903) | 4,886,028 | 26 |
| Utilities | 2,140,610 | — | 109,998 | (72,371) | 2,178,237 | 12 |
| Total corporates | 15,270,614 | (7,132) | 539,925 | (880,363) | 14,923,044 | 81 |
| Collateralized debt obligations | 36,685 | — | 5,798 | — | 42,483 | — |
| Other asset-backed securities | 83,573 | — | 1 | (1,677) | 81,897 | 1 |
| Total fixed maturities | $19,084,454 | $(7,132) | $595,188 | $(1,337,940) | $18,334,570 | 100 |
(1)Amount reported in the balance sheet.
(2)At fair value.
| At December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| AmortizedCost | Allowance for Credit Losses | GrossUnrealizedGains | GrossUnrealizedLosses | Fair Value(1) | % of TotalFixedMaturities(2) | |
| Fixed maturities available for sale: | ||||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $398,450 | $— | $7 | $(32,306) | $366,151 | 2 |
| States, municipalities, and political subdivisions | 3,296,305 | — | 47,346 | (403,329) | 2,940,322 | 16 |
| Foreign governments | 44,453 | — | 1 | (10,348) | 34,106 | — |
| Corporates, by sector: | ||||||
| Industrials | 8,016,126 | (7,115) | 213,078 | (566,847) | 7,655,242 | 43 |
| Financial | 5,028,151 | — | 112,368 | (388,340) | 4,752,179 | 27 |
| Utilities | 2,017,967 | — | 73,925 | (94,130) | 1,997,762 | 11 |
| Total corporates | 15,062,244 | (7,115) | 399,371 | (1,049,317) | 14,405,183 | 81 |
| Collateralized debt obligations | 37,110 | — | 5,036 | — | 42,146 | — |
| Other asset-backed securities | 86,352 | — | 3 | (4,057) | 82,298 | 1 |
| Total fixed maturities | $18,924,914 | $(7,115) | $451,764 | $(1,499,357) | $17,870,206 | 100 |
(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 $429 million (2% of the total fixed maturity portfolio) and $425 million (2% of the total fixed maturity portfolio) at September 30, 2024 and December 31, 2023, respectively.
A schedule of fixed maturities available for sale by contractual maturity date at September 30, 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.
| At September 30, 2024 | ||
|---|---|---|
| AmortizedCost, net | FairValue | |
| Fixed maturities available for sale: | ||
| Due in one year or less | $111,956 | $111,456 |
| Due after one year through five years | 748,300 | 771,458 |
| Due after five years through ten years | 1,841,477 | 1,912,103 |
| Due after ten years through twenty years | 8,954,048 | 8,827,993 |
| Due after twenty years | 7,301,254 | 6,587,150 |
| Mortgage-backed and asset-backed securities | 120,287 | 124,410 |
| $19,077,322 | $18,334,570 | |
Analysis of Investment Operations: "Net investment income" for the three and nine month periods ended September 30, 2024 and 2023 is summarized as follows:
| Three Months EndedSeptember 30, · Nine Months EndedSeptember 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2024 · 2023 · % Change · 2024 · 2023 · % Change | ||||||||
| Fixed maturities available for sale | $245,313 | $237,609 | 3 | $738,626 | $704,095 | 5 | ||
| Policy loans | 13,296 | 12,446 | 7 | 39,196 | 36,435 | 8 | ||
| Mortgage loans | 7,668 | 5,363 | 43 | 21,337 | 13,919 | 53 | ||
| Other long-term investments(1) | 19,992 | 14,630 | 37 | 58,608 | 38,753 | 51 | ||
| Short-term investments | 3,083 | 1,396 | 8,396 | 4,811 | ||||
| 289,352 | 271,444 | 7 | 866,163 | 798,013 | 9 | |||
| Less investment expense | (4,388) | (4,518) | (3) | (12,985) | (12,738) | 2 | ||
| Net investment income | $284,964 | $266,926 | 7 | $853,178 | $785,275 | 9 | ||
(1)For the three months ended September 30, 2024 and 2023, the investment funds, accounted for under the fair value option method, recorded $19.1 million and $14.0 million, respectively, in net investment income. For the nine months ended September 30, 2024 and 2023, the investment funds, accounted for under the fair value option method, recorded $56.1 million and $37.2 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:
| Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Fixed maturities available for sale: | ||||
| Proceeds from sales(1) | $163,221 | $46,210 | $674,125 | $192,034 |
| Gross realized gains | 2,042 | 261 | 6,086 | 308 |
| Gross realized losses | (1,856) | (67,018) | (15,824) | (77,879) |
(1)As of September 30, 2024 and 2023, the Company had $0 and $27 thousand of unsettled trades, respectively.
An analysis of "Realized gains (losses)" is as follows:
| Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Realized investment gains (losses): | ||||
| Fixed maturities available for sale: | ||||
| Sales and other(1) | $257 | $(66,767) | $(9,716) | $(77,730) |
| Provision for credit losses | — | 65,008 | (16) | (7,500) |
| Fair value option—change in fair value | (3,683) | 868 | (22,777) | 7,954 |
| Mortgage loans | (1,376) | (59) | (3,530) | (4,918) |
| Other investments | (16) | 880 | 1,135 | 502 |
| Realized gains (losses) from investments | (4,818) | (70) | (34,904) | (81,692) |
| Other gains (losses) | 2,626 | (2,123) | 8,324 | 2,729 |
| Total realized gains (losses) | (2,192) | (2,193) | (26,580) | (78,963) |
| Applicable tax | 460 | 461 | 5,582 | 16,583 |
| Realized gains (losses), net of tax | $(1,732) | $(1,732) | $(20,998) | $(62,380) |
(1)During the three months ended September 30, 2024 and 2023, the Company recorded $3.4 million and $21.1 million of issuer-initiated exchanges of fixed maturities (noncash transactions) that resulted inno realized gains (losses) in either period. During the nine months ended September 30, 2024 and 2023, the Company recorded $82.2 million and $39.0 million of issuer-initiated exchanges of fixed maturities (noncash transactions) that resulted in no 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 September 30, 2024 and December 31, 2023:
| Fair Value Measurement at September 30, 2024: | ||||
|---|---|---|---|---|
| Quoted Prices inActive Marketsfor IdenticalAssets (Level 1) | Significant OtherObservableInputs (Level 2) | SignificantUnobservableInputs (Level 3) | Total FairValue | |
| Fixed maturities available for sale | ||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $— | $376,981 | $— | $376,981 |
| States, municipalities, and political subdivisions | — | 2,878,239 | — | 2,878,239 |
| Foreign governments | — | 31,926 | — | 31,926 |
| Corporates, by sector: | ||||
| Industrials | — | 7,659,257 | 199,522 | 7,858,779 |
| Financial | — | 4,754,596 | 131,432 | 4,886,028 |
| Utilities | — | 2,063,380 | 114,857 | 2,178,237 |
| Total corporates | — | 14,477,233 | 445,811 | 14,923,044 |
| Collateralized debt obligations | — | — | 42,483 | 42,483 |
| Other asset-backed securities | — | 74,021 | 7,876 | 81,897 |
| Total fixed maturities | $— | $17,838,400 | $496,170 | $18,334,570 |
| Percentage of total | —% | 97% | 3% | 100% |
| Fair Value Measurement at December 31, 2023: | ||||
|---|---|---|---|---|
| Quoted Prices inActive Marketsfor IdenticalAssets (Level 1) | Significant OtherObservableInputs (Level 2) | SignificantUnobservableInputs (Level 3) | Total FairValue | |
| Fixed maturities available for sale | ||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $— | $366,151 | $— | $366,151 |
| States, municipalities, and political subdivisions | — | 2,940,322 | — | 2,940,322 |
| Foreign governments | — | 34,106 | — | 34,106 |
| Corporates, by sector: | ||||
| Industrials | — | 7,440,493 | 214,749 | 7,655,242 |
| Financial | — | 4,621,160 | 131,019 | 4,752,179 |
| Utilities | — | 1,888,797 | 108,965 | 1,997,762 |
| Total corporates | — | 13,950,450 | 454,733 | 14,405,183 |
| Collateralized debt obligations | — | — | 42,146 | 42,146 |
| Other asset-backed securities | — | 82,298 | — | 82,298 |
| Total fixed maturities | $— | $17,373,327 | $496,879 | $17,870,206 |
| Percentage of total | —% | 97% | 3% | 100% |
The following tables represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
| Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
|---|---|---|---|---|
| Asset-backed Securities | CollateralizedDebtObligations | Corporates | Total | |
| Balance at January 1, 2024 | $— | $42,146 | $454,733 | $496,879 |
| Included in realized gains / losses | — | — | — | — |
| Included in other comprehensive income | — | 762 | 5,448 | 6,210 |
| Acquisitions | 7,876 | — | 14,800 | 22,676 |
| Sales | — | — | — | — |
| Amortization | — | 3,414 | (38) | 3,376 |
| Other(1) | — | (3,839) | (29,132) | (32,971) |
| Transfers into Level 3(2) | — | — | — | — |
| Transfers out of Level 3(2) | — | — | — | — |
| Balance at September 30, 2024 | $7,876 | $42,483 | $445,811 | $496,170 |
| Percent of total fixed maturities | —% | —% | 3% | 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.
| Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
|---|---|---|---|---|
| Asset-backed Securities | CollateralizedDebtObligations | Corporates | Total | |
| Balance at January 1, 2023 | $— | $50,364 | $478,083 | $528,447 |
| Included in realized gains / losses | — | — | — | — |
| Included in other comprehensive income | — | (8,424) | (15,968) | (24,392) |
| Acquisitions | — | — | — | — |
| Sales | — | — | — | — |
| Amortization | — | 3,429 | 5 | 3,434 |
| Other(1) | — | (3,684) | (26,669) | (30,353) |
| Transfers into Level 3(2) | — | — | — | — |
| Transfers out of Level 3(2) | — | — | — | — |
| Balance at September 30, 2023 | $— | $41,685 | $435,451 | $477,136 |
| Percent of total fixed maturities | —% | —% | 3% | 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.
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:
| Changes in Unrealized Gains (Losses) included in Accumulated Other Comprehensive Income for Assets Held at the End of the Period | ||||
|---|---|---|---|---|
| Asset-backed Securities | CollateralizedDebtObligations | Corporates | Total | |
| At September 30, 2024 | $— | $762 | $5,448 | $6,210 |
| At September 30, 2023 | — | (8,424) | (15,968) | (24,392) |
Unrealized Loss Analysis: The following table discloses information about fixed maturities available for sale in an unrealized loss position.
| Less than Twelve Months | Twelve Months or Longer | Total | |
|---|---|---|---|
| Number of issues (CUSIPs) held: | |||
| As of September 30, 2024 | 87 | 1,553 | 1,640 |
| As of December 31, 2023 | 151 | 1,614 | 1,765 |
Globe Life's entire fixed maturity portfolio consisted of 2,532 issues by 975 different issuers at September 30, 2024 and 2,473 issues by 980 different issuers at December 31, 2023. The weighted-average quality rating of all unrealized loss positions at amortized cost was A- as of September 30, 2024 and December 31, 2023.
The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at September 30, 2024 and December 31, 2023.
Analysis of Gross Unrealized Investment Losses
| At September 30, 2024 | ||||||
|---|---|---|---|---|---|---|
| Less than Twelve Months | Twelve Months or Longer | Total | ||||
| FairValue | UnrealizedLoss | FairValue | UnrealizedLoss | FairValue | UnrealizedLoss | |
| Fixed maturities available for sale: | ||||||
| Investment grade securities: | ||||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $— | $— | $374,361 | $(21,026) | $374,361 | $(21,026) |
| States, municipalities, and political subdivisions | 201,640 | (4,821) | 1,636,467 | (420,168) | 1,838,107 | (424,989) |
| Foreign governments | — | — | 28,493 | (9,885) | 28,493 | (9,885) |
| Corporates, by sector: | ||||||
| Industrials | 124,717 | (11,134) | 4,071,839 | (464,628) | 4,196,556 | (475,762) |
| Financial | 19,176 | (303) | 2,005,383 | (261,465) | 2,024,559 | (261,768) |
| Utilities | 7,012 | (92) | 667,192 | (71,489) | 674,204 | (71,581) |
| Total corporates | 150,905 | (11,529) | 6,744,414 | (797,582) | 6,895,319 | (809,111) |
| Collateralized debt obligations | — | — | — | — | — | — |
| Other asset-backed securities | — | — | 68,549 | (1,607) | 68,549 | (1,607) |
| Total investment grade securities | 352,545 | (16,350) | 8,852,284 | (1,250,268) | 9,204,829 | (1,266,618) |
| Below investment grade securities: | ||||||
| Corporates, by sector: | ||||||
| Industrials | 2,670 | (169) | 143,088 | (32,158) | 145,758 | (32,327) |
| Financial | 4,199 | (13) | 178,887 | (38,122) | 183,086 | (38,135) |
| Utilities | — | — | 11,945 | (790) | 11,945 | (790) |
| Total corporates | 6,869 | (182) | 333,920 | (71,070) | 340,789 | (71,252) |
| Collateralized debt obligations | — | — | — | — | — | — |
| Other asset-backed securities | — | — | 5,432 | (70) | 5,432 | (70) |
| Total below investment grade securities | 6,869 | (182) | 339,352 | (71,140) | 346,221 | (71,322) |
| Total fixed maturities | $359,414 | $(16,532) | $9,191,636 | $(1,321,408) | $9,551,050 | $(1,337,940) |
Gross unrealized losses may fluctuate quarter over quarter due to 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
| At December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Less than Twelve Months | Twelve Months or Longer | Total | ||||
| FairValue | UnrealizedLoss | FairValue | UnrealizedLoss | FairValue | UnrealizedLoss | |
| Fixed maturities available for sale: | ||||||
| Investment grade securities: | ||||||
| U.S. Government direct, guaranteed, and government-sponsored enterprises | $— | $— | $364,006 | $(32,306) | $364,006 | $(32,306) |
| States, municipalities, and political subdivisions | 252,800 | (3,520) | 1,610,163 | (399,809) | 1,862,963 | (403,329) |
| Foreign governments | — | — | 32,591 | (10,348) | 32,591 | (10,348) |
| Corporates, by sector: | ||||||
| Industrials | 191,573 | (3,881) | 4,317,827 | (530,011) | 4,509,400 | (533,892) |
| Financial | 242,099 | (6,584) | 2,341,424 | (339,628) | 2,583,523 | (346,212) |
| Utilities | 81,194 | (648) | 686,043 | (91,959) | 767,237 | (92,607) |
| Total corporates | 514,866 | (11,113) | 7,345,294 | (961,598) | 7,860,160 | (972,711) |
| Collateralized debt obligations | — | — | — | — | — | — |
| Other asset-backed securities | — | — | 70,956 | (3,648) | 70,956 | (3,648) |
| Total investment grade securities | 767,666 | (14,633) | 9,423,010 | (1,407,709) | 10,190,676 | (1,422,342) |
| Below investment grade securities: | ||||||
| Corporates, by sector: | ||||||
| Industrials | 10,745 | (199) | 145,697 | (32,756) | 156,442 | (32,955) |
| Financial | 25,563 | (2,602) | 151,190 | (39,526) | 176,753 | (42,128) |
| Utilities | — | — | 19,654 | (1,523) | 19,654 | (1,523) |
| Total corporates | 36,308 | (2,801) | 316,541 | (73,805) | 352,849 | (76,606) |
| Collateralized debt obligations | — | — | — | — | — | — |
| Other asset-backed securities | — | — | 11,288 | (409) | 11,288 | (409) |
| Total below investment grade securities | 36,308 | (2,801) | 327,829 | (74,214) | 364,137 | (77,015) |
| Total fixed maturities | $803,974 | $(17,434) | $9,750,839 | $(1,481,923) | $10,554,813 | $(1,499,357) |
Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows.
| Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Allowance for credit losses beginning balance | $7,132 | $72,508 | $7,115 | $— |
| Additions to allowance for which credit losses were not previously recorded | — | — | — | 72,508 |
| Additions (reductions) to allowance for fixed maturities that previously had an allowance | — | (65,008) | 17 | (65,008) |
| Reduction of allowance for which the Company intends to sell or more likely than not will be required to sell or sold during the period | — | — | — | — |
| Allowance for credit losses ending balance | $7,132 | $7,500 | $7,132 | $7,500 |
As of September 30, 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 September 30, 2024 and December 31, 2023 are as follows:
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Carrying Value | % of Total | Carrying Value | % of Total | |
| Property type: | ||||
| Multi-family | $127,155 | 33 | $116,299 | 42 |
| Industrial | 102,402 | 27 | 57,267 | 20 |
| Retail | 73,252 | 19 | 23,925 | 9 |
| Hospitality | 43,435 | 11 | 43,897 | 16 |
| Mixed use | 35,886 | 10 | 34,749 | 12 |
| Office | 6,387 | 2 | 6,734 | 2 |
| Total recorded investment | 388,517 | 102 | 282,871 | 101 |
| Less allowance for credit losses | (7,202) | (2) | (3,672) | (1) |
| Carrying value, net of allowance for credit losses | $381,315 | 100 | $279,199 | 100 |
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Carrying Value | % of Total | Carrying Value | % of Total | |
| Geographic location: | ||||
| Texas | $75,002 | 20 | $45,111 | 16 |
| New Jersey | 51,454 | 14 | 44,574 | 16 |
| Florida | 46,506 | 12 | 48,233 | 17 |
| California | 40,715 | 11 | 54,721 | 20 |
| New York | 35,865 | 9 | 20,284 | 7 |
| Alabama | 35,838 | 9 | 11,003 | 4 |
| Other | 103,137 | 27 | 58,945 | 21 |
| Total recorded investment | 388,517 | 102 | 282,871 | 101 |
| Less allowance for credit losses | (7,202) | (2) | (3,672) | (1) |
| Carrying value, net of allowance for credit losses | $381,315 | 100 | $279,199 | 100 |
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.
| September 30, 2024 | |||||
|---|---|---|---|---|---|
| Recorded Investment | |||||
| Debt Service Coverage Ratios(1) | |||||
| <1.00x | 1.00x—1.20x | >1.20x | Total | % of Gross Total | |
| Loan-to-value ratio(2): | |||||
| Less than 70% | $22,841 | $138,034 | $203,226 | $364,101 | 94 |
| 70% to 80% | 1,058 | — | — | 1,058 | — |
| 81% to 90% | 8,569 | — | — | 8,569 | 2 |
| Greater than 90% | 14,789 | — | — | 14,789 | 4 |
| Total | $47,257 | $138,034 | $203,226 | 388,517 | 100 |
| Less allowance for credit losses | (7,202) | ||||
| Total, net of allowance for credit losses | $381,315 | ||||
(1)Annual net operating income divided by annual mortgage debt service (principal and interest).
(2)Loan balance divided by stabilized appraised value at origination, including planned renovations and stabilized occupancy. Updated internal valuations are used when a loan is materially underperforming.
| December 31, 2023 | |||||
|---|---|---|---|---|---|
| Recorded Investment | |||||
| Debt Service Coverage Ratios(1) | |||||
| <1.00x | 1.00x—1.20x | >1.20x | Total | % of Gross Total | |
| Loan-to-value ratio(2): | |||||
| Less than 70% | $27,091 | $180,761 | $58,364 | $266,216 | 94 |
| 70% to 80% | — | — | — | — | — |
| 81% to 90% | 8,468 | — | 1,153 | 9,621 | 3 |
| Greater than 90% | 7,034 | — | — | 7,034 | 3 |
| Total | $42,593 | $180,761 | $59,517 | 282,871 | 100 |
| Less allowance for credit losses | (3,672) | ||||
| Total, net of allowance for credit losses | $279,199 | ||||
(1)Annual net operating income divided by annual mortgage debt service (principal and interest).
(2)Loan balance divided by stabilized appraised value at origination, including planned renovations and stabilized occupancy. Updated internal valuations are used when a loan is materially underperforming.
As of September 30, 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 36 loans in the portfolio. For the nine months ended September 30, 2024, the allowance for credit losses increased by $3.5 million to $7.2 million. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statements of Operations.
| Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Allowance for credit losses beginning balance | $5,826 | $2,928 | $3,672 | $1,789 |
| Provision (reversal) for credit losses | 1,376 | 60 | 3,530 | 1,199 |
| Allowance for credit losses ending balance | $7,202 | $2,988 | $7,202 | $2,988 |
There wasone delinquent commercial mortgage loan, with an outstanding par value of $36.0 million and outstanding interest due of $1.9 million, as of September 30, 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 September 30, 2024. There were no delinquent commercial mortgage loans as of December 31, 2023. As of September 30, 2024, the Company hadthree commercial mortgage loans in non-accrual status with a principal balance of $8.8 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 $31 million as of September 30, 2024.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.