GLOBE LIFE INC

A discussion of life operations by distribution channel follows.

The American Income Life Division markets to members of labor unions and other affinity groups and continues to diversify its lead sources, utilizing third-party internet vendor leads and obtaining referrals to facilitate sustainable growth. This Division is Globe Life's largest contributor of life premium of any distribution channel at 52% of the Company's September 30, 2024 total life premium. For the nine months ended September 30, 2024, the average monthly life premium issued per policy was $56 as compared to $53 for the same period in the prior year. Net sales were $289 million for the nine months ended September 30, 2024, up from $246 million in the year-ago period. The underwriting margin, as a percent of premium, was 47% for the nine months ended September 30, 2024 up from 45% in the year ago period.

Below is the average producing agent count for the nine months ended September 30, 2024 for the American Income Life Division. The average producing agent count is based on the actual count at the beginning and end of each week during the year. The average producing agent count increased 12% over the year-ago period, and over 65% of the Division's net sales are driven by agents that have been producing for the Division for 6 months or more. The increase in average producing agent count was driven by an increase in new agent recruiting along with continued improvement in new agent retention. Sales growth in this Division, as well as within our other exclusive agencies, is generally dependent on growth in the size of the agency force.

American Income Life continues to focus on growing and strengthening the agency force, specifically through emphasis on agency middle-management growth and additional agency office openings. In addition to offering financial incentives and training opportunities, the Division has made considerable investments in information technology, including a customer relationship management (CRM) tool for the agency force. This tool is designed to drive productivity in lead distribution, conservation of business, manager dashboards and new agent recruiting. Additionally, this Division has invested in and successfully implemented technology that allows the agency force to engage in virtual recruiting, training, and sales activity. The agents have shifted to primarily a virtual experience with the customers and have generated a vast majority of sales through virtual presentations. We find this flexibility to be enticing for new recruits as well as a driver of sustainability for our agency force.

The Direct to Consumer Division (DTC) offers adult and juvenile life insurance through a variety of marketing approaches, including direct mailings, insert media, and electronic media. In recent years, production from electronic media, which is comprised of sales through both the internet and inbound phone calls to our call center, continue to be the customer preference when compared to direct mail. The proportion of sales from the internet and inbound phone calls continue to outpace the activity from the direct mailings, but all three channels continue to work in an omnichannel approach. The different media channels support and complement one another in the Division's efforts to reach the consumer. Additionally, this channel provides critical support to our agency business through brand impressions and the generation of sales leads. DTC's long-term growth has been fueled by constant innovation and name recognition. We continually introduce new initiatives in this Division in an attempt to increase response rates and create a seamless customer experience.

The juvenile market is an important source of sales, it is also a vehicle to reach the parents and grandparents of juvenile policyholders, who are more likely to respond favorably to a DTC solicitation for life coverage on themselves in comparison to the general adult population. Also, future offerings to juvenile policyholders and their parents are sources of lower acquisition-cost life insurance sales in the future.

DTC net sales declined 8% to $83 million for the nine months ended September 30, 2024 compared with $91 million for the same period in the prior year. This decline is due primarily to the management of direct mail and mailing insert marketing activity resulting from the impact of inflation on postage, paper and online advertising costs. While total sales have declined, the focus has been on improving profitability and improving the underwriting margin. DTC’s underwriting margin, as a percent of premium, was 28% for the nine months ended September 30, 2024 compared with 24% for the same period in 2023.

The Liberty National Division markets individual life insurance to middle-income household and worksite customers. Recent investments in new sales technologies as well as recent growth in middle management within the agency are expected to help continue this growth. The underwriting margin as a percent of premium was 38% for the nine months ended September 30, 2024, up from 32% during the same period a year ago. The increase isprimarily attributable toincreased premiums and lower policy obligations as a percent of premium duringthe first nine months of 2024 as compared to same period in 2023. For the nine months ended September 30, 2024, the average monthly life premium per policy issued was $43 down slightly from the prior year period.

Net sales rose 4% in the nine months ended September 30, 2024 over the same period in 2023 due primarily to increased agent count.

Below is the average producing agent count for the nine months ended September 30, 2024 and 2023 for the Liberty National Division. The average producing agent count is based on the actual count at the beginning and end of each week during the year.

The Liberty National Division average producing agent count increased significantly compared with the prior-year comparable period. We continue to execute our long-term plan to grow this agency through expansion from small-town markets in the Southeast to more densely populated areas with larger pools of potential agent recruits and customers. Continued expansion of this agency's presence into more heavily populated, less-penetrated areas will help create long-term agency growth. In addition to the aforementioned geographic expansion, we have also started a campaign of market expansion to increase our agency presence in cities where we currently have offices, but not enough to properly serve the community, region, area and city. These tend to be larger geographic cities which will help create long-term sustainable agency growth. Additionally, the agency continues to help improve the ability of agents to develop new worksite marketing business. Systems that have been put in place, including the addition of a CRM platform and enhanced analytical capabilities, have helped the agents develop additional worksite marketing opportunities as well as improve the productivity of agents selling in the individual life market. As the Division continues to gain momentum in its sales and recruiting initiatives, as well as advances in its technology and CRM platform, the agency anticipates continued growth in recruiting activity and average producing agent count and projects sales growth for the full year.

The Other agency distribution channels primarily include non-exclusive independent agencies selling primarily life insurance. The other distribution channels contributed $153 million of life premium income, or 6% of Globe Life's total life premium income in the nine months ended September 30, 2024, and contributed 2% of net sales for the period.

HEALTH INSURANCE

Health insurance sold by the Company primarily includes Medicare Supplement insurance including Retiree Health Insurance business, accident coverage, and other limited-benefit supplemental health products including accident, cancer, critical illness, heart, and intensive care products.

Health premium accounted for 30% of our total premium in 2024, while the health underwriting margin accounted for 22% of total underwriting margin. Health underwriting margin increased slightly to $281 million compared to $280 million in the prior year. While the Company continues to emphasize life insurance sales relative to health due to life’s superior long-term profitability and its greater contribution to excess investment income, the health business provides a significant contribution to return on equity as it does not require a substantial amount of up-front capital.

The following table presents underwriting margin data for health insurance.

Summary of Results

Net policy obligations amounted to 52% of premium for the nine months ended September 30, 2024 compared to 51% in the year ago period. This increase was primarily due to the assumptions review of lapses and morbidity resulting in a remeasurement loss of $10.5 million compared to a remeasurement gain of $5.2 million for the nine months ended September 30, 2024 and 2023, respectively. Refer to Note 6—Policy Liabilities for further discussion of the Company's annual assumptions review.

The table below summarizes health underwriting margin by distribution channel.

Underwriting Margin by Distribution Channel

Globe Life markets supplemental health insurance products through a number of distribution channels. The following table is an analysis of our health premium by distribution channel.

Premium by Distribution Channel

Premium related to limited-benefit supplemental health products comprise $586 million, or 56%, of the total health premiums for the nine months ended September 30, 2024, compared with $553 million, or 56%, in the same period in the prior year. Premium from Medicare Supplement products comprises the remaining $461 million, or 44%, for the nine months ended September 30, 2024, compared with $430 million, or 44%, in the same period in the prior year.

Annualized health premium in force was $1.45 billion at September 30, 2024, an increase of 7% over $1.36 billion a year earlier.

Presented below is a table of health net sales by distribution channel.

Net Sales by Distribution Channel

Health net sales related to limited-benefit supplemental health products comprise $130 million, or 76%, of the total health net sales for the nine months ended September 30, 2024, compared with $121 million, or 79%, in the same period in the prior year. Medicare Supplement sales make up the remaining $41 million, or 24%, for 2024 compared with $33 million, or 21%, in the same period in the prior year.

The following table presents health insurance first-year collected premium by distribution channel.

First-Year Collected Premium by Distribution Channel

First-year collected premium related to limited-benefit supplemental health products is $119 million, or 72%, of total first-year collected premium for the nine months ended September 30, 2024 compared with $98 million, or 72%, in the same period in the prior year. First-year collected premium from Medicare Supplement policies make up the remaining $46 million, or 28%, for the nine months ended September 30, 2024 compared with $38 million, or 28%, in the same period in the prior year.