GLOBE LIFE INC

"Globe Life" and the "Company" refer to Globe Life Inc. and its subsidiaries and affiliates.

How Globe Life Views Its Operations. Globe Life Inc. is the holding company for a group of insurance companies that market primarily individual life and supplemental health insurance to lower middle to middle-income households throughout the United States. We view our operations by segments, which are the insurance product lines of life and supplemental health, and the investment segment that supports the product lines.

Insurance Product Line Segments. The insurance product line segments involve the marketing, underwriting, and administration of policies. Each product line is further subdivided by the various distribution channels that market the insurance policies. Each distribution channel operates in a niche market offering insurance products designed for that particular market. Whether analyzing profitability of a segment as a whole, or the individual distribution channels within the segment, the measure of profitability used by management is the underwriting margin, as seen below:

Premium revenue (Policy obligations) (Policy acquisition costs and commissions) Underwriting margin

Investment Segment. The investment segment involves the management of our capital resources, including investments and the management of liquidity. Our measure of profitability for the investment segment is excess investment income, as seen below:

Net investment income(Required interest on policy liabilities) Excess investment income

Current Highlights.

•Net income as a return on equity (ROE) for the year ended December 31, 2024 was 21.7% and net operating income as an ROE, excluding accumulated other comprehensive income(1) was 15.1%.

•Total premium increased 5% over the same period in the prior year. Life premium increased 4% for the period from $3.14 billion in 2023 to $3.26 billion in 2024.

•Net investment income increased 7% over the same period in the prior year.

•Total net sales increased 9% over the same period in the prior year from $768 million in 2023 to $840 million in 2024. The average producing agent count across all of the exclusive agencies increased 11% over the prior year.

•Book value per share increased 33% over the same period in the prior year from $47.10 to $62.50. Book value per share, excluding accumulated other comprehensive income(1), increased 13% over the prior year from $76.21 in 2023 to $86.40 in 2024.

•For the year ended December 31, 2024, the Company repurchased 10.1 million shares of Globe Life Inc. common stock at a total cost of $946 million for an average share price of $93.76.

The following graphs represent net income and net operating income for the three years ended December 31, 2024.

(1)As shown in the charts above, net operating income is primarily comprised of insurance underwriting margin plus excess investment income and annuity and other income, offset by operating expenses after tax and, as such, is considered a non-GAAP measure. It has been used consistently by Globe Life's management for many years to evaluate the operating performance of the Company. It differs from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain significant and unusual items included in net income. Net income is the most directly comparable GAAP measure.

Net operating income as an ROE, excluding accumulated other comprehensive income (AOCI), is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates. The impact of the adjustment to exclude AOCI is $(2.03) billion and $(2.77) billion for the year ended December 31, 2024 and 2023, respectively.

Book value per share, excluding AOCI, is also considered a non-GAAP measure. Management utilizes this measure to view the book value of the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates. The impact of the adjustment to exclude AOCI is $(23.90) and $(29.11) for the year ended December 31, 2024 and 2023, respectively.

Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.

Summary of Operations. Net income increased 10% to $1.07 billion in 2024, compared with $971 million in 2023. In 2023, net income increased 9% from $894 million in 2022. On a diluted per common share basis, net income per common share for 2024 increased from $10.07 to $11.94. In 2023, net income per common share, on a diluted per common share basis, increased 11% from $9.04 in 2022.

Net operating income increased 8% to $1.11 billion in 2024, compared with $1.03 billion in 2023, due to a 26% increase in excess investment income as well as a 13% increase in life underwriting margin. In 2023, net operating income increased 7% from $961 million in 2022. On a diluted per common share basis, net operating income per common share for 2024 increased from $10.65 to $12.37, an increase of 16%. In 2023, net income per common share, on a diluted per common share basis, increased 10% from $9.71 in 2022. Net operating income is primarily comprised of insurance underwriting margin plus excess investment income and annuity and other income, offset by operating expenses, after tax and, as such, is considered a non-GAAP measure. Net income is the most directly comparable GAAP measure. We do not consider realized gains and losses to be a component of our core insurance operations or operating segments. Additionally, net income in 2024, 2023, and 2022 was affected by certain non-operating items. We do not view these items as components of core operating results because they are not indicative of past performance or future prospects of the insurance operations. We remove items such as these that relate to prior periods or are non-operating items when evaluating the results of current operations, and therefore exclude such items from our segment analysis for current periods.

As previously noted, a component of insurance underwriting margin is policy obligations, which includes for each reporting period the change in the liability for future policy benefits (LFPB). The LFPB is determined each reporting period based on the net level premium method. Net level premiums reflect a recomputed net premium ratio using actual experience since the issue date, and expected future experience based on future cash-flow assumptions. See Note 6—Policy Liabilities for additional information. The policy liability is accrued as premium revenue is recognized and adjusted for differences between actual and expected experience in the form of remeasurement gains and losses during the period. If actual mortality, morbidity, and lapse experience equals our expected assumptions used in the development of our liability for future policy benefits, there would be no impact to our financial results. Actual experience can have a material impact on financial results to the extent it significantly deviates from the expected assumptions which are used to develop our estimates of the liability for future policy benefits and amortization of the deferred acquisition cost asset (DAC). For example, deviations in actual versus expected lapses in the early policy years tend to have a larger impact on DAC amortization than LFPB change in reserves. Conversely, deviations in actual versus expected lapses in the later policy years typically have a larger impact on LFPB change in reserves than DAC amortization. This is due to the release of DAC and LFPB where DAC capitalization in earlier years is amortizing over time and the LFPB is increasing over time as the policy stays inforce. Disaggregated rollforwards of our present value of expected future net premiums and our expected future policy benefits are presented within Note 6—Policy Liabilities, which include disclosure of remeasurement gain (loss) for the effect of actual variances from expected experience and the changes in assumptions (mortality, morbidity, and lapses) on future cash flows.

The Company performed an annual review of its assumptions in the third quarter of 2024 that resulted in favorable changes to its mortality and lapse assumptions on life and unfavorable changes to morbidity assumptions on health. In our life segment mortality assumptions generally decreased across most channels in line with recent experience consistent with decreasing levels of excess deaths. Lapse rate assumptions in the life segment were slightly increased across all channels. For the health segment, morbidity assumptions were increased, causing higher future policy benefit reserves. The assumption review process of the life and health segments resulted in a $46.3 million net remeasurement gain for the period ended December 31, 2024 as compared to a $3.2 million net remeasurement gain for the period ended December 31, 2023 and a $36.5 million net remeasurement loss for the period ended December 31, 2022.

Excluding the impact of assumption changes, the Company's results for actual variances from expected experience for both life and health produced a $57.4 million net remeasurement gain for the period ended December 31, 2024, as compared to a $38.0 million net remeasurement gain for the period ended December 31, 2023 and a $4.6 million net remeasurement gain for the period ended December 31, 2022.

Overall, the Company continues to see positive signs in its core operations, including sales and premium growth, and continues to achieve an operating ROE (excluding accumulated other comprehensive income) generally in the mid-teens.

Globe Life's operations on a segment-by-segment basis are discussed in depth below. Net operating income has been used consistently by management for many years to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs from GAAP net income primarily because it excludes certain non-operating items such as realized gains and losses and other significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company’s business. Net income is the most directly comparable GAAP measure.