UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ________

Commission File Number: 001-08052

GLOBE LIFE INC.

(Exact name of registrant as specified in its charter)


Delaware						63-0780404
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3700 South Stonebridge Drive, McKinney, Texas 75070

(Address of principal executive offices) (Zip Code)

(972) 569-4000

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value per share	GL	New York Stock Exchange
4.250% Junior Subordinated Debentures	GL PRD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of the last practicable date.


Class						Outstanding at July ~~29, 2020~~28, 2021
Common Stock, $1.00 Par Value						~~106,512,688~~101,720,608

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Table of Contents


			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Comprehensive Income (Loss)	3
		Condensed Consolidated Statements of Shareholders' Equity	4
		Condensed Consolidated Statements of Cash Flows	6

		Notes to Condensed Consolidated Financial Statements	7
		Note 1—Significant Accounting Policies	7
		Note 2—New Accounting Standards	118
		Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income	129
		Note 4—Investments	1411
		Note 5—Commitments and Contingencies	2522
		Note 6—Liability for Unpaid Claims	2623
		Note 7—Postretirement Benefits	2724
		Note 8—Earnings Per Share	2926
		Note 9—~~Business Segments~~Debt	3027
		Note 10—~~Debt~~Business Segments	3528
		Note 11—Subsequent Events	3533

		Cautionary Statements	3634

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3735

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6864

	Item 4.	Controls and Procedures	6864

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	6864

	Item 1A.	Risk Factors	6965

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7065

	Item 6.	Exhibits	7066

Signatures				7167

As used in this Form 10-Q, “Globe Life,” the “Company,” “we,” “our” and “us” refer to Globe Life Inc., a Delaware corporation incorporated in 1979, its subsidiaries and affiliates.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Globe Life Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollar amounts in thousands, except per share data)

June 30,
2020 December 31, 2019
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2020—$16,697,900;
2019—$16,415,776, allowance for credit losses: 2020— $32,719; 2019— $0)
$ 19,661,182 $ 18,907,147
Policy loans 579,541 575,492
Other long-term investments (includes: 2020—$264,246; 2019—$185,851 under the fair value option) 432,325 326,347
Short-term investments 531,651 38,285
Total investments 21,204,699 19,847,271
Cash 114,031 75,933
Accrued investment income 251,595 245,129
Other receivables 445,539 441,662
Deferred acquisition costs 4,446,356 4,341,941
Goodwill 441,591 441,591
Other assets 630,369 583,933
Total assets $ 27,534,180 $ 25,977,460
Liabilities:
Future policy benefits $ 14,826,175 $ 14,508,134
Unearned and advance premium 68,397 63,709
Policy claims and other benefits payable 380,178 365,402
Other policyholders' funds 96,708 96,282
Total policy liabilities 15,371,458 15,033,527
Current and deferred income taxes 1,631,817 1,476,832
Short-term debt 831,076 298,738
Long-term debt (estimated fair value: 2020—$1,417,343; 2019—$1,473,364) 1,272,104 1,348,988
Other liabilities 579,356 525,068
Total liabilities 19,685,811 18,683,153
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2020 and 2019 — —
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2020—117,218,183 issued; 2019— 117,218,183 issued) 117,218 117,218
Additional paid-in-capital 528,060 531,554
Accumulated other comprehensive income (loss) 2,231,893 1,844,830
Retained earnings 5,838,930 5,551,329
Treasury stock, at cost: (2020—10,767,653 shares; 2019—9,497,940 shares) (867,732) (750,624)
Total shareholders' equity 7,848,369 7,294,307
Total liabilities and shareholders' equity $ 27,534,180 $ 25,977,460



	June 30, 2021		December 31, 2020
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2021—$17,451,918; 2020—$17,197,145, allowance for credit losses: 2021— $0; 2020— $3,346)	$	21,101,780	$	21,213,509
Policy loans	583,088		584,379
Other long-term investments (includes: 2021—$533,658; 2020—$385,038 under the fair value option)	698,188		546,981
Short-term investments	371,922		107,782
Total investments	22,754,978		22,452,651
Cash	138,072		94,847
Accrued investment income	254,587		248,991
Other receivables	484,392		474,180
Deferred acquisition costs	4,743,032		4,595,444
Goodwill	441,591		441,591
Other assets	763,405		739,027

Total assets	$	29,580,057	$	29,046,731
Liabilities:
Future policy benefits	$	15,642,106	$	15,243,536
Unearned and advance premium	70,550		61,728
Policy claims and other benefits payable	375,823		399,507
Other policyholders' funds	98,316		97,968
Total policy liabilities	16,186,795		15,802,739
Current and deferred income taxes	1,773,524		1,833,723
Short-term debt	259,946		254,918
Long-term debt (estimated fair value: 2021—$2,164,430; 2020—$1,871,754)	1,986,116		1,667,886
Other liabilities	756,754		716,373

Total liabilities	20,963,135		20,275,639
Commitments and Contingencies (Note 5)	0		0
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2021 and 2020	0		0
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2021—113,218,183 issued; 2020—113,218,183 issued)	113,218		113,218
Additional paid-in-capital	524,647		527,435
Accumulated other comprehensive income (loss)	2,750,279		3,029,244
Retained earnings	6,185,966		5,874,109
Treasury stock, at cost: (2021—11,055,223 shares; 2020—9,420,699 shares)	(957,188)		(772,914)
Total shareholders' equity	8,616,922		8,771,092
Total liabilities and shareholders' equity	$	29,580,057	$	29,046,731

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenue:	Revenue:									Revenue:
Life premium	Life premium	$	670,822	$	631,201	$	1,320,452	$	1,255,490	Life premium	$	728,170	$	670,822	$	1,436,289	$	1,320,452
Health premium	Health premium	282,877		266,282		563,082		532,966		Health premium	295,586		282,877		589,759		563,082
Other premium	Other premium	3		1		3		1		Other premium	0		3		1		3
Total premium	Total premium	953,702		897,484		1,883,537		1,788,457		Total premium	1,023,756		953,702		2,026,049		1,883,537
Net investment income	Net investment income	231,568		227,425		460,559		454,098		Net investment income	238,308		231,568		474,128		460,559
Realized gains (losses)	Realized gains (losses)	(4,790)		5,154		(30,887)		6,483		Realized gains (losses)	8,659		(4,790)		36,811		(30,887)

Other income	Other income	404		398		729		639		Other income	388		404		683		729
Total revenue	Total revenue	1,180,884		1,130,461		2,313,938		2,249,677		Total revenue	1,271,111		1,180,884		2,537,671		2,313,938

Benefits and expenses:	Benefits and expenses:									Benefits and expenses:
Life policyholder benefits	Life policyholder benefits	459,845		410,961		881,515		820,653		Life policyholder benefits	498,471		459,845		1,016,102		881,515
Health policyholder benefits	Health policyholder benefits	183,496		170,511		362,207		340,528		Health policyholder benefits	188,854		183,496		376,683		362,207
Other policyholder benefits	Other policyholder benefits	7,475		7,890		15,063		15,938		Other policyholder benefits	7,286		7,475		14,545		15,063
Total policyholder benefits	Total policyholder benefits	650,816		589,362		1,258,785		1,177,119		Total policyholder benefits	694,611		650,816		1,407,330		1,258,785

Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	146,160		138,165		289,997		273,987		Amortization of deferred acquisition costs	148,021		146,160		301,014		289,997
Commissions, premium taxes, and non-deferred acquisition costs	Commissions, premium taxes, and non-deferred acquisition costs	76,140		73,698		155,077		147,163		Commissions, premium taxes, and non-deferred acquisition costs	82,312		76,140		161,978		155,077
Other operating expense	Other operating expense	72,714		79,044		151,296		151,837		Other operating expense	79,155		72,714		160,365		151,296
Interest expense	Interest expense	22,813		21,432		43,621		42,710		Interest expense	21,769		22,813		42,947		43,621
Total benefits and expenses	Total benefits and expenses	968,643		901,701		1,898,776		1,792,816		Total benefits and expenses	1,025,868		968,643		2,073,634		1,898,776

Income before income taxes	Income before income taxes	212,241		228,760		415,162		456,861		Income before income taxes	245,243		212,241		464,037		415,162
Income tax benefit (expense)	Income tax benefit (expense)	(39,193)		(42,151)		(76,574)		(84,858)		Income tax benefit (expense)	(45,625)		(39,193)		(85,902)		(76,574)
Income from continuing operations		173,048		186,609		338,588		372,003

Income (loss) from discontinued operations, net of tax		—		(43)		—		(92)

Net income	Net income	$	173,048	$	186,566	$	338,588	$	371,911	Net income	$	199,618	$	173,048	$	378,135	$	338,588

Basic net income (loss) per common share:
Continuing operations		$	1.63	$	1.70	$	3.17	$	3.38
Discontinued operations		—		—		—		—
Total basic net income per common share		$	1.63	$	1.70	$	3.17	$	3.38

Diluted net income (loss) per common share:
Continuing operations		$	1.62	$	1.67	$	3.13	$	3.32
Discontinued operations		—		—		—		—
Total diluted net income per common share		$	1.62	$	1.67	$	3.13	$	3.32

Basic net income per common share										Basic net income per common share	$	1.94	$	1.63	$	3.66	$	3.17

Diluted net income per common share										Diluted net income per common share	$	1.92	$	1.62	$	3.62	$	3.13

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollar amounts in thousands)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	173,048	$	186,566	$	338,588	$	371,911	Net income	$	199,618	$	173,048	$	378,135	$	338,588

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):

Investments:	Investments:									Investments:
Unrealized gains (losses) on securities:
Unrealized gains (losses) on fixed maturities:										Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period	Unrealized holding gains (losses) arising during period	1,459,508		714,862		481,572		1,408,344		Unrealized holding gains (losses) arising during period	904,048		1,459,508		(358,011)		481,572

Other reclassification adjustments included in net income	Other reclassification adjustments included in net income	(3,190)		(843)		25,222		(3,287)		Other reclassification adjustments included in net income	645		(3,190)		(16,497)		25,222
Foreign exchange adjustment on securities recorded at fair value		233		626		(2,164)		484
Unrealized gains (losses) on securities		1,456,551		714,645		504,630		1,405,541
Foreign exchange adjustment on fixed maturities recorded at fair value										Foreign exchange adjustment on fixed maturities recorded at fair value	2,218		233		4,660		(2,164)
Unrealized gains (losses) on fixed maturities										Unrealized gains (losses) on fixed maturities	906,911		1,456,551		(369,848)		504,630

Unrealized gains (losses) on other investments	Unrealized gains (losses) on other investments	(2,540)		3,591		(13,260)		7,634		Unrealized gains (losses) on other investments	0		(2,540)		0		(13,260)
Total unrealized investment gains (losses)	Total unrealized investment gains (losses)	1,454,011		718,236		491,370		1,413,175		Total unrealized investment gains (losses)	906,911		1,454,011		(369,848)		491,370
Less applicable tax (expense) benefit	Less applicable tax (expense) benefit	(305,338)		(150,829)		(103,188)		(296,765)		Less applicable tax (expense) benefit	(190,452)		(305,338)		77,667		(103,188)
Unrealized gains (losses) on investments, net of tax	Unrealized gains (losses) on investments, net of tax	1,148,673		567,407		388,182		1,116,410		Unrealized gains (losses) on investments, net of tax	716,459		1,148,673		(292,181)		388,182

Deferred acquisition costs:	Deferred acquisition costs:									Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs	Unrealized gains (losses) attributable to deferred acquisition costs	382		170		765		(3,029)		Unrealized gains (losses) attributable to deferred acquisition costs	408		382		767		765
Less applicable tax (expense) benefit	Less applicable tax (expense) benefit	(81)		(35)		(161)		636		Less applicable tax (expense) benefit	(86)		(81)		(161)		(161)
Unrealized gains (losses) attributable to deferred acquisition costs, net of tax	Unrealized gains (losses) attributable to deferred acquisition costs, net of tax	301		135		604		(2,393)		Unrealized gains (losses) attributable to deferred acquisition costs, net of tax	322		301		606		604

Foreign exchange translation:	Foreign exchange translation:									Foreign exchange translation:
Foreign exchange translation adjustments, other than securities	Foreign exchange translation adjustments, other than securities	16,947		(38)		(10,495)		3,051		Foreign exchange translation adjustments, other than securities	6,173		16,947		5,563		(10,495)
Less applicable tax (expense) benefit	Less applicable tax (expense) benefit	(3,560)		7		2,203		(640)		Less applicable tax (expense) benefit	(1,296)		(3,560)		(1,168)		2,203
Foreign exchange translation adjustments, other than securities, net of tax	Foreign exchange translation adjustments, other than securities, net of tax	13,387		(31)		(8,292)		2,411		Foreign exchange translation adjustments, other than securities, net of tax	4,877		13,387		4,395		(8,292)

Pension:	Pension:									Pension:

Pension adjustments	Pension adjustments	4,158		2,118		8,315		4,238		Pension adjustments	5,200		4,158		10,400		8,315
Less applicable tax (expense) benefit	Less applicable tax (expense) benefit	(873)		(446)		(1,746)		(891)		Less applicable tax (expense) benefit	(1,094)		(873)		(2,185)		(1,746)
Pension adjustments, net of tax	Pension adjustments, net of tax	3,285		1,672		6,569		3,347		Pension adjustments, net of tax	4,106		3,285		8,215		6,569

Other comprehensive income (loss)	Other comprehensive income (loss)	1,165,646		569,183		387,063		1,119,775		Other comprehensive income (loss)	725,764		1,165,646		(278,965)		387,063
Comprehensive income (loss)	Comprehensive income (loss)	$	1,338,694	$	755,749	$	725,651	$	1,491,686	Comprehensive income (loss)	$	925,382	$	1,338,694	$	99,170	$	725,651

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity			Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity
Balance at December 31, 2019		$	—	$	117,218	$	531,554	$	1,844,830	$	5,551,329	$	(750,624)	$	7,294,307
Cumulative effect of change in accounting principles, net of tax⁽¹⁾		—		—		—		—		(454)		—		(454)
Balance at January 1, 2020		—		117,218		531,554		1,844,830		5,550,875		(750,624)		7,293,853
Balance at December 31, 2020																Balance at December 31, 2020	$	0	$	113,218	$	527,435	$	3,029,244	$	5,874,109	$	(772,914)	$	8,771,092

Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		(778,583)		165,540		—		(613,043)		Comprehensive income (loss)	—		—		—		(1,004,729)		178,517		—		(826,212)
Common dividends declared ($0.1875 per share)		—		—		—		—		(19,963)		—		(19,963)
Common dividends declared ($0.1975 per share)																Common dividends declared ($0.1975 per share)	—		—		—		—		(20,435)		—		(20,435)
Acquisition of treasury stock	Acquisition of treasury stock	—		—		—		—		—		(166,729)		(166,729)		Acquisition of treasury stock	—		—		—		—		—		(132,720)		(132,720)
Stock-based compensation	Stock-based compensation	—		—		(12,126)		—		(482)		21,964		9,356		Stock-based compensation	—		—		(11,422)		—		1,168		18,142		7,888
Exercise of stock options	Exercise of stock options	—		—		—		—		(9,539)		26,347		16,808		Exercise of stock options	—		—		—		—		(12,807)		45,531		32,724

Balance at March 31, 2020		—		117,218		519,428		1,066,247		5,686,431		(869,042)		6,520,282
Balance at March 31, 2021																Balance at March 31, 2021	0		113,218		516,013		2,024,515		6,020,552		(841,961)		7,832,337

Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		1,165,646		173,048		—		1,338,694		Comprehensive income (loss)	—		—		—		725,764		199,618		—		925,382
Common dividends declared ($0.1875 per share)		—		—		—		—		(19,956)		—		(19,956)

Common dividends declared ($0.1975 per share)																Common dividends declared ($0.1975 per share)	—		—		—		—		(20,171)		—		(20,171)
Acquisition of treasury stock																Acquisition of treasury stock	—		—		—		—		—		(162,864)		(162,864)
Stock-based compensation	Stock-based compensation	—		—		8,632		—		—		—		8,632		Stock-based compensation	—		—		8,634		—		—		—		8,634
Exercise of stock options	Exercise of stock options	—		—		—		—		(593)		1,310		717		Exercise of stock options	—		—		—		—		(14,033)		47,637		33,604

Balance at June 30, 2020		$	—	$	117,218	$	528,060	$	2,231,893	$	5,838,930	$	(867,732)	$	7,848,369
Balance at June 30, 2021																Balance at June 30, 2021	$	0	$	113,218	$	524,647	$	2,750,279	$	6,185,966	$	(957,188)	$	8,616,922

~~(1)Adoption of~~ ~~Accounting Standard Update (ASU) 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ ~~on January 1, 2020. See more information in~~ ~~Note 2—New Accounting Standards~~.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Condensed Consolidated Statements of Shareholders' Equity ~~(Continued)~~

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity			Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Shareholders' Equity

Balance at December 31, 2018		$	—	$	121,218	$	524,414	$	319,475	$	5,213,468	$	(763,398)	$	5,415,177
Balance at December 31, 2019																Balance at December 31, 2019	$	0	$	117,218	$	531,554	$	1,844,830	$	5,551,329	$	(750,624)	$	7,294,307
Cumulative effect of change in accounting principles, net of tax⁽¹⁾	Cumulative effect of change in accounting principles, net of tax⁽¹⁾	—		—		—		—		(497)		—		(497)		Cumulative effect of change in accounting principles, net of tax(1)	—		—		—		—		(454)		—		(454)
Balance at January 1, 2019		—		121,218		524,414		319,475		5,212,971		(763,398)		5,414,680
Balance at January 1, 2020																Balance at January 1, 2020	0		117,218		531,554		1,844,830		5,550,875		(750,624)		7,293,853
Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		550,592		185,345		—		735,937		Comprehensive income (loss)	—		—		—		(778,583)		165,540		—		(613,043)
Common dividends declared ($0.1725 per share)		—		—		—		—		(18,943)		—		(18,943)
Common dividends declared ($0.1875 per share)																Common dividends declared ($0.1875 per share)	—		—		—		—		(19,963)		—		(19,963)
Acquisition of treasury stock	Acquisition of treasury stock	—		—		—		—		—		(110,896)		(110,896)		Acquisition of treasury stock	—		—		—		—		—		(166,729)		(166,729)
Stock-based compensation	Stock-based compensation	—		—		(5,885)		—		(6,817)		23,261		10,559		Stock-based compensation	—		—		(12,126)		—		(482)		21,964		9,356
Exercise of stock options	Exercise of stock options	—		—		—		—		(7,736)		19,825		12,089		Exercise of stock options	—		—		—		—		(9,539)		26,347		16,808

Balance at March 31, 2019		—		121,218		518,529		870,067		5,364,820		(831,208)		6,043,426
Adoption of accounting standard		—		—		—		—		105		—		105
Balance at March 31, 2020																Balance at March 31, 2020	0		117,218		519,428		1,066,247		5,686,431		(869,042)		6,520,282

Comprehensive income (loss)	Comprehensive income (loss)	—		—		—		569,183		186,566		—		755,749		Comprehensive income (loss)	—		—		—		1,165,646		173,048		—		1,338,694
Common dividends declared $0.1725 per share)		—		—		—		—		(18,838)		—		(18,838)
Acquisition of treasury stock		—		—		—		—		—		(119,201)		(119,201)
Common dividends declared ($0.1875 per share)																Common dividends declared ($0.1875 per share)	—		—		—		—		(19,956)		—		(19,956)

Stock-based compensation	Stock-based compensation	—		—		7,989		—		—		3,267		11,256		Stock-based compensation	—		—		8,632		—		—		—		8,632
Exercise of stock options	Exercise of stock options	—		—		—		—		(18,136)		46,037		27,901		Exercise of stock options	—		—		—		—		(593)		1,310		717

Balance at June 30, 2019		$	—	$	121,218	$	526,518	$	1,439,250	$	5,514,517	$	(901,105)	$	6,700,398
Balance at June 30, 2020																Balance at June 30, 2020	$	0	$	117,218	$	528,060	$	2,231,893	$	5,838,930	$	(867,732)	$	7,848,369

(1)Adoption of ~~ASU 2016-02,~~ Accounting Standard Update (ASU) 2016-13, ~~Leases~~Financial Instruments—Credit Losses (Topic ~~842)~~326): Measurement of Credit Losses on Financial Instruments,, on January 1, ~~2019.~~2020.

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)

Six Months Ended
June 30,
2020 2019
Cash provided from (used for) operating activities
$ 769,302 $ 686,637
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold 52,020 34,997
Fixed maturities available for sale—matured or other redemptions 218,022 440,796
Other long-term investments 29,058 —
Total investments sold or matured 299,100 475,793
Acquisition of investments:
Fixed maturities—available for sale (562,875) (703,406)
Other long-term investments (156,291) (80,979)
Total investments acquired (719,166) (784,385)
Net (increase) decrease in policy loans (4,049) (10,403)
Net (increase) decrease in short-term investments (493,366) (1,806)
Additions to properties (20,145) (21,654)
Sale of other assets 18 15
Investments in low-income housing interests (23,049) (13,916)
Cash provided from (used for) investing activities
(960,657) (356,356)
Cash provided from (used for) financing activities:
Issuance of common stock 17,525 39,598
Cash dividends paid to shareholders (38,541) (36,652)
Repayment of debt (4,375) (3,125)
Proceeds from issuance of debt 300,000 —
Payment for debt issuance costs (891) —
Net borrowing (repayment) of commercial paper 159,920 (51,645)
Acquisition of treasury stock (166,729) (230,097)
Net receipts (payments) from deposit-type products (44,873) (74,217)
Cash provided from (used for) financing activities
222,036 (356,138)
Effect of foreign exchange rate changes on cash 7,417 (5,850)
Net increase (decrease) in cash 38,098 (31,707)
Cash at beginning of year 75,933 121,026
Cash at end of period $ 114,031 $ 89,319


	Six Months Ended June 30,
	2021		2020













Cash provided from (used for) operating activities	$	702,039	$	769,302

Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold	74,710		52,020
Fixed maturities available for sale—matured or other redemptions	108,815		218,022
Other long-term investments	4,490		29,058
Total investments sold or matured	188,015		299,100
Acquisition of investments:
Fixed maturities—available for sale	(415,134)		(562,875)
Other long-term investments	(141,975)		(156,291)
Total investments acquired	(557,109)		(719,166)
Net (increase) decrease in policy loans	1,291		(4,049)
Net (increase) decrease in short-term investments	(264,140)		(493,366)


Additions to properties	(23,727)		(20,145)
Other investing activities	0		18
Investments in low-income housing interests	(19,732)		(23,049)
Cash provided from (used for) investing activities	(675,402)		(960,657)

Cash provided from (used for) financing activities:
Issuance of common stock	66,328		17,525
Cash dividends paid to shareholders	(39,891)		(38,541)
Repayment of debt	0		(4,375)
Proceeds from issuance of debt	325,000		300,000
Payment for debt issuance costs	(7,639)		(891)
Net borrowing (repayment) of commercial paper	5,028		159,920
Acquisition of treasury stock	(295,584)		(166,729)
Net receipts (payments) from deposit-type products	(30,736)		(44,873)
Cash provided from (used for) financing activities	22,506		222,036

Effect of foreign exchange rate changes on cash	(5,918)		7,417
Net increase (decrease) in cash	43,225		38,098
Cash at beginning of year	94,847		75,933
Cash at end of period	$	138,072	$	114,031

See accompanying Notes to Condensed Consolidated Financial Statements.

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 1—Significant Accounting Policies

Business: "(Globe ~~Life"~~Life), ~~the "Company"~~(the Company), ~~refer~~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. (the ~~"Parent Company")~~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 4 reportable segments: life insurance, supplemental health insurance, annuities, and investments.

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 June 30, ~~2020,~~2021, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended June 30, ~~2020~~2021 and ~~2019.~~2020. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Form 10-K filed with the Securities Exchange Commission (SEC) on February ~~27, 2020.~~

~~Significant Accounting Policies: The following accounting policies were updated since the 2019 Form 10-K due to the adoption of~~ ~~ASU 2016-13~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ~~(ASU 2016-13.)~~

On January 1, 2020, the Company adopted ASU 2016-13, replacing the GAAP "incurred loss" model with a new methodology referred to as current expected credit losses (CECL). The previous methodology delayed recognition of credit losses until it was probable that a loss had incurred, ultimately resulting in fewer instances of losses being recorded in earnings. The new CECL methodology is forward looking—encompassing relevant information about historical experience, current conditions, as well as reasonable and supportable forecasts that affect the collectability of a reported amount.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. The standard affected the Company's commercial mortgage loan participations (~~Other long-term investments) and agent debit balances (Other receivables). The Company adopted the standard using the modified retrospective method.~~

The Company recorded a cumulative effect adjustment, net of tax of $454 thousand to retained earnings, consisting of $265 thousand, net of tax and $189 thousand, net of tax for commercial mortgage loan participations and agent debit balances, respectively. Refer to the table below for pre-tax amounts and ~~Note 4—Investmentsfor additional details.~~

As reported on December 31, 2019 Pre-tax impact of adoption As reported on January 1, 2020
Assets:
Commercial mortgage loan participations $ 137,692 $ (335) $ 137,357
Agent debit balances 423,877 (240) 423,637

25, 2021.

GL Q2 ~~2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollar amounts in thousands, except per share data)~~

In addition, the standard made changes to the accounting for available-for-sale debt securities through the removal of "other-than-temporary-impairment" (OTTI) write downs and replaced them with an allowance for credit losses. The new methodology will allow the Company to record reversals of credit losses in situations where the estimate of credit losses declines through current period net income (~~Realized gains (losses)~~).

The Company adopted the standard using the prospective transition approach for available-for-sale fixed maturities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis and the effective interest rate remain unchanged after the adoption of ASU 2016-13. Amortized cost will now be reflected as "amortized cost, net of allowance for credit losses" or "amortized cost, net." ~~The Company has not elected the fair value option for any financial assets recorded at amortized cost that would be in scope of this standard.~~

~~Investments, Available-For-Sale Fixed Maturities~~: Globe Life classifies all of its fixed maturity investments as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of taxes reflected directly in ~~Accumulated other comprehensive income~~ ~~("AOCI").~~

~~Income from investments is recorded in net investment income on the~~ ~~Condensed Consolidated Statements of Operations. Gains and losses from sales, maturities, or other redemptions of investments are recorded in~~ ~~Realized gains (losses)~~. Interest income and prepayment fees are recognized when earned. Premiums and discounts are amortized using the interest method. When amortized cost of a callable debt security exceeds the first call price, the premium is amortized to the earliest call date. Otherwise, the period of amortization or accretion generally extends from the purchase date to the maturity date.

Accrued investment income consists of interest income or dividends earned on the investment portfolio, but which are yet to be received as of the balance sheet date. The Company will write-off accrued investment income that is deemed to be uncollectible related to the fixed maturities. As a practical expedient, the Company excludes the accrued investment income from the amortized cost basis of the fixed maturity and separately reports it in another financial statement line item, ~~Accrued investment income. Additionally, the amount will be excluded from disclosures within~~ ~~Note 4~~.

~~Investments, Allowance For Credit Losses For Available-For-Sale Fixed Maturities~~: At the onset of the evaluation, the Company individually assesses each fixed maturity to determine whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria are met, the Company will write down the fixed maturity's amortized cost basis to fair value through ~~Realized gains (losses)~~.

If neither of the aforementioned criteria are met, the Company will evaluate whether the decline in fair value has resulted from a credit event. The Company will evaluate many factors, as further described below, to determine the present value of the expected cash flows. A credit loss occurs when the present value of the expected cash flows is less than the amortized cost basis. This will result in the recording of an allowance for credit losses as a contra asset account to the amortized cost basis with an offsetting provision for credit losses in ~~Realized gains (losses)~~ ~~on the~~ ~~Condensed Consolidated Statement of Operations~~. Additionally, the CECL methodology includes a fair value floor where the allowance for credit loss for a security cannot exceed the difference between fair value and amortized cost. When it is determined that there is not a credit loss, the decline in fair value is recognized in Other comprehensive income.

All changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses recorded to the allowance for credit losses are management's best estimate of the uncollectibility of principal and interest of a fixed maturity.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollar amounts in thousands, except per share data)~~

The evaluation of Globe Life's securities for credit losses is a process that is undertaken at least quarterly and is overseen by a team of investment and accounting professionals. The process for making this determination is highly subjective and involves the careful consideration of many factors. The factors considered include, but are not limited to:

•~~The Company’s ability and intent to hold the security until anticipated recovery~~

•~~The reason(s) for the impairment~~

•~~The financial condition of the issuer and the prospects for recovery in fair value of the security~~

•~~Expected future cash flows~~

The relative weight given to each of these factors can change over time as facts and circumstances change. In many cases, management believes it is appropriate to give more consideration to prospective factors than to retrospective factors. Prospective factors that are given more weight include prospects for recovery, the Company’s ability and intent to hold the security until anticipated recovery, and expected future cash flows.

~~Among the facts and information considered in the process are:~~

•~~Financial statements of the issuer~~

•~~Changes in credit ratings of the issuer~~

•~~The value of underlying collateral~~

•~~News and information included in press releases issued by the issuer~~

•~~News and information reported in the media concerning the issuer~~

•~~News and information published by or otherwise provided by securities, economic, or research analysts~~

•~~The nature and amount of recent and expected future sources and uses of cash~~

•~~Default on a required payment~~

•~~Issuer bankruptcy filings~~

The expected cash flows are determined using judgment and the best information available to the Company. Inputs used to derive expected cash flows generally include expected default rates, current levels of subordination, and estimated recovery rate. The discount rate utilized in the discounted cash flows is the effective interest rate, which is the rate of return implicit in the asset at acquisition.

~~Investments, Commercial Mortgage Loan Participations (Commercial Mortgage Loans)~~: Commercial mortgage loans, a type of investment where the commercial mortgage loan is shared among investors, are accounted for as financing receivables. The commercial mortgage loans are managed by a third party. The Company purchased the legal rights to interests in commercial mortgage loans that are secured by properties such as hotels, retail, multiple family, or offices. The commercial mortgage loans typically have a term of three years with an option to extend up to two years.

The commercial mortgage loans are recorded at unpaid principal balance, net of unamortized origination fees and net of allowance for loan losses. Interest income, net of the amortization of origination fees, is recorded in ~~Net investment income~~ ~~under the effective yield method.~~ ~~Accrued investment income~~ ~~on the~~ ~~Condensed Consolidated Balance Sheets~~ consists of interest income earned on the commercial mortgage loan portfolio, but which is yet to be received as of the balance sheet date. Accrued investment income will be placed in nonaccrual status at the time the loan is 90 days delinquent or otherwise deemed to be uncollectible by management. Any currently accrued investment income will subsequently be written off.~~As a practical expedient, the Company excludes theaccrued investment income from the amortized cost basis of the commercial mortgage loans and separately reports it in another financial statement line item,~~ ~~Accrued investment income. Additionally, the amount will be excluded from disclosures within~~ ~~Note 4~~. As of June 30, 2020, the accrued interest receivable for commercial mortgage loans was $384 thousand. Commercial mortgage loans generally pay interest monthly, therefore accrued interest is typically for a period of 30 days or less. The unfunded commitment balance was $81 million as of June 30, 2020.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollar amounts in thousands, except per share data)~~

The Company evaluates the performance and credit quality of the commercial mortgage loan portfolio at least on a quarterly basis, or as needed, by utilizing common metrics such as loan-to-value and debt service coverage ratios as well as evaluating the fair value of the underlying collateral. The fair value of the underlying collateral is based on a third-party appraisal of the property at origination of the loan, and is reviewed on an annual basis thereafter, or more frequently when a loan is materially underperforming, 30 days delinquent, or in technical default. The Company determines the probability of estimated losses for the commercial mortgage loan portfolio on a pool basis each quarter and records an allowance. The allowance for credit losses is based on estimates, historical experience, probability of loss, value of the underlying collateral, and macro factors that affect the collectibility of the loan. Each loan within the pool is assigned a risk rating (credit quality indicator) of low, medium, and high based on risk and expected future performance. A loan that is assigned as high risk would have a higher probability of a potential principal loss. The assigned risk category and the estimated loss rate is adjusted each quarter for current and forecasted economic factors management believes are relevant.

If management determines that foreclosure of a particular property is probable, the Company may elect the practical expedient for an individual mortgage loan to estimate the expected credit losses, which are based on the fair value of the property less amortized cost, adjusted for selling and other associated costs. See ~~Note 4~~ ~~for current activity.~~

~~Other Receivables, Agent Debit Balances~~: Agent debit balances primarily represent commissions advanced to insurance agents, a common industry practice. These balances are repaid to the Company over time, generally one year, as the premiums associated with the advanced commissions are collected by the Company and a portion of the agents' commissions on such premiums are retained in order to repay the balances. The balances were $428 million at June 30, 2020 and $424 million at December 31, 2019. When an agent sells a policy, commissions are advanced to the agent, and the collection of the advance is made as long as the policy stays in force. While there is a susceptibility to loss should an agent terminate or excessive policy lapses occur, the ability of the Company to continue to collect an agent's commission streams over time from prior sales of policies reduces the Company's exposure to loss.

The Company has a very low inherent risk with regards to the collection of agent debit balances and views these balances as recoverable since they are, in aggregate, less than the estimated present value of future commissions discounted at a conservative rate which includes assumptions for lapses and mortality. The Company’s security, or collateral, is in the form of future commission streams collected over the life of the policies sold by the respective agents, which ultimately revert to the Company in the event an agent is terminated. The Company evaluated the agent debit balances on a pool basis to determine the allowance for credit losses, as the loans have similar characteristics. A provision for credit losses will be recorded in ~~Realized gains (losses)~~ ~~on the~~ ~~Condensed Consolidated Statement of Operations~~ ~~and the asset balance will be reflected as Agent Debit Balances, net of allowance for credit losses (Other receivables~~). Based on factors considered by management, there were no additional credit losses recorded during the three months ended June 30, 2020. As of June 30, 2020, the allowance for credit losses was $1.2 million compared with $1.0 million as of December 31, 2019.

~~GL Q2 2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 2—New Accounting Standards

Accounting Pronouncements Adopted in the Current Year

Standard

Description

Effective Date

Effect on the Consolidated Financial Statements

ASU No. ~~2016-13/2019-04/2019-05~~2020-08, ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ ~~with clarification guidance issued in April 2019.~~Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs

~~This~~The standard ~~("CECL") provides financial statement users~~was issued as an amendment to ASU 2017-08, and clarifies that callable debt securities with ~~more decision-useful information about~~a premium should be amortized to the expected credit losses on financial instruments that are recorded at amortized cost. Additionally, it changes the loss impairment methodology for available-for-sale fixed maturities by the use of an allowance rather than a direct write down.next call date.

This standard became effective on January 1, ~~2020.~~2021.

The ~~Company's available-for-sale fixed maturities and other financing receivables (commercial mortgage loans and agent debit balances) were concluded to be the relevant financial assets within the scope~~adoption of ~~the standard. See Note 1 for information on the adoption and revised accounting policies.~~

~~ASU No. 2020-04,~~ ~~Reference Rate Reform (Topic 848):~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~

~~This~~this standard was issued primarily to provide optional expedients for simplifying the accounting for contract modifications to existing agreements, which is expected to arise from the market's transition from LIBOR to the secured overnight financing rate (SOFR) as a result of reference rate reform.

~~This standard became effective upon issuance, or March 12, 2020, and will remain effective until December 31, 2022.~~

~~The Company has limited assets and liabilities that utilize LIBOR as a benchmark rate. We will continue to monitor the progress towards the establishment of a new floating rate; however, we do~~did not ~~expect~~have a material impact ~~at this time.~~on the consolidated financial statements.

Accounting Pronouncements Yet to be Adopted

Standard

Description

Effective Date

Effect on the Consolidated Financial Statements

ASU No. 2018-12/~~2019-09~~2019-09/2020-11,

Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, with clarification guidance issued in November ~~2019.~~2019 and 2020.

ASU 2018-12 is a significant change to our current accounting and disclosure of long-duration contracts, which is our primary business. The guidance was primarily issued to: 1) improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows, 2) simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, 3) simplify the amortization of deferred acquisition costs, and 4) improve the effectiveness of the required disclosures.

~~The current~~As a result of the issuance of ASU 2020-11 in November 2020, the effective date for this standard ~~is January 1, 2022. On July 9, 2020, the FASB issued a proposed ASU~~was changed to ~~delay LDTI an additional year until~~ January 1, 2023. Early adoption is available.

~~An entity may select to either adopt a modified retrospective transition or a full retrospective transition.~~

The Company is currently in the process of evaluating the impact this standard will have on the consolidated financial statements and disclosures, specifically assessing key accounting policies, assumption and data inputs, controls, and enhanced system solutions.

As of the balance sheet date, the Company is continuing to upgrade its valuation systems as part of its implementation plan. In addition, significant progress has been made allowing the Company to execute parallel valuation runs on major blocks of business and is updating its accounting policies. Due to the overall nature of the standard, the impact on the consolidated financial statements is expected to be significant. At this time, the Company does not have an estimate of the impact. The Company does not expect to early adopt this ~~ASU.~~ASU and has selected a modified retrospective transition method.

~~ASU No. 2018-14~~, ~~Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20), Changes to the Disclosure Requirements for Defined Benefit Plans~~

The standard removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant to defined benefit plans.

~~This standard is effective beginning January 1, 2021, and will be applied retrospectively. Early adoption is permitted.~~

~~The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.~~

118

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

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 six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:



	Three Months Ended June 30, 2021
	Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at April 1, 2021	$	2,166,932	$	(4,420)	$	22,820	$	(160,817)	$	2,024,515
Other comprehensive income (loss) before reclassifications, net of tax	715,949		322		4,877		0		721,148
Reclassifications, net of tax	510		0		0		4,106		4,616
Other comprehensive income (loss)	716,459		322		4,877		4,106		725,764
Balance at June 30, 2021	$	2,883,391	$	(4,098)	$	27,697	$	(156,711)	$	2,750,279


		Three Months Ended June 30, 2020																			Three Months Ended June 30, 2020
		Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total			Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at April 1, 2020	Balance at April 1, 2020	$	1,222,159	$	(5,613)	$	(9,621)	$	(140,678)	$	1,066,247	Balance at April 1, 2020	$	1,222,159	$	(5,613)	$	(9,621)	$	(140,678)	$	1,066,247
Other comprehensive income (loss) before reclassifications, net of tax	Other comprehensive income (loss) before reclassifications, net of tax	1,151,193		301		13,387		—		1,164,881		Other comprehensive income (loss) before reclassifications, net of tax	1,151,193		301		13,387		0		1,164,881
Reclassifications, net of tax	Reclassifications, net of tax	(2,520)		—		—		3,285		765		Reclassifications, net of tax	(2,520)		0		0		3,285		765
Other comprehensive income (loss)	Other comprehensive income (loss)	1,148,673		301		13,387		3,285		1,165,646		Other comprehensive income (loss)	1,148,673		301		13,387		3,285		1,165,646
Balance at June 30, 2020	Balance at June 30, 2020	$	2,370,832	$	(5,312)	$	3,766	$	(137,393)	$	2,231,893	Balance at June 30, 2020	$	2,370,832	$	(5,312)	$	3,766	$	(137,393)	$	2,231,893


	Six Months Ended June 30, 2021
	Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at January 1, 2021	$	3,175,572	$	(4,704)	$	23,302	$	(164,926)	$	3,029,244
Other comprehensive income (loss) before reclassifications, net of tax	(279,148)		606		4,395		0		(274,147)
Reclassifications, net of tax	(13,033)		0		0		8,215		(4,818)
Other comprehensive income (loss)	(292,181)		606		4,395		8,215		(278,965)
Balance at June 30, 2021	$	2,883,391	$	(4,098)	$	27,697	$	(156,711)	$	2,750,279

Three Months Ended June 30, 2019
Available
for Sale
Assets Deferred
Acquisition
Costs Foreign
Exchange Pension
Adjustments Total
Balance at April 1, 2019
$ 984,701 $ (6,691) $ 8,937 $ (116,880) $ 870,067
Other comprehensive income (loss) before reclassifications, net of tax 568,073 135 (31) — 568,177
Reclassifications, net of tax (666) — — 1,672 1,006
Other comprehensive income (loss) 567,407 135 (31) 1,672 569,183
Balance at June 30, 2019
$ 1,552,108 $ (6,556) $ 8,906 $ (115,208) $ 1,439,250

Six Months Ended June 30, 2020
Available
for Sale
Assets Deferred
Acquisition
Costs Foreign
Exchange Pension
Adjustments Total
Balance at January 1, 2020
$ 1,982,650 $ (5,916) $ 12,058 $ (143,962) $ 1,844,830
Other comprehensive income (loss) before reclassifications, net of tax 368,257 604 (8,292) — 360,569
Reclassifications, net of tax 19,925 — — 6,569 26,494
Other comprehensive income (loss) 388,182 604 (8,292) 6,569 387,063
Balance at June 30, 2020
$ 2,370,832 $ (5,312) $ 3,766 $ (137,393) $ 2,231,893


		Six Months Ended June 30, 2019																			Six Months Ended June 30, 2020
		Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total			Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at January 1, 2019		$	435,698	$	(4,163)	$	6,495	$	(118,555)	$	319,475
Balance at January 1, 2020												Balance at January 1, 2020	$	1,982,650	$	(5,916)	$	12,058	$	(143,962)	$	1,844,830
Other comprehensive income (loss) before reclassifications, net of tax	Other comprehensive income (loss) before reclassifications, net of tax	1,119,007		(2,393)		2,411		—		1,119,025		Other comprehensive income (loss) before reclassifications, net of tax	368,257		604		(8,292)		0		360,569
Reclassifications, net of tax	Reclassifications, net of tax	(2,597)		—		—		3,347		750		Reclassifications, net of tax	19,925		0		0		6,569		26,494
Other comprehensive income (loss)	Other comprehensive income (loss)	1,116,410		(2,393)		2,411		3,347		1,119,775		Other comprehensive income (loss)	388,182		604		(8,292)		6,569		387,063
Balance at June 30, 2019		$	1,552,108	$	(6,556)	$	8,906	$	(115,208)	$	1,439,250
Balance at June 30, 2020												Balance at June 30, 2020	$	2,370,832	$	(5,312)	$	3,766	$	(137,393)	$	2,231,893

129

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Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Reclassification adjustments: Reclassification adjustments out of Accumulated Other Comprehensive Income are presented below for the three and six month periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.


		Three Months Ended June 30,						Six Months Ended June 30,								Affected line items in the Statement of Operations				Three Months Ended June 30,						Six Months Ended June 30,		Affected line items in the Statement of Operations
Component Line Item	Component Line Item	2020		2019		2020		2019			Affected line items in the Statement of Operations	Component Line Item			2021				2020			2021			2020		Affected line items in the Statement of Operations
Unrealized investment (gains) losses on available for sale assets:	Unrealized investment (gains) losses on available for sale assets:
Realized (gains) losses	Realized (gains) losses	$	(5,063)	$	(2,237)	$	21,857	$	(5,907)	Realized (gains) losses	Realized (gains) losses		$	(866)			$	(5,063)		$	(19,656)		$	21,857		Realized (gains) losses

Amortization of (discount) premium	Amortization of (discount) premium	1,873		1,394		3,365		2,620		Net investment income	Amortization of (discount) premium		1,511				1,873			3,159			3,365			Net investment income
Total before tax	Total before tax	(3,190)		(843)		25,222		(3,287)			Total before tax		645				(3,190)			(16,497)			25,222
Tax	Tax	670		177		(5,297)		690		Income taxes	Tax		(135)				670			3,464			(5,297)			Income taxes
Total after-tax	Total after-tax	(2,520)		(666)		19,925		(2,597)			Total after-tax		510				(2,520)			(13,033)			19,925
Pension adjustments:	Pension adjustments:										Pension adjustments:
Amortization of prior service cost	Amortization of prior service cost	158		158		316		316		Other operating expense	Amortization of prior service cost		158				158			316			316			Other operating expense
Amortization of actuarial (gain) loss	Amortization of actuarial (gain) loss	4,000		1,960		7,999		3,922		Other operating expense	Amortization of actuarial (gain) loss		5,042				4,000			10,084			7,999			Other operating expense
Total before tax	Total before tax	4,158		2,118		8,315		4,238			Total before tax		5,200				4,158			10,400			8,315
Tax	Tax	(873)		(446)		(1,746)		(891)		Income taxes	Tax		(1,094)				(873)			(2,185)			(1,746)			Income taxes
Total after-tax	Total after-tax	3,285		1,672		6,569		3,347			Total after-tax		4,106				3,285			8,215			6,569
Total reclassification (after-tax)	Total reclassification (after-tax)	$	765	$	1,006	$	26,494	$	750		Total reclassification (after-tax)		$	4,616			$	765		$	(4,818)		$	26,494

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Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 ~~the corporates~~"Corporates, by ~~sector.~~sector".

~~As noted in~~ ~~Note 1—Significant Accounting Policies~~, the Company prospectively adopted ASU 2016-13 as of January 1, 2020 for the available-for-sale fixed maturities. Results after January 1, 2020 are presented under ASU 2016-13, while prior periods continue to be reported in accordance with previously applicable GAAP. See additional discussion of the allowance for credit losses later in this note.


		At June 30, 2020																						At June 30, 2021
		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value⁽¹⁾		% of Total Fixed Maturities⁽²⁾		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:	Fixed maturities available for sale:												Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	377,555	$	—	$	89,319	$	(58)	$	466,816	2	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	377,327	$	0	$	69,245	$	(128)	$	446,444	2
States, municipalities, and political subdivisions	States, municipalities, and political subdivisions	1,617,951		—		206,554		(478)		1,824,027		9	States, municipalities, and political subdivisions	1,904,617		0		242,686		(696)		2,146,607		10
Foreign governments	Foreign governments	33,900		—		2,633		(17)		36,516		—	Foreign governments	62,027		0		1,835		(3,707)		60,155		0
Corporates, by sector:	Corporates, by sector:												Corporates, by sector:
Financial	Financial	4,303,589		—		798,500		(53,564)		5,048,525		26	Financial	4,522,818		0		933,508		(13,620)		5,442,706		26
Utilities	Utilities	1,930,929		—		518,495		(1,616)		2,447,808		13	Utilities	1,959,373		0		529,966		(902)		2,488,437		12
Energy	Energy	1,663,051		(32,719)		209,597		(53,861)		1,786,068		9	Energy	1,629,246		0		364,800		(1,852)		1,992,194		9
Other corporate sectors	Other corporate sectors	6,584,590		—		1,294,194		(21,202)		7,857,582		40	Other corporate sectors	6,839,315		0		1,507,500		(11,254)		8,335,561		40
Total corporates	Total corporates	14,482,159		(32,719)		2,820,786		(130,243)		17,139,983		88	Total corporates	14,950,752		0		3,335,774		(27,628)		18,258,898		87
Collateralized debt obligations	Collateralized debt obligations	57,031		—		21,988		(9,920)		69,099		—	Collateralized debt obligations	36,288		0		28,119		0		64,407		0
Other asset-backed securities	Other asset-backed securities	129,304		—		2,866		(7,429)		124,741		1	Other asset-backed securities	120,907		0		5,209		(847)		125,269		1
Total fixed maturities	Total fixed maturities	$	16,697,900	$	(32,719)	$	3,144,146	$	(148,145)	$	19,661,182	100	Total fixed maturities	$	17,451,918	$	0	$	3,682,868	$	(33,006)	$	21,101,780	100

(1)Amount reported in the balance sheet.

(2)At fair value.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)


		At December 31, 2019																		At December 31, 2020
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value⁽¹⁾		% of Total Fixed Maturities⁽²⁾		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value(1)		% of Total Fixed Maturities(2)
Fixed maturities available for sale:	Fixed maturities available for sale:										Fixed maturities available for sale:
U.S. Government direct, guaranteed, and government-sponsored enterprises	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	396,079	$	41,737	$	(296)	$	437,520	2	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	380,602	$	0	$	87,272	$	(43)	$	467,831	2
States, municipalities, and political subdivisions	States, municipalities, and political subdivisions	1,559,736		158,546		(626)		1,717,656		9	States, municipalities, and political subdivisions	1,880,607		0		251,291		(315)		2,131,583		10
Foreign governments	Foreign governments	25,874		2,073		(396)		27,551		—	Foreign governments	52,913		0		2,635		(898)		54,650		0
Corporates, by sector:	Corporates, by sector:										Corporates, by sector:
Financial	Financial	4,101,917		701,196		(22,307)		4,780,806		25	Financial	4,404,203		0		1,016,813		(24,221)		5,396,795		26
Utilities	Utilities	1,937,738		416,114		(1,565)		2,352,287		13	Utilities	1,975,460		0		608,595		(108)		2,583,947		12
Energy	Energy	1,678,969		269,640		(33,725)		1,914,884		10	Energy	1,623,970		(3,346)		346,197		(3,083)		1,963,738		9
Other corporate sectors	Other corporate sectors	6,514,677		955,908		(16,765)		7,453,820		40	Other corporate sectors	6,687,644		0		1,727,366		(6,218)		8,408,792		40
Total corporates	Total corporates	14,233,301		2,342,858		(74,362)		16,501,797		88	Total corporates	14,691,277		(3,346)		3,698,971		(33,630)		18,353,272		87
Collateralized debt obligations	Collateralized debt obligations	56,990		24,298		(7,184)		74,104		—	Collateralized debt obligations	57,007		0		23,460		(8,869)		71,598		0
Other asset-backed securities	Other asset-backed securities	143,796		5,094		(371)		148,519		1	Other asset-backed securities	134,739		0		3,614		(3,778)		134,575		1
Total fixed maturities	Total fixed maturities	$	16,415,776	$	2,574,606	$	(83,235)	$	18,907,147	100	Total fixed maturities	$	17,197,145	$	(3,346)	$	4,067,243	$	(47,533)	$	21,213,509	100

(1)Amount reported in the balance sheet.

(2)At fair value.

A schedule of fixed maturities available for sale by contractual maturity date at June 30, ~~2020~~2021 is shown below on an amortized cost basis, net of allowance for credit losses, ~~basis~~ and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions.

At June 30, 2020
Amortized
Cost, net Fair
Value
Fixed maturities available for sale:
Due in one year or less $ 62,732 $ 63,550
Due after one year through five years 745,715 816,256
Due after five years through ten years 1,783,317 2,065,078
Due after ten years through twenty years 5,788,845 7,141,059
Due after twenty years 8,097,882 9,381,016
Mortgage-backed and asset-backed securities 186,690 194,223
$ 16,665,181 $ 19,661,182


	At June 30, 2021
	Amortized Cost, net		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	96,034	$	97,942
Due after one year through five years	774,012		858,646
Due after five years through ten years	1,963,341		2,348,161
Due after ten years through twenty years	6,485,804		8,277,620
Due after twenty years	7,975,330		9,329,517
Mortgage-backed and asset-backed securities	157,397		189,894
	$	17,451,918	$	21,101,780

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Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Analysis of Investment Operations: ~~Net~~"Net investment ~~income~~income" for the three and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 is summarized as follows:


		Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,			Six Months Ended June 30,
		2020		2019		% Change	2020		2019		% Change		2021		2020		% Change	2021		2020		% Change
Fixed maturities available for sale	Fixed maturities available for sale	$	217,556	$	215,867	1	$	434,683	$	431,630	1	Fixed maturities available for sale	$	223,278	$	217,556	3	$	444,997	$	434,683	2
Policy loans	Policy loans	11,213		10,821		4	22,331		21,457		4	Policy loans	11,324		11,213		1	22,592		22,331		1
Other long-term investments⁽¹⁾	Other long-term investments⁽¹⁾	7,146		3,991		79	11,769		7,379		59	Other long-term investments(1)	8,880		7,146		24	17,042		11,769		45
Short-term investments	Short-term investments	134		763		(82)	441		1,582		(72)	Short-term investments	6		134		(96)	10		441		(98)
		236,049		231,442		2	469,224		462,048		2		243,488		236,049		3	484,641		469,224		3
Less investment expense	Less investment expense	(4,481)		(4,017)		12	(8,665)		(7,950)		9	Less investment expense	(5,180)		(4,481)		16	(10,513)		(8,665)		21
Net investment income	Net investment income	$	231,568	$	227,425	2	$	460,559	$	454,098	1	Net investment income	$	238,308	$	231,568	3	$	474,128	$	460,559	3

(1)For the three months ended June 30, ~~2020~~2021 and ~~2019, the investment funds, accounted for under the fair value option method, recorded $4.5 million and $1.4 million, respectively in net investment income. For the six months ended June 30,~~ 2020, ~~and 2019,~~ the investment funds, accounted for under the fair value option method, recorded $6.5 million and ~~$2.8~~$4.5 million of distributions, respectively in net investment income. For the six months ended June 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $12.3 million and $6.5 million of distributions, respectively in net investment income. Refer to Other Long-Term Investmentsbelowfor further discussion on the investment funds.

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

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Fixed maturities available for sale:
Proceeds from sales⁽¹⁾
$ 1,660 $ — $ 52,020 $ 34,997
Gross realized gains — — 2,642 46
Gross realized losses (371) — (371) (3,027)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Fixed maturities available for sale:
Proceeds from sales(1)	$	12,852	$	1,660	$	74,710	$	52,020
Gross realized gains	0		0		1,134		2,642
Gross realized losses	(82)		(371)		(12,101)		(371)

(1)There were no unsettled sales in the periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.

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

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other⁽¹⁾
$ 5,928 $ 2,237 $ 10,862 $ 5,907
Provision for credit losses (865) — (32,719) —
Fair value option—change in fair value (19,434) 2,869 (18,851) 684
Other investments 9,581 48 9,821 (108)
Realized gains (losses) from investments
(4,790) 5,154 (30,887) 6,483
Applicable tax 1,006 (1,082) 6,486 (1,361)
Realized gains (losses), net of tax
$ (3,784) $ 4,072 $ (24,401) $ 5,122


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)	$	865	$	5,928	$	16,309	$	10,862

Provision for credit losses	0		(865)		3,346		(32,719)
Fair value option—change in fair value	2,543		(19,434)		12,428		(18,851)
Other investments	5,251		9,581		4,728		9,821
Realized gains (losses) from investments	8,659		(4,790)		36,811		(30,887)



Applicable tax	(1,818)		1,006		(7,730)		6,486
Realized gains (losses), net of tax	$	6,841	$	(3,784)	$	29,081	$	(24,401)

(1)During the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company recorded ~~$80.4~~$22.4 million and ~~$48.3~~$80.4 million of exchanges of fixed maturities (noncash transactions) that resulted in ~~$7.9 million~~$0 and ~~$2.5~~$7.9 million, respectively in realized gains (losses). During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company recorded ~~$86.3~~$108.3 million and ~~$117.2~~$86.3 million of exchanges of fixed maturities (noncash transactions) that resulted in ~~$7.9~~$25.2 million and ~~$8.3~~$7.9 million, respectively in realized gains (losses).

1613

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Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Fair Value Measurements: The following tables represent the fair value of fixed maturities measured on a recurring basis at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		Fair Value Measurement at June 30, 2020 Using:																						Fair Value Measurement at June 30, 2021 Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale	Fixed maturities available for sale													Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	466,816		$	—		$	466,816		U.S. Government direct, guaranteed, and government-sponsored enterprises	$	0		$	446,444		$	0		$	446,444
States, municipalities, and political subdivisions	States, municipalities, and political subdivisions	—			1,824,027			—			1,824,027			States, municipalities, and political subdivisions	0			2,146,607			0			2,146,607
Foreign governments	Foreign governments	—			36,516			—			36,516			Foreign governments	0			60,155			0			60,155
Corporates, by sector:	Corporates, by sector:													Corporates, by sector:
Financial	Financial	—			4,900,057			148,468			5,048,525			Financial	0			5,268,630			174,076			5,442,706
Utilities	Utilities	—			2,286,065			161,743			2,447,808			Utilities	0			2,331,689			156,748			2,488,437
Energy	Energy	—			1,748,616			37,452			1,786,068			Energy	0			1,953,907			38,287			1,992,194
Other corporate sectors	Other corporate sectors	—			7,546,329			311,253			7,857,582			Other corporate sectors	0			8,025,927			309,634			8,335,561
Total corporates	Total corporates	—			16,481,067			658,916			17,139,983			Total corporates	0			17,580,153			678,745			18,258,898
Collateralized debt obligations	Collateralized debt obligations	—			—			69,099			69,099			Collateralized debt obligations	0			0			64,407			64,407
Other asset-backed securities	Other asset-backed securities	—			111,861			12,880			124,741			Other asset-backed securities	0			125,269			0			125,269
Total fixed maturities	Total fixed maturities	$	—		$	18,920,287		$	740,895		$	19,661,182		Total fixed maturities	$	0		$	20,358,628		$	743,152		$	21,101,780
Percentage of total	Percentage of total	—		%	96		%	4		%	100		%	Percentage of total	0		%	96		%	4		%	100		%


		Fair Value Measurement at December 31, 2019 Using:																						Fair Value Measurement at December 31, 2020 Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Fixed maturities available for sale	Fixed maturities available for sale													Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	437,520		$	—		$	437,520		U.S. Government direct, guaranteed, and government-sponsored enterprises	$	0		$	467,831		$	0		$	467,831
States, municipalities, and political subdivisions	States, municipalities, and political subdivisions	—			1,717,656			—			1,717,656			States, municipalities, and political subdivisions	0			2,131,583			0			2,131,583
Foreign governments	Foreign governments	—			27,551			—			27,551			Foreign governments	0			54,650			0			54,650
Corporates, by sector:	Corporates, by sector:													Corporates, by sector:
Financial	Financial	—			4,628,875			151,931			4,780,806			Financial	0			5,222,066			174,729			5,396,795
Utilities	Utilities	—			2,195,539			156,748			2,352,287			Utilities	0			2,400,602			183,345			2,583,947
Energy	Energy	—			1,873,482			41,402			1,914,884			Energy	0			1,925,549			38,189			1,963,738
Other corporate sectors	Other corporate sectors	—			7,131,773			322,047			7,453,820			Other corporate sectors	0			8,090,550			318,242			8,408,792
Total corporates	Total corporates	—			15,829,669			672,128			16,501,797			Total corporates	0			17,638,767			714,505			18,353,272
Collateralized debt obligations	Collateralized debt obligations	—			—			74,104			74,104			Collateralized debt obligations	0			0			71,598			71,598
Other asset-backed securities	Other asset-backed securities	—			135,342			13,177			148,519			Other asset-backed securities	0			121,705			12,870			134,575
Total fixed maturities	Total fixed maturities	$	—		$	18,147,738		$	759,409		$	18,907,147		Total fixed maturities	$	0		$	20,414,536		$	798,973		$	21,213,509
Percentage of total	Percentage of total	—		%	96		%	4		%	100		%	Percentage of total	0		%	96		%	4		%	100		%

1714

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

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)																						Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Asset- backed Securities			Collateralized Debt Obligations			Corporates			Total				Asset- backed Securities			Collateralized Debt Obligations			Corporates			Total
Balance at January 1, 2020		$	13,177		$	74,104		$	672,128		$	759,409
Balance at January 1, 2021														Balance at January 1, 2021	$	12,870		$	71,598		$	714,505		$	798,973

Included in realized gains / losses	Included in realized gains / losses	—			—			1,213			1,213			Included in realized gains / losses	(82)			(6,787)			840			(6,029)
Included in other comprehensive income	Included in other comprehensive income	(250)			(5,046)			11,765			6,469			Included in other comprehensive income	63			13,528			(12,489)			1,102
Acquisitions	Acquisitions	—			—			—			—			Acquisitions	0			0			0			0
Sales	Sales	—			—			—			—			Sales	(12,851)			(13,213)			0			(26,064)
Amortization	Amortization	—			2,275			4			2,279			Amortization	0			2,270			4			2,274
Other⁽¹⁾	Other⁽¹⁾	(47)			(2,234)			(26,194)			(28,475)			Other(1)	0			(2,989)			(24,115)			(27,104)
Transfers into Level 3⁽²⁾	Transfers into Level 3⁽²⁾	—			—			—			—			Transfers into Level 3(2)	0			0			0			0
Transfers out of Level 3⁽²⁾	Transfers out of Level 3⁽²⁾	—			—			—			—			Transfers out of Level 3(2)	0			0			0			0
Balance at June 30, 2020		$	12,880		$	69,099		$	658,916		$	740,895
Balance at June 30, 2021														Balance at June 30, 2021	$	0		$	64,407		$	678,745		$	743,152
Percent of total fixed maturities	Percent of total fixed maturities	—		%	1		%	3		%	4		%	Percent of total fixed maturities	0		%	1		%	3		%	4		%

(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			Collateralized Debt Obligations			Corporates			Total
Balance at January 1, 2020	$	13,177		$	74,104		$	672,128		$	759,409

Included in realized gains / losses	0			0			1,213			1,213
Included in other comprehensive income	(250)			(5,046)			11,765			6,469
Acquisitions	0			0			0			0
Sales	0			0			0			0
Amortization	0			2,275			4			2,279
Other(1)	(47)			(2,234)			(26,194)			(28,475)
Transfers into Level 3(2)	0			0			0			0
Transfers out of Level 3(2)	0			0			0			0
Balance at June 30, 2020	$	12,880		$	69,099		$	658,916		$	740,895
Percent of total fixed maturities	0		%	1		%	3		%	4		%

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

Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Asset-
backed Securities
Collateralized
Debt
Obligations Corporates Total
Balance at January 1, 2019
$ 12,982 $ 73,369 $ 553,471 $ 639,822
Included in realized gains / losses — — — —
Included in other comprehensive income 441 6,306 23,620 30,367
Acquisitions — — — —
Sales — — — —
Amortization — 2,315 7 2,322
Other⁽¹⁾
(220) (2,912) (6,927) (10,059)
Transfers into Level 3⁽²⁾
— — — —
Transfers out of Level 3⁽²⁾
— — — —
Balance at June 30, 2019
$ 13,203 $ 79,078 $ 570,171 $ 662,452
Percent of total fixed maturities — % 1 % 3 % 4 %

~~(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.

1815

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The following table presents changes in unrealized gains or (losses) for the period included in other comprehensive income for assets held at the end of the reporting period for Level 3s:


		Changes in Unrealized Gains/Losses included in Other Comprehensive Income for Assets Held at the End of the Period															Changes in Unrealized Gains/Losses included in Other Comprehensive Income for Assets Held at the End of the Period
		Asset- backed Securities		Collateralized Debt Obligations		Corporates		Total			Asset- backed Securities		Collateralized Debt Obligations		Corporates		Total
At June 30, 2021										At June 30, 2021	$	63	$	13,528	$	(12,489)	$	1,102
At June 30, 2020	At June 30, 2020	$	(250)	$	(5,046)	$	11,765	$	6,469	At June 30, 2020	(250)		(5,046)		11,765		6,469
At June 30, 2019		441		6,306		23,620		30,367

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 June 30, 2020 102 35 137
As of December 31, 2019 82 51 133


	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIPs) held:
As of June 30, 2021	99	17	116
As of December 31, 2020	54	24	78

Globe Life's entire fixed maturity portfolio consisted of ~~1,731~~1,917 issues by ~~711~~779 different issuers at June 30, ~~2020~~2021 and ~~1,633~~1,900 issues by ~~656~~777 different issuers at December 31, ~~2019.~~2020. The weighted-average quality rating of all unrealized loss positions at amortized cost was BBB+ and BBB- as of June 30, ~~2020 was BB+ compared with BBB- as of~~2021 and December 31, ~~2019.~~2020, respectively.

1916

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The following table discloses unrealized investment losses by class and major sector of fixed maturities available for sale for which an allowance for credit losses has not been recorded at June 30, ~~2020.~~2021.

~~Analysis of Gross Unrealized Investment Losses~~

At June 30, 2020
Less than Twelve Months Twelve Months or Longer Total
Fair
Value Unrealized
Loss Fair
Value Unrealized
Loss Fair
Value Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises $ — $ — $ 1,968 $ (58) $ 1,968 $ (58)
States, municipalities and political subdivisions 21,170 (478) — — 21,170 (478)
Foreign governments 4,690 (17) — — 4,690 (17)
Corporates, by sector:
Financial 205,161 (10,765) 5,594 (2,906) 210,755 (13,671)
Utilities — — — — — —
Energy 299,831 (23,252) 1,736 (212) 301,567 (23,464)
Other corporate sectors 106,389 (7,081) 17,844 (155) 124,233 (7,236)
Total corporates 611,381 (41,098) 25,174 (3,273) 636,555 (44,371)
Other asset-backed securities 47,730 (5,642) 8 — 47,738 (5,642)
Total investment grade securities 684,971 (47,235) 27,150 (3,331) 712,121 (50,566)
Below investment grade securities:
States, municipalities and political subdivisions — — — — — —
Corporates, by sector:
Financial 33,256 (6,676) 99,492 (33,217) 132,748 (39,893)
Utilities 11,387 (246) 14,307 (1,370) 25,694 (1,616)
Energy 62,252 (8,099) 55,653 (22,298) 117,905 (30,397)
Other corporate sectors 33,629 (2,741) 68,808 (11,225) 102,437 (13,966)
Total corporates 140,524 (17,762) 238,260 (68,110) 378,784 (85,872)
Collateralized debt obligations — — 10,080 (9,920) 10,080 (9,920)
Other asset-backed securities — — 12,314 (1,787) 12,314 (1,787)
Total below investment grade securities 140,524 (17,762) 260,654 (79,817) 401,178 (97,579)
Total fixed maturities
$ 825,495 $ (64,997) $ 287,804 $ (83,148) $ 1,113,299 $ (148,145)

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. ~~As noted in~~ ~~Note 1, the~~The Company considers many factors when determining whether an allowance for a credit loss ~~exists.~~should be recorded. While the Company holds securities that may be in an unrealized loss position from time to time, Globe Life does not intend to sell and it is likely that management will not 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 June 30, 2021
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	3,888	$	(128)	$	2	$	0	$	3,890	$	(128)
States, municipalities and political subdivisions	61,437		(696)		0		0		61,437		(696)
Foreign governments	32,095		(3,707)		0		0		32,095		(3,707)
Corporates, by sector:
Financial	108,309		(4,251)		5,069		(158)		113,378		(4,409)
Utilities	22,950		(815)		0		0		22,950		(815)
Energy	84,963		(403)		0		0		84,963		(403)
Other corporate sectors	125,515		(5,677)		100		(2)		125,615		(5,679)
Total corporates	341,737		(11,146)		5,169		(160)		346,906		(11,306)
Collateralized debt obligations	0		0		0		0		0		0
Other asset-backed securities	10,552		(9)		2		0		10,554		(9)
Total investment grade securities	449,709		(15,686)		5,173		(160)		454,882		(15,846)

Below investment grade securities:
States, municipalities and political subdivisions	0		0		0		0		0		0

Corporates, by sector:
Financial	20,243		(58)		103,362		(9,153)		123,605		(9,211)
Utilities	15,008		(87)		0		0		15,008		(87)
Energy	0		0		26,647		(1,449)		26,647		(1,449)
Other corporate sectors	7,857		(3,442)		19,190		(2,133)		27,047		(5,575)
Total corporates	43,108		(3,587)		149,199		(12,735)		192,307		(16,322)
Collateralized debt obligations	0		0		0		0		0		0
Other asset-backed securities	0		0		12,962		(838)		12,962		(838)
Total below investment grade securities	43,108		(3,587)		162,161		(13,573)		205,269		(17,160)
Total fixed maturities	$	492,817	$	(19,273)	$	167,334	$	(13,733)	$	660,151	$	(33,006)

2017

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The following table discloses unrealized investment losses by class and major sector of fixed maturities available for sale at December 31, ~~2019. Globe Life considered these investments to be only temporarily impaired.~~2020.

Analysis of Gross Unrealized Investment Losses

At December 31, 2019
Less than Twelve Months Twelve Months or Longer Total
Fair
Value Unrealized
Loss Fair
Value Unrealized
Loss Fair
Value Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises $ 1,255 $ (2) $ 21,044 $ (294) $ 22,299 $ (296)
States, municipalities and political subdivisions 66,774 (626) — — 66,774 (626)
Foreign governments 6,496 (396) — — 6,496 (396)
Corporates, by sector:
Financial 117,389 (1,733) 7,183 (1,317) 124,572 (3,050)
Utilities 8,400 (166) — — 8,400 (166)
Energy 52,312 (1,058) 1,833 (115) 54,145 (1,173)
Other corporate sectors 136,386 (1,584) 61,473 (3,260) 197,859 (4,844)
Total corporates 314,487 (4,541) 70,489 (4,692) 384,976 (9,233)
Other asset-backed securities — — — — — —
Total investment grade securities 389,012 (5,565) 91,533 (4,986) 480,545 (10,551)
Below investment grade securities:
States, municipalities and political subdivisions — — — — — —
Corporates, by sector:
Financial — — 113,481 (19,257) 113,481 (19,257)
Utilities 7,529 (135) 14,985 (1,264) 22,514 (1,399)
Energy 14,968 (146) 69,956 (32,406) 84,924 (32,552)
Other corporate sectors — — 67,655 (11,921) 67,655 (11,921)
Total corporates 22,497 (281) 266,077 (64,848) 288,574 (65,129)
Collateralized debt obligations — — 12,816 (7,184) 12,816 (7,184)
Other asset-backed securities — — 13,879 (371) 13,879 (371)
Total below investment grade securities 22,497 (281) 292,772 (72,403) 315,269 (72,684)
Total fixed maturities
$ 411,509 $ (5,846) $ 384,305 $ (77,389) $ 795,814 $ (83,235)


	At December 31, 2020
	Less than Twelve Months				Twelve Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	2,006	$	(43)	$	0	$	0	$	2,006	$	(43)
States, municipalities and political subdivisions	32,910		(315)		0		0		32,910		(315)
Foreign governments	19,532		(898)		0		0		19,532		(898)
Corporates, by sector:
Financial	117,762		(2,564)		6,333		(2,168)		124,095		(4,732)
Utilities	2,726		(108)		0		0		2,726		(108)
Energy	1,692		(8)		14,871		(106)		16,563		(114)
Other corporate sectors	21,882		(720)		0		0		21,882		(720)
Total corporates	144,062		(3,400)		21,204		(2,274)		165,266		(5,674)
Collateralized debt obligations	0		0		0		0		0		0
Other asset-backed securities	28,864		(1,051)		5		0		28,869		(1,051)
Total investment grade securities	227,374		(5,707)		21,209		(2,274)		248,583		(7,981)

Below investment grade securities:
States, municipalities and political subdivisions	0		0		0		0		0		0

Corporates, by sector:
Financial	6,822		(36)		115,093		(19,453)		121,915		(19,489)
Utilities	0		0		0		0		0		0
Energy	18,432		(757)		38,720		(2,212)		57,152		(2,969)
Other corporate sectors	25,711		(3,588)		19,516		(1,910)		45,227		(5,498)
Total corporates	50,965		(4,381)		173,329		(23,575)		224,294		(27,956)
Collateralized debt obligations	0		0		11,131		(8,869)		11,131		(8,869)
Other asset-backed securities	0		0		11,223		(2,727)		11,223		(2,727)
Total below investment grade securities	50,965		(4,381)		195,683		(35,171)		246,648		(39,552)
Total fixed maturities	$	278,339	$	(10,088)	$	216,892	$	(37,445)	$	495,231	$	(47,533)

2118

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows. ~~Based on key factors considered by management, a provision for credit losses of $33 million was recorded for one energy issuer during the six months ended June 30, 2020. Refer to~~ ~~Note 1~~ ~~for factors considered in the recording of the allowance for credit losses.~~


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Allowance for credit losses beginning balance	Allowance for credit losses beginning balance	$	31,854	$	—	$	—	$	—	Allowance for credit losses beginning balance	$	0	$	31,854	$	3,346	$	0
Additions to allowance for which credit losses were not previously recorded	Additions to allowance for which credit losses were not previously recorded	—		—		31,854		—		Additions to allowance for which credit losses were not previously recorded	0		0		0		31,854
Additions (reductions) to allowance for fixed maturities that previously had an allowance	Additions (reductions) to allowance for fixed maturities that previously had an allowance	865		—		865		—		Additions (reductions) to allowance for fixed maturities that previously had an allowance	0		865		0		865
Reduction of allowance for which the Company intends to sell or more likely than not will be required to sell		—		—		—		—
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										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	0		0		(3,346)		0
Allowance for credit losses ending balance	Allowance for credit losses ending balance	$	32,719	$	—	$	32,719	$	—	Allowance for credit losses ending balance	$	0	$	32,719	$	0	$	32,719

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company did not have any fixed maturities in non-accrual status.

Other Long-Term Investments: Other long-term investments consist of the following assets:


		June 30, 2020		December 31, 2019
									June 30, 2021		December 31, 2020
Investment funds	Investment funds	$	264,246	$	185,851	Investment funds	$	533,658	$	385,038
Commercial mortgage loan participations	Commercial mortgage loan participations	164,420		137,692		Commercial mortgage loan participations	160,639		160,602
Other	Other	3,659		2,804		Other	3,891		1,341
Total	Total	$	432,325	$	326,347	Total	$	698,188	$	546,981

The investment funds consist of limited partnerships whereby the Company has a pro-rata share of ownership ranging from 1% to 20%. For each investment, the Company has elected the fair value option, but would have been otherwise accounted for as an equity method investment. The fair value option is assessed for each individual investment and concluded at the inception of the investment. Additionally, each investment is evaluated under ASC 810, Consolidation to determine if it is a variable interest entity and would qualify for consolidation; none of the investments qualify for consolidation as the Company is not the primary beneficiary in any of these investments.

The investments are reported at the Company's pro-rata share of the investment fund's net asset value or its equivalent (NAV) as a practical expedient for fair value. Changes in the net asset value are recorded in ~~Realized~~"Realized gains (losses)" on the Condensed Consolidated Statements of Operations. Distributions received from the funds arise from income generated by the underlying investments as well as the liquidation of the underlying investments. Periodic distributions are recorded in net investment income until cumulative distributions exceed our pro-rata share of operating earnings at which point the distributions will reduce the carrying value. Our maximum exposure to loss is equal to the outstanding carrying value and future funding commitments.

During the quarter, the Company ~~has not~~ committed to ~~any~~one new limited ~~partnerships.~~partnership. The Company had ~~$100~~$72 million of capital called during the quarter from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were ~~$456~~$409 million as of June 30, ~~2020.~~

2021.

2219

GL Q2 ~~2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollar amounts in thousands, except per share data)~~

~~Commercial Mortgage Loan Participations (commercial mortgage loans):Summaries of commercial mortgage loans by property type and geographical location at June 30, 2020 and December 31, 2019 are as follows:~~

June 30, 2020 December 31, 2019
Carrying Value % of Total Carrying Value % of Total
Property type:
Office $ 42,997 26 $ 42,350 31
Mixed use 44,892 27 27,501 20
Hospitality 22,736 14 22,324 16
Industrial 22,439 14 17,612 13
Retail 18,899 11 17,318 12
Multi-family 16,295 10 10,587 8
Total recorded investment 168,258 102 137,692 100
Less allowance for credit losses (3,838) (2) — —
Carrying value, net of allowance for credit losses
$ 164,420 100 $ 137,692 100

June 30, 2020 December 31, 2019
Carrying Value % of Total Carrying Value % of Total
Geographic location:
South Atlantic $ 52,003 32 $ 50,867 37
Pacific 59,042 36 36,546 27
Middle Atlantic 30,514 18 25,328 18
East North Central 10,589 6 10,568 8
West South Central 8,388 5 8,072 6
East South Central 4,692 3 4,676 3
West North Central 1,389 1 — —
New England 1,641 1 1,635 1
Total recorded investment 168,258 102 137,692 100
Less allowance for credit losses (3,838) (2) — —
Carrying value, net of allowance for credit losses
$ 164,420 100 $ 137,692 100

As of June 30, 2020, the Company evaluated the commercial mortgage loan portfolio on a pool basis to determine the allowance for credit losses, except for individual loans where the practical expedient was elected. At the end of the period, the Company had 27 loans in the portfolio.

~~GL Q2 2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

~~As noted in~~ ~~Note 1, the Company adopted~~ ~~ASU 2016-13~~ using the modified retrospective method for commercial mortgage loans. On January 1, 2020, a cumulative effect adjustment was recorded to retained earnings of $335 thousand ($265 thousand, net of tax). For the three months ended June 30, 2020, the allowance for credit losses was increased by $3.5 million to $3.8 million as result of macroeconomic events. The provision for credit losses, recorded in Realized gains (losses) in Other investments, includes the provision for credit losses for the pool and the individual loan as described below.

As of June 30, 2020, the Company determined that 1 of the commercial mortgage loans (multi-family) was probable of foreclosure and elected the practical expedient to record the loan at the fair value of the property less amortized cost, adjusted for selling and other associated costs. For the three months ended June 30, 2020, the allowance was $1 million.

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Allowance for credit losses beginning balance
$ 335 $ — $ — $ —
Cumulative effect of adoption ASU 2016-13 — — 335 —
Provision for credit losses 3,503 — 3,503 —
Securities charge-off — — — —
Recoveries — — — —
Allowance for credit losses ending balance
$ 3,838 $ — $ 3,838 $ —

The following table presents additional information about the ~~aging~~Company's investment funds as of ~~the amortized cost basis of delinquent commercial mortgage loans. Loans are considered delinquent after~~June 30, ~~days.~~2021 and December 31, 2020 at fair value:



	Fair Value				Unfunded Commitments
Investment Category	June 30, 2021		December 31, 2020		June 30, 2021		Redemption Term/Notice




Commercial mortgage loans	$	347,042	$	227,050	$	172,001	Portion non-redeemable and fully redeemable after 6 month period, subject to fund liquidity/discretion of General Partner. Expected life is 7 years for non-redeemable fund.
Opportunistic credit	169,351		157,461		0		Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.




Other	17,265		527		236,811		Fully redeemable with varying terms and non-redeemable.
Total investment funds	$	533,658	$	385,038	$	408,812

As of June 30, 2020 30-59 Days Delinquent 60-89 days Delinquent Greater than 90 Days Delinquent Total Delinquent
Commercial mortgage loans $ — $ 4,600 $ — $ 4,600
Number of delinquent commercial mortgage loans. — 1 — 1

Commercial Mortgage Loan Participations (commercial mortgage loans):

~~There were no delinquent~~Summaries of commercial mortgage loans ~~as of~~by property type and geographical location at June 30, 2021 and December 31, ~~2019. As of June 30,~~ 2020 the Company had 1 commercial mortgage loan in non-accrual status. As of December 31, 2019, the Company did 0t have any commercial mortgage loans in non-accrual status. Additionally, all other commercial mortgage loans were current with respect to payment status and no commercial mortgage loans were classifiedare as ~~a troubled debt restructuring (TDRs).~~

follows:


	June 30, 2021			December 31, 2020
	Carrying Value		% of Total	Carrying Value		% of Total
Property type:
Mixed use	$	51,124	32	$	49,002	31
Office	36,156		23	36,153		22
Hospitality	22,540		14	22,605		14
Retail	19,699		12	19,319		12
Industrial	17,900		11	17,900		11
Multi-family	14,859		9	19,128		12

Total recorded investment	162,278		101	164,107		102
Less allowance for credit losses	(1,639)		(1)	(3,505)		(2)
Carrying value, net of allowance for credit losses	$	160,639	100	$	160,602	100


	June 30, 2021			December 31, 2020
	Carrying Value		% of Total	Carrying Value		% of Total
Geographic location:
California	$	62,764	39	$	61,610	38
Virginia	27,019		17	27,019		17
New York	17,107		11	16,602		10
Pennsylvania	11,661		7	11,314		7
Indiana	9,717		6	9,717		6
Florida	8,142		5	12,420		8
Other	25,868		16	25,425		16
Total recorded investment	162,278		101	164,107		102
Less allowance for credit losses	(1,639)		(1)	(3,505)		(2)
Carrying value, net of allowance for credit losses	$	160,639	100	$	160,602	100

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The following tables are reflective of Management's internal risk ratings of the ~~key~~loan portfolio. Loans are rated low, moderate, and high. The risk categories consider many different factors such as quality of asset, borrower status, as well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 2021, are transitional or under construction and may not yet be income producing. Certain ratios, such as loan to value and debt service coverage ratios, ~~and loan-to-value ratios (LTVs), that are utilized by management to monitor~~may not be evaluated as the ~~performance~~value of the ~~portfolios.~~underlying transitional property significantly fluctuates based on completion of the project.


	Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
	As of June 30, 2021
Risk Rating:	Number of Loans	2021		2020		2019		2018		2017		Total
Low	16	$	0	$	20,884	$	13,080	$	32,957	$	62,057	$	128,978
Moderate	5	0		0		13,601		8,142		0		21,743
High	2	0		0		4,568		6,989		0		11,557
Total commercial mortgage loans	23	$	0	$	20,884	$	31,249	$	48,088	$	62,057	162,278
Less allowance for credit losses on the investment pool												(1,639)
Less allowance for credit losses on individual loans												0
Carrying value, net of valuation allowance												$	160,639


	Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
	As of December 31, 2020
Risk Rating:	Number of Loans	2020		2019		2018		2017		Total
Low	17	$	20,176	$	14,757	$	33,132	$	61,460	$	129,525
Moderate	4	0		10,640		7,796		0		18,436
High	3	0		4,554		11,592		0		16,146
Total commercial mortgage loans	24	$	20,176	$	29,951	$	52,520	$	61,460	164,107
Less allowance for credit losses on the investment pool										(2,503)
Less allowance for credit losses on individual loans										(1,002)
Carrying value, net of valuation allowance										$	160,602

As of June 30, 2021, 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 23 loans in the portfolio. For the six months ended June 30, 2021, the allowance for credit losses decreased by $1.9 million to $1.6 million. The ~~Company primarily invests~~provision for credit losses is included in "Realized gains (losses)".


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Allowance for credit losses beginning balance	$	2,147	$	335	$	3,505	$	0
Cumulative effect of adoption ASU 2016-13	0		0		0		335
Provision (reversal) for credit losses	(508)		3,503		(1,866)		3,503
Loans charge-off	0		0		0		0
Allowance for credit losses ending balance	$	1,639	$	3,838	$	1,639	$	3,838

GL Q2 2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

There were no delinquent commercial mortgage loans ~~that have a loan-to-value ratio less than 80%. Generally, higher LTV ratios can potentially equate~~as of June 30, 2021, compared with one delinquent commercial mortgage at December 31, 2020. As of June 30, 2021 and December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. The Company's unfunded commitment balance to ~~higher risk~~commercial loan borrowers was $37 million as of ~~loss.~~

June 30, 2020
Recorded Investment
Debt Service Coverage Ratios⁽¹⁾
<1.00x 1.00x—1.20x >1.20x Total % of Total
Loan-to-value ratio⁽²⁾:
Less than 70% $ 19,747 $ 106,408 $ — $ 126,155 77
70% to 80% 1,365 33,379 — 34,744 21
81% to 90% — — — — —
Greater than 90% 3,521 — — 3,521 2
Total
$ 24,633 $ 139,787 $ — $ 164,420 100

December 31, 2019
Recorded Investment
Debt Service Coverage Ratios⁽¹⁾
<1.00x 1.00x—1.20x >1.20x Total % of Total
Loan-to-value ratio⁽²⁾:
Less than 70% $ 64,160 $ 47,634 $ 12,666 $ 124,460 90
70% to 80% 11,445 1,787 — 13,232 10
81% to 90% — — — — —
Greater than 90% — — — — —
Total
$ 75,605 $ 49,421 $ 12,666 $ 137,692 100

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

~~(2)Loan balance divided by the fair value of the property. LTVs are generally assessed on an annual basis, or more frequently when a loan is materially underperforming, greater than~~June 30, ~~days delinquent, or in technical default.~~2021.

Note 5—Commitments and Contingencies

Guarantees: The Parent Company has guaranteed letters of credit in connection with its credit facility with a group of banks. The letters of credit were issued by TMK Re, Ltd., a wholly-owned subsidiary, to secure TMK Re, Ltd.’s obligation for claims on certain policies reinsured by TMK Re, Ltd. that were sold by other Globe Life insurance subsidiaries. These letters of credit facilitate TMK Re, Ltd.’s ability to reinsure the business of Globe Life's insurance carriers. The agreement expires in 2023. The maximum amount of letters of credit available is $250 million. The Parent Company would be liable to the extent that TMK Re, Ltd. does not pay the reinsured party. As of June 30, 2021 and December 31, 2020, the outstanding balance was $135 million.

Litigation: Globe Life Inc. (formerly Torchmark Corporation) and its subsidiaries, in common with the insurance industry in general, are subject to litigation, including putative class action litigation, alleged breaches of contract, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of agents of the Parent Company's insurance subsidiaries, employment discrimination, and miscellaneous other causes of action. Based upon information presently available, and in light of legal and other factual defenses available to the Parent Company and its subsidiaries, management does not believe that it is reasonably possible that such litigation will have a material adverse effect on Globe Life's financial condition, future operating results or liquidity; however, assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future. This bespeaks caution, particularly in states with reputations for high punitive damage verdicts. Globe Life's management recognizes that large punitive damage awards bearing little or no relation to actual damages continue to be awarded by juries in jurisdictions in which the Company has substantial business, creating the potential for unpredictable material adverse judgments in any given punitive damage suit.

~~With respect to~~On January 4, 2021, putative class and collective action litigation was filed against National Income Life Insurance Company in the ~~aforementioned litigation, at this time, management believes that~~United States District Court for the ~~possibility~~Northern District of New York. (John Turner v. National Income Life Insurance Company, Case No. 5:21-cv-0003). Plaintiff Turner is a former New York National Income agent who asserted a claim under New York law on behalf of a ~~material judgment adverse~~putative New York class of trainees and sales agents for the six years prior to February 13, 2020 through case conclusion. He made a claim under the ~~Company is remote.~~New York Labor Law for alleged failure to pay minimum wage and overtime, and for expense reimbursement. In addition, Mr. Turner asserted a claim under the Fair Labor Standards Act (FLSA) on behalf of trainees and sales agents for the three years prior to February 13, 2020 through case conclusion. The FLSA claim alleged failure to pay for all hours worked and sought expense reimbursement. The lawsuit also requested declaratory relief and liquidated damages. Prior to filing a motion to compel arbitration of Mr. Turner’s individual claims, National Income reached a settlement with Mr. Turner for a non-material sum as to his individual claims, and the litigation has been dismissed.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 6—Liability for Unpaid Claims

Activity in the liability for unpaid health claims is summarized as follows:

Six Months Ended
June 30,
2020 2019
Balance at beginning of period
$ 163,808 $ 154,528
Incurred related to:
Current year 301,767 302,129
Prior year (4,139) 77
Total incurred 297,628 302,206
Paid related to:
Current year 251,768 190,599
Prior year 40,503 110,587
Total paid 292,271 301,186
Balance at end of period
$ 169,165 $ 155,548


	June 30, 2021		December 31, 2020

Balance at beginning of period	$	162,261	$	163,808
Incurred related to:
Current year	325,582		584,936
Prior year	(19,681)		(14,829)
Total incurred	305,901		570,107
Paid related to:
Current year	197,328		442,127
Prior year	106,148		129,527
Total paid	303,476		571,654
Balance at end of period	$	164,686	$	162,261

Below is the reconciliation of the liability of "Policy claims and other benefits ~~payable~~"payable" in the Condensed Consolidated Balance Sheets.


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
											December 31, 2020
Policy claims and other benefits payable:	Policy claims and other benefits payable:					Policy claims and other benefits payable:
Life insurance	Life insurance	$	211,013	$	201,594	Life insurance	$	211,137	$	237,246
Health insurance	Health insurance	169,165		163,808		Health insurance	164,686		162,261
Total	Total	$	380,178	$	365,402	Total	$	375,823	$	399,507

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 7—Postretirement Benefits

Globe Life has qualified noncontributory defined benefit pension plans (Pension Plans) and contributory savings plans that cover substantially all employees. There is also a nonqualified noncontributory supplemental executive retirement plan (SERP) that covers a limited number of ~~employees.~~officers. The tables included herein will focus on the defined benefit plans ~~("Pension Plan")~~ and SERP.

Pension Assets: The following table presents the assets of the Company's defined benefit pension ~~plans~~plan at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Pension Assets by Component at June 30, ~~2020~~

Fair Value Determined by:

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Amount
% to
Total
Corporate bonds:
Financial $ — $ 52,297 $ — $ 52,297 11
Utilities — 43,921 — 43,921 9
Energy — 20,497 — 20,497 4
Other corporates — 92,000 — 92,000 20
Total corporate bonds — 208,715 — 208,715 44
Exchange traded fund⁽¹⁾
199,512 — — 199,512 42
Other bonds — 266 — 266 —
Guaranteed annuity contract⁽²⁾
— 28,551 — 28,551 6
Short-term investments 19,992 — — 19,992 4
Other 6,376 — — 6,376 1
$ 225,880 $ 237,532 $ — 463,412 97
Other long-term investments⁽³⁾
14,768 3
Total pension assets
$ 478,180 100
2021


	Fair Value Determined by:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Amount		% to Total
Corporate bonds:
Financial	$	0	$	56,211	$	0	$	56,211	10
Utilities	0		44,358		0		44,358		8
Energy	0		23,119		0		23,119		4
Other corporates	0		89,934		0		89,934		16
Total corporate bonds	0		213,622		0		213,622		38
Exchange traded fund(1)	281,693		0		0		281,693		51
Other bonds	0		247		0		247		0
Guaranteed annuity contract(2)	0		30,381		0		30,381		5
Short-term investments	13,583		0		0		13,583		2
Other	2,812		0		0		2,812		1
	$	298,088	$	244,250	$	0	542,338		97
Other long-term investments(3)							15,720		3
Total pension assets							$	558,058	100

(1)A fund including marketable securities that mirror the S&P 500 index.

(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income Pension Plan").

(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns less than 1% of the investment fund. As of June 30, ~~2020,~~2021, the expected term of the investment fund is approximately 4 years and the commitment of the investment is fully funded. The investment is non-redeemable. The investment fund strategy is opportunistic, applying a comprehensive relative value approach across various asset classes and opportunities in public and private markets, geographies, and capital structures.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Pension Assets by Component at December 31, ~~2019~~2020


		Fair Value Determined by:																	Fair Value Determined by:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Amount		% to Total		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Amount		% to Total
Corporate bonds:	Corporate bonds:										Corporate bonds:
Financial	Financial	$	—	$	51,111	$	—	$	51,111	11	Financial	$	0			$	52,252		$	0	$	52,252	10
Utilities	Utilities	—		42,758		—		42,758		9	Utilities	0				45,888			0		45,888		9
Energy	Energy	—		21,907		—		21,907		5	Energy	0				22,480			0		22,480		4
Other corporates	Other corporates	—		89,725		—		89,725		19	Other corporates	0				88,983			0		88,983		17
Total corporate bonds	Total corporate bonds	—		205,501		—		205,501		44	Total corporate bonds	0				209,603			0		209,603		40
Exchange traded fund⁽¹⁾	Exchange traded fund⁽¹⁾	207,176		—		—		207,176		44	Exchange traded fund(1)	245,170				0			0		245,170		46
Other bonds	Other bonds	—		251		—		251		—	Other bonds	0				258			0		258		0
Guaranteed annuity contract⁽²⁾	Guaranteed annuity contract⁽²⁾	—		28,278		—		28,278		6	Guaranteed annuity contract(2)	0				30,119			0		30,119		6
Short-term investments	Short-term investments	8,414		—		—		8,414		2	Short-term investments	20,960				0			0		20,960		4
Other	Other	6,876		—		—		6,876		1	Other	7,109				0			0		7,109		1
		$	222,466	$	234,030	$	—	456,496		97		$	273,239			$	239,980		$	0	513,219		97
Other long-term investments⁽³⁾	Other long-term investments⁽³⁾													12,267				3		Other long-term investments(3)				16,313		3
Total pension assets	Total pension assets													$	468,763			100		Total pension assets				$	529,532	100

(1)A fund including marketable securities that mirror the S&P 500 index.

(2)Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the obligations of the American Income Pension Plan.

(3)Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited partnership's net asset value per share or its equivalent (NAV), as a practical expedient for fair value. The Globe Life Inc. Pension Plan owns approximately 1% of the investment fund. As of December 31, ~~2019,~~2020, the expected term of the investment fund is approximately 54 years and the ~~unfunded~~ commitment of the investment ~~fund~~ is ~~$4.1 million.~~fully funded. The investment is non-redeemable. The investment fund strategy is opportunistic, applying a comprehensive relative value approach across various asset classes and opportunities in public and private markets, geographies, and capital structures.

SERP: The following table includes information regarding the SERP.


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Premiums paid for insurance coverage	Premiums paid for insurance coverage	$	443	$	444	Premiums paid for insurance coverage	$	443	$	443

		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Total investments:	Total investments:					Total investments:
Company owned life insurance	Company owned life insurance	$	48,855	$	47,733	Company owned life insurance	$	52,529	$	51,361
Exchange traded funds	Exchange traded funds	66,254		65,585		Exchange traded funds	79,788		75,390
		$	115,109	$	113,318		$	132,317	$	126,751

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Pension and SERP Liabilities: The following table presents liabilities for the defined benefit pension plans and SERP at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Defined benefit pension	Defined benefit pension	$	577,841	$	578,860	Defined benefit pension	$	704,695	$	667,753
SERP	SERP	86,742		86,347		SERP	95,917		95,560
Pension benefit obligation	Pension benefit obligation	$	664,583	$	665,207	Pension benefit obligation	$	800,612	$	763,313

Net Periodic Benefit Cost: The following table presents the net periodic benefit costs for the defined benefit pension plans and SERP by expense components for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Components of Net Periodic Benefit Cost

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Service cost $ 6,115 $ 4,983 $ 12,231 $ 9,965
Interest cost 5,647 5,964 11,298 11,928
Expected return on assets (7,391) (6,966) (14,781) (13,932)
Amortization:
Prior service cost 158 158 316 316
Actuarial (gain) loss 3,925 1,896 7,849 3,790
Net periodic benefit cost
$ 8,454 $ 6,035 $ 16,913 $ 12,067


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Service cost	$	7,918	$	6,115	$	15,836	$	12,231
Interest cost	5,469		5,647		10,936		11,298
Expected return on assets	(8,083)		(7,391)		(16,166)		(14,781)
Amortization:
Prior service cost	158		158		316		316
Actuarial (gain) loss	4,984		3,925		9,969		7,849


Net periodic benefit cost	$	10,446	$	8,454	$	20,891	$	16,913

Note 8—Earnings Per Share

Earnings per Share: A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:


		Three Months Ended June 30,			Six Months Ended June 30,				Three Months Ended June 30,		Six Months Ended June 30,
		2020	2019	2020	2019		2021	2020	2021	2020
Basic weighted average shares outstanding	Basic weighted average shares outstanding	106,441,311	109,649,714	106,863,267	109,973,820	Basic weighted average shares outstanding	102,895,435	106,441,311	103,187,567	106,863,267
Weighted average dilutive options outstanding	Weighted average dilutive options outstanding	692,706	1,935,962	1,195,173	1,975,492	Weighted average dilutive options outstanding	1,337,911	692,706	1,331,047	1,195,173
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	107,134,017	111,585,676	108,058,440	111,949,312	Diluted weighted average shares outstanding	104,233,346	107,134,017	104,518,614	108,058,440

Antidilutive shares	Antidilutive shares	5,417,077	1,359,686	2,281,300	1,359,686	Antidilutive shares	31,269	5,417,077	1,326,599	2,281,300

Antidilutive shares are excluded from the calculation of diluted earnings per share.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 9—Debt

Long-term debt: On June 14, 2021, Globe Life completed the issuance and sale of $325 million in aggregate principal amount of 4.25% unsecured Junior Subordinated Debentures due June 15, 2061. The net proceeds from the sale of the Junior Subordinated Debentures were $317 million and were used to redeem the 6.125% Junior Subordinated Debentures plus accrued interest of $1.5 million on July 15, 2021 as well as for general corporate purposes.

The following table presents information about the terms and outstanding balances of Globe Life's debt.

Selected Information about Debt Issues


				As of
				June 30, 2021								December 31, 2020
Instrument	Issue Date	Maturity Date	Coupon Rate	Par Value		Unamortized Discount & Issuance Costs		Book Value		Fair Value		Book Value
Senior notes	5/27/1993	5/15/2023	7.875%	$	165,612	$	(529)	$	165,083	$	187,310	$	164,954
Senior notes(1)	9/24/2012	9/15/2022	3.800%	150,000		(419)		149,581		155,873		149,414
Senior notes	9/27/2018	9/15/2028	4.550%	550,000		(5,361)		544,639		643,418		544,328
Senior notes	8/21/2020	8/15/2030	2.150%	400,000		(4,435)		395,565		395,184		395,157
Junior subordinated debentures(2)	5/17/2016	6/15/2056	6.125%	300,000		(9,312)		290,688		313,320		290,652
Junior subordinated debentures	11/17/2017	11/17/2057	5.275%	125,000		(1,612)		123,388		129,895		123,381
Junior subordinated debentures	6/14/2021	6/15/2061	4.250%	325,000		(7,828)		317,172		339,430		0


Total long-term debt				2,015,612		(29,496)		1,986,116		2,164,430		1,667,886


Commercial paper				260,000		(54)		259,946		259,946		254,918
Total short-term debt				260,000		(54)		259,946		259,946		254,918

Total debt				$	2,275,612	$	(29,550)	$	2,246,062	$	2,424,376	$	1,922,804

(1)An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.

(2)The $300 million of 6.125% Junior subordinated debentures were redeemed on July 15, 2021.

The commercial paper has the highest priority of all the debt, followed by senior notes then junior subordinated debentures. The Senior Notes due 2023 are noncallable, the remaining senior notes are callable under a make-whole provision, and the junior subordinated debentures are subject to optional redemption five years from issuance. Interest on the 4.25% "Junior subordinated debentures" is payable quarterly, all other long-term debt is payable semi-annually.

GL Q2 2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Note 10—Business Segments

Globe Life is organized into 4 segments: life insurance, supplemental health insurance, annuities, and investments. In addition, other expenses not included in these segments are reported in "Corporate & Other."

Globe Life's reportable insurance segments are based on the insurance product lines it markets and administers: life insurance, supplemental health insurance, and annuities. These major product lines are set out as reportable segments because of the common characteristics of products within these categories, comparability of margins, and the similarity in regulatory environment and management techniques. There is also an investment segment which manages the investment portfolio, debt, and cash flow for the insurance segments and the corporate function. The Company's chief operating decision makers evaluate the overall performance of the operations of the Company in accordance with these segments.

Life insurance products marketed by Globe Life include traditional whole life and term life insurance. Health insurance products are generally guaranteed-renewable and include Medicare Supplement, critical illness, accident, and limited-benefit supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.

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 (Direct to Consumer). The tables below present segment premium revenue by each of Globe Life's distribution channels.

Premium Income by Distribution Channel


		Three Months Ended June 30, 2020																									Three Months Ended June 30, 2021
		Life					Health				Annuity						Total					Life			Health			Annuity	Total
Distribution Channel	Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total	Distribution Channel	Amount			% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	American Income	$	308,675	46	$	25,554	9	$	—	—	$	334,229	35	American Income	$	347,696		48	$	28,789	10	$	0	0	$	376,485	37
Direct to Consumer	Direct to Consumer	235,201		35	19,060		7	—		—	254,261		27	Direct to Consumer	249,440			34	18,450		6	0		0	267,890		26
Liberty National	Liberty National	73,326		11	47,391		17	—		—	120,717		13	Liberty National	77,853			11	47,118		16	0		0	124,971		12
United American	United American	2,481		—	112,885		40	3		100	115,369		12	United American	2,261			0	116,217		39	0		0	118,478		12
Family Heritage	Family Heritage	1,042		—	77,987		27	—		—	79,029		8	Family Heritage	1,226			0	85,012		29	0		0	86,238		8
Other	Other	50,097		8	—		—	—		—	50,097		5	Other	49,694			7	0		0	0		0	49,694		5
		$	670,822	100	$	282,877	100	$	3	100	$	953,702	100		$	728,170		100	$	295,586	100	$	0	0	$	1,023,756	100


		Three Months Ended June 30, 2019																									Three Months Ended June 30, 2020
		Life					Health				Annuity						Total					Life			Health			Annuity	Total
Distribution Channel	Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total	Distribution Channel	Amount			% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	American Income	$	288,334	46	$	24,450	9	$	—	—	$	312,784	35	American Income	$	308,675		46	$	25,554	9	$	0	0	$	334,229	35
Direct to Consumer	Direct to Consumer	217,278		35	19,249		7	—		—	236,527		26	Direct to Consumer	235,201			35	19,060		7	0		0	254,261		27
Liberty National	Liberty National	71,478		11	47,292		18	—		—	118,770		13	Liberty National	73,326			11	47,391		17	0		0	120,717		13
United American	United American	2,647		—	102,254		38	1		100	104,902		12	United American	2,481			0	112,885		40	3		100	115,369		12
Family Heritage	Family Heritage	927		—	73,037		28	—		—	73,964		8	Family Heritage	1,042			0	77,987		27	0		0	79,029		8
Other	Other	50,537		8	—		—	—		—	50,537		6	Other	50,097			8	0		0	0		0	50,097		5
		$	631,201	100	$	266,282	100	$	1	100	$	897,484	100		$	670,822		100	$	282,877	100	$	3	100	$	953,702	100

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Premium Income by Distribution Channel


		Six Months Ended June 30, 2020																									Six Months Ended June 30, 2021
		Life					Health				Annuity						Total					Life			Health			Annuity	Total
Distribution Channel	Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total	Distribution Channel	Amount			% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	American Income	$	611,527	46	$	51,281	9	$	—	—	$	662,808	35	American Income	$	682,591		48	$	56,140	9	$	0	0	$	738,731	37
Direct to Consumer	Direct to Consumer	455,244		35	38,856		7	—		—	494,100		26	Direct to Consumer	493,468			34	37,810		6	0		0	531,278		26
Liberty National	Liberty National	146,194		11	95,031		17	—		—	241,225		13	Liberty National	153,590			11	94,158		16	0		0	247,748		12
United American	United American	4,971		—	222,944		40	3		100	227,918		12	United American	4,538			0	233,304		40	1		100	237,843		12
Family Heritage	Family Heritage	2,063		—	154,970		27	—		—	157,033		9	Family Heritage	2,344			0	168,347		29	0		0	170,691		8
Other	Other	100,453		8	—		—	—		—	100,453		5	Other	99,758			7	0		0	0		0	99,758		5
		$	1,320,452	100	$	563,082	100	$	3	100	$	1,883,537	100		$	1,436,289		100	$	589,759	100	$	1	100	$	2,026,049	100


		Six Months Ended June 30, 2019																									Six Months Ended June 30, 2020
		Life					Health				Annuity						Total					Life			Health			Annuity	Total
Distribution Channel	Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total	Distribution Channel	Amount			% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	American Income	$	570,101	45	$	48,549	9	$	—	—	$	618,650	35	American Income	$	611,527		46	$	51,281	9	$	0	0	$	662,808	35
Direct to Consumer	Direct to Consumer	434,837		35	39,509		7	—		—	474,346		26	Direct to Consumer	455,244			35	38,856		7	0		0	494,100		26
Liberty National	Liberty National	142,195		11	95,448		18	—		—	237,643		13	Liberty National	146,194			11	95,031		17	0		0	241,225		13
United American	United American	5,398		1	205,159		39	1		100	210,558		12	United American	4,971			0	222,944		40	3		100	227,918		12
Family Heritage	Family Heritage	1,858		—	144,301		27	—		—	146,159		8	Family Heritage	2,063			0	154,970		27	0		0	157,033		9
Other	Other	101,101		8	—		—	—		—	101,101		6	Other	100,453			8	0		0	0		0	100,453		5
		$	1,255,490	100	$	532,966	100	$	1	100	$	1,788,457	100		$	1,320,452		100	$	563,082	100	$	3	100	$	1,883,537	100

Due to the nature of the life insurance industry, Globe Life has no individual or group that would be considered a major customer. Substantially all of Globe Life's business is conducted in the United States.

The measure of profitability established by the chief operating decision makers for the insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner in which the segments are managed. It essentially represents gross profit margin on insurance products before insurance administrative expenses and consists primarily of premium less net policy benefits, acquisition expenses, and commissions. Required interest on net policy liabilities (benefit reserves less deferred acquisition costs) is reflected as a component of the Investment segment (rather than as a component of underwriting margin in the insurance and annuity segments) in order to match this cost with the investment income earned on the assets supporting the net policy liabilities.

The measure of profitability for the Investment segment is excess investment income, representing the income earned on the investment portfolio in excess of net policy requirements and financing costs associated with Globe Life's debt. Other than the above-mentioned interest allocations, ~~and an intersegment commission, there are~~ no other intersegment revenues or ~~expenses.~~expenses are recognized. Expenses directly attributable to corporate operations are included in the “Corporate & Other” category. Stock-based compensation expense is considered a corporate expense by Globe Life management and is included in this category. All other unallocated revenues and expenses on a pretax basis, including insurance administrative expense, are also included in the “Corporate & Other” segment category.

Globe Life holds a sizable investment portfolio to support its insurance liabilities, the yield from which is used to offset policy benefit, acquisition, administrative and tax expenses. This yield or investment income is taken into account when establishing premium rates and profitability expectations offor its insurance products. From time to time, investments are sold or called, or experience a credit loss event, each of which ~~are~~is reflected by the Company as

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

realized ~~gains (losses).~~gain (loss)—investments. These gains or losses generally occur as a result of disposition due to issuer calls, compliance with Company investment policies, or other reasons often beyond management’s control. Unlike investment income, realized gains and losses are incidental to insurance operations, and only overall yields are considered when setting premium rates or insurance product profitability expectations. While these gains and losses are not relevant to segment profitability or core operating results, they can have a material positive or negative result on net income. For these reasons, management removes realized investment gains and losses when it views its segment operations.

Management removes items that are related to prior periods when evaluating the operating results of current periods. Management also removes non-operating items unrelated to ~~its~~the Company's core insurance activities when evaluating those results. Therefore, these items are excluded in its presentation of segment results, because accounting guidance requires that operating segment results be presented as management views its business. With the exception of the administrative settlements noted in the paragraphs above, all of these items are included in “Other operating expense” in the Condensed Consolidated Statements of Operations for the appropriate year. See additional detail below in the tables.

The following tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major income statement line items. See Note—1 Significant Accounting Policies for additional information concerning reconciling items of segment profits to pretax income.


		Three Months Ended June 30, 2020																														Three Months Ended June 30, 2021
		Life		Health		Annuity		Investment		Corporate & Other		Adjustments		Consolidated			Life		Health		Annuity		Investment		Corporate & Other				Adjustments			Consolidated
Revenue:	Revenue:															Revenue:
Premium	Premium	$	670,822	$	282,877	$	3	$	—	$	—	$	—	$	953,702	Premium	$	728,170	$	295,586	$	0	$	0	$	0			$	—		$	1,023,756
Net investment income	Net investment income	—		—		—		231,568		—		—		231,568		Net investment income	0		0		0		238,308		0				—			238,308
Other income	Other income	—		—		—		—		404		—		404		Other income	0		0		0		0		388				0			388
Total revenue	Total revenue	670,822		282,877		3		231,568		404		—		1,185,674		Total revenue	728,170		295,586		0		238,308		388				0			1,262,452
Expenses:	Expenses:															Expenses:
Policy benefits	Policy benefits	459,845		183,496		7,475		—		—		—		650,816		Policy benefits	498,471		188,854		7,286		0		0				0			694,611
Required interest on reserves	Required interest on reserves	(173,208)		(22,851)		(10,332)		206,391		—		—		—		Required interest on reserves	(182,495)		(25,434)		(10,016)		217,945		0				—			0
Required interest on DAC	Required interest on DAC	52,107		6,582		84		(58,773)		—		—		—		Required interest on DAC	54,222		7,077		66		(61,365)		0				—			0
Amortization of acquisition costs	Amortization of acquisition costs	117,802		27,854		504		—		—		—		146,160		Amortization of acquisition costs	120,407		27,132		482		0		0				—			148,021
Commissions, premium taxes, and non-deferred acquisition costs	Commissions, premium taxes, and non-deferred acquisition costs	52,577		23,556		7		—		—		—		76,140		Commissions, premium taxes, and non-deferred acquisition costs	58,810		23,496		6		0		0				0			82,312
Insurance administrative expense⁽¹⁾	Insurance administrative expense⁽¹⁾	—		—		—		—		61,566				61,566		Insurance administrative expense(1)	0		0		0		0		67,503				261		(2)	67,764
Parent expense	Parent expense	—		—		—		—		2,516		—		2,516		Parent expense	0		0		0		0		2,757				0			2,757
Stock-based compensation expense	Stock-based compensation expense	—		—		—		—		8,632		—		8,632		Stock-based compensation expense	0		0		0		0		8,634				—			8,634
Interest expense	Interest expense	—		—		—		22,813		—		—		22,813		Interest expense	0		0		0		21,769		0				—			21,769
Total expenses	Total expenses	509,123		218,637		(2,262)		170,431		72,714		—		968,643		Total expenses	549,415		221,125		(2,176)		178,349		78,894				261			1,025,868
Subtotal	Subtotal	161,699		64,240		2,265		61,137		(72,310)		—		217,031		Subtotal	178,755		74,461		2,176		59,959		(78,506)				(261)			236,584
Non-operating items	Non-operating items	—		—		—		—		—				—		Non-operating items	—		—		—		—		—				261		(2)	261
Measure of segment profitability (pretax)	Measure of segment profitability (pretax)	$	161,699	$	64,240	$	2,265	$	61,137	$	(72,310)	$	—	217,031		Measure of segment profitability (pretax)	$	178,755	$	74,461	$	2,176	$	59,959	$	(78,506)			$	0		236,845

Realized gain (loss)—investments	Realized gain (loss)—investments																										(4,790)			Realized gain (loss)—investments				8,659

Legal proceedings																Legal proceedings																(261)
Income before income taxes per Condensed Consolidated Statements of Operations	Income before income taxes per Condensed Consolidated Statements of Operations																										$	212,241		Income before income taxes per Condensed Consolidated Statements of Operations				$	245,243

(1)Administrative expense is not allocated to insurance segments.

(2)Legal proceedings.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Three Months Ended June 30, 2019																														Three Months Ended June 30, 2020
		Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated			Life		Health		Annuity		Investment		Corporate & Other				Adjustments		Consolidated
Revenue:	Revenue:																Revenue:
Premium	Premium	$	631,201	$	266,282	$	1	$	—	$	—	$	—		$	897,484	Premium	$	670,822	$	282,877	$	3	$	0	$	0			$	—	$	953,702
Net investment income	Net investment income	—		—		—		227,425		—		—			227,425		Net investment income	0		0		0		231,568		0				—		231,568
Other income	Other income	—		—		—		—		398		—			398		Other income	0		0		0		0		404				0		404
Total revenue	Total revenue	631,201		266,282		1		227,425		398		—			1,125,307		Total revenue	670,822		282,877		3		231,568		404				0		1,185,674
Expenses:	Expenses:																Expenses:
Policy benefits	Policy benefits	410,961		170,511		7,890		—		—		—			589,362		Policy benefits	459,845		183,496		7,475		0		—				—		650,816
Required interest on reserves	Required interest on reserves	(165,513)		(21,680)		(10,888)		198,081		—		—			—		Required interest on reserves	(173,208)		(22,851)		(10,332)		206,391		0				—		0
Required interest on DAC	Required interest on DAC	50,298		6,341		127		(56,766)		—		—			—		Required interest on DAC	52,107		6,582		84		(58,773)		0				—		0
Amortization of acquisition costs	Amortization of acquisition costs	110,319		27,343		503		—		—		—			138,165		Amortization of acquisition costs	117,802		27,854		504		0		0				—		146,160
Commissions, premium taxes, and non-deferred acquisition costs	Commissions, premium taxes, and non-deferred acquisition costs	50,086		23,608		4		—		—		—			73,698		Commissions, premium taxes, and non-deferred acquisition costs	52,577		23,556		7		0		0				0		76,140
Insurance administrative expense⁽¹⁾	Insurance administrative expense⁽¹⁾	—		—		—		—		59,416		5,500		(2)	64,916		Insurance administrative expense(1)	0		0		0		0		61,566				0		61,566
Parent expense	Parent expense	—		—		—		—		2,872		—			2,872		Parent expense	0		0		0		0		2,516				0		2,516
Stock-based compensation expense	Stock-based compensation expense	—		—		—		—		11,256		—			11,256		Stock-based compensation expense	0		0		0		0		8,632				—		8,632
Interest expense	Interest expense	—		—		—		21,432		—		—			21,432		Interest expense	0		0		0		22,813		0				—		22,813
Total expenses	Total expenses	456,151		206,123		(2,364)		162,747		73,544		5,500			901,701		Total expenses	509,123		218,637		(2,262)		170,431		72,714				0		968,643
Subtotal	Subtotal	175,050		60,159		2,365		64,678		(73,146)		(5,500)			223,606		Subtotal	161,699		64,240		2,265		61,137		(72,310)				0		217,031
Non-operating items	Non-operating items	—		—		—		—		—		5,500		(2)	5,500		Non-operating items	—		—		—		—		—				0		0
Measure of segment profitability (pretax)	Measure of segment profitability (pretax)	$	175,050	$	60,159	$	2,365	$	64,678	$	(73,146)	$	—		229,106		Measure of segment profitability (pretax)	$	161,699	$	64,240	$	2,265	$	61,137	$	(72,310)			$	0	217,031

Realized gain (loss)—investments	Realized gain (loss)—investments																											5,154			Realized gain (loss)—investments			(4,790)

Legal proceedings																												(5,500)

Income before income taxes per Condensed Consolidated Statements of Operations	Income before income taxes per Condensed Consolidated Statements of Operations																											$	228,760		Income before income taxes per Condensed Consolidated Statements of Operations			$	212,241

(1)Administrative expense is not allocated to insurance segments.

~~(2)Legal proceedings.~~

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Six Months Ended June 30, 2020																															Six Months Ended June 30, 2021
		Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated			Life		Health		Annuity		Investment		Corporate & Other				Adjustments			Consolidated
Revenue:	Revenue:																Revenue:
Premium	Premium	$	1,320,452	$	563,082	$	3	$	—	$	—	$	—		$	1,883,537	Premium	$	1,436,289	$	589,759	$	1	$	0	$	0			$	0		$	2,026,049
Net investment income	Net investment income	—		—		—		460,559		—		—			460,559		Net investment income	0		0		0		474,128		0				0			474,128
Other income	Other income	—		—		—		—		729		—			729		Other income	0		0		0		0		683				0			683
Total revenue	Total revenue	1,320,452		563,082		3		460,559		729		—			2,344,825		Total revenue	1,436,289		589,759		1		474,128		683				0			2,500,860
Expenses:	Expenses:																Expenses:
Policy benefits	Policy benefits	881,515		362,207		15,063		—		—		—			1,258,785		Policy benefits	1,016,102		376,683		14,545		0		0				0			1,407,330
Required interest on reserves	Required interest on reserves	(344,413)		(45,361)		(20,788)		410,562		—		—			—		Required interest on reserves	(362,420)		(50,429)		(20,021)		432,870		0				0			0
Required interest on DAC	Required interest on DAC	104,225		13,101		172		(117,498)		—		—			—		Required interest on DAC	108,017		14,039		136		(122,192)		0				0			0
Amortization of acquisition costs	Amortization of acquisition costs	232,110		56,879		1,008		—		—		—			289,997		Amortization of acquisition costs	243,711		56,339		964		0		0				0			301,014
Commissions, premium taxes, and non-deferred acquisition costs	Commissions, premium taxes, and non-deferred acquisition costs	106,513		48,551		13		—		—		—			155,077		Commissions, premium taxes, and non-deferred acquisition costs	115,478		46,486		14		0		0				0			161,978
Insurance administrative expense⁽¹⁾	Insurance administrative expense⁽¹⁾	—		—		—		—		125,186		3,275		(2)	128,461		Insurance administrative expense(1)	0		0		0		0		133,679				5,089		(2)	138,768
Parent expense	Parent expense	—		—		—		—		4,847		—			4,847		Parent expense	0		0		0		0		5,075				0			5,075
Stock-based compensation expense	Stock-based compensation expense	—		—		—		—		17,988		—			17,988		Stock-based compensation expense	0		0		0		0		16,522				0			16,522
Interest expense	Interest expense	—		—		—		43,621		—		—			43,621		Interest expense	0		0		0		42,947		0				0			42,947
Total expenses	Total expenses	979,950		435,377		(4,532)		336,685		148,021		3,275			1,898,776		Total expenses	1,120,888		443,118		(4,362)		353,625		155,276				5,089			2,073,634
Subtotal	Subtotal	340,502		127,705		4,535		123,874		(147,292)		(3,275)			446,049		Subtotal	315,401		146,641		4,363		120,503		(154,593)				(5,089)			427,226
Non-operating items	Non-operating items	—		—		—		—		—		3,275		(2)	3,275		Non-operating items	—		—		—		—		—				5,089		(2)	5,089
Measure of segment profitability (pretax)	Measure of segment profitability (pretax)	$	340,502	$	127,705	$	4,535	$	123,874	$	(147,292)	$	—		449,324		Measure of segment profitability (pretax)	$	315,401	$	146,641	$	4,363	$	120,503	$	(154,593)			$	0		432,315

Realized gain (loss)—investments	Realized gain (loss)—investments																											(30,887)			Realized gain (loss)—investments				36,811

Legal proceedings	Legal proceedings																											(3,275)			Legal proceedings				(5,089)

Income before income taxes per Condensed Consolidated Statements of Operations	Income before income taxes per Condensed Consolidated Statements of Operations																											$	415,162		Income before income taxes per Condensed Consolidated Statements of Operations				$	464,037

(1)Administrative expense is not allocated to insurance segments.

(2)Legal proceedings.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)


		Six Months Ended June 30, 2019																															Six Months Ended June 30, 2020
		Life		Health		Annuity		Investment		Corporate & Other		Adjustments			Consolidated			Life		Health		Annuity		Investment		Corporate & Other				Adjustments			Consolidated
Revenue:	Revenue:																Revenue:
Premium	Premium	$	1,255,490	$	532,966	$	1	$	—	$	—	$	—		$	1,788,457	Premium	$	1,320,452	$	563,082	$	3	$	0	$	0			$	0		$	1,883,537
Net investment income	Net investment income	—		—		—		454,098		—		—			454,098		Net investment income	0		0		0		460,559		0				0			460,559
Other income	Other income	—		—		—		—		639		—			639		Other income	0		0		0		0		729				0			729
Total revenue	Total revenue	1,255,490		532,966		1		454,098		639		—			2,243,194		Total revenue	1,320,452		563,082		3		460,559		729				0			2,344,825
Expenses:	Expenses:																Expenses:
Policy benefits	Policy benefits	820,653		340,528		15,938		—		—		—			1,177,119		Policy benefits	881,515		362,207		15,063		0		0				0			1,258,785
Required interest on reserves	Required interest on reserves	(329,175)		(43,176)		(22,008)		394,359		—		—			—		Required interest on reserves	(344,413)		(45,361)		(20,788)		410,562		0				0			0
Required interest on DAC	Required interest on DAC	100,322		12,624		258		(113,204)		—		—			—		Required interest on DAC	104,225		13,101		172		(117,498)		0				0			0
Amortization of acquisition costs	Amortization of acquisition costs	218,609		54,357		1,021		—		—		—			273,987		Amortization of acquisition costs	232,110		56,879		1,008		0		0				0			289,997
Commissions, premium taxes, and non-deferred acquisition costs	Commissions, premium taxes, and non-deferred acquisition costs	100,192		46,960		11		—		—		—			147,163		Commissions, premium taxes, and non-deferred acquisition costs	106,513		48,551		13		0		0				0			155,077
Insurance administrative expense⁽¹⁾	Insurance administrative expense⁽¹⁾	—		—		—		—		118,607		5,900		(2,3)	124,507		Insurance administrative expense(1)	0		0		0		0		125,186				3,275		(2)	128,461
Parent expense	Parent expense	—		—		—		—		5,515		—			5,515		Parent expense	0		0		0		0		4,847				0			4,847
Stock-based compensation expense	Stock-based compensation expense	—		—		—		—		21,815		—			21,815		Stock-based compensation expense	0		0		0		0		17,988				0			17,988
Interest expense	Interest expense	—		—		—		42,710		—		—			42,710		Interest expense	0		0		0		43,621		0				0			43,621
Total expenses	Total expenses	910,601		411,293		(4,780)		323,865		145,937		5,900			1,792,816		Total expenses	979,950		435,377		(4,532)		336,685		148,021				3,275			1,898,776
Subtotal	Subtotal	344,889		121,673		4,781		130,233		(145,298)		(5,900)			450,378		Subtotal	340,502		127,705		4,535		123,874		(147,292)				(3,275)			446,049
Non-operating items	Non-operating items	—		—		—		—		—		5,900		(2,3)	5,900		Non-operating items	—		—		—		—		—				3,275		(2)	3,275
Measure of segment profitability (pretax)	Measure of segment profitability (pretax)	$	344,889	$	121,673	$	4,781	$	130,233	$	(145,298)	$	—		456,278		Measure of segment profitability (pretax)	$	340,502	$	127,705	$	4,535	$	123,874	$	(147,292)			$	0		449,324

Realized gain (loss)—investments	Realized gain (loss)—investments																											6,483			Realized gain (loss)—investments				(30,887)

Administrative settlements																												(400)

Legal proceedings	Legal proceedings																											(5,500)			Legal proceedings				(3,275)

Income before income taxes per Condensed Consolidated Statements of Operations	Income before income taxes per Condensed Consolidated Statements of Operations																											$	456,861		Income before income taxes per Condensed Consolidated Statements of Operations				$	415,162

(1)Administrative expense is not allocated to insurance segments.

(2)~~In 2019, the Company recorded $400 thousand in administrative settlements related to state regulatory examinations.~~

~~(3)~~Legal proceedings.

~~Note 10—Debt~~

~~Issuance of short-term debt~~: On April 9, 2020, Globe Life entered into a 364-Day Term Loan Agreement. The Agreement provided the Company with access to up to $300 million in unsecured term loans, all maturing on April 8, 2021. Globe Life borrowed the full amount on April 15, 2020 and used the proceeds for general corporate purposes, including additional holding Company liquidity and the repayment of a portion of outstanding commercial paper.

Note 11—Subsequent Events

On ~~July 31, 2020,~~August 1, 2021, the Company ~~paid down~~acquired Beazley Benefits, a small unit of Beazley Insurance Company, Inc. that specializes in the ~~remaining principal balance~~distribution of ~~$82.5~~supplemental health insurance in the U.S., for $59.2 million ~~and $101 thousand~~to enhance Globe Life’s reach in ~~interest on~~ the ~~5-year $100 million term loan with a maturity date of May 17, 2021.~~worksite market.

~~An energy holding in our investment portfolio, which had a credit loss allowance of $32.7 million as of June 30, 2020 (discussed in~~

~~Note 4~~

)

, filed for Chapter 11 bankruptcy on July 31, 2020. On August 3, 2020, management sold all holdings of this company for $660 thousand and realized a loss of $7 million ($6 million of principal and $1 million of accrued investment income).

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CAUTIONARY STATEMENTS

We caution readers regarding certain forward-looking statements contained in the foregoing discussion and elsewhere in this document, and in any other statements made by, or on behalf of Globe Life whether or not in future filings with the Securities and Exchange Commission. Any statement that is not a historical fact, or that might otherwise be considered an opinion or projection concerning the Company or its business, whether express or implied, is meant as and should be considered a forward-looking statement. Such statements represent management's opinions concerning future operations, strategies, financial results or other developments. We specifically disclaim any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.

Forward-looking statements are based upon estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control, including uncertainties related to the ~~expected~~ impact of the COVID-19 outbreak on our business operations, financial results and financial condition. If these estimates or assumptions prove to be incorrect, the actual results of Globe Life may differ materially from the forward-looking statements made on the basis of such estimates or assumptions. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, which may be national in scope, related to the insurance industry generally, or applicable to the Company specifically. Such events or developments could include, but are not necessarily limited to:

1.Economic and other conditions, including the COVID-19 pandemic and its impact on the U.S. economy, leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality, morbidity, and utilization of health care services that differ from Globe Life's assumptions;

2.Regulatory developments, including changes in accounting standards or governmental regulations (particularly those impacting taxes and changes to the Federal Medicare program that would affect Medicare Supplement);

3.Market trends in the senior-aged health care industry that provide alternatives to traditional Medicare (such as Health Maintenance Organizations and other managed care or private plans) and that could affect the sales of traditional Medicare Supplement insurance;

4.Interest rate changes that affect product sales and/or investment portfolio yield;

5.General economic, industry sector or individual debt issuers’ financial conditions (including developments and volatility arising from the COVID-19 pandemic, particularly in certain industries that may comprise part of our investment portfolio) that may affect the current market value of securities we own, or that may impair an issuer’s ability to make principal and/or interest payments due on those securities;

6.Changes in ~~pricing competition;~~the competitiveness of the Company's products and pricing;

7.Litigation results;

8.Levels of administrative and operational efficiencies that differ from our assumptions (including any reduction in efficiencies resulting from increased costs arising from operating during the COVID-19 pandemic);

9.The ability to obtain timely and appropriate premium rate increases for health insurance policies from our regulators;

10.The customer response to new products and marketing initiatives;

11.Reported amounts in the consolidated financial statements which are based on management estimates and judgments which may differ from the actual amounts ultimately realized;

12.Compromise by a malicious actor or other event that causes a loss of secure data from, or inaccessibility to, our computer and other information technology systems;

13.The severity, magnitude and impact of the COVID-19 pandemic, including effects of the pandemic and the effects of the U.S. and state governments' and other businesses’ response to the pandemic, on our operations and personnel, and on commercial activity and demand for our products; and

14.Our ability to access the commercial paper and debt markets, particularly if such markets become unpredictable or unstable for a certain period as a result of the COVID-19 pandemic.

Readers are also directed to consider other risks and uncertainties described in other documents on file with the Securities and Exchange Commission.

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GLOBE LIFE INC.

Management's Discussion & Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Globe Life's Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this report.

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

Results of Operations


						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, supplemental health, and annuities, and the investment segment that supports the product lines. Segments are aligned based on their common characteristics, comparability of the profit margins, and management techniques used to operate each segment.

						Insurance Product Line Segments. The insurance product line segments involve the marketing, underwriting, and administration of policies. Each product line is further segmented 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 corporate debt and liquidity. Our measure of profitability for the investment segment is excess investment income, as seen below:
						Net investment income (Required interest on net policy liabilities) (Financing costs) Excess investment income

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GLOBE LIFE INC.

Management's Discussion & Analysis

Current Highlights, comparing ~~year to date 2020~~year-to-date 2021 with ~~2019.~~2020.

•Net income as a return on equity ~~("ROE")~~(ROE) for the six months ended June 30, ~~2020~~2021 was ~~9.4%~~9.0% and net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio⁽¹⁾ was ~~13.6%~~12.4%.

•Total premium increased 5%8% over the same period in the prior year. Life premium increased 5%9% for the period from ~~$1.26~~$1.3 billion in ~~2019~~2020 to ~~$1.32~~$1.4 billion in ~~2020.~~2021. Life underwriting margin declined 1%7% from ~~$345 million in 2019 to~~ $341 million in ~~2020.~~2020 to $315 million in 2021.

•Net investment income increased 1%3% over the same period in the prior year. Excess investment income declined 5%3% below the prior year.

•Total net sales increased ~~slightly~~15% over the same period in the prior year from ~~$300~~$301 million to ~~$301~~$347 million.

•Book value per share increased ~~22%~~14% over the same period in the prior year from ~~$60.22~~$73.26 to ~~$73.26.~~$83.59. Book value per share, excluding net unrealized gains on the fixed maturity portfolio⁽¹⁾, increased ~~10%~~9% over the prior year from ~~$46.43~~$51.21 to ~~$51.21.~~$55.66.

•The Company ~~is estimated to have incurred an additional $22~~estimates $49 million of net life ~~policy obligations~~claims were incurred as a result of ~~COVID-19 through~~the novel coronavirus (COVID-19) for the six months ended June 30, ~~2020.~~2021 compared with $22 million during the same period last year.

•For the six months ended June 30, 2021, the Company repurchased 2.2 million shares of Globe Life Inc. common stock at a total cost of $214 million for an average share price of $98.61.

The following graphs represent net income and net operating income ~~from continuing operations~~ for the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

~~(1)Net~~As shown in the charts above, net operating income is the consolidated total of segment profits 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.

(1) Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure. Management utilizes this measure to view the business without the effect of the net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities, net of tax is $2.9 billion and $2.4 billion for the six months ended June 30, 2021 and ~~$1.5 billion for~~ 2020, ~~and 2019,~~ respectively.

Book value per share, excluding net unrealized gains on the fixed maturity portfolio, is also considered a non-GAAP measure. Management utilizes this measure to view the book value of the business without the effect of net unrealized gains, which are primarily attributable to fluctuation in interest rates on the available for sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities is ~~$22.05~~$27.93 and ~~$13.79~~$22.05 for six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

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

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GLOBE LIFE INC.

Management's Discussion & Analysis

~~COVID-19.~~ The Company continues to monitor the impact of the novel coronavirus (COVID-19) on the Company's business, distribution channels, employees, and policyholders. The Company has transitioned the organization—its employees, agents and customers from an in-person experience to one that is primarily virtual and has taken the necessary steps to help ensure the health and safety of these individuals. While the current operating environment presents challenges, Globe Life's operations continue to be conducted in an effective manner.

With respect to the estimated impact of COVID-19 on our underwriting results, overall we have not seen a significant adverse impact of the pandemic on our lapse rates or premium income through June 30, 2020. However, in the second quarter, we estimate that we incurred an additional $22 million of life policy obligations from COVID-related deaths, primarily in our Direct to Consumer Division and American Income Life Division. The policy obligations of our health segment were not significantly impacted by the COVID-19 pandemic in the second quarter.

After further analysis with more granular data regarding infection and projected deaths in various geographies, management estimates the total incurred life policyholder obligations in 2020 related to COVID-19 deaths to be approximately $45 million. However, due to lower overall utilization rates, management now anticipates that supplemental health obligations will be approximately $8 million lower than expected at the beginning of the year. Thus, the combined impact of COVID-19 to the Company's life and health policy obligations for the full year is estimated to be approximately $37 million. Of course, this estimate is dependent on many variables, including the effect of efforts to reopen the economy, the timing and availability of effective treatments for the disease, and the actual ages and states in which infections and deaths occur.

Summary of Operations. Net income ~~declined 9%~~increased 12% to ~~$339~~$378 million during the six months ended June 30, ~~2020,~~2021, compared with ~~$372~~$339 million in the same period in ~~2019.~~2020. This ~~decrease~~increase was primarily attributed to ~~the recording~~$29 million of ~~a $25.8 million~~ after tax ~~provision for credit~~realized gains on investments in the current period, as compared to $24 million of after tax realized losses on investments in the ~~available-for-sale fixed maturities.~~year-ago period. See further discussion under the caption Investments. The increase in after tax realized gains was partially offset by lower life underwriting results due to higher COVID-19 life claims. On a diluted per common share basis, net income per common share for the six months ended June 30, ~~2020 declined 6%~~2021 increased 16% from ~~$3.32~~$3.13 to ~~$3.13.~~$3.62.

Net operating income is the consolidated total of segment profits after-tax and as such is considered a non-GAAP measure. Net operating income declined 2%3% to ~~$366~~$353 million for the six months ended June 30, ~~2020,~~2021, compared with ~~$372~~$366 million for the same period in ~~2019.~~2020 primarily due to COVID-19 net life claims. On a diluted per common share basis, net operating income per common share for the six months ended June 30, ~~2020 increased 2% from $3.32 to~~2021 was flat at $3.38.

COVID-19. For the six months ended June 30, 2021, we estimate $49 million of COVID-19 net life claims were incurred, with $38 million or 77% of which were incurred in the first quarter of 2021. For the full year and at the mid-point of our guidance, we estimate COVID-19 net life claims will be between $53 million to $55 million, based on an estimate of approximately 20 to 30 thousand U.S. COVID-19 deaths in the second half of the year. This estimate of U.S. deaths is based on various third-party models. The projected life claims are dependent on this estimate and many other variables, including, but not limited to, the effect of efforts to reopen the economy, the timing and availability of effective treatments for the disease, vaccination rates and effectiveness of vaccines, impact from potential variants, and the actual ages and geographic areas in which infections and deaths occur. As such, should actual COVID-19 deaths in the second half of the year be greater than currently anticipated, the total amount of COVID-19 life claims incurred for the full year 2021 will likely be greater than projected at the mid-point of our guidance.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~GLOBE LIFE INC.~~

~~Management's Discussion & Analysis~~

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 ~~investment~~ 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.

GL Q2 2021 FORM 10-Q

Table of Contents

GLOBE LIFE INC.

Management's Discussion & Analysis

Analysis of Profitability by Segment

(Dollar amounts in thousands)

Six Months Ended June 30,
2020 2019 Change %
Life insurance underwriting margin $ 340,502 $ 344,889 $ (4,387) (1)
Health insurance underwriting margin 127,705 121,673 6,032 5
Annuity underwriting margin 4,535 4,781 (246) (5)
Excess investment income 123,874 130,233 (6,359) (5)
Other insurance:
Other income 729 639 90 14
Administrative expense (125,186) (118,607) (6,579) 6
Corporate and other (22,835) (27,330) 4,495 (16)
Pre-tax total 449,324 456,278 (6,954) (2)
Applicable taxes (83,748) (84,652) 904 (1)
Net operating income
365,576 371,626 (6,050) (2)
Reconciling items, net of tax:
Realized gain (loss)—investments (24,401) 5,122 (29,523)
Part D adjustments—discontinued operations — (92) 92
Administrative settlements — (400) 400
Legal proceedings (2,587) (4,345) 1,758
Net income
$ 338,588 $ 371,911 $ (33,323) (9)


	Six Months Ended June 30,
	2021		2020		Change		%
Life insurance underwriting margin	$	315,401	$	340,502	$	(25,101)	(7)
Health insurance underwriting margin	146,641		127,705		18,936		15
Annuity underwriting margin	4,363		4,535		(172)		(4)
Excess investment income	120,503		123,874		(3,371)		(3)
Other insurance:
Other income	683		729		(46)		(6)
Administrative expense	(133,679)		(125,186)		(8,493)		7
Corporate and other	(21,597)		(22,835)		1,238		(5)
Pre-tax total	432,315		449,324		(17,009)		(4)
Applicable taxes	(79,241)		(83,748)		4,507		(5)
Net operating income	353,074		365,576		(12,502)		(3)
Reconciling items, net of tax:
Realized gain (loss)—investments	29,081		(24,401)		53,482





Legal proceedings	(4,020)		(2,587)		(1,433)

Net income	$	378,135	$	338,588	$	39,547	12

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GLOBE LIFE INC.

Management's Discussion & Analysis

In ~~the first six months of 2020,~~2021, the largest contributor of total underwriting margin was the life insurance segment and the primary distribution channel was American Income Life Division. The following ~~tables~~charts represent the breakdown of total underwriting margin by operating segment and distribution channel for the six months ended June 30, ~~2020.~~2021.

Total premium income rose 5%8% for the six months ended June 30, ~~2020~~2021 to ~~$1.9~~$2.0 billion. Total net sales increased ~~slightly~~15% to ~~$301~~$347 million, when compared with the same period in ~~2019.~~2020. Total first-year collected premium was $288 million for the 2021 period, compared with $264 million for the 2020 ~~period, compared with $241 million for the 2019~~ period.

Life insurance premium income increased 5%9% to ~~$1.32~~$1.4 billion over the prior year total of ~~$1.26~~$1.3 billion. Life net sales rose 3%18% to ~~$225~~$265 million for the first six months of ~~2020.~~2021. First-year collected life premium rose 8%20% to ~~$176~~$211 million. Life underwriting margins, as a percent of premium, declined to ~~26%~~22% in ~~2020~~2021 from ~~27%~~26% in the prior year. Underwriting margin declined to ~~$341~~$315 million for the six months ended June 30, ~~2020, 1%~~2021, 7% below the same period in ~~2019.~~2020. The decline in the life underwriting margin is primarily due to an estimated $49 million of COVID-19 net life claims incurred during the first six months of 2021 versus $22 million during the same period in 2020.

Health insurance premium income increased 6%5% to ~~$563~~$590 million over the prior year total of ~~$533~~$563 million. Health net sales ~~fell~~rose 8% to ~~$76~~$82 million for the first six months of ~~2020.~~2021. First-year collected health premium ~~rose 13%~~fell 11% to ~~$87~~$78 million. Health underwriting margins, as a percent of premium, ~~were~~increased to 25% in 2021 compared with 23% in ~~both periods. Underwriting~~2020. Health underwriting margin increased to ~~$128~~$147 million for the first six months of ~~2020, 5%~~2021, 15% over the same period in ~~2019.~~2020.

Excess investment income, the measure of profitability of our investment segment, declined 5%3% during ~~the first six months of 2020~~2021 to ~~$124~~$121 million from ~~$130~~$124 million in the same period in ~~2019.~~2020. Excess investment income per common share, reflecting the impact of our share repurchase program, ~~declined 1% to~~was flat at $1.15 ~~from $1.16 in~~when compared with the same period ~~last year.~~in 2020.

Insurance administrative expenses increased ~~5.5%~~7% in ~~2020~~2021 when compared with the prior year period. These expenses were 6.6% as a percent of premium during the first six months of ~~2020, the same as a year earlier.~~2021 and 2020.

For the six months ended June 30, ~~2020,~~2021, the Company repurchased ~~1.6~~2.2 million Globe Life Inc. shares at a total cost of ~~$139~~$214 million for an average share price of $85.47. In the second quarter, the Company announced a temporary postponement of its share repurchase program while it evaluated the impact of COVID-19 on the Company’s operations and financial results. The Company anticipates that it will resume its share repurchase program in the third quarter of 2020.$98.61.

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GLOBE LIFE INC.

Management's Discussion & Analysis

A discussion of each of Globe Life's segments follows. A significant factor in the performance of our various segments has been the impact of COVID-19. In response to this crisis, our crisis management and incident response teams have successfully guided the Company into a smooth transition of working remotely. We quickly transitioned those employees whose jobs did not require them to be in the office, approximately 80-85% of the Company's total workforce, to working remotely. The Company has continued to operate effectively while taking the necessary steps to help ensure the health and safety of our employees through adherence to the CDC and local government work guidelines.

With over 12,000 exclusive agents in the field, the Company was presented with a challenge to move from face-to-face sales presentations in customers' homes and businesses to a virtual sales process. The Company's agencies also had to move from in-person recruiting and training of new agents to virtual processes. While not without its challenges, the Company's exclusive agency divisions have been able to quickly pivot and continue to write new business and hire new agents due in part to new and updated information technology systems that we have put in place over the last several years. While our exclusive agencies made significant changes to their distribution processes as a result of COVID-19, our Direct to Consumer Division experienced record high demand for its products through its internet and inbound phone call channels. The Company has often seen through the years that times of crisis highlight the need for basic life protection and this has proven true with the pandemic.

The discussions of our segments are presented in the manner we view our operations, as described in Note 9—10—Business Segments.

We use three statistical measures as indicators of premium growth and sales over the near term: “annualized premium in force,” “net sales,” and “first-year collected premium.”

•Annualized premium in force is defined as the premium income that would be received over the following twelve months at any given date on all active policies if those policies remain in force throughout the twelve-month period. Annualized premium in force is an indicator of potential growth in premium revenue.

•Net sales, a statistical performance measure, is calculated as annualized premium issued, ~~(gross premium that would be received during the policies' first year in force and assuming that none of the policies lapsed or terminated),~~ net of cancellations in the first thirty days after issue, except in the case of ~~our~~ Direct to Consumer, ~~Division,~~ where net sales is annualized premium issued at the time the first full premium is paid after any introductory offer period has expired. Management considers net sales to be a better indicator of the rate of premium growth ~~as compared with~~than annualized premium issued.

•First-year collected premium is defined as the premium collected during the reporting period for all policies in their first policy year. First-year collected premium takes lapses into account in the first year when lapses are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added to premium income in the future.

While it is difficult to predict sales activity during this uncertain environment, the Company is expecting sales to be relatively flat for the full year. However, due to the strength of the Company's policies in force, we still expect our total life premiums to grow around 5% for the full year and our total health premiums to grow by 6%. Furthermore, while we may see decreased sales in certain distribution channels over the next several months, we are pleased with the willingness of our agents and employees to quickly respond to the crisis. See further discussion of the distribution channels below for Life and Health.

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GLOBE LIFE INC.

Management's Discussion & Analysis

LIFE INSURANCE

Life insurance is the Company's predominant ~~segment, with the first six months of 2020~~segment. During 2021, life premium ~~representing 70%~~represented 71% of total premium and life underwriting margin ~~representing 72%~~represented 68% of the total. Additionally, investments supporting the reserves for life products produce the majority of excess investment income attributable to the investment segment.

The following table presents the summary of results of life insurance. Further discussion of the results by distribution channel is included below.

Life Insurance

Summary of Results

(Dollar amounts in thousands)

Six Months Ended June 30, Increase
(Decrease)
2020 2019
Amount % of Premium Amount % of Premium Amount %
Premium and policy charges $ 1,320,452 100 $ 1,255,490 100 $ 64,962 5
Policy obligations 881,515 67 820,653 65 60,862 7
Required interest on reserves (344,413) (26) (329,175) (26) (15,238) 5
Net policy obligations 537,102 41 491,478 39 45,624 9
Commissions, premium taxes, and non-deferred acquisition expenses 106,513 8 100,192 8 6,321 6
Amortization of acquisition costs 336,335 25 318,931 26 17,404 5
Total expense 979,950 74 910,601 73 69,349 8
Insurance underwriting margin
$ 340,502 26 $ 344,889 27 $ (4,387) (1)


	Six Months Ended June 30,						Change
	2021			2020
	Amount		% of Premium	Amount		% of Premium	Amount		%
Premium and policy charges	$	1,436,289	100	$	1,320,452	100	$	115,837	9

Policy obligations	1,016,102		71	881,515		67	134,587		15
Required interest on reserves	(362,420)		(25)	(344,413)		(26)	(18,007)		5
Net policy obligations	653,682		46	537,102		41	116,580		22
Commissions, premium taxes, and non-deferred acquisition expenses	115,478		8	106,513		8	8,965		8
Amortization of acquisition costs	351,728		24	336,335		25	15,393		5
Total expense	1,120,888		78	979,950		74	140,938		14
Insurance underwriting margin	$	315,401	22	$	340,502	26	$	(25,101)	(7)

The lower life insurance underwriting margins for the six months ended June 30, 2021 are primarily attributed to the increase in COVID-19 net life claims in the current year. The Company incurred $49 million for the six months ended June 30, 2021, compared with $22 million at the same time in the prior year.

The following table presents Globe Life's life insurance premium by distribution channel.

Life Insurance

Premium by Distribution Channel

(Dollar amounts in thousands)

Six Months Ended June 30, Increase
(Decrease)
2020 2019
Amount % of Total Amount % of Total Amount %
American Income $ 611,527 46 $ 570,101 45 $ 41,426 7
Direct to Consumer 455,244 35 434,837 35 20,407 5
Liberty National 146,194 11 142,195 11 3,999 3
Other 107,487 8 108,357 9 (870) (1)
Total
$ 1,320,452 100 $ 1,255,490 100 $ 64,962 5


	Six Months Ended June 30,						Increase (Decrease)
	2021			2020
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	682,591	48	$	611,527	46	$	71,064	12
Direct to Consumer	493,468		34	455,244		35	38,224		8
Liberty National	153,590		11	146,194		11	7,396		5
Other	106,640		7	107,487		8	(847)		(1)
Total	$	1,436,289	100	$	1,320,452	100	$	115,837	9

Annualized life premium in force was ~~$2.65~~$2.86 billion at June 30, ~~2020,~~2021, an increase of 5%8% over ~~$2.54~~$2.65 billion a year earlier.

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Globe Life Inc.

Management's Discussion & Analysis

An analysis of life net sales, an indicator of new business production, by distribution channel is presented below.

Life Insurance

Net Sales by Distribution Channel

(Dollar amounts in thousands)

Six Months Ended June 30, Increase
(Decrease)
2020 2019
Amount % of Total Amount % of Total Amount %
American Income $ 114,283 51 $ 118,599 54 $ (4,316) (4)
Direct to Consumer 81,943 37 66,903 31 15,040 22
Liberty National 23,197 10 25,687 12 (2,490) (10)
Other 5,319 2 6,290 3 (971) (15)
Total
$ 224,742 100 $ 217,479 100 $ 7,263 3


	Six Months Ended June 30,						Increase (Decrease)
	2021			2020
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	142,856	54	$	114,283	51	$	28,573	25
Direct to Consumer	81,972		31	81,943		37	29		—
Liberty National	34,148		13	23,197		10	10,951		47
Other	5,635		2	5,319		2	316		6
Total	$	264,611	100	$	224,742	100	$	39,869	18

First-year collected life premium by distribution channel is presented in the table below.

Life Insurance

First-Year Collected Premium by Distribution Channel

(Dollar amounts in thousands)

Six Months Ended June 30, Increase
(Decrease)
2020 2019
Amount % of Total Amount % of Total Amount %
American Income $ 101,975 58 $ 96,220 59 $ 5,755 6
Direct to Consumer 47,775 27 42,447 26 5,328 13
Liberty National 21,308 12 19,475 12 1,833 9
Other 5,325 3 5,924 3 (599) (10)
Total
$ 176,383 100 $ 164,066 100 $ 12,317 8


	Six Months Ended June 30,						Increase (Decrease)
	2021			2020
	Amount		% of Total	Amount		% of Total	Amount		%
American Income	$	121,432	58	$	101,975	58	$	19,457	19
Direct to Consumer	60,878		29	47,775		27	13,103		27
Liberty National	23,747		11	21,308		12	2,439		11
Other	4,763		2	5,325		3	(562)		(11)
Total	$	210,820	100	$	176,383	100	$	34,437	20

A discussion of life operations by distribution channel follows.

The American Income Life Division markets to members of labor unions and continues to diversify its lead sources by building relationships with other affinity groups, utilizing third-party internet vendor leads, and obtaining referrals to facilitate sustainable growth. This division is Globe Life's largest contributor to life premium of any distribution channel at ~~46%~~48% of the Company's ~~2020 year-to-date~~June 30, 2021 total. Net sales ~~declined 4%~~increased 25% to ~~$114~~$143 million during the first six months of ~~2020~~2021 over the ~~2019~~2020 total for the same period of ~~$119~~$114 million. The underwriting margin, as a percent of premium, was ~~32%~~30% for the six months ended June 30, ~~2020,~~2021, down from ~~33%~~32% in the year-ago period. The lower underwriting margin was primarily due to higher policy obligations as a result of the pandemic.

~~The~~This division ~~has seen a decrease~~is anticipating an increase in net sales for the full year 2021 as compared towith 2020. Sales growth in our exclusive agencies is generally dependent on growth in the size of the agency force.

While this division has experienced $13 million in COVID-19 net life claims for the six months ended a year-ago as a result of COVID-19 restrictions on in-person contact. COVID-19 may also cause net sales to be lower in the remainder of 2020 as compared to the same periods in 2019. In addition, due to higher mortality from the pandemic,June 30, 2021, the underwriting margin as a percent of premium, at the mid-point of our guidance, is ~~also likely~~expected to ~~be slightly lower.~~remain flat for the year due to improved persistency and higher projected net sales.

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Globe Life Inc.

Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for the American Income Life Division. The average producing agent count is based on the actual count at the end of each week during the year. ~~The~~This division ~~saw a large increase in activity during~~continues to experience agent growth compared with the ~~quarter as we continue to see a significant pool~~prior year at the beginning of ~~high quality candidates due to current unemployment levels.~~the COVID-19 pandemic.

At June 30, Change
2020 2019 Amount %
American Income 8,012 7,115 897 13


	At June 30,		Change
	2021	2020	Amount	%
American Income	10,198	8,012	2,186	27

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 agency has made considerable investments in information technology, including launching a ~~lead mapping and~~ customer relationship management (CRM) tool for the agency force. ~~We anticipate~~This tool is designed to drive productivity in lead distribution, conservation of business, manager dash boards and new agent recruiting. Additionally, this ~~tool will help enhance agent productivity~~division has invested in and ~~agent retention.~~successfully implemented technology that allows the agency force to engage in virtual recruiting, training and sales activity.

The Direct to Consumer Division (DTC) offers adult and juvenile life insurance through a variety of marketing approaches, including direct mail, insert media, and electronic media. In recent years, electronic media production has grown rapidly as management has aggressively increased marketing activities related to internet and mobile technology as well as focused on driving traffic to our inbound call center. The different approaches support and complement one another in the division's efforts to reach the consumer. The 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.

While the juvenile market is an important source of sales, it also is 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, both juvenile policyholders and their parents are low acquisition-cost targets for sales of additional coverage over time.

~~The~~ DTC division saw record high demand of its life insurance products in the current quarter through its internet and inbound phone channels as a result of the response from COVID-19. Our continued investments in technology have allowed us to successfully serve the higher demands for our products through the digital self-serve and phone channels. If this level of activity continues as a result of COVID-19 response, net sales ~~are expected to be higher during~~were flat for the ~~remainder of 2020 as~~six months ended June 30, 2021 compared towith the same period in ~~2019.~~the prior year. In the second quarter of 2020, the Company saw record net sales at this division as a response to the COVID-19 pandemic. While we expect continued strong sales due to the heightened awareness as to the benefits of life insurance, we anticipate sales levels over the remainder of 2021 will be lower than the same period in 2020. Despite the lower sales, we expect favorable persistency to continue over the remainder of this year, leading to higher premiums, higher policy obligations, and lower acquisition expenses as a percent of premium.

DTC’s underwriting margin, as a percent of premium, was ~~15%~~9% for the six months ended June 30, ~~2020,~~2021, which was lower than the ~~18%~~15% result during the same period in ~~2019 and driven by higher obligations related to COVID-19. Additionally,~~2020 primarily due to ~~expected~~approximately $13 million of higher COVID-19 net life claims ~~from COVID-19, we likely~~in the current period. Additionally, this division will see a decrease ~~from prior year~~ in ~~our~~ underwriting margin as a percent of premium for the full year 2021 due to higher policy obligations incurred as a result of ~~increased policyholder claims relating to~~ the pandemic.

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 ~~26%~~17% for the six months ended June 30, ~~2020, up~~2021, down from ~~25%~~26% during the same period a year ago. The ~~increase~~decrease is primarily attributable to ~~lower~~higher policy obligations during the six months ended June 30, ~~2020~~2021 as a result of the COVID-19 pandemic compared with ~~higher than normal policy obligations during~~ the same period a year ago. ~~While~~This division incurred $9 million COVID-19 net life claims for the six months ended June 30, 2021 compared with 2,063 for the same period in 2020. With the division's ability to return to face-to-face customer interaction and the option of virtual sales, the Company is projecting total net life sales to increase for the full year 2021 as compared to the prior year. However, due to increased policy obligations expected to be incurred associated with the pandemic, we ~~did not incur significant additional COVID-19 incurred losses in the second quarter of 2020, we do~~ anticipate ~~higher levels of claims in the remainder of the year, which may cause~~ the underwriting margin, as a percent of premium, to ~~decrease.~~

~~While~~be slightly lower for the division has seen an increase in individual net sales over the past two quarters, the worksite business is more challenging in this current work-from-home environment as a result of COVID-19 restrictions and closings of many small businesses. It has been challenging to obtain new worksite sales as small businesses have been adversely affected by the pandemic. As a result, net sales may be lower in the remainder of 2020full year 2021 as compared to ~~the same period in 2019.~~2020.

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Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

Below is the average producing agent count at the end of the period for Liberty National Division. As the division gains momentum in the virtual sales environment, ~~we will benefit from~~ the ~~abundant~~agency should see an increase in recruiting ~~opportunities currently available for~~of new agents.

At June 30, Change
2020 2019 Amount %
Liberty National 2,522 2,235 287 13


	At June 30,		Change
	2021	2020	Amount	%
Liberty National	2,717	2,522	195	8

The Liberty National Division average producing agent count increased ~~13% since~~8% over the prior ~~year.~~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 geographic expansion of this agency's presence into more heavily populated, less-penetrated areas will help create long-term 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 customer relationship management (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. Sales were hindered in the first half of 2020 due to difficulties in agents transitioning to a virtual work environment after the onset of the COVID-19 lockdown, as well as mandatory shut-downs of non-essential small businesses which hindered the ability of the division’s agents to prospect at the worksite.

The Other Agencies distribution channels primarily include non-exclusive independent ~~agencies selling predominantly life insurance.~~agencies. The Other Agencies contributed $107 million of life premium income, or 8%7% of Globe Life's total premium income in the six months ended June 30, ~~2020,~~2021, and contributed 2% of net sales for the period.

HEALTH INSURANCE

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

~~Year-to-date health~~Health premium accounted for ~~30%~~29% of our total premium in ~~2020,~~the first six months of 2021, while the health underwriting margin accounted for ~~27%~~31% of total underwriting ~~margin, reflective of the lower~~margin. Health underwriting margin ~~as a percent~~increased 15% to $147 million primarily due to improved persistency and lower amortization of ~~premium for health compared with life insurance.~~acquisition costs. 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 following table presents underwriting margin data for health insurance.~~

~~Health Insurance~~

~~Summary of Results~~

~~(Dollar amounts in thousands)~~

Six Months Ended June 30, Increase
(Decrease)
2020 2019
Amount % of
Premium Amount % of
Premium Amount %
Premium and policy charges $ 563,082 100 $ 532,966 100 $ 30,116 6
Policy obligations 362,207 64 340,528 64 21,679 6
Required interest on reserves (45,361) (8) (43,176) (8) (2,185) 5
Net policy obligations 316,846 56 297,352 56 19,494 7
Commissions, premium taxes, and non-deferred acquisition expenses 48,551 9 46,960 9 1,591 3
Amortization of acquisition costs 69,980 12 66,981 12 2,999 4
Total expense 435,377 77 411,293 77 24,084 6
Insurance underwriting margin
$ 127,705 23 $ 121,673 23 $ 6,032 5

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Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

~~We market~~The following table presents underwriting margin data for health insurance.

Health Insurance

Summary of Results

(Dollar amounts in thousands)


	Six Months Ended June 30,						Change
	2021			2020
	Amount		% of Premium	Amount		% of Premium	Amount		%
Premium	$	589,759	100	$	563,082	100	$	26,677	5

Policy obligations	376,683		64	362,207		64	14,476		4
Required interest on reserves	(50,429)		(9)	(45,361)		(8)	(5,068)		11
Net policy obligations	326,254		55	316,846		56	9,408		3
Commissions, premium taxes, and non-deferred acquisition expenses	46,486		8	48,551		9	(2,065)		(4)
Amortization of acquisition costs	70,378		12	69,980		12	398		1
Total expense	443,118		75	435,377		77	7,741		2
Insurance underwriting margin	$	146,641	25	$	127,705	23	$	18,936	15

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.

Health Insurance

Premium by Distribution Channel

(Dollar amounts in thousands)


		Six Months Ended June 30,													Increase (Decrease)						Six Months Ended June 30,						Increase (Decrease)
		2020					2019												2021					2020		Increase (Decrease)
		Amount		% of Total	Amount		% of Total	Amount		%		Amount		% of Total			Amount			% of Total		Amount			%
United American	United American	$	222,944	40	$	205,159	39	$	17,785	9	United American	$	233,304	40			$	222,944		40		$	10,360		5
Family Heritage	Family Heritage	154,970		27	144,301		27	10,669		7	Family Heritage	168,347		29		154,970			27		13,377			9
Liberty National	Liberty National	95,031		17	95,448		18	(417)		—	Liberty National	94,158		16		95,031			17		(873)			(1)
American Income	American Income	51,281		9	48,549		9	2,732		6	American Income	56,140		9		51,281			9		4,859			9
Direct to Consumer	Direct to Consumer	38,856		7	39,509		7	(653)		(2)	Direct to Consumer	37,810		6		38,856			7		(1,046)			(3)
Total	Total	$	563,082	100	$	532,966	100	$	30,116	6	Total	$	589,759	100		$	563,082		100		$	26,677		5

~~Of total health premium ($563 million), premium from~~Premium related to limited-benefit plans comprise ~~$289~~$308 million, or ~~51%~~52%, of the total health premiums, for ~~2020~~2021 compared with ~~$274~~$289 million in the same period in the prior year. Premium from Medicare Supplement products comprises the remaining ~~49%~~$282 million, or ~~$274 million~~48%, for ~~2020~~2021 compared with ~~$259~~$274 million in the same period in the prior year.

Annualized health premium in force at June 30, ~~2020~~2021 increased 6%4% to $1.2 billion over the prior year total.

GL Q2 2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

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

Health Insurance

Net Sales by Distribution Channel

(Dollar amounts in thousands)


		Six Months Ended June 30,													Increase (Decrease)						Six Months Ended June 30,						Increase (Decrease)
		2020					2019												2021					2020		Increase (Decrease)
		Amount		% of Total	Amount		% of Total	Amount		%		Amount		% of Total			Amount			% of Total		Amount			%
United American	United American	$	26,465	35	$	31,481	38	$	(5,016)	(16)	United American	$	25,027	30			$	26,465		35		$	(1,438)		(5)
Family Heritage	Family Heritage	29,845		39	29,928		36	(83)		—	Family Heritage	34,744		42		29,845			39		4,899			16
Liberty National	Liberty National	10,032		13	11,429		14	(1,397)		(12)	Liberty National	12,053		15		10,032			13		2,021			20
American Income	American Income	8,440		11	8,198		10	242		3	American Income	9,277		11		8,440			11		837			10
Direct to Consumer	Direct to Consumer	1,112		2	1,727		2	(615)		(36)	Direct to Consumer	1,226		2		1,112			2		114			10
Total	Total	$	75,894	100	$	82,763	100	$	(6,869)	(8)	Total	$	82,327	100		$	75,894		100		$	6,433		8

~~Of total~~Health net sales ~~($76 million), sales of~~related to limited-benefit plans comprise ~~$48~~$56 million, or ~~64%~~68%, of the total health net sales, for ~~2020,~~2021, compared with ~~$50~~$48 million in the same period in the prior year. Medicare Supplement sales make up the remaining ~~36%~~$26 million, or ~~$27 million~~32% for ~~2020,~~2021, compared with ~~$33~~$27 million in the same period in the prior year.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

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

Health Insurance

First-Year Collected Premium by Distribution Channel

(Dollar amounts in thousands)


		Six Months Ended June 30,													Increase (Decrease)						Six Months Ended June 30,						Increase (Decrease)
		2020					2019												2021					2020		Increase (Decrease)
		Amount		% of Total	Amount		% of Total	Amount		%		Amount		% of Total			Amount			% of Total		Amount			%
United American	United American	$	39,853	46	$	33,498	43	$	6,355	19	United American	$	28,702	37			$	39,853		46		$	(11,151)		(28)
Family Heritage	Family Heritage	26,584		30	24,465		32	2,119		9	Family Heritage	28,165		36		26,584			30		1,581			6
Liberty National	Liberty National	10,407		12	9,661		12	746		8	Liberty National	9,847		13		10,407			12		(560)			(5)
American Income	American Income	8,951		10	7,784		10	1,167		15	American Income	9,334		12		8,951			10		383			4
Direct to Consumer	Direct to Consumer	1,508		2	1,979		3	(471)		(24)	Direct to Consumer	1,581		2		1,508			2		73			5
Total	Total	$	87,303	100	$	77,387	100	$	9,916	13	Total	$	77,629	100		$	87,303		100		$	(9,674)		(11)

First-year collected premium related to limited-benefit plans comprises ~~$46~~$47 million, or ~~53%~~61%, of total first-year collected premium, for ~~2020~~2021 compared with ~~$42~~$46 million in the same period in the prior year. First-year collected premium from Medicare Supplement policies makes up the remaining ~~47%~~$30 million, or ~~$41 million~~39%, for ~~2020~~2021, compared with ~~$35~~$41 million in the same period in the prior year.

A discussion of health operations by distribution channel follows.

The United American ~~Independent Agency~~Division consists of non-exclusive independent agencies who may also sell for other companies. The United American ~~Independent Agency~~Division was Globe Life's largest health agency in terms of health premium income.

This division is also Globe Life's largest producer of Medicare Supplement insurance. The United American ~~Independent Agency~~Division represents ~~80%~~81% of all Medicare Supplement premium and ~~96%~~95% of Medicare Supplement net sales. For the six months ended June 30, ~~2020,~~2021, Medicare Supplement premium in this agency rose 9%5% to ~~$218~~$229 million in ~~2020~~2021 over the prior period ~~balance~~total of ~~$200~~$218 million. Medicare Supplement net sales declined ~~16%~~6% to ~~$26~~$25 million in ~~2020~~2021 from the prior year period, primarily as a result of a decrease in ~~group~~individual sales. Underwriting margin as a percent of premium was ~~14%, down from 15%~~16% for the six months ended June 30, ~~2019. This decrease was primarily due to higher policy obligations as a percentage of premium~~2021, up from 14% in ~~the current period versus the year-ago period.~~

~~Individual Medicare Supplement net sales decreased from the prior year. This agency will likely see reduced sales during the remainder of the year, in part due to the COVID-19 pandemic.~~

2020.

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Globe Life Inc.

Management's Discussion & Analysis

The Family Heritage Division primarily markets limited-benefit supplemental health insurance in non-urban areas. Most of its policies include a cash-back feature, such as a return of premium, where any excess of premiums over claims paid is returned to the policyholder at the end of a specified period stated within the insurance policy. Underwriting margin as a percent of premium was ~~25%~~26% for the six months ended June 30, ~~2020, same as~~2021, up from 25% in the year-ago ~~period.~~period primarily due to improved persistency and lower acquisition costs.

The division ~~saw~~experienced a ~~slight decrease~~16% increase in net health sales as compared with the six-month period a year ~~ago. However, net sales were significantly lower~~ago, primarily due to an increase in ~~the second quarter of 2020 as compared to the same period a year ago as a result of COVID-19 restrictions. While it has been a challenge at this division to move from in-home~~agent productivity and ~~in-business sales to virtual sales, we are encouraged by the adoption of the agency owners to this supplementary way of doing business.~~training. The division ~~is also encouraged by~~will be launching incentive programs during the ~~positive results from new~~year to help drive an increase in productivity and the number of producing agents. For the full year, net sales in 2020 may be lower than the same periods in 2019. Despite higher costs associated with those infected with the COVID-19 virus, we expect higher underwriting margins as a percent of premium due to lower overall utilization rates.

Below is the average producing agent count at the end of the period for the Family Heritage Division.

At June 30, Change
2020 2019 Amount %
Family Heritage Division 1,238 1,042 196 19


	At June 30,		Change
	2021	2020	Amount	%
Family Heritage Division	1,253	1,238	15	1

The Liberty National Division represented ~~17%~~16% of all Globe Life health premium income for the six-month period ended June 30, ~~2020.~~2021. The Liberty National Division markets limited-benefit supplemental health products consisting primarily of critical illness insurance. Much of this health business is now generated through worksite ~~marketing. In 2020 and 2019, health~~marketing targeting small businesses of 10 to 100 employees. Health premium at Liberty National Division ~~were $95~~was $94 million for the ~~six-month periods. As discussed~~six months ended June 30, 2021, down from $95 million in the ~~Liberty National Division life section above,~~year ago period. We anticipate an increase in net health sales at this division ~~has seen decreased net sales across both life and health~~ as ~~result of~~ the ~~COVID-19 response. For the remainder of 2020, we expect health net sales~~Company is able to ~~decrease~~interact face-to-face with customers compared with ~~prior-year periods.~~2020.

Other distribution. While some of the Company's other distribution channels market health products, their main emphasis is on life insurance. On a combined basis, they accounted for ~~16%~~15% of health premium in ~~2020~~2021 and ~~2019.~~16% in 2020. The American Income Life Division primarily markets accident plans. The Direct to Consumer Division markets primarily Medicare Supplements to employer or union-sponsored groups. The Direct to Consumer Division added $1 million of Medicare Supplement net sales as of June 30, ~~2020~~2021 and ~~$2 million in 2019.~~2020.

ANNUITIES

Annuities represent an insignificant part of our ~~business~~business. We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life and ~~are not expected to be an important part of our marketing strategy going forward.~~supplemental health insurance products.

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Globe Life Inc.

Management's Discussion & Analysis

INVESTMENTS

We manage our capital resources including investments, debt, and cash flow through the investment segment. Excess investment income represents the profit margin attributable to investment operations and is the measure that we use to evaluate the performance of the investment segment as described in Note 9—10—Business Segments. It is defined as net investment income less both the required interest on net insurance policy liabilities and the interest cost associated with capital funding or “financing costs.”

Management also views excess investment income per diluted common share as an important and useful measure to evaluate the performance of the investment segment. It is defined as excess investment income divided by the total diluted weighted average shares outstanding, representing the contribution by the investment segment to the consolidated earnings per share of the Company. Since implementing our share repurchase program in 1986, we have used ~~$8.0~~$8.4 billion of excess cash flow at the Parent Company to repurchase Globe Life Inc. common shares after determining that the repurchases provided a greater risk adjusted after-tax return than other investment alternatives. If we had not used this excess cash to repurchase shares, but had instead invested it in interest-bearing assets, we would have earned more investment income and had more shares outstanding. As excess

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

investment income per diluted common share incorporates all capital resources, we view excess investment income per diluted share as a useful measure to evaluate the investment segment.

Excess Investment Income. The following table summarizes Globe Life's investment income, excess investment income, and excess investment income per diluted common share.

Analysis of Excess Investment Income

(Dollar amounts in thousands, except for per share data)

Six Months Ended
June 30,
Increase
(Decrease)
2020 2019 Amount %
Net investment income $ 460,559 $ 454,098 $ 6,461 1
Interest on net insurance policy liabilities:
Interest on reserves (410,562) (394,359) (16,203) 4
Interest on deferred acquisition costs 117,498 113,204 4,294 4
Net required interest (293,064) (281,155) (11,909) 4
Financing costs (43,621) (42,710) (911) 2
Excess investment income
$ 123,874 $ 130,233 $ (6,359) (5)
Excess investment income per diluted share
$ 1.15 $ 1.16 $ (0.01) (1)
Mean invested assets (at amortized cost) $ 17,700,476 $ 16,847,397 $ 853,079 5
Average net insurance policy liabilities⁽¹⁾
10,328,750 9,980,813 347,937 3
Average debt and preferred securities (at amortized cost) 1,726,718 1,761,751 (35,033) (2)


	Six Months Ended June 30,				Change
	2021		2020		Amount		%
Net investment income	$	474,128	$	460,559	$	13,569	3
Interest on net insurance policy liabilities:
Interest on reserves	(432,870)		(410,562)		(22,308)		5
Interest on deferred acquisition costs	122,192		117,498		4,694		4
Net required interest	(310,678)		(293,064)		(17,614)		6
Financing costs	(42,947)		(43,621)		674		(2)
Excess investment income	$	120,503	$	123,874	$	(3,371)	(3)

Excess investment income per diluted share	$	1.15	$	1.15	$	—	—

Mean invested assets (at amortized cost)	$	18,748,877	$	17,700,476	$	1,048,401	6
Average net insurance policy liabilities(1)	10,838,913		10,328,750		510,163		5
Average debt and preferred securities (at amortized cost)	1,966,285		1,726,718		239,567		14

(1)Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon.

Excess investment income declined 5%$3 million, or 3%, compared with the year-ago ~~period, while on a~~period. Excess investment income per diluted common share ~~basis it declined 1%~~was $1.15 for both periods. Excess investment income per diluted common share generally increases at a faster pace than excess investment income because the number of diluted shares outstanding generally decreases from ~~the prior year-ago period.~~year to year as a result of our share repurchase program.

Net investment income for the six months ended June 30, ~~2020~~2021 was ~~$461~~$474 million or 1%3% greater than the year ago period. Mean invested assets increased 5%6% during the first six months of ~~2020~~2021 over the same period last year. The effective annual yield rate earned on the fixed maturity portfolio was ~~5.38%~~5.24% in the first six months of ~~2020,~~2021, compared with ~~5.52%~~5.38% a year earlier. Growth in net investment income has been negatively impacted in recent ~~periods primarily due to reinvesting~~years by the low interest rate environment during which time we have invested new money at yields lower than our average portfolio yield. In addition, we have reinvested the proceeds from ~~dispositions~~bonds that matured, were called, or were otherwise

GL Q2 2021 FORM 10-Q

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Globe Life Inc.

Management's Discussion & Analysis

disposed of at yield rates less than what we earned on these bonds ~~prior to~~before their maturity or disposition. ~~As a result, growth in net investment income has been slower than~~We currently expect that the ~~growth in mean invested assets. While the Company may see a higher~~average annual turnover rate of fixed maturity assets ~~of 2% to 4% in 2020 due to calls of highly-rated municipal securities, we expect that the average annual turnover of fixed maturity assets during the next five years~~ will be less than 2% ofover the ~~portfolio~~next five years and will not have a material negative impact on net investment income. To help mitigate the decline of the portfolio yield over the past few years, the Company has increased its position in investment funds to fixed maturity assets by investing in limited partnerships with debt like characteristics that diversify risk and enhance risk adjusted capital adjusted returns on the portfolio. The earned yield on the fund investments for the six months ended June 30, 2021 was 5.42%. See additional information in Note 4—Investments.

Should the current low interest rate environment continue, the growth of the Company's net investment income will continue to be negatively impacted primarily due to the investment of new money and proceeds from dispositions at rates less than the average portfolio yield rate. While net investment income would grow, it would continue to grow at rates less than the growth in mean invested assets. For ~~2020,~~2021, we currently anticipate the average new money yield on our fixed maturity acquisitions to be approximately 7030 basis points lower than the rate applicable to our ~~2019~~2020 acquisitions.

Should interest rates, especially long-term rates, rise, Globe Life's net investment income would benefit due to higher interest rates on new ~~purchases.~~investments. While such a rise in interest rates could adversely affect the fair value of the fixed maturities portfolio, we could withstand an increase in interest rates of approximately ~~130~~150 to ~~135~~155 basis points before the net unrealized gains on our fixed maturity portfolio as of June 30, ~~2020~~2021 would be eliminated. Should interest rates increase further, we would not be concerned with potential interest rate driven unrealized losses in our fixed maturity portfolio because we ~~have~~do not intend to sell, nor is it likely that management will be required to sell, the ~~intent and, more importantly, the ability to hold our~~ fixed maturities prior to ~~maturity.~~

~~GL Q2 2020 FORM 10-Q~~

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~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

their anticipated recovery.

Required interest on net insurance policy liabilities reduces net investment income, as it is the amount of net investment income considered by management necessary to “fund” required interest on net insurance policy liabilities, which is the net of the benefit reserve liability and the deferred acquisition cost asset. As such, it is removed from the investment segment and applied to the insurance segments to offset the effect of the required interest from the insurance segments. As discussed in Note 9—10—Business Segments, management regards this as a more meaningful analysis of the investment and insurance segments. Required interest is based on the actuarial interest assumptions used in discounting the benefit reserve liability and the amortization of deferred acquisition costs for our insurance policies in force.

The great majority of our life and health insurance policies are fixed interest rate protection policies, not investment products, and are accounted for under current GAAP accounting guidance for long-duration insurance products which mandate that interest rate assumptions for a particular block of business be “locked in” for the life of that block of business. Each calendar year, we set the discount rate to be used to calculate the benefit reserve liability and the amortization of the deferred acquisition cost asset for all insurance policies issued that year. That rate is based on the new money yields that we expect to earn on cash flow received in the future from policies of that issue year, and cannot be changed. The discount rate used for policies issued in the current year has no impact on the in force policies issued in prior years as the rates of all prior issue years are also locked in. As such, the overall discount rate for the entire in force block of 5.7% is a weighted average of the discount rates being used from all issue years. Changes in the overall weighted-average discount rate over time are caused by changes in the mix of the reserves and the deferred acquisition cost asset by issue year on the entire block of in force business. Business issued in the current year has very little impact on the overall weighted-average discount rate due to the size of our in force business.

Since actuarial discount rates are locked in for life on essentially all of our business, benefit reserves and deferred acquisition costs are not affected by interest rate fluctuations unless a loss recognition event occurs. Due to the strength of our underwriting margins, we do not expect an extended low interest rate environment towill cause a loss recognition event.

~~Required~~In comparison to the year-ago period, required interest on net insurance policy liabilities increased ~~$12~~$18 million, or 4%6%, to ~~$293~~$311 million, ~~greater than~~compared with the 3%5% growth in average net interest-bearing insurance policy liabilities.

GL Q2 2021 FORM 10-Q

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Globe Life Inc.

Management's Discussion & Analysis

Financing costs for the investment segment consist primarily of interest on our various debt instruments. The table below presents the components of financing costs and reconciles interest expense per the Condensed Consolidated Statements of Operations.

Analysis of Financing Costs

(Dollar amounts in thousands)

Six Months Ended
June 30, Increase
(Decrease)
2020 2019 Amount %
Interest on funded debt $ 34,984 $ 34,883 $ 101 —
Interest on term loan⁽¹⁾
2,870 1,732 1,138 66
Interest on short-term debt 5,767 6,093 (326) (5)
Other — 2 (2) (100)
Financing costs
$ 43,621 $ 42,710 $ 911 2


	Six Months Ended June 30,				Increase (Decrease)
	2021		2020		Amount		%
Interest on funded debt	$	40,126	$	34,984	$	5,142	15
Interest on term loans	—		2,870		(2,870)		(100)
Interest on short-term debt	2,821		5,767		(2,946)		(51)

Financing costs	$	42,947	$	43,621	$	(674)	(2)

~~(1)As of June 30, 2020, the entire term loan was classified as short-term debt on the~~ Co ~~ndensed~~ Co ~~nsolidated Balance Shee~~ts.

In ~~2020,~~2021, financing costs ~~increased~~decreased 2% compared with the prior year primarily due to ~~an increase in~~lower rates on the short-term debt. The interest on funded debt ~~outstanding. We anticipate our financing costs to increase in 2020~~was higher than prior year as a result of the ~~new $300 million~~2.15% Senior Note issued in August 2021. The debt proceeds were used, in part, to redeem all the outstanding term ~~loan facility.~~loans. The net increase in interest was more than offset by lower interest rates on the short-term debt. More information on our debt transactions is disclosed in the Financial Condition section of this report.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

Realized Gains and Losses. Our core business of providing insurance coverage requires us to maintain a large and diverse investment portfolio to support our insurance liabilities. From time to time, investments are sold or called, or experience a credit loss event, each of which results in a realized gain or loss. ~~As discussed in~~ ~~Note 4~~, for the six months ended June 30, 2020, the Company recorded a $26 million (net of tax) provision for credit losses on a single energy fixed maturity holding (offshore driller). See further discussion on the energy sector below.

The Company also elects to measure its investment in certain limited partnerships at fair value in accordance with the fair value option for financial instruments with changes recognized in Realized gains (losses) in the Condensed Consolidated Statements of Operations.

Realized gains and losses can be significant in relation to the earnings from core insurance operations, and as a result, can have a material positive or negative impact on net income. The significant fluctuations caused by gains and losses can cause period-to-period trends of net income that are not indicative of historical core operating results or ~~predicative~~predictive of the future trends of core operations. Accordingly, they have no bearing on core insurance operations or segment results as we view operations. For these reasons, and in line with industry practice, we remove the effects of realized gains and losses when evaluating overall insurance operating results. The following table summarizes our tax-effected realized gains (losses) by component.

Analysis of Realized Gains (Losses), Net of Tax

(Dollar amounts in thousands, except for per share data)

Six Months Ended June 30,
2020 2019
Amount Per Share Amount Per Share
Fixed maturities:
Sales $ 1,794 $ 0.02 $ (2,355) $ (0.02)
Matured or other redemptions⁽¹⁾
6,787 0.06 7,022 0.06
Provision for credit losses (25,848) (0.24) — —
Fair value option—change in fair value (14,892) (0.14) 540 0.01
Other 7,758 0.07 (85) —
Total realized gains (losses)
$ (24,401) $ (0.23) $ 5,122 $ 0.05


	Six Months Ended June 30,
	2021				2020
	Amount		Per Share		Amount		Per Share
Fixed maturities:
Sales	$	(8,664)	$	(0.08)	$	1,794	$	0.02
Matured or other redemptions(1)	21,548		0.21		6,787		0.06
Provision for credit losses	2,643		0.02		(25,848)		(0.24)
Fair value option—change in fair value	9,818		0.09		(14,892)		(0.14)
Other	3,736		0.04		7,758		0.07


Total realized gains (losses)	$	29,081	$	0.28	$	(24,401)	$	(0.23)

(1)During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company recorded ~~$86.3~~$108.3 million and ~~$117.2~~$86.3 million of exchanges of fixed maturity securities (noncash transactions) that resulted in ~~$6.2~~$19.9 million and ~~$6.6~~$6.2 million, respectively in realized gains, net of tax.

GL Q2 2021 FORM 10-Q

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Globe Life Inc.

Management's Discussion & Analysis

Investment Acquisitions. Globe Life's investment policy calls for investing primarily in investment grade fixed maturities that meet our quality and yield objectives. We generally prefer to invest in securities with longer maturities because they more closely match the long-term nature of our policy liabilities. We believe this strategy is appropriate since our expected future cash flows are generally stable and predictable and the likelihood that we will need to sell invested assets to raise cash is low. If longer-term securities that meet our quality and yield objectives are not available, we do not compromise on our quality objectives; instead, we consider investing in shorter-term or lower-yielding securities taking into consideration the slope of the yield curve and other factors such as risk adjusted capital adjusted returns.

~~GL Q2 2020 FORM 10-Q~~

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~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

The following table summarizes selected information for fixed maturity investments. The effective annual yield shown is based on the acquisition price and call features, if any, of the securities. For non-callable bonds, the yield is calculated to maturity date. For callable bonds acquired at a premium, the yield is calculated to the earliest known call date and call price after acquisition ("first call date"). For all other callable bonds, the yield is calculated to maturity date.

Fixed Maturity Acquisitions Selected Information

(Dollar amounts in thousands)

Six Months Ended
June 30,
2020 2019
Cost of acquisitions:
Investment-grade corporate securities $ 349,933 $ 501,668
Investment-grade municipal securities 194,680 197,999
Other investment-grade securities 18,174 3,739
Total fixed maturity acquisitions⁽¹⁾
$ 562,787 $ 703,406
Effective annual yield (one year compounded)⁽²⁾
4.16 % 4.91 %
Average life (in years, to next call) 15.7 21.0
Average life (in years, to maturity) 24.4 28.6
Average rating A A


	Six Months Ended June 30,
	2021			2020
Cost of acquisitions:
Investment-grade corporate securities	$	339,711		$	349,933
Investment-grade municipal securities	65,068			194,680
Other investment-grade securities	10,355			18,174
Total fixed maturity acquisitions(1)	$	415,134		$	562,787

Effective annual yield (one year compounded)(2)	3.49		%	4.16		%
Average life (in years, to next call)	29.5			15.7
Average life (in years, to maturity)	34.2			24.4
Average rating	A			A

(1)Fixed maturity acquisitions included no unsettled trades as of June 30, ~~2020~~2021 and ~~2019.~~2020.

(2)Tax-equivalent basis, where the yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.

For investments in callable bonds, the actual life of the investment will depend on whether the issuer calls the investment prior to the maturity date. Given our investments in callable bonds, the actual average life of our investments cannot be known at the time of the investment. Absent sales and "make-whole calls", however, the average life will not be less than the average life to next call and will not exceed the average life to maturity. Data for both of these average life measures is provided in the above chart.

Acquisitions in both periods consisted primarily of corporate and municipal bonds with securities spanning a diversified range of issuers, industry sectors, and geographical regions. In the first six months of ~~2020,~~2021, we invested primarily in the ~~municipal,~~ industrial and financial sectors. For the entire portfolio, the taxable equivalent effective yield earned was ~~5.38%~~5.24%, down approximately 14 basis points from the yield in the first six months of ~~2019.~~2020. As previously noted in the discussion of net investment income, ~~this large~~the decrease was primarily due to the combination of lower interest rates applicable to new purchases and ~~a significant amount of securities called~~fixed maturity dispositions during ~~2019 and~~ 2020. For the remainder of ~~2020,~~2021, the Company will continue to execute on its existing ~~investment~~ strategy by seeking ~~investments with~~to invest in assets that satisfy our quality and other objectives, while maximizing the highest risk adjusted capital adjusted return. ~~We also do not participate in securities lending nor have any exposure to European sovereign debt as of June 30, 2020.~~

GL Q2 2021 FORM 10-Q

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Globe Life Inc.

Management's Discussion & Analysis

In 2017, it was announced by the head of the United Kingdom's Financial Conduct Authority ~~that they~~of its plan to phase out the floating rate, London Interbank Offered Rate (LIBOR)~~, by the end of 2021. Uncertainty remains as~~. The rate will transition out from 2021 to what will be the final replacement floating rate; however, the Federal Reserve Bank of New York has begun publishing a Secured Overnight Funding Rate (“SOFR”) which is intended to replace the U.S. dollar LIBOR.mid-year 2023. As of June 30, ~~2020,~~2021, the Company had limited assets and liabilities that utilize LIBOR as a benchmark rate. We will continue to monitor the progress toward the establishment of a new floating rate.

Since fixed maturities represent such a significant portion of our investment portfolio, the remainder of the discussion of portfolio composition will focus on fixed maturities. See a breakdown of the Company's Other long-term investments in

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~Note 4—Investments

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~.

Selected information concerning the fixed maturity portfolio is as follows:

Fixed Maturity Portfolio Selected Information

At
June 30,
2020 December 31, 2019 June 30,
2019
Average annual effective yield⁽¹⁾
5.36% 5.41% 5.50%
Average life, in years, to:
Next call⁽²⁾
16.5 16.8 16.9
Maturity⁽²⁾
19.0 19.2 18.8
Effective duration to:
Next call^(2,3)
10.9 10.8 10.6
Maturity^(2,3)
12.0 11.8 11.4


	At
	June 30, 2021	December 31, 2020	June 30, 2020
Average annual effective yield(1)	5.23%	5.28%	5.36%
Average life, in years, to:
Next call(2)	16.0	16.2	16.5
Maturity(2)	18.9	19.0	19.0
Effective duration to:
Next call(2,3)	10.8	11.0	10.9
Maturity(2,3)	12.1	12.3	12.0

(1)Tax-equivalent basis. The yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.

(2)Globe Life calculates the average life and duration of the fixed maturity portfolio two ways:

(a) based on the next call date which is the next call date for callable bonds and the maturity date for noncallable bonds, and

(b) based on the maturity date of all bonds, whether callable or not.

(3)Effective duration is a measure of the price sensitivity of a fixed-income security to a ~~particular~~1% change in interest rates.

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Globe Life Inc.

Management's Discussion & Analysis

Credit Risk Sensitivity. The following tables summarize certain information about the major corporate sectors and security types held in our fixed maturity portfolio at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

As a result of the adoption of ASU 2016-13, amortized cost will now be reflected as "amortized cost, net of allowance for credit losses" or "amortized cost, net", while prior periods continue to be reported in accordance with previously applicable GAAP.

Fixed Maturities by Sector

June 30, ~~2020~~2021

(Dollar amounts in thousands)

Below Investment Grade Total Fixed Maturities % of Total Fixed Maturities
Amortized
Cost, net Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Amortized
Cost, net Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value At Amortized Cost, net At Fair Value
Corporates:
Financial
Insurance - life, health, P&C $ 57,747 $ 4,557 $ (10,760) $ 51,544 $ 2,237,514 $ 447,823 $ (23,170) $ 2,662,167 13 14
Banks 27,030 — (2,825) 24,205 984,093 216,251 (3,137) 1,197,207 6 6
Other financial 114,892 — (26,308) 88,584 1,081,982 134,426 (27,257) 1,189,151 7 6
Total financial 199,669 4,557 (39,893) 164,333 4,303,589 798,500 (53,564) 5,048,525 26 26
Utilities
Electric 46,163 701 (1,616) 45,248 1,412,448 418,094 (1,616) 1,828,926 8 9
Gas and water — — — — 518,481 100,401 — 618,882 3 3
Total utilities 46,163 701 (1,616) 45,248 1,930,929 518,495 (1,616) 2,447,808 11 12
Industrial - Energy
Pipelines 85,378 — (13,770) 71,608 923,020 129,015 (21,110) 1,030,925 6 5
Exploration and production 50,932 — (6,801) 44,131 555,977 53,854 (22,908) 586,923 3 3
Oil field services — — — — 49,809 7,518 — 57,327 — —
Refiner — — — — 89,534 19,210 (17) 108,727 1 1
Driller 11,992 — (9,826) 2,166 11,992 — (9,826) 2,166 — —
Total energy 148,302 — (30,397) 117,905 1,630,332 209,597 (53,861) 1,786,068 10 9
Industrial - Basic materials
Chemicals — — — — 615,650 75,997 (1,451) 690,196 4 3
Metals and mining 10,547 1,703 — 12,250 398,685 104,286 — 502,971 2 3
Forestry products and paper — — — — 110,696 18,220 — 128,916 1 1
Total basic materials 10,547 1,703 — 12,250 1,125,031 198,503 (1,451) 1,322,083 7 7
Industrial - Consumer, non-cyclical 96,626 2,100 (3,849) 94,877 2,140,193 456,192 (3,890) 2,592,495 13 13
Other industrials 25,707 1,027 — 26,734 1,312,345 242,889 (678) 1,554,556 8 8
Industrial - Transportation 25,885 1,320 (613) 26,592 581,022 152,236 (613) 732,645 3 4
Other corporate sectors 147,814 3,607 (9,504) 141,917 1,425,999 244,374 (14,570) 1,655,803 9 8
Total corporates 700,713 15,015 (85,872) 629,856 14,449,440 2,820,786 (130,243) 17,139,983 87 87
Other fixed maturities:
Government (U.S., municipal, and foreign) — — — — 2,029,051 298,478 (553) 2,326,976 12 12
Collateralized debt obligations 57,031 21,988 (9,920) 69,099 57,031 21,988 (9,920) 69,099 — —
Other asset-backed securities 14,100 — (1,787) 12,313 129,168 2,839 (7,429) 124,578 1 1
Mortgage-backed securities⁽¹⁾
— — — — 491 55 — 546 — —
Total fixed maturities $ 771,844 $ 37,003 $ (97,579) $ 711,268 $ 16,665,181 $ 3,144,146 $ (148,145) $ 19,661,182 100 100


	Below Investment Grade								Total Fixed Maturities								% of Total Fixed Maturities
	Amortized Cost, net		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost, net		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		At Amortized Cost, net	At Fair Value

Corporates:
Financial
Insurance - life, health, P&C	$	57,565	$	3,825	$	(7,256)	$	54,134	$	2,314,258	$	524,585	$	(8,109)	$	2,830,734	13	13
Banks	26,997		753		—		27,750		969,497		216,103		(2,489)		1,183,111		6	6
Other financial	114,949		156		(1,955)		113,150		1,239,063		192,820		(3,022)		1,428,861		7	7
Total financial	199,511		4,734		(9,211)		195,034		4,522,818		933,508		(13,620)		5,442,706		26	26
Utilities
Electric	49,494		5,857		(87)		55,264		1,415,411		414,324		(311)		1,829,424		8	9
Gas and water	—		—		—		—		543,962		115,642		(591)		659,013		3	3
Total utilities	49,494		5,857		(87)		55,264		1,959,373		529,966		(902)		2,488,437		11	12
Industrial - Energy
Pipelines	85,275		5,106		(1,449)		88,932		921,382		209,567		(1,449)		1,129,500		5	5
Exploration and production	100,698		18,279		—		118,977		568,872		113,638		(403)		682,107		3	3
Oil field services	—		—		—		—		49,788		14,464		—		64,252		—	—
Refiner	—		—		—		—		89,204		27,131		—		116,335		1	1
Driller	—		—		—		—		—		—		—		—		—	—
Total energy	185,973		23,385		(1,449)		207,909		1,629,246		364,800		(1,852)		1,992,194		9	9
Industrial - Basic materials
Chemicals	—		—		—		—		669,278		142,568		(83)		811,763		4	4
Metals and mining	—		—		—		—		406,359		129,374		—		535,733		3	3
Forestry products and paper	—		—		—		—		65,675		17,426		—		83,101		—	—
Total basic materials	—		—		—		—		1,141,312		289,368		(83)		1,430,597		7	7
Industrial - Consumer, non-cyclical	84,275		10,900		(2,133)		93,042		2,224,277		481,449		(2,458)		2,703,268		13	13
Other industrials	25,614		3,729		—		29,343		1,275,891		296,869		(228)		1,572,532		7	8
Industrial - Transportation	25,668		5,126		—		30,794		570,150		143,130		—		713,280		3	3
Other corporate sectors	143,317		19,024		(3,442)		158,899		1,627,685		296,684		(8,485)		1,915,884		10	9
Total corporates	713,852		72,755		(16,322)		770,285		14,950,752		3,335,774		(27,628)		18,258,898		86	87
Other fixed maturities:
Government (U.S., municipal, and foreign)	—		—		—		—		2,343,770		313,750		(4,531)		2,652,989		13	12
Collateralized debt obligations	36,288		28,119		—		64,407		36,288		28,119		—		64,407		—	—
Other asset-backed securities	13,800		—		(838)		12,962		120,801		5,192		(847)		125,146		1	1
Mortgage-backed securities(1)	—		—		—		—		307		33		—		340		—	—
Total fixed maturities	$	763,940	$	100,874	$	(17,160)	$	847,654	$	17,451,918	$	3,682,868	$	(33,006)	$	21,101,780	100	100

(1)Includes Government National Mortgage Association (GNMA).

5553

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

Fixed Maturities by Sector

December 31, ~~2019~~2020

(Dollar amounts in thousands)

Below Investment Grade Total Fixed Maturities % of Total Fixed Maturities
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value At Amortized Cost At Fair Value
Corporates:
Financial
Insurance - life, health, P&C $ 57,833 $ 3,114 $ (6,542) $ 54,405 $ 2,111,735 $ 394,326 $ (9,277) $ 2,496,784 13 13
Banks 27,045 — (1,196) 25,849 904,449 175,771 (1,300) 1,078,920 6 6
Other financial 97,580 737 (11,519) 86,798 1,085,733 131,099 (11,730) 1,205,102 7 6
Total financial 182,458 3,851 (19,257) 167,052 4,101,917 701,196 (22,307) 4,780,806 26 25
Utilities
Electric 47,298 1,059 (1,399) 46,958 1,418,359 342,302 (1,484) 1,759,177 9 9
Gas and water — — — — 519,379 73,812 (81) 593,110 3 3
Total utilities 47,298 1,059 (1,399) 46,958 1,937,738 416,114 (1,565) 2,352,287 12 12
Industrial - Energy
Pipelines 85,428 396 (5,839) 79,985 934,884 141,705 (6,803) 1,069,786 6 6
Exploration and production 17,129 400 (127) 17,402 559,826 96,312 (335) 655,803 3 3
Oil field services — — — — 49,818 10,982 — 60,800 — —
Refiner — — — — 89,692 20,641 — 110,333 1 1
Driller 44,748 — (26,586) 18,162 44,749 — (26,587) 18,162 — —
Total energy 147,305 796 (32,552) 115,549 1,678,969 269,640 (33,725) 1,914,884 10 10
Industrial - Basic materials
Chemicals — — — — 608,081 61,263 (325) 669,019 4 3
Metals and mining 10,563 1,643 — 12,206 398,477 86,138 (58) 484,557 2 3
Forestry products and paper — — — — 111,011 15,700 — 126,711 1 1
Total basic materials 10,563 1,643 — 12,206 1,117,569 163,101 (383) 1,280,287 7 7
Industrial - Consumer, non-cyclical 33,474 411 (5,504) 28,381 2,126,768 303,088 (6,875) 2,422,981 13 13
Other industrials 25,752 2,648 — 28,400 1,309,149 199,765 (539) 1,508,375 8 8
Industrial - Transportation 25,996 1,245 (16) 27,225 570,694 107,704 (127) 678,271 3 4
Other corporate sectors 130,069 7,105 (6,401) 130,773 1,390,497 182,250 (8,841) 1,563,906 8 8
Total corporates 602,915 18,758 (65,129) 556,544 14,233,301 2,342,858 (74,362) 16,501,797 87 87
Other fixed maturities:
Government (U.S., municipal, and foreign) — — — — 1,981,243 202,325 (1,318) 2,182,250 12 12
Collateralized debt obligations 56,990 24,298 (7,184) 74,104 56,990 24,298 (7,184) 74,104 — —
Other asset-backed securities 14,250 — (371) 13,879 143,651 5,066 (371) 148,346 1 1
Mortgage-backed securities⁽¹⁾
— — — — 591 59 — 650 — —
Total fixed maturities $ 674,155 $ 43,056 $ (72,684) $ 644,527 $ 16,415,776 $ 2,574,606 $ (83,235) $ 18,907,147 100 100


	Below Investment Grade								Total Fixed Maturities								% of Total Fixed Maturities
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		At Amortized Cost	At Fair Value

Corporates:
Financial
Insurance - life, health, P&C	$	57,658	$	3,894	$	(10,788)	$	50,764	$	2,275,843	$	563,349	$	(14,769)	$	2,824,423	13	13
Banks	27,014		15		(456)		26,573		993,946		259,489		(1,050)		1,252,385		6	6
Other financial	114,919		271		(8,245)		106,945		1,134,414		193,975		(8,402)		1,319,987		7	6
Total financial	199,591		4,180		(19,489)		184,282		4,404,203		1,016,813		(24,221)		5,396,795		26	25
Utilities
Electric	50,663		6,289		—		56,952		1,438,796		476,744		(108)		1,915,432		9	9
Gas and water	—		—		—		—		536,664		131,851		—		668,515		3	3
Total utilities	50,663		6,289		—		56,952		1,975,460		608,595		(108)		2,583,947		12	12
Industrial - Energy
Pipelines	85,327		1,624		(2,309)		84,642		923,756		187,851		(2,423)		1,109,184		5	5
Exploration and production	104,719		5,980		(678)		110,021		555,796		121,940		(678)		677,058		3	3
Oil field services	—		—		—		—		49,799		13,613		—		63,412		—	—
Refiner	—		—		—		—		89,371		22,793		—		112,164		1	1
Driller	1,902		—		18		1,920		1,902		—		18		1,920		—	—
Total energy	191,948		7,604		(2,969)		196,583		1,620,624		346,197		(3,083)		1,963,738		9	9
Industrial - Basic materials
Chemicals	—		—		—		—		642,258		152,016		—		794,274		4	4
Metals and mining	—		—		—		—		406,564		144,110		—		550,674		2	3
Forestry products and paper	—		—		—		—		88,804		21,588		—		110,392		1	1
Total basic materials	—		—		—		—		1,137,626		317,714		—		1,455,340		7	8
Industrial - Consumer, non-cyclical	96,265		8,680		(1,903)		103,042		2,233,324		576,007		(2,070)		2,807,261		13	13
Other industrials	25,661		3,925		—		29,586		1,260,646		328,986		(6)		1,589,626		7	7
Industrial - Transportation	25,777		4,315		—		30,092		566,935		175,405		—		742,340		3	3
Other corporate sectors	179,878		17,459		(3,595)		193,742		1,489,113		329,254		(4,142)		1,814,225		9	9
Total corporates	769,783		52,452		(27,956)		794,279		14,687,931		3,698,971		(33,630)		18,353,272		86	86
Other fixed maturities:
Government (U.S., municipal, and foreign)	—		—		—		—		2,313,855		341,176		(1,256)		2,653,775		13	13
Collateralized debt obligations	57,007		23,460		(8,869)		71,598		57,007		23,460		(8,869)		71,598		—	—
Other asset-backed securities	13,949		—		(2,727)		11,222		134,616		3,591		(3,778)		134,429		1	1
Mortgage-backed securities(1)	—		—		—		—		390		45		—		435		—	—
Total fixed maturities	$	840,739	$	75,912	$	(39,552)	$	877,099	$	17,193,799	$	4,067,243	$	(47,533)	$	21,213,509	100	100

(1)Includes GNMAs.

5654

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

Corporate securities, which consist of bonds and redeemable preferred stocks, were the largest component of the June 30, ~~2020~~2021 fixed maturity portfolio, representing ~~87%~~86% of ~~both~~ amortized cost, net and 87% of fair value. The remainder of the portfolio is invested primarily in securities issued by the U.S. government and U.S. municipalities. The Company holds insignificant amounts in foreign government bonds, collateralized debt obligations, asset-backed securities, and mortgage-backed securities. Corporate securities are diversified over a variety of industry sectors and issuers. At June 30, ~~2020,~~2021, the total fixed maturity portfolio consisted of ~~711~~779 issuers.

At June 30, ~~2020,~~2021, fixed maturities had a fair value of ~~$19.7~~$21.1 billion, compared with ~~$18.9~~$21.2 billion at December 31, ~~2019.~~2020. The net unrealized gain position in the fixed-maturity portfolio ~~increased~~decreased from ~~$2.5~~$4.0 billion at December 31, ~~2019~~2020 to ~~$3.0~~$3.6 billion at June 30, ~~2020~~2021 due to an increase in market rates during the period.

The Company continues to monitor the impact of COVID-19 on the fixed maturity portfolio. Our investment in certain sectors that have been greatly impacted, such as airlines, department stores, leisure, restaurants, lodging/gaming, apparel, auto parts, toys, and trucking sectors are less than 3% of the fixed maturity portfolio. Additionally, we do not have any unsecured debt in the airline or restaurant sectors.

As noted previously, the Company recorded a $33 million provision, $26 million net of tax, for credit losses on an offshore driller (energy holding). In total, our exposure to the energy sector is approximately 10% of our fixed maturity portfolio. Of the $1.6 billion exposure at amortized cost, net of the allowance for credit losses, over 90% is in the midstream (transportation, storage, and wholesaling of oil and gas) and exploration and production subsectors, while a very limited amount are in oil field service and offshore drillers subsectors. The offshore drilling and oil field services are the most vulnerable to low oil prices. However, our two holdings in the oil field services subsector are two of the largest service companies in this industry and currently maintain investment grade ratings by the various rating agencies. Less than $13 million is invested in offshore drilling companies.

We invest long and as such, one of our key criterion in our investment process is to select issuers that have the ability to weather multiple financial cycles. Our energy portfolio is well diversified across multiple sub-sectors and issuers, and is heavily weighted towards issuers that are less vulnerable to depressed commodity prices. We do not currently foresee increasing our holding position in this sector nor the need to sell.

For more information about our fixed maturity portfolio by component at June 30, ~~2020~~2021 and ~~2019,~~December 31, 2020, including a discussion of allowance for credit losses, an analysis of unrealized investment losses and a schedule of maturities, see Note 4—Investments.

An analysis of the fixed maturity portfolio by a composite quality rating at June 30, ~~2020~~2021 and ~~2019~~December 31, 2020 is shown in the following tables. The composite rating for each security, other than private-placement securities managed by third parties, is the average of the security’s ratings as assigned by Moody’s Investor Service, Standard & Poor’s, Fitch Ratings, and Dominion Bond Rating Service, LTD. The ratings assigned by these four nationally recognized statistical rating organizations are evenly weighted when calculating the average. The composite quality rating is created ~~using~~utilizing a methodology developed by Globe Life using ratings from the various rating agencies noted above. The composite quality rating is not a Standard & Poor's credit rating. Standard & Poor's does not sponsor, endorse or promote the composite quality rating and shall not be liable for any use of the composite quality rating. Included in the following chart are private placement fixed maturity holdings of ~~$556~~$567 million at amortized cost, net of allowance for credit losses ($~~602~~611 million at fair value) for which the ratings were assigned by the third-party managers.

Fixed Maturities by Rating

At June 30, 2021

(Dollar amounts in thousands)


	Amortized Cost, net		% of Total	Fair Value		% of Total	Average Composite Quality Rating on Amortized Cost, net
Investment grade:
AAA	$	736,648	4	$	850,126	4
AA	1,861,834		11	2,060,123		10
A	4,422,833		26	5,559,919		26
BBB+	3,784,244		22	4,669,494		22
BBB	4,282,348		24	5,192,531		25
BBB-	1,600,071		9	1,921,933		9
Total investment grade	16,687,978		96	20,254,126		96	A-

Below investment grade:
BB	582,084		3	631,877		3
B	145,568		1	151,370		1
Below B	36,288		—	64,407		—
Total below investment grade	763,940		4	847,654		4	BB-
	$	17,451,918	100	$	21,101,780	100

Weighted average composite quality rating							A-

5755

GL Q2 ~~2020~~2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

Fixed Maturities by Rating

At ~~June 30,~~December 31, 2020

(Dollar amounts in thousands)

Amortized Cost, net % of Total Fair
Value % of Total Average Composite Quality Rating on Amortized Cost, net
Investment grade:
AAA $ 738,135 4 $ 868,394 4
AA 1,383,248 8 1,572,073 8
A 4,490,421 27 5,701,782 29
BBB+ 3,513,241 21 4,267,590 22
BBB 3,817,658 23 4,424,293 22
BBB- 1,950,634 12 2,115,782 11
Total investment grade
15,893,337 95 18,949,914 96 A-
Below investment grade:
BB 597,108 4 534,050 3
B 110,035 1 101,726 1
Below B 64,701 — 75,492 —
Total below investment grade
771,844 5 711,268 4 B+
$ 16,665,181 100 $ 19,661,182 100
Weighted average composite quality rating
BBB+


	Amortized Cost		% of Total	Fair Value		% of Total	Average Composite Quality Rating on Amortized Cost
Investment grade:
AAA	$	713,053	4	$	848,621	4
AA	1,657,270		10	1,873,323		9
A	4,566,999		26	5,969,677		28
BBB+	3,634,583		21	4,612,898		22
BBB	4,137,099		24	5,088,114		24
BBB-	1,644,056		10	1,943,777		9
Total investment grade	16,353,060		95	20,336,410		96	A-

Below investment grade:
BB	686,184		4	692,609		3
B	115,646		1	122,104		1
Below B	38,909		—	62,386		—
Total below investment grade	840,739		5	877,099		4	BB-
	$	17,193,799	100	$	21,213,509	100

Weighted average composite quality rating							A-

~~Fixed Maturities by Rating~~

~~At December 31, 2019~~

~~(Dollar amounts in thousands)~~

Amortized
Cost
% of Total
Fair
Value
% of Total Average Composite Quality Rating on Amortized Cost
Investment grade:
AAA $ 769,564 5 $ 841,176 4
AA 1,311,902 8 1,455,815 8
A 4,608,959 28 5,603,235 30
BBB+ 3,509,311 21 4,119,737 22
BBB 3,818,589 23 4,309,394 23
BBB- 1,723,296 11 1,933,263 10
Total investment grade
15,741,621 96 18,262,620 97 A-
Below investment grade:
BB 465,296 3 450,925 2
B 107,653 1 96,077 —
Below B 101,206 — 97,525 1
Total below investment grade
674,155 4 644,527 3 B+
$ 16,415,776 100 $ 18,907,147 100
Weighted average composite quality rating
A-

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

The overall quality rating of the portfolio is ~~BBB+~~A-, the same as ~~the year ago period and down from~~ year-end ~~2019 at A-.~~2020. Fixed maturities rated BBB are ~~56%~~55% of the total portfolio at June 30, ~~2020, compared with 55%~~2021 and at year-end ~~2019.~~2020. While this ratio is high relative to our peers, we have limited exposure to higher-risk assets such as derivatives, equities, and asset-backed securities. Additionally, the Company does not participate in securities lending and has no off-balance sheet investments ~~and has no exposure to European sovereign debt~~ as of June 30, ~~2020.~~2021. BBB securities generally provide the Company with the best risk adjusted capital adjusted returns, largely due to our unique ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets.

An analysis of changes in our portfolio of below-investment grade fixed maturities at amortized cost, net of allowance for credit losses is as follows:

Below-Investment Grade Fixed Maturities

(Dollar amounts in thousands)

Six Months Ended
June 30,
2020 2019
Balance at beginning of period
$ 674,155 $ 666,061
Downgrades by rating agencies 135,667 86,562
Upgrades by rating agencies — (65,708)
Dispositions (6,883) (43,231)
Provision for credit losses (32,719) —
Amortization and other 1,624 1,888
Balance at end of period
$ 771,844 $ 645,572


	Six Months Ended June 30,
	2021		2020
Balance at beginning of period	$	840,739	$	674,155
Downgrades by rating agencies	—		135,667
Upgrades by rating agencies	(36,311)		—
Dispositions	(45,450)		(6,883)
Provision for credit losses	3,346		(32,719)
Amortization and other	1,616		1,624
Balance at end of period	$	763,940	$	771,844

Our investment policy calls for investing primarily in fixed maturities that are investment grade and meet our quality and yield objectives. Thus, any increases in below-investment grade issues are typically a result of ratings downgrades of existing holdings. Below-investment grade bonds at amortized cost, net of allowance for credit losses, were ~~14%~~13% of our shareholders’ equity, excluding the effect of unrealized gains and losses on fixed maturities

GL Q2 2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

as of June 30, ~~2020.~~2021. Globe Life invests long term and as such, one of our key criterion in our investment process is to select issuers that have the ability to weather multiple financial cycles.

OPERATING EXPENSES

Operating expenses are included in the ~~Corporate~~"Corporate and ~~Other~~Other" segment and are classified into two categories: insurance administrative expenses and expenses of the Parent Company. Insurance administrative expenses generally include expenses incurred after a policy has been issued. As these expenses relate to premium for a given period, management measures the expenses as a percentage of premium income. The Company also views stock-based compensation expense as a Parent Company expense. Expenses associated with the issuance of our insurance policies are reflected as acquisition expenses and included in the determination of underwriting margin.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

An analysis of operating expenses is shown below.

Operating Expenses Selected Information

(Dollar amounts in thousands)


		Six Months Ended June 30,													Increase				Six Months Ended June 30,				Increase
		2020					2019						(Decrease)					2021			2020	(Decrease)
		Amount		% of Premium	Amount		% of Premium	Amount		%		Amount		% of Premium		Amount		% of Premium	Amount		%
Insurance administrative expenses:	Insurance administrative expenses:										Insurance administrative expenses:
Salaries	Salaries	$	52,200	2.7	$	49,835	2.8	$	2,365	5	Salaries	$	56,572	2.8		$	52,200	2.7	$	4,372	8
Other employee costs	Other employee costs	20,687		1.1	18,013		1.0	2,674		15	Other employee costs	22,241		1.1		20,687		1.1	1,554		8
Information technology costs	Information technology costs	22,755		1.2	21,576		1.2	1,179		5	Information technology costs	23,455		1.1		22,755		1.2	700		3
Legal costs	Legal costs	5,312		0.3	4,857		0.3	455		9	Legal costs	7,355		0.4		5,312		0.3	2,043		38
Other administrative costs	Other administrative costs	24,232		1.3	24,326		1.3	(94)		—	Other administrative costs	24,056		1.2		24,232		1.3	(176)		(1)
Total insurance administrative expenses	Total insurance administrative expenses	125,186		6.6	118,607		6.6	6,579		6	Total insurance administrative expenses	133,679		6.6		125,186		6.6	8,493		7

Parent company expense	Parent company expense	4,847			5,515			(668)			Parent company expense	5,075				4,847			228
Stock compensation expense	Stock compensation expense	17,988			21,815			(3,827)			Stock compensation expense	16,522				17,988			(1,466)
Administrative settlements		—			400			(400)

Legal proceedings	Legal proceedings	3,275			5,500			(2,225)			Legal proceedings	5,089				3,275			1,814

Total operating expenses, per Condensed Consolidated Statements of Operations	Total operating expenses, per Condensed Consolidated Statements of Operations	$	151,296		$	151,837		$	(541)	—	Total operating expenses, per Condensed Consolidated Statements of Operations	$	160,365			$	151,296		$	9,069	6

~~The~~Total operating expenses increased 6% over the prior year period primarily due to a 7% increase in insurance administrative expenses. Insurance administrative expenses ~~was~~increased primarily due to ~~an increase in~~higher employee-related expenses, including pension costs and ~~legal expenses.~~information technology salaries. Pension expense increased due to the lower discount rate used to determine net periodic benefit costs in ~~2020~~2021 as compared to ~~2019. Refer to~~ ~~Note 7—Postretirement Benefits~~. Legal expense increased due to an increase in regulatory and other compliance matters. The increase in information technology costs reflects investments related to data analytics capabilities, administrative systems modernization, and information security programs.2020. The decrease in stock-based compensation expense was primarily due to ~~a lesser amount of~~fewer performance based equity ~~awards.~~awards applicable to the first half of 2021 as compared to the same period in 2020. While insurance administrative expenses were up 7% from prior year, as a percentage of premium at 6.6%, it was flat compared with 2020.

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Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

SHARE REPURCHASES

Globe Life has an ongoing share repurchase program that began in 1986, and is reviewed quarterly by management and annually reaffirmed by the Board of Directors. ~~The program was reaffirmed on August 8, 2019.~~ With no specified authorization amount, we determine the amount of repurchases based on the amount of the excess cash flow at the Parent Company, general market conditions, and other alternative uses. The majority of these purchases are made from excess cash flow. Excess cash flow at the Parent Company is primarily comprised of dividends received from the insurance subsidiaries less interest expense paid on its debt, dividends paid to Parent Company shareholders, and other limited operating activities. Additionally, when stock options are exercised, proceeds from these exercises and the resulting tax benefit are used to repurchase additional shares on the open market to minimize dilution as a result of the option exercises. The Board of Directors has authorized the Parent Company’s share repurchase program in amounts and with timing that management, in consultation with the Board, determines to be in the best interest of the Company and its shareholders. In April, the Company announced a temporary postponement of its share repurchase program while it evaluated the expected impact of COVID-19 on the Company’s operations and financial results. Accordingly, the Company did not repurchase shares of Globe Life during the second quarter. The Company anticipates that it will resume its share repurchase program in the third quarter of the year.

The following chart summarizes share repurchases for the six month periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Analysis of Share Repurchases

(Amounts in thousands, except per share data)


		Six Months Ended June 30,																			Six Months Ended June 30,
		2020								2019									2021				2020
		Shares	Amount		Average Price		Shares	Amount		Average Price			Shares	Amount		Average Price		Shares	Amount		Average Price
Purchases with:	Purchases with:											Purchases with:
Excess cash flow at the Parent Company	Excess cash flow at the Parent Company	1,629	$	139,254	$	85.47	2,069	$	173,971	$	84.09	Excess cash flow at the Parent Company	2,165	$	213,503	$	98.61	1,629	$	139,254	$	85.47
Option exercise proceeds	Option exercise proceeds	267	27,475		103.13		658	56,126		85.30		Option exercise proceeds	812	82,081		101.14		267	27,475		103.13
Total	Total	1,896	$	166,729	$	87.95	2,727	$	230,097	$	84.38	Total	2,977	$	295,584	$	99.30	1,896	$	166,729	$	87.95

Throughout the remainder of this discussion, share repurchases will only refer to those made from excess cash flow at the Parent Company.

FINANCIAL CONDITION

Liquidity. Liquidity provides Globe Life with the ability to meet on demand the cash commitments required to support our business operations and meet our financial obligations. Our liquidity is primarily derived from three sources: positive cash flow from operations, a portfolio of marketable securities, and ~~a line of~~revolving credit facility.

Insurance Subsidiary Liquidity. The operations of our insurance subsidiaries have historically generated substantial cash inflows in excess of immediate cash needs. Cash inflows for the insurance subsidiaries primarily include premium and investment income. In addition to investment income, maturities and scheduled repayments in the investment portfolio are cash inflows. Cash outflows from operations include policy benefit payments, commissions, administrative expenses, and taxes. A portion of the excess cash inflows in the current year will provide for the payment of future policy benefits, and are invested primarily in long-term fixed maturities as they better match the long-term nature of these obligations. Excess cash available from the insurance subsidiaries’ operations is generally distributed as a dividend to the Parent Company, subject to regulatory restrictions. The dividends are generally paid in amounts equal to the subsidiaries’ prior year statutory net income excluding realized capital gains. While the leading source of the excess cash is investment income, a significant portion of the excess cash also comes from underwriting income due to our high underwriting margins and effective expense control. While the insurance subsidiaries routinely generate more operating cash inflows than cash outflows annually, the companies also have the entire available-for-sale fixed maturity investment portfolio available to create additional cash flows if required.

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Globe Life Inc.

Management's Discussion & Analysis

Parent Company Liquidity. An important source of Parent Company liquidity is the dividends from its insurance subsidiaries. These dividends are received throughout the year and are used by the Parent Company to pay dividends on common and preferred stock, interest and principal repayment requirements on Parent Company debt, and operating expenses of the Parent Company. Despite the overall impact of COVID-19 on the insurance subsidiaries' operations, the ability of the insurance subsidiaries to pay dividends to the Parent Company during the remainder of the year should not be impeded.


		Six Months Ended June 30,						Twelve Months Ended December 31,							Six Months Ended June 30,				Twelve Months Ended December 31,
		2020		2019		Projected 2020		2019			2021		2020		Projected 2021		2020
Liquidity Sources:	Liquidity Sources:									Liquidity Sources:
Dividends from Subsidiaries	Dividends from Subsidiaries	$	343,447	$	310,875	$	485,000	$	479,988	Dividends from Subsidiaries	$	240,120	$	343,447	$	480,000	$	485,871
Excess Cash Flows	Excess Cash Flows	284,488		262,302		380,000		374,232		Excess Cash Flows	179,684		284,488		365,000		387,606

Additional sources of liquidity for the Parent Company are cash, intercompany receivables, intercompany borrowings, public debt markets, term loans, and a credit facility. At June 30, ~~2020,~~2021, the Parent Company had ~~$635~~access to $545 million of invested cash, ~~and~~ net intercompany ~~receivables.~~receivables and other liquid assets. The credit facility is discussed below.

Short-Term Borrowings. An additional source of Parent Company liquidity is a credit facility with a group of lenders allowing for unsecured revolving borrowings and stand-by letters of credit up to $750 million, which could be extended up to $1 billion. The Parent Company may request the extension, however it is not guaranteed. Up to $250 million in letters of credit can be issued against the facility. The facility serves as a back-up credit line for a commercial paper program under which commercial paper may be issued at any time, with total commercial paper outstanding not to exceed the facility maximum, less any letters of credit issued. Interest charged on the commercial paper program resembles variable rate debt due to its short term nature. ~~This facility was amended in May 2016 to extend the maturity date of the facility to May 2021.~~ The Company intends to renew the facility prior to the end of 2020. The amendment also allowed for an additional $100 million term loan to be issued under the facility rate structure. The term loan was issued during 2016 and has been repaid in quarterly escalating installments with a balloon payment of $75 million due in May 2021. Interestthree-year credit agreement will mature on ~~the term loan is computed and paid monthly at 125 basis points plus 1 month LIBOR. In accordance with the agreement, certain covenants regarding capitalization must be met.~~August 24, 2023. As of June 30, ~~2020,~~2021, the Parent Company was in full compliance with ~~those covenants. On July 31, 2020,~~all covenants related to the ~~Company paid down the remaining principal balance of $82.5 million and $101 thousand in interest on the 5-year $100 million term loan with a maturity date of May 17, 2021.~~aforementioned debt.

On April 9, 2020, the Company entered into a new $300 million 364-day term loan facility and borrowed all $300 million on April 15, 2020 for additional liquidity during these uncertain times. Interest on the term loan is computed and paid monthly at 162.5 basis points plus 1 month LIBOR, subject to a 1% LIBOR floor. In accordance with the agreement,The following table presents certain covenants regarding capitalization must be met. As of June 30, 2020, the Parent Company was in full compliance with those covenants. The term loan is due in full on April 8, 2021, however, due to the current low interest rates available in the public debt markets, the Company will consider replacing the term loan with long-term financing before the end of 2020.information about our commercial paper borrowings.

Credit Facility—Commercial Paper

(Dollar amounts in thousands)


	At
	June 30, 2021			December 31, 2020			June 30, 2020
Balance of commercial paper at end of period (par value)	$	260,000		$	255,000		$	450,000
Annualized interest rate	0.22		%	0.27		%	0.94		%
Letters of credit outstanding	$	135,000		$	135,000		$	150,000
Remaining amount available under credit line	355,000			360,000			150,000

Credit Facility—Commercial Paper Activity

(Dollar amounts in thousands)


	Six Months Ended June 30,
	2021			2020
Average balance of commercial paper outstanding during period (par value)	$	297,901		$	370,130
Daily-weighted average interest rate (annualized)	0.24		%	2.05		%
Maximum daily amount outstanding during period (par value)	$	355,000		$	482,000

The Company increased the commercial paper borrowings by $5 million since year-end reflecting timing of cash needs of the Parent Company. We had no difficulties in accessing the commercial paper market under this facility during the six months ended June 30, 2021 and 2020.

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Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

~~Commercial paper outstanding and any principal payments or maturities of the term loans due within one year are included in short-term debt.~~

~~The following table presents certain information about our commercial paper borrowings.~~

~~Credit Facility—Commercial Paper~~

~~(Dollar amounts in thousands)~~

At
June 30,
2020 December 31, 2019 June 30,
2019
Balance of commercial paper at end of period (par value) $ 450,000 $ 290,000 $ 250,000
Annualized interest rate 0.94 % 2.04 % 2.74 %
Letters of credit outstanding $ 150,000 $ 150,000 $ 150,000
Remaining amount available under credit line 150,000 310,000 350,000

~~Credit Facility—Commercial Paper Activity~~

~~(Dollar amounts in thousands)~~

Six Months Ended June 30,
2020 2019
Average balance of commercial paper outstanding during period (par value) $ 370,130 $ 298,965
Daily-weighted average interest rate (annualized) 2.05 % 2.88 %
Maximum daily amount outstanding during period (par value) $ 482,000 $ 355,000

During the first quarter, the Company increased the commercial paper borrowings by approximately $160 million to enhance our liquidity position as a result of COVID-19. We had no difficulties in accessing the commercial paper market under this facility during the six months ended June 30, 2020 and 2019. Should access to the regular commercial paper market become unavailable, the Company does qualify to participate in the Federal government's new Commercial Paper Funding Facility established under the CARES Act on March 27, 2020. Under this facility, the Company is able to issue up to $432.5 million at any time through March 17, 2021.

Globe Life expects to have readily available funds for ~~2020~~2021 and the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiaries through liquid assets currently available, internally-generated cash flow and the credit facility. In the unlikely event that more liquidity is needed, the Parent Company could generate additional funds through multiple sources including, but not limited to, the issuance of debt, an additional short-term credit facility or term loan, and intercompany borrowing.

As ~~noted above,~~of June 30, 2021, the Parent Company ~~has $635~~had access to $545 million of liquid assets. On July 15, 2021, the Company used $300 million of these assets ~~available at the end of the second quarter of 2020. In addition~~ to ~~these liquid~~call our 6.125% Junior subordinated debenture due in 2056. The remaining assets, ~~the Parent Company is expected to generate~~plus additional excess cash flows during the ~~remainder of 2020 in the range of $95 million to $105 million. Thus, the Parent Company is expected to have around $730 million to $740 million available during the remainder~~second half of the ~~year. This liquidity is~~year, are available to the Company in the event additional funds are needed to support the targeted capital levels within our insurance subsidiaries due to adverse impacts of ~~COVID-19.~~COVID-19 and other contingencies. Should the Parent Company have liquidity in excess of the amount needed to fund capital contributions to the insurance subsidiaries, the Parent will consider using a portion of such excess for additional ~~funds not be necessary,~~share repurchases before the ~~Company intends to reduce~~end of the ~~overall amount of its borrowings and to use any excess cash flows for its share buyback program.~~year.

Consolidated ~~Liquidity~~.Liquidity. Consolidated net cash inflows from operations were ~~$769~~$702 million in the first six months of ~~2020,~~2021, compared with ~~$687~~$769 million in the same period of ~~2019.~~2020. The ~~increase~~decrease is primarily attributable to fluctuations in the settlement of certain amounts included in other liabilities. In addition to cash inflows from operations, our insurance companies received proceeds from dispositions of fixed maturities available for sale in the amount of ~~$218~~$109 million during the ~~2020~~2021 period. As previously noted under the caption Credit Facility, the Parent Company has in place a ~~line of~~ credit facility. The insurance companies have no additional outstanding credit facilities.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~Globe Life Inc.~~

~~Management's Discussion & Analysis~~

Cash and short-term investments were ~~$646~~$510 million at June 30, ~~2020,~~2021, compared with ~~$114~~$203 million at December 31, ~~2019.~~2020. In addition to these liquid assets, the entire ~~$19.7~~$21.1 billion (fair value at June 30, ~~2020)~~2021) portfolio of fixed income securities is available for sale in the event of an unexpected need. Approximately 97% of our fixed income securities are publicly traded, freely tradable under SEC Rule 144, or qualified for resale under SEC Rule 144A. We generally expect to hold fixed income securities to maturity, and even though these securities are classified as available for sale, we have the ability and intent to hold any securities to recovery. Our strong cash flows from operations, on-going investment maturities, and available liquidity under our credit ~~line availability~~facility make any need to sell securities for liquidity highly unlikely.

GL Q2 2021 FORM 10-Q

Table of Contents

Globe Life Inc.

Management's Discussion & Analysis

Capital Resources. The Parent Company's capital structure consists of short-term debt (the commercial paper ~~facility, the current maturity of funded debt and the term loans~~facility)), long-term debt, and shareholders’ equity.

Long-Term Borrowings. The outstanding long-term debt at book value was ~~$1.3~~$2.0 billion at June 30, ~~2020~~2021 and $1.7 billion at December 31, ~~2019. An analysis of debt issues outstanding is as follows at June 30,~~ 2020.

Selected Information about Debt Issues

As of June 30, ~~2020~~2021

(Dollar amounts in thousands)

Instrument Issue Date Maturity Date Coupon Rate Interest Payment Dates Par
Value Book
Value Fair
Value
Notes 05/27/1993 05/15/2023 7.875% semiannual $ 165,612 $ 164,831 $ 194,808
Senior notes⁽¹⁾
09/24/2012 09/15/2022 3.800% semiannual 150,000 149,250 157,607
Senior notes 09/27/2018 09/15/2028 4.550% semiannual 550,000 544,031 634,607
Junior subordinated debentures 05/17/2016 06/15/2056 6.125% quarterly 300,000 290,618 307,080
Junior subordinated debentures 11/17/2017 11/17/2057 5.275% semiannual 125,000 123,374 123,241
Total long-term debt
1,290,612 1,272,104 1,417,343
Term Loan I 06/13/2016 05/17/2021 1.424% monthly 82,500 82,500 82,500
Term Loan II 04/09/2020 04/08/2021 2.625% monthly 300,000 299,293 299,293
Commercial paper 450,000 449,283 449,283
Total short-term debt
832,500 831,076 831,076
Total debt
$ 2,123,112 $ 2,103,180 $ 2,248,419


Instrument	Issue Date	Maturity Date	Coupon Rate	Interest Payment Dates	Par Value		Book Value		Fair Value
Senior notes	05/27/1993	05/15/2023	7.875%	semiannual	$	165,612	$	165,083	$	187,310
Senior notes(1)	09/24/2012	09/15/2022	3.800%	semiannual	150,000		149,581		155,873
Senior notes	09/27/2018	09/15/2028	4.550%	semiannual	550,000		544,639		643,418
Senior notes	08/21/2020	08/15/2030	2.150%	semiannual	400,000		395,565		395,184
Junior subordinated debentures(2)	05/17/2016	06/15/2056	6.125%	quarterly	300,000		290,688		313,320
Junior subordinated debentures	11/17/2017	11/17/2057	5.275%	semiannual	125,000		123,388		129,895
Junior subordinated debentures	06/14/2021	06/15/2061	4.250%	quarterly	325,000		317,172		339,430



Total long-term debt					2,015,612		1,986,116		2,164,430



Commercial paper					260,000		259,946		259,946
Total short-term debt					260,000		259,946		259,946

Total debt					$	2,275,612	$	2,246,062	$	2,424,376

(1)An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.

(2)~~Interest paid at 1 month LIBOR plus 125 basis points, resets each month.~~

~~(3)Interest paid at 1 month LIBOR plus 162.5 basis points, resets each month.~~The $300 million of 6.125% Junior subordinated debentures were redeemed on July 15, 2021.

Subsidiary ~~Capital~~Capital: . The National Association of Insurance Commissioners (NAIC) has established a risk-based factor approach for determining threshold risk-based capital levels for all insurance companies. This approach was designed to assist the regulatory bodies in identifying companies that may require regulatory attention. A Risk-Based Capital (RBC) ratio is typically determined by dividing adjusted total statutory capital by the amount of risk-based capital determined using the NAIC’s factors. If a company’s RBC ratio approaches two times the RBC amount, the company must file a plan with the NAIC for improving their capital levels (this level is commonly referred to as “Company Action Level” RBC). Companies typically hold a multiple of the Company Action Level RBC depending on their particular business needs and risk profile.

Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current ratings. For 2021, Globe Life ~~is targeting~~has targeted a consolidated Company Action Level ~~Risk Based Capital (RBC)~~RBC ratio ~~in the range~~ of 300% to 320% ~~for 2020.~~. The Company ~~believes~~concludes that this capital level is more than adequate and is sufficient to support its current ratings, given the nature of its business and its risk profile. ~~At the end~~As of ~~2019, the~~December 31, 2020, our consolidated Company Action Level RBC ratio was ~~318%~~309%. ~~While~~In 2021, a proposal is expected to be adopted by the ~~effect~~NAIC that would increase the risk based capital required to be held with respect to investments, commonly referred to as C-1 factors. These changes would increase the amount of ~~COVID-19, including lower growth in premium, higher policyholder claims, downgrades of fixed income securities within~~capital required to maintain our ~~investment portfolio and additional credit losses could adversely affect the~~consolidated target RBC ~~ratio~~

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~GLOBE LIFE INC.~~

~~Management's Discussion & Analysis~~

~~during 2020, the~~ratio. The Parent Company is committed to maintaining the targeted consolidated RBC ratio at its insurance subsidiaries and has sufficient liquidity available to provide additional capital if necessary.

GL Q2 2021 FORM 10-Q

Table of Contents

GLOBE LIFE INC.

Management's Discussion & Analysis

Shareholders' ~~Equity~~Equity:. On May ~~15, 2020,~~3, 2021, the Parent Company announced that it had declared a quarterly dividend of ~~$0.1875~~$0.1975 per share. This dividend was paid on July ~~31, 2020.~~30, 2021.

Shareholders’ equity was $8.6 billion at June 30, 2021. This compares with $8.8 billion at December 31, 2020 and $7.8 billion at June 30, 2020. ~~This compares with $7.3 billion at December 31, 2019 and $6.7 billion at June 30, 2019.~~ During the six months since December 31, ~~2019,~~2020, shareholders’ equity ~~increased~~decreased primarily due to ~~$399~~$292 million of after-tax unrealized ~~gains~~losses in the fixed-maturity portfolio as interest rates have ~~decreased~~increased over the period. In addition, shareholders' equity ~~was~~ increased by net income of ~~$339 million. Share~~$378 million during the first six months of 2021, but was offset by share repurchases of ~~$139~~$214 million ~~noted above during~~and an additional $82 million in share purchases to counterbalance the ~~period reduced shareholders’ equity.~~dilution from stock option exercises.

We plan to use excess cash available at the Parent Company as efficiently as possible in the future. Possible uses of excess cash flow include, but are not limited to, share repurchases, acquisitions, increases in shareholder dividends, investment in securities, or repayment of short-term debt. We will determine the best use of excess cash after ensuring that targeted capital levels are maintained in our insurance subsidiaries. If market conditions are favorable, we currently expect that share repurchases will continue to be a primary use of those funds.

GL Q2 2021 FORM 10-Q

Table of Contents

GLOBE LIFE INC.

Management's Discussion & Analysis

Globe Life is required under GAAP to revalue its available for sale fixed maturity portfolio to fair market value at the end of each accounting period. These changes, net of their associated impact on deferred acquisition costs and income tax, are reflected directly in shareholders’ equity.

While GAAP requires our fixed maturity assets to be revalued, it does not permit interest-bearing insurance policy liabilities supported by those assets to be valued at fair value in a consistent manner, with changes in value applied directly to shareholders’ equity. However, due to the size of both the investment portfolio and our policy liabilities, this inconsistency in measurement can have a material impact on shareholders’ equity. Because of the long-term nature of our fixed maturities and liabilities and the strong cash flows generated by our insurance subsidiaries, we have the intent and ability to hold our securities to maturity. As such, we do not expect to incur realized gains or losses due to fluctuations in the market value of fixed maturities caused by interest rate changes or losses caused by temporarily illiquid markets. Accordingly, management removes the effect of this rule when analyzing the Company's balance sheet, capital structure, and financial ratios in order to provide a consistent and meaningful portrayal of the Company’s financial position from period to period.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

~~GLOBE LIFE INC.~~

~~Management's Discussion & Analysis~~

The following table presents selected data related to our capital resources. Additionally, the table presents the effect of this accounting guidance on relevant line items, so that investors and other financial statement users may determine its impact on Globe Life's capital structure. Excluding the effect of unrealized gains and losses on the fixed maturity portfolio from shareholders' equity is considered non-GAAP. Below we include the reconciliation to GAAP.

Selected Financial Data

(Dollar amounts in thousands, except per share data)

At
June 30, 2020 December 31, 2019 June 30, 2019
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation⁽¹⁾
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation⁽¹⁾
GAAP
Effect of
Accounting
Rule
Requiring
Revaluation⁽¹⁾
Fixed maturities $ 19,661,182 $ 2,996,001 $ 18,907,147 $ 2,491,371 $ 17,934,274 $ 1,950,002
Deferred acquisition costs⁽²⁾
4,446,356 (6,723) 4,341,941 (7,488) 4,232,717 (8,299)
Total assets 27,534,180 2,989,278 25,977,460 2,483,883 24,855,445 1,941,703
Short-term debt 831,076 — 298,738 — 257,453 —
Long-term debt 1,272,104 — 1,348,988 — 1,353,395 —
Shareholders' equity 7,848,369 2,361,530 7,294,307 1,962,268 6,700,398 1,533,945
Book value per diluted share 73.26 22.05 66.02 17.76 60.22 13.79
Debt to capitalization⁽³⁾
21.1 % (6.6) % 18.4 % (5.2) % 19.4 % (4.4) %
Diluted shares outstanding 107,137 110,494 111,264
Actual shares outstanding 106,451 107,720 109,223


	At
	June 30, 2021						December 31, 2020						June 30, 2020
	GAAP			Effect of Accounting Rule Requiring Revaluation(1)			GAAP			Effect of Accounting Rule Requiring Revaluation(1)			GAAP			Effect of Accounting Rule Requiring Revaluation(1)
Fixed maturities	$	21,101,780		$	3,649,862		$	21,213,509		$	4,019,710		$	19,661,182		$	2,996,001
Deferred acquisition costs(2)	4,743,032			(5,188)			4,595,444			(5,955)			4,446,356			(6,723)
Total assets	29,580,057			3,644,674			29,046,731			4,013,755			27,534,180			2,989,278
Short-term debt	259,946			—			254,918			—			831,076			—
Long-term debt	1,986,116			—			1,667,886			—			1,272,104			—
Shareholders' equity	8,616,922			2,879,292			8,771,092			3,170,866			7,848,369			2,361,530

Book value per diluted share	83.59			27.93			83.19			30.07			73.26			22.05
Debt to capitalization(3)	20.7		%	(7.5)		%	18.0		%	(7.6)		%	21.1		%	(6.6)		%

Diluted shares outstanding	103,081						105,429						107,137
Actual shares outstanding	102,163						103,797						106,451

(1)Amount added to (deducted from) comprehensive income to produce the stated GAAP item, per accounting rule ASC 320-10-35-1.

(2)Includes the value of business acquired (VOBA).

(3)~~Globe Life's debt covenants require that the effect of this accounting rule be removed to determine this ratio.~~ This ratio is computed by dividing total debt by the sum of total debt and shareholders’ equity.

6663

GL Q2 ~~2020 FORM 10-Q~~

~~Table of Contents~~

~~GLOBE LIFE INC.~~

~~Management's Discussion & Analysis~~

~~CRITICAL ACCOUNTING POLICIES~~

~~The following critical accounting policy was updated since the 2019 Form 10-K due to the adoption of ASU 2016-13~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ~~(ASU 2016-13.)~~

~~Valuation of Fixed Maturities.~~ We hold a substantial investment in high-quality fixed maturities to provide for the funding of our future policy contractual obligations over long periods of time. While these securities are generally expected to be held to maturity, they are classified as available for sale and are sold from time to time, primarily to manage risk. We report this portfolio at fair value. Fair value is the price that we would expect to receive upon sale of the asset in an orderly transaction. The fair value of the fixed maturity portfolio is primarily affected by changes in interest rates in financial markets. Because of the size of our fixed maturity portfolio and the long average life, small changes in rates can have a significant effect on the portfolio and the reported financial position of the Company. However, as discussed under the caption ~~Financial Condition~~in this report, the Company regards these unrealized fluctuations in value as having no meaningful impact on our actual financial condition and, as such, we remove them from consideration when viewing our financial position and financial ratios.

At times, the values of our fixed maturities can also be affected by illiquidity in the financial markets. Illiquidity would contribute to a spread widening, and accordingly to unrealized losses, on many securities that we would expect to be fully recoverable. Even though our fixed maturity portfolio is available for sale, we do not intend to sell securities and have the ability to hold the securities until maturity as a result of our strong and stable cash flows generated from our insurance products. Considerable information concerning the policies, procedures, classification levels, and other relevant data concerning the valuation of our fixed maturity investments is presented in ~~Note 1—Significant Accounting Policies~~ ~~and in~~ ~~Note 4—Investments~~ ~~under the captions~~ ~~Fair Value Measurements~~ ~~in both notes.~~

~~Allowance for Credit Losses of Investments.~~We continually monitor our investment portfolio for investments where the fair value has declined below amortized cost as a potential result of a credit event. While the values of the investments in our portfolio constantly fluctuate due to non-credit events, a credit loss occurs when the present value of the expected cash flows is less than the amortized cost basis. This will result in the recording of a provision for credit losses for an individual security. The policies and procedures that we use to evaluate and account for impairments of investments are disclosed in ~~Note 1~~ ~~and the discussions under the captions~~ ~~Investments~~ ~~and~~ ~~Realized Gains and Losses~~ in this report. While every effort is made to make the best estimate of status and value with the information available regarding an allowance for credit loss, it is difficult to predict the future prospects of a distressed security.

~~GL Q2 2020~~2021 FORM 10-Q

Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no quantitative or qualitative changes with respect to market risk exposure during the six months ended June 30, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: Globe Life, under the direction of the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, has established disclosure controls and procedures that are designed to ensure that information required to be disclosed by Globe Life in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to Globe Life's management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As of the end of the fiscal period completed June 30, ~~2020,~~2021, an evaluation was performed under the supervision and with the participation of Globe Life management, including the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer, of the disclosure controls and procedures (as those terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon their evaluation, the Co-Chairmen and Chief Executive Officers and the Executive Vice President and Chief Financial Officer have concluded that disclosure controls and procedures are effective as of the date of this Form 10-Q. In compliance with Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. § 1350), each of these officers executed a Certification included as an exhibit to this Form 10-Q.

Changes in Internal Control over Financial Reporting: As of the period ended June 30, ~~2020,~~2021, there have not been any changes in Globe Life Inc.'s internal control over financial reporting or in other factors that could significantly affect this control over financial reporting subsequent to the date of their evaluation which have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Part II—Other Information

Item 1. Legal Proceedings

Discussion regarding litigation and unclaimed property audits is provided in Note 5—Commitments and ~~Contingencies~~Contingencies.

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Item 1A. Risk Factors

~~The impact of COVID-19 and related risks could materially affect our results of operations, financial position and/or liquidity.~~ The effects of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive and rapidly changing. The global COVID-19 pandemic has resulted in and is expected to continue to result in significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely affected the Company and will likely continue to do so for an uncertain period of time. Because of the size and breadth of this pandemic and the impact of related government and regulatory actions, all of the direct and indirect consequences of COVID-19 on the Company are not yet known and may not emerge for some time. Risks presented by the ongoing effects of COVID-19 which could negatively impact our revenues, expenses, cash flows or overall financial results include the following:

•~~Reduced demand of our insurance products;~~The Company had no material changes to its risk factors.

•~~Reduced sales resulting from difficulties of a virtual sales and agent recruiting process;~~

•~~Reduced cash flows from premium waivers. delayed receipt of premium payments or lapses of premium-paying policies currently in force;~~

•~~Reduced cash flows from higher surrenders and claim payments;~~

•~~Greater than anticipated losses from higher policyholder claims;~~

•~~Exposure to increased risks related to the effectiveness of underwriting;~~

•~~Increased needs for capital at our regulated insurance subsidiaries;~~

•~~Disruptions, delays, and increased costs and risks related to working remotely, having limited or no access to our facilities and reductions or interruptions of critical or essential services;~~

•~~Increased operational risk due to the potential exposure and illness of key personnel;~~

•Exposure to additional and increased risks related to internal controls, data security and information privacy, both for the Company and for our suppliers, vendors and other third parties with whom we do business;

•Inability to properly comply in a timely manner with rapidly and dramatically changing business conditions and compliance requirements, including as a result of federal and state executive orders and regulatory guidance;

•~~Legislative, regulatory, and judicial actions in response to COVID-19, including, but not limited to:~~

◦~~prohibiting or postponing the cancellation or non-renewal of~~ ~~insurance policies in accordance with our policy terms;~~

◦~~requiring us to cover losses when our policies did not provide coverage or excluded coverage;~~

◦~~relaxing policyholder reporting requirements for claims, which may affect coverage under our policies;~~

◦~~requiring or encouraging premium waivers or refunds;~~

◦~~granting of extended grace periods for payment of premiums;~~

◦~~extending due date to pay past due premiums; and~~

◦~~regulatory slowdown resulting in a delay of rate and policy form approvals.~~

•Volatility and declines in global financial markets, defaults on fixed-maturity investments, and declines in interest rates, which could reduce (i) our future investment results (ii) the fair market value of our invested assets, or (iii) a permanent impairment of our invested assets; and

•~~Ratings downgrades, increased bankruptcies and credit spread widening in industries in which we invest in our fixed income portfolio.~~

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in Part I, Item 1A, Risk Factors, of our 2019 Annual Report on Form 10-K.

~~GL Q2 2020 FORM 10-Q~~

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Certain Equity Securities by the Issuer and Others for the Second Quarter of ~~2020~~

~~Period~~

~~(a) Total Number~~

~~of Shares~~

~~Purchased~~

~~(b) Average~~

~~Price Paid~~

~~Per Share~~

~~(c) Total Number of~~

~~Shares Purchased as~~

~~Part~~

~~of Publicly Announced~~

~~Plans or Programs~~

~~(d) Maximum Number~~

~~of Shares (or~~

~~Approximate Dollar~~

~~Amount) that May~~

~~Yet Be Purchased~~

~~Under the Plans or~~

~~Programs~~

~~April 1-30, 2020~~

—

~~May 1-31, 2020~~

—

~~June 1-30, 2020~~

—

2021


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Approximate Dollar Amount) that May Yet Be Purchased Under the Plans or Programs
April 1-30, 2021	292,744	$	101.18	292,744
May 1-31, 2021	529,606	105.02		529,606
June 1-30, 2021	775,035	100.16		775,035

On August ~~8, 2019,~~4, 2021, the Globe Life Board of Directors reaffirmed its continued authorization of ~~its~~the Company's stock repurchase program in amounts and with timing that management, in consultation with the Board, determined to be in the best interest of the Company. The program has no defined expiration date or maximum shares to be repurchased. ~~The Company plans to begin the share buyback program in the third quarter.~~

GL Q2 2021 FORM 10-Q

Table of Contents

Item 6. Exhibits


Exhibit No.						Description
~~10.1~~						~~Amendment to the Globe Life Inc.~~ ~~Pension Plan~~ ~~Executed 07-28-2020~~
31.1						Rule 13a-14(a)/15d-14(a) Certification by ~~Larry M. Hutchison~~Gary L. Coleman
31.2						Rule 13a-14(a)/15d-14(a) Certification by ~~Gary L. Coleman~~Larry M. Hutchison
31.3						Rule 13a-14(a)/15d-14(a) Certification by Frank M. Svoboda
32.1						Section 1350 Certification by Gary L. Coleman, Larry M. Hutchison, ~~Gary L. Coleman,~~ and Frank M. Svoboda
101.INS						XBRL Instance Document- the instance document does not appear in the Interactive Data file because the XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

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Table of Contents

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GLOBE LIFE INC.

Date: August ~~5, 2020~~4, 2021

/s/ Gary L. Coleman

Gary L. Coleman

Co-Chairman and Chief Executive Officer

Date: August ~~5, 2020~~4, 2021

/s/ Larry M. Hutchison

Larry M. Hutchison

Co-Chairman and Chief Executive Officer

Date: August ~~5, 2020~~4, 2021

/s/ Frank M. Svoboda

Frank M. Svoboda

Executive Vice President and Chief Financial Officer

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GL Q2 ~~2020~~2021 FORM 10-Q



	June 30, 2020		December 31, 2019
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2020—$16,697,900; 2019—$16,415,776, allowance for credit losses: 2020— $32,719; 2019— $0)	$	19,661,182	$	18,907,147
Policy loans	579,541		575,492
Other long-term investments (includes: 2020—$264,246; 2019—$185,851 under the fair value option)	432,325		326,347
Short-term investments	531,651		38,285
Total investments	21,204,699		19,847,271
Cash	114,031		75,933
Accrued investment income	251,595		245,129
Other receivables	445,539		441,662
Deferred acquisition costs	4,446,356		4,341,941
Goodwill	441,591		441,591
Other assets	630,369		583,933

Total assets	$	27,534,180	$	25,977,460
Liabilities:
Future policy benefits	$	14,826,175	$	14,508,134
Unearned and advance premium	68,397		63,709
Policy claims and other benefits payable	380,178		365,402
Other policyholders' funds	96,708		96,282
Total policy liabilities	15,371,458		15,033,527
Current and deferred income taxes	1,631,817		1,476,832
Short-term debt	831,076		298,738
Long-term debt (estimated fair value: 2020—$1,417,343; 2019—$1,473,364)	1,272,104		1,348,988
Other liabilities	579,356		525,068

Total liabilities	19,685,811		18,683,153
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2020 and 2019	—		—
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding: (2020—117,218,183 issued; 2019— 117,218,183 issued)	117,218		117,218
Additional paid-in-capital	528,060		531,554
Accumulated other comprehensive income (loss)	2,231,893		1,844,830
Retained earnings	5,838,930		5,551,329
Treasury stock, at cost: (2020—10,767,653 shares; 2019—9,497,940 shares)	(867,732)		(750,624)
Total shareholders' equity	7,848,369		7,294,307
Total liabilities and shareholders' equity	$	27,534,180	$	25,977,460


	As reported on December 31, 2019		Pre-tax impact of adoption		As reported on January 1, 2020
Assets:


Commercial mortgage loan participations	$	137,692	$	(335)	$	137,357
Agent debit balances	423,877		(240)		423,637


As of June 30, 2020	30-59 Days Delinquent		60-89 days Delinquent		Greater than 90 Days Delinquent		Total Delinquent
Commercial mortgage loans	$	—	$	4,600	$	—	$	4,600
Number of delinquent commercial mortgage loans.	—		1		—		1


	June 30, 2020
	Recorded Investment
	Debt Service Coverage Ratios⁽¹⁾
	<1.00x		1.00x—1.20x		>1.20x		Total		% of Total
Loan-to-value ratio⁽²⁾:
Less than 70%	$	19,747	$	106,408	$	—	$	126,155	77
70% to 80%	1,365		33,379		—		34,744		21
81% to 90%	—		—		—		—		—
Greater than 90%	3,521		—		—		3,521		2
Total	$	24,633	$	139,787	$	—	$	164,420	100


	At
	June 30, 2020	December 31, 2019	June 30, 2019
Average annual effective yield⁽¹⁾	5.36%	5.41%	5.50%
Average life, in years, to:
Next call⁽²⁾	16.5	16.8	16.9
Maturity⁽²⁾	19.0	19.2	18.8
Effective duration to:
Next call^(2,3)	10.9	10.8	10.6
Maturity^(2,3)	12.0	11.8	11.4


	At
	June 30, 2020									December 31, 2019									June 30, 2019
	GAAP			Effect of Accounting Rule Requiring Revaluation⁽¹⁾			GAAP			Effect of Accounting Rule Requiring Revaluation⁽¹⁾			GAAP			Effect of Accounting Rule Requiring Revaluation⁽¹⁾
Fixed maturities	$	19,661,182		$	2,996,001		$	18,907,147		$	2,491,371		$	17,934,274		$	1,950,002
Deferred acquisition costs⁽²⁾	4,446,356			(6,723)			4,341,941			(7,488)			4,232,717			(8,299)
Total assets	27,534,180			2,989,278			25,977,460			2,483,883			24,855,445			1,941,703
Short-term debt	831,076			—			298,738			—			257,453			—
Long-term debt	1,272,104			—			1,348,988			—			1,353,395			—
Shareholders' equity	7,848,369			2,361,530			7,294,307			1,962,268			6,700,398			1,533,945

Book value per diluted share	73.26			22.05			66.02			17.76			60.22			13.79
Debt to capitalization⁽³⁾	21.1		%	(6.6)		%	18.4		%	(5.2)		%	19.4		%	(4.4)		%

Diluted shares outstanding	107,137						110,494						111,264
Actual shares outstanding	106,451						107,720						109,223