GLOBE LIFE INC. - Quarter Report: 2021 September (Form 10-Q)

Table of Contents

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 September 30, 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 October 27, 2021
Common Stock, $1.00 Par Value						100,979,225

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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	9
		Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income	10
		Note 4—Investments	12
		Note 5—Commitments and Contingencies	23
		Note 6—Liability for Unpaid Claims	24
		Note 7—Postretirement Benefits	25
		Note 8—Earnings Per Share	27
		Note 9—Debt	28
		Note 10—Business Segments	29


		Cautionary Statements	36

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	67

	Item 4.	Controls and Procedures	67

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	67

	Item 1A.	Risk Factors	68

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68

	Item 6.	Exhibits	69

Signatures			70

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.

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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)



	September 30, 2021		December 31, 2020
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2021—$17,622,028; 2020—$17,197,145, allowance for credit losses: 2021— $0; 2020— $3,346)	$	21,160,866	$	21,213,509
Policy loans	585,791		584,379
Other long-term investments (includes: 2021—$586,223; 2020—$385,038 under the fair value option)	733,177		546,981
Short-term investments	93,364		107,782
Total investments	22,573,198		22,452,651
Cash	96,325		94,847
Accrued investment income	264,257		248,991
Other receivables	485,475		474,180
Deferred acquisition costs	4,837,409		4,595,444
Goodwill	481,791		441,591
Other assets	758,123		739,027

Total assets	$	29,496,578	$	29,046,731
Liabilities:
Future policy benefits	$	15,837,212	$	15,243,536
Unearned and advance premium	64,900		61,728
Policy claims and other benefits payable	395,914		399,507
Other policyholders' funds	98,151		97,968
Total policy liabilities	16,396,177		15,802,739
Current and deferred income taxes	1,749,427		1,833,723
Short-term debt	393,593		254,918
Long-term debt (estimated fair value: 2021—$1,680,536; 2020—$1,871,754)	1,546,194		1,667,886
Other liabilities	803,036		716,373

Total liabilities	20,888,427		20,275,639
Commitments and Contingencies (Note 5)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in 2021 and 2020	—		—
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	533,683		527,435
Accumulated other comprehensive income (loss)	2,661,619		3,029,244
Retained earnings	6,353,261		5,874,109
Treasury stock, at cost: (2021—12,078,358 shares; 2020—9,420,699 shares)	(1,053,630)		(772,914)
Total shareholders' equity	8,608,151		8,771,092
Total liabilities and shareholders' equity	$	29,496,578	$	29,046,731

See accompanying Notes to Condensed Consolidated Financial Statements.

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Globe Life Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue:
Life premium	$	728,924	$	674,021	$	2,165,213	$	1,994,473
Health premium	299,143		287,795		888,902		850,877
Other premium	—		1		1		4
Total premium	1,028,067		961,817		3,054,116		2,845,354
Net investment income	238,975		231,432		713,103		691,991
Realized gains (losses)	10,475		1,501		47,286		(29,386)

Other income	321		292		1,004		1,021
Total revenue	1,277,838		1,195,042		3,815,509		3,508,980

Benefits and expenses:
Life policyholder benefits	516,196		459,231		1,532,298		1,340,746
Health policyholder benefits	187,906		184,237		564,589		546,444
Other policyholder benefits	7,303		7,508		21,848		22,571
Total policyholder benefits	711,405		650,976		2,118,735		1,909,761

Amortization of deferred acquisition costs	151,593		140,843		452,607		430,840
Commissions, premium taxes, and non-deferred acquisition costs	82,774		74,614		244,752		229,691
Other operating expense	80,385		75,397		240,750		226,693
Interest expense	20,886		21,674		63,833		65,295
Total benefits and expenses	1,047,043		963,504		3,120,677		2,862,280

Income before income taxes	230,795		231,538		694,832		646,700
Income tax benefit (expense)	(41,924)		(42,593)		(127,826)		(119,167)



Net income	$	188,871	$	188,945	$	567,006	$	527,533




Basic net income per common share	$	1.86	$	1.78	$	5.53	$	4.95




Diluted net income per common share	$	1.84	$	1.76	$	5.46	$	4.90

See accompanying Notes to Condensed Consolidated Financial Statements.

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Globe Life Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollar amounts in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	188,871	$	188,945	$	567,006	$	527,533

Other comprehensive income (loss):

Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period	(95,906)		380,299		(453,917)		861,871

Other reclassification adjustments included in net income	(14,599)		11,838		(31,096)		37,060
Foreign exchange adjustment on fixed maturities recorded at fair value	(519)		1,250		4,141		(914)
Unrealized gains (losses) on fixed maturities	(111,024)		393,387		(480,872)		898,017

Unrealized gains (losses) on other investments	—		—		—		(13,260)
Total unrealized investment gains (losses)	(111,024)		393,387		(480,872)		884,757
Less applicable tax (expense) benefit	23,317		(82,612)		100,984		(185,800)
Unrealized gains (losses) on investments, net of tax	(87,707)		310,775		(379,888)		698,957

Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs	432		385		1,199		1,150
Less applicable tax (expense) benefit	(91)		(81)		(252)		(242)
Unrealized gains (losses) attributable to deferred acquisition costs, net of tax	341		304		947		908

Foreign exchange translation:
Foreign exchange translation adjustments, other than securities	(6,839)		5,522		(1,276)		(4,973)
Less applicable tax (expense) benefit	1,437		(1,158)		269		1,045
Foreign exchange translation adjustments, other than securities, net of tax	(5,402)		4,364		(1,007)		(3,928)

Pension:



Pension adjustments	5,198		4,156		15,598		12,471
Less applicable tax (expense) benefit	(1,090)		(873)		(3,275)		(2,619)
Pension adjustments, net of tax	4,108		3,283		12,323		9,852

Other comprehensive income (loss)	(88,660)		318,726		(367,625)		705,789
Comprehensive income (loss)	$	100,211	$	507,671	$	199,381	$	1,233,322

See accompanying Notes to Condensed Consolidated Financial Statements.

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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
Balance at December 31, 2020	$	—	$	113,218	$	527,435	$	3,029,244	$	5,874,109	$	(772,914)	$	8,771,092


Comprehensive income (loss)	—		—		—		(1,004,729)		178,517		—		(826,212)
Common dividends declared ($0.1975 per share)	—		—		—		—		(20,435)		—		(20,435)
Acquisition of treasury stock	—		—		—		—		—		(132,720)		(132,720)
Stock-based compensation	—		—		(11,422)		—		1,168		18,142		7,888
Exercise of stock options	—		—		—		—		(12,807)		45,531		32,724

Balance at March 31, 2021	—		113,218		516,013		2,024,515		6,020,552		(841,961)		7,832,337

Comprehensive income (loss)	—		—		—		725,764		199,618		—		925,382
Common dividends declared ($0.1975 per share)	—		—		—		—		(20,171)		—		(20,171)
Acquisition of treasury stock	—		—		—		—		—		(162,864)		(162,864)
Stock-based compensation	—		—		8,634		—		—		—		8,634
Exercise of stock options	—		—		—		—		(14,033)		47,637		33,604

Balance at June 30, 2021	—		113,218		524,647		2,750,279		6,185,966		(957,188)		8,616,922



Comprehensive income (loss)	—		—		—		(88,660)		188,871		—		100,211
Common dividends declared ($0.1975 per share)	—		—		—		—		(19,981)		—		(19,981)
Acquisition of treasury stock	—		—		—		—		—		(97,796)		(97,796)
Stock-based compensation	—		—		9,036		—		(1,260)		—		7,776
Exercise of stock options	—		—		—		—		(335)		1,354		1,019

Balance at September 30, 2021	$	—	$	113,218	$	533,683	$	2,661,619	$	6,353,261	$	(1,053,630)	$	8,608,151

See accompanying Notes to Condensed Consolidated Financial Statements.

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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

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
Comprehensive income (loss)	—		—		—		(778,583)		165,540		—		(613,043)
Common dividends declared ($0.1875 per share)	—		—		—		—		(19,963)		—		(19,963)
Acquisition of treasury stock	—		—		—		—		—		(166,729)		(166,729)
Stock-based compensation	—		—		(12,126)		—		(482)		21,964		9,356
Exercise of stock options	—		—		—		—		(9,539)		26,347		16,808


Balance at March 31, 2020	—		117,218		519,428		1,066,247		5,686,431		(869,042)		6,520,282

Comprehensive income (loss)	—		—		—		1,165,646		173,048		—		1,338,694
Common dividends declared ($0.1875 per share)	—		—		—		—		(19,956)		—		(19,956)

Stock-based compensation	—		—		8,632		—		—		—		8,632
Exercise of stock options	—		—		—		—		(593)		1,310		717

Balance at June 30, 2020	—		117,218		528,060		2,231,893		5,838,930		(867,732)		7,848,369



Comprehensive income (loss)	—		—		—		318,726		188,945		—		507,671
Common dividends declared ($0.1875 per share)	—		—		—		—		(19,692)		—		(19,692)
Acquisition of treasury stock	—		—		—		—		—		(129,919)		(129,919)
Stock-based compensation	—		—		8,667		—		—		—		8,667
Exercise of stock options	—		—		—		—		(5,776)		15,588		9,812

Balance at September 30, 2020	$	—	$	117,218	$	536,727	$	2,550,619	$	6,002,407	$	(982,063)	$	8,224,908

(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 accompanying Notes to Condensed Consolidated Financial Statements.

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Globe Life Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollar amounts in thousands)


	Nine Months Ended September 30,
	2021		2020













Cash provided from (used for) operating activities	$	1,060,022	$	1,078,616

Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold	91,795		52,681
Fixed maturities available for sale—matured or other redemptions	249,653		333,631
Other long-term investments	36,060		35,547
Total investments sold or matured	377,508		421,859
Acquisition of investments:
Fixed maturities—available for sale	(687,993)		(905,371)
Other long-term investments	(206,609)		(213,075)
Total investments acquired	(894,602)		(1,118,446)
Net (increase) decrease in policy loans	(1,412)		(5,719)
Net (increase) decrease in short-term investments	14,418		(225,594)


Additions to properties	(30,730)		(28,790)
Other investing activities	(59,200)		(7,099)
Investments in low-income housing interests	(35,236)		(28,669)
Cash provided from (used for) investing activities	(629,254)		(992,458)

Cash provided from (used for) financing activities:
Issuance of common stock	67,347		27,337
Cash dividends paid to shareholders	(60,068)		(58,503)
Repayment of debt	(300,000)		(386,875)
Proceeds from issuance of debt	325,000		700,000
Payment for debt issuance costs	(7,639)		(5,844)
Net borrowing (repayment) of commercial paper	(10,991)		(9,605)
Acquisition of treasury stock	(393,380)		(296,648)
Net receipts (payments) from deposit-type products	(48,276)		(56,858)
Cash provided from (used for) financing activities	(428,007)		(86,996)

Effect of foreign exchange rate changes on cash	(1,283)		5,006
Net increase (decrease) in cash	1,478		4,168
Cash at beginning of year	94,847		75,933
Cash at end of period	$	96,325	$	80,101

See accompanying Notes to Condensed Consolidated Financial Statements.

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

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

Basis of Presentation: The accompanying condensed consolidated financial statements of Globe Life have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual financial statements. However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at September 30, 2021, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended September 30, 2021 and 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 25, 2021.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

Acquisition: On August 1, 2021 the Company acquired Beazley Benefits, a small unit of Beazley Insurance Company, Inc. for $59.2 million. This business will enhance our ability to reach the worksite market. In conjunction with this agreement, the Company also executed a 100% coinsurance agreement assuming the remaining inforce business produced by the unit, which included a $2.5 million ceding commission. The acquisition was accounted for under the purchase method of accounting as required by accounting guidance generally accepted in the United States of America. This guidance requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The results of operations since the acquisition date have been consolidated.


	Fair Value as of
	August 1, 2021
Assets Acquired:
Trade name	$	300
Value of Customer Relationships Acquired	5,200
Value of Distribution Acquired	11,000
Goodwill	40,200
	56,700
Ceding commission	2,500
Total purchase price	$	59,200

In accordance with the applicable guidance, the Company is finalizing the estimation of the fair value of the acquired assets and may do so up to one year. If any changes are deemed necessary to the preliminary estimates and possibly goodwill, the Company will make an opening balance sheet adjustment.

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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. 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs

The standard was issued as an amendment to ASU 2017-08, and clarifies that callable debt securities with a premium should be amortized to the next call date.

This standard became effective on January 1, 2021.

The adoption of this standard did not have a material impact on the consolidated financial statements.

Accounting Pronouncements Yet to be Adopted

Standard

Description

Effective Date

Effect on the Consolidated Financial Statements

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

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

As a result of the issuance of ASU 2020-11 in November 2020, the effective date for this standard was changed to January 1, 2023. Early adoption is available.

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 and has selected a modified retrospective transition method.

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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 nine month periods ended September 30, 2021 and 2020:



	Three Months Ended September 30, 2021
	Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at July 1, 2021	$	2,883,391	$	(4,098)	$	27,697	$	(156,711)	$	2,750,279
Other comprehensive income (loss) before reclassifications, net of tax	(76,174)		341		(5,402)		—		(81,235)
Reclassifications, net of tax	(11,533)		—		—		4,108		(7,425)
Other comprehensive income (loss)	(87,707)		341		(5,402)		4,108		(88,660)
Balance at September 30, 2021	$	2,795,684	$	(3,757)	$	22,295	$	(152,603)	$	2,661,619



	Three Months Ended September 30, 2020
	Available for Sale Assets		Deferred Acquisition Costs		Foreign Exchange		Pension Adjustments		Total
Balance at July 1, 2020	$	2,370,832	$	(5,312)	$	3,766	$	(137,393)	$	2,231,893
Other comprehensive income (loss) before reclassifications, net of tax	301,423		304		4,364		—		306,091
Reclassifications, net of tax	9,352		—		—		3,283		12,635
Other comprehensive income (loss)	310,775		304		4,364		3,283		318,726
Balance at September 30, 2020	$	2,681,607	$	(5,008)	$	8,130	$	(134,110)	$	2,550,619


	Nine Months Ended September 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	(355,322)		947		(1,007)		—		(355,382)
Reclassifications, net of tax	(24,566)		—		—		12,323		(12,243)
Other comprehensive income (loss)	(379,888)		947		(1,007)		12,323		(367,625)
Balance at September 30, 2021	$	2,795,684	$	(3,757)	$	22,295	$	(152,603)	$	2,661,619


	Nine Months Ended September 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	669,680		908		(3,928)		—		666,660
Reclassifications, net of tax	29,277		—		—		9,852		39,129
Other comprehensive income (loss)	698,957		908		(3,928)		9,852		705,789
Balance at September 30, 2020	$	2,681,607	$	(5,008)	$	8,130	$	(134,110)	$	2,550,619

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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 nine month periods ended September 30, 2021 and 2020.


	Three Months Ended September 30,				Nine Months Ended September 30,				Affected line items in the Statement of Operations
Component Line Item	2021		2020		2021		2020
Unrealized investment (gains) losses on available for sale assets:
Realized (gains) losses	$	(16,269)	$	10,276	$	(35,925)	$	32,133	Realized (gains) losses

Amortization of (discount) premium	1,670		1,562		4,829		4,927		Net investment income
Total before tax	(14,599)		11,838		(31,096)		37,060
Tax	3,066		(2,486)		6,530		(7,783)		Income taxes
Total after-tax	(11,533)		9,352		(24,566)		29,277
Pension adjustments:
Amortization of prior service cost	158		158		474		474		Other operating expense
Amortization of actuarial (gain) loss	5,040		3,998		15,124		11,997		Other operating expense
Total before tax	5,198		4,156		15,598		12,471
Tax	(1,090)		(873)		(3,275)		(2,619)		Income taxes
Total after-tax	4,108		3,283		12,323		9,852
Total reclassification (after-tax)	$	(7,425)	$	12,635	$	(12,243)	$	39,129

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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 September 30, 2021 and December 31, 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 "Corporates, by sector".


	At September 30, 2021
	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:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	380,193	$	—	$	65,063	$	(140)	$	445,116	2
States, municipalities, and political subdivisions	2,068,436		—		220,945		(8,433)		2,280,948		11
Foreign governments	61,476		—		1,363		(4,382)		58,457		—
Corporates, by sector:
Financial	4,563,734		—		927,421		(12,474)		5,478,681		26
Utilities	1,935,489		—		509,282		(988)		2,443,783		12
Energy	1,603,163		—		364,899		(2,131)		1,965,931		9
Other corporate sectors	6,867,918		—		1,462,369		(15,339)		8,314,948		39
Total corporates	14,970,304		—		3,263,971		(30,932)		18,203,343		86
Collateralized debt obligations	36,088		—		27,073		—		63,161		—
Other asset-backed securities	105,531		—		5,046		(736)		109,841		1
Total fixed maturities	$	17,622,028	$	—	$	3,583,461	$	(44,623)	$	21,160,866	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, 2020
	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:
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	380,602	$	—	$	87,272	$	(43)	$	467,831	2
States, municipalities, and political subdivisions	1,880,607		—		251,291		(315)		2,131,583		10
Foreign governments	52,913		—		2,635		(898)		54,650		—
Corporates, by sector:
Financial	4,404,203		—		1,016,813		(24,221)		5,396,795		26
Utilities	1,975,460		—		608,595		(108)		2,583,947		12
Energy	1,623,970		(3,346)		346,197		(3,083)		1,963,738		9
Other corporate sectors	6,687,644		—		1,727,366		(6,218)		8,408,792		40
Total corporates	14,691,277		(3,346)		3,698,971		(33,630)		18,353,272		87
Collateralized debt obligations	57,007		—		23,460		(8,869)		71,598		—
Other asset-backed securities	134,739		—		3,614		(3,778)		134,575		1
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 September 30, 2021 is shown below on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions.


	At September 30, 2021
	Amortized Cost, net		Fair Value
Fixed maturities available for sale:
Due in one year or less	$	104,924	$	106,663
Due after one year through five years	845,481		938,870
Due after five years through ten years	1,806,609		2,160,941
Due after ten years through twenty years	6,583,636		8,359,748
Due after twenty years	8,139,586		9,421,456
Mortgage-backed and asset-backed securities	141,792		173,188
	$	17,622,028	$	21,160,866

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		% Change	2021		2020		% Change
Fixed maturities available for sale	$	223,287	$	217,900	2	$	668,284	$	652,583	2
Policy loans	11,376		11,241		1	33,968		33,572		1
Other long-term investments(1)	9,390		6,925		36	26,432		18,694		41
Short-term investments	10		88		(89)	20		529		(96)
	244,063		236,154		3	728,704		705,378		3
Less investment expense	(5,088)		(4,722)		8	(15,601)		(13,387)		17
Net investment income	$	238,975	$	231,432	3	$	713,103	$	691,991	3

(1)For the three months ended September 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $7.1 million and $4.0 million of distributions, respectively in net investment income. For the nine months ended September 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $19.4 million and $10.5 million of distributions, respectively in net investment income. Refer to Other Long-Term Investments below for further discussion on the investment funds.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Fixed maturities available for sale:
Proceeds from sales(1)	$	17,085	$	661	$	91,795	$	52,681
Gross realized gains	304		—		1,438		2,642
Gross realized losses	—		(38,782)		(12,101)		(39,153)

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)	$	16,269	$	(38,608)	$	32,578	$	(27,746)

Provision for credit losses	—		28,332		3,346		(4,387)
Fair value option—change in fair value	1,585		12,053		14,013		(6,798)
Other investments	1,935		358		6,663		10,179
Realized gains (losses) from investments	19,789		2,135		56,600		(28,752)

Realized loss on redemption of debt	(9,314)		(634)		(9,314)		(634)
	10,475		1,501		47,286		(29,386)
Applicable tax	(2,200)		463		(9,930)		6,949
Realized gains (losses), net of tax	$	8,275	$	1,964	$	37,356	$	(22,437)

(1)During the three months ended September 30, 2021 and 2020, the Company recorded $0 and $65.8 million of exchanges of fixed maturities (noncash transactions) that resulted in $0 and $0, respectively in realized gains (losses). During the nine months ended September 30, 2021 and 2020, the Company recorded $108.3 million and $152.1 million of exchanges of fixed maturities (noncash transactions) that resulted in $25.2 million and $7.9 million, respectively in realized gains (losses).

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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 September 30, 2021 and December 31, 2020:


	Fair Value Measurement at September 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
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	445,116		$	—		$	445,116
States, municipalities, and political subdivisions	—			2,280,948			—			2,280,948
Foreign governments	—			58,457			—			58,457
Corporates, by sector:
Financial	—			5,306,960			171,721			5,478,681
Utilities	—			2,288,585			155,198			2,443,783
Energy	—			1,952,029			13,902			1,965,931
Other corporate sectors	—			8,001,599			313,349			8,314,948
Total corporates	—			17,549,173			654,170			18,203,343
Collateralized debt obligations	—			—			63,161			63,161
Other asset-backed securities	—			109,841			—			109,841
Total fixed maturities	$	—		$	20,443,535		$	717,331		$	21,160,866
Percentage of total	—		%	97		%	3		%	100		%


	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
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises	$	—		$	467,831		$	—		$	467,831
States, municipalities, and political subdivisions	—			2,131,583			—			2,131,583
Foreign governments	—			54,650			—			54,650
Corporates, by sector:
Financial	—			5,222,066			174,729			5,396,795
Utilities	—			2,400,602			183,345			2,583,947
Energy	—			1,925,549			38,189			1,963,738
Other corporate sectors	—			8,090,550			318,242			8,408,792
Total corporates	—			17,638,767			714,505			18,353,272
Collateralized debt obligations	—			—			71,598			71,598
Other asset-backed securities	—			121,705			12,870			134,575
Total fixed maturities	$	—		$	20,414,536		$	798,973		$	21,213,509
Percentage of total	—		%	96		%	4		%	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 represent changes in fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


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

Included in realized gains / losses	(82)			(6,787)			2,733			(4,136)
Included in other comprehensive income	63			12,482			(15,346)			(2,801)
Acquisitions	—			—			25,000			25,000
Sales	(12,851)			(13,213)			—			(26,064)
Amortization	—			3,388			8			3,396
Other(1)	—			(4,307)			(72,730)			(77,037)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at September 30, 2021	$	—		$	63,161		$	654,170		$	717,331
Percent of total fixed maturities	—		%	—		%	3		%	3		%

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

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


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

Included in realized gains / losses	—			—			1,213			1,213
Included in other comprehensive income	(318)			(5,220)			11,324			5,786
Acquisitions	—			—			17,820			17,820
Sales	—			—			—			—
Amortization	—			3,415			11			3,426
Other(1)	109			(3,642)			(38,278)			(41,811)
Transfers into Level 3(2)	—			—			—			—
Transfers out of Level 3(2)	—			—			—			—
Balance at September 30, 2020	$	12,968		$	68,657		$	664,218		$	745,843
Percent of total fixed maturities	—		%	1		%	3		%	4		%

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

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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
	Asset- backed Securities		Collateralized Debt Obligations		Corporates		Total
At September 30, 2021	$	63	$	12,482	$	(15,346)	$	(2,801)
At September 30, 2020	(318)		(5,220)		11,324		5,786

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


	Less than Twelve Months	Twelve Months or Longer	Total
Number of issues (CUSIPs) held:
As of September 30, 2021	242	29	271
As of December 31, 2020	54	24	78

Globe Life's entire fixed maturity portfolio consisted of 1,981 issues by 813 different issuers at September 30, 2021 and 1,900 issues by 777 different issuers at December 31, 2020. The weighted-average quality rating of all unrealized loss positions at amortized cost was A and BBB- as of September 30, 2021 and December 31, 2020, respectively.

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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 September 30, 2021.

Gross unrealized losses may fluctuate quarter over quarter due to adverse factors in the market that affect our holdings, such as changes in interest rates or credit spreads. The Company considers many factors when determining whether an allowance for a credit loss should be recorded. While the Company holds securities that may be in an unrealized loss position from time to time, Globe Life does not 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 September 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	$	2,033	$	(37)	$	1,960	$	(103)	$	3,993	$	(140)
States, municipalities and political subdivisions	324,878		(8,330)		1,623		(103)		326,501		(8,433)
Foreign governments	20,088		(2,114)		11,017		(2,268)		31,105		(4,382)
Corporates, by sector:
Financial	154,075		(3,836)		32,692		(1,972)		186,767		(5,808)
Utilities	21,841		(736)		2,511		(252)		24,352		(988)
Energy	86,710		(911)		—		—		86,710		(911)
Other corporate sectors	172,274		(6,871)		17,555		(2,661)		189,829		(9,532)
Total corporates	434,900		(12,354)		52,758		(4,885)		487,658		(17,239)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	—		—		—		—		—		—
Total investment grade securities	781,899		(22,835)		67,358		(7,359)		849,257		(30,194)

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

Corporates, by sector:
Financial	5,479		(4)		55,878		(6,662)		61,357		(6,666)
Utilities	—		—		—		—		—		—
Energy	—		—		26,869		(1,220)		26,869		(1,220)
Other corporate sectors	—		—		26,890		(5,807)		26,890		(5,807)
Total corporates	5,479		(4)		109,637		(13,689)		115,116		(13,693)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	—		—		12,882		(736)		12,882		(736)
Total below investment grade securities	5,479		(4)		122,519		(14,425)		127,998		(14,429)
Total fixed maturities	$	787,378	$	(22,839)	$	189,877	$	(21,784)	$	977,255	$	(44,623)

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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, 2020.

Analysis of Gross Unrealized Investment Losses


	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)	$	—	$	—	$	2,006	$	(43)
States, municipalities and political subdivisions	32,910		(315)		—		—		32,910		(315)
Foreign governments	19,532		(898)		—		—		19,532		(898)
Corporates, by sector:
Financial	117,762		(2,564)		6,333		(2,168)		124,095		(4,732)
Utilities	2,726		(108)		—		—		2,726		(108)
Energy	1,692		(8)		14,871		(106)		16,563		(114)
Other corporate sectors	21,882		(720)		—		—		21,882		(720)
Total corporates	144,062		(3,400)		21,204		(2,274)		165,266		(5,674)
Collateralized debt obligations	—		—		—		—		—		—
Other asset-backed securities	28,864		(1,051)		5		—		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	—		—		—		—		—		—

Corporates, by sector:
Financial	6,822		(36)		115,093		(19,453)		121,915		(19,489)
Utilities	—		—		—		—		—		—
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	—		—		11,131		(8,869)		11,131		(8,869)
Other asset-backed securities	—		—		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)

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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.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Allowance for credit losses beginning balance	$	—	$	32,719	$	3,346	$	—
Additions to allowance for which credit losses were not previously recorded	—		4,387		—		37,106
Additions (reductions) to allowance for fixed maturities that previously had an allowance	—		—		—		—
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	—		(32,719)		(3,346)		(32,719)
Allowance for credit losses ending balance	$	—	$	4,387	$	—	$	4,387

As of September 30, 2021 and December 31, 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:



	September 30, 2021		December 31, 2020
Investment funds	$	586,223	$	385,038
Commercial mortgage loan participations	137,072		160,602
Other	9,882		1,341
Total	$	733,177	$	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 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.

The Company did not commit to any new investment funds during the quarter. The Company had $56 million of capital called during the quarter from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $357 million as of September 30, 2021.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The following table presents additional information about the Company's investment funds as of September 30, 2021 and December 31, 2020 at fair value:



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




Commercial mortgage loans	$	397,723	$	227,050	$	124,913	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	170,117		157,461		—		Initial 2 year lock on each new investment/semi-annual withdrawals thereafter/full redemption within 36 month period.




Other	18,383		527		232,100		Fully redeemable with varying terms and non-redeemable.
Total investment funds	$	586,223	$	385,038	$	357,013

Commercial Mortgage Loan Participations (commercial mortgage loans): Summaries of commercial mortgage loans by property type and geographical location at September 30, 2021 and December 31, 2020 are as follows:


	September 30, 2021			December 31, 2020
	Carrying Value		% of Total	Carrying Value		% of Total
Property type:
Mixed use	$	54,042	39	$	49,002	31
Office	9,137		7	36,153		22
Hospitality	22,550		17	22,605		14
Retail	19,754		14	19,319		12
Industrial	17,900		13	17,900		11
Multi-family	14,873		11	19,128		12

Total recorded investment	138,256		101	164,107		102
Less allowance for credit losses	(1,184)		(1)	(3,505)		(2)
Carrying value, net of allowance for credit losses	$	137,072	100	$	160,602	100


	September 30, 2021			December 31, 2020
	Carrying Value		% of Total	Carrying Value		% of Total
Geographic location:
California	$	64,519	47	$	61,610	38
Virginia	—		—	27,019		17
New York	18,111		13	16,602		10
Pennsylvania	11,672		9	11,314		7
Indiana	9,717		7	9,717		6
Florida	8,182		6	12,420		8
Other	26,055		19	25,425		16
Total recorded investment	138,256		101	164,107		102
Less allowance for credit losses	(1,184)		(1)	(3,505)		(2)
Carrying value, net of allowance for credit losses	$	137,072	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 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, may not be evaluated as the value of the 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 September 30, 2021
Risk Rating:	Number of Loans	2021		2020		2019		2018		2017		Total
Low	14	$	—	$	22,473	$	11,345	$	32,958	$	35,209	$	101,985
Moderate	6	—		—		16,517		8,182		—		24,699
High	2	—		—		4,575		6,997		—		11,572
Total commercial mortgage loans	22	$	—	$	22,473	$	32,437	$	48,137	$	35,209	138,256
Less allowance for credit losses on the investment pool												(1,184)
Less allowance for credit losses on individual loans												—
Carrying value, net of valuation allowance												$	137,072


	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	—		10,640		7,796		—		18,436
High	3	—		4,554		11,592		—		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 September 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 22 loans in the portfolio. For the nine months ended September 30, 2021, the allowance for credit losses decreased by $2.3 million to $1.2 million. The provision for credit losses is included in "Realized gains (losses)" in the Condensed Consolidated Statement s of Operations.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Allowance for credit losses beginning balance	$	1,639	$	3,838	$	3,505	$	—
Cumulative effect of adoption ASU 2016-13	—		—		—		335
Provision (reversal) for credit losses	(455)		(119)		(2,321)		3,384
Loans charge-off	—		—		—		—
Allowance for credit losses ending balance	$	1,184	$	3,719	$	1,184	$	3,719

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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 as of September 30, 2021, compared with one delinquent commercial mortgage at December 31, 2020. As of September 30, 2021 and December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. The Company's unfunded commitment balance to commercial loan borrowers was $34 million as of September 30, 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 was amended on September 30, 2021 and now expires in 2026. 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 September 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.

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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:


	September 30, 2021		December 31, 2020

Balance at beginning of period	$	162,261	$	163,808
Incurred related to:
Current year	480,487		584,936
Prior year	(20,961)		(14,829)
Total incurred	459,526		570,107
Paid related to:
Current year	339,773		442,127
Prior year	116,374		129,527
Total paid	456,147		571,654
Balance at end of period	$	165,640	$	162,261

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


	September 30, 2021		December 31, 2020

Policy claims and other benefits payable:
Life insurance	$	230,274	$	237,246
Health insurance	165,640		162,261
Total	$	395,914	$	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 officers. The tables included herein will focus on the Pension Plans and SERP.

Pension Assets: The following table presents the assets of the Company's Pension Plans at September 30, 2021 and December 31, 2020.

Pension Assets by Component at September 30, 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	$	—	$	53,927	$	—	$	53,927	9
Utilities	—		44,135		—		44,135		8
Energy	—		22,945		—		22,945		4
Other corporates	—		89,212		—		89,212		16
Total corporate bonds	—		210,219		—		210,219		37
Exchange traded fund(1)	283,277		—		—		283,277		49
Other bonds	—		244		—		244		—
Guaranteed annuity contract(2)	—		34,910		—		34,910		6
Short-term investments	9,605		—		—		9,605		2
Other	16,214		—		—		16,214		3
	$	309,096	$	245,373	$	—	554,469		97
Other long-term investments(3)							14,455		3
Total pension assets							$	568,924	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 September 30, 2021, the expected term of the investment fund is approximately 3 years and the commitment of the investment is fully funded. The investment is non-redeemable.

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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, 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	$	—	$	52,252	$	—	$	52,252	10
Utilities	—		45,888		—		45,888		9
Energy	—		22,480		—		22,480		4
Other corporates	—		88,983		—		88,983		17
Total corporate bonds	—		209,603		—		209,603		40
Exchange traded fund(1)	245,170		—		—		245,170		46
Other bonds	—		258		—		258		—
Guaranteed annuity contract(2)	—		30,119		—		30,119		6
Short-term investments	20,960		—		—		20,960		4
Other	7,109		—		—		7,109		1
	$	273,239	$	239,980	$	—	513,219		97
Other long-term investments(3)							16,313		3
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, 2020, 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.

SERP: The following table includes information regarding the SERP.


	Nine Months Ended September 30,
	2021		2020
Premiums paid for insurance coverage	$	2,193	$	2,480

	September 30, 2021		December 31, 2020
Total investments:
Company owned life insurance	$	54,380	$	51,361
Exchange traded funds	82,000		75,390
	$	136,380	$	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 Plans and SERP Liabilities: The following table presents liabilities for the defined benefit pension plans and SERP at September 30, 2021 and December 31, 2020.


	September 30, 2021		December 31, 2020
Pension Plans	$	705,371	$	667,753
SERP	96,179		95,560
Pension benefit obligation	$	801,550	$	763,313

Net Periodic Benefit Cost: The following table presents the net periodic benefit costs for the Pension Plans and SERP by expense components for the three and nine months ended September 30, 2021 and 2020.

Components of Net Periodic Benefit Cost


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	7,919	$	6,116	$	23,755	$	18,347
Interest cost	5,467		5,653		16,403		16,951
Expected return on assets	(8,083)		(7,390)		(24,249)		(22,171)
Amortization:
Prior service cost	158		158		474		474
Actuarial (gain) loss	4,984		3,921		14,953		11,770


Net periodic benefit cost	$	10,445	$	8,458	$	31,336	$	25,371

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 September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Basic weighted average shares outstanding	101,498,408	106,146,809	102,618,327	106,622,704
Weighted average dilutive options outstanding	882,609	906,302	1,171,159	1,082,474
Diluted weighted average shares outstanding	102,381,017	107,053,111	103,789,486	107,705,178

Antidilutive shares	2,601,499	4,007,482	2,349,321	2,415,182

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

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

Selected Information about Debt Issues


				As of
				September 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	$	(463)	$	165,149	$	184,414	$	164,954
Senior notes(1)	9/24/2012	9/15/2022	3.800%	150,000		(334)		149,666		154,767		149,414
Senior notes	9/27/2018	9/15/2028	4.550%	550,000		(5,206)		544,794		637,719		544,328
Senior notes	8/21/2020	8/15/2030	2.150%	400,000		(4,328)		395,672		396,944		395,157
Junior subordinated debentures(2)	—	—	—	—		—		—		—		290,652
Junior subordinated debentures	11/17/2017	11/17/2057	5.275%	125,000		(1,608)		123,392		130,349		123,381
Junior subordinated debentures	6/14/2021	6/15/2061	4.250%	325,000		(7,813)		317,187		331,110		—
				1,715,612		(19,752)		1,695,860		1,835,303		1,667,886
Less current maturity of long-term debt(1)				150,000		(334)		149,666		154,767		—
Total long-term debt				1,565,612		(19,418)		1,546,194		1,680,536		1,667,886

Current maturity of long-term debt(1)				150,000		(334)		149,666		154,767		—
Commercial paper				244,000		(73)		243,927		243,927		254,918
Total short-term debt				394,000		(407)		393,593		398,694		254,918

Total debt				$	1,959,612	$	(19,825)	$	1,939,787	$	2,079,230	$	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 while all other long-term debt is payable semi-annually.

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 $300 million 6.125% Junior Subordinated Debentures due 2056 plus accrued interest of $1.5 million on July 15, 2021 as well as for general corporate purposes.

Credit facility: On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020, which provides for a $750 million revolving credit facility that may be increased to $1 billion. The amended credit facility matures September 30, 2026 and may be extended up to two one-year periods upon the Company's request. Pursuant to this agreement, the participating lenders have agreed to make revolving loans to Globe Life and to issue secured or unsecured letters of credit. The Company has not drawn on any of the credit to date.

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Globe Life Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollar amounts in thousands, except per share data)

The facility is further designated as a back-up credit line for a commercial paper program under which the Company may either borrow from the credit line or issue commercial paper at any time, with total commercial paper outstanding not to exceed the facility maximum of $750 million, less any letters of credit issued. Interest is charged at variable rates. In accordance with the agreement, Globe Life is subject to certain covenants regarding capitalization. As of September 30, 2021, the Company was in full compliance with these covenants.

Federal Home Loan Bank (FHLB) funding: In July 2021, three of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding agreements. The membership requires ownership of FHLB stock and Globe Life owns $6 million as of the end of the quarter. The stock is restricted for the duration of the membership and recorded at par as required by applicable guidance. The capital stock is included in "Other long-term investments" in the Condensed Consolidated Balance Sheets. As of September 30, 2021, there were no borrowings with the FHLB.

Note 10—Business Segments

Globe Life is organized into four 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 September 30, 2021
	Life			Health			Annuity			Total
Distribution Channel	Amount		% of Total	Amount		% of Total	Amount		% of Total	Amount		% of Total
American Income	$	356,456	49	$	29,070	10	$	—	—	$	385,526