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 June 30, 2021

or

☐ 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 28, 2021
Common Stock, $1.00 Par Value						101,720,608

1        

GL Q2 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			8
						Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income			9
						Note 4—Investments			11
						Note 5—Commitments and Contingencies			22
						Note 6—Liability for Unpaid Claims			23
						Note 7—Postretirement Benefits			24
						Note 8—Earnings Per Share			26
						Note 9—Debt			27
						Note 10—Business Segments			28
						Note 11—Subsequent Events			33
						Cautionary Statements			34
			Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
			Item 3.			Quantitative and Qualitative Disclosures about Market Risk			64
			Item 4.			Controls and Procedures			64
PART II. OTHER INFORMATION
			Item 1.			Legal Proceedings			64
			Item 1A.			Risk Factors			65
			Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			65
			Item 6.			Exhibits			66
Signatures									67

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.

2        

GL Q2 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, 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)
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			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.

1        

GL Q2 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,
			2021						2020						2021						2020
Revenue:
Life premium			$	728,170					$	670,822					$	1,436,289					$	1,320,452
Health premium			295,586						282,877						589,759						563,082
Other premium			—						3						1						3
Total premium			1,023,756						953,702						2,026,049						1,883,537
Net investment income			238,308						231,568						474,128						460,559
Realized gains (losses)			8,659						(4,790)						36,811						(30,887)
Other income			388						404						683						729
Total revenue			1,271,111						1,180,884						2,537,671						2,313,938
Benefits and expenses:
Life policyholder benefits			498,471						459,845						1,016,102						881,515
Health policyholder benefits			188,854						183,496						376,683						362,207
Other policyholder benefits			7,286						7,475						14,545						15,063
Total policyholder benefits			694,611						650,816						1,407,330						1,258,785
Amortization of deferred acquisition costs			148,021						146,160						301,014						289,997
Commissions, premium taxes, and non-deferred acquisition costs			82,312						76,140						161,978						155,077
Other operating expense			79,155						72,714						160,365						151,296
Interest expense			21,769						22,813						42,947						43,621
Total benefits and expenses			1,025,868						968,643						2,073,634						1,898,776
Income before income taxes			245,243						212,241						464,037						415,162
Income tax benefit (expense)			(45,625)						(39,193)						(85,902)						(76,574)
Net income			$	199,618					$	173,048					$	378,135					$	338,588
Basic net income per common share			$	1.94					$	1.63					$	3.66					$	3.17
Diluted net income per common share			$	1.92					$	1.62					$	3.62					$	3.13

See accompanying Notes to Condensed Consolidated Financial Statements.

2

GL Q2 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,
			2021						2020						2021						2020
Net income			$	199,618					$	173,048					$	378,135					$	338,588
Other comprehensive income (loss):
Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period			904,048						1,459,508						(358,011)						481,572
Other reclassification adjustments included in net income			645						(3,190)						(16,497)						25,222
Foreign exchange adjustment on fixed maturities recorded at fair value			2,218						233						4,660						(2,164)
Unrealized gains (losses) on fixed maturities			906,911						1,456,551						(369,848)						504,630
Unrealized gains (losses) on other investments			—						(2,540)						—						(13,260)
Total unrealized investment gains (losses)			906,911						1,454,011						(369,848)						491,370
Less applicable tax (expense) benefit			(190,452)						(305,338)						77,667						(103,188)
Unrealized gains (losses) on investments, net of tax			716,459						1,148,673						(292,181)						388,182
Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs			408						382						767						765
Less applicable tax (expense) benefit			(86)						(81)						(161)						(161)
Unrealized gains (losses) attributable to deferred acquisition costs, net of tax			322						301						606						604
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities			6,173						16,947						5,563						(10,495)
Less applicable tax (expense) benefit			(1,296)						(3,560)						(1,168)						2,203
Foreign exchange translation adjustments, other than securities, net of tax			4,877						13,387						4,395						(8,292)
Pension:
Pension adjustments			5,200						4,158						10,400						8,315
Less applicable tax (expense) benefit			(1,094)						(873)						(2,185)						(1,746)
Pension adjustments, net of tax			4,106						3,285						8,215						6,569
Other comprehensive income (loss)			725,764						1,165,646						(278,965)						387,063
Comprehensive income (loss)			$	925,382					$	1,338,694					$	99,170					$	725,651

See accompanying Notes to Condensed Consolidated Financial Statements.

3

GL Q2 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
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

See accompanying Notes to Condensed Consolidated Financial Statements.

4

GL Q2 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
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

(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.

5

GL Q2 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,
			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			—						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			—						(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.

6

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 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 June 30, 2021, and the condensed consolidated results of operations, comprehensive income, and cash flows for the periods ended June 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.

7

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 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.

8

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 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, 2021 and 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						—						721,148
Reclassifications, net of tax			510						—						—						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
			Available for Sale Assets						Deferred Acquisition Costs						Foreign Exchange						Pension Adjustments						Total
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			1,151,193						301						13,387						—						1,164,881
Reclassifications, net of tax			(2,520)						—						—						3,285						765
Other comprehensive income (loss)			1,148,673						301						13,387						3,285						1,165,646
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						—						(274,147)
Reclassifications, net of tax			(13,033)						—						—						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

			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

9

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)

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

						Three Months Ended June 30,												Six Months Ended June 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						$	(866)					$	(5,063)					$	(19,656)					$	21,857					Realized (gains) losses
Amortization of (discount) premium						1,511						1,873						3,159						3,365						Net investment income
Total before tax						645						(3,190)						(16,497)						25,222
Tax						(135)						670						3,464						(5,297)						Income taxes
Total after-tax						510						(2,520)						(13,033)						19,925
Pension adjustments:
Amortization of prior service cost						158						158						316						316						Other operating expense
Amortization of actuarial (gain) loss						5,042						4,000						10,084						7,999						Other operating expense
Total before tax						5,200						4,158						10,400						8,315
Tax						(1,094)						(873)						(2,185)						(1,746)						Income taxes
Total after-tax						4,106						3,285						8,215						6,569
Total reclassification (after-tax)						$	4,616					$	765					$	(4,818)					$	26,494

10

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 4—Investments

Portfolio Composition: Summaries of fixed maturities available for sale by amortized cost, fair value, and allowance for credit losses at June 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 June 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			$	377,327					$	—					$	69,245					$	(128)					$	446,444					2
States, municipalities, and political subdivisions			1,904,617						—						242,686						(696)						2,146,607						10
Foreign governments			62,027						—						1,835						(3,707)						60,155						—
Corporates, by sector:
Financial			4,522,818						—						933,508						(13,620)						5,442,706						26
Utilities			1,959,373						—						529,966						(902)						2,488,437						12
Energy			1,629,246						—						364,800						(1,852)						1,992,194						9
Other corporate sectors			6,839,315						—						1,507,500						(11,254)						8,335,561						40
Total corporates			14,950,752						—						3,335,774						(27,628)						18,258,898						87
Collateralized debt obligations			36,288						—						28,119						—						64,407						—
Other asset-backed securities			120,907						—						5,209						(847)						125,269						1
Total fixed maturities			$	17,451,918					$	—					$	3,682,868					$	(33,006)					$	21,101,780					100

(1)Amount reported in the balance sheet.

(2)At fair value.

11

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)

			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 June 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 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

12

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)

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

			Three Months Ended June 30,																		Six Months Ended June 30,
			2021						2020						% Change						2021						2020						% Change
Fixed maturities available for sale			$	223,278					$	217,556					3						$	444,997					$	434,683					2
Policy loans			11,324						11,213						1						22,592						22,331						1
Other long-term investments(1)			8,880						7,146						24						17,042						11,769						45
Short-term investments			6						134						(96)						10						441						(98)
			243,488						236,049						3						484,641						469,224						3
Less investment expense			(5,180)						(4,481)						16						(10,513)						(8,665)						21
Net investment income			$	238,308					$	231,568					3						$	474,128					$	460,559					3

(1)For the three months ended June 30, 2021 and 2020, the investment funds, accounted for under the fair value option method, recorded $6.5 million and $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 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 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			—						—						1,134						2,642
Gross realized losses			(82)						(371)						(12,101)						(371)

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

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

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

13

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)

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

			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
Fixed maturities available for sale
U.S. Government direct, guaranteed, and government-sponsored enterprises			$	—					$	446,444					$	—					$	446,444
States, municipalities, and political subdivisions			—						2,146,607						—						2,146,607
Foreign governments			—						60,155						—						60,155
Corporates, by sector:
Financial			—						5,268,630						174,076						5,442,706
Utilities			—						2,331,689						156,748						2,488,437
Energy			—						1,953,907						38,287						1,992,194
Other corporate sectors			—						8,025,927						309,634						8,335,561
Total corporates			—						17,580,153						678,745						18,258,898
Collateralized debt obligations			—						—						64,407						64,407
Other asset-backed securities			—						125,269						—						125,269
Total fixed maturities			$	—					$	20,358,628					$	743,152					$	21,101,780
Percentage of total			—		%				96		%				4		%				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		%

14

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)

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)						840						(6,029)
Included in other comprehensive income			63						13,528						(12,489)						1,102
Acquisitions			—						—						—						—
Sales			(12,851)						(13,213)						—						(26,064)
Amortization			—						2,270						4						2,274
Other(1)			—						(2,989)						(24,115)						(27,104)
Transfers into Level 3(2)			—						—						—						—
Transfers out of Level 3(2)			—						—						—						—
Balance at June 30, 2021			$	—					$	64,407					$	678,745					$	743,152
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.

			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			(250)						(5,046)						11,765						6,469
Acquisitions			—						—						—						—
Sales			—						—						—						—
Amortization			—						2,275						4						2,279
Other(1)			(47)						(2,234)						(26,194)						(28,475)
Transfers into Level 3(2)			—						—						—						—
Transfers out of Level 3(2)			—						—						—						—
Balance at June 30, 2020			$	12,880					$	69,099					$	658,916					$	740,895
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.

15

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)

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 June 30, 2021			$	63					$	13,528					$	(12,489)					$	1,102
At June 30, 2020			(250)						(5,046)						11,765						6,469

 

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, 2021			99						17						116
As of December 31, 2020			54						24						78

 

Globe Life's entire fixed maturity portfolio consisted of 1,917 issues by 779 different issuers at June 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 BBB+ and BBB- as of June 30, 2021 and December 31, 2020, respectively.

16

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)

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, 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 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					$	—					$	3,890					$	(128)
States, municipalities and political subdivisions			61,437						(696)						—						—						61,437						(696)
Foreign governments			32,095						(3,707)						—						—						32,095						(3,707)
Corporates, by sector:
Financial			108,309						(4,251)						5,069						(158)						113,378						(4,409)
Utilities			22,950						(815)						—						—						22,950						(815)
Energy			84,963						(403)						—						—						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			—						—						—						—						—						—
Other asset-backed securities			10,552						(9)						2						—						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			—						—						—						—						—						—
Corporates, by sector:
Financial			20,243						(58)						103,362						(9,153)						123,605						(9,211)
Utilities			15,008						(87)						—						—						15,008						(87)
Energy			—						—						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			—						—						—						—						—						—
Other asset-backed securities			—						—						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)

 

17

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)

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)

18

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)

Fixed Maturities, Allowance for Credit Losses: A summary of the activity in the allowance for credit losses is as follows.

						Three Months Ended June 30,												Six Months Ended June 30,
						2021						2020						2021						2020
Allowance for credit losses beginning balance						$	—					$	31,854					$	3,346					$	—
Additions to allowance for which credit losses were not previously recorded						—						—						—						31,854
Additions (reductions) to allowance for fixed maturities that previously had an allowance						—						865						—						865
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						—						—						(3,346)						—
Allowance for credit losses ending balance						$	—					$	32,719					$	—					$	32,719

As of June 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:

			June 30, 2021						December 31, 2020
Investment funds			$	533,658					$	385,038
Commercial mortgage loan participations			160,639						160,602
Other			3,891						1,341
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 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 committed to one new limited partnership. The Company had $72 million of capital called during the quarter from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $409 million as of June 30, 2021.

19

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)

The following table presents additional information about the Company's investment funds as of June 30, 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						—						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

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

20

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)

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 June 30, 2021
Risk Rating:						Number of Loans						2021						2020						2019						2018						2017						Total
Low						16						$	—					$	20,884					$	13,080					$	32,957					$	62,057					$	128,978
Moderate						5						—						—						13,601						8,142						—						21,743
High						2						—						—						4,568						6,989						—						11,557
Total commercial mortgage loans						23						$	—					$	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																																										—
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						—						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 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 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					$	—
Cumulative effect of adoption ASU 2016-13						—						—						—						335
Provision (reversal) for credit losses						(508)						3,503						(1,866)						3,503
Loans charge-off						—						—						—						—
Allowance for credit losses ending balance						$	1,639					$	3,838					$	1,639					$	3,838

21

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 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 commercial loan borrowers was $37 million as of June 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 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.

On January 4, 2021, putative class and collective action litigation was filed against National Income Life Insurance Company in the United States District Court for the 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 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 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.

22

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 6—Liability for Unpaid Claims

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

			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" in the Condensed Consolidated Balance Sheets.

			June 30, 2021						December 31, 2020
Policy claims and other benefits payable:
Life insurance			$	211,137					$	237,246
Health insurance			164,686						162,261
Total			$	375,823					$	399,507

23

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 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 defined benefit plans and SERP.

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

Pension Assets by Component at June 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			$	—					$	56,211					$	—					$	56,211					10
Utilities			—						44,358						—						44,358						8
Energy			—						23,119						—						23,119						4
Other corporates			—						89,934						—						89,934						16
Total corporate bonds			—						213,622						—						213,622						38
Exchange traded fund(1)			281,693						—						—						281,693						51
Other bonds			—						247						—						247						—
Guaranteed annuity contract(2)			—						30,381						—						30,381						5
Short-term investments			13,583						—						—						13,583						2
Other			2,812						—						—						2,812						1
			$	298,088					$	244,250					$	—					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, 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.

24

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)

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.

			Six Months Ended June 30,
			2021						2020
Premiums paid for insurance coverage			$	443					$	443
			June 30, 2021						December 31, 2020
Total investments:
Company owned life insurance			$	52,529					$	51,361
Exchange traded funds			79,788						75,390
			$	132,317					$	126,751

25

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)

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

			June 30, 2021						December 31, 2020
Defined benefit pension			$	704,695					$	667,753
SERP			95,917						95,560
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, 2021 and 2020.

Components of Net Periodic Benefit Cost

			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,
			2021						2020						2021						2020
Basic weighted average shares outstanding			102,895,435						106,441,311						103,187,567						106,863,267
Weighted average dilutive options outstanding			1,337,911						692,706						1,331,047						1,195,173
Diluted weighted average shares outstanding			104,233,346						107,134,017						104,518,614						108,058,440
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. 

26

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 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						—
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.

27

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 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 June 30, 2021
						Life												Health												Annuity												Total
Distribution Channel						Amount						% of Total						Amount						% of Total						Amount						% of Total						Amount						% of Total
American Income						$	347,696					48						$	28,789					10						$	—					—						$	376,485					37
Direct to Consumer						249,440						34						18,450						6						—						—						267,890						26
Liberty National						77,853						11						47,118						16						—						—						124,971						12
United American						2,261						—						116,217						39						—						—						118,478						12
Family Heritage						1,226						—						85,012						29						—						—						86,238						8
Other						49,694						7						—						—						—						—						49,694						5
						$	728,170					100						$	295,586					100						$	—					—						$	1,023,756					100

						Three Months Ended June 30, 2020
						Life												Health												Annuity												Total
Distribution Channel						Amount						% of Total						Amount						% of Total						Amount						% of Total						Amount						% of Total
American Income						$	308,675					46						$	25,554					9						$	—					—						$	334,229					35
Direct to Consumer						235,201						35						19,060						7						—						—						254,261						27
Liberty National						73,326						11						47,391						17						—						—						120,717						13
United American						2,481						—						112,885						40						3						100						115,369						12
Family Heritage						1,042						—						77,987						27						—						—