Globe Life (GL) Q3 Earnings Beat Estimates, Improve Y/Y

Globe Life’s GL third-quarter 2019 net operating income of $1.73 per share beat the Zacks Consensus Estimate by 1.76%. The bottom line also improved 8.8% year over year on the back of higher premiums from Life and Health segments and Insurance underwriting income.

Globe Life Inc. Price, Consensus and EPS Surprise

Globe Life Inc. Price, Consensus and EPS Surprise

Globe Life Inc. price-consensus-eps-surprise-chart | Globe Life Inc. Quote

Behind the Headlines

Globe Life reported total premium revenues of $900 million, up 5% year over year. This upside was primarily driven by higher premiums from Life, Health and Annuity Insurance businesses.

Net investment income increased 3% year over year to $228.9 million.

The company’s operating revenues of $1.1 billion grew 4.2% from the year-ago quarter. This top-line improvement was driven by growth in Life and Health Insurance premiums along with higher net investment income. Additionally, the top line beat the Zacks Consensus Estimate by 0.45%.

Excess investment income, a measure of profitability, climbed 5% year over year to $64.8 million.

Total insurance underwriting income grew 5% year over year to $184.6 million. Improvement in Life Insurance underwriting margins resulted in this uptrend. However, higher administrative expenses partially offset this upside.

Administrative expenses were up 8.5% year over year to $61 million.

Total benefits and expenses rose 3.5% year over year to $894 million.

Segmental Update

Premium revenues at Life Insurance operations increased 4.1% year over year to $630.8 million, driven by higher premiums written by distribution channels like American Income Agency, Global Life Direct Response and Liberty National Exclusive (LNL) Agency. While American Income Agency grew 7%, Global Life Direct Response was up 2% and LNL Agency inched up 2%.

Life Insurance underwriting income improved 7.6% year over year to $181 million. Net sales of 105.6 million were 6% higher on a year-over-year basis.

Health insurance premium revenues rose 5% year over year to $269.2 million. Underwriting income of $60.9 million increased 1.1% year over year. Net health sales grew 16% year over year to $44.7 million.

Annuity underwriting margins declined 8.3% year over year to $2.3 million.

Financial Update

Adjusted shareholders’ equity as of Sep 30, 2019 increased 6% year over year to $5.2 billion.

Globe Life reported book value per share (excluding net unrealized gains on fixed maturities) of $47.58, up 10.4% year over year.

As of Sep 30, 2019, operating return on equity (excluding net unrealized gains on fixed maturities) was 14.7%, unchanged year over year.

Business Update

Globe Life was earlier called Torchmark. The change in company name came into effect on Aug 8, 2019.

Share Repurchase and Dividend Update

In the third quarter, Globe Life repurchased shares for a total cost of $83 million.

Guidance Update

Globe Life projects net operating income per share to be in the range of $6.71 to $6.77 for the year ending Dec 31, 2019 and $7.00 to $7.30 for the year ending Dec 31, 2020.

Zacks Rank

Global Life currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Of the insurance industry players that have reported third-quarter results so far, The Progressive Corporation PGR, MGIC Investment Corporation MTG and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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