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Globe Life (GL) Q1 Earnings Meet Estimates, Improve Y/Y
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Globe Life Inc.’s (GL - Free Report) first-quarter 2020 net operating income of $1.73 per share matched the Zacks Consensus Estimate. The bottom line improved 5.5% year over year on the back of higher premiums from Life and Health segments and Insurance underwriting income.
Globe Life reported total premium revenues of $929.8 million, up 4% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 1% year over year to $228.9 million.
The company’s operating revenues of $1.1 billion grew 0.8% 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. However, the top line missed the Zacks Consensus Estimate by 3.8%.
Excess investment income, a measure of profitability, decreased 4% year over year to $62.7 million.
Total insurance underwriting income grew 4% year over year to $181.2 million. Improvement in Life Insurance underwriting margins and Health Insurance underwriting margins resulted in this upside. However, higher administrative expenses partially offset this upside.
Administrative expenses were up 7.5% year over year to $64 million.
Total benefits and expenses rose 4.4% year over year to $930.1 million, primarily due to increased policyholder benefits, higher amortization of deferred acquisition costs, commissions, premium taxes, and non-deferred acquisition costs and other operating expense.
Segmental Update
Premium revenues at Life Insurance operations increased 4% year over year to $649.6 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 1% and LNL Agency inched up 3%.
Life Insurance underwriting income improved 5% year over year to $178.8 million. Net sales of $110.6 million were 5% higher on a year-over-year basis.
Health insurance premium revenues rose 5% year over year to $280.2 million. Underwriting income of $63.5 million increased 3% year over year. Net health sales grew 9% year over year to $42 million.
Annuity underwriting margins declined 6% year over year to $2.3 million.
Financial Update
Adjusted shareholders’ equity as of Mar 31, 2020 increased 4.6% year over year to $5.3 billion.
Globe Life reported book value per share (excluding net unrealized gains on fixed maturities) of $49.66, up 9.3% year over year.
As of Mar 31, 2020, operating return on equity (excluding net unrealized gains on fixed maturities) was 14.1%, reflecting a contraction of 60 basis points year over year.
Share Repurchase and Dividend Update
In the first quarter, Globe Life repurchased 1.6 million shares for a total cost of $139 million for an average share price of $85.47.
2020 Guidance
Globe Life projects net operating income per share to be in the range of $6.65 to $7.15 for the year ending Dec 31, 2020.
Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed the respective Zacks Consensus Estimate.
Upcoming Releases
First American Financial Corporation (FAF - Free Report) is scheduled to release first-quarter earnings on Apr 23.
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Globe Life (GL) Q1 Earnings Meet Estimates, Improve Y/Y
Globe Life Inc.’s (GL - Free Report) first-quarter 2020 net operating income of $1.73 per share matched the Zacks Consensus Estimate. The bottom line improved 5.5% 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-eps-surprise-chart | Globe Life Inc. Quote
Behind the Headlines
Globe Life reported total premium revenues of $929.8 million, up 4% year over year. This upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 1% year over year to $228.9 million.
The company’s operating revenues of $1.1 billion grew 0.8% 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. However, the top line missed the Zacks Consensus Estimate by 3.8%.
Excess investment income, a measure of profitability, decreased 4% year over year to $62.7 million.
Total insurance underwriting income grew 4% year over year to $181.2 million. Improvement in Life Insurance underwriting margins and Health Insurance underwriting margins resulted in this upside. However, higher administrative expenses partially offset this upside.
Administrative expenses were up 7.5% year over year to $64 million.
Total benefits and expenses rose 4.4% year over year to $930.1 million, primarily due to increased policyholder benefits, higher amortization of deferred acquisition costs, commissions, premium taxes, and non-deferred acquisition costs and other operating expense.
Segmental Update
Premium revenues at Life Insurance operations increased 4% year over year to $649.6 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 1% and LNL Agency inched up 3%.
Life Insurance underwriting income improved 5% year over year to $178.8 million. Net sales of $110.6 million were 5% higher on a year-over-year basis.
Health insurance premium revenues rose 5% year over year to $280.2 million. Underwriting income of $63.5 million increased 3% year over year. Net health sales grew 9% year over year to $42 million.
Annuity underwriting margins declined 6% year over year to $2.3 million.
Financial Update
Adjusted shareholders’ equity as of Mar 31, 2020 increased 4.6% year over year to $5.3 billion.
Globe Life reported book value per share (excluding net unrealized gains on fixed maturities) of $49.66, up 9.3% year over year.
As of Mar 31, 2020, operating return on equity (excluding net unrealized gains on fixed maturities) was 14.1%, reflecting a contraction of 60 basis points year over year.
Share Repurchase and Dividend Update
In the first quarter, Globe Life repurchased 1.6 million shares for a total cost of $139 million for an average share price of $85.47.
2020 Guidance
Globe Life projects net operating income per share to be in the range of $6.65 to $7.15 for the year ending Dec 31, 2020.
Zacks Rank
Global Life currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed the respective Zacks Consensus Estimate.
Upcoming Releases
First American Financial Corporation (FAF - Free Report) is scheduled to release first-quarter earnings on Apr 23.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>