Q4 2023 Globe Life Inc Earnings Call

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Operator: Thomas Gallagher, Eric Aboaf, Kenneth Lee, Jimmy Bhullar, Bob Glasspiegel, Eric Aboaf, Kenneth Lee, Jimmy Bhullar, Bob Glasspiegel, Eric Aboaf, Kenneth Lee, Jimmy Bhullar, Hello and welcome to Globe Life, Inc.'s fourth quarter of 2023 earnings release. My name is Melissa, and I will be your operator for today's call. Please note this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad to register your question.

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Operator: If you require assistance at any point, please press star zero, and you will be connected to an operator. I'll now turn the call over to Stephen Moda, Senior Director of Investor Relations. Please go ahead. Thank you. Good morning, everyone. Joining the call today are Frank Sabota and Matt Darden, our Co-Chief Executive Officers. Tom Kombach, our Chief Financial Officer; and Mike Majors, our Chief Strategy Officer. And Brian Mitchell, our General Counsel.

Melissa: Hello, and welcome to Globe Life, Inc. Fourth quarter 2023 earnings release, My name is Melissa and I will be your operator for today's call. Please note. This conference is being recorded and for the duration of the call. Your lines will be in a listen only mode. However, you will have the opportunity to ask questions at the end of the frequency.

Stephen Moda: Some of our comments or answers to your questions may contain forward-looking statements that are provided for general guidance purposes only. Accordingly, please refer to our earnings release 2022-10-K and any subsequent Forms 10-Q on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for a discussion of these terms and reconciliations to GAAP measures. I will now turn the call over to Frank. Thank you, Stephen, and good morning, everyone.

Melissa: This can be done by pressing star one on your telephone keypad to register your question.

Melissa: If you require assistance at any point, Please press star zero and Youll be connected to an operator I'll now turn the call over to Steven Mora Senior director of Investor Relations. Please go ahead.

Steven Mora: Thank you good morning, everyone, joining the call today, Frank Nora and Matt Dougherty <unk> co Chief Executive officers, Tom <unk>, Our Chief Financial Officer, Mike Majors, our Chief strategy Officer, and Brian Mitchell, Our General Counsel Council some of our comments or answers to your questions may contain forward looking statements that are provided.

Frank Sabota: In the fourth quarter, net income was $275 million, or $2.88 per share, compared to $242 million, or $2.46 per share, a year ago. Net operating income for the quarter was $267 million, or $2.80 per share, an increase of 10% from a year ago. On a GAAP-reported basis, return on equity through December 31st is 23.2%, and book value per share is $47.10. Excluding Accumulated Other Comprehensive Income, or AOCI, return on equity is 14.7%, and book value per share as of December 31st is $76.21, up 11% from a year ago.

Melissa: General guidance purposes, only accordingly, please refer to our earnings release, 2022, 10-K, and any subsequent forms 10-Q on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures I will now turn the call.

Melissa: Thank you Steven and good morning, everyone in.

Melissa: In the fourth quarter net income was $275 million or.

Melissa: Or $2 88 per share compared to $242 million or $2 46 per share a year ago.

Melissa: Net operating income for the quarter was $267 million.

Melissa: Or $2 80 per share an increase of 10% from a year ago.

Frank Sabota: In our life insurance operations, premium revenue for the fourth quarter increased 4% from the year-ago quarter to $795 million. Life underwriting margin was $305 million, also up 4% from a year ago, in 2024, driven by strong premium growth in both our American Income and Liberty National Divisions. We expect life premium revenue to grow between 4.5% and 5% at the midpoint of our guidance and life underwriting margin to grow between 7% and 7.5%. As a percent of premium, we anticipate life underwriting margin to be in the range of 38 to 40 percent.

Melissa: On a GAAP reported basis.

Melissa: <unk> equity through December 31 is 23, 2% and book value per share was $47.10. Excluding accumulated other comprehensive income or OCI return on equity is 14, 7% and book value per share as of December 31, $76 a tonne.

Melissa: What sets up 11% from a year ago.

Melissa: In our life insurance operations premium revenue for the fourth quarter increased 4% from the year ago quarter to $795 million.

Melissa: Life underwriting margin was $305 million also up 4% from a year ago.

Melissa: In 2024, driven by strong premium growth in both our American income and Liberty National divisions, We expect life premium revenue revenue to grow between four 5% at 5% at the midpoint of our guidance and life underwriting margin to grow between seven and seven 5%.

Frank Sabota: In health insurance, premium grew 3% to $336 million, and health underwriting margin was up 1% to $97 million. In 2024, we expect health premium revenue to grow seven to eight percent. At the midpoint of our guidance for the full year 2024, we expect health underwriting margin to grow between 5 and 6 percent and, as a percent of premium, to be around 27 to 29 percent. Administrative expenses were $77 million for the quarter, down 1% from a year ago, primarily due to a decline in pension and other employee-related costs.

Melissa: As a percent of premium we anticipate life underwriting margin to be in the range of 38% to 40%.

Melissa: In health insurance premiums grew 3% to $336 million and health underwriting margin was up 1% to $97 million.

Melissa: 2024, we expect health premium revenue to grow 7% to 8%.

Melissa: At the midpoint of our guidance for the full year 2024, we expect health underwriting margin to grow between 5%, 6% and as a percent of premium to be around 27% to 29%.

Melissa: Administrative expenses were $77 million for the quarter down 1% from a year ago, primarily due to a decline in pension and other employee related costs.

Frank Sabota: As a percentage of premium, administrative expenses were 6.8% compared to 7.2% from the year-ago quarter; for the year, administrative expenses were 6.8% of premium compared to 6.9% a year ago. In 2024, we expect administrative expenses to be approximately 7% of premium, higher than in 2023, due primarily to continuing investments in technology as we modernize and transform how we operate. I will now turn the call over to Matt for his comments on the fourth quarter marketing operation. Thank you, Frank.

Melissa: As a percentage of premium administrative expenses were six 8% compared to seven 2% from the year ago quarter.

Melissa: For the year administrative expenses were six 8% of premium compared to 6.9% a year ago.

Melissa: In 2024, we expect administrative expenses to be approximately 7% of premium.

Melissa: Higher than 2023, due primarily to continuing investments in technology, as we modernize and transform how we operate.

Melissa: I will now turn the call over to Matt for his comments on the fourth quarter marketing operations.

Matthew Coad: Thank you Frank.

Matthew Coad: At American Income Life, life premiums were up 7% over the year-ago quarter to $406 million, and life underwriting margin was up 5% to $183 million. In the fourth quarter of 2023, net life sales were $76 million, up 9% from a year ago, primarily due to growth in agent capital. The average producing agent count for the fourth quarter was 11,131, up 20% from a year ago.

Matthew Coad: At American income life life premiums were up 7% over the year ago quarter to $406 million and life underwriting margin was up 5% to $183 million in the fourth quarter of 2023 net life sales were $76 million at <unk>.

Matthew Coad: 9% from a year ago, primarily due to growth in agent count.

Melissa: The average producing agent count for the fourth quarter was 11131.

Melissa: 20% from a year ago American income has had sequential agent growth each quarter of 2023, but it accelerated in the last half of the year to double digit growth, which bodes well for sales growth in 2024.

Matthew Coad: American Income had sequential agent growth each quarter of 2023 but accelerated in the last half of the year to double-digit growth, which bodes well for sales growth in 2024. I am pleased to see the strong growth in agent count and sales as we continue to build momentum from the recruiting and agent retention initiatives put in place at the end of 2022. Now at Liberty National, life premiums were up 8% over the year-ago quarter to $90 million, and the life underwriting margin was up 16% to $31 million.

Melissa: I'm pleased to see the strong growth in agent count and sales as we continue to build momentum from the recruiting and agent retention initiatives put in place at the end of 2022.

Melissa: Now Liberty National life premiums were up 8% over the year ago quarter to $90 million and life underwriting margin was up 16% to $31 million the.

Matthew Coad: The growth in life premium reflects the significant progress this agency has made over the past several years, going from no growth in life premiums in 2016 and just 2% annual growth through 2019 to where we are today. Net life sales grew 12% to $26 million, and net health sales were $9 million, up 9% from the year-ago quarter, due primarily to increased agent counts. The average producing agent count for the fourth quarter was 3,387, which is up 15% from a year ago. Liberty continues to generate strong growth in both agent counts and sales, due in part to the new technology implemented over the past few years, which has provided more granular field activity feedback and allowed agents to track their sales activity and training progress. Now Family Heritage.

Melissa: The growth in life premiums reflects the significant progress. This agency has made over the past several years going from no growth in life premiums in 2016, and just 2% annual growth through 2019 to where we are today.

Melissa: Net life sales grew 12% to $26 million and net health sales were $9 million up 9% from the year ago quarter due primarily to increased agent counts.

Melissa: The average producing agent count for the fourth quarter was 3397, which is up 15% from a year ago Liberty continues to generate strong growth in both agent count and sales due in part to the new technology implemented over the past few years, which has provided more granular field activity.

Melissa: Feedback and allows agents to track their sales activity and training progress.

Melissa: Now family Heritage.

Matthew Coad: At Family Heritage, health premiums increased 8% over the year-ago quarter to $102 million and helped underwriting margin increase 12% to $36 million. Net health sales grew 12% to $25 million due to increased productivity and a higher aging count during 2023. The average producing age account for the fourth quarter was 1,368, which is up 3% from a year ago. For the full year 2023, the average producing agent count increased 10% from a year ago. Family Heritage will continue to focus on recruiting with an additional emphasis on middle management growth.

Melissa: Heritage Health premiums increased 8% over the year ago quarter to $102 million and health underwriting margin increased 12% to $36 million.

Melissa: Net health sales grew 12% to $25 million due to the increased productivity and higher agent count during 2023.

Melissa: The average producing agent count for the fourth quarter was 1368, which is up 3% from a year ago.

Melissa: For the full year 2023, the average producing agent count increased 10% from a year ago.

Melissa: Family Heritage will continue to focus on recruiting with additional emphasis on middle management growth now.

Matthew Coad: Now on to direct-to-consumer. In our direct-to-consumer division at Globe Life, life premiums were flat compared to the year-ago quarter at $247 million, while life underwriting margin declined 2% to $59 million due to increased acquisition costs. Net life sales were $26 million, which is down 16% from the year-ago quarter, primarily due to declines in customer inquiries as we have reduced marketing spend on certain campaigns that did not meet our profit objectives. We continue to focus on maximizing the underwriting margin on new sales by managing the rising advertising and distribution costs associated with acquiring this new business. In addition to generating new business at profitable margins, the Direct-to-Consumer Channel provides critical support to our agency business through brand impressions and the generation of sales leaders. Now, on to United American General Agency. Here the health premiums were flat compared to the year-ago quarter at $139 million.

Melissa: Now under direct to consumer and our direct to consumer Division at Globe life life premiums were flat compared to the year ago quarter at $247 million, while life underwriting margin declined 2% to $59 million due to increased acquisition cost.

Melissa: Net life sales were $26 million, which is down 16% from the year ago quarter, primarily due to declines in customer inquiries as we've reduced marketing spend on certain campaigns that did not meet our profit objectives.

Melissa: We continue to focus on maximizing the underwriting margin dollars on new sales are managing the rising advertising and distribution costs associated with acquiring this new business.

Melissa: In addition to generating new business at profitable margins the direct to consumer channel provides critical support to our agency business their brand impressions and a generation of sales lease.

Melissa: Onto United American General Agency here, the health premiums were flat compared to the year ago quarter at $139 million health underwriting margin was $14 million down approximately $3 million from the year ago quarter due to both higher policy obligations and Aqua.

Matthew Coad: Health underwriting margin was $14 million, down approximately $3 million from the year-ago quarter due to both higher policy obligations and acquisition costs. Net health sales were $28 million, which is up 40% over the year-ago quarter due to strong activity both in the individual and group Medicare supplement business. Projections.

Melissa: <unk> costs.

Melissa: Net health sales were $28 million, which is up 40% over the year ago quarter due to strong activity both in the individual and group Medicare supplement businesses.

Matthew Coad: Let me talk about where we are headed based on the trends that we are seeing and the experience with our business. We expect the average producing agent count trends for the full year 2024 to be as follows: at American Income Life, high single-digit growth, at Liberty National, low double-digit growth, and at Family Heritage, low double-digit growth.

Melissa: Projections, let me talk about where we are headed based on the trends that we're seeing and the experience with our business. We expect the average producing agent count trends for the full year 2024 to be as follows at.

Melissa: At American income life high single digit growth in Liberty National low double digit growth at family heritage low double digit growth.

Matthew Coad: Net life sales for the full year 2024 are expected to be as follows. American Income Life, Low Double-Digit Growth, also at Liberty National, Low Double-Digit Growth, and Direct-to-Consumer, Relatively Flat. Net health sales for the full year 2024 are expected to be as follows. Liberty National, Low Double-Digit Growth, also at Family Heritage, low double-digit growth.

Melissa: Net life sales for the full year 2024 are expected to be as follows.

Melissa: American income life low double digit growth also at Liberty national low double digit growth.

Melissa: Direct to consumer relatively flat.

Melissa: Net health sales for the full year 2024 are expected to be as follows.

Melissa: Liberty National low double digit growth.

Melissa: Also at family Heritage low double digit growth.

Matthew Coad: United American General Agency, low to mid-single-digit growth. Now, before turning the call back over to Frank, I'd like to discuss one additional item. During 2023, an online publication posted articles related to litigation pending arbitration against American Income Life and one of its state general agents. Although we generally do not comment on pending litigation and will not be taking any questions on the topic today, we'd like to provide the following limited statements. This litigation relates to allegations made by a former independent contractor sales agent with American Income.

Melissa: American General agency low to mid single digit growth.

Speaker Change: Now before turning the call back over to Frank I'd like to discuss one additional item.

Melissa: During 2023 and online publication posted articles related to litigation pending an arbitration against American income life and one of its state general agents.

Melissa: Although we generally do not comment on pending litigation and will not be taking any questions on the topic today, we'd like to provide the following limited statement.

Melissa: This litigation relates to allegations made by a former independent contractor sales agent with American income.

Matthew Coad: In 2021, prior to the litigation, and as soon as American Income became aware of the agent's allegations, the company engaged an external third party to conduct an impartial and thorough investigation. American Income took prompt and appropriate action based on that investigation. We continue to vigorously dispute and defend against the allegations made about American Income Life in this litigation, and we do not believe the litigation will be material to Globe Life's overall results or American Income Life's agency operations. We take seriously any allegations brought to our attention concerning harassment, inappropriate conduct, or unethical business practices, and we do not tolerate such behavior. American Income Life provides numerous ways for sales agents to raise concerns, including contacting the company's agency department directly or utilizing an independent third-party reporting hotline. We have processes in place to address such concerns when we learn of them. We also provide mandatory anti-harassment and anti-discrimination training to agents and provide and ask agents to review the company's Code of Business Conduct and Ethics, which includes information about how to report concerns.

Melissa: In 2021 prior to the litigation and as soon as American income became aware of the agents allegations.

Melissa: The company engaged an external third party to conduct an impartial and thorough investigation.

Melissa: <unk> come to prompt and appropriate action based on that investigation.

Melissa: We continue to vigorously dispute independent defend against the allegations made about American income life in this litigation and we do not believe the litigation will be material to globe life's overall results or American income life Agency operations.

Melissa: We take seriously any allegations brought to our attention concerning harassment inappropriate conduct or unethical business practices.

Melissa: And we do not tolerate such behavior.

Melissa: Income life provides numerous ways for sales agents to raise concerns including contacting.

Melissa: Contacting the company's agency department directly are utilizing an independent third party reporting hotline we.

Melissa: We have processes in place to address such concerns when we learn of them. We also provide mandatory anti harassment and anti discrimination training to agents and provide an ask agents to review the company's code of business conduct and ethics, which includes information about how to report concerns.

Matthew Coad: I want to emphasize that at Globe Life, we strive to act in accordance with the highest level of ethics and integrity at all levels of our organization. I'll now turn the call back to Frank. Thanks, Matt. We'll now turn to the investment operations. Excess investment income, which we define as net investment income plus only required interest, was $36 million, up $5 million from the year ago. Net investment income was $272 million, up 6%, or $16 million from the year-ago quarter. The increase is due primarily to growth in average invested assets but also supplemented by the impact of higher interest rates across fixed maturities, commercial mortgage loans, limited partnerships, and short-term investments. Required interest is up nearly 5% over the year-ago quarter, slightly higher than the 4.5% growth in average policy liabilities.

Melissa: I want to emphasize that at Globe life, we strive to act in accordance with the highest level of ethics and integrity at all levels of our organization.

Melissa: I'll now turn the call back to Frank.

Frank Nora: Thanks, Matt.

Frank Nora: We will now turn to the investment operations.

Excess investment income, which we define as net investment income less all the required interest was $36 million up $5 million from the year ago quarter.

Frank Nora: Net investment income was $272 million up 6% or $16 million from the year ago quarter.

Matthew Coad: The increase is due primarily to growth in average invested assets, but also supplemented by the impact from higher interest rates across fixed maturities commercial mortgage loans limited partnerships and short term investments.

Frank Nora: Required interest is up nearly 5% over the year ago quarter slightly higher than the four 5% growth in average policy liabilities.

Frank Sabota: For the full year 2024, we expect net investment income to grow between 5% and 6% due to the combination of a favorable interest rate environment and steady growth in our invested assets. In addition, at the midpoint of our guidance, we anticipate required interest will go around 5% for the year, resulting in growth in excess investment income of approximately 10-12%. Now regarding our investment yield, in the fourth quarter, we invested $443 million in investment-grade fixed maturities, primarily in the industrial and financial sectors. We invested at an average yield of 6.61%. With an average rating of triple B plus and an average life of 23 years, we also invested approximately $114 million in commercial mortgage loans and limited partnerships that have debt-like characteristics and an average expected cash return of 8%. None of our direct investments in commercial mortgage loans involved office property.

Frank Nora: For the full year 2024, we expect net investment income to grow between five and 6% due to the combination of a favorable interest rate environment and steady growth in our invested assets.

Frank Nora: In addition at the midpoint of our guidance, we anticipate required interest will grow around 5% for the year, resulting in growth in excess investment income of approximately 10% to 12%.

Frank Nora: Now regarding our investment yield.

Frank Nora: In the fourth quarter, we invested $443 million in investment grade fixed maturities, primarily in the industrial and financial sectors.

Frank Nora: We invested at an average yield of 661% an average rating of Triple B plus.

Frank Nora: And an average life of 23 years.

Frank Nora: We also invested approximately $114 million in commercial mortgage loans and limited partnerships that have debt like characteristics and an average expected cash return of 8%.

Frank Sabota: None of our direct investments and commercial mortgage loans at Bald office properties.

Frank Sabota: These investments are expected to produce additional cash yield over our fixed maturity investments, and they are in line with our conservative investment philosophy. For the entire fixed maturity portfolio, the fourth-quarter yield was 5.23%, up five basis points from the fourth quarter of 2022 and up four basis points from the third quarter. As of December 31st, the portfolio yield was also 5.23%.

Frank Nora: These investments are expected to produce additional kashyap over our fixed maturity investments and they are in line with our conservative investment philosophy.

Frank Sabota: For the entire fixed maturity portfolio, the fourth quarter yield was five 3% up five basis points for the fourth quarter of 2022 and up four basis points for the third quarter.

Frank Sabota: As of December 31, the portfolio yield was also five 3%.

Frank Sabota: Now regarding our investment portfolio. Invested assets are $20.7 billion, including $18.9 billion of fixed maturities at amortized costs. Of the fixed maturities, $18.4 billion are investment grade with an average rating of A-.

Frank Nora: Now regarding our investment portfolio.

Frank Nora: Invested assets of $20 $7 billion, including 18.9 billion of fixed maturities at amortized cost.

Frank Sabota: Of the fixed maturities $18 $4 billion are investment grade with an average rating of a minus overall the total fixed maturity portfolio is rated a minus same as a year ago.

Frank Sabota: Overall, the Total Fixed Maturity Portfolio is rated A-, same as a year ago. Our Fixed Maturity Investment Portfolio has a net unrealized loss position of approximately $1 billion due to current market rates being higher than the average book yield on our holdings. As we have historically noted, we are not concerned by the unrealized loss position and is mostly interest rate driven and currently relates entirely to bonds with maturities that extend beyond 10 years. We have the intent and, more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprise 48% of the fixed maturity portfolio, compared to 51% from the year-ago quarter. While this ratio is high relative to our peers, we have little or no exposure to high-risk assets such as derivatives, common equities, residential mortgages, CLOs, and other asset-backed securities held by our peers.

Frank Nora: Our fixed maturity investment portfolio has a net unrealized loss position of approximately $1 billion due to current market rates being higher than the average book yield on our holdings.

Frank Nora: As we have historically noted we are not concerned by the unrealized loss position and is mostly interest rate driven and currently relates entirely to bonds with maturities that extend beyond 10 years.

Frank Sabota: We have the intent and more importantly, the ability to hold our investments to maturity.

Frank Nora: Bonds rated triple B comprised 48% of the fixed maturity portfolio compared to 51% from the year ago quarter.

Frank Sabota: While this ratio is high relative to our peers, we have little or no exposure to higher risk assets, such as derivatives common equities residential mortgages clo's and other asset backed securities held by our peers. Additionally, unlike many other insurance companies, we do not have any exposure to direct real estate.

Frank Sabota: Additionally, unlike many other insurance companies, we do not have any exposure to direct real estate equity investments or private equity. We believe that the BBB securities we acquired generally provide the best risk-adjusted, capital-adjusted returns, due in part to our ability to hold securities to maturity, regardless of fluctuations in interest rates or equity markets. The low investment-grade bonds remain low at $530 million compared to $542 million a year ago. The percentage of the low-investment-grade bonds that have fixed maturities is 2.8%.

Frank Sabota: Equity investments or private equities.

Frank Sabota: We believe that Triple B Securities, we acquire generally provide the best risk adjusted capital adjusted returns due in part to our ability to hold securities to maturity, regardless of fluctuations in interest rates or equity markets.

Frank Nora: Below investment grade bonds remained low at $530 million compared to $542 million a year ago.

Frank Sabota: The percentage of below investment grade bonds. The total fixed maturities is two 8%.

Frank Sabota: At the midpoint of our guidance for the full year 2024, we expect to invest approximately $1.1 billion in fixed maturities with an average yield of 5.5%, and approximately $440 million in commercial mortgage loans and limited partnership investments with debt-like characteristics and an average estimated cash yield of approximately 8.2%. As we said before, we are pleased to see higher interest rates, as this has a positive impact on operating income by driving up net investment income, with no impact on our future policy benefits since they are not interest-sensitive. Now, I will turn the call over to Tom for his comments on capital and liquidity. Thanks, Frank.

Frank Sabota: At the midpoint of our guidance for the full year 2024, we expect to invest approximately $1 $1 billion in fixed maturities and an average yield of five 5%.

Tom: And approximate $440 million in commercial mortgage loans and limited partnership investments with debt like characteristics at an average estimated cash yield of approximately eight 2%.

Frank Nora: As we've said before we are pleased to see higher interest rates. As this has a positive impact on operating income by driving up net investment income with no impact to our future policy benefits since they are not interest sensitive.

Frank Sabota: Now I will turn the call over to Tom for his comments on capital and liquidity.

Thomas George Gallagher: First, let me spend a few minutes discussing our share repurchase program, available liquidity, and capital position. The parent began the year with liquid assets of $91 million and ended the year with liquid assets of approximately $48 million. In the fourth quarter, the company repurchased approximately 660,000 shares of Globe Life Inc. common stock for a total cost of $77 million. The average share price for these repurchases was $117.02.

Tom: Thanks, Frank first let me spend a few minutes discussing our share repurchase program available liquidity and capital position the.

Thomas George Gallagher: The parent began began the year with liquid assets of $91 million and ended the year with liquid assets of approximately $48 million in.

Thomas George Gallagher: In the fourth quarter the company repurchased approximately 660000 shares of Globe Life, Inc. Common stock for a total cost of $77 million.

Thomas George Gallagher: The average share price for these repurchases was $117 <unk>.

Thomas George Gallagher: For the full year, we purchased 3.4 million shares for a total cost of $380 million at an average share price of $112.84. Including shareholder dividend payments of $84 million, the company returned approximately $464 million to shareholders during 2023. In addition to liquid assets held by the parent, the parent company will generate excess cash flows during 2024. Excess cash flows, as we define it, result primarily from the dividends received by the parent from its subsidiaries, less the interest paid on debt.

Thomas George Gallagher: For the full year, we purchased three 4 million shares for a total cost of $380 million at an average share price of $112.84.

Thomas George Gallagher: Included shareholder dividend payments of $84 million the company returned approximately $464 million to shareholders during 2023.

Thomas George Gallagher: In addition to liquid assets held by the parent the parent company will generate excess cash flows during 2020 for.

Thomas George Gallagher: The parent company's excess cash flows as we define it results primarily from the dividends received by the parent from its subsidiaries less the interest paid on debt.

Thomas George Gallagher: We anticipate the parent company's excess cash flow for the full year will be approximately $420 million to $460 million and is available to return to its shareholders in the form of dividends and through share repurchases.

Thomas George Gallagher: We anticipate the parent company's excess cash flow for the full year will be approximately $420 to $460 million, and it is available to return to its shareholders in the form of dividends and through share repurchases. Excess cash flows in 2024 are estimated to be higher than those in 2023, primarily due to anticipated higher statutory earnings in 2023 as compared to 2022, thus providing higher dividends to the parent in 2024 than were received in 2023. The reason for this anticipated increase is due primarily to favorable life claims, which are sufficient to offset approximately $50 million of realized losses in 2023. So using the $48 million of liquid assets, plus the $420 to $460 million of excess cash flows expected to be generated in 2024, we anticipate having approximately $470 million to $510 million of liquid assets available to the parent in 2024, of which we anticipate distributing approximately $85 to $90 million to our shareholders in the form of a dividend payment. As mentioned on previous calls, we will use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other available alternatives. Blah!

Thomas George Gallagher: Excess cash flows in 2024 are estimated to be higher than those in 2023, primarily due to anticipated higher statutory earnings to 2023 as compared to 2022.

Thomas George Gallagher: Thus, providing higher dividends to the parent in 2024 that were received in 2023 there.

Thomas George Gallagher: The reason for this anticipated increase is due primarily to favorable life claims, which are sufficient to offset approximately $50 million of realized losses in 2023.

Thomas George Gallagher: So using the $48 million of liquid assets, plus the $420 million to $460 million of excess cash flows expected to be generated in 2024, we anticipate having approximately $470 million to $510 million of liquid assets available to the parent in 2024.

Thomas George Gallagher: Of which we anticipate distributing approximately $85 million to $90 million to our shareholders in the form of dividend payments.

Thomas George Gallagher: As mentioned on previous calls we will use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other alternatives other available alternatives.

Thomas George Gallagher: Thus.

Thomas George Gallagher: We anticipate share repurchases will continue to be the primary use of parents' excess cash flows after the payment of shareholder dividends. It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made substantial investments during the year to generate new sales, transform and modernize our information technology and other operational capabilities, as well as acquire new long-duration assets to fund their future cash needs. The remaining amount is sufficient to support the targeted capital levels within our insurance operations and maintain the share repurchase program in 2024. In our earnings guidance, we estimate that approximately $330 to $370 million of share repurchases will occur during the year. With regard to the capital levels at our insurance subsidiaries, our goal is to maintain the necessary capital levels to support our current ratings. Globe Life targets a consolidated company action level RBC ratio in the range of 300% to 320%.

Thomas George Gallagher: We anticipate share repurchases will continue to be the primary use of parent's excess cash flows after the payment of shareholder dividends.

Thomas George Gallagher: It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made substantial investments during the year to generate new sales transform and modernize our information technology and other operational capabilities as well as acquire new long duration assets to fund the future cash.

Thomas George Gallagher: Needs.

Thomas George Gallagher: The remaining amount is sufficient to support the targeted capital levels within our insurance operations and maintain the share repurchase program in 2024.

Thomas George Gallagher: Our earnings guidance, we estimate approximately $330 million to $370 million of share repurchases will occur during the year.

Thomas George Gallagher: With regards to the capital levels at our insurance subsidiaries. Our goal is to maintain our capital levels necessary to support our current ratings.

Thomas George Gallagher: <unk> targets, a consolidated company action level RBC ratio in the range of 300% to 320%.

Thomas George Gallagher: As discussed on previous calls our consolidated RBC ratio was 321% at the end of 'twenty five 2022.

Thomas George Gallagher: As discussed on previous calls, our consolidated RBC ratio was 321% at the end of 2022. For 2023, since our statutory financial statements are not yet finalized, our consolidated RBC ratio is not yet known, however, we anticipate the final 2023 RBC ratio will be slightly above the middle of our targeted range without any additional capital contributions being made. Now, with regard to policy obligations for the current quarter... As we have discussed on previous calls, we have included the historical operating summary results under LDTI for each of the quarters in 2023 and 2022 within the supplemental financial information available on our website. In addition, we include an exhibit that details the remeasurement gain or loss by distribution channel. As also noted on previous calls, life and health assumption changes were made in the third quarter of 2023, and no assumption changes were made in the fourth quarter.

Thomas George Gallagher: For 2023 since our statutory financial statements are not yet finalized our consolidated RBC ratio is not yet known however, we anticipate the final 2023 RBC ratio will be slightly above the middle of our targeted range without any additional capital contributions being made.

Thomas George Gallagher: Now with regards to policy obligations for the current quarter.

Thomas George Gallagher: As we have discussed on previous calls we have included the historical operating summary under results under Ti for each of the quarters in 2023, and 2022 with a supplemental financial information available on our website.

Thomas George Gallagher: In addition, we included an exhibit that details the remeasurement gain or loss by distribution channel.

Thomas George Gallagher: As also noted on previous calls life and health assumption changes were made in the third quarter of 2023, no assumption changes were made in the fourth quarter.

Thomas George Gallagher: In addition to the impact of assumption changes, the re-measurement gain or loss also indicates experience fluctuation. For the fourth quarter, life policy obligations were favorable when compared to our assumptions of mortality and persistency. The remeasurement gain related to experience fluctuations resulted in $13 million of lower life policy obligations and $4 million of lower health policy obligations, primarily as a result of favorable claims experience versus expected. For the full year, encompassing both assumption changes and experience-related fluctuations, the remeasurement gain for the life segment resulted in $29 million of lower life policy obligations and $12 million of lower health policy obligations. This is the second quarter in a row with life remeasurement gains greater than $10 million. We are encouraged by this short-term trend, and to the extent it continues, we would expect continued favorable remeasurement gains in 2024.

Thomas George Gallagher: In addition to the impact of assumption changes the remeasurement gain or loss also indicates experience fluctuations for the fourth quarter life policy obligations were favorable when compared to our assumptions of mortality and persistency.

Thomas George Gallagher: The remeasurement gain related to experience fluctuations resulted in a $13 million of lower life policy obligations and $4 million of lower health policy obligations, primarily a result of favorable claims experience versus expected.

Thomas George Gallagher: For the full year and compensate both assumption changes and experience related fluctuations the remeasurement gain for the life segment resulted in $29 million of lower life policy obligations and $12 million of lower health policy obligations.

Thomas George Gallagher: This is the second quarter in a row with life remeasurement gains greater than $10 million.

Thomas George Gallagher: We are encouraged by the short term trend and to the extent. It continues we would expect a continued favorable remeasurement gains in 2024.

Thomas George Gallagher: The recent experience, as well as life mortality trends in the first half of 2024, will inform the third quarter 2024 update to our endemic mortality assumptions. Recall, our endemic mortality assumption currently assumes a return to mortality levels slightly above pre-pandemic levels over the next few years. Recent trends, if they should continue, may indicate a quicker recovery than our current assumption. So, with respect to our earnings guidance for 2024, for the full year 2024, we estimate net operating earnings per diluted share will be in the range of $11.30 to $11.80, representing 8.5% growth at the midpoint of the range. The $11.55 midpoint is higher than our previous guidance and reflects recent favorable mortality trends continuing in 2024. Those are my comments. I will now turn the call back to Matt.

Thomas George Gallagher: The recent experience as well as life mortality trends in the first half of 2024 will inform the third quarter of 2024 update to our debit mortality assumptions recall are endemic mortality assumption currently assumes returning to mortality levels slightly above pre pandemic levels over the next few years.

Thomas George Gallagher: Recent trends if they should continue.

Matt: Indicate a quicker recovery in our current assumption.

Matt: So finally with respect to our earnings guidance for 2024 for the full year 2024, we estimate net operating earnings per diluted share will be in the range of $11 30.

Matt: To $11 80 reps.

Matt: Representing eight 5% growth at the midpoint of the range.

Matt: The $11 55 midpoint is higher than our previous guidance and reflects recent favorable mortality trends continuing in 'twenty four.

Matt: Those are my comments I will now turn.

Thomas George Gallagher: On the call back to Matt.

Matthew Coad: Thank you, Tom. Those are our comments. We will now open up the call for questions. Thank you. As a reminder, if you would like to ask a question on today's call, please press star 1 on your telephone keypad. To withdraw your question for any reason, you may press star 2.

Matt: Thank you Tom those are our comments, we will now open up the call for questions.

Matthew Coad: Thank you as a reminder, if you'd like to ask a question on today's call.

Matthew Coad: One on your telephone keypad.

Matthew Coad: A question for any reason you May press star two.

Operator: You will be advised when to ask your question. Our first question comes from Jimmy Bhullar with J.P. Morgan. Please go ahead. Hi, good morning.

Matthew Coad: You will be advised when to ask your question.

Jimmy Bhullar: Our first question comes from Jimmy <unk> with Jpmorgan. Please go ahead.

Jimmy Bhullar: Hi, Good morning, So first just on the re measurement gains.

Jimmy Bhullar: So first, just on the remeasurement gains, what's your policy in terms of when you see actual experience? Are you reflecting the entire variance in remeasurement gains in the given quarter or only a portion of it in any given quarter on the experience-related gains and losses? Jimmy, you reflect the full difference between what we had expected in our evaluation assumptions versus what we actually incurred from claims and lapse experience in the quarter that it occurs. Okay, but then you're not unlocking any assumptions, that just happens when you do your annual. Yeah, our plan is to unlock assumptions in the third quarter. So, for instance, you know, we've seen two quarters of good experience, mortality experience, in the third quarter and the fourth quarter.

Jimmy Bhullar: What is your policy in terms of when you see actual experience are you, reflecting the entire variance and remeasurement gains in the given quarter or only a portion of it.

Jimmy Bhullar: And then any given quarter on the experience related gains and losses.

Jimmy Bhullar: Jimmy you reflect the full.

Jimmy Bhullar: The difference between what we had expected in our valuation assumptions versus what we actually incurred from claims and lapse experience in the quarter that it occurs.

Jimmy Bhullar: Okay, but then you're not unlocking any assumptions that just happens when you do your annual review.

Jimmy Bhullar: Yes, our plan is to unlock assumptions in the third quarter. So for instance, we've seen two quarters of good experience mortality experience in the third quarter and the fourth quarter.

Jimmy Bhullar: We'd like to see the development of that fourth-quarter experience as it moves into 2024, and then we'd also like to see that continue in the first half of 2024 before we make a decision to inform our updates to our underlying assumptions. And then on the health business, a few health insurers have seen significant upticks in claims in MedAdvantage plans, and they're raising prices as a result.

Jimmy Bhullar: We'd like to see that the development of that fourth quarter experience as it as it moves into 2024 and then we'd also like to see that continue in the first half of 2024 before we make a decision to yes and.

Jimmy Bhullar: To inform our updates to our underlying assumptions.

Jimmy Bhullar: Okay.

Jimmy Bhullar: And then on the health business.

Jimmy Bhullar: Ill health insurers have seen significant uptick in claims in med advantage plan.

Speaker Change: And they are raising prices as a result doesn't seem like you've seen at least not as much of an uptick in med sub claim but what is it that you've seen and do you expect any impact on med sup.

Thomas George Gallagher: It doesn't seem like you've seen, at least not as much of an uptick in MedSupp. But what is it that you've seen, and do you expect any impact on MedSupp sales because of potential disenrollment from MedAdvantage? Yeah, just from a claims experience on MedSupp, you know, we have seen some increased trends over the course of 2023 in both our individual and our group business, but more so on the group side. And then that subsided a little bit later in the year.

Thomas George Gallagher: Sales.

Thomas George Gallagher: Because of the potential dis enrollment from Madhu Med advantage plan.

Speaker Change: Yeah just from a.

Thomas George Gallagher: Our claims experience that unmet stuff we have seen.

Thomas George Gallagher: Some increased trend over the course of 2023.

Thomas George Gallagher: In both our individual and our group business, but more so on the group side.

Thomas George Gallagher: And then that subsided a little bit later in the year, we've reflected those trends into our rate projections for rate.

Thomas George Gallagher: We've reflected those trends into our rate projections for, or rate increases for 2024. So we continue to monitor that regularly, and actually, you know, whatever trend we're seeing will build into rates for the following year. And then Jimmy, I think your second question was related to sales, as we mentioned in the past.

Thomas George Gallagher: Increases in for 2024 so.

Speaker Change: We contain them out of that.

Thomas George Gallagher: Regularly and actually whatever trend, we're saying, we'll build into rates for the following year.

Thomas George Gallagher: And then Jimmy I think your second question was related to sales as we mentioned in the past.

Thomas George Gallagher: You know, as the Medicare Advantage plans and you saw people moving into those, you know, had a little bit of an impact on us. So from a 2024 sales perspective, to the extent that there is more disenrollment or, you know, as you mentioned, you're seeing some trends out there from the cost side, costs might be increased by competitors offering those plans. I think that could be a tailwind for us for our supplemental product. Our goal is really to keep steady in that market, and we see competitive pressures coming and going over a long period of time, so our goal is really to keep steady and price for what we ultimately want to achieve and kind of ride out some of the short-term fluctuations from market dislocation. Okay, thanks. And if I could just ask one more question there, there's been a lot of confusion about the tri-agency rules on limited benefit health plans. Are any of your products in the scope of that?

Thomas George Gallagher: Is the Medicare advantage plans in new south people living into that had a little bit of impact on us. So from the 2024 sales perspective to the extent that there is more of this enrollment or as you had mentioned you're seeing some trends out there from the cost side.

Speaker Change: It is.

Thomas George Gallagher: Cost about me increased bad competitors offering those plans I think that could be a tailwind for us for our.

Thomas George Gallagher: Our supplemental product our goal is really to keep it.

Thomas George Gallagher: Keep steady in that market and we see competitive pressures are coming and going over a long period of time. So our goal is really to <unk>.

Thomas George Gallagher: Keep steady and price for what we ultimately want to achieve and kind of ride out some of the short term fluctuations from market dislocation.

Speaker Change: Okay. Thanks, and then if I could just ask one more there there's been a lot of confusion about the dry agencies, a little limited benefits health plan.

Thomas George Gallagher: Are any of your products and scope of that and do you expect any impact on your business. If the loan is unchanged from the initial proposal.

Thomas George Gallagher: And do you expect any impact on your business if the rule isn't changed from the initial proposal? Well, the tri-agency rule's primary target was short-duration health plans, so we don't have any of those products in our portfolio.

Thomas George Gallagher: Sure.

Thomas George Gallagher: Well the Tri agency rolled the primary targets was.

Thomas George Gallagher: Short duration health plans right. So we don't have any of those products in our portfolio.

Thomas George Gallagher: It did also bring in some supplemental health plans that we do sell. But there's been quite a bit of reaction to that tri-agency rule, and there have been comments from a broad spectrum of constituents, whether that be unions, employers, companies themselves. So we're really waiting to see what actually happens within that ruling.

Thomas George Gallagher: It did also bring in some supplemental health plans that we do sell.

Thomas George Gallagher: And but there's been quite a bit of reaction to that try that try agency rule.

Thomas George Gallagher: And it's been it's been comments from.

Thomas George Gallagher: A broad spectrum of constituents whether that be.

Thomas George Gallagher: Unions employers.

Thomas George Gallagher: We're expecting something to come out in April, and at the end of the day, we'll make the changes that we need to make, depending upon what comes out in that rule, but we don't see it as having a very significant impact overall on our marketing efforts. Thank you. Thank you. Our next question comes from John Barnidge with Piper Sandler. Please go ahead. Good morning.

Thomas George Gallagher: Companies themselves. So we're really waiting to see what apps, what actually happens within that really were expecting some something to come out in April and.

John Bakewell Barnidge: At the end of the day, we will make the changes that we need to make dependent upon what comes out in that role, but we don't see it as having a very significant impact overall to our marketing efforts.

John Bakewell Barnidge: Thank you.

Thomas George Gallagher: Thank you. Our next question comes from John Barnidge with Piper Sandler. Please go ahead.

John Bakewell Barnidge: Good morning. Thank you very much see you updated your commercial real estate.

John Bakewell Barnidge: Thank you very much. I see you updated your commercial real estate disclosures. Could you maybe talk about your 24 Maturities?

John Bakewell Barnidge: Disclosures.

John Bakewell Barnidge: Could you maybe talk about your outlook for.

John Bakewell Barnidge: For 24 maturities.

John Bakewell Barnidge: Okay.

Thomas George Gallagher: Yeah, for 2024, we have about $70 million of our total direct commercial mortgage loans maturing. Of that, about $4 million is for office buildings, and then we have about $35 million of mixed use, of which about $12 million is office. So you kind of think the hot spot, of course, right now is what kind of office exposure is maturing here this next year. And so, in total, between those two, we do have about $16 million. Of what's maturing, on average, it's below a 50% LTV, and none have over a 90% LTV on any that we've looked at. And about $47 million of those do have some continuing optional extensions. So a good portion of those could get extended into 25 or beyond. Thank you for that. My follow-up question, what is the outlook assumed around the rate environment? Can you talk about sensitivity to the short-end or floaters?

John Bakewell Barnidge: Yeah for for 2024, we have about $70 million.

Speaker Change: Of our total direct.

Thomas George Gallagher: Commercial mortgage loans.

Thomas George Gallagher: Maturing.

Thomas George Gallagher: That is about $4 million of office buildings, and then we have about $35 million of mixed use of which about $12 million as office. So you kind of think the hotspot of course right now is.

Thomas George Gallagher: What kind of office exposure is maturing here. This next year and so in total between those two we do have about $16 million.

Speaker Change: Of what's maturing on.

Speaker Change: On average, it's below a 50% LTV and none have over a 90% LTV on.

Speaker Change: And is that we've looked at in Nevada.

Thomas George Gallagher: About $47 $50 million of those who do have some continuing optional extension. So it's a good portion of those could could get extended on up into 25 or beyond.

Speaker Change: Thank you for that my follow up question, what does the outlook assume around the rate environment can you talk about sensitivity in the short end or floaters. Thank you.

Thomas George Gallagher: Thank you. Yeah, you're saying sensitivity to the rates of this particular asset class? Now I'm just talking generally within the outlook for net investment income. Oh, okay.

Speaker Change: Yes, I'd say its sensitivity on the rates of this particular.

Speaker Change: Asset class.

Speaker Change: No I'm just talking generally within the outlook for net investment income.

Speaker Change: Oh, okay.

Thomas George Gallagher: Yeah, we're taking, you know, over the course of 2024, we kind of see basically the benchmark, you know, we kind of rely mostly on the 30-year as kind of our benchmark, and so we see that being relatively stable but, you know, probably drifting downward over the course of the year. You know, but right now, as you know, the spreads are extremely tight. Currently, we do expect that to expand a little bit over the course of the year as well, and so built into our guidance, we're expecting our fixed maturities to be around 5.5%.

Thomas George Gallagher: Yes were taken over the course of 2024.

Thomas George Gallagher: We kind of see basically the benchmark, we kind of rely mostly on 30 year, it's kind of our benchmark and so see that being relatively stable, but probably drifting downward over the course of the year.

Thomas George Gallagher: But right now as you know that spreads are extremely tight.

Thomas George Gallagher: Currently we do expect that.

Thomas George Gallagher: Expand a little bit over the course of the year as well and so built into our.

Thomas George Gallagher: Into our guidance, we're expecting for our fixed maturities to be around five 5%.

Thomas George Gallagher: It's a little bit lower than we had in 2023, largely due to the declines in the spreads. If you look at 23, our benchmark was just a little bit higher on average over the course of the year, a little over 4%, but we were getting nearly 200 basis point spreads on those investments. It's really tightened up here during the fourth quarter, so we don't expect that highest spread to continue at this point in time, at least into 2020. Thank you for the answer.

Thomas George Gallagher: A little bit lower.

Thomas George Gallagher: Then we had in 2023 and it's largely due to the declines in the spreads. If you look at 'twenty three our benchmark with just over a little bit over on average over the course of the year a little over 4%, but we were getting nearly 200 basis points spreads on those investments.

Thomas George Gallagher: Really tightened up here during the fourth quarter and so we don't expect that highest spread.

Thomas George Gallagher: <unk> at this point in time at least into 2024.

Thomas George Gallagher: Thank you for the answers.

Operator: Thank you. Our next question comes from Ryan Krueger with KBW. Please go ahead. Hey, thanks. Good morning.

Thomas George Gallagher: Thank you. Our next question comes from Ryan Krueger with cadence play VW. Please go ahead.

Ryan Krueger: Hey, Thanks. Good morning first question was on American income.

Ryan Krueger: The first question was on American income. I think if I look at the full-year average producing agents, that for 2023, it was up 12%. But sales were up 2%. And I was just curious what the disconnect was.

Ryan Krueger: If I look at the full year average producing agent.

Ryan Krueger: For 2023, it was up 12%, but sales were up 2%.

Ryan Krueger: And just curious what's the disconnect there was a bit.

Matthew Coad: First Year Agents Needing to be Trained to Become More Productive, or something else going on? Yeah, and I think one of the things you look at is just really how the agent count growth accelerated in the last half of the year. So if you just kind of look at that on a sequential basis, you know, Q1 is three and a half percent, Q2 is eight and a half, and then Q3 was 15, 16 percent, and 20 percent in Q4 from a growth perspective. So the agent count growth really accelerated in the last half of the year, which bodes very well from a 2024 perspective. So usually, as we've talked about in the past, there will be a little bit of a lag from those new agents getting onboarded, trained, and productive.

Ryan Krueger: Your agent needing to be trained to become more productive or something else going on.

Speaker Change: Yes, and I think.

Matthew Coad: One of the things you can look at is just really the agent count growth accelerated in the last half of the year. So if you just kind of look at that over a sequential basis Q1 was three 5% Q2 was eight and a half and then Q3 was 15, 16% and 20% in Q4.

Matthew Coad: From a growth perspective, so the agent count growth really accelerated in the last half of the year, which bodes very well from a 2024 perspective, so usually as we've talked about in the past there will be a little bit of a lag from those new agents getting on boarded trained and productive or more experienced agents or more.

Matthew Coad: Our more experienced agents are more productive than newer agents, and so that should carry forward into 2024 as we think about our sales guidance. So we generally look at that as a little bit of a timing lag. One of the things, if you look over a long period of time, agent count is directly related to sales count growth. When you start looking at it on a or a year or multi-year basis, as an example, generally across all our agencies, our five-year CAGR is within one percent of each other, our agent count growth, and our sales growth. So we really think about it on a long-term basis. Of course, we talk about it on a quarterly basis here on the calls, but I'm very bullish on where I think 2024 is going to come out for American income. Thanks.

Matthew Coad: Productive the newer agents and so that should carry forward into 2024, as we thought about our sales guidance. So we generally look at that as a little bit of a timing lag one of the things. If you look over a long period of time, if you look at.

Matthew Coad: Agent Count is directly related to sales count grows when you start looking at it on it or a year or multiyear basis or as an example are generally across all of our agencies are five year.

Matthew Coad: CAGR is within 1% of each other our agent count growth in our sales growth. So we really think about it on a long term basis of course, we talk about it on a.

Matthew Coad: On a quarterly basis here on the calls, but I am very.

Matthew Coad: Bullish on where I think 'twenty 'twenty four is going to come out for American income.

Speaker Change: Thanks, and then I had a question on mortality and I don't know if you look at it this way, but maybe stepping back and trying to remove <unk> from the equation.

Thomas George Gallagher: And then I had a question on mortality. And I don't know if you look at it this way, but maybe stepping back and trying to remove LBTI from the equation. How does mortality look relative to where it did pre-pandemic at this point in 2023? I'm trying to get a sense of whether there's mortality fully back to kind of where it was before the pandemic for the company, even though the population is still seeing some excess mortality. Yeah,

Thomas George Gallagher: How does mortality look relative to where it did pre pre pandemic at this point into 2023 Im trying to get a sense.

Thomas George Gallagher: With mortality fully back to kind of where it was before the pandemic.

Thomas George Gallagher: For the company even though.

Thomas George Gallagher: The population is still seen some excess mortality.

Thomas George Gallagher: Yes.

Thomas George Gallagher: So in the first half of the year, you know, mortality was quite a bit higher, and the remeasurement gains were quite a bit lower than we saw in the second half of the year. So there really does seem to be kind of a change that's happened in the third and fourth quarters. And when you look at the third quarter, it's coming much closer to pre-pandemic mortality levels. And similarly with the fourth quarter, we would want to see the fourth quarter develop more fully because, you know, it takes a little bit of time for all the claims to get adjudicated and paid during that period. So we'd like to see those claims develop and continue actually into Q1 and Q2 to make sure that it's sustainable. But at this point, I'd say it's getting fairly close to pre-pandemic levels.

Thomas George Gallagher: So in the first half of the year mortality was quite a bit higher the remeasurement gains were quite a bit lower than we saw in the second half of the year. So there really does seem to be kind of a change that's happened in the third and fourth quarter.

Thomas George Gallagher: And kind of look at the third quarter, it's coming much closer to pre pandemic mortality levels and similarly, with the fourth quarter, but we would want to see the fourth quarter develop more fully to two.

Thomas George Gallagher: It takes a little bit of time for all the claims to get adjudicated and paid vary from that period, so we'd like to see.

Thomas George Gallagher: Those claims develop and continue.

Thomas George Gallagher: Continue actually the Q1 and Q2 to make sure that it is sustainable.

Thomas George Gallagher: But at this point I'd say, it's getting fairly close to pre pandemic levels. So yes that excess mortality seems to have had.

Thomas George Gallagher: So, you know, that excess mortality seems to have dropped much more quickly than our assumptions had anticipated. You know, one thing I would add to that is that I think we're generally pleased with, you know, what we were seeing here in the third and fourth quarters. And as Tom said, it was a little bit higher, or it was definitely higher early in the year, but we're seeing that improvement across all the distributions. And then, as we look into it, we really are seeing it across all the issue years.

Thomas George Gallagher: Have dropped much more quickly than what are our assumptions had anticipated.

Speaker Change: Yeah, one thing I would add to that is that I think we're generally pleased clearly with the <unk>.

Thomas George Gallagher: What we're seeing here in the third and fourth quarters.

Thomas George Gallagher: As Tom said, it was a little bit higher or it was definitely higher early in the year, but we're seeing that improvement across all of the distributions and then as we look into it we really are seeing across all of the issue years. So it's a little bit kind of a broad based.

Thomas George Gallagher: So it's a little bit of a broad-based improvement overall in mortality, which we think is favorable. And as Tom said, we clearly want to see how that kind of plays itself out here over the next couple of quarters and see if it continues in that fashion or if it was just a fluctuation that we had here at the end of the year. So we'll see how that turns out. Thank you. Thank you. Our next question comes from Sunit Kamath with Jeffreys. Please go ahead.

Sunit Kamath: Improvement overall in the mortality, which you think that is favorable and as Tom said, we clearly want to see how that kind of plays itself out here over the next couple of quarters and see if it continues in that fashion or if it was just.

Sunit Kamath: A fluctuation that we've had here at the end of the year. So we'll see how that turns out.

Sunit Kamath: Thank you.

Sunit Kamath: Thank you. Our next question comes from Sydney to math with Jefferies. Please go ahead.

Sunit Kamath: Yeah, thanks. You talked about an acceleration in recruiting in the second half of 23. I guess as we think about 24, is the plan to kind of keep the foot on the gas pedal there or maybe shift and focus a little bit more on productivity? I'd say it would be more of a shift toward, we're still not going to take our foot off the gas from a recruiting perspective, but a lot of when we have such significant growth is really focused on getting those agents in, trained, and retention. And then productivity is kind of a natural byproduct of the fact that they're better, have more training, they've been there longer, and have more experience.

Sunit Kamath: Yes. Thanks.

Sunit Kamath: You talked about an acceleration in recruiting in the second half of 'twenty three I guess as we think about 'twenty four is the plan to kind of keep the foot on the gas pedal there or may be shifting focus a little bit more on productivity.

Sunit Kamath: I'd say it would be more of a shift toward we're still not going to take our foot off the gas from a recruiting perspective, but a lot of when we have such a significant growth is really focus on getting those agents and trained in retention.

Sunit Kamath: And then productivity is kind of a natural byproduct of the fact that there there are better have more training they've been there longer have more experience. So our focus is really on the retention and training the results in the higher productivity and so just considering we've had this accelerated.

Matthew Coad: So our focus is really on retention and training that results in higher productivity. And so, considering we've had this accelerated growth over the last half of the year, that's our real focus. The other thing I'm really pleased to see is our agent retention trends have been continuing to move up throughout 2023. And in fact, in American Income, our agent retention trends are higher than in 2019. You know, so from a pre-pandemic level, obviously, there were some disconnects during the pandemic.

Matthew Coad: Growth over the last half of the year, that's our that's our real focus the other thing I'm really pleased to see it.

Matthew Coad: Is our agent retention trends have been and continuing to move throughout 2023 and in fact in American income our agent retention trends are higher than 2019.

Matthew Coad: So from a pre pandemic level, obviously, there were some disconnects Darren during the pandemic. So we kind of look at it where we were in 2019 and prior and I am very happy to see that the retention efforts that we've put in place at American income are coming through and in the stats that we're seeing in those retention number.

Matthew Coad: So we kind of look at where we were in 2019 and prior, and I'm very happy to see that the retention efforts that we've put in place at American Income are coming through in the stats that we're seeing. And those retention numbers are going up across all our different vintages from a hiring perspective. So I think that's going to bode very well for 2024 performance as well.

Matthew Coad: Or is there going up across all our different vintage.

Matthew Coad: Integer is from a hiring perspective, so I think that's going to bode very well for 2020 for performance as well.

Speaker Change: Got it and then it looks like I think based on your comments the RBC ratio is going to be.

Sunit Kamath: And then it looks like, based on your comments, the RBC ratio is going to be... in your range, maybe slightly above the midpoint. Is there a level of liquid assets at the holding company that you just wanna keep as sort of a buffer just as we think about excess capital? Yeah, we tend to keep $50 million to $60 million as our kind of target range for liquid assets at the parent company. Okay, I got it. I mean, if I could just sneak one more in, it looks like you took up your 24 EPS Outlook a little bit. Can you just unpack some of the drivers?

Sunit Kamath: In your range, maybe slightly above the mid point is there a level of.

Sunit Kamath: Liquid assets at the holding company that you just want to keep as sort of a buffer just as we think about excess capital.

Sunit Kamath: Yes, we tend to keep $50 million to $60 million is our kind of target range for.

Sunit Kamath: Liquid assets at the parent company.

Sunit Kamath: Okay got it and then maybe if I could just sneak one more in it looks like you took up your 24 EPS outlook a little bit can you just unpack some of the drivers it doesn't seem like it's investment income, but I'm just curious what caused that bump up yes.

Thomas George Gallagher: It doesn't seem like it's investment income, but I'm just curious what caused that bump up. The biggest driver is continued remeasurement gains in our life segments, just what we've seen in Q3 and Q4. What we've tried to do in the guidance range is to reflect what we see as potential continuation of those remeasurement gains as well as the potential impact of assumption change in 2024. Got it. That that's embedded in your Outlook already. It is embedded in our Outlook, yep.

Thomas George Gallagher: The biggest driver is continued re measurement gains that are life segments. This is just what we've seen in Q3 and Q4, what we've tried to do is reflected in the in the guidance ranges to reflect what we see as a potential continuation.

Thomas George Gallagher: Of those re measurement gains as well as.

Thomas George Gallagher: The potential impact of assumption change and.

Thomas George Gallagher: In 2024.

Thomas George Gallagher: Got it thats embedded in your in your outlook already it is embedded in our outlook, yes, perfect. Thank you.

Thomas George Gallagher: Thank you. Our next question comes from Wilma Burtis with Raymond James. Please go ahead. Hey, good morning.

Wilma Burtis: Thank you. Our next question comes from a well known <unk> with Raymond James. Please go ahead.

Wilma Burtis: Hey, good morning.

Wilma Burtis: Can you talk a little bit more about what's driving the high sales guides in the health segment? You've had very strong agent count growth, but is there any tailwind in the market or anything that's, and more Thank you. Well, on Family Heritage, for sure, it's driven based on, you know, agent count. We rolled out a CRM system in 2023, so that helped on the productivity side. Overall, Family Heritage included all of our exclusive agencies.

Wilma Burtis: Can you talk a little bit what's driving the high sales guys in the health segment.

Wilma Burtis: I know you've had very strong agent count growth, but is there any tailwind in the market or anything that's attractive about the market right now.

Wilma Burtis: Ron.

Wilma Burtis: Family Heritage for sure, it's driven based on agent count, we rolled out a CRM system.

Wilma Burtis: In 2023, so that helped on the productivity side.

Wilma Burtis: Overall family Heritage included all of our exclusive agencies, we see continued positive momentum on the recruiting side. So we're anticipating.

Matthew Coad: We see continued positive momentum on the recruiting side, so we're anticipating good recruiting growth in 2024. I don't see anything in the market out there that would suggest we should have a different experience there. And then on the MedSup side, you know, that is kind of market forces. Clearly, we had a very good, very strong Q4, and what was nice to see is that was both on the individual side and the group side. A lot of times, those group sales can be lumpy, but that was very strong in Q4, and our individual MedSup sales as well.

Matthew Coad: Good recruiting growth in 2024.

Matthew Coad: We don't see anything in the market out there that would suggest.

Matthew Coad: We should have different experience there.

Matthew Coad: Then on the the med sup side.

Matthew Coad: That is kind of market forces clearly we had a very good very strong Q4 in what was nice to see is that was both on the individual side and the group side.

Matthew Coad: A lot of time those those groups sales can be lumpy, but that was very strong in Q4, but our individual med sub sales as well and so that's what I had mentioned earlier depending on.

Matthew Coad: And so that's what I mentioned earlier. Depending on pricing and market changes out there, you know, that's a highly price competitive market, Medicare supplement sales, we could see some additional tailwinds depending on what others in that marketplace do. Again, our course is kind of steady with our pricing targets and objectives, and, you know, sometimes we're the beneficiary of that to the extent other folks get back to profitability and adjust prices accordingly. Thank you. And then, a follow-up on Sonny's question, you mentioned that the Hire Guide is... some of life. Thanks for watching. Bye. Bye. Bye.

Matthew Coad: Pricing and market changes out there.

Matthew Coad: A price competitive market the Medicare supplement sales.

Matthew Coad: Could see some additional tailwind depending on what others in that marketplace do again our courses.

Matthew Coad: Steady with our pricing targets and objectives.

Matthew Coad: Sometimes we're the beneficiary of that to the extent.

Matthew Coad: Other folks or get back to profitability and adjust pricing accordingly.

Matthew Coad: Thank you and then with <unk> question.

Matthew Coad: You mentioned that the higher guide includes.

Matthew Coad: Some of the light.

Matthew Coad: Mortality coming through.

Wilma Burtis: Should we think about that? Wait for the back end because you'll review it in 3Q, or how should we think about that coming through throughout the year? Thank you. The re-measurement games would continue in the first quarter and second quarter, and to the extent that we make an assumption update, that would be in the third quarter. You know, in the first quarter, usually mortality is a little bit higher just because of seasonal flu. And so we may see a little, you know; we would expect a little bit higher mortality in that first quarter. But the other thing is, we still expect to see COVID deaths. So COVID is still out there.

Speaker Change: Should we think about that being weighted towards the back end because youll review it in <unk> or how should we think about that coming through throughout the year.

Speaker Change: Thank you.

Wilma Burtis: Yes.

Wilma Burtis: Re measurement gains.

Wilma Burtis: Would continue in first quarter and second quarter and to the extent that we make an assumption update that would be in the third quarter.

Wilma Burtis: In the first quarter, usually mortality is a little bit higher just because of seasonal flu.

Wilma Burtis: And so we may see it a little.

Wilma Burtis: We would expect a little bit higher mortality in that in that first quarter. I mean, the other thing is as we still expect to see COVID-19 deaths. So COVID-19 is still out there.

Thomas George Gallagher: We expect that we will see, you know, 60 to 80,000 U.S. deaths in the U.S. next year. So that's still a factor as well. But, you know, I think you should expect to see if

Wilma Burtis: Expect that we'd see 60 to 80000 U S deaths in the U S. Next year, So that's still a factor as well.

Thomas George Gallagher: But.

Thomas George Gallagher: I think you should expect to see if trends continue re measurement gains in first quarter and second quarter.

Thomas George Gallagher: Trends continue, remeasurement gains in the first quarter and second quarter. We'll revisit the assumptions and reset those in the third quarter, and a fourth quarter remeasurement would probably be a little bit lighter. Thank you. Thank you. As a reminder, if you'd like to ask a question on today's call, you may press star 1 on your telephone keypad to register.

Thomas George Gallagher: We will revisit the assumptions and reset those in the third quarter and fourth quarter re measure it would probably be a little bit lighter.

Speaker Change: Thank you.

Thomas George Gallagher: As a reminder, if you'd like to ask a question on today's call you may have hit star one on your telephone keypad.

Thomas George Gallagher: And our next question is from Tom Gallagher with Evercore Evercore ISI. Please go ahead.

Operator: And our next question is from Tom Gallagher with Evercore ISI. Please go ahead. Thanks, Ed. Just to follow up on Wilma's question on the rib measurement gains, the... If I heard you correctly, 38% to 40% margin guide on life. And in 4Q, when you had big measurement gains, it was at 38.

Thomas George Gallagher: Thanks, Yeah, just to follow up on wellness question on the re measurement gains fee.

Thomas George Gallagher: So if I heard you correctly, 38% to 40% margin guide on life.

Operator: And then <unk> when you had big Remeasurement gains.

Thomas George Gallagher: That was at 38 so.

Thomas George Gallagher: It looks like it's a little bit above that, at least in terms of where it's been trending. Is that because you've deferred part of them and you're going to be getting the benefit through the amortization of those gains through earnings in 24, or at least some part of that? So is it really just the deferred profitability that's emerging here that you're guiding to, or are you assuming the measurement gains themselves actually get a little better, or underlying experience gets a little better? I would say, Tom, that, as you say, kind of at the midpoint of that, right, we had in the fourth quarter of 2022, which is kind of where you would have set at that point in time, we had about a 38% margin overall for the life of the fourth quarter.

Thomas George Gallagher: It looks like it's a little bit about that at least midpoint in terms of where its been trending is that is that because you've deferred part of them and youre going to be getting the benefit through the amortization of those gains through earnings in 'twenty four or at least some some piece of that so is it really just the deferred profitability that's emerging here.

Thomas George Gallagher: That you're guiding to or are you, assuming there remeasurement gains themselves actually get a little better or underlying experience gets a little better.

Thomas George Gallagher: Okay.

Thomas George Gallagher: I would say Tom that you think about.

Thomas George Gallagher: As you say, it's kind of at the midpoint of that right. We had in the fourth quarter 2022, which is kind of where you would have said at at that point in time.

Thomas George Gallagher: At about a 38% margin.

Thomas George Gallagher: Overall for the life.

Thomas George Gallagher: That was kind of the expectations, if you will, of where that would have been, what we would have expected from a margin on a long-term basis. And so we had a little higher expenses, remember we had a little higher expenses. We talked about having higher amortization on our overall life business as we continue to capitalize and Amortized Renewal Commissions. And so that was a little bit of a drag in 2023, and that was really offset by some of the favorable remeasurement gains that we saw in 2023. So we saw a little bit, you know, less than a half-a-percent increase, if you will, in that overall margin between 23 and between 22 and 23.

Thomas George Gallagher: In the fourth quarter that was kind of the expectations, if you will of where that.

Thomas George Gallagher: <unk>.

Thomas George Gallagher: Where that would have been.

Thomas George Gallagher: What we would've expected from a margin on a long term basis.

Thomas George Gallagher: And so we had a little higher expenses and remember we had a little higher expense, we talked about having higher amortization on our overall life business as we continue to capitalize.

Thomas George Gallagher: And.

Thomas George Gallagher: And amortize a renewal commissions.

Thomas George Gallagher: And so that was a little bit of a drag in 'twenty three and that was really offset with some of the favorable the re measurement gains that we saw in 2023, So we saw a little bit less.

Thomas George Gallagher: Less than a half a percent increase if you will on that overall margin.

Thomas George Gallagher: Between 23 and.

Thomas George Gallagher: Between 22 and 23, so I think what we're anticipating from Remeasurement gains and just improvement in that overall mortality is what youre seeing in that expectation for that margin that margin improvement in 2024. So that's what's really driving that so we're still going to end up having a little bit higher amortization.

Thomas George Gallagher: So I think what we're anticipating from remeasurement gains and just improvement in overall mortality is what you're seeing in that expectation for that margin, that margin improvement in 2024. So that's what's really driving that. So we're still going to end up having a little bit higher amortization, you know, which... Talked about that we'll probably have, you know, between 0% to 0.5% increase in our amortization expense over the course of the next few years as we continue to capitalize and amortize those renewal commissions, especially at American income. And that's the higher margins really representing that better mortality, which is really going to manifest itself in the combination of those measurement gains over the coming years. That's, that's helpful. So a little bit of less expense drag when you think about which may have maybe obscured the level of favorability due to the underwriting. That's correct. Now, I just want to make sure I'm thinking about it correctly, though. In a year like 23, where you had, particularly the back half, where you had significant favorability for measurement gains. There's some out there.

Thomas George Gallagher: <unk>.

Thomas George Gallagher: We talked about that will probably have.

Thomas George Gallagher: Between zero to a half a percent increase in our amortization expense over the course of the next few years as we continue to capitalize and amortize those renewal commissions, especially at American income and and that's the.

Thomas George Gallagher: The higher margins really represented that better mortality, which is really going to manifest itself in the combination of both remeasurement gains over the course of the year.

Thomas George Gallagher: That's that's helpful. So a little bit of less expense drag when you think which which is maybe <unk> the level of favorability due to the underwriting.

Speaker Change: That's correct.

Thomas George Gallagher: Now I just wanted to make sure I'm thinking about it correctly, though in a year like 23, where you had.

Thomas George Gallagher: Particularly the back half, where you had significant favorability of Remeasurement gains, there's some piece of that.

Thomas George Gallagher: The experience that is getting deferred and then amortized back through earnings I believe.

Speaker Change: Is that meaningful.

Speaker Change: And will that like meaningfully improve future earnings at all or is that not that meaningful because it gets amortized over such a long period of time.

Thomas George Gallagher: It really is spread out over a long period of time so.

Thomas George Gallagher: It's that spreading out over time as reflected in the obligation ratio as a percent of premium that we need to.

Thomas George Gallagher: Set aside to pay future future benefits, so it's spread out over quite a long period of time, yes.

Speaker Change: Thanks, and then just one more if I could the.

Speaker Change: So when I look at the dividends and share repo guidance for 'twenty four $440 million at the midpoint.

Thomas George Gallagher: Ed.

Thomas George Gallagher: If I just solve for a free cash flow conversion ratio, which is only about 40% to 45% of your updated GAAP EPS guidance.

Thomas George Gallagher: And I recognize a company like globe, that's growing faster than average in the industry is going to have a good amount of capital consumed on writing new business.

Thomas George Gallagher: But the 40 to 45 is just way below the industry average.

Speaker Change: And curious if you've.

Speaker Change: Thought about exploring ways to improve that conversion ratio at all or is that just something.

Speaker Change: Does the intensity of the commission and the life insurance business you are just willing to live with.

Speaker Change: Yes, Tom I mean that is something that we're really taking a look at as to making sure that we understand what are those differences that we're seeing between our our GAAP earnings and then the statutory earnings that are.

Thomas George Gallagher: Clearly driving that cash flow conversion.

Speaker Change: What portion of that is related to the growth that we're seeing.

Thomas George Gallagher: In our agency businesses right, because thats thats, a good portion of where we see those drags as.

Thomas George Gallagher: We continue if theyre, having 10% to 15% growth years.

Thomas George Gallagher: So that's a really good thing for the long term, but we need to make sure that we can articulate what that means from a cash flow conversion perspective as.

Thomas George Gallagher: As well as as we continue to make investments in our technology stack.

Thomas George Gallagher: Proving.

Thomas George Gallagher: Youre, making those investments that setting us up for the future what that really it tails, but we are also then taking a look at are there ways that we can manage that a little bit better.

Thomas George Gallagher: In order to.

Thomas George Gallagher: We'd like to get to where we're probably closer to 60% conversion rate.

Thomas George Gallagher: And not sure if we can what that would really take to get there, but but it's something that we want to take a look at it and make sure. We have had in addition, we had the drag of the.

Thomas George Gallagher: Defaults in the capital losses that we had in 2023.

Thomas George Gallagher: So that's a drag here a little bit on our cash flow conversion in 2024 platform and so.

Speaker Change: Yeah, we'll see where if we get past some of those headwinds.

Thomas George Gallagher: That really it looks like on a go forward basis.

Speaker Change: Okay. Thanks I appreciate it.

Thomas George Gallagher: Thank you Okay. We have no further questions I would like to turn the call back over to Stephen <unk> for any closing remarks.

Speaker Change: Alright, Thank you for joining us this morning, as our comments, we will talk to you again next quarter.

Thomas George Gallagher: Yes.

Speaker Change: Thank you very much that concludes today's conference you may now disconnect.

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Speaker Change: Thank you.

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