Q1 2024 Globe Life Inc Earnings Call

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Speaker Change: Hello, and welcome to the Globe life incorporated first quarter earnings call My.

George: My name is George there'll be coordinator.

Speaker Change: Today's event.

George: Please note. This conference is being recorded average ratio the call you'll lines will be in listen only mode. However, you will have the opportunity to ask questions towards the end of the presentation and.

George: This can be done by pressing star one on your a couple of key pad to register your question.

George: If you require assistance at any point, Please press star zero and you will be connected to an operator.

George: I'd now like turn the call over to your host today, Mr. Steven Mora Senior director of Investor Relations. Please go ahead Sir.

Stephen Mota: Thank you good morning, everyone. Joining the call today are Frank Sinatra, and Matt <unk>, Our co Chief Executive officers, Tom <unk>, Our Chief Financial Officer, Mike Majors, our Chief strategy Officer, and Brian Mitchell, Our general counsel some of our comments or answers to your questions may contain forward looking statements that are provided for general guidance.

Stephen Mota: Purposes, only accordingly, please refer to our earnings release, and 2023 10-K on file with the SEC some of our comments.

Frank Sinatra: 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 over to Frank Thank.

Frank Sinatra: Thank you Steven and good morning, everyone.

George: Hello, and welcome to the Globe Life Incorporated first quarter earnings release call. My name is George.

Frank Sinatra: In the first quarter net income was $254 million.

Or $2 67 per share compared to $224 million or $2 28 per share a year ago.

George: I'll be coordinating today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation, and this can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you will be connected to an operator, and I'd like to turn the call over to your host today, Mr. Stephen Mota, Senior Director of Investor Relations. Please go ahead, sir.

Frank Martin Svoboda: Net operating income for the quarter was $264 million.

Frank Sinatra: Our $2 78 per share an increase of 10% from a year ago.

Frank Sinatra: On a GAAP reported basis return on equity through March 31 is 21, 3% and book value per share is $53 three.

Stephen Mota: Thank you. Good morning, everyone. Joining the call today are Frank Svoboda and Matt Darden, our co-chief executive officers, Tom Kalmbach, our chief financial officer, Mike Majors, our chief strategy officer, and Brian Mitchell, our general counsel. Some of our comments or answers to your questions may contain forward-looking statements that are provided for general guidance purposes. Accordingly, please refer to our earnings release in 2023-10K on file with the FAA. Additionally, 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 Stephen. Thank you, Stephen. And good morning, everyone.

Frank Sinatra: Excluding accumulated other comprehensive income or <unk>.

Frank Sinatra: Return on equity is 14, 3% and book value per share as of March 31 at $79 up 12% from a year ago.

Speaker Change: Before we continue we'd like to take a moment to address ahead of time questions. Many of you may have regarding dismiss litigation against the company.

Speaker Change: The Doj inquiry and the recent attack on the company by a short seller.

For over 70 years, our business model has stood the test of time.

Speaker Change: And as we will further discuss today, we continue to generate sustainable earnings growth that provides long term value for our shareholders.

Frank Martin Svoboda: In the first quarter, net income was $254 million, or $2.67 per share, compared to $224 million, or $2.28 per share, a year ago. Net operating income for the quarter was $264 million, or $2.78 per share, an increase of 10% from a year ago. On a GAAP reported basis, return on equity through March 31st is 21.3%, and book value per share is $53.03. Excluding Accumulated Other Comprehensive Income, or AOTI, return on equity is 14.3%, and book value per share as of March 31st is $79, up 12% from a year ago.

Speaker Change: With over 17 million policies in force, our millions of customers value the protection of the company's products and we strive to be there when our customers need us most.

Speaker Change: We want to assure you that globe life, its management and our board of directors strive to act in accordance with the highest level of ethics and integrity at all levels of the organization.

Speaker Change: While we believe the short sellers claims presented a false and misleading overall picture of the company added subsidiaries.

Speaker Change: As a demonstration of our commitment to operating ethically. The company's audit Committee has retained the international law firm Wilmerhale to conduct an independent review of the assertions in the short sellers reports.

Speaker Change: As you can appreciate given the ongoing nature of the Doj's investigation and out of respect for the integrity of the independent review initiated by the Audit Committee. We are limited in what we can say.

Frank Martin Svoboda: Before we continue, we'd like to take a moment to address questions ahead of time that many of you may have regarding dismissed litigation against the company, the DOJ inquiry, and the recent attack on the company by a short seller. For over 70 years, our business model has stood the test of time, and as we will further discuss today, we continue to generate sustainable earnings growth that provides long-term value for our shareholders.

Speaker Change: For this reason, we will not be taking any additional questions on issues today, although our intent is to address questions. We understand you may have to the extent possible.

Speaker Change: We will provide updates as and when appropriate.

Speaker Change: First we want to provide a brief update on the status of the lawsuit filed by climate related entity, a former independent contractor sales agents, which as many of you know included allegations of sexual harassment and proportion fraudulent business practices, neither of which we tolerate and declining that she was misclassified as.

Frank Martin Svoboda: With over 17 million policies in force, our millions of customers value the protection of the company's products, and we strive to be there when our customers need us most. We want to assure you that Globe Life, its management, and our board of directors strive to act in accordance with the highest level of ethics and integrity at all levels of the organization.

Speaker Change: An independent contractor.

Speaker Change: At September 27, 2022, the climate filed a demand for arbitration and participated in the selection of the three arbitrator panel.

Speaker Change: After a year and a half of litigation the arbitration hearing was scheduled to begin on March 4th 2024.

Frank Martin Svoboda: Well, we believe the short sellers' claims present a false and misleading overall picture of the company and its subsidiary. As a demonstration of our commitment to operating ethically, the company's audit committee has retained the international law firm, WilmerHale, to conduct an independent review of the assertions in the short sellers' report. As you can appreciate, given the ongoing nature of the DOJ's investigation and out of respect for the integrity of the independent review initiated by the Audit Committee, we are limited in what we can say.

Speaker Change: The night before the hearing the climate side to dismiss our clients without obtaining any relief or payment.

Speaker Change: After a lengthy discussion on the record that panel dismiss the case with prejudice and on April three 2024 of the United States District Court for the Western District of Pennsylvania affirmed the dismissal with prejudice.

Speaker Change: On March 14th 2024 globally filed an 8-K addressing this matter in more detail and the court filings are publically available for those interested.

Frank Martin Svoboda: For this reason, we will not be taking any additional questions on these issues today, although our intent is to address questions we understand you may have to the extent possible. We will provide updates as and when appropriate. First, we want to provide a brief update on the status of the lawsuit filed by claimant Rene Zimpher, a former independent contractor sales agent, which, as many of you know, included allegations of sexual harassment and purported fraudulent business practices, neither of which we tolerate, and the claim that she was misclassified as an independent contractor.

Speaker Change: Also noted in our form 8-K globalized at American income received subpoenas from the U S. Attorney's office for the Western District of Pennsylvania.

Speaker Change: These subpoenas sard documents related to sales practices by certain licensed insurance agents in the areas of organization, who are contracted to sell American income policies.

Speaker Change: The company at American income is in the process of responding to the subpoenas, which were received in late 2023 and have been fully cooperating with the Doj.

Frank Martin Svoboda: On September 27, 2022, the claimants filed a demand for arbitration and participated in the selection of the three arbitrator panels. After a year and a half of litigation, the arbitration hearing was scheduled to begin on March 4th, 2024. However, the night before the hearing, the claimants sought to dismiss their claims without obtaining any relief or payment.

The Doj has not asserted any claims are made allegations against the company and American income with respect to the foregoing investigation.

Speaker Change: As a company currently as outerwear that any legal proceedings are contemplated by governmental authorities.

Speaker Change: While no assurances can be made and we are still evaluating the batter management does not believe with the subpoenas well received and does not believe now.

Frank Martin Svoboda: After a lengthy discussion of the record, the panel dismissed the case with prejudice, and on April 3, 2024, the United States District Court for the Western District of Pennsylvania affirmed the dismissal with prejudice. On March 14, 2024, Globe Life filed an AK addressing this matter in more detail, and the court filings are publicly available for those. Also, as noted in our Form 8K, Globe Life and American Income received subpoenas from the U.S. Attorney's Office for the Western District of Pennsylvania.

Speaker Change: That is these are reasonably possible or probable. This investigation will result in material liability to the company.

Speaker Change: As such the company did not disclose the existence of the request from the Doj and its Form 10-K.

Speaker Change: We are providing additional information regarding this matter to you now in light of recent questions that had been raised Matt Thanks, Frank <unk>.

Speaker Change: Most recently the litigation and the Doj's investigation were the subject of a lengthy attack on the company past short seller.

Speaker Change: As we have stated publicly we believe the report mischaracterizes, many facts and it relies on anonymous sources dismiss lawsuits and allegations that have not been proven and litigation to percent of false and misleading overall picture, a globalized and American income.

Frank Martin Svoboda: These subpoenas sought documents related to sales practices by certain licensed insurance agents in the area's organization who are contracted to sell American Income policies. American Income and Company are in the process of responding to these subpoenas, which were received in late 2023, and have been fully cooperating with the DOJ. The DOJ has not asserted any claims or made allegations against the company and American Income with respect to the foregoing investigation, and the company currently is not aware that any legal proceedings are contemplated by governmental authorities.

Speaker Change: In this instance, we believe the short seller report demonstrates a fundamental lack of understanding of the life insurance business generally and as our company operates and reports revenue.

Speaker Change: As we have disclosed in our annual reports and audited financial statements low black recognizes revenue from premiums for long duration life and health insurance products over the life of the contract and when payments are due from the policyholder.

Frank Martin Svoboda: While no assurances can be made, and we are still evaluating the matter, management did not believe when the subpoenas were received and does not believe now that it is either reasonably possible or probable that this investigation will result in material liability to the company. As such, the company did not disclose the existence of the request from the DOJ in its form 10-K. However, we are providing additional information regarding this matter to you now, in light of recent questions that have been raised.

Speaker Change: Therefore premium revenue closely matches the cash we collect monthly.

Speaker Change: For example, during the fiscal year 2023 American Income's collected premium payments and reported GAAP premium income were essentially the same at $1 6 billion.

Speaker Change: Our history of American intense collected premium as compared towards reported GAAP premium is included in the supplemental financial information available in the investors section of our website.

James Matthew Darden: Thanks, Frank. Most recently, both the litigation and the DOJ's investigation were the subject of a lengthy attack on the company by a short seller. As we have stated publicly, we believe the report mischaracterizes many facts, and it relies on anonymous sources, dismissed lawsuits, and allegations that have not been proven in litigation.

Speaker Change: Now we only report net sales on policies after they have been through our underwriting and quality control processes.

Speaker Change: And as disclosed in our public filings when calculating net sales for American income we exclude policies that are canceled in the first 30 days after issue.

Speaker Change: Fundamentally the success of our business depends on our underwriting rigor and our ability to continue selling policies to customers, who keep their policies and pay their premiums over time now.

James Matthew Darden: 2% of a false and misleading overall picture of Globe Life and American income. In this instance, we believe the short seller's report demonstrates a fundamental lack of understanding of the life insurance business generally and of how our company operates and reports revenue. As we have disclosed in our annual reports and audited financial statements, Globe Life recognizes revenue from premiums for long-duration life and health insurance products over the life of the contract and when payments are due from the policy.

Speaker Change: Now this builds a solid book of business and we have continued to do so year over year.

In fact over 80% of American intense total last premiums are received from policies that have been enforced for over one year. Please.

Speaker Change: Please see our first year renewal GAAP premium page under the financial reports and other financial information in the investors section of our website.

James Matthew Darden: Therefore, premium revenue closely matches the cash we collect monthly. For example, during the fiscal year 2023, American incomes collected premium payments and reported gap premium income were essentially the same at $1.6 billion. A history of American Income's collective premium, as compared to its reported gap premium, is included in the supplemental financial information available in the Investor section of our website. Now we only report net sales and policies after they have been through our underwriting and quality control process.

Speaker Change: Now the more than 11000 independent agents, who sell American income policies offer products designed to help families to make tomorrow better working to protect their financial future.

Speaker Change: Each agency office has a structured hierarchy, whereas agents above the writing agents receive an override commission paid by the company.

Speaker Change: While there is a hierarchy there is no pyramid scheme as the policies require customers to pay the monthly premium for the policy to continue.

Speaker Change: There is no third party payer of premiums. It is important to note. This business model has stood the test of time and is common in the industry American income realized as revenue and profits only when these customer pay their premiums over time.

James Matthew Darden: And, as disclosed in our public filings, when calculating net sales for American income, we exclude policies that are canceled in the first 30 days after issuance. Fundamentally, the success of our business depends on our underwriting rigor and our ability to continue selling policies to customers who keep their policies and pay their premiums over time. Now this builds a solid book of business, and we have continued to do so year over year. In fact, over 80% of American Income's total life premiums are received from policies that have been in force for over one year.

Speaker Change: We have generated consistent growth, providing long term value for our shareholders with a history of integrity and our business practices and principles, while providing our customers with financial protection when it matters most.

As well as job opportunities for agents small business owners and employees to build financial security.

Speaker Change: Now these agents are independent contractors and the agency offices are independent businesses notwithstanding their independence globalized takes unethical agent conduct seriously and has measures to detect and deter actions that are inconsistent with the company's values.

James Matthew Darden: Please see our first year renewal gap premium page under the financial reports and other financial information in the investor section of our website. Now, the more than 11,000 independent agents who sell American income policies offer products designed to help families make tomorrow better by working to protect their finances. Each agency office has a structured hierarchy, whereas agents above the writing agent receive an override commission paid by the company. While there is a hierarchy, there is no pyramid scheme, as the policies require customers to pay the monthly premium for the policy to continue. There is no third-party payer involved.

Including among others American income has internal controls and monitoring processes in place to identify potential agent misconduct.

Speaker Change: And monitors relevant data metrics for each individual agent to identify and assess trends regarding unethical or fraudulent business practices, including data related to policy lapse in persistency.

Speaker Change: Now our annual policy count and face amount lapse rates are disclosed in our regulatory filings and our quarterly premium in force lapse rates are disclosed each quarter in the supplemental financial information we provide.

James Matthew Darden: It is important to note that this business model has stood the test of time and is common in the industry. American Income realizes revenue and profits only when customers pay their premiums over time. We have generated consistent growth providing long-term value for our shareholders with a history of integrity in our business practices and principles while providing our customers with financial protection when it matters most, as well as job opportunities for agents, small business owners, and employees to build financial security.

Speaker Change: These controls also increased flat ground chance on all prospective agents.

Speaker Change: <unk>, who contract with American income must have a valid license issued by the appropriate state departments of insurance, who have their own processes for determining one suitability to be a licensed insurance agent.

Speaker Change: American income has control is to validate the entity and legitimacy of the sale to the customer, including conducting quality assurance calls to verify and new applications.

James Matthew Darden: Now these agents are independent contractors, and the agency offices are independent businesses. Notwithstanding their independence, Globe Life takes unethical agent conduct seriously and has measures to detect and deter actions that are inconsistent with the company's values.

Speaker Change: And when complaints are raised including complaints alleging fraud, deceit and ethical business practices or other misconduct American income has a dedicated group responsible for investigating these allegations American income has not hesitated to take disciplinary actions against agents and.

James Matthew Darden: Among others, American Income has internal controls and monitoring processes in place to identify potential agent misconduct and monitors relevant data metrics for each individual agent to identify and assess trends regarding unethical or fraudulent business practices, including data related to policy lapse and pursuit. Now, our annual policy count and face amount lapse rates are disclosed in our regulatory filings, and our quarterly premium enforced lapse rates are disclosed each quarter in the supplemental financial information we provide.

Speaker Change: Agency owners, where warranted, including termination and notice to the appropriate regulatory bodies.

Speaker Change: The short seller report relies heavily on allegations by a former employee who following an internal review was terminated for cause based on violations of the company's policies prohibiting sexual harassment. This matters is subject to pending litigation the companys investigate complaints when they are received.

Speaker Change: And where appropriate authorizes independent investigations.

James Matthew Darden: These controls also include background checks on all prospective agents. Agents who contract with American Income must have a valid license issued by the appropriate state departments of insurance, which have their own processes for determining one's suitability to be a licensed insurance agent.

Speaker Change: The report also contains allegations regarding property Capex schemes. These claims are based on a lawsuit that was filed by an insurance licensing exam test prep company.

Speaker Change: This lawsuit was dismissed by the U S District Court for the Eastern District of Texas.

Speaker Change: American income does not contract wins to recommend any test prep companies to prospective agents and we're not aware of any bribes kickbacks to the company incentives.

James Matthew Darden: American Income has controls to validate the identity and legitimacy of the sale to the customer, including conducting quality assurance calls to verify new customers. And when complaints are raised, including complaints alleging fraud, deceit, unethical business practices, or other misconduct, American Income has a dedicated group responsible for investigating these allegations. American Income has not hesitated to take disciplinary actions against agents and agency owners where warnings have been given, including termination and notice to the appropriate regulatory body.

Speaker Change: Additionally, we want to make clear that the projections and guidance, we will be providing on this call today incorporate our current view based on our knowledge of the business and the information we have at this time.

Now with respect to our insurance operations I'll turn the call back over to Frank.

Frank Sinatra: Thanks, Matt.

Frank Sinatra: In our life insurance operations.

Frank Sinatra: Premium revenue for the first quarter increased 4% from the year ago quarter to $804 million.

Frank Sinatra: Life underwriting margin was $309 million.

James Matthew Darden: Indeed, the short sellers' report relies heavily on allegations by a former employee who, following an internal review, was terminated for cause based on violations of the company's policies prohibiting sexual harassment. This matter is the subject of pending litigation. The company investigates complaints when they are received and, where appropriate, authorizes independent investigations. The report also contains allegations regarding bribery and conflicts of interest. These claims are based on a lawsuit that was filed by an insurance licensing exam test prep company. This lawsuit was dismissed by the U.S. District Court for the Eastern District of Texas.

Frank Sinatra: Up 6% from a year ago.

Frank Sinatra: For the year driven by strong premium growth in both our American income and Liberty National divisions, We expect life premium revenue to grow between four five and 5% at the midpoint of our guidance and life underwriting margin to grow between 7% seven 5% as.

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

Frank Sinatra: In health insurance premiums grew 6% to $341 million and health underwriting margin was up 3% to $94 million.

Frank Sinatra: For the year, we expect health premium revenue to grow around 7% at.

Frank Martin Svoboda: American Income does not contract with or recommend any test prep companies to prospective agents, and we're not aware of any bribes or kickbacks to the company. Additionally, we want to make clear that the projections and guidance we will be providing on this call today incorporate our current view based on our knowledge of the business and the information we have at this time. Now with respect to our insurance operations, I'll turn the call back over to Frank. Thanks, Matt, for your life insurance operation. Premium revenue for the first quarter increased 4% from the year-ago quarter to $804 million. Life Underwriting Margin was $309 million, up 6% from a year ago.

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

Frank Martin Svoboda: For the year, driven by strong premium growth in both our American Income and Liberty National Divisions, we expect life premium revenue to grow between four and a half and five percent at the midpoint of our guidance, and Life Underwriting Margin to grow between seven and seven and a half percent. As a percent of premium, we anticipate life underwriting margin to be in the range of 38 to 40%. In health insurance, premiums grew 6% to $341 million, and the health underwriting margin was up 3% to $94 million.

Frank Sinatra: The final try agency rule regarding various health plan was finalized with minimal impact to the supplemental health products, we sell and therefore to our business.

Frank Sinatra: The final rule requires an additional consumer disclosure, which we will implement as required.

Frank Sinatra: Administrative expenses were $80 million for the quarter up 9% from a year ago.

Frank Sinatra: As a percentage of premium administrative expenses were 7% consistent with our expectations and compared to six 7% a year ago.

Frank Sinatra: For the year, we expect administrative expenses to be approximately 7% of premium higher than 2023, due primarily to continuing investments in technology as we modernize and transform how we operate.

Frank Sinatra: I will now turn the call over to Matt for his comments on the first quarter marketing operations.

Frank first lets discuss American income life at American income life life premiums were up 7% over the year ago quarter to $414 million and life underwriting margin was up 7% to $187 million in the first quarter of 2024 net life sales were 900.

Frank Martin Svoboda: For the year, we expect health premium revenue to grow around 7%. At the midpoint of our guidance for the full year, we expect health underwriting margin to grow between 5 and 6 percent, and as a percent of premium, to be around 27 to 29. The final tri-agency rule regarding various health plans was finalized with minimal impact on the supplemental health products we sell and, therefore, to our business. The final rule requires additional consumer disclosure, which we will implement as required. Administrative expenses were $80 million for the quarter, up 9% from a year ago.

Matt: $7 million, which is up 17% from a year ago quarter, primarily due to growth in agent count.

Matt: Average producing agent count for the first quarter was 11139. This is up 15% from a year ago. This is another strong quarter for American income and builds on the growth in sales and agent count and we achieved in the third and fourth quarter of 2023.

Matt: At Liberty National flat premiums were up 7% over the year ago quarter to $91 million and life underwriting margin was up 11% to $31 million.

Frank Martin Svoboda: As a percent of premium, administrative expenses were 7%, consistent with our expectations and compared to 6.7% a year ago. For the year, 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 comment on the first quarter marketing operation. Thank you, Frank.

Matt: Net life sales declined 2% to $22 million and net health sales were $8 million up 7% from a year ago quarter due primarily to increased agent count.

Matt: Now as a reminder, we report on sales after the policy has been through our quality control and underwriting processes. As we have previously discussed we continue to make investments in technology to enhance our business.

James Matthew Darden: First, let's discuss American Income Life. At American Income Life, life premiums were up 7% over the year-ago quarter to $414 million, and life underwriting margin was up 7% to $187 million. In the first quarter of 2024, net life sales were $97 million, which is up 17% from a year ago quarter, primarily due to growth in Asia. Average producing agent count for the first quarter was 11,139.

Matt: One of these investments is a new business and underwriting platform for our life business at Liberty National which we implemented towards the end of the first quarter.

Matt: As a result of this system implementation our policy issue, Steve temporarily slowed down now I am pleased to see that the amount of business submitted from the field to the underwriting department is up 11% from the prior year quarter now.

Matt: Now I anticipate as we finalize our transition to this new system, our throughput of policies will return to historical norms. The.

James Matthew Darden: This is up 15% from a year ago. This is another strong quarter for American income and builds on the growth in sales and agent count that we achieved in the third and fourth quarters of 2020. At Liberty National, life premiums were up 7% over the year-ago quarter to $91 million, and life underwriting margin was up 11% to $31 million. Net life sales declined 2% to $22 million, and net health sales were $8 million, up 7% from a year ago quarter, due primarily to increased aging.

Matt: The average producing agent count for the first quarter was 3419 up 14% from a year ago. We continue to be proud of the strong agent count growth at Liberty National.

Matt: At family Heritage Health premiums increased 8% over the year ago quarter to $103 million and health underwriting margin increased 13% to $36 million net.

Matt: Net health sales were up 11% to $25 million and this is due to increased agent productivity enabled by our investments in technology.

Matt: Average producing agent count for the first quarter was 1295, approximately flat from a year ago family.

James Matthew Darden: Now, as a reminder, we report on sales after the policy has been through our quality control and underwriting process. As we have previously discussed, we continue to make investments in technology to enhance. One of these investments is a new business and underwriting platform for our life business at Liberty National, which we implemented toward the end of the first quarter. As a result of this system implementation, our policy issue speed temporarily slowed down.

Matt: Family Heritage continues to focus on agent count and Middle management growth now lets discuss direct to consumer and our direct to consumer division at Globe life life premiums were flat compared to the year ago quarter and $248 million.

Matt: While life underwriting margin increased 4% to $59 million net.

Matt: Net life sales were $29 million down 12% from the year ago quarter and as we have previously disclosed. This decline is primarily due to lower customer inquiries as we've reduced marketing spend on certain campaigns that did not meet our profit objectives. We will continue to focus on maximizing the underwriting margin dollars on new.

James Matthew Darden: I'm pleased to see that the amount of business submitted from the field to the underwriting department is up 11% from the prior year quarter. Now I anticipate as we finalize our transition to this new system, our throughput of policies will return to historical normal. The average producing agent count for the first quarter was 3,419, up 14% from a year ago.

Matt: Sales by managing the rising advertising and distribution costs associated with acquiring this new business.

James Matthew Darden: We continue to be proud of the strong agent count growth at Liberty Max. At Family Heritage, health premiums increased by 8% over the year-ago quarter to $103 million, and the health underwriting margin increased 13% to $36 million. Net health sales were up 11% to $25 million, and this is due to increased agent productivity enabled by our investments in technology. The average producing agent count for the first quarter was 1,295, approximately flat from a year ago.

Matt: Additionally, the direct to consumer channel provides critical support to our agency business through brand impressions and a generation of sales leads.

Matt: Now, let's discuss United American General Agency, Here's the health premiums increased 7% over the year ago quarter to $142 million health underwriting margin of $12 million is down approximately $1 million from the year ago quarter net.

Net health sales were $16 million at 7% over the year ago quarter due to strong activity in individual Medicare supplement business.

Matt: Now, let's discuss predict projections now based on the trends that we're seeing in our experienced with our business. We expect the average annual producing agent count trends for 2024 to be as follows.

James Matthew Darden: Family Heritage continues to focus on agent count and middle management growth. Now, let's discuss direct-to-consumer. In our direct-to-consumer division at Globe Life, life premiums were flat compared to the year-ago quarter at $248 million.

James Matthew Darden: While the Life Underwriting Margin increased 4% to $59 million, net life sales were $29 million, down 12% from the year-ago quarter. As we have previously discussed, this decline is primarily due to lower customer inquiries as we have reduced marketing spend on certain campaigns that did not meet our profit objectives. We will 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. Additionally, the Direct-to-Consumer channel provides critical support to our agency business through brand impressions and the generation of sales.

And Liberty National mid teens growth.

Matt: At family Heritage low single digit growth.

Matt: Net life sales for 2024 are expected to be as follows for Liberty National mid teens growth direct to consumer slightly down.

Matt: Net health sales for 2024 are expected to be as follows Liberty national mid teens growth family heritage low double digit growth.

Matt: At United American General agency low to mid single digit growth.

Matt: Now based on very recent events, we are actively evaluating the impact on <unk> agent count and projected sales for the remainder of the year.

Matt: Now to date, we have not seen a significant impact on our agent recruiting pipeline as.

James Matthew Darden: Now let's discuss United American General Agency. Here the health premiums increased 7% over the year go court to $142 million. The health underwriting margin of $12 million is down approximately $1 million from the year-ago quarter. Net health sales were $16 million, that's 7% over the year-ago quarter, due to strong activity in the individual Medicare supplement business. Now let's discuss projections.

Matt: As the majority of our business is produced by experienced agents any negative recruiting trends should have a muted impact on 2024 sales in.

Matt: In addition, it should be noted that sales in the second half of the year have a diminished impact on premium earnings, especially since over 80% of American income life premiums come from policies that have been enforced for greater than one year.

James Matthew Darden: Now, based on the trends that we're seeing in our experience with our business, we expect the average annual producing agent count trends for 2024 to be as follows: at Liberty National, mid-teens growth. At Family Heritage, low single digits.

That said taking into account, what we know today and the knowledge of our business at the midpoint of our guidance, we estimate average agent count growth and sales growth.

Matt: For the full year to be in the low single digits and mid single digits, respectively. We acknowledge these are estimates and this agent count and sales growth could be higher or lower.

James Matthew Darden: Net life sales for 2024 are expected to be as follows for Liberty National: mid-teens growth, direct-to-consumer slightly down. Net health sales for 2024 are expected to be as follows: Liberty National, mid-teens growth, family heritage, low double-digit. United American General Agency, low to mid single-digit.

Matt: The range of our earnings guidance contemplates a range of possibilities regarding sales and agent count growth, including reasonably severe scenarios due to the significant growth in the first quarter. Our sales guidance does assume a moderation of sales for the remainder of the year I will now turn the call back to Frank.

Matt: Matt We will now turn to the investment operations.

Matt: Excess investment income, which we define as net investment income less only required interest was $44 million up $15 million from the year ago quarter.

James Matthew Darden: Now, based on very recent events, we are actively evaluating the impact on AIL's agent count and projected sales for the remainder of the year. However, to date, we have not seen a significant impact on our agent recruiting pipeline. As the majority of our business is produced by experienced agents, any negative recruiting trends should have a muted impact on 2024. In addition, it should be noted that sales in the second half of the year have a diminished impact on premium earnings, especially since over 80% of American Income Life's premiums come from policies that have been in force for greater than one year.

Frank Sinatra: Net investment income was $283 million.

Matt: Up 10% or $25 million from the year ago quarter.

Matt: The increase is due to the continued strong growth in average invested assets.

Matt: Higher interest rates across fixed maturities commercial mortgage loans limited partnerships and short term investments also contributed to the higher growth rate.

Matt: Required interest is up four 8% over the year ago quarter same as the increase in average policy liabilities.

James Matthew Darden: That said, taking into account what we know today and our knowledge of our business, at the midpoint of our guidance, we estimate average agent count growth and sales growth at AIL for the full year to be in the low single digits and mid single digits, respectively. We acknowledge these are estimates, and thus, agent count and sales growth could be higher or lower. The range of our earnings guidance contemplates a range of possibilities regarding sales and agent count growth, including reasonably severe scenarios. Due to the significant growth in the first quarter, our sales guidance does assume a moderation of sales for the remainder of the year. I will now turn the call back to you... Thanks, Matt.

Matt: For the full year, we expect net investment income to grow between 7% and 9% due to the combination of the favorable interest rate environment and steady growth in our invested assets, especially related to our CML and limited partnership investments.

Matt: In addition at the midpoint of our guidance, we anticipate required interest will grow between 5% five 5% for the year, resulting in growth in excess investment income of approximately 25% to 30%.

Matt: Now regarding our investment yield.

Frank Martin Svoboda: We will now turn to the investment operator. Excess Investment Income, which we define as net investment income less only required, was $44 million, up $15 million from the year-ago quarter. Net investment income was $283 million, a 10% increase or $25 million from the year ago. The increase is due to the continued strong growth in average invested assets. Higher interest rates across fixed maturity, commercial mortgage loans, limited partnerships, and short-term investments also contributed to the higher growth. However, required interest is up 4.8% over the year ago quarter, the same as the increase in average policy liability.

Matt: In the first quarter, we invested $682 million in investment grade fixed maturities, primarily in the industrial and financial sectors.

Matt: This amount was higher than expected to take advantage of opportunities in the market.

Matt: We invested at an average yield of 586% an average rating of AA minus and an average life of 32 years.

Matt: Also invested approximately $126 million in commercial mortgage loans and limited partnerships that have that light characteristics and an average expected return of 10%.

Matt: None of our direct investments and commercial mortgage loans involve office properties.

Matt: These investments are expected to produce additional cash yield over our fixed maturity investments and they are in line with our conservative investment philosophy.

Frank Martin Svoboda: For the full year, we expect net investment income to grow between 7% and 9% due to the combination of the favorable interest rate environment and steady growth in our invested assets, especially relating to our CMLs and Limited Partnership Investments. In addition, at the midpoint of our guidance, we anticipate required interest will grow between 5 and 5.5% for the year, resulting in growth in excess investment income of approximately 25 to 30%. Now regarding our investment yield,

Matt: For the entire fixed maturity portfolio. The first year first quarter yield was five.

Matt: 4% up six basis points from the first quarter of 2023 and up one basis point for the fourth quarter.

Matt: As of March 31, 31.

Matt: The tax equivalent effective yield rates on the fixed maturity portfolio was five 5%.

Matt: Including the cash yield from our commercial mortgage loans and limited partnerships. The first quarter earned yield was 546%.

Frank Martin Svoboda: In the first quarter, we invested $682 million in investment grade fixed maturities, primarily in the industrial and financial sectors. This amount was higher than expected to take advantage of opportunities in the market. We invested at an average yield of 5.86%, an average rating of A-, and an average life of 32 years. We also invested approximately $126 million in commercial mortgage loans and limited partnerships that have debt-like characteristics, at an average expected return of 10%. None of our direct investments in commercial mortgage loans involve office property.

Invested assets are $21 4 billion.

Matt: Including $19 5 billion of fixed maturities at amortized cost.

Matt: Of the fixed maturities 19 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.

Matt: On fixed maturity.

Matt: Investment portfolio has a net unrealized loss position of approximately $1 4 billion.

Matt: Due to the current market rates being higher than the book yield of our holdings.

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

Frank Martin Svoboda: These investments are expected to produce additional cash yields over our fixed maturity investments, and they are in line with our conservative investment philosophy. For the entire Fixed Maturity Portfolio, the first quarter yield was 5.24%, up six basis points from the first quarter of 2023 and up one basis point from the fourth quarter. As of March 31st, the tax equivalent effective yield rate on the fixed maturity portfolio was 5.25%.

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

Matt: Bonds rated triple B comprised 47% 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 higher risk assets, such as derivatives equities residential mortgages real estate equities clo's and other <unk>.

Frank Martin Svoboda: Including the cash yield from our commercial mortgage loans and limited partnerships, the first quarter earned yield was 5.46. Invested assets are $21.4 billion, including $19.5 billion of fixed maturities at amortized costs. Of the fixed maturities, $19 billion are investment grade with an average rating of A-. Overall, the Total Fixed Maturity Portfolio is rated A-, same as a year on Fixed Maturity. The Investment Portfolio has a net unrealized loss position of approximately $1.4 billion due to the current market rates being higher than the book yields of our holders.

Matt: Asset backed securities held by our peers.

Matt: We believe that the 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.

Matt: So investment grade bonds remained low at $542 million compared.

Matt: Compared to $596 million a year ago the.

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

Matt: At the midpoint of our guidance for the full year, we expect to invest approximately one to $1 2 billion in fixed maturities at an average yield of five six to five 8% and approximately 4% to $500 million.

Frank Martin Svoboda: As we have historically noted, we are not concerned by the unrealized loss position as it 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 47% of the fixed maturity portfolio, compared to 51% from the year-ago quarter.

Matt: And commercial mortgage loans and limited partnership investments with debt light characteristics at an average expected cash return of 8% to 10%.

Matt: As we've said before we are pleased to see higher interest rates as it 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 Martin Svoboda: While this ratio is high relative to our peers, we have little or no exposure to higher-risk assets such as derivatives, equities, residential mortgages, real estate equities, CLOs, and other asset-backed securities held by our peers. We believe that the BBB securities we acquire generally provide the best risk-adjusted, capital-adjusted returns, due in part to our ability to hold securities to maturity, regardless The low investment-grade bonds remain low at $542 million compared to $596 million a year ago.

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

Thanks, Brian.

Tom: First let me spend a few minutes discussing our share repurchase program available liquidity and capital position.

Tom: <unk> began the year with liquid assets of $48 million and ended the quarter with liquid assets of approximately $66 million slightly higher than the $50 million to $60 million that we have historically targeted.

Tom: In the first quarter the company repurchased almost 128000 shares of Globe Life, Inc. Common stock for a total cost of approximately $16 million at an average share price of $122 13.

Frank Martin Svoboda: The percentage of below investment-grade bonds to total fixed maturities is 2.8%. At the midpoint of our guidance, for the full year, we expect to invest approximately $1 to $1.2 billion in fixed maturities at an average yield of 5.6 to 5.8 percent, and approximately $400 to $500 million in commercial mortgage loans and limited partnership investments with debt-like characteristics, at an average expected cash return of 8 to 10 percent. As we said before, we are pleased to see higher interest rates, and 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-centric.

Tom: Thus, including shareholder dividend payments of $21 million for the quarter. The company returned approximately $37 million to shareholders. During the first quarter of 2024.

Tom: The amount of share repurchases during the first quarter is lower than we had anticipated solely due to the evaluation of a potential acquisition, wherein we paused share repurchases until conclusion on the acquisition was reached we have decided not to pursue the acquisition and as such and tend to continue repurchases as soon as possible.

Tom: In addition to the liquid assets held by the parent the parent company generated excess cash flows during the first quarter and we will continue to do so for the remainder of 2024.

Frank Martin Svoboda: Now, I will turn the call over to Tom for his comments on capital and liquidity. Thanks, Frank. First, let me spend a few minutes discussing our share repurchase program, available liquidity, and capital. Parent began the year with liquid assets of $48 million and ended the quarter with liquid assets of approximately $66 million, slightly higher than the $50 to $60 million that we had historically targeted. In the first quarter, the company repurchased almost 128,000 shares.

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

Thomas Peter Kalmbach: Inc. common stock for a total cost of approximately $16 million at an average share price of $122.13. Thus, including shareholder dividend payments of $21 million for the quarter, the company returned approximately $37 million to shareholders during the first quarter of 2024. The amount of share repurchases during the first quarter was lower than we had anticipated solely due to the evaluation of a potential acquisition wherein we paused share repurchases until a conclusion on the acquisition was reached.

Tom: We anticipate the parent company's excess cash flow for the full year will be approximately $450 million to $470 million and is available to return to shareholders in the form of dividends and through share repurchases.

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

Tom: Including $66 million of available liquid assets at the end of the quarter, along with the $390 million to $410 million in excess cash flows we expect to generate during the remainder of 2024. The company has approximately 455 million to $475 million of liquid assets available to the parent for the remainder.

Tom: There are 2024 of which we anticipate anticipate distributing approximately $65 million to $70 million to our shareholders in the form of dividend payments.

Thomas Peter Kalmbach: We have decided not to pursue the acquisition, and as such, intend to continue repurchases as soon as possible. In addition to the liquid assets held by the parent company, the parent company generated excess cash flows during the first quarter and will continue to do so for the remainder of 2024. A parent company's excess cash flow, as we define it, results primarily from dividends received by the parent from its subsidiaries, less the interest paid on debt.

As mentioned on previous calls, we will use our cash as efficiently as possible at.

Tom: At this time, we believe that share repurchases provide the best return or yield to our shareholders over other alternative investments.

Tom: No.

Tom: Overall their alternatives.

We anticipate share repurchases will continue to be the primary use of excess.

Tom: Excess cash flows after the payment of shareholder dividends at.

Thomas Peter Kalmbach: We anticipate the parent company's excess cash flow for the full year will be approximately $450 to $470 million and is available to return to shareholders in the form of dividends and through share repurchase. Excess cash flows in 2024 are estimated to be higher than those in 2023, primarily due to higher statutory earnings in 2023 as compared to 2022. Including $66 million of available liquid assets at the end of the quarter, along with the $390 million to $410 million in excess cash flows we expect to generate during the remainder of 2024, the company has approximately $455 million to $475 million of liquid assets available to the parent for the remainder of 2024, of which we anticipate distributing approximately $65 to $70 million to our shareholders in the form of dividend, As mentioned on previous calls, we will use our cash as efficiently as possible. At this time, we believe that share repurchases provide the best return or yield to our shareholders over other alternative investments. University.

Tom: At the midpoint of our earnings guidance, we anticipate approximately 350 million to $370 million of share repurchases for the year with approximately one half of that occurring in the second quarter and the remainder in the third and fourth quarters.

That said current market conditions and should they remain favorable we will clearly consider accelerating repurchases and may consider accelerating some portion of our anticipated 2025 excess cash flows into 2024.

Now with respect to our capital levels at our insurance subsidiaries.

Tom: Our goal is to maintain our capital levels necessary to support ratings.

Tom: <unk> closed life targets, a consolidated company action level RBC in the range of 300% to 320%.

Tom: At the end of 2023, our consolidated RBC ratio was 314% at.

Tom: This ratio our subsidiaries had at that time, approximately $85 million of capital over the amount needed to meet the low end of our consolidated RBC target of 300%.

Thomas Peter Kalmbach: Thus, we anticipate share repurchases will continue to be the primary use of parents' excess cash flows after the payment of the shareholder dividend. We anticipate approximately $350 million to $370 million of share repurchases for the year, with approximately one half of that occurring in the second quarter and the remainder in the third and fourth quarters. That said, current market conditions, and should they remain favorable, we will clearly consider accelerating repurchases, and may consider accelerating some portion of our anticipated 2025 excess cash flows into 2024.

Tom: Now with regards to policy obligations for the current quarter.

Tom: As we discussed on prior calls we are included within the supplemental financial information available on our website and exhibit that details the remeasurement gain or loss by distribution channel.

Tom: As a reminder, in the third quarter of 2023, we updated both our life and health assumptions in there, but no changes to our long term assumptions in the period.

Tom: No assumption updates were made in the first quarter of 2024, and we intend to update life and health assumptions in the third quarter of this year.

Tom: In addition to the impact of assumption changes the remeasurement gain or loss also indicates experience fluctuations.

Thomas Peter Kalmbach: Now we respect our capital levels at our insured subsidiaries. Our goal is to maintain our capital levels necessary to support ratings. Globe Life targets a consolidated company action level RBC in the range of 300% to 320%. At the end of 2023, our consolidated RBC ratio was 314%.

Tom: For the first quarter of 2024 life policy obligations were favorable when compared to our assumptions mortality and persistency. The remeasurement gain related to experience fluctuations fluctuations resulted in $5 million of lower life policy obligations and $3 million of lower health policy obligations.

Tom: As expected life re measurement gains were lower this quarter than in the first half of 2023 and the sorry in the last half of 2023, which we believe is due in part to the seasonally high first quarter like claims versus the rest of the year.

Thomas Peter Kalmbach: At this ratio, our subsidiaries had, at that time, approximately $85 million of capital over the amount needed to meet the low end of our consolidated RBC target of 300%. Now, with regard to policy obligations for the current quarter, As we discussed on prior calls, we have included within the supplemental financial information available on our website an exhibit that details the remeasurement gain or loss by distribution channel. As a reminder, in the third quarter of 2023, we updated both our life and health assumptions, and there have been no changes to our long-term assumptions in the period since.

Tom: We continue to be encouraged by the recent short term trends and policy obligations experience.

Tom: Arrange of earnings guidance.

Tom: Encompasses the possibility of future favorable re measurement gains through 2024.

Tom: The recent experience as well as our life mortality trends in the first half of 2024 will inform the third quarter 2024 update to our endemic mortality assumptions.

Tom: As we noted on our last call our debit mortality assumptions currently assumes returning to mortality levels slightly above pre pandemic levels over the next few years.

Thomas Peter Kalmbach: No assumption updates were made in the first quarter of 2024, and we intend to update life and health assumptions in the third quarter of this year. In addition to the impact of assumption changes, the remeasurement gain or loss also indicates experience fluctuation. For the first quarter of 2024, life policy obligations were favorable when compared to our assumptions of mortality and persistence. A Remeasurement Game Related to Experienced Fluctuation

Tom: Recent trends if they should continue to indicate a quicker recovery that our current assumptions.

Tom: Finally, with respect to earnings guidance for 2024.

Tom: For the full year 2024, we estimate net operating earnings per diluted share will be in the range of $11 50.

To $12, representing 10, 3% growth at the midpoint of our range.

Thomas Peter Kalmbach: Resulted in $5 million of lower life policy obligations and $3 million of lower health policy obligations. As expected, life re-measurement gains were lower this quarter than in the first half of 2023 and, I'm sorry, in the last half of 2023, which we believe is due in part to the seasonally high first quarter life claims versus the rest of the year. We continue to be encouraged by the recent short-term trends and policy obligations experienced. The Range of Earnings Guidance encompasses the possibility of future favorable remeasurement gains through 2024. The recent experience, as well as our life mortality trends in the first half of 2024, will inform the third quarter 2024 update to our endemic mortality assumption.

Tom: $11 75 midpoint.

Tom: This is higher than our previous guidance and reflects recent and anticipated investment income results. In addition to a greater impact from the $350 million to $370 million of share repurchases in 2024 as discussed earlier.

Tom: Those are my comments I'll now return the call back to Matt.

Matt: Thank you Tom does our comments and we will now open up the call for questions.

Matt: Thank you very much sir.

Matt: Ladies and gentlemen, as a reminder, if you have any questions. Please press star one on your telephone keypad.

Matt: Please also assure you meet folks who they stopped excavated ignored so just sticking with your equipment.

Matt: Yes.

Operator: Operator first question is coming from Jim Butler of Jpmorgan. Please go ahead.

Thomas Peter Kalmbach: As we noted on our last call, our endemic mortality assumptions currently assume returning to mortality levels slightly above pre-pandemic levels over the next few years. However, recent trends, if they should continue, indicate a quicker recovery than our current assumption. Finally, with respect to earnings guidance for 2024. For the full year 2024, we estimate net operating earnings per diluted share will be in the range of $11.50.

James Matthew Darden: Hey, good morning.

James Matthew Darden: First just had a question on.

James Matthew Darden: What is your what's your rough idea on the timing of Glenmark invested.

James Matthew Darden: Investigation, and then what's your process going to be going forward in terms of giving investors updates.

Should we assume that once something is completed or if you get a request from a regulator you would actually put out a filing or is it going to be more.

Thomas Peter Kalmbach: $12.00, representing 10.3% growth at the midpoint of our range. The $11.75 point midpoint is higher than our previous guidance and reflects recent and anticipated investment income results, in addition to a greater impact from the $350 million to $370 million of share repurchases in 2024, as discussed earlier. Those are my comments.

James Matthew Darden: Around scheduled earnings calls or other events.

Speaker Change: Yeah, Hi, Jimmy.

Speaker Change: The investigation.

Speaker Change: From over Hill will be happening in the near term.

Speaker Change: And we'll be providing updates.

Speaker Change: As appropriate on that if there is any material updates that are needed. Obviously, we will put that out through some type of a.

Speaker Change: 8-K.

James Matthew Darden: I now return the call to Matt. Thank you, Tom. Those are our comments, and we'll now open up the call for questions. Thank you very much, sir. Ladies and gentlemen, as a reminder, if you have any questions, please press star 1 on your telephone keypad. Please also ensure your mute function is not activated in order to let your signal reach your equipment.

Speaker Change: Filing.

Speaker Change: Otherwise there'll be more through our normal channels.

Speaker Change: And near term is it like one.

Speaker Change: A quarter or so or is even faster or slower just starting to get some sense right.

Speaker Change: As we mentioned earlier in respect of the ongoing <unk>.

Speaker Change: Activity don't have a specific time frame on that we're not really going to comment.

Speaker Change: Okay.

Operator: Our very first question is coming from Jim Bhullar of J.P. Morgan. Please go ahead. Hey, good morning.

Speaker Change: And then in terms of the impact on your business thus far.

Speaker Change: Realized two weeks is too short of a period, but.

Jamminder Singh Bhullar: So first, just had a question on what is your rough idea of the timing of the WilmerHale investigation? And then, what's your process going to be going forward in terms of giving investors updates? What should we assume that once something is completed, or if you get a request from a regulator, you'd actually put out a filing? Or is it going to be more around scheduled earnings calls or other events? Yeah, hi Jimmy.

Speaker Change: And you are implying that sales thus far have not been affected but are there other parts of your business that are affected there you've seen an impact either.

Speaker Change: Persistency of policies or retention of agents or any other aspects of the business where you're.

Speaker Change: You have seen an impact short term or longer term from what's gone on over the past couple of weeks.

Speaker Change: As I've mentioned in the earlier remarks is we're really not seeing an impact.

Speaker Change: The first place I think it would show up would be in the agent.

Unknown Executive: The investigation from WilmerHale will be happening in the near term, and we'll be providing updates, you know, as appropriate on that. If there are any material updates that are needed, obviously, we'll put that out through some type of AK filing. Otherwise, it'll be more through our normal channels. And in the near term, is it like one, a quarter or so, or is it even faster or slower, just trying to get something

Speaker Change: Our recruiting pipeline and we're not seeing an impact there as well as from a customer perspective, we received very limited out input from that.

Speaker Change: For point of reference we receive about 40% to 50000 calls a day and.

Speaker Change: In the early days, we're receiving three four or five calls.

Speaker Change: Recently that trend has been zero.

Speaker Change: We also have the agent call in line as well and we are receiving.

Unknown Executive: earlier in respect of the ongoing activity, don't have a specific time frame for that. We're, And then in terms of the impact on your business thus far, I realize two weeks is too short of a period, but, and you're implying that sales thus far have not been affected. But are there other parts of your business that are affected, where you've seen an impact either on persistency of policies or retention of agents, or any other aspects of the business where you've seen an impact short term or longer term from what's gone on over the past couple of weeks?

Speaker Change: Same thing just minimal to know zero calls from our agent field as well on this topic.

Speaker Change: And the blackout on your buybacks is that expiring.

Speaker Change: That goes a bit tomorrow or is it later on today or next week.

Yes, Jimmy that goes away it just in the normal course.

Speaker Change: But were open tomorrow to be able to start buying back shares.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you, Sir ladies and gentlemen, if your question has been answered you may remove yourself from the queue with pricing start to.

Speaker Change: Our next question please coming from Ryan Krueger from <unk>. Please go ahead.

Unknown Executive: Yeah, as I've mentioned in the earlier remarks, we're really not seeing an impact. You know, the first place I think it would show up would be in the agent recruiting pipeline, and we're not seeing an impact there.

Ryan Joel Krueger: Hi, Thanks. Good morning. My first question is can you help us understand.

Unknown Executive: As well as from a customer perspective, we received very limited input from that. You know, for point of reference, we receive about 40 to 50,000 calls a day. And in the early days, we'd receive three, four, or five calls. Recently, that trend has been zero.

Ryan Joel Krueger: Can you quantify the typical amount of capital strain on your free cash flow from new business in any given year I guess, what I'm trying to understand it.

Ryan Joel Krueger: Kind of separate the amount of in force free cash flow you generate versus the typical new business strength. So anything you can do to.

Ryan Joel Krueger: To help.

Ryan Joel Krueger: Quantify that please.

Speaker Change: Yes, Brian.

Brian Mitchell: Thanks for the question.

Speaker Change: On prior calls I've actually given a rule of thumb kind of along those lines for the agency channels, we expect.

Unknown Executive: We also have a call in line as well. And we're receiving the same thing just minimal to zero calls from our agent field as well on this. And the blackout on your buybacks, is that expiring, or does that go away tomorrow, or is it later today or next week? Yeah, Jimmy, that should go away just in the normal course, you know, that we're open tomorrow to be able to start buying back shares. Okay, thank you. Thank you, sir. Ladies and gentlemen, if your question is being answered, you may remove yourself from the queue by pressing star 2.

Speaker Change: Statutory strain.

Brian Mitchell: Up 40% to 50% of any increase in sales so that would work the same way as if we had a reduction in sales. So that gives you a good frame frame of reference for determining that.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: That's for the change in sales, but what about if you had no new sales at all can you give any sense of what how much higher your free cash flow would be.

Speaker Change: Yes, the same the same rule of thumb works. So if we had no sales.

Speaker Change: Basically about half of that would be an increase in excess cash flows.

Speaker Change: And the important thing to note is those would be increases in statutory earnings in the current year, which would then be excess cash flows in the following year at the parent to the parent.

Operator: Our next question is coming from Ryan Krueger calling from KBW. Please go ahead. Hi, thanks. Good morning.

Ryan Joel Krueger: My first question is, can you help us understand, can you quantify the typical amount of capital strain on your free cash flow from new business in a given year? I guess what I'm trying to understand is, I'm trying to separate the amount of in-force free cash flow you generate versus the typical new business strain. So anything you can do to help quantify that, Yeah, Ryan, thanks for the question. You know, on prior calls, I've actually given a rule of thumb kind of along those lines that for the agency channels, we expect [inaudible] Got it.

Speaker Change: Got it thanks and then.

Speaker Change: Maybe it will be temporary but given where your stock is currently trading in the depressed valuation multiple.

Speaker Change: You consider looking into <unk>.

Speaker Change: Enforce reinsurance transaction to monetize some portion of your existing in force value to then lead to additional buyback capacity to take advantage of the differential in price you may be able to get on a transaction like that versus where your stock is currently trading.

Speaker Change: Yes, Ryan I think we will take.

Ryan Joel Krueger: We will look at various options of how we might.

Speaker Change: Generate some financing for that or just say if that makes sense I mean that would be one of the opportunities that we would look into.

Okay, Great and then just one last quick one.

Ryan Joel Krueger: Can you give any sense of the mix between <unk>.

Ryan Joel Krueger: That's because of the change in sales. But what about if you had no new sales at all? Can you give any sense of how much higher your free cash flow would be? Yeah, the same rule of thumb works. So if we had no sales, you know, basically about half of that would be an increase in excess cash. And the important thing to note is that those would be increases in statutory earnings in the current year, which would then be excess cash flows in the following year to the parent.

Ryan Joel Krueger: First year commissions versus renewal commissions that you pay on business just trying to size kind of how meaningful our renewal commissions are the vast majority are paid in the first year.

Ryan Joel Krueger: Tom.

Tom: I do want to say, Brian I don't have that wrapped up here I do want to say that the majority of it is the first year commissions, but.

Tom: <unk>.

Speaker Change: I want to be careful with that.

Speaker Change: Yes, I would agree I think.

Ryan Joel Krueger: Got it. Thanks. And then, Maybe it will be temporary, but given where your stock is currently trading at a depressed valuation multiple, would you consider looking into an in-force reinsurance transaction to monetize some portion of your existing in-force value to then lead to additional buyback capacity to take advantage of the differential and the price you may be able to get on a transaction like that versus where your stock is currently trading?

Speaker Change: I mean, I think we can look at this.

Speaker Change: Commissions in our statutory filings to give some insight there, but I would say renewal commissions are less.

Speaker Change: Less than 10% of a renewal premiums so that might be a good frame frame of reference.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you Mr. Kruger.

Speaker Change: We'll now move to Wes Carmichael, calling from autonomous research. Please go ahead.

Wesley Collin Carmichael: Hey, good morning, and thanks for taking my question you talked about in your prepared remarks, potentially accelerating the buyback and bringing back maybe 2025 does that decision depend on the outcome of any review by Wilmerhale or irregular regulators.

Unknown Executive: Yeah, right. I think we will take, you know, a look at various options of how we might, you know, generate some financing for that or just see if that makes sense. I mean, that would be one of the opportunities that we would look at. Okay, great. And then just one last quick one.

Wesley Collin Carmichael: No.

Wesley Collin Carmichael: What we know today.

Unknown Executive: What can you give any sense of the mix between first-year commissions versus renewal commissions that you pay on business? Just trying to gauge how meaningful renewal commissions are, or are they the vast majority paid in the first year? I do want to say, right off the top here, that the majority of it is first-year commissions, but... Be careful with that. Yeah, I'd agree.

Wesley Collin Carmichael: We're looking at just our the timing of.

Wesley Collin Carmichael: Resources to be able to.

Wesley Collin Carmichael: Accomplishing that buyback and obviously, we're looking at market conditions as well and so if we have an opportunity to be buying back shares clearly less than our book value.

Wesley Collin Carmichael: We believe that Thats, a very good answer for our shareholders and very good return for that.

Wesley Collin Carmichael: That money now.

Wesley Collin Carmichael: Typically as you know our historic buyback methodology has been pro rata over the year, because we receive our dividends from our subsidiaries.

Wesley Collin Carmichael: When we get that over the course of the year and we kind of use our our CP balances to kind of help even that out some of the timing of that over the course of time.

Unknown Executive: I think. I think we could look at the Renewal Commissions and our statutory filings to get some insight there, but I would think, you know, renewal commissions are less than 10% of a renewal premium, so that might be a good frame of reference. Okay, great. Thank you. Thank you, Mr. Kruegger. When I move to Wes Carmichael calling from Autonomous Research, please go ahead.

Wesley Collin Carmichael: And so.

Wesley Collin Carmichael: All things else being equal we would be kind of doing that ratably throughout the remainder of 2024 as the liquidity becomes available and so we will be looking at opportunities to accelerate that and depending on the timing of just being able to get to.

Wesley Collin Carmichael: Hey, good morning, and thanks for taking my question. You talked about in your prepared remarks potentially accelerating the buyback and bringing back maybe 2025. Does that decision depend on the outcome of any review by WilmerHale or regulators? No, I mean, for what we know today, you know, we're looking at just the timing of, you know, resources to be able to accomplish any of that buyback. And obviously, we're looking at market conditions as well.

Wesley Collin Carmichael: To fund some of those.

Speaker Change: Got it and.

Speaker Change: And I guess the press release mentioned that you were blacked out repurchases compared to the quarter, you talked about that a little bit but can you just confirm with global potential acquirer of something and maybe any more color you could provide on that would be helpful.

Speaker Change: Though we were we were looking at an opportunity where we were going to be the acquirer early in January.

Wesley Collin Carmichael: And so if we have an opportunity to be buying back shares, clearly less than their book value, you know, we believe that that's a very good answer for our shareholders and a very good return for that money. Now, you know, typically, as you know, our historic buyback methodology has been prorated over the years. We receive our dividends from our subsidiaries. We kind of...and we get that over the course of the year.

Speaker Change: We've reached a.

Speaker Change: A decision where.

Speaker Change: The transaction would be material enough that it was probable enough to actually happen.

Speaker Change: But that we should put ourselves into a blackout period with respect to the repurchasing of our shares.

Speaker Change: As Tom noted in his comments.

Speaker Change: We are no longer considering that opportunity of course during the month of April.

Unknown Executive: And we kind of use our CP balances to kind of help even that out, some of the timing of that over the course of time. And so... All things else being equal, we would be kind of doing that radically throughout the remainder of 2024 as the liquidity becomes available. So we'll be looking at opportunities to accelerate that, and depending on the timing of just being able to fund some of those.

Speaker Change: Over the time period prior to our call. We're not we're at a normal blackout anyway because of.

Speaker Change: Material dollars that we have around earnings and such.

Speaker Change: So.

And then as I mentioned to Jim Neal will be coming out of that tomorrow.

Speaker Change: Thank you.

Speaker Change: Thank you Sir.

Speaker Change: We'll move now to John Darted clinical Piper Sandler. Please go ahead.

John Dart: Thank you for the opportunity and good morning, the guidance for admin expense include the cost of the Wilmerhale investigation.

Unknown Executive: And I guess the press release mentioned that you were blacked out of repurchases for part of the quarter. You talked about that a little bit, but can you just confirm that Globe was the potential acquirer of something and maybe some newer color you could provide on that? Yeah, no, we were looking at an opportunity where we were going to be the acquirer early in January. You know, we reached a decision where the transaction would be material enough, and it was probable enough that it would actually happen, that we thought that we should put ourselves into a blackout period with respect to the repurchasing of our shares.

Speaker Change: I would say that the.

Speaker Change: Overall estimates of.

James Matthew Darden: Everything that we know today would be included in our overall guidance of what we have given.

James Matthew Darden: Okay and then when.

James Matthew Darden: When you looked at the Beasley transaction, a few years ago.

James Matthew Darden: Did that cause the repurchase blackout during.

Speaker Change: That period I'm, just trying to get some sizing of what you were looking to be thank you.

Yes. It did it was just a short period of time.

Speaker Change: Thank you for that.

Unknown Executive: As Tom noted in his comments, you know, we're no longer considering that opportunity. Of course, during the month of April, here, there's a time period prior to our call where we're not in a normal blackout anyway because of, you know, knowledge, material knowledge that we have around earnings and such. So, and then, as I mentioned to Jim, you know, we'll be coming out of that tomorrow. Thank you. Thank you. We'll move now to John Darnage calling from Piper-Sandler.

Speaker Change: Thank you Sir.

Speaker Change: Our next question will be coming from heavy Zig Greenspan, calling from Wells Fargo. Please go ahead.

Zig Greenspan: Hi, Thanks. Good morning. My first question I guess is also on the potential M&A deal did you guys choose to walk away.

Zig Greenspan: Because you weren't interested in the property or did you walk away because it was a function of where your stock price was when you made that decision.

Zig Greenspan: Yes.

Zig Greenspan: We did end up walking away, primarily as a result of the stock price of where we're at today as we got to looking at what would be the best utilization of our funds for.

John Bakewell Barnidge: Please go ahead. Thank you for the opportunity and good morning. Did guidance for admin expenses include the cost of the WilmerHale investigation? I would say that the overall estimates of everything that we know today would be included in our overall guidance of what we... Okay, and then when you looked at the Beazley transaction a few years ago, did that cause a repurchase blackout during that period? Just trying to get some sizing on what you were looking at. Thank you. Yeah, it did. It was just a short period of time.

Zig Greenspan: For our shareholders and being able to give the highest and best risk adjusted returns to our shareholders. We did make the decision that.

Zig Greenspan: Repurposing any acquisition funds, if you will towards the purchase of our own shares would be in the best interest.

Zig Greenspan: And then can you just remind us like some properties I guess that you like.

Zig Greenspan: And M&A perspective find attractive I mean, I guess, obviously the buyback it sounds like you guys are on hold for a while with deals, but just as we try to get a sense of maybe what you might have been looking at in the quarter.

Speaker Change: Yes, as far as M&A goes we typically look at.

Unknown Executive: Thank you for that. Thank you, sir. Our next question will be coming from Eddie Zagareenspan calling from Wells Fargo. Please go ahead. Hi, thanks. Good morning.

Speaker Change: Opportunities that are in our markets, we like the middle income market. We also like the products that we distribute in the form of the risk profile of the profitability profile of those so basic protection life for supplemental health products. We also like exclusive.

Eddie Zagareenspan: My first question, I guess, is also on the potential M&A deal. Did you guys choose to walk away? You know, because you were no longer interested in the property?

Speaker Change: <unk>.

Speaker Change: Or opportunities from a direct to consumer perspective, and so our current business model is that framed up is that's the lens, we look through as we think about M&A opportunities.

Unknown Executive: Or did you walk away because it was a function of where your stock price was when you made the decision? Yeah, we did end up walking away primarily as a result of the stock price where we're at today, as we got to looking at what would be the best utilization of our funds for our shareholders and being able to give the highest and best risk-adjusted returns to our shareholders. We did make the decision that repurposing any acquisition funds, if you will, you know, toward the purchase of our own shares would be the best. And then can you just remind us of some properties, I guess, that you would, you know, from an M&A perspective, find attractive?

Speaker Change: Thank you.

Speaker Change: Thank you ma'am.

Speaker Change: We'll now go to Wilma Burtis claims from Raymond James. Please go ahead.

Speaker Change: Yes.

Hey, good morning could you talk a little bit about what drove up the 2020 for excess cash flow.

Wilma Burtis: Versus the prior guide.

Wilma Burtis: Yeah, well look it really was just a little bit higher statutory earnings as we finalize the earnings from 2023.

Unknown Executive: I mean, obviously, the buyback, it sounds like you guys are on hold for a while, it feels, but just as we try to get a sense of maybe what you might have been looking at in the quarter. As far as M&A goes, we typically look at opportunities that are in our markets. We like the middle-income market. We also like the products that we distribute in the form of the risk profile, and the profitability profile of those. So basic protection life or supplemental health products.

Wilma Burtis: Seeing a little bit higher subsidiary dividends to 'twenty two.

Wilma Burtis: To the parent.

Wilma Burtis: Well I would just think about the timing of that that our statutory blue book for 2023 really don't get fully completed until sometime in <unk>.

Wilma Burtis: In February.

Wilma Burtis: That's after the time that we have that first quarter call.

Speaker Change: What I would add is I think thats consistent with the favorable mortality results that we saw in the third and fourth quarter of 2023 as well.

Speaker Change: Okay and following up on an earlier question, maybe just can you talk a little bit about.

Unknown Executive: We also like exclusive distribution or opportunities from a direct-to-consumer perspective. And so our current business model, as that's framed up, that's the lens we look through as we think about M&A opportunities. Thank you. Thank you, ma'am. We'll now go to Wilma Burdis calling from Raymond James. Please go ahead. Hey, good morning.

Speaker Change: You talked about bringing forward some 2025 excess cash flows or is there any way to quantify that amount or.

Speaker Change: That could work.

Speaker Change: Right now we will move there really is we'll take a look at the situation.

Speaker Change: As we as we think about where the share price.

Speaker Change: Changes over time, and just in our availability of cash flows in.

Speaker Change: <unk>.

Speaker Change: We'll just have to look at that over and we should be able to give more update on that clearly on our next call.

Wilma Carter Jackson Burdis: Could you talk a little bit about what drove up the 2024 excess cash flow versus the prior guide? Yeah, well, it really was just a little bit higher statutory earnings as we finalized the earnings from 2023. We're seeing a little bit higher subsidiary dividends. Yeah, well, just think about the timing of that, that our statutory blue book for 2023 really doesn't get fully completed until sometime in February.

Speaker Change: Thank you.

Speaker Change: Thank you very much.

Speaker Change: Our next question will be coming from Tom Gallagher Evercore ICI. Please go ahead.

Thomas George Gallagher: Good morning.

Thomas George Gallagher: First first a question just on the Doj subpoena.

Unknown Executive: So at the time that we have that first quarter call, and what I'd add is, you know, I think that's consistent with the favorable mortality results that we saw in the third and fourth quarters of 2023 as well. Okay, and following up on an earlier question, maybe just can you talk a little bit about, you know, you talked about bringing forward some 2025 excess cash flows. But is there any way to quantify that amount or how that could work? Right now, Wilma, there really isn't.

Thomas George Gallagher: Im curious like why Theres any involvement by the Doj here at all just considering I thought the domain of sales practices of life insurers.

Thomas George Gallagher: State insurance regulators, not any kind of federal body, but.

Thomas George Gallagher: And then any perspective on that of what's going on here and is there a subpoena in coordination with insurance regulators or just is it just stand alone.

As Ed mentioned earlier.

Thomas George Gallagher: Jay Kevin ongoing matter I, just refer you back to what we said earlier in our prepared remarks related to our.

Thomas George Gallagher: Our assessment of the Doj.

Unknown Executive: We'll take a look at the situation as we think about where the share price changes over time and just in our availability of cash flows, and we'll just have to look at that over the course of the cut. And we should be able to give more updates on that clearly on our next call. Thank you. Thank you so much.

Thomas George Gallagher: Activity.

Thomas George Gallagher: And the impacts thereof.

Thomas George Gallagher: Yes.

Thomas George Gallagher: Okay.

And then just a follow up on the.

Thomas George Gallagher: The blackout the M&A opportunity you were looking at.

Thomas George Gallagher: Good.

Since I guess it was material.

Thomas George Gallagher: Should we assume that you would have been using equity to finance it or was it just a question of excess cash flows uses of excess cash flows for M&A I just wanted to get a sense for what the message here is on.

Unknown Executive: Our next question will be coming from Tom Gallagher calling from Evercore ICI. Please go ahead. Good morning.

Thomas George Gallagher: Just first, a question just on the DOJ subpoena. I'm curious, like, why there's any involvement by the DOJ here at all. Just considering, I thought the domain of sales practices of life insurers was state insurance regulators, not any kind of federal body. But, you know, any perspective on that of what's going on here? And is there a subpoena in coordination? With insurance regulators? Or is it just standalone?

Thomas George Gallagher: The decision to not go ahead with it yes.

Thomas George Gallagher: Yes, Tom I don't think you should make that assumption necessarily.

Thomas George Gallagher: We would be looking at just a matter of regardless of how we were looking at financing it not necessarily with equity.

Thomas George Gallagher: It was a better use of those funds.

Thomas George Gallagher: Gotcha, Okay. Thank you.

Thomas George Gallagher: Thank you Mr Gallagher.

Thomas George Gallagher: We'll now move to Bob Wang calling from Morgan Stanley. Please go ahead.

Unknown Executive: As I mentioned earlier, you know, that's the subject of an ongoing matter. I just refer you back to what we said earlier in our prepared remarks related to our assessment of DOJ activity and the impact thereof. Okay. And then just to follow up on the blackout, the M&A opportunity you were looking at, would, since I guess it was material, should we have assumed that you would have been using equity to finance it?

Bob Wang: Hi, Good afternoon. Good morning. Thank you for that so my first question is regarding our lapse rate. So if we look at American income the lapse rate continues to inch higher year on year understanding there are quite a bit of quarterly fluctuations, but maybe can you talk about what is driving the lapse rate moving higher.

Unknown Executive: Or was it just a question of excess cash flows, and uses of excess cash flows for M&A? I just want to get a sense of what the message here is about the decision not to go ahead with it. Unknown Speaker: Yeah, Tom, I don't think you should make that assumption necessarily, you know, we would be looking at just a matter of, regardless of how we were looking at financing it, not necessarily with equity. You know, it was a better use of those, Gotcha.

Bob Wang: <unk> this quarter versus last year's same quarter and further just maybe just.

Bob Wang: As lapse rate has normalized higher from 2021 from a statutory basis can you maybe talk about generally what are the drivers on a run rate expectation for lapse rate of American income.

Bob Wang: Yes.

Bob Wang: <unk> first year lapse rates were higher for the quarter.

Bob Wang: At this point, we don't see the uptick as anything other than fluctuations.

Bob Wang: And we've had quarters in the past that have been.

Bob Wang: Lapse rates.

Bob Wang: We're similar in addition at kind of as you mentioned there is some seasonality in lapse rates in the first quarter tends to be a little higher than other quarters.

Bob Wang: On the renewal of lapse rates I think thats really a function of.

Bob Wang: A change in the mix of business as sales as we generated more sales over the over the recent years Theres more business in that second third and fourth durations, which tend to have a little bit higher lapse rates then.

Unknown Executive: Okay. Thank you. Thank you, Mr. Gallagher. We'll now move to Bob Huang coming from Morgan Stanley. Please go ahead. Hi, good afternoon, good morning.

Bob Huang: Thank you for this. So my first question is regarding the lapse rate. So if we look at American income, right, the lapse rate continues to inch higher year on year, understanding there are quite a few quarterly fluctuations. But maybe can you talk about what is driving the lapse rate moving higher this quarter versus last year, same quarter, and further just maybe just as it has normalized higher from since 2021, on a statutory basis? Can you maybe talk about, generally, what are the drivers and the run rate expectation for lapse rate for American income?

Bob Wang: We would have in place for those that have been on the books for a long period of time. So I think those are the things that are that are impacting <unk> at this point.

Speaker Change: Okay got it so it was essentially like a normal lapse rate changed or not necessarily something abnormal got it. Thank you.

Speaker Change: So my second question I know that a lot of people have been asking about the Doj is not something that you're at liberty to discuss for most of it but just given the current Doj probe given the negative headlines from the third party distributors than previously.

Is there a need to maybe revisit the sales organization structure of the compliance procedures.

Unknown Executive: Yeah, I mean, the AIL first year lapse rates were higher for the quarter. But at this point, we don't see the uptick as anything other than fluctuation. We've had quarters in the past that had lapse rates that were similar. In addition, as you mentioned, there is some seasonality in lapse rates; the first quarter tends to be a little higher than other quarters. On the renewal lapse rates, I think that's really a function of a change in the mix of business as sales as we've generated more sales over the recent years.

Youre a distributor relationship things of that nature in terms of how you think about risk management and compliance going forward is there a need for change so to speak.

As we have said, we take unethical agent conduct very seriously we have measures that we detect and detour. These actions. We also continually evaluate our controls and update those as necessary and we're comfortable that our processes continue to function as intended.

Speaker Change: So for now we are.

Speaker Change: Pleased with the.

Speaker Change: The processes that we have in place.

Speaker Change: <unk> of issues in the field and as Ed mentioned, we have dedicated teams that research and evaluate and conduct investigations on issues as they become known.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you Mr. Wang.

Speaker Change: Well now move to soon need how much calling from Jefferies. Please go ahead.

Jefferies: Yeah. Thanks, I was wondering if you could comment a bit on the.

Unknown Executive: [inaudible] So my second question, I know that a lot of people have been asking about the DOJ, and it's not something that you're at liberty to discuss for most of it. But just given the current DOJ probe, given the negative headlines from the third-party distributors and previously, is there a need to maybe revisit the sales organization structure, the compliance procedures, your distributor relationship, things of that nature, in terms of how you think about risk management and compliance going forward? Is there a need for change, so to speak? As we have said, we take unethical agent conduct very seriously. We have measures that detect and deter these actions.

Jefferies: <unk> of your sales in your various channels.

Two two agencies you had mentioned the areas organization in <unk> can you give us a sense of how much premium comes from that organization as well as just some data on that concentration top couple of distributors in each channel and how much that represents.

Jefferies: Sure.

Jefferies: Maybe first for areas, it's about 6% or so of our new production one of the things I think is important to keep in mind is that as an organization of several hundred agents and all of those agents are individual contractors that are contracted with us and we have agency.

Unknown Executive: We also continually evaluate our controls and update those as necessary, and we're comfortable that our processes continue to function as intended. So for now, we're pleased with the processes that we have in place, the identification of issues in the field, and, as I mentioned, we have dedicated teams that research, evaluate, and conduct investigations on issues as they become known. Thank you very much. Thank you, Mr. Wayne. We'll now move to Suneet Kamath calling from Jeffreys.

Owners that.

Jefferies: Come and go.

Jefferies: Routine basis is just part of our normal business practices as you might imagine we have agency owners that retire they pursue other interests and as I had mentioned earlier on occasion, it's necessary for us to terminate one so we have long business practices over the our ability to transition those age.

Jefferies: <unk>, who keep producing business for us and they're contracted.

Jefferies: And so sometimes we look at just overall.

Suneet Laxman L. Kamath: Please go ahead. Yeah, thanks. I was wondering if you could comment a bit on the concentration of your sales and your various channels to agencies. You mentioned the ARIES organization and AIL. Can you give us a sense of how much premium comes from that organization, as well as just some data on that concentration, you know, the top couple distributors in each channel, like how much that represents.

Jefferies: The larger agencies in our larger organizations in our different agencies, sometimes that kind of follows along the 80 20 rule.

Jefferies: But again those are really.

Jefferies: Sometimes they are partnerships theres multiple agency owners involved et cetera, and so I feel like we've got great processes in place to deal with transitions as they are necessary.

Suneet Laxman L. Kamath: Sure. Maybe first for Arius, it's about 6% or so of our new production. One of the things I think it's important to keep in mind is that it's an organization of several hundred agents, and all of those agents are individual contractors that are contracted with us. And we have agency owners that come and go on a routine basis. It's just part of our normal business practices. As you might imagine, we have agency owners that retire, they pursue other interests, and, as I mentioned earlier, on occasion, it's necessary for us to terminate one.

Jefferies: And with that.

Jefferies: Is that sorry go ahead.

Speaker Change: I was going to say, Matt to add to that that 6% is part of American income life sale, yes at about 3% overall, yes American income life new sales.

Matt: And when you think about that 6% is that a is that a big number relative to.

Matt: It's kind of the overall organization like the other distributors that you have in there or is that.

Speaker Change: I just wanted to get a sense of what that 6% feels like to you guys.

Speaker Change: It's one of our larger ones.

Speaker Change: It's kind of gets back to that 80 20 rule is that we.

Speaker Change: We have over.

Speaker Change: Around 100 agency owners, and then more more than that when we start looking at.

Unknown Executive: So we have long business practices over our ability to transition those agents who keep producing business for us, and they're contracted with us. And so sometimes we look at just overall the larger agencies in our larger organizations across our different agencies. Sometimes that kind of follows along the 80-20 rule.

Speaker Change: Individuals involved in partnerships and the like and so.

Speaker Change: Simplistically, our top 20%, probably produce about 70% or 80% of our new sales, but I'll just go back to as a reminder.

Speaker Change: Those agency owners are in charge of and the organization of those agents that are individually contracted with us and those agents who are individually contracted with us stay with us over a period of time and work their way through their our own career tracks.

Unknown Executive: But again, those are really partnerships, there are multiple agency owners involved, etc. And so I feel like we've got great processes in place to deal with transitions as they're necessary. And with that, sorry, go ahead.

Speaker Change: Got it and then I guess I'm still a little confused on the whole remeasurement gains it sounds like there wasn't anything here in the quarter, but.

Unknown Executive: I was just going to say, Matt, to add to that, that 6% is part of American Income Life sales and about 3% overall. American Income Life's news. And when you think about that 6%, is that a big number relative to kind of the overall organization, like the other distributors that you have in there? Or is that? I just want to get a sense of what that 6% feels like to you guys. It's one of our larger ones.

Speaker Change: Are you guiding it sounds like also you are guiding to some sort of impact with the third quarter assumption review that should be positive.

Speaker Change: If that is true I don't know if theres any way that you could kind of size that and is that embedded in your guidance yet or not.

Speaker Change: Yes.

Speaker Change: Our our guidance in the range of our guidance reflects kind of are they.

Speaker Change: The information that we have now and our expectations with regards to re measurement.

Unknown Executive: Like I said, it kind of gets back to that 80-20 rule of, you know, the fact that we have over, around 100 agency owners. And then more, more than that, when we start looking at individuals involved in partnerships and the like. And so, you know, simplistically, our top 20% probably produce about 70 or 80% of our new sales. But I'll just go back to, as a reminder, those agency owners are in charge of an organization of those agents that are individually contracted with us, and those agents that are individually contracted with us, you know, stay with us over a period of time and work their way through our own career track. I got it.

Speaker Change: Gains or losses due to an assumption change I think.

Speaker Change: We continue to monitor the trends and if you could look back to the third quarter and fourth quarter re measurement gains those are.

Speaker Change: Fairly sizable we had expected first quarter to be lower just because of the flu season, and RSV and other things that usually lead to a little bit higher mortality in the first quarter. So.

Speaker Change: Those are kind of some of the inputs to how do we think about assumption changes when we when we go into the third quarter.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you very much.

Speaker Change: We now have a follow up question from Jimmy Bullard, calling from Jpmorgan. Please go ahead.

Jamminder Singh Bhullar: Hey, So just wanted to follow up on a couple of things related to your guidance.

Unknown Executive: And then I guess I'm a little confused on the whole remeasurement gains. It sounds like there wasn't anything here in the quarter, but, Are you guiding? It sounds like you're guiding to some sort of impact with the third quarter assumption review that, you know, should be positive. If that's true. I don't know if there's any way that you could kind of size that.

Jamminder Singh Bhullar: Are you assuming the lower share price.

Jamminder Singh Bhullar: For buybacks in your updated guidance as well.

Jamminder Singh Bhullar: We are yes.

Jamminder Singh Bhullar: The lower share price, if I think about the ink the 20% increase to our guidance a little less than half was related to investment income and the remainder was really driven by share price changes.

Unknown Executive: And is that embedded in your guidance yet or not? Yeah, our guidance and the range of our guidance reflects the kind of information that we have now and our expectations with regard to remeasurement gains or losses due to an assumption change. I think, you know, we continue to monitor the trends, and if you look back at the third quarter and fourth quarter remeasurement gains, those were fairly sizable. We had expected the first quarter to be lower just because of the flu season and RSV and other things that usually lead to a little bit higher mortality in the first quarter.

Jamminder Singh Bhullar: And then the rig.

Measurement gains it seems clear that that's in the order assumption as well any sort of big changes in the euro assumption the underlying assumptions as part of the annual actuarial review.

Jamminder Singh Bhullar: And guidance as well or are they not.

Jamminder Singh Bhullar: They're reflected in our range Jimmy so.

Jamminder Singh Bhullar: Again, we're making based upon what we what we know today and the trends we're trying to make our best estimate as far as where we think guidance will emerge yeah. Jimmy it's still too early to know whether or not of course, whether there would be any assumption change coming up in the third quarter. We're obviously of the range, we're looking at various possibilities.

Unknown Executive: So those are kind of some of the inputs to how we think about assumption changes when we go into the third quarter. Okay, thanks. Thank you very much. We now have a follow-up question from Jimmy Bhullar calling from J.P. Morgan. Please go ahead.

I mean, if we continue to have a re measurement gains.

Jamminder Singh Bhullar: And whether or not that could lead to an assumption change or not or if we ended up having some worst experience, which goes the other way right. So all of that all of that.

Jamminder Singh Bhullar: Hey, so just wanted to follow up on a couple of things related to your guidance. Are you assuming the lower share price for buybacks in your updated guidance as well? We are, yeah, the lower share price. If I think about the 20 percent increase in our guidance, a little less than half was related to investment income, and the remainder was really driven by share prices. And then the remeasurement gains, it seems clear that that's in your assumption as well.

Jamminder Singh Bhullar: Embedded in the overall guidance.

Jamminder Singh Bhullar: And then if we look at CDC data overall population that they are still running higher than pre COVID-19.

Jamminder Singh Bhullar: And some of that has to do with drug abuse and other things they are improving but they haven't gotten back to pre COVID-19. Yet are you noticing the same in the order book as well or is the order book recently been running close to long term pre COVID-19 type levels.

Yes, I'd say, it's still running a little bit higher, particularly for some causes and drug related deaths are continue to be elevated.

Jamminder Singh Bhullar: Any sort of big changes in your assumptions, the underlying assumptions as part of the annual actuarial review, are those in guidance as well, or are they not? They're reflected in our range, Jimmy, so... Again, we're making, based upon what we know today and the trends, we're trying to make our best estimate as far as where we think guidance will emerge. Yeah, Jimmy, it's still too early to know whether or not, of course, whether there will be any assumption change, you know, coming up in the third quarter.

Jamminder Singh Bhullar: Even we've seen some improvements off the peak for say heart disease, but it's still not back to pre pandemic levels, where we are seeing some significant improvement as in motor vehicles and homicide seem to have come down quite a bit.

Speaker Change: And then just lastly on the deal that you were talking about.

Speaker Change: Was this along and assuming this is along the lines of deals that you've done in the past in terms of business mix and distribution, but in terms of size was this a lot larger than what you've done in the past because I don't remember youre doing sort of a multibillion dollar type deal recently, but it seems like this could have been a lot bigger but not.

Unknown Executive: We're obviously in the range, and we're looking at various possibilities of, I mean, if we continue to have remeasurement gains and whether or not that could lead to an assumption change or not, or if we end up having some worse experiences, which, you know, goes the other way, right? So all that's, all of that's embedded, you know, in the overall. And then if we look at CDC data or overall population deaths, they're still running higher than before COVID, and some of that has to do with drug abuse and other things. They're improving, but they haven't gotten back to pre-COVID yet.

Speaker Change: I'm not sure if you're able to comment.

Speaker Change: Yes, Jimmy.

Speaker Change: Can't really comment about any kind of specifics I mean, obviously it was it was material enough.

Unknown Executive: Are you noticing the same in your book as well? Or is your book recently running close to long-term pre-COVID type levels? Yeah, I'd say it's still running a little bit higher, particularly for some causes, and drug-related deaths continue to be elevated. Even, you know, we've seen some improvements off the peak for, say, heart disease, but it's still not back to pre-pandemic levels.

I would just say a little bit bigger than what some of them that we've tiered done recently.

Speaker Change: Okay, and I'll just ask one more.

Speaker Change: Direct response sales have been weak for a while and part of that is just high inflation and higher postage costs.

Speaker Change: There is talk of both digit costs going up further I am assuming that if they do then you'll probably see continued weak sales or an incremental impact from that right.

Speaker Change: Yes.

Speaker Change: Getting more muted over over time as more of our sales come through the digital channel, but it does it does have an impact and we do watch closely.

Unknown Executive: What we are seeing some significant improvement in are motor vehicles, and homicide seems to have come down quite a bit. And then just lastly, on the deal that you were talking about, was this along, I'm assuming this is along the lines of deals that you've done in the past in terms of business mix and distribution, but in terms of size, was this a lot larger than what you've done in the past?

Speaker Change: With the postage increases are planned to be and adjust accordingly.

Speaker Change: As I've mentioned, our guidance is probably slightly down for the year from a sales growth perspective, but also just keep in mind, it's very important the activity that direct to consumer is doing to support all of our agency sales that would not be reflected directly in the sales attributed.

Unknown Executive: Because I don't remember you doing sort of a multi-billion dollar type deal recently, but it seems like this could have been a lot bigger, but I'm not sure if you're able to comment. Yeah, Jimmy. You can't really comment about any kind of specifics. I mean, obviously, it was material enough.

Speaker Change: The direct to consumer channel.

Speaker Change: Okay. Thank you.

Speaker Change: Okay. Thank you very much sir.

We have another follow up question. This time from will Curtiss of Raymond Jones Raymond James. Please go ahead.

Will Curtiss: Hey, guys. Thanks for taking the follow up.

Unknown Executive: It was, I would just say, a little bit bigger than some of them that we've done here recently. Okay, and I'll just ask one more question on direct response sales being weak for a while. And part of that is just high inflation and higher postage costs. There is talk of postage costs going up further. I'm assuming that if they do, then you'll probably see continued weak sales or an incremental impact from that, right? Yes, it's getting more muted over time as more of our sales come through the digital channel, but it does, it does have an impact.

Will Curtiss: Just a quick one I think Tom asked earlier about the Doj investigation.

Unknown Executive: And we do watch closely what the postage increases are planned to be and adjust accordingly. You know, as I've mentioned, our guidance is probably slightly down for the year from a sales growth perspective. But also, just keep in mind that it's very important the activity that direct to consumer is doing to support all of our agency sales that would not be reflected directly in the sales attributed to the direct to consumer channel. Yeah. Okay. Thank you. Thank you very much, sir. We have another follow-up question, this time from Wilma Burdis of Raymond James. Please go ahead.

Will Curtiss: From everything I've read it seems like it could be related to that.

Will Curtiss: Susan investigation sexual harassment claim.

Will Curtiss: Is that.

Will Curtiss: Well Mark there or.

Mark: Yes. It is.

Mark: We mentioned in our prepared remarks is the subpoena is sought documents related to sales practices that certain licensed insurance agents in the areas of organization.

Mark: So we're contracted to sale of American income policies.

Speaker Change: Okay got you.

Speaker Change: And then the other one you guys talked a little bit about the percentage of premium from policies that have been enforced for more than one year.

Have you noticed any trends in that figure over time or has it been pretty stable.

Speaker Change: Really been pretty stable I mean, you look at the data I would point to your attention too.

Speaker Change: The data that we did put on the supplemental financial information on the website and so we've got 10 years worth of data out there for both global life and.

As a whole and then American income in 10 years breakdown between renewal.

Speaker Change: And first year premium on those as well so.

Wilma Carter Jackson Burdis: Hey guys, thanks for taking the follow-up. Just a quick one; I think Tom asked earlier about the DOJ investigation. You know, from everything I've kind of read, it seems like it could be related to the, you know, EEOC and the investigations into sexual harassment claims. Is that my way off mark there, or not? Yeah, as we mentioned in our prepared remarks, the subpoena sought documents related to sales practices by certain licensed insurance agents in the area's organization who are contracted to sell American income policies, and the other one, you guys talked a little bit about the percentage of premiums from policies that have been enforced for more than one year.

Speaker Change: Yes, and I, just think that really.

Speaker Change: Is it really shows the stable nature of our business as I continue to go through and look.

Speaker Change: And I think about our business.

Speaker Change: If you go back.

Three 510 years and look at our in force business. It has grown over 5% in each of those periods and I think if you look at 15 years. This is our life business and if you go back 15 years.

Speaker Change: It's probably just a little bit under 5% and our earned premiums are growing basically at that same rate as well.

Speaker Change: You kind of look at that schedule and you look at the renewal premium versus the first year premium and it's.

Speaker Change: Pretty consistent so.

Unknown Executive: Have you noticed any trends in that figure over time, or has it been pretty stable? It has really been pretty stable. I mean, you look at the data, and I would point your attention to the data that we did put on the supplemental financial information on the website. And so we've got 10 years worth of data out there for both Globe Life and as a whole, and then American income, and it's the 10 years breakdown between renewal and first year premium on those as well. So I, yeah, and I just think that it really shows the stable nature of our business as I continue to go through and look, and think about our business. Yep, you go back.

Speaker Change: It is just really showing a very stable consistent growth and that as Matt mentioned in his comments turns into stable consistent growth of cash premium collections of which at least at American income over 95% of those are collected on a monthly base.

Speaker Change: <unk>.

And it's a little bit less of that on a total global life basis.

Speaker Change: But again, that's consistent cash flow that we've talked about over the over the years many years.

Speaker Change: On.

Is the the strong stable support for our operations and our statutory operations, where we generate.

Speaker Change: Over $1 billion of operating cash flows year engineer out so.

Unknown Executive: 3, 5, 10 years, and look at our in-force business; it has grown over 5% in each of those periods. And I think if you look at 15 years, this is on our life business. And if you go back 15 years, it's probably just a little bit under 5%.

Speaker Change: The trends on those are pretty consistent over time.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you very much.

Speaker Change: We will now go back to Tom Gallagher of Evercore ISI. Please go ahead.

Thomas George Gallagher: But just a follow up on something you mentioned on the investment new money yield side. When you said, the 8% to 10% expected returns on some <unk>.

Unknown Executive: And our earned premiums are growing, you know, basically at that same rate as well. And you kind of look at that schedule, and you look at the renewal premium versus the first year premium, and it's, you know, pretty consistent. So it is, it's just really showing very stable, consistent growth. And that, as Matt mentioned in his comments, turns into stable, consistent growth of cash premium collections, of which, at least at American income, over 95% of those are collected on a monthly basis. And it's a little bit less than that on a total Globe Life basis.

Thomas George Gallagher: Alternative type strategies can you can you just.

Thomas George Gallagher: Clarify how much money are you expecting to invest in those.

Thomas George Gallagher: And what types of asset classes are you looking to expand into again.

Speaker Change: Yes, that's about four to $4 to $500 million is what we would anticipate and spending and non fixed maturity.

Speaker Change: Investments during the year.

Speaker Change: What that is is really hit.

Speaker Change: Those three year commercial transitional commercial mortgage loans and then there is.

Unknown Executive: But again, that's consistent cash flow that we've talked about over the years, many years on, you know, is the strong, stable support for our operations and our statutory operations where we generate, you know, over a billion dollars of operating cash flows year in and year out. The trends on those are pretty consistent. Thank you. Thank you very much. We'll now go back to Tom Gallagher of Evercore ISI.

Speaker Change: LP.

Speaker Change: Strategies.

Speaker Change: Half of which are in commercial some of those are in commercial mortgage loans as well as other have more they have.

Speaker Change: Underlying that white characteristics, whether it be infrastructure.

Speaker Change: Or other types of.

Speaker Change: Debt strategies within them.

Speaker Change: It's probably not quite.

Speaker Change: Relatively close to half and half with respect to those.

Speaker Change: Got it so infrastructure and.

Speaker Change: Transitional real estate or the main two categories.

Thomas George Gallagher: Please go ahead. But just a follow up on something you mentioned on the investment new money yield side, when you said that eight to 10% expected returns on some alternative type strategies, can you just clarify how much money were you expecting to invest in those? And what types of asset classes are you looking to expand into again? Yeah, that's about four to four to five hundred million dollars. That's what we would anticipate spending on non-fixed maturity investments during the year.

Speaker Change: Yes.

Speaker Change: And just just out of curiosity I presume, there's a higher <unk> charges.

Speaker Change: And if youre looking to husband capital and improve free cash flow isn't that kind of be somewhat of a drag obviously not for this year's free cash flow, but for next year.

Yes, so on the commercial mortgage loans thats not the case now if they are in the LP structure, you do end up with a little higher RBC, where obviously, we're taking that into account as we look we talk a lot about having a risk adjusted.

Thomas George Gallagher: And what that is, is really it's those three-year commercial transitional commercial mortgage loans. And then there are LP strategies, about half of which are in commercial real estate, some of those are in commercial mortgage loans as well as others that have more, you know, they have underlying debt-like characteristics, whether it be infrastructure or other types of, you know, debt strategies within them. So it's probably not quite, you know, relatively close to half and half with respect.

Speaker Change: And capital adjusted returns so when we look at these.

Speaker Change: Investments that are that are getting put on.

Speaker Change: Scheduled VA and having a little RBC charge.

Speaker Change: We make we look at that and make sure that we're getting that.

Appropriate lift if you will to pay for that additional capital.

Got you okay. Thanks.

Speaker Change: And I will just clarify theres some piece of that that infrastructure is one of them the volatile.

Speaker Change: Straight credit Lps.

Speaker Change: We're looking just at some private credit strategies and I'll keep in mind. All of these are managed by outside of more partnering with JP Morgan Goldman Pimco Aries.

Unknown Executive: Got it. So infrastructure and transitional real estate are the main two categories. And just out of curiosity, I presume there's a higher C1 charge.

Speaker Change: Metlife, Yes, we have had several different partners that are helping too.

Speaker Change: We're investing these through.

Unknown Executive: And if you're looking to manage capital and improve free cash flow, isn't that going to be somewhat of a drag? Now, obviously not for this year's free cash flow, but for next year. Yeah, so on the commercial mortgage loans, that's not the case. Now, if they are in the LP structure, you do end up with a little higher RBC.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you Mr Gallagher.

Speaker Change: We have another follow up question. This time from Wes Carmichael of Autonomous research. Please go ahead.

Wesley Collin Carmichael: Yes, Thanks for taking my follow up just one on American income I think you said the midpoint of your guidance on agent count and sales growth is low to mid single digits and I think that's a slowdown from what you were expecting last quarter and I guess I'm. Just curious is that slowdown youre anticipating from negative press or litigation and you're actually seeing that show up yet.

Unknown Executive: We're obviously taking that into account as we look, you know, we talked a lot about having risk-adjusted and capital-adjusted returns. So when we look at these investments that are getting put on Schedule BA and having a little RBC charge, we look at that and make sure that we're getting that as an appropriate lift, if you will, to pay for that additional capital. Okay, thanks. And I will just clarify, there's some pieces that the infrastructure is one of them. There are also just, you know, just straight credit LPs.

Speaker Change: Like I mentioned earlier, we're really not seeing it.

Speaker Change: And our recruiting pipeline, which I think is where it would show up first.

Speaker Change: We just revised down slightly to low single digit growth on the agent count side and mid single digit growth on the sales side and just again.

Unknown Executive: You know, we're looking just at some private credit strategies. And I will keep in mind, all of these are managed by outsiders and we're partnering with, you know, JP Morgan, Goldman, PIMCO, Aries, MetLife, you know; we have had several different partners that are helping to, you know, we're investing these through. Okay, thanks. Thank you, Mr. Gallagher. We have another follow-up question, this time from Wes Carmichael of Autonomous Research. Please go ahead.

Speaker Change: Too early to tell but we're really not hearing much from the field related to any sort of.

Speaker Change: Disruption or concerns so just trying to be cognizant of.

Speaker Change: What's out there and it's early days.

Speaker Change: Thank you.

Speaker Change: Thank you Sir.

Speaker Change: And gentlemen that will conclude today's question answer session I turn call back over to Steven Martin for any additional or closing remarks. Thank you.

Steven Martin: Alright. Thank you for joining us. This morning as are our comments, we will talk to you again next quarter.

Wesley Collin Carmichael: Thanks for taking my follow-up question just one on American income. I think you said the midpoint of your guidance on agent count and sales growth is low to mid single digits. And I think that's a slowdown from what you expected last quarter. And I guess I'm just curious, is that slowdown you're anticipating from negative press or litigation? And are you actually seeing that show up yet? Like I mentioned earlier, we're really not seeing it in our recruiting pipeline, which I think is where it would show up first.

Speaker Change: Ladies and gentlemen that concludes today's call. We've had prepayments you may all disconnect have a good day.

Speaker Change: Goodbye.

Unknown Executive: So we just revised down slightly to low single-digit growth on the agent count side and mid single-digit growth on the sales side. And just, again, it's too early to tell, but we're really not hearing much from the field related to any sort of disruption or concern. So just trying to be cognizant of what's out there in its early days.

Unknown Executive: Thank you, sir. Ladies and gentlemen, that will conclude today's question and answer session. I turn the call back over to Stephen Mota for any additional or closing remarks. Thank you. Alright, thank you for joining us this morning. Those are our comments.

Stephen Mota: We will talk to you again next quarter. Ladies and gentlemen, that concludes today's call. Without pre-attendance, you may disconnect. Have a good day, and goodbye.