Globe Life Q4 2025 Globe Life Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Globe Life Inc Earnings Call
Operator: Hello, and welcome to Globe Life Inc. Fourth Quarter Earnings Release Call. My name is Jim. I will be your coordinator for today's event. Please note this call is being recorded, and all phone lines have been placed in a listen-only mode to prevent any potential background noise. Also, if you would like to ask a question during today's question and answer session, simply press Star and the digit 1 on your telephone keypad. Pressing, or pressing Star and 1 will place your line into a queue, and we'll take your questions one at a time. I will now hand you over to your host, Stephen Mota, Senior Director of Investor Relations, to begin today's conference. Thank you, sir.
Operator: Hello, and welcome to Globe Life Inc. Fourth Quarter Earnings Release Call. My name is Jim. I will be your coordinator for today's event. Please note this call is being recorded, and all phone lines have been placed in a listen-only mode to prevent any potential background noise. Also, if you would like to ask a question during today's question and answer session, simply press Star and the digit 1 on your telephone keypad. Pressing, or pressing Star and 1 will place your line into a queue, and we'll take your questions one at a time. I will now hand you over to your host, Stephen Mota, Senior Director of Investor Relations, to begin today's conference. Thank you, sir.
Speaker #1: welcome to GLOBE LIFE INC. Fourth quarter earnings release call. My name is Jim. I will be your coordinator for today's event. Please note this call is being recorded, and all phone lines have been placed in a listen-only mode to prevent any potential background noise.
Speaker #1: Also, if you would like to ask a question during today's question and answer session, simply press star and the digit one on your telephone. Pressing star and one will place your line into a queue, and we'll take your questions one at a time.
Speaker #1: I will now hand you over to your host, Stephen Mota, Senior Director of Investor Relations, to begin today's conference. Thank you, sir.
Speaker #2: Thank you. Good morning, everyone. Joining the call today, 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.
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. They're provided for general guidance purposes only. Accordingly, please refer to our earnings release, 2024 10-K, and any subsequent Forms 10-Q on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures. I will now turn the call over to Frank.
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. They're provided for general guidance purposes only. Accordingly, please refer to our earnings release, 2024 10-K, and any subsequent Forms 10-Q on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures. I will now turn the call over to Frank.
Speaker #2: Some of our comments or answers to your questions may contain forward-looking statements that are provided for general guidance purposes only. Accordingly, please refer to our earnings release, 2024 10-K, and any subsequent Forms 10-Q on file with the SEC.
Speaker #2: Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures.
Speaker #2: I will now turn the call over to Frank.
Speaker #3: Thank you, Stephen, and good morning, everyone. In the fourth quarter, net income was $266 million, or $3.29 per share, compared to $255 million or $3.01 per share a year ago.
Frank Svoboda: Thank you, Stephen, and good morning, everyone. In the fourth quarter, net income was $266 million, or $3.29 per share, compared to $255 million, or $3.01 per share a year ago. Net operating income for the quarter was $274 million, or $3.39 per share, an increase of 8% over the $3.14 per share from a year ago. For the full year 2025, net operating income was $14.52, 2 cents above the midpoint of our previous guidance. On a GAAP reported basis, return on equity through December 31 is 20.9%, and book value per share is $74.17.
Frank Svoboda: Thank you, Stephen, and good morning, everyone. In the fourth quarter, net income was $266 million, or $3.29 per share, compared to $255 million, or $3.01 per share a year ago. Net operating income for the quarter was $274 million, or $3.39 per share, an increase of 8% over the $3.14 per share from a year ago. For the full year 2025, net operating income was $14.52, 2 cents above the midpoint of our previous guidance. On a GAAP reported basis, return on equity through December 31 is 20.9%, and book value per share is $74.17.
Speaker #3: Net operating income for the quarter was $274 million, or $3.39 per share, an increase of 8% over the $3.14 per share from a year ago.
Speaker #3: For the full year 2025, net operating income was $14.52, 2 cents above the midpoint of our previous guidance. On a GAAP-reported basis, return on equity through December 31st is 20.9%, and book value per share is $74.17.
Speaker #3: Excluding accumulated other comprehensive income, or AOCI, return on equity is 16%, and book value per share as of December 31st is $96.16, up 11% from a year ago.
Frank Svoboda: Excluding accumulated other comprehensive income, or AOCI, return on equity is 16%, and book value per share as of December 31 is $96.16, up 11% from a year ago. Before discussing the Q3 insurance operations, I would like to say a few words about the nature of our business. As I reflect on the results of the past year, I remain confident that our business model effectively positions us for future success. Globe Life helps provide financial security in the vastly underserved lower-middle to middle-income market that has largely been ignored by the financial services industry. We distribute basic protection products that are simple for agents and consumers to understand and are designed specifically to meet the needs of this market. Studies indicate that over 50% of Americans are underinsured.
Frank Svoboda: Excluding accumulated other comprehensive income, or AOCI, return on equity is 16%, and book value per share as of December 31 is $96.16, up 11% from a year ago. Before discussing the Q3 insurance operations, I would like to say a few words about the nature of our business. As I reflect on the results of the past year, I remain confident that our business model effectively positions us for future success. Globe Life helps provide financial security in the vastly underserved lower-middle to middle-income market that has largely been ignored by the financial services industry. We distribute basic protection products that are simple for agents and consumers to understand and are designed specifically to meet the needs of this market. Studies indicate that over 50% of Americans are underinsured.
Speaker #3: Before discussing the third quarter insurance operations, I would like to say a few words about the nature of our business. As I reflect on the results of the past year, I remain confident that our business model effectively positions us for future success.
Speaker #3: GLOBE LIFE helps provide financial security in the vastly underserved lower middle to middle-income market that has largely been ignored by the financial services industry.
Speaker #3: We distribute basic protection products that are simple for agents and consumers to understand, and are designed specifically to meet the needs of this market.
Speaker #3: Studies indicate that over 50% of Americans are underinsured. As such, we have a significant sustainable growth opportunity without having to compete for market share with other insurance companies.
Frank Svoboda: As such, we have a significant sustainable growth opportunity without having to compete for market share with other insurance companies. The history of of growth at Globe Life is clearly demonstrated by both our recent and long-term results, and we are fully focused and confident in our ability to continue to grow in the future. We are honored to serve this market and grateful to have the opportunity to make tomorrow better for millions of working families. Now, in our insurance operations, total premium revenue in Q4 grew 5% over the year-ago quarter. For the full year 2026, we expect total premium revenue to grow approximately 7% to 8%. Life premium revenue for Q4 increased 3% from the year-ago quarter to $850 million.
Frank Svoboda: As such, we have a significant sustainable growth opportunity without having to compete for market share with other insurance companies. The history of of growth at Globe Life is clearly demonstrated by both our recent and long-term results, and we are fully focused and confident in our ability to continue to grow in the future. We are honored to serve this market and grateful to have the opportunity to make tomorrow better for millions of working families. Now, in our insurance operations, total premium revenue in Q4 grew 5% over the year-ago quarter. For the full year 2026, we expect total premium revenue to grow approximately 7% to 8%. Life premium revenue for Q4 increased 3% from the year-ago quarter to $850 million.
Speaker #3: The history of growth at Globe Life is clearly demonstrated by both our recent and long-term results. And we are fully focused and confident in our ability to continue to grow in the future.
Speaker #3: We are honored to serve this market, and grateful to have the opportunity to make tomorrow better for millions of working families. Now, in our insurance operations, total premium revenue in the fourth quarter grew 5% over the year-ago quarter.
Speaker #3: For the full year 2026, we expect total premium revenue to grow approximately 7% to 8%. Life premium revenue for the fourth quarter increased 3% from the year ago quarter to $850 million.
Speaker #3: Life underwriting margin was $350 million, up 4% from a year ago. Driven by premium growth and lower overall policy obligations, in 2026, we expect life premium revenue to grow between 4% and 4.5%.
Frank Svoboda: Life underwriting margin was $350 million, up 4% from a year ago, driven by premium growth and lower overall policy obligations. In 2026, we expect life premium revenue to grow between 4% and 4.5%, compared to 3% growth for the full year 2025. As a percent of premium, we anticipate life underwriting margin to be between 41.5% and 44.5%. In health insurance, premium revenue grew 9% to $392 million, and health underwriting margin was also up 9% to $99 million. In 2026, we expect health premium revenue to grow in the range of 14% to 16%, compared to 9% growth for 2025.
Frank Svoboda: Life underwriting margin was $350 million, up 4% from a year ago, driven by premium growth and lower overall policy obligations. In 2026, we expect life premium revenue to grow between 4% and 4.5%, compared to 3% growth for the full year 2025. As a percent of premium, we anticipate life underwriting margin to be between 41.5% and 44.5%. In health insurance, premium revenue grew 9% to $392 million, and health underwriting margin was also up 9% to $99 million. In 2026, we expect health premium revenue to grow in the range of 14% to 16%, compared to 9% growth for 2025.
Speaker #3: Compared to 3% growth for the full year 2025. As a percent of premium, we anticipate life underwriting margin to be between 41.5% and 44.5%.
Speaker #3: In health insurance, premium revenue grew 9% to $392 million, and health underwriting margin was also up 9% to $99 million. In 2026, we expect health premium revenue to grow in the range of 14% to 16%, compared to 9% growth for 2025.
Speaker #3: This is due to strong sales activity and premium rate increases on our Medicare supplement business. As a percent of premium, we anticipate health underwriting margin to be between 23% and 27%.
Frank Svoboda: This is due to strong sales activity and premium rate increases on our Medicare supplement business. As a percent of premium, we anticipate health underwriting margin to be between 23% and 27%. The midpoint of the range is slightly below the underwriting margin percentage for 2025, primarily due to the strong premium growth expected in 2026 from our United American general agency division, which does have a lower underwriting margin percentage than our other distributions. Administrative expenses were $92 million for the quarter, an increase of approximately 1% over Q4 2024. As a percent of premium, administrative expenses were 7.4%. In 2026, we expect administrative expenses to be approximately 7.3% of premium, the same as in 2025.
Frank Svoboda: This is due to strong sales activity and premium rate increases on our Medicare supplement business. As a percent of premium, we anticipate health underwriting margin to be between 23% and 27%. The midpoint of the range is slightly below the underwriting margin percentage for 2025, primarily due to the strong premium growth expected in 2026 from our United American general agency division, which does have a lower underwriting margin percentage than our other distributions. Administrative expenses were $92 million for the quarter, an increase of approximately 1% over Q4 2024. As a percent of premium, administrative expenses were 7.4%. In 2026, we expect administrative expenses to be approximately 7.3% of premium, the same as in 2025.
Speaker #3: The midpoint of the range is slightly below the underwriting margin percentage for 2025, primarily due to the strong premium growth expected in 2026 from our United American General Agency division.
Speaker #3: Which does have a lower underwriting margin percentage than our other distributions. Administrative expenses were $92 million for the 1% over the fourth quarter of 2024.
Speaker #3: As a percent of premium, administrative expenses were $7.4%. In 2026, we expect administrative expenses to be approximately $7.3% of premium, the same as in 2025.
Speaker #3: I will now turn the call over to Matt for his comments on the fourth quarter marketing operations.
Frank Svoboda: I will now turn the call over to Matt for his comments on the Q4 marketing operations.
Frank Svoboda: I will now turn the call over to Matt for his comments on the Q4 marketing operations.
Speaker #4: Thank you, Frank. Now, as a reminder, I mentioned last quarter that while growth in our agent count has historically been subject to frequent short-term fluctuations, we continually see significant long-term growth.
Matt Darden: Thank you, Frank. Now, as a reminder, I mentioned last quarter that while growth in our agent count has historically been subject to frequent short-term fluctuations, we continually see significant long-term growth. Over the last 10 years, our agent count has nearly doubled, and I am confident we can continue to see strong long-term growth due to the enormous pool of potential agent recruits and the opportunity that we provide. Our recruiting strategy does not target insurance agents. We are simply recruiting individuals from all walks of life who are looking to improve their financial position and have more control over their career. Now let's discuss the results of each distribution, starting with our exclusive agencies. At American Income Life, the life premiums were up 6% over the year-ago quarter to $457 million....
Matt Darden: Thank you, Frank. Now, as a reminder, I mentioned last quarter that while growth in our agent count has historically been subject to frequent short-term fluctuations, we continually see significant long-term growth. Over the last 10 years, our agent count has nearly doubled, and I am confident we can continue to see strong long-term growth due to the enormous pool of potential agent recruits and the opportunity that we provide. Our recruiting strategy does not target insurance agents. We are simply recruiting individuals from all walks of life who are looking to improve their financial position and have more control over their career. Now let's discuss the results of each distribution, starting with our exclusive agencies. At American Income Life, the life premiums were up 6% over the year-ago quarter to $457 million....
Speaker #4: Over the last 10 years, our agent count has nearly doubled. And I am confident we can continue to see strong long-term growth due to the enormous pool of potential agent recruits and the opportunity that we provide.
Speaker #4: Our recruiting strategy does not target insurance agents. We are simply recruiting individuals from all walks of life who are looking to improve their financial position and have more control over their career.
Speaker #4: Now, let's discuss the results of each agency. At American Income Life, the life premiums were up 6% over the year-ago quarter to $457 million.
Speaker #4: And the life underwriting margin was up 5% to $208 million. In the fourth quarter, net life sales were $102 million, up 10% from a year ago.
Matt Darden: The life underwriting margin was up 5% to $208 million. In Q4, net life sales were $102 million, up 10% from a year ago. The average producing agent count for Q4 was 11,699, down 2% from a year ago. While we generated strong recruiting activity, we had more agent turnover than expected. Now, this is not always a bad thing, as it can result in a more productive agency, depending on the quality of the agents we lose. The 10% sales growth this quarter was due to better overall agent productivity. That being said, we place great importance on agent retention and have introduced an initiative to emphasize agent retention to help ensure continued agency growth.
Matt Darden: The life underwriting margin was up 5% to $208 million. In Q4, net life sales were $102 million, up 10% from a year ago. The average producing agent count for Q4 was 11,699, down 2% from a year ago. While we generated strong recruiting activity, we had more agent turnover than expected. Now, this is not always a bad thing, as it can result in a more productive agency, depending on the quality of the agents we lose. The 10% sales growth this quarter was due to better overall agent productivity. That being said, we place great importance on agent retention and have introduced an initiative to emphasize agent retention to help ensure continued agency growth.
Speaker #4: Producing agent count for the fourth quarter—the average was 11,699, down 2% from a year ago. While we generated strong recruiting activity, we had more agent turnover than expected.
Speaker #4: Now, this is not always a bad thing, as it can result in a more productive agency depending on the quality of the agents lost.
Speaker #4: The 10% sales growth this quarter was due to better overall agent productivity. That being said, we place great importance on agent retention and have introduced an initiative to emphasize agent retention to help ensure continued agency growth.
Speaker #4: Now, at Liberty National, the life premiums were up 4% over the year-ago quarter to $98 million. And the life underwriting margin was up 6% to $36 million.
Matt Darden: Now, at Liberty National, the life premiums were up 4% over the year ago quarter to $98 million, and the life underwriting margin was up 6% to $36 million. Net life sales were $28 million, up 6% from the year ago quarter. Net health sales were $9 million, roughly flat from the year ago quarter. The average producing agent count for the fourth quarter was 3,965, up 6% from a year ago. I believe the initiatives that I'd mentioned last quarter are having a positive impact, and I'm confident we will continue to see growth at this agency as we move forward. At Family Heritage, health premiums increased 10% over the year ago quarter to $121 million, and the health underwriting margin also increased 10% to $44 million.
Matt Darden: Now, at Liberty National, the life premiums were up 4% over the year ago quarter to $98 million, and the life underwriting margin was up 6% to $36 million. Net life sales were $28 million, up 6% from the year ago quarter. Net health sales were $9 million, roughly flat from the year ago quarter. The average producing agent count for the fourth quarter was 3,965, up 6% from a year ago. I believe the initiatives that I'd mentioned last quarter are having a positive impact, and I'm confident we will continue to see growth at this agency as we move forward. At Family Heritage, health premiums increased 10% over the year ago quarter to $121 million, and the health underwriting margin also increased 10% to $44 million.
Speaker #4: Net life sales were $28 million, up 6% from the year-ago quarter. Net health sales were $9 million, roughly flat from the year-ago quarter. The average producing agent count for the fourth quarter was 3,965.
Speaker #4: Up 6% from a year ago. I believe the initiatives that I'd mentioned last quarter are having a positive impact. growth at this agency as we move forward.
Speaker #4: At Family Heritage, health premiums increased 10% over the year-ago quarter to $121 million. And the health underwriting margin also increased 10% to $44 million.
Speaker #4: Net health sales were up 15% to $31 million. Due to increases in agent count and productivity, the average producing agent count for the fourth quarter was 1,640.
Matt Darden: Net health sales were up 15% to $31 million due to increases in agent count and productivity. The average producing agent count for Q4 was 1,640, up 8% from a year-ago. We've now seen 6 consecutive quarters of strong agent count growth for Family Heritage, resulting from the continued focus on recruiting and growing agency middle management. In our direct-to-consumer division at Globe Life, the life premiums were approximately flat over the year-ago quarter to $244 million, while the life underwriting margin increased 3% to $74 million. While life premiums were flat this quarter, net life sales were $29 million, up 24% from the year-ago quarter. We are excited to see this continued sales turnaround from the declining trend of recent years.
Matt Darden: Net health sales were up 15% to $31 million due to increases in agent count and productivity. The average producing agent count for Q4 was 1,640, up 8% from a year-ago. We've now seen 6 consecutive quarters of strong agent count growth for Family Heritage, resulting from the continued focus on recruiting and growing agency middle management. In our direct-to-consumer division at Globe Life, the life premiums were approximately flat over the year-ago quarter to $244 million, while the life underwriting margin increased 3% to $74 million. While life premiums were flat this quarter, net life sales were $29 million, up 24% from the year-ago quarter. We are excited to see this continued sales turnaround from the declining trend of recent years.
Speaker #4: Up 8% from a year ago. We've now seen six consecutive quarters of strong agent count growth for Family Heritage, resulting from the continued focus on recruiting and growing agency middle management.
Speaker #4: In our the life premiums were approximately direct-to-consumer division at GLOBE LIFE, flat over the year-ago quarter to $244 million. While the life underwriting margin increased 3% to $74 million.
Speaker #4: quarter, net life sales were While life premiums were flat this $29 million, up 24% from the year-ago quarter. We are excited to see this continued sales turnaround from the declining trend of recent years.
Speaker #4: As we've mentioned introduced earlier this year has helped improve the conversion of customer inquiries into sales without incurring incremental underwriting risk. The resulting margin improvement has allowed us to increase marketing volume and further grow direct-to-consumer inquiries and sales.
Matt Darden: As we've mentioned before, new technology introduced earlier this year has helped improve the conversion of customer inquiries into sales without incurring incremental underwriting risk. The resulting margin improvement has allowed us to increase marketing volume and further grow direct-to-consumer inquiries and sales. Now, we've also seen improved conversion of the direct-to-consumer leads shared with our agencies, which has also contributed to margin improvement, allowing us to invest more heavily in advertising, further increasing lead volume, which in turn leads to sales growth in both our direct-to-consumer and agency channels. We expect this division to increase leads generated for our three exclusive agencies during 2026 by approximately 10%.
Matt Darden: As we've mentioned before, new technology introduced earlier this year has helped improve the conversion of customer inquiries into sales without incurring incremental underwriting risk. The resulting margin improvement has allowed us to increase marketing volume and further grow direct-to-consumer inquiries and sales. Now, we've also seen improved conversion of the direct-to-consumer leads shared with our agencies, which has also contributed to margin improvement, allowing us to invest more heavily in advertising, further increasing lead volume, which in turn leads to sales growth in both our direct-to-consumer and agency channels. We expect this division to increase leads generated for our three exclusive agencies during 2026 by approximately 10%.
Speaker #4: Now, we've also seen improved conversion of the direct-to-consumer leads shared with our agencies which has also contributed to margin improvement, allowing us to invest more heavily in advertising further increasing lead volume, which in turn leads to sales growth in both our direct-to-consumer and agency channels.
Speaker #4: We expect this division to increase leads agencies during generated for our three exclusive 2026 by approximately 10%. United American is our general agency division.
Matt Darden: United American is our general agency division, and here the health premiums increased 14% over the year ago quarter to $173 million, and this is driven by sales growth and Medicare supplement rate increases that we have discussed previously. Health underwriting margin was $8 million, up $2 million from the year ago quarter. Strong activity across the entire agency resulted in net health sales of $77 million, an increase of approximately $47 million over the year ago quarter. We attribute this tremendous growth primarily to the significant movement of Medicare beneficiaries from Medicare Advantage plans to Medicare Supplement plans. As a result, no, as a reminder, we do not market Medicare Advantage plans.
Matt Darden: United American is our general agency division, and here the health premiums increased 14% over the year ago quarter to $173 million, and this is driven by sales growth and Medicare supplement rate increases that we have discussed previously. Health underwriting margin was $8 million, up $2 million from the year ago quarter. Strong activity across the entire agency resulted in net health sales of $77 million, an increase of approximately $47 million over the year ago quarter. We attribute this tremendous growth primarily to the significant movement of Medicare beneficiaries from Medicare Advantage plans to Medicare Supplement plans. As a result, no, as a reminder, we do not market Medicare Advantage plans.
Speaker #4: And here, the health premiums increased 14% over the year-ago quarter to $173 million. And this is driven by sales growth and Medicare supplement rate increases that we have discussed previously.
Speaker #4: Health underwriting margin was $8 million, up $2 million from the year-ago quarter. Strong activity across the entire agency resulted in net health sales of $77 million.
Speaker #4: An increase of approximately $47 million over the year-ago quarter. We attribute this tremendous growth primarily to the significant movement of Medicare beneficiaries from Medicare Advantage plans to Medicare Supplement plans.
Speaker #4: As a result, no, as a reminder, we do not market Medicare Advantage plans. Now, I'd like to discuss our projections and based on recent trends in our experience with our producing agent count trends for the full year 2026 to be as follows.
Matt Darden: Now I'd like to discuss our projections, and based on recent trends and our experience with our business, we expect the average producing agent count trends for the full year 2026 to be as follows: at American Income, mid-single-digit growth; Liberty National, high single-digit growth; and at Family Heritage, low double-digit growth. Net life sales for 2026 are expected to be as follows: at American Income, high single-digit growth; Liberty National, low double-digit growth; and Direct to Consumer, mid-single-digit growth. Net health sales for 2026 are expected to be as follows: for Liberty National and Family Heritage, both low double-digit growth. Now for United American, considering we nearly doubled our sales in 2025, we are currently projecting flat sales growth for 2026. We acknowledge there are considerable dynamics in the Medicare marketplace, and we will refine our estimates as we move through the year.
Matt Darden: Now I'd like to discuss our projections, and based on recent trends and our experience with our business, we expect the average producing agent count trends for the full year 2026 to be as follows: at American Income, mid-single-digit growth; Liberty National, high single-digit growth; and at Family Heritage, low double-digit growth. Net life sales for 2026 are expected to be as follows: at American Income, high single-digit growth; Liberty National, low double-digit growth; and Direct to Consumer, mid-single-digit growth. Net health sales for 2026 are expected to be as follows: for Liberty National and Family Heritage, both low double-digit growth. Now for United American, considering we nearly doubled our sales in 2025, we are currently projecting flat sales growth for 2026. We acknowledge there are considerable dynamics in the Medicare marketplace, and we will refine our estimates as we move through the year.
Speaker #4: At American Income, mid-single-digit growth; at Liberty National, high single-digit growth; and at Family Heritage, low double-digit growth. Net life sales for 2026 are expected to be as follows.
Speaker #4: At American Income, high single-digit growth, Liberty National, low double-digit growth, and direct-to-consumer, mid-single-digit growth. Net health sales for 2026 are expected to be as follows.
Speaker #4: For Liberty National and Family Heritage, both low double-digit growth. Now, for United American, considering we nearly doubled our sales in 2025, we are currently projecting flat sales growth for 2026.
Speaker #4: We acknowledge there are considerable dynamics in the Medicare marketplace, and we will refine our estimates as we move through the year. I'll now turn the call back to Frank.
Matt Darden: I'll now turn the call back to Frank.
Matt Darden: I'll now turn the call back to Frank.
Speaker #2: Thanks, Matt. We will now turn to the investment operations. Excess investment income, which we define as net investment income less only required interest, was $31 million, down approximately $8 million from the year-ago quarter.
Frank Svoboda: Thanks, Matt. We will now turn to the investment operations. Excess investment income, which we define as net investment income less only required interest, was $31 million, down approximately $8 million from the year-ago quarter. Net investment income was $281 million, approximately flat, while average invested assets grew 1%. Required interest is up approximately 3% over the year-ago quarter, relatively consistent with growth in average policy liabilities. Net investment income was negatively impacted in the current quarter by lower average invested asset growth, as discussed on prior calls, and lower average earned yields on our short-term direct commercial mortgage loan and limited partnership investments as compared to a year ago.
Frank Svoboda: Thanks, Matt. We will now turn to the investment operations. Excess investment income, which we define as net investment income less only required interest, was $31 million, down approximately $8 million from the year-ago quarter. Net investment income was $281 million, approximately flat, while average invested assets grew 1%. Required interest is up approximately 3% over the year-ago quarter, relatively consistent with growth in average policy liabilities. Net investment income was negatively impacted in the current quarter by lower average invested asset growth, as discussed on prior calls, and lower average earned yields on our short-term direct commercial mortgage loan and limited partnership investments as compared to a year ago.
Speaker #2: Net investment income was $281 million, approximately flat, while average invested assets grew 1%. Required interest is up approximately 3% over the year-ago quarter, relatively consistent with growth in average policy liabilities.
Speaker #2: Net investment income was negatively impacted in the current quarter by lower average invested asset growth, as discussed on prior calls, and lower average earned yields on our short-term direct commercial mortgage loan and limited partnership investments, as compared to a year ago.
Speaker #2: Net investment income also declined sequentially from the third quarter, as we had very good returns from our limited partnership investments in the third quarter, but that returned to more normal levels in the fourth quarter.
Frank Svoboda: Net investment income also declined sequentially from Q3, as we had very good returns from our limited partnership investments in Q3, but that returned to more normal levels in Q4. As a reminder, the income reported from these investments is based on income earned by the partnerships in the quarter and will vary from quarter to quarter. In addition, we held a little more cash during the current quarter than normal due to the Bermuda reinsurance transactions executed in the quarter. For the full year 2026, we do expect net investment income to grow between 3% and 4%, required interest to grow around 4%, and excess investment income to be relatively flat. Now, regarding our investment yield. In Q4, we invested $131 million in fixed maturities, primarily in the financial and industrial sectors.
Frank Svoboda: Net investment income also declined sequentially from Q3, as we had very good returns from our limited partnership investments in Q3, but that returned to more normal levels in Q4. As a reminder, the income reported from these investments is based on income earned by the partnerships in the quarter and will vary from quarter to quarter. In addition, we held a little more cash during the current quarter than normal due to the Bermuda reinsurance transactions executed in the quarter. For the full year 2026, we do expect net investment income to grow between 3% and 4%, required interest to grow around 4%, and excess investment income to be relatively flat. Now, regarding our investment yield. In Q4, we invested $131 million in fixed maturities, primarily in the financial and industrial sectors.
Speaker #2: As a reminder, the income reported from these investments is based on income earned by the partnerships in the quarter and will vary from quarter to quarter.
Speaker #2: In addition, we held a little more cash during the current quarter than normal, due to the Bermuda reinsurance transactions executed in the quarter. For the full year 2026, we do expect net investment income to grow between 3% and 4%.
Speaker #2: Required interest to grow around 4%, and excess investment income to be relatively flat. Now, regarding our investment yield—in the fourth quarter, we invested $131 million in fixed maturities.
Speaker #2: Primarily in the financial and industrial sectors. These investments were at an average yield of 6.23% and average rating of A- and average life of 27 years.
Frank Svoboda: These investments were at an average yield of 6.23%, an average rating of A-minus, and an average life of 27 years. We also invested approximately $145 million in commercial mortgage loans and limited partnerships, with debt-like characteristics at an average expected cash return over time of approximately 9% to 10%. These non-fixed maturity investments are expected to produce additional cash yields over our fixed maturity investments, while still being in line with our overall conservative investment philosophy. For the entire fixed maturity portfolio, the Q4 yield was 5.29%, up 2 basis points from the Q4 of 2024. Including the investment income from our other long-term, non-fixed maturity investments, the Q4 earned yield was 5.4%.
Frank Svoboda: These investments were at an average yield of 6.23%, an average rating of A-minus, and an average life of 27 years. We also invested approximately $145 million in commercial mortgage loans and limited partnerships, with debt-like characteristics at an average expected cash return over time of approximately 9% to 10%. These non-fixed maturity investments are expected to produce additional cash yields over our fixed maturity investments, while still being in line with our overall conservative investment philosophy. For the entire fixed maturity portfolio, the Q4 yield was 5.29%, up 2 basis points from the Q4 of 2024. Including the investment income from our other long-term, non-fixed maturity investments, the Q4 earned yield was 5.4%.
Speaker #2: We also invested approximately $145 million in commercial mortgage loans and limited partnerships with debt-like characteristics at an average expected cash return over time of approximately 9 to 10%.
Speaker #2: These non-fixed maturity investments are expected to produce additional cash yield over our fixed maturity investments while still being in line with our overall conservative investment philosophy.
Speaker #2: For the entire fixed maturity portfolio, the fourth quarter yield was 5.29%, up two basis points from the fourth quarter of 2024. Including the investment income from our other long-term non-fixed maturity investments, the fourth quarter earned 5.4%.
Speaker #2: For the entire fixed maturity portfolio, the fourth quarter yield was 5.29%, up two basis points from the fourth quarter of 2024. Including the investment income from our other long-term non-fixed maturity investments, the fourth quarter earned 5.4%. yield was While we do own floating rate investments, they are well matched balance sheet.
Frank Svoboda: While we do own floating rate investments, they are well matched with floating rate liabilities on the balance sheet. Invested assets are $21.7 billion, including $18.8 billion of fixed maturities at amortized cost. Of the fixed maturities, $18.3 billion are investment grade, with an average rating of A. Overall, the total fixed maturity portfolio is rated A-minus, same as a year ago. Our fixed maturity investment portfolio has a net unrealized loss position of $1.2 billion, due to the current market rates being higher than the book value on our holdings. 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.
Frank Svoboda: While we do own floating rate investments, they are well matched with floating rate liabilities on the balance sheet. Invested assets are $21.7 billion, including $18.8 billion of fixed maturities at amortized cost. Of the fixed maturities, $18.3 billion are investment grade, with an average rating of A. Overall, the total fixed maturity portfolio is rated A-minus, same as a year ago. Our fixed maturity investment portfolio has a net unrealized loss position of $1.2 billion, due to the current market rates being higher than the book value on our holdings. 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.
Speaker #2: with floating rate liabilities on the Invested assets are $21.7 billion. Including $18.8 billion of fixed maturities at amortized cost. Of the fixed maturities, $18.3 billion are investment-grade with an average rating of A.
Speaker #2: Overall, the total fixed maturity portfolio is rated A-, the same as a year ago. Our fixed maturity investment portfolio has a net unrealized loss position of $1.2 billion due to the current market rates being higher than the book value on our holdings.
Speaker #2: As we have a 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.
Speaker #2: We have the intent and, more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprise 42% of the fixed maturity portfolio compared to 46% from the year-ago quarter.
Frank Svoboda: We have the intent, and more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprise 42% of the fixed maturity portfolio, compared to 46% from the year ago quarter. This percentage is at its lowest level since 2003. As we have discussed on prior calls, 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 of fluctuations in interest rates or equity markets. That said, our allocation to BBB-rated bonds has decreased over the past few years, as we have found better risk-adjusted, capital-adjusted value in higher-rated bonds, given the narrowing of corporate spreads.
Frank Svoboda: We have the intent, and more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprise 42% of the fixed maturity portfolio, compared to 46% from the year ago quarter. This percentage is at its lowest level since 2003. As we have discussed on prior calls, 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 of fluctuations in interest rates or equity markets. That said, our allocation to BBB-rated bonds has decreased over the past few years, as we have found better risk-adjusted, capital-adjusted value in higher-rated bonds, given the narrowing of corporate spreads.
Speaker #2: This percentage is at its lowest level since 2003. As we have discussed on prior calls, 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 of fluctuations in interest rates or equity markets.
Speaker #2: That said, our allocation to BBB-rated bonds has decreased over the past few years, as we have found better risk-adjusted, capital-adjusted value in higher-rated bonds, given the narrowing of corporate spreads.
Speaker #2: While the concentration of our BBB bonds might still be a little higher than some of our peers, remember that we have little or no exposure to other higher-risk assets, such as derivatives, equities, residential mortgages, CLOs, and other asset-backed securities.
Frank Svoboda: While the concentration of our BBB bonds might still be a little higher than some of our peers, remember that we have little or no exposure to other higher-risk assets, such as derivatives, equities, residential mortgages, CLOs, and other asset-backed securities. Below investment-grade bonds remain near historical lows at $521 million, compared to $529 million a year ago. The percentage of below investment-grade bonds to total fixed maturities is just 2.8%, consistent with year-end 2024. The amount of our below investment-grade bonds, at just 6.7% of our total equity, excluding AOCI, is at its lowest percentage of equity at any year-end in over 25 years. Due to the long duration of our fixed maturity liabilities, we invest in long-dated assets.
Frank Svoboda: While the concentration of our BBB bonds might still be a little higher than some of our peers, remember that we have little or no exposure to other higher-risk assets, such as derivatives, equities, residential mortgages, CLOs, and other asset-backed securities. Below investment-grade bonds remain near historical lows at $521 million, compared to $529 million a year ago. The percentage of below investment-grade bonds to total fixed maturities is just 2.8%, consistent with year-end 2024. The amount of our below investment-grade bonds, at just 6.7% of our total equity, excluding AOCI, is at its lowest percentage of equity at any year-end in over 25 years. Due to the long duration of our fixed maturity liabilities, we invest in long-dated assets.
Speaker #2: Below investment-grade bonds remain near-historical lows at $521 million. Compared to $529 million a year ago. The percentage of below investment-grade bonds to total fixed maturities is just 2.8%, consistent with year-end 2024.
Speaker #2: The amount of our below investment-grade bonds at just 6.7% of our total equity excluding AOCI is at its lowest percentage of equity at any year-end in over 25 years.
Speaker #2: Due to the long duration of our fixed maturity liabilities, we invest in long-dated assets. As such, a critical and foundational part of our invest in entities that can investment philosophy is to survive through multiple economic cycles.
Frank Svoboda: As such, a critical and foundational part of our investment philosophy is to invest in entities that can survive through multiple economic cycles. While there may be uncertainty as to where the US economy is headed, we are well positioned to withstand a significant economic downturn due to holding historically low percentages of invested assets in BBB and below investment-grade bonds as a percentage of equity. In addition, we have very strong underwriting profits and long-dated liabilities, so we will not be forced to sell bonds in order to pay claims.
Frank Svoboda: As such, a critical and foundational part of our investment philosophy is to invest in entities that can survive through multiple economic cycles. While there may be uncertainty as to where the US economy is headed, we are well positioned to withstand a significant economic downturn due to holding historically low percentages of invested assets in BBB and below investment-grade bonds as a percentage of equity. In addition, we have very strong underwriting profits and long-dated liabilities, so we will not be forced to sell bonds in order to pay claims.
Speaker #2: While there may be uncertainty as to where the U.S. economy is headed, we are well-positioned to withstand a significant economic downturn due to holding historically low percentages of invested assets in BBB and below investment-grade bonds as a percentage of equity.
Speaker #2: In addition, we have very strong underwriting profits and long-dated liabilities. So we will not be forced to sell bonds in order to pay claims.
Speaker #2: With respect to our anticipated investment acquisitions for the full year 2026, at the midpoint of our guidance, we assume investment of approximately $900 million to $1.1 billion in fixed maturities at an average yield between 5.9% and 6%.
Frank Svoboda: With respect to our anticipated investment acquisitions for the full year 2026, at the midpoint of our guidance, we assume investment of approximately $900 million to $1.1 billion in fixed maturities at an average yield between 5.9% and 6%, and approximately $300 to $400 million in Commercial Mortgage Loans and Limited Partnerships with debt-like characteristics at an average expected cash return over time of 7% to 9%. Also, at the midpoint of our guidance, we expect the average yield earned on the fixed maturity portfolio to be around 5.3% for the full year 2026. With respect to our non-fixed maturity long-term investments, we anticipate the yield impacting net investment income to be in the range of 7% to 8% for 2026.
Frank Svoboda: With respect to our anticipated investment acquisitions for the full year 2026, at the midpoint of our guidance, we assume investment of approximately $900 million to $1.1 billion in fixed maturities at an average yield between 5.9% and 6%, and approximately $300 to $400 million in Commercial Mortgage Loans and Limited Partnerships with debt-like characteristics at an average expected cash return over time of 7% to 9%. Also, at the midpoint of our guidance, we expect the average yield earned on the fixed maturity portfolio to be around 5.3% for the full year 2026. With respect to our non-fixed maturity long-term investments, we anticipate the yield impacting net investment income to be in the range of 7% to 8% for 2026.
Speaker #2: And approximately $300 to $400 million in commercial mortgage loans and limited partnership investments with debt-like characteristics at an average expected cash return over time of 7 to 9%.
Speaker #2: Also, at the midpoint of our guidance, we expect the average yield earned on the fixed maturity portfolio to be for the year 2026. With respect to our non-fixed maturity long-term investments, we anticipate the yield impacting net investment income to be in the range of 7% to 8% for 2026.
Speaker #2: In total, including these additional investments, we anticipate the blended earned yield to be approximately 4.5.4% to 5.5%. Now, I will turn the call over to Tom for his comments on capital and liquidity.
Frank Svoboda: In total, including these additional investments, we anticipate the blended earned yield to be approximately 5.4% to 5.5%. Now, I will turn the call over to Tom for his comments on capital and liquidity.
Frank Svoboda: In total, including these additional investments, we anticipate the blended earned yield to be approximately 5.4% to 5.5%. Now, I will turn the call over to Tom for his comments on capital and liquidity.
Speaker #2: Thanks, Frank. First, I'll spend a few minutes discussing our available liquidity, share repurchases, and the capital position. The parent began the year with liquid assets of approximately $90 million and ended the year with liquid assets of approximately $80 million.
Thomas Kalmbach: Thanks, Frank. First, I'll spend a few minutes discussing our available liquidity, share repurchases, and the capital position. The parent began the year with liquid assets of approximately $90 million and ended the year with liquid assets of approximately $80 million. In Q4, the company repurchased approximately 1.3 million shares of Globe Life Inc. common stock for a total cost of approximately $170 million at an average share price of $134.44. For the full year, we purchased 5.4 million shares for a total cost of $685 million at an average share price of $126.41. Including shareholder dividend payments of approximately $85 million, the company returned approximately $770 million to shareholders during 2025.
Thomas Kalmbach: Thanks, Frank. First, I'll spend a few minutes discussing our available liquidity, share repurchases, and the capital position. The parent began the year with liquid assets of approximately $90 million and ended the year with liquid assets of approximately $80 million. In Q4, the company repurchased approximately 1.3 million shares of Globe Life Inc. common stock for a total cost of approximately $170 million at an average share price of $134.44. For the full year, we purchased 5.4 million shares for a total cost of $685 million at an average share price of $126.41. Including shareholder dividend payments of approximately $85 million, the company returned approximately $770 million to shareholders during 2025.
Speaker #2: In the fourth quarter, the company repurchased approximately $1.3 million shares of Globe Life Inc. common stock for a total cost of approximately $170 million at an average share price of $134.44.
Speaker #2: For the full year, we purchased 5.4 million shares for a total cost of $685 million at an average share price of $126.41. Including shareholder dividend payments of approximately $85 million, the company returned approximately $770 million to shareholders during 2025.
Speaker #2: In addition to the liquid assets held by the parent, the parent will generate excess cash flows during 2026. The parent company's excess cash flows, as we define it, results primarily from the dividends received by the parent from its subsidiaries, less interest paid on debt, and is available to return to its shareholders in the form of dividends and through share repurchases.
Thomas Kalmbach: In addition to the liquid assets held by the parent, the parent will generate excess cash flows during 2026. The parent company's excess cash flows, as we define it, results primarily from the dividends received by the parent from its subsidiaries, less interest paid on debt, and is available to return to its shareholders in the form of dividends and through share repurchases. We invest-- We continue to invest in our growth through making investments in the business, in new business, technology, and insurance operations. It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made these substantial investments and acquired new long-duration assets to fund their future cash needs. In 2025, parent excess cash flow, excluding the benefit of extraordinary dividends, was approximately $620 million.
Thomas Kalmbach: In addition to the liquid assets held by the parent, the parent will generate excess cash flows during 2026. The parent company's excess cash flows, as we define it, results primarily from the dividends received by the parent from its subsidiaries, less interest paid on debt, and is available to return to its shareholders in the form of dividends and through share repurchases. We invest-- We continue to invest in our growth through making investments in the business, in new business, technology, and insurance operations. It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made these substantial investments and acquired new long-duration assets to fund their future cash needs. In 2025, parent excess cash flow, excluding the benefit of extraordinary dividends, was approximately $620 million.
Speaker #2: We continue to invest in our growth through making investments in the business, in new business, technology, and insurance operations. It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made these substantial investments and acquired new long-duration assets to fund their future cash needs.
Speaker #2: In 2025, parent excess cash flow excluding the benefit of extraordinary dividends was approximately $620 million. Although statutory results are not yet final, for 2026, we anticipate excess cash flow to increase to approximately $625 million to $675 million.
Thomas Kalmbach: Although statutory results are not yet final, for 2026, we anticipate excess cash flow to increase to approximately $625 million to $675 million, given recent favorable mortality trends and growth in premium. Excuse me. We will continue to use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other available alternatives. Thus, we anticipate share repurchases will continue to be the primary use of parent's excess cash flow after the payment of shareholder dividends. In our guidance, we anticipate distributing between $85 million to $90 million to our shareholders in the form of dividend payments, with the remainder being used for share repurchases in the range of $535 million to $585 million.
Thomas Kalmbach: Although statutory results are not yet final, for 2026, we anticipate excess cash flow to increase to approximately $625 million to $675 million, given recent favorable mortality trends and growth in premium. Excuse me. We will continue to use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other available alternatives. Thus, we anticipate share repurchases will continue to be the primary use of parent's excess cash flow after the payment of shareholder dividends. In our guidance, we anticipate distributing between $85 million to $90 million to our shareholders in the form of dividend payments, with the remainder being used for share repurchases in the range of $535 million to $585 million.
Speaker #2: Given recent favorable mortality trends and growth in premium. Excuse me. We will continue to use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other available alternatives.
Speaker #2: Thus, we anticipate share repurchases will continue to be the primary use of parent's excess cash flow after the payment of shareholder dividends. In our guidance, we anticipate distributing between $85 million to $95 million sorry, $85 million to $90 million to our shareholders in the form of dividend payments with the remainder being used for share repurchases in the range of $535 million to $585 million.
Speaker #2: We anticipate liquid assets at the parent to $60 million at the end of 2026. Now, with regards to the capital positions at our insurance subsidiaries, our goal is to maintain capital within our insurance operations at levels necessary to support our current ratings: Globe Life targets a consolidated company action level RBC ratio in the range of 300% to 320%.
Thomas Kalmbach: We anticipate liquid assets at the parent to be in the range of $50 million to 60 million at the end of 2026. Now, with regards to the capital positions at our insurance subsidiaries, our goal is to maintain capital within our insurance operations at levels necessary to support our current ratings. Globe Life targets a consolidated company action level RBC ratio in the range of 300% to 320%. Although this target range is lower than many of our peers, it is appropriate given the stable premium revenue from our large number of in-force policies, the nature of our protection products with benefits that are not sensitive to interest rates or equity markets, our conservative investment portfolio, and strong, consistent underwriting margins, which result in consistent statutory earnings at our insurance companies.
Thomas Kalmbach: We anticipate liquid assets at the parent to be in the range of $50 million to 60 million at the end of 2026. Now, with regards to the capital positions at our insurance subsidiaries, our goal is to maintain capital within our insurance operations at levels necessary to support our current ratings. Globe Life targets a consolidated company action level RBC ratio in the range of 300% to 320%. Although this target range is lower than many of our peers, it is appropriate given the stable premium revenue from our large number of in-force policies, the nature of our protection products with benefits that are not sensitive to interest rates or equity markets, our conservative investment portfolio, and strong, consistent underwriting margins, which result in consistent statutory earnings at our insurance companies.
Speaker #2: Although this target range is lower than many of our stable premium revenue from our large number of enforced policies, the nature of our protection products with benefits that are not sensitive to interest rates or equity markets, our conservative investment portfolio, and strong, consistent underwriting margins result in consistent statutory earnings at our insurance companies.
Speaker #2: Since our statutory financial statements are not yet final, our consolidated RBC ratio for year-end 2025 is not yet known. However, we anticipate the final 2025 RBC ratio will be within our targeted range.
Thomas Kalmbach: Since our statutory financial statements are not yet final, our consolidated RBC ratio for year-end 2025 is not yet known. However, we anticipate the final 2025 RBC ratio will be within our targeted range. During the quarter, we finalized the licensing and formation of Globe Life Re, Ltd., a Bermuda reinsurance affiliate, for the purposes of reinsuring a portion of new business and in-force life insurance policies issued by Globe Life affiliates and executed the initial reinsurance transactions. As previously noted, we estimate parent excess cash flow will increase from incremental earnings from our US and Bermuda subsidiaries over time as the reinsurance block grows. We anticipate parent's annual excess cash flow will increase over time toward $200 million as earnings emerge from reinsuring additional in-force and new business.
Thomas Kalmbach: Since our statutory financial statements are not yet final, our consolidated RBC ratio for year-end 2025 is not yet known. However, we anticipate the final 2025 RBC ratio will be within our targeted range. During the quarter, we finalized the licensing and formation of Globe Life Re, Ltd., a Bermuda reinsurance affiliate, for the purposes of reinsuring a portion of new business and in-force life insurance policies issued by Globe Life affiliates and executed the initial reinsurance transactions. As previously noted, we estimate parent excess cash flow will increase from incremental earnings from our US and Bermuda subsidiaries over time as the reinsurance block grows. We anticipate parent's annual excess cash flow will increase over time toward $200 million as earnings emerge from reinsuring additional in-force and new business.
Speaker #2: During the quarter, we finalized the licensing information of Globe Life Re LTD, an Arbuto Reinsurance affiliate, for the purposes of reinsuring a portion of new business and in-force life insurance policies issued by Globe Life affiliates, and executed the initial reinsurance transactions.
Speaker #2: As previously noted, we estimate parent excess cash flow will increase from incremental earnings from our U.S. and Arbuto subsidiaries over time as the reinsurance block grows.
Speaker #2: We anticipate parents' annual excess cash flow will increase over time toward $200 million as earnings emerge from reinsuring additional enforced and new business. This additional excess cash flow will enhance the financial strength of the company and will provide additional financial flexibility for the parent to support growth.
Thomas Kalmbach: This additional excess cash flow will enhance the financial strength of the company and will provide additional financial flexibility for the parent to support growth. Now, with regards to policy obligations for the current quarter. For the fourth quarter, policy obligations as a percent of premium has declined from 36.7% in the year ago quarter to 35.4%, consistent with continued favorable trends in mortality. Health policy obligations as a percent of premium were 53.7%, compared with 54.1% from the year ago quarter. For United American, individual Medicare supplement claim trends have been relatively stable. However, we did see seasonally high claims in the fourth quarter for both individual and group health products.... Now, with regards to our full year underwriting margins, normalized for the impact of assumption updates.
Thomas Kalmbach: This additional excess cash flow will enhance the financial strength of the company and will provide additional financial flexibility for the parent to support growth. Now, with regards to policy obligations for the current quarter. For the fourth quarter, policy obligations as a percent of premium has declined from 36.7% in the year ago quarter to 35.4%, consistent with continued favorable trends in mortality. Health policy obligations as a percent of premium were 53.7%, compared with 54.1% from the year ago quarter. For United American, individual Medicare supplement claim trends have been relatively stable. However, we did see seasonally high claims in the fourth quarter for both individual and group health products.... Now, with regards to our full year underwriting margins, normalized for the impact of assumption updates.
Speaker #2: Now, with regards to policy obligations for the current quarter, for the fourth quarter, policy obligations as a percent of premium have declined from 36.7% to 35.4%, consistent with continued favorable trends in obligations as a percent of premium. Obligations were 53.7% compared with 54.1% from the year-ago quarter.
Speaker #2: For United American, individual Medicare supplement claim trends have been relatively stable. However, we did see seasonally high claims in the fourth quarter for both individual and group health products.
Speaker #2: Now, with regards to our full-year underwriting margins, normalized for the impact of assumption updates, as I mentioned on previous calls, as required by GAAP accounting standards, each year we review and generally update actual assumptions for mortality, morbidity, and lapses we have chosen to do this in the third quarter each year.
Thomas Kalmbach: As I mentioned on previous calls, as required by GAAP accounting standards, each year we review and generally update actuarial assumptions for mortality, morbidity, and lapses, and we have chosen to do this in Q3 each year. When assumptions changes are made, GAAP accounting standards require a cumulative catch-up adjustment. This cumulative catch-up is the assumption-related remeasurement gain or loss. An assumption remeasurement gain lowers the reserve balances and indicates an improved outlook as less premium is needed to fund reserves to meet future policy obligations. The opposite is true if there is an assumption remeasurement loss. To better understand the performance of the business for the full year, we think it is beneficial to look at normalized underwriting margins, which exclude the impact of assumption changes and provide an improved basis for comparison of year-over-year results.
Thomas Kalmbach: As I mentioned on previous calls, as required by GAAP accounting standards, each year we review and generally update actuarial assumptions for mortality, morbidity, and lapses, and we have chosen to do this in Q3 each year. When assumptions changes are made, GAAP accounting standards require a cumulative catch-up adjustment. This cumulative catch-up is the assumption-related remeasurement gain or loss. An assumption remeasurement gain lowers the reserve balances and indicates an improved outlook as less premium is needed to fund reserves to meet future policy obligations. The opposite is true if there is an assumption remeasurement loss. To better understand the performance of the business for the full year, we think it is beneficial to look at normalized underwriting margins, which exclude the impact of assumption changes and provide an improved basis for comparison of year-over-year results.
Speaker #2: When assumptions changes are made, GAAP accounting standards require a cumulative catch-up adjustment. This cumulative catch-up is the assumption-related remeasurement gain or loss. An assumption remeasurement gain lowers the reserve balances and indicates an improved outlook as less premium is needed to fund reserves to meet future policy obligations.
Speaker #2: The opposite is true if there is an assumption remeasurement loss. To better understand the performance of the business for the full year, we think it is beneficial to look at normalized underwriting margins, which exclude the impact of assumption changes and provide an improved basis for comparison of year-over-year results.
Speaker #2: For the full year 2025, normalized life underwriting margin as a percentage of premium increased to 41% compared with 39.7% for the prior year. Normalized life policy obligations as a percent of premium improved by over two percentage points.
Thomas Kalmbach: For the full year 2025, normalized life underwriting margin as a percentage of premium increased to 41%, compared with 39.7% for the prior year. Normalized life policy obligations as a percent of premium improved by over 2 percentage points from the prior year due to favorable mortality trends, but was partially offset by higher amortization of acquisition costs. Normalized health margin as a percent of premium was 25.4%, compared with 27.3% for the prior year, and is reflective of higher claims experience and the timing of premium rate increases during the year at United American.
Thomas Kalmbach: For the full year 2025, normalized life underwriting margin as a percentage of premium increased to 41%, compared with 39.7% for the prior year. Normalized life policy obligations as a percent of premium improved by over 2 percentage points from the prior year due to favorable mortality trends, but was partially offset by higher amortization of acquisition costs. Normalized health margin as a percent of premium was 25.4%, compared with 27.3% for the prior year, and is reflective of higher claims experience and the timing of premium rate increases during the year at United American.
Speaker #2: From the prior year due to favorable mortality trends but was partially offset by higher immunization of acquisition costs. Normalized health margin as a percent of premium was 25.4% compared with 27.3% for the prior year.
Speaker #2: And is reflective of higher claims experience and the timing of premium rate increases during the year at United American. Finally, with respect to our 26 guidance, for the full year '26, we estimate net operating earnings per diluted share will be in the range of $14.95 to $15.65, representing 5% earnings per share growth at the midpoint of the range.
Thomas Kalmbach: Finally, with respect to our 2026 guidance, for the full year 2026, we estimate net operating earnings per diluted share will be in the range of $14.95 to 15.65, representing 5% earnings per share growth at the midpoint of the range. This is an increase from our prior guidance, related primarily to continued improved mortality and experience trends that we are monitoring, including anticipated positive impacts from life assumption updates that will occur in Q3. In addition, we are anticipating higher health underwriting margins, given the strong premium growth at United American. Normalized earnings per share growth, which removes the impact of assumption updates in both 2025 and the midpoint of 2026, is approximately 10%.
Thomas Kalmbach: Finally, with respect to our 2026 guidance, for the full year 2026, we estimate net operating earnings per diluted share will be in the range of $14.95 to 15.65, representing 5% earnings per share growth at the midpoint of the range. This is an increase from our prior guidance, related primarily to continued improved mortality and experience trends that we are monitoring, including anticipated positive impacts from life assumption updates that will occur in Q3. In addition, we are anticipating higher health underwriting margins, given the strong premium growth at United American. Normalized earnings per share growth, which removes the impact of assumption updates in both 2025 and the midpoint of 2026, is approximately 10%.
Speaker #2: This is an increase from our prior guidance related primarily to continued improved mortality and experience trends that we are monitoring including anticipated positive impacts from life assumption updates that will occur in the third quarter.
Speaker #2: In addition, we are anticipating higher health underwriting margins given the strong premium growth at United American. Normalized earnings per share growth, which removes the impact of assumption updates in both 2025 and the midpoint of 2026, is approximately 10%.
Speaker #2: At the midpoint of our guidance, we anticipate total premium revenue growth of 7% to 8%, with life premium growth of 4% to 4.5% and health premium revenue growth of 14% to 16%.
Thomas Kalmbach: At the midpoint of our guidance, we anticipate total premium revenue growth of 7% to 8%, with life premium growth growing 4% to 4.5% and health premium revenue growth growing 14% to 16%. Health premium growth is benefiting not only from strong growth in Medicare Supplement sales in 2025, but also $80 to 90 million of additional annualized premiums resulting from approved rate increases on individual Medicare Supplement policies that would be phased in throughout 2026 and fully implemented by 2027. Recall, the majority of these rate increases will be effective beginning in the second quarter of 2026. As a result, this delay, along with seasonally high claims typically incurred in the first quarter, we anticipate United American's health margin percentage in the first quarter will be lower than the full year margin percent of 8% to 10%.
Thomas Kalmbach: At the midpoint of our guidance, we anticipate total premium revenue growth of 7% to 8%, with life premium growth growing 4% to 4.5% and health premium revenue growth growing 14% to 16%. Health premium growth is benefiting not only from strong growth in Medicare Supplement sales in 2025, but also $80 to 90 million of additional annualized premiums resulting from approved rate increases on individual Medicare Supplement policies that would be phased in throughout 2026 and fully implemented by 2027. Recall, the majority of these rate increases will be effective beginning in the second quarter of 2026. As a result, this delay, along with seasonally high claims typically incurred in the first quarter, we anticipate United American's health margin percentage in the first quarter will be lower than the full year margin percent of 8% to 10%.
Speaker #2: Health premium growth is benefiting not only from strong growth in Medicare supplement sales in 2025, but also $80 to $90 million of additional annualized premiums resulting from approved rate increases on individual business to be phased in throughout 2026 and fully implemented by 2027.
Speaker #2: Recall, the majority of these rate increases will be effective beginning in the second quarter of 2026 as a result, this delay along with seasonally high claims, typically incurred in the first quarter, we anticipate United American's health margin percentage in the first quarter will be lower than the full-year margin percent of 8 to 10%.
Speaker #2: However, we anticipate an average of 10 to 11% in the last three quarters of the year as the full effect of the premium rate increases is realized.
Thomas Kalmbach: However, we anticipate an average of 10% to 11% in the last three quarters of the year as the full effect of the premium rate increases is realized. We anticipate underwriting margins as a percent of premium to be in the range of 41.5% to 44.5% for the life segment and 23% to 27% for the health segment. In our guidance, we anticipate recent favorable trends will continue through 2026. Given this, our 2026 guidance range reflects an estimated Q3 benefit from assumption updates and resulting remeasurement gain of $50 million to $100 million, which is expected to increase the life margin as a percent of premium in the Q3 to a range of 48% to 52%. Those are my comments. I'll now turn it over to Matt.
Thomas Kalmbach: However, we anticipate an average of 10% to 11% in the last three quarters of the year as the full effect of the premium rate increases is realized. We anticipate underwriting margins as a percent of premium to be in the range of 41.5% to 44.5% for the life segment and 23% to 27% for the health segment. In our guidance, we anticipate recent favorable trends will continue through 2026. Given this, our 2026 guidance range reflects an estimated Q3 benefit from assumption updates and resulting remeasurement gain of $50 million to $100 million, which is expected to increase the life margin as a percent of premium in the Q3 to a range of 48% to 52%. Those are my comments. I'll now turn it over to Matt.
Speaker #2: We anticipate underwriting margins as a percent of premium to be in the range of 41.5% to 44.5% for the life segment and 23% to 27% for the health segment.
Speaker #2: In our guidance, we anticipate recent favorable trends will continue through 2026 given this our 26 guidance range reflects an estimated third-quarter benefit from assumption updates and resulting remeasurement gain of $50 million to $100 million which is expected to increase the life margin as a percent of premium in the third quarter to a range of 48% to 52%.
Speaker #2: Those are my comments. I'll now turn it over to Matt. Thank you, Tom. Those are our comments, and we will now open up the call for questions.
Matt Darden: Thank you, Tom. Those are our comments, and we will now open up the call for questions.
Matt Darden: Thank you, Tom. Those are our comments, and we will now open up the call for questions.
Speaker #3: Ladies and gentlemen, at this time, a reminder that if you would like to ask a question, simply press star and one on your telephone keypad.
Operator: Ladies and gentlemen, at this time, a reminder that if you would like to ask a question, simply press star and one on your telephone keypad. Pressing star and one will place you into a queue, and we will open your lines one at a time. Once again, ladies and gentlemen, that is star and one on your telephone keypad. Our first question today will come from the line of Jimmy Bhullar at J.P. Morgan. Please go ahead. Your line is open.
Operator: Ladies and gentlemen, at this time, a reminder that if you would like to ask a question, simply press star and one on your telephone keypad. Pressing star and one will place you into a queue, and we will open your lines one at a time. Once again, ladies and gentlemen, that is star and one on your telephone keypad. Our first question today will come from the line of Jimmy Bhullar at J.P. Morgan. Please go ahead. Your line is open.
Speaker #3: Pressing star and one will place you into a queue and we will open one on your telephone keypad. Our first question today will come from the line of Jimmy Buller at JP Morgan.
Speaker #3: Please go ahead. Your line is
Speaker #4: Hey, good open. morning. I had a couple of questions. First was just on the first-year lapses. They seem to pick up across various channels, especially in direct response.
Jimmy Bhullar: Hey, good morning. I had a couple of questions. First was just on the first-year lapses. They seemed to pick up across various channels, especially in direct response. So hoping that you could give us some color on what's going on there.
Jimmy Bhullar: Hey, good morning. I had a couple of questions. First was just on the first-year lapses. They seemed to pick up across various channels, especially in direct response. So hoping that you could give us some color on what's going on there.
Speaker #4: So hoping that you could give us some color on what's going on there.
Thomas Kalmbach: Yeah. Thanks, Jimmy. Yeah, we, you're definitely right. Q1 lapses for direct consumer and actually Liberty National were actually a little bit higher than what we had expected. You know, at this point, we see them as fluctuations, and we'll continue to monitor them. On DTC, you know, our sales increases are primarily coming from the internet channel, which we actually see higher lapses on the internet channel. So a little bit higher, not to be unexpected, but it was higher than what we would have anticipated from that channel. The one thing I'd say is I think the growth in sales, even with a little bit higher lapses, is a positive because it does add to underwriting margins overall, but it is something we'll continue to pay attention to.
Thomas Kalmbach: Yeah. Thanks, Jimmy. Yeah, we, you're definitely right. Q1 lapses for direct consumer and actually Liberty National were actually a little bit higher than what we had expected. You know, at this point, we see them as fluctuations, and we'll continue to monitor them. On DTC, you know, our sales increases are primarily coming from the internet channel, which we actually see higher lapses on the internet channel. So a little bit higher, not to be unexpected, but it was higher than what we would have anticipated from that channel. The one thing I'd say is I think the growth in sales, even with a little bit higher lapses, is a positive because it does add to underwriting margins overall, but it is something we'll continue to pay attention to.
Speaker #5: Yeah, you're definitely right. Yeah. First-quarter lapses for direct-to-consumer and actually Liberty National were actually a little bit higher than what we had as fluctuations, and we'll continue to monitor them.
Speaker #5: On DTC, our sales increases are primarily coming from the internet channel, where we actually see higher lapses on the internet channel. So a little bit higher—not to be unexpected—but it was higher than what we would have anticipated from that channel.
Speaker #5: The one thing I'd say is, I think the growth in sales, even with a little bit higher lapses, is a positive because it does add to underwriting margins overall, but it is something we'll continue to pay attention to.
Speaker #4: Okay, and then on MedSup, maybe if you could just talk about the dynamics between MedSup and MedAdvantage. Historically, obviously, with the Republican government, you'd assume MedAdvantage was going to grow.
Jimmy Bhullar: Okay. Then on MedSup, maybe if you could just talk about the dynamics between MedSup and Med Advantage. Historically, obviously with the Republican government, you'd assume Med Advantage is gonna grow. This time, it's sort of going in the opposite direction. But the two questions I had on that was, do you expect, like, I'm assuming your outlook for growth in Med Supp is fairly constructive. And if that is correct, then if we think about you filed prices, I think, around the middle of last year, maybe third quarter or so, and since then, claim trends have sort of stayed elevated. So should we assume that, you'd have to sort of go through a round of price increases to get the margins on the business that you've signed to more of a normal level?
Jimmy Bhullar: Okay. Then on MedSup, maybe if you could just talk about the dynamics between MedSup and Med Advantage. Historically, obviously with the Republican government, you'd assume Med Advantage is gonna grow. This time, it's sort of going in the opposite direction. But the two questions I had on that was, do you expect, like, I'm assuming your outlook for growth in Med Supp is fairly constructive. And if that is correct, then if we think about you filed prices, I think, around the middle of last year, maybe third quarter or so, and since then, claim trends have sort of stayed elevated. So should we assume that, you'd have to sort of go through a round of price increases to get the margins on the business that you've signed to more of a normal level?
Speaker #4: This time, it's sort of going in the opposite direction. But the two questions I had on that were, do you expect—I'm assuming your outlook for growth in MedSup is fairly constructive.
Speaker #4: And if that is correct, then if we think about your filed prices, I think around the middle of last year, maybe third quarter or so.
Speaker #4: And since then, claims trends have sort of stayed elevated. So, should we assume that you'd have to sort of go through a round of price increases to get the margins on the business that you've signed to more of a normal level?
Speaker #4: So maybe we should expect slightly weaker margins initially and then improved after you implement the higher
Jimmy Bhullar: So maybe we should expect slightly weaker margins initially, and then improved after you implement the higher prices.
Jimmy Bhullar: So maybe we should expect slightly weaker margins initially, and then improved after you implement the higher prices.
Speaker #5: Yeah,
Thomas Kalmbach: Yeah, Jimmy, on the claim trends, you know, we've actually seen claim trends stabilize in the Q3 and Q4. So that's different than what we saw in 2024, where we had seen claim trends increase in the Q3 and Q4. So those trends that we've seen recently are actually a little bit less than the anticipated trends that we had in our rate increases. So we do feel like the rate increases that we got approvals for are adequate to bring us over the course of 2026 and into 2027, back to kind of our normal margins in that 10% to 12% range.
Thomas Kalmbach: Yeah, Jimmy, on the claim trends, you know, we've actually seen claim trends stabilize in the Q3 and Q4. So that's different than what we saw in 2024, where we had seen claim trends increase in the Q3 and Q4. So those trends that we've seen recently are actually a little bit less than the anticipated trends that we had in our rate increases. So we do feel like the rate increases that we got approvals for are adequate to bring us over the course of 2026 and into 2027, back to kind of our normal margins in that 10% to 12% range.
Speaker #5: Jimmy, on the claim prices and trends, we've actually seen claim trends stabilize in the third and fourth quarter. So, we had seen claim trends increase in the third and fourth quarter.
Speaker #5: So those trends that we've seen recently are actually a little bit less than the anticipated trends that we had in our rate increases. So we do feel like the rate increases that we got approvals for are adequate to bring us over the course of '26 and into '27 back to kind of our normal margins in that 10 to 12 percent range.
Thomas Kalmbach: You know, as I mentioned in my comments, you know, we'd expect 10 to 11% in Q2, Q3, and Q4 of 2026, and those rate increases will carry into the first quarter of 2027 as well.
Thomas Kalmbach: You know, as I mentioned in my comments, you know, we'd expect 10 to 11% in Q2, Q3, and Q4 of 2026, and those rate increases will carry into the first quarter of 2027 as well.
Speaker #5: As I mentioned in my comments, we'd expect 10 to 11 percent in quarter two, three, and four of 2026. And those rate increases will carry into the first quarter of '27 as well.
Speaker #3: Yeah, I'd probably just add, just kind of a reminder that fourth quarter would, just as, again, seasonality, would be probably just a little bit on the lower end of that range.
Frank Svoboda: Yeah, I'd probably just add, just kind of a reminder, that Q4 would just as, again, seasonality would be probably just a little bit on the lower end of that range and probably just slightly behind where second and third quarter would have been. And then really, as you get all that rate increase, you know, fully into 2027, that's where we would really anticipate getting back into, you know, those more normal levels as you get it for the full year.
Frank Svoboda: Yeah, I'd probably just add, just kind of a reminder, that Q4 would just as, again, seasonality would be probably just a little bit on the lower end of that range and probably just slightly behind where second and third quarter would have been. And then really, as you get all that rate increase, you know, fully into 2027, that's where we would really anticipate getting back into, you know, those more normal levels as you get it for the full year.
Speaker #3: And probably just slightly behind where second and third quarter would have been. And then really, as you get all that rate increase, fully into 2027, that's where we would really anticipate getting back into those more normal levels as you get it for the full year.
Speaker #2: And then I'll touch on your market—very strong trend. Obviously, our results are for the fourth quarter; a lot of that is, we believe, the dynamic of what's going on with the Medicare Advantage market and people continuing to find value in Medicare Supplement.
Matt Darden: Then I'll touch on your market trend. You know, obviously, our results are very strong for the fourth quarter. A lot of that is, we believe, the dynamic of what's going on with the Medicare Advantage market and people continuing to find value in Medicare Supplement. You know, there's been a lot of discussion related to the government, you know, reimbursement rates and associated impact on Medicare Advantage carriers, as well as what they're doing from either premium increase, cost reductions, or scaling back. We see that also on the provider side of scaling back, taking Medicare Advantage plans. All of those are beneficial to us for a marketplace perspective.
Matt Darden: Then I'll touch on your market trend. You know, obviously, our results are very strong for the fourth quarter. A lot of that is, we believe, the dynamic of what's going on with the Medicare Advantage market and people continuing to find value in Medicare Supplement. You know, there's been a lot of discussion related to the government, you know, reimbursement rates and associated impact on Medicare Advantage carriers, as well as what they're doing from either premium increase, cost reductions, or scaling back. We see that also on the provider side of scaling back, taking Medicare Advantage plans. All of those are beneficial to us for a marketplace perspective.
Speaker #2: There's been a lot of discussion related to the government reimbursement rates and associated impact on Medicare Advantage. Carriers, as well as what they're doing from either premium increase, cost reductions, or scaling back, we see that also in the provider side of scaling back, taking Medicare Advantage plans.
Speaker #2: All of those are beneficial to us for a marketplace perspective. I think it is going to be very interesting to see how Q1 and Q2 play out with the dynamics of that market.
Matt Darden: You know, I think it is gonna be very interesting to see how Q1 and Q2 play out with the dynamics of that market. As we've mentioned before, you know, we are pricing for profitability. We're not pricing just to gain market share. And so it's very important, as Tom has mentioned, the management of our rate increases consistent with our claims performance, is very important for the overall profitability of that block of business. And, you know, we're clearly, from what we see, not out of line with what other carriers are experiencing, nor the rate increases that we're requesting, you know, which bodes well for our premium earnings in 2026. And so there... You know, the sales side is really hard to predict right now.
Matt Darden: You know, I think it is gonna be very interesting to see how Q1 and Q2 play out with the dynamics of that market. As we've mentioned before, you know, we are pricing for profitability. We're not pricing just to gain market share. And so it's very important, as Tom has mentioned, the management of our rate increases consistent with our claims performance, is very important for the overall profitability of that block of business. And, you know, we're clearly, from what we see, not out of line with what other carriers are experiencing, nor the rate increases that we're requesting, you know, which bodes well for our premium earnings in 2026. And so there... You know, the sales side is really hard to predict right now.
Speaker #2: As we've mentioned before, we are pricing for profitability. We're not pricing just to gain market share. And so it's very important, as Tom has mentioned, the management increases consistent with our claims performance.
Speaker #2: It's very important for the of our rate overall profitability of that block of business. And we're clearly, from what we see, not out of line with what other carriers are experiencing, nor the rate increases that we're requesting.
Speaker #2: Which bodes well for our premium earnings in 2026. And side is really hard to predict right now. But we had tremendous growth in the current—well, prior year now, 2025.
Matt Darden: But we had tremendous growth in the prior year, now 2025. And so it'll be. We'll really see how things come through as we get into Q1 and Q2 of this year.
Matt Darden: But we had tremendous growth in the prior year, now 2025. And so it'll be. We'll really see how things come through as we get into Q1 and Q2 of this year.
Speaker #2: And so it'll be we'll really see how things come through as we get into the first and second quarter of this year.
Speaker #5: Maybe one other thing to mention, Jimmy, is just as we think about claim trends, CMS did introduce prior authorization requirements for traditional Medicare supplements starting in six states in 2026.
Thomas Kalmbach: Maybe one other thing to mention, Jimmy, is just, as we think about claim trends, is CMS did introduce, prior authorization requirements, for traditional Medicare Supplement starting in six states in 2026. So we'd like to see kind of how that impacts overall claim trends, but I think overall it should be a favorable, a favorable impact as, they try to, reduce fraud, waste, and other abuses that they've seen in the Medicare program.
Thomas Kalmbach: Maybe one other thing to mention, Jimmy, is just, as we think about claim trends, is CMS did introduce, prior authorization requirements, for traditional Medicare Supplement starting in six states in 2026. So we'd like to see kind of how that impacts overall claim trends, but I think overall it should be a favorable, a favorable impact as, they try to, reduce fraud, waste, and other abuses that they've seen in the Medicare program.
Speaker #5: So we'd like to see kind of how that impacts overall claim trends. But I think overall, it should be a favorable impact, as they try to reduce fraud waste and other abuses that they've seen in the Medicare
Speaker #5: program. Thank
Jimmy Bhullar: Thank you.
Jimmy Bhullar: Thank you.
Speaker #1: Our next question today will come from Wilma Bertus at Raymond James.
Operator: Our next question today will come from Wilma Burdis at Raymond James.
Operator: Our next question today will come from Wilma Burdis at Raymond James.
Wilma Burdis: Hey, good morning. Sales have been quite strong in the last few years, even probably stronger than the long term. You cited some efficiencies there with branding, lead sharing, and sourcing. Is there more tailwind to unlock there, or has a lot of that work been done? Thanks.
Wilma Burdis: Hey, good morning. Sales have been quite strong in the last few years, even probably stronger than the long term. You cited some efficiencies there with branding, lead sharing, and sourcing. Is there more tailwind to unlock there, or has a lot of that work been done? Thanks.
Speaker #6: Hey, good morning. Sales have been quite strong in the last few years, even probably stronger than the long term. And you cited some efficiencies there with branding and lead sharing and sourcing.
Speaker #6: Is there more tailwind to unlock there, or has a lot of that work been done?
Speaker #6: Thanks. No, I
Matt Darden: No, I think, you know, as we continue to leverage on our technology investments, I think we'll continue to see tailwinds from an efficiency perspective. On the agency side, I think there's still more to unlock. There's a variety of technology that has been implemented, but there's a lot of things on the horizon that we're in process that will come online in 2026 and in 2027. So I think that'll continue to help our agent, you know, productivity, which clearly drives sales growth and drives it a little bit faster to the extent that we do that effectively, drives it a little bit faster than our agent count growth, which is our overall goal with those investments.
Matt Darden: No, I think, you know, as we continue to leverage on our technology investments, I think we'll continue to see tailwinds from an efficiency perspective. On the agency side, I think there's still more to unlock. There's a variety of technology that has been implemented, but there's a lot of things on the horizon that we're in process that will come online in 2026 and in 2027. So I think that'll continue to help our agent, you know, productivity, which clearly drives sales growth and drives it a little bit faster to the extent that we do that effectively, drives it a little bit faster than our agent count growth, which is our overall goal with those investments.
Speaker #2: I think as we continue to leverage on our technology investments, we'll continue to see tailwinds from an efficiency perspective. On the agency side, I think there's still more to unlock.
Speaker #2: There’s a variety of technology that has been implemented, but there’s a lot of things on the horizon that we are in process—that will come online in '26 and in '27.
Speaker #2: So I think that'll continue to help our agent productivity, which clearly drives sales growth and drives it a little bit faster to the extent that we do that effectively.
Speaker #2: Drives it a little bit faster than our agent count growth, which is our overall goal with those investments. And then the technology on the DTC side, the way we market, as was mentioned, is significant from our online channel.
Matt Darden: And then the technology on the DTC side, the way we market, as was mentioned, a significant amount of those sales are coming from our online channel. And as we market and target customers that are in our demographic, that are looking for our type of product, the sophistication there from a technology perspective continues to be a significant focus of ours, and we continue to invest in that area. And I think that's why you'll continue to see growth trends there, as well as just any sort of efficiency that we have through the distribution model. So we've talked about converting people that are interested, those leads and inquiries into ultimate sales, and then keeping them on the books through a great customer experience will continue to benefit us going forward.
Matt Darden: And then the technology on the DTC side, the way we market, as was mentioned, a significant amount of those sales are coming from our online channel. And as we market and target customers that are in our demographic, that are looking for our type of product, the sophistication there from a technology perspective continues to be a significant focus of ours, and we continue to invest in that area. And I think that's why you'll continue to see growth trends there, as well as just any sort of efficiency that we have through the distribution model. So we've talked about converting people that are interested, those leads and inquiries into ultimate sales, and then keeping them on the books through a great customer experience will continue to benefit us going forward.
Speaker #2: And as we market and target customers that are in our demographic that are looking for our type of product, the sophistication there amount of those sales are coming from a technology perspective continues to be a significant focus of ours.
Speaker #2: And we continue to invest in that area and I think that's why you'll continue to see growth trends there as well as just any sort of efficiency that we have through the distribution model as we've talked about of converting people that are interested, those leads and inquiries into ultimate sales and then keeping them on the books.
Speaker #2: Through a great customer experience, we'll continue to benefit us going forward. So I'd say my punchline to all that is I don't think we've fully achieved all that we can through the use of technology enhancements, but we'll continue in the coming days to get the growth that we're looking for.
Matt Darden: So, I'd say my punch line to all that is, I don't think we've fully achieved all that we can through the use of, you know, technology enhancements, but we'll continue to focus on that in the coming days to get the growth that we're looking for.
Matt Darden: So, I'd say my punch line to all that is, I don't think we've fully achieved all that we can through the use of, you know, technology enhancements, but we'll continue to focus on that in the coming days to get the growth that we're looking for.
Speaker #2: for. Great to hear.
Wilma Burdis: Great to hear. Thanks. Could you talk a little bit about remeasurement gains, which were strong in both life and in health, which actually reversed recently, but health remeasurement gains look pretty strong. Can you go into a little bit more detail on the drivers there and how you expect that to trend? Thanks.
Wilma Burdis: Great to hear. Thanks. Could you talk a little bit about remeasurement gains, which were strong in both life and in health, which actually reversed recently, but health remeasurement gains look pretty strong. Can you go into a little bit more detail on the drivers there and how you expect that to trend? Thanks.
Speaker #6: Thanks. Could you talk a little bit about focusing on that in remeasurement gains, which we're strong in both life and in health, which actually reversed recently, but health remeasurement gains look pretty strong.
Speaker #6: Can you just go into a little bit more detail on the drivers there and how you expect that to trend? Thanks.
Speaker #5: Yeah. With regards to kind of what I'd say is quarterly actual-to-expected remeasurement gains, we are seeing life mortality experience and lapse experience that's favorable relative to our long-term assumptions.
Thomas Kalmbach: Yeah. With regards to kind of what I'd say is quarterly actual to expected remeasurement gains, you know, we are seeing life mortality experience and lapse experience that's favorable relative to our long-term assumptions, and similarly on the health side as well. I think, you know, we continue to expect mortality to continue at kind of where they've been recently, which would result in continued, life, you know, actual to expected remeasurement gains. And as we're, you know, looking at that experience and looking to see how the Q1 and Q2 emerge, we kind of follow our process of updating assumptions. We'd also, as I mentioned, expect an assumption remeasurement gain in the $50 to 100 million range, in the Q3 of 2026.
Thomas Kalmbach: Yeah. With regards to kind of what I'd say is quarterly actual to expected remeasurement gains, you know, we are seeing life mortality experience and lapse experience that's favorable relative to our long-term assumptions, and similarly on the health side as well. I think, you know, we continue to expect mortality to continue at kind of where they've been recently, which would result in continued, life, you know, actual to expected remeasurement gains. And as we're, you know, looking at that experience and looking to see how the Q1 and Q2 emerge, we kind of follow our process of updating assumptions. We'd also, as I mentioned, expect an assumption remeasurement gain in the $50 to 100 million range, in the Q3 of 2026.
Speaker #5: And similarly, on the health side as well. I think we continue to expect mortality to continue at kind of where they've been recently, which would result in continued life actual-to-expected remeasurement gains.
Speaker #5: And as we're looking at that experience and looking to see how the first quarter and second quarter emerge, we kind of follow our process of updating assumptions.
Speaker #5: We'd also, as I mentioned, expect an assumption remeasurement gain in the 50 to 100 million dollar range in the third quarter of 2026. Now, when we make those assumption changes, I think we can depending upon where we set those long-term assumptions, I think that we would continue to see remeasurement gains potentially even in the third and the fourth quarter of next year as well.
Thomas Kalmbach: Now, when we make those assumption changes, you know, I think we can you know, depending upon where we set those long-term assumptions, I think that we would continue to see remeasurement gains, you know, potentially even in the third and the fourth quarter of next year as well. So I don't think we'd necessarily eliminate all of them. For the health side, it's a little bit different, you know, health the premium rate increases on the health side will help, help our ability to generate, experience that could produce continued remeasurement gains. But the health side remeasurement gains are much more volatile, just because of the way, Medicare Supplement and the rate increases are applied to, in the reserve practices is, just a little bit unique versus, versus, you know, our normal supplemental health business.
Thomas Kalmbach: Now, when we make those assumption changes, you know, I think we can you know, depending upon where we set those long-term assumptions, I think that we would continue to see remeasurement gains, you know, potentially even in the third and the fourth quarter of next year as well. So I don't think we'd necessarily eliminate all of them. For the health side, it's a little bit different, you know, health the premium rate increases on the health side will help, help our ability to generate, experience that could produce continued remeasurement gains. But the health side remeasurement gains are much more volatile, just because of the way, Medicare Supplement and the rate increases are applied to, in the reserve practices is, just a little bit unique versus, versus, you know, our normal supplemental health business.
Speaker #5: So I don't think we necessarily eliminate all of them. For the health side, it's a little bit different. Health, the premium rate increases on the health side will help our ability to generate experience that could produce continued remeasurement gains.
Speaker #5: But the health side remeasurement gains are much more volatile. Just because of the way Medicare supplement and the rate increases are applied to in the reserve practices, it's just a little bit unique versus our normal supplemental health business.
Speaker #5: So, we will see a little bit of volatility around remeasurement gains and losses in the health.
Thomas Kalmbach: So we will see a little bit of volatility around remeasurement gains and losses in the health line.
Thomas Kalmbach: So we will see a little bit of volatility around remeasurement gains and losses in the health line.
Speaker #5: line. Thank
Wilma Burdis: Thank you.
Wilma Burdis: Thank you.
Speaker #1: Our next question will come from Jack Matton.
Operator: Our next question will come from Jack Matten at BMO.
Operator: Our next question will come from Jack Matten at BMO.
Speaker #1: BMO. Hi.
Jack Matten: Hi, good morning. Especially how someone on excess cash flow, I think that the guidance this year is the same midpoint as before, even with a higher GAAP earnings outlook. So I guess that's partly related to the kind of the GAAP assumption remeasurement gain that you're embedding now. But anything else that's different across GAAP versus statutory that we should be thinking about there?
Jack Matten: Hi, good morning. Especially how someone on excess cash flow, I think that the guidance this year is the same midpoint as before, even with a higher GAAP earnings outlook. So I guess that's partly related to the kind of the GAAP assumption remeasurement gain that you're embedding now. But anything else that's different across GAAP versus statutory that we should be thinking about there?
Speaker #7: Good on excess cash flow. I think that the guidance this year is the same midpoint as before, even with the higher GAAP earnings outlook.
Speaker #7: Guessing that's probably related to the gap assumption remeasurement gain that you're embedding now. But anything else that's different across GAAP versus statutory that we should be thinking about?
Speaker #2: Yeah. And I'm sorry, Jack. It was just a little bit hard to understand your question, but I think it was looking for differences that were kind of happening that we're seeing on the gap or the statutory side that was impacting the excess cash flows.
Frank Svoboda: Yeah, and I'm sorry, Jack. You were. It was just a little bit-
Frank Svoboda: Yeah, and I'm sorry, Jack. You were. It was just a little bit-
Jack Matten: Garbled
Frank Svoboda: Garbled
Frank Svoboda: ... hard to-
Frank Svoboda: ... hard to-
Jack Matten: Yeah
Matt Darden: Yeah
Frank Svoboda: I understand your question, but I think it was looking for, you know, differences that were kind of happening, that we're seeing on the GAAP or the statutory side that was impacting the excess cash flows. I mean, I think in what Tom was providing from his guidance of 625 to 675, we are just seeing that, you know, is really being driven in and of itself by, you know, just good, solid statutory earnings in 2025, that then converted to dividends to the parent company in 2026. That is growing a little bit over, I'm gonna say, the normal statutory earnings that we had in the prior year there. Of course, we had some extraordinary dividends in 2025, that were brought up as well.
Frank Svoboda: I understand your question, but I think it was looking for, you know, differences that were kind of happening, that we're seeing on the GAAP or the statutory side that was impacting the excess cash flows. I mean, I think in what Tom was providing from his guidance of 625 to 675, we are just seeing that, you know, is really being driven in and of itself by, you know, just good, solid statutory earnings in 2025, that then converted to dividends to the parent company in 2026. That is growing a little bit over, I'm gonna say, the normal statutory earnings that we had in the prior year there. Of course, we had some extraordinary dividends in 2025, that were brought up as well.
Speaker #2: I mean, I think in what Tom
Speaker #2: of 625 to 675, we are just seeing that there? is really being driven in and of itself by just good solid statutory earnings in 2025 that then convert into dividends to 2026.
Speaker #2: That is growing a little bit over, I'm going to say, the normal statutory earnings that we had in the prior year there. Of course, we had some extraordinary dividends in 2025 that were brought up as well.
Speaker #2: But if you kind of pull those out, we're seeing just a nice increase. We feel better that we're actually at kind of another level with respect to our statutory earnings and, therefore, the cash flow generation up at the parent company.
Frank Svoboda: But if you kind of pull those out, we're seeing, you know, just a, a nice increase, feel better that we're actually at a, at a kind of another level, with respect to our statutory earnings and therefore the cash flow generation, up at the parent company. No real significant changes in the statutory or the GAAP models. You know, if you think about 25 or even 26 at this point in time, that's really impacting it, like we maybe have had in some of the prior years.
Frank Svoboda: But if you kind of pull those out, we're seeing, you know, just a, a nice increase, feel better that we're actually at a, at a kind of another level, with respect to our statutory earnings and therefore the cash flow generation, up at the parent company. No real significant changes in the statutory or the GAAP models. You know, if you think about 25 or even 26 at this point in time, that's really impacting it, like we maybe have had in some of the prior years.
Speaker #2: No real significant changes in the statutory or the GAAP models if you think about '25 or even '26 at this point in time. It's not really impacting it like we maybe have had in some of the prior periods.
Speaker #2: years. Yeah.
Thomas Kalmbach: Yeah. And just for clarity, we don't expect any benefit from the Globe Life Re Bermuda transaction in 2026 at this point in time.
Thomas Kalmbach: Yeah. And just for clarity, we don't expect any benefit from the Globe Life Re Bermuda transaction in 2026 at this point in time.
Speaker #3: And just for clarity, we don't expect any benefit from the GLOBE LIFE RE for the muted transaction in 2026 at this point in time.
Speaker #2: Yeah, and to the extent that that changes at all over the course of the year, as we talk to our regulators, we'll be sure to disclose that and talk about that on future calls.
Frank Svoboda: Yeah. And to the extent that that changes at all, you know, over the course of the year, as we talk to our regulators, you know, we'll be sure to disclose that and talk about that on future calls.
Frank Svoboda: Yeah. And to the extent that that changes at all, you know, over the course of the year, as we talk to our regulators, you know, we'll be sure to disclose that and talk about that on future calls.
Speaker #2: calls. Great.
Jack Matten: Great. Thank you. And then, to follow up on the American Income agent count, I know that there's, you know, usually a like, a stairstep pattern over time, but it looked like a bit of a larger drop this quarter than what we usually would see. Can you guys any sense on what's driving that? And then any more detail on the retention initiatives that you referenced in your prepared remarks?
Jack Matten: Great. Thank you. And then, to follow up on the American Income agent count, I know that there's, you know, usually a like, a stairstep pattern over time, but it looked like a bit of a larger drop this quarter than what we usually would see. Can you guys any sense on what's driving that? And then any more detail on the retention initiatives that you referenced in your prepared remarks?
Speaker #3: Thank you. And then a follow-up on the American Income agent count. I know that there's usually a stair-step pattern over time, but it looks like a bit of a larger drop this quarter than what we usually would see.
Speaker #3: Any sense on what's driving that, and then any more detail on the retention initiatives that you referenced in your prepared remarks?
Speaker #3: remarks? Yeah.
Matt Darden: Yeah, I would say for American Income, it is not uncommon for the fourth quarter, end of the year for our agent count from a sequential basis to go down. If you look at three of the last four years, we've had that phenomenon. So I'd say it's not unexpected. Typically, we see those agents that, you know, may be struggling with their productivity and production, you know, kind of toward the end of the year, may be a time that they fall off. What we're doing from a focus on that perspective is, as we've talked about in the past, it's our middle management and managers that are out there recruiting, training, onboarding, and retaining agents. And so we're looking at some incentives, changing their incentive compensation a little bit to continue to focus on that agent retention.
Matt Darden: Yeah, I would say for American Income, it is not uncommon for the fourth quarter, end of the year for our agent count from a sequential basis to go down. If you look at three of the last four years, we've had that phenomenon. So I'd say it's not unexpected. Typically, we see those agents that, you know, may be struggling with their productivity and production, you know, kind of toward the end of the year, may be a time that they fall off. What we're doing from a focus on that perspective is, as we've talked about in the past, it's our middle management and managers that are out there recruiting, training, onboarding, and retaining agents. And so we're looking at some incentives, changing their incentive compensation a little bit to continue to focus on that agent retention.
Speaker #4: I would say, for American Income, it is not uncommon for the fourth quarter, end of the year, for our agent count from a sequential basis to go down.
Speaker #4: If you look at three of the last four years, we've had that phenomenon. So I'd say it's not unexpected. Typically, we see those agents that may be struggling with their productivity and production kind of toward the end of the year—maybe a time that they fall from a focus on that, off.
Speaker #4: What we're doing, perspective is, as we've talked about in the past, it's our middle management and managers that are out there recruiting, training, onboarding, and retaining agents.
Speaker #4: And so we're looking at some incentives changing their incentive compensation a little bit to continue to focus on that agent retention. So those will go in toward the beginning of the year and then obviously they take a little bit of time to get implemented.
Matt Darden: So those will go in toward the beginning of the year, then obviously, they take a little bit of time to get implemented. And so, like I said, if you look at it over long term, it's not a concerning trend. It's why we're projecting that we're gonna have agent count growth. But, you know, overall, we are focused on the productivity of our entire agency, and that continues to be very strong for all our agencies, but including American Income. And so I think that's why you see a little bit higher sales growth than just the agent count growth. Again, quarter to quarter, we're gonna get some of those fluctuations.
Matt Darden: So those will go in toward the beginning of the year, then obviously, they take a little bit of time to get implemented. And so, like I said, if you look at it over long term, it's not a concerning trend. It's why we're projecting that we're gonna have agent count growth. But, you know, overall, we are focused on the productivity of our entire agency, and that continues to be very strong for all our agencies, but including American Income. And so I think that's why you see a little bit higher sales growth than just the agent count growth. Again, quarter to quarter, we're gonna get some of those fluctuations.
Speaker #4: And so, like I said, if you look at it over the long term, it's not a concerning trend. That's why we're projecting that we're going to have agent count growth.
Speaker #4: That's why you see a little bit higher sales growth than just the agent count growth. Again, quarter to quarter, we're going to get some of those fluctuations.
Speaker #3: Thank
Andrew Kligerman: Thank you.
Jack Matten: Thank you.
Speaker #3: You. We'll take our next question.
Operator: We'll take our next question from Andrew Kligerman at TD Cowen.
Operator: We'll take our next question from Andrew Kligerman at TD Cowen.
Speaker #1: from Andrew Klagerman at TD Gowen.
Speaker #8: Good morning. Almost good afternoon. I want to stay on Jack's question with regard to sales. So it sounds like you're going to put the retention initiatives in place this year.
Andrew Kligerman: Good morning. Almost good afternoon. I wanna stay on Jack's question with regard to sales. So it sounds like you're gonna put the retention initiatives in place this year, so that wasn't the case last year. So I guess that explains why you cited average producing agents going up mid-single digit, and then at American Income, and then net life sales going up high single digit. So maybe that's. I'm trying to get at the productivity a little bit more. What drove it up in Q4 to see a 2% drop in average producing agents with a 10% increase in sales?
Andrew Kligerman: Good morning. Almost good afternoon. I wanna stay on Jack's question with regard to sales. So it sounds like you're gonna put the retention initiatives in place this year, so that wasn't the case last year. So I guess that explains why you cited average producing agents going up mid-single digit, and then at American Income, and then net life sales going up high single digit. So maybe that's. I'm trying to get at the productivity a little bit more. What drove it up in Q4 to see a 2% drop in average producing agents with a 10% increase in sales?
Speaker #8: So, that wasn’t the case last year. So, I guess that explains why you cited average producing agents going up mid-single digits at American Income, and then net life sales digit.
Speaker #8: So, maybe that's—I'm trying to get at the productivity a little bit more. What drove it up in the fourth quarter to see a 2% drop in average producing agents with a 10% increase in sales?
Speaker #8: Was it—I think you touched on earlier those lead generation coming from direct-to-consumer? But I can see that you're baking in more productivity even going forward.
Andrew Kligerman: I think you touched on earlier, those, you know, the lead generation coming from direct-to-consumer, but I can see that you're baking in more productivity even going forward. I'd like to get a better understanding of what's driving that.
Andrew Kligerman: I think you touched on earlier, those, you know, the lead generation coming from direct-to-consumer, but I can see that you're baking in more productivity even going forward. I'd like to get a better understanding of what's driving that.
Speaker #8: So trying to get a better—I'd like to get a better understanding of what's driving that.
Speaker #4: Sure. I think, as we've talked about in the past, you've got to look at the agent count growth as a leading indicator, and then the sales growth follows.
Matt Darden: Sure. I think, you know, as we've talked about in the past, you gotta look at the agent count growth as a leading indicator, and then the sales growth follows. And so if you go back for American Income, Q4 of 2024 was a 7% growth, and then Q1, Q2, and Q3 were all low single digit growth quarters for just the agent count. And so, you know, that carries forward into sales in Q4. We're also seeing some productivity gains, as well as just the premium on a per sale basis is up, compared to the same quarter in the prior year. And so that's also driving it as well. And as we've talked about, you know, the thing with the product in the marketplace is that the consumer is...
Matt Darden: Sure. I think, you know, as we've talked about in the past, you gotta look at the agent count growth as a leading indicator, and then the sales growth follows. And so if you go back for American Income, Q4 of 2024 was a 7% growth, and then Q1, Q2, and Q3 were all low single digit growth quarters for just the agent count. And so, you know, that carries forward into sales in Q4. We're also seeing some productivity gains, as well as just the premium on a per sale basis is up, compared to the same quarter in the prior year. And so that's also driving it as well. And as we've talked about, you know, the thing with the product in the marketplace is that the consumer is...
Speaker #4: And so, if you go back for American Income, Q4 of '24 was a 7% growth, and then Q1, low single-digit growth quarters for just the agent count.
Speaker #4: And so that carries forward into sales in Q4. We're also seeing some productivity gains, as well as just the premium on a per-sale basis is up compared to the same quarter in the prior year.
Speaker #4: And so that's also driving it as well. And as we've talked about, the thing with the product and the marketplace is that the consumer is—we go through a needs-based analysis that is sitting down with the customer and determining what their needs are, and then based upon what those are, we have the right amount of coverage, which obviously has an impact on the amount of premium that we collect on a per-policy basis.
Matt Darden: We go through a needs-based analysis that is sitting down with the customer and determining what their needs are, and then based upon what those are, you know, we have the right amount of coverage, which obviously has an impact on the amount of premium that we collect on a per policy basis. I think some of the when I talked about the quality of the leads and the conversion of those Globe leads generated out of our DTC channel into American Income is also helping on that productivity, is reflected in the premium on a per sale basis, as well as just the agents that are producing every single week what their sales are from that perspective. And so you are correct, just recognizing the agent count.
Matt Darden: We go through a needs-based analysis that is sitting down with the customer and determining what their needs are, and then based upon what those are, you know, we have the right amount of coverage, which obviously has an impact on the amount of premium that we collect on a per policy basis. I think some of the when I talked about the quality of the leads and the conversion of those Globe leads generated out of our DTC channel into American Income is also helping on that productivity, is reflected in the premium on a per sale basis, as well as just the agents that are producing every single week what their sales are from that perspective. And so you are correct, just recognizing the agent count.
Speaker #4: I think some of the—what I talked about, the quality of the leads and the conversion of those Globe leads generated out of our DTC channel into American Income is also helping on that productivity, as reflected in the premium on a per-sale basis, as well as just the agents that are producing every single week.
Speaker #4: What their sales are from that perspective. And so you are correct. Just recognizing the agent count, we think the agent count growth might be just a little bit slower than the sales growth for 2026, and it's just reflective of some of those dynamics.
Matt Darden: We think the agent count growth might be just a little bit slower than the sales growth for 2026, and it's just reflective of some of those dynamics. And we'll see how some of these incentives come into place. And I wouldn't characterize it that we had no incentives in 2025 for our managers to recruit and retain agents. It's just, we found that we always have to kind of adjust to that and make sure we've got the right incentives correct between that balance of sales, recruiting, training, and retaining agents. And so we're doing some few tweaks that will go in here at the beginning of 2026, and we'll see if we got it right as we move throughout the year.
Matt Darden: We think the agent count growth might be just a little bit slower than the sales growth for 2026, and it's just reflective of some of those dynamics. And we'll see how some of these incentives come into place. And I wouldn't characterize it that we had no incentives in 2025 for our managers to recruit and retain agents. It's just, we found that we always have to kind of adjust to that and make sure we've got the right incentives correct between that balance of sales, recruiting, training, and retaining agents. And so we're doing some few tweaks that will go in here at the beginning of 2026, and we'll see if we got it right as we move throughout the year.
Speaker #4: And we'll see how some of these incentives come into place. And I wouldn't characterize it that we had no incentives in 2025 for our managers to recruit and retain agents.
Speaker #4: It's just, we found that we always have to kind of adjust to that and make sure we've got the right incentives correct between that balance of sales and recruiting, training, and retaining agents.
Speaker #4: And so, we're doing a few tweaks that will go in here at the beginning as we move throughout the year.
Speaker #8: Very helpful. And if
Andrew Kligerman: Very helpful. And if I can go back to the Med Sup, I mean, what a fabulous year in terms of sales growth at United American, and just saying that you think sales will be flat in 2026 is pretty darn good. As we look further out, is there a chance that the dynamic between Med Advantage and Med Supplement kind of shifts in the favor of Med Advantage, where they kind of align better with regulations, compliance, and pricing, and you could see a dip in the opposite direction, some real pressure on sales as more Med Advantage gets sold?
Andrew Kligerman: Very helpful. And if I can go back to the Med Sup, I mean, what a fabulous year in terms of sales growth at United American, and just saying that you think sales will be flat in 2026 is pretty darn good. As we look further out, is there a chance that the dynamic between Med Advantage and Med Supplement kind of shifts in the favor of Med Advantage, where they kind of align better with regulations, compliance, and pricing, and you could see a dip in the opposite direction, some real pressure on sales as more Med Advantage gets sold?
Speaker #8: I can go back to the MEDSUP—I mean, '26—and we'll see if we got it right, as what a fabulous year in terms of sales growth that United American had. Just saying that you think sales will be flat in '26 is pretty darn good.
Speaker #8: As we look further out, is there a chance that the dynamic between MedAdvantage and MedSupplement kind of shifts in favor of MedAdvantage, where they kind of align better with regulations and compliance and pricing?
Speaker #8: And you could see a dip in the opposite direction, some real pressure on sales as more Medicare Advantage gets—
Speaker #8: sold. I mean, it certainly
Matt Darden: I mean, it's certainly possible. As we've mentioned before, we've been in this business for decades. Have more and more people, from an age perspective, entering into the market in general. So that would be, I would think, a tailwind. But it's really hard to predict the government support within the Medicare Advantage space. And so, you know, that will play some into the dynamics. But I think from a Medicare Supplement perspective, there's always going to be a need in the marketplace for that particular product. People that want, you know, the freedom of choice and some of the benefits that the Medicare Supplement marketplace provides. So, you know, again, I think there'll always be a place in that market.
Matt Darden: I mean, it's certainly possible. As we've mentioned before, we've been in this business for decades. Have more and more people, from an age perspective, entering into the market in general. So that would be, I would think, a tailwind. But it's really hard to predict the government support within the Medicare Advantage space. And so, you know, that will play some into the dynamics. But I think from a Medicare Supplement perspective, there's always going to be a need in the marketplace for that particular product. People that want, you know, the freedom of choice and some of the benefits that the Medicare Supplement marketplace provides. So, you know, again, I think there'll always be a place in that market.
Speaker #4: Possible. As we've mentioned before, we've been in this business for decades. We have more and more people, from an age perspective, entering into the market in general.
Speaker #4: So that would be—I would think—a tailwind. But it's really hard to predict the government support within the Medicare Advantage space, and so that will play some into the dynamics.
Speaker #4: But I think, from a Medicare supplement perspective, there's always going to be a need and a marketplace for that particular product. People that want the freedom of choice and some of the benefits that the Medicare supplement marketplace provides.
Speaker #4: So, again, I think there will always be a place in that market. We are very much focused on maintaining our margins, and we're really not going to chase market share at the expense of just pricing to gain market share for the sake of it.
Matt Darden: We are very much focused on maintaining our margins, and we're really not gonna chase market share at the expense of just pricing to gain market share for the sake of it. So I think you've seen that over a long period of time with us, is that our sales growth will ebb and flow in that area, depending on the marketplace. But it's very important that we maintain our pricing for the existing in-force block as well. That really translates into that underwriting margin dollar that we're really focused on from a long-term stability perspective.
Matt Darden: We are very much focused on maintaining our margins, and we're really not gonna chase market share at the expense of just pricing to gain market share for the sake of it. So I think you've seen that over a long period of time with us, is that our sales growth will ebb and flow in that area, depending on the marketplace. But it's very important that we maintain our pricing for the existing in-force block as well. That really translates into that underwriting margin dollar that we're really focused on from a long-term stability perspective.
Speaker #4: So, I think you've seen that, over a long period of time with us, our sales growth will ebb and flow in that area depending on the marketplace.
Speaker #4: But it's very important that we maintain our pricing for the existing in-force block as well. That really translates into that underwriting margin dollar that we're really focused on from a long-term stability perspective.
Speaker #8: Thanks very much, Matt.
Wes Carmichael: Thanks very much, Matt.
Andrew Kligerman: Thanks very much, Matt.
Matt Darden: Thanks, Andrew.
Matt Darden: Thanks, Andrew.
Speaker #1: And a reminder to our phone, Andrew. Thanks, audience. That is star and one if you would like to ask a question of John Barnage. Moving on, we'll hear from Piper.
Operator: A reminder to our phone audience, that is star and one if you would like to ask a question. Moving on, we'll hear from John Barnidge at Piper Sandler.
Matt Darden: A reminder to our phone audience, that is star and one if you would like to ask a question. Moving on, we'll hear from John Barnidge at Piper Sandler.
Speaker #1: Sandler. Good morning.
John Barnidge: Good morning, thank you for the opportunity. My first question: on the investment portfolio, can you talk about exposure to software and how you see the portfolio impacted by AI, along with any de-risking activities that have been pursued? Thank you.
John Barnidge: Good morning, thank you for the opportunity. My first question: on the investment portfolio, can you talk about exposure to software and how you see the portfolio impacted by AI, along with any de-risking activities that have been pursued? Thank you.
Speaker #9: Thank you for the opportunity. My first question, on the investment portfolio: can you talk about exposure to software and how you see the portfolio impacted by AI, along with any de-risking activities that have been pursued?
Speaker #9: Thank
Speaker #9: you. Sure.
Frank Svoboda: Sure. Thanks, John. You know, on our—I think a lot of the discussion on, you know, potential exposure has kind of been in that alternative portfolio category. We've kind of taken a look at within the limited partnerships and the different investments, looking at information that we have available there. You know, our best estimate is that, you know, there's really less than probably $15 million within that alternative portfolio that is really related to software companies. So we do think it's pretty limited. You know, overall, our private credit is probably about 1% of our total invested assets. I think that's about what we had last quarter, and that really hasn't changed again this year.
Frank Svoboda: Sure. Thanks, John. You know, on our—I think a lot of the discussion on, you know, potential exposure has kind of been in that alternative portfolio category. We've kind of taken a look at within the limited partnerships and the different investments, looking at information that we have available there. You know, our best estimate is that, you know, there's really less than probably $15 million within that alternative portfolio that is really related to software companies. So we do think it's pretty limited. You know, overall, our private credit is probably about 1% of our total invested assets. I think that's about what we had last quarter, and that really hasn't changed again this year.
Speaker #10: Thanks, John. On our—I think a lot of the discussion on potential exposure has kind of been in that alternative portfolio category. We've kind of taken a look at, within the limited partnerships and the different investments, looking at information that we have available there.
Speaker #10: Our best estimate is that there's really less than probably $15 million within that alternative portfolio that is really related to software companies. So we do think it's pretty limited.
Speaker #10: Overall, our private credit is probably about 1% of our total invested assets. I think that's about what we had last quarter, and that really hasn't changed again this year.
Speaker #10: So overall, we have pretty low allocation to the alternative space in general, and then private credit. And then it doesn't look like, right now at least, on that side, we have much from the software.
Frank Svoboda: So, you know, overall, we have pretty, pretty low allocation to the alternative space in general, than private credit, and then it doesn't look like right now, at least in that side, we have much from the software. As we think about it on the fixed maturity portfolio, you know, we've always been underweight, I would say, on tech. You kind of think about, you know, we're out there trying to buy bonds that are 20, 30 years out, and, and it's hard to find the technology companies that we, you know, really feel comfortable fit into that space. So less than 2% of our invested assets of our fixed maturity portfolio is, you know, in some type of a technology, type, activity within that sector.
Frank Svoboda: So, you know, overall, we have pretty, pretty low allocation to the alternative space in general, than private credit, and then it doesn't look like right now, at least in that side, we have much from the software. As we think about it on the fixed maturity portfolio, you know, we've always been underweight, I would say, on tech. You kind of think about, you know, we're out there trying to buy bonds that are 20, 30 years out, and, and it's hard to find the technology companies that we, you know, really feel comfortable fit into that space. So less than 2% of our invested assets of our fixed maturity portfolio is, you know, in some type of a technology, type, activity within that sector.
Speaker #10: So, we think about it on the fixed maturity portfolio—we've always been underweight, I would say, on tech. Kind of think about, we're out there trying to buy bonds that are 20, 30 years out, and it's hard to find the technology companies that we've really felt comfortable fit into that space.
Speaker #10: So, less than 2% of our invested assets in our fixed maturity portfolio is in some type of technology-type activity within that sector. What we have exposure to mostly are the hardware providers, data service providers, and that type of thing.
Frank Svoboda: What we have exposure to mostly are the hardware hardware providers, data service providers, and that type of thing. There's probably a couple names in there. We kind of think probably less than $50 million that, you know, have a little bit more susceptibility to be displaced. They do have some moats with respect to some proprietary data that they have, with respect to, you know, the space that they operate in. So that, I think, gives them some protection, but that we're kind of keeping an eye on.
Frank Svoboda: What we have exposure to mostly are the hardware hardware providers, data service providers, and that type of thing. There's probably a couple names in there. We kind of think probably less than $50 million that, you know, have a little bit more susceptibility to be displaced. They do have some moats with respect to some proprietary data that they have, with respect to, you know, the space that they operate in. So that, I think, gives them some protection, but that we're kind of keeping an eye on.
Speaker #10: There's probably a couple of names in there. We kind of think probably less than $50 million that have a little bit more susceptibility to be displaced.
Speaker #10: They do have some moats with respect to some proprietary data that they have with respect to the space that they operate in. So I think it gives them some protection, but that's something we're kind of keeping an eye on.
Speaker #10: It is, I think, the whole AI disruption is a risk that the investment team has been considering for a number of years, and clearly within part of the matrix that they utilize as they think about the bonds that the companies that we're going to invest in.
Frank Svoboda: I think the whole AI disruption is a risk that the investment team has been considering, you know, for a number of years, and clearly within part of the matrix that they utilize as they think about the bonds that the companies that we're gonna invest in. And again, we're looking for those names that are really long-term, you know, we think are gonna be around for the long term. And so it's, you know, the IBMs and the Amazons and the Microsofts that are mostly in our portfolio.
Frank Svoboda: I think the whole AI disruption is a risk that the investment team has been considering, you know, for a number of years, and clearly within part of the matrix that they utilize as they think about the bonds that the companies that we're gonna invest in. And again, we're looking for those names that are really long-term, you know, we think are gonna be around for the long term. And so it's, you know, the IBMs and the Amazons and the Microsofts that are mostly in our portfolio.
Speaker #10: And again, we're looking for those names that are really long-term, we think are going to be around for the long term, and so it's the IBMs and the Amazons and the Microsofts that are mostly in our—
Speaker #10: portfolio. Thank you.
John Barnidge: Thank you. Appreciate the answer.
John Barnidge: Thank you. Appreciate the answer.
Speaker #9: Appreciate the answer.
Speaker #1: Our next question will come from Wes Carmichael at Wells Fargo.
Operator: Our next question will come from Wes Carmichael at Wells Fargo.
Operator: Our next question will come from Wes Carmichael at Wells Fargo.
Speaker #11: Hey, thank you. Good morning. I had a couple of questions on Bermuda. One, I think the press release in December— I think you noted that the first reinsurance transaction was executed with your business plan.
Wes Carmichael: Hey, thank you. Good morning. Had a couple of questions on Bermuda. One, I think the press release in December, I think you noticed-or you noted that the first reinsurance transaction you executed with your business plan. Wondering if you could provide a little more detail on that transaction, just in terms of size and scope?
Wes Carmichael: Hey, thank you. Good morning. Had a couple of questions on Bermuda. One, I think the press release in December, I think you noticed-or you noted that the first reinsurance transaction you executed with your business plan. Wondering if you could provide a little more detail on that transaction, just in terms of size and scope?
Speaker #11: Wondering if you could provide a little more detail on that transaction, just in terms of size and scope.
Speaker #10: Sure. Yeah, we were pleased to get the licensing information of the company and the approval of our U.S. regulators, as well as the Bermuda regulators, to complete that transaction.
Frank Svoboda: Sure. Yeah, we were pleased to get, you know, the licensing information of the company and the approval of our US regulators, as well as the Bermuda regulators, to complete that transaction. Our goal there was really to get the company established and, 'cause we wanted to actually get it established in 2025, so we could have audited financial statements for that entity beginning in 2026 that we'd finalize those 2025 results. So that allows us to be on a path for the requirements of reciprocal jurisdiction, and so we're well on that path, and we're executing relative to kind of our business plan at this point in time. That initial transaction was about $1.2 billion of statutory reserves that got transferred.
Frank Svoboda: Sure. Yeah, we were pleased to get, you know, the licensing information of the company and the approval of our US regulators, as well as the Bermuda regulators, to complete that transaction. Our goal there was really to get the company established and, 'cause we wanted to actually get it established in 2025, so we could have audited financial statements for that entity beginning in 2026 that we'd finalize those 2025 results. So that allows us to be on a path for the requirements of reciprocal jurisdiction, and so we're well on that path, and we're executing relative to kind of our business plan at this point in time. That initial transaction was about $1.2 billion of statutory reserves that got transferred.
Speaker #10: And our goal there was really to get the company established, because we wanted to actually get it established in 2025 so we could have audited financial statements for the entity beginning in 2026, that we'd finalize as '25 results.
Speaker #10: So that allows us for the requirements to be on a path of reciprocal jurisdiction. On that path, and we're executing relative, and so we're well to kind of our business plan at this point in time.
Speaker #10: That initial transaction was about $1.2 billion of statutory reserves that got transferred. And so during the course of 2026, we do intend—and this is consistent with our business plan as well, that was approved by Bermuda—we do intend to reinsure some new business as well as incrementally a little bit more in-force business in 2026.
Frank Svoboda: And so, during the course of 2026, we do intend, and this is consistent with our business plan as well, that was approved by Bermuda, we do intend to reinsure some new business as well as incrementally a little bit more in-force business in 2026. So we'll grow the amount of business that's reinsured in Bermuda over the next, you know, three to five years.
Frank Svoboda: And so, during the course of 2026, we do intend, and this is consistent with our business plan as well, that was approved by Bermuda, we do intend to reinsure some new business as well as incrementally a little bit more in-force business in 2026. So we'll grow the amount of business that's reinsured in Bermuda over the next, you know, three to five years.
Speaker #10: So, we'll grow the amount of business that's reinsured in Bermuda over the next three to five years.
Wes Carmichael: ... Thanks. And I guess my follow-up was on that point, is it still possible to get early approval for reciprocal jurisdiction? And I'm just trying to understand when you get that status, are there near-term plans to increase the pace of reinsurance? And just really trying to understand how much of a lift in excess cash flows do you kinda expect in 2026 or 2027?
Wes Carmichael: ... Thanks. And I guess my follow-up was on that point, is it still possible to get early approval for reciprocal jurisdiction? And I'm just trying to understand when you get that status, are there near-term plans to increase the pace of reinsurance? And just really trying to understand how much of a lift in excess cash flows do you kinda expect in 2026 or 2027?
Speaker #11: Thanks. And I guess my follow-up was on that point. Is it still possible to get early approval for status, or are they trying to understand when you get that pace of reinsurance? I'm just really trying to understand how much of a lift in excess cash flows you kind of expect in 2026 or 2027.
Speaker #10: Yeah, we've kind of thought through that, and that's really part of our business plan that we established earlier on. We do think it is possible to get early reciprocal jurisdiction, but it is subject to regulatory approval.
Thomas Kalmbach: Yeah, we've kind of thought through that, and that's really part of kind of our business plan that we established earlier on. We do think it is possible to get early Reciprocal Jurisdiction, but it is subject to regulatory approval. So we really wanna, you know, go through the process, and we'll update you if we do, in fact, get Reciprocal Jurisdiction early. And that would allow the potential for, again, I'd say potential for additional dividend distributions from the Bermuda sub, but those are also subject to Bermuda regulatory approval. So, you know, again, we don't wanna get too far ahead of ourselves, and we wanna actually go through the process of having those discussions with our regulators.
Thomas Kalmbach: Yeah, we've kind of thought through that, and that's really part of kind of our business plan that we established earlier on. We do think it is possible to get early Reciprocal Jurisdiction, but it is subject to regulatory approval. So we really wanna, you know, go through the process, and we'll update you if we do, in fact, get Reciprocal Jurisdiction early. And that would allow the potential for, again, I'd say potential for additional dividend distributions from the Bermuda sub, but those are also subject to Bermuda regulatory approval. So, you know, again, we don't wanna get too far ahead of ourselves, and we wanna actually go through the process of having those discussions with our regulators.
Speaker #10: So, we really want to go through the process, and we'll update you if we do, in fact, get reciprocal jurisdiction early. And that would allow the potential for—again, I say potential for—additional dividend distributions from the Bermuda sub, but those are also subject to Bermuda regulatory approval.
Speaker #10: So again, we don't want to get too far ahead of ourselves, and we want to actually go through the process of having those discussions with our regulators.
Speaker #11: Yeah, and I'd just add, I think the timeframe on that, as far as working with the regulators, is probably something that happens a little bit more mid-year.
Frank Svoboda: Yeah, and I just add, you know, if I think the kind of timeframe on that as far as, you know, working with the regulators is probably something that happens a little bit more mid-year. We do anticipate that if we were able to get that, you know, any potential distributions that we might get in 2026 would be toward the end of the year.
Frank Svoboda: Yeah, and I just add, you know, if I think the kind of timeframe on that as far as, you know, working with the regulators is probably something that happens a little bit more mid-year. We do anticipate that if we were able to get that, you know, any potential distributions that we might get in 2026 would be toward the end of the year.
Speaker #11: We do anticipate that, if we were able to get that, any potential distributions that we might get in '26 would be toward the end of the year.
Speaker #11: Yeah, right. And so we have not built any of that into our '26 plan as of this time. And we'll clearly take a look at that as the year progresses.
Thomas Kalmbach: Right.
Thomas Kalmbach: Right.
Frank Svoboda: So, we have not built any of that into our 2026 plan as of this time, and we'll clearly take a look at that as the year progresses. We do anticipate, you know, that there would be, you know, some opportunity then in starting in 2027, and as Thomas kind of talked about, you know, we think that it can be, you know, up to, you know, $200 million or at least working toward $200 million over time. You know, and that would be, just kind of a reminder, that is what we would anticipate would be annual, you know, cash flows up to the parent.
Frank Svoboda: So, we have not built any of that into our 2026 plan as of this time, and we'll clearly take a look at that as the year progresses. We do anticipate, you know, that there would be, you know, some opportunity then in starting in 2027, and as Thomas kind of talked about, you know, we think that it can be, you know, up to, you know, $200 million or at least working toward $200 million over time. You know, and that would be, just kind of a reminder, that is what we would anticipate would be annual, you know, cash flows up to the parent.
Speaker #11: We do anticipate that there would be some opportunity then starting in 2027, and as Tom has kind of talked about, we think that it can be up to $200 million or at least working toward $200 million over time. And that would be, just kind of a reminder, that is what we would anticipate would be annual cash flows up to the parent.
Speaker #11: But again, part of that is with the business plan and continuing to build that up with continuing transactions here over the next few years.
Frank Svoboda: But again, part of that is with the business plan and continuing to build that up with continuing transactions here over the next few years.
Frank Svoboda: But again, part of that is with the business plan and continuing to build that up with continuing transactions here over the next few years.
Wes Carmichael: Very helpful. Thanks. Good luck with the regulators.
Wes Carmichael: Very helpful. Thanks. Good luck with the regulators.
Speaker #11: Very helpful. Thanks. Good luck with the regulators.
Speaker #1: And we'll hear from Mark Hughes at Truist Securities.
Operator: And we'll hear from Mark Hughes at Truist Securities.
Operator: And we'll hear from Mark Hughes at Truist Securities.
Speaker #9: Yeah, thanks for sneaking me in. On the claim you said were seasonally higher in individual and group health. Was that normal seasonality or was that a little bit above and
Speaker #9: Yeah, thanks for sneaking me in. On the claim you said were seasonally higher in individual and group health. Was that normal seasonality or was that a little bit above and beyond?
Mark Hughes: Yeah, thanks for sneaking me in. On the claims you said were seasonally higher in individual and group health, was that normal seasonality, or is that a little bit above and beyond?
Mark Hughes: Yeah, thanks for sneaking me in. On the claims you said were seasonally higher in individual and group health, was that normal seasonality, or is that a little bit above and beyond?
Speaker #10: I think, first of all, we normally expect a little bit higher claims in the fourth quarter. In the individual and group health lines. However, I would say is that in the group lines, we did see a little bit higher severity.
Thomas Kalmbach: I think, first of all, we normally expect a little bit higher claims in the fourth quarter, in the, you know, individual and group health lines. However, I would say is that in the group lines, we did see a little bit higher severity, and so it was a little bit higher than what we had anticipated.
Thomas Kalmbach: I think, first of all, we normally expect a little bit higher claims in the fourth quarter, in the, you know, individual and group health lines. However, I would say is that in the group lines, we did see a little bit higher severity, and so it was a little bit higher than what we had anticipated.
Speaker #10: And so it was a little bit higher than what we had
Speaker #10: anticipated.
Mark Hughes: Understood. And then, you've talked to a lot of factors that could influence profitability in the health business, but the 23% to 27%, 4-point swing. Anything else that we should consider when we think about the high end or low end of that range?
Mark Hughes: Understood. And then, you've talked to a lot of factors that could influence profitability in the health business, but the 23% to 27%, 4-point swing. Anything else that we should consider when we think about the high end or low end of that range?
Speaker #9: Understood. And then you've talked to a lot of factors that could influence profitability in the health business, but the 23 to 27 percent, the 4-point swing—anything else that we should consider when we think about the high end or low end of that?
Speaker #9: range? I think some of
Thomas Kalmbach: I think some of it, Frank alluded to this in his comments as well, is that Medicare Supplement has a lower underwriting margin, just on its, you know, as a line of business. And so to the extent that that grows faster than some of the other lines, we're gonna see a little bit of downward pressure on just the overall health underwriting margins as a percent of premium. Now, the underwriting margin dollars from health would grow, and so I think we just gotta. So that's why the range of 23% to 27% is somewhat dependent upon how strong Medicare Supplement comes in, sales come in.
Thomas Kalmbach: I think some of it, Frank alluded to this in his comments as well, is that Medicare Supplement has a lower underwriting margin, just on its, you know, as a line of business. And so to the extent that that grows faster than some of the other lines, we're gonna see a little bit of downward pressure on just the overall health underwriting margins as a percent of premium. Now, the underwriting margin dollars from health would grow, and so I think we just gotta. So that's why the range of 23% to 27% is somewhat dependent upon how strong Medicare Supplement comes in, sales come in.
Speaker #10: It, frankly—this, and his comments as well—is that Medicare supplements has a lower underwriting margin just on its own as a line of business.
Speaker #10: And so to the extent that that grows faster than some of the other lines, we're going to on just the overall health underwriting margins as a percent of premium.
Speaker #10: Now, the underwriting margin dollars from Health would grow, and so I think we just got to—so that's why the range of '23 to '27 is somewhat dependent upon how strong Medicare Supplement sales come in.
Speaker #11: Yeah, Mark, that's exactly right. When you kind of look at 2025, United American, that whole side of it, then the Medicare supplement side, comprised about 49% of the total health premium.
Frank Svoboda: Yeah, Mark, that's, that's exactly right. When you kind of look at 2025, you know, United American, that whole side of it, the, then the Medicare, Medicare Supplement side, you know, comprised about 49% of the total health premium. Whereas in Family Heritage, Liberty, American Income, that have that other limited or true limited benefit, product that's a little bit more stable. You know, the margins on that limited benefit side are more in that 43% to 44% range versus, you know, what we had in 2025, you know, of around 5, 6 percent with respect to, you know, overall margins on the, on the med sub side. Now in 2026, we expect that med sub margin to be up in that 8% to 10% range.
Frank Svoboda: Yeah, Mark, that's, that's exactly right. When you kind of look at 2025, you know, United American, that whole side of it, the, then the Medicare, Medicare Supplement side, you know, comprised about 49% of the total health premium. Whereas in Family Heritage, Liberty, American Income, that have that other limited or true limited benefit, product that's a little bit more stable. You know, the margins on that limited benefit side are more in that 43% to 44% range versus, you know, what we had in 2025, you know, of around 5, 6 percent with respect to, you know, overall margins on the, on the med sub side. Now in 2026, we expect that med sub margin to be up in that 8% to 10% range.
Speaker #11: Whereas in Family Heritage, Liberty, American Income that have that other limited, are true limited benefit products—that's a little bit more stable. The margins on that limited benefit side are more in that 43% to 44% range, versus what we had in 2025 of around 5%, 6% with respect to overall margins on the MedSupp side.
Speaker #11: Now, in 2026, we expect that mid-sub margin to be up in that 8% to 10% range. But again, it's now at about 53% of the overall premium, is what we kind of anticipate.
Frank Svoboda: But again, it's now at about 53% of the overall premium is what we kind of anticipate, right now, and so it's just taking a little higher percentage of that overall, premium piece, and so it's kind of just bringing down the average just a little bit. You know, despite the lower margins that we have on that, I mean, it is still a very good business for us, and because it is, you know, very, lower amount of capital required ultimately. So when you start thinking about internal rates of return and returns on capital and that type of thing, it is, a very good business from that perspective. So, we don't find it really overly concerning, as, you know, when you kind of see a, the, a slight decrease in the overall health margin percentage.
Frank Svoboda: But again, it's now at about 53% of the overall premium is what we kind of anticipate, right now, and so it's just taking a little higher percentage of that overall, premium piece, and so it's kind of just bringing down the average just a little bit. You know, despite the lower margins that we have on that, I mean, it is still a very good business for us, and because it is, you know, very, lower amount of capital required ultimately. So when you start thinking about internal rates of return and returns on capital and that type of thing, it is, a very good business from that perspective. So, we don't find it really overly concerning, as, you know, when you kind of see a, the, a slight decrease in the overall health margin percentage.
Speaker #11: Right now, and so it's just taken a little higher percentage of that overall premium piece, and so it's kind of just bringing down the average just a little bit.
Speaker #11: Despite the lower margins that we have on that, I mean, it is still a very good business for us, and because it is a very lower amount of capital required, ultimately.
Speaker #11: So when you start thinking about internal rates of return and returns on capital and that type of thing, it is a very good business from that perspective.
Speaker #11: So, we don't find it really overly—see the slight concerning—as when you kind of see a decrease in the overall health margin percentage. As we think about it, as long as it's kind of just from that overall mix of business, we think overall that's still a good diversification for—
Frank Svoboda: As we think about it, as long as it's kind of just from that overall mix of business, we think overall that's, that's still a good diversification for us.
Frank Svoboda: As we think about it, as long as it's kind of just from that overall mix of business, we think overall that's, that's still a good diversification for us.
Speaker #11: us. Yeah, I
Mark Hughes: Yeah, appreciate that detail. Thank you.
Mark Hughes: Yeah, appreciate that detail. Thank you.
Speaker #9: appreciate that detail. Thank you.
Speaker #1: And that was our final question from our audience today. I'm happy to turn the floor back to Mr. Stephen Mota for any additional or closing remarks.
Operator: That was our final question from our audience today. I'm happy to turn the floor back to Mr. Stephen Mota for any additional or closing remarks.
Operator: That was our final question from our audience today. I'm happy to turn the floor back to Mr. Stephen Mota for any additional or closing remarks.
Speaker #1: remarks.
Speaker #11: All right. Thank you for joining us.
Thomas Kalmbach: All right. Thank you for joining us this morning. Those are our comments, and we will talk to you again next quarter.
Stephen Mota: All right. Thank you for joining us this morning. Those are our comments, and we will talk to you again next quarter.
Speaker #11: This morning. Those are our comments, and we will talk to you again next.
Speaker #11: Quarter. Ladies and gentlemen, thank you for joining.
Operator: Ladies and gentlemen, thank you for joining today's Globe Life Inc. Q4 earnings. You may now disconnect your lines. Enjoy the rest of your day.
Operator: Ladies and gentlemen, thank you for joining today's Globe Life Inc. Q4 earnings. You may now disconnect your lines. Enjoy the rest of your day.
