Globe Life has become the first major, publicly traded life insurer to report earnings for the COVID-19-shadowed second quarter, and it posted a profit.
The McKinney, Texas-based company announced Wednesday that it earned $173 million for the quarter on $1.2 billion in revenue, compared with $187 million in net income on $1.3 billion in revenue for the second quarter of 2019.
Globe Life managed to earn more than $100 million even after COVID-19 forced it to shift most of its employees and agents to working at home, and even after the agents had to shift to selling coverage mainly through telephone- and web-based arrangements, rather than through in-person meetings.
“While the current environment continues to present challenges, Globe Life’s operations are being conducted successfully,” the company said in a comment on its performance that was included in the earnings announcement. “We continue to support our agents and serve our customers in an effective manner.”
The company focuses mainly on selling life insurance, supplemental health insurance products and Medicare plans to middle-income consumers.
New health insurance sales fell 23% between the second quarter of 2019 and the latest quarter, to $34 million, but life insurance sales increased 7%, to $64 million, and life insurance renewal lapse rates were down.
At the company’s American Income Life division, for example, the renewal year lapse rate fell to 1.95%, from 2.1% for the second quarter of 2019.
The average number of producing agents increased 12%, to about 12,000.
The total amount of commissions paid to producers increased to $76 million, from $74 million.
In spite of low interest rates, and all of the turmoil in the investment markets, net investment income increased to $132 million, from $227 million.
Another sign of strength, and optimism, is talk about Globe Life using money to buy some of its own shares from investors.
Earlier in the year, the company responded to the threat of the COVID-19 crisis, and the possibility of a dramatic spike in death claim costs, or big problems with investments, by announcing that it was suspending share buybacks. The company says it it now expects to resume buying back shares sometime in the second half of the year.
— Read New Credit Loss Accounting Rules Ding Globe Life’s Q1 Earnings, on ThinkAdvisor.