Globe Life was the first publicly traded U.S. life insurer to release its earnings for the second quarter, and that means it’s getting a few days of obsessive attention from investors.
Globe Life is the first company that has talked, in detail, about what it’s like to run a life insurance company during an entire three-month period affected by the COVID-19 outbreak.
- Links to Globe Life earnings resources are available here.
- An article about Globe Life’s new numbers is available here.
The McKinney, Texas-based company reported earnings $173 million for the quarter on $1.2 billion in revenue, in spite of all of the large and sudden changes.
Company executives then participated in a conference call with securities analysts, to answer the analysts’ questions about the results.
The Globe Life representatives on the call were Gary Coleman, Globe Life’s co-chairman and co-chief executive; Larry Hutchison, the company’s other co-chairman and co-CEO; and Frank Svoboda, the company’s chief financial officer.
Most publicly traded companies hold similar calls every quarter. Members of the public can listen to the calls while the calls are under way. Once the calls are over, the companies that organize the calls make recordings available on their websites.
Here are eight things the Globe Life executives said during their company’s quarterly earnings call, drawn from the recorded version of the call.
1. Globe Life believes it has incurred about $22 million in COVID-19-related life insurance claims, and it expects to receive about $45 million in life claims related to the outbreak for the full year.
Globe Life has already paid about $10 million to $10.5 million in cash life insurance benefits due to COVID-19, Svoboda said.
Svoboda predicted that the company will receive about $2 million in COVID-19-related life insurance claims for every 10,000 COVID-19-related U.S. deaths.
2. The shift to new, quarantine-friendly sales processes has increased the amount of time it takes between the time an agent talks to a life insurance applicant and the time Globe Life records the issuance of a policy.
“While life sales were down for the quarter, we have seen an increase in agent activity,” Hutchison said. “The rise in activity is not reflected in the second quarter sales due to increased time for policies to be issued, resulting from changes in our underwriting procedures. These changes are designed to accommodate the virtual sales process, to work around limitations in obtaining certain data, and to protect the company from antiselection. As we continue to work through this, our processing time will improve.”
3. The current economic turmoil is good for hiring.
Companies like Globe Life hire many would-be life insurance agents, in an effort to find people with the drive and skills to help get consumers covered.
In some years, Globe Life has had with finding would-be agents.
This year, “we continue to see a significant pool of high-quality candidates, due to current unemployment levels,” Hutchison said. “Overall, we’re encouraged by our virtual sales and recruiting.”
The average number of producing agents increased to 8,393 in the second quarter, up 14% from the average for the second quarter of 2019, Hutchison said.
4. Running worksite sales programs is harder.