GL-PD

Management's Discussion & Analysis Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with Globe Life's Consolidated Financial Statements and Notes thereto appearing elsewhere in this report.
The following management discussion will only include comparison to prior year.
For discussion regarding activity from 2023, please refer to the prior filed Form 10-Ks at www.sec.gov.
"Globe Life" and the "Company" refer to Globe Life Inc. and its subsidiaries and affiliates.
Results of Operations How Globe Life Views Its Operations.
Globe Life Inc. is the holding company for a group of insurance companies that market through exclusive, direct-to-consumer and independent distribution channels primarily individual life and supplemental health insurance to lower middle to middle-income households throughout the United States.
We view our operations by segments, which are the insurance product lines of life and supplemental health, and the investment segment that supports the product lines.
The insurance product line segments involve the marketing, underwriting, and administration of policies.
Each product line is further subdivided by the various distribution channels that market the insurance policies.
Each distribution channel operates in a niche market offering insurance products designed for that particular market.
Whether analyzing profitability of a segment as a whole, or the individual distribution channels within the segment, the measure of profitability used by management is the underwriting margin, as seen below: Premium revenue (Policy obligations) (Policy acquisition costs and commissions) Underwriting margin Investment Segment.
The investment segment involves the management of our capital resources, including investments and the management of liquidity.
Our measure of profitability for the investment segment is excess investment income, as seen below: Net investment income (Required interest on policy liabilities) Excess investment income GLOBE LIFE INC.
Management's Discussion & Analysis Globe Life serves the lower-middle to middle-income market.
We believe this market is underserved, has significant growth potential, and provides us with a distinct competitive advantage.
This advantage is protected due not only to our ability to efficiently reach this market through both exclusive and direct to consumer distribution channels, but also due to the amount of data and experience we possess, as we have been in this same market for over 60 years with essentially the same products.
The basic protection life and health insurance products we offer are specifically designed to help provide financial security to consumers in this market.
Current Highlights. • Net income as a return on equity (ROE) for the year ended December 31, 2025 was 20.9% and net operating income as an ROE, excluding accumulated other comprehensive income (1) was 16.0%. • Total premium increased 5% over the same period in the prior year.
Life premium increased 3% for the period from $3.3 billion in 2024 to $3.4 billion in 2025.
Health premium increased 9% to $1.5 billion over the prior-year period of $1.4 billion. • Total net sales increased 13% over the same period in the prior year from $840 million in 2024 to $948 million in 2025.
The average producing agent count across all of the exclusive agencies increased 3% over the prior year. • Book value per share increased 19% over the same period in the prior year from $62.50 to $74.17.
Book value per share, excluding accumulated other comprehensive income (1) , increased 11% over the prior year from $86.40 in 2024 to $96.16 in 2025. • For the year ended December 31, 2025, the Company repurchased 5.4 million shares of Globe Life Inc. common stock at a total cost of $685 million for an average share price of $126.41.
The following graphs represent net income and net operating income (1) for the twelve month periods ended December 31, 2025 and 2024.
(1) As shown in the charts above, net operating income is primarily comprised of insurance underwriting margin plus excess investment income and annuity and other income, offset by operating expenses after tax and, as such, is considered a non-GAAP measure.
It has been used consistently by Globe Life's management for many years to evaluate the operating performance of the Company.
It differs from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain significant and unusual items included in net income.
Net income is the most directly comparable GAAP measure.
Net operating income as an ROE, excluding accumulated other comprehensive income ("AOCI"), is considered a non-GAAP measure.
Management utilizes this measure to view the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates.
The impact of the adjustment to exclude AOCI is $(1.8) billion and $(2.0) billion for the year ended December 31, 2025 and 2024, respectively.
Book value per share, excluding AOCI, is also considered a non-GAAP measure.
Management utilizes this measure to view the book value of the business without the effect of changes in AOCI, which are primarily attributable to fluctuation in interest rates.
The impact of the adjustment to exclude AOCI is $(21.99) and $(23.90) per share for the year ended December 31, 2025 and 2024, respectively.
Refer to Analysis of Profitability by Segment for non-GAAP reconciliation to GAAP.
Management's Discussion & Analysis Summary of Operations. • Net income totaled $1.16 billion in 2025, compared with $1.07 billion in 2024 and $971 million in 2023. • On a diluted per common share basis, net income per common share for 2025 increased 18% to $14.07.
Net income per common share, on a diluted per common share basis was $11.94 in 2024 and $10.07 in 2023. • Net operating income was $1.20 billion in 2025, compared with $1.11 billion in 2024 and $1.03 billion in 2023. • On a diluted per common share basis, net operating income per common share for 2025 increased 17% to $14.52.
Net operating income per common share, on a diluted per common share basis, was $12.37 in 2024 and $10.65 in 2023.
Net remeasurement gains of $134.3 million in 2025, $46.3 million in 2024, and $3.2 million in 2023 were attributable to the Company's annual third-quarter review and unlocking of life and health long-term assumptions, including lapses, mortality and morbidity.
See the remeasurement gain/loss table in Note 6—Policy Liabilities for additional information.

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Risk Factors Risks Related to Our Business The following is a summary of the material risks and uncertainties that could adversely affect our business, financial condition, and results of operations.
Business and Operational Risks The development and maintenance of our various distribution channels are critical to growth in product sales and profits.
Our future success depends, in substantial part, on our ability to recruit, hire, and motivate highly-skilled insurance personnel.
Further, the development and retention of producing agents are critical to supporting sales growth in our agency operations because our insurance sales are primarily made to individuals.
A failure to effectively develop new methods of reaching consumers, realize cost efficiencies or generate an attractive value proposition in our Direct to Consumer Division business could result in reduced sales and profits.
In addition, if we do not provide an attractive career opportunity with competitive compensation as well as motivation for producing agents to increase sales of our products, our growth could be impeded.
Doing so may be difficult due to many factors, including but not limited to, fluctuations in economic and industry conditions and the effectiveness of our compensation programs and competition among other companies.
Our life insurance products are sold in niche markets.
We are at risk should any of these markets diminish.
We have several life distribution channels that focus on distinct market niches, three of which are labor unions, affinity groups, and sales via Direct to Consumer solicitations.
Deterioration of our relationships with either organized labor union groups or affinity groups, or adverse changes in the public’s receptivity to Direct to Consumer marketing initiatives could negatively affect our life insurance business.
Actual or alleged misclassification of independent contractors at our insurance subsidiaries could result in adverse legal, tax or financial consequences.
A significant portion of our sales agents are independent contractors.
Although we believe we have properly classified such individuals, a risk nevertheless exists that a court, the Internal Revenue Service or other authority will take the position that our sales agents are employees.
From time-to-time, we are subject to civil litigation, including class and collective action litigation, alleging that we have improperly classified certain of our sales agents as independent contractors.
In September 2024, the Equal Employment Opportunity Commission (EEOC) notified us that it had determined that all sales agents affiliated with State General Agent Simon Arias were employees, not independent contractors, of Globe Life Inc. and/or AIL.
Such determination is not binding but we expect any potential civil action brought by the EEOC would include such an allegation.
A future adverse judgment in connection with any such civil litigation described above could result in substantial damages.
Future changes in rules, regulations or interpretations of existing rules and regulations, or significant adverse judgments in litigation, could require us to reclassify all or a portion of our agents as employees and the impact could significantly increase our operating costs and negatively impact our insurance business.
The use of third-party vendors, including independent sales agents, to support the Company's operations makes the Company susceptible to the operational risk of those third parties, which could lower revenues, increase costs, reduce profits, disrupt business, or damage the Company’s reputation.
The Company utilizes third-party vendors, including independent sales agents, to provide certain business services and functions, which exposes the Company to risks outside the control of the Company.
The reliance on these third-party vendors creates a number of business risks, such as the risk that the Company may not maintain service quality, control or effective management of the outsourced business operations and that the Company cannot control the data, information systems, facilities or networks of such third-party vendors.
We employ controls and procedures designed to facilitate service quality of our third party vendors; however, such controls and procedures cannot be 100% effective in all cases.
The Company may be adversely affected by a third-party vendor who operates in a poorly controlled manner or fails to deliver contracted services, which could lower revenues, increase costs, reduce profits, disrupt business, or damage the Company’s reputation.
Extensive federal and state laws regulate our business, imposing certain requirements that independent sales agents must follow in dealing with clients.
Misconduct of our independent sales agents could result in violations of law by, or claims against, us or our subsidiaries.
From time to time, we are subject to private litigation as a result of alleged misconduct by independent agents.
We employ controls and procedures designed to prevent and detect agent misconduct; however, such controls and procedures cannot be 100% effective in all cases.
Instances of misconduct or non-compliance or violations of laws or regulations by our independent sales agents could result in adverse findings in either examinations or litigation and subject us to sanctions, monetary liabilities, restrictions on or loss of the operation of our business or reputational harm, any of which could have a material adverse effect on our business, financial condition or results of operations.
Additionally, the Company is at risk of being unable to meet legal, regulatory, financial or customer obligations if the data, information systems, facilities or networks of a third-party vendor are disrupted, damaged or fail, whether due to physical disruptions, such as fire, natural disaster, pandemic or power outage, or due to cybersecurity incidents, ransomware or other impacts to vendors, including labor strikes, political unrest and terrorist attacks.
Financial and Strategic Risks Our investments are subject to market and credit risks.
Significant downgrades, delinquencies and defaults in our investment portfolio could potentially result in lower net investment income and increased realized and unrealized investment losses.
Our invested assets are subject to the customary risks of defaults, downgrades, and changes in market values.
Our investment portfolio consists predominately of fixed income investments, where we are exposed to the risk that individual issuers will not have the ability to make required interest or principal payments.
A concentration of these investments in any particular issuer, industry, group of related industries or geographic areas could increase this risk.
Factors that may affect both market and credit risks include interest rate levels (consisting of both treasury rate and credit spread), financial market performance, disruptions in credit markets, general economic conditions, legislative changes, particular circumstances affecting the businesses or industries of each issuer and other factors beyond our control.
Additionally, as the majority of our investments are long-term fixed maturities that we typically hold until maturity, a significant increase in interest rates and/or credit spreads could cause a material temporary decline in the fair value of our fixed investment portfolio, even with regard to performing assets.
These declines could cause a material increase in unrealized losses in our investment portfolio.
Significant unrealized losses could substantially reduce our capital position and shareholders’ equity.
It is possible our investment in certain of these securities with unrealized losses could experience a credit event where an allowance for credit loss is recorded, reducing net income.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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