Globe Life (GL) Q3 Earnings Top Estimates on Improved Premiums
Globe Life Inc.’s GL third-quarter 2023 net operating income of $2.71 per share beat the Zacks Consensus Estimate by 2.3%. The bottom line improved 26% year over year, primarily driven by higher excess investment income.
The company reported operating revenues of $1.4 billion, up 5% from the year-ago quarter. The improvement was driven by growth in Life and Health insurance premiums and higher net investment income. The top line beat the Zacks Consensus Estimate by a whisker.
The strong quarterly results of Globe Life were supported by improving life and health premiums and net investment income. Higher expenses partially offset the upside.
Globe Life Inc. Price, Consensus and EPS Surprise
Globe Life Inc. price-consensus-eps-surprise-chart | Globe Life Inc. Quote
Behind the Headlines
Globe Life reported total premium revenues of $1.1 billion, up 3.7% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.
Net investment income increased 8.2% year over year to $266.9 million.
Excess investment income, a measure of profitability, increased 41% year over year to $33.9 million.
Total insurance underwriting income increased 17% year over year to $324.3 million. The increase was due to improved Life underwriting income.
Administrative expenses were down 1% year over year to $74.6 million.
Total benefits and expenses increased 0.3% year over year to $1.1 billion, primarily due to higher amortization of deferred acquisition costs, commissions, premium taxes, non-deferred acquisition costs and interest expenses.
Segmental Results
Premium revenues at Life increased 3.9% year over year to $788.1 million, driven by higher premiums written by distribution channels like American Income, Direct to Consumer, Liberty National and Family Heritage Division. American Income grew 6%, Direct to Consumer increased 1% and Liberty National gained 7%.
Net sales of $134.2 million increased 6% year over year. Underwriting margins improved 21% year over year to $300 million.
Health insurance premium revenues rose 3% year over year to $331.2 million, primarily driven by higher premiums from United American, Family Heritage, Liberty National and American Income. Net health sales increased 16% year over year to $54.9 million. Underwriting margins decreased 4% year over year to $96.7 million.
Financial Update
Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Sep 30, 2023, increased 7.6% year over year to $7.1 billion.
As of Sep 30, 2023, Globe Life reported book value per share, excluding AOCI, of $74.31, up 10.7% year over year.
Operating return on equity, excluding AOCI, was 14.7% in the reported quarter, which contracted 100 basis points year over year.
Share Repurchase
Globe Life repurchased 0.75 million shares worth $84 million in the reported quarter.
2023 View
GL estimates net operating income between $10.49 per share and $10.65 per share for the year ending Dec 31, 2023.
Zacks Rank
Globe Life currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
Of the other Finance sector players that have reported third-quarter results so far, the bottom-line results of The Goldman Sachs Group, Inc. GS, M&T Bank Corporation MTB and Morgan Stanley MS beat the Zacks Consensus Estimate.
Goldman Sachs reported third-quarter 2023 earnings per share (EPS) of $5.47, surpassing the Zacks Consensus Estimate of $5.32. Also, the bottom line fell 34% from the year-earlier quarter. Net earnings of $2.05 billion plunged 33% from the prior-year quarter. Net revenues of $11.82 billion fell 1% from the year-ago quarter.
Nonetheless, the top line surpassed the consensus estimate of $11 billion. The Asset & Wealth Management division of GS generated revenues of $3.23 billion in the reported quarter, down 20% year over year. The Platform Solutions division’s revenues were $578 million, rising 53% year over year.
M&T Bank’s third-quarter 2023 net operating EPS of $4.05, which surpassed the Zacks Consensus Estimate of $3.94. The bottom line compared favorably with the EPS of $3.83 earned in the year-ago quarter. Net income available to common shareholders was $664 million, which increased 6.9% from the prior-year quarter.
MTB’s quarterly revenues were $2.34 billion, beating the consensus estimate of $2.32 billion. Also, the reported figure increased 4% year over year. Total non-interest income was $560 million, down marginally year over year. The efficiency ratio was 53.7%, up from 53.6% in the year-earlier quarter.
Morgan Stanley posted third-quarter 2023 EPS of $1.38, which surpassed the Zacks Consensus Estimate of $1.27. However, the bottom line reflects a decline of 6% from the year-ago quarter. Fixed-income trading revenues decreased 11%, while equity trading income was up 2% year over year. While equity underwriting fees of MS increased 9%, fixed income underwriting income was down 31% and advisory fees tanked 35%.
Therefore, total IB fees (in the Institutional Securities division) decreased 27% from the prior-year quarter. Net revenues were $13.27 billion, up 2% from the prior-year quarter. The top line also beat the consensus estimate of $13.08 billion. Total non-interest revenues of $11.3 billion increased 8%.
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