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Globe Life (GL) Q1 Earnings Beat, Revenues Miss Estimates

Globe Life Inc.’s GL first-quarter 2023 net operating income of $2.53 per share beat the Zacks Consensus Estimate by 2.4%. The bottom line improved 4.1% year over year, primarily driven by higher Insurance underwriting income and excess investment income.

Globe Life Inc. Price, Consensus and EPS Surprise

Globe Life Inc. Price, Consensus and EPS Surprise
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 billion, up 3% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.

Net investment income increased 5% year over year to $257 million.

The company reported operating revenues of $1.3 billion, up 3.3% 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 however missed the Zacks Consensus Estimate by 0.8%.

Excess investment income, a measure of profitability, increased 13% year over year to $29.2 million.

Total insurance underwriting income increased 1% year over year to $311 million. The increase was attributable to higher Life, Annuity and Health underwriting income.

Administrative expenses were up 2% year over year to $73.9 million.

Total benefits and expenses increased 3.8% year over year to $1 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs and interest expense.

Segmental Results

Premium revenues at Life increased 3% year over year to $772 million, driven by higher premiums written by distribution channels like American Income, Direct to Consumer and Liberty National. American Income grew 5%, Direct to Consumer increased 1% and Liberty National gained 6%.

Net sales of $140.4 million increased 1% on a year-over-year basis. Underwriting margins increased 1% year over year to $291.3 million.

Health insurance premium revenues rose 2% year over year to $322 million, primarily driven by higher premiums from United American, American Income and Family Heritage. Net health sales increased 17% year over year to $50 million. Underwriting margins increased 4% year over year to $91.3 million.

Financial Update

Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Mar 31, 2023, increased 6.8% year over year to $6.8 billion.

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As of Mar 31, 2023, Globe Life reported book value per share, excluding AOCI, of $70.34, up 10% year over year.

Operating return on equity, excluding AOCI, was 14.6% in the reported quarter, reflecting an expansion of 80 basis points year over year.

Share Repurchase

Globe Life repurchased 1.2 million shares worth $135 million in the reported quarter.

2023 View

New accounting guidance related to long-duration insurance contracts became effective on Jan 1, 2023. Under this new requirement, Globe Life estimates net operating income between $10.28 per share and $10.52 per share for the year ending Dec 31, 2023.

Zacks Rank

Globe Life currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

BlackRock, Inc.’s BLK first-quarter 2023 adjusted earnings of $7.93 per share surpassed the Zacks Consensus Estimate of $7.71. However, the figure reflects a decrease of 16.7% from the year-ago quarter. Our estimate for adjusted earnings was $7.37. Results have benefited from a decline in expenses. However, lower revenues and AUM balance were major headwinds.

Net income attributable to BlackRock (on a GAAP basis) was $1.16 billion, down 19.4% from the prior-year quarter. We had projected the metric to be $1.07 billion. Revenues (on a GAAP basis) were $4.24 billion, marginally beating the Zacks Consensus Estimate of $4.23 billion. However, the top line declined 9.7% year over year. Our estimate for GAAP revenues was $4.17 billion.

Total expenses amounted to $2.81 billion, down 4.4% from the prior-year quarter. Our estimate for expenses was $2.79 billion. Non-operating income (on a GAAP basis) was $116 million against non-operating expenses of $138 million in the year-ago quarter. BlackRock’s adjusted operating income was $1.51 billion, down 17.1% from the prior-year period.

Ameriprise Financial, Inc.’s AMP first-quarter 2023 adjusted operating earnings of $7.25 per share handily surpassed the Zacks Consensus Estimate of $7.13. The bottom line reflects a rise of 25% from the year-ago quarter. We had projected the same to be $6.60. After considering significant items, net income (GAAP basis) was $417 million or $3.79 per share, down substantially from $825 million or $7.10 per share in the prior-year quarter.

On an operating basis, adjusted total net revenues were $3.7 billion, up 3% year over year. The top line missed the Zacks Consensus Estimate of $3.72 billion. Our estimate for the metric was $3.52 billion. On a GAAP basis, net revenues were $3.74 billion, growing 3%.

Adjusted operating expenses totaled $2.72 billion, which declined 2%. We had projected the same to be $2.60 billion. Total AUM and assets under administration decreased 8% year over year to $1.24 trillion.

Invesco Ltd.’s IVZ first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.

On a GAAP basis, net income attributable to common shareholders was $145 million or 32 cents per share, down from $197.7 million or 43 cents per share a year ago. Adjusted quarterly net revenues were $1.08 billion, falling 14.1% year over year. The top line matched the Zacks Consensus Estimate. Our estimate for net revenues was $1.03 billion. Adjusted operating expenses were $749 million, down 1.2%. We expected the metric to be $749.1 million. The adjusted operating margin was 30.4%, down from 39.5% a year ago.

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