Globe Life Inc.

Hello, and welcome to the Globe Life Incorporated first quarter earnings release call. My name is George. I'll be coordinating today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in listen-only mode. However, you will have the opportunity to ask questions towards the end of the presentation. And this can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0, and you will be connected to an operator. And I'd like to turn the call over to your host today, Mr. Stephen Moda, Senior Director of Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone. Joining the call today are Frank Sabota and Matt Darden, our co-chief executive officers. Tom Kambach, our chief financial officer. Mike Majors, our chief strategy officer. And Brian Mitchell, our general counsel. Some of our comments or answers to your questions may contain forward-looking statements that are provided for general guidance purposes only. Accordingly, please refer to our earnings release in 2023 10-K on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures. I will now turn the call over to Frank.

Thank you, Stephen, and good morning, everyone. In the first quarter, net income was $254 million, or $2.67 per share. compared to $224 million, or $2.28 per share, a year ago. Net operating income for the quarter was $264 million, or $2.78 per share, an increase of 10% from a year ago. On a GAAP-reported basis, return on equity through March 31 is 21.3%, and book value per share is $53.03. Excluding Accumulated Other Comprehensive Income, or AOCI, return on equity is 14.3%, and book value per share as of March 31st is $79, up 12% from a year ago. Before we continue, we'd like to take a moment to address ahead of time questions many of you may have regarding dismissed litigation against the company, the DOJ inquiry, and the recent attack on the company by a short seller. For over 70 years, our business model has stood the test of time, and as we will further discuss today, we continue to generate sustainable earnings growth that provides long-term value for our shareholders. With over 17 million policies in force, our millions of customers value the protection of the company's products, and we strive to be there when our customers need us most. We want to assure you that Globe Life, its management, and our board of directors strive to act in accordance with the highest level of ethics and integrity at all levels of the organization. While we believe the short seller's claims present a false and misleading overall picture of the company and its subsidiaries, as a demonstration of our commitment to operating ethically, the company's audit committee has retained the international law firm WilmerHale to conduct an independent review of the assertions in the short seller's report. As you can appreciate, given the ongoing nature of the DOJ's investigation, and out of respect for the integrity of the independent review initiated by the Audit Committee, we are limited in what we can say. For this reason, we will not be taking any additional questions on these issues today, although our intent is to address questions we understand you may have to the extent possible. We will provide updates as and when appropriate. First, we want to provide a brief update on the status of the lawsuit filed by claimant Renee Zimski, a former independent contractor sales agent which, as many of you know, included allegations of sexual harassment and purported fraudulent business practices, neither of which we tolerate, and a claim that she was misclassified as an independent contractor. On September 27, 2022, The claimant filed the demand for arbitration and participated in the selection of the three arbitrator panel. After a year and a half of litigation, the arbitration hearing was scheduled to begin on March 4, 2024. The night before the hearing, the claimant sought to dismiss her claims without obtaining any relief or payment. After a lengthy discussion on the record, the panel dismissed the case with prejudice, and on April 3rd, 2024, the United States District Court for the Western District of Pennsylvania affirmed the dismissal with prejudice. On March 14th, 2024, Globe Life filed an 8 addressing this matter in more detail, and the court filings are publicly available for those interested. Also noted in our form 8 , Globe Life and American Income received subpoenas from the U.S. Attorney's Office for the Western District of Pennsylvania. These subpoenas sought documents related to sales practices by certain licensed insurance agents in the area's organization who were contracted to sell American Income policies. The company and American Income is in the process of responding to these subpoenas, which were received in late 2023 and have been fully cooperating with the DOJ. The DOJ has not asserted any claims or made allegations against the company and American Income with respect to the foregoing investigation, and the company currently is not aware that any legal proceedings are contemplated by governmental authorities. While no assurances can be made and we are still evaluating the matter, management did not believe when the subpoenas were received and does not believe now that is either reasonably possible or probable, this investigation will result in material liability to the company. As such, the company did not disclose the existence of the request from the DOJ in its Form 10-K. We are providing additional information regarding this matter to you now in light of recent questions that have been raised.