Globe Life Inc. (NYSE:GL) Q4 2022 Earnings Call Transcript

Mark Hughes: Yes, thank you. Excuse me, good morning. I don’t know if you touched on the Is there anything about the LDTI accounting standard that impacts your growth on a go-forward basis? You, obviously, got a nice EPS benefit this year. But just the timing and the emergence of profitability, is it changed over time so that there’s a natural acceleration or deceleration perhaps as time goes by, that will impact your kind of trend line growth rate in future years?

Tom Kalmbach: Yes, I’ll answer that one. Probably the one thing as we think about the implementation of LDTI is the treatment of future deferrals of renewal commissions. So, to the extent that a portion of renewal commissions are deferred, the new rules require us now to — in historical gap, we would look at all anticipated future renewal commissions and determine an amortization rate, that was an average that was needed to amortize both the first year capitalized expenses as well as future renewal capitalized expenses. Under the new method, we’re only allowed to — as we capitalize, we’re only — we are forced to change the amortization rate upon each additional capitalization. And so, for our AIL line of business, we do have some renewal commissions that we capitalize.

And we had kind of talked last quarter that for the block, we’d expect kind of a 50 basis point increase in amortization. That’s really driven by two things. One is, we have a mix of business where — we don’t have any DAC on some of the business. And on the other business we have DAC that is being amortized. So, as the block that we don’t have any DAC on where we fully amortize it with as that runs off, the average amortization rate goes up. But the other is that as we get new renewals, commissions that are deferred on AIL, we’ll see the amortization rate tick up a little bit. In aggregate, we’d see probably that amortization rate tick up around 20 basis points to 30 basis points over the next few years and then kind of even out and that increase would diminish over time as we put new business on the books.

Frank Svoboda: And Mark, the one thing I would just add to that is, I think, really other than that, and other than assumption changes that might come through from time to time, I would expect once it kind of gets reset, then that the general level of growth rate should be somewhat similar.

Mark Hughes: Okay, great. Thank you very much.

Operator: Thank you, Mr. Hughes. We do not appear to have any further questions at this time, gentlemen. I’d like to turn the call back over to you, Mr. Mota, for any additional or closing remarks.

Stephen Mota: All right. Thank you for joining us this morning. Those were our comments, and we’ll talk to you again next quarter

Operator: Ladies and gentlemen, that will conclude this conference. Thank you very much for your participation. You may now disconnect. Have a good day, and goodbye.