Globe Life Boosts Shareholder Value, Okays Buyback Program
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The board of directors of Globe Life Inc. GL recently announced the authorization to buy back up to $1.8 billion of the company’s common shares under the existing stock repurchase program. This program replaces the earlier authorization of $1.3 billion, which was announced on April 29, 2024.
Backed by a sustained operational performance, Globe Life has maintained a strong liquidity position with sufficient cash-generation capabilities. The parent company began the quarter with liquid assets of approximately $35 million and ended the quarter with approximately $85 million of liquid assets. It expects to conclude 2024 with liquid assets in the range of $50-$60 million, which the company had historically targeted. Globe Life targets a consolidated company action RBC ratio in the range of 300-320%.
Globe Life can be considered a shareholder-friendly company as it has been actively increasing shareholders’ wealth through an ongoing buyback program that began in 1986. Since then, GL repurchased nearly $10 billion of shares.
Strong capital position enables Globe Life to enhance its shareholder value via share buybacks and dividend payouts. For the nine months ended Sept. 30, 2024, the company repurchased 9.7 million shares at a total cost of $910 million. GL anticipates parent excess cash flows available to return to shareholders in 2025 will be approximately $575-$625 million. This is higher than 2024 due to the anticipated increases in statutory earnings in 2024 over 2023 and reflects the favorable impact of statutory valuation changes.
For the third quarter of 2024, share repurchases were higher than expected as Globe Life increased share repurchases given the favorable market conditions and the additional capital raised during the quarter as the net proceeds from refinancing the term loan and the issuance of the senior note were about $100 million higher than previously assumed.
Apart from this, Globe Life has continuously been increasing its dividend over the past eight years (2017-2024), witnessing a CAGR of 7%. In March 2024, it hiked its dividend by 6.7% to 24 cents per share. Dividends from subsidiaries and excess cash flows are projected to be higher in 2024 than in 2023, primarily due to lower life obligations and the growth in underwriting margins in 2023, both of which resulted in higher statutory earnings generated by the affiliates. Additional sources of liquidity for the Parent Company are cash, intercompany receivables, intercompany borrowings, debt markets, term loans and a revolving credit facility.
Globe Life’s past performance depicted a robust earnings picture. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average surprise of 4.58%.
