Globe Life (GL) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Oct. 22, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations - Stephen Mota
• Co-Chief Executive Officer - Frank Martin Svoboda
• Co-Chief Executive Officer - James Matthew Darden
• Chief Financial Officer - Thomas Peter Kalmbach
• Chief Strategy Officer - Mike Majors
• General Counsel - Brian Mitchell

TAKEAWAYS

• Net Operating EPS -- $4.84 per diluted share, representing a 1% increase over $4.81 a year ago.
• Total Premium Revenue -- $1.3 billion, representing 7% growth compared to the year-ago quarter.
• Life Underwriting Margin -- $458 million, representing a 5% decrease year over year primarily due to fluctuations in long-term death (LTD) assumption updates.
• United American Health Underwriting Margin -- negative $6 million, down from a $16 million margin a year ago due to a $7 million CMS processing delay and a $16 million underwriting loss at the Evry startup unit.
• Evry Net Health Sales -- $48 million, representing a 95% increase over the year-ago quarter driven by strong Medicare Supplement demand.
• American Income Agent Count -- 11,331 average producing agents, representing a 7% decline from a year ago.
• Liberty National Agent Count -- 4,187 average producing agents, representing 9% growth year over year.
• Family Heritage Health Net Sales -- $35 million, representing a 5% increase over the year-ago quarter driven by increased agent productivity.
• Direct to Consumer Life Net Sales -- $24 million, representing a 12% decrease compared to the year-ago quarter due to shifts in digital marketing and consumer behavior.
• Full-Year 2026 Net Operating EPS Guidance -- $15.35 to $15.65, revised from previous estimates due to margin compression at the United American division.
• Full-Year 2027 Net Operating EPS Guidance -- $16.10 to $17.10, representing a 7% increase at the midpoint.
• Share Repurchases -- $185 million for 1.1 million shares at an average price of $175.61 during the quarter.
• Book Value Per Share Excluding AOCI -- $103.62, representing an 11% increase over the prior year.
• Administrative Expense Ratio -- 7.3% of premium, which remained consistent with the year-ago quarter.
• Invested Assets -- $22.3 billion, with 97% of the fixed maturity portfolio rated as investment grade.
• Excess Cash Flow Projection (2027) -- $850 million to $950 million, reflecting anticipated dividend capacity from U.S. and Bermuda subsidiaries.
• Investment Yield on New Fixed Maturities -- 6.4% on $833 million in fixed maturities, primarily in the industrial and financial sectors.
• Total Long-Term Investment Yield -- 5.52% for the quarter, up from 5.46% a year ago.
• Below Investment Grade Bonds -- 2.9% of the total fixed maturity portfolio, a level similar to the end of 2025.
• RBC Ratio Target -- 300% to 320%, which management noted is appropriate given stable premium revenue from the in-force policy block.

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RISKS

• Svoboda stated, "In addition, underwriting results this quarter at United American General Agency Division were adversely impacted by a process change at CMS the government agency that administers Medicare supplement claims, and high severity claims at Evri, the developing group health business."
• Darden stated, "AI powered search and consumer behavior, are impacting digital marketing for all goods and services including life insurance. This shift has impacted our recent sales results generated by our digital channels."

SUMMARY

Globe Life Inc. (NYSE:GL) reported third-quarter results that demonstrated premium revenue growth alongside specific operational challenges in the health segment. Management noted that net income was affected by nonrecurring factors, including a claims processing delay from the Centers for Medicare and Medicaid Services (CMS) and elevated claim severity within its Evry group health startup. Despite these impacts, the company received reciprocal jurisdiction approval from regulators, facilitating the transformation of capital support through its Bermuda subsidiary. Management provided 2027 guidance anticipating continued earnings growth driven by premium rate actions, agent productivity improvements, and a significant planned increase in parent company excess cash flow for share repurchases and dividends.

• The company received reciprocal jurisdiction approval, which CFO Kalmbach noted allows for new reinsurance cessions from American Income Life to the Bermuda-based Globe Life Re.
• CFO Kalmbach stated, "We currently believe share repurchases provide the best return or yield to our shareholders over other available alternatives," identifying buybacks as the primary use for projected excess cash flow.
• The Evry group health unit experienced high-severity claims related to cancer and heart conditions exceeding $100,000 per claim, which management expect to normalize as the business scales to reach a larger pool of insured lives.
• Management is implementing structural compensation changes later this year at the American Income Life division to improve agent recruiting and retention.
• Co-CEO Darden stated, "The ability to be your own boss, set your own schedule, and create financial security" continues to drive recruitment interest despite broader economic shifts.
• The Direct to Consumer channel is transitioning its digital content to be more visible to AI assistants to address changing consumer search patterns that have pressured recent sales results.

INDUSTRY GLOSSARY

• RBC Ratio: Risk-Based Capital ratio, a regulatory measure used to determine the minimum amount of capital an insurance company must hold to support its operations and protect policyholders.
• AOCI: Accumulated Other Comprehensive Income, a component of equity that includes unrealized gains and losses on investments that are not yet recognized in the income statement.
• LTD: Long-Duration Targeted Improvements, an accounting standard that updated how insurers measure and disclose liabilities for long-term insurance contracts.
• Medicare Supplement: Private insurance policies sold to supplement Original Medicare coverage, often referred to as Medigap.
• CMS: The Centers for Medicare and Medicaid Services, the federal agency that administers the Medicare program.
• Evry: A startup group health insurance division within Globe Life that markets to employer groups through brokers.
• Reciprocal Jurisdiction: A regulatory status that allows certain non-U.S. reinsurers to provide reinsurance to U.S. companies without posting collateral, subject to meeting specific criteria.

Full Conference Call Transcript

Operator: Hello, and welcome to Globe Life Inc. Third Quarter Earnings Release Call. My name is Regina, and I will be your coordinator for today's event. Please note this call is being recorded. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand you over to your host, Stephen Mota, Vice President of Investor Relations, to begin today's conference. Please go ahead.

Stephen Mota: Thank you. Good morning, everyone. Joining the call today are Frank Martin Svoboda and Matt Darden, our co chief executive officers. Thomas Peter Kalmbach, 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 30 ks and any subsequent forms 10 Q on file with the SEC. Some of our comments may also contain non GAAP measures. Please see our earnings release and website for a discussion of these terms, and reconciliations to GAAP measures. I will now turn the call over to Frank.

Frank Martin Svoboda: Thank you, Stephen, and good morning, everyone. In the third quarter, net income was $361 million or $4.62 per share, a decrease of 2% over $4.73 per share a year ago. Net operating income for the quarter was $379 million or $4.84 per share, an increase of 1% over $4.81 per share a year ago. As a reminder, both net income and net operating income are impacted in the third quarter of each year, by the annual updating of our assumptions utilized in establishing our policy obligations. As was the case in 2025, we recorded a remeasurement gain related to assumption updates this quarter.

Reflecting our positive outlook for future policy obligations as our actual claims experience continues to be favorable compared to those long term assumptions. In addition, underwriting results this quarter at United American General Agency Division were adversely impacted by a process change at CMS the government agency that administers Medicare supplement claims, and high severity claims at Evri, the developing group health business that is included in United American's results. Matt and Tom will talk more about these items in their comments. On a GAAP reported basis, return on equity through September 30 is 19.7% and book value per share is $85.35 up 23% from a year ago.

Excluding accumulated other comprehensive income or AOCI, return on equity is 15.9% and book value per share, as of September 30 is $103.62. Up 11% from a year ago. Now in our insurance operations. Total premium revenue in the third quarter grew 7% from the year-ago quarter. For the full year,, we expect total premium revenue growth to be around 6.5%. Life premium revenue for the third quarter increased 2% from the year-ago quarter to $865 million. For the full year, we expect life premium revenue to grow between 2.5% to 2.75%, driven by strong premium growth in our American Income and Liberty National divisions.

Life underwriting margin was $458 million, down 5% from a year ago, primarily due to fluctuations in the assumption updates related to LTD. Excluding the impact of the assumption updates, life underwriting margin would have increased by approximately 3%. We anticipate life underwriting margin as a percent of premium to be between 44% to 45% for the full year 2026. In health insurance, premium revenue grew 16% to $447 million, and health underwriting margin was up 7% to $116 million. For the full year, we expect health premium revenues to grow by around 15% and underwriting margin to grow in the range of 4.0% to 4.5%.

The strong premium growth is due to premium rate increases on our Medicare supplement business as well as strong sales in both our United American and Family Heritage divisions. We anticipate health underwriting margin as a percent of premium to be in the range of 22% to 24% for the full year Administrative expenses were $95 million for the quarter, an increase of 6% over the third quarter of 2025. As a percent of premium, administrative expenses were 7.3%. For the full year, we expect administrative expenses to stay at approximately 7.3% of premium consistent with 2025.

As we mentioned on the last call, we believe that expanding AI use across the company will allow us over time, to grow our expenses at a rate lower than our revenue growth given the high transaction volumes inherent in our business. As such, we expect this ratio to be the same or slightly lower in 2027 and we intend to reduce it over time. Finally, we are very pleased that we have received reciprocal jurisdiction approval from our regulators. Allowing us to continue with our business plan to transform how we support our growth and to provide added financial flexibility and strength as a parent by providing an additional source of dividend income.

Tom will provide more of an update in his comments. I will now turn the call over to Matt for his comments on the third quarter marketing operations.

James Matthew Darden: Thank you, Frank. I will discuss the trends at each of our distributions and start with our exclusive agencies. At American Income Life, the life premiums were up 4% over the year-ago quarter to $470 million and the life underwriting margin was up 3% to $268 million Net life sales were $97 million, flat compared to the year ago quarter as increased productivity offset a 7% decline in agent count from a year ago. The average producing agent count for the third quarter was 11.3 thousand. Which was essentially flat compared to the second quarter of this year. On our last call, we discussed some compensation adjustments that were implemented at the beginning of the second quarter.

These adjustments have helped improve agent productivity and stabilize agent count as the agent count has been relatively flat over the past couple of quarters. Agent compensation design is inherently a complex, dynamic process, and it involves human behavior and sometimes the behavioral changes do not occur as quickly as we would like. We are rolling out further structural compensation changes later this year to help drive growth in sales recruiting, and retention. For the full year 2027, we expect mid- to high-single-digit sales growth. And I am confident that we will increase sales growth for this division as the fundamental conditions for agency growth remain in place.

If anything, the current economic environment enhances our value proposition to individuals looking for a better opportunity. The ability to be your own boss, set your own schedule, and create financial security. At Liberty National, the life premiums were up 4% over the year-ago quarter to $102 million while the life underwriting margin was down 27% to $51 million. The decline was due primarily to fluctuations in LTD assumption updates as the annual assumption update declined from $35 million in the year-ago quarter to only $14 million this quarter.

Absent a large decline in assumption update, Liberty's life underwriting margin would have been up 5%, and net life sales were $27 million up 7% from the year-ago quarter due primarily to agent count growth. Net health sales were $7 million, down 13% from the year ago quarter. As we mentioned last quarter, we have implemented changes to the sales presentation and placed additional emphasis on health sales. We expect this to help drive significant growth in health sales going forward. The average producing agent count for the third quarter was 4.19 thousand. Up 9% from a year ago.

And I continue to be pleased with the agent count growth and I am confident that this will drive strong sales growth going forward. At Family Heritage, health premiums increased 8% over the year-ago quarter to $129 million and the health underwriting margin increased 12% to $57 million Net health sales were up 5% to $35 million and is primarily driven by increased productivity. The average producing agent count for the third quarter was 1.56 thousand. Up 1% from a year ago. And agency middle management counts rose for the third quarter in a row. And we are continuing to see improvement in agent retention. These results reinforce our optimism regarding the long term growth at Family Heritage.

Now in our direct to consumer division, the life premiums were down 1% over the year-ago quarter to $243 million and the life underwriting margin declined 1% to $113 million Net life sales were $24 million, down 12% from the year-ago quarter. And as we discussed during the last call, our direct to consumer channel is in a transition period due to a shift in digital advertising. Including traditional paid search volume. AI powered search and consumer behavior, are impacting digital marketing for all goods and services including life insurance. This shift has impacted our recent sales results generated by our digital channels.

However, during the second half of the third quarter, we are seeing some encouraging improvement in our inquiry rates supported by several initiatives including AI enabled advertising. We continue our efforts to adapt to this change and position digital content to be authoritative visible, and easily interpreted by AI assistants. I am confident that DTC will successfully make this transition as we continue to meet the consumer where they want to be met. In addition, as we have discussed before, the value of this division extends well beyond DTC sales. And this is due to the support it provides to our agencies. We still anticipate that we will meet agency demands by generating 1 million leads this year.

Now on to United American General Agency. Where here the health premiums increased 29% over the year-ago quarter to $219 million And overall, I am pleased with the routine operations at United American Now while the health underwriting margin was negative $6 million compared to a margin of $16 million from the year ago quarter, This loss was driven by the items Frank mentioned earlier. The processing delay at CMS resulted in nearly $7 million of excess Medicare Supplement claims paid during the current quarter but were related to prior periods.

In addition, we experienced an unusually high number of high severity claims at Evri, For the quarter, Evri realized an underwriting loss of nearly $16 million As a reminder, Evri is included in the United American division as they market group health insurance through brokers. Evri has begun to generate strong sales activity But as a start up, they do not yet have the scale to meet our target margins. Excluding these 2 items, United American's health underwriting margin would have been a positive $16 million, or approximately 7% of premium. We anticipate as they continue to grow, they will ultimately contribute to the UA's health margins as they achieve scale and generate more stable results.

That being said, are taking steps to improve margins including pricing adjustments. Net health sales were $48 million, a 95% increase over the year ago quarter. Sales continued to be very strong in the Medicare Supplement business, due primarily to tailwinds from the high volume of people turning 65, the movement of Medicare beneficiaries from Medicare Advantage to Medicare Supplement, and the rate increases implemented during the second quarter. Once again, I would note that we do not market Medicare Advantage plans. Now I would like to discuss projections, and this is based on our recent trends and the experience with our business.

We expect the average producing agent count for the full year 2026 to be as follows: at American Income, a decrease of around 5% Liberty National, an increase of around 9% and Family Heritage, an increase of around 5%. Net life sales for the full year 2026 are expected to be as follows: at American Income, approximately flat at Liberty National, an increase of around 10%; and at Direct to Consumer, a decrease of around 9%. Net health sales for the full year 2026 are expected to be as follows: for Liberty National, a decrease of around 7%; at Family Heritage, an increase of approximately 10% and United American, an increase of around 45%.

Now moving on to projections for 2027. At the midpoint of our guidance, we expect sales growth for the full year to be as follows: For net life sales, as I mentioned earlier, at American we expect mid- to high single digit growth. At Liberty National, low double digit growth and at direct to consumer, low single digit growth. For net health sales, Liberty National and Family Heritage, we expect low double digit growth And in United American, high single digit growth. I will now turn the call back to Frank.

Frank Martin Svoboda: Thanks, Matt. We will now turn to the investment operations. Excess investment income, which we define as net investment income less required interest, was $38 million, up 3% from the year ago quarter. Net investment income was $296 million, up 3% and average invested assets were also up 3% from the year ago quarter. Required interest and average policy liabilities both grew approximately 4% over the year ago quarter. For the full year, we expect net investment income to grow around 4.5% and required interest to grow around 3.5%. Resulting in excess investment income growth of 10% to 11%.

Looking forward to 2027, we anticipate net investment income will grow in the range of 2.5% to 3.5% while required interest will grow in the range of 3.5% to 4.0%. Now regarding our investment yield. In the third quarter, we invested $833 million in fixed maturities. Primarily in the industrial and financial sectors. These investments were at an average yield of 6.4% an average rating of A, and an average life of 35 years. We also invested $94 million in commercial mortgage loans and other long term investments with debt like characteristics. These nonfixed maturity investments are expected to produce additional cash yield over our fixed maturity investments. While still being in line with our overall conservative investment philosophy.

In the third quarter, the yield earned on our total long term invested assets which includes our fixed maturity, commercial mortgage loans and other long term nonfixed maturity investments, was 5.52%. Up from 5.46% in the third quarter of 25. The fixed maturity portfolio earned yield was 5.33% in the current quarter compared to 5.26% a year ago. We expect the average yield earned on our total long term investments will be approximately 5.51% for the full year 2026 and between 5.50% to 5.55% for the full year 2027. For the fixed maturity portfolio, we anticipate the earned yield will be approximately 5.33% for 2026, and around 5.35% for 2027.

While we do own some floating rate investments, they are well matched with floating rate liabilities on the balance sheet. As such, we do not expect changes in short term rates to have a meaningful impact on our net income. Now regarding our investment portfolio. Invested assets were $22.3 billion including $19.6 billion of fixed maturities and amortized cost. Of the fixed maturities, $19 billion are investment-grade with an average rating of A. Overall, the total fixed maturity portfolio is rated A minus, same as a year ago, Of our total investment portfolio, only 2% is in senior direct lending and asset based finance combined on. And another approximately 1% is in traditional private placements.

Our fixed maturity investment portfolio has a net unrealized loss position of $2.7 billion due to the current market rate being higher than the book yield on our holdings, As we have historically noted, we are not concerned by the unrealized loss position as it is mostly interest rate driven and currently relates mostly to bonds with maturities that extend beyond 10 years. We have the intent and, more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprised 39% of the fixed-maturity portfolio, compared to 43% from the year ago quarter. The percentage is at its lowest level since 2002.

As we have discussed on prior calls, the BBB securities we acquired have historically provided the best risk adjusted capital adjusted returns due in part to our ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets. That said, our allocation of BBB bonds has declined over the past several years, as we have found better risk adjusted, capital adjusted value in higher rated bonds giving the narrowing of corporate spreads. While the concentration of our BBB bonds might still be higher than some of our peers, remember that we have little or no exposure to other higher risk assets.

Below investment grade bonds remain near historical lows at $573 million compared to $455 million a year ago. The percentage of below investment grade bonds to total fixed maturities is just 2.9%,. Similar with year end 2025. The total exposure to both BBB and below investment grade securities as a percentage of our total equity excluding AOCI, is at its lowest level in over 25 years. Due to the long duration of our fixed maturity liabilities, we predominantly invest in long dated assets. As such, a critical and foundational part of our investment philosophy is to invest in entities that can survive through multiple economic cycles.

We are well positioned to withstand an economic downturn should 1 occur due to holding historically low percentages of invested assets in BBB and below investment grade bonds. As a percentage of equity. In addition, we have very strong underwriting profits and long dated liabilities. So we will not be forced to sell bonds in order to pay claims. With respect to our anticipated investment acquisition for the remainder of the year, at the midpoint of our guidance, we assume investment of approximately $175 million to $200 million in fixed maturities at an average yield between 6.4% to 6.5%.

Including the expected investments in commercial mortgage loans and other long term investments with debt like characteristics, we expect to invest approximately $250 million to $300 million across all asset classes. At an average yield of 6.75% to 7.0%. Now I will turn the call over to Tom for his comments.

Thomas Peter Kalmbach: On capital and liquidity. Thanks, Frank. First, I will spend a few minutes discussing our available liquidity, share repurchase program, and capital position. The parent ended the quarter with liquid assets of approximately $110 million. We anticipate ending the year with liquid assets in the top end of our targeted range of $50 million to $60 million During the quarter, the company repurchased approximately 1.1 million shares of Globe Life Inc. Common stock for a total cost of $185 million at an average share price of $175.61. Including shareholder dividend payments of $25 million the company returned approximately $210 million to shareholders during the third quarter and approximately $630 million year to date.

We will continue to use our cash as efficiently as possible Our first priority is to ensure adequate capital is maintained at our insurance subsidiaries. Once met, we currently believe share repurchases provide the best return or yield to our shareholders over other available alternatives Thus, we anticipate share repurchases will continue to be the primary use of parent's excess cash flow after the payment of shareholder dividends. Parent company's excess cash flow as we define it, results primarily from the dividends received by the parent from its subsidiaries less interest paid on debt and is available to return to shareholders in the form of dividends and through share repurchases.

For the full year, we anticipate distributing approximately $95 million to shareholders in the form of dividend payments In addition, anticipate share repurchases will be in the range of $725 million to $775 million, with approximately $185 million of share repurchases in the fourth quarter This is a $65 million increase at the midpoint of the range from what we indicated on our last call as a result of updated capital projections for the year At this level, we anticipate the combination of shareholder dividends and share repurchases for the year will be near 70% of full-year net operating income at the midpoint of our guidance.

We continue to invest our growth by making investments in new business, technology, and our insurance operations. It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made these substantial investments and acquired new long duration assets to fund their future cash needs. With respect to the capital levels of our insurance subsidiaries, our goal is to maintain capital within our insurance operations at levels necessary to support our current ratings. Globe Life targets a consolidated company action level RBC ratio in the range of 300 to 320%.

And although this range is lower than many of our peers, it is appropriate given the stable premium revenue from a large number of in force policies the nature of our protection products, with benefits that are not sensitive to interest rates or equity markets, our conservative investment portfolio and strong consistent underwriting margins which result in consistent statutory earnings at our insurance companies. For 2026, based on the current projections of 2026 statutory results, we anticipate our consolidated RBC for The U.S. subsidiaries within the targeted range of 300% to 320%. In addition, the capital of our Bermuda subsidiaries will exceed management's target capital levels which exceed regulatory minimums.

As expected, with regards to Globe Life Re, our Bermuda subsidiary, we received reciprocal jurisdiction approval from India American Income's state of domicile in the third quarter. In addition, consistent with our business plan in the third quarter, we completed new reinsurance cessions, which reinsured a portion of new business, and in force life insurance policies issued by American Income to Globe Life Re. In the fourth quarter, we intend to request a dividend distribution from Globe Life Re This dividend distribution is subject to approval by Bermuda regulators. And if approved this year, it is unlikely to be distributed to the parent until late in the year.

As such, we have not included this dividend in our 2026 excess cash flow estimates, but I have included it in our 2027 excess cash flow estimates. Now with regards to policy obligations for the current quarter. Each year, GAAP accounting standards require us to review and generally update actuarial assumptions for mortality, morbidity, and lapses When assumption changes are made, the accounting standards require a cumulative catch up adjustment back to January 1, 2021 which is the transition date to LTD. This cumulative catch up is the assumption related remeasurement gain or loss. The assumption remeasurement gain lowers the reserve balances and indicates an improved outlook as less premiums are needed to fund reserves to meet future policy obligations.

The opposite is true, if there is an assumption remeasurement loss. We review and update our life and health reserve assumptions in the third quarter each year. The remeasurement exhibit by distribution channels included within our supplemental financial information is available on our website and includes the impact of assumption changes as well as total remeasurement gains and losses, which include those related to current quarter experience results.

For the quarter, the overall impact of both life and health assumption changes reduced policy obligations by approximately $120 million with life obligations reduced by $96 million and health obligations reduced by $24 million While this is lower than the prior year's remeasurement gain of $131 million It continues to indicate improved outlook for future policy obligations. Total gap life and health reserves on our consolidated balance sheets are approximately $18 billion with the adjustments to reserves was less than 1%. In total. To better understand the performance of the business, we believe it is beneficial to look at normalized underwriting margins, which exclude the impact of assumption changes and provide an improved basis for comparison of quarterly results.

For the third quarter, normalized life underwriting margin as a percent of premium increased to 41.8% from 41.5% for the year ago quarter. Normalized health underwriting margin as a percent of premium was 20.5% compared to 27.2% for the year ago quarter, reflecting higher policy obligations at United American primarily from the 2 items that Matt and Frank previously mentioned. We anticipate the impact of high severity claims at Evri to improve in the fourth quarter However, we anticipate loss ratios will be higher than target loss ratios for the remainder of the year.

The impact of the additional Medicare supplement claims resulted in increased claim trends, which will be reflected in 2027 rate filings and if approved, will be effective beginning in the second quarter of 2027. Now with respect to our 2026 guidance, For the full year 2026, we estimate net operating earnings per diluted share will be in the range of $15.35 to $15.65, a decrease from the prior guidance reflecting the impact of third quarter results and revisions to fourth quarter margin estimates for United American. Normalized EPS growth which removes the impact of assumption updates, is estimated to be approximately 8% for the full year 2026.

Finally, with respect to 2027 guidance, For the full year 2027, we estimate net operating earnings per diluted share will be in the range of $16.10 to $17.10, representing an increase of 7% at the midpoint. At the midpoint of our guidance, we anticipate total premium revenue growth of 6% to 8% for the full year with life premium revenue growth of 4% and health premium revenue growth of 13% to 15%. We anticipate underwriting margin as a percent of premium for the full year to be in the range of 42% to 45% for life, and 20% to 24% for health.

Although the health underwriting margin as a percent of premium is anticipated to decline, this is primarily due to the mix of our health business. Health underwriting margin dollars, are expected to grow by 7% to 9%, given the strong sales anticipated premium rate actions for both Medicare supplement business and for Evri. Although 2026 statutory results are not final for the year, we anticipate parent excess cash flows to be approximately $850 million to $950 million in 2027 This range reflects subsidiary dividends anticipated from both our U.S. and Bermuda subsidiaries, some of which are subject to regulatory approvals.

Absent our need to support capital levels at our insurance subsidiaries, this amount will be available to return to shareholders through both dividends and share repurchases in 2027 Should this amount be used entirely for dividends and share repurchases the cash conversion ratio would be in the range of 70% to 75% of net operating income, at the midpoint of our guidance. We intend to ensure capital levels at our subsidiaries, are consistent with management's targeted ranges and sufficient to meet current ratings. On the next call, I will provide an update as we get updated statutory results for 2026. Those are my comments. I will now turn the call back to Matt.

James Matthew Darden: Thank you, Tom. Those are our comments. We will now open up the call for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, simply press star followed by the number 1 on your telephone keypad. Our first question will come from the line of Ryan Krueger with KBW. Please go ahead.

Ryan Krueger: Hey. Thanks. Good morning. First question was, can you say how much of an assumption review benefit that you embedded in the midpoint of your 2027 EPS guidance?

Thomas Peter Kalmbach: Yes, Ryan. The ranges reflect what we expect from just overall, obligations as well as assumption updates No specifics. We really want to see--so we try to incorporate a number of scenarios and have incorporated that into the ranges. We really want to see how results emerge in Q4 to help guide us to further clarify how much assumption updates we would expect I would expect remeasurement gains, each quarter, so I think you will see those in and, those will be indicative of the likelihood of an assumption update in 2027.

If you look at our third quarter results, you will see that we had actual to expected remeasurement gains for the quarter of about $20 million for the life business, which is after the update to our life assumptions. So that is indicative that mortality continues to run favorable relative to our long term assumptions.

Robert Brian Mitchell: As we continue down that path, I would expect that we would see an assumption update And Tom, is it safe to say oh, Brian, I was gonna say I think, also, as Tom mentioned, you know, it is embedded in our ranges in a variety of scenarios. And we need to really see how experience comes in over the next couple of quarters to refine that. I would say overall, on the margin, we would expect that if we were going to have an adjustment, it would probably be lower in magnitude than what we had in current year.

Ryan Krueger: Got it. Then, maybe just a. I guess, kinda 2 part question on Evri and United American. I guess 1 is just more quantitative in what you are projecting for the United American margin in 2027. But then secondly, I guess just on Evri more from a strategic standpoint. I mean, it is a different business than with a wider range of claim outcomes than your typical supplemental health and supplement businesses And I guess I am just kind of wondering your views on, you know, does it--does it are you confident that it makes sense to be in a business like this at Globe Life long term?

That it is primary health care, and you know, it does differ quite a bit from the narrower kind of fixed benefit costs of the other businesses you are in.

James Matthew Darden: Yeah. Tom, why do not I start with the strategic part of the question, and I will let you do the margin. From a strategy perspective, 1 of the things that does help us with is that as we go to market in United American with our limited benefit health plans, it helps to have a full range of products and dealing with brokers. And so having a health plan option, there is some market synergy, there. I think from a long term perspective, it is not unexpected that as that builds the size of that book, and we get more credibility in size you know, we would expect more stable results going forward.

We do recognize it is a start up, and we are gonna have a little bit lumpy results here in the beginning. I think, overall, from a long term strategic perspective, we would not ever expect this to be a significant part of the overall health business if you just look at it from a contribution to our underwriting margin from a health perspective, So I have--what we want to do is be able to grow this thing to, scale so that we get more of the economies of scale from our overall results perspective and get some of the volatility back out of it.

But from a long term perspective, there is some market synergies with this type of business. But our main focus going forward will continue to be the supplemental health products that we have historically sold, and that will be the vast majority of our underwriting margin dollars in our health lines.

Thomas Peter Kalmbach: I think what I would say on the margins themselves, a couple of things. We do think that impact of high severity claims will diminish over the course of the fourth quarter. And so we would really like to see kind of where those fourth quarter results come in. The other thing is we have taken a couple actions to actually improve the overall profitability of the business. We are reflecting that business is renewable Evri year. So on renewal, we are looking at rate increases on that business as well. And so those are being factored in not only to renewal rates, but also to new business rates as those gets quoted.

So I think that bodes well for margin improvement in every. And I think what is important as we get more stable of a size of membership that actually. The volatility around results will be better understood, and we could take the management actions. And we also expect that volatility to be reduced over time. So as we think about 2027, we have factored, those in the range of the 20% to 24% margin for the health business. that is a little bit wider range than where we have had previously and is reflective of there is an opportunity for some additional volatility in 2027. I think, you know, we will update you next quarter.

We will have the fourth quarter results and can provide some better guidance on that coming up in the. Following the. Those results.

Frank Martin Svoboda: Yeah. I would just add that I think for UA/GA itself, you know, it is probably still somewhere in that mid to you know, upper single digit margin percentages overall because even without the Evri some of the price, we are still seeing some higher utilization costs on the UA/GA and on the on the individual meds. We do anticipate, you know, working those additional trends into our you know, into our rate filings that will take effect in 2027. Of course, we have talked about you know, here for the last couple years, you have a delay before those rate increases take effect, and so you do not get the full effect in 2027.

So it is still not we do not anticipate for 2027 that they will still be reading reaching those longer term, you know, margins that we would expect for the long term. 1 of the things I think you benefit there, though, is strong premium growth that we are seeing at UA and GA, which will add to underwriting margin dollars. Yeah.

Operator: So Our next question will come from the line of Wilma Burdis with Raymond James. Please go ahead.

Wilma Burdis: Just following up on Evri, maybe you can give us a little bit more color on the market synergies and the product suite. And maybe just give us a little bit more color on financial impact there. Is it enough to offset? It seems like we have already had a $20 million of underwriting losses this year from Evri Maybe just talk about that. Are you seeing enough financial benefit there to make that worth it? Thanks.

James Matthew Darden: I would say, you know, from an overall perspective, again, the market that it is serving, it is a health plan. You know? And so you get a little bit of a volatility as we are growing that the number of groups that were signed up this year compared to last year, you know, is significant. Different. So. And we are in the early stages of this. So you really need to build that business to a credible amount of lives. And part that you gotta keep in mind is, you know, the premium that you charge on the book of business occurs ratably over the year. However, the claims do not come in ratably.

And so to the extent that we have got and that is what we have here. We have a handful of high severity claims that are hitting you know, in this quarter. As the earned premium ramps up, you know, over a period of time. And so as Tom mentioned, we really need to get this to more of a credible size block of business. And that should help from a stability of the earnings perspective.

Frank Martin Svoboda: I would say that I think it is important to note that, I mean, we are pricing the business, what we believe, you know, to be profitable But, again, as Matt and Tom talked about, just with some of the smaller size of groups, you end up with some volatility that we are clearly right now. With respect to some of those groups and just having more high severity claims than 1 would normally expect in a more mature block. So that is what is kind of driving some of the losses here.

But I think to your point around some of the, you know, synergies around, you know, if the broker relationships and being able to go to the brokers with multiple types of products helps us within that And as we are continuing to expand what we are doing in the broker area with some of the supplemental health plans as well. Then that just helps us to with the relationships with those brokers as well as providing a broader product suite and enabling us to get more of our supplemental health products into employer groups.

James Matthew Darden: And the nice thing I like about this business is that we can reprice Evri year upon renewal for experience that we are seeing and we anticipate, as well as if we need to, we can non-renew a group. You know, so that gives us a lot of flexibility on a go forward basis to really once we have a credible number of groups, to be able to manage those appropriately.

Wilma Burdis: Okay. Thank you. And then is there a good buyback opportunity. Or a good opportunity here in stock to lean in on buybacks? Especially given you guys cited pretty outsized excess cash flow estimates for 2027, maybe just give us a little bit of color there.

Thomas Peter Kalmbach: May I think you know, as we think about excess cash flow, is that is the source of funds for shareholder dividends and buybacks. And so we are seeing growth in that just from growth of statutory earnings as well as which creates dividend capacity for subsidiaries. And then also the reciprocal jurisdiction actually provides us a little bit of onetime benefit that we should see in 2027. But I think more importantly, is that is the business that we are. Is. We are reinsuring to Bermuda will continue to generate earnings and dividend capacity in Bermuda consistent with what we have communicated previously, on a go forward basis.

So we feel pretty good about current excess capital levels and our ability to maintain that going forward. Excess cash flow levels and our ability to maintain that going forward.

Wilma Burdis: Okay. Thank you.

Operator: Our next question will come from the line of Randy Binner with Texas Capital. Please go ahead.

Randy Binner: Hey there. I would like to actually just ask some procedural questions if I can about the health claims. For the first the first is on the CMS claim delay. Can you just review for us kinda, like, why that happened and when it happened and just the I guess, the visibility you have on the resolution of that You mentioned, I think, was $7 million of extra claims in the quarter. But does that go to like zero extra in the fourth quarter? Just trying to understand kind of the facts of that drove that situation.

Thomas Peter Kalmbach: Yeah. To give you a little bit of background, so Medicare is a in the first quarter, and that is 2 issues that delayed claims reporting and processing. The first issue was billing rates to Medicare doctors where the reimbursement rates were corrected. And so that resulted in some higher reimbursements that we needed to process through, and that was largely a second quarter event. But those higher billing rates continue into the third and fourth quarter as well. The second issue was involved in the reissuing of Medicare IDs. Leading to previously denied legitimate claims.

And so beneficiaries were issued new medical IDs Physicians or hospitals who submitted claims that were denied, they would need to obtain those IDs from those beneficiaries. Which takes a little bit of time. So we did not have good visibility into the full impact of that until this quarter. And so that is we feel like that is pretty much gone through the system that those medical IDs were issued in April of 2026. And so we feel like that is pretty much gone through the system. But and should be normalized on a go forward basis.

And the nice thing is that what we have based on the timing of our rate filings is that as I have mentioned in my comments, a lot of those related to earlier periods and 2026, those claims that came through in the third quarter. So that will be part of our claim trend that will go into our rate filing. For those 2027 rates that most of those will start being picked up starting in the beginning of the second quarter of 27 into this additional premium.

Randy Binner: that is all So that was gonna be my follow-up. So, certainly, the. Every claims are in your rate filings, but these. I guess, these still count. Even though they are nonrecurring or you know, should even out. And then just 1 more follow-up, on Evri what when do you have a severity claim, what--like, what--what is it? What is the--what would be a typical type of high severity claim you have experienced there? And what are the what are the specifics of that kind of claim?

James Matthew Darden: The claims fall, which you might imagine, you know, cancer, heart attacks, some of those type of issues. And so you have claimants with over $100 thousand as an example. On a claim related to some of those higher severity. Now we do have reinsurance that kicks in, you know, at some point to protect us from very large claims. But to the extent we have got certain medical conditions that we are paying for, with. Underneath that reinsurance cap you know, that is that is getting to, a little bit of the severity.

And so back to the number of lives that we ultimately ensured, if you have a handful of those, it is just a bigger percent of your total than if you have a better distribution of risk. As we sign a more groups.

Randy Binner: Alright. I will leave it there. Thank you.

Operator: Our next question will come from the line of Andrew Kligerman with TD Cowen. Please go ahead.

Andrew Kligerman: Hey, good morning, team. I wanted to follow-up on the Evry and CMS. And I just wanna make sure I understand the, the timelines. It sounds to me like the CMS issue might linger into Q4, and then it kind of evaporates.

And with Evri, you know, just given you are guiding to health margins of 20 to 24%, it does not sound like you are totally certain as we progress through 2027, but do you have confidence that by 2028, the Evri issue will be cleaned up And I will stop there, but just a quick sidebar to As I look at startups across all of the insurance sectors, it is so hard to compete with these you know, behemoth companies with massive data and analytics generally, what gives you confidence that Evri can compete? But, really, the first part of it is just the timelines that I laid out. Thank you.

Frank Martin Svoboda: Sure, Andrew. Hey. On the on the. So I will start with the Medicare and the and the CMS piece. The you know, additional claims that we really saw as a result of the Medicare ID issue really, you know, impacts Q3. Because you end up with some out of period claims. When we look at the full year those become more normalized in the overall margin and the claims activity, for Medicare and then go into how we think about the trend that we are seeing and the and the that we are incurring on that Medicare business in 2026. And, of course, then, as Matt indicated, that will influence That will run its course in 2026.

And then know, get taken into account as we think about those rate filings that we are making now. And impacting the premium rate increases. For 2027 with respect to that.

Thomas Peter Kalmbach: You know? And so we are seeing. But it did impact as we were incurring that in Q3, then it was. It became evident that some of the expectations that we had for claims development in Q4 were really understated. So as we had to think about that new claims trend and what impact that had on the fourth quarter, that is why we ended up needing to increase some of the you know, claims and loss expectations with respect to the MedSupp business. For the full year 2026.

You know, with respect to you know, to Evri we do you know, anticipate that pricing actions that we are taking will help to moderate any of the claims activity that we are seeing and respect to that business. In 2027. And as we continue to add more groups and you get a broader base, that also gives you that broader set of groups that you can absorb from higher claims in some groups that are absorbed by profitability in other groups. So we do have a. To your point, we do have a broader range in 2027. So we do anticipate or we would.

You know, as we have said before, we have priced this to be profitable, but do understand that there is still some volatility that we expect in 2027, and so that there is the possibility that there is still could be some level of losses. In 2027 and built that into the overall range. We will see how that how that transpires over the course of the year, and we will take necessary actions as we go forward and continuing to look at you know, each new group as they renew. And continuing to rethink about the. How we are pricing new groups coming in as well. And ensuring that we are you know, that we are pricing those appropriately.

But I do think you know, so there is at least a possibility that there is some loss, but we do not think that would be we do not that it would be as significant in 2027 as. As what we have actually incurred here in 2026. We just. We do not see as we grow the broader book of business you know, that the occurrence of the high severity losses will lessen as a percentage of the whole.

Andrew Kligerman: Got it. Thank you for that. And then my follow-up is around American Income. The producer count, the average quarterly producers It looks like next year, your point well, said in the guidance mid to high single digit sales growth at American but it is been a bunch of quarters that you. You have had to adjust and revise the compensation methodologies used at American Income. And the other point I would make is, yeah, you know, with the count, the average producer count down 7%. And I guess sequentially, it was only down a half point.

But bottom line, what gives you such confidence in the mid to high single digit? what is going to be different in 2027 versus 2026. Thanks.

James Matthew Darden: Yeah. Andrew, I guess I would point out it is really been 2 quarters since the compensation adjustment has been in place. So in other words, we put that in at the beginning of Q2 And so for Q2 and Q3, what we are seeing is a stabilization of the agent count But what we are seeing. And I have mentioned this before. When we talk about the incentive compensation structure we roll out to the agents, we are really trying to balance activity between sales activity and recruiting, training, and growth, activity. And so what we did see was positive improvement on the productivity side. You know?

And we had an increase productivity of 11% this quarter, and it was 9% last quarter. So the compensation changes, the way I think about it, were effective. We got increase in sales. We increased the requirement to achieve certain what we call bonuses, but it is effectively incentive compensation. We increase that with the sales growth was necessary at the agent level to be able to achieve those. And so we are seeing that on the productivity side. We are also seeing that as we have got a stabilization of the base, we have got more people that have more experience. And so they are gonna they are gonna produce more.

So overall, the compensation adjustment, I think, that went in the beginning of the second quarter of this year was effective. It just did not quite move the needle as much as we had liked on the recruiting side. And so we are gonna put in additional changes to that structure that really focus a little bit more of that incentive comp on the recruiting and training side. And so we anticipate we have got a long history of doing this, We anticipate those changes will start flowing through in the beginning of next year because they are going in at the end of this year.

And as I mentioned in my comments, this is human behavior we are dealing with. And so when we put a change in, it takes a little bit of time for everybody to migrate to the new, structure that we have put in place. And so we recognize it takes a couple of quarters to kind of figure that out. So I think we have a good base to build on. And that is why you know, we are pointing to. We think we can be at the high mid- to high single digit growth for next year because of what we are putting in here at the end of this year.

Andrew Kligerman: Thanks for the insights.

Operator: Our next question will come from the line of Joel Hurwitz with Dowling and Partners. Please go ahead.

Joel Hurwitz: Hey, good morning. 2 first on cash generation. Just what is the expected dividend from Bermuda in 2027? And then Tom, could you provide some more color on what drove the increase to your 2020 capital projection?

Thomas Peter Kalmbach: Sure. So I mentioned on the 2026 capital, what I had mentioned is we were looking at our 2026 subsidiary capital positions, and recognized that we had a little bit of excess capital in the entities. And so, so that is what kinda drove that estimate. And that keeps us at a RBC ratio right within our target ranges. So, we feel comfortable, comfortable with that capital position. 2027 for Bermuda, you know, we actually have to go through approval process, so it is it is not definitive yet. But we would expect that to be somewhere in the $150 million range.

For 2020--for not what we are requesting in 2026, but in the combination of what we request in 2026 and 2027 would be in that range.

Joel Hurwitz: Got it. that is helpful. And then just a quick 1 on the life margin with the assumption update, done this quarter? what is the expected life margin for the fourth quarter of this year?

Thomas Peter Kalmbach: Yes. Fourth quarter, like, margin is. Hold on 1 second. 41. 41 and a half range, 43.

Joel Hurwitz: Okay. Thank you.

Operator: Our next question will come from the line of Suneet Kamath with Jefferies. Please go ahead.

Suneet Kamath: Thanks. Just, I wanna start with Bermuda also. Have you guys done any work on which blocks of business would be, I guess, the most advantageous to move to Bermuda, between, say, life and health? And then, relatedly, do you have any limits in terms of how much, what percentage of your reserves you ultimately would want to cede to Bermuda?

Thomas Peter Kalmbach: We continuously look at our opportunities to reinsure to Bermuda, and we have not sent any solid limits on what those limits would be. But we do think that it is important to keep, reserves here in The US. I think that helps us from a liquidity perspective and from a. Just a operational perspective. So, I think we will we will have a balanced view of that, and it will emerge over time as we continue to look at our business and opportunities, with using a Bermuda framework.

Frank Martin Svoboda: Yeah. And I would just add that the team really has done a lot of work in looking at potential blocks and which ones are you know, make more sense to be reinsured to Bermuda and which ones do not. And there is definitely some art to being able to optimize you know, which blocks you are reinsuring and which ones you are not and just based on age and stability and a lot of other factors. So you know, we have a. I think in our business plan, and we have talked about it in prior calls, I think initially, we are kind of looking at maybe around 25% of the statutory reserves being included.

But we will definitely continue to take a look at that. Our primary focus is really executing on that business plan. But then as we are doing that, continuing to look to see are there other blocks that would make sense and that have some opportunity as we think about just overall managing the that business and the and the capital that we have in there.

James Matthew Darden: Yeah. And to your question on life and health, it is more on the life side than where the opportunity is that is where you incur quite a bit of deferred acquisition costs and the treatment of that. Under a gap regime in Bermuda, along with the difference between US statutory and GAAP reserves on the life business is much more substantial. So those are the 2 things as we have talked about, both on the in force blocks that we reinsure as well as on a go forward basis, the new business that we reinsure into Bermuda will be more of the benefits are gonna be on our life blocks and life sales.

Suneet Kamath: Okay. that is helpful. And then I was trying to jot this down during your prepared remarks, so I apologize if I got it wrong. But it sounded like the growth in NII for 2027 was expected to be and a half to 3.5 percent,, and then the growth in required interest was supposed to be higher at 3.5 to 4.5 percent. So if those numbers are right, does that imply that, you know, excess investment income will decline year over year, or am I not thinking about that right?

Frank Martin Svoboda: Yeah. No. I think I think you are the right ballpark. it is probably flat to maybe just slightly declining depending on kind of the nuances of where that falls within that. And really, what is really driving that is that as you think about the additional distributions that we are making out of you know, the entities up to the parent. And then if in fact those are not needed for our capital purposes and if those are distributed out to shareholders, then that is gonna reduce the amount of your average invested assets that we have available. So that is what is really driving kind of the lower growth in net investment income.

And while at the same time, you still have the same amount of GAAP reserves out there, so you are required interest continues to grow at the same rate. But that is so we would anticipate you know, not much growth in net investment income but then to the extent that those we are avail. Are able to return out to the shareholders in the form of buybacks, and we are getting the benefit from that.

Suneet Kamath: Okay. Thanks.

Operator: Our next question will come from the line of Tom Gallagher with Evercore ISI. Please go ahead.

Tom Gallagher: Thanks. Just a few Every questions. What are the total quarterly premiums that you have associated with that business right now? And how big are the average groups you are insuring in terms of employee size?

Thomas Peter Kalmbach: Yeah. In the in the third quarter, Evri premiums were about $11 million. So it was not very significant. And next year, we did not assume total annualized premium of around $100 million. So that will give you some idea of the of the size of the business. And then the number of groups is we have. You know, we would expect to be around 50 groups, next year. So you are going to--you are going to more than double from a size standpoint versus where you are right now. Right now, we have about 30 groups. So we have some groups come on in the in the beginning of the fourth quarter. So not quite double, but close Gotcha.

Tom Gallagher: And I guess my follow-up is just you know, covering some of the companies that have medical stop loss we have been watching. and hearing about 2 to 3 years of high severity claims. Happening. So I guess my just in light of that, what gives you confidence that you are not being selected against? Because there is obviously rerates going on across major medical it is been happening for at least 2 years. So do you have any way of sort of filtering out your underwriting on these groups as you grow to make sure that you are not gonna see these persistently high severity claims. Thanks.

James Matthew Darden: Well, 1 of the things we have done is looked at just our underwriting standards, our pricing methodology, We have done a deep dive on that. We have also brought in some external expertise just to validate some of our assumptions We do know that there is a lot of cases out there that are getting shopped and we turned down a significant number of those trying to maintain the discipline on the pricing and underwriting side. So we had over 70% of the cases that we are looking at that we turned down declined to quote. So we are being very disciplined around what we take on and what we write from a new group perspective.

And that is really, again, since it is not a major piece of our business, we are really gonna constrain growth. We wanna get to a credible size so that we can diversify the risk of a few large claims over a greater number of lives. But we are gonna be very disciplined on our pricing approach. To this. And we are going to we will moderate the growth if we need to or we will nonrenew group if we need to.

Operator: Our next question will come from the line of Maxwell Fritscher with Truist. Please go ahead.

Maxwell Fritscher: Hi. Thank you. I am calling in for Mark Hughes. You had mentioned the higher productivity at American Income. I believe you are only focusing on American Income. But how are productivity trends across the enterprise, Liberty National, for example, and a smaller piece of the pie, but are you seeing similar improvement?

James Matthew Darden: Yeah. You know, you can kind of just tell from aggregate. If you just look at American Income, our average agent count over the last, you know, 3 to 4 quarters has been pretty stable. But we have got some, you know, sales growth or sales moderating there. And so that just gives you an idea of the productivity on a per agent basis is, know, if we have got less agents, 7% less agents, this time this year than we did same time last year, but our sales are relatively flat, you know, we are just--higher productivity. You are seeing that in family heritage as well. You know, we see nice productivity gains there.

So the sales are a little bit different or outpacing. The growth in the agent count. On Liberty, it is really pretty consistent. Our agent count growth is pretty consistent with our, sales growth there, and that is what we would expect over a long period of time. What we see sometimes is changes in whether it is compensation or sometimes rolling out new technology, like CRM systems or enhancements to sales systems or training systems, you know, we will get some productivity gains. Overall, long term, not quarter to quarter, but long term, we are really focused on we wanna have more agents that sell more business.

We like productivity gains as we think about investments in technology and investments in leads and advertising and branding and all those things. But overall, long term growth strategy is definitely to grow our agent count. But what that gives me comfort about is it just gives us. And this is why I like having 3 different agencies. It really gives us a sense of the market is that we are not seeing headwinds from an environment perspective, from an economic perspective is that we have got agent productivity going up. We have got sales growing up. The extent we are growing our agent count.

So all of that again, is what I believe is under our control to manage and achieve strong growth going forward. And we will continue to get that by focusing on growing our agent count. And as a reminder, the agent recruiting activity happens out in the field in individual offices. And a lot of that activity happens by our manager group. And as I have mentioned in my prepared remarks, Family Heritage, what I like seeing is we have got middle management growth. And to the extent that we have got middle management growth, I know that is a forward looking item as we think about who is at.

We got more people out there recruiting and training agents so that bodes well from a long term growth perspective.

Maxwell Fritscher: Very good. Thank you. And I asked a similar question last quarter, but it seems like a lot has gone on in the economy in the past 3 months. So I would like to know if you have any incremental views around recruiting Last call, you noted that the pipeline was strong, but I would like to know if you can provide any updated views on the environment.

James Matthew Darden: Yeah. I think from a recruiting perspective, we continue to see, and this would be a good example of looking at the most recent experience at Liberty. Is that there continues to be a lot of people that are interested our opportunity, and that is in the form of they feel more in control of their career. We give them flexibility, opportunity for growth. there is plenty of people that are interested in being able to own their own business someday. We provide pathway to be able to do that.

And so as you look at the backdrop of what is happening with you know, college graduates as an example, and it is hard to find that entry level job or people that are in jobs that, you know, that a particular industry may not be growing and those are stagnant. Our opportunity provides opportunity for growth. So we do not see any headwinds from a recruiting perspective. We see that as strong and robust. And the nice thing is that our business model does not require that we recruit from a certain segment of the population or a certain experience or background, or you have got to be an experienced agent.

We recruit people that have no experience in this business and have a great process for getting them up, trained, and licensed, and selling. You know? So there is--that is the biggest, part of the population out there. Is our pool that we recruit from. And so I feel very good about our prospects going forward.

Maxwell Fritscher: Great. Thank you.

Operator: Our next question will come from the line of Pablo Singzon with JPMorgan. Please go ahead. Pablo, you might be on mute.

Pablo Singzon: Hello? Can you hear me now? Sorry about that. Yes. The first question I had was on 27 EPS guidance, which implies about 7% growth at the midpoint. So how much of the growth will be driven by buybacks? I think in recent years, buybacks have contributed anywhere from 4% to 8% of incremental EPS growth versus growth in dollar earnings. So I guess if we could tie everything together, right, sounds like excess investment income will be flat to slightly down Underwriting income could be up. Right, but perhaps the premium growth offset by some slight deterioration in margins. But are there any high level perspective on how you see EPS progression from 2026 into 2027 would be helpful.

Thanks.

Frank Martin Svoboda: Yeah. I think overall, Pablo, you know, think at the midpoint, of the guidance for 2027, you are looking at around 7% overall at that midpoint. Actually, probably in that range of 5% to 6%, probably coming from share buybacks. Is what we are anticipating, and then you are having a debt underwriting growth in net underwriting excuse me, net operating income more in that 1% to 2% range.

Pablo Singzon: Okay. that is helpful. Yep.

Frank Martin Svoboda: And so part of that, I mean, because of you know, as Tom mentioned, I. And I mentioned earlier, you know, you are having. We are anticipating you know, some additional dividend distributions out of the operating entities up to the parents. And so the extent that Tom mentioned, I mean, that is really in that $150 million range or so. that is being inclusive. So that is if you will, pulling that out of the system is taking out of the growth of our invested assets, which is and then turning into net investment income. So that is a piece of that. And then probably, if you will, the low.

Little lower you know, growth rates still even on the. If you think about it from a life underwriting perspective, it just I think the midpoint of the range that we have in 2020 7 on the, you know, underwriting margin percentage. Slightly down perhaps. It probably just. You know, we have had think about some of the assumption changes that are. They are probably going through as Matt really mentioned, how we anticipate even though we would anticipate some assumption updates, probably you know, less than what we had in 2026 right now. So that is kinda driving, if you will, a little bit of the lower growth in net operating income.

Pablo Singzon: Got it. And then may second set of questions just on Evri. A couple here. Right? So do you think pricing will be sufficient to get the book back on track, or are there any changes in underwriting that you need to implement? And then relatedly, since you had given stats on premium sizes and accounts of the group. Groups that you have now, At what premium size or group count size do you think the book will reach, you know, better credibility from a claims perspective? Thanks.

James Matthew Darden: I think from. On the pricing it is from a volatility in the earnings, you need both. We put in some. For those groups that we renewed, we put in some pretty significant price adjustments as well as, as I had mentioned, making sure we challenged what pricing is for new groups that would be coming on at the beginning of 2027. But, also, again, you know, if I have got just a handful of groups, really need more groups from a credibility perspective. So the way I think about it, it is a combination of both. Is more price to action in addition to just getting the group.

The volume of the business bigger to spread across the risk over multiple groups. I think more from your question of credibility perspective, you know, we need to get it up to a certain level and more stable results and ongoing growth perspective, And so we would anticipate that would happen more toward the end of 27 or into 2028 is that as we get volume and scale that makes some of the chances for volatility to be reduced going forward.

Thomas Peter Kalmbach: I think 1 of the groups on the book for a period of time to create that confidence in the experience. And so, you know, kinda end of 27 is good, but that is probably the starting point of gaining you know, solid credibility.

Operator: Our next question will come from the line of Wesley Carmichael with Wells Fargo. Please go ahead.

Wesley Carmichael: Hey, thank you. Just had a follow-up on Capital and Bermuda. But could you just quantify the size of the additional reinsurance transaction And maybe with reciprocal jurisdiction approval now, have your expectations around longer term cash flow uplift changed at all? Any help there would be great.

Thomas Peter Kalmbach: Yeah. The reinsurance transaction that we did in the third quarter was about $275 million of reserves. So it is relatively small. But we also had new business that we are reinsuring a large portion of American Income Life's new business to the to the to Bermuda. And then on excess cash flow, our 2027 excess cash flow, going from something like $850 million to $950 million is the range. That actually reflects kind of an increased run rate. And you know, over time, I would expect as we you know, fully get the benefits of Bermuda, that is. That could increase absent other, capital needs within the insurance operations.

Frank Martin Svoboda: Yeah. I think I am, you know, just really optimistic on you know, that ability to increase the kind of the run rate on the excess cash flow at the parent company. I think you know, we kinda look back over the last couple years you know, you know, before shareholder dividends, you know,, we have been in that $600 million to $700 million range. And you know, we have been able to through some of these transactions, you know, been able to take out some extraordinary dividends. Over the past couple of years.

But I think going forward, being able to have it in that $8.50 to $9.50 range and just as business grows and our block of business grows, to have that potentially you know, increase from there. Really sets us at a new level and really gives us that added flexibility as the parent to make sure that we can support the capital needs of our of our organization. But and then have us more flexibility to use that excess cash flow for other purposes if we are able to.

Wesley Carmichael: Got it. that is helpful. And sorry if I missed this in the prepared remarks, but did you give an outlook for the Health margin for the fourth quarter of 2026? I know there are some moving pieces in the third quarter with the claims and assumption review. So sorry if I missed that, but just wanted to clarify that.

Thomas Peter Kalmbach: Not specifically for the fourth quarter, but overall. 22% to 24% in--just the fourth quarter of 26. Yeah. 20. The 22%? Did you say 22%? 20 to 22%. Somewhere in that range.

Wesley Carmichael: Okay. Thank you. Got it. Thanks so much. Yep.

Operator: Thank you. And there are no further questions in queue. I will hand it back to Stephen Mota for closing remarks.

Stephen Mota: All right. Thank you for joining us this morning. Those are our comments. We will talk to you again next quarter.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

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