Globe Life’s profit climbs on higher investment returns, stronger underwriting

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(Reuters) – Life and supplemental health insurance firm Globe Life reported an increase in fourth-quarter profit on Wednesday, driven by stronger underwriting performance and higher income from investments.

Despite economic uncertainties and fluctuating interest rates, demand for life insurance has remained resilient as consumers prioritize financial security amid rising living costs.

Insurers have reported steady policy sales, fueled by a heightened awareness among consumers of coverage needs in the post-pandemic era.

At the same time, technological advancements and digital distribution channels have made access to insurance policies easier for younger demographics, supporting sustained growth in the insurance sector.

This stability underscores the essential role of insurance, an industry that often sees consistent or increased demand during periods of heightened economic volatility.

Total underwriting margin increased 6% over the year-ago quarter.

Meanwhile, higher interest rates have increased yields from bonds held in insurers’ investment portfolios and the broader equity markets also closed a banner year on the back of a rally across major sectors, including technology and financials.

For 2024, the Nasdaq surged 28.6%, while the bellwether S&P 500 notched a 23.3% gain, marking the index’s best two-year run since 1997-1998.

Insurers typically invest a portion of their capital to various asset classes, including fixed-income securities and equities, generating returns that generally align with broader market trends.

Globe Life’s insurance underwriting income increased 16% in the fourth quarter ended December 31, to $3.99 per share. Its net investment income grew 4% in the quarter compared to the year-ago quarter.

The McKinney, Texas-based company’s diluted net income per share rose to $3.01 per share in the three months ended Dec. 31. That compares with $2.88 per share, a year earlier.

(Reporting by Jaiveer Singh Shekhawat and Manya Saini in Bengaluru; Editing by Mohammed Safi Shamsi)