Digital Transformation And Demographic Shifts Will Expand Insurance Markets

Key Takeaways

• Expansion into underserved markets and digital innovations are driving sales growth, efficiency gains, and a broader customer base.
  
• Advanced analytics, disciplined risk management, and share buybacks are strengthening profitability and delivering greater value to shareholders.
  
• Rising health claims, reliance on agents, demographic headwinds, regulatory scrutiny, and pressured investment returns threaten Globe Life’s profitability and long-term earnings growth.

Catalysts

Through its subsidiaries, provides various life and supplemental health insurance products, and annuities to lower middle- and middle-income families in the United States.

• Ongoing population aging and the persistent decline of employer-provided benefits are set to expand Globe Life’s addressable market for life and supplemental health insurance, supporting sustained growth in premium revenue over the long term.
  
• The company’s focused expansion within underserved and middle-income markets—demonstrated by robust growth in agent recruitment and agency middle management—continues to boost new policy sales and should drive both top-line growth and a broadened customer base.
  
• Globe Life’s increasing use of digital tools for direct-to-consumer sales and brand engagement, paired with automation and data-driven underwriting, is improving efficiency, reducing customer acquisition costs, and expanding margins, pointing to higher net margins and operating leverage in future periods.
  
• Persistent investment in advanced analytics and risk pricing allows Globe Life to limit claims volatility and maintain or improve policy underwriting margins, which is expected to translate into better-than-expected net income and underwriting profitability over time.
  
• Aggressive and consistent share repurchase activity, supported by strong and growing statutory earnings and cash flows, is expected to meaningfully increase earnings per share and total returns for shareholders, further amplifying any operational outperformance.

Globe Life Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Globe Life compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Globe Life's revenue will grow by 5.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 18.3% today to 18.7% in 3 years time.
• The bullish analysts expect earnings to reach $1.3 billion (and earnings per share of $17.57) by about July 2028, up from $1.1 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.5x on those 2028 earnings, up from 9.5x today. This future PE is lower than the current PE for the GB Insurance industry at 14.4x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.51%, as per the Simply Wall St company report.

Globe Life Future Earnings Per Share Growth

Risks

• Globe Life continues to face higher health claim costs, especially in its Medicare Supplement business, where claim utilization has outpaced premium rate increases, leading to near-term and potentially prolonged margin compression through at least 2026, which could negatively affect future underwriting profits and overall earnings.
  
• The company remains heavily reliant on agent-driven sales across key divisions, and although agent count is growing, this traditional distribution model could lose effectiveness over time as the industry shifts to digital-first engagement, raising customer acquisition costs and exerting pressure on net margins and revenue growth if Globe Life does not adapt quickly to technological disruption.
  
• Persistent demographic headwinds—such as slowing U.S. population growth and lower birth rates—may limit the expansion opportunity for new life insurance policyholders over the long term, hampering future premium revenue growth and challenging the company’s ability to sustain historical earnings growth rates.
  
• Growing regulatory scrutiny and ongoing SEC and DOJ investigations, together with elevated legal expenses recently reported, increase the risk of higher compliance costs or restrictions on Globe Life’s sales practices, which could erode profitability and constrain net margins.
  
• Persistently low or volatile interest rates have resulted in flat net investment income and a $1.5 billion unrealized loss position in the fixed maturity portfolio; if low yields continue, investment returns will remain under pressure, potentially reducing normalized earnings per share and book value growth.

Valuation

• The assumed bullish price target for Globe Life is $185.35, which represents two standard deviations above the consensus price target of $146.91. This valuation is based on what can be assumed as the expectations of Globe Life's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $188.0, and the most bearish reporting a price target of just $114.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $6.9 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 11.5x, assuming you use a discount rate of 6.5%.
• Given the current share price of $122.83, the bullish analyst price target of $185.35 is 33.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.