Globe Life (GL)

Total return at 5 years: 16.3%/year = 15.6% appreciation + 0.8% dividend. The target price ($359) is ex-dividend; the $9 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $509 · Multiples $296) exceeds the market price ($174).

Today — with margin of safety: at $174 trades ~41.1% below its value discounted to today (~$296) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($359) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($174) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-13.9%/year) than we project (9.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.6 bn of owner earnings in year 5 (vs ~$1.9 bn of our base case). It recalculates if the DCF assumptions are edited.

A bank is valued on equity (P/E × common earnings + price/tangible book), not EV: deposits and debt are funding. It returns capital via dividend + buyback —the buyback reduces the share count, so earnings per share grow faster than aggregate earnings—. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Operating income (EBIT) in the XBRL froze at 2024-09-30 (638 days of lag); the valuation flow is rebuilt from the filing's income statement as pretax income plus interest expense (TTM US$1.637bn). The path starts from the raised guidance in the 8-K of 22-jul-2026 for 2026 net operating income per share (US$15.55-US$15.95, midpoint US$15.75) and decelerates smoothly toward a durable 6.5% annual growth rate, which combines premium growth (low-to-mid single digit) with underwriting margin expansion. Net buybacks are modeled at 5.13% per year, the rate revealed by the point-in-time share count series over the twelve-month window; the two- and three-year windows give 7.51% and 6.76%, and the short one governs because it describes the rate currently in effect. No corporate action contaminates the series. It runs identically across the three scenarios, per the single share-path rule. Dividend per share starts from the current run-rate (US$1.32) with a low payout (~8% of earnings), which leaves ample room for growth independent of the buyback. Book value and return on capital are shown on a GAAP basis (including the interest-rate adjustment, AOCI); the health note also declares the basis excluding AOCI, which the company itself uses as its central operating measure.

Today's multiple compresses on its own going forward as the metric per share grows (accelerated by the buyback, which reduces the share count). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $359 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $174, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $359 in 5 years plus $9 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $296. Against the current market price ($174), the margin of safety is 41.1% (trades below the maximum → there is margin) and the total return at that price would be 16.3% annually.

• Entry multiple. Trades at 11× times earnings, within the lower third of the life and health protection archetype band (10-14x).
• Margin of safety. There is a margin of safety: the market's perception is meaningfully worse than reality.
• Sensitivity to the terminal multiple. The 5-year return depends more on sustained buybacks and earnings growth than on multiple expansion: the base case assumes only modest expansion, from 11.3x today to 12x.

• Cash generation. Operating cash flow (US$1.392 billion TTM) comfortably funds the dividend and buybacks without resorting to additional debt for capital return.
• Sustained ROIC. Return on invested capital of 15.3%, comfortably above the 10% bar, sustained by underwriting margin expansion.
• Reinvestment runway. Maintenance capex is low (US$159 million TTM) and there is no visible growth-reinvestment runway beyond organic agent expansion; nearly all excess capital is returned.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Globe Life's growth breaks down into volume (producing agents and new policies issued) and price (average monthly premium per policy), reported by channel in management's discussion. Annualized premium in force is the indicator that best anticipates premium revenue for upcoming periods, because it reflects already-contracted policies not yet fully recognized as revenue.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Premium growth. Annualized premium in force growing 4% in life and 12% in health, a low-to-mid single-digit pace consistent with a mature protection business.
• Agent growth. The producing-agent count at American Income and Liberty National grows at a low single-digit pace, the volume driver behind new premium.
• Buyback amplification. Net buybacks of ~7.5% annually amplify earnings per share well above growth in the consolidated business; the company's own communiqué reports double-digit growth in operating income per share in eight of the last nine quarters.

• Premium recurrence. Long-term life and health policies generate a recurring, predictable premium stream, with high persistency across a 14.28 million policy base.
• Product differentiation. The life and supplemental health insurance it underwrites is largely commoditized within the industry; the advantage lives in cost and distribution, not in the product.
• Pricing power. It can set rates with some freedom in life and limited-benefit health, but the Medicare Supplement segment (44% of health premium) requires state-by-state regulatory approval to raise prices.
• Recession behavior. Low-face-amount life and health protection insurance tends to be resilient in recessions — the need for coverage does not disappear — though policy persistency can suffer if policyholder incomes fall.

• ✓Underwriting profitability (combined ratio)Combined ratio 61.2%
• ✓Reserve adequacy (development)Favorable +2.8% pts
• ✓Catastrophe exposure0.0% pts of the combined ratio
• ✓Book value compounding+11%/yr · core ROE 14%
• ✓Float return (investment income)$0.1 bn

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Total debt of US$2.943 billion against equity of US$6.156 billion, a moderate leverage level for a life insurer.
• Investment portfolio quality. ~86% of the portfolio in quality fixed income, exposed to interest-rate risk (AOCI) and reinvestment risk, not to significant credit risk.
• Reserve development. A net remeasurement gain of US$134.3 million in 2025 from the annual review of actuarial assumptions (mortality, morbidity, lapse), a favorable development that should not be extrapolated as recurring.

• Incentive alignment. The CEO was Chief Financial Officer for over a decade before taking the helm, suggesting continuity in the capital discipline that already characterized the company.
• Capital allocation. Prioritizes buybacks over dividends by 8 to 1, with a dividend payout of just ~8% of earnings; no material M&A in the period.
• Transparency. The company has devoted significant resources to defending against short-seller allegations since 2024, with shareholder litigation still active.

• Unresolved short-seller litigation: the securities class action and shareholder derivative suits filed in 2024 remain active, sustaining a discount premium for legal uncertainty even though the underlying business shows no deterioration in its operating metrics.
• Regulatory and labor risk that cannot be precisely quantified: the EEOC's determination on agent reclassification is a legal contingency the market cannot price exactly, which typically translates into an evenly applied conservative discount.
• Limited analyst coverage and visibility compared to larger P&C or life insurers: Globe Life runs a niche model (distribution via exclusive agents to lower-middle-income segments) less followed than its larger-cap peers.

The combination of active, unresolved litigation (a motivated seller reacting to legal uncertainty, not to business deterioration) and narrower market coverage than larger-scale insurers are the two identifiable sources of the discount. The business itself — growing premiums, expanding underwriting margins, sustained buybacks — shows no signs of deterioration that would justify a multiple of 11× times earnings.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +6%/year (+34% total): the margin of safety protects the downside. The bull (+22%/year, +173% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Labor litigation (EEOC). A non-binding September 2024 determination on reclassifying independent agents as employees, with active civil litigation.
• Shareholder litigation. Securities class action and derivative suits since the April 2024 price decline triggered by short-seller reports.
• Agent dependence. Growth in three of the five divisions depends on recruiting and retaining a force of more than 17,000 independent agents.
• Rate regulation (Medicare Supplement). 44% of health premium requires state-by-state approval to adjust rates, limiting the speed of response to rising medical costs.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A narrow moat and ROE 14% above the 10% bar, with a +41% margin → a quality business at a good price.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 9% at a PEG of 1.3 → reasonable for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -14% vs our 9%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +5%/yr, bull-scenario ceiling +22%/yr over 5y and a +41% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: cost advantage, intangibles, switching costs, efficient scale → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -14%, within what we project (9%) — the story squares with the numbers.