Good day, and welcome to the Fourth Quarter 2021 Earnings Release Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mike Majors, Executive Vice President, Administration and Investor Relations. Please go ahead, sir. Thank you. Good morning, everyone. Joining the call today are Gary Coleman and Larry Hutchison, our Co-Chief Executive Officers; Frank Svoboda, our Chief Financial 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, 2020 10-K in 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 discussion of these and reconciliations to GAAP measures. I will now turn the call over to Gary Coleman.

Thank you, Mike, and good morning, everyone. In the fourth quarter, net income was $178 million or $1.76 per share compared to $204 million or $1.93 per share a year ago. Net operating income for the quarter was $172 million or $1.70 per share, a decline of 2% per share from a year ago. On a GAAP reported basis, return on equity was 8.8%, and book value per share is $85.9. Excluding unrealized gains and losses on fixed maturities, return on equity was 12.3%, and book value per share is $58.50, up 10% from a year ago. In our life insurance operations, we continue to see improved persistency compared to pre-pandemic levels. In the fourth quarter, premium revenue increased 8% from a year ago to $733 million. Life underwriting margin was $146 million, down 11% from a year ago. The decline in margin is due primarily to higher COVID-related claims, which Frank will discuss further in his comments. In 2022, we expect life premium revenue to grow 6% to 7%, and at the midpoint of our guidance, we expect underwriting margin to grow around 29% due primarily to an expected decline in COVID claims. In health insurance, premium revenue grew 8% over the year-ago quarter to $313 million, and health underwriting margin was up 12% to $81 million. The increase in underwriting margin is primarily due to increased premium and improved claims experience. In 2022, we expect health premium revenue to grow 6% to 7%, and underwriting margin to grow around 3%. Administrative expenses were $70 million for the quarter, up 11% from a year ago. As a percentage of premium, administrative expenses were 6.7% compared to 6.5% a year ago. For the year, administrative expenses were 6.6% of premium, same as last year. In 2022, we expect administrative expenses to grow 9% to 10% and be around 6.8% of premium due primarily to higher IT and information security costs, employee costs, a gradual increase in travel and facilities costs, and the addition of the Global Life Benefits division. I will now turn the call over to Larry for his comments on the fourth quarter marketing operations.

Thank you, Gary. I will now discuss each distribution channel. At American Income, life premiums were up 11% over the year-ago quarter to $364 million, and life underwriting margin was down 3% to $102 million. The higher premium is primarily due to improved persistency and higher sales in recent quarters. In the fourth quarter of 2021, net life sales were $74 million, up 4%. The increase in net life sales is due to increased productivity. The average producing agent count for the fourth quarter was 9,530, down 1% from the year-ago quarter and down 4% from the third quarter. The producing agent count at the end of the fourth quarter was 9,415. At Liberty National, life premiums were up 7% over the year-ago quarter to $79 million, while life underwriting margin was down 12% to $12 million. The decline in underwriting margin was caused by higher claims expense. Net life sales increased 4% to $19 million, and net health sales were $8 million, up 7% from the year-ago quarter due to increased agent productivity. The average producing agent count for the fourth quarter was 2,724, up 1% from the year-ago quarter and up 1% compared to the third quarter. The producing agent count at Liberty National ended the quarter at 2,804. About 4% sales growth may not appear dramatic. We are very pleased with the ability of both Liberty and American Income agencies to build on the significant increases we saw a year ago. Fourth quarter sales for 2021 at Liberty and American Income are higher than the fourth quarter of 2019 by approximately 29% and 25%, respectively. At Family Heritage, premiums increased 8% over the year-ago quarter to $89 million, and health underwriting margin increased 16% to $25 million. The increase in underwriting margin is due to increased premium and improved claims experience. Net health sales were down 13% to $18 million due to a lower agent count. The average producing agent count for the fourth quarter was 1,194, down 18% from the year-ago quarter but up 4% from the third quarter. The producing agent count at the end of the quarter was 1,157. We'll continue to focus on sales and recruiting at Family Heritage in 2022. In our direct-to-consumer division of Globe Life, life premiums were up 6% over the year-ago quarter to $237 million, while underwriting margin declined 47% to $12 million. Frank will further discuss the decline in underwriting margin in his comments. Net life sales were $34 million, down 14% from the year-ago quarter. We expected this sales decline due to the high level of sales growth experienced in the fourth quarter of 2020. Although sales declined from the fourth quarter of 2020, we are still pleased with this quarter's sales results as it was 13% higher than the fourth quarter of 2019. At United American General Agency, health premiums increased 12% over the year-ago quarter to $130 million. The health underwriting margin increased 7% to $20 million. The increase in underwriting margin is a result of increased premium. Net health sales were $27 million, up 19% compared to the year-ago quarter. It is difficult to predict sales activity in this uncertain environment. I will now provide projections based on trends we are seeing and knowledge of our business. We expect the producing agent count for each agency at the end of 2022 to be in the following ranges: American Income, an increase of 3% to 8%; Liberty National, an increase of 3% to 18%; and Family Heritage, an increase of 12% to 30%. Net life sales for the full year 2022 are expected to be as follows: American Income an increase of 2% to 10%; Liberty National, an increase of 8% to 16%; direct-to-consumer, a decrease of 6% to an increase of 4%. Net health sales for the full year 2022 are expected to be as follows: Liberty National, an increase of 7% to 15%; Family Heritage, an increase of 3% to 11%; the United American individual Medicare supplement, a decrease of 1% and to an increase of 7%. I will now turn the call back to Gary.

Thanks, Larry. We will now turn to the investment operations. Excess investment income, which we define as net investment income less required interest on net policy liabilities and debt, was $59 million, down 4% from a year ago. On a per share basis, reflecting the impact of our share repurchase program, excess investment income was flat. For the year, excess investment income in dollars declined 2%, but on a per share basis, was up 1%. In 2022, we expect excess investment income to decline around 3% but to grow around 1% on a per share basis. As to investment yield, in the fourth quarter, we invested $271 million in investment-grade fixed maturities, primarily in the municipal, industrial, and financial sectors. We invested at an average yield of 3.49%, an average rating of A+, and an average life of 31 years. We also invested $45 million in limited partnerships that have debt-like characteristics. These investments are expected to produce additional yield and are in line with our conservative investment philosophy. For the entire fixed maturity portfolio, the fourth quarter yield was 5.17%, down 12 basis points from the fourth quarter of 2020. As of December 31, the portfolio yield was 5.17%. Invested assets are $19.2 billion, including $17.8 billion of fixed maturities at amortized cost. Other fixed maturities, $17.1 billion are in investment grade with an average rating of A-, and below investment-grade bonds are $702 million compared to $841 million a year ago. The percentage of below investment-grade bonds to fixed maturities is 3.9%. Excluding net unrealized gains in the fixed maturity portfolio, below investment-grade bonds as a percentage of equity is 12%. Overall, the total portfolio is rated A-minus, same as years ago. Bonds rated BBB are 54% of the fixed maturity portfolio. While this ratio is in line with the overall bond market, it is high relative to our peers. However, we have little or no exposure to higher-risk assets such as derivatives, equities, residential mortgages, CLOs, and other asset-backed securities. Because we invest long, a key criterion utilized in our investment process is that an issuer must have the ability to survive multiple cycles. We believe that the BBB securities that we acquire provide the best risk-adjusted, capital-adjusted returns, and that's due in large part to our unique ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets. For the full year 2022 at the midpoint of our guidance, we expect to invest approximately $900 million in fixed maturities at an average yield rate of around 3.9% and approximately $200 million in limited partnership investments with debt-like characteristics at an average rate of around 7%. We are encouraged by the prospect of higher interest rates. Higher new money rates will have a positive impact on operating income by driving up net investment income. We are not concerned about potential losses that are interest rate driven since we would not expect to realize them. We have the intent and, more importantly, the ability to hold our investments to maturity. In addition, our live products have fixed benefits that are not interest-sensitive. While we would clearly benefit from higher interest rates, Globe Life can continue to thrive in an extended low-interest rate environment. Now I will turn the call over to Frank for his comments on capital and liquidity.

Thanks, Gary. First, I want to spend a few minutes discussing our share repurchase program, available liquidity and capital position. In the fourth quarter, the company repurchased 1.6 million shares of Globe Life Inc. common stock at a total cost of $145 million at an average share price of $90.97. We ended the fourth quarter with liquid assets of approximately $119 million. For the full year, we spent approximately $455 million to purchase 4.8 million shares at an average share price of $95.11. The total amount spent on repurchases included $85 million from excess liquidity at the parent. To date, in 2022, we have repurchased 230,000 shares for $23 million at an average price of $101.17. In 2021, the parent had approximately $450 million of excess cash flows available to be returned to shareholders. Of this amount, $80 million was paid to shareholders in the form of dividends, and $370 million was returned through share repurchases. Including our total share repurchases and the shareholder dividends, the company returned $535 million to its shareholders in 2021. For 2022, while 2021 statutory financials have not been finalized, we expect around $465 million to $470 million in cash flow to be available to the parent before the payment of interest on its debt and dividends to its shareholders. After payments of interest on its debt, the parent should have around $380 million to $385 million available to return to its shareholders either in the form of dividends or through share repurchases. This amount is lower than 2021, primarily due to higher COVID life losses incurred in 2021 and the nearly 15% growth in our exclusive agency sales, both of which result in lower statutory income in 2021 and thus lower dividends to the parent in 2022 that were received in 2021. Obviously, while an increase in sales creates a drag on the parent's cash flows in the short term, they will result in higher operating cash flows in the future. As noted on previous calls, we will use our cash as efficiently as possible. We still believe that share repurchases provide the best return or yield to our shareholders over other available alternatives. Thus, we anticipate share repurchases will continue to be a primary use of the parent's excess cash flows after the payment of shareholder dividends. As previously noted, we had approximately $119 million of liquid assets at the end of the year as compared to the $50 million to $60 million of liquid assets we have historically targeted. We currently expect that approximately $25 million to $30 million of this amount will be needed for additional insurance company capital in 2022. We will continue to evaluate the potential impact of the pandemic on our capital needs. And should there be excess liquidity, we anticipate the company will return such excess to the shareholders in 2022. In our earnings guidance, we anticipate between $325 million and $350 million of share repurchases will occur during the year. With regard to our capital levels at our insurance subsidiaries, our goal is to maintain our capital 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%. For 2021, since our statutory financial statements are not yet finalized, our consolidated RBC ratio is not yet known. However, we anticipate the final 2021 RBC ratio will be near the midpoint of this range. At this time, I'd like to provide a few comments related to the impact of COVID-19 on fourth quarter results. For the year, the company incurred approximately $140 million of COVID life claims, including $58 million in the fourth quarter. The claims incurred in the fourth quarter were approximately $23 million higher than anticipated primarily due to elevated levels of COVID deaths in both the third and fourth quarters, likely due to the impact of the Delta variant. The CDC reported that approximately 115,000 U.S. deaths occurred due to COVID in the fourth quarter, a little higher than the $100,000 projected on our last call. In addition, after the end of last quarter, and based on actual death certificates received by the agency, the CDC revised their estimate of third quarter deaths upward by approximately 28,000, indicating the impact of the Delta variants in the third quarter was worse than they originally reported. This is consistent with the adverse claims development we experienced related to the third quarter, the impact of which is included in our fourth quarter results. Based on data we currently have available, we now estimate COVID losses on deaths occurring in the third quarter were at the rate of $3.9 million per 10,000 U.S. deaths, and approximately $3.7 million per 10,000 U.S. deaths occurring in the fourth quarter. This is at the higher end of the range previously provided. For the full year 2021, our losses averaged approximately $3 million per 10,000 U.S. deaths. The fourth quarter COVID life claims include approximately $27 million in claims incurred in our direct-to-consumer division or 11.5% of its fourth quarter premium income, approximately $10 million at Liberty National or 12.9% of its premium for the quarter, and approximately $16 million at American Income or 4.5% of its fourth quarter premium. To date, we have experienced low levels of COVID claims on policies sold since the start of the pandemic. The vast majority, roughly 68% of COVID claim counts come from policies issued more than 10 years ago and approximately 3% from policies issued in 2020 and 2021. For business issued since March of 2020, we paid 394 COVID life claims with a total amount paid of $5.2 million. The 394 claims comprised only 0.01% of the nearly 4 million policies issued by Globe Life during that time. As noted on past calls, in addition to COVID losses, we continue to experience higher policy obligations from lower policy lapses and non-COVID causes of death. The increase from non-COVID causes of death are primarily medical related, including deaths due to heart and circulatory issues and neurological disorders. The losses we are seeing continue to be elevated over 2019 levels due at least in part, we believe, to the pandemic and the existence of either delayed or unavailable health care. In the fourth quarter, the policy obligations related to the non-COVID causes of death and favorable lapses were in line with projections at approximately $16 million. For the full year, we incurred approximately $78 million in excess policy obligations with about $46 million of those related to higher reserves due to lower policy lapses and $32 million related to non-COVID claims. With respect to our earnings guidance for 2022, we are projecting net operating income per share will be in the range of $8 to $8.50 for the year ended December 31, 2022. The $8.25 midpoint is lower than the midpoint of our previous guidance of $8.35, primarily due to higher non-COVID policy obligations related to better expected persistency and health underwriting income being slightly lower than previously anticipated. We continue to evaluate data available from multiple sources, including the IHME and CDC, to estimate total U.S. deaths due to COVID and to estimate the impact of those deaths on our in-force book. For 2022, we estimate that we will incur COVID life claims at the rate of $3 million to $4 million per 10,000 U.S. COVID deaths. At the midpoint of our guidance, we estimate we'll incur approximately $50 million of COVID life claims, assuming approximately 145,000 COVID deaths in the U.S., most of which are expected to occur in the first half of the year. Now I'd like to take a few moments to comment on some qualitative impacts of the new long-duration accounting standard that will be effective in 2023. We anticipate being in a position to discuss the more quantitative impacts of the standard on our book of business after the second quarter of this year once we finalize and properly test our models, our assumptions, and the determination of current discount rates. To the extent we are in a position to discuss the quantitative impact sooner, we will do so. Remember, nearly all of our business is impacted by the new rules, and we are required to apply historical data and future assumptions on every one of our 16 million policies subject to the rules. Given the volume and complexity of computations, we need to ensure the computations have been validated with proper controls in place before discussing the quantitative impacts. In general, this accounting change will have no economic impact on the cash flows of our business. Meaning it will not impact our premium rates, the amount of premiums we collect, nor the amount of claims we ultimately pay. In addition, it will not influence us to change our business model of providing basic protection-oriented products to the underserved and low to middle-income market. The accounting change will also not impact our capital management philosophies as this is a GAAP accounting change and will not impact the capital required by our regulators to be held at our insurance subsidiaries or the amount of dividend cash flow to the parent, both of which are driven by statutory accounting rules. The accounting standard simply modifies the timing of when the profits emerge on our insurance policies. With respect to the impact on earnings, overall, we anticipate our reported GAAP net income and net operating income to increase under the new standard. With respect to our reported underwriting income, we expect a relatively small change to our overall policy obligation ratios and expect the amortization of our deferred acquisition cost to be significantly lower in the near and intermediate term. This significant reduction in amortization is primarily due to the requirement to stop interest accruals on DAC asset balances and to unlock lapse assumptions, which will generally extend amortization periods beyond current schedules. Both of these changes will result in less amortization being incurred as a percent of premium. Thus, we anticipate our reported underwriting income and our underwriting margin as a percent of premium to increase due to these changes. A portion of the expected increase in underwriting income will be offset by a reduction in excess investment income relating to the elimination of interest accruals on our DAC asset. With respect to the potential impact to our equity, under the standard, we will elect a modified retrospective approach as of January 1, 2021. This standard requires a much more granular view of reserve sufficiency. For certain blocks that have embedded policy reserve deficiencies, we will be required to increase the policy reserve balance as of the transition date or January 1, 2021. We do not expect this adjustment to cause a significant change to equity, excluding AOCI, upon adoption of the standard. We do, however, expect that our reported GAAP equity, including the effects of AOCI, will be significantly reduced upon adoption. This is primarily due to the requirement to use current discount rates to remeasure the policy liabilities for AOCI purposes, which are lower than our current valuation rates that are based on historical investment strategies and assumptions. Since current rates are lower than the rates assumed in valuing our policy liabilities for income statement purposes, we will have an unrealized interest rate loss recognized through AOCI. This is especially relevant for Globe given the high persistency of our products and the fact that we have many policies still on the books that were sold 30, 40, or even 50 years ago when the interest rate environment was much higher than today. While the required methodology requires the unrealized interest rate loss to be reflected in AOCI, it ignores the unrealized gains from underwriting margins on future premiums that are available to fund future policy benefits and changes in interest rates, which has the effect of overstating the policy liability that will be reflected on the balance sheet upon adoption. Given our strong persistency, this exclusion is especially impactful for Globe, due to our strong underwriting margins and low policy obligation ratio. To lower the ratio, the more future gains from future premiums are excluded from the computation of the new liability. Finally, as the average duration of our policy liabilities is over 20 years, the amount of the ALC adjustment is expected to be larger. In the AOCI market rate adjustment on our fixed maturity portfolio will be sensitive to changes in interest rates and will have the potential to be volatile going forward, especially when the current interest rate used to determine the reported policy liabilities is reset each quarter. Should interest rates decrease from period to period, we will see a decrease in our reported AOCI. If interest rates increase, we will see an increase in our reported AOCI. Again, none of these interest rate changes will impact the amount of claims we will pay in the future. In summary, we expect the new guidance will be a positive to our GAAP net income and net operating income, and will initially result in a significantly lower GAAP equity, including AOCI due to the adjustments required in computing the policy liabilities to reflect current interest rates. While the new guidance will likely lower GAAP equity, including AOCI as of the transition date for many life insurance companies, we expect the impact will be amplified for Globe and other companies like Globe, that have a substantial portion of their business subject to the new guidance, reserves on policies issued many years ago, policy liabilities with long duration and strong underwriting margins. Following the transition date, we expect GAAP equity, including AOCI, to be more volatile as market rate adjustments impacting our policy liabilities will be greater than those impacting our fixed maturity assets. Given the noneconomic impact on our business operations from these market adjustments, due to our intent and ability to hold assets to maturity and the noninterest-sensitive nature of our liability cash flows, we still believe that equity, excluding AOCI, will be a superior and more meaningful measure of Globe's financial condition going forward. Those are my comments. I will now turn the call back to Larry.

Thank you, Frank. Those are our comments. We will now open the call up for questions.

We can now take our first question from Jimmy Bhullar of JPMorgan. Please go ahead.

So first, just a question on claims and the life side. You mentioned non-COVID claims being high. Do you think some of those are related to the pandemic as well indirectly? Or are they independent of that and could stay elevated even once we go over debates?

We do think that a good portion of those are indirectly related to the pandemic, it seems to be just looking at trends that we're seeing across the U.S. and would give an indication that some of these can at least be attributed to delayed care, so we do anticipate them to subside somewhat in 2022. And we anticipate that they'll start to be less impactful over the course of 2, but we do anticipate that we'll still at least see some elevated levels throughout the year.

And has your view on margins being long-term changed at all because of what's happened with COVID either because of any potential sort of adverse selection in your sales or just long-term health effects of the pandemic?

At this time, Jimmy, it's really hard to determine what that impact will be. Right now, our views have not been changed with respect to that. Whether it has some potential negatives due to COVID and, if you will, the long COVID that's being talked about, having an adverse impact on mortality, there are also the possibility of some positive impacts to mortality in the future, whether that be through improved vaccines. The use of this particular vaccine, or other types of factors that might cause some better mortality. So at this time, it's a little bit early. We'll continue to look at the data and see what's out there and take that into consideration.

And just lastly, can you talk about like recruiting and retention, how that is given the tight labor market? And how tough of an environment it is given the market?

I'm sure the new agent recruiting was down as expected in part because of the seasonality we experienced in the fourth quarter of this year and we've related season to last year. Agent retention has actually increased over the last 2 years, particularly at American Income because of the export home schedule. I would say that we're seeing more candidates look at the agent opportunity. There's just so many available jobs in this labor market, it's been a little bit difficult to track and also retain new agents. But I know we can grow our three agencies going forward. Historically, we've been able to do that. And as an example, the economic downturn in 2010 following that American Income had strong agency growth. And in 2018 and '19, where we had record low unemployment, American Income, Liberty and Family Heritage all had strong growth, assuming our ability to grow the agencies, it really depends on growing middle management, expanding through new office openings and providing additional sales to our agents. During 2022, we are going to open new offices in the three agencies. We increased the number of middle managers in all three agencies, and we're also providing additional sales technologies to support our agents. So as COVID declines, we expect to see the recruiting and agent counts pick up during the end of the first and the second quarter of this year.

We can now take our next question from Andrew Kligerman from Credit Suisse. Please go ahead.

Hello, can you hear me?

Yes.

You mentioned $27 million of the COVID claims came from direct-to-consumer. Any concern around that? Is it something to lead into that being the biggest component of the COVID claims and not the biggest component of premium?

No, it has a little bit more of an impact on DTC, given their simplified underwriting; they tend to have a mortality that mirrors a little bit more closely to that of the general U.S. population. And then just remember that their policy obligations are a much greater percentage of their premiums. And so we expect higher mortality just in general, within our DTC line than we do in our other agency lines. One of the things that we do look at is we look at what percentage of their claims are being paid related to COVID versus the average for the entire company, and it's in line. When you look at total claims, we also take a look at just what levels of increased activity we're seeing on our COVID claims versus what would be expected when looking at COVID death across the U.S. And again, we're comfortable that our risk profile really hasn't changed with respect to DTC.

And maybe just a quick follow-up on the recruiting question. As we looked at the American Income agents down 3% year-over-year. And the Family Heritage agents down 21%. The points were great as to the ability to grow. But why not in 2021? Why the drop-off, particularly at Family Heritage?

I believe 2021 was an extraordinary year due to COVID, and in all three agencies, there was a greater focus on production rather than recruiting. Family Heritage is a health insurance company, not a life insurance company, and recruiting during 2020 and 2021 was much more challenging than for life insurance because of the high demand for life insurance. Additionally, Family Heritage has smaller agencies compared to Liberty National or American Income. As a result, managers at Family Heritage are more involved in production than in recruiting, unlike the larger agencies of American Income and Liberty National, where middle managers focus primarily on recruiting. Furthermore, regarding leads for life insurance agencies, we support virtual contact and presentations, making it easier to recruit for those virtual presentations. In contrast, health agents typically engage in in-person presentations without the advantage of leads, which adds another layer of challenge.

And then just maybe lastly, real quickly on persistency. You highlighted that it was very good. Premium was up a terrific 8% in the quarter. Do you feel good about that from a claims standpoint going forward? Some have suggested a variety of insurance companies that there could be persistency anti-selection. How do you feel about the greater persistency in terms of profitability going forward?

We are noticing improvements in persistency for both the first year and renewal year, and we haven't encountered anything that raises concerns about anti-selection. It's primarily that the pandemic has heightened awareness for the need for protection, and our policyholders purchase for pure protection. We don't have signs indicating anti-selection and we don't expect any to arise. While persistency might not maintain these elevated levels, which are higher than pre-pandemic levels, we can't predict the future. This year's persistency is slightly lower than in 2020, yet still above pre-pandemic levels. It may eventually return to pre-pandemic levels, but we do not foresee extreme cases of anti-selection or similar issues.

And we can now take our next question from John Barnidge of Piper Sandler. Please go ahead.

Can you maybe talk about the average age of COVID death in 4Q '21 versus 3Q '21 for your insurance?

What we observed in our paid claims remained consistent overall. Approximately 62% of our deaths are among individuals over 60, which aligns closely with what we saw in the second quarter. We're beginning to notice that COVID-related deaths are affecting younger age groups more than they did earlier in the pandemic. Additionally, we observed a higher incidence of deaths in the South during both the third and fourth quarters, with fourth quarter figures being similar. There was a slight increase in the South as we addressed some of the deaths recorded in the third quarter. When analyzing our incurred claims, we are seeing a modest upward trend in the average age, indicating that we may experience an increase in average age moving forward as more younger individuals get vaccinated.

And then my follow-up question, with the employment market hot, makes it more challenging for commission-based job recruitment. Can you maybe talk about the tools that are being brought to existing producing agents to drive productivity gains?

Well, I think that it's not necessarily tools, but we obviously have additional technology we've entered or we've given the agents from 2019, '20 and '21, so they can better recapture leads and be more efficient with the virtual presentations in terms of more presentations and it's a lower cost for them because it’s not the travel alone.

We can now take our next question from Eric Bass of Autonomous Research. Please go ahead.

I think you mentioned one of the factors and you're changing your guidance range was a reduction in the health underwriting margin outlook. So I was just hoping you can give some more color there on what you're seeing?

Yes, Eric, we're just looking at what we were seeing in October and what we were projecting back at that point in time versus the revised outlook here, just slightly higher. It's a little bit in several different areas, maybe a little lower premium, a little higher acquisition expenses, and a little higher claims as well. And I think it's a combination of all those. For the most part, we're looking at our health margins to gravitate back towards 2020, 2019 levels. 2020 was that we had some very favorable claims experience, I should say. And we're really just kind of anticipating those to move back a little bit more towards the more normal levels you think about our underwriting margin on the health side, still thinking it's about between 24% and 25%, but maybe a little closer to 24% as a percentage of premium than what we had anticipated back in October.

I have a question regarding the relationship between recruiting and sales, which seem to have a broad range in both areas. Should we view these two as interconnected, suggesting that if agent count growth is on the higher end, it would likely lead to higher sales, and vice versa? Or are these two factors not as closely related?

They are connected over a long period. In the short term, a decrease in recruiting new agents can occur while production increases, as veteran agents are generally more productive than new ones. With more experienced agents, there is less training time required for middle managers, which can lead to increased production because more agents will submit weekly, and the average premium written by these agents will rise as well. The long-term success is clearly linked to an increase in the number of agents. Over extended periods, there is a strong correlation between agent growth, sales growth, and premium growth for each of the agency companies.

It's a product, but those sales ranges are influenced by the impact of COVID. If COVID declines quickly, we would anticipate sales to be on the higher end of those ranges. However, if COVID persists with this new variant, we expect sales activity and agent count to be on the lower end of those ranges.

And we have no further questions at this time. I'd now like to turn the call back to Mike Majors for closing remarks.

All right. Thank you for joining us this morning. Those are our comments, and we'll talk to you again next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.