Problems at Globe Life (GL)
Globe Life (NYSE: GL — $7.71 billion) sells life insurance, burial insurance, and supplemental health insurance to millions of low-income and middle-class families. The company boasts it is “the largest volume issuer of life insurance policies in the U.S.” and sells insurance to consumers directly through its website and through over 10,000 independent agents at its various subsidiaries. The largest of those subsidiaries, American Income Life, has recently faced “extensive allegations of insurance fraud” and a host of ethical charges leaving many investors wondering: how bad is it?
Today’s independent investigation by The Bear Cave, based on hundreds of consumer complaints obtained through public records requests, expands the scope and severity of previous reporting well beyond American Income Life. The Bear Cave has uncovered numerous allegations of fraudulent policies and practices by Globe Life including 1) consumers issued unwanted insurance policies after only seeking insurance quotes, 2) claims from Globe Life of being unable to locate policies that it collects premiums on, and 3) improperly delayed or denied insurance payouts, which are sometimes only resolved after regulatory inquires. The dysfunction appears so bad that one former Globe Life employee even complained to regulators after Globe Life was unable to locate his own personal insurance policy. In addition, veterans have complained the company falsely implies ties to the Department of Veteran Affairs when it actually has none, the company appears to have created numerous deceptive lead generation websites, and Globe Life customer service agents have suggested the company is intentionally set up to provide deficient service. Based on the evidence, The Bear Cave believes Globe Life is morally bankrupt and financially uninvestable.
Public misconduct allegations against Globe Life started spreading recently. On April 3, The Friendly Bear pitched Globe Life as a short at the Ira Sohn Conference citing questionable sales practices and growing regulatory scrutiny. On April 11, Fuzzy Panda Research “uncovered extensive allegations of insurance fraud” at Globe Life’s American Income Life subsidiary. Fuzzy Panda alleged a former Vice President at American Income Life, which accounts for roughly half of Globe Life’s underwriting profits, “sent over 200 emails detailing fraud to executives.” And on April 30, Viceroy Research alleged that American Income Life “has a widespread culture of fraudulent, dishonest, and unethical sales tactics.”
Globe Life replied that Fuzzy Panda published “unsubstantiated claims,” announced that its audit committee “has retained the international law firm, Wilmer Hale, to conduct an independent review,” and on May 21 disclosed it “received a preliminary, informal inquiry from the SEC’s Fort Worth Regional Office requesting information related to recent short seller reports.”
(The Bear Cave has no ties to Fuzzy Panda, The Friendly Bear, or Viceroy and conducted our investigation independently. The Bear Cave never takes positions against the companies we write about and instead only makes money from reader subscriptions.)
The past allegations against Globe Life largely focused on its American Income Life subsidiary and relied on allegations from former employees and court filings. The Bear Cave instead focused on issues outside of American Income Life and assembled our evidence largely from documents obtained through public records requests.
For example, The Bear Cave filed a public records request with the Wisconsin Department of Agriculture, Trade and Consumer Protection for complaints against Globe Life. One of the agency’s two complaints was under the category “identity theft.”
The complaint reads, in full,
“I originally submitted an online rate quote with Globe Life a few months ago. I did not proceed further than that. One day I checked my email to see a bill for a policy that I did not give permission for [nor] sign for. I tried calling the company but, all I would reach was automated answering service. They created this policy not only without my permission but, fraudulently as I did not sign the policy in question. I am furious and would like this company to stop harassing me with bills and to be held accountable for their fraudulent activity.”
The Bear Cave also filed a public records request with the Texas Department of Insurance and paid $25.20 for an Excel sheet containing approximately 90 consumer complaints against Globe Life since January 2022.