Globe Life Cuts Guidance as Evry Loses $16M and CMS Delays Claims

Globe Life's United American division lost $6.4 million on health underwriting in the third quarter, against a $16.1 million gain a year earlier, according to the earnings release the company filed as an 8-K exhibit on October 21, 2026. The division's health premium grew 29% to $219.3 million in the same quarter.

The release attributes the loss to two items. One is an underwriting loss of approximately $16 million at Evry, the group health unit Globe Life bought in 2024. The other is approximately $7 million of excess prior-period Medicare Supplement claims that reached the company in the quarter because of a claims processing delay at the Centers for Medicare and Medicaid Services. Globe Life cut its 2026 net operating income guidance to $15.35 to $15.65 per share, from the $15.55 to $15.95 it had set in July.

Total health underwriting margin still rose 7% to $115.6 million on premium up 16% to $446.9 million, helped by a $24.1 million assumption-update gain.

Key Takeaways

Evry's loss exceeded its premium: about $16 million of underwriting loss on roughly $11 million of quarterly premium, per the CFO.
The two items took about 10.5 points off United American's margin; excluding them it earned 7% of premium, against 9% a year earlier.
The Medicare Supplement claims were delayed prior-period claims: CMS reissued 1.3 million Medicare IDs in April, delaying the primary adjudication a Medigap claim waits on.
Health margin excluding assumption updates fell to 20.5% of premium from 27.2%, and the company guided the fourth quarter to 20% to 22%.
The guidance cut of $0.25 at the midpoint matches the after-tax size of the two items; 2027 guidance of $16.10 to $17.10 stands.

The United American swing

United American is Globe Life's independent-agency division, the home of its Medicare Supplement book and of Evry. Its health premium rose $49.6 million year on year, the largest increase of any Globe Life division. Health net sales rose 95% to $47.7 million on Medicare Supplement demand, co-CEO Matt Darden said on the call.

Margin went the other way, from 9% of premium a year ago and 5% in the second quarter of 2026, per the second-quarter release, to a loss of 3%.

United American health	Q3 2025	Q2 2026	Q3 2026
Premium	$169.7M	$211.4M	$219.3M
Underwriting margin	$16.1M	$10.9M	($6.4M)
Margin, % of premium	9%	5%	(3)%
Named items	none disclosed	none disclosed	~$16M Evry, ~$7M Med Supp

Source: Globe Life Q2 and Q3 2026 earnings releases. The Q3 items are the company's approximations.

Together the items come to about $23 million, or about 10.5 points of the division's $219.3 million of premium. "Excluding these 2 items, United American's health underwriting margin would have been a positive $16 million," Darden said on the October 22 call, or approximately 7% of premium.

Why a CMS delay reads as prior-period claims

Under the Coordination of Benefits Agreement program, the Benefits Coordination and Recovery Center transmits Medicare-paid claims to supplemental insurers, and Medigap plans use that data, in CMS's words, "for the purpose of calculating their secondary payment." A claim crosses over only after it leaves the Medicare payment floor, 14 days for electronic claims under the Medicare Claims Processing Manual. If Medicare denies the claim, nothing crosses over and the Medigap insurer never sees it.

CFO Tom Kalmbach described two Medicare issues announced in the first quarter. One corrected reimbursement rates paid to physicians, which raised the allowed amounts Medicare Supplement coinsurance is calculated on. He called that "largely a second quarter event," with higher billing rates continuing into the third and fourth. The other was the "reissuing of Medicare IDs," which led to "previously denied legitimate claims" that providers could resubmit only after obtaining the new number from the patient.

CMS processed 1.3 million Medicare Beneficiary Identifier reassignments effective April 14, 2026, deactivating the old numbers for claims from that date, according to Ritter Insurance Marketing's account of the CMS notice to plans. A Part B claim filed on an old number was rejected, re-filed weeks or months later on the new one, paid by Medicare, and only then crossed over to United American.

Hence the release's wording, "excess prior period Medicare Supplement claims." Services were rendered in earlier periods of 2026, and the completion factors behind the June 30 claim liability assumed those dates were largely run off. A batch of them arriving in the third quarter emerges as adverse development on prior service dates. Kalmbach said the resubmissions have "pretty much gone through the system."

Reissued IDs moved timing only. The reimbursement correction raised the Part B allowed amount, so the coinsurance a Medicare Supplement plan pays is permanently higher per service. Kalmbach said the higher claim trend will go into the 2027 Medicare Supplement rate filings, with approved increases taking effect from the second quarter of 2027. Until then the division carries the higher cost on the current rate base, one reason the company revised its fourth-quarter United American margin estimate downward.

Evry, a $16 million loss on $11 million of premium

Globe Life announced the Evry acquisition on October 13, 2023, describing a Dallas company founded in 2017 that sells group health plans to mid-size employers with "no copays or deductibles for in-network care," according to the release. The deal closed in 2024 and added $8.7 million of goodwill, according to the 2024 Form 10-K. The unit has not yet turned a profit, Insurance Business reported on October 22.

Asked on the call how big Evry is, Kalmbach put its third-quarter premium at about $11 million, with about 30 groups on the books. Darden said the loss came from a handful of high-severity claimants, conditions such as cancer and heart attacks, with individual claimants above $100,000. Reinsurance caps the largest claims, he said, but severity below the cap was enough to produce the loss on so few groups.

In the release the items reflect "high-severity claims at Evry, a developing group health business still growing and scaling to a size that will enable stable results." Darden said the company had reviewed Evry's underwriting standards and pricing methodology, brought in outside expertise to validate assumptions, and declined to quote more than 70% of the cases it reviewed.

For 2027 management expects about 50 groups and roughly $100 million of annualized premium, and said the 2027 guidance range allows for some loss at Evry, smaller than this year's. At $100 million, Evry would be under 8% of the $1.3 billion of health premium Globe Life wrote in the first nine months of 2026.

The remeasurement gain beside the loss

The segment that absorbed the United American loss also booked the year's assumption review. Health policyholder benefit remeasurement gains were $29.1 million before tax, against $8.8 million a year ago, of which $24.1 million came from assumption updates. American Income's health margin printed at 120% of premium because of those updates; excluding them it was 65.4%, against 59.7% a year earlier. How this annual third-quarter review moves reported results is covered in the site's LDTI year-three volatility piece.

Kalmbach said the normalized health underwriting margin, excluding assumption updates, was 20.5% of premium against 27.2% a year earlier. Adding back the two United American items brings it to about 25.6%, still below last year. For the fourth quarter he guided the health margin to 20% to 22%, below the 26% reported for the third.

The 2026 guidance midpoint fell $0.25, from $15.75 to $15.50. On the quarter's 78.2 million diluted shares that is about $19.6 million after tax, roughly the two items at a 21% tax rate, with the remainder in the revised fourth-quarter United American estimate. The 2027 range of $16.10 to $17.10, a 7.1% increase at the midpoint, was left in place.

Globe Life's quarter sits apart from the managed-care carriers that reported the same week. Elevance raised guidance while its Health Benefits margin fell to 1.0%, and UnitedHealth's operating cost ratio fell to 12.8% from 13.5%. Globe Life's problem was a $23 million pair of items in a division that writes 5% of its premium through a 30-group startup. Its 2027 Medicare Supplement rate filings will show how much of the $7 million it treats as trend.