Globe Life to report third quarter results amid heated controversy – Insurance News

Globe Life executives are scheduled to meet with Wall Street analysts on Thursday in a much more interesting call than two weeks ago.

The insurer is expected to share numbers for a successful third quarter. But ongoing court cases and a troubling data breach are sure to be discussed.

It has been a difficult 2024 for Globe Life. At least three short-selling firms and other research firms have issued reports accusing brokers at subsidiary American Income Life of widespread sexual harassment and insurance fraud, including writing policies for dead and fictitious people , and an alleged kickback scheme that made millions for top executives.

Last week, the insurer revealed it is being extorted by a hacker who stole sensitive customer data.

In a regulatory filing Thursday with the Securities and Exchange Commission, Globe Life said it “recently received communications” from an unknown entity seeking to extort money from the company in exchange for not disclosing data stolen from its systems .

The extortion threat is apparently related to a June data breach self-reported by the insurer. In a subsequent filing with the SEC, Globe Life said it “initiated a review of potential vulnerabilities related to access permissions and user identity management for a company web portal that likely lead to unauthorized access to certain consumer and borrower information.”

Despite all the negative publicity, Globe Life continues to deliver.

Globe Life reported a sharp increase in life and health insurance premiums during the second quarter. The insurer also said an internal audit of countless allegations of fraud and misconduct by agents cleared the company of any wrongdoing.

Victory in court

The news is not all doom and gloom for Globe Life. The insurer recently won a major court victory when a federal judge threw out a lawsuit by a former American Income Life executive alleging wrongful termination.

Scott Dehning claims Globe Life and its subsidiary American Income fired him in May 2023 after he reported “a clear practice of unethical and potentially illegal business practices” to Michigan regulators.

“Dehning has failed to demonstrate a genuine issue of material fact with respect to her (plaintiff’s) claim,” Judge Hala Y. Jarbou wrote in an Oct. 11 decision. “(E) is unable to establish the causal connection between his protected activity and its termination.”

Jarbou also dismissed AIL’s counterclaim.

Dehning was vice president of field operations from September 2015 until he was fired. In that role, he oversaw about 17 state agents-general, according to the lawsuit.

In the original eight-page complaint filed in August 2023, Dehning said he viewed certain sales practices with growing concern. He eventually investigated and confirmed the “unethical and potentially illegal sales practices,” sharing his findings with Globe Life’s executive team, according to the suit.

Globe Life and AIL suggest Dehning was fired after a sexual harassment claim was filed by his girlfriend at the time, according to court documents. The woman had contacted AIL about a possible job and Dehning endorsed her for a job.

Stocks rebound strongly

Globe Life shares initially fell sharply after the first short-selling reports in April, but have risen about 65% since then.

In its report Fuzzy Panda stated that it “reviewed hundreds of pages of court documents and interviewed dozens of former executives and agents. We discovered a whistleblower in the executive ranks who showed us where the fraud was hidden. Even we went undercover to go through the recruitment process more than 10 times.”

Fuzzy Panda alleged that third-party policy sellers known to have committed insurance fraud contributed more than 60% of new business to Globe Life’s American Income Life unit. AIL accounted for almost half of total underwriting margins last year.

The report claimed that Globe Life and AIL executives were involved in a bribery and kickback scheme that, according to a lawsuit, netted them more than $65 million. Fuzzy Panda said it has spoken to a former executive who sent more than 200 emails detailing the fraud to senior executives. The research firm claims to “have documents to prove it”.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John can be contacted at (email protected). Follow him on Twitter @INNJohnH.