Globe Life Inc (GL) — Q4 2020 Earnings Call Transcript

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, our 2019 10-K, and 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 terms and reconciliations to GAAP measures. I'll now turn the call over to Gary Coleman.

Thank you, Mike, and good morning everyone. I would like to open by saying that in this COVID environment, the company continues to conduct business effectively and our operations are running efficiently. In the fourth quarter, net income was $204 million or $1.93 per share, compared to $187 million or $1.69 per share a year ago. Net operating income for the quarter was $184 million or $1.74 per share, a per share increase of 2% from a year ago. On a GAAP reported basis, return on equity was 9.5% and book value per share was $83.19. Excluding unrealized gains and losses on fixed maturities, return on equity was 13.5% and book value per share grew 10% to $53.12. In our life insurance operations, premium revenue increased 7% to $678 million. As noted before, we have seen improved persistency and premium collections since the onset of the crisis. Life underwriting margin was $164 million, down 8% from a year ago. The decline in margin is due primarily to approximately $27 million of COVID claims. In 2021, we expect both life premium revenue and underwriting margin to grow 6% to 7%. At the midpoint of our guidance, we anticipate approximately $52 million of COVID claims. Health insurance premium grew 5% to $290 million and health underwriting margin was up 18% to $72 million. The increase in underwriting margin was primarily due to improved persistency and lower acquisition expenses. In 2021, we expect both health premium revenue and underwriting margin to grow around 6%. Administrative expenses were $63 million for the quarter, up 3% from a year ago. As a percentage of premium, administrative expenses were 6.5% compared to 6.7% a year ago. In 2021, we expect administrative expenses to grow 7% to 8% and be around 6.7% of premium due primarily to higher pension costs, higher IT and Information Security costs, and a gradual increase in travel and facilities costs. I’ll now turn the call over to Larry for his comments on the fourth quarter marketing operations.

Thank you, Gary. I am optimistic as I look ahead; I believe we'll emerge from the pandemic stronger than before as a result of the adjustments we've made during the crisis. We now have more ways to generate sales and recruiting activity. The ability to recruit agents and sell to customers both virtually and in person in the future will enhance our ability to generate sales growth. Looking back at the fourth quarter, we were pleased with the results as we continue to see strong growth in sales and agent count. I will now discuss trends at each distribution channel. At American Income, life premiums were up 10% to $327 million and life underwriting margin was up 7% to $105 million. Net life sales were $71 million, up 20%. The increase in net life sales is primarily due to increased agent count. The average producing agent count for the fourth quarter was 9,642, up 26% from the year-ago quarter, and up 4% from the third quarter. The producing agent count at the end of the fourth quarter was 9,664. We continue to see significant recruiting opportunity due to current economic conditions and our ability to recruit both virtually and in person. At Liberty National, life premiums were up 3% to $74 million, while life underwriting margin was down 26% to $14 million, as the lower underwriting margin is primarily due to COVID claims. Net life sales increased 24% to $18 million, while net health sales were $7 million, down 1% from the year-ago quarter. The increase in net life sales is due to increased agent count, continued adoption of virtual sales methods and increased ability to conduct worksite sales activities. The average producing agent count for the fourth quarter was 2,705, up 7% for the year-ago quarter, and up 6% from the third quarter. The producing agent count at Liberty National ended the quarter at 2,770. We're encouraged by Liberty National's continued growth and ability to adapt to the current environment. At Family Heritage, health premiums increased 8% to $82 million and health underwriting margin increased 17% to $22 million. The increase in underwriting margin is primarily due to improved persistency and lower acquisition expenses. Net health sales were up 17% to $21 million. The increase in net health sales is primarily due to increased agent count. The average producing agent count for the fourth quarter was 1,452, up 18% from the year-ago quarter, and up 6% from the third quarter. The producing agent count at the end of the quarter was 1,463. Family Heritage continues to generate recruiting and sales from letting. In our direct to consumer division at Globe Life, life premiums were up 7% to $224 million, while life underwriting margin declined 42% to $23 million. Frank will further discuss the decline in underwriting margin in his comments. Net life sales were $39 million, up 32% from the year-ago quarter. We continue to see strong consumer demand and basic life insurance protection across all channels of the direct to consumer distribution. At United American General Agency health premiums increased 7% to $116 million and health underwriting margin increased 21% to $19 million. The increase in underwriting margin is primarily due to increased premium and improved persistency. Net health sales were $22 million, down 30% compared to the year-ago quarter. It is always difficult to predict United American sales, as the Medicare supplement marketplace is highly competitive. Although it is difficult to predict sales activity in this environment, I will now provide projections based on our knowledge of our business and current trends. We expect a producing agent count for each agency at the end of 2021 to be in the following ranges: American Income 3% to 14% growth; Liberty National 1% to 16% growth; Family Heritage 1% to 9% growth. Net life sales trends are expected to be as follows: American Income Life for the full-year 2021, an increase of 9% to an increase of 13%; Liberty National for the full-year 2021, an increase of 7% to an increase of 11%; Direct to consumer for the full-year 2021, a decrease of 5% to an increase of 5%. Net health sales trends are expected to be as follows: Liberty National for the full-year 2021, an increase of 7% to an increase of 11%; Family Heritage for the full-year 2021 an increase of 5% to an increase of 9%; United American Individual Medicare supplement for the full-year 2021 a decrease of 3% to an increase of 7%. I'll now turn the call back to Gary.

Thanks, Larry. Excess investment income, which we define as net investment income less required interest on net policy liabilities and debt, was $61 million, a 2% decrease over the year-ago quarter. On a per share basis reflecting the impact of our share repurchase program, excess investment income was up 2%. For the year, excess investment income in dollars declined 5% and on a per share basis was down 1%. In 2021, we expect excess investment income to be flat, but up 1% to 3% on a per share basis. In the fourth quarter, we invested $359 million in investment-grade fixed maturities, primarily in the municipal and financial sectors. We invested at an average yield of 3.54%, an average rating of A, and average life of 26 years. While we continue to invest primarily in fixed maturities, 17% of our total investment acquisitions in 2020 were in other long-term investments, primarily limited partnerships, investing in credit instruments. These investments are expected to generate incremental additional yield, while still being in line with our conservative investment philosophy. For the entire fixed maturity portfolio, the fourth quarter yield was 5.29%, down 12 basis points from the fourth quarter of 2019. As of December 31, the portfolio yield was approximately 5.28%. Invested assets were $18.4 billion, including $17.2 billion of fixed maturities and amortized costs. Of the fixed maturities, $16.4 billion are investment grade with an average rating of A- and below investment-grade bonds are $841 million compared to $840 million at September 30. The percentage of below investment-grade bonds to fixed maturities is 4.9%. Excluding net unrealized gains from the fixed maturity portfolio, the low investment-grade bonds as a percentage of equity is 15%. Overall, the total portfolio is rated A, same as a year ago. Bonds rated BBB are 55% of the fixed maturity portfolio, the same as at the end of 2019. 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, our key criteria 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 and capital-adjusted returns and due in large part to our unique ability to hold securities to maturity, regardless of fluctuations in interest rates or equity markets. Finally, lower interest rates continue to pressure investment income. For 2021, at the midpoint of our guidance, we assume an average yield rate on new fixed-maturity investments of around 3.55%. But we would like to see higher interest rates going forward; Globe Life can thrive in a lower to prolonged interest-rate environment. Extended low interest rates will not impact the GAAP or saturate balance sheets under the current accounting rules since we sell non-interest-sensitive protection products. Fortunately, the impact of lower new money rates on our investment income is somewhat limited as we expect to have an average turnover of less than 2% per year in our investment portfolio over the next five years. Now, I'll 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. The parent began the year with liquid assets of $45 million. In addition to these liquid assets, the parent company generated excess cash flows in 2020 of $388 million compared to $374 million in 2019. The parent company's excess cash flow, as we define it, results primarily from the dividends received by the parent from its subsidiaries less the interest paid on debt and the dividends paid to Globe Life shareholders. Thus, including the assets on hand at the beginning of the year, we had $433 million of excess cash flow available to the parent during the year. In the fourth quarter, the company purchased 1.4 million shares of Globe Life, Inc. common stock at a total cost of $123 million with an average share price of $88.55. For the full year, we spent $380 million of parent company cash to acquire 4.5 million shares at an average share price of $85.24. As noted on our last call, the parent ended the third quarter with $435 million in liquid assets. As just noted, the parent used $123 million of cash for share repurchases in the fourth quarter. In addition, the parent reduced its commercial paper holdings by $25 million during the quarter. The parent ended the fourth quarter with liquid assets of approximately $290 million. Looking forward, the parent will continue to generate excess cash flow in 2021. While their 2020 statutory earnings have not yet been finalized, we expect our excess cash flow in 2021 to be in the range of $330 million to $360 million. Thus, including the assets on hand at January 1, we currently expect to have around $620 million to $650 million of cash and liquid assets available to the parent in 2021. As I'll discuss in more detail in just a few moments, this amount is more than necessary to support the targeted capital levels within our insurance operations and maintain the share repurchase program. As noted on previous calls, we'll use our cash as efficiently as possible. We currently believe share repurchases provide the best return to our shareholders versus other available alternatives. Thus, we anticipate share repurchases will continue to be a primary use of the parent's excess cash flows. It should be noted that the cash received by the parent company from our insurance operations is after they have made substantial investments during the year to issue new insurance policies, to expand our information technology and other operational capabilities, as well as to acquire new long-duration assets to fund future cash needs. Now capital levels at our insurance subsidiaries. Our goal is to maintain our capital levels necessary to support our current ratings. As noted on previous calls, Globe Life has targeted a consolidated company action level RBC ratio in the range of 300% to 320% for 2020. Although we have not finalized our 2020 statutory financial statements, we anticipate that our consolidated RBC ratio for 2020 will be at the midpoint of this range, reflecting additional capital contributions of $20 million to $30 million. For 2021, we intend to maintain the same targeted RBC range. As discussed on previous calls, a primary driver of potential future capital needs from the parent is the adverse capital effect during this economic downturn from either downgrades that increase required capital or investment credit losses that reduce statutory income, and thus total capital. To estimate the potential impact on capital due to changes in our investment portfolio, we continue to model several scenarios that take into account consensus views on the economic impact of the recession, the strength and timing of the eventual recovery, and a bottoms-up application of such views on the particular holdings in our portfolio, as well as other stress tests. We now estimate that our insurance companies will require $35 million to $140 million of additional capital over the course of this credit event to maintain the minimum 300% RBC ratio of our stated target range. This amount is lower than our previous estimates. In our base case, we expect less than $20 million in after-tax credit losses, and approximately $700 million of additional downgrades over the next 12 to 18 months. In our worst-case scenario, we increase the expected downgrades to approximately $2 billion over that same target. Regardless of whether the need is $35 million or $140 million of capital, or something in between, the parent company has ample liquidity to cover the amount required. It is important to note that Globe Life statutory reserves are not negatively impacted by the low interest rates or the equity markets given our basic fixed protection products. Furthermore, the current interest rates do not have any impact on our statutory reserves given the strong underwriting margin in our products. In the aggregate, our statutory reserves are more than adequate under all cash flow testing scenarios. As noted by Gary, total life underwriting margins declined by 8% during the quarter. These lower margins were primarily due to an estimated $27 million of COVID-related policy obligations incurred in the quarter, $11 million more than we had anticipated on our last call, due to 65,000 more COVID deaths across the U.S. in the fourth quarter than projected. During the quarter, direct to consumer incurred an additional $13 million in COVID claims and Liberty National incurred an additional $6 million. Absent these additional losses, direct to consumers' underwriting margin would have been 16% of premium for the quarter. In the Liberty National distribution, absent the estimated policy obligations due to COVID, their underwriting margin would have been 27% of premium for the quarter. For the full year 2020, our total incurred COVID policy obligations across our life operations were approximately $67 million. Absent these additional losses, our total life underwriting margin would have been slightly below 28% of premium comparable to 2019. With respect to our health operations, total health claims were approximately $7 million lower than what we expected at the beginning of the year due to COVID. Finally, with respect to our earnings guidance for 2021, we're projecting net operating income per share will be in the range of $7.16 to $7.56 for the year ended December 31, 2021. The $7.36 midpoint is lower than the midpoint of our previous guidance at $7.55 primarily due to higher anticipated COVID death benefits. On our last call, our midpoint included an estimate of $32 million in COVID life claims relating to approximately 160,000 U.S. deaths. The midpoint of our guidance now estimates approximately $52 million of COVID life claims on projections of around 270,000 U.S. deaths, the vast majority of which are expected to occur in the first quarter of 2021. We continue to estimate that we will incur COVID life claims of roughly $2 million for every 10,000 U.S. deaths. Obviously, the amount of death benefits paid due to COVID-19 in 2021 will depend on many factors, including the effectiveness of the various vaccines and the speed at which the highest-risk segments of our population get vaccinated. The larger than normal range for our guidance reflects this additional uncertainty. Those are my comments on there. Now I'll turn the call back to Larry.

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

Hi, good morning. If I take your updated COVID guidance, it looks like there may have been a small amount of reduction to the EPS expectation outside of COVID. Can you provide any detail on what any additional drivers beyond just COVID mortality?

Sure. We are expecting a higher average share price in 2021 than we had originally anticipated back in October, reflecting our current trading price. This has resulted in a reduction in the overall effect of the buyback, possibly by around $0.06 to $0.07. Additionally, we are likely to see $0.03 to $0.04 better underwriting results, mainly from American Income and Liberty, which are performing slightly better than we had expected back in October.

Got it. And then I continue on the buyback, can you provide any thoughts on your expectations for buyback levels in 2021, you obviously have some excess cash at the parent company, any thoughts there?

Yes, Ryan, right now we anticipate just using whatever excess cash flow that we generate at the parent company for the global buybacks. So again, in that $340 million to $370 million range, somewhere in there. Well, as far as the excess cash that's sitting there at the parent company, for right now we'll hold on to that to make sure of what levels of additional capital we might need and as we work our way through the year, then we'll see if we're able to redeploy those in some other fashion.

Thanks. And I just had one last quick one. Life persistency has generally been favorable and was favorable in 2020; it looks like some of that reversed in the fourth quarter in direct to consumer. So curious what you're expecting for persistency in 2021?

Ryan, in the mid-point of our guidance, we expect that persistency over the year will eventually return to or just prior to 2020 levels. However, what we observed in the fourth quarter, even in the direct-to-consumer segment, was that the persistency didn't quite match the performance from the second or third quarters. Still, it was an improvement compared to historical averages. We're uncertain about the timing of a return to prior historical levels, but we anticipate that as we approach the end of 2021, it will be closer to what we experienced in 2019 and earlier.

Good morning. My first question is about the life underwriting margins as a percentage of premiums in the direct-to-consumer segment, which decreased by 860 basis points to 10.1%. In contrast, for American Income, the decline was only 90 basis points to 32.1%. I have an idea of the answer, but I would appreciate more insight into what might be causing the difference between these two channels.

Liberty National has a slightly higher exposure to some of the more affected populations within their overall business. In comparison, American Income typically serves a younger demographic and has less impact from the populations most affected right now. Consequently, Liberty National is experiencing a greater overall impact from COVID.

Again in direct to consumer as well?

Yes, in direct to consumer, the simplified underwriting process contributes to our expectations of higher mortality. This is in contrast to American Income, which has more underwriting processes conducted in the field. We have always factored in higher mortality experience in direct to consumer. Additionally, this segment tends to have an older demographic compared to American Income, although it is slightly younger than Liberty National's population. Overall, approximately 4% of our policies in force are for individuals aged 70 and above. In direct to consumer, this figure is closer to 5%. Liberty National has a slightly higher percentage than that, while American Income is around 3.5%.

I understand. That makes sense. Everything seems to be on track. As I consider the sales trends, they are nothing short of phenomenal. What percentage of sales in your exclusive producer channels do you think is being generated virtually compared to face-to-face interactions?

We don't keep the data because all of our applications record electronically. Only distinguish, I would estimate at this point in time, probably 80% of the American Income sales are still virtual. I think it would be a much larger percentage than the other two agencies. Well, the reason we don't capture that data is to go forward and what was important is we're looking at closing rates, we look at activity, that's really a better measure where sales will be, it really comes down to consumer preference. We'll show you the virtually around person, depending on what the consumer prefers as a sales channel.

I see. I see. Makes sense. And then just again, maybe a little color around statistics or metrics for just demand for protection-based products. Are there any metrics out there where you're seeing that pick up I know earlier, you said that you expect persistency will kind of revert back to where we were in 2019? Do you think demand will come down as well?

Well, I think we do expect to do life insurance demand for pandemic levels. However, we think demand should be greater than pre-COVID levels. Well, that's because I think that shows some benefit for the continued increase awareness of the importance of life insurance, of course, there's a possibility of future pandemic. Currently, the variants for the current pandemic, I think we'll see a consumer preference for the digital experience, which will help our direct to consumer. Only agencies are decreasing demand, I think it'd be offset by our ability to sell both virtually and in-person. And the growth in the agencies, both the agents and the middle management will also generate additional sales as we go-forward.

Andrew, I mentioned earlier that we have to assume that lapses will return to historical trends by the end of the year. However, I am unsure because we haven't experienced a pandemic like this before. It could very well happen since this situation has affected so many people and families in this country, leading to a continuation of the persistency and premise we've observed for some time. To be cautious, we assumed they would return to historical averages by the end of this year.

Hi, thank you. I think your guidance is for health premiums and underwriting income to grow 6% to 7% in 2021, which implies flat margins, think before you had expected the margin to come down a little bit, given some of the benefits of lower claims in 2020. So are you changing that view at all, and do you expect some of the benefits to continue into 2021?

We expect that our policy obligations will likely be similar in 2021 to what they were in 2020. However, with improved persistency, we are experiencing lower acquisition costs and reduced amortization. We've seen a decrease in premium from 19% in 2019 to 18%, and we anticipate that it could be slightly below 18% this coming year. This is contributing to maintaining our margin.

So overall, kind of in the 24% to 25% range again, is that what you're expecting?

Yes, I think at the midpoint of our guidance, this is right around 24%.

Got it. Thank you. And then I was just hoping you could maybe give a little bit more color on the long-term investments that you talked about the limited partnerships. Just hoping you could provide a little bit more detail on what these are in the credit profile and how they're treated in terms of required capital in the accounting for investment income?

Sure. Most of these are long-term limited partnerships that primarily invest in credit-related opportunities. Some of these include participation mortgages, which are very short-term, typically around three years in duration, and they have favorable loan-to-value ratios. The goal is to generate investment income periodically, with the potential for long-term gains and target rates. Generally, the quarterly distributions from these range from 5% to 6%, with long-term return expectations of about 8% to 10%. This distinction separates the quarterly income from these partnerships from the long-term returns that come from capital gains, which are realized over time. Most of these investments fall into this category. Additionally, we have some opportunistic credit partnerships that we have held onto for a while, and we continue to explore credit-related, structured partnerships that provide different types of exposure on the credit front compared to standard corporate fixed maturities.

Got it, thanks. That's helpful. So should we expect a little bit more volatility quarter-to-quarter in terms of the investment income from those? And is there a higher assumed capital charge as well?

Yes, we consider the higher capital charge when evaluating the benefits of such investments compared to fixed maturities, especially given their current higher yields. The capital charge is justified. From a risk perspective, these investments are definitely less risky than general alternatives or those that resemble equity-based hedge fund partnerships. The structure allows us to receive quarterly distributions from them, providing a steady and predictable income stream from these partnerships. However, there is some volatility in their value on a quarterly basis.

Thank you very much. With the increased level of COVID deaths, kind of embedded in revised guidance, can you talk about the corresponding claims tailwind offset we should be thinking about from lower utilization and health?

Yes, regarding health for 2020, we are currently observing a return to a normal level of utilization, particularly in the Medicare supplement business, where we experienced some advantages from decreased utilization last year. Towards the end of the year, trends indicate a move back to typical utilization levels, and we expect a similar pattern for 2021. On the health side, we do not foresee any significant benefits or costs related to this. Does that address your question?

Yes, it did, thank you. Maybe related to that. Can you talk about maybe telemedicine; do you feel that could long-term offer some claim savings for the health business?

I'm not sure I understood the question.

If telemedicine becomes a more permanent part of our services, could the claims utilization rates for people using Medicare supplemental products possibly decline over time?

Yes, it is possible. I don't believe we have included that in our guidance. However, it seems likely that it could lead to some cost savings in the long term.

Hi, good morning. I have a question regarding your sales, which have shown impressive growth across all channels. Do you believe there might be some adverse selection happening? What measures are you taking to mitigate that? Additionally, do you have any statistics on claims related to policies issued since the onset of the pandemic?

I'll address the last part of your question. We are actively monitoring sales, particularly in the direct-to-consumer segment, and we're observing changes in the average age of new applications and the amounts being requested, which are coming from higher risk areas. However, we haven't seen any significant changes in these demographics over the year. We've also taken steps through our marketing and underwriting processes to protect ourselves, especially concerning the older age segments of the population. Regarding claims, we paid out 28 claims in 2020 on policies issued after 31, totaling approximately $178,000. Considering we issued nearly 2 million policies throughout the year, that number is relatively small. We processed about 3,800 claims in total that year, although some might still be pending. Approximately 85% of our claims have been from individuals aged 60 and older, which aligns with the high-risk segment we expect to see, while nearly 70% of our claims come from policies written in 2010 or earlier, and 97% are from before 2019. Overall, we are observing a reasonable distribution across these policies.

Jimmy, on the sales side, the company is monitoring the increased sales levels; to be sure selection is not occurring. We haven't experienced a significant shift in product mix, apt age or location of the new sales. If you look at direct to consumer it's interesting that the sales increases across all channels. However, the juvenile sales have actually increased at a higher rate than adult life insurance. It gives us some further confidence there because the highest estimate is with the older ages.

Thank you. And then do you have any better insight into sort of the impact of changes in accounting for long-duration contracts going into effect in a couple of years?

Yes, I really don't have anything new from what we talked about in the last call. We do continue to work through that. It'll be something I think a little bit, maybe the latter part of this year that we'll have a little bit more information to really share on that.

Okay. And just lastly on, if you think about your agent recruiting and retention, it's obviously benefited, I think from a softer labor market in the services area. If assuming COVID vaccines are successful, and we sort of get to normal later this year, and everything opens up, do you think you could suffer in terms of retention, as some of these guys have left other industries and come to your, become sales agents or leave or what are your views on your retention, if we sort of get to normalcy agent retention?

The Federal Reserve is focusing on recruitment and retention. We've been successful in recruiting not just the unemployed but also those who are underemployed. You're right that unemployment impacts retention and recruiting, especially with more job opportunities available. We believe our ability to recruit both virtually and in person will enhance our growth potential for the agencies. Additionally, we anticipate that retention rates will remain at historical levels moving forward.

Good morning, a question on direct to consumer, you said I think I got this right, excluding COVID losses, the margin was 16% in the quarter. That's a bit lower than it's been trending on a normalized basis, I guess, full-year last year was 18%, 4Q last year was 19%. Are you expecting lower margins to persist in that business into 2021?

Yes, Tom. In the fourth quarter, we observed a slight increase in some non-COVID claims, particularly in areas highlighted in the news, such as homicides and deaths from drug overdoses, including drug or alcohol-related incidents. Some have linked these to indirect COVID-related deaths and trends, and in fact, those claims have risen over 24% compared to the fourth quarter of 2019. This accounted for about 2% of our premium in the fourth quarter. We expect these elevated levels to continue into 2021. Overall, we anticipate margins for the entire year of 2021 to be in the range of 12% to 16%, with approximately three percentage points attributable to COVID. Additionally, we expect another 1% or 2% due to higher other causes of death that are likely a byproduct of the COVID environment, which we believe will decrease over time and won’t be a long-term issue. For now, we are factoring some of this into our 2021 projections.

That’s not excluding the impact of COVID next year, the direct COVID claims is still going to be somewhere, it'd be in the 16% to 17% range.

Got you. So a little bit later, are you still comfortable with that level of margin from an overall return standpoint, considering the expectation for repricing?

Well, we've always looked at the possibility of repricing. But I think what we’ve been looking at we’ve only given guidance for 2021. But I think our feeling is that until we get past the amount of COVID claims we'll get past 2021. We think we'll get closer back to that 80% range that we were prior to 2020.

Yes, that's predominantly the credit losses that we actually had in 2020, which impacted statutory income in 2020 and therefore the dividends that are available to the holding company in 2021. And there's probably another $10 million or so, we're kind of seeing and just looking at some of the other cash flows that the holding company has that looks like they maybe a little bit lower in 2021 versus 2020.

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