Globe Life (GL) 2026年第三季度业绩电话会议：健康险理赔下调每股收益指引lg...

Globe Life Inc.（NYSE：GL）公布2026年第三季度运营利润实现适度增长，这主要得益于保费增加以及人身险理赔情况良好。然而，Medicare Supplement（联邦医疗补充保险）的处理问题以及Evry的重定理赔给健康险利润率带来压力，导致管理层下调了全年收益预期。

核心要点

• 第三季度净运营收益为3.79亿美元，即摊薄后每股4.84美元，较上年同期的4.81美元增长1%。净利润为3.61亿美元，即每股4.62美元，按每股收益计算同比下降2%。
• 总保费收入同比增长7%。寿险保费增长2%至8.65亿美元，而健康险保费增长16%至4.47亿美元。
• United American General Agency录得600万美元的健康险承保亏损，反映出近700万美元的Medicare Supplement延迟理赔以及Evry约1600万美元的承保亏损。
• Globe Life将2026年净运营每股收益指引下调至15.35-15.65美元，反映了第三季度业绩以及对United American第四季度利润率预期的修正。
• 管理层预计2027年净运营每股收益为16.10-17.10美元，按中点计算代表7%的增长。预计股票回购将为该增长贡献约5至6个百分点。
• 公司预计2027年母公司超额现金流为8.5亿至9.5亿美元，其中包括来自其美国和百慕大子公司的预期股息，这部分取决于监管部门的批准。

核心财务数据

年度LDTI假设复核减少了约1.2亿美元的保单负债，其中包括9600万美元的寿险负债和2400万美元的健康险负债。上年同期的重新计量收益为1.31亿美元。

标准化寿险承保利润率升至保费的41.8%（原为41.5%）。标准化健康险承保利润率降至20.5%（原为27.2%），这主要是由于United American的保单负债增加。

业务与运营表现

American Income Life

寿险保费增长4%至4.70亿美元，而承保利润增长3%至2.68亿美元。尽管出单代理人平均数量减少7%至11,331人，但得益于生产率提升，净寿险销售额持平于9700万美元。

管理层表示，第二季度引入的薪酬改革有助于稳定代理人数量并提升生产率。公司计划在2026年晚些时候推行聚焦于销售、招聘和留存的进一步结构性改革。公司预计2027年American Income的销售额将实现中高单位数的增长。

Liberty National

寿险保费增长4%至1.02亿美元，但由于LDTI假设更新收益从3500万美元降至1400万美元，寿险承保利润下降27%至5100万美元。剔除该变化，利润本应增长5%。

在出单代理人数量增长9%的支撑下，净寿险销售额增长7%至2700万美元。净健康险销售额下降13%至700万美元。

Family Heritage

健康险保费增长8%至1.29亿美元，承保利润增长12%至5700万美元。净健康险销售额增长5%至3500万美元，主要归因于生产率提高。

直销业务

寿险保费下降1%至2.43亿美元，而净寿险销售额下降12%至2400万美元。管理层将这一疲软归因于数字广告、付费搜索量以及与AI驱动搜索相关的消费者行为发生变化。

公司表示，在该季度后半段，在包括AI助力广告在内的举措支撑下，咨询率有所改善。Globe Life仍预计该部门将在2026年为其代理机构带来约100万个潜在客户线索。

United American与Evry

United American健康险保费增长29%至2.19亿美元，净健康险销售额增长95%至4800万美元。强劲的Medicare Supplement销售反映了人口结构需求、从Medicare Advantage向Medicare Supplement的转移以及第二季度的费率上调。

尽管如此，该部门仍录得600万美元的承保亏损，而上年同期为利润1600万美元。管理层表示，若剔除延迟的CMS理赔和Evry的重大理赔，承保利润本应约为1600万美元，相当于保费的7%。

Evry在第三季度产生了约1100万美元的保费，但录得近1600万美元的承保亏损。管理层预计2027年Evry的年化保费约为1亿美元，团体客户约50个，而第四季度初新增后约为30个。

投资与资本回报

Globe Life在该季度投资了8.33亿美元的固定到期日证券，平均收益率为6.4%，平均评级为A级，平均期限为35年。公司还向商业抵押贷款和其他长期投资投放了9400万美元。

投资资产总额为223亿美元，其中按摊余成本计算的固定到期日证券为196亿美元。固定到期日证券组合存在27亿美元的净未实现亏损，管理层将其主要归因于利率影响。投资级固定到期日证券总计190亿美元，平均评级为A级。

公司在该季度以175.61美元的平均价格回购了约110万股股票，总耗资1.85亿美元。算上2500万美元的股息，第三季度资本回报总计约为2.1亿美元。

管理层业绩指引

管理层预计2027年健康险承保利润金额将增长7%-9%，尽管受业务结构影响利润率百分比有所下降。公司预计United American 2027年的利润率将维持在个位数中高段水平，因为费率上调需要时间才能生效。

预计2027年净投资收益将增长2.5%-3.5%，而所需利息预计增长3.5%-4%。因此，管理层预计超额投资收益将大致持平或略有下降。

风险与关注领域

• Evry理赔波动性：包括超过10万美元的癌症和心脏相关病例在内的重大理赔导致第三季度出现重大亏损。管理层预计随着业务规模扩大，波动性将会降低，但也承认亏损可能在2027年持续。
• Medicare Supplement理赔：CMS流程变动导致延迟的理赔在第三季度得到确认。管理层认为与身份验证相关的积压工作已基本处理完毕，但更高的理赔趋势影响了第四季度的预估，并将反映在2027年的费率申报中。
• 定价收益延迟：Medicare Supplement费率调整预计将于2027年第二季度开始生效，限制了对全年的收益提振。
• 直销业务转型：AI驱动的搜索和变化的付费搜索量正在影响数字线索生成和销售额。
• 代理人增长：American Income的代理人数量仍比上年同期低7%，尽管生产率提升弥补了这一不足，减轻了对第三季度销售额的影响。
• 监管批准：2027年预计现金流的一部分取决于来自百慕大子公司的股息及相关的监管批准。

分析师问答精选

管理层表示，EPS指引中包含的任何2027年假设更新收益都取决于理赔经验的发展情况。公司预计季度重新计量收益将持续，但表明2027年潜在的调整幅度可能小于2026年的收益。

在Evry方面，高管强调了年度重新定价、选择性不续约以及纪律严明的承保。公司拒绝为其审核的超过70%的案例提供报价。管理层预计，该业务将在2027年底或2028年开始建立更强的理赔可信度。

关于2027年EPS增长，管理层估计股票回购将贡献约5至6个百分点，而净运营收益增长将贡献约1至2个百分点。

第三季度完成的百慕大再保险交易覆盖了约2.75亿美元的准备金。管理层预计与2026年和2027年相关的百慕大股息申请总额约为1.5亿美元（需获批准）。公司的初始商业计划设想对约25%的法定准备金进行再保险，主要机会集中在寿险业务板块。

业绩电话会议完整转录

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完整财报电话会议逐字稿

管理层陈述

Operator

Hello and welcome to Globe Life Inc.'s Third Quarter Earnings Release Call. My name is Regina and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]

I will now hand you over to your host, Stephen Mota, Vice President of Investor Relations, to begin today's conference. Please go ahead.

Stephen Mota

Thank you. Good morning, everyone. Joining the call today are Frank Svoboda and Matt Darden, our Co-Chief Executive Officers; Tom Kalmbach, our Chief Financial Officer; Mike Majors, our Chief Strategy 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, 2025 10-K, 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 will now turn the call over to Frank.

Frank Svoboda

Thank you, Stephen and good morning, everyone. In the third quarter, net income was $361 million or $4.62 per share, a decrease of 2% over $4.73 per share a year ago. Net operating income for the quarter was $379 million or $4.84 per share, an increase of 1% over $4.81 per share a year ago. As a reminder, both net income and net operating income are impacted in the third quarter of each year by the annual updating of our assumptions utilized in establishing our policy obligations. As was the case in 2025, we recorded a remeasurement gain related to assumption updates this quarter, reflecting our positive outlook for future policy obligations as our actual claims experience continues to be favorable as compared to those long-term assumptions.

In addition, underwriting results this quarter at United American General Agency division were adversely impacted by a process change at CMS, the government agency that administers Medicare supplement claims and high severity claims at Evry, the developing group health business that is included in United American's results. Matt and Tom will talk more about these items in their comments. On a GAAP reported basis, return on equity through September 30 is 19.7% and book value per share is $85.35, up 23% from a year ago. Excluding accumulated other comprehensive income, or AOCI, return on equity is 15.9% and book value per share as of September 30 is $103.62, up 11% from a year ago.

Now on our insurance operations. Total premium revenue in the third quarter grew 7% over the year ago quarter. For the full year, we expect total premium revenue growth to be around 6.5%. Life premium revenue for the third quarter increased 2% from the year ago quarter to $865 million. For the full year, we expect life premium revenue to grow between 2.5% and 2.75%, driven by strong premium growth in our American Income and Liberty National divisions. Life underwriting margin was $458 million, down 5% from a year ago, primarily due to fluctuations in the assumption updates related to LDTI. Excluding the impact of the assumption updates, life underwriting margin would have increased by approximately 3%. We anticipate life underwriting margin as a percent of premium to be between 44% and 45% for the full year 2026.

In health insurance, premium revenue grew 16% to $447 million and health underwriting margin was up 7% to $116 million. For the full year, we expect health premium revenue to grow around 15% and underwriting margin to grow in the range of 4% to 4.5%. The strong premium growth is due to premium rate increases on our Medicare Supplement business as well as strong sales in both our United American and Family Heritage divisions. We anticipate health underwriting margin as a percent of premium to be in the range of 22% to 24% for the full year. Administrative expenses were $95 million for the quarter, an increase of 6% over the third quarter of 2025. As a percent of premium, administrative expenses were 7.3%. For the full year, we expect administrative expenses to stay at approximately 7.3% of premium, consistent with 2025.

As we mentioned on the last call, we believe that expanding AI use across the company will allow us over time to grow our expenses at a rate lower than our revenue growth given the high transaction volumes inherent in our business. As such, we expect this ratio to be the same or slightly lower in 2027 and intend to reduce it over time. Finally, we are very pleased that we have received reciprocal jurisdiction approval from our regulators, allowing us to continue with our business plan to transform how we support our growth and to provide added financial flexibility and strength at the parent by providing an additional source of dividend income. Tom will provide more of an update in his comments.

I'll now turn the call over to Matt for his comments on the third quarter marketing operations.

James Darden

Thank you, Frank. Now I'll discuss the trends at each of our distributions and will start with our exclusive agencies. At American Income Life, the life premiums were up 4% over the year ago quarter to $470 million and the life underwriting margin was up 3% to $268 million. Net life sales were $97 million, flat compared to the year ago quarter as increased productivity offset a 7% decline in agent count from a year ago. The average producing agent count for the third quarter was 11,331, which was essentially flat compared to the second quarter of this year. On our last call, we discussed some compensation adjustments that were implemented at the beginning of the second quarter. These adjustments have helped improve agent productivity and stabilize agent count as the agent count has been relatively flat over the past couple of quarters.

Agent compensation design is inherently a complex dynamic process as it involves human behavior and sometimes the behavioral changes do not occur as quickly as we would like. We are rolling out further structural compensation changes later this year to help drive growth in sales, recruiting and retention. For the full year 2027, we expect mid- to high single-digit sales growth and I'm confident that we will increase sales growth for this division as the fundamental conditions necessary for agency growth remain in place. If anything, the current economic environment enhances our value proposition to individuals looking for a better opportunity, the ability to be your own boss, set your own schedule and create financial security.

At Liberty National, the life premiums were up 4% over the year ago quarter to $102 million, while the life underwriting margin was down 27% to $51 million. The decline was due primarily to fluctuations in LDTI assumption updates as the annual assumption update declined from $35 million in the year ago quarter to only $14 million this quarter. Absent the large decline in assumption update, Liberty's life underwriting margin would have been up 5% and net life sales were $27 million, up 7% from a year ago quarter due primarily to agent count growth. Net health sales were $7 million, down 13% from the year ago quarter. As we mentioned last quarter, we have implemented changes to the sales presentation to place additional emphasis on health sales. We expect this to help drive significant growth in health sales going forward. The average producing agent count for the third quarter was 4,187, up 9% from a year ago. And I continue to be pleased with the agent count growth and I'm confident that this will drive strong sales growth going forward.

At Family Heritage, health premiums increased 8% over the year ago quarter to $129 million and the health underwriting margin increased 12% to $57 million. Net health sales were up 5% to $35 million and is primarily driven by increased productivity. The average producing agent count for the third quarter was 1,565, up 1% from a year ago. And agency middle management counts rose for the third quarter in a row and we are continuing to see improvement in agent retention. These results reinforce our optimism regarding the long-term growth potential at Family Heritage. Now in our Direct to Consumer Division, the life premiums were down 1% over the year ago quarter to $243 million and the life underwriting margin declined 1% to $113 million. Net life sales were $24 million, down 12% from the year ago quarter. And as we discussed during the last call, our direct-to-consumer channel is in a transition period due to a shift in digital advertising, including traditional paid search volume.

AI-powered search and consumer behavior are impacting digital marketing for all goods and services, including life insurance. This shift has impacted our recent sales results generated by our digital channels. However, during the second half of the third quarter, we are seeing some encouraging improvement in our inquiry rates, supported by several initiatives, including AI-enabled advertising. We continue our efforts to adapt to this change and position digital content to be authoritative, visible and easily interpreted by AI assistants. I am confident that DTC will successfully make this transition as we continue to meet the consumer where they want to be met. In addition, as we have discussed before, the value of this division extends well beyond DTC sales and this is due to the support it provides to our agencies. We still anticipate that we will meet agency demands by generating approximately 1 million leads this year.

Now on to United American General Agency, where here, the health premiums increased 29% over the year ago quarter to $219 million. And overall, I'm pleased with the routine operations at United American. Now while the health underwriting margin was negative $6 million compared to a margin of $16 million from the year ago quarter, this loss was driven by the items Frank mentioned earlier. The processing delay at CMS resulted in nearly $7 million of excess Medicare supplement claims paid during the current quarter but were related to prior periods. In addition, we experienced an unusually high number of high severity claims at Evry. For the quarter, Evry realized an underwriting loss of nearly $16 million. As a reminder, Evry is included in the United American division as they market group health insurance through brokers. Evry has begun to generate strong sales activity but as a start-up, they do not yet have the scale to meet our target margins.

Excluding these 2 items, United American's health underwriting margin would have been a positive $16 million or approximately 7% of premium. We anticipate as they continue to grow, they will ultimately contribute to UA's health margins as they achieve scale and generate more stable results. That being said, we are taking steps to improve margins, including pricing adjustments. Net health sales were $48 million, a 95% increase over the year ago quarter. Sales continue to be very strong in the Medicare Supplement business due primarily to tailwinds from the high volume of people turning 65, the movement of Medicare beneficiaries from Medicare Advantage to Medicare Supplement and the rate increases implemented during the second quarter. Once again, I would note that we do not market Medicare Advantage plans.

Now I'd like to discuss projections and this is based on our recent trends and the experience with our business. We expect the average producing agent count for the full year 2026 to be as follows: at American Income, a decrease of around 5%; Liberty National, an increase of around 9% and Family Heritage, an increase of around 5% Net life sales for the full year 2026 are expected to be as follows: at American Income, approximately flat; at Liberty National, an increase of around 10% and Direct to Consumer, a decrease of around 9%. Net health sales for the full year 2026 are expected to be as follows: for Liberty National, a decrease of around 7%; Family Heritage, an increase of approximately 10%; and United American, an increase of around 45%.

Now moving on to projections for 2027. At the midpoint of our guidance, we expect sales growth for the full year to be as follows. For net life sales, as I mentioned earlier, at American Income, we expect mid- to high single-digit growth. At Liberty National, low double-digit growth and at Direct to Consumer, low single-digit growth. For net health sales, Liberty National and Family Heritage, we expect low double-digit growth and at United American, high single-digit growth.

I'll now turn the call back to Frank.

Frank Svoboda

Thanks, Matt. We will now turn to the investment operations. Excess investment income, which we define as net investment income less required interest was $38 million, up 3% from the year ago quarter. Net investment income was $296 million, up 3% and average invested assets were also up 3% from the year ago quarter. Required interest and average policy liabilities both grew approximately 4% over the year ago quarter. For the full year, we expect net investment income to grow around 4.5% and required interest to grow around 3.5%, resulting in excess investment income growth of 10% to 11%. Looking forward to 2027, we anticipate net investment income will grow in the range of 2.5% to 3.5%, while required interest will grow in the range of 3.5% to 4%.

Now regarding our investment yield. In the third quarter, we invested $833 million in fixed maturities, primarily in the industrial and financial sectors. These investments were at an average yield of 6.4%, an average rating of A and an average life of 35 years. We also invested $94 million in commercial mortgage loans and other long-term investments with debt-like characteristics. These non-fixed maturity investments are expected to produce additional cash yield over our fixed maturity investments while still being in line with our overall conservative investment philosophy. In the third quarter, the yield earned on our total long-term invested assets, which includes our fixed maturity commercial mortgage loans and other long-term non-fixed maturity investments, was 5.52%, up from 5.46% in the third quarter of 2025. The fixed maturity portfolio earned yield was 5.33% in the current quarter compared to 5.26% a year ago.

We expect the average yield earned on our total long-term investments will be approximately 5.51% for the full year 2026 and between 5.5% and 5.55% for the full year 2027. For the fixed maturity portfolio, we anticipate the earned yield will be approximately 5.33% for 2026 and around 5.35% for 2027. While we do own some floating rate investments, they are well matched with floating rate liabilities on our balance sheet. As such, we don't expect changes in short-term rates to have a meaningful impact on our net income. Now regarding our investment portfolio. Invested assets are $22.3 billion, including $19.6 billion of fixed maturities at amortized cost. Of the fixed maturities, $19 billion are investment grade with an average rating of A. Overall, the total fixed maturity portfolio is rated A-, same as a year ago. Of our total investment portfolio, only 2% is in senior direct lending and asset-based finances combined and another approximately 1% is in traditional private placements.

Our fixed maturity investment portfolio has a net unrealized loss position of $2.7 billion due to the current market rates being higher than the book yield on our holdings. As we have historically noted, we are not concerned by the unrealized loss position as it is mostly interest rate driven and currently relates mostly to bonds with maturities that extend beyond 10 years. We have the intent and more importantly, the ability to hold our investments to maturity. Bonds rated BBB comprised 39% of the fixed maturity portfolio compared to 43% from the year ago quarter. The percentage is at its lowest level since 2002. As we have discussed on prior calls, the BBB securities we acquired have historically provided the best risk-adjusted capital-adjusted returns due in part to our ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets.

That said, our allocation of BBB bonds has declined over the past several years as we have found better risk-adjusted capital-adjusted value in higher-rated bonds given the narrowing of corporate spreads. While the concentration of our BBB bonds might still be higher than some of our peers, remember that we have little or no exposure to other higher-risk assets. Below investment-grade bonds remain near historical lows at $573 million compared to $455 million a year ago. The percentage of below investment-grade bonds to total fixed maturities is just 2.9%, similar with year-end 2025. The total exposure to both BBB and below investment-grade securities as a percentage of our total equity, excluding AOCI, is at its lowest level in over 25 years. Due to the long duration of our fixed maturity liabilities, we predominantly invest in long-dated assets. As such, a critical and foundational part of our investment philosophy is to invest in entities that can survive through multiple economic cycles.

We are well positioned to withstand an economic downturn should one occur due to holding historically low percentages of invested assets in BBB and below investment-grade bonds as a percentage of equity. In addition, we have very strong underwriting profits and long-dated liabilities, so we will not be forced to sell bonds in order to pay claims. With respect to our anticipated investment acquisitions for the remainder of the year, at the midpoint of our guidance, we assume investment of approximately $175 million to $200 million in fixed maturities at an average yield between 6.4% and 6.5%. Including the expected investments in commercial mortgage loans and other long-term investments with debt-like characteristics, we expect to invest approximately $250 million to $300 million across all asset classes at an average yield of 6.75% to 7%.

Now I will call the call -- turn the call over to Tom for his comments on capital and liquidity.

Thomas Kalmbach

Thanks, Frank. First, I'll spend a few minutes discussing our available liquidity, share repurchase program and capital position. The parent ended the quarter with liquid assets of approximately $110 million. We anticipate ending the year with liquid assets near the top end of our targeted range of $50 million to $60 million. During the quarter, the company repurchased approximately 1.1 million shares of Globe Life Inc. common stock for a total cost of $185 million at an average share price of $175.61. Including shareholder dividend payments of $25 million, the company returned approximately $210 million to shareholders during the third quarter and approximately $630 million to date.

We will continue to use our cash as efficiently as possible. Our first priority is to ensure adequate capital is maintained at our insurance subsidiaries. Once met, we currently believe share repurchases provide the best return or yield to our shareholders over other available alternatives. Thus, we anticipate share repurchases will continue to be the primary use of parent's excess cash flow after the payment of shareholder dividends. 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 is available to return to shareholders in the form of dividends and through share repurchases.

For the full year, we anticipate distributing approximately $95 million to shareholders in the form of dividend payments. In addition, anticipate share repurchases will be in the range of $725 million to $775 million with approximately $185 million of share repurchases in the fourth quarter. This is a $65 million increase at the midpoint of the range from what we indicated on our last call as a result of updated capital projections for the year. At this level, we anticipate the combination of shareholder dividends and share repurchases for the year will be near 70% of full year net operating income at the midpoint of our guidance. We continue to invest in our growth by making investments in new business, technology and our insurance operations.

It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made these substantial investments and acquired new long-duration assets to fund their future cash needs. With respect to the capital levels of our insurance subsidiaries, our goal is to maintain capital within our insurance operations 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%. And although this range is lower than many of our peers, it is appropriate given the stable premium revenue from a large number of in-force policies, the nature of our protection products with benefits that are not sensitive to interest rates or equity markets, our conservative investment portfolio and strong consistent underwriting margins, which result in consistent statutory earnings at our insurance companies.

For 2026, based on the current projections of 2026 statutory results, we anticipate our consolidated RBC for the U.S. subsidiaries within the targeted range of 300% to 320%. In addition, the capital of our Bermuda subsidiaries will exceed management's target capital levels, which exceed regulatory minimums. As expected, with regards to Globe Life Re, our Bermuda subsidiary, we received reciprocal jurisdiction approval from Indiana, American Income's state of domicile in the third quarter. In addition, consistent with our business plan in the third quarter, we completed new reinsurance cessions, which reinsured a portion of new business and in-force life insurance policies issued by American Income to Globe Life Re. In the fourth quarter, we intend to request a dividend distribution from Globe Life Re. This dividend distribution is subject to approval by Bermuda regulators. And if approved this year, it is unlikely to be distributed to the parent until late in the year. As such, we have not included this dividend in our 2026 excess cash flow estimates but have included it in our 2027 excess cash flow estimates.

Now with regards to policy obligations for the current quarter. Each year, GAAP accounting standards require us to review and generally update actuarial assumptions for mortality, morbidity and lapses. When assumption changes are made, the accounting standards require a cumulative catch-up adjustment back to January 1, 2021, which is the transition date to LDTI. This cumulative catch-up is the assumption-related remeasurement gain or loss. The assumption remeasurement gain lowers the reserve balances and indicates an improved outlook as less premiums are needed to fund reserves to meet future policy obligations. The opposite is true if there is an assumption remeasurement loss. We review and update our life and health reserve assumptions in the third quarter each year. The remeasurement exhibit by distribution channels included within our supplemental financial information is available on our website and includes the impact of assumption changes as well as total remeasurement gains and losses, which include those related to current quarter experience results.

For the quarter, the overall impact of both life and health assumption changes reduced policy obligations by approximately $120 million, with life obligations reduced by $96 million and health obligations reduced by $24 million. While this is lower than the prior year's remeasurement gain of $131 million, it continues to indicate improved outlook for future policy obligations. Total GAAP life and health reserves on our consolidated balance sheets are approximately $18 billion, with the adjustments to reserves was less than 1% in total. To better understand the performance of the business, we believe it is beneficial to look at normalized underwriting margins, which exclude the impact of assumption changes and provide an improved basis for comparison of quarterly results.

For the third quarter, normalized life underwriting margin as a percent of premium increased to 41.8% from 41.5% for the year ago quarter. Normalized health underwriting margin as a percent of premium was 20.5% compared to 27.2% for the year ago quarter, reflecting higher policy obligations at United American, primarily from the 2 items that Matt and Frank previously mentioned. We anticipate the impact of high severity claims at Evry to improve in the fourth quarter. However, we anticipate loss ratios will be higher than target loss ratios for the remainder of the year. The impact of the additional Medicare supplement claims resulted in an increased claim trend, which will be reflected in 2027 rate filings and if approved, will be effective beginning in the second quarter of 2027.

Now with respect to our 2026 guidance. For the full year 2026, we estimate net operating earnings per diluted share will be in the range of $15.35 to $15.65, a decrease from the prior guidance, reflecting the impact of third quarter results and revisions to fourth quarter margin estimates for United American. Normalized EPS growth, which removes the impact of assumption updates is estimated to be approximately 8% for the full year 2026. Finally, with respect to 2027 guidance. For the full year 2027, we estimate net operating earnings per diluted share will be in the range of $16.10 to $17.10, representing an increase of 7% at the midpoint. At the midpoint of our guidance, we anticipate total premium revenue growth of 6% to 8% for the full year with life premium revenue growth of 2% to 4% and health premium revenue growth of 13% to 15%. We anticipate underwriting margin as a percent of premium for the full year to be in the range of 42% to 45% for life and 20% to 24% for health.

Although the health underwriting margin as a percent of premium is anticipated to decline, this is primarily due to the mix of our health business. The health underwriting margin dollars are expected to grow 7% to 9% given the strong sales and anticipated premium rate actions for both Medicare Supplement business and for Evry. Although 2026 statutory results are not final for the year, we anticipate parent excess cash flows to be approximately $850 million to $950 million in 2027. This range reflects subsidiary dividends anticipated from both our U.S. and Bermuda subsidiaries, some of which are subject to regulatory approvals.

Absent a need to support capital levels at our insurance subsidiaries, this amount will be available to return to shareholders through both dividends and share repurchases in 2027. Should this amount be used entirely for dividends and share repurchases, the cash conversion ratio would be in the range of 70% to 75% of net operating income at the midpoint of our guidance. We intend to ensure capital levels at our subsidiaries are consistent with management key targeted ranges and sufficient to meet current ratings. On the next call, I'll provide an update as we get updated statutory results for 2026.

Those are my comments. I'll now turn the call back to Matt.

James Darden

Thank you, Tom. Those are our comments. We'll now open up the call for questions.

Operator

[Operator Instructions] Our first question will come from the line of Ryan Krueger with KBW.

分析师问答

Ryan Krueger

First question was, can you say how much of an assumption review benefit that you embedded in the midpoint of your 2027 EPS guidance?

Thomas Kalmbach

Ryan, we -- the ranges reflect what we expect from just overall obligations as well as assumption updates. No specifics. We really want to see -- so we tried to incorporate a number of scenarios and have incorporated that into the ranges. We really want to see how results emerge in Q4 to help guide us to further clarify how much assumption updates we expect. I would expect remeasurement gains each quarter. So I think you'll see those and those will be indicative of the likelihood of an assumption update in 2027. If you look at our third quarter results, you'll see that we had actual to expected remeasurement gains for the quarter of about $20 million for the life business, which is after the update to our life assumptions. So that's indicative that mortality continues to run favorable relative to our long-term assumptions. So as we continue down that path, I would expect that we would see an assumption update.

James Darden

And Tom, I was just going to say -- Oh, Ryan, I was going to say, I think also, as Tom mentioned, it's embedded in our ranges in a variety of scenarios. And we need to really see how experience comes in over the next couple of quarters to refine that. I'd say, overall, on the margin, we would expect that if we were going to have an adjustment, it would probably be lower in magnitude than what we had in the current year.

Ryan Krueger

Got it. Then maybe just a -- I guess, kind of a 2-part question on Evry and United American. I guess one is just more quantitative in what you're assuming for the United American margin in 2027. But then secondly, I guess just on Evry, so more from a strategic standpoint, I mean, it is a different business than with a wider range of claim outcomes than your typical supplemental health and Medicare Supplement businesses. And I guess I'm just kind of wondering your views on -- does it -- are you confident that it makes sense to be in a business like this at Globe Life long term, given that it is primary health care and it does differ quite a bit from the narrower kind of fixed benefit cost of the other businesses you're in?

James Darden

Yes. Tom, why don't I start with the strategic part of the question and I'll let you do the margin. From a strategy perspective, one of the things that does help us with is that as we go to market in United American with our limited benefit health plans, it helps to have a full range of products in dealing with brokers. And so having a health plan option, there is some market synergy there. I think from a long-term perspective, it's not unexpected that as that builds the size of that book and we get more credibility and size, we would expect more stable results going forward. We do recognize it's a start-up and we're going to have a little bit lumpy results here in the beginning.

I think overall, from a long-term strategic perspective, we wouldn't ever expect this to be a significant part of the overall health business, if you just look at it from a contribution to our underwriting margin from a health perspective. So what we want to do is be able to grow this thing to scale so that we get more of the economies of scale from our overall results perspective and get some of the volatility back out of it. But from a long-term perspective, there is some market synergies with this type of business. But our main focus going forward will continue to be the supplemental health products that we've historically sold and that will be the vast majority of our underwriting margin dollars in our health lines.

Thomas Kalmbach

I think what I'd say on the margins themselves, a couple of things. We do think that the impact of high severity claims will diminish over the course of the fourth quarter. And so we'd really like to see kind of where those fourth quarter results come in. The other thing is we've taken a couple of actions to actually improve the overall profitability of the business. We are reflecting -- that business is renewable every year. So upon renewal, we're looking at rate increases on that business as well. And so those are being factored in not only to renewal rates but also to new business rates as those gets quoted. So I think that bodes well for margin improvement in Evry.

And I think what's important as we get more stable of a size of membership that actually the volatility around results will be better understood and we could take the management actions and we also expect that volatility to be reduced over time. So as we think about 2027, we've factored those in the range of the 20% to 24% margin for the health business. That's a little bit wider range than where we've had previously and is reflective of there is an opportunity for some additional volatility in 2027. I think we'll update you next quarter, we'll have the fourth quarter results and can provide some better guidance on that coming up in the following those results.

Frank Svoboda

Yes. I would just add that I think for UAGA itself, probably still somewhere in that mid- to upper single-digit margin percentages overall because even without the Evry, some of the pricing, we are still seeing some higher utilization costs on the UAGA and on the individual med sup we do anticipate working those additional trends into our rate filings that will take effect in 2027. Of course, as we've talked about here for the last couple of years, you have a delay before those rate increases take effect and so you don't get the full effect into 2027. So it's still not -- we don't anticipate for 2027 that they'll still be reaching those longer-term margins that we would expect for the long term.

Thomas Kalmbach

One of the things I think is benefit there, though, is the strong premium growth that we're seeing at UAGA, which will add to underwriting margin dollars. Yes. So...

Operator

Our next question will come from the line of Wilma Burdis with Raymond James.

Wilma Jackson Burdis

Just following up on Evry. Maybe you can give us a little bit more color on the market synergies in the product suite. And maybe just give us a little bit more color on the financial impact there. Is it enough to offset -- seems like we've already had $20-plus million of underwriting losses this year from Evry. Maybe just talk about that. Are you seeing enough financial benefit there to make that worth it?

James Darden

I'd say from an overall perspective, again, the market it's serving, it's a health plan. And so you get a little bit of a volatility as we're growing that, the number of groups that were signed up this year compared to last year is significantly different. So -- and we're in the early stages of this. So you really need to build that business to a credible amount of lives. And the part that you got to keep in mind is the premium that you charge on the book of business occurs ratably over the year. However, the claims do not come in ratably. And so to the extent that we've got -- and that's what we have here. We have a handful of high severity claims that are hitting in this quarter as the earned premium ramps up over a period of time. And so as Tom mentioned, we really need to get this to more of a credible size block of business and that should help from a stability of the earnings perspective.

Frank Svoboda

I would say that I think it's important to note that, I mean, we are pricing the business, what we believe to be profitable. But again, as Matt, Tom talked about, just with some of the smaller size of groups, you end up with some volatility that we're clearly seeing right now, with respect to some of those groups and just having more high severity claims than one would normally expect in a more mature block. So that's what's kind of driving some of the losses here. But -- and I think to your point around some of the synergies around -- it's the broker relationships and being able to go to the brokers with multiple types of products helps us within that. And as we're continuing to expand what we're doing in the broker area with some of the supplemental health plans as well, then that just helps us to -- with the relationships with those brokers as well as providing a broader product suite and enabling us to get more of our supplemental health products into employer groups.

James Darden

And the nice thing I like about this business is that we can reprice every year upon renewal for experience that we're seeing and we anticipate, as well as if we need to, we can nonrenew a group. So that gives us a lot of flexibility on a go-forward basis to really -- once we have a credible number of groups to be able to manage those appropriately.

Wilma Jackson Burdis

Okay. And then is there a good buyback opportunity or a good opportunity here in the stock to lean in on buybacks, especially given you guys cited pretty outsized excess cash flow estimates for 2027. Maybe just give us a little bit of color there.

Thomas Kalmbach

I mean I think as we think about excess cash flow, is that, is the source of funds for shareholder dividends and buybacks. And so we are seeing growth in that just from growth of statutory earnings as well as which creates dividend capacity for our subsidiaries. And then also the reciprocal jurisdiction actually provides us a little bit of onetime benefit that we should see in 2027. But I think more importantly, is the business that we're is -- we're reinsuring to Bermuda will continue to generate earnings and dividend capacity in Bermuda consistent with what we've communicated previously on a go-forward basis. So we feel pretty good about current excess capital levels and our ability to maintain that going forward -- sorry, excess cash flow levels and our ability to maintain that going forward.

Operator

Our next question will come from the line of Randy Binner with Texas Capital.

Randy Binner

I'd like to actually just ask some procedural questions, if I can, about the health claims. The first is on the CMS claim delay. Can you just review for us kind of like why that happened and when it happened and just the, I guess, the visibility you have on the resolution of that. You mentioned, I think, it was $7 million of extra claims in the quarter but does that go to like 0 extra in the fourth quarter? Just trying to understand the kind of the facts that drove that situation.

Thomas Kalmbach

Yes. To give you a little bit of background. So Medicare business in the first quarter announced 2 issues that delayed claims reporting and processing. The first issue was billing rates to Medicare doctors where the reimbursement rates were corrected. And so that resulted in some higher reimbursements that we needed to process through. And that was largely a second quarter event but those higher billing rates continue into the third and fourth quarter as well. The second issue was involved in the reissuing of Medicare IDs, leading to previously denied legitimate claims. And so beneficiaries were issued new medical IDs.

Unknown Executive

[indiscernible] in our business.

Thomas Kalmbach

Physicians or hospitals who had submitted claims that were denied, they would need to obtain those IDs from those beneficiaries, which takes a little bit of time. So we didn't have good visibility into the full impact of that until this quarter. And so that's -- we feel like that's pretty much gone through the system, that -- those medical IDs were issued in April of 2026. And so we feel like that's pretty much gone through the system but -- and should be normalized on a go-forward basis.

James Darden

And the nice thing is that what we -- based on the timing of our rate filings is that, as I mentioned in my comments, a lot of those related to earlier periods in 2026, those claims that came through in the third quarter. So that will be part of our claim trend that will go into our rate filing for those 2027 rates that most of those will start being picked up starting in the beginning of the second quarter of 2027 into this additional premium.

Randy Binner

That's helpful. So that was going to be my follow-up. So certainly, the Evry claims are in your rate filings but these -- I guess these still count even though they're nonrecurring or should even out. And then just one more follow-up on Evry. What -- when you have a high severity claim, what is -- like what is it? What is the --- what would -- is there a typical type of high severity claim you've experienced there? And what are the specifics of that kind of claim?

James Darden

The claims fall, which you might imagine, cancer, heart attacks, some of those type of issues. And so you have claimants with over $100,000 as an example, up on a claim related to some of those higher severity. Now we do have reinsurance that kicks in at some point to protect us from very large claims. But to the extent we've got certain medical conditions that we're paying for with underneath that reinsurance cap, that's getting to a little bit of the severity. And so back to the number of lives that we ultimately insured, if you have a handful of those, it's just a bigger percent of your total than if you have a better distribution of risk as we sign up more groups.

Operator

Our next question will come from the line of Andrew Kligerman with TD Cowen.

Andrew Kligerman

I wanted to follow up on the Evry and CMS. And I just want to make sure I understand the time lines, it sounds to me like the CMS issue might linger into Q4 and then it kind of evaporates. And with Evry, just given you're guiding to health margins of 20% to 24%, it doesn't sound like you're totally certain as we progress through 2027. But do you have confidence that by '28, the Evry issue will be cleaned up? And I'll stop there but just a quick sidebar too. As I look at start-ups across all of the insurance sectors, it's so hard to compete with these behemoth companies with massive data and analytics. Generally, what gives you confidence that Evry can compete. But really, the first part of it is just the time lines that I laid out.

Frank Svoboda

Sure, Andrew. On the -- I'll start with the Medicare and the CMS piece, the additional claims that we really saw as a result of the Medicare ID issue really impacts Q3 because you end up with some out-of-period claims. When we look at the full year, those become more normalized in the overall margin and the claims activity for Medicare and then go into how we think about the trend that we're seeing and the -- that we're incurring on that Medicare business in 2026. And of course, then as Matt indicated, that will influence -- that will run its course in 2026 and then get taken into account as we think about those rate filings that we're making now and impacting the premium rate increases for 2027 with respect to that. And so we are seeing -- but it did impact as we were incurring that in Q3, then it was -- it became evident that some of the expectations that we had for claims development in Q4 were really understated.

So as we had to think about that new claims trend and what impact that had on the fourth quarter, that's why we ended up needing to increase some of the claims and loss expectations with respect to the med sup business for the full year 2026. With respect to Evry, we do anticipate that pricing actions that we're taking will help to moderate any of the claims activity that we're seeing and with respect to that business in 2027. And as we continue to add more groups and you get a broader base that, that also gives you that broader set of groups that you can absorb some higher claims in some groups that are absorbed by profitability in other groups. So we do have a -- but to your point, we do have a broader range in 2027.

So we do anticipate or we would -- as we've said before, we price this to be profitable but do understand that there's still some volatility that we expect in 2027 and so that there's the possibility that there still could be some level of losses in 2027 and built that into the overall range. We'll see how that transpires over the course of the year and we'll take necessary actions as we go forward and continuing to look at each new group as they renew and continuing to rethink about the -- how we're pricing new groups coming in as well and ensuring that we're pricing those appropriately. But I do think -- so there's at least a possibility that there's some losses. We don't think that, that would be -- we don't anticipate that it would be as significant in 2027 as what we've actually incurred here in 2026. So we just -- we don't see as we grow the broader book of business that the incurrence of the high severity losses will lessen as a percentage of the whole.

Andrew Kligerman

Got it. And then my follow-up is around American Income, the producer count, the average quarterly producers. It looks like next year, you -- well, you've said in the guidance, mid- to high single-digit sales growth at American Income. But it's been a bunch of quarters that you've had to adjust and revise the compensation methodologies used at American Income. And the other point I would make is, with the count, the average producer count down 7% and I guess, sequentially, it was only down 0.5 point. But bottom line, what gives you such confidence in the mid- to high single digit. What's going to be different in 2027 versus '26?

James Darden

Yes. Andrew, I guess I would point out, it's really been 2 quarters since the compensation adjustment has been in place. So in other words, we put that in at the beginning of Q2. And so for Q2 and Q3, what we're seeing is a stabilization of the agent count. But what we are seeing and I mentioned this before, when we talk about the incentive compensation structure we roll out to the agents, we're really trying to balance activity between sales activity and recruiting, training and growth activity. And so what we did see was a positive improvement on the productivity side.

And we had an increase of productivity of 11% this quarter and it was 9% last quarter. So the compensation changes, the way I think about it, were effective. We got increase in sales. We increased the requirement to achieve certain, what we call bonuses but it's effectively incentive compensation. We increased that what the sales growth was necessary at the agent level to be able to achieve those. And so we're seeing that on the productivity side. We're also seeing that as we've got a stabilization of the base, we've got more people that have more experience and so they're going to produce more.

So overall, the compensation adjustment, I think, that went in at the beginning of the second quarter of this year was effective. It just didn't quite move the needle as much as we'd like on the recruiting side. And so we're going to put in additional changes to that structure that really focus a little bit more of that incentive comp on the recruiting and training side. And so we anticipate -- we've got a long history of doing this. We anticipate those changes will start flowing through in the beginning of next year because they're going in at the end of this year. And as I mentioned in my comments, this is human behavior we're dealing with. And so when we put a change in, it takes a little bit of time for everybody to migrate to the new structure that we've put in place. And so we recognize it takes a couple of quarters to kind of figure that out. So I think we have a good base to build on. And that's why we're pointing to -- we think we can be at the high -- mid- to high single-digit growth for next year because of what we're putting in here at the end of this year.

Operator

Our next question will come from the line of Joel Hurwitz with Dowling & Partners.

Joel Hurwitz

Two, first on cash generation. Just what is the expected dividend from Bermuda in '27? And then, Tom, could you provide some more color on what drove the increase to your '26 capital projection?

Thomas Kalmbach

Sure. So I mentioned on the '26 capital, what I mentioned is we were looking at our 2026 subsidiary capital positions and recognize that we have a little bit of excess capital in the entities. And so that's what kind of drove that estimate and that keeps us at a RBC ratio right within our target ranges. So we feel comfortable with that capital position. On 2027 for Bermuda, we actually have to go through approval process. So it's not definitive yet but we'd expect that somewhere in the $150 million range for -- not what we're requesting in '26 but in the combination of what we request in '26 and '27 would be in that range.

Joel Hurwitz

Got it. That's helpful. And then just a quick one on the Life margin. With the assumption update done this quarter, what's the expected life margin for the fourth quarter of this year?

Thomas Kalmbach

Fourth quarter life margin is -- hold on, 1 second. 41.5% range, 41.3%...

Operator

Our next question will come from the line of Suneet Kamath with Jefferies.

Suneet Kamath

Just I want to start with Bermuda also. Have you guys done any work on which blocks of business would be, I guess, the most advantageous to move to Bermuda between, say, life and health? And then relatedly, do you have any limits in terms of how much -- what percentage of your reserves you ultimately would want to cede to Bermuda?

Thomas Kalmbach

We continuously look at our opportunities to reinsure to Bermuda and we haven't set any solid limits on what those limits would be. But we do think that it's important to keep reserves here in the U.S. I think that helps us from a liquidity perspective and from a, just a operational perspective. So I think we'll have a balanced view of that and it will emerge over time as we continue to look at our business and opportunities with using a Bermuda framework.

Frank Svoboda

Yes. And I would just add that the team really has done a lot of work in looking at potential blocks and which ones are -- make more sense to be reinsured to Bermuda and which ones don't. And there is definitely some art to being able to optimize which blocks you're reinsuring and which ones you aren't and just based on age and stability and a lot of other factors. So we have -- I think in our business plan, we've talked about on prior calls, I think initially, we're kind of looking at maybe around 25% of the statutory reserves being included. But we'll definitely continue to take a look at that. Our primary focus is really executing on that business plan. But then as we're doing that, continuing to look to see are there other blocks that would make sense and that have some opportunity as we think about just overall managing the -- that business and the capital that we have in there.

James Darden

Yes. And to your question on life and health, it's more on the life side where the opportunity is. That's where we incur quite a bit of deferred acquisition costs and the treatment of that under a GAAP regime in Bermuda, along with the difference between U.S. statutory and GAAP reserves on the life business is much more substantial. So those are the 2 things as we talked about, both on the in-force blocks that we reinsure as well as on a go-forward basis, the new business that we reinsure into Bermuda will be more of the benefits are going to be on our life blocks and life sales.

Suneet Kamath

Okay. That's helpful. And then I was trying to jot this down during your prepared remarks, so I apologize if I got it wrong. But it sounded like the growth in NII for '27 was expected to be 2.5% to 3.5% and then the growth in required interest was supposed to be higher at 3.5% to 4.5%. So if those numbers are right, does that imply that excess investment income will decline year-over-year? Or am I not thinking about that right?

Frank Svoboda

No, I think you're in the right ballpark. It's probably flat to maybe just slightly declining depending on kind of the nuances of where that falls within that. And really, what's really driving that is that as you think about the additional distributions that we're making out of the entities up to the parent and then if, in fact, those are not needed for our capital purposes and if those are distributed out to shareholders, then that's going to reduce the amount of your average invested assets that we have available. So that's what's really driving kind of the lower growth in net investment income. And while at the same time, you still have the same amount of GAAP reserves out there. So your required interest continues to grow at the same rate. But that's -- so we would anticipate not much growth in net investment income. But then to the extent that those we are able to return back to the shareholders in the form of buybacks and we're getting the benefit from that.

Operator

Our next question will come from the line of Tom Gallagher with Evercore ISI.

Thomas Gallagher

Just a few Evry questions. What are the total quarterly premiums that you have associated with that business right now? And how big are the average groups you're insuring in terms of employee size?

Thomas Kalmbach

Yes. In the third quarter, Evry premiums were about $11 million. So it wasn't very significant. And next year, we didn't -- we'd assume total annualized premium of around $100 million. So that will give you some idea of the size of the business. And then the number of groups is we have -- we'd expect to be around 50 groups next year.

Thomas Gallagher

So you're going to more than double from a size standpoint versus where you are right now?

Thomas Kalmbach

Not quite double. Right now, we have about 30 groups. We had some groups come on in the beginning of the fourth quarter. So not quite double but close.

Thomas Gallagher

Got you. And I guess my follow-up is just covering some of the companies that have medical stop loss, we've been watching and hearing about 2 to 3 years of high severity claims happening. So I guess my -- just in light of that, what gives you confidence that you're not being selected against because there's obviously rerates going on across major medical. It's been happening for at least 2 years. So do you have any way of sort of filtering out your underwriting on these groups as you grow to make sure that you're not going to see these persistently high severity claims?

James Darden

Well, one of the things we've done is, we've looked at just our underwriting standards, our pricing methodology. We've done a deep dive on that. We've also brought in some external expertise just to validate some of our assumptions. We do know that there's a lot of cases out there that are getting shopped and we turned down a significant number of those trying to maintain the discipline on the pricing and underwriting side. So we have over 70% of the cases that we are looking at that we turn down and decline to quote. So we're being very disciplined around what we take on and what we write from a new group perspective. And that is really, again, since it's not a major piece of our business, we're really going to constrain growth. We want to get to a credible size so that we can diversify the risk of a few large claims over a greater number of lives but we're going to be very disciplined on our pricing approach to this. And we're going to -- we'll moderate the growth if we need to or we'll nonrenew groups if we need to.

Operator

Our next question will come from the line of Maxwell Fritscher with Truist.

Maxwell Fritscher

I'm calling in for Mark Hughes. You had mentioned the higher productivity at American Income, I believe you're only focusing on American Income. But how are productivity trends across the enterprise, Liberty National, for example, I know a small piece of the pie but are you seeing similar improvement?

James Darden

Yes. You can kind of just tell from aggregate, if you just look at American Income, our average agent count over the last 3 to 4 quarters has been pretty stable but we've got some sales growth or sales moderating there. And so that just gives you an idea of the productivity on a per agent basis is, if we've got less agents, 7% less agents this time this year than we did same time last year but our sales are relatively flat, we're just higher productivity. You're seeing that in Family Heritage as well. We see nice productivity gains there. So the sales are a little bit different or outpacing the growth in the agent count.

On Liberty, it's really pretty consistent. Our agent count growth is pretty consistent with our sales growth there and that's what we'd expect over a long period of time. What we see sometimes is changes in whether it's compensation or sometimes rolling out new technology like CRM systems or enhancements to sales systems or training systems. We'll get some productivity gains, overall, long term, not quarter-to-quarter but long term, we're really focused on, we want to have more agents that sell more business. We like productivity gains as we think about investments in technology and investments in leads and advertising and branding and all those things. But overall, long-term growth strategy is definitely to grow our agent count.

But one that gives me comfort about is it just gives us -- and this is why I like having 3 different agencies, it really gives us a sense of the market is that we're not seeing headwinds from an environment perspective, from an economic perspective is that we've got agent productivity going up. We've got sales growing up to the extent we're growing our agent count. So all of that again, is what I believe is under our control to manage and achieve strong growth going forward and we'll continue to get that by focusing on growing our agent count. And as a reminder, the agent recruiting activity happens out in the field in the individual offices and a lot of that activity happens by our manager group. And as I mentioned in my prepared remarks, Family Heritage, what I like seeing is we've got middle management growth. And to the extent that we've got middle management growth, I know that's a forward-looking item as we think about who's out -- we got more people out there recruiting and training agents, so that bodes well from a long-term growth perspective.

Maxwell Fritscher

Very good. And I asked a similar question last quarter but it seems like a lot has gone on in the economy in the past 3 months. So I'd like to know if you have any incremental views around recruiting. Last call, you noted that the pipeline was strong but I'd like to know if you can provide any updated views on the environment.

James Darden

Yes. I think from a recruiting perspective, we continue to see and this would be a good example of looking at the most recent experience at Liberty is that there continues to be a lot of people that are interested in our opportunity and that is in the form of they feel more in control of their career. We give them flexibility, opportunity for growth. There's plenty of people that are interested in being able to own their own business someday. We provide a pathway to be able to do that. And so as you look at the backdrop of what's happening with college graduates as an example and it's hard to find that entry-level job or people that are in jobs that a particular industry may not be growing and those are stagnant, our opportunity provides opportunity for growth.

So we don't see any headwinds from a recruiting perspective. We see that as strong and robust. And the nice thing is that our business model does not require that we recruit from a certain segment of the population or a certain experience or background or you got to be an experienced agent. We recruit people that have no experience in this business and have a great process for getting them up, trained and licensed in selling. So there is -- that's the biggest part of the population out there is our pool that we recruit from. And so I feel very good about our prospects going forward.

Operator

Our next question will come from the line of Pablo Singzon with JPMorgan.

Pablo Singzon

The first question I had was on '27 EPS guidance, which implies about 7% growth at the midpoint. So how much of that growth will be driven by buybacks? I think in recent years, buybacks have contributed anywhere from 4% to 8% of incremental EPS growth versus growth in dollar earnings. So I guess if we could tie it together, right, it sounds like excess investment income would be flat to slightly down, underwriting income could be up, right but perhaps the premium growth offset by some slight deterioration in margins. But sort of any high-level perspective on how you see EPS progressing from '26 into '27 would be helpful.

Frank Svoboda

I think overall, Pablo, I think at the midpoint of the guidance for 2027, you're looking at around 7% overall at that midpoint. Actually probably in that range of 5% to 6% probably coming from share buybacks, is what we're anticipating and then you're having a net underwriting -- growth in net underwriting, excuse me, net operating income more in that 1% to 2% range. And so part of that, I mean, because of -- as Tom mentioned and I mentioned earlier, you are having -- we're anticipating some additional dividend distributions out of the operating entities up to the parent. And so to the extent that -- as Tom mentioned, I mean, that's really in that $150 million range or so that's being included.

So that is, if you will, pulling that out of the system is, taking out of the growth of our invested assets, which is -- and then turning into net investment income. So that's a piece of that. And then probably, if you will, a little lower growth rates still even on the -- if you think about it from a life underwriting perspective and just I think the midpoint of the range that we have in 2027 on the underwriting margin percentage, slightly down perhaps and probably just -- we've had -- we think about some of the assumption changes that are probably going through, as Tom -- as Matt really mentioned, probably anticipate even though we would anticipate some assumption updates, probably less than what we had in 2026 right now. So that's kind of driving, if you will, a little bit of a lower growth in net operating income.

Pablo Singzon

Got it. And then the second set of questions, just on Evry, a couple here, right? So do you think pricing will be sufficient to get the book back on track? Or are there any changes in underwriting that you need to implement? And then relatedly, since you had given stats on premium sizes and counts in the groups that you have now. At what premium size or group count size do you think the book will reach better credibility from a claims perspective?

James Darden

I think from -- on the pricing, it's -- from a volatility in the earnings, you need both. We put in some -- for those groups that we renewed, we put in some pretty significant price adjustments as well as, as I mentioned, making sure we challenged what pricing is for new groups that would be coming on at the beginning of 2027. But also, again, if I've got just a handful of groups, I really need more groups from a credibility perspective. So the way I think about it, it's a combination of both is more price action in addition to just getting the group -- the volume of the business bigger to spread across the risk over multiple groups. I think more from your question of credibility perspective, we need to get it up to a certain level and more stable results and ongoing growth perspective. And so we'd anticipate that would happen more towards the end of '27 or into '28 is that as we get volume and scale that makes some of the chances for volatility to be reduced going forward.

Thomas Kalmbach

I think we want to have the groups on the books for a period of time to create that confidence in the experience. And so I think end of '27 is good but that's probably the starting point of gaining solid credibility.

Operator

Our next question will come from the line of Wes Carmichael with Wells Fargo.

Wesley Carmichael

Just had a follow-up on capital in Bermuda but could you just quantify the size of the additional reinsurance transaction? And maybe with reciprocal jurisdiction approval now, have your expectations around longer-term cash flow uplift changed at all? Or any help there would be great.

Thomas Kalmbach

Yes. The reinsurance transaction that we did in the third quarter was about $275 million of reserves. So it's relatively small. But we also had new business that we're reinsuring a large portion of American Income Life's new business to the -- to Bermuda. And then on excess cash flow, our '27 excess cash flow going from some $850 million to $950 million is the range. That actually reflects kind of an increased run rate. And over time, I'd expect as we fully get the benefits of Bermuda that's -- that could increase absent other capital needs within the insurance operations.

Frank Svoboda

Yes. I think I'm just really optimistic on that ability to increase the kind of the run rate on the excess cash flow at the parent company. I think as we kind of look back over the last couple of years, before shareholder dividends, we've been in that $600 million, $700 million range. And we've been able to -- through some of these transactions, been able to take out some extraordinary dividends over the past couple of years. But I think going forward, being able to have it in that $850 million to $950 million range and just as the business grows and our block of business grows to have that potentially increase from there really sets us at a new level and really gives us that added flexibility at the parent to make sure that we can support the capital needs of our organization but -- and then have us more flexibility to use that excess cash flow for other purposes if we're able to.

Wesley Carmichael

Got it. That's helpful. And sorry if I missed this in the prepared remarks but did you give an outlook for the health margin for the fourth quarter of 2026? I know there are some moving pieces in the third quarter with the claims and assumption reviews. So sorry if I missed that but just wanted to clarify that.

Thomas Kalmbach

Not specifically for the fourth quarter but overall.

Frank Svoboda

22% to 24%, in that...

Wesley Carmichael

Just the fourth quarter of 2026, yes.

Thomas Kalmbach

20% to 22%...

Wesley Carmichael

You said 22%?

Thomas Kalmbach

20% to 22%, somewhere in that range.

Operator

And there are no further questions in queue. I'll hand it back to Stephen Mota for closing remarks.

Stephen Mota

All right. Thank you for joining us this morning. Those are our comments. We will talk to you again next quarter.

Operator

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

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