Good day, and welcome to the Globe Life, Inc. First Quarter 2021 Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mike Majors, Executive Vice President, Administration and Investor Relations. Please go ahead, sir.
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, 2020 10 ks and and in 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 a 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. In the Q1, net income was $179,000,000 for $1.70 per share compared to $166,000,000 or $1.52 per share a year ago. Net operating income for the quarter was $160,000,000 or $1.53 per share, a decrease of 12% per share from a year ago. On a GAAP reported basis, return on equity as of March 31 8.6 percent and book value per share was $75.10 Excluding unrealized gains And on fixed maturities, return on equity was 11.4% and book value per share was up 9% to $54.36 In the life insurance operations, Premium revenue increased 9% to $708,000,000 As we've noted before, Margin was $137,000,000 down 24% from a year ago. The decline in margin is due primarily to $38,000,000 for COVID related claims.
For the year, we expect live premium revenue to grow around 7% and underwriting margin to grow 4% to 6%. And at the midpoint of our 2021 guidance, We've seen approximately $50,000,000 of COVID claims. In health insurance, Premium revenue grew 5% to $294,000,000 and health underwriting margin was up 14% to $72,000,000 The increase in underwriting margin is primarily due to improved persistency and lower acquisition expense. For the year, we expect health premium revenue to grow 5% to 6% and underwriting margin to grow 7% to 8%. Before continuing, I'm pleased to note that this is the Q1 in company history in which total premium revenue exceeded $1,000,000,000 We appreciate the efforts of our agents and our employees in achieving this milestone.
Continuing the Q1 results, administrative expenses were $66,000,000 for the quarter, up 4% from a year ago. As a percentage of premiums, administrative expenses were 6.6% compared to 6.8% a year ago. For the full year, we expect administrative expenses to grow 7% to 8% and being around 6.7 percent of premium due primarily to higher pension costs, IT and information security costs as well as a gradual increase in travel and facilities costs. I will now turn the call over to Larry for his comments on the Q1 of marketing operations.
Thank you, Gary. We experienced strong growth in Life sales during the Q1, and we continue to make progress in the areas that drive recruiting and sales I will discuss current trends at each distribution channel. At American Income Life, Life premiums were up 11% to $335,000,000 while life underwriting margin was down 2% at $98,000,000 The lower underwriting margin is primarily due to COVID claims. Net life sales were $70,000,000 up 11%. The increase in net life sales is primarily due to increased agent count.
The average producing agent count for the Q1 was 9,918, up 30% from the year ago quarter and up 3% from the 4th quarter. The producing agent count at the end of the Q1 was 10,000 329. The American Income Agency has adapted exceptionally well to the virtual environment and continues to generate positive momentum. At Liberty National, life premiums were up 4% to $76,000,000 while life underwriting margin was down 48% to $10,000,000 Lower underwriting margin is primarily due to COVID claims. Net life sales grew 30% to $16,000,000 Our net health sales were $6,000,000 down 2% from the year ago quarter.
The increase in net life sales is due to an increased agent count and improved agent productivity. The average producing agent count for the Q1 was 2,734, up 3% from the year ago quarter and up 1% from the 4th quarter. The producing agent count at Liberty National ended the quarter at 2,727. We are encouraged by Liberty National's continued growth. At Family Heritage, health premiums increased to 8% to $83,000,000 and health underwriting margin grew 12% to $22,000,000 The increase in underwriting margin is primarily due to improved persistency and lower acquisition expense.
Net health sales declined 4% to $16,000,000 due primarily to a decline in agent productivity during the Q1. The average producing agent count for the Q1 was 1285, Up 5% from the year ago quarter, while down 12% from the 4th quarter. The agent count at the end of the quarter was 235. The drop in average agent count from the Q4 is not unusual as Family Heritage typically sees a decline in recruiting activity in the Q1 of the year. We have seen an increase in recruiting activity and productivity over the last several weeks I expect this will continue going forward.
In our direct to consumer division of Globe Life, life premiums were up 11% to $244,000,000 Our life underwriting margin declined 78% to $9,000,000 Frank will further discuss the decline in underwriting margin in his comments. Net life sales were $40,000,000 up 22% from the year ago quarter. We continued to see strong consumer demand for basic At United American General Agency, health premiums increased 6% to $117,000,000 and health underwriting margin increased 19 percent to $19,000,000 The increase in underwriting margin is primarily due to improve persistency and lower acquisition expenses. Net health sales were $13,000,000 down 11% compared to the year ago quarter. It's always difficult to predict the United American sales as the Medicare Supplement marketplace It's still difficult to predict future activity in this uncertain environment.
I will now provide projections based on trends we are seeing and knowledge of our business. We expect the producing agent count for each agency at the end of 2021 to be in the following ranges: American Income 7% to 17% growth Liberty National 1% to 16% growth LA Heritage 1% to 9% growth Net life sales for the full year 2021 are expected to be as follows: American Income Life, an increase of 11% to 15% Liberty National, An increase of 16% to 20%, direct to consumer, a decrease of 5% to an increase of 5%. Net health sales for the full year 2021 are expected to be as follows: Liberty National, an increase of 16% to 20% Family Heritage, an increase of 4% to 8% United American Individual Medicare Supplement, 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 was required interest on net policy liabilities and debt, was $61,000,000 a 3% decline over the year ago quarter. On a per share basis, reflecting the impact of our share repurchase program, Excess investment income grew 2%. For the full year, we expect excess investment income to be flat, but up 2% to 3% on a per share basis. As to investment yield, in the Q1, We invested $299,000,000 in investment grade fixed maturities, primarily in the industrial and financial sectors.
We invested at an average yield of 3.41 percent, an average rating of A- and an average life of 34 years. We also invested $61,000,000 in limited partnerships that invest in credit instruments. While these investments are For the entire fixed maturity portfolio, the 1st quarter yield was 5.24%, down 15 basis points from the Q1 of 2020. The portfolio yield as of March 31 was also 5.24%. Invested assets were $18,700,000,000 including $17,400,000,000 of fixed maturities and amortized costs.
Of the fixed maturities, dollars 16,600,000 are investment grade with an average rating of A- and below investment grade bonds are $802,000,000 compared to $841,000,000 at year end 2020. The percentage of below investment grade bonds to fixed maturities is 4.6%. Excluding net unrealized gains in fixed maturity portfolio, Below investment grade bonds as a percentage of equity is 14%. Overall, the total portfolio is rated A- compared to BBB plus a year ago. Bonds rated BBB are 56% of the fixed maturity portfolio compared to 55% at the end of 2020.
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 our higher risk assets such as derivatives, equities, residential mortgages, CLOs and other asset backed securities. Because we invest long, a key criterion utilized in our investment process is that an issuer must have the ability to survive multiple cycles. We believe that the BBB securities we acquire provide the best risk adjusted and capital adjusted returns due in large part to our ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets. Lower interest rates continue to pressure investment income.
For 2021, the average fixed maturity new May yield assume that the midpoint of our guidance is 3.6% for the full year. While we would like to see higher interest rates going forward, Globe Life can thrive in a lower for longer interest rate environment. The debt though rates will not impact the GAAP or statutory balance sheets under the current accounting rules, since we sell non interest sensitive protection products. Unfortunately, the impact of lower new money rates on our investment income is somewhat limited as we expect to have an average turnover at less than 2% per year in our investment portfolio over the next 5 years. Now, I will 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 $290,000,000 In addition to these liquid assets, the parent company will generate excess cash flows in 2021. The parent company's excess cash flow, as we define it, results primarily from the dividend received by the parent from its subsidiaries, less the interest paid on debt and the dividends paid to Globe Life shareholders. We anticipate our excess cash flow in 20 21 will be in the range of $360,000,000 to $370,000,000 higher than previously indicated and reflective of our final 2020 distributable statutory earnings.
Thus, including the assets on hand at the beginning of the year, We currently expect to have around $650,000,000 to $660,000,000 of assets available to the parent during the year. In the Q1, the parent company repurchased 944,000 shares of Globe Life Inc. Common stock at a total cost of $90,000,000 at an average share price of $95.47 So far in April, we have spent $13,000,000 to repurchase 132,000 shares at an average price of $99.18 Thus for the full year through today, we have spent $103,000,000 to purchase 1,100,000 shares at an average price of $95.92 Excluding the $103,000,000 spent on repurchases so far this year, We will have approximately $550,000,000 to $560,000,000 of assets available to the parent for the remainder of 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 will use our cash as efficiently as possible.
We still believe share repurchases provide the best return to our shareholders over other available alternatives. Thus, we anticipate share repurchases will continue to be the Primary use of the parent's $360,000,000 to $370,000,000 of excess cash flows during the year. 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, expand our information technology and other operational capabilities, as well as acquire new long duration assets to fund their future cash needs. Our goal is to maintain our capital at levels necessary to support our current ratings. As noted on previous calls, Globe Life has a targeted Consolidated company action level RBC ratio in the range of 300% to 320%.
At December 31, 2020, our consolidated RBC ratio was 309%. At this RBC ratio, our insurance subsidiaries have approximately $50,000,000 of capital over the amount required at the low end of our consolidated RBC target of 300%. This excess capital along with the $550,000,000 to $560,000,000 of liquid assets that we expect to be available at the parent provides sufficient capital to fund future capital needs. As we discussed on previous calls, a primary driver of potential additional capital needs from the parent in 2021 relates to investment downgrades that increase required capital. To estimate the potential impact on capital due to changes in our investment portfolio, we continue to model several scenarios and stress tests.
In our base case, we expect approximately $500,000,000 of additional NAIC 1 notch downgrades over the course of the year. We do not anticipate any significant credit losses, although some credit losses would normally be expected from time to time. With this amount of downgrades, our insurance companies could require up to $70,000,000 of capital to maintain the low end of our targeted RBC ratio of 300%. In addition to the potential capital needed for further Investment portfolio downgrades, changes in the NAIC RBC factors relating to investments, commonly referred to as C1 factors, Could create the need for additional capital for 2021. At this time, we do not know what the final factors will be.
However, we believe the worst case scenario is that additional capital relating to the new factors would not exceed 125 to $150,000,000 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. In the aggregate, our statutory reserves are more than adequate under all cash flow testing scenarios. And still have cash available to make our normal level of share repurchases. Once we get once we are able To get comfortable that our investment downgrades have returned to normal levels and we are able to determine the amount of additional capital required to support the new C1 factors, We will reevaluate our parent company retained assets. We will first determine the appropriate amount of liquid assets that should be retained at the parent.
We We'll then determine the best use of any excess amounts that remain. Depending on available alternatives, we would likely return such excess cash to our shareholders through additional At this time, we anticipate holding our higher level of liquid assets through the end of this year. At this time, I'd like to provide a few comments relating to the impact of COVID-nineteen on our Q1 results. As noted by Gary, total life underwriting margins declined in the quarter primarily due to an estimated $38,000,000 of COVID death claims incurred in the quarter. This amount was actually slightly less than we anticipated for the quarter.
The total COVID death benefits include Approximately $20,000,000 in COVID death benefits incurred in our direct to consumer division or approximately 8% of its 1st quarter premium income, Approximately $8,000,000 of COVID death benefits incurred at Liberty National, over 10.5% of its premium for the quarter and approximately $9,000,000 at American Income or 2.7% of its 1st quarter premium. It is important to note that the total COVID benefits paid through March 31, only 71 claims comprising slightly over $600,000 relate to policies sold since the beginning of March of 2020. This is a very small percent of the roughly 2,000,000 policies sold in 2020. In addition to the COVID obligations occurred in the quarter, We also saw adverse developments in non COVID claims relating to both medical and non medical causes of death, primarily those related to heart and other circulatory conditions, Alzheimer's and drug overdoses. This is a continuation of some adverse development that began to emerge last year.
While not directly a COVID claim, We believe the elevated deaths are related to the pandemic due to the difficulties many individuals have had in receiving timely healthcare as well as the adverse effects of isolation and stress. Increases in non COVID deaths since the start of the pandemic Have also been noted by the CDC and the National Center For Health Statistics for the U. S. Population as a whole. While we experienced higher obligations from non COVID causes in each of our distributions, the impact of these higher non COVID deaths has been more evident in our direct to consumer channel, whose insureds more closely represent the broader middle income U.
S. Population than our other distributions. In addition to COVID deaths, the adverse experience related to non COVID deaths also contributed to the lower underwriting margin in the quarter. We anticipated a lower margin as a percent of premium given the significant number of U. S.
Deaths expected in the quarter and since evidence of the higher non COVID deaths had started to emerge last year. As with COVID, we currently believe this adverse Claims experience will moderate over the remainder of the year and that the underwriting margin for the direct to consumer channel We'll be closer to 17% to 18% of premium in the second half of the year. Finally, with respect to our earnings guidance for 20 21. While first quarter earnings were substantially lower than recent quarters due to higher COVID and non COVID policy obligations, The Q1 operating earnings per share were very close to our expectations since we fully anticipated 200,000 COVID deaths in the quarter. We now believe we have seen the peak of COVID claims and anticipate a sharp drop off for the remainder of the year.
As noted last quarter, At the midpoint of our guidance, we anticipated approximately 270,000 U. S. COVID deaths over the course of 2021. We still believe that is a reasonable estimate with substantially all of the remaining deaths occurring in the second quarter. As in prior quarters, we continue to estimate that we will incur COVID life claims of roughly $2,000,000 for every 10,000 U.
S. Deaths. With respect to the higher obligations from non COVID causes of death, we believe these will also revert to more normal levels over the course of the year as disruptions in healthcare cease, the economy recovers and people are able to socialize again. As compared to our previous guidance, higher policy obligations from non COVID causes are expected to be offset by favorable health claims experience, Higher premium income and the favorable impact of share repurchases. As such, we are keeping the midpoint of our guidance For 2021 at $7.36 while narrowing the overall range to $7.21 to $7.51 for the year ended December 31, 2021.
Those are my comments. I will now turn the call back to Larry.
Thank you, Frank. Those are our comments. We will now open the call up for questions.
Our first question comes from John Barnidge, Piper Sandler.
Thank you. Your direct to consumer sales guide for life conflicts with what was put up in 1Q 2021. Can you add some color there? Was there like a onetime uplift last year that you don't think it's following through this year?
Well, there's a onetime uplift. If you look at last year, we had a real increase in our sales percentages in Q2, Q3 and Q4. Q1 is a fairly easy comparable because we were flat in the Q1 of last year, and that was pre COVID. So while we had a 22% increase in sales in the Q1 against those comparables in Q2, Q3 and Q4, we think our guidance of negative 5% to plus 5% It's reasonable for 2021.
Okay. And then my follow-up, given your comment about substantially all the remaining COVID deaths being in 2Q 2021, is Is there any way to give us a sense of what we're seeing in the first half to what it might run rate for the quarter? Thank you.
Yes. So in the Q1, there was around 200,000 COVID deaths. Right now, we're anticipating around 55,000 COVID deaths in the Q2 of the year and then about 15,000 over the remainder of over the second half of the year.
Thank you very much.
Our next question comes from Jimmy Bhullar, JPMorgan?
Hi, good morning. There's a big echo on your call that's not on my line though, but anyway. On your comment on Life margins ex COVID, I think you're assuming in your guidance that they might stay elevated. My question is more if you look beyond COVID, Is it reasonable to assume that some of these continue? Because I think you said people having difficulty getting care, obviously that improves or that goes away as hospitals are less burdened and stuff.
But if it's related to opioids and stuff, it's easier to get on them, but harder to get off. So could that Continue to be a drag for your results beyond the pandemic as well, at least for a little bit?
Yes, Jimmy. We're seeing while we're seeing some elevated in the opioids and some of the other, I would say, non medical causes, Really, the more that we're seeing is on the medical side with respect to whether it be, as I said, really Hard and circulatory is really one of them that we've seen, the larger increase over historical trends, if you will. So I think that's what gives us a little bit more comfort that while that we've seen some increases in multiple causes of death, including some of those from non medical. As the medical and access to the medical procedures opens back up and has opened back up now for Several months, that, that will subside and we'll be able to get back to more normal levels in those areas.
And Timmy, I would add that the medical claims that Frank has talked about is non COVID piece, over 80 Those are medical claims, whereas the drugs, alcohol would be lessened to the terms.
And then on your sales, obviously, we've seen a big step up in your sales in recruiting and sales because of the pandemic, and I think you've had an easier time recruiting because of the problems with the services industry. Do you think you'll retain the agents you've hired over the past year? Or if the economy opens up and things go back to normal that you could actually see a agent departures and a big sort of decline in the agent count, maybe not all the way back, but many of these, Like what do you think about your ability to retain a lot of the agents that you've hired over the past year?
I think recruiting will continue to increase in Q2, Q3 and Q4 of 2021. Given the middle management growth last year, particularly the American Income, I think we'll continue to see the recruiting activity. I think it's doubtful that most of the new agents would return to their previous jobs. Remember, we recruit the underemployed who are looking for a better opportunity. And again, given our sales increases, particularly at American Income, We believe many of these agents want to stay with the company.
Also during 2018 'nineteen, when unemployment levels were extremely low or historically low, All three agencies continue to recruit and grow the number of producing agents.
Okay. And then just lastly on your sales being strong, have you Vince, I'm sure you've enacted and you've talked about this in the past as well, enacted processes to avoid adverse selection in the pandemic. Can you talk about whether you've seen or what level of claims you've seen from policies you might have sold over the past year and What some of the processes are to avoid adverse election?
Yes, Jimmy, we do take a look at really do a lot of monitoring on the various policies that have been issued and especially in the direct to consumer, but across all the different lines. We're looking at, is there a change in the number of applications By age, are we seeing especially with respect to the pandemic where we have higher exposure to some of the higher ages, we're really looking at those Are we seeing any changes in the applications and the net issues from before the pandemic and then what we're seeing in the last Here, we're looking at are they trying to apply for higher face amounts, are we seeing changes in geographies where maybe there's been a little bit more incidents. And we're really monitoring that and we're really seeing no distribution shift toward older adults. We're not seeing really any significant Change by state groupings, and again, we're not seeing a shift to overall the higher face amounts. And then we've also done some limiting Between book marketing as well as just in our underwriting, putting some limitations on the amounts that they can older individuals can purchase.
At American Income, there's some limitations and some changes on some of the policy there for individuals over 60. So both through the underwriting and the marketing process, doing some things to try to limit our exposure there. And I think as we look at the Actual experience, again, I mentioned in my notes that since the since for policies that have been issued since March 1st of 2020, we've only seen 71 claims. So far, they've totaled about $600,000 And so that's both inclusive of American Income and Liberty and all the different So it's a very small percentage of the overall policies. And of course, the additional the incremental Those come in a very small incremental marketing costs.
So we expected there to be a little bit of additional mortality, But it's more than paid for through additional profits on that business.
And what I'll add to that is in addition, while the sales increases in direct to consumer Across all channels and products, the sales of the juvenile product have increased at a higher rate than adult life insurance And it gives us further confidence we're not experiencing any selection, just the highest incidence of serious illness mortality is at the older ages.
Got it. Thank you.
Our next question comes from Eric Bass on Thomas Research.
Hi, thank you. I guess sticking on the Life business, I
was hoping you could give a little bit more detail on your margin expectations By the business line for kind of the remainder of the year? And then what would you think of as kind of a normalized underwriting margin target for the 3 main businesses.
On As we think about life as a whole, and I'll talk about some of the individual businesses, we are we saw about 19% in the Q1. We do see that gradually improving over the course of the year, seeing it for the full year being somewhere around probably 25% for life as a whole. And what we're Really thing is that by the time we get to some of these the non COVID claims and in addition to the non COVID We've had we've talked about some of the lapses and that has an impact on policy obligations as well. It makes that a little bit higher. And that will again, those will I think tend to we think will tend to normalize over the course of the year.
At American Income, We anticipate that the margin for the full year will be closer to 32%. For Direct to consumer around 13% and for Liberty National around 21%. So Again, in each one of those lines, we see the overall underwriting margin improving over the course of the year And really by the anticipating by the Q4 that we're able to get back to pretty close to normal margin percentages as a Percentage of premium.
Got it. And should we look to 2019 as being a pretty normal margin level to think about, hopefully, Returning to in 2022?
That's what we're anticipating is when we think about it, it's about at those levels.
Thank you. And then maybe on the health side, can you
just talk about any changes you're seeing in terms of benefits utilization? And have you seen Any pickup in activity as kind of we've had reopening and more people are getting vaccinated?
Yes. So far, I mean, we are starting to see pretty normal levels of utilization both Especially in the mid supp lines and that we're seeing pretty normal levels of activity at this point in time.
Got it. So the favorable margin is more the better persistency and lower amortization?
That's correct. That's what's really driving most of that.
Okay. Thank you.
Our next question comes from Andrew Kligerman, Credit Suisse.
Hey, good morning and thanks for the thoughtful answers around mortality. I want to drill down a little bit more. I was wondering how many policies does Globe Life have outstanding In the life insurance area, I was doing some math around unfavorable claims and I guesstimated something around 350 to 400 policies above kind of what would have been normal. So the second part of the question, is that a Decent assessment and just how many policies do you have in force in the life area?
Yes, I believe As I say, Andrew, I don't have I think we have around 13,000,000 policies and boards, light bulbs.
$13,000,000 in force. And so would you have any type of like a standard deviation That you might apply to this to say how far out of the normal range is this? I mean, is this Really unusual. I mean Q1 of last year actually was modestly favorable, if I recall correctly. So anyway to kind of other than the dollars, which we know, how unusual was this?
And you're just talking about the general COVID claims or with respect to some
of the No, not all non I'm talking all non COVID. I'm sorry, when I was estimating close to 400 policies, it's non COVID outside of the norm.
Yes. I mean, I think it's a we tend to think about claims activity and Kind of growing overall with the size of business. I mean, definitely what we've seen here over the last few quarters Is there an increase in that activity? We just and it's in I don't have the percentage right off the top of my head. But it is not it comes from time to time.
You'll see those fluctuations to where you will have that on occasion. It is a little bit higher than what we would maybe have typically seen in some of the normal fluctuations, but and we can see that in just some of our overall Claim numbers, but it is not something that is terribly, I'm going to say, way out of The ranges that you might see from time to time.
Yes. I mean and let me just run another thought by you. I mean, If this were a trend, then shouldn't we have seen that in the Q3 and Q4 as well? It just seems like it's kind of come out of nowhere and could very well reverse. Am I thinking about that the right way?
Well, I do think the timing of it corresponds here with the pandemic and that's why we're kind of looking at it is that it's really popped up here toward the end of we started seeing some of the Claims emerging. As we get a little bit more experienced, obviously, we've always talked about there's a 2 or 3 month lag from what we're really seeing in our claims data to being able to get back and see that. And some of these claims that we're actually that we're paying, That we're seeing where the death did occur in late 2020, but we're seeing And that's what gives us some indication that it's more of a fluctuation relating to the overall pandemic. You may recall that just kind of to your point, and I forget exactly the year 2016 or 2017, we went through a really Short period where we ended up having some higher non medical causes of deaths as well and then those tend to subside and drop back down in periods of time. That will take place from time to time.
Very helpful. And then just one last one. I was intrigued a competitor of yours did an acquisition of a Medicare insurance oriented InsurTech Company. And as I look at your direct to consumer operation, Medicare supplements a A tiny fraction of your life sales through that channel. Is that a vertical that you might want to build out more Extensively, is it something where you could sell on behalf of another carrier as opposed to Globe Life providing the underwriting.
The channel in direct to consumer is currently group sales, and group sales are hard to predict. We continue to try and expand that channel. In the past, we've tested individual sales through our direct to consumer channel And we haven't been very successful with that. We've had greater success, obviously, with our agency operation. Through our branding efforts, as we go forward, Certainly, we're exploring how to expand those direct to consumer health sales and particularly in Medicare Supplement.
So I don't think we'll look to other carriers to try and distribute on behalf of other carriers. That would detract from our live sales and our agencies, We will continue to explore direct to consumer individual Medicare supplement sales.
Excellent. Thanks so much.
Our next question comes from Ryan Krueger, KBW.
Hey, good morning. I may have missed this, but did you disclose the amount of the dollar amount of Non COVID excess mortality that you saw in the Q1 and also your expectations for the full year?
Yes. For the Q1, it probably ran about $13,000,000 higher than what we anticipated, so roughly about 2% of premium just from that in the Q1. And for the full year, we anticipate around $18,000,000 more than what we had kind of anticipated initially. I think for Total inclusive for the entire year, including our expectations, if you will, It will be about $50,000,000 for the full year and it was about $25,000,000 in the Q1. So again, about half of what we kind of anticipate Of total extra obligations, if you will, will have occurred in the Q1.
And so that's why I think in the Q1, you kind of look at it was probably a drag of about 3.5% of premium due to some these The entire obligations and then about 1.8% or so, between 1.5% and 2% is kind of what we expect now for the full year.
Got it. Thanks. You mentioned that higher buyback was a partial offset
to this.
Can you give some updated commentary on your level of buybacks that you expect in 2021?
Yes. So at the midpoint of our guidance, again, we're looking at that excess cash flow of that $360,000,000 to $370,000,000 And That's kind of the level that we have around in that. And then we look at some different average prices over the course of the year. That's But that is a little bit higher than where we were back in January and kind of at the midpoint. Our expectations were not as It was not quite that high for overall share repurchases.
And then actually in the Q1, we were able to We purchased just a little bit more, so that wasn't it, but it's actually at a little bit lower price than what we had kind of built into the midpoint of our prior projections. So and kind of the benefit of that. So we bought back a few more shares than what we had anticipated. That just helps So we're getting the benefit of that over the course of the year as well.
Thanks. And then just the last one. Are you still thinking that $50,000,000 is your target for parent company liquidity? So And as you get to the end of this year, you'll determine how much you might capital you might need downstream for the updated C1 factors. But Beyond that, anything that's above $50,000,000 could be available for buybacks in 2022?
Yes, I think that's Kind of what we're thinking. Again, we'll take a look at that in the situation as we get closer to the end of the year probably and a little bit of this comes more into focus. But I think that's likely kind of that target that we'd be looking forward to retain.
Great. Thank you.
The next question comes from Tom Gallagher, Evercore.
Hi. Just a follow-up to Ryan's last question on capital management plan. With the $550,000,000 of total resources balance Minus the $50,000,000 would imply $500,000,000 And I know I presume some of that's going to be used through the balance of the year. There's Timing issues with getting dividends out. But realistically, are you looking at using some meaningful portion of that For additional buybacks, I mean, are we looking at, I don't know, an extra $200,000,000 to $400,000,000 of buybacks in 2022?
Or are you thinking about Staggering that out more when you think about capital deployment.
Yes. So when you think about the $500,000,000 $550,000,000 or what Have you. And then and as you kind of mentioned, you're pulling out, let's just say, for 50 with 500. For the remainder of 2021, if our share buybacks, let's just say, at the high end of that excess cash flow range of $370,000,000 We've already bought back $100,000,000 So you've got about $270,000,000 that's remaining for this year. Then that's where we'll have to look.
Then that so that's really leaving about $230,000,000 remaining out there for various Capital needs, so we'll see what type of capital needs we have for SeaOne and how the downgrades progress over the year. Now that's in excess clearly of where we north of what we think would have would be necessary. And so but depending on where that is, Tom, I think depends upon if that's something that and how much clarity we have. If we end up with A bigger chunk that we're able to return, it probably would come back over a period of time and tail clearly into 2022. I think we'd probably be trying to do it earlier than spread it out over the entire year.
But I think we'd probably focus on returning it sometime early in 2022 or at the very end of 2021 depending on how much there is.
Okay. That's helpful. And then just in terms of the, I guess, the philosophy of $50,000,000 Holding company buffer, I think your annual interest expenses are over $80,000,000 now and I think your common dividend is over 80,000,000 I guess standard industry practice seems to be holding one times coverage for interest and common dividends, which would be $160,000,000 plus for you. Is that not is it the stability of your cash flows that would give you confidence to not hold that much? But just Curious why you'd be able to hold a lot less than annual interest expense?
Yes, Tom here. I would say, I think you got the answer to the stability of the free cash flow that we have in The consistent growth over the years, the $58,000,000 is something that we had We adjusted that level several years ago, and we really had no issues. This past year, we did raise some additional liquidity, not knowing what What the COVID world is going to be like. And as it turns out, we raised a lot more than we needed. Frank, I don't think Frank is saying it's going to be $50,000,000 We'll evaluate that as we go along, but I don't think that we would see the need to keep as much as you're talking about.
Yes. And I would agree. It really is. When we look at having that comfort of having $350,000,000 plus or minus some each and every year in our excess cash flow. So after the payment of those interest and dividends that you mentioned, gives us great comfort as we go over that, that we'll have The funds and that creates a new pool of liquidity every year that we can access if we in fact needed it.
Okay. And then the final question just on I just want to make sure I understood it. The non COVID Sorry, the indirect COVID mortality, you said it was negative $13,000,000 this in 1Q?
Yes. That was higher than what we had kind of anticipated. So we had anticipated higher. We had seen some of the trends at the end of the year. And again, we anticipated the higher COVID death.
So we anticipated a decent amount Higher obligations in the Q1, but we did see about $13,000,000 more than what we had anticipated.
Okay, got it. So that was relative to expectation. But if I say relative to returning to normal, I was estimating like $20,000,000 to $25,000,000 Does that sound about right?
That does sound about right. Correct.
Okay. Thank you.
We have no further questions in the queue at this time.
All right. Thank you for joining us this morning. We'll talk to you again next quarter.
Thank