Short-Seller Accuses Globe Life Of Insurance Fraud, Shares Plummet 50%

(CTN News) – Globe Life shares plunged by more than 50% on Thursday after Fuzzy Panda Research disclosed a short position in the company, alleging multiple instances of insurance fraud against the insurer.

During the investigation, the short-seller stated in a report that there had been “extensive allegations of insurance fraud ignored by management despite the obvious fact that they had been reported hundreds of times”, including policies written for dead and fictitious individuals.

Globe Life says a statement will be issued within a short period of time.

According to Michelle Meyers, senior counsel at the law firm Singleton Schreiber, the company would have to do damage control to avoid questions in the future.

In addition, she pointed out that she expected the regulators to take this matter to an exceptionally high level of seriousness.

Using Ortex data, 2.99% of free float in Globe Life is believed to be short interest according to Ortex data.

The company alleged that third-party policy sellers known to commit insurance fraud contributed over 60% of the new business to Globe Life’s American Income Life unit last year, which accounted for nearly half of the total underwriting margin Globe Life received.

Labor unions, credit unions, associations, and other institutions use this unit.

At the beginning of April, Nate Koppikar of Orso Partners, one of the leading hedge funds in the world, said Globe Life’s book value was “inflated” and would be an attractive short-selling target.

It was in response to the criticism Koppikar had expressed in his criticism of the company. The company had emphasized its sustainable earnings growth and explained that the articles Koppikar referred to were inaccurate and misleading.

The fourth quarter of Globe Life’s financial year ended on a high note. This was driven by a stronger underwriting team and better investment returns.

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