DALLAS — Stock for Globe Life Inc., one of North Texas' largest insurance providers, lost more than half of its value on Thursday after allegations of potential fraud by a group called Fuzzy Panda Research.
Globe Life stock, which had hovered consistently at more than $100 per share, opened at $98.48 on Thursday. It began a sharp decline, bottoming out at $38.85 a share at 3:05 p.m. before closing at $49.17. It ended down 53% in a seismic price collapse for the company stock, though shares ticked back up around 18% during initial trading Friday morning.
The stock collapse on Thursday had wiped out $5 billion dollars in value for Globe Life, Inc., according to the Wall Street Journal.
The issue began when a group called Fuzzy Panda Research said it had taken a short position in the company after conducting an investigation it alleged revealed evidence of wide-ranging insurance fraud. Investors make money in so-called short positions when the value of a company goes down.
Fuzzy Panda alleged that third-party policy sellers known to have committed insurance fraud contributed over 60% of the new business at Globe Life's American Income Life unit, which accounted for nearly half of the total underwriting margins last year.
Globe Life responded after the market closed and said it was disappointed to see "self-motivated short sellers push inflammatory allegations" to drive its stock price down.
In a statement, the company said: "We reviewed the report and found it to be wildly misleading, mixing anonymous allegations with recycled points pushed by plaintiff law firms to coerce Globe Life into settlements. The motivations behind this short seller's report are driven solely by short-term profit earned on the backs of the thousands of shareholders, hardworking employees, independent contractor sales agents and customers who know and trust our brand and strong track record. We have successfully defended ourselves against these types of claims. The short seller analysis by Fuzzy Panda Research mischaracterizes facts and uses unsubstantiated claims and conjecture to present an overall picture of Globe Life that is deliberately false, misleading and defamatory. Globe Life intends to explore all means of legal recourse against the parties responsible."
Globe Life, Inc. employs more than 3,000 people at its headquarters in McKinney. The company also purchased the naming rights to the Rangers ballpark in Arlington. In 2017, Globe Life extended its naming rights agreement through 2048.
The Rangers and the City of Arlington, which owns the ballpark, declined to comment on the Globe Life situation.
"We intend to more fully rebut these allegations in the near future," the company's statement said. "Rest assured we are steadfast in our commitment to delivering sustainable earnings growth that provides substantial value for our shareholders. Our dedication to providing the highest quality to our customers remains unwavering."