Globe Life shares dive after Fuzzy Panda takes short position

By Manya Saini and Niket Nishant

(Reuters) -Shares of Globe Life plunged to their lowest in over a decade on Thursday after Fuzzy Panda Research disclosed a short position in the company, alleging multiple instances of insurance fraud.

The short-seller in a report said it had uncovered "extensive allegations of insurance fraud ignored by management despite being obvious and reported hundreds of times", including policies written for dead and fictitious people.

Reuters could not independently verify the claims in the report.

Globe Life denied the allegations, saying "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."

That pushed the company's shares up by 11.6% in extended trading. Globe Life had ended the day with its largest single-day drop of 53% and hit its lowest since April 2013.

Short interest in Globe Life is at an estimated 2.99% of free float, according to data from Ortex.

The company would have to do damage control to avoid questions, said Michelle Meyers, senior counsel at law firm Singleton Schreiber. "I would expect that the regulators should take this exceptionally seriously," she added.

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.

The unit sells policies to labor unions, credit unions and associations.

Earlier in April, Nate Koppikar of hedge fund Orso Partners said Globe Life's book value was "inflated" and it was an "attractive" potential target for short selling.

In response, the company touted its sustainable earnings growth and said the Business Insider articles Koppikar had referenced in his criticism of the company were inaccurate and misleading.

A spokesperson for Business Insider said in a mailed statement to Reuters that they stand by their reporting.

For the fourth quarter, Globe Life reported higher profit, driven by stronger underwriting and better returns on investments.

(Reporting by Manya Saini, Niket Nishant and Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli, Vijay Kishore and Maju Samuel)