Continued momentum in recruiting and
licensing, up 18% and 16%, respectively
Life-licensed sales force ended the quarter
at 142,855, up 5%
Term Life net premiums grew 5%; adjusted
direct premiums grew 6%
Investment and Savings Products sales of
$2.8 billion, up 20%
Investment and Savings Products client asset
values up 18%, ending the quarter at $103 billion
Earnings per diluted share (EPS) of $3.93
increased 14%; return on stockholders’ equity (ROE) was
25.9%
Diluted adjusted operating EPS of $3.91
increased 10%; adjusted net operating income return on adjusted
stockholders’ equity (ROAE) was 24.1%
Declared dividend of $0.75 per share,
payable on June 12, 2024, and repurchased $109 million of common
stock during the quarter
Primerica, Inc. (NYSE: PRI) today announced financial results
for the quarter ended March 31, 2024. Total revenues of $742.8
million increased 8% compared to the first quarter of 2023. Net
income of $137.9 million increased 8%, while earnings per diluted
share of $3.93 increased 14% compared to the prior year period.
Adjusted operating revenues of $741.7 million increased 7%
compared to the first quarter of 2023. Adjusted net operating
income of $137.0 million increased 4%, while adjusted operating
earnings per diluted share of $3.91 increased 10% compared to the
prior year period.
Financial results during the first quarter of 2024 reflected the
stability of the Company’s large in-force block of term life
insurance, higher investment products sales, appreciation of client
asset values, and the impact of higher interest rates on net
investment income. Results were partly offset by weakness in the
Senior Health business, which reported a loss of $14 million.
Distribution results demonstrated sustained momentum in recruiting
and the Company’s continued success in licensing new
representatives.
“Our financial results reflect the fundamental strength in our
core Term Life and ISP segments and the predictability of our
model, particularly during uncertain times,” said Glenn Williams,
Chief Executive Officer of Primerica, inc. “We started 2024 with
solid momentum and we are well-positioned to grow the size of our
sales force for the third consecutive year.”
First Quarter Distribution &
Segment Results
Distribution Results
Q1 2024
Q1 2023
% Change
Life-Licensed Sales Force
142,855
136,430
5
%
Recruits
110,710
93,540
18
%
New Life-Licensed Representatives
12,949
11,118
16
%
Life Insurance Policies Issued
86,587
84,561
2
%
Life Productivity (1)
0.20
0.21
*
Issued Term Life Face Amount ($ billions)
(2)
$
28.7
$
28.1
2
%
ISP Product Sales ($ billions)
$
2.8
$
2.3
20
%
Average Client Asset Values ($
billions)
$
99.5
$
86.6
15
%
Senior Health Submitted Policies (3)
16,068
19,826
(19
)%
Senior Health Approved Policies (4)
15,023
18,413
(18
)%
Closed U.S. Mortgage Volume ($ million
brokered)
$
71.4
$
55.6
28
%
_______________________
(1)
Life productivity equals policies issued
divided by the average number of life insurance licensed
representatives per month.
(2)
Includes face amount on issued term life
policies, additional riders added to existing policies, and face
increases under increasing benefit riders.
(3)
Represents the number of completed
applications that, with respect to each such application, the
applicant has authorized us to submit to the health insurance
carrier.
(4)
Represents an estimate of submitted
policies approved by health insurance carriers during the indicated
period. Not all approved policies will go in force.
* Not calculated
Segment Results
Q1 2024
Q1 2023
% Change
($ in thousands)
Adjusted Operating Revenues:
Term Life Insurance
$
440,412
$
421,069
5
%
Investment and Savings Products
243,716
210,202
16
%
Senior Health (1)
6,880
18,710
(63
)%
Corporate and Other Distributed Products
(2)
50,654
44,990
13
%
Total adjusted operating revenues
(2)
$
741,662
$
694,971
7
%
Adjusted Operating Income (Loss) before
income taxes:
Term Life Insurance
$
138,367
$
130,541
6
%
Investment and Savings Products
65,562
56,106
17
%
Senior Health (1)
(14,153
)
(3,762
)
276
%
Corporate and Other Distributed Products
(2)
(11,708
)
(11,008
)
(6
)%
Total adjusted operating income before
income taxes (2)
$
178,068
$
171,877
4
%
_______________________
(1)
First quarter 2024 included a $7.8 million
negative tail revenue adjustment reflecting an increase in plan
switching.
(2)
See the Non-GAAP Financial Measures
section and the Adjusted Operating Results reconciliation tables at
the end of this release for additional information.
Life Insurance Licensed Sales Force
The attractiveness of Primerica’s business opportunity continues
to generate a high degree of interest, creating momentum in both
recruiting and licensing and fueling growth in the size of the
sales force. During the first quarter, recruiting increased 18%
compared to the same period in 2023 while new life licenses
increased 16%. As of March 31, 2024, the Company had a total of
142,855 independent life-licensed representatives, a 5% increase
year-over-year.
Term Life Insurance
Life insurance policies issued during the first quarter of 2024
increased 2% to 86,587, helping to drive $28.7 billion in term life
face amount issued during the three months ended March 31, 2024.
Productivity, as measured by the number of policies issued per
life-licensed representative per month, was 0.20 policies compared
to 0.21 policies in the first quarter of 2023.
Compared to the prior year period, first quarter revenues
increased 5% to $440.4 million due principally to a 6% increase in
adjusted direct premium. Pre-tax operating income of $138.4 million
increased 6%. The benefits and claims ratio at 58.0% and the DAC
amortization ratio at 12.2% were both stable year-over-year. The
Term Life operating margin was 22.0%, in line with the prior year
period
Investment and Savings Products
Total product sales of $2.8 billion during the first quarter
increased 20% compared to the prior year period, driven by
continued strong sales of mutual funds in both the U.S. and Canada
as well as solid demand for variable annuities and managed
accounts. On March 31, 2024, client asset values were $103 billion,
up 18% year-over-year primarily due to strong equity market
appreciation as well continued net client inflows of $274 million
during the quarter.
First quarter revenues of $243.7 million increased 16% compared
to the prior year period, while pre-tax operating income of $65.6
million increased 17% driven by a combination of strong sales and
an increase in average client asset values. Sales-based commissions
and fees revenues increased 23%, in line with a 24% increase in
revenue generating product sales, while sales-based commission
expenses increased 20%. Asset-based revenues increased 15%, in line
with the growth in average client asset values. The change in
asset-based commission expenses was consistent with asset-based
revenues, excluding revenues on Canadian segregated funds. Expenses
related to Canadian segregated funds are reflected in insurance
commissions and amortization of DAC.
Senior Health
During the first quarter of 2024, a total of 15,023 policies
were approved by carriers, representing 18% fewer policies than in
the prior year period due to fewer tenured agents and the negative
impact of an industry-wide service disruption in a third-party
service provider that affected the ability of our agents to verify
plan eligibility. The lifetime value of commissions per approved
policy (“LTV”) was $926, while contract acquisition costs per
approved policy (“CAC”) were $901 for a LTV/CAC ratio of 1.0.
First quarter revenues of $6.9 million included a $7.8 million
negative tail revenue adjustment. The tail adjustment was largely
driven by an increase in plan switching. Total contract acquisition
costs declined 10% year-over-year, reflecting lower sales volume,
while operating expenses remained unchanged. The operating loss was
$14.2 million compared to a loss of $3.8 million in the prior year
period. The Company did not contribute cash to the segment during
the first quarter of 2024, nor does it expect to do so for the
remainder of the year.
Corporate and Other Distributed Products
During the first quarter of 2024, the segment recorded an
adjusted operating loss of $11.7 million compared to an adjusted
operating loss of $11.0 million in the prior year period. Adjusted
net investment income increased $6.6 million from the continued
benefit of higher interest rates and growth in the size of the
invested asset portfolio. Insurance and other operating expenses
increased $7.4 million due to higher growth-related technology
costs and employee-related compensation increase.
Capital
The Company repurchased 465,938 shares of common stock for $109
million during the first quarter of 2024 and the Board of Directors
has approved a dividend of $0.75 per share, payable on June 12,
2024 to stockholders of record on May 21, 2024.
Primerica has a strong balance sheet, including invested assets
and cash at the holding company of $281 million. Primerica Life
Insurance Company’s statutory risk-based capital (RBC) ratio was
estimated to be approximately 430% as of March 31, 2024.
Subsequent Event
In April 2024, the Company executed agreements providing for the
payment of certain claims filed by the Company under a
Representation and Warranty insurance policy negotiated and
purchased in connection with the acquisition of e-TeleQuote
Insurance. The claims made by the Company involved breaches of
certain representations and warranties relating to the
pre-acquisition financial statements made by the sellers of
e-TeleQuote in connection with the acquisition. The Company will
recognize a gain in earnings during the three months ended June 30,
2024 of $50 million, which is equal to the aggregate proceeds to be
received from the third-party insurers under the policy, reflecting
the full coverage under the policy. The proceeds of this claim will
be excluded from second quarter adjusted operating results to
provide comparability to the prior year results.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
U.S. generally accepted accounting principles (“GAAP”), the Company
presents certain non-GAAP financial measures. Specifically, the
Company presents adjusted direct premiums, other ceded premiums,
adjusted operating revenues, adjusted operating income before
income taxes, adjusted net operating income, adjusted stockholders’
equity and diluted adjusted operating earnings per share.
Adjusted direct premiums and other ceded premiums are net of
amounts ceded under coinsurance transactions that were executed
concurrent with our initial public offering (the “IPO coinsurance
transactions”) for all periods presented. We exclude amounts ceded
under the IPO coinsurance transactions in measuring adjusted direct
premiums and other ceded premiums to present meaningful comparisons
of the actual premiums economically maintained by the Company.
Amounts ceded under the IPO coinsurance transactions will continue
to decline over time as policies terminate within this block of
business.
Adjusted operating revenues, adjusted operating income before
income taxes, adjusted net operating income and diluted adjusted
operating earnings per share exclude the impact of investment gains
(losses), including credit impairments, and fair value
mark-to-market (“MTM”) investment adjustments for all periods
presented. We exclude investment gains (losses), including credit
impairments, and MTM investment adjustments in measuring these
non-GAAP financial measures to eliminate period-over-period
fluctuations that may obscure comparisons of operating results due
to items such as the timing of recognizing gains (losses) and
market pricing variations prior to an invested asset’s maturity or
sale that are not directly associated with the Company’s insurance
operations.
Adjusted stockholders’ equity excludes the impact of net
unrealized investment gains (losses) recorded in accumulated other
comprehensive income (loss) for all periods presented. We exclude
unrealized investment gains (losses) in measuring adjusted
stockholders’ equity as unrealized gains (losses) from the
Company’s available-for-sale securities are largely caused by
market movements in interest rates and credit spreads that do not
necessarily correlate with the cash flows we will ultimately
realize when an available-for-sale security matures or is sold.
Adjusted stockholders’ equity also excludes the difference in
future policy benefits calculated using the current discount rate
and future policy benefits calculated using the locked-in discount
rate at contract issuance recognized in accumulated other
comprehensive income. We exclude the impact from the difference in
the discount rate in measuring adjusted stockholders' equity as
such difference is caused by market movements in interest rates
that are not permanent and may not align with the cash flows we
will ultimately incur when policy benefits are settled.
Our definitions of these non-GAAP financial measures may differ
from the definitions of similar measures used by other companies.
Management uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating the
Company’s performance. Furthermore, management believes that these
non-GAAP financial measures may provide users with additional
meaningful comparisons between current results and results of prior
periods as they are expected to be reflective of the core ongoing
business. These measures have limitations and investors should not
consider them in isolation or as a substitute for analysis of the
Company’s results as reported under GAAP. Reconciliations of GAAP
to non-GAAP financial measures are attached to this release.
Earnings Webcast Information
Primerica will hold a webcast on Tuesday, May 7, 2024, at 10:00
a.m. Eastern, to discuss the quarter’s results. To access the
webcast, go to https://investors.primerica.com at least 15 minutes
prior to the event to register, download and install any necessary
software. A replay of the call will be available for approximately
30 days. This release and a detailed financial supplement will be
posted on Primerica’s website.
Forward-Looking Statements
Except for historical information contained in this press
release, the statements in this release are forward-looking and
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements contain known and unknown risks and uncertainties that
may cause our actual results in future periods to differ materially
from anticipated or projected results. Those risks and
uncertainties include, among others, our failure to continue to
attract and license new recruits, retain sales representatives or
license or maintain the licensing of sales representatives; new
laws or regulations that could apply to our distribution model,
which could require us to modify our distribution structure;
changes to the independent contractor status of sales
representatives; our or sales representatives’ violation of or
non-compliance with laws and regulations; litigation and regulatory
investigations and actions concerning us or sales representatives;
differences between our actual experience and our expectations
regarding mortality, persistency, disability or insurance as
reflected in the pricing for our insurance policies; changes in
federal, state and provincial legislation or regulation that
affects our insurance, investment product and mortgage businesses;
our failure to meet regulatory capital ratios or other minimum
capital and surplus requirements; a significant downgrade by a
ratings organization; the failure of our reinsurers or reserve
financing counterparties to perform their obligations; the failure
of our investment products to remain competitive with other
investment options or the loss of our relationship with one or more
of the companies whose investment products we provide; heightened
standards of conduct or more stringent licensing requirements for
sales representatives; inadequate policies and procedures regarding
suitability review of client transactions; revocation of our
subsidiary’s status as a non-bank custodian; we may not be able to
execute an effective senior health insurance business strategy; a
failure by e-TeleQuote to comply with the requirements of the
United States government’s Centers for Medicare and Medicaid
Services and those of its carrier partners; legislative or
regulatory changes to Medicare Advantage or changes to the
implementing guidance by the Centers for Medicare and Medicaid
Services; e-TeleQuote’s inability to acquire or generate leads on
commercially viable terms, convert leads to sales or if customer
policy retention is lower than assumed; e-TeleQuote’s inability to
enroll individuals during the Medicare annual election period; the
loss of a key carrier, or the modification of commission rates or
underwriting practices with a key carrier partner could adversely
affect e-TeleQuote’s business; a significant change to or
disruption in the mortgage lenders’ mortgage businesses or an
inability of the mortgage lenders to satisfy their contractual
obligations to us; economic downcycles that impact our business,
financial condition and results of operations; major public health
pandemics, epidemics or outbreaks or other catastrophic events; the
failure of our or a third-party partner’s information technology
systems, breach of our information security, failure of our
business continuity plan or the loss of the Internet; any failure
to protect the confidentiality of client information; the current
legislative and regulatory climate with regard to privacy and
cybersecurity; cyber-attack(s), security breaches or if e-TeleQuote
is otherwise unable to safeguard the security and privacy of
confidential data, including personal health information; the
effects of credit deterioration and interest rate fluctuations on
our invested asset portfolio and other assets; incorrectly valuing
our investments; changes in accounting standards may impact how we
record and report our financial condition and results of
operations; the inability of our subsidiaries to pay dividends or
make distributions; litigation and regulatory investigations and
actions; a significant change in the competitive environment in
which we operate; the loss of key personnel or sales force leaders;
the efficiency and success of business initiatives to enhance our
technology, products and services; any acquisition or investment in
businesses that do not perform as we expect or are difficult to
integrate; and fluctuations in the market price of our common stock
or Canadian currency exchange rates. These and other risks and
uncertainties affecting us are more fully described in our filings
with the Securities and Exchange Commission, which are available in
the "Investor Relations" section of our website at
https://investors.primerica.com. Primerica assumes no duty to
update its forward-looking statements as of any future date.
About Primerica, Inc.
Primerica, Inc., headquartered in Duluth, GA, is a leading
provider of financial products and services to middle-income
households in North America. Independent licensed representatives
educate Primerica clients about how to better prepare for a more
secure financial future by assessing their needs and providing
appropriate solutions through term life insurance, which we
underwrite, and mutual funds, annuities and other financial
products, which we distribute primarily on behalf of third parties.
We insured approximately 5.7 million lives and had approximately
2.9 million client investment accounts on December 31, 2023.
Primerica, through its insurance company subsidiaries, was the #2
issuer of Term Life insurance coverage in the United States and
Canada in 2023. Primerica stock is included in the S&P MidCap
400 and the Russell 1000 stock indices and is traded on The New
York Stock Exchange under the symbol “PRI”.
PRIMERICA, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Unaudited)
March 31, 2024
December 31, 2023
(In thousands)
Assets
Investments:
Fixed-maturity securities
available-for-sale, at fair value
$
2,782,140
$
2,719,467
Fixed-maturity security held-to-maturity,
at amortized cost
1,376,400
1,386,980
Short-term investments available-for-sale,
at fair value
271
276
Equity securities, at fair value
26,647
29,680
Trading securities, at fair value
3,253
18,383
Policy loans and other invested assets
50,835
51,175
Total investments
4,239,546
4,205,961
Cash and cash equivalents
593,399
613,148
Accrued investment income
24,991
23,958
Reinsurance recoverables
2,920,417
3,015,777
Deferred policy acquisition costs, net
3,503,940
3,447,234
Renewal commissions receivable
176,298
190,258
Agent balances, due premiums and other
receivables
287,459
273,066
Goodwill
127,707
127,707
Intangible assets, net
172,400
175,025
Income taxes
120,126
123,514
Operating lease right-of-use assets
52,135
53,693
Other assets
356,025
382,549
Separate account assets
2,334,911
2,395,842
Total assets
$
14,909,354
$
15,027,732
Liabilities and Stockholders'
Equity
Liabilities:
Future policy benefits
$
6,548,050
$
6,742,025
Unearned and advance premiums
15,855
14,876
Policy claims and other benefits
payable
517,468
513,803
Other policyholders' funds
421,027
435,094
Note payable
593,909
593,709
Surplus note
1,376,028
1,386,592
Income taxes
197,714
135,247
Operating lease liabilities
60,494
61,358
Other liabilities
581,342
583,434
Payable under securities lending
76,648
99,785
Separate account liabilities
2,334,911
2,395,842
Total liabilities
12,723,446
12,961,765
Stockholders' equity
Common stock
346
350
Paid-in capital
-
-
Retained earnings
2,285,937
2,276,946
Accumulated other comprehensive income
(loss), net of income tax:
Effect of change in discount rate
assumptions on the liability for future policy benefits
92,853
(39,086
)
Unrealized foreign currency translation
gains (losses)
(11,691
)
(2,235
)
Net unrealized investment gains (losses)
on available-for-sale securities
(181,537
)
(170,008
)
Total stockholders' equity
2,185,908
2,065,967
Total liabilities and stockholders'
equity
$
14,909,354
$
15,027,732
PRIMERICA, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Income
(Unaudited)
Three months ended March
31,
2024
2023
(In thousands, except
per-share amounts)
Revenues:
Direct premiums
$
841,047
$
817,872
Ceded premiums
(409,764
)
(405,347
)
Net premiums
431,283
412,525
Commissions and fees
255,021
231,547
Net investment income
37,806
31,065
Investment gains (losses)
1,305
(4,608
)
Other, net
17,415
19,507
Total revenues
742,830
690,036
Benefits and expenses:
Benefits and claims
166,321
163,265
Future policy benefits remeasurement
(gain) loss
55
559
Amortization of deferred policy
acquisition costs
72,049
67,923
Sales commissions
131,138
110,874
Insurance expenses
63,149
61,125
Insurance commissions
9,634
8,138
Contract acquisition costs
13,533
14,984
Interest expense
6,771
6,690
Other operating expenses
100,944
89,536
Total benefits and expenses
563,594
523,094
Income before income taxes
179,236
166,942
Income taxes
41,332
38,843
Net income
$
137,904
$
128,099
Earnings per share:
Basic earnings per share
$
3.94
$
3.47
Diluted earnings per share
$
3.93
$
3.46
Weighted-average shares used in
computing earnings per share:
Basic
34,883
36,710
Diluted
34,937
36,804
PRIMERICA, INC. AND
SUBSIDIARIES
Consolidated Adjusted
Operating Results Reconciliation
(Unaudited)
Three months ended March
31,
2024
2023
% Change
(In thousands, except
per-share amounts)
Total revenues
$
742,830
$
690,036
8
%
Less: Investment gains (losses)
1,305
(4,608
)
Less: 10% deposit asset MTM included in
NII
(137
)
(327
)
Adjusted operating revenues
$
741,662
$
694,971
7
%
Income before income taxes
$
179,236
$
166,942
7
%
Less: Investment gains (losses)
1,305
(4,608
)
Less: 10% deposit asset MTM included in
NII
(137
)
(327
)
Adjusted operating income before income
taxes
$
178,068
$
171,877
4
%
Net income
$
137,904
$
128,099
8
%
Less: Investment gains (losses)
1,305
(4,608
)
Less: 10% deposit asset MTM included in
NII
(137
)
(327
)
Less: Tax impact of preceding items
(269
)
1,151
Adjusted net operating income
$
137,005
$
131,883
4
%
Diluted earnings per share (1)
$
3.93
$
3.46
14
%
Less: Net after-tax impact of operating
adjustments
0.02
(0.11
)
Diluted adjusted operating earnings per
share (1)
$
3.91
$
3.57
10
%
_______________________
(1)
Percentage change in earnings per share is
calculated prior to rounding per share amounts.
TERM LIFE INSURANCE
SEGMENT
Adjusted Premiums
Reconciliation
(Unaudited)
Three months ended March
31,
2024
2023
% Change
(In thousands)
Direct premiums
$
836,321
$
812,880
3
%
Less: Premiums ceded to IPO coinsurers
206,502
220,240
Adjusted direct premiums
629,819
592,640
6
%
Ceded premiums
(408,558
)
(404,044
)
Less: Premiums ceded to IPO coinsurers
(206,502
)
(220,240
)
Other ceded premiums
(202,056
)
(183,804
)
Net premiums
$
427,763
$
408,836
5
%
CORPORATE AND OTHER
DISTRIBUTED PRODUCTS SEGMENT
Adjusted Operating Results
Reconciliation
(Unaudited)
Three months ended March
31,
2024
2023
% Change
(In thousands)
Total revenues
$
51,822
$
40,055
29
%
Less: Investment gains (losses)
1,305
(4,608
)
Less: 10% deposit asset MTM included in
NII
(137
)
(327
)
Adjusted operating revenues
$
50,654
$
44,990
13
%
Loss before income taxes
$
(10,540
)
$
(15,943
)
34
%
Less: Investment gains (losses)
1,305
(4,608
)
Less: 10% deposit asset MTM included in
NII
(137
)
(327
)
Adjusted operating loss before income
taxes
$
(11,708
)
$
(11,008
)
(6
)%
PRIMERICA, INC. AND
SUBSIDIARIES
Adjusted Stockholders' Equity
Reconciliation
(Unaudited)
March 31, 2024
December 31, 2023
% Change
(In thousands)
Stockholders' equity
$
2,185,908
$
2,065,967
6
%
Less: Net unrealized gains (losses)
(181,537
)
(170,008
)
Less: Effect of change in discount rate
assumptions on the liability for future policy benefits
92,853
(39,086
)
Adjusted stockholders' equity
$
2,274,592
$
2,275,061
0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506458863/en/
Investor Contact: Nicole Russell 470-564-6663 Email:
Nicole.Russell@primerica.com Media Contact: Susan Chana
404-229-8302 Email: Susan.Chana@Primerica.com
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