New life licenses up 14%, driving sales
force to record 145,789 representatives
Term Life net premiums increased 4%;
adjusted direct premiums increased 5%
Issued Term Life face amount of $33 billion;
total in force coverage of $951 billion
Investment and Savings Products sales of
$3.1 billion, up 29%
Investment and Savings Products client asset
values up 15%, ending the quarter at record $105 billion
GAAP diluted earnings per share of $0.03;
diluted adjusted operating earnings per share of $4.71
Declared a 20% increase in dividend to $0.90
per share, payable on September 12, 2024; repurchased $143 million
of common stock during the quarter
Primerica, Inc. (NYSE: PRI) today announced financial results
for the quarter ended June 30, 2024. The Company’s previously
announced decision to exit the Senior Health business and
associated write-offs of non-cash items impacted GAAP earnings with
net income ending at $1.2 million, or $0.03 per diluted share. Core
business results from the quarter were strong. Adjusted net
operating income of $162.7 million increased 12%, while adjusted
operating earnings per diluted share of $4.71 grew 18%
year-over-year. Total revenue of $803.4 million, which included $50
million in proceeds from payments under an insurance claim,
increased 17% compared to the second quarter of 2023. Adjusted
operating revenue of $753.3 million increased 9%
year-over-year.
The Company’s decision to exit the Senior Health business led to
several non-cash adjustments in the second quarter of 2024. These
included write-offs of the remaining goodwill and intangibles and
the recognition of a tax benefit from the removal of the deferred
tax liabilities associated with the intangible assets and a
valuation allowance for state net operating losses. The quarter’s
results also included income recognized from the receipt of cash
proceeds paid under a previously disclosed insurance claim. The
Company excluded these non-recurring items from adjusted operating
results to provide a comparable basis to the prior period results.
A reconciliation of these items to GAAP results is included in the
tables at the end of this release.
Second quarter operating results were driven by strong sales of
investment products and rising client asset values as well as
steady premium growth and the predictable margins of the Term Life
business. Investment income benefited from higher yielding
investments and growth in the Company’s invested asset portfolio.
Results were partially offset by weakness in the Senior Health
business. Distribution results were strong during the quarter,
driven by recruiting and growth in new life-licensed
representatives.
“I am pleased with the continued momentum of our business and
the ongoing efforts of our sales force to educate clients and help
them navigate these uncertain times,” said Glenn Williams, Chief
Executive Officer of Primerica, Inc. “We welcomed nearly 40,000
teammates during our international convention in July and believe
the event will build momentum for the future.”
Second Quarter Distribution &
Segment Results
Distribution Results
Q2 2024
Q2 2023
% Change
Life-Licensed Sales Force
145,789
137,806
6
%
Recruits
96,563
86,124
12
%
New Life-Licensed Representatives
14,402
12,638
14
%
Life Insurance Policies Issued
100,768
96,953
4
%
Life Productivity (1)
0.23
0.24
*
Issued Term Life Face Amount ($ billions)
(2)
$
33.2
$
32.2
3
%
ISP Product Sales ($ billions)
$
3.1
$
2.4
29
%
Average Client Asset Values ($
billions)
$
103.0
$
88.8
16
%
Senior Health Submitted Policies (3)
15,767
13,885
14
%
Senior Health Approved Policies (4)
14,646
12,915
13
%
Closed U.S. Mortgage Volume ($ million
brokered)
$
99.6
$
82.2
21
%
_______________________ (1)
Life productivity equals the average
monthly policies issued divided by the average number of life
insurance licensed representatives.
(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
Q2 2024
Q2 2023
% Change
($ in thousands)
Adjusted Operating Revenues:
Term Life Insurance
$
426,944
$
411,873
4
%
Investment and Savings Products
260,906
214,509
22
%
Senior Health
12,420
14,890
(17
)%
Corporate and Other Distributed Products
(1)
53,015
48,293
10
%
Total adjusted operating revenues
(1)
$
753,285
$
689,565
9
%
Adjusted Operating Income (Loss) before
income taxes:
Term Life Insurance
$
147,779
$
140,113
5
%
Investment and Savings Products
74,782
59,583
26
%
Senior Health (1)
(11,365
)
(6,032
)
88
%
Corporate and Other Distributed Products
(1)
942
(3,588
)
NM
Total adjusted operating income before
income taxes (1)
$
212,138
$
190,076
12
%
_________________________ (1)
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
During the second quarter, the Company successfully leveraged
the excitement leading into its convention and the efforts of its
field leaders to help new recruits effectively navigate the
licensing process. The appeal of Primerica’s business opportunity
continued to generate significant interest. The Company recruited a
total of 96,563 individuals, a 12% increase compared to the prior
year period. Licensing remained similarly strong with a total of
14,402 new life licenses during the quarter, a 14% increase
compared to the prior year period, fueling 6% growth in the size of
the sales force year-over-year to 145,789 life-licensed
representatives.
Term Life Insurance
Life insurance policies issued during the second quarter
increased 4% to 100,768, helping drive $33.2 billion in new term
life face amount issued during the three months ended June 30,
2024. Productivity was at the higher end of the historical range at
a monthly average of 0.23 policies issued per life-licensed
representative. We believe higher cost of living pressures
continued to impact middle-income families, contributing to
elevated lapse rates during the quarter.
During the second quarter, Term Life revenues of $426.9 million
increased 4% compared to the second quarter of 2023 driven by 5%
growth in adjusted direct premiums, while pre-tax operating income
of $147.8 million increased 5%. The benefits and claims ratio of
57.4% benefited from a $4.3 million remeasurement gain largely due
to better than anticipated claims experience. The DAC amortization
and insurance commissions ratio of 11.8% remained stable
year-over-year. The Term Life operating margin was 23.1%, in line
with the prior year period.
Investment and Savings Products
Total product sales during the quarter were $3.1 billion,
increasing 29% compared to the prior year period, driven by the
strong demand for mutual funds, annuities and managed accounts. On
June 30, 2024, client asset values were $105 billion, up 15%
year-over-year primarily due to strong equity market appreciation.
Net client inflows were $423 million during the quarter.
Second quarter ISP revenues of $260.9 million increased 22%
compared to the prior year period, while pre-tax operating income
of $74.8 million increased 26% due to strong sales and an increase
in average client asset values. Revenues from sales-based
commissions and fees increased 35%, rising at a slightly higher
rate than sales due to a favorable mix shift. Sales-based
commission expenses increased 31%, in line with the increase in
correlated sales. Asset-based revenues increased 17%, largely
consistent with the growth in average client asset values. The
change in asset-based commission expenses was in line 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 second quarter of 2024, a total of 14,646 policies
were approved by carriers, representing a 13% increase compared to
the prior year period. The lifetime value of commissions per
approved policy (“LTV”) was $914, while contract acquisition costs
per approved policy (“CAC”) were $1,074 for a LTV/CAC ratio of
0.9.
Second quarter Senior Health revenues were $12.4 million,
including a $1.8 million negative tail revenue adjustment due to
higher policy churn. The adjusted operating loss during the quarter
was $11.4 million, driven by higher contract acquisition costs,
which rose 25% as e-TeleQuote onboarded agents in preparation for
the upcoming enrollment period.
Corporate and Other Distributed Products
During the second quarter of 2024, the segment recorded pre-tax
adjusted operating income of $0.9 million compared to a pre-tax
adjusted operating loss of $3.6 million in the prior year period.
The year-over-year change was primarily driven by the continued
benefit of higher interest rates and growth in the size of the
invested asset portfolio, which added an additional $5.0 million of
adjusted net investment income to current quarter revenues.
Taxes
The effective tax rate was 85.0% in the second quarter of 2024
compared to 23.5% in the prior year period. The increase in the
effective tax rate during the second quarter of 2024 was primarily
driven by the non-cash goodwill impairment charge that is not
deductible for income tax purposes and a valuation allowance
established against e-TeleQuote’s state net operating losses. The
impact of those two items was partially offset by the
representation and warranty insurance proceeds, which will be
excluded from taxable income, and the write-off of deferred tax
liabilities on the intangibles that were fully impaired in the
quarter. Excluding the impact of the four aforementioned items, the
effective tax rate in the second quarter of 2024 would have been
23.3%.
Capital
The Company repurchased 629,378 shares of common stock for
$142.7 million during the second quarter of 2024 and the Board of
Directors has approved a 20% increase in the dividend to $0.90 per
share, payable on September 12, 2024 to stockholders of record on
August 21, 2024. Primerica Life Insurance Company’s statutory
risk-based capital (RBC) ratio was estimated to be about 445% as of
June 30, 2024.
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, 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. Also excluded from these non-GAAP financial measures is
the receipt of insurance proceeds under a Representation and
Warranty policy negotiated and purchased in connection with the
acquisition of e-TeleQuote. We exclude this gain from our non-GAAP
financial measures as it represents a non-recurring item that
causes incomparability in the Company’s results.
Adjusted operating income before taxes, adjusted net operating
income, and diluted adjusted operating earnings per share also
exclude non-cash goodwill and intangible asset impairment charges.
We exclude non-cash goodwill and intangible asset impairment
charges as non-recurring items that cause incomparability between
period-over-period results. Also excluded from these non-GAAP
financial measures is restructuring and related charges incurred
with the exit of our senior health business. We exclude these items
from our non-GAAP financial measures as they are not useful in
evaluating the Company’s ongoing operations. Adjusted net operating
income and diluted adjusted operating earnings per share also
exclude the tax effect of pre-tax operating adjustments, the
deferred tax benefit recognized in association with the impairment
of intangible assets and the valuation allowance recognized for
state operating losses in the Company’s Senior Health segment. We
exclude these items from our non-GAAP financial measures as they
represent the tax effect of pre-tax operating adjustments and/or
non-recurring items that will cause incomparability between
period-over-period results.
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 users 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 Thursday, August 8, 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; inability to abandon
our ownership of e-TeleQuote by the anticipated date, or at all,
which would cause us to exit the senior health insurance
distribution business by an alternative method that may not be as
beneficial to stockholder value as the planned abandonment; 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)
June 30, 2024
December 31, 2023
(In thousands)
Assets
Investments:
Fixed-maturity securities
available-for-sale, at fair value
$
2,796,030
$
2,719,467
Fixed-maturity security held-to-maturity,
at amortized cost
1,353,370
1,386,980
Short-term investments available-for-sale,
at fair value
-
276
Equity securities, at fair value
26,026
29,680
Trading securities, at fair value
3,158
18,383
Policy loans and other invested assets
49,791
51,175
Total investments
4,228,375
4,205,961
Cash and cash equivalents
627,292
613,148
Accrued investment income
25,687
23,958
Reinsurance recoverables
2,833,055
3,015,777
Deferred policy acquisition costs, net
3,566,126
3,447,234
Renewal commissions receivable
171,022
190,258
Agent balances, due premiums and other
receivables
288,766
273,066
Goodwill
-
127,707
Intangible assets, net
45,275
175,025
Income taxes
118,379
123,514
Operating lease right-of-use assets
50,646
53,693
Other assets
357,115
382,549
Separate account assets
2,253,966
2,395,842
Total assets
$
14,565,704
$
15,027,732
Liabilities and Stockholders'
Equity
Liabilities:
Future policy benefits
$
6,436,332
$
6,742,025
Unearned and advance premiums
17,076
14,876
Policy claims and other benefits
payable
478,773
513,803
Other policyholders' funds
412,570
435,094
Note payable
594,110
593,709
Surplus note
1,353,014
1,386,592
Income taxes
135,049
135,247
Operating lease liabilities
58,756
61,358
Other liabilities
613,303
583,434
Payable under securities lending
90,995
99,785
Separate account liabilities
2,253,966
2,395,842
Total liabilities
12,443,944
12,961,765
Stockholders' equity
Common stock
340
350
Paid-in capital
-
-
Retained earnings
2,122,832
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
201,441
(39,086
)
Unrealized foreign currency translation
gains (losses)
(15,507
)
(2,235
)
Net unrealized gains (losses) on
available-for-sale securities
(187,346
)
(170,008
)
Total stockholders' equity
2,121,760
2,065,967
Total liabilities and stockholders'
equity
$
14,565,704
$
15,027,732
PRIMERICA, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Income
(Unaudited)
Three months ended June
30,
2024
2023
(In thousands, except
per-share amounts)
Revenues:
Direct premiums
$
845,358
$
828,296
Ceded premiums
(427,561
)
(425,266
)
Net premiums
417,797
403,030
Commissions and fees
279,769
233,130
Net investment income
38,452
32,398
Investment gains (losses)
(99
)
(328
)
Other, net
67,456
20,155
Total revenues
803,375
688,385
Benefits and expenses:
Benefits and claims
150,030
148,911
Future policy benefits remeasurement
(gain) loss
(4,329
)
(1,867
)
Amortization of deferred policy
acquisition costs
73,643
68,110
Sales commissions
142,154
113,623
Insurance expenses
62,685
59,093
Insurance commissions
7,399
9,142
Contract acquisition costs
15,724
12,602
Interest expense
6,099
6,686
Impairment of goodwill and other
long-lived assets (1)
253,607
-
Other operating expenses
88,566
83,189
Total benefits and expenses
795,578
499,489
Income before income taxes
7,797
188,896
Income taxes
6,626
44,392
Net income
$
1,171
$
144,504
Earnings per share:
Basic earnings per share
$
0.03
$
3.97
Diluted earnings per share
$
0.03
$
3.97
Weighted-average shares used in
computing earnings per share:
Basic
34,383
36,215
Diluted
34,383
36,290
(1) Other long-lived assets impairment consists of intangible
assets ($124.5 million) and other assets ($1.4 million).
PRIMERICA, INC. AND
SUBSIDIARIES
Consolidated Adjusted
Operating Results Reconciliation
(Unaudited)
Three months ended June
30,
2024
2023
% Change
(In thousands, except
per-share amounts)
Total revenues
$
803,375
$
688,385
17
%
Less: Investment (losses) gains
(99
)
(328
)
Less: 10% deposit asset MTM included in
NII
189
(852
)
Less: Gain on insurance proceeds
50,000
-
Adjusted operating revenues
$
753,285
$
689,565
9
%
Income before income taxes
$
7,797
$
188,896
NM
Less: Investment (losses) gains
(99
)
(328
)
Less: 10% deposit asset MTM included in
NII
189
(852
)
Less: Gain on insurance proceeds
50,000
-
Less: Restructuring costs
(824
)
-
Less: Impairment of goodwill
(127,707
)
-
Less: Impairment of other long-lived
assets
(125,900
)
-
Adjusted operating income before income
taxes
$
212,138
$
190,076
12
%
Net income
$
1,171
$
144,504
NM
Less: Investment (losses) gains
(99
)
(328
)
Less: 10% deposit asset MTM included in
NII
189
(852
)
Less: Gain on insurance proceeds
50,000
-
Less: Restructuring costs
(824
)
-
Less: Impairment of goodwill
(127,707
)
-
Less: Tax impact of preceding items
18,720
277
Less: Impairment of other long-lived
assets
(125,900
)
-
Less: Deferred tax benefit of impairment
of other long-lived assets
35,126
-
Less: Valuation allowance on Senior Health
state net operating losses
(11,080
)
-
Adjusted net operating income
$
162,746
$
145,407
12
%
Diluted earnings per share
$
0.03
$
3.97
NM
Less: Net after-tax impact of operating
adjustments
(4.68
)
(0.02
)
Diluted adjusted operating earnings per
share
$
4.71
$
3.99
18
%
TERM LIFE INSURANCE
SEGMENT
Adjusted Premiums
Reconciliation
(Unaudited)
Three months ended June
30,
2024
2023
% Change
(In thousands)
Direct premiums
$
840,668
$
823,297
2
%
Less: Premiums ceded to IPO coinsurers
201,566
216,740
Adjusted direct premiums
639,102
606,557
5
%
Ceded premiums
(426,348
)
(423,704
)
Less: Premiums ceded to IPO coinsurers
(201,566
)
(216,740
)
Other ceded premiums
(224,782
)
(206,964
)
Net premiums
$
414,320
$
399,593
4
%
SENIOR HEALTH SEGMENT
Adjusted Operating Results
Reconciliation
(Unaudited)
Three months ended June
30,
2024
2023
% Change
(In thousands)
Income (loss) before income taxes
$
(264,972
)
$
(6,032
)
NM
Less: Impairment of goodwill
(127,707
)
-
Less: Impairment of other long-lived
assets
(125,900
)
-
Adjusted operating income (loss) before
income taxes
$
(11,365
)
$
(6,032
)
88
%
CORPORATE AND OTHER
DISTRIBUTED PRODUCTS SEGMENT
Adjusted Operating Results
Reconciliation
(Unaudited)
Three months ended June
30,
2024
2023
% Change
(In thousands)
Total revenues
$
103,105
$
47,113
NM
Less: Investment gains (losses)
(99
)
(328
)
Less: 10% deposit asset MTM included in
NII
189
(852
)
Less: Gain on insurance proceeds
50,000
-
Adjusted operating revenues
$
53,015
$
48,293
10
%
Income (loss) before income taxes
$
50,208
$
(4,768
)
NM
Less: Investment gains (losses)
(99
)
(328
)
Less: 10% deposit asset MTM included in
NII
189
(852
)
Less: Restructuring costs
(824
)
-
Less: Gain on insurance proceeds
50,000
-
Adjusted operating income (loss) before
income taxes
$
942
$
(3,588
)
NM
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