Primerica Reports Fourth Quarter 2017 Results, 2018 Share Repurchase Authorization and Fourth Quarter Stockholder Dividend

Press Release, February 7, 2018

8% increase in life insurance licensed representatives to over 126,000

16% growth in Term Life net premiums

14% increase in Investment and Savings Products (ISP) sales

Net earnings per diluted share (EPS) of $3.72 and net income return on stockholders' equity (ROE) of 49.9%, both reflecting the transition effect of the Tax Cuts and Jobs Act of 2017

Adjusted operating EPS increased 34% to $1.60 and adjusted net operating income return on adjusted stockholders' equity (ROAE) increased to 22.1%

~ $200 million common stock repurchases expected for 2018

25% increase in dividends to $0.25 per share, payable March 16, 2018

Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended December 31, 2017. In the fourth quarter, total revenues increased 12% and adjusted operating revenues increased 13% to $442.9 million and $441.9 million, respectively. Net income grew to $168.4 million in the fourth quarter, with EPS and ROE reaching $3.72 and 49.9%, respectively. Results reflect a net benefit of $95.5 million to recognize the transition effect of the Tax Cuts and Jobs Act of 2017 (Tax Reform) during the quarter1. Given the one-time and unusual nature of this benefit, Primerica has removed its impact from operating results. Adjusted net operating income grew 29% to $72.3 million compared with the fourth quarter of 2016 and adjusted operating EPS increased 34% to $1.60. ROAE expanded to 22.1% in the current period versus 19.2% in the prior year period.

_________________________
1 Amount represents a preliminary estimate of the transition effect of revaluing deferred tax assets and liabilities to a 21% tax rate and the inclusion of tax on mandatory deemed repatriated foreign earnings expected to be recognized in the fourth quarter of 2017 due to the enactment of Tax Reform, which was signed into law on December 22, 2017. The final transition impact of Tax Reform may change from this preliminary estimate, possibly materially, when assumptions are refined and interpretations of the legislation are finalized including the Company's application of any additional guidance that may be issued by the U.S. Department of the Treasury or the Internal Revenue Service.

For the full year 2017, total revenues and adjusted operating revenues both increased 11% to $1.69 billion. Net income, EPS and ROE increased to $350.3 million, $7.61 and 27.4%, respectively, inclusive of the transition effect of Tax Reform. Adjusted net operating income grew 17% year-over-year to $253.9 million. Earnings growth and share repurchases throughout the year drove a 22% increase in adjusted operating EPS to $5.52 and ROAE expanded to 20.6% in 2017. Results reflect solid Term Life and ISP performance including 14% growth in net premiums, 15% growth in average ISP client asset values and 11% growth in total ISP sales year-over-year. While fluctuations in persistency and claims experience impacted quarterly results in 2017, the full-year Term Life margin remained consistent with 2016. Positive market conditions, growth in the number of fee-generating positions and the launch of the new Lifetime Investments Platform positively impacted ISP results in 2017. Insurance and other operating expenses increased 7% year-over-year primarily reflecting higher growth- and employee-related costs as well as additional spending on mobile technology initiatives. In December, Primerica Life Insurance Company changed its state of domicile to Tennessee, which lowered the retaliatory premium taxes and representative licensing fees incurred by the Company in 2017 and going forward.

Glenn Williams, Chief Executive Officer, said, "During 2017, we successfully expanded distribution, grew our sales volumes and substantially increased EPS and ROE. Our life licensed sales force grew to over 126,000 representatives at year-end. Life insurance productivity remained at the top of the historical range throughout the year which drove an increase in life insurance policies issued at a rate that surpassed the life insurance industry's results. We also delivered solid growth in Investment and Savings Products sales and client asset values in 2017. As we head into a new year, we plan to drive further growth by continuing to expand distribution, execute strategic initiatives and by actively deploying capital, including around $200 million of common stock repurchases expected in 2018. We are well-positioned to deliver long-term value for all of our stakeholders."

Fourth Quarter Distribution & Segment Results
Distribution Results
Q4 2017 Q4 2016 % Change Q3 2017 % Change
Life Licensed Sales Force (1) 126,121 116,827 8 % 124,436 1 %
Recruits 64,401 60,326 7 % 90,210 (29 )%
New Life-Licensed Representatives 11,902 11,148 7 % 12,783 (7 )%
Life Insurance Policies Issued 80,068 79,110 1 % 78,056 3 %
Life Productivity (2) 0.21 0.23 * 0.21 *
ISP Product Sales ($ billions) $ 1.60 $ 1.41 14 % $ 1.43 12 %
Average Client Asset Values ($ billions) $ 59.91 $ 51.45 16 % $ 57.66 4 %
(1)  End of period
(2)  Life productivity equals policies issued divided by the average number of life insurance licensed representatives per month
*    Not calculated
Segment Results
Q4 2017 Q4 2016 % Change Q3 2017 % Change
($ in thousands)
Adjusted Operating Revenues: (1)
Term Life Insurance $ 263,031 $ 227,128 16 % $ 256,240 3 %
Investment and Savings Products 148,509 137,016 8 % 140,058 6 %
Corporate and Other Distributed Products 30,323 28,255 7 % 30,980 (2 )%
Total adjusted operating revenues (1) $ 441,863 $ 392,399 13 % $ 427,278 3 %
Adjusted Operating Income (loss) before income taxes:(1)
Term Life Insurance $ 68,237 $ 51,127 33 % $ 66,543 3 %
Investment and Savings Products 46,985 40,840 15 % 39,050 20 %
Corporate and Other Distributed Products (8,210 ) (6,368 ) 29 % (5,415 ) 52 %
Total adjusted operating income before income taxes (1) $ 107,012 $ 85,599 25 % $ 100,178 7 %
(1)  See the Non-GAAP Financial Measures section and the segment Operating Results Reconciliations at the end of this release for additional information.

Life Insurance Licensed Sales Force. Strong recruiting and licensing trends in recent quarters drove growth in the life insurance licensed sales force to over 126,000 representatives at the end of the fourth quarter. Both recruiting of new representatives and new life insurance licenses increased 7% from the year ago quarter. On a sequential quarter basis, recruiting and new life insurance licenses decreased due to the fourth quarter being seasonally slower and the third quarter benefitting from Independent Business Applications fees being waived for new recruits in hurricane-affected areas.

Term Life Insurance. In the fourth quarter of 2017, term life insurance policies issued increased 1% over the strong results in the fourth quarter of 2016. Productivity remained at the high end of the historical productivity range at 0.21 policies per life insurance licensed representative per month, albeit lower than the 0.23 in the prior year quarter. Term Life adjusted operating revenues increased 16% to $263.0 million compared with the year ago period. This was driven by a 16% increase in net premiums from higher levels of issued policies in recent years and the growth in the in force business not subject to IPO-related coinsurance agreements. Adjusted operating income before income taxes grew 33% to $68.2 million year-over-year.

Persistency for the fourth quarter was in-line with expectations, whereas weaker persistency during the prior year quarter increased DAC amortization by approximately $3 million in that period. Claims were consistent with historical trends and the prior year period. In December, Primerica Life Insurance Company changed its state of domicile to Tennessee, which reduced the amount of retaliatory premium taxes and representative licensing fees the company incurred in 2017. The $3.3 million full-year benefit of this change was recognized in the fourth quarter of 2017, increasing adjusted operating EPS by $0.05 for the period. This benefit will be recognized on a quarterly basis going forward.

Investment and Savings Products (ISP). In the fourth quarter, ISP revenues increased 8% to $148.5 million and income before income taxes grew 15% to $47.0 million compared with the year ago period. Sales-based revenues grew 2% whereas product sales grew 14% year-over-year. The trend of larger size trades shifting from annuities to mutual funds continued, dampening sales based revenue growth. Managed account sales were up 178% following the launch of the new Lifetime Investments Platform earlier in the year. Managed accounts do not generate sales-based revenues, but provide for ongoing asset-based revenues that are higher than those for retail mutual funds or annuities. Asset-based revenues grew 18% year-over-year driven by a 17% increase in ending client asset values to $61.2 billion and positive net flows of $297 million for the period. Account-based revenues declined 8% year-over-year largely related to the full-year benefit of a change made in the account-based fee structure in the fourth quarter of 2016.

During the fourth quarter, Canadian segregated fund DAC assumptions were updated based on emerging redemption experience. The assumptions are typically updated during the fourth quarter and the $2 million impact recognized this year was consistent with the prior year adjustment. The combination of the assumption adjustment and favorable market performance resulted in the reversal of DAC amortization during the quarter.

Corporate and Other Distributed Products (C&O). C&O adjusted operating revenues were $30.3 million and adjusted operating losses before income taxes were $8.2 million in the fourth quarter of 2017. The increase in net investment income reflects a larger invested asset portfolio partially offset by the continued impact of low investment yields. Benefits and claims for our New York subsidiary's closed block of life insurance products were approximately $1 million higher than the prior year reflecting normal volatility. Year-over-year other operating expenses in the segment increased largely due to a segment allocation change in the prior year period.

Taxes and the Impact of Tax Reform
The effective income tax rate for the fourth quarter of 2017 excluding the impact of Tax Reform, was 32.5% compared to 34.7% in the prior year period. The lower rate partially reflects excess tax benefits of approximately $0.9 million for the difference between the stock price of sales force equity awards at the time of grant and when the sales restrictions lapse whereas in the prior year period the excess tax benefits were recorded in additional paid-in-capital. The effective tax rate also benefitted from a higher proportion of Canadian earnings in the fourth quarter, which were subject to the lower Canadian tax rate.

As a result of Tax Reform, the Company's U.S. net deferred tax liability was revalued using a 21% tax rate in the fourth quarter of 2017 and taxes were increased to include mandatory deemed repatriated earnings from the Company's Canadian subsidiary. The net effect of these transition adjustments was a $95.5 million reduction to income tax expense during the quarter. As previously noted, Primerica has excluded this benefit from adjusted net operating income. Given the mix of business between the U.S. and Canada, Primerica's annual effective tax rate is expected to be in the 22-23% range for 2018. The Tax Cuts and Jobs Act includes two life insurance-specific provisions that do not impact the effective tax rate, but will reduce the cash tax benefit of a lower corporate rate. The Company's overall free cash flow is not expected to materially change due to Tax Reform.

Capital
Primerica Life Insurance Company's statutory risk-based capital (RBC) ratio was estimated to be approximately 450% as of December 31, 2017. If the NAIC adjusts the RBC calculation to reflect the new corporate tax rate, the Company's RBC ratio will decrease by approximately 70-80 basis points.

Primerica has a strong balance sheet and continues to be well-capitalized to meet future needs. In light of Primerica's strong capital generation, the Company's Board of Directors (Board) has authorized the repurchase of up to $275 million of its common stock through June 30, 2019 (including $50 million that remained under the previous share repurchase program). Primerica plans to repurchase approximately $200 million of its common stock in 2018. The Board has also approved a 25% increase in stockholder dividends to $0.25 per share payable on March 16, 2018 to stockholders of record as of February 15, 2018.

Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally accepted accounting principles (GAAP). We also present adjusted direct premiums, other ceded premiums, adjusted operating revenues, adjusted operating income before income taxes, net adjusted 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 (IPO) 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, net adjusted operating income, and diluted adjusted operating earnings per share exclude the impact of realized investment gains and losses, including other-than-temporary impairments (OTTI), for all periods presented. We exclude realized investment gains and losses in measuring adjusted operating revenues to eliminate period-over-period fluctuations that may obscure comparisons of operating results due to items such as the timing of recognizing gains and losses and other factors prior to an invested asset's maturity that are not directly associated with the Company's insurance operations. In 2017, we excluded from net adjusted operating income and diluted operating earnings per share the one-time transition impact from the Tax Cuts and Jobs Act of 2017 recognized in the fourth quarter of 2017 to present meaningful and useful period-over-period comparisons that could be distorted by this historically infrequent tax law change. Adjusted stockholders' equity excludes the impact of net unrealized investment gains and losses recorded in other comprehensive income (loss) for all periods presented. We exclude unrealized investment gains and losses in measuring adjusted stockholders' equity as unrealized gains and losses from the Company's invested assets 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 invested asset matures or is sold.

The 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 financial 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 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 Thursday, February 8, 2018 at 11:00 am EST, to discuss fourth quarter results. This release and a detailed financial supplement will be posted on Primerica's website. Investors are encouraged to review these materials. To access the webcast go to http://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 on Primerica's website, http://investors.primerica.com.

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 our sales representatives; changes to the independent contractor status of our sales representatives; our or our sales representatives' violation of or non-compliance with laws and regulations or the failure to protect the confidentiality of client information; differences between our actual experience and our expectations regarding mortality, persistency, expenses and interests rates as reflected in the pricing for our insurance policies; the occurrence of a catastrophic event that causes a large number of premature deaths of our insureds; changes in federal and state legislation, including other legislation or regulation that affects our insurance and investment product businesses, such as the DOL's rule defining who is a "fiduciary" of a qualified retirement plan as a result of giving investment advice; our failure to meet RBC standards or other minimum capital and surplus requirements; a downgrade or potential downgrade in our insurance subsidiaries' financial strength ratings or our senior debt ratings; the effects of credit deterioration and interest rate fluctuations on our invested asset portfolio; incorrectly valuing our investments; inadequate or unaffordable reinsurance or the failure of our reinsurers to perform their obligations; the failure of, or legal challenges to, the support tools we provide to our sales force; heightened standards of conduct or more stringent licensing requirements for our sales representatives; inadequate policies and procedures regarding suitability review of client transactions; the failure of our investment products to remain competitive with other investment options or the change to investment and savings products offered by key providers in a way that is not beneficial to our business; fluctuations in the performance of client assets under management; the inability of our subsidiaries to pay dividends or make distributions; our inability to generate and maintain a sufficient amount of working capital; our non-compliance with the covenants of our senior unsecured debt; legal and regulatory investigations and actions concerning us or our sales representatives; the loss of key personnel; the failure of our information technology systems, breach of our information security or failure of our business continuity plan; and fluctuations in 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 http://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 distributor of financial products to middle income households in North America. Primerica representatives educate their Main Street 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. In addition, Primerica provides an entrepreneurial full or part-time business opportunity for individuals seeking to earn income by distributing the company's financial products. We insured approximately 5 million lives and have over 2 million client investment accounts at December 31, 2017. Primerica stock is included in the S&P MidCap 400 and the Russell 2000 stock indices and is traded on The New York Stock Exchange under the symbol "PRI."

PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, 2017 December 31, 2016
(In thousands)
Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value $ 1,927,842 $ 1,792,438
Fixed-maturity securities-held-to-maturity, at amortized cost 737,150 503,230
Equity securities available-for-sale, at fair value 41,107 44,894
Trading securities, at fair value 6,228 7,383
Policy loans 32,816 30,916
Total investments 2,745,143 2,378,861
Cash and cash equivalents 279,962 211,976
Accrued investment income 16,665 16,520
Due from reinsurers 4,205,173 4,193,562
Deferred policy acquisition costs, net 1,951,892 1,713,065
Agent balances, due premiums and other receivables 229,522 210,448
Intangible assets, net 51,513 54,915
Deferred income taxes 48,614 37,369
Other assets 359,347 334,274
Separate account assets 2,572,872 2,287,953
Total assets $ 12,460,703 $ 11,438,943
Liabilities and Stockholders' Equity
Liabilities:
Future policy benefits $ 5,954,524 $ 5,673,890
Unearned premiums 486 527
Policy claims and other benefits payable 307,401 268,136
Other policyholders' funds 377,998 363,038
Notes payable 373,288 372,919
Surplus note 736,381 502,491
Current income tax payable 24,896 26,365
Deferred income taxes 152,572 198,641
Other liabilities 451,398 449,963
Payable under securities lending 89,786 73,646
Separate account liabilities 2,572,872 2,287,953
Total liabilities 11,041,602 10,217,569
Stockholders' equity:
Common stock 443 457
Paid-in capital - 52,468
Retained earnings 1,375,090 1,138,851
Accumulated other comprehensive income, net of income tax 43,568 29,598
Total stockholders' equity 1,419,101 1,221,374
Total liabilities and stockholders' equity $ 12,460,703 $ 11,438,943
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended December 31,
2017 2016
(In thousands, except per-share amounts)
Revenues:
Direct premiums $ 650,906 $ 618,362
Ceded premiums (397,318 ) (398,867 )
Net premiums 253,588 219,495
Commissions and fees 154,105 141,681
Net investment income 19,459 17,999
Realized investment gains (losses), including OTTI 1,079 1,465
Other, net 14,711 13,224
Total revenues 442,942 393,864
Benefits and expenses:
Benefits and claims 108,259 94,672
Amortization of deferred policy acquisition costs 56,304 53,305
Sales commissions 76,823 69,326
Insurance expenses 35,103 33,476
Insurance commissions 5,459 4,456
Interest expense 7,144 7,157
Other operating expenses 45,761 44,408
Total benefits and expenses 334,853 306,800
Income before income taxes 108,089 87,064
Income taxes (60,354 ) 30,191
Net income $ 168,443 $ 56,873
Earnings per share:
Basic earnings per share $ 3.73 $ 1.21
Diluted earnings per share $ 3.72 $ 1.21
Shares used in computing earnings per share:
Basic 44,809 46,444
Diluted 44,917 46,495
(1)  Percentage change in earnings per share is calculated prior to rounding per share amounts.
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Year ended December 31,
2017 2016
(In thousands, except per-share amounts)
Revenues:
Direct premiums $ 2,562,109 $ 2,444,268
Ceded premiums (1,600,771 ) (1,600,559 )
Net premiums 961,338 843,709
Commissions and fees 591,317 541,686
Net investment income 79,017 79,025
Realized investment gains (losses), including OTTI 1,339 4,088
Other, net 56,091 50,576
Total revenues 1,689,102 1,519,084
Benefits and expenses:
Benefits and claims 416,019 367,655
Amortization of deferred policy acquisition costs 209,399 180,582
Sales commissions 297,988 272,815
Insurance expenses 147,280 132,348
Insurance commissions 21,108 17,783
Interest expense 28,488 28,691
Other operating expenses 189,300 181,615
Total benefits and expenses 1,309,582 1,181,489
Income before income taxes 379,520 337,595
Income taxes 29,265 118,181
Net income $ 350,255 $ 219,414
Earnings per share:
Basic earnings per share $ 7.63 $ 4.59
Diluted earnings per share $ 7.61 $ 4.59
Shares used in computing earnings per share:
Basic 45,598 47,411
Diluted 45,689 47,453
(1)  Percentage change in earnings per share is calculated prior to rounding per share amounts.
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Adjusted Operating Results Reconciliation
(Unaudited – in thousands, except per share amounts)
Three months ended December 31,
2017 2016 % Change
Total revenues $ 442,942 $ 393,864 12 %
Less: Realized investment gains (losses), including OTTI 1,079 1,465
Adjusted operating revenues $ 441,863 $ 392,399 13 %
Income before income taxes $ 108,089 $ 87,064 24 %
Less: Realized investment gains (losses), including OTTI 1,079 1,465
Adjusted operating income before income taxes $ 107,010 $ 85,599 25 %
Net income $ 168,443 $ 56,873 196 %
Less: Realized investment gains (losses), including OTTI 1,079 1,465
Less: Tax impact of reconciling items (350 ) (509 )
Less: Transition impact of tax reform 95,457 -
Net adjusted operating income $ 72,257 $ 55,917 29 %
Diluted earnings per share (1) $ 3.72 $ 1.21 nm
Less: Net after-tax impact of operating adjustments 2.12 0.02
Diluted adjusted operating earnings per share (1) $ 1.60 $ 1.19 34 %
_________________________
(1)  Percentage change in earnings per share is calculated prior to rounding per share amounts.
nm – Not meaningful
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Adjusted Operating Results Reconciliation
(Unaudited – in thousands, except per share amounts)
Year ended December 31,
2017 2016 % Change
Total revenues $ 1,689,102 $ 1,519,084 11 %
Less: Realized investment gains (losses), including OTTI 1,339 4,088
Adjusted operating revenues $ 1,687,763 $ 1,514,996 11 %
Income before income taxes $ 379,520 $ 337,595 12 %
Less: Realized investment gains (losses), including OTTI 1,339 4,088
Adjusted operating income before income taxes $ 378,181 $ 333,507 13 %
Net income $ 350,255 $ 219,414 60 %
Less: Realized investment gains (losses), including OTTI 1,339 4,088
Less: Tax impact of reconciling items (434 ) (1,436 )
Less: Transition impact of tax reform 95,457 -
Net adjusted operating income $ 253,893 $ 216,762 17 %
Diluted earnings per share (1) $ 7.61 $ 4.59 66 %
Less: Net after-tax impact of operating adjustments 2.09 0.06
Diluted adjusted operating earnings per share (1) $ 5.52 $ 4.53 22 %
(1)  Percentage change in earnings per share is calculated prior to rounding per share amounts.
TERM LIFE INSURANCE SEGMENT
Adjusted Premiums Reconciliation
(Unaudited – in thousands)
Three months ended December 31,
2017 2016
Direct premiums $ 644,373 $ 611,583
Less: Premiums ceded to IPO coinsurers 300,144 315,955
Adjusted direct premiums $ 344,229 $ 295,628
Ceded premiums $ (394,987 ) $ (396,157 )
Less: Premiums ceded to IPO coinsurers (300,144 ) (315,955 )
Other ceded premiums $ (94,843 ) $ (80,202 )
Net premiums $ 249,386 $ 215,426
CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT
Adjusted Operating Results Reconciliation
(Unaudited – in thousands)
Three months ended December 31,
2017 2016
Total revenues $ 31,402 $ 29,720
Less: Realized investment gains (losses), including OTTI 1,079 1,465
Adjusted operating revenues $ 30,323 $ 28,255
Loss before income taxes $ (7,131 ) $ (4,903 )
Less: Realized investment gains (losses), including OTTI 1,079 1,465
Adjusted operating loss before income taxes $ (8,210 ) $ (6,368 )
PRIMERICA, INC. AND SUBSIDIARIES
Adjusted Stockholders' Equity Reconciliation
(Unaudited – in thousands)
December 31, 2017 December 31, 2016
Stockholders' equity $ 1,419,101 $ 1,221,374
Less: Unrealized net investment gains recorded in stockholders' equity, net of income tax 39,573 42,791
Adjusted stockholders' equity $ 1,379,528 $ 1,178,583

426291


GOOD NEWS FROM SCHOOLS: Primerica grant to fund Gwinnett schools mentoring program

www.gwinnettdailypost.com, December 2, 2017

The mentoring program at Gwinnett County Public Schools has shown steady growth in recent years.

This fall, the program began its ninth year of providing volunteer mentors to male students. The program for boys will serve nearly 600 students in more than 65 schools. There was a goal of recruiting an additional 50 men to join the ranks of the 200 who already are involved in the program. In January, it will begin serving girls.

This week, the district announced that the Primerica Foundation gave a $25,000 grant to the program. James Rayford, director of the program said the grant allows the program to add the girls mentoring component and “hit the ground running.” Leading the effort to create the mentoring program for Gwinnett girls will be former GCPS principal Janice Warren.

Every year, mentors interact and support more than 500 students from across the district. The district is also looking for female volunteer mentors.

“This program will address a need, providing help and support to students who, up to now, may not have been getting it,” Rayford said in a press release. “While the Community-Based Mentoring Program has been a success to date, we recognize that boys aren’t the only ones who need mentors.”

The school program in January had 210 men who volunteered as mentors, including 51 trained since July 2016, to serve 469 students in 57 schools. That’s up from 130 mentors serving more than 300 students two years ago. The program began in 2009 with 50 students.

Rayford has said research shows students involved with a mentor are 55 percent more likely to be enrolled in college, 81 percent more likely to report participating regularly in sports or extracurricular activities and 78 percent more likely to volunteer regularly in their communities.

Students are also more than twice as likely to say they held a leadership position in a club or sports team, as mentors help young people make responsible choices, attend and engage in school and reduce or avoid risky behaviors.

17SOC73


Primerica Among Recipients Of DALBAR “2017 Mutual Fund Service Award”

www.valuewalk.com, November 30, 2017

In 2017, the Department of Labor’s Fiduciary Rule created new pressures for mutual fund contact centers by redefining what constitutes a fiduciary act more broadly. Today, a casual answer to an investor’s question may be considered fiduciary advice, with all the responsibility that comes with it. Representatives are now required to walk an even finer line between education and advice, the details of which remain vague. It is in this context that DALBAR is pleased to announce the winners of the 2017 Mutual Fund Service Award.

DALBAR, which has been monitoring Mutual Fund contact centers for the last 30 years, added the tracking of fiduciary advice in October of 2016. In late 2016, 1.29% of mutual fund shareholder calls contained either explicit recommendations or information provided in such a way that it could be construed as fiduciary advice. Since that time, the incidence of potential fiduciary advice has dropped dramatically. During the months of August, September and October the fiduciary advice declined to less than 0.35% of calls. Despite these challenges, several mutual fund providers were able to rise above their peers and earn DALBAR’s Mutual Fund Service Award for providing an exceptional all-around customer experience. The firms earning this distinction in 2017 are:

  • JPMorgan Funds
  • Primerica
  • BlackRock
  • Putnam Investments
  • VOYA Investment Management

“Overall the industry has done a really good job avoiding fiduciary advice. Where these award winners really stand out is that they have been able to do so without impacting the overall quality of the customer experience,” said Brendan Yeager, Director at DALBAR. “Maintaining a customer focus in the face of competing priorities requires a deep-rooted commitment to the customer experience; these firms clearly have such a commitment.”

The Mutual Fund Service Award is earned through an objective third-party evaluation of the quality of contact center interactions with mutual fund shareholders. These interactions are reviewed throughout the year against detailed criteria covering all aspects of the customer experience. In order to qualify for the Award, companies must exceed quality thresholds in all criteria.

DALBAR, Inc. is the financial community’s leading independent expert for evaluating, auditing and rating business practices, customer performance, product quality and service. Launched in 1976, DALBAR has earned recognition for consistent and unbiased evaluations of investment companies, registered investment advisers, insurance companies, broker/dealers, retirement plan providers and financial professionals. DALBAR awards are recognized as marks of a superior standard of care in the financial community.

17SOC73


Primerica Reports Third Quarter 2017 Results

Press Release, November 7, 2017

8% increase in life insurance licensed representatives to 124,436

4% growth in life insurance policies issued

7% increase in Investment and Savings Products (ISP) sales

19% growth in both net earnings per diluted share (EPS) and adjusted operating EPS to $1.46

20.9% net income return on stockholders' equity (ROE) and 21.7% adjusted net operating income return on adjusted stockholders' equity (ROAE)

Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended September 30, 2017. In the third quarter, both total revenues and adjusted operating revenues increased 11% year-over-year to $427.3 million. Net income and adjusted net operating income both grew 15% to $66.6 million compared with the prior year period. During the quarter, earnings growth and ongoing share repurchases drove both EPS and adjusted operating EPS to $1.46, increasing 19% compared to the third quarter a year ago. ROE expanded to 20.9% and adjusted operating ROAE expanded to 21.7% in the period.

Glenn Williams, Chief Executive Officer, said, "In the third quarter we continued to build on our strong foundation and overall business momentum to deliver solid results. The outstanding performance of our sales force leadership produced an 8% increase in the size of our life insurance sales force along with 4% growth in life insurance policies issued and 7% increase in Investment and Savings (ISP) product sales. Income before income taxes grew 13% with Term Life and ISP segments' income before income taxes increasing 14% and 9%, respectively, year-over-year. Solid earnings and ongoing share repurchases contributed to a 19% increase in EPS year-over-year and 20.9% ROE in the third quarter. We are pleased with these results and continue to be well positioned to deliver meaningful value to our stakeholders in the future."

Third Quarter Distribution & Segment Results
Distribution Results
Q3 2017 Q3 2016 % Change Q2 2017 % Change
Life Licensed Sales Force (1) 124,436 115,345 8 % 121,471 2 %
Recruits 90,210 73,706 22 % 78,273 15 %
New Life-Licensed Representatives 12,783 11,739 9 % 12,947 (1 )%
Life Insurance Policies Issued 78,056 75,374 4 % 84,033 (7 )%
Life Productivity (2) 0.21 0.22 * 0.23 *
ISP Product Sales ($ billions) $ 1.43 $ 1.34 7 % $ 1.57 (9 )%
Average Client Asset Values ($ billions) $ 57.66 $ 50.68 14 % $ 55.78 3 %
(1) End of period
(2) Life productivity equals policies issued divided by the average number of life insurance licensed representatives per month
* Not calculated
Segment Results
Q3 2017 Q3 2016 % Change Q2 2017 % Change
($ in thousands)
Adjusted Operating Revenues: (1)
Term Life Insurance $ 256,240 $ 222,598 15 % $ 238,901 7 %
Investment and Savings Products 140,058 130,080 8 % 143,774 (3 )%
Corporate and Other Distributed Products 30,980 30,983 * 30,917 *
Total adjusted operating revenues (1) $ 427,278 $ 383,661 11 % $ 413,592 3 %
Adjusted Operating Income (loss) before income taxes:(1)
Term Life Insurance $ 66,543 $ 58,137 14 % $ 61,854 8 %
Investment and Savings Products 39,050 35,760 9 % 39,684 (2 )%
Corporate and Other Distributed Products (5,415 ) (5,425 ) * (5,253 ) 3 %
Total adjusted operating income before income taxes (1) $ 100,178 $ 88,472 13 % $ 96,285 4 %
* Less than 1%.
(1) See the Non-GAAP Financial Measures section and the segment Adjusted Operating Results Reconciliations at the end of this release for additional information.

Life Insurance Licensed Sales Force. Strong recruiting and licensing trends in recent quarters resulted in 8% year-over-year growth in the life insurance licensed sales force to 124,436 representatives at the end of the third quarter. New recruits increased 22% versus the prior year quarter, including approximately 17,000 recruits from hurricane-affected areas whose Independent Business Application fees were waived during September. A portion of these recruits would have likely entered the business without the waived fee. It is possible the licensing rate of those who joined through this program may be slightly lower than overall company levels. Strong recruiting levels following our June biennial convention drove 9% growth in new life insurance licenses year-over-year. On a sequential quarter basis, the size of the life insurance sales force increased 2% versus the second quarter.

Term Life Insurance. In the third quarter of 2017, Term Life insurance policies issued increased 4% year-over-year driven by growth in the life insurance licensed sales force. Results were somewhat impacted by lower production in hurricane-affected areas. Term Life productivity in the third quarter was 0.21 versus 0.22 policies per life insurance licensed representative per month in the prior year period.

Term Life revenues increased to $256.2 million driven by a 15% increase in net premiums compared with the third quarter a year ago. Income before income taxes in the segment increased 14% to $66.5 million year-over-year. During the quarter, normal claims volatility positively impacted benefits and claims by approximately $2 million. Persistency performance continued to improve relative to earlier in the year, although it was slightly lower than the third quarter a year ago. Insurance expenses increased $5.0 million from the prior year period primarily reflecting about $3.0 million of higher growth and employee-related costs and $1.5 million of incremental technology spending. Costs to enhance the sales force's mobile technology capabilities were largely offset by growth in other net revenues of $1.1 million.

Investment and Savings Products. In the third quarter, ISP revenues increased 8% to $140.1 million and income before income taxes grew 9% to $39.1 million compared with the year ago period. Product sales grew 7% year-over-year driven by a 10% increase in retail mutual fund sales as well as a 132% increase in managed account sales following the launch of the new Lifetime Investments Platform in June 2017. Managed accounts generate asset-based revenues and will provide for earnings in future periods. Annuities sales continued to be pressured in the quarter, declining 13% versus the year ago period. Net flows were positive $174 million and average client asset values increased 14% to $57.7 billion at the end of the third quarter. Account-based revenue grew 16% year-over-year largely related to a change made in the account-based fee structure in the fourth quarter of 2016 as well as a higher number of accounts subject to the fee. Canadian segregated funds DAC amortization was $1.1 million higher than a year ago, mostly reflecting the deceleration of DAC amortization in the third quarter of 2016.

Corporate and Other Distributed Products (C&O). C&O results were consistent year-over-year with adjusted operating revenues of $31.0 million and adjusted operating losses before income taxes of $5.4 million in the third quarter of 2017.

Taxes
The effective income tax rate for the third quarter of 2017 was 33.5%, down from 34.4% in the prior year period, primarily reflecting excess tax benefits of approximately $0.9 million for the difference between the stock price of sales force equity awards at the time of grant and when the sales restrictions lapse. Prior to the adoption of Accounting Standard Update 2016-09 effective January 1, 2017, any tax benefits or deficiencies were recorded in additional paid-in-capital.

Capital
Primerica repurchased $57.7 million or 741,087 shares of its common stock in the third quarter of 2017 and has repurchased $150.0 million or 1.9 million shares year-to-date through October. Primerica Life Insurance Company's (PLIC) statutory risk-based capital (RBC) ratio was estimated to be approximately 440% as of September 30, 2017.

Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally accepted accounting principles (GAAP). We also present adjusted direct premiums, other ceded premiums, adjusted operating revenues, adjusted operating income before income taxes, net adjusted 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 (IPO) 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, net adjusted operating income, and diluted adjusted operating earnings per share exclude the impact of realized investment gains and losses, including other-than-temporary impairments (OTTI), for all periods presented. We exclude realized investment gains and losses in measuring adjusted operating revenues to eliminate period-over-period fluctuations that may obscure comparisons of operating results due to items such as the timing of recognizing gains and losses and other factors prior to an invested asset's maturity that are not directly associated with the Company's insurance operations. Adjusted stockholders' equity excludes the impact of net unrealized investment gains and losses recorded in other comprehensive income (loss) for all periods presented. We exclude unrealized investment gains and losses in measuring adjusted stockholders' equity as unrealized gains and losses from the Company's invested assets 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 invested asset matures or is sold.

The 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 financial 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 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 Wednesday, November 8, 2017 at 10:00 am EDT, to discuss third quarter results. This release and a detailed financial supplement will be posted on Primerica's website. Investors are encouraged to review these materials. To access the webcast go to http://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 on Primerica's website, http://investors.primerica.com.

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 our sales representatives; changes to the independent contractor status of our sales representatives; our or our sales representatives' violation of or non-compliance with laws and regulations or the failure to protect the confidentiality of client information; differences between our actual experience and our expectations regarding mortality, persistency, expenses and interests rates as reflected in the pricing for our insurance policies; the occurrence of a catastrophic event that causes a large number of premature deaths of our insureds; changes in federal and state legislation, including other legislation or regulation that affects our insurance and investment product businesses, such as the DOL's rule defining who is a "fiduciary" of a qualified retirement plan as a result of giving investment advice; our failure to meet RBC standards or other minimum capital and surplus requirements; a downgrade or potential downgrade in our insurance subsidiaries' financial strength ratings or our senior debt ratings; the effects of credit deterioration and interest rate fluctuations on our invested asset portfolio; incorrectly valuing our investments; inadequate or unaffordable reinsurance or the failure of our reinsurers to perform their obligations; the failure of, or legal challenges to, the support tools we provide to our sales force; heightened standards of conduct or more stringent licensing requirements for our sales representatives; inadequate policies and procedures regarding suitability review of client transactions; the failure of our investment products to remain competitive with other investment options or the change to investment and savings products offered by key providers in a way that is not beneficial to our business; fluctuations in the performance of client assets under management; the inability of our subsidiaries to pay dividends or make distributions; our inability to generate and maintain a sufficient amount of working capital; our non-compliance with the covenants of our senior unsecured debt; legal and regulatory investigations and actions concerning us or our sales representatives; the loss of key personnel; the failure of our information technology systems, breach of our information security or failure of our business continuity plan; and fluctuations in 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 http://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 distributor of financial products to middle income households in North America. Primerica representatives educate their Main Street 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. In addition, Primerica provides an entrepreneurial full or part-time business opportunity for individuals seeking to earn income by distributing the company's financial products. We insured approximately 5 million lives and have over 2 million client investment accounts at December 31, 2016. Primerica stock is included in the S&P MidCap 400 and the Russell 2000 stock indices and is traded on The New York Stock Exchange under the symbol "PRI."

PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, 2017 December 31, 2016
(In thousands)
Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value $ 1,888,506 $ 1,792,438
Fixed-maturity securities-held-to-maturity, at amortized cost 688,840 503,230
Equity securities available-for-sale, at fair value 45,171 44,894
Trading securities, at fair value 11,513 7,383
Policy loans 34,905 30,916
Total investments 2,668,935 2,378,861
Cash and cash equivalents 177,418 211,976
Accrued investment income 17,847 16,520
Due from reinsurers 4,238,978 4,193,562
Deferred policy acquisition costs, net 1,900,122 1,713,065
Agent balances, due premiums and other receivables 240,731 210,448
Intangible assets, net 52,364 54,915
Income taxes 43,601 37,369
Other assets 379,883 334,274
Separate account assets 2,486,960 2,287,953
Total assets $ 12,206,839 $ 11,438,943
Liabilities and Stockholders' Equity
Liabilities:
Future policy benefits $ 5,894,882 $ 5,673,890
Unearned premiums 476 527
Policy claims and other benefits payable 284,451 268,136
Other policyholders' funds 371,508 363,038
Notes payable 373,196 372,919
Surplus note 688,055 502,491
Income taxes 255,877 225,006
Other liabilities 463,926 449,963
Payable under securities lending 106,978 73,646
Separate account liabilities 2,486,960 2,287,953
Total liabilities 10,926,309 10,217,569
Stockholders' equity:
Common stock 444 457
Paid-in capital - 52,468
Retained earnings 1,228,546 1,138,851
Accumulated other comprehensive income, net of income tax 51,540 29,598
Total stockholders' equity 1,280,530 1,221,374
Total liabilities and stockholders' equity $ 12,206,839 $ 11,438,943
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended September 30,
2017 2016
(In thousands, except per-share amounts)
Revenues:
Direct premiums $ 646,079 $ 616,587
Ceded premiums (397,641 ) (399,676 )
Net premiums 248,438 216,911
Commissions and fees 144,627 134,282
Net investment income 19,922 19,399
Realized investment gains (losses), including OTTI 22 (35 )
Other, net 14,291 13,069
Total revenues 427,300 383,626
Benefits and expenses:
Benefits and claims 105,864 93,022
Amortization of deferred policy acquisition costs 53,384 45,428
Sales commissions 72,022 66,700
Insurance expenses 37,637 32,837
Insurance commissions 5,593 4,709
Interest expense 7,073 7,184
Other operating expenses 45,527 45,309
Total benefits and expenses 327,100 295,189
Income before income taxes 100,200 88,437
Income taxes 33,565 30,400
Net income $ 66,635 $ 58,037
Earnings per share:
Basic earnings per share $ 1.46 $ 1.22
Diluted earnings per share $ 1.46 $ 1.22
Shares used in computing earnings per share:
Basic 45,318 47,008
Diluted 45,408 47,051
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Adjusted Operating Results Reconciliation
(Unaudited – $ in thousands, except per share amounts)
Three months ended September 30,
2017 2016 % Change
Total revenues $ 427,300 $ 383,626 11 %
Less: Realized investment gains (losses), including OTTI 22 (35 )
Adjusted operating revenues $ 427,278 $ 383,661 11 %
Income before income taxes $ 100,200 $ 88,437 13 %
Less: Realized investment gains (losses), including OTTI 22 (35 )
Adjusted operating income before income taxes $ 100,178 $ 88,472 13 %
Net income $ 66,635 $ 58,037 15 %
Less: Realized investment gains (losses), including OTTI 22 (35 )
Less: Tax impact of reconciling items (8 ) 12
Net adjusted operating income $ 66,621 $ 58,060 15 %
Diluted earnings per share (1) $ 1.46 $ 1.22 19 %
Less: Net after-tax impact of operating adjustments - -
Diluted adjusted operating earnings per share (1) $ 1.46 $ 1.22 19 %
(1) Percentage change in earnings per share is calculated prior to rounding per share amounts.
TERM LIFE INSURANCE SEGMENT
Adjusted Premiums Reconciliation
(Unaudited – in thousands)
Three months ended September 30,
2017 2016
Direct premiums $ 638,830 $ 608,396
Less: Premiums ceded to IPO coinsurers 304,580 319,517
Adjusted direct premiums $ 334,250 $ 288,879
Ceded premiums $ (395,772 ) $ (397,214 )
Less: Premiums ceded to IPO coinsurers (304,580 ) (319,517 )
Other ceded premiums $ (91,192 ) $ (77,697 )
Net premiums $ 243,058 $ 211,182
CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT
Adjusted Operating Results Reconciliation
(Unaudited – in thousands)
Three months ended September 30,
2017 2016
Total revenues $ 31,002 $ 30,948
Less: Realized investment gains (losses), including OTTI 22 (35 )
Adjusted operating revenues $ 30,980 $ 30,983
Loss before income taxes $ (5,393 ) $ (5,460 )
Less: Realized investment gains (losses), including OTTI 22 (35 )
Adjusted operating loss before income taxes $ (5,415 ) $ (5,425 )
PRIMERICA, INC. AND SUBSIDIARIES
Adjusted Stockholders' Equity Reconciliation
(Unaudited – in thousands)
September 30, 2017 December 31, 2016
Stockholders' equity $ 1,280,530 $ 1,221,374
Less: Unrealized net investment gains recorded in stockholders' equity, net of income tax 47,048 42,791
Adjusted stockholders' equity $ 1,233,482 $ 1,178,583

Primerica Schedules Third Quarter 2017 Financial Results Webcast

Press Release, October 12, 2017

Primerica, Inc. (NYSE: PRI) announced today that it will hold a webcast on Wednesday, November 8, 2017, at 10:00 a.m. Eastern Time to discuss the Company's results for the third quarter ended September 30, 2017, as well as other business-related matters. The earnings news release announcing the third quarter 2017 financial results will be distributed on Tuesday, November 7, 2017, after the close of the market.

The earnings news release, financial supplement and live webcast will be available on the Primerica Investors website at http://investors.primerica.com. A replay of the call will be available for approximately 30 days.


Primerica, Inc. Executives to Present at Keefe, Bruyette & Woods 2017 Insurance Conference

Press Release, August 28, 2017

Primerica, Inc. (NYSE: PRI) today announced that Glenn Williams, Chief Executive Officer, and Alison Rand, Chief Financial Officer, will discuss the Company and recent developments at the Keefe, Bruyette & Woods 2017 Insurance Conference on Wednesday, September 6, 2017, at 8:00 AM (EDT) in New York, NY. The webcast will be available on Primerica’s Investor Relations website at http://investors.primerica.com.


Primerica Reports Second Quarter 2017 Results

Press Release, August 8, 2017

8% increase in life insurance licensed representatives to 121,471
9% growth in life insurance policies issued
7% increase in Investment and Savings Products (ISP) sales
10% growth in net earnings per diluted share (EPS) to $1.36 and 14% growth in adjusted operating EPS to $1.36
20.1% net income return on stockholders' equity (ROE) and 20.9% adjusted net operating income return on adjusted stockholders' equity (ROAE)

Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended June 30, 2017.  In the second quarter, total revenues increased 9% and adjusted operating revenues increased 10% to $413.7 million and $413.6 million, respectively.  Net income grew 6% to $63.1 million and adjusted net operating income grew 10% to $63.0 million compared with the second quarter of 2016.

During the quarter, earnings growth and ongoing share repurchases drove EPS and adjusted operating EPS both to $1.36, increasing 10% and 14%, respectively, compared to the second quarter a year ago.  ROE expanded to 20.1% and adjusted operating ROAE expanded to 20.9% in the second quarter.

Glenn Williams, Chief Executive Officer, said, "We achieved a 10% increase in EPS year-over-year and ROE grew to 20.1% in the second quarter, reflecting solid earnings and ongoing share repurchases.   The outstanding performance of our sales force leadership resulted in an 8% increase in the size of our life insurance licensed sales force, 9% growth in our life insurance policies issued and 7% growth in Investment and Savings Products sales year-over-year.  Our biennial sales force convention in June focused on continuing momentum and success supported by technology initiatives and should continue to generate growth in the second half of 2017."

Second Quarter Distribution & Segment Results

Distribution Results

 

Q2 2017

 

 

Q2 2016

 

 

% Change

 

 

Q1 2017

 

 

% Change

 
Life Licensed Sales Force (1)

121,471

112,365

8

%

117,907

3

%
Recruits

78,273

65,273

20

%

70,983

10

%
New Life-Licensed Representatives

12,947

12,171

6

%

10,903

19

%
Life Insurance Policies Issued

84,033

77,384

9

%

70,642

19

%
Life Productivity (2)

0.23

0.23

*

0.20

*

ISP Product Sales ($ billions) $

1.57

$

1.47

7

% $

1.59

(1

)%
Average Client Asset Values ($ billions) $

55.78

$

48.94

14

% $

53.82

4

%
  1. End of period
  2. Life productivity equals policies issued divided by the average number of life insurance licensed representatives per month

*     Not calculated or less than 1%

Segment Results  

Q2 2017

 

 

Q2 2016

 

 

% Change

 

Q1 2017

 

 

% Change

 

($ in thousands)

Adjusted Operating Revenues: (1)

Term Life Insurance $

238,901

$

210,559

13

%

$

234,051

2

%
Investment and Savings Products

143,774

132,608

8

%

140,407

2

%
Corporate and Other Distributed Products

30,917

32,387

(5

)%

30,572

1

%
Total adjusted operating revenues (1) $

413,592

$

375,554

10

%

$

405,030

2

%

Adjusted Operating Income (loss) before
  income taxes:(1)

Term Life Insurance $

61,854

$

58,018

7

%

$

49,022

26

%
Investment and Savings Products

39,684

36,064

10

%

37,119

7

%
Corporate and Other Distributed Products

(5,253

)

(5,642

)

(7

)%

(11,433

)

(54

)%
Total adjusted operating income before
income taxes (1)
$

96,285

$

88,440

9

%

$

74,708

29

%
  1. See the Non-GAAP Financial Measures section and the segment Adjusted Operating Results Reconciliations at the end of this release for additional information.

 

Life Insurance Licensed Sales Force.  Strong recruiting and licensing trends in recent quarters resulted in 8% year-over-year growth in the life insurance licensed sales force to 121,471 representatives at the end of the second quarter.  Solid momentum leading up to and following the June convention led to a 20% increase in new recruits and 6% growth in new life insurance licenses versus the prior year period.  Recruiting growth was strongest in June and is expected to result in additional licenses in the third quarter due to the timing of the licensing process.  On a sequential quarter basis, the size of the life insurance sales force increased 3% versus the first quarter, driven by 19% growth in new life insurance licenses versus the first quarter.

Term Life Insurance.  In the second quarter of 2017, Term Life insurance policies issued increased 9% year-over-year reflecting the larger life insurance licensed sales force and seasonally strong productivity of 0.23 policies per life insurance licensed representative per month.  Term Life revenues increased to $238.9 million driven by a 13% increase in net premiums and income before income taxes increased 7% to $61.9 million year-over-year.

Claims and lapses were elevated during the second quarter, impacting benefits and claims and DAC amortization, respectively, by about $2 million each in the period. The elevated claims in the second quarter were in different blocks of business than the elevated claims in the first quarter, which suggests normal volatility. Second quarter persistency improved versus the first quarter results due to both normal seasonality as well as better underlying performance, but was weaker than the results seen in the second quarter of recent years. Insurance expenses increased $3.8 million year-over-year primarily due to growth-related costs and technology spending.  Additional costs to enhance our sales force's mobile technology capabilities were largely offset by growth in other net revenues.

Investment and Savings Products.  In the second quarter, ISP revenues increased 8% to $143.8 million and income before income taxes grew 10% to $39.7 million compared with the year ago period.  Product sales grew 7% year-over-year with retail mutual fund sales increasing 16% and variable annuity sales declining 4%, consistent with recent industry trends.  Net flows were positive $255 million and average client asset values increased 14% to $55.8 billion at the end of the second quarter.  Account-based revenue grew 14% year-over-year largely related to a change made in the account-based fee structure in the fourth quarter of 2016 as well as a higher number of accounts than the prior year period.  ISP expenses increased approximately $1.5 million from the year ago period, largely due to the development of a new ISP sales tool and the launch of the Primerica Advisors Lifetime Investment Platform in the second quarter.

Corporate and Other Distributed Products (C&O).  C&O adjusted operating revenues were $30.9 million and adjusted operating losses before income taxes were $5.3 million in the second quarter of 2017.  Net investment income was positively impacted by a larger invested asset portfolio than in the prior year period, partially offset by a lower portfolio yield.  The decline in net investment income largely reflects an approximate $1 million positive mark-to-market adjustment on the deposit asset backing an IPO-related reinsurance agreement in the prior year period.

Taxes
The effective income tax rate for the second quarter of 2017 was 34.5%, down from 35.4% in the prior year period, primarily reflecting excess tax benefits of approximately $900,000 for the difference between the stock price of sales force equity awards at the time of grant and when the sales restrictions lapse.  Prior to the adoption of Accounting Standard Update 2016-09 effective January 1, 2017, any tax benefits or deficiencies were recorded in additional paid-in-capital.

Capital
Primerica repurchased $45.2 million or 584,680 shares of its common stock in the second quarter of 2017 for a total of $75.0 million or 967,337 shares year-to-date through June.  Primerica Life Insurance Company's (PLIC) statutory risk-based capital (RBC) ratio was estimated to be approximately 440% as of June 30, 2017.

Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally accepted accounting principles (GAAP).  We also present adjusted direct premiums, other ceded premiums, adjusted operating revenues, adjusted operating income before income taxes, net adjusted 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 (IPO) 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, net adjusted operating income, and diluted adjusted operating earnings per share exclude the impact of realized investment gains and losses, including other-than-temporary impairments (OTTI), for all periods presented.  We exclude realized investment gains and losses in measuring adjusted operating revenues to eliminate period-over-period fluctuations that may obscure comparisons of operating results due to items such as the timing of recognizing gains and losses and other factors prior to an invested asset's maturity that are not directly associated with the Company's insurance operations.  Adjusted stockholders' equity excludes the impact of net unrealized investment gains and losses recorded in other comprehensive income (loss) for all periods presented.  We exclude unrealized investment gains and losses in measuring adjusted stockholders' equity as unrealized gains and losses from the Company's invested assets 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 invested asset matures or is sold.

The 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 financial 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 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 Wednesday, August 9, 2017 at 10:00 am EDT, to discuss second quarter results.  This release and a detailed financial supplement will be posted on Primerica's website.  Investors are encouraged to review these materials.  To access the webcast go to http://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 on Primerica's website, http://investors.primerica.com.

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 our sales representatives; changes to the independent contractor status of our sales representatives; our or our sales representatives' violation of or non-compliance with laws and regulations or the failure to protect the confidentiality of client information; differences between our actual experience and our expectations regarding mortality, persistency, expenses and interests rates as reflected in the pricing for our insurance policies; the occurrence of a catastrophic event that causes a large number of premature deaths of our insureds; changes in federal and state legislation, including other legislation or regulation that affects our insurance and investment product businesses, such as the DOL's rule defining who is a "fiduciary" of a qualified retirement plan as a result of giving investment advice; our failure to meet RBC standards or other minimum capital and surplus requirements; a downgrade or potential downgrade in our insurance subsidiaries' financial strength ratings or our senior debt ratings; the effects of credit deterioration and interest rate fluctuations on our invested asset portfolio; incorrectly valuing our investments; inadequate or unaffordable reinsurance or the failure of our reinsurers to perform their obligations; the failure of, or legal challenges to, the support tools we provide to our sales force; heightened standards of conduct or more stringent licensing requirements for our sales representatives; inadequate policies and procedures regarding suitability review of client transactions; the failure of our investment products to remain competitive with other investment options or the change to investment and savings products offered by key providers in a way that is not beneficial to our business; fluctuations in the performance of client assets under management; the inability of our subsidiaries to pay dividends or make distributions; our inability to generate and maintain a sufficient amount of working capital; our non-compliance with the covenants of our senior unsecured debt; legal and regulatory investigations and actions concerning us or our sales representatives; the loss of key personnel; the failure of our information technology systems, breach of our information security or failure of our business continuity plan; and fluctuations in 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 http://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 distributor of financial products to middle income households in North America. Primerica representatives educate their Main Street 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. In addition, Primerica provides an entrepreneurial full or part-time business opportunity for individuals seeking to earn income by distributing the company's financial products. We insured approximately 5 million lives and have over 2 million client investment accounts at December 31, 2016. Primerica stock is included in the S&P MidCap 400 and the Russell 2000 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, 2017

   

December 31, 2016

 

(In thousands)

Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value $

1,888,983

$

1,792,438

Fixed-maturity securities-held-to-maturity, at amortized cost

635,690

503,230

Equity securities available-for-sale, at fair value

45,936

44,894

Trading securities, at fair value

15,541

7,383

Policy loans

34,316

30,916

Total investments

2,620,466

2,378,861

Cash and cash equivalents

154,499

211,976

Accrued investment income

16,585

16,520

Due from reinsurers

4,191,754

4,193,562

Deferred policy acquisition costs, net

1,833,877

1,713,065

Agent balances, due premiums and other receivables

223,923

210,448

Intangible assets, net

53,214

54,915

Income taxes

39,764

37,369

Other assets

386,279

334,274

Separate account assets

2,424,937

2,287,953

Total assets $

11,945,298

$

11,438,943

Liabilities and Stockholders' Equity

Liabilities:

Future policy benefits $

5,812,217

$

5,673,890

Unearned premiums

500

527

Policy claims and other benefits payable

267,630

268,136

Other policyholders' funds

377,313

363,038

Notes payable

373,103

372,919

Surplus note

634,980

502,491

Income taxes

241,314

225,006

Other liabilities

428,176

449,963

Payable under securities lending

115,875

73,646

Separate account liabilities

2,424,937

2,287,953

Total liabilities

10,676,045

10,217,569

Stockholders' equity:

Common stock

450

457

Paid-in capital

-

52,468

Retained earnings

1,224,375

1,138,851

Accumulated other comprehensive income, net of income tax

44,428

29,598

Total stockholders' equity

1,269,253

1,221,374

Total liabilities and stockholders' equity $

11,945,298

$

11,438,943

 

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

Three months ended June 30,

2017

 

2016

(In thousands, except per-share amounts)

Revenues:

Direct premiums

$

637,426

$

612,189

Ceded premiums

(406,043

)

(406,683

Net premiums

231,383

205,506

Commissions and fees

148,317

136,902

Net investment income

19,742

20,389

Realized investment gains (losses), including OTTI

104

3,440

Other, net

14,150

12,757

Total revenues

 

413,696

378,994

 

Benefits and expenses:

Benefits and claims

99,512

88,984

Amortization of deferred policy acquisition costs

47,861

38,720

Sales commissions

75,440

70,146

Insurance expenses

36,920

32,906

Insurance commissions

5,157

4,472

Interest expense

7,143

7,178

Other operating expenses

45,274

44,708

Total benefits and expenses

317,307

287,114

Income before income taxes

96,389

91,880

Income taxes

33,282

32,554

Net income

$

63,107

$

59,326

Earnings per share:

Basic earnings per share

$

1.36

$

1.23

Diluted earnings per share

$

1.36

$

1.23

Shares used in computing earnings per share:

Basic

45,984

47,658

Diluted

46,071

47,708

 

PRIMERICA, INC. AND SUBSIDIARIES

 

Consolidated Adjusted Operating Results Reconciliation

 

(Unaudited  in thousands, except per share amounts)

 

Three months ended June 30,

 

2017

 

2016

 

% Change

 
Total revenues $

413,696

$

378,994

9

%
Less: Realized investment gains (losses), including OTTI

104

3,440

Adjusted operating revenues $

413,592

$

375,554

10

%

Income before income taxes $

96,389

$

91,880

5

%
Less: Realized investment gains (losses), including OTTI

104

3,440

Adjusted operating income before income taxes $

96,285

$

88,440

9

%

Net income $

63,107

$

59,326

6

%
Less: Realized investment gains (losses), including OTTI

104

3,440

Less: Tax impact of reconciling items

(36

)

(1,218

)

Net adjusted operating income $

63,039

$

57,104

10

%

Diluted earnings per share (1) $

1.36

$

1.23

10

%
Less: Net after-tax impact of operating adjustments

0.00

(0.04)

Diluted adjusted operating earnings per share (1) $

1.36

$

1.19

14

%

 

TERM LIFE INSURANCE SEGMENT

 

Adjusted Premiums Reconciliation

 

(Unaudited  in thousands)

 

Three months ended June 30,

 

2017

 

2016

 
Direct premiums $

630,485

$

604,117

Less: Premiums ceded to IPO coinsurers

308,323

322,767

Adjusted direct premiums $

322,162

$

281,350

Ceded premiums $

(404,175

) $

(404,492

)
Less: Premiums ceded to IPO coinsurers

(308,323

)

(322,767

)
Other ceded premiums $

(95,852

) $

(81,725

)
Net premiums $

226,310

$

199,625

 

CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT

 

Adjusted Operating Results Reconciliation

 

(Unaudited  in thousands)

 

Three months ended June 30,

 

2017

 

2016

 
Total revenues $

31,021

$

35,827

Less: Realized investment gains (losses), including OTTI

104

3,440

Adjusted operating revenues $

30,917

$

32,387

Loss before income taxes $

(5,149

) $

(2,202

)
Less: Realized investment gains (losses), including OTTI

104

3,440

Adjusted operating loss before income taxes $

(5,253

) $

(5,642

)

 

PRIMERICA, INC. AND SUBSIDIARIES

 

Adjusted Stockholders' Equity Reconciliation

 

(Unaudited  in thousands)

 

 

June 30, 2017

 

December 31, 2016

 
Stockholders' equity $

1,269,253

$

1,221,374

Less: Unrealized net investment gains recorded
in stockholders' equity, net of income tax

49,829

42,791

Adjusted stockholders' equity $

1,219,424

$

1,178,583

 


Quarterly Dividend Increased 5.3% Over the Prior Quarter

BusinessWire, August 7, 2017

The Board of Directors of Primerica, Inc. (NYSE:PRI), a leading distributor of financial products to middle income households in North America, today approved payment of a quarterly dividend of $0.20 per share for the second quarter of 2017, which reflects a 5.3% increase (or $0.01 per share) over the previous dividend. The dividend will be payable on September 15, 2017 to stockholders of record as of August 18, 2017.

"Our board of directors is pleased that Primerica's continued strong growth and cash generation supports increasing the dividend and enhancing stockholder return," said CEO Glenn Williams. "Today's board action reinforces our commitment to delivering value to our stockholders while meeting the needs of Main Street consumers."


Primerica Schedules Second Quarter 2017 Financial Results Webcast

BusinessWire.com, July 18, 2017

Primerica, Inc. (NYSE: PRI) announced today that it will hold a webcast on Wednesday, August 9, 2017, at 10:00 a.m. Eastern Time to discuss the Company's results for the second quarter ended June 30, 2017, as well as other business-related matters. The earnings news release announcing the second quarter 2017 financial results will be distributed on Tuesday, August 8, 2017, after the close of the market.

The earnings news release, financial supplement and live webcast will be available on the Primerica Investors website at http://investors.primerica.com. A replay of the call will be available for approximately 30 days.


Primerica and Answer Financial celebrate 10 years of helping clients with their auto and home insurance needs

PRNewswire.com, July 11, 2017

The partnership helps Main Street families find savings on auto and home insurance that can be saved or applied toward necessary life insurance products.

Primerica, Inc. (NYSE: PRI), a leading distributor of financial services to Main Street families throughout North America, along with Answer Financial®, one of the nation's largest auto and home insurance agencies, are pleased to announce ten years of successful partnership.

In 2007, Primerica noticed some of its potential clients lacked the financial means necessary to implement a sound financial plan and recognized the important role auto and home insurance could play in helping those clients. It then began to pursue a relationship with Answer, in an effort to help consumers compare rates and coverages from more than 20 top-rated insurance companies to see if they could be saving on their premiums.

The two industry leaders joined forces to launch Primerica Secure, a white-labeled auto and home insurance program that allows Primerica's representatives to refer clients to a team of Answer's US-based licensed agents. The auto and home insurance program enables Primerica representatives to help their clients find the right coverage and price for their auto and home insurance needs.

During their 10 years of partnership, Answer has served approximately 400,000 Primerica customers, helping them save on the important protection they need for their cars and homes. On auto insurance alone, Answer customers save an average of $451 a year1.

"The partnership between Primerica and Answer was a natural step for us, as we're both in the business of protecting families and their most valued assets by helping them find the best coverage possible for their budget," said Glenn Williams, Primerica CEO. "Answer routinely exceeds the expectations of both our sales force and clients, and we look forward to serving many more families through our partnership."

"Many successful Primerica life insurance representatives leverage Answer's auto and home insurance program to help their clients save money on their premiums while still getting the coverage they need," said Rob Slingerland, Answer Financial CEO. "Once Primerica clients become policyholders with Answer, we provide additional services like Rate Tracker, which automatically shops auto insurance rates at renewal time, and the Answer Mobile app for quick access to digital ID cards, policy information, roadside assistance, and click-to-call claims."

To explore Answer's partnership opportunities, visit b2b.answerfinancial.com.

  1. 1. Results of a national survey of new Answer Financial customers reporting auto insurance savings in 2016.