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.

 


Primerica Set to Open 2017 International Convention in Indianapolis

Press Release, June 12, 2017

Primerica to Celebrate Unprecedented Growth at Lucas Oil Stadium Event

Beginning Wednesday, an expected 45,000 people will converge on Indianapolis to attend the 2017 Primerica International Convention at the Indianapolis Convention Center and Lucas Oil Stadium, June 14-17, 2017. The biennial event will celebrate record achievements in meeting the financial needs of Main Street clients and the extraordinary success of our Field Leadership. It also will set the stage for continued growth throughout 2017 and beyond.

Glenn Williams, Primerica CEO, said, “Our Company and our Field Leadership have experienced a period of unprecedented growth since our 2015 Convention. At that meeting, we set several ambitious goals to achieve before our 2017 event – I’m proud that we’ve met or exceeded every one of them. I’m particularly excited about the growth in the size of sales force over the past 24 months: As of May 31, 2017, our sales force has exceeded 120,000 life insurance licensed representatives. These men and women are committed to doing what’s right for their clients and for their teammates, every day.

“Our sales force growth comes at a time when our clients need our help the most. It’s widely accepted that there is a significant life insurance protection gap in North America, with some estimates reaching as high as $12 trillion. Additionally, studies show that most families are not saving enough for retirement. Our sales force and Field Leadership stand ready to help more families take control of their finances and make a real difference in the lives of our clients.”

This event will be even more significant as we celebrate the Company’s 40th anniversary. In February 1977, a small group of visionary business leaders founded a company to help Main Street families find the right kind of insurance and help them save for retirement. Now, more than 4 decades later, Primerica has become a leading distributor of financial products to middle income households in North America.

“Our Convention provides an opportunity for us to highlight the accomplishments from our first 40 years in business and to set the course for the next 40 years. Tens of thousands of our teammates will meet in the Lucas Oil Stadium where they will learn from dynamic leaders, attend workshops and seminars, and enhance their skills. We will use this forum to build on the strong momentum we achieved in the first half of 2017 as we work to maximize the many opportunities that lie ahead for our clients, our Field Leaders, and our Company. Primerica is ideally positioned to meet the evolving needs of Main Street families now and for years to come.”


Primerica Reports First Quarter 2017 Results

BusinessWire, May 09, 2017

9% increase in life insurance licensed representatives to 117,907

6% growth in life insurance policies issued

15% increase in Investment and Savings Products (ISP) sales

21% growth in net earnings per diluted share (EPS) and 19% growth in adjusted operating EPS to $1.11

Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended March 31, 2017. In the first quarter, total revenues increased 12% and adjusted operating revenues increased 11% to $405.2 million and $405.0 million, respectively. Net income grew 15% to $52.1 million and adjusted net operating income grew 14% to $52.0 million compared with the first quarter of 2016.

Glenn Williams, Chief Executive Officer, said, “We achieved a 21% increase in EPS and a 130 basis points increase in return on equity (ROE) compared to the first quarter a year ago reflecting solid earnings and ongoing share repurchases. Strong organic growth continued with our life insurance licensed sales force reaching almost 118,000 representatives and a 6% year-over-year growth in life insurance policies issued. In addition, our Investment and Savings Products sales grew 15% year-over-year to a record $1.6 billion in first quarter 2017. We are optimistic about the future and our ability to drive growth and deliver long-term value for all of our stakeholders.”

First quarter results reflect a 13% increase in Term Life net premiums. Continued organic growth was partially offset by weaker persistency and claims experience during the quarter. Strong ISP performance was driven by 15% growth in both sales and average client asset values year-over-year. Insurance and other operating expenses, which are typically highest in the first quarter due to annual employee equity award grants, increased year-over-year from growth in the size of the business, annual employee merit increases and continued development of technology platforms. During the quarter, earnings growth and continued share repurchases drove EPS and adjusted operating EPS both to $1.11, increasing 21% and 19%, respectively, compared to the first quarter a year ago. ROE expanded to 16.9% and adjusted operating ROAE expanded to 17.5% in the first quarter versus 15.6% and 16.3%, respectively, in the prior year period.

First Quarter Distribution & Segment Results

Distribution Results

Q1 2017

Q1 2016

% Change

Q4 2016

% Change

Life Licensed Sales Force (1)

117,907

108,220

9

%

116,827

1

%
Recruits

70,983

63,427

12

%

60,326

18

%
New Life-Licensed Representatives

10,903

9,666

13

%

11,148

(2

)%
Life Insurance Policies Issued

70,642

66,376

6

%

79,110

(11

)%
Life Productivity (2)

0.20

0.21

*

0.23

*

ISP Product Sales ($ billions)

$

1.59

$

1.38

15

%

$

1.41

13

%
Average Client Asset Values ($ billions)

$

53.82

$

46.65

15

%

$

51.45

5

%

(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

Q1 2017

Q1 2016

% Change

Q4 2016

% Change

($ in thousands)

Adjusted Operating Revenues: (1)
Term Life Insurance

$

234,051

$

206,095

14

%

$

227,128

3

%
Investment and Savings Products

140,407

124,918

12

%

137,016

2

%
Corporate and Other Distributed Products

30,572

32,370

(6

)%

28,255

8

%
Total adjusted operating revenues (1)

$

405,030

$

363,383

11

%

$

392,399

3

%
Adjusted Operating Income (Loss) before

income taxes:(1)

Term Life Insurance

$

49,022

$

46,078

6

%

$

51,127

(4

)%
Investment and Savings Products

37,119

31,691

17

%

40,840

(9

)%
Corporate and Other Distributed Products

(11,433

)

(6,774

)

69

%

(6,368

)

80

%
Total adjusted operating income before income taxes (1)

$

74,708

$

70,995

5

%

$

85,599

(13

)%

(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 9% year-over-year growth in the life insurance licensed sales force to 117,907 representatives at the end of the first quarter. Recruiting of new representatives increased 12% and new life insurance licenses were 13% higher than the prior year period. On a sequential quarter basis, recruiting increased 18% from the typically slower holiday season and new life insurance licenses declined 2% as a result of typically lower recruiting levels in the fourth quarter.

Term Life Insurance. In the first quarter of 2017, Term Life insurance policies issued increased 6% year-over-year reflecting the larger life insurance licensed sales force and productivity of 0.20 policies per life insurance licensed representative per month. While still in the historical range, productivity was moderately lower than recent quarters due to seasonality in the first quarter following the slower holiday season. Term Life revenues increased 14% to $234.1 million compared with the year ago period, driven by a 13% increase in net premiums from higher levels of issued policies in recent years and the growth of in-force business not subject to IPO-related coinsurance agreements. Income before income taxes increased 6% to $49.0 million year-over-year. Deferred acquisition costs amortization was higher than expected in the first quarter with $2.5 million related to weaker persistency and approximately $1.5 million attributable to certain policies held by clients in Louisiana that we restricted from lapsing in 2016 at the state insurance department’s request due to severe flooding last year. Many of these policies ultimately lapsed in the first quarter once the restriction was removed. Benefits and claims were about $3 million higher than expected during the quarter reflecting a frequency of claims above historical trends, partially offset by lower reserve increases from weaker persistency experience. Insurance expenses increased $4.7 million year-over-year primarily due to growth-related costs, annual employee merit increases 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 first quarter, ISP revenues increased 12% to $140.4 million and income before income taxes grew 17% to $37.1 million compared with the year ago period. Product sales grew 15% year-over-year with U.S. retail mutual fund sales increasing 25% and variable annuity sales declining 5% consistent with recent industry trends. Sales-based revenue growth lagged revenue-generating sales growth due to the mix of product sales during the quarter. Net flows were positive $320 million and client asset values increased 14% to $54.9 billion at the end of the first quarter. Account-based revenue grew 17% 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 $2.5 million from the year ago period largely due to costs related to growth in the business, the launch of the Primerica Advisors Lifetime Investment Platform and technology enhancements.

Corporate and Other Distributed Products (C&O). C&O adjusted operating revenues were $30.6 million and adjusted operating losses before income taxes were $11.4 million in the first quarter of 2017. Net investment income was negatively impacted by lower portfolio yield than in the prior year period, offset by a larger invested asset portfolio. The impact on net investment income from the mark-to-market on the deposit asset backing an IPO-related reinsurance agreement was negligible in the first quarter of 2017; however, the prior year period included an approximate $1 million positive mark-to-market adjustment. Net unrealized gains increased to $73.0 million at quarter-end from $65.8 million at December 31, 2016.

Taxes

The effective income tax rate for the first quarter of 2017 was 30.4%, down from 35.7% in the prior year period, primarily reflecting excess tax benefits of $3.3 million from the adoption of Accounting Standards Update 2016-09, which requires the excess tax benefit or expense for the difference between the stock price of equity awards at the time of grant and vesting to be recorded in the income statement rather than directly to equity in the balance sheet. Also impacting the tax rate was the recognition of approximately $0.7 million of certain tax benefits for which the statute of limitations expired during the first quarter.

Capital

Primerica repurchased $29.8 million or 382,657 shares of its common stock in the first quarter of 2017. Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be approximately 440% as of March 31, 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, May 10, 2017 at 10:00 am EDT, to discuss first 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)

March 31, 2017

December 31, 2016

(In thousands)

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

$

1,832,228

$

1,792,438

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

535,160

503,230

Equity securities available-for-sale, at fair value

46,437

44,894

Trading securities, at fair value

12,737

7,383

Policy loans

32,969

30,916

Total investments

2,459,531

2,378,861

Cash and cash equivalents

185,762

211,976

Accrued investment income

17,654

16,520

Due from reinsurers

4,219,547

4,193,562

Deferred policy acquisition costs, net

1,767,681

1,713,065

Agent balances, due premiums and other receivables

215,567

210,448

Intangible assets, net

54,065

54,915

Income taxes

37,731

37,369

Other assets

356,139

334,274

Separate account assets

2,356,320

2,287,953

Total assets

$

11,669,997

$

11,438,943

Liabilities and Stockholders' Equity
Liabilities:
Future policy benefits

$

5,736,313

$

5,673,890

Unearned premiums

511

527

Policy claims and other benefits payable

268,397

268,136

Other policyholders' funds

373,733

363,038

Notes payable

373,011

372,919

Surplus note

534,435

502,491

Income taxes

237,719

225,006

Other liabilities

449,734

449,963

Payable under securities lending

93,326

73,646

Separate account liabilities

2,356,320

2,287,953

Total liabilities

10,423,499

10,217,569

Stockholders' equity:
Common stock

455

457

Paid-in capital

28,606

52,468

Retained earnings

1,182,039

1,138,851

Accumulated other comprehensive income, net of income tax

35,398

29,598

Total stockholders' equity

1,246,498

1,221,374

Total liabilities and stockholders' equity

$

11,669,997

$

11,438,943

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

Three months ended March 31,

2017

2016

(In thousands, except per-share amounts)

Revenues:
Direct premiums

$

627,698

$

597,130

Ceded premiums

(399,769

)

(395,333

)
Net premiums

227,929

201,797

Commissions and fees

144,268

128,821

Net investment income

19,894

21,238

Realized investment gains (losses), including OTTI

134

(783

)
Other, net

12,939

11,527

Total revenues

405,164

362,600

Benefits and expenses:
Benefits and claims

102,385

90,977

Amortization of deferred policy acquisition costs

51,850

43,129

Sales commissions

73,704

66,643

Insurance expenses

37,621

33,130

Insurance commissions

4,899

4,147

Interest expense

7,127

7,173

Other operating expenses

52,736

47,189

Total benefits and expenses

330,322

292,388

Income before income taxes

74,842

70,212

Income taxes

22,772

25,036

Net income

$

52,070

$

45,176

Earnings per share:
Basic earnings per share

$

1.12

$

0.92

Diluted earnings per share

$

1.11

$

0.92

Shares used in computing earnings per share:
Basic

46,301

48,550

Diluted

46,374

48,574

PRIMERICA, INC. AND SUBSIDIARIES

Consolidated Adjusted Operating Results Reconciliation

(Unaudited – in thousands, except per share amounts)

Three months ended March 31,

2017

2016

% Change

Total revenues

$

405,164

$

362,600

12

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

134

(783

)
Adjusted operating revenues

$

405,030

$

363,383

11

%
Income before income taxes

$

74,842

$

70,212

7

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

134

(783

)
Adjusted operating income before income taxes

$

74,708

$

70,995

5

%
Net income

$

52,070

$

45,176

15

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

134

(783

)
Less: Tax impact of reconciling items

(41

)

279

Net adjusted operating income

$

51,977

$

45,680

14

%
Diluted earnings per share (1)

$

1.11

$

0.92

21

%
Less: Net after-tax impact of operating adjustments

0.00

(0.01

)
Diluted adjusted operating earnings per share (1)

$

1.11

$

0.93

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 March 31,

2017

2016

Direct premiums

$

620,379

$

589,244

Less: Premiums ceded to IPO coinsurers

312,982

321,494

Adjusted direct premiums

$

307,397

$

267,750

Ceded premiums

$

(398,077

)

$

(393,270

)
Less: Premiums ceded to IPO coinsurers

(312,982

)

(321,494

)
Other ceded premiums

$

(85,095

)

$

(71,776

)
Net premiums

$

222,302

$

195,974

CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT

Adjusted Operating Results Reconciliation

(Unaudited – in thousands)

Three months ended March 31,

2017

2016

Total revenues

$

30,706

$

31,586

Less: Realized investment gains (losses), including OTTI

134

(783

)
Adjusted operating revenues

$

30,572

$

32,369

Loss before income taxes

$

(11,299

)

$

(7,557

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

134

(783

)
Adjusted operating loss before income taxes

$

(11,433

)

$

(6,774

)

PRIMERICA, INC. AND SUBSIDIARIES

Adjusted Stockholders' Equity Reconciliation

(Unaudited – in thousands)

March 31, 2017

December 31, 2016

Stockholders' equity

$

1,246,498

$

1,221,374

Less: Unrealized net investment gains recorded

in stockholders' equity, net of income tax

47,479

42,791

Adjusted stockholders' equity

$

1,199,019

$

1,178,583