SURVEY: Middle-Income Americans Spending Less Amid Recession Concerns

Rising inflation, interest rates have many taking proactive steps to secure finances

DULUTH, Ga. — Primerica, Inc. (NYSE: PRI), a leading provider of financial services in the United States and Canada, released the Middle-Income Financial Security Monitor for the second quarter of 2022 — a national survey that measures changes in the sentiments of middle-income families in the U.S. about their finances.

The survey found middle-income households taking proactive steps to secure their finances as they brace for a possible recession. About three-quarters (77%) believe the country will be in that situation by the end of the year, and most Americans are preparing by cutting back on spending, delaying major purchases, or planning to work longer before retirement.

“Middle-income families are taking a hard look at their finances right now. Rising costs continue to eat into their bottom line amid fresh concerns of a recession,” said Glenn J. Williams, CEO of Primerica. “For 45 years, we’ve helped working families prepare to weather these types of situations. We’ve reassured them that professional financial guidance is not only for the affluent. It is critical to their long-term planning and can support their efforts to endure a potential economic downturn.”

Key Findings from Primerica’s U.S. Middle-Income Financial Security Monitor

  • Inflation drives top concerns. The economy continues to be a major stressor for middle-income Americans, with 41% rating inflation as their top concern. Paying for food and groceries also ranks high (26%, up four percentage points since March) as does their current financial situation (25%, up eight percentage points since March).
  • Most plan to cut back on spending. Nearly three-quarters (71%) report cutting back on restaurant/takeout meals, up from 57% in March. Nearly the same amount (69%) say they plan to keep their current technology instead of upgrading, up from 44% in March. And about half (49%) are planning to budget or cut back on groceries, up from 37% in March.
  • Reassessing major purchases. Overall, more than one-third (38%) have already delayed a major purchase due to rising interest rates, including the biggest hike by the Fed in nearly 30 years. Still, about the same percentage (39%) say they plan to take a vacation in the next 12 months.
  • Many rethinking future financial plans. Forty-two percent say they plan to work longer before retirement, and three-quarters (75%) of employed middle-income Americans say they don’t think they have enough saved to retire comfortably, up 10 percentage points since March. In addition, one in five plan to find a higher paying job (22%).

Topline Trends Data

Jun.
2022

Mar.
2022

Dec.
2021

Aug.
2021

Apr.
2021

Dec.
2020

How would you rate the condition of your personal finances? (Reporting “Excellent” and “Good” responses.)

Q2 2022 Survey: Confidence in personal finances has trended downward since April 2021.

54%

60%

64%

65%

67%

57%

Overall, would you say your income is…? (Reporting “Falling behind the cost of living” responses.)

Q2 2022 Survey: Concern about meeting increased cost of living is up.

75%

67%

68%

65%

56%

59%

Do you have an emergency fund that would cover an expense of $1,000 or more (for example, if your car broke down or you had a large medical bill)? (Reporting “Yes” responses.)

Q2 2022 Survey: About the same percentage have an emergency fund that would cover an expense of $1,000 or more.

61%

62%

60%

65%

66%

56%

How would you rate the economic health of your community? (Reporting “Not so good” and “Poor” responses.)

Q2 2022 Survey: The economic health of communities is trending downward.

58%

52%

50%

54%

52%

57%

How would you rate your ability to save for the future? (Reporting “Not so good” and “Poor” responses.)

Q2 2022 Survey: Over 70% feel it will be difficult to save for the future, an increase from previous surveys.

72%

66%

62%

63%

58%

65%

In the past three months, has your credit card debt…? (Reporting “Increased” responses.)

Q2 2022 Survey: Credit card debt is at the highest point in Monitor history.

29%

25%

28%

21%

18%

25%

About Primerica’s Middle-Income Financial Security Monitor

The Monitor is a quarterly national survey to monitor the financial health of those with annual household incomes of $30,000-$100,000. Change Research conducted online polling from June 4th through 6th, 2022. Using Dynamic Online Sampling, Change Research polled 1384 adults over 18. Post-stratification weights were made on gender, age, race, education and Census region to reflect the population of these adults based on the five-year averages in the 2020 American Community Survey published by the U.S. Census. The margin of error is 3.1%.

About Primerica, Inc.

Primerica is a leading provider of financial services to middle-income households in the United States and Canada. Licensed financial representatives educate Primerica clients about how to prepare for a more secure financial future by assessing their needs and providing appropriate products like term life insurance, mutual funds, annuities, and other financial products. Primerica insured over 5.7 million lives and had over 2.7 million client investment accounts as of December 31, 2021. Primerica was the #2 issuer of Term Life insurance coverage in the United States and Canada in 2021 through its insurance company subsidiaries. Primerica stock is included in the S&P MidCap 400 and the Russell 1000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.


Forbes Names Primerica One of America’s Best Insurance Companies for 2022

Business Wire – October 8, 2021

(Duluth) – Primerica, Inc. (NYSE: PRI), a leading provider of financial services to middle-income families throughout the United States and Canada, has been named by Forbes to its list of “American Best Insurance Companies for 2022.” Primerica ranks 6th among 25 companies included in the Term Life Insurance category.

“Every day, thousands of Primerica representatives educate families on the necessity of preparing for the unexpected and protecting their loved ones through term life insurance. Each year, that preparedness helps some of those very same families make it through the worst times of their lives after the death of a family member,” said Glenn Williams, Primerica Chief Executive Officer. “For more than four decades, Primerica has remained committed to providing exemplary customer service and quality products. We are pleased to be recognized by Forbes for our efforts, and we look forward to serving many more families in the years to come.”

In order to determine which companies were best serving consumers, Forbes partnered with Statista to survey more than 16,000 customers and get their feedback on these companies' performance. Forbes also assessed the quality of customer service, financial advice, price/performance ratio, transparency, and damage/benefit ratio through direct solicitation of information from the companies, as well as through searches of publicly available information on each of the companies.

In addition to this recognition, Primerica also appears on Forbes' lists of America's Best Employers for Diversity and America’s Best Employers for Women for 2021. For more information on Primerica’s products and services, please visit www.primerica.com.

 

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AM Best Affirms Credit Ratings of Primerica, Inc. and Its Subsidiaries

Business Wire, October 6, 2021

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Primerica Life Insurance Company (Nashville, TN) and its affiliates, National Benefit Life Insurance Company (Long Island City, NY) and Primerica Life Insurance Company of Canada (Mississauga, Ontario), collectively referred to as Primerica Life. Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of Primerica, Inc. (Primerica) (headquartered in Duluth, GA) [NYSE: PRI], which is the holding company for the group’s insurance and noninsurance operating companies. AM Best also has affirmed the Long-Term Issue Credit Rating of “a-” (Excellent) on $375 million, 4.75% senior unsecured notes, due 2022, of Primerica. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Primerica Life’s balance sheet strength, which AM Best assesses as very strong, as well as its very strong operating performance, favorable business profile and appropriate enterprise risk management.

Primerica Life’s ratings recognize the group’s strongest risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), along with good liquidity, financial flexibility and an investment portfolio that traditionally is more focused on fixed income with no alternative asset classes, as well as very modest mortgage exposure, limited to commercial mortgage-backed securities. Primerica’s product risk is almost exclusively composed of term life insurance, which is viewed as low risk on AM Best’s product continuum. However, the group continues to maintain higher allocations to NAIC class 2 bonds relative to industry averages. Risk-adjusted capitalization ratios are dampened qualitatively by high reinsurance leverage with heavy reliance on captive reinsurance solutions to fund its Regulation XXX reserves, which should moderate over time as new business is issued under principles-based reserving practices. The company also has solid financial leverage and interest coverage ratios that are within AM Best’s guidelines for these ratings. Operating leverage is still within AM Best’s overall GAAP tolerance; however, it is at the upper range, driven primarily by the use of operating leverage related to Regulation XXX reserves.

Primerica Life’s earnings have been consistent with AM Best’s expectations, as the group continuously has generated solid levels of GAAP and statutory net income due to favorable loss ratios, although there has been some uptick in claims as a result of the COVID-19 pandemic, although more recently that has tempered. Primerica has demonstrated consistent premium growth in its insurance segment and favorable revenue growth in its investment and savings products segment. The company successfully has been able to pivot life insurance sales efforts during the pandemic. Premium growth has been offset partially by higher-than-industry lapse rates and historically high dividend payout ratios, along with insurance and other operating expenses as the company continues to invest in infrastructure. Primerica Life’s operating profile benefits from noninsurance revenue that represent a substantial portion of overall GAAP revenue, through the sale of mutual funds and other investment savings products, along with distribution of other manufacturers’ annuity products, which generates fee-based revenues and provides a source of earnings diversification.

The pandemic created strong demand for financial solutions for Primerica Life, which is one of the largest writers of term life insurance in the United States, with a continued strong market position attributable to its dedicated distribution affiliate, Primerica Financial Services, LLC. This integrated distribution includes approximately 135,000 life agents with almost 26,000 mutual fund-licensed representatives across the country. Primerica Life’s business profile in the United States and Canada is reinforced further by its experienced management team, which successfully built and supports its sizable sales force. However, its business model is heavily reliant upon the need to recruit agents continuously to maintain its competitive advantage, and the COVID-19 pandemic initially created some challenges with agent licensing. However, this has since normalized.

Offsetting rating factors is Primerica Life’s somewhat narrow insurance business profile focus, which has been focused on term life products. At the same time, however, Primerica continues to expand its affiliated relationships, and AM Best notes a new mortgage brokerage program initiated in partnership with Quicken Loans, whereby Primerica’s licensed mortgage loan originators can now broker mortgage loans in an effort to diversify its business profile further. Furthermore, Primerica announced the acquisition of e-TeleQuote, a direct-to-consumer broker focused on distribution of Medicare Advantage policies, for approximately $600 million to diversify its business profile further.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

 

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Forbes Names Primerica One of America’s Best Insurance Companies for 2022

Primerica, Inc. (NYSE:PRI), a leading provider of financial services to middle-income families throughout the United States and Canada, has been named by Forbes as one of America’s Best Insurance Companies for 2022. Primerica ranks 6th among 25 companies included in the Term Life Insurance category.

“Every day, thousands of Primerica representatives educate families on the necessity of preparing for the unexpected and protecting their loved ones through term life insurance. Each year, that preparedness helps some of those very same families make it through the worst times of their lives after the death of a family member,” said Glenn Williams, Primerica Chief Executive Officer. “For more than four decades, Primerica has remained committed to providing exemplary customer service and quality products. We are pleased to be recognized by Forbes for our efforts, and we look forward to serving many more families in the years to come.”

In order to determine which companies were best serving consumers, Forbes partnered with Statista to survey more than 16,000 customers and get their feedback on these companies' performance. Forbes also assessed the quality of customer service, financial advice, price/performance ratio, transparency, and damage/benefit ratio through direct solicitation of information from the companies, as well as through searches of publicly available information on each of the companies.

In addition to this recognition, Primerica also appears on Forbes' lists of America's Best Employers for Diversity and America’s Best Employers for Women for 2021. For more information on Primerica’s products and services, please visit www.primerica.com.

About Primerica, Inc.

Primerica, Inc., headquartered in Duluth, GA, is a leading provider of financial services to middle-income households in the United States and Canada. Independent licensed representatives educate Primerica clients about how to better prepare for a more secure financial future by assessing their needs and providing appropriate solutions through term life insurance, which the company underwrites, and mutual funds, annuities and other financial products, which the company distributes primarily on behalf of third parties. Primerica insured over 5.5 million lives and had approximately 2.6 million client investment accounts at December 31, 2020. Primerica, through its insurance company subsidiaries, was the #2 issuer of Term Life insurance coverage in North America in 2020. Primerica stock is included in the S&P MidCap 400 and the Russell 1000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI.”


The Primerica Foundation Donates $25,000 to Blessings in a Backpack Orlando Chapter

Yahoo Finance, August 31, 2021

The Primerica Foundation has announced a $25,000 donation to the Blessings in a Backpack Orlando Chapter to help feed elementary school children who might otherwise go hungry on the weekends.

“The Primerica Foundation focuses on helping families meet their critical needs and becoming self-sufficient in order to build a more secure financial future,” said Kathryn Kieser, Primerica Executive Vice President and Chair of The Primerica Foundation. “We are proud to support Blessings in a Backpack in their efforts to feed thousands of hungry school children in Central Florida every weekend.”

“This gift could not have come at a better time,” said Sarah Carlson, Managing Director, Blessings in a Backpack Orlando Chapter. “Since school has resumed, many of our existing programs have requested an increase in service to provide Blessings in a Backpack for more students, and requests for new programs continue to come in each week. This gift will allow us to provide food on the weekends for 200 additional children every weekend of this school year. We are truly grateful to The Primerica Foundation, and we absolutely love their practice of leaving good wherever they go.”

About Blessings in a Backpack

Blessings in a Backpack mobilizes communities, individuals, and resources to provide food on the weekends for elementary school children across America who might otherwise go hungry. As closures caused by COVID-19 lead to a rise in unemployment and poverty, it is projected that 18 MILLION CHILDREN* are experiencing food insecurity. That’s one in four American children who may be struggling with access to food. In Central Florida, that figure is closer to one in three.

The consequences of hunger are much more than a growling stomach. Poor nutrition can result in a weaker immune system, increased hospitalization, lower IQ, shorter attention spans, and lower academic achievement. Children are fed during the school week by federal government programs. We want to make sure they’re getting nutritional meals over the weekend, too, so that they can show up for school on Monday nourished and ready to learn. For more information, please visit orlando.blessingsinabackpack.org.

 

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Primerica Releases Fourth Financial Security Monitor

Original link

Valdosta Daily Times, September 9, 2021

Duluth – Primerica, Inc. (NYSE: PRI), a leading provider of financial services in the U.S. and Canada, is releasing its latest quarterly Middle-Income Financial Security Monitor – a national survey of middle-income families measuring their financial situation. The survey found that 65% of middle-income families feel positive about their current financial situation; however, an equal share (65%) says their income is falling behind the cost of living, up 9% from April. Primerica’s Financial Security Monitor measures changes in the sentiments of middle-income families about their finances.

“We’re encouraged that most middle-income families are optimistic about their financial situations, although they are feeling the pressure of rising inflation,” said Glenn J. Williams, CEO of Primerica. “We also see that more than half of these families are taking responsibility to improve their financial situation by saving for the future and protecting their families with life insurance, and even more families are considering taking similar actions. These steps are especially important today, as people are reporting increased prices on everything from gas to eating out to going to the movies.”

Key Findings from Primerica’s U.S. Middle-Income Financial Security Monitor

  • Nearly everyone has noticed increasing costs of goods and services. This includes gas (94%), local home prices (92%), groceries (91%), housing costs (90%), restaurants/bars (84%), health care (80%), entertainment – movies, sporting events, concerts (75%), taxes (73%), and childcare (73%).Additionally, concern about paying for food and groceries has grown from 12% to 17% in the past year.
  • About half have life insurance, but Covid-19 is increasing interest among middle-income families. About half (53%) of individuals report having life insurance, and 19% have life insurance policies outside of work of $100K or less, 10% have policies between $100-$300K, and 4% have policies worth more than $400K. Among those who do not have a life insurance policy outside of work, 10% of say they are more interested in finding out about purchasing life insurance because of Covid-19.
  • Topline Trends Data: As concerns over rising inflation are starting to emerge, middle-income consumers remain positive about their personal finances.
Aug. 2021 Apr. 2021 Dec. 2020 Sep. 2020
More say their income is falling behind the cost of living. 65% 56% 59% 50%
Fewer anticipate being financially better off a year from now. 18% 25% 23% 32%
Fewer are saving enough for a comfortable retirement. 22% 25% 24% 31%
More feel it will be difficult to save for the future. 63% 58% 65% 54%
About the same say their personal finances are in good shape. 65% 67% 57% 64%

The full study is available for review on Primerica’s "Our Impact” webpage here: http://www.primerica.com/public/our-impact.html

About Primerica’s Middle-Income Financial Security Monitor

The Monitor is a quarterly national survey to monitor the financial health of those with annual household incomes of $30,000-$100,000 in 2020. Change Research conducted online polling from July 27 through August 5, 2021. Using Dynamic Online Sampling, Change Research polled 841 adults. Post-stratification weights were made on gender, age, race, education and Census region to reflect the population of these adults based on the five-year averages in the 2018 American Community Survey published by the U.S. Census. The margin of error is 4.3%.

 

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Mitsubishi Electric Classic's Birdies for Charity Program Makes Donations to Local Programs

Gwinnett Daily Post, July 12, 2021

Together, the Gwinnett Championship Foundation and Primerica donated hundreds of thousands of dollars to local 501(c)(3) organizations through the 2021 Mitsubishi Electric Classic’s Birdies for Charity program.

This year’s Birdies for Charity beneficiaries included Annandale Village, Cooper’s Crew, Grayson Cluster Schools Foundation, Special Needs Schools of Gwinnett and the Women’s Club of Sugarloaf Country Club. The Mitsubishi Electric Classic, a PGA Tour Champions tournament, is held annually at TPC Sugarloaf in Duluth.

“We’re thrilled with the success of this year’s program,” said Kathryn Kieser, executive vice president, chief reputation officer and chair of The Primerica Foundation. “Meeting with the deserving organizations and hearing their unique stories was enlightening. This donation will help them make a positive impact in the communities where we work and live.”

The tournament’s Birdies for Charity program provides metro Atlanta non-profit organizations with a unique opportunity to raise funds to support their respective missions. Participating charities generate contributions leading up to tournament week, and in the end, the charities receive 100 percent of every donation collected on their behalf, plus additional matching funds.

“Primerica was an exceptional partner, and we couldn’t be more pleased with the result of this year’s program,” says Monte Ortel, executive director of the Mitsubishi Electric Classic. “On behalf of the Mitsubishi Electric Classic and the Gwinnett Championship Foundation, we want to thank Primerica for their outstanding support.”

Since the inception of the Birdies for Charity program in 2016, the Mitsubishi Electric Classic has helped raise over $1.5 million toward metro Atlanta charities.

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Most Middle-Income Canadians Feel They’re Not Making or Saving Enough

Survey reveals many have improved their financial situation, but others are still worried over financial goals

Leo Almazora, Wealth Professional Canada, May 12, 2021

Over the course of the pandemic, research has shown the emergence of a K-shaped recovery, with a lot of divergence happening along the income divide. But it seems that even within the middle-income segment, there are points of difference.

Primerica Canada has just released the results of a poll conducted in January, which looked at over 800 adults across Canada whose 2020 incomes were between $30,000 and $100,000.

Among the middle-income Canadians surveyed, 75% shared a feeling that their income is falling behind their costs of living. When it comes to savings, seven tenths (71%) expressed a belief that they’re not doing enough to retire comfortably.

When asked to evaluate their own financial situation, 48% rated their personal finances as either “excellent” or “good.” On the other hand, just 30% gave similarly positive ratings when it came to the economic health of their community.

“I am amazed by the resiliency of Canadians in the face of some tough economic conditions,” Primerica Canada CEO John A. Adams said in a statement.

“Our study finds that nearly one-in-three families improved their financial situation over the past year, and nearly half feel they will be better off a year from now than they are today. But we also see that many families are having a tough time financially.”

The struggles of many families are evident in the contours of statistics around financial improvement. Among 18- to 34-year-olds, for example, 40% reported that they were financially better off compared to the previous year. That number drops to 29% for those aged 35 to 49, 32% for 50- to 64-year-olds, and 28% of those aged 65 and up.

Looking at families’ financial resilience, the survey found that 42% can’t afford to pay $1,000 or more for an emergency expense. And a little over a third (36%) reported financial reserves amounting to a month or less in expenses, leaving them woefully exposed if a major breadwinner were to be laid off or pass away.

Looking at Canadian families’ savings behaviour, 69% of respondents said they have a savings account, and 19% have investments placed in non-retirement accounts.

And while most Canadians have access to retirement accounts, around one third (34%) said saving for retirement was their greatest worry. Making rent or mortgage payments (29%) and the state of their finances (28%) were also top worries.

When it comes to steps Canadian families have taken towards financial security over the past year, 26% said they’ve added to a savings account; 20% have approached financial professionals for advice; 19% drew up or stuck to a budget; and 18% added to an investment account.

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New Primerica Study Finds Income Is Falling Behind the Cost of Living for Many Canadians

May 11, 2021

A new study from Primerica Canada (NYSE: PRI) finds 75% of middle-income Canadians feel their income is falling behind cost of living, and 71% do not believe they are saving enough to retire comfortably. In spite of this, nearly half of all families feel positively about the condition of their personal finances.

"I am amazed by the resiliency of Canadians in the face of some tough economic conditions," said John A. Adams, CEO of Primerica Canada. "Our study finds that nearly one-in-three families improved their financial situation over the past year, and nearly half feel they will be better off a year from now than they are today. But we also see that many families are having a tough time financially. No matter the situation, Primerica’s representatives stand ready to help people with the education and resources they need to help them build a more secure financial future."

Key Findings from Primerica Canada’s Middle-Income Financial Security Monitor

  • Canadians feel they’re doing better financially than their neighbors. 48% rate their personal finances positively (either "excellent" or "good"), but only 30% rate the economic health of their community positively.
  • Young people in Canada experienced the greatest financial improvement over the past year. 40% of 18-34-year-olds report being financially better off than the previous year. Just 29% of those ages 35-49, 32% of those ages 50-64, and 28% of those ages 65+ say they’re better off.
  • Canadian families are living on a financial cliff. 42% of families can’t afford an emergency payment of $1,000 or more. 36% report having only a month or less in financial reserves, so their families would immediately struggle if a primary breadwinner lost their job or passed away.
  • Many Canadian families are saving for the future and protecting what they have, but they could do more. 69% have a savings account and 19% have investments in non-retirement accounts. Additionally, only 34% have a life insurance policy provided through work, and just 33% have a policy purchased outside of work.
  • Saving for retirement is a chief worry among middle-income Canadians. 34% say saving for retirement is their greatest worry, followed by making rent or mortgage payments (29%) and the state of their current finances (28%). Despite the worries about retirement savings, most Canadians do have access to retirement accounts.
  • Many Canadian families have taken steps towards financial security over the past year. 26% have added to a savings account, 20% sought advice from financial professionals, 19% created or followed a budget, and 18% added to an investment account.

Primerica’s full study of middle-income Canadians is available here: https://www.primericacanada.ca/public/canada/Primerica_Q4_Canada_final.pdf

About Primerica Canada’s Middle-Income Financial Security Monitor
Polling was conducted online from January 16-18, 2021. Using Dynamic Online Sampling, Change Research polled 837 adults nationwide in Canada with incomes in 2020 between $30,000 and $100,000. Post-stratification weights were made on gender, age, and province/territory region to reflect the population of these adults based on the 2016 Canadian Census. Interviewing was done in both English and French. The margin of error is 4.4%.

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Moody’s Affirms Primerica’s Ratings Upon Announced Acquisition of e-TeleQuote; Outlook Stable

Moody's Investors Service - April 20, 2021

(New York) – Moody's Investors Service ("Moody's") has affirmed the Baa1 senior debt rating of Primerica, Inc. and the A1 insurance financial strength (IFS) rating of its primary life insurance operating subsidiary, Primerica Life Insurance Company (PLIC). The affirmation follows the announcement of a transaction by which Primerica will acquire the operating subsidiaries of Etelequote Limited (e-TeleQuote), a fast growing broker focused on selling health products to seniors, especially Medicare Advantage. The outlook on the ratings is stable.

RATINGS RATIONALE

On April 19, 2021, Primerica announced its intention to acquire e-TeleQuote, with an 80% stake purchased upfront and the remaining to be acquired over a period of up to four years. Primerica will fund the transaction with $370 million in cash, a $125 million draw on its revolving facility, and a $15 million seller's note. Primerica has suspended stock buybacks through the end of the year, and we do not expect the transaction to cause a reduction in PLIC's capitalization level. The transaction is expected to close on July 1, subject to regulatory and other customary closing conditions.

Primerica's ratings are based on the company's strong financial profile, including conservative asset quality, sound risk adjusted capital under stress scenarios, and substantial free cash flow generated by unregulated entities that provide the company with solid cash flow coverage of its interest expense. Primerica also benefits from consistent profitability, driven in part by its ample technology and operating scale, and uncomplicated asset liability management, given its predictable and non-interest sensitive liability cash flows.

These strengths are offset by a relatively weak business profile for its rating level. To maintain new business revenues, Primerica's large distribution system is dependent on significant and constant agent recruiting, which may be constrained in economic downturns. In addition, PLIC relies on a narrowly focused product portfolio of term life business that had produced sizeable regulatory "XXX" reserves, which are supported by third-party financing arrangements.

The acquisition of e-TeleQuote will bring execution risk and temporarily elevated leverage but should be another source of cash flows for Primerica and should create recruitment and referral opportunities for its sales force.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The following factors could lead to an upgrade of Primerica's ratings:
1) financial and total leverage of less than 15%;
2) increased market share, without increasing the risk profile of the liabilities; and
3) increased diversification beyond term life and third-party mutual fund and annuity distribution.

Conversely, the following factors could lead to a downgrade of Primerica's ratings:
1) adjusted financial leverage of greater than 25%;
2) earnings coverage below 6 times;
3) cash flow coverage less than 4 times;
4) NAIC RBC ratio (company action level) below 350%; or 5) return on capital of less than 5%.

RATING ACTIONS

The following ratings were affirmed:

Primerica, Inc. -- senior unsecured debt at Baa1;
Primerica Life Insurance Company -- insurance financial strength at A1.
The rating outlook on all entities is stable. 

The principal methodology used in these ratings was Life Insurers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187348 . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Primerica is headquartered in Duluth, Georgia. As of December 31, 2020, Primerica reported total assets of $14.9 billion and total shareholders' equity of $1.8 billion.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004 .

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

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