Primerica Reports Q2 2019 Results
Primerica announced financial results for the quarter ended June 30, 2019. Total revenues of $504.9 million increased 8% compared to the second quarter of 2018. Net income of $97.4 million increased 12%, while earnings per diluted share of $2.28 increased 17% compared to the same quarter last year. ROE increased to 25.1% during the current quarter from 24.5% during the second quarter of 2018.
Adjusted operating revenues were $501.4 million, increasing 7% compared to the second quarter of 2018. Adjusted net operating income of $94.8 million increased 10%, while adjusted operating earnings per diluted share of $2.21 increased 14% compared to the same quarter last year. ROAE increased to 25.1% during the current quarter from 24.5% during the second quarter of 2018.
Key factors contributing to the quarter’s financial results were 11% growth in Term Life adjusted direct premiums year-over-year and the financial benefit of record sales and client asset values in the Investment and Savings Products (ISP) segment. Insurance and other operating expenses grew by a modest 2%, while other expenses such as commissions, benefits and claims and DAC amortization grew in line with their related revenues. The company repurchased $57.1 million of common stock during the quarter and is on track to achieve its $225 million repurchase target for the year.
“Our quarterly financial results reflect the strength of our model with net income growth of 12% and earnings per share growth of 17%. Our biennial convention in June was a great success. It energized our sales force, accelerated momentum and renewed our commitment to serve middle-income families as only Primerica can.” – Glenn Williams, Chief Executive Officer.
Second Quarter Distribution & Segment Results
Distribution Results |
|||||||||||||
Q2 2019 |
Q2 2018 |
% Change |
|||||||||||
Life Licensed Sales Force (1) |
129,550 |
130,156 |
* |
||||||||||
Recruits |
86,173 |
76,520 |
13 |
% |
|||||||||
New Life-Licensed Representatives |
10,919 |
13,544 |
(19 |
)% |
|||||||||
Life Insurance Policies Issued |
78,664 |
83,754 |
(6 |
)% |
|||||||||
Life Productivity (2) |
0.20 |
0.22 |
* |
||||||||||
ISP Product Sales ($ billions) |
$ |
1.94 |
$ |
1.76 |
10 |
% |
|||||||
Average Client Asset Values ($ billions) |
$ |
64.43 |
$ |
61.30 |
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 |
|||||||||||||
Q2 2019 |
Q2 2018 |
% Change |
|||||||||||
($ in thousands) |
|||||||||||||
Adjusted Operating Revenues: (1) |
|||||||||||||
Term Life Insurance |
$ |
296,868 |
$ |
272,978 |
9 |
% |
|||||||
Investment and Savings Products |
173,086 |
162,841 |
6 |
% |
|||||||||
Corporate and Other Distributed Products |
31,434 |
31,058 |
1 |
% |
|||||||||
Total adjusted operating revenues (1) |
$ |
501,388 |
$ |
466,877 |
7 |
% |
|||||||
Adjusted Operating Income (loss) before income taxes:(1) |
|||||||||||||
Term Life Insurance |
$ |
83,997 |
$ |
75,828 |
11 |
% |
|||||||
Investment and Savings Products |
47,343 |
43,227 |
10 |
% |
|||||||||
Corporate and Other Distributed Products |
(7,394 |
) |
(6,228 |
) |
19 |
% |
|||||||
Total adjusted operating income before income taxes (1) |
$ |
123,946 |
$ |
112,827 |
10 |
% |
|||||||
____________________
|
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Life Insurance Licensed Sales Force
During the second current quarter, 86,173 individuals were recruited to Primerica, a year-over-year increase of 13%. Much of this increase came during the second half of June, driven by excitement generated at the biennial convention and incentives announced to drive recruiting and productivity. Lower recruiting levels earlier in the year, and the resulting impact on new life-licensed representatives in the period, led to a life insurance licensed sales force at quarter-end of 129,550, largely unchanged from the prior year.
Term Life Insurance
Operating revenues of $296.9 million during the second quarter increased 9% compared to the second quarter of 2018 driven by 11% growth in adjusted direct premiums. Persistency during the quarter was consistent with the prior year and benefits and claims experience was in line with historical trends. Income before income taxes was $84.0 million, an increase of 11% year-over-year.
During the second quarter of 2019, new life insurance policies issued were 78,664, down 6% compared to the prior year period. Productivity for the quarter was 0.20 policies per life insurance licensed representative per month , which was within the Company’s historical range of 0.18 to 0.22, but below the prior year level of 0.22.
Investment and Savings Products
Operating revenues of $173.1 million during the second quarter increased 6% compared to the second quarter of 2018. The increase in revenues is due in part to a 10% increase in sales volume, reflecting strong demand for variable annuities and an increase in demand for mutual funds. Higher average client asset values also contributed to the increase in revenues as average assets increased 5% compared to the second quarter of 2019. Sales and asset-based commission expenses were generally consistent with the associated revenues. These strong drivers, combined with the Company’s efforts to reduce costs and realize operational efficiencies, led to a 10% increase in income before income taxes.
As of June 30, 2019, ending client asset values were $66 billion and sales for the quarter were $1.9 billion, both new high water marks for the Company. Net new client inflows were $305 million for the quarter.
