Primerica, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Primerica delivered adjusted net operating income of $206 million, up 7% year-over-year, and diluted adjusted operating EPS increased 11% to $6.33. $163 million was returned to stockholders via share repurchases and dividends.
• Distribution results: Recruiting and licensing were down from the prior year but remain healthy; over 101,000 recruits and nearly 12,500 new life licenses in Q3.
• Life sales: 79,379 new Term Life policies issued, down 15% year-over-year; projected total policies issued in 2025 to decline ~10% vs 2024. Efforts underway to improve productivity with new product approvals, better underwriting, and training.
• ISP segment: Sales grew 28% year-over-year to $3.7 billion in Q3; net inflows $363 million, client assets $127 billion. Mortgage business has ~3,450 licensed reps, licensed in 37 states, with year-to-date U.S. mortgage volume nearly $370 million, up 34% year-over-year.
• Financial results: Term Life pretax income $173 million, down 3% year-over-year; ISP operating revenues $319 million, up 20% year-over-year; Corporate and Other had pretax adjusted operating income of $3.8 million. Consolidated expenses up 4% year-over-year, expected to grow 6%-8% in Q4.

Segment Performance

• Term Life: Third quarter revenues were $463 million, up 3% year-over-year. Pretax income was $173 million, down 3% year-over-year, with a $23 million remeasurement gain. Persistency was stable overall, though lapses remained above long-term LDTI assumptions. Full year ADP growth is expected to be around 5%.
• Investment and Savings Products (ISP): Sales grew 28% year-over-year to a record $3.7 billion in the third quarter of 2025. Net inflows for the quarter were $363 million, client asset values ended at $127 billion, up 14% year-over-year. Full year ISP sales are expected to grow around 20% in 2025.
• Corporate and Other Distributed Products: Recorded pretax adjusted operating income of $3.8 million during the quarter, compared to a pretax loss of $5.7 million in the prior year period.

Guidance

• Full year ISP sales are expected to grow around 20% in 2025.
• Term Life ADP growth is expected to be around 5% for the full year.
• Benefits and claims ratio is expected to remain stable at around 58% in the fourth quarter.
• DAC amortization and insurance commissions ratio guidance remains unchanged at around 12%, with the operating margin expected to be above 22% for the full year.

Risks

• Economic headwinds impacting middle-income families, affecting life sales.
• Government policy uncertainties adding to client uncertainty.
• Interest rate impacts on investment portfolios and product guarantees.
• Volatility in equity markets potentially reversing ISP sales momentum.

Question and Answer

• Q: Joel Hurwitz asked about planned capital drawdown from the insurance entity; A: Tracy Tan discussed plans to increase capital release in the fourth quarter, driven by strong cash generation and regulatory conditions.
• Q: Joel Hurwitz asked about term sales drivers; A: Glenn Williams attributed to cost of living and general uncertainties, with plans to help reps navigate conversations.
• Q: Francis Matten asked about ISP sales sustainability; A: Glenn Williams discussed demographic trends and market risks, while Tracy Tan talked about cash flow generation from the fee business.
• Q: Ryan Krueger asked about the Term Life margin and investments; A: Tracy Tan discussed consistent Term Life performance and accelerated technology investments in the fourth quarter.
• Q: Ryan Krueger asked about the ISP net fee rate trend; A: Tracy Tan discussed mix shift and client demand driving higher rates.
• Q: Wilma Jackson Burdis asked about the assumption review impact; A: Tracy Tan explained the remeasurement gain and the impact of reinsurance.
• Q: Wilma Jackson Burdis asked about the term sales trajectory; A: Glenn Williams discussed the temporary nature of headwinds and household income impact.
• Q: John Barnidge asked about 50th anniversary events; A: Glenn Williams discussed regional events in spring 2026 to offset the lack of a convention.
• Q: Daniel Bergman asked about RBC ratio drivers; A: Tracy Tan discussed profitability and regulatory restrictions on capital release.
• Q: Mark Hughes asked about the asset-based revenue trend; A: Glenn Williams and Tracy Tan discussed product mix and managed accounts driving growth.
• Q: Suneet Kamath asked about the assumption update and annuity sales; A: Tracy Tan and Glenn Williams discussed mortality assumption and annuity market drivers.