Primerica Announces 4th Quarter Earnings
Primerica, Inc. (NYSE: PRI) announced today financial results for the quarter ended December 31, 2013. Total revenues were $327.2 million in the fourth quarter of 2013 and net income was $37.2 million, or $0.67 per diluted share. For the full year 2013, total revenues were $1.27 billion and net income was $162.7 million, or $2.83 per diluted share.
In the fourth quarter, operating revenues increased by 8% to $326.3 million and net operating income increased by 12% to $46.8 million compared with $303.4 million and $41.6 million, respectively, in the year ago period. Net operating income, a non-GAAP financial measure, excludes the impact of charges recorded for the potential settlement of claims made by certain Florida Retirement System (FRS) plan participants as described in our Form 8-K dated January 16, 2014. A reconciliation of non-GAAP to GAAP financial measures is included at the end of this release.
In the fourth quarter, net operating income per diluted share increased 22% to $0.84 and ROAE expanded to 16.4%. The year-over-year results demonstrate Primerica's earnings power when key drivers of our diverse business, including sales volumes, market performance, persistency and mortality, are strong or improving and capital redeployment remains a focus. Solid operating results in the fourth quarter versus the prior year period were primarily driven by growth in New Term premiums and strong Investment and Savings Products performance including a 19% growth in average client asset values. Results in the fourth quarter also reflect lower net investment income due to lower yield on invested assets and a smaller invested asset base following share repurchases during 2013.
For the full year 2013, operating revenues increased by 7% to $1.26 billion compared with 2012 driven by solid growth in Term Life net premiums and strong ISP performance. Net operating income declined to $171.0 million in 2013 from $174.5 million in 2012 primarily reflecting higher legal fees and expenses related to FRS. Results also reflect lower yield on invested assets and lower invested assets following the repurchase of $154.7 million of shares of common stock and warrants during the year to enhance shareholder value. Year-over-year, return of capital to stockholders drove a 9% increase in diluted operating EPS to $2.97 and a 70 basis points increase in ROAE to 15.0% compared with 2012.
Rick Williams, Chairman of the Board and Co-Chief Executive Officer said, Our full year 2013 results were marked by solid performance across segments including 10% growth in Term Life net premiums, 11% growth in ISP sales and a 20% increase in ending client asset values. ROAE grew to 15.0% in 2013 following the repurchase of warrants and approximately 5% of our common stock outstanding as of December 31, 2012. Our strong balance sheet and solid business fundamentals will enable us to continue delivering shareholder value long-term.
John Addison, Chairman of Primerica Distribution and Co-Chief Executive Officer said, 2013 enhancements made to our business opportunity, product portfolio and client experience drove growth in the size of the life insurance sales force and a double digit increase in Investment and Savings Products sales. We are confident in the strength of our business and our ability to execute a strategy to drive long-term sales force and revenue growth.
- The size of our life-licensed sales force grew to 95,566 at December 31, 2013 from 92,373 at December 31, 2012 and 94,529 at September 30, 2013. In the fourth quarter, recruiting of new representatives increased 4% to 38,022 compared to the year ago quarter and new life insurance licenses of 8,485 were in line with the fourth quarter a year ago. Sequentially, recruiting of new representatives declined from 51,523 and new life insurance licenses were down from 9,630 compared with the third quarter of 2013 reflecting seasonally lower activity in the fourth quarter. The percentage of license non-renewals and terminations in relation to the size of the sales force was consistent with the third quarter and decreased slightly from the year ago period.
- Term life insurance policies issued in the fourth quarter were consistent with the prior year quarter and declined 3% from the third quarter of 2013. Productivity in the fourth quarter of .18X policies per life licensed representative per month remained consistent with historical ranges and declined from .19X in the third quarter of 2013. The average annualized term premium per issued policy increased 4% compared with the fourth quarter of 2012.
- In the fourth quarter of 2013, Investment and Savings Products sales were $1.28 billion, up 3% compared with the prior year period, completing 2013 with the highest ever ISP sales in a single year of $5.21 billion. On a sequential basis, ISP sales increased 2% compared with the third quarter of 2013. Client asset values increased to an all-time high of $44.99 billion, up 20% at December 31, 2013 relative to a year ago, and increased 7% from the end of the third quarter, primarily reflecting market performance.
Primerica operates in two primary business segments: Term Life Insurance and Investment and Savings Products, and has a third segment, Corporate and Other Distributed Products.