Primerica Reports 1st Quarter Results – Up 3% To $324.3 million

John Addison,Primerica,Chairman


Primerica, Inc. (NYSE: PRI) announced today financial results for the quarter ended March 31, 2014. Total revenues were $324.3 million in the first quarter of 2014 and net income was $45.1 million, or $0.81 per diluted share.

Operating revenues increased by 9% to $324.1 million and net operating income increased by 12% to $43.3 million compared with $296.2 million and $38.6 million, respectively, in the year ago quarter. Net operating income per diluted share increased 20% to $0.77 and ROAE was 14.9% in the first quarter of 2014.

Solid operating results in the first quarter were primarily driven by growth in New Term premiums and strong Investment and Savings Products performance including 15% growth in ending client asset values. Insurance and operating expenses increased as expected with growth in our business and reflect significantly lower expenses associated with the Florida Retirement System (FRS) matter compared with the first quarter of 2013.

First quarter results also reflect lower net investment income highly correlated to our stock repurchases throughout 2013 and a lower yield on invested assets.

Consistent with our strategy to focus on core distribution competencies, in the first quarter of 2014 Primerica sold its short-term statutory disability insurance business (DBL) and discontinued marketing its student life insurance business, both of which were distributed through non-core distribution channels managed by our New York insurance subsidiary. Results from the DBL operations have been reported in discontinued operations, which are excluded from segment and operating results, for all periods presented.

Rick Williams, Chairman of the Board and Co-Chief Executive Officer said, We started the year strong with a 12% increase in net operating income led by a 29% increase in Investment and Savings Products net operating income. Diluted operating EPS grew by 20%, benefitting from 2013 share repurchases.

John Addison, Chairman of Primerica Distribution and Co-Chief Executive Officer said, We continued to see positive sales force trends with growth in the recruitment of new representatives, new life insurance licenses and the size of the life insurance licensed sales force compared with the first quarter a year ago.

Distribution Results

The size of our life-licensed sales force increased 5% to 95,382 at March 31, 2014 compared with 90,917 at March 31, 2013. In the first quarter, recruiting of new representatives increased 4% to 48,306 and new life insurance licenses grew 4% to 7,447 compared with the year ago quarter. The percentage of license non-renewals and terminations in relation to the size of the sales force declined versus the prior year period. The size of our life-licensed sales force remained consistent with the fourth quarter.

On a sequential basis, recruiting of new representatives increased 27% from 38,022, primarily due to seasonally slower recruiting levels during the fourth quarter. The lower level of fourth quarter recruits, many of whom are licensed in the first quarter, also contributed to the 12% sequential decline in new life licenses from 8,485 in the prior quarter.

In the first quarter, term life insurance policies issued were down 2% to 49,320 while the average annualized premium per issued policy increased 2% compared with the first quarter of 2013. Productivity in the quarter of .17X policies per life licensed representative per month was slightly lower than .18X in both the prior year and sequential quarter.

Historically productivity in the first quarter has been lower than in other quarters and this year it was also impacted by severe weather across North America. On a sequential basis, fewer life insurance applications submitted during the slower holiday season led to a 6% decline in term life insurance policies issued compared with the fourth quarter of 2013.

In the first quarter of 2014, Investment and Savings Products sales grew 3% to $1.41 billion primarily reflecting strong retail mutual funds sales compared with the first quarter a year ago. Sequentially, ISP sales increased 10% compared with the fourth quarter of 2013 reflecting strong retirement and saving sales typical of the first quarter. Market performance drove client asset values to an all-time high of $45.84 billion, up 15% at March 31, 2014 relative to a year ago and up from $44.99 billion at the end of the fourth quarter.

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