Primerica, Inc. Q3 FY2024 earnings call

• Primerica reported strong quarter with solid distribution momentum and double-digit growth in adjusted operating earnings. - Appeal of entrepreneurial business opportunity supports distribution growth. - Favorable equity markets bolster investment and savings business. - Revision to actuarial assumptions added $23M to pre-tax income. - Recruiting momentum with 14,349 licensed individuals in Q3, 17% YOY growth, life license sales force at 148,890 as of 9/30/2024. - Term Life issued 93,377 new policies, 5% YOY growth, expects full year life sales to grow ~3%. - ISP sales benefited from strong equity market returns, raised 2024 ISP sales forecast to 22%-25%, client asset values at $111B, up 26% YOY. - Entered new distribution agreement with Canada Life in Canada. - Mortgage volume up ~25% YTD, well positioned to help middle-income families.

Term Life: Revenues of $450 million during the quarter, up 5% year-over-year, with pre-tax income of $178 million, up 26% YOY. Investment and Savings Products (ISP): Revenues of $266 million, up 22% YOY, with pre-tax income of $80 million, up 24% YOY. Corporate and Other Distributed Products: Incurred a pre-tax operating loss of $5.7 million during the third quarter compared to pre-tax operating income of $3.1 million in the prior year period. Adjusted consolidated insurance and other operating expenses were $145 million during the third quarter, up 13% year-over-year.

• Raising 2024 ISP sales forecast to a range of 22% to 25%. - Expecting full year life sales to grow around 3%. - Expecting fourth quarter benefits and claims ratio to be around 58%, DAC amortization ratio around 12%, and operating margin around 22%. - Projecting fourth quarter insurance and other operating expenses to grow around 9% resulting in full year growth of 9% or approximately $50 million.

• Cost of living pressures on middle-income families affecting lapses. - Regulatory changes impacting product sets. - Interest rate dynamics affecting mortgage business. - Refinement in assumptions on closed book of non-term life insurance business causing remeasurement loss.

Q: How has recruiting been following the expiration of the discounted fees into September and October?

A: We were fortunate to have excellent momentum going into the convention. We continue to see strong growth in recruiting through the rest of the quarter and had a good October. The underlying fundamentals are strong and we feel good about where we are.

Q: Can you give more color on the ISP redemption rate?

A: You have to be careful quarter-to-quarter as odd occurrences can make comparisons difficult. We are seeing pressure from aging population needing to withdraw for retirement, economic dynamics of client base, and stress in budgets. The trends should average out over the long-term.

Q: Could you talk about the Canada Life opportunity?

A: We had our own segregated fund product set which we've run off. We entered a new distribution agreement with Canada Life to give reps access to curated segregated funds, expanding product choice for underserved Canadian families, to be rolled out in phases next year.

Q: What's your view on the mortgage business opportunity given interest rate dynamics?

A: Our mortgage business is unique in helping clients consolidate and accelerate debt to free up money. It's interest rate sensitive, and we see it as a great door opener. We expect a tailwind if interest rates decline.