Primerica(US:PRI)2025-08-06 20:17Preface and Non-GAAP Financial Measures This section defines non-GAAP financial measures like adjusted operating income and stockholders' equity, and notes a correction to Canadian mutual fund asset methodology with no financial statement impact - The company uses several non-GAAP measures to provide what management believes are more relevant and meaningful analytical metrics. These include: - Operating adjustments: Exclude investment gains/losses, MTM adjustments, and certain non-recurring items like restructuring charges to better show core insurance operations - Adjusted stockholders' equity: Removes unrealized gains/losses on invested assets and the effect of discount rate changes on future policy benefits to reduce volatility from market movements - IPO coinsurance transactions adjustments: Exclude amounts ceded under 2010 IPO-related coinsurance transactions to show premiums economically maintained by the company567 - A correction was made in Q2 2025 to the methodology for presenting outflows and calculating market value changes for Canadian mutual fund assets. This correction, which was assessed as immaterial, had no impact on the financial statements, product sales, or client asset values. Historical data back to 2023 has been restated9 Financial Statements and Key Metrics Condensed Balance Sheets and Reconciliations Balance sheet highlights $14.83 billion in total assets and $2.31 billion in stockholders' equity as of June 30, 2025, reflecting growth Balance Sheet Highlights (as of June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Assets | $14,829.8M | $14,565.7M | | Total Liabilities | $12,522.3M | $12,443.9M | | Total Stockholders' Equity | $2,307.5M | $2,121.8M | | Adjusted Stockholders' Equity | $2,257.5M | $2,107.7M | Financial Results and Other Statistical Data Q2 2025 diluted EPS decreased 11.0% to $5.40, while adjusted operating EPS increased 10.3% to $5.46, maintaining strong financial ratings Q2 2025 Earnings Per Share Summary | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Diluted EPS | $5.40 | $6.07 | -11.0% | | Diluted Adjusted Operating EPS | $5.46 | $4.95 | +10.3% | Q2 2025 Return on Equity | Metric | Q2 2025 | | :--- | :--- | | Net Income ROE | 31.3% | | Adjusted Net Operating Income ROAE | 32.2% | - The company's key financial strength ratings remain stable and strong: - Primerica Life Insurance Co: A1 (Moody's), AA- (S&P), A+ (A.M. Best) - Holding Company Senior Debt: Baa1 (Moody's), A- (S&P), a- (A.M. Best)15 Statements of Income Q2 2025 total revenues increased 0.3% to $793.3 million, while net income decreased 14.8% to $178.3 million Q2 2025 Income Statement Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $793.3M | $791.0M | +0.3% | | Total Benefits and Expenses | $558.8M | $518.2M | +7.8% | | Income from Continuing Operations | $178.3M | $209.3M | -14.8% | Q2 2025 Pre-Tax Income by Segment | Segment | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Term Life Insurance | $155.0M | $147.8M | +4.9% | | Investment & Savings Products | $79.4M | $74.8M | +6.2% | | Corporate & Other | ($0.06M) | $50.2M | -99.9% | Reconciliation of GAAP to Non-GAAP Financial Measures Q2 2025 adjusted operating revenues grew 7.4% to $796.0 million, and adjusted net operating income increased 5.5% to $180.4 million Reconciliation to Adjusted Net Operating Income (Q2) | ($ in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income from continuing operations (GAAP) | $178,344 | $209,301 | | Less: Investment (losses) gains | ($2,866) | ($99) | | Less: MTM investment adjustments | $182 | $189 | | Less: Insurance claim proceeds | — | $50,000 | | Less: Restructuring costs | — | ($824) | | Less: Tax impact & other adjustments | $643 | ($11,033) | | Adjusted net operating income (Non-GAAP) | $180,385 | $170,964 | Reconciliation to Adjusted Operating Revenues (Q2) | ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues (GAAP) | $793,334 | $790,955 | +0.3% | | Adjusted operating revenues (Non-GAAP) | $796,018 | $740,865 | +7.4% | Segment Operating Results Term Life Insurance Segment Term Life income before taxes increased 4.9% to $155.0 million in Q2 2025, supported by premium growth Financial Results and Analysis Term Life's pre-tax income grew 4.9% to $155.0 million, with adjusted direct premiums up 5.4% and a 23.0% operating margin Q2 2025 Term Life Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Income Before Income Taxes | $155.0M | $147.8M | +4.9% | | Adjusted Direct Premiums | $673.9M | $639.1M | +5.4% | | Term Life Operating Margin | 23.0% | 23.1% | -0.1 ppt | Key Statistics Term Life's licensed sales force grew 4.7%, new policies declined, but face amount in-force increased 1.8% to $968.3 billion Q2 2025 Term Life Operational Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Licensed Sales Force (EOP) | 152,592 | 145,789 | +4.7% | | Issued Term Life Policies | 89,850 | 100,768 | -10.8% | | Est. Annualized Issued Premium | $98.7M | $106.5M | -7.4% | | Face Amount In-Force (EOP) | $968.3B | $950.9B | +1.8% | Investment and Savings Products Segment ISP segment income before taxes rose 6.2% to $79.4 million, with product sales up 15.1% and client assets up 14.4% Financial Results and Analysis ISP pre-tax income grew 6.2% to $79.4 million on 14.3% higher revenues, with strong growth in both sales-based and asset-based fees Q2 2025 ISP Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Income Before Income Taxes | $79.4M | $74.8M | +6.2% | | Total Revenues | $298.3M | $260.9M | +14.3% | | - Sales-based Revenue | $115.9M | $101.2M | +14.6% | | - Asset-based Revenue | $154.7M | $132.8M | +16.5% | Key Statistics ISP total product sales increased 15.1% to $3.55 billion, with client assets growing 14.4% to $120.2 billion Q2 2025 ISP Product Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Product Sales | $3,548.4M | $3,082.9M | +15.1% | Client Asset Values Rollforward (Q2 2025) | ($ in millions) | Amount | | :--- | :--- | | Beginning Client Assets | $112,081 | | Inflows | $3,548 | | Outflows | ($3,062) | | Net Flows | $487 | | Market/FX/Other | $7,656 | | Ending Client Assets | $120,224 | Corporate & Other Distributed Products Segment Corporate & Other segment adjusted operating income before taxes significantly improved to $2.7 million in Q2 2025, driven by 5.4% revenue growth Q2 2025 Corporate & Other Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Adjusted Operating Revenues | $55.9M | $53.0M | +5.4% | | Adjusted Benefits and Expenses | $53.1M | $52.1M | +2.0% | | Adjusted Operating Income (Pre-Tax) | $2.7M | $0.9M | +190% | Investment Portfolio Summary of Holdings Total invested assets reached $3.75 billion as of June 30, 2025, with 82.8% in fixed-income securities, primarily corporate bonds Investment Portfolio by Asset Class (as of June 30, 2025) | Asset Class | Market Value | % of Total | | :--- | :--- | :--- | | Cash & Equivalents | $621.2M | 16.6% | | Fixed Income | $3,099.7M | 82.8% | | Equities and Other | $24.8M | 0.7% | | Total Invested Assets | $3,745.7M | 100.0% | - The fixed-income portfolio has a duration of 5.3 years, with the largest concentration (39.2%) in securities with effective maturities of 5-10 years44 Quality Ratings The investment portfolio maintains high credit quality, with 99.1% of fixed-income holdings rated investment grade (BBB or higher) as of June 30, 2025 Fixed Income Portfolio Quality Ratings (as of June 30, 2025) | Rating | % of Total (Amortized Cost) | | :--- | :--- | | AAA | 19.3% | | AA | 14.0% | | A | 23.8% | | BBB | 41.9% | | Below Investment Grade | 0.9% | | NA | 0.1% | Supplemental Data and Trends Q2 2025 net investment income increased 6.4% to $40.9 million, with a new money yield of 5.64% and stable 'A' average credit quality Net Investment Income and Yields (Q2) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Investment Income | $40.9M | $38.5M | +6.4% | | New Money Yield | 5.64% | 5.78% | -0.14 ppt | | Fixed Income Book Yield (EOP) | 4.26% | 4.01% | +0.25 ppt | - The company's largest single issuer exposure is to the Government of Canada, with a market value of $16.6 million54 Five-Year Historical Key Statistics Five-Year Historical Key Statistics This section presents five-year historical trends, showing consistent growth in licensed sales force, term life face amount in-force, and ISP sales Historical Trend: Life-Insurance Licensed Sales Force (End of Period) | Period | Count | | :--- | :--- | | 2020 | 134,907 | | 2021 | 129,515 | | 2022 | 135,208 | | 2023 | 141,572 | | 2024 | 151,611 | | Q2 2025 | 152,592 | Historical Trend: Term Life Face Amount In-Force (End of Period) | Period | Amount ($ in billions) | | :--- | :--- | | 2020 | $858.8 | | 2021 | $903.4 | | 2022 | $916.8 | | 2023 | $944.6 | | 2024 | $953.6 | | Q2 2025 | $968.3 |