Primerica(PRI) - 2023 Q3 - Quarterly Report

Recruitment and Sales Performance - The number of new recruits decreased to 92,269 in Q3 2023 from 127,788 in Q3 2022, while new life-licensed independent sales representatives remained stable at 12,311 [157]. - The average number of life-licensed independent sales representatives increased to 138,388 in Q3 2023 from 132,823 in Q3 2022, reflecting strong recruiting efforts [160]. - New policies issued rose to 88,589 in Q3 2023 compared to 71,104 in Q3 2022, driven by growth in the number of life-licensed independent sales representatives [161]. - The number of Senior Health submitted policies decreased to 10,718 in Q3 2023 from 16,095 in Q3 2022, representing a decline of approximately 33.5% [181]. - The number of approved Senior Health policies also fell to 9,948 in Q3 2023 from 14,862 in Q3 2022, a decrease of about 33.3% [181]. - Policies sourced by Primerica independent sales representatives increased to 1,549 in Q3 2023 from 1,016 in Q3 2022, marking a growth of approximately 52.3% [183]. Financial Performance - Total revenues for the three months ended September 30, 2023, increased by 6% to $710,932,000 compared to $673,289,000 in the same period of 2022 [220]. - Net income for the three months ended September 30, 2023, increased by 91% to $152,063,000, compared to $79,561,000 in the same period of 2022 [220]. - Total revenues for the nine months ended September 30, 2023, increased by 3% to $2,089,353,000 compared to $2,033,194,000 in the same period of 2022 [220]. - Net income for the nine months ended September 30, 2023, increased by 33% to $424,666,000 compared to $320,309,000 in the same period of 2022 [220]. - Total benefits and expenses decreased by 7% to $512,131,000 for the three months ended September 30, 2023, from $552,159,000 in the same period of 2022, largely due to a prior year goodwill impairment charge of $60 million [222]. Investment and Asset Management - The company experienced significant volatility in capital markets, impacting product sales and client asset values, but higher interest rates have led to increased net investment income [152]. - Investment income net of investment expenses increased by 26% to $51,036,000 for the three months ended September 30, 2023, compared to $40,629,000 in 2022 [220]. - The total invested asset portfolio amounted to $2,949.98 million as of September 30, 2023, up from $2,805.11 million at the end of 2022 [279]. - Net investment income for the nine months ended September 30, 2023, increased by $18.4 million, attributed to higher yields and a larger invested asset portfolio [268]. Regulatory and Accounting Changes - The company adopted new accounting standards (LDTI) on January 1, 2023, which affected the presentation of financial results [145]. - Changes in accounting methodology for Deferred Policy Acquisition Costs and Future Policy Benefit Reserves were necessitated by the adoption of LDTI [219]. - The company anticipates potential regulatory changes regarding worker classification that could impact its business model [188]. Client and Market Dynamics - Inflation remained elevated during the nine months ended September 30, 2023, potentially affecting demand for the company's products [153]. - The company retained 98% of client account balances during the transition of the managed accounts platform, with an estimated $150 million in net redemptions due to the transition [171]. - The majority of Canadian mutual fund product sales shifted to a no upfront sales commission model in 2023, impacting overall sales performance [174]. Costs and Expenses - The Customer Acquisition Cost (CAC) per approved policy increased to $1,263 in Q3 2023 from $905 in Q3 2022, reflecting a rise of approximately 39.5% [186]. - Total expenses for the three months ended September 30, 2023, were $154.5 million, an 8% increase from $142.5 million in the same period of 2022 [243]. - Other operating expenses for the nine months ended September 30, 2023, increased due to higher employee-related and technology costs [251]. Risks and Challenges - Significant risks include potential adverse effects from regulatory changes, economic down cycles, and cybersecurity threats [313]. - The company faces risks related to attracting and retaining independent sales representatives, which could materially affect business performance [308]. - The valuation of investments and expected credit losses are based on estimates that may prove incorrect, potentially affecting financial condition [312].