Primerica(US:PRI)2023-05-09 21:15Financial Data and Key Metrics Changes - Adjusted operating revenues for the first quarter were $695 million, largely unchanged year-over-year, while adjusted net operating income increased by 10% to $129 million [21] - The benefits and claims ratio for the first quarter was 58.7%, slightly improved from 58.9% in the prior-year period, indicating stability [25] - Consolidated insurance and other operating expenses totaled $151 million, reflecting a 4% increase year-over-year [29] Business Line Data and Key Metrics Changes - Term Life operating revenues increased by 3% year-over-year to $421 million, with pre-tax operating income rising by 7% to $127 million [85] - Investment and Savings Products segment sales declined by 25% to $2.3 billion compared to the first quarter of 2022, which was the largest sales quarter ever [82] - The Senior Health business maintained controlled growth, with a first quarter LTV to CAC ratio of 1.1, indicating improved unit economics [65] Market Data and Key Metrics Changes - Net inflows during the quarter were $642 million, reflecting clients' focus on long-term goals despite market volatility [6] - Client asset values at the end of the quarter were $87.6 billion, up around 4% since the beginning of the year but down 6% year-over-year [82] - The company expects second quarter ISP sales to decline by 7% to 10% year-over-year due to ongoing market uncertainty [6] Company Strategy and Development Direction - The company is focused on growing distribution capabilities and improving product attractiveness, with a goal to grow the sales force by approximately 3% in 2023 [4][22] - The introduction of new Term Life products has generated enthusiasm among the sales force, contributing to sales momentum [81] - The company aims to maintain a conservative investment portfolio while optimizing income, particularly in the current economic environment [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recruiting momentum, with approximately 93,500 individuals joining Primerica in the first quarter, a 10% increase year-over-year [63] - The company anticipates that high living costs will moderate sales growth in the near term, projecting mid-single digit growth in issued policies for the full year [64] - Management acknowledged the impact of persistent inflation and equity market volatility on ISP and Term Life sales, leading to a modest increase in policy lapses [80] Other Important Information - The company repurchased $85 million of common stock and paid $24 million in dividends during the first quarter, with a target of $375 million in repurchases for the year [4] - The adjusted loss in the Corporate and Other Distributed Products segment decreased by $3.5 million year-over-year, driven by higher net investment income [12] Q&A Session Summary Question: What were the key drivers of recruiting strength this quarter? - Management noted that there were no significant incentives or discounts, indicating solid fundamental growth driven by economic conditions [39] Question: Why did the face amount of new business grow more quickly than policy count? - Management explained that changes in product pricing allowed clients to purchase more coverage, leading to a 14% increase in face amounts despite only a 2% increase in policy count [97][100] Question: Will Primerica need to inject capital into the Senior Health business in 2024? - Management indicated that no capital injection is expected for 2023, and any future capital would be limited and contingent on achieving profitability metrics [104][122] Question: What are the expectations for subsidiary dividends from the Life subsidiaries? - The company expects to take $446 million from Primerica Life in 2023, in addition to amounts from Canadian operations and non-Life operations [127]