Primerica(US:PRI)2021-05-08 16:58Financial Data and Key Metrics Changes - Adjusted operating revenues for Q1 2021 were $637 million, an increase of 18% compared to Q1 2020 [5] - Diluted adjusted operating income per share rose to $2.44, a 19% increase year-over-year [5] - Return on average equity (ROAE) increased to 22.2% from 21.8% in the prior year [5] Business Line Data and Key Metrics Changes - Term life sales increased by 16% year-over-year, with nearly 83,000 new policies issued [9] - Investment and savings product sales rose by 27%, with mutual funds and managed accounts up 43% and 34% respectively [10] - Recruiting efforts saw a 12% increase, with nearly 95,000 individuals joining Primerica in Q1 2021 [6] Market Data and Key Metrics Changes - Net client inflows surpassed $1 billion for the first time in company history, driven by strong financial market performance [11] - Mortgage distribution business is expanding, with expectations of contributing approximately $8 million to pre-tax earnings in 2021 [12] Company Strategy and Development Direction - The company plans to acquire e-TeleQuote to enhance its product offerings for middle-income families [4] - Focus on improving the appeal of business opportunities to attract new recruits, especially in light of heightened career uncertainty due to the pandemic [6] - Anticipates a decline in life sales by approximately 5% for the full year compared to elevated levels in 2020, but expects 2021 sales to be about 10% higher than pre-pandemic levels [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of COVID-19 on sales and persistency is expected to normalize as vaccination rates increase and infection rates decline [20][22] - The company expects second quarter growth in investment product sales to meet or exceed the first quarter's growth rate of 27% [15] - Management is realistic about the challenges of preparing the sales force for the e-TeleQuote acquisition, especially with the upcoming annual enrollment period [52] Other Important Information - The estimated risk-based capital ratio for Primerica Life was 400% at the end of Q1 2021, with plans to maintain this level throughout the year [33] - The company does not plan to repurchase shares in 2021 but expects to resume repurchases in 2022 [32] Q&A Session Summary Question: Clarification on temporary or extended licenses - Management confirmed that the drop in individuals with temporary licenses is part of an anticipated process, with states reacting at different paces [34][35] Question: Outlook on ISP margins - Management indicated that ISP margins are benefiting from technology investments and renegotiated contracts, leading to lower operating expenses [38][40] Question: Expectations for Q2 term life sales - Management expects to see a decline in term life sales starting in Q2, projecting a full-year decrease of about 5% compared to 2020 [45][47]