Primerica(US:PRI)2021-02-10 17:39Financial Data and Key Metrics Changes - Adjusted operating revenues for Q4 2020 were $595 million, a 12% increase compared to Q4 2019, while diluted adjusted operating income per share was $2.45, up 10% year-over-year [9] - Full year adjusted operating revenues reached $2.2 billion, growing 9%, and diluted adjusted operating income per share was $9.70, a 15% increase [9] - Adjusted operating ROAE for Q4 was 23.4%, slightly down from 23.7% in the previous year, while full year adjusted operating ROE was 24.7%, up from 23.5% in 2019 [9] Business Line Data and Key Metrics Changes - In the term life segment, operating revenues increased 16% year-over-year to $369 million, with operating income growing 9% to $89 million [19] - The number of new policies issued in the term life segment rose by 22% year-over-year, reaching a record level of base amount issued in 2020 [20] - Investment and Savings Products segment saw operating revenues of $193 million, a 6% increase, with pretax income rising 7% to $57 million [24] Market Data and Key Metrics Changes - The company reported annual term life placed in force of over $109 billion and investment sales exceeding $7.8 billion, with client asset values totaling $82 billion at year-end [7] - Fourth quarter net client inflows in the investment segment were robust at $642 million, significantly outpacing the prior year due to higher sales and lower redemptions [12] Company Strategy and Development Direction - The company plans to continue capital deployment, with a Board authorization to repurchase up to $300 million in common stock through June 2022 and an 18% increase in the first quarter dividend to $0.47 per share [10] - The company is focusing on adapting to the ongoing pandemic by rescheduling its biannual convention to summer 2022 and planning a series of virtual meetings and incentives to maintain momentum [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic revealed weaknesses in financial planning for many middle-income families, leading to increased demand for financial solutions [6] - The company anticipates that while sales volume may moderate from record 2020 levels, there will be sustained client sentiment in favor of their products and opportunities [15][17] - The uncertainty surrounding the COVID pandemic makes it difficult to project results, but management expects adjusted direct premiums to continue growing in the 12% to 13% range for the full year [23] Other Important Information - The company returned a total of $296 million in capital to stockholders in 2020, representing a 5% increase compared to 2019, with a total payout rate of 76% of adjusted operating earnings [10] - The invested assets portfolio remains well diversified, with a net unrealized gain of $153 million at year-end and a strong liquidity position with $350 million in cash [28][29] Q&A Session Summary Question: Can you provide expectations on operating margin within the term life business? - Management indicated that it is unusually difficult to predict outcomes for the year, but they continue to see strong results in sales and persistency [32][33] Question: How should we think about persistency normalizing later in the year? - Management noted that while persistency may revert to historical levels, it could still be considered positive as it reflects a return to normalcy [34] Question: What are the expectations for the benefit ratio moving forward? - Management mentioned that the benefit ratio could trend closer to 58% versus 59%, but predicting future trends remains challenging due to ongoing uncertainties [39] Question: Are agents showing more interest in selling investment products? - Management confirmed that agents are attracted to successful lines of business, and there is a positive dynamic as agents shift focus between life insurance and investment products [40][41]