Primerica(US:PRI)2020-11-08 00:19Financial Data and Key Metrics Changes - Adjusted operating revenues for the third quarter were $567 million, an increase of 9% year-over-year [8] - Adjusted net operating income rose to $111 million, reflecting a 16% increase [8] - Diluted adjusted operating income per share increased by 23% to $2.78 [9] - Operating return on average equity (ROAE) improved to 28% from 24.9% in the previous year [9] Business Line Data and Key Metrics Changes - Term Life segment operating revenues grew 14% year-over-year to $358 million, with operating income before taxes increasing by 26% to $105 million [19] - Investment and Savings Products (ISP) segment operating revenues increased by 2% to $176 million, while pre-tax income grew by 5% to $51 million [26] - New life insurance policies issued reached 100,199, a 36% increase year-over-year [12] - Sales of managed accounts increased by 26%, while mutual fund sales rose by 5% [13] Market Data and Key Metrics Changes - Client asset values ended the quarter at $73 billion, up 10% year-over-year, with average client asset values increasing by 8% to $71.5 billion [14] - Net client inflows during the third quarter were $508 million, significantly higher than the previous year [14] - The number of temporary and permanent licenses issued during the quarter was 13,138, up 4% year-over-year [11] Company Strategy and Development Direction - The company is focusing on technology infrastructure and digital initiatives to modernize its business [28] - There is a strong emphasis on maintaining recruiting momentum and adapting to the operational challenges posed by COVID-19 [7][10] - The mortgage distribution business is progressing, with strong demand for refinancing mortgage and consumer debt [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are positive impacts from the pandemic, such as increased demand for insurance, there are also challenges like market uncertainty affecting ISP sales [7][8] - The company expects fourth quarter ISP sales to decline approximately 5% compared to the same period in 2019, while life insurance sales are projected to increase by 15% to 20% [15][16] - Management expressed confidence in the ability to meet increased demand for life insurance protection, aiming to issue over $100 billion of new face amount during 2020 [15] Other Important Information - The company declared a $0.40 per share dividend and completed approximately $231 million in share repurchases through the end of October [30] - The average credit rating of the invested assets portfolio remains at A, with a manageable below investment grade mix of about 4% [29] Q&A Session Summary Question: Impact on recruiting due to COVID-19 - Management indicated that the momentum prior to the pandemic contributed positively to recruiting, and the use of remote capabilities has enhanced outreach [37][39] Question: Changes in recruiting methods - The recruiting process has shifted significantly towards electronic methods, with Zoom and social media playing a crucial role in connecting with potential recruits [40][44] Question: Future expense guidance - Management noted that it is early to provide specific guidance for next year, but expenses are expected to increase moderately due to ongoing investments in technology and infrastructure [46][48] Question: Conversion rates for new life licensed representatives - Management reported improvements in the conversion rates for permanent licenses, although challenges remain due to testing and processing delays [52][53] Question: Update on sales agents for investment products - The number of sales agents licensed to sell investment products has remained flat, with slight increases noted [57][58]