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Primerica Reports Third Quarter 2013 Results

  Primerica Reports Third Quarter 2013 Results

                Diluted EPS and diluted operating EPS of $0.78

14.8% net income return on stockholders’ equity and 15.8% net operating income
                   return on adjusted stockholders’ equity

          14% growth in Investment and Savings Products (ISP) sales

                Life insurance sales force increased to 94,529

Business Wire

DULUTH, Ga. -- November 6, 2013

Primerica, Inc. (NYSE:PRI) announced today financial results for the quarter
ended September 30, 2013. Total revenues were $319.5 million in the third
quarter of 2013 and net income was $43.2 million, or $0.78 per diluted share.

In the third quarter of 2013 operating revenues increased by 8% to $319.9
million compared with $295.2 million in the third quarter of 2012. Results
were driven by strong Investment and Savings Products performance and growth
in Term Life net premium offset by a lower invested asset base from share
repurchases over the last 12 months. Net operating income per diluted share
increased 9% year-over-year to $0.78 for the quarter ended September 30, 2013
and returns were strong with net income return on stockholders’ equity of
14.8% (15.8% on a net operating income and adjusted stockholders’ equity
(ROAE) basis). Net operating income was $43.5 million in the third quarter of
2013 compared with $45.1 million in the year ago period as a result of higher
operating expenses, including legal fees and expenses, and lower net
investment income from a smaller invested asset base following capital
deployment and certain prior year period specific income sources.

Rick Williams, Chairman of the Board and Co-Chief Executive Officer, said,
“Our solid, recurring income base coupled with strong Investment and Savings
Product performance and share repurchases drove ROAE to 15.8% and net
operating earnings per diluted share to increase by 9% in the third quarter.
As we look to enhance shareholder value in the future, our unique distribution
model and large underserved target market provides the opportunity for organic
sales growth while our strong financial position allows for continued capital
deployment.”

John Addison, Chairman of Primerica Distribution and Co-Chief Executive
Officer, said, “We experienced growth in our life licensed sales force driven
by 12% growth in new life licenses and an 8% increase in the recruiting of new
representatives, year-over-year. Strength in our Investment and Savings
Products business continued with a 14% increase in both sales and ending
client asset values in the third quarter. Our goal is to build on this
momentum by focusing on initiatives to grow our distribution capabilities and
generate long-term growth.”

Distribution Results

  *The size of our life-licensed sales force grew to 94,529 at September 30,
    2013 from 91,506 at September 30, 2012 and 92,227 at June 30, 2013. In the
    third quarter, recruiting of new representatives increased 8% to 51,523
    compared with the year ago period and was 2% higher than the second
    quarter of 2013. New life insurance licenses were 9,630 in the third
    quarter up 9% from the previous quarter and 12% from the prior year
    period. The percentage of license non-renewals and terminations in
    relation to the size of the sales force declined on both a prior year
    period and prior quarter basis.
  *Term life insurance policies issued in the third quarter increased 1%
    compared with the prior year quarter and declined 6% from the second
    quarter of 2013. Productivity in the third quarter of .19X policies per
    life licensed representative per month remained consistent with historical
    ranges and declined from .21X in the historically higher second quarter of
    2013. The average term premium per issued policy increased 4% compared
    with the third quarter of 2012.
  *Year-over-year Investment and Savings Products sales grew 14% to $1.25
    billion compared with third quarter of 2012, primarily reflecting strong
    retail mutual funds and variable annuity sales. Sequentially, ISP sales
    declined 5% compared with the IRA season in the second quarter of 2013.
    Client asset values increased 14% to $42.18 billion at September 30, 2013
    relative to a year ago and were up 5% from the end of the second quarter,
    primarily reflecting market performance.

Segment Results

Primerica operates in two primary business segments: Term Life Insurance and
Investment and Savings Products, and has a third segment, Corporate and Other
Distributed Products. Results for the segments are shown below.

                                                                   
            Actual                              Operating (1)
            Q3 2013     Q3 2012    %          Q3 2013     Q3 2012    %
                         (2)         Change                  (2)         Change
Revenues:   ($ in thousands)                    ($ in thousands)
Term Life   $ 177,811    $ 163,028   9%         $ 177,811   $ 163,028   9%
Insurance
Investment
and Savings   114,723      101,163   13%          114,723      101,163   13%
Products
Corporate
and Other    26,923     34,897   -23%        27,330     31,025   -12%
Distributed
Products
Total       $ 319,457   $ 299,088  7%         $ 319,864   $ 295,216  8%
revenues
                                                                         
Income
(loss)
before
income
taxes:
Term Life   $ 50,136     $ 47,593    5%         $ 50,136     $ 47,593    5%
Insurance
Investment
and Savings   31,498       31,608    *            31,498       31,608    *
Products
Corporate
and Other    (15,080)   (8,645)  74%         (14,673)   (9,413)  56%
Distributed
Products
Total
income
before      $ 66,554    $ 70,556   -6%        $ 66,961    $ 69,788   -4%
income
taxes
                                                                         
(1) See the Non-GAAP Financial Measures section and the segment Operating
Results Reconciliations at the end of this release for additional information.
                                                                         
(2) In the second quarter of 2013, Primerica began classifying the deposit
asset underlying the 10% reinsurance agreement with Citigroup, Inc.
(Citigroup), as well as its related mark-to-market adjustments, within the
Corporate and Other Distributed Products segment instead of within the Term
Life Insurance segment. As such, results for Q3 2012 include the
reclassification of Net Investment Income from the Term Life Insurance Segment
to the Corporate and Other Distributed Products Segment of $983. The change
does not impact our consolidated financial statements.
                                                                         
* Less than
1%
                                                                         

Term Life Insurance. In the third quarter of 2013, Term Life operating
revenues increased 9% to $177.8 million and operating income before income
taxes increased 5% to $50.1 million compared with the same period a year ago.
Revenue growth was driven by an 11% increase in net premiums over the prior
year period. Allocated net investment income remained flat year-over-year. The
amount of net investment income allocated grew with required assets, but was
offset by certain prior year period-specific items including the recovery of
interest on previously defaulted bonds and an unusually high volume of called
securities.

Total incurred claims were in-line with our historical experience and benefits
and claims grew in-line with net premiums. Growth in DAC amortization was
lower than net premium growth reflecting general improvement in policy
persistency. Non-deferred commission expense continued the declining
year-over-year trend consistent with changes in our incentive programs. The
increase in insurances expenses largely reflects growth in premium-related
expenses as well as an annual employee benefits accrual true-up in 2012 that
was not necessary this year.

Sequentially, operating income before income taxes declined 3% reflecting
lower persistency than the seasonally favorable second quarter and higher
incurred claims partially offset by continued growth in net premiums compared
with the second quarter of 2013.

Investment and Savings Products. In the third quarter, operating revenues
increased 13% to $114.7 million and operating income before income taxes
remained consistent compared with the third quarter of 2012. Results in the
quarter reflect strong sales and higher average client asset values, offset by
higher expenses including $2.1 million of legal fees and expenses associated
with a series of arbitration hearings and court cases in Florida which
impacted net operating earnings per diluted share by $0.02. In addition,
Canadian segregated fund redemptions and market performance were in line with
DAC amortization assumptions in the third quarter whereas the prior year
period benefited from lower amortization expense.

Sequentially, operating income before income taxes increased 15% compared with
the second quarter of 2013 primarily reflecting higher average client asset
values, lower legal fees and expenses and lower Canadian segregated fund DAC
amortization in the third quarter primarily due to negative market-related
amortization adjustments in the second quarter.

Corporate and Other Distributed Products. Operating revenues of $27.3 million
were 12% lower and operating losses before income taxes grew by $5.3 million
compared with the third quarter of 2012. During the quarter,  allocated net
investment income declined primarily due to lower invested assets following
capital deployment, growth in Term Life required assets and certain prior year
period-specific net investment income items as described in Term Life above.
In our New York subsidiary, benefits and claims increased as a result of
increases in policy reserves for certain non-term life insurance products.
Insurance expenses at our New York subsidiary decreased largely due to the
release of certain state assessment accruals within our non-term life
insurance business.

Taxes

Our effective income tax rate for the third quarter of 2013 was 35.1% compared
with 35.4% in the prior year period and 35.5% in the second quarter of 2013.

Capital and Liquidity

As of September 30, 2013, our investments and cash totaled $1.91 billion
compared with $1.88 billion as of June 30, 2013. Our invested asset portfolio
had a net unrealized gain of $112.9 million (net of unrealized losses of $14.0
million) at September 30, 2013, consistent with June 30, 2013.

Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio
was estimated to be in excess of 480% as of September 30, 2013, well
positioned to support existing operations and fund future growth. Our
debt-to-capital ratio was 23.9% September 30, 2013.

Non-GAAP Financial Measures

We report financial results in accordance with U.S. generally accepted
accounting principles (GAAP). We also present operating revenues, operating
income before income taxes, net operating income and adjusted stockholders’
equity. Operating revenues, operating income before income taxes and net
operating income exclude the impact of realized investment gains and losses
for all periods presented. Operating income before income taxes and net
operating income exclude the expense associated with our IPO-related equity
awards for all periods presented. Adjusted stockholders' equity excludes the
impact of net unrealized gains and losses on invested assets for all periods
presented. Our definitions of these non-GAAP financial measures may differ
from the definitions of similar measures used by other companies. Management
uses these non-GAAP financial measures in making financial, operating and
planning decisions and in evaluating our financial performance. Furthermore,
management believes that these non-GAAP financial measures may provide users
with additional meaningful comparisons between current results and results of
prior periods as they are expected to be reflective of our core ongoing
business. These measures have limitations, and investors should not consider
them in isolation or as a substitute for analysis of our results as reported
under GAAP. Reconciliations of non-GAAP to GAAP financial measures are
attached to this release.

Earnings Webcast Information

Primerica will hold a webcast Thursday, November 7, 2013 at 10:00 am ET, to
discuss third quarter results. This release and a detailed financial
supplement will be posted on Primerica’s website. Investors are encouraged to
review these materials. To access the webcast go to
http://investors.primerica.com at least 15 minutes prior to the event to
register, download and install any necessary software.

A replay of the call will be available for approximately 30 days on
Primerica’s website, http://investors.primerica.com.

Forward-Looking Statements

Except for historical information contained in this press release, the
statements in this release are forward-looking and made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements contain known and unknown risks and uncertainties
that may cause our actual results in future periods to differ materially from
anticipated or projected results. Those risks and uncertainties include, among
others, our failure to continue to attract and license new recruits, retain
sales representatives or license or maintain the licensing of our sales
representatives; our or our sales representatives’ violation of or
non-compliance with laws and regulations; incorrect assumptions used to price
our insurance policies; the failure of our investment products to remain
competitive with other investment options; our failure to meet RBC standards
or other minimum capital and surplus requirements; a downgrade or potential
downgrade in our insurance subsidiaries’ financial strength ratings or our
senior debt ratings; inadequate or unaffordable reinsurance or the failure of
our reinsurers to perform their obligations; heightened standards of conduct
or more stringent licensing requirements for our sales representatives; the
inability of our subsidiaries to pay dividends or make distributions; the loss
of key personnel; and general changes in economic and financial conditions,
including the effects of credit deterioration and interest rate fluctuations
on our invested asset portfolio. These and other risks and uncertainties
affecting us are more fully described in our filings with the Securities and
Exchange Commission, which are available in the "Investor Relations" section
of our website at http://investors.primerica.com. Primerica assumes no duty to
update its forward-looking statements as of any future date.

About Primerica, Inc.

Primerica, Inc., headquartered in Duluth, GA, is a leading distributor of
financial products to middle income households in North America. Primerica
representatives educate their Main Street clients about how to better prepare
for a more secure financial future by assessing their needs and providing
appropriate solutions through term life insurance, which we underwrite, and
mutual funds, annuities and other financial products, which we distribute
primarily on behalf of third parties. In addition, Primerica provides an
entrepreneurial full or part-time business opportunity for individuals seeking
to earn income by distributing the company’s financial products. We insured
more than 4 million lives and have over 2 million client investment accounts
at December 31, 2012. Primerica stock is included in the S&P MidCap 400 and
the Russell 2000 stock indices and is traded on The New York Stock Exchange
under the symbol “PRI”.

                                                       
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Balance Sheets
                                                                  
                                                                  
                                                                  
                                          September 30,           December 31,
                                            2013 (1)              2012
                                          (In thousands)
Assets
Investments:
Fixed maturity securities
available for sale, at fair               $  1,688,096            $ 1,887,014
value
Equity securities available for              37,016                 37,147
sale, at fair value
Trading securities, at fair                  11,185                 7,762
value
Policy loans and other invested             25,795                24,613
assets
Total investments                            1,762,092              1,956,536
Cash and cash equivalents                    147,468                112,216
Accrued investment income                    19,595                 19,540
Due from reinsurers                          4,033,138              4,005,194
Deferred policy acquisition                  1,179,143              1,066,422
costs
Premiums and other receivables               182,702                170,656
Intangible assets                            69,432                 69,816
Income taxes                                 31,999                 17,256
Other assets                                 261,225                302,126
Separate account assets                     2,512,886             2,618,115
Total assets                              $  10,199,680           $ 10,337,877
                                                                  
Liabilities and Stockholders'
Equity
Liabilities:
Future policy benefits                    $  5,022,048            $ 4,850,488
Unearned premiums                            4,501                  6,056
Policy claims and other                      248,592                254,533
benefits payable
Other policyholders' funds                   334,553                345,721
Notes payable                                374,469                374,433
Income taxes                                 101,708                114,611
Other liabilities                            329,566                358,577
Payable under securities                     75,852                 139,927
lending
Separate account liabilities                2,512,886             2,618,115
Total liabilities                            9,004,175              9,062,461
                                                                  
Stockholders' equity:
Common stock                                 547                    564
Paid-in capital                              464,783                602,269
Retained earnings                            609,778                503,173
Accumulated other comprehensive             120,397               169,410
income, net of income tax
Total stockholders' equity                  1,195,505             1,275,416
Total liabilities and                     $  10,199,680           $ 10,337,877
stockholders' equity
                                                                  
(1) Unaudited
                                                                  

                               
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Statements of Income
(Unaudited)
                                      
                                      
                                      Three months ended September 30,
                                        2013                 2012     
                                      (In thousands, except per-share amounts)
Revenues:
Direct premiums                       $  576,095                  $ 567,273
Ceded premiums                          (407,488  )               (414,991 )
Net premiums                             168,607                    152,282
Commissions and fees                     118,443                    104,607
Net investment income                    22,103                     26,881
Realized investment gains                (407      )                3,872
(losses), including OTTI
Other, net                              10,711                   11,446   
Total revenues                          319,457                  299,088  
                                                                  
Benefits and expenses:
Benefits and claims                      81,912                     70,738
Amortization of deferred                 32,192                     29,234
policy acquisition costs
Sales commissions                        58,388                     49,370
Insurance expenses                       25,083                     23,744
Insurance commissions                    5,329                      6,684
Interest expense                         8,726                      8,828
Other operating expenses                41,273                   39,934   
Total benefits and                      252,903                  228,532  
expenses
Income before income                     66,554                     70,556
taxes
Income taxes                            23,364                   24,957   
Net income                            $  43,190                  $ 45,599   
                                                                  
Earnings per share:
Basic                                 $  0.78                    $ 0.74     
Diluted                               $  0.78                    $ 0.72     
                                                                  
Shares used in computing
earnings per share:
Basic                                   54,957                   60,060   
Diluted                                 54,958                   61,563   
                                                                  

                                                             
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Operating Results Reconciliation
(Unaudited – in thousands, except per share amounts)
                                                                    
                                                                    
                                                                    
                             Three months ended September 30,
                               2013            2012           % Change 
Operating revenues           $  319,864           $ 295,216         8%
Realized investment
gains (losses),                (407     )         3,872   
including OTTI
Total revenues               $  319,457          $ 299,088        7%
                                                                    
Operating income             $  66,961            $ 69,788          -4%
before income taxes
Realized investment
gains (losses),                 (407     )          3,872
including OTTI
Other operating
expense - IPO equity           -                 (3,104  )
awards
Income before income         $  66,554           $ 70,556         -6%
taxes
                                                                    
Net operating income         $  43,454            $ 45,104          -4%
Realized investment
gains (losses),                 (407     )          3,872
including OTTI
Other operating
expense - equity                -                   (3,104  )
awards
Tax impact of                  143               (273    )
reconciling items
Net income                   $  43,190           $ 45,599         -5%
                                                                    
Diluted operating            $  0.78              $ 0.72            9%
earnings per share (1)
Net after-tax impact
of operating                   -                 -       
adjustments (2)
Diluted earnings per         $  0.78             $ 0.72           7%
share (1)
                                                                    
(1) Percentage change in earnings per share is calculated prior to rounding
per share amounts.
(2) Less than $.01 per diluted share
                                                                    

                                      
CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT
Operating Results Reconciliation
(Unaudited – in thousands)
                                              
                                              
                                              Three months ended September 30,
                                                2013             2012   
Operating revenues                            $  27,330            $  31,025
Realized investment gains                       (407     )          3,872  
(losses), including OTTI
Total revenues                                $  26,923           $  34,897 
                                                                   
Operating loss before income                  $  (14,673  )        $  (9,413 )
taxes
Realized investment gains                        (407     )           3,872
(losses), including OTTI
Other operating expense - IPO                   -                  (3,104 )
equity awards
Loss before income taxes                      $  (15,080  )        $  (8,645 )
                                                                   

                                                
PRIMERICA, INC. AND SUBSIDIARIES
Adjusted Stockholders' Equity Reconciliation
(Unaudited – in thousands)
                                                            
                                                            
                                                            
                                                            September 30, 2013
Adjusted stockholders' equity                               $     1,123,779
Unrealized net investment gains
recorded in stockholders' equity, net                            71,726
of income tax
Stockholders' equity                                        $     1,195,505

Contact:

Primerica, Inc.
Kathryn Kieser, 470-564-7757
investorrelations@primerica.com