About 35,000 salespeople waved towels and banged noisemakers as Primerica’s (PRI) co-chief executive officer, John Addison Jr., walked across the stage of the Georgia Dome in front of exploding fireworks. “What we need, Primerica needs, is you, you—you in your seat right now—at your best to commit to go to a level you’ve never been,” Addison bellowed, pacing and pointing at the crowd, who traveled to Atlanta at their own expense for the insurer’s four-day conference in mid-June. “We are the answer. You are the answer. It’s our time.”
While other companies have cut back on hiring salespeople and stockbrokers to save money, Primerica, the country’s top seller of term life insurance, continues to recruit people to pitch its financial products. In a multilevel system similar to those at Avon Products (AVP) and Herbalife (HLF), representatives who sign up new recruits earn commissions on their underlings’ sales. Primerica isn’t like those “juice or soap companies” because it doesn’t pressure its workers to buy its products, says Bill Kelly, head of the company’s investment business.
Photograph by Troy Stains for Bloomberg Businessweek
The Georgia Dome, where the NFL’s Atlanta Falcons play, was full of believers, old and young, black, white, Hispanic, and Asian. Many wore matching neon T-shirts and hats with slogans such as “Empire Builders,” “Path to Glory,” or “Team Unstoppable.” One proposed to his girlfriend after the announcer said she had been promoted to regional vice president. “I’m going to be a RVP by December,” said a teenage salesman, Dan King, who had been running back and forth waving a flag for the Maniacs team. After a choir of salespeople in matching Primerica robes sang R. Kelly’s I Believe I Can Fly, the representatives lingered past midnight talking, hugging, and dancing under confetti. “You can do this,” a voice said over the public-address system after Addison’s speech. “People far less talented than you actually have.”
The odds are against them. More than 15,000 people each month pay $99 for the opportunity to become Primerica representatives, many joining with their spouses. More than 80 percent drop out without passing state licensing tests, Primerica said in a February regulatory filing. Since December, about four people per month have reached $100,000 in annual earnings, according to Mark Supic, a Primerica spokesman.
Photograph by Troy Stains for Bloomberg Businessweek
Phillip Bowers, who left the company this year after working for it off and on since 1989 near Nashville, says he never made more than about $50,000 a year—even when he had dozens of people under him. “I think they want you to make it, but they know you’re not going to,” says Bowers. “People would get into the business, bring their friends, and then after a while, the person who brought those friends would quit.”
Primerica agents sell term life policies and annuities, along with mutual funds run by companies such as Franklin Templeton Investments (BEN) and Invesco (IVZ). When a new representative sells a policy that carries an annual premium of $1,000, she makes $250, the person who hired her generally makes at least that much, and the people above them also get paid. The company paid an average $5,513 to its agents last year, according to its website.
One pitch to potential salespeople is that they’re helping others. On a video on the insurer’s website, the Primerica “movement” is compared to the U.S. effort to put a man on the moon, ending the Cold War, and the civil rights movement. Addison, who joined the company 31 years ago, says Primerica doesn’t profit from recruitment fees because it spends money on training, and those who dedicate themselves to the job have a fair chance of success. “We work hard not to overhype,” he says. “We don’t tell people they’re going to get rich. We tell people there’s a shot for you to do something great.”
The company that’s now Primerica was founded in 1977 by Arthur Williams Jr., a former high school football coach. He developed the sales structure and built the company by telling consumers to trade their whole life policies for cheaper term insurance and invest the savings, according to his autobiography. Sanford Weill, then CEO of Commercial Credit, bought Primerica in 1988 as part of a series of acquisitions that ultimately created Citigroup (C).
The system Williams devised is paying off for the company’s investors. Primerica’s operating profit margin last year was 25 percent—better than any of the 22 companies in the Standard & Poor’s 500 Insurance Index—on revenue of $1.2 billion. Its stock has more than doubled since Citigroup divested the company in 2010. “Their business model is attractive,” says Jeffrey Schuman, an analyst at Keefe, Bruyette & Woods (SF). “It’s both lower-risk and potentially higher-return than many other life insurance companies.”
At the Georgia Dome, salespeople expressed little doubt that they’d be among the successful, even as they acknowledged that most people don’t make it. Trevor Williams and Errol Stephenson said they were trying to support themselves after moving to Richmond, Va., from the Bronx, where they grew up poor. “The most exciting part of it is that people are so excited,” said Williams, who also performs spoken-word poetry and hip-hop. “Everyone has hopes and aspirations.”