Primerica (PRI) 7 Nov 24 2024 Q3 Earnings call transcript

In Primerica's recent third quarter earnings call, executives provided insightful updates on the company's financial performance and strategic initiatives. Key themes and trends emerged, offering valuable insights into the company's financial health and growth prospects.

Financial Performance and Growth

Primerica reported a strong quarter with double-digit growth in adjusted operating earnings, driven by solid distribution momentum and favorable equity markets. The company's adjusted net operating income was $193 million, up 21% compared to the prior year period. Diluted adjusted operating earnings per share increased 28% to $5.68. Strong cash flow generation enabled the company to repurchase $129 million of common stock and pay $31 million in regular dividends.

Recruiting and Sales Force Growth

Recruiting efforts were bolstered by a promotion that discounted licensing fees, leading to over 142,000 individuals being recruited during the quarter. The company licensed 14,349 individuals, a 17% increase compared to the prior year period. These results are attributed to record recruiting and improvements in licensing focus and process over the past few years. The sustained success in recruiting and licensing has fueled a 7% increase in the size of the life license sales force, totaling 148,890 life licensed reps as of September 30, 2024, and surpassing 150,000 licensed reps for the first time at the end of October. The company projects ending 2024 with a full year growth in the size of the life license sales force of 5%.

Product Sales and Innovation

Sales in the Investment and Savings Products business benefited from strong equity market returns and improvements in product offerings. Sales of $2.9 billion during the quarter increased 34% compared to the prior year period, driven by a 42% increase in variable annuity sales and a 23% increase in combined U.S. and Canada mutual fund sales. Sales of managed accounts were also robust, driven by the launch of a new custodial platform. The company raised its 2024 ISP sales forecast to a range of 22% to 25%.

Regulatory and Operational Updates

The company exited its senior health business by abandoning e-TeleQuote Inc. and permanently surrendering and relinquishing its rights to the company. This decision resulted in a tax saving of $98 million, with about half of the benefit realized in the third quarter of 2024. The company also entered into a new distribution agreement with Canada Life, expanding product choice and addressing the needs of underserved Canadian families. Sales volume in the mortgage business has started to improve, positioning the company to help middle-income families obtain new mortgages or refinance consumer debt.

Outlook and Future Prospects

Looking ahead, Primerica remains optimistic about its future prospects, driven by its mission to provide financial education and services to middle-income families. The company's strong performance and strategic initiatives position it well for continued growth and success in the years to come.

Key Takeaways

Primerica's Q3 2024 earnings call highlighted the company's strong financial performance, driven by a focus on distribution growth, product innovation, and regulatory updates. The company's optimism about its future prospects and strategic initiatives underscore its commitment to serving middle-income families and driving long-term value for its shareholders. Investors and stakeholders should closely monitor Primerica's ongoing performance and strategic initiatives as the company continues to navigate the evolving financial services landscape.