10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34680

Primerica, Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-1204330
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1 Primerica Parkway Duluth, Georgia		30099
(Address of principal executive offices)		(ZIP Code)

(770) 381-1000

(Registrant’s telephone number, including area code)

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	PRI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 31, 2022, the registrant had 36,898,170 shares of common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS



		Page
PART I – FINANCIAL INFORMATION		2
Item 1. Financial Statements (unaudited).		2
Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021		2
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021		4
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021		5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		53
Item 4. Controls and Procedures.		53
PART II – OTHER INFORMATION		53
Item 1. Legal Proceedings.		53
Item 1A. Risk Factors.		54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		55
Item 6. Exhibits.		55
Signatures		57

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	(Unaudited)
	September 30, 2022			December 31, 2021
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,779,015 in 2022 and $2,621,388 in 2021)	$	2,457,989		$	2,702,567
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,320,222 in 2022 and $1,551,113 in 2021)		1,433,760			1,379,100
Short-term investments available-for-sale, at fair value (amortized cost: $0 in 2022 and $85,246 in 2021)		-			85,243
Equity securities, at fair value (historical cost: $29,424 in 2022 and $34,255 in 2021)		33,079			42,551
Trading securities, at fair value (cost: $4,335 in 2022 and $24,769 in 2021)		3,718			24,355
Policy loans and other invested assets		48,787			30,612
Total investments		3,977,333			4,264,428
Cash and cash equivalents		438,025			392,501
Accrued investment income		19,949			18,702
Reinsurance recoverables		4,033,897			4,268,419
Deferred policy acquisition costs, net		3,049,102			2,943,782
Renewal commissions receivable		198,027			231,751
Agent balances, due premiums and other receivables		266,831			257,675
Goodwill		127,707			179,154
Intangible assets		188,150			195,825
Income taxes		90,719			81,799
Operating lease right-of-use assets		42,343			47,942
Other assets		403,452			441,253
Separate account assets		2,206,608			2,799,992
Total assets	$	15,042,143		$	16,123,223

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	7,314,688		$	7,138,649
Unearned and advance premiums		16,153			16,437
Policy claims and other benefits payable		496,563			585,382
Other policyholders’ funds		492,479			501,823
Note payable - Short term		-			15,000
Note payable - Long term		592,705			592,102
Surplus note		1,433,293			1,378,585
Income taxes		129,347			241,311
Operating lease liabilities		47,935			53,920
Other liabilities		611,646			615,710
Payable under securities lending		80,754			94,529
Separate account liabilities		2,206,608			2,799,992
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		13,422,171			14,033,440

Temporary Stockholders’ Equity
Redeemable noncontrolling interests in consolidated entities		-			7,271
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 shares in 2022 and 2021; issued and outstanding 37,027 shares in 2022 and 39,368 shares in 2021)		370			394
Paid-in capital		-			5,224
Retained earnings		1,887,952			2,004,506
Accumulated other comprehensive income (loss), net of income tax:
Unrealized foreign currency translation gains (losses)		(15,437	)		8,611
Net unrealized investment gains (losses) on available-for-sale securities		(252,913	)		63,777
Total permanent stockholders’ equity		1,619,972			2,082,512
Total liabilities and temporary and permanent stockholders’ equity	$	15,042,143		$	16,123,223

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income – Unaudited


	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	810,079		$	785,277		$	2,417,639		$	2,327,804
Ceded premiums		(404,870	)		(401,295	)		(1,223,804	)		(1,211,117	)
Net premiums		405,209			383,982			1,193,835			1,116,687
Commissions and fees		225,468			269,796			717,956			754,529
Investment income net of investment expenses		40,629			35,741			112,148			106,970
Interest expense on surplus note		(16,283	)		(15,741	)		(47,613	)		(46,382	)
Net investment income		24,346			20,000			64,535			60,588
Realized investment gains (losses)		292			1,730			924			3,762
Other investment gains (losses)		(2,991	)		(320	)		(4,765	)		114
Investment gains (losses)		(2,699	)		1,410			(3,841	)		3,876
Other, net		20,965			18,051			60,709			49,958
Total revenues		673,289			693,239			2,033,194			1,985,638

Benefits and expenses:
Benefits and claims		171,293			183,425			511,619			535,561
Amortization of deferred policy acquisition costs		90,925			62,214			262,367			182,604
Sales commissions		105,915			129,268			359,602			382,465
Insurance expenses		57,552			51,901			176,521			149,246
Insurance commissions		7,666			8,412			22,982			25,990
Contract acquisition costs		13,446			23,524			53,479			23,524
Interest expense		6,802			7,529			20,469			21,814
Goodwill impairment loss		60,000			-			60,000			-
Other operating expenses		73,791			79,864			239,952			219,559
Total benefits and expenses		587,390			546,137			1,706,991			1,540,763
Income before income taxes		85,899			147,102			326,203			444,875
Income taxes		34,092			35,663			90,069			107,403
Net income		51,807			111,439			236,134			337,472
Net income (loss) attributable to noncontrolling interests		-			(1,017	)		(5,038	)		(1,017	)
Net income attributable to Primerica, Inc.	$	51,807		$	112,456		$	241,172		$	338,489

Earnings per share attributable to common stockholders:
Basic earnings per share	$	1.38		$	2.83		$	6.26		$	8.53
Diluted earnings per share	$	1.37		$	2.82		$	6.24		$	8.50

Weighted-average shares used in computing earnings per share:
Basic		37,438			39,561			38,342			39,516
Diluted		37,541			39,679			38,452			39,637

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited


	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
	(In thousands)
Net income	$	51,807		$	111,439		$	236,134		$	337,472
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses) on available-for-sale securities:
Change in unrealized holding gains (losses) on available-for-sale securities		(97,516	)		(13,796	)		(401,335	)		(52,669	)
Reclassification adjustment for investment (gains) losses included in net income		(154	)		(1,879	)		(867	)		(3,052	)
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)		(18,086	)		(5,892	)		(24,048	)		6,490
Total other comprehensive income (loss) before income taxes		(115,756	)		(21,567	)		(426,250	)		(49,231	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(20,504	)		(3,386	)		(85,512	)		(12,294	)
Other comprehensive income (loss), net of income taxes		(95,252	)		(18,181	)		(340,738	)		(36,937	)
Total comprehensive income (loss)		(43,445	)		93,258			(104,604	)		300,535
Net income (loss) attributable to noncontrolling interests		-			(1,017	)		(5,038	)		(1,017	)
Comprehensive income (loss) attributable to Primerica, Inc.	$	(43,445	)	$	94,275		$	(99,566	)	$	301,552

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity– Unaudited


	Three months ended September 30,					Nine months ended September 30,
	2022			2021		2022		2021
	(In thousands)
Equity attributable to Primerica, Inc./Permanent stockholders’ equity
Common stock:
Balance, beginning of period	$	378		$	394	$	394	$	393
Repurchases of common stock		(8	)