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 March 31, 2023


☐	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 April 30, 2023, the registrant had 36,226,210 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 March 31, 2023 and December 31, 2022		2
Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022		4
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022		5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		33
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		52
Item 4. Controls and Procedures.		52
PART II – OTHER INFORMATION		52
Item 1. Legal Proceedings.		52
Item 1A. Risk Factors.		52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		53
Item 5. Other Information		53
Item 6. Exhibits.		53
Signatures		55

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets – Unaudited


	March 31, 2023			December 31, 2022
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,822,996 in 2023 and $2,801,415 in 2022)	$	2,558,626		$	2,495,456
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,388,411 in 2023 and $1,340,265 in 2022)		1,460,000			1,444,920
Short-term investments available-for-sale, at fair value (amortized cost: $70,185 in 2023 and $69,393 in 2022)		70,187			69,406
Equity securities, at fair value (historical cost: $29,475 in 2023 and $29,430 in 2022)		33,984			35,404
Trading securities, at fair value (cost: $19,033 in 2023 and $4,229 in 2022)		18,497			3,698
Policy loans and other invested assets		50,003			48,713
Total investments		4,191,297			4,097,597
Cash and cash equivalents		515,090			489,240
Accrued investment income		22,153			20,885
Reinsurance recoverables		3,179,074			3,176,397
Deferred policy acquisition costs, net		3,256,845			3,194,029
Renewal commissions receivable		194,409			200,043
Agent balances, due premiums and other receivables		259,759			254,276
Goodwill		127,707			127,707
Intangible assets, net (accumulated amortization: $18,375 in 2023 and $15,750 in 2022)		182,900			185,525
Income taxes		106,310			97,972
Operating lease right-of-use assets		38,575			40,500
Other assets		391,605			428,259
Separate account assets		2,329,968			2,305,717
Total assets	$	14,795,692		$	14,618,147

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	6,561,624		$	6,297,906
Unearned and advance premiums		16,703			15,422
Policy claims and other benefits payable		498,483			538,250
Other policyholders’ funds		481,561			483,769
Note payable		593,106			592,905
Surplus note		1,459,565			1,444,469
Income taxes		199,394			202,462
Operating lease liabilities		43,955			45,995
Other liabilities		615,780			580,780
Payable under securities lending		74,452			100,938
Separate account liabilities		2,329,968			2,305,717
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		12,874,591			12,608,613

Temporary Stockholders’ Equity
Redeemable noncontrolling interests in consolidated entities		-			-
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 shares in 2023 and 2022; issued and outstanding 36,407 shares in 2023 and 36,824 shares in 2022)		364			368
Paid-in capital		-			-
Retained earnings		2,151,771			2,130,935
Accumulated other comprehensive income (loss), net of income tax:
Effect of change in discount rate assumptions on the liability for future policy benefits		(11,679	)		131,295
Unrealized foreign currency translation gains (losses)		(11,198	)		(12,196	)
Net unrealized investment gains (losses) on available-for-sale securities		(208,157	)		(240,868	)
Total permanent stockholders’ equity		1,921,101			2,009,534
Total liabilities and temporary and permanent stockholders’ equity	$	14,795,692		$	14,618,147

Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on January 1, 2023.

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income – Unaudited


	Three months ended March 31,
	2023			2022
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	817,872		$	798,666
Ceded premiums		(405,347	)		(399,885	)
Net premiums		412,525			398,781
Commissions and fees		231,547			251,800
Investment income net of investment expenses		47,500			34,420
Interest expense on surplus note		(16,435	)		(15,515	)
Net investment income		31,065			18,905
Realized investment gains (losses)		(985	)		577
Other investment gains (losses)		(3,623	)		174
Investment gains (losses)		(4,608	)		751
Other, net		19,507			20,989
Total revenues		690,036			691,226

Benefits and expenses:
Benefits and claims		168,702			168,288
Future policy benefits remeasurement (gain) loss		(508	)		(1,272	)
Amortization of deferred policy acquisition costs		67,358			63,223
Sales commissions		110,874			133,924
Insurance expenses		61,125			59,509
Insurance commissions		8,138			7,721
Contract acquisition costs		14,984			20,649
Interest expense		6,690			6,853
Other operating expenses		89,536			86,435
Total benefits and expenses		526,899			545,330
Income before income taxes		163,137			145,896
Income taxes		38,031			33,512
Net income		125,106			112,384
Net income (loss) attributable to noncontrolling interests		-			(2,655	)
Net income attributable to Primerica, Inc.	$	125,106		$	115,039

Earnings per share attributable to common stockholders:
Basic earnings per share	$	3.39		$	2.92
Diluted earnings per share	$	3.38		$	2.91

Weighted-average shares used in computing earnings per share:
Basic		36,710			39,221
Diluted		36,804			39,332

Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on January 1, 2023.

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited


		Three months ended March 31,
		2023			2022
	(In thousands)
Net income		$	125,106		$	112,384
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			38,549			(164,937	)
Reclassification adjustment for investment (gains) losses included in net income			3,137			(658	)
Effect of change in discount rate assumptions on the liability for future policy benefits			(182,045	)		821,904
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)			998			3,289
Total other comprehensive income (loss) before income taxes			(139,361	)		659,598
Income tax expense (benefit) related to items of other comprehensive income (loss)			(30,096	)		140,384
Other comprehensive income (loss), net of income taxes			(109,265	)		519,214
Total comprehensive income (loss)			15,841			631,598
Net income (loss) attributable to noncontrolling interests			-			(2,655	)
Comprehensive income (loss) attributable to Primerica, Inc.		$	15,841		$	634,253

Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on January 1, 2023.

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity– Unaudited


	Three months ended March 31,
	2023			2022
	(In thousands)
Equity attributable to Primerica, Inc./Permanent stockholders’ equity
Common stock:
Balance, beginning of period	$	368		$	394
Repurchases of common stock		(6	)		(7	)
Net issuance of common stock		2			1
Balance, end of period		364			388

Paid-in capital:
Balance, beginning of period		-			5,224
Share-based compensation		16,622			14,820
Net issuance of common stock		(2	)		(1	)
Repurchases of common stock		(16,620	)		(20,043	)
Balance, end of period		-			-

Retained earnings:
Adjusted balance, beginning of period		2,130,935			2,074,111
Net income attributable to Primerica, Inc.		125,106			115,039
Dividends		(23,910	)		(21,645	)
Repurchases of common stock		(80,360	)		(83,813	)
Balance, end of period		2,151,771			2,083,692

Accumulated other comprehensive income (loss), net of income tax:
Adjusted balance, beginning of period		(121,769	)		(1,168,399	)
Effect of change in discount rate assumptions on the liability for future policy benefits		(142,974	)		646,141
Change in foreign currency translation adjustment		998			3,289
Change in net unrealized investment gains (losses) during the period		32,711			(130,216	)
Balance, end of period		(231,034	)		(649,185	)

Total permanent stockholders’ equity	$	1,921,101		$	1,434,895

Redeemable noncontrolling interests in consolidated entities/Temporary stockholders’ equity
Balance, beginning of period	$	-		$	7,271
Net income (loss) attributable to noncontrolling interests		-			(2,655	)
Balance, end of period	$	-		$	4,616

Dividends declared per share	$	0.65		$	0.55

Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on January 1, 2023.

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows – Unaudited


	Three months ended March 31,
	2023			2022
	(In thousands)
Cash flows from operating activities:
Net income	$	125,106		$	112,384
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Change in future policy benefits and other policy liabilities		(9,799	)		(161,385	)
Deferral of policy acquisition costs		(126,640	)		(130,881	)
Amortization of deferred policy acquisition costs		67,358			63,223
Change in income taxes		18,713			14,171
Investment (gains) losses		4,608			(751	)
Accretion and amortization of investments		(309	)		1,356
Depreciation and amortization		8,547			8,688
Change in reinsurance recoverables		47,766			248,511
Change in agent balances, due premiums and other receivables		(5,486	)		2,245
Change in renewal commissions receivable		5,634			18,576
Trading securities sold, matured, or called (acquired), net		(14,808	)		11,273
Share-based compensation		12,129			12,437
Change in other operating assets and liabilities, net		43,127			14,452
Net cash provided by (used in) operating activities		175,946			214,299

Cash flows from investing activities:
Available-for-sale investments sold, matured or called:
Fixed-maturity securities — sold		5,179			1,227
Fixed-maturity securities — matured or called		80,251			96,336
Short-term investments — matured or called		-			41,550
Equity securities — sold		5			-
Equity securities — matured or called		-