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 June 30, 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 July 31, 2023, the registrant had 35,766,835 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 June 30, 2023 and December 31, 2022		2
Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2023 and 2022		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2023 and 2022		4
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022		5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 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.		54
Item 4. Controls and Procedures.		54
PART II – OTHER INFORMATION		54
Item 1. Legal Proceedings.		54
Item 1A. Risk Factors.		54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		55
Item 5. Other Information		55
Item 6. Exhibits.		55
Signatures		57

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets – Unaudited


	June 30, 2023			December 31, 2022
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,829,066 in 2023 and $2,801,415 in 2022)	$	2,541,310		$	2,495,456
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,339,914 in 2023 and $1,340,265 in 2022)		1,433,520			1,444,920
Short-term investments available-for-sale, at fair value (amortized cost: $21,587 in 2023 and $69,393 in 2022)		21,576			69,406
Equity securities, at fair value (historical cost: $29,757 in 2023 and $29,430 in 2022)		33,601			35,404
Trading securities, at fair value (cost: $18,941 in 2023 and $4,229 in 2022)		18,379			3,698
Policy loans and other invested assets		49,605			48,713
Total investments		4,097,991			4,097,597
Cash and cash equivalents		561,585			489,240
Accrued investment income		22,928			20,885
Reinsurance recoverables		3,084,520			3,209,540
Deferred policy acquisition costs, net		3,319,844			3,188,502
Renewal commissions receivable		191,224			200,043
Agent balances, due premiums and other receivables		269,369			254,276
Goodwill		127,707			127,707
Intangible assets, net (accumulated amortization: $21,000 in 2023 and $15,750 in 2022)		180,275			185,525
Income taxes		107,697			93,632
Operating lease right-of-use assets		57,040			40,500
Other assets		372,733			428,259
Separate account assets		2,358,823			2,305,717
Total assets	$	14,751,736		$	14,641,423

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	6,491,564		$	6,297,906
Unearned and advance premiums		16,283			15,422
Policy claims and other benefits payable		495,141			538,250
Other policyholders’ funds		458,774			483,769
Note payable		593,307			592,905
Surplus note		1,433,101			1,444,469
Income taxes		169,487			204,018
Operating lease liabilities		62,309			45,995
Other liabilities		579,840			580,780
Payable under securities lending		77,643			100,938
Separate account liabilities		2,358,823			2,305,717
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		12,736,272			12,610,169

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 35,846 shares in 2023 and 36,824 shares in 2022)		358			368
Paid-in capital		-			-
Retained earnings		2,190,223			2,153,617
Accumulated other comprehensive income (loss), net of income tax:
Effect of change in discount rate assumptions on the liability for future policy benefits		55,386			130,416
Unrealized foreign currency translation gains (losses)		(4,253	)		(12,279	)
Net unrealized investment gains (losses) on available-for-sale securities		(226,250	)		(240,868	)
Total permanent stockholders’ equity		2,015,464			2,031,254
Total liabilities and temporary and permanent stockholders’ equity	$	14,751,736		$	14,641,423

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 June 30,						Six months ended June 30,
	2023			2022			2023			2022
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	828,296		$	808,894		$	1,646,169		$	1,607,560
Ceded premiums		(425,266	)		(419,048	)		(830,613	)		(818,933	)
Net premiums		403,030			389,846			815,556			788,627
Commissions and fees		233,130			240,688			464,677			492,489
Investment income net of investment expenses		49,006			37,099			96,504			71,519
Interest expense on surplus note		(16,608	)		(15,815	)		(33,042	)		(31,330	)
Net investment income		32,398			21,284			63,462			40,189
Realized investment gains (losses)		337			56			(648	)		632
Other investment gains (losses)		(665	)		(1,948	)		(4,288	)		(1,773	)
Investment gains (losses)		(328	)		(1,892	)		(4,936	)		(1,141	)
Other, net		20,155			18,756			39,663			39,745
Total revenues		688,385			668,682			1,378,422			1,359,909

Benefits and expenses:
Benefits and claims		148,911			148,369			312,179			311,953
Future policy benefits remeasurement (gain) loss		(1,867	)		(100	)		(1,308	)		(845	)
Amortization of deferred policy acquisition costs		68,110			64,830			136,033			128,684
Sales commissions		113,623			119,763			224,497			253,687
Insurance expenses		59,093			59,461			120,219			118,969
Insurance commissions		9,142			7,594			17,281			15,315
Contract acquisition costs		12,602			19,384			27,586			40,034
Interest expense		6,686			6,814			13,376			13,667
Other operating expenses		83,189			79,730			172,721			166,165
Total benefits and expenses		499,489			505,845			1,022,584			1,047,629
Income before income taxes		188,896			162,837			355,838			312,280
Income taxes		44,392			37,265			83,235			71,533
Net income		144,504			125,572			272,603			240,747
Net income (loss) attributable to noncontrolling interests		-			(2,384	)		-			(5,038	)
Net income attributable to Primerica, Inc.	$	144,504		$	127,956		$	272,603		$	245,785

Earnings per share attributable to common stockholders:
Basic earnings per share	$	3.97		$	3.32		$	7.44		$	6.31
Diluted earnings per share	$	3.97		$	3.31		$	7.43		$	6.29

Weighted-average shares used in computing earnings per share:
Basic		36,215			38,386			36,461			38,801
Diluted		36,290			38,501			36,545			38,914

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 June 30,						Six months ended June 30,
	2023			2022			2023			2022
	(In thousands)
Net income	$	144,504		$	125,572		$	272,603		$	240,747
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		(23,068	)		(138,879	)		15,364			(303,818	)
Reclassification adjustment for investment (gains) losses included in net income		(331	)		(56	)		2,815			(713	)
Effect of change in discount rate assumptions on the liability for future policy benefits		85,310			621,900			(95,971	)		1,442,716
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)		7,005			(9,511	)		8,026			(6,211	)
Total other comprehensive income (loss) before income taxes		68,916			473,454			(69,766	)		1,131,974
Income tax expense (benefit) related to items of other comprehensive income (loss)		12,651			103,440			(17,380	)		243,605
Other comprehensive income (loss), net of income taxes		56,265			370,014			(52,386	)		888,369
Total comprehensive income (loss)		200,769			495,586			220,217			1,129,116
Net income (loss) attributable to noncontrolling interests		-			(2,384	)		-			(5,038	)
Comprehensive income (loss) attributable to Primerica, Inc.	$	200,769		$	497,970		$	220,217		$	1,134,154

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 June 30,		Six months ended June 30,
	2023	2022	2023	2022
	(In thousands)
Equity attributable to Primerica, Inc./Permanent stockholders’ equity