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, 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 October 31, 2023, the registrant had 35,033,970 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, 2023 and December 31, 2022		2
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2023 and 2022		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022		4
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022		5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 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.		35
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		58
Item 4. Controls and Procedures.		58
PART II – OTHER INFORMATION		58
Item 1. Legal Proceedings.		58
Item 1A. Risk Factors.		58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		59
Item 5. Other Information		59
Item 6. Exhibits.		59
Signatures		61

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets – Unaudited


	September 30, 2023			December 31, 2022
	(In thousands, except per-share amounts)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,931,819 in 2023 and $2,801,415 in 2022)	$	2,589,000		$	2,495,456
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,285,369 in 2023 and $1,340,265 in 2022)		1,417,460			1,444,920
Short-term investments available-for-sale, at fair value (amortized cost: $20,056 in 2023 and $69,393 in 2022)		20,051			69,406
Equity securities, at fair value (historical cost: $27,359 in 2023 and $29,430 in 2022)		29,123			35,404
Trading securities, at fair value (cost: $18,837 in 2023 and $4,229 in 2022)		18,160			3,698
Policy loans and other invested assets		49,840			48,713
Total investments		4,123,634			4,097,597
Cash and cash equivalents		468,762			489,240
Accrued investment income		23,797			20,885
Reinsurance recoverables		2,954,245			3,209,540
Deferred policy acquisition costs, net		3,374,627			3,188,502
Renewal commissions receivable		191,818			200,043
Agent balances, due premiums and other receivables		287,138			254,276
Goodwill		127,707			127,707
Intangible assets, net (accumulated amortization: $23,625 in 2023 and $15,750 in 2022)		177,650			185,525
Income taxes		106,033			93,632
Operating lease right-of-use assets		55,203			40,500
Other assets		359,010			428,259
Separate account assets		2,183,435			2,305,717
Total assets	$	14,433,059		$	14,641,423

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	6,045,151		$	6,297,906
Unearned and advance premiums		15,387			15,422
Policy claims and other benefits payable		475,403			538,250
Other policyholders’ funds		447,876			483,769
Note payable		593,508			592,905
Surplus note		1,417,056			1,444,469
Income taxes		227,866			204,018
Operating lease liabilities		61,783			45,995
Other liabilities		575,143			580,780
Payable under securities lending		77,956			100,938
Separate account liabilities		2,183,435			2,305,717
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		12,120,564			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 35,342 shares in 2023 and 36,824 shares in 2022)		353			368
Paid-in capital		-			-
Retained earnings		2,215,378			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		377,635			130,416
Unrealized foreign currency translation gains (losses)		(11,269	)		(12,279	)
Net unrealized investment gains (losses) on available-for-sale securities		(269,602	)		(240,868	)
Total permanent stockholders’ equity		2,312,495			2,031,254
Total liabilities and temporary and permanent stockholders’ equity	$	14,433,059		$	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 September 30,						Nine months ended September 30,
	2023			2022			2023			2022
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	831,681		$	810,079		$	2,477,850		$	2,417,639
Ceded premiums		(411,015	)		(404,870	)		(1,241,629	)		(1,223,804	)
Net premiums		420,666			405,209			1,236,221			1,193,835
Commissions and fees		238,902			225,468			703,579			717,956
Investment income net of investment expenses		51,036			40,629			147,540			112,148
Interest expense on surplus note		(16,306	)		(16,283	)		(49,348	)		(47,613	)
Net investment income		34,730			24,346			98,192			64,535
Realized investment gains (losses)		(3	)		292			(650	)		924
Other investment gains (losses)		(1,792	)		(2,991	)		(6,080	)		(4,765	)
Investment gains (losses)		(1,795	)		(2,699	)		(6,730	)		(3,841	)
Other, net		18,429			20,965			58,091			60,709
Total revenues		710,932			673,289			2,089,353			2,033,194

Benefits and expenses:
Benefits and claims		162,062			159,396			474,240			471,349
Future policy benefits remeasurement (gain) loss		179			1,514			(1,129	)		668
Amortization of deferred policy acquisition costs		69,405			66,077			205,438			194,761
Sales commissions		116,200			105,915			340,697			359,602
Insurance expenses		57,821			57,552			178,039			176,521
Insurance commissions		7,911			7,666			25,192			22,982
Contract acquisition costs		12,568			13,446			40,154			53,479
Interest expense		6,632			6,802			20,008			20,469
Goodwill impairment loss		-			60,000			-			60,000
Other operating expenses		79,353			73,791			252,075			239,952
Total benefits and expenses		512,131			552,159			1,534,714			1,599,783
Income before income taxes		198,801			121,130			554,639			433,411
Income taxes		46,738			41,569			129,973			113,102
Net income		152,063			79,561			424,666			320,309
Net income (loss) attributable to noncontrolling interests		-			-			-			(5,038	)
Net income attributable to Primerica, Inc.	$	152,063		$	79,561		$	424,666		$	325,347

Earnings per share attributable to common stockholders:
Basic earnings per share	$	4.23		$	2.12		$	11.67		$	8.45
Diluted earnings per share	$	4.23		$	2.11		$	11.65		$	8.42

Weighted-average shares used in computing earnings per share:
Basic		35,760			37,438			36,225			38,342
Diluted		35,822			37,541			36,302			38,452

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 September 30,						Nine months ended September 30,
	2023			2022			2023			2022
	(In thousands)
Net income	$	152,063		$	79,561		$	424,666		$	320,309
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		(55,060	)		(97,516	)		(39,694	)		(401,335	)
Reclassification adjustment for investment (gains) losses included in net income		3			(154	)		2,817			(867	)
Effect of change in discount rate assumptions on the liability for future policy benefits		410,460			379,503			314,487			1,822,219
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)		(7,016	)		(18,950	)		1,010			(25,161	)
Total other comprehensive income (loss) before income taxes		348,387			262,883			278,620			1,394,856
Income tax expense (benefit) related to items of other comprehensive income (loss)		76,506			59,402			59,125			303,007
Other comprehensive income (loss), net of income taxes		271,881			203,481			219,495			1,091,849
Total comprehensive income (loss)		423,944			283,042			644,161			1,412,158
Net income (loss) attributable to noncontrolling interests		-			-			-			(5,038	)
Comprehensive income (loss) attributable to Primerica, Inc.	$	423,944		$	283,042		$	644,161		$	1,417,196

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 September 30,						Nine months ended September 30,
	2023			2022			2023			2022
	(In thousands, except per-share amounts)
Equity attributable to Primerica, Inc./Permanent stockholders’ equity
Common stock:
Balance, beginning of period	$	358		$	378		$	368		$	394
Repurchases of common stock		(5	)		(8	)		(17	)		(26	)
Net issuance of common stock		-			-			2			2
Balance, end of period		353			370			353			370

Paid-in capital:
Balance, beginning of period		-			-			-			5,224
Share-based compensation		3,926			3,747			26,053			27,528
Net issuance of common stock		-			-			(2	)		(2	)
Repurchases of common stock		(3,926	)		(5,980	)		(26,051	)		(34,983	)
Redemption of noncontrolling interest in consolidated entities		-			2,233			-			2,233
Balance, end of period		-			-			-			-

Retained earnings:
Adjusted balance, beginning of period		2,190,223			2,085,824			2,153,617			2,085,665
Net income attributable to Primerica, Inc.		152,063			79,561			424,666			325,347
Dividends		(23,336	)		(20,571	)		(70,845	)		(63,394	)
Repurchases of common stock