Exhibit 99.2
 
GRAPHIC
 
Supplemental Financial Information
Fourth Quarter 2011
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Table of Contents PRIMERICA, INC.
  Financial Supplement
   
 
Page
Preface, definition of Non-GAAP financial measures  
3
   
Condensed balance sheets and reconciliation of balance sheet non-GAAP to GAAP financial measures
4
   
Financial results and other statistical data  
5
   
Statements of income  
6
   
Reconciliation of statement of income non-GAAP to GAAP financial measures
7
   
Segment operating results  
8
        Term Life Insurance segment - financial results, key statistics, and financial analysis 
9-10
        Investment and Savings Products segment - financial results, key statistics, and financial analysis  
11
   
Investment portfolio  
12-15
   
Five-year historical key statistics  
16
 
 
This document may contain forward-looking statements and information. Additional information on factors that could cause results to differ materially from any forward-looking statements or information in this document is available in our Form 10-K for the year ended December 31, 2010, as modified by the exhibit to our Form 8-K dated April 12, 2011 and further modified by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.
 
 
2

 
 
Preface PRIMERICA, INC.
  Financial Supplement
 
FOURTH QUARTER 2011
 
This document is a financial supplement to our fourth quarter 2011 earnings release.  It is designed to enable comprehensive analysis of our ongoing business using the same core metrics that our management utilizes in assessing our business and making strategic and operational decisions.  Throughout this document we provide financial information that is derived from our U.S. GAAP financial statements and adjusted for two different purposes, as follows:

 
Operating adjustments exclude the expense associated with equity awards granted in connection with our initial public offering (“IPO”) and the impact of realized investment gains and losses.  For periods which include the first quarter of 2011 and the fourth quarter of 2010, operating adjustments exclude the impact of certain reinsurance recoveries which previously had not been recognized due to the uncertain nature of their recovery.  For periods which include the first quarter of 2010, operating adjustments reflect the impact of our reinsurance and reorganization activities as if they had been effected on January 1, 2010.
 
Adjusted when used in describing stockholders’ equity refers to the removal of the impact of net unrealized gains and losses on invested assets.

Management utilizes certain non-GAAP financial measures in managing the business and believes they present relevant and meaningful analytical metrics for evaluating the ongoing business.  Reconciliations of non-GAAP to GAAP financial measures are included in this financial supplement.

The following transactions were executed in conjunction with our IPO in March and April 2010 (the “IPO-related Transactions”) and are included in our actual and/or operating results as appropriate.
 
IPO-related Transactions executed in first quarter 2010:

 
On March 31, 2010, we reinsured between 80% and 90% of our business that was in-force at year-end 2009 to various affiliates of Citigroup Inc. (“Citi”) and declared extraordinary dividends to Citi.

IPO-related Transactions executed in second quarter 2010:

 
On April 1, 2010, Citi contributed the legal entities comprising our business to us.  We issued approximately 75.0 million shares of common stock and warrants exercisable for approximately 4.1 million additional shares of our common stock to Citi. Additionally, we issued a $300.0 million note to Citi, due March 31, 2015 and bearing interest at 5.5% annually.

 
On April 1, 2010, our common stock began trading under the ticker symbol “PRI” on the New York Stock Exchange.

 
On April 1, 2010, Citi sold approximately 24.6 million shares of our common stock (after giving effect to the over-allotment option) to the public in the IPO.

 
On April 1, 2010, Citi contributed approximately 5.0 million shares back to us, which we granted in the form of equity awards to certain of our management and sales force leaders.  Of these, approximately 200,000 shares were granted to replace unvested Citi awards.

 
On April 15, 2010, Citi sold approximately 16.4 million shares and the warrants to purchase approximately 4.1 million additional shares of our common stock to private equity funds managed by Warburg Pincus LLC (“Warburg Pincus”) for a purchase price of $230.0 million (the “private sale”).  Following the IPO and the private sale, certain historical Citi equity awards immediately vested.

 
Effective as of April 1, 2010, we made elections under Section 338(h)(10) of the Internal Revenue Code, which resulted in changes to our deferred tax balances and reduced stockholders’ equity.

 
Prior to April 2010, our federal income tax return was consolidated into Citi’s federal income tax return.  In anticipation of our corporate reorganization, we entered into a tax separation agreement with Citi and prepaid our estimated tax liability to Citi In accordance with the tax separation agreement, Citi will indemnify the Company and its subsidiaries against any federal, state or local income tax liability for any taxable period ending on or before April 7, 2010, the closing date of the IPO.  Our advance tax payments paid to Citi exceeded our actual tax liabilities.   As a result, we recorded the overpayment as a return of capital resulting in a reduction of tax assets and a reduction of stockholders' equity.

Certain items throughout this supplement may not add due to rounding and as such, may not agree to other public reporting of the respective item.  Certain items throughout this supplement are noted as ‘na’ to indicate not applicable.  Certain variances are noted as ‘nm’ to indicate not meaningful.  Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications. These reclassifications had no impact on net income or total stockholders’ equity.
 
 
3

 
 
Condensed Balance Sheets and Reconciliation of Balance Sheet to Non-GAAP to GAAP Financial Measures PRIMERICA, INC.
  Financial Supplement
 
                                   
    (2)   (3)                          
(Dollars in thousands)
 
Mar 31,
2010
 
Jun 30,
2010
 
Sep 30,
2010
 
Dec 31,
2010
 
Mar 31,
2011
 
Jun 30,
2011
 
Sep 30,
2011
 
Dec 31,
2011
 
Condensed Balance Sheets
                                     
Assets:
                                     
Investments and cash
  $ 2,983,780   $ 2,275,564   $ 2,284,127   $ 2,279,621   $ 2,330,098   $ 2,297,013   $ 2,319,873   $ 2,157,582  
Due from reinsurers
    3,595,239     3,639,298     3,694,015     3,731,634     3,770,966     3,795,348     3,819,738     3,855,890  
Deferred policy acquisition costs
    702,429     745,322     798,335     853,211     908,600     966,094     1,004,545     1,050,637  
Income taxes
    56,114                              
Other assets
    523,584     554,950     610,518     573,055     582,080     567,482     586,646     525,837  
Separate account assets
    2,222,267     2,098,936     2,301,896     2,446,786     2,582,881     2,544,429     2,276,705     2,408,598  
Total assets
  $ 10,083,413   $ 9,314,070   $ 9,688,891   $ 9,884,307   $ 10,174,625   $ 10,170,366   $ 10,007,507   $ 9,998,544  
                                                   
Liabilities:
                                                 
Future policy benefits
  $ 4,248,277   $ 4,286,258   $ 4,349,375   $ 4,409,183   $ 4,470,185   $ 4,532,615   $ 4,557,535   $ 4,614,860  
Other policy liabilities
    630,294     608,307     609,047     592,711     604,487     588,202     589,826     589,542  
Income taxes
        129,776     127,732     136,226     142,780     130,283     136,028     131,477  
Other liabilities
    1,106,834     412,141     395,762     386,182     397,561     364,533     390,297     382,068  
Note payable
        300,000     300,000     300,000     300,000     300,000     300,000     300,000  
Payable under securities lending
    129,042     161,056     208,765     181,726     186,089     163,342     185,483     149,358  
Separate account liabilities
    2,222,267     2,098,936     2,301,896     2,446,786     2,582,881     2,544,429     2,276,705     2,408,598  
Total liabilities
    8,336,714     7,996,474     8,292,577     8,452,814     8,683,983     8,623,404     8,435,874     8,575,903  
Stockholders’ equity:
                                                 
Common stock ($0.01 par value) (1)
        727     727     728     732     736     737     649  
Paid-in capital
    1,312,072     870,706     882,676     883,169     889,654     894,018     898,945     707,912  
Retained earnings
    300,531     304,075     342,920     395,057      446,767     488,521     526,847     566,021  
Treasury stock
                                 
Accumulated other comprehensive income (loss), net:
                                                 
Net unrealized investment gains (losses) not other-than-temporarily impaired
    85,265     97,505     120,949     98,322     96,543     105,647     99,257     97,082  
Net unrealized investment losses other-than-temporarily impaired
    (4,245 )   (3,703 )   (2,883 )   (2,275 )   (2,275 )   (2,275 )   (2,363 )   (1,665 )
Cumulative translation adjustment
    53,076     48,286     51,925     56,492     59,221     60,315     48,210     52,642  
Total stockholders’ equity
    1,746,699     1,317,596     1,396,314     1,431,493     1,490,642     1,546,962     1,571,633     1,422,641  
Total liabilities and stockholders' equity
  $ 10,083,413   $ 9,314,070   $ 9,688,891   $ 9,884,307   $ 10,174,625   $ 10,170,366   $ 10,007,507   $ 9,998,544  
                                                   
Reconciliation of Adjusted Stockholders' Equity to Total Stockholders' Equity
                                                 
Adjusted stockholders' equity
  $ 1,665,679   $ 1,223,794   $ 1,278,248   $ 1,335,446   $ 1,396,374   $ 1,443,590   $ 1,474,739   $ 1,327,224  
Reconciling items:
                                                 
Net unrealized investment gains (losses) not other-than-temporarily impaired
    85,265     97,505     120,949     98,322     96,543     105,647     99,257     97,082  
Net unrealized investment losses other-than-temporarily impaired
    (4,245 )   (3,703 )   (2,883 )   (2,275 )   (2,275 )   (2,275 )   (2,363 )   (1,665 )
Total reconciling items
    81,020     93,802     118,066     96,047     94,268     103,372     96,894     95,417  
Total stockholders’ equity
  $ 1,746,699   $ 1,317,596   $ 1,396,314   $ 1,431,493   $ 1,490,642   $ 1,546,962   $ 1,571,633   $ 1,422,641  
                                                   
Deferred Policy Acquisition Costs Rollforward
                                                 
Balance, beginning of period
  $ 2,789,905   $ 702,429   $ 745,322   $ 798,335   $ 853,211   $ 908,600   $ 966,094   $ 1,004,545  
General expenses deferred
    16,095     15,061     14,876      14,481     14,123     16,946     15,340     15,449  
Commission costs deferred
    77,208     56,831     57,232      65,285     60,296     66,661     66,302     62,795  
Amortization of deferred policy acquisition costs
    (91,756 )   (22,899 )   (23,844 )   (29,536 )   (25,556 )   (27,385 )   (30,532 )   (35,875 )
Transferred to reinsurers
    (2,099,941 )                            
Foreign currency impact and other, net
    10,918     (6,100 )   4,750     4,646      6,527     1,272     (12,659 )   3,724  
Balance, end of period
  $ 702,429   $ 745,322   $ 798,335   $ 853,211   $ 908,600   $ 966,094   $ 1,004,545   $ 1,050,637  
 

(1)
 
Outstanding common shares exclude restricted stock units.
(2)
 
The balance sheet as of March 31, 2010 reflects the impact of the Citi reinsurance transactions executed on March 31, 2010.  The Citi reinsurance transactions were given retroactive effect to January 1, 2010.  As a result, the first quarter 2010 balance sheet includes a return of capital to Citi equally offsetting the income attributable to the underlying policies earned between January 1, 2010 and March 31, 2010.  The first quarter 2010 balance sheet also reflects the extraordinary dividends declared on March 31, 2010.
(3)
 
 
The balance sheet as of June 30, 2010 reflects the issuance of the Citi note, reductions to stockholders' equity and corresponding changes in deferred tax balances as a result of the 338(h)(10) elections, and a reduction in stockholders' equity as a result of reflecting our overpayment of estimated taxes to Citi as a return of capital.
 
 
4

 
 
Financial Results and Other Statistical Data PRIMERICA, INC.
  Financial Supplement
 
                                                 
YOY Q4
       
(Dollars in thousands, except per-share data)
 
Q1
2010
   
Q2
2010
   
Q3
2010
   
Q4
2010
   
Q1
2011
   
Q2
2011
   
Q3
2011
   
Q4
2011
 
$
Change
 
%
Change
   
YTD
2011
 
Earnings per Share
                                                             
Basic earnings per share:
                                                             
Weighted-average common shares and fully vested equity awards
 
na
    71,843,588     72,259,352     72,453,126     72,671,481     73,457,333     73,658,253     69,366,432     (3,086,694 )   -4.3 %     72,283,068  
                                                                     
Net income
 
na
  $ 22,008   $ 39,595   $ 52,889   $ 52,467   $ 44,023   $ 40,600   $ 41,185   $ (11,704 )   -22.1 %   $ 178,276  
Less income attributable to unvested participating securities
 
na
    (928   (1,540 )     (2,051 )     (2,103 )     (1,284 )     (1,144 )     (1,230 )   821      40.0 %     (5,565 )
Net income used in computing basic EPS
 
na
  $ 21,080   $ 38,055   $ 50,838   $ 50,364   $ 42,739   $ 39,457   $ 39,955   $ (10,883 )   -21.4 %   $ 172,711  
Basic earnings per share
 
na
  $ 0.29   $ 0.53   $ 0.70   $ 0.69   $ 0.58   $ 0.54   $ 0.58   $ (0.13 )   -17.9 %   $ 2.39  
                                                                     
Net operating income
 
na
  $ 37,199   $ 40,913   $ 45,217   $ 48,629   $ 44,999   $ 42,817   $ 40,632   $ (4,585 )   -10.1 %   $ 177,077  
Less operating income attributable to unvested participating securities
 
na
    (1,569 )     (1,591 )     (1,753 )     (1,949 )     (1,313 )     (1,206 )     (1,213 )   540     30.8 %     (5,526 )
Net operating income used in computing basic operating EPS
 
na
  $ 35,631   $ 39,322   $ 43,464   $ 46,680   $ 43,686   $ 41,611   $ 39,419   $ (4,045 )   -9.3 %   $ 171,551  
Basic operating income per share
 
na
  $ 0.50   $ 0.54   $ 0.60   $ 0.64   $ 0.59   $ 0.56   $ 0.57   $ (0.03 )   -5.3 %   $ 2.37  
                                                                     
Diluted earnings per share:
                                                                   
Weighted-average common shares and fully vested equity awards
 
na
    71,843,588     72,259,352     72,453,126     72,671,481     73,457,333     73,658,253     69,366,432     (3,086,694 )   -4.3 %     72,083,068  
Dilutive impact of warrants
 
na
    890,777     660,066     786,628     1,154,597     743,814     541,184     802,787     16,159     2.1 %     823,497  
Shares used to calculate diluted EPS
 
na
    72,734,365     72,919,418     73,239,754     73,826,078     74,201,147     74,199,437     70,169,219     (3,070,535 )   -4.2 %     73,106,565  
                                                                     
Net income
 
na
  $ 22,008   $ 39,595   $ 52,889   $ 52,467   $ 44,023   $ 40,600   $ 41,185   $ (11,704 )   -22.1 %   $ 178,276  
Less income attributable to unvested participating securities
 
na
    (917 )     (1,527 )     (2,030 )     (2,072 )     (1,272 )     (1,136 )     (1,217 )   813     40.1 %     (5,507 )
Net income used in computing diluted EPS
 
na
  $ 21,091   $ 38,068   $ 50,859   $ 50,395   $ 42,751   $ 39,464   $ 39,968   $ (10,891 )   -21.4 %   $ 172,769  
Diluted earnings per share
 
na
  $ 0.29   $ 0.52   $ 0.69   $ 0.68   $ 0.58   $ 0.53   $ 0.57   $ (0.12 )   -18.0 %   $ 2.36  
                                                                     
Net operating income
 
na
  $ 37,199   $ 40,913   $ 45,217   $ 48,629   $ 44,999   $ 42,817   $ 40,632   $ (4,585 )   -10.1 %   $ 177,077  
Less operating income attributable to unvested participating securities
 
na
    (1,550 )     (1,578 )     (1,735 )     (1,920 )     (1,301 )     (1,198 )     (1,200 )   535     30.8 %     (5,469 )
Net operating income used in computing diluted operating EPS
 
na
  $ 35,649   $ 39,335   $ 43,482   $ 46,709   $ 43,698   $ 41,619   $ 39,432   $ (4,050 )   -9.3 %   $ 171,608  
Diluted operating income per share
 
na
  $ 0.49   $ 0.54   $ 0.59   $ 0.63   $ 0.59   $ 0.56   $ 0.56   $ (0.03 )   -5.3 %   $ 2.35  
 
In April 2010, Primerica issued shares, warrants, and equity awards to complete the transactions related to our corporate reorganization.  Both the vested and unvested equity awards maintain nonforfeitable dividend rights that result in dividend payment obligations on a one-to-one ratio with common shares for any future dividend declarations.  These awards are deemed participating securities for calculating EPS.
 
As a result of issuing equity awards that are deemed participating securities, we calculate EPS using the two-class method. Under the two-class method, we allocate earnings to common shares and to fully vested equity awards. Earnings attributable to unvested equity awards, along with the corresponding share counts, are excluded from EPS reflected on our consolidated statements of income.  In calculating basic EPS, we deduct any dividends on and undistributed earnings allocated to unvested equity awards from net income and then divide the result by the weighted average number of common shares and fully vested equity awards outstanding for the period.
 
We determine the potential dilutive effect of warrants on EPS using the treasury-stock method. Under this method, we utilize the exercise price to determine the amount of cash that would be available to repurchase shares if the warrants were exercised. We then use the average market price of our common shares during the reporting period to determine how many shares we could repurchase with the cash raised from the exercise. The net incremental share count issued represents the potential dilutive securities.  We then reallocate earnings to common shares and fully vested equity awards incorporating the increased, fully diluted share count to determine diluted EPS.
 

 
                                     
YOY Q4
     
   
Q1
2010
Q2
2010
 
Q3
2010
   
Q4
2010
 
Q1
2011
 
Q2
2011
 
Q3
2011
 
Q4
2011
   
Change
 
%
Change
 
YTD
2011
 
Annualized Return on Equity
                                                             
Average stockholders' equity
 
na
$ 1,296,220   $ 1,356,955     $ 1,413,904   $ 1,461,068   $ 1,518,802   $ 1,559,298   $ 1,497,137     $ 83,234     5.9 % $ 1,509,076  
Average adjusted stockholders' equity
 
na
$ 1,208,809   $ 1,251,021     $ 1,306,847   $ 1,365,910   $ 1,419,982   $ 1,459,165   $ 1,400,982     $ 94,135     7.2 % $ 1,411,510  
                                                                     
Net income return on stockholders' equity
 
na
  6.8 %   11.7 %     15.0 %   14.4 %   11.6 %   10.4 %   11.0 %     -4.0 %
nm
    11.8 %
Net income return on adjusted stockholders' equity
 
na
  7.3 %   12.7 %     16.2 %   15.4 %   12.4 %   11.1 %   11.8 %     -4.4 %
nm
    12.6 %
                                                                     
Net operating income return on adjusted stockholders' equity
 
na
  12.3 %   13.1 %     13.8 %   14.2 %   12.7 %   11.7 %   11.6 %     -2.2 %
nm
    12.5 %
                                                                     
Capital Structure
                                                                   
Debt-to-capital (1)
 
na
  18.5 %   17.7 %     17.3 %   16.8 %   16.2 %   16.0 %   17.4 %     0.1 %
nm
    17.4 %
                                                                     
Cash and invested assets to stockholders' equity
 
na
  1.7 x   1.6 x     1.6 x   1.6 x   1.5 x   1.5 x   1.5 x     (0.1x )
nm
    1.5 x
Cash and invested assets to adjusted stockholders' equity
 
na
  1.9 x   1.8 x     1.7 x   1.7 x   1.6 x   1.6 x   1.6 x     (0.1x )
nm
    1.6 x
                                                                     
Share count, end of period (2)
 
na
  72,729,617     72,727,173       72,843,213     73,187,837     73,603,111     73,740,120     64,882,643       (7,960,570 )     -10.9 %   64,882,643  
Adjusted stockholders' equity per share
 
na
$ 16.83   $ 17.58     $ 18.33   $ 19.08   $ 19.61   $ 20.00   $ 20.46     $ 2.12     11.6 % $ 20.46  
                                                                     
Financial Strength Ratings - Primerica Life Insurance Company
                                                                   
Moody's
 
na
na
 
na
   
na
 
na
  A2   A2   A2    
nm
 
nm
 
nm
 
S&P   
AA
AA-
 
AA-
   
AA-
 
AA-
 
AA-
 
AA-
 
AA-
   
nm
 
nm
 
nm
 
A.M. Best
  A+  A+   A+     A+   A+   A+   A+   A+    
nm
 
nm
 
nm
 
Fitch    A+  A+   A+     A+   A+   A+   A+   A+    
nm
 
nm
 
nm
 
                                                           
Holding Company Senior Debt Ratings
                                                           
Moody's
 
na
na
 
na
   
na
 
na
 
Baa2
 
Baa2
 
Baa2
   
nm
 
nm
 
nm
 
S&P   
na
na
 
na
   
na
 
na
  A-   A-   A-    
nm
 
nm
 
nm
 
A.M. Best
 
na
na
 
na
   
na
 
na
  a-   a-   a-    
nm
 
nm
 
nm
 
 

(1)
Capital in the debt-to-capital ratio includes stockholders' equity and the note payable.
(2)
Share count reflects outstanding common shares, including restricted shares, but excludes restricted stock units (RSUs).
 
 
5

 
 
Statements of Income PRIMERICA, INC.
  Financial Supplement
 
    (4)                              
YOY Q4
       
(Dollars in thousands)
 
Q1
2010
 
Q2
2010
 
Q3
2010
 
Q4
2010
 
Q1
2011
 
Q2
2011
 
Q3
2011
 
Q4
2011
 
$
Change
 
%
Change
   
YTD
2011
 
Statement of Income
                                                               
Revenues:                                                                
Direct premiums
  $ 537,845   $ 547,455   $ 547,444   $ 548,330   $ 552,069   $ 560,881   $ 560,739   $ 555,778   $ 7,448     1.4 %   $ 2,229,467  
Ceded premiums
    (148,119 )     (447,213 )     (437,054 )     (417,981 )     (422,238 )     (435,564 )     (425,643 )     (419,630 )     (1,649 )
nm
      (1,703,075 )
Net premiums
    389,726     100,242     110,390     130,349     129,831     125,317     135,096     136,148     5,799     4.4 %     526,392  
Net investment income
    82,576     27,991     27,855     26,688     28,626     27,229     27,103     25,644     (1,044 )   -3.9 %     108,602  
Commissions and fees:
                                                                     
Sales-based (1)
    36,363     36,301     32,941     37,001     43,128     44,904     42,244     40,086     3,085     8.3 %     170,362  
Asset-based (2)
    38,014     39,445     37,602     52,412     44,825     45,348     41,996     40,889     (11,523 )   -22.0 %     173,059  
Account-based (3)
    10,208     10,317     10,620     10,545     10,432     11,811     10,140     9,615     (930 )   -8.8 %     41,997  
Other commissions and fees
    7,105     7,162     8,574     8,331     7,731     6,635     6,502     6,693     (1,638 )   -19.7 %     27,560  
Realized investment (losses) gains
    31,057     374     1,015     1,700     327     2,035     (178 )   4,256     2,556  
nm
      6,440  
Other, net      11,893     12,466     12,239     12,362     11,452     11,816     12,886     12,525     163     1.3 %     48,679  
Total revenues
    606,942     234,299     241,236     279,387     276,352     275,095     275,790     275,855     (3,532 )   -1.3 %     1,103,092  
Benefits and expenses:
                                                                     
Benefits and claims
    170,735     45,124     49,811     52,033     57,635     57,272     64,101     63,688     11,655     22.4 %     242,696  
Amortization of DAC
    91,756     22,899     23,844     29,536     25,556     27,385     30,532     35,875     6,339     21.5 %     119,348  
Insurance commissions
    6,371     4,233     5,100     4,205     5,000     4,219     4,909     5,168     963     22.9 %     19,296  
Insurance expenses
    37,529     10,083     11,999     15,887     9,552     19,154     15,465     16,938     1,051     6.6 %     61,109  
Sales commissions:
                                                                     
Sales-based (1)
    26,203     25,998     23,474     25,319     30,547     31,378     29,627     26,792     1,473     5.8 %     118,344  
Asset-based (2)
    12,715     12,911     12,232     20,271     15,451     15,111     13,805     13,534     (6,737 )   -33.2 %     57,901  
Other sales commissions
    4,963     4,603     6,558     4,676     4,358     3,674     3,538     3,490     (1,185 )   -25.3 %     15,061  
Interest expense
        6,928     6,968     6,976     6,997     6,998     7,000     6,973     (3 )
nm
      27,968  
Other operating expenses
    36,268     65,183     39,371     39,962     40,111     41,743     42,962     40,709     747     1.9 %     165,525  
Total benefits and expenses
    386,541     197,961     179,357     198,865     195,207     206,934     211,940     213,167     14,302     7.2 %     827,248  
Income before income taxes
    220,402     36,338     61,879     80,522     81,145     68,161     63,850     62,688     (17,834 )   -22.1 %     275,844  
Income taxes      77,116     14,330     22,284     27,633     28,678     24,138     23,250     21,503     (6,130 )   -22.2 %     97,569  
Net income
  $ 143,286   $ 22,008   $ 39,595   $ 52,889   $ 52,467   $ 44,023   $ 40,600   $ 41,185   $ (11,704 )   -22.1 %   $ 178,275  
                                                                       
Income Before Income Taxes by Segment
                                                                     
Term Life    $ 160,367   $ 44,095   $ 42,581   $ 52,000   $ 57,649   $ 45,781   $ 48,088   $ 43,091   $ (8,909 )   -17.1 %   $ 194,609  
Investment & Savings Products
    25,447     26,735     26,578     34,769     31,039      30,470     26,746     28,821     (5,948 )   -17.1 %     117,076  
Corporate & Other Distributed Products
    34,587     (34,492 )     (7,280 )     (6,247 )     (7,543 )     (8,090 )     (10,984 )     (9,224 )     (2,977 )   -47.7 %     (35,841 )
Income before income taxes
  $ 220,402   $ 36,338   $ 61,879   $ 80,522   $ 81,145   $ 68,161   $ 63,850   $ 62,688   $ (17,834 )   -22.1 %   $ 275,844  
 

(1)
Sales-based - revenues or commission expenses relating to the sales of mutual funds and variable annuities
(2)
Asset-based - revenues or commission expenses relating to the value of assets in client accounts for which we earn ongoing service, distribution, and other fees
(3)
Account-based  - revenues relating to the fee generating client accounts we administer
(4)
Excludes the effect of the reinsurance and reorganization transactions we executed in connection with and subsequent to our IPO.  As such, ceded premiums, net investment income, benefits and claims, amortization of DAC, insurance expenses, interest expense, and other operating expenses exclude the impact of the various Citi reinsurance agreements, dividends, the note payable to Citi, and the equity grants made in connection with our IPO.
 
 
6

 
 
Reconciliation of Statement of Income Non-GAAP to GAAP Financial Measures PRIMERICA, INC.
  Financial Supplement
 
 
                                  
YOY Q4
             
YOY YTD
 
(Dollars in thousands)
Q1
2010
 
Q2
2010
 
Q3
2010
 
Q4
2010
 
Q1
2011
 
Q2
2011
 
Q3
2011
 
Q4
2011
 
$
Change
 
%
Change
   
YTD
2010
 
YTD
2011
   
$
Change
 
%
Change
 
Reconciliation from Operating Revenues to Total Revenues
                                                                           
Operating revenues
$ 224,822   $ 233,925   $ 240,221   $ 264,546   $ 267,296   $ 273,060   $ 275,968   $ 271,599   $ 7,053   2.7 %   $ 963,513   $ 1,087,923     $ 124,410   12.9 %
                                                                                     
Operating revenues reconciling items:
                                                                                   
Realized investment gains/losses
  31,057     374     1,015     1,700     327     2,035     (178 )   4,256  
nm
 
nm
      34,146     6,440     
nm
 
nm
 
Ceded premiums - reinsurance recoveries
              13,141     8,729              
nm
 
nm
      13,141      8,729     
nm
 
nm
 
Ceded premiums - ceded to Citi reinsurers
  296,328                              
nm
 
nm
      296,328         
nm
 
nm
 
Pro rata net investment income - assets transferred to Citi reinsurers
  54,735                              
nm
 
nm
      54,735         
nm
 
nm
 
Total operating revenues reconciling items
  382,121     374     1,015     14,841     9,056     2,035     (178 )   4,256   
nm
 
nm
      398,351      15,169     
nm
 
nm
 
                                                                                     
Total revenues
$ 606,942   $ 234,299   $ 241,236   $ 279,387   $ 276,352   $ 275,095   $ 275,790   $ 275,855   $ (3,532 ) -1.3 %   $ 1,361,864   $ 1,103,092     $ (258,772 ) -19.0 %
                                                                                     
Reconciliation from Operating Income Before Income Taxes to Income Before Income Taxes
                                                                                   
Operating income before income taxes
$ 58,689   $ 61,421   $ 63,940   $ 68,842   $ 75,209   $ 69,672   $ 67,337   $ 61,847   $ (6,995 ) -10.2 %   $ 252,891   $ 274,064     $ 21,173   8.4 %
                                                                                     
Operating income before income taxes reconciling items:
                                                                                   
Realized investment gains/losses
  31,057     374     1,015     1,700     327     2,035     (178 )   4,256  
nm
 
nm
      34,146     6,440     
nm
 
nm
 
Ceded premiums - reinsurance recoveries
              13,141     8,729              
nm
 
nm
      13,141     8,729     
nm
 
nm
 
Initial & accelerated management / field grant expense
      (25,457 )     (3,076 )     (3,161 )     (3,120 )     (3,546 )     (3,309 )     (3,415 )
nm
 
nm
      (31,694 )     (13,389 )  
nm
 
nm
 
Ceded premiums - ceded to Citi reinsurers
  296,328                              
nm
 
nm
      296,328        
nm
 
nm
 
Pro rata net investment income - assets transferred to Citi reinsurers
  54,735                              
nm
 
nm
      54,735        
nm
 
nm
 
Benefits and claims - ceded to Citi reinsurers
  (128,204 )                            
nm
 
nm
      (128,204 )      
nm
 
nm
 
Amortization of DAC - ceded to Citi reinsurers
  (71,389 )                            
nm
 
nm
      (71,389 )      
nm
 
nm
 
Insurance commissions - expense allowance received from Citi reinsurers
  (1,669 )                            
nm
 
nm
      (1,669 )      
nm
 
nm
 
Insurance expenses - expense allowance received from Citi reinsurers
  (26,083 )                            
nm
 
nm
      (26,083 )      
nm
 
nm
 
Interest expense - finance charge payable to Citi reinsurer
  2,812                              
nm
 
nm
      2,812        
nm
 
nm
 
Interest expense - note payable
  4,125                              
nm
 
nm
      4,125        
nm
 
nm
 
Total operating income before income taxes reconciling items
  161,713