a50256863ex99-2.htm

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, 2011.

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Preface	PRIMERICA, INC.
	Financial Supplement

FIRST QUARTER 2012

This document is a financial supplement to our first quarter 2012 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, operating adjustments exclude the impact of certain reinsurance recoveries which previously had not been recognized due to the uncertain nature of their recovery.

●	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.

Effective January 1, 2012, we adopted ASU 2010-26 Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts and no longer defer certain indirect acquisition costs or costs attributable to unsuccessful efforts of acquiring life insurance policies. We adopted this accounting policy change retrospectively and, accordingly, our historical results have been adjusted to reflect all results on a consistent basis across all periods presented. See the table below for the impact on key metrics.

During the first quarter 2012, we closed a redundant reserve financing transaction. In connection with this transaction, we formed Peach Re, Inc. (Peach Re), a special purpose financial captive insurance company and indirect wholly owned subsidiary of the company. In March 2012, Peach Re entered into a letter of credit facility with Deutsche Bank AG New York Branch with a term of approximately 14 years for a maximum amount of $510 million to support certain of its obligations for a portion of the reserves (commonly referred to as Regulation XXX reserves) related to level premium term life insurance policies ceded to Peach Re by Primerica Life under a new coinsurance agreement. In connection with this transaction, Primerica Life Insurance Company (PLIC) obtained regulatory approval for the March 2012 payment of an extraordinary dividend of $150 million to Primerica, Inc.

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.


ASU 2010-26 Implementation Impact Reconciliations
(Unaudited – in thousands, except per-share data)

	December 31,
	2011
Stockholders' equity prior to implementation	$	1,422,641
Adjustment for the adoption of ASU 2010-26		(95,991	)
Stockholders' equity upon adoption	$	1,326,650

	Three months
	ended March 31,
		2011
Net income as originally reported	$	52,467
Adjustment for the adoption of ASU 2010-26		(5,196	)
Net income as revised for the adoption of ASU 2010-26	$	47,271

Diluted earnings per share as originally reported	$	0.68
Adjustment for the adoption of ASU 2010-26		(0.06	)
Diluted earnings per share as revised for the adoption of ASU 2010-26	$	0.62

Diluted operating earnings per share as originally reported	$	0.63
Adjustment for the adoption of ASU 2010-26		(0.06	)
Diluted operating earnings per share as revised for the adoption of ASU 2010-26	$	0.57

3 of 16

Condensed Balance Sheets and Reconciliation of Balance Sheet to Non-GAAP to GAAP Financial Measures	PRIMERICA, INC.
	Financial Supplement

(Dollars in thousands)	Mar 31, 2011			Jun 30, 2011			Sep 30, 2011			Dec 31, 2011			Mar 31, 2012
Condensed Balance Sheets
Assets:
Investments and cash	$	2,330,098		$	2,297,013		$	2,319,873		$	2,157,582		$	2,167,231
Due from reinsurers		3,769,599			3,793,995			3,818,759			3,855,318			3,895,162
Deferred policy acquisition costs		786,055			833,784			864,623			904,485			948,087
Other assets		582,079			567,482			586,647			525,836			522,123
Separate account assets		2,582,881			2,544,429			2,276,705			2,408,598			2,541,313
Total assets	$	10,050,712		$	10,036,703		$	9,866,607		$	9,851,820		$	10,073,917

Liabilities:
Future policy benefits	$	4,470,185		$	4,532,615		$	4,557,535		$	4,614,860		$	4,676,374
Other policy liabilities		604,487			588,202			589,826			589,542			606,793
Income taxes		100,666			84,859			87,950			81,316			88,503
Other liabilities		396,195			363,181			389,319			381,495			331,112
Note payable		300,000			300,000			300,000			300,000			300,000
Payable under securities lending		186,089			163,342			185,483			149,358			142,507
Separate account liabilities		2,582,881			2,544,429			2,276,705			2,408,598			2,541,313
Total liabilities		8,640,502			8,576,628			8,386,817			8,525,169			8,686,602
Stockholders’ equity:
Common stock ($0.01 par value) (1)		732			736			737			649			653
Paid-in capital		1,016,973			1,021,338			1,026,265			835,232			842,613
Retained earnings		240,739			276,089			308,912			344,104			383,847
Treasury stock		—			—			—			—			—
Accumulated other comprehensive income (loss), net:
Net unrealized investment gains (losses) not other-than-temporarily impaired		96,542			105,646			99,257			97,082			107,598
Net unrealized investment losses other-than-temporarily impaired		(2,275	)		(2,275	)		(2,363	)		(1,665	)		(1,981
Cumulative translation adjustment		57,498			58,541			46,982			51,248			54,584
Total stockholders’ equity		1,410,210			1,460,076			1,479,790			1,326,650			1,387,314
Total liabilities and stockholders' equity	$	10,050,712		$	10,036,703		$	9,866,607		$	9,851,820		$	10,073,917

Reconciliation of Adjusted Stockholders' Equity to Total Stockholders' Equity
Adjusted stockholders' equity	$	1,315,943		$	1,356,704		$	1,382,895		$	1,231,233		$	1,281,697
Reconciling items:
Net unrealized investment gains (losses) not other-than-temporarily impaired		96,542			105,646			99,257			97,082			107,598
Net unrealized investment losses other-than-temporarily impaired		(2,275	)		(2,275	)		(2,363	)		(1,665	)		(1,981	)
Total reconciling items		94,268			103,372			96,894			95,417			105,617
Total stockholders’ equity	$	1,410,210		$	1,460,076		$	1,479,790		$	1,326,650		$	1,387,314

Deferred Policy Acquisition Costs Rollforward
Balance, beginning of period	$	738,946		$	786,055		$	833,784		$	864,623		$	904,485
General expenses deferred		7,381			8,410			7,625			7,754			7,003
Commission costs deferred		56,822			62,091			61,785			58,793			60,116
Amortization of deferred policy acquisition costs		(23,229	)		(23,975	)		(26,645	)		(30,185	)		(26,531	)
Foreign currency impact and other, net		6,135			1,203			(11,927	)		3,501			3,015
Balance, end of period	$	786,055		$	833,784		$	864,623		$	904,485		$	948,087

(1)	Outstanding common shares exclude restricted stock units.

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Financial Results and Other Statistical Data	PRIMERICA, INC.
	Financial Supplement

		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		YOY Q1
(Dollars in thousands, except per-share data)		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		Change			% Change
Earnings per Share
Basic earnings per share:
Weighted-average common shares and fully vested equity awards		72,671,481			73,457,333			73,658,253			69,366,432			65,133,035			(7,538,446	)		-10.4	%

Net income	$	47,272		$	37,620		$	35,096		$	37,204		$	41,756		$	(5,516	)		-11.7	%
Less income attributable to unvested participating securities		(1,895	)		(1,097	)		(988	)		(1,111	)		(1,357	)		538			28.4	%
Net income used in computing basic EPS	$	45,377		$	36,523		$	34,108		$	36,094		$	40,400		$	(4,978	)		-11.0	%
Basic earnings per share	$	0.62		$	0.50		$	0.46		$	0.52		$	0.62		$	(0.00	)		-0.7	%

Net operating income	$	43,441		$	38,592		$	37,301		$	36,652		$	42,377		$	(1,065	)		-2.5	%
Less operating income attributable to unvested participating securities		(1,741	)		(1,126	)		(1,051	)		(1,094	)		(1,377	)		364			20.9	%
Net operating income used in computing basic operating EPS	$	41,700		$	37,467		$	36,250		$	35,558		$	41,000		$	(701	)		-1.7	%
Basic operating income per share	$	0.57		$	0.51		$	0.49		$	0.51		$	0.63		$	0.06			9.7	%

Diluted earnings per share:
Weighted-average common shares and fully vested equity awards		72,671,481			73,457,333			73,658,253			69,366,432			65,133,035			(7,538,446	)		-10.4	%
Dilutive impact of warrants		1,154,597			743,814			541,184			802,787			1,141,687			(12,910	)		-1.1	%
Shares used to calculate diluted EPS		73,826,078			74,201,147			74,199,437			70,169,219			66,274,722			(7,551,356	)		-10.2	%

Net income	$	47,272		$	37,620		$	35,096		$	37,204		$	41,756		$	(5,516	)		-11.7	%
Less income attributable to unvested participating securities		(1,867	)		(1,087	)		(982	)		(1,099	)		(1,335	)		531			28.5	%
Net income used in computing diluted EPS	$	45,405		$	36,533		$	34,115		$	36,105		$	40,421		$	(4,984	)		-11.0	%
Diluted earnings per share	$	0.62		$	0.49		$	0.46		$	0.51		$	0.61		$	(0.01	)		-0.8	%

Net operating income	$	43,441		$	38,592		$	37,301		$	36,652		$	42,377		$	(1,065	)		-2.5	%
Less operating income attributable to unvested participating securities		(1,715	)		(1,115	)		(1,044	)		(1,083	)		(1,355	)		360			21.0	%
Net operating income used in computing diluted operating EPS	$	41,726		$	37,477		$	36,257		$	35,570		$	41,022		$	(704	)		-1.7	%
Diluted operating income per share	$	0.57		$	0.51		$	0.49		$	0.51		$	0.62		$	0.05			9.5	%

		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		YOY Q1
		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		Change			% Change
Annualized Return on Equity
Average stockholders' equity	$	1,383,369		$	1,435,143		$	1,469,933		$	1,403,220		$	1,356,982		$	(26,387	)		-1.9	%
Average adjusted stockholders' equity	$	1,288,212		$	1,336,324		$	1,369,800		$	1,307,064		$	1,256,465		$	(31,746	)		-2.5	%

Net income return on stockholders' equity		13.7	%		10.5	%		9.6	%		10.6	%		12.3	%		-1.4	%	nm
Net income return on adjusted stockholders' equity		14.7	%		11.3	%		10.2	%		11.4	%		13.3	%		-1.4	%	nm

Net operating income return on adjusted stockholders' equity		13.5	%		11.6	%		10.9	%		11.2	%		13.5	%		0.0	%	nm

Capital Structure
Debt-to-capital (1)		17.5	%		17.0	%		16.9	%		18.4	%		17.8	%		0.2	%	nm

Cash and invested assets to stockholders' equity		1.7	x		1.6	x		1.6	x		1.6	x		1.6	x		(0.1x	)	nm
Cash and invested assets to adjusted stockholders' equity		1.8	x		1.7	x		1.7	x		1.8	x		1.7	x		(0.1x	)	nm

Share count, end of period (2)		73,187,837			73,603,111			73,740,120			64,882,643			65,303,547			(7,884,290	)		-10.8	%
Adjusted stockholders' equity per share	$	17.98		$	18.43		$	18.75		$	18.98		$	19.63		$	1.65			9.2	%

Financial Strength Ratings - Primerica Life Insurance Company
Moody's	na			A2			A2			A2			A2			nm			nm
S&P	AA-			AA-			AA-			AA-			AA-			nm			nm
A.M. Best	A+			A+			A+			A+			A+			nm			nm
Fitch	A+			A+			A+			A+			A+			nm			nm

Holding Company Senior Debt Ratings
Moody's	na			Baa2			Baa2			Baa2			Baa2			nm			nm
S&P	na			A-			A-			A-			A-			nm			nm
A.M. Best	na			a-			a-			a-			a-			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 of 16

Statements of Income	PRIMERICA, INC.
	Financial Supplement

																YOY Q1
(Dollars in thousands)		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		$ Change			% Change
Statement of Income
Revenues:
Direct premiums	$	552,069		$	560,881		$	560,739		$	555,778		$	561,037		$	8,968			1.6	%
Ceded premiums		(422,238	)		(435,564	)		(425,643	)		(419,630	)		(418,163	)		4,074			1.0	%
Net premiums		129,831			125,317			135,096			136,148			142,874			13,042			10.0	%
Net investment income		28,626			27,229			27,103			25,644			26,097			(2,529	)		-8.8	%
Commissions and fees:
Sales-based (1)		43,128			44,904			42,244			40,086			44,467			1,339			3.1	%
Asset-based (2)		44,825			45,348			41,996			40,889			43,722			(1,104	)		-2.5	%
Account-based (3)		10,432			11,811			10,140			9,615			9,373			(1,059	)		-10.1	%
Other commissions and fees		7,731			6,635			6,502			6,693			6,343			(1,388	)		-18.0	%
Realized investment (losses) gains		327			2,035			(178	)		4,256			2,132			1,805		nm
Other, net		11,452			11,816			12,887			12,526			11,594			142			1.2	%
Total revenues		276,352			275,095			275,790			275,855			286,601			10,250			3.7	%
Benefits and expenses:
Benefits and claims		57,635			57,272			64,101			63,688			67,933			10,299			17.9	%
Amortization of DAC		23,229			23,975			26,645			30,185			26,531			3,302			14.2	%
Insurance commissions		8,998			9,532			10,536			9,553			8,496			(501	)		-5.6	%
Insurance expenses		15,798			26,988			22,133			24,273			22,444			6,646			42.1	%
Sales commissions:
Sales-based (1)		30,553			31,389			29,640			26,805			31,600			1,047			3.4	%
Asset-based (2)		15,451			15,111			13,805			13,534			14,745			(706	)		-4.6	%
Other sales commissions		4,434			3,774			3,692			3,534			3,371			(1,062	)		-24.0	%
Interest expense		6,997			6,998			7,000			6,973			6,910			(87	)		-1.2	%
Other operating expenses		40,001			41,590			42,732			40,630			41,104			1,102			2.8	%
Total benefits and expenses		203,095			216,630			220,285			219,175			223,135			20,040			9.9	%
Income before income taxes		73,256			58,465			55,505			56,681			63,466			(9,791	)		-13.4	%
Income taxes		25,985			20,845			20,409			19,477			21,709			(4,275	)		-16.5	%
Net income	$	47,272		$	37,620		$	35,096		$	37,204		$	41,756		$	(5,516	)		-11.7	%

Income Before Income Taxes by Segment
Term Life	$	49,716		$	36,027		$	39,663		$	37,045		$	44,283		$	(5,432	)		-10.9	%
Investment & Savings Products		31,039			30,470			26,746			28,821			28,869			(2,169	)		-7.0	%
Corporate & Other Distributed Products		(7,498	)		(8,032	)		(10,903	)		(9,185	)		(9,687	)		(2,189	)		-29.2	%
Income before income taxes	$	73,256		$	58,465		$	55,505		$	56,681		$	63,466		$	(9,791	)		-13.4	%

(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

6 of 16

Reconciliation of Statement of Income Non-GAAP to GAAP Financial Measures	PRIMERICA, INC.
	Financial Supplement

																YOY Q1
		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		$ Change			% Change
(Dollars in thousands)		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		$ Change			% Change
Reconciliation from Operating Revenues to Total Revenues
Operating revenues	$	267,296		$	273,060		$	275,968		$	271,600		$	284,469		$	17,173			6.4	%

Operating revenues reconciling items:
Realized investment gains/losses		327			2,035			(178	)		4,256			2,132		nm			nm
Ceded premiums - reinsurance recoveries		8,729			—			—			—			—		nm			nm
Total operating revenues reconciling items		9,056			2,035			(178	)		4,256			2,132		nm			nm

Total revenues	$	276,352		$	275,095		$	275,790		$	275,855		$	286,601		$	10,250			3.7	%


Reconciliation from Operating Income Before Income Taxes to Income Before Income Taxes
Operating income before income taxes	$	67,321		$	59,976		$	58,992		$	55,840		$	64,409		$	(2,912	)		-4.3	%

Operating income before income taxes reconciling items:
Realized investment gains/losses		327			2,035			(178	)		4,256			2,132		nm			nm
Ceded premiums - reinsurance recoveries		8,729			—			—			—			—		nm			nm
Initial & accelerated management / field grant expense		(3,120	)		(3,546	)		(3,309	)		(3,415	)		(3,075	)	nm			nm
Total operating income before income taxes reconciling items		5,936			(1,510	)		(3,487	)		841			(943	)	nm			nm

Income before income taxes	$	73,256		$	58,465		$	55,505		$	56,681		$	63,466		$	(9,791	)		-13.4	%


Reconciliation from Net Operating Income to Net Income
Net operating income	$	43,441		$	38,592		$	37,301		$	36,652		$	42,377		$	(1,065	)		-2.5	%

Net operating income reconciling items:
Operating income before income taxes reconciling items		5,936			(1,510	)		(3,487	)		841			(943	)	nm			nm
Tax impact of operating income reconciling items at effective tax rate		(2,105	)		539			1,282			(289	)		323		nm			nm
Total net operating income reconciling items		3,830			(972	)		(2,205	)		552			(621	)	nm			nm

Net income	$	47,272		$	37,620		$	35,096		$	37,204		$	41,756		$	(5,516	)		-11.7	%

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Segment Operating Results	PRIMERICA, INC.
	Financial Supplement

																YOY Q1
(Dollars in thousands)		Q1 2011			Q2 2011			Q3 2011			Q4 2011			Q1 2012		$ Change			% Change
Term Life Insurance
Revenues:
Direct premiums	$	532,167		$	540,283		$	539,693		$	537,450		$	542,157		$	9,990			1.9	%
Ceded premiums		(427,382	)		(431,890	)		(421,933	)		(416,477	)		(414,559	)		12,822			3.0	%
Net premiums		104,786			108,393			117,760			120,973			127,598			22,812			21.8	%
Allocated net investment income		15,794			15,669			15,664			15,560			16,659			865			5.5	%
Other, net		7,653			7,580			8,289			8,144			7,547			(106	)		-1.4	%
Operating revenues		128,233			131,641			141,713			144,678			151,805			23,571			18.4	%
Benefits and expenses:
Benefits and claims		47,351			43,921			52,067			53,820			57,509			10,158			21.5	%
Amortization of DAC		20,127			19,894			22,289			27,163			23,933			3,806			18.9	%
Insurance commissions		4,063			5,320			5,633			4,380			3,577			(486	)		-12.0	%
Insurance expenses		12,833			23,607			19,186			19,421			19,717			6,884			53.6	%
Interest expense		2,872			2,873			2,875			2,848			2,785			(87	)		-3.0	%
Operating benefits and expenses		87,246			95,615			102,050			107,633			107,521			20,275			23.2	%
Operating income before income taxes	$	40,987		$	36,027		$	39,663		$	37,045		$	44,283		$	3,296			8.0	%

Investment & Savings Products
Revenues:
Commissions and fees:
Sales-based	$	43,128		$	44,904		$	42,244		$	40,086		$	44,467		$	1,339			3.1	%
Asset-based		44,825			45,348			41,996			40,889			43,722			(1,104	)		-2.5	%
Account-based		10,432			11,811			10,140			9,615			9,373			(1,059	)		-10.1	%
Other, net		2,461			2,522			3,105			3,196			2,572			110			4.5	%
Operating revenues		100,846			104,586			97,485			93,786			100,133			(713	)		-0.7	%
Benefits and expenses:
Amortization of DAC		2,785			3,751			4,034			1,913			3,223			438			15.7	%
Insurance commissions		2,140			2,344			2,277			2,089			2,149			9			0.4	%
Sales commissions:
Sales-based		30,553			31,389			29,640			26,805			31,600			1,047			3.4	%
Asset-based		15,451			15,111			13,805			13,534			14,745			(706	)		-4.6	%
Other operating expenses		18,878			21,519			20,984			20,624			19,547			668			3.5	%
Operating benefits and expenses		69,807			74,115			70,740			64,964			71,264			1,457			2.1	%
Operating income before income taxes	$	31,039		$	30,470		$	26,746		$	28,821		$	28,869		$	(2,169	)		-7.0	%

Corporate & Other Distributed Products
Revenues:
Direct premiums	$	19,902		$	20,597		$	21,046		$	18,328		$	18,880		$	(1,022	)		-5.1	%
Ceded premiums		(3,585	)		(3,674	)		(3,710	)		(3,153	)		(3,604	)		(19	)		-0.5	%
Net premiums		16,317			16,924			17,336			15,174			15,276			(1,041	)		-6.4	%

Supplemental Financial Information
First Quarter 2012