pri-10q_20220630.htm

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, 2022


☐	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, 2022, the registrant had 37,453,088 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, 2022 and December 31, 2021		2
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021		4
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021		5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		28
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		51
Item 4. Controls and Procedures.		51
PART II – OTHER INFORMATION		51
Item 1. Legal Proceedings.		51
Item 1A. Risk Factors.		52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		53
Item 6. Exhibits.		54
Signatures		55

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	(Unaudited)
	June 30, 2022			December 31, 2021
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,777,820 in 2022 and $2,621,388 in 2021)	$	2,554,465		$	2,702,567
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,378,744 in 2022 and $1,551,113 in 2021)		1,415,940			1,379,100
Short-term investments available-for-sale, at fair value (amortized cost: $3,311 in 2022 and $85,246 in 2021)		3,311			85,243
Equity securities, at fair value (historical cost: $29,365 in 2022 and $34,255 in 2021)		35,877			42,551
Trading securities, at fair value (cost: $9,470 in 2022 and $24,769 in 2021)		8,976			24,355
Policy loans and other invested assets		46,226			30,612
Total investments		4,064,795			4,264,428
Cash and cash equivalents		400,119			392,501
Accrued investment income		19,326			18,702
Reinsurance recoverables		4,069,039			4,268,419
Deferred policy acquisition costs, net		3,028,511			2,943,782
Renewal commissions receivable		193,661			231,751
Agent balances, due premiums and other receivables		250,940			257,675
Goodwill		187,707			179,154
Intangible assets		190,775			195,825
Income taxes		92,352			81,799
Operating lease right-of-use assets		44,438			47,942
Other assets		428,355			441,253
Separate account assets		2,358,987			2,799,992
Total assets	$	15,329,005		$	16,123,223

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	7,276,278		$	7,138,649
Unearned and advance premiums		16,932			16,437
Policy claims and other benefits payable		481,229			585,382
Other policyholders’ funds		501,628			501,823
Note payable - Short term		-			15,000
Note payable - Long term		592,504			592,102
Surplus note		1,415,457			1,378,585
Income taxes		164,972			241,311
Operating lease liabilities		50,249			53,920
Other liabilities		596,409			615,710
Payable under securities lending		96,603			94,529
Separate account liabilities		2,358,987			2,799,992
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		13,551,248			14,033,440

Temporary Stockholders’ Equity
Redeemable noncontrolling interests in consolidated entities		2,233			7,271
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 shares in 2022 and 2021; issued and outstanding 37,768 shares in 2022 and 39,368 shares in 2021)		378			394
Paid-in capital		-			5,224
Retained earnings		1,948,244			2,004,506
Accumulated other comprehensive income (loss), net of income tax:
Unrealized foreign currency translation gains (losses)		2,648			8,611
Net unrealized investment gains (losses) on available-for-sale securities		(175,746	)		63,777
Total permanent stockholders’ equity		1,775,524			2,082,512
Total liabilities and temporary and permanent stockholders’ equity	$	15,329,005		$	16,123,223

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,
	2022			2021			2022			2021
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	808,894		$	780,299		$	1,607,560		$	1,542,526
Ceded premiums		(419,048	)		(413,850	)		(818,933	)		(809,822	)
Net premiums		389,846			366,449			788,627			732,704
Commissions and fees		240,688			250,688			492,489			484,733
Investment income net of investment expenses		37,099			36,030			71,519			71,230
Interest expense on surplus note		(15,815	)		(15,495	)		(31,330	)		(30,642	)
Net investment income		21,284			20,535			40,189			40,588
Realized investment gains (losses)		56			1,409			632			2,031
Other investment gains (losses)		(1,948	)		(708	)		(1,773	)		436
Investment gains (losses)		(1,892	)		701			(1,141	)		2,467
Other, net		18,756			16,313			39,745			31,907
Total revenues		668,682			654,686			1,359,909			1,292,399

Benefits and expenses:
Benefits and claims		153,257			168,347			340,326			352,136
Amortization of deferred policy acquisition costs		85,379			54,286			171,442			120,390
Sales commissions		119,763			131,303			253,687			253,197
Insurance expenses		59,461			48,579			118,969			97,346
Insurance commissions		7,594			8,838			15,315			17,578
Contract acquisition costs		19,384			-			40,034			-
Interest expense		6,814			7,141			13,667			14,285
Other operating expenses		79,730			66,726			166,165			139,694
Total benefits and expenses		531,382			485,220			1,119,605			994,626
Income before income taxes		137,300			169,466			240,304			297,773
Income taxes		31,737			41,304			55,977			71,740
Net income (loss)		105,563			128,162			184,327			226,033
Net income (loss) attributable to noncontrolling interests		(2,384	)		-			(5,038	)		-
Net income (loss) attributable to Primerica, Inc.	$	107,947		$	128,162		$	189,365		$	226,033

Earnings per share attributable to common stockholders:
Basic earnings per share	$	2.80		$	3.23		$	4.86		$	5.70
Diluted earnings per share	$	2.79		$	3.22		$	4.85		$	5.68

Weighted-average shares used in computing earnings per share:
Basic		38,386			39,531			38,801			39,493
Diluted		38,501			39,653			38,914			39,616

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,
	2022			2021			2022			2021
	(In thousands)
Net income (loss)	$	105,563		$	128,162		$	184,327		$	226,033
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		(138,879	)		26,018			(303,818	)		(38,874	)
Reclassification adjustment for investment (gains) losses included in net income		(56	)		(705	)		(713	)		(1,173	)
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)		(9,121	)		7,390			(5,963	)		12,382
Total other comprehensive income (loss) before income taxes		(148,056	)		32,703			(310,494	)		(27,665	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(29,628	)		5,376			(65,008	)		(8,909	)
Other comprehensive income (loss), net of income taxes		(118,428	)		27,327			(245,486	)		(18,756	)
Total comprehensive income (loss)		(12,865	)		155,489			(61,159	)		207,277
Net income (loss) attributable to noncontrolling interests		(2,384	)		-			(5,038	)		-
Comprehensive income (loss) attributable to Primerica, Inc.	$	(10,481	)	$	155,489		$	(56,121	)	$	207,277

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,
	2022			2021			2022			2021
	(In thousands)
Equity attributable to Primerica, Inc./Permanent stockholders’ equity
Common stock:
Balance, beginning of period	$	388		$	394		$	394		$	393
Repurchases of common stock		(10	)		-			(18	)		-
Net issuance of common stock		-			-			2			1
Balance, end of period		378			394			378			394

Paid-in capital:
Balance, beginning of period		-			8,138			5,224			-
Share-based compensation		8,961			5,683			23,781			19,788
Net issuance of common stock		(1	)		-			(2	)		(1	)
Repurchases of common stock		(8,960	)		(941	)