PRI - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Primerica Quarter one 2020 Earnings Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your speaker today, Nicole Russell, Head of Investor Relations. Thank you. Please go ahead.

Nicole Russell

good and operator, you, morning, everyone. Thank Primerica's to first quarter call. earnings Welcome of A to along with Relations today's, earnings materials release, are website. copy our on section our posted that of Investor the call are relevant

Joining our Officer, and prepared and Chief your our call remarks, Glenn Chief and Officer, Rand. will will questions. Glenn up open Alison the Williams; Financial Alison today call are Executive deliver then we for

the safe our assumes some with statements our in Litigation may Securities comments no update these company forward-looking provisions call, statements new contain harbor Reform to During of to The the of reflect accordance Act. information. obligation

We XX-Q, dated XXXX, to for will expressed XX-K, Form and Form the and recent a list press or those April implied. XX, of on our that results refer X-K actual you risks could release cause most Form materially subsequent as modified uncertainties from by filed differ to our

non-GAAP the press over are Relations turn provide the would certain are GAAP I believe numbers of measures, included we Reconciliations reference our on call available to to and respective now website. measures to earnings our operations. the also Glenn. non-GAAP end company's like We their which into release at insight Investor additional of

Glenn Williams

and Thank us. everyone, thanks, you, Nicole, joining for

pandemic. recruiting start First in up XX%, benefited part in strong results term continues quarter XX%. sales and is were reflect fundamental sales and a to up savings life XX%, we have investment to COVID to strength to the The XXXX. Year-over-year very and were our product response build business up model consumers'

we our to acquire a to which newly middle-income received steady and seeing announced intent and products solution other add families. offer progress constituents sales, also our we've We employees an will health the from enthusiastic response force, mortgage to sales senior to e-TeleQuote, are in

to operating income expand XXXX, operating of to per compared of adjusted me first quarter while also XX%. million XX.X% the compared ROAE of first in Starting adjusted on three, increased $X.XX revenues last rose these slide increased diluted on themes. year's XX.X% Let $XXX XX% share to quarter.

Continuing slide as four. Primerica first to XXXX. nearly of joined recruiting quarter next during was Turning double strong the its XX,XXX digits up individuals momentum,

the opportunity by efforts success caused our by to appeal heightened are pandemic. of reinforced communicate career our and business and improve the recent Our uncertainty

response work We process their lives. continue a continues for seeking a to license. life create bottleneck in obtain see a individuals and record The freedom licensing control trying to to permanent individuals from

normally XX,XXX our anticipated see both a first of obtained recruiting. have the The exam. state provincial a in life to and have candidates added Virtual than individuals are licensing who flexibility success quarter, for given process classes our online repercussions. and we preparing negative or COVID During nearly license, we positive take licensing has would less out emerging

a historically However, due select candidates have rate the who the learning. route to greater success in-person focused instructor-led

and availability Social general measures limit group of to hesitancy attend currently a classes. and distancing appeal live classes the

dynamic to time. improve We expect this over

fall includes that we quarter licensing count. This licenses exams the testing will extended more individuals Remote On out expectations. and fewer advantage, representatives. the and ended or the below convenient with this have approximately XXX,XXX now states side, temporary life the out completing attempting with about of COVID-related and license in-person have provinces similar remains in-person classes capabilities. Even and We positive with exams rolled than number believe are exam, accessible rate. eventually a candidates pass remote XX with X,XXX

Turning to slide five.

to per of of sales. our Year-over-year, life year life on fundamental period. rate comparisons insurance to issued remains term X.XX business rep prior policies month prior at products insurance to licensed impact our Consequently, range from solid sentiment. and our the as positive to top consumer per increase XX,XXX the the compared policies demand well as for new benefit almost quarter, strengthening a see during continue the X.XX first We productivity continue XX% at compared COVID's in year historical

Our AUM segment and new records. Savings to investment sales set Products in continued

slide six. to Turning

$X.X and rose products mutual our success Sales We were our of accounts managed to our much up clients. funds and efforts quarter of respectively, the declines. First of after force we first annuities were sales ongoing offer year-over-year, time up XX% the sales billion. for consecutive breadth to of variable the and three sales year-over-year XX% owe of while quarters of XX%

amplified Our interactions optimism, invest future financial surpassing client motivate along and emerging success by $X the first The the has to our net enhanced client billion of mark and with also support, helped time the for improved by evident has history. is markets, clients inflows strength the as which in communication technology connectivity. for

and We appeal progress to in in Distribution this see continue and efforts into our states. The into of million deliberate licenses business Mortgage existing to new this is million per toward more to program states their new $X $X our contribute remain then earnings, business to expand thereafter. this also leading believe reps in both by eligible appropriate the grow We year expand $X obtaining pre-tax will to million about area. XXXX opportunity

Assisting clients production a their recruiting. debt with also mortgages positive ISP on load and impact life managing and has sales,

impact in and recruiting be be year-over-year further used will comparisons to to preserve enter as recruiting the we we by quarter the production we difficult XXXX that worsened. and will continues Comparability pandemic to moderate, evaluate. As momentum incentives production and the distorted life second recognize COVID significant

to adopted states shutdowns, to through these starting licensing addition, In temporary manage are measures COVID-related measures and sunset.

and to as and normal and momentum return improving to processes continued ahead, provinces' As states' social ease. in we measures distance continue compared look levels, we to recruiting expect licensing pre-COVID see

a our view will quarter two we the rate better or take another it until have However, force. of of growth sales

for and in decline we XXXX. in negative quarter are year compared quarter, life As second X% expect to the levels elevated comparisons sales by sales be last projected to year-over-year shared the we full slightly to approximately

of strong in Preliminary very were investment projected higher approximately April. However, XXXX be XX% sales are pre-pandemic products to than levels. sales

resurgence sales second expect growth continue, will meet the We rate first to Investment's momentum quarter's or barring growth exceed year-over-year market quarter uncertainty. of product for of a XX%. believe We

it over to turn I'll Alison. Now

Alison Rand

this Thank the results $XX slide quarter operating term Starting first the more Term on impact XX% seven. on you, $XXX have level increased policy The did sales everyone. and margin demand in COVID pre-tax the driving million of of with million for income offset of these a and good with the was X%. Operating in persistency. revenues with XXXX. impact significant benefits claims our Glenn, year-over-year, continues strong quarter protection Life significant morning, products, not quarter and year growth XX% to results segment of COVID life declining XX.X% period. prior death than in Term Life from to

growth year-over-year million sales pace. growth strong income the and double-digit of policy As $X continued at premium and during Glenn growth The over added the retention to direct sales adjusted noted compounding to moved XX% last earlier, quarter. year pre-tax

Looking lower at closely more and strong year-over-year. persistency, retention lapse we about see to XX% policy aggregate rates continue

persistency We levels to very XXXX. strong to at to continue sustainable seen continue believe normalize more XXXX. persistencies, to see saw quarter first persistencies partially of duration prior to durations, lower half unprecedented duration of first experiencing durations other XXXX were in of increases the will not than levels year-over-year the persistency the already second onset policy First the COVID. although due Other we in the strong throughout

normalization at ultimately the retention levels However, it settle. will or which occur is to difficult predict where pace will

income. quarter, For million contribution the $X $X million and of reserve $XX of DAC increases persistency first net higher pre-tax to higher in lower amortization resulted benefit million for

start February Combined, in then period the first of on reinsurance incremental claims to million with to consistent with attributable during every net half which XX,XXX of Turning deaths. next deaths. the net the were is at a pre-tax in to million quarter. resulted recognized COVID million quarter, of deaths of We for population March. of approximately sales, the in and previous Claims persistency higher impact the experience with in projections claims in again reduction line during $XX income first the declining and excess January quarter's $X our much claims occurring in COVID-related $X and

Moving convention increased insurance in was to to restrictions that its to below COVID-related the next from expenses. during nondeferred related ratio normal business. costs, incentives compared expense the first at the Conversely, average quarter various year-over-year licensing which costs in-person to and X% X.X% year. year's Insurance higher quarter. offset last year-over-year meetings commissions Expenses that to historical impact to to remained enhanced field growth remains postponed absence biannual the our due Term higher Life due offset commissions in unchanged of

tapering as discussed. more on continue to year expect decline, rates infection year Glenn to to Persistency grow Adjusted full progresses. direct are levels Looking as as XX% earlier. forward, previously growth moderate, vaccinated sales with basis rates and normalize a as premiums are expected people described around will the we

XXXX Our typical quarters and the to is projection in to based DAC looks two will levels come will at million population over This U.S. the that next on XX% XX% by a XX,XXX estimate revert $X and ratio best like Canada. pre-COVID year-end. approximately estimate with quarter COVID-related from quarter-to-quarter. seasonality for persistency We second deaths claims between levels continue the of and down

we pace and On To the for extent decline, we XX% full continue to basis, benefits deaths COVID ratio expect in its range year expect neutralize later year. range XX% historical anticipate, to the be to the revert the XXXX. claims in to a life COVID-related term and between expect Assuming we margins the and XXXX. that mid-XX% the XX% at benefits year to we be ratio XX% for threats between full

drove million Operating XX%. XX%, Turning $XX XX%. pre-tax income funds $XXX Sales-based year-over-year sales eight. revenues mutual strong to the increased ISP increase. revenue-generating segment were the revenues slide sales Very growth of on XX% million while of was of and

However, have mutual as revenue higher sales-based well proportion our as average which rate. commission relative lower rate revenue. in growth Sales-based the on with to increased funds lower dollar associated trades, due to a commission other earned of investment the expenses a correlation also large products lagged sales

in with Asset-based revenues average in increase asset line client value. XX%, increased the

market segregated expense pace less period performance Canadian Expenses and Canadian-segregated the which larger of during favorable asset-based revenues slightly a was for the amortization by amortization funds negative than performance, at impact unfavorable market a are grew fund higher last which investment quarter Asset-based had fund as insurance, experienced much first to commissions experienced a products. than year's year-over-year compared our slightly result reflected this performance commission than as Canadian period's as captured other $X funds, DAC segregated DAC million rather quarter. lower commissions. the approximately

The Moving over quarter. next slide first last loss nine. by operating year's Other and Corporate increased on Distributed Products to segment $X.X our million

another expenses, education, year-over-year. segment combined approximately million sales. yields, of the Partly employee-related line million technology discontinued million, operating these entertainment commissions $X investment Benefits in-person and revenue program's to first million about following that such $XX ancillary year-over-year, higher in in million the whereas resulted Slide expenses commissions year-over-year. Net about expenses million and million lower offsetting spend, reinsurance investment quarters. employee-related few mortgage million rising Growth year due during $X in were with was a $X past to this prior loss being million $X.X or a support $X.X $XXX net associated expenses life the the the X% by restrictions lower costs technology on expenses more higher Consolidated were about with loan travel were On term due other allocated business, $X as operating and the increased business the increased growth business. to higher costs, in insurance over licensing $X with being and side, COVID-related and increased portfolio meetings and expenses strong expenses lower. and by recognized income million largely period. was quarter, to spending allowance and XX $X.X rollout segment the on costs product Mortgage-related on income in

second travel the the quarter, these these year both during restrictions, the as restrictions year. costs For period increase reflect and year and the prior current lift expect to expenses we

which than insurance the $XXX are to higher acquisition year quarter or period, be expenses with is of and associated prior the excluding other million any cost Second operating expected e-TeleQuote. XX%

Slide to Turning XX.

cash year-over-year. expect Our company and $XX to market increase to assets level assets be invested the a and during quarters. of we industries holding invested XX, income million portfolio about assets $X Immediately unrealized well holding XXXX, million building the compared the above e-TeleQuote in lower gain invested On the issuers. at consolidated was then reflecting The few to and to company over cash of investment close at more closing, remains $XXX million $XXX December to we $XXX the was Slide of end March the rates next has million at after growing acquisition, net across million the fund quarter. around basis, July been diversified million end X. expect normal a which $XXX On

plan announced, we do previously in XXXX. to we As repurchase shares not any

confident our in both growth fund repurchases capital resume cash us to continue needs. are allow and We to strong generation XXXX will e-TeleQuote's our and business

for plan this company. fund for to and the questions that, business We growth XXXX next I be we continue to in $XX XXX% million level up flows and expect of ordinary end the holding negative With quarter, remain few for remain the range at the around cash we million first negative the years. Life's the year e-TeleQuote's $XX ratio Primerica to and estimated to operator, capital dividends line risk-based pay was through to open rest as of the annually the

Operator

[Operator William Blair. Schmitt of Your question the first from with comes Jeff Instructions] line

Jeff Schmitt

Hi extended a pursue either there mentioned And dropped quarter? permanent you Good license. in in with drop differential? off X,XXX that at Is change those Or estimate temporary wouldn't is that thought to that quarter. individuals all? the licenses Did all you'd the Last X,XXX quarter, Morning. a or this

Glenn Williams

issue part quarter. more continuing on just we they're and that new we react. kind there a process This started. dependent of the had number renewals, that on number how last just they it's that we -- the path it states small of But there slope the deadline Whether open that their are that anticipated. slope, states out temporary negligible. when licenses, extended It's glide what of hanging longest, we kind number is states quickly small based about vast end a happening the -- just is very -- have It almost that's quarter. at process described of No, are the out continuing but the drop an of to talked a on of is that's last the is majority of of of

Jeff Schmitt

Okay.

Okay. with It moving of in line is kind expectations. your

Okay.

Glenn Williams

Exactly. Yes.

Jeff Schmitt

margins, to the looking XX.X%. ISP be then they at good And continue at really

think I just that years. is I your there? know higher while the XX in have Could base? speak expenses technology, first highest quarter other mean the held to leveraging outlook it's that you now. asset flat result for operating I

first I think they were flat flat the in quarter. XXXX. They're again in

expenses held other that that? outlook are could driving investments there? or maybe that's what speak you that your driving So to maybe And being in off -- operating

Glenn Williams

Yes.

driven very improvements, I segment the out, think have as experienced our seen our expense at because, we that in it's a and operating we investments costs change little technology you a healthy some differently it in maturing ISP as business growing by other -- and point growing it's that rate.

seeing so a there. are bit that little And -- of we concentrated you

Alison Rand

record reductions of hit, years, who and keeping of about, resulted the for years. think operating over Yes. out management, renegotiated under And reduced with has we it's with to we with normalized that but We've one like, us thing expenses, partners, breakpoints obviously, several of last this the several to our and several year, people which some lower business operate. significant help our last mentioned I've our contracts of saw pretty the which also assets over the also size in certain all cost the which

that say our changed. be of I that business philosophy toward wouldn't making in you're what could So from has anything investments the standpoint seeing. that

Jeff Schmitt

Okay.

speed. that’s Okay, Thank you answering for helpful. being

Glenn Williams

Glad to help.

Operator

next Hughes Your Instructions] line of [Operator the question Mark Truist. with from comes

Glenn Williams

Mark. morning Good

Mark Hughes

or QX All. little Good color early give life morning term thoughts late, did bit Glenn, any came in Good Morning I about but you a on sales?

Glenn Williams

in second talked and discussion, quarter the expect some. to we We are the full decline sales that start quarter's previous to going as see do discussed did. fact to year we we Yes, about that

we so probably the think elevated of X% XXXX. is full And year levels a than the at lower

year. of we will through of the that then So the of it the second evidence start of quarter to some the see half and end last kind by continue

Alison Rand

also language, you commented interesting we pre-COVID. were is that going an missed just thing we're he above feel to like if where do where But Yes. we that was on, the land

-- So that's I think

Glenn Williams

levels. pre-COVID About X%, XX% above

Mark Hughes

of you quarter? of properly? I And starting the You second said hear decline Yes. maybe end did the at kind the

Glenn Williams

exactly. Yes,

You quarter to end year's last start second in elevated anticipating report see of of than then you'd lower about a we're the evidence it the year, what by be X% at now itself. course the COVID levels. And is

Mark Hughes

ETQ million full Yes. Yes. year? -- color the about anticipated I for guess give operating how acquisition How Alison, about on any aside, expenses you for said did XQ. the you $XXX expenses do full the we year? think think I the in

Alison Rand

below quarter, We last in be some gave Those to slightly expectation believe timing. changed. numbers came have first it absolutely I in estimates Yes. just quarter. the but not

So overall, or I that to anything will haven't again, color operated unchanged. last at regard costs year associated with with that transaction this And side itself. revenue out either are provided the expense time. we the to remains regard be some deal with that in full the on obviously, quarter e-TeleQuote But layered

Mark Hughes

up for July for on Okay. business. year, -- strong think based a engaged is you period And them whatever this your you force obviously e-TeleQuote? doing then about sales force, given year for I you How gearing this going we close, groundwork the sales prepping are be are might to When be fourth the that know now? is the quarter

Glenn Williams

Mark, aware, end the Right. the enrollment of Well, uniqueness we're of period the year. the that certainly of at happens

being we'd plan pilot that's the good be, little enrollment delivery. and how ready. can like for the much the transaction a want to to sure the around process in business we that much not the of advantage success, game be do our to success new The time operating realistic are -- But And doesn't from line transaction, impact our assuming out of negatively as And we be that operates have annual we our anything want take about we agreement we in there's business our time get to to period. so as do closing. having And separately is lines. in we distribution that that current it the a simple make position of a where can rest we're get

moderate a bit assess to those we be to a considerations. expectation look And based can experience. might we when we in business, an to we trying just we are annual So get where on going first successful But as little once better try we're projecting at certain some how then point to two we'll future have years, that during the be into enrollment forward we maturity period. have that year's

So can of we our and have. preparing it time of we're we're it, in get also the expectations aware for but with done much how realistic we

Mark Hughes

you. Thank Understood.

Glenn Williams

Glad to help.

Operator

today’s questions. At this time no conclude there conference. are That does further

You disconnect you at this for participating. time. Thank

Primerica (PRI) 8 May 212021 Q1 Earnings call transcript