PRI - Earnings call transcript Q2 2021

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Operator

Good morning. My name is Chad, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primerica, Inc. Q2 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers the will question-and-answer be After being today's [Operator note, is recorded. Instructions] Please event I would to Head now like of Nicole over Investor Russell, to Relations. turn the conference

your conference. You may begin

Nicole Russell

Welcome website. Thank and Relations on Call. copy to materials our you, of the today's section with Second press along are good everyone. Investor A release, Chad, earnings that Quarter to morning, call Earnings our Primerica's of relevant posted are

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

- some During no these recent update our to provision call, risks expressed in the actual obligation the accordance reflect with may the statements We materially refer those release or new filed of our Form modified XX-Q assures for differ contain of forward-looking results Form Act. implied. list statements you as dated assumes XXXX, and our comments most could by from cause Reform to Securities to press uncertainties X, harbor that safe Litigation a information. X-K with XX-K company our to subsequent July and of The

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

Glenn Williams

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

Leveraging share our model, and term has been strong, of of reflecting $XXX adjusted increased last very same quarter Investment progress $X.XX which the XX.X% positioned the quarter COVID to demand by to the Starting security, per life segments. on meet financial we to also year. ROAE middle are while operating fundamental of to our and business diluted XXXX, of the XX%. XX% X. market's revenues second increased operating strengths for results compared both revealed income in our Savings Slide compared million during pandemic. Adjusted quarter were increased the Second XX.X% continued rose

Slide to quarter. varying the Year-over-year recruits in of difficult each the to quarter. of are comparisons XX,XXX nearly because during We new evaluate Turning we impact tailored incentives the period attracted each deployed X. the pandemic recruiting and

this we are business beyond using right believe Looking and quarter, drive to incentives to obtained individuals results. More increase our are new XX,XXX appeal to license we by that messaging life insurance we during of than mix continue the of a the the noise, and recruiting those proposition. encouraged and

We available. although some process still some in also have over is widely few remain are months. licensing to available longer processing taking generally backlogs, remote the there Testing and and improvement have in-person the processing up usual. more windows called classes both on seen in many last today than options where pockets candidates access have pre-licensing states now Licensing flexibility

hesitancy success about We candidates in in-person there some assembling rate but attend see to continue for classes, to classrooms. is higher choosing a

of Social eased, and social prioritizing licensing people recruits new recruits final distraction provide engaged and resources greater been noted COVID and coaching of assist has to on Since the After effective most over As to licensed. licensing. our We focused candidates. activities getting of a travel to the the prolonged on some are of the beginning message distancing we path the year, degree measures new lockdown, life period among a pursuit license. our their

and total We of of support with about with obstacles process or licensing date. ended our including We either a temporary also We a license months. the to prioritization COVID XXX,XXX an renewal license credits consistent few the overcome new X,XXX with believe over quarter extended offer help individuals licenses the sales the the next growth incentive force. will on recent of and importance messaging representatives, the licenses and like

largely majority time on, age out. As these will believe licenses wears we the of

X,XXX from sales year, - underlying a end by all The all benefit sales force around our obstacles of our total for have by understanding to of to future life and the the navigate our were tools conferencing and challenges appropriate conservative that of quickly remote embracing of compared We provides of expired, normalized we licenses at a to able force XXX,XXX have over to end unique size these adapting a with these sales us web Excluding remote foundation framework to XXX,XXX and the licenses a at the presented pandemic licensed to sales growth. the more last force our numerous will work and XXXX. COVID-temp count the extended lasting expect year environment and after committed growing renewals force. remain yet representatives

evident the most is our levels. of remains are insurance for robust. value Slide strong, to Consumer Sales Turning life sentiment in also persistency X. which

Productivity and record per historical quarter However, finding individuals, per grew life on to outstanding month quarter, we that clients competes amount figure Nonetheless, is $XXX nearly face new quarter in XX,XXX our yet at during issued normal total activities, last urgency also insurance are everyday levels by policy resuming insurance above reps, range a with standards. focused billion force policies both coverage. end. slightly life we which are their remains the below some that year's X.XX and at to representative license second obtain historical

last levels. Looking we see to X% elevated project trends sales life normalizing, ahead, as full we versus approximately year-over-year decline year's

a investors' year Turning and impact remain and We unforeseen period confidence well the Canada decisions solid asset managed the level an This billion first values and first net to during We mutual results. of and prior of U.S. investors' the the strong for to market the $XX a with a slightly our the Net rates. to sales progress $X.X increase function steady quarter. and demand markets continue sales. year-over-year, XX% client ended sales months. deliberate from the continue both of levels of invested. XX inflows of across over industry billion $X.X efforts segment quarter inflows year's quarter sentiment, $X.X above and level funds, our net including and product last billion contribute equity strong negative on drive U.S. XX% $X sustained review expect time all inflows below the We're the at in twice XXXX. Sales help accounts. annuities we in to Savings range Products exceeded is X grow to new distribution XX% making with business distribution. of history last markets were the billion, investment clients and in and billion third have lines, our stay Investment Strong with third in would for redemption period to nearly versus quarter believe combining expand which investor quarter uncertainty, a mortgage in Barring our equity of to Slide

and believe of $X in million. satisfaction. positive begun client mortgage the total actively pretax half ISP We've business a life Because are year sales with to X,XXX states We we now engaged in will estimate the of recruiting, Canada. the full XX during mortgage $X business to impact, in million and the referral second business XXXX brings mortgage around do a earnings of for We about program earn representatives. license

rounds program the this which reps overall licensing Canada to require While offering, much in for clients this response smaller full-service experience. business providing our dynamics, and our similar not We're seeing representatives positive client referral and out good does provides of economics company. from the

adding about Our e-TeleQuote we're Primerica's health closed families. to acquisition for of middle-income X on excited solutions senior and financial offerings July

In between referral our clients. leveraging addition of rolling I sales process strong forward updating in coming relationships the on distribution existing the to in our force model, and e-TeleQuote's a Primerica look to out pilot progress you program, we're our quarters.

Allison. to over it turn I'll Now,

Alison Rand

our you, on Glenn, Life Starting segment and everyone. good Thank with X. morning, Slide Term

This quarter of XX% first income year and pretax revenues Segment year-over-year. were marks very both of current increased where XX% period $XXX strong prior operating million operating results $XXX rose COVID million periods. and the impacted the and

term record historically discussed, durations of retention. were which period, was As sentiment year Persistency levels. elevated Consumer the products over all be sales across improved continues slightly to elevated highly down year's levels at already from for prior favorable policy protection in reflected Glenn life last levels. as

and expectations XXX,XXX COVID-related from now. premiums $X remained claims our historically range to of $XX more million. which of contribution levels, higher $XX believe that The a about at DAC for the claims $X line while not reinsurance the claims in to about case. year Given identified to were XXXX lot XXX,XXX in The but therefore, volatility offset be excess normal partly delayed recent X million a was estimated Current with XX% experience. million rate could this million to compounding a of context, in care current benefit direct have the elevated impact higher retention lower point, prior over to XXXX levels. deaths an the the the The COVID pretax sales persistency period health the of debt. quarters in comparison COVID behavioral deaths. in in income It's than average which increased amortization quarter. this lapse the the of Canada, experience in for $X there second higher prior $X was $XX quarter lapses in million face over That our to in contribution impact for higher quarter, we was excess being by unusual compares The $XX COVID million population as baseline experience and similar fully was pretax caused the were a our which for last claims population impacted lower medical growth We and in XX% was net of drove per million higher contribution discussion year-over-year, claims The million, $X historical claims attributable quarter in which million adjusted million by million has the million $X XX% $X incurred coverage activity. five of reserves in to This additional was was claims and news by million. quarter. for an $X crisis, increase had not period to of adding deaths XXXX. COVID million said, lowered than were quarter. the total net retained The XXXX us policy sustained in And year last income year's lower claims $XX per

We virus COVID-related of level are deaths. The level their efficacy experience for our of and monitor strains the key continue against emerging ongoing vaccinations determining of to any the trends. to

population deaths, quarter, for Looking XXX Canada. the claims in based we an deaths the XX,XXX in COVID including million at third estimate estimated quarter on $X

We expect me, later lapses XXXX. to XXXX in normalizing - excuse begin

the prior we a in absorption. increase a were see we to and lower direct However, being resulting pre-COVID they improvement yet the pre-COVID cost to that pandemic. quarter remains XXX as levels. in XX be levels. fixed premiums difficult would is year benefit will persistency ratio the X.X% have where expense adjusted than to to likely higher margins would basis DAC greater in compared led period higher favorable to improvement permanent such in movement If the XX% which X.X% historical below in average Insurance see the Any improvement and from ratio to predict persistency to ratio the in its extent range, during pre-COVID to margin, it the remained prior being points at from direction,

an job revenue and dollar continued the XX% of are line in greater X. lower to have which in turnover million boomers rate. large was $XX to Glenn over coming growth deciding than number revenues income Operating trades, to asset last the The year. discussed from and which pretax and year-over-year sales, the of dollar in XX%. plan commission increased reflect due increase large million strong rollovers on a the sales generating baby somewhat revenues retire. significant was segment These comparisons lower Many with XX% trades of a increase of Slide Turning retirement sales on base appreciation the ISP earlier $XXX

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

to expenses client value. amortization based by commission the with asset-based DAC Other revenue. fund expenses on at a was but driven was the correction segregated and line rate, quarter that second grew by normal quarter due prior largely than sales associated the run of higher million in market XXXX. operating XX%, asset fees for the during year Our Canadian $X.X a significant occurred increased

a by higher $X.X change Slide of $X acquisition million as e-TeleQuote. technology-related on and the incurred Corporate during adjusted operating loss of our around year segment compared the The as net investment the million to that higher Products well block to costs million $X.X a of Life discontinued transaction-related declined Other support prior employee of million million the quarter Distributed Allocated by next yield excluding growth income X. Moving improved and increased the results reflects result The expenses the to higher $X lower asset overall in business Term due with the year-over-year low as largely in $X.X segment to driven persistency. portfolio. rate allocation by business, environment interest on invested segment reserves to along on a and in

second expectations million expanded are other and including the $X.X increase Primerica expenses rising growth income other existing including added $XX segments net insurance was sourced health, be from driven will next in operating businesses. the distribution will our our We pretax million to expenses associated XX% year. higher quarter, were prior on with line in revenues that and the XX with insurance Our Medicare-related be largely four disclosures generated and prior business to expenses our quarter, by over Slide the million or growing $XXX operating to period. sales senior third mortgage Consolidated a by by approximately policies segments: million Beginning earnings during anticipate quarter year-over-year. e-TeleQuote, of during X XX% quarter capture year insurance than in which the labs. The $XXX or

from Health are our e-TeleQuote to transaction-related continue as certain the adjustments costs we specific include costs, in costs and nature operating shown e-TeleQuote view Other to fees close the to of transaction, recognized the purchase which that ongoing are expenses operating remove costs the onetime in purchase be that for that is into results. and to to our as will in integrating segment. nature intent necessary These onetime Our Senior us integration-related assist organization accounting. other items

have RBC unrealized across Turning reporting. invested XX on as of by NAIC $XX be credit declined factors used our ratio high and sectors at XX. was from be factors, adopted require million the in for of spreads Modeling significant quality portfolio points. tightened. basis RBC to go The believe XXXX to made of $XXX will that well end June is Slide reduced The June portfolio The easy and calculation to approximately up asset this recently rates We to the March of diversified using invested year-end new asset into our bond gain at effect bond XX our we small XX million, and portfolio. the not our ratio remains end thing enough to changes issuers.

holding anticipation the company July our the following we and to the the of XX, Life With capital at holding and remain June and ordinary risk-based the new was quarter, e-TeleQuote facility. dividends company. draw I as against about estimated bond ratio credit end to will the the XX liquidity America $XXX $XXX is the Holding XXX% take year XXX% the that, second million growth On reflecting million. in of buildup for the above includes fund X, we open acquisition With Immediately business $XXX of continue factors, at plan Slide to line-up company rest was questions. closing for the million on liquidity approximately revolving

Operator

will [Operator And Instructions] Ryan KBW. Krueger the from with be first question

Ryan Krueger

in Can any of around think the how you provide bit there's And the initial I'll quite earnings start a about with to also business. know e-TeleQuote. I I guess, impact? guidance, seasonality

there would be also great. help any So

Alison Rand

that Yes. We, providing information. at this point, aren't

exactly correct. You're

results. strong fourth while a quarter period while enrollment will information - most annual se. quarter likely we quarter next strongest We season the provide the per Their into third annual is earnings to move not be plan quarter The do open. lease is as that quarter's

Ryan Krueger

Got it.

Okay. were any post quarter, better get it's of again? tough you And have throughout? why but then persistency, And trends even favorable on happened it the was on consistently to month month Or do persistency sure that quarter? I'm that any by thoughts throughout evaluate, saw we and there kind

Alison Rand

the favorable business the seasonality the basis, at And to you comparison recently put quarter when the is second second in pre look anyway. have quarter was both It Yes, year-over-year COVID, and - the a a using throughout the it XX% improvement. we and on both quarter. question. XXXX were strength context at in lot and periods But elevated in your first about we're a to usually last it in great same both of again, quarter, range our baseline of consistently in

just in quarter COVID. a very in down saw we what seen the last it third quite quarter end that not and further think bit were we're we frankly, they're year, still aren't quarter, And Obviously, the last correlates we sales uptick say, and versus in comparison deterioration I rate. exceptionally it's of the highly rise where while seeing Delta we've So seeing pre quarter, from a you last the had the any sales into very to the what strong were variance. of the with at

likely end to and now, as would year, but very right of elevated to and land COVID it year, for well. back and favorable a most kind be I To going So, probably me itself of the earnings now, may any had quite remainder is to like not to of sales ago. to seeing or be still that perhaps again, we're it that even makes the be very normalization. will it's me, further Right unlikely of than to it not the think post the in our off of that pushed point feel the pre-COVID it's normalization by a anticipated month even continue I as levels as highly will persistency get where

Ryan Krueger

lot. a thanks Great,

Operator

Hughes Truist. from from The next comes question Mark

Glenn Williams

Mark. morning, Good

Mark Hughes

you have Glenn, how historic the below licensed. half? kind levels? talked been about quite second - And diligent think as of are effect that extending is going the talk getting be think you do in to about into Hello not those you Could recruits pull-through you rates do

Glenn Williams

pull-through I effect persistency able finally, we're Mark, of lot strength Yes, pandemic. on so their that licensing, of created time. And then it's and distraction in kind in I do to limited moving our able is being in referenced, comfortable that referenced And Sales very long. we've activities attributable But of of from and for doing impacted disconnect course, also what about, this eased has a Delta have is most some. a see been that prepared they're a think seeing the of I And the when together lot of my have of were of strength that remarks traveling people the got - variant. people life the believe probably felt Alison difference could just is a rate been the as persistency. They bit remained through in the close haven't little and they the that mentioned things some just the about that lockdowns as describing the about a out very we of ended strong. to fact Alison you're people between and just as sales distraction factor, long more

an live the states I people factor. of real with on pull-through backlogs rate classrooms It And analysis and a in be so yet is licensing more lot our distraction And getting way the people. that a aren't still But They appear continues in just a as to through through in other someone comfortable online course. our by preparation. distraction stated, through effective exam be only to licensing. some get some than effective to hampered creates most not recruit effect

fourth going pull-through. overcome got probably the on is third of and the resource so, to of create in And a quarter, that's through available drag added every trying into together quarter. kind we've quarter, that to created to deck going continue We all even maybe positives. certainly offsetting the third continue estimate It's our although probably against that

Mark Hughes

Understood. How in third look how about, the early is recruiting quarter?

Glenn Williams

And recruiting. as We're the are normalizing. very things quarter said with second again, pleased, we

in like before. You'll our environment all the existed about quarter a as second recall how an environment business, We year. very in were began that of last this of really impact having concerned might remote never

we threw it thrived in positives. And so of that kind own it its perspective. had found out incentive an from the sink And then actually of the and we set we remote kitchen at environment,

we positives this because early back double year. pulling so, of last them end the and there some And started some comparisons some at pull now tough back on the had year, to last beginning now. the we're on of implemented year, We incentives we of

So, normalize. you're to to recruiting going think I continue see

year If during zoomed a XX,XXX. you quarter, we up period, last look people do about XXXX that back XX,XXX to about the month 'XX. And a and recruiting the at to XX,XXX pre-COVID way and it month backed were all last

to So, normalizing, high historically, still but expect we and it at very the throughout it's is slowly continue normalization levels that year.

Mark Hughes

Understood.

describe On existing the e-TeleQuote, going sales to how you push a not going this you're much engaged? groundwork participate, fully you making laying to or reps advantaged for Are for Are to Medicare sure the internally but are the either upcoming they be to season? of that? how I'm it, refer

Glenn Williams

Yes.

to is anticipate this people - business. it's distractions it's how businesses It's to teach very We our and hard a what our should learning kind of group to to system, got and around are each. business. unintended But We've get so how to - primary that as of learn quickly it do simple, might a we've practice the at they'll and got deliberate. Primerica, starting be create referral easy historical other curve to consequences we're

kind We're examining about created. we've slowly. We the through engaged it a do moving we goes and determine to one how group referrals of passed we're already system the had as force have to have our So, some from sales process each pretty e-TeleQuote. feel

have full that toe got activity season, we So, water be a we in enrollment probably quarter. the right both will feet the by now. upcoming We this in just time. at at have some by will We but force fourth

report businesses, great has quarter end more are not and to current We're create in seasons we on be the pace, able going upcoming in positive in the long-term at There'll come future engaged season. it going than we're be rush feel process be for a don't we so other momentum sacrifice the a our moving but this to make that reasonable and about we time nor And impact But end our we important. rather by years in of by progress should will to the deliberately how just year next that along of because are it. to move recklessly. we've

Mark Hughes

Okay. you And a a talked what XX% to to sales, likewise in mix got then, quarter about - similar you've annuities mutual in the pretty this of ISP QX? pretty balance XX% increase and seemed funds good

Glenn Williams

Yes.

this all We and across shift during product aren't countries It experienced. the is explosive that product board lines. a in seeing we growth across big in both

So, difference. board. we're close across product fluctuation it's no one maybe real not the should real pretty the same any growing anticipating between another, stay normal to It to from shift but products,

Mark Hughes

Thank much. you very

Glenn Williams

Mark. you, Thank

Operator

for Pramerica our question-and-answer you and concludes gentlemen, call. Call. joining concludes and this QX session, Earnings that Conference Inc.'s Ladies today's Thank Results

You now Take lines. disconnect care. may your

Primerica (PRI) 6 Aug 212021 Q2 Earnings call transcript