Primerica, the Duluth, Georgia-based direct seller of financial services, recently announced financial results for the quarter ended September 30, 2017. Both total revenue and adjusted operating revenue increased 11 percent year-over-year to $427.3 million. Net income and adjusted net operating income both grew 15 percent to $66.6 million compared with the prior year period. During the quarter, earnings growth and ongoing share repurchases drove both EPS and adjusted operating EPS to $1.46, increasing 19 percent compared to the third quarter a year ago. ROE expanded to 20.9 percent and adjusted operating ROAE expanded to 21.7 percent in the period.
“In the third quarter we continued to build on our strong foundation and overall business momentum to deliver solid results,” said CEO Glenn Williams. “The outstanding performance of our salesforce leadership produced an 8 percent increase in the size of our life insurance salesforce along with 4 percent growth in life insurance policies issued and 7 percent increase in Investment and Savings (ISP) product sales. Income before income taxes grew 13 percent with Term Life and ISP segments’ income before income taxes increasing 14 percent and 9 percent, respectively, year-over-year. Solid earnings and ongoing share repurchases contributed to a 19 percent increase in EPS year-over-year and 20.9 percent ROE in the third quarter. We are pleased with these results and continue to be well positioned to deliver meaningful value to our stakeholders in the future.”
Life Insurance Licensed Salesforce. Strong recruiting and licensing trends in recent quarters resulted in 8 percent year-over-year growth in the life insurance licensed salesforce to 124,436 representatives at the end of the third quarter. New recruits increased 22 percent versus the prior year quarter, including approximately 17,000 recruits from hurricane-affected areas whose Independent Business Application fees were waived during September. Strong recruiting levels following the company’s June biennial convention drove 9 percent growth in new life insurance licenses year-over-year. On a sequential quarter basis, the size of the life insurance salesforce increased 2 percent versus the second quarter.
Term Life Insurance. In the third quarter of 2017, Term Life insurance policies issued increased 4 percent year-over-year driven by growth in the life insurance licensed salesforce. Results were somewhat impacted by lower production in hurricane-affected areas. Term Life productivity in the third quarter was 0.21 versus 0.22 policies per life insurance licensed representative per month in the prior year period. Term Life revenues increased to $256.2 million driven by a 15 percent increase in net premiums compared with the third quarter a year ago. Income before income taxes in the segment increased 14 percent to $66.5 million year-over-year. During the quarter, normal claims volatility positively impacted benefits and claims by approximately $2 million.
Investment and Savings Products. In the third quarter, ISP revenue increased 8 percent to $140.1 million and income before income taxes grew 9 percent to $39.1 million compared with the year ago period. Product sales grew 7 percent year-over-year driven by a 10 percent increase in retail mutual fund sales as well as a 132 percent increase in managed account sales following the launch of the new Lifetime Investments Platform in June 2017. Managed accounts generate asset-based revenues and will provide for earnings in future periods. Annuities sales continued to be pressured in the quarter, declining 13 percent versus the year ago period. Net flows were positive $174 million and average client asset values increased 14 percent to $57.7 billion at the end of the third quarter. Account-based revenue grew 16 percent year-over-year largely related to a change made in the account-based fee structure in the fourth quarter of 2016 as well as a higher number of accounts subject to the fee. Canadian segregated funds DAC amortization was $1.1 million higher than a year ago, mostly reflecting the deceleration of DAC amortization in the third quarter of 2016.
To read the full Primerica Q3 2017 financial report, click here.