Duluth, Georgia-based Primerica, Inc. has announced financial results for the quarter ended March 31, 2018. In the first quarter, total revenue and adjusted operating revenues each increased 14 percent to $459.9 million and $462.9 million, respectively.
Income before income taxes increased 11 percent and adjusted operating income before income taxes increased 15 percent over the prior year period. Net income grew 26 percent to $65.7 million and adjusted net operating income grew 27 percent to $66.2 million compared with the first quarter of 2017, both of which reflect the benefit of the Tax Cuts and Jobs Act of 2017 (Tax Reform).
“In the first quarter we continued to build on our strong foundation, generating 8 percent growth in the size of our life insurance licensed sales force to over 127,000 representatives and 12 percent growth in Investment and Savings Products (ISP) sales year-over-year,” said CEO Glenn Williams. “Income before income taxes grew 11 percent over the prior year period driven by increases of 22 percent and 8 percent for the Term Life and the ISP segments, respectively. Solid earnings, ongoing share repurchases and the benefit of Tax Reform contributed to the 31 percent growth in EPS year-over-year and 18.5 percent ROE in the first quarter. We are well positioned to continue delivering meaningful value to our stakeholders.”
During the first quarter, Term Life continued to show strong growth with net premiums increasing 15.5 percent year-over-year and insurance expenses benefitting from the change in Primerica Life Insurance Company’s state of domicile. Claims during the period were elevated as is often seen in the first quarter and persistency was generally in line with the prior period. Strong ISP performance was driven by 12 percent growth in total product sales and a 15 percent increase in average client asset values year-over-year.
Insurance and other operating expenses increased $14 million from the prior year period, about half of which was due to higher account-based expenses from revisions to ISP record-keeping contracts. These higher account-based expenses were offset by an associated increase in account-based revenues. Insurance and other operating expenses also increased by approximately $1.5 million for growth-related expenses and about $5 million for annual employee merit increases, equity award grants, ongoing technology spending and other expenses to support the business. Incremental spending announced in February for digital development and key constituent initiatives driven by Tax Reform was nominal in the first quarter but is still expected to be incurred during 2018.
Earnings growth, which benefited from Tax Reform as well as ongoing share repurchases, drove EPS and adjusted operating EPS to $1.46, up 31 percent, and $1.47, up 32 percent, respectively, compared to the first quarter a year ago. ROE expanded to 18.5 percent and ROAE expanded to 19.0 percent in the first quarter versus 16.9 percent and 17.5 percent, respectively, in the prior year period.
To read the full Primerica Q1 2018 report, click here.