Daniel Bergman

Dan Bergman requested an update on Primerica's term life sales initiatives, such as product changes, faster underwriting, and sales force training, and when their impact on sales trajectory might be expected. He also asked about the confidence in achieving 1% sales force growth in 2026, following flat growth, and which drivers (recruiting, licensing, or retention) present the biggest opportunity.

Answer

Glenn Williams (CEO) explained that initiatives involve adapting messaging and training to help representatives navigate tight budgets and capitalize on anticipated improvements in middle-income purchasing power, particularly around tax refund season. He noted it's too early to measure the full impact but expects a positive contribution. He expressed confidence in continued sales force growth, citing a large untapped market and the attractiveness of Primerica's opportunity, with stable attrition rates and increased market certainty aiding growth.

Dan Bergman asked for an update on Primerica's term life sales initiatives, including product changes, faster underwriting, and sales force training, and when these might impact sales trajectory. He also questioned the confidence in achieving 1% sales force growth in 2026 after flat growth last year, and whether higher growth is expected beyond this year, identifying key drivers like recruiting, licensing, or retention.

Answer

CEO Glenn Williams linked the sales initiatives to adapting messaging and training for evolving economic conditions, now focusing on helping families leverage improving purchasing power, particularly around tax refunds. He noted it's too early to measure the full impact but anticipates a positive effect. Regarding sales force growth, Williams expressed confidence in continued expansion, despite the challenge of growing a large base, citing the attractiveness of Primerica's opportunity and stable attrition rates. He acknowledged the extra effort needed for 2026 renewals from 2024's record licensing but expects to return to a growth track.

Daniel Bergman of TD Cowen inquired about the dynamics within ISP sales, particularly the mix shift towards variable annuities versus flatter mutual fund sales, and whether this is a temporary or long-term trend. He also asked for an outlook on the growing mortgage business.

Answer

CEO Glenn Williams attributed the shift to a long-term demographic tailwind of an aging population and a short-term desire for guarantees amid market volatility. He expressed optimism for the mortgage business, noting its potential for significant growth, especially if interest rates decline.

Daniel Bergman requested more detail on Term Life lapse rates across different vintages and asked about the sustainability of ISP sales levels given the full-year guidance implies flattish growth ahead.

Answer

Executive Nicole Russell explained that while overall lapse rates remain elevated compared to pre-pandemic levels, they have stabilized in recent quarters, and policies from the last year are lapsing as expected. She confirmed this is factored into guidance. CEO Glenn Williams addressed the ISP outlook, stating that while it would take a more severe market drop to cause a material decline, it is difficult to quantify sensitivities, and the guidance reflects tough comparisons and current uncertainty.

Daniel Bergman asked about the sustainability of increased capital returns, given the higher share repurchase and dividend, and inquired if the guided increase in 2025 technology spending represents a new run rate.

Answer

CFO Tracy Tan affirmed the sustainability of capital returns, stating the business model consistently generates cash to support a return of around 80% of earnings. She confirmed no unusual items in 2024 statutory earnings. Regarding technology, she positioned the higher spend as a strategic and ongoing investment in organic growth, productivity, and client experience, rather than a one-time expense.

Daniel Bergman of TD Securities inquired about the primary drivers of the better-than-expected sales force growth, its future sustainability, and the factors behind the recent decline in the ISP redemption rate.

Answer

CEO Glenn Williams attributed the robust sales force growth to strong recruiting, enhanced field leadership focus, and improved processes, noting he expects the momentum to continue. Regarding ISP redemptions, he explained that while long-term pressures exist from an aging client base, the recent quarterly dip is likely noise and not indicative of a new sustainable trend.

Daniel Bergman inquired about the drivers behind the quarter-over-quarter increase in base yield for the Group Retirement segment and the progress of asset portfolio optimization. He also asked for an update on market demand and the competitive environment for Individual Retirement products amid recent market volatility.

Answer

CEO Kevin Hogan and CFO Elias Habayeb explained that the yield improvement resulted from opportunistic asset repositioning, a part of their regular active portfolio management. They reiterated the long-term strategy for Group Retirement is a transition from spread to fee-based income. For Individual Retirement, Hogan confirmed that demand for annuities remains robust, supported by demographic trends and market uncertainty, and that the company continues to achieve attractive new business margins.

Daniel Bergman of TD Cowen asked for the outlook on alternative investment returns for Q4 and 2025, and for more color on the favorable mortality experience in the Life Insurance segment.

Answer

CFO Elias Habayeb projected Q4 alternative returns to be between Q2 and Q3 levels and reiterated the long-term 8-9% annual return expectation. He noted the recaptured life business has limited earnings impact and that mortality, while volatile, has been favorable to pricing. CEO Kevin Hogan added that Q3 mortality was well within expectations and the company is comfortable with its less interest-sensitive life product portfolio.

Daniel Bergman asked about the subdued premium growth in the Group Protection business and the competitive pricing environment. He also sought more color on the significant increase in variable annuity sales and the competitive landscape for those products.

Answer

CEO Ellen Cooper addressed the questions, stating that full-year Group premium growth was 3% and the company is prioritizing profitable growth and margin expansion over top-line growth. On annuities, she emphasized that Lincoln's broad product suite is a key strength, allowing it to adapt to market demand. While the strategic focus remains on growing spread-based products like RILAs and fixed annuities, variable annuities continue to be an important part of their holistic client offering.

Daniel Bergman from TD Cowen asked for an update on Lincoln's strategy for its remaining guaranteed universal life (ULSG) block, including the potential for reinsurance, and inquired about the market reception and competitive dynamics for its new RILA product.

Answer

CFO Chris Neczypor stated that while the company evaluates all options for its ULSG block, its current financial outlook does not rely on another reinsurance transaction. CEO Ellen Cooper reported that the new RILA product has been received well, driving the strongest sales in nearly two years, and noted that while the market is competitive, it is also growing.