Primerica - Earnings Call - Q1 2025
May 8, 2025
Executive Summary
- Q1 2025 delivered broad-based strength: adjusted EPS of $5.02 grew 20% y/y and GAAP diluted EPS of $5.05 grew 19% y/y, driven by record ISP sales and steady Term Life performance. Versus S&P Global consensus, PRI posted a beat on EPS ($5.02 vs $4.79*) and revenue ($804.8M vs $783.9M*) as ISP momentum outpaced expectations and Term Life remained stable (see Estimates Context).
- Distribution and ISP were standouts: life-licensed sales force rose 7% y/y to 152,167; ISP product sales hit a record $3.6B (+28% y/y) and net inflows reached $839M, with average client assets up 14% y/y to $113B.
- Term Life metrics were steady: benefits & claims ratio 58.2%, DAC+commission 12.0%, insurance expense ratio 7.7%, and operating margin 22.1%—all roughly in line with the prior year.
- Capital deployment remained robust: PRI repurchased $118M of stock and declared a $1.04 dividend; RBC improved to ~470% from ~430% at 4Q, underscoring balance sheet strength. Management reiterated FY25 Term Life and expense outlooks, but flagged April moderation in investment activity amid macro uncertainty—an important near‑term stock narrative catalyst.
What Went Well and What Went Wrong
-
What Went Well
- Record ISP performance and strong client asset trends: “Total [ISP] product sales during the first quarter of 2025 reached $3.6 billion, a 28% increase… Net inflows were $839 million… Average client asset values were up 14% year-over-year”.
- Consistent Term Life margins: benefits & claims 58.2%, DAC+commission 12.0%, insurance expense 7.7%, operating margin 22.1%—all stable vs. prior year.
- Capital strength and returns: $118M buybacks, dividend of $1.04, and RBC ~470% at quarter‑end; CFO emphasized “significant deployable capital… and… ability to sustain capital strength”.
-
What Went Wrong
- Softer recruiting/licensing vs. 2024 comps: recruits fell 9% y/y and new life-licensed reps decreased 5% y/y as economic uncertainty weighed on activity.
- April moderation in investment sales momentum: management noted a “wait‑and‑see” client attitude amid volatility and macro uncertainty, tempering the strong Q1 ISP cadence.
- Life productivity slightly below historical range (0.19 vs 0.20–0.24): cost‑of‑living pressures on middle‑income families continue to be a headwind for new policy sales productivity.
Transcript
Operator (participant)
Greetings and welcome to Primerica's First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Nicole Russell, SVP, Investor Relations. Thank you. You may begin.
Nicole Russell (SVP of Investor Relations)
Thank you, operator, and good morning, everyone. Welcome to Primerica's First Quarter Earnings Call. A copy of our earnings press release issued last night, along with other materials relevant to today's call, are posted on the investor relations section of our website. Joining our call today are our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Tracy Tan. Our comments this morning may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. We assume no obligation to update these statements to reflect new information and refer you to our most recent Form 10-K filing, as may be modified by subsequent Form 10-Q, for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied. We will also reference certain non-GAAP measures, which we believe provide additional insight into the company's financial results.
Reconciliations of non-GAAP measures to their respective GAAP numbers are included in our earnings press release. I would now like to turn the call over to Glenn.
Glenn Williams (CEO)
Thank you, Nicole, and good morning, everyone. Thanks for joining us. In the first quarter of 2025, Primerica delivered strong financial results despite headwinds from external factors, including sustained cost of living pressures and heightened economic uncertainty during the quarter. Starting with a snapshot of financial results, adjusted net operating income for the quarter was $168 million, up 14% year-over-year, while diluted adjusted operating EPS increased 20% to $5.02. These results reflect the continued strength within our investment and savings product business and the steady contribution from our Term Life business during the first quarter of 2025. The predictability of our business allowed us to return a total of $153 million to stockholders during the quarter through a combination of $118 million in share repurchases and $35 million in regular dividends.
The strength of our business model, our commitment to the salesforce, and the growing need for the financial education provided by our independent sales representatives resulted in record success during 2024. Following an outstanding year, we entered 2025 with solid business fundamentals and a clear understanding of the financial pressures affecting middle-income families. The recent increase in economic uncertainty has impacted our marketplace, pressuring recruiting and Term Life Insurance sales during the first quarter, and since April, we're starting to see some resistance to investment sales momentum. Looking at distribution, we recruited a total of 100,867 individuals during the first quarter, representing a 9% decline year-over-year. Similarly, new life licenses declined 5% versus the prior year period. Both recruiting and licensing activity were softer than expected, as uncertainty appears to be contributing to greater caution in decision-making.
That said, it's important to note that both recruiting and licensing numbers are historically strong and continue to fuel growth in our salesforce. The total number of life licensed representatives grew slightly since year-end and is up 7% compared to March 2024. We remain committed to growing our salesforce and continue to expect around 3% growth during 2025. Looking at Term Life results, we issued 86,415 new Term Life policies during the first quarter, representing $28 billion in new Term Life protection for our clients, which was in line with prior year levels. Productivity at 0.19 policies per rep was just below our historical range. We believe that today's challenging environment is particularly difficult for representatives to navigate, especially those with less sales experience. Considering these dynamics, we expect 2025 full-year policies issued to be broadly in line with 2024 levels.
At quarter-end, we had a total of $957 billion of protection in place for middle-income families, and we are pleased to see that persistency has remained stable again this quarter. Turning next to the ISP segment. Total sales during the quarter were $3.6 billion, up 28% year-over-year, driven by strong demand across the board, including U.S. and Canadian mutual funds, variable annuities, and managed accounts. Net inflows for the quarter were very strong at $839 million versus $274 million in the prior year period. Client asset values ended the quarter at $110 billion, up 6% year-over-year, and down 2% during the first three months of 2025 due to negative market performance. Our securities license salesforce has done a good job keeping clients focused on their long-term goals and the importance of staying invested despite heightened market volatility.
Preliminary sales results in April, while positive, are beginning to reflect the effects of continued market volatility and broader economic uncertainty. Considering our strong outperformance during the first quarter, we continue to expect full-year sales growth in the mid to high single-digit range during 2025. Our mortgage business showed strong sales growth in both the U.S. and Canada during the first quarter of 2025. In the U.S., we had $93.5 million of closed loans, up 31%. We now have 3,269 licensed mortgage loan originators in 33 states. Our referral program in Canada had CAD 43.3 million of closed loans, up 78%. While both programs are still relatively small, we believe their importance will continue to grow over time. The resilience of our business model, demonstrated over nearly 50 years, combined with our unwavering commitment to help middle-income families achieve financial independence, are the key drivers of our success.
There will always be a need for financial education among underserved families, a group that is often overlooked by the broader financial services industry. This reality underscores the importance of our mission and the opportunity that lies ahead. We have confidence in our model and in our salesforce's ability to continue meeting the needs of the communities we serve. With that, I'll hand it over to Tracy for the financial details.
Tracy Tan (CFO)
Thank you, Glenn, and good morning, everyone. Starting with Term Life segment. Operating revenues rose 4% year-over-year to $458 million, driven by 5% growth in adjusted direct premiums. Pre-tax operating income was $147 million, up 6% compared to the first quarter of 2024. All key financial ratios were in line with our expectations and consistent with the prior year period. These included the benefits and claims ratio at 58.2%, the DAC amortization and insurance commissions ratio at 12%, the insurance expense ratio at 7.7%, and the operating margin at 22.1%. Overall, lapse remains above our long-term expectations, which we believe reflects the ongoing financial impact from higher cost of living pressure on middle-income families. Over the last two quarters, lapse trends stabilized with persistency beyond policies issued during the last year, largely in line with our long-term assumptions. We expect that overall persistency will continue to normalize over time.
Turning to mortality, as noted on a number of occasions last year, claims experience continued to trend favorably relative to expectations. Given the relatively predictable nature of our Term Life business, we reiterate our full-year 2025 outlook to be consistent for ADP growth and TP financial ratios. We expect ADP to grow around 5%, the benefits and claims ratio at around 58%, the DAC amortization and insurance commissions ratio at around 12%, and operating margin around 22%. I want to remind investors that insurance expenses are subject to some seasonal variances. I will provide additional guidance on our expectations for the second quarter on a consolidated basis in a moment. Turning next to our investment and savings product segment, operating revenues of $291 million increased 19% from the prior period, driven by both higher sales and growth in client asset values. Pre-tax income rose 24% to $81 million.
Sales-based revenues increased 25%, slightly outpacing a 22% increase in revenue-generating sales, primarily driven by strong demand for variable annuities. Asset-based revenues increased 18% year-over-year compared to a 14% increase in average client asset values, as we continue to benefit from a mix shift towards products on which we earn higher asset-based commissions, including U.S. managed accounts and Canadian mutual funds sold under the principal distributor model. Sales commissions for both sales and asset-based products increased in close correlation with revenues. The corporate and other segments incurred a pre-tax adjusted operating loss of $8 million compared to a loss of $12 million in the prior year period. The year-over-year change was driven by an increase in net investment income, primarily due to growth in the size of the portfolio. Finally, consolidated insurance and other operating expenses were $163 million, up 4% year-over-year.
The growth in expenses was primarily driven by higher variable costs associated with growth in our Term Life and ISP segments and increased employee compensation costs from annual merit increases. First-quarter expense levels were a couple of million dollars lower than planned due to timing of technology investments and other expenses. We expect these projects to ramp up in the coming months. As such, we're maintaining our full-year outlook for expenses to increase by around $40 million, or 6%-8% in 2025, with second-quarter growth consistent with our full-year guidance. Our invested asset portfolio remained well-diversified, with a duration of 5.1 years and an average quality of A. The portfolio had a net unrealized loss of $169 million at the end of March, modestly better than prior year-end, as rates generally decreased during the quarter.
We continue to believe that the remaining unrealized loss is a function of interest rates and not due to underlying credit concerns, and we have the intent and ability to hold these investments until maturity. We continue to generate significant deployable capital, reflecting the strength and consistency of our capital-light distribution model. The predictability of our cash flow is driven by our large in-force block of Term Life Insurance policies, our use of reinsurance, which substantially reduces the mortality risk exposure, and our fee-based ISP business, which requires very little capital. This model supports our ongoing commitment to returning value to stockholders while also enabling us to invest in long-term growth. Our holding company ended the quarter with $407 million in cash and invested assets. Primerica Life estimated RBC ratio was 470%.
We remain confident in our ability to sustain capital strength while supporting ongoing growth initiatives and continuing to return capital to stockholders. With that, operator, please open the line for questions.
Operator (participant)
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that you please limit yourself to one question and one follow-up question. One moment, please, for your first question. Our first questions come from the line of Ryan Krueger with KBW. Please proceed with your questions.
Glenn Williams (CEO)
Good morning, Ryan.
Ryan Krueger (Managing Director)
Hey, thanks. Good morning. My first question was on the dynamic you're seeing between Term Life sales and ISP sales. It just seems striking that you're seeing some pressures on Term Life given economic uncertainty and cost of living pressures, but then very, you know, extremely high production in ISP. What do you attribute this to?
Glenn Williams (CEO)
Yeah, Ryan, one of the beauties of our complementary business model is that our two main lines of business often react differently under the same circumstances, and that gives us a unique balance. You're right, they're pretty much at an extreme right now as we have, you know, our life insurance momentum decelerating, a very strong quarter in ISP, although we're seeing some deceleration due to the uncertainty. Cost of living, as we've talked about before, impacts our life insurance business fairly quickly because families, you know, often middle-income families, are making priority decisions on whether to buy and keep a term policy. If they have some additional disposable income, they might start a systematic investment plan, generally fairly small, and when money gets tight, those two things come into question.
The larger sale business, particularly rollover business and movement of larger blocks of money, is not impacted nearly as much by cost of living. People aren't making a rollover decision based on, you know, did the cost of gas go up this month or not. They're looking for a better investment or different features of the investment. You know, one of the things we mentioned before is our variable annuity business is particularly strong, and that's because of the guarantees. Often, there's a flight to guarantees in time of uncertainty. We are seeing some of that. The businesses do react differently, specifically to cost of living.
The uncertainty tends to be a headwind for both because when people are not sure what's about to happen, they tend to wait and see, and that can impact, you know, Term Life sales, can impact even recruiting, as we've seen, and it's beginning to slow down, you know, some of the movement of money, even the rollovers and transfers in the ISP business. You know, that said, I hope that uncertainty is, you know, can be a relatively short phenomenon if we can get some clarity and direction, you know, some decisions about, you know, are tariffs in or tariffs out, what are their impacts, and so forth. Hopefully, this is a fairly short-term dilemma that could be resolved, you know, during this year, and then we can get some more certainty and clarity going forward.
Ryan Krueger (Managing Director)
Thanks. And related follow-up, the 5%-10% ISP sales outlook for the year, that's certainly, you know, much lower than you had, you know, for the first quarter. Are you kind of assuming that there's some ongoing headwinds the rest of the year because of the volatility that we're seeing, and that's embedded in your outlook?
Glenn Williams (CEO)
Yeah, we make the outlook based primarily on today's conditions because we're not sure what might happen next. I mean, uncertainty is a word that's going to be used at a record pace, I think, this quarter by companies and others. We tend to look out. We also had extremely strong last two quarters last year, so the comparisons to try to get the same percentage growth that we saw in the first quarter result in much bigger numbers. It's the combination of the very strong finish last year and the comparison in the kind of decelerating percentages, as well as assuming that the disruption and uncertainty we're experiencing today is probably going to continue for a while. I hope it doesn't, but we make our plans assuming it will.
Ryan Krueger (Managing Director)
Makes sense. Thank you.
Glenn Williams (CEO)
Certainly.
Operator (participant)
Thank you. Our next questions come from the line of Wilma Burdis with Credit Suisse. Please proceed with your questions.
Glenn Williams (CEO)
Good morning, Wilma.
Wilma Burdis (VP)
Hey, good morning. This is a little bit of a follow-up on Ryan's question, but you've talked before about how your clients tend to be a little bit slower to react to market news. Just can you talk about how people have been thinking about things and how you're seeing that now, especially in April? Thanks.
Glenn Williams (CEO)
Yeah, we do believe, Wilma, as you point out, that in general, most of our clients react a little more slowly, particularly the middle-income clients, but even those that have fairly large assets. You know, we always teach long-term investing, you know, buy and hold. Most of our accounts by far are retirement accounts, so they have a long-term time horizon. We are not in an environment where people are moving in and out like day traders or other more frequent traders might be. I would expect our people to buy and hold and react more slowly. We do see that, but after the noise gets so loud or lasts so long, we do start to see people take a wait-and-see attitude, and that does start to slow down some of the momentum. I think it is catching up with us now.
I do think that, again, it could be short-lived if we get some clarity quickly, but we're assuming that, you know, we're going to be under the current conditions for most of this year as we make our plans going forward.
Wilma Burdis (VP)
Thank you. Can you just talk a little bit about the recruiting environment or a little bit more about the recruiting environment, especially going forward? Is there, you know, maybe a situation where the Primerica opportunity becomes more attractive as people maybe look for a little bit more income or that kind of thing? Thanks.
Glenn Williams (CEO)
Sure. As we've talked about many times before, some disruption and dissatisfaction actually helps our recruiting. When people are frustrated or they fear for job loss, about job loss and that kind of thing, they look for alternatives, and I think we've benefited from that over the last few years. We do need to remember that the uncertainty is new, but the cost of living pressures are not new. It's something that has people, the families been dealing with for a number of years. There is a point, I believe, where when you just don't know what's going to happen next, you just stop and think a little longer. That's what we believe we're seeing both on the recruiting side compared to last year.
People are just giving it a little more consideration, a little more thought, whether they're buying, if money's tight, whether they're buying a term insurance policy or if they're about to invest the effort. There's very little money, but there's tremendous effort in building a business and kind of exercising that entrepreneurial spirit. They're in a wait-and-see mode. It is possible that this could be short-lived, that clarity could come quickly, but we're assuming it lasts for some time, and that's why we've taken the edge off of some of our expectations for the year. On the other side of that is once clarity does come back, people remember the disruption, and that becomes our recruiting tailwind.
You know, when we do get some clarity, if people start feeling better, money is not quite so tight, the future direction is not quite so cloudy, we will remind people what they just went through. You do not want to experience that with no control. You want to take control of your future, and it becomes a recruiting message. We will turn positive into a negative whenever we can when it comes to delivering our message of our entrepreneurial opportunity.
Wilma Burdis (VP)
Okay. Thank you.
Glenn Williams (CEO)
Thank you.
Operator (participant)
Thank you. Our next questions come from the line of Jack Matten with BMO Capital Markets. Please proceed with your questions.
Glenn Williams (CEO)
Welcome, Jack.
Jack Matten (VP of Equity Research)
Hey. Thank you. Good morning. Just one more follow-up on the ISP growth outlook. I'm just curious, are you seeing any particular products more impacted than others? I mean, I know in recent quarters, you've been seeing a mixed shift towards more higher margin products. Just wondering how we should think about that dynamic moving forward.
Glenn Williams (CEO)
Yeah. As we're accustomed to seeing, Jack, when things get bumpy, the guarantees of variable annuities and index-linked variable annuities become very attractive. We are seeing that as sort of our lead product that we've sold for a long time, mixed shift in that direction. Our managed account business is a newer business, and it's a fast-growing product line, not just at Primerica, but in the industry. We are seeing good percentage growth in that simply because it's new, and it's a great addition to our product line. We call it new. It's been a decade, but it's newer than the other product lines. That's what we're seeing is we're seeing the faster growth in VAs because of the guarantees, and then we're seeing some fast percentage growth in our managed account because it's a newer, smaller business that's got some really great momentum.
Jack Matten (VP of Equity Research)
Got it. Thank you. Just one on capital, can you just talk about what drove the nice uptick in the RBC ratio to 470% this quarter, up from 430%, I think, last quarter? Was there anything notable going on that drove that result?
Tracy Tan (CFO)
Good morning, Jack. On the RBC ratio in our capital position, overall, our RBC ratio is a function of, you know, some of the also state regulatory requirements for where we do not allow, and sometimes we have some variation on that. Overall, we believe in having strong capital position both for our insurance businesses as well as for our overall company. When you look at the RBC ratio, obviously, there are some, you know, quarterly ups and downs variations. Overall, our line of thinking is that we need strong, you know, capital in order to support our growth, but more importantly, also have a strong rating. In the time of any sort of potential uncertainty, our capital position is very important. You also look at the, you know, the hold call capital that we have.
By and large, we do believe that given any sort of growth for the long term, as well as for facing any sort of potential downturn, we have the resiliency and the strong capital position to absorb any sort of uncertainties and downside risks.
Jack Matten (VP of Equity Research)
Thank you very much.
Operator (participant)
Thank you. Our next questions come from the line of John Barnidge with Piper Sandler. Please proceed with your questions.
Glenn Williams (CEO)
Morning, John.
John Barnidge (Managing Director)
Good morning. Appreciate the opportunity. My question here is, how do you view the health of the economy in Canada? You talked about moderation in sales in April, I believe. Is that experience any different between your U.S. business and your Canada business?
Glenn Williams (CEO)
I think, John, speaking as an expert who lived in Canada for 15 years, but I'm not really an expert, I think there are more similarities than there are differences in the countries in most questions, and I think this is one of them. I think the two economies are very similar. There's uncertainty in both, although, you know, one segment of uncertainty has been removed with the election that's done in Canada, so now there's clarity in who the leadership is. We have a great business in Canada. We've been doing business there 39 years. We have a very strong and experienced leadership team, both in our salesforce and in our corporate office. Fortunately, we're viewed by Canadians as a Canadian company since we do have the strong outpost there.
We're anticipating that the timing might be a little different in the impact of some things, but it's going to be a very similar set of dynamics. Our business in Canada generally reacts very much like our business in the U.S. You know, the two investment businesses, for example, are tracking very close to each other in growth. I would say that our distribution building and term business has been exceptionally strong this year in Canada, following a period coming out of the pandemic where Canada reacted more slowly, so they're catching up. Again, there are a handful of differences, but at the same time, we would expect the results to be similar in direction and in quantity. We're just as optimistic about the future in Canada as we are here.
John Barnidge (Managing Director)
Appreciate that answer. My follow-up question, in light of a dynamic macro environment, how do you think about your presence in the market repurchasing stock versus maybe your expectations coming into the year? Thank you.
Tracy Tan (CFO)
Good morning, John. In terms of stock purchase program, we have announced the program for 2025 at $450 million, and there's a nice healthy growth from prior year. The way we look at the repurchase program is to provide consistent, resilient, and predictable type of return on capital for our stockholders. We typically try not to plate and time the market, and we also like to be able to provide the type of strength on the ability to return based on multi-year stress test as a premise. We do not, at current point, believe there's any risk to our program that's announced for 2025, and our, you know, thesis really is to have a predictable type of pattern, which is very helpful for investors.
John Barnidge (Managing Director)
Thank you for the answers.
Glenn Williams (CEO)
All right. Thank you.
Operator (participant)
Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions.
Glenn Williams (CEO)
Good morning, Mark.
Mark Hughes (Analyst)
Good morning, Glenn. Good morning, Tracy.
Tracy Tan (CFO)
Good morning.
Mark Hughes (Analyst)
The Corporate segment doing better. It looks like just higher net investment income. Was there anything unusual in this quarter, or should that higher allocated net investment income carry through the balance of the year and help, you know, help support a better corporate expense or corporate performance?
Tracy Tan (CFO)
Yeah. Mark, our corporate C&O segment really benefited from the investment portfolio. This is really a combination result for several things. One is the growth of the portfolio itself, and that has been, you know, on a pretty healthy trajectory, you know, in the past. The second part is we have moved some of our investment, as the securities mature, into a slightly higher yielding type of investments without giving up on the conservative risk profile we have. The majority of it is really fixed income portfolio that well matches our life side of the business in terms of durations, in terms of risk profile, and we are relatively conservative. However, that being said, we are pursuing some higher yield without giving up the risk and having that good balance.
I see this as a pretty good predictable around $40 million a quarter type of, you know, up or down in that range support for our C&O segment. I also do believe that our investment portfolio, in general, is a good way of keeping our capital very strong continuously while having a very balanced and low-risk profile that supports our distribution business model and not having that being the main relying focus on our revenue.
Mark Hughes (Analyst)
When thinking about the term business, did you provide guidance? I think in the past you've talked about a growth in adjusted direct premium, for instance. Any reason to think the outlook has changed? I think the new sales, perhaps stabilizing, is a little bit different. Any updates on that, you know, those performance measures within Term Life?
Tracy Tan (CFO)
Yeah. On the Term Life AVP guidance, even though we have seen some uncertainty and there are some headwinds on the recruiting licensing side, given the large size of our in-force block, any given year of new policies and premium is a very small slice of the overall income on the revenue that we bring in from Term Life. Considering the very stable nature of that business, there's really no impact materially this year. I think our AVP guidance is going to be very consistent around 5% of a growth. Also keep in mind that when we give out our guidance for AVP, we have already considered the lapse situation. That's already been factored in all of that situation as well. It's pretty consistent.
It's a very good defense business, and you could see that given also the capital-light nature, very good defensive business in the long term.
Mark Hughes (Analyst)
Thank you for that. Maybe one more quick one, Glenn. I think you've touched on this, but the annuity sales versus the mutual funds seems like, you know, more broadly, there's been growing demand for annuities as protection products. Volatile markets make those more attractive. Do you think maybe that outperforms in this go-around relative to your earlier experience?
Glenn Williams (CEO)
I'm just thinking in comparison to earlier experience because this is a fairly common phenomenon when things get a little bumpy and uncertain. We see it in the mixed shift toward VAs. Not sure whether it'll be more extreme this time. I think it depends on how long this goes on. You know, the longer uncertainty continues, kind of the more impact it has to a certain extent, I think, on the investment side at least. So I'm not sure it's much more extreme than it has in the past. It's a pretty natural phenomenon. We expect it. We see it. But I don't think it's too much different from the past.
Mark Hughes (Analyst)
Thank you.
Glenn Williams (CEO)
Certainly.
Operator (participant)
Thank you. Our next questions come from the line of Dan Bergman with TD Cowen. Please proceed with your questions.
Glenn Williams (CEO)
Welcome, Dan.
Dan Bergman (Director of Equity Research)
Hey. Thanks. Good morning. I guess just to follow up on your prepared remarks, I wanted to see if you could give a little more detail around what you're seeing regarding lapse rates across the term book. It sounded like they stabilized overall, but any more detail around, you know, what you're seeing, any differences across vintages would be very helpful. I know it sounds like you expect normalization over time, but just given the recent uncertainty, is there a risk that this could take a step back before it gets better? Just any thoughts on the outlook, given that the uncertain environment would be much appreciated.
Tracy Tan (CFO)
Yeah. Good morning, Dan. Regarding lapse rates, the first thing I will say is that we continue to see higher lapses across multiple durations than our long-term actuarial assumptions, which was really the pre-pandemic level of lapse rates. Also be reminded that during the pandemic period, we had extraordinarily low lapse rates. Some of the elevation in the, you know, recent past since pandemic had been the runoff of those relatively uncommitted population. Our recent, within, let's say, the last year of new policies have consistent lapse rates as our expectations. Cumulatively, persistency also is in line with pre-pandemic period. This is when you consider the very low lapse and the very high lapse. Over the long haul, when you look at it cumulatively, it's still very reasonable to our expectations. The last couple of quarters, we also have seen stabilizing trends.
You know, for example, last quarter has been a decrease from the recent past. That is also a good trend that we're observing. Obviously, we're going to need to give it a little bit more time. Even with the uncertainty that is, you know, being faced by middle-income families, we are still already considering some of those higher lapses in our AVP guidance. None of that is going to be new. We obviously, over time, expect the trend to return to normal. That is really just relying on how quick the economic can return for the normalcy for the income family. We know that in past financial recession type of situation, it may take a few years for the middle-income families to get back on their feet. By and large, we've considered a lot of those higher elevations in our guidance.
We see that for the year, our AVP growth outlook remains the same. We also do believe that, you know, overall cumulative trend is within our expectations. Hope that answers your question, Dan.
Dan Bergman (Director of Equity Research)
Yeah. It's very, very helpful. Thank you. Maybe one more on the ISP business, if I could. I guess despite the market volatility, if my math is right, I think your full year guidance still implies something like flattish sales growth for the rest of the year against a pretty tough comp, given that you had nice growth in 2024. Is there any way to frame, you know, what would it take in the markets for there to be a more material decline in sales over the rest of the year? I mean, I guess that's a business that's shown some sales volatility in the past. I think, for example, in 2022, you had a drop in sales after a really strong year in 2021. How confident are you that, you know, this 2024 sales level is relatively sustainable going forward?
A little bit of a broad question, but any thoughts would be much appreciated.
Glenn Williams (CEO)
Yeah. As we kind of view how our business has been reacting, again, you know, some of these pressures that we're seeing this year or there last year, the uncertainty, I think, is new. That is what we're trying to layer on and assess. You know, we do not have an exact formula that says if the market drops 20%, here is what we would expect. That would definitely impact us. We are assuming that we, you know, get sort of a flattish market, net, net. It seems like it goes way up and goes way down from day to day or week to week. If it were, you know, down 5%, 10%, you would see more slowing of our business.
To be able to gauge that and do the math, or you've done the math for the full year in your head very well, I think. To try to give sensitivities to that is a little trickier. That is why we'll update by quarter the full year number, and then you can see what that means we're thinking for the coming quarters as you kind of back into them. We do not try to participate. It would take something more severe than what we're seeing. Exactly how to quantify that, it's pretty difficult.
Dan Bergman (Director of Equity Research)
Got it. Very helpful. Thank you.
Glenn Williams (CEO)
Sure.
Operator (participant)
Thank you. Our next questions come from the line of Suneet Kamath with Jefferies. Please proceed with your questions.
Glenn Williams (CEO)
Good morning, Suneet.
Suneet Kamath (Senior Research Analyst)
Good morning, Glenn. I wanted to go back to your prepared remarks. I think it was when you were talking about the Term Life business. I believe you used the word resistance, or we're seeing some resistance, which, you know, I don't know, to me, it sounds like a stronger word than sort of phrasing we're seeing people take a pause. I just want to make sure I'm not reading too much into that. If you could provide any color in terms of what that means, that would be helpful. Thanks.
Glenn Williams (CEO)
Yeah. This is us trying to quantify human behavior, which is a little tricky at best. You know, what we're seeing in addition to the cost of living pressures, which we have been facing for a number of years now and have successfully overcome, I think our results would have been better in past years had it not been for the cost of living pressures, but we still were able to produce some growth. Now we have the uncertainty, which creates the wait and see kind of behavior is what we believe we're seeing. You're right. How to quantify, you know, the impact of the word resistance is, but what we see is we've got a growing sales force, which means we've got new salespeople in the marketplace overcoming objections as part of what salespeople do.
This is a particularly hard objection to overcome, saying, "I'm not sure what, you know, the economic situation means for my job or for my family, and therefore, you know, check back with me next quarter or check back with me in a few weeks." Particularly hard to overcome, particularly for a brand new salesperson. You know, whether we characterized it perfectly using the word resistance, it is another objection that a salesperson has to deal with sitting down with families and helping them through the very tough process of prioritizing, you know, tight budgets. That is a little different. That is a little new. That is what we are seeing that is different this year. Again, you know, uncertainty can resolve itself with certainty, or it can resolve itself that people just get used to it and start to ignore it after a period of time.
You know, we do have some optimism that this, you know, does not go on forever, but it is a phenomenon we believe we are seeing in the numbers right now. That is how we tried to express it.
Suneet Kamath (Senior Research Analyst)
I got it. That makes sense. Resistance in terms of customers, not in terms of recruits, is kind of the message?
Glenn Williams (CEO)
Exactly. You even get, you do even get some recruits with wait and see. You know, if you're thinking about starting a new business and the effort that it takes to get a new Primerica business up off the ground, and you're not sure what the economic environment is going to be, that's hard at the best of times. It looks like, you know, if I have an opinion that for the next three months, that might be particularly hard, I might say, "Let me start later when conditions are better." You get, you know, humans are looking for a reason to procrastinate in general, and uncertainty provides a great one. It is just, it is just another, it is not the first time we've seen this. It will not be the last time.
It is just an extra dynamic to deal with in the marketplace that is relatively new this year.
Suneet Kamath (Senior Research Analyst)
That makes sense. I guess in response to Ryan's question, you talked a little bit about the complementary nature of term versus ISP and, you know, these offsets that exist. It feels like maybe as you move into 2Q, you may lose some of that just because markets were generally pretty positive in the first quarter. I just want to make sure I have that right. If that is the case, are you guys thinking about anything that you might want to do on the cost side or anything like that, or is it sort of too early to kind of take those steps? Thanks.
Glenn Williams (CEO)
Sure. On the ISP side, we had a very strong April, you know, not at the percentage growth that we reported in the first quarter, but still significant growth. We are assuming that momentum continues for some period of time. It does not just turn on a dime and stop one day. We have a pretty good read on how we think this quarter shapes up. There are no cliffs in sight, I would say that. We think we have got a little bit of a tail. Obviously, we are working to generate momentum in our life business and overcome those objections we just discussed. We run a very disciplined and very lean organization expense-wise. What that means is that we do not just have a lot of fat. We cannot go and just drop a few million dollars of expenses.
Now, we do have a game plan where we can reduce expenses as necessary if it became necessary. But it's not something like we just got, you know, unimportant expenses that we can, you know, just lift out of here. It's because we run a disciplined ship all the time, it makes it a little harder to reduce your expenses when necessary. We can do it. We have a plan to do that. But we believe that, you know, we'll be able to overcome the headwinds. And that's not at the top of our list for our game plan for the rest of the year.
Suneet Kamath (Senior Research Analyst)
Got it. That makes sense. Thanks for the answers.
Glenn Williams (CEO)
Absolutely.
Operator (participant)
Thank you. We have reached the end of our question-and-answer session. With that, I would like to bring the call to a close. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.