Sign in
PI

Primerica, Inc. (PRI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered double‑digit top-line and adjusted EPS growth year over year, driven by strong ISP sales and steady term life premium growth; total revenue was $788.1M (+12% YoY) and diluted adjusted operating EPS was $5.03 (+17% YoY) .
  • Term Life operating margin compressed to 21.3% (vs. 22.6% a year ago) as insurance expenses rose and a $4.2M actuarial model refinement added to reserves; excluding the refinement, benefits & claims ratio was 57.9% (vs. 58.2% LY) .
  • ISP sales rose 41% to $3.3B with net inflows of $731M and client assets ending at ~$112.1B (+16% YoY), aided by demand for variable annuities and managed accounts; ISP pretax income climbed 31% to $82.0M .
  • Capital return stepped up: the Board authorized a new $450M buyback through 12/31/2025 and increased the quarterly dividend 16% to $1.04; RBC remained robust at ~430% .
  • Management guided 2025 ADP growth of ~5%, Term Life benefits & claims ratio ~58%, DAC+commissions ~12%, and operating margin ~22%; consolidated insurance/other opex expected to rise ~$40M (6–8%), with elevated tech spend to improve productivity .

What Went Well and What Went Wrong

What Went Well

  • Life‑licensed sales force reached a record 151,611 (+7% YoY), supported by sustained recruiting/licensing momentum; CEO highlighted another year of double‑digit adjusted operating earnings growth .
  • ISP momentum: sales +41% to $3.3B; client assets +16% to $112.1B with $731M net inflows, driven by variable annuities (higher up‑front fees) and mix shift toward managed accounts and Canadian proprietary mutual funds .
  • Capital discipline: completed $44.4M buyback in Q4, launched new $450M authorization, and raised dividend to $1.04; CFO reiterated sustainable ~80% capital return of earnings longer‑term and strong RBC ~430% .

What Went Wrong

  • Term Life operating margin declined to 21.3% on higher variable expenses (premium growth, recruiting/licensing), incentive comp, and technology costs; benefits & claims ratio reported at 58.6% due to an actuarial model refinement (+$4.2M reserves) .
  • Persistency/lapses remain elevated across durations (particularly years 2–5), tied to middle‑income cost‑of‑living pressures, constraining future ADP growth despite stabilization in Q4; management expects normalization over time .
  • Corporate & Other recorded a small adjusted pretax loss ($1.0M), and unrealized losses in the investment portfolio increased QoQ due to rates—not credit concerns—raising mark‑to‑market pressure .

Financial Results

Consolidated Revenue and EPS (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024Street Consensus
Total Revenues ($M)$803.4 $774.1 $788.1 N/A (SPGI unavailable)
Diluted EPS – Continuing Ops ($)N/A$5.72 $4.98 N/A (SPGI unavailable)
Diluted Adjusted Operating EPS ($)$4.71 $5.68 $5.03 N/A (SPGI unavailable)

Notes: Street consensus unavailable due to S&P Global API limit; we will update when accessible.

Segment Performance (Adjusted, oldest → newest)

SegmentQ2 2024 Revenues ($M)Q2 2024 Pretax ($M)Q3 2024 Revenues ($M)Q3 2024 Pretax ($M)Q4 2024 Revenues ($M)Q4 2024 Pretax ($M)
Term Life$426.9 $147.8 $450.3 $178.4 $450.6 $139.5
ISP$260.9 $74.8 $266.1 $79.9 $286.0 $82.0
Corporate & Other$53.0 $0.9 $53.7 $(5.7) $53.5 $(1.0)

Term Life Margin Metrics (oldest → newest)

MetricQ2 2024Q3 2024 (Reported)Q3 2024 (Ex Remeasurement)Q4 2024 (Reported)Q4 2024 (Ex Model Refinement)
Benefits & Claims Ratio (%)57.4 53.2 57.6 58.6 57.9
DAC + Insurance Commissions (%)11.8 11.9 11.9 12.2 12.2
Insurance Expense Ratio (%)7.6 7.4 7.4 8.0 8.0
Operating Margin (%)23.1 27.5 23.1 21.3 21.3

KPIs and Distribution (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
Life‑Licensed Sales Force145,789 148,890 151,611
Recruits96,563 142,655 95,497
New Life Licenses14,402 14,349 14,620
Policies Issued100,768 93,377 89,664
Issued Term Life Face Amount ($B)33.2 30.8 29.6
ISP Product Sales ($B)3.1 2.9 3.3
Avg Client Assets ($B)103.0 108.2 112.3
End‑Period Client Assets ($B)105.1 111.2 112.1
Net Inflows ($M)423 444 731
Closed U.S. Mortgage Volume ($M)99.6 105.4 121.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Term Life ADP GrowthFY 2025N/A~5%New
Benefits & Claims RatioFY 2025N/A~58%New
DAC + Insurance CommissionsFY 2025N/A~12%New
Term Life Operating MarginFY 2025N/A~22% (seasonality applies)New
Consolidated Insurance & Other OpexFY 2025N/A+~$40M (6–8% YoY); $12M growth, $12M staffing, $16M techNew
Term Life (near‑term) RatiosQ4 2024B&C ~58%; DAC ~12%; Op margin ~22%ConsistentMaintained
Share RepurchaseThrough 12/31/2025Completed $425M in 2024New $450M authorizationRaised
DividendQ1 2025$0.90$1.04 (+16%)Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Cost of Living & LapsesElevated lapses; stabilization in Q3; effects across durations; Q4 ratios guide maintained Lapses remain elevated but leveling; cumulative persistency post‑pandemic improving; normalization expected over time Stabilizing; gradual normalization
Technology/ProductivityOpex growth in Q3; focus on digital tools; tech to enhance processing and agent productivity 2025 tech spend +$16M; automation to improve application speed and productivity Higher near‑term spend; productivity benefits targeted
ISP Demand (VAs/Managed)Strong VA (+42%) and managed accounts; favorable markets; mix shift to higher fee assets ISP sales +41%; net inflows +$731M; continued VA demand and managed account mix shift Sustained strength
Demographics/Money in MotionOlder cohorts moving from accumulation to distribution; job changes driving rollovers Continued tailwind supporting VA/mutual fund flows Positive tailwind
Mortgage BusinessLicenses in 33 states; volume up ~25% YTD by Q3; focus on debt consolidation angle Q4 volume $121M (+66% YoY); positioned for potential rate tailwinds Improving
Capital Return & RBCQ3 buyback $128.8M; dividend $0.90; RBC ~440% New $450M buyback; dividend $1.04; RBC ~430% Strong, sustained

Management Commentary

  • CEO: “Strong growth in 2024 has fueled another year of double-digit adjusted operating earnings growth for our stockholders and positioned us for continued success.”
  • CFO on Term Life ratios: “Excluding the model refinement, the benefits and claims ratio was 57.9%... DAC amortization and insurance commissions ratio at 12.2%... Term Life operating margin was 21.3%” .
  • CFO on 2025 opex: “We expect full year consolidated insurance and other operating expenses to increase by around $40 million or 6% to 8%... includes $12M growth, $12M staffing, and $16M higher technology costs.”
  • CFO on capital return: “We returned 79% of adjusted net operating income to our stockholders in 2024... able to deliver around 80% in 2025” .

Q&A Highlights

  • ISP drivers vs. Life headwinds: Large rollover transactions are less impacted by household budgets; VA demand robust; lapses stabilizing though elevated, particularly in years 2–5 .
  • Cost-of-living catch‑up: Expect improvement to require sustained easing; impact may persist a year+ after normalization—consumer behavior driven .
  • Technology leverage: Focus on faster applications and processing; “NextGen” platform improvements; 2025 tech investments aimed at field and home office efficiency .
  • VA product mix: Increasing share of index‑linked variable annuities, consistent with industry trends .
  • Capital return sustainability: ~80% of earnings targeted for capital return; strong RBC (~430%) supports growth and capital actions .

Estimates Context

  • Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to an S&P Global API limit. We will update beats/misses when access is restored.
  • Given reported strength in ISP revenue and client assets, and lower Term Life operating margin in Q4, we expect analysts to reassess segment mixes and margin trajectories, but definitive estimate revisions cannot be assessed without consensus data .

Key Takeaways for Investors

  • Distribution engine remains a durable advantage: record life‑licensed sales force positions Primerica for continued policy and asset growth as cost-of-living pressures normalize .
  • ISP momentum is a core earnings driver: variable annuities and managed accounts mix shift support higher fee capture; net inflows accelerating .
  • Term Life margin pressure in Q4 appears transitory: excluding the actuarial refinement, benefits & claims improved vs. prior year; 2025 ratio guidance implies stability .
  • Elevated technology investment is strategic: 2025 tech spend is targeted at automation/productivity, likely enhancing agent throughput and client experience over time .
  • Capital return remains compelling: new $450M authorization and higher dividend underline confidence in cash generation and balance sheet (RBC ~430%) .
  • Near‑term trading: dividend increase and buyback authorization are positive catalysts; ISP outperformance vs. macro uncertainty in life may drive mixed sentiment until estimates are confirmed .
  • Medium‑term thesis: demographic tailwinds, a larger licensed base, and mix shift in ISP underpin earnings growth; watch persistency/lapses and opex discipline, particularly technology ROI .