Primerica (PRI) Tops Q1 EPS by 3c, Revenues Miss

Primerica (NYSE: PRI) reported Q1 EPS of $1.74, $0.03 better than the analyst estimate of $1.71. Revenue for the quarter came in at $490 million versus the consensus estimate of $498.57 million.

• Life insurance licensed representatives increase 2% to 129,821
• Term Life net premiums grow 10%; adjusted direct premiums grow 11%
• Investment and Savings Products ending client asset values grow 5%
• Net earnings per diluted share (EPS) of $1.83, up 26%; return on stockholders’ equity (ROE) of 21.2%
• Adjusted operating EPS of $1.74, up 19%; adjusted net operating income return on adjusted stockholders’ equity (ROAE) of 20.3%
• Declared dividend of $0.34 per share, payable on June 14, 2019

Adjusted operating revenues were $490.0 million, increasing 6% compared to the first quarter of 2018. Adjusted net operating income of $75.3 million increased 14%, while adjusted operating earnings per diluted share of $1.74 increased 19% compared to the same quarter last year. ROAE increased from 19.0% during the first quarter of 2018 to 20.3% during the current quarter.

Results for the quarter reflect the financial stability of the Company’s Term Life segment, including an 11% increase in adjusted direct premiums. Persistency during the first quarter of 2019 was generally consistent with the prior year’s first quarter and claims experience was in line with historical trends. Market volatility early in the year resulted in a slower start in the Investment and Savings Products (ISP) segment, however, client asset values rebounded in late January and average client asset values declined less than half a percent compared to the first quarter of 2018. Demand for investment products, most notably variable annuities, was robust through the last two months of the quarter and total product sales of $1.8 billion were only 1% below a very strong first quarter in 2018. Insurance and other operating expenses increased 5% due to business growth and incremental investments. The pace of investments is expected to increase as 2019 unfolds. The Company repurchased nearly $54 million of common stock during the quarter and is on track to achieve its $225 million repurchase target for the year.

“Our quarterly financial results reflect the strength and durability of our model with revenue growth of 8% and earnings per share growth of 26%, despite weaker sales than in the prior year period,” said Glenn Williams, Chief Executive Officer. “The need for financial security in middle-income families has never been greater and few companies possess the distribution breadth to assist this population demographic the way we do here at Primerica.”

For earnings history and earnings-related data on Primerica (PRI) click here.

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