14% growth in life insurance policies issued

11% increase in life insurance licensed representatives to 112,365

31% growth in diluted EPS to $1.23; 27% growth in diluted operating EPS to $1.19

19.9% net income return on stockholders’ equity (ROE) and 20.2% net operating income return on adjusted stockholders’ equity (ROAE)

DULUTH, Ga.--(BUSINESS WIRE)-- Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended June 30, 2016. In the second quarter, total revenues increased 8% to $379.2 million and operating revenues increased 7% to $375.8 million compared with the second quarter of 2015. Net income grew 21% to $59.3 million and net operating income grew 17% to $57.1 million from the prior year period. Solid earnings combined with ongoing share repurchases drove a 31% increase in net earnings per diluted share to $1.23 and a 27% increase in net operating earnings per diluted share to $1.19 compared with the prior year period. ROE expanded to 19.9% and operating ROAE expanded to 20.2% in the current period versus 16.1% and 17.0%, respectively, in the second quarter of 2015.

Results reflect the continued momentum in the Term Life business as well as the seasonally strong trends historically experienced in the second quarter. Ongoing growth in Term Life issued policies combined with strong second quarter persistency led to a 14% increase in Term Life net premiums year-over-year. Claims experience was below both historical levels and the modestly unfavorable levels experienced in the prior year period. Investment and Savings Product sales and average client asset values were lower than the prior year period while sales increased on a sequential quarter basis during the IRA season.

Glenn Williams, Chief Executive Officer said, “We continue to see strong performance throughout our business. Our sales force leaders delivered distribution growth and strong life insurance productivity in the second quarter. Recruiting and licensing momentum continued resulting in 11% growth in the size of our life insurance licensed sales force year-over-year to 112,365 representatives. Term Life insurance policies issued increased 14% and our Investment and Savings Products performed well despite the uncertainty in the market. EPS and ROE grew significantly through earnings and ongoing share repurchases.”

Distribution & Segment Results

Distribution Results
		Q2 2016			Q2 2015			% Change			Q1 2016			% Change
Life Licensed Sales Force (1)			112,365			101,008		11	%			108,220		4	%
Recruits			65,273			60,246		8	%			63,427		3	%
New Life-Licensed Representatives			12,171			10,439		17	%			9,666		26	%
Life Insurance Policies Issued			77,384			68,097		14	%			66,376		17	%
Life Productivity (2)			0.23			0.23		*				0.21		*
ISP Product Sales ($ billions)		$	1.47		$	1.57		(6	)%		$	1.38		7	%
Average Client Asset Values ($ billions)		$	48.94		$	49.66		(1	)%		$	46.65		5	%
(1) End of period
(2) Life productivity equals Policies issued divided by the average number of life insurance licensed representatives per month
* Not calculated

Segment Results
		Q2 2016				Q2 2015				% Change			Q1 2016				% Change
						($ in thousands)
Operating Revenues: (1)
Term Life Insurance		$	210,679			$	184,389			14	%		$	206,277			2	%
Investment and Savings Products			132,693				135,081			(2	)%			125,035			6	%
Corporate and Other Distributed Products			32,432				30,450			7	%			32,433			*
Total operating revenues (1)		$	375,804			$	349,920			7	%		$	363,745			3	%
Operating Income (loss) before income taxes: (1)
Term Life Insurance		$	58,017			$	44,689			30	%		$	46,078			26	%
Investment and Savings Products			36,065				37,746			(4	)%			31,691			14	%
Corporate and Other Distributed Products			(5,642	)			(6,207	)		(9	)%			(6,774	)		(17	)%
Total operating income before income taxes (1)		$	88,440			$	76,228			16	%		$	70,995			25	%
(1) See the Non-GAAP Financial Measures section and the segment Operating Results Reconciliations at the end of this release for additional information.
* Less than 1%

Life Insurance Licensed Sales Force. Strong recruiting and licensing trends in recent quarters drove 11% year-over-year growth in the life insurance licensed sales force to 112,365 representatives at the end of the second quarter. Second quarter recruiting of new representatives increased 8% and new life insurance licenses grew 17% from the year ago period. On a sequential quarter basis, recruiting increased 3% and new life insurance licenses grew 26% reflecting recent recruiting levels.

Term Life Insurance. In the second quarter of 2016, term life insurance policies issued increased 14% year-over-year driven by the larger life insurance licensed sales force and seasonally strong productivity at .23 policies per life insurance licensed representative per month. Term Life revenues increased 14% to $210.7 million compared with the year ago period reflecting a 14% increase in net premiums from ongoing growth in issued policies. Income before income taxes grew 30% to $58.0 million year-over-year. Second quarter claims experience was approximately $2 million below historical levels while claims experience in the year ago quarter was unfavorable by approximately $1 million. Favorable persistency experience contributed approximately $1 million to the segment’s income before income taxes in the second quarter of 2016.

Investment and Savings Products (ISP). In the second quarter, the ISP segment was impacted by uncertainty in the markets as well as by industry-wide weakness in variable annuity sales. ISP revenues decreased 2% to $132.7 million and income before income taxes declined 4% to $36.1 million compared with the year ago period. Results reflect a 6% decline in product sales to $1.47 billion primarily due to 20% lower variable annuity sales year-over-year. Average client asset values of $48.9 billion were consistent with the prior year period while account-based revenue increased 6%. Positive Canadian segregated fund market performance in the second quarter of 2016 led to deceleration of DAC amortization which contributed to $1.2 million lower DAC amortization year-over-year.

Corporate and Other Distributed Products (C&O). The C&O segment operating revenues were $32.4 million, and operating losses before income taxes were $5.6 million in the second quarter of 2016. Results were impacted by a modest increase in insurance and other expenses primarily reflecting higher employee-related expenses partially offset by a $1.5 million reduction in the interest expense on an IPO related reinsurance agreement. Net investment income benefited from an approximately $1 million positive mark-to-market on the deposit asset backing an IPO related reinsurance agreement which offset the continued pressure on the portfolio yield. The invested asset portfolio experienced price improvements with net unrealized gains increasing from $74.9 million at March 31, 2016 to $105.2 million at quarter-end due to a steep decline in interest rates and slightly tighter credit spreads during the period.

Capital

Primerica repurchased $40.6 million or approximately 800,000 shares of its common stock in the second quarter and repurchased $90.5 million, or 2.0 million shares year-to-date through June. Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be approximately 430% as of June 30, 2016.

Non-GAAP Financial Measures

We report financial results in accordance with U.S. generally accepted accounting principles (GAAP). We also present adjusted direct premiums, other ceded premiums, operating revenues, operating income before income taxes, net operating income, adjusted stockholders’ equity and diluted operating earnings per share. Adjusted direct premiums and other ceded premiums are net of amounts ceded under coinsurance transactions that were executed concurrent with our initial public offering for all periods presented. We exclude amounts ceded under the IPO coinsurance transactions in measuring adjusted direct premiums and other ceded premiums to present meaningful comparisons of the actual premiums economically maintained by the Company. Amounts ceded under the IPO coinsurance transactions will continue to decline over time as policies terminate within this block of business. Operating revenues, operating income before income taxes, net operating income, and diluted operating earnings per share exclude the impact of realized investment gains and losses, including other-than-temporary impairments (OTTI), for all periods presented. We exclude realized investment gains and losses in measuring operating revenues to eliminate period-over-period fluctuations that may obscure comparisons of operating results due to items such as the timing of recognizing gains and losses and other factors prior to an invested asset's maturity that are not directly associated with the Company's insurance operations. Adjusted stockholders' equity excludes the impact of net unrealized investment gains and losses recorded in other comprehensive income (loss) for all periods presented. We exclude unrealized investment gains and losses in measuring adjusted stockholders' equity as unrealized gains and losses from the Company's invested assets are largely caused by market movements in interest rates and credit spreads that do not necessarily correlate with the cash flows we will ultimately realize when an invested asset matures or is sold.

The definitions of these non-GAAP financial measures may differ from the definitions of similar measures used by other companies. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating financial performance. Furthermore, management believes that these non-GAAP financial measures may provide users with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of the core ongoing business. These measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of the results as reported under GAAP. Reconciliations of non-GAAP to GAAP financial measures are attached to this release.

Earnings Webcast Information

Primerica will hold a webcast Tuesday, August 9, 2016 at 10:00 am EDT, to discuss second quarter results. This release and a detailed financial supplement will be posted on Primerica’s website. Investors are encouraged to review these materials. To access the webcast go to http://investors.primerica.com at least 15 minutes prior to the event to register, download and install any necessary software.

A replay of the call will be available for approximately 30 days on Primerica’s website, http://investors.primerica.com.

Forward-Looking Statements

Except for historical information contained in this press release, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from anticipated or projected results. Those risks and uncertainties include, among others, our failure to continue to attract and license new recruits, retain sales representatives or license or maintain the licensing of our sales representatives; changes to the independent contractor status of our sales representatives; our or our sales representatives’ violation of or non-compliance with laws and regulations or the failure to protect the confidentiality of client information; differences between our actual experience and our expectations regarding mortality, persistency, expenses and interests rates as reflected in the pricing for our insurance policies; the occurrence of a catastrophic event that causes a large number of premature deaths of our insureds; changes in federal and state legislation, including other legislation or regulation that affects our insurance and investment product businesses, such as the DOL’s recently adopted rule defining who is a “fiduciary” of a qualified retirement plan as a result of giving investment advice; our failure to meet RBC standards or other minimum capital and surplus requirements; a downgrade or potential downgrade in our insurance subsidiaries’ financial strength ratings or our senior debt ratings; the effects of credit deterioration and interest rate fluctuations on our invested asset portfolio; incorrectly valuing our investments; inadequate or unaffordable reinsurance or the failure of our reinsurers to perform their obligations; the failure of, or legal challenges to, the support tools we provide to our sales force; heightened standards of conduct or more stringent licensing requirements for our sales representatives; inadequate policies and procedures regarding suitability review of client transactions; the failure of our investment products to remain competitive with other investment options or the change to investment and savings products offered by key providers in a way that is not beneficial to our business; fluctuations in the performance of client assets under management; the inability of our subsidiaries to pay dividends or make distributions; our inability to generate and maintain a sufficient amount of working capital; our non-compliance with the covenants of our senior unsecured debt; legal and regulatory investigations and actions concerning us or our sales representatives; the loss of key personnel; the failure of our information technology systems, breach of our information security or failure of our business continuity plan; and fluctuations in Canadian currency exchange rates . These and other risks and uncertainties affecting us are more fully described in our filings with the Securities and Exchange Commission, which are available in the "Investor Relations" section of our website at http://investors.primerica.com. Primerica assumes no duty to update its forward-looking statements as of any future date.

About Primerica, Inc.

Primerica, Inc., headquartered in Duluth, GA, is a leading distributor of financial products to middle income households in North America. Primerica representatives educate their Main Street clients about how to better prepare for a more secure financial future by assessing their needs and providing appropriate solutions through term life insurance, which we underwrite, and mutual funds, annuities and other financial products, which we distribute primarily on behalf of third parties. In addition, Primerica provides an entrepreneurial full or part-time business opportunity for individuals seeking to earn income by distributing the company’s financial products. We insured approximately 5 million lives and have over 2 million client investment accounts at December 31, 2015. Primerica stock is included in the S&P MidCap 400 and the Russell 2000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.

PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
				June 30, 2016 (1)				December 31, 2015
				(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value				$	1,726,774			$	1,731,459
Fixed-maturity securities held-to-maturity, at amortized cost					431,000				365,220
Equity securities available-for-sale, at fair value					49,040				47,839
Trading securities, at fair value					8,012				5,358
Policy loans					30,817				28,627
Total investments					2,245,643				2,178,503
Cash and cash equivalents					213,091				152,294
Accrued investment income					16,100				17,080
Due from reinsurers					4,147,284				4,110,628
Deferred policy acquisition costs, net					1,619,236				1,500,259
Premiums and other receivables					213,329				188,886
Intangible assets, net					56,617				58,318
Income taxes					30,844				35,067
Other assets					351,340				304,356
Separate account assets					2,311,124				2,063,899
Total assets				$	11,204,608			$	10,609,290
Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits				$	5,581,043			$	5,431,711
Unearned premiums					560				628
Policy claims and other benefits payable					235,265				238,157
Other policyholders’ funds					351,740				356,123
Notes payable					372,735				372,552
Surplus note					430,233				364,424
Income taxes					199,985				148,125
Other liabilities					422,556				416,417
Payable under securities lending					91,901				71,482
Separate account liabilities					2,311,124				2,063,899
Total liabilities					9,997,142				9,463,518
Stockholders’ equity:
Common stock					466				483
Paid-in capital					102,825				180,250
Retained earnings					1,040,860				952,804
Accumulated other comprehensive income (loss), net of income tax:					63,315				12,235
Total stockholders’ equity					1,207,466				1,145,772
Total liabilities and stockholders’ equity				$	11,204,608			$	10,609,290
(1) Unaudited

PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
				Three months ended June 30,
				2016					2015
				(In thousands, except per-share amounts)
Revenues:
Direct premiums				$	612,189				$	588,248
Ceded premiums					(406,683	)				(406,854	)
Net premiums					205,506					181,394
Commissions and fees					136,902					139,150
Net investment income					20,389					19,075
Realized investment gains (losses), including OTTI					3,440					597
Other, net					13,007					10,301
Total revenues					379,244					350,517
Benefits and expenses:
Benefits and claims					88,984					82,521
Amortization of deferred policy acquisition costs					38,720					36,384
Sales commissions					70,146					71,499
Insurance expenses					33,026					28,744
Insurance commissions					4,472					4,145
Interest expense					7,178					8,642
Other operating expenses					44,838					41,757
Total benefits and expenses					287,364					273,692
Income before income taxes					91,880					76,825
Income taxes					32,554					27,652
Net income				$	59,326				$	49,173
Basic earnings per share:
Basic earnings per share				$	1.23				$	0.94
Diluted earnings per share				$	1.23				$	0.94
Shares used in computing earnings per share:
Basic					47,658					51,787
Diluted					47,708					51,812

PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Operating Results Reconciliation
(Unaudited – in thousands, except per share amounts)
				Three months ended June 30,
				2016					2015					% Change
Operating revenues				$	375,804				$	349,920				7	%
Realized investment gains (losses), including OTTI					3,440					597
Total revenues				$	379,244				$	350,517				8	%
Operating income before income taxes				$	88,440				$	76,228				16	%
Realized investment gains (losses), including OTTI					3,440					597
Income before income taxes				$	91,880				$	76,825				20	%
Net operating income				$	57,104				$	48,791				17	%
Realized investment gains (losses), including OTTI					3,440					597
Tax impact of reconciling items					(1,218	)				(215	)
Net income				$	59,326				$	49,173				21	%
Diluted operating earnings per share (1)				$	1.19				$	0.93				27	%
Net after-tax impact of operating adjustments					0.04					0.01
Diluted earnings per share (1)				$	1.23				$	0.94				31	%
(1) Percentage change in earnings per share is calculated prior to rounding per share amounts.

TERM LIFE INSURANCE SEGMENT
Adjusted Premiums Reconciliation
(Unaudited – in thousands)
				Three months ended June 30,
				2016						2015
Adjusted direct premiums				$	281,350					$	247,889
Premiums ceded to IPO coinsurers					322,767						331,984
Direct premiums				$	604,117					$	579,873
Other ceded premiums				$	(81,725	)				$	(72,227	)
Premiums ceded to IPO coinsurers					(322,767	)					(331,984	)
Ceded premiums				$	(404,492	)				$	(404,211	)
Net premiums				$	199,625					$	175,662
CORPORATE AND OTHER DISTRIBUTED PRODUCTS SEGMENT
Operating Results Reconciliation
(Unaudited – in thousands)
				Three months ended June 30,
				2016						2015
Operating revenues				$	32,432					$	30,450
Realized investment gains (losses), including OTTI					3,440						597
Total revenues				$	35,872					$	31,047
Operating loss before income taxes				$	(5,642	)				$	(6,207	)
Realized investment gains (losses), including OTTI					3,440						597
Loss from continuing operations before income taxes				$	(2,202	)				$	(5,610	)
PRIMERICA, INC. AND SUBSIDIARIES
Adjusted Stockholders' Equity Reconciliation
(Unaudited – in thousands)
				June 30, 2016						December 31, 2015
Adjusted stockholders' equity				$	1,139,060					$	1,113,736
Unrealized net investment gains recorded
in stockholders' equity, net of income tax					68,406						32,036
Stockholders' equity				$	1,207,466					$	1,145,772

View source version on businesswire.com: http://www.businesswire.com/news/home/20160808006187/en/

Primerica, Inc.

Investor Contact:

Kathryn Kieser, 470-564-7757

[email protected]

or

Media Contact:

Keith Hancock, 470-564-6328

[email protected]

Source: Primerica, Inc.

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