Q3 2019 Earnings Call
non-GAAP measures to their respective now like to turn the call over to Glenn.
Thank you Nicole and thanks, everyone for joining us today.
I'll focus my prepared remarks on the highlights on our most recent quarter and share our game plan as we closed 2019 and prepare to enter the next decade, then Allison will review our financial results.
Starting with slide three in our presentation deck, you can see adjusted operating revenues increased 7% in adjusted net operating income increased 13%.
Adjusted operating earnings per diluted share was up 17% and operating Aro HBV was 24.9%, increasing 120 basis points compared to last year's third quarter.
These results attests to the strength.
Plan during the quarter, we've repurchased $70 million the primary the common stock for a year to date total of $181 million.
We are on pace to repurchase $225 million by year end and believe we will have the ability to deploy capital at.
It is which is up slightly since the beginning of the quarter, reflecting the growth.
So in newly licensed reps.
Compared to last year's third quarter Rychlik recruiting declined five accounted I'd be a promotion announced at our convention.
I believe this was due to changes in the licensing preparation program. We introduced earlier this year and our continued communication with the field force leadership about licensing.
Since I mentioned, our convention, let me take a moment and give our final assessment of the event now that we're almost six months beyond that I believe it was a success on many fronts.
First we had record attendance, which created energy and excitement in our Salesforce and we're starting to see the benefits of these efforts emerging.
Secondly, providing a platform to focus the salesforce on key priorities, such as sales growth productivity and licensing pull through.
Finally, I gave us the opportunity to cast of older vision for the future.
We recognized that our distribution results so far in 2019 were softer than expected.
We have recovered some momentum and there's more work to do we're making progress and I still expect the size of our Salesforce will end the year roughly flat compared to the prior year.
In term life on slide five we issued over 73000, new life insurance policy during the quarter or 2% fewer policies and in the third quarter of 2018.
We're diligently working to grow sales and we are gaining traction the pace of progress is slower than we expected.
While im encouraged by our progress also recognize it will not be able to overcome the slow start to this year. We expect full year issued policy results to be down approximately 4.5% year over year.
Productivity during the third quarters was within our historical range at 0.19 policies for life licensed representative per month.
As we continue to work on improving new sales and agent productivity. It's also important to recognize the financial impact of existing clients increasing their coverage.
Annualized issued premiums increased 3%, which included 9% growth in premiums associated with additions to existing policies.
These increases in coverage can happen either automatically with our increasing benefit rider or by representatives working with clients to increase existing policies.
On slide six we show a steady March forward and our investment in savings products results were pleased with our performance in the important contributions. This segment continues to bring to the bottom line.
Client asset values were $66 billion at the ended the quarter, an increase of 3% compared to September 2018.
The growth in assets continues to be supported by solid sales, which rose 5% year over year.
Sales strength during the quarter was led by client demand for retail mutual funds and variable annuities.
As we close 2019 and prepare for the new year, we will continue to emphasize recruiting in licensing that lead to growth in the size of our Salesforce. We also remain focused on improving the productivity of our representatives toward the upper end of our historical range to drive life sales, while continuing to build on the success of our eyes fee business.
As we approach 2020, new year provides us with the opportunity to generate excitement activity, while sharpening our focus on areas that need improvement.
Next year as an important milestone because it offers the opportunity to launch both in new year end in new decade, as well as marketing our 10th anniversary as a publicly traded company.
We will use this unique timing to take a boulder position in our marketplace in the cast a big bigger vision for our Salesforce, we've already begun to raise our profile in both traditional and social media as they thought leader, bringing experience and expertise to meet the financial chain challenges of the middle market.
We're also capitalizing on our strength as a prominent member of our community.
These efforts and credibility to our message that primarily offers an excellent business opportunity for individuals who are willing to get licensed and help our clients meet their financial needs.
We will generate further excitement in the Salesforce with a series of events across North America throughout January and February .
Combined with continued improvements to our products technology training and incentives. We believe we have the right formula to meet clients' needs and deliver value for stockholders in 2020 and beyond with that I'll now turn it over to Allison. Thank you Glenn and good morning, everyone. Let's start with the term life segment on slide seven.
Income before income tactically, 13% to 83.8 million for the quarter that margins expanding at 20.1%, 19.6% in the prior year period.
Topline results were strong with adjusted direct premiums increasing 10% year every year.
Operating ratios for the quarter more all at or better than noted in the same period internal team.
The benefits and claims ratio for the quarter with modestly favorable tree historical levels. It was slightly higher than the prior year period due to favorable incurred claims experience and training will soon.
Benefits and claims ratio was 57.9% for the quarter and 58.2% on a year to date basis, we expect that way share to remain near the 58.2% level for the full year 2019.
The DAC amortization ratio for the quarter influence to 15.5% from 15.8% in the prior year period.
As Glenn mentioned earlier, we continue to see growth and policy addition, such as our increasing benefit rider, which have lower acquisition cost.
In addition, persistency trended favorably during the quarter.
Typically see a race yet at around 17% in the fourth quarter data weaker seasonal persistency and we continue to expect a full year ratio to come in around 16%.
Insurance expense ratio for the quarter like 7.7% inline with the prior year third quarter.
Year to date ratio with 8% and we expect the full year ratio to increase by 10 to 20 basis points as we continue to ramp at planned technology spend.
I'll discuss company wide operating expense trends and expectations later in the call.
2019 comes to the Clegg, we expect adjusted direct premiums to grow by about 10.5% financial year basis and margin to come in at or above 19% at slightly from previous guidance.
As we look toward 2020 the growth in adjusted direct premiums is projected to remain strong at 9% and we cannot foresee any significant change in term life margin.
Turning now to investment in saving products segment on slide eight revenues increased 5% year every year to 173 million while income before income taxes increased 8% to 48.8 million.
Sales based revenues grew nearly 8% benefiting both from the growth in revenue generating products out and the mix of business itself.
Asset base revenues grew 3% in line with the growth in average client asset values.
Sales and asset based commission expenses generally increase with their respective revenue.
Other operating expenses were generally flat as we continue to benefit from fee reductions with third party service provider and our ongoing efforts to create operational efficiencies internally.
Let's continue the operating expense discussion by taking look at companywide insurance and other operating expenses on slide nine.
In the third quarter insurance and other operating expenses increased amount of 3% to 99.7 million.
We saw our typical year over year increases in categories, such as salaries and other expenses that support the growth in our term life threatening.
While expense reductions achieved in the IP segment provided a partial offsets.
We continue to make progress with our technology initiative, increasing our spend by 2.4 million year over year in the third quarter.
Expenses for the quarter about 2 million lower than the guidance to provide in last quarters earnings call. So we largely believed that the function of timing.
We expect insurance and other operating expenses to come in around 107 million in the fourth quarter and 416 million for the full year.
We are pleased that while growing the business and increasing our technology spend by $10 million, we've been able to limit the growth in insurance and other operating expenses to around 25% year over year.
Let's move now to review of adjusted net investment income in our invested asset portfolio on slide 10.
Net investment income for the quarter was 22.1 million up about a million or 6% from the prior year period.
The increase was predominantly due to 13% growth in our invested asset portfolio to $2.6 billion and higher bookings versus the prior year on assets backing the reinsurance deposit asset.
These positive factors were partially offset by the impact of lower reinvestment rate in the current low rate flat yield curve environment.
While the current environment has continued to pressure investment income we believe our exposure is relatively small and year to date the growth in our portfolio size has entirely offset the lower average field.
Over the next 12 months only 13% of our portfolio will mature with an average book yield of about 3.4%.
To illustrate the impact of lower rate, assuming a reinvestment rate consistent with the third quarter of 2.73% net investment income would be approximately 1 million lower over the next 12 months on those assets.
We will continue to look for opportunities to replace this yield while maintaining our discipline regarding credit quality and liquidity.
Finally on slide 11, our tax rate during the quarter was 23.1%, which is consistent with our full your estimate of 23%.
As of September primarily for life insurance companies statutory risk based capital ratio is estimated to be around 440% and holding company liquidity is approximately 235 million.
We plan to continue to take ordinary dividends from Primerica life to the extent available with the goal of maintaining our near term RBC ratio in the low to mid 400% range, our corporate balance sheet remains solid with ample liquidity now let's open the lineup for question.
As a reminder to ask a question you will need to press Star then number one on your telephone to withdraw your question press the pound key.
And your first question comes from a line of Andrew.
Vermin from credit Suisse.
When Andrew Hey.
Good morning.
So licensed sales force is now 31000 roughly.
Flat year over year had the conference in June and.
Hi, I'm kind of it seems like Thats. The number this is going to move the dial going forward. So what are you thinking out to 2020 in terms of the size of that salesforce and with that.
So I definitely would like and adds from where you think the size can grow.
And then with that I kind of gifted new newly licensed reps were eight up 8%. So that was like a very good qualitative numbers, so maybe a little backdrop color on that.
Hi, we should.
I don't know aviator, we should feel good even if it doesnt grow.
Yep.
Happy to address those issues, Andrew the bit you're right. The size. The salesforce is fundamental to the overall growth of our sales activity. It's it's pretty simple, it's not easy, but it's simple you've got the size of the salesforce in our productivity rate and we're always working to improve both.
After a number of years of significant growth. We did we have seen the slowdown we have seen quarter to quarter improvement and a piece of that of course, there was the positives of our convention in June , but as we talked about before where we try not to make the convention the cure all or a spike in activity.
That even greater unhealthy activity or that.
You know that we come to rely on just for alive say pursuant to its a normal part of our processes. The way I look at what we do recognize it coming out of that Youre going to see increase in activity, particularly in recruiting and as we focus this year, because we had done incentives in the past where recruiting increased but at the same time, we didn't get the licensing pull through we didn't feel.
We had the committed recruits and or that processes in place to turn recruits and the licenses.
So we overseer deliberately in that direction. After this convention to make sure that the recruits that we are result of the excitement from the event, we had a good pull through rate.
And of course, we did have more recruits as result of the incentives, but we have very strong pull through.
We didnt expected to be exactly normal anytime you have a sudden increase in recruiting you're going to expect to get a little bit of deterioration in your pull through but it was very very near our averages and so we're extremely pleased with that and that swing. A focus is what has driven some of the choppiness in the recruits being up one quarter licenses being down and then recruitment.
Then licenses being up.
Overall, we continue to be committed to grow in the size of our sales force. There is I don't see any natural barrier at 130 or 131000 as you can't go beyond that it continues to be one of our most important priorities when it comes to distribution and so we continue to put programs in place to increase topline recruiting.
To continue to maintain and improve our pull through rate.
And Thats, what we do everyday we do that we've talked about the levers we use our messaging and our recognition in incentives are always in play from month to month.
We have those improvements that are incremental we're always working on small things that make things better. For example, we worked hard on our own boarding process cutting through the confusion of the various ways to get license. They are all kinds of systems. In course is out there to get licensed and we focused on one straight path from.
Recruit to license, which I think has helped US we continue to deploy technology to reduce some of the friction in that process. The faster you can engage people and get them focused on getting licensing getting productive to more likely they are to stay any downtime works against you and then of course as I mentioned, a clear revision of the value of our opportunity attracts more people in retains will.
Pete So we've got all of those in play we continue to use those and expect to grow the size of our sales force as we look forward into 2020 and beyond we continue to think in terms of the kind of natural long term growth rate for recruiting licensing and so forth is mid single digits, we're working to get back to.
That level and then when we get to that level work to get beyond that level.
Hopefully that gives you a little bit of framework of what we see in the last couple of quarters in that dynamic, but I'm happy to clarify theres other things.
No debt definitely very helpful. And then on the expense side, and I guess insurance and operating expenses were up three 3% year to date, Alison you called out kind of guidance of four and a half and that.
It seems likely you would move more in that direction.
No again.
Maybe looking out to next year is 4.5% the right number were.
Where some of these initiatives slide we renegotiated is the.
Managed account contracts will they come into play and maybe you could do 3% next year.
Yeah, I mean, it's a really good question, we're in the process, obviously, a finalizing our budget.
For 2020 as we speak.
And if I had to look at at one and we have to remember is a lot of our expense base will actually just grow with a book of business.
So as our premiums increasing obviously premium taxes, Scott I'm, just kind of point out a few.
As our assets under management increase the the the cost that we pay to third parties. All go up so I expect we have that natural growth rate in our expenses and theoretically if you look at how our revenues growing look at maintaining neutral leverage you would have expected our expenses to grow.
Considerably higher than where we're coming in at when I look to next year I actually think we're going to continue to have the benefit from the things that we've negotiated on the I SP side and Thats highly another four and a half a million dollars of say get year over year as based on these contracts and how they've worked.
But we do have the natural growth in the business and we do have our continued views towards our technology platform. So I certainly wouldn't expected to be 3% I do expect it to be higher than it was this year, but largely because you have the natural trajectory of the growth in the book of business.
Net expense management expense control maintain continues to be top of mind for everybody here and so I'm real pleased with how we've been able to negotiate certain reductions and things along those lines the operational efficiencies internally.
To go ahead and fund if you will expenditures and things like technology to continue enhancing built the business.
Okay. So I mean, it sounds like you could keep it below the four and a half that it remains to be seen as you kind of were through your budget.
Yes, I would actually and again, we havent finalized we haven't presented the boards I certainly am not quite ready to go through all of our plans for 2020, yet I would expect more color next quarter I would actually not expected typically be below the 4.5% I would expect it can create modestly higher.
But again looking at what we would expect our growth in our revenues to be I would think that Dan.
I'll still maintain a positive margin positive leverage.
Hi, Thank you Allison.
Your next question comes from the line of Peters showing from KBW.
Peter.
Hi, Good morning, guys. Thanks for taking my question. So in the prepared remarks, I think you mentioned that there were plans to increase agent productivity toward the higher end of historical range. So do you want providing some additional color on the steps to achieve this and any sense of the timing of the development. If you have that.
Sure and it's a very similar answer to the recruiting in licensing answer I gave earlier is that we have three levers that are always in play our incentives recognition communication plan, which varies month to month than we customize it by month is we believe we can get more impact from those things and many.
Sounds are recognition in incentive programs is simply a framework that allows us to communicate it gives us a reason to communicate and we can we buy the messages in so first we got to communicate clearly what the priorities and here's a focus. Our then we continue to work on incremental improvement in our product and processes everything from making it easier to talk about.
Out our products to explain products planar language simpler products better use of technology to create a frictionless process between agents in clients and all those are going in and then we have more fundamental changes when we make real breakthroughs that are usually in some of those same area. So that's our process.
It's interesting as we come into the end of year end, the beginning of year their natural opportunities for messaging. We've already started talking about what the next year. The next decade will look like and help a little bit about that in my prepared comments and so what that means is we've got people listening and thats a natural advantage of this time of year.
Yes, we do have ongoing improvements in our technologies that we rollout and those are things that just simply make life easier for the salespeople, which therefore makes it more enjoyable sale and makes them more efficient. So they can make more sales. So all of those are in play and then we got plans as we head into 2020 more specifically.
To increase field support I mean, we do a I think we're probably one of our our strongest skillsets here is communications from here in our communication network that we've created but still there's a need to get out in the highways and Skyways. We have people out territory will people that helpful were actually increasing our resources that are out in.
The field to be able to provide better training better familiarity better communications on all those things I talked about what those resources on how to use them and so those are some of the things that are unique as we head into 2020.
He is not only will be communicating more loudly and more frequently from here in a more focused way, we're actually would have a brand new team of people out in the field will develop next year.
And to bring that home and make it more local.
So when when does that impact start to see itself as we start seeing results. We've seen a good progression. During this year as things have strengthened have strengthened quite as fast as we had hoped and originally discussed but we're moving the right direction and so we hope that during 2020, we're able to get back into that kind of fundamental natural long term growth.
Great for the year in mid single digits and as I said earlier, we'll build from there.
Not satisfied with that but we believe thats the natural kind of long term rate and so as we get to that point will start talking about other ways that we can push productivity, even higher into and as we've seen a few times in the past, we've even broken out the top of the quarter. So we know thats possible and we continue to hold that out as an objective.
Great. Thanks for the color and my next question is on speed. So sales have been trending pretty positively and so I wanted to ask if you had any growth outlooks going into 2020 and what areas are products do you see it really being the main drivers of growth.
Yes that it's interesting to study the product mix and the products mix shifts back and forth between our products and much of that driven by market conditions and client sentiment and their view of what might happen.
I believe some of the things as giving a tailwind our variable annuity businesses. The uncertainty there talk of how long can a pull bull market go on.
Is there a recession on the horizon is that there is an election on the rise and what does that mean and so I think that has given us a little bit of a swing toward the products that have more guarantees than others.
And so that's probably this is just my opinion is probably going continue.
To be one of the Tailwinds.
As long as market performance continues to be good I think obviously, that's a tailwind.
Significant disruption would slow down our growth and probably exacerbate the trends that I just talked about at the full kind of moving to guarantees and so forth. So we're expecting for the next year. We've got contingency plans would have any or all of that happens how do you shift and flex around it but right now as we look forward, we see similar kind of.
Growth rates and conditions as what we've seen in the past and we'll probably have a little bit of that fluctuation and product mix between products, but not anything that is much different from what we've seen over the past years as that occurs so I'd say the will short answer that question is more the site.
Awesome, Thanks for the color.
Very good.
Your next question comes from the line of Mark Hughes from Suntrust.
Morning, Mark.
Good morning.
How much.
Benefit you get from the writers it sounds like that.
Of automatic.
You've been getting more help on the if you look at the face amount issued from.
And those additions.
What kind of just underlying tailwind is there from the riders.
Well, it's a first of all I'll go first and I'll talk to Allison for some of the the numeric impact but.
It's an important part of our business and a huge value to our clients.
We we talked mostly about new business it primarily because what we've got a significant client base and those clients. Many times don't buy as much coverages. They needed the point of initial cycle, either due to budget constraints or other reasons and they want to be able to add coverage in the future of course, there's the risk of becoming uninsurable and as rod or kind of answers all.
Those questions, it's an automatic 10% increase and face amount for the first 10 policy anniversaries as long as you continue to use them. If you ever opt out of the new it's been freezes in place and you can't except.
Future increases the as your ability is guaranteed during that time, so it's a huge benefit to the consumer to know their ensure abilities lock the.
And since its automatic is Allison mentioned in her remarks, the acquisition costs are lower the compensation to the feel is lower and so forth. So it is good all way around that we're continuing to see the value of that drive those sales. So it's a process. We've had in place long term. We the newness is denied east we made some adjustments to the program.
Ram earlier, this decade, which really we made it.
An automatic unless the client chooses not to do so we gave every client the opportunity to participate.
And so forth and it's really starting to compound to make a significant impact on our business, which is one of the reasons, we'll talk about a little bit with that I'll talk to Allison for a little framework mathematical okay. Thanks, Glenn and really you covered most of what I would say I think you have to keep in perspective. It is it is we highlighted because as we do look.
To try to refresh our sales trajectory. It is one of those things that is naturally compounding and naturally adding to our financial position.
In in of itself that you could it in comparison to and total premiums that we have on the books. It's a relatively small component, but is becoming an increasing piece of what we are issuing every year. It's if you look at it in a finished up on give an annualized issue basis, which obviously isn't.
CNL basis, but I guess, a good proxy.
Looking at the value that is about 20% 25% of what we're issuing this year. So it is definitely compounding.
As I mentioned in my in my remarks, and Glenn just alluded to it that its profitability is it's a good profitable product for a very consistent with our new business geography wise, it's a little bit different you tend to have lower DAC amortization, because as we as Glen just said you have really lower acquisition costs.
You're not underwriting again.
But as you would expect as this business get further and further away from underwriting slightly higher mortality expectation. So.
There are a little different geography, but profitability, while still very consistent with our overall goals for new business. So I guess, that's really what I would say about it we do really likes the business.
It does it guns that enhances the relationship with the client and the sticking at them the client above anything else that I've already mentioned.
The that's helpful. Thank you the.
Productivity on the Salesforce, Glenn what you say.
Any you know I think your within historical range still down a little bit year over year, what would you say that productivity is more influenced by.
The.
Lack of new recruits are the kind of deceleration a new recruits as I understand there more productive early on it so that just more of a.
The knock on effect of the recruiting dynamic.
I think market risk certainly some connection there, but I don't believe it's a direct connection.
You just have times that you go through.
In it comes down to focus of the sales force of our massive salesforce. How many can we have focused at the same time.
And I think you probably got a common cause of recruiting being a little weak.
After we've gone through an extended period of significant growth well above and beyond kind of that natural growth rate I mentioned.
Then you have a period of where people relax recover refresh and then hopefully get started again, which is where I believe we are right now as we're starting to see things move a little bit in the positive direction and so obviously higher recruiting is better but I don't gauge productivity is being directly connected to recruiting they tend to move.
In tandem and have a relationship but it's not quite that Rick I believe they're both influenced by the level of focus that we can get in our sales force protect people from distractions give them a chance to recover from into a long period of hard work and then get back in the game is more of those types of things in that direct connection.
Okay, and then the I think you've touched on that fit the sales mix with an eye sp.
Annuities had been a big.
But the big contributor there still up but.
But not up as much is that a reflection of the broader market or is that.
Internal dynamic.
Yes, well specifically for our variable annuity business, we had a bit of an unusual comparison this quarter because in the third quarter of last year.
That that group is called annuities and others will be as another something to that if they could probably get the title exactly right, but the other is normally a very small piece. It just so happens it last quarter, we had a significant for one k. plan that moved into primarily in the third quarter last year. They don't happen that frequently when they do their big and that works.
A comparison quarter to quarter, just a little bit so actually our VA business was a little stronger.
Probably significantly stronger than it appears in the quarter to quarter comparison, because of the last year's unusual nature of that for one k. transfer agent. So our via business continues to be strong.
Right up there with our mutual fund business in the quarter in its growth rates kind of they were kind of neck and neck and both led all the other product line. So I would say that business continues to perform very well.
And then a funny health and just to confirm when we think about buyback.
For 12 months.
Your capital position so are we.
Just positioned to kind of do a same pace, maybe a little bit more any reason not to think thats the case.
Yeah, and I think at Glenn actually had in his remarks that we expect to be able to and have the ability I should say to do at or above the level. We've been at this year.
And we haven't concluded that with our board yet so at this point can't say anything further, but our capital position does support our ability to deploy.
Again at or above the level, we get this year, how we will deploy that still remains a question.
Great. Thank you.
Rob.
Your next question comes from the line of Dan Bergman from Citi.
Good morning, Dan.
Hi, good morning. Thanks.
So first I was not surprised that the number of accrued fell year over year, given I think you had a discounted licensing fee in place in early in mid July post the convention. So just wanted to see if you had any color on how your recruiting compared to your expectations or maybe how it trended over the course of of the quarter.
Yes, we did we had the special incentives in place for the first first two weeks of July since the convention was towards the end of June so roughly the last two weeks of June in last quarter, our second quarter and the first two weeks. So we did give us some some help in the quarter, but was not the didnt cover much of the.
Our quarter.
But.
We are still battling back to get to the recruiting level I'd like for us to be.
So I'm not going say I was happy with the third quarter, but at the same time I wasn't terribly surprised I knew that once we got beyond the incentive usually right. After an incentive there is a little lawless as people kind of newly squeeze This fund pretty hard when there's a discount and then you usually have a little all right after and those who often offset each other.
And so it was weaker than I would like as a quarter, but not unusually surprising. It I think it continues to reflect on our overall business improvement in our total business kind of as we March from quarter to quarter. This year I do think another influence was as I mentioned earlier, we did deliberately.
Oversteer and make sure we wanted to find out if we run on incentives like that can we pull the licenses through in a significant way and minimize any erosion in our pull through percentage and I think we did a very good job of that now we probably steered so hard that the messaging on licensing model ground up of recruiting message just a little.
But it was worthwhile if that was the case.
So again I wasn't terribly surprised by what happened.
During the quarter I believe it will be less noise in future quarters. So we'll really be able to understand what is going on underneath without having these unusual dynamics that sometimes kind of cover up the exactly what's happening both the good end the bad so think there'll be a little better transparency as we go forward could really understand where we are in the business and we're going to continue.
Due to March forward as I mentioned earlier.
Got it makes sense. Thank you.
And then maybe just shifting gears a little bit it looked like the salesforce non renewal rate ticked up a little bit in the third quarter I think relative to where it had been running I think theres been a little bit of an upward trend in recent years I just wanted to see if you then any color on what you saw in the quarter in terms of non renewals and maybe how we should expect that.
Pace of Nonrenewals trend going forward and into 2020.
We've said that we averaged about those 8% terminations per quarter and have been fairly steady in that rate. Obviously is the salesforce has grown the number is going to we actually had a little better retention in the quarter, then our projections that show.
Would you who helped us keep the Salesforce flat. So I think we're I think we feel good about that we're staying in that 8% range, but just maybe a 10th of a point or so above that but we're not seeing any erosion. There is nothing there. This alarming to me at this point in fact, it was it was a little better in the quarter than we anticipated.
Got it thanks, so much for taking the questions.
Sure Hey, Tim.
Your next question comes from the line of chest Schmidt from.
I am Blair.
Hi.
Good morning, everyone.
Question on the cost efficiencies are the highest piece segment.
I know you've launched that the easy key tool recently can you maybe give us an update on that and where else are you seeing efficiencies there.
Yeah, So I'll take part of it and then toss it back to Glenn the expense efficiencies really aren't related to Eagle team. They are related to the fact that time on several of our lines of business, we've been able to negotiate.
And far more favorable cost structure with third party providers. So the people that do a lot of the they were associated with art mutual fund transfer agent or account recordkeeping business.
As well as the custody side on our managed account platform that has a lot to deal with the fact that as we grow and hit I, obviously like a break points for getting significant benefit from that we also have an I mentioned this in a little more detail last quarter done quite a bit internally I'm really trying to cut out costs associated with managing.
Our client accounts, so thats really what we're seeing there and some of those continue to compound into 20 training I'll pass it over to Glenn know for easy It takes us yes, yes.
Easy key is an important initiative for us however, because.
And we've done this and several other areas, but I think this is the most success we've had where we said we really want to try to leverage technology to the maximum point.
At the point in our sales process and in our organization, where it can touch the most lives and so generally that's in the newer people that are doing a lot of smaller transactions and over time. If there will be efficiencies that are gained from this that as don't believe it's embedded broadly enough for that to start to show. There's clearly an efficiency play here, but we are seeing significant uptake.
The right population are people that are new to the eyes fee business or people that weren't in the eyes fee business and now they believe we've made it easy enough that they should attempted and so it's an entry point both representatives, but it's also an entry point for clients remember easy key is for that small transaction client that was a fast.
Easy convenient frictionless transaction that can be done in a very brief period of time, it's very convenient and end the call and it is something they can understand so it's also simple it's not just convenient a simple and we are seeing the uptake in clients is at the right place in reps is at the right place and now we're starting to try to figure out how we can leverage that's.
Access into the part of our business that impacts of the rest of our business the larger number of transactions in the larger transactions.
It's interesting that we've learned a lot from this process that now we're looking at in saying how can we do the same thing to try to impact the entry points for both our recruiting in licensing work stream as well as our life insurance work stream and so not only are we looking for the impact that we'll have in that area. It's a great role model for us doing the same thing.
Other areas of our business so still early but on a success track. We're pleased with the progress we made got a lot of work to do here.
Got it okay.
And I may have missed this but did you provide an update or could you provide an update on your planning for the mortgage lending solution.
Yes, I didn't talk about mortgage appreciate that question you know we're at the point now where we've closed about 100 mortgages roughly that's not a lot but it is enough for us to determine that this is a process that we want to pursue and expand.
We are finding out that to clients, we've done business with our extremely happy with how we've been able to help them.
Refocus on paying off their debts faster more efficiently in the lower interest rate.
We quicken is a great partner our relationship both actual relationship but also they connections the technological connections between the two companies are good. So we've proven that it's a business that we want to be in and right. Now we're working on the plan for 2020 to figure out how we can start to maximize the impact of that business I'm very excited.
About it but at the same time, we know it's a state by state process with approval of our company and our people by state and that's one of the things that brings into question how fast can we implemented and how fast can we grow because it's not all up to US is how quickly can we get the company and our reps approved in every state and lose differ by state in the timelines differ by state.
So.
Early success very pleased with pleased with the relationship and the infrastructure that we built on a small scale now looking at 2020 plans to expand that and I do believe what are the reasons I'm. Most excited about it is because it's a business that I believe enhances our other existing businesses. It's doesn't have the potential to cannibalize almost any product that we would be.
Going into our ecosystem, you've got to raise the question is it going to cannibalize recruiting licensing life sales and investment sales and this is actually a business that we believe enhances those because it gives clients in a better position financially because they get their debt under control and it actually frees up their focus and ability to look at our other.
Product offerings is very unique in that area. That's one of the reasons, we're pursuing it so diligently.
Okay. That's great. Thank you.
Certainly.
And that was our last question. Thank you for your participation in today's conference call you may now disconnect.
Yeah.
Okay.