Q1 2022 Primerica Inc Earnings Call
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Good morning, and thank you for attending today's Primerica's first quarter 'twenty two earnings webcast. My name is Austin and I'll be your moderator for.
Today.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if.
If you'd like to ask a question. Please press star on Star one on your telephone keypad.
I would now like to pass the conference over to our host Nicole Russell head of Investor Relations Nicole. Please go ahead.
Thank you Austin and good morning, everyone welcome to Primerica's first quarter earnings call.
A copy of our press release, along with materials that are relevant to today's call are posted on the Investor Relations section of our website.
Joining our call today are Chief Executive Officer, Glenn Williams, and our Chief Financial Officer Alison Rand.
Glenn and Alison will deliver prepared remarks, and then we'll open the call for your questions.
You're not call some of our comments may contain forward looking statements in accordance with the Safe Harbor provision of the Securities Litigation Reform Act.
The company does not assume any duty to update or revise these statements.
To reflect new information.
We refer you to our most recent Form 10-K 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 operations.
Reconciliations of these non-GAAP measures to their respective GAAP numbers are included at the end of our press release and are available on our Investor Relations website.
I would like now I would now like to turn the call over to Glenn.
Thank you Nicole and thanks, everyone for joining us.
For Americas results in the first quarter reflect the ongoing middle market need for our financial solutions and the strength of our business model is the post COVID-19 business environment continues to emerge our methods are evolving and our mission remains unchanged. We're seeing strong response to our business opportunity in recruiting numbers that remained elevated compared to <unk>.
Covid levels, although down from their peaks during the last two years are.
Our efforts to improve licensing pull through are beginning to show results pushing our license Salesforce number above 130000 once again.
Results for term life insurance sales and investments are normalizing on slightly different tracks, yet both remain above pre COVID-19 levels and results indicate that our mission to serve the financial needs of middle income families is more important than ever.
As we look more closely at our financial results the resilience of our business model is clear.
Main lines of business continue to deliver solid results. Despite the unknowns of the post pandemic environment for a while our newly acquired senior health business presents an area where more work is still needed as we continue to transition to a more normalized operating environment. We are experiencing a temporary period of elevated cost in certain operating expenses.
Alison will expand on this trend in her prepared remarks.
Starting on slide three adjusted operating revenues of $693 million increased 9% year over year as both our core term life insurance and investment businesses benefit from two plus years of strong sales and robust equity market appreciation.
Diluted adjusted operating income per share of $2.11 fell 33 compared to last year's first quarter due to a 37% loss in our newly acquired senior health business and temporarily elevated overall operating expenses.
Turning to slide four recruiting remains quite strong versus pre pandemic levels with nearly 85000, new individuals joining primarily during the first quarter of 2022.
Throughout most of 2020 in 2021 recruiting incentives were heavily used to maintain momentum.
Now as we emerge from the pandemic, we are shifting to more focus use of recruiting incentives.
Adding to the recruiting momentum is the record performance of our independent sales force leaders during the last two years, which has created a compelling recruiting message and given them the confidence to share this message more often.
Recent shifts in labor markets that further amplified the attractiveness of our business model with its flexibility in setting work hours and earnings potential.
Our efforts to drive licensing are starting to gain traction. Despite a slow start in January we saw meaningful improvements in February and March and total nearly 10000 individuals will license during the quarter, including 4000, New Wi Fi six reps in March alone.
Strength in new life license reps continued in April with another 4000, new licenses added.
As we approach our convention at the end of June and the beginning of July we anticipate a lull in recruiting and licensing activity during the two weeks around the event due to time out of the field.
Post convention, we expect high activity levels during July .
The combined recruiting and licensing momentum supports our ability to continue to grow the size of the sales force beyond the current 130000 reps based on current trends, we believe the salesforce could grow slightly above our prior full year, 2% estimate.
Turning to slide five we continue to see solid demand for protection products with more than 71000 policies issued during the first quarter, which compares favorably to the 2019 pre pandemic period.
Although we saw a decline in the number of issued policies compared to the first quarter of 2021 estimated average annualized issued premium per policy increased by 2% year over year in face amount in force ended the quarter at a record $910 billion.
We believe that Covid has had a longer term impact on our target market by renewing their awareness of the value for protection products.
While second quarter sales volumes are expected to be down around 10% year over year. They should remain four or 5% above 2019 pre COVID-19 levels and we expect continued strength in average premium per policy.
On slide six sales of investment products remained strong at $3 $1 billion during the quarter and net inflows of $1 $2 billion continue to reflect our clients' long term approach to investing.
However momentum during the quarter has clearly shifted as market volatility eroded investor confidence.
We continue to see slowing sales in April while redemption activity remained normal.
Volatility and economic uncertainty makes it difficult to predict sales levels for the second quarter. Our best estimate is that second quarter sales will be down around 7% year over year, making our full year projections roughly in line with 2021.
Turning next to <unk> and the senior health market on slide seven.
We made progress in reducing contract acquisition costs during the quarter. However policy churn during the January 1st annual renewal cycle was much higher than expected.
Particularly for the 2021 cohort.
This combined with refinements in our prediction models with Alison will discuss later led to a $19 million negative tail adjustment in the quarter.
We believe policy churn has been largely driven by increased advertising and policyholder shopping and switching plans.
Many of our competitors have indicated that they are pulling back on growth at any cost, which should help reduce churn.
Our carrier partners continue to recognize the importance of brokers likely teleglobe, which account for approximately half of our key carrier partner Medicare advantage sales.
The level of marketing development funds, we receive from carriers in the first quarter increased year over year.
We recognize that Ltvs have declined and as we must adjust our operating expenses and consider process enhancements to better retain clients. As a result of this we're going to continue to limit sales volumes for 2022.
Detailed quote agent recruiting has improved and we are not having any difficulty recruiting agents in this market. Our pullback in recruiting has been intentional as we work to stabilize and improve results in our senior health segment.
We continue to make progress in lean sourcing and productivity driven by improved marketing spend strategies and data science, we expect pressure on contract acquisition costs in the second and third quarters due to seasonally lower lead generation early conversion rates as the ability for individuals to purchase these products. During these periods is less.
<unk>.
By the time AEP occurs in the fourth quarter, we plan to have emerging processes around lead acquisition and conversion as well as policyholder retention in place to drive profits into 2023.
We also believe that primary care can be an important source of leads for retail at globe. Early indications are that approved policies that were referred by a primary care Rep has favorable early persistency and higher expected ltvs.
We recognize that we have a lot of work ahead, and we continue to believe that the business can generate acceptable stockholder returns over the long term, we are working diligently to change the momentum and growth trajectory of the business.
Finally, our mortgage business continues to gain traction as we expand into more states with the addition of Arizona and Hawaii, bringing the number of states in which we're currently doing business to 19. The recent increase in interest rates a significantly pressuring refinance activity. However, we continue to see good demand for debt consolidation and purchase money mortgages.
Our sales force is uniquely positioned to identify opportunities to help clients consolidate and manage that with that I'll now turn it over to Allison.
Thank you, Brian and good morning, everyone.
Financial results for the quarter continue to reflect revenue growth in the termite and investment savings product segment, which had benefited from strong sales and persistency again kind of in.
Favorable equity market.
Both segments experienced lagging pretax income, Greg with elevated insurance and operating expenses.
Being a key factor.
Additionally, the senior home segment continued to be pressured by increased churn is helping a lot being recognized for the quarter. Let me now expand on each of these earnings drivers.
And the camera segment on slide eight operating revenue at $418 million increased 10% driven by a 10% increase in adjusted direct premiums.
Pre tax income grew 4% at year over year trends were negatively impacted by normalizing persistency and elevated insurance expenses.
Starting with <unk>, we continue to see policy retention normalize as Covid subsides.
The business issued in the first year of net organic which is now in secondary.
As demonstrated weaker performance this quarter.
Not particularly surprising as the business was issued in the height of the pandemic.
Persistency for policies issued in the last 12 months, it's trending in line with pre pandemic level I policies issued prior to the pandemic continue to see very strong.
Lastly, as around 20% below.
Lower than pre pandemic levels.
DAC amortization is most significant lapses in the early duration and aspects of the persistency levels extensive quarter resulted in the DAC ratio rising to 15, 3% from 13, 3% in the prior year period.
Note that the current JAK ratio remains favorable compared to our pre pandemic range of approximately 15% for the first quarter.
On a year over year basis, the net impact of persistency on pretax operating income was minor at high.
Here DAC amortization is likely offset by continued adjusted direct premiums and lower benefit reserve increase that.
Turning to mortality quarter experienced net COVID-19 claims at $16 million, which was $5 million less than the prior year period.
Over half of the quarter's Covid claims are in January with a level steadily decreasing throughout the quarter.
Assuming no new strains emerge we expect net COVID-19 claims around $3 million for the second quarter.
<unk> recent quarter, we did not see notable levels of excess claims for reasons other than COVID-19.
As a result of lower excess claims and to a lesser extent normalizing for currency the benefit ratio declined to 62, 1% from 63, 9% in the prior year period.
And the operating margin perspective, the higher DAC ratio and lower benefit ratio generally offset one another.
100 basis point year over year deterioration in operating margin of 16, 4%.
Driven by a 23% increase in insurance expense.
The increase is largely due to adding a previously postponed biannual convention to our normal schedule a salesforce leadership event for 2022.
I will discuss this and other drivers of expense growth later in my remarks.
As we look to the second quarter, we expect adjusted direct premiums to around 9%.
Quarter has historically had the strongest persistency.
So assuming this seasonality and continued normalization of lapses.
The second quarter, DAC amortization ratio multi air between 5% to 14%.
Assuming we incurred a $3 million of COVID-19 related net debt to be around 59, 5%.
Insurance expenses are expected to be elevated in the second quarter as well as I will discuss further later in my remarks.
And we expect the term life operating margin to be between 20 and 21% in the second quarter.
Turning next to the investment and savings products segment on slide nine operating revenues at $241 million increased 8% while pretax income.
Of $65 million increased 2%.
Please go ahead.
Our sales based commission expense.
The increase in commission expense.
We have a sales force.
In recognition of outstanding sales performance.
116% for the quarter sales based net revenues as a percentage of revenue generation.
Greenfield is consistent with the 2021 full year rate of one <unk>.
Asset based revenue revenues and asset based commission expenses increased 12% and 14%.
But the first quarter of 2021.
In 2022 included in it.
As a result of unfavorable market performance on Canadian segregated.
The current period included a one.
$8 million increase in amortization, whereas the prior year period, including fees of about 900000.
Turning to the senior health segment on Slide 10, we recognized a $19 million negative tail revenue adjustment on policies approved in prior periods.
Going into the year, we expect it to January 1st renewal cycle with previous year cohort to demonstrate weakness given the level of uncertainty waited until the commission payments came in from carriers during the first quarter to make further Catholic estimate.
The talent assessment is also driven by continued refinements to the algorithm is model that predicts expected renewal Commission collections.
We have adjusted the model to overweight persistency trends and cohorts and believe this approach minimizes significant negative tallies estimates in the future and we could still have some additional smaller adjustments over the next few quarters.
We are also looking at how to adjust our revenue forecasting model and participants occurs to properly reflects the rising level of existing policyholders, who switched plans, but returned to us to facilitate the change.
We're monitoring the results of the business carefully to identify trends as early as possible.
The heightened renewals churn and an increase in a revenue constrained to 10% to reflect the level of collection uncertainty led to lower ltvs being recognized in the quarter for newly approved policies.
While still too early to see a change in renewal patterns for 2021, AEP thickness initial paid rates on the block or in line with expectations and modestly improved from prior year results.
Also able to reduce contract acquisition cost per approved policy from fourth quarter levels with reduction accurate with the reduction efforts continued healing as Glenn mentioned earlier.
There is significant seasonality within the sector and we expect pre tax losses in the second and third quarters in the range of about $10 million per quarter with profit in the $5 million range for Q4.
Importantly, we believe the actions we are taking that at a much stronger financial performance in 2023.
With the lower anticipated agent counts and improved productivity.
We expect negative cash flows to be at the low end of the range of our prior guidance of 10% to $15 million inclusive inclusive of the net operating loss and operating loss tax benefit recognized at the Cri level.
In the corporate and other distributed products segment, the adjusted pre tax operating loss of $28 million increased 4 million.
The increased loss was driven by $3 million lower allocated net investment income due to a higher <unk>.
Segment to support the growing block of business.
Pre tax operating earnings on other distribution.
And every year as well.
Consolidated insurance and other operating expenses on slide 11 increased $23 million or 19% year over year about $8 million of which was tied to the senior health segment that did not exist in the prior year period.
The components of the remaining.
Whereas follows.
That's $6 million was driven by higher costs associated with in person sales force leadership event.
As we noted last quarter, we expect full year 2022 expenses to be about 9 million higher than the prior year. Prior years, given that we've gone back to our in person events and Additionally will help it.
The previously postponed by annual convention in June this year.
The elevated expenses will be recognized in the first half of 2022 with expenses associated with Bell Salesforce leadership event Gen.
Generally being flat year over year in the second half.
Expenses associated with sales force leadership event will return to historical levels in 2023.
Approximately $4 million was driven by growth in our business, including higher pre licensing related costs as in person classes resumed to normal levels pre licensing classes resume to normal levels.
Approximately 2 million was related to higher employee related costs from annual Merit.
Merit increases, which were somewhat offset by a high level of open position.
The remaining $3 million related to various items, including higher employee travel given the lifted of Covid travel restrictions this year.
Looking ahead, we expect second quarter insurance and other operating expenses to again be elevated increasing about $25 million or 22% year over year.
$8 million of the elevated increase is tied to the senior health segment that did not exist in the prior year period and $4 million is driven by the catch up of in person sales force leadership events just discussed.
The remaining increase is generally driven by the same recurring factors noted for first quarter.
We expect year over year expense growth to slow significantly in the second half of 2002.
As the frequency of Salesforce events returns to normal and senior health operating expenses are reflected in both years.
On a year over year basis, third and fourth quarter insurance and other operating expenses are expected to increase by about 9% and 5% respectively.
Turning next to slide 12, the invested asset portfolio remains well diversified with an average rating of a and a duration of four nine years.
During the quarter significant increases in interest rates led to an unrealized loss in the portfolio of $84 million compared to an unrealized gain of 81 million at December 31 2021.
Interest rates have continued to rise in April fixed income prices have continued to decline.
The declines are predominantly interest rate driven and not a result of significant credit concerns.
We also believe we have plenty of flexibility in the portfolio and have the ability to hold investments until maturity as necessary.
The increase in interest rates has allowed for more attractive investment opportunities the yield on new purchases for our life companies during the quarter averaged eight 5% for quality of double a minus.
Compared to two 6% in the prior quarter.
While it will take some time to reverse the impact at year that low interest rates have had on the portfolio book yield.
Domestic about the better buying opportunities that we've seen.
Finally on slide 13 invested assets in cash at the holding company remains very strong at $260 million.
Primerica life statutory risk based capital ratio was estimated to be about 440% as of March 31 2022.
During the quarter, we repurchased $99 million of our common stock, which when combined with the $19 million purchased in December is that $207 million remaining of our $325 million program to be completed this year.
We continue our work towards the implementation of targeted improvements to the accounting for long duration contracts, our Lv Ti, which will go into effect in 2023.
Still plan on providing an estimate of a preliminary adjustment to the balance sheet and other qualitative information when we report second quarter results in early August with that operator, I'll open the lineup for questions.
Thank you.
A reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad.
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We will pause here briefly ask questions a registry.
Our first question is from Ryan Krueger of <unk>, Brian Your line is open.
Good morning, guys. Thanks, good morning.
Hey, good morning.
And my first question was on the.
The senior health outlook.
Appreciate the updated commentary on the rest of the year I guess how are you.
At this point thinking about how this could translate into earnings.
2023.
I'll start with Adam glad if you want to fill in any commentary that would be great. So at this point, we haven't gone full projections for 2023, because quite frankly, we're evaluating all of the steps. We're taking this year to see what will happen, but being optimistic that these.
Changes that we're making.
Take and will help grow the business. We would then look next year to start.
Knowing the sales volumes again this year as we as Glenn has said, we're very specifically holding back on volumes as we are.
Booked through the operating model.
One thing we want to make sure. We do is constrained the cash that we put towards of the capital that we put towards this business until we feel more comfortable about the operating model is one that we think is a good solution for the future at that point once we're comfortable we feel much better about where the commissions come in over time, but all of the Wil acquisition.
Actions are largely front end loaded. So again, we are being very cautious about doing that this year and as we see successes in our various approaches toward improving churn improving relationship with the client reducing contract acquisition cost look sort of put our foot back on the accelerator and take it off the brake.
So.
So thats for the year and see traction on our efforts I will provide further insights into 2023.
Yeah, I agree I think it's a very deliberate process and so Allison has described it very well.
Thanks, and then on termite sales.
I guess, how are you thinking I think you commented that in the second quarter, you expect a 10% year over year decline how are you thinking about.
And as you move through the back half of the year at the.
The convention.
I think we will have some positives Ryan in the single and this year. So I think you see those.
Comparisons improving as we go throughout.
The year.
I think the convention will be helpful. The types of announcements we make it again.
Convention are designed to try to increase excitement and productivity and then you add that to the.
You are less aggressive growth from previous year, and I think you get some continued improvements in the comparisons as year progresses.
Thank you.
Thank you.
Our next question is from Dan Bergman of Jefferies.
Dan Your line is open.
Hi, good morning.
Hi.
So your prepared remarks on the termite persistence you were really helpful. I just wanted to see if you could provide a little more color on what youre seeing in that block of policies issued in the first year. The pandemic has sounded like drove the weakness and I apologize if I missed it but.
Any color on how persistency on that cohort of policies compared to.
Typical levels for pre pandemic vintages and is there any risk we could see a similar trend.
Sure.
First entered the pandemic.
Sales level skyrocketed.
Lot of our commentary and our question was how.
And with this block of business going to be performing and we knew purchases happening straight out of fear and there was likely to be some level.
I didn't give the exact.
Numbers in my prepared remarks.
On that block of business. That's in its second duration I would say, it's about 5% worse than what we typically would have seen on a second duration block pre pandemic. So while it is certainly not performing as strongly as historical trends, it's not that far.
Off that I have too much concern about it becoming a real issue across the board.
And I would say on the first year persistency, it's still.
Still actually favorable to pre pandemic levels so given.
We've made a lot of those policies were purchased sort of a little bit later in the cycle. When I don't want to think <unk> become became an everyday phenomenon I don't want to say that lightly, but where it became more of a routine thought in people's lives.
I feel a little bit more confident that that business will perform and again. It is currently performing better than pre pandemic frustration policy. So even if it weakens a little bit it's still land pretty much in line with the historical trends. So all in all I'm actually very pleased with what we're seeing.
And I do think it's interesting to look at the policies that are in their third duration or later.
Yeah.
Those are policies that were issued prior to the pandemic and just across the board, we're seeing like I said, 20% better persistency, so the people who prior to the pandemic.
Understood the need for insurance still absolutely understand the need and in fact are holding onto their policies even longer than before so all in all we think it's pretty positive.
Got it that's really on your ability to bring in new recruits.
I believe in the prepared remarks, you mentioned some changes in recruiting incentives just wanted to see if you could expand on that initiative.
Sure look to you Dan.
<unk>.
As we were coming into and coming out of the pandemic, which charter territory, we work with.
We're using recruiting incentives pretty heavily because you might recall before the pandemic started we were at.
Momentum surge going we're feeling good about our business in the late 19 in early 'twenty.
As we thought dependent it might be short at one time, we said, let's try to bridge that and continue the momentum. So we were aggressively using incentives and discounts and then we continue to do that as the pandemic lengthened.
Now.
Finding the fundamental strength in our business and we're pleased with it and so we're easing back on the more significant pandemics and using us to consolidate significant incentives and using.
More normal incentives kind of regular things little extra credit on our fleet.
He has leveraged and so what we're doing is we're kind of weaning ourselves off of all of those who really impactful recruiting incentives and what were finding.
And our recruiting business.
And so that was the nod toward a more focused use of incentives now and so we believe in looking at our numbers you've got more fundamentally sound numbers, because they are not being as influenced by incentives as they were in previous years.
Now more specifically to your question about what we're seeing in the market as I said in my prepared remarks.
Nothing gives us recruiting momentum like success of our business model and so while we certainly need to always be conscious.
The.
The tremendous loss of the pandemic. It did drive productivity drove success of our field leaders and their income and so we've got a strong recruiting message that we've got a great opportunity it performed well in difficult times.
We're kind of at our highest levels ever of sales productivity and compensation and so that creates a strong recruiting message and it also creates the confidence for our leaders to tell that message more often when it can be mentally and the fundamentals that are strong and longer lasting.
And then, particularly the tight labor market.
It's got a lot of.
Conflicts.
Kind of contradictions built into it but what helps US is when people are frustrated with their current jobs don't believe they have the opportunity. We don't believe they have the flexibility.
So for us that's when they look for alternatives and Thats when we show up on the radar very frequently. So we are seeing a lot of interest in our opportunity as people move between careers or look for the things that we offer and our opportunity. That's a positive we're not seeing a lot of headwinds from the tightness and we're offering an opportunity that it takes.
A fairly extended period of time to build that seems to attract frustrated employees not those that are in the hunt for a brand new job. This week. So we're not as susceptible to kind of swings in the tightness of the labor market. If it were extraordinarily tight for a period of years, we might turn into a headwind, but we're just not seeing that right now.
Got it that's really helpful. Thank you.
Youre welcome.
Our next question is with Mark Hughes of Truest.
Mark Your line is open.
Good morning, Mark Yes. Thank you good morning.
Hey, good morning, Glenn.
Allison the term life margin mid 2020.
1%.
Operating margin <unk> pretty pretty strong.
And over the balance of the year.
We get.
More normalization and these factors have been a little bit more is.
Is that.
That's a good level.
Or would more normalized the maybe a little higher a little lower.
The second quarter.
Quarter historically.
In the second quarter.
Echo ACO.
On the season.
Sure.
I do expect.
The second quarter to be a little bit elevated as a slight offset to that you do have the higher operating expenses that I was mentioning earlier I believe last quarter. We gave the guidance that we thought we'd be it went down 20% for the full year and fifth point, we're not changing that.
Okay.
And then Glenn.
I think you've talked about a 10% year over year decline in new.
New policies issued was that for <unk>.
Yes that was just for <unk>.
And then I think you said as the year progresses, you see those numbers improve.
Yes.
Get marginally marginally better.
That's great quarter by quarter, we expect that difference to be smaller and become more in line with last year.
Okay.
I think that's it for me appreciate it thank you.
Sure. Thanks Laurence.
Our next question is with Andrew <unk> of Credit Suisse.
Andrew Your line is open.
Good morning.
Question on <unk>.
Rep count.
<unk>.
Historically, when you've had these bi annual conferences, what kind of boost because it's good for you in subsequent quarters too.
Yes.
It's kind of been a historic.
Boost level and then with that said I think you've been saying.
And the budget year over year pickup in your Rep count.
Thats still the trajectory.
Yes, Andrew we are seeing some success.
SaaS and our pull through rate as I mentioned in my remarks, and so we're a little more optimistic now than we were last quarter and I think I made a comment to that effect in my prepared remarks, but what we see around the convention.
In years gone by we saw significant differences I'm talking about over.
The last 10 years in momentum before convention and after convention and we really didn't feel like that was a healthy dynamic we work very hard to have the maximum momentum before the convention.
Better momentum coming out, but not a huge difference between the two.
And I think we've succeeded in that over the year. So.
Youre not going to see night and day difference in the first.
The second quarter versus the third quarter. The first six months versus the last six months. However, we do make announcements at the convention and run incentives coming out of the convention and so what you're likely to see.
As I mentioned in my remarks as is everybody comes out of the field, including travel for a period of a week to 10 days to or can you see a little low in all activity around the event itself and then based on the announcements we make and the excitement we generate is.
Strong recruiting coming out of the convention, that's usually what we see and we play into that because the recruiting dynamic with incentives is probably the easiest one to move one of the reasons. We've worked so hard on our licensing pull through and one of the reasons I'm glad we're seeing positive impact of that now is because we need that in place. So.
Those large numbers of recruits come in we're prepared to deal with them and try to get a reasonable pull through rate.
All of the recruiting surge that we would expect after an event.
And all of that nets out to improving our net sales for signs of growth in the numbers at the licensing.
Processes.
A one month two a four months process and in some provinces in Canada, even longer than that so it's not something you see immediately after the event, but in the second half of this year and into the first half of next year, you would expect to see the strong recruiting plenty in the pipeline and the good pull through were experiencing give us some some positive momentum.
Minimum in sales force size over that extended period.
Very helpful for Glenn.
Then maybe thinking more long term more broadly.
The Rep count around 130000 in 2018 in 2019 before that.
The chaos of the pandemic.
And Youre still there.
Lot of ways. This is a great thing.
And so the question is Glen.
As we think longer term.
Are there any levers.
Or initiatives.
That youre thinking about.
Give prime there is substantial growth off of that 132 number.
Yes, I think Andrew this size, there's not a magic potion of magic pill.
It is the blocking and tackling because youre dealing with a percentage increase on the very large number.
And we do believe that there is a demand in the marketplace that continues.
To support growth in the size of our sales force the middle market is still.
Chronically underserved.
Out of our best efforts in a handful of other companies, possibly so.
Marketplace. The addressable market is still strong and the attractiveness of our business model through all kinds of economic conditions and world events continues to be appealing. So we think we have the fundamentals in place and we will use the opportunities that we see to try to add momentum to that as they appear.
We don't have a game plan that says there will be a huge momentum shift all of a sudden based on one announcement of one change we've got some fundamental strength in our process, but I'm pleased with and I do think we can take advantage of the things that I've mentioned to accelerate the growth.
We have those we generally grown historically from plateau. The plateau, we were at 100000 for a long time, we with fairly quickly to $1 20 and plateau, there and we got all the same questions and then we went to 130 and Unfortunately, just as we were beginning to break out of that plateau, a little bit Covid hit and so we'll get the same questions now, but we believe we believe there is.
Another plateau in front of us that's much higher than where we are today.
Awesome I'm expecting 230000.
Anyway.
If I could sneak one quick question.
After a banner year last year and investment savings product sales were up well into the double digits and this year you posted a good first quarter at 7% and you've been guiding for mid single digits.
Given the volatility in the markets right now and they are quite volatile.
How are you thinking about that guidance.
Yes, as I said in my prepared remarks, we are seeing even more volatility than we would have ever anticipated.
As everyone is of course, and it's a little more significant headwind than when we talked last quarter and Thats why we said right now we're projecting full year to be flattish with last year.
As a result of things slowing.
And again it's.
Primarily it's not just the amount of volatility.
Eurasia.
If this passes fairly quickly then it's less impactful if it stays out there remains volatile for a long period of time the longer its out there the more it slows us down so it's not just the <unk>.
Amount that we're seeing right now which is higher than we expected.
I'll tie into the duration and how long it lasts but right now all of that into the recipe.
And looking at what we think is probably something pretty close to flat with last year for the full year.
That's great. Thanks, so much.
Great.
Our next question is with Mark Hughes of truth.
Mark Your line is open.
Yeah. Thank you when you think about expenses next year the rate of increase obviously tapering I think you talked about 4%.
Increase in the fourth quarter.
Is the is that a good way to think about 2023, you won't have the.
Convention costs should it be low mid single digit expense growth next year.
Obvious things you would highlight to influence that number.
Yeah, Let me, let me break that into sort of two buckets. So some of our expenses I always talk about our growth related category. So things like if our premiums grow our premium taxes grow our assets under management.
Administration.
Fees Grad. So there are certain things that we call Barry that we look at that are very tied to revenue growth. So to the extent, we think we're going to have 510 15, 20% growth in semi those underlying dynamics. We would have the same growth in expense. So you have to sort of take that buckets separately and you.
Can see specifically on the ISP side and lay those out for you.
In the financial supplement you can get a good sense of what percentage of the expenses are really very much tied to our revenue source versus overall general operating.
But when you look at sort of the core general operating expenses I think historically, we've ally can be in I'd say, the 4% to 6% range and that is because of things like maybe annual merit increases which tend to be like.
Say, 3% cash.
We have the ongoing need to invest in technology, which has been a little bit higher on the <unk>.
Range.
Or maybe more like 90, 10% so with all that said I think historically <unk> been things that arent tied to pure growth in our revenue sources, we'd like to be in the mid single digit so, let's say somewhere between 4% to 6% that's our target.
Again, a large chunk of expense that you really need to look at what your assumptions are on the wording before determining what those expenses all day.
That helps.
Got it thank you.
Doug Thank you.
Thank you.
That concludes the conference call. Thank you for your participation you may now disconnect your line.
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