Q4 2017 Earnings Call
Thank you I will now turn the call over to MS. Kathryn Kieser Executive Vice President of Investor Relations. You May begin your conference. Thank you Kelly and good morning, everyone.
Welcome to primary because fourth quarter earnings call a copy of our earnings release financial supplement presentation and webcast of today's call are all available on our website at investors stopped Primerica Dotcom, Glenn Williams, our Chief Executive Officer, and Alison Rand, Our Chief Financial Officer will deliver prepared remarks, then we'll open it up for questions.
We reference certain non-GAAP financial measures in our press release and on this call. These non-GAAP measures have limitations and reconciliations between GAAP and non-GAAP financial measures are attached to our press release, our fourth quarter GAAP results reflect a net benefit of $95 $5 million to recognize the transition effects.
Of the tax cuts and jobs Act of 2017 during the quarter given the one time and unusual nature of this benefit we removed it impact from our non-GAAP operating results during the call. We will make forward looking statements in accordance with the Safe Harbor provision of the Securities Litigation Reform Act the company will not revise or update.
These statements to reflect new information subsequent events or changes in strategy.
Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's 2016 annual report on Form 10-K as updated by our quarterly reports on Form 10-Q , now I'll turn the call over to Glenn.
Thank you Catherine and good morning, everyone. During the call today I will begin with a recap of our 2017 accomplishments then move to fourth quarter results and wrap up with an overview of our strategic plans for the future.
In 2017, we showcased our ability to drive growth across the business while at the same time adapting to changes in implementing enhancements to deliver production growth and positive financial returns. These.
These results were accomplished as we successfully navigated through regulatory uncertainty like the Dol fiduciary rule and the full implementation of the new licensing regime in Canada.
Ongoing technology improvements continued to play a significant role in the performance of our core model during the year, we revitalized the new representative online experience starting from their first exposure to prime Erica through the licensing and training process and beyond U.
New capabilities now allow us to deliver real time customized communications to individual representatives based on their unique stage in the business.
We also continue developing mobile sales tools that appeal to a broad spectrum of our representatives and provide a platform for more effective interaction with prospective clients and our sales force and we transitioned our electronic applications to a system that allows representatives to use their personal technology, regardless of the device or platform.
Midyear, we launched a new mobile life insurance App, allowing policy changes to be submitted electronically, which has reduced the paper forms we receive each month by the thousands of these.
These initiatives along with Salesforce growth led to our life insurance issued face amount, surpassing $95 billion in 2017 ranking us among the top term life insurance issuers in North America.
And the investment and savings products business, we launched our lifetime investment platform in order to better serve our clients who have significant assets. This new state of the art advisory platform with significantly expanded product offerings drove strong managed account sales growth in the second half of 2017, and we expect this momentum to continue in <unk>.
18.
These efforts enhanced our value proposition and helped to increase the number of insurance and mutual fund licensed representatives to over 126020 4300 Representatives respect the respectively at the end of 2017.
All of these accomplishments combined with prudent capital management allowed us to successfully drive strong financial results and 2017.
As Katherine mentioned, we excluded the impact of tax reform from our operating results.
On slide three you can see our adjusted net operating income grew 17% and we achieved a 22% increase in adjusted net operating earnings per share and a 160 basis point increase in adjusted operating our OE E, 226% compared with 2016.
In 2018, our ROA E should continue to be among the best in the industry as we expect it to expand to around 22% for the full year.
Financial results were driven by solid term life, and ISP performance, including 15% growth in both adjusted direct premiums and average ISP client asset values as well as 11% growth in total ISP sales year over year.
Our strong and diversified cash flow allowed us to return 73% of our operating earnings to stockholders in 2017 in the form of share repurchases and stockholder dividends, resulting in the retirement of about 4% of our common stock outstanding as of year end 2016.
Now, let's turn to fourth quarter results on slide four <unk>.
Adjusted operating revenues increased 13% and adjusted net operating income grew 29% compared with the fourth quarter of 2016.
Adjusted operating EPS increased 34% to $1 60, and Ro <unk> expanded to 22, 1% in the fourth quarter of 2017.
Term life business results reflected continued momentum in adjusted direct premiums consistent claims experience and persistency that was in line with the guidance we provided last quarter.
Our investment and savings products segment continued to perform well in the fourth quarter due to higher average client asset values and growth in product sales year over year.
Turning to slide five strong recruiting and licensing trends in recent quarters drove an 8% year over year increase in the size of the sales force in the fourth quarter.
We saw recruiting of new Representatives, and new life insurance licenses, both increased 7% from the year ago quarter.
The additional recruits from the hurricane affected areas, who had their independent business application fees waived contributed to licensing growth in the fourth quarter, even though they are obtaining licenses at a rate that is slightly less than half the usual rate.
We expect the size of the life insurance sales force to continue to grow in the first quarter with an annualized growth rate similar to the 8% growth we experienced in 2017.
On slide six you can see term life insurance policies increased 1% over the strong results in the fourth quarter, a year ago, although productivity slowed year over year. It remained at the higher end of the historical productivity range at two one policies per life insurance licensed representative per month.
Fourth quarter investment and savings product sales grew 14% driven by a 16% increase in retail mutual fund sales as well as a 178% increase in managed accounts sales following the launch of the new lifetime investment platform earlier this year.
Variable annuity sales declined 4% in line with the industry and fixed indexed annuity sales declined year over year, reflecting a lower demand for principal protection products, among our clients and a continued shift in larger size trades to managed accounts and retail mutual funds.
Net flows were positive $297 million in the fourth quarter and client asset values increased 17% versus prior year to a record $61 2 billion at the end of the year.
We remain well positioned to outperform the industry by effectively serving middle income families with one of the largest exclusive financial services sales forces in North America. Our educational approach provides these families with a financial roadmap to help them make prudent financial decisions about protecting their income and saving for retirement.
The significant need for what we do.
According to industry sources middle income households need approximately 12 trillion dollars of additional life insurance to become properly protected and 84% of all American households are falling short of reasonable retirement savings targets, which may create an additional 14 trillion.
Need for retirement savings in America.
We are currently striving to drive long term value for all of our stakeholders by executing our strategy for future growth through business initiatives and prudent capital management.
Over the course of the last few years, we have developed and we are executing a business strategy that is organized across four primary areas on.
On slide eight you can see the four components of our business strategy include maximizing our sales force growth leadership and productivity broadening our portfolio of protection products, enhancing our investment and savings products business and developing digital capabilities to deepen our client relationships.
Our distribution capabilities also allow us to consider offering other products and services to better meet our clients' needs throughout their lifecycle, we've been assessing opportunities to partner with third party providers in a couple of areas we.
We currently have about 23000 life insurance Representatives, who also have a health insurance license.
But do not have a significant health product to offer to their clients. So we see health insurance is an area of opportunity.
We believe partnering to provide a mortgage lending product to further help our clients consolidate and eliminate their debt also presents opportunities.
Today, we show our clients how to budget and prioritize their debt payments in order to get out a bit more quickly.
Our previous mortgage lending business was very successful and we believe a new program could also see success now that many middle income families have equity in their homes.
Later this year, we plan to launch an investment and savings products application tool called EZ key which will create efficiencies, allowing us to better serve clients with fewer assets by making it faster and more convenient to complete investment applications.
Easy key should drive long term productivity and make the ISP business more attractive to representatives, who are considering obtaining a mutual fund license.
We have an ongoing commitment to invest in technology development to enhance the effectiveness of our representatives and deepen client relationships successful strategy execution requires significant investment in digital initiatives. This year, we plan to lay the groundwork for a multi year initiative to modernize end to end systems data Guy.
<unk> and processes to enable speed agility innovation and continuous delivery, replacing slower complex systems and processes, we plan to invest about $11 million in 2018 to start the process.
In addition to our strategic initiatives to drive organic growth, we remain committed to increasing stockholder value by actively deploying capital.
We're confident in our business and future prospects and expect to accelerate capital deployment in 2018.
<unk> capital generation enables us to increase our expected share repurchases by about 33% to around $200 million in 2018.
We also raised our stockholder dividend, 25% from the third quarter to 25 per share payable in March of 2018.
Tax reform positively impacts primarily.
Tax reform been effective for all of 2017, our net operating income would have been about $35 million higher than actual experience. We believe this creates an opportunity for us to accelerate planned initiatives and give back to our key constituents. We've always invested in our communities our people and our clients.
We are carefully considering the options before us we expect to invest approximately $7 million to $10 million more in these areas in 2018.
Our commitment to the primary foundation will increase enabling us to increase our impact in the communities. We serve we will further invest in our people by earmarking funds for additional compensation for our non management employees and creating new positions to support growth.
I'm optimistic about the growth opportunities ahead, and our ability to deliver long term value for all of our stakeholders now I'll turn it over to Alison.
Thank you Glenn and good morning, everyone. Today, I will share with you the key drivers behind our fourth quarter financial results and insight into 2018 expectations, followed by an overview of how tax reform impacts primerica.
Starting on slide nine in the fourth quarter, our term life segment adjusted operating revenues increased 16% driven by 16% growth in adjusted direct premiums year over year.
Also reflect continued strength in term life production as well as growth in both new business and end of term business not subject to IPO related coinsurance agreements yes.
Adjusted operating income before income taxes grew 33% and our pre tax operating margin expanded to 19, 8% from $17 three in the prior year period.
Incurred claims in the fourth quarter were consistent with historical trends in both the current and prior year periods.
As we typically do in the fourth quarter, we locked in assumptions such as persistency and mortality for the current issue here.
The finalization of assumptions this period did not meaningfully impact the benefits and claims ratio, which was 57, 6% for the quarter, whereas in the prior year period, the assumption marking process resulted in a higher ratio of 58%.
On a full year basis. The 2017 benefits in claims ratio was 58, 5%, which is consistent with both the prior year and our expectations for 2018.
Persistency continued to stabilize in the second half of the year, the fourth quarter DAC amortization ratio was 16, 9%, whereas in the prior year period. The ratio was about 100 basis points higher largely due to weaker early duration persistency in that period.
On a full year basis 2017 ratio was 15, 9% up slightly from 15, 6% in 2016.
Let's say 2018, we expect the DAC amortization ratio, which you will notice from our financial supplement includes non deferred insurance commissions to be at or slightly below 2017 full year level.
While we believe <unk>.
2018, we will not see a repeat of the weaker participants results experienced in the first half of the year in 2017, we do expect to see a modest shift from deferred to non deferred insurance commissions due to a change in our sales force equity program.
Note that while there will be a change in the timing of expense recognition the level of sales force compensation remains unchanged.
The net insurance expense ratio of six 5% with lower than usual.
In December 2017, we changed the state of domicile for primary <unk> life insurance company to Tennessee, which reduced the retaliatory premium taxes and representative licensing fees incurred for 2017.
The $3 3 million full year benefit of this change was recognized in the fourth quarter 2017, and increased adjusted operating EPS by about <unk>.
For the period.
For 2018, this benefit will be recognized ratably throughout the year.
And a full year basis, the net insurance expense ratio was seven 5% in 2017.
Expect it to increase slightly in 2018, largely due to the strategic investment in the business that Glenn It's Scott.
Adjusted direct premiums grew 15% in 2017 on a full year basis, driven by strong sales levels in the past few years.
<unk> business subject to IPO related coinsurance.
And policies that continue when reaching the end of the initial level premium period, which beginning in January of 2017, we stop heating to the IPO reinsurers.
We're training these end of term policy positive positively impacted our adjusted direct premiums growth by approximately 2% in 2017.
We expect adjusted direct premiums to continue to grow by 15% to 16% in 2018.
The term life business continues to produce steady and predictable long term earnings.
While they were quarterly fluctuations in persistency and claims during 2017, the full year term life margin of 18, 8% was consistent with the margin achieved in 2016.
Assuming mortality experience stays at normal levels and participant experience is consistent with the second half of 2017.
We'd expect the term life margin in 2018 to be slightly below the 2017 level, reflecting modest pressure from the business investments Glen described earlier.
Moving now to our investment and savings products segment on slide 10, you'll see our ISP operating revenues and operating income before income taxes increased 8% and 15% respectively.
Fourth quarter a year ago.
Year over year revenue generating product sales increased 8%, while sales based revenue increased 2%, reflecting a continued shift in sales from annuities to other products with lower sales based earnings.
Sales of managed accounts increased significantly during the second half of 2017 following the launch of our Primerica advisors lifetime investment platform in June .
These sales do not generate sales based revenues they do provide ongoing asset based earnings above what we receive for U S retail mutual funds.
In the fourth quarter, the 18% growth in asset based revenue was driven by 16% growth in average client asset values.
Count based revenue declined 8% year over year largely related to the full year benefit of a change made in the account based fee structure in the fourth quarter of 2016, which was recognized ratably throughout 2017.
In December of 2017, we negotiated new contracts with certain parties involved with our record keeping platform that will include our record keeping economics by approximately $3 million in 2018.
As a result of these new contract in 2018, we expect account based revenue to increase by about $27 million with an offset of about $24 million and higher operating expenses.
Both of which will be generally incurred throughout the year.
As we typically do in the fourth quarter, we updated Canadian segregated fund DAC amortization assumptions to reflect emerging redemption experience in both this quarter and the fourth quarter of 2016, the resulting adjustments lower DAC amortization by about $2 million as redemption levels continue to improve.
We also experienced strong market performance in the current year period, which when combined with the redemption assumption update resulted in an overall reversal of DAC amortization period.
On Slide 11, you can see the corporate and other distributed product segment operating revenues were $30 3 million and operating losses before income taxes were $8 2 million in the fourth quarter of 2017.
It fits in claims for our New York subsidiary, a closed block of life insurance products were approximately $1 million higher than the prior year, reflecting normal volatility.
The increase in net investment income reflects a larger invested asset portfolio, partially offset by the continued impact of low investment yields.
While rising rates should continue to provide us with better yielding investment opportunities the impact of reinvestment will be somewhat gradual over the next 12 months, approximately 10% or $184 million of our portfolio will mature with an average yield of around three 9%.
Now I'll move to a discussion of the company's insurance and other operating expenses.
On Slide 12, you can see our fourth quarter expenses of $80 9 million or $3 million higher than the fourth quarter of last year.
The year over year change, primarily reflects higher employee growth and technology related expenses. These expenses were partially offset by lower retaliatory premium taxes. It agent licensing fees from the change in <unk> eight of domicile to Tennessee.
In the first quarter of 2018, we expect the typical increases in our in our insurance and other operating expenses that we normally see each year.
As a reminder, our first quarter expenses are usually higher due to the annual grant of management equity awards to retirement eligible employees eligible employees that are fully expensed when granted as well as other annual employee related and operational expenses unique to the first quarter.
In comparison to the prior year period, we expect expenses in the first quarter of 2018 to increase by about $18 million.
We anticipate an increase of approximately $2 million and growth related costs, driven by term life premium and ISP client asset values.
We expect another $7 million increase due to the new ISP record keeping contract, which will be more than offset by an increase in account based revenue.
We expect the remaining increase to be an employee and technology related expenses, some of which comes from the $11 million technology investment Glen discussed earlier.
Given our initiatives will modernize end to end system and transform the way primary build and deliver technology in the future about two thirds of the cost will be concentrated in the corporate and other distributed product segment during 2018.
As we execute our digital strategy. These expenses will shift to other segments based on individual initiatives.
Glenn also mentioned our intention to invest an additional $7 million to $10 million and our community people and businesses as a result of tax reform.
We're still working through these plans so very little is expected to be incurred in the first quarter of 2018.
Moving now to income taxes, the effective tax rate for the fourth quarter of 2017, excluding the impact of tax reform was 32, 5%.
<unk> reflects excess tax benefits of approximately $1 million for the difference between the stock price of Salesforce equity awards at the time of grant and when the sales restrictions last which was reflected in equity in the prior year period.
As a result of tax reform the company's U S. Net deferred tax liability was revalued using a 21% tax rate in the fourth quarter of 2017 and taxes were increased to include mandatory deemed repatriated earnings from the company's Canadian subsidiary.
As you can see on slide 13, the net effect of these transition adjustment, but a $95 5 million reduction to income tax expense during the quarter.
As previously noted Primerica has excluded this benefit from adjusted net operating income.
Given the mix of business between U S and Canada <unk> annual effective tax rate is expected to be in the 22% to 23% range for 2018.
Tax reform includes two life insurance specific provisions that do not impact the effective tax rate, but essentially offset the cash tax benefit of a lower corporate rate in our life insurance business.
While cash taxes in our non life business does benefit from a lower effective tax rate. The company's overall free cash flow is not expected to materially change from tax reform.
As I wrap up let me say that we remain committed to maintaining a strong balance sheet, who continue to demonstrate a strong capital position with primerica life insurance company's statutory risk based capital ratio estimated to be around 450% and holding company liquidity of $112 million at the end.
2017.
Yeah, Nick Formula to calculate calculate the company's RBC ratio has not been updated to reflect the reduction in the federal income tax rate.
If or when the NTIC adjust the RBC calculation, the company's RBC ratio would be negatively impacted by approximately 70 to 80 basis points.
While the lower corporate corporate tax rate could change the way the RBC ratio is calculated it did not detract from how we view our capital strength.
We will be monitoring the developments at DNA, IC and responses by rating agencies to determine whether permanent changes at targeted RBC levels are necessary.
We continue to generate a significant free cash flow from our diverse businesses.
Block of term life business under principal based reserving grows the lower reserve requirement will create distributable capital without the need for financing transactions, which require regulatory approval.
This provides us with more certainty about capital distributions from our term life business, which when combined with the growth from our ISP segment have allowed us to increase capital.
Our capital deployment plans in 2018 to around $200 million of share repurchase purposes. In addition to 25% increase in stockholder dividends now lets open the lineup for questions.
And at this time I would like to remind everyone. If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Our first question comes from the line of Dan Bergman from Citi. Your line is open.
Good morning, Diane Thanks, Hi, good morning, guys.
Thanks, So for the incremental expenses you talked about both the technology improvements and investments in the community businesses I apologize if I missed this but how should we think about how each of those should we think of them as kind of ongoing annual expenses are more isolated 2018 on that any color on how those might look over the next couple of years would be much appreciated.
Hey, Glenn I'll go ahead and take that one.
Interesting I think the technology is specifically I I believe as everyone knows technology never stays the same so while we do have some.
I'll call them onetime cost to do some fundamental changes to our infrastructure I would expect that we will continue to invest somewhere around this level.
Of our of our annual earnings toward improving our technology and so on.
As long as we continue to see obviously benefits associated with those efforts.
With regard to the pieces associated with tax reform most of those items are really going to be pretty permanent in nature, because we're really trying to get at benefits to our our employees, which really would not be onetime type of events.
So I would expect both of those to be fundamentally part of our expense base going forward.
Great. Thanks.
And then I guess.
You've had a really strong run with the investment savings product sales over the past year or so and.
And given that that metric has historically had some level of correlation with market performance I just wanted to see if you had any thoughts on what impact.
The recent market volatility might have on ISP sales should we expect growth to continue or maybe a shift from mutual funds to annuities any thoughts there would be much appreciated.
Hey, Dan.
Obviously that for every market I believe that kind of volatility creates a lot of questions and confusion.
We tend to be a little insulated from that on main street, but with today's communications abilities. It gets to main street pretty quickly I think the answer to your question is really on how long the disruption goes if it's something that's a blip and it smoothes out fairly quickly.
I don't think it impacts the long term trajectory of our business very much.
Volatility continues over a period of weeks or months and clearly that's going to create some nervousness and people tend to stay on the sidelines when nervous. So it's very it's a little too early to tell exactly how to answer that question, but I think you would be right in assuming that if it stayed volatile for a longer period of time, we'd start to see a headwind as a result.
Of it if it's kind of the ship writes itself fairly quickly it would be much less disruption.
Great. Thanks, so much for taking my questions.
Sure.
And our next question comes from the line of Mark Hughes of Suntrust. Your line is open.
Thank you good morning.
Alison the benefit of the.
The change in the IPO coinsurance treatment at the end of term issue I think you said it was the two point tailwind for the year, presumably stronger for the fourth quarter.
Should that relative impact I think it will be sustained but should the impact be greater should.
To become four or should that.
Did that impact stabilize or even diminish a bit over time.
First of all I am disappointed that you didn't start singing rocky top but okay.
Anyway.
Anyway. The you are correct and I think we've indicated that this benefit is going to be there for quite some time I think the number might be closer to about 3% for 2018 of our benefit probably starts to tail off a little bit after that and the reason it doesn't continue to grow as you go.
Remember this is a really lumpy block of business. So it really has to do with what we sold 10 or 20 whatever years ago.
To see whats coming through the pipeline.
But but one thing to caution and that's why we went ahead and gave you sort of our overall estimate for adjusted direct premium growth the number of 15% to 16% growth does incorporate that benefit you have to remember one of the things that would be otherwise taking the growth rate down is sort of this debt.
Mix, if you will between our old legacy business and the new business that we've been putting on since the IPO and that sort of an effect that we've been seeing.
Since we've been public over.
We've got a lot we've got a very high.
Retention rate on our ISP business. So those assets should be there generating earnings for quite some time.
Then the final question should look like the persistence he was a little bit weaker in the quarter I think fourth quarter it looks like historically.
For assistance he has been a little bit lower but then this was still down a little bit year over year.
Seeing them properly anything to read into that.
You are correct that fourth quarter is generally a weaker quarter I would not say necessarily that persistency is down I I'm not sure. It does have to really do with where the lapses are coming from we're very focused in from a dash perspective, what we were talking about earlier.
Earlier quarters is this early duration persistency and early duration persistency actually it was very much in line, if not maybe mildly better than last year. So you might be looking at overall lap station right maybe from the fins up I'm not sure where you are getting that from.
That is where you're getting it from you have to remember to unfortunately and determined I think I talked about this last quarter end of term does create.
Create a little bit of a phenomenon there theoretically when a policy reached the end of term.
Those policies all are supposed to last or they can laugh.
What we see happening is some people because of what's have are happening in their lifestyles are changes in the market and what they were they are in their lives as they go ahead and either renew or can continue their policy. So depending on the volume that we're going to have an end of term business from periods period, you can see sort of.
Lifts, if you will and lap station.
And if youre looking specifically at the role forward of the in fourth block and if you really look at the underlying details which is hard for you to see but from from what we are able to see again I say early duration persistency was consistent or potentially modestly improved.
From where it was last year.
Yeah and it was.
Supplement that we're looking at it thank you very much.
You're welcome.
Our next question comes from the line of Sean Dargan of Wells Fargo. Your line is open.
Charles Good morning, I have a question about the I guess the targeted RBC ratio.
And the move of the state of domicile to Tennessee.
It's my understanding that at the time of the IPO.
You made representations to Massachusetts that you keep RBC up around 450%, which seems high given the product that you're selling.
Putting aside the the hit RBC from from.
The change in in the tax code.
I'm just wondering if you think Tennessee is going to let you run at a lower RBC.
I will tell you this that.
The attempt or the desire to run at a lower RBC.
Not a factor in our decision to move to Tennessee.
Again, we've always operated based on what we have felt we really needed.
Part of the reason we were keeping it so high early on is just the newness of the organization and the fact that we had quite frankly taken out quite a bit of capital when we separated from city, but Massachusetts to their credit has been very willing to work with US and has never stood in the way of anything we wanted to do so it really isn't.
Function of trying to manage RBC level.
We have very strong we had very strong open dialogue with Massachusetts, and I can see from our early.
Nation ships with Tennessee, It will be the same there that they understand the business and understand what the businesses needs are so simply focusing on a ratio I don't think we'll be what anybody looks to do.
And just think.
Think about the capacity to buy back stock.
Common dividend is.
That being driven by higher free cash flow out of ISP.
Right.
Two things one is absolutely the higher free cash flow out of ISP.
One other item very specifically for US is principal base reserving and it does take some time for the the reserves that are under that new regime to build but the unique thing here is we have certainty around what are required capital will be or what our reserves.
Will be whereas in the past under Triple X. While we always felt like we were going to be able to execute financing transactions. They did require regulatory approval and therefore, we could really never say with certainty.
What would or would not be distributable. So what you are looking at here and what you're seeing with our effort to increase our deployment for 18 is a combination of having that certainty now as well as the strength we've seen in ISP.
Great. Thank you.
And again, if you would like to ask a question of star one from your telephone keypad.
Our next question comes from the line of Peter Schwinn K VW. Your line is open.
Hey, good morning.
Good morning, guys. Just a quick follow up on the increased share repurchase so does the $200 million represent a good proxy for free cash flow generation at this point.
It represents.
There is a good proxy for what we believe will be available at the holding company.
Okay got it thanks, and another quick question an agent recruiting so growth has been really strong for the last three years now so do prior year comparisons start getting tougher at this point and do you see this continued momentum going forward.
Yes, we will Peter as the numbers get bigger I mean, clearly the comparisons often are tougher but at the same time, that's offset by the fact that we see just ever increasing need for what we do in the marketplace, which we believe directly impacts.
Attractiveness of our opportunity so like most things in life, you've got a combination of headwinds and Tailwinds just continuing the incredible growth we've experienced does get harder mathematically, but at the same time, we do believe we've got a powerful story.
And we expect to be able to continue.
The momentum in the same.
General vicinity of what you've seen recently as we head into 2018.
Thank you everyone.
And our last question comes from the line of Adam Klauber from William Blair. Your line is open.
Yeah.
Morning, everyone.
Clearly mutual funds sales are doing well.
Is the or the amount of rough spring license is that growing tours how's the pipeline look for.
New reps to get a license to sell mutual funds.
Yes.
Group is still growing the size of our sales force as we reported in my prepared remarks at about 24300.
Has not been growing as we've talked about on previous calls.
At the same level as our insurance sales force.
And that's just to be expected.
Number one as we move our insurance Salesforce first because that is the the pool of resources from which we get those license to a mutual fund reps.
And so that has to go first.
And we expect the mutual fund licensing process, which is a little more difficult to be delayed somewhat do the timing of it being the second license, but also since it is a more difficult exam and it's one that people have to hire a higher level of commitment of both time and effort to get and maintain it probably goes a little bit slower rate.