Q4 2023 Primerica Inc Earnings Call

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Operator: Greetings. Welcome to Primerica's fourth quarter 2023 earnings call. At this time, all participants are in listen-only mode.

Speaker Change: Greetings and welcome to Primerica's fourth quarter 2023 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll now turn the conference over to Nicole Russell, Senior Vice President, Investor Relations. Nicole, you may now begin.

A question answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during todays conference. Please press star zero from your telephone keypad.

Speaker Change: Please note this conference is being recorded.

Speaker Change: At this time I'll now turn the conference over to Nicole Russell Senior Vice President of Investor Relations. Nicole you May now begin.

Nicole Russell: Thank you, operator, and good morning, everyone. Welcome to Primerica's fourth-quarter earnings call. A copy of our press release, along with other materials relevant to today's call, is posted in the Investor Relations section of our website. Joining our call today are our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Tracy Tam. Our comments this morning will contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. We assume no obligation to update these statements to reflect new information and refer you to our most recent Form 10-K filing, as may be modified by subsequent Form 10-Q, 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. Reconciliation of non-GAAP measures to their respective GAAP numbers is included at the end of our earnings press release and is also available on our investor relations website. I would now like to turn the call over to Glenn.

Nicole Russell: Thank you operator, and good morning, everyone welcome to primary catch it fourth quarter earnings call a copy of our press release, along with other materials relevant to today's call are posted on the Investor Relations section of our website.

Nicole Russell: Joining our call today, our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer Tracy Tam.

Nicole Russell: Our comments. This morning will contain forward looking statements in accordance with the Safe Harbor provisions of the Securities Litigation Reform Act.

Nicole Russell: We assume no obligation to update these statements to reflect new information.

Nicole Russell: I refer you to our most recent Form 10-K filing.

Nicole Russell: Maybe modified by subsequent filed 10-Q.

Nicole Russell: Form 10-Q, excuse me for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied.

Nicole Russell: We will also reference certain non-GAAP measures, which we believe provide additional insight into the company's operations rec.

Nicole Russell: A reconciliation to non-GAAP measures to their respective GAAP numbers are included at the end of our earnings press release and are also available on our Investor Relations website I would now like to turn the call over to Glenn.

Glenn J. Williams: Thank you, Nicole, and thank you everyone for joining us this morning. Primerica's strong performance during the fourth quarter and full year 2023 reflects the power of our distribution. The ongoing need for the financial solutions we provide is clear, and our sales force is uniquely positioned to reach and serve middle-income families. Now more than ever, our clients need the education and guidance provided by our representatives to navigate economic uncertainty and manage the financial pressures associated with a higher cost of living. Starting with the highlights of our financial results, fourth quarter adjusted net operating income increased 4% compared to the prior year period, while adjusted operating income per share increased 9%. On a full year basis, adjusted net operating income increased 8%, and adjusted operating income per share rose 15%.

Glenn: Thank you Nicole and thanks, everyone for joining us this morning Pri.

Glenn J. Williams: <unk> strong performance during the fourth quarter and full year 2023 reflects the power of our distribution.

Glenn J. Williams: The ongoing need for the financial solutions, we provide as clear and our sales force is uniquely positioned to reach and serve middle income families.

Glenn J. Williams: Now more than ever our clients need the education and guidance provided by our representatives to navigate economic uncertainty and manage the financial pressures associated with a higher cost of living.

Glenn J. Williams: Starting with the highlights of our financial results fourth quarter adjusted net operating income increased 4% compared to the prior year period, while adjusted operating income per share increased 9%.

Glenn J. Williams: On a full year basis, adjusted net operating income increased 8% and adjusted operating income per share rose 15%.

Glenn J. Williams: In addition, we maintained our commitment to returning capital to stockholders, including the completion of our previously announced $375 million stock repurchase authorization and payment of a total of $94 million in quarterly stockholder dividends. Taking into consideration the complementary nature of our insurance and investment businesses and the predictability of cash flows, the board approved a new $425 million share repurchase program in November 2023 to occur through December 31, 2024. The board has also declared a 15% increase in our next quarterly dividend, bringing the payment to 75 cents per share. Over the last few years, we've become more focused on communicating the attractiveness of our entrepreneurial business opportunity, and we continue to enhance our processes to keep new recruits engaged. There is also greater flexibility and more options for new recruits who are preparing for their licensing exams.

Glenn J. Williams: In addition, we maintained our commitment to returning capital to stockholders, including the completion of our previously announced $375 million stock repurchase authorization and payment of a total of $94 million in quarterly stockholder dividends.

Glenn J. Williams: Taking into consideration the complementary nature of our insurance and investment businesses and the predictability of cash flows the board approved a new $425 million share repurchase program in November 2023 to occur through December 31, 2024.

Glenn J. Williams: Our board has also declared a 15% increase to our next quarterly dividend, bringing the payment to 75 cents per share.

Glenn J. Williams: Over the last few years, we've become more focused on communicating the attractiveness of our entrepreneurial business opportunity, we continue to enhance our processes to keep new recruits engaged.

Glenn J. Williams: There's also greater flexibility and more options for new recruits who are preparing for their licensing exams. The fundamentals of our business are sound and we are well positioned for the future.

Glenn J. Williams: The fundamentals of our business are sound, and we are well positioned for the future. Looking more closely at our distribution progress, during the fourth quarter, we recruited nearly 90,000 individuals, a 17% increase compared to the prior year period. We also saw a 17% increase in licensing, with 13,000 reps obtaining a new life license, helping fuel 5% growth in the size of the sales force to end the year with a total of 141,572 life license representatives.

Glenn J. Williams: Looking more closely at our distribution progress during the fourth quarter, we recruited nearly 90000 individuals' a 17% increase compared to the prior year period. We also saw a 17% increase in licensee with 13000 reps obtaining a new life license, helping fuel 5% growth in the size of the sales force.

Glenn J. Williams: To end the year with a total of 141572 life license Representatives.

Glenn J. Williams: Our momentum has continued into the new year as we see a high degree of interest in our business opportunity. These dynamics are leading us to project around 3% growth in the size of the sales force during 2024. Turning next to sales results, we continue to see strong demand for our term-life business following the launch of our new insurance products in the fall of 2022. The simple and convenient application process has increased rep confidence, while advancements in underwriting technology allow us to issue policies more rapidly. The increase in the number of rate classes often appeals to clients across a broader spectrum of face amounts.

Glenn J. Williams: Our momentum has continued into the new year as we see a high degree of interest in our business opportunity. These dynamics are leading us to project around 3% growth in the size of the sales force during 2024.

Glenn J. Williams: Turning next to sales results, we continue to see strong demand in our term life business. Following the launch of our new insurance products in the fall of 2022, the simple and convenient application process is increase rep confidence while advancements in underwriting technology allow us to issue policies more rapidly.

Glenn J. Williams: The increase in the number of weight classes, often appeals to clients across a broader spectrum of face amount.

Glenn J. Williams: During the fourth quarter, we issued almost 89000, new term life policies or 12% more than the adjusted policy count in the same quarter in 2022 for an annual total of nearly 359000 new policies issued.

Glenn J. Williams: During the fourth quarter, we issued almost 89,000 new term life policies, or 12% more than the adjusted policy count in the same quarter of 2022. For an annual total of nearly 359,000 new policies issued. This represents an 8% increase over adjusted 2022 figures. In 2023, we issued a record $119 billion in new term life protection for our clients, a 15% increase compared to the prior year, bringing Primerica's total amount of coverage in force to $945 billion.

Glenn J. Williams: This represents an 8% increase over adjusted 2022 figures in.

Glenn J. Williams: In 2023, we issued a record $119 billion in new term life protection for our clients, a 15% increase compared to the prior year, bringing the primary cause total amount of coverage in force to $945 billion.

Glenn J. Williams: We believe we will continue to benefit from the positive response to our new insurance products during 2024.

Glenn J. Williams: Just on our current projections, we anticipate full year growth in the number of policies issued to be around 3% to 5%.

Glenn J. Williams: Turning next to our investment and savings products business total sales of $2 $4 billion during the quarter increased 13% compared to the fourth quarter of 2022, driven by a combination of strong demand for U S mutual funds and variable annuities.

Glenn J. Williams: We believe we will continue to benefit from the positive response to our new insurance products during 2024. Based on our current projections, we anticipate full-year growth in the number of policies issued to be around 3% to 5%. Turning next to our investment and savings products business, total sales of $2.4 billion during the quarter increased 13% compared to the fourth quarter of 2022, driven by a combination of strong demand for U.S. mutual funds and variable annuities. In addition, sales volume increased in managed accounts as activity resumed following a brief period of adjustment due to a platform conversion in the third quarter. Net client inflows in the fourth quarter of $172 million reflected normal levels of client redemptions as a percentage of client asset value.

Glenn J. Williams: In addition sales volume increased in managed accounts as activity resumed following a brief period of adjustment due to a platform conversions in the third quarter.

Glenn J. Williams: Net client inflows in the fourth quarter of $172 million reflected normal levels of client redemptions as a percentage of client asset values ending client asset values benefited from strong equity market appreciation in 2023, ending the year at $97 billion up 15% versus December 31, two.

Glenn J. Williams: 'twenty two.

Glenn J. Williams: We've continued to see ISP sales growth during the start of 2024, we're mindful of the continued economic uncertainty and the impact that a higher cost of living has a middle income families. We are projecting an increase of approximately 5% in ISP sales during 2024.

Glenn J. Williams: As we turn to our senior health business, we continue to take a deliberate approach to building the business as we evaluate its progress.

Glenn J. Williams: Looking at the results for the fourth quarter Ltvs were $1109 per approved policy of $221 a year over year, which includes the re class of $182 per policy for marketing development funds that were previously captured in the other revenues line.

Glenn J. Williams: Ending client asset values benefited from strong equity market appreciation in 2023, ending the year at $97 billion, up 15% versus December 31, 2022. We've continued to see ISP sales growth during the start of 2024. We're mindful of the continued economic uncertainty and the impact that a higher cost of living has on middle-income families.

Glenn J. Williams: The re class of marketing development funds as a result of changes in our carrier contracts.

Glenn J. Williams: Our current challenge of sales volume with fourth quarter total submitted policies down 17% year over year due to fewer tenured each eloquent agents entering AEP.

Glenn J. Williams: Referral activity from Primerica Representatives accounted for approximately 25% of submitted policies.

Glenn J. Williams: Lower productivity by 10 year D. TQ agents led to a 22% increase in CAC to $878 per approved policy during the fourth quarter of 2023.

Glenn J. Williams: We're projecting an increase of approximately 5% in ISP sales during 2024. As we turn to our senior health business, we continue to take a deliberate approach to building the business as we evaluate its progress. Looking at the results for the fourth quarter, LTVs were $1,109 per approved policy, up $221 year-over-year, which includes the reclassification of $182 per policy for marketing development funds that were previously captured in the other revenues line. The reclassified marketing development fund is a result of changes in our carrier contract. Our current challenge is sales volume, with fourth quarter total submitted policies down 17% year over year due to fewer tenured e-telequote agents entering AEP. Referral activity from Primerica representatives accounted for approximately 25% of submitted policies. Lower productivity by untenured ETQ agents led to a 22% increase in CAC to $878 per approved policy during the fourth quarter of 2023. The LTV to CAC ratio was 1.3.

Glenn J. Williams: The LTV to CAC ratio was one three.

Glenn J. Williams: The new leadership team that he telecom is now at full strength and focused on increasing the percentage of 10 year agents, while managing the cost structure to improve the LTV to CAC ratio.

Speaker Change: In closing, let me provide a few observations about our upcoming convention.

Glenn J. Williams: This summer we returned to the Mercedes Benz Stadium in Atlanta, and our team is already working hard to ensure another successful event.

Glenn J. Williams: We had a solid turn out coming out of the pandemic at our 2022 convention and we expect to see an even larger group at this year's event.

Glenn J. Williams: The magnitude of this event provides the perfect platform to cast a clear vision for the future to the entire prime Erika team.

Glenn J. Williams: Speaker service coaches motivating and unifying the salesforce toward a common goal of growing the business.

Glenn J. Williams: In the event creates a unique opportunity to recognize and celebrate past accomplishments, while renewing commitments for future success.

Glenn J. Williams: In the months, leading up to the event field leaders are pushing teammates to stretch for the finish line and earn an opportunity to be recognized as a top performer.

Glenn J. Williams: Following the event reinforce our vision with additional messaging to drive activity and sustained momentum well beyond the convention itself.

Speaker Change: Before turning the call over to Tracy I want to congratulate her on officially taking over as CFO in December I'm proud to say that the transition has been seamless.

Glenn J. Williams: The new leadership team at E-Telequote is now at full strength and focused on increasing the percentage of tenured agents while managing the cost structure to improve the LTV to CAC ratio. In closing, let me provide a few observations about our upcoming convention. This summer, we return to Mercedes-Benz Stadium in Atlanta, and our team is already working hard to ensure another successful event.

Tracy Tam: I want to thank Allison for her tremendous contributions to primary Erika the entire team wishes are the best in retirement, which becomes effective April the first now.

Tracy Tam: Now I'll hand, it over to Tracy to review our financial results.

Tracy Tam: Thank you Glenn good morning, everyone.

Tracy Tam: In my prepared remarks today.

Tracy Tam: Fourth quarter results and provide an outlook on key financial measures for 2024.

Tracy Tam: In the term life segment.

Tracy Tam: Operating income of $140 million increased 6%.

Tracy Tam: During the quarter on a year over year basis.

Tracy Tam: Driven by 6% higher adjusted direct premium.

Tracy Tam: Pre tax operating margin at 22, 6% remains unchanged.

Glenn J. Williams: We had a solid turnout coming out of the pandemic at our 2022 convention, and we expect to see an even larger group at this year's event. The magnitude of this event provides the perfect platform to cast a clear vision for the future on the entire Primerica team. Speakers serve as coaches, motivating and unifying the sales force toward a common goal of growing the business. And the event creates a unique opportunity to recognize and celebrate past accomplishments while renewing commitments for future success. In the months leading up to the event, field leaders are pushing teammates to stretch for the finish line and earn an opportunity to be recognized as a top performer.

Tracy Tam: To that fourth quarter of 2022.

Tracy Tam: Ladies and predictability.

Tracy Tam: Okay.

Tracy Tam: Reporting.

Tracy Tam: Looking more closely at our key financial ratio.

Tracy Tam: Fourth quarter benefits and claims ratio at 58, 2%.

Tracy Tam: 57, 8%.

Tracy Tam: Higher year period, and largely in line with alright.

Tracy Tam: Up around 8%.

Tracy Tam: The DAC amortization ratio essentially unchanged year over year at 12% or.

Tracy Tam: 11, 9%.

Tracy Tam: One of the prior year.

Tracy Tam: Finally, the insurance expense ratio was seven 1% compared to seven 8% from the prior year period due to additional expenses.

Tracy Tam: With the launch of our new insurance product in 2020.

Tracy Tam: 'twenty two.

Glenn J. Williams: Following the event, we reinforce our vision with additional messaging to drive activity and sustain momentum well beyond the convention itself. Before turning the call over to Tracy, I want to congratulate her on officially taking over as CFO in December. I'm proud to say that the transition has been seamless.

Tracy Tam: Mortality remains generally in line with expectations.

Tracy Tam: However, we continue to see higher lapses across multiple generations.

Speaker Change: That's the thing.

Speaker Change: Economic pressures are putting financial stress on middle income families.

Speaker Change: The persistent policy.

Tracy Tam: Last year under the same economic condition with us today are largely in line with historical trends.

Tracy Tam: As we look ahead, we expect.

Tracy Tam: ADP to grow around five 6%.

Tracy Tam: 24.

Tracy Tam: Reflecting the compounding of premium from new sales.

Tracy Tam: Our estimate also takes into consideration elevated lapses last right.

Tracy Tam: I also want to thank Alison for her tremendous contributions to Primerica. The entire team wishes her the best in her retirement, which becomes effective April 1st. Now I'll hand it over to Tracy to review our financial results. Thank you, Glenn. Good morning, everyone.

Tracy Tam: Getting benefit from the IPO Coinsurance block.

Tracy Tam: Looking at our key financial ratios.

Tracy Tam: Benefits and claims ratio and the DAC amortization ratio to remain stable in 2024 at around 58% and 12%.

Tracy Tam: Basketball.

Tracy Tam: We expect that 2024 pre tax operating margin to be around 22%.

Tracy Tam: Keeping in mind.

Tracy Tam: From seasonality.

Speaker Change: Thank you.

Tracy Tam: All of them.

Tracy Tam: Your ability to the pre tax margin between.

Tracy Tam: Sure.

Tracy Tam: And with my prepared remarks today, I will reveal fourth quarter results.,,, termline. $140,000,000 increase in the quarter on the year over year. Operating Margin at 22% more closely at our key financial www.primerica.com, largely in line with our expectations. That the amortization ratio was essentially unchanged year-over-year at 12%.

Tracy Tam: Turning next to the results of our ISP segment.

Tracy Tam: Fourth quarter operating revenue.

Tracy Tam: <unk> hundred $22 million and pretax operating income.

Tracy Tam: $63 million increased 12% and 11% respectively.

Tracy Tam: Our sales force delivered good revenue growth.

Tracy Tam: While equity market appreciation pushed average client asset values higher.

Tracy Tam: Sales based revenue increased 15% while commission expense was up 13%.

Tracy Tam: In line with revenue generating sales was.

Tracy Tam: Asset based revenue grew 12%.

Tracy Tam: Client asset values rose 9%.

Tracy Tam: We continue to see growth.

Tracy Tam: I'm, period, insurance expense ratio was 7.1% ®MD-BO products. The Bulletproof Executive 2013, However, we continue to see higher lapses, are largely in line. As we look ahead, we expect ADP to grow around 5.0%. Our estimates. Elevated Lab, http://TheBusinessProfessor.com. We expect the growth rate in 2024. Turning next to the results of our Quarter operating revenue. $2 million. million dollars. Our sales force delivers good revenue growth. Client Ethics. Sales-based revenue increased 15% in line with the revenue generating sales.

Tracy Tam: Managed accounts.

Tracy Tam: As well as higher asset levels in Canadian mutual funds and the PD model.

Tracy Tam: Our asset based fees.

Tracy Tam: From a sales commission.

Tracy Tam: Asset based commission expenses increased in line with related revenue.

Tracy Tam: Based on the 5% sales projection Glen provided earlier.

Tracy Tam: We estimate sales based revenue.

Tracy Tam: Michele.

Michele: To increase between four two.

Tracy Tam: $5 million in 2024.

Speaker Change: That's a good rule of thumb.

Tracy Tam: <unk> basis.

Tracy Tam: Every $1 billion change in average client asset value.

Tracy Tam: This translates to around $2 million change in asset based revenue.

Tracy Tam: Commission.

Tracy Tam: So as needed.

Tracy Tam: Expenses.

Tracy Tam: Turning next to senior Health segment.

Tracy Tam: AssetBase Revenue Group 12, or Average Client Asset Value, continues to see growth in the U.S., as well as higher asset levels in Canadian municipalities, model, which we aren't. Based on the 5% sales projection Glenn provided earlier, we estimate sales-based revenue at $4 to $5 million.

Speaker Change: I will focus on the financial results for the quarter as Glenn has already discussed most of the business dynamic.

Tracy Tam: This segment incurred a $2 7 million pre tax operating loss compared to pre tax income of.

Tracy Tam: $4 3 million in the fourth quarter of the prior year.

Tracy Tam: And by lower sales volume.

Tracy Tam: Cost of acquisition due to lower productivity from a higher mix of less tenured agents.

Tracy Tam: Looking ahead to 2024.

Tracy Tam: Good work. Thank you. And thank you.

Tracy Tam: We anticipate an operating loss.

Tracy Tam: Thank you. Thank you. Thank you. Thank you. Thank you. Good work, every $1 billion. Translate it to your language.

Tracy Tam: It's smaller than prior year as we continue to work for.

Tracy Tam: Improving business fundamentals.

Tracy Tam: Meanwhile, we do not expect the need for a capital infusion in 2024.

Tracy Tam: The CMO segment recorded a pre tax.

Tracy Tam: Adjusted operating loss of $5 $4 million.

Tracy Tam: $2 million dollar change. I will focus on the financial results for the quarter. $7 million pre-tax operating losses. $4.3 million in the fourth quarter, and by lower sales volume. www.primericaclub.com Looking ahead to 2024. We anticipate an operating loss of like smaller than... Thank you. Thank you. For more information, visit www. FEMA.gov, or go to Beadaholique.com for all of your beading supply

Tracy Tam: Versus a loss of $8 $8 million in the prior year period.

Tracy Tam: The year over year improvement is due to $7 5 million.

Tracy Tam: <unk> adjusted net investment income.

Tracy Tam: We continue to benefit from higher interest rates on both new investments and cash balances.

Tracy Tam: Partially offsetting this was higher benefits and claims costs, mainly due to a one time $3 3 million.

Tracy Tam: Sure.

Tracy Tam: Their workflows slots of non term life insurance.

Tracy Tam: Sure.

Tracy Tam: Our invested asset portfolio ended the year with net unrealized loss.

Tracy Tam: $16 million.

Tracy Tam: For instance, a net realized loss of $343 million at the end of September.

Tracy Tam: Operating Law. $4 million, a lot. $1.5 million in the prior year, year-over-year improvement. $7.5 million, Partial layoffs at and many more. Thank you. Our invested asset portfolio ended the year with an unrealized loss, and Real Life Law. Continue to believe. The remaining are real-life logs, follow me on and Ralph Everett, and Adam Klauber.

Tracy Tam: Interest rates and credit spreads tightened.

Tracy Tam: With the lithium market.

Tracy Tam: We continue to believe that remaining a realized loss is a function of interest rates and not due to underlying credit concerns.

Tracy Tam: And we have to return and the ability to hold these investments.

Tracy Tam: Alrighty.

Tracy Tam: The portfolio continues to be well diversified and high quality with an average rating of AA.

Tracy Tam: Finally, consolidated insurance and other operating expenses.

Tracy Tam: <unk> and $39 million during the fourth quarter up 2% versus the fourth quarter of 2022.

Tracy Tam: Our year period included elevated costs associated with the launch of the new.

Operator: Final, consolidated insurance, and other operating costs $139 million. The entire year period included elevated... Associated with a long, Looking ahead to 2024, and other operators by around $40 million. $30 million of higher staffing related costs, $17 million to support growth, and $10 million for ongoing technology, about one-third of the year-over-year... With that, operator, I open the line. Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Tracy Tam: New term life insurance product.

Tracy Tam: Looking ahead to 2024.

Tracy Tam: We expect insurance and other operating expenses to increase by around $40 million.

Tracy Tam: 6% to 8% in 2024.

Tracy Tam: This includes $30 million of higher staffing related costs.

Tracy Tam: $17 million to support growth in the business.

Tracy Tam: And $10 million for ongoing technology initiatives.

Tracy Tam: We expect term life, ISP and CMO to incur about one third of the year over year increase.

Speaker Change: With that operator, I'll open the line for questions.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session.

Speaker Change: If you'd like to ask a question. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two if you'd like to remove your question from the queue.

Operator: For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you, and our first question comes from the line of Mark Hughes with Truist Securities. Good morning, Mark. Yeah, thank you. Morning, Glenn. Morning, Tracy.

Speaker Change: For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Please when we poll for questions. Thank you.

Speaker Change: Thank you and our first question comes from the line of Mark Hughes with <unk> Securities. Please proceed with your question.

Mark Hughes: Good morning, Mark Yeah. Thank you good morning.

Mark Hughes: Good morning, Glenn Good morning Tracy.

Glenn J. Williams: Yeah, the $40 million increase in expenses. Is that on the basis of 142 million? And then how much of that is related to the conference? OK. So what I would say. Overall, the conference is just one of them.

Mark Hughes: Please see the $40 million $40 million increase on the base of 142.

Mark Hughes: The properly.

Mark Hughes: So how much of that is related to the comp plan.

Operator: And, you know, on a year-over-year basis, it's just to ensure www.primerica.com. Overall, big expenses on these activities. I'm going to go ahead and close this webinar.

Speaker Change: Can you say that again.

Speaker Change: Yes.

Speaker Change: $40 million increase in expenses is that on the base of $142 million.

Speaker Change: Yes.

Speaker Change: And then how much of that is related to the timeframe.

Operator: Thank you. Thank you, pretty even year over year. The Bulletproof Executive 2013 All Rights Reserved. Primerica Inc., conference, one of the.

Speaker Change: So the conference Okay.

Speaker Change: Well, what I would say.

Speaker Change: Yes.

Speaker Change: Overall the conference is just one of the sales event.

Speaker Change: And.

Glenn J. Williams: The Bulletproof Executive 2013, about 13 now. Mark, I would add, too, that we net some of that against the registration fees and so forth. So our convention is designed to cost us, after registration fees, about the same as one of our leadership events or incentive trips, as we call them. So that's why we do two incentives in one year, and then we'll do a convention and one incentive the next year. So the convention is designed to roughly equate to the trip that we don't do at a convention. Okay. Does this seem relatively elevated? Again, 40 on 142.

Speaker Change: Year over year basis is just to ensure.

Speaker Change: I gave you the overall big picture.

Speaker Change: The expenses on these activities are.

Speaker Change: We strive to keep them pretty even year over year.

Speaker Change: Specifically conference.

Speaker Change: Specifically our conference is one of the.

Speaker Change: Two events that we hold.

Speaker Change: Per year.

Speaker Change: In terms of dollars.

Speaker Change: We have about.

Speaker Change: $13 million.

Speaker Change: For the.

Speaker Change: You bet.

Speaker Change: Okay.

Speaker Change: Mark I would add to that we met some of that against the registration fees and so forth. So our convention is designed to cost us after registration fees about the same as one of our leadership events or incentive trips as we call them. So that is why we due to incentives in one year and they will do a convention in one instead of the next year. So the convention is designed to roughly.

Speaker Change: We equate to the trip that we don't do it a convention year.

Operator: Meaningful increase. Mark, you're coming through a little garbled. Would you mind asking that one more time? I'm sorry.

Speaker Change: Okay.

Speaker Change: Relatively elevated given 40 on the 142.

Glenn J. Williams: Yeah, I apologize. I was just remarking that the $40 million on the basis of $142 million seems like a meaningful increase. Were there more growth initiatives or a step function in staffing this year that contributed to that? Yeah, Mark, I would say that the increase year-over-year seems higher on the percentage base compared to 2023 versus 2040, or if that's what you're comparing at, you would notice that 2023 is compared. The Bulletproof Executive 2013, Elevated for two. Thank you.

Speaker Change: Meaningful increase.

Mark Hughes: You're coming through a little garbled would you mind asking that one more time I'm sorry.

Speaker Change: Yes, I apologize I was just remarking that the $40 million on the base of 142.

Speaker Change: Meaningful increase is that.

Speaker Change: They're more growth initiatives or.

Speaker Change: Step function in staffing this year that contributes to that.

Speaker Change: Yeah, Mark I.

Speaker Change: I'd say that.

Speaker Change: The increase year over year seems higher on a percentage basis compared to 2023 versus 2024, if that's what you're comparing that you would notice that 2023 comparison to 2022 was actually.

Glenn J. Williams: And secondly, we had the elevated expense for the launch of new products, your For more information, visit www.primerica.com. Also, in 2024, we're going to continue to why you see that in the breakdown. The Bulletproof Executive 2013, Continued investment in technology initiatives, http://TheBusinessProfessor.com, Proof, for, Very good. And one more, if I might, the senior health profit, I think, or the loss you said would be smaller than the prior year. Did that stay consistent through the quarter or quarters, which is to say consistently lower losses in each quarter, or will it be, will it vary? See it, Mark?

Speaker Change: Lower than typical because of 2022 patents being elevated for two reason one in 2022, we had three sales leadership events compared to typical too and then secondly, we had to the elevated expense for launch of new products for <unk>.

Speaker Change: And that also increase the spend so if you are comparing our historical 23% to 24, it's going to look a little bit higher also in 2024, we're going to continue to invest for business growth, which is why you see that in the breakdown the biggest number increased 17.

Glenn J. Williams: That's a great question. In a typical year, you would see the fourth quarter being the most profitable in terms of volume, followed by the first quarter, and then the second and third quarter would have higher expenses. For more information, And now, what I would say is coming out of, and you'll see that, following activity of cash flow coming through. Thank you for taking the time to analyze Gather the Information and Nick Poole. Overall, I would say.

Tom: Julien its Tom.

Tom: Supporting the business growth.

Tom: Some of that will go to continued investment of technology initiatives that we will certainly continue to improve for infrastructure for productivity to support our sales force and our top line for us.

Speaker Change: Good and one more if I might the senior health profit I think or the locks you said would be.

Tom: Smaller than the prior year.

Speaker Change: Could that be.

Tom: Consistent through the quarter.

Glenn J. Williams: We passed a smaller loss than the prior year, and we were, Thank you very much. Our next question is from the line of Ryan Krueger with KBW. Please proceed with your... Hey, good morning, Ryan. Hey, good morning.

Tom: Quarters.

Tom: To say consistently lower losses in each quarter.

Tom: Or will it be.

Tom: Woodbury.

Woodbury: Yes, Mark that's a great question there is some seasonality in the senior housing business.

Woodbury: In a typical year, you would see that fourth quarter being the most profitable because of the AEP and the volume followed by the first quarter and then second and third quarter would have higher expenses because of the hiring and preparing for the AEP season massive typical year now what I would say is coming out of four.

Glenn J. Williams: My first question was on lapses. Could you provide some additional color on how much higher lapses are trending relative to your longer-term expectations or trends and any more color you can provide, as you have in past quarters on how lapses look on policies that had been sold prior to the pandemic versus policies that had been sold during the pandemic? Good morning, Ryan, great questions. We noticed higher rates across multiple durations. I believe that this is really mainly due to economic pressure and middle-income families. Nevertheless, we, last year, are really very much in line. I mean, Normal.dotm, understood.

Woodbury: Quarter of 2023, when we for AEP.

Woodbury: The renewal season with a following activity of cash flow coming through it will take us literally to time to annualized gather the information.

Woodbury: Which we will share next quarter, but overall I would say that.

Woodbury: We expect to.

Tom: You have a smaller loss in prior year, and we would have a lot more to share on next quarter.

Speaker Change: Thank you very much.

Speaker Change: Thanks, Laura.

Speaker Change: Our next question is from the line of Ryan Krueger with Keyw. Please proceed with your question.

Ryan Krueger: Hey, good morning, Ryan.

Ryan Krueger: Hey, good morning.

Ryan Krueger: My first question was on lapses could you provide some additional color on <unk>.

Glenn J. Williams: Thank you. I guess somewhat related to this. It also seems like the redemption rate in ISP has been increasing in recent quarters. Are you seeing that?

Ryan Krueger: How much higher lapses are trending relative to your longer term expectations or trends and any more color you can provide.

Glenn J. Williams: Is that, do you believe that's a similar dynamic? And I guess if so, do you think you'll continue to see somewhat higher redemptions in 2024 there? Yeah, right.

Ryan Krueger: Thank you have in past quarters on how lapses look on policies that had been sold prior to the pandemic versus policies that had been sold during the pandemic.

Glenn J. Williams: I'll take that one because we have monitored those redemption rates as we've come through the pandemic, and you're right, they varied from a fairly stable historical trend over the years. You know, sometimes during a pandemic, people are holding their money a little closer, redemption rates go down, and then when money's gotten tight, redemption rates have gone up. However, if we try to sort through the pandemic and get all of that unusual noise out of it, what we're seeing right now are redemption rates that are pretty similar to pre-pandemic rates. They might be just a little bit higher, but certainly within our normal range of fluctuations prior to the pandemic. So you're right, they're probably people that are drawing down on their accounts a little bit more because of the cost of living, but it's still within the range that we would call normal to pre-pandemic levels.

Speaker Change: Good morning, Ryan.

Ryan Krueger: This is a great question, we noticed higher lapses in 2023, particularly towards the end of it because of cross multiple durations. It leads us to believe that this is really mainly due to the economic pressure and the stress from higher cost of living currently.

Ryan Krueger: Middle income family.

Ryan Krueger: Nevertheless, we see that the policies written in the last year really had persistency very much in line with historical trends.

Ryan Krueger: Eric will trend by which I mean pre pandemic by and large.

Ryan Krueger: So we expect that overtime persistency is going to return to normal pre pandemic levels.

Speaker Change: Understood. Thank you I guess somewhat related to this it also seems like the redemption rate in <unk>.

Speaker Change: <unk> has been increasing in recent quarters.

Speaker Change: Is that do you believe that a similar dynamic.

Speaker Change: And I guess, if so do you think youll continue to see somewhat higher redemptions.

Speaker Change: 2024 there.

Speaker Change: Yeah, Ryan I'll take that one it goes we have monitored those redemption rates as we've come through the pandemic and Youre right. They vary from a fairly stable historical trend over the years.

Operator: It hasn't exceeded that range yet. Okay, great. Thank you. And then, since it's her last call, I just wanted to say best wishes and retirement to Alison.

Speaker Change: Sometimes you are it depends I mean people are holding their money a little closer redemption rates went down and then with money has gotten tight redemption rates have gone up. However, if we if we try to sort through the pandemic and get all of that unusual noise out of it what we're seeing right now a redemption rates that are pretty similar to pre pandemic rates say they might be just a little bit higher but certainly with.

Operator: Thanks. Then, our next question is from the line of Wilma Burtis with Raymond James. Good morning, Wilma.

Glenn J. Williams: Hey, good morning, Glenn and Tracy. Um, I guess if there is a way to quantify the senior health loss you expect in the next couple of quarters. I know you mentioned it should improve year-over-year, but if there's any way you could provide a little bit more of a fine point, yeah, I'm a senior in health.

Ryan Krueger: Within our normal range of fluctuations prior to the pandemic. So youre right. There are probably people that are that are drawing down on their accounts, a little bit more because of the cost of living but it's still within the range that we would call normal to pre pandemic levels. It has it exceeded that range yet.

Ryan Krueger: Sure.

Speaker Change: Okay, great. Thank you and then is it fair last call just wanted to say best wishes in retirement policy.

Glenn J. Williams: Because of the renewal season and we still have a lot of cash flow coming through, it will take some time for us to really analyze and have an accurate read on it. So we will really be able to provide more. And then, with the convention coming up, how should we think about the trajectory of sales and recruiting throughout the year? I know that's usually a boost, but I know that there's a kind of interesting way it can flow through the quarters, so if you could give us an update there, Certainly, that's a great question, and I get that with every convention, is how does an event that takes place almost right in the middle of the year impact the entire year?

Speaker Change: Okay.

Speaker Change: Sure. Thank you.

Speaker Change: Our next question comes from the line of Walnut fairness with Raymond James. Please proceed with your questions.

Walnut fairness: Good morning.

Walnut fairness: Hey, good morning, Glenn and Tracy.

Walnut fairness: I guess if you if you is there a way to quantify the.

Walnut fairness: Alright, Senior health loss do you expect in the next couple of quarters. I know you mentioned it should improve year over year, but if theres any way you could provide a little bit more of a fine point on it.

Speaker Change: Yes senior house.

Speaker Change: Because of the renewal season, and we still have a lot of cash flow coming through it will take some time to really analyze and for us to have a accurate read on it. So we really would be able to provide more information next quarter.

Speaker Change: Okay. Thank.

Glenn J. Williams: And as I said in my remarks, we work hard to try to get benefit from the event for the entire year, and right now, we're working on it and seeing results from people striving to accomplish great things at the event and be recognized for it there. And then, of course, post-event, we want to use the momentum that's created by the event and stretch it as long as we can. So that's the theory: to try to level it out throughout the year. The reality is there's so much excitement that's created, and generally, we have some incentives that we launch at the convention that do create a spike in activity around the event itself, as hard as we work to try to level it out over the full year.

Speaker Change: Thank you and then with the convention coming up how should we think about the trajectory of sales and recruiting throughout the year I know that's usually a boost.

Speaker Change: But I know that there is a kind of interesting way it can flow through the quarter. So if you can give us.

Speaker Change: Update there.

Speaker Change: Certainly that's a great question and get that whenever you every convention is how does the event that takes place almost right in the middle of the year impact the entire year. It as I said in my remarks, we work hard to try to get benefit from the event for the entire year and right now, we're working and seeing results from people striving to occur.

Speaker Change: Great things by the event and be recognized for it there and then of course post event, we want to use the momentum that's created by the event and stretch it as long as we can so that's the theory is to try to level. It out throughout the year. The reality is there's so much excitement is created and generally we have some incentives that we launched at the convention.

Glenn J. Williams: So I would expect right now that you would see a kind of reasonable growth running up to the event and in the months, maybe September, October, and beyond after the event. During the month of the event in July and August, as we have some short-term incentives and the excitement immediately coming out of the event, you'll probably see a spike in recruiting.

Speaker Change: And that do create a spike in activity around the event itself as hard as we work to try to make it up to level. It out over the full year. So I would expect right now that you would you would see kind.

Speaker Change: Kind of reasonable growth running up to the event and in the months maybe September October and beyond after the event in the month of the rain in July and in August as we have some short term incentives and the excitement immediately coming out of the vet Youll, probably see a spike in recruiting and then of course, the pull through of that of the licensing it.

Glenn J. Williams: And then, of course, the pull-through of that, the licensing, and impact on the sales force is months long after that because it is a fairly long process in some states and provinces to get recruits licensed. So I would say that, you know, we would expect an impact throughout the year, but you will see the recruiting activity around the event, and then you would see licensing, and, you know, theoretically, at least, if productivity stays the same, you would see some sales impact in the last half of the year and into 2025. Was that helpful?

Speaker Change: Impact on the sales force is months long after that because it is a fairly long process in some states and provinces to get recruits licensed so I would say that we would expect an impact throughout the year, but you will see the recruiting activity around the event and then you would see licensing and.

Speaker Change: Theoretically at least of course, our productivity stays the same you would see some sales impact in the last half of the year and working into 2025.

Speaker Change: Was that helpful.

Glenn J. Williams: Yep, sounds great. Thank you guys, certainly. Our next question is from the line of Ian, raised with Jeffries. Please proceed with your question. Good morning.

Speaker Change: Yep sounds great. Thank you guys.

Speaker Change: Certainly.

Speaker Change: Our next question is from the line of Ian.

Ian: <unk> with Jefferies. Please proceed with your question.

Glenn J. Williams: Thank you for taking my question. First, on senior health, can you discuss the reason for the methodology change to marketing development revenues that's resulted in higher LTVs? And then second, can you talk about how you're thinking about increasing penetration of the underserved middle-income market where you see the most opportunity? What other regions, states, or cities are you targeting for higher growth? Thank you. Sure, I'll take a shot at both of those and see if they're helpful.

Ian: Hey, good morning. Good morning, Thank you for taking my question.

Ian: Just firstly on senior House can you discuss the reason for the methodology change to marketing development revenues has resulted in higher Ltvs and then second can you talk about how you're thinking about increasing penetration of the underserved middle income market, where do you see the most opportunity other re.

Ian: <unk> states or cities, you're targeting for higher growth. Thank you.

Ian: Sure.

Speaker Change: Take a shot at both of those and see if it's if it's helpful. Yes, we had a change in our contracts with our product providers that provided a little more clarity and perhaps even slightly more certainty in those marketing dollars because they know.

Glenn J. Williams: We had a change in our contracts with our product providers that provided a little more clarity and perhaps even slightly more certainty in those marketing dollars because the relationship we have with them is in writing now. It's not that it can't be changed; it can be changed, but at least I think it's a little clearer and slightly more ability to anticipate it. With that certainty and awareness, we could pull it into the LTV calculation. It was primarily money we were already receiving and other lines, but with the certainty, we moved it into the LTV, and I think that's a pretty standard procedure.

Ian: The relationship we have around them is and right now it's not that it can't be changed it can be changed but at least I think it's a little clearer it a little.

Ian: Slightly more ability to anticipate and so with that certainty and awareness we could pull it in to the LTV calculation. So it was primarily money we were already receiving and in other lines, but with the certainty we moved it into the LTV I think that's a pretty standard procedure.

Glenn J. Williams: Of course, there are additional increases as there have been some commission increases, so the change is not solely attributed to that. Of the increase, perhaps a little over 80% was attributed to the reclassification and a little less than 20% to other increases. That's behind that.

Ian: And of course, there are additional increases as there have been some commission increases. So the change is not solely attributed to that of the increase perhaps a little over 80% was attributed to the re class of less than 20% to other increases.

Glenn J. Williams: We like it better because it provides more clarity to the financials of the business doing it this way. We took it as a positive process change, but clearly, the financial impact change is not that big since it's just moving from one area to the other. Secondly, Ian, on the question of where we target, it's interesting. Our business grows where we have leadership on the ground, and we do move leadership around occasionally but not that frequently. Our business generally runs in line with the population of the U.S. and Canada, and as the middle income market grows, which it continues to do, we grow, but we have not found it worthwhile to specifically target areas. If we don't have leadership on the ground, then we try to artificially grow in an area that is underrepresented in our business. We've just not found success in doing that.

Ian: So that's that's behind that just and we like it better because it provides more clarity to the financials of the business doing it. This way. So we took it as a positive process change, but clearly it's not all financial impact change is not that big since it's just moving from one area to the other.

Ian: And then secondly, Ian on the question of where we target.

Ian: You know it's interesting our business grows where we have leadership on the ground.

Ian: We do move leadership around occasionally but not that frequently.

Ian: So our business generally runs in line with population of the U S and Canada.

Ian: As the middle income market grows which it continues to do we grow but we have not found it worthwhile to specifically target areas. If we don't have leadership on the ground than us trying to artificially grow in an area that is underrepresented in our business. We're just not sale success in doing that now when people ask us if they want to move.

Glenn J. Williams: When people ask us if they want to move to a place with more opportunities, we can tell them because we know where we're underrepresented, but we've just not found it profitable to move people who choose not to move to a new location and have them struggle. If they want to move back home where they came from, and that's an underrepresented area, that's great.

Ian: To a place with more opportunity, we can tell them, because we know where we're underrepresented, but we've just not found it profitable to move people, who choose not to move to a new location and have them struggle. If they want to move back home, where they came from and that's underrepresented area. That's great that works well for all of us, but we don't try to do that artificially from the company.

Glenn J. Williams: That works well for all of us, but we don't try to do that artificially from the company level. Got it. Thank you so much. Certainly. Our next question is from the line of Mark Hughes with Truist Securities. Welcome back, Mark. Yeah. Hey, glad to be back.

Ian: <unk>.

Speaker Change: Got it thank you so much.

Ian: Certainly.

Ian: Our next question is from the line of Mark Hughes with <unk> Securities. Please proceed with your question.

Mark Hughes: Welcome back Mark.

Mark Hughes: Hey, good to be back.

Mark Hughes: I did want to clarify, I had framed that question badly about the expenses. The $40 million increase on a base of... 570 million or so is a completely different matter. So using 140 million was a mistake on my part. And on that basis, it looks pretty reasonable.

Mark Hughes: I do.

Mark Hughes: Did want to clarify I'd frame the question badly about the expenses.

Mark Hughes: $40 million increase on a base of.

Mark Hughes: $570 million or so.

Mark Hughes: Completely different matter, so using $140 million was a mistake.

Speaker Change: Mistake on my part.

Speaker Change: And on that basis, it looks pretty reasonable.

Speaker Change: Okay.

Glenn J. Williams: One question on the... Senior Health, you said that 25% of the leads are coming from the Primerica sales force. Is that kind of full strength, is that what you would expect over time, about 25%, or should that continue to move up as you maybe do other internal initiatives? There's still room for growth in the numbers, Mark, but the percentage is artificially high right now because of the low sales levels in the main part of the IntelliQuote business. I would anticipate that as we grow together, as we grow that business, assuming that we determine that it can be grown in a profitable and sustainable way, that we could grow the Primerica business or the Primerica portion of those leads that are referred by our sales force at a similar rate.

Speaker Change: One one question on the.

Speaker Change: Senior Health you said, the 25% of the lead they are coming from the <unk>.

Mark Hughes: Sales force is that.

Mark Hughes: Kind of full screen because that what you would expect over time about 25% or should that continue to move up as you maybe do.

Mark Hughes: Other internal initiatives.

Mark Hughes: Yes.

Mark Hughes: There's still room for growth in the numbers Mark with the percentages a little artificially high right now because of the low sales levels in the main part of the telephone business.

Mark Hughes: I would anticipate that as we grow together as we grow that business, assuming that we determined that it can be grown in a profitable and sustainable way.

Mark Hughes: That we would grow the primary business are the primary portion of those leads that are referred in by our sales force at a similar rate and our objective is to run in the maybe 20% range a little either side of 20.

Glenn J. Williams: Our objective is to run in the maybe 20% range, a little either side of 20, so it's a little artificially high percentage-wise because the IntelliQuote leads were down in the quarter. But we do expect, again, assuming that we can demonstrate the profitability of the business and gain comfort in it, that we would grow that. There's more potential on the Primerica side, but we are not expecting that to become 40, 50% of the total. That's not the model we're running to.

Mark Hughes: So it's a little artificially high percentage wise because of the telephone leads were down in the quarter.

Mark Hughes: But we do expect again, assuming that we can demonstrate the profitability of the business and getting comfort in it that.

Mark Hughes: That we would grow that there is more potential on the primary side, but we are not expecting that to become 40% 50% of the total that's not the model. We're running two it's as we've described it. The primary piece is a unique advantage that we can have in this marketplace. Because we do have access to those leads in a unique way through the relay.

Glenn J. Williams: As we've described it, the Primerica piece is a unique advantage that we can have in this marketplace because we do have access to those leads in a unique way through the relationships of our Primerica representatives. Those leads are extraordinarily high quality, as we've all talked about before. We want a lot of them, but at the same time, we want that business to be successful on its own.

Mark Hughes: And shifts for a primerica representatives and those leads are extraordinarily high quality as we've all talked about before so we want a lot of them, but at the same time, we want that business to be successful on its own so something in the range of.

Glenn J. Williams: Running in the range of 20%, a little higher than that, a little lower as we grow would be a target I would take. Thank you very much. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Mark Hughes: 20%, a little higher than that were lower as we grow would be for a target I would take.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Speaker Change: This will conclude today's conference you may disconnect your lines at this time and thank you for your participation.