Q2 2025 Primerica Inc Earnings Call
Greetings, and welcome to Primerica's second quarter 2025 earnings webcast.
Once you require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to your host. Nicole Russell Head of investor relations. Thank you. You may begin.
Thank you, operator. And good morning, everyone.
Welcome to Primary Care.
Earnings call.
A copy of our earnings press release issued last night, along with other materials, relevant to today's call, or posted on the investor relations section of our website.
Joining our call today are chief executive officer, Glenn Williams and our Chief Financial Officer, Tracy Pam.
Our comments, this morning will contain Ford looking statements in accordance with the Safe Harbor provision of the Securities litigation Reform Act.
We assume no obligations to update these state.
To work, like you information and refer you.
K filing, as may be modified by subsequent forms, 10-Q for a list of risks and uncertainties that could cause actual results to materially differ from those that are expressed or implied.
We also reference certain non-gaap measures which we believe provide additional insight into the company's Financial results.
Reconciliation of non-gaap results to the effective Gap. Numbers are included in our earnings press release.
I would now like to turn the call over to Glenn.
Thank you Nicole and thanks everyone for joining us.
Prim America delivered, another strong quarter, which results that reflect the consistent performance of our business, despite continued economic and government policy uncertainty. Our investment clients remain committed to their long-term savings goals. Our life insurance clients, recognize the importance of protecting their income and their business opportunities. Attracting a significant number of recruits, our sales force plays a critical role in delivering protection and investment solutions to middle-income families when they need it. Most
as we sometimes see our 2 main product lines respond differently to changes in the business environment, creating a good balance in our business model and financial results.
Starting with our financial results. Suggested net operating income was $100 million during the second quarter of 2025 up. 6% year-over-year, while diluted adjusted operating EPS increased 10% to $5.46.
These results, reflect the continued strength with within our investment savings products business, and they spend a contribution from our term life business.
We continue to generate solid earnings growth and maintain our commitment to returning Capital to stockholders.
during the quarter, we return total of 163 million to stockholders through a combination of 129 million in share repurchases, and 34 million in regular dividends
Looking at this distribution, we recruited over 80,000 individuals during the second quarter and licensed nearly 13,000. New Representatives down 10% from the second quarter record set last year. This level of activity continues to pull fuel growth in our sales force, we ended the quarter with 152,592 life license Representatives up 5% compared to June 2024.
Recruiting in the third quarter, also started strong.
Using a recruiting incentive, which has been effective in the past. We added over 50,000 new recruits in the month of July.
We remain committed to Growing our sales force and expect to grow between 2% and 3% in the full year of 2025.
Turning to our sales results. We issued 89850 new term life, insurance policies during the second quarter and put in place over 30 billion dollars in new term life protection. For our clients, bringing our total face amount in force to a record. 968 billion.
On a year-over-year basis. The number of new life insurance policies and face amount issued declined 11% and 9% respectively.
We believe the decline reflects a combination of continued cost of living pressures and ongoing uncertainty compounded by comparison to exceptionally strong results in the prior year period.
productivity at 0.2 policies, per life, insurance license, representative per month was within our historical range of 0.20 to 0.24,
considering the stronger than expected. Headwinds were now, projecting, the total number of New Life policies issued to decline around 5% in 2025 compared to full year 2024
Total sales during the quarter of 15% to 3.5 billion dollars.
We continue to see strong demand for variable, annuities to manage accounts while us and Canadian. Mutual funds grew at a more modest pace.
Net inflows for the quarter or 487 million versus 227 million in the prior year period.
And client asset values. Ended the quarter at 12 billion dollars of 14% year-over-year.
We see more clients focusing on saving for retirement, driving higher transaction, volume and increase average sales size.
This trend has the potential to continue based on the large number of individuals in the baby boomer and Gen X. Populations who are approaching retirement age.
Given our momentum in the first half of 2025, and strong sales. In July, we expect full year, ISP sales growth to be more than 10%.
During the quarter, we discovered a need to correct our methodology for calculating outflows and market value for Canadian. Mutual fund assets, included in our Consolidated client asset, roll forward statistical data.
We updated the roll forward table, in our financial supplement to provide investors with restated historical statistics.
This direction had no impact on our financial statements, ISP product sales, nor the average, or ending client asset values, during the relevant periods. Net flows, were impacted but remained positive.
Our mortgage business showed solid year-over-year growth in both, the US and Canada during the second quarter of 2025.
In the US, we had 133 million of closed loan. Volume up 33% year-over-year.
we are licensed to do business in 35 States, through a total of nearly 3400, licensed mortgage loan, Originators
Our referral program in Canada, had 45 million dollars US dollars of closed loan volume of 30% from a year ago.
While mortgages currently represent a relatively small portion of our business, they provide our clients with a valuable Financial tool while also creating a diversified income stream for our mortgage licensed sales force.
The unique characteristics of each of our product lines can cause them to respond differently to changing business conditions this quarter. Highlighted, their complementary nature, with ISP with record ISP sales helping to offset the headwinds in life sales. Despite the pressure on new life sales, the size and stability of our life business continue to provide consistent earnings, even in an uncertain environment.
We remain. Well, positioned to deliver long-term value for our clients, our field and our stockholders.
With that, I'll hand it over to Tracy for the financial results.
Thank you, Glenn, and good morning, everyone. The company's financial performance across all segments was very strong, starting with term life. In the second quarter, revenues were $442 million, up 3% year-over-year, driven by 5% growth in adjusted direct premium.
The segment, delivered, solid performance with pre-tax income of, 155, million up 5%, compared to the prior year period.
Our key financial ratios remain consistent with expectations and largely in line with the prior period.
These included the benefits and claims ratio at 57.5%, the tax amortization and insurance commissions ratio. At 12%, the insurance expense ratio at 7.6% and the operating margin at 23%.
Overall, last rates for the quarter remain elevated and were stable compared to the prior period in aggregate.
We continue to believe higher loss rates are primarily driven by cost of living pressures and their impact on middle income families.
With belief that our clients are resilient over the long term and value our services and products.
Based on historical Trends, we expect persistence fees to normalize as clients adapt to the evolving economic environment. Therefore, we do not expect any significant changes to our ldti elapsed assumptions.
We started to experience favorable mortality in the second half of 2022. And continued to see favorable mortality Trends relative to our expectations.
Given the stable nature of our term life business, our full year, guidance remained, un remains unchanged
% with a benefits and claims ratio at around 58% the Dax amortization and insurance commissions ratio at around 12% and the operating margin at around 22%.
As a reminder, we will conduct our annual assumptions setting review in the third quarter, which may impact our future guidance for key ratios.
Continued sales momentum and growth in our client asset values drove record revenues in our investments and savings product segments.
Second quarter, operating revenues of 298 million increased 14% from the prior year period, while pre-tax income Rose 6% to 79 million.
Sales of space revenues, increased 15% slightly outpacing the 11% increase in relevant sales.
primarily driven by strong demand for variable annuities
At that base, revenues increased 17% year-over-year, compared to a 11% increase in average client asset values. As we continue to benefit from strong client, demand for products on which we earn higher asset based commissions.
Namely us managed accounts.
And Canadian mutual funds sold under the principal distributor model.
Sales commissions for both sales and asset based products increased relatively in line with the revenues.
Credit and other distributed product. Segment, recorded pre-tax, adjusted operating income of dollars during the quarter compared to $1 million in the prior year period.
The Euro your change was driven by an increase in net investment income, primarily due to the growth in the size of the portfolio.
Finally Consolidated insurance and other operating expenses. Were $154 million up 8% year-over-year.
Growth in expenses was primarily driven by higher variable growth related costs in our ISP and term life segments.
And higher technology and infrastructure Investments to support our sales force and business growth.
We reiterate our full year outlook for expenses to increase in 2025 by around 40 million dollars or 6 to 8%.
Are invested at that portfolio remain. Well Diversified with a duration of 5.3 years and an average quality of a
The average rate on new investment purchases in our life. Companies was 5.65% for the quarter with an average rating of a
The net unrealized loss in our portfolio continues to improve ending. The June quarter with a net unrealized loss of 158 million.
We believe that the remaining unrealized loss is a function of interest rates and not due to underlying credit concerns. And we have the intended ability to hold these Investments onto maturity.
We continue to generate significant Deployable Capital underscoring, the strength and reliability of our Capital light distribution model.
The steady cash flow from our term. Life business is driven by the sizable enforce block of insurance policies and our use of reinsurance which limits our exposure to mortality risk.
The fee-based nature of our ISP business supports, strong cash flow generation and the high rate of earnings conversion.
Consistently, we turn value to stockholders while also investing in long-term growth opportunities.
Our holding company ended the quarter with 371 million in cash and invested assets.
Primarily life, estimated RPC ratio was 490%.
We remain confident in our ability to maintain a strong Capital position while supporting ongoing growth initiatives.
And continuing to return Capital to stockholders.
In both good and bad Economic Times. Prime America has been able to deliver strong earnings.
Solid cash conversion and Superior Returns on equity.
With that operator, please open the line for questions.
And at this time, we will conduct our question and answer session.
In order to get through as many questions as as we can, please limit yourselves to 1 question. Only for each time that you queue.
To ask a question. Please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.
You may press star 2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keys 1 moment, please while we pull for questions.
and our first question comes from John barrage with Piper Sandler, please State your question,
Morning, John.
Good morning, thank you for the opportunity. Can you, uh, talk about the decline in term life at sales and the revised guidance? I know it's a point of sale that a monthly contributor like ISP
There's been concerns about cost of living as as you've noted in your prepared, remarks did that accelerate post Liberation day. Thanks,
hey, John of uh, call
Cost of living. And then, just some uncertainty, which has led I think for most middle-income families, living on a month-to-month type of budget, and a lot of a wait and see attitude. Let's, let's see how prices turn out moving from here. Let's see what happens to interest rates. Let's see what happens to other. Um, uh, issues that may not be clear yet. And of course, very difficult to get a bead on that. Based on what what media might be feeding the middle class, uh, on either side of any 1 of those issues. So we've seen cost of living pressures for a number of years. I think we outstrip them last year uh and were able just to overcome them and show Positive Growth. But adding that wait and see element is what we see for those middle-income families. That really have a very tight budget and that of course, impacts our term life sales as well as our monthly investments in the ISP side of our business, the larger ticket Investments as we've discussed in the past that move are not really related to a monthly budget. They're uh, you know, transfers of retirement accounts. They're um um,
You know, it states that move from 1 uh generation to another. Those types of things are not impacted as much at least by monthly cost of living. So, we see it first in our term life business. Um, and, and we do believe that as Tracy pointed out. This is a temporary, uh, issue. We do believe that middle-income families adapt to this over time. And the uncertainty becomes certainty, it may be different from last year's challenges, but at least it becomes certain and then they begin to adapt and move forward. So I think we're in a, wait and see period, right?
right now that we've experienced and and that we see that first in term life sales,
my follow-up question. Um, we talked about
A lot of wait-and-see mode on how the cost of living pressures will.
Turn up as the push back.
When you're talking about adding over 50,000 recruits in July,
are these pushbacks actually an opportunity to recruit new agents?
I'm I'm sorry. I didn't hear you is what an opportunity to recruit new agents.
These costs are living push backs. I mean you, oh absolutely. No, there's a push back like, hey, I costs are going up. I I don't know if I can commit to this. Well. Okay, well, I have to consider being an agent. Maybe you can get some part-time work.
Absolutely. There are generally, both a push and a pull for most economic Dynamics on, on a lot of what we do, but the positive side, uh, of financial stress and recruiting, is people looking for additional income. And so the attraction of our part-time opportunity, uh, absolutely plays into that. Uh, as we've said in the past, uh, you know, kind of rampant unemployment does not help us because that creates the need for someone to get a paycheck on Friday, not build a business, over a long period of time. So when things get extreme, uh, it it, it may work a little differently, but yes, while uh, cost of living pressures and to a certain extent employment uncertain.
They are reasonable. They actually give us a little bit of a tailwind for recruiting while they might provide a headwind for that month's life insurance sales. So yes, absolutely, you defined that correctly?
Thank you.
And your next question comes from Joel hurwitz with dialing and partners please State your question.
1. Joel.
To the lapse rate, but any potential for changes to the mortality assumption as part of the review.
Yeah, good morning Joe. Uh, so mortality has been a trend with
Observing.
Uh, very closely. And in the second half of 20122, we started to experience favorable mortality and for a a you know, over a more than 10 quarters. Um, at this point we had initially uh been uh, waiting to see if this was just a pull forward impact from, uh, Co which means that, you know, there could be a, uh, you know, earlier accelerated death rates and then somehow it's going to, um, you know, uh, stabilize, uh, over what the trend could turn out to be. But so far, we continue to see that. The mortality has been favorable especially last uh, 4 quarters and 12 months. And we've seen that Trend uh stabilizing uh, you know, downward at this point, I think, uh, uh there's a potential likelihood that this is a, a trend to stay and clearly in, uh, terms of magnitude and we're quite a few percentages.
Lower than our long-term pre-pandemic uh Baseline. Uh, Actuarial assumptions. So in the third quarter, uh, the annual reviews, we will certainly take very close look and make a decision. Uh, if we uh, change our long-term assumption to recognize this trend,
Got it that that's very helpful Tracy. Uh and and then moving to ISP uh really good sales in the quarter. I guess, just just a question. I look at the sales based margin uh it was 123 basis points in the quarter. That's that's a bit below where you've been running the past. Several quarters. Uh, any callers on on the driver there.
uh, in terms of IST margin, I
Part of the uh, uh, expenses. Uh, it's uh, the impact because of the variable growth related, uh, expenses that we have. And we also have commissions that is, uh, slightly higher than what you've seen in terms of dollars. Uh, we do, uh,
Try to True up as much as we can, but at your point, uh, where we see that the total year trend is running favorable. So we uh, you know, uh, do a uh, true up in the middle of the year, which may make the second quarter slightly higher than the first quarter. Uh, but it's, uh, in terms
Of the um, magnitude based on the uh, running rate of our growth and what commissions is headed. And the other part to consider also is uh as we see the growth trend of ISP last year was growing uh more than 20 25%. And this year we're continually on uh pretty strong, uh double digit, Topline growth. And our infrastructure has been a little bit stressed in terms of catching up with the volume. So we continue to invest in technology and infrastructure to support our ISP sales. So some of those are part of what we had uh, announced uh, earlier in the year, in terms of uh, expense Investments. That would be supporting our growth. So that's what you're seeing coming through for ISP and and that, that segment really deserves that that build up on technology and infrastructure.
That that that makes sense. Thank you guys.
Your next question comes from Ryan Krueger with KBW. Please State your question.
Hello Ryan. Hey hey, good morning. Um, had a question on ISP sales. Um, I know you mentioned, they were still strong in, in July was hoping, maybe you could give a little
More color on that reason I ask is um, I think you said you'd expect them to be grow above 10 or 10% or more of this year, but they were up over 20% in the first half of the year so maybe you're maybe the above 10, is what you're emphasizing. But um, just wanted to see if you expected any slowdown or should we kind of see the same momentum in the second half?
Double digits last quarter so we are seeing continued strength. Uh the comparisons with second half of last year do get more difficult because this real um momentum that we're experiencing today started in the second half. Um so we're seeing continued strength but we're expecting it to moderate in on a comparison basis.
Follow up on on lapses. Um in term life. Are they still running basically similar to what they were in the the first quarter or have you seen any change?
Yeah, good morning. Uh, in terms of last, uh, we continue to see in aggregate the uh, elevated last compared to our long-term, ldti assumptions, which is pre pandemic, but in terms of comparative to Prior year, the overall trend is pretty steady and we started to see the uh lacerate stabilizing um, you know, a few quarters earlier. Uh meaning that they're not elevating because during pandemic we have extraordinarily low latch rates and then after pandemic we see them run up because of the people who aren't committed embodied during the pandemic period. And that is part of the reason that for example, duration, 5, maybe the, you know, the duration that that we continue to see, uh, most of the fall off in terms of laps and ability to persist, uh, but we obviously still waiting for that to run off and to us.
That is going through the snake at some point that falls off, but you aggregate, I think we're seeing a stable Trend and we do believe that our consumers over the long term, if if you look at the history of our 40 years, you know, they learn to adapt as the economics conditions uh you know evolved. So uh they're going to continue to uh, value the policies. And we do believe that uh it's going to stabilize over time.
By the way, our ADP, uh, assumption of growth that we give the guidance on a 5% already considered this elevated lapse rate.
Thank you.
Your next question comes from Jack Madden.
Morning, Jack.
Good morning. Um, just a follow up on the, the recruiting, um, Outlook Inn. In terms of life, I think he referenced over 50,000 recruits in in July. Um, can you talk about the the incentives that drove the strong level and then in the second quarter was, was pressure and recruiting look more prevalent early in the quarter, um, in April and instead of approved or was there um, like a, a different Trend I guess.
Uh, some of the comparison Jack is because we had incentives and played in a, in a slightly different calendar last year, which was was kind of the perfect, uh, positive storm. We had the convention last year, which gives us an opportunity to communicate, uh, these incentives to the entire a large portion of the sales force, all at the same time, uh, rather than put it out through our normal Communication channel. So you get a bigger response during a commission year, uh, during a convention year. So, um, we do we decided to rerun, uh, the play that we did at the last convention. Uh, you know, when you, if you want to become part of prime America and you have an insurance license. There's absolutely no cost, uh, to to become part of prime America to join. If you don't have an insurance license, we have a process to help you get 1 and we do it at a very low rate, we discounted that licensing fee, uh, in July. And uh, of course that, uh, stimulated, the communication about that opportunity from our recruiters and our team, uh, to those that recruits. We were very pleased, uh, considering
All the other, you know, kind of an econ, any negative economic headwinds and uncertainties, we talked about earlier uh to know what kind of response we might want to get very pleased to see that it was a, a powerful response. Uh, our entrepreneurial opportunity is attractive or maybe even more attractive uh, than ever. And uh, we had a good excitement about spreading news and good response, uh, to it. So, um, you've got a convention year last year, we're comparing to you, you got a little bit of different timing in the calendar. You have to kind of look through all that to really understand the
Results: We were extraordinarily pleased with the response we received in July. It gave us a good start to the third quarter.
Um, the RBC ratio moved up again and I said it to 490% this quarter, I'm curious like when when, or if you might get into some of that excess up to the, the holding company. I think a Premiere is having a relatively low risk, um, asset and liability profile. So, just curious why, why you're kind of running a looks to be a pretty conservative RBC ratio at the moment.
Consideration, when you evaluate it. The first thing is that, you know, the rb2 ratio often times is, uh, impact. Also, from the uh, statutory regulatory restrictions meaning, you know, how much you can take out, uh, has a rule by the, uh, defined by the state that your domain filed in and you can only take out, you know, certain amount based on your prior year statutory income. So we practically are taking out the maximum, we can, uh, you know, given that, that that restriction and we do our best to estimate what that might be and take out or we can. And second part to consider is, we do have an overall desire to keep a very strong RBC ratio. Um, partly is because, uh, when we look at life insurance, if we had stronger growth, we wanted to be um,
You know, able to support that growth. And when when the growth occurs, you know, there is a capital requirement need to write that policy and, you know, put out the reserved for the, um, you know, the, uh, claims. So, that is another part to consider but, uh, over the Long Haul, I think, uh, uh, we do value, uh, to have a strong rating that really helps, uh, you know, give, uh, clients and Salesforce the confidence when they look at, uh, using our, uh, production, uh, protection product. So all of these are consideration. Now that being said we are looking at all the options,
And alternative on the best long-term strategy, capital deployment.
and certainly in consideration of, you know, supporting, um, you know, the, uh,
Hold Co for BuyBacks for dividends and all these support of the growth. And we're going to evaluate, you know, all the options to keep that ratio in reasonable range in terms of supporting growth and as well as being able to take it out, uh, when we can to, uh, you know, do all the things we need to do for a stockholders and growth
Thank you.
Your next question comes from Dan, Bergman with TD Securities, please State your question.
Good morning, Dan.
Hey, good morning. Uh, just digging into your ISP sales while more this quarter. There's really strong continued growth in variable annuities and managed accounts, but a little closer to flattish than us, mutual funds. There's still a really strong, you know, nominal level of sales there, but I was just hoping you could talk a little more about the
Dynamics and these different product areas and and do you view the mix shift, this quarter, as a as a 1-off, given the high Equity Market volatility in the US or or part of an ongoing Trend given you know, the shift towards more retirement savings.
I think it's some of both Dan. I think we do have a longer term kind of demographic Tailwind. As I mentioned, in my script, uh, from just kind of our, our aging Society, people moving toward retirement, uh, which would be positive for retirement products like variable annuities? I do think the uncertainty that we talked about, um, that that probably impacts everyone to a certain extent. Uh, our view is for investors, you know, they look for guarantees and uncertain times, are volatile times and, and while I think there's confidence in the overall direction of the market, you know, you look at the history this year. It's been tremendously volatile. And so that's where the variable annuity guarantees, the the guaranteed income options, uh, or the upside Market protection of the index, link variable, annuities have real appeal to Consumers. And I do think that the product providers have played into that and have continued to improve their products and make them uh appropriately more attractive uh, to that uh, to that Marketplace. So I I my guess is and again, I'm peering into a crystal ball.
So it's it's just entirely opinion is that uh you know as as people move toward retirement and want security, there's likely the potential for a long term Trend here. Um our other products continue to grow and continue to serve a fantastic purpose. Our managed account business that you mentioned is a newer business and you would expect it to be faster growing. Um, coming off a smaller base and it is um and it's something that our sales force more people are getting licensed and getting more experience with that. And so you
We would expect that to grow faster than an established business, but our mutual fund businesses is the largest of all those businesses. Uh, and, uh, if it still performs an important important function, uh, particularly as we see those middle-income families moving through, uh, their their periods of Life. Many times they start in mutual funds because the minimums are smaller. They're simpler products that they can understand. Um, they're they're appropriate because they're simpler and then later they move into more sophisticated products. So our products that works together very very well. We do see the mix shift according to economic conditions but it's very much what we would expect from this product set.
Got it. That's very helpful. And then um uh you know, I think that the mortgage volume showed so nice growth, this quarter I think it was the highest. It's been in a while just any more color on the trends here in the outlook for growth and just, you know, maybe big picture thoughts on how much room is there for uh continued incremental growth if interest in mortgage rates, remain elevated.
Yeah. We're we're very excited about the potential for our mortgage business. You know, Canada has had some rate reductions and that gave some early momentum to the referral program there. Uh, I think we're still waiting on rate reductions in the US. Um, but, you know, back in time when rates were lower, as this program came off the ground, it it got a very fast start, uh, you know, in the 2019 to 2021. Um, and and then we kind of stalled out and and retreated a little bit. But now we're regaining that momentum. I think there's tremendous potential if we do get some rate reductions you know. A lot of Our advice around mortgages is around reducing debt and reducing your weighted average interest rate as a family as interest rates, come down there are opportunities for refinancing folding in high interest rate credit card debt. Uh all of that comes on the table with falling interest rates. Uh so we're we're optimistic about the potential for the program and and can be a real player in the future for our company already as we stated in the prepared remarks important for clients and families. And
For our sales force, but there's upside for Primerica as well in the future.
Got it. Thanks so much.
Thank you and your next question comes from Wilma. Burden with Raymond James. Please State your question.
Good morning, Wilma.
Hey, good morning. Um, could you talk a little bit more specifically about what drove the good expense results in Q2? Um, I realize that you guys reiterated the full year guide, but is there any sustainable element to the lower expenses in the quarter, or is it more timing-related to the ISP Tech Investments? Thanks?
Good morning Wilma, the expenses in second quarter. Uh, was uh, certainly an aspect of, uh, timing and some of it also has to do with, um, you know, our uh, uh investment on technology. So it's a combination of those, the projects obviously are, uh, a long-term projects, uh, many of those. So, you know, the timing of the start and, and when they get ramped up, uh, could be more likely towards the, uh, third and fourth quarter at this point. And, uh, we obviously also our, uh, experiencing variable growth related expense, uh, that uh, is associated with how Topline is going and as, uh, ISP for example, continue to be strong and we see some of the expenses coming through that segment A Little Bit Stronger. Now, in terms of full year guidance, I think we
In the 6 to 8% range and just depends on how uh accelerated some of those technology and Investments can be so that there could be some timing variable uh depends on those as well.
Thank you. And then can you talk a little bit more about your efforts to grow the ISP Salesforce?
Um and also to increase the diversity of sales. So settling both term life and ISP across the sales force. Thanks.
Sure. Wilma, we um, feel it's very important to continue to grow that sales force size as well. It's not as directly related to production, uh, as it is on the term life side, there's a very close relationship in most circumstances between our life license and Salesforce size and life production. But on the security side, uh, there's so many more factors involved like confidence in the market. Like, we're seeing today appeal, of product, set makeshift, all the things that we talked about earlier, but we still believe having a growing base of the sales force is critical. Um, the process is more difficult for getting, uh, Securities licensed in individuals even if they're going to be with a limited Securities license, as opposed to the full, uh, you know, stock and bond license Series 7. Uh, we generally use the Series 6 and 63, um, and that has proven to be more difficult and grow more difficult over time. So that has provided somewhat of a hurdle in that growth rate. However, we're pleased to, we're beginning to see some traction. We had we had very good, uh, experience.
Begin to show results, but it does go generally more slowly than our life Salesforce.
Thank you.
You're welcome.
Thank you, you're not.
From Mark, Hughes with truist Securities. Please State your question,
Mark, yeah, thank you. Hello, Glenn.
The uh, ISP momentum continuing in July.
Are you seeing a little more mutual fund activity with the market having bounced back? I think you said, uh,
April was very poor sentiment was uh, soft in your uh last call is is that picking up some steam.
The the mix shift Mark that it usually is not quite that real time responses. I mean if if we have a a month or 2, or a quarter of positive returns, it's not like, suddenly people go. Oh, I don't need those guarantees anymore. Let's move back over here into the lower guarantee or no guarantee business. Uh, it it happens over longer term Trends and longer term sentiment. So, um, you know, I don't I don't have the data in front of me, on the mix, exactly for the month of July. Uh, but my gut tells me that it's similar to what we've seen in the past and, and, and if it does change, it will change, uh, slightly over time, rather than than take a hard turn. So, I don't think you've got much difference in mix shift, probably just for the single month.
I understood what you think about the term life sales. How do you think you stacked up relative to the industries, you know, some of the industry data seem to be
A, you know, it hadn't been great but it's been a little more stable than than your results. I wonder whether you think that's um, not reflective of your particular End Market or uh,
Just sort of curious. How you see your experience versus the the industry?
Yeah, that's a great question, Mark. I was looking earlier this morning at uh numbers that were released this morning on uh application activity in the industry. And and what we're seeing is a lot of the industry positive is that the upper End of the Age, Spectrum, 60, and above even 70 and above uh, in extraordinarily large, space amount, the growth in the, you know, the under 30 year to date was, you know, just barely go to 0.3% under 30 and 1% 2 percent, uh, between ages 30 and 50, which that pretty much covers the vast majority of all the sales that we do. Um, since you know, our philosophy is that that term insurance is a temporary need, while you're in income earning mode. So we're not that far off the industry. I think, the whole industry is struggling with the exception of of those selling to older ages and larger face amounts for estate planning purposes. Um, we may be a little behind
The industry this year, just slightly. But I think we're way ahead of the industry last year, so it goes back to those difficult comparisons. But I think we're seeing a lot of the same things that our peers are um, and as Tracy pointed out, we do believe, uh, you know, the resiliency, of the middle income Market always amazes me, they do adapt over time. And what's uncertain today. The same conditions will be considered certain after you've lived through them for a few months. And so we think it's a temporary issue um that will correct itself over time. Perhaps even turn into positive. Uh you know, cost of living discussion uh at some point in the future, um but uh certainly not for the immediate future. So I think we're traveling pretty much in the pack for our age group. Mark, maybe a little behind this year because we're head last year and we believe that something that will correct itself over time.
Very good. Thank you.
Thank you.
And your next question comes from Jeff. Schmitt with William Blair, please State your question.
Hi, good morning. Good morning.
Hi Glenn. Um, just curious how you're thinking about productivity here with it at the low end of these historical range. Um, do you think it could move below that and and what do what do we need to see for that to really turn around?
So I I think you want to continue to see pressure on that ratio for the rest of this year, but over the Long Haul, uh, we'd expect it to get back work toward the middle.
And does that suggest, I guess that the surge in the sales force? Last year, you may have brought on some, um, sort of less committed or just lower productivity, sales agents, and maybe that that kind of corrects itself, um, over the next year or 2
That's possible. Uh, yeah, but I I got to tell you that our sales force is so large and we've been doing this for so long. Um, and and we go for excellent quality individuals. I'm so proud of our sales force and the quality of what they do. I think it's the more difficult sales environment, not the, uh, commitment, or ability of the sales people that we're seeing today. Um, and um, and so I think that that's that's possible, but I don't think that's probable. I think it's the environment. We've got people entering the business in a tougher sales environment now than we did in the past. And I think that environment will change over time and their their skill set will grow. Just like the, the middle work will adapt to living in a High Cost of Living environment sales, people adapt to selling in high cost environment, get better at it. So, I, I don't think it's, it's quality or commitment.
Okay, that's helpful. Thank you.
Certainly.
And your next question comes from Sunni kamath with Jeffrey's please State your question.
Morning to me. Hey, Glenn. How are you? Um, so I I had a question on a nudity sales. Um, you know, if I just think back to, you know, historically they've been about a quarter of ISP sales roughly and just over the past few quarters. Um you know we're now about a third. Um if if we stay at that mix um does that impact the p&l at all? Does it you know cause it to change relative to maybe what we're used to seeing just wondering if if that's going to be a something that we should focus on thanks.
I think we we view a profitability of products as being very similar. It's, it's a timing of when we're compensated on products variable, annuities tend to have more upfront at the point of sale compensation, uh, and a little less compensation and based on assets. But the, the profitability of the product is, is pretty close to some of the others, most of the others. So I think you see it as we've seen this quarter uh when the mix shifts toward variable annuities, you see uh you know sales based commissions, outstripping the total and then if the product makes shifts back um it it it kind of corrects itself as well. So, um, I, you know, I we have never tried to manage product mix and say, oh my gosh, too much of its going to a product. That's a little less, uh, profitable because the profitability over time is so close. So, um, I I think the
Shift that we're seeing again, is happening because of the conditions. And because of the, uh, the excellent response to the current economic and market conditions of our product providers that are stepping up and providing features of products that meet the needs of consumers. So they become a very attractive, but, uh, you know, that's kind of the front end view. I'll go to Tracy and see if you think, you know, p&l has impacted by mix shift toward, uh, variable, annuities in any way to to help to meet with that. Yeah, I agree with Glenn. I think it's more of a timing and, um, most of the products, um, you know, in the long run, it, it it kind of evens itself out.
Got it. Okay, that makes sense. And then I guess sticking with variable annuities, you know, Glenn, as a distributor, I think you have a good sense of product design. And you know, we're starting to hear a little bit from some of the carriers about some aggressive, um, you know, features, particularly in the RYA market. Um, just wondering what you're seeing, if you're seeing any of that. And when you think about your product providers, do you tend to stick with the same sort of handful of carriers, or do you sort of swap in and out, um, kind of over time? Thanks.
Yeah, let me take those questions in reverse order, because I think your second question helps answer your first question. We absolutely stick with a narrow shelf of very high quality product providers. That we have a long-term relationship with, which is important for our business relationship with them, but it's also important. So they understand our philosophy around these products. You know, the the annuity business during my
Just like we do and so they are they tend not to get over into the the red zones uh that some of the other product providers that we don't represent. Do that said we do have a a a committee a team that analyzes products determines if they're suitable for our clientele before we put them on their product shelf, even among our high-quality providers. So uh yes there is the tendency to need for companies to do that. Uh we're on guard against that all time and at all times and I don't see us. Bearing any risk at that point of getting over into inappropriate products um that some others might
Thanks Glenn.
Thank you.
Thank you. And that was our last question for today. So with that, we will conclude today's call all parties, May now disconnect and have a great day.