2023
Primerica
Annual
Report
Financial Highlights
($ in millions, except per share amounts or as otherwise indicated.)
GAAP
2023
20221
Change2
Total Revenues
$2,815.7
$2,720.1
Net Income Attributable to Primerica, Inc.
$576.6
$472.1
3.5%
22.1%
Diluted Earnings Per Share3
$15.94
$12.33
29.2%
Weighted Average Shares Used to Calculate Diluted EPS
36.0
38.1
-5.5%
Stockholders’ Equity
Book Value Per Share3
$2,066.0
$2,031.3
$59.04
$55.16
Common Shares Repurchased
$375.0
$356.3
1.7%
7.0%
5.2%
End of Period Share Count4
35.0
36.8
-5.0%
Cash Dividends Declared Per Common Share
$2.60
$2.20
Market Price Per Share at Year End
$205.76
$141.82
Total Stockholder Return
47.1%
-5.9%
Debt-to-Capital, Excluding AOCI5
20.7%
21.6%
18.2%
45.1%
nm
nm
Operating6
2023
20221
Change2
Adjusted Operating Revenues
$2,822.0
$2,725.0
Adjusted Net Operating Income
$581.4
$536.9
3.6%
8.3%
Diluted Adjusted Operating Income Per Share3
$16.07
$14.03
14.6%
Adjusted Net Operating Income Return on
Adjusted Stockholders’ Equity
26.5%
25.7%
nm
1. Amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on January 1, 2023. 2. Certain variances are noted as “nm”
to indicate not meaningful. 3. Percent change in per share calculations is calculated prior to rounding per share amounts. 4. Share count reflects outstanding common shares and
excludes restricted stock units (RSUs). 5. Debt-to-capital (excluding accumulated other comprehensive income) is that of the parent company only. Capital in the debt-to-capital
ratio includes stockholders’ equity and the note payable. 6. A reconciliation of GAAP results to operating results can be found on our website at https://investors.primerica.com
Front Cover: By teaching clients our proven How Money Works™ concepts, Primerica’s mission to help middle-income families get on track to achieve financial independence has
changed the future of millions of people.
A Message
from
the CEO
Glenn J. Williams
Dear Fellow Stockholders,
Since Primerica’s founding in 1977, we have
never wavered from our commitment to serve
the financial needs of middle-income families.
During 2023, we achieved many milestones
of success in growing distribution, protecting
incomes with new term life insurance policies,
and helping our clients save for the future.
Yet financial challenges for families continue
to grow, creating opportunities for Primerica
representatives to provide financial education,
coaching and solutions to help put families on
the path toward financial security.
Our most significant accomplishments of 2023
included the expansion of our sales force to
over 141,500 life-licensed representatives and
issuing a record $119 billion of new term life
coverage, bringing our total coverage in force
to $945 billion. In 2023, we paid death claim
benefits of over $1.8 billion to beneficiaries
of our life insurance policies. In addition, we
assisted families with new investments of
$9.2 billion, bringing our assets under
management to nearly $97 billion at the end of
2023. These accomplishments led to 8% growth
in adjusted net operating income and a 15%
increase in diluted adjusted operating income
per share. The adjusted net operating income
return on adjusted equity (“ROAE”) of 26.5% in
2023 compares favorably to 25.7% in 2022.
New Life-Licensed Representatives
44,739
48,106
39,622
45,147
49,096
2019
2020
2021
2022
2023
Life Insurance-Licensed Sales Force
(End of Period)
130,522
134,907
129,515
135,208
141,572
2019
2020
2021
2022
2023
Strong Fundamentals
Support Continued Growth
Our continued success is driven by the
in the way we conduct business and provides
leadership, size and diversity of our sales
more engagement opportunities for our clients
force and our unique ability to reach and
and representatives.
serve middle-income families. Over the last
several years, we have become more effective
at communicating the attractiveness of our
business opportunity while developing a better
process to keep recruits engaged as they
prepare to take their insurance license exam.
What has not changed is the value placed by
new teammates on the independence and
flexibility that comes with building a Primerica
business. The combination of traditional face-
to-face interaction with clients, complemented
by virtual communication, adds efficiencies
With the fundamental building blocks in place
to grow our sales force, we licensed nearly
50,000 new representatives in 2023, fueling
5% growth in the size of the sales force to end
the year with a total of 141,572 life licensed
representatives. As we look ahead, we see a
high level of interest in building a Primerica
business among those who wish to create
a secondary source of income to offset the
increasing cost of living and those who are
interested in pursuing an alternative career.
Paul and Sydney Neely share our
proven How Money Works™ concepts
with others, continuing Primerica’s
mission to educate middle-income
families about their finances.
April and Rufus Taylor help
Primerica continue to grow
its licensed sales force, allowing
us to reach more families.
Issued Term Life Face Amount
($ In Billions)
$94.0
$109.4
$108.5
$103.8
$119.1
2019
2020
2021
2022
2023
Term Life Face Amount in Force
($ In Billions)
$808
$859
$903
$917
$945
2019
2020
2021
2022
2023
Sales and
Product Innovation
We continue to see strong demand in our life
2022 counts to a one-life per policy basis to be
insurance business following the launch of our
consistent with the new products.
new term life insurance products in the fall of
2022. The streamlined, convenient application
process has increased confidence with our
licensed representatives, while advancements
in underwriting technology allow us to
issue policies more rapidly, in many cases
providing an approval within seconds while the
representative and clients are meeting at the
kitchen table. The new products also feature
more underwriting classes, which often appeal
to clients across a broader spectrum of face
amount. In 2023, we issued nearly 359,000
new policies, representing an 8% increase
compared to the prior year, after adjusting
Despite headwinds in our investment
and savings products business created
by economic and market uncertainty, we
experienced strong sales volume of $9.2 billion
driven by the increased appeal of variable
annuities in the U.S. as higher interest rates
helped providers enhance product guarantee
features. In Canada, mutual fund sales from
our principal distributor model have been well
received. Total client asset values ended the
year at nearly $97 billion, up 15% compared to
December 31, 2022.
Using Primerica’s innovative product
technology, Jaime and Janett Gomez help
clients find the right solutions for their
specific needs and financial goals.
Investments & Savings Products Sales
($ In Billions)
$7.5
$7.8
$11.7
$10.0
$9.2
2019
2020
2021
2022
2023
Total Assets Under Management
($ In Billions)
$70.5
$81.5
$97.3
$83.9
$96.7
2019
2020
2021
2022
2023
Committed
to Our Communities
At Primerica, we believe we have a
competitors focus on the more affluent clients,
responsibility to be good citizens and to make
leaving our target market without much of the
a positive impact in the communities where
assistance they need.
we live and work. Our commitment to “doing
what’s right” is at the very heart of who we are.
It represents our mission to provide access to
financial information, products and services to
traditionally underserved markets in the United
States and Canada. Our clients typically have
household income between $30,000 and
$130,000. And, according to the most recent
U.S. Census Bureau’s population survey and
the Census of Population survey conducted
by Statistics Canada, this group accounts for
approximately half of the population in the U.S.
and Canada. We believe that many middle-
income families have inadequate life insurance
coverage and often lack a plan to save for
retirement and reduce debt. Many of our
We also recognize the importance of
attracting and cultivating talent and we are
proud of the culture we have created. Doing
things the Primerica way has created an
environment where employees can thrive
and feel supported. Our hard work has been
recognized with multiple awards, including
Newsweek’s America’s Greatest Workplaces
for Diversity 2024 and America’s Greatest
Workplaces for Women 2024, USA Today’s
Top Workplaces USA 2024, and Forbes’
America’s Best Midsize Employers 2024.
Further, our common stock is a component of
the 2023 Bloomberg Gender-Equality Index.
2023
Member
You can learn more about the social impact of our business
in our most recent Corporate Sustainability Report (CSR)
under the sustainability tab on our investor relation website
at https://investors.primerica.com/sustainability.
Josh and Shawna Johner are part
of Primerica’s mission to do what’s
right for families and make a positive
impact on the community.
Sustaining Long-Term
Stockholder Value
Primerica’s total stockholder return (“TSR”) in
businesses and the predictability of cash flows,
2023 was 47%, while on a five-year cumulative
our board approved a new $425 million share
basis the TSR was 125%. Our ability to deliver
repurchase program in November 2023 to
solid financial results allowed us to fulfill our
occur through December 31, 2024.
commitment of returning excess capital to
stockholders. During 2023, we executed
the $375 million stock repurchase program
authorized by our board of directors and paid
a total of $94 million in stockholder dividends.
Taking into consideration the complementary
nature of our insurance and our investment
Above all else, we remain committed to
executing on our mission for the benefit
of all our stakeholders including clients,
representatives, employees and owners of our
common stock. Thank you for your continued
commitment to Primerica’s success.
Glenn J. Williams
Glenn J. Williams
Chief Executive Officer
Total Stockholder Return
Primerica, Inc
.
S&P 500 Insurance
S&P MidCap 400
125%
105%
81%
2018
2019
2020
2021
2022
2023
Juba and Oumnia Menguellet are committed
to providing the right financial education,
coaching and solutions to help families get
on the path to financial security.
Executive Officers
LEFT TO RIGHT: Greg Pitts, Chief Operating Officer, Peter Schneider, President, Tracy Tan, Chief Financial Officer and
Glenn Williams, Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transition period from
to
Commission File Number: 001-34680
Primerica, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1 Primerica Parkway
Duluth, Georgia
(Address of principal executive offices)
27-1204330
(I.R.S. Employer Identification No.)
30099
(ZIP Code)
Registrant’s telephone number, including area code: (770) 381-1000
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
Title of each class
Name of each exchange on which registered
Common Stock
PRI
Securities registered pursuant to Section 12(g) of the Act: None
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. È Yes ‘ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. ‘ Yes È No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. È Yes ‘ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). È Yes ‘ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer È
Non-accelerated filer ‘
‘
Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ‘ Yes È No
The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, 2023, was
$7,062,078,025. The number of shares of the registrant’s Common Stock outstanding at January 31, 2024, with $0.01 par value,
was 34,847,562.
Documents Incorporated By Reference
Certain information contained in the Proxy Statement for the Company’s Annual Meeting of Stockholders to be held on
May 8, 2024 is incorporated by reference into Part III hereof.
TABLE OF CONTENTS
Cautionary Statement Concerning Forward-Looking Statements
Risk Factors Summary
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C.
Cybersecurity
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
Item X.
Information About Our Executive Officers and Certain Significant Employees
PART II
Item 5.
Item 6.
Item 7.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Item 9A.
Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
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210
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements
contained in this report as well as some
statements in periodic press releases and some
oral statements made by our officials during our
presentations are “forward-looking” statements.
Forward-looking statements include, without
limitation, any statement that may project,
indicate or imply future results, events,
performance or achievements, and may contain
the words “expect”, “intend”, “plan”, “anticipate”,
“estimate”, “believe”, “will be”, “will continue”,
“will likely result”, and similar expressions, or
future conditional verbs such as “may”, “will”,
“should”, “would”, and “could”. In addition, any
statement concerning future financial
performance (including future revenues,
earnings or growth rates), ongoing business
strategies or prospects, and possible actions
taken by us or our subsidiaries are also forward-
looking statements.
Forward-looking statements are based on
current expectations and projections about
future events and are inherently subject to a
variety of risks and uncertainties, many of which
are beyond the control of our management
team. All forward-looking statements in this
report and subsequent written and oral forward-
looking statements attributable to us, or to
persons acting on our behalf, are expressly
qualified in their entirety by these risks and
uncertainties. These risks and uncertainties are
described under “Item IA. Risk Factors” and
summarized below under “Risk Factors
Summary.”
Developments in any of the areas addressed in
these risks or uncertainties could cause actual
results to differ materially from those anticipated
or projected or cause a significant reduction in
the market price of our common stock. Further,
the risks and uncertainties described under “Item
IA. Risk Factors” and summarized below under
“Risk Factors Summary” may not include all of
the risks and uncertainties that could affect us. In
addition, in light of these risks and uncertainties,
the matters referred to in the forward-looking
statements contained in this report may not in
fact occur. Accordingly, undue reliance should
not be placed on these statements. We
undertake no obligation to publicly update or
revise any forward-looking statements as a
result of new information, future events or
otherwise, except as otherwise required by law.
Primerica 2023 Annual Report
i
RISK FACTORS SUMMARY
The following is a summary of the risks and
uncertainties that could have a material adverse
effect on our business. See “Item 1A. Risk
Factors” for additional information regarding
these risks and uncertainties.
RisksRelatedtoOurDistribution
Structure
• Our failure to continue to attract new
recruits, retain independent sales
representatives or license or maintain the
licensing of independent sales
representatives would materially adversely
affect our business.
• Certain laws and regulations could apply to
our independent contractor distribution
model, which could require us to modify our
distribution structure.
•
There may be adverse consequences if the
classification of our independent contractor
sales representatives is changed.
• Violation of, or non-compliance with, laws
and regulations and related claims and
proceedings could expose us to material
liabilities.
RisksRelatedtoOurInsuranceBusiness
andReinsurance
• Our life insurance business may face
significant losses or volatility if our actual
experience differs from our expectations
regarding mortality, persistency, disability or
reinsurance.
• Our life insurance business is highly
regulated, and statutory and regulatory
changes may materially adversely affect our
business.
• A decline in the regulatory capital ratios of
our insurance subsidiaries could result in
increased scrutiny by insurance regulators
and ratings agencies and have a material
adverse effect on our business.
• A significant ratings downgrade by a ratings
organization could materially adversely
affect our business.
ii
Primerica 2023 Annual Report
•
The failure by any of our reinsurers or
reserve financing counterparties to perform
its obligations to us could have a material
adverse effect on our business.
RisksRelatedtoOurInvestmentand
SavingsProductsBusiness
• Our Investment and Savings Products
segment is heavily dependent on a limited
platform of mutual fund and annuity
products offered by a relatively small
number of companies and managers. If
these products fail to remain competitive
with other investment options, our business
could be materially adversely affected.
•
If our relationship with one or more of our
funds, annuities or managers is significantly
altered or terminated or there is a shift in
the business mix, our business could be
materially adversely affected.
• Violations of, or non-compliance with, laws
and regulations of the securities business
could expose us to material liabilities.
•
•
If heightened standards of conduct or more
stringent licensing requirements (such as
those adopted by the Securities and
Exchange Commission) and the Department
of Labor, state legislatures or regulators or
Canadian securities and insurance
regulators, are imposed on us or the
independent sales representatives, or selling
compensation is reduced as a result of new
legislation or regulations, it could have a
material adverse effect on our business.
If our suitability policies and procedures, or
our policies and procedures for compliance
with federal, state or provincial regulations
governing standards of care, were deemed
inadequate, it could have a material adverse
effect on our business.
• Non-compliance with applicable regulations
could lead to revocation of our subsidiary’s
status as a non-bank custodian, which could
have a material adverse effect on our
business.
RisksRelatedtoe-TeleQuote’sSenior
HealthInsuranceDistributionBusiness
• We may not be able to execute an effective
senior health insurance business strategy,
which could adversely affect our business.
•
•
•
•
e-TeleQuote Insurance, Inc. (“e-TeleQuote”)
is highly regulated and subject to
compliance requirements of the U.S.
government’s Centers for Medicare and
Medicaid Services (“CMS”) and those of its
carrier partners. Non-compliance with, or
violations of, such requirements may harm
its business, which could have a material
adverse effect on our business.
e-TeleQuote generates leads that are
internally sourced from marketing initiatives
and receives referrals from Primerica
independent sales representatives. It also
receives leads externally acquired from
third-party vendors. e-TeleQuote’s business
may be harmed if it cannot continue to
acquire or generate leads on commercially
viable terms, if it is unable to convert leads
to sales at acceptable rates, if Primerica
independent sales representatives do not
introduce consumers to e-TeleQuote, or if
policyholder retention is lower than
assumed, any of which could adversely
impact our business.
If e-TeleQuote’s ability to enroll individuals
during the Medicare annual election period
is impeded, its business may be harmed,
which could adversely impact our business.
e-TeleQuote’s business is dependent on key
carrier partners. The loss of a key carrier
partner, or the modification of commission
rates or underwriting practices with a key
carrier partner, could harm its business,
which could adversely impact our business.
RisksRelatedtoOurMortgage
DistributionBusiness
RISK FACTORS SUMMARY
• Our mortgage brokerage business is highly
regulated and subject to various laws and
regulations in the U.S. and Canada. Changes
in, non-compliance with, or violations of,
such laws and regulations could affect the
cost or our ability to distribute our products
and could adversely affect our business.
•
In the U.S., we distribute mortgage loans
based on contractual agreements with a
very limited number of mortgage lenders. A
significant change to or disruption in the
mortgage lenders’ mortgage businesses or
an inability of the mortgage lenders to
satisfy their contractual obligations to us
could adversely affect our business.
RisksRelatedtoEconomicDowncycles,
PublicHealthCrisesorCatastrophes,
andDisasters
•
The effects of economic downcycles, issues
affecting the national and/or global
economy or global geopolitical event(s)
could materially adversely affect our
business.
• Major public health pandemics, epidemics
or outbreaks (such as the COVID-19
pandemic) or other catastrophic events,
have impacted and could again materially
adversely impact our business.
•
In the event of a disaster, our business
continuity plan may not be sufficient, which
could have a material adverse effect on our
business.
RisksRelatedtoInformation
TechnologyandCybersecurity
•
If one of our, or a third-party partner’s,
significant information technology systems
fails, if its security is compromised, or if the
Internet becomes disabled or unavailable,
our business may be materially adversely
affected.
•
Licensing requirements will impact the size
of the mortgage loan sales force, which
could adversely affect our mortgage
brokerage business.
• Any failure to protect the confidentiality of
client information could adversely affect our
reputation and have a material adverse
effect on our business.
Primerica 2023 Annual Report
iii
RISK FACTORS SUMMARY
•
•
The current legislative and regulatory
climate with regard to privacy and
cybersecurity could adversely affect our
business.
e-TeleQuote’s security measures, which are
designed to protect against breaches of
security and other interference with its
systems and networks, operate
independently from Primerica’s systems. If
e-TeleQuote is subject to cyber-attacks or
security breaches or is otherwise unable to
safeguard the security and privacy of
confidential data e-TeleQuote’s business
may be harmed, which could have a
material adverse effect on our business.
FinancialRisksAffectingOurBusiness
• Credit deterioration in, and the effects of
interest rate fluctuations on, our invested
asset portfolio and other assets that are
subject to changes in credit quality and
interest rates could materially adversely
affect our business.
• Valuation of our investments and the
determination of expected credit losses
when the fair value of our available-for-sale
invested assets is below amortized cost are
both based on estimates that may prove to
be incorrect, which could adversely affect
our financial condition.
• Changes in accounting standards can be
difficult to predict and could adversely
impact how we record and report our
financial condition and results of operations.
•
The inability of our subsidiaries to pay
dividends or make distributions or other
payments to us in sufficient amounts would
impede our ability to meet our obligations
and return capital to our stockholders.
RisksRelatedtoLegislativeand
RegulatoryChanges
• We are subject to various federal, state and
provincial laws and regulations in the U.S.
and Canada, changes in which may require
us to alter our business practices and could
materially adversely affect our business.
iv
Primerica 2023 Annual Report
•
The current legislative and regulatory
climate with regard to financial services
could adversely affect our business.
• Medicare Advantage is a product legislated
and regulated by the U.S. government. If the
enabling legislation and regulation or
implementing guidance issued by CMS
changes, e-TeleQuote’s business may be
harmed, which could have a material
adverse effect on our business.
•
The current regulatory climate with regard
to climate change may adversely affect our
business.
GeneralRiskFactors
•
Litigation and regulatory investigations and
actions may result in financial losses and
harm our reputation.
• A significant change in the competitive
environment in which we operate could
negatively affect our ability to maintain or
increase our market share and profitability.
• Our continued success requires a high-
performing and stable team of employees
across all levels, and the loss of key
employees could negatively affect our
financial results and impair our ability to
implement our business strategy.
• We regularly undertake business initiatives
to enhance our technology, products, and
services. The efficiency and success of these
initiatives may vary significantly and may
cause unanticipated costs, errors, or
disruptions which could have a material
adverse effect on our business.
• We may be materially adversely affected by
currency fluctuations.
• Any acquisition of or investment in
businesses that we may undertake that does
not perform as we expect or that is difficult
for us to integrate could materially
adversely impact our business.
•
The market price of our common stock may
fluctuate.
PART I
ITEM 1.
BUSINESS.
Primerica, Inc. (“Primerica” or the “Parent
Company” and, together with its direct and
indirect subsidiaries, “we”, “us” or the
“Company”) is a leading provider of financial
products and services to middle-income
households in the United States and Canada
with 141,572 life insurance-licensed sales
representatives as of December 31, 2023. These
independent licensed representatives
(“independent sales representatives” or
“independent sales force”) assist our clients in
meeting their needs for term life insurance,
which we underwrite, and mutual funds,
annuities, managed investments, Medicare-
related insurance products and other financial
products, which we distribute primarily on behalf
of third parties. We insured approximately
5.7 million lives and had approximately
2.9 million client investment accounts as of
December 31, 2023. Our business model
uniquely positions us to reach underserved
middle-income consumers in a cost-effective
manner and has proven itself in both favorable
and challenging economic environments.
Our mission is to serve middle-income families
by helping them make informed financial
decisions and providing them with a strategy
and tools to gain financial independence. Our
distribution model is designed to:
• Address our clients’ financial
needs.
Independent sales representatives
use our proprietary Financial Needs Analysis
tool (“FNA”) and an educational approach to
demonstrate how our product offerings can
provide financial protection for our clients’
families, save for their retirement and other
needs, and manage their debt. Typically, our
clients are the friends, family members and
personal acquaintances of the sales
representatives. Meetings are generally held
in informal, face-to-face settings either in
person or through remote communication
tools, usually while clients are in their
homes.
• Provide a business opportunity. We
provide an entrepreneurial business
opportunity for individuals to distribute
financial products. Low entry fees as well as
the ability to select their own schedules and
time commitments allow independent sales
representatives to supplement their income
by starting their own businesses without
leaving their current jobs. Our unique
compensation structure, technology, sales
support and back-office processing are
designed to enable independent sales
representatives to successfully grow their
businesses.
We believe there is significant opportunity to
meet the increasing array of financial services
needs of our clients. We intend to leverage the
independent sales force to meet such client
needs, which will drive long-term value for all of
our stakeholders. Our strategy during 2023 was
organized across four primary areas:
• Maximizing independent sales force growth,
leadership and productivity;
• Broadening and strengthening our
protection product portfolio, including term
life insurance and third-party products;
• Becoming the middle-income market’s
provider of choice for retirement and
investment products; and
• Developing powerful digital capabilities that
deepen our client relationships and extend
our reach in the market.
CorporateStructure
We conduct our core business activities in the
United States through four principal entities, all
of which are direct or indirect wholly owned
subsidiaries of the Parent Company:
• Primerica Financial Services, LLC (“PFS”), our
general agency and marketing company;
• Primerica Life Insurance Company
(“Primerica Life”), our principal life insurance
underwriting company;
Primerica 2023 Annual Report
1
ITEM 1. BUSINESS
• PFS Investments Inc. (“PFS Investments”),
our principal investment and savings
products company, broker-dealer and
registered investment advisor; and
•
e-TeleQuote Insurance, Inc. (“e-TeleQuote”),
a distributor of Medicare-related insurance
products underwritten by third-party health
insurance carriers.
$30,000 to $130,000 of annual income.
According to the 2022 U.S. Census Bureau
Current Population Survey, the latest period for
which data is available, approximately 54% of
U.S. households fall in this range. We believe
that we understand the financial needs of the
middle-income segment, which include:
• Many have inadequate or no life insurance
Primerica Life is domiciled in Tennessee, and its
wholly owned subsidiary, National Benefit Life
Insurance Company (“NBLIC”), is a New York-
domiciled life insurance underwriting company.
We conduct our core business activities in
Canada through three principal entities, all of
which are indirect wholly owned subsidiaries of
the Parent Company:
• Primerica Life Insurance Company of
Canada (“Primerica Life Canada”), our
Canadian life insurance underwriting
company;
• PFSL Investments Canada Ltd. (“PFSL
Investments Canada”), our Canadian
licensed mutual fund dealer; and
• PFSL Fund Management Ltd. (“PFSL Fund
Management”), our Canadian investment
funds manager.
Primerica was incorporated in the United States
as a Delaware corporation in October 2009 to
serve as a holding company for the Primerica
businesses (collectively, the “Company”). Except
for e-TeleQuote, which was acquired on July 1,
2021, our businesses were transferred to us by
Citigroup, Inc. on April 1, 2010 in a
reorganization pursuant to which we completed
an initial public offering in April 2010 (the “IPO”).
On March 31, 2010, we entered into certain
coinsurance transactions to cede between 80%
and 90% of the risks and rewards of our term life
insurance policies that were in force at year-end
2009. We administer pre-IPO policies subject to
these coinsurance agreements.
OurClients
Our clients are generally middle-income
consumers, which we define as households with
2
coverage.
Individual life insurance sales in
the United States declined from 12.9 million
policy sales in 1975 to 9.2 million policy
sales in 2022, the latest period for which
data is available, according to Life Insurance
Marketing and Research Association
(“LIMRA”), a worldwide association of
insurance and financial services companies.
We believe that term life insurance, which
we have provided to middle-income clients
for nearly 40 years, is generally the best
option for them to meet their life insurance
needs.
• Many need help investing and saving for
retirement and other personal goals. Many
middle-income families find it challenging
to invest and save for retirement and other
personal needs. By developing personalized
savings programs for our clients using our
proprietary FNA and offering a wide range
of mutual funds, annuities, managed
investments and segregated fund products
sponsored and managed by established
firms, independent sales representatives are
well equipped to help clients develop long-
term savings plans to address their financial
needs. We allow our clients to establish
monthly contributions to investment
savings plans with as little as $25 per
month.
• Many need to reduce their debt. Many
middle-income families have numerous
debt obligations from credit cards, auto
loans, and home mortgages. We help our
clients address these financial burdens by
providing personalized and client-driven
debt resolution techniques.
• Many prefer to meet face-to-face when
considering financial products. Historically,
many middle-income consumers have
indicated a preference to meet face-to-face
when considering financial products or
services. As such, we have designed our
distribution model to address this
preference in a cost-effective manner
through a network of more than 141,000 life
insurance-licensed independent sales
representatives who meet with clients in
person or using remote communication
tools based on client preference.
• Many need Medicare coverage as they reach
the age of eligibility.
In 2023, there were
approximately 60 million eligible Medicare
beneficiaries in the United States according
to the Kaiser Family Foundation. According
to the United States Census Bureau, over
11,000 individuals will be turning 65 on a
daily basis. As a result, the number of
Medicare eligible beneficiaries is expected
to continue to grow. We distribute
Medicare-related insurance products to
eligible Medicare beneficiaries and enroll
them in coverage utilizing licensed health
insurance agents who are employees of our
subsidiary e-TeleQuote.
• Many are looking to finance the purchase of
a home or refinance an existing
mortgage. Most middle-income
consumers need mortgages to finance the
purchase of a home. In addition, through
refinancing a mortgage loan, clients may be
able to change the term of their loan, access
home equity for cash, home improvements
and/or debt consolidation and in limited
circumstances lower their interest rate.
OurDistributionModel
Our distribution model is a modified traditional
insurance agency model designed to reach and
serve middle-income consumers efficiently
through the independent sales force. Key
characteristics of our unique distribution model
include:
•
Independent
Independent entrepreneurs:
sales representatives are independent
contractors building and operating their
own businesses. This approach means that
independent sales representatives are
ITEM 1. BUSINESS
•
•
entrepreneurs who take responsibility for
selling products, recruiting and developing
other independent sales representatives,
setting their own schedules and managing
and paying the administrative expenses
associated with their sales activities.
Low barriers to entry:
By offering a flexible
time commitment opportunity, we are able
to attract a significant number of recruits
who desire to earn supplemental income
and generally concentrate on smaller-sized
transactions typical of middle-income
consumers. Independent sales
representatives are able to start their
businesses for low fees, for which they
receive technological support, pre-licensing
training and access to licensing examination
preparation programs. Independent sales
representatives sell or refer products
directly to consumers, and therefore our
business opportunity does not require
recruits to purchase and resell our products.
Most independent sales representatives
begin selling products on a part-time basis,
which enables them to hold jobs while
exploring an entrepreneurial business
opportunity with us.
Sales force leadership: An independent
sales representative who has built a
successful organization and has obtained
his or her life insurance and securities
licenses can achieve the sales designation of
Regional Vice President (“RVP”), which
qualifies him or her for a higher commission
schedule. RVPs are independent contractors
who open and operate offices for their sales
organizations and devote their full-time
attention to their businesses. RVPs also
support and monitor the independent sales
representatives, on whose sales they earn
commissions, in achieving compliance with
applicable regulatory requirements. RVPs’
efforts to expand their businesses are a
primary driver of our success.
•
Innovative compensation structure: We
have developed an innovative system for
compensating the independent sales force
that is contingent upon product sales. We
Primerica 2023 Annual Report
3
ITEM 1. BUSINESS
advance to independent sales
representatives a significant portion of their
insurance commissions, which are subject to
chargebacks, upon their submission of an
insurance application and the first month’s
premium payment. In addition to being a
source of motivation, this advance provides
independent sales representatives with
immediate cash flow to offset their costs.
Monthly production bonuses are also paid
to RVPs whose sales organizations meet
certain sales levels. With compensation tied
to sales activity, our approach
accommodates varying degrees of
individual productivity, which allows us to
effectively use a large group of part-time
independent sales representatives while
providing a variable cost structure. In
addition, we incentivize RVPs with quarterly
stock awards based largely on sales
production (“agent equity awards”), which
aligns their interests with those of our
stockholders.
Large, dynamic sales force: Members of
the independent sales force primarily serve
their friends, family members and personal
acquaintances through individually driven
networking activities. We believe that this
warm market approach is an effective way
to distribute our product offerings because
it facilitates face-to-face interaction initiated
by a trusted acquaintance of the
prospective client, which is difficult to
replicate using other distribution
approaches. Due to the large size of the
independent sales force and the active
recruiting of new independent sales
representatives, the independent sales force
is able to continually access an expanding
base of prospective clients without
engaging costly media channels.
•
• Motivational culture:
In addition to the
motivation for independent sales
representatives to achieve financial success,
we seek to create a culture that inspires and
rewards independent sales representatives
for their personal successes and those of
their sales organizations through
independent sales force recognition events
4
and contests. We also use Intranet-
streamed broadcasts and local, regional and
national meetings to inform and teach
independent sales representatives, as well
as facilitate camaraderie and the exchange
of ideas across the independent sales force.
These initiatives encourage and empower
independent sales representatives to
develop their own successful sales
organizations.
•
Building and maintaining
Inclusive culture:
a diverse independent sales force is
important to us because we believe the
independent sales force reflects the middle-
income communities we serve. As the
communities we serve become more
diverse, the independent sales force does as
well.
StructureandScalabilityofthe
IndependentSalesForce
New independent sales representatives are
recruited by existing independent sales
representatives. When these new recruits
become independent sales representatives, they
become part of the sales organization of the
independent sales representative who recruited
them as well as the sales organizations to which
the recruiting independent sales representative
belongs. We encourage independent sales
representatives to bring in new recruits to build
their own sales organizations, enabling the
Company to reach more middle-income families.
RVPs establish and maintain their own offices,
which we refer to as field offices. Additionally, as
independent entrepreneurs, they are responsible
for, and have control over, the costs of their
administrative staff, marketing materials, travel,
training and certain recognition events for the
independent sales representatives in their
respective sales organizations. Field offices
provide a location for independent sales
representatives to conduct recruiting meetings,
training events and sales-related meetings,
disseminate our Intranet-streamed broadcasts,
conduct compliance functions, and house field
office business records. Some business locations
house more than one field office. At
December 31, 2023, approximately 6,000 field
offices in 3,300 locations were managed by
independent sales representatives that served as
RVPs. Independent sales representatives also
leverage remote communication tools to
conduct field office meetings. RVPs play a major
role in training, motivating and monitoring their
independent sales force organization.
Because the independent sales representative’s
compensation grows with the productivity of his
or her sales organization, our distribution model
provides financial rewards to independent sales
representatives who successfully develop,
support and monitor productive independent
sales representatives. In addition to our
commission structure, we offer the Primerica
Ownership Program. This program provides
qualifying RVPs a contractual right, upon
meeting certain criteria, to transfer their
Primerica businesses to another RVP or a
qualifying family member at such time as they
desire. Furthermore, we have developed
proprietary tools and technology, which we
make available to the independent sales
representatives, to enable RVPs to reduce the
time spent on administrative responsibilities
associated with their sales organizations so they
can devote more time to the sales, recruiting
and training activities that drive our growth. We
believe that our tools and technology, coupled
with our sales compensation programs, further
incentivize independent sales representatives to
become RVPs.
Both the structure of the independent sales
force and the capacity of our support
capabilities provide us with a high degree of
scalability as we grow our business. Our support
systems and technology are capable of
supporting a large independent sales force and
a high volume of transactions. In addition, by
sharing training and compliance activities with
RVPs, we are able to grow the Company without
incurring proportionate overhead expenses.
RecruitmentofIndependentSales
Representatives
The recruitment of independent sales
representatives is undertaken by existing
ITEM 1. BUSINESS
independent sales representatives, who identify
prospects and share with them the benefits of
associating with our organization. Independent
sales representatives showcase the Company as
dynamic and capable of improving the lives of
middle-income families.
After the initial contact, independent sales
representatives typically invite prospective
recruits to an opportunity meeting, conducted in
person or through remote communication tools,
which is conducted by an RVP. The objective of
an opportunity meeting is to inform prospective
recruits about our mission and their opportunity
to start their own businesses by becoming
independent sales representatives. At the
conclusion of each opportunity meeting,
attendees who are interested are asked to
complete an application and pay a nominal fee
to commence their pre-licensing training and
licensing examination preparation programs
and, depending on the state or province, to
cover their licensing exam registration costs,
which are generally paid by the Company.
Recruits are not obligated to purchase any of the
products we offer in order to become
independent sales representatives, though they
may elect to make such purchases.
Recruits may become our clients or provide us
with access to their friends, family members and
personal acquaintances. We continually work to
improve our systematic approach to recruiting
and training new independent sales
representatives.
Similar to other distribution systems that rely
upon part-time independent sales
representatives and typical of the life insurance
industry in general, we experience wide
disparities in the productivity of individual
independent sales representatives. Many new
recruits do not get licensed, often due to the
time commitment required to obtain licenses
and various regulatory and licensing hurdles.
Many licensed independent sales representatives
are only marginally active, as there are no
minimum life insurance production
requirements. We plan for this disparate level of
productivity and view a continuous recruiting
cycle as a key component of our distribution
Primerica 2023 Annual Report
5
ITEM 1. BUSINESS
model. Our distribution model is designed to
address the varying productivity associated with
independent sales representatives by paying
production-based compensation, emphasizing
recruiting, and developing initiatives to address
barriers to licensing new recruits. By providing
commissions to independent sales
representatives on the sales generated by their
sales organization, our compensation structure
aligns the interests of independent sales
representatives with our interests in recruiting
new representatives and creating sustainable
sales production.
The following table provides information on new
recruits and life insurance-licensed independent
sales representatives:
Number of new recruits
Number of newly life insurance-licensed independent sales
representatives
Number of life insurance-licensed independent sales representatives, at
period end
Year ended December 31,
2023
2022
2021
361,925 359,735 349,374
49,096
45,147
39,622
141,572 135,208 129,515
Average number of life insurance-licensed independent sales
representatives during period
137,760 132,077 131,315
We define new recruits as individuals who have
submitted an independent business application
to become independent sales representatives
together with payment of the nominal fee to
commence their pre-licensing training. Certain
recruits may not meet the compliance standards
to become an independent sales representative,
and others elect to withdraw prior to becoming
actively engaged.
On average, it takes approximately three months
for independent sales representatives to
complete the necessary applications and pre-
licensing coursework and to pass the applicable
state or provincial examinations to obtain a
license to sell term life insurance products. As a
result, individuals recruited to become
independent sales representatives within a given
fiscal period may not become licensed
independent sales representatives or meet
compliance standards until a subsequent period.
SalesForceMotivation,Training,
CommunicationandSalesSupport
Tools
Motivating, training and communicating with the
independent sales force, as well as sales support
tools, are critical to our success and that of the
independent sales force.
6
Through our proven system of
Motivation.
sales force recognition events, contests and
communications, we provide incentives that
motivate our independent sales force.
Motivation is driven largely by independent
sales representatives’ desire to achieve higher
levels of financial success by building their own
businesses. The opportunity to help underserved
middle-income households address financial
challenges is also a source of motivation for
many independent sales representatives.
While the RVPs are responsible for motivating
the independent sales representatives in their
own organizations, we provide a system that
motivates independent sales representatives to
succeed in their businesses by:
•
•
•
•
compensating independent sales
representatives for product sales or referrals
made by them and their sales organizations;
training independent sales representatives
on financial fundamentals so they can
confidently and effectively assist our clients;
reducing the administrative burden on the
independent sales force, which allows them
to devote more of their time to building a
sales organization and selling products;
creating a culture in which independent
sales representatives are encouraged to
achieve goals through the recognition of
their sales and recruiting achievements, as
well as those of their sales organizations;
and
•
conducting numerous local, regional and
national meetings to help inform and
motivate the independent sales force.
In 2022, we hosted our biennial international
convention, which was attended by
approximately 35,000 people, at the Mercedes-
Benz Stadium in Atlanta, Georgia. New recruits
and independent sales representatives who
attended our convention and associated
meetings do so at their own expense, which we
believe further demonstrates their commitment
to our organization and mission. We are
planning to hold our next biennial international
convention in July 2024 at the Mercedes-Benz
Stadium.
Primerica Online (“POL”), delivered
Training, Communication and Sales Support
Tools.
through a secure Intranet website and a cross-
platform mobile application (“Primerica App”) is
our primary tool designed to support
independent sales representatives and assist
them in building their own businesses. We
provide independent sales representatives with
communication, training, and sales support tools
on POL that allow both new and experienced
sales representatives to offer financial
information and products to our clients. POL
provides independent sales representatives with
access to various business tracking and
management tools, licensing support tools,
product-specific training, and sales procedures
and tools. Additionally, POL provides access to
internal training programs and videos covering
sales, management skills, business ownership,
and compliance. We also use POL to provide
real-time recognition of independent sales
representatives’ successes and scoreboards for
independent sales force production, contests,
and leadership trips. In addition, POL is a
gateway to our product providers and product
support. Subscribers generally pay a small
monthly fee to subscribe to POL, which helps
cover the cost of developing new resources and
maintaining this support system. A limited
ITEM 1. BUSINESS
version of POL that provides access to Primerica
e-mail, compliance and compensation
information, newsletters and bulletins is
available at no cost to the independent sales
force.
The primary features and tools available on POL
include:
•
POL
Training and Licensing Tools:
provides independent sales representatives
with access to study tools for life insurance
and securities licensing examinations such
as pre-licensing study materials, on-demand
videos, personalized licensing study plans,
exam simulators, progress tracking, and
exam and license registration. POL also
provides training materials and access to
online certification programs to sell or refer
certain other distributed products.
• Communication Tools:
POL provides access
to marketing materials for our product
offerings, Company news and events, live
streaming shows, on-demand videos, home
office bulletins, Primerica e-mail, contact lists,
and a hosted professional business website
for independent sales representatives. We
broadcast and deliver video content on POL
through our own digital video channel, PFN
TV. We create original broadcasts and videos
that enable home office management to
provide business updates to the independent
sales force as well as training and
motivational presentations. We broadcast
live programs hosted by the home office
management and selected RVPs that focus
on new developments and provide
motivational messages to the independent
sales force. We also broadcast training-
oriented programs to the independent sales
force on a weekly basis and profile successful
independent sales representatives, allowing
these individuals to educate and train other
independent sales representatives by sharing
their methods for success.
•
Sales Support and Client Management Tools
offered through POL:
– Our Financial Needs Analysis: Our FNA
is a proprietary, needs-based analysis
Primerica 2023 Annual Report
7
ITEM 1. BUSINESS
tool. The FNA gives independent sales
representatives the ability to collect and
synthesize client financial data and
develop a financial analysis for the client
that is easily understood. The FNA helps
our clients understand their financial
needs in the areas of debt, financial
protection, and savings as well as
introduces prudent financial concepts,
such as regular saving and accelerating
the repayment of high cost credit card
debt, to help them reach their financial
goals. The FNA also provides clients with
a snapshot of their current financial
position and identifies their life
insurance, savings and debt resolution
needs.
– Our Point-of-Sale Application Tool: Our
point-of-sale technology, TurboApps,
streamlines the application process for
our insurance and investment products.
These applications automatically
populate client information from the
FNA and other external sources to
eliminate redundant data collection and
provide real-time feedback to eliminate
incomplete and illegible applications.
Integrated with our paperless field office
management system described below
and with our home office systems,
TurboApps allows RVPs and us to realize
the efficiencies of straight-through-
processing of application data and other
information collected on independent
sales representatives’ mobile devices,
which results in expedited processing of
product sales. TurboApps also features
EZ-Key, which is a tool that helps
independent sales representatives guide
clients through the investment decision
process and ultimately provides
investment alternatives based on the
client’s individual situation. TurboApps is
available on the independent sales
representatives’ portal, POL and our
mobile platform, the Primerica App.
– Primerica App:
The mobile Primerica
App platform has been adopted broadly
and provides the independent sales
8
force with access to the critical
components needed to start, build and
maintain their businesses. We
continually enhance and expand the
scope and resources available on this
strategic platform.
– Virtual Base Shop:
In an effort to ease
the administrative burden on RVPs and
simplify independent sales force
operations, we make available to RVPs a
secure Intranet-based paperless field
office management system as part of the
POL subscription. This virtual office is
designed to automate the RVP’s
administrative responsibilities and can
be accessed by subscribing independent
sales representatives in an RVP’s
immediate sales organization, which we
refer to as his or her base shop.
–
Shareholder Account Manager
(“SAM”):
SAM is a web-based tool,
accessed through our transfer agent
recordkeeping platform, that allows
securities-licensed independent sales
representatives to service client
investments in mutual funds.
– Client Relationship Manager
(“CRM”): Our CRM tool allows
independent sales representatives and
their RVPs to organize client information,
such as personal contact information,
product relationships, account details,
notes, appointments, follow-ups, and
marketing campaigns, in one place to
enable fast and convenient access.
– Primerica Social: We offer a social
media automation tool that provides
independent sales representatives with
pre-approved social media posts that
can be shared on their social media
accounts.
In addition, our publications department
produces materials to support, motivate and
inform the independent sales force. We sell
recruiting materials, sales brochures, business
cards and stationery and provide
communications services that include web
design, print presentations, graphic design and
script writing. We also produce a weekly mailing
that includes materials promoting our current
incentives as well as the latest news about our
product offerings.
Performance-BasedCompensation
Structure
Our commission structure is rooted in our origin
as an insurance agency. Sales representatives,
who are independent contractors, can receive
compensation in multiple ways, including:
•
•
sales commissions and fees based on their
personal sales, referrals and client assets
under management;
sales commissions and fees based on their
sales organizations’ sales, referrals and
client assets under management; and
• bonuses and other compensation, including
agent equity awards, generated by their
own sales performance, the aggregate sales
performance of their sales organizations
and other criteria.
Our compensation structure pays commissions
to the independent sales representative who
sells the product and to several representatives
above the selling representative within their
sales organization.
With respect to term life insurance sales,
commissions are calculated based on the total
first-year premium (excluding the policy fee) for
all policies and riders. To motivate the
independent sales force, we compensate
independent sales representatives for term life
insurance product sales as quickly as possible.
We advance a majority of the insurance
commission upon the submission of a
completed application and the first month’s
premium payment. As the client makes his or her
premium payments, the commission is earned
by the independent sales representative and the
commission advance is recovered by the
Company. If premium payments are not made
by the client and the policy terminates, any
outstanding advance commission is charged
back to the independent sales representative.
The chargeback, which only occurs in the first
ITEM 1. BUSINESS
year of a policy, equals that portion of the
advance that was made, but not earned, by the
independent sales representative because the
client did not pay the full premium for the
period of time for which the advance was made
to the independent sales representative.
Chargebacks, which occur in the normal course
of business, may be recovered by reducing any
cash amounts otherwise payable by the
Company to the independent sales
representative.
Independent sales representatives and
representatives above them in their sales
organizations are contractually obligated to
repay us any commission advances that are
ultimately not earned due to the underlying
policy lapsing prior to the full commission being
earned. Additionally, we hold back a portion of
the commissions earned by independent sales
representatives as a reserve out of which we may
recover chargebacks. The amounts held back are
referred to as deferred compensation account
commissions (“DCA commissions”). DCA
commissions are available to reduce amounts
owed to the Company by independent sales
representatives and they provide an
independent sales representative with a cushion
against the chargeback obligations of
representatives in their sales organization. DCA
commissions, unless applied to amounts owed,
are ultimately released to independent sales
representatives.
We pay most term life insurance commissions
during the first policy year. One of our term
riders provides for coverage increases after the
first year. For such riders, we pay first-year and
renewal commissions only for premium
increases related to the increased coverage.
Additionally, we pay renewal commissions on
some older in-force policies. At the end of a
policy’s level premium paying period, we pay
commissions on policy exchanges and bonuses
on some policy exchanges and continuations.
We also pay bonuses as a percentage of
premiums to RVPs with respect to sales of term
life policies and riders, up to a maximum
premium. Bonuses are paid to RVPs for
achieving specified production levels.
Primerica 2023 Annual Report
9
ITEM 1. BUSINESS
For U.S. mutual funds (non-managed
investments) and annuity products, commissions
are paid both on the sale and on the value of
assets under management. Commissions are
calculated based on the dealer reallowance and
trail compensation actually paid to us. For
managed investment products, fees earned are
based on the assets under management and
represent the fee we receive as compensation
for as long as we retain the account. In July
2022, we began offering a series of mutual funds
in Canada whereby independent sales
representatives who earn monthly fees based on
client asset values (the “asset-based fees”) have
the option of receiving up-front compensation
from PFSL Investments Canada based on the
amount invested with reduced asset-based fees
for a period of five years, and they are able to
negotiate with an investor to earn a front-end
load sales commission. If independent sales
representatives choose to receive up-front
compensation from PFSL Investments Canada,
they are subject to a chargeback of the up-front
compensation on a declining scale if the investor
redeems some or all of the investment within
five years. For our Canadian segregated fund
investment products, we pay independent sales
representatives a sales commission based on the
amount invested and a monthly fee based on
client asset values. As a result of Canadian
regulatory changes that became effective in June
2023, we no longer pay an up-front sales
commission on new segregated fund contracts
and only pay a monthly fee based on client asset
values. For further details of these regulatory
changes, refer to the “Regulatory Changes”
section in “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations”.
Primerica compensates Primerica Senior Health
certified independent sales representatives with
fees for services provided, including education
and related services associated with introducing
eligible Medicare beneficiaries to e-TeleQuote.
We also pay the independent sales force for
mortgage originations, sales of prepaid legal
services subscriptions, and referrals for other
distributed products. Mortgage originations
compensation paid to the independent sales
10
force is earned for each closed mortgage loan
based on a percentage of the loan amount,
subject to regulatory maximums. Prepaid legal
services commissions paid to the independent
sales force are earned in fixed amounts on a
monthly basis as long as the prepaid legal
service subscription remains active.
Compensation related to other distributed
products is calculated based on the type of
product sold or referred.
In addition to these methods of compensation,
RVPs can earn quarterly agent equity awards
based largely on sales production.
SalesForceLicensingandSupport
The states, provinces and territories in which
independent sales representatives operate
generally require them to obtain and maintain
licenses to sell our insurance and securities
products, which requires them to pass applicable
examinations. Independent sales representatives
may also be required to maintain licenses to sell
certain of our other distributed products. To
encourage new recruits to obtain their life
insurance licenses, we either pay directly or
reimburse the independent sales representative
for certain licensing-related fees and expenses
once he or she passes the applicable exam and
obtains the applicable life insurance license. In
addition, new recruits are eligible to earn
compensation if they participate in field training
observations with experienced independent
sales representatives and complete the licensing
process within a specified timeframe. To sell
insurance products, independent sales
representatives must be licensed by their
resident state, province or territory and by any
other state, province or territory in which they
do business. In most states, independent sales
representatives must also be appointed by our
applicable insurance subsidiary. Our in-house life
insurance licensing program offers new recruits
a significant number of classroom life insurance
pre-licensing courses to meet applicable state
and provincial licensing requirements and
prepares recruits to pass applicable licensing
exams.
To sell mutual funds and variable annuity
products, U.S. sales representatives must be
registered with the Financial Industry Regulatory
Authority (“FINRA”) and hold the appropriate
license(s) designated by each state in which they
sell securities products, as well as be appointed
by the annuity underwriter in the states in which
they market annuity products. Sales
representatives must meet all state and federal
regulatory requirements and be designated as
an investment advisor representative in order to
sell our managed investment products. We
contract with third-party training firms to
conduct securities license exam preparation for
sales representatives, and we also offer
supplemental training tools.
Canadian independent sales representatives
selling mutual fund products are required to be
registered by the securities regulators in the
provinces and territories in which they sell
mutual fund products. Canadian independent
sales representatives who are licensed to sell our
insurance products do not need any further
licensing to sell our segregated funds products.
In most states, Primerica’s independent sales
representatives can become certified to make
Senior Health referrals by completing an internal
training and brief certification course. Upon
completion of the certification process,
Primerica’s independent sales representatives
may educate eligible beneficiaries about
Medicare in general, refer them to an
e-TeleQuote licensed health insurance agent and
provide certain other related services.
To offer mortgage loan products in the United
States, independent sales representatives must
be individually licensed as mortgage loan
originators by the states in which they do
business and, in some states, they must also be
individually licensed as mortgage brokers.
For sales of our other distributed products,
appropriate state, provincial and territorial
licensing may be required.
SupervisionandCompliance
To ensure compliance with various federal, state,
provincial and territorial legal requirements, we
ITEM 1. BUSINESS
and the RVPs share responsibility for
maintaining an overall compliance program that
involves compliance training and supporting, as
well as monitoring, the activities of independent
sales representatives. We work with the RVPs to
develop and maintain appropriate compliance
procedures and systems.
Generally, RVPs must obtain a principal license
(FINRA Series 26 in the United States and Branch
Manager license in Canada), and, as a result,
they assume additional regulatory responsibility
over the activities of their sales organizations.
Additional supervision is provided by designated
principal-licensed home office personnel,
referred to as Regional Securities Principals
(“RSP”). RSPs are required to supervise and
monitor activity across all product lines and
report any compliance issues they observe to
our Compliance Department. In addition, our
Compliance Department regularly runs
surveillance reports designed to monitor the
activity of the independent sales force and
investigates any unusual or suspicious activity
identified during these reviews or during
periodic inspections of RVP offices.
All independent sales representatives are
required to participate in our annual compliance
meeting, a program administered by our senior
management and our legal and compliance staff.
We provide a compliance training overview
across all product lines and require the
completion of compliance checklists by each
licensed independent sales representative for
each product he or she offers. Additionally,
independent sales representatives receive
periodic compliance communications, both in
writing and through videos, regarding new
compliance developments and business issues of
significance.
Our Field Audit Department regularly conducts
audits of all sales representative offices,
including scheduled and no-notice audits when
feasible. Our Field Audit Department reviews
regulatory-required records that are not
maintained at our home office. Any compliance
deficiencies noted in the audit must be
corrected, and we carefully monitor all corrective
action. Audit deficiencies are addressed through
Primerica 2023 Annual Report
11
ITEM 1. BUSINESS
reprimands, probations and contract
terminations.
SeniorHealthDistribution
In the United States, our subsidiary e-TeleQuote
distributes Medicare-related insurance products
to eligible Medicare beneficiaries and enrolls
them in coverage utilizing e-TeleQuote’s team of
licensed health insurance agents. e-TeleQuote’s
licensed health insurance agents are employees
of e-TeleQuote. These licensed health insurance
agents utilize both third-party and e-TeleQuote’s
proprietary technology, including telephony,
relationship management, lead analytics, and
plan comparison tools, to enroll beneficiaries in
eligible Medicare plans.
e-TeleQuote’s licensed health insurance agents
are full-time employees who are motivated
through compensation systems that track
performance and reward them accordingly. This
compensation system includes an hourly wage
plus an incentive compensation component
based on individual sales performance and key
performance indicators, which include policy
retention. We provide sales support through the
sourcing and screening of leads, allowing our
licensed health insurance agents to maximize
time spent with potential enrollees, as well as
through technology that provides relationship
management, lead analytics, and plan
comparisons for licensed health insurance
agents to facilitate the enrollment of
beneficiaries in eligible Medicare plans.
e-TeleQuote manages the licensing, certification
and training process through its dedicated
health insurance licensing team and technology
platform for regulatory compliance. Continuing
education is provided annually to ensure that
our licensed health insurance agents are up to
date with carrier updates, compliance and
technology.
In order to market Medicare-related insurance
products, e-TeleQuote’s licensed health
insurance agents are required to hold a state-
issued license to market health insurance
products within that state. Each agent holds a
resident license from the state in which they are
based and acquires non-resident licenses for
12
each of the other states in which they conduct
business. In order to obtain an initial resident
license, prospective e-TeleQuote licensed health
insurance agents are required to complete
online or classroom training and pass a
comprehensive state licensing exam covering
health insurance product features and benefits,
risk management and health insurance
regulations. Non-resident licenses are issued by
states on the basis of reciprocity as long as the
agent is in good standing with their resident
state, as well as upon payment of a license fee.
Once licensed to sell health insurance by state
agencies, e-TeleQuote’s licensed health
insurance agents need to be certified annually
by a health insurance carrier to sell that carrier’s
products. State law may also require agents to
be appointed by a health insurance carrier as the
carrier’s agent. Such certification involves online
classes and testing for subject matters such as
the basics of Medicare, fee-for-service plan
eligibility and benefits, different types of plans,
enrollment processes and requirements,
marketing compliance, anti-money laundering,
fraud, waste, and abuse detection and reporting.
The certification process can take up to 40 hours
of classes and testing before an agent will be
allowed to sell Medicare plans.
e-TeleQuote has developed an internal
regulatory compliance system that tracks
requirements for agent licensing, agent
continuing education, agent appointment by
carrier, carrier mandated certifications and
Centers for Medicare and Medicaid Services
(“CMS”) mandated certifications. e-TeleQuote’s
compliance officer manages, implements, and
oversees all aspects of agent compliance,
including the quality assurance testing of sales
calls.
OurProductOfferings
Reflecting our philosophy of helping middle-
income clients with their financial services needs
and ensuring compatibility with our distribution
model, our product offerings generally meet the
following criteria:
• Consistent with sound individual finance
principles:
Products must be consistent
ITEM 1. BUSINESS
with good personal finance principles for
middle-income consumers, such as financial
protection, encouraging long-term savings
and reducing debt.
• Designed to support multiple client
Products are designed to address
goals:
and support a broad range of financial
goals rather than compete with or
cannibalize each other. For example, term
life insurance does not compete with
mutual funds because term life insurance
has no cash value or investment element.
• Ongoing needs based:
Products are
generally designed to meet the ongoing
financial needs of many middle-income
consumers. This long-term approach
bolsters our relationship with our clients by
allowing us to continue to serve them as
their financial needs evolve.
We use four operating segments to organize,
evaluate and manage our business: Term Life
Insurance; Investment and Savings Products;
Senior Health; and Corporate and Other
Distributed Products.
The following table provides information on our
principal product offerings and the principal
sources thereof by operating segment as of
December 31, 2023.
Operating Segment
Principal Product Offerings
Term Life Insurance
Term Life Insurance
Investment and Savings
Products
Mutual Funds and Certain
Retirement Plans
Managed Investments
Variable Annuities
Fixed Indexed Annuities
Fixed Annuities
Employer Sponsored
Retirement Plans
Segregated Funds
Medicare Advantage and
Medicare Supplement
Plans
Senior Health
Principal Sources of Products
(Applicable Geographic Territory)
Primerica Life (U.S. (except New York) and
certain territories) NBLIC (New York)
Primerica Life Canada (Canada)
American Century Investments (U.S.)
American Funds (U.S.)
Equitable Distributors, LLC (U.S.)
Nuveen, LLC (U.S.)
VOYA Financial, Inc. (U.S.)
Fidelity Investments (U.S.)
Franklin Templeton Investments (U.S.)
Invesco (U.S.)
AGF Investments (Canada)
Mackenzie Investments (Canada)
PFS Investments (dba Primerica Advisors) (as a
program sponsor) (U.S.)
Corebridge Financial, Inc. (U.S.)
Brighthouse Financial, Inc. (U.S.)
Equitable Distributors, LLC (U.S.)
Lincoln National Corporation (U.S.)
Corebridge Financial, Inc. (U.S.)
Lincoln National Corporation (U.S.)
Universal Life Insurance Company (Puerto Rico)
Universal Life Insurance Company (Puerto Rico)
American Funds (U.S.)
Equitable Distributors, LLC (U.S.)
VOYA Financial, Inc. (U.S.)
Primerica Life Canada (Canada)
Aetna Inc. (U.S.)
Elevance Health, Inc. (U.S.)
Cigna, Inc. (U.S.)
Humana, Inc. (U.S.)
Mutual of Omaha (U.S.)
UnitedHealthcare Group, Inc. (U.S.)
Primerica 2023 Annual Report
13
ITEM 1. BUSINESS
Operating Segment
Principal Product Offerings
Corporate and Other
Distributed Products
Mortgage Loans (1)(2)
Prepaid Legal Services
ID Theft Defense
Supplemental Health and
Accidental Death &
Disability Insurance
Auto and Homeowners’
Insurance (2)
Home Automation
Solutions
Principal Sources of Products
(Applicable Geographic Territory)
Rocket Mortgage, LLC (U.S.)
Spring EQ LLC (U.S.)
Rocket Mortgage Canada ULC (Canada)
8Twelve Mortgage Corp. (Canada)
Pre-Paid Legal Services, Inc. (U.S. and Canada)
Pre-Paid Legal Services, Inc. (U.S. and Canada)
The Edge Benefits Inc. and its affiliates
(Canada)
Various insurance companies, as offered
through Answer Financial, Inc. (U.S.)
SurexDirect.com Ltd. (Canada)
Vivint, Inc. (U.S.)
(1)
(2)
In the U.S., mortgage loans are made by Rocket Mortgage, LLC and Spring EQ LLC. In Canada, representatives refer
mortgage loans to Rocket Mortgage Canada ULC (a subsidiary of Rocket Companies, Inc.) and 8Twelve Mortgage Corp.
In Canada, referrals only.
TermLifeInsurance
Through our three life insurance subsidiaries –
Primerica Life, NBLIC and Primerica Life Canada –
we offer term life insurance to clients in the
United States, its territories, the District of
Columbia and Canada. As of the third quarter of
2023, the latest period for which data is available
from LIMRA, we ranked as a leading provider of
individual term life insurance in the
United States.
We believe that term life insurance is generally a
better alternative for middle-income clients than
cash value life insurance. Term life insurance
provides a guaranteed death benefit if the
insured dies during the fixed coverage period of
an in-force policy, thereby providing financial
protection for his or her named beneficiaries in
return for the periodic payment of premiums.
Term insurance products, which are sometimes
referred to as pure protection products, have no
savings or investment features. By buying term
life insurance rather than cash value life
insurance, a policyholder pays a lower premium
over the level term period and, as a result, may
have funds available to invest for retirement and
other needs. We also believe that a person’s
need for life insurance is inversely proportional
to that person’s need for retirement savings, a
concept we refer to as the theory of decreasing
14
responsibility. Young adults with children, new
mortgages and other obligations need to buy
higher amounts of insurance to protect their
family from the loss of future income resulting
from the death of a primary earner. With its
lower premium over the level term period, term
life insurance lets young families buy more
coverage for their premium dollar when their
needs are greatest and still have the ability to
have funds for their retirement and other
savings goals.
We design our term life insurance products to
be easily understood by, and meet the needs of,
our clients. Clients purchasing our term life
insurance products generally seek stable, longer-
term income protection products for themselves
and their families. In response to this demand,
we offer term life insurance products with initial
level-premium coverage periods that range from
10 to 35 years and a wide range of coverage
face amounts. Policies remain in-force until
expiration of the coverage period or until the
policyholder ceases to make premium payments
and terminates the policy. Our in-force term life
insurance policies have level premiums for the
stated term period. As such, the policyholder
pays the same amount each year. After the initial
policy term, the policyholder has the option to
continue coverage by renewing or exchanging
their contract. Both options result in higher
premiums due to the policyholder’s more
advanced age.
In October 2022, we introduced our new
generation of life insurance products in all
jurisdictions except New York where we continue
to sell our legacy term life insurance products.
The Primerica PowerTerm (“PowerTerm”)
product is our rapid issue term life product that
provides for face amounts of up to $300,000
(local currency). PowerTerm allows an
independent sales representative to submit an
application via TurboApps, during which the
Company collects information compliant with
the Fair Credit Reporting Act (“FCRA”) from
external data sources to inform the underwriting
process. The Company uses this data and the
client’s responses to application questions to
determine any additional underwriting
requirements. Results of these processes are
reported in real time to our underwriting system,
which then determines whether or not we can
rapidly issue a policy.
Life insurance issued:
Number of policies issued
ITEM 1. BUSINESS
We also offer our Primerica PrecisionTerm
(“PrecisionTerm”) product, which is our
traditionally underwritten term insurance
product for face amounts in excess of $150,000
(local currency). PrecisionTerm allows an
independent sales representative to submit an
application via TurboApps. The Company then
collects information from external data sources
that are traditional in nature, excluding credit
scores. Most applicants are required to undergo
traditional paramedical testing requirements to
complete the underwriting process; however,
certain applicants may have testing waived
based on application and external data
information. Policies with face amounts less than
or equal to $300,000 and greater than $150,000
may be issued as either PowerTerm or
PrecisionTerm products depending on the
underwriting method the insured prefers.
The average face amount of our in-force policies
issued in 2023 was approximately $256,100. The
following table sets forth the number of term life
insurance policies issued:
Year ended December 31,
2023(1)
2022
Adjusted
2022
(estimated)(1)
358,860 291,918
333,020
(1)
For the year ended December 31, 2022, the previously reported number of new policies issued has been adjusted for
comparability purposes as a result of our new term life insurance products introduced in October 2022, which modified how
policies are structured in relation to individual lives. Historically, two adult lives could be covered under a single policy by
adding a spouse rider. To better align risk and pricing in our new life insurance products, we eliminated this rider and now
sell a separate policy for each insured life. Results for the year ended December 31, 2023 reflect additional policies issued to
reflect the former spouse rider with a separate policy in the new life insurance products. To make year-over-year
comparisons more consistent, we have provided estimates for the year ended December 31, 2022.
The following table sets forth selected information regarding our term life insurance product portfolio:
Life insurance issued:
Face amount issued (in millions)
Life insurance in force:
Number of policies in force
Face amount in force (in millions)
Year ended December 31,
2023
2022
2021
$ 119,102 $ 103,822 $ 108,521
December 31,
2023
2022
2021
2,959,006
2,896,667
2,885,963
$ 944,609 $ 916,808 $ 903,404
Primerica 2023 Annual Report
15
ITEM 1. BUSINESS
Pricing and Underwriting. We believe that
effective pricing and underwriting are significant
drivers of the profitability of our life insurance
business and we have established our pricing
assumptions to be consistent with our
underwriting practices. We set pricing
assumptions for expected claims, lapses and
expenses based on our experience and other
factors, while also considering the competitive
environment. These other factors include:
•
expected changes from relevant experience
due to changes in circumstances, such as
(i) revised underwriting procedures affecting
future mortality and reinsurance rates,
(ii) new product features, and (iii) revised
administrative programs affecting sales
levels, expenses, and client continuation or
termination of policies; and
• observed trends in experience that we
expect to continue, such as general
mortality changes in the general population
and better or worse policy persistency (the
period over which a policy remains in force)
due to changing economic conditions.
Under our current underwriting guidelines, we
individually assess each insurable adult applicant
and place each applicant into one of ten risk
classifications that has specific criteria based on
current health, medical history, and other risk
factors. We may decline an applicant’s request
for coverage if his or her health or activities
create unacceptable risks. Our PowerTerm and
PrecisionTerm products cover one adult life per
policy, which is a change from our historical term
life products which offered family coverage with
multiple lives on an individual policy.
Independent sales representatives ask applicants
a series of questions regarding the applicant’s
medical history and other risk factors. We may
also consider information about the applicant
from FCRA compliant third-party sources. If we
believe that further information regarding an
applicant’s medical history is necessary, we use a
third-party provider and its trained personnel to
contact the applicant to obtain a more detailed
medical history. The report resulting from this
process is electronically transmitted to us and is
16
evaluated in our underwriting process.
Paramedical requirements may also be required.
To accommodate the significant volume of
insurance business that we process, we and the
independent sales force use specialized
technology. We offer independent sales
representatives an electronic life insurance
application that supports our term life insurance
products. Approximately 99% of the life
insurance applications we received in 2023 were
submitted electronically via TurboApps.
Independent sales representatives may utilize
video collaboration tools to assist with the
completion of the life insurance application and
submit completed applications through
TurboApps. Our PowerTerm and PrecisionTerm
electronic life insurance applications have
technology to streamline the application process
and deliver a superior experience by using
industry-standard security, identity verification
(in the U.S. only), precise and real-time
underwriting to speed up processing time and
reduce errors in submitted applications.
Electronic disclosure delivery and digital client
signatures through third-party technology,
seamless banking information importation, and
simple policy language provide a convenient
client experience.
Claims Management. Our insurance
subsidiaries processed over 18,800 life insurance
benefit claims in 2023 on policies underwritten
by us and sold by independent sales
representatives. During the COVID-19 pandemic,
we experienced elevated claims due to the
premature deaths of our insureds. Beginning in
early 2022, we experienced fewer COVID-19
related claims than during the height of the
pandemic. For additional information regarding
the impact of COVID-19 on our claims expense,
the related reinsurance effects, and policyholder
persistency, see “Item 7. Management’s
Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in
this report.
Claims fall into three categories: death, waiver of
premium (applicable to disabled policyholders
who purchased this benefit for which we agree
to waive life insurance premiums during a
qualifying disability), or terminal illness. The
ITEM 1. BUSINESS
claim may be reported by an independent sales
representative, a beneficiary or, in the case of
qualifying disability or terminal illness, the
policyholder. Following are the benefits paid by
us for each category of claim:
have not been presented in the normal course of
business. If unreported deaths are identified,
Primerica Life and NBLIC attempt to determine if
a valid claim exists, to locate beneficiaries, and
to pay benefits accordingly.
Year ended December 31,
2023
2022
2021
(In thousands)
$1,779,822 $1,903,179 $2,245,614
53,758
55,394
54,465
16,433
16,044
11,635
Death
Waiver of
premium
Terminal
illness(1)
(1) We consider claims paid for terminal illness to be loans
made to the policyholder that are repaid to us from the
death benefit upon the death of the insured.
In the United States, after coverage has been in
force for two years, we may not contest the
policy for misrepresentations in the application.
The contestability period for suicide of the
insured is one to two years depending on state
regulation. In Canada, we have a similar two-
year contestability period, but we are permitted
to contest insurance fraud at any time. As a
matter of policy, we do not contest any coverage
issued by us to replace the face amount of
another insurance company’s individual
coverage to the extent the replaced coverage
would not be contestable by the replaced
company. We believe this approach helps
independent sales representatives sell
replacement policies, as it reassures clients that
claims made under their replacement policies
are not more likely to be contested as to the
face amount replaced. Through our claims
administration system, we record, process and
pay the appropriate benefit for any reported
claim. Our claims system is used by our home
office claims adjusters to order medical and
investigative reports from third-party providers,
calculate amounts due to the beneficiary
(including interest), and report payments to the
appropriate reinsurance providers.
Primerica Life and NBLIC regularly consult the
Social Security Administration’s Death Master
File in accordance with applicable state
requirements. These processes help identify
potential deceased insureds for whom claims
Reinsurance. We use reinsurance primarily to
reduce the volatility risk with respect to
mortality. Since 1994, we have reinsured death
benefits in the United States on a first dollar
quota share yearly renewable term basis. Since
2012, we have reinsured death benefits in
Canada on a first dollar quota share yearly
renewable term basis. We pay premiums to each
reinsurer based on rates in the applicable
agreement.
We generally reinsure between 80% and 90% of
the mortality risk for all term life insurance
policies, excluding coverage under certain riders.
We also reinsure substandard cases on a
facultative basis to capitalize on the extensive
experience some of our reinsurers have with
substandard cases. A substandard case has a
level of risk that is acceptable to us, but at
higher premium rates than a standard case
because of the health, habits or occupation of
the applicant.
While most of our reinsurance agreements have
indefinite terms, both we and our reinsurers are
entitled to discontinue any reinsurance
agreement as to future policies by giving
advance notice of 90 days to the other. Each
reinsurer’s ability to terminate coverage for
existing policies is limited to circumstances such
as a material breach of contract or nonpayment
of premiums by us. Each reinsurer has the right
to increase rates with certain restrictions. If a
reinsurer increases rates, we have the right to
immediately recapture the business. Either party
may offset any balance due from the other party.
For additional information on our reinsurance,
see Note 1 (Description of Business, Basis of
Presentation, and Summary of Significant
Accounting Policies) and Note 6 (Reinsurance) to
our consolidated financial statements included
elsewhere in this report.
Financial Strength Ratings. Ratings with
respect to financial strength are an important
factor in establishing our competitive position
Primerica 2023 Annual Report
17
ITEM 1. BUSINESS
and maintaining public confidence in us and our
ability to market products. Ratings organizations
review the financial performance and condition
of most insurers and provide opinions regarding
financial strength, operating performance and
ability to meet obligations to policyholders. For
additional information, see “Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations –
Liquidity and Capital Resources – Financial
Ratings.”
InvestmentandSavingsProducts
We believe that many middle-income families
have significant unmet retirement and savings
needs. Independent sales representatives help
our clients understand their current financial
situations and how they can use time-tested
financial principles, such as prioritizing personal
savings, to reach their savings goals. Our
product offerings include saving and investment
vehicles that seek to meet the needs of clients in
all stages of life.
Through PFS, PFS Investments, Primerica Life
Canada, PFSL Investments Canada, and licensed
sales representatives, we distribute and sell to
our clients a variety of investment products:
mutual funds; managed investments; variable,
index-linked, fixed and fixed indexed annuities;
and segregated funds. As of December 31, 2023,
approximately 25,272 sales representatives were
licensed to distribute mutual funds in the United
States (including Puerto Rico) and Canada. As of
December 31, 2023, approximately 13,420 sales
representatives were licensed and appointed to
distribute annuities in the United States and
approximately 10,087 sales representatives were
licensed to sell segregated funds in Canada.
In the United States, licensed
Mutual Funds.
sales representatives primarily distribute mutual
funds from selected asset management firms
that are on our proprietary platform. The
selected firms have diversified product offerings,
including domestic and international equity,
fixed-income and money market funds. Each
firm continually evaluates its fund offerings and
adds new funds on a regular basis. Additionally,
their product offerings reflect diversified asset
18
classes and varied investment styles. We believe
that these selected asset management firms
provide funds that meet the investment needs of
our clients.
During 2023, Franklin Templeton, Invesco,
American Funds and Fidelity collectively
accounted for approximately 98% of our mutual
fund sales in the United States. Franklin
Templeton and Invesco each have large
wholesaling teams that support the sales force in
distributing their mutual fund products. Our
selling agreements with these firms all have
indefinite terms and provide for termination at
will.
A wholly owned indirect subsidiary of the Parent
Company and affiliate of PFS Investments,
Primerica Shareholder Services, Inc. (“PSS”),
provides transfer agent recordkeeping services
to investors who purchase shares of mutual
funds offered by certain of our fund families
through PFS Investments. In exchange for these
services, PSS receives recordkeeping and
account maintenance fees from the applicable
fund company. PSS has retained BNY Mellon
Asset Servicing to perform the necessary transfer
agent recordkeeping services for these accounts
on its proprietary SuRPAS system. PFS
Investments serves as the Internal Revenue
Service (“IRS”) approved non-bank custodian for
customers that open individual retirement
accounts (“IRAs”) (or certain other retirement
accounts) with PFS Investments and invest in
shares of mutual funds offered by certain of our
fund families. For these services, PFS Investments
receives an annual custodian fee.
As a result of Canadian regulatory changes, in
July 2022 PFSL Investments Canada’s services
became focused on acting as the exclusive
principal distributor for two families of mutual
funds (the “PD Funds”) that are managed by
well-established, unrelated investment fund
managers. The PD Funds are: (i) the AGF
Platform Funds, which consist of a range of
mutual funds managed by AGF Investments Inc.
(“AGF”); and (ii) the Mackenzie FuturePath Funds,
which consist of a range of mutual funds
managed by Mackenzie Financial Corporation.
PFSL Investments Canada has an exclusive right
to distribute the PD Funds and, as a principal
distributor, it markets the PD Funds through its
representatives. PFSL Investments Canada
representatives no longer recommend other
mutual funds (the “Legacy Canada Mutual
Funds”) that were previously available for
purchase through PFSL Investments Canada. Like
our U.S. fund family, the PD Funds asset
management partners we have chosen in
Canada have a diversified offering of equity,
fixed-income and money market funds,
including domestic and international funds with
a variety of investment styles. The regulatory
changes continue to be examined by Canadian
regulators and may be modified.
In addition to the PD Funds, under limited
circumstances, PFSL Investments Canada can
offer investments in the Legacy Canada Mutual
Funds, which include the Primerica-branded
Concert™ Series funds and other non-
proprietary funds. PFSL Fund Management is the
Investment Fund Manager of the Concert™
Series funds. These limited circumstances
primarily consist of pre-authorized purchases
made pursuant to a systemic investment plan for
existing clients. Our Concert™ Series funds
consist of five different asset allocation funds
and a money market fund with varying
investment objectives. Each Concert™ Series
fund is a fund of funds that allocates fund assets
among equity, income and money market
mutual funds of AGF. The asset allocation within
each Concert™ Series fund is determined on an
advisory contract basis by an independent
portfolio adviser.
A key part of our investment philosophy for our
clients is the long-term benefits of dollar cost
averaging through systematic investing. To
accomplish this, we assist our clients by
facilitating monthly contributions to their
investment accounts by bank drafts against their
checking accounts for as little as $25 per month.
During the year ended December 31, 2023,
average client assets held in individual
retirement accounts in the United States and
Canada accounted for an estimated 73% and
65% of total average client account assets,
respectively. The Canadian counterpart to IRAs
in the United States are Registered Retirement
Savings Plans (“RRSPs”). RRSPs and IRAs behave
ITEM 1. BUSINESS
similarly, providing tax advantaged treatment
and enabling clients to earn income on a tax-
deferred basis. Our high concentration of
retirement plan accounts and our systematic
savings philosophy are beneficial to us as these
accounts tend to have lower redemption rates
than the industry and, therefore, generate more
recurring asset-based revenues.
Managed Investments. PFS Investments (dba
Primerica Advisors) is a registered investment
advisor in the United States, and it offers a
managed investments program, Primerica
Advisors Lifetime Investment Program (the
“Lifetime Investment Program”), which we
launched in 2017. The Lifetime Investment
Program is a robust advisory offering designed
for clients who have at least $25,000 of
investable assets. It provides our customers
access to investment models designed and
managed by several unaffiliated investment
advisers. PFS Investments, as sponsor and
portfolio manager of the program, evaluates
models for inclusion in the program and
conducts ongoing due diligence of the models
and unaffiliated investment advisers made
available through the program. As of
December 31, 2023, we used 11 unaffiliated
investment advisers. Primerica Brokerage
Services, Inc. (“PBSI”), a wholly owned affiliate of
Primerica, is the introducing broker-dealer for
customer accounts managed through the
Lifetime Investment Program. Pershing LLC
(“Pershing”), an unaffiliated clearing firm,
provides custody, trade execution, clearing,
settlement and related services through a fully
disclosed clearing agreement with PBSI.
Variable Annuities. U.S. securities licensed
sales representatives also distribute variable
annuities issued by American General Life
Insurance Company and its affiliates
(“Corebridge”), Equitable Financial Life Insurance
Company (“Equitable Life”), Lincoln National Life
Insurance Company and its affiliates (“Lincoln
National”) and Brighthouse Life Insurance
Company (“Brighthouse Life”). Variable annuities
are insurance products that enable our clients to
invest in accounts with attributes similar to
mutual funds, but also have benefits not found
in mutual funds, including death benefits that
Primerica 2023 Annual Report
19
ITEM 1. BUSINESS
protect beneficiaries from losses due to a market
downturn and income benefits that guarantee
future income payments for the life of the
policyholder(s). We also offer index-linked
annuities issued by Equitable Life, Brighthouse
Life and Lincoln National. Index-linked annuities
are insurance contracts that provide investors
with potential growth, subject to a cap, and
partial downside protection against losses. Gains
and losses are measured over a fixed period,
typically three to six years, based on the
performance of a securities index. Although
linked to an index, an investment in these
contracts does not involve ownership of any
underlying portfolio securities by the client. Each
of these companies bears the insurance risk on
its variable annuities and index-linked variable
annuities that we distribute.
Fixed Indexed Annuities. We offer fixed
indexed annuity products in the U.S. through
Lincoln National, Corebridge and Universal Life
Insurance Company (“Universal Life”) (Puerto
Rico). These products combine safety of
principal and guaranteed rates of return with
additional investment options tied to equity
market indices that allow for returns that move
based on the performance of an index. We
believe these and other fixed annuity products
give both life and securities representatives
more ways to assist our clients with their
retirement planning needs.
In Puerto Rico, we currently
Fixed Annuities.
offer two annuity products: a fixed annuity and a
fixed bonus annuity underwritten by Universal
Life. These products provide guarantees against
loss with several income options.
In
Employer-Sponsored Retirement Plans.
the United States, we also offer Employer
Sponsored Retirement Plans (“ESRP”), such as
401(k) plans, primarily to small and medium-
sized businesses. The ESRPs we distribute are
offered by a limited number of third-party
providers, including American Funds
Distributors, Inc., Equitable Distributors, LLC and
VOYA Financial, Inc., which together account for
most of our ESRP business. In addition, we
distribute 457(b) plans to governmental entities.
Our licensed representatives generally provide
20
educational and administrative services with
respect to ESRPs, which include helping our
ESRP clients understand the benefits of offering
a tax-deferred retirement plan and assisting
their employees to realize the need to save for
retirement and the benefits of doing so in an
ESRP.
In Canada, we underwrite
Segregated Funds.
segregated fund products, branded as our
Common Sense FundsTM, that have some of the
characteristics of our variable annuity products
distributed in the United States. Our Common
Sense FundsTM are underwritten by Primerica Life
Canada and offer our clients the ability to
participate in a diversified managed investments
program that can be opened for as little as $25.
While the assets and corresponding liability
(reserves) are recognized on our consolidated
balance sheets, the assets are held in separate
accounts for the benefit of the segregated fund
contract owners and are not commingled with
the general assets of the Company.
There are three fund products within our
segregated funds: the Asset Builder Funds, the
Strategic Retirement Income Fund (“SRIF”), and a
money market fund known as the Cash
Management Fund. The investment objective of
Asset Builder Funds is long-term capital
appreciation combined with some guarantee of
principal. Unlike mutual funds, our Asset Builder
Funds product guarantees clients at least 75% of
their net contributions (net of withdrawals) at
the earlier of the date of their death or at the
Asset Builder Funds’ maturity date, which is
selected by the client. The portfolio consists of
both equities and fixed-income securities with
the equity component consisting of a pool of
primarily large cap Canadian and U.S. equities
and the fixed-income component consisting of
Canadian federal government zero coupon
treasuries and government-backed floating rate
notes. The portion of the Asset Builder Funds’
portfolio allocated to zero coupon treasuries are
held in sufficient quantity to satisfy the
guarantees payable at the maturity date of each
Asset Builder Fund. As a result, our potential loss
exposure is very low as it comes from the
guarantees payable upon the death of the client
prior to the maturity date.
As a result of Canadian regulatory changes that
became effective in June 2023, we no longer pay
an up-front sales commission on new
segregated fund contracts (subject to certain
exceptions below) and independent sales
representatives are paid a monthly fee based on
client asset values. We may pay independent
sales representatives a sales commission based
on the amount invested under limited
circumstances including (i) pre-authorized
purchases and subsequent purchases for
existing clients with existing Common Sense
FundsTM contracts prior to the June 1, 2023
effective date and (ii) if any sales-based up-front
commissions were negotiated between the
investor and the independent sales
representative.
The investment objective of the SRIF is to
provide income during retirement plus the
opportunity for modest capital appreciation. The
SRIF product guarantees clients 75% of their net
contributions (net of withdrawals) at the earlier
of the date of their death or age 100. The
portfolio consists of both equities and fixed-
income securities, with the equities consisting of
a pool of primarily large cap Canadian and U.S.
equities that are capped at 25% of the portfolio.
The balance is a fixed-income portfolio
consisting of investment-grade government and
corporate bonds. The high quality of the
investments and the percentage cap on equities
results in a relatively low potential loss exposure.
All accounts in the SRIF are held as Registered
Retirement Income Funds which carry
government-mandated minimum annual
withdrawals. Similar to the Asset Builder Funds,
our potential exposure for loss associated with
the SRIF is very low because its investment
allocations are conservatively aligned with the
risks of the client contracts.
The Cash Management Fund invests in
government guaranteed short-term bonds and
short-term commercial and bank papers, with
the principal investment objective being the
provision of interest income while maintaining
liquidity and preserving capital.
With the guarantee level at 75% and in light of
the time until the scheduled maturity of our
ITEM 1. BUSINESS
segregated funds contracts, we currently do not
believe it is necessary to allocate any corporate
capital as reserves for segregated fund contract
benefits.
In the United States, we earn
Investment and Savings Products
Revenue.
revenue from our Investment and Savings
Products business in three ways: up front
commissions and payments earned on the sale
of such products; trailing fees and payments
earned based upon client asset values; and
account-based revenue. On the sale of mutual
funds (not including managed investments) and
annuities, we earn a dealer re-allowance or
commission on new purchases as well as trail
commissions on the assets held in our clients’
accounts. We also receive marketing and
distribution fees from most of our mutual fund
and annuity providers. These payments are
typically a percentage of sales or a percentage
of the clients’ total asset values, or a
combination of both. For investments into the
Lifetime Investment Program, we receive an
asset-based fee as compensation for the
investment advisory and other administrative
services we provide.
As the IRS-approved non-bank custodian for
certain funds noted above, PFS Investments
receives annual fees on a per-account basis for
as long as it services the account. As explained
above, PSS receives transfer agent
recordkeeping fees for the services it provides to
the fund families noted above in “Mutual Funds”
section. An individual client account may include
multiple fund positions for which we earn
recordkeeping fees.
Because the total amount of these fees
fluctuates with the number of such accounts and
positions within those accounts, the opening or
closing of accounts has a direct impact on our
revenues. From time to time, the fund
companies for which we provide these services
request that accounts or positions with small
balances be closed.
In Canada, we have historically earned revenue
on our mutual fund offerings in two ways: up-
front commissions from fund managers under
the deferred sales charge compensation model
Primerica 2023 Annual Report
21
ITEM 1. BUSINESS
(or dealer re-allowance) on mutual fund sales
and fees paid based upon client asset values
(mutual fund trail commissions and investment
advisory fees from Concert™ Series funds). As a
result of Canadian regulatory changes, a new
business model for the distribution of mutual
funds was adopted in July 2022, pursuant to
which PFSL Investments Canada acts as the
exclusive principal distributor for the PD Funds.
In this new principal distributor model, PFSL
Investments Canada earns revenue primarily in
the form of fees paid based upon client asset
values, which include dealer services fees that
are paid monthly to us by clients and principal
distributor fees which are paid to us on a
periodic basis by the PD Fund managers. PFSL
Investments Canada also has the opportunity to
earn revenue from sales-based up-front
commissions if such commissions are negotiated
between investors and PFSL Investments Canada
representatives. PFSL Investments Canada
continues to earn revenue from Legacy Canada
Mutual Funds in the form of up-front
commissions on mutual fund sales (only if
negotiated between our representative and the
investor) and fees paid based upon client asset
values. For our segregated fund products, we
earn revenue primarily from fees paid based
upon client asset values in the form of
investment advisory fees. We may also earn
deferred sales charges for early withdrawals at
an annual declining rate within seven years of an
investor’s original contribution for segregated
funds contracts entered into prior to June 2023.
As a result of certain Canadian regulatory
changes that were effective in June 2023, we no
longer offer new segregated funds contracts
with deferred sales charges. For further details of
these regulatory changes, refer to the
“Regulatory Changes” section in “Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations”.
SeniorHealth
In the United States, we distribute Medicare-
related insurance products to eligible Medicare
beneficiaries and enroll eligible Medicare
beneficiaries in coverage utilizing licensed health
insurance agents through our subsidiary,
22
e-TeleQuote (dba easyMed Insurance Services).
These products consist of Medicare Advantage
Plans and Medicare Supplement Plans. Medicare
Advantage Plans are insurance policies offered
by private health insurance carriers approved by
CMS. These policies are fully funded by the
federal government and managed by private
health insurance carriers. They cover hospital
care, outpatient medical services and, in some
cases, additional coverage for prescription
drugs, vision, hearing and dental. Medicare
Supplement Plans provide additional insurance
to help pay for costs not covered by Medicare,
such as copayments, coinsurance, deductibles
and coverage for travel outside of the United
States. Medicare Supplement Plans are private
health insurance without any Medicare subsidy.
During 2023, UnitedHealthcare Group, Inc.,
Humana, Inc., Aetna Inc., Cigna, Inc. and
Elevance Health, Inc. accounted for the majority
of the Senior Health segment’s commissions
revenues.
e-TeleQuote earns commissions and fees when
eligible Medicare beneficiaries are enrolled in
plans offered by third-party health insurance
carriers. We are entitled to commissions at the
time the initial policy is approved by the health
insurance carrier and renewal commissions for as
long as the policy renews. Additionally,
e-TeleQuote earns consideration related to
certain services it provides for purposes of
selling policies on behalf of health insurance
carriers. The Senior Health segment experiences
notable seasonality. For further details of this
seasonality, refer to the “Senior Health Key
Performance Indicators” section in “Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations”.
OtherDistributedProducts
In the United States, we distribute other
products, including mortgage loans through
mortgage-licensed loan originators, prepaid
legal services, auto and homeowners’ insurance
referrals and home automation solutions. In
Canada, we offer mortgage loan referrals, auto
and homeowners’ insurance referrals and
insurance offerings for small businesses. While
some of these products are Primerica-branded,
all of them are underwritten or otherwise
provided by a third party.
We have a contractual arrangement with Rocket
Mortgage, LLC (“Rocket Mortgage”), a mortgage
lender, whereby Primerica Mortgage, LLC
(“Primerica Mortgage”), a state-licensed
mortgage broker, offers refinance mortgages
and purchase-money mortgages through its
mortgage loan originator licensed
representatives. We also have a program with
Spring EQ LLC, a mortgage lender, whereby
Primerica Mortgage offers second mortgages
and home equity lines of credit through its
mortgage loan originator licensed
representatives. In 2023, we continued to
expand our mortgage program into new states.
We receive compensation from the mortgage
lenders for each closed loan based on a fixed
percentage of the loan amount (subject to
regulatory maximums) for mortgage brokering
services provided and pay compensation to the
representatives for services rendered.
We offer our U.S. and Canadian clients a
Primerica-branded prepaid legal services
program on a subscription basis that is
underwritten and provided by Pre-Paid Legal
Services, Inc. The prepaid legal services program
offers a network of attorneys in all states, and
certain provinces and territories, to assist
subscribers with legal matters such as drafting
wills, living wills and powers of attorney, trial
defense and motor vehicle-related matters. We
receive commissions based on sales and
renewals of these subscriptions.
We have a contractual arrangement with Answer
Financial, Inc. (“Answer Financial”), an
independent insurance agency, whereby U.S.
sales representatives refer clients to Answer
Financial to receive multiple, competitive auto
and homeowners’ insurance quotes. Answer
Financial’s comparative quote process allows
clients to easily identify the underwriter that is
most competitively priced for their type of risk.
We receive commissions based on completed
auto and homeowners’ placement of insurance
and policy renewals and pay independent sales
ITEM 1. BUSINESS
representatives a flat referral fee for each
completed application and policy renewal.
We have a contractual arrangement with Vivint,
Inc. (“Vivint”), a company that offers
homeowners in the U.S. a comprehensive suite
of products and services to protect and remotely
control, monitor and manage their homes using
any Internet-connected smart device. We receive
commissions based on referrals that result in a
subscription to Vivint’s home services and pay
sales representatives a referral fee for each such
subscription.
In the Canadian provinces of Alberta, Ontario
and British Columbia (with respect to
homeowners’ insurance only), we have an
arrangement with SurexDirect.com Ltd. (“Surex
Direct”), an independent insurance agency,
whereby sales representatives refer clients to
Surex Direct to receive multiple, competitive
auto, commercial, and homeowners’ insurance
quotes. Surex Direct’s comparative quote
process allows clients to easily identify the
underwriter that is most competitively priced for
their type of risk. We receive referrals based on
completed auto, commercial, and homeowners’
placement of insurance and policy renewals and
pay sales representatives a flat referral fee for
each completed application and policy renewal.
In Canada, we have a referral program for
mortgage loan products offered by third-party
lenders Rocket Mortgage Canada ULC and
8Twelve Mortgage Corp. Due to regulatory
requirements, sales representatives in Canada
only refer clients to the lender and are not
involved in the loan application and closing
process. We receive referral fees based on the
funded loan amount and, in turn, pay a
commission to independent sales
representatives.
In Canada, we offer insurance products,
including supplemental medical and dental,
accidental death, and disability, to small
businesses. These insurance products are
underwritten and provided by The Edge Benefits
Inc. and its affiliates. We receive a commission
based on sales and renewals of these policies.
Primerica 2023 Annual Report
23
ITEM 1. BUSINESS
Regulation
Our business is subject to extensive laws and
governmental regulations, including
administrative determinations, court decisions
and similar constraints. The purpose of the laws
and regulations affecting our business is
primarily to protect our clients and other
consumers. Many of the laws and regulations to
which we are subject are regularly re-examined,
and existing or future laws and regulations may
become more restrictive or otherwise adversely
affect our operations.
Regulatory authorities periodically make
inquiries regarding compliance by us and our
subsidiaries with insurance, securities and other
laws and regulations regarding the conduct of
our insurance and securities businesses. At any
given time, a number of financial or market
conduct examinations of our subsidiaries may be
ongoing. We cooperate with such inquiries and
take corrective action when warranted.
Regulation of Our Insurance
Business. Primerica Life, as a Tennessee-
domiciled insurer, is regulated by the Tennessee
Department of Commerce and Insurance and is
licensed to transact business in the United States
(except New York), the District of Columbia and
most U.S. territories. NBLIC, as a New York-
domiciled life insurance underwriting company
and a wholly owned subsidiary of Primerica Life,
is regulated by the New York State Department
of Financial Services (“NYDFS”) and is licensed to
transact business in all 50 U.S. states, the District
of Columbia and the U.S. Virgin Islands.
State insurance laws and regulations regulate all
aspects of our U.S. insurance business. Such
regulation is vested in state agencies having
broad administrative and, in some instances,
discretionary power dealing with many aspects
of our business, which may include, among other
things, premium rates and increases thereto,
reserve requirements, marketing practices,
advertising, privacy, policy forms, algorithmic
underwriting, grace periods, reinsurance reserve
requirements, acquisitions, mergers, and capital
adequacy.
24
Our U.S. insurance subsidiaries are required to
file certain annual, quarterly and periodic reports
with the supervisory agencies in the jurisdictions
in which they do business, and their business
and accounts are subject to examination by such
agencies at any time. These examinations
generally are conducted under National
Association of Insurance Commissioners (“NAIC”)
guidelines. Under the rules of these jurisdictions,
insurance companies are examined periodically
(generally every three to five years) by one or
more of the supervisory agencies on behalf of
the states in which they do business. Our most
recent examinations of the financial condition
and affairs of Primerica Life and NBLIC, as well as
Peach Re, Inc. (“Peach Re”) and Vidalia Re, Inc.
(“Vidalia Re”), special purpose financial captive
insurance companies and wholly owned
subsidiaries of Primerica Life, performed by the
respective domiciliary state insurance
departments as of December 31, 2019, were
completed during 2021 with no material findings
or recommendations noted.
Primerica Life Canada is federally incorporated
and provincially licensed and is required to file
periodic reports with Canadian regulatory
agencies. It transacts business in all Canadian
provinces and territories. Primerica Life Canada
is regulated federally by the Office of the
Superintendent of Financial Institutions Canada
(“OSFI”) and provincially by the Superintendents
of Insurance for each province and territory.
Canadian federal and provincial insurance laws
regulate all aspects of our Canadian insurance
business. OSFI regulates insurers’ corporate
governance, financial and prudential oversight,
and regulatory compliance, while provincial and
territorial regulators oversee insurers’ market
conduct practices and related compliance.
Primerica Life Canada files quarterly and annual
financial statements prepared in accordance with
International Financial Reporting Standards
(“IFRS”) and other locally accepted standards
with OSFI in compliance with legal and
regulatory requirements. OSFI conducts periodic
detailed examinations of insurers’ business and
financial practices, including the control
environment, internal and external auditing and
capital adequacy, surpluses and related testing,
legislative compliance and appointed actuary
requirements. These examinations also address
regulatory compliance with anti-money
laundering practices, outsourcing, related-party
transactions, privacy and corporate governance.
Provincial regulators conduct periodic market
conduct examinations of insurers doing business
in their jurisdictions.
In addition to federal and provincial oversight,
Primerica Life Canada is also subject to the
guidelines set out by the Canadian Life and
Health Insurance Association (“CLHIA”). CLHIA is
an industry association that works closely with
federal and provincial regulators to establish
market conduct guidelines and sound business
and financial practices addressing matters such
as sales representative suitability and screening,
insurance illustrations and partially guaranteed
savings products.
The laws and regulations governing our U.S. and
Canadian insurance businesses include
numerous provisions governing the marketplace
activities of insurers, including policy filings,
payment of insurance commissions, disclosures,
advertising, product replacement, sales and
underwriting practices and complaints and
claims handling. The state insurance regulatory
authorities in the United States and the federal
and provincial regulators in Canada generally
enforce these provisions through periodic
market conduct examinations.
In addition, most U.S. states and Canadian
provinces and territories, as well as the Canadian
federal government, have laws and regulations
governing the financial condition of insurers,
including standards of solvency, types and
concentration of investments, establishment and
maintenance of reserves, reinsurance and
requirements of capital adequacy. As discussed
previously, U.S. state insurance law and Canadian
provincial insurance law also require certain
licensing of insurers and their agents.
Primerica Life
Primerica Life Canada
ITEM 1. BUSINESS
Insurance Holding Company Regulation;
Limitations on Dividends. The states in which
our U.S. insurance subsidiaries are domiciled
have enacted legislation and adopted
regulations regarding insurance holding
company systems. These laws require
registration of, and periodic reporting by,
insurance companies domiciled within the
jurisdiction that control, or are controlled by,
other corporations or persons so as to constitute
an insurance holding company system. These
laws also affect the acquisition of control of
insurance companies as well as transactions
between insurance companies and companies
controlling them.
The Parent Company is a holding company that
has no significant operations. Our primary asset
is the capital stock of our subsidiaries, and our
primary liability is $600.0 million in principal
amount of senior unsecured notes (the “Senior
Notes”). As a result, we depend on dividends or
other distributions from our insurance and other
subsidiaries as the principal source of cash to
meet our obligations, including the payment of
interest on, and repayment of, principal of any
debt obligations.
The states in which our U.S. insurance
subsidiaries are domiciled impose certain
restrictions on our insurance subsidiaries’ ability
to pay dividends to us. In Canada, dividends can
be paid subject to the paying insurance
company’s continuing compliance with
regulatory requirements and upon notice to
OSFI. We determine the dividend capacity of our
insurance subsidiaries using statutory
accounting principles (“SAP”) promulgated by
the NAIC and each subsidiary’s domiciliary state
in the United States and using IFRS in Canada.
The following table sets forth the amount of
cash and distributions paid or payable by our
direct insurance subsidiaries:
Year ended December 31,
2023
2022
2021
(In thousands)
$330,000 $255,000 $ 30,000
22,348
22,929
140,243
Primerica 2023 Annual Report
25
ITEM 1. BUSINESS
For additional information on dividend capacity
and restrictions, see Note 16 (Statutory
Accounting and Dividend Restrictions) to our
consolidated financial statements included
elsewhere in this report.
Policy and Contract Reserve Sufficiency
Analysis. Under the laws and regulations of
their jurisdictions of domicile, our U.S. insurance
subsidiaries are required to conduct annual
analyses of the sufficiency of their life insurance
statutory reserves. In addition, other U.S.
jurisdictions in which our U.S. subsidiaries are
licensed may have certain reserve requirements
that differ from those of their domiciliary
jurisdictions. In each case, a qualified actuary
must submit an opinion that states that the
aggregate statutory reserves, when considered
in light of the assets held with respect to such
reserves, make good and sufficient provision for
the associated contractual obligations and
related expenses of the insurer. If such an
opinion cannot be provided, then the affected
insurer must set up additional reserves by
moving funds from surplus. Our U.S. insurance
subsidiaries most recently submitted these
opinions without qualification to applicable
insurance regulatory authorities.
Primerica Life Canada is also required to conduct
regular analyses of the sufficiency of its life
insurance statutory reserves. Life insurance
reserving and reporting requirements are
completed by Primerica Life Canada’s appointed
actuary. Materials provided by the appointed
actuary are filed with OSFI as part of our annual
filing and are subject to OSFI’s review. Based
upon this review, OSFI may institute remedial
action against Primerica Life Canada as OSFI
deems necessary. Primerica Life Canada has not
been subject to any such remediation or
enforcement by OSFI.
Surplus and Capital Requirements. U.S.
insurance regulators have the discretionary
authority, in connection with the ongoing
licensing of our U.S. insurance subsidiaries, to
limit or prohibit the ability of an insurer to issue
new policies if, in the regulators’ judgment, the
insurer is not maintaining a minimum amount of
surplus or is in hazardous financial condition.
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Insurance regulators may also limit the ability of
an insurer to issue new life insurance policies
and annuity contracts above an amount based
upon the face amount and premiums of policies
of a similar type issued in the prior year. We do
not believe that the current or anticipated levels
of statutory surplus of our U.S. insurance
subsidiaries present a material risk that any such
regulator would limit the amount of new policies
that our U.S. insurance subsidiaries may issue.
The NAIC has established risk-based capital
(“RBC”) standards for U.S. life insurance
companies, as well as a risk-based capital model
act (the “RBC Model Act”) that has been adopted
by the state insurance regulatory authorities. The
RBC Model Act provides that life insurance
companies must submit an annual RBC report to
state regulators regarding their RBC based upon
four categories of risk: asset risk; insurance risk;
interest rate risk; and business risk. For each
category, the capital requirement is determined
by applying factors that vary based upon the
degree of risk to various asset, premium and
policy benefit reserve items. The formula is
intended to be used by insurance regulators as
an early warning tool to identify possible weakly
capitalized companies for purposes of initiating
further regulatory action. If an insurer’s RBC falls
below specified levels, then the insurer would be
subject to different degrees of regulatory action
depending upon the level. These actions range
from requiring the insurer to propose actions to
correct the capital deficiency to placing the
insurer under regulatory control.
In Canada, OSFI has authority to request an
insurer to enter into a prudential agreement
implementing measures to maintain or improve
the insurer’s safety and soundness. OSFI also
may issue orders to an insurer directing it to
refrain from unsafe or unsound practices or to
take action to remedy financial concerns. OSFI
has neither requested that Primerica Life Canada
enter into any prudential agreement nor issued
any order against Primerica Life Canada.
In Canada, OSFI requires federally-regulated life
insurance companies to maintain adequate
capital in accordance with regulatory Capital
Guidelines. The Capital Guidelines define and
establish criteria and limits for determining an
insurer’s required capital to support defined
risks and the amount of qualifying regulatory
available capital. In addition, OSFI requires
companies to set internal target levels of capital
sufficient to provide for all risks of the insurer,
including risks specified in OSFI’s Capital
Guidelines.
NAIC Pronouncements and Reviews. The NAIC
promulgates model insurance laws and
regulations for adoption by the states in order to
standardize insurance industry accounting and
reporting guidance. Although many state
regulations emanate from NAIC model statutes
and pronouncements, SAP continue to be
established by individual state laws, regulations
and permitted practices. Certain changes to
NAIC model statutes and pronouncements,
particularly as they affect accounting issues, may
take effect automatically without affirmative
action by a given state. With respect to some
financial regulations and guidelines, non-
domiciliary states sometimes defer to the
interpretation of the insurance department of
the state of domicile. However, neither the
action of the domiciliary state nor the action of
the NAIC is binding on a non-domiciliary state.
Accordingly, a non-domiciliary state could
choose to follow a different interpretation.
The NAIC has established guidelines to assess
the financial strength of insurance companies for
U.S. state regulatory purposes. The NAIC
conducts annual reviews of the financial data of
insurance companies primarily through the
application of 12 financial ratios prepared on a
statutory basis. The annual statements are
submitted to state insurance departments to
assist them in monitoring insurance companies
in their states.
Statutory Accounting Principles. SAP is a basis
of accounting developed by U.S. insurance
regulators to monitor and regulate the solvency
of insurance companies. In developing SAP,
insurance regulators were primarily concerned
with evaluating an insurer’s ability to pay all of
its current and future obligations to
policyholders. As a result, statutory accounting
focuses on conservatively valuing the assets and
ITEM 1. BUSINESS
liabilities of insurers, generally in accordance
with standards specified by the insurer’s
domiciliary jurisdiction. Uniform statutory
accounting practices are established by the NAIC
and generally adopted by regulators in the
various U.S. jurisdictions. These accounting
principles and related regulations determine,
among other things, the amounts our insurance
subsidiaries may ultimately pay to us as
dividends, and they differ in many instances
from U.S. generally accepted accounting
principles (“U.S. GAAP”), which are designed to
measure a business on a going-concern basis.
Under U.S. GAAP, incremental direct costs of
successful policy acquisitions are capitalized
when incurred and then amortized over the life
of the associated policies. The valuation of assets
and liabilities under U.S. GAAP is based in part
upon best estimate assumptions made by the
insurer. U.S. GAAP-basis stockholders’ equity
represents the ownership interest in the U.S.
GAAP-measured net assets held by stockholders.
As a result, the values for assets, liabilities and
equity reflected in financial statements prepared
in accordance with U.S. GAAP will be different
from those reflected in financial statements
prepared under SAP.
State Insurance Guaranty Funds Laws. Under
most state insurance guaranty fund laws,
insurance companies doing business therein can
be assessed up to prescribed limits for
policyholder losses incurred by insolvent
companies. Most insurance guaranty fund laws
currently provide that an assessment may be
excused or deferred if it would threaten an
insurer’s own financial strength. In addition,
assessments may be partially offset by credits
against future state premium taxes.
Other Regulatory Changes.
From time to time,
various jurisdictions make changes to the state
or provincial licensing examination process that
may make it more difficult for independent sales
representatives to obtain their life insurance
licenses. In addition, certain jurisdictions have
passed laws or proposed regulations that
require insurers and insurance agents in the sale
of life insurance, including term life insurance
and annuities, to disclose conflicts of interest to
consumers or meet standards of care requiring
Primerica 2023 Annual Report
27
ITEM 1. BUSINESS
that their advice be in the customer’s best
interest. The impact on our business and the
level of resources necessary to conform to such
new regulations will vary depending on the
extent of changes required and the jurisdictions
that adopt such regulations.
Regulation of Our Investment and Savings
Products Business. PFS Investments is
registered with, and regulated by, FINRA and the
Securities and Exchange Commission (“SEC”) as a
broker-dealer. PFS Investments operates as an
introducing broker-dealer, which does not hold
client accounts. As an investment adviser, PFS
Investments is registered with and is regulated
by the SEC. PFS Investments also is subject to
regulation by the Department of Labor (“DOL”)
with respect to certain retirement plans, and by
state securities agencies. With respect to our
managed investments offerings, PFS Investments
provides clearing services through PBSI, a wholly
owned broker-dealer. PBSI provides custody,
trade execution, clearing, settlement and other
services for customer assets invested through
the Lifetime Investment Program. PBSI
subcontracts its services through a fully
disclosed clearing agreement with Pershing.
PFS Investments is registered in all 50 U.S. states
and certain territories. All aspects of PFS
Investments’ business are regulated, including
sales methods and charges, trade practices, the
use and safeguarding of customer securities,
capital structure, recordkeeping, data protection,
conduct and supervision of registered
representatives.
PFS Investments is required to file quarterly
reports as well as annual audited financial
statements with the SEC pursuant to Section 17
of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and Rule 17a-5
thereunder. As part of filing these reports, PFS
Investments is subject to minimum net capital
requirements, as mandated by Rule 15c3-1 of
the Exchange Act.
In the United States, clients acquire securities
products from PFS Investments in either a
brokerage or advisory relationship. In a brokerage
relationship, a PFS Investments registered
representative making recommendations is
28
subject to a “best interest” standard under SEC
regulations and FINRA rules and, in some cases,
state rules. PFS Investments markets mutual funds
and variable annuities on a brokerage basis. In an
advisory relationship, namely our managed
investment offerings, PFS Investments and its
investment advisory representative have a
fiduciary obligation to the client and conduct
ongoing monitoring of the client’s investments.
PFS Investments’ sales representatives making
recommendations with respect to retirement
accounts also may have fiduciary obligations
under DOL regulations.
PFS Investments is also approved as a non-bank
custodian under IRS regulations and, in that
capacity, may act as a custodian or trustee for
certain retirement accounts. In addition, PFS
Investments is an SEC-registered investment
advisor and, under the name Primerica Advisors,
offers managed investment programs. In most
states, independent sales representatives are
required to obtain an additional license to offer
these programs.
PBSI is registered with, and regulated by, FINRA
and the SEC, and is registered in all 50 U.S. states
and certain territories. PBSI operates as the
introducing broker-dealer for the accounts
managed through the Lifetime Investment
Program and does not hold customer accounts.
PBSI introduces all accounts to Pershing, an
unaffiliated clearing firm that provides order
execution, custody, clearing, settlement and
related services to PBSI’s customers. PBSI filed
monthly reports beginning in April 2023 as a
first year broker-dealer and is required to file
annual audited financial statements with the SEC
pursuant to Section 17 of the Exchange Act, and
Rule 17a-5 thereunder. PBSI is subject to
minimum net capital requirements as mandated
by Rule 15c3-1 of the Exchange Act.
PSS is registered with the SEC as a transfer agent
and, accordingly, is subject to SEC rules and
examinations. Acting in this capacity, PSS and
third-party vendors employed by PSS are
responsible for certain client investment account
shareholder services.
PFSL Investments Canada is a mutual fund
dealer registered with and regulated by the
Canadian Investment Regulatory Organization
(“CIRO”), the national self-regulatory
organization that overseas all investment
dealers, mutual fund dealers and trading activity
on Canada’s debt and equity marketplaces. PFSL
Investments Canada is also registered with
provincial and territorial securities commissions
throughout Canada (collectively referred to as
the Canadian Securities Administrators (“CSA”)).
As a registered mutual fund dealer, PFSL
Investments Canada performs the suitability
review of mutual fund investment
recommendations, and like our U.S. broker-
dealers, it does not hold client accounts. PFSL
Investments Canada is subject to the rules and
regulations established by the CSA for the sale
of securities, which include standards of conduct
for the firm and its sales representatives.
PFSL Investments Canada is required to file
monthly and annual financial statements and
reports with CIRO that are prepared to comply
with the prescribed CIRO reporting
requirements. CIRO has established a risk
adjusted capital standard for mutual fund
dealers. Its formula is designed to provide
advance warning of a member encountering
difficulties. If a mutual fund dealer falls below
specified levels, then restrictions would apply
until rectified, including not being able to act on
certain matters without prior written consent
from CIRO.
PFSL Investments Canada sales representatives
are required to be registered in the provinces
and territories in which they do business,
including regulation by the Autorité des marchés
financiers in Quebec, and are also subject to
regulation by CIRO. These regulators have broad
administrative powers, including the power to
limit or restrict the conduct of our business and
impose censures or fines for failure to comply
with the law or regulations.
PFSL Fund Management in Canada is registered
as an Investment Fund Manager in connection
with our Concert™ Series mutual funds and is
regulated by provincial securities commissions.
PFSL Fund Management is required to file
quarterly and annual financial statements with
the Ontario Securities Commission (“OSC”)
ITEM 1. BUSINESS
prepared to meet the requirements of National
Instrument 31-103, Registration Requirements,
Exemptions and Ongoing Registrant Obligations,
based on the financial reporting framework
specified in National Instrument 52-107,
Acceptable Accounting Principles and Auditing
Standards. PFSL Fund Management is required
to maintain a minimum level of capital and file
its quarterly and annual calculation of excess
working capital with the OSC. As an Investment
Fund Manager, PFSL Fund Management is
required to file periodic reports with provincial
and territorial securities commissions
throughout Canada for its Concert™ Series
mutual funds. Such reports include semi-annual
and annual financial statements prepared in
accordance with IFRS.
As the segregated funds are separate accounts
of Primerica Life Canada, the segregated funds
are also regulated by OSFI and included as part
of the quarterly and annual financial statement
filings for Primerica Life Canada. In addition, the
segregated funds are also subject to the
guidelines set out by the CLHIA.
Regulation of Our Senior Health
Business. The sale of senior health insurance
products is heavily regulated. e-TeleQuote is
subject to numerous U.S. federal and state laws,
regulations and agency guidance. These laws,
regulations and guidance may involve financial
services, privacy and data collection, data
protection, intellectual property, competition,
consumer protection and other subjects.
e-TeleQuote has a compliance function that is
accountable to state insurance regulators, health
insurance carriers and CMS at the federal level. The
CMS Medicare Communication and Marketing
Guidelines prescribe specific details of marketing
to and interactions with Medicare beneficiaries and
those soon to be Medicare eligible. e-TeleQuote
digitally records all telephone calls with potential
and current beneficiaries and stores them for
requested retrieval by health insurance carriers or
CMS as required.
We are subject to state and federal laws and
regulations that require us to maintain the
privacy and security of personal information
which we collect from consumers.
Primerica 2023 Annual Report
29
ITEM 1. BUSINESS
The Health Insurance Portability and
Accountability Act (“HIPAA”) limits the use and
disclosure of certain individually identifiable
health information and requires the
implementation of administrative, physical and
technological safeguards to protect such
information. As a provider of services subject to
HIPAA, we are permitted to use and disclose
certain protected health information to provide
our services to existing customers and for other
limited purposes, but other uses and disclosures
such as marketing communications require
authorization from the applicant or must meet
an exception specified in the HIPAA privacy
regulations.
In the United States, state mortgage
Regulation of Our Mortgage Brokerage
Business.
banking, brokering and lending laws regulate
our mortgage brokerage business. In the United
States, Primerica Mortgage is regulated at the
state and local level by state banking
commissioners and other equivalent regulators
and at the federal level principally by the
Consumer Financial Protection Bureau. Our
mortgage brokerage business must comply with
the laws, rules and regulations, as well as judicial
and administrative decisions, in all of the
jurisdictions in which we are licensed to offer
mortgage loans, as well as an extensive body of
federal laws and regulations. These state and
federal laws and regulations address the type of
loan products that can be offered to consumers
through predatory lending and high cost loan
laws and the type of licenses that must be
obtained by individuals and entities seeking to
solicit mortgage loan applications from
consumers. As a mortgage broker licensee,
Primerica Mortgage is subject to periodic
examinations by regulators.
To offer mortgage loan products, Primerica
Mortgage must hold an active mortgage
company license in each state in which
mortgage products are offered. Independent
sales representatives engaged in the mortgage
loan brokerage business must also be
individually licensed as mortgage loan
originators (and in some states also licensed as
mortgage brokers) by each state in which they
do business and be sponsored in the Nationwide
30
Multistate Licensing System to conduct
mortgage loan brokerage business exclusively
on behalf of Primerica Mortgage.
In addition, our mortgage brokerage business is
subject to various other federal laws, including
the Truth In Lending Act and its implementing
regulation, Regulation Z, the Equal Credit
Opportunity Act and its implementing
regulation, Regulation B, the Fair Housing Act
and the Home Ownership Equity Protection Act.
We are also subject to the Real Estate
Settlement Procedures Act and its implementing
regulation, Regulation X, which requires timely
disclosures related to the nature and costs of
real estate settlement amounts and limits those
costs and compensation to amounts reasonably
related to the services performed. We are also
subject to the Dodd-Frank Wall Street Reform
and Consumer Protection Act and any
implementing regulations.
In Canada, our loan activities are more limited
and the sales representatives only provide
mortgage loan referrals to Rocket Mortgage
Canada ULC and 8Twelve Mortgage Corp. The
sales representatives are not required to obtain
mortgage loan licensure from any regulatory
entity to make these referrals.
Other Laws and Regulations. Our business is
subject to a number of additional laws and
regulations.
The USA Patriot Act of 2001 (the “Patriot Act”)
contains anti-money laundering and financial
transparency laws and mandates the
implementation of various regulations applicable
to broker-dealers and other financial services
companies, including insurance companies. The
Patriot Act seeks to promote cooperation
among financial institutions, regulators and law
enforcement entities in identifying parties that
may be involved in terrorism or money
laundering.
U.S. federal and state laws and regulations
require financial institutions, including insurance
companies, to protect the security and
confidentiality of consumer financial information
and to notify consumers about their policies and
practices relating to their collection and
disclosure of consumer information and their
policies relating to protecting the security and
confidentiality of that information. Similarly,
federal and state laws and regulations also
govern the disclosure and security of consumer
health information. In particular, regulations
promulgated by the U.S. Department of Health
and Human Services regulate the disclosure and
use of protected health information by health
insurers and others (including certain life
insurers), the physical and procedural safeguards
employed to protect the security of that
information and the electronic storage and
transmission of such information. Congress and
state legislatures are expected to consider
additional legislation relating to privacy and
other aspects of consumer information.
The Federal Trade Commission (“FTC”), through
the Federal Trade Commission Act (the “FTC
Act”), is responsible for protecting consumers
and competition by preventing anticompetitive,
deceptive, and unfair business practices. This
includes regulation of deceptive trade practices
such as pyramiding and unsubstantiated
earnings or lifestyle claims in advertisements,
including on social media.
The Gramm-Leach-Bliley Act (“GLBA”) regulates
the use and disclosure of certain data that we
collect from consumers, and it requires us to
provide consumers with notice regarding how
their nonpublic personal health and financial
information is used and the opportunity to “opt
out” of certain disclosures before sharing such
information with third parties. GLBA generally
requires safeguards for the protection of
personal information.
The Telephone Consumer Protection Act of 1991
restricts telemarketing and the solicitation of
customers without proper consent.
The Financial Consumer Agency of Canada
(“FCAC”), a Canadian federal regulatory body, is
responsible for ensuring that federally regulated
financial institutions, which include Primerica Life
Canada, comply with federal consumer
protection laws and regulations, voluntary codes
of conduct and their own public commitments.
The Financial Transactions and Reports Analysis
Centre of Canada is Canada’s financial
intelligence unit. Its mandate includes ensuring
that entities subject to the Proceeds of Crime
ITEM 1. BUSINESS
(Money Laundering) and Terrorist Financing Act
comply with reporting, recordkeeping and other
obligations under that act. We are also subject
to privacy laws under the jurisdiction of federal
and provincial privacy commissioners and the
consumer complaints provisions of federal
insurance laws under the mandate of the FCAC,
which requires insurers to belong to a
complaints ombud-service and file a copy of
their complaints handling policy with the FCAC.
Competition
We operate in a highly competitive environment
with respect to the sale of financial products and
the retention of the more productive members
of the sales force. Competitors with respect to
our term life insurance products consist both of
stock and mutual insurance companies, as well
as other financial intermediaries. Competitive
factors affecting the sale of life insurance
products include the level of premium rates,
benefit features, risk selection practices,
compensation of independent sales
representatives and financial strength ratings
from ratings agencies such as A.M. Best.
In offering our securities products, sales
representatives compete with a range of other
advisers, broker-dealers and direct channels,
including wirehouses, regional broker-dealers,
independent broker-dealers, insurers, banks,
asset managers, registered investment advisers,
mutual fund companies and other direct
distributors. The mutual funds that we offer face
competition from other mutual fund families and
alternative investment products, such as
exchange-traded funds, while our managed
investment programs compete with other fee-
based advisory services offered by financial
services firms. Our annuity products compete
with products from numerous other companies.
Competitive factors affecting the sale of annuity
products include price, product features,
investment performance, commission structure,
perceived financial strength, claims-paying
ratings, service and distribution capabilities.
e-TeleQuote operates in a competitive
marketplace. Medicare Advantage Plans
Primerica 2023 Annual Report
31
ITEM 1. BUSINESS
compete with traditional Medicare as well as
associated private health insurance options such
as Medicare Supplement Plans. Beneficiaries
may also consider private options that cater to
unique needs not otherwise provided for by
Medicare. e-TeleQuote faces competition from
national direct to consumer brokers, health
insurance carriers that directly market to
beneficiaries and national brokers that either sell
through independent agent sales forces or
affiliate with independent downstream brokers.
We have distributor agreements with many
health insurance carriers that can compete with
us by directly marketing to beneficiaries.
PrivacyandInformationSecurity
Our business prioritizes maintaining a secure,
confidential environment for our clients,
employees and other partners’ information. We
have built sophisticated information technology
platforms to support our clients and operations
and the independent contractor sales force. Our
data center houses an enterprise-class IBM
Full-time employees
Part-time employees
On-call and temporary employees(1)
Total
mainframe as well as modern distributed and
cloud technology infrastructure. Our business
applications, many of which are proprietary, are
supported by application developers and data
center staff.
Primerica’s information security teams provide
services, including project consulting, threat
management, application and infrastructure
assessments, secure configuration management,
and information security administration.
Additionally, we support advanced business
continuity and disaster recovery capabilities.
For a discussion of the Company’s risk
management, strategy, and governance related
to cybersecurity, see “Item 1C. Cybersecurity”,
which is incorporated herein by reference.
HumanCapitalManagement
Employees
General. The following table provides
information about our 3,450 employees as of
December 31, 2023.
U.S.
Canada
Pakistan
2,432
21
519
274
1
60
2,972
335
143
—
—
143
(1)
Represents employees who provided services on an as-needed or temporary basis.
The following table provides information about the diversity of our U.S. employees(1) at December 31,
2023:
Executive Management(2)
Non-Executive Management(3)
Professionals(4)
All Other Employees(5)
Female Male
Asian/
Pacific
Islander
Black or
African
American
Hispanic
or Latino Other(6) White
7.6%
49.5% 50.5% 5.7%
61.6% 38.4% 5.8% 24.2%
55.1% 44.9% 16.4% 25.5%
68.3% 31.7% 3.8% 38.4%
2.9%
8.2%
7.1%
16.0%
0.0% 83.8%
0.7% 61.1%
2.7% 48.3%
5.1% 36.7%
63.3% 36.7% 7.5% 32.0%
12.1%
3.7% 44.7%
Reflects U.S. employees only, as comparable data is not required by law to be collected in Canada and Pakistan.
Includes Primerica employees at the Senior Vice President level and above, and comparable e-TeleQuote employees.
Includes Primerica employees at the Assistant Vice President and Vice President levels, non-Assistant Vice President
managers, and comparable e-TeleQuote employees.
(1)
(2)
(3)
32
(4) All remaining exempt (as defined by the Fair Labor Standards Act) employees.
(5) All remaining non-exempt employees.
(6)
Includes employees with two or more races and employees who choose not to disclose their race.
ITEM 1. BUSINESS
The Corporate Governance Committee (the
“Corporate Governance Committee”) of our
Board of Directors (the “Board of Directors” or
“Board”) has responsibility for oversight of our
diversity, equality, inclusion and belonging
(“DEIB”) initiatives. Our Chief Administrative
Officer is responsible for the development and
implementation of our DEIB strategy. Identifying,
developing, and mentoring diverse talent, while
also ensuring our people-related policies and
practices allow all employees to thrive at
Primerica, is at the center of our DEIB efforts.
Primerica prides itself on having a collaborative
culture with our employees. As such, none of our
employees are members of any labor union, and
we have never experienced any business
interruption as a result of any labor disputes. For a
more detailed description of our employee
initiatives, see our 2023 Corporate Sustainability
Report (available at https://investors.primerica.com),
which is not incorporated by reference into this
report or any filings with the SEC into which this
report is incorporated by reference.
Talent Development. A core strength is that
many of our employees, including our
executives, have been with Primerica for over
20 years. The result of this longevity and loyalty
is that many of our long-term executives and
employees will reach retirement age over the
coming years. Executive management continues
to be focused on enhancing succession planning
and talent pipeline identification and
development both through the hiring of external
talent and internal programs. The Corporate
Governance Committee has responsibility for
oversight of our talent development. The
Corporate Governance Committee meets
regularly with our Chief Administrative Officer
and endeavors to interact regularly with rising
talent.
Compensation and Total Rewards. Primerica’s
compensation philosophy is designed to attract,
retain and motivate highly competent
employees at all levels through compensation
programs and practices. For 2023, approximately
350 of our employees participate in an annual
incentive program that reflects both corporate
performance and individual achievement.
Incentive awards to officers are paid in both cash
and equity (with a higher proportion being paid
in equity for higher level officers) while Assistant
Vice Presidents receive all of their incentive
awards in cash. Employees below the level of
Assistant Vice President are eligible for cash
bonuses based on individual achievement. In
2023, we introduced a new cash bonus plan for
managers and senior level professionals
(approximately 325 employees) with higher
bonus targets and broader eligibility than the
existing cash bonus plan. Beginning in 2024, this
new plan will be based on both corporate
performance and individual achievement.
Among other things, our employee benefits
package includes health and dental insurance,
various paid-leave options, parental leave, a
robust employee assistance program, and a
401(k) retirement savings plan with a generous
company match.
Employees
Employee Engagement and Wellness.
are highly satisfied at Primerica, as evidenced by
our employee retention rate in 2023 of 89%
(excluding employees of e-TeleQuote). Further,
from 2019 through 2023, we were recognized by
Forbes as a Best Employer for Women, and we
were named to the Bloomberg Gender Equality
Index from 2020 through 2023. We were also
recognized as a regional “Top Workplace” by the
Atlanta Journal-Constitution for ten consecutive
years from 2014 through 2023. From 2021 through
2023, we were nationally recognized as a “Top
Workplace USA” by the employee
Primerica 2023 Annual Report
33
ITEM 1. BUSINESS
engagement service partner that conducted the
regional survey. In 2023, we were recognized as
one of “America’s Greatest Workplaces” by
Newsweek. In order to monitor employee
satisfaction, we conduct annual employee
surveys and provide detailed results to
managers and our Board of Directors. Changes
to policies, programs, and benefits packages are
made based on this feedback. In addition, each
year we hold a series of town hall meetings at
our U.S. headquarters in Duluth, Georgia and our
Canadian head office in Mississauga, Ontario
during which employees hear updates on the
Company’s performance and strategic direction,
as well as information on benefits
enhancements, policy changes, and other
workplace topics. Employees have the
opportunity to ask questions of senior
management and are encouraged to raise issues
of concern and offer suggestions for
improvement.
Information Specific to Employees of
e-TeleQuote. Since the acquisition of
e-TeleQuote in July 2021, its employees have
continued to operate under many of its existing
human resources policies and procedures.
Primerica’s Code of Conduct, however, applies to
e-TeleQuote employees. e-TeleQuote’s
compensation philosophy is designed to attract,
retain and motivate high performing employees
at all levels of the organization. e-TeleQuote’s
incentive plans combine individual achievement
and e-TeleQuote company performance in
determining total incentive compensation.
e-TeleQuote’s licensed health insurance agents
are full-time employees who are motivated
through compensation systems that track
performance and reward them accordingly. They
receive an hourly wage plus an incentive
compensation component based on individual
sales performance and key performance
indicators including retention of sales.
e-TeleQuote offers an employee benefits
package which includes health and dental
insurance, various paid-leave options including a
parental leave program, an employee assistance
program and a 401(k) retirement savings plan
with a company match.
34
Independent Contractors. A description of the
independent contractor sales force is included
elsewhere in this section. See “– Our Distribution
Model”, “– Recruitment of Sales Representatives”,
“– Sales Force Motivation, Training,
Communication and Sales Support Tools”
“– Performance-Based Compensation Structure”
and “– Supervision and Compliance.” The
independent contractor sales force is extremely
diverse, as it reflects the communities in which
the sales representatives live and work. Further,
the sales force utilizes strategic market groups to
encourage professional and personal growth and
development, including Women in Primerica, the
African American Leadership Council and the
Hispanic American Leadership Council, which we
refer to as our Strategic Markets. These groups
provide opportunities for networking and
mentorship, sales and business management
training and deep learning opportunities
customized for these respective market segments.
For a more detailed description of sales force
initiatives, see our 2023 Corporate Sustainability
Report on our investor relations website
(https://investors.primerica.com), which is not
incorporated by reference into this report or any
filings with the SEC into which this report is
incorporated by reference.
Board of Directors. Primerica’s Board of
Directors values diversity among its members. As
of December 31, 2023, 30% of our Board
members were racially or ethnically diverse and
40% of our Board members were women. The
Board has a Board Diversity Policy, requiring
consideration of Board candidates based on
merit against objective criteria tied to the needs
of the Board and the Company at the time of
nomination to the Board while giving due regard
to diverse characteristics such as gender, race,
ethnicity, country of origin, nationality or cultural
background and other personal characteristics.
Further, diverse Board candidates are to be
considered whenever the Board commences a
director search. The Board Diversity Policy is
available on our investor relations website
(https://investors.primerica.com). In addition, our
Board receives regular updates on the
Company’s efforts to improve DEIB among its
employees and independent contractors.
AvailableInformation
We make available free of charge on our
investor relations website
(https://investors.primerica.com) our annual
reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable
upon filing such information with, or furnishing
it to, the SEC. The Company’s reports are also
available on the SEC’s website (www.sec.gov).
The SEC maintains an Internet site that contains
reports, proxy and information statements, and
other information regarding issuers that file
electronically with the SEC, at www.sec.gov. We
routinely post financial and other information,
including information about our corporate
responsibility and sustainability efforts on the
investor relations page of our corporate website
(https://investors.primerica.com). Information
included on any Company websites is not
incorporated by reference into this report or any
other filings with the SEC into which this report
is incorporated by reference.
ITEM 1A. RISK FACTORS.
RisksRelatedtoOurDistribution
Structure
Our failure to continue to attract new
recruits, retain independent sales
representatives or license or maintain the
licensing of independent sales
representatives would materially adversely
affect our business, financial condition and
results of operations.
New independent sales representatives provide
us with access to new clients, enable us to
increase sales and provide the next generation
of successful independent sales representatives.
As is typical with distribution businesses, we
experience a high rate of turnover among part-
time independent sales representatives, which
requires us to attract, retain and motivate a large
number of independent sales representatives.
ITEM 1. BUSINESS
Recruiting is performed by current independent
sales representatives, and the effectiveness of
recruiting is generally dependent upon our
reputation as a provider of a rewarding and
potentially lucrative income opportunity, as well
as the general competitive and economic
environment. Whether recruits are motivated to
complete their training and licensing
requirements and commit to selling our
products depends in part on the effectiveness of
our compensation and promotional programs,
as well as the competitiveness of such programs
compared with other companies, including other
part-time business opportunities and the
recruits’ desire to help middle-income families in
their communities.
If our new business opportunity and the products
we distribute do not generate sufficient interest
to attract new recruits, motivate them to become
licensed independent sales representatives and
maintain their licenses, and incentivize them to
sell our products and recruit other new
independent sales representatives, our business
would be materially adversely affected.
Certain Regional Vice Presidents (“RVPs”) have
large sales organizations. These RVPs are
responsible for attracting, motivating,
supporting and assisting the independent sales
representatives in their sales organizations. The
loss of key RVPs together with substantial
numbers of independent sales representatives
from their related sales organizations for any
reason could adversely affect our business and
could impact our recruitment of new
independent sales representatives.
Like many other companies with large
independent sales organizations, we have
written agreements with independent sales
representatives that define the contractual terms
of the relationships both during and after their
affiliations with the Company. From time to time,
current and former independent sales
representatives violate these agreements, and
the Company takes steps to enforce them. If
former or current independent sales
representatives are successful in legally
challenging our written agreements, then our
business could be adversely impacted.
Primerica 2023 Annual Report
35
ITEM 1A. RISK FACTORS
Furthermore, if we or any other businesses with
a similar distribution structure engage in
practices resulting in increased negative public
attention for our business model, the resulting
reputational challenges could adversely affect
our ability to attract new recruits. Companies
such as ours that distribute through
independent agents to sell directly to customers
have been and may continue to be the subject
of negative commentary on website postings,
social media and other media. This negative
commentary can spread inaccurate or
incomplete information about distribution
companies in general or the Company in
particular, which can make our recruiting more
difficult.
From time to time, various jurisdictions make
changes to the state or provincial licensing
examination process that may make it more
difficult for independent sales representatives to
obtain or retain their life insurance and/or
securities licenses. For example, the Financial
Industry Regulatory Authority (“FINRA”) has
changed the continuing education (“CE”)
regulatory requirement from a three-year period
to an annual requirement for securities-licensed
representatives. In addition, the North American
Securities Administrators Association approved a
model rule for participating states that imposes
a CE requirement for investment adviser
representatives. Such changes place an
increased burden on representatives to maintain
their securities licenses, which could negatively
impact the size of the active securities sales
force in the event that representatives do not
complete the applicable CE requirements on a
timely basis.
There are a number of laws and
regulations that could apply to our
independent contractor distribution model,
which could require us to modify our
distribution structure.
We have not been, and are not currently, subject
to business opportunity laws because the
amounts paid by the new independent sales
representatives to us: (i) are less than the
36
minimum thresholds set by many state and
provincial statutes and (ii) are not fees paid for
the right to participate in a business, but rather
are for bona fide expenses such as state and
provincial-required insurance examinations and
pre-licensing training. We have not been, and
are not currently, subject to franchise laws for
similar reasons. However, there is a risk that a
governmental agency or court could disagree
with our assessment or that these laws and
regulations could change. In addition, although
we do not believe that the Federal Trade
Commission’s (“FTC”) current Business
Opportunity Rule applies to the Company, it is
under review by the FTC. As a result of that
review or otherwise, it could be amended or
interpreted in a manner inconsistent with our
current interpretation. Becoming subject to
business opportunity or franchise laws or
regulations could require us to provide
additional disclosures and regulate the manner
in which we recruit independent sales
representatives that may increase the expense
of, or adversely impact our recruitment of, new
independent sales representatives.
There are various laws and regulations, including
laws of general application such as the Federal
Trade Commission Act (“FTC Act”), which
prohibit fraudulent or deceptive practices,
including but not limited to, pyramid schemes
and misrepresentations regarding distributors’
earnings potential. The FTC has issued an
Advance Notice of Proposed Rulemaking
regarding earnings claims, which is the first step
in a multi-year rulemaking process. Likewise, the
FTC has exercised its Penalty Offense Authority
found in Section 5(m)1(B) of the FTC Act by
issuing Notices of Penalty Offenses as a
reminder of the law on earnings claims and as a
deterrence against violations. The application of
these laws and regulations to a given set of
business practices is inherently fact-based and,
therefore, is subject to interpretation by
applicable enforcement authorities. Although we
believe that our business practices comply with
applicable laws and regulations, there is a risk
that a governmental agency or court could
disagree with our assessment, or that these laws
and regulations could change in actuality or in
application, which could require us to restructure
our operations or result in regulatory fines,
penalties or other costs, or reputational harm, or
could otherwise adversely affect our business,
financial condition and results of operations.
Various unfair and deceptive trade practices laws
and regulations could potentially be invoked to
challenge aspects of our recruiting of
independent sales representatives. In particular,
we and the independent sales representatives
use promotional materials in recruiting that
describe the potential business opportunity of
becoming an independent sales representative
and information with respect to earnings and
lifestyle statements. These materials and
statements made by us or the independent sales
representatives may be deemed to be unfair,
deceptive, or misleading under the FTC Act or
other federal, state and provincial laws or
regulations and could result in regulatory fines,
penalties or other costs, or reputational harm.
Being out of compliance with the
aforementioned laws and regulations could
require changes to the recruiting of independent
sales representatives, which could have a
materially adverse effect on our business,
financial condition and results of operations.
There may be adverse tax, legal or
financial consequences if the classification
of our independent contractor sales
representatives is changed.
Other than e-TeleQuote Insurance, Inc.’s
(“e-TeleQuote”) team of licensed health
insurance agents, sales representatives are
independent contractors who operate their own
businesses. Although we believe that we have
properly classified these sales representatives as
independent contractors, there is a risk that the
Internal Revenue Service (“IRS”), the Department
of Labor (“DOL”), the Canada Revenue Agency, a
court or other authority will take a different view.
Furthermore, the tests governing the
determination of whether an individual is
considered to be an independent contractor or
an employee are fact-sensitive and vary from
jurisdiction to jurisdiction. Laws and regulations
ITEM 1A. RISK FACTORS
that govern the status and classification of
independent sales representatives are subject to
change or interpretation.
The classification of workers as independent
contractors continues to be the subject of
increasing federal, state and provincial
legislative, regulatory and judicial interest.
Legislative and regulatory proposals have been
introduced by federal and state authorities, and
judicial decisions have been made, that call for
or result in greater scrutiny of independent
contractor classifications. In January 2024, the
DOL, issued a final rule interpreting the
“economic realities” worker classification
standard applicable to the Fair Labor Standards
Act. The DOL’s interpretation generally aligns
with legal precedent, relying on an analysis of six
typical factors indicating worker status and
taking into account the “totality of the
circumstances”. Other federal and state
legislative and regulatory proposals regarding
worker classification have also come under
consideration. It is difficult to predict what the
outcome of worker classification activity may be.
Changes to worker classifications could have a
material adverse impact on our business,
financial condition and results of operations
because sales representatives (other than those
employed by e-TeleQuote) are independent
contractors.
If there is an adverse determination with respect
to the classification of some or all of the
independent contractors by a court or
governmental agency, we could incur significant
costs complying with such laws and regulations,
including tax withholding, social security
payments, retirement plan contributions and
recordkeeping, employee benefits, payment of
wages or modification of our business model,
any of which could have a material adverse
effect on our business, financial condition and
results of operations. In addition, there is the risk
that we may be subject to significant monetary
liabilities arising from fines or judgments as a
result of any such actual or alleged non-
compliance with federal, state, or provincial laws.
Primerica 2023 Annual Report
37
ITEM 1A. RISK FACTORS
The Company’s, the independent sales
representatives’, or the licensed health
insurance agents’ violation of, or non-
compliance with, laws and regulations and
related claims and proceedings could
expose us to material liabilities.
Extensive federal, state, provincial and territorial
laws regulate our product offerings, imposing
certain requirements that independent sales
representatives and licensed health insurance
agents must follow in dealing with clients.
Instances of non-compliance or violations on the
part of the independent sales representatives or
licensed health insurance agents could have a
material adverse effect on our business, financial
condition and results of operations.
In addition to imposing requirements on
independent sales representatives and licensed
health insurance agents when dealing with
clients, federal, state, provincial and territorial
laws and regulations generally require us to
maintain a system of supervision reasonably
designed to ensure that independent sales
representatives and licensed health insurance
agents comply with the requirements to which
they are subject. We have policies and
procedures to comply with these laws and
regulations. Further, at any given time, we may
have pending state, federal or provincial
examinations or inquiries of our investment and
savings products, insurance, mortgage, and
other businesses. However, despite these
compliance and supervisory efforts, the breadth
of our operations and the broad regulatory
requirements could result in oversight failures
and instances of non-compliance or violations
on the part of the Company, independent sales
representatives or licensed health insurance
agents.
From time to time, we are subject to private
litigation as a result of alleged misconduct by
independent sales representatives and/or
licensed health insurance agents. Non-
compliance with or violations of laws or
regulations could result in adverse findings in
either examinations or litigation and could
subject us to sanctions, monetary liabilities,
38
restrictions on or the loss of the operation of our
business, or reputational harm, any of which
could have a material adverse effect on our
business, financial condition and results of
operations.
RisksRelatedtoOurInsuranceBusiness
andReinsurance
Our life insurance business may face
significant losses or volatility if our actual
experience differs from our expectations
regarding mortality, persistency, disability
or reinsurance.
We set prices for life insurance policies based
upon expected claim payment patterns derived
from assumptions we make about the mortality
rates, or likelihood of death, of our policyholders
in any given year. The long-term profitability of
these products depends upon how our actual
mortality rates compare to our pricing
assumptions. For example, if mortality rates are
higher than those assumed in our pricing
assumptions, we could be required to make
more death benefit payments under our life
insurance policies or to make such payments
sooner than we had projected, which may
decrease the profitability of our term life
insurance products.
The prices and expected future profitability of
our life insurance products are also based, in
part, upon assumptions related to persistency.
Actual persistency that is lower than our
persistency assumptions could have an adverse
effect on profitability, especially in the early
years of a policy, primarily because we may not
collect sufficient revenue to cover our
acquisition costs. Actual persistency that is
higher than our persistency assumptions could
have an adverse effect on profitability in the
later years of a block of policies because the
anticipated claims experience is higher in these
later years. We are precluded from adjusting
premiums on our in-force business during the
initial term of the policies, and our ability to
adjust premiums on in-force business after the
initial policy term is limited to the maximum
premium rates in the policy.
Our profitability is also affected by the extent
actual disability rates underlying our waiver
benefits, including recovery rates for individuals
currently disabled, differ from actuarial
assumptions. The waiver benefit is secondary to
the death benefit coverage provided. However,
the waiver benefit is not reinsured and material
changes in assumptions compared to
expectations can have a disproportionate impact
on our financial results.
We reinsure 80-90% of our mortality risk.
Interest in reinsuring our mortality risk could
diminish if there is increased volatility in the
reinsurance market and/or a change in the
perceived value of reinsuring Primerica’s
business. As a result, in the future we may not be
able to access reinsurance on new business and
we could be forced to reinsure a smaller
percentage of our mortality risk or the same
percentage but at higher costs much greater
than we have historically paid.
Our life insurance business is highly
regulated, and statutory and regulatory
changes may materially adversely affect
our business, financial condition and
results of operations.
Life insurance statutes and regulations are
generally designed to protect the interests of
the public and policyholders. Those interests
may conflict with the interests of our
stockholders. Currently, in the United States, the
power to regulate insurance resides almost
exclusively with the states, which grant state
insurance regulators broad powers to regulate
almost all aspects of our insurance business.
Much of this state regulation follows model
statutes or regulations developed or amended
by the National Association of Insurance
Commissioners (“NAIC”), which is composed of
the insurance commissioners of each U.S.
jurisdiction. The NAIC re-examines and amends
existing model laws and regulations (including
holding company regulations), in addition to
determining whether new ones are needed.
ITEM 1A. RISK FACTORS
modernize and improve insurance regulation.
We cannot predict with certainty whether, or in
what form, reforms will be enacted and, if so,
whether the enacted reforms will materially
affect our business. Changes in federal statutes,
financial services regulation and federal taxation,
in addition to changes to state statutes and
regulations, may be more restrictive than current
requirements or may result in higher costs, and
could materially adversely affect our business,
financial condition and results of operations.
In 2018, the New York Department of Financial
Services (“NYDFS”) amended its suitability
regulation for annuities (the “NY Amended
Suitability Rule”), requiring insurers and
insurance producers to ensure that life insurance
sales and annuities are suitable and consistent
with the customer’s “best interest”. In early 2020,
the NAIC approved revisions to the Suitability in
Annuity Transactions Model Regulation (“NAIC
Annuities Best Interest Rule”) requiring insurance
producers to act in the “best interest” of
consumers when recommending an annuity.
Most states have adopted, and others are
proposing to adopt, the NAIC Annuities Best
Interest Rule. The NY Amended Suitability Rule
and the NAIC Annuities Best Interest Rule
impose a higher standard of care than previously
required, enhanced disclosure, and other
obligations with respect to life and/or annuities
recommendations, which may increase our
regulatory or litigation risk.
Federal and provincial insurance laws regulate all
aspects of our Canadian insurance business.
Changes to federal or provincial statutes and
regulations may be more restrictive than current
requirements or may result in higher costs,
which could materially adversely affect our
business, financial condition and results of
operations. If the Office of the Superintendent of
Financial Institutions (“OSFI”) determines that
our corporate actions do not comply with
applicable Canadian law, Primerica Life Canada
could face sanctions or fines, and be subject to
increased capital requirements or other
requirements.
The Federal Insurance Office is authorized to,
among other things, study methods to
The Minister of Finance (Canada) approved our
indirect acquisition of Primerica Life Canada in
Primerica 2023 Annual Report
39
ITEM 1A. RISK FACTORS
2010 with the expectation that we will provide
ongoing financial, managerial or operational
support to this subsidiary as necessary. If OSFI
determines Primerica Life Canada is not
receiving adequate support from the Parent
Company under applicable Canadian law,
Primerica Life Canada may be subject to
increased capital requirements or other
requirements deemed appropriate by OSFI.
If there are extraordinary changes to U.S. or
Canadian statutory or regulatory requirements,
we may be unable to fully comply with or
maintain all required insurance licenses and
approvals. As a result, the regulatory authorities
could preclude or temporarily suspend us from
conducting some or all of our insurance
activities or impose fines or penalties on us,
which could materially adversely affect our
business, financial condition and results of
operations. We cannot predict with certainty the
effect any proposed or future legislation or
regulatory initiatives may have on the conduct of
our business.
A decline in the regulatory capital ratios of
our insurance subsidiaries could result in
increased scrutiny by insurance regulators
and ratings agencies and have a material
adverse effect on our business, financial
condition and results of operations.
Each of our U.S. insurance subsidiaries is subject
to Risk-Based Capital (“RBC”) standards
(imposed under the laws of its respective
jurisdiction of domicile). The RBC formula for
U.S. life insurance companies generally
establishes capital requirements relating to
asset, insurance, interest rate and business risks.
Our U.S. insurance subsidiaries are required to
report RBC calculations annually to the
applicable state department of insurance and
the NAIC. Our Canadian life insurance subsidiary
is subject to the Life Insurance Capital Adequacy
Test Guideline (“LICAT”) and is required to
provide its capital ratio calculations to the
Canadian regulators. The capitalization of our
insurance subsidiaries is maintained at levels in
excess of the effective minimum requirements of
40
the NAIC in the United States and OSFI in
Canada. In any particular year, statutory capital
and surplus amounts and RBC and LICAT ratios
may increase or decrease depending on a variety
of factors, many of which are outside of our
control.
Our financial strength and credit ratings are
significantly influenced by the statutory surplus
amounts and RBC and LICAT ratios of our
insurance company subsidiaries. Ratings
agencies may change their internal models,
effectively increasing or decreasing the amount
of statutory capital our insurance subsidiaries
must hold to maintain their current ratings.
Ratings agencies also may downgrade the
ratings of securities held in our insurance
subsidiaries’ portfolios, which could result in a
reduction of our insurance subsidiaries’ statutory
capital and surplus and RBC. Our insurance
subsidiaries may need additional capital and, if
needed, we may not be able to provide it to
maintain the targeted RBC and LICAT levels to
support their business operations, either of
which may impact our financial strength and
credit ratings.
The failure of any of our insurance subsidiaries
to meet its applicable RBC and LICAT
requirements or minimum capital and surplus
requirements could subject it to further
examination or corrective action imposed by
insurance regulators, including limitations on its
ability to write additional business, supervision
by regulators or seizure or liquidation. Any
corrective action imposed could have a material
adverse effect on our business, financial
condition and results of operations. A decline in
RBC or LICAT also limits the ability of our
insurance subsidiaries to pay dividends or make
distributions and could be a factor in causing
ratings agencies to downgrade the financial
strength ratings of our insurance subsidiaries.
Such downgrades would have an adverse effect
on our ability to write new insurance policies
and, therefore, could have a material adverse
effect on our business, financial condition and
results of operations.
A significant ratings downgrade by a
ratings organization could materially
adversely affect our business, financial
condition and results of operations.
Each of our non-captive life insurance
subsidiaries has been assigned a financial
strength rating by A.M. Best. Primerica Life
currently also has an insurer financial strength
rating from each of Standard & Poor’s (“S&P”)
and Moody’s.
The financial strength ratings of our rated
insurance subsidiaries are subject to periodic
review using, among other things, the ratings
agencies’ proprietary capital adequacy models
and are subject to revision or withdrawal at any
time. Insurance financial strength ratings are
directed toward the concerns of policyholders
and are not intended for the protection of
stockholders or as a recommendation to buy,
hold or sell securities. Our financial strength
ratings will affect our competitive position
relative to other insurance companies. If the
financial strength ratings of our insurance
subsidiaries fall below certain levels, some of our
policyholders may move their business to our
competitors. In addition, the models used by
ratings agencies to determine financial strength
are different from the capital requirements set
by insurance regulators.
Ratings organizations review the financial
performance and financial conditions of
insurance companies and provide opinions
regarding financial strength, operating
performance and ability to meet obligations to
policyholders. A significant downgrade in the
financial strength ratings of any of our insurance
subsidiaries, or the announced potential for a
downgrade, could have a material adverse effect
on our business, financial condition and results
of operations.
If the rating agencies or regulators change their
approach to financial strength ratings and
statutory capital requirements, we may need to
take action to maintain current ratings and
capital adequacy ratios, which could have a
material adverse effect on our business, financial
condition and results of operations.
ITEM 1A. RISK FACTORS
The Parent Company currently has investment
grade credit ratings from S&P, Moody’s, and
A.M. Best. These ratings are indicators of a debt
issuer’s ability to meet the terms of debt
obligations and are important factors in its
ability to access liquidity in the debt markets. A
rating downgrade by a rating agency can occur
at any time if the rating agency perceives an
adverse change in our financial condition, results
of operations or ability to service debt. If such a
downgrade occurs, it could have a material
adverse effect on our financial condition and
results of operations in many ways, including
adversely limiting our access to capital in the
unsecured debt market and potentially
increasing the cost of such debt.
The failure by any of our reinsurers or
reserve financing counterparties to
perform its obligations to us could have a
material adverse effect on our business,
financial condition and results of
operations.
We rely on a limited number of reinsurers in the
United States and Canada to diversify our risk
and to manage our loss exposure to mortality
risk. Reinsurance does not relieve us of our
direct liability to our policyholders, even when
the reinsurer is liable to us. We, as the insurer,
are required to pay the full amount of death
benefits even in circumstances where we are
entitled to receive payments from the reinsurer.
Our reinsurers may be unable to pay the
amounts they owe us on a timely basis or at all.
Further, reinsurers might refuse or fail to pay
losses that we cede to them or might delay
payment. Since death benefit claims may be paid
long after a policy is issued, we bear credit risk
with respect to our reinsurers. The
creditworthiness of our reinsurers may change
before we can recover amounts to which we are
entitled. Any such failure to pay by our
reinsurers could have a material adverse effect
on our business, financial condition and results
of operations. One of our reinsurers that is
associated with a small block of runoff business
was in receivership and has filed for liquidation.
We have written down all associated reinsurance
Primerica 2023 Annual Report
41
ITEM 1A. RISK FACTORS
recoverable balances to zero in our statement of
financial position.
We also have in place coinsurance agreements
that we originally entered into at the time of our
initial public offering (the “IPO”) in 2010,
pursuant to which we ceded between 80% and
90% of the risks and rewards of our term life
insurance policies that were in force at year-end
2009. Under this arrangement, our existing
reinsurance agreements remain in place. Each
coinsurer entered into trust agreements with our
respective insurance subsidiaries and a trustee
pursuant to which the coinsurer placed assets
(primarily treasury and fixed-income securities)
in trust for such subsidiary’s benefit to secure
the coinsurer’s obligations to such subsidiary.
Each such coinsurance agreement requires the
relevant coinsurer to maintain assets in trust, the
amount of which will not be less than the
amount of the statutory reserves for the
coinsured liabilities. In Canada, the IPO coinsurer
must hold pledged assets in an amount
sufficient for us to take credit for reinsurance in
a Canadian financial institution, not affiliated
with the IPO coinsurer. Our Canadian insurance
company has an enforceable security interest
that has priority over any other security interest
for the pledged assets. Furthermore, our
insurance subsidiaries have the right to
recapture the business upon the occurrence of
an event of default under their respective
coinsurance agreement subject to any applicable
cure periods. While any such recapture would be
at no cost to us, such recapture would result in a
substantial increase in our insurance exposure
and require us to be fully responsible for the
management of the assets set aside to support
statutory reserves. The type of assets we might
obtain as a result of a recapture may not be as
liquid as our current invested asset portfolio and
could result in an unfavorable impact on our risk
profile.
There is no assurance that the relevant coinsurer
will pay the coinsurance obligations owed to us
now or in the future or that it will pay these
obligations on a timely basis. If any of the
coinsurers becomes insolvent and the trust
account to support the obligations of such
coinsurer is insufficient to pay such coinsurer’s
42
obligations to us and we fail to enforce our right
to recapture the business, it could have a
material adverse effect on our business, financial
condition and results of operations.
We have entered into transactions by which we
finance redundant statutory reserves of certain
issue years of our term life insurance business.
Under these transactions, we pay a fee to
financial counterparties for their commitment to
support redundant reserves and provide
corresponding statutory reinsurance credit,
allowing us to more efficiently manage our
capital. If the financial strength of these
counterparties was significantly impaired to the
extent that their support of our redundant
reserves could no longer be relied upon, it could
have a material adverse effect on our business,
financial condition, and results of operations.
RisksRelatedtoOurInvestmentand
SavingsProductsBusiness
Our Investment and Savings Products
segment is heavily dependent on a limited
platform of mutual fund and annuity
products offered by a relatively small
number of companies and managers. If
these products fail to remain competitive
with other investment options, our
business, financial condition and results of
operations could be materially adversely
affected.
We offer mutual funds and annuities through
our U.S. retail broker-dealer, but not exchange
traded funds, individual stocks and bonds, or
alternative investments. Our advisory program in
the U.S. offers a wider menu of investment types;
however, fewer of the independent sales
representatives are eligible to offer the program.
Our current investment products in Canada
consist of two families of mutual funds that
include a diversified offering of equity, fixed-
income and money market funds. Because of
these limitations, our business could be
materially adversely impacted if consumer
demand were to shift toward products we do
not offer. In addition, if any of our investment
and savings products fail to achieve satisfactory
investment performance, our clients may seek
higher yielding or lower cost investment options,
and we could experience higher redemption
rates.
If our relationship with one or more of our
funds, annuities or managers is significantly
altered or terminated or there is a shift in
the business mix, our business, financial
condition and results of operations could
be materially adversely affected.
We receive revenue and other marketing and
support fees from the manufacturers of the
investment and savings products we distribute
and the investment managers we make
available. We earn a significant portion of our
earnings through our relationships with a small
group of mutual fund and annuity companies. A
decision by one or more of these companies to
alter or discontinue their current arrangements
or product offerings with us, or a change in law
or regulation that compels us to alter or
discontinue such arrangements, could materially
adversely affect our business, financial condition
and results of operations.
In addition, we derive a growing portion of our
earnings through our asset-based advisory
platform. A shift in the business mix of new
investments across our products and platforms
could materially impact cash flows to our
business, financial condition and results of
operations.
In addition to sales commissions and asset-
based compensation, a portion of our earnings
from investment and savings products comes
from recordkeeping services that we provide to
mutual fund companies and from fees earned
for custodial services that we provide to clients
with retirement plan accounts in the funds of
these mutual fund companies.
A decision by one or more of our fund
companies, annuities companies, or managers to
alter or discontinue their current arrangements
with us, or a change in law or regulation that
compels us to alter or discontinue such
ITEM 1A. RISK FACTORS
arrangements, would materially adversely affect
our business, financial condition and results of
operations.
The Company’s or the securities-licensed
independent sales representatives’
violations of, or non-compliance with, laws
and regulations of the securities business
could expose us to material liabilities.
Our subsidiary broker-dealers, Primerica
Brokerage Services, Inc. (“PBSI”) and PFS
Investments, Inc. (“PFS Investments”), and the
independent sales representatives, are subject to
federal and state regulation of the securities
business. PFS Investments is additionally a
registered investment adviser and its investment
adviser representatives likewise are held to a
high standard of conduct. Our subsidiary,
Primerica Shareholder Services, Inc. (“PSS”), is a
registered transfer agent engaged in the
recordkeeping business and is subject to
regulation by the Securities and Exchange
Commission (“SEC”). Violations of, or non-
compliance with, laws or regulations applicable
to the activities of PFS Investments or PSS, or
violations by a third party with which PFS
Investments or PSS contracts, could subject us to
regulatory actions and/or litigation. Such events
could result in the imposition of cease and desist
orders, fines or censures, restitution to clients,
suspension or revocation of SEC registration,
suspension or expulsion from FINRA,
reputational damage and legal expense, any of
which could materially adversely affect our
business, financial condition and results of
operations.
Our Canadian broker-dealer subsidiary, PFSL
Investments Canada and the sales
representatives are subject to the securities laws
of the provinces and territories of Canada in
which we sell our mutual fund products and to
the rules of the Canadian Investment Regulatory
Organization (“CIRO”) (formerly known as the
Mutual Fund Dealers Association of Canada), the
self-regulatory organization governing mutual
fund dealers (except in the case of Quebec, the
Autorité des Marchés Financiers (“AMF”)). PFSL
Primerica 2023 Annual Report
43
ITEM 1A. RISK FACTORS
Investments Canada is subject to periodic review
by both the CIRO and the provincial and
territorial securities commissions to assess its
compliance with, among other things, applicable
capital requirements and sales practices and
procedures. These regulators have broad
administrative powers and may impose
sanctions that could materially adversely affect
our business, financial condition and results of
operations.
If heightened standards of conduct or
more stringent licensing requirements
(such as those adopted by the SEC) and
the DOL, state legislatures or regulators or
Canadian securities and insurance
regulators, are imposed on us or the
independent sales representatives, or
selling compensation is reduced as a result
of new legislation or regulations, it could
have a material adverse effect on our
business, financial condition and results of
operations.
The U.S. independent sales representatives are
subject to federal and state regulation as well as
state licensing requirements. PFS Investments,
which is regulated as a broker-dealer and
registered investment adviser, and U.S. sales
representatives are currently subject to general
anti-fraud limitations under the Securities
Exchange Act of 1934, as amended, the
Investment Advisers Act of 1940 (the
“Investment Advisers Act”) and SEC rules and
regulations, as well as other conduct standards
prescribed by the FINRA. These standards
generally require that broker-dealers, investment
advisers, and their sales representatives disclose
and mitigate conflicts of interest that might
affect the advice or recommendations they
provide and require them to make investment
recommendations in the best interest of
customers. In 2019, the SEC adopted rules
addressing the standards of conduct applicable
to broker-dealers and their associated persons
(collectively, “Reg BI”). Among other things, Reg
BI created a “best interest” standard of conduct
similar to the fiduciary standard applicable to
44
investment advisers. In 2020, the DOL issued PTE
2020-02, an exemption for the retention of
compensation by a fiduciary. In October 2023,
the DOL proposed a new definition to determine
fiduciary status and proposed amendments to
PTE 2020-02, among other proposals. Reg BI and
the DOL regulations impose higher standards of
care and enhanced obligations that increase
regulatory and litigation risk to our business.
In addition to federal regulators, certain states
have proposed or passed laws or proposed or
issued regulations requiring investment advisers,
broker-dealers, and/or insurance agents to meet
fiduciary standards or standards of care that
their advice be in the customer’s best interest,
and to mitigate and disclose conflicts of interest
to consumers of investment and insurance
products. The severity of the impact that such
state laws or regulations could have on our
business vary from state to state depending on
the content of the legislation or regulation and
how it would be applied by state regulators and
interpreted by the courts. Therefore, such laws
or regulations could disrupt our brokerage
business in the relevant state. We cannot
quantify the financial impact, if any, of any
changes to our business that may be necessary
in order to comply with such laws or regulations
at this time.
The organization of provincial and territorial
securities regulators (collectively referred to as
the Canadian Securities Administrators (“CSA”))
implemented rule amendments that prohibit up-
front sales commissions by fund companies for
the sale of mutual funds offered under a
prospectus in Canada (the “DSC Ban”), effective
June 1, 2022. During 2022, in response to the
DSC Ban, we began to offer through our
independent sales representatives, a unique and
exclusive range of funds under Principal
Distributor agreements (the “PD Funds”) with
two third-party mutual fund companies (the
“Principal Distributor model”).
While we received regulatory approval for the
Principal Distributor model, the CSA has
indicated that it intends to closely re-examine
the Principal Distributor provisions of National
Instrument 81-105, including potentially through
a public consultation on sales practices. Further,
the CSA may require undertakings or consider
future amendments that would require
modifications to the Principal Distributor model,
including with respect to advance and
chargeback commissions. Such undertakings or
amendments could require us to restructure our
Principal Distributor model for the sale of mutual
funds, or discontinue use, which could have a
material adverse effect on our investment
advisory business in Canada.
The Canadian Council of Insurance Regulators
mandated a cessation of deferred sales charges
on segregated fund contracts entered into after
May 31, 2023. Deferred sales charges will
continue to be allowed on subsequent deposits
of existing segregated funds contracts for a
period of time; however, insurance regulators
will be further evaluating whether to allow its
continued use. As we anticipated, we
experienced a decline in segregated funds
product sales beginning in June 2023. Without
further clarity from regulators on allowable
segregated funds compensation practices, we
are unable to evaluate and introduce new
compensation practices for the sale of our
segregated funds or similar products we could
potentially distribute on behalf of third parties.
This could have a further material adverse effect
on our investment and savings products
business in Canada.
Heightened standards of conduct or restrictions
on compensation as a result of any of the above
items or other similar proposed rules or
regulations could also increase the compliance
and regulatory burdens on the sales
representatives and could lead to increased
litigation and regulatory risks, changes to our
business model, a decrease in the number of
licensed sales representatives and a reduction in
the products we offer to our clients, any of which
could have a material adverse effect on our
business, financial condition and results of
operations.
ITEM 1A. RISK FACTORS
If our suitability policies and procedures, or
our policies and procedures for
compliance with federal, state or provincial
regulations governing standards of care,
were deemed inadequate, it could have a
material adverse effect on our business,
financial condition and results of
operations.
We review the account applications that we
receive for our investment and savings products
for suitability, for compliance with Reg BI, the
Investment Advisers Act and the DOL
regulations, and for compliance with other
federal, state or provincial regulations governing
standards of care, as applicable. We believe that
the policies and procedures we implement to
help sales representatives assist clients in
making investment choices are reasonably
designed to achieve compliance with applicable
securities laws and regulations and to satisfy
other applicable federal, state, and provincial
standards of care. Nonetheless, it is possible that
the SEC, FINRA, the DOL, the IRS, state securities
and insurance regulators, CIRO or AMF may not
agree. Further, we could be subject to regulatory
actions or private litigation, which could
materially adversely affect our business, financial
condition and results of operations.
The support tools we make available to the sales
force are designed to educate potential and
existing clients, help identify their financial
needs, generally introduce the potential benefits
of our product offerings, and identify suitable
investment products. The tools themselves or
the assumptions and methods of analyses
embedded in them could be challenged and
subject us to regulatory action by the SEC, the
DOL, FINRA or other regulators, or private
litigation, which could materially adversely affect
our business, financial condition and results of
operations.
Primerica 2023 Annual Report
45
ITEM 1A. RISK FACTORS
Non-compliance with applicable
regulations could lead to revocation of our
subsidiary’s status as a non-bank
custodian, which could have a material
adverse effect on our business.
PFS Investments is a non-bank custodian of
retirement accounts, as permitted under
Treasury Regulation 1.408-2. A non-bank
custodian is an entity that is not a bank and that
is permitted by the IRS to act as a custodian for
retirement plan account assets of our clients.
The IRS retains authority to revoke or suspend
that status if it finds that PFS Investments is
unwilling or unable to administer retirement
accounts in a manner consistent with the
requirements of the applicable regulations.
Revocation of PFS Investments’ non-bank
custodian status would affect its ability to earn
revenue for providing such services and,
consequently, could materially adversely affect
our business, financial condition and results of
operations.
RisksRelatedtoe-TeleQuote’sSenior
HealthInsuranceDistributionBusiness
We may not be able to execute an
effective senior health insurance business
strategy, which could adversely affect our
business, financial condition and results of
operations.
On July 1, 2021, we acquired 80% of
e-TeleQuote and subsidiaries, a senior health
insurance distributor of Medicare related
insurance policies and, on July 1, 2022, we
acquired the remaining 20%, which comprise our
Senior Health business segment. If e-TeleQuote
does not perform as expected, it could materially
adversely affect our business, financial condition
and results of operations.
We test goodwill for impairment at least
annually. As of December 31, 2023, we have
recognized cumulative goodwill impairment
charges in our Senior Health business segment
of $136.0 million. The failure of e-TeleQuote to
achieve anticipated revenue and earnings levels
could result in additional goodwill impairment
charges. See “Item 1A. Risk Factors – Any
acquisition of or investment in businesses that
we may undertake that does not perform as we
expect or that is difficult for us to integrate
could adversely impact our business, financial
condition and results of operations”.
e-TeleQuote, consistent with other Medicare
Advantage distributors, has experienced
elevated policy churn in recent years, which
caused the ratio of lifetime value of commissions
(“LTV”) to contract acquisition costs (“CACs”) to
reach an undesirable level. Our inability to
execute e-TeleQuote’s business strategy may
adversely affect our business, financial condition
and results of operations. In 2022 and 2023, the
Company managed e-TeleQuote in such a way
to eliminate the need for capital support from
the ultimate parent company. Upon indication of
improved performance and/or the expectation
that the business will generate acceptable
returns, we may allow the future use of capital
relating to the development and growth of
e-TeleQuote’s business, including expenditures
relating to lead acquisition, marketing, website
and technology development, security, and
hiring of additional employees.
e-TeleQuote’s success will depend on its ability
to retain key management and hire, develop and
retain highly skilled and qualified licensed health
insurance agents who attain desired productivity
levels. Failure to successfully perform any of the
activities listed above could have a material
adverse effect on e-TeleQuote’s business and
results of operations, which could adversely
affect our business.
46
e-TeleQuote is highly regulated and
subject to compliance requirements of the
United States government’s Centers for
Medicare and Medicaid Services (“CMS”)
and those of its carrier partners. Non-
compliance with, or violations of, such
requirements may harm its business, which
could have a material adverse effect on
our business, financial condition and
results of operations.
e-TeleQuote’s business and operating results are
heavily dependent on marketing and selling
Medicare-related insurance plans. The marketing
and sale of Medicare Advantage and Medicare
Part D prescription drug plans are principally
regulated by CMS and are also subject to state
laws. The marketing and sale of Medicare
Supplement plans are principally regulated by
state insurance departments. These laws and
regulations are numerous and complex, and
CMS regulations and guidance frequently
change.
CMS regulations require that many aspects of
e-TeleQuote’s online platforms, marketing
materials and processes, as well as changes
thereto, including call scripts, be filed with CMS
and reviewed and approved by carriers. In
addition, certain aspects of Medicare plan
marketing partner relationships are subject to
CMS and carrier review. Further, some carriers
provide e-TeleQuote with marketing
development revenue, consistent with CMS
regulations. Changes to applicable laws,
regulations and guidelines, their interpretation
or the manner in which they are enforced could
be incompatible with carrier relationships, the
manner in which e-TeleQuote conducts business,
e-TeleQuote’s platforms, or the sale of Medicare
plans, which could harm its business and
materially adversely affect our business.
In October 2023, CMS proposed a rule that
would limit certain forms of payments, such as
fees for administrative services, that e-TeleQuote
can receive from carriers. In addition, payments
that e-TeleQuote receives would decline if:
(i) other laws or regulations limit or remove the
ITEM 1A. RISK FACTORS
ability for carriers to provide funds to
e-TeleQuote; (ii) federal or state governments
determine that e-TeleQuote’s compensation or
administrative payment arrangements with
carrier providers do not meet regulatory
requirements, or (iii) actions of federal or state
governments result in a reduction in
commissions paid to e-TeleQuote or impact the
timing of revenue recognition in connection with
the sale of Medicare related health insurance.
Each of these could have a material adverse
effect on e-TeleQuote’s business and operations.
CMS audits Medicare carriers and holds carriers
responsible for actions of their subcontractors,
downstream entities, and broker partners such
as e-TeleQuote and its licensed health insurance
agents. Federal or state governments may allege
or determine that e-TeleQuote’s Medicare
product sales, marketing or operations are not in
compliance with Medicare or other requirements
or give rise to excess complaints. As a result,
carriers may terminate their relationships with
e-TeleQuote or take other corrective action,
which could harm its business and materially
adversely affect our business.
e-TeleQuote generates leads that are
internally sourced from marketing
initiatives and receives referrals from
Primerica independent sales
representatives. It also receives leads
externally acquired from third-party
vendors. e-TeleQuote’s business may be
harmed if it cannot continue to acquire or
generate leads on commercially viable
terms, if it is unable to convert leads to
sales at acceptable rates, if Primerica
independent sales representatives do not
introduce consumers to e-TeleQuote, or if
policyholder retention is lower than
assumed, any of which could adversely
impact our business.
e-TeleQuote’s business requires access to a large
quantity of quality sales leads to keep its
licensed health insurance agents productive. The
Primerica 2023 Annual Report
47
ITEM 1A. RISK FACTORS
business is also dependent upon a number of
lead suppliers, including Internet search engines,
from whom it obtains leads to support its sales
of insurance policies. e-TeleQuote’s failure to
generate quality sales leads internally or the loss
of one or more lead suppliers could significantly
limit its ability to access its target market.
e-TeleQuote may not be able to compete
successfully for high quality leads against its
current or future competitors, some of whom
may have greater technical, marketing and other
resources. If it fails to compete successfully with
its competitors to source sales leads from lead
suppliers, it may experience increased marketing
costs and loss of market share.
Converting quality sales leads to policy sales is
key to e-TeleQuote’s success. Many factors
impact e-TeleQuote’s conversion rate, including
the quality of leads, agent tenure, and its
proprietary workflow technology. Any adverse
impact on conversion rates could harm
e-TeleQuote’s business, operating results,
financial condition and prospects, which could
adversely impact our business.
Primerica certifies certain of its independent
sales representatives to receive fees for Senior
Health services associated with introducing
seniors to e-TeleQuote. If Primerica’s certified
independent sales representatives do not
educate consumers about e- TeleQuote and
make introductions, e-TeleQuote’s operating
results and financial condition could be
impacted, which could adversely impact our
business.
e-TeleQuote records revenue at the time a
policy is sold based on the expected lifetime
value of commissions to be collected for that
policy. The most important assumption used in
determining the lifetime value of commissions is
expected policyholder retention. If actual
renewal activity for any given period is lower
than the renewal assumptions included in the
estimated lifetime value of commissions on
issued policies, it could have a material adverse
effect on e-TeleQuote’s business and could
adversely impact our business.
48
If e-TeleQuote’s ability to enroll individuals
during the Medicare annual election
period (“AEP”) is impeded, its business may
be harmed, which could adversely impact
our business, financial condition and
results of operations.
e-TeleQuote handles an increased volume of
health insurance sales transactions in a short
period of time during the Medicare AEP, which
runs from mid-October through early December.
As a result, e-TeleQuote must ensure that an
adequate number of health insurance agents are
timely licensed, trained and certified and have
the appropriate authority to sell health insurance
in various states and for a number of different
health insurance carriers during this period. If
e-TeleQuote’s ability to market and sell
Medicare-related health insurance is constrained
during a Medicare AEP for any reason, such as
technology failures, reduced allocation of
resources, any inability to timely employ, license,
train, certify and retain agents to sell health
insurance, interruptions in the operation of its
website or systems, or disruptions caused by
other external factors, such as the COVID-19
pandemic, e-TeleQuote could sell fewer policies,
which could adversely impact our business and
results of operations.
e-TeleQuote’s business is dependent on
key carrier partners. The loss of a key
carrier partner, or the modification of
commission rates or underwriting practices
with a key carrier partner, could harm its
business, which could adversely impact our
business, financial condition and results of
operations.
e-TeleQuote derives a substantial portion of its
revenue from a few key carrier partners. The
agreements with key carrier partners to sell
Medicare plans are typically terminable by
carrier partners without cause upon short term
advance notice. Should e-TeleQuote become
dependent on fewer key carrier partner
relationships (whether as a result of the
termination of key carrier partner relationships,
key carrier consolidation or otherwise), it may
become more vulnerable to adverse changes in
its relationships with key carrier partners,
particularly in states where it distributes
insurance from a relatively smaller number of
key carrier partners or where a small number of
key carrier partners dominate the market. The
loss of business or the failure to retain a
significant amount of business with any of our
key carrier partners could adversely impact our
business, financial condition and results of
operations.
Commission rates from carriers are either set by
each carrier or negotiated between e-TeleQuote
and each carrier, and Medicare Advantage
commission rates are subject to CMS regulation.
Commission rates paid to e-TeleQuote are, for
any given plan for a given customer, based on a
number of factors, including: (i) the carriers
offering those plans; (ii) the state of residence of
the customer; (iii) the laws and regulations in the
jurisdictions where the customer is
located; (iv) the customer’s previous Medicare
enrollment history (if any); and (v) the services
provided by e-TeleQuote. Carriers have the right
to alter these commission rates and their
contractual relationships with e-TeleQuote on
relatively short notice, including in certain
instances by unilateral amendment of contracts
relating to commission rates or otherwise. In
October 2023, CMS proposed a rule that would
constrain certain contract terms between carriers
and their distribution partners related to fees for
certain services provided by the distribution
partners. If the rule is finalized and made
effective as proposed, it could adversely affect
the compensation e-TeleQuote may receive
from key carrier partners.
RisksRelatedtoOurMortgage
DistributionBusiness
Licensing requirements will impact the size
of the mortgage loan sales force, which
could adversely affect our mortgage
brokerage business.
To offer mortgage loan products, independent
sales representatives must be individually
ITEM 1A. RISK FACTORS
licensed as mortgage loan originators by the
states in which they do business and, in some
states, they must also be individually licensed as
mortgage brokers. These licensing requirements
include enrollment in the Nationwide Multistate
Licensing System, application to state regulators
for individual licenses, a minimum of 20 hours of
pre-licensing education, an annual minimum of
eight hours of CE, and the successful completion
of both national and state tests or a national test
with uniform state content. Compliance with
these licensing regimes (including background
and credit checks) have proven to be a barrier for
many sales representatives. In addition, the tests
have historically been challenging for the sales
representatives to pass. Primerica Mortgage, LLC
(“Primerica Mortgage”) must also be licensed at
the company level as a mortgage broker (or
equivalent) and, in almost all states,
representatives’ offices must be licensed as
branch offices. To offer mortgage loans in a state,
independent sales representatives, offices, and
Primerica Mortgage must be licensed as required
by state law. These licenses must be renewed on
an annual basis. Failure of independent sales
representatives to obtain the required licenses
and comply with ongoing licensing requirements
would adversely affect the size of the mortgage
loan sales force, which could adversely affect our
mortgage distribution business.
Our mortgage brokerage business is highly
regulated and subject to various federal,
state and provincial laws and regulations in
the U.S. and Canada. Changes in, non-
compliance with, or violations of, such laws
and regulations could affect the cost or
our ability to distribute our products and
could adversely affect our business,
financial condition and results of
operations.
Our U.S. mortgage brokerage business is subject
to a wide array of laws at the federal, state, and
local levels. It is regulated by federal, state and
local regulators, including the Consumer
Financial Protection Bureau, state mortgage and
licensing regulators, state attorneys general,
Primerica 2023 Annual Report
49
ITEM 1A. RISK FACTORS
state and local consumer protection offices, the
FTC, the Department of Housing and Urban
Development, and the Department of Justice,
which have the authority to examine, supervise,
investigate, and enforce applicable laws,
regulations and policies. Federal law and
regulations impose prohibitions and restrictions
on the manner and amount of compensation
paid in connection with a mortgage loan
transaction and establish a federal ability to
repay standard for all mortgage loans. Other
laws could have the effect of limiting the
availability of certain loan products in the market
and adversely impact the range of products
offered and the volume of loan business.
Additionally, we must comply with various state
and local laws and policies concerning the
lender, compensation, fair lending, supervision,
the provision of consumer disclosures, net
branching, predatory lending and high cost
loans and recordkeeping. Differing
interpretations of, changes in, or violations of,
any of these laws or regulations could subject us
to damages, fines, or sanctions and could affect
the cost or our ability to distribute our products,
which could materially adversely affect our
business, financial condition, and results of
operations. Remediation for noncompliance with
federal, state or local laws could be costly and
significant fines may be incurred. Failure to
comply with applicable laws could result in
potential litigation liability. Further, the lender
must comply with applicable federal, state, and
local laws and regulations, and any
noncompliance by such lender may adversely
impact our U.S. mortgage distribution business.
In Canada, independent sales representatives
offer mortgage loans on a referral basis only.
Various provincial mortgage brokerage laws
strictly prescribe the requirements applicable to
a mortgage referral program in order for
individuals who make the referrals to be exempt
from the requirement to be licensed as
mortgage brokers. Differing interpretations of,
changes in, or violations of, any of the applicable
exemptions under mortgage brokerage laws
could subject us to damages, fines or sanctions
and could have a material adverse effect on our
ability to offer mortgage loan referrals in
50
Canada. In addition, independent sales
representatives selling mutual funds must
comply with the disclosure requirements of the
MFDA and applicable securities laws governing
mortgage referral arrangements. Failure to
comply with such disclosure requirements could
result in regulatory sanctions, which could have
an adverse effect on our ability to offer
mortgage loan referrals in Canada.
In the United States, we distribute
mortgage loans based on contractual
agreements with a very limited number of
mortgage lenders. A significant change to
or disruption in the mortgage lenders’
mortgage businesses or an inability of the
mortgage lenders to satisfy their
contractual obligations to us could
adversely affect our business, financial
condition and results of operations.
Through a contractual agreement with Rocket
Mortgage, LLC, Primerica Mortgage offers
mortgage loans through our independent sales
representatives who are licensed as mortgage
loan originators. Beginning in late 2022, Primerica
Mortgage also offers, through its mortgage loan
originators, second mortgages and home equity
lines of credit based on a contractual agreement
with Spring EQ LLC. A significant change to or
disruption in the lenders’ businesses or their
inability to satisfy their contractual obligations to
Primerica Mortgage could have an adverse
impact on our business, financial condition and
results of operations.
RisksRelatedtoEconomicDowncycles,
PublicHealthCrisesorCatastrophes,
andDisasters
The effects of economic downcycles, issues
affecting the national and/or global economy
or global geopolitical event(s) could materially
adversely affect our business, financial
condition and results of operations.
Our business, financial condition and results of
operations may be materially adversely affected
by economic downturns in the United States and
Canada, as well as issues in the national and/or
global economy such as elevated inflation that
may have repercussions on our local markets.
Economic downturns, which are often
characterized by conditions such as elevated
inflation, declines in capital markets, higher
unemployment, lower household income, lower
valuation of retirement savings accounts, lower
corporate earnings, lower business investment
and/or lower consumer spending, can impact
the disposable income of middle-income
consumers, which can influence their investment
and spending decisions. With respect to our
term life insurance business, we may experience
an elevated incidence of lapses or surrenders of
term life insurance policies, and some of our
policyholders may stop paying insurance
premiums. Consumer spending and borrowing
levels affect how consumers evaluate their
savings and debt management plans. In 2023,
interest rates, equity market returns and our
customers’ perception of the strength of the
capital markets continued to impact consumer
demand for the savings and investment
products we distribute. More specifically,
elevated interest rates relative to the
performance of the equity markets and the
perceived attractiveness of investing in equity
markets versus other investments, such as U.S.
Treasury bills and money market funds, could
adversely impact consumer demand for the
mutual funds, annuities, and managed accounts
we distribute. Continued elevated inflation has
caused and may continue to cause higher labor
costs and increased vendor and supplier costs.
Economic conditions, including continued
elevated inflation has impacted and may
continue to impact prospective recruits’
perceptions of the business opportunity that
becoming an independent sales representative
offers, which can drive or dampen recruiting.
Similarly, these economic conditions can also
affect e-TeleQuote’s ability to recruit and retain
licensed health insurance agents.
Our investment and savings products business is
sensitive to the performance of the equity
markets. A protracted long-term downturn in
equity market performance brought about by an
ITEM 1A. RISK FACTORS
economic downturn and/or global geopolitical
event(s) could adversely affect new sales and
cause clients to liquidate mutual funds and other
investments sold by independent sales
representatives. This could cause a decrease in
the asset value of client accounts, reduce our
trailing commission revenues and result in a
decline in the fair value of our invested asset
portfolio. Further, volatility or downturns in
equity markets could dampen purchases of the
investment products that we distribute and
could have a material adverse effect on our
business, including our ability to recruit and
retain independent sales representatives.
Major public health pandemics, epidemics
or outbreaks (such as the COVID-19
pandemic) or other catastrophic events,
have impacted and could again materially
adversely impact our business, financial
condition and results of operations.
Our operations are exposed to the risk of major
public health pandemics, epidemics or outbreaks
(a “major public health crisis”), such as the
COVID-19 pandemic, or other catastrophic
events (“catastrophic events”), which, among
other things, has caused and could again cause a
large number of premature deaths of our
insureds. Although we have ceded a significant
majority of our mortality risk to reinsurers, a
major public health crisis or catastrophic event
could cause: (i) substantial volatility in our
financial results for a period of time; (ii) material
harm to the financial condition of our reinsurers;
(iii) increases in the probability of default on
reinsurance recoveries; (iv) decreases in the
availability of reinsurance on new business; or
(v) increases in reinsurance costs on new
business and/or rates during the post-level term
period. In addition, most of the jurisdictions in
which our insurance subsidiaries are licensed to
transact business require life insurers to
participate in guaranty associations, which raise
funds to pay contractual benefits owed pursuant
to insurance policies issued by impaired,
insolvent or failed issuers. A major public health
crisis or catastrophic event could require
extraordinary assessments on our insurance
Primerica 2023 Annual Report
51
ITEM 1A. RISK FACTORS
companies, which could have a material adverse
effect on our business, financial condition and
results of operations.
A major public health crisis or catastrophic event
has impacted and could again negatively impact
our ability to attract new recruits, train and
license the independent sales force, and
incentivize the independent sales force to sell
our products. If a significant number of
independent sales representatives were to be
impacted by a major public health crisis or
catastrophic event, it could have a material
adverse effect on recruiting, licensing, and our
ability to write new business. Similarly, a major
public health crisis or catastrophic event could
again impair our ability to hire, license, and train
health insurance agents in our senior health
business. A major public health crisis or
catastrophic event could again cause significant
volatility in global financial markets and disrupt
the economy and the demand for the term life
insurance, investment and savings, Medicare
related insurance, and other financial products
that we sell. Our investment portfolio and the
valuations of invested assets we hold could also
be materially adversely affected.
In the event of a disaster, our business
continuity plan may not be sufficient, which
could have a material adverse effect on
our business, financial condition and
results of operations.
Our infrastructure supports a combination of
local and remote recovery solutions for business
resumption in the event of a disaster, including a
security incident. Our Canadian and U.S.
operations (except for e-TeleQuote) utilize a
data center located in our main campus in
Duluth, Georgia. In the event of either a main
campus destruction or the inability to access our
data center or main campus in Duluth, Georgia,
our business recovery plan provides for our
employees to perform their work functions via a
dedicated business backup/recovery site located
about 20 miles from our main campus or by
remote access from an employee’s home. In
addition to this site, the Company uses a
52
business resumption vendor that will provide the
hardware required for recovery within a
reasonable timeframe in the event of a disaster.
However, in the event of main campus
destruction, our business recovery plan may be
inadequate, and our employees and the
independent sales representatives may be
unable to carry out their work immediately,
which could have a material adverse effect on
our business, financial condition and results of
operations.
e-TeleQuote, with its main campus in Clearwater,
Florida, has a separate business recovery and/or
disaster recovery plan, which, in the event of
e-TeleQuote’s main campus destruction, could
be inadequate and could have a material
adverse effect on e-TeleQuote’s business,
financial condition and results of operations.
RisksRelatedtoInformation
TechnologyandCybersecurity
If one of our, or a third-party partner’s,
significant information technology systems
fails, if its security is compromised, or if the
Internet becomes disabled or unavailable,
our business, financial condition and
results of operations may be materially
adversely affected.
Our business is highly dependent upon the
effective operation of our information
technology systems and third-party technology
systems, networks and clouds to record, process,
transmit and store information, including
sensitive customer and proprietary information.
We rely on these systems throughout our
business for a variety of functions including to
conduct many of our business activities and
transactions with customers, independent sales
representatives, vendors and other third parties,
to prepare our financial statements and to
communicate with our Board of Directors.
Further, our information technology systems and
applications run a variety of third-party and
proprietary software intended to support the
sales force. Our business also relies on the use
by employees, independent sales
representatives and other third parties of
electronic mobile devices, such as laptops,
tablets and smartphones, which are particularly
vulnerable to loss and theft.
Maintaining the integrity of these systems and
networks is critical to the success of our business
operations, including the retention of
independent sales representatives and
customers, and to the protection of our
proprietary information and our customers’
confidential and personal information. We could
experience a failure of one or more of these
systems or could fail to complete all necessary
data reconciliation or other conversion controls
when implementing new software systems. In
addition, despite the implementation of security
and back-up measures, our information
technology systems may be vulnerable to
physical or electronic intrusions, viruses or other
attacks, programming errors and similar
disruptions.
We are subject to international, federal, state,
and provincial regulations, and in some cases
contractual obligations, that require us to
establish and maintain policies and procedures
designed to protect sensitive customer,
employee, independent sales representative and
third-party information. We have implemented
and maintain security measures, including
industry-standard commercial technology,
designed to protect against breaches of security
and other interference with our systems and
networks resulting from attacks by third parties,
including hackers, and from employee or
independent sales representative error or
malfeasance. We continually assess our ability to
monitor, respond to, and recover from such
threats. We also require third-party vendors,
who in the provision of services to us are
provided with or process information pertaining
to our business or our customers, to meet
certain information security standards. Despite
the measures we have taken and may in the
future take to address and mitigate
cybersecurity and technology risks, we cannot
assure that our systems and networks will not be
subject to breaches or interference. Any such
breaches or interference by third parties or by
independent sales representatives or employees
ITEM 1A. RISK FACTORS
that may occur in the future, including the failure
of any one of these systems for any reason,
could cause significant interruptions to our
operations, which could have a material adverse
effect on our business, financial condition and
results of operations.
Anyone who is able to circumvent our security
measures and penetrate our information
technology systems could access, view,
misappropriate, alter, or delete information in
the systems, including personally-identifiable
client information, health information, and
proprietary business information. In addition, an
increasing number of regulators require that
regulators and clients be notified if a security
breach results in the disclosure of personally-
identifiable client information or health
information, which could exacerbate the harm to
our business, financial condition or results of
operations. We cannot be certain that advances
in criminal capabilities, discovery of new
vulnerabilities, attempts to exploit vulnerabilities
in our systems, data thefts, physical system,
network or cloud break-ins or inappropriate
access, or other developments will not
compromise or breach the technology or other
security measures protecting the networks and
systems used in connection with our business.
Operating system failures, ineffective system
implementation, loss of the Internet or the
compromise of security with respect to internal,
external or third-party operating systems or
electronic devices could subject us to significant
civil and criminal liability, harm our reputation,
interrupt our business operations, deter people
from purchasing our products, require us to
incur significant technical, legal and other
expenses, and adversely affect our internal
control over financial reporting, business,
financial condition, or results of operations.
Any failure to protect the confidentiality of
client information could adversely affect
our reputation and have a material
adverse effect on our business, financial
condition and results of operations.
Various government bodies have established
rules protecting the privacy and security of
Primerica 2023 Annual Report
53
covered financial services institutions to
implement a cybersecurity program designed to
protect information systems and data. The
NYDFS also recently finalized material updated
provisions to NYDFS Cybersecurity
Requirements that could affect the compliance
requirements of the Company and the
independent sales representatives. The NAIC has
adopted the Insurance Data Security Model Law
(“Model Law”), which among other things,
requires insurers and insurance producers to
develop and maintain a written information
security program, conduct risk assessments, and
assess the data security practices of third-party
service providers. The Model Law, which has
some similarities as well as differences from the
NYDFS Cybersecurity Requirements, has been
adopted by a significant number of states. In
addition, various regulators and legislators are
proposing, have proposed, and have passed
more stringent privacy requirements, including
the California Consumer Privacy Act of 2018, its
updates in the California Privacy Rights Act of
2023, and related regulations (“CCPA”). The
CCPA is designed to give consumers more
control over their personal data and imposes
strict liability for security incidents under certain
circumstances.
Such laws or regulations could require us to
implement new technologies or revise and
maintain policies and procedures designed to
protect sensitive customer, employee,
representative and third-party information.
Being subject to, or out of compliance with, the
aforementioned laws and regulations could
result in material costs, fines, penalties or
litigation, which could materially adversely affect
our business, financial condition and results of
operations.
ITEM 1A. RISK FACTORS
personal information, which vary significantly
from jurisdiction to jurisdiction. Many
independent sales representatives, employees,
and third-party service providers have access to,
and routinely process, personal information of
clients on paper and on personal and Company-
owned hardware, the cloud and mobile devices
through a variety of media, including the
Internet and software applications. We rely on
internal processes and controls to protect the
confidentiality of client information that is
accessible to, or in the possession of, our
Company, our employees and the independent
sales representatives. If: (i) an independent sales
representative, employee, or third-party service
provider intentionally or unintentionally
discloses or misappropriates confidential client
information; (ii) our data is the subject of a
cybersecurity attack; (iii) we fail to maintain
adequate internal controls; or (iv) independent
sales representatives, employees or third-party
service providers fail to comply with our policies
and procedures, then misappropriation or
intentional or unintentional inappropriate
disclosure or misuse of client information could
occur. Such internal control inadequacies or
non-compliance could materially damage our
reputation or lead to civil or criminal penalties,
which could have a material adverse effect on
our business, financial condition and results of
operations.
The current legislative and regulatory
climate with regard to privacy and
cybersecurity could adversely affect our
business, financial condition, and results of
operations.
Various international, federal and state
legislative and regulatory bodies are considering
or have considered, proposed, or adopted new
standards and rules regarding protection of
personally-identifiable information. All 50 U.S.
states and Canada have breach notification
requirements. NYDFS’s Cybersecurity
Requirements for Financial Services Companies
(“NYDFS Cybersecurity Requirements”) require
54
e-TeleQuote’s security measures, which
are designed to protect against breaches
of security and other interference with its
systems and networks, operate
independently from Primerica’s systems. If
e-TeleQuote is subject to cyber-attacks or
security breaches or is otherwise unable to
safeguard the security and privacy of
confidential data, including personal health
information, e-TeleQuote’s business may
be harmed, which could have a material
adverse effect on our business, financial
condition and results of operations.
e-TeleQuote’s services involve the collection,
processing, use, transmission, and storage of
confidential and personal information of
consumers and current and former employees,
including protected health information subject
to the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) and other
individually identifiable health information.
Accordingly, e-TeleQuote is subject to
international, federal and state regulations, and
in some cases contractual obligations, that
require us to establish and maintain policies and
procedures designed to protect HIPAA and
other personal and sensitive information.
e-TeleQuote has implemented and maintains
certain security measures intended to protect
against breaches of security and other
interference with its systems and networks
resulting from attacks by third parties, including
hackers, and from employee or representative
error or malfeasance. We have made and expect
to continue making future expenditures relating
to privacy and security to ensure that
e-TeleQuote’s information security measures
continue to align with industry information
security standards.
Despite the measures e-TeleQuote has taken
and may in the future take to address and
mitigate cybersecurity and technology risks, we
cannot be certain that its systems and networks
will not be subject to breaches or interference.
Any such breaches or interference by third
parties or by licensed health insurance agents or
ITEM 1A. RISK FACTORS
employees that may occur in the future,
including the failure of any one of these systems
for any reason, could cause significant
interruptions to its operations, damage its or our
reputation, cause the termination of
relationships with government-run health
insurance exchanges, carriers, customers, and
marketing partners, reduce demand for services
and subject e-TeleQuote to significant liability
and expense as well as regulatory action and
lawsuits, any of which could have a material
adverse effect on our business, financial
condition and results of operations.
FinancialRisksAffectingOurBusiness
Credit deterioration in, and the effects of
interest rate fluctuations on, our invested
asset portfolio and other assets that are
subject to changes in credit quality and
interest rates could materially adversely
affect our business, financial condition and
results of operations.
A large percentage of our invested asset
portfolio is invested in fixed-income securities.
As a result, credit deterioration and interest rate
fluctuations could materially affect the value of
and earnings generated by our invested asset
portfolio. During periods of declining market
interest rates, we must invest the cash we
receive as interest, return of principal on our
investments and cash from operations in lower-
yielding, high-grade instruments or in lower-
credit instruments to maintain comparable
returns. Issuers of fixed-income securities could
also decide to prepay their obligations to
borrow at lower market rates, which would
increase our reinvestment risk. If interest rates
generally increase, the fair value of our fixed rate
income portfolio decreases. Additionally, if the
fair value of any security in our invested asset
portfolio decreases, we may realize losses if we
deem the value of the security to be impaired
due to a credit loss. We also have an asset on
deposit with a coinsurer backing a 10%
coinsurance agreement entered into at the time
of our IPO. The fair value of this asset is
influenced by fluctuation in credit spreads and
Primerica 2023 Annual Report
55
ITEM 1A. RISK FACTORS
interest rates, and changes in fair value are
recognized in income. To the extent that any
fluctuations in fair value or interest rates are
significant or we recognize impairments that are
material, it could have a material adverse effect
on our business, financial condition and results
of operations.
Valuation of our investments and the
determination of expected credit losses
when the fair value of our available-for-
sale invested assets is below amortized
cost are both based on estimates that may
prove to be incorrect, which could
adversely affect our financial condition.
Our portfolio of invested assets primarily
consists of fixed-maturity securities that are
classified as available-for-sale. When the fair
value of any of our available-for-sale invested
assets declines below amortized cost, an
impairment exists and we recognize a loss in
either our statement of income or in other
comprehensive income based on our
assessment of expected credit losses. The
determination of the fair value of certain
invested assets, particularly those that do not
trade on a regular basis, requires an assessment
of available data and the use of assumptions and
estimates. Once it is determined that the fair
value of an available-for-sale security is below its
carrying value, we first determine if we intend to
sell or will more-likely-than-not be required to
sell the security before the expected recovery of
its amortized cost. If we intend to sell or will
more-likely-than-not be required to sell the
security, then we recognize the impairment as a
credit loss in our consolidated statements of
income by writing down the security’s amortized
cost to its fair value. If we do not intend to sell or
it is not more-likely-than-not that we will be
required to sell the security before the expected
recovery of its amortized cost, we recognize the
portion of the impairment that is due to a credit
loss, if any, in our consolidated statement of
income through an allowance. The portion of the
impairment that is due to factors other than a
credit loss is recognized in other comprehensive
income in the consolidated statement of
56
comprehensive income as an unrealized loss.
The determination of whether an impairment is
due to credit factors is subjective and involves a
variety of assumptions and estimates.
There are various risks and uncertainties
associated with determining whether an
impairment is due to credit factors when the fair
value of available-for-sale securities declines
below amortized cost. To the extent that we are
incorrect in our determination of the fair value of
our investment securities or our determination
of whether an impairment is due to credit
factors for available-for-sale securities, we may
realize losses that never actually materialize and
are subsequently reversed, or may fail to
recognize losses within the appropriate
reporting period.
Changes in accounting standards can be
difficult to predict and could adversely
impact how we record and report our
financial condition and results of
operations.
Our accounting policies and methods are
fundamental to how we record and report our
financial condition and results of operations. U.S.
GAAP is a continuously evolving set of financial
accounting and reporting standards that
governs the preparation of our financial
statements. Changes to U.S. GAAP can be
difficult to implement and can materially impact
how we record and report our financial
condition and results of operations. A recent
change in U.S. GAAP that was effective on
January 1, 2023 and impacted how we record
and report our financial condition and results of
operations is Accounting Standards Update
No. 2018-12, Financial Services – Insurance
(Topic 944) – Targeted Improvements to the
Accounting for Long-Duration Contracts (“ASU
2018-12”). The amendments in this update
changed the accounting guidance we follow for
long-duration insurance contracts. ASU 2018-12
requires us to update assumptions used in
measuring future policy benefits, including
mortality, persistency, and disability rates, at
least annually instead of locking those
assumptions at contract inception. In addition,
the new standard requires differences in
assumptions and actual performance be
reflected in reserves as the experience occurs.
ASU 2018-12 also includes changes to how we
amortize deferred policy acquisition costs and
determine and update the discount rate
assumptions used in measuring future policy
benefits reserves while increasing the level of
financial statement disclosures required. The
amendments in ASU 2018-12 were effective for
the Company beginning in 2023 as of the
earliest period presented in the consolidated
financial statements. The adoption of ASU 2018-
12 has had a pervasive impact on our
consolidated financial statements and related
disclosures and required changes to certain of
our processes, systems, and controls. Future
financial reporting standard changes by the
Financial Accounting Standards Board (“FASB”)
and the SEC could adversely impact our ability to
maintain effective control over financial
reporting given the changes that are needed to
adopt such standards.
Additionally, the Company’s insurance company
subsidiaries prepare statutory financial
statements in accordance with accounting
principles designated by regulators in the
jurisdictions in which they are domiciled. The
financial statements of our U.S. insurance
subsidiaries are prepared in accordance with
statutory accounting principles (“SAP”)
prescribed or permitted by state insurance
departments and the NAIC. SAP, including
actuarial methodologies for estimating reserves,
are subject to continuous evaluation by the
NAIC and state insurance departments. Similarly,
our Canadian life insurance subsidiary is
required to prepare statutory financial
statements in accordance with IFRS, as
prescribed by the OSFI in Canada. The
International Accounting Standard Board’s new
accounting standard for insurance contracts
(“IFRS 17”) became effective on January 1, 2023.
IFRS 17 significantly overhauls the measurement
model for insurance contracts at our Canadian
life insurance subsidiary for statutory reporting
purposes. The statutory financial statements of
our insurance company subsidiaries are used to
ITEM 1A. RISK FACTORS
determine dividend capacity and risk-based
capital and are monitored closely by regulators.
The complexities and novelty of IFRS 17 could
adversely impact our ability to comply with the
financial statement requirements stipulated by
OSFI in Canada.
The inability of our subsidiaries to pay
dividends or make distributions or other
payments to us in sufficient amounts
would impede our ability to meet our
obligations and return capital to our
stockholders.
Operations of the Company are conducted by its
subsidiaries. As such, Primerica, Inc. is a holding
company that has no significant operations. Our
primary asset is the capital stock of our
subsidiaries and our primary liability is our senior
unsecured notes (the “Senior Notes”). We rely
primarily on dividends and other payments from
our subsidiaries to meet our operating costs,
other corporate expenses, and Senior Note
obligations, as well as to return capital to our
stockholders. The ability of our subsidiaries to
pay dividends to us depends on their earnings,
covenants contained in existing and future
financing or other agreements and on regulatory
restrictions. The ability of our insurance
subsidiaries to pay dividends will further depend
on their statutory income and surplus. If the cash
we receive from our subsidiaries pursuant to
dividend payments and tax sharing
arrangements is insufficient for us to fund our
obligations or if a subsidiary is unable to pay
dividends to us, we may be required to raise
cash through the incurrence of debt, the
issuance of equity or the sale of assets. However,
given the risk of volatility in the capital markets,
there is no assurance that we would be able to
raise cash by these means.
The jurisdictions in which our insurance
subsidiaries are domiciled impose certain
restrictions on their ability to pay dividends to
us. In the United States, these restrictions are
based, in part, on the prior year’s statutory
income and surplus. In general, dividends up to
specified levels are considered ordinary and may
Primerica 2023 Annual Report
57
ITEM 1A. RISK FACTORS
be paid without prior approval. Dividends in
larger amounts are subject to approval by the
insurance commissioner of the state of domicile.
In Canada, dividends can be paid, subject to the
paying insurance company continuing to meet
the regulatory requirements for capital adequacy
and liquidity and upon 15 days’ minimum notice
to OSFI. More stringent restrictions could be
adopted from time to time by jurisdictions in
which our insurance subsidiaries are domiciled,
and such restrictions could have the effect,
under certain circumstances, of significantly
reducing dividends or other amounts payable to
us by our subsidiaries without prior approval by
regulatory authorities. In addition, in the future,
we may become subject to debt covenants or
other agreements that limit our ability to return
capital to our stockholders. The ability of our
insurance subsidiaries to pay dividends to us is
also limited by our need to maintain the
financial strength ratings of our subsidiaries
assigned by the ratings agencies.
If any of our subsidiaries were to become
insolvent, liquidate, or otherwise reorganize, we,
as sole stockholder, will have no right to proceed
against the assets of that subsidiary.
Furthermore, with respect to our insurance
subsidiaries, we, as sole stockholder, will have no
right to cause the liquidation, bankruptcy, or
winding-up of the subsidiary under the
applicable liquidation, bankruptcy or winding-up
laws, although, in Canada, we could apply for
permission to cause liquidation. The applicable
insurance laws of the jurisdictions in which each
of our insurance subsidiaries is domiciled would
govern any proceedings relating to that
subsidiary. The insurance authority of that
jurisdiction would act as a liquidator or
rehabilitator for the subsidiary. Both creditors of
the subsidiary and policyholders (if an insurance
subsidiary) would be entitled to payment in full
from the subsidiary’s assets before we, as the
sole stockholder, would be entitled to receive
any distribution from the subsidiary.
If the ability of our insurance or non-insurance
subsidiaries to pay dividends or make other
distributions or payments to us is materially
restricted by regulatory requirements,
bankruptcy, or insolvency, or our need to
58
maintain our financial strength ratings, or is
limited due to operating results or other factors,
it could materially adversely affect our ability to
fund our obligations and return capital to our
stockholders.
RisksRelatedtoLegislativeand
RegulatoryChanges
We are subject to various federal, state
and provincial laws and regulations in the
United States and Canada, changes in
which may require us to alter our business
practices and could materially adversely
affect our business, financial condition and
results of operations.
Our business is subject to many regulations that
relate to, among other things, consumer
protection, fair credit reporting, financial privacy,
consumer fraud, anti-money laundering, worker
classification standards, corporate taxation,
artificial intelligence or algorithmic underwriting,
and transactions with certain countries. These
laws and regulations often are subject to the
political climate.
Changes in any of these laws or regulations may
require additional compliance procedures, which
could have a material adverse effect on our
business, financial condition, and results of
operations.
The current legislative and regulatory
climate with regard to financial services
may adversely affect our business, financial
condition, and results of operations.
The volume of legislative and regulatory activity
relating to financial services has increased
substantially in recent years, and the level of
enforcement actions and investigations by
federal, state and provincial regulators may
increase correspondingly. Legislative, regulatory
and enforcement activity at the federal level may
contribute to heightened activity at the state
and provincial level. If we or the independent
sales representatives become subject to new
requirements or regulations, it could result in
increased litigation, regulatory risks, changes to
our business model, a decrease in the number of
securities-licensed representatives, increased
compliance costs, or a reduction in the products
we offer to our clients or the profits we earn,
which could have a material adverse effect on
our business, financial condition and results of
operations.
Regulators could also adopt laws or interpret
existing laws in a way that would require
retroactive changes to our business, accounting
practices, or redundant reserve financing
structures. Any such retroactive changes could
have a material adverse effect on our business,
financial condition and results of operations.
Medicare Advantage is a product
legislated and regulated by the United
States government. If the enabling
legislation and regulation or implementing
guidance issued by CMS changes,
e-TeleQuote’s business may be harmed,
which could have a material adverse effect
on our business, financial condition and
results of operations.
e-TeleQuote’s business depends upon the public
and private sector of the U.S. health insurance
system, which is subject to a changing
regulatory environment. Accordingly, the future
financial performance of its business will depend
in part on e-TeleQuote’s ability to adapt to
regulatory developments, including changes in
laws and regulations or changes to
interpretations of such laws or regulations,
especially laws and regulations governing
Medicare.
Additionally, ongoing healthcare reform efforts
and measures may expand the role or scope of
government-sponsored coverage, such as single
payer or so called “Medicare-for-All” proposals,
and expansion of Medicare’s coverage to dental,
vision and hearing. Reforms, if enacted, could
have far-reaching implications for the health
insurance industry. Some proposals would seek
to eliminate the private marketplace, whereas
others would expand a government-sponsored
ITEM 1A. RISK FACTORS
option to a larger population, change eligibility
ages, or expand coverage. We are unable to
predict the impact of potential healthcare reform
initiatives on e-TeleQuote’s operations in light of
substantial uncertainty regarding the likelihood
of enactment, or the terms and timing of, any
such reforms. We are also unable to predict the
impact any such reforms may have on healthcare
and health insurance industry beneficiaries.
Changes in laws, regulations and guidelines
governing health insurance may also be
incompatible with various aspects of
e-TeleQuote’s business and require that it make
significant modifications to its existing
technology or practices, which may be costly
and time-consuming to implement. Various
aspects of healthcare reform could also cause
carriers to discontinue certain health insurance
products or prohibit carriers from distributing
certain health insurance products in particular
jurisdictions.
The current regulatory climate with regard
to climate change may adversely affect our
business, financial condition, and results of
operations.
Activity by federal, state and provincial
regulators relating to the possible impacts of
climate change on companies and their
constituents has resulted in heightened
legislative and regulatory activity at the federal,
state and provincial levels. For example, on
March 21, 2022, the SEC proposed significant
new disclosure requirements to enhance and
standardize climate-related disclosures (the “SEC
Climate-Related Disclosures proposal”). In
general, the SEC Climate-Related Disclosures
proposal focuses on three main areas:
(i) climate-change related risks (including risk
identification/impact, governance, oversight/risk
management and mitigation); (ii) greenhouse
gas emissions (“GHG”) (Scope 1 and 2, and if
material, Scope 3); and (iii) climate-related
financial statement metrics (including a
description of climate impacts in the notes to
the audited financial statements). The timing of a
final climate-related disclosures rule and its
effective date are uncertain. Depending on the
Primerica 2023 Annual Report
59
ITEM 1A. RISK FACTORS
nature of the final rule, preparation of new
disclosures may require significant assistance
from third-party vendor(s), for which there may
be high demand and limited availability.
On October 7, 2023, California enacted The
Climate Corporate Accountability Act (“SB 253”)
and The Climate-Related Financial Risk Act (“SB
261”), which impose extensive new climate-
related reporting requirements on any U.S.
business entity with annual revenues over $1
billion and $500 million (for SB 253 and SB 261,
respectively) doing business in California. SB 253
requires disclosure of Scope 1 and 2 GHG
emissions beginning in 2026 and Scope 3 GHG
emissions beginning in 2027. SB 261 requires
covered entities to biennially report on climate-
related financial risk and measures adopted to
reduce and adapt to such risk; however, the
Company appears to be exempt from SB 261
because it already completes the Climate Risk
Disclosure Survey, an annual survey
administered by the California Department of
Insurance. The Company is awaiting clarification
as to whether the Company is exempt from SB
261. In addition, on March 7, 2023, OFSI issued
its final Guideline-15, which sets out
expectations for the management and disclosure
of climate-related risks for federally regulated
financial institutions in Canada, including
disclosure of Scope 1, 2 and 3 GHG emissions by
the end of 2025. Compliance with SB 253, SB
261, Guideline-15 and any other climate
disclosure rules applicable to the Company may
require significant assistance from third-party
vendor(s). Factors that could adversely impact
our ability to comply with any new climate
disclosure rules include, but are not limited
to, failure to secure the assistance of a third-
party vendor(s), inability to gather the requisite
data in a timely manner or at all, and/or
significant associated financial costs.
GeneralRiskFactors
Litigation and regulatory investigations and
actions may result in financial losses and
harm our reputation.
We face a risk of litigation and regulatory
investigations and actions in the ordinary course
60
of operating our businesses. From time to time,
we are subject to private litigation as a result of
alleged sales representative misconduct or
alleged failure of the Company to follow
applicable insurance, securities or other laws or
regulations. If we become subject to any such
litigation, the associated legal expense and any
judgment or settlement of the claims could have
a material adverse effect on our business,
financial condition and results of operations.
We are also routinely subject to regulatory
inquiries, such as information requests,
subpoenas and books and record examinations,
from state, provincial and federal regulators and
other authorities and from time to time,
regulatory investigations as a result of alleged
sales representative misconduct or alleged
failure of the Company to follow applicable laws
or regulations. A substantial legal liability or a
significant regulatory action against us could
have a material adverse effect on our business,
financial condition and results of operations.
Moreover, even if we ultimately prevail in any
litigation, regulatory action or investigation, we
could suffer significant reputational harm and
we could incur significant legal expenses, either
of which could have a material adverse effect on
our business, financial condition and results of
operations. In addition, increased regulatory
scrutiny and any resulting investigations or
proceedings could result in new legal precedents
and industry-wide regulations or practices that
could materially adversely affect our business,
financial condition and results of operations.
A significant change in the competitive
environment in which we operate could
negatively affect our ability to maintain or
increase our market share and profitability.
We face competition in all of our business lines.
Our competitors include financial services
companies, banks, investment management
firms, broker-dealers, registered investment
advisers, insurance companies, insurance
brokers, direct sales companies, and technology
companies. In many of our product offerings, we
face competition from competitors that may
have greater market share or breadth of
distribution, offer a broader range of products,
services or features, assume a greater level of
risk, have lower profitability expectations, have
lower fee and expense ratios, have higher
financial strength ratings, offer more robust
digital tools and self-service capabilities than we
do or made use of emerging technologies more
fully or rapidly than us. More recently, significant
capital has been invested in direct-to-consumer
offerings, including wealth management,
retirement and life insurance products. In
addition, regulatory changes and competitive
factors are leading to innovations in product
offerings and compensation structures. To the
extent these entrants create a significant change
in the competitive environment, our ability to
maintain or increase our market share and
profitability could be materially adversely
affected.
Primerica’s continued success requires a
high-performing and stable team of
employees across all levels, and the loss of
key employees could negatively affect our
financial results and impair our ability to
implement our business strategy.
In addition to intense competition for talent,
workforce dynamics are constantly evolving. A
disproportionate loss of staff can negatively
impact morale, productivity and service levels. If
the Company does not manage these changing
workforce dynamics effectively, leading to
prolonged employee attrition, it could materially
adversely affect the Company’s financial
condition and inhibit our long-term business
strategy.
Further, our success substantially depends on
our ability to attract and retain members of our
senior management team. The efforts, level of
engagement, and leadership of our senior
managers have been, and will continue to be,
critical to our success. Many of our most senior
managers are very tenured and we expect
increased instances of retirement in 2024 and
2025. The loss of service of members of our
senior management team for any reason and
without adequate succession planning and
ITEM 1A. RISK FACTORS
talent management could reduce our ability to
successfully motivate the independent sales
representatives or implement our business plan
which could have a material adverse effect on
our business, financial condition and results of
operations. Although our executive officers have
entered into employment agreements with us,
there is no assurance that they will complete the
term of their employment agreements or that
such agreements will be renewed.
We regularly undertake business initiatives
to enhance our technology, products, and
services. The efficiency and success of
these initiatives may vary significantly and
may cause unanticipated costs, errors, or
disruptions which could have a material
adverse effect on our business, financial
condition and results of operations.
We regularly evaluate and undertake business
initiatives to improve and support our
competitiveness and grow our business.
Business initiatives that we are currently
developing or executing, for example, include
enhancements to information technology, our
client relationship manager tool, and other
systems, updates to our client and
representative-facing software tools and
applications, and streamlining of our off-channel
communications systems. Our ability to
implement these initiatives often may be
dependent on our ability to integrate systems,
develop and invest in new technologies and
evolve existing methods and tools. The
execution of these initiatives also may depend
on our ability to change vendors, and
implementation of certain initiatives may be
dependent on third parties. In addition, these
initiatives may take longer than anticipated to
implement, and our ability to execute these
initiatives in a timely manner may impact the
outcomes. Likewise, technological and other
changes made in connection with these
initiatives may result in increased or
unanticipated costs, inadvertent data
disclosures, operating errors, disruptions to our
business, or may present other unanticipated
technical or operational hurdles. The expansion
Primerica 2023 Annual Report
61
ITEM 1A. RISK FACTORS
of services or changes of vendors may involve
client, regulatory and other third-party data use,
storage and security challenges, as well as other
regulatory compliance, business continuity and
other considerations. As a result, we may not
achieve some or all of the anticipated benefits or
other intended results associated with these
initiatives, which could have a material adverse
effect on our business, financial condition and
results of operations.
We may be materially adversely affected
by currency fluctuations in the United
States dollar versus the Canadian dollar.
The Canadian dollar is the functional currency
for our Canadian subsidiaries and our financial
results, reported in U.S. dollars, are affected by
changes in the currency exchange rate. The
assets, liabilities, revenues, and expenses of our
Canadian subsidiaries are generally all
denominated in Canadian dollars. However, the
Canadian dollar financial statements of our
Canadian subsidiaries are translated into U.S.
dollars in our consolidated financial statements.
Therefore, significant exchange rate fluctuations
between the U.S. dollar and the Canadian dollar
could have a material adverse effect on our
financial condition and results of operations. A
weaker Canadian dollar relative to the U.S. dollar
would result in lower levels of reported
revenues, expenses, net income, assets, liabilities
and accumulated other comprehensive income
as translated in our U.S. dollar reporting
currency financial statements. In addition, our
net investment in our Canadian subsidiaries is
significantly affected by fluctuations in the
exchange rate between the U.S. dollar and the
Canadian dollar.
Any acquisition of or investment in
businesses that we may undertake that
does not perform as we expect or that is
difficult for us to integrate could materially
adversely impact our business, financial
condition and results of operations.
At any particular time, we may be in various
stages of assessment, discussion, and
62
negotiation with regard to one or more potential
acquisitions or investments, not all of which will
be consummated. Acquisitions involve numerous
risks and uncertainties and may be of businesses
in which we lack operational or market
experience. If we complete one or more
acquisitions, our results of operations and
financial condition may be adversely affected by
a number of factors, including but not limited to:
regulatory or compliance issues that could arise;
a rating downgrade by a rating agency if it
perceives an adverse change in our financial
condition; changes in regulations and laws; the
failure of the acquired businesses to achieve the
results we have projected in either the near or
long term, which could result in additional
goodwill impairment charges; the assumption of
unexpected liabilities, including litigation risks;
the difference between the estimated and actual
fair value of assets acquired and liabilities
assumed; the difficulties of imposing adequate
financial and operating controls on the acquired
companies and their management and the
potential cost that might be incurred to
implement adequate controls; the difficulties in
the integration of the operations, technologies,
services and products of the acquired
companies; and the failure to achieve the
strategic objectives of these acquisitions.
Further, completion of one or more acquisitions
may cause our Board to suspend the payment of
dividends and/or share repurchases. For
example, we paused our share repurchase
program in 2021 to accumulate cash used to
fund the acquisition of e-TeleQuote and
restarted after closing the acquisition.
If e-TeleQuote does not perform as expected, it
could materially adversely affect our business,
financial condition and results of operations. See
“Item 1A. Risk Factors – Risks Related to
e-TeleQuote’s Senior Health Insurance
Distribution Business” above.
The market price of our common stock
may fluctuate.
The stock market in general, and the market for
companies in the financial services industry in
particular, have experienced extreme price and
volume fluctuations that have often been
unrelated or disproportionate to the operating
performance of these companies. Also, broad
market and industry factors may negatively
affect the market price of our common stock,
regardless of our actual operating performance.
Our stock could be subject to wide fluctuations
in price in response to various factors, many of
which are beyond our control.
ITEM 1B. UNRESOLVED STAFF
COMMENTS.
Not applicable.
ITEM 1C. CYBERSECURITY.
RiskManagementandStrategy
Primerica has processes in place aimed at
assessing, identifying, and managing material
risks from cybersecurity threats. Cybersecurity
risk is integrated into Primerica’s enterprise risk
management system. Primerica’s enterprise risk
management and internal audit functions
conduct regular assessments and audits of risks
from cybersecurity threats and report the results
to the Board of Directors at least quarterly. The
Board considers cybersecurity risk as part of its
business strategy, risk management, and
financial oversight.
Primerica institutes a three-lines-of-defense
model for information security risk assurance, in
which management owns the risk, our enterprise
risk management team assesses the risk and
oversees compliance with internal guidelines
and policies, and our internal audit team reviews
the effectiveness of the first two lines of defense.
Management works with external assessors,
consultants, auditors, and other third parties
from time to time in conducting maturity and
technical assessments.
Primerica has processes in place to oversee and
identify material risks from cybersecurity threats
associated with its use of third-party service
providers. The Company maintains a policy
governing information security, which includes
risk assessment policies and procedures relating
to third-party vendors, as well as a data loss
prevention policy. The Company’s policies
ITEM 1A. RISK FACTORS
address technical requirements needed to
protect the environments in which data is
processed, as well as how it is maintained,
governed, and protected. Primerica also imposes
mandatory privacy and information security
controls and data security protection
requirements on the independent contractor
sales force. We train all regular employees in
information security and privacy-related risks
and we perform regular tests to determine
whether our employees can recognize phishing
emails. Similarly, our annual compliance training
for the independent sales representatives
includes training on maintaining data security
and privacy. e-TeleQuote operates under certain
of its own separate policies and procedures
related to physical and information security.
These policies and procedures are similar in
nature to the ones discussed above.
We have an incident response plan designed to
help us monitor the prevention, detection,
mitigation, and remediation of information
security incidents. The incident response plan
documents the roles and responsibilities of
Primerica personnel in responding to
information security incidents, including the
process by which the Chief Information Security
Officer, the Chief Information Officer, senior
management, and the Board is informed about
such incidents.
The Chief Information Security Officer leads the
Company’s Incident Advisory Committee (“IAC”),
which is notified in the event of high or medium
severity incidents. The IAC includes
representatives from information technology,
legal, and often the impacted business unit. The
Incident Response Team (“IRT”) consists of the
IAC and a larger group of managers that is
typically notified of more significant
incidents. The IRT reports findings to
management and the Board as necessary. Each
IRT member has specific responsibilities related
to his or her function at the Company. On a
semi-annual basis, the IRT and management
undertake facilitator-led trainings and
simulations of information security incidents.
Previous cybersecurity incidents have not
materially affected the Company. For a
Primerica 2023 Annual Report
63
ITEM 1C. CYBERSECURITY.
discussion of risks to the Company related to
cybersecurity threats, see “Item 1A. Risk
Factors – Risks Related to Information
Technology and Cybersecurity”, which is
incorporated herein by reference.
Governance
The Board of Directors has responsibility for
oversight of risks from cybersecurity threats. The
Board receives a quarterly report from the Chief
Information Officer and Chief Information
Security Officer on risks from cybersecurity
threats and, under the Company’s incident
reporting plan, the Board is informed by
management of certain cybersecurity incidents
as appropriate. In 2023, the Board participated in
a facilitator-led training and simulation of an
information security incident.
Primerica’s senior executive leadership is actively
involved in managing material risks from
cybersecurity threats. Primerica’s cybersecurity
operations risk steering group is chaired by the
Chief Operating Officer and holds quarterly
meetings. It includes key executives from the
Company’s technology, security, privacy, and
legal teams, coordinates corporate security
initiatives and provides high-level guidance on
technology-and security-related issues. The
Chief Information Security Officer has
responsibility for assessing and managing the
Company’s material risks from cybersecurity
threats. The Chief Information Security Officer
has served in various roles in information
technology and information security for 35
years, including serving as the Company’s Chief
Information Security Officer for over 23 years.
ITEM 2. PROPERTIES.
Our executive offices and business operations
are housed primarily at our home office facility
located in Duluth, Georgia. Our home office
facility consists of approximately 345,000 square
feet of general office space where our primary
business operations are maintained including
our information technology infrastructure and
our media production studios. The lease for this
building originally was to expire in June 2028
64
but, in May 2023, the lease was extended to
December 31, 2035. This office space is used by
all of our operating segments.
We also maintain a regional head office location
for our Canadian operations in Mississauga,
Ontario. Our Canadian head office location
consists of general office space under a lease
expiring in October 2030. This office space is
primarily used by the Term Life Insurance,
Investment and Savings Products and Corporate
and Other Distributed Products segments.
We lease general office space for our NBLIC
subsidiary in Long Island City, New York under a
lease expiring in March 2030. This office space is
primarily used by the Corporate and Other
Distributed Products segment.
We lease general office space for our
e-TeleQuote subsidiary’s headquarters in
Clearwater, Florida, under a lease expiring in
October 2024. This office space is primarily used
by the Senior Health segment.
We believe that our existing facilities in the U.S.
and Canada are adequate for our current
requirements and for our operations for the
foreseeable future.
ITEM 3.
LEGAL PROCEEDINGS.
We are involved from time to time in legal
disputes, regulatory inquiries and arbitration
proceedings in the normal course of business.
Additional information regarding certain legal
proceedings to which we are a party is described
under “Contingent Liabilities” in Note 17
(Commitments and Contingent Liabilities) to our
consolidated financial statements included
elsewhere in this report, and such information is
incorporated herein by reference. As of the date
of this report, we do not believe any pending
legal proceeding to which Primerica or any of its
subsidiaries is a party is required to be disclosed
pursuant to this item.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM X. INFORMATION ABOUT OUR EXECUTIVE
OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES
ITEM X.
SIGNIFICANT EMPLOYEES
INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND CERTAIN
The name, age at February 28, 2024, and position of each of our executive officers and certain
significant employees are presented below. These officers comprise our senior management team.
Name
Age
Position
Glenn J. Williams
64 Chief Executive Officer
Peter W. Schneider
Tracy X. Tan
Gregory C. Pitts
John A. Adams
Michael C. Adams
Lisa A. Brown
Jeffrey S. Fendler
Kathryn E. Kieser
Michael W. Miller
Robert H. Peterman, Jr.
Alison S. Rand
Brett A. Rogers
Julie A. Seman
67
53
61
President
Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Operating Officer
65 Chief Executive Officer of Primerica Life Insurance Company of Canada
67
54
67
54
46
58
56
58
54
Executive Vice President and Chief Business Technology Officer
Executive Vice President and Chief Administrative Officer
Executive Vice President and Chief Compliance and Risk Officer
Executive Vice President and Chief Reputation Officer
Executive Vice President, President of Primerica Mortgage, LLC and
Executive Chairman of Primerica Health, Inc.
Executive Vice President and Chief Distribution Officer
Executive Vice President
Executive Vice President and General Counsel
Executive Vice President and Chief Marketing and Innovation Officer
Set forth below is biographical information
concerning our executive officers, who are
elected by our Board of Directors and serve
subject to their respective employment
agreements.
Glenn J. Williams has served as Chief Executive
Officer since April 2015. He served as President
from 2005 through March 2015, as Executive
Vice President of Field and Product Marketing
for international operations from 2000 to 2005,
as President and Chief Executive Officer of
Primerica Canada from 1996 to 2000, and in
roles of increasing responsibility as part of
Primerica’s international expansion team in
Canada from 1985 to 2000. He began his career
with Primerica in 1981 as a member of the
Company’s sales force and joined the home
office team in 1983. Mr. Williams earned his B.S.
degree in education from Baptist University of
America. He served on the board of trustees for
the Georgia Baptist Foundation from 2019 to
2023.
Peter W. Schneider has served as President since
April 2015. He served as Executive Vice
President, General Counsel, and Chief
Administrative Officer from 2000 to April 2015
and as Corporate Secretary from 2000 through
January 2014. He began his professional career
as an Associate at the law firm of Paul, Weiss,
Rifkind, Wharton & Garrison and worked as a
Partner at the law firm of Rogers & Hardin LLP in
Atlanta, Georgia from 1988 to 2000.
Mr. Schneider earned both his B.S. degree in
political science and industrial relations and his
J.D. from the University of North Carolina at
Chapel Hill. He serves on the Advisory Council of
the Securities Industry and Financial Markets
Association (SIFMA), the board of directors of
Camp John W. Hanes (YMCA), the board of
visitors of the University of North Carolina at
Chapel Hill and the National Commission of the
Anti-Defamation League.
Tracy X. Tan has served as Executive Vice
President and Chief Financial Officer since
Primerica 2023 Annual Report
65
ITEM X. INFORMATION ABOUT OUR EXECUTIVE
OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES
December 2023. She joined Primerica in October
2023 as Executive Vice President, Finance. Prior
to joining Primerica, Ms. Tan served as Chief
Financial Officer of Strategic Link Consulting
(SLC), a fintech enterprise offering turnkey
solutions, lending platform and risk
management services, from November 2018 to
October 2023. At SLC, she was responsible for
overseeing economic and business strategy,
financial management, planning and analysis,
controllership, treasury, investor relations, tax,
audits, and capital markets for all lines of
business. During portions of her tenure at SLC,
she also headed the Strategy and Human
Resources functions. From December 2015 to
January 2018, Ms. Tan was Senior Vice President
and Chief Financial Officer for Assurant Global
Housing, a subsidiary of Assurant, Inc., an
insurance and financial services company. From
October 2013 to December 2015, she served as
Vice President of Finance and Divisional CFO for
Novelis North America, a subsidiary of Novelis
Inc., a global leader in rolled aluminum. From
September 2005 to September 2013, she was
Vice President of Finance and Divisional CFO for
the Electrical and Industrial Divisions of
Southwire Company, a top global wire and cable
producer. Ms. Tan began her career at General
Electric Company (GE) in 1996, where she held
various roles with increasing responsibilities
across four industries through 2005, including
her last role, from July 2003 to August 2005, as
Vice President and Chief Financial Officer for GE
Intelligent Platform Embedded Systems. Ms. Tan
holds a B.A. degree in English Language Arts
from Xi’an International Studies University, China
and an M.B.A. degree from Bowling Green State
University. She is also an alumna of GE’s
Experienced Financial Leadership Program and
Financial Management Program.
Gregory C. Pitts has served as Executive Vice
President and Chief Operating Officer since
December 2009, as Executive Vice President
since 1995 with responsibilities within the Term
Life Insurance and Investment and Savings
Products segments, and the information
technology division and in various capacities at
the Company since 1985. Mr. Pitts earned his
B.S.B.A. degree in general business from the
66
University of Arkansas. He serves on the board
of directors of the Boy Scouts of America Atlanta
Area Council.
Set forth below is biographical information
concerning certain significant employees, who
are elected by our Board of Directors.
John A. Adams has served as the Chief Executive
Officer of Primerica Life Canada since 2003. He
previously served Primerica Life Canada as Chief
Financial Officer and before that as Vice
President of Finance. Before joining Primerica,
Mr. Adams served as the Director of Finance of a
major Canadian university and Treasurer of an
insurance group of companies. He began his
career in 1980 with KPMG LLP. He graduated
from Trinity College at the University of Toronto
with a Bachelor of Commerce degree, and is a
Chartered Accountant and Chartered
Professional Accountant. Mr. Adams has
provided industry leadership as a board member
of the Investment Funds Institute of Canada (the
mutual fund industry association) since 2005,
having served as its Board Chairman from 2015
to 2017. He also serves as a board member of
the Federation of Mutual Fund Dealers.
Michael C. Adams has served as Executive Vice
President responsible for business technology
since 1998 and as Chief Business Technology
Officer since April 2010. He was Co-Head of
Business Technology from December 2017 to
May 2021 and served in various capacities at the
Company since 1980. Mr. Adams earned his B.A.
degree in business and economics from Hendrix
College in 1978.
Lisa A. Brown has served as Executive Vice
President and Chief Administrative Officer since
October 2020. She oversees the Company’s
Human Resources, Talent Management, Facilities
and Physical Securities functions and leads the
Company’s efforts to create and implement
programs, processes and protocols that focus on
DEIB. She also works closely with Marketing
leaders to support our Strategic Markets affinity
groups in the field. Prior to joining Primerica,
Ms. Brown held several leadership positions at
Delta Air Lines for more than 20 years
overseeing the Human Resources function for
Delta’s wholly-owned subsidiaries, talent
development and multiple operations functions.
She earned her B.S. degree in Human Resources
Administration from Michigan State University
and a Masters of Business Administration from
Kennesaw State University. Ms. Brown serves on
the Business Advisory Board of the Michigan
State University Broad College of Business, is co-
chair of the LEAD mentorship committee of the
Atlanta Alumni Chapter of Delta Sigma Theta
Sorority, Inc., and is chair of the development
committee of the board of directors of Cool
Girls, Inc.
Jeffrey S. Fendler has served as Executive Vice
President and Chief Compliance and Risk Officer
of the Company since February 2014. He served
as President of Primerica Life from 2005 through
January 2014 and in various capacities at the
Company since 1980. Mr. Fendler received a B.A.
degree in economics from Tulane University.
Kathryn E. Kieser has served as Executive Vice
President and Chief Reputation Officer of
Primerica, Inc. and President and Chair of the
Primerica Foundation since January 2019.
Previously, she served as Executive Vice
President of Investor Relations from April 2010
to December 2018. Ms. Kieser joined Primerica in
October 1995 and has held many positions over
her career including Vice President of Sales and
Product Marketing, Senior Vice President of
Auto and Homeowners Insurance, and Chief
Marketing Officer for Primerica Life Insurance
Company. Ms. Kieser earned her B.S. degree in
Business Administration from Auburn University
and a Master of Science degree from Georgia
State University. She serves on the boards of
directors for the Gwinnett Chamber of
Commerce and the Community Foundation for
Northeast Georgia and on the board of advisors
for the Metro Atlanta Chamber of Commerce.
Michael W. Miller has served as Executive Vice
President since 2015, President of Primerica
Mortgage, LLC since January 2018 and Executive
Chairman of Primerica Health, Inc. since July
2021. He served as Head of Corporate
Development and Strategic Planning from
September 2015 to August 2021. Prior to joining
Primerica, Mr. Miller was senior investment
banker at Lazard from 2006 to September 2015,
ITEM X. INFORMATION ABOUT OUR EXECUTIVE
OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES
where he specialized in providing strategic
advice to a broad array of financial institutions
and their regulators. While at Lazard, Mr. Miller
advised on over $85 billion of successful
transactions and restructuring assignments.
Mr. Miller also worked in the insurance industry
in various capacities. He holds a B.S. degree from
Brigham Young University in Business
Administration and Finance and earned the
Chartered Property & Casualty Underwriter
designation.
Robert H. Peterman, Jr. has served as Executive
Vice President and Chief Distribution Officer
since March 2023. He previously served as
Executive Vice President and Chief Marketing
Officer from June 2018 to March 2023. He
served as President of Primerica Distribution
from December 2013 to June 2018, where he
was responsible for recruiting, licensing,
licensing education, field compensation, field
equity, and decision support. In 2005, he
became Executive Vice President and was given
responsibility for the Company’s Grow the Sales
Force initiative. He also served as Chief Executive
Officer of Primerica’s New York Life Insurance
Company from January 2017 to June 2018.
Mr. Peterman joined the Company in October
1984 and has served in many varying roles
throughout the business.
Alison S. Rand has served as Executive Vice
President since 2000. She served as Chief
Financial Officer from 2000 to December 2023
and in various capacities at the Company from
1995 to 2000. Prior to 1995, Ms. Rand worked in
the audit department of KPMG LLP. Ms. Rand
earned her B.S. degree in accounting from the
University of Florida and is a certified public
accountant. Ms. Rand has served on the board
of directors of Regions Financial Corporation
since October 2023 and served on the board of
directors of Warburg Pincus Capital Corporation
I-A, a special purpose acquisition company, from
July 2021 to March 2023. She is a member of the
University of Florida National Foundation and
serves as Vice Chair the University of Florida
Warrington College of Business Dean’s Advisory
Council. She is also a member of the Executive
Committee of the board of directors of Junior
Achievement of Georgia and serves on the
Primerica 2023 Annual Report
67
ITEM X. INFORMATION ABOUT OUR EXECUTIVE
OFFICERS AND CERTAIN SIGNIFICANT EMPLOYEES
University of Georgia Terry College of Business
Executive Education CFO Roundtable Advisory
Board.
Brett “Ben” A. Rogers has served as Executive
Vice President and General Counsel since May
2019. Previously, he was a Partner at Rogers &
Hardin LLP in Atlanta, Georgia, where he
represented Primerica as outside counsel for
more than 20 years. At Rogers & Hardin, his
practice focused on complex business matters,
including securities litigation, arbitration, and
general commercial litigation. Mr. Rogers
received a B.A. degree from Dickinson College
and his J.D. with honors from Florida State
University.
Julie A. Seman has served as Executive Vice
President and Chief Marketing and Innovation
Officer since March 2023, overseeing, in addition
to her previous areas of responsibility, marketing
of our investment and savings business. She
previously served as Executive Vice President
and Chief Marketing Officer of Field Distribution,
Digital Distribution, Primerica Life, Client
Solutions, and Strategic Markets from May 2018
to March 2023. From August 2014 she has been
responsible for sales force growth and increased
product distribution through the training and
development of financial services
representatives in the United States, Canada,
Puerto Rico and Guam. In addition, Ms. Seman
supports Primerica’s strategic markets which
include African American, Hispanic, Partnership
and Women with a focus on personal financial
education and entrepreneurship. Prior thereto,
she was Senior Vice President of Client Solutions
from April 2010 to August 2014 where she
supervised all front-end products, including
Auto & Home Marketing and Legal Protection
and oversaw field communication tools.
Ms. Seman joined the Company in September
1998 and has served in many roles with
increasing responsibility. Ms. Seman received her
B.S. degree in Business Management from
Southern Illinois University.
68
PART II
ITEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
MarketInformation
Our common stock is listed for trading on the
New York Stock Exchange (“NYSE”) under the
symbol “PRI.”
Holders
As of January 31, 2024, we had 168 holders of
record of our common stock.
Dividends
In the first quarter of 2024, we declared a
quarterly dividend to stockholders of $0.75 per
share. We currently expect to continue to pay
comparable quarterly cash dividends to holders
of our common stock. Our payment of cash
dividends is at the discretion of our Board of
Directors in accordance with applicable law after
taking into account various factors, including our
financial condition, operating results, current
and anticipated cash needs and plans for
growth. Under Delaware law, we can only pay
dividends either out of surplus or out of the
current or the immediately preceding year’s
earnings. Therefore, no assurance is given that
we will continue to pay any dividends to our
common stockholders, or as to the amount of
any such dividends.
IssuerPurchasesofEquitySecurities
Depending on market conditions, shares of our
common stock may be repurchased from time to
time at prevailing market prices through open
market or privately negotiated transactions.
The Parent Company has no obligation to
repurchase any shares. Subject to applicable
corporate and securities laws, repurchases may
be made at such times and in such amounts as
management deems appropriate. Repurchases
under a publicly announced program can be
discontinued at any time if management
believes additional repurchases are not
warranted.
During the quarter ended December 31, 2023,
we repurchased shares of our common stock as
follows:
Period
October 1-31, 2023
November 1-30, 2023
December 1-31, 2023
Total
Total number of
shares purchased (1)
Average price paid
per share (1)
324,633
39,984
—
364,617
$198.93
202.89
—
$199.37
Total number of shares
purchased as part of
publicly announced
plans or programs (2)
Approximate dollar
value of shares that
may yet be
purchased under the
plans or programs (2)(3)
324,182
39,668
—
363,850
$
8,046,834
425,000,000
425,000,000
$425,000,000
(1) Consists of repurchases of (a) 767 shares of common stock at an average price of $200.97 arising from share-based
compensation tax withholdings and (b) open market repurchases of shares of common stock under the share repurchase
program approved by our Board of Directors.
(2) On November 17, 2022, our Board of Directors authorized, and the Company announced, a share repurchase program for
purchases of up to $375.0 million of our outstanding common stock from January 1, 2023 through December 31, 2023.
(3) On November 16, 2023, our Board of Directors authorized, and the Company announced, a share repurchase program for
purchases of up to $425.0 million of our outstanding common stock from November 16, 2023 through December 31, 2024.
Primerica 2023 Annual Report
69
ITEM 5. COMMON STOCK AND STOCKHOLDER MATTERS
For more information on our share repurchases,
see Note 13 (Stockholders’ Equity) to our
consolidated financial statements included
elsewhere in this report.
StockPerformanceTable(1)
The following graph compares the performance
of our common stock to the S&P MidCap 400
Index and the S&P 500 Insurance Index by
assuming $100 was invested in each investment
option as of December 31, 2018 and the
reinvestment of all dividends. The S&P MidCap
400 Index measures the performance of the
United States middle market capitalization
(“mid-cap”) equities sector. The S&P 500
Insurance Index is a capitalization-weighted
index of domestic equities of insurance
companies traded on the NYSE and NASDAQ.
Our common stock is included in the S&P
MidCap 400 index.
Total Return Performance
l
e
u
a
V
x
e
d
n
I
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$200
$150
$100
$50
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9
1
0
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1
3
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2
1
0
2
0
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1
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2
1
Primerica, Inc.
S&P 500 Insurance
S&P MidCap 400
Index
Primerica, Inc.
S&P 500 Insurance
S&P MidCap 400
Period Ended
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
$100.00
$135.10
$140.38
$162.66
$153.02
$225.06
100.00
100.00
129.38
126.20
128.81
143.44
170.18
178.95
187.42
155.58
204.78
181.16
(1) The stock performance table is not deemed “soliciting material” or subject to Section 18 of the Exchange Act.
ITEM 6.
Not applicable.
[RESERVED]
70
ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
(“MD&A”) is intended to inform the reader
about matters affecting the financial condition
and results of operations of Primerica, Inc. (the
“Parent Company”) and its subsidiaries
(collectively, “we”, “us” or the “Company”) for the
three-year period ended December 31, 2023. As
a result, the following discussion should be read
in conjunction with the consolidated financial
statements and accompanying notes that are
included herein. This discussion contains
forward-looking statements that constitute our
plans, estimates and beliefs. These forward-
looking statements involve numerous risks and
uncertainties, including, but not limited to, those
discussed in “Item 1A. Risk Factors”. Actual
results may differ materially from those
contained in any forward-looking statements.
This MD&A is divided into the following
sections:
• Business Trends and Conditions
•
Factors Affecting Our Results
• Critical Accounting Estimates
• Results of Operations
•
•
Financial Condition
Liquidity and Capital Resources
The Company adopted Accounting Standards
Update No. 2018-12, Financial Services –
Insurance (Topic 944) – Targeted Improvements
to the Accounting for Long-Duration Contracts
(“LDTI”) on January 1, 2023. The amendments in
LDTI changed accounting guidance for insurance
companies that issue long-duration contracts,
such as term life insurance and segregated funds
products. All prior period financial information
has been restated as of January 1, 2021 (the
“Transition Date”). See Note 1 (Description of
Business, Basis of Presentation, and Summary of
Significant Accounting Policies) to our
ITEM 7. MD&A
consolidated financial statements included
elsewhere in this report for more information
about the adoption of LDTI.
BusinessTrendsandConditions
The relative strength and stability of financial
markets and economies in the United States and
Canada affect our growth and profitability. Our
business is, and we expect will continue to be,
influenced by a number of industry-wide and
product-specific trends and conditions.
Economic conditions, including unemployment
levels and consumer confidence, influence
investment and spending decisions by middle-
income consumers, who are generally our
primary clients. These conditions and factors
also impact prospective recruits’ perceptions of
the business opportunity that becoming an
independent sales representative offers, which
can drive or dampen recruiting. Consumer
spending and borrowing levels affect how
consumers evaluate their savings and debt
management plans. In addition, interest rates
and equity market returns impact consumer
demand for the savings and investment
products we distribute. Our customers’
perception of the strength of the capital markets
may also influence their decisions to invest in
the investment and savings products we
distribute.
The financial and distribution results of our
operations in Canada, as reported in U.S. dollars,
are affected by changes in the currency
exchange rate. As a result, changes in the
Canadian dollar exchange rate may significantly
affect the result of our business for all amounts
translated and reported in U.S. dollars.
Significant volatility in capital markets in recent
periods has continued to impact our business.
Volatility in capital markets influenced product
sales and client asset values that drive revenue
in the Investment and Savings Products
segment. In addition, the sharp rise in market
interest rates during 2022 and further rate
increases in 2023 have driven unrealized losses
in our investment portfolio, although a sharp
decline in market rates during the fourth quarter
Primerica 2023 Annual Report
71
ITEM 7. MD&A
of 2023 reduced our unrealized losses. We have
not recognized losses caused by interest rate
volatility in the income statement as we have the
ability to hold these investments until maturity
or a market price recovery, and we have no
present intention to dispose of them. Increased
interest rates have also led to increases in net
investment income as we are able to earn higher
returns on our new debt securities purchases
and cash balances.
Inflation remained elevated from historical levels
during 2023, although to a lesser extent than
2022 and 2021, which led to an increased cost of
living for middle-income families. Continued
elevated cost of living could impact demand for
our products.
Certain year-over-year comparisons are
impacted by the effects of the COVID-19
pandemic (“COVID-19”). Results during 2021 and
the first quarter of 2022 reflected the continued
impact of COVID-19, namely strong policyholder
persistency and elevated claims activity in our
Term Life Insurance segment. The elevated
impacts of COVID-19 on our results tapered off
subsequent to the first quarter of 2022.
The effects of these trends and conditions are
discussed below, in the Results of Operations
section and in the Financial Condition section.
Size of the Independent Sales Force. Our
ability to increase the size of the independent
sales force (“independent sales representatives”
or “independent sales force”) is largely based on
the success of the independent sales force’s
recruiting efforts as well as training and
motivating recruits to get licensed to sell life
insurance. We believe that recruitment and
licensing levels are important to independent
sales force trends, and growth in recruiting and
licensing is usually indicative of future growth in
the overall size of the independent sales force.
Recruiting changes do not always result in
commensurate changes in the size of the
licensed independent sales force because new
recruits may obtain the requisite licenses at rates
above or below historical levels.
Details on recruiting and life-licensed
independent sales representative activity were as
follows:
New recruits
New life-licensed independent sales representatives
Year ended December 31,
2023
2022
2021
361,925 359,735 349,374
49,096
45,147
39,622
Life-licensed independent sales representatives, at period end
141,572 135,208 129,515
The number of new recruits increased in 2023
compared to 2022. Recruiting activity was strong
in 2023 without the benefit of significant
recruiting incentives as the Company continues
to see a high degree of interest from people
who are attracted to the business opportunity.
The number of new recruits increased in 2022
compared to 2021 primarily due to strong
recruiting efforts and the offering of special
recruiting incentives following our biennial
convention held in June 2022. Approximately
83,000 individuals were recruited while the
special incentives were in place. Various
recruiting incentives in both 2022 and 2021 also
positively impacted recruiting results during
each year.
New life-licensed independent sales
representatives increased in 2023 compared to
2022 primarily due to strong life-licensing
momentum experienced throughout 2023. The
strong life-licensing activity realized in 2023 was
primarily driven by the heightened emphasis
placed by the Company and independent sales
force leaders on licensing and the continued
benefits of improvements to the licensing
process, which include new licensing progress-
tracking tools and an increased number of in-
person licensing classes. New life-licensed
independent sales representatives increased in
2022 compared to 2021 primarily due to the
elevated recruiting volume discussed above
combined with licensing process improvements
72
ITEM 7. MD&A
throughout 2022 such as the restoration of in-
person licensing classes.
The number of life-licensed independent sales
representatives increased during both 2023 and
2022, reflecting strong recruiting and
improvements to the licensing process as
discussed above.
Term Life Insurance Product Sales and Face
Amount In Force. The average number of life-
licensed independent sales representatives and
the number of term life insurance policies issued,
as well as the average monthly rate of new
policies issued per life-licensed independent
sales representative (historically between 0.20
and 0.24, as adjusted (1)), were as follows:
Year ended December 31,
2023
2022
Adjusted 2022
(estimated)
Average number of life-licensed independent sales representatives
137,760 132,077
132,077
Number of new policies issued(1)
358,860 291,918
333,020
Average monthly rate of new policies issued per life-licensed(1)
independent sales representative
0.22
0.18
0.21
(1)
For the year ended December 31, 2022, the previously reported number of new policies issued has been adjusted for
comparability purposes as a result of our new term life insurance products introduced in October 2022, which modified how
policies are structured in relation to individual lives. Historically, two adult lives could be covered under a single policy by
adding a spouse rider. To better align risk and pricing in our new life insurance products, we eliminated this rider and now
sell a separate policy for each insured life. Results for the year ended December 31, 2023 reflect additional policies issued to
reflect the former spouse rider with a separate policy in the new life insurance products. To make year-over-year
comparisons more consistent, we have provided estimates for the year ended December 31, 2022.
The average number of life-licensed
independent sales representatives increased
during both 2023 and 2022 from 131,315 at
December 31, 2021 as a result of strong
recruiting and improvements to the licensing
process as discussed above.
New policies issued during 2023 increased
compared to adjusted 2022 as a result of
continued growth in the number of life-licensed
independent sales representatives and the
customer appeal of our new term life insurance
products that were introduced in late 2022.
Productivity in 2023 and adjusted 2022,
measured by the average monthly rate of new
policies issued per life-licensed independent
sales representative, was in line with our
adjusted historical range.
New policy issuance metrics for 2021 are not
comparable to the information shown for 2023
and adjusted 2022 due to the change in how
policies are structured in relation to individual
lives as described in the footnote to the table
above. The discussion of new policy issuance
comparisons between 2022 and 2021 under our
legacy policy structure can be found in
“Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in
Part II, Item 7 of the Company’s Annual Report
on Form 10-K for the fiscal year ended
December 31, 2022 (the “2022 MD&A”).
Primerica 2023 Annual Report
73
ITEM 7. MD&A
The changes in the face amount of our in-force book of term life insurance policies were as follows:
Year ended December 31,
% of
beginning
balance
2022
% of
beginning
balance
2021
% of
beginning
balance
2023
(Dollars in millions)
Face amount in-force, beginning of
period
$916,808
$903,403
$858,818
Net change in face amount:
Issued face amount
Terminations
Foreign currency
Net change in face amount
Face amount in-force, end of
119,102
(94,230)
2,929
27,801
13%
(10)%
*
3%
103,822
(82,894)
(7,523)
13,405
11%
(9)%
*
1%
108,521
(64,798)
862
44,585
13%
(8)%
*
5%
period
$944,609
$916,808
$903,403
2022 decreased versus 2021 due to a decrease
in new policies issued partially offset by higher
average issued face amounts. New policies
issued decreased and policy terminations
increased in 2022 versus 2021 as new policy
demand and persistency normalized toward pre-
COVID-19 pandemic levels.
Our average issued face amount per new policy
increased to approximately $256,100 in 2023
compared to $228,000 in 2022, using the
adjusted 2022 number of new policies issued as
discussed above. The average issued face
amount per new policy was higher in 2023
compared with adjusted 2022 due to the launch
of our new term life insurance products, which
drove an increase in demand for policies at
higher face amount levels. For discussion of
average issued face amount per new policy
between 2022 and 2021 under our legacy policy
structure, refer to the 2022 MD&A.
*
Less than 1%.
The face amount of term life policies in-force
increased from December 31, 2022 to
December 31, 2023 as the face amount issued
continued to exceed the face amount
terminated. Issued face amount during 2023
increased from 2022 due to an increase in both
the number of new policies issued and higher
average face amounts per life insured. Policy
terminations were elevated across many policy
durations during 2023 with the higher cost of
living likely a key contributing factor. The early
part of 2022 was the last period that reflected
the benefit of the higher persistency
experienced during the height of the COVID-19
pandemic. The face amount of term life policies
in-force increased from December 31, 2021 to
December 31, 2022 as the face amount issued
continued to exceed the face amount
terminated. The increase was partially offset by
movement in the foreign exchange rate as the
U.S. dollar strengthened in relation to the
Canadian dollar, which negatively impacted the
translated face amount in force as of
December 31, 2022. Issued face amount during
74
Investment and Savings Product Sales, Asset Values and Accounts/Positions.
savings product sales were as follows:
Investment and
ITEM 7. MD&A
Product sales:
U.S. retail mutual funds
Canada retail mutual funds – with up-
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in millions)
$3,898 $ 4,266 $ 5,146 $(368)
(9)% $ (880)
(17)%
front sales commissions
478
912
1,439 $(434)
(48)% $ (527)
(37)%
Annuities and other
2,818
2,629
3,076
189
7%
(447)
(15)%
Total sales-based revenue generating
product sales
Managed investments
Canada retail mutual funds – no up-front
sales commissions
Segregated funds
7,194
1,212
7,807
1,513
9,661
1,506
(613)
(8)% (1,854)
(19)%
(301)
(20)%
7
*
691
115
494
195
318
219
197
40%
176
55%
(80)
(41)%
(24)
(11)%
Total product sales
$9,212 $10,009 $11,704 $(797)
(8)% $(1,695)
(14)%
*
Less than 1%.
The rollforward of asset values in client accounts was as follows:
Year ended December 31,
% of
beginning
balance
2023
2022
% of
beginning
balance
2021
% of
beginning
balance
(Dollars in millions)
Asset values, beginning of period
$83,949
$ 97,312
$81,533
Net change in asset values:
Inflows
Redemptions
Net flows
Change in fair value, net
Foreign currency, net
9,212
(7,663)
1,549
10,865
11%
(9)%
2%
13%
10,009
(6,587)
10%
(7)%
11,704
(7,162)
3,422
4%
4,542
(15,855)
(16)%
11,146
14%
(9)%
6%
14%
372
*
(930)
*
91
*
Net change in asset values
12,786
15%
(13,363)
(14)%
15,779
19%
Asset values, end of period
$96,735
$ 83,949
$97,312
*
Less than 1%.
Primerica 2023 Annual Report
75
ITEM 7. MD&A
Average client asset values were as follows:
Average client asset values:
Retail mutual funds
Annuities and other
Managed investments
Segregated funds
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in millions)
$55,286 $53,822 $55,997 $1,464
3% $(2,175)
(4)%
24,229
23,947
25,211
7,663
2,295
6,951
2,474
6,086
2,698
282
712
1% (1,264)
(5)%
10%
865 14%
(179)
(7)%
(224)
(8)%
Total average client asset values
$89,473 $87,194 $89,992 $2,279
3% $(2,798)
(3)%
Average number of fee-generating positions was as follows:
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
Positions % Positions %
(Positions in thousands)
Average number of fee-generating positions (1):
Recordkeeping and custodial
Recordkeeping only
2,335
2,281
2,171
836
814
749
Total average number of fee- generating positions
3,171
3,095
2,920
54
22
76
2% 110
3%
65
2% 175
5%
9%
6%
(1) We receive transfer agent recordkeeping fees by mutual fund positions. An individual client account may include multiple
mutual fund positions. We may also receive fees, which are earned on a per account basis, for custodial services that we
provide to clients with retirement plan accounts that hold positions in these mutual funds.
Investment and savings product
Product sales.
sales decreased in 2023 from 2022, resulting
primarily from lower year-over-year product
sales during the first half of 2023. The impact of
market volatility, the higher cost of living, and
the availability of high yield money market and
savings account alternatives likely drove the
reduction in demand for U.S. mutual funds, total
Canadian mutual funds and managed accounts
during the first half of 2023. By comparison,
product sales in the early part of 2022 reflected
strong demand that followed positive equity
market returns. The majority of Canadian mutual
fund product sales shifted to a no up-front sales
commission model in 2023 compared to an up-
front sales commission model in the first part of
2022 as a result of the introduction of our new
principal distributor Canadian mutual fund
product in July 2022. The principal distributor
model results in higher asset-based trail
commission revenues over time in lieu of up-
76
front compensation at the time of sale.
Additionally, Canadian segregated funds
product sales decreased in 2023 versus 2022
due to regulatory restrictions on fees charged
for these products that went into effect in
Canada. Refer to “Regulatory Changes” below
for additional information regarding restrictions
on segregated funds compensation models in
Canada. Partially offsetting these decreases were
higher sales of variable annuities in 2023 as
investor demand for the guarantee features
these products offer increased likely due to
recent market volatility.
The decrease in investment and savings product
sales in 2022 from 2021 was led by lower sales
of retail mutual funds and variable annuities as
investor demand during 2022 deteriorated in
response to negative market conditions.
Demand for investment and savings products
was robust in 2021 due in large part to positive
equity market conditions. The reversal of the
positive equity market conditions in 2022 led to
the year-over-year decline in product sales. Also
contributing to the decline in product sales from
2021 to 2022 was the transition to the new
principal distributor Canadian mutual fund
product in July 2022 as described above.
Rollforward of client asset values. Ending client
asset values increased in 2023 from 2022
primarily due to the difference in market
performance during each respective period. Net
flows remained positive during 2023 but were
lower than net flows in 2022. Ending client asset
values decreased in 2022 from 2021 primarily
due to negative market performance in 2022.
Also contributing to the decrease was
movement in the foreign exchange rate as the
U.S. dollar strengthened in relation to the
Canadian dollar, which negatively impacted
client asset values as of December 31, 2022. Net
flows remained positive for 2022, albeit to a
lesser extent than in 2021.
Average client asset values. Average client asset
values increased modestly in 2023 compared to
2022. The increase was driven by the timing and
changes in market conditions that affected the
balance of client assets during each year
combined with the impact of positive net flows.
Average client asset values decreased modestly
in 2022 compared to 2021 primarily due to the
timing of negative equity market performance
during 2022 partially offset by the impact of
positive net flows.
Number of Senior Health submitted policies
Number of Senior Health approved policies
(1)
From the acquisition date of July 1, 2021.
The Senior Health segment experiences notable
seasonality with the strongest demand occurring
in the fourth quarter due to the Medicare
Annual Election Period (“AEP”) from October 15th
to December 7th. We also experience seasonally
higher demand in the first quarter due to the
Medicare Open Enrollment Period (“OEP”) from
January 1st to March 31st, which allows
individuals to switch Medicare Advantage plans.
ITEM 7. MD&A
Average number of fee-generating
positions. The average number of fee-
generating positions increased in 2023
compared to 2022 and in 2022 compared to
2021 primarily due to the continued cumulative
effect of retail mutual fund sales in recent
periods. This led to an increase in the number of
retail mutual fund positions serviced on our
transfer agent recordkeeping platform.
Senior Health Key Performance Indicators.
Submitted Policies and Approved Policies
Submitted policies. Submitted policies
represent the number of completed applications
that the applicant has authorized e-TeleQuote
Insurance, Inc. (“e-TeleQuote”) to submit to the
health insurance carrier. The applicant may need
to take additional action, including providing
subsequent information, before the application
is reviewed by the health insurance carrier.
Approved policies. Approved policies represent
an estimate of submitted policies approved by
the health insurance carriers for the identified
product during the indicated period. Not all
approved policies will go in force. In general, the
relationship between submitted policies and
approved policies has been seasonally
consistent. Therefore, factors impacting the
number of submitted policies generally impact
the number of approved policies.
The number of Senior Health submitted policies
and approved policies were as follows:
Year ended December 31,
2021(1)
2022
2023
63,092 85,038 60,009
58,457 77,086 50,323
Meanwhile, the second and third quarters
experience seasonally lower demand as the
focus for submitted policies is limited to
beneficiaries that are dual eligible (Medicare and
Medicaid), qualify for a special enrollment
period, recently aged into Medicare or are
enrolling off of an employer-sponsored plan,
and other less common situations.
Primerica 2023 Annual Report
77
ITEM 7. MD&A
The number of submitted and approved policies
decreased in 2023 compared to 2022 primarily
due to the Company’s efforts to temper growth
in favor of developing more efficient lead
procurement and conversion, a decline in the
number of tenured e-TeleQuote licensed health
insurance agents and an increase in newly-hired
licensed health insurance agents that resulted in
lower productivity. The number of submitted
and approved policies in 2022 compared to
2021 is primarily impacted by the timing of the
acquisition of e-TeleQuote on July 1, 2021. A full
year of submitted and approved policies are
included in 2022 compared to only six months
for 2021. The number of submitted and
approved policies in 2022 also reflects the
Company’s efforts to scale back growth and limit
the number of agents in favor of developing
more efficient lead procurement.
Senior Health Policies Sourced by Primerica
Independent Sales Representatives
Primerica independent sales representatives are
certified by Primerica to refer eligible Medicare
beneficiaries to e-TeleQuote licensed health
insurance agents for potential enrollment in
policies distributed by e-TeleQuote after
completion of a brief certification course offered
by Primerica.
The number of submitted policies sourced by
Primerica independent sales representatives
measures the number of Senior Health policies
submitted by e-TeleQuote to its third-party
health insurance carriers that originated through
the Primerica independent sales force.
Submitted policies sourced by Primerica independent sales representatives
10,440 8,501 4,494
Year ended December 31,
2023
2022
2021(1)
(1)
From the acquisition date of July 1, 2021.
The number of submitted policies sourced by
Primerica independent sales representatives
increased in 2023 compared to 2022 primarily due
to increasing experience with the Primerica referral
program. The number of submitted policies
sourced by Primerica independent sales
representatives during 2022 increased compared
to 2021 primarily due to the timing of our
acquisition of e-TeleQuote on July 1, 2021. A full
year of submitted policies sourced by Primerica
independent sales representatives are included
during 2022 compared to only six months for
2021.
Lifetime Value of Commissions and Contract
Acquisition Costs
LTV
Lifetime value of commissions (“LTV”).
represents the cumulative total of commissions
and administrative fees estimated to be
collected over the expected life of a policy for
policies approved during the period. For more
information on LTV, refer to Note 19 (Revenue
from Contracts with Customers) of our
consolidated financial statements included
78
elsewhere in this report and the Factors
Affecting our Results – Senior Health Segment
section.
Contract acquisition costs (“CAC”). CAC
represents the total direct costs incurred to
acquire approved policies. CAC are primarily
comprised of the costs associated with
generating or acquiring leads, including fees
paid to Primerica Senior Health certified
independent sales representatives, as well as
compensation, licensing, and training costs
associated with our team of e-TeleQuote
licensed health insurance agents in addition to
per policy technology costs. The number of
e-TeleQuote licensed health insurance agents,
agent tenure, attrition rate and productivity all
impact CAC. Other than costs incurred to assist
beneficiaries who are switching plans with the
same carrier, we incur the entire cost of
approved policies prior to enrollment and prior
to receiving our first commission-related
payment.
Per policy metrics for LTV and CAC measure our
ability to profitably distribute Senior Health
insurance products.
The LTV per approved policy, CAC per approved policy, and ratio of LTV to CAC per approved policy
were as follows:
ITEM 7. MD&A
LTV per policy approved during the period
CAC per policy approved during the period
LTV/CAC per approved policy
(1)
From the acquisition date of July 1, 2021.
LTV per approved policy reflects current
estimates for renewal rates, policy retention and
chargeback activity taking into consideration the
most recent experience through December 31,
2023. LTV per approved policy increased during
2023 compared to 2022 primarily due to the
inclusion of the majority of marketing
development revenue in LTV beginning in the
fourth quarter of 2023 due to changes in carrier
contracts. Prior to the fourth quarter of 2023, all
marketing development revenue received from
carriers was recognized in Other, net revenue.
Also contributing to the higher LTV in 2023
versus 2022 were higher commission rates from
annual rate increases and stabilizing policy
churn. The Company saw lower renewal
retention rates during 2022 compared to
historical experience due to an increased
number of consumers who changed plans and
increased plan offerings by carriers. This
dynamic led to the lower LTV estimated per
approved policy in 2022 compared to 2021.
CAC per approved policy increased in 2023
compared to 2022 primarily due to the impact
from a lower mix of tenured e-TeleQuote
licensed health insurance agents. During 2023,
e-TeleQuote experienced higher agent attrition
while it planned for an increase in its agent base,
which led to increased costs to hire, train and
license new agents in preparation for AEP and
OEP. In addition, lower tenured agents do not
convert leads to approved policies as efficiently
as more tenured agents, contributing to higher
CAC per approved policy. Comparing 2022 to
2021, the reduction in CAC per approved policy
reflects a number of factors including a higher
ratio of tenured agents, revised lead acquisition
strategies, improved lead routing, and
enhancements in agent training.
Year ended December 31,
2021(1)
2022
2023
$ 945 $ 860 $1,109
$ 945 $ 888 $1,049
1.00
0.97
1.10
RegulatoryChanges.
Worker classification standards.
In the U.S.,
the Department of Labor (“DOL”) issued a final
rule interpreting the “economic realities” worker
classification standard applicable to the Fair
Labor Standards Act. The DOL’s interpretation
generally aligns with legal precedent, relying on
an analysis of six typical factors indicating
worker status and taking into account the
“totality of the circumstances”. Other federal and
state legislative and regulatory proposals
regarding worker classification have also come
under consideration. It is difficult to predict what
the outcome of worker classification activity may
be. Changes to worker classification laws could
impact our business as sales representatives
(other than those hired by e-TeleQuote) are
independent contractors.
In October 2023, the DOL
Fiduciary standards for investment
recommendations.
proposed a fiduciary rule package (“DOL
Fiduciary Proposal”) that would revise the
fiduciary definition and amend certain
prohibited transaction exemptions relied on by
fiduciaries subject to the Employee Retirement
Income Security Act of 1974 for the receipt of
compensation. In response to prior rulemakings
and guidance, our business already utilizes the
DOL’s prohibited transaction exemption
established in 2020 for fiduciary
recommendations. As a proposed rulemaking
package, the DOL Fiduciary Proposal is subject
to public comments and challenges. While its
final outcome is uncertain, we anticipate that if
the DOL Fiduciary Proposal were finalized as
proposed then we would not have to make
substantial adjustments to our Investment and
Savings Products business operations.
Primerica 2023 Annual Report
79
ITEM 7. MD&A
Restrictions on compensation models in
Canada. The organization of provincial and
territorial securities commissions throughout
Canada (collectively referred to as the Canadian
Securities Administrators (“CSA”)) implemented
rule amendments that prohibit up-front sales
commissions by fund companies for the sale of
mutual funds offered under a prospectus in
Canada (“DSC Ban”), effective June 1, 2022.
During 2022, in response to regulatory changes
in Canada, we developed a set of mutual fund
products with two third-party mutual fund
companies that are sold exclusively by our
independent sales representatives (the “Principal
Distributor funds”). The revenue we receive is
primarily in the form of asset-based distribution
fees from the mutual fund companies and asset-
based service fees that are charged to investors.
In turn, the primary compensation we offer
independent sales representatives is the option
of an up-front sales commission or higher asset-
based commissions over time. Although we
received the requisite approval, the CSA has
indicated that it intends to closely examine the
model, including potentially through a public
consultation on sales practices, and may require
undertakings or consider future amendments
that would require modifications to the model,
including with respect to its up-front
commission features. At this time, we cannot
quantify the financial impact, if any, of future
changes to our business that may be necessary if
our Principal Distributor funds model is required
to be modified or discontinued. During the year
ended December 31, 2023, Canadian mutual
funds represented approximately 13% of our
total investment and savings product sales and
approximately 13% of our average client asset
values.
As mandated by insurance regulators in Canada,
a cessation of deferred sales charges on new
segregated fund contracts entered into after
May 31, 2023 went into effect as previously
announced. Deferred sales charges will continue
to be allowed on subsequent deposits to
existing segregated funds contracts for a period
of time; however, insurance regulators will be
further evaluating whether to allow this
continued use. Our Canadian segregated funds
80
products were primarily sold on a deferred sales
charge basis and we paid up-front commissions
to the independent sales representatives for the
sale of these products. As we anticipated, we
experienced a decline in segregated funds
product sales beginning in June 2023. Without
further clarity from regulators on allowable
segregated funds compensation practices, we
are unable to evaluate and introduce new
compensation practices for the sale of our
segregated funds or similar products we could
potentially distribute on behalf of third parties.
We earn revenue from Canadian segregated
funds products based on a percentage of client
assets under management. During the year
ended December 31, 2023, Canadian segregated
funds represented approximately 1% of our total
investment and savings product sales and
approximately 3% of our average client asset
values.
FactorsAffectingOurResults
Refer to the Business Trends and Conditions
section for discussion of the potential impact on
our business from COVID-19.
Term Life Insurance Segment. The Term Life
Insurance segment results are primarily driven
by sales volumes, how closely actual experience
matches our pricing assumptions, terms and use
of reinsurance, and expenses.
Sales and policies in-force. Sales of term
policies and the size and characteristics of our
in-force book of policies are vital to our results
over the long term. Premium revenue is
recognized as it is earned over the term of the
policy. However, because we incur significant
cash outflows at or about the time policies are
issued, including the payment of sales
commissions and underwriting costs, changes in
life insurance sales volume in a period will have
a more immediate impact on our cash flows than
on revenue.
Historically, we have found that while sales
volume of term life insurance products between
fiscal periods may vary based on a variety of
factors, the productivity of sales representatives
generally remains within a range (i.e., an average
monthly rate of new policies issued per life-
licensed independent sales representative
between 0.20 and 0.24, as adjusted). The volume
of term life insurance products sales will
fluctuate in the short term, but over the longer
term, our sales volume generally correlates to
the size of the independent sales force.
Actuarial assumptions. The actuarial
assumptions that underlie our reserves are
based upon our best estimates of mortality,
persistency, and disability. Our results will be
affected to the extent there is a variance
between our actuarial assumptions and actual
experience. These variances will be reflected in
our financial results by unlocking assumptions
and cash flows underlying the liability for future
policy benefits (“LFPB”) and ceded reserves that
are part of the reinsurance recoverables. See
Note 10 (Future Policy Benefits) for more
information on LFPB. The variances are also
reflected in the projection of future face amount
that is the basis for amortizing deferred policy
acquisition costs (“DAC”).
• Persistency. Persistency is a measure of
how long our insurance policies stay in-
force. As a general matter, persistency that
is lower than our actuarial assumptions
adversely affects our results over the long
term because we lose the recurring revenue
stream associated with the policies that
lapse. In general, persistency differences
have a minimal impact on our financial
results from period to period since DAC is
generally amortized on a straight-line basis
and the unlocking of the LFPB adjusts both
expected net premiums and expected future
policy benefits and spreads any variances
over the remaining contract period.
• Mortality. Our profitability will fluctuate to
the extent actual mortality rates differ from
actuarial assumptions. We mitigate a
significant portion of our mortality exposure
through reinsurance. Long term mortality
variances that result in an assumption
change may have a significant impact on
our financial results.
• Disability. Our profitability will fluctuate to
the extent actual disability rates underlying
ITEM 7. MD&A
our waiver benefits, including recovery rates
for individuals currently disabled, differ from
actuarial assumptions. The waiver benefit is
secondary to the death benefit coverage
provided. However, the waiver benefit is not
reinsured on a yearly renewable term
(“YRT”) basis and material changes in
assumptions compared to expectations can
have a disproportionate impact on our
financial results.
•
Interest Rates. We use a locked-in
assumption for future interest rates for
reserves underlying our segment results.
Policies issued prior to the Transition Date
use an interest rate that reflects the
portfolio’s current reinvestment rate while
policies issued on or after the Transition
Date use an upper-medium grade fixed
income instrument yield during the period
of issue.
Reinsurance. We use reinsurance extensively,
which has a significant effect on our results of
operations. We have generally reinsured
between 80% and 90% of the mortality risk on
term life insurance (excluding coverage under
certain riders) on a quota share YRT basis. To the
extent actual mortality experience is more or less
favorable than the contractual rate, the reinsurer
will earn incremental profits or bear the
incremental cost, as applicable. In contrast to
coinsurance, which is intended to eliminate all
risks (other than counterparty risk of the
reinsurer) and rewards associated with a
specified percentage of the block of policies
subject to the reinsurance arrangement, the YRT
reinsurance arrangements we enter into are
intended only to reduce volatility associated with
variances between estimated and actual
mortality rates.
In 2010, as part of our corporate reorganization
and the initial public offering of our common
stock, we entered into significant coinsurance
transactions (the “IPO coinsurance transactions”)
with entities then affiliated with Citigroup, Inc.
(collectively, the “IPO coinsurers”) and ceded
between 80% and 90% of the risks and rewards
of term life insurance policies that were in-force
at year-end 2009. We administer all such policies
Primerica 2023 Annual Report
81
ITEM 7. MD&A
subject to these coinsurance agreements.
Policies reaching the end of their initial level
term period are no longer ceded under the IPO
coinsurance transactions.
The effect of our reinsurance arrangements on
ceded premiums and benefits and expenses on
our statements of income follows:
• Ceded premiums. Ceded premiums are
the premiums we pay to reinsurers. These
amounts are deducted from the direct
premiums we earn to calculate our net
premium revenues. Similar to direct
premium revenues, ceded coinsurance
premiums remain level over the initial term
of the insurance policy. Ceded YRT
premiums increase over the period that the
policy has been in-force. Accordingly, ceded
YRT premiums generally constitute an
increasing percentage of direct premiums
over the policy term.
• Benefits and claims. Benefits and claims
include incurred claim amounts and
changes in future policy benefit reserves.
Reinsurance reduces incurred claims in
direct proportion to the percentage ceded
and reinsurance cash flows are reflected in
the ceded reserves included in reinsurance
recoverables. Changes in ceded reserves
offset changes in future policy benefit
reserves.
•
Insurance expenses
Insurance expenses.
are reduced by the allowances received
from coinsurance. There is no impact on
insurance expenses associated with our YRT
contracts.
We may alter our reinsurance practices at any
time due to the unavailability of YRT reinsurance
at attractive rates or the availability of
alternatives to reduce our risk exposure. We
intend to continue ceding approximately 90% of
our U.S. and Canadian mortality risk on new
business.
Expenses. Results are also affected by variances
in client acquisition, maintenance and
administration expense levels.
Investment and Savings Products Segment.
The Investment and Savings Products segment
82
results are primarily driven by sales, the value of
assets in client accounts for which we earn
ongoing management, marketing and support,
and distribution fees, and the number of transfer
agent recordkeeping positions and non-bank
custodial fee-generating accounts we
administer.
Sales. We earn commissions and fees, such as
dealer re-allowances and marketing and
distribution fees, based on sales of mutual fund
products and annuities in the United States and
sales of certain mutual fund products in Canada.
Sales of investment and savings products are
influenced by the overall demand for investment
products in the United States and Canada, as
well as by the size and productivity of the
independent sales force. We generally
experience seasonality in the Investment and
Savings Products segment results due to our
high concentration of sales of retirement
account products. These accounts are typically
funded in February through April, coincident
with our clients’ tax return preparation season.
While we believe the size of the independent
sales force is a factor in driving sales volume in
this segment, there are a number of other
variables, such as economic and market
conditions, which may have a significantly
greater effect on sales volume in any given fiscal
period.
Asset values in client accounts. We earn
marketing and distribution fees (trail
commissions or, with respect to U.S. mutual
funds, 12b-1 fees) on mutual fund and annuity
assets in the United States and Canada. In the
United States, we also earn investment advisory
and administrative fees on assets in managed
investments. In Canada, we earn marketing,
distribution, and shareholder services fees on
mutual fund assets for which we serve as the
principal distributor and management fees on
the segregated funds for which we serve as
investment manager. Asset values are influenced
by new product sales, ongoing contributions to
existing accounts, redemptions and the change
in market values in existing accounts. While we
offer a wide variety of asset classes and
investment styles, our clients’ accounts are
primarily invested in equity funds. Volatility in
equity markets will impact the value of assets in
client accounts and, as a result, the revenue we
earn on those assets.
Positions. We earn transfer agent
recordkeeping fees for administrative functions
we perform on behalf of several of our mutual
fund providers. An individual client account may
include multiple fund positions for which we
earn transfer agent recordkeeping fees. We may
also receive fees earned for non-bank custodial
services that we provide to clients with
retirement plan accounts.
Sales mix. While our investment and savings
products all provide similar long-term economic
returns to the Company, our results in a given
fiscal period will be affected by changes in the
overall mix of products within these categories.
Examples of changes in the sales mix that
influence our results include the following:
•
•
•
sales of annuity products in the United
States will generate higher revenues in the
period such sales occur than sales of other
investment products that either generate
lower up-front revenues or, in the case of
managed investments and segregated
funds, no up-front revenues;
sales of a higher proportion of managed
investments, Canadian mutual funds, and
segregated funds products will spread the
revenues generated over time because we
earn higher revenues based on assets under
management for these accounts each
period as opposed to earning up-front
revenues based on product sales; and
sales of a higher proportion of mutual fund
products sold in the United States will
impact the timing and amount of revenue
we earn given the distinct transfer agent
recordkeeping and non-bank custodial
services we provide for certain mutual fund
products we distribute.
Senior Health Segment. The Senior Health
segment results are primarily driven by the
number of approved policies, LTV per approved
policy and tail revenue adjustments, CAC per
approved policy, and other revenue.
ITEM 7. MD&A
Approved policies. Approved policies represent
an estimate of submitted policies approved by
the health insurance carriers for the identified
product during the indicated period. Not all
approved policies will go in force. In general, the
relationship between the number of submitted
policies and approved policies has been
seasonally consistent. Therefore, factors
impacting the number of submitted policies
generally impact the number of approved
policies. Revenue is primarily generated from
approved policies, and LTVs are recorded when
the enrollment is approved by the applicable
health insurance carrier. Medicare Advantage
plans make up nearly all of the approved policies
we distribute. The number of approved policies
is influenced by the following:
•
the number and tenure of our licensed
health insurance agents;
• our ability to hire and train our team of
e-TeleQuote licensed health insurance
agents to manage leads and help eligible
Medicare beneficiaries through the
enrollment process;
• our ability to generate and obtain leads for
our team of e-TeleQuote licensed health
insurance agents;
•
•
the size and growth of the population of
senior citizens in the United States;
the appeal of government-funded Medicare
Advantage plans that provide privately
administered healthcare coverage with
enhanced benefits relative to traditional
Medicare;
• our health insurance carrier relationships
that allow us to offer plans that most
appropriately meet eligible Medicare
beneficiaries’ needs; and
• our ability to compete with national direct
to consumer brokers, health insurance
carriers that directly market to beneficiaries
and other independent brokers.
LTV per approved policy and tail revenue
adjustments. When a policy is approved by the
health insurance carrier, commission revenue is
Primerica 2023 Annual Report
83
ITEM 7. MD&A
recognized based on an estimated LTV per
approved policy. LTV per approved policy is the
cumulative total of commissions (including
administrative and marketing development
payments received on a per approved policy
basis) estimated to be collected over the
expected life of a policy, subject to constraints
applied in accordance with our revenue
recognition policy. Specifically, LTV per approved
policy is equal to the sum of the initial
commissions and payments, less an estimate of
chargebacks for paid policies that are
disenrolled during the first policy year, plus
forecasted renewal commissions. This estimate is
driven by several factors including, but not
limited to, commission rates from health
insurance carriers, expected policy turnover,
emerging chargeback activity and applied
constraints. These factors may result in varying
values from period to period.
We recognize adjustments to revenue outside of
LTV for approved policies from prior periods
when our cash collections are, or are expected to
be, different from the estimated constrained
LTVs, which we refer to as tail revenue
adjustments. The recognition of tail revenue
adjustments results from a change in the
estimate of expected cash collections when
actual cash collections or communicated rate
increases have indicated a trend that is different
from the estimated constrained LTV. Tail revenue
adjustments can be positive or negative, and we
recognize positive adjustments to revenue when
we do not believe it is probable that a significant
reversal of cumulative revenue will occur.
CAC per approved policy. Results are also
driven by the costs of acquisition, which is
defined as the total direct costs incurred per
approved policy. Our costs of acquisition are
primarily comprised of the cost to generate and
acquire leads, including fees paid to Primerica
Senior Health certified independent sales
representatives, and the labor, benefits, bonus
compensation, licensing and training costs
associated with our team of e-TeleQuote
licensed health insurance agents. Other than
costs incurred to assist beneficiaries with
switching plans within the same carrier, we incur
84
our entire cost of approved policies prior to
enrollment and prior to receiving our first
commission related payment. Factors that
impact our costs of acquisition per approved
policy include:
•
the market price of externally-generated
leads;
• our ability to efficiently procure internally-
generated leads; and
•
the productivity of our e-TeleQuote licensed
health insurance agents in converting
procured leads into approved policies.
Other revenue. Other revenue recognized in
the Senior Health segment includes other
revenues received for providing marketing
services and health risk assessment services to
certain health insurance carriers. Marketing
development revenue is based on meeting
agreed-upon objectives with certain health
insurance carriers. Marketing development
revenue serves to offset contract acquisition
costs associated with the distribution of
approved policies. Agreements for marketing
development revenue are generally short-term
in nature and can vary from period to period.
Marketing development payments received on a
per approved policy basis are recognized in
commissions and fees revenue. Health risk
assessment services generate revenue from
health insurance carriers by collecting
information from beneficiaries during the sales
process.
Corporate and Other Distributed Products
Segment. We earn revenues and pay
commissions and referral fees within the
Corporate and Other Distributed Products
segment for mortgage loan originations, prepaid
legal services, auto and homeowners’ insurance
referrals, and other financial products, all of
which are originated by third parties. The
Corporate and Other Distributed Products
segment also includes in-force policies from
several discontinued lines of insurance
underwritten by National Benefit Life Insurance
Company (“NBLIC”).
The Corporate and Other Distributed Products
segment includes net investment income
recognized by the Company. Net investment
income is impacted by the size and performance
of our invested asset portfolio, which can be
influenced by interest rates, credit spreads, and
the mix of invested assets. Net investment
income also is influenced by short-term interest
rates and the amount of cash and cash
equivalents on hand.
The Corporate and Other Distributed Products
segment also includes corporate income and
expenses not allocated to our other segments,
general and administrative expenses (other than
expenses that are allocated to the Term Life
Insurance, Investment and Savings Products, or
Senior Health segments), interest expense on
notes payable, redundant reserve financing
transactions and our revolving credit facility
(“Revolving Credit Facility”), as well as realized
gains and losses on our invested asset portfolio.
Capital Structure. Our financial results are
affected by our capital structure, which includes
our senior unsecured notes (the “Senior Notes”),
redundant reserve financing transactions, our
Revolving Credit Facility, and our common stock.
See Note 11 (Debt), Note 13 (Stockholders’
Equity) and Note 17 (Commitments and
Contingent Liabilities) to our consolidated
financial statements included elsewhere in this
report for more information on changes in our
capital structure.
Foreign Currency. The Canadian dollar is the
functional currency for our Canadian subsidiaries
and our consolidated financial results, reported
in U.S. dollars, are affected by changes in the
currency exchange rate. As such, the translated
amount of revenues, expenses, assets and
liabilities attributable to our Canadian
subsidiaries will be higher or lower in periods
where the Canadian dollar appreciates or
weakens relative to the U.S. dollar, respectively.
The year-end exchange rates (U.S. dollar per
Canadian dollar) used by the Company to
translate our Canadian dollar functional currency
assets and liabilities into U.S. dollars increased
by 3% in 2023 from 2022. Also, the average
ITEM 7. MD&A
exchange rates used by the Company in 2023 to
translate our Canadian dollar functional currency
revenues and expenses into U.S. dollars
decreased 4% compared to 2022. The 2022 year-
end exchange rates decreased by 7% from 2021
and the average exchange rates decreased 4%
compared to 2021.
See the Results of Operations section, the
Financial Condition section, and “Quantitative
and Qualitative Disclosures About Market Risk –
Canadian Currency Risk” and Note 3 (Segment
and Geographical Information) to our
consolidated financial statements included
elsewhere in this report, for more information on
our Canadian subsidiaries and the impact of
foreign currency on our financial results.
Income Taxes. The profitability of the
Company and its subsidiaries is affected by
income taxes assessed by federal, state, and U.S.
territorial jurisdictions in the U.S. and federal and
provincial jurisdictions in Canada. Changes in tax
legislation may impact the measurement of our
deferred tax assets and liabilities and the
amount of income tax expense we incur.
CriticalAccountingEstimates
We prepare our financial statements in
accordance with U.S. generally accepted
accounting principles (“U.S. GAAP”). These
principles are established primarily by the
Financial Accounting Standards Board. The
preparation of financial statements in conformity
with U.S. GAAP requires us to make estimates
and assumptions based on currently available
information when recording transactions
resulting from business operations. Our
significant accounting policies are described in
Note 1 (Description of Business, Basis of
Presentation, and Summary of Significant
Accounting Policies) to our consolidated
financial statements included elsewhere in this
report. The most significant items on our
consolidated balance sheets are based on fair
value determinations, accounting estimates and
actuarial determinations, which are susceptible
to changes in future periods and could affect
our results of operations and financial position.
Primerica 2023 Annual Report
85
ITEM 7. MD&A
The estimates that we deem to be most critical
to an understanding of our results of operations
and financial position are those related to DAC,
future policy benefit reserves and corresponding
amounts recoverable from reinsurers, income
taxes, renewal commissions receivable, goodwill
and the valuation of investments. The
preparation and evaluation of these critical
accounting estimates involve the use of various
assumptions developed from management’s
analyses and judgments. Subsequent experience
or use of other assumptions could produce
significantly different results.
Deferred Policy Acquisition Costs. We defer
incremental direct costs of successful contract
acquisitions that result directly from and are
essential to the contract transaction(s) and that
would not have been incurred had the contract
transaction(s) not occurred. These costs include
commissions and policy issue expenses.
Deferrable Term Life Insurance policy acquisition
costs are amortized on a constant-level basis
over the expected term of the contracts using
face amount as the unit of measure. Interest is
not accrued on unamortized DAC balances and
DAC is not subject to impairment testing.
Contracts are grouped by cohorts consistent
with the grouping used in estimating the
LFPB. The cohorts are defined by the legal entity
that issued the policy and the year the policy
was issued.
Assumptions of face amounts used to amortize
DAC for term life policies, including persistency
and mortality, are consistent with the
assumptions used in estimating the LFPB.
Changes in persistency would have the most
notable impact on DAC amortization; however,
the differences primarily affect DAC amortization
on a go-forward basis. If annual lapse rate
assumptions at each policy duration were 5%
higher during 2023, we would have recognized
approximately $9 million of additional
amortization of DAC expense for 2023, before
the impact of tax, and the rate of DAC
amortization would increase in future years.
Conversely, if annual lapse rate assumptions
were 5% lower during 2023, we would have
recognized approximately $9 million of lower
DAC amortization for 2023, before the impact of
86
tax, and the rate of DAC amortization would
decrease in future years. We believe that a plus
or minus 5% annual lapse rate change is a
reasonably possible variation. Changes in
persistency assumptions also impact the balance
of future policy benefit reserves and reinsurance
recoverables as discussed below.
For additional information on DAC, see Note 1
(Description of Business, Basis of Presentation,
and Summary of Significant Accounting Policies)
and Note 7 (Deferred Policy Acquisition Costs) to
our consolidated financial statements included
elsewhere in this report.
Liabilities for future policy
Future Policy Benefit Reserves and
Reinsurance.
benefits on our term life insurance products are
reserves established for death claims, waiver of
premium benefits, and claim settlement
expenses. The LFPB is calculated as the present
value of expected future benefits less the
present value of expected future net premiums
receivable under the contracts. Net premiums
are defined as the portion of policyholder gross
premiums that are needed to pay for all
benefits.
The assumptions underlying the LFPB include
mortality, persistency, discount rates, disability
rates, and other assumptions that reflect our
best estimate based on our historical experience
and modified, as necessary, to reflect non-
recurring and/or anticipated trends.
The LFPB is estimated by grouping insurance
policies into cohorts. Policy cohorts for the Term
Life Insurance segment are based on the legal
entity that issued the policy and the year the
policy was issued.
The cash flows and assumptions underlying the
LFPB are unlocked each quarter to reflect
differences between actual and expected
experience. In general, assumption changes,
such as mortality, lapse and disability, to the
extent necessary, are expected to only occur
during the third quarter when we update our
experience studies. However, they may occur at
any time based on emerging experience.
The impact of unlocking assumptions, such as
mortality, lapse and disability, will be partly
reflected in the current period and partly spread
to future periods based on the remaining
duration of the impacted cohort(s). The catch-up
is retroactive back to the later of the Transition
Date or issue date, after reinsurance
recoverables and is recognized as a
remeasurement gain or loss as a separate
component of benefits and claims expense in
the consolidated statements of income.
The ceded policy reserve balances included in
reinsurance recoverables are calculated in the
same manner as the LFPB by cohort and apply
best estimate assumptions and quarterly
unlocking.
The Company uses discount rates applied by
country to align with local currency cash
flows. Discount rates consist of yield curves that
are developed using Bloomberg’s Evaluated
Pricing Product based on senior unsecured fixed
rate bonds ratings of A+, A, or A-. The discount
rate assumption is updated quarterly, and the
ITEM 7. MD&A
impact of remeasuring the net LFPB, after
reinsurance recoverables from changes in the
locked-in discount rate assumption is reflected
in other comprehensive income in the
consolidated statements of comprehensive
income.
The LFPB is necessarily based on estimates,
assumptions and our analysis of historical
experience. Factors that could cause prospective
assumptions to be different from historical
experience include but are not limited to
changes to our term life product series,
economic and societal trends, new
pharmaceutical drugs, and the impact of
regulatory changes. The assumptions and
estimates underlying the LFPB require significant
judgment, and therefore, are inherently
uncertain. The following table provides
illustrated net impact of changes in assumptions
affecting both the LFPB and reinsurance
recoverables that we believe are reasonably
possible, before the impact of tax:
Assumption
Lapse
Mortality
Disability
Sensitivity assumption change
Estimated impact at December 31, 2023
5% decrease / 5% increase
($33 million) / $33 million(1)
5% increase / 5% decrease
($31 million) / $31 million(1)
5% increase / 5% decrease
($15 million) / $15 million(1)
Discount rate
100 bps decrease / 100 bps increase
($567 million) / $691 million(2)
(1)
(2)
Changes in lapse, mortality and disability affect the benefits and claims expense on the consolidated statements of income.
Estimated impacts show the (decrease) / increase in income before income taxes. The assumption change sensitivities shown
are based on a consistent percentage change across all policy durations.
Changes in discount rate affect the effect of change in discount rate assumptions on the liability for future policy benefits on
the consolidated statements of comprehensive income. Estimated impacts show the (decrease) / increase in accumulated
other comprehensive income before income taxes. The assumption change is based on a parallel shift in the discount rate
curve.
As discussed above, changes in lapse, mortality,
and disability assumptions would also affect the
net premium ratio used to recognize benefits
expenses in future periods.
For additional information on future policy
benefits, reinsurance and the impact to
accumulated other comprehensive income see
Note 1 (Description of Business, Basis of
Presentation, and Summary of Significant
Accounting Policies), Note 6 (Reinsurance), and
Note 10 (Future Policy Benefits) to our
consolidated financial statements included
elsewhere in this report.
Income Taxes. We account for income taxes
using the asset and liability method. We
recognize deferred tax assets and liabilities for
the future tax consequences attributable to
(i) temporary differences between the financial
statement carrying amounts of existing assets
and liabilities and their respective tax bases and
(ii) operating loss and tax credit carryforwards.
Deferred tax assets are recognized subject to
management’s judgment that realization is more
likely than not applicable to the periods in which
we expect the temporary difference will reverse.
Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to
Primerica 2023 Annual Report
87
ITEM 7. MD&A
taxable income in the years in which those
temporary differences are expected to be
recovered or settled.
In light of the multiple tax jurisdictions in which
we operate, our tax returns are subject to
routine audit by the Internal Revenue Service
and other taxation authorities. These audits at
times may produce alternative views regarding
particular tax positions taken in the year(s) of
review. As a result, the Company records
uncertain tax positions, which require
recognition at the time when it is deemed more
likely than not that the position in question will
be upheld. Although management believes that
the judgment and estimates involved are
reasonable and that the necessary provisions
have been recorded, changes in circumstances
or unexpected events could adversely affect our
financial position, results of operations, and cash
flows.
For additional information on income taxes, see
Note 1 (Description of Business, Basis of
Presentation, and Summary of Significant
Accounting Policies) and Note 12 (Income Taxes)
to our consolidated financial statements
included elsewhere in this report.
Renewal Commissions Receivable. We earn
commissions when e-TeleQuote enrolls
Medicare beneficiaries in insurance policies
offered by its customers, third-party health
insurance carriers. We have no further
obligations to our customers once an eligible
Medicare beneficiary is approved for a policy by
the customer. We are entitled to commissions at
the time the initial policy is approved by the
health insurance carrier and are entitled to
renewal commissions for as long as the policy
renews. The estimate of renewal commissions is
part of the variable consideration recognized
and requires significant judgment including
determining the number of periods in which a
renewal will occur and the value of those
renewal commissions to be received if renewed.
We utilize the expected value approach for this
estimate, incorporating a combination of
historical lapse data and effective commission
rates to estimate forecasted renewal
consideration. We apply a constraint on our
88
estimate of renewal commissions so that it is
probable that a significant reversal in the
amount of cumulative revenue will not occur.
Variable consideration in excess of the amount
constrained is recognized in subsequent
reporting periods when the uncertainty is
resolved.
We utilize a practical expedient to estimate
renewal commissions revenue by applying the
use of a portfolio approach to policies grouped
together by health insurance carrier, Medicare
product type, and policy effective date. This
provides a practical approach to estimating the
renewal commissions expected to be collected
by evaluating various factors, including but not
limited to, contracted commission rates,
disenrollment experience and renewal
persistency rates. We continuously evaluate the
assumptions and inputs into our calculation of
renewal commissions revenue and refine our
estimates based on current information. There
could be situations where new facts or
circumstances, that were not available at the
time of the initial estimate, may indicate that the
renewal commissions receivable recognized is
higher or lower than our original expectation of
renewal commissions that will be collected. In
those situations, the renewal commissions
receivable will be written down or up to its
revised expected value by recording tail revenue
adjustments. During 2023, we recorded $2.3
million in net positive tail revenue adjustments
as retention for policies scheduled to renew was
higher than expected.
In applying the acquisition method
Goodwill.
of accounting for the e-TeleQuote business
combination, amounts assigned to identifiable
assets and liabilities acquired were based on
estimated fair values as of the date of
acquisition, subject to certain exceptions, with
the remainder recorded as goodwill. Significant
judgment is used to determine the value of the
acquired assets and liabilities as well as the
purchase consideration for non-controlling
interests. Key assumptions used to develop
these estimates include projected revenue,
expenses, cash flows, weighted average cost of
capital, estimates of customer turnover rates,
estimates of terminal values, forward-looking
estimates of peer company values, and
assessment of the probabilities of the earnout
metrics.
Goodwill is tested at the reporting unit level, all
of which is attributable to the Senior Health
segment (which is defined as the reporting unit).
The annual date used by the Company to test
goodwill for impairment is July 1. The Company
will also test goodwill for impairment between
annual tests if an event occurs or circumstances
change that would more likely than not result in
the fair value of the Senior Health reporting unit
being lower than its carrying value.
During the annual impairment test as of July 1,
2023, the Company performed a quantitative
impairment analysis using the income approach
by preparing a discounted cash flow analysis to
determine the reporting unit’s fair value. The
discounted cash flow analysis included key
assumptions such as the weighted average cost
of capital, long-term growth rate and projected
operating results such as approved policies,
lifetime value of commissions, contract
acquisition costs, operating expenses, collections
of renewal commissions receivable, and
utilization of net operating losses for income tax
purposes. We did not utilize a market approach
as part of the quantitative impairment analysis
as we believe management’s expectations of the
cash flows generated by the reporting unit were
more relevant in determining fair value given
inherent limitations in the credibility of available
peer company data. The measurement of the
reporting unit’s fair value is classified as a Level 3
fair value measurement given the significance of
the unobservable inputs such as forecasted
operating results and discount rates.
After the fair value of the reporting unit was
determined, the Company calculated its carrying
value by taking the reporting unit’s assets less its
liabilities. The carrying value of the Senior Health
reporting unit as of July 1, 2023 included
remaining goodwill of $127.7 million after
accumulated goodwill impairment charges of
$136.0 million that were recognized in previous
periods. The carrying value of the reporting unit
was then compared to its fair value to determine
the extent of any goodwill impairment. Based on
ITEM 7. MD&A
this 2023 analysis, the fair value exceeded the
carrying value of the reporting unit and,
therefore, we did not recognize any additional
non-cash goodwill impairment charges during
2023. The determination of whether the carrying
value of the reporting unit exceeds its fair value
involves a high degree of estimation and can be
affected by a number of industry and company-
specific risk factors that are subject to change
over time.
For additional information on goodwill, see Note
1 (Description of Business, Basis of Presentation,
and Summary of Significant Accounting Policies)
and Note 22 (Goodwill) to our consolidated
financial statements included elsewhere in this
report.
Invested Assets. We hold primarily fixed-
maturity securities, including bonds and
redeemable preferred stocks. We have classified
these invested assets as available-for-sale,
except for the securities of our U.S. broker-
dealer subsidiaries, which we have classified as
trading securities. We also hold a credit-
enhanced note, which we classified as a held-to-
maturity security that was issued in exchange for
a surplus note (the “Surplus Note”) with an equal
principal amount as part of a redundant reserve
financing transaction. All of these securities are
carried at fair value, except for the held-to-
maturity security, which is carried at amortized
cost. Unrealized gains and losses on available-
for-sale securities are included as a separate
component of other comprehensive income in
our consolidated statements of comprehensive
income.
We also hold equity securities, including
common and non-redeemable preferred stock.
These equity securities are measured at fair
value, and changes in unrealized gains and
losses are recognized in net income. Changes in
fair value of trading securities are included in net
income in our consolidated statements of
income in the period in which the change
occurred.
Fair value.
Fair value is the price that would be
received upon the sale of an asset in an orderly
transaction between market participants at the
measurement date. Fair value measurements are
Primerica 2023 Annual Report
89
ITEM 7. MD&A
based upon observable and unobservable
inputs. Observable inputs reflect market data
obtained from independent sources, while
unobservable inputs reflect our view of market
assumptions in the absence of observable
market information. We classify and disclose all
invested assets carried at fair value in one of the
three fair value measurement hierarchy
categories prescribed by U.S. GAAP.
As of each reporting period, we classify all
invested assets in their entirety based on the
lowest level of input that is significant to the fair
value measurement. Significant levels of
estimation and judgment are required to
determine the fair value of certain of our
investments. The factors influencing these
estimations and judgments are subject to
change in subsequent reporting periods.
Credit losses for available-for-sale fixed-maturity
securities.
For available-for-sale securities in an
unrealized loss position that we intend to sell or
would more-likely-than-not be required to sell
before the expected recovery of the amortized
cost basis, we recognize the impairment as a
credit loss in our consolidated statements of
income by writing down the amortized cost
basis to the fair value. For available-for-sale
securities in an unrealized loss position that we
do not intend to sell or it is not more-likely-
than-not that we will be required to sell before
the expected recovery of the amortized cost
basis, we recognize the portion of the
impairment that is due to a credit loss in our
consolidated statements of income through an
allowance for credit losses. We reverse credit
losses previously recognized in the allowance for
credit losses in situations where the estimate of
credit losses on those securities has declined.
We do not consider the length of time an
available-for-sale security has been in an
unrealized loss position when estimating credit
losses.
Analyses that we perform to determine whether
an impairment is due to a credit loss or other
factors involve the use of estimates,
assumptions, and subjectivity. We evaluate a
number of quantitative and qualitative factors
when determining the credit loss on individual
90
securities, including issuer-specific risks as well
as relevant macroeconomic risks. If these factors
or future events change, we could experience
material credit losses recognized in our
consolidated statements of income for available-
for-sale securities in future periods, which could
adversely affect our financial condition, results of
operations and the size and quality of our
invested assets portfolio.
For additional information on our invested
assets, see Note 1 (Description of Business, Basis
of Presentation, and Summary of Significant
Accounting Policies), Note 4 (Investments) and
Note 5 (Fair Value of Financial Instruments) to
our consolidated financial statements included
elsewhere in this report.
ResultsofOperations
Revenues. Our revenues consist of the
following:
• Net premiums. Reflects direct premiums
payable by our policyholders on our in-
force insurance policies, primarily term life
insurance, net of reinsurance premiums that
we pay to reinsurers.
• Commissions and fees. Consists primarily of
dealer re-allowances earned on the sales of
investment and savings products, trail
commissions and management fees based
on the asset values of client accounts,
marketing and distribution fees from product
originators, fees for non-bank custodial
services rendered in our capacity as nominee
on client retirement accounts funded by
mutual funds on our servicing platform,
transfer agent recordkeeping fees for mutual
funds on our servicing platform, and fees
associated with the sale of other distributed
products. Also consists of commissions and
fees earned from the distribution of
Medicare-related insurance products on
behalf of health insurance carriers.
• Net investment income. Represents
income, net of investment-related expenses,
generated on cash, cash equivalents, and
our invested asset portfolio, which consists
primarily of interest income earned on
fixed-maturity investments. Investment
income recorded on our held-to-maturity
invested asset and the offsetting interest
expense recorded for our Surplus Note are
included in net investment income.
•
Investment gains (losses). Primarily reflects
the difference between amortized cost and
amounts realized on the sale of available-
for-sale securities, credit losses recognized
on available-for-sale securities and changes
in the fair value of equity securities.
• Other, net. Reflects revenues generated
from the fees charged for access to
Primerica Online (“POL”), our primary sales
force support tool, marketing development
revenue received from health insurance
carriers, as well as revenues from the sale of
other miscellaneous items.
Benefits and Expenses. Our operating
expenses consist of the following:
• Benefits and claims. Reflects the benefits
and claims payable on insurance policies,
changes in our reserves for future policy
claims and reserves for other benefits
payable, net of reinsurance.
• Future policy benefits remeasurement
(gain) loss. Represents the impact on the
starting LFPB, net of reinsurance
recoverables, from unlocking current
period cash flows and assumptions. It
reflects the catch-up on the net liability
that is retroactive back to the later of the
Transition Date or issue date up to the
current reporting date.
• Amortization of DAC. Represents the
amortization of capitalized costs directly
associated with the sale of an insurance
policy or segregated fund, including sales
commissions, medical examination and
other underwriting costs, and other
eligible policy issuance costs.
• Sales commissions. Represents
commissions to the sales representatives
in connection with the sale of investment
ITEM 7. MD&A
and savings products, and products other
than insurance products.
• Insurance expenses. Reflects non-
capitalized insurance expenses, including
staff compensation, technology and
communications, insurance independent
sales force-related costs, printing,
postage and distribution of insurance
sales materials, outsourcing and
professional fees, premium taxes, and
other corporate and administrative fees
and expenses related to our insurance
operations. Insurance expenses also
include both indirect policy issuance costs
and costs associated with unsuccessful
efforts to acquire new policies.
• Insurance commissions. Reflects sales
commissions with respect to insurance
products that are not eligible for deferral.
• Contract acquisition costs. Reflects the
total direct costs incurred to acquire an
approved policy during the period on
Senior Health products. Contract
acquisition costs are primarily comprised
of the cost to generate and acquire
compliant leads and the labor, benefits,
incentive compensation and training costs
associated with our team of e-TeleQuote
licensed health insurance agents. The
number of e-TeleQuote licensed health
insurance agents, agent tenure and
attrition rate all impact CAC.
• Interest expense. Reflects interest on our
notes payable, any interest and the
commitment fee on our Revolving Credit
Facility, the financing charges related to
the letter of credit issued under the credit
facility agreement with Deutsche Bank,
fees paid for the credit enhancement
feature on our held-to-maturity invested
asset, and a finance charge incurred
pursuant to one of our coinsurance
agreements with an IPO coinsurer.
• Goodwill impairment loss. Represents
the excess of the Senior Health reporting
unit’s carrying value over its estimated fair
value.
Primerica 2023 Annual Report
91
ITEM 7. MD&A
• Loss on extinguishment of debt. Consists
primarily of the make whole premium
paid in 2021 to extinguish senior notes
issued in 2012 prior to the scheduled
2022 maturity date.
• Other operating expenses. Consists
primarily of expenses that are unrelated
to the distribution of life insurance
products, including staff compensation,
technology and communications, various
sales force-related costs, non-bank
custodial and transfer agent
recordkeeping administrative costs,
outsourcing and professional fees, and
other corporate and administrative fees
and expenses.
Insurance expenses and other operating
expenses directly attributable to the Term Life
Insurance, Investment and Savings Products and
Senior Health segments are recorded directly to
the applicable segment. We allocate certain
other revenue and operating expenses that are
not directly attributable to a specific operating
segment using methods expected to reasonably
measure the benefit received by each reporting
segment. Such methods include time studies,
recorded usage, revenue distribution, and sales
force representative distribution. These allocated
items include fees charged for access to POL and
costs incurred for technology, sales force
support, occupancy and other general and
administrative costs. Costs that are not directly
charged or allocated to our three primary
operating segments are included in the
Corporate and Other Distributed Products
segment.
92
Primerica, Inc. and Subsidiaries Results. Our results of operations for the years ended
December 31, 2023, 2022, and 2021 were as follows:
ITEM 7. MD&A
Revenues:
Direct premiums
Ceded premiums
Net premiums
Commissions and fees
Investment income net of
investment expenses
Interest expense on surplus note
Net investment income
Realized investment gains (losses)
Other investment gains (losses)
Investment gains (losses)
Other, net
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in thousands)
$ 3,312,125 $ 3,230,120 $ 3,122,148 $ 82,005
21,919
(1,651,811)
(1,629,892)
(1,616,264)
3% $107,972
1% 13,628
3%
*
1,660,314
950,416
1,600,228
944,676
1,505,884
1,042,813
60,086
5,740
4% 94,344
(98,137)
*
6%
(9)%
201,311
(65,474)
135,837
(645)
(5,251)
(5,896)
75,020
156,987
(63,922)
142,795
(62,207)
93,065
1,444
(2,439)
(995)
83,159
80,588
4,665
1,207
5,872
74,575
44,324 28% 14,192 10%
3%
1,715
1,552
2%
42,772 46% 12,477 15%
(2,089)
(2,812)
(3,221)
(3,646)
*
*
*
*
(4,901)
(8,139)(10)%
*
(6,867)
8,584 12%
*
Total revenues
2,815,691
2,720,133
2,709,732
95,558
4% 10,401
*
Benefits and expenses:
Benefits and claims
Future policy benefits
remeasurement (gain) loss
Amortization of DAC
Sales commissions
Insurance expenses
Insurance commissions
Contract acquisition costs
Interest expense
Goodwill impairment loss
Loss on extinguishment of debt
Other operating expenses
642,979
632,403
602,007
10,576
2% 30,396
5%
(384)
275,816
457,444
235,460
34,222
55,233
26,594
—
—
336,647
1,626
261,629
462,764
235,405
30,261
68,431
27,237
60,000
—
320,394
1,297
238,270
522,308
202,605
34,532
52,788
30,618
76,000
8,927
296,851
*
329
3,961 13%
(2,010)
14,187
(5,320)
55
*
5% 23,359 10%
(1)% (59,544)(11)%
32,800 16%
*
(4,271)(12)%
(13,198)(19)% 15,643 30%
(2)% (3,381)(11)%
(16,000)
*
(8,927)
— *
5% 23,543
(643)
(60,000)
*
*
8%
16,253
Total benefits and expenses
2,064,011
2,100,150
2,066,203
(36,139)
(2)% 33,947
2%
Income before income
taxes
Income taxes
Net income
Net income (loss)
attributable to
noncontrolling
interests
Net income
attributable to
Primerica, Inc.
*
Less than 1% or not meaningful
751,680
175,079
619,983
152,953
643,529 131,697 21% (23,546)
22,126 14% (14,591)
167,544
(4)%
(9)%
576,601
467,030
475,985 109,571 23%
(8,955)
(2)%
—
(5,038)
(1,377)
5,038
*
(3,661)
*
$ 576,601 $ 472,068 $ 477,362 $104,533 22% $ (5,294)
(1)%
Primerica 2023 Annual Report
93
ITEM 7. MD&A
2023 compared to 2022
Total revenues. Total revenues increased in
2023 from 2022 due to increases in net
premiums earned in our Term Life Insurance
segment, asset-based commissions and fees
earned in our Investment and Savings Products
segment, and net investment income earned by
our invested asset portfolio. Partially offsetting
these increases in total revenues were lower
sales-based commissions and fees earned in our
Investment and Savings Products segment.
These movements are further discussed in detail
in the Segment Results sections below.
Net investment income increased in 2023 from
2022 due primarily to $23.3 million from higher
yields in the invested asset portfolio, a $9.4
million higher total return on the deposit asset
backing our 10% coinsurance agreement and
$8.5 million from a larger invested asset
portfolio compared to the prior year. Investment
income net of investment expenses includes
interest earned on our held-to-maturity asset,
which is offset by interest expense on the
Surplus Note, thereby eliminating any impact on
net investment income.
Amounts recognized for each line item will
remain offsetting and will fluctuate from period
to period along with the principal amounts of
the held-to-maturity asset and the Surplus Note
based on the balance of reserves being
contractually supported under a redundant
reserve financing transaction used by Vidalia Re,
Inc. (“Vidalia Re”). For more information on the
Surplus Note, see Note 4 (Investments) and
Note 11 (Debt) to our consolidated financial
statements included elsewhere in this report.
Investment losses increased during 2023
compared to 2022 primarily due to a $2.2 million
credit loss recognized for debt securities,
associated with a specific issuer, that we had
designated as intending to sell, partially offset
by a $0.4 million gain from the subsequent sale
of these securities. In addition, we recognized a
$3.1 million negative mark-to-market
adjustment on equity securities held within our
investment portfolio during 2023 compared to a
$2.4 million negative mark-to-market
adjustment during 2022.
94
Other, net revenues decreased in 2023 from
2022, primarily due to a decrease in revenue
earned for providing agreed-upon marketing
services to health insurance carriers in the Senior
Health segment during 2023. Refer to the Senior
Health segment results below for further
discussion.
Total benefits and expenses. Total benefits and
expenses decreased in 2023 from 2022 largely
due to a non-cash goodwill impairment charge
of $60.0 million recorded in our Senior Health
segment during 2022, lower sales-based
commissions expenses in our Investment and
Savings Products segment, and lower contract
acquisition costs in our Senior Health segment.
Partially offsetting the decrease in total benefits
and expenses were increases in asset-based
sales commissions expenses in our Investment
and Savings Products segment, amortization of
DAC, and other operating expenses during 2023.
The increase in other operating expenses was
due to increased technology spending as well as
higher employee-related and growth-related
costs. These movements are discussed in further
detail in the Segment Results section below.
Income taxes. Our effective income tax rate for
2023 was 23.3% compared to 24.7% in 2022.
Excluding the non-cash, non-deductible
goodwill impairment charge in 2022, the
effective income tax rate was 22.5% in 2022. The
year-over-year increase in the effective tax rate
excluding the goodwill impairment charge was
primarily due to higher state income taxes in
2023.
2022 compared to 2021
Total revenues. Total revenues increased in
2022 from 2021 primarily driven by growth in
net premiums in the Term Life Insurance
segment. Partially offsetting this increase were
lower commissions and fees in 2022 versus 2021
due to lower sales-based revenues in our
Investment and Savings Products segment.
These movements are further discussed in detail
in the Segment Results sections below.
Net investment income increased in 2022 from
2021 due to $9.0 million from higher yields in
the invested asset portfolio and $5.4 million
from a larger invested asset portfolio compared
to the prior year. As noted above, investment
income net of investment expenses includes
interest earned on our held-to-maturity asset,
which is offset by interest expense on the
Surplus Note, thereby eliminating any impact on
net investment income.
Investment gains (losses) decreased to a loss
during 2022 compared to a gain in 2021
primarily due to a $2.4 million negative mark-to-
market adjustment on equity securities held
within our investment portfolio in 2022 as a
result of negative equity market performance
compared to a $2.4 million positive mark-to-
market adjustment on equity securities held
within our investment portfolio in the
comparable 2021 period and a $3.2 million
decrease in realized investment gains from sales
of fixed-maturity securities from 2021 to 2022.
Other, net revenues increased in 2022 from 2021
primarily due to the timing of the acquisition of
e-TeleQuote on July 1, 2021. A full year of
marketing development revenue was included in
the Senior Health segment in 2022 compared to
only six months in 2021. Also contributing to the
increase in other, net revenues was an increase
in fees received for access to POL, our primary
sales force support tool, consistent with
subscriber growth.
Total benefits and expenses. Total benefits and
expenses increased in 2022 from 2021 primarily
due to increased insurance expenses, benefits
and claims, other operating expenses,
amortization of DAC and contract acquisition
costs in 2022. Benefits and claims and
ITEM 7. MD&A
amortization of DAC increased primarily due to
growth in our Term Life Insurance business.
Insurance expenses and other operating
expenses increased due to higher costs
associated with sales force leadership events,
which included one additional event than a
typical year. Contract acquisition costs increased
due to the acquisition of e-TeleQuote on July 1,
2021. These increases were partially offset by
lower sales commissions in line with lower
commissions and fees revenue in the Investment
and Savings Products segment as discussed
above, lower non-cash goodwill impairment
charge in the Senior Health segment, and a
nonrecurring loss on extinguishment of debt as
a result of the 2021 accelerated repayment of
senior notes issued in 2012 that were scheduled
to mature in 2022.
Income taxes. Our effective income tax rate for
2022 was 24.7% compared to 26.0% in 2021. The
decrease in the effective tax rate in 2022 was
driven by a smaller non-cash goodwill
impairment charge that is not deductible for
income tax purposes, state income tax benefits
at e-TeleQuote and revaluation of Canadian
deferred tax assets as a result of a Canadian
statutory tax rate increase.
Net income (loss) attributable to noncontrolling
interests. The net loss attributable to
noncontrolling interest increased during 2022
compared to 2021 primarily due to higher
operating losses incurred by the Senior Health
segment prior to the redemption of the
noncontrolling interest on July 1, 2022.
For additional information, see the discussions
of results of operations by segment below.
Primerica 2023 Annual Report
95
4%
*
6%
3%
6%
8%
3%
ITEM 7. MD&A
Term Life Insurance Segment. Our results for the Term Life Insurance segment for the years ended
December 31, 2023, 2022, and 2021 were as follows:
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in thousands)
Revenues:
Direct premiums
Ceded premiums
$ 3,292,760 $ 3,209,088 $ 3,099,828 $83,672
3% $109,260
(1,648,004)
(1,623,442)
(1,609,598)
24,562
2%
4%
13,844
95,416
Net Premiums
1,644,756
1,585,646
1,490,230
59,110
Other, net
48,286
50,320
48,970
(2,034)
(4)%
1,350
Total revenues
1,693,042
1,635,966
1,539,200
57,076
3%
96,766
Benefits and expenses:
Benefits and claims
Future policy benefits
622,084
619,997
589,958
2,087
remeasurement (gain) loss
(213)
911
(767)
*
*
30,039
5%
(357)
*
268,803
230,390
19,814
554
254,875
230,796
15,335
231,380
13,928
5%
23,495
197,262
(406)
*
33,534
10%
17%
18,457
4,479 29%
(3,122)
(17)%
Amortization of DAC
Insurance expenses
Insurance commissions
Total benefits and
expenses
Income before income taxes $ 552,164 $ 514,409 $ 501,232 $37,755
7% $ 13,177
1,140,878
1,121,557
1,037,968
19,321
2%
83,589
*
Less than 1% or not meaningful
2023 compared to 2022
Net premiums. Direct premiums increased in
2023 from 2022 largely due to the layering effect
of new policy sales that contributed to growth in
the in-force book of business. In addition, direct
premiums continued to increase in 2023 despite
the impact of elevated lapses due to the growth
in new policy sales. This increase is partially
offset by an increase in ceded premiums, which
includes $61.9 million in higher non-level YRT
reinsurance ceded premiums as business not
subject to the IPO coinsurance transactions ages,
reduced by $37.4 million in lower coinsurance
ceded premiums due to the run-off of business
subject to the IPO coinsurance transactions.
Benefits and claims. Benefits and claims were
generally flat during 2023 compared to 2022.
Direct benefits and claims increased with the
96
growth in the business but were mostly offset by
an increase in ceded benefit reserves from YRT
reinsurance. YRT reinsurance ceded benefit
reserves will fluctuate based on the specifics of
premiums ceded and claims incurred during
each period. Year-over-year claims incurred in
2023 were flat compared to 2022.
Future policy benefits remeasurement (gain)
loss.
Future policy benefits remeasurement
(gain) loss was generally flat during 2023
compared to 2022 and represent differences in
experience variances that occurred in each
respective period. The portion of experience
variances recognized in net income during each
period will increase as we move further away
from the Transition Date of LDTI.
Amortization of DAC. The amortization of DAC
increased in 2023 from 2022 primarily due to
continued growth in the in-force book of
business.
Insurance expenses
Insurance expenses.
decreased slightly during 2023 compared to
2022 due to costs incurred for the additional
sales force leadership event held in 2022 largely
offset by higher growth-related, employee-
related, and technology costs in 2023.
Insurance commissions.
Insurance commissions
increased in 2023 from 2022 as a result of higher
non-deferrable sales force promotional activities.
2022 compared to 2021
Net premiums. Direct premiums increased in
2022 from 2021 largely due to sales of new
policies that contributed to growth in the in-
force book of business. This is partially offset by
an increase in ceded premiums, which includes
$55.5 million in higher non-level YRT reinsurance
ceded premiums as business not subject to the
IPO coinsurance transactions ages, reduced by
$41.6 million in lower coinsurance ceded
premiums due to the run-off of business subject
to the IPO coinsurance transactions.
ITEM 7. MD&A
Benefits and claims. Benefits and claims
increased in 2022 from 2021 consistent with the
increase in net premiums.
Future policy benefits remeasurement (gain)
loss.
Future policy benefits remeasurement
(gain) loss was generally flat during 2022
compared to 2021.
Amortization of DAC. The amortization of DAC
increased in 2022 from 2021 primarily due to
continued growth in the in-force book of
business.
Insurance expenses
Insurance expenses.
increased in 2022 from 2021 due to higher costs
associated with growth in the sales force and the
business and higher employee compensation
costs. Also contributing to the increase were
higher costs associated with adding the
previously postponed biennial convention to our
normal cycle of sales force leadership events.
Insurance commissions
Insurance commissions.
decreased in 2022 from 2021 as a result of
higher non-deferrable sales force promotional
activities offered in 2021 to incentivize the
independent sales force during the COVID-19
pandemic.
Primerica 2023 Annual Report
97
ITEM 7. MD&A
Investment and Savings Products Segment. Our results of operations for the Investment and
Savings Products segment for the years ended December 31, 2023, 2022, and 2021 were as follows:
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in thousands)
Revenues:
Commissions and fees:
Sales-based revenues
$296,617 $326,378 $401,508 $(29,761)
(9)% $(75,130)
(19)%
Asset-based revenues
462,955
434,053
441,303
28,902
Account-based revenues
Other, net
93,189
12,504
90,391
12,610
86,939
12,097
2,798
(106)
Total revenues
865,265
863,432
941,847
1,833
7%
3%
*
*
(7,250)
(2)%
3,452
513
4%
4%
(78,415)
(8)%
Expenses:
Amortization of DAC
5,479
5,581
5,511
(102)
(2)%
70
1%
Insurance commissions
13,148
13,834
14,904
(686)
(5)% (1,070)
(7)%
Sales commissions:
Sales-based
Asset-based
Other operating expenses
164,788
156,578
150,130
8,210
5%
6,448
212,482
234,711
287,359
(22,229)
(9)% (52,648)
(18)%
226,542
206,838
206,201
19,704 10%
637
*
4%
Total expenses
622,439
617,542
664,105
4,897
*
(46,563)
(7)%
Income before income taxes
$242,826 $245,890 $277,742 $ (3,064)
(1)% $(31,852)
(11)%
*
Less than 1% or not meaningful
2023 compared to 2022
Commissions and fees. Commissions and fees
increased slightly during 2023 compared to 2022
led by higher asset-based revenues. The year-
over-year increase in asset-based revenues was
higher than the year-over-year increase in
average client asset values due to a mix shift to
asset-based products that earn higher fees,
including managed accounts and Canadian
mutual funds under the new principal distributor
model. Also contributing to the increase in
commissions and fees in 2023 were higher
account-based revenues due to the cumulative
effect of incremental retail mutual funds sales
that we service on our transfer agent
recordkeeping platform. Substantially offsetting
the increase were lower sales-based revenues
during 2023 primarily due to the adverse impact
on revenue-generating product sales from the
98
high cost of living and the availability of high
yield money market and savings account
alternatives in the first half of 2023. Another
contributing factor to the decrease in sales-
based revenues was the discontinuation of most
up-front sales-based revenue on the sale of
Canadian mutual funds, which are now sold
under the principal distributor model. The
principal distributor funds we now distribute in
Canada primarily shift the revenue we earn to
asset-based that is recognized over time.
Sales commissions. The decrease in sales-
based commissions in 2023 from 2022 was in
line with the decrease in sales-based revenue.
Asset-based commissions were up for 2023 and
were generally consistent with the movement in
asset-based revenues when excluding Canadian
segregated funds revenue. Asset-based
expenses for our Canadian segregated funds are
reflected within insurance commissions and
amortization of DAC.
Other operating expenses. Other operating
expenses increased in 2023 from 2022 due to
increased employee-related and technology
costs.
2022 compared to 2021
Commissions and fees. Commissions and fees
decreased in 2022 from 2021 driven by lower
sales-based revenues in 2022 as investor demand
for mutual fund products and variable annuity
products weakened due to volatility in capital
markets. Also contributing to the decrease in
2022 were lower asset-based revenues, driven by
negative equity market performance, partially
offset by positive net flows.
Sales commissions. The decrease in sales-
based commissions in 2022 from 2021 was
ITEM 7. MD&A
generally in line with the decrease in sales-based
revenue. Asset-based commissions were
relatively flat for 2022 and were consistent with
the movement in asset-based revenues,
excluding the Canadian segregated funds
revenue. Asset-based expenses for our Canadian
segregated funds are reflected within insurance
commissions and amortization of DAC.
Other operating expenses. Other operating
expenses increased in 2022 from 2021 due to
higher costs associated with adding the
previously postponed biennial convention to our
normal cycle of sales force leadership events and
higher expenses to support growth in managed
accounts assets.
Senior Health Segment. Our results of
operations for the Senior Health segment for the
years ended December 31, 2023, 2022, and 2021
were as follows:
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021(1)
$
%
$
%
(Dollars in thousands)
Revenues:
Commissions and fees(2)
$ 57,563 $ 47,420 $ 50,903 $ 10,143
21% $ (3,483)
(7)%
Other, net
9,621
15,262
9,537
(5,641)
(37)%
5,725
60%
Total revenues
67,184
62,682
60,440
4,502
7%
2,242
4%
Expenses:
Contract acquisition costs
Goodwill impairment loss
Other operating expenses
55,233
—
32,009
68,431
60,000
32,924
52,788
(13,198)
(19)% 15,643
30%
76,000
(60,000)
*
(16,000)
*
16,702
(915)
(3)% 16,222
97%
Total expenses
87,242
161,355
145,490
(74,113)
(46)% 15,865
11%
Income (loss) before income taxes $(20,058) $ (98,673) $ (85,050) $ 78,615
80% $(13,623)
(16)%
(1)
(2)
*
From the acquisition date of July 1, 2021.
Includes a positive tail revenue adjustment of $2.3 million for 2023, a negative tail revenue adjustment of ($18.9) million for
2022, and a negative tail revenue adjustment of ($4.9) million for 2021.
Less than 1% or not meaningful
2023 compared to 2022
Commissions and fees. Excluding the impact of
tail revenue adjustments, commissions and fees
decreased during 2023 compared to 2022 as a
result of lower approved policy sales volumes in
2023 given the reduction in tenured
e-TeleQuote licensed health insurance agents
during the second half of 2023 as well as the
Company’s efforts during the first half of 2023 to
control growth in favor of developing more
efficient lead procurement and conversion.
There was a positive tail revenue adjustment of
Primerica 2023 Annual Report
99
ITEM 7. MD&A
$2.3 million recorded during 2023 due to higher
commission rates and stable policy churn
compared to a negative tail revenue adjustment
of $18.9 million recorded during 2022 as
discussed below. Also contributing to the
change in commissions and fees in 2023 is the
inclusion of approximately $3 million in
marketing development revenues that are now
earned on a per policy basis and presented in
commissions and fees revenue instead of in
other, net revenue. During the most recent AEP,
our contracts for most of our marketing
development revenue arrangements were
shifted to a per approved policy model;
therefore, we classified revenue from these
arrangements of approximately $3 million in
commissions and fees revenue instead of other,
net revenue in 2023.
Other, net. The largest contributor to the
decrease in other, net revenue in 2023
compared with 2022 is the change in
presentation of approximately $3 million in
marketing development revenues as noted in
the preceding paragraph. In addition, marketing
development revenues decreased during 2023
compared to 2022 due to lower lead acquisition
volumes and expenses.
Contract acquisition costs. Contract acquisition
costs decreased during 2023 compared to 2022
primarily due to lower approved policy volumes.
Goodwill impairment loss. There was no
goodwill impairment charge recognized during
2023 compared to a $60.0 million non-cash
goodwill impairment charge recognized during
2022. The charge represented the excess of the
Senior Health reporting unit’s carrying value
over its estimated fair value as of July 1, 2022.
Refer to Note 22 (Goodwill) within our
consolidated financial statements included
elsewhere in this report for more information.
Other operating expenses. Other operating
expenses during 2023 did not change
significantly compared to 2022.
2022 compared to 2021
Commissions and fees. Excluding the impact of
tail revenue adjustments, commissions and fees
100
increased during 2022 compared to 2021
primarily due to the timing of the acquisition of
e-TeleQuote on July 1, 2021. As a result, 2022
includes a full year of operations compared to
only six months in 2021. This increase was
completely offset by the recognition of $18.9
million of net negative tail revenue adjustments
in 2022 as a result of lower than expected
renewals and refined renewal estimates on
policies approved in prior periods. The negative
tail revenue adjustment offset commissions and
fees revenue of $66.3 million recognized for the
lifetime value of commissions for policies
approved during 2022. In comparison, a
negative tail adjustment of $4.9 million was
recognized during 2021. Also contributing to the
year-over-year change in commissions and fees
in 2022 compared to 2021 was lower sales
volume during AEP due to our strategic initiative
to limit the number of licensed health insurance
agents.
Other, net. Marketing development revenue
increased during 2022 compared to 2021
primarily due to the timing of the acquisition of
e-TeleQuote on July 1, 2021. As a result, 2022
includes a full year of operations compared to
only six months in 2021. Partially offsetting the
increase in marketing development revenue was
lower year-over-year amounts earned during
AEP in connection with lower year-over-year AEP
approved sales volumes in 2022 versus 2021.
Contract acquisition costs. Contract acquisition
costs increased during 2022 compared to 2021
primarily due to the timing of the acquisition of
e-TeleQuote on July 1, 2021. As a result, a full
year of operations are included in 2022
compared to only six months in 2021. This
increase was partially offset by lower costs in
2022 from reduced sales volumes as well as
lower unit contract acquisition costs attributable
to a number of factors including revised lead
acquisition strategies, improved lead routing,
and enhancements in agent training.
Goodwill impairment loss. Goodwill
impairment loss reflects the non-cash goodwill
impairment charge, which represents the excess
of the Senior Health reporting unit’s carrying
value over its estimated fair value.
Other operating expenses. Other operating
expenses increased during 2022 compared to
2021 primarily due to the timing of the
acquisition of e-TeleQuote on July 1, 2021. As a
result, 2022 includes a full year of operations
compared to only six months in 2021. Other
operating expenses includes $11.0 million and
$5.8 million of amortization expense for
acquired intangible assets and internally
ITEM 7. MD&A
developed software for 2022 and 2021,
respectively.
Corporate and Other Distributed Products
Segment. Our results of operations for the
Corporate and Other Distributed Products
segment for the years ended December 31,
2023, 2022, and 2021 were as follows:
Revenues:
Direct premiums
Ceded premiums
Net Premiums
Commissions and fees
Investment income net of
investment expenses
Year ended December 31,
2023 vs. 2022
change
2022 vs. 2021
change
2023
2022
2021
$
%
$
%
(Dollars in thousands)
$ 19,365 $ 21,032 $ 22,320 $ (1,667)
(8)% $ (1,288)
(3,807)
(6,450)
(6,666)
(2,643)
(41)%
(216)
(6)%
(3)%
15,558
40,092
14,582
46,434
15,654
62,160
976
7%
(1,072)
(7)%
(6,342)
(14)% (15,726)
(25)%
201,311
156,987
142,795
44,324
28% 14,192
10%
Interest expense on surplus note
(65,474)
(63,922)
(62,207)
1,552
2%
1,715
3%
Net investment income
135,837
93,065
80,588
42,772
46% 12,477
15%
Realized investment gains (losses)
(645)
1,444
Other investment gains (losses)
(5,251)
(2,439)
Investment gains (losses)
Other, net
(5,896)
4,609
(995)
4,967
4,665
1,207
5,872
3,971
(2,089)
(2,812)
(4,901)
*
*
*
(3,221)
(3,646)
(6,867)
*
*
*
(358)
(7)%
996
25%
Total revenues
190,200
158,053
168,245
32,147
20% (10,192)
(6)%
Benefits and expenses:
Benefits and claims
Future policy benefits
remeasurement (gain) loss
Amortization of DAC
Insurance expenses
Insurance commissions
Sales commissions
Interest expense
Loss on extinguishment of debt
20,895
12,406
12,049
8,489
68%
357
3%
(171)
1,534
5,070
1,260
18,420
26,594
—
1,072
1,173
4,609
1,092
21,215
27,237
—
1,379
5,343
1,171
28,748
30,618
8,927
386
(1,243)
*
686
*
361
461
168
31%
10%
15%
(206)
(15)%
(734)
(14)%
(79)
(7)%
(2,795)
(13)% (7,533)
(26)%
(643)
(2)% (3,381)
(11)%
—
*
7%
(8,927)
873
*
*
Other operating expenses
139,850
130,892
130,019
8,958
Total benefits and expenses
213,452
199,696
218,640
13,756
7% (18,944)
(9)%
Loss before income taxes
$ (23,252) $ (41,643) $ (50,395) $(18,391)
(44)% $ (8,752)
(17)%
*
Less than 1% or not meaningful
Primerica 2023 Annual Report
101
ITEM 7. MD&A
2023 compared to 2022
Total revenues. Total revenues increased in
2023 from 2022 primarily due to higher net
investment income. Net investment income
increased due to the factors described in
“Primerica, Inc. and Subsidiaries Results” above.
This increase was partially offset by a year-over-
year decline in revenue from commissions and
fees and investment gains (losses). Commissions
and fees revenue earned from our mortgage
distribution product offerings were lower during
2023 compared to 2022 primarily attributable to
higher mortgage interest rates that reduced
demand for mortgage products. The change in
investment gains (losses) is discussed in the
“Primerica, Inc. and Subsidiaries Results” section
above.
Total Benefits and Expenses. Total benefits and
expenses increased in 2023 from 2022 due to
higher benefits and claims and other operating
expenses. The increase in benefits and claims
was primarily due to two factors that occurred
during 2023. The first item was the recognition
of a credit loss for the remaining ceded reserves
on a closed block of non-term life insurance
business from an insolvent reinsurer that was
liquidated. The second item was an adjustment
to the estimated portion of ceded claims to be
recovered in excess of premiums ceded for a
closed block of non-term life insurance. The
increase in other operating expenses in 2023
versus 2022 was primarily driven by higher
employee-related costs, technology, and legal
expenses. Partially offsetting these increases was
the decrease in sales commissions for 2023
compared to 2022 that was in line with the
decrease in commissions and fees revenue from
our mortgage distribution product offerings.
2022 compared to 2021
Total revenues. Total revenues decreased in
2022 from 2021 primarily due to lower
commissions and fees from our mortgage
distribution business as a result of rising interest
rates, as well as a decrease in investment gains
(losses), partially offset by an increase in net
investment income. The change in investment
gains (losses) and net investment income are
102
discussed in “Primerica, Inc. and Subsidiaries
Results” above.
Total Benefits and Expenses. Total benefits and
expenses decreased in 2022 from 2021 due to
lower sales commissions from our mortgage
distribution business, the loss on extinguishment
of debt in 2021 as a result of the accelerated
repayment of senior notes in 2021 scheduled to
mature in 2022, and lower interest expense.
Interest expense in 2021 was higher than 2022
as a result of borrowings on the Revolving Credit
Facility to fund the e-TeleQuote acquisition and
an overlap of interest obligations due to the
issuance of the Senior Notes in November 2021
before the early extinguishment of our previous
senior notes.
FinancialCondition
Investments. Our insurance business is
primarily focused on selling term life insurance,
which does not include an investment
component for the policyholder. The invested
asset portfolio funded by premiums from our
term life insurance business does not involve the
substantial asset accumulations and spread
requirements that exist with other non-term life
insurance products. As a result, the profitability
of our term life insurance business is not as
sensitive to the impact that interest rates have
on our invested asset portfolio and investment
income as the profitability of other companies
that distribute non-term life insurance products.
We follow a conservative investment strategy
designed to emphasize the preservation of our
invested assets and provide adequate liquidity
for the prompt payment of claims. To meet
business needs and mitigate risks, our
investment guidelines provide restrictions on our
portfolio’s composition, including limits on asset
type, per issuer limits, credit quality limits,
portfolio duration, limits on the amount of
investments in approved countries and
permissible security types. We also manage and
monitor our allocation of investments to limit
the accumulation of any disproportionate
concentrations of risk among industry sectors or
issuer countries outside of the U.S. and Canada.
In addition, as of December 31, 2023, we did not
hold any country of issuer concentrations
outside of the U.S. or Canada that represented
more than 5% of the fair value of our available-
for-sale invested asset portfolio or any industry
concentrations of corporate bonds that
represented more than 10% of the fair value of
our available-for-sale invested asset portfolio.
We invest a portion of our portfolio in assets
denominated in Canadian dollars to support our
Canadian operations. Additionally, to ensure
adequate liquidity for payment of claims, we
take into account the maturity and duration of
our invested asset portfolio and our general
liability profile.
We also hold within our invested asset portfolio
a credit enhanced note (“LLC Note”) issued by a
limited liability company owned by a third-party
service provider which is classified as a held-to-
maturity security. The LLC Note, which is
scheduled to mature on December 31, 2030, was
obtained in exchange for the Surplus Note of
equal principal amount issued by Vidalia Re, a
special purpose financial captive insurance
company and wholly owned subsidiary of
Primerica Life Insurance Company (“Primerica
Life”). For more information on the LLC Note, see
Note 4 (Investments) to our consolidated
financial statements included elsewhere in this
report.
We have an investment committee composed of
members of our senior management team that
is responsible for establishing and maintaining
our investment guidelines and supervising our
investment activity. Our investment committee
regularly monitors our overall investment results
and our compliance with our investment
ITEM 7. MD&A
objectives and guidelines. We use a third-party
investment advisor to assist us in the
management of our investing activities. Our
investment advisor reports to our investment
committee.
Our invested asset portfolio is subject to a
variety of risks, including risks related to general
economic conditions, market volatility, interest
rate fluctuations, liquidity risk and credit and
default risk. Investment guideline restrictions
have been established to minimize the effect of
these risks but may not always be effective due
to factors beyond our control. Interest rates and
credit spreads are highly sensitive to many
factors, including governmental monetary
policies, domestic and international economic
and political conditions and other factors
beyond our control. A significant increase in
interest rates or credit spreads could result in
significant unrealized losses in the value of our
invested asset portfolio. For example, the
increase in interest rates during the first three
quarters of 2023 resulted in the fair value of the
invested asset portfolio declining, with a
subsequent increase in fair value as interest rates
declined and credit spreads tightened during the
fourth quarter of 2023. As of December 31, 2023,
unrealized losses were $215.7 million compared
to an unrealized loss of $305.9 million as of
December 31, 2022. We believe that fluctuations
caused by movement in interest rates and credit
spreads generally have little bearing on the
recoverability of our investments as we have the
ability to hold these investments until maturity
or a market price recovery and we have no
present intention to dispose of them.
Primerica 2023 Annual Report
103
ITEM 7. MD&A
Details on asset mix (excluding our held-to-maturity security) were as follows:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Mortgage- and asset-backed securities
Short-term investments
Equity securities
Trading securities
Cash and cash equivalents
December 31, 2023 December 31, 2022
Fair
value
Cost or
amortized
cost
Fair
value
Cost or
amortized
cost
0%
5%
4%
48%
23%
0%
1%
1%
18%
0%
5%
4%
48%
24%
0%
1%
1%
17%
1%
5%
4%
48%
22%
2%
1%
1%
16%
1%
5%
4%
49%
23%
2%
1%
1%
14%
Total
100%
100%
100%
100%
The composition and duration of our portfolio will vary depending on several factors, including the yield
curve and our opinion of the relative value among various asset classes. The proportion of the invested
asset portfolio invested in short-term investments decreased and the proportion invested in cash and cash
equivalents and mortgage- and asset-backed securities increased from 2022 to 2023 as a result of our view
of the relative value between those asset classes. The year-end average rating, duration and book yield of
our fixed-maturity portfolio (excluding our held-to-maturity security) were as follows:
Average rating of our fixed-maturity portfolio
Average duration of our fixed-maturity portfolio
Average book yield of our fixed-maturity portfolio
December 31, 2023 December 31, 2022
A
4.7 years
A
4.7 years
3.83%
3.44%
The increase in the average book yield of our fixed-maturity portfolio as of December 31, 2023 reflects
higher reinvestment rates compared to the yield on maturing investments during 2023.
Ratings for our investments in fixed-maturity securities are determined using Nationally Recognized
Statistical Rating Organizations designations and/or equivalent ratings. The distribution of our
investments in fixed-maturity securities (excluding our held-to-maturity security) by rating, including
those classified as trading securities, were as follows:
AAA
AA
A
BBB
Below investment grade
Not rated
Total
December 31, 2023
December 31, 2022
Amortized
cost (1)
%
Amortized
cost (1)
%
(Dollars in thousands)
$ 556,936
439,814
735,647
1,162,279
58,221
698
19% $ 606,982
321,450
15%
25%
688,936
39% 1,120,096
67,450
199
2%
*
22%
11%
25%
40%
2%
*
$2,953,595 100% $2,805,113 100%
(1)
*
Includes trading securities at carrying value and available-for-sale securities (excluding short-term investments) at amortized cost.
Less than 1%.
104
The ten largest holdings within our fixed-maturity securities invested asset portfolio (excluding our
held-to-maturity security and short-term investments) were as follows:
ITEM 7. MD&A
$
Issuer
Government of Canada
Province of Alberta Canada
Province of Quebec Canada
Wells Fargo & Co
Province of Ontario Canada
Bank of America Corp
Ontario Teachers’ Pension Plan
ONEOK Inc
Boeing Co
Manulife Financial Corp
December 31, 2023
Fair value
Amortized
cost (1)
Unrealized
gain (loss)
Credit
rating
19,546 $
(Dollars in thousands)
20,310
$ (764)
15,569
15,367
14,922
14,610
13,258
13,182
12,257
12,211
11,148
16,231
15,649
14,881
14,850
13,382
14,449
12,399
11,835
11,708
AAA
AA-
AA-
(662)
(282)
41
BBB+
(240)
(124)
(1,267)
(142)
376
(560)
A+
A-
AA+
BBB
BBB-
A
Total – ten largest holdings
$ 142,070 $ 145,694
$(3,624)
Total – fixed-maturity securities
$2,737,850 $2,953,595
Percent of total fixed-maturity securities
5%
5%
(1)
Includes trading securities at carrying value and available-for-sale securities at amortized cost.
For additional information on our invested asset portfolio, see Note 4 (Investments) and Note 5 (Fair
Value of Financial Instruments) to our consolidated financial statements included elsewhere in this
report.
Other Significant Assets and Liabilities. The balances of and changes in other significant assets and
liabilities were as follows:
Assets:
Reinsurance recoverables
December 31,
2023
2022
Change
$
%
(Dollars in thousands)
$3,015,777 $3,209,540 $(193,763)
(6)%
Deferred policy acquisition costs, net
3,447,234
3,188,502
258,732
8%
Liabilities:
Future policy benefits
Reinsurance recoverables. Reinsurance
recoverables reflects future policy benefit
reserves and claim reserves ceded to reinsurers,
including the IPO coinsurers. Reinsurance
recoverables as of December 31, 2023 decreased
compared with December 31, 2022 primarily due
to the continued runoff of the IPO book of
business.
$6,742,025 $6,297,906 $ 444,119
7%
Deferred policy acquisition costs, net. The
increase in DAC was primarily a result of the
cumulative impact of incremental commissions
and expenses deferred as a result of new
business in 2023 not subject to the IPO
coinsurance agreements.
Primerica 2023 Annual Report
105
ITEM 7. MD&A
Future policy benefits. The increase in future
policy benefits was mostly a result of continued
growth in our in-force book of business. Also
contributing to the year-over-year increase in
future policy benefits is the decrease in market
observable interest rates at year-end that are
used to discount the present value of the
estimated future cash flows included in the
liability for future policy benefits.
For additional information, see the notes to our
consolidated financial statements included
elsewhere in this report.
LiquidityandCapitalResources
Dividends and other payments to the Parent
Company from its subsidiaries are our principal
sources of cash. The amount of dividends paid
by the subsidiaries is dependent on their capital
needs to fund future growth and applicable
regulatory restrictions. The primary uses of funds
by the Parent Company include the payments of
stockholder dividends, interest on notes payable,
general operating expenses, and income taxes,
as well as repurchases of shares of our common
stock outstanding. During 2023, our life
insurance underwriting companies declared and
paid ordinary dividends of $352.3 million to the
Parent Company. See Note 16 (Statutory
Accounting and Dividend Restrictions) to our
consolidated financial statements included
elsewhere in this report for more information on
insurance subsidiary dividends and statutory
restrictions. In addition, in 2023 our non-life
insurance subsidiaries declared and paid
dividends of $203.2 million to the Parent
Company. At December 31, 2023, the Parent
Company had cash and invested assets of
$381.9 million.
The Parent Company’s subsidiaries generate
operating cash flows primarily from term life
insurance premiums (net of premiums ceded to
reinsurers), income from invested assets,
commissions and fees collected from the
distribution of investment and savings products,
Medicare-related insurance plans as well as
other financial products. The subsidiaries’
principal operating cash outflows include the
106
payment of insurance claims and benefits (net of
ceded claims recovered from reinsurers),
commissions to the sales force, contract
acquisition costs, insurance and other operating
expenses, interest expense for future policy
benefit reserves financing transactions, and
income taxes.
The distribution and underwriting of term life
insurance requires up-front cash outlays at the
time the policy is issued as we pay a substantial
majority of the sales commission during the first
year following the sale of a policy and incur
costs for underwriting activities at the inception
of a policy’s term. During the early years of a
policy’s term, we generally receive level term
premiums in excess of claims paid. We invest the
excess cash generated during earlier policy years
in fixed-maturity and equity securities held in
support of future policy benefit reserves. In later
policy years, cash received from the maturity or
sale of invested assets is used to pay claims in
excess of level term premiums received.
e-TeleQuote is a senior health insurance
distributor of Medicare-related insurance plans.
e-TeleQuote collects cash receipts over a
number of years after selling a plan, while the
cash outflow for commission expense and other
acquisition costs to sell the plans are generally
recognized at the time of enrollment. Therefore,
in periods of growth, net cash flows at
e-TeleQuote are expected to be negative, which
may require the Parent Company to provide
working capital to e-TeleQuote. During the year
ended December 31, 2023, e-TeleQuote
generated sufficient cash from operations to
fund its operating needs.
Historically, cash flows generated by our
businesses, primarily from our existing block of
term life policies and our investment and savings
products, have provided us with sufficient
liquidity to meet our operating requirements.
We anticipate that cash flows from our
businesses will continue to provide sufficient
operating liquidity over the next 12 months.
If necessary, we could seek to enhance our
liquidity position or capital structure through
sales of our available-for-sale investment
portfolio, changes in the timing or amount of
ITEM 7. MD&A
share repurchases, borrowings against our
Revolving Credit Facility, or some combination
of these sources. Additionally, we believe that
cash flows from our businesses and potential
sources of funding will sufficiently support our
long-term liquidity needs.
Cash Flows. The components of the changes
in cash and cash equivalents were as follows:
Net cash provided by (used in) operating activities
Year ended December 31,
2023
2022
2021
(In thousands)
$ 692,517 $ 757,665 $ 656,956
Net cash provided by (used in) investing activities
(90,051)
(200,048)
(923,383)
Net cash provided by (used in) financing activities
(479,621)
(457,850)
107,974
Effect of foreign exchange rate changes on cash
1,063
(3,028)
3,385
Change in cash and cash equivalents
$ 123,908 $ 96,739 $(155,068)
Operating Activities. Cash provided by
operating activities decreased in 2023 from
2022. The largest factor contributing to the
decrease in cash provided by operating activities
in 2023 compared to 2022 was the timing of
cash payments received from reinsurers in the
prior year. At the beginning of 2022, there was a
large balance of ceded claims due from
reinsurers from claims paid during the height of
the COVID-19 pandemic, which were collected
during 2022. Also contributing to the decrease
were timing differences of purchases and
maturities of trading securities as well as timing
of cash disbursements for accounts payable and
claims checks.
Cash provided by operating activities increased
in 2022 from 2021. Although net income
decreased slightly during 2022, cash generated
from operating activities increased as it excludes
non-cash charges such as amortization of
deferred policy acquisition costs, goodwill
impairments and renewal commissions tail
adjustments. The timing of cash receipts for
ceded claims due at the beginning of 2022 as
discussed above drove the increase in cash
provided by operating activities in 2022 versus
2021. Also contributing to the year-over-year
increase in cash provided by operating activities
were lower cash outlays for deferred acquisition
costs due to lower term life policy sales.
Investing Activities. Cash used in investing
activities decreased in 2023 from 2022 primarily
due to fluctuations in the timing of maturities
and reinvestment of debt securities held in our
available-for-sale investment portfolio. In both
periods, cash provided by operating activities
was used to fund investment purchases that
increased the size of our invested asset portfolio.
Cash used in investing activities decreased in
2022 from 2021 primarily due to funding the
acquisition of e-TeleQuote on July 1, 2021. Also
contributing to the decrease were lower
purchases of securities in the invested assets
portfolio. In 2021, purchases of securities were
higher as the Company deployed the net cash
received from the issuance of the Senior Notes.
Financing Activities. Cash used in financing
activities increased in 2023 from 2022 primarily
due to an increase in dividends paid per share
and an increase in our share repurchase
program.
Financing activities was a use of cash during
2022 compared to a source of cash during
2021. This movement is primarily due to cash
used to fund share repurchases during 2022. By
comparison, the Company paused share
repurchases during 2021 to accumulate cash to
fund the acquisition of e-TeleQuote. In addition,
during 2021 cash provided by financing activities
included cash received from the issuance of the
Senior Notes partially offset by the early
extinguishment of our previous senior notes that
were scheduled to mature in 2022.
Risk-Based Capital (“RBC”). The National
Association of Insurance Commissioners (“NAIC”)
Primerica 2023 Annual Report
107
ITEM 7. MD&A
has established RBC standards for U.S. life
insurers, as well as a risk-based capital model act
(the “RBC Model Act”) that has been adopted by
the insurance regulatory authorities. The RBC
Model Act requires that life insurers annually
submit a report to state regulators regarding
their RBC based upon four categories of risk:
asset risk, insurance risk, interest rate risk and
business risk. The capital requirement for each is
determined by applying factors that vary based
upon the degree of risk to various asset,
premiums and policy benefit reserve items. The
formula is an early warning tool to identify
possible weakly capitalized companies for
purposes of initiating further regulatory action.
As of December 31, 2023, our U.S. life insurance
subsidiaries maintained statutory capital and
surplus substantially in excess of the applicable
regulatory requirements and remain well
positioned to support existing operations and
fund future growth.
In Canada, an insurer’s minimum capital
requirement is overseen by the Office of the
Superintendent of Financial Institutions (“OSFI”)
and determined as the sum of the capital
requirements for six categories of risk: asset
default risk, mortality/morbidity/lapse/expense
risks, changes in interest rate environment risk,
operational risk, segregated funds risk and
foreign exchange risk. As of December 31, 2023,
Primerica Life Insurance Company of Canada
was in compliance with Canada’s minimum
capital requirements as defined by OSFI.
For more information regarding statutory capital
requirements and dividend capacities of our
insurance subsidiaries, see Note 16 (Statutory
Accounting and Dividend Restrictions) to our
consolidated financial statements included
elsewhere in this report.
Redundant Reserve Financings. The Model
Regulation entitled Valuation of Life Insurance
Policies, commonly known as Regulation XXX,
requires insurers to carry statutory policy benefit
reserves for term life insurance policies with
long-term premium guarantees which are often
significantly in excess of the future policy benefit
reserves that insurers deem necessary to satisfy
claim obligations (“redundant policy benefit
108
reserves”). Accordingly, many insurance
companies have sought ways to reduce their
capital needs by financing redundant policy
benefit reserves through bank financing,
reinsurance arrangements and other financing
transactions.
We have established Peach Re, Inc. (“Peach Re”)
and Vidalia Re as special purpose financial
captive insurance companies and wholly owned
subsidiaries of Primerica Life. Primerica Life has
ceded certain term life policies issued prior to
2011 to Peach Re as part of a Regulation XXX
redundant reserve financing transaction (the
“Peach Re Redundant Reserve Financing
Transaction”) and has ceded certain term life
policies issued in 2011 through 2017 to Vidalia
Re as part of a Regulation XXX redundant
reserve financing transaction (the “Vidalia Re
Redundant Reserve Financing Transaction”).
These redundant reserve financing transactions
allow us to more efficiently manage and deploy
our capital. The Peach Re Redundant Reserve
Financing Transaction was approaching the end
of its scheduled term in 2025, and effective
January 2, 2024, Primerica Life recaptured the
block of business reinsured by Peach Re and
exercised its right to terminate the Peach Re
Redundant Reserve Financing Transaction
without an early termination penalty. See Note
16 (Statutory Accounting and Dividend
Restrictions) and Note 17 (Commitments and
Contingent Liabilities) to our consolidated
financial statements included elsewhere in this
report for more information.
The NAIC has adopted a model regulation for
determining reserves using a principle-based
approach (“principle-based reserves” or “PBR”),
which is designed to reflect each insurer’s own
experience in calculating reserves and move
away from a single prescriptive reserving
formula. Primerica Life adopted PBR as of
January 1, 2018 and NBLIC adopted the New
York amended version of PBR effective
January 1, 2021. PBR significantly reduced the
redundant statutory policy benefit reserve
requirements while still ensuring adequate
liabilities are held. The regulation only applies
for business issued after the effective dates. See
Note 4 (Investments), Note 11 (Debt) and
Note 17 (Commitments and Contingent
Liabilities) to our consolidated financial
statements included elsewhere in this report for
more information on these redundant reserve
financing transactions.
Notes Payable – Long Term. The Company
has $600.0 million of publicly-traded Senior
Notes outstanding issued at a price of 99.55%
with an annual interest rate of 2.80%, payable
semi-annually in arrears on May 19 and
November 19. The Senior Notes are scheduled
to mature on November 19, 2031. We were in
compliance with the covenants of the Senior
Notes at December 31, 2023. No events of
default occurred on the Senior Notes during the
year ended December 31, 2023.
Financial Ratings. As of December 31, 2023,
the investment grade credit ratings for our
Senior Notes were as follows:
Agency
Moody’s
Senior Notes rating
Baa1, stable outlook
Standard & Poor’s
A-, stable outlook
A.M. Best Company
a-, stable outlook
As of December 31, 2023, Primerica Life’s
financial strength ratings were as follows:
Agency
Moody’s
Financial strength rating
A1, stable outlook
Standard & Poor’s
AA-, stable outlook
A.M. Best Company
A+, stable outlook
Securities Lending. We participate in
securities lending transactions with brokers to
increase investment income with minimal risk.
See Note 4 (Investments) to our consolidated
financial statements included elsewhere in this
report for additional information.
Surplus Note. Vidalia Re issued a Surplus Note
in exchange for the LLC Note as a part of the
Vidalia Re Redundant Reserve Financing
Transaction. The Surplus Note has a principal
amount equal to the LLC Note and is scheduled
to mature on December 31, 2030. For more
information on the Surplus Note, see Note 11
ITEM 7. MD&A
(Debt) to our consolidated financial statements
included elsewhere in this report.
Off-Balance Sheet Arrangements. We have
no transactions, agreements or other contractual
arrangements to which an entity unconsolidated
with the Company is a party, under which the
Company maintains any off-balance sheet
obligations or guarantees as of December 31,
2023.
Credit Facility Agreement. We maintain an
unsecured $200.0 million Revolving Credit
Facility with a syndicate of commercial banks
that has a scheduled termination date of
June 22, 2026. Amounts outstanding under the
Revolving Credit Facility bear interest at a
periodic rate equal to the Secured Overnight
Financing Rate (“SOFR”) rate loan or the base
rate, plus in either case an applicable margin.
The Revolving Credit Facility contains language
that allows for the Company and the lenders to
agree on a comparable or successor reference
rate in the event SOFR is no longer available. The
Revolving Credit Facility also permits the
issuance of letters of credit. The applicable
margins are based on our debt rating with such
margins for SOFR rate loans and letters of credit
ranging from 1.000% to 1.625% per annum and
for base rate loans ranging from 0.000% to
0.625% per annum. Under the Revolving Credit
Facility, we incur a commitment fee that is
payable quarterly in arrears and is determined
by our debt rating. This commitment fee ranges
from 0.100% to 0.225% per annum of the
aggregate $200.0 million commitment of the
lenders under the Revolving Credit Facility. As of
December 31, 2023, no amounts were
outstanding under the Revolving Credit Facility
and we were in compliance with its covenants.
Furthermore, no events of default occurred
under the Revolving Credit Facility in 2023.
Contractual Obligations. Our material cash
requirements from known contractual and other
obligations primarily consist of following:
Future Policy Benefits. Our liability for future
policy benefits, which is presented in the
consolidated balance sheets, represents the
present value of expected future net premiums
Primerica 2023 Annual Report
109
ITEM 7. MD&A
receivable under the contracts. Net premiums
are defined as the portion of the gross
premiums received from policyholders that are
needed to pay for all benefits. These benefit
payments are contingent on policyholders
continuing to renew their policies and make
their premium payments. We expect to fully
fund the obligations for future policy benefits
from cash flows from general account invested
assets, claims reimbursed by reinsurers, and
from future premiums.
Policy Claims. Policy claims, which is presented
in the consolidated balance sheets and Note 9
(Policy Claims and Other Benefits Payable) to our
consolidated financial statements included
elsewhere in this report, represents claims and
benefits that have been incurred but not paid to
policyholders and are assumed to be due within
a year.
Other Policyholder Funds. Other policyholder
funds, which is presented in the consolidated
balance sheets, primarily represent claim
payments left on deposit with us that are
payable on demand.
Notes Payable and Interest Obligations. We
have debt obligations for the principal balance
of our Senior Notes, which is presented in the
consolidated balance sheets and described
further in Note 11 (Debt) to our consolidated
financial statements included elsewhere in the
report. We also maintain interest obligations for
interest on our Senior Notes, the commitment
fee on our Revolving Credit Facility, the
financing charges related to an issued letter of
credit, fees paid for the credit enhancement
feature on the LLC Note and a finance charge
incurred pursuant to one of our IPO coinsurance
agreements as of December 31, 2023. We did
not expect the principal or interest on the
Surplus Note will result in any cash requirements
as the payments due for these items are
contractually offset by the principal and interest
on the LLC Note as long as we hold the LLC
Note. The Company asserts its positive intent
and ability to hold the LLC Note until maturity.
Lease Obligations. Our lease obligations
primarily represent payments for operating
leases related to office space. For additional
110
information on leases see Note 20 (Leases) to
our consolidated financial statements included
elsewhere in this report.
For additional information concerning our
commitments and contingencies, see Note 17
(Commitments and Contingent Liabilities) to our
consolidated financial statements included
elsewhere in this report.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
Market risk is the risk of the loss of fair value
resulting from adverse changes in market rates
and prices, such as interest rates and foreign
currency exchange rates. Market risk is directly
influenced by the volatility and liquidity in the
markets in which the related underlying financial
instruments are traded. Sensitivity analysis
measures the impact of hypothetical changes in
interest rates, foreign exchange rates and other
market rates or prices on the profitability of
market-sensitive financial instruments.
The following discussion about the potential
effects of changes in interest rates and Canadian
currency exchange rates is based on shock-tests,
which model the effects of interest rate and
Canadian exchange rate shifts on our financial
condition and results of operations. Although we
believe shock tests provide the most meaningful
analysis permitted by the rules and regulations
of the SEC, they are constrained by several
factors, including the necessity to conduct the
analysis based on a single point in time and by
their inability to include the extraordinarily
complex market reactions that normally would
arise from the market shifts modeled. Although
the following results of shock tests for changes
in interest rates and Canadian currency
exchange rates may have some limited use as
benchmarks, they should not be viewed as
forecasts. These disclosures also are selective in
nature and address, in the case of interest rates,
only the potential direct impact on our financial
instruments and, in the case of Canadian
currency exchange rates, the potential
translation impact on net income from our
Canadian subsidiaries. They do not include a
variety of other potential factors that could
affect our business as a result of these changes
in interest rates and Canadian currency
exchange rates.
InterestRateRisk
The fair value of the fixed-maturity securities
(excluding the held-to-maturity security) in our
invested asset portfolio as of December 31, 2023
and 2022 was $2.7 billion and $2.5 billion,
respectively. One of the primary market risks for
this portion of our invested asset portfolio is
interest rate risk. One means of assessing the
exposure of our fixed-maturity securities
portfolios to interest rate changes is a duration-
based analysis that measures the potential
changes in market value resulting from a
hypothetical change in interest rates of 100 basis
points across all maturities. This model is
sometimes referred to as a parallel shift in the
yield curve. Under this model, with all other
factors constant and assuming no offsetting
change in the value of our liabilities, we
estimated that such an increase in interest rates
would cause the fair value of our fixed-maturity
securities portfolios to decline by $111.8 million,
or 4%, based on our actual securities positions
as of December 31, 2023. For comparative
purposes, the same increase in rates would have
caused the fair value of our fixed-maturity
securities portfolios to decline by $105.1 million,
or 4%, based on our actual securities positions
as of December 31, 2022.
CanadianCurrencyRisk
We also have exposure to foreign currency
exchange risk to the extent we conduct business
in Canada. A strong Canadian dollar relative to
the U.S. dollar results in higher levels of reported
revenues, expenses, net income, assets, liabilities,
and accumulated comprehensive income (loss)
in our U.S. dollar financial statements, and a
weaker Canadian dollar would have the opposite
effect. Generally, our Canadian dollar-
denominated assets are held in support of our
Canadian dollar-denominated liabilities. For the
year ended December 31, 2023, 12% of our
ITEM 7A. MARKET RISK
revenues from operations, excluding realized
investment gains, and 14% of income before
income taxes were generated by our Canadian
operations. For the year ended December 31,
2022, 13% of our revenues from operations,
excluding realized investment gains, and 18% of
income before income taxes were generated by
our Canadian operations.
One means of assessing exposure to changes in
Canadian currency exchange rates is to model
the effects on reported income using a
sensitivity analysis. We analyzed our Canadian
currency exposure for the year ended
December 31, 2023. Net exposure was measured
assuming a 10% decrease in the value of the
Canadian dollar relative to the U.S. dollar. We
estimated that such a decrease would decrease
our income before income taxes for the year
ended December 31, 2023 by $10.5 million.
Our investment in the net assets of our Canadian
operations is also subject to Canadian currency
risk. If we were to assume a 10% decrease in
Canadian currency exchange rates compared to
the U.S. dollar, the translated value of our net
investment in our Canadian subsidiaries in U.S.
dollars would decrease by $32.9 million based
on net assets as of December 31, 2023. For
comparative purposes, a similar decrease in
Canadian currency exchange rates compared to
the U.S. dollar would have caused the translated
value of our net investment in our Canadian
subsidiaries in U.S. dollars to decline by $30.1
million based on net assets as of December 31,
2022. Historically, we have not hedged this
exposure, although we may elect to do so in
future periods. The impact of translating the
balance of net assets of our Canadian operations
is recorded in our consolidated balance sheets
within the accumulated other comprehensive
income component of stockholders’ equity.
CreditRisk
We extensively use reinsurance in the United
States to diversify our insurance and
underwriting risk and to manage our loss
exposure to mortality risk. Reinsurance does not
relieve us of our direct liability to our
policyholders. Due to factors such as insolvency,
Primerica 2023 Annual Report
111
ITEM 7A. MARKET RISK
adverse underwriting results or inadequate
investment returns, our reinsurers may not be
able to pay the amounts they owe us on a timely
basis or at all. Further, reinsurers might refuse or
fail to pay losses that we cede to them or might
delay payment. To limit our exposure with any
one reinsurer, we monitor the concentration of
credit risk we have with our reinsurance
counterparties, as well as their financial
condition. We manage this reinsurer credit risk
through analysis and monitoring of the credit-
worthiness of each of our reinsurance partners
to minimize collection issues. Also, for
reinsurance contracts with unauthorized
reinsurers, we require collateral such as letters of
credit. For information on our reinsurance
exposure and reinsurers, see Note 6
(Reinsurance) to our consolidated financial
statements included elsewhere in this report.
Concurrent with the execution of the Vidalia Re
Redundant Reserve Financing Transaction
between Vidalia Re and Primerica Life, Vidalia Re
entered into a Surplus Note Purchase
Agreement (the “Surplus Note Purchase
Agreement”) with Hannover Life Reassurance
Company of America and certain of its affiliates
(collectively, “Hannover Re”) and a newly-formed
limited liability company (the “LLC”) owned by a
third-party service provider. Under the Surplus
Note Purchase Agreement, Vidalia Re issued the
Surplus Note to the LLC in exchange for the LLC
Note of equal principal amount. The Company
assumes credit risk associated with a credit
enhancement feature provided by Hannover Re,
which bears the obligation to absorb the LLC’s
losses in the event of a Surplus Note default in
exchange for a fee.
For information on the Surplus Note Purchase
Agreement, see Note 4 (Investments) and
Note 11 (Debt) to our consolidated financial
statements included elsewhere in this report.
We also bear credit risk on our investment
portfolio related to the uncertainty associated
with the continued ability of an obligor to make
timely payments of principal and interest. In an
effort to meet business needs and mitigate
credit and other portfolio risks, we established
investment guidelines that provide restrictions
on our portfolio’s composition, including limits
on asset type, per issuer limits, credit quality
limits, portfolio duration, limits on the amount of
investments in approved countries and
permissible security types. See “Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations –
Financial Condition” for details on our
investment portfolio, including investment
strategy, asset mix and credit ratings.
112
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ITEM 8. FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Primerica, Inc.:
OpinionontheConsolidatedFinancialStatements
We have audited the accompanying consolidated balance sheets of Primerica, Inc. and subsidiaries (the
Company) as of December 31, 2023 and 2022, the related consolidated statements of income,
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2023, and the related notes and financial statement schedules I, II, III and
IV (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years
in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the Company’s internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated February 28, 2024 expressed an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
ChangeinAccountingPrinciple
As discussed in Note 1 to the consolidated financial statements, the Company adopted the FASB issued
Accounting Standards Update No. 2018-12, Financial Services – Insurance (Topic 944) – Targeted
Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12” or “LDTI”), effective
January 1, 2023, with a transition date of January 1, 2021.
BasisforOpinion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Primerica 2023 Annual Report
113
ITEM 8. FINANCIAL STATEMENTS
CriticalAuditMatters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the
audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
Liabilityforfuturepolicybenefitsfortermlifeinsurancecontracts
As described in Notes 1 and 10 to the consolidated financial statements, the liability for future policy
benefits is measured as the present value of expected future benefits less the present value of
expected future net premiums receivable under the contracts. The cash flow assumptions underlying
the liability for future policy benefits include mortality, persistency, and disability rates. The cash flow
assumptions used to measure the liability for future policy benefits are reviewed at least annually
and updated as necessary. As of December 31, 2023, the liability for future policy benefits was $6,742
million, which included the liability for future policy benefits for term life insurance contracts of
$6,531 million.
We identified the evaluation of the liability for future policy benefits for term life insurance contracts
as a critical audit matter. Specifically, the evaluation of the mortality, persistency and disability rate
cash flow assumptions (collectively, key assumptions) used in estimating the liability for future policy
benefits for term life insurance contracts required subjective auditor judgment and specialized skills
and knowledge.
The following are the primary procedures we performed to address this critical audit matter. With the
assistance of actuarial professionals with specialized skills and knowledge, we evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s process
for estimating the liability for future policy benefits for term life insurance contracts. This included
controls related to the actuarial methodologies and the key assumptions. We also involved actuarial
professionals with specialized skills and knowledge, who assisted in:
•
•
•
assessing the actuarial methodologies used to estimate the liability for future policy benefits for
term life insurance contracts for consistency with generally accepted actuarial methodologies
evaluating the Company’s key assumptions by comparing them to the Company’s relevant
historical experience data and anticipated trends
recalculating the projected cash flows for a selection of term life insurance contracts and
comparing the results to the Company’s estimates.
FairvalueoftheSeniorHealthreportingunit
As described in Notes 1 and 22 to the consolidated financial statements, the Company’s goodwill
balance was $128 million as of December 31, 2023, which is allocated to the Company’s Senior
Health reporting unit. The Company performs an annual assessment of the recoverability of its
goodwill on July 1 and also performs an assessment on an interim basis when events or changes in
circumstances indicate that the carrying value of the reporting unit may exceed its fair value. The
Company estimates the fair value of a reporting unit using a weighting of fair values derived from an
114
ITEM 8. FINANCIAL STATEMENTS
income approach and a market approach. The Company performed the annual assessment of the
recoverability of its goodwill on July 1, 2023. The estimated fair value of the reporting unit was then
compared to its carrying value which did not result in recognizing an impairment charge, as the
estimated fair value of the reporting unit exceeded its carrying value.
We identified the evaluation of the fair value of the Company’s Senior Health reporting unit used as
part of the annual assessment of the recoverability of the related goodwill as a critical audit matter.
Subjective auditor judgment and use of valuation professionals with specialized skills and knowledge
were required in assessing the valuation approach, the weighting applied to each approach, and the
significant assumptions used to develop the discount rate. Changes in the valuation approach and
significant assumptions could have a significant impact on the estimated fair value of the Company’s
Senior Health reporting unit.
The following are the primary procedures we performed to address this critical audit matter
(1) evaluated the design and tested the operating effectiveness of certain internal controls related to
the Company’s goodwill impairment process, including internal controls over management’s review
of the valuation approach, the weighting applied to each approach, and the significant assumptions
described above, and (2) evaluated the significant assumptions used in the determination of the
discount rate. We also involved valuation professionals with specialized skills and knowledge who
assisted in:
•
•
assessing the valuation approach, including the weighting applied to each approach, and
evaluating the discount rate by testing management’s process for developing the fair value of
the Company’s Senior Health reporting unit.
/s/ KPMG LLP
We have served as the Company’s auditor since 2007.
Atlanta, Georgia
February 28, 2024
Primerica 2023 Annual Report
115
ITEM 8. FINANCIAL STATEMENTS
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,935,212 in
2023 and $2,801,415 in 2022)
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,334,892
in 2023 and $1,340,265 in 2022)
Short-term investments available-for-sale, at fair value (amortized cost: $276 in
2023 and $69,393 in 2022)
Equity securities, at fair value (historical cost: $27,106 in 2023 and $29,430 in
2022)
Trading securities, at fair value (cost: $18,761 in 2023 and $4,229 in 2022)
Policy loans and other invested assets
Total investments
Cash and cash equivalents
Accrued investment income
Reinsurance recoverables
Deferred policy acquisition costs, net
Renewal commissions receivable
Agent balances, due premiums and other receivables
Goodwill
Intangible assets, net (accumulated amortization: $26,250 in 2023 and $15,750 in
2022)
Income tax receivable
Deferred income taxes
Operating lease right-of-use assets
Other assets
Separate account assets
Total assets
Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits
Unearned and advance premiums
Policy claims and other benefits payable
Other policyholders’ funds
Note payable
Surplus note
Income tax payable
Deferred income taxes
Operating lease liabilities
Other liabilities
Payable under securities lending
Separate account liabilities
Commitments and contingent liabilities (see Commitments and Contingent
Liabilities note)
Total liabilities
Temporary Stockholders’ Equity
December 31, 2023 December 31, 2022
(In thousands, except per-share amounts)
$ 2,719,467
$ 2,495,456
1,386,980
1,444,920
276
29,680
18,383
51,175
4,205,961
613,148
23,958
3,015,777
3,447,234
190,258
273,066
127,707
175,025
6,920
116,594
53,693
382,549
2,395,842
69,406
35,404
3,698
48,713
4,097,597
489,240
20,885
3,209,540
3,188,502
200,043
254,276
127,707
185,525
—
93,632
40,500
428,259
2,305,717
$15,027,732
$14,641,423
$ 6,742,025
14,876
513,803
435,094
593,709
1,386,592
22,669
112,578
61,358
583,434
99,785
2,395,842
$ 6,297,906
15,422
538,250
483,769
592,905
1,444,469
36,876
167,142
45,995
580,780
100,938
2,305,717
12,961,765
12,610,169
Redeemable noncontrolling interests in consolidated entities
—
—
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 shares in 2023 and 2022;
issued and outstanding 34,996 shares in 2023 and 36,824 shares in 2022)
Paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of income tax:
Effect of change in discount rate assumptions on the liability for future policy
benefits
Unrealized foreign currency translation gains (losses)
Net unrealized investment gains (losses) on available-for-sale securities
Total permanent stockholders’ equity
350
—
2,276,946
(39,086)
(2,235)
(170,008)
2,065,967
Total liabilities and temporary and permanent stockholders’ equity
$15,027,732
368
—
2,153,617
130,416
(12,279)
(240,868)
2,031,254
$14,641,423
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on
January 1, 2023.
See accompanying notes to consolidated financial statements.
116
ITEM 8. FINANCIAL STATEMENTS
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Revenues:
Direct premiums
Ceded premiums
Net premiums
Commissions and fees
Investment income net of investment expenses
Interest expense on surplus note
Net investment income
Realized investment gains (losses)
Other investment gains (losses)
Investment gains (losses)
Other, net
Total revenues
Benefits and expenses:
Benefits and claims
Future policy benefits remeasurement (gain) loss
Amortization of deferred policy acquisition costs
Sales commissions
Insurance expenses
Insurance commissions
Contract acquisition costs
Interest expense
Goodwill impairment loss
Loss on extinguishment of debt
Other operating expenses
Total benefits and expenses
Income before income taxes
Income taxes
Net income
Year ended December 31,
2023
2022
2021
(In thousands, except per-share amounts)
$ 3,312,125
$ 3,230,120
$ 3,122,148
(1,651,811)
(1,629,892)
(1,616,264)
1,660,314
1,600,228
1,505,884
950,416
201,311
944,676
156,987
(65,474)
(63,922)
1,042,813
142,795
(62,207)
135,837
(645)
(5,251)
(5,896)
75,020
93,065
1,444
(2,439)
(995)
83,159
80,588
4,665
1,207
5,872
74,575
2,815,691
2,720,133
2,709,732
642,979
632,403
602,007
(384)
275,816
457,444
235,460
34,222
55,233
26,594
—
—
1,626
261,629
462,764
235,405
30,261
68,431
27,237
60,000
—
1,297
238,270
522,308
202,605
34,532
52,788
30,618
76,000
8,927
336,647
320,394
296,851
2,064,011
2,100,150
2,066,203
751,680
175,079
619,983
152,953
643,529
167,544
576,601
467,030
475,985
Net loss attributable to noncontrolling interests
—
(5,038)
(1,377)
Net income attributable to Primerica, Inc.
$ 576,601
$ 472,068
$ 477,362
Earnings per share attributable to common stockholders:
Basic earnings per share
Diluted earnings per share
Weighted-average shares used in computing earnings per share:
Basic
Diluted
$
$
15.97
15.94
$
$
12.37
12.33
$
$
12.03
11.99
35,954
37,997
39,530
36,027
38,106
39,652
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on
January 1, 2023.
See accompanying notes to consolidated financial statements.
Primerica 2023 Annual Report
117
ITEM 8. FINANCIAL STATEMENTS
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Net income
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses) on available-for-sale
securities:
Year ended December 31,
2023
2022
2021
(In thousands)
$ 576,601 $ 467,030 $475,985
Change in unrealized holding gains (losses) on available-for-
sale securities
87,390
(385,735)
(78,348)
Reclassification adjustment for investment (gains) losses
included in net income
2,811
(1,387)
(3,849)
Effect of change in discount rate assumptions on the liability
for future policy benefits
(216,301)
1,739,762
347,041
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains
(losses)
10,044
(20,826)
6,969
Total other comprehensive income (loss) before income
taxes
(116,056)
1,331,814
271,813
Income tax expense (benefit) related to items of other
comprehensive income (loss)
(27,458)
288,689
56,753
Other comprehensive income (loss), net of income taxes
(88,598)
1,043,125
215,060
Total comprehensive income (loss)
488,003
1,510,155
691,045
Net income (loss) attributable to noncontrolling
interests
—
(5,038)
(1,377)
Comprehensive income (loss) attributable to Primerica,
Inc.
$ 488,003 $1,515,193 $692,422
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on
January 1, 2023.
See accompanying notes to consolidated financial statements.
118
ITEM 8. FINANCIAL STATEMENTS
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
Equity attributable to Primerica, Inc./Permanent stockholders’ equity
Common stock:
Balance, beginning of period
Repurchases of common stock
Net issuance of common stock
Balance, end of period
Paid-in capital:
Balance, beginning of period
Share-based compensation
Net issuance of common stock
Repurchases of common stock
Redemption of noncontrolling interest in consolidated entities
Balance, end of period
Retained earnings:
Balance, beginning of period
Cumulative effect from the adoption of new accounting standards, net
Adjusted balance
Net income
Dividends
Repurchases of common stock
Balance, end of period
Accumulated other comprehensive income (loss):
Balance, beginning of period
Cumulative effect from the adoption of new accounting standards, net
Adjusted balance
Effect of change in discount rate assumptions on the liability for future policy
benefits, net of income taxes
Change in foreign currency translation adjustment, net of income taxes
Change in net unrealized investment gains (losses) during the period, net of
income taxes
Balance, end of period
Year ended December 31,
2023
2022
2021
(In thousands, except per-share amounts)
$
$
368
(21)
3
350
$
394
(28)
2
368
—
32,130
(3)
(32,127)
—
5,224
33,624
(2)
(41,079)
2,233
393
(1)
2
394
—
31,043
(2)
(25,817)
—
—
—
5,224
2,153,617
2,085,665
—
—
2,153,617
576,601
(93,715)
(359,557)
2,085,665
472,068
(83,783)
(320,333)
1,705,786
(22,847)
1,682,939
477,362
(74,636)
—
2,276,946
2,153,617
2,085,665
(122,731)
(1,165,856)
—
—
129,706
(1,510,622)
(122,731)
(1,165,856)
(1,380,916)
(169,502)
10,044
1,368,596
(20,826)
272,442
6,969
70,860
(304,645)
(64,351)
(211,329)
(122,731)
(1,165,856)
Total permanent stockholders’ equity
$2,065,967
$ 2,031,254
$ 925,427
Redeemable noncontrolling interests in consolidated entities/Temporary stockholders’
equity
Balance, beginning of period
Acquisition of noncontrolling interest
Net income (loss) attributable to noncontrolling interests
Changes in noncontrolling interests in consolidated entities, net
Redemption of noncontrolling interest in consolidated entities
Balance, end of period
Dividends declared per share
$
$
$
— $
—
—
—
—
— $
$
7,271
—
(5,038)
—
(2,233)
—
8,438
(1,377)
210
—
— $
7,271
2.60
$
2.20
$
1.88
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on
January 1, 2023.
See accompanying notes to consolidated financial statements.
Primerica 2023 Annual Report
119
ITEM 8. FINANCIAL STATEMENTS
PRIMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Change in future policy benefits and other policy liabilities
Deferral of policy acquisition costs
Amortization of deferred policy acquisition costs
Deferred tax provision
Change in income taxes
Investment (gains) losses
Accretion and amortization of investments
Depreciation and amortization
Change in reinsurance recoverables
Change in agent balances, due premiums and other receivables
Change in renewal commissions receivable
Trading securities sold, matured, or called (acquired), net
Share-based compensation
Goodwill impairment loss
Loss on extinguishment of debt
Change in other operating assets and liabilities, net
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Available-for-sale investments sold, matured or called:
Fixed-maturity securities — sold
Fixed-maturity securities — matured or called
Short-term investments — sold
Short-term investments — matured or called
Equity securities — sold
Equity securities — matured or called
Available-for-sale investments acquired:
Fixed-maturity securities
Short-term investments
Equity securities — acquired
Purchases of property and equipment and other investing activities, net
Cash collateral received (returned) on loaned securities, net
Sales (purchases) of short-term investments using securities lending collateral, net
Purchase of business, net of cash acquired
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Dividends paid
Common stock repurchased
Proceeds from revolving credit facility
Repayment of revolving credit facility
Proceeds from issuance of debt
Debt issuance costs
Repayment of debt
Payment on note issued to seller of business
Tax withholdings on share-based compensation
Finance leases
Net cash provided by (used in) financing activities
Effect of foreign exchange rate changes on cash
Change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Year ended December 31,
2023
2022
2021
(In thousands)
$ 576,601 $ 467,030 $ 475,985
102,540
(514,970)
275,816
(43,380)
(8,842)
5,896
(2,034)
31,964
237,328
(18,761)
9,785
(14,552)
18,911
—
—
36,215
(35,831)
(503,336)
261,629
(52,802)
26,398
995
3,329
34,174
461,925
(475)
19,845
19,962
22,361
60,000
—
(27,539)
(417,640)
(552,192)
238,270
2,760
1,650
(5,872)
5,118
29,836
769,012
6,046
(23,459)
(8,817)
16,842
76,000
8,927
34,490
692,517
757,665
656,956
19,230
263,443
28,799
61,782
3,051
—
23,628
359,717
28,251
85,302
16
3,063
131,953
454,135
50,065
40,000
718
—
(412,262)
(19,767)
(430)
(33,897)
(1,153)
1,153
—
(901,591)
(580,485)
(176,125)
(97,415)
(3,391)
(187)
(24,688)
(25,805)
22,375
6,409
(6,409)
(22,375)
3,867 (494,459)
(90,051)
(200,048)
(923,383)
(93,715)
(375,062)
—
—
—
—
—
—
(10,579)
(265)
(83,783)
(356,306)
(74,636)
(18,751)
— 125,000
— (125,000)
— 597,300
—
(5,332)
— (383,691)
(12,364)
(5,135)
(262)
—
(6,652)
(264)
(479,621)
1,063
(457,850) 107,974
3,385
(3,028)
123,908
489,240
96,739 (155,068)
547,569
392,501
Cash and cash equivalents, end of period
$ 613,148 $ 489,240 $ 392,501
Supplemental disclosures of cash flow information:
Income taxes paid
Interest paid
Non-cash activities:
$ 227,271 $ 178,218 $ 154,812
33,905
27,279
27,060
Increases in note issued to seller of business
—
—
15,000
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption of accounting guidance on
January 1, 2023.
See accompanying notes to consolidated financial statements.
120
FINANCIAL STATEMENTS — NOTE 1
PRIMERICA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Description of Business, Basis of
Presentation, and Summary of
Significant Accounting Policies
Description of Business. Primerica, Inc. (the
“Parent Company”), together with its subsidiaries
(collectively, “we”, “us” or the “Company”), is a
leading provider of financial products and
services to middle-income households in the
United States and Canada through a network of
independent contractor sales representatives
(“independent sales representatives” or
“independent sales force”). We assist our clients
in meeting their needs for term life insurance,
which we underwrite, and mutual funds,
annuities, managed investments and other
financial products, which we distribute primarily
on behalf of third parties. We acquired 80% of
e-TeleQuote Insurance, Inc. and subsidiaries
(collectively, “e-TeleQuote”) through our
subsidiary, Primerica Health, Inc. (“Primerica
Health”) on July 1, 2021 and the remaining 20%
of e-TeleQuote on July 1, 2022. e-TeleQuote
markets Medicare-related insurance products
underwritten by third-party health insurance
carriers to eligible Medicare beneficiaries
through its licensed health insurance agents.
Refer to Note 21 (Acquisition) for more
information regarding the acquisition of
e-TeleQuote. Our other primary subsidiaries
include the following entities: Primerica Financial
Services, LLC (“PFS”), a general agency and
marketing company; Primerica Life Insurance
Company (“Primerica Life”), our principal life
insurance company; Primerica Financial Services
(Canada) Ltd., a holding company for our
Canadian operations, which includes Primerica
Life Insurance Company of Canada (“Primerica
Life Canada”) and PFSL Investments Canada Ltd.;
and PFS Investments Inc. (“PFS Investments”), an
investment products company and broker-
dealer. Primerica Life, domiciled in Tennessee,
owns National Benefit Life Insurance Company
(“NBLIC”), a New York insurance company. Peach
Re, Inc. (“Peach Re”) and Vidalia Re, Inc. (“Vidalia
Re”) are special purpose financial captive
insurance companies and wholly owned
subsidiaries of Primerica Life. Peach Re and
Vidalia Re have each entered into separate
coinsurance agreements with Primerica Life
whereby Primerica Life has ceded certain level-
premium term life insurance policies to Peach Re
and Vidalia Re (respectively, the “Peach Re
Coinsurance Agreement” and the “Vidalia Re
Coinsurance Agreement”).
Basis of Presentation. We prepare our
financial statements in accordance with U.S.
generally accepted accounting principles (“U.S.
GAAP”). These principles are established
primarily by the Financial Accounting Standards
Board (“FASB”).
Use of Estimates. The preparation of financial
statements in conformity with U.S. GAAP requires
us to make estimates and assumptions that affect
financial statement balances, revenues and
expenses and cash flows, as well as the disclosure
of contingent assets and liabilities. Management
considers available facts and knowledge of
existing circumstances when establishing the
estimates included in our financial statements.
The most significant items that involve a greater
degree of accounting estimates and actuarial
determinations subject to change in the future
are the valuation of investments, deferred policy
acquisition costs (“DAC”), liability for future policy
benefit reserves (“LFPB”) and corresponding
amounts recoverable from reinsurers, renewal
commissions receivable, income taxes, and
valuation of goodwill. Estimates for these and
other items are subject to change and are
reassessed by management in accordance with
U.S. GAAP. Actual results could differ from those
estimates.
Consolidation. The accompanying
consolidated financial statements include the
accounts of the Company and those entities
required to be consolidated under U.S. GAAP. All
material intercompany profits, transactions, and
balances among the consolidated entities have
been eliminated.
Primerica 2023 Annual Report
121
FINANCIAL STATEMENTS — NOTE 1
Reclassifications. Certain reclassifications
have been made to prior-period amounts to
conform to current-period reporting
classifications. These reclassifications had no
impact on net income or total stockholders’
equity.
Foreign Currency Translation. Assets and
liabilities of our Canadian subsidiaries are
translated into U.S. dollars using year-end
exchange rates, and the translation adjustments
are reported in other comprehensive income
(loss). Revenues and expenses of our Canadian
subsidiaries are translated monthly at amounts
that approximate weighted-average exchange
rates.
Investments.
following bases:
Investments are reported on the
• Available-for-sale (“AFS”) fixed-maturity
securities, including bonds and redeemable
preferred stocks, are carried at fair value.
• Our held-to-maturity fixed-maturity security
is carried at amortized cost.
•
•
Equity securities, including common and
nonredeemable preferred stocks, are carried
at fair value. Changes in fair value of equity
securities are included in realized
investment gains (losses) in the period in
which the change occurred.
Trading securities, which primarily consist of
bonds held by PFS Investments, are carried
at fair value. Changes in fair value of trading
securities are included in realized
investment gains (losses) in the period in
which the change occurred.
• Policy loans are carried at unpaid principal
balances, which approximate fair value.
Investment transactions are recorded on a trade-
date basis. We use the specific-identification
method to determine the realized gains or losses
from securities transactions and report the
investment gains or losses in the accompanying
consolidated statements of income.
Unrealized gains and losses on AFS securities are
included as a separate component of other
122
comprehensive income (loss), except for credit
loss impairment discussed below.
For an AFS security with an amortized cost that
exceeds its fair value, we first determine if we
intend to sell or will more-likely-than-not be
required to sell the security before the expected
recovery of its amortized cost. If we intend to
sell or will more-likely-than-not be required to
sell the security, then we recognize the
impairment as a credit loss in our consolidated
statements of income by writing down the
security’s amortized cost to its fair value. If we
do not intend to sell or it is not more-likely-
than-not that we will be required to sell the
security before the expected recovery of its
amortized cost, we recognize the portion of the
impairment that is due to a credit loss, if any, in
our consolidated statements of income through
an allowance. The portion of the impairment
that is due to factors other than a credit loss is
recognized in other comprehensive income in
the consolidated statements of comprehensive
income as an unrealized loss. Credit losses
recognized in the allowance for credit losses are
reversed in situations where the estimate of
credit losses on those securities has declined.
When determining whether an impairment is
due to a credit loss or other factors, we
determine the extent to which we do not expect
to recover the security’s amortized cost and
record such amount, if any, as a credit loss.
Factors we consider in determining whether the
security’s decline in fair value is below amortized
cost due to a credit loss include the magnitude
of the security’s decline in fair value below its
amortized cost, the financial condition, long and
near-term prospects for the issuer, industry
conditions and trends, rating agency actions, the
payment structure of the security, likelihood of
the recoverability of principal and interest, and
our ability and intent to hold the security for a
period of time sufficient to allow for the
anticipated recovery of its amortized cost. In
assessing our ability and intent to hold the
security for a period of time to allow for the
anticipated recovery of its amortized cost, we
also consider our anticipated sources of cash to
fund operating activities and share repurchases.
If we do not anticipate recovering a security’s
amortized cost basis, we estimate the present
value of the security’s expected cash flows and
recognize the difference from amortized cost
(using fair value as a floor) as a credit loss.
Interest income on fixed-maturity securities is
recorded when earned by determining the
effective yield, which gives consideration to
amortization of premiums, accretion of
discounts, and any previous credit losses.
Dividend income on equity securities is recorded
when declared. These amounts are included in
net investment income in the accompanying
consolidated statements of income.
Included within fixed-maturity securities are
loan-backed and asset-backed securities.
Amortization of the premium or accretion of the
discount uses the retrospective method. The
effective yield used to determine amortization/
accretion is calculated based on actual and
historical projected future cash flows and
updated quarterly.
Cash and Cash Equivalents. Cash and cash
equivalents include cash on hand, money market
instruments, and all other highly liquid
investments purchased with an original or
remaining maturity of three months or less at
the date of acquisition.
Reinsurance. We use reinsurance extensively,
utilizing yearly renewable term (“YRT”) and
coinsurance agreements. Under YRT
agreements, we reinsure only the mortality risk,
while under coinsurance, we reinsure a
proportionate part of all risks arising under the
reinsured policy. Under coinsurance, the
reinsurer receives a proportionate part of the
premiums, less commission allowances, and is
liable for a corresponding part of all benefit
payments.
All reinsurance contracts in effect for the three-
year period ended December 31, 2023 transfer a
reasonable possibility of substantial loss to the
reinsurer or are accounted for under the deposit
method of accounting.
Ceded premiums are treated as a reduction to
direct premiums and are recognized when due
to the assuming company. Ceded claims are
treated as a reduction to direct benefits and are
FINANCIAL STATEMENTS — NOTE 1
recognized when the claim is incurred on a
direct basis. Ceded policy benefit reserve
changes are also treated as a reduction to
benefits and claims expense and are recognized
during the applicable financial reporting period.
Reinsurance premiums, commissions, expense
reimbursements and ceded policy benefit
reserves related to reinsured long-duration
contracts are accounted for over the life of the
underlying contracts using assumptions
consistent with those used to account for the
underlying policies. Amounts recoverable from
reinsurers are estimated in a manner consistent
with the claim liabilities and the LFPB associated
with reinsured policies. Ceded policy benefit
reserves and claims liabilities relating to
insurance ceded are shown as reinsurance
recoverables on the consolidated balance sheets.
We analyze and monitor the credit-worthiness of
each of our reinsurance partners to minimize
collection issues. For reinsurance contracts with
unauthorized reinsurers, we require collateral
such as letters of credit.
To the extent we receive ceding allowances to
cover policy and claims administration under
reinsurance contracts, these allowances are
treated as a reduction to insurance commissions
and expenses and are recognized when due
from the assuming company. To the extent we
receive ceding allowances reimbursing
commissions that would otherwise be deferred,
the amount of commissions deferrable will be
reduced. The corresponding DAC balances are
reduced on a pro rata basis by the portion of the
business reinsured with reinsurance agreements
that meet risk transfer provisions. The reduced
DAC will result in a corresponding reduction of
amortization expense.
We estimate and recognize lifetime expected
credit losses for reinsurance recoverables. In
estimating the allowance for expected credit
losses for reinsurance recoverables, we factor in
the underlying collateral for reinsurance
agreements where available. Specifically, for
reinsurers with underlying trust assets, we
compare the reinsurance recoverables balance
to the underlying trust assets that mitigate the
potential exposure to credit losses. We also
Primerica 2023 Annual Report
123
FINANCIAL STATEMENTS — NOTE 1
analyze the financial condition of the reinsurers,
as determined by third-party rating agencies, to
determine the probability of default for the
reinsurers. We then utilize a third-party credit
default study to calculate an expected credit loss
given default rate or recovery rate. The
probability of default and loss given default
rates are then applied to the reinsurers’
recoverable balances, while also factoring in any
third-party letters of credit that support the
reinsurance agreement, in order to calculate our
allowance for credit losses.
DAC. We defer incremental direct costs of
successful contract acquisitions that result from
and are essential to the contract transaction(s)
and that would not have been incurred had the
contract transaction(s) not occurred. These
deferred policy acquisition costs mainly include
commissions, underwriting costs and certain
other policy issuance expenses associated with
successful contract acquisitions. All other
acquisition-related costs, including unsuccessful
acquisition and renewal efforts, are charged to
expense as incurred. Also, administrative costs,
rent, depreciation, occupancy, equipment, and
all other general overhead costs are considered
indirect costs and are charged to expense as
incurred.
DAC for term life insurance policies is amortized
on a constant-level basis over the expected term
of the contracts using face amount as the unit of
measure. Contracts are grouped by cohorts
consistent with the grouping used in estimating
the LFPB. The cohorts are defined by the legal
entity that issued the policy and the year the
policy was issued. Assumptions of face amounts
used to amortize DAC for term life insurance
policies, including persistency and mortality, are
consistent with the assumptions used in
estimating the LFPB.
DAC for Canadian segregated funds is amortized
on a constant-level basis over the expected term
of the contracts using policy count as the unit of
measure. Contracts are grouped by cohorts
based on the issue year of the policy.
Interest is not accrued on unamortized DAC
balances, and DAC is not subject to impairment
testing.
124
Business Combination. The Company
acquired e-TeleQuote on July 1, 2021 and
accounts for the acquisition as a business
combination in accordance with ASC Topic 805,
Business Combinations (“ASC 805”), which
requires most identifiable assets and liabilities
acquired in a business combination to be
recorded at fair value at the acquisition date,
subject to certain exceptions. Additionally, ASC
805 requires transaction-related costs to be
expensed in the period incurred. The Company
allocates the fair value of the purchase
consideration of its acquired business to the
tangible assets, liabilities assumed, and
intangible assets acquired at the acquisition
date. The excess of the fair value of purchase
consideration over the acquired values of these
identifiable assets and liabilities is recorded as
goodwill. Transaction-related costs are
recognized separately from the business
combination and expensed as incurred. Refer to
Note 21 (Acquisition) for further details.
Goodwill. Goodwill represents the excess of
the purchase price over the estimated acquired
values of identifiable assets and liabilities
acquired in a business combination at the
acquisition date. In accordance with U.S. GAAP,
goodwill is not amortized. The Company tests
goodwill for impairment annually on July 1 and
whenever events occur or circumstances change
that would indicate the carrying value of
goodwill more likely than not exceeds its fair
value. All of the Company’s goodwill was
obtained from the e-TeleQuote acquisition and
the e-TeleQuote business has been designated
as a separate operating segment called Senior
Health. Therefore, goodwill has been allocated
solely to the Senior Health segment and is
evaluated for impairment at the Senior Health
segment level, which is also defined as the
reporting unit. For additional information on the
results of the annual goodwill impairment test,
see Note 22 (Goodwill).
Intangible assets are
Intangible Assets.
amortized over their estimated useful lives. Any
intangible asset that was deemed to have an
indefinite useful life is not amortized but is
subject to an annual impairment test. An
impairment exists if the carrying value of the
FINANCIAL STATEMENTS — NOTE 1
indefinite-lived intangible asset exceeds its fair
value. For the other intangible assets, which are
subject to amortization, an impairment is
recognized if the carrying amount is not
recoverable and exceeds the fair value of the
intangible asset.
The components of intangible assets were as
follows:
2023
2022
December 31,
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
(In thousands)
Indefinite-lived
intangible asset
$ 45,275
n/a
$ 45,275
$ 45,275
n/a
$ 45,275
Amortizing intangible
assets
156,000
(26,250)
129,750
156,000
(15,750)
140,250
Total intangible
assets
$201,275
$(26,250)
$175,025
$201,275
$(15,750)
$185,525
We have an indefinite-lived intangible asset
related to the 1989 purchase of the right to
contract with the sales force. This asset
represents the core distribution model of our
business, which is our primary competitive
advantage to profitably distribute term life
insurance and investment and savings products
on a significant scale, and as such, is considered
to have an indefinite life. This indefinite-lived
intangible asset is supported by a significant
portion of the discounted cash flows of our
future business. We assessed this asset for
impairment as of its annual assessment date,
October 1, 2023, and determined that no
impairment had occurred.
Intangible assets acquired from the acquisition
of e-TeleQuote consist primarily of relationships
with health insurance carriers, who are our
customers, and are amortized over their
estimated useful lives. The Company uses an
estimated useful life of 15 years as our
relationships with health insurance carriers are
not expected to turn over rapidly because these
Data processing equipment and software
Leasehold improvements
Furniture and other equipment
relationships are in-depth, non-exclusive, and
pay-for-performance. Intangible asset
amortization expense was $10.5 million, $10.3
million, and $5.5 million in 2023, 2022, and 2021,
respectively. Amortization expense is expected
to be approximately $10.5 million annually for
the next five years. Intangible assets subject to
amortization are evaluated for impairment in the
event factors indicate that the net carrying value
may not be recoverable or the asset will not be
used throughout its estimated useful life. No
events have occurred, and no factors exist as of
December 31, 2023 that would indicate that the
net carrying value of our amortizing intangible
assets may not be recoverable or will not be
used throughout their estimated useful life.
Property and Equipment. Property and
equipment, which are included in other assets,
are stated at cost, less accumulated
depreciation. Depreciation is recognized on a
straight-line basis over the asset’s estimated
useful life, which is estimated as follows:
Estimated Useful Life
3 to 7 years
Lesser of 15 years or remaining life of lease
5 to 15 years
Primerica 2023 Annual Report
125
FINANCIAL STATEMENTS — NOTE 1
Depreciation expense is included in other
operating expenses in the consolidated
statements of income. Depreciation expense was
$21.7 million, $24.1 million, and $24.6 million for
the years ended December 31, 2023, 2022, and
2021, respectively.
Property and equipment balances were as
follows:
Data processing
equipment and
software
Leasehold
improvements
Other, principally
furniture and
equipment
Accumulated
depreciation
Net property and
equipment
December 31,
2023
2022
(In thousands)
$ 124,306 $ 132,596
18,662
18,137
38,713
35,592
181,681
186,325
(143,414)
(133,668)
$ 38,267 $ 52,657
Separate Accounts. The separate accounts are
primarily composed of contracts issued by the
Company through its subsidiary, Primerica Life
Canada, pursuant to the Insurance Companies
Act (Canada). The Insurance Companies Act
authorizes Primerica Life Canada to establish the
separate accounts.
The separate accounts are represented by
individual variable insurance contracts.
Purchasers of variable insurance contracts issued
by Primerica Life Canada have a direct claim to
the benefits of the contract that entitles the
holder to units in one or more investment funds
(the “Funds”) maintained by Primerica Life
Canada. The Funds invest in assets that are held
for the benefit of the owners of the contracts.
The Funds’ assets are administered by Primerica
Life Canada and are held separate and apart
from the general assets of the Company. The
liabilities reflect the variable insurance contract
holders’ interests in the Funds’ net assets based
126
upon actual investment performance of the
respective Funds. Separate accounts operating
results relating to contract holders’ interests are
excluded from our consolidated statements of
income.
These Funds primarily consist of a series of
branded investment funds known as the Asset
Builder Funds, a registered retirement fund
known as the Strategic Retirement Income Fund
(“SRIF”), and a money market fund known as the
Cash Management Fund. The principal
investment objective of the Asset Builder Funds
is to achieve long-term growth while preserving
capital. The principal objective of the SRIF is to
provide a stream of investment income during
retirement plus the opportunity for modest
capital appreciation. The Asset Builder Funds
and the SRIF use diversified portfolios of
publicly-traded Canadian stocks, investment-
grade corporate bonds, Government of Canada
bonds, and foreign equity investments to
achieve their objectives. The Cash Management
Fund invests in government guaranteed short-
term bonds and short-term commercial and
bank papers, with the principal investment
objective being the provision of interest income
while maintaining liquidity and preserving
capital.
Under these contract offerings, benefit
payments to contract holders or their
designated beneficiaries are only due upon
death of the annuitant or upon reaching a
specific maturity date. Benefit payments are
based on the value of the contract holder’s units
in the portfolio at the payment date, but are
guaranteed to be no less than 75% of the
contract holder’s contribution, adjusted for
withdrawals. Account values are not guaranteed
for withdrawn units if contract holders make
withdrawals prior to the maturity dates. Maturity
dates for contracts investing in the Asset Builder
Funds and Cash Management Fund vary by
contract and range from 10 years from the
contract issuance date to December 31, 2070.
Contracts investing in the SRIF mature when the
policyholder reaches age 100, which is a
minimum of 20 years after issue. The SRIF is
designed to provide periodic retirement income
payments and as such, regular withdrawals,
subject to legislated minimums, are anticipated.
The cumulative effects of the periodic
withdrawals are expected to substantially reduce
both account and minimum guaranteed values
prior to maturity.
Both the asset and the liability for the separate
accounts reflect the net value of the underlying
assets in the portfolio as of the reporting date.
Primerica Life Canada’s exposure to losses under
the guarantee at the time of account maturity is
limited to contract holder accounts that have
declined in value more than 25%, adjusted for
withdrawals since the contribution date, prior to
maturity. As maturity dates are of a long-term
nature, the likelihood that guarantee payments
will be required at any given point is very small.
Additionally, the portfolios consist of a very large
number of individual contracts, further
spreading the risk related to the guarantee. The
length of the contract terms provides significant
opportunity for the underlying portfolios to
recover any short-term losses prior to maturity
or the death of the contract holder. The
Company has estimated the fair value associated
with the market risk benefits provided by these
limited guarantees to be immaterial.
Furthermore, the Funds’ investment allocations
are aligned with the maturity risks of the related
contracts and include investments in
Government Strip Bonds and floating-rate notes.
Renewal Commissions Receivable. Renewal
commissions receivable are contract assets that
represent the renewal portion of estimated
constrained variable consideration recognized in
accordance with ASC Topic 606, Revenue from
Contracts with Customers (“ASC 606”). Renewal
commissions receivable primarily consist of the
expected value of commissions to be collected
by e-TeleQuote from the distribution of
Medicare-related health insurance policies
where the performance obligation has been
satisfied but payment is not due as the
underlying policy has not yet renewed. The
estimate of renewal commissions requires
significant judgment subject to the same
assumptions as noted under “Commissions and
Fees – Senior Health” below. Cash collections for
these receivables are expected to occur over a
period of several years. Renewal commissions
FINANCIAL STATEMENTS — NOTE 1
receivable will be adjusted for differences
between actual and expected cash collections as
well as for changes in estimates. Under ASC 606,
these receivables are not discounted as the
timing for collection of payments is dependent
on future policyholder renewals and not due to
the presence of a significant financing
component. Refer to Note 21 (Acquisition) for
renewal commissions receivable recognized as
part of the acquisition of e-TeleQuote.
Liability for Future Policy Benefits. The LFPB
on traditional life insurance products is
established for future policy benefits, which
includes death benefits, waiver of premium
benefits and claim settlement expenses. The
LFPB is calculated as the present value of
expected future benefits less the present value
of expected future net premiums receivable
under the contracts. Net premiums are defined
as the portion of the gross premiums received
from policyholders that are needed to pay for all
benefits.
The assumptions underlying the LFPB include
mortality, persistency, disability rates, and other
assumptions that reflect our best estimate based
on our historical experience and modified, as
necessary, to reflect non-recurring and/or
anticipated trends.
The LFPB is estimated by grouping insurance
policies into cohorts. Policy cohorts for the Term
Life Insurance segment are based on the legal
entity that issued the policy and the year the
policy was issued.
The cash flows and assumptions underlying the
LFPB are unlocked each quarter to reflect
differences between actual and expected
experience. In general, assumption changes, to
the extent necessary, are expected to only occur
during the third quarter when we update our
experience studies. However, they may occur at
any time based on emerging experience.
The impact of unlocking will be partly reflected
in the current period and partly spread to future
periods based on the remaining duration of the
impacted cohort(s). The catch-up is retroactive
back to the later of January 1, 2021 (the
“Transition Date”) or issue date, after reinsurance
Primerica 2023 Annual Report
127
FINANCIAL STATEMENTS — NOTE 1
recoverables and is recognized as a
remeasurement gain or loss as a separate
component of benefits and claims expense in
the consolidated statements of income.
The ceded reserve balances included in
reinsurance recoverables are calculated in the
same manner as the LFPB by cohort and apply
best estimate assumptions and quarterly
unlocking.
The Company uses discount rates applied by
country to align with local currency cash flows.
Discount rates consist of yield curves that are
developed using Bloomberg’s Evaluated Pricing
Product based on senior unsecured fixed rate
bonds ratings of A+, A or A-. The discount rate
assumption is updated quarterly and the impact
of remeasuring the net LFPB, after reinsurance
recoverables from changes in the locked-in
discount rate assumption is reflected in other
comprehensive income in the consolidated
statements of comprehensive income.
The LFPB we establish is necessarily based on
estimates, assumptions and our analysis of
historical experience. Factors that could cause
prospective assumptions to be different from
historical experience include but are not limited
to our term life product series, economic and
societal trends, new pharmaceutical drugs, and
the impact of regulatory changes. Our results
depend upon the extent to which our actual
experience is consistent with the assumptions
we use in determining the LFPB. The
assumptions and estimates underlying the LFPB
require significant judgment and, therefore, are
inherently uncertain.
Unearned and Advance Premiums. Unearned
and advance premiums primarily consist of
premiums received from policyholders in
advance of the premiums due date. Unearned
and advance premiums are deferred upon
collection and recognized as premiums revenue
upon the premium due date.
Other Policyholders’ Funds. Other
policyholders’ funds primarily represent claim
payments left on deposit with us.
Litigation. The Company is involved from
time-to-time in legal disputes, regulatory
128
inquiries and arbitration proceedings in the
normal course of business. Contingent litigation-
related losses are recognized when probable
and can be reasonably estimated. Legal costs,
such as attorneys’ fees and other litigation-
related expenses that are incurred in connection
with resolving litigation are expensed as
incurred. These disputes are subject to
uncertainties, including indeterminate amounts
sought in certain of these matters and the
inherent unpredictability of litigation. Due to the
difficulty of estimating costs of litigation, actual
costs may be substantially higher or lower than
any amounts reserved.
Income Taxes. We are subject to the income
tax laws of the United States, its states,
municipalities, and certain unincorporated
territories, as well as foreign jurisdictions, most
notably Canada. These tax laws can be complex
and subject to different interpretations by the
taxpayer and the relevant governmental taxing
authorities. In establishing a provision for
income tax expense, we must make judgments
and interpretations about the applicability of
these tax laws. We also must make estimates
about the future impact certain items will have
on taxable income in the various tax
jurisdictions, both domestic and foreign.
Income taxes are accounted for under the asset
and liability method. Deferred tax assets and
liabilities are recognized for the future tax
consequences attributable to: (i) differences
between the financial statement carrying
amounts of acquired assets and liabilities and
their respective tax bases and (ii) acquired
e-TeleQuote net operating loss and interest
deduction carryforwards available for future use.
Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to
taxable income in the years in which those
temporary differences are expected to be
recovered or settled. Deferred tax assets are
recognized subject to management’s judgment
that realization is more-likely-than-not
applicable to the periods in which we expect the
temporary difference will reverse. The Company
has not recognized any material deferred taxes
associated with goodwill as it has not acquired
any material goodwill with tax basis. Refer to
Note 21 (Acquisition) for deferred income taxes
recognized as part of the acquisition of
e-TeleQuote.
Noncontrolling Interest.
In connection with
the Company’s acquisition of e-TeleQuote, the
Company entered into a shareholders’
agreement with the noncontrolling equity
holders of Primerica Health (the “Shareholders’
Agreement”). Under the terms of the
Shareholders’ Agreement, the Company agreed
to purchase, and the noncontrolling equity
holders agreed to sell, the remaining 20% stake
over a period of up to four years through a
series of call and put rights. The Shareholders’
Agreement provided for the purchase of the
noncontrolling equity holders’ equity interests in
Primerica Health at a contractually defined
formulaic purchase price (the “Formulaic Price”),
which was based on a discounted calculation of
selected peer company equity value multiples
times the trailing twelve months of adjusted
earnings before interest, taxes, depreciation, and
amortization (“Adjusted EBITDA”) reduced by the
balance of intercompany debt owed by
e-TeleQuote to the Parent Company. The
noncontrolling equity holders’ interests in
Primerica Health was recognized as redeemable
noncontrolling interests (“Redeemable NCI”) in
the temporary stockholders’ equity section of
the consolidated balance sheets. Effective July 1,
2022, the Company executed its call option to
acquire the remaining 20% of Primerica Health.
The Formulaic Price calculation resulted in a
purchase price of zero. As such, no further
consideration was required to obtain the
outstanding 20% stake in Primerica Health and
the noncontrolling interest in the Company’s
consolidated financial statements was
redeemed.
Prior to redemption, the Company adjusted the
Redeemable NCI for net income (loss)
attributable to the noncontrolling interests in
Primerica Health. Upon redemption, the
Redeemable NCI in the temporary stockholders’
equity section of the consolidated balance
sheets was eliminated through an adjustment to
additional paid in capital as no further
consideration was required.
FINANCIAL STATEMENTS — NOTE 1
Premium Revenues. Traditional life insurance
products consist principally of those products
with fixed and guaranteed premiums and
benefits, and are primarily related to term
products. Premiums are recognized as revenues
when due.
Commissions and Fees. We receive
commissions and fees revenue from the sale of
various non-life insurance products.
Commissions revenue is generally received on
the sale of mutual funds and annuities. We also
receive trail commissions revenue from mutual
fund and annuity products based on the net
asset value of shares sold by us. We, in turn, pay
sales commissions to the sales force. We also
receive investment advisory and administrative
fees based on the average daily net asset value
of client assets held in managed investments
programs and contracts related to separate
account assets issued by Primerica Life Canada.
We, in turn, pay asset-based commissions to the
sales force. We earn recordkeeping fees for
transfer agent recordkeeping services that we
perform on behalf of several of our mutual fund
providers and custodial fees for services
performed as a non-bank custodian of our
clients’ retirement plan accounts. See Note 19
(Revenue from Contracts with Customers) for
details related to our commission and fees
revenues recognition policies.
Commissions and Fees – Senior Health. As a
result of the acquisition of e-TeleQuote, the
Company distributes Medicare-related insurance
policies offered by third-party health insurance
carriers to eligible Medicare beneficiaries.
e-TeleQuote receives initial commissions from
health insurance carriers, who are considered its
customers, for enrollments in policies it has
distributed as well as ongoing renewal
commissions that coincide with the period an
eligible Medicare beneficiary remains enrolled in
a policy after the first policy effective date
(collectively, “Lifetime value of commissions” or
“LTV”). Revenue is recognized at the point in
time e-TeleQuote’s single performance
obligation to health insurance carriers is
satisfied, which is generally on the date the
policy application is approved by the health
insurance carrier. The expected commissions
Primerica 2023 Annual Report
129
FINANCIAL STATEMENTS — NOTE 1
represent variable consideration that will not be
resolved until after the performance obligation
has been satisfied. The Company estimates
variable consideration in the transaction price
for policies it has distributed as the expected
amount of initial and renewal commissions to be
received over the life of the enrolled policy.
Variable consideration is estimated by using a
portfolio approach to policies grouped together
by health insurance carrier, Medicare product
type, and policy effective date (referred to as a
“cohort”). This approach to estimating the initial
and renewal commissions expected to be
collected involves the evaluation of various
factors, including but not limited to, contracted
commission rates, disenrollment experience and
renewal persistency rates. Upon development of
the estimate of expected renewal commissions
using the portfolio approach, management
applies a constraint so that it is probable that a
subsequent change in estimate will not result in
a significant revenue reversal. Management
judgment is required to determine the inputs to
these estimates and the inputs are established
primarily based on historical activity. There could
be situations where new facts or circumstances,
that were not available at the time of the initial
estimate, may indicate that the expected renewal
commissions are higher or lower than our
renewal commissions receivable. In those
situations, the expected renewal commissions
receivable will be written down or up to its
revised expected value by adjustments to
revenue, which we refer to as tail revenue
adjustments. Refer to Note 19 (Revenue from
Contracts with Customers) for detail related to
commissions and fees revenues recognized by
e-TeleQuote.
Benefits and Expenses. Benefit and expense
items are charged to income in the period in
which they are incurred. Both the change in
policyholder liabilities, which is included in
benefits and claims, and the amortization of
deferred policy acquisition costs will vary with
policyholder persistency.
Share-Based Transactions.
director share-based compensation awards, we
determine a grant date fair value based on the
price of our publicly-traded common stock and
For employee and
130
recognize the related compensation expense,
adjusted for actual forfeitures, in the
consolidated statements of income on a
straight-line basis over the requisite service
period for the entire award. For non-employee
share-based compensation, we recognize the
impact during the period of performance, and
the fair value of the award is measured as of the
grant date, which occurs in the same quarter as
the service period. To the extent non-employee
share-based compensation is an incremental
direct cost of successful acquisitions or renewals
of life insurance policies that result directly from
and are essential to the policy acquisition(s) and
would not have been incurred had the policy
acquisition(s) not occurred, we defer and
amortize the fair value of the awards in the same
manner as other deferred policy acquisition
costs.
Earnings Per Share (“EPS”). The Company
has outstanding equity awards that consist of
restricted stock units (“RSUs”), performance-
based stock units (“PSUs”), and stock options.
The RSUs maintain non-forfeitable dividend
rights that result in dividend payment
obligations on a one-to-one ratio with common
shares for any future dividend declarations.
Unvested RSUs are deemed participating
securities for purposes of calculating EPS as they
maintain dividend rights.
See Note 14 (Earnings Per Share) for details
related to the calculations of our basic and
diluted EPS using the two-class method.
In
New Accounting Standards Adopted.
August 2018, the FASB issued Accounting
Standards Update No. 2018-12, Financial
Services – Insurance (Topic 944) – Targeted
Improvements to the Accounting for Long-
Duration Contracts (“ASU 2018-12” or “LDTI”).
The amendments in this update changed
accounting guidance for insurance companies
that issue long-duration contracts, such as term
life insurance and segregated funds products.
ASU 2018-12 requires companies that issue
long-duration insurance contracts to review
assumptions used in measuring the LFPB and
DAC, including mortality, disability, and
persistency, at least annually and update as
necessary instead of locking those assumptions
at contract inception and reflecting differences
in assumptions and actual performance as the
experience occurs. ASU 2018-12 also changed
how insurance companies that issue long-
duration contracts amortize DAC and determine
and update the discount rate assumptions used
in measuring both the LFPB and ceded reserves
that are part of reinsurance recoverables while
increasing the level of financial statement
disclosures required.
The Company adopted ASU 2018-12 on
January 1, 2023 through the modified
retrospective method, which applies the
provisions of the standard by pivoting off the
historical December 31, 2020 liability for future
policy benefits (“Pre-transition Reserve”) and
DAC balances just prior to the Transition Date.
Upon adoption, the Company recorded certain
adjustments to its consolidated balance sheet as
of the Transition Date.
•
LDTI requires entities to use market
observable rates, based on an upper-
medium grade fixed income instrument
yield, to measure future policy benefits
reserves each period. The difference
between the LFPB calculated using market
observable rates and the Pre-transition
Reserve was recognized as part of
accumulated other comprehensive income
(“AOCI”) at the Transition Date. Given how
FINANCIAL STATEMENTS — NOTE 1
low market observable rates were at the
Transition Date, we recorded a reduction to
AOCI of approximately $1.5 billion, net of
income tax, as of January 1, 2021. Market
observable rates have increased since the
Transition Date, which resulted in a
cumulative decrease to AOCI of $39.1
million as of December 31, 2023.
• Under LDTI, policies are grouped into
cohorts and the net premium ratio for each
policy cohort is used to calculate the LFPB.
At the Transition Date, the “Net Premium
Ratio” is defined as the present value of
future benefits, which includes claim
settlement expenses less the Pre-transition
Reserve divided by the present value of the
gross premiums. Expected future benefits
and gross premiums use best estimate cash
flow assumptions and the locked-in
discount rate at the Transition Date is used
in the calculation. Under LDTI, a cohort’s
Net Premium Ratio is capped at 100%. The
adjustment necessary at the Transition Date
to cap the Net Premium Ratio for cohorts at
100% was approximately $23 million, which
was recognized as a reduction to retained
earnings as of January 1, 2021. The
identified impact from capping the Net
Premium Ratio at 100% was solely
attributable to a limited amount of older
policy year cohorts.
Primerica 2023 Annual Report
131
FINANCIAL STATEMENTS — NOTE 1
The impact of LDTI on the Company’s audited consolidated balance sheet as of December 31, 2022 as
previously reported before the adoption of LDTI (“Previously Reported”) is as follows:
Consolidated Balance Sheet
December 31, 2022
As Previously
Reported
Adoption
Impacts
As Adjusted
(In thousands, except per-share amounts)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,801,415)
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,340,265)
Short-term investments available-for-sale, at fair value (amortized cost: $69,393)
Equity securities, at fair value (historical cost: $29,430)
Trading securities, at fair value (cost: $4,229)
Policy loans and other invested assets
$ 2,495,456
1,444,920
69,406
35,404
3,698
48,713
$
— $ 2,495,456
1,444,920
—
69,406
—
35,404
—
3,698
—
48,713
—
Total investments
Cash and cash equivalents
Accrued investment income
Reinsurance recoverables
Deferred policy acquisition costs, net
Renewal commissions receivable
Agent balances, due premiums and other receivables
Goodwill
Intangible assets, net
Deferred income taxes
Operating lease right-of-use assets
Other assets
Separate account assets
Total assets
Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits
Unearned and advance premiums
Policy claims and other benefits payable
Other policyholders’ funds
Note payable
Surplus note
Income tax payable
Deferred income taxes
Operating lease liabilities
Other liabilities
Payable under securities lending
Separate account liabilities
Commitments and contingent liabilities (see Commitments and Contingent
Liabilities note)
Total liabilities
Temporary Stockholders’ Equity
Redeemable noncontrolling interests in consolidated entities
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 shares; issued and
outstanding 36,824 shares)
Paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of income tax:
4,097,597
489,240
20,885
4,015,909
3,081,886
200,043
254,276
127,707
185,525
101,333
40,500
428,259
2,305,717
—
—
—
(806,369)
106,616
—
—
—
—
(7,701)
—
—
—
4,097,597
489,240
20,885
3,209,540
3,188,502
200,043
254,276
127,707
185,525
93,632
40,500
428,259
2,305,717
$15,348,877
$ (707,454) $14,641,423
$ 7,390,800
15,422
538,250
483,769
592,905
1,444,469
36,876
91,457
45,995
580,780
100,938
2,305,717
$(1,092,894) $ 6,297,906
15,422
538,250
483,769
592,905
1,444,469
36,876
167,142
45,995
580,780
100,938
2,305,717
—
—
—
—
—
—
75,685
—
—
—
—
13,627,378
(1,017,209)
12,610,169
—
368
—
—
—
—
—
368
—
1,973,403
180,214
2,153,617
Effect of change in discount rate assumptions on the liability for future policy
benefits
Unrealized foreign currency translation gains (losses)
Net unrealized investment gains (losses) on available-for-sale securities
—
(11,404)
(240,868)
130,416
(875)
—
—
130,416
(12,279)
(240,868)
Total permanent stockholders’ equity
1,721,499
309,755
2,031,254
Total liabilities and temporary and permanent stockholders’ equity
$15,348,877
$ (707,454) $14,641,423
132
FINANCIAL STATEMENTS — NOTE 1
The impact of LDTI on the Company’s Previously Reported audited consolidated statements of income
for the years ended December 31, 2022 and 2021 is as follows:
Consolidated Statements of Income
Revenues:
Direct premiums
Ceded premiums
Net premiums
Commissions and fees
Investment income net of investment
expenses
Interest expense on surplus note
Net investment income
Realized investment gains (losses)
Other investment gains (losses)
Investment gains (losses)
Other, net
Total revenues
Benefits and expenses:
Benefits and claims
Future policy benefits remeasurement
(gain) loss
Amortization of deferred policy
acquisition costs
Sales commissions
Insurance expenses
Insurance commissions
Contract acquisition costs
Interest expense
Goodwill impairment loss
Loss on extinguishment of debt
Other operating expenses
Year ended December 31, 2022
Year ended December 31, 2021
As Previously
Reported
Adoption
Impacts
As
Adjusted
As Previously
Reported
Adoption
Impacts
As
Adjusted
(In thousands except per-share amounts)
$ 3,230,120
(1,629,892)
$
— $ 3,230,120
(1,629,892)
—
$ 3,122,148
(1,616,264)
$
— $ 3,122,148
(1,616,264)
—
1,600,228
944,676
156,987
(63,922)
93,065
1,444
(2,439)
(995)
83,159
2,720,133
—
—
—
—
—
—
—
—
—
—
1,600,228
944,676
1,505,884
1,042,813
156,987
(63,922)
93,065
1,444
(2,439)
(995)
83,159
142,795
(62,207)
80,588
4,665
1,207
5,872
74,575
2,720,133
2,709,732
—
—
—
—
—
—
—
—
—
—
1,505,884
1,042,813
142,795
(62,207)
80,588
4,665
1,207
5,872
74,575
2,709,732
665,749
(33,346)
632,403
722,753
(120,746)
602,007
—
1,626
1,626
—
1,297
1,297
356,143
462,764
235,405
30,261
68,431
27,237
60,000
—
320,394
(94,514)
—
—
—
—
—
—
—
—
261,629
462,764
235,405
30,261
68,431
27,237
60,000
—
320,394
251,179
522,308
202,605
34,532
52,788
30,618
76,000
8,927
296,851
(12,909)
—
—
—
—
—
—
—
—
238,270
522,308
202,605
34,532
52,788
30,618
76,000
8,927
296,851
Total benefits and expenses
2,226,384
(126,234)
2,100,150
2,198,561
(132,358)
2,066,203
Income before income taxes
Income taxes
Net income
Net income (loss)
attributable to
noncontrolling interests
Net income attributable to
Primerica, Inc.
Earnings per share attributable to
common stockholders:
Basic earnings per share
Diluted earnings per share
Weighted-average shares used in
computing earnings per share:
Basic
Diluted
493,749
125,775
367,974
126,234
27,178
99,056
619,983
152,953
467,030
511,171
139,191
132,358
28,353
371,980
104,005
643,529
167,544
475,985
(5,038)
—
(5,038)
(1,377)
—
(1,377)
$ 373,012
$ 99,056
$ 472,068
$ 373,357
$ 104,005
$ 477,362
$
$
9.77
9.74
$
$
2.60
2.59
$
$
12.37
12.33
$
$
9.41
9.38
$
$
2.62
2.61
$
$
12.03
11.99
37,997
38,106
—
—
37,997
38,106
39,530
39,652
—
—
39,530
39,652
Primerica 2023 Annual Report
133
FINANCIAL STATEMENTS — NOTE 1
Transition Impact on the Liability for Future Policy
Benefits.
The Company adopted ASU 2018-12 using the
modified retrospective transition method. As
part of the transition disclosures, ASU 2018-12
requires a reconciliation of the adoption impacts
to the Company’s LFPB, separated between the
changes in the present value of expected net
premiums and the present value of expected
future policy benefits as of the Transition Date.
These balances are presented before reinsurance
and income taxes for the Term Life Insurance
segment, which makes up the substantial
portion of the Company’s long-duration
insurance contract liabilities.
Transition Impact at January 1, 2021
Present Value of Expected Premiums
Balance at December 31, 2020
Impact to retained earnings from capping Transition Date net
premium ratio
Balance at original discount rate
Effect of changes in discount rate assumptions
Balance at January 1, 2021
Present Value of Expected Future Policy Benefits
Balance at December 31, 2020
Effect of changes in discount rate assumptions
Balance at January 1, 2021
(In thousands)
Term Life
$10,867,358
(137,112)
10,730,246
2,774,082
$13,504,328
$17,445,700
5,624,494
$23,070,194
134
New Accounting Standards Not Yet Adopted.
Accounting standard
Adoption date
Description
Effects on the financial statements
FINANCIAL STATEMENTS — NOTE 1
Segment Reporting
(Topic 280)—
Improvements to
Reportable Segment
Disclosures
ASU 2023-07
Annual periods
beginning after
December 15, 2023
and interim periods
thereafter. Early
adoption is permitted.
Retrospective
transition for all
periods presented.
Income Taxes (Topic
740)—Improvements
to Income Tax
Disclosures
ASU 2023-09
Annual periods
beginning after
December 15, 2024.
Early adoption is
permitted. Prospective
transition, although
retrospective
transition is permitted.
We do not believe the adoption
of the standard will have a
material impact on our
consolidated financial
statements. We will revise
disclosures in accordance with
the new standard in our annual
2024 financial statements and
for interim periods thereafter.
We do not believe the adoption
of the standard will have a
material impact on our
consolidated financial
statements. We will revise
disclosures in accordance with
the new standard in our annual
2025 financial statements.
In November 2023, the FASB
issued the ASU to enhance
segment disclosures. The
amendments (1) require
disclosure of significant segment
expenses that are regularly
provided to the chief operating
decision maker (“CODM”) and
included within each reported
measure of segment profit or loss;
(2) require disclosure of “other
segment items” by reportable
segment, which is the difference
between segment revenue and
significant segment expenses;
(3) require annual segment
disclosures to be included in
interim financial statements;
(4) clarify that if the CODM uses
more than one measure of a
segment’s profit or loss in
assessing segment performance
and deciding how to allocate
resources, an entity may report
one or more of those additional
measures; and (5) require
disclosure of the title and position
of the CODM and an explanation
of how the CODM uses the
reported measure(s) of segment
profit or loss in assessing segment
performance and deciding how to
allocate resources.
In December 2023, the FASB
issued the ASU to increase income
tax transparency through
improvements primarily related to
the existing rate reconciliation and
income taxes paid disclosures. The
amendments require
(1) consistent categories and
greater disaggregation of
information in the rate
reconciliation; and (2) income
taxes paid disaggregated by
jurisdiction.
The ASU also removes certain
disclosure requirements, such as
reasonably possible significant
changes in the total amount of
unrecognized tax benefits within
12 months of the reporting date.
Recently-issued accounting guidance not discussed above is not applicable, is immaterial to our
consolidated financial statements, or did not or is not expected to have a material impact on our
business.
Primerica 2023 Annual Report
135
FINANCIAL STATEMENTS — NOTE 2
(2) Other Comprehensive Income
The components of other comprehensive income (“OCI”), including the income tax expense or benefit
allocated to each component, were as follows:
Year ended December 31,
2023
2022
2021
(In thousands)
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains
(losses) before income taxes
$ 10,044
$ (20,826)
$
6,969
Income tax expense (benefit) on unrealized foreign
currency translation gains (losses)
—
—
—
Change in unrealized foreign currency translation gains
(losses), net of income taxes
$ 10,044
$ (20,826)
$
6,969
Unrealized gain (losses) on available-for-sale securities:
Change in unrealized holding gains (losses) arising during
period before income taxes
$ 87,390
$ (385,735)
$ (78,348)
Income tax expense (benefit) on unrealized holding gains
(losses) arising during period
18,751
(82,185)
(17,038)
Change in unrealized holding gains (losses) on available-
for-sale securities arising during period, net of income
taxes
Reclassification from accumulated OCI to net income for
(gains) losses realized on available-for-sale securities
Income tax (expense) benefit on (gains) losses reclassified
68,639
(303,550)
(61,310)
2,811
(1,387)
(3,849)
from accumulated OCI to net income
590
(292)
(808)
Reclassification from accumulated OCI to net income for
(gains) losses realized on available-for-sale securities,
net of income taxes
Change in unrealized gains (losses) on available-for-
sale securities, net of income taxes and
reclassification adjustment
Effect of change in discount rate assumptions on the
LFPB:
Change in effect in discount rate assumptions on the LFPB
2,221
(1,095)
(3,041)
$ 70,860
$ (304,645)
$ (64,351)
before income taxes
$(216,301)
$1,739,762
$347,041
Income tax (expense) benefit on the effect of change in
discount rate assumptions on the LFPB from
accumulated OCI to net income
Change in effect in discount rate assumptions on the
(46,799)
371,166
74,599
LFPB, net of income taxes
$(169,502)
$1,368,596
$272,442
136
(3) Segment and Geographical
Information
Segments. We have three primary operating
segments — Term Life Insurance, Investment
and Savings Products and (as of July 1, 2021)
Senior Health. The Term Life Insurance segment
includes underwriting profits on our in-force
book of term life insurance policies, net of
reinsurance, which are underwritten by our life
insurance company subsidiaries. The Investment
and Savings Products segment includes retail
and managed mutual funds and annuities
distributed through licensed broker-dealer
subsidiaries and includes segregated funds, an
insurance savings product that we have
underwritten in Canada through Primerica Life
Canada. In the United States, we distribute
mutual fund and annuity products of several
third-party companies. We also earn fees for
transfer agent recordkeeping functions and non-
bank custodial services that we provide for
certain mutual funds products we distribute. In
Canada, we primarily offer a suite of mutual fund
products, for which we serve as the principal
Revenues:
Term life insurance segment
Investment and savings products segment
Senior health segment
FINANCIAL STATEMENTS — NOTE 3
distributor, managed by two well-known mutual
fund companies. The Senior Health segment
consists of the distribution of Medicare-related
insurance products underwritten by third-party
health insurance carriers to eligible Medicare
beneficiaries through e-TeleQuote’s licensed
health insurance agents.
We also have a Corporate and Other Distributed
Products segment, which consists primarily of
revenues and expenses related to several
discontinued lines of insurance other than our
core term life insurance products and the
distribution of various other financial products
generally underwritten or offered by third-party
providers. All of the Company’s net investment
income is attributed to the Corporate and Other
Distributed Products segment. In addition,
interest expense incurred by the Company as
well as gains and losses on our invested asset
portfolio are entirely attributed to the Corporate
and Other Distributed Products segment.
Notable information included in profit or loss by
segment was as follows:
Year ended December 31,
2023
2022
2021
(In thousands)
$1,693,042 $1,635,966 $1,539,200
865,265
863,432
941,847
67,184
62,682
60,440
Corporate and other distributed products segment
190,200
158,053
168,245
Total revenues
$2,815,691 $2,720,133 $2,709,732
Net investment income:
Term life insurance segment
Investment and savings products segment
Senior health segment
$
— $
— $
—
—
—
—
—
—
—
Corporate and other distributed products segment
135,837
93,065
80,588
Total net investment income
$ 135,837 $
93,065 $
80,588
Primerica 2023 Annual Report
137
FINANCIAL STATEMENTS — NOTE 3
Amortization of DAC:
Term life insurance segment
Investment and savings products segment
Senior health segment
Corporate and other distributed products segment
Year ended December 31,
2023
2022
2021
(In thousands)
$268,803 $254,875 $231,380
5,479
5,581
5,511
—
—
—
1,534
1,173
1,379
Total amortization of DAC
$275,816 $261,629 $238,270
Non-cash share-based compensation expense:
Term life insurance segment
Investment and savings products segment
Senior health segment
Corporate and other distributed products segment
$
4,285 $
4,133 $
4,153
2,927
668
3,212
210
3,206
—
11,031
14,806
9,483
Total non-cash share-based compensation expense
$ 18,911 $ 22,361 $ 16,842
Income (loss) before income taxes:
Term life insurance segment
Investment and savings products segment
Senior health segment
Corporate and other distributed products segment
$552,164 $514,409 $501,232
242,826
245,890
277,742
(20,058)
(98,673)
(85,050)
(23,252)
(41,643)
(50,395)
Total income (loss) before income taxes
$751,680 $619,983 $643,529
Insurance expenses and other operating
expenses directly attributable to the Term Life
Insurance, Investment and Savings Products, and
Senior Health segments are recorded directly to
the applicable segment. We allocate certain
other revenue and operating expenses that are
not directly attributable to a specific operating
segment using methods expected to reasonably
measure the benefit received by each reporting
segment. Such methods include time studies,
recorded usage, revenue distribution, and sales
force representative distribution. These allocated
items include fees charged for access to
Primerica Online (“POL”) and costs incurred for
technology, sales force support, occupancy and
other general and administrative costs. Costs
that are not directly charged or allocated to our
three primary operating segments are included
in the Corporate and Other Distributed Products
segment.
138
Total assets by segment were as follows:
Assets:
Term life insurance segment
FINANCIAL STATEMENTS — NOTE 3
December 31,
2023
December 31,
2022
December 31,
2021
(In thousands)
$ 6,543,923 $ 6,457,156 $ 7,340,732
Investment and savings products segment (1)
2,537,079
2,424,256
2,923,404
Senior health segment
419,110
431,993
528,974
Corporate and other distributed products segment
5,527,620
5,328,018
5,402,854
Total assets
$15,027,732 $14,641,423 $16,195,964
(1)
The Investment and Savings Products segment includes assets held in separate accounts. Excluding separate accounts, the
Investment and Savings Products segment assets were $141.3 million, $118.6 million, and $123.5 million as of December 31,
2023, 2022, and 2021, respectively.
Assets specifically related to a segment are held
in that segment. All invested assets held by the
Company, including the deposit asset
recognized in connection with our 10%
coinsurance agreement (the “10% Coinsurance
Agreement”) and the held-to-maturity security
received in connection with the Vidalia Re
Coinsurance Agreement, are reported as assets
of the Corporate and Other Distributed Products
segment. DAC is recognized in a particular
segment based on the product to which it
relates. Separate account assets supporting the
segregated funds product in Canada are held in
the Investment and Savings Products segment.
Any remaining unallocated assets are reported
in the Corporate and Other Distributed Products
segment.
Geographical Information. Results of
operations by country and long-lived assets —
primarily tangible assets reported in other assets
in our consolidated balance sheets —were as
follows:
Revenues by country:
United States
Canada
Total revenues
Long-lived assets by country:
United States
Canada
Other
Year ended December 31,
2023
2022
2021
(In thousands)
$2,463,958
$2,355,139
$2,311,051
351,733
364,994
398,681
$2,815,691
$2,720,133
$2,709,732
December 31,
2023
December 31,
2022
December 31,
2021
(In thousands)
$
35,434
$
49,637
$
62,921
2,636
197
2,803
217
3,871
230
Total long-lived assets
$
38,267
$
52,657
$
67,022
Primerica 2023 Annual Report
139
FINANCIAL STATEMENTS — NOTE 4
(4) Investments
AFS Securities. The amortized cost, gross unrealized gains and losses, and fair value of AFS fixed-
maturity securities were as follows:
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
Amortized
cost
December 31, 2023
Gross
unrealized
gains
Gross
unrealized
losses
(In thousands)
Fair value
$
9,974
$
18
$
(476) $
9,516
170,354
145,779
1,616
891
(8,588)
163,382
(14,681)
131,989
1,723,023
14,787
(120,286)
1,617,524
499,771
127,454
258,857
1,688
(63,928)
437,531
156
763
(15,443)
112,167
(12,262)
247,358
Total fixed-maturity securities
$2,935,212
$19,919
$(235,664) $2,719,467
Short-term investments
276
—
—
276
Total fixed-maturity and short-term
investments
$2,935,488
$19,919
$(235,664) $2,719,743
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
Amortized
cost
December 31, 2022
Gross
unrealized
gains
Gross
unrealized
losses
(In thousands)
Fair value
$
31,217
$
18
$
(767) $
30,468
163,725
142,189
780
112
(11,590)
152,915
(20,056)
122,245
1,665,962
2,439
(171,552)
1,496,849
473,309
139,306
185,707
370
3
108
(71,949)
401,730
(16,342)
122,967
(17,533)
168,282
Total fixed-maturity securities
$2,801,415
$3,830
$(309,789) $2,495,456
Short-term investments
69,393
20
(7)
69,406
Total fixed-maturity and short-term
investments
$2,870,808
$3,850
$(309,796) $2,564,862
140
All of our AFS mortgage-and asset-backed
securities represent beneficial interests in
variable interest entities (“VIEs”). We are not the
primary beneficiary of these VIEs because we do
not have the power to direct the activities that
most significantly impact the entities’ economic
performance. The maximum exposure to loss as
Due in one year or less
Due after one year through five years
Due after five years through 10 years
Due after 10 years
Mortgage- and asset-backed securities
Total AFS fixed-maturity securities
FINANCIAL STATEMENTS — NOTE 4
a result of our involvement in these VIEs equals
the carrying value of the securities.
The scheduled maturity distribution of the AFS
fixed-maturity securities portfolio as of
December 31, 2023 was as follows:
Amortized cost
Fair value
(In thousands)
$ 209,201
$ 206,639
706,348
809,733
323,848
681,350
739,504
294,918
2,049,130
1,922,411
886,082
797,056
$2,935,212
$2,719,467
Expected maturities may differ from scheduled contractual maturities because issuers of securities may
have the right to call or prepay obligations with or without call or prepayment penalties.
Trading Securities. The costs and fair values of the fixed-maturity securities classified as trading
securities were as follows:
Fixed-maturity securities
Held-to-maturity Security. Concurrent with
the execution of the Vidalia Re Coinsurance
Agreement, Vidalia Re entered into a Surplus
Note Purchase Agreement (the “Surplus Note
Purchase Agreement”) with Hannover Life
Reassurance Company of America and certain of
its affiliates (collectively, “Hannover Re”) and a
newly formed limited liability company (the
“LLC”) owned by a third-party service provider.
Under the Surplus Note Purchase Agreement,
Vidalia Re issued a surplus note (the “Surplus
Note”) to the LLC in exchange for a credit
enhanced note from the LLC with an equal
principal amount (the “LLC Note”). The principal
amounts of the Surplus Note and the LLC Note
have reached their peaks and are expected to
decrease over time to coincide with the amount
of policy reserves being contractually supported
December 31, 2023 December 31, 2022
Cost
Fair
value
Cost
Fair
value
(In thousands)
$18,761 $18,383 $4,229 $3,698
under the Vidalia Re Coinsurance Agreement.
Both the LLC Note and the Surplus Note mature
on December 31, 2030 and bear interest at an
annual interest rate of 4.50%. The LLC Note is
guaranteed by Hannover Re through a credit
enhancement feature in exchange for a fee,
which is reflected in interest expense on our
consolidated statements of income.
The LLC is a VIE as its owner does not have an
equity investment at risk that is sufficient to
permit the LLC to finance its activities without
Vidalia Re or Hannover Re. The Parent Company,
Primerica Life, and Vidalia Re share the power to
direct the activities of the LLC with Hannover Re,
but they do not have the obligation to absorb
losses or the right to receive any residual returns
related to the LLC’s primary risks or sources of
Primerica 2023 Annual Report
141
FINANCIAL STATEMENTS — NOTE 4
variability. Through the credit enhancement
feature, Hannover Re is the ultimate risk taker in
this transaction and bears the obligation to
absorb the LLC’s losses in the event of a Surplus
Note default in exchange for the fee.
Accordingly, the Company is not the primary
beneficiary of the LLC and does not consolidate
the LLC within its consolidated financial
statements.
The LLC Note is classified as a held-to-maturity
debt security in the Company’s invested asset
portfolio as we have the positive intent and
ability to hold the security until maturity. As of
December 31, 2023, the LLC Note had an
estimated unrealized holding loss of $52.1
million based on its amortized cost and
estimated fair value. The estimated fair value of
the LLC Note is expected to be at least equal to
the estimated fair value of the offsetting Surplus
Note. See Note 5 (Fair Value of Financial
Instruments) for information on the fair value of
our financial instruments and see Note 11 (Debt)
for more information on the Surplus Note.
As of December 31, 2023, no credit losses have
been recognized on the LLC Note held-to-
maturity security.
Investments on Deposit with Governmental
Authorities. As required by law, we have
investments on deposit with governmental
authorities and banks for the protection of
policyholders. The fair value of investments on
deposit was $7.3 million and $7.1 million as of
December 31, 2023 and 2022, respectively.
Securities Lending Transactions. We
participate in securities lending transactions with
broker-dealers and other financial institutions to
increase investment income with minimal risk.
We require minimum collateral on securities
loaned equal to 102% of the fair value of the
loaned securities. We accept collateral in the
form of securities, which we are not able to sell
or encumber, and to the extent the collateral
declines in value below 100%, we require
additional collateral from the borrower. Any
securities collateral received is not reflected on
our consolidated balance sheets. We also accept
collateral in the form of cash, all of which we
reinvest. For loans involving unrestricted cash
collateral, the collateral is reported as an asset
with a corresponding liability representing our
obligation to return the collateral. We continue
to carry the loaned securities as invested assets
on our consolidated balance sheets during the
terms of the loans, and we do not report them
as sales. Cash collateral received and reinvested
was $99.8 million and $100.9 million as of
December 31, 2023 and 2022, respectively.
142
Net Investment Income. The components of net investment income were as follows:
FINANCIAL STATEMENTS — NOTE 4
Fixed-maturity securities (available-for-sale)
Fixed-maturity security (held-to-maturity)
Equity securities
Policy loans and other invested assets
Cash, cash equivalent and short-term investments
Total return on deposit asset underlying 10% coinsurance agreement(1)
Gross investment income
Investment expenses
Investment income net of investment expenses
Interest expense on surplus note
Net investment income
Year ended December 31,
2023
2022
2021
(In thousands)
$108,762 $ 90,975 $ 80,362
65,474
63,922
62,207
1,523
1,297
23,601
9,338
1,509
1,046
5,943
1,632
1,019
456
(65)
1,875
209,995
163,330
147,551
(8,684)
(6,343)
(4,756)
201,311
156,987
142,795
(65,474)
(63,922)
(62,207)
$135,837 $ 93,065 $ 80,588
(1)
Includes $(0.4) million, $(3.8) million, and $(2.5) of net gains (losses) recognized for the change in fair value of the deposit
asset underlying the 10% coinsurance agreement for the years ended December 31, 2023, 2022, and 2021, respectively.
The components of investment gains (losses), as well as details on gross realized investment gains
(losses) and other investment gains (losses) were as follows:
Year ended December 31,
2023
2022
2021
(In thousands)
Realized investment gains (losses):
Gross gains from sales of available-for-sale fixed maturity securities
$ 504 $ 2,036 $ 7,060
Gross losses from sales of available-for-sale fixed maturity securities
(1,149)
(592)
(2,395)
Net realized investment gains (losses):
(645)
1,444
4,665
Other investment gains (losses):
Credit losses impairment of available-for-sale securities
(2,166)
(57)
(816)
Market gains (losses) recognized in net income during the period on
equity securities
Gains (losses) from equity method investments
Gains (losses) from bifurcated options
Gains (losses) on trading securities
Other investment gains (losses):
(3,137)
(2,375)
2,362
12
13
27
—
—
(7)
—
(57)
(282)
(5,251)
(2,439)
1,207
Investment gains (losses)
$(5,896) $ (995) $ 5,872
Primerica 2023 Annual Report
143
FINANCIAL STATEMENTS — NOTE 4
The proceeds from sales or other redemptions of AFS securities were as follows:
Proceeds from sales or other redemptions
Year ended December 31,
2023
2022
2021
(In thousands)
$373,254 $496,898 $676,153
Accrued Interest. Accrued interest is recorded in accordance with the contractual interest schedule of
the underlying security. In the event of default, the Company’s policy is to no longer accrue interest on
these securities and to write off any remaining accrued interest. As a result, the Company has made the
policy election to not record an allowance for credit losses on accrued interest.
Credit Losses for Available-for-sale Fixed-maturity Securities. The following tables summarizes all
AFS securities in an unrealized loss position for which an allowance for credit losses has not been
recorded as of December 31, 2023, aggregated by major security type and by length of time such
securities have continuously been in an unrealized loss position:
Fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
December 31, 2023
Less than 12 months
12 months or longer
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
(In thousands)
$ — $ — $
9,188 $
(476)
17,209
4,883
39,783
14,872
4,721
41,417
(62)
(46)
(907)
(142)
(107)
(159)
104,827
107,021
(8,526)
(14,635)
1,231,694
(119,379)
360,987
97,417
136,841
(63,786)
(15,336)
(12,103)
Total fixed-maturity securities
$122,885
$(1,423)
$2,047,975 $(234,241)
144
Fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
FINANCIAL STATEMENTS — NOTE 4
December 31, 2022
Less than 12 months
12 months or longer
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
(In thousands)
$
4,927 $
(204) $ 25,209 $
(563)
97,094
71,131
974,931
187,158
65,165
81,907
(4,430)
(10,666)
38,085
44,324
(7,160)
(9,390)
(69,726)
452,541
(101,826)
(22,171)
201,595
(5,069)
(5,807)
56,799
72,977
(49,778)
(11,273)
(11,726)
Total fixed-maturity securities
1,482,313
(118,073)
891,530
(191,716)
Short-term investments:
U.S. government and agencies
Foreign government
Total Short Term Bonds
28,379
1,744
30,123
(5)
(2)
(7)
—
—
—
—
—
—
Total fixed-maturity and Short Term securities
$1,512,436 $(118,080) $891,530 $(191,716)
The amortized cost of AFS securities with a cost
basis in excess of their fair values were $2,406.5
million and $2,713.8 million as of December 31,
2023 and 2022, respectively.
As of December 31, 2023 and 2022, no
allowance for credit losses was recorded for AFS
securities. Substantially all of the unrealized
losses were the result of change in market
interest rates compared to the date the
securities were acquired rather than the credit
quality of the securities, and we have no present
intention to dispose of them.
For the years ended December 31, 2023, 2022,
and 2021, we recorded $2.2 million, less than
$0.1 million, and $0.8 million, respectively, for
credit (gains) losses in the consolidated
statements of income on AFS securities. We
recognized credit losses on securities due to:
(i) our intent to sell them; (ii) adverse credit
events indicating that we will not receive the
security’s contractual cash flows when
contractually due, such as news of an impending
filing for bankruptcy; (iii) analyses of the issuer’s
most recent financial statements or other
information indicating that significant liquidity
deficiencies, significant losses and large declines
in capitalization exist; and (iv) analyses of rating
agency information for issuances with severe
ratings downgrades indicating a significant
increase in the possibility of default.
Primerica 2023 Annual Report
145
FINANCIAL STATEMENTS — NOTE 4
The rollforward of the allowance for credit losses on AFS securities was as follows:
Allowance for credit losses, beginning of period
Additions to the allowance for credit losses on securities for
which credit losses were not previously recorded
Additional increases (decreases) to the allowance for credit
losses on securities that had an allowance recorded in a
previous period
Write-offs charged against the allowance, if any
Allowance for credit losses, end of period
Year ended December 31,
2022
2021
(In thousands)
$ 816
$ —
—
821
(81)
(735)
(5)
—
$ —
$816
2023
$—
—
—
—
$—
Derivatives. We have a deferred loss related
to closed forward contracts, which were settled
several years ago, that were used to mitigate our
exposure to foreign currency exchange rates
that resulted from the net investment in our
Canadian operations. The amount of deferred
loss included in accumulated other
comprehensive income (loss) was $26.4 million
as of each of December 31, 2023 and 2022.
These deferred losses will not be recognized
until such time as we sell or substantially
liquidate our Canadian operations, although we
have no such intention.
(5) Fair Value of Financial Instruments
Fair value is the price that would be received
upon the sale of an asset or paid to transfer a
liability in an orderly transaction between market
participants at the measurement date. Invested
assets recorded at fair value are measured and
classified in accordance with a three-tier fair
value hierarchy based on observable and
unobservable inputs. Observable inputs reflect
market data obtained from independent
sources, while unobservable inputs reflect our
view of market assumptions in the absence of
observable market information. We classify and
disclose all invested assets carried at fair value in
one of the following three levels:
•
Level 1. Quoted prices for identical
instruments in active markets. Level 1
consists of financial instruments whose
146
•
value is based on quoted market prices in
active markets, such as cash, cash
equivalents in money market funds,
exchange-traded common stocks and
actively traded mutual fund investments;
Level 2. Quoted prices for similar
instruments in active markets; quoted prices
for identical or similar instruments in
markets that are not active; and model-
derived valuations in which all significant
inputs are observable in active markets.
Level 2 includes those financial instruments
that are valued using industry-standard
pricing methodologies, models or other
valuation methodologies. Various inputs are
considered in deriving the fair value of the
underlying financial instrument, including
interest rate and yield curves, credit spread,
and foreign exchange rates. All significant
inputs are observable, or derived from
observable information in the marketplace
or are supported by observable levels at
which transactions are executed in the
marketplace. Financial instruments in this
category could include: cash equivalents
and short-term investments in U.S. treasury
securities; certain public and private
corporate fixed-maturity and equity
securities; government or agency securities;
and certain mortgage- and asset-backed
securities; and
•
Level 3. Valuations derived from valuation
techniques in which one or more significant
inputs are unobservable. Level 3 consists of
financial instruments whose fair value is
estimated based on industry-standard
pricing methodologies and models using
significant inputs not based on, nor
corroborated by, readily available market
information. Valuations for this category
primarily consist of non-binding broker
quotes. Financial instruments in this
category could include less liquid
mortgage-and asset-backed securities and
equity securities.
As of each reporting period, all assets and
liabilities recorded at fair value are classified in
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Mortgage-and asset-backed securities:
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
FINANCIAL STATEMENTS — NOTE 5
their entirety based on the lowest level of input
(Level 3 being the lowest in the hierarchy) that is
significant to the fair value measurement.
Significant levels of estimation and judgment are
required to determine the fair value of certain of
our investments. The factors influencing these
estimations and judgments are subject to
change in subsequent reporting periods.
The estimated fair value and hierarchy
classifications for assets and liabilities that are
measured at fair value on a recurring basis were
as follows:
December 31, 2023
Level 1
Level 2
Level 3
Total
(In thousands)
$ — $
9,516 $ — $
9,516
—
—
163,382
131,989
3,951
1,613,573
—
—
—
437,531
112,167
246,858
—
—
—
—
—
500
500
—
163,382
131,989
1,617,524
437,531
112,167
247,358
2,719,467
276
Total available-for-sale fixed-maturity securities
3,951
2,715,016
Short Term Investments
—
276
Total available-for-sale securities
3,951
2,715,292
500
2,719,743
Equity securities
Trading securities
Cash and cash equivalents
Separate accounts
Total fair value assets
Fair value liabilities:
Separate accounts
27,062
974
1,644
—
18,383
613,148
—
—
2,395,842
—
—
—
29,680
18,383
613,148
2,395,842
$644,161 $5,130,491 $2,144 $5,776,796
$ — $2,395,842 $ — $2,395,842
Total fair value liabilities
$ — $2,395,842 $ — $2,395,842
Primerica 2023 Annual Report
147
FINANCIAL STATEMENTS — NOTE 5
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies
Foreign government
States and political subdivisions
Corporates
Mortgage-and asset-backed securities:
Residential mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities
Total available-for-sale fixed-maturity securities
Short Term Investments
Total available-for-sale securities
Equity securities
Trading securities
Cash and cash equivalents
Separate accounts
Total fair value assets
Fair value liabilities:
Separate accounts
December 31, 2022
Level 1
Level 2
Level 3
Total
(In thousands)
$ — $
30,468 $ — $
30,468
—
—
152,915
122,245
3,586
1,493,263
—
—
—
401,730
122,967
168,282
3,586
—
3,586
2,491,870
69,406
2,561,276
—
—
—
—
—
—
—
—
—
32,727
—
489,240
967
1,710
3,698
—
—
—
—
—
2,305,717
152,915
122,245
1,496,849
401,730
122,967
168,282
2,495,456
69,406
2,564,862
35,404
3,698
489,240
2,305,717
$525,553 $4,871,658 $1,710 $5,398,921
$ — $2,305,717 $ — $2,305,717
Total fair value liabilities
$ — $2,305,717 $ — $2,305,717
In estimating fair value of our investments, we
use a third-party pricing service for
approximately all of our securities that are
measured at fair value on a recurring basis. The
remaining securities are primarily thinly traded
securities, such as private placements, and are
valued using models based on observable inputs
on public corporate spreads having similar
characteristics (e.g., sector, average life and
quality rating), liquidity and yield based on
quality rating, average life and U.S. Treasury
yields. All observable data inputs are
corroborated by independent third-party data.
We also corroborate pricing information
provided by our third-party pricing service by
performing a review of selected securities. Our
review activities include obtaining detailed
information about the assumptions, inputs and
148
methodologies used in pricing the security;
documenting this information; and
corroborating it by comparison to independently
obtained prices and or independently developed
pricing methodologies.
Furthermore, we perform internal
reasonableness assessments on fair value
determinations within our portfolio throughout
the year and as of year-end, including pricing
variance analyses and comparisons to alternative
pricing sources and benchmark returns. If a fair
value appears unusual relative to these
assessments, we will re-examine the inputs and
may challenge a fair value assessment made by
the pricing service. If there is a known pricing
error, we will request a reassessment by the
pricing service. If the pricing service is unable to
perform the reassessment on a timely basis, we
will determine the appropriate price by
requesting a reassessment from an alternative
pricing service or other qualified source as
necessary. We do not adjust quotes or prices
except in a rare circumstance to resolve a known
error.
Because many fixed-maturity securities do not
trade on a daily basis, third-party pricing services
generally determine fair value using industry-
standard methodologies, which vary by asset
class. For corporates, governments, and agency
securities, these methodologies include
developing prices by incorporating available
market information such as U.S. Treasury curves,
benchmarking of similar securities including new
issues, sector groupings, quotes from market
participants and matrix pricing. Observable
information is compiled and integrates relevant
credit information, perceived market movements
and sector news. Additionally, security prices are
periodically back-tested to validate and/or refine
models as conditions warrant. Market indicators
and industry and economic events are also
monitored as triggers to obtain additional data.
For certain structured securities (such as
mortgage-and asset-backed securities) with
limited trading activity, third-party pricing
services generally use industry-standard pricing
FINANCIAL STATEMENTS — NOTE 5
methodologies that incorporate market
information, such as index prices or discounting
expected future cash flows based on underlying
collateral, and quotes from market participants,
to estimate fair value. If one or more of these
input measures are not deemed observable for a
particular security, the security will be classified
as Level 3 in the fair value hierarchy.
Where specific market information is unavailable
for certain securities, pricing models produce
estimates of fair value primarily using Level 2
inputs along with certain Level 3 inputs. These
models include matrix pricing. The pricing matrix
uses current U.S. Treasury rates and credit
spreads received from third-party sources to
estimate fair value. The credit spreads
incorporate the issuer’s industry- or issuer-
specific credit characteristics and the security’s
time to maturity, if warranted. Remaining
unpriced securities are valued using an estimate
of fair value based on indicative market prices
that include significant unobservable inputs not
based on, nor corroborated by, market
information, including the utilization of non-
binding broker quotes.
The roll-forward of the Level 3 assets measured
at fair value on a recurring basis was as follows:
Level 3 assets, beginning of period
Net unrealized gains (losses) included in other comprehensive income
Realized gains (losses) and accretion (amortization) recognized in earnings
Purchases
Sales
Settlements
Transfers into Level 3
Transfers out of Level 3
Level 3 assets, end of period
Year ended
December 31,
2023
2022
(In thousands)
$1,710 $ 3,596
—
(66)
500
(1)
(204)
1,661
—
—
—
—
—
—
—
(3,342)
$2,144 $ 1,710
Primerica 2023 Annual Report
149
FINANCIAL STATEMENTS — NOTE 5
We obtain independent pricing quotes based on
observable inputs as of the end of the reporting
period for all securities in Level 2. Those inputs
include benchmark yields, reported trades,
broker/dealer quotes, issuer spreads, two-sided
markets, benchmark securities, market bids/
offers, quoted prices for similar instruments in
markets that are not active, and other relevant
data. We monitor these inputs for market
indicators, industry and economic events. There
were no material transfers between Level 1 and
Level 3 during the years ended December 31,
2023 and 2022.
The carrying values and estimated fair values of
our financial instruments were as follows:
December 31, 2023
December 31, 2022
Carrying
value
Estimated
fair value
Carrying
value
Estimated
fair value
(In thousands)
Assets:
Fixed-maturity securities (available-for-sale)
$2,719,467 $2,719,467 $2,495,456 $2,495,456
Fixed-maturity security (held-to-maturity)(1)
1,386,980
1,334,892
1,444,920
1,340,265
Short-term investments (available-for-sale)
Equity securities
Trading securities
Policy loans(1)
Deposit asset underlying 10% coinsurance
agreement(1)
Separate accounts
Liabilities:
Note payable(2) (3)
Surplus note(1) (2)
Separate accounts
276
29,680
18,383
38,975
276
29,680
18,383
38,975
69,406
35,404
3,698
35,940
69,406
35,404
3,698
35,940
187,377
187,377
224,371
224,371
2,395,842
2,395,842
2,305,717
2,305,717
593,709
508,832
592,905
491,753
1,386,592
1,329,159
1,444,469
1,333,047
2,395,842
2,395,842
2,305,717
2,305,717
(1) Classified as level 3 fair value measurement.
(2) Carrying value amounts shown are net of unamortized issuance costs.
(3) Classified as level 2 fair value measurement.
The fair values of financial instruments
presented above are estimates of the fair values
at a specific point in time using various sources
and methods, including market quotations and a
complex matrix system that takes into account
issuer sector, quality, and spreads in the current
marketplace.
Financial Instruments Recognized at Fair
Value in the Balance Sheets. Estimated fair
values of investments in AFS securities are
principally a function of current spreads and
interest rates that are corroborated by
independent third-party data. Therefore, the fair
values presented are indicative of amounts we
could realize or settle at the respective balance
sheet date. We do not necessarily intend to
150
dispose of or liquidate such instruments prior to
maturity. Trading securities and equity securities,
including common and nonredeemable
preferred stocks, are carried at fair value.
Segregated funds in separate accounts are
carried at the underlying value of the variable
insurance contracts, which is fair value.
The carrying amounts for cash and cash
equivalents, trade receivables, accrued
investment income, accounts payable, cash
collateral and payables for security transactions
approximate their fair values due to the short-
term nature of these instruments. Consequently,
such financial instruments are not included in
the above table.
(6) Reinsurance
We use reinsurance extensively, which has a
significant effect on our results of operations.
Reinsurance arrangements do not relieve us of
our primary obligation to the policyholder. Our
reinsurance contracts typically do not have a
fixed term. In general, the reinsurers’ ability to
terminate coverage for existing cessions is
limited to such circumstances as material breach
of contract or nonpayment of premiums by the
ceding company. Our reinsurance contracts
generally contain provisions intended to provide
the ceding company with the ability to cede
future business on a basis consistent with
historical terms. However, either party may
terminate any of the contracts with respect to
the future business upon appropriate notice to
the other party. Generally, the reinsurance
contracts do not limit the overall amount of the
loss that can be incurred by the reinsurer.
Our policy is to limit the amount of life insurance
retained on the life of any one person to $1
million. To limit our exposure with any one
reinsurer, we monitor the concentration of credit
risk we have with our reinsurance counterparties,
as well as their financial condition.
Reinsurance recoverables represents ceded
policy benefit reserve balances, ceded claim
liabilities, and ceded claims paid that have not
been reimbursed. The amounts of ceded claim
liabilities included in reinsurance recoverables
that we paid and which are recoverable from
those reinsurers were $22.0 million and $7.5
million as of December 31, 2023 and 2022,
respectively. Benefits and claims ceded to
reinsurers for 2023, 2022, and 2021 were
$1,376.4 million, $1,340.6 million, and $1,258.1
million, respectively.
In connection with our corporate reorganization
that included an initial public offering (“IPO”) of
our common stock by Citigroup, Inc.
(“Citigroup”), Primerica Life, Primerica Life
Canada and NBLIC entered into significant
coinsurance transactions (the “IPO coinsurance
agreements”) on March 30, 2010 with three
insurance companies then affiliated with
Citigroup (collectively, the “IPO coinsurers”).
FINANCIAL STATEMENTS — NOTE 6
Under the IPO coinsurance agreements, we
ceded between 80% and 90% of the risks and
rewards of our term life insurance policies in
force at year-end 2009. Because these
agreements were part of a business
reorganization among entities under common
control, they did not generate any deferred gain
or loss upon their execution. Concurrent with
signing these agreements, we transferred the
corresponding account balances in respect of
the coinsured policies along with the assets to
support the statutory liabilities assumed by the
IPO coinsurers. Each of the account balances
transferred were at book value with no gain or
loss recorded in net income. Beginning in 2017,
policies reaching the end of their initial term
period are no longer ceded under the IPO
coinsurance transactions, but the existing YRT
reinsurance already in place prior to the IPO will
continue.
Three of the IPO coinsurance agreements satisfy
U.S. GAAP risk transfer rules. Under these
agreements, we ceded between 80% and 90% of
our term life future policy benefit reserves, and
we transferred a corresponding amount of
assets to the IPO coinsurers. These transactions
did not impact our future policy benefit reserves.
As such, we have recorded an asset for the same
amount of risk transferred in reinsurance
recoverables. We also reduced DAC by a
corresponding amount, which reduces future
amortization expenses. In addition, we are
transferring between 80% and 90% of all future
premiums and benefits and claims associated
with these policies to the corresponding
reinsurance entities. We receive ongoing ceding
allowances, which are reflected as a reduction to
insurance expenses, to cover policy and claims
administration expenses as well as certain
corporate overhead charges under each of these
reinsurance contracts.
In the 10% Coinsurance Agreement, we ceded to
Prime Reinsurance Company (“Prime Re”), an
affiliate of Citigroup, 10% of our U.S. (except
New York) term life insurance business in force
at year-end 2009 subject to an experience
refund provision. As the 10% Coinsurance
Agreement includes an experience refund
provision, it does not satisfy U.S. GAAP risk
Primerica 2023 Annual Report
151
FINANCIAL STATEMENTS — NOTE 6
transfer rules. As a result, we have accounted for
this contract using deposit method accounting
and have recognized a deposit asset in other
assets on our consolidated balance sheets for
assets backing the economic reserves. The
deposit asset held in support of this agreement
was $187.4 million and $224.4 million at
December 31, 2023 and 2022, respectively. We
make contributions to the deposit asset during
the life of the agreement to fulfill our
responsibility of funding the economic reserve.
The market return on the deposit asset is
Direct life insurance in-force
Amounts ceded to other companies
Net life insurance in-force
reflected in net investment income during the
life of the agreement. Prime Re is responsible for
ensuring that there are sufficient assets to meet
all statutory requirements. The finance charge on
the statutory reserves in excess of economic
reserves funded by Prime Re in support of the
10% Coinsurance Agreement is 0.5% per annum
and is reflected in interest expense in our
consolidated statements of income.
The following table represents the Company’s
in-force life insurance as of December 31, 2023
and 2022:
December 31, 2023 December 31, 2022
(Dollars in thousands)
$ 946,756,416
$ 919,081,738
(810,145,801)
(787,907,229)
$ 136,610,615
$ 131,174,509
Percentage of reinsured life insurance in-force
86%
86%
Reinsurance recoverables include ceded policy benefit reserve balances, ceded claim liabilities, and
ceded claims paid that have not been reimbursed. The Company allocated reinsurance recoverables
estimated at the cohort level to individual reinsurers for disclosure purposes. Reinsurance recoverables
estimated by reinsurer and the financial strength ratings of those reinsurers were as follows:
Swiss Re Life and Health America, Inc. (Novated from
Pecan Re Inc.)(1)
Munich Re of Malta(1) (2)
SCOR Global Life Reinsurance Companies(3)
American Health and Life Insurance Company(1)
Munich American Reassurance Company
Swiss Re Life & Health America Inc.(4)
RGA Reinsurance Company
Korean Reinsurance Company
All other reinsurers
Allowance for credit losses
Reinsurance recoverables
December 31, 2023
December 31, 2022
Reinsurance
recoverables
A.M. Best
rating
Reinsurance
recoverables
A.M. Best
rating
(In thousands)
A+
NR
A
B++
A+
A+
A+
A
—
$2,271,223
243,890
160,381
141,771
50,273
43,873
43,188
41,373
20,925
(1,120)
$3,015,777
A+
NR
A+
B++
A+
A+
A+
A
—
$2,392,548
244,435
180,958
147,915
59,522
54,403
48,775
45,206
38,714
(2,936)
$3,209,540
NR – not rated by A.M. Best
(1) Reinsurance recoverables include balances ceded under coinsurance transactions of term life insurance policies that were in
force as of December 31, 2009. Amounts shown are net of their share of the reinsurance receivable from other reinsurers.
Arrangements with these reinsurers include collateral trust agreements held in support of reinsurance recoverables.
(2) Entity is rated AA- by S&P.
(3)
Includes amounts ceded to Transamerica Reinsurance Companies and fully retroceded to SCOR Global Life Reinsurance
Companies.
Includes amounts ceded to Lincoln National Life Insurance and fully retroceded to Swiss Re Life & Health America Inc.
(4)
152
FINANCIAL STATEMENTS — NOTE 6
Certain reinsurers with which we do business
receive group ratings. Individually, those
reinsurers are SCOR Global Life Americas
Reinsurance Company, SCOR Global Life U.S.A.
Reinsurance Company, SCOR Global Life Re
Insurance Company of Delaware, and SCOR
Global Life of Canada.
The IPO coinsurance agreements include
provisions to ensure that Primerica Life,
Primerica Life Canada and NBLIC receive full
regulatory credit for the reinsurance treaties.
Under these agreements, the ceded business can
be recaptured with no fee in the event the IPO
coinsurers do not comply with the various
safeguard provisions in their respective IPO
coinsurance agreements. Pecan Re Inc. also has
entered into a capital maintenance agreement
requiring Swiss Re Life and Health America, Inc.
to provide additional funding, if needed, at any
point during the term of the agreement up to
the maximum as described in the capital
maintenance agreement.
The rollforward of the allowance for credit losses
(“ACL”) on reinsurance recoverables for the years
ended December 31, 2023, 2022, and 2021 were
as follows:
Balance, beginning of period
Current period provision for expected credit losses
Writeoffs charged against the ACL, if any
Recoveries of amounts previously written off
Balance, at the end of period
(7) Deferred Policy Acquisition Costs
The balances and activity in DAC were as follows:
Year ended December 31,
2023
2022
2021
$ 2,936
(In thousands)
$2,942
$ 7,144
3,703
(5,519)
—
164
—
(170)
502
(4,651)
(53)
$ 1,120
$2,936
$ 2,942
DAC balance, beginning of period
Capitalization
Amortization
Foreign exchange translation and
other
Year ended December 31,
2023
2022
(In thousands)
Term Life
$3,106,148
521,718
(268,803)
Segregated Funds
(Canada)
$62,341
4,353
(5,479)
Term Life
$2,869,812
507,834
(254,875)
Segregated Funds
(Canada)
$65,411
7,003
(5,581)
7,218
1,814
(16,623)
(4,492)
DAC balance, end of period
$3,366,281
$63,029
$3,106,148
$62,341
Primerica 2023 Annual Report
153
FINANCIAL STATEMENTS — NOTE 7
Reconciliation of DAC by product was as follows:
Term Life
Segregated Funds (Canada)
Other
Total DAC, net
(8) Separate Accounts
Year ended December 31,
2023
2022
(In thousands)
$3,366,281
$3,106,148
63,029
17,924
62,341
20,013
$3,447,234
$3,188,502
The following table represents the fair value of assets supporting separate accounts by major
investment category:
Fixed-income securities
Equity securities
Cash and cash equivalents
Due to/from funds
Other
Total separate account assets
Year ended December 31,
2023
2022
(In thousands)
$ 876,524 $ 796,384
1,436,122
1,340,541
87,530
181,162
(4,357)
(12,399)
23
29
$2,395,842 $2,305,717
The following table represents the balances of and changes in separate account liabilities:
Separate account liabilities balance, beginning of period
Premiums and deposits
Surrenders and withdrawals
Investment performance
Management fees and other charges
Foreign exchange translation
Separate account liabilities balance, end of period
Cash surrender value
Year ended December 31,
2023
2022
(In thousands)
$2,305,717 $2,799,992
186,631
253,982
(343,473)
(293,278)
245,565
(202,997)
(62,159)
(62,281)
63,561
(189,701)
$2,395,842 $2,305,717
$2,354,813 $2,268,436
The cash surrender value represents the amount
of the contract holders’ account balance
distributable at the balance sheet date less the
Company’s estimate of the deferred sales
charges that would be assessed if the
policyholders redeemed their contracts at the
balance sheet date. This estimate requires the
Company to make certain assumptions
regarding the underlying account balances by
contribution year and application of the
contractually defined deferred sales charges that
would be applicable to each contribution year.
154
(9) Policy Claims and Other Benefits Payable
Changes in policy claims and other benefits payable were as follows:
FINANCIAL STATEMENTS — NOTE 9
Policy claims and other benefits payable, beginning of period
Less reinsured policy claims and other benefits payable
Net balance, beginning of period
Incurred related to current year
Incurred related to prior years (1)
Total incurred
Year ended
December 31,
2023
2022
(In thousands)
$ 538,250 $ 585,382
542,621
637,139
(4,371)
(51,757)
253,607
248,127
(3,856)
(4,363)
249,751
243,764
Claims paid related to current year, net of reinsured policy claims received
(283,808)
(263,114)
Reinsured policy claims received related to prior years, net of claims paid
18,119
67,267
Total paid
Foreign currency translation
Net balance, end of period
Add reinsured policy claims and other benefits payable
Balance, end of period
(265,689)
(195,847)
250
(531)
(20,059)
(4,371)
533,862
542,621
$ 513,803 $ 538,250
(1)
Includes the difference between our estimate of claims incurred but not yet reported at year end and the actual incurred
claims reported after year end.
Primerica 2023 Annual Report
155
FINANCIAL STATEMENTS — NOTE 10
(10) Future Policy Benefits
The following tables summarize balances and changes in the present value of expected net premiums
and the present value of expected future policy benefits underlying the LFPB:
Present Value of Expected Net Premiums
Balance at then current discount rate, beginning of period
Balance at original discount rate, beginning of period
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Adjusted balance, beginning of period
Issuances
Interest accrual at original discount rate
Net premiums collected
Foreign currency translation
Expected net premiums at original discount rate, end of period
Effect of changes in discount rate assumptions
Year ended December 31,
2023
2022
(Dollars in thousands)
Term Life Insurance
$13,053,386 $14,988,852
13,521,221
12,800,441
(5,364)
(229,884)
26,090
8,653
13,285,973
12,835,184
1,836,290
1,892,716
544,806
486,436
(1,682,924)
(1,623,000)
28,408
(70,115)
14,012,553
(35,200)
13,521,221
(467,835)
Expected net premiums at then current discount rate, end of period
$13,977,353 $13,053,386
Present Value of Expected Future Policy Benefits
Balance at then current discount rate, beginning of period
Balance at original discount rate, beginning of period
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Adjusted balance, beginning of period
Issuances
Interest Accrual at original discount rate
Benefit payments
Foreign currency translation
$19,143,253 $23,309,576
19,706,818
18,991,175
(7,254)
(225,539)
29,915
21,101
19,474,025
19,042,191
1,840,996
1,892,730
856,727
796,017
(1,823,542)
(1,915,518)
43,488
(108,602)
Expected future policy benefits at original discount rate, end of period
20,391,694
19,706,818
Effect of changes in discount rate assumptions
116,741
(563,565)
Expected future policy benefits at then current discount rate, end of period $20,508,435 $19,143,253
LFPB
Less: reinsurance recoverables
Net LFPB, after reinsurance recoverables
$ 6,531,082 $ 6,089,867
3,186,264
3,001,074
$ 3,530,008 $ 2,903,603
Weighted-average duration of net LFPB (in years)
7.9
7.8
156
An annual review of our LFPB assumptions was
performed during the third quarter of 2023 and
included mortality, persistency, and disability
rates (incidence and recovery rates for our
waiver of premium rider). When reviewing
assumptions, we used the Company’s own
historical experience and considered quarterly
cash flow variances by policy cohort. Judgment
was also used when evaluating assumptions
since prior historical experience was not fully
reflective of future expected experience.
During the review, volatility in our experience
studies was observed across all material
assumptions, in large part due to the impact of
the COVID-19 pandemic, and in the case of
persistency, current economic trends. Mortality
in excess of LFPB assumptions was experienced
from 2020 to the first half of 2022 due to an
increase in death claims caused by the COVID-
19 pandemic. Conversely, mortality experienced
in 2023 has been lower than expected compared
to our LFPB assumptions, which may be due in
part to a pull forward effect from the COVID-19
pandemic. Persistency rates were at historical
highs during the COVID-19 pandemic and into
the early part of 2022 and then regressed well
below our LFPB assumptions after the pandemic
subsided in 2022. In 2023, persistency rates have
trended towards more historical levels but are
still below our LFPB assumptions for certain
issue year cohorts. When examining our term life
waiver of premium benefit experience, we have
noted that disability incidence rates have fallen
since the COVID-19 pandemic and disability
recovery rates have also experienced volatility.
We believe the recent fluctuations between
actual experience and our LFPB assumptions was
Term Life Insurance
Other
Total
FINANCIAL STATEMENTS — NOTE 10
driven by the COVID-19 pandemic and its
lingering impacts as well as economic conditions
that have adversely impacted lapses. We believe
the COVID-19 pandemic is a historically atypical
event and not indicative of our long-term
mortality, persistency and disability rate
expectations and that economic conditions will
trend to historical norms over time. Therefore,
we continue to believe our best estimate LFPB
assumptions are represented by our pre-
pandemic experience. In the short-term, we may
continue to see experience variances due to
volatility created by the trailing effects of the
COVID-19 pandemic and economic conditions.
The only LFPB assumption that was changed
during the year ended December 31, 2023 was
shifting forward our assumption for long-term
mortality improvement one year for applicable
cohorts in our Term Life Insurance segment. We
made a similar assumption change in 2022. The
impact of this assumption change was
immaterial to the measurement of the LFPB in
both 2023 and 2022.
Discount rates, while a material assumption to
our LFPB, are not part of the assumption-setting
process since they are updated quarterly based
on observable rates. There have been no
changes with the compilation of data sources
used for this input.
Losses recognized as a result of capping the net
premium ratio at 100% were immaterial during
the years ended December 31, 2023, 2022, and
2021.
The following table reconciles the LFPB to the
consolidated balance sheets:
December 31,
2023
December 31,
2022
(In thousands)
$6,531,082
$6,089,867
210,943
208,039
$6,742,025
$6,297,906
Primerica 2023 Annual Report
157
FINANCIAL STATEMENTS — NOTE 10
The following table reconciles the reinsurance recoverables to the consolidated balance sheets:
Term Life Insurance
Other
Total
December 31,
2023
December 31,
2022
(In thousands)
$3,001,074
$3,186,264
14,703
23,276
$3,015,777
$3,209,540
The amount of discounted (using the then current discount rate) and undiscounted expected gross
premiums and expected future benefit payments were as follows:
Term Life Insurance
Expected future benefit payments
December 31, 2023
December 31, 2022
Undiscounted
Discounted
Undiscounted
Discounted
(In thousands)
$33,342,272 $20,508,435 $31,904,059 $19,143,253
Expected future gross premiums
$38,701,869 $26,687,880 $37,135,605 $25,070,802
The amount of revenue and interest recognized in our consolidated statements of income were as
follows:
Term Life Insurance
Gross premiums
Interest accretion (expense)
The weighted-average discount rates were as follows:
Term Life Insurance
Original discount rate
Current discount rate
Year ended December 31,
2023
2022
2021
(In thousands)
$3,292,760 $3,209,088 $3,099,828
$ (311,921) $ (309,581) $ (327,378)
December 31, 2023 December 31, 2022
4.93%
4.91%
5.00%
5.28%
There were no changes to the methods used to determine the discount rates during the years ended
December 31, 2023, 2022, and 2021.
(11) Debt
Notes Payable. Notes payable consisted of the following:
2.80% Senior Notes, due November 19, 2031
Unamortized issuance discount on notes payable
Total notes payable (1)
(1) Excludes unamortized debt issuance costs.
158
December 31, 2023 December 31, 2022
(In thousands)
$600,000
(2,115)
$597,885
$600,000
(2,385)
$597,615
As of December 31, 2023, we had outstanding
$600.0 million in principal amount of publicly-
traded, senior unsecured notes (the “Senior
Notes”). The Senior Notes were issued in
November 2021 at a price of 99.55% of the
principal amount with an annual interest rate of
2.80%, payable semi-annually in arrears on
May 19 and November 19, and are scheduled to
mature on November 19, 2031. As of
December 31, 2023, we were in compliance with
the covenants of the Senior Notes. No events of
default occurred on the Senior Notes during the
year ended December 31, 2023.
As unsecured senior obligations, the Senior
Notes rank equally in right of payment with all
existing and future unsubordinated
indebtedness and senior to all existing and
future subordinated indebtedness of the Parent
Company. The Senior Notes are structurally
subordinated in right of payment to all existing
and future liabilities of our subsidiaries. In
addition, the Senior Notes contain covenants
that restrict our ability to, among other things,
create or incur any indebtedness that is secured
by a lien on the capital stock of certain of our
subsidiaries, and merge, consolidate or sell all or
substantially all of our properties and assets.
Surplus Note. As of December 31, 2023, the
principal amount outstanding on the Surplus
Note issued by Vidalia Re was $1.4 billion, which
is equal to the principal amount of the LLC Note.
The principal amounts of the Surplus Note and
the LLC Note have reached their peaks and are
expected to decrease over time to coincide with
the amount of policy reserves being
contractually supported under the Vidalia Re
Coinsurance Agreement. Both the LLC Note and
the Surplus Note mature on December 31, 2030
and bear interest at an annual interest rate of
4.50%. This financing arrangement is non-
recourse to the Parent Company and Primerica
Life, meaning that neither of these companies
has guaranteed the Surplus Note or is otherwise
liable for reimbursement for any payments
FINANCIAL STATEMENTS — NOTE 11
triggered by the LLC Note’s credit enhancement
feature. The Parent Company has agreed to
support Vidalia Re’s obligation to pay the credit
enhancement fee incurred on the LLC Note. See
Note 4 (Investments) for more information on
the LLC Note.
Revolving Credit Facility. On June 22, 2021,
we amended and restated our unsecured $200.0
million revolving credit facility (“Revolving Credit
Facility”) with a syndicate of commercial banks.
The Revolving Credit Facility has a scheduled
termination date of June 22, 2026. Amounts
outstanding under the Revolving Credit Facility
are borrowed, at our discretion, on the basis of
either a Secured Overnight Financing Rate
(“SOFR”) rate loan, or a base rate loan. SOFR rate
loans bear interest at a periodic rate equal to
one-, three-, or six-month Adjusted Term SOFR,
plus an applicable margin. Base rate loans bear
interest at the highest of (a) the Prime Rate,
(b) the Federal Funds Rate plus 0.50% and
(c) one-month Adjusted Term SOFR plus 1.00%,
plus an applicable margin. The Revolving Credit
Facility also permits the issuance of letters of
credit. The applicable margins are based on our
debt rating with such margins for SOFR rate
loans and letters of credit ranging from 1.00% to
1.625% per annum and for base rate loans
ranging from 0.00% to 0.625% per annum.
Under the Revolving Credit Facility, we incur a
commitment fee that is payable quarterly in
arrears and is determined by our debt rating.
This commitment fee ranges from 0.10% to
0.225% per annum of the aggregate amount of
the $200.0 million commitment of the lenders
under the Revolving Credit Facility that remains
undrawn. During the year ended December 31,
2023, no amounts were drawn under the
Revolving Credit Facility. As of December 31,
2023, we were in compliance with the covenants
of the Revolving Credit Facility. Furthermore, no
events of default occurred under the Revolving
Credit Facility during the year ended
December 31, 2023.
Primerica 2023 Annual Report
159
FINANCIAL STATEMENTS — NOTE 12
(12) Income Taxes
Income tax expense.
Income tax expense (benefit) consists of the following:
Year ended December 31, 2023
Federal
Foreign
State and local
Total tax expense
Year ended December 31, 2022
Federal
Foreign
State and local
Total tax expense
Year ended December 31, 2021
Federal
Foreign
State and local
Total tax expense
Current
Deferred
Total
(In thousands)
$170,116
$(30,865)
$139,251
39,818
8,525
(11,318)
(1,197)
28,500
7,328
$218,459
$(43,380)
$175,079
$149,034
$(25,328)
$123,706
51,692
5,029
(24,340)
(3,134)
27,352
1,895
$205,755
$(52,802)
$152,953
$115,657
$ 14,902
$130,559
43,687
5,440
(11,028)
(1,114)
32,659
4,326
$164,784
$ 2,760
$167,544
Income before income taxes. Income before income taxes by domestic and foreign were as follows:
Income before income taxes by domestic and foreign
Domestic
Foreign
Year ended December 31,
2023
2022
2021
(In thousands)
$646,865
$510,749
$520,537
104,815
109,234
122,992
Total income before income taxes
$751,680
$619,983
$643,529
160
FINANCIAL STATEMENTS — NOTE 12
Effective tax rate reconciliation. Total income tax expense is different from the amount determined
by multiplying income before income taxes by the U.S. statutory federal tax rate of 21% for the years
ended December 31, 2023, 2022 and 2021. The reconciliation for such difference follows:
Year ended December 31,
2023
2022
2021
Amount
Percentage
Amount
Percentage
Amount
Percentage
(Dollars in thousands)
Computed tax expense
$157,853
21.0% $130,196
21.0% $135,141
21.0%
Goodwill impairment loss
Other
—
17,226
0.0%
2.3%
12,600
10,157
2.0%
1.7%
15,960
16,443
2.5%
2.5%
Total tax expense / effective
rate
$175,079
23.3% $152,953
24.7% $167,544
26.0%
Deferred tax assets and liabilities. The main components of deferred income tax assets and
liabilities were as follows:
December 31,
2023
2022
(In thousands)
Deferred tax assets:
Future policy benefit reserves and unpaid policy claims
$ 492,138 $ 368,283
Net operating loss and interest carryforwards
Investments
Future deductible liabilities
Foreign tax credits
Other
Total deferred tax assets before valuation allowance
Valuation allowance
19,219
41,590
21,791
26,637
31,437
28,675
59,085
23,217
36,424
23,809
632,812
539,493
(26,724)
(36,511)
Total deferred tax assets after valuation allowance
$ 606,088 $ 502,982
Deferred tax liabilities:
Deferred policy acquisition costs
Renewal commissions receivable
Intangibles
Reinsurance deposit asset
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
$(441,730) $(408,582)
(50,911)
(53,874)
(45,734)
(47,806)
(39,349)
(47,118)
(24,348)
(19,112)
(602,072)
(576,492)
$
4,016 $ (73,510)
Primerica 2023 Annual Report
161
FINANCIAL STATEMENTS — NOTE 12
The majority of total deferred tax assets are
attributable to future policy benefit reserves and
unpaid policy claims, which represents the
difference between the financial statement
carrying value and tax basis for liabilities related
to future policy benefits. The tax basis for future
policy benefit reserves and unpaid policy claims
is actuarially determined in accordance with
guidelines set forth in the respective
jurisdictional tax codes in the U.S. and Canada.
The majority of total deferred tax liabilities are
attributable to DAC, which represents the
difference between the policy acquisition costs
capitalized for U.S. GAAP purposes and those
capitalized for tax purposes, as well as the
difference in the resulting amortization methods.
The Company has federal net operating losses
resulting in a deferred tax asset of $4.1 million as
of December 31, 2023. The federal net operating
losses as of December 31, 2023 have an
indefinite life. The Company has state net
operating losses and interest carryforwards
resulting in a net deferred tax asset of $15.1
million, of which approximately half are available
for use through 2037 and approximately half
with an indefinite life. The Company has no
other material net operating loss or credit
carryforwards other than foreign tax credit
carryforwards.
In assessing the realizability of deferred tax
assets, management considers whether it is
more likely than not that some portion or all of
the deferred tax assets will not be realized.
Management considers the scheduled reversal
of deferred tax liabilities, projected future
taxable income, carryback and carryforward
periods, and tax planning strategies in making
this assessment. As of December 31, 2023,
management identified excess foreign tax
credits of approximately $26.6 million that could
not be used to offset the mandatory deemed
repatriation of foreign earnings tax stipulated by
the Tax Cuts and Jobs Act of 2017 and believes it
will not be able to utilize these foreign tax
credits in the future. Therefore, the Company
established a deferred tax asset for these foreign
tax credits with a corresponding full valuation
allowance. These foreign tax credits are available
for use through 2027 with some beginning to
162
expire in 2024. With the exception of these
foreign tax credits, management believes that it
is more likely than not that the results of future
operations will generate sufficient taxable
income to realize its deferred tax assets.
Therefore, there were no other significant
deferred tax asset valuation allowances as of
December 31, 2023 or 2022.
Controlled foreign corporations. The
Company has direct ownership of a group of
controlled foreign corporations. The tax effects
of controlled foreign corporations other than in
Canada were not material. We have not made a
permanent reinvestment assertion for any
unremitted earnings in Canada; therefore, we
have recorded a deferred tax liability to account
for Canadian withholding taxes that will occur
upon repatriation of such earnings and we
continue to record deferred tax liabilities to
account for Canadian withholding taxes as
earnings are recognized.
The Company has no intentions to sell or
substantially liquidate our Canadian operations
and, therefore, has not provided for any
additional outside basis difference for the
amount of book basis in excess of tax basis in its
Canadian subsidiaries. In addition, it is not
practicable to determine the amount of the
unrecognized deferred tax liability related to any
additional outside basis difference in these
entities.
Unrecognized tax benefits. The total amount
of unrecognized benefits on uncertain tax
positions that, if recognized, would affect our
effective tax rate was approximately $18.6
million and $18.8 million as of December 31,
2023 and 2022, respectively. We recognize
interest expense related to unrecognized tax
benefits in tax expense net of federal income tax.
The total amount of accrued interest and
penalties in the consolidated balance sheets was
$3.9 million and $3.4 million as of December 31,
2023 and 2022, respectively. Additionally, we
recognized less than $0.5 million of interest
expense related to unrecognized tax benefits in
the consolidated statements of income for the
years ended December 31, 2023, 2022, and
2021.
A reconciliation of the change in the unrecognized income tax benefit for the years ended
December 31, 2023, 2022, and 2021 is as follows:
FINANCIAL STATEMENTS — NOTE 12
Unrecognized tax benefits, beginning of period
Change in prior period unrecognized tax benefits
Change in current period unrecognized tax benefits
Reductions as a result of a lapse in statute of limitations
Unrecognized tax benefits, end of period
December 31,
2023
2022
2021
(In thousands)
$20,180 $19,224 $17,104
(2,327)
(944)
(103)
3,551
3,993
3,777
(2,042)
(2,093)
(1,554)
$19,362 $20,180 $19,224
We have an immaterial amount of penalties
included in calculating our provision for income
taxes. There is no significant change that is
reasonably possible to occur within twelve
months of the reporting date.
The major tax jurisdictions in which we operate
are the United States and Canada. We are
currently open to tax audit by the Internal
Revenue Service for the year ended
December 31, 2020 and thereafter for federal
income tax purposes. We are currently open to
audit in Canada for tax years ended
December 31, 2019 and thereafter for federal
and provincial income tax purposes.
Qualified investment tax credit projects. We
have investments in various limited partnerships
that sponsor qualified affordable housing
projects, which meet the definition of a VIE. We
are not the primary beneficiary of these VIEs
because we do not have the power to direct the
activities that most significantly impact the
entities’ economic performance. The maximum
exposure to loss as a result of our involvement in
these VIEs equals the carrying value of the
investments. The primary economic purpose of
these investments is to achieve a satisfactory
return on capital through the receipt of tax
credits. Our qualified affordable housing project
investments are accounted for using the
proportional amortization method of
accounting. During the year ended
December 31, 2023 and 2022, the amount of
income tax benefits recognized from these
investments was insignificant.
Our investment in qualified affordable housing
projects was $11.5 million and $12.8 million as of
December 31, 2023 and 2022, respectively, and
is included within policy loans and other
invested assets on our consolidated balance
sheets. Additionally, unfunded commitments to
provide additional capital to investees in
qualified affordable housing projects was $9.1
million and $9.7 million as of December 31, 2023
and 2022, respectively, and are included within
other liabilities on our consolidated balance
sheets. Substantially all of the unfunded
commitments as of December 31, 2023 are
expected to be paid out within the next four
years.
During the year ended December 31, 2023, we
invested in a limited partnership that
constructed and operates a solar energy
generation facility (“Solar Farm”), which meets
the definition of a VIE. We are not the primary
beneficiary of this VIE because we do not have
the power to direct the activities that most
significantly impact the entity’s economic
performance. The maximum exposure to loss
from our involvement in this VIE equals the
carrying value of the investment. The primary
economic purpose of this investment is to
achieve a satisfactory return on capital through
the receipt of tax credits and other tax attributes.
Our investment in the Solar Farm is accounted
for using the equity method of accounting. As of
December 31, 2023, the carrying amount of our
investment in the Solar Farm was $0.7 million
and is included in Policy loans and other
invested assets in the accompanying
Primerica 2023 Annual Report
163
FINANCIAL STATEMENTS — NOTE 12
consolidated balance sheet. The carrying value
recognized includes capital contributions of
$16.2 million reduced by $15.5 million of tax
credits and other tax attributes. The amount of
investment income (loss) and income tax benefit
recognized in the accompanying consolidated
statements of income were not material due to
our policy of reducing the carrying value of the
investment by the tax credits and other tax
attributes. As of December 31, 2023, there are
no scheduled unfunded commitments; however,
we have agreed to invest additional funds of up
to $5.9 million if the Solar Farm provides us with
a corresponding amount of additional qualified
tax credits.
(13) Stockholders’ Equity
The following table shows changes in our
outstanding common stock:
Common stock, beginning of period
Shares of common stock issued upon exercise of stock options
Shares of common stock issued when sales restrictions on RSUs lapsed
Year ended December 31,
2023
2022
2021
36,824
(In thousands)
39,368
60
207
—
236
(2,095)
(2,780)
39,306
10
225
(173)
34,996
36,824
39,368
authorized a new $425.0 million share
repurchase program (the “New Share
Repurchase Program”) to occur from
November 16, 2023 through December 31, 2024.
We did not repurchase any shares under the
New Share Repurchase Program in 2023.
(14) Earnings Per Share
The Company has outstanding common stock
and equity awards that consist of RSUs and
PSUs. All outstanding stock options were
exercised during the year ended December 31,
2023. The RSUs maintain non-forfeitable
dividend rights that result in dividend payment
obligations on a one-to-one ratio with common
shares for any future dividend declarations.
Unvested RSUs are deemed participating
securities for purposes of calculating EPS as they
maintain dividend rights. We calculate EPS using
the two-class method. Under the two-class
method, we allocate earnings to common shares
and vested RSUs outstanding for the period.
Earnings attributable to unvested participating
securities, along with the corresponding share
and PSUs were earned
Common stock retired
Common stock, end of period
The above table excludes RSUs and PSUs, which
do not have voting rights. As sales restrictions
on RSUs lapse and PSUs are earned, we issue
common shares with voting rights. As of
December 31, 2023, we had a total of 256,889
RSUs and 65,459 PSUs outstanding. The PSU
outstanding balance is based on the number of
PSUs granted pursuant to the award agreement;
however, the actual number of common shares
earned could be higher or lower based on actual
versus targeted performance. See Note 15
(Share-Based Transactions) for a discussion of
the PSU award structure.
On November 17, 2022, our Board of Directors
authorized a share repurchase program for up to
$375.0 million of our outstanding common stock
for purchases from January 1, 2023 through
December 31, 2023 (the “Share Repurchase
Program”). Under the Share Repurchase
Program, we repurchased 2,025,774 shares of
our common stock in the open market for an
aggregate purchase price of $375.0 million
through December 31, 2023. There is no
remaining authority under the Share Repurchase
Program as of December 31, 2023. On
November 16, 2023, our Board of Directors
164
counts, are excluded from EPS as reflected in our
consolidated statements of income.
In calculating basic EPS, we deduct from net
income any dividends and undistributed
earnings allocated to unvested RSUs and then
divide the result by the weighted-average
number of common shares and vested RSUs
outstanding for the period.
We determine the potential dilutive effect of
PSUs and stock options outstanding
(“contingently-issuable shares”) on EPS using the
treasury-stock method. Under this method, we
determine the proceeds that would be received
from the issuance of the contingently-issuable
shares if the end of the reporting period were
the end of the contingency period. The proceeds
from the contingently-issuable shares include
FINANCIAL STATEMENTS — NOTE 14
the remaining unrecognized compensation
expense of the awards and the cash received for
the exercise price on stock options. We then use
the average market price of our common shares
during the period the contingently-issuable
shares were outstanding to determine how
many shares we could repurchase with the
proceeds raised from the issuance of the
contingently-issuable shares. The net
incremental share count issued represents the
potential dilutive securities. We then reallocate
earnings to common shares and vested RSUs by
incorporating the increased fully-diluted share
count to determine diluted EPS.
The calculation of basic and diluted EPS was as
follows:
Year ended December 31,
2023
2022
2021
(In thousands, except per-share
amounts)
Basic EPS:
Numerator:
Net income attributable to Primerica, Inc.
$576,601 $472,068 $477,362
Income attributable to unvested participating securities
(2,483)
(2,131)
(1,960)
Net income used in calculating basic EPS
$574,118 $469,937 $475,402
Denominator:
Weighted-average vested shares
Basic EPS
Diluted EPS:
Numerator:
35,954
37,997
39,530
$
15.97 $
12.37 $
12.03
Net income attributable to Primerica, Inc.
$576,601 $472,068 $477,362
Income attributable to unvested participating securities
(2,479)
(2,126)
(1,955)
Net income used in calculating diluted EPS
$574,122 $469,942 $475,407
Denominator:
Weighted-average vested shares
35,954
37,997
39,530
Dilutive effect of incremental shares to be issued for
contingently-issuable shares
73
109
122
Weighted-average shares used in calculating diluted EPS
36,027
38,106
39,652
Diluted EPS
$
15.94 $
12.33 $
11.99
Primerica 2023 Annual Report
165
FINANCIAL STATEMENTS — NOTE 15
(15) Share-Based Transactions
RSUs.
The Company has outstanding equity awards
under the Primerica, Inc. Second Amended and
Restated 2010 Omnibus Incentive Plan (“2010
OIP”), which expired in 2020 in accordance with
its terms and under which no future awards will
be made, and the Primerica, Inc. 2020 Omnibus
Incentive Plan (the “2020 OIP”, and together with
the 2010 OIP, the “OIP”), which was approved by
the Company’s stockholders on May 13, 2020.
The OIP provides for the issuance of equity
awards, including stock options, stock
appreciation rights, restricted stock, deferred
stock, RSUs, PSUs, and stock payment awards, as
well as cash-based awards. In addition to time-
based vesting requirements, awards granted
under the OIP may also be subject to specified
performance criteria. Under the OIP, the
Company issues equity awards to our
management (officers and other key employees),
non-employees who served on our Board of
Directors, and sales force leaders. As of
December 31, 2023, we had 1.3 million shares
available for future grants under the 2020 OIP.
Employee and Director Share-Based
Compensation. As of December 31, 2023, the
Company had outstanding RSUs and PSUs
issued to our management (officers and other
key employees), as well as RSUs issued to our
directors, under the OIP.
• RSUs granted to management generally
have time-based vesting requirements
with equal and annual graded vesting
over approximately three years
subsequent to the grant date, but also
generally vest upon voluntary termination
of employment by any employee who is
“retirement eligible” as of his or her
termination date. In order to be
retirement eligible, an employee must be
at least 55 years old and his or her age
plus years of service with the Company
must equal at least 75.
• RSUs granted to directors have time-
based vesting requirements with equal
and quarterly graded vesting over four
quarters subsequent to the grant date.
• In addition, certain directors elected to
defer their cash and/or equity retainers
into deferred RSUs, which vest
immediately (for cash deferrals) or, if
applicable, on the dates the RSUs would
have vested.
All of our outstanding employee and director
RSU awards are eligible for dividend equivalents
regardless of vesting status.
We recognized expense and tax benefit offsets
as follows for employee and director RSU share-
based compensation:
Total equity awards expense recognized
Tax benefit associated with total employee and director share-based
compensation
Year ended December 31,
2023
2022
2021
(In thousands)
$11,854 $12,626 $11,779
1,874
1,642
1,638
166
The following table summarizes employee and director RSU activity during the years ended
December 31, 2023, 2022, and 2021.
FINANCIAL STATEMENTS — NOTE 15
Unvested employee and director RSUs, December 31, 2020
Granted
Forfeited
Vested
Unvested employee and director RSUs, December 31, 2021
Granted
Forfeited
Vested
Unvested employee and director RSUs, December 31, 2022
Granted
Forfeited
Vested
Unvested employee and director RSUs, December 31, 2023
Weighted-average
measurement-date fair
value per share
Shares
(Shares in thousands)
166
84
(4)
(93)
153
113
(3)
(90)
173
67
(3)
(91)
146
$117.87
144.95
147.23
116.55
132.85
117.06
123.38
129.89
131.78
185.71
155.49
132.72
155.63
As of December 31, 2023, total compensation
cost not yet recognized in our consolidated
financial statements related to employee and
director RSU awards with time-based vesting
conditions yet to be reached was $5.9 million,
and the weighted-average period over which
cost will be recognized was 0.8 years.
PSUs.
The Company issued PSUs to certain of its
executive officers under the OIP as part of their
annual equity compensation. To date, PSU
awards have included a performance target of a
specified average annual Return on Adjusted
Equity (“ROAE”) and EPS growth (starting with
the 2020 award) for the Company over a three-
year performance period, as well as a threshold
ROAE and EPS growth below which no shares
would be earned and an ROAE and EPS growth
metric at which the maximum number of shares
can be earned. Awards are earned two months
after the performance period ends. Depending
on the ROAE and EPS growth, if applicable,
achieved within the specified range, recipients
may receive shares of common stock equal to
between 0% and 150% of the number of PSUs
granted. In addition, PSUs accrue forfeitable
dividend equivalents, which are also paid out
based on the number of shares earned.
PSU awards provide for vesting upon the
voluntary termination of employment by any
employee who is “retirement eligible” as of his
or her termination date. The number of shares
that will be earned for a retirement-eligible
employee is equal to the amount calculated
using the Company’s actual performance metrics
for the entire performance period, even if that
employee retires prior to the completion of the
performance period.
Primerica 2023 Annual Report
167
FINANCIAL STATEMENTS — NOTE 15
In connection with our granting of PSU awards, we recognized expense and tax benefit offsets as
follows:
Total employee PSU award expense
Tax benefit associated with total employee PSU award expense
Year ended December 31,
2023
2022
2021
$2,565
—
(In thousands)
$2,092
—
$3,494
—
The following table summarizes PSU activity during the years ended December 31, 2023, 2022, and
2021.
Unvested employee PSUs, December 31, 2020(1)
Granted
Forfeited
Performance Adjustment
Vested
Unvested employee PSUs, December 31, 2021(1)
Granted
Forfeited
Performance Adjustment
Vested
Unvested employee PSUs, December 31, 2022(1)
Granted
Forfeited
Performance Adjustment
Vested
Unvested employee PSUs, December 31, 2023(1)
Weighted-average
measurement-date fair
value per share
Shares
(Shares in thousands)
81
22
—
3
(33)
73
27
—
2
(28)
74
17
—
(5)
(21)
65
$113.99
143.04
—
100.55
100.55
128.30
130.30
—
122.62
122.62
130.97
185.24
—
121.42
121.42
148.94
(1) The 2021 PSU awards outstanding are based on the actual performance for the 2021 to 2023 performance period. As a result
of the performance achieved during the performance period, recipients will receive an aggregate of 15,398 shares of
common stock on the vesting date of March 1, 2024, reflecting a payout rate of 70.5%. The 2022 PSU awards outstanding
are based on target. Depending upon the performance achieved during the performance period, recipients may receive
between 0 and 39,713 shares of common stock. The 2023 PSU awards outstanding are based on target. Depending upon the
performance achieved during the performance period, recipients may receive between 0 and 25,709 shares of common
stock.
As of December 31, 2023 the Company did not
have any unrecognized compensation related to
PSU awards.
Stock Options. From 2013 to 2016, the Company
issued stock options to certain of its executive
officers under the OIP as part of their annual
equity compensation. Stock options were
granted with an exercise price equal to the fair
market value of our common stock on the grant
date, and they expire 10 years from the date of
grant. These options had time-based restrictions
with equal and annual graded vesting over a
168
FINANCIAL STATEMENTS — NOTE 15
three-year period and are all fully vested. Upon
retirement, employees had the lesser of three
years or the remaining option term to exercise
any vested options. We did not issue any stock
options in 2023, 2022 or 2021 and no stock
options were outstanding as of December 31,
2023. We did not have any compensation
expense or related tax benefits for stock option
awards in 2023, 2022, or 2021.
The following table summarizes activity related
to stock options outstanding and exercisable
during the years ended December 31, 2023,
2022, and 2021:
Outstanding at December 31, 2020
Granted
Exercised
Outstanding at December 31, 2021
Granted
Exercised
Outstanding at December 31, 2022
Granted
Exercised
Outstanding at December 31, 2023
Outstanding
Exercisable
Number
of
shares
Weighted
average
exercise
price
Number
of
shares
Weighted
average
exercise
price
70
—
(10)
60
—
—
60
—
(60)
—
(Shares in thousands)
$44.23
70
$44.23
—
41.88
44.62
—
—
60
44.62
44.62
60
44.62
—
44.62
—
—
—
—
—
The intrinsic value, tax benefit realized and value of shares withheld related to option exercise activity
are summarized as follows:
Intrinsic value of options exercised
Tax benefit realized from the options exercised
Value of issued shares withheld to satisfy option exercise price
Year ended December 31,
2023
2022
2021
$8,606
—
2,674
(In thousands)
$—
$1,156
—
—
—
419
Non-Employee Share-Based Compensation.
Non-employee share-based transactions relate
to the granting of RSUs to members of the sales
force (“agent equity awards”). Agent equity
awards are generally granted as a part of
quarterly contests for successful life insurance
policy acquisitions and for sales of investment
and savings products for which the grant and
the service period occur within the same
quarterly reporting period.
Primerica 2023 Annual Report
169
FINANCIAL STATEMENTS — NOTE 15
The following table summarizes non-employee RSU activity during the years ended December 31,
2023, 2022, and 2021.
Unvested non-employee RSUs, December 31, 2020
Granted
Vested
Unvested non-employee RSUs, December 31, 2021
Granted
Vested
Unvested non-employee RSUs, December 31, 2022
Granted
Vested
Unvested non-employee RSUs, December 31, 2023
Weighted-average
measurement-date fair
value per share
Shares
(Shares in thousands)
26
99
(94)
31
118
(117)
32
79
(86)
25
$134.75
150.72
145.03
154.59
129.99
133.25
141.60
189.64
167.07
205.67
Agent equity awards are measured using the fair
market value at the grant date and vest during
the service period, which occur within the same
quarterly reporting period.
To the extent that these awards are an
incremental direct cost of successful acquisitions
of life insurance policies that result directly from
and are essential to the policy acquisition(s) and
would not have been incurred had the policy
acquisition(s) not occurred, we defer and
amortize the fair value of the awards in the same
manner as other deferred policy acquisition
costs. All agent equity awards that are not
directly related to the acquisition of life
insurance policies are recognized as expense in
the quarter granted and earned.
Details on the granting and valuation of these
awards were as follows:
Quarterly incentive awards expense recognized currently
Quarterly incentive awards expense deferred
Tax benefit associated with incentive awards
Year ended December 31,
2023
2022
2021
$ 4,492
10,546
2,965
(In thousands)
$ 4,060
11,260
3,056
$ 4,036
10,807
2,904
As of December 31, 2023, all agent equity
awards were fully vested with the exception of
approximately 25,399 shares that vested on
January 1, 2024.
owns Peach Re and Vidalia Re, and ceded to
each in separate coinsurance arrangements
certain level-premium term life insurance
policies.
(16) Statutory Accounting and
Dividend Restrictions
U.S. Insurance Subsidiaries. Our two
underwriting U.S. insurance subsidiaries are
Primerica Life and NBLIC. Primerica Life wholly
170
Our U.S. insurance subsidiaries are required to
report their results of operations and financial
position to state authorities on the basis of
statutory accounting practices prescribed or
permitted by such authorities and the National
Association of Insurance Commissioners
(“NAIC”), which is a comprehensive basis of
accounting other than U.S. GAAP. Prescribed
statutory accounting practices include a variety
of publications of the NAIC, as well as state laws,
regulations and general administrative rules.
Permitted statutory accounting practices
encompass all accounting practices not so
prescribed. The Company’s principal life
insurance company, Primerica Life, prepares its
statutory financial statements on the basis of
accounting practices prescribed or permitted by
the NAIC and the Tennessee Department of
Commerce and Insurance (“Tennessee DOCI”)
and includes the statutory financial statements
of its wholly owned insurance subsidiaries,
NBLIC, Peach Re, and Vidalia Re. NBLIC’s
statutory financial statements are prepared on
the basis of accounting practices prescribed or
permitted by the NAIC or the New York State
Department of Financial Services, while the
statutory financial statements of Peach Re and
Vidalia Re are prepared on the basis of
accounting practices prescribed or permitted by
the NAIC or the Vermont Department of
Financial Regulation (“Vermont DOI”). Our U.S.
insurance subsidiaries’ ability to pay dividends to
their parent is subject to and limited by the
various laws and regulations of their respective
states. There are no regulatory restrictions on
the ability of the Parent Company to pay
dividends (other than limitations under the
Delaware General Corporation Law that provide
that dividends on common stock shall be
declared by the Board of Directors out of surplus
or, if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared and/
or the preceding prior fiscal year).
Primerica Life’s statutory ordinary dividend
capacity is based on the greater of: (1) the
previous year’s statutory net gain from
operations (excluding pro rata distributions of
any class of the insurer’s own securities) or
(2) 10% of the previous year-end statutory
surplus (net of capital stock). Dividends that,
together with the amount of other distributions
or dividends made within the preceding 12
months, exceed this statutory limitation are
referred to as extraordinary dividends and
require advance notice to the Tennessee DOCI,
and are subject to potential disapproval.
FINANCIAL STATEMENTS — NOTE 16
Dividends paid from other than statutory
unassigned surplus require approval of the
commissioner of the Tennessee DOCI.
Primerica Life’s statutory capital and surplus as
of December 31, 2023 and 2022 were as follows:
December 31,
2023
December 31,
2022
(In thousands)
Statutory capital and
surplus
$781,222
$834,565
Primerica Life’s statutory net gain from
operations was $290.3 million, $446.1 million,
and $257.3 million for 2023, 2022, and 2021,
respectively. Primerica Life made no pro rata
distributions of any class of its own securities
during 2023. During 2023, Primerica Life paid
ordinary dividends of $330.0 million to the
Parent Company. As of January 1, 2024, the
amount of dividends Primerica Life could pay
from statutory unassigned surplus without prior
approval of the commissioner of the Tennessee
DOCI was $283.5 million, which is limited by the
amount of statutory unassigned surplus on that
date. Primerica Life’s ordinary dividend capacity
was subsequently reduced on January 2, 2024
due to the termination of the Peach Re
Coinsurance Agreement discussed in the next
paragraph.
Primerica Life’s investment basis in NBLIC, Peach
Re, and Vidalia Re reflect their statutory capital
and surplus amounts recorded in accordance
with statutory accounting practices prescribed or
permitted by the NAIC and/or each subsidiary’s
state of domicile; New York and Vermont. Peach
Re was formed as a special-purpose financial
captive insurance company and, with the explicit
permission of the Vermont DOI, has included the
value of a letter of credit serving as collateral for
its policy reserves as an admitted asset in its
statutory capital and surplus. This permitted
accounting practice was critical to the
organization and operational plans of Peach Re
and explicitly included in the licensing order
issued by the Vermont DOI. The impact of this
permitted practice as of December 31, 2023 was
$41.5 million on Peach Re’s statutory capital and
surplus. As of December 31, 2023, even if Peach
Primerica 2023 Annual Report
171
FINANCIAL STATEMENTS — NOTE 16
Re had not been permitted to include the letter
of credit as an admitted asset, Primerica Life
would not have been below the minimum
statutory capital and surplus level that triggers a
regulatory action event. Effective January 2,
2024, Peach Re terminated the letter of credit as
discussed further in Note 17 (Commitments and
Contingent Liabilities), the impact of which
decreased Primerica Life’s statutory capital and
surplus and ordinary dividend capacity by $53.2
million. There are no other permitted accounting
practices that are not encompassed in
prescribed statutory accounting practices.
Canadian Insurance Subsidiary. Primerica
Life Canada is incorporated under the provisions
of the Canada Business Corporations Act and is
a domiciled Canadian Company subject to
regulation under the Insurance Companies Act
(Canada) by the Office of the Superintendent of
Financial Institutions in Canada (“OSFI”) and by
Provincial Superintendents of Financial
Institutions/Insurance in those provinces in
which Primerica Life Canada is licensed. The
statutory financial statements of Primerica Life
Canada reported to OSFI are prepared in
accordance with International Financial
Reporting Standards (“IFRS”).
Primerica Life Canada’s capacity to pay ordinary
dividends to its parent is limited by OSFI
regulations to the extent that its capital exceeds
internal capital targets. OSFI requires companies
to set internal target levels of capital sufficient to
provide for all the risks of the insurer, including
risks specified in OSFI’s capital guidelines. As of
December 31, 2023 and 2022, Primerica Life
Canada’s statutory capital and surplus satisfied
regulatory requirements and was $682.9 million
and $511.4 million, respectively.
In Canada, dividends can typically be paid
subject to the paying insurance company
continuing to have adequate capital and forms
of liquidity as defined by OSFI following the
dividend payment and upon 15 days minimum
notice to OSFI. Primerica Life Canada’s dividend
capacity at January 1, 2024 was estimated to be
$180.9 million, which was calculated based on
satisfying the Company’s internal capital targets.
172
During 2023, Primerica Life Canada paid ordinary
dividends of $22.4 million to its parent company.
(17) Commitments and Contingent
Liabilities
Letter of Credit (“LOC”). Peach Re maintained
a Credit Facility Agreement with Deutsche Bank
(the “Credit Facility Agreement”) to support
certain obligations for a portion of the reserves
(commonly referred to as Regulation XXX
reserves) related to level premium term life
insurance policies ceded to Peach Re from
Primerica Life under the Peach Re Coinsurance
Agreement.
Under the Credit Facility Agreement, Deutsche
Bank issued a letter of credit in the initial
amount of $450.0 million with a term that was
originally set to expire on December 31, 2025 for
the benefit of Primerica Life, the direct parent of
Peach Re. Subject to certain conditions, the
amount of the LOC periodically increased up to
a maximum amount of approximately $507.0
million, which was reached in 2014. The amount
of the LOC then declined over time to
correspond to the declines in the Regulation
XXX reserve. As of December 31, 2023, the
amount outstanding under the LOC was $41.5
million, and the Company was in compliance
with all financial covenants under the Credit
Facility Agreement. Effective January 2, 2024,
Primerica Life recaptured the block of business
reinsured under the Peach Re Coinsurance
Agreement and exercised its right to terminate
the Credit Facility Agreement with Deutsche
Bank without an early termination penalty.
Contingent Liabilities. The Company is
involved from time-to-time in legal disputes,
regulatory inquiries and arbitration proceedings
in the normal course of business. These disputes
are subject to uncertainties, including the large
and/or indeterminate amounts sought in certain
of these matters and the inherent
unpredictability of litigation. As such, the
Company is unable to estimate the possible loss
or range of loss that may result from these
matters unless otherwise indicated.
(18) Benefit Plans
We sponsor defined contribution plans for the
benefit of our employees. The expense
associated with these plans was approximately
$11.5 million, $10.5 million, and $10.5 million in
2023, 2022, and 2021, respectively.
(19) Revenue from Contracts with
Customers
Our revenues from contracts with customers
primarily include:
• Commissions and fees earned for the
marketing and distribution of investment
and savings products underwritten by
mutual fund companies and annuity
providers. For purposes of revenue
recognition, mutual fund companies and
annuity providers are considered the
customers in marketing and distribution
arrangements;
•
Fees earned for investment advisory and
administrative services within our managed
investments program and shareholder
service fees earned in Canada for mutual
funds for which we serve as principal
distributor;
FINANCIAL STATEMENTS — NOTE 18
• Account-based fees for transfer agent
recordkeeping functions and non-bank
custodial services;
• Commissions and fees earned from the
distribution of Medicare-related insurance
products on behalf of health insurance
carriers, including tail revenue adjustments;
• Other Senior Health segment revenues
earned for providing certain marketing
services and health risk assessment services,
which are recorded in Other, net revenue;
•
Fees associated with mortgage brokerage
and the distribution of other third-party
financial products; and
• Other revenue from the sale of
miscellaneous products and services
including monthly subscription fees from
the sales representatives for access to POL,
our primary sales force support tool.
Premiums from insurance contracts we
underwrite, fees received from segregated funds
insurance contracts, and income earned on our
invested assets are excluded from the definition
of revenues from contracts with customers in
accordance with U.S. GAAP.
Primerica 2023 Annual Report
173
FINANCIAL STATEMENTS — NOTE 19
The disaggregation of our revenues from contracts with customers were as follows:
Term Life Insurance segment revenues:
Other, net
Year ended December 31,
2023
2022
2021
(In thousands)
$
48,286
$
50,320
$
48,970
Total segment revenues from contracts with customers
48,286
50,320
48,970
Revenues from sources other than contracts with customers
1,644,756
1,585,646
1,490,230
Total Term Life Insurance segment revenues
$1,693,042
$1,635,966
$1,539,200
Investment and Savings Products segment revenues:
Commissions and fees:
Sales-based revenues
Asset-based revenues
Account-based revenues
Other, net
$ 296,617
$ 326,378
$ 401,508
408,327
375,502
376,751
93,189
12,504
90,391
12,610
86,939
12,097
Total segment revenues from contracts with customers
810,637
804,881
877,295
Revenues from sources other than contracts with customers
(segregated funds)
54,628
58,551
64,552
Total Investment and Savings Products segment
revenues
$ 865,265
$ 863,432
$ 941,847
Senior Health segment revenues:
Commissions and fees
Other, net
Total Senior Health segment revenues
Corporate and Other Distributed Products segment
revenues:
Commissions and fees
Other, net
Total segment revenues from contracts with customers
Revenues from sources other than contracts with
$
$
57,563
9,621
67,184
$
$
47,420
15,262
62,682
$
$
50,903
9,537
60,440
$
40,092
$
46,434
$
62,160
4,609
44,701
4,967
51,401
3,971
66,131
customers
145,499
106,652
102,114
Total Corporate and Other Distributed Products
segment revenues
$ 190,200
$ 158,053
$ 168,245
We recognize revenue upon the satisfaction of
the related performance obligation, unless the
transaction price includes variable consideration
that is constrained; in such case, we recognize
revenue when the uncertainty associated with
the constrained amount is subsequently
resolved. Variable consideration is not treated as
constrained to the extent it is probable that no
significant reversal in the amount of cumulative
revenue recognized will occur when the
uncertainty associated with the variable
consideration is resolved. We have no material
obligations for refunds of commission and fees
on contracts with customers subsequent to
completion of our performance obligation.
174
Investment and Savings Products Marketing
and Distribution Services. We receive
commissions and fees from mutual fund
companies and annuity providers for the
marketing and distribution by the licensed sales
representatives of investment and savings
products underwritten by such companies and
providers. We recognize the sales-based
marketing and distribution revenue received
from such companies and providers at the point
in time our performance obligation to them is
satisfied, which is the trade date. The sales-
based commissions from mutual fund
companies and annuity providers are known and
are due at the same time our performance
obligation to such mutual fund companies and
annuity providers is satisfied. We also receive
ongoing asset-based commissions from mutual
fund companies and annuity providers each
reporting period based on client asset values.
We do not recognize revenue for asset-based
marketing and distribution commissions until
the end of each subsequent reporting period
when the amount becomes known and due from
mutual fund companies or annuity providers as
this revenue represents variable consideration
that is fully constrained at the point in time our
distinct performance obligation to mutual fund
companies and annuity providers is satisfied. We
consider variable consideration in the form of
asset-based marketing and distribution
commissions to be fully constrained as the
amounts we will be entitled to collect are highly
uncertain and susceptible to factors outside of
our control. Such factors include the market
values of assets under management and the
length of time investors hold their accounts.
Asset-based marketing and distribution
commissions recognized during the current
period are almost exclusively attributable to
distinct performance obligations satisfied to
mutual fund companies and annuity providers in
previous periods.
Investment Advisory and Administrative
Services. We provide investment advisory and
administrative services over time to investors in
the managed investments program we offer. We
recognize revenue as our performance
obligation is satisfied over time for daily
FINANCIAL STATEMENTS — NOTE 19
investment advisory and administrative services
that are substantially the same and have the
same pattern of delivery. Fees for these services,
which are based on a percentage of client assets
in the managed investments program, become
known and are charged to investors during the
same reporting period in which the daily
investment advisory and administrative services
are performed.
Shareholder Services. We provide shareholder
services over time to investors in the mutual
funds in which we serve as the principal
distributor in Canada. We recognize revenue as
our performance obligation is satisfied over time
for shareholder services that are substantially
the same and have the same pattern of delivery.
Fees for these services, which are based on a
percentage of client assets in the mutual funds,
become known and are charged to investors
during the same reporting period in which the
shareholder services are performed.
Account-based Services. We provide distinct
transfer agent recordkeeping services for certain
mutual funds we distribute and non-bank
custodial services to investors purchasing
investment products we distribute through
qualified retirement accounts in the United
States. Fees charged for these account-based
services consist primarily of a stated fee for each
investment position or each qualified retirement
account. Generally, our performance obligation
for each account-based service arrangement is
satisfied over time and is substantially the same
with the same pattern of delivery. We recognize
revenue to which we are entitled for each
investment position or each qualified account
over time based on the time-based pro-rata
amount earned each reporting period.
Distribution of Medicare-Related Insurance
Products on Behalf of Health Insurance
Carriers. As a result of the acquisition of e-
TeleQuote, the Company distributes Medicare-
related insurance policies to eligible Medicare
beneficiaries offered by third-party health
insurance carriers. e-TeleQuote receives initial
commissions and renewal commissions from
health insurance carriers for enrollments in
policies it has distributed. The Company
Primerica 2023 Annual Report
175
FINANCIAL STATEMENTS — NOTE 19
recognizes commission revenue in accordance
with the following five steps outlined in ASC 606
discussed in further detail below:
•
•
identification of the contract, or contracts,
with a customer;
identification of the performance
obligations in the contract;
• determination of the transaction price;
•
•
allocation of the transaction price to the
performance obligations in the contract;
and
recognition of revenue when, or as, the
Company satisfies a performance
obligation.
The Company’s customers are the health
insurance carriers that it contracts with to
distribute Medicare-related insurance policies on
their behalf.
The Company reviews each contract with
customers to determine what promises the
Company must deliver and which of these
promises are capable of being distinct in the
context of the contract. The identification and
delivery of new policyholders to the health
insurance carriers is the only material promise
specified within the contracts. After a policy is
approved by the health insurance carrier, the
Company has no material additional or recurring
obligations to the policyholder or the health
insurance carrier. The Company’s performance
obligation is complete when a health insurance
carrier has received and approved an insurance
application. The Company’s contracts do not
include downstream policyholder activities such
as claims support or payment collection services.
The transaction price is identified as the first-
year commission, including administrative and
marketing development payments received on a
per approved policy basis, due upon the initial
approval of a policy as well as an estimate of
renewal commission, which we define
collectively as the Lifetime value of commissions.
Commissions earned are determined based on
the health insurance carrier, where the insured is
based, and the month in which the policy
becomes effective. The commissions are based
176
on contractually agreed upon rate cards for
which guidance and ranges are set by the
regulatory body – Centers for Medicare and
Medicaid Services (“CMS”).
To estimate LTV, the Company utilizes the
expected value approach. This approach
incorporates historical lapse experience and
effective commission rates, an estimate of
chargebacks for paid policies that are
disenrolled in the first policy year, and
forecasted renewal commissions. The estimate
of initial and renewal commissions is considered
variable consideration and requires significant
judgment in determining the number of
approved policies that will become disenrolled
and the number of periods in which
policyholders will remain enrolled. We apply a
constraint on our estimate of renewal
commissions based on historical experience so
that it is probable that a significant reversal in
the amount of cumulative revenue will not occur.
The uncertainty associated with the variable
consideration is subsequently resolved each
period the policy remains enrolled or renews.
The Company recognizes the expected Lifetime
value of commission revenue by applying the
use of a portfolio approach to policies grouped
together by the health insurance carrier,
Medicare product type, and period the policy
was approved by the health insurance carrier
(referred to as a “cohort”). This approach to
estimating the commissions expected to be
collected for each cohort involves the evaluation
of various factors, including but not limited to,
contracted commission rates, disenrollment
experience and renewal persistency rates.
We recognize revenue for approved applications
during the period by applying the latest
estimated constrained LTV. We recognize
adjustments to revenue for approved
applications in prior periods when our cash
collections are, or are expected to be, different
from the estimated constrained LTVs, which we
refer to as tail adjustments. Tail adjustments to
revenue occur when actual cash collections or
communicated rate increases have indicated a
trend that is different from the estimated
constrained LTV. Tail adjustments to revenue can
be positive or negative and we recognize
positive adjustments to revenue when we do not
believe it is probable that a significant reversal
of cumulative revenue will occur.
Other Senior Health Segment Revenues. As a
result of the acquisition of e-TeleQuote, the
Company earns revenues for providing certain
marketing services and health risk assessment
services to health insurance carriers during the
process of selling Medicare-related insurance
products on behalf of health insurance carriers,
which are recorded in Other, net revenue.
Distribution of Other Third-party Financial
Products. We distribute various other financial
products on behalf of third parties to consumers.
We receive up-front commissions and/or
renewal commissions from product providers for
sales of other financial product sales we have
arranged. We recognize revenue at the point in
time our performance obligation to product
providers is satisfied, which is generally on the
date the financial product is purchased by the
consumer from the product provider. For certain
financial products, most notably prepaid legal
subscriptions and auto and homeowners’
insurance referrals, we receive ongoing renewal
commissions that coincide with recurring
payments received by product providers from
active subscribers or policyholders. Ongoing
renewal commissions represent variable
consideration that will not be resolved until after
the reporting period in which our performance
obligation has been satisfied. We estimate
variable consideration in the transaction price
for these financial products (with the exception
of miscellaneous products for which we expect
nominal ongoing commissions) as the expected
amount of commissions to be received over the
FINANCIAL STATEMENTS — NOTE 19
life of the subscription or referred policy and
apply a constraint so that it is probable that a
subsequent change in estimate will not result in
a significant revenue reversal. Management
judgment primarily is required to determine the
average life of a subscription or referred policy,
which we establish based on historical
information. We recognize variable
consideration in excess of the amount
constrained in subsequent reporting periods
when the uncertainty is resolved and the excess
amounts are due from the product providers.
Revenue for Other Services. We recognize
revenue from the sale of other miscellaneous
products and services, including monthly
subscription fees from the sales representatives
for access to POL, upon the transfer of the
promised product or service. For POL
subscriptions, we satisfy our performance
obligation by providing subscribers access to the
promised services over time during each
monthly subscription period. Revenue
recognized from the sale of other miscellaneous
products and services becomes known and
charged at the same time we satisfy the
corresponding performance obligation.
Renewal Commissions Receivable. For revenue
associated with ongoing renewal commissions in
the Senior Health and Corporate and Other
Distributed Products segments, we record a
renewal commission receivable asset for the
amount of ongoing renewal commissions we
anticipate collecting in reporting periods
subsequent to the satisfaction of the
performance obligation, less amounts that are
constrained in the accompanying consolidated
balance sheets.
Primerica 2023 Annual Report
177
FINANCIAL STATEMENTS — NOTE 19
Activity in the Renewal commissions receivable account was as follows:
Senior Health segment:
Balance, beginning of period
Contract balances acquired as part of business
combination
Measurement period adjustment
Commissions revenue
Less: collections
Tail revenue adjustment from change in estimate
December 31,
2023
December 31,
2022
December 31,
2021
(In thousands)
$139,399
$172,308
$ —
—
—
30,892
(43,731)
2,326
—
199,575
(11,863)
(46,128)
42,628
(40,740)
(22,934)
37,225
(13,442)
(4,922)
Balance, at the end of period
$128,886
$139,399
$172,308
Corporate and Other Distributed Products segment:
Balance, beginning of period
Commissions revenue
Less: collections
$ 60,644
$ 59,443
$ 54,845
25,188
25,325
27,618
(24,460)
(24,124)
(23,020)
Balance, at the end of period
$ 61,372
$ 60,644
$ 59,443
Incremental costs to obtain or fulfill contracts,
most notably sales commissions to the sales
representatives, are not incurred prior to the
recognition of the related revenue. Therefore, we
have no assets recognized for incremental costs
to obtain or fulfill contracts.
(20) Leases
We have operating leases for office space and
other real estate and finance leases of office
equipment. During 2023, we extended the lease
for our home office facility located in Duluth,
Georgia. The lease was set to expire in June 2028
and was extended to December 31, 2035. Upon
modifying the lease, the Company reassessed its
classification and concluded the lease remains
an operating lease. The lease disclosures below
reflect the extension of this lease as of
December 31, 2023.
In aggregate, our leases have remaining lease
terms of less than 1 year to 12 years, some of
which include options to extend the leases for
up to 10 years, and some of which include
options to terminate the leases within 1 year,
exercisable at the Company’s discretion.
Operating lease right-of-use assets and
operating lease liabilities are presented
separately in our consolidated balance sheets. As
of December 31, 2023 and December 31, 2022,
finance lease right-of-use assets of $0.5 million
and $0.7 million, respectively, and finance lease
liabilities of $0.5 million and $0.8 million,
respectively, were recorded within Other assets
and Other liabilities within our consolidated
balance sheets. The Company determines its
lease liabilities, which are measured at the
present value of future lease payments, using
the Company’s incremental secured borrowing
rate at the lease commencement date that is
commensurate with the term of the underlying
lease or the rate implicit in the lease if readily
determinable.
178
The components of lease expense were as follows:
FINANCIAL STATEMENTS — NOTE 20
Operating lease cost
Operating lease cost
Variable lease cost (includes taxes, common area maintenance and
insurance)
Finance lease cost
Depreciation of finance lease assets
Interest on lease liabilities
Total lease cost
Other information related to leases was as follows:
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases(1)
Operating cash flows used in finance leases(1)
Financing cash flows used in finance leases
Year ended December 31,
2023
2022
2021
(In thousands)
$ 9,437 $ 9,686 $8,620
1,130
1,099
980
258
37
271
55
280
60
$10,862 $11,111 $9,940
Year ended December 31,
2023
2022
2021
(In thousands)
$7,478 $9,960 $8,878
37
265
55
262
60
264
(1)
Included in change in other operating assets and liabilities, net in the accompanying consolidated statements of cash flows.
Weighted Average Remaining Lease Term
Operating leases
Finance leases
Weighted Average Discount Rate
Operating leases
Finance leases
December 31, 2023 December 31, 2022
10 years
2 years
6 years
3 years
4.7%
5.7%
4.2%
6.0%
Primerica 2023 Annual Report
179
FINANCIAL STATEMENTS — NOTE 20
Future minimum lease payments under non-cancellable leases were as follows:
Year Ended December 31,
2024(1)
2025
2026
2027
2028
Thereafter
Total minimum rental commitments for operating leases
Less imputed interest
Total lease liabilities
Operating Leases
Finance Leases
(In thousands)
$ 5,405
8,947
8,706
8,611
5,522
42,883
80,074
18,716
$61,358
$270
193
78
—
—
—
541
29
$512
(1) Excludes $4.8 million of scheduled rent payments expected to be offset by a leasehold improvement allowance funded by
the landlord of our home office facility.
(21) Acquisition
On July 1, 2021, the Company acquired an 80%
interest, as described in the next paragraph, in
the operating subsidiaries of Etelequote
Bermuda, including e-TeleQuote, a Florida
corporation that is a senior health insurance
distributor of Medicare-related insurance
policies in all 50 states and Puerto Rico (the
“Acquisition”).
The Company’s subsidiary, Primerica Health,
purchased from the shareholders of Etelequote
Limited (“Etelequote Bermuda”) 100% of the
issued and outstanding capital stock of e-
TeleQuote and its subsidiaries for consideration
of (i) approximately $350 million in cash,
(ii) replacement of e-TeleQuote’s debt as of the
closing date of $146 million with intercompany
funding provided by the Parent Company, (iii) a
$15 million majority shareholder note and
(iv) common shares of Primerica Health
constituting 20% of the total issued and
outstanding shares of capital stock of Primerica
Health that were issued to Etelequote Bermuda’s
minority shareholders, most of which included or
were beneficially owned by e-TeleQuote’s
management (“noncontrolling equity holders”).
The cash consideration provided was
subsequently reduced by $3.9 million as a result
180
of the final purchase price agreed upon with the
sellers following finalization of the closing
statement.
In connection with the Company’s acquisition of
80% of e-TeleQuote on July 1, 2021 (the
“Acquisition Date”), the Company entered into a
Shareholders’ Agreement with the
noncontrolling equity holders of Primerica
Health. Under the terms of the Shareholders’
Agreement, the Company agreed to purchase,
and the noncontrolling equity holders agreed to
sell, the remaining 20% stake over a period of up
to four years through a series of call and put
rights. The Shareholders’ Agreement provided
for the purchase of the noncontrolling equity
holders’ equity interests in Primerica Health at a
contractually defined Formulaic Price, which was
based on a discounted calculation of selected
peer company equity value multiples times the
trailing twelve months of Adjusted EBITDA
reduced by the balance of intercompany debt
owed by e-TeleQuote to the Parent Company.
Effective July 1, 2022, the Company executed its
call option to acquire the remaining 20% of
Primerica Health. The Formulaic Price calculation
resulted in a purchase price of zero. As such, no
further consideration was required to obtain the
outstanding 20% stake in Primerica Health and
the noncontrolling interest in the Company’s
FINANCIAL STATEMENTS — NOTE 21
consolidated financial statements was redeemed.
The following table presents the preliminary purchase price allocation recorded in the Company’s
consolidated balance sheets as of the Acquisition Date, adjustments made during the measurement
period that ended June 30, 2022, and the final purchase price allocation:
Assets:
Cash and cash equivalent
Accounts receivables
Other assets
Intangible assets
Goodwill
Total assets
Liabilities:
Preliminary
Purchase
Price
Allocation
2021
Measurement
Period
Adjustments
2022
Measurement
Period
Adjustments
Revised
Preliminary
Purchase Price
Allocation
(In thousands)
$
1,080
$ —
$ —
$
1,080
692
(390)
—
15,705
162,000
224,180
—
(6,000)
30,974
—
—
8,553
$603,232
$(21,544)
$ (3,310)
$578,378
302
141,584
15,705
156,000
263,707
Renewal commissions receivable
199,575
(46,128)
(11,863)
Accounts payable and accrued expenses
Deferred tax liability
Other liabilities
Total liabilities
8,785
65,425
10,046
(4,195)(1)
—
(13,482)
(3,310)
—
—
84,256
(17,677)
(3,310)
4,590
48,633
10,046
63,269
Net assets acquired
$518,976
$ (3,867)
$ —
$515,109
Temporary Stockholders’ Equity:
Redeemable noncontrolling interests
Total temporary stockholders’ equity
$
$
8,437
$ —
8,437
$ —
$ —
$ —
$
$
8,437
8,437
(1) The Company also recognized an adjustment during the measurement period to reclassify certain amounts from a payable
to a reduction in the renewal commissions receivable.
Renewal commissions receivable from the
acquired business was recognized in accordance
with Accounting Standards Codification Topic
606, Revenue from Contracts with Customers
(“ASC 606”) as the Company adopted
Accounting Standards Update No. 2021-08,
Business Combinations (Topic 805): Accounting
for Contract Assets and Contract Liabilities from
Contracts with Customers (“ASU 2021-08”). ASU
2021-08 requires contract assets arising from
revenue contracts with customers to be
accounted for in accordance with ASC 606
instead of at fair value.
During the measurement period, the Company
made two adjustments to renewal commissions
receivable as of the Acquisition Date. The
adjustments, which were booked in 2021 and
2022, resulted from the Company’s
reassessment of the estimates made by e-
Primerica 2023 Annual Report
181
FINANCIAL STATEMENTS — NOTE 21
TeleQuote for the variable consideration
expected for approved policies as of the
Acquisition Date. The reassessment of estimates
involved the implementation of an enhanced
algorithmic model for processing historical lapse
data and forecasting future policy duration
curves. In addition, the Company revised the
estimate for renewal commission rate escalation
assumptions in accordance with its accounting
policy for determining constraints of variable
consideration. As a result, the Company
recognized a purchase price allocation
adjustment to decrease renewal commissions
receivable and deferred tax liability with a
corresponding increase to goodwill.
Intangible assets identified in the acquisition of
the business are capitalized separately from
goodwill if the fair value can be measured
reliably on initial recognition (transaction date).
The primary intangible assets identified were
customer relationships with health insurance
carriers of $153.0 million with an estimated
useful life of 15 years. The Company will
amortize the intangible assets acquired on a
straight-line basis over their estimated useful
lives. During the measurement period, the
Company revised long-term growth rates used
in the cash flow projections that support the
intangibles valuation. As a result, the Company
recognized a purchase price allocation
adjustment to decrease intangible assets and
deferred tax liability with a corresponding
increase to goodwill.
Goodwill is calculated as the difference between
the acquisition date fair value of the total
consideration transferred and the aggregate
values assigned to the assets acquired and
liabilities assumed. The amount of goodwill
calculated as of the Acquisition Date determined
by the final purchase price allocation was $263.7
million. The goodwill created in the acquisition is
not deductible for tax purposes. Refer to Note
22 (Goodwill) for more information regarding
the valuation of goodwill.
Transaction costs related to the e-TeleQuote
acquisition included within Other operating
expenses on the consolidated statements of
income was $(2.0) million and $12.9 million for
the years ended December 31, 2022 and 2021,
respectively. There were no transaction costs
related to the e-TeleQuote acquisition recorded
for the year ended December 31, 2023.
The following unaudited pro forma consolidated
financial information combines the audited
results of the Company for the year ended
December 31, 2021 and the unaudited results of
e-TeleQuote for the year ended December 31,
2021, and assumes that the Acquisition, which
closed on July 1, 2021, was completed on
January 1, 2021 (the first day of fiscal year 2021).
The pro forma consolidated financial information
has been calculated after applying adjustments
for amortization expense of acquired intangible
assets and the consequential tax effect. These
pro forma results have been prepared for
comparative purpose only and do not purport to
be indicative of the operating results of the
Company that would have been achieved had
the e-TeleQuote acquisition actually taken place
on January 1, 2021.
Revenue
Net income (loss)
Year ended
December 31,
2021
(in thousands)
$2,774,991
361,783
182
FINANCIAL STATEMENTS — NOTE 22
(22) Goodwill
The rollforward of goodwill recognized by the Company in its Senior Health reporting unit was as
follows:
Balance as of December 31, 2020
Goodwill acquired
Impairment recognized
Balance as of December 31, 2021
Measurement period adjustment
Impairment recognized
Gross Goodwill
Accumulated Impairment
Loss
Net Goodwill
$ —
255,154
—
(In thousands)
$
—
—
(76,000)
$ —
255,154
(76,000)
$255,154
$ (76,000)
$179,154
8,553
—
—
(60,000)
8,553
(60,000)
Balance as of December 31, 2022
$263,707
$(136,000)
$127,707
Impairment recognized
—
—
—
Balance as of December 31, 2023
$263,707
$(136,000)
$127,707
As of December 31, 2021, we identified events
and circumstances that suggested it was more
likely than not that the fair value of the Senior
Health reporting unit was not greater than its
carrying value. These events and circumstances
consisted of various factors, including recent
financial performance, elevated industry-wide
policy churn, and declines in the market value of
publicly traded peers. As a result, the Company
performed a quantitative impairment analysis
using a combination of the income and market
approaches. We utilized an income approach by
preparing a discounted cash flow analysis to
determine the reporting unit’s fair value. The
discounted cash flow analysis included key
assumptions such as the weighted average cost
of capital (“WACC”), long-term growth rate and
projected operating results such as approved
policies, LTV’s, contract acquisition costs,
operating expenses, collections of renewal
commissions receivable, and utilization of net
operating losses for income tax purposes. We
utilized a market approach by deriving the
reporting unit’s fair value applying publicly-
traded peer company trading multiples to
forward looking operating results. We then
weighted each approach to determine the
reporting unit’s fair value placing greater
emphasis on the income approach as we believe
management’s expectations of the cash flow
generated by the reporting unit were more
relevant in determining fair value given the
limitations in the creditability of available peer
company data. The measurement of the
reporting unit’s fair value as of December 31,
2021 was classified as a level 3 fair value
measurement given significance of the
unobservable inputs such as forecasted
operating results, discount rates, normalized
peer company operating information and
weights assigned to each approach that are used
in determining the fair value. After the fair value
of the reporting unit was determined, the
Company calculated its carrying value by taking
the reporting unit’s assets minus its liabilities.
The carrying value of the reporting unit was then
compared to its fair value to determine the
goodwill impairment recognized as of
December 31, 2021.
During the annual impairment test as of July 1,
2022, the Company performed a quantitative
impairment analysis using the income approach
by preparing a discounted cash flow analysis to
determine the reporting unit’s fair value. The
discounted cash flow analysis included key
assumptions such as the WACC, long-term
growth rate and projected operating results such
Primerica 2023 Annual Report
183
FINANCIAL STATEMENTS — NOTE 22
as approved policies, lifetime value of
commissions, contract acquisition costs,
operating expenses, collections of renewal
commissions receivable, and utilization of net
operating losses for income tax purposes. We
did not utilize a market approach as part of the
quantitative impairment analysis as of July 1,
2022 as we identified a lack of credibility in the
available peer company data at that time and
believed management’s expectations of the cash
flow generated by the reporting unit were more
relevant in determining the fair value. The
measurement of the reporting unit’s fair value as
of July 1, 2022 was classified as a Level 3 fair
value measurement given the significance of the
unobservable inputs such as forecasted
operating results and discount rates. After the
fair value of the reporting unit was determined,
the Company calculated its carrying value by
taking the reporting unit’s assets minus its
liabilities. The carrying value of the reporting
unit was then compared to its fair value to
determine the goodwill impairment recognized
as of July 1, 2022. The decline of the Senior
Health reporting unit’s fair value below its
carrying value as of July 1, 2022 that led to the
impairment recognized in 2022 was primarily
driven by an increase in the market-based WACC
used to discount the forecasted cash flows at
that time. The increase in the WACC as of July 1,
2022 was driven by increases in the equity
market risk premium and higher interest rates.
During the annual impairment test as of July 1,
2023, the Company performed a quantitative
impairment analysis using the income approach
by preparing a discounted cash flow analysis to
determine the reporting unit’s fair value. The
discounted cash flow analysis included key
assumptions such as the WACC, long-term
growth rate and projected operating results such
as approved policies, lifetime value of
commissions, contract acquisition costs,
operating expenses, collections of renewal
commissions receivable, and utilization of net
operating losses for income tax purposes.
Similar to 2022, we did not utilize a market
approach as part of the quantitative impairment
analysis as of July 1, 2023 as we identified a lack
of credibility in the available peer company data
at that time and management’s assessment that
its expectations of the cash flow generated by
the reporting unit were more relevant in
determining the fair value. The measurement of
the reporting unit’s fair value as of July 1, 2023
was classified as a Level 3 fair value
measurement given the significance of the
unobservable inputs such as forecasted
operating results and discount rates. After the
fair value of the reporting unit was determined,
the Company calculated its carrying value by
taking the reporting unit’s assets minus its
liabilities. The carrying value of the reporting
unit was then compared to its fair value and no
impairment was determined as its fair value
exceeded its carrying value as of July 1, 2023.
The goodwill impairment charges recognized in
2022 and 2021 did not impact the Company’s
income tax expense as the goodwill acquired
from the e-TeleQuote acquisition does not have
any tax basis. The determination of whether the
carrying value of the reporting unit exceeds its
fair value involves a high degree of estimation
and can be affected by a number of industry and
company-specific risk factors that are subject to
change over time.
184
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no changes in, or
disagreements with, accountants on accounting
and financial disclosure matters during the years
ended December 31, 2023 and 2022.
ITEM 9A. CONTROLS AND
PROCEDURES.
DisclosureControlsandProcedures
The Company’s management, with the
participation of the Company’s Chief Executive
Officer and Chief Financial Officer, has evaluated
the effectiveness of the Company’s disclosure
controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) as of the end of the period
covered by this report (the “Evaluation Date”).
Based on such evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer have
concluded that, as of the Evaluation Date, the
Company’s disclosure controls and procedures
are effective.
ChangesinInternalControlOver
FinancialReporting
There have not been any changes in the
Company’s internal control over financial
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fourth quarter of 2023
that have materially affected, or are reasonably
likely to materially affect, the Company’s internal
control over financial reporting.
Management’sAnnualReportOn
InternalControlOverFinancial
Reporting
Our management is responsible for establishing
and maintaining adequate internal control over
financial reporting for the Company. With the
participation of the Chief Executive Officer and
the Chief Financial Officer, our management
conducted an evaluation of the effectiveness of
our internal control over financial reporting
based on the framework and criteria established
in Internal Control—Integrated Framework
(2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Based on this evaluation, our management has
concluded that our internal control over financial
reporting was effective as of December 31, 2023.
Our independent auditor, KPMG LLP, an
independent registered public accounting firm,
has issued an attestation report on the
effectiveness of our internal control over
financial reporting. This attestation report
appears below.
Primerica 2023 Annual Report
185
ITEM 9A. CONTROLS AND PROCEDURES
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Primerica, Inc.:
OpiniononInternalControlOverFinancialReporting
We have audited Primerica, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the
related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each
of the years in the three-year period ended December 31, 2023, and the related notes and financial statement
schedules I, II, III and IV (collectively, the consolidated financial statements), and our report dated
February 28, 2024 expressed an unqualified opinion on those consolidated financial statements.
BasisforOpinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
DefinitionandLimitationsofInternalControlOverFinancialReporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ KPMG LLP
Atlanta, Georgia
February 28, 2024
186
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
Trading Plans
During the quarter ended December 31, 2023, none of our directors or executive officers adopted or
terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as
those terms are defined in Item 408 of Regulation S-K, except for the following:
• On November 24, 2023, Peter Schneider, the Company’s President, terminated a Rule 10b5-1
trading arrangement that was adopted on May 12, 2023 and provided for the sale of an aggregate
of up to 14,000 shares of the Company’s common stock between August 28, 2023 and June 4,
2024.
• On December 11, 2023, Peter Schneider, the Company’s President, adopted a Rule 10b5-1 trading
arrangement that provides for the sale of an aggregate of up to 6,000 shares of the Company’s
common stock between March 15, 2024 and December 2, 2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.
Not applicable.
Primerica 2023 Annual Report
187
PART III
Pursuant to General Instruction G to Form 10-K
and as described below, portions of Items 10
through 14 of this report are incorporated by
reference from the Company’s definitive Proxy
Statement relating to the Company’s 2024
Annual Meeting of Stockholders to be held on
May 8, 2024 (the “Proxy Statement”), which will
be filed with the SEC within 120 days of
December 31, 2023, pursuant to Regulation 14A
under the Exchange Act. The Report of the Audit
Committee of our Board of Directors and the
Report of the Compensation Committee of our
Board of Directors to be included in the Proxy
Statement shall be deemed to be furnished in
this report and shall not be incorporated by
reference into any filing under the Securities Act
of 1933, as amended, as a result of such
furnishing.
Our website address is www.primerica.com. You
may obtain free electronic copies of our annual
reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and all
amendments to those reports from the investors
section of our website. These reports are
available on our website as soon as reasonably
practicable after we electronically file them with
the SEC. These reports should also be available
through the SEC’s website at www.sec.gov.
We have adopted Corporate Governance
Guidelines. The Corporate Governance
Guidelines and the charters of our Board
committees are available in the corporate
governance subsection of the investor relations
section of our website, www.primerica.com, and
are also available in print upon written request
to the Corporate Secretary, Primerica, Inc., 1
Primerica Parkway, Duluth, GA 30099.
Item 10. Directors, Executive Officers
and Corporate Governance.
For a list of executive officers, see “Part I, Item X.
Information About Our Executive Officers and
Certain Significant Employees”, included
elsewhere in this report.
188
We have adopted a written Code of Conduct
that applies to directors, officers and employees,
including a separate code that applies to only
our principal executive officers and senior
financial officers in accordance with Section 406
of the Sarbanes-Oxley Act of 2002 and the rules
of the SEC promulgated thereunder. Our Code
of Conduct is available in the corporate
governance subsection of the investor relations
section of our website, www.primerica.com, and
is available in print upon written request to the
Corporate Secretary, Primerica, Inc., 1 Primerica
Parkway, Duluth, GA 30099. In the event that we
make changes in, or provide waivers from, the
provisions of the Code of Conduct that the SEC
requires us to disclose, we will disclose these
events in the corporate governance section of
our website.
Except for the information above and the
information set forth in “Part I, Item X.
Information About Our Executive Officers and
Certain Significant Employees”, the information
required by this item will be contained under the
following headings in the Proxy Statement and is
incorporated herein by reference:
• Matters to be Voted on — Proposal 1:
Election of Directors;
• Governance — Director Independence;
• Governance — Sustainability Matters – Our
Corporate Culture;
• Board of Directors — Board Members;
• Board of Directors — Directors
Qualifications;
• Board of Directors — Board Committees;
•
Executive Compensation — Employment
Agreements;
• Audit Matters — Audit Committee Report;
and
• Related Party Transactions.
ITEM 11. EXECUTIVE COMPENSATION.
Item 11. Executive Compensation.
The information required by this item will be contained under the following headings in the Proxy
Statement and is incorporated herein by reference:
• Board of Directors — Board Committees — Compensation Committee;
• Board of Directors — Director Compensation; and
•
Executive Compensation (excluding the information under the subheading Pay Versus
Performance (PVP)).
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
SecuritiesAuthorizedforIssuanceUnderEquityCompensationPlans
We have two compensation plans under which our equity securities are authorized for issuance. The
Primerica, Inc. 2020 Omnibus Incentive Plan was approved by our stockholders in May 2020. The
Primerica, Inc. Stock Purchase Plan for Agents and Employees was approved by our sole stockholder in
March 2010. The following table sets forth certain information relating to these equity compensation
plans at December 31, 2023.
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available
for future issuance
Equity compensation plans approved
by stockholders:
Primerica, Inc. Second Amended and
Restated 2020 Omnibus Incentive
Plan
Primerica, Inc. Stock Purchase Plan for
Agents and Employees
Total
Equity compensation plans not
approved by stockholders
237,095(1)
$— (2)
1,252,002(3)
—
237,095
n/a
—
$—
n/a
1,646,243(4)
2,898,245
n/a
(1) Consists of 171,636 shares of our common stock to be issued in connection with unvested restricted stock units. Also
includes 65,459 shares of our common stock to be issued to certain executive officers in connection with outstanding
performance stock units if the Company achieves the targeted level of performance specified in the award agreement over a
three-year period. Based on the actual ROAE and EPS growth (if applicable) achieved within the three-year performance
period ended December 31, 2023, recipients of the 2021 PSU awards will receive 15,398 shares of our common stock
compared with the targeted 21,845 shares on the vesting date of March 1, 2024. See Note 13 (Stockholders’ Equity) and
Note 15 (Share-Based Transactions) to our consolidated financial statements included elsewhere in this report for more
information on the equity awards outstanding.
(2) At December 31, 2023, there were no outstanding stock options under our equity compensation plans.
(3) The number of shares of our common stock available for future issuance is 2,442,102 less the cumulative number of awards
granted under the plan plus the cumulative number of awards canceled under the plan.
(4) Represents shares of our common stock, which have already been issued and are outstanding, available to be purchased by
employees and agents under the plan. The number of outstanding shares of our common stock available to be purchased is
2,500,000 less the cumulative number of outstanding shares purchased to date under the plan.
Primerica 2023 Annual Report
189
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
Other information required by this item will be
contained under the following headings in the
Proxy Statement and is incorporated herein by
reference:
•
Stock Ownership
Item 13. Certain Relationships and
Related Transactions, and Director
Independence.
The information required by this item will be
contained under the following headings in the
Proxy Statement and is incorporated herein by
reference:
•
Introductory paragraph to Governance;
• Governance — Director Independence;
• Board of Directors — Board Committees;
and
• Related Party Transactions.
Item 14. Principal Accountant Fees
and Services.
The information required by this item will be
contained under the following headings in the
Proxy Statement and is incorporated herein by
reference:
• Matters to be Voted on — Proposal 3:
Ratification of the Appointment of KPMG
LLP as Our Independent Registered Public
Accounting Firm;
• Board of Directors — Board Committees —
Audit Committee; and
• Audit Matters — Fees and Services of
KPMG.
190
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) 1. FINANCIAL STATEMENTS
Included in Part II, Item 8, of this report:
Primerica, Inc.:
Report of Independent Registered Public Accounting Firm (KPMG LLP, Atlanta, GA, Auditor
Firm ID: 185)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Income for each of the years in the three-year period ended
December 31, 2023
Consolidated Statements of Comprehensive Income for each of the years in the three-year
period ended December 31, 2023
Consolidated Statements of Stockholders’ Equity for each of the years in the three-year period
ended December 31, 2023
Consolidated Statements of Cash Flows for each of the years in the three-year period ended
December 31, 2023
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedule I — Consolidated Summary of Investments — Other than Investments in Related
Parties as of December 31, 2023
Schedule II — Condensed Financial Information of Registrant as of December 31, 2023 and
2022, and for each of the years in the three-year period ended December 31,
2023
Schedule III — Supplementary Insurance Information as of December 31, 2023 and 2022 and
for each of the years in the three-year period ended December 31, 2023
Schedule IV — Reinsurance for each of the years in the three-year period ended December 31,
2023
3. EXHIBIT INDEX –
113
116
117
118
119
120
121
199
200
207
209
An “Exhibit Index” has been filed as part of this report beginning on the following page and is
incorporated herein by reference.
Schedules other than those listed above are omitted because they are not required, are not material,
are not applicable, or the required information is shown in the financial statements or notes thereto.
(b) Exhibit Index.
The agreements included as exhibits to this report are included to provide information regarding the
terms of these agreements and are not intended to provide any other factual or disclosure information
about the Company or its subsidiaries, our business or the other parties to these agreements. These
agreements may contain representations and warranties by each of the parties to the applicable
agreement. These representations and warranties have been made solely for the benefit of the other
parties to the applicable agreement and:
•
should not in all instances be treated as categorical statements of fact, but rather as a way of
allocating the risk to one of the parties if those statements prove to be inaccurate;
Primerica 2023 Annual Report
191
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
• may have been qualified by disclosures that were made to the other party in connection with the
negotiation of the applicable agreement, which disclosures are not necessarily reflected in the
agreement;
• may apply standards of materiality in a way that is different from what may be viewed as material
to our investors; and
• were made only as of the date of the applicable agreement or such other date or dates as may be
specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the
date they were made or at any other time, and should not be relied upon by investors.
Description
Reference
Share Purchase Agreement, dated as of April
18, 2021, by and among the Registrant,
Primerica Newco, Inc., ETeleQuote Limited,
the Selling Shareholders named therein, and
Fortis Advisors, LLC
Amendment to Share Purchase Agreement
dated as of June 30, 2021, between the
Registrant, Primerica Newco, Inc.,
ETeleQuote Limited, the Selling
Shareholders named therein, and Fortis
Advisors, LLC
Amended and Restated Certificate of
Incorporation of the Registrant.
Third Amended and Restated By-laws of
Primerica, Inc.
Incorporated by reference to Exhibit 2.1 to
Primerica’s Current Report on Form 8-K filed
April 19, 2021 (Commission File
No. 001-34680).
Incorporated by reference to Exhibit 2.2 to
Primerica’s Current Report on Form 8-K filed
July 1, 2021 (Commission File
No. 001-34680)
Incorporated by reference to Exhibit 3.1 to
Primerica’s Current Report on Form 8-K filed
May 24, 2013 (Commission File
No. 001-34680).
Incorporated by reference to Exhibit 3.1 to
Primerica’s Current Report on Form 8-K filed
March 3, 2023 (Commission File
No. 001-34680).
Indenture, dated July 16, 2012, between the
Registrant and Computershare Trust
Company N.A., as successor to Wells Fargo
Bank, National Association, as trustee.
Incorporated by reference to Exhibit 4.1 to
Primerica’s Current Report on Form 8-K filed
July 16, 2012 (Commission File
No. 001-34680).
First Supplemental Indenture, dated July 16,
2012, between the Registrant and
Computershare Trust Company N.A., as
successor to Wells Fargo Bank, National
Association, as trustee.
Second Supplemental Indenture, dated as of
November 19, 2021, between the Registrant
and Computershare Trust Company N.A., as
successor to Wells Fargo Bank, National
Association, as trustee.
Incorporated by reference to Exhibit 4.2 to
Primerica’s Current Report on Form 8-K filed
November 19, 2021 (Commission File No.
001-34680).
Incorporated by reference to Exhibit 4.2 to
Primerica’s Current Report on Form 8-K filed
November 19, 2021 (Commission File
No. 001-34680).
Exhibit
Number
2.1
2.2
3.1
3.2
4.1
4.2
4.3
192
Description
Reference
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number
4.4
Form of 2.800% Senior Notes due 2031
(No. R-1)
4.5
Form of 2.800% Senior Notes due 2031
(No. R-2)
4.6
Description of Registrant’s Securities
Incorporated by reference to Exhibit 4.3 to
Primerica’s Current Report on Form 8-K filed
November 19, 2021 (Commission File
No. 001-34680).
Incorporated by reference to Exhibit 4.4 to
Primerica’s Current Report on Form 8-K filed
November 19, 2021 (Commission File
No. 001-34680).
Incorporated by reference to Exhibit 4.4 to
Primerica’s Annual Report on Form 10-K for
the year ended December 31, 2020 filed
March 1, 2021 (Commission File
No. 001-34680).
10.1
10.2
10.3
10.4
10.5
10.6
10.7
Amended and Restated Credit Agreement,
dated as of June 22, 2021 between the
Registrant, the Lenders referred to therein,
and Wells Fargo Bank, National Association
Incorporated by reference to Exhibit 10.1 to
Primerica’s Current Report on Form 8-K filed
June 24, 2021 (Commission File
No. 001-34680).
Tax Separation Agreement dated as of
March 30, 2010 by and between the
Registrant and Citigroup Inc.
Incorporated by reference to Exhibit 10.3 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001- 34680).
10% Coinsurance Agreement dated March
31, 2010 between Primerica Life Insurance
Company and Prime Reinsurance Company,
Inc.
Incorporated by reference to Exhibit 10.6 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Amendment No. 1 dated as of October 5,
2015 to the 10% Coinsurance Agreement
dated March 31, 2010 by and between
Primerica Life Insurance Company and Prime
Reinsurance Company, Inc.
Amendment No. 2 dated as of January 25,
2016 to the 10% Coinsurance Agreement
dated March 31, 2010 by and between
Primerica Life Insurance Company and Prime
Reinsurance Company, Inc.
Amendment No. 3 dated as of March 31,
2016 to the 10% Coinsurance Agreement
dated March 31, 2010 by and between
Primerica Life Insurance Company and Prime
Reinsurance Company, Inc.
Assignment, Transfer and Novation
Agreement dated as of June 23, 2022
between Primerica Life Insurance Company,
Pecan Re and Swiss Re Life and Health
America Inc.
Incorporated by reference to Exhibit 10.29 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2015
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.1 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2016
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.2 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2016
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.1 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2022
(Commission File No. 001-34680).
Primerica 2023 Annual Report
193
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Description
Reference
Second Amended and Restated 80%
Coinsurance Agreement dated as of June 23,
2022 between Primerica Life Insurance
Company and Swiss Re Life and Health
America Inc.
Reinsurance Trust Agreement dated as of
June 23, 2022 between Swiss Re Life and
Health America Inc., as Grantor, and
Primerica Life Insurance Company, as
Beneficiary, and The Bank of New York
Mellon, as Trustee
10% Coinsurance Economic Trust
Agreement dated March 29, 2010 among
Primerica Life Insurance Company, Prime
Reinsurance Company, Inc. and The Bank of
New York Mellon.
Amendment No. 1 dated as of March 31,
2016 to the 10% Coinsurance Economic
Trust Agreement dated March 29, 2010
among Prime Reinsurance Company, Inc.
Primerica Life Insurance Company, and The
Bank of New York Mellon.
10% Coinsurance Excess Trust Agreement
dated March 29, 2010 among Primerica Life
Insurance Company, Prime Reinsurance
Company, Inc. and The Bank of New York
Mellon.
Amendment No. 1 dated as of March 31,
2016 to the 10% Coinsurance Excess Trust
Agreement dated March 29, 2010 among
Prime Reinsurance Company, Inc. Primerica
Life Insurance Company, and The Bank of
New York Mellon.
Incorporated by reference to Exhibit 10.2 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2022
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.3 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2022
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.8 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.5 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2016
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.9 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.6 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2016
(Commission File No. 001-34680).
Amended and Restated Capital Maintenance
Agreement dated as of March 31, 2016 by
and between Citigroup Inc. and Prime
Reinsurance Company, Inc.
Incorporated by reference to Exhibit 10.7 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2016
(Commission File No. 001-34680).
90% Coinsurance Agreement dated March
31, 2010 by and between National Benefit
Life Insurance Company and American
Health and Life Insurance Company.
Incorporated by reference to Exhibit 10.11 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Exhibit
Number
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
194
Exhibit
Number
10.16
10.17
10.18
10.19
10.20
10.21
10.22
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Description
Reference
Reinsurance Trust Agreement dated
November 23, 2020 among National Benefit
Life Insurance Company, American Health
and Life Insurance Company, and JP Morgan
Chase Bank, N.A.
Coinsurance Agreement dated March 31,
2010 by and between Primerica Life
Insurance Company of Canada and Financial
Reassurance Company 2010, Ltd. (currently
known as Munich Re Life Insurance
Company of Vermont).
Coinsurance Amending Agreement dated as
of December 31, 2011 among Primerica Life
Insurance Company of Canada and Financial
Reassurance Company 2010, Ltd. (currently
known as Munich Re Life Insurance
Company of Vermont).
Coinsurance Amending Agreement dated as
of October 20, 2016 among Primerica Life
Insurance Company of Canada, Munich Re
Life Insurance Company of Vermont
(formerly known as Financial Reassurance
Company 2010, Ltd.) and Munich-American
Holding Corporation.
Coinsurance Agreement Novation
Amendment dated as of December 15, 2016
among Primerica Life Insurance Company of
Canada, Munich Re Life Insurance Company
of Vermont and Munich Re of Malta P.L.C.
Incorporated by reference to Exhibit 10.15
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2020
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.13 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.19
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2016
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.20
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2016
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.19
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2019
(Commission File No. 001-34680).
Coinsurance Amending Agreement dated as
of January 1, 2018 among Primerica Life
Insurance Company of Canada and Munich
Re of Malta P.L.C.
Incorporated by reference to Exhibit 10.20
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2019
(Commission File No. 001-34680).
Monitoring and Reporting Agreement dated
as of March 31, 2016 by and among
Primerica Life Insurance Company and
Pecan Re Inc.
Incorporated by reference to Exhibit 10.21
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2016
(Commission File No. 001-34680).
10.23*
Primerica, Inc. Stock Purchase Plan for
Agents and Employees.
10.24*
Primerica, Inc. 2020 Omnibus Incentive Plan
Incorporated by reference to Exhibit 10.45 to
Primerica’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.1 to
Primerica’s Registration Statement on Form
S-8 filed (Commission File No. 333-238268)
Primerica 2023 Annual Report
195
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
Description
Reference
Form of Primerica, Inc. Performance Stock
Unit Award Agreement under the Primerica,
Inc. 2020 Omnibus Incentive Plan (2021
awards).
Form of Primerica, Inc. Performance Stock
Unit Award Agreement under the Primerica,
Inc. 2020 Omnibus Incentive Plan (2022
awards).
Form of Primerica, Inc. Performance Stock
Unit Award Agreement under the Primerica,
Inc. 2020 Omnibus Incentive Plan (2023
awards).
Form of U.S. Employee Restricted Stock Unit
Award Agreement under the Primerica, Inc.
2020 Omnibus Incentive Plan (2021 awards)
Form of U.S. Employee Restricted Stock Unit
Award Agreement under the Primerica, Inc.
2020 Omnibus Incentive Plan (2022 awards)
Form of Executive Team Restricted Stock
Unit Award Agreement under the Primerica,
Inc. 2020 Omnibus Incentive Plan (2023 ET
awards)
Incorporated by reference to Exhibit 10.26
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2021 filed
March 1, 2022 (Commission File
No. 001-34680).
Incorporated by reference to Exhibit 10.27
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2022 filed
on February 28, 2023 (Commission File
No. 333-238268).
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Incorporated by reference to Exhibit 10.29
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2021
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.30
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2022 filed
on February 28, 2023 (Commission File
No. 333-238268)
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Executive Team Restricted Stock Unit Award
Agreement, dated as of October 16, 2023,
between Primerica, Inc. and Ms. Tracy X.
Tan.
Incorporated by reference to Exhibit 10.2 to
Primerica’s Current Report on Form 8-K filed
on September 14, 2023 (Commission File
No. 001-34680).
Form of Director Restricted Stock Unit
Award Agreement under the Primerica, Inc.
2020 Omnibus Incentive Plan (2023 awards)
Filed with the Securities and Exchange
Commission as part of this Annual Report.
10.33*
Form of Indemnification Agreement for
Directors and Officers.
Incorporated by reference to Exhibit 10.48
to Primerica’s Registration Statement on
Form S-1 (File No. 333-162918).
10.34
Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Mr. Glenn J.
Williams.
Incorporated by reference to Exhibit 99.4 to
Primerica’s Current Report on Form 8-K filed
January 5, 2015 (Commission File
No. 001-34680).
196
Exhibit
Number
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Description
Reference
Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Mr. Peter W.
Schneider.
Incorporated by reference to Exhibit 99.5 to
Primerica’s Current Report on Form 8-K filed
January 5, 2015 (Commission File
No. 001-34680).
Amendment dated as of November 17, 2015
to the Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Mr. Peter W.
Schneider.
Incorporated by reference to Exhibit 10.30
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2015
(Commission File No. 001-34680).
Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Ms. Alison S.
Rand.
Incorporated by reference to Exhibit 99.6 to
Primerica’s Current Report on Form 8-K filed
January 5, 2015 (Commission File
No. 001-34680).
Amendment dated as of November 17, 2015
to the Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Ms. Alison S.
Rand.
Incorporated by reference to Exhibit 10.32
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2015
(Commission File No. 001-34680).
Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Mr. Gregory C.
Pitts.
Incorporated by reference to Exhibit 99.7 to
Primerica’s Current Report on Form 8-K filed
January 5, 2015 (Commission File
No. 001-34680).
Amendment dated as of November 17, 2015
to the Amended and Restated Employment
Agreement, dated as of January 2, 2015,
between the Registrant and Mr. Gregory C.
Pitts.
Employment Agreement, dated as of
September 13, 2023, between Primerica, Inc.
and Ms. Tracy X. Tan.
Incorporated by reference to Exhibit 10.34
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2015
(Commission File No. 001-34680).
Incorporated by reference to Exhibit 10.1 to
Primerica’s Current Report on Form 8-K filed
on September 14, 2023 (Commission File
No. 001-34680).
Nonemployee Directors’ Deferred
Compensation Plan, effective as of
January 1, 2011, adopted on November 10,
2010.
Incorporated by reference to Exhibit 10.31
to Primerica’s Annual Report on Form 10-K
for the year ended December 31, 2010
(Commission File No. 001-34680).
21.1
Subsidiaries of the Registrant.
23.1
Consent of KPMG LLP.
31.1
Rule 13a-14(a)/15d-14(a) Certification,
executed by Glenn J. Williams, Chief
Executive Officer.
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Primerica 2023 Annual Report
197
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number
31.2
32.1
Description
Reference
Rule 13a-14(a)/15d-14(a) Certification,
executed by Tracy X. Tan, Executive Vice
President and Chief Financial Officer.
Certifications required by Rule 13a-14(b) or
Rule 15d-14(b) and Section 1350 of Chapter
63 of Title 18 of the United States Code (18
U.S.C. 1350), executed by Glenn J. Williams,
Chief Executive Officer, and Tracy X. Tan,
Executive Vice President and Chief Financial
Officer.
Filed with the Securities and Exchange
Commission as part of this Annual Report.
Filed with the Securities and Exchange
Commission as part of this Annual Report.
97.1
Incentive Compensation Recovery Policy
101.INS
Inline XBRL Instance Document
Filed with the Securities and Exchange
Commission as part of this Annual Report.
The instance document does not appear in
the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL
document.
101.SCH
104
Inline XBRL Taxonomy Extension Schema
With Embedded Linkbase Documents
Cover Page Interactive Data File (formatted
as Inline XBRL with applicable taxonomy
extension information contained in
Exhibits 101).
*
Identifies a management contract or compensatory plan or arrangement.
198
(c) Financial Statement Schedules.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule I
Consolidated Summary of Investments — Other Than Investments in
Related Parties
PRIMERICA, INC.
Type of Investment
Fixed maturities:
Bonds(1):
December 31, 2023
Cost
Fair value
Amount at which
shown in the
balance sheet
(In thousands)
United States government and government agencies
and authorities
States, municipalities, and political subdivisions
Foreign governments
All other corporate bonds(1)
Certificates of deposit
Redeemable preferred stocks
$ 103,508 $
99,937
$
99,937
145,779
170,354
131,989
163,382
131,989
163,382
3,916,511
3,673,307
3,725,395
176
4,247
176
3,951
176
3,951
Total fixed maturities
4,340,575
4,072,742
4,124,830
Equity securities:
Common stocks:
Public utilities
Banks, trusts and insurance companies
Industrial, miscellaneous and all other
Nonredeemable preferred stocks
Total equity securities
Policy loans and other invested assets
Short-term investments
Total investments
6,469
14,127
4,672
1,838
27,106
51,175
276
8,173
13,702
6,831
974
29,680
51,175
276
8,173
13,702
6,831
974
29,680
51,175
276
$4,419,132 $4,153,873
$4,205,961
(1)
The amount shown on the consolidated balance sheet does not match the amortized cost or cost or fair value for “All other
corporate bonds” due to our held-to-maturity security, which is carried at cost on the consolidated balance sheet and all
other fixed maturities are carried at fair value.
See the report of independent registered public accounting firm.
Primerica 2023 Annual Report
199
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule II
Condensed Financial Information of Registrant
PRIMERICA, INC. (Parent Only)
Condensed Balance Sheets
Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost:
$154,983 in 2023 and $112,052 in 2022)
Short-term investments available-for-sale, at fair value (amortized cost:
$39,270 in 2022)
Equity securities, at fair value (historical cost: $2,517 in 2022)
Other investments
Total investments
Cash and cash equivalents
Due from affiliates*
Other receivables
Income tax receivable
Deferred income taxes
Investment in subsidiaries*
Other assets
Total assets
Liabilities and Stockholders’ Equity
Liabilities:
Notes payable
Deferred income taxes
Interest payable
Other liabilities
Commitments and contingent liabilities (see Note G)
Total liabilities
Temporary Stockholders’ Equity
Redeemable noncontrolling interests in consolidated entities
Permanent Stockholders’ Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 in 2023 and 2022;
issued and outstanding 34,996 shares in 2023 and 36,824 shares in 2022)
Paid-in capital
Retained earnings
Accumulated other comprehensive income, net of income tax
Total permanent stockholders’ equity
December 31,
2023
2022
(In thousands)
$ 152,000 $ 107,538
—
—
725
152,725
229,143
4,590
1,345
8,334
5,168
2,268,581
945
39,285
2,572
—
149,395
157,462
9,825
785
493
6,902
2,304,064
946
$2,670,831 $2,629,872
$ 593,709 $ 592,905
2,434
1,913
1,366
4,694
1,913
4,548
604,864
598,618
—
—
350
—
2,276,946
(211,329)
368
—
2,153,617
(122,731)
2,065,967
2,031,254
Total liabilities and temporary and permanent stockholders’ equity
$2,670,831 $2,629,872
*
Eliminated in consolidation.
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption
of accounting guidance effective January 1, 2023.
See the accompanying notes to condensed financial statements.
See the report of independent registered public accounting firm.
200
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule II
Condensed Financial Information of Registrant
PRIMERICA, INC. (Parent Only)
Condensed Statements of Income
Revenues:
Dividends from subsidiaries*
Net investment income
Realized investment gains (losses)
Other investment gains (losses)
Investment gains (losses), including credit losses
Total revenues
Expenses:
Interest expense, net
Loss on extinguishment of debt
Other operating expenses
Total expenses
Income before income taxes
Income taxes
Income before equity in undistributed earnings of
subsidiaries
Equity in undistributed earnings of subsidiaries*
Net income
*
Eliminated in consolidation.
Year ended December 31,
2023
2022
2021
(In thousands)
$555,578 $450,929 $387,355
12,730
3,916
1,503
84
235
319
872
(519)
353
115
259
374
568,627
455,198
389,232
18,041
11,066
15,675
—
—
8,927
14,961
13,358
26,421
33,002
24,424
51,023
535,625
430,774
338,209
(2,840)
(1,504)
(5,786)
538,465
432,278
343,995
38,136
39,790
133,367
$576,601 $472,068 $477,362
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption
of accounting guidance effective January 1, 2023.
See the accompanying notes to condensed financial statements.
See the report of independent registered public accounting firm.
Primerica 2023 Annual Report
201
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule II
Condensed Financial Information of Registrant
PRIMERICA, INC. (Parent Only)
Condensed Statements of Comprehensive Income
Net income
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses):
Equity in unrealized holding gains (losses) on investment
Year ended December 31,
2023
2022
2021
(In thousands)
$ 576,601 $ 472,068 $477,362
securities held by subsidiaries
69,663
(299,847)
(63,089)
Change in unrealized holding gains (losses) on investment
securities
1,600
(5,201)
(1,483)
Reclassification adjustment for realized investment (gains)
losses included in net income
(84)
(872)
(115)
Equity in effect of change in discount rate assumptions on the
liability for future policy benefit of subsidiaries
(169,502)
1,368,596
272,442
Foreign currency translation adjustments:
Equity in unrealized foreign currency translation gains (losses)
of subsidiaries
10,044
(20,826)
6,969
Total other comprehensive income (loss) before income taxes
(88,279)
1,041,850
214,724
Income tax expense (benefit) related to items of other
comprehensive income (loss)
319
(1,275)
(336)
Other comprehensive income (loss), net of income taxes
(88,598)
1,043,125
215,060
Total comprehensive income
$ 488,003 $1,515,193 $692,422
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption
of accounting guidance effective January 1, 2023.
See the accompanying notes to condensed financial statements.
See the report of independent registered public accounting firm.
202
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule II
Condensed Financial Information of Registrant
PRIMERICA, INC. (Parent Only)
Condensed Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiaries* (1)
Deferred tax provision
Change in income taxes
Investment (gains) losses
Accretion and amortization of investments
Share-based compensation
Change in due to/from affiliates* (2)
Trading securities sold, matured, or called (acquired), net
Change in other operating assets and liabilities, net
Loss on extinguishment of debt
Year ended December 31,
2023
2022
2021
(In thousands)
$ 576,601
$ 472,068
$ 477,362
(108,798)
5,496
5,840
(319)
(2,201)
1,195
5,235
—
1,334
—
(69,096)
2,800
3,837
(353)
205
1,592
4,458
—
1,967
—
(104,288)
(3,751)
(1,696)
(374)
1,448
1,559
(34,886)
—
(9,519)
8,927
Net cash provided by (used in) operating activities
484,383
417,478
334,782
Cash flows from investing activities:
Available-for-sale investments sold, matured or called:
Fixed maturity securities — sold
Fixed-maturity securities — matured or called
Short-term investments — sold
Short-term investments — matured or called
Equity securities — sold
Available-for-sale investments acquired:
Fixed-maturity securities(1)
Short-term investments
Equity securities acquired
Purchase of business, net of cash acquired
Other investing activities
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Dividends paid
Common stock repurchased
Proceeds from revolving credit facility
Repayment of revolving credit facility
Proceeds from issuance of debt
Debt issuance costs
Repayment of debt
Tax withholdings on share-based compensation
Net cash provided by (used in) financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplement disclosures:
Interest paid
—
93,092
—
60,008
3,051
(53,539)
(19,496)
(236)
—
(16,226)
409
94,960
—
85,302
16
(57,762)
(39,090)
(7)
3,867
—
—
91,710
50,065
40,000
718
(84,564)
(176,125)
(1,155)
(494,459)
—
66,654
87,695
(573,810)
(93,715)
(375,062)
(83,783)
(356,306)
—
—
—
—
—
(10,579)
—
—
—
—
—
(5,135)
(74,636)
(18,751)
125,000
(125,000)
597,300
(5,332)
(383,691)
(6,652)
(479,356)
(445,224)
108,238
71,681
157,462
59,949
97,513
(130,790)
228,303
$ 229,143
$ 157,462
$ 97,513
$ 17,053
$ 17,053
$ 20,150
Eliminated in consolidation.
*
(1) Does not include $81.4 million and $41.3 million of fixed-maturity securities transferred from subsidiaries in the form of
noncash dividend for the years ended December 31, 2023 and 2022, respectively. There were no fixed-maturity securities
transferred from subsidiaries in the form of noncash dividends for the year ended December 31, 2021.
(2) Does not include $170.5 million reduction in due from affiliates for the conversion of a subsidiary note to an equity
contribution in that subsidiary during the year ended December 31, 2022.
Prior year amounts related to long-duration insurance contracts have been adjusted for the adoption
of accounting guidance effective January 1, 2023.
See the accompanying notes to condensed financial statements.
See the report of independent registered public accounting firm.
Primerica 2023 Annual Report
203
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule II
Condensed Financial Information of Registrant
PRIMERICA, INC. (Parent Only)
Notes to Condensed Financial Statements
(A) Description of Business
(B) Basis of Presentation
Primerica, Inc. (“we”, “us” or the “Company”) is a
holding company with our primary asset being
the capital stock of our wholly owned operating
subsidiaries, and our primary liability being
$600.0 million in principal amount of senior
unsecured notes issued in a public offering in
2021 (the “Senior Notes”). Our subsidiaries assist
clients in meeting their needs for term life
insurance, which our insurance subsidiaries
underwrite, and mutual funds, annuities,
managed investments and other financial
products, which our subsidiaries distribute
primarily on behalf of third parties. We acquired
80% of e-TeleQuote Insurance, Inc. and
subsidiaries (collectively, “e-TeleQuote”) through
our subsidiary, Primerica Health, Inc. on July 1,
2021 and the remaining 20% of e-TeleQuote on
July 1, 2022. e-TeleQuote markets Medicare-
related insurance products underwritten by
third-party health insurance carriers to eligible
Medicare beneficiaries through its licensed
health insurance agents. Our primary
subsidiaries include the following entities:
Primerica Financial Services, LLC, a general
agency and marketing company; Primerica Life
Insurance Company (“Primerica Life”), our
principal life insurance company; PFS
Investments Inc., an investment products
company and broker-dealer; and Primerica
Financial Services (Canada) Ltd., a holding
company for our Canadian operations, which
includes Primerica Life Insurance Company of
Canada and PFSL Investments Canada Ltd.
Primerica Life, domiciled in Tennessee, owns
National Benefit Life Insurance Company, a New
York insurance company. In addition, we
established Vidalia Re, Inc. (“Vidalia Re”) as a
special purpose financial captive insurance
company domiciled in Vermont and a wholly
owned subsidiary of Primerica Life.
204
These condensed financial statements reflect the
results of operations, financial position and cash
flows for the Company. We prepare our financial
statements in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”).
These principles are established primarily by the
Financial Accounting Standards Board. The
preparation of financial statements in conformity
with U.S. GAAP requires us to make estimates
and assumptions that affect financial statement
balances, revenues and expenses and cash flows,
as well as the disclosure of contingent assets
and liabilities. Management considers available
facts and knowledge of existing circumstances
when establishing the estimates included in our
financial statements.
The most significant item that involves a greater
degree of accounting estimates subject to
change in the future is the determination of our
investments in subsidiaries. Estimates for this
and other items are subject to change and are
reassessed by management in accordance with
U.S. GAAP. Actual results could differ from those
estimates.
The accompanying condensed financial
statements should be read in conjunction with
the consolidated financial statements and notes
thereto of Primerica, Inc. and subsidiaries
included in Part II, Item 8 of this report.
(C) Summary of Significant Accounting
Policies
In August 2018, the Financial Accounting
Standards Board issued Accounting Standards
Update No. 2018-12, Financial Services—
Insurance (Topic 944) — Targeted Improvements
to the Accounting for Long-Duration Contracts
(“ASU 2018-12”). The amendments in this update
changed accounting guidance for insurance
companies that issue long-duration contracts,
such as term life insurance and segregated funds
products. The Company adopted ASU 2018-12
on January 1, 2023 through the modified
retrospective method, recording adjustments
effective as of January 1, 2021. Although the
Company itself does not have any insurance
contracts in scope of ASU 2018-12, the standard
affects its subsidiaries such that there are
resulting adjustments to the Company’s equity
in undistributed earnings of subsidiaries for prior
periods on the condensed statements of income,
equity in effect of change in discount rate
assumptions on the liability for future policy
benefits of subsidiaries on the condensed
statements of comprehensive income, and
related changes to investment in subsidiaries,
retained earnings, and accumulated other
comprehensive income (“AOCI”) on the
condensed balance sheets. The impact of LDTI
on the Company’s balance sheet as of
December 31, 2022 as previously reported
before the adoption of LDTI (“Previously
Reported”) was an increase to investment in
subsidiaries of $309.8 million, an increase in
retained earnings of $180.2 million, and an
increase in AOCI of $129.5 million. The impact of
LDTI on the Company’s Previously Reported
statements of income for the years ended
December 31, 2022 and 2021 was an increase in
equity in undistributed earnings of subsidiaries
of $99.1 million and $104.0 million, respectively.
(D) Notes Payable
Notes Payable. As of December 31, 2023, we
had $600.0 million in principal amount of
publicly-traded, senior unsecured notes (the
“Senior Notes”). The Senior Notes were issued in
November 2021 at a price of 99.55% of the
principal amount with an annual interest rate of
2.80%, payable semi-annually in arrears on
May 19 and November 19, and are scheduled to
mature on November 19, 2031. As of
December 31, 2023, we were in compliance with
the covenants of the Senior Notes. No events of
default occurred on the Senior Notes during the
year ended December 31, 2023.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
As unsecured senior obligations, the Senior
Notes rank equally in right of payment with all
existing and future unsubordinated
indebtedness and senior to all existing and
future subordinated indebtedness of the
Company. The Senior Notes are structurally
subordinated in right of payment to all existing
and future liabilities of our subsidiaries. In
addition, the Senior Notes contain covenants
that restrict our ability to, among other things,
create or incur any indebtedness that is secured
by a lien on the capital stock of certain of our
subsidiaries, and merge, consolidate or sell all or
substantially all of our properties and assets.
(E) Revolving Credit Facility
On June 22, 2021, we amended and restated our
unsecured $200.0 million revolving credit facility
(“Revolving Credit Facility”) with a syndicate of
commercial banks. The Revolving Credit Facility
has a scheduled termination date of June 22,
2026. Amounts outstanding under the Revolving
Credit Facility are borrowed, at our discretion, on
the basis of either a Secured Overnight
Financing Rate (“SOFR”) rate loan, or a base rate
loan. SOFR rate loans bear interest at a periodic
rate equal to one-, three-, or six-month Adjusted
Term SOFR, plus an applicable margin. Base rate
loans bear interest at the highest of (a) the Prime
Rate, (b) the Federal Funds Rate plus 0.50% and
(c) one-month Adjusted Term SOFR plus 1.00%,
plus an applicable margin. The Revolving Credit
Facility contains language providing for a
benchmark replacement in the event that SOFR
is no longer available. The Revolving Credit
Facility also permits the issuance of letters of
credit. The applicable margins are based on our
debt rating with such margins for SOFR rate
loans and letters of credit ranging from 1.00% to
1.625% per annum and for base rate loans
ranging from 0.00% to 0.625% per annum.
Under the Revolving Credit Facility, we incur a
commitment fee that is payable quarterly in
arrears and is determined by our debt rating.
This commitment fee ranges from 0.10% to
0.225% per annum of the aggregate amount of
the $200.0 million commitment of the lenders
Primerica 2023 Annual Report
205
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
under the Revolving Credit Facility that remains
undrawn. During the year ended December 31,
2023, no amounts were drawn under the
Revolving Credit Facility. As of December 31,
2023, we were in compliance with the covenants
of the Revolving Credit Facility. Furthermore, no
events of default occurred under the Revolving
Credit Facility during the year ended
December 31, 2023.
(F) Dividends
For the years ended December 31, 2023, 2022,
and 2021, the Company received dividends from
our non-life insurance subsidiaries of
$203.2 million, $173.0 million, and
$217.1 million, respectively. For the years ended
December 31, 2023, 2022, and 2021, the
Company received dividends from our life
insurance subsidiaries of $352.3 million,
$277.9 million, and $170.2 million, respectively.
(G) Commitments and Contingent
Liabilities
Vidalia Re has entered into a coinsurance
agreement with Primerica Life whereby Primerica
Life has ceded certain level-premium term life
insurance policies to Vidalia Re. In conjunction
with the coinsurance agreement, we have a
capital maintenance agreement with Vidalia Re.
The capital maintenance agreement may require
us at times to make capital contributions to
Vidalia Re to ensure that its regulatory account,
as defined in the coinsurance agreement with
Primerica Life, will not be less than $20.0 million
for the financial captive insurance company. The
regulatory account will only be used to satisfy
obligations under its coinsurance agreement
after all other available assets have been used,
including its held-to-maturity security ultimately
guaranteed by Hannover Life Reassurance
Company of America. As of December 31, 2023,
Primerica Life also had a coinsurance agreement
with Peach Re, Inc. (“Peach Re”), a special
purpose financial captive insurance company
domiciled in Vermont and a wholly owned
subsidiary of Primerica Life, which included a
capital maintenance agreement that could have
required us to make capital contributions to
Peach Re to ensure that a regulatory account
held by Peach Re would not be less than $20.0
million. The coinsurance agreement with Peach
Re was terminated effective January 2, 2024
when Primerica Life recaptured the block of
business reinsured under the coinsurance
agreement and our guarantee to support Peach
Re’s regulatory account will not be utilized.
The Company is involved from time-to-time in
legal disputes, regulatory inquiries and
arbitration proceedings in the normal course of
business. These disputes are subject to
uncertainties, including large and/or
indeterminate amounts sought in certain of
these matters and the inherent unpredictability
of litigation. As such, the Company is unable to
estimate the possible loss or range of loss that
may result from these matters.
206
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule III
Supplementary Insurance Information
PRIMERICA, INC.
Deferred policy
acquisition costs
Future
policy
benefits
Unearned
and
advance
premiums
(In thousands)
Policy claims
and other
benefits payable
Separate
account
liabilities
$3,366,280
$6,531,082
$14,533
$503,788
$
—
63,029
—
—
—
—
—
—
—
17,925
210,943
343
10,015
2,395,819
—
23
$3,447,234
$6,742,025
$14,876
$513,803
$2,395,842
$3,106,147
$6,089,861
$14,992
$525,877
$
—
62,341
—
—
—
—
—
—
—
20,014
208,045
430
12,373
2,305,688
—
29
$3,188,502
$6,297,906
$15,422
$538,250
$2,305,717
December 31, 2023
Term Life Insurance
Investment and Savings Products
Senior Health
Corporate and Other Distributed
Products
Total
December 31, 2022
Term Life Insurance
Investment and Savings Products
Senior Health
Corporate and Other Distributed
Products
Total
See the report of independent registered public accounting firm.
Primerica 2023 Annual Report
207
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Premium
revenue
Net
investment
income
Benefits and
claims
Amortization of
deferred policy
acquisition
costs
Other
operating
expenses
Premiums
written
(In thousands)
$1,644,756 $ — $622,084
$268,803
$ 249,991
$ —
—
—
—
—
—
—
5,479
616,960 —
—
87,242 —
Year ended December 31, 2023
Term Life Insurance
Investment and Savings Products
Senior Health
Corporate and Other Distributed
Products
Total
15,558 135,837
20,895
1,534
191,023
557
$1,660,314 $135,837 $642,979
$275,816
$1,145,216
$557
Year ended December 31, 2022
Term Life Insurance
Investment and Savings Products
Senior Health
Corporate and Other Distributed
$1,585,646 $ — $619,997
$254,875
$ 246,685
$ —
—
—
—
—
—
—
5,581
611,961 —
—
161,355 —
Products
Total
14,582
93,065
12,406
1,173
186,117
602
$1,600,228 $ 93,065 $632,403
$261,629
$1,206,118
$602
Year ended December 31, 2021
Term Life Insurance
Investment and Savings Products
Senior Health
Corporate and Other Distributed
$1,490,230 $ — $589,958
$231,380
$ 216,630
$ —
—
—
—
—
—
—
5,511
658,594 —
—
145,490 —
Products
Total
15,654
80,588
12,049
1,379
205,212
670
$1,505,884 $ 80,588 $602,007
$238,270
$1,225,926
$670
See the report of independent registered public accounting firm.
208
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Schedule IV
Reinsurance
PRIMERICA, INC.
Year ended December 31, 2023
Gross amount
Ceded to other
companies
Assumed
from
other
companies
Net amount
Percentage
of amount
assumed
to net
(Dollars in thousands)
Life insurance in force
$946,756,416 $810,145,801
$—
$136,610,615
— %
Premiums:
Life insurance
$
3,311,541 $
1,651,811
Accident and health insurance
584
—
Total premiums
$
3,312,125 $
1,651,811
$—
—
$—
$
1,659,730
584
$
1,660,314
— %
— %
— %
Year ended December 31, 2022
Gross amount
Ceded to other
companies
Assumed
from
other
companies
Net amount
Percentage
of amount
assumed
to net
(Dollars in thousands)
Life insurance in force
$919,081,738 $787,907,229
$—
$131,174,509
— %
Premiums:
Life insurance
$
3,229,229 $
1,629,634
Accident and health insurance
891
258
Total premiums
$
3,230,120 $
1,629,892
$—
—
$—
$
1,599,595
633
$
1,600,228
— %
— %
— %
Year ended December 31, 2021
Gross amount
Ceded to other
companies
Assumed
from
other
companies
Net amount
Percentage
of amount
assumed
to net
(Dollars in thousands)
Life insurance in force
$905,819,671 $777,826,233
$—
$127,993,438
— %
Premiums:
Life insurance
$
3,121,167 $
1,615,966
Accident and health insurance
981
298
Total premiums
$
3,122,148 $
1,616,264
$—
—
$—
$
1,505,201
683
$
1,505,884
— %
— %
— %
See the report of independent registered public accounting firm.
ITEM 16. FORM 10-K SUMMARY.
Not applicable.
Primerica 2023 Annual Report
209
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Primerica, Inc.
By:
/s/ Tracy X. Tan
Tracy X. Tan
Executive Vice President and
Chief Financial Officer
February 28, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ D. Richard Williams
D. Richard Williams
/s/ Glenn J. Williams
Glenn J. Williams
/s/ Tracy X. Tan
Tracy X. Tan
/s/ Nicholas A. Jendusa
Nicholas A. Jendusa
/s/ John A. Addison, Jr.
John A. Addison, Jr.
/s/ Joel M. Babbit
Joel M. Babbit
/s/ Amber L. Cottle
Amber L. Cottle
/s/ Gary L. Crittenden
Gary L. Crittenden
/s/ Cynthia N. Day
Cynthia N. Day
/s/ Sanjeev Dheer
Sanjeev Dheer
/s/ Beatriz R. Perez
Beatriz R. Perez
/s/ Darryl L. Wilson
Darryl L. Wilson
/s/ Barbara A. Yastine
Barbara A. Yastine
210
Chairman of the Board
February 28, 2024
Chief Executive Officer (Principal
Executive Officer) and Director
February 28, 2024
Executive Vice President and
Chief Financial Officer (Principal
Financial Officer)
Executive Vice President and
Controller (Principal
Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
Stockholder Information
Annual Meeting
The annual meeting of
stockholders of Primerica, Inc.
will be held on Wednesday,
May 8, 2024 at 8:30 a.m.
in our Corporate Office.
Corporate Office
Primerica, Inc.
1 Primerica Parkway
Duluth, GA 30099
(770) 381-1000
www.primerica.com
Investor Contact
Nicole Russell
(470) 564-6663
nicole.russell@primerica.com
Media Contact
Susan Chana
(404) 229-8302
susan.chana@primerica.com
Form 10-K
Copies of the Company’s
Annual Report on Form 10-K
for the fiscal year ended
December 31, 2023, including
financial statements, are available
on the Company’s Investor
Relations website at
http://investors.primerica.com
or by written request to Investor
Relations.
Common Stock
Trading Symbol: PRI
New York Stock Exchange
Transfer Agent and Registrar
Computershare Limited
c/o Shareholder Services
150 Royall Street
Canton, MA 02021
Written Requests by First Class,
Registered, Certified Mail:
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c/o Shareholder Services
P.O. Box 43078
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Written Requests by Overnight
Delivery, Courier Mail:
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c/o Shareholder Services
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Toll Free Number:
1-866-517-2488
(US, Canada, Puerto Rico)
Phone Number:
1-781-575-4305
(non-US)
Stockholder Website:
www.computershare.com/
investor
Board of Directors
John A. Addison, Jr.
CEO, Addison Leadership Group
Joel M. Babbit
Co-Founder and CEO,
Narrative Content Group, LLC
Amber L. Cottle
Vice President of Global Public
Policy, Government Affairs &
Social Impact, Dropbox, Inc.
Gary L. Crittenden
Private Investor
Cynthia N. Day
President and CEO,
Citizens Bancshares Corporation
and Citizens Trust Bank
Sanjeev Dheer
Founder and CEO, CENTRL Inc.
Beatriz R. Perez
EVP and Chief Communications,
Sustainability and Strategic
Partnerships Officer,
The Coca-Cola Company
D. Richard Williams
Chairman of the Board
Glenn J. Williams
CEO, Primerica, Inc.
Darryl L. Wilson
Founder, Chairman and
President, The Wilson Collective
Barbara A. Yastine
Former Chairman, President and
CEO, Ally Bank
© 2024 Primerica / 62599 / 3.24 / 3426779