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Schedule II - Condensed Financial Information Of Registrant

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Registrant

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Balance Sheets


	December 31,
	2022			2021
	(In thousands)
Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $112,052 in 2022 and $107,969 in 2021)	$	107,538		$	109,547
Short-term investments available-for-sale, at fair value (amortized cost: $39,270 in 2022 and $85,246 in 2021)		39,285			85,243
Equity securities, at fair value (historical cost: $2,517 in 2022 and $2,486 in 2021)		2,572			3,059
Total investments		149,395			197,849
Cash and cash equivalents		157,462			97,513
Due from affiliates*		9,825			184,733
Other receivables		785			4,348
Income tax receivable		493			4,330
Deferred income taxes		6,902			8,475
Investment in subsidiaries*		1,994,309			2,190,437
Other assets		946			1,005
Total assets	$	2,320,117		$	2,688,690

Liabilities and Stockholders’ Equity
Liabilities:
Notes payable		592,905			592,102
Deferred income taxes		2,434			2,482
Interest payable		1,913			1,913
Other liabilities		1,366			2,410
Commitments and contingent liabilities (see Note F)
Total liabilities		598,618			598,907

Temporary Stockholders' Equity
Redeemable noncontrolling interests in consolidated entities		-			7,271
Permanent Stockholders' Equity
Equity attributable to Primerica, Inc.:
Common stock ($0.01 par value; authorized 500,000 in 2022 and 2021; issued and outstanding 36,824 shares in 2022 and 39,368 shares in 2021)		368			394
Paid-in capital		-			5,224
Retained earnings		1,973,403			2,004,506
Accumulated other comprehensive income, net of income tax		(252,272	)		72,388
Total permanent stockholders’ equity		1,721,499			2,082,512
Total liabilities and temporary and permanent stockholders’ equity	$	2,320,117		$	2,688,690

* Eliminated in consolidation.

See the accompanying notes to condensed financial statements.

See the report of independent registered public accounting firm.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Income


	Year ended December 31,
	2022			2021			2020
	(In thousands)
Revenues:
Dividends from subsidiaries*	$	450,929		$	387,355		$	378,063
Net investment income		3,916			1,503			3,670
Realized investment gains (losses)		872			115			112
Other investment gains (losses)		(519	)		259			63
Investment gains (losses), including credit losses		353			374			175
Total revenues		455,198			389,232			381,908
Expenses:
Interest expense, net		11,066			15,675			18,673
Loss on extinguishment of debt		-			8,927			-
Other operating expenses		13,358			26,421			13,903
Total expenses		24,424			51,023			32,576
Income before income taxes		430,774			338,209			349,332
Income taxes		(1,504	)		(5,786	)		(3,540	)
Income before equity in undistributed earnings of subsidiaries		432,278			343,995			352,872
Equity in undistributed earnings of subsidiaries*		(59,266	)		29,362			33,292
Net income	$	373,012		$	373,357		$	386,164

* Eliminated in consolidation.

See the accompanying notes to condensed financial statements.

See the report of independent registered public accounting firm.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Comprehensive Income


	Year ended December 31,
	2022			2021			2020
	(In thousands)
Net income	$	373,012		$	373,357		$	386,164
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses):
Equity in unrealized holding gains (losses) on investment securities held by subsidiaries		(299,847	)		(63,089	)		62,618
Change in unrealized holding gains (losses) on investment securities		(5,201	)		(1,483	)		1,372
Reclassification adjustment for realized investment (gains) losses included in net income		(872	)		(115	)		(175	)
Foreign currency translation adjustments:
Equity in unrealized foreign currency translation gains (losses) of subsidiaries		(20,015	)		7,033			7,343
Total other comprehensive income (loss) before income taxes		(325,935	)		(57,654	)		71,158
Income tax expense (benefit) related to items of other comprehensive income (loss)		(1,275	)		(336	)		250
Other comprehensive income (loss), net of income taxes		(324,660	)		(57,318	)		70,908
Total comprehensive income	$	48,352		$	316,039		$	457,072

See the accompanying notes to condensed financial statements.

See the report of independent registered public accounting firm.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Cash Flows


	Year ended December 31,
	2022			2021			2020
	(In thousands)
Cash flows from operating activities:
Net income	$	373,012		$	373,357		$	386,164
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiaries* (1)		29,960			(283	)		(42,030	)
Deferred tax provision		2,800			(3,751	)		2,553
Change in income taxes		3,837			(1,696	)		(1,607	)
Investment (gains) losses		(353	)		(374	)		(175	)
Accretion and amortization of investments		205			1,448			1,777
Share-based compensation		1,592			1,559			1,447
Change in due to/from affiliates* (2)		4,458			(34,886	)		(2,580	)
Trading securities sold, matured, or called (acquired), net		-			-			(6	)
Change in other operating assets and liabilities, net		1,967			(9,519	)		3,030
Loss on extinguishment of debt		-			8,927			-
Net cash provided by (used in) operating activities		417,478			334,782			348,573

Cash flows from investing activities:
Available-for-sale investments sold, matured or called:
Fixed maturity securities — sold		409			-			26,256
Fixed-maturity securities — matured or called		94,960			91,710			131,894
Short-term investments —sold		-			50,065			-
Short-term investments — matured or called		85,302			40,000			-
Equity securities — sold		16			718			212
Available-for-sale investments acquired:
Fixed-maturity securities(1)		(57,762	)		(84,564	)		(36,190	)
Short-term investments		(39,090	)		(176,125	)		-
Equity securities acquired		(7	)		(1,155	)		(76	)
Purchase of business, net of cash acquired		3,867			(494,459	)		-
Net cash provided by (used in) investing activities		87,695			(573,810	)		122,096

Cash flows from financing activities:
Dividends paid		(83,783	)		(74,636	)		(64,346	)
Common stock repurchased		(356,306	)		(18,751	)		(231,431	)
Proceeds from revolving credit facility		-			125,000			-
Repayment of revolving credit facility		-			(125,000	)		-
Proceeds from issuance of debt		-			597,300			-
Debt issuance costs		-			(5,332	)		-
Repayment of debt		-			(383,691	)		-
Tax withholdings on share-based compensation		(5,135	)		(6,652	)		(5,739	)
Net cash provided by (used) in financing activities		(445,224	)		108,238			(301,516	)
Change in cash and cash equivalents		59,949			(130,790	)		169,153
Cash and cash equivalents, beginning of period		97,513			228,303			59,150
Cash and cash equivalents, end of period	$	157,462		$	97,513		$	228,303

Supplement disclosures:
Interest paid	$	17,053		$	20,150		$	18,118

* Eliminated in consolidation.

(1)

Does not include $41.3 million and $33.6 million of fixed-maturity securities transferred from subsidiaries in the form of noncash dividend for the years ended December 31, 2022 and 2020, 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.

See the accompanying notes to condensed financial statements.

See the report of independent registered public accounting firm.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Notes to Condensed Financial Statements

(A) Description of Business

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 participants 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 Peach Re, Inc. (“Peach Re”) and Vidalia Re, Inc. (“Vidalia Re”) as special purpose financial captive insurance companies domiciled in Vermont and wholly owned subsidiaries of Primerica Life.

(B) Basis of Presentation

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.

Notes Payable – Long term. As of December 31, 2022, 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 99.550% 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, 2022, 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, 2022.

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.

(D) 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 LIBOR rate loan, or a base rate loan. LIBOR rate loans bear interest at a periodic rate equal to one-, three-, six-, or 12-month LIBOR, 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 LIBOR plus 1.00%, plus an applicable margin. The Revolving Credit Facility contains language providing for a benchmark replacement in the event that LIBOR 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 LIBOR 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, 2022, no amounts were drawn under the Revolving Credit Facility. As of December 31, 2022, 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, 2022.

(E) Dividends

For the years ended December 31, 2022, 2021, and 2020, the Company received dividends from our non-life insurance subsidiaries of $173.0 million, $217.1 million, and $185.5 million, respectively. For the years ended December 31, 2022, 2021, and 2020, the Company received dividends from our life insurance subsidiaries of $277.9 million, $170.2 million, and $192.5 million, respectively.

(F) Commitments and Contingent Liabilities

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. In conjunction with these coinsurance agreements, we have capital maintenance agreements with both Peach Re and Vidalia Re. Each capital maintenance agreement may require us at times to make capital contributions to Peach Re and Vidalia Re to ensure that their regulatory accounts, as defined in the coinsurance agreements with Primerica Life, will not be less than $20.0 million for each financial captive insurance company. For Peach Re, the regulatory account will only be used to satisfy obligations under its coinsurance agreement after all other available assets have been used, including a letter of credit issued by Deutsche Bank for the benefit of Primerica Life. For Vidalia Re, 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.

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.