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Schedule II - Condensed Financial Information Of Registrant

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of Registrant

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Balance Sheets


	December 31,
	2023			2022
	(In thousands)
Assets
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $154,983 in 2023 and $112,052 in 2022)	$	152,000		$	107,538
Short-term investments available-for-sale, at fair value (amortized cost: $39,270 in 2022)		-			39,285
Equity securities, at fair value (historical cost: $2,517 in 2022)		-			2,572
Other investments		725			-
Total investments		152,725			149,395
Cash and cash equivalents		229,143			157,462
Due from affiliates*		4,590			9,825
Other receivables		1,345			785
Income tax receivable		8,334			493
Deferred income taxes		5,168			6,902
Investment in subsidiaries*		2,268,581			2,304,064
Other assets		945			946
Total assets	$	2,670,831		$	2,629,872

Liabilities and Stockholders’ Equity
Liabilities:
Notes payable	$	593,709		$	592,905
Deferred income taxes		4,694			2,434
Interest payable		1,913			1,913
Other liabilities		4,548			1,366
Commitments and contingent liabilities (see Note G)
Total liabilities		604,864			598,618

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)		350			368
Paid-in capital		-			-
Retained earnings		2,276,946			2,153,617
Accumulated other comprehensive income, net of income tax		(211,329	)		(122,731	)
Total permanent stockholders’ equity		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.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Income


	Year ended December 31,
	2023			2022			2021
	(In thousands)
Revenues:
Dividends from subsidiaries*	$	555,578		$	450,929		$	387,355
Net investment income		12,730			3,916			1,503
Realized investment gains (losses)		84			872			115
Other investment gains (losses)		235			(519	)		259
Investment gains (losses), including credit losses		319			353			374
Total revenues		568,627			455,198			389,232
Expenses:
Interest expense, net		18,041			11,066			15,675
Loss on extinguishment of debt		-			-			8,927
Other operating expenses		14,961			13,358			26,421
Total expenses		33,002			24,424			51,023
Income before income taxes		535,625			430,774			338,209
Income taxes		(2,840	)		(1,504	)		(5,786	)
Income before equity in undistributed earnings of subsidiaries		538,465			432,278			343,995
Equity in undistributed earnings of subsidiaries*		38,136			39,790			133,367
Net income	$	576,601		$	472,068		$	477,362

* 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.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Comprehensive Income


	Year ended December 31,
	2023			2022			2021
	(In thousands)
Net income	$	576,601		$	472,068		$	477,362
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses):
Equity in unrealized holding gains (losses) on investment 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.

Schedule II

Condensed Financial Information of Registrant

PRIMERICA, INC. (Parent Only)

Condensed Statements of Cash Flows


	Year ended December 31,
	2023			2022			2021
	(In thousands)
Cash flows from operating activities:
Net income	$	576,601		$	472,068		$	477,362
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiaries* (1)		(108,798	)		(69,096	)		(104,288	)
Deferred tax provision		5,496			2,800			(3,751	)
Change in income taxes		5,840			3,837			(1,696	)
Investment (gains) losses		(319	)		(353	)		(374	)
Accretion and amortization of investments		(2,201	)		205			1,448
Share-based compensation		1,195			1,592			1,559
Change in due to/from affiliates* (2)		5,235			4,458			(34,886	)
Trading securities sold, matured, or called (acquired), net		-			-			-
Change in other operating assets and liabilities, net		1,334			1,967			(9,519	)
Loss on extinguishment of debt		-			-			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		-			409			-
Fixed-maturity securities — matured or called		93,092			94,960			91,710
Short-term investments —sold		-			-			50,065
Short-term investments — matured or called		60,008			85,302			40,000
Equity securities — sold		3,051			16			718
Available-for-sale investments acquired:
Fixed-maturity securities(1)		(53,539	)		(57,762	)		(84,564	)
Short-term investments		(19,496	)		(39,090	)		(176,125	)
Equity securities acquired		(236	)		(7	)		(1,155	)
Purchase of business, net of cash acquired		-			3,867			(494,459	)
Other investing activities		(16,226	)		-			-
Net cash provided by (used in) investing activities		66,654			87,695			(573,810	)

Cash flows from financing activities:
Dividends paid		(93,715	)		(83,783	)		(74,636	)
Common stock repurchased		(375,062	)		(356,306	)		(18,751	)
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		(10,579	)		(5,135	)		(6,652	)
Net cash provided by (used in) financing activities		(479,356	)		(445,224	)		108,238
Change in cash and cash equivalents		71,681			59,949			(130,790	)
Cash and cash equivalents, beginning of period		157,462			97,513			228,303
Cash and cash equivalents, end of period	$	229,143		$	157,462		$	97,513

Supplement disclosures:
Interest paid	$	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.

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 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.

(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.

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.

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 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.