0001564590-19-030787.txt : 20190808 0001564590-19-030787.hdr.sgml : 20190808 20190808161531 ACCESSION NUMBER: 0001564590-19-030787 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 102 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190808 DATE AS OF CHANGE: 20190808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Primerica, Inc. CENTRAL INDEX KEY: 0001475922 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 271204330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34680 FILM NUMBER: 191009701 BUSINESS ADDRESS: STREET 1: 1 PRIMERICA PARKWAY CITY: DULUTH STATE: GA ZIP: 30099 BUSINESS PHONE: 7703811000 MAIL ADDRESS: STREET 1: 1 PRIMERICA PARKWAY CITY: DULUTH STATE: GA ZIP: 30099 10-Q 1 pri-10q_20190630.htm 10-Q pri-10q_20190630.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-34680

 

Primerica, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

27-1204330

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1 Primerica Parkway

Duluth, Georgia

 

30099

(Address of principal executive offices)

 

(ZIP Code)

(770381-1000

(Registrant’s telephone number, including area code)

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

PRI

 

New York Stock Exchange

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.     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).     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

Accelerated filer

 

 

 

 

Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes     No

As of July 31, 2019, the registrant had 41,880,767 shares of common stock, $0.01 par value per share, outstanding.

 

 

 


 

 

TABLE OF CONTENTS

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

2

Item 1. Financial Statements (unaudited).

 

2

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

2

Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018

 

3

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018

 

4

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018

 

5

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

 

6

Notes to Condensed Consolidated Financial Statements

 

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

42

Item 4. Controls and Procedures.

 

42

 

PART II – OTHER INFORMATION

 

42

Item 1. Legal Proceedings.

 

42

Item 1A. Risk Factors.

 

43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

44

Item 6. Exhibits.

 

44

 

Signatures

 

46

 

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

 

 

(Unaudited)

 

 

 

 

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,144,445 in 2019

   and $2,078,822 in 2018)

 

$

2,216,260

 

 

$

2,069,635

 

Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,157,585 in 2019 and

   $945,331 in 2018)

 

 

1,087,790

 

 

 

970,390

 

Short-term investments available-for-sale, at fair value (amortized cost: $0 in 2019

   and $8,171 in 2018)

 

 

-

 

 

 

8,171

 

Equity securities, at fair value (historical cost: $32,212 in 2019 and $34,997 in 2018)

 

 

38,897

 

 

 

37,679

 

Trading securities, at fair value (cost: $23,295 in 2019 and $13,597 in 2018)

 

 

23,375

 

 

 

13,610

 

Policy loans

 

 

33,527

 

 

 

31,501

 

Total investments

 

 

3,399,849

 

 

 

3,130,986

 

Cash and cash equivalents

 

 

244,975

 

 

 

262,138

 

Accrued investment income

 

 

17,434

 

 

 

17,057

 

Reinsurance recoverables

 

 

4,185,850

 

 

 

4,141,569

 

Deferred policy acquisition costs, net

 

 

2,238,315

 

 

 

2,133,920

 

Agent balances, due premiums and other receivables

 

 

238,367

 

 

 

215,139

 

Intangible assets, net (accumulated amortization: $83,737 in 2019 and $82,035 in 2018)

 

 

46,409

 

 

 

48,111

 

Income taxes

 

 

65,777

 

 

 

59,336

 

Operating lease right-of-use assets

 

 

49,381

 

 

 

-

 

Other assets

 

 

394,058

 

 

 

391,291

 

Separate account assets

 

 

2,437,291

 

 

 

2,195,501

 

Total assets

 

$

13,317,706

 

 

$

12,595,048

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Future policy benefits

 

$

6,314,403

 

 

$

6,168,157

 

Unearned and advance premiums

 

 

17,111

 

 

 

15,587

 

Policy claims and other benefits payable

 

 

322,417

 

 

 

313,862

 

Other policyholders’ funds

 

 

377,737

 

 

 

370,644

 

Notes payable

 

 

373,848

 

 

 

373,661

 

Surplus note

 

 

1,087,117

 

 

 

969,685

 

Income taxes

 

 

206,301

 

 

 

187,104

 

Operating lease liabilities

 

 

55,662

 

 

 

-

 

Other liabilities

 

 

496,027

 

 

 

486,772

 

Payable under securities lending

 

 

43,867

 

 

 

52,562

 

Separate account liabilities

 

 

2,437,291

 

 

 

2,195,501

 

Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)

 

 

 

 

 

 

 

 

Total liabilities

 

 

11,731,781

 

 

 

11,133,535

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock ($0.01 par value; authorized 500,000 shares in 2019 and 2018; issued and

   outstanding 42,008 shares in 2019 and 42,694 shares in 2018)

 

 

420

 

 

 

427

 

Paid-in capital

 

 

-

 

 

 

-

 

Retained earnings

 

 

1,537,535

 

 

 

1,489,520

 

Accumulated other comprehensive income (loss), net of income tax:

 

 

 

 

 

 

 

 

Unrealized foreign currency translation gains (losses)

 

 

(8,258

)

 

 

(21,064

)

Net unrealized investment gains (losses) on available-for-sale securities:

 

 

 

 

 

 

 

 

Net unrealized investment gains (losses) not other-than-temporarily impaired

 

 

56,288

 

 

 

(7,253

)

Net unrealized investment losses other-than-temporarily impaired

 

 

(60

)

 

 

(117

)

Total stockholders’ equity

 

 

1,585,925

 

 

 

1,461,513

 

Total liabilities and stockholders’ equity

 

$

13,317,706

 

 

$

12,595,048

 

 

See accompanying notes to condensed consolidated financial statements.

 

2


 

 

 

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income – Unaudited

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands, except per-share amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums

 

$

687,262

 

 

$

667,191

 

 

$

1,364,548

 

 

$

1,323,278

 

Ceded premiums

 

 

(400,588

)

 

 

(403,449

)

 

 

(790,383

)

 

 

(797,698

)

Net premiums

 

 

286,674

 

 

 

263,742

 

 

 

574,165

 

 

 

525,580

 

Commissions and fees

 

 

178,468

 

 

 

167,940

 

 

 

345,783

 

 

 

334,767

 

Investment income net of investment expenses

 

 

36,637

 

 

 

29,082

 

 

 

71,424

 

 

 

56,472

 

Interest expense on surplus note

 

 

(11,769

)

 

 

(9,052

)

 

 

(22,444

)

 

 

(17,425

)

Net investment income

 

 

24,868

 

 

 

20,030

 

 

 

48,980

 

 

 

39,047

 

Realized investment gains (losses), including other-than-

   temporary impairment losses

 

 

1,067

 

 

 

1,313

 

 

 

3,914

 

 

 

(344

)

Other, net

 

 

13,825

 

 

 

14,790

 

 

 

27,048

 

 

 

28,687

 

Total revenues

 

 

504,902

 

 

 

467,815

 

 

 

999,890

 

 

 

927,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits and claims

 

 

115,068

 

 

 

105,069

 

 

 

237,352

 

 

 

221,960

 

Amortization of deferred policy acquisition costs

 

 

58,762

 

 

 

53,847

 

 

 

123,390

 

 

 

114,011

 

Sales commissions

 

 

90,099

 

 

 

82,954

 

 

 

173,898

 

 

 

165,473

 

Insurance expenses

 

 

44,570

 

 

 

43,451

 

 

 

87,972

 

 

 

84,560

 

Insurance commissions

 

 

5,829

 

 

 

6,417

 

 

 

11,447

 

 

 

12,294

 

Interest expense

 

 

7,201

 

 

 

7,229

 

 

 

14,381

 

 

 

14,401

 

Other operating expenses

 

 

55,913

 

 

 

55,083

 

 

 

121,622

 

 

 

118,311

 

Total benefits and expenses

 

 

377,442

 

 

 

354,050

 

 

 

770,062

 

 

 

731,010

 

Income before income taxes

 

 

127,460

 

 

 

113,765

 

 

 

229,828

 

 

 

196,727

 

   Income taxes

 

 

30,014

 

 

 

27,065

 

 

 

53,217

 

 

 

44,313

 

Net income

 

 

97,446

 

 

 

86,700

 

 

 

176,611

 

 

 

152,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

2.28

 

 

$

1.96

 

 

$

4.12

 

 

$

3.41

 

Diluted earnings per share

 

$

2.28

 

 

$

1.95

 

 

$

4.11

 

 

$

3.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in computing earnings

   per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,483

 

 

 

44,066

 

 

 

42,653

 

 

 

44,401

 

Diluted

 

 

42,619

 

 

 

44,207

 

 

 

42,780

 

 

 

44,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total impairment losses

 

$

(161

)

 

$

(54

)

 

$

(161

)

 

$

(103

)

Impairment losses recognized in other comprehensive income

   before income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net impairment losses recognized in earnings

 

 

(161

)

 

 

(54

)

 

 

(161

)

 

 

(103

)

Other net realized investment gains (losses)

 

 

251

 

 

 

828

 

 

 

197

 

 

 

1,165

 

Net gains (losses) recognized on equity securities

 

 

977

 

 

 

539

 

 

 

3,878

 

 

 

(1,406

)

Net realized investment gains (losses), including other-than-

  temporary impairment losses

 

$

1,067

 

 

$

1,313

 

 

$

3,914

 

 

$

(344

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 


 

3


 

 

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income – Unaudited

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Net income

 

$

97,446

 

 

$

86,700

 

 

$

176,611

 

 

$

152,414

 

Other comprehensive income (loss) before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized investment gains (losses) on available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains (losses) on investment securities

 

 

34,826

 

 

 

(15,578

)

 

 

81,027

 

 

 

(47,920

)

Reclassification adjustment for realized investment (gains)

   losses included in net income

 

 

(90

)

 

 

(347

)

 

 

(25

)

 

 

(662

)

Foreign currency translation adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized foreign currency translation gains (losses)

 

 

6,639

 

 

 

(5,902

)

 

 

12,806

 

 

 

(14,304

)

Total other comprehensive income (loss) before income taxes

 

 

41,375

 

 

 

(21,827

)

 

 

93,808

 

 

 

(62,886

)

Income tax expense (benefit) related to items of other

   comprehensive income (loss)

 

 

7,425

 

 

 

(3,379

)

 

 

17,404

 

 

 

(10,293

)

Other comprehensive income (loss), net of income taxes

 

 

33,950

 

 

 

(18,448

)

 

 

76,404

 

 

 

(52,593

)

Total comprehensive income

 

$

131,396

 

 

$

68,252

 

 

$

253,015

 

 

$

99,821

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

4


 

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity – Unaudited

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

424

 

 

$

440

 

 

$

427

 

 

$

443

 

Repurchases of common stock

 

 

(5

)

 

 

(9

)

 

 

(10

)

 

 

(14

)

Net issuance of common stock

 

 

1

 

 

 

1

 

 

 

3

 

 

 

3

 

Balance, end of period

 

 

420

 

 

 

432

 

 

 

420

 

 

 

432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

4,778

 

 

 

4,368

 

 

 

17,950

 

 

 

18,356

 

Net issuance of common stock

 

 

(1

)

 

 

(1

)

 

 

(3

)

 

 

(3

)

Repurchases of common stock

 

 

(4,777

)

 

 

(4,367

)

 

 

(17,947

)

 

 

(18,353

)

Balance, end of period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

 

1,506,943

 

 

 

1,416,564

 

 

 

1,489,520

 

 

 

1,375,090

 

Cumulative effect from the adoption of new accounting standards, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,610

 

Net income

 

 

97,446

 

 

 

86,700

 

 

 

176,611

 

 

 

152,414

 

Dividends

 

 

(14,517

)

 

 

(11,087

)

 

 

(29,145

)

 

 

(22,364

)

Repurchases of common stock

 

 

(52,337

)

 

 

(83,073

)

 

 

(99,451

)

 

 

(120,646