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, 2020

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)

(770) 381-1000

(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, 2020, the registrant had 39,519,530 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, 2020 and December 31, 2019	2
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019	3
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019	4
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	43
Item 4. Controls and Procedures.	43
PART II – OTHER INFORMATION	43
Item 1. Legal Proceedings.	43
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, 2020			December 31, 2019
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $2,237,474 in 2020    and $2,274,770 in 2019)	$	2,357,154		$	2,356,996
Fixed-maturity security held-to-maturity, at amortized cost (fair value: $1,495,594 in 2020 and    $1,299,102 in 2019)		1,278,580			1,184,370
Equity securities, at fair value (historical cost: $30,451 in 2020 and $32,671 in 2019)		33,689			40,684
Trading securities, at fair value (cost: $22,436 in 2020 and $43,257 in 2019)		22,399			43,233
Policy loans		31,471			32,927
Total investments		3,723,293			3,658,210
Cash and cash equivalents		360,351			256,876
Accrued investment income		16,940			17,361
Reinsurance recoverables		4,217,129			4,169,823
Deferred policy acquisition costs, net		2,434,462			2,325,750
Agent balances, due premiums and other receivables		270,421			227,100
Intangible assets		45,275			45,275
Income taxes		69,408			70,492
Operating lease right-of-use assets		48,487			47,265
Other assets		401,129			384,634
Separate account assets		2,377,654			2,485,745
Total assets	$	13,964,549		$	13,688,531
Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits	$	6,567,169		$	6,446,569
Unearned and advance premiums		18,619			15,470
Policy claims and other benefits payable		412,446			339,954
Other policyholders’ funds		424,018			388,663
Notes payable		374,226			374,037
Surplus note		1,277,970			1,183,728
Income taxes		265,369			209,221
Operating lease liabilities		54,680			53,487
Other liabilities		519,745			510,443
Payable under securities lending		29,973			28,723
Separate account liabilities		2,377,654			2,485,745
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		12,321,869			12,036,040
Stockholders’ equity:
Common stock ($0.01 par value; authorized 500,000 shares in 2020 and 2019; issued and    outstanding 39,667 shares in 2020 and 41,207 shares in 2019)		397			412
Paid-in capital		-			-
Retained earnings		1,569,689			1,593,281
Accumulated other comprehensive income, net of income tax:
Unrealized foreign currency translation gains (losses)		(21,132	)		(5,765	)
Net unrealized investment gains on available-for-sale securities:		93,726			64,563
Total stockholders’ equity		1,642,680			1,652,491
Total liabilities and stockholders’ equity	$	13,964,549		$	13,688,531

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,
	2020			2019			2020			2019
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	717,088		$	687,262		$	1,419,725		$	1,364,548
Ceded premiums		(402,549	)		(400,588	)		(789,374	)		(790,383	)
Net premiums		314,539			286,674			630,351			574,165
Commissions and fees		171,788			178,468			361,857			345,783
Investment income net of investment expenses		36,784			36,637			65,676			71,424
Interest expense on surplus note		(14,074	)		(11,769	)		(27,546	)		(22,444	)
Net investment income		22,710			24,868			38,130			48,980
Realized investment gains (losses)		1,742			1,067			(8,288	)		3,914
Other, net		15,036			13,825			28,701			27,048
Total revenues		525,815			504,902			1,050,751			999,890
Benefits and expenses:
Benefits and claims		139,646			115,068			274,459			237,352
Amortization of deferred policy acquisition costs		53,177			58,762			123,488			123,390
Sales commissions		85,492			90,099			182,099			173,898
Insurance expenses		43,753			44,570			92,463			87,972
Insurance commissions		6,333			5,829			13,177			11,447
Interest expense		7,200			7,201			14,392			14,381
Other operating expenses		56,152			55,913			122,066			121,622
Total benefits and expenses		391,753			377,442			822,144			770,062
Income before income taxes		134,062			127,460			228,607			229,828
Income taxes		32,552			30,014			54,628			53,217
Net income		101,510			97,446			173,979			176,611
Earnings per share:
Basic earnings per share	$	2.52		$	2.28		$	4.26		$	4.12
Diluted earnings per share	$	2.51		$	2.28		$	4.25		$	4.11
Weighted-average shares used in computing earnings    per share:
Basic		40,132			42,483			40,632			42,653
Diluted		40,246			42,619			40,743			42,780
Supplemental disclosures:
Total impairment losses	$	(545	)	$	(161	)	$	(4,246	)	$	(161	)
Impairment losses recognized in other comprehensive income before income taxes		-			-			-			-
Net impairment losses recognized in earnings		(545	)		(161	)		(4,246	)		(161	)
Other net realized investment gains		740			251			1,083			197
Net gains (losses) recognized on equity securities		1,547			977			(5,125	)		3,878
Net realized investment gains (losses)	$	1,742		$	1,067		$	(8,288	)	$	3,914

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,
	2020			2019			2020			2019
	(In thousands)
Net income	$	101,510		$	97,446		$	173,979		$	176,611
Other comprehensive income before income taxes:
Unrealized investment gains (losses) on available-for-sale securities:
Change in unrealized holding gains on available-for-sale securities		121,164			34,826			34,275			81,027
Reclassification adjustment for realized investment (gains) losses included in net income		(231	)		(90	)		3,179			(25	)
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses)		13,644			6,639			(15,367	)		12,806
Total other comprehensive income before income taxes		134,577			41,375			22,087			93,808
Income tax expense related to items of other comprehensive income		25,889			7,425			8,291			17,404
Other comprehensive income, net of income taxes		108,688			33,950			13,796			76,404
Total comprehensive income	$	210,198		$	131,396		$	187,775		$	253,015

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,
	2020			2019			2020			2019
	(In thousands)
Common stock:
Balance, beginning of period	$	405		$	424		$	412		$	427
Repurchases of common stock		(9	)		(5	)		(17	)		(10	)
Net issuance of common stock		1			1			2			3
Balance, end of period		397			420			397			420
Paid-in capital:
Balance, beginning of period		-			-			-			-
Share-based compensation		4,964			4,778			18,456			17,950
Net issuance of common stock		(1	)		(1	)		(2	)		(3	)
Repurchases of common stock		(4,963	)		(4,777	)		(18,454	)		(17,947	)
Balance, end of period		-			-			-			-
Retained earnings:
Balance, beginning of period		1,565,803			1,506,943			1,593,281			1,489,520
Cumulative effect from the adoption of new accounting standards, net		-			-			(1,240	)		-
Net income		101,510			97,446			173,979			176,611
Dividends		(16,084	)		(14,517	)		(32,614	)		(29,145	)
Repurchases of common stock		(81,540	)		(52,337	)		(163,717	)		(99,451	)
Balance, end of period		1,569,689			1,537,535			1,569,689			1,537,535
Accumulated other comprehensive income: