Primerica, Inc. (NYSE:PRI) reported second-quarter 2016 operating income of $1.19 per share, which outperformed the Zacks Consensus Estimate by 12.3%. The bottom line improved 27% year over year.
In the quarter, the company experienced consistent momentum in Term Life (on the back of solid policy persistency that led to a year-over-year increase of 14% in Term Life net premiums) and claims experience, which was below both historical and unfavorable levels experienced in the prior-year period .
Including net after-tax impact of operating adjustments of 4 cents, net income surged 30.9% year over year to $1.23 per share.
Behind the Headlines
Primerica's revenues increased 8.2% year over year to $379 million on the back of strong Term Life performance. Revenues narrowly surpassed the Zacks Consensus Estimate of $374 million.
Total benefits and expense increased 5% year over year to $287.4 million owing to a rise in benefits and claims, amortization of deferred policy acquisition costs, insurance commissions, insurance expenses and other operating expenses.
The life-licensed sales force size grew 11% year over year to 112,365 representatives in the reported quarter.
Segment Details
The Term Life Insurance segment reported operating revenues of $210.7 million, up 14.3% year over year due to a rise in net premiums. In the quarter, Term Life Insurance policies issued grew 13.6% to 77384.
Operating income before income taxes of Term Life Insurance inched up 29.8% to $58 million driven by solid growth in net premiums. However, higher employee-related expenses partially offset the income.
The Investment and Savings Products segment reported operating revenues of $132.7 million, down 1.8% from the year-ago quarter. Investment and Savings Products sales declined 6% to $1.47 billion, primarily due to 20% lower variable annuity sales, year over year.
Operating income before income taxes of Investment and Savings Products decreased 4.2% year over year to $36.1 million. The downside stemmed from lower sales and higher employee-related expenses.
The Corporate and Other Distributed Products segment reported operating revenues of $32.4 million, up 6.2% from the year-ago quarter.
Operating loss before income taxes narrowed 9.1% to $5.6 million in the quarter.
Financial Update
Primerica exited the quarter with cash and investments of $2.46 billion as against $2.33 billion at year-end 2015.
Notes payable totaled $372.7 million, slightly above the 2015-end level of $372.6 million.
Total assets as of Jun 30, 2016 were $11.2 billion, up 5.6% from the 2015-end level.
Shareholders’ equity increased 9% to $1.2 billion from the 2015-end level of $1.1 billion.
As of Jun 30, 2016, PLIC’s (Primerica Life Insurance Company) statutory risk-based capital (RBC) was estimated to be approximately 430%.
Share Buyback Update
Primerica spent $40.6 million to buy back 0.8 million shares in the second quarter. On year-to-date basis, the company repurchased $90.5 million or 2.0 million shares through Jun 2016.
Zacks Rank
Primerica currently has a Zacks Rank #3 (Hold).
Performance of Other Insurers
Among the other players in the insurance industry that reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (NYSE:TRV) and First American Financial Corp. (NYSE:FAF) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (NYSE:RLI) missed the same.
PRIMERICA INC (PRI): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
FIRST AMER FINL (FAF): Free Stock Analysis Report
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