Primerica (PRI) Q1 Earnings Miss Estimates, Improve Y/Y

Primerica, Inc. (NYSE:PRI) reported first-quarter 2018 operating income of $1.47 per share, missing the Zacks Consensus Estimate of $1.49 by nearly 1.3%. However, the bottom line improved 32.4% year over year on lower effective tax rate (from the legislation of the Tax Cuts and Jobs Act of 2017). Also, ongoing share buybacks offered an additional upside to the bottom line.

Moreover, the quarter witnessed solid results at both Term Life Insurance and Investment and Savings Products.

Operational Update

Operating revenues grew 13.9% year over year to $461.6 million on higher net premiums, investment income, commissions and fees as well as other, net.

While Term Life Insurance revenues increased 15% to $270.3 million year over year, Investment and Savings Products revenues improved 15% to $162 million. Meanwhile, Corporate and Other Distributed Products dipped 0.2% from the year-ago quarter.

The quarter witnessed 8% increase in the size of life insurance sales force, 0.3% growth in life insurance policies issued and 12% increase in Investment and Savings product sale.

Total benefits and expenses of $376.9 million were up 14.1 % year over year due to higher benefits and claims, amortization of deferred policy acquisition costs, sales commissions, insurance expenses as well as insurance commissions and other operating expenses.

Adjusted operating income before taxes increased 15% year over year on 22% higher operating income at Term Life Insurance and 8% growth at Investment and Savings Products.

Financial Update

Cash and cash equivalents were $190.6 million as of Mar 31, 2018, down 31.9% from the level as of Dec 31, 2017.

Total investments were $2.9 billion, up 4.2% from the figure as of Dec 31, 2017.

Notes payable were $373 million, which remained flat with the level at 2017-end.

Adjusted stockholders’ equity totaled $1.4 billion, up 2.4% from the level on Dec 31, 2017.

Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was about 480% as of Mar 31, 2018.

Return on equity stood at 18.5% in the first quarter.

Dividend and Share Repurchase Update

During the first quarter, the company approved a dividend of 25 cents per share, payable Jun 15, 2018 to shareholders of record as of May 22, 2018.

In the quarter under review, Primerica spent $46.3 million to buy back 0.5 million shares. The company plans to repurchase shares worth approximately $200 million during 2018.

Zacks Rank

Primerica carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Life Insurers

Among other players from the life insurance industry having already reported first-quarter earnings, the bottom line of Lincoln National Corporation (NYSE:LNC) and Torchmark Corporation (NYSE:TMK) beat the respective Zacks Consensus Estimate while that of Reinsurance Group of America, Incorporated (NYSE:RGA) missed the mark.

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