Primerica Inc. announced Nov. 6 in a third quarter earnings report that it experienced 13% growth in term life net premiums during the quarter, and a 5% increase in life insurance licensed representatives, expanding its force to 130,658.
The Duluth, Ga.-based term life carrier, specializing in the middle-income market, announced financial results for the quarter ended September 30, 2018. In the third quarter, total revenues increased 13% to $484.8 million and adjusted operating revenues grew 14% to $485.2 million. Income before income taxes increased 11% and adjusted operating income before income taxes increased 12% over the prior year period. Net income grew 28% to $85.1 million and adjusted net operating income grew 27% to $84.5 million compared with the third quarter of 2017, both of which reflect 2018 benefits from the Tax Cuts and Jobs Act of 2017 (Tax Reform).
“The power of our franchise was evident in the third quarter with top-line growth in each of our businesses,” said CEO Glenn Williams. “The tremendous sales growth achieved in our Investment and Savings Products segment was a highlight of the quarter. The performance of our two complementary businesses combined with capital deployment and the benefit of Tax Reform delivered a 33% increase in EPS year-over-year and 23.9% ROE in the third quarter. We remain focused on executing initiatives to drive growth in order to deliver long-term value to our clients, representatives and stockholders.”
Term life performance
Term Life continued to achieve strong financial results with revenues increasing to $288.0 million driven by a 13% increase in net premiums compared with the third quarter a year ago, according to a statement summarizing Primerica’s performance in the third quarter.
Income before income taxes in the segment increased 12% to $74.3 million year-over-year. Term Life productivity of 0.19 policies per life insurance licensed representative per month was within the historical range, although lower than the elevated levels experienced in the past few years. As a result, Term Life insurance policies issued declined 4% year-over-year.
Term Life estimated annualized issued premiums at Primerica continue to grow year-over-year with policy additions and other increases. Normal claims volatility positively impacted benefits and claims by approximately $2 million in the third quarter of 2018, which was similar to the favorable impact experienced in the prior year period.
Persistency was generally consistent with the year ago quarter while non-deferred insurance commissions increased, largely due to revisions in the sales force equity program that changed the timing of expense recognition but not the economics of the program. Insurance expenses increased $3.7 million from the prior year period to support business growth and initiatives.
Life insurance licensed sales force
New recruits declined 16% from the third quarter a year ago, which benefitted from approximately 17,000 recruits in hurricane-affected areas whose Independent Business Application (IBA) fees were waived. New life insurance licenses were down 8% year-over-year, while the size of the life insurance licensed sales force increased 5% to 130,658 representatives in the period.
About Primerica: Primerica, Inc., headquartered in Duluth, Ga., provides financial services to middle income households in North America. Primerica representatives educate their clients about how to better prepare for a more secure financial future by assessing their needs and providing appropriate solutions through term life insurance, which the Company underwrites, and mutual funds, annuities and other financial products, which are distributed primarily on behalf of third parties. Primerica insured approximately 5 million lives and have over 2 million client investment accounts at December 31, 2017. Primerica stock is included in the S&P MidCap 400 and the Russell 2000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.
Yes! More inventory to convert!
Seems most of the growth is attributed to increasing benefit/premium riders and not actual policy sales.
probably raised their inforce premiums on existing clients or something.
average contracted agent writes 1 life app every 5-6 months—how in the world do they even cover the costs of annual fees in states to keep someone appointed with record setting sales of 1 new life app every 5-6 months.
That was my first thought too!!
That seems like a smart rider for the company. Not sure that the agent gets his whooping 25% comp on the increases every year.
The Increasing Rider actually makes it easier to defeat the product and their stance that you won't need insurance after XX years.
Actually that average may include a policy they bought themselves, and doesnt include policies cancelled later in the same year.
true
that makes it even worse & would kill profitability with all the upfront UW, issuance & compensation costs
Profitability for whom?
the carrier
What if the carrier can charge monthly online access fees to the reps, or pack 50,000 of them into a stadium at $100 per head?
I wouldn't consider them a carrier. that is likely the MLM arm of their operations. crazy stuff:mad:
Back in my recruiting life I recruited several PFS agents. I recall them talking about going to convention in GA. I think. I am thinking they won the trip. They had to pay to attend. Plus airfare, several people animal housing in a small single room. They even had to buy the required Tshirt.
So you won by not winning?
In my 20s my wife was invited to a meeting for prospective business owners. Hundreds of dollars later we were the proud owners of a garage full of AmWay products and a subscription to a bunch of motivational cassette tapes.
Winning?
While these training and marketing materials and seminars may not come close to the revenues of product sales, the profit margins make them a key component of the bottom line.
Could interest you in a bulk order of some environmentally friendly low sudsy soap?
Please!
Why are you so jealous that Primerica is the best?
finally! well played
Sounds like MDRT… other than the single room and the required T-shirt.
Here is an observation. Back in the days where there were intense net battles between the pro and con Primerica I noticed many of the pro Primerica people talked more emotion/hype and stayed away from facts.
“Primerica is the best”. Compared to what? The separation between the company, products, and compensation were rarely ever considered.
As for the recruiting they talk to a bunch of people. Just get there first and as for agents for some that is the best company for them. Others just quit or move on.
"Others just quit or move on."
Over 60,000 licensed reps moved on in the last 18 months for instance?
I was reading the article and didn't quite follow the math "New recruits declined 16% from the third quarter a year ago, which benefitted from approximately 17,000 recruits in hurricane-affected areas whose Independent Business Application (IBA) fees were waived. New life insurance licenses were down 8% year-over-year, while the size of the life insurance licensed sales force increased 5% to 130,658 representatives in the period." Not sure how they get a 5% increase from this.
Well I suppose if new life licences issued was up 13% a year ago. Don't forget, last year was the annual convention, which they typically get a boost from. There were 303,867 recruits in 2017.
New recruits were down- Those are new people to Primerica.
New life licenses are down- These are recruits who get their first license with Primerica.
Life licenses sales force increased- They are attracting agents from other parts of the industry.
I highly doubt that because historically, when you add the number of newly licensed agents to the existing force, the number jives with the sales force size at year end, when you factor in terminations, which are also indicated in financial reports. It would appear that very few, if any, already licensed people sign up.
So is it your turn to be that guy who appears, tells everybody how great Prime is and then is gone a few months later? Just asking for a friend.
We have a little more fun with them (and the other MLM'ers) on the FB page. 🙂
The only Robert Wilkins with a Florida license is not appointed with Primerica.
Probably one of the 43,336 licensed reps who left in 2018.
Yes, but do you serve Koolaid?
Only with laxatives so it can all be flushed out of their system. 🙂
The fact of the matter is the life insurance industry left the window wide open for Art Williams. When I started with Pru we had two term products an ART and a 5 year term. Most people back then we’re underinsured ( the largest client on my assigned book with Pru had $65,000 of insurance) and term was not a viable option for 20 or 30 years. Bottom line if the insurance industry offered competitive term you never would have heard of Art Williams, and I really believe if it were not for him we would still be selling ART and 5 year term products.
But the ALW crowd was not replacing "short term term", they were replacing WL with an overpriced SI term plan coupled with an annuity. They had bumper stickers and t-shits – A L Williams changed my WHOLE LIFE.
Replacing perm with term. Selling the dream of accumulating great wealth. "Client" will have no need for life insurance because of the stash of cash in the annuity. BTID quickly became buy term and spend the difference. Some who still had a need for life insurance when their term ran out, or became too expensive, could not qualify for replacement insurance, or could not afford it.
The only thing positive that came out of the ALW cult was the awakening of carriers and agents to focus more on protection than commissions.
My first job in the life insurance business involved a form of FNA/CNA where we showed the prospect how much life insurance they NEEDED. Let's say the figure was $500,000.
But they could not afford $500k in WL so we sold what they could afford, $50,000 and then come back and sell them more each year, moving them towards the ultimlate goal of being "fully insured". In some cases we sold $50k WL with a $450k term rider. The agent was supposed to come back and convert a litle each year creating a new income stream (for them).
Part time agents resulted in stricter licensing rules for new agents, pre-liscensing training, continuing ed and higher license fees. Temporary insurance licenses were also eliminated.
I fail to see how AL Williams has improved the industry. By all accounts, Americans are more under-insured now than before his arrival.
The young ones think they will never die, or if they do it will only be after they have amassed a fortune, are debt free and no longer need life insurance.
The old and sick would buy it in a heartbeat if they could qualify and had the $$$
Somehow I don't think that is any different than before his arrival.
I think Hubert Humphrey did more to change the industry by introducing the MLM business model into Art's business. It exposed them to an entirely new revenue stream. . .their force.
Way back in my earlier life in 1980 I joined AL Williams. I truly believe Art Williams did change the industry for the better. I also believe Art Williams had honest intentions. He stressed the importance of recruiting honest people. The problem was and perhaps still is that the MLM model leaves the door open for con artists. ALW became infiltrated with too many opportunist and that is what turned me off. Today there are a few copy cats of the ALW MLM model in the industry. From what I have seen they are mostly of the con artist mode. MLM is ok if you are selling soap or vitamins, but life insurance is a different animal. Firms like Symmetry Financial Group continue to "sell the dream". SFG is all about selling leads. They claim that they actually lose money on their lead system. I would say that is not true. Insurance should be made up of qualified honest people and probably is for the most part. I would not include firms that promote recruiting over selling.
He improved it by making term more well known and forcing the life companies to develop competitive term products but I don’t condone his sales tactics. I can’t believe people are more underinsured today then in the 70’s and 80’s but if they are it’s not because they can’t afford enough coverage as was the case in the 70’s and 80’s.
The numbers would say other wise.
The shocking statistics behind the life insurance coverage gap | ThinkAdvisor
As Bob mentioned earlier too, it was quite common to put a term rider on top of the base WL policy and convert each year as budget allowed.
If people are underinsured today it’s because they are stubborn or stupid. With the cheap term policies available almost everyone who is insurable can afford to get enough coverage.
So perhaps affordability never was the real issue?
It actually was. Back in the 70's and early 80's the term policies sold were very bad and expensive. Very Very rarely did you ever come across someone who had term insurance, most of it was small whole life policies sold by debit companies. Then UL burst on the scene and agents were replacing whole life policies with a UL stating you can double your coverage for the same premium, which is exactly what AL Williams was doing but they were using 20 year term and a side fund.
Today there is no reason people should be under insured with the internet the non stop radio term ads, and the competitively priced term policies in the market place.
And yet industry statistics indicate that 99.7% of those involved in MLM actually lose money when factoring in expenses. Its a great way to create clients out of your own force tho.
When the cost of living rises in comparison to earnings, and everybody wants a big house, its often a choice of paying a mortgage or paying premiums.
So I'm confused then. Affordability was the issue. Now term has never been cheaper than it was, yet life insurance ownership is at an all time low…
And now the issues are:
– less agents overall
– most agents are afraid to prospect ("No cold-calling" standards promoted when recruiting).
– more experienced agents are prospecting at upper levels
– lack of quality training for agents to get started and stay in the business
# of active agents selling life insurance has plummeted in the last few decades. Tons of people holding licenses may never use them as a staff person, PT person in a MLM setup and a ton of stock broker/financial planners that good life licenses but sell no Life insurance. If people don't buy it at work or go find it themselves, many are never approached by agents like they were 20-40 years ago
Your right, 20 and 30 years ago there were a lot more agents. I live in a small town boarding Ohio and Pennsylvania with maybe 50,000 people in the area.
At that time Pru, Met, American General and Western Southern had approximately 100 agents between them, today every one is shut down.
It shouldn’t be. I just wrote a guy a $500,000 30 year term for under $40 a month.
I was going to state that it is hard to stay in this business selling $25 a month premiums. Unless they are coming to buy immediately, you're not making a lot of money per hour. We can talk about underserved markets but it is really difficult to survive in some of those markets.
What I have found is the "I messed up and listened to a prime agent market" These are people over 50 that have a level term policy ending and realize they still have a need. Premiums aren't cheap and commission percentages make it worth while to serve them. In most cases it's a 20-30 year term or a GUL without a lot of "selling". They know they need something and you can provide answers and costs.
It was the easiest and fastest sale I ever made, it was my new son in law. But I agree with what you said the 50+ market is wide open because their term ended or is ending and most did not invest the difference.
Hard to say no when a gun is pointing at you…. "you best take care of my daughter boy" LOL ;):D
Even if people bypassed insurance altogether, and instead invested the premium equivalent over 20-30 years, its not going to make anybody independently wealthy, or allow them to lie on a beach and drive exotic sports cars as illustrated in MLM pamphlets. Disposable income is at an all time low while personal debt is at an all time high. At least for Mainstreet Americans. In the 60's, there was one tv on the block (if you were lucky). Today, the average home has 3 tvs. Society has a spend now, worry later mindset.
Yet, it has never been easier to buy life insurance. You can buy it over the phone, internet, in a multitude of ways. And an agent can help more people than before as most agents are not visiting people in their homes anymore.
So if affordability was issue, and its been solved, why do fewer Americans own life insurance now?
Simple fewer agents
Since premiums are cheaper than ever what do you think the cause could be?
Perhaps Albert Gray is still right 70 years later?
Good question. I'm not completely sure.
Without a pro active conversation from a 3rd party bringing the topic up, only a small fraction of the public will go out on their own to be a buyer of life insurance. it is not something they love to think about, they believe it is more complicated than it is & most of all it doesnt go from 0-60 in 4 seconds, doesn't have a white sand beach, doesnt float on the water, etc. So, because it is a intangible product compared to all the tangible products & services we all blow money on as consumers, it doesnt get done for the majority of the public without prompting by someone else, whether it be a professional agent, a radio talk show host or an HRD department at their employer
I think this is why the PC agents are so perfectly lined up to take care of these lower premium term only cases. They make the majority of their income from PC sales & renewals. Life only agents cant take enough time to sell those low premium term for $20-$30 per month. Studies show consumers want to buy it from their PC agents, but the same studies show the consumers don't think their PC agent sell it.
So that would suggest more affordable premiums are actually the problem. If there isn't enough money to pay agents to be interested and pursue the business, then ultimately consumers suffer because no one is actively soliciting them to buy coverage.
There are 3 kinds of life insurance leads & sales (generally speaking):
1) The uninsurable hoping to get coverage; these people are looking for coverage because they can't get it.
2) The insurable who doesn't feel the need to spend much on coverage; they feel that they are healthy enough in their health, lifestyle, and activities that it's a "checkmark" on their financial planning checklist.
3) Get healthy people to spend thousands, or even tens of thousands of dollars for coverage. But they need to see the reasons why it makes sense for them to do it. And that takes a well-trained agent.
Most people think agents only help with #1 and #2. They don't know that #3 exists. Most AGENCIES don't know that #3 exists.
Strangely enough, companies WANT sales like #3 because it helps their general investment account. #1 are higher risk of early claims and #2 may be profitable as long as they keep their term life for a long time and then let it expire.
That could definitely be an issue. in our race for cheaper rates as agents for competition and consumers, we also now have not only cheaper, we also have worse products today in terms of conversion privileges, renewal rates after level period, etc.
interesting stuff
While I can't say this is the real problem, I don't think it helps.
A joke I heard some time ago, and I think applies to many industries.
When the pilot of the plane says, "Thank you for flying Delta today." He's really thinking, "**** you! Your cheap fares and free peanuts cost me my pension."
I'm sure I got it wrong, but hopefully you get the gist.
so true. Throw in with life carriers the historic low interest rate environment for them to invest money, the escalating expense ratios for all the technology needed today & the race for lower premiums, it is the marketing/distribution compensation areas to suffer along with worse customer service for the consumer
Because let's remember, there is more than just straight salary/commission to consider. As I alluded to above, there are also benefits. And training, really good training, is a benefit to a salesperson. I'm pretty sure the training and coaching today from carriers is nothing compared to what it use to be.
Generational differences.
30 year old male in 1950 v a 30 year old male today.
No more man rasing.
30 year old in 1950, married 12 years, 3 kids. 30 year old kid in 2018, refers to himself as a millennial, lives in his parent's basement (or original bedroom), still gets an allowance, and spends hours daily on social media or playing Nintendo. Loves his mom's cooking.
I think because there are fewer agents and the amount of insurance people can buy thru work has increased significantly.
I think demise of the debit system
In my opinion the life insurance business model is a lot different than 30 years ago. As I stated earlier my town and the surrounding area had approx 100 debit agents working for various companies and their job was to sell life insurance. Today in my hometown there are 5 life agents. Two state farm agents, one Ohio National and two independents. Except for the Ohio National Guy none of us make life insurance a priority we do other things.
Kinda sorta.
There are a hell of a lot more agents at the other end of the phone and computer monitor. I am in California am currently doing some deals in California, Texas, Idaho and Virginia. Just like the prospects have changed so have the agents. The new ones come in different. The old ones evolve or die out.
I recently wrote a large Term policy on a California guy in his late 50s. He was referred to me but had already started preliminary work with a internet agent from the north east. The business has changed from the old days of a roll of dimes and 3" rate binder.
That’s for sure I just wrote a girl in a Texas a few months ago.
totally agree there is a much greater number of agents working by phone/internet. My experience has been most of those additional sales are driven by leads, internet interest & some referrals. that is great for us as producers to be efficient and for those consumer we speak to.
However, in those old decades, I believe the agents locally connected with more people face to face as part of the community events, door knocking, whatever. that helped drive the discussion of protection to a greater number of people. that is why I believe PC agents or Worksite writers still have an opportunity to close the gap of insuring those who are uninsured or underinsured for protection. I would also include Brokers & Financial planners, but most I have spoke with have zero interest in dealing with term protection or the hassle of writing life for 1 time commission checks.
Luckily, young families have at least the safety net of Social Security Survivors that provides a baseline of income replacement for a window of time