Some interesting numbers emerged from Primerica’s recently released second quarter 2021 report, with 90,000 sticking out for two reasons.
One, the company reported it recruited nearly 90,000 individuals, and two, issued over 90,000 life insurance policies during the Q2.
As for the top-line figures, total revenues of $654.7 million increased 25% compared to the second quarter of 2020. Net income of $128.2 million increased 26%, while earnings per diluted share of $3.22 increased 28% compared to the same quarter last year. ROE remained robust at 26.3%.
The company said in a statement that second quarter results reflect clients’ continued demand for investment products and term life protection, strength in equity markets, and elevated persistency across all durations of the company’s in-force term life insurance business.
Clients remain focused on the future and planning for retirement which, when combined with strong equity markets, pushed investment products sales over $3.0 billion for the first time in Company history. The term life segment continues to experience elevated death claims due to a combination of COVID-related deaths as well as excess mortality not identified as COVID.
“Sales results in our core businesses remain very strong,” said Primerica CEO Glenn Williams. “We are encouraged by our continued momentum and remain focused on growing our sales force as the licensing process starts to normalize and new recruits resume their pre-COVID activities.”
Life insurance licensed sales force
During the second quarter, over 10,000 representatives obtained a new life insurance license among the 90,000 recruited. Year-over-year comparisons are challenging due to measures introduced last year to mitigate the COVID shutdown. The company said it remains focused on converting new recruits to licensed representatives despite disruptions in the licensing process.
At June 30, 2021, Primerica had a total of 132,041 independent life-licensed representatives, including an estimated 2,400 individuals with COVID-related temporary licenses or licenses with an extended renewal date.
Experience suggests the likelihood of conversion to a permanent license or ultimately renewing an extended renewal diminishes over time. At this point, the 2,400 individuals are not expected to remain licensed.
Term life insurance
Term life continues to experience strong results with revenues increasing to $383.5 million, or 17% year-over-year, driven by 16% growth in adjusted direct premiums from strong sales and favorable persistency. Pre-tax income of $116.8 million increased 23% over the prior year period.
Client demand for term life insurance protection remains high. The 90,000 policies issued during the quarter is only 4% below the heightened level issued last year when the onset of COVID created a surge in demand for new policies. Productivity for the quarter, which is seasonally elevated in the second quarter, remained above the Company’s historical range at 0.23 policies per life-licensed representatives per month versus 0.24 in the prior year’s second quarter, reflecting the continued favorable sentiment for protection products.
COVID claims of approximately $6 million during the quarter were generally in line with expectations and $4 million lower than the prior year period. Primerica also experienced about $3 million in higher claims not identified as COVID in the current period that is believed to be normal volatility.
Persistency remains above historical levels and improved over the already strong persistency experienced a year ago. Better persistency reduced DAC amortization by $6 million, partially offset by a $2 million higher benefit reserve increase year-over-year. Insurance expenses increased 12% due to growth in the business, higher employee costs and investments in technology.
