Earnings rise and new tax equity deal at Primerica (NYSE: PRI)
Rhea-AI Filing Summary
Primerica, Inc., a diversified financial services distributor serving middle-income households in the U.S. and Canada, reports solid results for the quarter ended June 30, 2026. Total revenues were $ 865,067 (In thousands), up from $ 793,334 (In thousands) a year earlier. Net income for the quarter rose to $ 202,278 (In thousands) from $ 178,344 (In thousands), with diluted EPS of $ 6.45 versus $ 5.40. For the first six months of 2026, revenues were $ 1,737,759 (In thousands) and net income was $ 392,374 (In thousands), yielding diluted EPS of $ 12.42.
The Term Life Insurance segment generated Q2 revenues of $ 443,605 (In thousands) and income before income taxes of $ 148,479 (In thousands). The Investment and Savings Products segment continued to grow, with revenues of $ 360,518 (In thousands) and income before income taxes of $ 104,215 (In thousands). Corporate and Other Distributed Products contributed $ 60,944 (In thousands) of revenue and $ 5,525 (In thousands) of pre-tax income. As of June 30, 2026, total assets were $ 14,781,939 (In thousands) and stockholders’ equity was $ 2,522,954 (In thousands). Operating cash flow for the first half of 2026 was $ 350,610 (In thousands), while the company returned capital through common stock repurchases of $ 270,227 (In thousands) and dividends declared of $ 2.40 per share. Primerica also entered into a $ 110.0 million solar tax equity investment, recognizing income tax benefits of $ 50.3 million and related amortization of $ 45.7 million in Q2 2026.
Positive
- None.
Negative
- None.
Filing Explained
The solar tax-equity investment leaves Primerica with an $88.0 million recorded funding commitment expected to be paid by early 2027.
This unaudited quarterly report adds that the 2026 tax-equity investment is partly funded: Primerica paid
The investment is held through a pass-through entity that the filing identifies as a variable interest entity managed by an independent capital management firm; Primerica does not consolidate it because it is not the primary beneficiary.
As of
Key Figures
Key Terms
deferred policy acquisition costs financial
liability for future policy benefits financial
variable interest entities financial
tax equity investment financial
proportional amortization method financial
surplus note financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Primerica (PRI) perform financially in Q2 2026?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(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 |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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. ☒
Indicate by check mark whether the registrant has submitted electronically, if any, 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). ☒
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of July 31, 2026, the registrant had
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Item 1. Financial Statements (unaudited). |
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Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |
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Condensed Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
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Item 4. Controls and Procedures. |
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PART II – OTHER INFORMATION |
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Item 1. Legal Proceedings. |
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Item 1A. Risk Factors. |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
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Item 5. Other Information |
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Item 6. Exhibits. |
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Signatures |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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(Unaudited) |
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June 30, 2026 |
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December 31, 2025 |
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(In thousands, except per-share amounts) |
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Assets: |
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Investments: |
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Fixed-maturity securities available-for-sale, at fair value (amortized cost: $ |
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$ |
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$ |
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Fixed-maturity security held-to-maturity, at amortized cost (fair value: $ |
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Short-term investments available-for-sale, at fair value (amortized cost: $ |
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Equity securities, at fair value (historical cost: $ |
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Trading securities, at fair value (cost: $ |
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Policy loans and other invested assets |
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Total investments |
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Cash and cash equivalents |
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Accrued investment income |
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Reinsurance recoverables |
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Deferred policy acquisition costs, net |
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Agent balances, due premiums and other receivables |
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Intangible asset |
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Income taxes |
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Operating lease right-of-use assets |
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Other assets |
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Separate account assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity: |
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Liabilities: |
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Future policy benefits |
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$ |
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$ |
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Unearned and advance premiums |
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Policy claims and other benefits payable |
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Other policyholders’ funds |
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Note payable |
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Surplus note |
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Income taxes |
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Operating lease liabilities |
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Other liabilities |
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Payable under securities lending |
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Separate account liabilities |
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(see Commitments and Contingent Liabilities note) |
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Total liabilities |
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Stockholders’ equity: |
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Common stock ($ |
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Paid-in capital |
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- |
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Retained earnings |
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Accumulated other comprehensive income (loss), net of income tax: |
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Effect of change in discount rate assumptions on the liability for future policy benefits |
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Unrealized foreign currency translation gains (losses) |
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Net unrealized investment gains (losses) on available-for-sale securities |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
2
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income – Unaudited
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Three months ended June 30, |
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Six months ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(In thousands, except per-share amounts) |
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Revenues: |
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Direct premiums |
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$ |
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$ |
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$ |
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$ |
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Ceded premiums |
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Net premiums |
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Commissions and fees |
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Investment income net of investment expenses |
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Interest expense on surplus note |
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Net investment income |
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Realized investment gains (losses) |
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Other investment gains (losses) |
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Investment gains (losses) |
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Other, net |
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Total revenues |
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Benefits and expenses: |
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Benefits and claims |
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Future policy benefits remeasurement (gain) loss |
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Amortization of deferred policy acquisition costs |
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Sales commissions |
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Insurance expenses |
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Insurance commissions |
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Interest expense |
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Other operating expenses |
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Total benefits and expenses |
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Income before income taxes |
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Income taxes |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic earnings per share |
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$ |
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$ |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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$ |
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$ |
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Weighted-average shares used in computing earnings |
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Basic |
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Diluted |
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See accompanying notes to condensed consolidated financial statements.
3
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited
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Three months ended June 30, |
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Six months ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(In thousands) |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss) before income taxes: |
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Unrealized investment gains (losses) on available-for-sale securities: |
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Change in unrealized holding gains (losses) on available-for-sale securities |
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( |
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Reclassification adjustment for investment (gains) losses included in net income |
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( |
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Effect of change in discount rate assumptions on the liability for future policy benefits |
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Foreign currency translation adjustments: |
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Change in unrealized foreign currency translation gains (losses) |
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( |
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Total other comprehensive income (loss) before income taxes |
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Income tax expense (benefit) related to items of other comprehensive income (loss) |
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Other comprehensive income (loss), net of income taxes |
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( |
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Total comprehensive income (loss) |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
4
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity – Unaudited
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Three months ended June 30, |
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Six months ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(In thousands, except per-share amounts) |
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Equity |
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Common stock: |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Repurchases of common stock |
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( |
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Net issuance of common stock |
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- |
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Balance, end of period |
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Paid-in capital: |
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Balance, beginning of period |
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- |
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- |
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- |
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Share-based compensation |
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Net issuance of common stock |
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- |
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Repurchases of common stock |
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Balance, end of period |
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- |
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- |
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- |
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- |
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Retained earnings: |
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Balance, beginning of period |
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Net income |
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Dividends |
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Repurchases of common stock |
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Balance, end of period |
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Accumulated other comprehensive income (loss), net of income tax: |
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Balance, beginning of period |
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Effect of change in discount rate assumptions on the liability for future policy benefits |
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Change in foreign currency translation adjustment |
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Change in net unrealized investment gains (losses) during the period |
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Balance, end of period |
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Total stockholders’ equity |
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$ |
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$ |
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$ |
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$ |
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Dividends declared per share |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
PRIMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows – Unaudited
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Six months ended June 30, |
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|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by (used in) operating activities: |
|
|
|
|
|
|
||
Change in future policy benefits and other policy liabilities |
|
|
|
|
|
|
||
Deferral of policy acquisition costs |
|
|
( |
) |
|
|
( |
) |
Amortization of deferred policy acquisition costs |
|
|
|
|
|
|
||
Change in income taxes |
|
|
( |
) |
|
|
( |
) |
Investment (gains) losses |
|
|
( |
) |
|
|
|
|
Accretion and amortization of investments |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
|
|
|
|
||
Change in reinsurance recoverables |
|
|
|
|
|
|
||
Change in agent balances, due premiums and other receivables |
|
|
( |
) |
|
|
( |
) |
Trading securities sold, matured, called or (acquired), net |
|
|
( |
) |
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
||
Change in other operating assets and liabilities, net |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Available-for-sale investments sold, matured or called: |
|
|
|
|
|
|
||
Fixed-maturity securities — sold |
|
|
|
|
|
|
||
Fixed-maturity securities — matured or called |
|
|
|
|
|
|
||
Equity securities — sold |
|
|
|
|
|
|
||
Equity securities — matured or called |
|
|
|
|
|
|
||
Available-for-sale investments acquired: |
|
|
|
|
|
|
||
Fixed-maturity securities |
|
|
( |
) |
|
|
( |
) |
Short-term investments |
|
|
( |
) |
|
|
|
|
Equity securities — acquired |
|
|
( |
) |
|
|
( |
) |
Purchases of property and equipment and other investing activities, net |
|
|
( |
) |
|
|
( |
) |
Cash collateral received (returned) on loaned securities, net |
|
|
|
|
|
( |
) |
|
Sales (purchases) of short-term investments using securities lending collateral, net |
|
|
( |
) |
|
|
|
|
Cash received from redemption of deposit asset |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Common stock repurchased |
|
|
( |
) |
|
|
( |
) |
Excise tax paid on common stock repurchased |
|
|
( |
) |
|
|
( |
) |
Tax withholdings on share-based compensation |
|
|
( |
) |
|
|
( |
) |
Finance leases |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of foreign exchange rate changes on cash |
|
|
( |
) |
|
|
|
|
Change in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See accompanying notes to condensed consolidated financial statements.
6
PRIMERICA, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements — Unaudited
(1) Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies
Description of Business. Primerica, Inc. (the “Parent Company”), together with its subsidiaries (collectively, “we”, “us” or the “Company”), is a leading diversified financial services distribution company serving middle-income households in the United States and Canada. Our licensed representatives (“independent sales representatives” or “independent sales force”) educate families on how to prepare for a more secure financial future and help them achieve their financial goals with our term life insurance and third-party mutual funds, managed accounts, annuities, loans and other financial products. Our primary subsidiaries include the following entities: Primerica Financial Services, LLC, a general agency and marketing company; Primerica Life Insurance Company (“Primerica Life”), our principal life insurance company; Primerica Financial Services (Canada) Ltd., a holding company for our Canadian operations, which includes Primerica Life Insurance Company of Canada (“Primerica Life Canada”) and PFSL Investments Canada Ltd.; and PFS Investments Inc., an investment products company and broker-dealer. Primerica Life, domiciled in Tennessee, owns National Benefit Life Insurance Company, a New York insurance company. Vidalia Re, Inc. (“Vidalia Re”) is a special purpose financial captive insurance company and wholly owned subsidiary of Primerica Life. Vidalia Re has entered into a separate coinsurance agreement with Primerica Life whereby Primerica Life has ceded certain level-premium term life insurance policies to Vidalia Re (the “Vidalia Re Coinsurance Agreement”).
Basis of Presentation. We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). These principles are established primarily by the Financial Accounting Standards Board (“FASB”).
The accompanying unaudited condensed consolidated financial statements contain all adjustments, generally consisting of normal recurring accruals, which are necessary to fairly present the balance sheets as of June 30, 2026 and December 31, 2025, the statements of income, comprehensive income (loss), and stockholders’ equity for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025. Results of operations for interim periods are not necessarily indicative of results for the entire year or of the results to be expected in future periods.
These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are sufficient to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”).
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect financial statement balances, revenues and expenses and cash flows, as well as the disclosure of contingent assets and liabilities. Management considers available facts and knowledge of existing circumstances when establishing the estimates included in our financial statements. The most significant items that involve a greater degree of accounting estimates and actuarial determinations subject to change in the future are the valuation of investments, deferred policy acquisition costs (“DAC”), liability for future policy benefits (“LFPB”) and corresponding amounts recoverable from reinsurers, and income taxes. Estimates for these and other items are subject to change and are reassessed by management in accordance with U.S. GAAP. Actual results could differ from those estimates.
Consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and those entities required to be consolidated under U.S. GAAP. All material intercompany profits, transactions, and balances among the consolidated entities have been eliminated.
Changes to Accounting Policies. All significant accounting policies remain unchanged from the 2025 Annual Report unless otherwise described.
Reclassifications. Certain reclassifications have been made to prior period amounts to conform to current period reporting classifications. These reclassifications had no impact on net income or total stockholders’ equity.
New Accounting Standards Not Yet Adopted. For more information on new accounting standards not yet adopted, see Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies) to our consolidated financial statements in our 2025 Annual Report. Other recently issued accounting guidance not discussed in our 2025 Annual Report is not applicable, is immaterial to our consolidated financial statements, or did not or is not expected to have a material impact on our business.
7
(2) Other Comprehensive Income (Loss)
The components of other comprehensive income (loss) (“OCI”), including the income tax expense or benefit allocated to each component, were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Foreign currency translation adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unrealized foreign currency translation gains (losses) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Income tax expense (benefit) on unrealized foreign currency |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change in unrealized foreign currency translation gains |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Unrealized gain (losses) on available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unrealized holding gains (losses) arising during period |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Income tax expense (benefit) on unrealized holding gains |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Change in unrealized holding gains (losses) on available-for-sale |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification from accumulated OCI to net income for (gains) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Income tax (expense) benefit on (gains) losses reclassified |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Reclassification from accumulated OCI to net income for (gains) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Change in unrealized gains (losses) on available-for-sale |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Effect of change in discount rate assumptions on the LFPB: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in effect in discount rate assumptions on the LFPB before income taxes |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Income tax expense (benefit) on the effect of change in discount rate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
assumptions on the LFPB from accumulated OCI to net income |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Change in effect in discount rate assumptions on the LFPB, net of income taxes |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
(3) Segment Information
Segments. We have
Income (loss) before income taxes by segment, including significant expense categories, was as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Term Life Insurance segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Benefits and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefits and claims |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Future policy benefits remeasurement (gain) loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of DAC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance commissions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total benefits and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
8
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Investment and Savings Products segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of DAC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance commissions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales-based |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-based |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fees based on client asset values |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fees based on fee-generating positions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Corporate and Other Distributed Products segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Benefits and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefits and claims |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Future policy benefits remeasurement (gain) loss |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amortization of DAC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance commissions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales commissions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total benefits and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The following table reconciles segment revenues to total revenues and segment income (loss) before income taxes to total income before income taxes in the unaudited condensed consolidated statements of income:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Term Life Insurance segment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investment and Savings Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other Distributed Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Term Life Insurance segment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investment and Savings Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other Distributed Products segment |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Insurance expenses and other operating expenses directly attributable to the Term Life Insurance and Investment and Savings Products segments are recorded directly to the applicable segment. These expenses consist primarily of employee compensation, technology and communications costs, various independent sales force-related costs, non-bank custodial and transfer agent recordkeeping administrative costs, outsourcing and professional fees, and other corporate and administrative fees and expenses.
9
We allocate certain other revenue and operating expenses that are not directly attributable to a specific operating segment using methods expected to reasonably measure the benefit received by each reporting segment. Such methods include recorded usage, revenue distribution, and independent sales force representative distribution. These allocated items include fees charged for access to Primerica Online (“POL”) and costs incurred for technology, independent sales force support, occupancy, shared services and other general and administrative costs. Costs that are not directly charged or allocated to our two primary operating segments are included in the Corporate and Other Distributed Products segment.
(4) Investments
Available-for-sale Securities.
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Amortized cost |
|
|
Gross unrealized gains |
|
|
Gross unrealized losses |
|
|
Fair value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Securities available-for-sale, carried at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Foreign government |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
States and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporates |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Commercial mortgage-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other asset-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total fixed-maturity securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term investments |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total fixed-maturity securities and short-term investments |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Amortized cost |
|
|
Gross unrealized gains |
|
|
Gross unrealized losses |
|
|
Fair value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Securities available-for-sale, carried at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Foreign government |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
States and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporates |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Commercial mortgage-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other asset-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total fixed-maturity securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
All of our AFS mortgage- and asset-backed securities represent beneficial interests in variable interest entities (“VIEs”). We are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact the entities’ economic performance. The maximum exposure to loss as a result of our involvement in these VIEs equals the carrying value of the securities.
The scheduled maturity distribution of the AFS fixed-maturity securities portfolio as of June 30, 2026 was as follows:
|
|
Amortized cost |
|
|
Fair value |
|
||
|
|
(In thousands) |
|
|||||
Due in one year or less |
|
$ |
|
|
$ |
|
||
Due after one year through five years |
|
|
|
|
|
|
||
Due after five years through 10 years |
|
|
|
|
|
|
||
Due after 10 years |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Mortgage- and asset-backed securities |
|
|
|
|
|
|
||
Total AFS fixed-maturity securities |
|
$ |
|
|
$ |
|
||
Expected maturities may differ from scheduled contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.
10
Held-to-maturity Security. Concurrent with the execution of the Vidalia Re Coinsurance Agreement, Vidalia Re entered into a Surplus Note Purchase Agreement (the “Surplus Note Purchase Agreement”) with Hannover Life Reassurance Company of America and certain of its affiliates (collectively, “Hannover Re”) and a newly formed limited liability company (the “LLC”) owned by a third- party service provider. Under the Surplus Note Purchase Agreement, Vidalia Re issued a surplus note (the “Surplus Note”) to the LLC in exchange for a credit enhanced note from the LLC with an equal principal amount (the “LLC Note”). The principal amounts of the Surplus Note and the LLC Note have reached their peaks and are expected to decrease over time to coincide with the amount of policy reserves contractually supported under the Vidalia Re Coinsurance Agreement. Both the Surplus Note and the LLC Note mature on
The LLC is a VIE as its owner does not have an equity investment at risk that is sufficient to permit the LLC to finance its activities without Vidalia Re or Hannover Re. The Parent Company, Primerica Life, and Vidalia Re share the power to direct the activities of the LLC with Hannover Re, but they do not have the obligation to absorb losses or the right to receive any residual returns related to the LLC’s primary risks or sources of variability. Through the credit enhancement feature, Hannover Re is the ultimate risk taker in this transaction and bears the obligation to absorb the LLC’s losses in the event of a Surplus Note default in exchange for the fee. Accordingly, the Company is not the primary beneficiary of the LLC and does not consolidate the LLC within its unaudited condensed consolidated financial statements. Hannover Re’s financial strength rating by A.M. Best Company, Inc. (“AM Best”) was A+ as of June 30, 2026.
The LLC Note is classified as a held-to-maturity debt security in the Company’s as we have the positive intent and ability to hold the security until maturity. As of June 30, 2026, the LLC Note had an estimated unrealized holding loss of $
As of June 30, 2026 and December 31, 2025,
Investments on Deposit with Governmental Authorities. As required by law, we have investments on deposit with governmental authorities and banks for the protection of policyholders. The fair value of investments on deposit was $
Securities Lending Transactions. We participate in securities lending transactions with broker-dealers and other financial institutions to increase investment income with minimal risk. We require minimum collateral on securities loaned equal to
Net Investment Income. The components of net investment income were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Fixed-maturity securities (available-for-sale) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fixed-maturity security (held-to-maturity) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policy loans and other invested assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, cash equivalents and short-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total return on deposit asset underlying |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Investment income net of investment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense on surplus note |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net investment income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
The components of investment gains (losses), as well as details on gross realized investment gains (losses) and other investment gains (losses) were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Realized investment gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross gains from sales, maturities and calls of available-for-sale fixed-maturity securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gross losses from sales, maturities and calls of available-for-sale fixed-maturity securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gross losses from sales, maturities and calls of equity securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net realized investment gains (losses): |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Other investment gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market gains (losses) recognized in net income during the period on equity securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Gains (losses) from equity method investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains (losses) from bifurcated options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains (losses) on trading securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other investment gains (losses): |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Investment gains (losses) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
The proceeds from sales or other redemptions of AFS securities were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Proceeds from sales or other redemptions |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accrued Interest.
Credit Losses for AFS Fixed-maturity Securities.
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Less than 12 months |
|
|
12 months or longer |
|
||||||||||
|
|
Fair value |
|
|
Unrealized losses |
|
|
Fair value |
|
|
Unrealized losses |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Foreign government |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
States and political subdivisions |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Corporates |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Residential mortgage-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Commercial mortgage-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other asset-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total fixed-maturity securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total short-term investments |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total fixed-maturity securities and short-term investments |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
12
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Less than 12 months |
|
|
12 months or longer |
|
||||||||||
|
|
Fair value |
|
|
Unrealized losses |
|
|
Fair value |
|
|
Unrealized losses |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Foreign government |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
States and political subdivisions |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Corporates |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Residential mortgage-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Commercial mortgage-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other asset-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total fixed-maturity securities |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
The amortized cost of AFS securities with a cost basis in excess of their fair values was $
As of June 30, 2026,
We did
Tax Equity Investment. In the second quarter of 2026, the Company entered into a $
The carrying value of the 2026 Tax Equity Investment, net of amortization, was $
The 2026 Tax Equity Investment will generate a return for the Company through the receipt of federal income tax credits, other income tax benefits and other non-income tax-related benefits that are primarily net investment income in the form of cash distributions. We have elected to apply the proportional amortization method (“PAM”) accounting for these types of investments. In accordance with PAM accounting, the Company amortizes the cost of its tax equity investments (less residual value) in Income taxes in our unaudited condensed consolidated statements of income based on the proportion of the income tax credits and other income tax benefits received during the period to the total income tax credits and other income tax benefits expected to be received over the life of the investment. The income tax credits and other income tax benefits generated by the investment are recognized as a reduction in Income taxes in our unaudited condensed consolidated statements of income. We recognize our capital contributions for the tax equity investment in Purchases of property and equipment and other investing activities, net within Net cash flows provided by (used in) investing activities, and we recognize the reduction of income tax payments in Change in income taxes within Net cash flows provided by (used in) operating activities in our unaudited condensed consolidated statements of cash flows. Other net investment income generated by the tax equity investment is recognized when the cash distribution is realized or realizable in Investment income net of investment expenses in our unaudited condensed consolidated statements of income.
13
During the three and six months ended June 30, 2026, the Company recognized income tax benefits of $
Derivatives. We have a deferred loss related to closed forward contracts, which were settled several years ago, that were used to mitigate our exposure to foreign currency exchange rates that resulted from the net investment in our Canadian operations. The amount of deferred loss included in accumulated other comprehensive income (loss) was $
(5) Fair Value of Financial Instruments
Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Invested assets recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We classify and disclose all invested assets carried at fair value in one of the following three levels:
As of each reporting period, all assets and liabilities recorded at fair value are classified in their entirety based on the lowest level of input (Level 3 being the lowest in the hierarchy) that is significant to the fair value measurement. Significant levels of estimation and judgment are required to determine the fair value of certain of our investments. The factors influencing these estimations and judgments are subject to change in subsequent reporting periods.
14
The estimated fair value and hierarchy classifications for assets and liabilities that are measured at fair value on a recurring basis were as follows:
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Fair value assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign government |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
States and political subdivisions |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Corporates |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Mortgage- and asset-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgage-backed securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Commercial mortgage-backed securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other asset-backed securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total available-for-sale fixed-maturity securities |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Short-term investments |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total available-for-sale securities |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Equity securities |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Trading securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Separate accounts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total fair value assets |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||
Fair value liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Separate accounts |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total fair value liabilities |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Fair value assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale fixed-maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agencies |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Foreign government |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
States and political subdivisions |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Corporates |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Mortgage-and asset-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgage-backed securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Commercial mortgage-backed securities |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Other asset-backed securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total available-for-sale fixed-maturity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Trading securities |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Separate accounts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total fair value assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fair value liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Separate accounts |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total fair value liabilities |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
In estimating fair value of our investments, we use a third-party pricing service for nearly all of our securities that are measured at fair value on a recurring basis. The remaining securities are primarily thinly-traded securities, such as private placements, and are valued using models based on observable inputs on public corporate spreads having similar characteristics (e.g., sector, average life and quality rating), liquidity and yield based on quality rating, average life and U.S. Treasury yields. All observable data inputs are corroborated by independent third-party data. We also corroborate pricing information provided by our third-party pricing service by performing a review of selected securities. Our review activities include: obtaining detailed information about the assumptions, inputs and methodologies used in pricing the security; documenting this information; and corroborating it by comparison to independently obtained prices and/or independently developed pricing methodologies.
15
Furthermore, we perform internal reasonableness assessments on fair value determinations within our portfolio throughout the year and as of year-end, including pricing variance analyses and comparisons to alternative pricing sources and benchmark returns. If a fair value appears unusual relative to these assessments, we will re-examine the inputs and may challenge a fair value assessment made by the pricing service. If there is a known pricing error, we will request a reassessment by the pricing service. If the pricing service is unable to perform the reassessment on a timely basis, we will determine the appropriate price by requesting a reassessment from an alternative pricing service or other qualified source as necessary. We do not adjust quotes or prices except in a rare circumstance to resolve a known error.
Because many fixed-maturity securities do not trade on a daily basis, third-party pricing services generally determine fair value using industry-standard methodologies, which vary by asset class. For corporates, governments, and agency securities, these methodologies include developing prices by incorporating available market information such as U.S. Treasury curves, benchmarking of similar securities including new issues, sector groupings, quotes from market participants and matrix pricing. Observable information is compiled and integrates relevant credit information, perceived market movements and sector news. Additionally, security prices are periodically back-tested to validate and/or refine models as conditions warrant. Market indicators and industry and economic events are also monitored as triggers to obtain additional data. For certain structured securities (such as mortgage- and asset-backed securities) with limited trading activity, third-party pricing services generally use industry-standard pricing methodologies that incorporate market information, such as index prices or discounting expected future cash flows based on underlying collateral, and quotes from market participants, to estimate fair value. If one or more of these input measures are not deemed observable for a particular security, the security will be classified as Level 3 in the fair value hierarchy.
Where specific market information is unavailable for certain securities, pricing models produce estimates of fair value primarily using Level 2 inputs along with certain Level 3 inputs. These models include matrix pricing. The pricing matrix uses current U.S. Treasury rates and credit spreads received from third-party sources to estimate fair value. The credit spreads incorporate the issuer’s industry- or issuer-specific credit characteristics and the security’s time to maturity, if warranted. Remaining unpriced securities are valued using an estimate of fair value based on indicative market prices that include significant unobservable inputs not based on, nor corroborated by, market information, including the utilization of non-binding broker quotes.
The rollforward of the Level 3 assets measured at fair value on a recurring basis was as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, (1) |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Level 3 assets, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Investment gains (losses) and accretion (amortization) recognized in earnings |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchases |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Sales |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Settlements |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Transfers out of Level 3 |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Level 3 assets, end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
We obtain independent pricing quotes based on observable inputs as of the end of the reporting period for all securities in Level 2. Those inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, quoted prices for similar instruments in markets that are not active, and other relevant data. We monitor these inputs for market indicators, industry and economic events. Transfers of investments that enter and exit Level 3 in different quarters within the same year are not eliminated until the full year amounts are presented. Such transfers within the same year generally include purchases of new debt issuances during the quarter that do not yet have independent pricing quotes available as of the end of the quarter but are transferred to Level 2 when independent pricing quotes become available the next quarter within the same year. There were
16
The carrying values and estimated fair values of our financial instruments were as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Carrying value |
|
|
Estimated fair value |
|
|
Carrying value |
|
|
Estimated fair value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed-maturity securities (available-for-sale) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fixed-maturity security (held-to-maturity) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments (available-for-sale) |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policy loans (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposit asset underlying |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Separate accounts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Note payable (3)(4) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Surplus note (1)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Separate accounts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The fair values of financial instruments presented above are estimates of the fair values at a specific point in time using various sources and methods, including market quotations and a complex matrix system that takes into account issuer sector, quality, and spreads in the current marketplace.
Financial Instruments Recognized at Fair Value in the Balance Sheets. Estimated fair values of investments in AFS securities are principally a function of current spreads and interest rates that are corroborated by independent third-party data. Therefore, the fair values presented are indicative of amounts we could realize or settle at the respective balance sheet date. We do not necessarily intend to dispose of or liquidate such instruments prior to maturity. Trading securities and equity securities, including common and nonredeemable preferred stocks, are carried at fair value. Segregated funds in separate accounts are carried at the underlying value of the variable insurance contracts, which is fair value.
The carrying amounts for cash and cash equivalents, trade receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximate their fair values due to the short-term nature of these instruments. Consequently, such financial instruments are not included in the above table.
(6) Reinsurance
We use reinsurance extensively, which has a significant effect on our results of operations. Reinsurance arrangements do not relieve us of our primary obligation to the policyholder.
Details on in-force life insurance were as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Direct life insurance in-force |
|
$ |
|
|
$ |
|
||
Amounts ceded to other companies |
|
|
( |
) |
|
|
( |
) |
Net life insurance in-force |
|
$ |
|
|
$ |
|
||
Percentage of reinsured life insurance in-force |
|
|
% |
|
|
% |
||
17
Benefits and claims ceded to reinsurers during the three and six months ended June 30, 2026 were $
Reinsurance recoverables include ceded policy benefit reserve balances, ceded claim liabilities, and ceded claims paid that have not been reimbursed.
|
|
June 30, 2026 |
|
December 31, 2025 |
||||||||
|
|
Reinsurance recoverables |
|
|
AM Best rating |
|
Reinsurance recoverables |
|
|
AM Best rating |
||
|
|
(In thousands) |
||||||||||
Swiss Re Life & Health America Inc. (IPO coinsurance) (1) |
|
$ |
|
|
A+ |
|
$ |
|
|
A+ |
||
Munich Re of Malta (1)(2) |
|
|
|
|
NR |
|
|
|
|
NR |
||
American Health and Life Insurance Company (1) |
|
|
|
|
B++ |
|
|
|
|
B++ |
||
SCOR Global Life Reinsurance Companies (3) |
|
|
|
|
A |
|
|
|
|
A |
||
Swiss Re Life & Health America Inc. (4) |
|
|
|
|
A+ |
|
|
|
|
A+ |
||
RGA Reinsurance Company |
|
|
|
|
A+ |
|
|
|
|
A+ |
||
Korean Reinsurance Company |
|
|
|
|
A |
|
|
|
|
A |
||
Munich American Reassurance Company |
|
|
|
|
A+ |
|
|
|
|
A+ |
||
All other reinsurers |
|
|
|
|
- |
|
|
|
|
- |
||
Allowance for credit losses |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
Reinsurance recoverables |
|
$ |
|
|
|
|
$ |
|
|
|
||
NR – not rated by AM Best
We estimate and recognize lifetime expected credit losses for reinsurance recoverables. In estimating the allowance for credit losses for reinsurance recoverables, we factor in the underlying collateral for reinsurance agreements where available. Specifically, for reinsurers with underlying trust assets, we compare the reinsurance recoverables balance to the underlying trust assets that mitigate the potential exposure to credit losses. We also analyze the financial condition of the reinsurers, as determined by third-party rating agencies, to determine the probability of default for the reinsurers. We then utilize a third-party credit default study to calculate an expected credit loss given default rate or recovery rate. The probability of default and loss given default rates are then applied to the reinsurers’ recoverable balance, while also factoring in any third-party letters of credit that support the reinsurance agreement, in order to calculate our allowance for credit losses.
The rollforward of the allowance for credit losses on reinsurance recoverables were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Current period (benefit) provision for expected credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Balance, at the end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(7) Deferred Policy Acquisition Costs
The balances and activity in DAC were as follows:
|
|
Six months ended |
|
|
Year ended |
|
||||||||||
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
(In thousands) |
|
|||||||||||||
|
|
Term Life Insurance |
|
|
Segregated Funds (Canada) |
|
|
Term Life Insurance |
|
|
Segregated Funds (Canada) |
|
||||
DAC balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Capitalization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign exchange translation and other |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
DAC balance, at the end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
18
Reconciliation of DAC by product was as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Term Life Insurance |
|
$ |
|
|
$ |
|
||
Segregated Funds (Canada) |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total DAC, net |
|
$ |
|
|
$ |
|
||
There were no material changes to the judgments, assumptions and methods used to amortize DAC during the six months ended June 30, 2026 and 2025.
(8) Separate Accounts
The following table represents the fair value of assets supporting separate accounts by major investment category:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Fixed-income securities |
|
$ |
|
|
$ |
|
||
Equity securities |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Due to/from funds |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Total separate account assets |
|
$ |
|
|
$ |
|
||
The following table represents the balances of and changes in separate account liabilities:
|
|
Six months ended |
|
|
Year ended |
|
||
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Separate account liabilities balance, beginning of period |
|
$ |
|
|
$ |
|
||
Premiums, deposits and transfers |
|
|
|
|
|
|
||
Surrenders, withdrawals and transfers |
|
|
( |
) |
|
|
( |
) |
Investment performance |
|
|
|
|
|
|
||
Management fees and other charges |
|
|
( |
) |
|
|
( |
) |
Foreign exchange translation |
|
|
( |
) |
|
|
|
|
Separate account liabilities balance, end of period |
|
$ |
|
|
$ |
|
||
Cash surrender value |
|
$ |
|
|
$ |
|
||
The cash surrender value represents the amount of the contract holders’ account balance distributable at the balance sheet date less the Company’s estimate of the deferred sales charges that would be assessed if the policyholders redeemed their contracts at the balance sheet date. This estimate requires the Company to make certain assumptions regarding the underlying account balances by contribution year and application of the contractually defined deferred sales charges that would be applicable to each contribution year.
(9) Policy Claims and Other Benefits Payable
Changes in policy claims and other benefits payable were as follows:
|
|
Six months ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Policy claims and other benefits payable, beginning of period |
|
$ |
|
|
$ |
|
||
Less reinsured policy claims and other benefits payable |
|
|
|
|
|
|
||
Net balance, beginning of period |
|
|
( |
) |
|
|
( |
) |
Incurred related to current year |
|
|
|
|
|
|
||
Incurred related to prior years (1) |
|
|
( |
) |
|
|
( |
) |
Total incurred |
|
|
|
|
|
|
||
Claims paid related to current year, net of reinsured policy claims received |
|
|
( |
) |
|
|
( |
) |
Reinsured policy claims received related to prior years, net of claims paid |
|
|
|
|
|
|
||
Total paid |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
( |
) |
|
|
|
|
Net balance, end of period |
|
|
( |
) |
|
|
( |
) |
Add reinsured policy claims and other benefits payable |
|
|
|
|
|
|
||
Balance, end of period |
|
$ |
|
|
$ |
|
||
19
The liability for policy claims and other benefits payable on traditional life insurance products includes estimated unpaid claims that have been reported to us and claims incurred but not yet reported. We estimate claims incurred but not yet reported based on our historical claims activity, adjusted for any current trends and conditions, and reported lag time experience.
(10) Future Policy Benefits
The following tables summarize balances and changes in the present value of expected net premiums and the present value of expected future policy benefits underlying the LFPB:
|
|
Six months ended |
|
|
Year ended |
|
||
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Present Value of Expected Net Premiums |
|
Term Life Insurance |
|
|||||
Balance at then current discount rate, beginning of period |
|
$ |
|
|
$ |
|
||
Balance at original discount rate, beginning of period |
|
|
|
|
|
|
||
Effect of changes in cash flow assumptions |
|
|
( |
) |
|
|
( |
) |
Effect of actual variances from expected experience |
|
|
( |
) |
|
|
( |
) |
Adjusted balance, beginning of period |
|
|
|
|
|
|
||
Issuances |
|
|
|
|
|
|
||
Interest accrual at original discount rate |
|
|
|
|
|
|
||
Net premiums collected |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
( |
) |
|
|
|
|
Expected net premiums at original discount rate, end of period |
|
|
|
|
|
|
||
Effect of changes in discount rate assumptions |
|
|
( |
) |
|
|
|
|
Expected net premiums at then current discount rate, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Present Value of Expected Future Policy Benefits |
|
|
|
|
|
|
||
Balance at then current discount rate, beginning of period |
|
$ |
|
|
$ |
|
||
Balance at original discount rate, beginning of period |
|
|
|
|
|
|
||
Effect of changes in cash flow assumptions |
|
|
( |
) |
|
|
( |
) |
Effect of actual variances from expected experience |
|
|
( |
) |
|
|
( |
) |
Adjusted balance, beginning of period |
|
|
|
|
|
|
||
Issuances |
|
|
|
|
|
|
||
Interest accrual at original discount rate |
|
|
|
|
|
|
||
Benefit payments |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
( |
) |
|
|
|
|
Expected future policy benefits at original discount rate, end of period |
|
|
|
|
|
|
||
Effect of changes in discount rate assumptions |
|
|
( |
) |
|
|
( |
) |
Expected future policy benefits at then current discount rate, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(Dollars in thousands) |
|
|||||
|
|
Term Life Insurance |
|
|||||
LFPB |
|
$ |
|
|
$ |
|
||
Less: reinsurance recoverables |
|
|
|
|
|
|
||
Net LFPB, after reinsurance recoverables |
|
$ |
|
|
$ |
|
||
Weighted-average duration of net LFPB (in years) |
|
|
|
|
|
|
||
During the three and six months ended June 30, 2026, we recognized a remeasurement gain, consisting of experience variances, of $
There were no significant changes to the inputs, judgments, assumptions, or methods used in measuring the LFPB during the three and six months ended June 30, 2026 and 2025.
Losses recognized as a result of capping the net premium ratio at
20
The following table reconciles the LFPB to the unaudited condensed consolidated balance sheets:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Term Life Insurance |
|
$ |
|
|
$ |
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The following table reconciles the reinsurance recoverables to the unaudited condensed consolidated balance sheets:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
|
|
(In thousands) |
|
|||||
Term Life Insurance |
|
$ |
|
|
$ |
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The amount of discounted (using the then current discount rate) and undiscounted expected gross premiums and expected future benefit payments were as follows:
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
(In thousands) |
|
|||||||||||||
Term Life Insurance |
|
|
|||||||||||||
|
Undiscounted |
|
|
Discounted |
|
|
Undiscounted |
|
|
Discounted |
|
||||
Expected future benefit payments |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected future gross premiums |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The amount of revenue and interest recognized in our unaudited condensed consolidated statements of income were as follows:
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
(In thousands) |
|
|||||||||||||
Term Life Insurance |
|
|
|
|
|
||||||||||
Gross premiums |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest accretion (expense) |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The weighted-average discount rates were as follows:
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Term Life Insurance |
|
|
|
|
|
||
Original discount rate |
|
% |
|
|
% |
||
Current discount rate |
|
% |
|
|
% |
||
There were no changes to the methods used to determine the discount rates during the six months ended June 30, 2026 and the twelve months ended December 31, 2025.
(11) Debt
Notes Payable. As of June 30, 2026, the Company had outstanding $
Further discussion on the Company’s Senior Notes is included in Note 12 (Debt) to our consolidated financial statements within our 2025 Annual Report.
Surplus Note. As of June 30, 2026, the principal amount outstanding on the Surplus Note issued by Vidalia Re was $
Further discussion on the Company’s LLC Note is included in Note 4 (Investments).
21
Revolving Credit Facility. We maintain an unsecured $
(12) Stockholders’ Equity
The following table shows changes in the number of shares of our outstanding common stock:
|
|
Six months ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Common stock, beginning of period |
|
|
|
|
|
|
||
Shares of common stock issued when sales restrictions on restricted stock units |
|
|
|
|
|
|
||
Common stock retired |
|
|
( |
) |
|
|
( |
) |
Common stock, end of period |
|
|
|
|
|
|
||
The above table excludes RSUs, director deferred shares, and PSUs, which do not have voting rights. As sales restrictions on RSUs lapse and PSUs are earned, we issue common shares with voting rights. As of June 30, 2026, we had a total of
On November 19, 2025, our Board of Directors (“Board”) authorized, and the Company announced, a share repurchase program for up to $
(13) Earnings Per Share
The Company has outstanding common stock and equity awards that consist of RSUs and PSUs. The RSUs maintain non-forfeitable dividend rights that result in dividend payment obligations on a one-to-one ratio with common shares for any future dividend declarations.
Unvested RSUs are deemed participating securities for purposes of calculating earnings per share (“EPS”) as they maintain dividend rights. We calculate EPS using the two-class method. Under the two-class method, we allocate earnings to common shares and vested RSUs outstanding for the period. Earnings attributable to unvested participating securities, along with the corresponding share counts, are excluded from EPS as reflected in our unaudited condensed consolidated statements of income.
In calculating basic EPS, we deduct from net income any dividends and undistributed earnings allocated to unvested RSUs and then divide the result by the weighted-average number of common shares and vested RSUs outstanding for the period.
We determine the potential dilutive effect of PSUs (“contingently-issuable shares”) on EPS using the treasury-stock method. Under this method, we determine the proceeds that would be received from the issuance of the contingently-issuable shares if the end of the reporting period were the end of the contingency period. The proceeds from the contingently-issuable shares include the remaining unrecognized compensation expense of the awards. We then use the average market price of our common shares during the period the contingently-issuable shares were outstanding to determine how many shares we could repurchase with the proceeds raised from the issuance of the contingently-issuable shares. The net incremental share count issued represents the potential dilutive securities. We then reallocate earnings to common shares and vested RSUs by incorporating the increased fully-diluted share count to determine diluted EPS.
22
The calculation of basic and diluted EPS was as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
||||
|
|
(In thousands, except per-share amounts) |
|
|
|||||||||||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Income attributable to unvested participating securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net income used in calculating basic EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average vested shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Income attributable to unvested participating securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net income used in calculating diluted EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average vested shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of incremental shares to be issued for |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares used in calculating diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
(14) Share-Based Transactions
The Company has outstanding equity awards under the Primerica, Inc. 2020 Omnibus Incentive Plan (the “OIP”), which was approved by the Company’s stockholders on May 13, 2020. The OIP provides for the issuance of equity awards, including stock options, stock appreciation rights, restricted stock, deferred stock, RSUs, PSUs, and stock payment awards, as well as cash-based awards. In addition to time-based vesting requirements, awards granted under the OIP may also be subject to specified performance criteria. Under the OIP, the Company issues equity awards to our management (officers and other key employees), non-employees who serve on our Board, and independent sales force leaders. For more information on equity awards granted under the OIP, see Note 16 (Share-Based Transactions) to our consolidated financial statements in our 2025 Annual Report.
In connection with our granting of equity awards to management and members of the Board, we recognize expense over the requisite service period of the equity award. We defer and amortize the fair value of equity awards granted to the independent sales force in the same manner as other deferred policy acquisition costs for those awards that are an incremental direct cost of successful acquisitions of life insurance policies that result directly from and are essential to the policy acquisition(s) and would not have been incurred had the policy acquisition(s) not occurred. All equity awards granted to the independent sales force that are not directly related to the successful acquisition of life insurance policies are recognized as expense as incurred, which is in the quarter granted and earned.
The impact of equity awards granted under the OIP are as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Equity awards expense recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Equity awards expense deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
On February 20, 2026, the Compensation Committee of our Board granted the following equity awards to employees as part of the annual approval of management incentive compensation:
23
All awards granted to employees on February 20, 2026 vest upon voluntary termination of employment by any employee who is “retirement eligible” as of his or her termination date. The substantive service conditions in order to be retirement eligible require that an employee must be at least 55 years old and his or her age plus years of service with the Company must equal at least 75. The number of shares that will be earned for a retirement-eligible employee is equal to the amount calculated using the Company’s actual performance metrics for the entire performance period, even if that employee retires prior to the completion of the performance period.
The following table summarizes non-cash share-based compensation expense by segment included in net income:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Term Life Insurance segment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investment and Savings Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other Distributed Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total non-cash share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(15) Commitments and Contingent Liabilities
The Company is involved from time-to-time in legal disputes, regulatory inquiries and arbitration proceedings in the normal course of business. These disputes are subject to uncertainties, including the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation. As such, the Company is unable to estimate the possible loss or range of loss that may result from these matters.
(16) Revenue from Contracts with Customers
Our revenues from contracts with customers primarily include:
Premiums from insurance contracts we underwrite, fees received from segregated funds insurance contracts we underwrite, and income earned on our invested assets are excluded from the definition of revenues from contracts with customers in accordance with U.S. GAAP.
Further discussion on the Company’s revenues from contracts with customers and revenue recognition policies are included in Note 20 (Revenue from Contracts with Customers) to our consolidated financial statements in our 2025 Annual Report.
The disaggregation of our revenues from contracts with customers were as follows:
24
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Term Life Insurance segment revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total segment revenues from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from sources other than contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Term Life Insurance segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment and Savings Products segment revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commissions and fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales-based revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Asset-based revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Account-based revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from sources other than contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Investment and Savings Products segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other Distributed Products segment revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commissions and fees |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment revenues from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from sources other than contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Corporate and Other Distributed Products segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Renewal Commissions Receivable. For revenue associated with ongoing renewal commissions in the Corporate and Other Distributed Products segment, we record a renewal commission receivable contract asset for the amount of ongoing renewal commissions we anticipate collecting in reporting periods subsequent to the satisfaction of the performance obligation, less amounts that are constrained, in Other assets in the accompanying unaudited condensed consolidated balance sheets. The renewal commissions receivable is reduced for commissions that are billed and become due receivables from product providers during the reporting period.
Activity in the renewal commissions receivable account was as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commissions revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: collections |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, at the end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Incremental costs to obtain or fulfill contracts, most notably sales commissions to the independent sales representatives, are not incurred prior to the recognition of the related revenue. Therefore, we have
25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of Primerica, Inc. (the “Parent Company”) and its subsidiaries (collectively, “we”, “us” or the “Company”) for the period from December 31, 2025 to June 30, 2026. As a result, the following discussion should be read in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”). This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed under the heading “Risk Factors” in the 2025 Annual Report and in Item 1A of this Report. Actual results may differ materially from those contained in any forward-looking statements.
This MD&A is divided into the following sections:
Business Overview
We are a leading diversified financial services distribution company serving middle-income households in the United States and Canada. Our licensed representatives (“independent sales representatives” or “independent sales force”) educate families on how to prepare for a more secure financial future and help them achieve their financial goals with our term life insurance and third-party mutual funds, managed accounts, annuities, loans, and other financial products. We have two primary operating segments, Term Life Insurance and Investment and Savings Products, and a third segment, Corporate and Other Distributed Products.
Term Life Insurance. We distribute the term life insurance products that we underwrite through our three issuing life insurance company subsidiaries: Primerica Life Insurance Company (“Primerica Life”), National Benefit Life Insurance Company (“NBLIC”), and Primerica Life Insurance Company of Canada (“Primerica Life Canada”). Policies remain in-force until the expiration of the coverage period or until the policyholder ceases to make premium payments. Our in-force term life insurance policies have level premiums for the stated term period. As such, the policyholder pays the same amount each year. Initial policy term periods are between 10 and 35 years. While premiums typically remain level during the initial term period, our claim obligations generally increase as our policyholders age. We cede a significant portion of the mortality risk of our term life insurance policies to third-party reinsurers to substantially reduce the uncertainty of our benefits and claims expense. In addition, we incur significant up-front costs in acquiring new insurance business.
Investment and Savings Products. In the United States, we distribute mutual funds, managed accounts, variable annuity, and fixed annuity products of several third-party companies. We provide investment advisory and administrative services for client assets invested in our managed accounts investments program. We also perform distinct transfer agent recordkeeping services and non-bank custodial services for investors purchasing certain mutual funds we distribute. In Canada, we offer mutual funds of other companies and segregated funds. Our segregated funds product offerings consist of (1) our legacy segregated funds product, which is underwritten by Primerica Life Canada, and (2) a segregated funds product underwritten by a third-party.
Corporate and Other Distributed Products. The Corporate and Other Distributed Products segment includes net investment income earned on cash, cash equivalents, and our invested asset portfolio. This segment also includes revenues and expenses related to other distributed products, including closed blocks of various insurance products underwritten by NBLIC, prepaid legal services, mortgage originations, and other financial products. These products, except for closed blocks of various insurance products underwritten by NBLIC, are distributed pursuant to distribution arrangements with third-party companies through the independent sales force. Interest expense incurred by the Company is attributed to the Corporate and Other Distributed Products segment.
Business Trends and Conditions
The relative strength and stability of the financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levels, inflation and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, investors’
26
perception of the strength of the capital markets and prospective returns impact consumer demand for the investment and savings products we distribute. We believe the economic conditions impacting middle-income households underscore their increasing need for our financial education, products and services to assist them in reaching the long-term goal of becoming financially independent.
The financial and distribution results of our operations in Canada, as reported in U.S. dollars, are affected by changes in the currency exchange rate. As a result, changes in the Canadian dollar exchange rate may significantly affect the results of our business for all amounts translated and reported in U.S. dollars.
The cumulative impact of inflation in recent years has led to an elevated cost of living for middle-income families, which may be adversely impacting persistency and demand for term life insurance policies. In the first half of 2026, policy lapse rates of term life insurance products remained above long-term historical levels and sales of new term life insurance policies were lower versus the comparable period in 2025.
Meanwhile, favorable demographic trends, robust client demand, expanded product offerings, and strong equity market performance in recent periods have provided significant momentum for our Investment and Savings Products (“ISP”) business. Despite volatility in the first half of 2026, positive equity market performance from 2024 through 2025 and into the first half of 2026 has beneficially influenced product sales and client asset values that drive revenue in the ISP segment.
Our ISP segment is expected to benefit over the long term from favorable demographic trends. These include increased demand for income and account value protection from investors in retirement that drive sales for our annuity business, the intergenerational wealth transfer from the silent generation and baby boomers to younger generations which benefits our managed accounts and mutual funds over future decades, and younger generations’ increased interest in equity market investments. Additionally, our high concentration of client assets in retirement accounts and our systematic investment philosophy are beneficial to our business as these accounts tend to have lower redemption rates than the industry. Our long-standing relationship with clients positions us well to drive resilient and faster growth in the ISP segment.
The rise in market interest rates since the COVID-19 pandemic have largely driven the unrealized losses that have accumulated in our investment portfolio from fixed-maturity securities purchased when long-term interest rates were at historical lows. Although market interest rates edged lower at the end of 2025, interest rates increased in the first half of 2026, resulting in higher unrealized losses compared to the end of 2025. We have not recognized losses caused by interest rate volatility in the income statement for securities that we have no present intention to dispose of and we have the ability to hold these investments until maturity or a market price recovery. Elevated interest rates have also led to increases in net investment income as we are able to earn higher returns on our new fixed-maturity securities purchases and cash balances.
The effects of these trends and conditions on our quarterly results are discussed below in the Results of Operations and Financial Condition sections.
Size of the Independent Sales Force.
Our ability to increase the size of the independent sales force (“independent sales representatives” or “independent sales force”) is largely based on the success of the independent sales force’s recruiting efforts as well as training and motivating recruits to get licensed to sell life insurance. We believe that recruitment and licensing levels are important to independent sales force trends, and growth in recruiting and licensing is usually indicative of future growth in the overall size of the independent sales force. Recruiting changes do not always result in commensurate changes in the size of the licensed independent sales force because new recruits may obtain the requisite licenses at rates above or below historical levels.
Details on recruiting and life-licensed independent sales representative activity were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
New recruits |
|
|
82,346 |
|
|
|
80,924 |
|
|
|
166,563 |
|
|
|
181,791 |
|
New life-licensed independent sales representatives |
|
|
11,020 |
|
|
|
12,903 |
|
|
|
21,589 |
|
|
|
25,242 |
|
The number of new recruits increased during the three months ended June 30, 2026 compared to the same period in 2025 due to the timing of special recruiting incentives offered during April 2026. The number of new recruits decreased during the six months ended June 30, 2026 compared to the same period in 2025 likely due to headwinds presented by economic uncertainty during the six months ended June 30, 2026 that were partially offset by the timing of special recruiting incentives during the second quarter of 2026.
New life-licensed independent sales representatives decreased during the three and six months ended June 30, 2026 compared to the same periods in 2025, largely due to the decline in new recruits in recent periods as it typically takes around three months for an independent sales representative to obtain a life insurance license.
27
The size of the life-licensed independent sales force was as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Life-licensed independent sales representatives, at period end |
|
|
148,612 |
|
|
|
151,524 |
|
The number of life-licensed independent sales representatives as of June 30, 2026 was lower compared to December 31, 2025 as the number of new life-licensed representatives did not keep pace with the level of agent non-renewal and termination activity experienced during the first six months of 2026.
Term Life Insurance Face Amount In-Force and Product Sales.
The changes in the face amount of our in-force book of term life insurance policies were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
% of beginning balance |
|
|
2025 |
|
|
% of beginning balance |
|
|
2026 |
|
|
% of beginning balance |
|
|
2025 |
|
|
% of beginning balance |
|
||||||||
|
|
(Dollars in millions) |
|
|||||||||||||||||||||||||||||
Face amount in-force, beginning of period |
|
$ |
965,671 |
|
|
|
|
|
$ |
956,981 |
|
|
|
|
|
$ |
967,612 |
|
|
|
|
|
$ |
953,583 |
|
|
|
|
||||
Net change in face amount: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Issued face amount |
|
|
27,737 |
|
|
|
3 |
% |
|
|
30,292 |
|
|
|
3 |
% |
|
|
53,415 |
|
|
|
6 |
% |
|
|
58,747 |
|
|
|
6 |
% |
Terminations |
|
|
(23,645 |
) |
|
|
(2 |
)% |
|
|
(24,795 |
) |
|
|
(3 |
)% |
|
|
(49,223 |
) |
|
|
(5 |
)% |
|
|
(49,775 |
) |
|
|
(5 |
)% |
Foreign currency |
|
|
(1,858 |
) |
|
* |
|
|
|
5,834 |
|
|
* |
|
|
|
(3,899 |
) |
|
* |
|
|
|
5,757 |
|
|
* |
|
||||
Net change in face amount |
|
|
2,234 |
|
|
* |
|
|
|
11,331 |
|
|
|
1 |
% |
|
|
293 |
|
|
* |
|
|
|
14,729 |
|
|
|
2 |
% |
||
Face amount in-force, end of period |
|
$ |
967,905 |
|
|
|
|
|
$ |
968,312 |
|
|
|
|
|
$ |
967,905 |
|
|
|
|
|
$ |
968,312 |
|
|
|
|
||||
* Less than 1%.
The face amount of term life insurance policies in-force increased for the three and six months ended June 30, 2026 as the face amount issued exceeded the face amount terminated. Issued face amount decreased during the 2026 periods compared to the same periods in 2025 primarily due to the decrease in the number of new policies issued as discussed below. Policy terminations also decreased during the 2026 periods compared to the same periods in 2025. During the 2026 periods, the strengthening of the U.S. dollar in relation to the Canadian dollar unfavorably impacted the translated face amount in-force, whereas a stronger Canadian dollar relative to the U.S. dollar contributed to the increases in the face amount in-force in the 2025 periods.
The average number of life-licensed independent sales representatives and the number of term life insurance policies issued, as well as the average monthly rate of new policies issued per life-licensed independent sales representative, were as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Average number of life-licensed independent sales representatives |
|
|
149,200 |
|
|
|
152,508 |
|
|
|
149,801 |
|
|
|
152,113 |
|
Number of new policies issued |
|
|
78,904 |
|
|
|
89,850 |
|
|
|
152,958 |
|
|
|
176,265 |
|
Average monthly rate of new policies issued per life-licensed |
|
|
0.18 |
|
|
|
0.20 |
|
|
|
0.17 |
|
|
|
0.19 |
|
The average number of life-licensed independent sales representatives decreased for the three and six months ended June 30, 2026 from the same periods in 2025 as a result of the agent licensing activity discussed above.
New policies issued during the three and six months ended June 30, 2026 decreased compared to the same periods in 2025, which we believe is attributable to the lower level of newly life-licensed independent sales representatives as well as macro level uncertainty that challenged demand for new policies.
Productivity in the three and six months ended June 30, 2026, measured by the average monthly rate of new policies issued per life-licensed independent sales representative, decreased from the same periods in 2025. Lower year-over-year productivity is due to the decline in new life insurance policy sales relative to the generally stable size of the life-licensed sales force.
28
Investment and Savings Product Sales, Asset Values and Accounts/Positions.
Investment and savings product sales were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in millions) |
|
|||||||||||||||||||||||||||||
Product sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. retail mutual funds |
|
$ |
1,482 |
|
|
$ |
1,244 |
|
|
$ |
238 |
|
|
|
19 |
% |
|
$ |
2,943 |
|
|
$ |
2,562 |
|
|
$ |
381 |
|
|
|
15 |
% |
Canada retail mutual funds - with up-front sales commissions |
|
|
199 |
|
|
|
168 |
|
|
|
31 |
|
|
|
18 |
% |
|
|
434 |
|
|
|
389 |
|
|
|
45 |
|
|
|
12 |
% |
Annuities and other |
|
|
1,456 |
|
|
|
1,272 |
|
|
|
184 |
|
|
|
14 |
% |
|
|
2,917 |
|
|
|
2,382 |
|
|
|
535 |
|
|
|
22 |
% |
Total sales-based revenue generating product sales |
|
|
3,137 |
|
|
|
2,684 |
|
|
|
453 |
|
|
|
17 |
% |
|
|
6,294 |
|
|
|
5,333 |
|
|
|
961 |
|
|
|
18 |
% |
Managed accounts |
|
|
904 |
|
|
|
634 |
|
|
|
270 |
|
|
|
43 |
% |
|
|
1,725 |
|
|
|
1,231 |
|
|
|
494 |
|
|
|
40 |
% |
Canada retail mutual funds - no up-front sales commissions |
|
|
282 |
|
|
|
219 |
|
|
|
63 |
|
|
|
29 |
% |
|
|
596 |
|
|
|
515 |
|
|
|
81 |
|
|
|
16 |
% |
Segregated funds |
|
|
34 |
|
|
|
11 |
|
|
|
23 |
|
|
|
209 |
% |
|
|
74 |
|
|
|
29 |
|
|
|
45 |
|
|
|
155 |
% |
Total product sales |
|
$ |
4,357 |
|
|
$ |
3,548 |
|
|
$ |
809 |
|
|
|
23 |
% |
|
$ |
8,689 |
|
|
$ |
7,108 |
|
|
$ |
1,581 |
|
|
|
22 |
% |
The rollforward of asset values in client accounts was as follows:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||||||||||||||||||||
|
|
2026 |
|
|
% of beginning balance |
|
2025 |
|
|
% of beginning balance |
|
2026 |
|
|
% of beginning balance |
|
2025 |
|
|
% of beginning balance |
||||||||||||||||
|
|
(Dollars in millions) |
||||||||||||||||||||||||||||||||||
Asset values, beginning of period |
|
$ |
126,763 |
|
|
|
|
|
|
$ |
109,908 |
|
|
|
|
|
|
$ |
128,892 |
|
|
|
|
|
|
$ |
112,082 |
|
|
|
|
|
||||
Net change in asset values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Inflows |
|
|
4,357 |
|
|
|
3 |
% |
|
|
|
3,548 |
|
|
|
3 |
% |
|
|
|
8,689 |
|
|
|
7 |
% |
|
|
|
7,108 |
|
|
|
6 |
% |
|
Redemptions |
|
|
(3,961 |
) |
|
|
(3 |
)% |
|
|
|
(3,063 |
) |
|
|
(3 |
)% |
|
|
|
(7,931 |
) |
|
|
(6 |
)% |
|
|
|
(6,081 |
) |
|
|
(5 |
)% |
|
Net flows |
|
|
396 |
|
|
* |
|
|
|
|
485 |
|
|
* |
|
|
|
|
758 |
|
|
* |
|
|
|
|
1,027 |
|
|
* |
|
|
||||
Change in fair value, net |
|
|
13,201 |
|
|
|
10 |
% |
|
|
|
8,931 |
|
|
|
8 |
% |
|
|
|
11,061 |
|
|
|
9 |
% |
|
|
|
6,227 |
|
|
|
6 |
% |
|
Foreign currency, net |
|
|
(318 |
) |
|
* |
|
|
|
|
900 |
|
|
* |
|
|
|
|
(669 |
) |
|
* |
|
|
|
|
888 |
|
|
* |
|
|
||||
Net change in asset values |
|
|
13,279 |
|
|
|
10 |
% |
|
|
|
10,316 |
|
|
|
9 |
% |
|
|
|
11,150 |
|
|
|
9 |
% |
|
|
|
8,142 |
|
|
|
7 |
% |
|
Asset values, end of period |
|
$ |
140,042 |
|
|
|
|
|
|
$ |
120,224 |
|
|
|
|
|
|
$ |
140,042 |
|
|
|
|
|
|
$ |
120,224 |
|
|
|
|
|
||||
* Less than 1%.
Average client asset values were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in millions) |
|
|||||||||||||||||||||||||||||
Average client asset values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. retail mutual funds |
|
$ |
62,298 |
|
|
$ |
54,324 |
|
|
$ |
7,974 |
|
|
|
15 |
% |
|
$ |
61,270 |
|
|
$ |
54,486 |
|
|
$ |
6,784 |
|
|
|
12 |
% |
Canada retail mutual funds |
|
|
18,624 |
|
|
|
15,153 |
|
|
|
3,471 |
|
|
|
23 |
% |
|
|
18,194 |
|
|
|
14,854 |
|
|
|
3,340 |
|
|
|
22 |
% |
Annuities and other |
|
|
34,572 |
|
|
|
30,108 |
|
|
|
4,464 |
|
|
|
15 |
% |
|
|
33,970 |
|
|
|
30,098 |
|
|
|
3,872 |
|
|
|
13 |
% |
Managed accounts |
|
|
17,760 |
|
|
|
12,167 |
|
|
|
5,593 |
|
|
|
46 |
% |
|
|
16,975 |
|
|
|
11,852 |
|
|
|
5,123 |
|
|
|
43 |
% |
Segregated funds |
|
|
2,297 |
|
|
|
2,223 |
|
|
|
74 |
|
|
|
3 |
% |
|
|
2,303 |
|
|
|
2,206 |
|
|
|
97 |
|
|
|
4 |
% |
Total average client asset values |
|
$ |
135,551 |
|
|
$ |
113,975 |
|
|
$ |
21,576 |
|
|
|
19 |
% |
|
$ |
132,712 |
|
|
$ |
113,496 |
|
|
$ |
19,216 |
|
|
|
17 |
% |
Average number of fee-generating positions was as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Positions |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
Positions |
|
|
% |
|
||||||||
|
|
(Positions in thousands) |
|
|||||||||||||||||||||||||||||
Average number of fee-generating positions (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Recordkeeping and custodial |
|
|
2,483 |
|
|
|
2,437 |
|
|
|
46 |
|
|
|
2 |
% |
|
|
2,475 |
|
|
|
2,428 |
|
|
|
47 |
|
|
|
2 |
% |
Recordkeeping only |
|
|
938 |
|
|
|
893 |
|
|
|
45 |
|
|
|
5 |
% |
|
|
931 |
|
|
|
889 |
|
|
|
42 |
|
|
|
5 |
% |
Total average number of fee-generating positions |
|
|
3,421 |
|
|
|
3,330 |
|
|
|
91 |
|
|
|
3 |
% |
|
|
3,406 |
|
|
|
3,317 |
|
|
|
89 |
|
|
|
3 |
% |
29
Changes in Investment and Savings Product Sales, Asset Values and Accounts/Positions During the Three Months Ended June 30, 2026
Product sales. Investment and savings product sales increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The growth in product sales was driven by our clients’ strong demand for retirement savings products, positive investor sentiment, and the effect of enhanced product offerings we have rolled out in recent years. At a product level, managed accounts product sales increased, fueled by continued strength in investor demand for these products as well as the expansion of investment strategies offered on our advisory platform. U.S. retail mutual fund sales experienced strong growth that was also boosted by favorable seasonal trends combined with sales force initiatives emphasizing the benefits of long-term investing. In addition, variable annuity product sales continued to grow as the guarantees offered by these products are more appealing to investors given strong equity market performance, expanded product offerings, and elevated interest rates. These trends have been further aided by the growing population of investors who are reaching retirement age and seeking the protection provided by annuity products.
Rollforward of client asset values. Ending client asset values increased during the three months ended June 30, 2026 and 2025 primarily due to strong market performance during both periods.
Average client asset values. Average client asset values increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily driven by the year-over-year cumulative effect of strong market performance and net client asset inflows.
Average number of fee-generating positions. The average number of fee-generating positions was higher during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to the continued cumulative effect of retail mutual fund sales in recent periods that led to an increase in the number of retail mutual fund positions serviced on our transfer agent recordkeeping platform.
Changes in Investment and Savings Product Sales, Asset Values and Accounts/Positions During the Six Months Ended June 30, 2026
Product sales. Investment and savings product sales increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Rollforward of client asset values. Ending client asset values increased during the six months ended June 30, 2026 and 2025 primarily due to the same factors as described in the three month comparison.
Average client asset values. Average client asset values increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Average number of fee-generating positions. The average number of fee-generating positions was higher during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Factors Affecting Our Results
Term Life Insurance Segment. The Term Life Insurance segment results are primarily driven by sales volumes, how closely actual experience matches our actuarial assumptions, terms and use of reinsurance, and expenses.
Sales and policies in-force. Sales of term life insurance policies and the size and characteristics of our in-force book of policies are vital to our results over the long term. Premium revenue is recognized as it is earned over the term of the policy. However, because we incur significant cash outflows at or about the time policies are issued, including the payment of sales commissions and underwriting costs, changes in life insurance sales volume in a period will have a more immediate impact on our cash flows than on revenue.
Sales volume of term life insurance products between fiscal periods may vary based on the productivity of independent sales representatives. Accordingly, the volume of term life insurance products sales will fluctuate in the short term, but over the longer term, our sales volume generally correlates to the size of the independent sales force.
Actuarial assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates of mortality, persistency, disability, and interest rates. Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. These variances will be reflected in our financial results by unlocking assumptions and cash flows underlying the liability for future policy benefits (“LFPB”) and ceded reserves that are part of the reinsurance recoverables. See Note 10 (Future Policy Benefits) to our unaudited condensed consolidated financial statements included elsewhere in this report for more information on LFPB. The variances are also reflected in the projection of future face amount that is the basis for amortizing deferred policy acquisition costs (“DAC”).
30
Reinsurance. We use reinsurance extensively, which has a significant effect on our results of operations. We have generally reinsured between 80% and 90% of the mortality risk on term life insurance (excluding coverage under certain riders) on a quota share YRT basis. To the extent actual mortality experience is more or less favorable than the contractual rate, the reinsurer will earn incremental profits or bear the incremental cost, as applicable. In contrast to coinsurance, which is intended to eliminate all risks (other than counterparty risk of the reinsurer) and rewards associated with a specified percentage of the block of policies subject to the reinsurance arrangement, the YRT reinsurance arrangements we enter into are intended only to reduce volatility associated with variances between estimated and actual mortality rates.
In 2010, as part of our corporate reorganization and the initial public offering of our common stock, we entered into significant coinsurance transactions (the “IPO coinsurance transactions”) with entities then affiliated with Citigroup, Inc. (collectively, the “IPO coinsurers”) and ceded between 80% and 90% of the risks and rewards of term life insurance policies that were in-force at year-end 2009. We administer all such policies subject to these coinsurance agreements. Policies reaching the end of their initial level term period are no longer ceded under the IPO coinsurance transactions.
The effect of our reinsurance arrangements on ceded premiums and benefits and expenses on our unaudited condensed consolidated statements of income follows:
We may alter our reinsurance practices at any time due to the unavailability of YRT reinsurance at attractive rates or the availability of alternatives to reduce our risk exposure. We intend to continue ceding approximately 90% of our mortality risk on new business.
Expenses. Results are also affected by variances in client acquisition, maintenance and administration expense levels.
Investment and Savings Products Segment. The Investment and Savings Products segment results are primarily driven by sales, the value of assets in client accounts for which we earn ongoing management, marketing and support, and distribution fees, and the number of transfer agent recordkeeping positions and non-bank custodial fee-generating accounts we administer.
Sales. We earn commissions and fees, such as dealer re-allowances and marketing and distribution fees, based on sales of mutual fund products and annuities in the United States and sales of certain mutual fund products in Canada. Sales of investment and savings products are influenced by the overall demand for investment and savings products in the United States and Canada, as well as by the size and productivity of the independent sales force. We generally experience seasonality in the Investment and Savings Products segment results due to our high concentration of sales of retirement account products. These accounts are typically funded in February
31
through April, coincident with our clients’ tax return preparation season. While we believe the size of the independent sales force is a factor in driving sales volume in this segment, there are a number of other variables, such as economic and market conditions, which may have a significantly greater effect on sales volume in any given fiscal period.
Asset values in client accounts. We earn marketing and distribution fees (trail commissions or, with respect to U.S. mutual funds, 12b-1 fees) on mutual fund and annuity assets in the United States and Canada. In the United States, we also earn investment advisory and administrative fees and marketing support fees on assets in managed accounts. In Canada, we earn marketing, distribution, and shareholder services fees on mutual fund assets for which we serve as the principal distributor and management fees on our legacy segregated funds. Asset values are influenced by new product sales, ongoing contributions to existing accounts, redemptions and the change in market values in existing accounts. While we offer a wide variety of asset classes and investment styles, our clients’ accounts are primarily invested in equity funds. Volatility in equity markets will impact the value of assets in client accounts and, as a result, the revenue we earn on those assets.
Positions. We earn transfer agent recordkeeping fees for administrative functions we perform on behalf of several of our mutual fund providers. An individual client account may include multiple fund positions for which we earn transfer agent recordkeeping fees. We may also receive fees earned for non-bank custodial services that we provide to clients with retirement plan accounts.
Sales mix. Our results in a given fiscal period will be affected by changes in the overall mix of products within these categories. Examples of changes in the sales mix that influence our results include the following:
Corporate and Other Distributed Products Segment. We earn revenues and pay commissions and referral fees within the Corporate and Other Distributed Products segment for mortgage loan originations, prepaid legal services, auto and homeowners’ insurance referrals, and other financial products, all of which are originated by third parties. The Corporate and Other Distributed Products segment also includes in-force policies from several discontinued lines of insurance underwritten by NBLIC.
The Corporate and Other Distributed Products segment includes net investment income recognized by the Company. Net investment income is impacted by the size and performance of our invested asset portfolio, which can be influenced by interest rates, credit spreads, and the mix of invested assets. Net investment income also is influenced by short-term interest rates and the amount of cash and cash equivalents on hand.
The Corporate and Other Distributed Products segment also includes corporate income and expenses not allocated to our other segments, general and administrative expenses (other than expenses that are allocated to the Term Life Insurance and Investment and Savings Products segments), interest expense on notes payable, a redundant reserve financing transaction and our revolving credit facility (“Revolving Credit Facility”), as well as recognized gains and losses on our invested asset portfolio.
Capital Structure. Our financial results are affected by our capital structure, which includes our senior unsecured notes (the “Senior Notes”), a redundant reserve financing transaction, our Revolving Credit Facility, and our common stock. See our unaudited condensed consolidated balance sheets, Note 11 (Debt), and Note 12 (Stockholders’ Equity) to our unaudited condensed consolidated financial statements included elsewhere in this report for more information on our capital structure.
Foreign Currency. The Canadian dollar is the functional currency for our Canadian subsidiaries, and our consolidated financial results, reported in U.S. dollars, are affected by changes in the currency exchange rate. As such, the translated amount of revenues, expenses, assets and liabilities attributable to our Canadian subsidiaries will be higher or lower in periods where the Canadian dollar appreciates or weakens relative to the U.S. dollar, respectively. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Canadian Currency Risk and Note 4 (Segment and Geographical Information) to our consolidated financial statements included in our 2025 Annual Report for more information on our Canadian subsidiaries and the impact of foreign currency on our financial results.
Critical Accounting Estimates
We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). These principles are established primarily by the Financial Accounting Standards Board. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions based on currently available information when recording transactions resulting from business operations. Our significant accounting policies are described in Note 1 (Description of Business, Basis of Presentation,
32
and Summary of Significant Accounting Policies) to our consolidated financial statements included in our 2025 Annual Report. The most significant items in our unaudited condensed consolidated balance sheets are based on fair value determinations, accounting estimates and actuarial determinations, which are susceptible to changes in future periods and could affect our results of operations and financial position.
The estimates that we deem to be most critical to an understanding of our results of operations and financial position are those related to DAC, future policy benefit reserves and corresponding amounts recoverable from reinsurers, income taxes, and the valuation of investments. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. Subsequent experience or use of other assumptions could produce significantly different results.
Results of Operations
Primerica, Inc. and Subsidiaries Results. Our results of operations were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in thousands) |
|
|
||||||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct premiums |
|
$ |
877,754 |
|
|
$ |
866,254 |
|
|
$ |
11,500 |
|
|
|
1 |
% |
|
$ |
1,748,999 |
|
|
$ |
1,725,099 |
|
|
$ |
23,900 |
|
|
|
1 |
% |
Ceded premiums |
|
|
(442,280 |
) |
|
|
(433,408 |
) |
|
|
8,872 |
|
|
|
2 |
% |
|
|
(857,139 |
) |
|
|
(843,930 |
) |
|
|
13,209 |
|
|
|
2 |
% |
Net premiums |
|
|
435,474 |
|
|
|
432,846 |
|
|
|
2,628 |
|
|
* |
|
|
|
891,860 |
|
|
|
881,169 |
|
|
|
10,691 |
|
|
|
1 |
% |
|
Commissions and fees |
|
|
368,610 |
|
|
|
306,032 |
|
|
|
62,578 |
|
|
|
20 |
% |
|
|
725,352 |
|
|
|
602,988 |
|
|
|
122,364 |
|
|
|
20 |
% |
Investment income net of investment expenses |
|
|
56,600 |
|
|
|
55,549 |
|
|
|
1,051 |
|
|
|
2 |
% |
|
|
113,106 |
|
|
|
111,888 |
|
|
|
1,218 |
|
|
|
1 |
% |
Interest expense on surplus note |
|
|
(12,862 |
) |
|
|
(14,621 |
) |
|
|
(1,759 |
) |
|
|
(12 |
)% |
|
|
(26,085 |
) |
|
|
(29,289 |
) |
|
|
(3,204 |
) |
|
|
(11 |
)% |
Net investment income |
|
|
43,738 |
|
|
|
40,928 |
|
|
|
2,810 |
|
|
|
7 |
% |
|
|
87,021 |
|
|
|
82,599 |
|
|
|
4,422 |
|
|
|
5 |
% |
Realized investment gains (losses) |
|
|
78 |
|
|
|
(2,338 |
) |
|
|
2,416 |
|
|
* |
|
|
|
(769 |
) |
|
|
(2,421 |
) |
|
|
1,652 |
|
|
* |
|
||
Other investment gains (losses) |
|
|
1,613 |
|
|
|
(528 |
) |
|
|
2,141 |
|
|
* |
|
|
|
2,856 |
|
|
|
312 |
|
|
|
2,544 |
|
|
* |
|
||
Investment gains (losses) |
|
|
1,691 |
|
|
|
(2,866 |
) |
|
|
4,557 |
|
|
* |
|
|
|
2,087 |
|
|
|
(2,109 |
) |
|
|
4,196 |
|
|
* |
|
||
Other, net |
|
|
15,554 |
|
|
|
16,394 |
|
|
|
(840 |
) |
|
|
(5 |
)% |
|
|
31,439 |
|
|
|
33,530 |
|
|
|
(2,091 |
) |
|
|
(6 |
)% |
Total revenues |
|
|
865,067 |
|
|
|
793,334 |
|
|
|
71,733 |
|
|
|
9 |
% |
|
|
1,737,759 |
|
|
|
1,598,177 |
|
|
|
139,582 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefits and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefits and claims |
|
|
147,328 |
|
|
|
152,494 |
|
|
|
(5,166 |
) |
|
|
(3 |
)% |
|
|
318,582 |
|
|
|
327,355 |
|
|
|
(8,773 |
) |
|
|
(3 |
)% |
Future policy benefits remeasurement (gain) loss |
|
|
(5,038 |
) |
|
|
(5,895 |
) |
|
|
(857 |
) |
|
* |
|
|
|
(12,415 |
) |
|
|
(9,168 |
) |
|
|
3,247 |
|
|
* |
|
||
Amortization of DAC |
|
|
85,128 |
|
|
|
80,043 |
|
|
|
5,085 |
|
|
|
6 |
% |
|
|
169,388 |
|
|
|
158,592 |
|
|
|
10,796 |
|
|
|
7 |
% |
Sales commissions |
|
|
201,924 |
|
|
|
166,291 |
|
|
|
35,633 |
|
|
|
21 |
% |
|
|
397,134 |
|
|
|
324,409 |
|
|
|
72,725 |
|
|
|
22 |
% |
Insurance expenses |
|
|
71,159 |
|
|
|
64,362 |
|
|
|
6,797 |
|
|
|
11 |
% |
|
|
137,726 |
|
|
|
129,168 |
|
|
|
8,558 |
|
|
|
7 |
% |
Insurance commissions |
|
|
5,778 |
|
|
|
5,751 |
|
|
|
27 |
|
|
* |
|
|
|
11,396 |
|
|
|
11,875 |
|
|
|
(479 |
) |
|
|
(4 |
)% |
|
Interest expense |
|
|
5,833 |
|
|
|
6,000 |
|
|
|
(167 |
) |
|
|
(3 |
)% |
|
|
11,693 |
|
|
|
12,005 |
|
|
|
(312 |
) |
|
|
(3 |
)% |
Other operating expenses |
|
|
94,736 |
|
|
|
89,791 |
|
|
|
4,945 |
|
|
|
6 |
% |
|
|
196,618 |
|
|
|
188,129 |
|
|
|
8,489 |
|
|
|
5 |
% |
Total benefits and expenses |
|
|
606,848 |
|
|
|
558,837 |
|
|
|
48,011 |
|
|
|
9 |
% |
|
|
1,230,122 |
|
|
|
1,142,365 |
|
|
|
87,757 |
|
|
|
8 |
% |
Income before income taxes |
|
|
258,219 |
|
|
|
234,497 |
|
|
|
23,722 |
|
|
|
10 |
% |
|
|
507,637 |
|
|
|
455,812 |
|
|
|
51,825 |
|
|
|
11 |
% |
Income taxes |
|
|
55,941 |
|
|
|
56,153 |
|
|
|
(212 |
) |
|
* |
|
|
|
115,263 |
|
|
|
108,417 |
|
|
|
6,846 |
|
|
|
6 |
% |
|
Net income |
|
$ |
202,278 |
|
|
$ |
178,344 |
|
|
$ |
23,934 |
|
|
|
13 |
% |
|
$ |
392,374 |
|
|
$ |
347,395 |
|
|
$ |
44,979 |
|
|
|
13 |
% |
* Less than 1% or not meaningful.
Results for the Three Months Ended June 30, 2026
Total revenues. Total revenues increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to higher commissions and fees earned in our Investment and Savings Products segment, investment gains and net investment income in our Corporate and Other Distributed Products segment, and net premiums in our Term Life Insurance segment. Further discussion related to revenue movements are discussed in detail in the Segment Results section below.
Total benefits and expenses. Total benefits and expenses increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 largely due to higher sales commissions in our Investment and Savings Products segment. Also contributing to the year-over-year increase were higher amortization of DAC in our Term Life Insurance segment. Insurance expenses and other operating expenses increased in the 2026 period compared to the 2025 period primarily due to higher growth-related costs, employee compensation, and technology investments. The increases in total benefits and expenses were partially offset by lower benefits and claims in our Term Life Insurance segment. Further discussion related to benefits and expenses movements are discussed in detail in the Segment Results section below.
33
Income taxes. The effective income tax rate was 21.7% for the three months ended June 30, 2026 compared to the effective income tax rate of 23.9% for the three months ended June 30, 2025. The decrease in the effective income tax rate during the 2026 period was primarily driven by a decrease in the estimated annual effective tax rate due to the expected realization of federal income tax benefits in 2026 related to the tax equity investment that occurred in the second quarter of 2026, net of the related investment amortization. For more information on the tax equity investment and its impact on income taxes, see Note 4 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Results for the Six Months Ended June 30, 2026
Total revenues. Total revenues increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Total benefits and expenses. Total benefits and expenses increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Income taxes. The effective income tax rate was 22.7% for the six months ended June 30, 2026 compared to the effective income tax rate of 23.8% for the six months ended June 30, 2025. The decrease in the effective income tax rate during the 2026 period was primarily due to the same factor as described in the three month comparison.
For additional information, see the Segment Results discussions below.
Segment Results
Term Life Insurance Segment. Our results for the Term Life Insurance segment were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct premiums |
|
$ |
873,604 |
|
|
$ |
861,919 |
|
|
$ |
11,685 |
|
|
|
1 |
% |
|
$ |
1,740,807 |
|
|
$ |
1,716,350 |
|
|
$ |
24,457 |
|
|
|
1 |
% |
Ceded premiums |
|
|
(441,242 |
) |
|
|
(432,306 |
) |
|
|
8,936 |
|
|
|
2 |
% |
|
|
(855,085 |
) |
|
|
(841,640 |
) |
|
|
13,445 |
|
|
|
2 |
% |
Net premiums |
|
|
432,362 |
|
|
|
429,613 |
|
|
|
2,749 |
|
|
* |
|
|
|
885,722 |
|
|
|
874,710 |
|
|
|
11,012 |
|
|
|
1 |
% |
|
Other, net |
|
|
11,243 |
|
|
|
12,221 |
|
|
|
(978 |
) |
|
|
(8 |
)% |
|
|
22,518 |
|
|
|
24,966 |
|
|
|
(2,448 |
) |
|
|
(10 |
)% |
Total revenues |
|
|
443,605 |
|
|
|
441,834 |
|
|
|
1,771 |
|
|
* |
|
|
|
908,240 |
|
|
|
899,676 |
|
|
|
8,564 |
|
|
* |
|
||
Benefits and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefits and claims |
|
|
144,174 |
|
|
|
148,725 |
|
|
|
(4,551 |
) |
|
|
(3 |
)% |
|
|
311,425 |
|
|
|
319,968 |
|
|
|
(8,543 |
) |
|
|
(3 |
)% |
Future policy benefits remeasurement (gain) loss |
|
|
(4,858 |
) |
|
|
(5,743 |
) |
|
|
(885 |
) |
|
* |
|
|
|
(12,422 |
) |
|
|
(9,145 |
) |
|
|
3,277 |
|
|
* |
|
||
Amortization of DAC |
|
|
83,567 |
|
|
|
78,386 |
|
|
|
5,181 |
|
|
|
7 |
% |
|
|
166,234 |
|
|
|
155,308 |
|
|
|
10,926 |
|
|
|
7 |
% |
Insurance expenses |
|
|
70,020 |
|
|
|
63,216 |
|
|
|
6,804 |
|
|
|
11 |
% |
|
|
135,399 |
|
|
|
126,861 |
|
|
|
8,538 |
|
|
|
7 |
% |
Insurance commissions |
|
|
2,223 |
|
|
|
2,238 |
|
|
|
(15 |
) |
|
* |
|
|
|
4,265 |
|
|
|
4,887 |
|
|
|
(622 |
) |
|
|
(13 |
)% |
|
Total benefits and expenses |
|
|
295,126 |
|
|
|
286,822 |
|
|
|
8,304 |
|
|
|
3 |
% |
|
|
604,901 |
|
|
|
597,879 |
|
|
|
7,022 |
|
|
|
1 |
% |
Income before income taxes |
|
$ |
148,479 |
|
|
$ |
155,012 |
|
|
$ |
(6,533 |
) |
|
|
(4 |
)% |
|
$ |
303,339 |
|
|
$ |
301,797 |
|
|
$ |
1,542 |
|
|
* |
|
|
* Less than 1% or not meaningful.
Results for the Three Months Ended June 30, 2026
Net premiums. Direct premiums increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 largely due to the layering effect of new policy sales that contributed to growth in the in-force book of business compared to the prior year period. This increase was partially offset by an increase in ceded premiums, which includes $9.9 million in higher non-level YRT reinsurance ceded premiums as business not subject to the IPO coinsurance transactions ages, and was reduced by $1.0 million in lower coinsurance ceded premiums due to the run-off of business subject to the IPO coinsurance transactions.
Benefits and claims. Benefits and claims decreased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 despite the increase in net premiums. Higher ceded premiums for YRT reinsurance as noted above contributed to the decrease in benefits and claims expense. As the Company cedes higher premiums to YRT reinsurers, it also cedes higher future policy benefits reserves to the YRT reinsurers, which effectively offsets the net amount of benefits and claims expense recognized.
Future policy benefits remeasurement (gain) loss. Future policy benefits remeasurement gain decreased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 and represents differences in experience variances that occurred in each period. The future policy benefits remeasurement gains in both periods are largely from better mortality and lower reserves benefiting from elevated lapse experience compared to our future policy benefit reserve assumptions.
Amortization of DAC. Amortization of DAC increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to growth in the in-force book of business compared to the prior year period.
34
Insurance expenses. Insurance expenses increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to higher technology investments, employee compensation, other variable expenses to support recruiting and licensing initiatives, and premium growth-related costs.
Results for the Six Months Ended June 30, 2026
Net premiums. Direct premiums increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 largely due to the layering effect of new policy sales that contributed to growth in the in-force book of business compared to the prior year period. This increase was partially offset by an increase in ceded premiums, which includes $17.3 million in higher non-level YRT reinsurance ceded premiums as business not subject to the IPO coinsurance transactions ages, and was reduced by $3.9 million in lower coinsurance ceded premiums due to the run-off of business subject to the IPO coinsurance transactions.
Benefits and claims. Benefits and claims decreased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Future policy benefits remeasurement (gain) loss. Future policy benefits remeasurement gain increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 and represents differences in experience variances that occurred in each period, due to the same factors as described in the three month comparison.
Amortization of DAC. Amortization of DAC increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Insurance expenses. Insurance expenses increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Investment and Savings Products Segment. Investment and Savings Products segment results were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commissions and fees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales-based revenues |
|
$ |
135,509 |
|
|
$ |
115,933 |
|
|
$ |
19,576 |
|
|
|
17 |
% |
|
$ |
271,864 |
|
|
$ |
227,204 |
|
|
$ |
44,660 |
|
|
|
20 |
% |
Asset-based revenues |
|
|
197,598 |
|
|
|
154,735 |
|
|
|
42,863 |
|
|
|
28 |
% |
|
|
384,965 |
|
|
|
306,749 |
|
|
|
78,216 |
|
|
|
25 |
% |
Account-based revenues |
|
|
24,118 |
|
|
|
24,394 |
|
|
|
(276 |
) |
|
|
(1 |
)% |
|
|
47,737 |
|
|
|
48,588 |
|
|
|
(851 |
) |
|
|
(2 |
)% |
Other, net |
|
|
3,293 |
|
|
|
3,236 |
|
|
|
57 |
|
|
|
2 |
% |
|
|
6,598 |
|
|
|
6,568 |
|
|
|
30 |
|
|
* |
|
|
Total revenues |
|
|
360,518 |
|
|
|
298,298 |
|
|
|
62,220 |
|
|
|
21 |
% |
|
|
711,164 |
|
|
|
589,109 |
|
|
|
122,055 |
|
|
|
21 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of DAC |
|
|
1,304 |
|
|
|
1,368 |
|
|
|
(64 |
) |
|
|
(5 |
)% |
|
|
2,638 |
|
|
|
2,705 |
|
|
|
(67 |
) |
|
|
(2 |
)% |
Insurance commissions |
|
|
3,450 |
|
|
|
3,468 |
|
|
|
(18 |
) |
|
* |
|
|
|
6,907 |
|
|
|
6,745 |
|
|
|
162 |
|
|
|
2 |
% |
|
Sales commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales-based |
|
|
95,816 |
|
|
|
82,935 |
|
|
|
12,881 |
|
|
|
16 |
% |
|
|
190,984 |
|
|
|
160,202 |
|
|
|
30,782 |
|
|
|
19 |
% |
Asset-based |
|
|
100,677 |
|
|
|
78,010 |
|
|
|
22,667 |
|
|
|
29 |
% |
|
|
196,037 |
|
|
|
154,256 |
|
|
|
41,781 |
|
|
|
27 |
% |
Other operating expenses |
|
|
55,056 |
|
|
|
53,096 |
|
|
|
1,960 |
|
|
|
4 |
% |
|
|
109,483 |
|
|
|
104,510 |
|
|
|
4,973 |
|
|
|
5 |
% |
Total expenses |
|
|
256,303 |
|
|
|
218,877 |
|
|
|
37,426 |
|
|
|
17 |
% |
|
|
506,049 |
|
|
|
428,418 |
|
|
|
77,631 |
|
|
|
18 |
% |
Income before income taxes |
|
$ |
104,215 |
|
|
$ |
79,421 |
|
|
$ |
24,794 |
|
|
|
31 |
% |
|
$ |
205,115 |
|
|
$ |
160,691 |
|
|
$ |
44,424 |
|
|
|
28 |
% |
* Less than 1% or not meaningful.
Results for the Three Months Ended June 30, 2026
Commissions and fees. Commissions and fees increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily driven by higher asset-based and sales-based revenues. Higher asset-based revenues were driven by an increase in average client assets in the 2026 period compared to the same period in 2025 as well as a higher mix of assets under management that earn higher asset-based commissions, namely managed accounts and Canadian mutual funds sold under the principal distributor model. The increase in sales-based revenue was largely the result of strong growth in product sales for U.S. retail mutual funds and variable annuities.
Sales commissions. The increases in asset-based commissions and sales-based commissions for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 were largely in line with the increases in asset-based revenues and sales-based revenues, respectively.
Other operating expenses. Other operating expenses for the three months ended June 30, 2026 increased compared to the three months ended June 30, 2025 largely due to higher variable growth-related costs.
35
Results for the Six Months Ended June 30, 2026
Commissions and fees. Commissions and fees increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Sales commissions. The increases in asset-based commissions and sales-based commissions for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 were primarily due to the same factors as described in the three month comparison.
Other operating expenses. Other operating expenses for the six months ended June 30, 2026 increased compared to the six months ended June 30, 2025 largely due to the same factors as described in the three month comparison.
Corporate and Other Distributed Products Segment. Corporate and Other Distributed Products segment results were as follows:
|
|
Three months ended June 30, |
|
|
Change |
|
|
Six months ended June 30, |
|
|
Change |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct premiums |
|
$ |
4,150 |
|
|
$ |
4,335 |
|
|
$ |
(185 |
) |
|
|
(4 |
)% |
|
$ |
8,192 |
|
|
$ |
8,749 |
|
|
$ |
(557 |
) |
|
|
(6 |
)% |
Ceded premiums |
|
|
(1,038 |
) |
|
|
(1,102 |
) |
|
|
(64 |
) |
|
|
(6 |
)% |
|
|
(2,054 |
) |
|
|
(2,290 |
) |
|
|
(236 |
) |
|
|
(10 |
)% |
Net premiums |
|
|
3,112 |
|
|
|
3,233 |
|
|
|
(121 |
) |
|
|
(4 |
)% |
|
|
6,138 |
|
|
|
6,459 |
|
|
|
(321 |
) |
|
|
(5 |
)% |
Commissions and fees |
|
|
11,385 |
|
|
|
10,970 |
|
|
|
415 |
|
|
|
4 |
% |
|
|
20,786 |
|
|
|
20,447 |
|
|
|
339 |
|
|
|
2 |
% |
Investment income net of investment expenses |
|
|
56,600 |
|
|
|
55,549 |
|
|
|
1,051 |
|
|
|
2 |
% |
|
|
113,106 |
|
|
|
111,888 |
|
|
|
1,218 |
|
|
|
1 |
% |
Interest expense on surplus note |
|
|
(12,862 |
) |
|
|
(14,621 |
) |
|
|
(1,759 |
) |
|
|
(12 |
)% |
|
|
(26,085 |
) |
|
|
(29,289 |
) |
|
|
(3,204 |
) |
|
|
(11 |
)% |
Net investment income |
|
|
43,738 |
|
|
|
40,928 |
|
|
|
2,810 |
|
|
|
7 |
% |
|
|
87,021 |
|
|
|
82,599 |
|
|
|
4,422 |
|
|
|
5 |
% |
Realized investment gains (losses) |
|
|
78 |
|
|
|
(2,338 |
) |
|
|
2,416 |
|
|
* |
|
|
|
(769 |
) |
|
|
(2,421 |
) |
|
|
1,652 |
|
|
* |
|
||
Other investment gains (losses) |
|
|
1,613 |
|
|
|
(528 |
) |
|
|
2,141 |
|
|
* |
|
|
|
2,856 |
|
|
|
312 |
|
|
|
2,544 |
|
|
* |
|
||
Investment gains (losses) |
|
|
1,691 |
|
|
|
(2,866 |
) |
|
|
4,557 |
|
|
* |
|
|
|
2,087 |
|
|
|
(2,109 |
) |
|
|
4,196 |
|
|
* |
|
||
Other, net |
|
|
1,018 |
|
|
|
937 |
|
|
|
81 |
|
|
|
9 |
% |
|
|
2,323 |
|
|
|
1,996 |
|
|
|
327 |
|
|
|
16 |
% |
Total revenues |
|
|
60,944 |
|
|
|
53,202 |
|
|
|
7,742 |
|
|
|
15 |
% |
|
|
118,355 |
|
|
|
109,392 |
|
|
|
8,963 |
|
|
|
8 |
% |
Benefits and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefits and claims |
|
|
3,154 |
|
|
|
3,769 |
|
|
|
(615 |
) |
|
|
(16 |
)% |
|
|
7,157 |
|
|
|
7,387 |
|
|
|
(230 |
) |
|
|
(3 |
)% |
Future policy benefits remeasurement (gain) loss |
|
|
(180 |
) |
|
|
(152 |
) |
|
|
28 |
|
|
* |
|
|
|
7 |
|
|
|
(23 |
) |
|
|
30 |
|
|
* |
|
||
Amortization of DAC |
|
|
257 |
|
|
|
289 |
|
|
|
(32 |
) |
|
|
(11 |
)% |
|
|
516 |
|
|
|
579 |
|
|
|
(63 |
) |
|
|
(11 |
)% |
Insurance expenses |
|
|
1,139 |
|
|
|
1,146 |
|
|
|
(7 |
) |
|
* |
|
|
|
2,327 |
|
|
|
2,307 |
|
|
|
20 |
|
|
* |
|
||
Insurance commissions |
|
|
105 |
|
|
|
45 |
|
|
|
60 |
|
|
|
133 |
% |
|
|
224 |
|
|
|
243 |
|
|
|
(19 |
) |
|
|
(8 |
)% |
Sales commissions |
|
|
5,431 |
|
|
|
5,346 |
|
|
|
85 |
|
|
|
2 |
% |
|
|
10,113 |
|
|
|
9,951 |
|
|
|
162 |
|
|
|
2 |
% |
Interest expense |
|
|
5,833 |
|
|
|
6,000 |
|
|
|
(167 |
) |
|
|
(3 |
)% |
|
|
11,693 |
|
|
|
12,005 |
|
|
|
(312 |
) |
|
|
(3 |
)% |
Other operating expenses |
|
|
39,680 |
|
|
|
36,695 |
|
|
|
2,985 |
|
|
|
8 |
% |
|
|
87,135 |
|
|
|
83,619 |
|
|
|
3,516 |
|
|
|
4 |
% |
Total benefits and expenses |
|
|
55,419 |
|
|
|
53,138 |
|
|
|
2,281 |
|
|
|
4 |
% |
|
|
119,172 |
|
|
|
116,068 |
|
|
|
3,104 |
|
|
|
3 |
% |
Income (loss) before income taxes |
|
$ |
5,525 |
|
|
$ |
64 |
|
|
$ |
5,461 |
|
|
* |
|
|
$ |
(817 |
) |
|
$ |
(6,676 |
) |
|
$ |
(5,859 |
) |
|
* |
|
||
* Less than 1% or not meaningful.
Results for the Three Months Ended June 30, 2026
Total revenues. Total revenues increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to investment gains (losses) and net investment income. The increase in investment gains (losses) is largely due to more favorable market performance for equity securities in the 2026 period and $2.0 million of investment losses in the 2025 period related to the tender of bonds from a certain issuer that allowed us to reinvest the proceeds at current market interest rates rather than accept replacement bonds from the issuer at less favorable terms. Net investment income increased largely due to continued growth of the invested asset portfolio. Investment income net of investment expenses includes interest earned on our held-to-maturity asset, which is offset by interest expense on the surplus note (“Surplus Note”), thereby eliminating any impact on net investment income. Amounts recognized for each line item will remain offsetting and will fluctuate from period to period along with the principal amounts of the held-to-maturity asset and the Surplus Note based on the balance of reserves being contractually supported under a redundant reserve financing transaction used by Vidalia Re, Inc. (“Vidalia Re”). For more information on the Surplus Note, see Note 4 (Investments) and Note 11 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Total benefits and expenses. Total benefits and expenses increased during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to increased professional fees and employee compensation.
36
Results for the Six Months Ended June 30, 2026
Total revenues. Total revenues increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the same factors as described in the three month comparison.
Total benefits and expenses. Total benefits and expenses increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to increased professional fees.
Financial Condition
Investments. Our insurance business is primarily focused on selling term life insurance, which does not include an investment component for the policyholder. The invested asset portfolio funded by premiums from our term life insurance business does not involve the substantial asset accumulations and spread requirements that exist with other non-term life insurance products. As a result, the profitability of our term life insurance business is not as sensitive to the impact that interest rates have on our invested asset portfolio and investment income as the profitability of other companies that distribute non-term life insurance products.
We follow a conservative investment strategy designed to emphasize the preservation of our invested assets and provide adequate liquidity for the prompt payment of claims. To meet business needs and mitigate risks, our investment guidelines provide restrictions on our portfolio’s composition, including limits on asset type, per issuer limits, credit quality limits, portfolio duration, limits on the amount of investments in approved countries and permissible security types. We also manage and monitor our allocation of investments to limit the accumulation of any disproportionate concentrations of risk among industry sectors or issuer countries outside of the U.S. and Canada. In addition, as of June 30, 2026, we did not hold any country of issuer concentrations outside of the U.S. or Canada that represented more than 5% of the fair value of our available-for-sale invested asset portfolio or any industry concentrations of corporate bonds that represented more than 10% of the fair value of our available-for-sale invested asset portfolio.
We invest a portion of our portfolio in assets denominated in Canadian dollars to support our Canadian operations. Additionally, to ensure adequate liquidity for payment of claims, we take into account the maturity and duration of our invested asset portfolio and our general liability profile.
We also hold within our invested asset portfolio a credit enhanced note (“LLC Note”) issued by a limited liability company owned by a third-party service provider which is classified as a held-to-maturity security. The LLC Note, which is scheduled to mature on December 31, 2030, was obtained in exchange for the Surplus Note of equal principal amount issued by Vidalia Re, Inc. a special purpose financial captive insurance company and wholly owned subsidiary of Primerica Life. For more information on the LLC Note, see Note 4 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.
We have an investment committee composed of members of our senior management team that is responsible for establishing and maintaining our investment guidelines and supervising our investment activity. Our investment committee regularly monitors our overall investment results and our compliance with our investment objectives and guidelines. We use a third-party investment advisor to assist us in the management of our investing activities. Our investment advisor reports to our investment committee.
Our invested asset portfolio is subject to a variety of risks, including risks related to general economic conditions, market volatility, interest rate fluctuations, liquidity risk and credit and default risk. Investment guideline restrictions have been established to minimize the effect of these risks but may not always be effective due to factors beyond our control. Interest rates and credit spreads are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. A significant increase in interest rates or credit spreads could result in significant unrealized losses in the value of our invested asset portfolio. We believe that fluctuations caused by movement in interest rates and credit spreads generally have little bearing on the recoverability of our investments as we have the ability to hold these investments until maturity or a market price recovery and we have no present intention to dispose of them.
Details on asset mix of fixed-maturity securities in our available-for-sale and trading securities investment portfolio (excluding short-term investments) were as follows:
|
|
June 30, 2026 |
|
December 31, 2025 |
Average rating of our fixed-maturity portfolio |
|
A |
|
A |
Average duration of our fixed-maturity portfolio |
|
5.2 years |
|
5.2 years |
Average book yield of our fixed-maturity portfolio |
|
4.43% |
|
4.30% |
37
The distribution of fixed-maturity securities in our available-for-sale and trading securities investment portfolio (excluding short-term investments) by rating were as follows:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Amortized cost (1) |
|
|
% |
|
|
Amortized cost (1) |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
AAA |
|
$ |
670,861 |
|
|
|
18 |
% |
|
$ |
666,842 |
|
|
|
20 |
% |
AA |
|
|
494,329 |
|
|
|
14 |
% |
|
|
503,652 |
|
|
|
15 |
% |
A |
|
|
902,900 |
|
|
|
25 |
% |
|
|
805,885 |
|
|
|
24 |
% |
BBB |
|
|
1,543,745 |
|
|
|
42 |
% |
|
|
1,377,969 |
|
|
|
40 |
% |
Below investment grade |
|
|
31,080 |
|
|
* |
|
|
|
36,627 |
|
|
|
1 |
% |
|
Not rated |
|
|
1,421 |
|
|
* |
|
|
|
444 |
|
|
* |
|
||
Total |
|
$ |
3,644,336 |
|
|
|
100 |
% |
|
$ |
3,391,419 |
|
|
|
100 |
% |
* Less than 1%.
The ten largest holdings within our fixed-maturity securities available-for-sale and trading securities invested asset portfolio (excluding short-term investments) were as follows:
|
|
June 30, 2026 |
||||||||||||
Issuer |
|
Fair value |
|
|
Amortized cost (1) |
|
|
Unrealized gain (loss) |
|
|
Credit rating |
|||
|
|
(Dollars in thousands) |
||||||||||||
ONEOK Inc. |
|
$ |
15,117 |
|
|
$ |
15,455 |
|
|
$ |
(338 |
) |
|
BBB |
Province of Alberta Canada |
|
|
14,568 |
|
|
|
15,022 |
|
|
|
(454 |
) |
|
AA- |
Province of Ontario Canada |
|
|
13,622 |
|
|
|
13,744 |
|
|
|
(122 |
) |
|
A+ |
Realty Income Corp |
|
|
13,612 |
|
|
|
13,961 |
|
|
|
(349 |
) |
|
A- |
T-Mobile US, Inc. |
|
|
12,993 |
|
|
|
13,013 |
|
|
|
(20 |
) |
|
BBB |
Manulife Financial Corp |
|
|
12,884 |
|
|
|
13,277 |
|
|
|
(393 |
) |
|
A |
Enbridge Inc. |
|
|
12,046 |
|
|
|
12,349 |
|
|
|
(303 |
) |
|
BBB+ |
Morgan Stanley |
|
|
12,038 |
|
|
|
11,973 |
|
|
|
65 |
|
|
BBB+ |
Oracle Corporation |
|
|
11,738 |
|
|
|
12,891 |
|
|
|
(1,153 |
) |
|
BBB |
Province of New Brunswick Canada |
|
|
11,653 |
|
|
|
12,017 |
|
|
|
(364 |
) |
|
A+ |
Total – ten largest holdings |
|
$ |
130,271 |
|
|
$ |
133,702 |
|
|
$ |
(3,431 |
) |
|
|
Total – fixed-maturity securities |
|
$ |
3,504,058 |
|
|
$ |
3,644,336 |
|
|
|
|
|
|
|
Percent of total fixed-maturity securities |
|
|
4 |
% |
|
|
4 |
% |
|
|
|
|
|
|
For additional information on our invested asset portfolio, see Note 4 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Liquidity and Capital Resources
Dividends and other payments to the Parent Company from its subsidiaries are our principal sources of cash. The amount of dividends paid by the subsidiaries is dependent on their capital needs to fund future growth and applicable regulatory restrictions. The primary uses of funds by the Parent Company include the payments of stockholder dividends, interest on note payable, general operating expenses, and income taxes, as well as repurchases of shares of our common stock outstanding. As of June 30, 2026, the Parent Company had cash, cash equivalents and available-for-sale securities of $587.4 million.
The Parent Company’s subsidiaries generate operating cash flows primarily from term life insurance premiums (net of premiums ceded to reinsurers), income from invested assets, commissions and fees collected from the distribution of investment and savings products, as well as other financial products. The subsidiaries’ principal operating cash outflows include the payment of insurance claims and benefits (net of ceded claims recovered from reinsurers), commissions to the independent sales force, insurance and other operating expenses, interest expense for future policy benefit reserves financing transactions, and income taxes.
The distribution and underwriting of term life insurance requires up-front cash outlays at the time the policy is issued as we pay a substantial majority of the sales commission during the first year following the sale of a policy and incur costs for underwriting activities at the inception of a policy’s term. During the early years of a policy’s term, we generally receive level term premiums in excess of claims paid. We invest the excess cash generated during earlier policy years primarily in fixed-maturity securities held in support of future policy benefit reserves. In later policy years, cash received from the maturity or sale of invested assets is used to pay claims in excess of level term premiums received.
Historically, cash flows generated by our businesses, primarily from our existing block of term life insurance policies and our investment and savings products, have provided us with sufficient liquidity to meet our operating requirements. We anticipate that cash flows from our businesses will continue to provide sufficient operating liquidity over the next 12 months.
38
If necessary, we could seek to enhance our liquidity position or capital structure through sales of our available-for-sale investment portfolio, changes in the timing or amount of share repurchases, borrowings against our Revolving Credit Facility, or some combination of these sources. Additionally, we believe that cash flows from our businesses and potential sources of funding will sufficiently support our long-term liquidity needs.
Cash Flows. The components of the changes in cash and cash equivalents were as follows:
|
|
Six months ended June 30, |
|
|
Change |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|||
|
|
(In thousands) |
|
|||||||||
Net cash provided by (used in) operating activities |
|
$ |
350,610 |
|
|
$ |
360,042 |
|
|
$ |
(9,432 |
) |
Net cash provided by (used in) investing activities |
|
|
(149,050 |
) |
|
|
(100,471 |
) |
|
|
(48,579 |
) |
Net cash provided by (used in) financing activities |
|
|
(356,210 |
) |
|
|
(328,745 |
) |
|
|
(27,465 |
) |
Effect of foreign exchange rate changes on cash |
|
|
(1,394 |
) |
|
|
2,551 |
|
|
|
(3,945 |
) |
Change in cash and cash equivalents |
|
$ |
(156,044 |
) |
|
$ |
(66,623 |
) |
|
$ |
(89,421 |
) |
Operating Activities. Cash flows provided by operating activities decreased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to timing differences in payments made for income tax remittances, partially offset by higher cash inflows from Investment and Savings Products segment income in the 2026 period. The largest timing difference resulted from a payment made in the first quarter of 2026 for a transferable federal tax credit that was used to offset estimated federal income tax payments in the fourth quarter of 2025. Also contributing to the change in cash flows provided by operating activities was the timing of purchases, maturities, and sales of financial instruments classified as trading securities.
Investing Activities. Cash flows used in investing activities increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to fluctuations in the timing of maturities, sales and reinvestments of debt securities held in our available-for-sale investment portfolio as well as a capital contribution made for a tax equity investment in the second quarter of 2026. For more information on the tax equity investment, see Note 4 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Financing Activities. Cash flows used in financing activities increased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to the increase in the size of our share repurchase program and higher per share stockholder dividend payments.
Risk-Based Capital (“RBC”). The National Association of Insurance Commissioners (“NAIC”) has established RBC standards for U.S. life insurers, as well as a risk-based capital model act (the “RBC Model Act”) that has been adopted by the insurance regulatory authorities. The RBC Model Act requires that life insurers annually submit a report to state regulators regarding their RBC based upon four categories of risk: asset risk; insurance risk; interest rate risk and business risk. The capital requirement for each is determined by applying factors that vary based upon the degree of risk to various asset, premiums and policy benefit reserve items. The formula is an early warning tool to identify possible weakly capitalized companies for purposes of initiating further regulatory action. As of June 30, 2026, our U.S. life insurance subsidiaries maintained statutory capital and surplus substantially in excess of the applicable regulatory requirements and remain well positioned to support existing operations and fund future growth.
In Canada, an insurer’s minimum capital requirement is overseen by the Office of the Superintendent of Financial Institutions (“OSFI”) and determined as the sum of the capital requirements for six categories of risk: asset default risk; mortality/morbidity/lapse/expense risks; changes in interest rate environment risk; operational risk; segregated funds risk; and foreign exchange risk. As of June 30, 2026, Primerica Life Canada was in compliance with Canada’s minimum capital requirements as defined by OSFI.
Redundant Reserve Financing. The Model Regulation titled Valuation of Life Insurance Policies, commonly known as Regulation XXX, requires insurers to carry statutory policy benefit reserves for term life insurance policies with long-term premium guarantees which are often significantly in excess of the future policy benefit reserves that insurers deem necessary to satisfy claim obligations (“redundant policy benefit reserves”). Accordingly, many insurance companies have sought ways to reduce their capital needs by financing redundant policy benefit reserves through bank financing, reinsurance arrangements and other financing transactions.
We have established Vidalia Re as a special purpose financial captive insurance company and wholly owned subsidiary of Primerica Life. Primerica Life has ceded certain term life insurance policies issued in 2011 through 2017 to Vidalia Re as part of a Regulation XXX redundant reserve financing transaction (the “Vidalia Re Redundant Reserve Financing Transaction”). This redundant reserve financing transaction allows us to more efficiently manage and deploy our capital.
The NAIC has adopted a model regulation for determining reserves using a principle-based approach (“principle-based reserves” or “PBR”), which is designed to reflect each insurer’s own experience in calculating reserves and move away from a single prescriptive reserving formula. Primerica Life adopted PBR as of January 1, 2018 and NBLIC adopted the New York amended version of PBR effective January 1, 2021. PBR significantly reduced the redundant statutory policy benefit reserve requirements while still ensuring adequate liabilities are held. The regulation only applies for business issued after the effective dates. See Note 5 (Investments), Note 12
39
(Debt) and Note 18 (Commitments and Contingent Liabilities) to our consolidated financial statements in our 2025 Annual Report for more information on the Vidalia Re Redundant Reserve Financing Transaction.
Note Payable. The Company has $600.0 million of publicly-traded Senior Notes outstanding issued at a price of 99.55% with an annual interest rate of 2.80%, payable semi-annually in arrears on May 19 and November 19. The Senior Notes are scheduled to mature on November 19, 2031. We were in compliance with the covenants of the Senior Notes as of June 30, 2026. No events of default occurred during the three and six months ended June 30, 2026.
Rating Agencies. There have been no changes to Primerica, Inc.’s Senior Notes ratings or Primerica Life’s financial strength ratings since December 31, 2025.
Surplus Note. Vidalia Re issued a Surplus Note in exchange for the LLC Note as a part of the Vidalia Re Redundant Reserve Financing Transaction. The Surplus Note has a principal amount equal to the LLC Note and is scheduled to mature on December 31, 2030. For more information on the Surplus Note, see Note 11 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Off-Balance Sheet Arrangements. We have no transactions, agreements or other contractual arrangements to which an entity unconsolidated with the Company is a party, under which the Company maintains any off-balance sheet obligations or guarantees as of June 30, 2026.
Credit Facility Agreement. We maintain an unsecured $200.0 million Revolving Credit Facility with a syndicate of commercial banks. The Revolving Credit Facility, which had a previously-scheduled termination date of June 22, 2026, was renewed on June 2, 2026. The new termination date is June 2, 2031. As of June 30, 2026, no amounts were outstanding under the Revolving Credit Facility and we were in compliance with its covenants. Furthermore, no events of default occurred under the Revolving Credit Facility during the three and six months ended June 30, 2026. For more information on the Revolving Credit Facility, see Note 11 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this report.
Contractual Obligations Update. There have been no material changes in contractual obligations from those disclosed in the 2025 Annual Report.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements contained in this report as well as some statements in periodic press releases and some oral statements made by our officials during our presentations are “forward-looking” statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “expect”, “intend”, “plan”, “anticipate”, “estimate”, “believe”, “will be”, “will continue”, “will likely result”, and similar expressions, or future conditional verbs such as “may”, “will”, “should”, “would”, and “could”. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries are also forward-looking statements. These forward-looking statements involve external risks and uncertainties, including, but not limited to, those described under the section entitled “Risk Factors” included herein.
Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond the control of our management team. All forward-looking statements in this report and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties include, among others:
Risks Related to Our Distribution Structure
Risks Related to Our Insurance Business and Reinsurance
Risks Related to Our Investment and Savings Products Business
Risks Related to Our Mortgage Brokerage Business
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Risks Related to Economic Downcycles, Public Health Crises or Catastrophes, and Disasters
Risks Related to Information Technology and Cybersecurity
Financial Risks Affecting Our Business
Risks Related to Legislative and Regulatory Changes and Government Policy Uncertainty
General Risk Factors
Developments in any of these areas could cause actual results to differ materially from those anticipated or projected or cause a significant reduction in the market price of our common stock.
The foregoing list of risks and uncertainties may not contain all of the risks and uncertainties that could affect us. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact
42
occur. Accordingly, undue reliance should not be placed on these statements. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in our exposures to market risk since December 31, 2025. For details on the Company’s interest rate, foreign currency exchange, and credit risks, see “Item 7A. Quantitative and Qualitative Information About Market Risks” in our 2025 Annual Report.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are involved from time to time in legal disputes, regulatory inquiries and arbitration proceedings in the normal course of business. Additional information regarding certain legal proceedings to which we are a party is described under “Contingent Liabilities” in Note 15 (Commitments and Contingent Liabilities) to our unaudited condensed consolidated financial statements included elsewhere in this report, and such information is incorporated herein by reference. As of the date of this report, we do not believe any pending legal proceeding to which Primerica, Inc. or any of its subsidiaries is a party is required to be disclosed pursuant to this item.
ITEM 1A. RISK FACTORS.
The risk factors contained in our 2025 Annual Report are incorporated herein by reference.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the quarter ended June 30, 2026, we repurchased shares of our common stock as follows:
Period |
|
Total number of shares purchased (1) |
|
|
Average price paid per share (1) |
|
|
Total number of shares purchased as part of publicly announced plans or programs (2) |
|
|
Approximate dollar value of shares that may yet be purchased under the plans or programs (2) |
|
||||
April 1 - 30, 2026 |
|
|
171,651 |
|
|
$ |
268.02 |
|
|
|
171,617 |
|
|
$ |
294,011,377 |
|
May 1 - 31, 2026 |
|
|
158,725 |
|
|
|
275.62 |
|
|
|
158,725 |
|
|
|
250,263,592 |
|
June 1 - 30, 2026 |
|
|
165,540 |
|
|
|
274.85 |
|
|
|
165,439 |
|
|
|
204,792,683 |
|
Total |
|
|
495,916 |
|
|
$ |
272.73 |
|
|
|
495,781 |
|
|
$ |
204,792,683 |
|
For information regarding year-to-date share repurchases, refer to Note 12 (Stockholders’ Equity) to our unaudited condensed consolidated financial statements included elsewhere in this report.
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ITEM 5. OTHER INFORMATION.
Trading Plans
During the quarter ended June 30, 2026, none of our directors or executive officers
ITEM 6. EXHIBITS.
The agreements included as exhibits to this report are included to provide you with information regarding the terms of these agreements and are not intended to provide any other factual or disclosure information about the Company or its subsidiaries, our business or the other parties to these agreements. These agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon by investors.
Exhibit Number |
|
Description |
|
Reference |
10.1
|
|
Second Amended and Restated Credit Agreement dated as of June 2, 2026 |
|
Incorporated by reference to Exhibit 10.1 to Primerica’s Current Report on Form 8-K filed June 2, 2026 (Commission File No.001-34680) |
31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification, executed by Glenn J. Williams, Chief Executive Officer. |
|
Filed with the Securities and Exchange Commission as part of this Quarterly Report. |
|
||||
31.2 |
|
Rule 13a-14(a)/15d-14(a) Certification, executed by Tracy X. Tan, Executive Vice President and Chief Financial Officer. |
|
Filed with the Securities and Exchange Commission as part of this Quarterly Report. |
|
||||
32.1 |
|
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Glenn J. Williams, Chief Executive Officer, and Tracy X. Tan, Executive Vice President and Chief Financial Officer. |
|
Filed with the Securities and Exchange Commission as part of this Quarterly Report. |
|
||||
101.INS |
|
Inline XBRL Instance Document. |
|
The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
|
|
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Primerica, Inc. |
|
|
August 6, 2026 |
/s/ Tracy X. Tan |
|
Tracy X. Tan |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
45