67 WALL STREET, New York - June 6, 2014 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors
Companies include: Primerica, Inc. (PRI) and many more.
In the following excerpt from the Insurance Report, the Chairman and Co-CEO of Primerica, Inc. (PRI) discusses company strategy and the outlook for this vital industry:
TWST: You began a stock repurchase plan in the first quarter. Can you tell us a little bit about that?
Mr. Williams: Our business generates substantial capital, and since we've been public over the last three years, we've been able to return to the shareholders more than 100% of operating earnings each year, including stockholder dividends and stock repurchases. What we've announced this year just continues that trend through $150 million of stock repurchases that is funded by $40 million from our nonlife insurance company business. And $110 million will come from our U.S. life insurance company as soon as we complete a redundant reserve financing that requires regulatory approval. In addition, we'll pay out over $25 million in dividends in our regular stockholder dividend program.
TWST: Can you comment overall on the strength of your balance sheet, and are there any areas that you're working to improve?
Mr. Williams: We actually have a very strong balance sheet because of the nature of our product itself: We offer term-life insurance, which does not have an investment component. Our investment business is done through the sale of mutual funds and variable annuities, where we earn a commission or fees from it. This results in a relatively low capital-intensive, smaller-balance-sheet business.
Just to give you a feel for it, if you look at our investment leverage - that's our ratio of total investments on the balance sheet compared to shareholder equity - our ratio was 1.7 times versus traditional life insurance companies' average of 9.5 times. When you look at the risk associated with a large investment portfolio depending on what you've invested in, interest rate risk, equity risk, real estate risk, etc., our business has relatively little of that risk compared to the rest of the industry.
TWST: What trends are you observing on the cost side of your business, and what's your strategy to control costs?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.