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Primerica (PRI) Q2 Earnings Surpass Estimates, Shares Up

Zacks Equity Research

Primerica, Inc. PRI delivered second-quarter 2019 operating income of $2.21 per share, which beat the Zacks Consensus Estimate by 3.3%. The bottom line improved 14.5%. Results benefited from 11% growth in Term Life adjusted direct premiums and record sales and client asset values in the Investment and Savings Products segment. Share buybacks added to the upside.

Shares of the company were up 2.8% in the last couple of trading sessions, reflecting this outperformance.

Operational Update

Operating revenues grew 7.9% year over year to $505 million on higher net premiums, investment income, commissions and fees. Revenues were in line with the Zacks Consensus Estimate.

While Term Life Insurance revenues increased 9% to $297 million year over year, Investment and Savings Products revenues rose 6% to $173 million. Corporate and Other Distributed Products revenues inched up 1% to $31 million.

Life Insurance policies issued in the quarter declined 6%. Investment and Savings Products sales jumped 10% to $1.94 billion in the second quarter.

Total benefits and expenses of $377.4 million were up 6.6% year over year due to higher benefits and claims, amortization of deferred policy acquisition costs, sales commissions and other operating expenses.

Adjusted operating income before taxes increased 10% year over year as Term Life Insurance operating income increased 11% and Investment and Savings Products income improved 10%.

Primerica, Inc. Price, Consensus and EPS Surprise

Primerica, Inc. Price, Consensus and EPS Surprise

Primerica, Inc. price-consensus-eps-surprise-chart | Primerica, Inc. Quote

Financial Update

Cash and cash equivalents were $245 million as of Jun 30, 2019, down 6.6% from the level on Dec 31, 2018.

Total investments were $3.4 billion, up 8.6% from the figure as of Dec 31, 2018.

Notes payable were $373.8 million, up 0.1% from 2018-end level.

Stockholders’ equity totaled $1.6 billion, up 8.5% from the level on Dec 31, 2018.

Primerica Life Insurance Company’s statutory risk-based capital ratio was about 440% as of Jun 30, 2019.

Return on equity was 25.1% in the second quarter, up 60 basis points.

Dividend and Share Repurchase Update

During the second quarter, the company approved a dividend of 34 cents per share to be paid out on Sep 13, 2019 to shareholders of record as of Aug 21. The company is on track to achieve its $225 million repurchase target for 2019.

In the reported quarter, Primerica spent $57.1 million to buy back 0.5 million shares.

Zacks Rank

Primerica currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Life Insurers

Second-quarter earnings of Lincoln National LNC and Torchmark TMK surpassed the Zacks Consensus Estimate while that of Sun Life Financial SLF missed the same.

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