Primerica, Inc.

Greetings and welcome to Primerica's first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nicole Russell, Head of Investor Relations. Thank you. You may begin.

Thank you, Maria, and good morning, everyone. Welcome to Primerica's first quarter earnings call. A copy of our earnings press release, along with materials relevant to today's call, are posted on the investor relations section of our website. Joining our call today are our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Allison Rand. Glenn and Allison will deliver prepared remarks, and then we'll open the call up for your questions. During our call, some of our comments may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. The company assumes no obligations to update these statements to reflect new information. We refer you to our most recent Form 10-K filing, as may be modified by subsequent Forms 10-Q, for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied. We will also reference certain non-GAAP measures, which we believe provide additional insight into the company's operations. Reconciliations of non-GAAP measures to the respective GAAP numbers are included at the end of our earnings press release and available on our investor relations website. I would now like to turn the call over to Glenn.

Thank you, Nicole, and thanks, everyone, for joining us today. We're encouraged by our first quarter performance, reflecting positive results from our focus on growing distribution capabilities and improving the attractiveness of our products. Our unique ability to meet the financial needs of middle-income families is attracting more people to our entrepreneurial opportunity. These dynamics have created momentum in recruiting and licensing, resulting in sales force growth. In addition, both our clients and our sales force have reacted positively to our new series of term life products leading to growth in sales. Although securities market conditions continue to create resistance to growth in our ISP sales, clients' desire for financial guidance remains strong. Starting with a quick recap of our financial results, adjusted operating revenues of $695 million remain largely unchanged year over year, while adjusted net operating income of $129 million grew 10%. These results reflect the continued growth in term life premiums, the benefit of higher interest rates on net investment income, and our progress in improving the results of our senior health business. The quarter was also negatively impacted by persistent inflation and continued equity market volatility that pressured ISP and term life sales and led to a modest increase in policy lapses. On the capital deployment front, we repurchased $85 million of our common stock and paid $24 million in regular dividends during the first quarter. Given the strength of our capital and liquidity positions, we believe we will meet our targeted repurchases for the year of $375 million. Recognizing the importance of growing the sales force, both the home office and field leadership teams are focused on its key components, recruiting and licensing. Starting with recruiting, momentum remained solid with approximately 93,500 individuals joining Primerica during the first quarter. This represents a 10% increase over the prior year period. Licensing results were similarly strong with more than 11,000 new life license reps added during the quarter, which represents an 11% increase year over year. We ended the quarter with 136,430 life license reps, which was slightly elevated due to delays in processing about 800 terminations by the state of Florida. These terminations should all be processed during the second quarter, and we continue to believe that we can grow the sales force around 3% in 2023. Turning next to our production results, the new term life insurance products introduced last fall have given the sales force an increased degree of enthusiasm. By introducing more rate classes, we're able to better match risk and price, which allows our clients to potentially purchase more insurance coverage. During the quarter, we issued 84,500 new life insurance policies, which represents an increase of nearly 2% year over year, after adjusting the prior year figure to reflect a one life per policy issued equivalent. Productivity at .21 policies per life license rep per month remained in our historical range .20 to .24. In addition to issued policies, we believe estimated annualized issued term life premiums and issued term life face amounts provide useful information about our term life business. These figures capture the amount of protection of newly issued policies as well as additions to coverage on enforced policies. During the quarter, estimated annualized issued term life premiums were $89 million, up 6%, while newly issued face amount of $28.1 billion grew 14% year over year. Looking ahead, we believe the high cost of living will moderate sales growth in the near term, but we believe full year growth and issued policies will be in the mid single digit range. Turning to the investment and saving product segment, sales of $2.3 billion declined 25% compared to the first quarter of 2022, which was our largest sales quarter ever. Client asset values ended the quarter at $87.6 billion, up around 4% since the beginning of the year, but down 6% versus March 31, 2022. Volatility in the equity market continues to negatively impact large transactions such as rollovers. However, we see very little change in the number of automatic monthly investment transactions or redemption activity. Net inflows during the quarter were $642 million. We believe that our clients' continued focus on long-term goals, along with systematic monthly investing, sets Primerica apart from many other distributors. Considering the current market environment, we expect second quarter ISP sales could decline as much as 7% to 10% year over year, but ongoing uncertainty makes it difficult to project too much further ahead. We turn now to our senior health business. Results for the quarter were in line with our expectations and our efforts to maintain controlled growth during the fourth quarter's AEP and this quarter's OEP. Progress has been made on our goal of improving unit economics. First quarter LTV to CAC ratio was 1.1. As we discussed last quarter, we deliberately entered the 2022 enrollment and the 2023 renewal periods with about half the number of agents compared to the previous year. and a focus on agent productivity. The early results of these efforts are encouraging. We are also pleased that leads sourced by Senior Health Certified Primerica representatives represented 10% of first quarter sales volume, up from 4% last year. These leads remain attractive in terms of conversion rates and early indications of more favorable persistency. We're encouraged by the progress of the eTeleQuote team over the last three quarters. It is clear that we need to keep working towards scaling the business, and we will continue to evaluate how best to do so. While it's still early, our efforts to grow judiciously are consistent with our plan to achieve adequate volume, supported by reasonable and growing margins, while controlling the capital required by the business. Finally, I'm proud of the Primerica team and the steady progress we're making at executing against our plan to grow the size of the sales force. It's clear that middle-income families need help navigating these uncertain times. The current economic conditions underscore the important role that Primerica representatives play in providing education and guidance to their clients, keeping them focused on the future, and working toward financial independence. Now I'll ask Allison to add her comments.