Supplemental Financial Information

Fourth Quarter 2015

Table of Contents

PRIMERICA, INC. Financial Supplement

  

 

This document is a financial supplement to our fourth quarter 2015 earnings release.  It is designed to enable comprehensive analysis of our ongoing business using the same core metrics that our management utilizes in assessing our business and making strategic and operational decisions.  Throughout this document we provide financial information that is derived from our U.S. GAAP financial statements and adjusted for three different purposes, as follows:

●	Operating adjustments exclude the impact of realized investment gains and losses and the impact of entering into Co-CEOs transition agreements as described in our Form 8-K dated January 2, 2015.

●	Adjusted when used in describing stockholders’ equity refers to the removal of the impact of net unrealized gains and losses on invested assets.

●	IPO coinsurance transactions adjustments relate to transactions in the first quarter of 2010, where we reinsured between 80% and 90% of our business that was in-force at year-end 2009 to entities then affiliated  with Citigroup Inc. (“Citi”) that were executed concurrent with our IPO.

Management utilizes certain non-GAAP financial measures in managing the business and believes they present relevant and meaningful analytical metrics for evaluating the ongoing business.  Reconciliations of non-GAAP to GAAP financial measures are included in this financial supplement.

Certain items throughout this supplement may not add due to rounding and as such, may not agree to other public reporting of the respective item.  Certain items throughout this supplement are noted as ‘na’ to indicate not applicable.  Certain variances are noted as ‘nm’ to indicate not meaningful.  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.

 

(Dollars in thousands)		Mar 31, 2014				Jun 30, 2014				Sep 30, 2014				Dec 31, 2014				Mar 31, 2015				Jun 30, 2015				Sep 30, 2015				Dec 31, 2015
Condensed Balance Sheets
Assets:
Investments and cash excluding securities held to maturity		$	2,014,610			$	2,042,834			$	2,038,236			$	2,040,313			$	2,056,975			$	1,965,675			$	1,924,636			$	1,965,576
Securities held to maturity			—				—				189,830				220,000				238,000				328,000				356,000				365,220
Total investments and cash			2,014,610				2,042,834				2,228,066				2,260,313				2,294,975				2,293,675				2,280,636				2,330,796
Due from reinsurers			4,074,527				4,077,734				4,130,637				4,115,533				4,094,456				4,137,425				4,103,949				4,110,628
Deferred policy acquisition costs			1,242,983				1,293,974				1,321,415				1,351,180				1,377,022				1,430,508				1,465,175				1,500,259
Other assets			597,265				597,348				591,895				570,267				571,496				594,592				626,504				606,536
Separate account assets			2,458,739				2,581,659				2,469,118				2,440,303				2,386,265				2,324,980				2,086,598				2,063,899
Total assets		$	10,388,124			$	10,593,549			$	10,741,132			$	10,737,596			$	10,724,214			$	10,781,181			$	10,562,863			$	10,612,119
Liabilities:
Future policy benefits		$	5,103,278			$	5,180,013			$	5,214,878			$	5,264,608			$	5,289,016			$	5,361,580			$	5,388,042			$	5,431,711
Other policy liabilities			586,118				577,923				600,108				591,719				602,392				607,891				578,322				594,908
Income taxes			127,906				137,797				136,065				140,467				157,684				156,212				152,314				148,125
Other liabilities			374,962				345,350				394,518				410,629				381,268				366,436				397,114				416,417
Notes payable			374,494				374,506				374,519				374,532				374,545				374,558				374,572				374,585
Surplus note			—				—				189,830				220,000				238,000				328,000				356,000				365,220
Payable under securities lending			109,094				93,569				67,614				50,211				55,622				63,898				83,220				71,482
Separate account liabilities			2,458,739				2,581,659				2,469,118				2,440,303				2,386,265				2,324,980				2,086,598				2,063,899
Total liabilities			9,134,591				9,290,818				9,446,650				9,492,470				9,484,792				9,583,555				9,416,183				9,466,347
Stockholders’ equity:
Common stock ($0.01 par value) (1)			546				542				537				522				516				501				486				483
Paid-in capital			462,837				447,949				429,257				353,335				323,996				259,937				195,314				180,250
Retained earnings			679,183				721,788				756,738				795,741				830,624				871,440				912,749				952,804
Treasury stock			—				—				—				—				—				—				—				—
Accumulated other comprehensive income (loss), net:
Net unrealized investment gains (losses) not other-than-temporarily impaired			78,911				92,049				78,130				74,307				83,401				61,742				49,889				32,106
Net unrealized investment losses other-than-temporarily impaired			(1,346	)			(1,346	)			(461	)			(461	)			(461	)			(461	)			(73	)			(71	)
Cumulative translation adjustment			33,404				41,749				30,282				21,682				1,346				4,468				(11,684	)			(19,801	)
Total stockholders’ equity			1,253,532				1,302,731				1,294,482				1,245,126				1,239,422				1,197,626				1,146,680				1,145,772
Total liabilities and stockholders' equity		$	10,388,124			$	10,593,549			$	10,741,132			$	10,737,596			$	10,724,214			$	10,781,181			$	10,562,863			$	10,612,119
Reconciliation of Adjusted Stockholders' Equity to Total Stockholders' Equity
Adjusted stockholders' equity		$	1,175,968			$	1,212,028			$	1,216,813			$	1,171,280			$	1,156,482			$	1,136,345			$	1,096,864			$	1,113,736
Reconciling items:
Net unrealized investment gains (losses) not other-than-temporarily impaired			78,911				92,049				78,130				74,307				83,401				61,742				49,889				32,106
Net unrealized investment losses other-than-temporarily impaired			(1,346	)			(1,346	)			(461	)			(461	)			(461	)			(461	)			(73	)			(71	)
Total reconciling items			77,564				90,703				77,669				73,846				82,940				61,281				49,816				32,036
Total stockholders’ equity		$	1,253,532			$	1,302,731			$	1,294,482			$	1,245,126			$	1,239,422			$	1,197,626			$	1,146,680			$	1,145,772
Adjusted Stockholders' Equity Rollforward
Balance, beginning of period		$	1,155,996			$	1,175,968			$	1,212,028			$	1,216,813			$	1,171,280			$	1,156,482			$	1,136,345			$	1,096,864
Net Income			45,080				49,271				41,595				45,466				43,401				49,173				49,350				47,948
Shareholder dividends			(6,738	)			(6,666	)			(6,646	)			(6,462	)			(8,517	)			(8,357	)			(8,042	)			(7,893	)
Retirement of shares and warrants			(19,187	)			(21,972	)			(30,694	)			(82,447	)			(44,789	)			(70,999	)			(71,433	)			(20,538	)
Net foreign currency translation adjustment			(8,571	)			8,346				(11,468	)			(8,600	)			(20,336	)			3,121				(16,152	)			(8,116	)
Other, net			9,389				7,081				11,997				6,510				15,444				6,925				6,795				5,471
Balance, end of period		$	1,175,968			$	1,212,028			$	1,216,813			$	1,171,280			$	1,156,482			$	1,136,345			$	1,096,864			$	1,113,736
Deferred Policy Acquisition Costs Rollforward
Balance, beginning of period		$	1,208,466			$	1,242,983			$	1,293,974			$	1,321,415			$	1,351,180			$	1,377,022			$	1,430,508			$	1,465,175
General expenses deferred			7,273				8,136				7,147				8,171				7,953				8,554				8,396				7,951
Commission costs deferred			69,559				68,674				66,602				67,980				70,389				78,799				79,787				77,810
Amortization of deferred policy acquisition costs			(35,193	)			(32,696	)			(36,944	)			(39,544	)			(36,213	)			(36,383	)			(40,797	)			(44,334	)
Foreign currency impact and other, net			(7,122	)			6,877				(9,363	)			(6,842	)			(16,287	)			2,516				(12,718	)			(6,343	)
Balance, end of period		$	1,242,983			$	1,293,974			$	1,321,415			$	1,351,180			$	1,377,022			$	1,430,508			$	1,465,175			$	1,500,259

 

(1)	Outstanding common shares exclude restricted stock units.