Earnings call transcript: Primerica Q3 2025 beats expectations with strong EPS

Primerica Inc. reported its third-quarter 2025 earnings, showcasing a robust performance with earnings per share (EPS) of $6.33, significantly surpassing the forecasted $5.53. The company also exceeded revenue expectations, reporting $839.85 million against a forecast of $816.08 million. Despite the positive earnings surprise, the stock experienced a slight decline of 1.02% to close at $255.26, although it showed a premarket uptick of 1.08% the following day.

Key Takeaways

• Primerica's EPS of $6.33 exceeded forecasts by 14.47%.
• Revenue increased to $839.85 million, beating expectations by 2.91%.
• Stock decreased by 1.02% post-earnings but showed positive premarket movement.
• Strong performance in investment and term life segments.
• Middle-income market challenges noted amid economic uncertainty.

Company Performance

Primerica demonstrated solid growth in Q3 2025, with a 7% year-over-year increase in adjusted net operating income to $206 million. The company's diversified product offerings, particularly in investment and term life segments, contributed significantly to this performance. The term life segment saw a 3% revenue increase, while the Investment and Savings Products (ISP) segment surged by 20%.

Financial Highlights

• Revenue: $839.85 million, up from $816.08 million forecasted.
• Earnings per share: $6.33, an 11% increase year-over-year.
• Term life segment revenue: $463 million, up 3% YoY.
• ISP segment revenue: $319 million, up 20% YoY.

Earnings vs. Forecast

Primerica's earnings per share of $6.33 exceeded the forecast of $5.53, marking a 14.47% surprise. This performance is consistent with the company's trend of surpassing expectations, reflecting effective cost management and strategic product offerings. Revenue also outperformed expectations by 2.91%, highlighting strong operational execution.

Market Reaction

Despite the earnings beat, Primerica's stock fell by 1.02% to $255.26 after the earnings announcement. This decline may reflect broader market trends or investor caution due to economic uncertainties. However, the stock showed a slight recovery in premarket trading, rising by 1.08%.

Outlook & Guidance

Looking ahead, Primerica expects full-year ISP sales growth of approximately 20% but anticipates a 10% decline in term life policy issuance. The company is preparing for significant events, including regional field events in spring 2026 and its 50th-anniversary convention in 2027, indicating a focus on strategic growth and community engagement.

Executive Commentary

CEO Glenn Williams remarked, "We delivered solid earnings growth and generated strong cash flows." He emphasized the advantage of Primerica's complementary product lines and expressed confidence in the company's ability to serve middle-income families effectively.

Risks and Challenges

• Economic uncertainty affecting life insurance sales.
• Cost of living pressures on the middle-income market.
• Potential changes in mortality assumptions impacting future earnings.
• Recruitment and licensing challenges compared to previous years.
• Competition in the investment product space.

Q&A

During the earnings call, analysts inquired about the challenges in life insurance sales amid economic uncertainty. Management addressed updates in mortality assumptions and highlighted the strong performance in investment products, indicating potential strategies for capital release to enhance shareholder value.

Full transcript - Primerica Inc (PRI) Q3 2025:

Melissa, Conference Operator: Greetings and welcome to the Primerica third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, Nicole Russell, Senior Vice President, Investor Relations. Please go ahead.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Thank you, Melissa, and good morning, everyone. Welcome to Primerica's third quarter earnings call. A copy of our press release issued last night, along with other 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, Tracy Tan. Our comments this morning may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. We assume no obligation to update these statements to reflect new information and refer you to our most recent Form 10-K filing, as may be modified by subsequent Form 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 financial results.

Reconciliations of non-GAAP measures to their respective GAAP numbers are included in our earnings press release. I would now like to turn the call over to Glenn.

Glenn Williams, Chief Executive Officer, Primerica: Thank you, Nicole, and good morning, everyone. Primerica delivered solid earnings growth and generated strong cash flows during the third quarter of 2025, underscoring the resilience of our business model and consistent execution as our clients gradually adapt to economic headwinds. Our complementary product lines have proven to be a key advantage and powerful differentiator, while our sales force's commitment to serving middle-income families continues to set us apart. Starting with a snapshot of third quarter financial results, adjusted net operating income was $206 million, up 7% year-over-year, while diluted adjusted operating EPS increased 11% to $6.33. We remained disciplined in our capital deployment strategy and returned a total of $163 million to stockholders through a combination of $129 million in share repurchases and $34 million in regular dividends during the quarter, for a total of $479 million returned year to date.

Looking more closely at our distribution results, both recruiting and licensing were down compared to the prior year period, which benefited from elevated post-convention activity. However, current levels remain healthy relative to historical trends in non-convention years. During the quarter, more than 101,000 recruits became part of Primerica, and nearly 12,500 people obtained a new life license, positioning us to end the year at around 153,000 life license representatives. This projection is slightly above last year's record level. Looking at our life sales results, during the quarter, we issued 79,379 new term life policies, down 15% year-over-year compared to record performance in the prior year period. Those policies contributed $27 billion in new protection for our clients, for a total of $967 billion in enforced coverage.

Productivity at 0.17 policies per rep per month was below our historical range, driven by a combination of lower life sales and continued growth of our life sales force over the last 12 months. As we close out the year, we project the total number of policies issued in 2025 to decline around 10% compared to 2024's record-setting pace. Lower life sales are largely driven by cost of living pressures in the middle market. However, our conviction in the future potential for our life business remains unchanged. Primerica is well-positioned to reach and serve middle-income families, one of the largest and most underserved market segments. We're working toward improving productivity on several fronts. First, we continue to improve the accessibility and appeal of our term life products. Our next generation of products recently received approval for sale in the state of New York. For all U.S.

States and Canada, we continue to work toward more convenient and faster underwriting and issue processes to make sales simpler for our reps and clients. In addition, we have introduced improved life product training for newer representatives with the goal of positively impacting their productivity. In the coming months, we will evaluate the effectiveness on productivity of this training alongside increased focus by field leadership, with expectations of a positive impact. Moving to our ISP segment, where results continue to outpace our guidance. Sales grew 28% year-over-year to a record $3.7 billion during the third quarter of 2025. We continue to see strong demand for all product categories, including managed accounts, variable annuities, and U.S. and Canadian mutual funds. Net inflows for the quarter were $363 million, comparing favorably to $255 million in the prior year period, while client asset values ended the quarter at $127 billion, up 14% year-over-year.

Over the last few years, we made meaningful improvements to our platform and fund offering, including the addition of over 50 new investment portfolios. In Canada, the principal distributor model continues to be well-received and is driving strong sales. We believe demand for investment solutions will continue to benefit from inflows as the baby boomer and Gen X populations prepare for retirement. Given the strength in the equity markets and continued momentum, we expect full-year ISP sales to grow around 20% in 2025. Through our mortgage business, supported by more than 3,450 licensed representatives, we remain well-positioned to help middle-income families obtain a new mortgage or refinance to consolidate consumer debt. We are now licensed to do business in 37 states, with a recent addition of South Carolina. Year to date, we have closed nearly $370 million in U.S. mortgage volume, up 34% compared to the first nine months of 2024.

We also have a mortgage referral program in Canada, bringing refinancing and new mortgages to our clients there. As 2026 approaches, we are laying the foundation for strong momentum by launching a series of major regional field events in the spring. Our goal is to build excitement and field engagement as we move toward our 50th anniversary convention in 2027, a milestone we are proud to share with our sales force. We remain focused as we close 2025 and look forward to the exciting opportunities ahead. With that, I will hand it over to Tracy for the financial results.

Tracy Tan, Chief Financial Officer, Primerica: Thank you, Glenn, and good morning, everyone. Our third quarter financial results were strong across all segments, giving us confidence that we're well-positioned to end 2025 with solid year-over-year growth in both revenues and earnings. Starting with term life segment, third quarter revenues of $463 million rose 3% year-over-year, driven by a 5% increase in adjusted direct premiums. Pre-tax income was $173 million, compared to $178 million in the prior year period, down 3% year-over-year. Results during the quarter included a $23 million remeasurement gain compared to a $28 million gain in the prior year period. Excluding the impact of these remeasurement gains, pre-tax income remained largely unchanged. As required under LDTI accounting, we completed our annual review of actuarial assumptions and made certain changes to our long-term assumptions, which resulted in a $23 million remeasurement gain in the current period.

In the largest portion of the gain, it was from mortality assumption change, reflecting favorable trends observed since the pandemic, in addition to a positive experience variance from the quarter. As a reminder, the prior year period included a remeasurement gain of $28 million, primarily driven by an adjustment to our best estimate assumptions for the disability incident rate under our waiver of premium rider. Persistency remained stable on a year-over-year basis in aggregate. Although lapses remained above our long-term LDTI assumptions, we believe that our clients are resilient over the long term and value our services and products. Based on historical trends, we expect persistency to normalize as clients adapt to the evolving economic environment. As a result, we did not make a change to our long-term lapse assumptions during the recent review cycle. Turning next to our key financial ratios.

Excluding the impact of the remeasurement gain, the term life margin at 22% and the benefit and claims ratio at 58.3% remains consistent with our guidance. Our other key financial ratios also remain stable, with a DAC amortization and insurance commissions ratio at 12.2% and the insurance expense ratio at 7.5%. Given the size of our enforced block and the stable nature of our term life business, we maintain our full-year guidance to the ADP growth at around 5%. After revising our updated mortality assumptions, we expect the benefits and claims ratio to remain stable at around 58% in the fourth quarter. Guidance for the DAC amortization and insurance commissions ratio remains unchanged at around 12% and the operating margin at around 21% for the quarter, with expectation for some accelerated technology investments to support growth. This will result in full-year operating margin above 22%.

I will provide full-year guidance for 2026 in February. Turning next to the results of our investment and savings product segment, which continued to perform well on the strength of robust sales momentum and increasing client asset values. Third quarter operating revenues of $319 million increased 20% from prior year period, while pre-tax income rose 18% to $94 million. Sales-based revenues increased 23%, slightly outpacing the 20% increase in commissionable sales, primarily driven by strong demand for variable annuities. Asset-based revenues increased 21% year-over-year compared to a 14% increase in average client asset values, as we continued to benefit from a mix shift due to customer demand for products on which we earn higher asset-based commissions, namely U.S. managed accounts and Canadian mutual funds sold under the principal distributor model. Sales commissions for both sales and asset-based products increased relatively in line with revenues.

In the corporate and other distributed product segments, we recorded pre-tax adjusted operating income of $3.8 million during the quarter, compared to a pre-tax loss of $5.7 million in the prior year period. The year-over-year change is due to higher net investment income, primarily from growth in the size of the portfolio and a $5.2 million remeasurement loss on a closed block of business in the prior year period. Finally, consolidated insurance and other operating expenses were $151 million during the quarter, up 4% year-over-year. The growth in expenses was driven by a combination of higher variable growth-related costs in the ISP segment and, to a lesser degree, in the term life segment, as well as higher employee-related costs. We continued to see year-over-year growth in technology investments and anticipate some accelerations as we move towards the fourth quarter.

We expect fourth quarter expenses to grow around 6%-8%, resulting in full-year growth towards the lower end of our original guidance of 6%-8%, as we have realized expense savings that offset some of the investments we made this year. Our invested asset portfolio remained well-diversified, with a duration of 5.4 years and an average quality of 8. The average rate on new investment purchases in our life companies was 5.25% for the quarter, with an average rating of 8-plus. The net unrealized loss in our portfolio continued to improve, ending the September quarter with a net unrealized loss of $116 million. We believe that the remaining unrealized loss is a function of interest rates and not due to underlying credit concerns, and we have the intent and ability to hold these investments until maturity. We continue to generate strong cash.

Driven by the superior growth of our fee-based ISP business and the steady premium contribution from our large enforced block of insurance policies. Our holding company ended the quarter with $370 million in cash and invested assets. Primerica, Alison Rand, estimated RBC ratio was 515%. We have plans to increase capital release from our insurance companies in the fourth quarter and to continue our effective capital conversion for the long run. We are confident in our strong capital position to fund growth initiatives, absorb economic volatility, and to provide superior return on equity to our stockholders. With that, operator, please open the line for questions.

Melissa, Conference Operator: Thank you. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Joel Hurwitz with Dowling & Partners. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Good morning, Joel.

Good morning. How are you guys?

I'm great. Thanks.

Great. Tracy, I just wanted to start with your last comments there on the planned capital drawdown from the insurance entity. Just can you elaborate on what you're expecting in the fourth quarter and maybe going forward?

Tracy Tan, Chief Financial Officer, Primerica: Yeah. Good morning, Joel. Our capital position remains very strong, particularly because of the excellent cash generation from our enforced block. In the third quarter, we also had really nice improvement on profitability from our statutory entities, and that's part of the reason why the RBC got higher. From a cash generation standpoint, the continued strength of our profitability on the term life of being consistent and being resilient is a big part of why the RBC ratio continued to be very strong. As you know, our ability to take the cash out of the life business is really based on the regulatory conditions as a limitation of how much you can take out as a percent of or limited by the prior fiscal year income. We are taking maximum amount out as we speak. However, in the fourth quarter, we do have.

Plans to increase that conversion from our insurance entities. The specific plan clearly will help us reduce that RBC ratio, while keeping a strong enough ratio above 400% to help support the growth. As we continue to anticipate growth for the long run for life insurance business, we know when the growth pace starts to pick up, it is going to consume more cash because of how the cash flow is more front-loaded for a policy issuance. That is part of our long-term plan. For the fourth quarter, we have actions in place that could possibly include, in the long run, looking at how dividend can be converted out, not excluding special dividend, but also including some other actions that we are putting in place to certainly increase that conversion rate. Hope that helps answer your question.

Yeah. No, that's helpful. I look forward to seeing what you do in Q4. Maybe shifting from my second one, shifting to the term sales. Can you just help unpack, I guess, sort of what you're seeing and what you think the drivers of the weaker sales relative to your prior expectations? Is this all cost of living, or are you starting to see other headwinds emerge that are impacting sales?

Glenn Williams, Chief Executive Officer, Primerica: Yeah. Joel, we think it's primarily cost of living and other general uncertainties. It seems like every day there's something new about the future that's unknown that you thought you knew the day before. As far as we can tell, it's all external, as I said in my prepared remarks. Obviously, we don't want to just be victims of the environment. We want to push back as hard as we can. As we look at making our processes easier and faster, I had some conversations with some of our reps yesterday about the difficulties in the marketplace. They're saying the conversations are taking longer. Clients are having to dig deeper into their budgets to reprioritize because their budgets are tighter. The discussions take longer. The decisions are harder for clients. We want to be able to work through that with them.

We're not going to just say, "Okay, thanks. We'll check with you when things get better." That is part of the training process we were talking about earlier, to help our reps have those conversations with clients that can get them deeper into their budgets for prioritization, understanding the importance of protection in their family, of putting in force and keeping it in force. There is still that uncertainty out there that has people in a wait-and-see mode in general. I polled our kind of an informal poll of a number of our reps that were in yesterday for a training session and said, "How many feel like it's harder to make a life insurance sale this year than last year because of the economic and social circumstances around?" They all raised their hand. They said, "Life has gotten harder.

Investments for those clients that have money have gotten easier. I think what we're seeing is the result of the path of least resistance. We've seen that before in our business, when one line of business goes up and another one struggles a little bit, and then it turns around in future years.

Got it. That makes sense. Thank you.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: You're welcome.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Jack Madden with BMO Capital Markets. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Good morning, Jack.

Hey. Good morning. First one on the ISP business. Just wondering if you could talk about the sustainability of these kind of strong sales growth levels. Certainly, the VA or Riley Market's been a tailwind. I also do think of you all as having some structural advantages given your kind of built-in customer base. I know you've been adding new products and funds. Just curious, putting it all together, whether there's kind of an underlying kind of growth rate we should think about over time.

Glenn Williams, Chief Executive Officer, Primerica: Yeah. As we look forward, Jack, we are pleased that we see the growth across the product line. We have seen strong growth of mutual funds, variable annuities, managed accounts, Canadian business. That breadth adds to our confidence that this is a trend that probably has some legs. That said, a sudden turn in the market, a lot of discussion out there about, is the market higher than it should be? Is a correction out on the horizon? Those are the types of things that can really turn this momentum around, again, far beyond our ability to control them. The fundamentals of the breadth, the fundamentals that I mentioned in my prepared remarks of the demographics. Long term, we think there are true growth opportunities here.

It might be a little choppier than it has been in 2025 if the market starts to reverse direction on us in a significant way or for an extended period of time. I think we just have to keep that in mind. The fundamentals are sound in that business.

Got it. That makes sense. Thank you. Just to follow up on the cash flow outlook, I guess, are you suggesting that there's the potential to have maybe a structural improvement in your cash flow conversion ratio over time, or are your comments more related just to this year where you've had better experience and so maybe more cash flow coming out and then it normalizes heading into next year?

Tracy Tan, Chief Financial Officer, Primerica: Good morning, Jack. On cash performance, what I would comment about is the question in terms of cash conversion, what's more specific about cash conversion out of life insurance business to the whole core where the RBC ratio is. I think we have plans in the fourth quarter to improve that conversion. Even though that conversion is largely limited by the statutory requirement, we do have plans that could help improve that conversion. In terms of long-term cash flow generation, I think we're very confident of the ability to generate very positive cash flow. First and foremost is that our fee business has been really outperforming in terms of the ability to generate cash, and that conversion continues to be very strong. We have very good momentum on those fee business growth beyond just what the market normal growth rate is.

As we look at our growth rate on these businesses, we've been outperforming the market in the comparatives. That generation has been very strong, and that gives us a very good long-term potential from the fee business cash generation. When I look at in the longer term, when I'm looking at more four or five years out. At the same time, our term life is an extraordinarily important business that produces very consistent, strong cash flow because of how big the enforced block is and how consistent that business performs. If you look at the margins, it doesn't really vary all that much, more than 200 basis points. Combined, our total business profitability is very, very sound at over 20% if you look at the overall profitability. The consistency, the resilience, and our ability to just.

Convert the cash from subs into whole core and our ability to return from whole core to the stockholders. I mean, we've been performing at around 79-80% capital return to stockholders, which really is superior to the health and life performance. You look at our conversion from our subs of insurance to our whole core, it's around 80% and some years higher, possibly. That's also superior to our peers. Overall, our cash performance has been fantastic. That's why that's also part of, in the long run, look at our ROE performance. At 30 cents return on a dollar of investment, that's also superior to many peers as well. Overall, we're confident of our ability to generate cash and our ability to return a good amount of cash back to the stockholders in various ways.

Cool. Thank you.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Ryan Krueger with KBW. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Welcome, Ryan.

Hey. Good morning, Glenn. I had a question on the 21% margin in the fourth quarter in term life. You had mentioned some higher investments. Can you elaborate on what you're doing there to start?

Tracy Tan, Chief Financial Officer, Primerica: Yes. Good morning, Ryan. So our term life performance.

Hi.

Yeah. Our term life performance has been relatively consistent. Really, when we look at the ratios, they do not really vary more than 50 basis points much at all. Some quarters, there is a little bit of a pattern, maybe higher than the other quarters, due to just the spending patterns. In terms of looking at the fourth quarter, we do have some activities of accelerated technology investments that will be continuously supporting our growth potential from the front end. If you look at the overall ratio on the term life business, it is pretty steady. If I look at the benefit, I look at the DAC ratio, and look at the expense ratio, they are very consistent overall on the total year basis to our guidance. The margin for the year is going to be well over 22% as well for the total year.

Now, in terms of fourth quarter, we do believe that some of these accelerations are specifically targeted at addressing our front-end productivity side of the improvement, purposes that make the reps' journey easier, and that will continue to be a focus of ours to support the technology side of the improvement and the digital marketing and then the reps and the clients' experience.

Thanks.

Hope that answers your question, Ryan.

Yes, it does. Thank you. The follow-up was in the ISP business. Your net fee rate has been kind of gradually trending up for the last several quarters. Is there any specific thing that is driving that? I know you are growing the managed account platform more, which I wonder if maybe that has slightly higher revenue rates. Do you have any color on what is driving that and if this trend may continue going forward?

Yeah, Ryan, this is a great observation. I think certainly on the ISP side, we do have a mix shift because of the client's demand. This is particularly driven by where the highest growth rates are. If you look at the growth rate on managed accounts, it significantly outpaces most of the other categories. Then variable annuity, as an example, also outpaces the other categories. All of those on a relative basis compared to mutual funds, they have higher, from a margin and the variable side of the story, it is a little bit of a higher ending trend that pushes some of the improvement you see on the ISP business. Now, again, as we talked about previously when Jack even talked about the variable annuity, it is there on the tail end, I will say that.

Some of this certainly has an impact of where the interest rate is that pushes people to try to capitalize on the opportunity to lock in the higher rates. Secondarily, more importantly, is the demographic shift of people, to Glenn's point, preparing for retirement as well as certain needs to avoid the volatility, possibly from an equity market standpoint. All of those help push our good performance on the ISP rates and margins.

Thanks, Tracy.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Wilma Burdis with Raymond James. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Good morning, Wilma.

Hey, good morning. Do you guys expect any forward impact from the assumption review? Maybe you can just walk me through this a little bit, but how is the assumption review so outsized given the 90% mortality reinsurance? Thanks.

Tracy Tan, Chief Financial Officer, Primerica: Good morning, Wilma. Our assumption review in the third quarter generated $23 million of remeasurement gains. In relative terms, it is still a small %. When we consider reinsurance. And that is actually. On the. Comparative speaking terms of size. If we did not have reinsurance, this would have been several times bigger of an adjustment number. Looking at our overall mortality performance, we have been experiencing very good mortality for several years since the middle of 2022. We took a portion of that improvement and adjusted our long-term best assumptions. Now, to your point, what the size would have been, without the reinsurance treaties and the size of that 90% YRT that we reinsure, this would have been several times larger of a number. This $23 million total remeasurement gain in the third quarter is a very, very small % in terms of.

What the size could have been. Hopefully, that helps answer the question.

Yes. Thank you. I realize you guys have given quite a bit of color on the term life sales, but I guess I'm just wondering what might change the trajectory of those sales. I've been looking at your recent surveys on households, and I'm not seeing that the trends appear sharply worse than they have in some of the recent results. I'm just wondering if there's anything else that might contribute to the pressure that could potentially run off nearer term. Thanks.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Wilma, you're right. Fortunately, we have seen kind of some flattening of the increases in cost of living. As we talk to our reps and our clients and survey them, we find that the cumulative effect is still causing some struggle. While it's not getting worse as fast, it's not getting better very fast either. We do believe that clients are adapting. Over time, people become accustomed to where they are. I'm not going to say they like it, but they become accustomed to it and learn to deal with it. That's where we've often seen these types of pressures start to ebb some is after a period of time. Clearly, it's better if we can have household incomes really start to gain some ground.

Prices are not going to come down significantly, I do not think, but it is household income catching up that will help us get out of this. We are seeing some of that begin to happen. I think it just takes time to get some traction. Fortunately, we have seen this kind of dynamic in the past. We believe, number one, it is a temporary situation and that we can take some actions to help clients work their way through it because we have seen it before. If you look at our history as an almost 16-year-old public company, we have had a number of years where we see this exact dynamic that recruiting and life insurance is down and investments is up. We have seen other years where recruiting and life insurance is up and investments is down.

We have seen a lot of years, which is what we strive for, where everything is up at the same time. It is not unprecedented by any means. It is probably a little more severe than we have seen in probably 15 years or so and taking a little longer to get out of it. I would say there are also what we have termed government policy uncertainties, that other things in life that are not directly financial. There is everything from the government shutdown. We have federal employees on furlough right now. They are saying, "Let us wait till this is over before we make a buying decision." There is just an unusual amount of uncertainty to add to the financial pressure. Again, we think it is temporary, and we eventually will get out of it.

We think we can take some actions to work through it and sort of turn the tide along the way.

Thank you. Can I squeeze one more?

Go ahead.

Oh, okay. Is there anything that you think is going to change near term for your customer base? I know that there are some different tax impacts that are coming in next year. Is there anything like that that you see on the horizon that could provide some relief? Thanks.

Wilma, not anything that we have enough confidence in to count on. I mean, we always keep our ear to the ground on the types of decisions that might be made at government policy level or taxation level that will be helpful for the middle market. You're right, there are some discussions out there that might provide some relief and that kind of thing. We want to build a plan about what we can control. If we get some breaks that are beyond our control, it'll just be icing on the cake. We are not counting on those to turn the direction, but we do know there are all types of discussions going on because I think everyone recognizes the pressure that middle-income families are under.

is a universal agreement, I think, among all the divisions in our two countries where we do business right now, that middle-income families are under a significant amount of pressure. Hopefully, there would be some relief that would give us a tailwind.

Thank you.

Melissa, Conference Operator: Thank you. Our next question comes from the line of John Barnidge with Piper Sandler. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Good morning, John. Good morning. Thank you for the opportunity. Certainly. Cost of living headwinds, I think. The competition's clearly with space in your core customer's wallet. It's been talked about that rates are going lower. It's also been talked about rates are going lower for a seemingly longer time as well. With the refinancing of a mortgage, when that does occur, how much on average do you save a consumer versus the average life policy premium? Thank you. I can give you some directional answers, John. I don't have the averages at my fingertips. We could maybe follow up with you on that. You're exactly right. Another area of uncertainty is the direction of interest rates. I think the entire mortgage industry has been struggling with that for a while. We assumed for a long time they were going to come down, and then they didn't.

They actually went the other direction. I think that's common among all in that business. When we help a family refinance in addition to their mortgage, we're also looking at their consumer debt, which is generally at a much higher interest rate than their mortgage, and trying to bring all that in together to maximize their savings. When we're able to do that, we also can adjust the term as needed to make things affordable or to accelerate, which is what we'd rather do, accelerate their payment. Generally, when we help a family on the mortgage side, it frees up more than the cost of a life insurance policy. It actually can, where appropriate, not only provide them the funding for that, but also to get a systematic investment plan started. That's the reason that we like that business.

I've said many times, we get approached all the time by people, product providers wanting us to load additional products into our distribution system. More products tend to cannibalize existing products. We are very resistant to that. I think the product that does not do that is a refinance of a mortgage where we can lower the average interest rate and pull in those consumer debts that are at high interest rates and high payments, and then we can get the clients on better financial ground. That is one of the reasons that we think that business is important. As you know, it is a highly regulated business. We have a significant licensing process to take people through to enter the business. It is also highly regulated as you transact the business. It is a more complicated and sophisticated business.

It will move at a slower pace in our growth than us being able to add on term life insurance representatives. You hit directly on why we love that business, because it does free up money for clients to get on a better financial footing.

Glenn Williams, Chief Executive Officer, Primerica: Thanks for the answer. My follow-up question. Do you track the amount of sales maybe on term life. In any given year to government employees? I'm just trying to get a size of how much your total addressable market is directly impacted by the shutdown. In Q4, as the revised. Or the term life guidance for the year suggests acceleration in the decline of term life policies issued. Thank you.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Yeah. John, I would not attribute the government shutdown specifically to a change or magnifying a change in the fourth quarter. I just use it as another level of uncertainty that we are dealing with. I mean, we do not target government employees, but we cover a slice of the middle market that includes everything that is out there. There are government employees included in that. It is just one more level of uncertainty that our reps have to deal with to get around. I do not think it is the difference maker. It is just one more issue that I would add to the list. Again, I do not have the percentage of our clients that are government employees at my fingertips either. I would not attribute everything that happened in the fourth quarter to that. I would just say the uncertainty continues to be a headwind for us.

Glenn Williams, Chief Executive Officer, Primerica: Appreciate the answers and best of luck in the quarter ahead.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: I'm sorry. Say that again. I didn't hear you.

Glenn Williams, Chief Executive Officer, Primerica: Appreciate the answers. Best of luck in the quarter ahead.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: All right. Thank you.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Dan Bergman with TD Cowen. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Hello, Dan.

Glenn Williams, Chief Executive Officer, Primerica: Hey, good morning. To start, I guess it sounds like with the 50-year anniversary coming up, the next convention was pushed out to 2027 instead of the typical biennial pattern. In the prepared remarks, I believe you mentioned a number of field events next year instead. Just given that the convention typically drives outside sales force and new business momentum, I was just hoping you could provide more color on your plans for next year and whether the events are expected to offset the lack of a convention. I guess just with the timing of these events, will that drive any change in your typical seasonal pattern of sales and recruiting as we look into next year?

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Sure. You've read that exactly right. We moved the convention out for two reasons. One was it does coincide with our 50th anniversary being in 2027. The other reason was because of the World Cup in 2026. You can't rent a stadium in the U.S. or Canada. It was convenient that it gave us a reason to push it out and have a payoff there that it does sync up with our 50th anniversary. We do recognize the importance of those events in generating momentum and excitement and casting a vision for our business. We certainly did not want to go for another year in 2026 without big events, but we also did not want to compete with the 2027 convention.

It had to be big enough a plan to make a difference, small enough not to take anything away from the drive we have going already to the 2027 convention. Working with our field leaders, we ran a play that we have run in the past. It has probably been more than a decade, but it is regional events, five locations, three in the U.S., two in Canada that will run in the spring, starting at the end of April for the first one. We have one every week or every other week through the first week in June. It is during the second quarter. It is a little earlier than our convention. That was intentional to give us more benefit during the year by getting them out there a little earlier.

We wanted to avoid the kickoff of the year because we still do encourage all of our teams to have a big kickoff and engage quickly at the beginning of the year. We did not want to step on that. We wanted to get beyond bad weather for travel. That is the reason we chose the spring. It was really as early in the year as possible. These will not be the size of our convention, but if you add them all together, they should be as big as our convention is the thinking. In attendance. We will treat them differently. It will not be as long an event. It is a Friday afternoon, evening, Saturday event as opposed to a four-day event so people can get in and out more easily. Geographically being closer, we think it makes it more convenient and less expensive for people to attend.

We have other events that we've consolidated to offset the expense of doing these. We are doing it kind of in a virtually an expense-neutral plan for our events budget next year by doing it this way. We are going virtual with some of our other events to make these live events possible. We are excited about it. It is something that had not been done in a while. It should have the type of impact we would expect around the convention. Remember, the convention is not just the event itself that drives momentum. It is the incentives that we announce and use around the convention. We use the convention as a platform to announce those incentives, and it is the combination of those two. We will be doing a slightly smaller version of that. We will have some incentives in play around these five events. We will use this big stage as a recognition platform.

We have people competing right now to be recognized on those stages. That is always an important driver of our business. We think in combination, this gives us an opportunity to really come off of what has been a slow year compared to the previous year in our distribution and life business. Add some momentum to those two businesses and continue to maximize the momentum in our ISP business as we head into 2026.

Glenn Williams, Chief Executive Officer, Primerica: Got it. Very, very helpful. Maybe just following up on the earlier questions around the rise in your RBC ratio so far this year, is there any way to break down the drivers further? I guess specifically how much of the improved capital generation has been due to strong in-force earnings versus less capital strain from the lower level of life sales? I guess what I'm trying to understand is if life sales do remain somewhat subdued for a period of time, could this allow for an ongoing outsized level of dividends to the holding company and ultimately share purchases to help offset the slower sales trends for a period of time? Just any way to size that or how you're thinking about that would be great.

Melissa, Conference Operator: Yeah. Good morning, Dan. In terms of the RBC ratio being higher, obviously, one of the reasons is the higher profitability and income generated from the statutory side. Clearly, the statutory side of the cash impact is one of the reasons why RBC ratios are higher. Still, primarily the reason is the overall ability to convert the cash out based on the regulatory restrictions of the 12-month rolling combined cash you can take out as an example, not exceeding prior statutory income. As our income gets to be higher in the future period than the prior period combined, you're limited to how much you can take out. Just by continually improving profitability on the statutory basis, as an example, there is a possibility of cash generating more than what your prior profitability combined would allow you to take out.

That being part of the reason, we clearly are looking at plans that we're going to put in action in the fourth quarter to help us be able to convert more cash out. You will see when we get into the fourth quarter how those actions take place. To your point, the faster growth of the term life business will consume more cash than when it's at a slower pace. That is part of the reason why, when we look at the future rates that we want to keep for RBC, we always want to have a little bit of a cushion. Should we get towards the 50th anniversary, as the excitement starts to build and the momentum starts to get stronger, we wanted to make sure that there is sufficient cash in place to capture that growth potential. Currently, we're on relatively lower.

Growth speed compared to prior year because it was at such a record pace. If you look at it on the longer 20-year term, 30-year term, our growth is still at pretty consistently good levels. Just the fact that last year was higher does not necessarily say the current growth is somewhat really unseen in the past. That being said, that is part of what is driving our decisions on how much we keep in those entities and how much we take out. In the long run, I think we have anticipation of keeping at relatively high historical level conversion. Some periods could even possibly exceed what you have seen historical ratios. Overall, I think we are confident, Dan, to keep at that very high-end performance. In the older peer compared to older peer sectors, being able to continue that relatively predictable trend.

In terms of the ratios that we predict and use.

Glenn Williams, Chief Executive Officer, Primerica: Got it. Thanks so much. Appreciate it.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Mark Hughes with Truist Securities. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Hello, Mark.

Hey, Glenn. How are you?

I'm great. Thanks.

Excellent. The asset-based revenue, you point out that has been growing faster than the underlying.

Melissa, Conference Operator: Mr. Hughes, it seems that you're not.

Different categories. Should that sustain a positive trend?

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Hey, Mark, we lost you for the entire middle part of your question. Would you mind restating?

Trend continue?

Yeah, Mark, we're only getting two or three words out of that. I apologize. I don't know if you've got a bad speaker or what, but we're only hearing every other word or so of your question, so it's not coming through.

Yeah. Can you hear me now, Glenn? Is this clear?

Yeah. That's much better.

Okay. All right. Thank you. Appreciate that. The faster growth in asset-based revenue relative to assets, is there any reason that trend should not continue?

I think, as Tracy said, it is driven by a product mix. Our managed account business, and then also the principal distributor model in Canada, which has similar dynamics, both are kind of some of our fastest-growing product lines. They are smaller, and on a percentage basis, they tend to grow faster, but they are also beginning to catch up in the overall mix. We would expect, barring some unforeseen disturbance, that that should have some legs and should continue. You are right. That direction is not something we anticipate would change.

Yeah. Thank you. Tracy, the YRT seeded premiums, if you look at those relative to adjusted direct premiums, those have been moving up. That ratio has been moving up. What is the update on how that should trend over the next year or so? Will it just continue that upward drift? This is YRT seeded premiums as a percentage of adjusted direct premiums in term life?

Melissa, Conference Operator: Good morning, Mark. I think the YRT seeded premium, as compared to the adjusted direct premium, is because for those life policies, as the insured age, the seeded premiums start to creep up to cover for the higher mortality risk. When you look at it, you actually do not want to look at it in its silo. You want to add it to actually the benefit cost. When you combine those as a percent of ADP, it is relatively steady. That is how you want to look at it.

Yeah. Okay. Appreciate that. Thank you.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Thank you.

Melissa, Conference Operator: Thank you. Our next question comes from the line of Sunit Thomas with Jefferies. Please proceed with your question.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Good morning, Sunit.

Glenn Williams, Chief Executive Officer, Primerica: Good morning, Glenn. Good morning, Tracy. First question just on the assumption update. Tracy, you had mentioned that you took a portion of the mortality or favorable mortality that you're seeing and put it through your assumptions. I'm not expecting a specific answer, but can you give a rough sense of what proportion of the favorable mortality you put inside? Was it half? Was it 20%? Just a rough estimate would be helpful.

Melissa, Conference Operator: Yeah. Good morning, Sunit. Our mortality performance since 2024, middle of that year, has been consistently favorable. We had thought that it was possibly a pull forward from the pandemic, increased unfavorable mortality experience, and that it would end at some point. We continue to see that consistently. It's been reasonably good size of a favorability. We took a portion of it. In terms of what the proportion is, I think the theory really is that we believe our best estimate assumption is that we've taken the portion that we think for the long run is the best estimate on what the mortality experience would be in the long-term trend. If we had thought that it needs to be higher, we would have taken it in our assumption review. This is truly our best estimate.

In terms of what we could expect for the future, I would say that because we have had favorable experience, possibly bigger than what we've taken, it wouldn't be unlikely that we might have some favorable period. Claims and mortality favorable experiences from period to period. Long-term trend, we have taken our best estimate on what that trend would be.

Glenn Williams, Chief Executive Officer, Primerica: Got it. Just again, I do not want to box you into a corner, but is it 20%, 25% of what you would expect, what you think? I mean, just more than half, just trying to get a sense of size.

Melissa, Conference Operator: Yeah. That is a great question. The challenge really is there are a lot of complications of really deciphering the mortality performance on the cohorts and what that predictable trend, what cohort is a predictable trend for the long run. I think that what our combined study, looking at our experience, really tells us this truly is the best estimate. The future is uncertain. We believe that the portion we have taken truly represents what the long-term trends would be given our best estimate. The period variance that we will experience, we will continue to monitor and size that. If that continues to be a pattern that we think becomes a long-term trend, at that point, we will recognize that if that were to come true.

Glenn Williams, Chief Executive Officer, Primerica: Okay. That's fair. I guess my second question just on the annuity sales. We've seen sales volumes increase for both you and the industry. Now, some of that could be driven by just higher markets as essentially 401(k) rollover assets, 401(k) asset balances are higher, and the rollovers are higher. Another way to think about growth would be growth in the number of contracts that you write. I'm just wondering if you have any data on that. Sort of relatedly, Glenn, do you think you're increasing the total addressable market for the annuity business, or are you effectively selling products to the existing customer base? You're seeing a lot of exchange activity. Any color on that would be helpful. Thanks.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Sure. Do not have a specific stat, but I can give you some directional answers on that, Sunit. The annuity business is attractive. Again, some of it is the demographic change. I think Tracy mentioned it in an earlier answer. The demographic direction, the aging demographics, people have accumulated some amount of money, and they are looking for ways to preserve that in uncertain times or expecting volatile markets down the road. The guarantees within variable annuities, the floors that are created, and the guaranteed income coming out of them are what makes them attractive. As we have said before, our product providers have done a great job in making those products as attractive as actuarially possible. They have done well there. Changes in interest rates and their ability to provide those guarantees may be adjusted. Nothing is forever.

I think the product providers have done a good job of making their products attractive. I think our salespeople have used that to both help existing clients as well as be referred out to other clients. We are seeing not only larger transactions, but increasing transaction volume. We believe that is coming not only from our existing clients where we would be able to see a move if it was out of one of our products into a variable annuity. We have existing clients who have assets elsewhere outside of Primerica that bring them to Primerica to join the other assets that we already have with them. We see some of that. We see brand new clients as well as those satisfied clients, as happens throughout the industry, refer us to others. We are getting some of all of what you described, Sunit, that is driving that business.

Glenn Williams, Chief Executive Officer, Primerica: Okay. That's helpful. Thanks, Glenn.

Nicole Russell, Senior Vice President, Investor Relations, Primerica: Glad to help.

Melissa, Conference Operator: Thank you. Ladies and gentlemen, this concludes our Q&A session, and we'll conclude our call today. We thank you for your interest and participation. You may now disconnect your line.

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