DULUTH, Ga.--(BUSINESS WIRE)--Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended September 30, 2020. Total revenues of $568.5 million increased 9% compared to the third quarter of 2019. Net income of $112.1 million increased 17%, while earnings per diluted share of $2.81 increased 23% compared to the same quarter last year. ROE increased to 26.7% during the quarter from 24.1% during the third quarter of 2019.

Compared to the third quarter of 2019, adjusted operating revenues of $566.7 million increased 9%, adjusted operating net income of $110.7 million increased 16% and diluted adjusted operating earnings per share of $2.78 increased 23%. ROAE increased to 28.0% during the quarter from 24.9% during the third quarter of 2019.

Third quarter results were positively impacted by strong demand for protection products, which has been on the rise since the onset of the COVID-19 pandemic. Record term life policy sales and persistency more than offset elevated claims experience during the quarter. Investment and Savings Products (ISP) sales remained under pressure, but market appreciation and lower levels of redemptions during the period drove an 8% increase in average client asset values year-over-year. The Company continued to invest in opportunities that will support and accelerate growth, including digital technologies and the recently launched mortgage distribution program. During the quarter, the Company repurchased $41.5 million of common stock for a year-to-date total of $218.1 million.

“Primerica continues to meet the strong demand for all of our financial solutions that has been aided by consumer sentiment during the COVID-19 pandemic. Protecting their families and pursuing our business opportunity have been a top priority for middle-income families, followed closely by investing for the future,” said Glenn Williams, Chief Executive Officer. “The adaptability of our sales force and the flexibility of our business model have positioned us to meet the ongoing needs of our clients.”

Life Insurance Licensed Sales Force

Recruiting activity remained robust throughout the quarter, even as the business application fee discount ended on July 31. The Company saw favorable year-over-year comparisons in each of July through September, resulting in a total of 101,861 new recruits during the third quarter. The licensing process continues to be challenged due to various issues, including social distancing restrictions and processing backlogs; nonetheless, a total of 13,138 individuals received a new life license during the third quarter of 2020.

As of September 30, 2020, the Company had 136,306 independent life-licensed representatives, including 5,200 licenses that were issued on a temporary basis due to COVID-19. We expect approximately 40% of the COVID-19 temporarily licensed representatives to take the steps necessary to obtain a permanent license. The number of independent life-licensed representatives also includes 4,500 licenses where the state has extended the renewal date, 40% of which we estimate will ultimately be renewed.

Term Life Insurance

During the third quarter, the Company issued 100,199 new life insurance policies, a 36% increase year-over-year. Greater demand for protection products, along with a smooth transition to remote sales at the onset of COVID-19, led productivity during the quarter to 0.25 policies per life insurance licensed representative per month, well above our historical range of 0.18 to 0.22.

Revenues of $357.8 million increased 14% compared to the third quarter of 2019 and pre-tax income of $105.3 million increased 26% year-over-year. Continued strength in sales volume, along with a notable increase in persistency across all policy durations, led to a 14% increase in adjusted direct premiums. Strong policy persistency positively impacted DAC amortization by $22 million year-over-year and was partially offset by $8 million higher benefit reserve increases. Benefits and claims also included approximately $9 million of unfavorable claims experience during the third quarter of 2020, $8 million of which the Company estimates is related to COVID-19 deaths.

Investment and Savings Products

Total product sales during the quarter were $1.8 billion, or 1% lower than the third quarter of 2019 as investors began to see signs of market stabilization and resumed investing to meet long-term goals. Net client inflows were robust at $508 million during the quarter, a 173% increase year-over-year, driven by a 20% decline in gross redemptions. Average client asset values were $71.5 billion, increasing 8% year-over-year.

Revenues of $176.3 million during the quarter increased 2% compared to the same quarter in 2019 and pre-tax income of $51.4 million increased 5%. Sales-based revenues declined 5%, in line with revenue-generating product sales, as growth in sales of retail mutual funds were offset by continued weakness in annuity product sales. Asset-based revenues increased 7%, in line with the increase in average client asset values year-over-year. Sales and asset-based commission expenses generally moved in correlation with the associated revenues.

Net Investment Income and Invested Asset Portfolio

Consolidated net investment income of $23.0 million for the quarter was largely unchanged versus the prior year period as the $2.3 million impact of lower rates was offset by $1.7 million higher income due to the growth in the size of the invested asset portfolio. The invested asset portfolio ended the quarter with an unrealized gain of $135 million, up from $120 million as of June 30, 2020, and with an average credit rating of A.

Taxes

The third quarter effective income tax rate was 23.5% versus 23.1% in the prior year period.

Capital

During the third quarter, the Company repurchased 340,154 shares of common stock for $41.5 million, bringing the total through September 30 to $218.1 million. The Board of Directors has approved a dividend of $0.40 per share, payable on December 14, 2020, to stockholders of record on November 20, 2020.

Primerica has a strong balance sheet and continues to be well-capitalized to meet future needs. Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be about 425% and holding company liquidity was $251.1 million as of September 30, 2020.

About Primerica, Inc.

Primerica, Inc., headquartered in Duluth, GA, is a leading provider of financial services to middle-income households in North America. Independent licensed representatives educate Primerica clients about how to better prepare for a more secure financial future by assessing their needs and providing appropriate solutions through term life insurance, which we underwrite, and mutual funds, annuities and other financial products, which we distribute primarily on behalf of third parties. We insured over 5 million lives and had approximately 2.5 million client investment accounts at December 31, 2019. Primerica, through its insurance company subsidiaries, was the #2 issuer of Term Life insurance coverage in North America in 2019. Primerica stock is included in the S&P MidCap 400 and the Russell 1000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.