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Primerica's (PRI) Stock Down 1.6% Despite Q1 Earnings Beat
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Shares of Primerica, Inc. (PRI - Free Report) have lost 1.6% since it reported first-quarter 2023 results on May 8. Despite reporting better-than-expected results, investors were concerned regarding the poor performance of its Investment and Savings Products segment. The company’s results were supported by consistent growth in term life insurance premiums, a high-interest rate environment and improving Senior Health business. The upside was partially offset by persistent inflation and volatility in equity markets.
PRI delivered first-quarter 2023 operating income of $3.49 per share, which beat the Zacks Consensus Estimate by 1.2%. The bottom line improved 65.4%, reflecting better performance in the Term Life Insurance and Senior Health business.
PRI’s operating revenues of $695 million in the first quarter beat the consensus mark by 0.1%. The metric rose 0.3% from the year-ago quarter.
Term Life Insurance revenues increased 3% year over year to $421.1 million driven by 6% growth in adjusted direct premiums. New term life insurance products launched last year enabled the company to better match the risk and price factors resulting in more insurance coverage being purchased.
Investment and Savings Products revenues dropped 13% to $210.2 million due to volatility in equity markets acting as a headwind. Corporate and Other Distributed Products revenues increased 16% to $45 million. Senior Health generated $18.7 million in revenues in the reported quarter, up more than two-fold year over year.
Life Insurance policies issued in the quarter were 84,561, up 2% from the prior-year quarter’s adjusted figure. Investment and Savings Products sales declined 25% to $2.3 billion in the first quarter.
Total benefits and expenses of $526.9 million were down 3.4% year over year on higher technology, employee and growth-related costs.
Adjusted operating income before taxes increased 11% year over year, driven by a 7% increase in Term Life Insurance operating income and an 80% rise in Senior Health operating income. Investment and Savings Products income dropped 16%.
Financial Update
Cash and cash equivalents were $515.1 million as of Mar 31, 2023, up from $489.2 million at 2022-end.
Total investments were $4.2 billion, up from $4.1 billion at 2022-end.
Debt was $593.1 million, up from $592.9 million at 2022-end.
Stockholders’ equity totaled $1.9 billion, down from $2 billion at 2022-end.
Primerica Life Insurance Company’s statutory risk-based capital ratio was about 455% as of Mar 31, 2023.
Capital Deployment Update
Primerica bought back shares worth $85.2 million in the first quarter. PRI has $375 million worth of share repurchase program for 2023.
The board of directors approved a dividend of 65 cents per share, to be paid out on Jun 12 to stockholders of record as of May 22, 2023.
2023 Outlook
The company expects full-year mid-single-digit growth in issued policy.
The company expects adjusted direct premiums to grow around 6% for the remainder of 2023, in line with first-quarter growth.
The benefits and claims ratio is expected to remain at 58.7% in the second quarter.
Losses in the Senior Health segment are expected to be $5 million in 2023.
Net Investment income is expected to be $32 million throughout 2023.
Insurance and Other operating expenses are expected to grow by 4-5% in 2023.
Reinsurance Group of America, Incorporated (RGA - Free Report) reported first-quarter 2023 adjusted operating earnings of $5.16 per share, which beat the Zacks Consensus Estimate by 53%. The bottom line, however, increased 23.4% from the year-ago quarter.
Net foreign currency fluctuations had an adverse effect of 18 cents per share on adjusted operating income year over year.
Reinsurance Group witnessed solid performance in the United States, Latin America and Canada segments, offset by soft results in Asia/Pacific and Europe, the Middle East and Africa.
Voya Financial (VOYA - Free Report) reported first-quarter 2023 adjusted operating earnings of $1.69 per share, which missed the Zacks Consensus Estimate by 1.7%. The bottom line, however, increased 15% year over year. Our estimate was $1.71.
The increase reflects the benefits of diverse revenue streams and strong margins across Voya’s businesses.
Brighthouse Financial Inc. (BHF - Free Report) reported first-quarter 2023 adjusted net income of $2.86 per share, which missed the Zacks Consensus Estimate by 9.2%. The bottom line dropped 46% year over year. Our estimate was $3.01 per share.
The reported quarter witnessed lower revenues and higher expenses.
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Primerica's (PRI) Stock Down 1.6% Despite Q1 Earnings Beat
Shares of Primerica, Inc. (PRI - Free Report) have lost 1.6% since it reported first-quarter 2023 results on May 8. Despite reporting better-than-expected results, investors were concerned regarding the poor performance of its Investment and Savings Products segment. The company’s results were supported by consistent growth in term life insurance premiums, a high-interest rate environment and improving Senior Health business. The upside was partially offset by persistent inflation and volatility in equity markets.
PRI delivered first-quarter 2023 operating income of $3.49 per share, which beat the Zacks Consensus Estimate by 1.2%. The bottom line improved 65.4%, reflecting better performance in the Term Life Insurance and Senior Health business.
PRI’s operating revenues of $695 million in the first quarter beat the consensus mark by 0.1%. The metric rose 0.3% from the year-ago quarter.
Primerica, Inc. Price, Consensus and EPS Surprise
Primerica, Inc. price-consensus-eps-surprise-chart | Primerica, Inc. Quote
Operational Update
Term Life Insurance revenues increased 3% year over year to $421.1 million driven by 6% growth in adjusted direct premiums. New term life insurance products launched last year enabled the company to better match the risk and price factors resulting in more insurance coverage being purchased.
Investment and Savings Products revenues dropped 13% to $210.2 million due to volatility in equity markets acting as a headwind. Corporate and Other Distributed Products revenues increased 16% to $45 million. Senior Health generated $18.7 million in revenues in the reported quarter, up more than two-fold year over year.
Life Insurance policies issued in the quarter were 84,561, up 2% from the prior-year quarter’s adjusted figure. Investment and Savings Products sales declined 25% to $2.3 billion in the first quarter.
Total benefits and expenses of $526.9 million were down 3.4% year over year on higher technology, employee and growth-related costs.
Adjusted operating income before taxes increased 11% year over year, driven by a 7% increase in Term Life Insurance operating income and an 80% rise in Senior Health operating income. Investment and Savings Products income dropped 16%.
Financial Update
Cash and cash equivalents were $515.1 million as of Mar 31, 2023, up from $489.2 million at 2022-end.
Total investments were $4.2 billion, up from $4.1 billion at 2022-end.
Debt was $593.1 million, up from $592.9 million at 2022-end.
Stockholders’ equity totaled $1.9 billion, down from $2 billion at 2022-end.
Primerica Life Insurance Company’s statutory risk-based capital ratio was about 455% as of Mar 31, 2023.
Capital Deployment Update
Primerica bought back shares worth $85.2 million in the first quarter. PRI has $375 million worth of share repurchase program for 2023.
The board of directors approved a dividend of 65 cents per share, to be paid out on Jun 12 to stockholders of record as of May 22, 2023.
2023 Outlook
The company expects full-year mid-single-digit growth in issued policy.
The company expects adjusted direct premiums to grow around 6% for the remainder of 2023, in line with first-quarter growth.
The benefits and claims ratio is expected to remain at 58.7% in the second quarter.
Losses in the Senior Health segment are expected to be $5 million in 2023.
Net Investment income is expected to be $32 million throughout 2023.
Insurance and Other operating expenses are expected to grow by 4-5% in 2023.
Zacks Rank
Primerica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Reinsurance Group of America, Incorporated (RGA - Free Report) reported first-quarter 2023 adjusted operating earnings of $5.16 per share, which beat the Zacks Consensus Estimate by 53%. The bottom line, however, increased 23.4% from the year-ago quarter.
Net foreign currency fluctuations had an adverse effect of 18 cents per share on adjusted operating income year over year.
Reinsurance Group witnessed solid performance in the United States, Latin America and Canada segments, offset by soft results in Asia/Pacific and Europe, the Middle East and Africa.
Voya Financial (VOYA - Free Report) reported first-quarter 2023 adjusted operating earnings of $1.69 per share, which missed the Zacks Consensus Estimate by 1.7%. The bottom line, however, increased 15% year over year. Our estimate was $1.71.
The increase reflects the benefits of diverse revenue streams and strong margins across Voya’s businesses.
Brighthouse Financial Inc. (BHF - Free Report) reported first-quarter 2023 adjusted net income of $2.86 per share, which missed the Zacks Consensus Estimate by 9.2%. The bottom line dropped 46% year over year. Our estimate was $3.01 per share.
The reported quarter witnessed lower revenues and higher expenses.