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Primerica (PRI) Q2 Earnings Surpass on Segmental Strength

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Primerica, Inc. (PRI - Free Report) delivered second-quarter 2018 operating income of $1.93 per share, beating the Zacks Consensus Estimate of $1.80 by 7.2%. However, the bottom line improved 41.9% year over year on continued strong operational performance and a lower effective tax rate. Also, ongoing share buybacks offered an additional upside to the metric. Shares of the company inched up 1.4% in the last couple of trading sessions to reflect this outperformance.

Primerica, Inc. Price, Consensus and EPS Surprise

Moreover, the reported quarter witnessed solid results at both Term Life Insurance and Investment and Savings Products.

Operational Update

Operating revenues grew 13% year over year to $466.9 million on higher net premiums, investment income, commissions and fees.

While Term Life Insurance revenues increased 14% to $273 million year over year, Investment and Savings Products revenues rose 13% to $163 million. Meanwhile, Corporate and Other Distributed Products revenues remained almost flat at $31 million.

The quarter under review witnessed 7% increase in the size of life insurance sales force and a 12% rise in Investment and Savings product sale.

Total benefits and expenses of $354 million were up 11.6 % year over year due to higher benefits and claims, amortization of deferred policy acquisition costs, sales commissions, insurance expenses as well as insurance commissions and other operating expenses.

Adjusted operating income before taxes increased 17% year over year on 23% higher operating income at Term Life Insurance and 9% growth at Investment and Savings Products.

Financial Update

Cash and cash equivalents were $159.3 million as of Jun 30, 2018, down 43% from the level on Dec 31, 2017.

Total investments were $2.9 billion, up 6.5% from the figure as of Dec 31, 2017.

Notes payable were $373 million, which remained almost flat with the level at 2017-end.

Stockholders’ equity totaled $1.4 billion, down 1.3% from the level on Dec 31, 2017.

Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was about 430% as of Jun 30, 2018.

Return on equity stood at 24.5% in the second quarter, expanding 360 basis points.

Dividend and Share Repurchase Update

During the second quarter, the company approved a dividend of 25 cents per share, payable Sep 14, 2018 to shareholders of record as of Aug 21, 2018.

In the quarter under discussion, Primerica spent $133.7 million to buy back 1.4 million shares.

Zacks Rank

Primerica carries a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Performance of Other Insurers

Among other players from the insurance industry having already reported second-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.

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