0001564590-15-008140.txt : 20150925 0001564590-15-008140.hdr.sgml : 20150925 20150925082038 ACCESSION NUMBER: 0001564590-15-008140 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20150925 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150925 DATE AS OF CHANGE: 20150925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Primerica, Inc. CENTRAL INDEX KEY: 0001475922 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 271204330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34680 FILM NUMBER: 151124019 BUSINESS ADDRESS: STREET 1: 1 PRIMERICA PARKWAY CITY: DULUTH STATE: GA ZIP: 30099 BUSINESS PHONE: 7703811000 MAIL ADDRESS: STREET 1: 1 PRIMERICA PARKWAY CITY: DULUTH STATE: GA ZIP: 30099 8-K 1 pri-8k_20150925.htm 8-K pri-8k_20150925.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (Date of earliest event reported):      September 25, 2015

 

 

PRIMERICA, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

001-34680

 

27-1204330

(State or Other Jurisdiction of
Incorporation)

 

(Commission File Number)

 

(I.R.S. Employer
Identification Number)

 

 

 

1 Primerica Parkway

Duluth, Georgia 30099

 

 

 

(Address of Principal Executive Offices)

 

 

 

 

 

 

 

 

 

(770) 381-1000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

Item 8.01

Other Events.

Beginning with the third quarter of 2015, Primerica, Inc. (the “Company”) has changed its basis for allocating net investment income and interest expense between its Term Life Insurance segment and its Corporate and Other Distributed Products segment in measuring segment results. The change in allocating net investment income and interest expense for measuring segment results does not impact the Company's consolidated financial statements, nor does it impact the Company’s view that the Term Life Insurance segment operating income before income taxes will grow by as much as 8-10% per year over the next several years even if life insurance policies issued remain flat, with upside potential if policies issued increases.

The amount of net investment income allocated to the Term Life Insurance segment will now equal the assumed net interest accreted to the segment’s future policy benefit reserve liability less deferred acquisition costs (“DAC”) as measured under U.S. generally accepted accounting principles (“U.S. GAAP”). All remaining net investment income will be allocated to the Corporate and Other Distributed Products segment. Concurrent with this change, all interest expense incurred by the Company will be attributed solely to the Corporate and Other Distributed Products segment. Exhibit 99.1 attached hereto presents segment operating results under the new basis of allocation for each historical quarterly and annual reporting period beginning in 2012.

This change in segment measurement most appropriately reflects the information used in assessing the Company’s performance and aligns with the operating strategy for managing the Term Life Insurance segment. The performance of the Term Life Insurance segment is focused on distribution and primarily evaluated by pricing margins with fluctuations for mortality, persistency and expenses. Therefore, the impact of yields on the Company’s investment portfolio is not a key driver for the profitability of the Term Life Insurance segment.

The use of captive insurance companies has provided the Company with an efficient method of supporting the portion of statutorily-prescribed term life insurance benefit reserves believed to be redundant. Accordingly, the net investment income earned by the Company’s invested assets is no longer aligned directly with the level of statutory reserves in the Term Life Insurance segment. As such, the updated measurement of segment results is also consistent with the Company’s strategies for managing capital, which have evolved over time with the use of captive insurance company financing transactions.

The information provided hereto as Exhibit 99.1 in Item 9.01, is “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such section, and shall not be incorporated by reference in any filing made by the Company under the Exchange Act or the Securities Act, except to the extent expressly set forth by specific reference in any such filings.

 

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

99.1

Recast of Historical Segment Operating Results and Certain Supplemental Financial Information

 

 

2

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  September 25, 2015

 

PRIMERICA, INC.

 

 

 

 

 

/s/ Alison S. Rand

 

 

 

Alison S. Rand

 

 

Executive Vice President and Chief Financial Officer

 

3

 

EXHIBIT INDEX

 

 

 

Exhibit No.

Description

99.1

Recast of Historical Segment Operating Results and Certain Supplemental Financial Information

 

 

 

 

4

 EX-99.1 2 pri-ex991_8.htm EX-99.1 pri-ex991_8.htm

Exhibit 99.1

 

Recast of Historical Segment

Operating Results and Certain

Supplemental Financial Information

 

 

 

 

 

 

Table of Contents

Page

 

 

 

 

Recast of Historical Segment Operating Results and Certain Supplemental Financial Information

3

Term Life Insurance – Financial Results and Analysis

4

Corporate & Other Distributed Products – Financial Results and Analysis

5

Operating Income

6

Reconciliation of Non-GAAP to GAAP Financial Measures

7

 

 

 

 

 

Recast of Historical Segment Operating Results and Certain Supplemental Financial Information

This document recasts historical segment operating results and certain supplemental financial information contained within financial supplements to our quarterly earnings releases.  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. 

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company presents certain non-GAAP financial measures in this document. Specifically, the Company presents adjusted direct premiums, other ceded premiums, operating revenues and operating income before income taxes.  Adjusted direct premiums and other ceded premiums are net of amounts ceded to affiliates of Citigroup Inc. under coinsurance transactions that were executed concurrent with our initial public offering (“IPO”) for all periods presented. Operating revenues and operating income before income taxes exclude the impact of realized investment gains and losses for all periods presented. Operating income before income taxes also excludes (1) the expense associated with our IPO-related equity awards, (2) the impact of charges recorded in 2013 for the settlement of claims made by certain Florida Retirement System plan participants and (3) the compensation expense recorded in 2014 associated with the CEO transition agreements discussed in our Current Report on Form 8-K dated January 2, 2015. We exclude these items because they are considered unusual or not indicative of our ongoing operations.  Our definitions of these non-GAAP financial measures may differ from the definitions of similar measures used by other companies.  Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance.  Furthermore, management believes that these non-GAAP financial measures may provide users with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business.  These measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

Certain items throughout this document may not add due to rounding and as such, may not agree to other public reporting of the respective item.

 

 

Page 3 of 7

 

Term Life Insurance - Financial Results and Analysis

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Life Insurance Operating

   Income Before Income Taxes

FY

2012

 

FY

2013

 

FY

2014

 

Q1

2012

 

Q2

2012

 

Q3

2012

 

Q4

2012

 

Q1

2013

 

Q2

2013

 

Q3

2013

 

Q4

2013

 

Q1

2014

 

Q2

2014

 

Q3

2014

 

Q4

2014

 

Q1

2015

 

Q2

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Premiums

$

2,193,280

 

$

2,229,204

 

$

2,266,649

 

$

542,157

 

$

550,329

 

$

549,069

 

$

551,725

 

$

552,034

 

$

559,035

 

$

557,486

 

$

560,649

 

$

559,663

 

$

567,849

 

$

568,592

 

$

570,545

 

$

569,164

 

$

579,873

 

Premiums ceded to Citi

 

(1,473,314

)

 

(1,418,299

)

 

(1,366,697

)

 

(372,420

)

 

(371,184

)

 

(365,906

)

 

(363,804

)

 

(358,625

)

 

(357,613

)

 

(351,983

)

 

(350,077

)

 

(344,883

)

 

(344,143

)

 

(340,170

)

 

(337,501

)

 

(331,733

)

 

(331,984

)

Adjusted direct

   premiums

 

719,966

 

 

810,905

 

 

899,952

 

 

169,737

 

 

179,145

 

 

183,163

 

 

187,921

 

 

193,409

 

 

201,422

 

 

205,503

 

 

210,572

 

 

214,780

 

 

223,706

 

 

228,422

 

 

233,044

 

 

237,430

 

 

247,889

 

Other ceded premiums

 

(176,308

)

 

(213,743

)

 

(239,268

)

 

(42,139

)

 

(40,854

)

 

(45,334

)

 

(47,981

)

 

(49,229

)

 

(56,608

)

 

(52,476

)

 

(55,430

)

 

(55,450

)

 

(63,424

)

 

(59,417

)

 

(60,978

)

 

(63,389

)

 

(72,227

)

Net premiums

 

543,658

 

 

597,162

 

 

660,684

 

 

127,598

 

 

138,292

 

 

137,829

 

 

139,939

 

 

144,180

 

 

144,813

 

 

153,027

 

 

155,142

 

 

159,330

 

 

160,282

 

 

169,005

 

 

172,067

 

 

174,042

 

 

175,662

 

Allocated net investment

   income

 

2,483

 

 

3,029

 

 

4,446

 

 

677

 

 

580

 

 

586

 

 

641

 

 

688

 

 

713

 

 

764

 

 

864

 

 

1,000

 

 

1,033

 

 

1,142

 

 

1,270

 

 

1,405

 

 

1,436

 

Other, net

 

30,357

 

 

29,017

 

 

28,838

 

 

7,547

 

 

7,753

 

 

7,788

 

 

7,268

 

 

6,984

 

 

7,436

 

 

7,399

 

 

7,199

 

 

6,937

 

 

7,245

 

 

7,337

 

 

7,318

 

 

7,042

 

 

7,641

 

Operating

   revenues

 

576,498

 

 

629,208

 

 

693,968

 

 

135,822

 

 

146,625

 

 

146,203

 

 

147,848

 

 

151,851

 

 

152,962

 

 

161,190

 

 

163,204

 

 

167,267

 

 

168,561

 

 

177,485

 

 

180,655

 

 

182,489

 

 

184,738

 

Benefits and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits and claims

 

239,346

 

 

262,357

 

 

295,332

 

 

57,509

 

 

59,984

 

 

60,733

 

 

61,120

 

 

65,547

 

 

61,689

 

 

67,788

 

 

67,334

 

 

71,263

 

 

68,287

 

 

77,722

 

 

78,059

 

 

77,990

 

 

78,268

 

Amortization of DAC

 

104,272

 

 

115,891

 

 

133,331

 

 

23,933

 

 

22,547

 

 

27,645

 

 

30,147

 

 

27,865

 

 

25,777

 

 

29,679

 

 

32,570

 

 

32,721

 

 

29,778

 

 

34,171

 

 

36,661

 

 

35,017

 

 

32,797

 

Insurance commissions

 

9,599

 

 

4,600

 

 

4,003

 

 

3,577

 

 

2,314

 

 

2,168

 

 

1,539

 

 

1,199

 

 

1,062

 

 

901

 

 

1,437

 

 

1,315

 

 

929

 

 

1,070

 

 

690

 

 

601

 

 

1,382

 

Insurance expenses

 

85,156

 

 

98,081

 

 

109,198

 

 

19,717

 

 

21,782

 

 

20,532

 

 

23,125

 

 

23,846

 

 

24,508

 

 

25,125

 

 

24,603

 

 

26,413

 

 

26,293

 

 

30,514

 

 

25,978

 

 

32,804

 

 

27,603

 

Interest expense

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Operating

   benefits and

   expenses

 

438,373

 

 

480,928

 

 

541,865

 

 

104,736

 

 

106,628

 

 

111,078

 

 

115,931

 

 

118,456

 

 

113,035

 

 

123,493

 

 

125,944

 

 

131,713

 

 

125,287

 

 

143,477

 

 

141,388

 

 

146,413

 

 

140,049

 

Operating

   income

   before

   income taxes

$

138,126

 

$

148,280

 

$

152,103

 

$

31,087

 

$

39,997

 

$

35,125

 

$

31,918

 

$

33,395

 

$

39,927

 

$

37,698

 

$

37,260

 

$

35,555

 

$

43,274

 

$

34,008

 

$

39,267

 

$

36,076

 

$

44,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Term Life Insurance - Financial

   Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary direct premiums

$

361,596

 

$

465,730

 

$

567,380

 

$

79,146

 

$

88,860

 

$

94,133

 

$

99,458

 

$

106,077

 

$

114,407

 

$

119,852

 

$

125,394

 

$

130,855

 

$

139,973

 

$

145,636

 

$

150,916

 

$

156,714

 

$

167,118

 

Legacy direct premiums

 

1,831,684

 

 

1,763,473

 

 

1,699,269

 

 

463,011

 

 

461,470

 

 

454,936

 

 

452,267

 

 

445,957

 

 

444,628

 

 

437,634

 

 

435,255

 

 

428,809

 

 

427,876

 

 

422,956

 

 

419,629

 

 

412,449

 

 

412,754

 

Total direct

   premiums

$

2,193,280

 

$

2,229,204

 

$

2,266,649

 

$

542,157

 

$

550,329

 

$

549,069

 

$

551,725

 

$

552,034

 

$

559,035

 

$

557,486

 

$

560,649

 

$

559,663

 

$

567,849

 

$

568,592

 

$

570,545

 

$

569,164

 

$

579,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums ceded to Citi

$

1,473,314

 

$

1,418,299

 

$

1,366,697

 

$

372,420

 

$

371,184

 

$

365,906

 

$

363,804

 

$

358,625

 

$

357,613

 

$

351,983

 

$

350,077

 

$

344,883

 

$

344,143

 

$

340,170

 

$

337,501

 

$

331,733

 

$

331,984

 

% of Legacy direct premiums

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

80.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits and claims, net

$

415,654

 

$

476,100

 

$

534,600

 

$

99,648

 

$

100,838

 

$

106,067

 

$

109,101

 

$

114,776

 

$

118,297

 

$

120,263

 

$

122,764

 

$

126,713

 

$

131,711

 

$

137,139

 

$

139,037

 

$

141,379

 

$

150,494

 

% of adjusted direct premiums

 

57.7

%

 

58.7

%

 

59.4

%

 

58.7

%

 

56.3

%

 

57.9

%

 

58.1

%

 

59.3

%

 

58.7

%

 

58.5

%

 

58.3

%

 

59.0

%

 

58.9

%

 

60.0

%

 

59.7

%

 

59.5

%

 

60.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DAC amortization & insurance

   commissions

$

113,871

 

$

120,490

 

$

137,335

 

$

27,510

 

$

24,861

 

$

29,813

 

$

31,686

 

$

29,064

 

$

26,839

 

$

30,580

 

$

34,007

 

$

34,036

 

$

30,707

 

$

35,241

 

$

37,351

 

$

35,619

 

$

34,179

 

% of adjusted direct premiums

 

15.8

%

 

14.9

%

 

15.3

%

 

16.2

%

 

13.9

%

 

16.3

%

 

16.9

%

 

15.0

%

 

13.3

%

 

14.9

%

 

16.1

%

 

15.8

%

 

13.7

%

 

15.4

%

 

16.0

%

 

15.0

%

 

13.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance expenses, net

$

54,798

 

$

69,063

 

$

80,361

 

$

12,169

 

$

14,029

 

$

12,743

 

$

15,857

 

$

16,862

 

$

17,072

 

$

17,726

 

$

17,404

 

$

19,476

 

$

19,047

 

$

23,177

 

$

18,660

 

$

25,762

 

$

19,962

 

% of adjusted direct premiums

 

7.6

%

 

8.5

%

 

8.9

%

 

7.2

%

 

7.8

%

 

7.0

%

 

8.4

%

 

8.7

%

 

8.5

%

 

8.6

%

 

8.3

%

 

9.1

%

 

8.5

%

 

10.1

%

 

8.0

%

 

10.9

%

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total term life operating income

   before income taxes

$

138,126

 

$

148,280

 

$

152,103

 

$

31,087

 

$

39,997

 

$

35,125

 

$

31,918

 

$

33,395

 

$

39,927

 

$

37,698

 

$

37,260

 

$

35,555

 

$

43,274

 

$

34,008

 

$

39,267

 

$

36,076

 

$

44,689

 

% of adjusted direct premiums

 

19.2

%

 

18.3

%

 

16.9

%

 

18.3

%

 

22.3

%

 

19.2

%

 

17.0

%

 

17.3

%

 

19.8

%

 

18.3

%

 

17.7

%

 

16.6

%

 

19.3

%

 

14.9

%

 

16.8

%

 

15.2

%

 

18.0

%

 

Recast due to change in segment measurement

 

 

Page 4 of 7

 

Corporate & Other Distributed Products – Financial Results and Analysis

 

(Dollars in thousands)

FY

2012

 

FY

2013

 

FY

2014

 

Q1

2012

 

Q2

2012

 

Q3

2012

 

Q4

2012

 

Q1

2013

 

Q2

2013

 

Q3

2013

 

Q4

2013

 

Q1

2014

 

Q2

2014

 

Q3

2014

 

Q4

2014

 

Q1

2015

 

Q2

2015

 

Corporate & Other Distributed

   Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums

$

37,751

 

$

35,987

 

$

34,683

 

$

9,713

 

$

10,275

 

$

9,061

 

$

8,703

 

$

8,870

 

$

9,356

 

$

9,561

 

$

8,200

 

$

8,542

 

$

8,892

 

$

8,890

 

$

8,360

 

$

8,295

 

$

8,376

 

Ceded premiums

 

(14,130

)

 

(12,117

)

 

(10,852

)

 

(3,604

)

 

(3,777

)

 

(3,752

)

 

(2,998

)

 

(2,750

)

 

(3,229

)

 

(3,030

)

 

(3,109

)

 

(2,381

)

 

(2,980

)

 

(2,611

)

 

(2,880

)

 

(2,419

)

 

(2,644

)

Net premiums

 

23,620

 

 

23,870

 

 

23,831

 

 

6,108

 

 

6,499

 

 

5,309

 

 

5,705

 

 

6,120

 

 

6,127

 

 

6,531

 

 

5,091

 

 

6,160

 

 

5,912

 

 

6,279

 

 

5,480

 

 

5,876

 

 

5,732

 

Allocated net investment

   income

 

98,321

 

 

85,723

 

 

82,027

 

 

25,419

 

 

23,025

 

 

26,296

 

 

23,580

 

 

22,528

 

 

20,314

 

 

21,338

 

 

21,543

 

 

20,598

 

 

20,648

 

 

19,323

 

 

21,458

 

 

19,768

 

 

17,640

 

Commissions and fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

2,378

 

 

1,220

 

 

447

 

 

913

 

 

627

 

 

438

 

 

400

 

 

293

 

 

406

 

 

264

 

 

256

 

 

200

 

 

101

 

 

78

 

 

69

 

 

42

 

 

43

 

DebtWatchers

 

2,522

 

 

1,846

 

 

1,398

 

 

717

 

 

648

 

 

609

 

 

548

 

 

491

 

 

462

 

 

482

 

 

411

 

 

385

 

 

360

 

 

337

 

 

316

 

 

307

 

 

311

 

Prepaid Legal Services

 

9,236

 

 

9,321

 

 

10,336

 

 

2,289

 

 

2,266

 

 

2,364

 

 

2,318

 

 

2,254

 

 

2,255

 

 

2,396

 

 

2,415

 

 

2,339

 

 

2,285

 

 

2,487

 

 

3,225

 

 

2,468

 

 

2,494

 

Auto and Homeowners

   Insurance

 

6,588

 

 

7,028

 

 

7,354

 

 

1,689

 

 

1,836

 

 

1,271

 

 

1,791

 

 

1,685

 

 

1,890

 

 

1,470

 

 

1,982

 

 

1,719

 

 

1,998

 

 

1,606

 

 

2,032

 

 

1,770

 

 

2,096

 

Long-Term Care Insurance

 

2,905

 

 

2,562

 

 

2,206

 

 

729

 

 

653

 

 

756

 

 

767

 

 

628

 

 

664

 

 

705

 

 

565

 

 

521

 

 

570

 

 

565

 

 

550

 

 

534

 

 

583

 

Other sales commissions

 

915

 

 

1,369

 

 

1,392

 

 

6

 

 

219

 

 

325

 

 

364

 

 

323

 

 

316

 

 

341

 

 

389

 

 

337

 

 

399

 

 

467

 

 

188

 

 

391

 

 

412

 

Other, net

 

5,442

 

 

5,040

 

 

5,259

 

 

1,475

 

 

1,373

 

 

1,337

 

 

1,257

 

 

1,270

 

 

1,263

 

 

1,374

 

 

1,133

 

 

1,269

 

 

1,318

 

 

1,569

 

 

1,103

 

 

1,136

 

 

1,140

 

Operating

   revenues

 

151,927

 

 

137,978

 

 

134,250

 

 

39,346

 

 

37,145

 

 

38,705

 

 

36,731

 

 

35,592

 

 

33,699

 

 

34,902

 

 

33,786

 

 

33,527

 

 

33,591

 

 

32,710

 

 

34,422

 

 

32,291

 

 

30,451

 

Benefits and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits and claims

 

14,701

 

 

17,574

 

 

16,085

 

 

4,511

 

 

2,435

 

 

3,619

 

 

4,137

 

 

3,269

 

 

2,634

 

 

8,760

 

 

2,912

 

 

3,928

 

 

4,125

 

 

3,513

 

 

4,519

 

 

4,510

 

 

4,253

 

Amortization of DAC

 

3,371

 

 

2,097

 

 

2,313

 

 

(625

)

 

2,778

 

 

178

 

 

1,040

 

 

496

 

 

459

 

 

(29

)

 

1,171

 

 

137

 

 

747

 

 

289

 

 

1,141

 

 

(5

)

 

685

 

Insurance commissions

 

3,055

 

 

2,883

 

 

2,550

 

 

1,040

 

 

566

 

 

874

 

 

574

 

 

750

 

 

738

 

 

783

 

 

612

 

 

681

 

 

715

 

 

686

 

 

468

 

 

617

 

 

581

 

Insurance expenses

 

5,738

 

 

7,376

 

 

6,254

 

 

1,417

 

 

1,300

 

 

2,179

 

 

843

 

 

1,667

 

 

2,006

 

 

1,451

 

 

2,252

 

 

2,088

 

 

1,900

 

 

981

 

 

1,285

 

 

1,837

 

 

1,491

 

Sales commissions

 

13,164

 

 

12,439

 

 

11,593

 

 

3,371

 

 

3,159

 

 

3,292

 

 

3,342

 

 

3,007

 

 

3,129

 

 

3,316

 

 

2,986

 

 

2,833

 

 

2,803

 

 

2,929

 

 

3,029

 

 

2,764

 

 

2,845

 

Interest expense

 

33,101

 

 

35,018

 

 

34,570

 

 

6,910

 

 

8,505

 

 

8,829

 

 

8,857

 

 

8,795

 

 

8,792

 

 

8,726

 

 

8,704

 

 

8,606

 

 

8,552

 

 

8,712

 

 

8,700

 

 

8,676

 

 

8,642

 

Other operating

   expenses

 

70,884

 

 

72,075

 

 

78,792

 

 

18,489

 

 

17,189

 

 

17,092

 

 

18,113

 

 

17,492

 

 

19,698

 

 

17,911

 

 

16,975

 

 

18,266

 

 

19,161

 

 

22,211

 

 

19,154

 

 

19,486

 

 

18,161

 

Operating

   benefits and

   expenses

 

144,014

 

 

149,463

 

 

152,159

 

 

35,113

 

 

35,933

 

 

36,063

 

 

36,905

 

 

35,476

 

 

37,456

 

 

40,919

 

 

35,611

 

 

36,540

 

 

38,002

 

 

39,321

 

 

38,295

 

 

37,886

 

 

36,657

 

Operating

   income

   before

   income taxes

$

7,913

 

$

(11,485

)

$

(17,909

)

$

4,233

 

$

1,213

 

$

2,642

 

$

(174

)

$

116

 

$

(3,758

)

$

(6,017

)

$

(1,826

)

$

(3,013

)

$

(4,412

)

$

(6,611

)

$

(3,874

)

$

(5,595

)

$

(6,207

)

 

Recast due to change in segment measurement

Page 5 of 7

 

Operating Income

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Before Income Taxes

FY

2012

 

FY

2013

 

FY

2014

 

Q1

2012

 

Q2

2012

 

Q3

2012

 

Q4

2012

 

Q1

2013

 

Q2

2013

 

Q3

2013

 

Q4

2013

 

Q1

2014

 

Q2

2014

 

Q3

2014

 

Q4

2014

 

Q1

2015

 

Q2

2015

 

Term life insurance segment

$

138,126

 

$

148,280

 

$

152,103

 

$

31,087

 

$

39,997

 

$

35,125

 

$

31,918

 

$

33,395

 

$

39,927

 

$

37,698

 

$

37,260

 

$

35,555

 

$

43,274

 

$

34,008

 

$

39,267

 

$

36,076

 

$

44,689

 

Investment and savings products segment

 

121,116

 

 

120,888

 

 

146,017

 

 

28,869

 

 

29,445

 

 

31,608

 

 

31,194

 

 

26,353

 

 

27,675

 

 

31,498

 

 

35,361

 

 

34,028

 

 

36,047

 

 

36,904

 

 

39,039

 

 

35,044

 

 

37,746

 

Corporate and other distributed products segment

 

7,913

 

 

(11,485

)

 

(17,909

)

 

4,233

 

 

1,213

 

 

2,642

 

 

(174

)

 

116

 

 

(3,758

)

 

(6,017

)

 

(1,826

)

 

(3,013

)

 

(4,412

)

 

(6,611

)

 

(3,874

)

 

(5,595

)

 

(6,207

)

Total consolidated operating income before income taxes

$

267,155

 

$

257,683

 

$

280,211

 

$

64,189

 

$

70,654

 

$

69,374

 

$

62,937

 

$

59,864

 

$

63,844

 

$

63,179

 

$

70,795

 

$

66,569

 

$

74,909

 

$

64,301

 

$

74,432

 

$

65,525

 

$

76,228

 

 

Recast due to change in segment measurement

 

Page 6 of 7

 

Reconciliation of Non-GAAP to GAAP Financial Measures

 

(Dollars in thousands)

FY

2012

 

FY

2013

 

FY

2014

 

Q1

2012

 

Q2

2012

 

Q3

2012

 

Q4

2012

 

Q1

2013

 

Q2

2013

 

Q3

2013

 

Q4

2013

 

Q1

2014

 

Q2

2014

 

Q3

2014

 

Q4

2014

 

Q1

2015

 

Q2

2015

 

Reconciliation from Term Life Adjusted Direct

   Premiums to Term Life Direct Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Life adjusted direct premiums

$

719,966

 

$

810,905

 

$

899,952

 

$

169,737

 

$

179,145

 

$

183,163

 

$

187,921

 

$

193,409

 

$

201,422

 

$

205,503

 

$

210,572

 

$

214,780

 

$

223,706

 

$

228,422

 

$

233,044

 

$

237,430

 

$

247,889

 

Premiums ceded to Citi

 

1,473,314

 

 

1,418,299

 

 

1,366,697

 

 

372,420

 

 

371,184

 

 

365,906

 

 

363,804

 

 

358,625

 

 

357,613

 

 

351,983

 

 

350,077

 

 

344,883

 

 

344,143

 

 

340,170

 

 

337,501

 

 

331,733

 

 

331,984

 

Term Life direct premiums

$

2,193,280

 

$

2,229,204

 

$

2,266,649

 

$

542,157

 

$

550,329

 

$

549,069

 

$

551,725

 

$

552,034

 

$

559,035

 

$

557,486

 

$

560,649

 

$

559,663

 

$

567,849

 

$

568,592

 

$

570,545

 

$

569,164

 

$

579,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation from Term Life Other Ceded

   Premiums to Term Life Ceded Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Life other ceded premiums

$

(176,308

)

$

(213,743

)

$

(239,268

)

$

(42,139

)

$

(40,854

)

$

(45,334

)

$

(47,981

)

$

(49,229

)

$

(56,608

)

$

(52,476

)

$

(55,430

)

$

(55,450

)

$

(63,424

)

$

(59,417

)

$

(60,978

)

$

(63,389

)

$

(72,227

)

Premiums ceded to Citi

 

(1,473,314

)

 

(1,418,299

)

 

(1,366,697

)

 

(372,420

)

 

(371,184

)

 

(365,906

)

 

(363,804

)

 

(358,625

)

 

(357,613

)

 

(351,983

)

 

(350,077

)

 

(344,883

)

 

(344,143

)

 

(340,170

)

 

(337,501

)

 

(331,733

)

 

(331,984

)

Term Life ceded premiums

$

(1,649,622

)

$

(1,632,041

)

$

(1,605,965

)

$

(414,559

)

$

(412,038

)

$

(411,240

)

$

(411,786

)

$

(407,854

)

$

(414,222

)

$

(404,459

)

$

(405,506

)

$

(400,334

)

$

(407,566

)

$

(399,587

)

$

(398,478

)

$

(395,122

)

$

(404,211

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation from Consolidated Operating

   Revenues to Consolidated Total Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

$

1,142,390

 

$

1,224,324

 

$

1,340,290

 

$

275,302

 

$

286,737

 

$

286,071

 

$

294,280

 

$

296,164

 

$

300,022

 

$

310,815

 

$

317,323

 

$

324,065

 

$

330,299

 

$

339,468

 

$

346,459

 

$

343,854

 

$

350,270

 

Realized investment gains/(losses)

 

11,382

 

 

6,246

 

 

(261

)

 

2,132

 

 

4,320

 

 

3,872

 

 

1,058

 

 

2,286

 

 

3,468

 

 

(407

)

 

899

 

 

263

 

 

831

 

 

(281

)

 

(1,074

)

 

1,284

 

 

597

 

Total revenues

$

1,153,772

 

$

1,230,570

 

$

1,340,030

 

$

277,434

 

$

291,057

 

$

289,944

 

$

295,337

 

$

298,450

 

$

303,490

 

$

310,408

 

$

318,222

 

$

324,328

 

$

331,130

 

$

339,187

 

$

345,385

 

$

345,139

 

$

350,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation from Consolidated Operating

   Income Before Income Taxes to Consolidated

   Income from Continued Operations Before

   Income Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes

$

267,155

 

$

257,683

 

$

280,211

 

$

64,189

 

$

70,654

 

$

69,374

 

$

62,937

 

$

59,864

 

$

63,844

 

$

63,179

 

$

70,795

 

$

66,569

 

$

74,909

 

$

64,301

 

$

74,432

 

$

65,525

 

$

76,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes reconciling

   items:

 

—

 

 

—

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized investment gains/(losses)

 

11,382

 

 

6,246

 

 

(261

)

 

2,132

 

 

4,320

 

 

3,872

 

 

1,058

 

 

2,286

 

 

3,468

 

 

(407

)

 

899

 

 

263

 

 

831

 

 

(281

)

 

(1,074

)

 

1,284

 

 

597

 

Co-CEOs transition expenses

 

—

 

 

—

 

 

(4,228

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(4,228

)

 

—

 

 

—

 

FRS legal settlements

 

—

 

 

(15,738

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(188

)

 

—

 

 

(15,551

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

IPO equity award grants

 

(12,415

)

 

(3,184

)

 

—

 

 

(3,068

)

 

(3,184

)

 

(3,096

)

 

(3,067

)

 

(3,010

)

 

(174

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Total operating income before income taxes

   reconciling items

 

(1,033

)

 

(12,677

)

 

(4,489

)

 

(936

)

 

1,136

 

 

776

 

 

(2,009

)

 

(724

)

 

3,106

 

 

(407

)

 

(14,652

)

 

263

 

 

831

 

 

(281

)

 

(5,302

)

 

1,284

 

 

597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continued operations before income

   taxes

$

266,121

 

$

245,006

 

$

275,723

 

$

63,253

 

$

71,790

 

$

70,150

 

$

60,928

 

$

59,140

 

$

66,950

 

$

62,772

 

$

56,143

 

$

66,832

 

$

75,740

 

$

64,020

 

$

69,130

 

$

66,809

 

$

76,825

 

 

 

 

 

Page 7 of 7

 

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